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P087094 | Page 1
1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB3173
Project Name
FOREST AND MOUTAIN PROTECTED AREAS PROJECT
Region
EUROPE AND CENTRAL ASIA
Sector
Forestry (50%);Sub-national government administration
(25%);Central government administration (25%)
Project ID
P087094
GEF Focal Area
Biodiversity
Borrower(s)
GOVERNMENT OF BOSNIA AND HERZEGOVINA
Implementing Agencies
Ministry of Foreign Trade and Economic Relations, BiH (GEF
Focal Point)
FBiH Ministry of Environment and Tourism
RS Ministry of Civil Engineering, Physical Planning, and Ecology
FBiH Ministry of Agriculture, Water Management and Forestry
Republika Srpska: Ministry of Agriculture, Forestry and Water
Management
Environment Category
[
]
A
[X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
Mar 24, 2008
Date of Appraisal
Authorization
June 22, 2007
Date of Board Approval
May 29, 2008
1\.
Country and Sector Background
1\. Country and sector issues
Land Use\.
Bosnia and Herzegovina (BiH), with a land area of 51,000 km
2
and an estimated
population of 4\.1 million, is endowed with internationally recognized rich biodiversity assets\.
About 50% of the country is covered by forests and 25% by pastures\. It is mostly hilly and
mountainous, with only 5% of territory classified as plains, 24% as hills, 29% as Karst (irregular
limestone terrain) and 42% as mountains\.
Economic Role of Natural Resources\.
About 2 million people (54
%
of
BiHs population) live in
rural areas, and for them forest and mountain ecosystems serve as an important source of
subsistence, employment, energy and recreation\. Furthermore, since BiH has a rural population
density (43 persons per square km) which is lower than any of the other Balkan countries, sound
management of its production landscape values (forest and grassland management) can
provide income for local people while also maximizing environmental services\.
Biodiversity Significance\.
BiH is at a geographical cross-roads and includes 5 types of climate, 3
agro-climatic regions, and multiple provinces, landscape types, and biotopes\. BiH covers three
globally significant ecosystems and several smaller-scale globally important sites\. The countrys
rich biodiversity includes over 5,000 confirmed taxa of vascular flora, including 450 of which
are endemic to BiH only\. For several taxonomic groups (e\.g\., lichens, mosses, algae, fungi, and
bacteria) comprehensive surveys do not exist, but available data indicate these groups are also
Page 2
2
highly diverse\. BiHs forest resources are among the richest in Europe with a wide variety of
coniferous and deciduous species\. The countrys large blocks of forests maintain ecological
integrity, river dynamics, and large carnivore dispersion between Central and South-East Europe\.
At least thirty-two species of animals and plants found in BiH are on the 2002 IUCN Red List of
threatened species\. Keystone species include bear, wolf and river otter\. Interesting flagship
species are bats, of which several are considered in vulnerable status\.
Protected Area Coverage\.
It is estimated that at 19%, BiH has the highest proportion of
threatened plant species of any European country, and yet less than 1% of its land is set aside as
PAs\. Currently only 0\.55% of the territory is formally protected the lowest level in Europe -
compared to the regional average of 7%\. Broad consensus to expand the network of protected
areas (PAs) exists among stakeholders at all levels in both Entities\. Key ministerial officials, as
well as local governments, and numerous civil society organizations, are committed to
developing a system of PAs which would protect key biodiversity and cultural assets, as well as
providing new income opportunities for local residents\. However, civil society organizations
working on environmental issues are relatively weak\. Furthermore, there is little experience with
participatory approaches to sustainable landscape management\.
Post-Conflict Context\.
The conflict associated with the breakup of the former Yugoslavia,
between 1992 and 1995 caused heavy damage to natural resources the direct damage to forests
and associated sectors is estimated at US$2 billion\. A minimum of 200,000 hectares became
contaminated by landmines, resulting in overexploitation of some rural areas and abandonment
of others\. Subsequent to the conflict, poverty, inadequate land-use planning, as well as limited
capacity of local institutions and lack of awareness of conservation issues, have contributed to
unsustainable land use practices and habitat change\. In this context, the conservation of globally
significant natural resources has to take into account economic development considerations\.
Government Structure\.
As a result of the Dayton Peace Accords (1995), in addition to central
government authority at the 'state' level, Bosnia-Herzegovina (BiH) is divided into two Entities -
the Federation of Bosnia and Herzegovina (FBiH), and the Republika Srpska (RS), and a
separate territory of Brcko\. The Entities have separate administrative and legislative bodies\. In
most areas of natural resources management, the Entities have responsibility for creating and
implementing all relevant laws\. FBiH delegates some authority and responsibilities to the
cantonal level\.
Allocation of Responsibilities for Protected Areas
\.
Responsibilities for PA planning and much
of their oversight rests with the Entity ministries in charge of environment - the Ministry of
Environment and Tourism (MET) in FBiH, and the Ministry of Civil Engineering, Physical
Planning and Ecology (MCEPPE) in RS\. In the FBiH the Ministry of Physical Planning is
responsible for preparing spatial development plans\. Four types of PAs are defined: (a) nature
protection areas, (b) national parks, (c) natural monuments and (d) landscape protection areas\.
Entity environmental ministries provide oversight for the first two PA categories (nature
protection areas and national parks), with the right to delegate specific responsibilities to other
institutions\. Management of these two types of PAs, however, is primarily carried out by
specialized public enterprises\. In contrast, for natural monuments and landscape protection areas
oversight and management responsibilities rest with a variety of other institutions (including
Cantonal Ministries in charge of Water Management and Forestry; Municipalities; NGOs; and
others)\. Where such PAs are located within public forests, public forest enterprises (in the RS,
the enterprise associated with Entity Ministries of Agriculture, Forests, and Water Resources,
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3
and in FBIH, enterprises associated with cantonal forest offices) are responsible for maintaining
conservation status\.
PA Financing
\.
Existing PAs have been under-funded and largely self-financed, relying on the
generation of revenues from various activities\. Historically, the largest portion of funding
(between 60-90%) has come from sales associated with selective thinning of forests\. While
existing national parks have progressively reduced the total volume of forest thinning, in the
absence of significant revenues from non-consumptive sources, this is likely to remain an
important revenue source for the medium term
1
\.
Other revenue sources from forest products
include fees for grazing, gathering of non-timber forest products (NTFPs) and hunting (generally
less than 10%)\. National parks do obtain some budget support from government authorities, and
the level of funding is likely to increase in the future\. In RS, it is expected that Entity budgets
will provide for nearly 100% of park operating and investment costs\. In FBiH, the Ministry of
Finance is committed to long-term financing of new PA operations and investments, but final
levels will only be determined after formal PAs establishment\. Tourism is also an important
revenue source (between 3-25%) for existing national parks\. That said, tourism revenues will
continue to be insufficient to cover all operational expenditures, much less new investments\.
World-wide experience demonstrates that PAs require government budget support to operate\.
Government Strategy and Plans
\.
BiH is an active party to the United Nations Convention on
Biodiversity Conservation (1992)\. With support of the United Nations Environment Program
Global Environment Facility (UNEP-GEF), Bosnia-Herzegovina is developing its National
Biodiversity Strategy and Action Plan (NBSAP), which includes a national plan for PAs, and is
expected to be completed in 2008\. A government-sponsored Biodiversity Committee composed
of technical professionals from government ministries, universities and the private sector has
guided the NBSAP preparation\. The involvement of NBSAP committee members in this
preparation work has ensured consistency between the proposed project design and the PA plan\.
Collaboration between the project and the NBSAP would continue during project
implementation, especially through capacity building of Entity ministerial staff and involvement
of NBSAP committee members in project activities\.
Selection of Project Areas\.
The selection of areas for inclusion in the Forest and Mountain
Protected Areas Project (FMPAP) was made through a comprehensive and participatory
consultation process and reflects a strong technical consensus on priorities\. Four areas are
already official PAs\. Another two areas, Igman-Bjelasnic-Treskavica-Visocica (IBTV)
mountain complex, and the Una River, have completed feasibility studies and are expected to be
legally proclaimed as national parks in 2008 and early 2009 respectively\. The proposed project
also includes a feasibility study for Prenj-Cvrsnica-Cabulja-Vran an important site in the Dinaric
Alps, which may subsequently be funded under the project\.
2\. Objectives
The Project Development Objective\.
The project development objective (PDO) is to strengthen
the institutional and technical capacity for sustainable PA and natural resource management, and
1
In the RS, new laws are nearly completed which will change the incentive structure by converting the
management bodies for national parks
from public enterprises to public institutions\. This new status will channel
revenue from thinnings directly to the Entity-level (thus restricting this as a source of financing PA operations)\. The
status also provides a revised governance structure that will represent a wider range of stakeholder interests\.
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4
expand the national network of forest and mountain PAs\. Because the PDO is considered both
local and global in nature, it is also considered to be the
global environmental objective
for
purposes of GEF consideration\. The project focuses on improving the management effectiveness
of four existing PAs, bringing two additional sites under protected status, assessing feasibility for
another site and promoting sustainable natural resource management and biodiversity
conservation activities in or around PAs\.
Outcomes\.
Indicators for outcomes associated with this objective include:
Area under formal protection (of various types of PA management categories, mostly
multiple use) increases from approximately 0\.6% to 3\.0% (i\.e\., an addition of approximately
120,000 ha);
Portion of recurrent management costs financed by at least 20% from user fees and other
revenue from non-consumptive activities, and at least 15% from government budget\.
Improved PA management effectiveness resulting from use of Protected Areas Management
Effectiveness (PAME) Tracking Tool
2
Public support for PAs maintained at a minimum of 80% of respondents as assessed through
public opinion surveys\.
Recipients Objectives
\.
The proposed project will support Government efforts to address threats
to biodiversity, promote ecosystem management, and expand the PA system to a level
commensurate with local needs and regional averages\. The Project will directly support
implementation of the National Biodiversity Strategy and Action Plan (NBSAP) described
above\. Project activities also support the
Governments Medium Term Development Strategy
by: (a) creating conditions for sustainable and balanced economic development and promoting
poverty alleviation through improved use of PAs for local livelihoods and tourism;, and (b)
supporting the acceleration of EU integration through support to the Government in meeting the
EU nature and biodiversity policy (Natura 2000) requirements\. Preparation and implementation
of community-based initiatives will also build technical skills for activities eligible for funding
by EU accession instruments\.
Bank Country Partnership Strategy\.
The proposed project will directly address the 2008-2011
Country Partnership Strategy (CPS) objective to improve the environment for private-sector led
growth and convergence to Europe with support for expanded business opportunities and
strengthened regional cooperation to manage public goods\. The CPS specifically mentions
FMPAP as one of the
projects on environmental protection, both to improve
governance and transparency and to support tourism
\.
The project is included as one of
the CPS deliverables\.
Relevance to Global Environment Facility Priorities\.
The project is fully consistent with the
provisions of the GEF Operational Strategy, and specifically with the Operational Program (OP)
for Forest Ecosystems (OP3) with additional relevance to the OP for Mountain Ecosystems
(OP4) and linkages to the program for Conservation And Sustainable Use of Biological Diversity
important to Agriculture (OP13)\. Within the biodiversity focal area the project primarily
supports the first strategic objective: Catalyzing Sustainability of Protected Area Systems\.
3\.
Rationale for Bank Involvement
2
World Bank / World Wildlife Fund Alliance for Forest Conservation and Sustainable Use: Reporting Progress in
Protected Areas
A
Site Level Management Effectiveness Tracking Tool
,
2003
Page 5
5
World Bank Involvement in BiH Forest Areas\.
The Bank has been continuously involved in
the natural resources/environment sector since 1998\. From 1998 to 2003, a Forestry Project,
financed by the International Development Association (IDA), the EU, and Italian and
Norwegian governments, focused on recovery of the forest sector, but also helped to improve the
protection of forest ecosystems\. A follow-up project, the Forest Development and Conservation
Project (FDCP) supports implementation of reforms in forest organization and management It
includes support for landscape approaches to forest planning and management that incorporate
improved information systems, conservation values and stakeholder engagement\. It has four
components:
(i)
accelerating the implementation of new legal, institutional and economic frameworks,
(ii)
development of a Forest Management Information System and a State Forest
Inventory
(iii)
promoting biodiversity and forest conservation
(iv)
project management\.
A
US$3\.74 million equivalent IDA Credit for FDCP approved in 2003 and extended with an
additional IDA Credit of US$3\.35 million equivalent in 2007 until late 2010, is financing the
first, second and fourth components\. An US$780,000 equivalent Italian Grant (2003-2007) for
FDCP financed the third (biodiversity) component, including most of the preparation studies for
the Forest and Mountain Protected Areas Project (FMPAP), as well as other inputs for the
NBSAP\. The FMPAP preparation studies, which are listed in Annex 12, included generic
frameworks (for environmental management plans, social assessments including participation
plans, feasibility studies, and PA management plans) which can be applied to any proposed PA
investments, as well as site analysis specific to FMPAP\. Other biodiversity studies supported
under FDCP which were not a specific part of FMPAP preparation (e\.g\., status of specific
species, impacts of hunting on resource use) are also relevant to FMPAP\.
Other Relevant Bank and Donor Activities\.
The World Bank/GEF-supported Neretva and
Trebisnjinica River Basin Management Project, will complement activities in forest and
mountain ecosystems\. In addition, the World Bank has wide regional experience in GEF
biodiversity projects and forestry operations, including the Croatian Karst Ecosystem
Conservation Project, which includes similar and nearby landscapes\. Other donors active in
forest development and biodiversity conservation include the United State Agency for
International Development (USAID) the United Nation Development Program (UNDP),
Japanese International Development Agency (JICA), the EU, the World Wildlife Fund (WWF),
and the International Union for Conservation of Nature (IUCN)\. Through its lead role in the
forestry sector, the Bank has and will continue to mobilize donor support for biodiversity
conservation in BiH\. On the broader rural agenda, the local initiatives grants under the project
will build technical skills for activities eligible for EU funds under the Instrument for Pre-
accession Assistance for Rural Development ( IPARD) program, and thus complement the IDA-
financed Agriculture and Rural Development Project\.
4\. Description
Total Costs\.
The FMPAP costs total US$6\.00 million over four years, including a GEF grant of
US $3\.40 million, contributions from Entity governments of US$2\.51 million (US$1\.255 million
from FBiH and US$1\.255 million from RS), beneficiary contributions (from the community
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6
initiatives component) of US$0\.09 million\. In addition, the additional financing phase of the
IDA Project (FDCP), which is considered associated with FMPAP, provides US$2\.5 million in
parallel financing, although these expenditures are administered separately from FMPAP\. The
leveraged financing from FDCP comprises US$1\.7 million for forest inventory; US$0\.5 million
for FMIS; and US$0\.3 million for strategic forestry planning, planning for alternative revenue
source generation, certification, and communication skills\.
Component 1: Protected Area Development
(total US $3\.66 million, of which US$2\.00 million
GEF financed)\.
This component will support PA management plans, operations, assessments,
and facilities development in existing and new PAs\.
Sub-component 1a): PA Management Planning\.
The project will finance development and
implementation of new PA plans for the two existing National Parks (NPs) Sutjeska and Kozara,
for the existing Janj and Lom Forest reserves and for the new NPs in Una River and IBTV\. In
addition, the project will undertake new feasibility studies to: i) cover the possibility of
establishing a new PA in and around the karstic mountain ranges of Prenj-Cvrsnica-Cabulja; and
ii) examine the options for expansion of existing protected areas\. The project will involve
stakeholders to develop and implement different models of PA expansion and management (e\.g\.,
PA zoning, joint management of adjacent areas, etc\.)\. It will also address the policy
development and implementation regarding sources and proportions of PA financing\. These
efforts will help the PAs to at least meet, and preferably exceed the result targets on expansion
and financing\.
Sub-component 1b): Ecological and PA Management Assessment\.
The project will establish a
Monitoring and Evaluation (M&E) system for both the PAs and the project\. This will include
support for the ecological assessments to be used as inputs to the PA management planning as
well as for subsequent monitoring biodiversity status\. It will also include periodic assessment of
PA management effectiveness, based on application of the GEF-mandated Protected Areas
Management Effectiveness (PAME) Tracking Tool\.
Sub-component 1c): PA Facilities
\.
The project will support new infrastructure, and limited
small-scale building rehabilitation, necessary for improving the operations of existing PAs, and
for establishing the newly created protected areas\. The infrastructure is generally soft, e\.g\.,
trail improvements, new trail creation, signage, resting places, park boundary markings, visitor
entry booths, etc\. In addition, the project will finance goods for park operations\. It is expected
that these investments will improve the products and services offered by PAs, and increase the
capture of key revenues such as entry fees\.
Component 2: Capacity and Support for Biodiversity Conservation
(total US$1\.84 million, of
which US$0\.99 million is GEF-financed)
\.
This component will focus on strengthening the
institutions responsible for planning, establishment, and management of PAs\.
Sub-component 2a): Institutional Capacity Development
\.
At the PA-level, training and technical
assistance will focus on building competencies in key areas including: ecosystem-based
management focusing on adaptive management, integration of ecological, economic and social
aspects, and sustainability; business planning emphasizing financial sustainability and marketing
of PAs as quality destinations; and field-level skills in areas such as patrolling, community
engagement, visitor management and interpretation\. Given the critical roles of the forest and
tourism sectors the training will also be targeted towards professionals in these sectors\. At Entity
level, the project will finance capacity building for the environmental ministries and other
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7
concerned agencies in charge of protected area management, so that these institutions are able to
provide enhanced leadership as they prepare for EU convergence and strengthen regional
cooperation\. This component will also support case studies on selected PA management issues\.
Sub-component 2b): Public Awareness Programs
\.
The project will support the development and
implementation of an outreach program to raise public awareness for biodiversity conservation
and PAs\.
Sub-component 2c): Project Management\.
Limited financing will be provided for project
management and associated operating costs, and the State-level Project Steering Committee\.
Component 3: Local Initiatives in Biodiversity Conservation
(total US $0\.50 million, of which
US $0\.41 million is GEF-financed)\. The Project will support conservation efforts by local
stakeholders which promote improved natural resource management and generate economic
benefits to local communities involved in protected areas management\. It is expected that
eligible subprojects will fall under three categories: (i) PA compatible income-generation, e\.g\.,
ecotourism activities (home-based accommodation, guide training, trail development),
sustainable NTFP extraction, agri-environmental enterprises, environmental certification
assistance for ecotourism and agriculture; (ii) habitat and landscape conservation, e\.g\., site and
landscape restoration, participatory pasture management; and (iii) sustainable environmental
management, e\.g\., waste management schemes, alternative energy promotion\. To ensure
sustainability, the project will provide technical assistance to facilitate the design and screening
of subproject proposals, and to help monitor their implementation\. Beneficiaries will be required
to contribute at least 20% of the overall sub-project budget\. Suitable initiatives to be developed
into subprojects will be identified and selected through public consultations involving local
stakeholders, taking into account opportunities to address restrictions resulting from PA
management\. Eligible sub-projects can range in value from $20,000 to $100,000\. At least one
grant will be awarded per project PA, and the total value of grants is estimated at US$360,000\.
5\. Financing
Source: ($m\.)
BORROWER/RECIPIENT 2\.51
Global Environment Facility (GEF)
3\.40
Beneficiaries 0\.09
Total
6\.00
6\. Implementation
Ministerial Responsibilities\.
BiH, represented by the Ministry of Finance and Treasury, would
be the recipient of the GEF grant and would transfer the proceeds to the FBiH and RS
Governments by opening two special accounts\. The Sector for Project Implementation within
the FBiH MET and the Sector for Project Coordination and Development within the RS
MCEPPE (in order to simplify terminology, both are called Project Management Units (PMUs)
hereafter in this document) have specialized teams who will undertake core implementation
functions including oversight, procurement, financial management, annual planning, supervision,
monitoring of repayments, reporting and evaluation\. Where appropriate (for example in the Janj
and Lom Forest Reserves in RS) implementation will be closely coordinated with the Ministries
of Agriculture, Water Management and Forestry (MAWMFs), in both Entities\. The MET and
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8
MCEPPE would also lead the process of protected area declaration, establishment and
expansion\. A Project Steering Committee, chaired by the state MFTER (the GEF Focal Point)
and with representatives from the four most concerned Entity ministries (MET, MCEPPE, and
Entity MAWMFs) will provide project oversight, policy dialogue and a forum for exchanging
experience\.
PMU Capacity\.
The MET PMU is a well-established unit, already staffed by government
employees with long experience implementing Bank projects and funded under the FBiH
domestic budget\. It has appointed a new financial management specialist (FMS) to work on
FMPAP
,
and once this FMS is trained by the PMUs experienced FMS who is responsible for
the ongoing Bank-financed Solid Waste Management Project, this PMU will be fully capable to
undertake all necessary functions\. The MCEPPE has established a PMU office with RS
domestic budget and appointed a Project Manager to head this unit \. This PMU plans to appoint
an financial management and procurement staff shortly\. Prior to negotiations, the RS PMU
plans to sign a memorandum of understanding (MOUs) with financial management and
procurement specialists who already have experience with a Bank-financed project\. These
experienced specialists will (a) establish the financial management and procurement systems in
the MCEPPE PMU (b) provide financial management and procurement services and hands-on
training to PMU staff during the first three months after project effectiveness, and (c) provide
advice on a retainer basis to PMU staff for at least three additional months\.
Site Specific Management Responsibilities\.
In the RS, the two existing National Parks (Kozara
and Sutjeska) are under the authority of MCEPPE\. For each PA a NP Authority, currently
operating as a public enterprise, manages day-to-day operations\. Each Park has Government-
appointed Steering and Supervisory Boards\. Forest Reserves, such as Janj and Lom, are
generally under the supervision of State Forest Enterprises that report to their respective
MAWMF\. National Parks in FBiH will be under the authority of MET and are expected to
operate as public institutions\.
Further details of Implementation Arrangements can be found in Annex 6\.
7\.
Sustainability and Replicability
Financial Sustainability
\.
The project is designed to build financial sustainability and diminish
the reliance on revenue from forest thinning\. As noted above, under a new legal definition in the
RS, (with PAs now established as public institutions) PAs will be able to access additional
government budget revenues, in particular for protection functions and capital improvements,
improving their financial sustainability in the near and long-term\. The Project will also assist PA
authorities in the development of management plans that will include the most appropriate and
feasible options for diversified revenue generation given the conservation objectives of PAs\. As
part of EU pre-accession capacity building, the EC will complete a preliminary assessment
(including an investment and action plan) covering biodiversity and nature protection in July
2008, which FMPAP will take into account\. Not all financing options will be appropriate in all
places\. For example, the Janj and Lom forest preserves will rely largely on government budget
support\. As strict preserves, options such as entry fees or other tourist fees are not available\. On
the other hand, both of the proposed new National Parks (Una River and the IBTV) offer
outstanding tourism opportunities, and are in fact already widely visited, particularly IBTV\. It is
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9
reasonable to assume that demand for services in these parks will be sufficient to provide critical
financial contributions to their long-term operations\.
Institutional and social sustainability\.
Institutional sustainability will be addressed by training
and increased hands-on experience in PA management, project management, and associated
policy analysis\. The project is making use of existing administrative and organizational
structures\. Social sustainability will be achieved by including relevant stakeholders in
developing a country-wide approach towards the expansion of the network of protected areas, by
incorporating community perspectives and needs into PA management, by building awareness of
the benefits of mainstreaming biodiversity, and by building experience in participatory
approaches to sustainable natural resource management\.
Environmental sustainability
\.
Environmental sustainability will be addressed by the
introduction of environmentally sound PA management plans and detailed monitoring, and by
applying the Banks environmental safeguards\.
Models to be Replicated\.
FMPAP will establish a number of models that can be replicated
outside the scope of the project\.
Standards and precedents for improved PA management in existing PAs will be applicable to
other existing PAs which are not included in the project as well as new PAs (both under
FMPAP and for other future efforts)\.
Criteria and processes associated with the establishment of new PAs, especially those related
to site selection, PA management plans and consultation with local stakeholders should help
guide establishment of additional future PAs\.
Public communications campaign, and related marketing of BiHs protected areas should not
only establish capacity within the country related to PAs, but also be relevant for other
sectors with tourism potential, and develop international linkages that will facilitate ongoing
learning and commercial alliances across countries\.
Local initiatives in conservation under component 3, will serve as a model for accessing EU
pre-accession assistance instruments such as Financial Instrument for the Environment
(LIFE)-Nature and Special Action Program for Pre-Accession Aid for Agriculture and Rural
Development (SAPARD), and Entity-based Funds for Environmental Protection (Eco-Funds)
for similar activities in the country\.
Replication through Dissemination and Learning\.
Replicability will also be addressed by the
projects emphasis on dissemination and learning\. Public consultation associated with PA
management planning and implementation will build communication channels\. Project support
for M&E will not only identify lessons learned, but also cultivate a learning culture within the
agencies responsible for PA management, so that they adjust their operations to take into account
these lessons, consistent with modern ecosystem management approaches (i\.e\., adaptation,
integration, precaution (avoidance of negative impacts) and sustainability)\. The institutional
capacity development subcomponent will also support exchange of experiences across PAs and
build awareness of good practices in other countries (through study tours to neighboring
countries, participation in international conferences, and more robust access to the Internet)\. The
public awareness program will also promote dissemination and interactive learning\.
8\.
Lessons Learned from Past Operations in the Country/Sector
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10
From the experience of comparable projects in Central and Eastern Europe and elsewhere, the
following lessons have been learned:
Projects should have broad support in the government, civil society, and local communities
where the protected areas are proposed, or to be expanded;
Early involvement of stakeholders in project preparation through a participatory planning
process, including local communities and influential decision makers, is essential to ensure
ownership and successful project implementation;
Resource users should be involved in the design and development of the management system
to ensure the sustainable use of the resource concerned, and of the control measures which
need to be developed and applied;
Effective public awareness campaigns should be built into the PA planning and management
processes in order to ensure that all stakeholders are well informed and can provide support;
Management strategies for PAs, buffer zones, biological corridors, etc\. should establish a
link between the conservation objectives and tangible benefits from sustainable natural
resource use; and
PA projects should maintain close co-operation with other types of projects and initiatives
working in the same broad technical / geographical areas\.
Project preparation and design has incorporated these lessons through: (i) addressing the links
between sustainable natural resource use, natural resource management and socio-economic
issues; (ii) building regional, Entity and local capacity for conservation management; and (iii)
ensuring a participatory and transparent approach to project preparation and implementation\.
9\.
Safeguard Policies (including public consultation)
Environmental Assessment (OP/
BP
/
GP
4\.01) is triggered and an Environmental Assessment and
Management Plan have been prepared\. The project is classified as Category B, whose potential
adverse environmental impacts are few and site specific\. The project is expected to have an
overall positive environmental impact by conserving biodiversity and improving natural resource
use\. The Environmental Management Plan was subjected to numerous informal public
discussions prior to preparation of the final draft\. The final draft, incorporating all comments,
was formally disclosed in public meetings in Sarajevo on June 7, 2007, and Banja Luka, on June
13, 2007\.
Consistent with OP 4\.12, the Involuntary Resettlement Policy is triggered, and an Access
Restriction Process Framework was developed during project preparation to guide the mitigation
of potential negative impacts on livelihoods of populations resident near the PAs\. The
Framework was disclosed in public meetings on 7 June, 2007 and 13 June, 2007 in Sarajevo and
Banja Luka respectively, and has the endorsement of the relevant Entity ministries\. Consultations
were held in the communities during the development of the Process Framework\.
Consistent with OP 4\.36, the project aims to harness the potential of forest ecosystems to reduce
poverty in a sustainable way integrate forest conservation effectively into sustainable
development and protect vital local and global environmental services and values of forests\.
Consistent with OP 4\.04, the project will help to conserve natural habitats, and ensure that
specific project activities avoid habitat degradation\.
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Safeguard policies
Safeguard Policies Triggered by the Project
Yes
No
Environmental Assessment
(
OP
/
BP
/
GP
4\.01) [X]
[
]
Natural Habitats (
OP
/
BP
4\.04)
[
X] [
]
Pest Management (
OP 4\.09
)
[
]
[X]
Cultural Property (
OPN 11\.03
,
being revised as OP 4\.11)
[
]
[X]
Involuntary Resettlement (
OP
/
BP
4\.12)
[X] [
]
Indigenous Peoples (
OD 4\.20
,
being revised as OP 4\.10)
[
]
[X]
Forests (
OP
/
BP
4\.36)
[X] [
]
Safety of Dams (
OP
/
BP
4\.37)
[
]
[X]
Projects in Disputed Areas (
OP
/
BP
/
GP
7\.60)
*
[
]
[X]
Projects on International Waterways (
OP
/
BP
/
GP
7\.50)
[
]
[X]
10\.
List of Factual Technical Documents
1\. Social Assessment, 2006
2\. Process Framework, 2007
3\. Participation Plan, 2007
4\. Operational Sourcebook\. 2007
5\. Final Environmental Assessment/Framework Environmental Management Plan, 2007
6\. Updated Access Restriction Framework, 2008
7\. FMPAP: Detailed Project Site Descriptions, 2008
8\. Guidelines for Implementing the Local Initiatives Grant Program, 2008
11\. Contact
point
Contact: Jessica Mott
Title: Senior\. Natural Resource Economist
Tel: (202) 458-5607
Fax: (202 614-0857
Email: jmott@worldbank\.org
12\.
For more information contact
:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Page 12
12 | APPROVAL |
P100966 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: AB2554
Project Name
Second Community Nutrition
Region
AFRICA
Sector
Health (80%);Primary education (19%);Agricultural extension and
research (1%)
Project ID
P100966
Borrower(s)
GOVERNMENT
Implementing Agency
Primature
Madagascar
ONN/PNNC-SEECALINE
Madagascar
Environment Category
[
]
A
[
]
B
[X] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
September 19, 2006
Estimated Date of
Appraisal Authorization
September 26, 2006
Estimated Date of Board
Approval
November 21, 2006
1\. Key development issues and rationale for Bank involvement
In 2003 the Government of Madagascar requested the Bank to start preparation of the follow up
project to continue and scale-up activities under the successful community nutrition program\. At
the same time as the request for a third nutrition project, the Government and the Bank were in
discussion about a Poverty Reduction Strategy Credit or budget support in which the social
sectors would hav
e
a
central part\. SEECALINEs strong performance together with the
perceived need to both, institutionalize Banks support to community nutrition in Madagascar
after a decade of Projects, and to create more sustainable implementation arrangements for the
different nutrition projects in the country, made SEECALINEs activities the logical target for
financing under the PRSC\. The Government and IDA agreed to include PRSC triggers guiding
the set-up of the institutional framework\. In addition, the earlier mentioned supplemental credit
was approved to provide financing to cover the damage from the 2003-04 tough harsh cyclones
season, and to create the institutional capacity needed to transition from Project-based financing
to budget support financing\. The Government developed the National Nutrition Policy (NNP)
and decreed the creation of the institutions to oversee the implementation of said policy, namely
the
Office National de Nutrition
(National Nutrition Office, ONN) and the
Conseil National de
Nutrition,
(National Nutrition Counsel, CNN)\.
The proposed additional credit of US$8 million would continue the Banks ongoing assistance to
the Government of Madagascar in support of poor communities to reduce malnutrition\. This
calls for an increase of external financing for the next two years to cover the current and
Page 2
projected financial gap caused by unexpected low fiscal revenues, and the still somewhat limited
capacity of the newly created institutions in charge of Nutrition to raise and manage sufficient
resources\. If granted, the Additional Financing would help to maintain the current coverage and
partially finance the projected scale-up of Community Nutrition Program activities supported by
the Project, making it very likely for Madagascar to achieve the MDGs nutrition target in 2015\.
Moreover, the Additional Financing would provide much needed financial predictability as all
the Countrys community-based nutritional service models are harmonized under the aegis of the
newly created ONN\. Finally, financial continuity would allow proceeding with the transfer of
competences from the SEECALINE Project to the ONN under the Prime Ministry in Madagascar
which has the mandate to develop and implement nutrition policies\.
After careful analysis, both the Government and the Banks team have concluded that limited
additional financing plus partial support through the PRSC is the best option at this point to: i)
minimize the disruption of successful Project activities in this moment of transition for the
Seecaline Program; ii) ensure financial and institutional sustainability of the activities financed
until this point; while, iii) build Governments capacity to manage, monitor and evaluate
community-based nutritional activities\.
Once the institutions are set the likelihood that Madagascar will continue to provide sufficiently
support for the community nutrition interventions, is very high\. There is evidence of very strong
political commitment (Prime Minister, Minister of Finance, a large number of senators) and in
particular the very high demand from the community level for continuation and expansion of the
services (often communicated through their mayors and senators who represent them)\. The
Government has agreed on maintaining the SEECALINE management unit until the ONN,
which is supposed to take over management, is ready to take over\. In parallel the capacity of the
ONN is being increased and Nominations for the CNN are being finalized\. The Government will
be carrying out shortly an institutional and organizational assessment to suggest further areas for
improvement particularly at the decentralized level\.
2\. Proposed objective(s)
The objectives of the Credit, which would remain unchanged, are to reduce chronic malnutrition
among children under three and to improve the nutritional status of school-aged children,
pregnant and lactating women in targeted project areas\. The project consists of four components,
which also remain unchanged and which have been rated satisfactory over the entire life of the
project\. However, on the basis of the lessons learned, activities financed with the additional
resources would focus particularly on reaching pregnant and lactating women and for children
under two and transferring day to day implementation and follow-up responsibilities gradually to
the commune level\. Finally, and within the context of the transition from the SEECALINEs
Project to the National Nutrition Program, the Projects management unit would continue to
transfer its competencies to the recently created National Nutrition Office (ONN)\.
Page 3
3\. Preliminary description
The Credit supporting the Community Nutrition Program (SDR 20\.7 million) was approved on
May 7, 1998 and became effective on November 2, 1998\. A supplemental Credit (SDR 7\.3
million) was approved on December 1, 2003, to cover the additional costs incurred to address the
emergency situation that arose from the cyclones that struck Madagascar in 2000 and the
political turbulence that occurred in 2002 and resulted in increased risk of malnutrition among
the poorest population\. To date, 81% of the original and supplemental Credits have been
disbursed\. The balance (US$2\.15 million) is expected to be fully disbursed by September 2006
(approximate effectiveness date of the additional financing)\. The project management unit,
operating since 1993, has demonstrated capacity to effectively support poor communities,
monitor nutritional status and rapidly react in case of deterioration with support of local NGOs
whose capacity has been built by the Project\. Both the development objective and progress on
implementation are rated satisfactory\.
4\. Safeguard policies that might apply
No safeguard policy
5\. Tentative financing
Source: ($m\.)
BORROWER/RECIPIENT 0
INTERNATIONAL DEVELOPMENT ASSOCIATION
8
Total
8
6\. Contact point
Contact: Montserrat Meiro-Lorenzo
Title: Sr Public Health Spec\.
Tel: (202) 473-0161
Fax: (202) 473 8107
Email: Mmeirolorenzo@worldbank\.org | APPROVAL |
P123461 |  DOCUMENTO DE INFORMACIÃN SOBRE EL PROYECTO
ETAPA DE EVALUACIÃN INICIAL
Informe n\.° 65352
Nombre del proyecto Asistencia Técnica para el Fortalecimiento Institucional:
Financiamiento Adicional
Región AMÃRICA LATINA Y EL CARIBE
Sector Sector de la administración pública en general (100%)
Número de identificación P123461
del proyecto
Prestatario(s) REPÃBLICA DE URUGUAY
Organismo de ejecución
Ministerio de EconomÃa y Finanzas
Colonia 1089, 3er Piso
Montevideo
Uruguay
Tel\.: (598-2) 1712-2210 Fax: (598-2) 1712-2212
mmaglia@mef\.gub\.uy
CategorÃa ambiental [ ] A [ ] B [X] C [ ] FI [ ] PD (por determinar)
Fecha de preparación del 20 de septiembre de 2011
documento de
información sobre el
proyecto
Fecha estimada de 7 de octubre de 2011
autorización de la
evaluación inicial
Fecha estimada de 6 de diciembre de 2011
aprobación en el
Directorio Ejecutivo
1\. Contexto nacional y sectorial
Uruguay es un paÃs de ingreso mediano-alto que se caracteriza por una democracia
madura y estable, instituciones públicas muy sólidas y un largo historial de reformas
destinadas a modernizar el sector público\. Si bien el paÃs se embarcó en una serie de
programas encaminados a fortalecer la administración de dicho sector, durante las dos
últimas décadas ciertos aspectos del proceso de modernización han quedado rezagados y
continúan afectando la eficiencia y la transparencia generales del aparato del Estado\. El
Gobierno del presidente José Mujica, quien asumió el cargo en marzo de 2010, ha
reconocido la importancia de mejorar el desempeño del sector público a fin de lograr un
crecimiento sostenible y equitativo, lo que quedó plasmado en su plataforma sobre
reforma del Estado\. Asimismo, se considera que para promover el crecimiento y el
bienestar social en el largo plazo es fundamental contar con un Estado moderno y
eficiente que rinda cuentas a su base electoral y sea capaz de impulsar un desarrollo
económico sostenido y a la vez incrementar la eficacia y la eficiencia del gasto social\.
2\. La necesidad de mejorar las instituciones básicas del sector público es un tema recurrente
en varios de los pilares de la plataforma del Gobierno\. Entre los pilares más importantes
de la reforma del sector público propuesta por el Gobierno figuran: mejor gestión de los
recursos públicos, uso más adecuado de la tecnologÃa en la gestión del sector público,
estadÃsticas más precisas para la toma de decisiones y mejor clima para los negocios\. El
Gobierno ha manifestado su deseo de mejorar la calidad y el impacto del gasto público y
pone especial énfasis en fortalecer su capacidad presupuestaria\.
3\. El Gobierno está decidido a aumentar la eficacia de las polÃticas públicas, por ejemplo
ampliando aún más los programas del sector social y procurando especialmente
intensificar su impacto\. El Ministerio de EconomÃa y Finanzas (MEF) ha sido un
importante impulsor de la reforma del sector público y ha articulado tanto los aspectos
que hace falta consolidar desde el punto de vista institucional para mejorar el desempeño
de dicho sector como las necesidades derivadas de la aplicación del programa de reforma
de las polÃticas públicas\.
4\. Objetivos
El objetivo es mejorar el desempeño del sector público del prestatario a través de las
siguientes medidas: i) apoyar su programa de modernización del sector público en las
esferas de seguimiento y evaluación, elaboración del presupuesto basado en el
desempeño, gobierno electrónico, administración tributaria y estadÃstica, y ii) fortalecer
las instituciones involucradas en el diseño y la ejecución de las reformas de las polÃticas
públicas en las áreas de impuestos, promoción del clima para los negocios y protección
social\.
5\. Justificación de la participación del Banco
La consolidación de la administración pública sigue siendo una de las principales
prioridades del Gobierno del presidente Mujica, lo cual se ve confirmado en la nueva
estrategia de alianza con el paÃs para el perÃodo 2010-15 (informe n\.o 55863-UY),
analizada por el Directorio el 18 de agosto de 2010\. El Banco ha respaldado al Gobierno
en sus esfuerzos por mejorar el desempeño del sector público a través del Préstamo de
Asistencia Técnica para el Fortalecimiento Institucional, aprobado en mayo de 2007\. De
los siete componentes originales de este proyecto, se dejó de lado el primero (centrado en
mejorar la administración aduanera y la gestión de los recursos humanos), debido a que
las prioridades del Gobierno cambiaron en ese momento\. Los seis componentes restantes
están dando buenos resultados e incluyen: i) componente 2: mejora de la planificación, el
seguimiento y la evaluación de las instituciones; ii) componente 3: gobierno electrónico;
iii) componente 4: apoyo al Banco de Previsión Social para el fortalecimiento
institucional y la aplicación de reformas tributarias y de protección social; iv)
componente 5: apoyo a los mercados de capital y las reformas para la transparencia de las
empresas; v) componente 6: apoyo a las reformas de la regulación sobre bancarrotas, y
vi) componente 7: desarrollo de estrategias y coordinación de proyectos\.
6\. El prestatario ha solicitado el financiamiento adicional para el Préstamo de Asistencia
Técnica para el Fortalecimiento Institucional (P097604, Préstamo 7451-UR) para ampliar
las actividades y mejorar asà su impacto en términos de desarrollo\. Esto se llevará a cabo
mediante: i) el incremento del financiamiento destinado a cuatro de los componentes para
ampliar su cobertura original; ii) la adición de dos nuevos componentes; iii) una leve
modificación en los objetivos de desarrollo del proyecto para reflejar los cambios
introducidos en los componentes originales y la inclusión de dos nuevos componentes;
iv) la revisión y eliminación de varias actividades propuestas en el Acuerdo legal inicial,
que han dejado de ser pertinentes, y v) la adaptación del marco de resultados del proyecto
para mostrar la identificación de ciertas limitaciones de datos, las modificaciones a los
componentes originales y la inclusión de nuevos componentes\. Asimismo, el
financiamiento adicional ayudará a seguir brindando asistencia técnica para la serie de
préstamos para polÃticas de desarrollo orientados a la competitividad del sector público y
la inclusión social, especialmente en las áreas de reforma fiscal, mercados de capitales y
el Sistema Integrado de Información en el �rea Social (SIIAS)\.
7\. Descripción
Cuatro componentes que ya integran el proyecto actual recibirán financiamiento
adicional: i) componente 2: mejora del seguimiento y la evaluación; ii) componente
4\.b: apoyo al fortalecimiento institucional y aplicación de reformas de protección
social; iii) componente 5\.b: respaldo a la transparencia de las empresas, y iv)
componente 7: coordinación del proyecto y desarrollo de estrategias\. El componente
2 (mejora del seguimiento y la evaluación) recibirá fondos adicionales por
US$1 millón para comenzar a trabajar en mejoras de segunda generación respecto del
seguimiento y la evaluación, con especial énfasis en aumentar la transparencia y la
difusión de los resultados del seguimiento y la evaluación, fomentar las evaluaciones
rápidas de intervenciones gubernamentales prioritarias, fortalecer la capacidad de
evaluación de los proyectos, programas y polÃticas del sector público, y, por último,
diseñar y ejecutar evaluaciones del impacto\. El componente 4\.b (apoyo al
fortalecimiento institucional y aplicación de reformas de protección social) recibirá
un monto adicional de US$1,1 millones para financiar el SIIAS y ampliar asà la
cobertura institucional de los programas sociales, financiar encuestas analÃticas y
seguir promoviendo el fortalecimiento institucional\. El componente 5\.b (respaldo a la
transparencia de las empresas) recibirá fondos adicionales por US$500 000 para
fortalecer la AuditorÃa Interna de la Nación, orientada a la puesta en práctica del
lenguaje XBRL, que constituye la nueva taxonomÃa para la comunicación digital de la
información financiera al Registro de Estados Contables\. Por último, el componente 7
(coordinación del proyecto y el desarrollo de estrategias) también recibirá fondos
adicionales por US$3 millones para continuar brindando apoyo oportuno a los
estudios y otras actividades de consultorÃa relacionadas con la coordinación del
proyecto y el desarrollo estratégico que proponga el prestatario y reciban la
aprobación del Banco\.
8\. Los dos componentes extra serán el componente 8, que se refiere al respaldo a
determinadas iniciativas de modernización de la Dirección General Impositiva (DGI)
de la Nación, y el componente 9, relativo al apoyo del fortalecimiento institucional
del Instituto Nacional de EstadÃstica\. Al componente 8 (respaldo a la DGI) se
destinarán US$3 millones para fortalecer el cumplimiento fiscal y la gestión de
riesgos en la DGI y para dar asistencia al desarrollo de un programa informático de
gestión contable electrónica, su difusión y el soporte técnico a los clientes\. Este
programa tendrá como objetivo incrementar el manejo electrónico de documentos y,
como resultado complementario, mejorará los controles impositivos\. El componente 9
(apoyo al Instituto Nacional de EstadÃsticas) recibirá US$1,4 millones para respaldar
el fortalecimiento institucional; la coordinación de un equipo de la Asociación de
EconomÃa de América Latina y el Caribe abocado a la medición de la pobreza; el
diseño y la implementación de una encuesta panel orientada a los sectores más
vulnerables de la población, y una encuesta de gastos e ingresos de los hogares\.
9\. Financiamiento
Fuente: (en millones
de US$)
Prestatario 0
Banco Internacional de Reconstrucción y Fomento 10
Total 10
10\. Ejecución
El MEF, a través del Viceministerio de EconomÃa, seguirá a cargo de la ejecución general
del proyecto\. El MEF ha sido un interlocutor clave para el Banco en lo que respecta al
diseño de la operación y ha sido el vÃnculo entre las actividades básicas de modernización
del sector público y las que respaldan la aplicación de las reformas de las polÃticas\.
Asimismo, ocupa una posición de fuerte liderazgo en el Gobierno central y todas las
entidades involucradas en el proyecto han aceptado explÃcitamente los mecanismos de
ejecución propuestos\. Los resultados de la ejecución del Préstamo de Asistencia Técnica
para el Fortalecimiento Institucional son satisfactorios\.
11\. Sostenibilidad
Se observan numerosas pruebas del compromiso del prestatario con la ejecución de este
proyecto\. En primer lugar, el Gobierno sigue mostrando eficacia en la ejecución del
proyecto original\. En segundo lugar, funcionarios gubernamentales de alto rango ya se
han referido a los elementos que conforman el componente de modernización del sector
público básico como esferas clave para la reforma del sector\. En tercer lugar, el
compromiso del Gobierno con la reforma del sector público ha sido estable, se ha
extendido a lo largo de varias administraciones y se sustenta en el consenso\. Por último,
el MEF, responsable de la ejecución general, es un organismo que goza de un alto grado
de credibilidad y respeto en la administración pública y ha acompañado de cerca el
diseño del proyecto\.
12\. Enseñanzas derivadas de operaciones anteriores en el paÃs o el sector
En la operación de financiamiento adicional se incorporan tres importantes enseñanzas
derivadas de operaciones anteriores: la necesidad de que el diseño del proyecto sea
flexible, la necesidad de contar con un fuerte liderazgo durante la ejecución y la
importancia de la coordinación con otros donantes, tanto antes de la implementación
como durante el proceso\. En lo que respecta a la necesidad de que el diseño del proyecto
sea flexible âtal como se indica en el manual de asistencia técnica del Bancoâ, a través
del financiamiento adicional se fortalecerá el componente 7\.3 (estudios y otras
actividades de consultorÃa)\. Este componente permite incorporar en el proyecto las
actividades identificadas durante la ejecución, siempre que se correspondan con los
objetivos de desarrollo del proyecto\. Mediante este componente se ha puesto a
disposición del MEF un conjunto de recursos para el apoyo y el análisis oportunos de
temas especÃficos\. Dicho organismo ha sacado provecho de esos recursos para contratar
servicios de asesorÃa o respaldo en esferas tan diversas como el impacto fiscal de la
reforma en el sector de la salud, la reforma del catastro, la competitividad y los posibles
impactos fiscales de un proyecto de ley sobre la participación público-privada en
infraestructura, entre otras\. Las autoridades consideran que este componente es muy
valioso y desearÃan que se ampliara\.
13\. La segunda enseñanza importante que se ha incorporado en el diseño del proyecto es la
necesidad de contar con un fuerte liderazgo durante la ejecución\. En vista del gran
número de organismos involucrados en el proyecto, es esencial contar con un fuerte
liderazgo\. En el diseño de este proyecto se ha establecido una única unidad de ejecución
dentro del MEF, que controlará la implementación general\. Todos los organismos que
participan en el proyecto han manifestado explÃcitamente que aceptan este mecanismo y
el liderazgo del MEF\. Dado que se trata de una institución muy respetada y con
capacidad para movilizar a todas las partes interesadas en pos de los objetivos del
proyecto, el MEF ha cumplido o superado los estándares de ejecución\.
14\. La tercera enseñanza aprendida ha sido la importancia de la coordinación con otros
donantes, tanto antes de la ejecución como durante el proceso\. Uruguay ha recibido
considerable apoyo de otros donantes para la modernización del sector público, en
particular del Banco Interamericano de Desarrollo (BID)\. En el diseño del proyecto se
han establecido reuniones anuales de coordinación entre el prestatario, el BID y el Banco
en las que se examinarán los planes para las operaciones y se evaluarán los resultados del
proyecto\. Gracias a las conversaciones constructivas que el Banco mantuvo con otros
donantes, se ha garantizado que su labor no se superpondrá con otras operaciones en pos
del desarrollo ni se duplicarán esfuerzos\.
15\. PolÃticas de salvaguardia (incluida la consulta pública)
El proyecto original (P097604, Préstamo 7451-UR) se ubicó dentro de la categorÃa C\. Si
bien no exigió la aplicación de ninguna salvaguardia, es probable que algunos de los
estudios y actividades de consultorÃa previstos en el marco del componente 7\.c (estudios
y otras actividades de consultorÃa) de la operación de financiamiento adicional tengan
efectos ambientales y sociales a través de programas o proyectos futuros\.
Se han analizado los estudios y las actividades de consultorÃa financiados en virtud del
componente 7\.c del proyecto original, con especial énfasis en la legislación sobre alianzas
entre el sector público y el privado, y la actualización de la metodologÃa de evaluación
del sistema catastral\. No se han identificado cuestiones de salvaguardia\.
Los nuevos estudios y actividades de consultorÃa que recibirán financiamiento a través
del componente 7\.c, que posiblemente impliquen la elaboración de polÃticas y
reglamentaciones con posibles efectos ambientales y sociales, se confirmarán una vez que
se definan su naturaleza y su alcance durante la implementación del proyecto\. El Banco
examinará los términos de referencia de estas futuras actividades y formulará
sugerencias, si correspondiera\. Los términos de referencia incluirán una sección estándar
donde se solicita a los asesores que identifiquen cualquier posible repercusión ambiental
y social que pueda derivar de su trabajo o de la implementación de sus recomendaciones
en el futuro\.
\.
16\. Lista de documentos técnicos fácticos
17\. Forma de contacto
Persona de contacto: Amparo Ballivian
Cargo: Economista principal
Tel\.: (202) 458-4962
Fax:
Correo electrónico: aballivian@worldbank\.org
18\. Para obtener más información, dirÃjase a:
The InfoShop
Banco Mundial
1818 H Street, NW
Washington, DC 20433
Teléfono: (202) 458-4500
Fax: (202) 522-1500
Correo electrónico: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P007501 | L-145
RESTRICTED
This report is restricted to use within the Bank\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
FIRST LOAN ADMINISTRATION REPORT
ON THE
BANK'S LOANS TO MEXICO
March 12, 1952
Loan Department
Edition B
I -U\.S\. $1 - \.8\.65 pesos
1 peso -- U\.S\. $0\.12
| 1 million pesos\.- U\.S\. $1\.15,607
I
FIRST LOAN ADMMNLTTktfION iEPOrT
TABLE OF CONTENTS
Parafpraihns
INTRODUCTION
PART ONE - Loan of W424,100,000 to Nacional Financiera, S\.A\.
and Comision Federal de Electricidad (Comision
Project)
I, NEGOTIATIONS 1,- 2
II, THE LOAN 3 - 6
III\. THE BORRCWERS 7 - 11
IT\. THE PROJECT 12 - 1\.3
V4v CHANGES IN THE PROJECT 14 - 126
VI\. PRCGRESS OF-THE PROJECT 27 - 34
VIIe EFFECTS OF THE LOAN 35 _-\.39
VTII\. FINANCIAL POSITION OF CFE 40 - 44
PART TWO (a) Loan of $10,000,000 to Nacional Financiera, S\.A\.
and Comision Federal de Electricidad (Mexlight
Project)
(b) Loan of $426,000,0O0 to The Mexican Light and
Power Company, Limited
I\. NEGOTIATIONS 45- 48
II\. THE LOAN 49 53
ITTT THE BORROWER 5L4 56\.
T- vwTH FRo\.TFCT 57 -
V\. rWANGFS TN T4E PRO\.T7rT 59 - 6t)
VIT PRrr\.PRESOF n\. TJFROJrT 6 _ 6
VTT r-PV7'r'rV M 'PUP\. Tf)MAW AI
VTTT Tnr AT TPtT\.UA AP C
* ,11_,,J\.~* VJVWflL * J^;VAS*fl'4\.f' -\.1 I
TIv FTTATICITAT OnSrTIrO QvW UEYTT('3'T '72 *
A\." a U \.UV lfl'J\.914J U \.-\.L4 J\.IJ\. -JX *hLflJJAAI
Paragraphs
PART THREE - Line of Credit of t1O,pOO,OOO in Favor of
Consortium of Commercial Banks and Nacional
Financiera' S\. A\.
I\. NEGOTIATIONS 83 - 86
II\. THE LINE OF CREDIT 87- \.90
III\. LOANS GRANTED 91 - 95
PART FOUR S Relations Between the Bank and the United
Mexican States
I\. POLITICAL AND GENERAL 96 - 98
II\. CONSULTATION, NEGATIVE PLEDGE 99 - 102
III\. ENABLING LEGISLATION 103 - 106
IV\. COMBINED WORKING PARTY 107 - 109
ANNEX A - Annual Report T The Miexican Light and
Pow,er Compar-y, Ltd\.
It is expected that the forthcoming report of the combined Bank-Mexican'
Working Party (see paragraph 108):,will throw new light on the Mexican economy
and that, in\.particular, it will,contain statistics of foreign trade, na-
tional income and produc,tion;\.which will'supersede those at present available\.
For,this\.rea$on, no econ6mic"section is'included in the present Report, and
the usual Table of Basic Statistics is omitted\.
FIRST LOAN ADIMINISTRATION REPORT
INTRODUCTION
This report deals with the following loans:
,2M,100,000 25 yaear 4% loan of January 6, 1949 to
Naeional Financiera\. S\.A\. ind Comision
Federal de Electricidad for the latterts
electrin power dpvelopment nrogram;
$10,aoo,00t Iea- Lk itnteroim loan of \.Tanuary\. 6; l9L9
to Nacional Financiera, S\.A\.,- and Comision
Loeqn?-Ml de Elec1 +t-e\.^; ^na fonr f\.th Al Pn\.trj,r
poaver development program of The M\.9exican
T4Light ar Power" re-v,v,r Tjmnit+d\. (Ref1lnded
April 28, 1950)\.
$26,o000,QOQ 25 year Wi% loan of April 2a, 1950 to The
mexicsLtar, 4iIVt, aln"d Pr-rr VpVG- -VlF+^v8 4
for refunding the above $10 million interim
loan and, 4to prov'dAe lul WIV J\.ancn fo1CP,4r,
the electric power development program;
$10,000,400 3 2B line of credit of October 18, 1950 in
favor of consortium of CoV-1imercia1 baks
and Nacional Financiera, S\.A,
Deducting the refunded $10 million interim mexlight
Project Loan, the Bank nas granted Mexico credits total-
ing $60,100,000,\. Of this tota4, $27\.4 million have been
disbursed as of September 30, 1951\.
PART ONE\.
Loan of 92h\.100\.000 to Nacional Financiera\. SA\.
and Comision-Federal de Electricidad (Comision Project)
I\. NEGOTIATIONS
1\. In April 1948, Nacional Financ4era,-S\. A\., ("Financieralt) applied
to the Bank for a lo4n of about $109 million to finance the balance of
the foreign exchange costs of the 19h7-52 construction program of the
Comision Federal de Electricidad ("tCE")\. The Bank and the Miexican
*- 2 -
Government had previously agreed that, among a wide\.-range of development
Priottsc discussed with thei Pnnk in 1Q)i7- e_IletriG npwer nuvht to have
priority\.
2\. As a result of discussions between the Bank and CFE, it was agreed
\.J~in N V ~IflL;1;\. +ha+, forI- bo+ financ4a ar\.d ei r\. reas --omns,it w-a
advisable to confine attention for the time being to the most urgently
needed par+s ofe pP anmd,rv\.m n,nA *nroie so\. of , h ha a1readnyr
been begun with the help of financing from the Export-Import Bank and other
bstJturc es, )0re 0 S r A 4\. A 1he accol-d i_- 1 -S U*S cv ffi\.; n
was made in consultation with the private companies serving the areas con-
wased ma gre tho esrfulcodntowihhirxpsonlareascn
%\.W\. L1iU, \.LAi )J\.L lAVJ\. L t1V =1 \.± \.LW LJ\.LJ\. %)\.AJV±\.LU\.LIA tU\.&'I IV\.WVA VLOL\.41\.A~
II, THE LOAN
3\. On january 6, 1949, the Bank grarnted a loan of $24L,100,000 to Nacion-
al Financiera, S\.A\. (utFinancieralt) and Comision Federal de Electricidad
(k1CFE'0) as co-borrowers, The Loan became effective on Harch 15,7 199,
The Closing Date is December 31, 1952\. Amortization, calculated to retire
the Loan by its maturity on August o,i973, begins on February 1, 1953\.
Interest is at the rate of bs per annum (including the statutory 1% com-
mission)\. The Loan is guaranteed by the mexican Government\.
\.4\. It was agreed that an amount not exceeding $4 million of- the Loan
could be applied to purchases of electrical equipment within M\.exico\. This
authorization was based on the fac t that the production of electrical
goods\.in Mexico mainly takes the form of the assembly of components im-
ported from the U\.S\. The price of these goods therefore contains a sub-
stantial dollar element\.
5\. As of September 30, 1951, some U\. S\. $12\.8 million of the Loan
had been disbursed'\. Of this amount, approximately $ll\.7 million was dis-
bursed in U\. S\. dollars, the equivalent of $ \.8 million in Canadian dollars,
the-equivalent of\.$ \.3 million in $wiss francs, and the equivalent of $ \.o5
in Italian lire\. The geographical distribution of purchases under the Loan
was as fol1ows:
Country Value of Purchases
(in thousands, U\.S\.$ equivalent)
united States 9,823
Canada 517
Germany 819
Switzerland 319
Mexico' 1\.269
Italy '48
Total 12 825
6\. Payments of interest and commitment charge have been made as due\.
To Hei t-he PnrrmrPes have nno\. heen requested to fdeliver n anyr bnd to the
Bank, as provided in Article V of the Loan Agreement\.,
\. - 3 -\.
TIT THE RQRRQJM¶S
Nacional Finangiera
7\. Nacional Financiera is a corporation established in 1934 to finance
the Aev%lo^nman+\.t \.a\.-\. -\.Mg%ry,i \. Jr T 9-7 h O of\.th Mexican
Congress, it was designated the sole agency for negotiating external loans
on libealfb Af' t*h I\.nq4 ,
_~~~~~~~~~'l-\.* -^ _ V 'I\. \._w4 1 f lLtA V
8\. - , *S\.e hal of Fir\.a is eapta so of 'nO\.-VS\.lli\. pesoe, lly
paid, must by law be owned and retained by t'he Government\. The remaindar
\. be sold to J-,4va+e V ivest0r8L atu a \.tV\. 0s\.q;U a sub8tantial Par
of it is held by Government agencies, It is provided, however, that the
j\.'i ~va\.ei\.,y, stock Lh u hava a Iujur\.L\.U*y S-epnEnAUIon Uon bLe BDUoru Vf
Directors\. Additional funds for investment in Mexican industry are obtained
chiefly by the sale of Financiera!s own bonds in Mexico and by external
borrowing\.
Comision Federal de Electricidad
9,\. Comision Federal de Electricidad is a government agency established
in '937 for t'he purpose oI organizing and directing, on a non-profit basiis,
a national system for the generation, transmission and,distribution of
\.electrical energy,\. The Minister of Economy presides over its Board of
Directors, to which the chief executive officer, the Director:--General, is
responsible\.
10\. CFE derives funds for investment in construction from the following
principal sources:
{a) The proceeds of a 10% Federal tax on electricity
consumption;
(b) Federal budgetary appropriations;
(c) Profits on the sale of power;
(d) Borrowing, both external and internal\.
11\. CFE's policy has been to supplement where necessary the power facil-
ities provided by,existing power companies\. Thus,\.in urban areas, CFE
normally\.confines its assistance to the construction and operation of gen-
erating plants, selling their output,at wholesale for distribution through
existing networks, In rural'areas, where there has hitherto been no organ-
ized\.provision of electric po\.wr, CFE may\.have to construct and to operate
facilitie,s for distribution as well as generation\.
IV\.- THE FROJECT
12\. At the end of 1948, Mexico's total installed capacity for the genr
eration nf ol + rIf ecrc o1e amAfnn±nd to aboiit\. 1 m11i n kw n1f whi ph flFEtcI
plants accounted for about 100,000 kw\. With the aid of the Loan, CFE
- il \. QAA oven r +e ----- n+4\.1A +0 i -i *c d the'\.,\. endI of l9'52
The hexlight'program (see Part Two of this report)\. will add a further
I\. l1 co A n 1 *
P
-J j\.LgUe\. I-~nL OAIII1-i1\. \. ~\.~L~Lyr~~4\.
VJo "vv Inr ; wzLe sa,\.'e peri %A
'3\. T,^\.e Loa -ro-jectlw falils under Ile following mair\. head,gs,rQ
(a) lv'iig-uel Alma a,yt - Il"ai is a large hydroelect-i7--
development intended to supplement the power supplied
by iMexligAt to the Mriexico City area\. When the Loan
was granted, a two-unit station of 56,ooo kw\. at
Ix apantongo was the only part, of this sy5steem in
operation\. 'With the help of the Loan, new stations
at Santa BarDara ( units), San Bartolo (1 unit)j
and El Durazno (2 units) will be completed, and a
third unit will be added,at -xtapantongo, so tnht the
capacity of the systqm will be increased by about
18,o000 Mw\. A transmission line is being constructed
to carry the power to the El Alano te,rminal in M1exico
City, vrhere a new substation is being built\. At this
point the power will be fed into the M4exlight distri-
bution system\.
(b) Puebla-Veracruz System - Three hydroelectric plants,
of total ca'acity 35',000 Tiw,, are being constructed
at Tepazolco, EIinas and El Encanto re,spectively\. The
power produced will be distributed mainly through sub-
sidiaries Qf the American and Foreign Pover Qompany,
The area served is the center of the Tlexican textile
industry\. Mining and the manufacture of pulp, paper
and cement are also important\.
(c) Sonora System - CFE is constructinz steam Dlants at
Guaynias '(25,500 kw\.) and Ciudad Obregon (15,000 kVw\.) in
order to supplement the power supplied by the Emnpresa
de Servicios Publicos, an American owned company which
CFE may purchase in the near future\. Irrigation pump-
ing provides a major use for electric power in this
important aericultural area\.
(d) Juarez Svstem r A second 15\.000 kw steam nlant is be-
ing com"pleted at Juarez, the center of an agricultural
area which hitherto has had to import Dovier from E'
Paso, Texas\.
(\.e) Bombana System - A hydroeIectric plant of 2,600 kwTis
of the State of Chiapas, hitherto'supplied by a few
C4e,fl\. plr\. nly\. Tn ti raas,irgto
pumping is important\.
(f) Torreon-Chihuahua-Aldama System - The project in its
u; v gtat _\.vx-lutp wJXV M ut:U\. qLw vs- FaJs a +G 41t;VV L; a us
at Gomez Palacio and Aldama\. It was later decided
(see paragraph 22) that the needs of-,this important
mining area could be better served by constructing
a steam station of three 15,000- k, units at Chihuahua\.
The output of this station would supplement that of
the plants (Qapacity 51,000 kw,) of the American and
Foreign Power Company subsidiaries which serve this
area, IMore recently, it has been decided for the pres-
ent to limit the new station to two I$g000 kW\.units
(see paragraph 23)\.
(g) Rural Electrification - Small diese\. electric stations
are being installed in nine outlying communities,
hitherto largely without reliable sources of electric
power, in order to provide them with power for irriga-
tion pumping, small industrial enterprises, and domes-
tic use\.
(h) Miscellaneous Projects -r Chief of these are the con-
struction of di'esel generating stations at the important
fishing port of Carmen, (State of Campeche) and the
Pacific port and resort of Acapulco\. The five diesel
units at Acapulco are mobile, and can be used elsewhere
when a more permanent solution of the powTer problem of
the area is reached,
This section alsp inoludes five other small diesel
installations- and additions to distribution facilities
in a number of towns\.
(i) Equipment for Private Companies CFE is assisting
three sm\.a11 privafe t om\.p n 'ts, Jn the tRtptpc of TLwPer
California, Chihuahua and Veracruz, respectively, to
expa\.nd their generating nnd distrShuving vanar itlr ne
of these companies, serving Tuxpan, Veracruz, hap re-
cently been \. lho\. y anqunreA Cy GFE\.
V\. CHANGES IN THE PROJECT
Llt\. ^\.sanyx ext-ensivea constrcztYio-\.n mrna nm\. is ca-r-ored oitj it, i s nati-ral
to expect revisions of preliminary plans \.nd estiviates which-will call for
min\.or am\.-endntms of te o rig lgst iav gooods ar\.d dec-i-t-on of the
project, In the case of the present Loan, however, the degree of revi-
sion vWhich has proved neceasary has been greater tha, is normally to be
expected, and it is clear that\.the preliminary plans and estimates put
forward by CFE during the loan negotiations were more tentative than the
Bank believed at the time\.
15\. The Bank first became aware\.of this fact when, in Mlay 191t9, less
than five months after the granting oi thn Loan, CFE submitted a neW L'ast
-6-
of r GoAs, 4the net effect of which \.vrv\. to reduW from 6;\. O57l 00 +o e;77 ilr0
VI %\.Jo'\.A\. LI, Jk ; J\.L IJ '\.J Vii4\.& LA VV0 U' uuc \. LSL i\.J4\.JU q?, LJI ,'J'J\J q~',z* I \.9-J"-I
the amount provided for the Rural Electrification project in order to meet
net- increase;: of estib-iattes totoal-ing J220s0 n other parlts of the
programt,
16\. The Bank was disturbed to learn that a substantial part of these
net increases was to be ascribed to omissions in the earlier estimates
(e,g, an omission of Pl\.2 million in the estimates for the Sonora proj-
ect) and by the implication that the Rural-iElectrification project, which
the Bank had understood to be an integral and important part of CFE's
program, was to be regarded as a safety margin to absorb changes in the
rest of the program\. The Bank therefore decided that, before the re-
vised Li'st of Goods could be adopted as a firm basis\.for disbursements,
its engineering staff ought to review afresh CFE's plans and estimates\.
17\. Rank\.engineers visited Il\.exico for this purpose in August 19h9\. Thei1r
report showed that the projects could be divided into three groups:
(a) Those on which work\. was far advanced, and plans and
estimates could be considered firm, These accounted
for about p5\.8 million of the Loan\.
(b) Those for which some orders had been placed, and for
which estimates could to that extent be considered
firm, The firm estimates in this category amounted
to $8\.3 million, leaving a further '\.5\.6 million liable
to revision\.
(C) Those in the preliminary planning stage, for\.which $1\.4
million had been allotted in the revised List of Goods\.
18\. Since only about lL million out of the-92b\.1 million Loan could
therefore be linked with firm plans and estimates, there was clearly a
rdanger that fiirfhPr shbstnntipl innrRpses of estimates might cGonfront the
Bank with the alternatives of increasing the Loan on the one hand or, on
the other\. of seeing projects susnended for lack of financing The fact
that the CFE was at that time experiencing considerable difficulty (see
Section VIII belowv) -in seCiir1ng adeqinate peso finanr\.ing for the project
served to emphasize the latter alternative\.
19\. In order to ensure that projects, once begun, would be carried to
completionp the Rank deGided that it\. wmld approve the reiiied Lis\.t nf
Goods only insofar as it related to firm estimates, and that approval of
other ite\.Pn wmAould be given only w\.hen, and to the eytent thn+t firm estim\.ates
were received1 and the Bank was satisfied that no circumstances were likely
to arse wwhich w^-ould m+ake if+ inadvisable for CF +io qproceed ler: th\. th ef
tion of the projects or portions thereof in question,
20\. Since October 1949` when this procedure was first adopted, the Bank,,
in agreeme\.;1 \.iith CFE, has continued to base disbursements on the sameil
principle\. From time to time, as estimates have been made firm, it has
beue pUossble to transfer itemis to the -appro-ved- Qategory and, at the
time of the 'Last major revision of the List of Goods on these lines (May 1\.951),
only \.l\.7 million of the Loan related to items yet to be approved,, In
addition, there remained an unallocated margin of about $300,000 designed
to provide for contingencies\.w This amount was subsequently increased to
,1\.8 million as the result of the elimination of the third unit from the
Chihuahua project (see paragraph 24 below)\.
21\. The chief changes in the project that have been made since the Loan
was granted are reviewed in the following paragraphs,\.
22, In the original project\.,\.the needs of the Torreon,\.Chihuahua area were
to be met by installing an additional generator at Gomez Palacio and a new
plant at Aldama\. CFE decided shortly after the Loan was granted tha\.t the
problem could be better solved by installing a single new plant of three
15\.000 kw units at Chihuahua\. and the Bank agreed to this course\.
23\. Tn April 1951\. when two of the above units had already been installed
at Chihuahua, and installation Qf the third was beginning, CFE represented
to the Bank that there was an ureent shortage of power at the important
industrial center of Monterrey, for which no provision had been made in the
Bank-financed nrogram\. CFE had already ordered two new units for Monterrevy
but was of the opinion that the povwer shortage could be alleviated more
ranidlv by transferring the third Chihuahua unit to Monterrev than bv await-
ing delivery of the first of these, CFE contended that the third unit would
not be hneded at fhihniahiia for snm\. 18 months (hy whinh time it onuil hp
replaced), and asked the Bank to permit its transfer to ronterrey on condli-
tion that it was subseque\.nJtly replace \. athi hiuahiiu hy nne of the new-rly
ordered Monterrey units, The Bank agreed that there was no pressing needl
for a third un\.it a+ Chihuah\.ua, but wJas un\.ab'e to satisfy itselft~b~ te11icl
on the timing and amount\. of the contribution the unit could make to the
vIolverrv\. A p o_J JJA-v4r supply A A 1LAV a +J\. V\.L 4- L e Wr *'A\.A A IA+
and arrangements for their provision had not yet been worked out between
CVEZ anAd the local po-er comupan-y,
4u\. Noti wishing to preventi UCE fr-om aking tLIhe 4ranser on "is -ovn\. res-_
ponsibility, the Bank decided to divest the third Chihuahua unit of as,socia-
JtiVUk V fi I fl1tA \.arin J\.U VVAIQCv*14 M,Y CU VY\.LVIL UJV rr " UL \.A\. \. U 7p;, -
that reference to the third Chihuahua ui4t should be removed from the Des-
cription of the Project, and that WI e third of t,, amount provided for tJe
Chihuahua station in the L4st of Goods should be transferred to the "Unppeci-
fied': category oT the 1su for later allocation\.
2\.,5 The amount allotted to the Rur4a Electrification project has aito-
gether had to be reduced from 83,257,000,\.as originally provided, to
D*589,O00, in order to\.meet increases of estimates on otner projects\. The
program now covers nine towns only, as compared with the 23 originally
included\. CFE has,\. however,, agreed with the Bank tnat \.this rural electr:L-
fication program should not be subject to further reduction\.
26\. The amount provided for Mliscellaneois Projects, after undergoing reduc-
tions,\. was subsequently\. increased from the original\.figure\.of s:;626p703 to
lt,2h8,089\. Whi4e the diasel station extensions -at Oaxaca and La Paz or\.:gi-
nally included have been el#ninated, new diesel pLantp at Ciudad del C' men,
Acapulqo, Santiago Ix=uiintla and Tecorman Zone have been added\.
v i\. rrLUnflwnO ur ±nz rru<Jnfi±
27\. Several of CFE's projects have now been completed, and are, or soon
will be, in operation\. Among these are the fo1loQwin1g -ydroelectric plants:
Santa Barbara (67,575 kw), Minas (l14,400 kw), El Encanto (10,000 kv),
Bombana (2,600 kw)) and tne iollowing thermo-electric plants: Csudad Juarez
(15,000 kw), C4\.udad Obregon (15,000 kw)\. Some of these stations were begun
before the Loan was granted, so that their foreign exchange cost nas been
financed by the Bank in part only\. A diesel electric plant at Acapulco,\.
and six others in the rural electrification program, are in operatlon\. TChe
El Alamo receiving station at the Mexico City terminal of the Iiguel Alernan
system, and several transmission lines have been completed\.
28\. In 1949 and l950, construction proceeded much more slowly than was
expected vwhen the Loan was granted, and a correspondingly accelerated rate
has therefore to be maintained this year and next if the program is to be
oompleted in 1952\. At present it appears that it may not be possible to
complete the San Bartolo hydroelectric station and the river diversions i\.n
the \.iiguel Aleman system by the end of T952\. If no unforeseen difficulty
arises however, the rest of the program should be completed on schedule\.
29, The chief reason for the slow progress during the first half of the
construction period was a shortage of pesos experienced by CFE in 1949\.
This problem is dealt with in Section VIII below, A further reason is the
fact, referred to above, that much of the planning was at a preliminary
and tentative stage when the Loan was granted, so that much detailed engi-
neering work has had to be done on some of the nroiects before orders could
be placed and construction begun\.
30\. Furthermore, the present constructiorn program goes far beyond anything
previoun1v iinedertik0ren hyv (FE'j whi-h ridid not\. heagi n activern oeratinnonsuil
1937, and has imposed a severe strain on its planning and administrative
staff, GFE has aeen confronted with the probleA;lms of undertaking major con-
struction projects of a kind of which it had little previous experience,
of reptr-iitino' aidditional GomnPtent tGivil and P'letrinnI oninieers in a
country where they are not yet plentiful, and of devising an appropriate
oranization for its tenhninnl qtRff_ ProareAp hvas thPrPfnreO ton cwnp
extent been achieved by the method of trial and error\. For example, a
ca:na:l sctior+n in t\.he ITapaentorng river dver;sion,; buiTlt at a rcs ofX overo
1 million pesos1 had to be abandoned because of alides and replaced by a
tu\.nnel costing about 22mi4io pe sow-P t a r tha+v the study W\.A th
subsoil conditions and the cost compariaons leading to the design of the
cr\.a' rJere Xnadeq , ard nna +1-+ + 1- -- resid-e+ enginee A4A did n -o p -P-4-i
attention to the progress and quality of the work\. Moreqver, the contractors
i\. the p ticular section appear to pave had great difficulty in assembli
the organization and equipment appropriate to such a task,
31\. In other cases,,\. there has been imperfect coordination between differ\.-
ent phases of the same project; sometimes due to tne generai interruption
of work in 1902 as a result -of the shortage of pesos, but more often to
inadequate planning, zt Ei Durazno and Tepazoico, penstocks were delivered
9~ 9
mariy montuhs before thiley orere needuedu\.,\.Ato l,iLnas, thi'e generating p'lanI-1 nas
completed more than six months before the transmission line necessa-y to
U\.L\.Z \.-L L±U~ 4A!I~ UU\.4ILi - O\.L ao ed b Ul~L filI '\.L11Ut \. \.L41V U±Vlfit;Ult LL U±_LVtob~ UJT\.
expensive equipment for long periods\. have cost CFE very substantial sums
In in lterevt payments or 'Lss of operatLng revenues\.a\.
32,\. The management of CFE has been fully aware of these problems\. and has
shown readiness to improve organization in the light of experience\. A major
step fornvard was the creation early in 1950 of the post of Chief Engineer,
who is to take charge of the planning, coordination and supervision of a:Ll
construction,\. Unfortunately, -the first holder of this post resigned after
a few months\. A successor has been appointed, but it will take him some
months to become sufficiently familiar with operations to make his in-
fluence felt\.
33\. This period of growing pains, inevitable in any large new organiza--
tion, should now be drawing to a close\. The delays and losses of this\.
phase should be regarded as the necessary cost of acquiring experience,\.
3h\. The Bank's supervision of the progress of the project under this,\.
as under other loans, is based on the receipt from the borrower, as soon
as possible after the loa\.n is made, of detailed basic descriptions of
the project, and thereafter of periodic progress reports\. This documenta-
tiQn is supplemented by field visits of Bank engineers and accountants\.
The strain mentioned above, placed by the magnitude of the construction
program on CFE's administrative and technical staff was reflected in the
facts that many months elapsed before all the basic project descriptions
were received,\.and that\.it was not until the spring of 1950 that the flow
of progress repQrts and their content became entirely satisfactory,\. In
advising CFE of the importance of these reports, Bank representatives have
laid stress on the fact that the information required was of a kind which
mras essential to CEP's management in the interests of its own efficient
control of operations\. Experience has led CFE to endorse this point of
view stronelv\. and to attach great value to the internal renorting system
which has in consequence been set up,\.
VTT, RPFEWTS OF TE TLQFAN
35\. In Mexico, rapidly increasing population, combined with a remarkable
grow!th o^f industry ir\. recent years, create an urgent demand fqr more power,
The need isall the more acute because of the lack of new construction
during the depression of t thirts and during the w ar,\.
among the worldls o4l producers, increasihg domestic consumnption in recent
cs> LLQ *1a DZ iUU 1%\. = J0A4IVW+l WJLA v4LD 111Q4\. 6L1 O\.V>±\.LOUJ\. \.IJ\. A\.VI\. U*Pp v ± * 1
development\.of hydroelectric facilities, which figures prominently in the
Loan project, is therefore the most logical and euon,unical si-ut-ion of
the power problem, although the uncertainties of rainfall make i; impossible
to dispense witrh a certain proportio¶-n ol thermo-electric plantts
- 10
37\. Since the Loan was granted, CFE;s generating capacity nas roughly
doubled, increasing\.from about 100,000 kv to more than 200,000 kw, This
expansion means an increase of about 10% in M'exico's total installed cap-
acity,\.
38\. Of the individual projects completed, the Santa Barbara hydroelec-
tric station in the Miguel Aleman system is most important, It should
materially relieve the-shortage of power which has handicapped the growth
of indcustry- in the Federal District, Mexico's most important industrial
area\.
39\. Some of the smaller projects, however, are of great significance
for the areas they serve\. The rural electrificatiQn projects, for example,
have in some cases brought electric power to areas where it was previously
virtually unknown, and have thus made a striking contribution in terms of
both productive efficiency and amenity\. It must be remembered in this con-
nection that the importance of irrigation pumping in many parts of Mlfexico
makes power significant in rural as well as in industrial areas\.
VIII\. FINANCIAL POSITION OF CFE
h0\. As its constructional activities pass their peak\. >a d operating
revenues grow, CFE should eventually become financially self-supporting\.
For the present, however, its revenue from plants in operation and from
the 10% tax imposed for CFE's benefit on consumerst electricity bills
in Mexico must be sunnlemented by governmental annronriations if it iS to
carry out extemsive construction which brings no immediate return,
Ll, Soon after the Loan was made, CFE realized that its appropriation
for 19hi9 wmas insufficieon\.t to main-tain the pla=ned rate of eonc+\.r'+tion\.
The most peso-consuming part of the loan program is the diversion of three
rivers in orear t\.n provide the Mtiguel Aler\.an hydroelectrie rstem wi+h
sufficient water for maximum efficiency, and work on these river diver-
sions had to be sunpend\.ed\.earl1 that year\.= woirkon other proJects WAr
also seriously retarded, so that only $2\.6 million of the Bank Loan was
actiually withdrawn during7 19)i9 instead oef the $8 million thAt had been
contemplated\. at the begilining of the year,
42\. The Loan Director visited Mexico at the end of October 1949 to ex-
press the%-ank's cor\.cern at thinis \.sit-ain to Ilr\. Be t 1a, the S \.
of Finance, Mr\. Beteta explained that the rigid avoidance of inflationary
-P; n- _4^ mp 4\.s anc , ¢ ,^, __|__A_A_ s_
\. *s-J-ILsE, YV-X~ A4 r V44w 1U4 V A- ss4& vVZ I;+I4IXLUU J\.V A r '\.L A Q c4 }y V LiijJ8\.ii to
made it difficult for him to provide more than 50 million out of the 153
million p4U o appropriation wJhich OFE required for 1950, He agr-eeu e-ven-
tually, however,\.to make available 100 million pesos during that year\.
The President of the Ban, -during his visit to;o ivle o in Jan-uiary 1950,
further discussed the problem with Mr\. Beteta, who was then able to say
that, insofar as CFE was unable to raise funds from other sources, ne
would make available from,\.appropriations the whole of the needed 153
million pesos\. Later in the\.year\.,CFE, obtained a loan from the Chemical
Bank and Trust of New York\.equivalent to 16\.9 miU ion pesos, which reduced
to 136,1 million pesos the amount to be provided from appropriated funds,
-j
43\. The Chemical Bank and Trust loan came within the terms of the
consultation clause'of the Guarantee Agreement and also required the
Bankis consent under the debt limitation clause of the Loan Agreement
(Article VII, Section 7)\. The Bank offered no objection to this
loan,
Since the beginning of 1950o CFE has experienced no shortage
of pesos for construction expenditures\. An appropriation of 161
million pesos has been made for 1951\. This, together with a 100
million peso appropriation which the Mexican Treasury is expected to
make for 1952, should enable the construction program to be completed
on schedule\.,
PART TWO
(a) Loan of -1no,nOnO,OOO to Unainn
Financiera, and Ccriaicn
Federal de Electricidad (Mexlnght
project)
(b) Loan of $26,ooo,0oo to The Mexican
TI~ 4 \.L -U\.& -A 'n- UWU4Jd1, 4\., -A~I
I\. NEGOTIATIONS
T,n F'ebruary 94O, Tvne viexican Lignt and Power Cuompany, Lamited
(",gexlight") applied to the Bank for a long-term loan of nearly !2
million (this amount wva subSequently increased) to fLiI Jnarce t4he fo
exchange costs of new electric\.power plants and transmi83ion lines to
be constri\.cted by thn Company and i ts subpidiWriep in Wexico City and
the surrounding area\. The Mexican Government informed the Bank that
it was willing tp guarantee the Loan,
46\. On,June 24, 1)49, the Bank !po'oqned Mexlight that it woulq not
be prepared to consider long-term financing until the Companyts capital
structure had been reorgan4zed so ap to achieve the following purposes;
(a) to enablje any loan from the, Internationa\.
Bank to ran1 p4ri passu with the other
bonded debt of the Company and its sub'-
sidiaLries;-
- 12 -
(b) to ensure adequlate ceverage of thA Clompanyts
fixed charges; and
(c) to establish a capital and debt structure
wh\.ch, 1WrOU11d facil\.Litate -n \.d"S'' th CmJ r ac
to types of financing it might require in
\.LK- J\. V,
4" Ija+UeU ,L1~U AiJproJviUZU W1ilr\.Lt 1V1WA4J_\.j11IW VVViLLJ\. U,1JUJV\. IJXV V S~4\.L' W-
The ~ th fu+ure\. - ,a4AA -
a financial reorganization on these lines by the end or 1949, it would
glve syU-llrpathetlo UoUnideratiorn to an interim loan\., to be m,,ade through
the medium of Mexican Government agencies, to enable the construction
program uo proceeed while the reorganization WdS in progr8 -u
47\. On July 28, 1948, the Company's Board passed a resolution of in-
tention to carry out such a reorganization by December 31, 1949\. The
Bank accordingly opened negotiations as a result of whicn, on January
6, 1949, an interim loan of $10 million, maturing on December 31, 1949,
was granted to Financiera and CFE to be re-lent to Mexlight\. At the
same time, the Bank informed Mexlight that it would be willing to nego-
tiate a long-term loan in the approximate amount of $26 million for the
purpose of refunding the short-term loan and financing further foreign
exchange expenditures of its construction program, provided that the
reorganization was satisfactorily completed during 1949, and that, in
the opinion of the Bank, other relevant conditions, including electric
power rates (see paragraph 76), at the time warranted the making of
such a loan\.
48, It proved impossible to complete the reorganization by the end
of 1949, and the Bank agreed, on December 1, 1949, to postpone the
maturity of the short-term loan until July 1, 1950\. :\.The reorganization
was completed by April 12, 1950 and the Bank, being satisfied that other
relevant conditions were fulfilled, granted a long-term loan of $26
million to HIexlight on April 28\. 1950\.
II, THE LOAN
h9\. The long-term Loan is for a term of 25 years and carries interest
(including commission) at the rate of 4-1/2% per annum, Amortization paly-
ments, calculated to retire the Loan by maturity, will begin on August 1\.
1953\. The Closing Date is June 30, 1953\.
50\. The Loan became effective on June 30, 1950, and the amount of
$5,52\.7h1 then outstanding under the short-term loan was charged to the
new Loan Account on that day\.
51\. Disbursements on both\.loans through September 30, 1951 amounted to
somke $1L6 million- Some A12\.6 million was disbihrsed in UTS\. dollars,
and the balance, equivalent to $2 million, in Canadian and European
currenoe e-s
The geographical distribution of purchases was as follows:
Country Value of Purchases
(in thousands, US\.$ equivalent)
United States 0l,1460
Canada 83L
United Kingdom 629
Belgium 380
Switzerland 85
Sweden 115
Italy 99
France 26
Germany 950
M1exico 976
Total 14,551
52\. The Bank has received bonds from the Borrower in the amounts of
United Staltes $1\.1,746,0oo and Canadian $ 300,000\.
53\. Payments of i\.nterest and commitment charge have been made as due\.
TTT\. THE qnlMRflVFRw
54\. The mexican Light and Pover Company, Limited, originally organized
in I1902, is a oman\.ntnopael by Te++erS -aten+ und-r 4the Gompanies 4 -
Act of Canada\. Its securities are videly distributed in both M>orth America
and >-rope,~-4 as - - - Ac by the fact- thas its B'4 oardA Qf DPr reclors 1c-le
~~**~ JJ~~* ~ ~V ~~ LJy U±l \.LQ U VL~~\. V L LJd\.LU yJ\. ~JJ\.I Ui tJ\. I cLe
Mexican, U\. S,, Canadian, British and Belgian members\.
55\. Mexlight and its wholly-ovmed subsidiaries serve a population of
more than 3 million in the Federal Dlstrict (whleh includes M tlexlco City)
and parts of adjacent states,
56\. Until the opening of CFEts Ixtapantongo station, 17exlight generated,
as viell s distriuted? pustant-aly a;1 vh e,ectri po-rer -ued ' *hi
area, 1lexlight will continue to be entirely responsible for distribution,\.
supplementing its o-w- outup-uta by purchasirig that of CFE;s Miguel Aleman
system\.
IV, THE Pj-R\. \. -,
57, The Project comprises the constructiQn and installation of hydro-
and thermo-electric generating plants, transmission lines, substations
1/ For further intofrnation see M,exlight s Annual -Report for 1950, an-
nexed to this Repoitt,
- 14 -
and otner distrioution equipment needed, in conjunction witn CFrE's Tvliguel
Aleman projects, to enable the supply of power in the Mexico City area
to keep pace with-the growth of demand over the next three or four yearsp
It involves the addition of 152\.,o0o kw to Mlexlight's previous installed
capacity of 275F0000 m,
58\. The construction program falls under the following main headings:
(a) The installation of a tenth unit of 16,000 kw at
the existing Necaxa hydroelectric station\.
(b) The installation of a third urit of \.,ho00 kw at
the existing Lerma hydroelectric station,
(c) The oonstruction of new three-unit hydroelectric
plant of 45,6o0 kw at'patla, downstream from Necaxa\.
(d) The const-ruction of a new 66\.ooo kw thermo--electric
plant at Lecheria\. This plant is particularly im-
portant in view of the present DreDonderance of
hydroelectric power in the mexico City area, and it
should reduce the vulnerability of the area to drought\.
(e) The construction of various transmission lines, most
important of which is a new double-circuit 220 kv line
connecting Nee\paxa with the Federal District\. 85 miles
away,
(f) The provision of extensive distribution facilities,
and meters\.
V\. \.r~ \.U \. (J2 \. 'J\.
59\. No substantial change in the Loan Project has been made since the
Loan, was grantpdo As~ utscQUbe ir'= L ecio QV% belvfA 4vreer +heWV Bank w
has expressed its conditional willingne-s to give favorable consideratiorn
to the expansion of the Loan PrQject, wvi-ithout increasing th,1e &,moLint of the
Loan, to include certain construction projects which Mexlight has been
carrying qu-u in addition -uo tIhe na 4-finiLue program,
OU\. The cn\.ei anenget5wiliuL1 Tv\. cuurbt 2L UU a ,u C WVLVL4JU £-S4U-UJ \.L1
Schedule I (Description cf the Project) to the Loan Agreement would be as
follows:
(a) The provision of a portion of the spare parts re-
qui,ed for the maintenance and repair of existing
hydroelectriq equipment would cover the period from
1949 to 1952, instead of frora 1949 to 1951\.
(b) Instead of 190;000 watt hour meters\. 242\.000
would be included\.
(c) A new item, "Increases in Capacity of Various
Substations,n Itould be added\.
VI, PROGRESS OF THE PROJECT
61\. C1 on st4,ractiVon h,as prvoceeded without ertrWso inoep th ganin
of the interim loan on January 6, 1949, although there was a temporary
slowing down during the period of n\.egotat-on of the 1ong,tenn loan in
late 1949 and early 1950\. The present construction schedule provides
for the completion ol all projects by the end of 1952, a goal -which ap-
pears to be technically feasible\. A failure to solve the cash problem
(see Section 1A below) and delivery delay ar?e tle unly fuautrs likely
to prevent its attainment\.
62\. Mexlight has an experienced apd competent engineering staff and
the construction program has been planned and executed in a satisfactory
way\. Progress on the major items of the program may be sunmmarized as
follows:
(a) The installation of a tenth generating unit, of
16,000 kw capacity, at the existing Necaxa hydro-
electric plant, was completed last year, and the
unit is now in operation\.
(b) The installation of a third generating unit of
2h4boo kw capacity, at the existing Lerma hydro-
electric station, was completed last year, and the
unit is now in operation\.
(c) The civil engineering work on the new 45,600 kw
hydroelectric station to be built at Patla is
underway\. Construction of the powerhouse and
transmission line is about to begin,and the proj-
ect is due to be completed before the end of
1952\.
(d) Good progress has been made on the new 66,000 kw
Lecheria steam plant, which should be qompleted
early next year\.
(e) The new 85-mile double circuit transmission
line from Necaxa to IVexico City is due for com-
pletion next year\.7
- 16 -
U63\. E_arly n11 i951 \.th prmU1ptU Uel-vU-y of t4L±upIitLL, toU 4\.f
U\. S\. suppliers was hindered by difficulty in obtaining the assignment by
the ivMexican authorities o£ sufficient railroad freight cars\. The Bank
represented to Nacional Financiera, the enbibrrrarsing situr:ticr
which might result vis-a-vis the u\.S\. defense authorities if,\. vwhen the
Bank had pressed them to release strategically important materials for
urgent use in Mexico, the Mexican authorities apparently assigned a iow
priority to their transportation\. Nacional Financiera wan able
to secure the release of sufficient cars\.
VII\. EFFECTS OF THE LOAN
64\. The completion of the tenth unit at Necaxa and the third unit at
Lerma, of combined capacity 30,400 kw, means that, taking account also of
CEE's recently completed 67,600 kw Santa Barbara station, the installed
capacity serving the Mexico City area has increased from about 370,000
kw to nearly 70,000 kw, i,e\. by 27%, since the interim loan was granted\.
In view of the backloo' of construction which accumulated during the war
years, and the rapid growth of population and industry in the area, this
increase is no more than is necessary to avert a serious shortage of power\.
VIII\.- LOCAL PURCHASES\.
65, The Bank authorized pIexlight to use up to P;3 million of the lona-
term loan for purchases in Mlexico\. This $3 million included $300,000
allocated for the same purnose out of the short"term loan
66\. The nlthorization in the case of the lng-term lnan waq in the form
of a letter agreement, dated April 28, 1950, which permitted these pur-
the terms o4 rp,rcha5e shall be more Cvrnble thar,
the terms\.offered by other prcspective suppliers outside
of +4Y n+ "\.k wirgtken in such compariaon of
Mexican import and similar duties imposed pursuant to
legisLati6n or regulaiLon adoptqd after the date of
this letter\."
67\. When the Loan was granted, the bturden of T\.rexican import duties on
trical Indqstry permitted p4blic uti'ities to import free of duty all
eqWipmenlt and u mauerials requsIued 4o\.v v± their sy\.Utxup providueu
that they were not-manufactured in-,,e4ico\. in the\.requisite quantity and
qu ality\. In July i,9507 t"e Plexi(arl Governlent in1troduced a system of iml
port licensing for electrical goods, and in January 1951, goods of the
kind manufactured by Induptria 4lectrica de Mexico, S,A\., the principail
Mexican manufacturer of such goods, were subjected to very substantial
increases of import duty, in cases where Mexican manufacturers could
- 17 -
not produce goods of the type or in the quantity required, or make delivery
in time, it was possible to obtain an import license and exemption from
duty\.
68\. At the time when these new duties were imposed, Mexlight was con-
sidering the purchase of 825 distribution transformers required for the
loan projeet\. Industria Electrica quoted a price of $868,000\. A Belgian
firm quoted t6270ooo c\.if\. Mexico City for comparable equipment and
delivery date; Inport duty at the old rate would have raised the cost of
the Belgian goods to $670,000, but the new rate would have raised the coot
to $918,000\.
69\. Mexlipht nroceeded on thA assuimption that an annlination for an
import license and exemption from duty would be refused, since Industria
Plectrica -was nhle to meet the order in terms nf quantity\.y, qunlity anti
delivery, and placed the order with Industria EleQtrica\. When the Bank
was infArnme of' the irctan it- hriq no eehetoin, 1'biut\.r, VtIIM 1 h\.t tfhe
condition quoted in paragraph 66 above had not been mpt1 and that the
Plrhae wstherfo r^e Ih-, 0e^~ - -14J;l < fm1% o^M+_Ef ^r ^^nA
rJ~¼ 4\. _\.a\._ * %J\.4JULt A4 \. \. tI% S , '- F M
The same ruling was later found to be applicable to another purchase from
Industr4a Electric>\., in, he amoung of $85,ooo, w tha+ a tl4-4- of $955,0
of the Loan thus became ineligible for withdrawal\.
70\. The financial implications of this ruling for fMexlight, and the ac-
+ior\.proposed by the Dank to ,ini\.ize them, are described in Part FoM-- - wluw
71J4 lT:: B4ank r\.ayV r\.t, itVs1eJ\.f LUU4-j1 boIz-tO ebnjdlu i p;O-cee(J In
any particular member country\. It is correspondingly reluctant to finance
purchas, ruade in a ~articular pountry if it appears that such purcnases
could have been made elsewhere on better terms in the absence of some
regulato,ry action, such as the imposition oI import duties, on the part
of the government of the country\. It was for this reason that the Bank
attached the condition quoted in paragraph 66 above to its local purchase
aithorization\. The effect of the new regulations and duties has been to
increase the cost of the projeqt and, by making it impossible to spend Loan
proceeds as planned, to create a serious financial problen for Mexlight\.
The introduction of such duties and regi4aAions, subsequ4ent to the grant-
ing of the Loan, without express provision for the exemption of Bank-
financed goods, constitutesiin the opinion of the Bank, a serious dis-
turbance of the as$umptions 14pon which the Loan,was made\.
72\. A review of further orders which Yexlight hjap placed, or proposes
to place with Industria Electrica, suggests that they are unlikely to
raise further problems of this kindo In a number of cases Industria Elec-
tricals quotations, while lower than those of U\. S\. manufacturers, are
higher than the prices prevailing in Europe for'similar equipment\. Never-
theless, in triese cases the fact that much of Mqxlight's existing equip-
ment is standardized on Arerioan patterns would strongly favor the pur\.-
chase of American types of equipment, as manufactured by Industria Elec-
trica, even though there were no import duties on goods purchased in
Europe\.
- 18 -
IX\. FINANCIAL POSITION OF ASXLIGHT
73\. As far as normal operations are concerned, Mexlight is able, on the
basis of a definitive\.rate structure awarded by the Mexican authorities
in December 1949, to\.earn a moderate surplus after covering operating ex-
penses and financial\.charges\. Earnings have, however, fallen somewhat
below the expected level during the last-two years as a result of the ab-
normaal reliance on thermal, as\. opposed to the cheaper hydroelectric power,
necessitated by two very disappointing rainy seasons-
74, At present there is some uncertainty about rates\. In M5ay 1950, nego)-
tiations for the biennial revision of Mexlight's labor contract were sett:Led
according to a formula proposed by the Government\.- Wages were to be raised
by 15% but, to the extent-that Mexlight failed during the f'irst year of
the new contract to-earn the "reasonable rate of return" provided for in
the rate award, the workers were to return the increase during the second
year\. Thus,\.assuming that over both years'of the contract I"Iexlight failed
to earn enough to lustify anv increase of wages\. the wages paid would theo-
retically have varied as follows (denoting ,the original rate of wages as
lOo)-:
19L9-nO l950n-51 1,91 -52 195? -5
Ino0: < i'-, i\.e\.l00 015\.' q RE:
Thiq fnrmiiTA ws\. nhioisr ii -i4+\.ic ip tpe sens +Ata\. +-he uorker we-re
--
~~ob-\.-\. ,~ _ 11 t _- t h er
unlikely to accept-such downward revislons'if called upon to do so, and
It apnpeared mo\.re
prbbQthn\.rompr\.to wre to 4fx-h ^vul
have to take the form of increased power rates,
75\. -\.The Tariff' Commissiqn hap for some time been studying Mexlight's
fnr\.&-\.^il ~ ~ rww w to /e;,ere\.d pil015\. 4\.A'-O'es 4J\.uls, ac-
cording to Mexqight, show no retrn\.zi n eXcess of the standard rate to 3us-\.
t4iy ar-\.of the \.1uo va-ge increase paid during that year\. The announcement
of a decision based on this study has so far been delayed\.
76\. The Bank is particularly concerned that the Mexican authorities main-
tain the principe of v r-Esonable rate of retrn, on -w-hich tPhe definitive
rate structure was based Onoe pf its conditions for financing Mexlight's
prQgram wap thaT the Company secure ;from the mex4can\.autnhorities rates
adequate -to provide a satisfactory earping baais for the Company, and the
sanK would not have granted the \.rInterim loan\.paq:it not been r?assured on
this point by a letter which the\. Secretary'of Eqonomy had address'§d to
Napional Financiera, Ird whIlh con1C;LWd AS r\.0llow2 s
"\.you are authorized to assure said Banking Institution'
that the Secretariat of National Economy, in qccor'dance
with the s\.tatutory and regulatory\. proceduresw iwthin the
scope of its legal authority, will dil-igently take all
necessarya teps in order that rates applicable to said\.
Company and its subsidiaries will all9w them said reasons
able rezurn\.11
- 19 -
Furthermlore, the Bank m,ale Ile grar\.tnrg of an adequaate def-'tie'at
£ U\.l W1I~IU~I\.l D JIIA 1~U~ L'l1i ILVA±LL\. J ~L %4 LI "1\.VJ\.V~ ~'V
structure one of its conditions for granting a long-term 'loan\.
77,' According to the terms of the rate award, payment of a tax at the!
rate of -% annually on the value of Mexlightls properties other 'han per-
manent\.hydraulic works is not required insofar as earnings fall below th\.e
standard rate\. This has a cushioning effect which, for the time being,
should partiqlly\.offset the effect of the uncompensated wage increase on
earnings and cash resources\.
78, The above-mentioned factors, together with rising peso construction
costs, have caused Mlexlight to experience increasing difficulty in find-
ing sufficient liquid resources for investment in its Current major oon-
struction program to supplement the U4 million peso loan made by Nacional
Financiera, concurrent;y with the Bank Lpan\. This is, Qf course, despite
the fact that dividends may not be paid 4nd sinking funds will not begin
until the end of\.the construction period,
79, When the Loan was made, it wap already forqseen that cash margins
over the construction period would be uncomforta\.bly thin, and that an
actual cash deficiency of $165,0C0 was likely at the\.end\.of 1952\. Revised
estimates made in June this year showed, however, that\.the cash deficiency
at the end of 1952 was likely to be of the order of $? million\.: There-
after, satisfactory cash margins would prevail, since the construction
program would be completed\. Of the $2 million, $955,000, or nearly half\.,
would-be due to the fact that purchases to that amount had been ruled by
the Bank as ineligible for its financing (pee Seption VII; above)\.
80\. To help to remedy this situation,\. Mexlight has requested the Bank
to agree:
(ta tn restore thA diqallcwed AQ$5jOOn to the T\.oan hv
substituting for the rejected items an equivalent
amou-\.nt o\.f dlrq4mt+\.-er
incurred\.subsequent to the Effective Date of the
Toan, or to be iniUrr0cd hpfore the end of 1952j
on account of projects hitherto outside the Bank-
penditures for an equivalent amount of Qxpendi-
tureshihet schedulled~ to be made-o_u+\. o ~ f +Yhe
proceeds of the Bank Loan in 1953\.
81\. This procedure is designed to make it possible to vwithdraw as much
as posSi ' ]Ji Ve of 4the- LoT- J4 l --e endL I\.752, n a\.n \. \. b\.y \. he
$955,000 which otherwise could not have been withdrawn at a11, and partly
by~ ~~ r\.ki\. ayi -abeii15 4n ---2 ----- A-wed w-wh woulA not- o-4e-1
LY L11a±IM\.LLI, _VL~ Lil J,7n1e\. andU J17)_54 4\.UCLU P1YVUQ V4\.& LIVUA\.U IIUI\.' ULIIC:L-
wise have been available until 1953\. In this way, the end,-l952 cash posi--
tion would be improved by nearly- $1s500,000 w4utlout arny red-Uction of the
margins in 1953 and subsequent years,
- 20 -
82\. This would not be enough, however, to solve the problem complete'ly\.
A further $1 milliqn wouad still be necessary to close the 1952 gap- and
to provide, in addition, a minimum working balance of\.about $500,000 Fo-r
this reason, and realizing that the full cooperation of the Mexican Gov--
ernment was essential to the success of any plan designed to ensure that;
the due completion of the project should not be impeded by a shor-age
of cash,, the Bank informed lvlexlight on July 3, 1951, that it was prepared
to give favorable consideration to the request for accelerated withdrawali
of the Loan, and the substitution of new items for the disallowed $955,ooo,
provided that:
(a) Meclight was able to satisfy the Bank that addition-
al financing sufficient to maintain an adequate
caph balance in 1952 and 1953 would be forthcoming;
(b) Nacional Financiera,\. S\.A\.,\. as representative of the
Guarantor, offered no objection to the proposed\.
course of action,
On being informed of this decision, Financiera expressed approval of the
proposed course of action,, and stated that it was prepared to grant\.Mex-
light a short term loan of up to 10 million pesos (equal to approximately
$1,156,000) in order to enable the Company to fulfil;\.condition (a) above\.
PART THREE
LTine of Credit of $10 Million in Favor of Consortium
of Commercial Banks and Nacional\.Financiera\.
I\. NrOTLTATI)NS
83\. In JITarch 1950, i4r\. Antonio Carrillo Flores,\. Director General of
Naclonal Finanriera, the official L,exican financing agency, informally
sbmitted to the Bank a proposal for a credit of about $lO!million to
be ~ applie + +he financ'in of small ani mpreiiuymscale development nroi-
ects through the intermediary, and with the participation,\.of-private
coinmmercia1 ba\.nks in exi^o\.
84,\. The pre \.+\.L r 4 of the Ba"r\. n_\.- fs 'o-rable for i+t aw in
the proposal not only an opportunity of fruitful and widespread coopera,
4t, o a -vvith '1I11xican\. pri,v-a4t-e\. b ar\.4k%i ngan\.d enterprises 'but al-so the possibility
of stimulating the interest of Mexican banks in the hitherto relatively
unfairiiar field of developrment credits\.
Or' -y' ±L\. ~~~~~~~~~~ \.4on' - el-4~ 4 n,A-, a 1- ;Ingt n an 6,,A P
85\. ILn the course of conversati\.J\.o h' \.I\. h an Mexico City
between the Ban1k and Amexican private bankers 4nd government officials,\.
various mechanisms of operat4on were explored\.- The creation o- a nevw
development bank, either private or governmental, was considered unneces-
- ?1 -
sarv\.because of the high degree of development of the bankine structure
in Mexico and because,\.in the shape of Nacional Financiera \.thero
L1readrv existed an evnerienGae nanrnv for finArtnina industria1 demrelon-
\.ment\. Since, however\., one of the objects of the operation was to work
ns f'\.r as possible through the normal channels of private enterprise,
it was considered inappropriate to rely entirely on Financiera\. On the
other hand, the Bank wished to be able to deal with a single bodyr wicrh+t
could-relieve it of the meticulous screening of many small projects from
p \.int of v J \. J\.L \.~L'J1 4\. 1%A W\. %"\. \.1\. ~\.6bJJ\.JA\.LJ ~ '\.%\.V J \.~
worthiness Qf the applicants\.
86\. To meet this need, Mexican bankers and government officials proposed
Vile creation of\. aL N'onsox tdunr- consisting ofL eight oL;, 1 p-e: prir\.cipall com,\.
mercial banks in Mexico and Nacional Financiera, the financing
agency oI the Mexican Government * The banks participating in the Consortilum
are as follows: Banco\.Nacional de Mexico, S\.A\., Banco de Comercio, S\.A\.,
Banco Internacionai, S,A\., Banco de Londre5 y Miexico, S\.A\., Banco Mhexicario\.,
S\.A,,\.Banco M,Iercantil de Monterrey, S\.A\., Banco Industrial de Monterrey,
\.S\.A\. and Banco Comercial ivMexicano, S\.A\.
\.II, THE LINE OF CREDIT
87, On October \.18\., 1950, the Dank opened a line of credit of $10 millicn
in favor of the Consortium, The line of credit is to be used to make
loans to members of the Consortium, who will re-lend the proceeds of the
loans to Mexican private enterprises in order to finance the foreign ex-
change costs of expansion projects to be carried out by these enterprises\.
The loans will normally range in amount from $25,ooo to $1 million, and
their term will nqt in general exceed five years\. At least five members
of the Consortium must participate in each loan,\.and the maximum partici-
pation of any one bank in a single loan is limited to \.40%\. The Bank will
charge interest on\.its loans tQ the members of the Consortium at the rate
of 3-1/2% per arnum (including the 1% commiSsion)\. The line of credit
Loan Agreement is guaranteed by the United Mexican States,
88\. A\.Supplement No, 1 to the Loan Agreement\., providing for\.mrinor tech-
nical changes, was\.signed on January ?6, 1951\.
89\., Before the line of credit Loan Agreement could become effective,
the Bank had\. to be satisfied that the Loan and Guarantee ARreements\.had
been duly authorized or ratified by their signatories\., and that\.the\.
Consortium Aereement between the Mexican banks was a valid agreement\.
Progress in meeting these requirement-s was\.slow, and the Bank was not
able to declare the Loan Agreement effective-until\.July 20;\.-1951
90L\. Nacional Firnanciera's authority\.to euarantee the line \.of:\.credit on
behalf of the MeNfican Government was defined in enabling legislation
which camp into force at the heginnin;g nf this vear\.- rerti n questiAns
have arisen in connection with this enabling legislation, as described
in Part Four of this Remort,
- 22 -
TTT Th)ANS GRANTED
91\. The following loans have been granted under the line of credit:
(a) August 10, 1951\. $73, 550, for Industrias Mabe, S\.A\.,
+o, ~ a ptcha\. rshir\.e 4for thea mornacf' e o vf ki ttehAr
stoves;
(b) August 10, 1951\. $50,000, for Compania Textil de
C! A +--,+4I1- -ft 4,"fsi, fPnv\.
VJC4tJ0±4UV\.la, Se A\., wJ Ft," prlq9e +extile &\.+; -
the manufacture of fibre bags and packing cloths;
(c) August 17, -1951\. $144,500, for Textiles Acozac, S,A\.,\.
to purchase anutomatic loomus for the-,,manu\.act4re o
cotton-fabrics;
(d) October 4, 1951\. $37,000,\.for Compania Textil de
Nayarit-to pvrchase cotton spinning machinery\.
92\. The relativ&'inactivity of the line of 'credit has been dizpFuifl\.t-
ing to the Bank,\. which has done'all that it could-in the way of simplifice-
tion of procedure to ensure that its own requirements impose no unneces-
sary burdens on the:members of the Consortium or the ultimate borrowers\.
93\. A general-difficulty springs from the fact that coommercial bank
loans for industrial development are relatively unfamiliar in Mexico\. 'ore-
over, these "creditos refaccionarios! pre regulated by Mexican banking law,
which requires, i-nter al)a, that each loan should be secured by a mortgage
on the whole property of the borrower\., Prospective borrowers may thus be
deterred, not only by the need to give security which may be dispropor-
tionate to the amount of the loan, but also by the fact that an expensive
appraisal of the'property must be made,\. and approved by the Banking Comr-
mission, before a loan can be granted\.' A borrower is reluctant to go to
the expense of this appraisal unless he feels reasonably certain to obtain
a loan\. It is understood, however,\. that the-Banking\.Commission is prepared
to waive the appraisal as far as Consortium-loans-of less than $100,000
are concerned\.
94, It appears also that the present arrangement, under which the ul-
timate borrowerp can insure with the Banco de Mexico against the foreign
exchange risk attending only the latter-half of-the maturities of a loan
and must themselves assume the risk on the earlier maturities, may tend
to cause borrowers to prefer peso loans from which s4ch' risk is absent\.
95\. Difficulties of this kind can only be nettled by the Consortium
in conjuhction with the Mexican authorities\. \.The Bank-is anxious that
thev should be resolved without further' delay\.
*- 23 -
DADMT ('nTT
Relations Between the Bank and the
Unived NIexican S t at e s
I\. POLITICAL AND GENERAL
9u6 During the period nurle e-rView, ri\.iexico Uh been goverr,ue bu I IC
administration of President Aleman, who came into office in 1946\. Pres-
ident Aleman's term of office expires at the end OI 52 and a presi-
dential election is to be held next July\.
97, The notable stability of the Mexican political scene during this
period has contributed greatly to economic progress, especially in the
field of development\. It has permitted the Bank's staff to work con-
stantly with the same mexican officials and to develop close and friend-
ly relations with them,
98\. Bank representatives visiting Mlexico have always been most hospi-
tably received and given the utmost help in conducting their business\.
Early in 1950, the president of the Bank visited Mexico at the invita-
tion of Mr\. Ramon Beteta, Secretary of Finance\., and discussed problems
of common interest to nexico and the Bank with President Aleman, Mr\.
Beteta, Mr\. Carrillo Flores (Director General of Nacional Financiera),
\.4r\. Carlos Novoa (Director General of the Banco de M\.1exico) and other
leading figures\. Ifr\. Black also visited the sites of some of the most
important projects of CFE and Mexlight\.
IT\. CONSULTATION NEGATIVE PLEDGE
990 From the time when the Bank made its first loans to Mlexico in January
19h9, until October 1950, the chief external source, other than the IBRD,
of long-term funds-for Mexican development was the balance of a $50 million
line of credit opened by the Export-Import Bank in favor of Mexico in 1Q47,
The Bank was duly notified by Financiera of applications to Eximbank for
loans-under this line of credit, but in no case did the Bank have any com-
ment to make\.
100\. Since January 1949 the Mexican\.authorities have obtained a series
of short,term advances, totaling $22\.,5 million, from the Bank of America,
chiefly for the purpose of financing the neso costs of hiehwav construc-
tion\. In various discussions with the Mexican authorities, the Bank has
exnressed its doubt of the wisdom of inenurrinn eyternal deht for this
purpose, and of borrowing at short-term for long-term development project,s\.
Finanuiter hav infdis knd ofe fiank tchn\.g th\. \.eican authorities intend in
future to avoid this kind of financing,
- 24 -
101= The largest of these sank of America loans is one of $15 million
maturing in 4 years\. The underlying security for this loan involved a
pledge of the proceeds of the TMexican tax on the consumption of gasoline\.
The Bank agreed to waive its right, deriving from the 'fnegative pledge"
clauses of the Guarantee Agreements, to share in this securitvy
102\. Tn October 19S0, the E--ort-fnport Bank opneda a line of credit of
$150 million in favor of Mlexico\. The Bank had not been notified by the
Ik,exican Governrment tha+ negotatitons for such a line of credit were in
progress, and took the view that the consultation clauses of the Guarantee
Agreements had thus been i" ringed\. In the co-se of subsequent conversa-
tions, Mexican representatives raised the question whether these clauses
w;iere lntended to cover proposals to open $uch lines of credit, as distinc
from specific proposals for loans under such lines of credit\. To clari y
the sLu ui I, "e Bark addressed a 'letter to Fnan that i
considered that the relevant clauses of the Guarantee Agreements coverecl
both types of proposal and, in' reply, Financiera expressed its acceptance
of this interpretation\. Financiera has notified the Bank of proposals so
far made for the utilization of the $i50 million line of credit~
III\. ENABLING LECTISLATION
103\. Specific legislation was passed by the Mexican Congress to authorize
the signature of the Guarantee Agreements in the case of the Comision Proj-
ect and M!exlight Project Loans\. The Bank subsequently discussed with
Financiera the desirability of requesting Congress to enact general enabling
legislation which would enable Financiera to guarantee Bank loans on behalf
of the Mexican Government without need for specific reference to Congress
on each occasion\.
104\. Financiera prepared a draft of an appropriate bill which was intro-
duced in Congress in December 1950, In the course of its consideration by
Congress, however, a number of amendments were introduced l\.miting the
powers sought by Financiera in a number of ways, the chief of which are
the following:
(a) the authority given to Financiera is limited
to loans, not exceeding $30 million, contracted
before October 31, 1951;
(b) loans to private enterprise may not exceed 33%
of the $30 million total;
(c) national property or revenues may not be pledged
to secure the loans\.
105\. This law, which caine into force on December 31, 1950, had implica-
tions, not only for future loans, but also for the Consortium line of
credit; the guarantee of which by Financiera was ratified thereby- The
restriction of loans to private enterprise to 33% of $30 million, i\.e\.
$9\.9 million, meant that the full amount of the $10 million line of cred:Lt
could not be utilized, Furtherm6re, although the Consortium Loan Agree-
ment set 'June-30\. 1952'as the latest date for the-Banka's approval of loans
under the line of credit, the new-law gave Financira no power to guararr-
tee-loans after October 31; 1951\. Finally; the\. prohibition of pledges of
national prQperty or revenues to secure Bank loans appe'ared possibly to'
affectAthe\.anplication of the nheatlve nledge-cov\.enant of the Guarantee
Agreement,\.whereby the Bank was entitled to share in any security which
Mexico m ight givA to other creditors
106\. After' SeAMring- the opni40n of infenpenAent MAeiaVi nmiin Al the
Bank informed Frinanciera on March\.15, 1951, that its willingness to make
the Consortim Loa A\.emen\.e-t effective wo1\.T-dle'r\.d on t~he receipt rf a
letter from Financiera to the effect that;
(a)\. The M\.exican Government would undertake to refrain
f,\.nw ,\.ol\.n n1aAt\. cc e IAn,,\.4 + Paw orvyr e,,+Ay\.n
debt until the Consortium line of credit was\.repaid
\.LiA 4\. IA\. 'l-\.o U\.4LV\.LL the n1Abling l\.aW UI A VVU -%AS\.L\.y
amended to recognize-expressly the validity of the
rsegatiVe p\.ledU cover4 --- of - -\. -'d 4\.r1- puug
Guarantee Agreement, and
(b) Fix\.anciera undertook to obtain appropriate amendments
of the enabling law at the next session oI the Mexican
Congress in order to provide-for (i)' the express recog-
nition oI the negative pledge covenants, (i) the
guarantee of loans made under the Consortium line of
credit4 from November I, 1951 until june 30, 1952, and
(iii) the eventual use of the entire $10 million line
OIf credit,
The Bank further pointed out that it would have to limit its approval to
loans totaling not more than $9,9 million-made not later than October 31,
1951, unless prior to that datellegislative modifications as in (b) abovs
had been duly\.made\. In a-reply, dated\.April 9,'1951, Financiera stated
that'it was authorized by the Mexi9an Government to give the assurances
whtch the Bank had\.requested\. A new enabling bill was'introduced in the
Mexicaz Congrese ip September, but tad\.not, been passed by ct-ober 31, T:he
Bank will therefore be- unable\.to grant further loans under the line of
credit until the\.bill is passed\.
IV, COMBDNED WORKING PAITX
1070 \.At the time of the opening of the $150 million Zximbank line of
credit in favor of Mexico, referred to above, the Bank was considering
the scope and purposes of its possible'future lending\.to Mexico\.in the
light of an economic survey-made by members of its staff iin 'April'- May
1950, at the'request'of the Mexican Government\. The'granting of a new
external credit of this magnitude, together with the $15 'million-Bank of\.
America loan (see paragraph 101), clearly cal4ed for reconsideration of
the'situation\. Pend'ing such reconsideration\. the Bank-informed Financiera,
in December 1950, as a result of a preliminary request for a further loan
to CFE\. that for the time beine it could consider financing additional
- 26 -
projects only if the Mexican authorities would undertake not to avail,
themselves of an amount of the Export-Import Bankfs line of credit equiv"
alent to the amounts of any loans that the International Bank might be
willing to make\.
108\. \. In February 1951, Nacional Financiera proposed the setting up of
a Combined Working Party\. consisting of representatives of the Bank and
the Mexican Government, to assess the major long-term trends of the
Mlexican economy\. with Darticular reference to lexico's caDacity to ab-
sorb additional foreign investments, -The conclusions of this Combined
Working Party were not to be regarded as committing either the Bank or
the Mexican Government on matters of policy\. The Bank welcomed this
proposal and the first meeting of the Working Partv; consisting of two
Mexican and two Bank economists, took place in Washingtpn in April, wher
its ter\.m\.s of referenre 2nd program nf ntmriis were agreed ipon\. Siuhse-
quent meetings have taken place in Mexico City\. The Working Party is
expnected to present its repnrt shor+t2y
109\. In a letter dated October 15, l951, M\.r\. Bet_tainfnrmard the Banr
that the Mexican Government was authorizing CFE to present a number of
the Bank granted loans for these or other projects, Mfexico would not avail
itseLf of a correspondingamour\.t of t+1\., d150n izllin line o- ---A,+ it
being understood that this arrangement neither implied that'Mexico's
further loans toMexico r t c t wslmitllo fi gr50 mhaiod nor precluded
further- loans to Miexico after the $150 million figure had been reached,
4:~~~~~~~~~~
44 ~ ~
1\. - -- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ N~~~~~h
S~~~~~~~~~~~~~~~¾
*1 tI~~~~~~~~~~n
I ~~~~PAI
* \., ~~~~~~~~~~~~ 't*~~~~~~~~~~Q ~~~~~'1~~~~~~ ihI~~~~~~~~~~jp~~~~z;ay- '4
I I ' 44ui' -i V1 :y
The Mexican Light and Power Company, Limited
Incorpor-ted under The Componies Act (Conodc)
H E A D O F F I C E: 2 5 K I N G S T R E E T W E S T, T O R O N T 1 I, C A N A DA
MEXi CO C i TY OFFi C E: 2 a\. CALL E DE GANT E No\. 2 0, ME XI CO, D\. F\.
0
AND ITS SUBSIDIARIES
TI li:N\IEXC5ANT 1ELECTRN;U LIG(HT (l0AIPANY, LHHTED}\.j
CIA\. l)E LUZ Y I'FUEi{ZA DE PtACHUIlJCA, S\.A\.
C IA\. \.N'EXICANA INItERI)DI0NAiL lIE F UERZA, S\.A\.
*I 1\. IE FUI:ZA DEL\. SliR(tE,TMOTt TiP ?VtEX!(t- A
(IA\. lil Luz Y FuERtZA LI\.EICT'I1CA DE ToLUCA\. S\.A\.
CIA\. XIENICANA HIDI/OELECTItCA lI DE TIERHENO\./, SA\.
1:'DIFICIO DE LUZ Y Fu'tiERZA, S\.A\. 3J [
1\. NJ\. GUIBARA, S1C\. 8(:)1ES, S\. EN C\.
Directors (CEorIwi I S\. - - S i-s - l- I I-'ll- -
-1- - Chi irmn
I'AtA;N ZEELAN - - - - - - - - - - - - - - - J U \.
I,\. \. (IAYD N - - - - - - - - - - - - - - - - i -'ss l
B\. 11\. Bi NI)NIER AIl\.I\.AX (GIAYlON, K\.(,\.
RIKIN(] BIttD/NNS I )\.N I I) C\. G UN>'IT
I?\. ( *\. \.t vp ( 1\. r\. 111:XI M
W\. i)\. D)A WiES HEI NIRX \. I-St1KI-It
\.J\. IDNAI\.u D\.)U;NC,AN SIlI lHE':(NAL\.Dt L\.EtP'EiR, Kx\.-'\.:\.(:, C \.t\.E\.
JUAN IM'IAI''TINEZ TIl\.IEDl\.\
0
iitittt/
ItA- - - - - - - - - - - - - - - - AIAMIE L\. STiENWARItT
'e"\./y :;I -l - - - - - - - - - -- i\. \.\AIENDEZ AIMENDAtIZ
Trustee for
Bondholders NATI tINAt, T1USIT (CIPANY, \.IMID - - - - - - - - - - I I
Transfer
Agent NATIONAI\. THIiUST COC)IIANY,JiANtI) - - - - - TIN)lNITON) AXI) AUNTI'iEALI
Solicitors Bi1A NE, AN(I,I\.N, OSLER & CASSEI,S
- - - - - - - - - - - -ItONrT
Auditors (,AHKI KSION, ( OI(tVN &C (
-- - - - - \.- - - - - - - - - 'T()tNT
!I !t, rr\ X1,>,''w,,,I,-,,rQr &\. C } (- - - - - - - - - - - \ ICO CITY
:W-*Xz~ Ligh an Poe Copn L-rld&
39t,,\. \. h A\.ua R \.po61rt of th
I U(I GIUl IJIA l\.llo\.;Clv 016' ,1I \.'JL'L' j
7'/1 7'11F Sll IiI;l() LJL)El'S:
Ir ae iioll oi])reeol begs to subsmit its AnnaualR:ep)ort for the vetl 19)50) to-
gele gvtl ;oslitedl ]3alanc(e Shleet\. of the CJOnlP\.IIy attI its suh)si(lialrv
_- (\.oIip\.4Iinie Q atH9LItfonliaecl'91UH kUtJII\.di1 \.I t\. diiUl I\.~ oss\.t\.tjlillJ I i of )iisIIicl\.tVi(
Rlain1ed1 ,SurPlUS anid ,StatemIenIt Of COnSOljIdatedCcI Clelleal RCeerV e\.
T he Airnluall P epol 1 of t;he C erreral M!anagter onlt,ainling add (i t;iOl:rI 11ff dnn pl)llI c&ol-
cern i rg lhe mera t\.ions durinlg the yetr l9\.-,( is also apJpendcedl\.
PESO RATE OF EXCHANGE
'rihe peso has remalinedi firm at l,he r\.tte of *''\.ti;) to) the Unlitedl Stales diot:lla att which
it was stablilizedl in 1!k949- as rep)orte(l last year\. lhea aeragpe ratte forl the peso dluir ing l')95(,
il tel,'111S of' C':triad ialn currl'ency, wa':s 7\.9 to th;Ile dollar eomll)arel \\it}l~ tire avera\.ge rat\.( in 1 94!1
of{ 7'\.79 tin, tire oli)1:rlla\.
EARNINGS
'tlire corwolidl\.tetel net operatt,ing revenute for 1\.9;)t, in terms o-f Carad\.:iaril curriency,\r \Viit,
$!2, Ot)4-(,)98 cor11par1ecl w Mith 1 1 \.27 D4,77 in 1')49\. 'fi'e rii its ase iri the gross Iar fie g\.a of 1) 5()
as conlp1led witlh vi'94, amounstintg to B$:i,2c7, ' hct is chiefly attributable to Ithe Cuopa\.ny'
new r iat;es 'x hit Ii a\.s rep)orted lalst yea\.!' becatme effee tive ini Decembller 1949) \. lowever, asF
s \. r \.-1 , , - s l r - 4\. -\.1 D1 - \.4 4 - ,I I 1 1\. , I , 1, o\.
ICSUll, 01 I mc i estrietionswhichl,hadpllU to be In poset Ih :;ne authoriti lees 0n the cof,suriptollr 01
elec'tic energy dulinpg mnore than mont;hs of the year, t,he 195 sales in kilowvatt hours wver(l
practitli) tpeo OlAis in1eained fii the the i L' Report of itIed Statesl doll:1"- a" twhie
it wnssnh~iiz I1d in 94a i-pi ted 1A)Ins et\.''i vi,g -t f01U kiC ltUI VIMl\.g 19;50,
suistintio iInead\.tse in operatintg expenses in 19;() is com pared w ith 1949, was c ausedll
li1It'ifll Iii)\.l!' 1),' n-ip liiliilte' fiZthe'ViiOP1PCt'li(\. gl-el"liC I '-m!l \.thc 1 AZX 0/\. iCu,ldil ;uuH 'ml inl\.;'\.lS ill \\\.'
grfnt 7cl to thi wokers fromo May 1 19\.50
As a\. resulit of a eareful studly meade dlu'iog t\.he year bsy the Compan\.)y's engirrer wa
slightly revised rat;\.es were appliecl in provicling depreciaion fo the yeagr an\. These r(' x950 (
rates confor'mt to mloder n prac tice t aking into accoun1t oper at;ing conlditionls in 1\Iexico\. \ tlu -R
was also nade with respect to amoltization of the boo0k valube of thle C'ompany's righct\.sp
franehises whiotr a\.cts anod goodwill for which no speeific pl ovisioir iS been made in past; ye1F v s;
anldt with tghe year 1\.95)0 t;heroe has been inaugurated an annhual plovision for' the amort,iou it nor
ol sutntinlira] i:nre i\.sset,s\.
ill lt- 1\.11v 117 ho bi-ho\. yrn r\.4;c '11i 0 f,1T,1\.'11 w I
Trhe total consolidated provision in 1 95() for deprecialuoi of physical assets and atolrti-
zation of riffiht,s, frn,nehi'ies, (O,ItAIVflP ' tId VOW]xvill minnoiixI fS9 to 79 ), i 1,(100 \xhieh i'nh liucle
1 0,000,00(0 pesos representing a provision for' retiremnent s andcl rep lacemelnts set, ttsidce iII
accoldance with the regulationis of the Law of the Electric fnclustry of Mexico\. I'or coni-
parison, the consolibdated provision for dlepreciationi in 1949 wVas $2,27<,:30()\.
\.-As JxplJialied ill IotcU to-1 Uthe l,Ul- heclJ i i\.U ll ;i;Uil St,iFIUIllU,IIA, I ild '\. (JiijJp tiv lliy ii lss
for the vear 1950 were insufficient, to require any payinent, to be made in respect of' th( onil-
panv s obljogatiori, uncnenthe I biz \. of ~t he b'1nit-,fie\.~ i' Indlty to p:l :I,uu!! ito tte('o\e: r:n'
all amount of ulp to 2`%7 of t,he rate base value of its properties other t hi l it\.s lpermlleairilt\.
hy,draulic works,\.
AS a result of the reorganization of the ('Com1pallny s caplital st ru tn-ce ull(lel the Plall of
\.-1 JIa Ig e ic 1, [Ute P975 0 lfl:ti I\.ial ha rgeS 0il full -RIC (I d) c an rU;U iar l WCFe les-,s rnail ill I \.141)\.
'The Compinlay's financial charges will, of coUrse, increase materially as further funds for the
S/I ict;-,lrgrnarni are dn dwwnI fr\.l1n ib} rI l-1- 1-11 \. I -t- 1 1 1
Of' the 1950 financial charges, ^2 'I ,cr40 wa(s charged to const ruct ion account as lb)einig properly
\.1nlj-n hic:1e to thoe cost of t,he now \vork-
The consoli(lated earninigs for the year' 1 950 will permit payment, oi \.J uly 1 next of the
first, year's i'iteresi, on the (Obhi ny'S new 5 1 -% Cumulative Income Debient\.ure btocR\.
In 1949 the ac(ciumulated ileficit to Decemlber 31\. 1949 Was t1r1nsf'elled t,o (Weierrl-
Reserve\. Coinmeiicing wit-h 1950( the Profit and L\.oss balance for' t,he vear is Il ing carried
forward in Earnlel Sur'plus Accounlt\.
TAXES
Tihe Mexican l Ineoie 'r'ax l,aw was revised bv decree pub lished on December' 30,
--I-\. - - 1\.-S - l~~~~~~~~~~~~~~~~~~l C~~ - I I T - I
I ;l\.) U , Ip w ie- o\.:1z-l ' -15 airtd i) t ItU~ 11 Iu iuati I lautIJ 0 UIl\.~Ai LMIii ZtIjJJI MIIi[- HU I111 I 1 U l PitIILliAh~ I * I ;yv) I \. I) rliC[ic - lie
inicreasedl rates provided ii t,his d1e( ree the Colripavly's taxable revelluie ill ex(cexs of I ,00\.)0,000)
BALANCE SHEET
'T'he attached Consolidated Balanie She'et at I)ecenber 31, 19\.50 shows the ('lialiaes
ill the (C'opn0lpy's capitall Structure r'esultilng froms the Hlal Of \rallngeViLerit , aplp0VeCd b)V t,he
slhar'ehlolder-s anid bondholders in lFebruarYv I () arald which became effect,ive in May 1950\.
It, aLso fleets the Corplipa'lls new filla ncing\.
zA,S --t 1 res of the PI*5 of A Ir:-l'-\. lil-f, th fll s,' \.d' flt\.l 6 inpan\
of S 3 ,244 Preferreld Shares of t,he pal value of $13\.50 each anll(l 1,77G S3 C(onmion Shiares
of lo n( oirxmli Ie 1__067i-(t( (if the ( oUnnioll rShr o i-edi 1t from i !h o - ( cl'o
in t,he 'lain, of the forimler Preference IShares, SecondI Preference Share-'' and Ordinar x Sha-es;
t,he re niaining 711,036 Comimont Shares anidl all the new Preferred Shar-es were ussued to
National ''Trust Companiy, Limnited, as Irustee, for distributiori, as pr ov idCed iit the Plan, to
the holders of the Company's formner Cumulative Incolme D)ebenture St,ock\.
'I'he new Preferred and Commoin Shamres are carried in the Balance Sheet, at $4t0,t35,6i0(t,
h:eingS t,hc aggEregatec of thc boo!;~ valuc- of +the -Ict Ih,EsS t,i )l('ja I-n;t of le *;kl
I ricomie Debenit ure Stock\.
Durinig 19;5( the Conipany issued $1 t1,369,93() UnitedI Stal,es clurTelWv of its new First
Alortgage and Collateral Trust I3onds and Debentule Stock of Series \.A t-o National Trust
Conillany, Limited, as trustee, to be delivered in exchianige for- thie okic First lviortgage Bolnds
of the Conipany, 'T'he Mexican Electric Light Company, Limited and the lPachluca Light arid
Io'wer cv '\.-n prcilJIl \. It \.' xvl l)e r-4lel L l 1-t t Ihe UIC Ul MI[U i t l-UVI[UCt IJUl(U' \\ ir grlniteu tie
It
option, exercisable ul) to [Decemiber 30, 1950, to receive frvoim the T'rustee bonds payable in
Canadian curren( ', and as t result the amount of this issue payable in Canadian currency is
$9()1,692, as showxn in t,he footnotes to thc Balance Sheet\.
n)1tillr I 0"di (\.!l (\.')nnOrmin' n-Iv issu etil \.4 21 \. 91tAO UTn;fnl -\.!\. vr\.r,lnrind\.- n\.f i l011
a !2% C'um1l1a,tix I 11onie Debenture Stock to Nationial Trust Company, Lin-ited, as Trustee,
t,o be delivere(d in ex\(hia lage for the C'ompap ny's 0o1l 5"% Second Mortgage Bonds ad D)ebentlre
Stock\.
'I'he Co1nsolidateel Bi^hn(e Sheet at December 31, 150 reflecis n the- issue Jtiinicr t-hc
year' to the Fedceral Comlimissioni of Electricity of $5,530,000 Unit;ed States curlenev of the
Company's First AMortgagre and Collateral T'rust\. Bonds of Series C in settlement of the United
States (dollatI loan of the same anmount owing by t;he Mericlional Company, a wholly owined
subsidiary of rhe Mfexican iUght and Power Company, Limited, for funds borrowed for coi-
strietion of the Tacubaya (diesel plant which wvas completed in 1949\.
Al 11 \.t, iVI 'I _asv18 (1111- t JI '1 t1 \.L I ti U \.JJII\. W1 v 'C1 IG\. a 10\.n\.D&UVL ALIIJIl ] 1 0-; t\.J IA{} ,11v;
International Bank for Reconstruction and Development in r espect of funds drawn down unidiel
1-to (-imnqT- v 1], n leerrrnpylt\. witfl I\.hi\. BRi o- irnntjlfoult\. ti to\. T8 0O) in Iti;lil p t'des
currency bonds and $164,50() in Canadian currency bonds\. 'I'he arnount of the Bank's loall at
December 31\. 1950 ill respect of which Series B bonds had not, vet been issued at thati dlate
anountd t,o t-h equixvileniti of $1,470,075 ITnitec States c'Urrent\.
\.t -~~~~~~~~~~~ I \ -, 11 \. w\W1 \. tIe o\.scurA{\relicy ,,] \. \.I
) I i\.:JU I1I nloIIt [ t 1 o 1) 1 - 0X [U } d IS Ut iue I tl t ±11 IU J |)t\.1) f Jl I tuttI U gi, -tt (I tl i I
by N acionl Iini,niciera, S\.A\. amniotnled to 12,614,199 pesos\. No First Mortgage arid Col-
11otI\.i T rl'ri ustnfic z -f "OrCies n I --heir- issued as ,-eZC in r espec(t of this l-n\.
It shlould be nmenitionedl that the amnounits borrowed by the Company from tihe World
Bank and iNacioi FiiFanciera, S\. A\. to t;he end( of 1();)O arc not, a\. proper indicat ,ion of the
act ual1 tempo of the plrogress of the c(istructioln pr'ograininele, for the reasoll hi( flyl that large
o --el I'\.>t (1\.elil^,y\.l eqoipni]eiit; arte inl i)rocess oif iii<o'iuf atur;le audi I tiCe '\. 0111) LilY lili5
orulers ror Jiuaclilrierv ani (L11H111t r I F("3( l3l1Z tLY tIILl , )HR1V I1 S
so far been required to nmiake onIly the iniitial percentage pavments on t,hese ordcers T'his is
\iccl(x Iby< thl!,ic favh\. 1- f,t 19(_\.1-;!_ :1,1':-,( \.o(Coli\.t;>\. i ""l(?lls ;Itder o;(lers
foir materials alnd equipment fori the progran\.l\.lilc aggregatlinig l)proxiniat,ely $145)50O)00 U\.S\.
Otiler importaInt, changes ill the 1 () 90Consolidated Balance Sheet, \.S comip are(l with
1 949, a\.r'e an in cr ease( of $5, 79 S,23 in the pr opei ty+ a ( oun t rep reselting the amiount\. (of capiht al
exl)enciiture diuritg tne year less propetlyi reitie(i, anid 0 (consOiiolidion wiith the reserve ifor
dlepreciatioln of the p)rovision foi amortizattion of intingible assets to wxhich previolis reference
1 'ri r~~~~~~~~~4" ~\. _ , I \.A'_\.n
h\.s l,een mi-adue Ii 'thi's report\. 'L'he conlsolidul,LUeL *ee ve for deIeeiLttUVIioll aic z1oi,j1)Iz\.t,Mio
at I)ecembher :31, 1'50), anouniting to $45 ,463,303 \.s shown in the Balance ,Sleet, is considleredl
snfl,ipuTit f0t I h (O!l11)Wt!!x S'I'(\.'1'oil r ojijit-I!vlt,oo t\.o thi onId (tf 10-)() folr\.iet'i,ition of its
physical properties and fo1r amortizaition of its rights, fralichises, contiracts aid goodiwill\.
During i350) inhe Companiy sofi tIle remarlaincer of its investment in Canacaian Governr-
mienit securities wvhich, at the end of 1949, am11ounted to $450,000\. I'he heavy requirements of
;,he Ci-pn-m-s --isu- t-ior\. pr ogn-amm over ancl above the ,inmoun s \\!:c hie its abl'e t-o bor roiv
(III \-l,lllpally Ill g lll iiU 5 11\.1,0) 5tlSjt10\.1 C 111 II It, L tt I L, 01110
from the World 13Bank nncl Naeioinal Financiera, S\.A\., is naturally placing a severe straill of) the
('C-\.rnn\.aro c: z A0itnLir ("1l'ltl7i 0a1]o it ic:(( V\.EZ ho Iootr shqt tho C'trrttt lITlo 'CVi I htwsi vt UlflDoto
on a rediuced anmd n ir row margin of working capital until the const;ruet;ion programmiie is
colmpleted\.
CONSTRUCTION PROGRAMME
Details are given in tlie Report of the General Manager regarding the Constructionll work
eU1:l'ed out durilg 1'-\.350 a)Idthe posit\.ion at the end of the xroyr of the rinrintql insta!!ations
in the programimie still under constlutiction, namely the Lecheria steam plant;, the Patla hydro-
electrie piroiect and the tranisimiissioni lines between Neeaxa and the Federal D)istrict\.
(Cowtiw,,ed ,i" PatIe 8)
r
*Et111!E1-|S,!t~~1
XSl-|;Al1 iiS
O"Od~~~~I2:~
4~:- - E
--~~- - I"
71 I~~11
III'e \. te(rti'!!Sll!!Si\.ll,O! f'r \\!Ie IIf!('!' iS In:'CI(' !eo\ leh proesenlt,
construetion progra mine sholuld b ul)-i in lid) N on pletedl I) v the end of 1 9'2 itn accordicce
\vith lhe estimates mlde in 1949 xxhen thIe 1P1:a of Arralngellient, lvwis subllmltted to) the (Iom-l-
panv's shareholders and bondholdters\.
At that tiime it wvaS eStimaiwi di thlat I'lle 101 ti (W)St oi the programmnie woula aoulit\. t o
I he equivaleti l of a-plroxiimately S42, 00,0((00) United States cturrency, com(posed of ,(f ),00) ,00(
p)esos for expendlitures ii I\'l(xi(co represelt iigi t he e(quiviixent, of alpproximat,cly \.$ 1 6,000,000\.
Oii the basis of t;he most recellt estximites, it aIppears that t}liC total dolloI (0ost5\. till not
exceed the aforementioned figure of $26,00),0\. 1 It, has only been p(ossible, In the face of l'iSilig
costs durinlg the last, t\.wo years, tso keep the foieigii cxpeidit iiies withiil the limits previously
estimated by the prompt, Ordlelillg Of eQ(uilmJIll0I itCIlred for the programme and this ii) t;urn
was made possiblje b)y the ineiculioIis care thatt u a(i beetn taikeIn ini making ttie preparatory
studies and the advance- planninig and w\oirking out, of the niy deleails of the programme\.
T'he latest; estimates indicate, however, that, the local cos(ts of thle programnne will be
the equivalent in pesos of approximately C)9,000,000, an inreatse of $3,000,000 over the
previous estiniates\. Much of the local c ost of the plrogr ammllne is foi labour and, with risi llg
labour costs and :dlso the llncrease in the eost, of buildiilnr materinis thlat, are purchased in
Mexico, it is inpossible to avoid somae increase in the local cost,s of the programme\.
It xill be litdoed Ihatt onll) Ihe -if tIhIe Ial est inates , the total \. cs'; ofoth ra-n-
\ill exceed the pirexiously estimiated t\. ost bx less than 1(1% which, u ndler pvaleitt , olldit iolls
of rising )rices, should be regarCded :S vei\v sat,istfatorv\.
TIo the enld of 19)5(1 fOleigli CN\l)C iIdidtl(S Wtinder tHie progran 1c aggrega tcd Ippioxi-
mien`i eLI T mc,-iiii5uii crxpiCt, i s i ii i t in11 xm it(i :l' it , n ;n li,c(i iii [i utceiixulvleiit,
of anpproxi m at elv $4,200)t,000 kniing tot taCl expenditure of $1 1,ti((),()()()\. \.As ncl tiotoed ( earlier
i i I)o\.l, tilt, f^ I ~ p t, O l ls of 11 tt- A' 1 li\. tLj- c111V3 [1C IA 1 Uo 1I9;t 19! 1
refle(t\., for the reasons st-ated, the ollre rapid progiess of thac tintUal dI('Vt0elol)iiClt, of t(he
I'he prresent initeriiationa\.l siluatioll an(l the clefence progrianme in t;he Unite eI St i tes
:lnld Othe-lr COUHlti'iCS h,ls resuilt(ck- i;;th lile,lti;jU;ULUtzioi ofL tAi 1X01bzSOll :111 inm-iint r:iiiiww iil
short supply ani upon the uallufacture :an,1d dGelivery, of many importint i(,ems of m i hllnt'iV
*a,(t az,r,ninv,,ganf ?t !eUaIi('' faat' I hl- (_011a\.i,v''z S,i~ ijiri ia-aniOl n1aaa9aiaa,na!(:? i'i he vtr- rnl! l;\.tv 1-
alreild7 ulinder' order dll ol' t\.he pirincipal itet is of nmichi nerv and (equipment req uiLred for lhe
coliollet ionl of it,s )ioux\.iniinitc tiIld \. x oivlded thI in omiseiid delixery claf es are inet\. t,lhe? cotIst;iic-
tion pirograimmine should lie substt inti dly coinl)led t y(Cl l h th en( of 952 ais oiigiially est,inlated\.
The (ompauilly is making C xey e-ffolt to obtaill the l nee(lecI cquipimentt in timne and, gencerallv
speaking, has been able so f r to obtailn Cit l cy tl(ies x ire sd usfn t oi x but the sidtttiatOnw
is bcconing more, diffictilt, evi v dayx Itd it i; im1)poSsible to folr Cist hox these matlters will
develop in t,he futur(\. It, is thi( (oinpam) ixs bedif th t dh eie is- a proper appitlmat ion in official
circles of the extrenie imiiportance of the industria\.l developient of Nexi(co a-n(l that-\. tills ill-
dusti\.al dlevelopliient cannot, be maiiitaiitlnd and expadiie(i unless there is an adeqtiualt eSUp)ply
of elect,ric energy \.Ac cordingly your Board is hopeful tha:t these imp prtanit, (onsideiations will
bei \.iiUeii lullv inito aecouuuiit aicl i,i\.t 't,i ,OuItiiUIx i\\Ill )t- ;Mille U,o MA\.ill tiui Ri t e iiit-ctt1 iMaii<tis
fol it,S conist\.sin't\.irtoi programm n :111(1 ill timle to enable completion if the pograinme onl
HYDROLOCGICAL CONDITIONS
T'he P eport of tel c Gener\.i 1aiager cionlt}alins det\.ails regarding the \water situautionl\.
WVat-er storage in t\.he (Conipany s ieseixois h:s not, been salisfactory for the last few yearis
durini ig wht ich M'exico hIa:S suffered frI 11 a cyelCle (1 colipllnpatiV (xdoLighlt;\. It is tt be hop1)ed th:t
13
this period w-ill soon end and that, there w\ill ag,ain be sufficient rains to fill the reservoirs arid
enal)le normal generation of energy in the Company's hydiaulic plants\. In the ineantime, as
stated in the Report of the (Ileneral i\lanager, it is expected that,, clue to some slight improve-
mncit in the water situation in 1950 as compared wvith 1949 and the other factors mentionied,
restrictions on the use of energy will not be necessary during 1951 tunliess some untowardi
event occurs\. Nevertheless the water situation remains unsatisfactoryv ani( hampers the
I A 12I11
T'he Compiny's relations with the leaders of the union of its wvorkers have soniewhat
improved since the settlement last Aay of the labour colRict which resulted in the workers
receiving a 1\.5% coalitional increase in wages\.
Studies ate presetly being made by the appropriate Government authorities to deter-
mine the effect of this increase in wages oni the Companv's rate of return, for the year Mav 1,
195 0 to April 30, 19151, as fixed by t,he Tariff Commission as the hasis of the Company's
taariffs\. In the eventi these studies show that the Company's irate of r etur n h:as not been maini-
taimied, as is anticipated by the Company, it will be necessarv f'or the authorities t,o give
consideratlion- to the manimer in which the Company is to be compenssated\.
CONDITIONS IN MEXICO
The remarkable advance of recent years in the industrial and commercial development
of Mexico has continued unabated during,i the V'ar 1 950\. Production in most lines of industry
is still increasing and durinig the year many new industrial concernis commeliced busilne\.ss in
the ar\.ea servedl by the Comipany\. The populat ion of the Federal District is growing propor-
tionately; it was announced recenitlv by the CGovernmeni Statistical Bureau that; there are
now over :3,000,0()0 inhabitants in the Federal Dist,rict and over 2,500,000 in Mexico City
proper\. in this coninection there appear on pages (i 6ld 7 of this report views of soline new
miioderin buildings which have been erected in Mcxico (City and which indicate the remnarkable
development of the city in recenti years\.
Agricultural production has continiuecd to incicase as a result of the Governmient's
irrigation programme andc improved product,ion methods\. 'rhe agricult ur al achieVemenits of
recent years haave placed iMlexico amongst the counitries able to expoirt food\. WAVith the excep-
tion of certaini grains, Mexico is no longer dlepenidenit UpoII inmpoits for her national cliet\.
E i i g\.1 c1 1(JI5 n Ith tO l'i\.;t I itIra e T inT- -I l ,itC 1 dIn 'I ? -ll lI-i 'II hi t lo t I v I' vl zollft C'I -rI-IT
important invisible export\. It is reported that the toUrist trade durinig 19() 50was >1)0 greater
thain in 1949 amid therc iS every indication that Mcxico is becornina incre\.Iinglv l)oprlar as a
vacation resort, painrticularly for citizens of the Uiiitedl States and Canada\.
JIn 1949 iviexico had a favourable balance of tfrade but in 1930, whilie both exports
and imports increasecl substantially, there was an unfavourable balance of approxima tely
dtit: ,()OO,Of) eoscue,iti unde;rstood, to an_ eaigofsm f th I_ tlitolso1i;pu l ;(
Uk, kvlj~JJU "kill, A 1 UiUC 'AUU UU dUII U1,d0L1 t 01-11 pe o u ,Jk ,-" IIK UtU1"L ,11101 iIIIJI1 iI
to the inereased cost of imports due to the devaluation of the peso in 1949\. fIn 1950 there
wa,;: hmowevr,r a fonir1ahle halaq1nncer of pqx;mpnf-t, n\.f--cilinnr to rrt'\. isrsu' by, tho I*ntI-
of Mexico\.
Jimiflationariy coilici olis are present, in vLexiCo, as clsewnele, ainu uthese nave beemn
aggravated by the heavy influx of United States dollars during 1950\. The Government is
t,aking measurs designed to *cducc domestI c - -liC, -ueh Cas thc jk l of\.-\.- cxp,ot U)of Ut
certairi essential fIoodstuffs and certain materials, uitil domestic needs are satisfied, and the
makinfr of C\.'overnment loans to furthor st4imulat;e agricultural production\. The general cost-
of-living index of the -working class in Mexico City rose from 348\.3 in December [949 to 362\.1
in September 1950\.
I,
1 \.tilC 9(19\.5 thlle U llited St\.ttes awll d Iexico Mitni)COed the caiicellatioi, hy mutual
coiiseiit, of thle 1949 Tra'lde Treatv hetweeii the two m0(lintiesC totil caincellatioll to become
effective on\.1 Janitiary 1, 19)5\. lloi SOflie tiie prie\vious t;o this\. XMexico hac l)eeli applying,
with the agreement; of tha Unite( d St ates, quaint it itive irestrictiOns oni imports fl'omIl that
countrv iII order to recdu(e the then setious draini on I\ lexioo s (ollari resoulees\. Qn O January 1,
I951, upyon finll ( ctna eellati l of the triacle agi'ee leiit, Mexico re0moved it's restlrictiolns Onl
iml)orts frolml the Uintieci t ite'tanesut aidopited short\.li ithereftir a tit w tarifi sCheduie and an
import liceiisiiig system lesigine(l I)partly to discourage the importatl-iotn of Itluxuriv items and
piarfl- to pUrot1e1t) I"s (vv1 Inldusti ies\. Aert\.inI el\.lae oft (i (11)iIet 1eqltlred hy OLII' (Lo011paiiy
for it\.s coml4touctionl programme are subrjec t to these netw taiil's\.
T'he fillillciai positionl oif Mexico remaiis fa voult\.i The niational incolmle showed a
substantial ille rease in 1950(: :md, for the secoii(n v e\.Li in Sll(''CSeSiOI, t\.he public treasury showved
a sMiPllus\. I I Ltt -11 LA"C l l -r:uui (J es t,h 1\.IL I I I\ (of o'1 \ItO e iiic easxo v IL as wVell as1 money iln
Circulation, (redit :ncl iidvestnient$ s\. ns a cti -infla tiOI ary meisuire the (overnmentt has
lii- en U n,', i I iin ni,,,,\.i i- I I\.
t\.teI, en tei \.c'L1 p raf tt bId i Co redCuee Iwiibb , I iii eileu\.l baib'l,tIIII to1 r\.dri l I ed'I
h'e ab)ove b)riii sllmnmari of genI (l ollditions in Mexico di cluri- 19:0 indclicates the
gre\. adv aIMnce WinI is si,ill triaking pIace in ine eeonomi( and industrial dievelotpm tent of MviexiCo
and her present favowuible tfilnll(ial poSit,ionIl IFlo\eter, it ill he fully appr (eiated that, the
jIbbli l lb Jhlfl(( o \.l IChis Ill l;)of ill the folA 1l ii life of I l/txicJ Is\. e ,Ill depeIIli ellt
l1)oi aln a\.lerjua\.t e upsl)pl of eletfricity foi- it,s indtustries: and therefore the completion oni
s\.cldclule of orOU__ C\.O!'Illy'S (l-ollstlru('e1l()!m1 )1(" ztnirle iS of par,,amllou tlllVol (11ta1e since a
serious shortage of elect ritity is ot\.herwxxise bound to result\.
CHANGES IN DIRECTORS AND OFFICERS
Al Ht, !;e zt Awm!dE1! _klopt'no (if tll' ((Xcmm1):mv\ lle!( inl Sep-tembe!re !1050, Rar\.onl R4ichn1a\.1,
Mr\. \.J\. S\. 1ollnested ad 1 Ir\. C\. F\. Imifley rettired fromtI tie Btard\. 'f'he Board wishes to
expiess its ampreeittion of their services t;o the (nolpaln \. At the A\nuiim\.l Mewtinif there were
elected to tlhe Bloard in their steadc S'ir ReLginiald Leeper, G\.('\.I\.(-\., (B\.B\. , and i\MJr\. 13\. H\.
Binder of 1,oniloI, Eingland, \.c(l I \.i Juainl aIr ,tinez [ejeda of Mt xico ('ity More reeentlv
i\Ii W illiaml MIelnschlaert, who for some y ears has rellde'red jillport\.ant services to your C'om-
pt, :n s a in ember of its Board, fotund it, IleSe1S:ii (Ihic to other respmnsi bilities t-o suL)mit\. h1is
riesimlition i which was ateepted with reireLt\. He 1lis b)een relplacdci oni the Board by Mir\.
eBi16 ]iioselns\.
])ue tIo thme ill eiased re- pl)(nilbilitiet at T(Ir ollto OftlW( e, il\. I \.-\\. (I iavdcln ha:s lresignied
a, ,Secret\.ary of the Compny)1- butbill, ConttillUCes :rs Vi -PrIstidenllt ill (hll:-ge of Torontto Office\.
1vir'\. Grienie i\. e rttt, his beei aIppolinit d to thl post, of ,9ecretall\.
STAFF
tlhe ieorganizatiomi of the Coniipany's eap)ital st rt utire, thle inew tinino ing, the heavy
('/)!!1 't!\.'iO' p'O,,''allile 1111 \.lll !lit,'l':l l O fX'lCflSO!l (if +t\.ln ( 'lb llj)lli s o ilc: zIi ni(ll inl \.n lii
tii!istiiiitiOfl i~~~~~~~ogiaI~~~~ and! tl\.- "Interial ex-aIon, o the ,n - U1-1 JlI~tl1,t
placed greatly nwirceased de-in-1nd5s (II the tnie alnd eiergy of the staff, piarticularly the seniol
officials\. The'ese lhen v ol liL,1i I iols hlve been llet\. lovallv and IIfficiponv t\.l !m vtlt Ol!! BOat( wishes
to iecoid its great :tppreeci:tiou of the services renidered by all the officiats altid staff of the
Collpanlly, inll Mexico aiild Troli)lto (,durinig tle year 195\.:I0\.
lor the B3oard of Directois,
kGCorge \. viessersinithi
TILoMilto, ('aiacla, C'hairMMIc
I"liZIA, 1 1, 1 '-)\.
7i//it mp/(o i8's /pI/t/ic 1s to iX e toi Ule press riMerly ofitemws 0I bl/ilcr mo?in/lh/s \.hrelders desirous
of ming /l0i7 1/ Cil 11/ Immes ce)C 0p 1 tihc 1it1(ili 1/ list to rercive ae copo, of tiCe q/0(arterlyC eartbi/gs stlele cmls directfrom the
COb bIPall / bib t11011(l azr,dr/ri tl/ei rceQ/IC s ta lt'i- ~le I'trl]
10
II
GENERAi IVINAGER
7'0' TNIE BOAII 01i'F DIRZECTORS',$:
h bee l;o submit the followina reoort on the omrations of '1'he Mexican light and
fI Power C'orripaiiy, DLimiteclI anid its subsidiar y cornpanlies foi- the year einded
Decei-nber :31,,1950\.
Ats is custornixy, the amounits mienitionied in thiis r-eport, except wvhere ot,herwvise stated,
art- pFre-sented in terms\. of C',al-di-ll d11rs
GENERAT;vN AND ENERGY PURCHASED
A~s imentionied in lasl, year 's rep)or t the r ainy seasoin of \.194,9 -as extreinlely unf\.avourable
andl, as a consequenee, r-esl;l-ictioris had t,o bc inmposed in the use of electric energy startiing oil
J}anuai-3 19, 1950 alnd Wvere maintainled for- mioie thani six inorlths uint,il the begiiininTg of
the ra\.inly season c)f 1\.')50 mnade possible a higher- genieratioii of the hycdroeiect]i- pianits oi
the initei-conected systems of the Company aeod of the oederal CoifiTheisioan of Electricity\.
'Line reSPIC o0S CMer Com1p1ea Li d n11 \.JI sbiiy, 1 compalni for the rest ode the y dear rO
further mDeasures htcmb to be applied\.
As i cosequesey the above situation, the total a,mexouct of energy gerewiates and
puIrchased ducl'ilg 195\.,0 wa\.Is i,79() million K\.wrc \. as compared vith 1,8\.0 illloi for 1949,
a' dlecrease of 9 nillioas ot 5\.24ya's durior g the yen ofp1949 as aet inrelease of 121
inillioii in 1949) over 1948S\.
a All, the theamoelec,tric platis of the Coimpainy had, of course, to be operated at full
Januait,y d19ir,g 1 knd weni re arin0 aned foir ovre to ha osirtond ath fll production through
1h9\.e or at least until the beginning of ths raine y seasor \. ge he enerio y generated duilantg 19of by
the thercoelectei ystations of the Company, includiiog the raillay Counted m ls,0(0 o \.f \. steani
turbo-generator and the eight 500 K\.mw raliway mounted diesel -units which, as mentioned in
last hear's repost, here tmade available to us by the Ud\.ited St;ates Navy, was 921 millioii
K\.Nv\.ii\. as companred oifth el milaion in 1949, , hile the total energy generated in the
hydroelectric planws of the Company and that received facom the intercon1,ected hymloelectric
plant of the Federal 9 omimissioon of l4ectdricity ysaras c to m r midwitihin K\.in\.i\. as com-
parel l ith 1,085 inillioo in 1948 9\.
It is interesting to note the rainoyint of eon\.Tegy generated by the mobile units made
lsyersrpr,wrmaeavailable to us by t,he Unit,ed 8I;ates Navy,Nhc Nn ,84,7 \.V 1 o was 921se miiosnd
65,848,000 a \.c \.r\. fow the st;eam tulbo-geneiator\. 1 These figules shor the substantial help
these units have g Uive di us\.
THE MEXICAN LIGHT & POWER C° LTD\. 1j800
AND SU B SD IAR IES A R I[
CLASSIFICATION OF POWER GENERATED
AND PURCHASED 1600
J PURCHASED
I ST M - \ ; -D I E S E Ln I 3 !
I\.- \. Z Is T E A M i :5 _ |4 U I
H Y DR A U L I C L
FdSMpH-|M80oDut~~~~~~~~~~~~~~~~~~~~~~~~~0
_~~~~~~~~~~~i1 ~ ~ ~ ~ ~ ~~~z
[~~~-- mUf Iga ---7 M R-5| A 1 00
It
,' C ,\. o
~~~~I~ 00
1935 '36 '37 '38 '39 '40 "41 *42 '43 '44 '45 '46 '47 '48 '49 '50
At thie rfcniu-est\. of tht-e Fnvdtel Nt,\.( v i\3 \. tfh(p eight ivinhilp diesel 1l1it\., 1erereturned
at\. the end of 1950( but;, takinig in\.to considerationi the nie1cis of ouri Company and the fact that\.
the rainy season waS not, fa Vour1able (durina 19'50, the UJniited St ates Navy Depart\.ment\. agreed
to extelid for another y-ear the contract for the lease of the steam turbo-generator of 10(,0()
K\. \V\. [l'he extelnsioln gra:n1tel b)y th,e Unlit\.ed Stat:es Navy Del)par'l 111 tm is sLlbject however' to
cancellation shlould the Nlavv nee(!d this Unlit at, any timle\.
Despite the import,ant, reduction in the amount, of energy generated and pulclhased,
the total etiergy sold Ciulinlg 19;50 was 1,344:3 millioll K\.w\.ii\., a decrease fri:omi 1949 of only 5
'illion, or (\.:37 7\. Trhis satisfactomr result was mainly due tlo the installat,ion of meter's duI-inig
19\.() for pracUticatiy ali tne 30i,iuJ (CUSOtOIlCI'S laCKinlg meters at tne C(I,01 of 1049 anl whio nia(i
previously heen billed oni the hasis of estimliatedl average consumpt,ion inst,ead of actual conl-
\.Ulllpl,IlUli\. IJhUI I1g tHILU IitFl\. tA's U M111 ,111,11\.F Il tL11: y'tiY, 1til k-1UlhIII)ithly 's's i t V tlk'U itlJIUC 1) tUaLl I (tiC
collvelsi(I-I into metelred ser'Vi( Cs of c Certatill number of flat-rat,e services the aetual corsurnlp-
I isIn Xof 'sv'hich\.'sv \\"ISfhiilt In III 0ln Q t}iSll"'ds-' ionn it sho11ulA Ie 1n1-Aioc-A thtj-,i
aecorlacra e \w bli the rates now0 ill iorc(, flat-rate contr';actS can only be signed w'ith customers
nlot havinllg over 40 watt,s 0f iinStftlled ( -aDa(cit,v andl met,ers murst be inst\.alled to reciorcl and(l bill
the C01SUIisupt,iolr of the SO-watt I customer's whio had pl'eviouslY been conrtracted on1 a flat-ratc
basis\.
D)ue to these two factors, and rmainly to the first, one, the dlistribution losses in 1950
decr'eased substant\.iadllv\. 'I'lTe t otal losses of the svstenil ill 1 95() were 21\.3:3% of the gerner'ation
as compared with 2'\.;!1, 3 in 1949 and 28\.05% in 1948\. The figure of 21\.33%O can be considered
as normal for our system and no further reduction is to be expected until the new transmissior
lines between Necaxa and the Federal Districtl are placed in service\.
'l'he ietr~i Ut julis irl Lilt u Vi Ulo U lct1iii lie;gy have3'7, IJ Iourse, aifect1eUAdl all our customers
but, were less severe for the industrial customers as the intent;ioni of the authorities was to
\.0etF1-\.t ;iflliiQl Il i;Q1 7fif(tifll fl nA finlp n- iQii In fnof\. thii omnp-ro 'tol(d to ouir i,urrrp hirrh
tension industrial customers includinig mines increased, in spite of the restrictions, from 662
million K\.-\x\.ll, in 1949 to 685 rnillion in 1950,\. this increase being however mostly due to the
higher numiiber of industrial consumners contracted w0-hich vwas 770 at the end of 1950 as against
730 at the end of 1949\.
The energy sold to t,he Pachuca gold and silver mines decreased from 111 millioln
A\.I1\. ii\. ini A3 tJtLU Uto 0lilillion im ]-J11 minly duu to the Dos (- _-',a-los ii ax ila tLdllUned
wvork on the low\ er levels\. The energy sold to the large mining cormpanies of the El Oro district,
;fin!ilcl(r A-,cr nfallnn, iV\.IS 23 7 nidiioni \.t\. iv u tir iifrOv;rifol!ihir lthe Q'ifllo asQ in 1049\.
The energy distributed to t;he Mexico City dlistrict, was 1,293 million K\.w\.ii\. as againlst
1,403 million in 1949, a decrease of 7\.8676\.
Our customers numibered 464,805 at the end nf 1\.tO5 wvith - ,\.ntrn\.te a inri of 871 914
K\.W\., as against 454,557 ctustomers at the end of 1949 xvith a contracted load of 825,367 K\.W\.
Gino ~~~~_INPXOXWEiRM _SLE 1 2 0 0
1100
I_ 800_0 I E N
7 6900 a
1 | _ -110~~~~~~~~~~~~~~~~~~~~~~~~~~~~80 0
500
400
0
300 -
- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~200 I]
----n-- lo o
1941 1942 19A3 1 944 1945 1946 1947 1948 1949 1950
i3
HYDROLOGICAL CONDITIONS
The rain\. y selason o! 1t <1 9 \a 5'ienht Iol aao!!! h! hto h )'\iU
year but as a whole was againa poor one\. This can ibe appreciated from the following figures
of t,he wat;er eterinf the reservoirs hiirtii 19\.-)() which at Necaxa amnouted to 416\.9 million
cubic mleter-s or 70%() of the previous yearly average recordedl as comnlpared withli (;62%7, in 1949;
at Lerma :342 tnilloion cul)ic meters or 49(7' of the yearly average as compared with (62 ' in
1 949; at Ixtapantongo :30:3\.1 million cubic ineters or 65%;'/ of the yearly average as compared
vit\.h 61,% in 1949\.
However, due to a slighl impl rovement in the water storage; t,o the fact that Nve could
counlt on the geneI'atio\. of the steam a!d dilesel umt\.s ma:lde a vailahile to us bv the Uinited
States Navy and which it was p)ossible to operate durinig practically the entire year 1950 at,
full load: to the hell) received fromii the four portalble (liesel generating units which were
connected to our systenm ly the Federal Commn:ission of Electricitv- and, finally, to the fact
ant,~ l) Electricityywa
that the new Santa Barbara hydroelectric plant\. of the Federal Commission of Electri ity I as
placed in continuous operation in February 1951, ino restrictions in the use of clectric power are
expected to b)e necessary dulillg the balance of the dry season 1950-1951\.
FARNINGS FROM OPERATIONS
Despite the small reduction in the K\.wv\.ii \.slales, thie gross operating revenue of thle (,on-
"-lx -- i-,' l-\.x\.--v, (xI ~ ~ ~ ~ :11-L AlA iv-71 A00 :__ I CAl _:-----
pally ini ;30U was 179,921,u\.1 -peso)s, as oullpal-ed c i,u lv ti0 -,U1 q e,s0 ill u an Hincrease
of 20`7%\. This inerease is mnainl1 due to tle appiciationi of the new rates which, as mentioned in
last yen-'s report,,bax 1xc ffc\.tive \.u of Decehnibcr 15, 1\.10- 4 ,0 to a sn ,lt1\.r 1IPUT,qx to the
adequate lbilling of those dlomesti( an(l oommerci\.al customers previously connectecl without
meter s=
On thle other hantd, the operintin\.g exp enses inreased substantially, due p)rinlcipally to
thc highlel tinermlloelectric generad\.timl( anid to lhe ,'O oiur tional increase of )ages granted
to the workers as fromii May 1, 1950\.
Wheni the Company's new rates wcre lbeing studied in 1949, the Rate ComImission
assumed that, the cost of fuel used by ithe Company in it,s thermloelectric plants would be
reduced below thie price paid in 1949, in view of certain conversationts w-hich had taken place
oni that subject; with Petroleos Mexicanios, the supplier of fuel\. However, this reductioni was
onlvy miade effective as fromn July 1, il;50( anicn as a conseqluence ine C'onipa\.miy s expenses for
fuel during 105() were appr oxinmately 3 imillion pesos more tian was con temlplatedl in the rate
s ,d-\.t Thi\. exr\. c\.,s \. hc l,ey;u;;\.tI l ly , thfv;p l-- \.ug! thc apliato
0I U 10C \.0 1 IC11rIL I AtL lll\. >1-01 _1\. LIII\. U- II III\. - JIIcLLJ
of an adjustment in t,hc rates, effective as from January 1, 1951, which was approved by the
111 ±h1u *i xl\.s ,I l)tL\. ! elll l 90( 1!)5()
'T'he net, operating erevenue, explessed in Canadian currency, was $2,2604,098 in
1950 as comp)arcei wit h \.i, in 1949\.
The conmarative consolidated figures of operating earnings for the vears 1941 t\.o 1950
inclusive are shown in the Consolidated ,Stat istics appendled to this report\.
COLLECTIONS
It was noit possible, dtiring I 9-u, t,o collie to anly arrangument e it vin prescint\. acunnnnrcs-
trationi of the trarmways system) for the settlemenlt of its debt\. It will 1)e recalled that the
T-a--,vavys (',-\.,\.-\. \. inter \. I the It IIth ,ics in 1 ,1 r, -A 1- d has 'c opIe s c
f-IlI I\.'\.J IjltI x\.0 I\.lt,1Z SI -, UIIC fJf tIl\.1 -,- -Ll0IIl" Il I\. -j* _ _ll __11,0 ll,l 11- t-lA\.-
theii by a representative of the Federal Districit Department\. The total of bills reirmaining un-
paiid at the il(1d to!' I (-LI)nllunt\.ed tn R 09 / 17-4 npo as5 eoynn1 rcar with 390 073 n-esos t\. the
enid of 1949, both figures excluding the 10b()', tax on the consumption of elect-ric energy\. These
figules do niot take into account' certain credit,s in favour of the traniwavs w-hich are being
'C-~ IN THOUSANDS
i >1 OF K\.W\.
i NCR EASE i N T HE O K
L O A r O ki T D A r T r n Y M E O F _ | \.| 2
L W ~ %\. \. \. \.,,- \. 0 \.
THE MOST IMPORTANT INDUSTRIES 25
I N TH E ZO N E S E RVE D BY
THE MEXICAN LIGHT & POWER CO LTD\.
AN D S U B5 IDIAR I E5 20
FROM 1 942 TO 1950
M W ~~~~i
1942 ~or I I"
W 11950 Ls 1'"'1"1
ZIZ 1l942 $l
EXT I LES~~~~~~~~~~~~TIE
G MILLS & FOUNDRIES
I_sRT~~~~~~ EA LP RO DU CT S C EM E NT P RO DU CT S
^F wlC il I XTI5 t lTREES AND RUBBER PRODUCTS
I MILLS & FUNDRICEESANEOUS
i WUEIIE -1 -, tOl mPING AND REFINERIES
]TCHEMICALS, MEDICINES AND PAINTS
m LOUR MILLS AND BAKERIES
VEGETABLE OFIS AND COMPOUNDS
I YIEIJX , lmASTEURIZING PLANTS
CARBIDE FURNACES
> \ 1 1lSl1 | \. i >w E R cW c ; cS A ND SO;FT DR;INK S
ND RERIGERATION
RADIO BROADCASTING
( CERAMICS AND GLASS
i 21 OVING PICTURE STUDIOS
_/ JC\.vvZQUARRIES AND BRICKS
_ g ANNNE RIES
_ ,- -A RETTBER MILLS
GAETE
_PLAST~ICS
held in suspense\. However the conversations relative t\.o the settlement of t,his debt, have now
been resumedl arnd, at, the time of writing lhis report, a satisfact,ory verhal agreement\. has
been reached\.
f'olet,ols ':In the Fedlet-1, Stat,e -J T 1esrt\.v-ivi for ligh t anl- VIoXIr
services were satisfactory\. By the endl of the year t,he Federal District, as was expected when
writillfaIt In\."d l', rnt) , xv\.-IS llp to (lite i it\.s pvi-ents to the, Company\.
CONSTRUCTION
TIhe nronmirt,' 'tC(oul!t of tOw (nOInn 'i!ICd it\. s bsildi, rios increased in 19;;() hvn elt
amiiounit of $5,798,823 as against, ani inc iese of 8S,946,574 ini 1949\. This net increase is conIi-
pc)se(l of gross additiolns foIr work complet(ed Ol' in progress bv the end of 1950( of $6,437,628,
Iess retireme nts of property at actual or estimated originial cost amounting to $638,0()\.
During 1950 preparat,ory work was sttrt,edl and(i orders for imost of the equiplmenit ixvere
placed or discussed wit,h t,he inanufact,urers for the major portion of t\.he rem-ainider of t,he
construct\.ioni prograinine of t\.he ( Company\. The p)rincipal installations still ullnder constrluc-
tioii are:
a) The lTecheria st,eamii plant in wN-hich, it is explected, onie of the two 33,000 K\.WN-\.
itS (l!r0 l voil 11 ujt If ilt nno)e III t( b t he o nd o fthe yc ,!'\.r l\\.}1
1)) 'Ihe l'atla hydroelectric project for x-hich all of the principal equipment has l)een
or(lerc(e and in resl)e(ct of \\hich a cont,ract\. was siginedl at\. the cii(( of 1950 with Empresa de
('onistruccionles ( etierales, \.A\\. for the idrilling and(I lininig of tlhe pressure tuninlel, the const,ruc-
tionl of roads and thle ( iv il xxoirk in connection wit l the wat\.er it\. ke, ineline railway, penstocks,
surge tanik, po)weir p1iit, etc(\.
c) 'I'he colnstrluittion of t,w-o three-lphilse 220 K\. v\. trinsrnission lines fromil Neca xa- to
the Federala z l)icst,i(t,: \.,-{iQl-, *,ofah- ut 137 L-Jl l 't fol f,8 I-II t - i th, iI w itifl,i'I t\.( i '\.Q ! I IIl If-f
have been or(de-ec as well as the major equipment for the two terminal 230,000 rolt, sub-
cl) The installation of the 100 K\.v \. siigle circuit\. three-phase pressure t\.ype tidler-
giotiui(n caie, 5,7 > inetelrs long froll1 IA I-oiloaico io NIan aLazar -o a1iLi \.3,99i' I1Ieteri\. 'ioill Sail
Lazaro to Jaqnaica, is in progress and the caible is expe(\.cted t\.o be put, inl service ill \.July 1951\.
During the year\. the conistruict toil of t\.he Huast,eca subst ation of 20,)()0() I\.AV\.A\. was wN-ell
(Iv!xq lip(t it Aw'i}'r\.ql SU?t' it) m the i iS<imlln tioi of 36 i00()l \.5 /44/22) KV\. t\.r-:1ansformerICs
a-nd three 115 K\.v\. oil cir(uit, breakers was completedll at\. t,he Notioalco sublstatioii thlie instal-
lation of t,he Mulsifvre fir e pioteectioon was well advanwed: the Pantittlan ;,000 K\.\ \.A\. subst,at,ion
was ill progress; It\. Niecix plant, riansfornier hanks 1 anid 9 were re1)laced 1hy iiexw :32,000
\.V\.A\. banLks: the 6,()()0 xolt, lines, three-phase circuits, wxere extencdecl i20) knins\. the 20,000
volt lilles, th-icee-phcase circuits, were extend(led 75 kIms\.: the coostlu (ution of x arious sulbstat,ions
aind feede's wais (cariied oUt to supp)ly electritc eniergy to nexv inidust i es 1n(d ot,her coisuIir's\.
'tlih capi itv of distribution t\.rinsforiers was incr(eased by 21,40i K\.V\.A\. againist anl
in(creasce of 2'4, 45 in 194); in t\.he public, lighting service 9'\.ii addit\.ionial lalips were
installed, imipioviing considerably t\.he lighting of the (ity mid suburIs\.
Tl (olistructiomi of the mant\.a 1 irbara hydioelc etrii plnint of t\.he Federal iomnimission
of li'iririt\.,ltX' wtlz m-litjqlax, finiisher- -ix\. the end of '\.1 t) n\.nd it t hl time of xvrd\.itw this re'ort
the generation of two 22,5225 K\.W\. xUllitS illStalled ill this plant lihs been- miiade available for
(list ributioll by our (vu illonm \. A thllid id Uit of the samie cat)ac itv is at t)resent unider test\.
l6
LABOUR RELATIONS
\.-_ IW&IIUJI JI\.ki l i Ihts U 's;U c , nIIt"I agree Imcn O tas iglUL e I o I\.Icby L fJ, I flju I; ilul ULh
Compipany's labour union, l:)y which a 15%70 wvage increase xwas granted to the wotrkers from
Mayi\.X 1 190\.0 This increase is enndidintimnl honwuper, Unpn the Ilit enarnin cr nht,i np by the
Company in the period M[ay 1, 1950 tzo April 30, 1931 being sufficient to cover such increase
without reducing lthe rate of return belowv the figure fixed bY the 'Tairiff Comnmission when
approving the new rates for our Company\. As a consequence of this settlement the 15%',4 wage
incr ease has been paid provisionally to the wvorker s from May 1, 1950 and, at tlhe timie of writ-
ing, several experts appointed by the Rate Coommlwissioni are nmaking an analysis of the results
obtained by the C(ompany during the last eight months of 1950 and the expected results for
the first four mont,hs of 1951 to ascertain if the earnings of the Company durinig that\.
twelve-month period will be sufficient to cover the albove mientioniecd -wage increase\.
Since the settlemietit, was re\.aIched, no serious labour difficulties have been encountered\.
INTERNAL ORGANIZATION
Since settle:ment of the many problenms which had to be dealt with in connection with
the financing of the constructioni programme and the financial reorganization, the offlicers of'
the Comiipaniy have beeni able to devote more time to stuclying methocls of improving the
Company's internal organization in ordler to inclease ils efficiency and to imnprove its maniv
services to the public\.
Tl'he major activities of th~e Companp-ty have now- beenl groupecl under four importIlnt
sections-Adminlistr ative, 'T'echniical, Commner cial and Treasury-each hea(led by a\. senior
official resDonsible directly to myvself as General A/lanaver\. This will relieve mli of many,11
adminnistrative detaiils andl leave me more free to deal wvith important problems\.
At the pressent tlimie disCussions are aking pIlace betIweell tne Company and its unionI
with r espect, lo a reorganizationi of the Commllercial Departmnen-t in orcler to inicrease its general
ILL f T; y, \.;o nure iu, \. ,\. L \. + L, II\.C A\. L, a \., < L U ,} I \. lC 11 l \., rLIfl II I CLCflI ; C II AA C IL LLA II UA I II thUA Ul L C
sigming of contracts, etc\., with the Company's customers who now total somne 465,0(0\.
TAXES
An inicrease in the incomiie tax irate was approved by Congress onl December 30, 1950\.
'The new rates in force are still on a sliding scale, but\. reach a maximum of 34c,% for earnliiiigs in
Cx(cess of one riiillioni pesos as agailnst 31 % previously foi earninigs in excess of 500,000 pesos\.
I his JeW ]-i0o111C LLaX FaiU coes IOiU affeei eItine i1 ;k) eartllilngs\.
STAFF
As ini years nast;\. it gives me uleostire to mentioni at this ti3ne the loyal services of niw
staff\. Due lto the problems placed on the Companv the lemnainds on each individual are
coonstantly growhing and t,he staff' is meeting these new obligatim0s1 fully\. It is a constant\.
source of encouragement to be surrounided by these loyal employees\.
C\. MARYSSAEL
Mexico, D\.F\.,
Ap3ril 9, 1951\.
17
CONSOLIDATED STATISTICS OF GROWTH
194 1 11942 194 94 4
TorAL ASSEIS \. \. ( v C\. SI 16,97:3,437 $120\.587,141 S116, 142,1 86 \. 5116,746\.389
GRO1SS OPERATING REVENUE (Jan\. C\. t\. $ 9, 887, 71 ;1 11,405\.194 S I 2,1364,766 $ 12\.627,880
OPERATING AND OTHEI lEXPI:NSES
Power pilrchased \. \. ( \. tIl 1\. c ! ' 8' $ 54,321 S 52,181 $ 231, 794
Opelration :iid main,ten e \.I 8 4,695,553 \.;,30;,859 7\. 29\.';S
Taxes, i neluling Alexica n t\.axes
\. - - "1 470 004 2 347 039) 2495\.563 2\.018\.081
Provision fi l depieciatiori ai ;
am11ortizationl I \.4\.8(i() 1,5\.584,864 1\.685,000 1\.616,000
NE'l OP'ERATrING REVENUE \.Calil\. Cy ' \. 1 ,756367 $ 2,723,417 $ 2,880, 1 63 i I\.6:32,421
!ENPERGY (,ENEIiATE ANDI) PURCHASEID) IN
AMILLIONS OF K\.W\.H\.
H-lydIroelectric generation\. \. 929\.56 1,090\.27 1,038\.96 880\.42
Tlherimoelectric generation 134\.37 1\.23 90\.28 191\.04
IPuirelhased cnergy \. 25\.64 21\.50 21\.12 74\.95
Total \. ,, 1\.089\.57 1,113\.00 1 t50\.36 1,146(41
l:; j[:;\.v\.:Y S;\.l ;) IN \\.1'\. \.O N \.: \. \. \.,7160\.92 8! I,\. 9 -
K\.Ws \.H\. SOiD \. aCl 4 !1\. !\. a\.') I \.40 1\. \.42 1\. 4 t6
I'I\.AN IA (\. \CAI TY IN K\.W\.
Hydrolelectric mt \. ,,650 23,650 22 3\. t5 u 2233,150
Thlierninelectric plinltts \. 30,000 30,000 :30,000 5s,0oo
Total \.253,650 253,650 253,650 278\.650
IxtapaIt\.ollg() Plolanto foederaIl Coinmiiis-\.
sioll of IElectri(itv (interconnected)\. i ; 27\.900
Tlotal 253,650 253, 65 0 25:3,650 3o6\.510
(\.ON'I'RActrFD l OAD IN E\.A\.
! v es i d 'e\.e\. ti t\. \. \. \. I5 ' 0( 171,777 187\.872 2102\.779
C(mi'il'ercial, induIstrial :1( othirs \. 255\.980 283,140 :306,:386 326,179
I A id1 \. 1 I 4 '\.,4,9 4-\.- -95
1IcIE:',ST !SYsTEM P1EAK (I 1Loul) K\.W\. 211,390 214,225 222,409 229,338
*YEAIILY SYSTEM l,OAI) FACTOR \. / 0 58\.84 59\.31 59\.04 56\.91
NUtMBER *OF *fN;SE¢
Residential \. '228\.807 240,292 259,941 277\.465
(Cninwlercial\. indust,rial and()thes\. 6 G9, 351 72,182 76,547 79\.936
TotaL\. 298,158 312,474 :336,48S 35-7,401
PIO\.)IULATIION SER\X Fl) (APPOrXI\.NATE \. \., 20\.():) 2\. I1 I\.,\.1 - 7) , I 2 1- '20
NUmmIKII (o, IT)WNS ANI)
' I l\.l\.A ES :V \. -221 20 2 2 24
* Truat inyg thc in0trconxt) aedt 1\. I\.tapntJlll)ltoIlgO pia at (ourinC(c by tiie F'ederai (Conoln1 issiol of I; !'\. ; ) as a part of the system\.
T \ ot incIlldl\.a tq/c railow ay m0o0 tild a imts rentnlcd froi tIhe lnited Stotes af'Navy Illd l/ic ptortable uinits installed temiaporarily by
tthPo'luamiary ((ca 'nsu 1950\.
18
1 9 4 5 1 946 1 9 47 1 9 4o8 194r9 1950
$121,209,303 S123\.674\.71/ 3 S1 27,181,065 $131,082\.287 139,096,695 s1416,746,787
15i\.62:3\.98 S\ 18\.236,579 $ 19,924,091 $ 20,289,113 $ 19,3:3s5,834 $ 22,603\.770
\.S SS3,(99 S 812A-fi7 S 800,772 $ 1\.207,0,52 S 8SG\.o107 S 1,251,666
7:39,55 7l, 2\.1D¶l 1:3\.;9i1t3,4 2i2 , II9 I I ,;44 7 i2,4\.41 I6,1Ti3 , i i8
2\.790\.29(6 3\.098\.370 3\.308\.885 2,869\.700 2 470_909 9 767\.RN8
1,782\.000 1, 813,0()( 1,8144(000 2,0:35\.000 2,278,300 2,272,000
\. 2,769\.918 $ 2\.787,386; s 3,056,937 s 1,261,735 s 1\.274,877 2,604,098
1,045\.32 1,03:3\.27 889\.40 952\.45 789\.79 741 \.54
61\.28 23:330 4:34\.5s 534\.76 801\.041 921\.47
184\.78 20\.14\. 1 224\.63 280ft67 298\.10 127\.21
1,291\.38 1,472\.71 1548\.61 \.767\.88 1,888\.9:3 1,790\.22
970\.7:t I ! 1,079\.60 I ,2 7 47 1 ! (V\. 2 1: 13229
970~~~ ,~ \., \.<
22: \.-6;(J 2293\.650Q 22:3,\.50 223, 65)0 2:23,65( 267,59(5
55,0!) 5-5\.000 80,001) 90:300 i 10,9(0 II o9)(0Ot
278,5;\.0)O 278\.650 303,650 :313,950 334,5501 :378,495
27,91)0 27,900 55,8((0 55,80(1 55,800 55,80(
'306\.55(0 3:0 6,5)50 359, 4\.50 3 69, 750 :'390\.:350 4:34,295
21 9:34:3 2381:37 264\.423 276; 034 292_957 I! (i 974
356,0:35 :387:382 439,193 -191,577 5:32,410 554,240
F i,5 67 6 19 'I m ii 7i7 , I1 R, ,Ii7 8 71 2!]4
25:3\.827 283\.211 31 1,601 : 338\.565 355,570 :364,57!
58\.08 59\.:36 56\.73 59\.45 6(1\.64 56\.06
294,\.758 309\.771 324,150 338,944 :354,411 :362,27:3
81:38 89,:307 9)1,888 96,092 100\. 146i 102,5:32
37S,89(; \.399,078 4I 6,038 43,15\.036 454,557 464\.805
2\.210,00011 2 2\.0 (\. 0(1 2\.,2 i0, 00 2,21(1 ,700 2,3 07\. '01oo \. 0004
,_ , 9Qr 927 19 J
_ vel _ W~~ ~~Ub JUl JOo v ) o
Substantially all tihe power daenerated at ihis plant is sold to and distributed by the Company\.
the Federal Cousmmission of Electricity\.
19
w: ~~~~~~~
-I j iNW--V
AMA
-~~~~ ~
4crial prhotograph of two of the lower Neca\.ra re\.eCrvoirs tfaken\. it), lIano 19\.()\.
(7'iae her-e photograph a-d the aerial phoioyraph of Mexico City appearing-i 010ie rclpOrt corer by Corm pa74a M exicana Aerofoto\.)
A U D I T O R S' R E P O R T
To the Shareholders of
The Mexican Light and Power Company, Limited:
We have auditecl the heatdc oHice accounts in Toronto of 'rie
Ailexican Light and Power Coinpaniy, Limite(d and The Alexicanl
Jlof,nI\., furi\.t f'neinnon,,5 I i\.n,i-n,I nr al,l n]R,, nvnn,lnncI tim, r,\.nrmrt rmf
N-lessis\. P'rice, Waterhouse & Co\., Public Accountants, covering the
ca pitil and revelnue accou it ts ini Alrexico h1 T Atex ica Light a
Polwver Company, L\.initedc and(1 its sub1siidiarlies for the yeal en(Ie(d
December 31, 1950\. \Ve have ieceiveti all the iniformation anld ex-
planations wve required\.
We report that ill otil' opillion the auceo inpaniyintg consolidated
balance sheet and related statements of consoli(ldttecl profit and loss,
ca:lIled sol r)IplS anmid ge'lneral reserve have b!)eelI dralan up so as to
exhibit a tine anidl corlreet viewv of the state of the combined e(Oln-
tiolls for the yeal, according to tile best of oul inforimatioln and ti:e
exj)iall:ationIs given us, anid as shoiwi by tie i0ooks and tihe reports
referred to\.
CLAIRKSON, GORDON & CO\.,
(Catrtered A ccou,tWto!ds\.
FrOCONTO, CANADA,
\.\Z!l AV (I I 951 1
21
T h e M e x i c a n L i g h t a n d P o w e r C o m p a n y, L i m i t e d
Incorporated under The Companies Act (Canada)
A N D I T S S U B S I D I A R Y C O M PA N I E S
I1,nX)purtie s, Ha1l,,t :,ld 1,t111ipmen('lt\. :A c(, ,>t\. \. SI 12,804,iO II
Ri'ditl is\.i I C )lI ,n'ic s ,()lb SI I' :11( i ( \. \. \. \. \. \. \. \. \. \. \. \. \. ; ; 9, 4 ;42 l, 1;
~xpelic\.es z(i 19 151 riemtg:ini/:litioll :,llii issue ,f inw s(ecllrities (inc/idiny e\.timatu' of
\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. I 5 1 1 \.0 9\.1
\.XiA'II'\.AI,\.S ANT) S tiliES, illcludiinig eoilstrIctlii( llI18t,eria:Il c:l\. si \. less \. 4\.:110\.723:
(I I zil:lNr Ass :is:
( ell( l:l! !!IlI{!\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 2 \. :\. 4\. \. \. \. \. \. \. \.
l Iullik 1,(10 1 ill cmilmll,, :111(1 inlt\.ercst :acc (lililt\.s \. \. \. \. \. \. \. \. \. \. 2t:i9,4 -l:i
s 2\.i1:8\.821
Ae mints ,,c(Jv:dl1e\. Icss re st i ev \.I\. \.7\. -1,70I4234
AdIvalnceslil o i n pI hvi , :u \.I\.u\.I\. IeIuIa\.I\./\.i\. if; \. u) \. '\. \. 659 7192 02
(~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~ 9411;:07\.;slls
P ,pzl :ii oxpen ses lId uis eii:iiieii is uIej sits \. \. \. \. \. \. \. \. \. \. \. :,i i
1olselb-curr ll( d v tlwe \. ' : \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 2-10\.5-,:;1
\liszw llallem i>ls invu(stil(lents \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 1-12,757 , 1,088,75,
!46\.,74G,78 7,o
- U r Fr = E ! E §iRg- a WM \.si
-35o L~B~J\. B A L A N C E \. S H E E T A S AT D9
Caiildiiin Cill' elif'l
tLI AB LI T I [ES
(\.AI :TAL STI--K\. GELNERtAL\. !ESI;IV\E AN:) SURLUlUS: (\.e Aolc !1)
I'l-cfeiriedl sIi les, cilrryilng a prefeietiatn clividIendiI of \.31 per sh:ne per
:1I M11lli, UMUI nfi veitti' frol' it Jatltluary} i, 19\.53:, liltitle(l of] redemplltionl ,\.r
li(qliidtiol to $16\.50 per shaie-
Authorizedl and issued 85:3,244 shalnres it par va:dhl' of $13\.50 \. $1 1\.51 8,794
(\.'C/1llonii slaires-
\iitIlojzc,l a(i issued1(i 1\.S77G,836 shiares nf iio pal value \. 29,1 11806 $ 40,635_600
E:a:rilic:i Sipiplus fromii JIamilnlv 1, ] ! i5\.l \. I,1 9,2\.55
\.2;\. ,7 1 7 ,r,,72r
IFUNDEII) DEIBTl AXN) C/iN,S6IIT iUTIIOIN l\.()ANS:
I irst NAlort,vLLgi :ti, (Sillhi\.t,eri\.l Trust Bolndls anuid l)cleiiture iStick (sec
NA'0t( 2 f' (/('foidl\.'\.) -
Auth\.o ized - Scr ies A, I & C( ( ii\. S'\. c irren/cy or' eqoiv jim eleit) $41 \.899,9:30
- SerieS 1:) (Mexicnii curlrlccy)i \. \. IsoIs 90,000,100
1 ss/ii I1 :11111 I iit,st:a (iii I
Selies A, i & (' (C(US\. C(1'1CyltCJ or equi iolent) \. \. 5221 44 1 8! I 8
Ca,lidill /il e lle qli 'jlivalX t \.l\.t\. 823,2:1\.359
Adivaiices iinlie L oan Agreemcnts (sec A5 3tc \.)-
kia:licc(s il rcsjw((\.t of whliech First Ak[ortpg\.c \.midz COdl:tend:l Trust
liwid:<! 11::t yet Is-lln:d aut De(c-l"Cel:t, l! \.W,(
Initerna:tiona:l 13:ink l'or- Rleconstruc\.tionl and( Developlunelit-((i\.S\.
ciirri /i or c//illent) \. \. \. \.$ 1\. \.470\.07\.5
Nalional 1 imincierni S\.A\.iei anA - ( icL rlict \./r\.) Pesos 12\.6zi, I99
C:Il:iilia\. ii illLclicy equivalelit \. \. \. \.1:3)0511
21/(J (i nih1aitive IncoUme D)eclitiire Stock (scee Nle I1)-
Auit1Iirizedl andcl issueud--(,\.S, c'irrenLcy/) \. -I\.621:-,40
C:iii:l i:iii cilllCi Y i:ijiuivnIleit \.0 5,086 774 iI
ID)IE FIM ED111) IIA AXiiYiFI II:S AND\. C,ONTINGENCY R{ESERI:VE: (sce A\: o5)
D)eleirrel li:il ities \. I 46 ,140
IRescive fl/ c,ij ltili2lniCs \.4 \. \. ' : i:4409 \.5,79-1 549
( 1,11ENT LIABIiLITIES:
Accrued finannial chaiges oil Fullnled Deht aild Construction I on iS
iilililiig interest Ilmi the yonir 1950 on the \.Y/% Ciiniia\.t\.v tive ie/ino
Deeltle Stock \. \. \.$ 876,531
T\.11p l\.se\.it\.ed in \.est (\. \. I)011,e wllld ;aarrallts \.9\.1] \. 2 A
i\cciollts r11(d Nvages paybIle , acc:riuedl cha:rges, retilurinable depioisits niid
miovision folr taxes\. \. \. \. 3,91 7,541 5,0:37,92(1
IS\. ;I \! ES
1Oir ilepreciation Of p,roperties (incudinig reserve for retirements aiid
replace/lieit\.s proavided ii'der Mexican liiw) anid f'OI' a:imortizatioii of
riglits, firn elihises, coitn lts Mid go(i\.ViI ill \. \. 845,,463,303
F/i exchilnge (see Note 7) \. i ,844,646 47,\.30;
Chi bechalf of' the !3oardl: ^¢146,746,7877
GEORIGE S\. AilESSER{SAITII II l
E\. A\. IIAYDON J l\.irectors\.
23
The Mexican Light and Power Company, Limited
AND ITS SUBSIDIARY COMPANIES
\.Staitenientit of Con solidaled Prffit adloif\.f\.S for the Year eadedl Decemnber \.31, 195) |
Y
* (,'{tto(I(/Ol!Ut ( U Ico '7't/
(;IMSS (P'ING iEENIH,l \.J\.E\. \.I\.' \. i 22, 77*-, )
(IPERA'l'ING AND ()I-llI;lt E \XPIEN,SES:
1P m v l pJlll(dila s(1d \. \. \. \. \. r\.
(Op eC rlti n d : I l( r i)aiIlIteIllr:Il w( e \. \. \. \. \. \. \. \. \. 1 , f /S\.I 1 8
Taxes, ilo¶IudIing N\lexicnli taes o1 ilc ll) \. \. \. \. \. \. 2\.767\.SSS
PljrJviS;iol SrUl dieplelint ;i,11C, i Il(I jilrg 10\.00\.)000 peSoS fOIJ ICtil(illientS :1IIJd nq'd1 \.aJ:C-
l -lellt S pm ided undel !"llexic'm lav; (s \. \. \. \. \. 2\.1 ^:ot\.) \. i1
iI'JioviSiOIl foI ailI tiza:ItioII oJf Iigl1ts\. fl'lJll,SCS, eOIltliclItS a11id gooliwill (sC A'otc S) I 7\. 68 I I 9\.9 99\. 1; 7 2
NEl' OP'ERAi'I N\. INEVNE N\. \. \. 2,o()4i eJ8
INCOME I"I(\.IM INVES'IMENTS AND) BANK BA LA NCES \. \. \. \. 7f
INCO(E1; AVAII\.AIILE FIJII FINANCIAL\. (CHAG\.IS \. \. \. S 2\.0\.209,861
FINANCIAIL (HICAGE;S ON FIIiS'FI NI TIWGAJIE 1;)10K FTN(ILtDI INO
(,oxs'rilUC"I'I(IIN 1\.1ANS (Wse Vole 10) \. \. \. $ 1\.4\.30j;\.7
Less: C pitaliZC(d (iJil'lig c(JIJt\.l't1icti )ll \. \. 209\.-40(
$ 1\.221\.007
IN 'I4;IIF)Sl O\.N Ill\.N/; 'NUU (TI-0(0K \.1\.1 260\.5\. 0 1 \. 111;
Ni EPl iFIl' FIJ 1111E YIAI \.255 \. 1, I ( ,255
A\ ole: T'I, be 1)5' (a ('Ceo Jrco!7J in Jd'C/l nI rc Jtnreatiol1 o f d/irc'(:tors (c\.xl dlI 1inq exieculietic
ofrJtiCJ'r) 5'? K, 5\.5\.3 olbl?J Ic Id Ji- ll ero t iu 0)7 ( of 0 cn sel\. \.so0l7\.itor\.s (*l)1 lega(l (Idvise-S
PJ'OJ'q(J 0izatio JJ) (Io ) am loo t i;l I\. pS/eCt of wlJicb 7\.8 i71ellchI'1/ lII t/ll' (abo?'C (IoCcoilnt)
lull? of llood (\.( laic\. teifju IS\. s,i l (\. iC/J /1 lJ (i CI\.ss'l3ile 1xric S l r 1 50\.7\.?0\.
State,nent o,f Consolidated Earnedi Surplus for the Year eilded Deverenber 31, 1950
N E1' 1lliiJ" i'om n111iK\. XI'Ali 19910\. tN\.lrlsfel-ledi Frmn st,:It\.elioenlt, Ji J:1J* MIISIid:ItcdJ IJI it
al Id Io\.SS \.$\. \. \. \. \. \. \. \. \. 1, 91 19\.255
IAI(\.AN\.'I\. Al F)l (I\.MISER 31\. 1 950 \. \. \. \. \. S l\.I 1!9,255
Staltemienit of Carnsolidaite(d Gerieral Reserve for the Year eialted December \.31, 1950
BALANCE Al' DI'C(\.E:N !BEt 31, 1949\. \.ftell JiOJIgilig tllCICt\.J) tile (icITit acculnuIII)ItJOd t(l
tilat date \. \.7\. \.$\. S ,008\.779
ADD AD\.I USTNENT!`S A 1(15NO I(;'' IF 1 95( 1'! tlN OT AuRAX(l;E1IENTF:
linteiest ;cJumlnII)i)Jtedi to ID)eleilllr :31, I949! (/i/-2i%') (JI thl (1%,0 0Jnl(l:otiVe
InCOnIIe I)ebJeultuie IStJ)k, cn:clllediI uII;el' tile l'iall \.8 i0,D4(i
Exess if llt e,iiiiiiilt it at wic1llHiet pI'iJoiusly existilIg iljst MJllJtgage o\.iJligattimlis
olt thc C'ollip\.ivally:ul its sn!-: ndais l t!wc Slelomll! M/!Dtl,a-e~ B-nd(s and!
Dllebetulr; SitJ(wk IJI tlle (CJJIIIl)CIIV \N-ele Statedl ill t1lCil' :ICCJO\.LItS JJ e till
Canadll(ian cui-i,ency equ|tivalent of OEle pui-incipl atinmuint o:f tlle nleov s(ecm-iti(es
issueci in exchallg e (I iie tile Hiall \.09\.1\.4 I), 4 9 2,09
BALANCE AT DECENMIJEE 31, 1950I\. \. \. \.Sl,4201870
/ 14
T he M e xi can Li g h t and Pow e r Co m p any, Limited
AND 'TS' SSUBS-DI ARY CO MPAN!ES
L Notes to Fianarci\.l Statenaent\.s\.
t\. (CO)NVERSYIX )F iORElIN C'UlRENCl\.I:S\.
Assets aiiid liabilities :al revlellues :111(1 expellses ill cili'eilcis other tlhaii Can:ainni: :aC coliverted ilito
lnalian f iidl(ls oil the followiltg l) ases:
Ciurreilt; issets, otielr :assCts aii(l Ic lrlt an(l jdeferred( liatilities -At tie cutirrenlt rate o:)f exeialige at
Exlp)Cil(dituiles Oil prlo)peties\. ialllt and equlip)miielit aild iivenltolries of materials aind suipplies-at the rates
of ex(iajige in effect niwehi tue expeindituies were riade\.
ConIstrucetioiln lo)ails a ie 1 Series 13 Fi st IVM rtgage aind (Collateral 'V tist 1Bo11nis issmied in resp ect tlielieof-at
the rates (if exchallge in eff-ect when tile fuin(is were boriowed\.
Seties A F'il st A\lortgage and- C(o11ateratl rnUSt Bow lls antld cibentutre Stock Series C' Firist Mkiortgage a indi
Collateral 'irst r 31 Bndis a nd 53/4"%, Cumu lin Iative ITnllionie D)ebentu re StI ck-at the rate in foiceT at the date
Ill issule\.
Reveliiies a\.iid expelises oin (ll cperlttiolis ill Nlexico and froil traillsactillIS ill cierreieies-at exciiaiige
rltes Prevailinlg (1iirilig the Yeal\.
2\. I)E'1AILS oF- VMsi,[ NI'10RT\.A:G ENI) A oN\.i\.COA'I'rE\.lAi Titsl'i' I3ONDS AND D)FEIBEN'FURE STUC(K SHOWN IN iIALANCIE
S II E l'Y\. A ittht/iZe(l Is\.t Izd
I\. (S''\. C(In\. Cy\.
5% Series A Sinikiiig Fu1 d 13on1dIlls ai id D)ebentill e Stock d1uc 1 975*\. Etlli'val/lt El/l)OinivIen
Auitll orize(l (U;\.S\. currenc t o o mlt i d) \. \. S1o, 0o \.i it\. 9;t
Issiiedi-miIIer I'Laii of Arrangelelllit lbearig interest\. frIl
Fcliuaixi 1, 1!;50
Pa :lllhe in i rnY \. \. \.lr\.len\. I9,55021 0 S 9,55(,210 $10,50)5,231
D\. : le in tii\. CIi;t4 11! \,Ijh\.7 "th no mol),) , in
Optit 01)1 i;; (1:)d I';l xclJ-(ci\.dt Sq holdhrs; off rtifer
PochI-tical bonds) \.79012692 9711, i9 ' I, 692
1 1 ),69\.93( $1 1 \.406,923
41 2% Series Ii Serial 13B1oIs (iCe I 953-75\.
(;ual-Nnibted ul lco(,ldfitionit-11ll a, to, play;lien;t ;of pr;i;ncipa:l :nd
interest by tile Unitedl lexilill Statess\. ClIiilissiolln of VI of
10/ per annu11m1111 payable tol the UJiited Miexicall States is
Guaran:lttor-
Authorized (Uli\.S\. currncI t)r e/uirlent) \. 26,000,000
Isstleil to (late ii Cesple(At\. of alIvalnces m111der Loal Agieelienit
will iteriintional Bank for Reco nstiiutiotn :ila( D)evelolp-
I'ayabw)le ill U\.S\. e \. 11111
Payable iii Canadian curreti \. 164,500 5,541,968 5,723,43(i
5J Series C Sinkinig Funid l3oi I(s (lne 197\.5 Colininissiol of 1%
p:yaylle to Comisioll FI'cleral (Ide Electricidad\.
Auth0lniZed-( U\.S\. eur r enCy)) \. \. 5,530,000
Issuecl-to) Conlisioii Federal Ice Electricidlad bearinig iiiterest
fi-o,li Fcl,\.I1 950, 1 iisettIelielest,67loi(f\.,\.-O U\.Q\. 5 3 0, 0 00 610(832,000K
11 10\.I \.,1,II WIUIuIIO u 0 1 6 U/' 1 o 11 II o ,J\.,4\.JU,UUU IT \.0 , \.1'' , Q,1 '\.
lotal alithoiilized-Series A, 13 and C \. \. \. $4\.1, 99,9930)
Scries iI) Serial Bonds diue 195-3-75 (interest oto to exCceed 7%)\.
Authorized - (M1exic(n currency) \. Pesols 90,000,001)
lsel\.
(7% bonds itci, to 44,000,000 pesos (tre issuitile to refundl' a(ldvances
for construction received or to be received undrer Loan AIgree-
I)teC)t ivitI, N(acion\.al Financiera, S\.A\.)
Total BIols alld )Cbehnttuie Sto(k issued at I1)eccmiber:31 1950 \. 1-21l 898 $23,213\.359
25
3\. I)ETAI'II\.S IlF" AIIVAN12ES UNIEI l\.(\.)AN A(HI:EMI'INTS SH(OWN IN IIAI\.AN( E SHEEt;T\.
UIiC"[t I(1'e(ia/\. G I Cy\.¶(4i
Im4an A,greincnt Nk itli Intern:timAl lsaiz; i <,k F(w e('('lruc'tiUlnI( nid('D'v'lll)l)lwlt\.
I I- I7ti t- I oeiI \. \. \. \. \. \. -1\.1)()lI,(-\.)()
A N 1v 1 AI I to ' )HA (i E I) : r I 50 i(C I I I\.N ( )ill dI\.J\. II (IN\.lI I i es \. 77012,04:1
SL eiteslT31 i::rs th 1it1age i\.ad171t111 it rdalTrist fl' eolstl ldtt;O 1B(a Deke\.lA Nt I") S2:51 \.4 1 ,9ilt 17
O\.I' 0 I YI'7I'7 I'l ,SIN \.INI SE I A IA III PAYMENITS\.
13alal)(\.e (l adva:llves ill resp)ect o\.) whichel Series i5 NIldOII(S t vet i~ssillcd\. SP 1,47()\.07#5 i 1,)\. )2
IlelISlOll~~ ~~~~~~~~~~~~~~~~~~~~~~~ie:ill fIlIUII illfI
imant1 Ag)'mcCl(('t N\\ith Nac(ional:i Flinz:invier\.-t, S\.A\.
Ic t\.ll 1( tli \.(\. l\. \.it \. \. \.0 \. \. I 1 s()) s 4 i 11 11 011
Advanced too 1 tle ltn er ;) I, 19 l0 \. \. \. \. \. \.t\. \. \. \. Pe so t 1I' 2i t ,l I 91 fl' IT-IO t-i 9
A\.-; shso\%- it in:dae Slhceet \.I\. \. \. \.l\. )1 i
It\. FEINAENCIAI1 (HAR1GES DUI:IN(\. A)NS'I'ICT )N\.
I liter'(st ;nd 1\.( I i'Ol1ll 11101 I):npi (InI b(1r1'Xwings foi- constrction l purp I s(s Lr I lltpO, 1ita\.lize(dI (III lI)l' OI theO' plrlloI (fI
ticx:t :H I'tg(1I (\If tile;J:t12 III Hl;ll!le' V!tiS Illtite (' !I'll the ClJit\.i 'II:!"C01 tP ! 11(1bIH'!!"I\\'!12 :l(l1(0lOt!!! i\.,, tle(' ((lOS'll lily 5
e0ngIreci5\.1121 elflpii( l )'VliI IPI'2''tIl o tii Y111 910 1 e 1T\.ppiI:lwn (If tileS 1)1211 1, ci'tI \.II\.itit21
till :1Sigltio SfIIIalchI s t'il:l'gS c(Io it(lliZed lIP iIi1)g tfl:0 w'S Si2l09,l40(i 1h:it4h Ippcq 11:s ill the Itro'i)t :ld I (J\.S
Acu\.nt\. as a deducIIti\.on i\.m the tot\.::i rinmi1i\. c\.arg'es tor\. the year\.
Insterest is lso\. ecapitallizedl ilbl espect tIf e owistr:et\.ionl iillalleed w\ith(at!trc(oull'S( tof lmrrlowVims\. Il slts ll e;aes
the( Capiltalized( I!ltere(St is Crei'tedlt' to th(' reserve'( fOI' (lpel)lc('ll!mlI\. I lie a:imil0111 SO cre'('(teT(l( Ill 1 !1')l \\:I \.>\. Z
: '!!!(iVVV-'!' P'lEN\.IONS AYI) S-EV'lA'lAT(N PA\YMINTS\.
Underl S!l((''('SSiv'( labIoiI ollticrtts, tile Cm01ipall' hlas lbe(ll a:11(l iS ()bilgatcd( to g:twalt retireme clit penIsionls t6
:iIlphlyce whoCC \\ir ''til'( duril'l"'\. tl:e period() o theC ('Oltr"t(t and( t,o) make :: (,er:t\.ainsas: pnovisio1l} ill its a('c'lits
iO'w p(';lSi"iO IMI lelItS :!((;III'(li; ill i:av lt' ir tl W V> Lelw F1 1111(\.lle 1MV le te ('0111pll) ly X\n-s :1114 i\., mmsig:nt(l Iill(iel
each cl(olitr:a(t to) payX separ:i:tiolt 1l>\ll ( Ah sc t(I 0111pl\.,\.yees A t-ile t\.ime z>11 retirelienlt\. dea:thl ol1 w\ithllZllw:d l':i- 0111 the
'Ilile ha:tl:nve (If the( accl (lwi:ite(I( pn)vzisi(lms I'm\. po(llsionll requille(I 11(1der thef Od{lec'Xtive( Cotraclt!:(s is
il(hltide(t in the lbal:mcc sheet ill tile it,(\.ll (If Dleferredl Lialhilities\.
Addf itionlal pl'O\iSiOIIS fi()l fittul- paymlenlts we(''' llr ('t Iad fii(IIl)i Det ine 31 1\.)4! ;11 atccOrdLate wvith t!le ter 1s
,,r the 194-1 Suple>llientl(:1; Truwst, Deedls (i:nch:idil- S664,60 pr0t)v[luided il: 1()4!)) andI ;IIIt sm l)I\;;OI pr\(vsim were mad
I'- om yeIIC\arSs prior therebts\. At D)(ecenIwr :31, 1949( thlese prmoisi()lls w\ere} l -nnserred( tOi :1 r(Mesre fin\. vowtill-
:1I(ZS II11(i I(I I :!(I(Ic addt&(ional1)( ;S;(i!I S I l v b1e\ ilg" 111ndeI Since i\ ll thle oplilli(ull (If tile 1\.3(lard{ (if D)irectorlS
th!e I tar;!1S\. tO, \v!il(_-!\.tI 'l!L)ll R I; [( !! ! heI !l SI\ Of t!1C Fl-A i 1eT ! ; ! i( I rS ! \. Se X l !dl!!!Pf>}!
I'm- tile reum-ery (If' f'ttiirc p:avnieits,ot (\.llt ful'turzTe rCevnties\.
6\. ( (0AINIFI'\.MLF:iNT6' FO()l CA:'I'I'Al\. I'XP'lNl)IT!llES\.
'Ilicte :nre cwllnl!litilllcnts~ ill resp)ect ,, 1) cnIPt:l exp)end(itures ammlI)tltill" '' ( app)IlOX\lli:ttek\ *t;I-1\.((,80HI0 ;\.o)
wi h;(h1 :pI imJ( n jil lyIT l\ 14\. -X\.)));{; \\;1 I) -(tl) IE 1!} 1;\.; \.;\.ile I;t~\.S _i :;;1a I\., I\.I_ \. X l 1 ,1;:1: \___ \.:l -:t\.
wi t!h t!lC 1TrlltIII:t;OI1;1 Ba;Ik I)mI Rsee\.onstrucetioml andz D)evehipmlent and( Nac0jimi:l FqinTancier:[ S,A\.
7 t:I:I \. 14(SEVP]FO E-\.CiSAN(;]--,
There,( has been nlo, chaiwue ill tlhis reserve (1111'im," 1!):}) 1\. I,iel)lCSCIItS tl1C hn\!lance at thle ed(ofS10 1!)4!) 0f
CX,\.!,:O,,e rio-d'(itts t'(latilg t\., (]lefe!CT 1;e" fahlli;;ic's \\1;;(, ,:;\.:,"S(\.,S a ;S;;It, OIf the dlecl:ne ;11 th:( vn:ito (;f t!,(PeSO
8\. IDEPRECI\.(IATION ANI) tAMIT)It'ZAT''ON\.
1)1(11I 1 195g l(),r; a ea:efUIl StU(Id\ (If the( (OIlpIally's depreI)I( :t,imi requirjelinellts, ina:de by0 thie C'oin:paiivRts eClwi-
1werfls\. illd iiCte (t thlat tllc lii'c ,or tile va:rious r]lass( s (tIf' pI)(wrt}r w\\Il b R11e bm'-ej\.rc th:all tlh;t P:e\v;OIIS1V estil:imtled
al lliii T, I'l( 9lle Iep (i:nu l) r:aes Ill I( c',--\. -Icc(If-\.linigly b>I)liumj-al:X l(m\Ul M;1tN, (;,U,I-II JR1 g 1115::111;A! t
tih' av erto(le Of tlle r:ttes IlSe(1 bv elee trie (itilities ill thle Uniit\.cfl State's and( e(:)isideredl ad1eqluate by\ tile Cm11pIINr:l:yS
C:1g;11eerS, \Vel(l app)ied( jill pr()v-id!il ll)!C depecition! foi- tile yearl i 950(\. Th app 1!;lica:tion: (If tilesc n)ew r:t(es resl!lt(ed
ill a1 siitysmllaer depreceiationl eharvie in15thll i ll-( !lt : 1()49, \$jZ\. SD2,13-1319 comXp:nredl witi S2,278,:31)l)
llotwith)stalid(inig tile :ndd(iti(onl:t pnip)lerty which] b(ctu-ne( Slli);('(t t()ol depre(ti:tiolil ill 19\.)0
AS :Ig:lillSt thIc le(tLI:tioll ill tile d\.epreciattiol charge, tlhere wnis iinatugUlate(i iln 195-)( anl annulla prIO'SiOI:
Of $1\.37,681I foi- amriotizattionl (If the boeok valule of r-igl:ts, franch!ises, conltractS" a!1)(! gvwdwdvl\. While nlo prm-isioll
fo:r alliltizat;:tOim (Ad thu(se ;iltall"FibIe asjets \wi1s ;il;a\.d p;rior tOi 191\.50, t!1( aforincl;e;,t9;;:;d St::h(!y(f depre(l:;tjiI"
r(e(flircinclits illade durilig the year by the Companvy's eIgilieceis indicates thit, oil the_ basis of thoe oevlx
a:idoptedi depreciatioi rates, tlle 1euiUiaOdte reseive is sufficieiit to (c(VerI :1ai0ortiz:itioll of iiitnitgible :Issets ti
ilte as wei asiepdeein iII of properties\.
Il i(ler the LimW of the lie Ilie 1 niiistrx' 0f Alexieo, aln aliilal provision; for retirellnsi iits and( repiaceliemets 'i
p~~~~~~~~~ er1it( WI a- ;10\. I;eii( e; p- l",S f(r\.aep poss Iis ;;]I I l;a I plrovision; ;; 1; icx h h;as h(e cnfi;e, I fI t) tl;e C(; i;;; n!a l
at 10,000,000 pesos for te five-yeal (I 1 iirattion of the presenit rates, is treated iii the (C5i;oj p ilmy's ilinii neai state-
InelntS :IS oiniliig part of' the depreciation PIOvisiOII\.
9\. PAYMENT TO AMEXICAN (GOVEIN\.MENT ItE rEOPERTIES\.
ITl(e 1 i\ of, the lEleetrie Industry aid its regulations Provide that tle eiectrie ecoillnmlnies :re reqIlired to
niiike it anno ,i p iynienit to the Covernmlellt of 2% of the valiue of thieir properties :s estahlished for rate lla iflg
purpioses excluhding the permianiient hyidrauilie works\.
The (xerlinlent iavy however waive this obdligitioi, ill whole or iln plrt, wiiell fixing tih rats ,,for the
eieetric (clIlipanies iii orler to IOiIiiiiiize the inlrease in tue eost of electricity t,i the consmilersi Ill wco li lallc
tlerewlill Zwi!n ti, C11 ipll),li'S \.5( dinitive mlt\.eS wree fijX( i ; ioivr I !)-10, ftIe I n;\.xli_ leiIei Ii!!l wa:!ve (
for the 5-veur doUrII I of SlIill rates, onle half of tile aforesaid 2% alIlnl:li lpayllileit\.
'rite i,:i\\n of tihe lie Iiiilistry lriii its regulationis further provide t!at the ahove-loeltioled(l yearly
ollig;atioll x\ii he bC waived ill iolei it If is provel th\.tt the rate of returln oltailned hv t!e C(onipally for the veal:
tIliteCi Considleratioln dioe s 1lot rieacih that lixeti by) the Tariff Commnissioii as the basis for the (Con'pal)Iy's riates; aI(I
i11 ;;hl;cl (;r il1 p\.i;t to '-the exte;i-t tl;ts;lh,vieit;o;' ei;ete X;pn';;; fre;;lleovti;
iixed Ixv the Taliff Commni;ssion\.
|Iuioii]rtlf flp t 1'e I ()\.'A1i t,ie' ( nosoIA)ll OX {enI'Iirois lodvef nt](t been] snifiien(t to u! )i'nohf l'l:ll('l (t\. of l 11!) o't ofr t\.i)fe
I0 C,othierwise pay! i ie (ailiuk ;lnting to 6i 72,;i2) \. Ac(cordinigly 1io paym;e;nt has heel mlde or provided for il the
accotilitS 11(l the (Colipl)ly hias addlresse(l the reqcuirecd formal request to tile Goiyernilnenlt fol colIfirmatiolI flit
I10 anltUlilt is pyaoiiic In respe(Tt o1 tile Year I950
10\. FINANCIAL CHAiIRGES\.
'I'he amioulit of $1 ,43ff,i47 shown ill the P'rofit aiidI Loss Account as tile gross fil :ieiail chiiar-ges
drling 1950 (h(efore (ll(IluCtiog chtarges cnpitalizedl) on tlme First Mlortgage deit illwhidig \.ioistiiie-
1t\.in lwos i;R T1*iIll 11 !a fofll,owv
*im ("Y\.
Interest for the inolithi of JanulIaI ]'95(f oll the foriliel First Mlortgage 1ondis of 'I'lTe Alexican AP'iiol'10/,11
Light 1(li Plower Co(nxpaliy, Limiiiteil, The Aexicali l\.lectric Light L (h 1 Co1)pally \.il lifteCl :m1d(
Pachullca Lightl iiad Power Comp:mIIIv wxicihi wvere exhln nge(l d under the Phila of A rram, ( tlllllt
for S4privs AI irSt \lotgli+g *1 oi l Collter TI rust\. Bondls and 1)(i(ntnre Stovk of T1he1 AM'xi-
canl light alid Power ColmpalnyV\. Lilited \. 47\. 7 S
Iliterest f'ori the eleveln monliths elile(l lDecellmber 31, l95() on Series A First Axlortgage andi
CollaIteCral Trust 130115 at(is I)eeeltture Stock\. f-1,59)
Iltelest anId ComioIIlssionI for tl;e eleveil iIIoiitlis eiidcd Delcemlbhr 31 I1950 oll Series C First
vhitaliortu,e :1\.1d C olltrlTr'is fisin(i5\.s \.2\.i \.i\.i \. \.
Ilterlest for 1950 oil Collstrulltioll Loalls all(l iterest 11(l coimillissioI (i oll Series 1B First Alort-
gage lic! ' a!atel ! 'Trust Bmlids' is-u-1 -l spec t thereof! \.ti \. \. \.
Co(\.l1limitillll ellthre fiiol 9 tn 111 1( iwn xi :t ilotinlt of constrluctionl dioi liar ((c llits\. 1, 4-9t3
430, I -:l l7l
1I\. I1lsriuCTIOXS UNDER AGIREEMENT WITH TIIE INTERNATIONAL 13ANK FORl R{ECONSTIIUCTION ANI) D)EV'ELOPI-
M EN I \.
Ud(!er the provisions (of the Loani Agreemiient datedi April 28, 1 950 with the iiterinatioinal hBanik fOr RecoIl-
5tr ltil (Iii1d 1)w'('Plo 01'lte t XI s!i ginvtw l ) C thle Companyfix I!s indodrta\.ke, :!Ii()g other th!ioiosi tlit
miiless the lBank shall otiherwise agree-
(it) it xwiil not fa' dividenlds (other thani stock dlividlenids) O0i make otlier distribuitiolins oi allny ShaeCres if its
capital stock except out of consolidated iiet inicome earned subseqituenit to December 31, 19ff49;
(b) it xvill nOt pay divicienldis or make other distributions on any shares of its capital stock iiiitil the voil-
striuctioll pr(i \.1(mg ille h:is beeii coplll etedi ani( the local cu11rrency costs thereof anidi aiiy inidehtei\.lless il
excess of 50,000,000 pesos cont-lacted for the purpose of payin-g Such local currency costs sliahl have enCII
\.Si i or, ofrovviled for oult \.,f PIOSS olelerati 11 a receintS amnd
(c) it Will nOt reIeeIm o1 pJrIIchase any of its capital stock or of its 512% Cum-1ulatiVe III(OIIIC Del)entlure
Stock (except ts such 5l% C(umulative Income D)ebeiture Stock shaidl be retilerl throuiglh operatioln of the
sinkinig fulii(i to Lie proviided therefor), exeept out of the proceedis of the saie of caplital stock aindl, ill tile case
(f thc 51 2% CUiiiUllitiiVe iICIICe De)benituie Stock, olit of thie plroceedIs of the sale of i ncomie dceieltlre
stock !ha\viigernis nO ore tfavOIurabe to the ders Ft\.e\.!b cS k
2 7
(Y PA
L \. 1
Ie
L'4;~~~~~~~~~~
\.31~ ~~ ~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\.
4 -~~~~~~~~~~~~~~~~~~~~~~~~~~1 * 0w
I\. IhSI~~~s
I ~~~~~~ A ~~~~~~~~ * ~~i"' Y
C gV ZIMAPAN 5MI
QUERETARO 'o ) , ,' VR R
I '#> > / , i VERAkCRILJZ
HIDALGC) Om /
NECAXA
TEPEXIC
N CANADA PACHUCA TEZCA
-' F; \\._\.w^\ JUANDO PATLA
ZCAP-~ / \ ou_ _ {(PROJECT) j
/- A / ;LR /MA
N! s t() / #t j P'UE BLA X
MEXICO
KRO TLILAN 20-C' / 1,
J¢F ) ~~~~~~~~~~~~~F\. LE'AL OS^yS goop ook- %01\.J- \. 1'
ANG;ANGUEO '0 LECHER IA ER OD
ANC;ANGIO -s W S NONOALCC O TIAXCALA
*1' TACUDAYA ~~~~~~~~~~~~~~~~~~~~~~~~~SYSTEM COF
7 0 MEXICO THE MEXIICAN LIGHT & POWIER CO\. LTI
* ~ C i,,TOLLC0 \. Cly AND SUEBSIDIARY COMPANIES
IXTAPANTONG0lGENERAIING PLANTS
* IPq**;ANTONGOUZ---- \ J; D\.F\. i \rwAr CAPCrTY K W\.
J / STA\. BARBARA) * o* HYDROELECTIIIC
_ ' (EL DURAZNO CFE\. PROJECT QS B, A RTOLONECAXA 1115,000
SN\. BARTOLO1 *~~~~~~\.i a 4TEPEXIC 45,000
: )TEMASCAILTEPEC: IV ZICTEPEC 0 I \.|* TEZCAPA 5,367
S ZEPAYAUITLAt I6"? 3 LERMA 79,945
p ZEPAYAUTLA ) I CUERNAVAICA * *- VILLADA 19280
j J S\. SIMONITO dE FERNANDEZ LEAL 1,280
U g ALAMEDA LAS FUENTES TIIAN 680
/ * * Jt JUANDO 3,600
A CANADA 1,215
/\. f '*+ i (-1' AtAAMAEDDAA 8 288o~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~AAMDA8,8
LAS FUENTE:S 264
MOR~IEIL'4\."\. TEMASCALTIEPEC233
C40RONA YS LEGEND ZICI'EPEC 384
transmission lines ~~~~~~ZEPAYALITLA 664
Existing treasmision lines and S\. SIMON 1,700
IL\. generating stations of Companies-- Black IXTAPANTONGO C\.F\.E\.) 55,80CI
TAXC\.O ProDposed ltransmission lines and TOTAL HYDROELECTRIC 323,395
4- N\. \. *1 generating station; of Companies -- Red THERMiOELECI'RIC
A > *~ jExisting transmission line and NONOALCO 80,000
%~~* s \.**generating, station of Coamkion TACUBAYA 30,900
(GU ERRERCO Federal detB ectricidad Green TOTrAL THERMOELECTRIC 110,90( | APPROVAL |
P004567 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 25422
IMPLEMENTATION COMPLETION REPORT
(CPL-38520; SCL-3852A)
ON A
LOAN
IN THE AMOUNT OF US$ 13\.7 MILLION
TO THE
PHILIPPINES
FOR A
PH-WOMEN'S HEALTH & SAFE MOTHERHOOD
02/21/2003
Human Development Sector Unit
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective February 21, 2003)
Currency Unit = Philippines Pesos (PHP)
PHP1\.00 = US$ 0\.018
US$ 1\.00 = PHP54\.24
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank
AusAID Australian Agency for Intemational Development
BME Benefit Monitoring and Evaluation
DOH Department of Health
EC European Community
EU European Union
FP Family Planning
GOP Government of the Philippines
GTZ German Technical Cooperation
HIV Human Immunodeficiency Virus
HSRA Health Sector Reform Agenda
EC Information, Education and Communication
ILHZ Inter-Local Health Zone
KfW Kreditanstalt fur Wiederaufbau of Germany
LCA Life Cycle Approach
LGU Local Govemment Unit
LMIS Logistics Management and Information System
NG National Government
NGO Non-Governmental Organization
NHIP National Health Insurange Program
OR Operations Research
PCU Project Coordination Unit
PHDP Philippines Health Development Project
PHIC Philippine Health Insurance Corporation
PMO Project Monitoring Office
RH Reproductive Health
RTI Reproductive Tract Infection
SAR Staff Appraisal Report
STD Sexually Transmitted Disease
STI Sexually Transmitted Infection
UNFPA United Nations Population Fund
UPMD Unified Project Management Division
USAID United States Agency for Intemational Development
WH Women's Health
WHDP Women's Health and Development Program
WHTP Women's Health Training Project
Vice President: Jemal-ud-din Kassum
Country Manager/Director: Robert Vance Pulley
Sector Manager/Director: Enmmanuel Y\. Jimenez
Task Team Leader/Task Manager: Teresa J\. Ho
PHILIPPINES
PH-WOMENS HEALTH & SAFE MOTHERHOOD
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 9
6\. Sustainability 10
7\. Bank and Borrower Performance 12
8\. Lessons Learned 13
9\. Partner Comments 15
10\. Additional Information 15
Annex 1\. Key Performance Indicators/Log Frame Matrix 16
Annex 2\. Project Costs and Financing 17
Annex 3\. Economic Costs and Benefits 19
Annex 4\. Bank Inputs 20
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 23
Annex 6\. Ratings of Bank and Borrower Performance 24
Annex 7\. List of Supporting Documents 25
Project ID: P004567 Project Name: PH-WOMENS HEALTH & SAFE
MOTHERHOOD
Team Leader: Teresa Ho TL Unit: EASHD
ICR Type\. Core ICR Report Date: February 20, 2003
1\. Project Data
Name: PH-WOMENS HEALTH & SAFE MOTHERHOOD LIC/TFNumber: CPL-38520;
SCL-3852A
Country/Department: PHILIPPINES Region: East Asia and Pacific
Region
Sector/subsector: Health (100%)
KEY DATES
Original Revised/Actual
PCD: 03/09/1992 Effective: 07/27/1995
Appraisal: 06/01/1994 MTR: 12/30/1998 12/11/1998
Approval: 03/09/1995 Closing: 12/31/2002 06/30/2002
Borrower/lImplementing Agency: GOVT OF THE PHILS/DOH
Other Partners: ADB, AUSAID, EU, KfW
STAFF Current At Appraisal
Vice President: Jemal-ud-din Kassum Gautam S\. Kaji
Country Manager: Robert V\. Pulley Callisto E\. Madavo
Sector Manager: Emmanuel Y\. Jimenez Jayasankar Shivakumar
Team Leader at ICR: Teresa Ho Stanley Scheyer
ICR Primary Author: Teresa Ho; Richard Heaver
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: U
QAG (if available) ICR
Quality at Entry:
Project at Risk at Any Time: Yes
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The project's objective was to improve the health status of women, with particular focus on women of
reproductive age, and thereby support the Government's long term goals of reducing fertility, female
morbidity and matemal mortality\. Its specific objectives were to:
a) improve the quality and range of women's health and safe motherhood services;
b) strengthen the capacity of local governments to manage the provision of these services, and of the
Department of Health (DOH) to provide policy,
technical, financial and logistical support;
c) enhance the effectiveness and sustainability of health interventions, through the participation of local
communities and NGOs in the project; and
d) expand the knowledge base on which to draw policy and technical guidance for the women's health
program\.
The project objectives were clear and broadly appropriate\. As indicated in the SAR, the project embodied
the Philippine Govemment's response to the Program of Action of the 1994 International Conference on
Population and Development in Cairo\. This project was the first in support of a newly created Women's
Health Program, seen then as the 'flagship' program of the Department of Health (DOH)\. Bringing five
donors under one project umbrella helped to ensure that a single program concept was endorsed-an
important benefit, which was probably worth the extra management burden of multiple donor procedures\.
Although the first objective, which covered the core of the project's activities and outcomes, might have
benefited from more explicit statement of how exactly the quality and range of services were to be
improved, these details were evident in the project description and content\. Objective (b) gave the needed
attention to the evolving roles of local govemments and central DOH in a then-recently devolved health
system - LGUs were to manage and provide services, DOH to provide support\. Objective (c) rightly
stressed the roles of local communities and beneficiaries themselves\. Objective (d) would ensure that the
science behind the new Women's Health Program was up-to-date\.
Quantitative service outcome and impact objectives were developed at appraisal for the ADB-financed
areas of the project, but not for the WB-financed areas\. Quantifying impact objectives at appraisal was not
realistic, given the lack of baseline data at the time\. It might have been appropriate to put in place a system
for developing disaggregated, locally appropriate outcome objectives with participating local governments,
but this did not happen, making it difficult to measure performance during implementation and evaluation\.
The project's multiple objectives made it complex and therefore difficult to implement\. Furthermore, the
project's scale and cost were ambitious, given the uncertainties posed by the recent devolution\. But the
positive experience with implementing the earlier Bank-financed Philippines Health Development Project
(PHDP) suggested that such complexity could have been managed, with the appropriate institutional
arrangements (see section on Project Management below)\.
3\.2 Revised Objective:
No change
3\.3 Original Components:
1\. Service Delivery (US$85\.73m of which US$8\.20m from IBRD), including civil works and equipment to
upgrade health facilities; piloting of an approach for integrating services and targeting them on high risk
women (the 'life cycle' approach); and provision of drugs and supplies for key women's health services,
-2 -
including matemal care, family planning, reproductive tract infections (RTIs), sexually transmitted diseases
(STDs) and cervical cancer\. The strategies and interventions chosen were appropriate\. They were high
priorities from an epidemiological point of view, and the range of services was limited enough to be
implementable\. It would, however, have been simpler and probably more effective to have planned just one
or two service packages, rather than several permutations in different provinces, mainly determined by
which provinces were supported by which donor\.
2\. Institutional Development (US$36\.53m of which US$8\.80m from IBRD), including information,
education and communication (IEC), training, developing the DOH logistics system for distributing
essential drugs, and project management\. This component was broadly appropriate, but it failed to provide
for strengthening the health management capacity of local governments, even though this was included in
the appraisal report as a project objective and benefit\.
3\. Community Partnerships (USS$13\.Om of which US$O\.Om from IBRD), aiming to bring the DOH, local
governments, and local NGOs/peoples' organizations together to increase health awareness, empower
women, and raise finance to implement mini health improvement projects\. This concept was appropriate\.
4\. Policy and Operations Research (US$1\.18m of which US$ 1\.00m from IBRD)\. This component funded
project evaluation, and operations research (OR) to feed into policy\. The OR focused on testing new
technical approaches for service delivery\.
3\.4 Revised Components:
Although there was no formal restructuring of the IBRD portion of the project at anytime during project
implementation, the project concept evolved in a number of ways and for a number of reasons\. Among the
reasons for change were: (i) as donors came on board, they made changes to the project design presented in
the SAR, following their own respective evaluations; (ii) the roles of LGUs in implementation of women's
health programs became increasingly evident as devolution itself took shape; (iii) implementation delays in
the first half of project life made it necessary to reduce output targets for certain project activities; and (iv)
new activities to promote the project's objectives were identified as implementation proceeded\. Among the
main changes were:
* The target number of health workers to be trained was scaled down in an effort to ensure the quality of
the training activities, given that Competency Based Training was an untested approach within DOH\.
This decision was made at the onset of the AusAID-funded Women's Health Training Project (WHTP) in
1996\. A similar adjustment was made in 1998 at the start of training activities for the 36 WB-funded
provinces\. Original targets that called for universal training coverage among health workers were
drastically reduced to cover only areas where other project inputs were provided\. Later, because of
difficulties experienced in running the distance education modules for Barangay Health Workers (there
was insufficient communication infrastructure at the village level to support distance learning), the
approach was shifted to the training of Rural Health Midwives, reducing target numbers significantly\.
* The Logistics sub-component was adjusted twice\. The first change was made in 1998 to shift
responsibility for drug logistics from central DOH to regional DOH offices\. A second, major change
was made in 1999, in which drug distribution by the public sector was replaced by a system to contract
private sector suppliers to deliver drugs directly to health facilities; funds budgeted for upgrading
govemment warehousing were therefore no longer needed\.
\. In recognition of the role of LGUs in supporting women's health programs, the ADB-funded LEC
component was revised at mid-term to add advocacy activities addressed to Local Govemment
Executives (in addition to IEC activities directly focused on project beneficiaries)\. Coverage of the
component was expanded nationwide from the original 40 ADB-supported provinces\.
- 3 -
* Due to general delays in implementation, the project was rated as unsatisfactory by the WB in May,
1998\. The components were revised at the time of the November 1998 project mid-term review, since
spending was no more than 13% of the initial loan amount by that time\. Output targets for civil works,
equipment and training were reduced (minor changes for civil works, major reductions for equipment and
training), and there was a partial cancellation of the ADB and WB loans (although target reductions
were only one of several reasons for cancellation - see section E)\. A number of new activities were also
added at mid-term (RTI/STD prevalence study, procurement of additional cervical cancer reagents,
expansion of coverage of LMIS)\.
\. In the last year of the project, anticipated uncommitted funds from the IIBRD loan were reallocated to the
establishment of ten Reproductive Health Clinics in areas of high STI prevalence (large numbers of
commercial sex workers), justified on the basis of project research findings of very high STI prevalence
countrywide and the fear that this could lead to a sudden flare-up of HIV infection\.
Except for reductions in output targets due to implementation delays, the above adjustments can be
considered to be appropriate strategic adjustments in response to a changing implementation environment\.
3\.5 Quality at Entry:
Quality at entry is rated satisfactory\. The project was consistent with the Govermment's policies and the
WB's Country Assistance Strategy objectives, and was in most respects well designed\. Co-fnancing
arrangements for the project were complex but were clearly defined at the time of appraisal\. Donor
commitments worked out as planned and were maintained throughout the project life\.
The project was prepared with participation of local governments who, after devolution, would be key
implementors, and although adjustments needed to be made in the design of specific components as the
roles of LGUs and DOH were further clarified over time, the recognition of LGUs' roles during appraisal
at a time when the real impact of devolution was still uncertain indicated conscious effort to address the
problem\. Risks related to devolution were highlighted in the SAR and mitigating measures undertaken
(including signing of Project Implementation Agreements between DOH and individual LGUs at the start of
the project, requiring LGUs to pay salaries, utilities, travel costs, and other specific project costs)\. The one
shortcoming of LGU-DOH arrangements was the failure to indicate explicitly in the PLAs co-financing
shares of LGUs, let alone specifically requiring increasing LGU shares over project life to increase the
chances of project sustainability\.
Though not Bank requirements at the time the project was prepared, implementation by today's WB
standards would have required the following, which were not present at the time of this project's entry:
* civil works and equipment requirement surveys completed by effectiveness
* key indicators defined, and monitoring and reporting processes and formats ready
e detailed design for project evaluation, or plan for strengthening evaluation capacity\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Rating the achievement of this project is difficult, because (a) most activities were implemented well but
some output targets were reduced due to implementation delays in the first half of project life; and (b)
performance was much better in the second half of the project than the first\. On the positive side, the
project contributed to increasing the quality and range of women's health services (objective (a)) through
upgrading health facilities, through technical training, and through a modest expansion of relatively new
interventions for RTI and STD detection and treatment\. The project was successful in achieving several of
its institutional development objectives, especially in developing (i) a competency-based approach to
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women's health training, (ii) a service quality assurance system, which is now being extended to other
DOH programs; and (iii) a new drug distribution system, initial tests of which are promising (objective b))\.
The community partnership component appears to be increasing the effectiveness and sustainability of
health interventions (objective c), albeit on a small scale\. Some though not all of the planned operational
research was carried out, and has expanded the knowledge base on which to draw policy and technical
guidance (objective d)\. The RTI/STI prevalence study and establishment of ten Reproductive Health
Centers in high STI-prevalence areas were added achievements not anticipated at appraisal, but responsive
to the growing threat of HIV/AIDS\.
The project met the revised targets agreed at mid term, following which implementation performance was
satisfactory\. However, rated against the achievement planned at appraisal, rather than later revisions, many
project inputs were significantly delayed, or on a lesser scale than planned\. For example, drugs and
supplies reached the field in significant quantities only in the fourth year of the project, due to serious
procurement delays\. Project training reached only a quarter of midwives, compared to the universal
coverage planned at appraisal; while the appraisal target was over-ambitious, the achievement could have
been greater\. The IEC program was so late that it was still scaling up as the project ended\.
On balance, judging by the standards (targets) prevailing at the time of the ICR, the project's overall output
is rated as satisfactory, although only marginally so if rated either against the original plan, or what could
realistically have been done with better management\.
4\.2 Outputs by components:
Component 1: Service Delivery\.
This component is rated as satisfactory, though it is considered to be only marginally satisfactory because
of the delays in implementation and the consequent reduction in some output targets at mid-term\. The
repair, extension, equipping and supplying of health facilities were financed by the WB, ADB and KFW\.
Overall, there was a 2-3 year delay in implementation of this component\. The designs by the project's
architectural consultants (who had to be replaced) did not comply with DOH standards\. Remedial works
had to be undertaken, to ensure that facilities were appropriate for their purpose and met building codes\.
Civil works delays in turn delayed the provision of equipment\. Procurement of drugs was delayed due to
slow project procurement overall, and because of a temporary suspension of drug procurement DOH-wide
in 1998 following revelations of large-scale procurement anomalies under an ADB-funded component of
the project\. At mid-term, a decision was taken to reduce targets for civil works, equipment and training
and loan funds were cancelled correspondingly for both IBRD and ADB loans\. Ultimately, with overall
project implementation improved after mid-term, these adjusted output targets were completed as planned,
and provision of drugs and supplies for key women's health services, including maternal care, family
planning, reproductive tract infections (RTIs), sexually transmitted diseases (STDs) and cervical cancer all
took place\. In addition, the project's quality standards for RHU infrastructure, equipment and staffing
were adopted as the country-wide standard for Sentrong Sigla (health facility quality assurance) around
which an award system has been developed\.
The Life Cycle Approach pilot was carried out under the ADB loan, then re-piloted in a different setting to
more clearly draw out lessons on effectiveness\. Initial reviews of the re-pilot have been positive in terns of
heightened community participation in ensuring improved health outcomes and overall responsibility for the
LCA systems established under the project was turned over to the community in December 2002\. The
syndromic approach to treatment of RTIs proved an effective alternative to specific treatment of RTIs in
areas where laboratory facilities are not available to identify the specific infection\.
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Data from the Benefit Monitoring and Evaluation (BME) study shows mixed results with respect to
changes in awareness and satisfaction betwen the first and second surveys (conducted in 2000 and 2001
respectively)\. Awareness and satisfaction for prenatal care remained unchanged (at around 98-99%)\.
Awareness of delivery care services increased substantially (from 69 to 82%) but satisfaction declined from
79 to 80%\. Awareness of postpartum services also declined from 98 to 90%, although satisfaction with
these services increased substantively from 65 to 89% (see Annex 1, Outcome/Impact Indicators)\. Note the
short period between surveys which may explain partly the erratic results\. Service data in project
barangays showed increases in utilization between 1996 and 2001 for all key services - prenatal visits,
postpartum care, iron, Vitamin A and iodine supplementation, use of family planning methods - except for
voluntary female sterilization, which showed a disturbing decline during the period\. Rates of increase
ranged from 14% for postpartum visits to 302% for iodine supplementation\. Female sterilization declined
by 51% during that period (pls see Annex 1, Output Indicators)\.
The clearest lesson resulting from evaluation of this component is the importance of ensuring that
procurement procedures are well advanced by effectiveness or earlier\. In addition, although project design
is not in question, as it was consistent with the state of the women's health program needs and know-how at
the time of preparation, a number of lessons have been learned\. These are listed in the "lessons learned"
section below\.
Component 2: Institutional Development\. Performance varied by activity, as follows\.
IEC\. Affected by the general slow pace of implementation during the first half of the project, IEC activities
picked up during the second half, including the added dimension of activities aimed to raise awareness
among LGU executives and promote women-friendly legislation at the local level\. Other strategic changes
made at midterm were also implemented by project completion\. The ICR mission was not staffed to
evaluate this ADB-financed sub-component in detail and a fuller evaluation awaits the results of the ADB's
completion report\.
Training\. AusAID and the Bank financed this sub-component in different areas of the country\.
Implementation of Bank-financed training activities was slower than AusAID-financed ones, since Bank
funds were managed through the mainstream DOH and LGU systems, while the AusAID grant was
managed by a foreign consultant team and directly disbursed to locally hired trainors\. AusAID evaluated
the training activities it financed very positively\. Though slightly delayed at start-up, the project completed
on time and met or exceeded its target number of trainees, except in the categories of Rural Health
Physicians, Ob-Gynecologist, and Medical Technologists, where insufficient numbers of trainees could be
identified (short by 6%, 12% and 30% respectively)\. Bank-funded training activities also met or exceeded
target numbers\. There was clear evidence that trainees had increased knowledge, competence and
confidence\. Training in gender sensitivity was consistently mentioned as the most useful component of
training, likely contributing significantly to improved client satisfaction\. Project training activities also
succeeded in developing considerable institutional capacity, for example through improving the training
needs assessment process, and introducing competency-based training and a new training MIS\.
The component was not without difficulties, including hesitation on the part of local governments to release
staff for training, or to help as trainers; and, apparently by far the most important, a moratorium in 1999
on all DOH training outside of government training facilities\. Local governments, on the other hand,
suffered from counterpart funding constraints\. In addition, procurement and training were poorly
synchronized because of the delays in the former, although the AusAID end-project evaluation states:
"While this has had an effect on some skills which they were trained in, evaluation studies reveal this has
had a minimal impact"\. The trade-off between timely implementation and capacity-building is also evident
-6 -
in the contrast between AusAID and World Bank areas post-project: in the former, where consultants
carried out training, contributing to timely completion, there is less continuity in training activities after the
project than in the latter areas where, though implemented more slowly through mainstreafn staff, training
activities are continuing to some extent even after project closing\.
Overall, the training sub-component contributed substantially to institutional development and to increasing
skills levels in women's health service delivery\. Given the large unmet training needs for the program,
however, new strategies will be needed in the future to greatly accelerate the pace of training\. These should
include strategies for sustainable financing of staff training\.
Logistics\. The changes of logistics strategy around mid term delayed implementation, but the revised
system is now being piloted in several regions, and seems promising\. The sub-component is therefore rated
as satisfactorily implemented\. It is unfortunate that DOH management decided to not fully integrate the
drugs and contraceptives logistics systems through the project - apparently under pressure from USAID
who felt that integration would endanger the existing contraceptives distribution system established with
their support\. With current plans to phase out USAID funding of contraceptives in the country, a thorough
review of contraceptive distribution (and financing) systems would be appropriate at this time, and
integration of drugs and logistics system should be considered\.
Project Management\. This was highly unsatisfactory during the first half of the project, as evidenced by
* the lack of systems for a) annual planning and targeting and b) physical and financial reporting, which
could have provided an early warning of slow progress and under-spending
* insufficient management action and technical support from the DOH Women's Health Program, due to
lack of clarity about roles and responsibilities
* slowness by top management to intervene following the poor performance of much of the technical
assistance contracted to help the PMO with civil works management, procurement, monitoring and
evaluation
* serious procurement and disbursement delays, due to understaffing, unfamiliarity with donor procedures,
and systemic problems in the procurement and financial management systems\.
Most of the above problems stemmed from causes beyond the control of the PMO staff\. The first two were
the consequence of incomplete project preparation; the third was the responsibility of top management; and
the fourth resulted in large part from a decision by DOH management not to use the services of the PHDP
Project Coordination Unit (PCU), which had a successful track record, to manage WHSMP procurement
and disbursements as had been discussed during preparation\.
Project management improved to satisfactory in the second half of the project, with
* more top management attention (following changes in DOH management)
* the development of a conceptual framework for the Women's Health Program, and the issuance of
administrative orders clarifying working relationships between the PMO and the technical program units
* the cancellation of the original technical assistance contract for the PMO, and the hiring of better
performing consultants
* considerably improved processing times for procurement and disbursements
* the formation in 2000 of a DOH Unified Project Management Division (UPMD), which is systematizing
management procedures for all foreign-assisted projects\.
Despite these positive developments, some project management problems remain to be resolved:
* the staff of the Woman's Health Program is too small for it to be able to carry out the functions of
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strategic planning, technical support, and program monitoring and management, which are its
responsibility, rather than that of the UPMD
\. some procurement posts need to be upgraded in seniority, and procurement and financial management
should be handled by pernanent staff who are professionals in these fields
* staff in the DOH technical programs need training in the procurement process, in the assessment of new
technologies, and in specification-writing
* Bids and Awards Committee members need training in technical evaluation\.
Component 3: Community Partnerships
Agreement on the design of this EU-financed component was reached only in 1997, and implementation
will continue until December, 2003\. The component has therefore not been rated\. However, it is clear that
much has already been achieved in developing and field testing systematic processes for partnership
development and community empowerment, and there are indications that these will be sustainable\. The
component is expected to fully disburse by its revised closing date, by when it is expected to be operating in
250 villages\.
Community and local government empowerment are essential to the success of health programs after
devolution\. There is therefore a strong case for extending some form of community partnership activity to
all municipalities, not just a few of the most distant and disadvantaged\. What is needed prior to a policy
decision on whether to upscale is more evidence, as quantitative as possible, about outcomes; and a careful
analysis of the costs and cost-effectiveness of this activity in areas where there are NGO partners, and
where there are none\.
Component 4: Policy and Operations Research
This component has two parts\. The first is the project evaluation, which was Government-funded\. This
activity is rated as unsatisfactory, because of the delayed start-up and, particularly because of the poor
quality of the analysis\. Results of the baseline survey carried out as part of the Benefit Monitoring and
Evaluation (BME) Study were not available until after mid-term\. A number of shortcomings were noted in
the application of certain statistical methods as well as in the analysis of available data, raising questions
about some conclusions reached by the researchers that link observed outcomes to project interventions\.
The BME exercise is potentially helpful to policy but needs further work to validate conclusions on the
project's performance in terms of targeting poor and underserved, awareness and availment of and
satisfaction with women's health services under the project, and the costs of interventions versus derived
benefits\. However, the data collected appears to be of sufficiently good quality, and further analysis, with
improved analytical methods, could yield more reliable results\. The DOH has been encouraged to pursue
analysis of this data\.
Factors contributing to poor evaluation performance appear to be lack of a plan at the time of project
appraisal for how evaluation would be done; and weak evaluation capacity in DOH\. It is tempting to
conclude that this activity might have been more successful had it been Bank-funded and therefore more
closely supervised by the Bank team\. However, the poor record of project evaluation performance in Bank
health projects overall, where evaluation components are more typically Bank-funded, does not permit
drawing this conclusion\.
The operations research component, which was Bank-funded is rated successful\. Planned operations
research on active contact tracing for STDs, on altemative iron supplementation regimes and on the
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incidence of breast cancer were not carried out; but planned studies on social marketing of iodized salt, on
altemative interventions to reduce violence against women, and on alternative approaches to cervical cancer
screening were\. The study on cervical cancer was very successful\. It demonstrated the cost-effectiveness of
an alternative lower-cost approach to Pap smear - acetic acid wash screening - and resulted in a March,
2001 decision by DOH management to adopt the new screening technique for areas where laboratory
facilities for doing Pap smears are not accessible\.
4\.3 Net Present Value/Economic rate of return:
These were not calculated\. But the interventions included in the project (such as maternal tetanus
immunization, maternal health care, family planning and micro-nutrient supplementation) are ones which
the Bank's global analytical work has shown to have high cost-benefit ratios\. A new and more
cost-effective approach for cervical cancer screening was developed under the project\. Cost-effectiveness
analysis remains to be done for the following strategies: maternity waiting homes, lying-in clinics,
community partnerships, and interventions for violence against women\.
4\.4 Financial rate of return:
Not Applicable
4\.5 Institutional development impact:
The project provided the vehicle for establishment of the DOH's Women's Health and Development
Program (WHDP), following commitments made at the Cairo Conference\. The WHDP, formally
established as a Unit under the Family Health Cluster of the DOH during the DOH re-engineering of 2000,
is responsible for DOH's activities in family planning, safe motherhood, RTI, nutrition and control of
violence against women\. The project also provided a vehicle for establishment of close working relations
among major donors actively supporting various components of the WHDP and ensured that common
approaches were used wherever possible\. In addition to these program-wide contributions, a range of
institutional development contributions were achieved under specific project components, as described in
the component-specific discussions (above)\. The most significant among these were in establishment of
quality standards for health facilities; introduction of training approaches and methodologies; introduction
of an LGU-based logistics system; development of approaches to building community partnerships for
women's health; and establishment/development of cost effective clinical practices for RTI treatment and
cervical cancer screening and prevention\. The project's institutional development impact fell short in areas
involving LGUs and their roles in managing and financing Women's Health Programs, largely because of
the slow progress in defining LGUs' amd NG's respective roles under the devolved health system overall\.
These latter shortcomings notwithstanding, the project's institutional development impact is considered to
be substantive overall\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
Outside the control of government and implementing agency:
* Confusing and rapidly evolving sector management framework following devolution of the health system
imposed by legislative action\. As is typical of
radically decentralized system, the sector took many years to stabilize following devolution, and is still
evolving one decade after the start of devolution\.
* There were three elections at the national level during the project life, and three local elections meant that
incoming governors and mayors had to be
oriented\.
* Multiple donor procurement and disbursement procedures complicated project management, and
contributed to procurement and disbursement delays\.
-9-
Close donor coordination on the project, including joint supervision missions, helped mitigate these
complications\.
5\.2 Factors generally subject to government control:
e There were seven DOH Secretaries during the project\. Because of the political appointee system, each
change meant changes in some of the DOH
managers and staff dealing with the project\. The different priorities of successive Secretaries also meant
varying commitment and attention to women's
health\.
* One other factor concems the difficult political environment given the conflict between the position of the
Catholic Church and the objectives of the
project with respect to improved Family Planning\. With 80% of the population being Catholic, and with the
Catholic Church actively advocating against
artificial FP methods, government support for the program has been (and continues to be) erratic, subject to
the vagaries of politics\. In this sense, the
project was a high risk operation to some extent, still it was important to work on the reproductive health
and women's health issues to try and influence
the substance and content of the RH and WH programs while also helping move FP forward\.
5\.3 Factors generally subject to implementing agency control:
* DOH management paid insufficient attention to the project during its first half\. Non-performing technical
assistance consultants were replaced only
three years into the project, and a Unified Project Management Division was created only after five years\.
* Weaknesses in DOH procurement and financial management processes
5\.4 Costs andfinancing:
The project is estimated to cost up to US$83\.57 million (if we assume full disbursement of the EC Grant
which is still ongoing) as against the $136\.4 million estimated at appraisal, an under-run of US$52 million,
or 39%\. With US$11\.58 million disbursed as of October 31, 2002, the under-run on the original WB loan
amount of US$18 million was almost as big as that on the project as a whole, at 36%\. This disbursement
level is 85% of the reduced US$13\.7 million WB loan, after cancellation\. Estimated GOP expenditure is
US$3\.13 million as against projected GOP expenditures of US$26\.6 million, a saving of US$23\.5 million
on the part of Government
Of the total project under-run, about US$27 million can be accounted for by savings due to a) decisions by
DOH management to buy less than the planned amount of obstetric kits (about US$8 million) and iron
supplements for pregnant women (about US$4 million); b) depreciation of the Peso (about US$ 10 million);
and c) redesign of the logistics strategy (about US$5 million)\. The remaining under-spending can be
attributed to reduced targets due to slow project implementation\. In response to the savings from these
various causes, US$4\.3 million was cancelled at mid term from the WB loan of US$18 million, and
US$21\.2 million from the ADB loan of US$54 million\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
Institutional capacity improvements in quality assurance, logistics management and training management
are likely to be sustained, as are the application of the syndromic approach for RTI control and acetic acid
wash for cervical cancer screening and prevention\. Because they are lower-cost than previously prevailing
approaches, and depend less on access to laboratory facilities, these latter two activities also contribute to
long-term access and financial sustainability of the RTI and cervical cancer programs\. The project also
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appears to have had a demonstration effect\. Though not fonnally documented, there are numerous
anecdotal cases of non-project LGUs "copying" project activities in neighboring project areas\.
Financial sustainability of project activities is less certain\. Given the current and anticipated fiscal
situation, National Government (NG) budgets, including DOH's, are likely to remain under tight control\.
LGU budgets are also likely to be cut back, given their almost exclusive dependence on their Internal
Revenue Allotments from the NG\. While better planning of LGU co-financing for project activities,
including imposing a declining loan allocation for recurrent inputs, might have improved chances of
financial sustainability by shifting at least part of the responsibility for this high priority program to the
LGU, there is no guarantee that the LGUs will be in any better position than the DOH to finance it\. One
promising source of new funding is the National Health Insurance Program run by the Philippine Health
Insurance Corporation (PHIC) which, after years of concentrating benefits on inpatient services, has now
expanded its outpatient benefit package to include capitation coverage for Indigent Program members
through Rural Health Units and has plans to introduce coverage for prenatal care, facility-based normal
deliveries (up to the 2nd birth), IUD insertion, acetic acid wash for cervical cancer screening, STI treatment
using the syndromic approach and some support for HIV patients (yet to be determnined)\. Note that
coverage for the syndromic approach for STI treatment and for the acetic acid wash cancer screening
method are being justified on the basis of experience under this project\. DOH is also helping LGUs plan
their funding more carefully under the franework of the Health Sector Reform Agenda (HSRA), launched
in 1999\. Like any far-reaching reform program, though, the HSRA is expected to be a long-term
undertaking, requiring 10-15 years before results can be felt\.
Continued assistance from the donor community will therefore be required to ensure sustainability of the
project's outcomes\. Of the 5 donor agencies that co-financed this project, at least 3 (WB, ADB and KfW)
have decided to continue with a follow-on project\. USAID, UNFPA and GTZ are also continuing ongoing
support and starting new initiatives\. In addition, WB, ADB, GTZ and EU have started or will start
preparing projects to support the HSRA\. With respective responsibilities of NG/DOH and LGUs getting
clearer with time, it is evident that DOH can no longer carry sole responsibility for national priority
programs like women's health, and that LGUs must take the lead on delivery of these programs, with
continuing priority support from the DOH\. Preparation of the two new WB projects is therefore focusing
closely on allocation of responsibility for management (between NG and LGUs) and financing (among NG,
PHIC and LGUs) of health services in general and women's health services in particular in the devolved
health system\. Both projects will also explore ways in which existing private sector capacity for provision
of care can be used to speed up expansion of services, using public sector financing\.
Because of the likely sustainability of institutional improvement capacities and the promising financing
franework under PHIC and the HSRA, project sustainability is judged to be likely\. Nevertheless,
substantial risk remains due to NG and LGU budget constraints, making continued donor support still
necessary\.
6\.2 Transition arrangement to regular operations:
Although there will be a gap between project closing and start-up of the follow-on project (FY04), DOH
and PHIC are continuing during this period with implementation of system-wide reforms under the HSRA\.
Implementation of the HSRA, started with USAID support and now being picked up by other donors, will
improve the overall environment for implementation of the women's health program\. The DOH is also
initiating efforts (with support from the WB) to pool donor resources for preparation of the proposed
follow-on projects for women's health, with focus on remaining gaps in the program following the first
round of operations, including:
* Clarifying respective roles of NG/DOH, PHIC and LGU for management and financing of women's
health services, including shifting the lead for women's health programs to LGUs\.
* Developing templates for LGU-level planning of integrated women's health services, targeting women at
specific stages in their life cycle and/or women with special needs: adolescents, women in unions, women
in commercial sex, pregnant women\. Integrated delivery of the full menu of family planning methods is
especially critical
* Undertaking a comprehensive review of women's health training programs to find ways to reduce costs,
accelerate implementation and ensure sustained financing, given the large numbers of health workers still
requiring training
* Seeking ways to facilitate procurement and logistics of women's health commodities and supplies,
including merging logistics systems for contraceptives and essential drugs, pooling procurement at
appropriate levels regardless of source of funding (NG or LGU) to gain economies of scale; clarifying
funding sources and financial management arrangements\.
* Seeking ways to strengthen staffing of the DOH Women's Health Program given general staff shortages
in DOH and the NG-wide freeze on hiring
* Developing an effective evaluation system for the program\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
The WB led the multi-donor project preparation missions, and was successful in building donor
commitment to a unified women's health program, a very significant achievement\. The technical aspects of
the project were generally well prepared, and were notable for stretching the bounds of the women's health
program by promoting sterilization as a family planning method, exploring interventions to reduce violence
against women, promoting the syndromic approach to management of RTIs, and testing acetic acid wash as
an altemative to Pap smears\. As noted above, however, project management arrangements were
insufficiently prepared by current standards\.
It is debatable whether more might have been done at the time of appraisal to push for greater LGU
involvement in management and financing of the program under the devolved health system\. With
hindsight, and given experience in other countries where decentralization/devolution of health services has
been shown to lead to many years of uncertainty and confusion, it may be unfair to judge preparation a
failure because more was not done four years after a devolution that had been imposed on the executive
branch of govemment by the legislature, when the former was clearly unprepared for it\. To the Bank
team's credit, the uncertainties related to devolution were highlighted as a project risk and mitigating
actions (involvement of LGU executives during preparation, signing of Project Implementation
Agreements) were undertaken\.
Preparation is on balance rated as satisfactory\. However, because of the shortcomings in project
management arrangements, preparation is considered to be only marginally satisfactory\.
7\.2 Supervision:
This was generally satisfactory\. Joint-donor missions were regular, and procurement supervision improved
when this was handed over to resident mission staff mid-way through the project\. Regular participation of a
financial management specialist in missions during the last two years of the project also made a difference\.
Mission aide-memoires identified the major problems and appropriate courses of action\. The WB and
other donors seem to have been flexible in their approach to the project revisions at mid term, and the
agreed reallocations were appropriate\. Given the large number of donors involved, and the practice of
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conducting regular joint missions and collaborative preparation of aide memoires, donor coordination can
be rated as highly satisfactory\.
7\.3 Overall Bank performance:
On balance, Bank performance is rated as satisfactory\.
Borrower
7\.4 Preparation:
For the same reasons as in the case of the Bank - building a framework for a unified women's health
program to which major donors were able to subscribe, pushing the technical boundaries of the women's
health program, and highlighting the risks related to devolution while taking the first steps to involve LGUs
in national public health programs -- performance is rated as satisfactory\.
7\.5 Government implementation performance:
Sufficient counterpart funds for the project were made available by the central Government\. Some local
governments balked at providing counterpart funds for training activities and others experienced delays in
providing counterpart funds for other project activities, but in general LGUs provided the necessary
counterpart funds (or inputs in kind) for the project\.
7\.6 Implementing Agency:
As detailed in section D, project management was highly unsatisfactory in the first half of the project,
resulting in very substantial implementation delays\. More could have been achieved in the project overall if
the project management skills of the PHDP PCU had been drawn on as planned during preparation, if the
project had had more attention from DOH management at the start and if the contract of the
poorly-performing management consultants had been terminated sooner\. Borrower performance improved
very significantly during the second half of the project\. Consequently, the revised targets set at the mid
term review were largely met\. Compliance with covenants was satisfactory\.
7\.7 Overall Borrower performance:
Because of the unsatisfactory performnance during the first half of the project related directly to omissions
at the level of DOH senior management, and the consequent loss in time and overall project achievements,
overall Borrower performance is rated as unsatisfactory
8\. Lessons Learned
The project experience reaffirms three critical lessons that have been learned across many Bank projects:
* the need to improve project readiness by effectiveness;
* the importance of adequate implementation capacity and management oversight in the implementing
agency; and
* the need to clarify respective responsibilities of National and Local Governments from as early as
preparation when implementing a project in a
devolved/decentralized health system\.
On the first point, joint adoption by the GOP and the World Bank of the Project Readiness Filter since the
time this project was prepared will ensure that any new project is appropriately prepared by the time of
effectiveness\. On the second point, establishment in 2000 of the Unified Project Management Division in
DOH to provide permanent in-house project management and implementation skills, as well as clarification
of the respective responsibilities of the UPMD and the Department's technical/program units, has helped
improve project management capacity in DOH\. Still, staff shortages in both the UPMD and the technical
- 13 -
units due to general budget constraints represent a serious threat to any future projects\. On the third point,
the Health Sector Reform Agenda (and preparation of the Bank's Health Sector Reform Project) is paving
the way for more orderly joint implementation of future programs and projects in the health sector\. Since
HSRA implementation is slow and complex, special attention to devolution-related issues will still be
required for preparation of any future projects in the sector\.
Other lessons specific to the field of WHSM and requiring attention in the proposed Second Women's
Health Project include:
A\. Recognize that WHSM programs and policy frameworks require complex operations which have had
mixed results worldwide over the past three decades\. Projects in this area therefore require careful
technical preparation and designs that are sensitive to the local context\. In the case of the Philippines, a
number of policy areas require further exploration of options and development of good guidelines for their
application\. These include:
* the technical strategy for iron supplementation
* where deliveries should take place, and exactly what interventions are needed to improve management of
the referral system for obstetric
emergencies, to help reduce matemal mortality; whether Matemity Waiting Homes and Lying-In Centers
are cost-effective interventions
\. how STI services are to be integrated with other women's health services
B\. Promote integration and avoid waste caused by duplication
* the planning, financing, management and delivery of different services related to women's health need to
be integrated for greater efficiency and
effectiveness\. This integration should take place at the key operational level for women's health services,
which is at the health district or Inter-Local Health Zone (ILHZ) as referred to in the HSRA (comprising
the first level referral hospital and outpatient facilities in its catchment area)\. Integration of services should
revolve around service packages tailored to specific target groups such as adolescents, women in unions,
women in commercial sex and pregnant women, as attempted under the LCA component\.
* program inputs should be delivered as a complete package, with proper timeliness (convergence) - for
each catchment area or ILHZ\. Fragmented
delivery of program inputs (e\.g\., training and civil works/equipment inputs going to different sets of project
sites or arriving at different times) is to be
avoided\.
* the essential drug and contraceptive logistics systems should be unified\.
C\. Intensify interventions in Family Planning to reduce the lag in family planning services and organize
services to deliver the full menu of FP methods to ensure that clients have full choice based on complete
information\. Priority needs to be given to catching up with the backlog in basic training (only 40% of
doctors, nurses and midwives in rural health facilities have had basic family planning training), giving
family planning appropriate IEC support, and ensuring that contraceptives remain available and affordable\.
D\. Intensify interventions in RTI/STI control, given the operational success of the syndromic approach,
the findings of high STI prevalence under project research, and the potential link between STI prevalence
and BIV infection\.
E\. Plan and implementfinancing arrangements at the outset, to improve financial sustainability,
- 14 -
including LGUs and the NHIP as sources of finance, in addition to the NG\.
F\. Undertake a comprehensive review of training programs in women's health with the goals of (i)
accelerating the rate of uptake to be able to keep up with needs; (ii) reducing costs (e\.g\., by reducing
duplication and shortening course duration); (iii) rationalizing program content (tailoring courses to
specific skills needs of specific health workers, integrating content); (iv) seeking sustainable sources of
financing (including LGUs as employers of health workers); (v) expanding capacity for training
provision, introducing a program of accreditation for training providers and developing mechanisms for
competitive contracting of training courses\.
9\. Partner Comments
(a) Borrower/implementing agency:
NA
(b) Cofinanciers:
NA
(c) Other partners (NGOs/private sector):
NA
10\. Additional Information
- 15 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome /Impact Indicators:
IndicatoriMatri4, \.,\.,\. ' \. Projected In lst PSR ActualLatest Estimate
Maternal mortality rate per 100,000 births 209 (1993) 172 (1998)
Infant mortality rate per 1,000 births 34 (1993) 35 (1998)
Iron deficiency anaemia among: (a) pregnant (a) 43 6 (1993) (a) 60\.7 (1998)
, (b) lactating (b) 43 (1993) (b) 45\.7 (1998)
Iodine deficiency (with goiter) (a) pregnant; (a) 23 (1993) (a) no new data
(b) lactating (b) 18 (1993) (b) no new data
Vitamin A deficiency(nightblindness) (a) (a) 16\.4 (1993) (a) 7\.1 (1998)
pregnant and (b) lactating (b) 16\.3 (1993) (b) 3 9 (1998)
Family Planning\. Total fertility rate 4\.1 (1993) 3\.7 (1998)
% of women who are aware of pre-natal 99\.93 (BME1) 98\.69 (BME2)
services
% of women who are satisfied with pre-natal 98\.12 (BME1) 98\.4 (BME2)
services
% of women who are aware of delivery care 69\.34 (BME1) 82\.41 (BME2)
services
% of women who are satisfied with delivery 79 44 (BME1) 60\.24 (BME2)
care services
% of women who are aware of postpartum 97\.72 (BME1) 90\.14 (BME2)
care services
% of women who are satisfied with 65\.5 (BME1) 89\.12 (BME2)
postpartum services
BMEI survey was conducted in 2000; BME2 survey was conducted in 2001; all BME data refer to Implementation
Areas
Output Indicators:
indtcato,r/Matilxk ' \. P s_-ectd in,last PSR , , 'Actua/Late'stEstimate\.
1\. Pregnant women with at least 3 pre-natal 756 969
visits (per 1000 livebirths)
2\. Pregnant women given oomplete iron 657 920
dosage (per 1000 livebirths)
3\. Postpartum women with at least 1 visit (per 834 952
1000 livebirths)
4 Lactatng women given complete vitamin A 720 887
(per 1000 livebirths)
5\. Lactating women given iron dosage (per 225 844
1000 livebirths)
6 Women 15-49 years old given Iodized oil 282 851
capsule (per 1000)
7 Current users of FP methods (per 1000 471 680
women of reprod age)
8 % of women of reprod age who availed of 2\.44 (BHS) 1\.2 (BHS)
Bilateral Tubal Ligation (BME1 vs BME2) 4\.86 (RHU) 1\.85 (RHU)
5\.56 (Dist Hosp) 1\.63 (Dist Hosp)
6\.72 (Prov\. Hosp\.) 1\.63 (Prov\. Hosp\.)
End of project
For items 1-7, data are based on Field Health Service Inforrnation Data in Barangay/Village Health Stations in
Intervention Areas in 1996 (column 2) and 2001 (column 3) -- from Benefit Momtoring and Evaluation (BME)
Study II; Item 8 is based on BMEI(2000) and BME2(2001) Data\.
- 16 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
i ' l'''\.~, \.-_ 1 vt ; - Aporaisil ActuallLatest Percentage of
s 1 - -1 e ~' - - zwri , - \. ;- , * * , \. Estimate,i, 'Estimate: \. m: Appraisal
, \., -Corponent '\.;US$ \.million ' US$ million \._\. _*
Service Delivery 74\.96 42\.17 54\.35
Institutional Development 32\.68 26\.07 82\.37
Community Partnerships (USS$13\.Om of which US$0\.0 11\.80 6\.85 58\.05
from IBRD)
Policy and Operations Research 0\.96 2\.33 233\.33
Total Baseline Cost 120\.40 77\.42
Physical Contingencies 4\.98
Price Contingencies 11\.07
Total Project Costs 136\.45 77\.42
Total Financing Required 136\.45 77\.42
The table above refers to total project financing, including from GOP and other donors\. Except for EC
which still has activities underway, all costs are as of the various donor-funded components, and hence,
final costs\.
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
Procurement Method
\. Expenditu,re!Category \. ICB - - Other2 , N\.B\.F\. Total Cost-
1\. Works 0\.00 3\.62 0\.00 0\.00 3\.62
(0\.00) (2\.54) (0\.00) (0\.00) (2\.54)
2\. Goods 5\.15 2\.48 2\.61 0\.00 10\.24
(4\.99) (2\.42) (2\.54) (0\.00) (9\.95)
3\. Services 0\.00 5\.92 0\.00 0\.00 5\.92
(0\.00) (5\.51) (0\.00) (0\.00) (5\.51)
4\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 5\.15 12\.02 2\.61 0\.00 19\.78
_______________________ (4\.99) (10\.47) (2\.54) (0\.00) (18\.00)
Above table refers only to procurement under the IBRD loan\.
- 17 -
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivale nt)
\. \. ,, \. ! Procurement Method
Expenditure Category ICB -Other N\.B\.F\. Total Cost
1\. Works 0\.00 1\.74 0\.00 0\.00 1\.74
(0\.00) (1\.57) (0\.00) (0\.00) (1\.57)
2\. Goods 0\.49 0\.69 3\.51 0\.00 4\.69
(0\.49) (0\.69) (3\.51) (0\.00) (4\.69)
3\. Services 0\.00 0\.00 7\.25 0\.00 7\.25
(0\.00) (0\.00) (5\.32) (0\.00) (5\.32)
4\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 0\.49 2\.43 10\.76 0\.00 13\.68
(0\.49) (2\.26) (8\.83) (0\.00) (11\.58)
Above table refers only to IBRD loan-financed procurement\.
"Figures in parenthesis are the amnounts to be financed by the Bank Loan\. All costs include contingencies\.
2Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff
of the project management office, training, technical assistance services, and incremental operating costs related to (i)
managing the project, and (ii) re-lending project funds to local government units\.
Project Financing by Component (in US$ million equivalent)
\. Percentage f-Aipraiial
\.9Cm> f' ;\.)A pp'i a KXtes e\. \.=t \. eretagke
Co ~ ,Apal aIstiinate - -
- tt$; Bank \. G -\. CoF\. xjBank ;; G,Pai'ik Civt\. lCoF\. \.C Ba Govt:' CoF\.
Service Delivery 8\.20 16\.77 60\.76 3\.66 2\.04 36\.47 44\.6 12\.2 60\.0
Institutional Development 8\.80 9\.71 18\.02 5\.93 0\.75 19\.39 67\.4 7\.7 107\.6
Community Partnerships 0\.00 0\.00 13\.00 0\.00 0\.00 6\.85 0\.0 0\.0 52\.7
Policy and Operations 1\.00 0\.18 0\.00 1\.99 0\.34 0\.00 199\.0 188\.9 0\.0
Research
Note that US$3\.7m, or 20\.6% of the Bank loan, was cancelled in 1999\. Gov't costs are based on
approximated exchange rates at the time of the transaction\.
- 18 -
Annex 3\. Economic Costs and Benefits
An economic rate of return was not calculated for the project at the time of appraisal, nor at closure\.
- 19 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
n\.a\. n\.a\. n\.a\.
Appraisal/Negotiation
n\.a\. n\.a\. n\.a\.
Supervision
06/28/1995 2 TASK MANAGER (1); HS HS
MISSION LEADER (1)
02/26/1996 3 LOGISTICS CONSULTANT S S
(1); TASK MANAGER (1); SR
HEALTH SPECIALIST (1)
10/04/1996 3 OPERATIONS OFFICER (1); S S
HEALTH SPECIALIST (1);
PUBLIC HEALTH SPEC\. (1)
03/12/1997 2 CONSULTANT (1); Task S S
Manager (1)
12/09/1997 3 MISSION LEADER (1); S S
PROCUREMENT (1);
REPRODUCTIVE HEALTH (1)
05/28/1998 3 TASK MANAGER (1); U U
CONSULTANT (1);
PROCUREMENT SPECIALIST
(1)
08/13/1999 4 TASK MANAGER (1); U U
OPERATIONS OFFICER (1);
CIVIL WORKS CONSULTANT
(1); FINANCIAL
CONSULTANT (1)
08/13/1999 5 SR\. HEALTH SPECIALIST (1); S S
SECTOR MANAGER, HNP (1);
OPERATIONS ANALYST (1);
PRINCIPAL HEALTH SPEC
(1); PROCUREMENT OFFICER
(1)
03/21/2000 14 TASK TEAM LEADER (1); S S
PROCUREMENT SPECIALIST
(1); OPERATIONS OFFICER
(1); FM SPECIALIST (1); ADB
TASK MANAGER (1); PROJ\.
MGR\., KFW (I);
CONSULTANT, KFW (2);
FIRST SECRETARY, AUSAD
(1); SR\. PROG OFF\., AUSAID
- 20 -
(1); COUNSELLOR, EU (1); EU
(1); PROJ\. MGR\., EU (1); ADB
(1)
10/11/2000 8 TEAM LEADER (1); S S
PROCUREMENT SPECIALIST
(1); OPERATIONS OFFICER
(1); FM SPECIALIST (1); ADB
TASK MANAGER (1); ADB
PROJECT ASSISTANT (1);
PROGRAMME OFFICER, (1);
CONSULTANT, KFW (1)
04/30/2001 8 TASK MANAGER (1); S S
OPERATIONS OFFICER (I);
PROCUREMENT OFFICER (1);
FM CONSULTANT (1); TEAM
ASSISTANT (1); ASSOCIATE
PROJ ANALYST (1);
CONSULTANT (2)
10/15/2001 12 TASK MANAGER (1); S S
OPERATIONS OFFICER (1);
PROC\. OFFICER (1); FM
SPECIALIST (I); TEAM
ASSISTANT (2); ADB TASK
MANAGER (1); COUNSELLOR
(1); PROJ\. OFFICER (I); SR\.
PROJ\. MANAGER (1); SR\.
PUBLIC HEALTH SPEC (1);
KFW CONSULTANT (1)
04/24/2001 6 TASK TEAM LEADER (1); S S
OPERATIONS OFFICER (1);
PROCUREMENT SPECIALIST
(1); TEAM ASSISTANT (1); FM
SPECIALIST (I); PROJECT
OFFICER (EU) (1)
ICR
09/27/2002 8 TASK TEAM LEADER (1);
PUBLIC HEALTH
SPECIALIST/CO-TEAM
LEADER (1); FP/RH
SPECIALIST (1);
HIV/AIDS SPECIALIST
(1); PROCUREMENT
SPECIALIST (1); FM
SPECIALIST (I);
OPERATIONS OFFICER
(I); EVALUATION
SPECIALIST (1)
-21 -
(1) Staff\.
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ (000)
Identification/Preparation n\.a\.
Appraisal/Negotiation n\.a\. 605\.8 '
Supervision n\.a\. 439\.4 t
ICR n\.a\.
Total 1,045\.2
includes identification/preparation
O includes ICR
- 22 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies O H OSUOM O N * NA
FSector Policies O H OSU*M O N O NA
f Physical O H OSUOM O N O NA
E Financial O H O SU * M O N O NA
E Institutional Development O H * SU O M O N 0 NA
El Environmental O H OSUOM O N O NA
Social
0 Poverty Reduction O H OSU*M O N O NA
Gender OH *SUOM ON ONA
O Other (Please specify) O H OSUOM O N * NA
F Private sector development 0 H O SU O M 0 N 0 NA
O Public sector management 0 H O SU *M 0 N 0 NA
a Other (Please specify) O H OSUOM O N O NA
- 23 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending OHS OS OFU OHU
F Supervision OHS OS OU OHU
2 Overall OHS OS O U O HU
6\.2 Borrowerperformance Rating
X Preparation OHS Os O u O HU
X Government implementation performance O HS Os 0 U 0 HU
z Implementation agency performance OHS Os u O Hu
X Overall OHS Os O u O HU
- 24 -
Annex 7\. List of Supporting Documents
- 25 -
TZGp07k Na\.: 25422
Type: IGS | APPROVAL |
P010395 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 19726
IMPLEMENTATION COMPLETION REPORT
(CR-23570)
ONA
CREDIT
IN THE AMOUNT OF SDR 21\.8 MILLION (US$30\.6 MILLION EQUIVALENT)
TO THE
KINGDOM OF NEPAL
FOR THE
BASIC AND PRIMARY EDUCATION PROJECT
May 10, 2000
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 1999)
Currency Unit = Nepalese Rupees (NRs\.)
NRs\. 68\.00 = US$ 1\.00
US$ 0\.0147 = NRs\. 1\.00
FISCAL YEAR
July 16 - July IS
ABBREVIATIONS AND ACRONYMS
APA Annual Plan of Action
APL Adaptable Program Loan
CDC Curriculum Development Center
DANIDA Danish International Developmnent Agency
DEO District Education Office(r)
DOE Department of Education
GER Gross Enrollment Ratio
HMG His Majesty's Government
IDA International Development Association
MHPP Ministry of Housing and Physical Planning
MOE(C) Ministry of Education (and Culture)
MTR Mid-term Review
NFE Non-formal Education
NFEU Non-formal Education UnitiBPEP
NGO Non-Governmental Organization
OSP Out-of-School Program
PCTDU Primary Curriculun and Textbooks Development Unit
PEP Primary Education Project
PIU Project Implementation Unit
PTTU Primary Teacher Training Unit
RCs Resource Centers
RCDU Resource Centre Development Unit
REDs Regional Education Directorates
RME Research, Monitoring and Evaluation
RP Resource Person
SLC School Leaving Certificate
SMC School Management Comrnittee
UNICEF United Nations Children's Fund
UPE Universal Primary Education
WEP Women's Education Program
Vice President: Mieko Nishimizu
Country Director: Hans M\. Rothenbuhler
Sector Director: Emmanuel Y\. Jimenez
Team Leader/Task Team Leader: Grant Sinclair/Ana Maria Jeria
FOR OFFICIAL USE ONLY
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 1
4\. Achievement of Objective and Outputs 3
5\. Major Factors Affecting Implementation and Outcome 7
6\. Sustainability 9
7\. Bank and Borrower Performance 10
8\. Lessons Learned 12
9\. Partner Comments 12
10\. Additional Information 13
Annex 1\. Key Performance Indicators/Log Frame Matrix 14
Annex 2\. Project Costs and Financing 17
Annex 3\. Economic Costs and Benefits 20
Annex 4\. Bank Inputs 21
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 23
Annex 6\. Ratings of Bank and Borrower Performance 24
Annex 7\. List of Supporting Documents 25
Annex 8\. HMG - Ministry of Education-Basic and Primary Education Project (1992-1998) 26
Project Evaluation Report
This docment has a restricted distnbution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
Project ID: P010395 Project Name: Basic and Primary Education Project
Team Leader: Grant G\. Sinclair TL Unit: SASED
ICR Type: Core ICR Report Date: May 10, 2000
1\. Project Data
Name: Basic and Primary Education Project L/C/TF Number: CR-23570
Country/Department: NEPAL Region: South Asia Regional
Office
Sector/subsector: EP - Primary Education
KEY DATES
Original Revised/Actual
PCD: 03/31/89 Effective: 07/01/92 07/08/92
Appraisal\. 09/11/91 MTR: 12/31/94 01/15/96
Approval: 04/21/92 Closing: 12/31/99 12/31/99
Borrower/lImplementing Agency: GOVT OF NEPAL/MIN\. OF EDUCATION & CULTURE
Other Partners:
STAFF Current At Appraisal
Vice President: Mieko Nishimizu D\. Joseph Wood
Country Manager: Hans M\. Rothenbuhler Jochen Kraske
Sector Manager: Emmanuel Y\. Jimenez Martin Karcher
Team Leader at ICR: Grant Sinclair Thomas Schmidt
ICR Primary Author: Ana Maria Jeria
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU-=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: M
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
Nepal is one of the poorest countries in South Asia\. During the 1980s, the extremely low levels of
most human resources indicators hindered the economic and social development of the Kingdom\. Literacy
was estimated at only 35% (18% for females)\. The primary and non-formal education system suffered
from low enrollment, high drop-out rates, poor quality and lack of adequate school facilities\. Management
problems were pervasive, with the system suffering from lack of planning, poor data and little monitoring\.
Chronic underfunding of the sector hampered both the growth and the quality of basic and primary
education\.
The Ministry of Education and Culture (MOEC) was well aware of these problems and had been
conducting a series of pilot projects designed to address issues of quality and access in basic and primary
education\. Projects such as the earlier Primary Education Project (PEP) supported by IDA and the
Education for Rural Development (SETI) UNESCO Project were experimental in nature, focusing on
innovations designed to test methods to improve the curriculum, teaching materials, teacher training and
supervision\. Although geographically scattered throughout a few districts in the country, data showed that
access, education quality and students' performance levels could be increased\. In 1990, MOEC developed
a Master Plan for the subsector which emphasized the need for investments in quality improvement, access
and management\. In preparing its Eighth Five-Year Plan (FY1993-97), the Government developed an
integrated nationwide program which would be financed by IDA, UNDP, UNICEF, DANIDA and JICA\.
The IDA Basic and Primary Education Project (BPEP) was designed to support this program\.
The major thrust of the BPEP project was to improve quality and access in the basic and primary
education sector\. The Staff Appraisal Report (SAR) recognized that the BPEP project would not allow
Nepal to achieve Universal Primary Education (UPE) by the year 2000, but that it would provide a strong
foundation for later expansion\. Specifically, the project had three objectives: (a) to improve the quality of
primary education; (b) to increase equitable access to primary schooling; and (c) to strengthen the
management of the formal and non-formal primary education delivery system\.
3\.2 Revised Objective:
n\.a\.
3\.3 Original Components:
The project was organized into three components:
3 A quality component, which sought to: (a) simplify and make more relevant the curriculum of the
primary schools; (b) provide improved teacher instructional materials, textbooks and supplementary
materials; and (c) institutionalize a teacher supervision, support and training system\.
* An access component, which financed the strengthening of the non-formal primary education and
literacy programs\. The project supported a number of initiatives to increase participation of girls, the
very poor and those living in remote areas; and renovate and construct additional classroom facilities
for primary schools\.
* An institutional development component, which supported: (a) the strengthening of MOEC's
capacity to plan, manage and monitor its formal and non-formal primary education programs; (b)
assistance to the development of MOEC's capacity to coordinate and manage donor-aided projects; and
(c) improvements in the capacity to plan and monitor physical facilities development and maintenance\.
3\.4 Revised Components:
n\.a\.
3\.5 Quality at Entry:
-2-
The quality at entry is rated as satistactory in this ICR\. The project was well designed and directed
towards addressing the key educational issues of the time\. The objectives were relevant, clearly defined
and had a direct link to the Government's medium-term plans in the sector\. The project benefited from
lessons learned from earlier projects in the sector\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The project satisfactorily achieved its stated objectives, exceeded its physical targets and almost
fully disbursed the IDA Credit\. As was typical of the design of projects of the time, no performance
indicators were described\. Therefore, assessment of achievements in this ICR is based on the quantity and
quality of the project's educational inputs, the processes which were followed to accomplish the wide range
of tasks, and the outcomes as illustrated from analysis of statistical data and from qualitative reports\.
The BPEP project was designed to support the Government's Basic and Primary Education
Program which recommended national objectives and strategies that were based on past project experience\.
The project's SAR noted that in building the primary education system from such a low base, changes in
quality and efficiency of the primary education system would require a long-term perspective\. The BPEP
was seen as the initial building block to increase the quantity and the quality of inputs required to
effectively support a national primary education system --books and educational materials, teaching skills
and competencies, classrooms and furniture, management capacity for planning and monitoring\.
Simultaneously, a major goal was to make schools more accessible to a wide diversity of social groups in
very different environments, and to try out a range of strategies to raise the national literacy levels,
especially among women\.
The BPEP project has laid the foundation for an efficient delivery system for better quality primary
education\. There were improvements in the physical leaming environment resulting from the new and
renovated classrooms, the curriculum and textbook reform, the recurrent training of teachers and other
education officials and the increased number of female primary school teachers\. These contributed to an
increase in children enrolling in primary schools, especially girls and students in remote areas, and a
moderate increase in the proportion of children completing the five-year primary school program, as well as
some improvement in their learning\.
4\.2 Outputs by components:
A\. Improving the Quality of Primary Education Component
(a) Curriculum development\. National curriculum goals and the objectives and expected leaming
outcomes were identified; and the content, methods and subject organization of the curriculum were
determined\. The result was a revised and simplified integrated primary school curriculum for grades 1 to 5
that was gender-sensitive and increased the emphasis on health and environmental issues\. There was key
stakeholder involvement in setting national goals for primary education, identifying primary education
leaming outcomes and contributing to discussions of curriculum relevance and subject organization\. Skills
and expertise were developed amongst curriculum teams on how children leam and teachers teach in the
different contexts in Nepal through a three-year rolling plan\. Materials were tried and tested in increasing
numbers of schools before they were finalized and distributed nationwide\.
(b) Textbook development and distribution\. Textbooks, teachers guides and supplementary materials
- 3 -
were prepared based on the new curriculum\. Textbooks for three subjects in grades 1 to 3, and for five
subjects in grades 4 and 5 were distributed free annually to all children in grades 1 to 3, to all girls in
grades I to 5, and to all students in the 18 remote districts of the country\. The new curriculum, textbooks
and teacher guides were disseminated nationally through inservice teacher training programs\. These
activities were coordinated to introduce the curriculum and textbooks for one new grade level each year
over a five-year period\. The process of textbook and materials development increased participation of
teachers and students in the design and development phases; and coordinated the technical expertise of
illustrators, designers, practitioners and curriculum experts to produce improved instructional text design\.
Book distribution, despite the communication difficulties throughout the country, is mostly effective\.
(c) Inservice teacher training and professional support\. A cascade system of teacher training provided
rapid dissemination of the new curriculum to all teachers of all schools through the country as each grade
level was introduced\. Although this provided a short introduction to the subject content and recommended
methods of the new curriculum and textbooks, there was little follow-up in the 35 districts not included in
the project\. Based on the experience under the previous IDA-supported PEP project, the school cluster
model, with some adaptations, was extended from six to 40 districts in the country\. Teachers received
professional support for the effective implementation of the new curriculum through Resource Persons
(RPs)\. However, given the low base from which BPEP started, the impact of the training varied
considerably\. The RP's role is key to bringing about change in classrooms, but as the system expanded, the
selection criteria and training of RPs were diluted\. Their effectiveness was therefore reduced\. The
politicization of teachers, and the very frequent transfers of RPs, District Education Officers (DEOs) and
Program Coordinators (PCs) over recent years, has also decreased their effectiveness in implementing the
programs\.
National assessment in the three core primary curriculum subjects started in 1997\. Results showed
that mean scores in the Nepali language were 46%, in mathematics 44%, and in social studies 51%\.
Results were different across the three major geographical regions with students in the Hills having slightly
higher correct responses compared with students in the Terai and the Mountains\. The national assessment
of grade 3 will be carried out periodically to assess changes in national standards over the long term\. In
1999, a national assessment of the three core subjects at grade 5 level was conducted and will be repeated
periodically\.
B\. Increasing Equitable Access to Educational Resources Component
(a) Strengthening Non-formal Primarv Education\. Literacy programs and materials were provided for
adults, especially women\. Literacy facilitators were trained and a network of local supervisors for support
to literacy centers provided professional support to about 20 centers each\. Programs for out-of-school
children, especially girls, were provided for those who have difficulty in attending regular primary schools\.
Early childhood centers were conducted near schools that had large numbers of under-age children in grade
1, so that the young children could benefit from appropriate educational programs and their older siblings
could be retained in primary school\. Equivalence has been established between out-of-school programs and
the grade 2 curriculum\. About 152,000 children have benefited from these programs\. But tracer studies
indicate that about 75% of the children, especially those belonging to the disadvantaged communities (so
called "hard core" groups) and those living in the most remote areas, did not transfer to the formal system\.
Local support for non-formal education (NFE) programs was mobilized which resulted in wider
participation\. The project's NFE unit prepared annual plans and programs, trained facilitators and
supervisors, produced and distributed materials, coordinated with NGOs (national and intemational)
engaged in NFE, and monitored program implementation\.
- 4 -
(b) Initiatives to increase participation of girls in schooling\. More female teachers were recruited, and
trained, to encourage more girls to attend primary school\. Scholarships were awarded to girls from
disadvantaged groups and the MOE established a Women's Education Unit (WEU)\. Other initiatives to
increase female participation included provision of sanitation facilities at schools, conducting alternative
programs for out-of-school children and literacy programs for women and providing early childhood
programs to allow older siblings in grades 1 and 2 (usually girls) to be able to attend regularly and without
having to 'mind' younger children brought to class with them\. Females as a percentage of primary school
teachers increased from 14% in 1991 to 23% in 1997; 61% of the additional primary school teachers
appointed between 1991 and 1997 were female\. Females as a percentage of primary school teachers in the
18 remote districts increased from 7% in 1991 to 16% in 1997; 64% of the newly recruited teachers were
female\. There was also a significant increase of about 32% in girls' gross enrollment ratio (GER) in the 18
remote districts\. The GER increased nationally from 106% (females 83%) in 1991 to 122% (females
104%) in 1997\.
(c) Renovation and construction of additional classrooms\. An improved physical environment was
provided to about 800,000 children through the classroom construction and renovation program\. New and
replacement classrooms were built through a community cost-sharing agreement with the School
Management Committees (SMCs) to increase acconmmodation capacity\. Community construction
increased SMC ownership of schools, and is cost-effective\. Instead of the standard space allocation for 35
students in each classroom, larger rooms built for classes with high enrollment and smaller rooms for
classes with low enrollment were introduced in the last year of the project in the Terai (Chitwan district)\.
The quality of construction could have been better with more engineers in the districts, trained supervisors
in clusters and a system of inspection and certification\. Community perception of quality achieved,
however, has been generally satisfactory when compared to other local construction\. Maintenance of
schools by the comnmunities remains an issue\.
The project has been able to construct 14,232 new classrooms, rehabilitate 8,462 classrooms and
supply furniture allowing group activities to 13,412 classrooms\. Communities constructed classrooms and
shared the cost as per agreements signed between the DEOs and the SMCs\. Communities contributed from
15% to about 48% of the cost, as against 40% envisaged\. In general, it took longer to complete the
construction work because of delayed contribution by the communities\. However, community construction
has made possible a high degree of ownership of the school by teachers and communities and is cost-
effective as well\. In spite of this, links between school, parents and communities are still weak\. The
communities have to go a long way in developing their capacities\. Constitution and selection of SMC
members require changes to give adequate representation to parents\.
C\. Improving the Management of the Subsector Component
(a) Strengthening MOE's capacity\. In terms of implementation achievements, organizational structures
and operating procedures of the BPEP project have on the whole been effective\. A foundation has been laid
to strengthen the Ministry's capacity to plan, manage and monitor education programs through the
establishment of a Policy Formulation and Coordination Committee (PFCC), a Project Implementation Unit
(PIU) and several other units at central and district levels\. However, the cancellation of UNDP technical
assistance to this activity bogged down progress towards capacity building at MOE (see section 9(b))\.
Towards the end of the project, a cadre of trained personnel was created by sending 204 key persons
abroad on study tours and training courses\. In addition, training was provided to 4,189 Head Teachers,
639 RPs/School Supervisors, 40 Program Coordinators, and the functioning SMCs\. Localized training
facilities have been created for the teachers by establishing 670 Resource Centers (RCs); 314 RC buildings
-5 -
were constructed\. A better working environment has been created for the DEOs by constructing 20 office
buildings\. Adequate planning freedom, financial and administrative powers were given to the PIU\.
(b) Monitoring and evaluation\. Formats for planning, monitoring, evaluation of all units, and district
offices have been developed and used\. Though established, the Education Management Information
System (EMIS) has been mostly working as a data collection unit\. Thirty-one research and evaluation
studies have been conducted and several of them disseminated through workshops\. Several major studies
to prepare the second phase (BPEP II) were finalized\. A better system, capable of collecting, analyzing
and disseminating education data, as well as clearly formulated performance indicators, needs to be
developed\.
(c) Donor Coordination\. Donor coordination was effectively managed by the PIU, which facilitated the
integration of project funds\. Joint Annual Plans of Action (APA) have been prepared and needs for BPEP
II have been identified\. The collaboration among donors begun under BPEP has been extended further in
support of BPEP II preparation\. When IDA fumds were not available for some activities, other donors
supported the activities of the project, e\.g\., during the last year of the project\.
(d) Construction Management\. Agreement between the Ministry of Housing and Physical Planning
(MHPP) and MOE collapsed early during the implementation of the project\. Therefore, a Physical
Planning and School Mapping Unit (PPSMU) was added to the PIU\. Standard construction designs were
developed to suit local materials and skill availability but structural details were not provided\. The school
teachers have been trained to carry out routine maintenance using the maintenance manuals and the tool
kits provided for this purpose\. But very few schools are doing any maintenance\. Even simple cleaning of
the school compound is not done thoroughly\. Although several missions recommended that the
maintenance trainers be absorbed into the system through hiring them permanently as master technicians,
these recommendations were not followed\.
4\.3 Net Present Value/Economic rate of r eturn:
n\.a\.
4\.4 Financial rate of return:
n\.a\.
4\.5 Institutional development impact:
The institutional development impact has been rated as modest\. Organizational structures and
operating procedures within the PIU have on the whole been effective\. However, progress towards the
project's institutional development objectives remained limited\. A permanent Program Management
Division, replacing the PIU and designed to coordinate the activities of all the donors in the sub-sector, was
never established\. BPEP activities have been running parallel to the regular system\. This was partly due
to a planned UNDP technical assistance program which did not materialize (see Section 9(b))\. MOE has
established a Department of Education (DOE) to institutionalize structures and activities that will provide
sustainability\. In addition, frequent transfers of DEOs, PCs and some Unit heads have been a problem\.
Project directors (PDs) were not transferred so frequently\. Stability in staffing is a prerequisite for
effective institutional, technical capacity building ensuring accountability of key professionals and
administrative staff\.
In spite of all this environment, a coherent policy, institutional framework and primary education
sector strategy with a clear long-term vision have been developed, which form the basis for the future
-6 -
investment program\. Three major planning exercises, namely the Master Plan for Basic and Primary
Education, the Development Program, and the Project Implementation Plan, were recently conducted by
MOE staff and local consultants, using limited inputs from expatriates\. Also on the positive side, better
awareness has been created among the Head Teachers and SMCs about school management and efficient
use of resources\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
The project was designed in the period immediately prior to the introduction of democratically
elected governments in Nepal\. The first national parliamentary elections were conducted in 1992, the year
the project became effective\. During the last year of project implementation, the third national elections
were conducted (May 1999)\. In the interim, there were nine different governments due to lack of a majority
party in Parliament and frequent reforming of coalitions\. An outcome of these changes was the
appointment of eight different Ministers of Education over the project period, frequent changes of civil
service personnel reflecting swings in changes in political power and the politicization of teachers as agents
of political change at the community level\.
The primary education base from which the project began was very low-a large percentage of
primary school teachers had no preservice certificate of teaching, and many had educational levels of SLC
(grade 10) only\. There were a series of subject syllabuses for grades 1-10, which made leaming difficult,
especially in the lower grades\. Only a few textbooks were available to students\. In addition, the pool of
national expertise in education areas relating to primary education was extremely limited; there was little
national expertise in child psychology, pedagogical theories and teaching practice appropriate to primary
education\. This was reflected in the content of subject syllabuses and design of textbooks in use at the
time\.
The cancellation of UNDP technical assistance created a gap in technical support, which hindered
the capacity building at the MOE and delayed the merger of project units into the MOE (see Section 9(b))\.
5\.2 Factors generally subject to government control:
The project was based on the Government's Master Plan for the primary education sector\. Policies
have been consistently applied relating to curriculum, textbook distribution, recruitment of female teachers,
community cost-sharing of school construction and strategies targeted at inclusiveness of all children in
primary education\. Late in the project period a Local Self-Govemance Act was passed (1999) to enhance
community participation in decision-making and service delivery, which should strengthen school
management in the future\. A Teaching Service Commission Act was also passed to provide a regulatory
framework and a transparent teacher recruitment process\. In addition, a five-year subsector program for
the BPEP II was developed, providing the basis for continued donors' support\.
The political impact of the factors referred to under Section 5\.1 above was greatest at the district,
resource center and school levels where very frequent changes occurred among DEOs, PCs and RPs\. For
example, in one district there were nine different DEOs in one year and several PCs were transferred at
least once\. In many cases, RPs were appointed without regard to the selection criteria and were also
frequently transferred\. Moreover, the impact of the political instability during the latter years of the project
affected the stability of the civil service, weakening implementation capacity and accountability of district
administration and resulting in overly frequent transfer of field staff and inappropriate recruitments of RPs\.
-7 -
In this context, it is remarkable that within the seven years of the project, so much was achieved in terms of
project implementation\. It is a reflection of the commitment of all political parties to the priority of
development of the primary education sector and the dedication and innovations of project staff\.
Two decisions taken midway during the project had a negative impact on the results of program
activities at school and district level, namely the change in RP status and their heavy involvement in
upgrading certificate training\. The Government is aware of these and, in preparing for the second phase of
BPEP, it is reviewing the role and function of the RPs and has taken policy decisions about primary teacher
education that will lead to a coherent teacher education, training and reward system over the next few
years\.
5\.3 Factors generally subject to implementing agency control\.
Project management has been effective at the PIU and its units responsible for curriculum,
textbook and the teacher professional support system\. Management of the project at district and cluster
levels has been mainly affected by frequent transfers of field staff\. A large amount of donor-supported
long-term intemational technical assistance has been provided to the project for support to the special
education programs and engineering supervisors\. Extensive financial and physical monitoring has been
carried out and a number of qualititive studies conducted\. There have been no problems with release of
counterpart funds, and administration by the project unit has been satisfactory\. The dissemination and use
of information has not always been used effectively in decision-making\. The Borrower contribution to the
ICR has been prepared and the Ministry is carrying out an independent evaluation of the project\. Lessons
learned from the project have fed into the preparation of the second phase of the Basic and Primary
Education Program and the Program Implementation Plan for BPEP II which will be supported by joint
funding from IDA, Danida, EC, NORAD and Finland; and additionally, with support from Unicef and
JICA, and from ADB in the near future\.
5\.4 Costs and financing:
At appraisal, the project was envisaged as a combined effort of Government and all donors in
improving primary and basic education\. Thus, the project cost appraisal estimates of US$136\.5 million
also incorporated donor estimates of their contribution to this effort\. However, because of issues of timing
or donor preference for other modes of participation and financing, actual costs do not include about
US$50 million from other donors (JICA - US$15 million, UNDP - US$7 million, UNICEF's
under-funding - US$7\.68 million, ADB's separate project - US$20\.2 million)\. Likewise, US$18 million
was estimated at appraisal as community contribution\. Although communities contributed from 15 percent
to about 48 percent of classroom construction, the final aggregate figure cannot be calculated with
accuracy due to the wide range of activities and degree of participation\.
The remaining difference of US$14\.82 million between the appraisal estimate and final costs can be
explained by: (a) lower construction costs resulting mainly from not using another line agency in
construction management; and (b) reduced activities under a few sub-components, such as teacher
recruitment and training, and curriculum and textbook development\.
The total actual project financing of $53\.8 million covered the original scope of the project
(excluding the activities of donors who subsequently did not participate jointly), broken down as follows:
IDA - US$30\.58 million (US$30\.6 million equivalent at appraisal); Danida - US$11\.09 million (US$10
million at appraisal), UNICEF - US$3\.12 million (US$10\.8 at appraisal); NORAD - US$0\.46 million;
and HMG - US$8\.55 million\.
-8 -
Finally, there were no significant implementation and/or disbursement delays\. Moreover, the project
closed as originally scheduled (December 31, 1999)\.
5\.5 Procurement and Financial Management:
Despite frequent key staff changes, PIU staff carried out procurement activities smoothly under the
project\. For physical activities, they were able to obtain the support of the Physical Planning and School
Mapping Unit (PPSMU)\. PIU staff participated in Bank procurement seminars held in Kathmandu, where
they discussed general project procurement issues in different sectors\.
In general, BPEP's accounting and internal control systems were satisfactory, as they were all
standardized by HMG\. PIU staff kept good physical progress and financial records on project activities,
which resulted in good accountability and financial management practice\. Audit reports were generally
submitted on time\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The project Sustainability has been rated "Likely"\. The Government is implementing the second
phase of the basic and primary education program, which is expected to continue and consolidate the BPEP
components, as well as expand and introduce new approaches\. This will unquestionably ensure
sustainability\. The BPEP II program is much larger in terms of size of investment and scope of
implementation\. Some policy decisions which are being introduced, such as school and district planning,
the introduction of automatic promotion or liberal promotion in primary grades, the inclusion of parents,
women and disadvantaged community members on the SMCs, and the introduction of compulsory primary
education through a decentralized framework, enhance the prospects of sustainability of the BPEP project\.
These decisions would not have taken place had BPEP not initiated them or had it not demonstrated the
positive outcome of such initiatives\.
Very importantly, a number of policy documents indicate government's priority to education and,
in particular, to the basic and primary education subsector\. The policy framework for BPEP II indicates
that 15% of the total budget would be allocated to the education sector with 55% made available for basic
and primary education, which would be partly supplemented by alternative sources of funding mobilized by
the communities\.
In the MOE restructuring, the government has already made a meaningful effort to institutionalize
the functions of the BPEP units and their programs\. The establishment of the DOE is an important step
towards institutional sustainability\. The BPEP units and components have been fully integrated within the
main framework of MOE and the academic and management capability of curriculum developers, teacher
trainers, supervisors, DEOs, Resource Persons, and headmasters will ensure the continuing improvement of
the subsector and enhance technical sustainability\.
Finally, the Government has also indicated that it will increase delegation of decision-making and
planning for primary education to the district, the school and the community, while helping communities
and local bodies to assume greater responsibility for basic and primary education\. The recently enacted
Local Self-Governance Act (1999) provides a legal basis for devolution of authority and responsibility
from central to local levels\. Increased planning, management and monitoring functions to be carried out at
-9-
districts and school levels will promote ownership of the program by the stakeholders and prepare them to
sustain local level activities\.
6\.2 Transition arrangement to regular operations:
Educational change and school environment are long-term processes which typically produce their
impact as a result of well-designed interventions sustained over a long period\. A foundation has been laid
for future interventions through the good implementation progress of this project\. BPEP II has been
developed and will be funded by a consortium of donors\. The project has created the demand for new
institutions to provide organizational infrastructure, and to promote and sustain educational development\.
MOE has recently decided to create such new institutions\. DOE and the Non-formal Education Council
(NFEC) at the central level will take charge of formal and non-formal primary education respectively\. This
in itself represents an important outcome of the BPEP program\. These two institutions are to absorb the
relevant components of BPEP\. The project has trained a cadre of MOE personnel who can take
responsible positions in DOE and other MOE departrnents\. The challenge for the Ministry is how to
upgrade the capacity of these new as well as existing institutions\. This is the task for BPEP II\.
Development activities carried out under BPEP will be consolidated (in the case of curriculum
implementation and professional support for teachers through school and cluster based activities) and will
be expanded to the remaining districts\. Communities and districts with the lowest participation rates and
the lowest girls GER will be given priority in resource allocation and planning\. In addition, lessons learnt
from BPEP led to decisions to increase school and community planning, management and monitoring of
primary schools to improve school quality and to allocate resources\. The integration of the RC/school
cluster system into the regular system still remains an outstanding issue\. Despite the policy statement on
promotion of RCs in the country, it has not yet been translated into operational terms and national
strategies are not yet in place\.
The multi-donor supported core investment plan for the BPEP II will release funds on an annual
basis based on need, past performance in the subsector against agreed benchmarks and within an agreed
policy framework\. Key performance indicators will assess system progress over a ten-year period and
annual benchmarks for more efficient planning purposes\. The indicators will address access, equity,
efficiency, leaming achievement, teacher performance and institutional capacity progress\. The Policy
Framework for Basic and Primary Education sets out policies, strategies and monitoring indicators for the
subsector program and will provide the standard against which annual work plans and budgets will be
prepared, implemented and monitored\. District planning and school improvement planning and monitoring
would be in compliance with the policy framework and any major change in the policy framework would be
agreed with the large donor consortium supporting the second phase\. Donor coordination will be the
function of the MOE and common procedures for monitoring and reporting have been agreed\. IDA has
prepared an Adaptable Program Loan (APL) for a proposed ten-year support to Nepal's Basic and Primary
Education Program\. The APL received Board approval on March 29, 1999 and the three-year first phase
of the APL was declared effective on October 19, 1999\.
7\. Bank and Borrower Performance
Bank
7\. 1 Lending:
With the possible exception of the management component and its proposed financing arrangement,
the project was well designed and directed towards addressing the key educational issues of the time\. The
objectives were therefore relevant, clearly defined and had a direct link to the Govemrnment's medium-term
- 10 -
plans in the sector\. The project was informed by lessons from earlier projects in the sector\.
7\.2 Supervision:
A total of eight full IDA missions assessed the progress at various stages in project implementation
and provided assistance in identified areas of need\. The BPEP PIU prepared documentation to facilitate the
work of the missions\. The missions consisted of national and international experts, with relevant
backgrounds in project management and primary education development\. Due to the Bank's ongoing
reorganization during the life of the project, there were changes of Bank task team leaders (five times) and
mission members and this hampered systematic follow-up and caused some discontinuity\.
7\.3 Overall Bankperformance:
A very good working relationship was established and maintained among donors and the education
authorities\. Supervision missions played a supportive role in policy development and the implementation of
the project, and the advice and assistance provided contributed significantly to expediting project
implementation\.
Borrower
7\.4 Preparation:
In 1990, MOEC developed a Master Plan for the subsector which emphasized the need for
investments in quality improvement, access and management\. In preparing its plan for the Eighth
Five-Year Plan period, the Government developed a US$136\.5 million seven-year integrated nationwide
program to be financed by HMG, IDA, UNDP, UNICEF, DANIDA and JICA\. IDA agreed to support the
Government's program through a US$30\.6 million Credit, which became effective on July 8, 1992\.
7\.5 Governzment inmplementation perjbrmance:
Government implementation was characterized by a high number of Ministers of Education over
the project period, frequent changes of civil service personnel (reflecting swings in changes in political
power) and the politicization of teachers as agents of political change at the community level\. The impact
on the project was greatest at the district, resource center and school levels where very frequent changes
occurred in DEOs, PCs and RPs\. Coordination among ministries was difficult\.
7\.6 ImplementingAgency:
The BPEP PIU was in charge of overall planning, programming, implementing, coordination,
supervision and monitoring of the project activities\. The project unit was headed by a Project Director\.
Over the life of the project, there have been three Directors, two of whom were on secondment from
Tribhuvan University; the other was a regular employee of the MOE\. The leadership of the project
remained relatively stable because the last two Directors were recruited from among project staff\. Many
other educational projects operating in Nepal during the same period saw more frequent changes in
leadership positions\.
7\.7 Overall Borrower performance:
Project components were largely implemented and IDA funds were almost fully disbursed\. The
BPEP project was effective in managing donors inputs\. In general, MOE made every effort to fulfill its
designated responsibilities, even at times of frequent changes in the Government\. Over the years, however,
- 11 -
the Government failed to accomplish some of its responsibilities\. In particular, MOE was unable to
integrate fully the BPEP components and activities within the mainstream of the Ministry during BPEP
implementation, and to regularize some of the personnel hired under the project\.
8\. Lessons Learned
Most key BPEP project lessons have already been incorporated in the design of the recent BPEP II project\.
These are:
Quality:
Although BPEP has laid the foundation for an efficient delivery to improve the quality of
education, it did not accomplish substantial improvements in the learning and achievement of students\.
Improvement in quality can be achieved where attention is focused on acquisition of basic learning skills
and by introducing an integrated approach at the school level to promote student learning, teacher
performance and school development\. BPEP II is designed to adapt and expand the school cluster model
for professional support in order to improve teaching and learning in primary schools, and it will focus on
strengthening curriculum implementation especially in grades 1-3 and support grade teaching and
multi-grade teaching in small schools\. Government and donors have agreed on a policy framework
supporting this next phase (BPEP II) which will provide the basis to improve efficiency and quality of
primary education in Nepal\.
Access\.
Strategies targeting the neediest can increase their participation in education\. Interventions to
increase girls and out-of-school children enrollment and retention through the appointment of female
teachers, provision of textbooks and scholarships, sanitary facilities in schools, literacy programs for
women, early childhood programs for siblings and the strengthening of the professional support for teachers
in their schools, result in increased access and participation of primary students\. Parents and local
communities must be closely involved in delivery of educational services if the needs of diverse groups are
to be met\.
Institutional development:
The integration of project management structures into the regular education system is not possibie
unless there are clear reinforcing policies and a change in bureaucratic culture\. A lean, field-based project
management structure with flexibility to acquire technical expertise when needed is the most appropriate
management approach, provided frequent changes in staff do not occur\. Stability in staffing is a
prerequisite for effective institutions, technical capacity building and accountability among key professional
and administrative staff\. In addition, good monitoring and evaluation, and sound financial management
contribute substantially to project success\. Ensuring communities' ownership in school construction and
involvement in school management and teacher monitoring are essential for increasing accountability\.
BPEP II will increase community management capacity through a district planning process that will
increasingly be built on school quality improvement plans prepared by communities\. Project development
emphasized a strong donor willingness to support a core basic education program\. Donor cooperation can
be effective provided firm funding commitments and agreements on funding arrangements and supervision
are reached before implementation begins\. Execution of BPEP II by the Department of Education in the
Ministry is expected to lead to stronger ownership by the MOE as a whole\.
9\. Partner Comments
(a) Borrower/implementing agency:
The Borrower's independent Project Evaluation Report is attached as Annex 8\. MOE and the
- 12 -
National Planning Commission have communicated in writing to IDA that this ICR is acceptable to them\.
(b) Cofinanciers:
Whilst DANIDA reported that this ICR is thorough and provides a good account of
implementation of the project (Letter of March 17, 2000), UNDP commented (Letter of May 8, 2000) that
slow progress towards capacity building and the absence of a clear-cut decision on the part of Government,
led to the cancellation of their technical assistance in late 1996\. Further, UNDP stated that since MOE did
not have a structure and merger plan, and MOE did not accept their September/October 1996 missions
recomrnendation for redesigning the technical assistance, UNDP had to cancel its assistance\.
(c) Other partners (NGOs/private sector):
10\. Additional Information
-13-
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome /m act Indicators:
NOTE: At the time of the design of the Component 1: (a) Proportion of teachers The following improvements in the primary
project, it was not usual practice to include applying improved teaching practices; and school system have been achieved: (a) the
outcome and performance indicators in the (b) Increased leaming achievement\. gross enrollment ratio increased nationally
SAR\. Nevertheless, around the mid-term from 106% (females 83%) in 1991 to 122%
review some broad indicators (listed in the Component 2: Percentage increase in (females 104%) in 1997; (b) the learning
adjacent column) were introduced\. enrollment and aKtendance in primary environment has improved through enhanced
Mechanisms for monitoring these indicators schools (boys and girls) and NFE Centers\. physical facilities, with 14,232 additional new
systematically are not yet in place\. Since the classrooms built, and 8,462 classrooms
building-up of the primary education system Component 3: (a) Effectiveness of work rehabilitated; (c) curriculum and textbook
started from a low base, the BPEP was planning, progress reporting and M&E reform has led to the introduction of an
envisaged as the initial building block to systems; (b) Output of resource institutions; integrated curriculum for primary education
improve primary education quality as well as and (c) Achievement and disbursement data which facilitates leaming; (d) a
to increase access to primary educabon\. by district\. criterion-based national assessment of three
core subjects was carried out in 1997;
results indicated that mean scores in Nepali
language were 46%, in Mathematics 44%
and in Social Studies 46%; (e) teachers have
been retrained, and female primary school
teachers increased from 14% in 1991 to 23%
in 1997; in addition, 61% of the addibonal
primary school teachers appointed between
1991 and 1997 were female; (f) the rate of
complebon of the five-year primary school
program has moderately increased; (g)
community construction increased SMC
ownership of schools and is cost effectve;
(h) MOE's capacity to plan, manage and
monitor education programs has been
strengthened; and (i) the project made
inroads in early childhood education and
non-formal education\.
Output Indicators:
Curriculum Development Cumiculum (Grades I - V) = 1
Curiculum Handbook Development (Grades
- V)= 1
Content Elaboration (Grades I - V)
Textbook Development Textbooks (Core Subjects: Nepali, Math &
Social Studies in Grades I - V and English
and Science in Grades IV & V) = 19
Text Materials for Grade I and 11 on Mother
Tongue = 2
Teachers' Guide (Core Subjects + Physical
Education and Creative Arts in all five
grades) = 29
Teachers' Resource Materials = 11
Supplementary Matenals Grade IlIl Math and Nepali (Copies) 6000 +
6000= 12000
Children Materals and Supplementary
Materials = 17
- 14 -
In-service Teacher Training (No\. of Teachers Curriculum Dissemination (Teachers) =
Trained) Program 107271
Master Training Program = 564
Recurrent Training (Whole School
Approach) = 37651
Teacher Training on Grade I - V Curriculum
= 90607
2\.5 Months Teacher Training = 8511
150 Hrs\. Teacher Training = 3986
180 Hrs\. Teacher Training = 8125
12 Day Teacher Improvement Training
(Grade Teaching) = 994
12 Day Teacher Improvement Training
(Multi-grade Teaching) = 3843
12 Day Teacher Improvement Training (Extra
Curricular) = 1448
Resource Center Development Program
Establish 500 resource centers (RCs)
Continuous Assessment Program Minimum Leaming Achievement Minimum Learning Achievement
Identification for Grade I - lil (Nepali, Math & Identification for Grade I - IlIl (Nepali, Math &
Social Science) = 3 Social Science) = 3
School Facilities Construction Management Maintenance Training = 7152
Program: (a) expansion and replacement of Distribution of Manuals for School Building
19,000 classrooms; Maintenance = 7690
(b) essential repairs to about 6,000 Distribution of Tool Box = 7640
classrooms Refurbishment of MOE Building = 1
DEO Building = 20
Pit Latrine = 330
Water Supply = 191
New Classroom Construction = 14232
Classroom Rehabilitation = 8462
Furniture for Classroom = 13412
RC Building Construction and Furnishing
314
Non-Formal Education Program District Level Training for Facilitators and
Supervisors = 38626
Out of School Program (Participants) =
151853
Women's Education Program (Participants)
= 265362
Adult Education Program (Participants) =
45659
Neo-Literacy Program (Participants) = 6625
Chelibeti Program (Participants) = 19818
Special Education Program District Level Disability Survey (District) 15
Awareness Training (Peoples Trained) = 225
Hostel Management (RC Classes) = 179
Special Education Training to the Primary
Teachers = 203
Scholarships for Physical Disabled Children
= 2700
Refresher Training to the Resource
Teachers = 281
Inclusive Training (Teachers) = 84
Vocational Skill Training for Teachers = 40
Women Education Program Recruitment of Female Teacher = 4151
Training for Women Teachers = 3588
Awareness Program = 500
Training to the Resource Persons = 176
Training to the Community Motivators = 600
Early Childhood Development Program Establishment of Classes - 1200
Training to Teachers = 2232
Training of Trainers = 221
- 15-
Compulsory Primary Education Program Compulsory Primary Education
Implementabon (Districts) = 5
Scholarship Distribufion = 27650
Program Management Monioring Package Orientation ( DEO, PC,
RP, Overseer, NFE Facilitators and
Supervisor) = 480
District, RC and School Register (Copies) =
13384
District, RC and School Register Package
Orientation (DEO, PC and RP ) = 418
Physical facilities surveys of primary schools School Physical Facilities Survey (Districts)
in about half of the districts in Nepal (37) = 40
School Mapping (Districts) = 75
Development of Design of Primary Schools
(Mt\., Hill and Terai) = 3
Management training program
Headmaster Training = 4189
End of project
-16-
Annex 2\. Project Costs and Financing
Anpraisal estimate Actual /a
Local Foreign Local Foreign
Source Costs Costs Total Costs Costs Total
IDA
Civil Works 9\.12 6\.08 15\.20 16\.35 16\.35
Professional Fees 0\.10 - 0\.10
Furniture 1\.57 0\.03 1\.60 0\.29 0\.29
Equipment 0\.10 0\.70 0\.80 0\.07 0\.08 0\.15
Vehicles 0\.04 1\.06 1\.10 0\.05 0\.46 0\.51
Books & Journal - - 0\.00 0\.01 0\.01
Technical Assistance
International Consultants - - 0\.00 - - 0\.00
Local Consultants 0\.10 - 0\.10 - - 0\.00
Sub-total 0\.10 0\.00 0\.10 0\.00 0\.00 0\.00
Local Training 4\.90 - 4\.90 6\.57 - 6\.57
Salaries of Add'l Staff & Operating Costs 6\.60 - 6\.60 4\.91 - 4\.91
Operation & Maintenance 0\.00
Buildings 0\.51 - 0\.51
Vehicles 1\.22 - 1\.22
Sub-total 6\.60 0\.00 6\.60 6\.64 0\.00 6\.64
Consumable Materials 0\.16 0\.04 0\.20 0\.06 0\.06
Subtotal IDA 22\.70 7\.90 30\.60 30,04 0\.55 30\.58
DANIDA
Civil works and Professional Fees n\.a n\.a n\.a 4\.11 - 4\.11
Equipment n\.a n\.a n\.a 0\.002 - 0\.0
Other (parallel) n\.a n\.a 10\.00 6\.98 6\.98
Subtotal DANIDA 0\.00 0\.00 10\.00 1 1\.09 0o00 1 109
Other Donors
UNICEF 0\.00 0\.00 10\.80 3\.12 0\.00 3\.12
ADB (separate financing) n\.a n\.a 20\.20 n\.a n\.a n\.a
UNDP (did not materialize) - - 7\.00 - - 0\.0
Japan/JICA Ic - - 15\.00 - - 0\.0
NORAD (Local Trg/incr\. Oper Cost\.) - - 0\.00 0\.46 - 0\.46
HMG Nepal
Civil Works & Professional Fees 0\.17 0\.17
Furniture 0\.01 0\.01
Equipment & Vehicles 0\.01 0\.01
Incremental Salaries, Consumable Mats\.
& Operations and Maintenance 8\.35 8\.35
Subtotal HMGN 42,90 0\.00 42790 /d 8\.55 0\.00 8\.55
Total project financing 65\.60 7\.90 136\.50 53\.25 0\.55 53\.80
Source: BPEP Staff Appraisal Report (March 27, 1992); MOE (BPEP)\.
a/ Includes actual data up to FY1997/98 and estimated expenditures for FY1998/99\. Breakdown into local
and foreign actual costs has been given to the extent possible\.
b/ USS amount fluctuated due to US$/SDR exchange rate; US$I=NRs 55 (1993/98); NRs 67\.35 (1999)\.
c/ Japan's original financing did not materialize; however, JICA provided construction materials for school
construction (actual figures not available)\.
d/ Includes US$18 million estimated as community contribution; actual data are not available\.
- 17 -
Project Costs b Procurement Arran ements (A raisal Estimate) (US$ million equivalent)
1\. Works 1\.50 4\.70 15\.90 36\.00 58\.10
(1\.50) (4\.20) (9\.60) (0\.00) (15\.30)
2\. Goods 1\.50 0\.70 1\.60 18\.20 22\.00
1\.50) (0\.50) (1\.40) (0\.00) (3\.40)
3\. Services 0\.00 0\.00 0\.10 13\.10 13\.20
(0\.00) (0\.00) (0\.00) (i0\.10)
4\. Local Training 0\.00 0\.00 17\.00 0\.20 17\.20
and Studies (0\.00) (0\.00) (4\.90) (0\.00) (4\.90)
5\. Salaries 0\.00 0\.00 21\.00 0\.00 21\.00
(0\.00) (0\.00) (6\.70) (0\.00) (6\.70)
6\. Operational Costs 0\.00 0\.00 0\.20 4\.80 5\.00
(0\.00) (0\.00) (0\.20) (0\.00) (0\.20)
Total 3\.00 5\.40 55\.80 72\.30 136\.50
(300) (4\.70) (22\.90) (0\.00) (30\.60)
a/ Includes cornmunity construction, international and local shopping and consultant selection according to
IDA Guidelines\.
b/ NRB\.F\. means non-Bank financed\.
cl Books and Journals under Goods (NBF category) include UNICEF procurement\.
Project Costs b Procurement Arran ements (Actual/Latest Estimate) (US$ million e uivalent)
1\. Works 1\.60 5\.02 11\.13 2\.88 20\.63
_______________________ =(1\.60) (4\.49) (10\.26) (0\.00) (16\.35)
2\. Goods 0\.42 0\.15 0\.41 0\.00 0\.98
(0\.42) (0\.14) (0\.40) (0\.00 (0\.96)
3\. Services 0\.00 0\.00 0\.00 4\.46 4\.46
(0\.00) 0\.00) (0\.00) (0\.00) (0\.00)
4\. Local Training 0\.00 0\.00 6\.57 6\.10 12\.67
and Studies (0\.00) (0\.00) (6\.57) (0\.00) (6\.57)
5\. Salaries 0\.00 0\.00 11\.21 0\.00 11\.21
(0\.00) (0\.00) (4\.91) (0\.00) (4\.91)
6\. Operational Costs 0\.00 0\.00 3\.85 0\.00 3\.85
(0\.00) (0\.00) A1\.79) (0\.00) (\.79)
Total 2\.02 5\.17 33\.17 13\.44 53\.80
(2\.02) (4\.63) (23\.93) (0\.00) (30\.58)
Note: (a) Discrepancy between actual and appraisal estimate reflects changes in donor programs (see above financing table and section 5\.4
on Costs and Financing); (b) Breakdown based on SAR estimates (ICR guidelines with this new format were issued after the ICR mission)\.
" Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted
staff of the project management office, training, technical assistance services, and incremental operating costs related to
(i) managing the project, and (ii) re-lending project funds to local govemment units\.
- 18-
Project Financing by Component (in US$ million equivalent)
Anuraisal estimate (US$M) Actual (US$M) /a /b
Components Local Foreign Total Local Foreign Total
A\. IMPROVING QUALITY OF
BASIC & PRIMARY EDUCATION
1\. Curriculum Development 1\.2 3\.0 4\.2 0\.2 0\.5 0\.6
2\. Textbook Development 4\.4 7\.5 11\.9 0\.7 1\.2 1\.8
3\. Inservice Teacher Training 12\.7 4\.1 16\.8 6\.5 2\.0 8\.5
4\. Additional Teacher Recruitment 13\.2 - 13\.2 8\.0 - 8\.0
5\. Initial Training 6\.4 2\.3 8\.7 0\.6 0\.3 0\.9
Sub-total 37\.9 16\.9 548\. 16\.0 3\.9 19\.9
B\. ACCESS TO BASIC &
PRIMARY EDUCATION
1\. Non-Formal Education 7\.4 0\.1 7\.5 4\.6 0\.05 4\.7
2\. Primary School Construction 27\.9 15\.4 43\.3 14\.7 8\.3 23\.0
Sub-total 35\.3 15\.5 50\.8 19\.3 8\.3 27\.7
C\. INSTITUTIONAL DEVELOPMENT
1\. Facilities Management 1\.1 1\.1 2\.2 1\.1 1\.0 2\.1
2\. Education Management Training 3\.5 0\.6 4\.1 - - -
3\. MOEC Strengthening 2\.0 2\.9 4\.9 0\.1 0\.2 0\.3
4\. Primary School Design & Maintenance 0\.3 1\.2 1\.5 0\.6 3\.3 3\.9
Sub-total 6\.9 5\.8 12\.8 1\.8 4\.5 6\.3
Baseline cost 80\.1 38\.2 118\.4 37\.1 16\.7 53\.8
Contingencies:
Physical 3\.5 2\.7 6\.2 - - -
Price increase 7\.9 4\.0 11\.9 - - -
Sub-total 11\.4 6\.7 18\.1 0\.0 0\.0 0\.0
TOTAL PROJECT COSTS 91\.5 44\.9 136\.5 37\.1 16\.7 53\.8
Source: BPEP Staff Appraisal Report (March 27, 1992); MOE (BPEP)\.
a/ The huge difference between appraisal estimate and the actual can be explained as follows: The total
SAR estimated project costs of US$136\.5 million included estimated financing from: (i) ADB -
US$20 million, Japan - US$15 million; and UNDP - US$7 million\. However, actual figures do not include
these financiers since (a) UNDP funding did not materialize, (b) ADB's data are not available, and (c) Japan
decided to participate only starting during FY1995 and contributing construction materials for schools only\.
Also included in the SAR estimate was the amount of US$18 million as community contribution for which
actual figures are not available\.
b/ These costs comprised of actual costs up to FY1997/98 and estimated expenditures for FY 1998/99\.
Breakdown for local and foreign costs has been estimated in some cases\.
- 19 -
Annex 3: Economic Costs and Benefits
Economic rates of return were not calculated at appraisal\.
- 20 -
Annex 4\. Bank Inputs
(a) Missions:
Stage oft 'roject Cycle No\. of Persos and Specialty Performnance ing
(eg 2 Economists, I FMS, edc\.) mplemertation Development
Month/Year Count sPecialty Pregs Objective
Identification/Preparation 10 General Educator, 2 Education
Specialists, Architect,
Economist, Curriculum
Development Specialist, 2
Textbook Specialists, Operations
Analyst, Non-Formal Education
Specialist
Appraisal/Negotiation
9/91 10 General Educator, 2
2/92 Education Specialists,
Architect, Economist,
Curriculum Development
Specialist, 2 Textbook
Specialists, Operations
Analyst, Non-Formal
Education Specialist
Supervision
6/92 2 General Educator, Architect S S
3/93 4 Education Specialist, Economist, S S
Architect, Soc\. Sectors Coord\.
6/93 7 3 Education Specialist, HS HS
Economist, Soc\. Sectors Coord\.,
Architect, Program Officer
2/94 6 2 Education Specialist, S S
Economist, Soc\. Sectors Coord\.
11/94 4 3 Education Specialist, Architect S S
1/96 2 2 Education Specialist S S
11/96 2 2 Education Specialist S S
6/97 4 4 Education Specialist S S
3/98 2 Economist/Human Res\., S S
Architect
2/99 4 Economist/Human Res\., S S
Education Specialist, Architect,
Accountant
ICR
6/99 3 Economist, 2 Education S S
Specialists, Operations
Analyst
-21 -
(b) Staff:
Stage of Project Cycle Actual/atsstimt|
No\. Statffweeks US$ (000t )
Identification/Preparation 20\.2 45\.9
Appraisal/Negotiation 135\.9 285\.6
Supervision 124\.2 240\.8
ICR 12 40
Total 292\.3 612\.3
- 22 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
FMacro policies O H OSUOM O N * NA
I Sector Policies O H * SU OM O N O NA
X Physical * H OSUOM O N O NA
Z Financial OH OSUOM ON *NA
2 Institutional Development 0 H O SU *M 0 N 0 NA
?Environmental O H OSUOM O N * NA
Social
D? Poverty Reduction O H *SUOM O N O NA
O Gender O H * SU O M O N O NA
O Other (Please specify)
? Private sector development 0 H O SU O M 0 N 0 NA
O Public sector management 0 H 0 SU * M 0 N 0 NA
O Other (Please specify)
- 23 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
E Lending OHS*S Ou OHU
2 Supervision OHS OS OU OHU
Z Overall OHS OS O U O HU
6\.2 Borrowerperformance Rating
L Preparation OHS OS O U O HU
F Government implementation performance O HS O S 0 U 0 HU
Z Implementation agency performance O HS O S 0 U 0 HU
t Overall O ffS S 3 U O HU
- 24 -
Annex 7\. List of Supporting Documents
Bista, Min Bahadur\. Basic and Primary Education Project (Management Component)\. June 1999\.
Pant, Yagya R\., Shiva R\. Lohani\. BPEP: Improving the Quality and Access of Primary Education\. June
27, 1999\.
Tiwari, Sudarshan Raj\. Assessment ofperformance: Access: Civil Works\. June 1999\.
A report on quantitative performance of BPEP, 1993 - 1994\.
A Study on the Physical Teaching/Learning Conditions of the BPEP Schools, Valley Research Group,
September, 1995\.
A study on the impact of Grade 1 new materials on learning and teaching\. CERES\. 1995\.
Aide Memoire, Implementation Completion Mission, June 19-30, 1999\. The World Bank\. Kathmandu\.
June 30, 1999
Development Credit Agreement, The World Bank\.
Education Statistics of Nepal (various years)\. Ministry of Education, Kathmandu\.
Monitoring: a summary report\. 1995\.
National achievement study of Grade 3 children, 1997 (EDSC)\.
Project Implementation Plan, BPEP II\. Ministry of Education, Kathmandu\. 1999\.
Quantitative Performance of BPEP\. 1995 - 1998\.
Rapid Independent Assessment of Basic and Primary Education Project\. Institute for Integrated
Development Studies (IIDS), February 22, 1998\.
Report of the National Education Commission\. National Education Commission\. Ministry of Education &
Culture, Kathmandu\. 1992\.
Report of the Mid-term Review Mission for BPEP\. Mid-term Review Mission\. 1996\.
Reports of various Supervision Missions for BPEP\. 1992-1999\.
Staff Appraisal Report (SAR), BPEP\. World Bank\. 1992\.
The Basic and Primary Agreement Master Plan, 1991-2001\. The Master Plan Team, Ministry of
Education and Culture, His Majesty's Government\. July 31, 1991\.
The Basic and Primary Education Master Plan for 1997-2002\. Ministry of Education\. 1997\.
The effect of new curriculum on the achievement of grade IV students, 1997\.
The effect of new curriculurn on the achievement of grade V students, 1998\.
The Ninth Plan (1997-2002)\. NPC\. His Majesty's Government of Nepal\. Kathmandu\. 1997\.
Workshop on 'primary school construction and design'\. BPEP, Physical Planning and School Mapping
Unit, MOECSW\. Kathmandu\. June 1994\.
- 25 -
- 26 - | APPROVAL |
P000801 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 5098
PROJECT COMPLETION REPORT
THE GAMBIA
INFRASTRUCTUlRE AND TOURISM PROJECT
(Credit 602-GM)
May 29, 1984
Western Africa Projects Departments
Urban Division
lTis document bas a restricted distribution and may be used by recipients only in the performance of
their official dueies\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS AND COUNTRY EXCHANGE RATES
Currency Unit = Dalasi (D)
US$1 = DL\.80 (appraisal date)
Dl = 0\.56
US$l = D2\.30 (Intervening years average)
Dl = 0\.50
US*1 = D2\.21 (Completion year average)
D1\.0 = US$0\.45
D1\.0 = Bututs 100
MEASURES AND EQUIVALENTS
rIetric Imperial
1 metre (m) 3\.28 feet (ft)
I kilometer (km) 0\.62 mile (mi)
I square kilometer (km2) 0\.386 square mile (sq\.mi)
1 kilogram (kg) 2\.2 pounds (lb)
L tonne (m ton) 2,204 pounds (lb)
1 liter (l) 0\.22 Imperial gallon (Sal)
or 0\.26 US gallon
PRINCIPAL ABBREVIATIONS JAD ACROYNMS
AfDB - African Development Bank
IDA - International Development Association
FRG (KfW) - Federal Republic of Germany through KreditanstaLt fUr
Wiederaufbau
FRG (GTZ) - Federal Republic of Germany through Gesellschaft fur
Technische Zusammenarbeit
GUC - Gambia Utilities Corporation
MEPID - Ministry of Economic Planning and Industrial Development
J4WC - Ninistry of Works and Communications
ODM - Overseas Development Ministry (U\.K\.)
PWD - Public Works Department (part of MWC)
TDA - Tourism Development Area (at Kotu)
TLB - Tourism Liaison Board
Fiscal Year
July 1 - June 30
FOR OMCIAL USE ONLY
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
(Credit 602-M)
PROJECT COMPLETION REPORT
Table of Contents
Page Ne\.
Preface \. (i)
Basic Data Sheet \. 00*0060o\. \.a\. (ii)-(iv)
Highlights \. (v)-(vi)
I\. INTRODUCTION **\.*\. I\.1
II\. SECTOR AND MARKET BACKGROUND \. \. 2
III\. PROJECT PREPARATION ADD APPRAISAL \. 4
IV\. IMPLEMENTATION, OPERkTION AND COSTS \. 5
A\. Tourism Ccmpcnents \. 6
B\. Infrastructure and Public Utilities Components \. 13
C\. Precurement \. \. \. 21
D\. Ccmpliance with Covenants \. 21
E\. Ccsts and Disbursements \. \.0\. 22
V\. ORGANISATION AND MANAGEMENT \.o \. 23
A\. Project Management \. \. O\. 23
B\. Supervisicn \. 24
C\. Performance cf Cc-financiers \. 25
VI\. FINANCIAL PERFORMANCE \. \. \. \. 26
A\. Tcurism Ccmpcnents \. 26
B\. Gambia Utilities Corporation \. 27
VII\. ECONOMIC PERFORLANCE \. \. \. 30
A\. Rate of Retun \. 30
B\. Balance ef Payments' Effects \. \. \. 31
C\. Budgetary Effects \. \. \. \. 31
D\. Emplcyment Effects \. 32
VIII\. SOCIAL AND INSTITUTIONAL DEVELOPMENT \. 32
IX\. ISSUES, OPPORTUNITIES AJD BENEFITS IN RETROSPECT \. 34
I\. CONCLUSIONS \. 0\.0 \. 35
This report was compiled by Messrs\. Laurence Clarke (WAPUR) and Randolph
Andersen (VAPNS), with the assistance cf Ms\. Carolyn Tager and Ms\. Anita
Aguilar (VAPUR)\.
This docunmen has a resticted distibution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Table of Contents (continued)
Page No\.
2-1 (a) Air-Charter Tourist Arrivals to The Gambia by month
(1974/75 - 1980/81 \. \. **\. 37
(b) Air-Charter Tourists Classified by Length of Stay \. \.38
4-1 Gambia Hotel Training School-Enrollments/
Graduates (1977-1982) 71 8\.Z\. 39
4-2 PHC: Vegetable Production and Consumption-Pilot
Horticultural Scheme (1980/81-1981/82) \. 40
4-3 PHC: Vegetable Purchases made by Hotels, Restaurants and
Supermarkets (1980/81-1981/82) \. 41
4-4 (a) Hotel Bed Occupancy Rates (All Hotels) (1976/77-1981/82)\. 42
tb) Distribution 'by Hotel Beds By Area \. 43
(c) No\. of Hotel Rooms by Hotels: Within Tourism
Development Area \. \. 44
4-5\. Analysis of Forecast Appraisal and Actual Project
Costs \. 45
4-6 Analysis of Actual and Appraisal Disbursement
Profiles \. 46
4-7 Water Supply Component Contracts 47
6-1 Financial and Operational Indicators of Selected
Hotels in The Gambia \. 48
6-2 GUC - Consolidated Income Statements FY1975-FY1982 49
6-3 GUC - Consolidated Sources and Application of Funds
Statements - FY1975-FY1982 \. 50
6-4 GUC - Consolidated Balance Sheets - F11975-FY1982 \.51
6-5 GUC - E'lectricity and Water Tariffs, 1974-82 \. 52
6-6 GUC - Staff Analysis - 1974 versus 1982 \. 53
6-7 GUC - Electricity Division-Units Generated FY1 975-s 982 \. 54
6-8 GUC - Electricity Division-Units Sold FY1975-1982\. 55
6-9 GUC - Water Division-Gallons Produced FY1975-1982 \.56
6-10 GUC - Water Division-Gallons Sold FY1975-1982 \. 57
7-1 Economic Analysis (Tourfsm Components) \. \. 58
7-2 Summary of Total Collected Revenues of Hotel Bed Tax
and Airport Departure Taxes \. 60
8-1 Borrower's Comments on Draft Project Completion Report 61
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
PROJECT COMPLETION REPORT
(Credit 602-Gh)
PREFACE
1e This report presents the results of a review of the Tourism
and Irnfrastructure Project in The Gambia, for which Credit 602-GX for
US$4-\.0 million was approved on December 30, 1975\. The credit was fu'ily
disbursed on January 25, 1983, although it was officially closed on
June 30, 1982\.
2\. This report consists of a-Project Completion Report (PCR) prepared by
the Urban and Water Supply Projects Divisions of the Western Africa Region\.
In preparing the PCR from a review of Bank files, the Region took into account
the findings of a project completion mission carried out in February 1983, at
which time a draft report was discussed with Government\. A draft completion
report-prepared by the Government of The Gambia and the Gambia Utilities
Corporation (GUC), the Government owned entity responsible for implementing
part of the project, was substantiallly utilised\.
3\. In accordance with the revised procedures for project performance
audit reporting, this Project Completion Report was read by the Operations
Evaluation Department (OED), but the project was not audited by OED staff\.
The draft report was sent to the Borrower for comments; their reply is shown
as Annex 8-1, together with some specific views expressed in their draft of
the PCR\.
4\. Grateful thanks are extended to all those in Government and its
agencies who contributed to the execution of this project and especially to
those who participated in the review of the project performance and the
preparation of this report\.
5\. As is evident, the report is slightly longer than usual for PCR's\.
This is largely due to the multi-sectoral nature of the project, in which
there were sixteen discrete components (including four studies)\.
- ii -
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
(Credit 602-GM)
PROJECT COMPLETION REPORT BASIC DATA SHEET
A\. KEY PROJECT DATA
Original Actual/
Item Plan
Total project costs (US$ million) 11\.3 11\.5
Overrun (%) 1/ 2
Credit amount (us$ million) 4\.0 -
Disbursed (US$ million) - 3\.99
Cancelled (US$) - 437\.72
Repaid
Outstanding 3\.99
Date physical component completed Q2-1 980 Q4-1981
Proportion completed by above date 100% 75%
Proportion of time overrun - 18 months
Economic rate of return 12\.1% 2/ 5\.8%
Financial performance Fair Poor
Institutional performance - GUC - Fair
- Overall - Good
Performance of consultants - Good
B\. OTHER PRO-JECT DATA
Item Actual
First mention in files September 14, 1971
Government application No formal application
Negotiation August, 1975
Board approval 12/30/75
Credit agreement date 1/12/76
Effectiveness date 12/16/76
Closing date 6/30/82
Borrower Government of The Gambia
Executing agencies Ninistry of Information
and Tourism and GUC
Fiscal year of borrower July 1-June 30
Fiscal year of the
executing agencies July 1-June 30
Follow-on project name N\.A\.
Loan/Credit number N\.A\.
Amount USSmillion N\.A\.
Loan/Credit agreement date N\.A\.
1/ In US dollar terms - 16% in dalasi terms\.
2/ For tourism components alone\.
- iii -
C\. CUMULATIVE ESTIMATES AND ACTUAL DISBURSERMTS (IDA)
(US$ '000)
FY77 FY78 FY79 FY80 FY81 FY82 FY83
Ci) Appraisal 394 1926 3355 3797 4000 4000 4000
(ii) Actual 305 845 2122 2844 3408 3780 3898
(iii) % of (ii) and (i) 77 44 63 75 85 95 97
D\. MISSION DATA
Originating Number of Staff weeks Date of
Number Month/Year Divis\./Dept\. Persons in Field Report
I 3/76 Tourism (OPS) I -- 4/01/76
II 5/76 4 3\.6 6/15/76
III 11/76 2 1\.3 12/01/76
IV 3/77 3 3\.7 4/29/77
V 11/77 2 5\.3 1/19/78
VI 2/78 ' 6 7\.3 6/19/78
VII 6/78 IF 2 2\.0 8/23/78
VIII 11/78 Tourism (OPS) 2 1\.9 1/12/79
WAPEW
IX 2/79 i 2 3\.0 3/30/79
x 7/79 URB2 (OPS) 4 4\.3 8/15/79
VAPEW
URB4 (OPS)
XI 12/79 URB4 COPS) 1 0\.8 1/29/80
XII 4/80 WAPEW 1 1\.3 6/29/80
XIII 8/80 URB4 (OPS) 1 0\.8 9/29/80
XIV 9/80 WAPEW 1 1\.0 10/24/80
XV 2/81 WAPEW 2 0\.8 3/30/81
XVI 5/81 URB4 2 1\.3 6/13/81
XVII 2/82 NAPUR 3 2\.0 3/31/82 1/
NAPWS
OPS
XVIII 2/83 VAPUR 2 1\.2 6/83 (PCR)
41\.6
1/ Between Nissions XVII and XVIII, there were brief stopovers in The
Gambia by Messrs\. Andersen (WAPVS) and Clarke (WAPUR) on one occasion
each while on other projects, during which brief discussions were held\.
- iv -
E\. COUIRTR' EXCHANGE RATES
Year Exchange Rates 1/
Appraisal US$1 = Dl\.80
1976 US$1 = D2\.21
1977 US$1 = D2\.29
1978 US$1 = D2\.08
1979 USS1 = DI\.89
1980 US$1 = DI\.72
1981 US$1 = DI\.97
1982 US$1 = D2\.29
1983 US$1 = D2\.64
1/ Average exchange rates\.
-V -
THE GAMBIA
TOURISM AND INFRASTRUCTURE PROJECT
PROJECT COMPLETION REPORT
(Credit 602-GM)
HIGHLIGHTS
1\. The objective of the Infrastructure and Tourism Project was to
provide basic infrastructure vorks for the construction of new hotels on a
site identified on the Atlantic Coast about 15 kilometers from the capital
city, Banjul\. Appraisal estimated capacity for the Tourism Development Area
(TDA) by 1986 was 2,500 beds in five hotels: infrastructure to have been
provided as part of its project included access roads, water and power
supplies, sewage collection and treatment, communication, beach facilities,
construction of a hotel training school, technical assistance to the GUC,
tourism and investment studies and a food storage and marketing component\.
Water and power investments were to be financed by the Federal Republic of
Germany (KfW) and the AfDB respectively on a parallel basis\.
2\. The following are the main features and highlights of project
execution:
(a) Total actual project costs was US$ 11\.5 million compared with
US$ 11\.3 million estimated at appraisal\. The 2% overrun 1/ was due
largely to inflation and exchange rate movements\. The major
components affected were the sewerage, roads, and hotel training
school\. Disbursements though generally satisfactory, lagged
appraisal estimates by a year and a half on average (paras 4\.62 -
4\.64)\.
(b) Completion of implementation and project closing were delayed by two
years mainly as a result of a number of design and administrative
problems\.
(c) Physical works were generally a success, with the hotel training
school, severage system, pilot horticultural irrigation scheme (which
replaced the food storage and Marketing component) and water supply
systems being well constructed, despite delays experienced in each
case\. Four new hotels with aggregate bed capacity of over 1300 were
completed on the TDA by project closing, one less than appraisal
estimates\. However a casino was also completed, which was not
anticipated at appraisal (paras 4\.04 - 4\.10)\.
(d) Financial performance for the hotels has been barely satisfactory,
based on limited data received to date\. Slumpb in tourist arrival
have considerably affected the viability of their operations\. Due to
Government restraint on tariffs financial performance of GUC has been
I/ In US dollar terms; 16% in dalasi terms\.
- vi -
very poor, with none of the financial criteria identified at
appraisal being met during execution\. The pilot horticultural scheme
is doing well ana should fully recover its investment costs in five
years\.
(e) Largely on account of the slump in tourist arrivals, it is likely
that the project's actual economic rate of return on tLe tourism
components would fail short of appraisal estimates (6% contrasted
with 12%) unless there is a significant upswing in bed occupancy and
industry-wide consolidation of existing hotel capacity\. I/ Employ-
ment generated and budgetary gains were modest (paras 7\.01-7\.05)\.
(f) Institutional performance has been generally good, with capability
for managing local tourism industry by Gambians being improved
substantially (paras 8\.01-8\.04), although GUC performance has been
patchy\.
(g) Project management was good overall with the performance of the local
project manager during the last half of the implementation period
being creditable\. Technical assistance performance varied from fair
to good (paras 5\.01-5\.04)\.
3\. The following were the major lessons learnt:
(a) the need for careful selection of consultancy and technical
assistance personnel;
(b) the fact that external economic benefits from multi-sectoral projects
of this nature could be high despite occasional implementation
difficulties; and
(c) the need for improved institutional mechanisms to reduce leakages in
foreign exchange flows from the tourist industry (para\. 9\.01)\.
1/ Mainly through restraint in new hotel construction or expansion of
existing capacity and through increased and more agressive external and
internal marketing programs, including strengthening of on-ground
entertainment opportunities for tourists\.
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
(Credit 602-GM)
PROJECT COMP"JETION REPORT
I\. INTRODUCTION
1\.O1 At the invitation of the Government of The Gambia, a Bank mission and
local officials in 1972 identified the Kotu area, a coastal strip west of
Banjul, as potentially highly suitable for tourism development\. With UNDP
assistance, Government in the following two years prepared a 15-year compre-
hensive tourism investment program focusing almost exclusively on the area
identified\. A five-year segment of this investmeat program subsequently
formed the nucleus of a project proposed for IDA financing\. A public utili-
ties component was later included, having been considered both complementary
to the development of the tourism sector and the Kotu area itself and
providing vitally missing facilities to the heavily ropulated neighboring
areas of Bakau, Fajara and Serrekunda\.
1\.02 In November 1974, a Bank mission appraised an integrated tourism and
public utilities project for US$11\.3 million, with IDA providing US$4\.0 million\.
The AfDB and the Federal Republic of Germany (KfW) subsequently provided
parallel financing of US$2\.1 million and US$3\.1 million respectively for the
electricity and water supply components\. 1/ The project as conceived at
appraisal envisaged the provision of basic infrastructure for the identified
Tourism Development Area (TDA), the establishment of a hotel training school
and a food market program\. Also to be included, were public utility services
such as water and electric power\. Consulting services and studies for the
strengthening of the GUC and a study of the likely socio-economic impact of
tourism development on The Gambia were also included\. 2/
1\.03 Considering in particular that for The Gambia, this had been the
first large-scale investment in tourism infrastructure, implementation
experience has been generally satisfactory\. Project execution was faced with
moderate problems for the most part, although the infrastructure components
often experienced serious administrative and operational bottlenecks\. While
the project as a whole had an implementation overrun of one and a half years,
1/ The project was later updated in November, 1975, mainly because of
a delay in firming up co-financing\.
2/ Details of project components are set out at para\. 3\.02\.
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total cost overrun of about US$200,000, 1/ vith one component abandoned and
snother redefined, both the Borrower and the Association are of the view that
the project has made a distinct contribution both to the country's tourist
industry and to the upgrading of the quality of life of hundreds of people
directly involved in the TDA and neighboring areas\. The completed hotel
training school and innovative pilot horticultural scheme, while both ex-
periencing moderate implementation delays, have been generally considered two
of the hallmarks of this seminal project\.
1\.04 This project completion report is based on information contained in
the Project Appraisal Report, a review of Bank Piles which included supervi-
sion and progress reporte of the project, as well as detailed discussions with
and a Project Completion Report of the Borrower (see Project Files)\.
II\. SECTOR AND MARKET BACKGROUND
2\.01 The Gambia is virtually a one crop economy with about 90% of its
export earnings and 25% of public revenues being derived from ground nuts and
its by-products\. Appreciating the need for diversifying the economic base
given the vagaries of prices of primary products in the international economy,
Government in the early 1960's shortly after Independence explored the
possibility of developing alternative exploitable options available to this
small economy\. As a result of its relatively poor endowment with natural
resources, especially mineral deposits, one of the activities that emerged
with the greatest potential for exploitation in the country was the tourist
industry\.
2\.02 The Gambia's strength as a tourist center has been its extensive and
clean palm-fringed beaches, with its consistently pleasant climate during the
European and North American cold seasons\. The country's relative proximity to
the major European tourism-generating countries and the increases in trans-
atlantic flights between neighboring Dakar and the U\.S\. 2/ have also been
significant in the realisation of its previously untapped potential in this
sector\. For a variety of reasons, The Gambia is still relatively "unspoiled"
culturally, with very pleasant people and attractive bird-life\. The majestic
Gambia River and the traditional calm of the country itself, one of Africa's
most stable, have provided The Gambia with the reputation of being a haven in
the Western African region\.
1/ Because of favorable exchange rates during the execution period,
dalasi overruns was actually D3\.3 million\.
2/ Although traffic on this leg has to date not been as heavy as
originally anticipated\. Response from the U\.S\. tourist market has so
far been only lukewarm\.
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2\.03 Since the commencement of beach-based tourism traffic in 1966/67,
largely through air-charters, tourist arrivals in The Gambia rose sharply from
528 to just under 25,000 in 1973/74\. 1/ Since then arrivals have fluctuated
between a low of 16,000 in the 1977/78 season and a high of just under 26,000
in 1978/79\. A number of factors, including a slowdown in the development of
the international tourism market and the 1981 attempted coup d'-stat have taken
a toll on the country's tourism industry\. From 1978/79, arrivals in The
Gambia have generally fallen off each year, except for the current 1982/83
season which is expected to reflect a moderate upturn (see Annex 2-1)\.
Foreign visitor nights have also been fluctuating mainly as a result of the
fluctuation in arrivals and the often adverse rate of exchange of the dalasi
relative to other European currencies\. 2/ Historically, tourism arrivals to
The Gambia had originally been largely from Scandinavia (mainly Sweden and
Denmark)\. Subsequently, the number of German charters has risen signifi-
cantly, with arrivals in 1978/79 representing some 25% of total arrivals for
that year\. There was, however, a major slump in the 1980/81 season, on
account of a withdrawal of the German air charters\. Thereafter, the U\.K\.
became the leading source of tourists\. In fact, it has been this heavy depen-
dence on the air charters that has induced the marked fluctuation in the
Gambian tourist industry in\. recent years\. While emphasis on charters presents
major benefits of bulk supply, charter travel tends to be highly volatile to
changes in market condition\.
2\.04 At appraisal, gross foreign exchange earnings from tourism amounted
to D9 million, representing 15% of commodity exports and 7% of G\.D\.P\. Net
foreign exchange earnings were estimated at 45% of gross earnings from tourism\.
The industry also provided employment for about 3,100 people directly, while
indirect employment in restaurants, shops, tour agencies, construction,
handicrafts and other related services amounted to about 1,000 jobs\.
2\.05 Largely as a result of changing international and domestic circum-
stances and the impact of the project itself, The Gambia's tourist industry
as a whole has emerged-very rapidly over the past six years of project execu-
tion\. Bed capacity for new hotel investments has exceeded appraisal esti-
mates, though there has been some ir\.balance in the actual location of these
investments among the three development areas originally identified under the
project\. Virtually all construction has been centered on Kotu Strand, with
only one of the four new hotels on the TDA constructed outside this area
(para 4\.18)\. Earnings and yields from the industry have not been as
significant as anticipated (Chapters 6 and 7) and the overall operating
performances of newly constructed and previously existing hotels have been
below levels projected at appraisal\. In recognition of the stagnation in
international tourist industry in general in recent years and a resultant
excess capacity created in The Gambia, the Government has decided (and has
incorporated in its Second Five Year Plan for 1981/82-1985/86) to restrain
1/ Tourist arrival figures have generally only reflected air-charter
arrivals\.
2/ The dalasi has fluctuated in value iCron US56 cents in 1975 to
US48 cents in 1978 to US58 cents in 1980 and is presently US40 cents\.
further expansion of accommodation capacity during the coming five years\. New
hotel investments or increases to existing capacity would not be encouraged
and emphasis would be directed at improvements of on-ground support activities
as well as the quality of the product delivered\. Further, as a result of
studies made both under and as a result of the project, efforts are being
intensified as a priority to improve the institutional means of capturing more
of the gains from the tourist industry to the benefit of the local economy\.
The Bank project itself has been crucial in the identification of some of
these institutional constraints and loopholes and in providing Government with
an infrastructure and framework within which to direct the industry's
evolution in the future (paras\. 8\.01-8\.04)\.
III\. PROJECT PREPARATION AND APPRAISAL
3\.01 Following the initial request and invitation by Government for Bank
assistance (para 1\.01), several Bank missions visited The Gambia to prepare
the project over a two and one-half year period\. A nunber of issues were
raised during preparation, resolution of which formed the basis for the final
proposal that was appraised and for the agreed covenants\.
3\.02 The project consisted of the follo-wing components at appraisal:
(a) expansion of the water supply and electric power systems serving the
Banjul, Kombo-St\. Nary and Kombo North areas, and their extension
into the tourism and labor support areas (KfV and AfDB respectively);
(b) conversion of the power generating plant in Banjul to use heavy fuel
oil;
(i) extension of the telecommunications facilities to the tourism and
labor support areas;
(d) sewerage and solid waste disposal for the tourism area;
(e) extension of an access road to the tourism area and construction of
secondary roads and paths bet-ween the resort sites and within the
labor support area;
(f) public beach facilities and shopping area for the resort sites;
(g) hotel training facilities for about 100 trainees, including the
cGnstruction and equipnent of classrooms, and funds for technical
assistance;
(h) a food storage and marketing program aimed at increasing the
proportion of locally produced food consumed by tourists in order to
reduce imports; and,
(i) funds for the project management unit, investment promotion, studies
and technical assistance to strengthen GUC\.
-5-
3-03 Subsequent to appraisai, and at the Bank's suggestion, Government had
invited the African Development Bank and the German Government to participate
in the financing of the project, on account of limited availability of IDA
funds\. AfDB first responded and agreed to finance the electricity component
for wbich the credit agreement was signed in January, 1976\. After some a&min-
istrative delays, the German Government through KfW undertook to finance the
water supply component, signing the credit agreement in October, 1976\. Both
agreements were finally completed and ratified by The Gambian Parliament in
October, 1976\.
3\.04 At appraisal, it was estimated that effectiveness of the credit would
take place within ninety days of Board signing\. As it turned out, effective-
ness was not completed until almost a year after\. The major conditions of
effectiveness were (a) signing of the financing agreements between Government
and the AfDB and KfW for the electricity and water supply components respec-
tively; (b) the conclusion of a subsidiary agreement between Government and
GUC; and (c) the appointment of the Project Manager\. After two extensions of
the deadline, credit effectiveness finally took place on December 12, 1976,
seven months after the original expected date\. The major sources of delay
were the signing of the financing agreement between Government and KfW -and the
appointment of the Project Manager\.
3\.05 The total estimated cost of the project at appraisal was about
US$11\.3 million, or D22 million, including contingenctes\. Of this total, an
estimated US$4 million or (D7\.2 million), would be for tourism-related infra-
structure and the remainder for investments in Dublic utilities to meet the
needs of the expanding local urban population\. The foreigL exchange component
was about US$8\.8 million\. It was proposed that the foreign exchange component
and US$0\.4 million of local cost - in total, 81% of project cost - be financed
from abroad\. The AfDB was to finance the electricity component (US$2\.1 million)
and Kfff the water supply component (US$3\.1 million)\. Government was to
provide the balance of funds (US$2\.1 million) for local costs\.
IV\. IMPLEMENTATION, OPERATION AND COSTS
4\.01 Although the project as a whole has been affected, with aggregate
delays of 18 months and cost overruns'of 2X 1/ of total over appraisal
estimates, the implementation experience must on balance be considered
satisfactory\. For purposes of reanalysis and review of this experience, it
would be appropriate to distinguish between those components directly related
to tourism and those that were supportive to the tourist sector as a whole,
namely the infrastructure and public utilities' components\.
1/ In US dollar terms (16% in Dalasis)\.
-6-
A\.' Tourism Components
4\.02 The tourism components comprise (a) the construction of a new hotel
training school; (b) the construction of public beach facilities and shopping
centers; (c) the pilot horticultural scheme; (d) the food storage complex and
marketing program; (e) the waste disposal and beach-cleaning equipment;
(f) tourism and investment promotion; and (g) the study of the socio-economic
aspects of tourism in The Gambia\.
4\.03 Responsibility for execution of the tourism component lay primarily
with the Ministry of Information and Tourism (MIT)\. An existing Tourism
Liaison Board (TLB), set up in 1972 and chaired by the Ministry of Infrrmation
and Tourism with representation from all agencies involved in tourism planning
and development, was upgraded as a condition of effectiveness to enhance
project coordination and investment promotion activity\.
Execution/Construction
4\.04 Execution of the tourism element under the Project was generally
satisfactory, although virtually all of the components were affected by some
delays\. At appraisal, it was envisaged that execution of the tourism com-
ponents would all be completed by mid-1980, anticipated execution ranging from
two years for the studies to three years for the hotel training school and
tourism and investment promotion components\. Actual execution of all of these
components was finally completed by mid-1982\. 1/
4\.05 Hotel Training School: The Hotel Training School has been generally
considered successful, both by the Borrower, the co-financiers, the Federal
Republic of Germany (GTZ) and IDA\. At appraisal, it was envisaged that the
school would comprise two teaching classrooms, a language laboratory and
practical classrooms for kitchen, restaurant/bar, front office and house-
keeping training, with adequate facilities for an intake of 50 students
annually and an upgrade of another 50 already in the industry\. Two man-years
of technical assistance, to complement an incumbent German training team in
the field at appraisal, were also funded under the Project\. There were some
significant initial design and contracting delays partly resulting from poor
performance by the original architects\. Two years after the commencement of
initial design work, another firm was'contracted to complete the work and
finally submitted drawings in May, 1978\. Tenders were advertised in
December, 1978\. Work finally began by a British construction firm in late
1979, with a promised completion date of September, 1980 and an estimated cost
of DI\.7 million\. By the time the School was tutned over to the Ministry of
Information and Tourism, some 17 months after the estimated completion date,
it was significantly different from that anticipated at appraisal\. It was
determined, for instance, that the area of 200 square meters originally
estimated was very inadequate and, as a result, there'was a major under-
estimation of funds required\. Fortunately, much needed supplementary finan-
cing (Dl million) was provided by the GTZ at Government's request\. IDA funds
1/ Of which delays in effectiveness accounted for seven months\.
-7-
(D700,000) were used exclusiveli for consulting and construction costs, while
the GTZ contribution vas shared between construction and costs of equipment\.
The school, as constructed presently in the Kar\.fi-ig area (after it was
determined that the first site at Cape Point had a major foundation problem),
bas tne following major facilities: five classrooms, one training kitchen, one
training restaurant, one bar, administrative block, laundry training section
and a solar hot water heating system\. No major construction prc\.jlems have
emerged so far, and landscaping has virtually been completed already\. The
school is presently staffed by ten instructors and headed by a vell-trained
Gambian\. The FRG (GTZ) provided an experienced advisor, whose contract is
expected to conclude by 1984\. Since completion of construction, some
57 students have graduated, and another batch of 86 is presently under train-
ing (Annex 4\.1)\. Competition, based on written and oral exsaminations for
entry, has been quite-intense\. Government has fully assumed responsibility
for future operations, including recurrent costs, which have grown by over
25% 1/ between 1980/81 and 1981/82\. Efforts are being made by Government to
convince the hotels to contribute in a substantial way to the school's rapidly
growing operating requirements\. The present curriculum envisages continued
refresher training courses for about 200 hotel employees annually\. Some 400
employees have already benefitted from such courses\.
4\.06 Food Storage and Marketing: The food storage aspect of this component
was dropped after serious review by Government and IDA\. At appraisal, it was
determined that some 85% of foodstuff consumed by tourists in The Gambia was
imported\. The food storage and marketing program was designed to address this
shortcoming through the provision of a storage complex, including a reception
and grading area, dry and cold storage and a deep-freeze plant to supply fresh
food regularly during the summer season\. The services of an experienced
marketing manager and a plant engineer were to be financed under the project\.
This component was also to serve as a pilot for a larger horticultural storage
and market project which was to be prepared later by Government\. During
implementation, a feasibility study of the proposal was undertaken on behalf
of the Ministry of Agriculture, with ODM financing\. The study concluded that
the overheads of the proposed complex were likely to be unreasonably high,
implying a consistent reliance on the Government for compensatory fundu\. In
addition, it was determined that hotel food consumption would be relatively
small, and that the range of vegetable and fruits and their production cycles
were not consistent with hotel requirements and the timing of the tourist
season\. As a result, it was agreted bf IDA and Government to replace this
component by a pilot horticultural scheme\.
4\.07 Pilot Horticultural Scheme: At Government's request, the pilot
horticultural scheme was included after a few other alternatives, including
the construction of limited storage facilities at the Albert and Serrakunda
markets were evaluated\. Under a revised credit agreement, the new scheme was
to establish three cooperative irrigated schemes in neighboring towns near the
Greater Banjul area\. The first phase was to consist Of the establisbment of a
ten-hectare scheme at Banjullunding near the Yundum International Airport,
1/ Largely as a result of expansion in activities and recurrent
expenditure arising from the new school\.
-8
while subsequent phases under the project envisaged the establishment of 18-
and 30-hectare schemes respectively at Brikana and Medina Sering Mass in the
Western and North Bank divisions\. However, Government was of the view that,
while this component would address the production or supply side of food Crops
as an important requirement of the tourist sector, there was a distinct need,
nevertheless, for a study to review the prospects of marketing horticultural
products in general in The Gambia\. Government therefore requested that such a
study be also included under this component\.
4\.08 Of all the tourism components, this pilot horticultural scheme was,
in fact, subject to the longest delays, on account of the redefinition that
was required and a number of other difficulties experienced subsequently\. On
the physical side, after it was decided that Phase I would be implemented
under the Project largely on account of funding constraints, there were major
delays resulting from (a) problems in the requisition (specifications) and
installation of the irrigation equipment; (b) confusion over the funding
arrangements by the Department of Agriculture responsible for execution; and
(c) inadequate supply of seeds for the first phase of planting\. These diffi-
culties notwithstanding, construction of the boreholes and other irrigation
equipment was completed in April, 1980, and planting for the first season
began in May, 1980\. It was decided that the Banjul site would be cultivated
by a cooperative of 40 farmers in two seasons\. Groundnuts would be planted
during the wet season and other cash crops during the dry season\. In the two
wet seasons of 1980 and 1981, 7\.5 hectares and 4 hectares respectively of
groundnuts were planted\. Total net yield was 29 tons and 7 tons respectively
and gross cash takings were just over D16,000 and D3,000 respectively\.
Operating costs represent 14% and 50% of gross revenues for the two seasons\.
It is evident that lack of such economies was emerging in the second year's
activities\. In addition, the quality of seeds in 1981 was apparently very
inferior to that in 1980\.
4\.09 In the dry season, a variety of vegetables was planted\. Annex 4\.2
indicates that for both seasons a total of just over 7 hectares were culti-
vated, with varying effective crop yields grossing over D31,000 and just under
D30,000 respectively in sales in the 1980 and 1981/82 seasons\. As a result,
if the eristing trends are sustained in both wet and dry seasons, the initial
capital investment for this componenit (D29,000) would be fully recovered in
five years\. While production was, on average, quite good for both seasons,
marketing has, by contrast, been proving to be a problem\. In the first cycle
of vegetable production, some 45% of the total produce was spoilt as a result
of a lack of adequate storage\. In the second cycle, significantly less of the
produce was spoilt, which though an improvement, is still far from efficient\.
Lack of seeds has also affected both crop growing dry seasons to date\. Both
problems are now being seriously addressed by the Department of Agriculture,
and it is expected that the present 1982/83 season should show distinct
improvements in these areas\.
4\.10 As Annex 4\.3 indicates, consumption by hotels and supermarkets of
produce from the pilot horticultural scheme amounted to about 7\.4 tons in
1980/81 and 1981/82 crop seasons\. This has represented only about 20% of
total production of 36 tons over the same period\. Moreover, consumption by
hotels in 1981/82 was lower than in 1980/81, despite the fact that the scheme
-9-
had demonstrated its capability and potential\. Efforts have been intensified,
as a result, to convince the hotels of their need to demonstrate increased
loyalty to the scheme, given its overall objectives\.
4\.11 After a very difficult start, owing to the lack of appropriate
expertise in The Gambia and initial wavering about the desirability of under-
taking it, the study of marketing of vegetables and fruits was finally
initiated\. Terms of reference were agreed upon in March, 1982, and a team of
local officers in the Ministries of Agriculture, Economic Planning and
Industrial Development (one horticulturalist and one economist), was awarded
the assignment, to be supported by an expatriate market expert\. After work
lasting five months, including two months of field surveys and interviews and
a study tour of neighboring Senegal, a detailed draft final report was
produced by the team just after project closing date\. While the report has
clearly made a contribution to the body of knowledge on vegetable and fruit
cultivation in The Gambia, it suffered from, among other things, a lack of
thoroughness in the analysis of the financial implications of the three
marketing options proposed\. In addition, it was not rigorous enough in the
analysis of the Senegalese experience in a major similar marketing undertaking
(Budsenegal), which went bankrupt\. This experience, and a number of other
features of marketing in general in The Gambian context, would have clear
implications for the viability of any of the report's propositions\. Further
work is being done on the report, including improved editing\. A summary, to
be produced, is expected to form the basis of a policy paper to be prepared
for Cabinet consideration\.
4\.12 Despite these setbacks and difficulties there is little doubt, based
on the extensive coverage and reviews the pilot horticultural scheme in
particular received both by Gambians and non-Gambians, that this scheme was
path-breaking and replicable\. Government is now embarking on attempts at
replicating the irrigation techniques, and has since been urging private
sector intervention in the area\.
4\.13 Socio-Economic Study: The objective of the study of the socio-
economic aspects of tourism was to afford Government an opportunity of
assessing the likely economic, social and other impact of the emerging tourist
industry in The Gambia and adopt suitable policies and programs accordingly\.
The study experienced significant implementation delays and some divergence
from the original appraisal objectives\. In addition to some initial diffi-
culty with consultant selection, there were a number of operational difficul-
ties experienced during subsequent execution\. The consultants appeared
distinctly stronger in the socio-cultural than economic aspects of the study,
and as a result almost twice as much time was spent on the former than the
latter\. There appeared to have been confusion over the need for the con-
sultants to prepare interim reports, as well as setbacks in data processing,
occasioned by the inadequacy of processing facilities in Senegal (which -
material had to be subsequently taken back to the United States)\. The draft
final report, while representing a major contribution to the area in The
Gambia, was considered by IDA and, to a large extent, also by Government, of
low quality, especially in the economic aspects\. It was generally felt that
the lack of expertise by the consultants in the tourism sector 'per se' was
largely responsible for the substandard quality of the work\. (In retrospect,
- 10 -
IDA's original insistence that the study should have been done by a consulting
firm, as opposed to individual consultants, might have been particularly
\.justified\.) After some revisions, an edited executive summary was prepared,
which partially formed the basis for the Government's paper on Tourism for the
Second National Development Plan\.
4\.14 Public Beach Facilities (Bengdulas): These facilities were completed
and procured with generally no major construction problems, though with some
delay due largely to procurement problems\. While at appraisal, it was decided
to provide two rentable public beach facilities, to include dressing rooms,
showers and sanitary facilities, along with African-style market stands for
- \.he sale of local handicrafts and fruits, only one was finally constructed at
Kotu Strand\. This was mainly on account of reallocation of funds resulting
from cost overruns on the access roads, sewerage and other components and the
poor progress made on hotel construction on the other two sites\. The complex
was put into use in March, 1979\. The 34 stalls, including stores, an informa-
tion kiosk, a bicycle rental, and restaurant are presently rented to
60 vendors at D50 and D25 per stall during the tourist and off-tourist seasons
respectively\. Each stall is shared by two vendors\. Operation has been to
full capacity during tourist seasons to date\. The Bengdula iB a distinct
success in both design and commercial aspects, though there are a number of
defects in workmanship that have affected its overall effectiveness\.
4\.15 Solid Waste Disposal: Instead of one tractor-trailer and bulldozer
anticipated at appraisal for the collection of solid waste from the TDA and
the cleaning of beaches, only one tractor with front loader and a covered
refuse lorry were acquired, mainly on funding constraints\. The supply of the
equipment has noticeably improved the performance of cleansing services for
the TDA\.
4\.16 Investment and Tourism Promotion: The objective of the hotel invest-
ment promotion component was to provide expert assistance to Government in
attracting hotel investors for the Tourism Development Area\. Funds were made
available for expert services, promotional materials and an advertising
campaign to attract hotel investors to The Gambia\. It was also intended that
the program would prepare the establishment of a line of credit for hotel
construction\. As it turned out, the;e appeared to have been some-confusion
between the Borrower and the Association about the original intention of this
component\. The general argument made was that the funds earmarked (D140,000
or US$78,000) were inadequate for the kind of extended and sustained activity
required to attract hotel investment\. This arqument, however, appears to be
only partially accurate\. The true objective at appraisal appears to have been
the provision of the basic infrastructure under the credit, with further work
to be done by Government, utilizing the background materials and expertise
provided with project funding\. At the outset of execution, there were a
number of delays experienced arising from differences in positions between IDA
and Government\. IDA, for instance, favored the engagement of a consultant
group to effect the assignment, while Government preferred an employment
advisor\. After the terms of reference were agreed upon, IDA reversed its
position in the interest of speedy implementation and supported the advisor\.
When the advisor finally got on board, for six months he was attached almost
exclusively to the Ministry of Economic Planning and Industrial Development\.
- 11 -
As a result, he was not fully involved in the development of a national
tourism investment strategy to the extent anticipated at appraisal, despite
his very solid personal experience in the sector\. For example, the report be
left at the end of his mission was reviewed, but apparently given only limited
follow-up by Government\.
4\.17 Recognizing a vacuum in the area of tourist traffic promotioh,
Government subsequently requested and acquired agreement from the Association
to fund the production of some tourism information literature, namely, the
production of some 100,000 guidebooks and 8,000 posters\. After a first
contract by a local producer ran into difficulties, because the producer
committed a criminal offense (not related to his assignment), a second con-
tract for the production of a holiday guide was finally awarded in
November, 1981 to a British firm for D100,000 (US$48,000), after a delay of
almost two years\. Completion of this guide was expected by August, 1982, but
were not actually delivered until lay, 1983\.
4\.18 Hotel Construction: Since project effectiveness, construction of
hotel investments on the TDA has been satisfactory\. At appraisal, it was
anticipated that by the end of 1982 some five new hotels would be on stream in
the TDA with incremental capacity of 1,490 beds and aggregate capacity of
1,755 (Annex 4-4)\. As it turned out, while actual capacity over this review
was 10% less than appraisal estimates (Annex 4\.4) in the TDA, construction was
also quite imbalanced, being concentrated mainly in Kotu Strand, with very
little activity in Kotu Beach apart from the Senegambia Hotel\. Virtually
nothing has been done to date on Kotu Point\. 1/ Although all the plots were,
at one time or another, allocated to potentiaT investors, construction was
very slow on average\. Of the four new hotels actually built since appraisal,
Government's participation has been substantial, though private sector
involvement has been greater by far\. 2/
4\.19 It was generally felt that the stagnation in the international
tourist industry, the often inconsistent and unaggressive follow-up by the
Ministry of Information and Tourism, lack of funding and, in the case of Kotu
Beach, inadequate provision of basic infrastructure, together adversely
affected the overall development of hotels on the TDA\. In the case of Kombo
Beach Hotel, persistent management disputes have left the hotel closed for
some 24 months now since completion, despite the potential for a successful
1982/83 tourist season\.
1/ A c&sino was constructed by a Sierra Leonean at Kotu Point\. A
hotel commenced on one of the plots was never completed\. By project
closing there were rumours of an impending closure of the casino on
account of lack of adequate business\.
2/ Government, for instance, holds 60% and 49% respectively of the
shares of Senegambia and Kombo Beach Hotels, which together have over
1,100 beds\.
- 12 -
4\.20 Tourist Arrivals: The table below sets out a suamary position of
actual tourist arrivals and appraisal projects between 1975/76 and 1985/86\.
It is evident that actual arrivals have been significantly less than appraisal
estimates in every single year\. As a start, hotel bed occupancy rates in The
Gambia have slumped from a high of 64% in 1979/80 to a low of 41\.3% in
1981/82\. A number of factors have been ascribed for this marked decline in
tourist arrivals and resulting hotel bed occupancy\. 1/
NMRKET SITUATION AID PROSPECTS FOR CHARTER TOURISM
(Number of Charter Tourists)
Year Appraisal ProJection Actual and Current
Projection
1975/76 20,000 21,116
1980/81 30,000 21,327
1981/82 - 16,962
1982/83 - 25,000
1985/86 45,000 28,000
Source: Ministry of Information and Tourism
(a) The increasing cost of air fares internationally, largely as a result
of sharp rises in aviation fuel costs, and the reduction in growth in
tourism internationally;
(b) the national disturbances in mid-1981, as a result of which a number
of planned charters were cancelled;
(c) sour relations in the early-1980a between German tour operators and
Gambian promoters;
(d) below-average promotion and marketing efforts prior to 1980, though
significant improvements have taken place since then through presence
at international tourist fairs in Europe and other promotional
activies; and, 0
(e) relatively poorly developed on-ground activities 2/ for tourists,
which has affected the 'faithfulness' factor with not many visitors
generally undertaking repeat trips to The Gambia\. Government has
recently intensified efforts in this area to redress this drawback\.
1/ Although declining average bed occupancy is also attributable to
the increase in the number of beds relative to demand\.
2/ Attractions and places of interest to be visited in The Gambia\.
- 13 -
B\. Infrastructure and Public Utilities Components
:\.21 These components embrace (a) TDA access roads; (b) expansion of tele-
communications fac lities into the TDA; (c) electricity generation; (d) heavy
fuel conversion of generating sets; (e) alternative fuel study; (f) vater
supply system augmentation; and (g) provision of sewerage to the TDA\.
4\.22 Responsibility for execution of these components was assigned to the
Public Works Department (PYD) of the Ministry of Works and Communications (NMC)
for (a) above, the Posts and Telecommunications Department (PTD) of the NMC
for (b) above, and to GUC for the remainder, (c) to (g) above\.
Execution/construction
4\.23 Access Roads: The fundamental objective of the access roads component
was to provide road access to the resort sites and the labor support areas, as
i,=\.l as footpeth\.; \.-tween the resort sites themselves\.
4\.24 The design contract which was awarded to a Sierra Leonean company in
ALugust 1976, was completed in June 1977\. The construction contract for
US$1\.35 million was awarded to a Spanish company based in Banjul\. There were
a number of problems during the design and tendering stages\. For instance, it
became evident during execution that there was an underestimation at design
stage of the earthiork required to be done\. Additionally, the intersection
designs were also very poor and tender instructions by the Sierra Leonean
consultants were apparently not satisfactory\. Their first evaluation report
was rejected by the Gambia Government\. As a result, the consultants were not
engaged to supervise execution, which was carried out by the PWD'B Western
Region Engineer\.
4\.25 Although construction, which began in February, 1978 and ended in
March, 1979, was completed some three months before the appraisal target, the
component was subject to a 78% cost overrun (US$0\.7 million)\. I/ In a number
of respects also, the quality of the work was also quite poor\. Apart from the
technical errors made at the design stage, the original bills of quantities
were not followed regarding the use of basalt for the pavement resulting in
all 10 kms of the road being paved with the wrong size chips\. It was there-
fore necessary to apply a third layer of 3/8 mm chips in order to seal the
surface properly\. Moreover, at construction, the faults of designing were
either not readily recognized or were ignored\. Finally, supervision under-
taken by the PWD was apparently below standard, due to four changes of PWD
engineer and the lack of continuous monitoring of construction activity\. This
gave rise to a number of technical errors which would noTmally have been
resolved during execution\. The PWD complained of lack of manpower and
expertise to maintain continuous supervision of the project site, in the face
of their other competing job requirements\.
4\.26 Telecommunications: The objective of the telecommunications component
was to provide telephone and telex facilities to the resort sites in Kotu and
1/ A large part of which was attributable to exchange rate changes\.
- 14 -
the labor support area\. In the course of implementing the project component,
its scope was slightly expanded to include certain equipment which was
necessary to remove bottlenecks at the Serrekunda Exchange\. As a result of
accelerated demand for telecommunications service in the Kombo Areas, the
strain on the Serrekunda Exchange was increased\. This bottleneck had to be
removed before extending the lines to the TDA, as no more connections could be
made\. Due to the prevailing low price of copper, it became possible to expand
the scope of the project component without exceeding the appraisal estimate of
US$0\.11 million\. Serrekunda Telephone Exchange was extended by an additional
200 lines, bringing the capacity to 800 lines from the original 600 line
capacity\.
4\.27 On the whole, the component was well executed with no overruns,
although two points need to be raised which have implications for future
operations of the component\. First, the cable paths to the hotels are mainly
through swampy areas, subjecting them to seasonal damages during the farming
period\. Also, frequent occurrences of lightning discharges during the rainy
season adversely affect the underground cables\. All this creates problems for
the Department, resulting in periodic disruptions of services to the resort
sites\. Second, the existing trunk line between Bmanjul and the Kombos is
already obsolete, resulting in connection delays\. A proposed project, the
first phase of which will be commissioned by the end of 19B5, has been
designed to respond to existing deficiencies and to expand the entire
telecommuniations system in the Greater Banjul and Kombo Areas (Annex 8-1)\.
4\.28 Electricity Generation and Transmission: The electricity component
of this Project was intended to reinforce GUC installations in the Banjul Area
and to improve its management\. More specifically, it was to:
(a) expand the capacity of Half Die Power Station with a three megawatt
generator;
(b) eouip five new 33kV/11kV sub-stations to upgrade the 33kV line then
being constructed, and five I1kV/0\.4kV sub-stations;
(c) to construct various overhead and underground 11kV transmission lines
and 400/230 volt distribution lines in the tourism and labor support
areas; and, -
(d) to obtain tools, instruments and vehicles\.
4\.29 A British firm acting as electrical engineering consultants to GUC,
prepared and issued the approved tender documents during 1977\. Nine offers
were received from four co-intries in January, 1978 for the generator and the
sub-stations\. The consultants, in their April, 1978 evaluation report,
recommended acceptance of the tender from a British engineering firm\.
4\.30 However, concurrently with their tender evaluation, the consultants
suggested in 1978, probably influenced by the November 1977 problems at Half
Die (see para\. 4\.37), that Half Die was not a suitable venue for the new
generator\. The consultants proposed that a new power station should be built
at Kanifing\. They also warned that due to the recent high rate of inflation
- 15 -
all of the work originally proposed could not be carried out within the funds
available\. In April, 1978, the Project Manager reported to IDA and AfDB that
most of the \.esser parts of the electricity component could no longer be
funded, and that the generator and the sub-stations would absorb all the
available funds\. In May, 1978, AfDB responded to this initiative by cabling
agreement in general terms to the idea of a new site, but subject to an
appraisal mission to The Gambia to evaluate the proposal\. The AIDB indicated
that a Government req-iest to the Bank for an emergency power loan would be
favorably received if it was supported by a suitable study to be performed by
new consultants\. In June, 1978, GUC formally asked another U\.K\. consultant to
perform a feasibility study, which was available in draft in October, 1978\.
4\.31 In the meantime, the supply contract for the diesel generating set
was made available to AfDB for approval prior to signature\. This component
was by now being referred to as "Power Project I", to distinguiah it from the
new loan being considered from AfDB in respect of a new power station which
was known as "Power Project II"\.
4\.32 The advent of Power Project II meant a lengthy delay in the final
implementation of the electricity component of the infrastructure and tourism
project under its new auspices as Power Project I\. This was partly due to the
fact that the generator could not be delivered until the new power station was
constructed\. The AfDB in 1976 had approved a project to install a particular
generator at Half Die Power Station\. By 1978, it was faced with new circum-
stances demanding a modified generator in a new location\. Strict application
of the AfDB's own procedures presented it with problems requiring post-
approval changes in a project\. This prevented any progress on the finaliza-
tion of the contract and supply of the generator\. These difficulties caused
GUC some embarrassment since the supplier had, in good faith, performed much
of the manufacturing work required on the assurance that they had won the
tender\. In an agreement dated February 21, 1979, between AfDB and The Gambia
Government, a further loan of 5 million UA became available for Power Project
II, and Power Project I then proceeded concurrently with Power Project II\.
4\.33 The engineering firm never did receive the contract for the generator
they had made because at a meeting in October, 1979 between AfDB, OUC and
another engineering firm, it was agreed that the former engineering firm would
drop out of the picture in favor of the latter, their parent eompany, who were
the successful tenderers for the generAtor required under Power Project II\.
The AfDB finally accepted this solution to their procedural dilemma, and the
parent engineering company received the down-payment in December, 1979\.
Finally, the generator was installed at Kotu Power Station, becoming
operational in June, 1981, some three and a half years after submission of the
original bid\.
4\.34 By the beginning of 1980, with a substantial fall in the value of the
Unit of Account due to the fall in value of the dollar, it became clear that
the 2 million Units of Account were no longer sufficient for the pruned
project, and GUC applied for a top-up loan through Government, which was
refused by AfDB\. The original value of 2 million Units of Account in 1976 was
D5,550,000\. However, most of the expenditure on this component was not
disbursed until 1980 and 1981 when the value had fallen to D4,300,000\. As a
_ 16 -
result, only the 3\.5 NW generator was supplied and installed; all other sub-
components were dropped to keep within the limit of the available funds\.
4\.35 Heavy Fuel Adaptation: The objective of this project component was to
assist GUC to shift to heavy fuel oil by converting Engine Sets 2, 5, and 6 at
the Corporation's Half Die plant and thereby reduce the fuel cost by about
one-third\.
4\.36 The funds allocated, US$739,000, were to cover conversion equipment,
fuel supply facilities and engineering services\. The Corporation's elec-
tricity U\.K\. based conaultants, were appointed consultants in May, 1976 for
the component, although they were hesitant about conversion from the outset,
as they contended that there was a need for better maintenance of the
engines\. In June, 1977, they submitted a report on the feasibility of
converting the engines\. While the report highlighted the economic viability
of the conversion, the consultants also introduced the possibility of the need
for a new power station, and questioned the appropriateness of the conver-
sion\. On the insistence of Government, work continued, and specifications for
the conversion equipment were prepared and steps were taken to procure the
fuel aupply facilities\.
4\.37 Events were to overtake this project component when, in November, 1977,
Engine Set No\. 5 was irreparably damaged due to f)jwhoel disintegration and
also caused extensive damage to sets numbered 4 and 6\. It also became clear
that Engine Set No\. 2 was in a bad mechanical condition with limited life,
which could not justify the expense of conversion\. The consultants, in
May, 1978, documented eight reasons why conversion to heavy fuel was not
appropriate for the generating sets at Half Die\. All the circumstances led to
the cancellation of this component after £9,939\.49, or US$20,433, had already
been spent on the engineering services\. A substantial part of the funds was
reallocated into technical assistance to help repair the damaged sets and
install several emergency sets\.
4\.38 Because of the cancellation, no reasonable evaluation can be made
about this component\. The performance of the British consultant, is
questioned by the Borrower indicating that the consultants probably felt
vindicated by the problems caused by Engine Set No\. 5 and the subsequent
problems with the other sets rendering them not capable of conversion\. Never-
theless, the component should not be viewed in isolation, as the conversion
could only have taken place concurrently with the installation of the new
engine financed by the AfDB (Set No\. 7), and with technical assistance from
and training of personnel by the manufacturer\.- Additionally, it should be
noted that Government's electrical engineering consultant for Power
Project II, also recommended against the use of heavy fuel due to GUC's
perceived level of technical competence\.
4\.39 Alternative Fuel Study: This study was commissioned early in 1976 and
undertaken by GUC's electricity consultants, to assess the availability and
feasibility of steam power generation, using groundnut shells as fuel\. The
Interim Report was made available in June, 1977, and there was some doubt
about the extent to which the consultants made sufficiently energetic investi-
gations in The Gambia and elsewhere to obtain new and valid data\. As a result
- 17 -
of the many weaknesses in the report, especially the economic analysis,
including sensitivity tests\. A British firm of financial consultants was
appointed in 1978 to assist GUC's electri-ity consultants with their economic
analysis\. In April, 1978, the financial consultants produced a sensitivity
analysis, based on the cost analysis contained In the electricity consultant's
Interim Report\. In their sensitivity analysis it was clearly stated by the
financial consultants that before any decision was taken on either mode of
generation (i\.e\., steam or diesel), further work was required regarding diesel
fuel prices, cost of capital and future availability of groundnut shells\.
4\.40 Due to various delays and the focus on a new power station (see
paragraph 4\.30), there was a loss of interest in this study by all concerned\.
There was a growing assumption that this component was not viable, due to lack
of sufficiently reliable suppLies of the relevant alternative fuels, parti-
cularly groundaut shells (the groundnut crop was decelining), although coose
and other waste agricultural products could have been canvassed\. Due to a
change of personnel, a final report was never produced\. However, the Borrower
suggests that in the national interest, from the point of view of saving
foreign exchange by the efficient utilization of a local resource and the
possible reduction in unit costs of electricity generation, this project
should be regenerated\.
4\.41 Banjul Water Supply System Expansion: In 1974, GtCs water supply
consultants undertook an Outline Design Study (funded by the UK, ODM) of the
Banjul and Kombos water production and distribution requirements over the next
decade\. The consultant's report of May, 1974 -was the basis for the Tourism
Project Water Component, financed by KfW\. Part of the KfW loan interest was
to be used for 'approved projects", and by a later modification of the wording
of the Agreement, to finance four expatriate experts, including an accountant\.
4\.42 As part of site investigation, GUC asked their consultants in March,
1976 to undertake a Groundwater Study\. A British firm was awarded the
drilling contract in November, 1976\. Work began in January, 1977, and was
completed by December, 1977\. Seven observations and five exploration
boreholes were drilled, which confirmed the adequacy of the underground
aquifers, showing at least three times the required capacity\. Seven produc-
tion wells were sunk, including five at the new wellfield at Wellingara\.
4\.43 Concurrently with the Groundwater Study, GUC also in March 1976 made
a further agreement with their water supply consultants to design and
supervise the construction of the wFirst Stage" program of works proposed in
their Outline Design Study\. The design was sufficiently advanced by the end
of 1976 to allow invitations for supply of materials and civil works\.
4\.44 There were two civil works contracts, one for the boreholes and one
f-or the remaining construction woric\. There were ten supply contracts, cover-
ing pipes, valves, steel tanks, treatment plant, high lift pumps, borehole
pumps, standby generators and transmission line materials required to link the
new Vellingara wellfield to the public electricity supply\. The majority of
the tenders were received in March, 1977, evaluated in April, 1977, and order
placed in July, 1977, with materials arriving in early 1978\. The civil works
contracts began in April, 1978, and the works continued through 1978 and
- 18 -
1979\. The works were commissioned in October, 1979 after the Vellingara power
line had been erected by GUC staff\. Standby generators were installed at
Wellingara and at the new Serrekunda Pumping Complex between December, 1979
and February, 1980 to give security of supply in view of the, then, parlous
state of GUC's electric geueration facilities at Half Die Power Station\.
4\.45 The details of the twelve major contracts are lioted in Annex 4\.7 and
show final costs of D6\.453 million against awards of D7\.017 million\. After
completion of all the works, including mains at Campama and Kotu, there was
Btill an unspent balance of Project F'mds sufficient to implement a main from
Serrekunda to Abuka by GUC labor at a cost of D90,OOO\. Additionally, costs
amounting to D379,477 were incurred locally and financed by KfW for purchase
of vehicles, helix meters and a compressor; laying of a distribution main by
GUC labor in Kotu Township and Campama and erection of 11kV overhead trans-
mission line to Wellingara boreholes\.
4\.46 Bngineering costs comprised three main components:
(a) Sxecution of the Groundwater Resource Study and the concurrent
supervision of the drilling contract (total cost D218,3B6)\.
(b) Detailed design, including the preparation of tender documents,
international advertising for tenders, and tender evaluation (total
cost D257,276)\.
(c) Supervision of construction, including progressing of materials
supply contracts, inspection and testing of materials, site
supervision of the civil contra\.ctor, and liaison with the client and
financing agency (total cost D600,OOO)\.
4\.47 Commissioning of the Project Works has resulted in doubling-the long-
term sustainable water production capacity for supply to the Banjul Area from
1\.7 million gallons per day to 3\.4 million gallons per day\. It has also
provided the transmission and storage reservoir facilities to ensure that this
volume can be delivered to the various distribution networks of the water
supply area\. However, as water requirements in the area are inevitably
increasing, it is desirable that studies and planning for the next stages of
development of the system should begin now, if they are to be implemented
before the demand exceeds the new capacity\. It is already forecast that the
system demand will exceed the supply during the tourist season 19B3-84,
although certain production rehabilitation works may alleviate the problem if
the necessary plant, equipment and spares can bt financed\.
4\.4B Finally, it should be noted that this was a highly successful com-
ponent, carried out in a most efficient manner and within the limits of the
available funds\.
4\.49 Kotu Sewerage: The Kotu sewerage component was designed to serve the
ThA, and envisaged a sewerage system which would consist of:
(a) a collection system at each of the three tourist sites (Kotu Beach,
Point, Strand);
- 19 -
(b) a pumping station in each site to boost sewage water; and,
(c) central stabilization ponds operating under natural aeration\.
4\.50 This proposal superseded the consultant's original concept of the use
of septic tanks and seepage fields for both the resort areas and support areas\.
Such a procedure would have left the responsibility for and finaacing of
sewage disposal facilities with prospective hotel developers, as had been the
case with hotels built to that date\. However, to avoid the provision of
inadequate facilities (as had also occurred with some existing hotels), it was
intended to use powers under the Hotels Development Ordinances to control the
location and size of facilities the developers should build\.
4\.51 Late in 1976, GUC instructed its water supply consultants to proceed
with the detailed design and preparation of tender documents for a sewerage
system with stabilization ponds providing for sewage disposal from all three
Kotu Resort Areas\. A stabilization pond site was selected south of the
Atlantic Highway in the area between the Kotu Stream and the location of the
future (now existing) Kotu Power Station, had it surveyed and proceeded with
detailed design\.
4\.52 In March, 1977, the detailed design, though not yet complete, was
sufficiently advanced to enable quantities of materials (pipes, penstocks,
pumps, etc\.) to be taken off and specified for tendering\. These materials
were then included as separate sections of tender documents already being
compiled for materials for the Banjul Area Water Supply component\. Muring
June, 1977, while in the process of compiling their evaluation report on the
tenders received for both the water supply and sewerage project materials, the
water supply consultants were asked by the Association to use the tendered
cost figures to derive an estimated cost to completion of the whole Kotu
Sewerage Project\.
4\.53 This estimate cane to approximately D2,800,000, compared with the
provision of D1,180,000 in the Pro-ect funds\. Work was suspended on the
design of this component (about 90% complete at that stage) pending its
further consideration by the Association\. During the next 14 months, various
options were pursued in order to contain the costs, and the Association
appointed an independent consultant to,review all aspects with a view to
containing the costs and using an appropriate technological approach\.
4\.54 The report prepared by a British consultant considered seven
alternative sewage disposal systems, including septic tanks, package plants
and sea-outfalls\. It cor\.n^luded that a two-phasea sewerage system with
stabilization ponds would be the nost- cost-effective, with septic tanks
ranking second, sea-outfalls fifth, and package plants last\. Inherent in the
adoption of such a phased scheme would be the need to phase hotel development
so that hotel construction at the Kotu Beach Resort Area would not be allowed
to proceed until virtually full development had been reached at the other two
Reso,rt Areas at Kotu Strand and Kotu Point\.
4\.55 In October, 1978, the water supply consultants were instructed to
proceed with the detailed design and preparation of tender documents for Phase I
- 20 -
utilizing the above design criteria of the British consultant\. (The latter
provided for deep ponds in order to accommodate them within the comparatively
limited area north of the Atlantic Highway, in contrast to the original design
based on shallow ponds at a different site, sized on different design
criteria\.) At the end of March, 1979, the water supply consultants produced
calculations, drawings and draft tender documents for materials' procurement,
and civil construction of the Phase I scheme\. After some further economies
had been made by the amendment or removal of various detailed items, the
estimated cost was now D2,500,000, of which the IDA funding had been increased
to US$750,000, equated to D1,500,000, excluding engineering costs\. After
agreement between all the parties, GUC instructed their water supply
consultants in June, 1979 to finalize the design and documents based on the
stabilization pond system to serve Kotu Strand and Kotu Point only\.
4\.56 Bids were received in October, 1979 for materials procurement and
civil construction works, and the consultants submitted their evaluation
report the same month\. In April, 1980, GUC'B water supply consultants placed
orders for pipes and pumps with the successful tenderers, as selected by the
Central Tenders Board, and to administer the execution of these materials
contracts\. After extensive discussion with the Association regarding the
capacity of the lowest evaluated bidder to undertake the civil works, the
contract was awarded to a Gambian company, and the work commenced in May,
1980\. Site supervision of the contract was carried out competently by PWD,
with GUC's U\.K\. water supply consultants acting in the role of Advisors to PWD
on any points which might arise during the construction and on which P1D might
-wish to consult them\. Commissioning tests on the newly-installed pumping
equipment were carried out in February, 1982, some 21 months after the target
date at appraisal\. However use of the new system could not be implemented
until all connections had been made to the hotels, including the newly
constructed Sengambia at Kotu Beach, and the start of the tourist season in
Jovember, 1982\. All connection costs, including the Senegambia, were met by
Government\. Two of the four ponds have been brought into operation and are
coping satisfactorily with the 1982/83 tourist capacity\. The total cost of the
sewerage component at US$0\.83 million is 26% over the appraisal estimate\.
4\.57 Following requests to GUC during execution of the sewerage contract
to second staff to participate in site supervision and for limited overseas
training for a supervisor, steps were,taken to prepare for the future
operation and maintenance of the sewerage system\. One of the engineers from
the GUC Water Division closely liaised with the consultants and the
supervising staff from the Public Works Department\. After the creation of the
corporation's Sewerage Division, the Division's,engineers took an active part
in the actual connection of the Senegambia Hotel to the sewerage system in 1982\.
4\.58 This component has suffered from long delays and indecision as to
the required design\. Although the ponds are operating satisfactorily and
without odor, deploying low level technology and requiring minimal
maintenance, the Borrower questions whether the finally agreed design is too
elaborate and costly, and whether it is the best available choice\. The
component was insufficiently funded because of its size and scope, and it is a
tribute to the contractor, the supervising engineer and all concerned that the
construction work was completed successfully\. Despite the difficulties
- 21 _
encountered during the executicn cf this cempcnent, relaticns remained cordial
thrcughout\. Due tc the slower than forecast hetel grcwth, it will cnly be
necessary tc utilize half the installed capacity ef the pcnds in the immediate
future\.
C\. Procurement
4\.59 Precurement for the entire prcject was, in general, effected in
accordance with IDA guidelines for civil works, equipment use and technical
assistance (AfDB guidelines for the electricity ccmpcnent)\. ICB prccedures
were fellewed fcr the Hctel Training Scheol, rcads, electricity, water supply
and sewerage compcnents, while the remaining compcnents were subject te LCB
and selecticn in the case cf the technical assistance and appointment of
ocusultants\. The quality cf equipment and materials precured was satisfac-
tcry, except for minor articles of fittings fcr the Hctel Training Schecl and
the public beach facilities\. The landscaping was done by force account
provided by GUC and was cf satisfactory quality\. Arrival of the irrigaticn
equipment fcr the pilet herticultural scheme was held up fcr several months
because cf a dock strike in the United Kingdcm and the subsequent misplacement
cf relevant documentation by authorities in The Gambia\.
D\. Compliance with Covenants
4\.60 Rost of the covenants under the project were adequately fulfilled
within the time presented in the legal agreements\. In terms cf the Credit
Agreement, legislaticn in building and planning laws, permitting the Physical
Planninig Office in the Ministry of Local Government and Lands Department to
exercise adequate control cver land use in The Gambia, while drafted and
presented to Cabinet, was never formally enacted into law\. However, special
regulatics within the existing 1966 Building Act were prepared specifically
for the TDA and approved in December 1977\. In addition, there were signifi-
cant delays in the finalization of a schedule cf ground rents for the TDA\.
Altheugh a draft proposal was presented by the Prcject Management Unit in
1978, a final decision cn the tariff levels and implementation procedures was
nct agreed upcn by Government until mid-1980\. Although now effective, actual
ccllecticn cf these rents from the hotels has still not yet comaenced, mainly
on acocunt cf administrative bottlenecks in the responsible Government
agencies\. Sectien 4\.04 of the Credit Agreement provided for the provision of
D5 millicn within three years of project commencement to cover at least half
of the lcng-term debt capital requirement to 1980,for hetel investment in the
TDA\. While there had been no formal allecation cf these funds in a systematic
manner, Govez\.ment did actively inject substantial funding in two of the four
new hotels constructed on the sites and provided lcan guarantees for a number
of hoteliers with options for constructicn\. In generaL Government provided
relevant Ministries and Agencies invelved in project executicn with adequate
counterpart funds, with the exception of GUC\. The operating deficit of GUC
for PY1976 (D1\.876 million) was covenanted to be met by Government - it toek
until 1982 tc obtain those funds and even then only as part of an offsetting
statement for another IDA project (Cr\. 1187-GM)\.
- 22 -
4\.61 The Project Agreement with GUC was breached in most ef the impertant
aspects relating te financial performance; the full extent of the non-
compliance is described in paras 6\.04 tc 6\.11\. Beth Government and GUC itself
share responsibility for this peor perfermance\.
E\. Ccsts and Disbursements
4\.62 Annex 4\.5 indicates that total actual project costa were US$ 11\.5
million, exceeding appraisal estimates cf US$ 11\.3 millicn by about 2%\. Of
the total of sixteen coapcnents completed, nine were effected with cost
cverruns\. Five coapcnents were redefined and reduced in scope\. Major cost
overruns were recorded by the Hctel Training Schcol compcnents (308%), I/
followed by the severage compcnent (227%)\. 1/ Ccst overruns were abscrbed by
Government itself, as it was act possible tc increase the external sources of
funding\. By project conclusion, Government contribution to total costs was
26%, while external financiers accounted for 74%, broken down as follows: IDA
(17%); KfW (33%); GTZ (5%); and AfDB (19%)\. This varied semewhat froe
appraisal estimates in which Government was expected to provide about 19% of
project financing and cc-financiers to provide the remaining 81%\.
4\.63 An analysis of the cost overruns suggests four primary sources,
namely (a) domestic and international inflation, (b) exchange rate move-
ments,2/ (c) implementation delays, and (d) underestimates at appraisal\.
Altheugh ever the 1976-82 period, domestic prices increased by 44% (7\.3% per
annum on average), international prices by 85% (12\.3% per annum on average),
the exchange rates of the dalasi relative tc the United States dollar
fluctuated widely between 1\.78 and 2\.30, and there were implementation delays
cf almCBt twC years, it is not pcssible tc determine which of these possible
sources was primarily respensible for cost overruns\.
4\.64 Annex 4\.6 sets cut actual and appraisal estimates of the disbursement
profiles fcr the project\. At appraisal it was estimated that 50% of total
disbursements would take place by the first 18 months of project executicn,
with the remainder ccvering the 30-month period tc project coapletion\. In
actuality, only 11% of project funds was disbursed by the former period, with
the remainder covering an additional pericd of 48 months\. Total disbursement
spanned a period of six years frem the first quarter of Xarch, 1977 to the end
of 1982, when the first and last withdrawal applicaticns respectively were
paid\. During implementation, disbursements were highest in the fifth year
(20%) and lowest in the second\.
1/ In dalasi terms\.
2/ Between 1978 and 1980 in particular\.
- 23 -
V\. ORGAITZATIOJ AND MANAGEWEIT
A\. Project Management
Project Ccordinaticn
5\.01 Ultimate management responsibility fer the prcject lay with the
Tcurism liaison Board (TLB) which, as a ccnditicn of effectiveness, was to be
reccnstituted tc include bread representatien from all prcject executing
agencies\. At the cutset, the Chairman of the TLB was the Deputy Secretary-
General in the President's cffice, with the head cf the Physical PlaLaing
Divisicn in the Ministry of Lccal Government and Lands as Secretary\. During
preject executicn, Bank apprcval was given fcr the Permanent Secretary of the
Ministry cf Informaticn and Tourism tc chair the TLB\. This move had the
advantage of making the subject Ministry more directly responsible fcr project
execution\. As it turned cut, project cocrdination was also further imprcved\.
In general, overall management of the project by the TLB was quite satisfac-
tory, particularly with the appointment in 1979 of the incumbent Permanent
Secretary of the NIT\. While more frequent meetings could have been held, and
greater interaction at times with the Naticnal Investment Board 1/ cculd have
been possible, the TLB has played a significant role in ensuring stability and
effectiveness in project executicn\.
Project Manager
5\.02 Day-to-day management was effected thrcugh a small Project Management
-Unit (PiU) headed by a Project Mawnager\. The project manager reported directly
to the head cf the TLB\. There were two changes of manager during project
executicn\. The first project manager was an expatriate, appointed within the
six-month period agreed upon in the Credit Agreement\. Initially appcinted fcr
a period of two years, his contract was firstly extended by eight mcnths in
the same capacity and subsequently by another five months as a project adviscr\.
A Deputy Project Manager, a Gambian, who was at that time in charge of the
Physical Planning Department, was appointed to understudy the project manager
throughout his stay in The Gambia\. Unfcrtunately, it appears that for cne
reasen cr another, this understanding -,as not effected\. Very often, the
Deputy Project Manager was sc totally absorbed in his cther non-project duties
that he had very little contact with actual project executicn\. This was one
of the reasens, for instance, why, at the conclusicn of the project manager's
tcur cf duty, it was necessary fcr him tc stay on and act as project advisor
to enhance the transiticn\. Very shortly after assuming full responsibility
fcr project management in 1979, the new local project manager was granted
leave to fill a positicn cutside cf The Gambia with an international crganiza-
tion\. Since there had not been enough time for someone to be appcinted to
understudy him, a virtually fresh individual from the tcans Office cf the
Ninistry of Finance and Trade was appointed to manage the project\. While
1/ The NIB is respcnsible fcr ultimate investment decisicns invclving
the public sectcr, cf which tcurism is one of the sectors affected\.
- 24 -
IDA's apprcval was nct scught ex-ante fcr this appointment, with one cf the
results being that the cfficer selected was not freed from his substantive
duties, it turned cut that the chcice was, in effect, a satisfactory cne\. The
new prcject manager was very enthusiastic and moved executicn markedly thrcugh
ccmpleticn\. By the time cf the departure cf the expatriate prcject manager,
eight ccmpcnents were ccmpleted and the prcject 50% disbursed ever the
30 months from effectiveness\. The second Gambian prcject wmnager advanced
project executicn tc completicn within 36 mcnths after assuming reapcn-
sibility, with the remaining funds fully disbursed vithin 45 mcnths\. 1/
Repcrting, Accounting and Auditing
5\.03 Project accounting and reporting were consistently cf a high
standard\. While the audits tended to lag somewhat in the latter half cf the
project, cnce completed they indicated no major issues\. Prom time tc time,
Gcvernment information cn local expenditure incurred was not as fortheeming as
was necessary, but there appeared te be no major problems revealed in the
audits\. Management cf PMU expenses was very good\. Apparent prudent control
gave rise to a 5% underrun by project completicn, despite an increase in
emcluments of the unit's staff in 1979, at Gcverzment's request and delays in
project implementaticn\.
5\.04 On balance, it appears that accounting management cf the project was
satisfactory\. In the initial stages cf executicn, there were indicaticns of
difficulties experienced in acquiring decisicos from Gcvernment cfficials by
the PNTY, but this appeared tc decrease noticeably with advances in project
executicn\. Finally, the fact that the twc local project managers were beth
remunerated at significantly lower levels than their expatriate predecessor,
despite the fact that, in both cases, they were expected to retain their
substantive duties, tended at times tc draw some resentment during execution,
although the problem was partly alleviated by salary adjustments towards the
end of project executicn\.
B\. Supervisicn
5\.05 Borrcoer supervision of the teurism compcnents was done essentially
by the responsible subject Ministry or Department\. In general, the quality of
local supervisicn cculd have been of a higher standard\. This was particularly
true in the case of the PiD and the access rcads, in which the final product
suffered from a number cf defects which, it is generally accepted, cleser
supervision would have averted (para\. 4\.25)\. On the cther hand, PWD supervi-
sicn of the sewerage component was commendable and alsc cheaper than the use
cf fcreign consultants\.
5\.06 Supervisicn of the public beach facilities by a private architect and
the water supply component by a consulting engineer was creditable\. GUC,
which both executed and supervised the landscaping, delivered vwrk of a high
1/ Except fcr a small amcunt cf US$437\.72 cancelled\.
- 25 -
quality\. Supervisicn by the Department of Agriculture cf the pilet herticul-
tural scheme alse could have been cf a higher standard cn balance\. It appears
that the Department was not fully briefed at the cutset cf the project cn the
precedures for disbursement and procurement\. Supervisien at a later stage of
project executicn was, however, much improved\.
5\.07 Some 11 perscn-mcnths and 18 missions of supervision time was
expended by the Asscciaticn during prcject implementaticn cver the eight-year
period, averaging seven staff-weeks per year\. Average mission size was
2\.3 persons, with average length of missicn stay being cne week\. Thrcughout
executicn, a mix cf technical and financial expertise was used, though perhaps
a greater input by scurism specialists, especially after t;;e dissolution cf
the Tcurism Projects Department of the Association in 1979, might have been
useful\. Nevertheless, the Borrower is cf the view that "the constant super-
vision cf the project compcnents by Bank cfficials not cnly ensured better
performance by the project consultants and contractors, but also solved
occasional problems cf remittance both locally and overseas"\. 1/
C\. Performance cf Cc-Financiers
AfDB and FRG (KfW)
5\.08 There were criginally twc major cc-financiers in the tetal prcject,
namely The Federal Republic of Germany (KfW), fcr the water supply, and AfDB
fcr the electricity\. Subsequently, the Pederal Republic of Germany (GTZ) was
invited to assist in financing the Hotel Training Schocl\. While the AfDB
agreemeLt was promptly signed in early January, 1976, that cf KfW was delayed
fcr several months cn account cf administrative difficulties facing both the
KfW and the Gcvernment cf The Gambia\. The financing agreement was not signed
until October, 1976\. This had the effect cf delaying credit effectiveness\.
Both the water and electricity components were expected tc be fully completed
in just over four years after commencement of designs in mid-1976\. While the
water supply ccmpcnent was completed cn time and within budget, the elec-
tricity compcnent exceeded appraisal estimates and had the seepe of work
reduced fcr a number cf reascns\. The major disruptions in the country's
electrical supplies were perhaps the principal scurce cf delays (para\. 4\.36)\.
While the processing of Power Prcject-II by AfDB slowed up implementaticn
progress cn the parallel ccmponent in the IDA project, the responsiveness cf
AfDB to the Government's 1978 request for further assistance has been
generally applauded by the Borrower\. Disbursements for the electricity
component were completed by June, 1981, just under a year over appraisal
estimates\. In general, it appears that execution arrangements by these two
cc-financiers were satisfactcry\. Supervision by AfDB was generally limited,
and the Bank undertoek supervision of the FRG (KfW) financed component\.
1/ BOrrewer's PCR, page 34; Octcber 22, 1982\.
- 26 -
PRG (aTZ)
5\.09 As in the case ef PRG (KfW) and AfDB, the Berrcwer has expressed
particular satisfaction with the cc-financing prcvided by The Federal Republic
cf Germany (GTZ), particularly for construction and staffing and totally
equipping the Hotel Training Schccl (paragraph 4\.05)\. GTZ's interventicn has
generally been ccnsidered very timely\. Executicn was apparently enhanced by
the promptness in the relative preessing cf disbursement requests and release
of project funds\. The able and experienced prcject eccrdinatcr, whc aloc
acted as Principal to the schcol and later adviscr, was instrumental in
completing the physical wcrks and initiating cperaticns\. Being based in The
Gambia itself, this officer was able to maintain consistent and regular
supervision cf executien and simultaneously prepare fcr subsequent initial
operaticn cf the instituticn\.
5\.10 In general, relaticns between IDA missions and the cc-financiers were
satisfactcry, with missions occasionally overlapping tc facilitate coordi-
nation and jcint discussions as was envisaged at the time of determinatien of
project financing\.
VI\. FINANCIAL PERFORMANCE
A\. Tcurism Ccmponents
6\.01 It has not been possible to evaluate the financial perfcrmance of the
tourism eomponents to the same degree as projected at appraisal\. The majcr
reasen has been sustained reluctance cn the part of existing hotels tc release
infcrmation cn the operating results\. A survey conducted-jcintly by IDA and
the Ministry of Information and Tourism yielded only scanty information\. The
excuse often given by hotels was that their figures were "cut cf the country",
and details were simply not available\. Nevertheless, based cn the limited
financial and cperational data turned in by four hotels 1/ in the survey, a
reasonably reliable picture cf the financial impact cf the project has been
cbtained\. In addition, figures fcr the pilot horticultural scheme, not
available at appraisal (since the ccUponent was not included in that fcrm at
appraisal) have been ebtained\. In general, it is fair to say that for the
tcurism components, despite rapidly escalating costs, occasicnal adverse
exchange movements and falling tcurist arrivals, mest hetels have had fairly
pcsitive financial returns\. These returns ard expected to be sustained and
enhanced well after project clesing date, particularly given the anticipated
gradual recovery cf the tcurist trade to The Gambia\.
1/ Three of which are directly located in the Tcurist Development
Area\. Two cf these were actually ccnstructed during project execution\.
- 27 -
6\.02 At appraisal, it wras estimated that by the end cf 1982, an additicnal
1,490 beds vould have been added cn the TDA in five new hetels tc be con-
structed cn the three resort sites\. Over a 15-year period, it was estimated
that with average censtructien costs per hotel bed cf D14,850 (US$8,250),
30,000 tourist arrivals annually (45,000 after 1985) and 85% and 45% bed
cocupancy respectively in high- and cff-seascns, the tcurism ccmpcnent vould
have an average minimum net internal rate cf return of 9\.6%\. In actuality, to
date a total of 1,320 additicnal beds (about 90% of appraisal estimate) have
been constructed en the TDA\. It is not anticipated that this figure wculd
change significantly in the near future, given Government's decisicn to
constrain additicnal new investment in the industry (paragraph 2\.05)\. Based
on limited information acquired during the survey, average "turnkey" construc-
tion cest per bed for new hotels has ranged from D7,400 tc D22,000 (US$3,200
tc US$9,565), as cppcsed tc D14,850 anticipated at appraisal (Annex 6\.1)\.
Hcwever, since cver the past six years tcurism traffic has not been even half
the annual level predicted at appraisal in virtually every year, occupancy
rates have averaged only about 40%, and'costs cf imports have risen signifi-
cantly over the same period, it idi highly unlikely that internal financial
returns cf the average hotel wculd parallel appraisal estimates, unless majcr
pcsitive changes occur in the near future\.
6\.03 The pilet herticultural scheme is expected tc break even (i\.e\., cover
investment and operating cests) within five years, based on financial returns
in the twc seasons 1980/81 and 1981/82 (Annex 6\.2)\. When the project preposal
was prepared in mid-1978, total project cost fcr the Tundum site was estab-
lished at D205,000, including one year's cperational cests\. Using the actual
twc-year period cf cultivaticn, investment and cperaticn costs have totalled
D216,000, exceeding earlier proposals by just over 5%\.
B\. Gambia Utilities Ccrperation
6\.04 The appraisal forecasts and actual results for FY75 to FY80 are shovn
in the Income Statements, Scurces and Applicaticn cf Funds Statements and
Balance Sheets cf GUC in Annexes 6\.2, 6\.3 and 6\.4 respectively\. The tariff
levels and changes during the peried of project execution are listed in
Annex 6\.5\.; The comments in paragraphs 6\.05 tc 6\.12 explain some of the
salient features cf GUC's generally pocr financial performance\.
6\.05 Rate of Return: The prime cbjective of GUC's performance was to
achieve average annual rates of return on net fized assets of 3% in FY80
cnards fcr all its services combined in every year\. Fcr GUC's electricity
and severage services, the target was individual rates of return of 8% in FY81
and thereafter\. GUC has nct maintained completely separate annual acccunts
for each service, but it is evident that due tc the high\.operating losses and
a failure tc generate sufficient revenues frem electricity censumers to meet
even its cperating cests in several years, the estimated rate of return is
negative for electricity in FY82\. The sewerage system which has cnly become
cperative in FY83, appears tc be perfcrming relatively efficiently\. For water
supply, the rate of return cbjective cf 3% is tc be met in FY85 cnwards; with
some cest reducticn and tariff adjustment, the target is achievable\.
- 28 -
6\.06 Tariffs and Reverues: Electricity tariffs have risen for commercial
usage in the high band since 1974 from DO\.16 to DO\.42 per kWh, and for basic
domestic usage from DO\.19 to DO\.33 per kWh; increases of 163% and 75% respec-
tively (See Annex 6\.5)\. For water supplies, the rates have risen from D1\.50
to D3\.60 per 1,000 gallons (140%) and from D1\.0 to D2\.0 per 1,000 gallons
(100%) for commercial and domestic usage respectively\. The tariff structure
introduced in 1976 incorporates a social block and was developed by a con-
sultant financed under the project\. There has not been any criticism of
inequity in the structure, apart from the operation of the maximum demand
tariff by large electricity consumers during the period 1978-1980 when GUC was
having to load shed extensively; most load shedding was being carried out
without GUC warning its consumers that it was switching off or switching on
the electricity supply\. This load shedding also adversely affacted GUC's
revenue generation through lost electricity sales and some water sales\. On
the basis of the poor service provided by GUC between 1977 and 1981, Govern-
ment was always reluctant to approve tariff proposals put before it, with the
result that all tariff increases since 1977 have been too little too late,
thereby compounding GUC's financial problems\.
6\.07 Although the Government of The Gambia gave support for what was
thought to be adequate tariff action in the earlier part of the project,
costs, especially fuel, ran ahead of forecasts and therefore of revenue
generation\. In the latter part of project execution, Government became
reluctant to comprehensively address the financial problems of GUC\. The
adoption of a financial recovery plan for GUC was therefore made a condition
of effectiveness for the Energy Credit (CR\.1187-GH) in 1981\. A feature of
this plan apart from financial restructuring and electricity tariff action was
freedom for GUC to pursue its debtors, including disconnection if necessary\.
Although Government agreed the plan, GUC is still being restrained from
pursuing satisfactory debt recovery especially from the hotels, some of whom
presently owe for two years electricity and water consumption\. GUC's accounts
receivable stood at D4\.2 m for FY82, equivalent to 120 days average billing or
90 days if the hotel arrears of D1\.2 m are excluded\. The inadequate tariff
levels and poor collection performance have caused GUC continuous liquidity
problems\. These features and increasing indebtedness to its own suppliers are
reflected in a current ratio of less than 1 throughout the period of project
execution which is a further indicalion of the frequent liquidity problems
experienced by GUC management\.
6\.08 Operating Costs: Although GUC managed to contain its operating
expenses to an increase of ebout 120% between\.1976 and 1982, its fuel costs
rose by 280% to FY82 and accounted for some 60% of GUC's total expenses in
that year\. Labor costs also rose 20% above the average due to additional
- 29 -
recruitment, especially in the latter part of project execution period with
limited justification\. 1/ Annex 6\.6 shows how GUC'a staff has nearly doubled
from 472 employees in 1974 to 891 in 1982 with above average increases in the
transport and administration areas\. GUC revalued its assets in 1976 and has
kept the values current\. Depreciation has therefore continued to rise
significantly both due to annual indexing of the assets and the growth in the
assets base, which collectively has seen the value of net assets in operation
rise from D5\.2 million in FY75 to D45\.2 million in FY82\. GUC'a revenue
coverage of operating costs has consistently fallen below par\.
6\.09 Debt Coverse: Debt servicing, mainly interest payments, have also
risen substantially in recent years to nearly D1\.9 million in FY82\. Due to
its poor financial performance, GUC failed to satisfy the revenue coverage of
1\.5 times its debt servicing, whether taken on total debt service or interest
payments alone\.
6\.10 Internal Cash Generation: At the time of appraisal it was intended
that GUC would provide 26% of its total capital investment requirements out of
internally generated funds\. GUC did not generate sufficient funds to make any
contribution towards the project\. The Government was obliged to provide the
entire counterpart funds for the total capital investment program of GUC
during this period\.
6\.11 Accounts and Audit: GUC's annual audited accounts were covenanted to
be submitted to the Bank within 4 months of the end of each fiscal year\. This
target has not been met in any year, delays having averaged between 4 and
8 months\. However, the accounts, when presented, are comprehensive and
supported by substantial annexes relating to financial and physical data\. The
accounts have been audited by the same firm of international accountants
located in Banjul throughout the period\. There were no qualifications, except
the highlighting of the problem of obtaining confirmations from the Accountant
General of the outstanding balances on loan accounts with Government - a
reflection of the problems of accounting at the Government level\.
6\.12 Units Produced/Sold\. The number of electricity units generated and
sold and the volume of water produced and sold between 1975 and 1982 are set
out in Annexes 6\.7 to 6\.10\. For Banjul, which encompasses the project area,
there are wide discrepancies between appraisal forecasts and actual figures\.
These are primarily due to the breakdown in the electricity system between
1977 and 1980, the slower rate of project implementation, and the failure of
GUC to address its electrical line losses and unaccounted-for water margins,
all of which adversely affected GUC's revenue base (para\. 6\.06) and its
operating costs (para\. 6\.08)\.
1/ The sharp increase in staffing between 1974 and 1982 did however
occur during a period of almost a doubling of consumption\. Government
restrictions on staff layoffs also curtailed the GUC's freedom to fully
operate on a commercial basis\. In addition, it could be mentioned that
operating costs include transportation costs that are heavily affected by
the wide geographical location of a nuxgber of small generating stations
and generating sets, requiring constant servIcing\.
-30-
VII\. ECONOMIC PEEPORNANCE
A\. Rate of Return
7\.01 The same constraints identified abcve fcr the financial perfermance
have affected analysis of the economic effectiveness cf the tourism com-
penents\. At appraisal, it vas prejected that the tcurism compcnents vould
have a net ERR of 12\.1% in the base seenaric over a 30-year period\. Benefits
were calculated on the basis cf average daily expenditure cf D66 per visitcr,
expected average annual arrivals ef 30,000 up tc 1985 and 45,000 thereafter,
and total capital costs cf D53\.4 millicn, being the costs of infrastructure
(D6\.8 millicn), improvements tc the runway at Yundum airport (D9 million), and
hotels and other superstructure (D37\.6 millicn)\. Operating costs cf the Hotel
Training Schocl and road maintenance costs had alsc been taken intc account\.
7\.02 Based cn the survey, investment costs fcr the four new hotels con-
structed (superstructure) on the TDA under the prcject, tetalled apprcximately
D49\.5 millicn\. Allcwable infrastructure coats 1/ are approximated at
D8\.8 millicn, while actual costs cf ti's runway were DlO millicn, 27% higher
than anticipated at appraisal\. 2/ Aunex 6\.1 indicates that most hotels
estimated an average per diem i\.ctIL expenditure cf abcut D85 presently\. If
adjustments are made for miseellanecus expenditures, such as purchases outside
of the hctel, a total daily expenditure cf D100 per tcurist could be con-
sidered realistic\. 3/ Operating ecosts cf the Hctel Training Schcol and road
maintenance ccats fer the Ketu rescrt area, but nct grcss public utility
revenues, have also been included\. Transit arrivals are expected to rise
annually from 22,000 in 1982/83 to 30,000 by 1986/87 and tc level off there-
after\. Labor and fcreign exchange have not been shadow-priced, and no
residual value has been assumed in year 30\.
7\.03 Applying these streams of benefits and costs cver 30 years, a pCsi-
tive internal econemic rate cf return of just under 6% Wam been obtained\. It
is nct surprising that this rate cf return fer the tcurism cemponents is less
than estimated at appraisal, given the significant decline in actual relative
tc anticipated tcurism arrivals, significant cest cverruns cn infrastructure
and superstructure cests, and, to some extent, inflatic;-fuelled increases in
cperating cests for the typical hotels\. As a result, while the trend in
tourist arrivals is likely tc change somewhat in the nec\.': future based on the
existing 1982/83 season, it is hardly likely that tcurist arrivals would
increase cr coats reduced on a sustained encugh basis by 20% fcr the tcurism
1/ See Annex 7\.1 fcr details and assumpticos cf this item and rest cf
economic analysis\.
2/ In dalasi terms\.
3/ Given the average rate cf inflation cf about 6\.5% p\.a\. over the past
six years in The Gambia, and appraisal estimates cf D66 per visitor in
1976, this figure cf D100 appears realistic\.
- 31 -
compcnent ci the preject to atzain the appraisal rate ef return of 12\.1% over
the 30-year peried\. Nevertheless, the industzy as a whole is expected to
centinue to demonstrate mcdest viability, especiall if Government relent-
lessly pursues its prepcsed pclicy cf ccueclidati cver the next few years\.
B\. Balance cf Payments' Effects
7\.04 While no reliable figures are currently available in The Gambia, it
is dcubtful whether, as a result of this project, there has been a net inflow
of the fcreign exchange earnings over the project execution period\. Given the
formative and evcluticnary stage cf the country's industry over the 1976-82
period, it is highly likely that cutflows resulting from the significant
import content of operating costs, debt service on cffshert hotel loans, and
ether infrastructure and superstracture investment costs would exceed possible
inflows mainly from tourist expenditure\. As was substantiated by the secic-
economic study of tcurism in The Gambia financed under the project, the high
incidence of charter arrivals results in sizeable tcurist expenditure, being
paid for as a package cutside of the ccuntry with large vclumes of local
currency borrowing in The Gambia by hotels tc finance domestic expenditure\.
In addition, given the heavy impert content cf the industry, net inflcos have
tended act to be significant\. Further, weak exchaage contrcl and other insti-
tuticnal constraints affecting the country are believed tc have contributed tc
majcr leakages, resulting in net deficit fcreign exchange earnings' position
frcm tourism\. Government has plugged some cf these leepheles and has initiated
measures tc tap a more significant amount cf pctential benefits derivable from
the tourist industry\. These include: (a) stricter excbange control monitor-
ing at points of entry and departure into and from Tkc- Gambia; (b) strength-
ening of implementaticn capacity cf the exchange control department cf the
Central Bank and more adequate recovering cf tourism sector data; (c) in-
creased effcrt tc ensure a larger share cf payment fcr tourist packages
remitted tc The Gambia; and (d) stricter contrcl over local currency-borrowing
by hoteliers for investment purposes\.
- C\. Budgetary Effects
7\.05 As is the case in the neasuremenm cf external receipts and outflows
from tourism, no reliable fiscal figures are available for the sector as a
whole\. Annex 7\.2, however, indicates that over the past six years, just under
D2 million has been generated from the hotel bed tax, which was levied mainly
as a result cf the project\. In additicn, cver DO\.7\. million has been ccllected
in airport departure taxes, a significant porticn of which wculd result from
tourist traffic\. It is expected that incremental revenues from ground rents,
income and business taxes, casino levies and cther fiscal charges are likely
to be substantial, especially as the investments made under the project execu-
ticn peried mature in fcrthceming years\. Najor incremental tourism related
costs to be financed from Government budget are likely to be for maintenance
of the Hotel Training Schcol and the infrastructure works themselves,
especially roads\. Given a realistic approach tc tariffs by Government, other
operating costs for public utilities and the pilet herticultural scheme should
be self-financing to a very large extent, and would therefore nct present any
- 32 -
unusual incremental finamcial demands cn the public treasury\.
D\. Emplcyment Effects
7\.06 Mainly because of the general slower rate of growth in the tourism
industry in recent yars, employment perfcrmance since project cummencement
has not been as optimistic as anticipated at appraisal\. D! rect employment as
a result of the project rose from 110 in 1976 te just under 800 in 1982 (com-
pared with alacst 1,600 expected at appraisal)\. About one-third cf these
employees are permanent, with the remainder seasonal\. At project closing,
while tctal employment expatriate staff represented only 6%, this category of
staff, nevertheless, filled over 90% of the available managerial slots in the
hotels\. At appraisal, it was estimated that emplcyment of 0\.6 person per bed
wculd be created, while the actual figure was 0\.5\. Although it is not
possible to estimate indirect employment, it is evident that construction,
handicrafts, agriculture, transpertatica, and other services have accounted
for a number of additional jobs, even above the 900 anticipated at appraisal\.
VIII\. SOCIAL AID INSTITUTIONAL DEVELOPMENT
8\.01 There is little doubt that the project as a whole has had a major
impact en the social and institutional life in The Gambia\. The infrastructure
provided by the project has made a majcr contributicn to the opening up of a
new residential site in the Kotu area, while the water supply, and electricity
facilities have already begun and will centinue tc serve densely populated
neighboring regions to a very large extent\. Increased and new property values
to be brought on to the valuaticn rolls of the Kanifing Urban District Ccuncil
are likely to increase municipal revenues and ultimately enhance the level cf
services provided by this municipality\. The pilot horticultural scheme has
provided a demonstrattin cf the feasibility cf doing this type of agricultural
venture, and should be replicated in other areas throughout The Gambia\. While
there were definitely adverse effects arising from the major thrust in tourism
that the project has precipitated, the effcrts made by Government through the
media, at scheols, and in cther fcra to diffuse-the negative aspects could be
counted a success\.
8\.02 Over and beyond the "people effects", the project has also put into
place a number of new institutions and upgraded weak ones in the sector\. The
Tcurism Liaison Bcard has acquired valuable informaticn on the sector and is
now in a strcnger position tc plan for future undertakings\. Through the
secic-economic study and a related tcurism marketing study a number of
institutional constraints facing the industry in The Gambia te g\., the need to
develop more destination facilities) have been highli\.ghted\. A stronger
Department of Tourism could now probably address such issues\. A Gaming Unit
has been set up within the Customs and Excise Department for the purpose of
ccllecting fees from the casino at the TDA\. Similarly, a new division of
sewerage is being installed at GUC tc maintain and operate the project
component and future investments in this area\. The Hotel Training School is,
hcwever, perhaps the single mest important institutional development arising
- 33 -
cut of this project\. A basis has new been laid fcr the systematic training
and development cf lccal rescurces for the hotel industry\. Already signs ef
improved "product" from the scheol have become evident in the hetels,
especially the Atlantic Hotel in Banjul city\. There are long range plans tc
upgrade the facilities at the Training Schcol tc provide training in corperate
management tc permit the indigenizatica of the management cadres of the hotels
in the country\.
8\.03 let at ancther level it might be argued that in a way the project has
nct been as institutionally effective as it could be\. In fact, the Borrover
does have definite and firm views on this (see Annex 8\.1 for details)\.
Because the preject management unit was detached to a large extent from the
subject Ministry (MIT), the benefit of the training arising frem t1e preject
in this respect is in a sense reduced tc the sectcr\. Ideally, day-tc-day
project cperaticns might have been handled in the MIT, even if a change was
made midstream in project execution, if the MIT instituticn was weak at
appraisal\. In addition, the fact that by far the bulk of the investment in
the hotels is foreign-owned cannot be escaped\. The chances of a trickle-down
and real transfer of ccmpetent managerial skills are remote in such a situa-
ticn, unless extremely clesely monitored\. The tremendous delays in the
production of investment and tcurism promotion literature have taken their
toll and are in some measure indicative of some of the constraints facing the
KIT and the overall level of development cf the industry\.
8\.04 The apparent relative inactivity or inability of Gcvernment to take
contrel of the reporting and information flow system from the hetels, as
evidenced by the latter's non-cooperation in the PCR exercise, must be some
source of concern in an emerging industry and should be addressed as a matter
of instituticnal policy and reform in the near future\. The project could have
done more, it might be argued, in enhancing the capability fcr undertaking
such functicns\.
8\.05 A certain measure of the pcst implementation success of the water
supply operations of GUC can be attributed to the presence cf a strcng tech-
nical assistance team in the water supply division\. Your people financed by
KfW were seconded tc GUC by the engineering consultants to assist with water
supply preduction and distributicn operations after commissioning\.
8\.06 Nc technical assistance was envisaged by the project for the elec-
tricity divisicn of GUC, but after the problems at Half Die in 1977 and 1978
(see para\. 4\.37) the Asseciation was asked for assistance\. It was agreed that
the funds available from the heavy fuel conversion compcnent could be used
partly fcr financing the recruitment cf 4 mechanic/fitters fcr perieds cf 12
to 18 months\. Although all were technically competent, some secial aspects
marred their performance\. It was generally agreed that the remuneration
package was pitched too low in crder tc attract techniq#l assistance of the
right caliber\.
8\.07 The twC most significant technical assistance appointments were those
cf the IDA financed Assistant Managing Director (1980-82) and the EfW financed
Accounting Adviscr (1978 an; cngoing)\. The latter was appointed to assist GUC
in impreving its accounting, reperting, and financial management\. His time
has been very much shared between this activity and general management and in
- 34 -
assisting in reselving the many crises facing GUC\.
8\.08 The arrival cf the Assistant Nanaging Directcr, after wcrldwide
recruitment, signalled the mevement cf GUC upstream in its many facets\. He
was unrelenting in his pursuit o:f achieving soluticns tc GUC's acst pressing
problems and restoring the respective respcnsibilities of Government and
GUC\. The blurring of respcnsibilities by gcvernment interventicn vas a majcr
factcr in GUC's malaise at that time\. The Assistant Managing Directer made a
substantial centributicn to GUC'B effectiveness, especially as Acting Managing
Directcr during his last 6 months in effice, and laid the foundation for the
technical assistance nev being provided by GTZ, since the Government decided
to remcve 3 of the top 4 GUC managerial personnel from effice\.
8\.09 In snmmary, it can be said that technical assistance tc GUC under the
project was successful in keeping GUC operaticnal but failed tc improve the
longer lasting institutional capability of GUC\. It failed because GUC did not
assign and recruit qualified counterpart staff tc work with them; training was
not formalized within GUC\. Therefore, any training provided by the technical
assistance was 'ad hoc', when the technical assistance could have provided
substantial input under a structured training program\. Additionally, the lack
of spare parts and equipment to carry cut even simple imprevements was a
severe ccnstraint cn the perfcrmance of the technical assistance perscnnel\.
The lack of tariff action by Government, and therefore cf revenues in GUC, was
a major contributor to the lack of spare parts and inadequate benefits from
the technical assistance expenditures\.
- IX\. ISSUES, OPPORTUNITIES A)D BENEFITS IN RETROSPECT
9\.01 Bcth the Borrower and the Association are of the view that the
project has been cf significant value and impact to the development cf the
Tourisn sectcr and tc a lesser extent the national econony at large\. During
project execution a number of specific issues arose, the resclutilon cf which
and the experience thereby gained should form the basis for positive future
opportunities and benefits in similar secteral ventures\. In particular, the
fellowing shculd be noted:
(a) While, as already discussed, the project has undcubtedly provided a
wcrkable and replicable infrastructure cn which further effcrts in
the sector cculd be built, the Borrower is ef the view that incre-
mental benefits to The Gambia arising from the Tcurist industry could
only be enhanced with increased local participaticn in the management
cf hetels\. In addition, a number of institutional arrangements
(e\.g\., the National Investment Board) designed to ensure such
potential benefits are derived, have nct fullX played the role-
envisaged and should be reviewed and strengthened\.
(b) In specialized projects of this nature the cheice cf consultancy and
technical assistance cculd be cracial in the cptimizaticn cf the
quality cf the output\. The tcurism sectcr does require specific
technical know-how which is hardly substitutable or generalizable\.
- 35 -
This was particularly evident in the secic-economic study in which
the final product apparently suffered because ef relative
inexperience cf the tcurism sectcr cf scme of the technical
assistance used\.
(c) Substantial savings accrue to Gcvernment if an apprcpriate blend cf
lccal and foreign technical expertise could be utilised in executicn
and supervision, as was demenstrated by the York perfcrmed by the
Public Works Department in the case of the sewerage component\.
(d) The Borrower might have benefitted and execution prcgress enhanced if
a general mid-implementation review of the project had been
undertaken\. This might have facilitated minor redefinition and
adjustments to the project resulting in improved benefits and
effectiveness\.
(e) Preject management is a critical variable in efficient executicn\.
Implementation and project impact cculd be significantly improved if
full-time attention could be affcrded to this activity\. While the
twc local project managers did a satisfactory jcb, at times they
appeared to be under intense personal strain because of alternative
_cnflicting official responsibilities\.
(f) While the project did provide an effective and useful institutional
mecasnism for enhancing the operational skills if Gambian employees
in the tcurist sector (Hctel Training Scheol), there was, in the
Bcrrower's opinion, a striking design omission in the lack of
provisen fcr any managerial training for naticnals in the industry\.
As a result, at the mcment less than 10% of total management staff in
the hotels are Gambians\. Government recognizes that the soluticn to
this problem is of a leng-term nature but is, nevertheless, cf the
view that failure to address it in the near future could have far-
reaching adverse effects on the future evolution of the industry\. It
has begun to redress this situation through 'inter alia' increased
spcnsorship for lecals tc pursue managerial training abroad\.
X\. CONCLUSIONS
10\.01 As the first major investment in the tourism sectcr in The Gambia,
the Infrastructure and Tcurism Project has put into place the primary infra-
structure for cne of the country's most important industries\. However, while
the ztege has noe been set for the continued evclution cf the tourism sector,
a conscicus policy of consolidation must be introduced and sustained if the
industry's continued viability is to be assured\. Major efforts vould need to
be directed at:
(a) adequately maintaining the investments already sunk;
(b) intensifying promotion efforts;
(c) enhancing on-grcund attractions in the ccuntry; and,
- 36 -
(d) ensuring that institutional arrangements fer securing maximum foreign
exchange benefits frem the industry are strengthened (para\. 7\.04)\.
At a time when The Gambia's ability to remain internatienally competitive and
efficient in tourism is likely te be severely tested cn acocunt of werldwide
sectoral stagnatien, early and systematic adepticn ef these measures cannet be
cveremphasized\.
10\.02 While the likelihood ef further direct intervention in the seetcr by
the Bank is remote, continued indirect assistance threugh seetor-specific
projects could ensure that the basic infrastructure installed under the
projeet is both maintained and expanded as ecenomic circumstances permit\.
Government vould need tc continually monitor develcpments in the sector,
especially given an increasingly stringent naticnal economic environment and
only modest prespects fcr a major turn-around cf the industry internationally
in the near future\.
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
AIR-CHARTER TOURIST ARRIVALS TO THE GAMBIA BY MONTH (1974/75-1980/81)
July August September October November Deoember January February Maroh April My June TOTAL
1974/75 - - - -8- --9817 37442 3- 372 3,110 3,312 l7482 331 18,651
1975/76 - - - 949 3\.205 3,727 4,l80 3,448 3,355 2,252 21,1l16
1976/77 - - - 662 2,870 3,669 3,774 3,424 3,655 1,451 19,505
1977/78 - - - 524 2,494 3,213 2,672 2,672 300 815 15,769
1978/79 - - - 641 4,613 4,701 4,333 4,333 4,578 2,270 57 65 25,907
1979/80 180 133 69 575 3,145 4,517 4,087 4,087 3,927 2,189 - - 23,847
1980/81 - - - 14 1,786 3,229 3,569 3,569 3,616 2,699 65 19,209
Source: Central Statistics Department
June 1983
w
TII aANBIA
INFRASTRUCTURE AND TOURISK PROJECT
AIR CHARTER TOURISTS CLASSIFIED BY LENGTH OF STAY
YEAR ONE WEEK TWO VREKS THREE WERES FOUR VIEKS
1973/74 7,400 11,707 896 25
1974/75 6,660 10,867 1,044 80
1975/76 8,115 12,013 914 74
1976/77 8,283 10,180 977 65
1977/78 5,130 9,477 1,041 121
1978/79 9,014 14,084 2,535 274
1979/80 9,468 11,905 2,134 315
1980/81 6,149 12,290 519 251
198/82 4,331 7,591 1,177 232
TOTAM: 64,550 r00014 11,237 1,437
Source: Ministry of Information and Tourism\.
Nr
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
GAMBIA HOTEL TRAINING SCHOOL
ENROLLMENTS / GRADUATES (1977-1982)
OLD SCHOOL NEW SCHOOL (PROJECT)
1977 1978 1979 1980 1981 1982
Year/section Enrol\. Grad\. Enrol\. Grad\. Enrol\. Grad\. Enrol\. Grad\. Enrol\. Grad\. Enrol\. Grad\.
Cookery t2 9 9 15 - 20 12 14 - 15 10
Pastry
Restaurant 12 - - 7 15 - 20 10 10 - 13 10
and Bar
Front Office 12 - - ll 10 - 12 8 - - 12 10 w
Reception '
Housekeeping 12 - - l 16 - 20 15 10 17 12 10
Laundry
TOTAL 48 _ _ 38 56 _ 72 45 34 17 52 40
Source: Hotel Training School
June 1983
TIlE GAMBIA
INRASTRUCTURE AND TOURISM PROJECT
VEGETABLE PRODUCTION AND CONSUMP ION
rIuW IOrTICUlthtiiAL 51310m
(iggoIlui - lgai,nz)
THII 19808111 DPV IIAWN TOE 1981/82 CAT SCASON
C I 0 p 1 t Atual Amiunt viola AmoIu To\.tal
Platintid A~tuel Wild Pr\. Welsiat b\.ti\.eJ Plme £t From Arva lllht Ealized coasavas,
Area From A,\., Recteresto m~~~~~~arketed
Ilectaffeae ilaciarege Area ~ Fr\. Area ectarsage ecteteei~(Doe-Apr) Frau sure\. Upr Fa es*
(kg) (kg) (OI4ala2 (the) (kg) (Dalesl) (DIaelI)
lit\. 0\.20 0\.1 621\.00 621\.00 1,663\.00 0\.20 0\.55 464\.50 464\.50 929\.0 -
V:Ater M*ln 0\.e0 0\.60 6,490\.00 U,I,3S\.00 4,242\.00 0\.60 0\.60 4,514\.50 3,186\.30 ,l8\.9323 194\.0O
tww\.u 0\.20 0\.15 4,154\.15 *,056\.25 3,243\.50 0\.20 0\.20 3,925\.1s 1,09\.00 7,509\.15 1,41\.00
dainw 0\.20 0\.1 350\.00 S19\.00 191\.00 0\.40 0GA 2,100\.15 2,616\.15 4\.011\.6) 36\.00
C'srroats 0\.20 0\.15 3,221\.50 1\.135\.00 3,414\.15 0\.40 0\.40 1,210\.50 6,126\.00 6,126\.00 1\.152\.10
I at I uce 0\.20 0\.5 4I,253\.40 1,4)1\.10 618\.50 0\.20 0\.20 1,491\.14 1,333\.26 509\.S1S 12\.00
Sltter Tomato 0\.20 0\.15 1,145\.50 1,743\.00 052\.00 0\.20 0\.35 5,T92\.25 4,911\.11 3,351 IS 6ZZ\.19
Cabbalta 0\.20 0\.15 4,141\.50 6,141\.50 3,941\.49 0\.20 0\.20 3,319\.00 2,184\.0 21,714\.50 | 5\.t; 0
lh Iuns 1\.60 1\.60 U1,425\.00 30,91S\.00 12,0S0\.00 2\.00 0\.10 1,245\.25 1,165\.25 1,591\.31 0 I26\.
lint Pepper _ _ _- - 0\.10 0\.05s 93\.50 s\.50 11\.15 * U1\.00
S\.ect Pepper - - _ _ 0\.10 0\.15 1,113\.15 7V\.1s 1,121\.6) 1t\.0
TOtALS 4\.00 3\.25 S9,I51\.35 54,S31\.35 1, 2124 4\.40 5\.0 31,200\.53 38\.62416 29,921\.51 ___@
Souirce: Dept\. of Agriculture\.
June 1983
4
INFRASTRUCTURE AND TOURISM PROJECT
EUry ImIRr3%LTUtIAL W\.11VI3
VEGETASjjACS98,4011 BY HOTE\.LS, RFSTAUIANTjII \.-D 0JENAUZT3
le/dtIh anil 1981112
(KItlau5ras)
TOMITO CASBACI IHEUXI ISBTIUC CARI0TS PUANS PUPPEA SKA ITTER ONioNiS TOTAlS5
IhAnS TOlIATO
1960/ 1911/ 1980/ 1981/ 19 I0/ 1951/ 1900/ 19el1 198_1 1911/ 1980/ 19e1/ 1930/ 19111/ log0/ 18I/ 19SO, 1961/ 1 0 1961 I960/ 1951,
* 1 62 Al 62 St *2 81 62 I1 62 31 62 I1 $2 61 82 41 62 I1 at 1 I2
Yonu Stiand Hotol 110 98 - - 101 120 210 - 90 39 40 2S - - - 5_3 293
Isopic lungalS 4doteI - - 90 G S - s - - - - - 3111
sunpAL\. dachi Hulutol 411 - - _ \. _ _ 145 - 110 - \.- - - - U_6 -
crAo Ssprs\.AgkaI - i5s - _ 1 - 190 40 66 - 151 20 64 \. _ \. , 45 - - 6_ 8152
Uhl,grs bachb llotel - 35 115 _ 119 11 120 - 120 5t 90 27 - - - s502 16
Teopic 11410t ' - - _ _ _ _ _ _ _ 4 \. _ _ _ _ - - _ - 4
AtlangIc Hot*l 360 - \. - 120 140 20 S o 227 \. 5 _ 340 99)
-\.p
algjoniIotel _ _ \. _ _ _ _ _ \. \. \. 4 4 \. \. _ _ \. \. \. \.
alajrd Ieltal _ 14 _ _ 639 602 I _ 210 2a6 I60 300 _ 32 _ _ _ \. \. \. 1069 i1
Danjul lotel _ 6 _ _ \. _ \. \. _ 10 55 - - _3
rUnlel id from shop _ _ _ _ _ _ 20 _ - - 60 - _ so -
t Plvi Naata aRnd Restauaat 5O - 30 22 30 - _ _ _133 -
TOTALS 131 26\. 225 I1 t2t 1103 542 86 146 1052 so0 508 - 9 is1 45 - 4086 f3291
Source: Dept\. of Agricutlture\.
June 1983
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
HOTEL BED OCCUPANCY RATES (ALL HOTELS) (1976/77 - 1981/82)
Year July Aug\. Sept\. Oct\. Nov\. Dec\. Jan\. Feb\. March April May June TOTAL
1975/76 25\.75 13\.94 14\.05 15\.43 66\.71 86\.70 97\.87 95\.17 82\.79 57\.73 12\.16 12\.1 72\.17
1976/77 14\.35 14\.63 14\.89 27\.46 51\.00 66\.55 74\.91 75\.39 69\.59 48\.21 27\.51 21\.50 55\.0
1977/78 26\.81 23\.54 21\.42 15\.78 58\.16 65\.30 66\.6 51\.14 68\.60 40\.73 19\.89 13\.48 39\.3
1978/79 21\.21 15\.79 15\.18 30\.28 75\.87 90\.08 93\.81 89\.86 83\.87 58\.0 11\.48 10\.91 49\.7
1979/80 14\.9 14\.5 13\.4 14\.4 52\.9 77\.8 85\.6 76\.2 71\.4 52\.1 10\.2 12\.1 45\.2
1980/81 10\.4 11\.2 11\.7 10\.8 38\.5 52\.3 64\.9 59\.9 49\.4 48\.4 12\.1 12\.5 35\.1 $
1981/82 17\.7 7\.7 21\.1 10\.8 42\.8 58\.6 59\.3 57\.7 52\.4 28\.5 11\.8 14\.0 40\.00
SOURCE; Minietry of Information and Tourism\.
June 1983
- 43 -
Annex 4-4(b)
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
DISTRIBUTION OF HOTEL BEDS
BY AREA
YEAR BANJUL TOURISM DEVELOPMENT AREA TOTAL GAMBIA 1/
1970i71 404 - 1\.0
1971/72 645 N\.0
1972/73 645 17\.0
1973/74 691 - N\.0\.
1974/75 684 340 1\.0\.
1975/76 625 340 N\.0\.
1976/77 703 340 1997
1977/78 608 430 2147
1978/79 792 430 2128
1979/80 830 430 2291
1980/81 1200 926 3340 (EST\.)
1981/82 1200 1550 3956
Source: 1/ Including other hotels in the Kombo-St\.Mary area outside the
TDA and up country\.
N\.0\. = Not obtained\.
Ministry of Information and Tourism
June 1983
-44 -
Annex 4-4(c)
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
NO\. OF HOTEL BOOMS BY HOTELS:
WITHIN TOURISM DEVELOPMENT AREA
Hotel 76/77 76/77 77/78 78/79 79/81 80/81 81/82
Kotu Stand - - - - 90 90 90
Bangalow Beach 220 220 220 220 224 224 224
Bakotu - 72 72 72 120 120 120
Kombo Beach - - - - - 500
Senegambia - - - - - - 616
TOTAL 220 292 292 292 434 434 1550
Source: Ministry of Information and Tourism
June 1983
; ~~~~~~~~~45
- -45-t 4
ANNEX 4-5
THE GAJBIA
D ERASTRM AmD TOURISN PROJECT
Alalysis of Forecast Appraisal and Actual Project Costs
Dalas ('OOOs) US$ ('0008) 3
CO WPOENT i_-
___________ ________________ ppraisal ActuallY Appraisal\.:':V Actal
vJcer Supply 4,360 7,818 2,422 3,890
Electricity 3,380 4\.568 1,878 2,273
Heavy Fuel Adaptation 962 40 535 20
Telecommunications 195 259 108 129
Roads 1,709 3,393 949 1,688
Sewerage 780 2,851 433 1,418
Solid Vaste Disposal; Beach Cleaning 43 108 24 54
Public Beach Facilities; ShoppIug Areas 195 187 108 93
H2otel TraIning School 406 1,853 226 922
Food Storage and Marketing 895 - 497 _
Pilot Vegetable Growing Scheme - 209 - 104
Invcestment and Tourism Promotion 200 182 111 91
Studies- nzd TechnicaL Assistance 640 1\.686 \. 356 839
Total Base Costs 14,315 7,953
Physical Iucrease ClOZ) 1,630 905
Price lncrease (30) 4,447 2,471
Sub-total 6,077 3,376
TOTAL COST 20,392 i 23,677 11\.329 ! 11,521
11 Including contingencies\.
2/ At USSi - Dl\.80\.
3/ LTsiug average rare of exchange over 1976/77 - 1981/82 period of
USSI - D2\.01-
4/ Socio-economic study and Alternative Fuel study\.
Source: Project YManagement Unit and PCR mission compurat±ons\.
- 46 -
Annex 4-6
THE GANBIA
INFRASTRUCTURE AND TOURISM PROJECT
ANALYSIS OF ACTUAL AND APPRAISAL DISBURSEMENT PROFILES
Number Quarterly Endings Appr\.est\. App\. est\. Actual\. Actual
Quarterly Cumulative Quarterly Cumulative
I December 31, 1976 47 47 208 208
II March 31, 1977 63 110 32 240
III June 30, 1977 284 394 65 305
IV September 30, 1977 303 697 61 366
V December 31, 1977 380 1077 3 369
VI March 31, 1978 395 1472 58 427
VII June 30, 1978 454 1926 418 845
VIII September 30, 1978 470 2396 397 1242
IX December 31, 1978 400 2796 220 1462
x March 31, 1979 383 179 606 2068
xI June 30, 1979 176 3355 54 2122
XII September 30, 1979 133 3488 18 2140
XIII December 31, 1979 120 3608 - -
XIV March 31, 1980 104 3712 464 2604
XV June 30, 1980 85 3797 240 2844
XVI SepLember 30, 1980 75 3872
XVII December 31, 1980 128 4000 564 3408 -
XVIII March 31, 1981 - - - -
XX Sept\. 30, 1981 - - - -
XXI December 31, 1981 - - 372 - 3780 -
XXII March 31, 1982 - - - -
XXIII June 30, 1982 - - - -
XXIV September 30, 1982 - - 118 3898
XXV December 31, 1982 - 102 4000 -
Source: Bank Project Files\.
June 1983
- 47 -
Annex 4-\.7
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
Water Supply Component Contracts
Contract 1/ Award Final Cost
(Dalasis) (Dalasis)
No\.1 Drilling 1,967,364 1,756,124
No\. 2A Pipes 898,962 843,758
No\. 2B Pipes 400,000 391,062
No\. 3 Valves 89,638 88,828
No\. 4 Tanks 471,324 434,854
No\. 5 High Lift Pumps 401,044 389,670
No\. 6 Borehole Pumps 257,652 251,769
No\. 7 Treatment Equipnent 47,140- 45,878
No\. 8 Civil Construction 2,055,664 1,833,616
Standby Generators 164,000 158,080
Power Line Materials 72,478 76,370
Supplementary 192,295 192,295
Totals 7,017,561 6,453,304
1/ Apart from Contract No\. 8 which was awarded to a Senegalese
firm, all contracts werc avarded to British firms\.
Source: PCR misslon compilation
June 1983
TIlE CAMBIA
INFRASTRUCTURE ANM TOURISK PROJECT
FINANCIAL ANI) OPEgRATIONAIL INDICATORS OF SUEECTED ROTELS IN THlE GkIBIAS1
(ont eR4 Naiby tee tairtat ev\.loyna Arce
(15191/0 od4 1910141)
_Jelarehl 1tu"i4W laneb 5545W tot\.ai4v4 YUts1
bns i8 ___ \./1 O/ i921 \.990 1\.93/II 1 IS 9/bO\. 19UO0/li 1919114 l910/al
Total 1*roa 1wvenM4s S mill 3\.69 3\.09 5\.23 1\.49 11M\.0\. 0\.a1g 0\.* 0\.44
Total Casts D et11\. )3\.3 13\.7 1\.23 1049 11\.0\. 0\.141 0\.39 0\.31
Oguma Psoili D mlii 0\.55 \. 0\.14 0\.20 11\.0\. (045*) 0\.U4 0\.0J
lCa taxes pa Dm111 0\.3 - 0\.21 0\.12 mo0o , _
_~~~~~ - - - - - --____\.__ -
Wet FVault o 111 0\.33 (0\.36) 0\.43 0\.0 I\.0\. (0,45) 0\.4 0\.09
Total LOUasrulloe Cota O\.111 \. 11\.0\. 1\.00 1\.66 1\.40 1\.40 1\.10 : ll9
Svsi~sr at beds s ab $s0 540 231 \.221 t20 120 94 00 90
C41\.69FACCIUM COk Vr hOd 04 D 1\.40 1\.40 11\.01 11\.41 32\.06 C2\.00
CruJa Ratusa per bed L 3 \. * 0\.24 0\.01 \. * 0\.01 0,%
CruJe pay-bac\. P*1e 4 eu op\. flR years 1i3 - , 14 33
Cludd * asne pe J\.*4redtr
pot vi iter r\. eacr 15 9 9 109 \. 41 050 0100
f h on uo Oclcel 14 40 34 34 40 0
l c siglo 44sDaleel _ _ 40 SO 44 44 40 40
4 o ita\.on (Co::e Dlol \. _ 4 45 4 0 40
(S"111alami- -do 35 - 30 30
NushuaP N op r v'y* 215 2*0 103 91 34 24 53 46
lo\.lluiea per bud 0\.53 0\.46 0\.45 C\.43 0\.28 0\.22 0\.59 0\.51
Aveqra\.to gved 4mceciuncy 3 ' _ 43 11, \. _ 41 43
Covwretsmng rquity I - ! Y _ _ _ _
NanCa\.llec equity I _ - 100 100 o0
Pfivate masuller qity 330 3_ '_\.
NMflI *ae 4 sn late alid innluraion subilat4e1 to PCI murvey uqJarsub\.l by 'letmils of IfmormIi\.4 ald Teurtla,
b sjara IIutel ts msar eCusilly In the tourist DevelopmeA t Arsa\. attllwh i very elee\.
c, Not lirulit per bad divided by CeplILI lmveatn\.RL Colst Pe bad\.
4d Adragd coanutructiun caus Var bed divided by nct Iatso\. ote 4e4 isisclulde deprcaccrlso)\.
* ToJil Srul revenude divided by twser of Ieoi divided by a Iitte\.a1l shre of leal teurtll arrivals par eera\. based
en similar proparlceage Veletiooehip of "user \.1 b4ad 'of 1s1tw 4bateso * a preparti\. of totl bed4 eIpJtig 4
The t;\.bla at t1me\.
1\. At pock pst#od4\.
Sotircu: ICR missioll eonIputations\.
TIll GANSIA
TOURISM AND INVIIASTRUCTURE PRO\.IRCT (CR,\. 6071
aUC - CONSO1IATK1) INCOHK STATIiLENTS FY 1975 - 1982
(D OOOY})
1975 1976 1977 1978 1979 1980 1981 1982
Year elidilig Iuna 30 Aettial BAR Actual SAI Actiwo BAR Acttal SAR Attual SAR Atulal Aetual EUitluted
OI'ERATINU REVENUV\.H
E!lectricity 2,317 2,891 1,085 4,304 3,949 4,742 4,547 5,091 4,401 5,901 6,222 7,266 9,808
Witter 552 665 837 d6l 1\.230 1,129 1,414 1,472 1,510 1\.936 2\.143 2,614 2,803
Sewerage - - - - - 43 - B7
(Iti, (i%tu) - - - - 5 - 5 _ 25 - 20 6 S
Total Reveliieu 2,869 3,556 3,922 5,165 5,184 5,871 S,966 6,606 5,936 7,924 8,385 g,886 12,616
OPEIIAI NGl EXI1'ENS e
Si6larlea 687 1,061 1,114 1,178 1,515 1,307 1,382 1,460 1,135 1,621 1,219 1,755
Fiuel 1,450 1,787 1,860 1,991 2,554 2,165 2,842 1,753 2,783 1,917 3,563 5,666
Adm1,i,atrat ion 462 636 660 695 83? 758 853 826 781 902 1,157 1,291 N/ A\.
Mii11n1,aance 318 359 406 419 436 461 401 5S9 586 675 1,303 952
Ptnwer 195 234 201 264 223 279 369 276 478 313 552 411
Saul dub1t/old attick -28 33 609 33 80 33 166 33 242 33 897 A1 I
Total OlaeratiLiag gxpeumuau 3,140 4,110 4,852 4,580 5,646 5,003 6,013 4,907 6,011 5,461 8,691 10,416 14,550
Incomae bufore Popreulatioih (271) (554) (930) 5as (462) 868 (47) 1,699 (75) 2,463 (306) (530) (1,934)
Depr"flatiu\.n 319 463 816 563 876 653 944 1,297 (1,294) 1,557 1,391 1,862 3,187
Zl,eaau before InteruaL (590) (1,017) (1,746) 22 (1,338) 215 (991) 402 (1,369) 906 (1,697) (2,392) (5,121)
IiitereML 99 75 131 71 260 162 413 268 642 1\.110 771 420 1,923
Incuaa, before KxC\. Iteas (6fl9) (1,092) (1,874) (49) (1,598) 53 (1,404) 134 (2,011) (203) (2,468) (2,812) (7,044)
KxeceptloawI Itemas etc\. 13649 _ (582) _ (_12) _ 349 - 3,l54 (1,343) (1,310)
Not Incuou (689) (1,092) (5,526) (49) (1,016) 53 198 134 (2,360) (204) (5,722) (1,469) (5,734)
Average Htil Assets 4,810 5,490 8,331 6,468 11,514 7,180 11,232 13,394 16,369 20,144 18,187 21,974 35\.356
Rate of Return I N'Hg\. Has\. Neg\. NHl Neg\. 3 It'R\. 3 Neg\. 4\.5 Neg\. Neg\. Ne\.
Operati,l: Costa Coiverage 0
(law\. Debt Service/Working Calaital) 0\.9 0,7 0\.9 1\.0 0\.9 1\.0 0\.8 1\.0 0\.9 1\.1 0\.0 1\.1 0\.1
Source: GUC and mission compilations\.
Tllg CANBIA
TOURISH & INVRASTRU(\.TURE PROJECT (CR 602)
GUC - CONSO\.IDIATEIID SOUIIS 6 APPWICATION OP FUNDS STATEINKTS FY 1915-1982
(D '000\.)
1l9 - 1976 197Z 1978 1979 1980 1981 1982
Vualr E11111uR Jutall J0 Art:,at SAN Actuat WA Actual SAN Actual 'SAl Actual SAl Actual Actual Fstlatu t edi
SOIlIURCS
Nut lIncuuu befoure Iitereat (590) (1011) (1\.746) 22 (1,338) 215 (991) 402 (1,369) 906 (1\.697) (2,392) (5\.121)
Adds Ueplrealution 319 463 816 563 876 653 944 1,297 1,294 1\.557 1,391 1,862 3\.181
Adt/Dh uict\.: b\.xueljtluautet LL\.a, - - 6 - --
ate\. Inivulvig Movement of -- -AR (LIM)
Vuid\.s (271) (554) (936) 58S 15 868 2,121 1,699 (75) 2,463 (1,271) (604) (624)
I\.VS1S Uebt Survsea - PriuiailIaI - 59 - 63 - 67 17 89 8 123 6 27 43
- Interest 99 124 131 335 260 665 __l3 961 __ 642 1,110 771 420 1!923
ToLal Uebt Sorvicu 99 183 131 398 260 732 430 1,050 650 1,233 777 447 1,966
Intoriusii Cash I1uioratiie (370) (737) (1\.067) 187 (245) 136 1\.691 649 (725) 1,230 (2,048) (1,051) (1,347)
I\.u:&-Tlerm DurrowisiI
Cuivt\. No\. 1 262 491 245 545 1,028 - 4 - 881 - 97 257 - U
Ossyt\. No\. 2 b Af(DI - 327 - 3,853 1,000 4,840 1\.627 3,363 3,765 888 13,299 3,253 6,598 0
01 HI - - 200 - 66 - - - - - -
StH1Ub PeInuluai BDard o-- - 500o
Total Horruwillu 262 IHl8 445 4,398 2,094 4,840 1,631 3,363 5,146 888 13,396 3,510 6\.598
GUUVernodiltl Luntribul1luil - 1\.549 839 434 400 215 1\.296 - 2,439 - 3,091 4\.233 3,825
lAIAl\.SOUlltgB \.s112) 1 l\.I ,,2l IQ12 \.IA4!\. l\.2ll ht6!!\. MI\.Q 6,U26 I&1!\. !4A12 ,6623 2\.Q21
Capiltal Invastm:lst 866 1,170 4,937 2,716 5,161 5,091 3,207 8,887 1,783 14,742 10,659 7,784
WUirkisg (NSp1tal udreoasu (DIcreauaL , 164 (953) 82 (467) 90 (479) 805 (2\.021) 335 (303) (3,967) 1\.307
IDbL Surviee CLoverago (Limo\.) NIl\. Nill Nil\. 1\.5 Nil\. 1\.2 Nil\. 1\.6 NIL 2\.0 NIL NIl\. NIL
U)
TOURISM A INFRASTRUCTURN FROJMLM (CA 602)
0100: - CONS0LIDATIM AAIA4CK SIIE8TS FY 1975-1982
1975 1976 1977 _197 1979 19S0 1981 £952
Yu\.ar kiIsI!BA \.1lu 3u Acg,aal SAN Actual SAN ActuIl MAR Actual StAR Aca AN- Actual ACtUal cat\.mited
ASSh'tS
Flxedi Aoets
Oruoa Asioeta 8,520 9,911 19,321 12,248 20,404 13,473 26,101 27\.783 32,454 31,272 37,468 47J819 70,618
L\.oU Slaprueeatiius 3,320 4,123 7,850 5,099 8,726 6,262 11\.314 8,185 14,502 10,562 19,045 22S294 25,481
Nut Aussuie In\. 0puratIlus 5,192 5,185 11,471 7\.149 11,678 7,211 14,787 19,578 17,951 20,710 18,423 25,525 45,207
Cugigtriiut lois Il Progruas 606 1\.043 930 S,002 2,563 11,304 4,695 _,521 9,106 4,922 18,425 19,791 4\.707
Tutal VIxuod Abuut 5,7'J8 6,831 12,401 12\.151 14,241 1,5815 19,482 23,099 27,057 25,612 36,848 45,316 49,914
Cutrralut AMMLtc
S1us-kw 1,157 ) 1,863 ) 2,353 ) 3,743 ) 5,004 ) 4,926 4,751 5,942
DUISOuIL Work In l5rugrust, 216 ) 331 432 ) IIS ) 17 ) 241 203 551
Ascoiiuts Necelviible 887 ) 3,871 1,041 ) 4,243 1,322 ) 4,653 1,976 ) 5,808 1,597 ) 6,523 3,198 2,348 4,164
Suinidry Debtiors 260 ) 382 ) 753 ) 2,597 ) 2\.595 ) 3,321 2,108 2,612
Csasls A &Hsk 3) _ 1 ) 19) 23 ) ?_ 68 ) I 178 3,185
'I'itt Lstrrusit Asauta 2,523 3,871 3,624 4,243 4,879 4,653 8,458 5,808 10,081 6,523 11,843 9,590 16,454
ItOrAI ASS1S \.1 lY\.Z 12&191 *a&3I 1hf2t 12&112 ZMM14\. HiAM M22z Z2t1 JIaiaa tuA\.21 Ai4gt b *Ati1
ItIUSTY 6 IABLI\.TIES
(h,vargsmua,it Eqiqity 5,489 7,863 S,725 8,297 6,125 8,752 7,421 8,592 7,421 8,572 9,788 5,489 5,525
Capital Oranuts - - 500 500 - 500 Soo - 500 4,857 5,866
D)uvalupmu,nt Funisi18 -i - - - - 2,439 - 3,183 7,338 10,115
Provsinial cap\. Uusurve S 25 _ 758 - 687 - 616 - 520 - 422 322 1SO
Nuvalatinss Resurvu - 580 9,955 1,262 9,955 2,615 12,6S7 4,596 14,564 6,903 14,555 15,213 15,214
ACC11sulatud Deficits (IJ67) (2,767) (7\.200) (2,816) (8,217) (2,763) (8,151) \.(h\.29) (10,521) (2,833) (16,219) (17,688) (23,42S)
Tultal Slulty 4,640 5,676 9,738 6,743 9,050 8,424 13,071 10,539 14,923 12,642 11,829 15,531 13,480
l\.wsM Tuar Dllebt
Ouvt, lawn Nu\. C/A 1,014 1,829 1,319 2,311 2,347 2,244 2,351 2,155 3,232 2,032 3,329 3,586 3,586
lluvt\. LI,JII N\. (EKxuerial) 327 - 4,180 5,000 9,020 2,627 12,383 6,392 13,271 19,691 22,944 29,542
(I'HB - - 200 - 266 - 249 - 241 - 235 208 165
Statu Pruasi\.IuI Silir,l -- - - - - - 500 - 500 SOO 500
TulIl l\.utig-Turm Ddbt 1,074 2,156 I,559 6,491 3,613 11,264 S,227 14,538 10,365 15,303 23,755 27,238 33,19
Currant I\.lab IIt lou
ACLuIIItajst CUlur-ul 991 ) 2,334 ) 3,369 ) 5,028 ) 4,532 ) 2,948 ,P2, 703E 6
Sundry CrutSlturs & Acernalt 697 ) 2870 743 3 160 1,261 ) 40 257 ) 830 3,874 ) ,210 31,781 5,0104 5,353
Diak Ovurdrsalt & S\.T\. Ilabt 694 ) 1,123 ) 1,071 ) 1,126 ) 1,685 ) 4,262 1,743 7,325
Cumasuoer Dueposltu 225 ) _ 56 ) 756 ) -131 ) _231 1,759 ) 2\.116 2\.554 3|581 f
TuLal Utirra,st l\.iabillIlud 2,607 2\.870 4,768 3,160 6,457 3,480 9,642 3,H30 II5S50 4,210 13,107 52,137 19,095
rilAIl, OlqIrTY & lAKIIIITIES \.Adi6J! ' H 1L*21 1f i2i 12&\.1\.2 Q &M HA am i2z JLIM U&2M teAs21 aa29\. 9H&2tO
lDubt/E\.lullty Hilli\. 21/71 28/72 I5/83 49/51 28/72 S7/43 29/71 S/42 41/39 55/45 66/34 63/37 72/28
Ourrut Hitl Io 1\.0 1\.3 0\.8 1\.3 0\.8 1\.3 0\.9 5\.S 0\.9 1\.5 0\.9 0\.8 0\.9
NL CurreLnt Asucts (84) 5,001 (1,344) (,0)83) (1,578) 1,173 (18184) 1,978 (1,769) 2,312 (1,264) (2,547) (2,641)
SOutc:: GUC aliid mission compilations\.
- 52 -
Annex 6\.5
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT (Credit 602-GM)
GTUC: ELECTRICITY AND WATER TARIFFS 1974-81
* FECTIVE A=c\. 1 DEC\. 1 SEZZ\. 1 OCT\. 1 OCT\. I OCT\. I
____ DATE IS7S~ZL 1979 1976 L9\., 197? t198
VATER TARIMF
1\. Dowetic
All econsutiou DIIOOO 011" 1\.00 1\.20 _ - -
lot 500o al1tins 1\.00 140 1\.50 1\.50 2\.00 2\.00
2ad 5000 gallons 1\.00 1\.20 2\.00 2\.00 2\.67 2\.67
1\.00 1\.20 2\.70\. 2\.70 3\.60 3\.60
2\. Conmrcial/TidustrIal
All conuumptin D/h000 alnms 1\.50 2\.25 2\.70 2\.70 3\.60 3\.60
3\. Local Authorities D110l ganlous 1\.50 2\.25 1\.50 1 50 2\.00 2\.00
4\. locels and C'Ls1s DI1000 xallons 1\.0 22 \.02 4\.0( 5\.1 5
5 KAsbwn Ch rg! D/=o\.h X ~150 2\.25 4\.00 4 0- S 3 lGE
5\. K=Lmlan Charse olzanh --- -5\.33 10\.00
zrz=cRIC\. T\.AWT\.S
6\. ludustrial
Xw-dmom Densad DIIVA/onth j 13\.50 17\.50 20\.00 20\.00 26\.67 3'\.GO
VISItS D/IM consuc\.d 0\.11n 0\.13 0\.14 0\.172 0\.23 0\.26
mInIvgu charse D/rknth - - - - 5\.33 1600\.CO
7\. Domestic 1i
'-t BloekL D/ wh |0\.19 0\.19 0\.20 0\.232 0\.31 0\.333
2rd Block C\.16 0\.18 0\.21 0\.242 0\.32 0\.37
3rd Block 1- - - - 0\.40
aLance 0\.14 0\.17 0\.22 0\.252 0\.34 0\.4
Maninu Charge D/rneth 3\.50 4\.00 4\.00 4\.00 5\.33 10\.00
8\. Commercia2\. 21
lit Block D/Kuh 0\.19 0\.20 0\.22 0\.252 0\.34 0\.'33
2ad Block 0\.18 0\.20 0\.22 0\.252 0\.34 0\.37
3rd Block - 0\.20 0\.22 0\.252 0\.34 0\.40
Balance 0\.16 0\.2 222 02522 0\.34 0\.42
=ialzm Charge Dat=th 3\.50 2 4\.00 4\.00 s\.33 10\.G
9\. Street Lishttng D/Kwh 0\.14 0\.16 0\.20 0\.31\.
10\. Vatervorks DM&Wh 0\.105 0\.105 0\.105 0\.105 0\.105 0\.105
Votes re Flctrr'ir7t Tariffs
If rrom Aur\. 1\. 1974\. 1st Black = 1st 2\.1 e\.1i consumed, :rJ alock = Uext 1OO 1=4 consumiel\.
rrom Oct\. 1\. 1979\.' l:t Slack = 1st 30 X-1 cotsu=ed\. 'nd Alck = exc ltO t\.i: consn=ed\.
From Oct\. 1, 1931\. general tariff adcpred is 1st Block = !st 30 units, 2:d -ock = Next
100 uaits\. 3rd Block = N-xt 1000 unirs\.
2/ Fron Augp\. 1\. 1076\. Bloeck struc:ure 5jr1ai as for Dotest:c (sce 1/ 4bove)\.
From Oct\. 1\. 1979\. aon =tlform tar:f c!f n 0\.4 zcr unit adortrd\.
From Oct\. 1\. I081, gencral tariff adauced (see 11 above)\.
3/ At peak\.
Source: GUC\.
June 19q84
53 _ \. kc6-6
THE GAMBIA
IN RASTRUCTURE AND TOURISK PROJECT
GCAtIA UTILITIES COMRPOATION
STAFF ANALYSIS - 1974 vs\. 1982
DEPARnIENT PERMANENT DAILY CASUAL TOTAL
STAFF PAID _ -
1974 1982 1974 1982 1974 1982 1974 1982
ELECTRICITY
GeAeration 103 25 8 136
Transmission \. 95 8 56 159
Provinces 120 8 _ 128
Sub-Total 206 318 25 41 - 64 231 423
Production 50 34 33 117
Distributiou 43 18 8 69
ProviEces 2 11 _ 13
Sub-Total 88 95 37 63 - 41 j 125 199
HEA OFFICE
Transport - 49 - - - 3 - 52
Stores - 13 8 13 - 10 19 36
Meter Billing 39 - 17 - 9 f 65
Accounts ~~~60 --60
Accouts 32 _1 \. _1 34
Adml\.nistration 37 19 _ 50 _ 13 37 82
Sub-Total 108 152 8 81 _ 36 116 269
GRAND TOTAL 402 565 70 185 I _ 141 472 891
Source: GUC\.
June 1983
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
TUIE GAMIBIA UTILITIES CORPORATION
ELECTRICITY DIVISION -UNITS GENERATED 1975 TO 1982
(Thousands of kw'h)
Location 1975 1976 1977 1978 1979 1980 1981 1982*
Banjul 20,704 21,396 24,128 231,578 17,097 21,193 259524 32,,131
(SAR Forecast) (20,705) (229746) (24,128) (26,149) (279878) (30,352) (32,865) (35,854)
Brikamia 221 233 267 307 289 417 538 557
Manskonko 215 237 148 307 289 417 538 398
Bansang 99 112 117 149 157 291 317 367
Georgetown 342 269 285 269 238 310 338 248
Buasse 265 347 463 484 434 N/k 457 462 u
Farafenni 82 137 169 215 246 459 440 360
TOTt%L 21,928 22,733 25,691 25,183 18,650 23,025 27,,964 34,523
*Inc\. New Kotu Power Station
Source: GUC
June 1983
I
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
THE GAMBIA UTILITIES CORPORATION
ELECTRICITY DIVISION -UNITS SOLD 1975 TO 1982
(Thousands of kWh)
Location 1975 1976 1977 1978 1979 1980 1981 1982
Banjul 13,614 16,075 17,116 16,929 17,978 16,330 19,757 23,571
(SAR Forecast) (14,255) (15,922) (17,727) (19,478) (21,335) (23,538) (25,823) (28,537)
Brikama 143 190 421 232 244 377 433 434
Mansakonko 116 136 151 157 153 206 308 354
Bansang 83 118 103 111 153 185 183 257 @
Georgetown 259 237 200 217 250 250 263 244
Basse 246 297 249 433 350 420 459 467
Farafenni 55 116 151 171 248 373 471 531
TOTAL 14,516 17,169 18,391 18,250 19,376 18,141 21,874 25,858
Source: GUC
June 1983
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
THE GAMBIA UTILITIES CORPORATION
WATER DIVISION - GALLONS PRODUCED 1975 TO 1982
(Millions of Gallons)
Location 1975 1976 1977 1978 1979 1980 1981 1982
Banjul 595\.2 596\.2 567\.9 673\.2 601\.8 531\.4 927\.3 979\.3
(Sar Forecast) (678\.0) (720\.0) (744\.0) (771\.0) (796\.0) (851\.0) N/A N/A
Fatoto - - - - - 1\.7 -
Yorobowal - - - 0\.5 _
Karantaba - - - 6\.1 -
Bwiam - - - - - 0\.5 -
Brikama - - - - - - N/A -
Mansakonko - - - - - - 13\.1 -
Farafenni - - - - - - 45\.2 -
Georgetown - - - - - - 15\.2
Bansang -- - - - - 7\.6
Basse - - - - - - 40\.7
TOTAL 595\.2 596\.2 567\.9 673\.2 601\.8 531\.4 1,057\.9 979\.3
Source: GUC
June 1983
INFRASTRUCTURE AND TOURISM PP9JECT
TIE CAtMBIA UTILITIES CORPORATION
WATER DIVISION - GALLONS SOLD 1975 TO 1982
(Mlllons of Gallons)
Locattion 1975 1976 1977 1978 1979 1980 1981 1982
BauJul 436\.6 482\.5 482\.1 549\.2 577\.0 658\.0 720\.5 785\.)
(Sar Forecast) (454\.0) (497,0) (536\.0) (586\.0) (637\.0) (698\.0) (N/A) (N/A)
Brikama 13\.9 16\.9 29\.6 19\.8 24\.4 29\.8 28\.5 32 8
Farafenini - - - - 1\.6 1\.5 11\.9 2' 1
Mtansakonko 2\.4 5\.4 6\.7 6\.9 5\.7 6\.2 8\.8 9\.1
Georgetown - 5\.6 11\.5 9\.3 5\.0 4\.8 7\.5 9\.1 >
Bansang - 2\.4 6\.0 6\.1 3\.9 2\.2 3\.2 3\.4
Basse - 15\.5 19X4 16\.4 13\.9 16\.9 21\.5 v
TOTAL 452\.9 528\.3 555\.3 607\.7 631\.5 719\.4 801\.9 88' \.
Source X GUC
0",
- 58 - Annex 7-1
THE GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
ECONOMIC ANALYSIS (TOURISM COMPONENTS)
* (D '000) ,\.
1975/76 1976/77 1977/78 1978/79 1979/80 1980/81
Year 1 Year 2 Year 3 Year 4 year 5 year 6
COSTS
InvestSent costs
Tourism related Infrastructure\./ 526\.98 439\.55 3601\.03 1141\.79 1756\.60
Superstruoture (hotels)
-Bakotu 1,500\.00
-Kotu Strand 1000\.00 1000\.00
-Kombo-Beach 6000\.00 6000\.00
-Senegambia 14000\.00
Airport Runway\.
Operating coste\.b/ 2500\.00 2500\.00 2500\.00 2500\.00
Hotels
-Bakotu 300\.00 600\.00 600\.00 600\.00 600\.00
-Kotu Strand 293\.00 374\.00
-Kombo-Beach -
-Senegambia
Road maintenance\./
Hotel Training School\./_ 176\.9
TOTAL COSTS 1500\.00 3326\.98 4539\.55 7701\.03 10534\.79 22907\.50
BENEFITS
Tourist expenditure-2i 1058\.00 1080\.00 922\.00 2387\.00 1814\.00 1083\.00
Lands rents\.( - - - - - 43\.40
Pilot Horticultural Scheme^1 - - - - - 35-00
TOTAL BENEFITS\.h/ 1058\.00 1080\.00 922\.00 2387\.00 1814\.00 1161\.40
1981/82 1982/83 1983/84 1984/85 1985/86 86/87-87/88
Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 2004/5
COSTS
Investment Costs
Tourism related Infrastructure etc\. 1317\.45
Superstructure (hotels)
-Bakotu
-Kotu Strand
-Kombo Beach 6000\.00
-Seneganbia 14000\.00
Airport Runvay
Operating Costs
Hotels
-Bakotu 600\.00 600\.00 600\.00 600\.00 600\.00 600\.00
-Kotu Strand 450\.00 450\.00 450\.00 450\.00 450\.00 450\.00
-Kombo Beach - 2500\.00 2500\.00 2500\.00 2500\.00 2500\.00
-Senegambia - 3080\.00 3080\.00 3080\.00 3080\.00 3080\.00
Road Maintenance 34\.00 34\.00 34\.00 34\.00 34\.00 34\.00
Hotel Training school 230\.10 250\.00 250\.00 250\.00 250\.00 250\.00
TOTAL COSTS 23231\.55 6914\.00 6914\.00 6914\.00 6914\.00 6914\.00
BENEFITS
Tourist Expenditure\.e/ 3024\.00 9504\.00 10368\.00 10368\.00 11232\.00 12096\.00
Land rents\.f/ 10\.50 10\.50 15\.50 15\.50 15\.50 15\.50
Pilot Horticultural Scheme\.g/ 35\.00 35\.00 35\.00 35\.00 35\.00 35\.00
TOTAL BENEFITS\.h/ 2830\.50 9549\.5 10418\.50 11282\.50 12146\.50 13010\.50
Annex 7-1
- ~ 59 ~ Page 2
Notes and Assumptions
a/ Tourism related infrastructure costs cover: Roads, sewerage, solid waste
disposal and beach cleaning, public beach facilities, hotel training
school, pilot vegetable growing scheme, investment and tourism promotion
components\. Costs allocated annually in same proportion as disbursements
for project as a whole\. (Annex 6\.1\.)
b/ Based on declarations made during survey in which an average operating
cost ranging from D3,000 to D9,000 per year per bed was determined for
four hotels\. D5,000 was used in analysis for each hotel\.
c/ 1% of total investment costs of D3400 assuaed for each year\.
d/ Actual data submitted for 1980/81 and 1981/82 with indications for 1982/83
of D250,000 - used throughout remaining period\.
e/ Average daily expenditure per tourist assumed as follows: 1975/66 - D66;
1976/77 - D69; 1977/78 - D73; 1978/79 - D76; 1979/80 - D83; 1980/81 - D89;
1981/82 - D96; 1982/83 onwards DlOO\. Number of visitors per hotel assumed
to be proportion of total national tourist arrivals, as is number of beds
in specific hotel to total bed capacity in The Gambia for each given
year\. Total national tourist arrivals and estimated percentage of total
belonging to TDA hotels as follows:
1975/76 21,000 and 6%
1976/77 20,000 6%
1977/78 16,000 6%
1978/79 26,000 9%
1979/80 24,000 7%
1980/81 19,000 5%
1981/1982 15,000 21%
1982/83 22,000 36%
1983/84 24,000
1984/85 26,000
1985186 28,000
1986/87 30,000
These ranged from D43 to D100 in the four hotels\. Number of visitors
determined times daily expenditure per tourist and, assuming each visitor
remains 12 days, equals estimates of benefits for each hotel\. Expenditure
covers full board (D50), additional food and beverage (DIO), miscellaneous
sales from hotels (D10), departure tax (D15), excursion (D5), local
transportation, souvenirs and entertainment (D10)\. Gross profits and
costs from public utilities omitted
f/ Land rents in TDA are DIOO per bed per annum\. Collection commenced in
1981\. 1980/81 - 434 beds; 1981/82 and 1982/83 - 1050 beds; 1983/84 - 1550
beds assumed avaiLable in operating hotels\.
gj/ Based on takings for 1980/81 and 1981/82 seasons\.
h/ 1No shadow pricing of labour or foreign exchange assumed\.
Source: Mission calculations based on Government data
June 1983
- 60 -
Annex 7-2
THE GAMBIA
INFASTRUCTURE AND TOURISM COMEPONES
SUIDAr OF TOTAL COLLECTED REV1EUES
OF HOTEL BED TAX AID AIRPORT DEPARTURE TAXES
From July, 1977 to December, 1982\.
Hotel Bed Tax Airport Departure Tax
(Dalasi) (Dalasi)
1977 - 1978 191,814\.75
1978 - 1979 358,845\.00 199,245
1979 - 1980 528,220\.00 192,940
1980 - 1981 484,272\.00 177,975
1981 - 1982 222,800\.00 55,250 (July to
November)
1982 - 1983 (July to Dec) 88,720\.00
1,874,671\.75 625,410
Source: Mnistry of Information and Tourism and Finance and Trade
June 1983
BOlRROWERS' COMMENTS
- 61 Annex 8-1
Pasc 1
THE GAMlBIA
INFRASTRUCTURE AND TOURISM PROJECT
BORROWER'S COMMENTS ON DRAF7 PROJECT COMPLETION REPORT
CUll 16U-1 R513 -33 jJ3/15/834 22:04
8165J WO)iLLI6BA(4\. N ibrl
6A i3/15 20:53 t929 3G4-1 CiO-6 461 03/15/34 21:06o
/ wGA304 LCC112 NYA11G
UjWNX CU GVWA U3-
DANJUL 30/37 15 11 O6
ElATk
SH I \' S APUX;
I -;LEVAL
dEFrrFRIii YUbi LETTER 15 FEi5kUj4RY 13,-4 PLEASE TU INFjivai T[nAT
ijjtAFT PR;JECT ,U1iPLLTIU;; riEPv\.UT hAj iLEa_i FOUiPj) TU DDL SATIbFACTuRY
L,ii_ SAi"IATEii
F0rc P'r_-mAi:,,,T [nw_^
r ll sILtITinY UF s h I^ s AtIj TuJvr\. 1 # 1
OJL 'TAT 15 1Jo44
March 1984
80BRORERS ' CO* Annex 8-1
DORR~ERS'CONKENTSPage
G\.U\.C\. 62 -
GAMBIA UTILlTIES CORPORATION
Tlephone: BANUL 275,276 A U49 P\.O\. MOX 609
BANUL 82I Ext\. 69 BANJUL
Yfekgpi: ELECrRICTY OR WATER WORKS REPUDUC OF THE GAADIA
RefsGUC/MD/804/1 19th April 1984
Shiv S\. Xapur, Esq
Acting Director-General
Operations Evaluation
1818 H Street
N\.W\. Washi}gton DC 20433
U \. S \. A
Dear\. Sir,
RE: PROJECT COMPLETION REPORT ON GAMBIA
INFRASTRUCTURE AND TOURISM PROJECT
(CREDIT 602-GM)
I wish to make the following coments on the above
report, a copy of which was sent to us\.
Kotu Sewerage
4\.57: You mentioned that no steps were taken by
the GUC to prepare for the future operation
of the sewerage system\. In faq±: drr4-
execution of the project, one of our engineers
fr~om the Water Division liaised very closeIly
wi~=thLe consultants and the suervis staff
from the Public Works Deparent\. Later on,
after the creation of the 5ewezge Division,
our engineers took an active part in the connec-
tion-of the Senegambia Hotel to the system in
1982\.
GUC Financial Performance
* 605: The sewerage system is operating efficiently
according to the guidelines set by the World
Bank\.
608: A look at electricity generation figures
reveals that electricity units have doubled from
17\.3 million kwh in 1972 to 34\.2 millina kwh in
1982; such an increase in output is bound to
necessitate a corresponding increase in manpowex\.
Also, cognizance must be taken of the fact that
GUC is obliged to operate several small generat-
ing stations which, given the geograpby of the
cointry, impose heavy transportation costs\. -In
addition, GUC operates and maintains a significant
number of government owned generating sets, the
bulk of which are situated at health centres in
the Provinces\.
/2\.
The above comments from GUC have been incorporated in the identical
sections of the text\.
Annex 8-1
BORROWERS' COMMENTS Page 3
-63-
Th2se small stations constitute a heavy burden on
our financial resources\.
Finally,GUC is restrained by the Government from
laying off staff, further curtai3lng its freedom
to operate on sound commercial principles\.
Borrower's Views on the Environmental Impact of the Project\. (Annex 8-1,
*6 : It must be borne in mind that the I-otu sewerage system page 6)
vas designed to serve about 8,800 people\. Tne GUC
expresses serious reservations about any plans to connect
hA: residents of Fajara and Pipeline as sucji,scheme would be
uneconomical\. The residents in these areas are already
adequately served by individual septic tanks\.
It is hoped that the views expressed abowe will be reflected
in the conclusions of the project completion report and the
final report\.
Yours faithfully
FOR: GA4BISA UrILITIES CO'tPORATION
S * J \. FORSTER
Technical Planning Engineer
*
The above comments from GUC have also been incorporated in the appropriate
paragraphs of the text\.
ANNEX 8-1
Page 4
-64-
BORROWER'S VIEWS
ON THE
SOCIAL AND ENVIRONMENTAL IMPACT 1/
OF THE PROJECT
1\. Befcre 1975, the resort sites were uninhabited and were used fcr
neither agriculture ner fishing, in essence human and economic activities were
net existing before this project was launched\. Today the area is a vastly
different place changing from a virgin undisturbed scrubland to an established
rescrt area with modern infrastructure and services, develcpments that cculd
have taken decades tc come about witheut this project\.
2\. This sudden development brought with it intangible cests by rapidly
confrenting the village populations near the tcurism area with fcreigners of
different cultural, social and ecenomic backgrounds\.- The secial impact
includes such intangible costs as the "negative demonstration effects" result-
ing from the exposure of traditicnal Gambian society tc the behavicur of
Buropean tcurists\. The cests resulting frem the shattering of existing
cultural values and the increase in sccial problems as begging, stealing and
prostitution have been evaluated as being very high\.
3\. The social costs wculd have been much higher had concerted effcrts
not been made by the varicus governmental and private bedies tc identify the
dangers of the industry with a view to obtaining a national support fcr
controlling these phenomena\.
4\. The rescrts have created considerable employment for the nearby
villages but of a seasonal nature\. Only about 30% of hetel employees work
year round, the remainder fcr about seven mcnths\. This has created many
social problems within the nearby vifnlages where agricultural land has beceme
very scarce as a result of the growing populaticn forcing farmlands to be used
fcr settlements\.
5\. Sharp differences have occured within the villages in Kembo St\. Mary
area with a few people becoming very wealthy while the pecrest segments of the
society continued tc be niaffected by the development\.
1/ The Bcrrower has expressly asked that its views on this subject be
included in the Project Completion Repcrt, exactly as it appears in its
version cf the PCR (Chapters XIX - pages 32 and 33)\.
-65 - ANNEX 8-1
Page 5
6\. A preper Sewerage will secn be ccmmissicned and it is hoped that the
residents ef Fajara and Pipeline will be connected te the system\. 1/ This
will greatly imprcve sanitatien and the envircnmental quality of the area\.
7\. The layouts fer the labour suppcrt areas have been made and plcts
have been give- for an urban set-up that will be created tc supply labcur and
provide services fcr the hotel industry\. The pregramme cannct be evaluated,
as no majcr wcrk has taken place cn the site\. The existing infrastructure,
water supply, electricity, telephenes and rcads could hewever easily be
extended to the settlement witheut much cest\.
6\. Meanwhile the development at the Tcurism Development Area has brcught
about an increase in populaticn in the surrounding villages and housing has
become an acute problem in these villages\.
7\. Strains have also been made on-the transport system in particular and
tc such services as medical facilities and security cperations arcund Banjul
and the Kembo St\. Mary area\. There is certainly a need for strengthening
these services to ccpe with the high populaticn growth\.
8\. In evaluating the social impact of the project, one can distinguish
between several phases; the land acquisition phase, the construction phase,
and tourism development phases\. An 800 meter-wide strip cf land aleng the
seashore was leased by the district authority fcr 99 years tc the Minister in
charge of lands cn behalf cf the Gcvernment who has the autherity tc lease it
to third Parties with the consent cf the district autherity\. The villagers
helding traditional rights over this area were handsomely compensated and some
of them constructed better houses while cthers used the ncney tc start small
retail shops and cthers just bought mere fcodstuffs for their families\.
9\. The impact during the construction phase was mestly econemic: prices,
income and employment increased, men left farming tc find a job in censtruc-
ticn, lecal women built stalls tc sell handicrafts\. The producticn of handi-
crafts also became highly commercialised, instead of being a chcsen career for
a particular caste\. This was a positive secial impact as such a caste system
which has now been weakened tended to pclarise village communities\.
10\. Ccnstructicn of rcads and provi'sicn cf utilities alsc disrupted
farming activities in parts cf Kctu\. Fcllcwing the completien of the majcr
werks, the tewns in the Kcmbc-St\. Mary area experienced a depressicn that is
still pinching\. Nevertheless the sudden development of hotels and tourism has
since had a favcurable impact on employment and iztccme despite the seasonality
cf the industry\. Foreign contrcl of business and services is gradually being
replaced by lecal control\. Similarly as a result cf the investments and the
process cf urbanization many families are better off\. The peor and the
illiterates however, have difficulties in adjusting tc the new envircnment\.
1/ Although the GUC notes that the system was designed to serve about
8,800 peeple, it has strcng reservations abcut any plans to connect with
residents of the Fajara and Pipeline areas, whc are already adequately
served by individual septic tanks\.
ANNEX B-1
-66 - Page 6
11\. Building and planning regulations fcr the Tcurism Development Area
have been drafted by the Physical Planning Office\. Sc far there has nct
ccocurred significant damage to the environment in the area\. The constructicn -
cf structurally and architecturally sub-standard hctels have been avoided and
land-use has been ccntrclled by invoking the Building and Planning regula-
ticns\. The vegetaticn and the landscape cf the rescrt sites have nct been
sericusly affected by the develepment\. The woods featuring mangoes, bacbab
and palm trees have been preserved and a nature reserve zene identified\. This
apart from preserving the environment, vill contribute to the maintenance ef
the esc'ic feature of the area\. In the case of the beaches, however, certain
areas have been illegally mined by hotel constructors and this has sericusly
affected the sea flocr and if nct checked could render the area unsafe for
sWimming\.
Source: PCR repcrt, Ministry cf Informaticn and TCurism, Banjul,
Octeber 1982\. | APPROVAL |
P007282 | Document de
la Banque Mondiale
A Usage Officiel
â¢
Rapport No\. 3218-HA
HAITI
RAPPORT D'EVALUATION
D'UN PROJET DE CREDIT INDUSTRIEL
26 Mars, 1981
\.
\. DepartemE'mt des Proj ets
Bureau Regional pour l'Amerique Latine e\.t les Caraibes
Le prâ¬~sent document fait 1 'objet d 'une diffusion restrainte, et ne
peut etre utilise par ses destinataires que dans l'exercice de leurs
foncti)ns officielles\. Sa teneur ne peut etre autrement divulgee
sans l'autorisation de la Banque Mondiale\.
f ,\. * -
EQUIVALENTS MONETAIRES
Unite monetaire Gourde (G)
1 $ 5 G
1 G 0\.20 $
1,000,000 G 200\.000 $
(Depuis 1919, Is\. parite de la gourde
est fixee en dollars au taux de 5 G =1 $)
ABREVIATIONS
BID Banque Inter-Areericair\.e de Developpement
BNC Banque Nationale du Credit
BNRH Banque Nationale de la Republique d'Haiti (ex-banque centrale)
BPH Banque Populaire Haitienne
BRH Banque de la Republique d'Haiti (a succede comme banque centrale a la Bh~)
CEGES Centre de Formation aux Affair~s et a la Gestion
FDI Fonds de Developpement Industriel
PHI Fonds Monetaire International
IDAI Institut de Developpement Agricole et Industriel
INAGHEI Institut National d'Administration, de Gestion et de Hautes Etudes
Internationales
INFP Institut National de Formation Professionelle
OFATMA Office d'Assurances Accident du Travail, Maladie et Maternite
OIT Organisation Internationale du Tra\.vail
ONA Office National de l'Artisanat
ONAPI Office National de Promotions Industrielles
PWD Programme des Nations Unies pour Ie Developpement
pppA Avance au titre de la preparation des projets
SEN Societe d'Equipement National (une filiale de l'IDAI
ANNEE FISCALE
1 octobre au 30 septembre
HAITI A N'UTILISER QU' A DES FINS OFFICIELLES
TABLE DES MATIERES
~Io\. de :)age
I\. LE SECTEUR INDUSTRIEL
A\. Le Cadre economique 1
Emplois 1
B\. Le secteur industriel 2
Croissance et structure 2
Exportation de prcduits manufactures 3
Politique industrielle 3
Le code des investissements 4
Protection tarifaire 4
Services d'assistance technique 5
Les projets industriels de l'Etat 6
C\. Las perspectives de croissance industrielle 6
II\. LE SYSTEME FINANCIER
A\. Institutions et reglementation financieres i
:;eneralites 7
La Banque Centrale 7
"i\.as institutions financieres 8
LIIDAI 9
~:Iolitiques monetaire et financiere 9
Taux d'interets et marges financieres 9
Inflation 10
Reserves de change 10
B\. Performance du systeme financier 11
l:ltermediation 11
S\.Jurces de financement 11
C\. P'!:oblemes et perspectives 11
Ce rapport a ete redige a la suite d'une mission composee de M\. J\.R\. Calderon-Rossel
and Mme 5aInia Sl Baroudy de la Division Financement et Developpement Industriel,
Bureau Regj,onal Amerique Latine et Caraibe, qui se sont rendus en Haiti en juillet et
aout 1980
Le present d~ument rait I'objet d'une diffusion restreinte, et De peut etre utilise par ses
destinatllires que dans I'exercice de leurs fonctions officielles\. Sa teneur ne peut etre
autremel1t divullUft sans l'autorisation de la Banque Mondiale\.
TABLE DES MATIERES (suite) No de page
III\. LE PROJET
A\. Objectifs et cadre institutionne1
12
Historique 12
Objectifs du projet 12
Structure institutionne11e 13
B\. Le Fonds de Deve10ppement Industrie1
13 â¢
Criteres de fonctionnement 13
Direction et personnel 14
Ressources et perspectives financieres 15
Ressources 15
Operations et resu1tats escomptes 16
C\. Financement des sous-projets 16
Categories et tai11e de prets subsidiaires 16
Conditions des prets 17
Conditions et 1imites app1icab1es aux garanties 18
Evaluation et supervision des sous-projets 19
Intermediaires financiers agrees 20
D\. Assistance technique 20
Assistance aux beneficiaires finaux 20
Assistance technique institutionne11e 21
IV\. LE CREnIT ENVISAGE
A\. L'administration du credit 22
Montant et conditions 22
Conditions et 1imites des prets subsidiaires 23
Procedures d'achat 23
Retraits de fonds 23
B\. Avantages et risques 24
V\. ACCORDS ET RECOMMANDATIONS 25
TABLE DES MATIERES (suite)
1\. Tableau 1\. Produit National Brut par secteur, 1970-79
Tableau 2\. Nombre d'entreprises, emp10is et salaires par branche d'activite
industriel1e, 1976
Tableau 3\. Exportations de produits manufactures
2\. Ta:Jleau 1Â Bi1an des etablissements financiers, 1979
Tableau 2\. Credit
3\. Tahleau 1\. FDI, principa1es hypotheses des projections financieres
Tableau 2\. Ca1endrier previsionne1 des deb10cages du credit envisage
Tableau 3\. FDI, Bilan previsionnel
Tableau 4\. FDI, Compte d'exploitation previsionnel
Tableau 5\. FDI, Cash-flow previsionnel
4\. Documents et statistiques disponibles dans Ie dossier du projet\.
I\. LE SECTEUR INDUSTRIEL 1/
A\. Le Cadre Economique
1\.01 Au cours des dix dernieres annees, l'economie haitienne a connu une
croissance encourageante du Produit interieur brut (3,8% par an), due surtout
au d~~misme de l'industrie, des services publics, et de la construction\. Depuis
1970, c'est Ie secteur du batiment qui se montre Ie plus actif grace a des investisÂ
sement:s considerables dans les infrastructures et, plus recemment dans la construction
de logements\. La croissance de la population d'Haiti, qui est actuellement d'environ
1,7% par an, reste inferieure a la moyenne des pays a faible revenu, mais Ie PNB par
habits,nt -- 260 dollars US en 1979 -- reste Ie plus faible de 1 'hemisphere occidental\.
La repartition des revenus est particulierement desequilibree, la malnutrition est
tres repandue, et 75% de la population vit dans la pauvrete absolue\. A part quelques
petits depots de bauxite, de lignite, et de cuivre, Haiti dispose de peu de ressources
naturelles\. Les problemes causes par la penurie de terres disponibles sont exacerbes
par l'~tilisation de mauvaises techniques, qui provoquent une erosion severe et
reduisent l'utilisation efficace des ressources foncieres\.
1\.02 L'agriculture, qui represente 40% du Produit national brut en 1979
(Annexn 1, T-l) 2/ reste l'activite dominante d'Haiti\. Son incapacite croissante
a suiv-::~e Ie rythme de la demande interieure de produits alimentaires et les flucÂ
tuations considerables de la production agricole ont incite Ie gouvernement a donner
la priorite a l'amelioration de l'agriculture dans son plan de developpement (1977Â
81)\. :Nalgre son decollage au cours de la derniere decennie (para 1\.04), Ie secteur
industriel ne represente qu'environ 13% du PNB en 1979, ce qui reste un des pourcenÂ
tages Ie,s plus faibles parmi les pays latino-americains\. La base industrielle
souffre d'une mauvaise infrastructure, de la rarete de gestionnaires et d'ouvriers
qualifies, de l'etroitesse du marche et de l'inadaptation des organismes de credit
(para\. 1\.19 et 1\.20)\. Neanmoins, l'amelioration du climat politique au cours des
dix derClieres annees a suscite l'expansion industrielle recente\. Le gouvernement
envisage actuellement de participer directement a des projets importants (para 1\.18)
qui pourraient ne pas etre economiquement justifies et auraient des repercussions
importalltes sur la dette nationale\. Une politique industrielle claire et coherente
reste e:tlcore a mettre en place\. Le projet envisage sera un excellent moyen de
poursui',rre Ie dialogue entre l' IDA et Ie gouvernement sur l' orientation de ses
politiques, particulierement de celles qui touchent aux secteurs industriels et
financiers\.
Emplois
1\.03 Sur une population totale d'environ 5 millions, la population active de
2,7 millions qui augmente de 1,4% par an (1970-1980) exige la creation de mUliers
d'emplois productifs nouveaux\. Le chomage actuel, estime a 15% de la force de
travail, est aggrave par un chomage deguise tres repandu, surtout dans l'agriculture
et Ie secteur informel\. Alors que 64% de la main-d'oeuvre est employee dans Ie
Cette section s'inspire de plusieurs rapports qui sont disponibles dans Ie
dos:3ier du projet (Annexe 4), surtout Ie rapport nO 3079-HA, "Haiti : MemoÂ
randum Economique-Evolution Industrielle Recente", du 11 novembre 1980\.
Les chiffres sur la repartition sectorielle de l'economie sont exprimes sur
la base des prix de 1955\. II n'existe pas de donnees statistiques en prix
COUl:'ants\. C'est pourquoi, ces chiffres sont simplement indicatifs et devraient
etrE: utilises avec prudence,
- 2 Â
secteur agricole, 8% seulement trouve un emploi dans l'industrie\. Les emplois
industriels ont augmente de 3% par an entre 1971 et 1977, alors que la main-d'oeuvre
urbaine a augmente de 4% par an, bien plus rapidement que la population active et
plus vite que les emplois crees dans Ie secteur industrie\. Cette situation confirme
qu'il est necessaire de developper les regions et les infrastructures tout en creant
des emplois, surtout dans l'industrie et en ameliorant la productivite de l'agriÂ
culture\. Bien qu'il y ait une penurie de gestionnaires et d'ouvriers qualifies,
la modicite des salaires a provoque l'expansion d'indutries tournees vers l'exporÂ
tation\. Actuellement, Ie salaire minimum est de 2,30 dollars par jour, Ie plus bas
parmi les operations de montage dans les pays latino-americains; ces bas salaires
assurent une rentabilite elevee aux investissements, souvent de l'ordre de 30 a 50%\.
B\. Le 5ecteur Industriel
Croissance et structure
1\.04 En termes reels, la croissance de l'industrie est passee d'un taux moyen
de 0,6% par an pendant les annees 1950 et 1960 a pres de 7% sur la periode 1970-79
(Annexe 1, T-l)\. Ces estimations de la croissance sont faites a partir d'un Indice
de production industrielle,etabli a partir d'un echantillon des activites indusÂ
trielles qui existaient a la fin des annees 1950; elles ne tiennent donc pas
compte de beaucoup d'industries de substitution aux importations qui ont demarre
pendant les annees 1960 et ignorent virtuellement toutes les industries exporÂ
tatrices qui ont vu Ie jour dans les annees 1970\. 5i l'on tient compte de ces
sous-secteurs, on peut estimer que la croissance industrielle a ete d'environ 14%
par an pendant les annees 1970\.l/ Les industries qui ont Ie plus contribue a
cette croissance se trouvent parmi des industries qui fabriquent des substituts aux
importations : ciment, produits cerealiers, farine, habillement, chaussures, biere,
et sucre raffine\. Parmi les operations de montage qui travaillent a l'exportation,
les textiles, les jouets et les articles de sport sont les principales productions\.
Par contre, la mediocre performance des entreprises agro-industrielles s'explique
essentiellement par Ie declin de la production cotonniere et textile et la penurie
de matieres premieres agricoles,
1\.05 D'apres les estimations de l'Institut Haitien de statistiques sur la
valeur ajoutee industrielle en 1976, les activites industrielles les plus imporÂ
tantes sont l'alimentation et l'habillement\. Ensemble, ils representent pres de
48% de la valeur ajoutee totale\. 5i on inclut d'autres biens produits surtout pour
satisfaire les besoins elementaires de la population, comme les boissons, les
textiles, Ie cuir et les articles chaussants, ce pourcentage passe a 57% environ\.
Parmi les autres activites moins importantes, il yale materiel et les machines
(10% de 1a valeur ajoutee, 1es materiaux de construction (environ 5%), 1e tabac (5%),
et 1es huiles essentie1les (environ 3%)\. Les produits mobilier en bois, 1e papier
et l'imprimerie, 1es produits metalliques et 1es autres activites representaient 1es
21% restants de la valeur ajoutee totale de cette annee 1a\. Cette repartition
sectorielle est caracteristique d'un pays qui se trouve encore a un stade e1ementaire
d'industrialisation\.
1\.06 Le secteur industriel haitien est essentiellement compose d'entreprises
petites et informel1es\. Le nombre moyen d'employes par entreprise affiliee au
systeme de securite sociale est d'environ 19 (Annex 1, T-2)\. La concentration des
Y Bm les possibilites d'investissement industrie1 en Haiti, Mai 1979\.
- 3 Â
entreprises rappelle aussi la structure du secteur industriel : en 1976, environ
65% des entreprises industrielles etaient concentrees dans les produits alimentaires,
les boissons, et l'habillement et 1es articles chaussants\.
1\.07 L'utilisation de la capacite des usines, qui etait en moyenne de 63% au debut
des aTl\.nees 1970 varie beaucoup d'un sous-secteur a l'autre\. Les industries qui
benef::\.cient d 'un monopole, soit a cause de 1 'etroitesse du marche, soit a cause
d'une protection elevee, ont l'uti1isation de capacite la plus faible\. Par contre,
1es industries de transformation qui travaillent a l'exportation tendent a fonctionner
plus pres de leur p1eine capacite\. Recemment, 1a minoterie et 1es cimenteries ont
quasit!lent fonctionne a plein rendement a cause d 'une augmentation de la demande\.
Exportation de Produits Manufactures
1\.08 Les exportations nettes de produits manufactures 11 ont augmente au taux
remarquab1e de 12% par an (aux prix de 1970) entre 1970 et-1977; pendant cette
periode, e11es sont passees de 11 millions de dollars a plus de 54 millions de
dollars (Annexe 1, T-3)\. Les industries de transformation travaillant a l'exporÂ
tation qui, en 1977, etaient responsables de 42,3% des exportations nettes des
produits manufactures, couvrent une large gamme de produits; mais el1es sont conÂ
centrees dans l'habillement (52%), 1es composantes electroniques (26%), et les
articles de sport (16%)\. Toutes ces industries de montage emploient beaucoup de
main-d'oeuvre: elles ont cree environ 18,000 emp10is nouveaux depuis 1971\. A
titre de comparaison, les industries modernes qui produisent pour 1e marche local
en ont cree 2,000\. L'investissement direct par emp10i a ete en moyenne de 2,800
dollars US\. Le faible cout de 1a main-d'oeuvre, 1a proximite du marche americain
et 1e c1imat favorable aux investissements sont a l'origine du developpement des
industries de transformation a l'exportation en Haiti\. Leur croissance, comme celIe
de toute l'industrie, a cependant ete freinee par des goulots d'etrang1ement en
matiere d'infrastructures\. Les restrictions p1acees sur les importations de veteÂ
ments par les Etats-Unis ont aussi limite l'expansion du secteur de l'habillement\.
Le deve10ppement futur des industries de transformation travai1lant a l'exportation
dependra de la possibi1ite d'identifier et d'exp1oiter de nouveaux marches, ainsi
que de 1a capacite a diversifier 1es produits exportes\. En meme temps qu'il
cherche a promouvoir les industries a vocation exportatrice, Ie gouvernement doit
s' efforl~er d' ameliorer les infrastructures et d' adopter des po1itiques agricoles
qui faciliteront l'integration vers l'amont des industries de transformation traÂ
vaillant a l' exportation (para 1\.21)\.
Politique Industriel1e
1\.09 Bien qu'elle ne soit pas clairement definie, la politique industrielle du
gouverm::ment a ete mise en oeuvre par l' intermediaire d 'un systeme d' incitations
(para 1,10 - 1\.13) qui favorise 1a creation d'emplois, 1a croissance des exportaÂ
tions, e:t la decentralisation regionale\. De plus, 1 'Etat soutient Ie developpement
de services d'assistance technique en faveur du secteur industrie1 (para 1\.14-17),
!I Les exportations brutes de produits manufactures moins 1es inputs importes par
1es industries de transformation travai1lant a 1 'exportation\.
- 4 Â
et envisage de participer activement a plusieurs grands projets industriels (para
1\.18), La politique industrielle du 3eme plan de developpement (1982-86) est en
cours d'elaboration; elle serait fondee sur la promotion des industries creatrices
d'emplois\. L'efficacite de cette politique pourrait cependant etre partiellement
compromise par ce qu'il adviendra des infrastructures et de l'agriculture (1\.21)\.
1\.10 Le Code des investissements\. Le Code des investissements, qui est en cours
de revision, comprend cinq decrets-lois passes entre 1960 et 1977\. Des incitations
fiscales differenciees sont octroyees (a) aux entreprises qui fabriquent des marchanÂ
dises non-produites en Haiti; (b) aux entreprises qui favorisent l'integration
industrielle; (c) aux entreprises qui emploient beaucoup de main-d'oeuvre, travailÂ
lant a l'exportation et utilisent des matieres premieres locales; et (d) celles qui
sont situees en-dehors de Port au Prince\. Les entreprises agrees sont exonerees
d'impots sur Ie revenu pendant les cinq premieres annees, taxees selon un bareme
progressif pendant les cinq annees suivantes, et imposees pleinement lors de la
onZ1eme annee\. Les exonerations fiscales maximales sont consenties a des industries
"pionnieres lt (qui fabriquent des produits qui n'etaient pas encore fabriques en
Haiti), tandis que les entreprises de la meme branche qui s'installent plus tard
obtiennent des incitations moindres qui sont fonction du degre de saturation du
marche local\. La periode d'exoneration d'impot sur Ie revenu est plus longue pour
les nouvelles entreprises qui s'installent dans des zones industrielles (exoneraÂ
tion totale pendant 8 ans, et imposition totale a partir de la quatorzieme annee)
et beaucoup plus longtemps pour les entreprises situees en-dehors de Port au Prince
(exoneration totale pour quinze ans et imposition totale a partir de la vingtieme
annee)\. II existe aussi une incitation fiscale liee a l'intensite en capital du
projet; la duree de 1 'exoneration des impots sur la propriete augmente avec la taille
de l'investissement\. Les dividendes sont taxes entre les mains des recipiendaires
a un taux fixe de 8%\.
1\.11 Protection tarifaire\. La structure du tarif douanier d'Haiti est relatiÂ
vement constante; ses taux sont dans l'ensemble assez bas car ils sont lies a des
droits specifiques qui etaient autrefois la regIe\. Les droits ad valorem ne sont
pas progressifs en fonction du degre de transformation des importations; ils vont
de 0 a 30% sur les machines, les matieres premieres et les biens intermediaires et
de 30 a 55% sur les biens de consommation\. De plus, des droits specifiques sont
per~us sur un grand nombre d'articles\. La protection totale (definie par la ratio
"droit a l'importation/importation totale lt ) est cependant passee de 22,4% en 1971
a 10,8% en 1976 a cause de l'importance croissante des importations en franchise
et de l'erosion des droits specifiques provoquee par l'inflation\.
1\.12 La plupart des importations en Haiti sont libres de restrictions quantiÂ
tatives\. Les quotas sont limites a quelques produits seulement : confitures et
gelees, viandes en conserve, pates alimentaires, chaussures d'une valeur inferieure
a 35 gourdes (prix CAF) Ie sucre et les confiseries, les peintures et les vernis
d'une valeur superieure a 25,000 G (prix CAF), les barres d'acier et les fers a
beton\. Quelques importations sont monopolisees par la regie du tabac et des
allumettes\.
1\.13 L'application liberale du systeme d'incitation pendant les annees 1970
a contribue a la croissance du secteur industriel\. II ne compense cependant pas
les carences des institutions et des infrastructures physiques qui font obstacle a
la poursuite de l'industrialisation\. De plus, la protection octroyee a certaines
entreprises privilegiees, qui decourage la concurrence, tend a creer des situations
de monopoles qui n'incitent pas les industries etablies a ameliorer leur qualite ou
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redui<re leurs prix\. Le systeme d' incitations, qui privilegie les entreprises
exportant l'ensemble de leur production, decourage la creation de firmes produiÂ
sant i la fois pour Ie marche interieur et l' exportation\. Les produits traditionÂ
nels \. :omme ceux de l' artisanat sont exclus du Code des investissements qui est
reserve a des produits qui n'etaient pas fabriques auparavant en Haiti\. Les taxes
a 1 'e:Â::portation sur 1 'artisanat dtkouragent sensiblement la production\. En outre,
il n '}' a pas assez d' incitations pour les entreprises qui transforment les matieres
premii:\.res locales\. En general, les avantages qui sont octroyes de plus en plus sur
la base des emplois crees et de la valeur ajoutee locale pourraient eliminer quelÂ
ques-lines des faiblesses du systeme actue1\. Cependant, parallelement a l'amelioÂ
ratiot:1 du Code des investissements, U faut s' efforcer d' eliminer les obstacles au
develc:ppement industriel (para\. 1\.19 et 1\.20)\.
Services d'Assistance Technique
1\.14 En plus du systeme d'incitations et de la promotion de certains investisÂ
sements specifiques, l'Etat favorise Ie developpement de services d'assistance
technique en faveur de l'industrie\. II n'a cependant pas coordonne tres efficaÂ
cement les institutions concernees, dont la plupart sont encore dans une phase
initiale de developpement\.
1\.15 L'Office National de Promotion Industrielle (ONAPI), cree en 1979 est
encore en cours d'organisation; il devrait devenir la cle de voute du programme
public d'assistance technique en faveur du secteur industriel\. L'ONAPI devrait
fournir au secteur industriel des services techniques et specialises, tels que des
progrcunmes de formation, des seminaires et une assistance aux entrepreneurs pour
preparer des projets bancables\. L'ONAPI a aussi un role de promotion important tant
a l'interieur quIa l'etranger OU il devra faire connaitre les possibilites d'invesÂ
tissements et les privileges consentis en Haiti\. Le ConseU d'Administration de
l'ONAPI est preside par Ie Ministre du Commerce et de l'Industrie; il est dirige
par un ,)1recteur General, mais son organisation definitive n' a pas encore ete
arretee\. L'ONAPI envisage de creer trois divisions operationnelles responsables de
la promotion internationale, de la r~cherche industrielle et des etudes de projets,
et des services de vulgarisation pour les petites et moyennes entreprises\. Le
projet envisage (para\. 3\.38) fournira une assistance technique institutionnelle
pour renforcer l'organisation et les competences de l'ONAPI\. Si Ie gouvernement
met des res sources a sa disposition, l'ONAPI envisage de recruter plus de cadres et
d'augmeuter sensiblement son budget de fonctionnement pour l'annee prochaine\.
1\.16 L' Office National de l' Artisanat (ONA) a ete cree en 1977 pour repondre aux
besoins des artisants et des micro-entreprises, mais c'est encore une institution
extremement faible, handicapee surtout par un manque de moyens et de personnel comÂ
petent\. En outre, l'Institut National de Formation Professionnelle (INFP), cree en
1977 avec l'aide du PNUD et du BIT, est un des meilleurs etablissements de formation
professionnelle\. Ses ressources proviennent de la taxe d'apprentissage qui a ete
instauree recemment\. Dans Ie cadre du 2eme Projet Education (credit 770-HAO, l'IDA
travaille avec l'INFP et les autorites haitiennes pour developper la formation
continue des adultes et des programmes de recyclage\. Travaillant presque comme une
equipe interne d'assistance technique, la Division des Services Industriels (DSI) de
l'Institutde Developpement Agricole et Industriel (IDAI) fournit des services reserves
aux propres projets de l'IDAI\.
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1\.17 L'Institut National d'Administration, de Gestion et de Hautes Etudes
Internationales (INAGHEI), qui depend de l'Universite d'Haiti, offre surtout des
programmes de formation a la gestion\. Bien qu'il ne fournissait autrefois qu'une
formation de type universitaire, cet institut a recemment demarre, avec l'assisÂ
tance du Canada et de la Banque Inter-Americaine de Developpement, un programme
a temps partiel pour adultes de gestion et comptabilite elementaires\. En plus de
l'INAGHEI, il Y a quelques ecoles privees de gestion a Port au Prince; l'une
d'entre elles, Centre de Formation aux Affaires et a la Gestion (CEGES), offre des
cours de niveau universitaire et des seminaires sur Ie commerce, l'industrie et
l'administration des entreprises\.
Les Projets Industriels de l'Etat
1\.18 S'eloignant du plan a cinq ans et de son budget d'equipement, l'Etat s'est
engage dans trois projets relativement importants : une sucrerie, un armement de
peche, et une huilerie, qui ont ete finances a des conditions relativement dures\.
De plus, leur justification economique n'est pas claire\. Le gouvernement envisage
maintenant une deuxieme sucrerie, une cimenterie et une usine textile\. L'IDA a deja
fait part au gouvernement de ses observations, mais on ne sait s'il en tiendra compte
dans sa decision a l'egard de ces projets et d'autres projets industriels futurs\.
C\. Les Perspectives de Croissance Industrielle
1\.19 L'industrialisation d'Haiti est encore a une phase initiale\. Le developÂ
pement de l'industrie est limite par plusieurs facteurs, en particulier l'etroiÂ
tesse du marche interieur, les difficultâ¬s d'approvisionnement et la mauvaise qualite
des matieres premieres, la penurie de gestionnaires et d'ouvriers qualifies, Ie
manque d'infrastructures appropriees, les contraintes de credit (section II) et
autres carences institutionnelles\.
1\.20 La demande interieure est tres limitee, a cause surtout du faible pouvoir
d'achat de la majorite des Haitiens et de l'insuffisance du tissu industriel qui
est incapable de susciter une demande raisonnable de biens intermediaires\. En meme
temps, la croissance des exportations s'est ralentie dans certaines branches -Â
surtout les textiles et l'habillement -- a cause du systeme americain de quotas,
qui malgre sa liberalisation recente reste encore tres contraignant\. Du cote de
l'offre, l'insuffisance des approvisionnements et la qualite mediocre des matieres
premieres font obstacle aux relations inter-industrielles et a l'integration amont,
tout en reduisant la qualite des produits finis\. II y a aussi des penuries severes
d'ouvriers qualifies, de techniciens, de gestionnaires et d'entrepreneurs\. Le
manque d'infrastructures physiques en dehors de Port au Prince, (graves coupures de
courant, mauvais etat des routes, communications defectueuses, approvisionnement en
eau insuffisant) a incite l'industrie a se concentrer dans la zone metropolitaine
de Port au Prince\. De plus, l'acces et Ie recours au credit est un probleme majeur
pour les entreprises nouvelles ou petites\. A moins d'offrir des garanties physiques
importantes les prets locaux sont, pour la plupart, des prets individuels consent is
sur la reputation et l'histoire de l'emprunteur; en fait, cela exclut les entreprises
nouvelles ou petites\. Finalement, la faiblesse du cadre institutionnel et l'inefÂ
ficacite de l'administration a aussi freine la croissance du secteur industriel\.
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1\.21 La croissance industrielle a venir depend du developpement des industries
exportatrices a forte intensite de main-d'oeuvre; pour cela, il faut identifier et
penetrer de nouveaux marches\. II est aussi necessaire de promouvoir la croissance
et la rationalisation du secteur agricole afin d'augmenter la quantite et la qualite
des matieres premieres locales destinees a l'industrie\. A long terme, Ie developÂ
pement de l'economie, et en particulier, celui du secteur industriel, sera determine
par li~s infrastructures physiques qui ont besoin d 'etre ameliorees\. Mais a court
terme, les domaines industriels pourraient alleger quelques-unes de leurs faiblesses\.
II faudrait accorder plus d'attention au programme national de domaines industriels,
qui prevoit des implantations regionales et a l'amelioration future des infrastrucÂ
tures\. En outre, il faut reviser Ie systeme d' incitations (para\. 1\.13) et supprimer
les gculots d'etranglement administratifs qui contrecarrent l'encouragement donne
aux investissements industriels prives et etrangers\. Finalement, on pourra contriÂ
buer f, augmenter Ie nombre de gestionnaires et d'ouvriers qualifies' en fournissant une
assistance technique a quelques sous-secteurs prioritaires\. Le projet envisage
aiders Ie gouvernement a reduire les contraintes de credit (Chapitre II), en mettant
des ressources a long terme a la disposition du secteur industriel et en ameliorant
Ie systeme de credit\. En outre, il renforcera et fournira des services d'assistance
technique\. Comme on l'a vu au para\. 1\.02, Ie projet permettra d'approfondir Ie
dialogue entre l'IDA et Ie gouvernement, particulierement sur ses politiques
industrielles et financieres (para\. 4\.07)\.
II\. LE SYSTEME FINANCIER
A\. Institutions et Reglementation Financieres
Generalites
2\.01 Les politiques monetaires et financieres d'Haiti sont elaborees par Ie
Ministere des Finances et des Affaires Economiques en consultation avec la Banque
de la Republique d'Haiti (BRH)\. Une loi du 26 juin 1980 confie au Ministere des
Finances et des Affaires Economiques, la tutelle du systeme financier qui comprend
la BRH, Ie secteur bancaire et d'autres institutions financieres\. BRH garde encore
une grande influence sur la monnaie et Ie credit, surtout par Ia politique des
taux d'interet\. La marge de manoeuvre est limitee par Ia dualite des monnaies
(dollar/gourde), la petite taille de l'economie haitienne et son ouverture sur
l'exter:Leur\. Les capitaux peuvent entrer et sortir librement d'Haiti avec une
parite fixe de 5 gourdes par dollar, qui n'a pas change de puis 1919\.
La Banque Centrale
2\.02 Jusqu'au 11 septembre 1979, la Banque Nationale de la Republique d'Haiti
fonctior\.mait a la fois comme Banque Centrale et comme Banque Commerciale\. Pour
eliminer Ie conflit entre ces fonctions, Ie gouvernement a detache les operations
commerc:i\.ales et les a confiees a la Banque Nationale du Credit (BNC) nouvellement
creee\. Les fonctions de Banque Centrale sont reservees a la BRH, un organisme public
dote de la personalite juridique et de l'autonomie financiere\. La BRH est responÂ
sable dE: la circulation des billets et de la monnaiej elle fixe les taux d'interets
et les reserves obligatoiresj e1le gere les avoirs en devises et controle les instiÂ
tutions financieresj elle agit aussi en tant que Banque de l'Etat\. La BRH est une
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institution encore faib1e, encore a peine capable de contra1er et survei11er 1es
institutions financieres\. C'est 1e Ministere des Finances et des Affaires Economiques
qui autorise 1es banques a exercer, sur recommandation de 1a BRR et du Ministere du
Commerce et de l'Industrie\. La 10i du 26 juin 1980 (para\. 2\.10) qui soumet 1a BRH
a 1a tute11e du Ministere des Finances et Affaires Economiques pourrait affaib1ir 1e
contra1e du systeme financier et entrainer des conf1its de competence entre 1es
diverses autorites monetaires\. La revision d'ensemb1e du cadre juridique qui conÂ
cerne 1es institutions financieres fera l'objet des discussions, entre l'IDA et 1e
gouvernement\.
Les Institutions Financieres
2\.03 En plus de 1a BRH et de 1a BNC, i1 Y a neuf etab1issements bancaires 11
(8 banques privees et une banque pub1ique), et une societe financiere de deve1opÂ
pement qui appartient a l'Etat (l'IDAI)\. 11 y a aussi 32 guichets de compagnies
d'assurances privees (surtout etrangeres)\. 4 caisses de retraite appartenant a
l'Etat, environ 50 "caisses populaires ll en activite et un bureau de financement
agrico1e au sein du Ministere de l'Agricu1ture, des Ressources Nature1les et du
Developpement Rural\. La creation d'une societe financiere de developpement privee
est envisagee mais elle n'est encore qu'a l'etat de projet, surtout parce qu'e11e
semble manquer du soutien gouvernemental\. La p1upart des banques commercia1es
privees, dont 1a majorite sont des agences locales de banques etrangeres, ont ete
creees dans 1es annees 1970\. Les banques nationales, par comparaison avec 1es
banques etrangeres, sont des institutions assez faib1es\. Les banques commercia1es
financent surtout l'import/export, et environ 94% de leur portefeuille total porte
sur des operations a court terme\. Les prets a plus long terme ont habitue11ement
une maturite d'environ un an ou bien ils sont mobilisables sur demande; on peut donc
les assimi1er a du court terme\. L'octroi de credit a long terme par les banques
commerciales est compromis par la difficu1te que rencontrent toutes institutions
financieres autres que 11IDAI, de prendre des hypotheques et par 1e cout eleve de
l'enregistrement des hypotheques et autres barrieres reglementaires\.
2\.04 La Banque Royale du Canada, la plus ancienne de toutes les banques privees
et etrangeres en Haiti, est aussi la plus importante avec 36,3% de llensemble des
actifs des banques privees qui s'elevent a 886 millions de gourdes (Annexe 2-T)\.
Immediatement derriere, on trouve la Banque Nationale de Paris, la First National
Bank of Boston, et la Bank of Nova Scotia, qui ensemble possedent 49,7% des actifs\.
Ainsi, 4 banques etrangeres contralent 86% de l'ensemble des actifs des banques
prLvees\. Deux banques privees haitiennes -- a savoir la Banque Industrielle et
Commerciale d'Haiti etla Banque de l'Union Haitienne -- ne contralent que 3,5% des
actifs des banques privees tandis que 1e solde (environ 10%) est detenu par des
banques etrangeres de moindre importance (Annexe 2, T-l)\.
2\.05 Des deux banques commerciales qui appartiennent a l'Etat, la BNC est certaiÂ
nement la plus importante, bien qu'il ne soit pas possible d'obtenir Ie chiffre de
son portefeui1le puisque ses actifs sont encore consolides avec ceux de la BNH\. La
2eme banque publique, la Banque Popu1aire Haitienne (BPH) est plus importante que
les deux banques privees haitiennes combinees et son portefeuille comprend environ
46% de prets a moyen ou long terme\. Cependant, la BPH traverse des difficultes
financieres et il est possible que son portefeuille a moyen et long terme represente
en fait des renouvellements d'arrieres douteux; pour la maintenir en operations, 1a
BRR a diminue son coefficient de reserves ob1igatoires\. A cause de 1a precarite de
sa situation financiere 1a BPH fonctionnecomme une filiale de la BNC\.
11 A l'exclusion de la Banque Commerciale d'Haiti qui est en cours de liquidation\.
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2\.06 L'Institut de Developpement Agricole et Industriel (IDAI), un etablisÂ
sement public cree en 1961 est la seule societe financiere de developpement d'Haiti\.
Ses cinq agences dans le pays ont un actif total de 70,6 millions de gourdes (14,1
millions de dollars US) qui represente 8% de l'ensemble des actifs des banques
priveE::s\. L I IDAl prend surtout des participations qui representent 58% de ses actifs\.
Sa filiale a 100%, la Societe d'Equipement National (SEN) possede plusieurs societes
dans Ie textile, l'huile, le beurre et autres sous-secteurs lies a l'agriculture\.
En outre, 25% environ des actifs totaux de l'IDAI sont des prets, surtout a l'indusÂ
trie; 66% de son portefeuille de prets sont affectes par des arrieres\. Apparemment,
â¢
l'IDAI est la seule institution financiere qui peut garantir ses prets a long terme
par des hypotheques; cependant, on ne connatt pas son experience en matiere de
garanties, a cause du manque de reglementation a cet egard\. Les res sources de
l'lDAI sont essentiellement constituees de concours de l'Etat et de prets a long
terme de la Banque Inter-Americaine de Developpement (BID)\. La direction de l' IDAI
ayant i~te changee recemment, on s' attend a ce que ses politiques et ses procedures
soient revisees\.
Politql1es Monetaire e t Financiere
2\.07 La capacite de la BRR a gerer la masse monetaire est limitee par Ie systeme
de double monnaie, les parites fixes et la petite taille de l'economie (para\. 2\.01);
Le tam:: d' interet est donc comme Ie principal instrument de politique monetaire et de
credit, et la Banque Centrale essaye de Ie maintenir au niveau des taux d'interets a
l'etranger et du taux d'inflation\. Cependant, elle n'a aucun controle sur la
quantite de dollars qui circulent en Haiti et pesent sur la masse monetaire\. Une
nouvelle loi bancaire, en date du 17 novembre 1980 definit la reglementation geneÂ
rale applicable aux etablissements bancaires\. La BRR peut, en outre, determiner
la repa\.rtition de leurs operations a court, moyen et long terme ainsi que leur ratio
de liquidite et d'endettement\. Les reserves obligatoires, (qui representent actuelÂ
lement 34% des depots a vue et des comptes d'epargne, 10% des depots a terme de plus
d'un an et 20% des depots a moins d'un an) sont rarement changees et ne sont pas
normale::nent utilisees pour affecter Ie volume de credits bancaires\. Le capital miniÂ
mum exige favorise les banques etrangeres, en particulier celles qui sont deja etaÂ
blies d,:ms Ie pays\. L' application de la loi bancaire pourrait etre genee par Ie
manque r\.l' experience du Departement d' inspection de la BRR et par des restrictions,
dans Ie cadre de 1a 101, sur 1a communication d'informations specifiques concernant
les operations bancaires\.
2\.08 Taux d'Interets et Marges Financieres\. Dans sa gestion des taux d'interets,
1a BRR revise periodiquement 1es taux minimum et maximum imposes aux etablissements
financie:rs de fa~on ales garder en harmonie avec les taux d' interets a I' etranger
et Ie taux d'inflation\. Actuellement, les taux debiteurs en Haiti varient, a la
discretion des banques, a l'interieur d'une fourchette de 14 a 18% par an\. Les
comptes d'epargne sont renumeres a 6% par an et les depots a terme de moins d'un an
a 10 - 12% par an\. Les taux d'interets consent is aux depots a terme de plus d'un an
varient entre 11 et 14% par an pour les depots inferieurs a 100,000 dollars US tandis
que les depots a terme superieurs a 100,000 dollars US touchent entre 12 et 18% par an\.
Au vu de ces taux et des reserves obligato ires, on estime que la marge moyenne des
banques -privees est d'environ 4% par an sur leurs operations\. D'apres les banquiers
locaux, ,~es operations qui degagent une marge d' au moins 2% sont interessantes\. Ces
marges rnisonnables sont Ie resultat de la politique des taux que pratique la BRR et
qui permettent et favorisent la competition entre etablissements financiers\.
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2\.09 Inflation\. Pendant 1a periode 1975-79, l'inf1ation a ete en moyenne de
10,6% par an, a10rs que pendant 1es 12 derniers mois e11e est passee a environ 12%\.
Ma1gre ces niveaux d'inf1ation, et a cause de 1a po1itique d'interet de 1a BRR, 1es
taux d'interets en vigueur donnent un taux d'interetree1 qui peut a11er jusqu'a
6% par an\. En 1981, Ie taux d'inf1ation pourrait depasser 15%, essentie11ement a
cause de la penurie de produits alimentaires; cela pourrait affecter les taux d'inteÂ
rets reels\. Mais 1es politiques de la BRB permettent, cependant, de penser que 1es
taux d'interets nominaux seront ajustes conformement\.
2\.10 Reserves de change\. Une caracteristique speciale au systeme monetaire haitien
est l'aff1ux saisonnier de devises qui affecte 1a masse monetaire et 1es reserves
de change\. Une grande partie des recettes en devises proviennent des exportations
de cafe et des depenses touristiques; e1les augmentent donc de novembre a maio Par
contre, 1es paiements plafonnent d'aout a octobre a cause de la reconstitution
annuelle des stocks\. Cette saisonalite des paiements et des recettes entraine un
rationnement de devises, particulierement pendant la periode de forts paiements et
provoque ainsi des difficultes administratives et des problemes de tresorerie pour
Ie secteur bancaire\.
aI
Tableau 2\.01 : PIB, Epargne et Credit
(Millions de Gourdes)
Pourcentage Pourcentage Pourcentage
d' augmentation d'augmentation d'augmentation
Epargne de l' ensemble de'lamonnaie des credits
interieure des credits/ et de la quasi totaux/EIB
AnneJ!i PIB brute/EIB EIB/PIB PIB monnaie/EIB
% % % %
1975 3,973\.5 250\.8 6\.3 5\.9 26\.0 66\.5
1976 4,894\.0 281\.4 5\.7 3\.1 69\.3 48\.8
1977 5,543\.2 339\.2 6\.1 3\.9 46\.6 53\.5
1978 5,813\.4 395\.5 6\.8 5\.1 59\.4 64\.8
1979 6,370\.4 234\.0 3\.7 4\.4 83\.8 99\.5
Moyenne 5\.7 4\.5 57\.0 66\.6
Les augmentations de credit ont ete obtenues a partir des creances totales qui
apparaissent au Tableau 2 de l'Annexe 2\.
Annee fisca1e\.1!
Source : BRR, FNI et estimations de 1a Mission\.
l/ Dans cette section, les annees font reference a l'annee fiscale haitienne
(ler octobre au 30 septembre)\.
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B\. Performance du Systeme Financier
Intermediation
2\.11 En Haiti, le niveau d'epargne reelle est faible; pendant les cinq dernieres
annees, l'epargne a represente 5,7% du PIB en moyenne (Tableau 2\.01)\. Le secteur
public degage peu d'epargne parce que la croissance des recettes de fonctionnement
est encore limitee par une legislation fiscale et douaniere perimee (elle est en
cours de revision), et par les fluctuations des recettes fiscales sur les exportaÂ
tions de cafe\. Un petit groupe de personnes a revenus eleves n'a pas place son
epargne\. aupres du secteur financier parce que, jusqu'a la fin de 1979, les taux
d'interets, qui n'avaient pas change depuis 1974, n'encourageaient par l'epargne\.
Cependant, les mesures recentes, qui permettent a la BRE d'ajuster plus facilement
ses taux devraient encourager la croissance de l'epargne a partir de son faible
niveau ,9\.ctuel\.
2\.12 Pendant la periode 1975-1979, le credit total a augmente plus vite que la
monetisation de l'epargne interieure (Tableau 2\.01), ce qui indique qu'une portion
significative de l'augmentation du credit a ete financee par des ressources exteÂ
rieures\. L'essentiel de ces ressources, cependant, ont ete utilisees par l'Etat et
des organismes publiques\.
Sources de Financement
2\.13 La BRE, la BNC, l'IDAI et la Banque Populaire Haitienne constituent les
sources principales de financement en Haiti\. En 1979, ces institutions represenÂ
taient 59,1% (Annexe 2, T-2) de l'ensemble des creances sur le systeme financier,
tandis c:\.ue les 40,9% restants etaient entre les mains du secteur bancaire prive\.
La croissance des actifs -- environ 18,7% par an -- a ete semblable dans les deux
secteurs\. Cependant, les organismes financiers appartenant a l'Etat -- 98% de
leurs creances sont sur le secteur public -- sont la source principale de financement
pour les entreprises publiques qui, en 1979 representaient 43,4% du passif du systeme
financier (Annexe 2, T-2)\. Les reserves obligato ires des banques privees fournissent
aussi d'tmportantes ressources financieres substantielles aux autorites monetaires;
en 1979, elles s'elevaient a 17,4% des creances des autorites monetaires\. Enfin avec
70,8% de!3 creances sur le secteur prive, les banques privees sont la principale source
de finan,:~ement des entreprises privees, qui, en 1979, beneficient de 56,6% de toutes
les crea::lces sur le systeme financier\. Neanmoins, la participation d' etablissements
bancaires publics -- surtout la BNC -- dans le credit au secteur prive n'est pas neÂ
gligeablE~ et se situe aux environs de 29,2% en 1979\.
C\. Problemes et Perspectives
2\.14 En resume, les autorites monetaires ont reussi a gerer une politique de taux
d'interet, qui, etant proche des taux du marche, anime la competition entre instiÂ
tutions financieres, et contribue, malgre les contraintes de la petite iikonomie
haitienne, a entretenir un minimum d'epargne\. Neanmoins, il y a encore besoin de
ressources etrangeres pour financer la croissance economique, et particulierement la
croissance du secteur industriel\. Les ressources a moyen et long terme sont rares et
les prets a court terme sont surtout octroyes a des emprunteurs tres surs\. Parce que
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1e credit commercial est presque exc1usivement a court terme, et qu'on manque de statisÂ
tiques, il est diffici1e de quantifier 1a demande de credits a moyen et long terme\.
Le gouvernement, ainsi que les secteurs bancaire et industriel sont cependant conÂ
vaincus que la demande est importante\. Cela est confirme par des contacts pris avec
le secteur prive pendant l'evaluation du projet, et par un rapport sur la creation
eventuelle d'une societe financiere de developpement privee\.
2\.15 Pour continuer a favoriser la croissance des marches financiers embryonaires,
la BRH devrait continuer sa politique de taux d'interet proches de ceux du marche tout
en facilitant les operations du systeme financier\. 11 faudrait aussi, elaborer une
reglementation normalisee sur les garanties (nantissement et hypotheque)\. La loi
creant 1e FDI devrait faciliter le recours au nantissement pour les intermediaires
financiers qui participeront au projet envisage\. En outre, pour toutes les instituÂ
tions financieres, la BRH doit definir la structure du portefeuille et leurs ratios
de liquid1te et d'endettement; elle devrait aussi reviser la reglementation et en
particulier celle qui a trait aux operations a moyen et long terme\. On attend du
projet envisage qu'il contribue a encourager les intermediaires financiers a faire
des prets a long terme en faveur de bons projets productifs du secteur prive\. FinaÂ
lement, la BRH a besoin de renforcer considerablement son Departement d'Inspection
pour lui permettre de controler les operations du systeme financier et de fournir
quelque assistance aux autres etablissements financiers\. Une assistance technique
institutionnelle serait fournie a cet effet dans le cadre du projet envisag~ (para\. 3\.37)\.
III\. LE PROJET
A\. Objectifs et Cadre Institutionnel
Historique
3\.01 Le projet envisage represente le premier effort direct de l'IDA en faveur du
developpement du secteur industriel haitien\. Des septembre 1978, l'IDA a etudi~ la
possibilite de creer une banque de developpement privee en Haiti\. Cependant, de
fagon a elargir l'acces au financement a terme, la decision fut prise en mai 1979 de
creer, au sein de la Banque Centrale, un fonds special qui accorderait des prets a
moyen ou long terme et, qui offrirai~ sur option et pour les prets les plus petits,
des garanties aux petites et moyennes entreprises (PME) par l'intermediaire des
institutions financieres agreees (para\. 3\.24)\. A la requete du gouvernement, le
projet fut evalue en juillet et aout 1980\.
Objectifs du Projet
3\.02 Le premier objectif du projet envisage est de soutenir la politique de proÂ
motion industrielle du gouvernement haitien, par le financement d'operations indusÂ
trielles et la mise a disposition d'une assistance technique limitee\. Le projet
sera aussi l'occasion d'ouvrir un dialogue avec le gouvernement sur l'efficacite de
sa politique et de la reglementation industrielle et financiere ainsi que sur les
mesures qui permettraient de renforcer le systeme financier et d'ameliorer l'affecÂ
tation de ressources\. Plus precisemment, le projet est congu pour:
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(a) mettre en place un mecanisme efficace de financement du secteur
industriel hartien prive, et plus particulierement des petites et
moyennes industries, par l'octroi de prets a moyen et long terme;
(b) aider la BRH a renforcer sa capacite a contraler et evaluer la perÂ
formance des etablissements financiers; et
(c) contribuer au developpement d'un programme d'assistance pour les PME
et au renforcement des capacites institutionnelles de l'ONAPI pour
lui permettre de fournir cette assistance\.
Structure Institutionnelle
3\.03 Pour accomplir ces objectifs, un systeme de credit a deux niveau serait
instaure : la BRH agirait comme organisme de refinancement pour un reseau d'interÂ
mediaires financiers selectionnes par la BRH\. Un fonds special, appele Fonds de
Developpement Industriel (FDI) , dote de ressources et d'un personnel separe, a ete
cree au sein de la BRH pour financer les operations industrielles\.
3\.04 Toutes les institutions financieres accreditees par la BRH et dont moins de
25% du portefeuille de prets est affecte par des arrieres auront acces au FDI\. Les
intermediaires seront responsables de l'octroi et de l'administration de tous les
prets subsidiaires consentis aux industries beneficiaires pour leurs operations
respectives,apres approbation du FDI\. Le FDI, principalement par l'intermediaire
du Departement d'Inspection de la BRH, suivra les operations des intermediaires et
verifie't'a, ponctuellement, la performance des entreprises financees par Ie Fonds\.
B\. Le Fonds de Developpement Industriel
Criteres de fonctionnement
3\.05Le Fonds de Developpement Industriel a ete cree au sein de la BRH en accord
avec l'IDA, par un decret-loi l'autorisant a reescompter des prets a moyen et long
terme et a garantir des petits prets\. Le FDI, qui est soumis au contrale du Conseil
d'Administration de la BRH,est cree pour une duree indeterminee; il dispose d'un
personnel propre et de res sources permanentes non-transferables\. Bien que Ie FDI
soit soumis au Controleur interne de la BRH, ses comptes seront verifies annuellement
par des reviseurs comptables independants acceptables aI' IDA\.
3\.06 Les activites de pret du FDI seront gerees conformement a sa Declaration de
politique generale, qui, en accord avec l'IDA, a ete approuvee par Ie Conseil
d'Administration de la BRH\. La Declaration de politique generale du FDI decrit aussi
les proddures de base que son personnel doit suivre dans l'exercice de ses fonctions\.
3\.07 I\.e FDI financera les projets d'investissements et Ie fonctionnement d'entreÂ
prises privees hattiennes 1/ nouvelles ou existantes, engagees dans l'artisanat,
l'industrie (y compris l'agro-industrie), la peche, les mines, Ie tourisme, Ie
transport, la construction industrielle, et les services annexes\. Seules des entreÂ
1/ Definies comme des entreprises dont au moins 51% du capital appartiennent a des
Haiti\.ens\.
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prises viab1es et des projets solides pourront beneficier d'un financement FOI, qui
couvrira l'achat, 1a construction ou 1a renovation d'equipement\. 1es machines et
1es vehicu1es de transport, 1es travaux de genie civil et 1es batiments industrie1s
ainsi que 1e fonds de rou1ement, 1es etudes de pre-investissement et 1es services
d'assistance technique\.
3\.08 Pour favoriser l'acces d'un grand nombre de firmes et d'individus aux res-
sources a terme du FOI, 1e financement maximum par beneficiaire sera initia1ement
limite a 250\.000 dollars US\. D'autresconcoursaux memes beneficiaires ne seront
permis que s'i1s ont deja rembourse plus de 50% des prets qu'i1s avaient deja re~us
du FOI, mais a aucun moment, 1e total des engagements courants du FDI en vers un
meme beneficiaire ne pourra depasser 250\.000 dollars US\. Les prets subsidiaires
exc1usivement destines a financer 1e fonds de rou1ement ne seront autorises que sur
une base 1imitee (para\. 3\.18)\.
3\.09 Pour inciter 1es intermediaires a octroyer des petits prets, 1e systeme
prevoit que 1a marge sera plus importante dans ces cas 1a (para\. 3\.20)\. L'IDA exaÂ
minera de temps a autre 1a repartition des encours du FOI entre 1es differents sousÂ
secteurs industrie1s, y compris 1es PME\. Le premier de ces contro1es sera execute
quand 1es engagements du FOI s'e1everont au tiers de 1a composante du credit IDA
affectee aux operations de reescompte\. Vu 1e grand besoin d'assistance technique
ins titutionne11e , 1a supervision du projet exigera une participation intensive du
personnel de l'IDA et de frequents deplacements sur 1e terrain\. Pendant l'execution
du projet, et en fonction de l'experience acquise dans 1e contexte haitien, des
ajustements pourront etre introduits dans 1es criteres operationne1s du FOI\.
Direction et Personnel
3\.10 L'encadrement initial du FOI comprend un directeur et deux cadres de formation
financiere et administrative/comptab1e\. Le directeur du FOI (un juriste avec une
bonne experience de gestion et detache de 1a Banque Mondia1e) a ete nomme, en accord
avec l'IDA,par 1e Gouverneur de 1a BRR apres consultation du Ministre des Finances et
des Affaires Economiques\. Le personnel du FDI sera assiste par un consultant de
formation economique et financiere qui a l'experience des programmes d'assistance
technique en faveur de l'industrie\. Le consultant aidera 1e directeur du FOI a former
son personnel et, dans 1a mesure du possible, a concevoir des programmes d'assistance
technique en faveur des industries beneficiaires (para\. 3\.31-34)\.
3\.11 Les procedures detai11ees d'etude\. d'approbation, de deb10cage et de superÂ
vision des prets, dont 1es grandes 1ignes sont decrites dans 1a Declaration de po1iÂ
tique genera1e du FDI, sont en cours d'e1aboration pour 1e manuel des operations du
FOI\. Le manuel prendra en compte to utes 1es demandes nouvelles de credit soumises
a l'approbation du directeur du FOI\. Les changements dans 1es conditions des prets
subsidiaires requis pendant l'execution des sous-projets seront soumis au Consei1
d'Administration de 1a BRR pour approbation\. Le Consei1 sera aussi tenu informe
de tous 1es projets approuves ou rejetes par 1e FDI\.
3\.:2 , Pour faci1iter l'execution du projet, un Comite de surveillance du projet,
preside par 1e Gouverneur de 1a BRH\.sera compose du directeur du FOI et des repreÂ
sentants du Ministere des Finances et des Affaires Economiques, du Ministere de
l'Industrie et du Commerce, du Ministere du Plan, de l'ONAPI, des intermediaires
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financiers qui participent au projet et de l'industrie privee\. Le Comite de surÂ
veillance du projet exercera ses fonctions dans Ie cadre de statuts qui devront
etre prepares par Ie BRa et adoptes avant Ie 30 septembre 1981\. Le Comite permettra
d'obtenir la cooperation des organismes publics; il examinera les politiques
d'ensemble en matiere d'industrie et de credit ainsi que les programmes d'assistance
technique en faveur des PME\. II se reunira au moins une fois tous les 12 mois, ou
sur convocation de son President\.
Ressou~ces et Perspectives Financieres
\.
3\.13 Ressources: Le FDI sera cree avec une base financiere solide; il aura une
comptabilite autonome et ses etats financiers seront verifies separemment\. Les
reSSOUl'ces initiales qui lui seront allouees en propre par l'Etat comprendront :
(a) la composante "credit tl du Credit IDA envisage (6,0 millions de dollars US); et
(b) un million de dollars US qui seront fournis par l'Etat au titre des fonds de
contrepartie\. Le versement de la premiere tranche (250\.000 dollars US) sera une
condition d'entree en vigueur du credit\. Le solde de cette dotation sera mis a la
disposition du FDI a sa demande, mais en aucun cas apres Ie 31 octobre 1983\. Comme
on Ie voit au tableau 3\.1, les ressources initiales du FOI, qui s'eleveront a
7 millions de dollars US, representeront 70% de l'ensemble des investissements prevus
dans Ie cadre du projet\. La prise en charge par l'Etat du remboursement et du service
de credit IDA devrait permettra au FDI d'augmenter ses ressources permanentes desÂ
tinees i1 des prets industriels et de financer une assistance technique institutionÂ
nelle\. L'Etat financera aussi,jusqu'au 30 septembre 1983,la partie des frais admiÂ
nistrat:i\.fs du FDI qui ne sera pas couverte par ses recettes\. Cependant, une partie
des seI"',;-ices de consultants sera financee par la composante "assistance technique
institut::ionnelle tl (para\. 3\.35-3\.36); Ie solde inutilise de cette composante sera aussi
ajoute c;IUX ressources du FDI pour etre reprete\. Enfin, pour assurer la liquidite du
FOI, la BRH lui fournira jusqu'a 1 million de dollars-equivalents sous forme de
finance1!lent interimaire, en cas de besoin, pour permettre au FDI de financer les
retraits de fonds imprevus et de prefinancer les sous-projets individuels en attendant
Ie refinancement de l'IDA\.
Tableau 3\.1 : Sources de Financement du Projet
(En millions de dollars US)
Total Pourcentage
FDI
Contribution de 1 'Etat Haitien 1\.0 10%
IDA (composante credit seulement) 6\.0 60%
7\.0 70%
Intermedi\.aires financiers et entreprises 3\.0 30%
Investissement total 10\.0 100%
Assistance technique institutionnelle IDA 1\.0
Cout total du projet 11\.0
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3\.14 Les couts du projet comprennent l'equivalent d'un million de dollars US
pour financer une assistance technique institutionnelle en faveur du FDI, du
Departement de Supervision de la BRH et de l'ONAPI (paras\. 3\.35-3\.38)\. Les
avances au titre de la preparation du projet aurotisees par l'IDA a concurrence de
375\.000 dollars US sont comprises dans ce montant (para\. 4\.01)\. La repartition
initiale du solde qui s'eleve a 625\.000 dollars US, se presente comme suit:
150\.000 dollars US pour l'ONAPI, 250\.000 dollars US pour le FDI, 100\.000 dollars US
pour le Departement d'Inspection de la BRH, et 125\.000 dollars US qui ne sont pas
affectes\.
3\.15 Operations et resultats escomptes\. Le FDI fonctionnera comme un fonds
renouvelable (revolving fund) ou tous les remboursements de prets initiaux seront
recycles dans les deblocages au titre de nouveaux prets\. Avec des ressources iniÂ
tiales de 7 millions de dollars US (para\. 3\.13), le FDI debourserait en moyenne
2 millions de dollars US par an pendant les quatre premieres annees de fonctionneÂ
ment\. Lors de la 4eme annee, on prevoit qu'il obtiendrait des ressources suppleÂ
mentaires aux memes conditions que celles du Credit IDA\. La marge brute annuelle
moyenne varierait entre 11 et 12% des actifs moyens totaux et le revenu net atteinÂ
drait 6% en 1984 (Annexe 4, T-4)\. Les pertes sur garanties sont estimees a 10% du
portefeuille garanti total, ou 4% de l'ensemble du portefeuille du FDI; cependant,
l'experience pourrait montrer pertes moindres\. Neanmoins, le FDI gardera,au debut,
l'equivalent de 4 a 5 mois de deboursement sous forme liquide, principalement comme
reserves contre les pertes eventuelles\. On prevo it aussi que 20% du benefice net du
FDI servira a subventionner des programmes speciaux d'assistance technique suscepÂ
tibles de developper le secteur industriel\.
C\. Financement des Sous-Projets
Categories et taille de prets subsidiaires
3\.16 En accord avec sa Declaration de politique generale, le FDI ne financera que
des entreprises privees industrielles, saines, et appartenant a des Hattiens (para\.
3\.07)\. A cause de la nouveaute du systeme de credit propose, il est impossible de
compiler une liste de projets individuels qui recherchent un financement FDI\.
Cependant, puisqu'au debut, le FDI financera surtout des expansions d'entreprises
existantes, il est probable que le type de sous-projets finances corresponde aux
principaux sous-secteurs de l'industrie\. Les concours du FDI devraient donc beneficier
principalement aux sous-secteurs alimentation et boisson, suivi du cuir et de l'habilÂ
lement, des textiles et de la construction\.
3\.17 En fonction des objectifs du projet, et de la petite taille de l'economie
hattienne, les prets subsidiaires du FDI seront limites a 250\.000 dollars US (para\.
3\.08)\. Pour encourager les intermediaires a financer les PME, les prets subsidiaires
sont classes en trois categories, dont chacune est plafonnee a un certain montant
(para\. 3\.21)\.
3\.18 Repondant aux besoins des PME, leFDIaccordera sur une base limitee, des prets
subsidiaires independants pour financer des matieres premieres et des stocks d'invenÂ
taires\. Dans ce cas, le montant maximum par client n'excedera pas l'equivalent de
45\.000 dollars US\. Le montant maximum consolide des concours pour fonds de roulement
accordes sur les fonds IDA ne depassera pas 30% des res sources initiales dont le FDI
dispose pour des operations de prets (soit environ 2\.1 millions de dollars US)\. En
outre, cette meme limite de 30% sera appliquee a des projets comprenant a la fois du
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fonds de roulement et des immobilisations\. Finalement, les etudes de pre-investisseÂ
ment et les prestations d'assistance technique liees a des projets d'investissements
ou destinees a ameliorer l'exploitation d'une entreprise donnee seront aussi admises
au refinancement\.
Conditions des prets
3\.19 Les concours du FDI auront une duree maximale de 10 ans (15 ans dans des cas
exceptj,onnels), avec un differe d' amortissement du principal pouvant aller jusqu' a
3 ana; mais leur duree moyenne devrait se situer aux environs de 6 ans\. La duree et
la per:!,ode de grace consentie dependra de la nature des sous-projets et du cash-flow
de l'entreprise emprunteuse\. Dans Ie cas de prets subsidiaires pour fonds de rouleÂ
ment (matieres premieres et financement des sotcks) ou de contrats d'assistance
technique, la periode de remboursement pourrait aller jusqu'a deux ana, et la periode
de grace jusqu'a six mois\.
3\.20 Pour encourager les intermediaires financiers a financer 1es PME, Ie FDI leur
consent ira une marge plus forte sur les petits prets\. Cependant, pour promouvoir la
competition et respecter 1es conditions du marche, la marge des intermediaires sera
exprimef\.~ en fraction du taux d'interet exige des beneficiaires, qui sont soumis a 1a
politiql\.le des taux d'interet de 1a BRR (para\. 2\.08)\.
3\.21 Le FDI refinancera au maximum 70 a 90% des prets consentis par les intermeÂ
diaires selon leur categorie; les prets subsidiaires 1es plus petits beneficieront
du pourc::entage Ie plus eleve\. En fonction de ces criteres, les plafonds et les
pourcentages de refinancement par Ie FDI et les marges des intermediaires seront
'les suivants :
Cadgorie Montant a reescompter Pourcentage maximum Marge des
d'operations de par Ie FDI de reescompte par 1e FDI intermediaires
reescompte des prets des interme financiers
diaires
I 50\.000 dollars US 90% 1/3 de l'interet
facture au beneÂ
ficiaire final\.
II de 50\.000 dollars US 80% 1/4 de l'interet
a 150\.000 dollars US facture au beneÂ
ficiaire final\.
III de 150\.000 dollars US 70% 1/6 de l'interet
a 250\.000 dollars US facture au beneÂ
ficiaire final\.
3\.22 les intermediaires ainsi remuneres devront payer les interets et rembourser
Ie capital de tous les prets subsidiaires refinances par Ie FDI, a l'exception des
impayes sur les prets subsidiaires garantis (para\. 3\.24)\. Tous les prets subsidiaires
FDI seront libelles en gourdes; l'Etat a accepte d'assumer Ie risque de change sur Ie
Credit emrisage\.
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3\.23 Les taux d'interet factures par les intermediaires financiers sont soumis
aux limites etablies par la BRH pour les banques commerciales, limites qui sont
periodiquement revisees pour tenir compte des conditions du marche\. En ce moment,
la BRH a institue untaux minimum de 14% et un taux maximum de 18% par an\. Ainsi,
Ie taux d'interet applicable aux beneficiaires finaux sera compris entre ces limites\.
Le taux reel paye par les beneficiaires finaux moins la marge de l'intermediaire
donnera Ie taux d'interet facture par Ie FOI aux intermediaires\. Ainsi, pour
encourager Ie credit aux PME, Ie taux de refinancement aupres de FOI dependra du taux
d'interet paye par Ie beneficiaire de chaque pret subsidiaire\. Les taux d'interet de
la BRH seront periodiquement examines par 1 'IDA et modifies d'un commun accord entre
l'IDA et la BRH en fonction des conditions du marche et des tendances inflationistes\.
De toute fa~on, cet examen sera fait systematiquement lors du controle de l'utilisaÂ
tion des ressources du FOI (para\. 3\.9)\. Les taux d'interets sont actuellement posiÂ
tifs en termes reels (para\. 2\.09) et bien que 1 'inflation puisse atteindre environ
15% en 1981, ils devraient rester positifs pendant la periode de deboursement (quatre
ana) du Credit IDA\.
Conditions et limites applicables aux garanties
3\.24 Pour encourager les intermediaires financiers a consentir des prets a moyen
et long terme aux PME, Ie FOI leur fournira sur demande des garanties en meme temps
que les prets subsidiaires specifiques FDI\. Les operations de garantie ne seront
consenties que pour les deux premieres categories d'operations de reescompte (para\.
3\.21)\. Mais, leur couverture sera limitee a une portion du principal reescompte
aupres du FOI\. Les intermediaires financiers paieront au FOI une commission de
garantie payable en meme temps que les echeances des prets subsidiaires FDI mais qui
ne sera pas repercutee sur les entreprises emprunteuses\. Toujours pour encourager
les intermediaires a financer les petites entreprises, les prets les plus petits
seront mieux couverts\. La couverture maximum et les commissions de garantie seront
les suivantes :
Categorie d Montant reescomptable Couverture maximum Commission de garantie
d'operation aupres du FOI de la garantie
de reescompte
I jusqu'a 50\.000 dollars US Jusqu'a 75% du prin- 1/8 de l'interet facture
cipal reescompte par au beneficiaire final\.
la FOI
II de 50\.000 dollars US Jusqu'a 60% du prin- 1/8 de l'interet facture
jusqu'a 150\.000 dollars US cipal reescompte par au beneficiaire final\.
la FOI
III de 150\.000 dollars US Non disponible
jusqu'a 250\.000 dollars US
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3\.25 Pour maintenir Ie risque assume par Ie FOI sur son portefeuille a un niveau
acceptable, Ie montant maximum des garanties que peut accorder Ie FOI est limite a
40% de tous ses actifs financiers (disponible et portefeuille de prets subsidiaires)\.
De plus, pour proteger la liquidite du FOI des garanties douteuses, sa direction
maintiendra sous une forme disponible, un montant egal a 25% des encours garantis\.
En fonction de l'experience acquise\. ce pourcentage sera abaisse si l'un peut prouver
que les pertes reelles sont inferieures\. Le Directeur du FOI suivra attentivement
Ie portefeuille de garanties pour s'assurer que ces pertes sont maintenues a un
niveau minimum\.
3\.26 Les demandes de garanties seront faites en meme temps que les demandes de
reesconlpte\. L' approbation du FOI sera basee sur des criteres d' e1igibilite et
l'evalu,ation du risque\. Les principaux criteres d'e1igibilite pour les garanties
sont le\.s suivantes :
(a) les beneficiaires finaux doivent avoir un ratio d'endettement infeÂ
rieur a 3:1 et un ratio de couverture du service de la dette pendant
la periode d'amortissement du pret reescompte d'au moins 2:1;
(b) ils n'ont pas d'impayes;
(c) les garanties n'entrainent pas d'operations de refinancement partiel
ou total; et
(d) Ie risque total du FDI en matiere de garantie est limite a 90\.000
dollars US par beneficiaire (cela n'a rien a voir avec Ie montant des
encours de credit consentis au meme beneficiaire (para\. 3\.08)\.
Evaluati\.:m et supervision des sous-projets
3\.27 T\.a complexite et la taille des sous-projets finances par Ie FOI peuvent varier\.
Cependant, des procedures d'evaluation simplifiees sont en cours d'elaboration pour
tenir compte de la taille des prets subsidiaires refinances aupres du FDI et de la
capacite limitee des etablissements financiers a evaluer des projets\. Les intermeÂ
diaires financiers, en collaboration avec les beneficiaires,seront responsables de
l'evaluation simplifiee dessous-projets\. Le FDI examinera et approuvera toutes les
requetes de reescompte et de garantie\. mais la profondeur de cet examen dependra du
montant de son engagement\. D'une maniere generale, les demandes soumises par des
intermedtaires comprendront la description sommaire du projet et de ses besoins de
financeme,nt et l'information requise pour (1) verifier les criteres d' eligibilite au
reescompte et aux garanties, et (2) evaluer Ie risque des garanties eventuelles\. Le
FDI fera l'analyse economique des projets de la categorie III qui sera incluse dans
leur evaluation\. Le formulaire type comprendra aussi la liste des biens et marchanÂ
dises soumis au FDI pour refinancement\.
3\.28 Les intermediaires financiers seront responsables de la supervision des
entreprises beneficiant des concours du FDI et garderont les informations necessaires
au suivi des sous-projets\. Les responsabiliUis des intermediaires en matiere de
supervision seront clairement specifiees dans les accords de participation que les
intermediaires seront appeles a signer avec la BRH\. Le Departement d'inspection de
la BRR collaborera etroitement avec Ie personnel du FDI; il lui transmettra des
informations concernant les intermediaires financiers et lui fournira des rapports
- 20 Â
d'evaluation periodiques\. Une attention particuliere sera portee sur les operations
financees par le FDI, specialement les operations de garantie\. Neanmoins , en cas
de besoin, le personnel du FDI pourra chercher des informations speciales aupres des
intermediaires en prenant soin de ne pas empieter sur les fonctions du Departement
d'Inspection de la BRE\.
Intermediaires financiers agrees
3\.29 Toutes les banques commerciales et de developpement legalement etablies en
Haiti peuvent etre admises a participer au systeme de reescompte et de garantie\.
Un etablissement agree doit cependant se conformer aux criteres d'eligibilite de la
BRH qui limite a 25% la part du portefeuille affectee par des arrieres\. Les etablisÂ
sements financiers autorises a collaborer avec la FDI signeront un accord de particiÂ
pation : elles s'engagent ainsi a respecter les objectifs du projet et a proteger les
ressources du FDI\. Entre autre, cet accord de participation exigera des intermeÂ
daires financiers (a) qu'ils respectent les objectifs et la reglementation du projet;
(b) qu'ils supervisent les sous-projets pour s'assurer de leurs progres et, surtout
en cas de garantie, du remboursement des prets; (c) qu'ils adherent aux conditions
d'octroi et de remboursement des prets; (d) qu'ils rendent compte periodiquement et
gardent des informations adequates sur les sous-projets finances par l'IDA; (e)
qu'ils fournissent au FDI et a l'IDA les informations qu'ils pourraient raisonnableÂ
ment demander\. La reception, par l'IDA, de la copie d'un accord de participation
satisfaisant conclu entre la BRE et au moins deux intermediaires financiers sera une
condition d'entree en vigueur du credit\.
3\.30 Quatre banques privees qui pourraient devenir eligibles ont exprime leur
interet pour le projet\. Des quatre banques privees restantes, deux sont presque des
oanques "de gros" et deux ne satisferont probablement pas les criteres d'eligibilite\.
En outre, les etablissements d'Etat, la BNC et l'IDAI, ont des problemes de liquiÂ
dite, et beaucoup de creances douteuses en portefeuille; ils ont besoin d'ameliorer
leur organisation et leur gestion; il est donc probable que ces institutions ne
soient pas en mesure de satisfaire les criteres d'eligibilite de la BRE\. D'un autre
cote, l'IDAI dispose actuellement de ressources provenant d'autres sources et la BNC
aurait besoin de disponibilites internes supplementaires a terme pour financer la
part des prets que 1e FDI ne pourrait pas reescompter\. Toutefois, les etablissements
financiers publics interesses qui ne satisfont pas encore les criteres d'eligibilite
devraient preparer et executer un programme, agree par Ie FDI et l'IDA pour ameliorer
leur gestion, leur organisation et leur situation financiere\. Un programme de cette
nature pourrait expliquer comment l'etablissement entend ramener son portefeuille
affecte par des arrieres a 25% en l'espace d'une annee (pendant laquelle il serait
admis provisoirement,mais seulement au reescompte) et a environ 10% a la fin de la
troisieme annee et pour les annees suivantes\.
D\. Assistance Technique
Assistance aux beneficiaires finaux
3\.31 Le FDI cherchera a promouvoir la mise en place, par des organismes qualifies
et/ou des consultants, de programmes d'assistance technique pour les petites et
moyennes entreprises eligibles\. A cette fin, le FDI affectera, en temps opportun,
jusqu'a 20% de ses benefices nets au financement de tels programmes sous forme de
subventions\. L'objectif principal des services d'assistance technique est d'aider
- 21 Â
les petits entrepreneurs a acceder aux credits du FDI par l'intermediaire des
intermediaires financiers et de faciliter Ie developpement et l'amelioration des
entreprises haltiennes, particulierement celles qui sont dans les sous-secteurs
prioritaires\.
3\.32 Le Conseil d'Administration de la BRH, en accord avec l'IDA, etablira les
regles de coordination et de financement des programmes d'assistance technique sur
les benefices du FDI\. 11 examinera et approuvera, apres avoir entendu l'opinion du
Comite de Surveillance du projet, les propositions precises qui seront soumises par
des organismes et/ou des consultants qualifies\. L'administration des ressources
destinees aux programmes d'assistance technique sera aussi confiee au FDI\. Cette
tache s,~ra confiee a un cadre du FDI (assiste par Ie consultant) qui sera responsable
de 1 'elaboration des propositions prikises d 'assistance technique soumises au Conseil
d'Admin:::'stration de la BRH et de la coordination avec les autres bailleurs d'assisÂ
tance technique\. Les propositions approuvees et financees par Ie FDI seront executees
par l'organisme concerne dans Ie cadre d'un simple arrangement contractuel avec Ie
FDI\.
3\.33 Pendant les deux premieres annees de l'execution du projet, les programmes
d'assistance technique du FDI seront essentiellement mis au point et executes par
l'ONAPI, en accord avec Ie FDI, et l'IDA\. Les besoins de financement de ces proÂ
grammes seront principalement couverts par des dotations budgetaires de l'Etat a
1 'ONAPI, mais quelques services de consultantsseront necessaires pour renforcer les
competences techniques de l'ONAPI (para\. 3\.38)\. La signature du premier accord de
cooperation technique, conclu entre l'ONAPI et Ie FDI et agree par l'IDA, sera une
condition des deboursements en faveur de l'ONAPI\. Les premiers programmes de
l'ONAPI probablement chercheront a aider les petits entrepreneurs a preparer et
soumettn~ des demandes de credit aux institutions financieres locales\. Des proÂ
grammes de formation elementaire a la gestion dans des domaines comme la finance, la
comptabi::\.ite, Ie marketing, Ie contrSle et la planification de la production seront
aussi em:ourages\. Quelques services de consultants specialises seront aussi mis a
la disposition d'entreprises specifiques dans les secteurs prioritaires\. Un personnel
professicmnel minimum sera affecte par l'ONAPI a la mise en place de ce programme\.
3\.34 En plus des programmes generaux d'assistance technique, les entreprises indiÂ
viduellenlent eligibles pourraient obtenir des prets subsidiaires dans Ie cadre du
projet pour contracter directement les services de consultants\. Bien que cet arranÂ
gement ne devrait couvrir qu'une faible partie de la demande de credit, ces prets
subsidiai\.res permettraient a des entreprises industrielles de financer les ameliorations
technolog:iques ou manage\.riales susceptibles d'augmenter leur productivite\.
Assistancli~ technique institutionnelle
3\.35 Lo:! projet envisage prevoit 1 million de dollars US pour une assistance
technique au FDI, au Departement d'Inspection de la BRH et a l'ONAPI, y compris les
375\.000 dollars US deja autorises au titre de l'avance pour la preparation du projet
(para\. 4\.01)\. Un montant de 125\.000 dollars US n'a pas ete affecte; il pourra etre
utilise pClur des besoins d' assistance technique identifies pendant l' execution du
projet\. A l'exclusion du montant non-affecte, 84 hommes-mois de services de consulÂ
tants sont inc1us dans Ie projet, pour un coutmoyenglobal de 6\.000 dollars US par
homme-mois\. Cette assistance institutionnelle contribuera a l'execution du projet en
renfor~ant la competence des institutions responsables de sa realisation\. Tous les
consultant\.s et les contrats devront etre acceptes par 11 IDA\.
- 22 Â
3\.36 Le FDI\. Le projet financera des services de consultants pour assister Ie
personnel du FDI car il est difficile de trouver des cadres qualifies en Haiti\.
Initialement un consultant de formation economique et financiere aidera Ie perÂ
sonnel du FDI a evaluer et examiner les projets et a superviser les beneficiaires
et, occasionnellement, les intermediaires financiers\. Des services de consultants
a court terme seront requis pour l'execution du projet et pourront aussi etre
finances dans Ie cadre du projet\. Les termes de reference des consultants que
pourrait embaucher Ie FDI devront etre acceptes par l'IDA\. Un montant total de
250\.000 dollars US a ete affecte a la prise en charge du coat total des services
de consultants\.
3\.37 Le Departement d'Inspection de la BRH\. Le FDI recherchera la cooperation du
Departement d'Inspection de la BRH pour evaluer la situation financiere des interÂ
mediaires financiers et assurer la supervision complete de ces etablissements\.
Cependant, la conception d'un systeme de contrale des etab~issements financiers (qui
est quasiment inexistant)\. et la formation du personnel du Departement d'Inspection
de la BRH, exigeront des services de consultants, quelques depenses de formation et
un peu de materiel de bureau\. Le EMI a recemment nomme comme consultant un inspecteur
des banques experimente\. II pourrait etre partiellement finance dans Ie cadre du
projet envisage, pour mettre au point un programme detaille d'assistance technique
au Departement d'Inspection de la BRH et, sur requete du Gouverneur de la BRH, pour
faire des recommandations sur l'egibilite des intermediaires financiers, la fonction
de supervision du projet par la BRH, Ie contrale interne et l'audit des operations
du FDI\. En principe, 100\.000 dollars US ont ete initialement affectes au financement
de l'assistance technique pour Ie Departement d'Inspection de la BRH\. Les termes de
reference des consultants supplementaires destines au Departement d'Inspection de la
BRH,qui pourraient etre finances dans Ie cadre du projet,devraient etre acceptes par
l'IDA\.
3\.38 L'ONAPI\. A cause de l'experience limitee de son personnel l'ONAPI a aussi
besoin de services de consultants pour mettre en place Ie programme initial d'assisÂ
tance technique aux beneficiaires finaux, diagnostiquer son organisation et concevoir
Ie developpement de ses pol1tiques d'assistance technique\. L'ONAPI a engage un
consultant local acceptable a l'IDA pour une periode de quatre mois, pour entreprendre
ces taches\. Le Credit IDA envisage prevoit 150\.000 dollars US pour financer les besoins
en consultants de l'ONAPI; ce montant devra etre revise quand Ie consultant local de
l'ONAPI presentera ses conclusions vers Ie mois d'avril 1981\.
IV\. LE CREDIT ENVISAGE
A\. L'Administration du Credit
Montant et conditions
4\.01 Le Credit de 7 millions de dollars US qui est envisage comprend une ligne de
credit a l'industrie de 6 millions de dollars US et 1 million de dollars US d'assisÂ
tance technique dont 375\.000 dollars US ont ete avances au titre de la preparation
du projet\.l/ La composante "assistance technique" a pour but de renforcer l'ONAPI et
Ie Departement d'Inspection de la BRH ainsi que d'organiser Ie FDI et former son
200\.000 dollars US de l'avance au titre de la preparation du projet ont ete engages
en faveur de la firme de consultants qui met au point les politiques et procedures
du FDI; Ie solde peut etre utilise pour financer les services de consultants pour
l'ONAPI et la BRH, en attendant la mise en vigueur du credit envisage\.
- 23 Â
personnel (para\. 3\.35-3\.41)\. Toute ressource affectee a l'assistance technique qui
ne sera pas utilisee sera remise a disposition du FDI pour completer la ligne de
credit a l'industrie\. La composante "credit industriel" de 6 millions de dollars US
sera retrocedee par l'Etat au FDI sous forme de fonds propres\.
4\.02 Conditions et limites des prets subsidiaires\. Les fonds du Credit IDA
seront retrocedes a des intermediaires qui les repreteront sous forme de prets subsiÂ
diaires, normalement pour une duree de 1 a 10 ans\. Les pr~ts subsidiaires paieront un
interet compris dans la fourchette imposee par la BRH aux banques commerciales
(qui est actuellement de 14 a 18%), ces taux seront periodiquement examines par la
BRH et l'IDA\. Les intermediaires financiers qui participeront au projet toucheront
une marge de 1/3, 1/4 ou 1/6 de l'interet facture au beneticiaire final, selon la
tal1le du pret subsidiaire\. La marge brute du FDI, qui est d'environ 12%, vu les
taux d'interet en vigueur, sera utilisee pour couvrir les depenses administratives
et, apres les deux premieres annees des operations du FDI, pour augmenter les resÂ
sources du FDI destinees au financement de l'industrie, couvrir les pertes eventuelles
des operations de garantie et financer des programmes d'assistance technique aux PME\.
Le montant maximum des prets subsidiaires du FDI sera de 250\.000 dollars US\. Les
quatre premieres operations de chaque intermediaire financier devront etre approuvees
par l'D)A\. Le FDI soumettra a l'IDA, pour approbation, une copie de leurs rapports
critiques sur les evaluations standard preparees par les intermediaires (para\. 3\.27)\.
Apres que ces premiers rapports aient ete approuves, cas par cas, Ie Directeur du
FDI demandera l'autorisation de l'IDA des sous-projets par lots d'un montant minimum
d'environ 200\.000 dollars US\. Chaque demande d'autorisation comprendra la liste des
sous-projets classes par branche industrielle, et pour chaque sous-projet, une breve
description, Ie montant et les conditions de pret consentis, les depenses a\. financer,
Ie nom de l'intermediaire financier qui l'accorde et la date de sou~ission de la
demande de reescompte aupres du FDI\. La date finale de soumission des requetes pour
Ie finar:\.cement des sous-projets dans Ie cadre du Credit IDA sera Ie 31 janvier 1985\.
4\.03 Procedures d'achat\. Le FDI et les intermediaires qui participeront au
projet vÂerifieront que les articles achetes sont conformes au projet d'investissement
en question, que leur prix est raisonnable, que les beneficiaires ont examine les
principales sources d'approvisionnement et qu'ils ache tent aupres du fournisseur Ie
plus avantageux\. Les articles importants seront normalement achetes sur la base de
plusieurs offres, selon les methodes utilisees habituellement dans les projets de type
SFD\. Les services de consultants et de formation seront ouverts a un recrutement
internat:::'onal et pourront etre finances entierement par Ie Credit, a condition que
les consultants, leurs termes de reference, et les conditions de leur contrat aient
ete approuves par l'IDA\.
Retraits de fonds
4\.04 IDA remboursera Ie FDI a convenance de 86% des deblocages consentis en faveur
des prets subsidiaires approuves, sur presentation de demandes de retrait de fonds
pleinement documentees\. Avec un tel pourcentage de remboursement, l'IDA devrait
financer, en moyenne, Ie cout en devises des sous-projets estime a 60-65%\. L'IDA
remboursera Ie FDI pour les depenses faites moins de 90 jours avant la soumission de
la demande de reescompte par les intermediaires financiers au FDI\. Pour l'assistance
technique institutionnelle, les fonds IDA seront debloques sur documentation complete
et couvri:::'ont 100% des depenses totales\. La date de cloture pour les deboursements
sera Ie 30 juin 1985 (Annexe 3, T-2)\.
- 24 Â
4\.05 Pour enregistrer les operations de reescompte, Ie FDI creera\.un compte
special de projet au nom de chaque intermediaire\. Le FDI et les intermediaires
financiers feront verifier leurs comptes par des reviseurs comptables reputes selon
des principes comptables acceptes par l'IDA\. Cependant, Ie FDI sera aussi soumis
au controle du controleur de la BRR\.
B\. Avantages et risques
4\.06 Le projet envisage favorisera l'extension du secteur industriel, l'amelioÂ
ration de son efficacite et la creation d'emplois grace a la fourniture de ressources
a moyen et long terme ( qui sont actuellement tres rares en Haiti) et d'assistance
technique\. Les incitations prevues dans Ie projet provoquent une distortion en
faveur des petites et moyennes entreprises\. Rendus ainsi plus accessibles, les
fonds contribueront a leur developpement\. Le Credit IDA devrait contribuer a la
creation d'au moins 2,000 emplois supplementaires directs, puisqu'initialement,
la plupart des sous-projets seront des extensions\. Le projet renforcera aussi la
gestion par la BRR des taux d'interets, renforcera sa capacite a evaluer la perforÂ
mance des intermediaires financiers et renforcera les competences professionnelles
de l'ONAPI pour qu'il fournisse de l'assistance technique aux petites et moyennes
entreprises\. Le projet offrira la possibilite d'intensifier Ie dialogue entre l'IDA
et Ie gouvernement sur les politiques industrielle et financiere\. II contribuera a
renforcer la competence des etablissements financiers publics puis que ces dernieres
devront suivre un programme acceptable a l'IDA (para\. 3\.30) pour pouvoir beneficier
des operations de reescompte du FDI\.
4\.07 Par beaucoup d'aspects, Ie projet est un projet pilote et les risques
inherents a la creation d'un nouveau systeme en Haiti sont relativement eleves, part iÂ
culierement les risques lies a la direction et au personnel du FDI, et a la promotion
requise des Ie demarrage du systeme: Ceci est particulierement vrai dans Ie cas de
Haiti ou les cadres competents sont rares\. De plus, les institutions financieres n'ont
pas l'experience de ce type de credit, et malgre les incitations prevues au projet,
elles pourraient ne pas accomplir l'effort intense de promotion du systeme, freinant
ainsi l'execution du projet\. En outre, la capacite de la BRR a superviser la proÂ
fession bancaire est encore en cours d'elaboration et cela pourrait aussi retarder
l'execution du projet\. Toutefois, ces risques devraient etre considerablement
reduits par (a) la nomination d'un directeur competent au FDI; (b) les contacts
etroits prevus entre Ie FDI et l'IDA pendant l'execution du projet, et (c) les efforts
actuels du FMI pour doter la BRR des moyens qui lui permettront d'entreprendre son
role de supervision\. Le besoin de garder les rapports d'evaluation des projets tres
sommaires pourra constituer un risque supplementaire dans la mesure aU il pourrait
etre difficile de s'assurer que seuls des projets viables et economiquement favorables
ont ete finances\. Cependant, la fonction de controle exercee par Ie FDI devrait reduire
progressivement ce risque et ses repercussions possibles sur les remboursements des
prets secondaires et les pertes eventuelles du fonds de garantie\. Bien que Ie risque
global concernant les garanties ait ete limite (para\. 3\.25), Ie fonds de garantie preÂ
sente des risques supplementaires qui sont assumes afin de promouvoir l'octroi de
credit aux entreprises petites et nouvelles\. Les services de vulgarisation limites
mis a la disposition des petites et moyennes entreprises devraient favoriser Ie succes
de quelques-unes d'entre-elles, et reduire ainsi Ie risque inherent a ces operations\.
- 25 Â
V\. ACCORDS ET RECOMMANDATIONS
5\.01 Pendant les negocia\.tions du credit, un accord a ete atteint ou confirme sur
les elements suivants
(a' Avec Ie gouvernement d'Haiti et la BRH, sur :
(i) les termes, conditions et procedures pour mettre les fonds du
Credit IDA a la disposition du FDI sous forme de res sources
permanentes (para\. 3\.13), les taux d'interets sur les prets
subsidiaires (para\. 3\.21 et 3\.23), la prise en charge du
risque de change par Ie gouvernement (para\. 3\.22), les exigenÂ
ces en matiere d'approbation de sous-projets (para\. 4\.02), la
couverture maximale des garanties (para\. 3\.24-3\.26), les
engagements et les retraits de fonds (para\. 4\.04);
(ii) l'octroi au FDI d'un million de dollars US equivalents comme
fonds de contrepartie, dont Ie premier versement devrait etre
fait avant la mise en vigueur du credit, et Ie solde regIe
sur appels de fonds du FDI, mais en tout cas avant Ie 31
octobre 1983, (para\. 3\.13); et la prise en charge par l'Etat
des frais administratifs du FDI jusqu'au 30 septembre 1983
(para\. 3\.13);
(iii) Ie decret-loi autorisant la creation du FDI au sein de la BRH,
et l'autorisant de fonctionner en accord avec sa Declaration
de politique (para\. 2\.15 et 3\.05);
(iv) Ie premier programme d'assistance technique a preparer et
realiser par l'ONAPI et Ie contenu des accords de cooperation
technique a signer entre l'ONAPI et Ie FDI; ils doivent etre
soumis a l'IDA, pour examen et accord, apres que Ie consultant
qui etudie actuellement l'organisation de l'ONAPI ait termine
son travail vers avril 1981 (para\. 3\.33); et
(v) la nomination des membres du Comite de Surveillance du projet
et l'adoption formelle de ses statuts\. dont Ie fonds et 1a
forme doivent etre acceptes par l'IDA\. pas plus tard que Ie
30 septembre 1981 (para\. 3\.12)\.
(b) Avec Ie BRH, sur :
(i) Ie contenu et l'etat du decret-loi creant Ie FDI au sein de
la BRH, dote d'une organisation et d'un personnel propre, de
ressources financieres, d'une comptabilite et d'un contrale
separes (para\. 3\.05 et 3\.13);
(ii) la declaration de politique generale du FDI (para\. 3\.06),
comprenant les procedures de base pour les operations du FDI,
qui seront detaillees dans son Manuel d'Operations (para\. 3\.11);
(iii) Ie contenu de l'avant projet d'accord entre la BRH et les
intermediaires financiers qui participeront au projet (para\. 3\.29);
- 26 Â
(iv) les criteres d'eligibilite pour les intermediaires financiers
qui participeront au projet (para\. 3\.29 et 3\.30) et l'assisÂ
tance destinee a forcer les competences du Departement de la
BRH charge de l'inspection des etablissements financiers
(para\. 3\.37);
(v) l'assurance que des concours temporaires, a convenance d'un
million de dollars US seront mis a disposition du FDI pour
assurer le deblocage satisfaisant des prets subsidiaires par
le FDI en faveur des intermediaires financiers qui particiÂ
peront au projet (para\. 3\.13); et
(vi) le contrale de la repartition des concours du FDI entre les
differents sous-secteurs industriels, y compris les petites
et mayennes entreprises (para\. 3\.09)\. Le premier contrale
sera effectue quand les engagements du FDI auront atteint le
tiers du Credit IDA\.
5\.02 Les conditions d'entree en vigueur du credit sont :
(a) le paiement par le gouvernement de la premiere partie des fonds de
contrepartie qui s'elevent a 250\.000 dollars US equivalents pour
completer les ressources du credit envisage (3\.13);
(b) la signature d'un accord de participation, acceptable a l'IDA sur le
fond et la forme, entre le FDI et au mains deux intermediaires
financiers (para\. 3\.29)\.
5\.03 La condition de deblocage en faveur de l'ONAPI est:
La signature du premier accord de cooperation technique, acceptable a l'IDA
sur le fond et la forme entre l'ONAPI et le FDI (para\. 3\.33)\.
Recommandations
5\.04 Avec les assurances et les conditions indiquees ci-dessus, le projet justifie
un Credit IDA de 7 millions de dollars-equivalents\.
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
Gross Domestic Product by Sector, 1970-79
(million of 1955 gourdes)
Average Annual
Growth
1970 1975 1976 1977 1978 1979 GDP
(%)
1960-70 1970-79
Agriculture 698\.9 809\.9 849\.3 823\.7 887\.7 869\.9 40 -0\.7 2\.5
Mining and Quarrying 28\.6 23\.6 32\.2 30\.9 28\.7 28\.7 1 5\.0 0\.0
Manufacturing 163\.8 206\.3 250\.7 268\.4 269\.5 291\.1 13 0\.6 6\.6
Construction 36\.8 82\.4 92\.2 98\.2 110\.3 119\.1 6 1\.8 13\.9
Public Utilities 21\.6 39\.1 48\.3 49\.9 46\.6 47\.0 2 3\.9 9\.0 N
"'-J
Transport and Communications 56\.8 49\.2 55\.1 68\.3 80\.0 85\.0 4 0\.0 4\.6
Commerce 164\.1 193\.0 223\.5 227\.6 238\.4 245\.5 11 -0\.6 4\.6
Banking and Insurance 7\.5 12\.3 15\.2 17\.0 17\.4 17\.0 1 -4\.2 9\.5
Housing 156\.8 169\.8 173\.0 176\.0 180\.0 182\.0 8 1\.6 1\.7
Government 122\.2 148\.8 142\.1 145\.2 150\.0 155\.0 7 2\.2 2\.7
Personal Services 103\.6 123\.9 132\.8 135\.0 142\.1 147\.0 7 1\.8 4\.0
GDP at market prices 1,560\.7 1,858\.1 2,014\.4 2,040 3 2,148\.8 2,187\.3 100 0\.2 3\.8
Source: IBRD Current Economic position and Prospects of Haiti, 1978, Institut Haitien de Statistique, and
IBRD Haiti Economic Memorandum, February 17, 1981\.
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HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
Number of Enterprises, Employment~/ and
Payrolls by Industrial Activity, 1976
Average Annual
Number of Location Payroll Wage/
Enterprises % Port-au Other Number of % (GIOOO) % Worker
Prince Locat Employees (GIOOO)
Ions
Food products 277 27\.9 147 130 4,476 24\.0 14,688 23\.7 3\.28
Beverages 240 24\.2 90 150 1,206 6\.5 4,009 6\.5 3\.32
Tobacco 1 0\.1 1 0 206 1\.1 2,054 3\.3 9\.97
Textiles 20 2\.0 15 5 1,636 8\.8 3,876 6\.2 2\.37 N
00
Clothing and footwear 126 12\.7 124 2 3,621 19\.4 9,748 15\.7 2\.69
Wood and cork
excl\. furniture 3 0\.3 3 0 25 0\.1 84 0\.1 3\.36
Furniture 41 4\.2 30 11 247 1\.3 616 1\.0 2\.49
Paper and printing 12 12\.2 11 1 126 0\.7 526 0\.8 4\.17
Leather excl\. manufacturers 17 1\.7 16 1 1,308 7\.0 3,982 6\.4 3\.04
Chemicals 32 3\.2 15 17 649 3\.5 1,661 2\.7 2\.56
Non-metallic minerals 30 3\.0 28 2 780 4\.2 4,782 7\.7 6\.13
Metal products excl\. machinery 23 2\.3 22 1 413 2\.2 1,683 2\.7 4\.08
Engineering products 26 2\.6 26 0 1,190 6\.4 5,355 8\.6 4\.50
Transport material 52 5\.3 46 6 423 2\.3 2,176 3\.5 5\.14
Others 92 9\.3 ~339 12\.5 6,809 11\.1 2\.91
Total 992 100\.0 574 326 18 645 100\.0 62 049 100\.0 3\.3
1-3 :PÂ
I
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Source: IBRD: Economic Position and Prospects of Haiti, 1978\. OFA1lMA\. :><
\.
a/ Covers only insured labor force as recorded by OFATMA\.
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
Manufactured Exports
(US millions)
Average Annual
Growth Rate %
1970 1971 1972 1973 1974 1975 1976 1977 1970-77
Wheat flour 0\.27 0\.25 0\.17
Wheat by-products 0\.27 0\.03 0\.67 0\.79 0\.76
Cement 0\.01 0\.06 2\.43 3\.15
Small Industries and
Handicrafts 6\.71 4\.60 6\.33 9\.07 9\.88 16\.10 13\.36 12\.85 9\.7
Others 1\. 27 2\.35 1\.40 2\.45 3\.33 4\.12 4\.03 15\.29 42\.7 N
\\.0
Export Processing
Industries 6\.80 12\.00 19\.60 32\.08 48\.14 60\.28 81\.36 84\.28 43\.3
Imported Input for Export
processing Industries (4\.00 ) 00\.20 ) 06\.70) (22\.80) 05\.50) (44\.30) (58\.90) (61\. 30)
Total (Gross) 15\.05 18\.95 27\.61 43\.60 62\.27 81\.52 101\.95 115\.57 33
Total (Net) 11\.05 8\.75 10\.91 20\.80 26\.77 37\.22 43\.05 54\.27 25\.5
Value Added by Export
Processing Industries 2\.8 1\.8 2\.9 9\.3 12\.6 16\.00 22\.46 23\.00 35\.1
% of Export Industries
(Net) 25\.3 20\.6 26\.6 44\.6 47\.1 43\.0 52\.2 42\.3
Source: IBRD Economic Memorandum on Haiti, February 17, 1981\. I1
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Banque Cormnerciale Natlonale Ilank of Hank of F! c"t Nat 101\a\ nf Nuva Private I'opulaire
Ad,set!> d'Hail\.i
___ ~ _ _ _ I3U!'il'JU ~ _____ ~ Chicaf!,u ~ ____ J:;U:tyI}ank SeOl ill , ,i\.:Q\.MdOl ~_~~\. ___ _
~ lIlAl
FlHeign exchange 112\.0 9\.1 43\.9 lJl\.rl 5043\.4 3JO\.0 109\. :J
Cash In 24\.1 452\. :\. 660\./j 528\.5 13,277\.5
BRH 52!\. t 'l\.l88\.7 22,087\.0 728\. S 1,000\.0
3,781\.2
1,2413\.4 84\.8 263\. '} 10,423\.0
5\.889\.7
Loa/ls: Short tcnn lLJ\.!\.U 24\.9
publlc sector B\.HH\.2
private sector ~- 24\.9 201\.273\.lj 16\.079\.9
Medium_term private aectt t 913\.1 31,412\. ')
Long_tern private $ector 613\.8 1\.191\.6 3,419\.6
Provisions for losses
investments 297,9 3\.818\.9 427\.3 5,634\.6
Real est ate 949\.1
Other
~
Total Assets ~~L_~Â_3\. lSl\.Sl\.,7 16\\.442, S t6,642\.0 ~~'CJ\.2 \. J1L\.645 \.6 ~R~4\.6 887,049\.2 72\.469\.8 IO\.&22 â¢\.~
Lic:tbilltiel<
r'orcign banks I" 11,542\.2 3, ]'}O\.O
CoverfUllent depos i ts
Private sectot deposits
,- ,'Dtllnand
Savings
Time
Local bank deposits
30/125\.7 Jy\.n '''O\.l!\.7\.0
1 "'ans 3S,OOO,0 II
Insurance A
Paid-up C T 5,000\.0 4,000\.0
Reserves en\. J 744,1
\.~;:-~'P-~-
Undistributed profits
Other 287\.7 0,4
Source: BRH 81)d lOAl\.
al Excluding aRI! 8lld BNt, IoIhose accrn\.u1tS are stitl combint:d w\.nuer SNRH account\.
bl Not com,o! idate:d\.
-;;/ The JII\.fIlllrJry of th~ lnf!\.06 is nOt reportl\.!d, however, it is esti\.mateu that rI'-\.Jst tn~ sbort-tt:nu \\.)anb\.
d/ Net investments\. includ:fn\.: loans to ent\.,rpr1BeS where investments are held\.
:!I
Ilbl"O
- 31 - nex 2
T-2
HAITI
STAFF APPRAISAL REPORT
nmUSTRIAL CREDIT PROJECT
Credit
Total Claims of the Financial S~stem
1975 1976 1977 1978 1979 % of 1979 Claims
1\.
Monetary Authorities ~/~I 482\.7 577 \.3 673\.2 842\.0 961\.9 59\.1
Private Banks 337\.8 380\.6 466\.3 553\.7 666\.7 40\.9
Total 820\.5 957\.9 1,139\.5 1\.395\.7 1,628\.6 100\.0 100\.0
II\. Total Claims on the Private Sector
Source
Monetary Authorities'~1 129\.2 155\.1 206\.5 251\.9 269\.2 29\.2 16\.5
Private Banks 322\.1 364\.6 451\.4 539\.6 652\.6 70\.8 40\.1
Total 451\. 3 519\.7 657\.9 791\.5 921\.8 100\.0 56\.6
III\. Total Claims on the Public Sector
Monetary Authorities ~I 353\.5 422\.2 466\.7 590\.1 692\.7 98\.0 42\.5
Private Banks 15\.7 16\.0 14\.9 14\.1 14\.1 2\.0 0\.9
Total 369\.2 438\.2 481\.6 604\.a 706\.8 100\.0 43\.4
IV\. Net Claims on Private Banks
Monet\.aD:\.~!\.tllOri t\.~
Assets 13\.3 13\.7 29\.9 31\.8 42\.4
Liabilities 101\.9 159\.5 174\.8 207\.3 209\.3
-88\.6 -145\.8 -144\.9 -175\.5 -166\.9 -10\.2
Source: BRH, IMF and mission estimates\.
al Consolidated and excluding unclassified assets and interbank float\.
bl Except crp\.oit to private banks\.
~I Net of official capital and surplus\.
- 32 -
ANNEX 3
T-I
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
FDI Main Assumptions in Financial Projections
IDA Credit US$ 6 million
Government Contribution US$1 million
Total US$ 7 million
Those resources would be allocated to FDI as permanent resources and would
be disbursed to FDI over a 4-year period\. (Annex 3, T-2: IDA Credit)\.
Additional resources with the same terms of US$0\.8 million in the 4th year
and U:3$2 million in the 5th year'are assumed\.
Subloans and Maturities
FDI would have basically two types of subloans as follows:
Subloan % Share in Maturity
Type Portfolio (Years) Grace Period
Raw Ma,terial 30 2 6 months
Integrated 70 6 1 year
Disbursements
Disbursements would take place in the same year of commitment since
loanslre small\.
Intere~;t Rates
The average interest rate to FDI is estimated at 12% based on the current
intere~!trates standing between 14 and 18% and the envisaged spreads for finanÂ
cial intermediaries\.
Administrative Expenses
Based on (i) a staff of 3 professionals and 2 support staff (increasing
to three in the second year) with an average annual salary of US$10,000 and
an estimated $20,000 for part of the Director's salary\. The other part of the
Director's salary may be financed by external assistance while consultants
- 33 Â
ANNEX 3
T-l
cost would be financed from the technical assistance funds allocated for
that in the Credit; (iil other administrative expenses for legal and
auditing services estimated at US$15,000 in the first year, (iii)
depreciation over five years of the FDI fixed assets estimated to have
an initial cost of US$lO,OOO\.
Guarantees
It is estimated that guarantees represent 40% of the total outstanding
portfolio at any time\. Also guarantee reserves, increasing to up to 25% of
the guarantee portfolio in the 4th year, would earn an annual interest of
10%\. Guarantee losses are estimated at 10% of\. guarantee portfolio and
written off starting from the second year of operations\. The guarantee
fee is estimated at 2% p\.a\. of the guarantee portfolio\.
ANNEX 3
- 34 - T-2
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
Estimated Schedule of Disbursements
of Proposed Credit
(US$ 1000)
Cumulative Disbursements at End of Quarter
Technical
IDA FLsca1 Year and Quarter IDA Assistance Total
FY 1982
Sept;'~mber 30, 1981 100 300 400
December 31, 1981 200 500 700
March 31, 1982 400 600 1,000
June 30, 1982 600 700 1,300
FY 1983
September 30, 1982 1,000 800 1,800
December 31, 1982 1,500 900 2,400
March 31, 1983 2,000 950 2,950
June 30, 1983 2,600 1,000 3,600
FY 1984
September 30, 1983 3,000 4,000
December 31, 1983 3,500 4,500
March 31, 1984 4,000 5,000
June 30, 1984 4,600 5,600
FY 1985
September 30, 1984 4,900 5,900
December 31, 1984 5,300 6,300
March 31, 1985 5,700 6,700
June 30, 1985 6,000 7,000
- 35 Â
ANNEX 3
T-3
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
FDI: Estimated Balance Sheet
(US$ '000)
Sept\.30 Sept\.30 Sept\.30 Sept\.30 Sept\. 30
1982 1983 1984 1985 1986
Assets
Cash 162 \. 775 1,155 1,282 1,478
Loan Portfolio 1,440 2,920 4,790 7,220 9,980
Net Fixed Assets 8 6 4 2 0
1,610 3,701 5,949 8,504 11,458
Liabilities and EguitX I
Long-term Liabilities~
Capital !!\.! 1,600 3,600 5,600 7,800 10,200
Reserves for Guar\. Oper\. 10 101 340 704 998
Surplus 260
Total Liab\. & Equity 1,610 3,701 5,949 8,504 11,458
al FDI would have no long term liabilities\. The IDA credit would be made
available by the Government as an equity type contribution\.
bl Estimates for the fourth and fifth years show additional resources
assumed to be acquired by the FDI under same terms\.
- 36 Â
ANNEX 3
T-4
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
FDI: Estimated Results of Operations
(US$ '000)
FYl982 FYl983 FY1984 FY1985 FY1986
Income
Interest Income 86 262 463 720 1,032
Gurantee Fees 6 17 31 48 69
Interest on Reserves 7 21 40 60 86
Total Income 99 300 534 828 1,187
Expenses
Administrative Expenses!!:\./ 85 98 108 123 138
Depreciatio~/ 2 2 2 2 2
WriteJffs - 87 114 240 344
Total Expenses 87 187 224 385 484
Net Income (loss) 12 113 310 443 693
Tech'lical Assistance~/ 2 22 62 88 139
Net revenue 10 91 248 355 554
Gurantee Reserve 10 91 248 355 294
Cumulative Guarantee reserveil/ 10 101 349 704 998
Surp:i,us 260
Average Total Assets (ATA) 805 2,656 4,825 7,227 9,981
Gross Spl'ead as % of ATA 12\.3 11\.3 11\.1 11\.5 11\.9
Net Income as % of ATA 1\.5 4\.3 6\.4 6\.1 6\.9
Administrative Expenses as % of ATA 10\.6 3\.7 2\.2 1\.7 1\.4
~/ Include the salary of FDI staff and other legal and auditing service
expen:,es\. The second year shows a full staff\. Administrative
expeni~es increase at about 12% p\.a\.
b/ Annual losses of the guarantee operations, assumed to start 1n the second
year, are estimated at 10% of the guarantee portfolio\.
c/ Techn::,cal assistance expenses are calculated at 20% of net income\.
d/ The reserve of the guarantee operation builds up until it reaches 25%
of the guarantee portfolio in the 4th year of operation\.
- 37 Â
ANNEX 3
T-5
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
FDI: Estimated Cash Flow
(US$ '000)
FY1982 FY1983 FY1984 FY1985 FY1986
Sources
Net Income 12 113 310 443 693
Loan Recovery 160 610 760 800 1,150
Depreciation a 2 2 2 2 2
Paid-in Capital~1 1,600 2,000 2,000 2,200 2,400
Total Sources 1,774 2,725 3,072 3,445 4,245
Uses
Loan Disbursements 1,600 2,090 2,630 3,230 3,910
Technical Assistance ProgramsQI 2 22 62 88 139
Fixed Assets 10
Total Uses 1,612 2,112 2,692 3,318 4,049
Total Sources Less USP1 162 613 380 127 196
Cumulative Cash level~ 162 775 1,155 1,282 1,478
~I Includes IDA credit\. It is assumed FDI would have additional capital
contributions amounting to US$0\.8 million in year 4 and US$2\.4 million in year 5\.
bl Technical assistance programs to priority subsectors (para\. 3\.34)\. These figures
do not include institutional technical assistance\. (para, 3\.38)\.
~I FDI liquidity required for disbursements and potential guarantee losses is
equivalent to an average of 4 to 5 months disbursements\. If required, one
million US$ bridge financing would be made available by BRH (para\. 3\.15)\.
- 38 Â ANNEX 4
HAITI
STAFF APPRAISAL REPORT
INDUSTRIAL CREDIT PROJECT
Selected Documents and Data Available
in the Project File
A\. General Reports
AI\. Enquete Sur L'Emploi Industriel\.
(PNUD/BIT/HAI/741014), Ministere des Affairs Sociales\.
Abril, 1980\.
A2\. Guide Economique de la Republique d'Haiti, Institut
Haitien de Statistique, Avril, 1977\.
A3\. Industrial Investment Code for the Republic of
Haiti, UNIDO, June, 1975\.
A4\. Loi Creant La Banque de la Republique d'Haiti\.
Le Moniteur, 16 Aout 1979\.
AS\. Opportunities and Obstacles to the Development
of the Private Sector in Haiti, M\.A\. Amsalem, Consultant,
March 27, 1980\.
A6\. Private Development Finance Company for Haiti,
Vol\. I\. ADELATEC, May, 1978\.
A7\. Project de Creation d'un Office National Pour la
Promotion des Investissements (ONAPI), April, 1979\.
A8\. Small Manufacturing and Repair Enterprises ~n Haiti:
Survey Results, Michigan State University, June,
1979\.
B\. Selec t:ed IDA-BANK Reports
⢠Bl\. Current Economic position and Prospects of Haiti,
Vol\. I and II\. World Bank Report No\. 2165-HA,
December 22, 1978 â¢
â¢
B2\. The Manufacturing Sector ~n Haiti, World Bank (draft),
November 6, 1979\.
C\. FDI Project Documents (preliminary drafts)\.
Gl\. FDI: Operating Policies and Summary Procedures\.
C2\. FDI: Organizational Aspects
C3\. FDI: Operating Manual
\.
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- | APPROVAL |
P005406 | Document of
The World Bank
FOR OFMICIA USE ONLY
lit l't\. N~C\. I ill ' i "!''y RCP0"No\. 10075
,9i _>i, (\.[ / X \. hi ;f\A j4 , : \.- I}hj}j
PROJECT COMPLETION REPORT
KINGDOM OF MOROCCO
PILOT PROJECT FOR THE COMMUNAL !NFRASTRUCTURE FUND (FEC)
(LOAN 2272-MOR)
NOVEMBER 14, 1991
Infrastructure Operations Division
Country Department II
Europe, Middle East and North Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
\.
CURRENCY EQUIVALEhTS
Local Currency - Dirham (DH)
Appraisal Year Average: US$1\.00 - DH 6
DH 1\.00 - US$0\.167
Project Execution Average: US$1\.00 - DH 8\.47
DH 1\.00 - US$0\.118
GLOSSARY OF ABBREVIATIONS
BDCL - Municipal Development Bank
(Banque de Developpement des Collectivit6s Locales)
BM - Central Bank of Morocco
(Bank Al-Maghrib)
CDG - Savings and Management Bank
(Caisse de Depot et de Gestion)
CIH - Credit Immobilier et H6telier
CL - Local Authorities
(Collectivit6s Locales)
DGCL - General Directorate for Local Authorities
(Direction G6n6rale des Collectivit6s Locales)
FEC - Fonds d'Equipement Communal
MOF - Ministry of Finance
mOI - Ministry of Interior
ONE - National Power Corporation
(Office National de l'Electricit6)
ONLP - National Water Corporation
(Office National de l'Eau Potable)
FISCAL YEAR
January 1 - Dacember 31
FOR OFFICIL USE ONLY
THE WORLD BANK
Washington, D\.C\. 20433
U\.S\.A\.
Offioc of Direotor-Generai
Operation\. Evaluation
November 14, 1991
MEM_RANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Kingdom of Morocco -
Pilot Project for the Communal Infrastructure
Fund (FEC) (Loan 2272-MOR)
Attached, for information, is a copy of a report entitled "Project
Completion Report on Xingdom of Morocco - Pilot Project for the Communal
Infrastructure Pund (EEC) (Loan 2272-MOR)" prepared by the EMENA Regional
Office\. No audit of this project has been made by the Operations Evaluation
Department at this time\.
Attachment
This document hs a tricted distribution and may be usd by recipiints only la the performance of their oMcil dutles\.
Its contents may not otherwise be disclosed without World Bank autborizatlon\.
FOR OFFICIAL USE ONLY
PROJECT COMPLETION REPORT
KINDO\.M OF MOROCCO
PILOT PROJECT -FOR THE COMMUNAL INFRASTRUCTURE FUND (FEC)
(LOAN 2272-MOR)
TABLE OF CONTENTS
Page No\.
PREFACE \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
EVALUATION SUMMARY \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. ii
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE \. \. \. \. \. \.
I\. PROJECT IDENTITY \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 1
II\. BACKGROUND \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.1
III\. PROJECT OBJECTIVES AND DESCRIPTION \. 3
IV\. PROJECT DESIGN AND ORGANIZATION \. \. \. \. \. \. \. \. \. \. \. \. 4
V\. PROJECT IMPLEMENTATION \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 5
FEC Operations \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 5
Financial Restructuring \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 6
Institutional Development \. \. \. \. \. \. \. \. \. \. \. \. \. \. 7
VI\. PROJECT RESULTS \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 8
VII\. PROJECT SUSTAINABILIT& \. \. \. \. \. \. \. \. \. \. \. \. \. 9
VIII\. BANK'S PERFORMANCE \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 9
IX\. BORROWER'S PERFORMANCE \.10
X\. RELATIONS BETWEEN THE BANR AND THE BORROWER\. 11
XI\. CONSULTANTS' SERVICES \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 11
XII\. PROJECT DOCUMENTATION AND DATA \. \. \. \. \. \. \. \. \. \. \. \. 11
PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE \. \. \. 12
Comments on Part I \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 12
Project Design \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 13
Project Organization \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 14
General Project Overview \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 15
Bank's Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 16
FEC's Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 16
Project Implementation \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 16
Impact of FEC Actions \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 18
Conclusions \. \. \. \. \. \. \. \. \. \. \. \. 18
PART III: STATISTICAL INFORMATION \. \. \. \. \. \. \. \. \. \. \. \. \. \. 19
Table I : Related Bank Loans \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 19
Table 2 : Project Timetable \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 20
Table 3 : Cumulative Loan Disbursements \. \. \. \. \. \. \. \. \. \. 21
Table 4 : Project Costs and Financing \. \. \. \. \. \. \. \. \. \. \. 22
Table 5 : Status of Covenants \. \. \. \. \. \. \. \. \. \. \. e \. \. \. 23
Table 6\.1 : Missions \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 24
Table 6\.2 : Staff Inputs \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 25
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
TABLE OF CONTENTS (cont'd\.)
Page No\.
PART III: STATISTICAL INFORMATION (cont'd\.)
Table 7 : List of Subprojects \. \. \. \. \. \. \. \. \. \. \. \. \. 26
Table 8 : FEC Activity (1981-1990) \. \. \. \. \. \. \. \. \. \. \. \. \. 28
Table 9 : FEC Income Statements (1981-1990) \. \. \. \. \. \. \. \. 29
Table 10 : FEC Sources and Application of Funds (1981-1990) \. 30
Table 11 : FEC Balance Sheets (1981-1990) \. \. \. \. \. \. \. \. \. \. 31
Table 12 : FEC Financial Performance Indicators (1981-1989) \. 32
Table 13 : Lending Rates \.33
Table 14\.1: Accumulative Disbursements \. \. \. \. \. \. \. \. \. \. \. 34
Table 14\.2: Distribution of Loans Refinanced by IBRD
by Sector \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 35
Table 14\.3: Distribution of Loans Refinanced by IBRD
by Type of Borrower \. \. \. \. \. \. \. \. \. \. \. \. \. \. 36
PROJECT COMPLETION REPORT
KINGDOM OF MOROCCO
PILOT PROJECT FOR THE COMMUNAL INFRASTRUCTURE FUND (FEC)
(LOAN 2272-MOR)
PREFACE
This Project Completion Report describes the preparation, appraisal,
and implementation of the Pilot Project for the Communal Infrastructure Fund
(FEC), for which Loan 2272-MOR in the amount of US$16 million was signed on
May 23, 1983\. The project became effective on April 2, 1984 and was closed
on December 31, 1989 after one six-month extension\. The loan account remained
open until February 7, 1990\. The US$16 million loan was fully disbursed\.
The Evaluation Summary, Parts I and III of the PCR were prepared by
the Infrastructure Operations Division, Technical Department, with the
assistance of the Infrastructure Operations Division, Country Department II,
of the Europe, Middle East and North Africa Regional Office, on the basis of,
inter alia, the Staff Appraisal Report, the Loan Agreement, supervision
reports, correspondence between the Bank and the Borrower, internal Bank
memoranda, and consultaLion with implementation agency officials and staff,
and former project officers\.
Part II has been prepared by FEC's managerial staff\.
- iii -
PROJECT COMPLETION REPORT
KINGDOM OF MOROCCO
PILOT PROJECT FOR THE COMMUNAL INFRASTRUCTURE FUND (FEC)
(LOAN 2272-MOR)
EVALUATION SUMMARY
Background
1\. When the project was identified in 1980, Morocco's population was
approximately 20 million, with about 9 million, or 40% living in urban areas\.
Whereas most of the urban population was concentrated in six major cities of
the Kingdom, a new trend emerged in which mid-sized cities experienced rapid
population growth in response to the development of agriculture, light
industries, and services\. To address Lne new needs arising frim the shift in
urban population, the Government adopted a strategy aimed at administrative
decentralization and a more balanced regional development\. By Decree-Law of
September 1976, the local authorities (CLs) were accorded greater responsi-
bility for infrastructure and public services management\. This new level of
responsibility meant a simultaneous increase in their financial decision-
making authority\.
Project Obiectives and Implementation Experience
2\. The project aimed at supporting the Government's decentralization
policy by assisting CLs in implementing primary infrastructure\. This was the
second time, after Jordan,!/ the Bank financed municipal infrastructure
through a line of credit to a specialized financial institution\. The Bank
granted a US$16 million loan, consisting of a line of credit for refinancing
eligible subprojects at the local level (US$15 million), supplemented with a
technical assistance program (US$1 million)\. The borrower was the Government\.
The Loan proceeds were used to reimburse FEC disbursements on the foreign
components of the projects it financed\. There was a Loan Agreement between
the Government and the Bank and a Project Agreement between the Bank and FEC\.
The foreign exchange risk was born by the Government\. The Communal Infra-
structure Fund (FEC) was to prcvide CLs with both financial resources and
technical assistance\.-' It was presumed that by strengthening FEC's technical
capacity, FEC would, in turn, eventually be able to help the CLe design
projects that were both economically and technically viable\.
Jordan - First Cities and Villages Development Project (Loan 1826-JO)\.
2 The Communal Infrastructure Fund (FEC) is a public institution with legal
status and financial autonomy, established by Law No\. 1-59-169 of June 13,
1959, as amended by Decree No\. 929-66 of March 2, 1967\. Its administrative
and financial management is entrusted to the Savings and Management Bank
(CDG)\.
_ iv -
3\. During project implementation, annual commitments of subloans to CLs
and public utility R6gies increased by more than 300%, from an annual average
of DH 120 million in 1981-84 to DH 530 million in 1989-90, along with FEC's
increase in, and training of, its professional staff, Disbursements of sub-
loans, however, were much slower, as the CLs' absorptive capacity was limited
due to (i) insufficient training of local staff in the appraisal of investment
projects and (ii) cumbersome withdrawal procedures, which were subject to
public expenditure guidelines\.
4\. FEC's equity was to have been increased through three budgetary
allocations of DH 20 million p\.a\. beginning in 1983\. However, out of these
three payments, the Treasury pr,;vided only two, the first one in 1985 and the
second one in 1988\. Lending interest rates were also to have been increased
to yield a minimum spread of 3%\. However, the progressive increase in FEC
loan interest rates was incommensurate with the more rapidly escalating
resource costs\. In November 1986, the rediscounting facility at prime rate
available through the Central Bank was eliminated, compelling FEC to turn
hastily to more expensive resources, whereas its assets were locked at fixed
interest rates\. This placed FEC in a precarious financial position,
culminating in a negative spread for fiscal years 1987-89\. In 1990, a
positive spread was re-established\.
5\. In collaboration with the Bank, FEC established project evaluation
criteria for each subsector and integrated them into a Policy Statement
according to schedule\. However, because of staff and other resource
constraints, FEC was unable to supervise subprojects effectively\. It is
therefore impossible to ascertain the extent to which appraisal expectations
for cost recovery were met\.
Proiect Results
6\. Ninety subprojects benefitted from Bank assistance\. Eighty-three of
these were for CL infrastructure and the remaining seven were for investment
projects carriad out by public utility corporations ("R6gies")\. Bank
refinancing averaged DH 1\.49 million, or 42% of average project costs\. The
beneficiaries were 44 "rural communes"i,&o followed by 27 "municipalities", 12
"autonomous centers"t, and 7 R6gies\. The subsectors benefitting were:
commercial infrastructure, 36 subloans; water supply, 12; solid waste
disposal, 11; and sewerage, 8\.
7\. FEC staff, especially those in charge of financial activities and
appraisal studies, benefitted substantially from practical training\. The use
of office technology for management control and financial projections made it
possible to simplify pro:edures, increase staff productivity, and develop a
better management approach\.
3/ Moroccan Local Authorities are classified into categories depending on
their size\. Below "Provinces" and "Prefectures," local communities
comprise (by decreasing size): "municipalities," "autonomous centers," and
"rural communes\."
Sustainabillity
8\. As FEC continued to evolve towards becoming an autonomous financial
institution, its organizational structure took on a more sustainable
character\. Under the project, the training of FEC personnel was a major
project goal\. In the future, management training is expected to expand and
replicate current lending operations\. During project implementation, it was
observed that tnere was a correlation between the technical quality of loan
applications submitted to FEC and the pace of loan and subloan disbursement\.
The preparation of sectorial guidelines should also have a lasting effect\.
A partial procedures manual has been approved and eligibility criteria have
been defined as part of a long-range strategy for FEC's eventual transforma-
tion into an independent financial institution\.
Conclusions and Lessons Learned
9\. This pilot project had a decisive impact on:
(a) resource allocation\. As a result of the application of subloan
eligibility criteria, FEC and some of the CLs can now better
determine which investments will generate positive financial rates
of return\. Doubtless, the preparation and processing of applications
for FEC loans left CLs' managers with a good understanding of project
analysis and cost recovery;
(b) human resources development\. Project-related training made it
possible for existing FEC personnel to form the core of a potentially
autonomous financial institution; and
(c) poverty alleviation\. Subloans to CLs were granted to finance house
connections for water supply and sewerage, benefitting several
thousand low-income families\.
10\. The following lessons may be applied to future operations of similar
scope:
The use of a specialized financial institution for lending to
municipalities and their agencies has proved to be the right approach
at a time when the financial sector in Morocco was still affected by
Government constraints and directed credit was the only way to
introduce financial discipline into a heavily subsidized sector
(municipal development)\. In the future, the liberalization of the
financial sector in Morocco should lead the Government to decide on
granting more managerial autonomy to FEC and on the best ways to
ensure that FEC mobilization and use of resources for the financing
of urban infrastructure projects responds to its policy\.
Funds earmarked for the prefinancing of feasibility studies for low-
income CLs were invested wisely, making it possible to maximize
resource allocation (by increasing the number of beneficiaries for
each DH invested\.)
Staff were continually and systematically provided with in-service
training\. But it was conducted almost entirely in-house\. Clearly,
- vi -
the training cycle and organization could have been more efficient
if specialized training institutions had been involved\.
FEC should have paid more attention to subproject supervision\. It
should also have monitored more rigorously its pipeline of subloans
to the R6gies, particularly in the light of their financial restruc-
turing operations\.
PROJECT COMPLETION REPORT
KINGDOM OF MOROCCO
PILOT PROJECT FOR THE COMMbNAL INFRASTRUCTURE FUND (FEC)
(LOAN 2272-MOR)
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE
I\. PROJECT IDENTITY
Name; Pilot Project for the Communal Infrastructure Fund (FEC)
Loan Number: 2272-MOR
RVP Units EMENA
Countrys Kingdom of Morocc-
Sectors Infrastructure
Sub-Sector: Urban Development
II\. BACKGROUND
2\.01 From 1980 to 1982, Morocco's macroeconomic situation was marked by
a sharply increasing external debt\. This was generated by an ambitious
investment program when export prices, and phosphate prices in particular,
declined while the price for imported oil increased\. Thus, the external debt
service on exports increased from 10\.7% in 1977 to 35%, or US$1\.5 billion, in
1982\. For the 1978-80 period, the Govsrnment adopted a Stabilization Plan and
enforced rigorous credit and import controls\. It also severely reduced
expenditures through a concerted effort to decrease investments\. As a result,
new investments declined from 27% of the GNP in 1978 to 12% in 1980\. Internal
factors (drought, military expenditures, and increasing commodities subsidies)
and external factors (appreciation of the dollar, increase in oil prices and
interest rates) added to the effects of the Stabilization Plan, leading to a
1\.3% decline in GNP in 1981, a Treasury deficit of 14% of GNP, and a negative
balance of payments of US$1\.8 billion, or 12\.6% of GNP\. In April 1982, the
International Monetary Fund intervened within the framework of an agreement
that focussed on fiscal measures and expenditure restrictions\.
2\.02 When the project was identified in 1980, Morocco's population was
approximately 20 million, with about 9 million, or 40% living in urban areas\.
Whereas most of the urban population was concentrated in six major cities of
the Kingdom, i\.e\., Casablanca, Rabat-Sal6, Marrakech, Fez, Meknes, and Tanger,
a now trend emerged in which mid-sized cities experienced rapid population
growth in response to the development of agriculture, light industries, and
services\. To address the new needs arising from the shift in urban population
and macro-economic conditions (para\. 2\.01), the Government adopted a strategy
aimed at the administrative decentralization and a more balanced regional
development\. Decentralization appeared as being potentially a major source of
improvement in public sector management by reducing the distance between
decisi\.n makers and users of public goods and services, and giving a more
manageable scale to the delivery and administration of local services\.
-2^
Decentralization had, hence, beyond the social dimension of promoting
political participation at the local level, an economic objective, namely the
improvement in the use and allocation of resources\. The decentralization
process had to be gradual\. Consistency was needed between local needs and the
availability of means, and the State needed to ensure that essential
investments received adequate priority when decisions were taken at the local
level\. A Decree-Law of September 1976 defined the organization of local
authorities (CLs) and gave them greater responsibility for infrastructure and
public services management\. This new level of responsibility meant a
simultaneous relative increase in their financial decieion-making authority\.
In this respect, additional decisions were taken between 1976 and 1980, iitter
alia, to reform the local fiscal system and to strengthen the role of the
Communal Infrastructure Fund (FVC in the financing of municipal investments\.
However, decisions concerning th ^cal fiscal system were not translated into
action until 1988\. In 1976, how, ar, provincial governments were given the
responsibility for the distribution of Ministry of the Interior (MOI)
budgetary allocations\. This strengthened their authority in setting
investment priorities at the commune level\. Previously, the financial
autonomy of local authoritiss had been very limited, both because of the
weight of centrally allocated funds in local budgets and because of insuf-
ficient cost recovery when providing local services\. Indeed, budgetary
allocations from the Central Government to the CLs had been made through
various technical ministries for each project category and consisted of
(a) the redistribution of local taxes collected by the Central Government on
behalf of the CLs and returned to them and (b) transfers to the poorest CLs\.
2\.03 Decisions concerning FEC's financial and managerial autonomy and
institutional strengthening were gradually implemented\. FEC was created in
1959 as a public agency to finance investments in infrastructure by the
provinces, urban and rural communes and syndicates therefore, and municipal
autonomous Regies (essentially for urban transport and the distribution of
electricity and water)\. Although FEC was legally and financially autonomous,
it was, for practical purposes, a small department appended to, and adminis-
tered by, CDG (Caisse de Dep6t et de Gestion)\. It had a staffing complement
of seven in 1980\. Decisions affecting its lending operations were taken by
the CDG Director after consultation with a Technical Committee composed of
representatives from MOI and the Ministry of Finance (MOF)\. Its statutory
resources were largely public, i\.e\., rediscounts from CDG and the Central Bank
(BM), and whenever necessary, Government grants and subsidies or local
borrowings guaranteed by the Government\.
2\.04 In mid-1979, an ITter in^sterial Committee met to study and recommend
measures to expand the role of FEC as a major promoter and financier of
investment by the local authorities\. The Committee recommended, in particu-
lar, that:
(a) to increase its assistance to CLs both quantitatively and qualita-
tively, FEC should be administratively reorganized and should create
a Technical Unit responsible for the technical and financial
appraisal of projects, as well as for their supervision and follow
up;
(b) FEC establish a Project Preparation Fund, financed from FEC's
profits, to prefinance feasibility studies;
- 3 -
(c) FEC's financial resources be diversified and expanded in line with
the expansion of its loan cc-mmitments\. New sources of funds would
be the BM rediscount facilities, bond issues, and foreign borrowing
with Government guarantee; and
(d) the average maturity of FEC loans be extended from 8 to 12 years,
while increasing the interest rate to 8\.5Z to maintain financial
equilibrium\.
III\. PROJECT OBJECTIVES AND DESCRIPTION
3\.01 Project preparation took place in the background described above\.
The project was to support the Govetrnment's decentralization policy by
assisting CLe in implementing primary infrastructure\. In this respect, FEC
was to provide them with both financial resources and technical assistance\.
It was presumed that by str'engthening of FEC's technical capacity, that
institution would, in turn, eventually be able to help the CLs design projects
that were both economically and technically viable\.
3\.02 The total project cost was estimated to be US$31 million\. The Bank
granted a loan to the Government in the amount of US$16 million, consisting
of:
(a) a line of credit of US$15 million to FEC for the financing of
infrastructure subprojects in eligible sectors (to be specified in
FEC's Policy Statement); and
(b) a technical assistance program of US$1 million for staff training and
the services of technical experts as well as experts on banking
organization\.
3\.03 The line of credit would be used for the funding of about 30 self-
financing subprojects\. Prospective sub-borrowers were urban and rural CLs,
groups of CLs, and public utility and transport Rggies\. It was agreed that
all FEC-financed projects, regardless of whether they were refinanced by the
Bank, would have to comply with the same eligibility criteria defined
according to sector\. The line of credit was limited to the foreign cost of
subprojects, estimated at about 50% of their value\. With the exceptior\. of
sanitation investments with unit costs below US$80,000, fees, user charges,
and taxes collected by the municipalities had to cover the total capital
investment and recurrent expenditures\.
3\.04 In this context, the Bank's strategy was to help strengthen FEC to
use the institution as a conduit for channeling assistance to the CLs\.
Technical assistance provided by FEC to CLa in project and financial matters
was seen as a means to develop, at the local level, concepts of cost-recovery
and reduce accordingly subsidies from the Central Government\.
3\.05 The technical assistance component was designed to support:
(a) the training of FEC's technical staff; and
-4-
(b) consultant services\. It was envisaged that an expert would be
engaged for a two-year period\. That person's assistance would focus
on: (i) project preparation techniques and feasibility studies on
small-size projects in particular; (ii) the formulation of subproject
eligibility criteria; (iii) the definition of financing and loan
recovery procedures; and (iv) project supervision by FEC\.
IV\. PROJECT DESIGN AND ORGANIZATION
4\.01 This was the second time (after Jordan)"1 the Bank financed municipal
infrastructure through a line of credit to a financial institution\. To ensure
replicability of this financing, the project concentrated primarily on FEC's
institutional development, particularly its organization, procedures, and
staff training\. FEC management, with Bank assistance, prepared a Policy
Statement, which defined sectorial intervention priorities, cost-recovery
procedures, credit policy, and project eligibility criteria\. The technical
strengthening of FEC would ultimately help CLs prepare and implement their own
projects\.
4\.02 The Bank considered this operation a pilot project in view of its
multisectorial nature, its innovative character, and FEC's inexperience in
investment project selection\. At the same time, the Bank and Moroccan
authorities envisaged that if FEC were successful in meeting project
objectives, it might eventually be granted full managerial and financial
autonomy\.
4\.03 Project preparation was carried out over two years\. The first
identification mission visited Morocco in May 1980\. The project was appraised
in June 1982 and negotiations were held in March 1983 in Washington\. The loan
was signed on May 23, 1983\.
4\.04 A number of serious problems had to be solved during project
preparation:
- Moroccan authorities preferred to fill the technical advisor position
with a Mo=occan national, which limited recruitment possibilities\.
- To restrict fttture loans to revenue-generating projects, FEC's Policy
Statement had to be drafted and ratified\. Moreover, since a
systematic cost recovery policy for the sanitation sector was not yet
clearly defined in Morocco, the refinancing of these subprojects
would have to be approved by the Bank on a case-by-case basis\.
- Water supply and electricity subprojects eligible for refinancing
would be implemented by ONEP and ONE, which were the only institu-
tions technically capable of preparing and carrying out these
projects at the time\.
Jordan - First Cities and Villages Development Project (Loan 1826-JO)\.
- 5 -
- To increase the number of potential borrowers, each eligible
subproject had a ceiling of up to DH 6\.5 million for loans to
municipalities and DH 5\.0 million for loans to R6gies\.
Subprojects submitted to FEC financing had to comply with eligibility
criteria\. The criteria defined: (a) the eligible subsectors, i\.e\.:
water and electricity distribution, urban transportation, commercial
facilities, urban development, sewerage, and municipal roads; (b)
cost-ceilings by type of borrower; (e) the cost-recovery percentage
by subproject size; (d) the minimum internal rate of return by type
of investment; (e) the maximum duration of the equipment saturation
capacity; and (f) the minimum cash-flow expected in relation to the
investment programs of the R6gies\.
- To lay the groundwork for PEC's financial autonomy from CDG, interest
rates had to be increased from an annual average of 8\.5% in 1982 to
10% in 1983 and 11\.5% in 1984, and the Government would increase
FEC's capital by DH 20 million in each of the fiscal years 1984,
1985, and 1986\.
- The regular supervision at the mtnicipal level of EEC-financed
subprojects was deemed necessary to ensure the success of the staff
training program\. All projects financed by FEC (regardless of
whether they were to be refinanced by the Bank) were subject to the
same appraisal and eligibility criteria\.
- To meet institution-building objectives, an organizational chart
would have to be approved not later than November 1983\.
4\.05 Project design proceeded from the critical need to reinforce PEC
institutionally\. Its current organization was inappropriate for its new
financial responsibilities\. Clearly, the project's success could be traced
directly to the high priority assigned to developing a strategy that focussed
on realigning interest rates to correspond to the capital market in Morocco
and the training of FEC staff to enable them to carry out that strategy\.
V\. PROJECT IMPLEMENTATION
FEC Operations
5\.01 Total subloan annual commitments increased by more than 300%, from
an average of DH 120 million in 1981-84 to DH 530 million in 1989-90, along
with FEC's increase in, and training of, its professional staff\. Disburse-
ment, however, was much slower, as the CLs' absorptive capacity was limited
due to (a) insufficient training of local staff in the appraisal of investment
projects and (b) cumbersome withdrawal procedures, as municipalities are
subject to public expenditure guidelines\. The sharp and steady depreciation
of the dirham in relation to the US dollar in the mid-1980s translated into
a slower disbursement pace than originally forecast; cumulative withdrawals
lagged behind appraisal estimates, up to 1988\.
-6-
Financial Pestructuring
5\.02 FEC's equity was to have been increased through three budgetary
allocations of DH 20 million p\.a\. beginning in 1983\. However, out of the
three payments expected from the Treasury (totalling DH 60 million), only two
were made, thn first one in 1985 and the second one in 1988\. Insufficient
equity not only increased FEC's average resource cost (see table below), but
also led to an increase in its debt/equity ratio from 9 in 1988 to 12 in 1989\.
5\.03 As covenanted in the Loan Agreement, interest rates on lending were
to have been increased to yield a minimum spread of 3%\. In November 1986,
pursuant to an IMF request, the rediscounting facility at prime rate through
BM was eliminated\. FEC suddenly had to rely on bonds issued on the national
financial market\. This led to a precarious financial position as CDG's
conditions for subscribing to FEC's bonds were similar to those on the
national financial market whose rates approached 11\.5% (compared with 5\.8%
within the B\.M\. rediscounting facility)\. Following the Bank's repeated
request, in April 1987, MOF and MOI authorized a rate increase between 0\.52
and 3% depending on the beneficiary\. Trends in the resulting spreads were as
follows:
1984 1985 1986 1987 1988 1989 1990
Loan return 8\.00 8\.10 9\.09 9\.26 10\.08 10\.57 11\.19
Resource cost 7\.24 7\.79 8\.53 9\.30 10\.66 10\.68 10\.89
Spread 0\.76 0\.39 0\.56 -0\.13 -0\.58 -0\.11 0\.30
5\.04 Whereas arrears on CLs were insignificant, the arrears on reRavments
from th_ R6gies, since 1982, could not be covered because neither revenue nor
provisioas were sufficient\.
R6aies 1984 1985 1986 1987 1988 1989 1990
Arrears/
Outstanding debt 19% 12% 2\.6% 9\.4% 13\.5% 23\.1% -
Provisions/
Outstanding debt
of regies 0\.5% 0\.86% 1\.75% 2\.07% 1\.84% 2\.04% 4\.25%
5,05 Debt consolidation through substitution of long-term bonds with
short-term borrowing from CDG reduced the maturity mismatching risk\. With an
average maturity of 10 years, the long-term debt rose from 28% of the
liabilities in 1986 to 83% in 1987\.
5\.06 Concrete measures were taken throughout the project life to increase
commitment fees and limit the negative impact of the interest-rate structure
on the institution's viability\.
-7-
Funds earmarked for the prefinancing of feasibility studies for low-
income CLs were invested wisely, making it possible to widen the
number of potential borrowers\. The committed amount for this use
exceeded DH 12 million at the end of 1989\.
The serious risk posed by the R6gies' debt structure (especially that
of the transport R6gies) prompted debt rescheduling through the
consolidation of arrears and interest capitalization, as well as a
requirement that any future loan to a R6gie be guaranteed by the
responsible CL\.
To restore F \.C's financial viability, the interest rates on FEC loans
were increased in April 1987 and June 1990\. Compared with the
prevailing conditions of 1984 (i\.e\., flat rate of 10%), rates on
loans to rural CLs remained the same (i\.e\., 10%), whereas rates
applicable to urban CLs and R6gies were increased to 11\.5% or 12\.5%
and 13%, depending on the purpose of the loan\. However, these
increases were insufficient to compensate for the 4ncrease in the
resource cost in the short-term\.
Institutional Development
5\.07 Experience in implementing the organizational and institutional
aspects of the project is summarized as follows:
(a) The recruitment of an experienced and qualified technical adviser to
assist in reorganizing FEC and in formulating administrative
procedures took longer than originally envisaged; however, this was
offset by the quality of the candidate who eventually filled the
position\.
(b) The Operations Manual defined several procedures relating to the
institution's clients but did not consolidate all procedural
guidelines for FEC's operations\. FEC should have prepared and
distributed a detailed operational manual to all staff\.
(c) Staff benefitted from continuous and systematic in-service training\.
But training was conducted almost entirely in-house\. The training
cycle and organization could have been more efficient, if specialized
training institutions had been involved as specified in the Project
Agreement\. The Bank's missions repeatedly recommended such an
action\.
(d) In collaboration with the Bank, FEC established project evaluation
criteria for each sector and integrated them into the Policy
Statement according to schedule\. However, the criteria were not
always strictly followed\.
(e) Because of staff and other resources constraints, FEC was unable to
supervise subprojects effectively\. It is, therefore, impossible to
ascertain the extent to which appraisal expectations for cost
recovery, a major subproject selection criterion for FEC refinancing,
were met\.
- 8 -
VI\. PROJECT RESULTS
6\.01 Ninety subprojects benefitted from Bank assistance\. Eighty-three of
these were for CL's infrastructure and the remaining seven were for investment
projects carried out by the R6gies\. Bank refinancing averaged DH 1\.5 million,
or 42Z of average project costs\. The main beneficiaries were 44 rural CLs,
followed by 27 municipalities, 12 autonomous centers, and 7 R6gies\. The
subsectors benefitting from subloans were: commercial infrastructure, 36
subloans; water supply, 12; solid waste disposal, 11; and sewerage, 8\.
6\.02 Since 1987, FEC has restructured its liabilities and generated new
long-term resources through the i\.ssuance of 12-year bonds paid at market
prices\. Except for 1988, the resources provided by the Bank have been at a
limited level:
1984 1985 1986 1987 1988 1989 1990
(DH million)
FEC disbursements p\.a\. 147 201 364 321 384 361 498
Bank refinancing 0\.5 8\.8 3\.1 37\.5 74\.4 8\.7 3\.9
0\.4% 4% 1% 12% 19% 2% 1%
Average Bank refinancing - 5\.6% -- __ __
6\.03 Although the increase in FEC's lending rates have lagged behind the
increase of the resource cost, it is worth mentioning that two important
measures were taken in 1987: the increase of the lending rates and the
suppression of the three point interest subsidy have brought FEC's lending
conditions near market level (see Table 13)\.
6\.04 FEC staff, especially managers in charge of financial activities and
appraisal studies, benefitted substantially from practical training\. The use
of office technology for project appraisal and financial projections made it
possible to simplify procedures, increase staff productivity, and develop a
better management approach\.
6\.05 This pilot project had a decisive impact on:
(a) resource allocation\. As a result of the application of subloan
eligibility criteria, FEC and some of the CLs can now better
determine which investments will generate positive financial rates
of return\. Doubtless, the preparation and processing of applications
for FEC loans left CLs' managers with a good understanding of project
analysis and cost recovery;
(b) human resources development\. Project-related training made it
possible for existing FEC personnel to form the core of a potentially
autonomous institution; and
- 9 -
(c) poverty alleviation\. Subloans to CLe were granted to finance house
connections for water supply and sewerage benefitting low-income
families\.
VII\. PROJECT SUSTAINABILITY
7\.01 As FEC continues to evolve towards becoming an independent financial
institution for which new statutes are presently before the Parliament, its
organizational structure takes on a more sustainable character\. Under the
project, the training of FEC personnel was a major goal\. Management training
is expected to expand and replicate current lending operations\. During
project implementation, a correlation between the technical quality of loan
applications submitted to FEC and the pace of loan and subloan disbursement
was noticed\.
7\.02 The preparation of specific procedures should also have a lasting
effect\. Procedural guidelines have already been approved and eligibility
criteria defined, thereby preparing FEC to achieve a sound, financial
performance\.
7\.03 The cost-recovery of municipal investments in commercial facilities
varies according to municipality\. In some cases, the front-end fee paid for
the right to benefit from a retail or artisan shop fully covered investment
costs, even before the rent payments had begun\. In other cases, new stores
were financed only after a period of two to three years\. Municipal facilities
are subject to recovery through tariffs or the local tax system, in particular
since the approval of the Tax Reform of 1989 pertaining to the modification
of the local fiscal system and the extension of sources of income (e\.g\.,
users' rights, slaughter tax)\.
VIII\. BANK'S PERFORMANCE
8\.01 The Bank played a dual role throughout the project life\. As a
financial institution, the Bank established efficient refinancing procedures
even though the major depreciation of the dirham in relation to the US dollar
during the mid-1980s, combined with the Government's delays in transferring
the reimbursements received from the Bank to FEC, resulted in an average Bank
refinancing of 42% to 45%, instead of the originally estimated 50%, of the
investment value\. In its advisory capacity, the Bank continually provided FEC
personnel with assistance in technical and strategic problem solving\. In
particular, the Bank helped FEC prepare eligibility criteria for its loans and
improve its financial projection methodology, as well as its technical and
financial project appraisal procedures\. The Bank regularly drew FEC
management's attention to corrective measures aimed at preserving the
institution's financial viability\.
8\.02 Finally, in accordance with the Government's plans for FEC's
progressive transformation into a municipal development bank (BDCL), the Bank
assisted MOI and MOF in preparing terms of reference for the feasibility
study, in coordinating outside 3sistance, and in making technical recommenda-
- 10 _
tions at each stage of the project preparation\. The proposed (Bank-assisted)
project to transform FEC into fully-fledged bank was finally dropped in early
1990 in favor of a more modest updating of FEC statutes as a financial public
corporation\. However, the bulk of the studies performed during the prepara-
tion of this project are expected to be used by FEC in the future\.
8\.03 The Bank has put constant pressure on FEC to undertake subproject
supervision\. It also has encouraged FEC to monitor more rigorously its
pipeline of subloans to the R6gies, particularly in the light of their
financial restructuring plans\.
IX\. BORROWER'S PERFORMANCE
9\.01 Due to cyclical problems within the Treasury, the Government has
repeatedly delayed the reimbursements received from the Bank to FEC\. A
special account had i\.ot been envisaged for the implementation of this pilot
project\. If a second line of credit to FEC is considered, advance funding
should be envisaged through a special account\. Similarly, interest-payment
subsidies due by the Government, according to a program that was dropped in
January 1987, were constantly in arrears\. Since the CLs had to bear only the
net rate, the Government had to pay directly the discounts (amourting to three
percentage points) to FEC on a quarterly basis\. Even though new subsidies
have been eliminated, the Government continues to bear responsibility for the
current maturities of loans granted before 1987\. At the end of 1988, the
Govertment had accumulated DH 17 million in arrears\.
9\.02 The availability of a local project preparation facility against
future income from loans enabled FEC to prefinance project studies by CLe\.
This fund not only helped the CLs define their borrowing needs but also helped
FEC expand its market and loan absorption capacity\. If the currently proposed
follow-on municipal development project is not approved, the advance is to be
transformed into a subsidy\.
9\.03 FEC made good use of the technical assistance provided to strengthen
its organization\. Managers and staff profited from in-house training and
increased their efficiency\. Both their and the new recruits' dynamism made
it possible to increase significantly the annual commitment volume in a short
time\.
9\.04 FEC's main weakness was its failure to supervise subprojects
systematically\. The department responsible for this task had insufficient
staff and operating budget\. The CLs did not submit all information FEC
requested for completed operations\. Therefore, actual implementation costs
and detailed cost recovery are unknown\.
9\.05 The inability of FEC to address the supervision issue was due not
only to its lack of capacity but also to the reluctance of the beneficiary
municipalities and R6gies to be evaluated and controlled\. The problem of the
R6gies together with the lack of adequate pricing of municipal services still
has to be addressed through future Bank involvement in the sector\.
- 11 -
X\. RELATIONS BETWEEN THE BANK AND THE BORROWER
10\.01 Cooperation between FEC and the Bank was close throughout the project
life\. A meaningful dialogue with CDG and FEC, together with both professional
and personal relations, were strengthened over the supervision period\. A
series of important actions having a direct impact on project success and in
particular, the institutional viability of FEC, emerged from decisions taken
by MOI and MOF\. The sensitization of Moroccan authorities towards various
constraints faced by FEC (e\.g\., need for interest rates high enough to cover
fees, recapitalization by the Government as shareholder, application of strict
eligibility criteria) laid the groundwork for FEC's eventual transformation
into an autonomous financial institution\.
XI\. CONSULTANTS' SERVICES
11\.01 The consultants carried out their tasks to the satisfaction of the
Borrower\. One expert spent two years helping FEC prepare the organizational
chart and procedures and train staff in banking activities\. His assistance
was especially useful towards the goal of institution strengthening\.
XII\. PROJECT DOCUMENTATION AND DATA
12\.01 The Loan Documents and Staff Appraisal Report proved to be useful
tools in project supervision\. In addition, FEC facilitated the task of Bank
missions by providing access to its financial statements and technical files\.
The Borrower made the necessary efforts to submit audit reports in a timely
manner in accordance with the Loan Agreement\.
- P -
Unofficial Translation
PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE
Comments on Part I
1\. Part I of the PCR covered the following points:
(a) Project Identity
(b) Background
(c) Project Objectives and Description
(d) Project Design and Organization
(e) Project Implementation
(f) Project Results
2\. The analysis contained in this part of the Report does not call for
any particular comments\. However, a few details should be added in the
following sections:
Project preparation (para\. 4\.04)\. Side Letter No\. 2 to the Loan Agreement
referred to Morocco's commitment to make supplemental contributions to
FEC's capital, or to ensure that CDG would make loans to FEC at moderate
long-term cost, so as to increase FEC's own funds by annual installments
of DH 20 million starting December 31, 1983\. In compliance with the above,
the Government made two annual payments of DH 20 million on each of the
following dates:
- November 28, 1985: DH 20 million
- June 15, 1988: DH 20 million
FEC operations (para\. 5\.01)\. The pace of annual commitments experienced
a sharp increase during the life of the project, matching, though on a
smaller scale, the strengthening of FEC's staff complement\. FEC's staff
peaked at 49 in December 31, 1987, stabilizing at 48 by 1989\. Since 1990,
following the departure of four professionals, FEC has had 44 employees\.
The recruitment of replacement staff and of reinforcements (32 new
employees), designed to bring the total up to 80 by December 31, 1990, has
not yet taken place\. Having acquired experience and expertise, particu-
larly in the use of PCs (of which there are 10), FEC personnel, although
reduced in numbers, have been able to increase their productivity and
output\. The average rate of increase was lower for disbursements than for
commitments\. This was the result of the time needed to prepare contracts,
issue invitations to tender, and have the contracts approved (approval by
the central authorities is required when the amount involved is over DH I
million), the funds being released in installments\.
Financial strengthenins of FEC (para\. 5\.02)
(a) Progressive increase in interest rates\. The financial difficulties
experienced by FEC between 1987 and 1989 were due less to the slow
increase in lending rates than to the rapid escalation in resource
- 13 -
costs, which came about in 1987 following elimination of the
rediscounting facility and consolidation of DH 800 million through
issuance of bonds at 11\.5%\. Between 1980 and 1990, lending rates
were adjusted as follows:
- for the rural communes, the rate rose from 6% (through 1979) to 8\.52
in 1980, stabilizing at 10% in 1984\. During this period, several
rural communes were transformed into autonomous centers, sometimes
even into municipalities, thus becoming subject to the rates
applicable to such categories;
- for urban centers, the rate rose from 6% (through 1979) to 8\.5% in
1980 and 10% in 1984\. Over the period 1987-1990 the range was
between 10\.5% and 13%, and after July 1990 it was between 11\.5% and
13%;
- for the R6gIes Autonomes, the rate rose from 6% (through 1979) to
8\.5% in 1980 and 10% in 1984\. Between 1987 and 1990 the range was
between 11\.5% (urban transportation) and 13%, and then, starting in
1990, between 12% (for the same sector) and 13%\.
The effects of the rates revision in 1990 are already being felt at the end
of this fiscal year, and should yield increasing improvements in operating
results over the next three fiscal years\.
(b) FEC recapitalization\. The 1983 tranche was paid in November 1985 and
the 1984 tranche in June 1988\.
(c) Arrears on repavments from the R6gies\. It was stipulated in the Loan
Agreement that FEC would set up loan loss provisions reaching (no
later than December 31, 1984) 0\.25% of the portfolio of loans to the
R6gies Autonomes not guaranteed by the State\. These loan loss
provisions were to be increased to 0\.50% of portfolio by December 31,
1985 at the latest, and up to 1% by December 31, 1986\. After 1986,
FEC was to gradually increase the provisions to 3%\. However, FEC
actually established provisions in the following percentages:
- 1986: 1\.75% instead of the proposed 1%;
- 1990: 4\.25%, higher than the proposed 3% ceiling\.
Prolect sustainability (Chapter VII)\. The duration of FEC loans rarely
exceeds 10 years and never 12\. Except for vehicles, for which the loan
term is equivalent to the period of technical depreciation (5 years), all
FEC-financed projects have a life of at least 20 years\. Without it being
necessary to measure the sustainability of a project's effects, we may be
sure that after paying the installmenta on the respective loan, the
commune concerned will continue to earn revenues from the project for
several more years\.
Proiect DesiRn
3\. This was the first time the FEC had received a loan from an
international financial institution, let alone from the World Bank, the
world's foremost development financing agency\. This is why it was so
- 14 -
important to obtain this loan, not for monetary considerations, but essen-
tially with a view to establishing a working relationship between Bank and FEC
staff\. FEC staff would, therefore, be able to acquire experience, particu-
larly in the area of appraisal of viable projects for the communes, thus
giving them the capability to handle a specific type of project and bor-
rower\. This also explains the delays -- due to the need to take precautions
and also to take particular care -- that occurred during preparation of the
appraisal of the FEC Pilot Project (1980-1983)\. It also explains why so much
emphasis was placed on project design and organization\.
Proiect Organization
4\. The project's main priority was the institutional strengthening of
FEC in the areas of procedures, organization, and staff training\.
(a) Procedures
(i) Dreparation of the Policy Statement\. Based on the fact that the
FEC's areas of intervention were not clearly established in its
statutes, it was considered necessary to limit its intervention to
well-defined sectors falling habitually within its sphere of
activity, but excluding the financing of the Local Authorities'
buildings\. It is pointed out that an arbitrarily pre-established
classification of the communes' different requirements is imprac-
tical, since those requirements change depending on the level of
development achieved and the new responsibilities conferred by
legislation (communal schools, health centers)\. Lastly, it would be
desirable in the future to include in this statement the possibility
of supporting the training of commune professionals, to enhance their
experience through special internships related to the maragement of
complex projects; and
(ii) rreparation of project apraisal _criteria\. This was the most
difficult task for all the parties concerned, since it mainly
involved the adoption of technical ratios and the establishment of
deadlines for meeting the various requirements, to ensure that the
infrastructure was designed to the appropriate scale\. The data for
the various analyses needed to be gathered from the communes, but
they generally did not have the statistics requested\. It was thus
difficult to apply the project appraisal criteria at the start, but
this represented an opportunity for both PEC and commune staff to
familiarize themselves with this project approach\. The original
criteria obviously had to be adapted to make them compatible with
local conditions\. As progress was made with the gathering of
information, the volume of appraisal reports kept increasing, to the
point that it was considered advisable to trim their content\. On the
financial side, the analyses relate both t, the commune budget and
to project viability, taking account, as far as possible, the
borrowing capacity of the commune concerned\. Comments and recommen-
dations on financing terms for a given project do not appear in the
actual Loan Agreement, but are forwarded to the commune in the form
of a Project Agreement annexed to the letter that the loan has been
granted\.
- 15 -
(b; Organization and training of i3ersonnel
(i) The Technical Adviser was hired following a very careful selection
process, which emphasized staff training and its impact on the
commune professionals in the area of preparation of loan applica-
tions\. The operations manual and the list of procedures relative to
each function were drawn up\. Since preparation of the appraisal
criteria took up a great deal of the time of FEC's reduced staff
complement, it was not possible to prepare a detailed operations
manual reproducing the existing documents, which in any case are
assimilated by each employee during the course of his work; and
(ii) A new FEC organizational chart was drawn up in July 1986, with later
versions appearing in 1988 and 1990\.
(c) Staff training took place mainly at FEC itself and during missions
to the communes\. The small number of staff in relation to the volume
of work militated in favor of providing training in the field\.
5\. Project activities were not monitored systematically because the
necessary information was collected whenever funds were released\. However,
the monitoring that was done was always satisfactory\. On the other hand, in
communes that have already received loans [and have applied for further
loans), ex-post supervision takes place, for logistical reasons, at the time
of appraisal of future projects\. FEC accounts have been subject to audit
since 1980; the audit reports are sent regularly to the Bank\. The audits for
1990 are now in progress\.
General Prolect Overview
6\. We feel that the project was largely successful for the following
reasons:
(a) Institutional strengthening was carried out as indicated above, and
FEC staff acquired experience in the areas related to its activities;
(b) FEC's financial strengthening also took place as planned, despite the
higher cost of funds\. Fiscal year 1990 represented the start of a
period of sound financial management and surplus for FEC, which will
improve its borrowing capacity;
(c) FEC intensified its assistance both in the area of financial
resources and in terms of technical assistance to the communes\.
(d) The notion of project cost recovery and of recovery in general, i\.
now well understood by the commune authorities; and
(e) The achievement of these resulto is made possible owing to the
constructive dialogue preceding client relationships, and to the
close collaboration between FEC staff and World Bank experts\.
- 16 -
Bank's Performance
7\. Overall, the Bank's performance was positive\. However, a review of
the project implementation gives rise to the following comments:
(a) A systematic examination of all the appraisal reports on a case-by-
case basis should no longer be necessary\.
(b) Bank disbursements were made generally according to schedule\.
However, in view of the small amounts of the PEC subloans, requests
for disbursement were seldom submitted to the Bank until a large
volume of project expenditures had been accumulated\. It would thus
be advisable in the future to set up a revolving fund to facilitate
and accelerate withdrawals\.
(c) The FEC project was supervised by Bank experts, who always stressed
the importance of the success of such projects to the development of
our local communities\.
(d) The most recent supervision missions (those undertaken since 1988)
have worked on the preparation of a new line of credit\. The FEC
staff are very anxious to see the definitive appraisal of this second
line of credit completed as soon as possible\.
FEC's_Performance
8\. FEC's performance under this project should not be dissociated from
its general framework of activity, both in terms of its intervention policies
and the appraisal of the technical, economic and financial feasibility of the
operations submitted to it for financitig\. FEC, whose reform was decided by
the Interministerial Commission on November 10, 1979 and begun in 1980, in
parallel with preparation and startup of the FEC Pilot Project, has made every
effort to act in accordance with the principles of that reform, as enhanced
and supplemented by the covenants of the IBRD Loan and Project Agreements\.
In the desire to make FEC into an instrument of local development, the public
authorities, in compliance with the principles of the reform and with the
agreements signed with IBRD, have made every effort to respect the Policy
Statement and mutually agreed eligibility and approval criteria in all of its
operations\.
Proiect Imtlementation
9\. Despite initial difficulties, FEC's actions during implementation
conformed as closely as possible to the objectives of the reform and the terms
of the Agreements\. It may now be affirmed that the project was broadly
positive for the local communities as well as for FEC, which now tends fully
to assume the role of a municipal development bank\. The delay occurring
during project startup was essentially the result of difficulties linked to
the transition and changes experienced by FEC\. The start of the Government-
ordered restructuring process coincided with project identification and
preappraisal by the Bank experts\.
- 17 -
10\. Two types of difficulties caused some hindrance during startup:
(a) Internal difficulties:
- start of restructuring (basic organizational chart);
- start of human resource strengthening;
- time needed to assimilate criteria and learn methods of project
appraisal appropriate to the wide variety of sectors of communal
infrastructure;
- gradual establishment of new appraisal report outlines;
- technical capacity of a staff still limited in numbers to handl, an
increasing work load and supervise the ever-expanding inflow of
recruits; and
- difficulties of application of certain rigorous criteria\.
(b) External difficulties:
sudden increase in loan applications, following the missions of the
traveling Extension Committee;
difficulties encountered by the Local Authorities and RftIes in
establishing loan applications, since they were still accustomed to
the old procedures; and
new procedure for releasing loan funds in tranches\.
II\. All these difficulties were overcome in 1985 and 1986, because of the
following actions:
- human resource strengthening, with good results in terms of perfor-
mance;
- recruitment of a technical assistant, who helped with:
the establishment of a new organizational chart;
the drafting of an outline for a manual of procedures\.
the preparation of standard loan application outlines\.
- initial computerization of FEC through the purchase of a microcom-
puter under the technical assistance component of the Pilot Project
Loan\.
- familiarization of clients, thanks to identification and assistance
missions, with loan application outlines and project preparation
procedures\.
- advanoes to finance studies\.
- 18 -
Impact of FEC Actions
12\. Both within the project framework and by its overall actions, FEC's
actions had beneficial and satisfactory effects in terms of helping to provide
infrastructure for the Local Authorities:
- provision of water supply to urban and rural dwellers, which slowed
down the flight from the land;
- contribution to solid and liquiA waste disposal up to the treatment
stage, with its impact on the environment and the prevention of
water-borne diseases;
- contribution to the solution of the housing crisis, in restructuring
unserviced housing and in slum absorption;
- opening up of areas to urban and industrial development (industrial
parks) with all their multiplier effects (e\.g\., mobilization of
public savings and leverage effect on the mobilization of private
savings, creation of permanent jobs);
- incentives to encourage citizens to participate in urban improvement
works through neighborhood associations;
- execution of commercial infrastructure to improve communal revenues;
- realization by the Local Authorities of the need for cost recovery,
which has now become accepted practice; and
- consideration of recurrent expenses (maintenance costs) before
implemen ation of the communal infrastructure projects\.
Conclusions
13\. In the future, these efforts should be encouraged and extended to
reach the maximum number of Local Authorities, thereby increasing the numbers
of beneficiaries\. In particular, the following measures should be taken:
- preparation of FEC project preparation guides;
- preparation of a consolidated internal procedures manual;
- review of appraisal criteria in light of the retrospective analysis;
- simplification of appraisal reports, making them more concise;
- logistical arrangements for the monitoring and more widespread
*upervision of FEC-financed operations; and
- review of fund release procedures\.
- 19 -
PART IIIs STATISTICAL INFORMATION
Table 1: Related Bank Loans
Loan Number
and Title Purpose FY Status
Loan 1528-MOR Help the Government finance the 78 Completed;
First Urban Development rehabilitation and develop- March 1984
Project ment program in the Butte
district of Rabat\.
Loan 1944-MOR Help the Government finance the 81 Completed;
Second Urban Development rehabilitation and develop- July 1988
Project ment program as well as
improve municipal services
in Meknes and Kenitra\.
Loan 2245-MOR Line of credit to CIH 83 Completed;
Third Urban Development for low-cost housing January 1990
Project subprojects\.
Loan 3121-MOR Help the Government promote 89 Ongoing
Housing Finance Project development of housing for
low- and medium-income
households\.
Loan 3122-MOR Stimulate housing finance 89 Ongoing
Housing Finance Project activities and help CIH
improve financial position
operations\.
- 20 -
Table 2: Project Timetable
Planned Revised Actual
Identification 05/80
Preappraisal 02/81
Appraisal Mission 06/82
Loan Negotiations 03/25/83
Board Approval 04/26/83
Loan Signing 05/23183
Loan Effectiveness 08/22/83 11/22/83 04/02/84
Loan Closing 06/30/89 12/31/89 12/31/89
Last Disbursement 06/30/89 12/31/89 01/29/90
- 21 -
Table 3: Cumulative Loan Disbursements (in million US Dollars)
Ratio of
Estimated Actual Disb\.
Bank Disbursements Cumulative Actual Cumulative vs\. Estimated
Fiscal Year at Appraisal Total Disbursements Total Total Disbursements
Sep\. 1982
Dec\. 1982
Mar\. 1983
Jun\. 1983 0%
1984
Sep\. 1983
Dec\. 1983
Mar\. 1984
Jun\. 1984 0\.9 0\.9 0\.04 0\.04 4\.44%
Sep\. 1984 0\.04
Dec\. 1984 0\.02
Mar\. 1985 0\.02
Jun\. 1985 3\.3 4\.2 0\.30 0\.42 10\.00%
Sep\. 1985 0\.28
Dec\. 1985 0\.28
Mar\. 1986 0\.25
Jun\. 1986 4\.7 8\.9 1\.45 2\.68 30\.11%
19~87
Sep\. 1986 0\.53
Dec\. 1986 2\.02
Mar\. 1987 1\.00
Jun\. 1987 3\.6 12\.5 2\.04 8\.28 65\.28%
Sep\. 1987 0\.76
Dec\. 1987 0\.00
Mar\. 1988 2\.86
Jun\. 1988 2\.0 14\.5 0\.57 12\.47 86%
Sep\. 1988 1\.46
Dec\. 1988 0\.58
Mar\. 1989 0\.27
Jun\. 1989 1\.5 16 0\.32 15\.90 94\.37%
1990
Sep\. 1989 0\.21
Dec\. 1989 0\.20
Mar\. 1990 16\.0 0\.49 16\.00 100%
Jun\. 1990
Date of last disbursement: January 29, 1990
Table 4: Proiect Costs and Financing
IBRD REFINANCING (LOAN 2272-MOR)
Distribution by Benefici\.ary
Number of FEC Loan IBRD Refinancing Average
Beneficiary Refinanced Projects Amount in M DH in M DHin % Refinancing in H DH
1\. Local Authorities (83) (242\.76) (106\.75) (44) (1\.29)
of which
- Rural Communes 44 84\.98 38\.35 45 0\.87
- Autonomous Centers 12 51\.37 20\.92 41 1\.74
- Municipalities 27 106\.41 47\.48 45 1\.76
2\. Autonomous Regies 17L (78\.53) (27\.291 (351 (3\.901
TOTIAL 90 321\.29 134\.04 42 1\.49
Distribution by Sector
Number of FEC Loan IBRD Refinancing Average
Sector Refinanced Projects Amount in M DH in M DH in % Refinancing in M DH
1\. Water Supply 12 43\.40 19\.32 45 1\.61
2\. Electricity 0
3\. Urban Transport 4 55\.40 15\.92 29 3\.98
4\. Commercial Infrastructure 36 79\.18 37\.17 47 1\.03
5\. Special Infrastructure 6 15\.89 6\.68 42 1\.11
6\. Urban Development 9 37\.15 15\.22 41 1\.69
7\. Sport/Tourism Infrastructure 4 21\.62 9\.64 45 2\.41
8\. Liquid Waste a 51\.70 22\.29 43 2\.79
9\. Solid Waste 11 16\.95 7\.80 46 0\.71
TOTAL 90 321\.29 134\.04 42 1\.49
- 23 -
Table 5: Status of Covenants
Loan Agreement
Reference* Description/Deadline for Compliance Status
LA 4\.02 Borrower to review with the Bank and FEC capital Complied with\.
requirements and interest charged to ensure FEC's sound
financial position, by October 1, 1985\.
PA 2\.06 (a) FEC to maintain and provide the Bank with records of Complied with\.
costs and benefits at regular intervals\.
PA 2\.06 (b) FEC to prepare a completion report no later than six Complied with in
months after the closing date\. May 1991\.
PA 2\.07 FEC to employ
(i) qualified technical advisor to assist in Complied with in
project appraisal and supervision, by October April 1984\.
1, 1983\.
(ii) technical experts as project advisors, by Complied with\.
October 1, 1983\.
(iii) technical consultants, by January 1, 1984\. Complied with\.
PA 2\.08 (a) FEC to review each year with tha Bank its capital Government in
requirements and interest charged to ensure its sound default\.
financial position\.
PA 3\.02 (a) CDG to submit to the Bank a staffing plan for PEC, by Complied with in
October 1, 1983\. 1988\.
PA 3\.02 (b) CDG to employ five economists/financial planners, two Complied with in
engineers, and three technical aides; January 1, 1984\. September 1984\.
PA 3\.02 (c) CDG to submit to the Bank the training program of the Complied with in
department managing PEC, by January 1, 1984\. March 1985\.
PA 4\.01 FEC to maintain detailed financial and accounting Complied with\.
records and retain for one year after the closing date\.
PA 4\.02 (a) EEC to have its accounts audited each fiscal year\. Complied with\.
PA 4\.02 (b) FEC to furnish the Bank with audited financial Complied with
statements no later than six months after the end of generally within
each fiscal year\. several months of
the due date\.
* LAt Loan Agreement, dated May 23, 1983
PAs Project Agreement, dated May 23, 1983
- 24 -
Table 6\.1 Missions
Stage of Month/ No\. of Dayc in Specializations Nature of
Project Cycle Year Staff Field Represented Ratings Problems
Preparation 01/81 4 14 2 Loan Officers
1 Urban Specialist
1 Financial Analyst
05/81 1 7 1 Urban Specialist
06/81 5 3 1 Urban Specialist
1 Financial Analyst
1 Loan Officer
Preappraisal 03/82 3 14 1 Urban Speciatist
1 Financial Analyst
1 Economist
Appraisal 07/82 3 24 1 Financial AnaLyst
1 Loan Officer
1 Urban Specialist
02/83 2 4 1 Division Chief
1 Urban Specialist
Supervision 11/83 1 3 1 Urban Specialist I
03/84 1 12 1 FinanciaL Analyst 1
10/84 1 8 1 Financial Analyst 2 Managerial
03/85 2 6 1 Financial AnaLyst 2 Managerial
1 Consultant Engineer
10/85 3 5 1 Deput- Chief 2 Managerial
1 Consultant, Engineer
1 Consultant, Economist/
Financial Analyst
03/86 4 12 1 Urban Specialist 2 ManageriaL
1 Engineer
10/87 3 12 1 Engineer 2 Managerial
1 Economist/Fin\. Analyst
07/88 1 7 1 Financial Analyst 2 Managerial
Project
Cospletion 06/89 1 28 1 Financial Analyst
10/90 1 15 1 FinanciaL Analyst
12/90 1 5 1 Financial Analyst
05/91 1 10 1 Financial Analyst
- 25 -
Table 6\.2: Staff Inputs (in weeks)
Preparation AppraisaL Negotiations Processing Supervision PCR TotaL
FY81 51\.6 6\.5 58\.1
FY82 12\.4 3\.0 \.7 16\.1
FY83 \.2 16\.8 \.1 9\.5 26\.6
FY84 \.9 2\.7 3\.6
FY85 6\.1 6\.1
FY86 8\.7 8\.7
FY87 1\.8 1\.8
FY88 2\.7 2\.7
FY89 4\.8 4\.8
FY90 1\.9 1\.9
FY91 14\.7 14\.7
Total 64\.2 19\.8 \.1 17\.6 30\.4 14\.7 145\.1
-26 -Table 7
Page 1 of 2
Table 7: List of Subprolects Loan MOR-2272
Loan data: Original amount 16,000,000 US Dollars
Amounts
disbursed
by Bank
Categorv Description Lin US dollars)
A-1 C\.R\. SIDI MOUSSA BEN 26,877\.21
A-10 MUNICIP\. D'ALHOCEIMA (CHAUSSEES) 77,750\.27
A-100 MARCHE COUVERT C\.R\. IFRANE ATLAS SAGHIR 24,984\.17
A-101 MATERIEL ROULANT MUNICIP\. MER-SULTAN 124,233\.80
A-102 MAT\. COLLECTE ORDURES MENAGERES/TANGER 224,176\.15
A-103 VOIRIE-MUNICIP\. TAZA 333,676\.17
A-104 A\.E\.P\. C\.R\. SBAA AIOUNE 57,116\.63
A-105 MARCHE C\.A\. GUERCIF 157,342\.27
A-106 MAT\. COLLECTE ORDURES MENAGERES-KHEMISSET 86,820\.00
A-107 2 CAMIONS BENNE C\.R\. MELLALYINE 0\.00
A-108 HALTE ROUTIERE-VOYAGEURS-ESSAOUIRA 123,387\.07
A-14 MUNICIP\. DE KSAR EL KEBIR 51,547\.74
A-15 MUNICIP\. DE TAZA (ASSAINISSEMENT) 349,219\.31
A-16 C\.R\. DE MOUALINE EL OUED 8,088\.83
A-17 C\.A\. DE MARTIL (CAMION BENNE A ORDURES) 9,516\.27
A-18 CENTRE COMMERCIAL SEFROU 227,094\.09
A-19 C\.R\. DE BOUARFA (ASSAISSEMENT) 260,959\.64
A-2 C\.R\. EL BOROUJ 52,795\.99
A-20 VOIERIE C\.A\. FQIH BEN SALAH 131,100\.14
A-21 C\.R\. DE SOUR SEBT OULED NEMMA 125,961\.67
A-22 C\.R\. ISSAGUEN 118,903\.38
A-23 C\.R\. LARABAA TAOURIT 106,330\.22
A-24 C\.R\. IZZEMOUREN 42,758\.27
A-25 SOUK C\.R\. BENI ABDELLAH 43,867\.95
A-26 STATION D'EPURATION PISCINE A RHEMISSET 59,762\.31
A-27 DEPLACEMENT DU SOUK C\.R\. BENI HADIFA 93,923\.99
A-28 SOUR C\.R\. BENI BOUAYACH 131,5\.6\.54
A-29 EQUIPEMENT SOUR D'IMZOUREN 55,034\.61
A-3 MUNICIPALITE DE TANGER 104,573\.69
A-30 EQUIPEMENT SOUR C\.R\. BENI BOUNSAR 28,683\.29
A-31 SOUK TAMASSINT C\.R\. IMRABTEN 103,451\.69
A-32 DEPLACEMENT SOUK C\.R\. SOUALEM TRIFIA 390,797\.55
A-33 EQUIPEMENT SOUK C\.R\. ROUADI 43,629\.34
A-34 EQUIPEMENT SOUK C\.R\. TAGHZOUT 22,221\.97
A-35 C\.R\. D'EL KBAB (CAMION BENNE) 9,161\.35
A-36 ZONE INDUSTRIELLE ELJEDIDA 297,262\.78
A-37 ZONE INDUSTRIELLE ELJEDIDA 186,625\.60
A-38 AEP C\.R\. AHLAF 33,891\.62
A-39 COMPLEXE SPORTIF/CU ESSOURHOUR ASSAWDA 349,749\.71
A-42 MARCHE COUVERT C\.R\. BOUMIA 123,102\.54
A-43 A\.E\.P\. MELILLA 13,204\.81
A-44 A\.E\.P\. OULED ALI 27,723\.44
A-45 A\.E\.P\. MOUALINE EL GHABA 26,695\.81
A-46 RESERVOIR 30,OOOM A SALE-RED 569,794\.13
A-47 MARCHE COUVERT A OUARZAZATE 91,860\.31
Table 7
- 27 Page 2 of 2
Amounts
disbursed
by Bank
Category Description (in US dollars)
A-48 MARCHE C\.R\. DE ZAGORA 116,186\.37
A-49 MARCHE C\.R\. DE TINEGHIR 89,889\.36
A-5 CENTRE AUTONOME DE TIZNIT 320,120\.84
A-50 MARCHE C\.R\. D'ELKALAA M'GOUNA 61,270\.09
A-51 ASSAINISSEMENT C\.A\. DE YOUSSOUFIA 389,904\.92
A-52 ASSAINISSEMENT C\.A\. DE BEN SLIMANE 403,797\.26
A-53 20 AUTOBUS + 60 MINIBUS-REGIE TRANSRABAT 542,397\.59
A-54 RESERVOIR 25,OOOM AINTEKKI-RAD 545,284\.13
A-57 VOIRIE MUNICIP\. DE TANGER 64,392\.25
A-58 EXTENSION MARCHE MUNICIP\. DE TANGER 50,343\.04
A-59 EQUIP\. ORDURES MENAGERES MUNICIP\. TETOUAN 281,859\.90
A-6 MUNICIPALITE D'OUED-ZEM 191,600\.27
A-61 ANENAGEMENT FRONT DEMER-AGADIR 274,081\.33
A-63 MARCHE COUVERT-TIFLET 296,744\.82
A-65 RESERVOIR 3000M A BENI MELLAL RADEET 220,956\.35
A-66 MATERIEL ROULANT-MUNICIP\. D'ASILAH 56,979\.41
A-67 CAMIONS ORDURES MENAGERES-RHENIFRA 40,210\.67
A-68 SOUR C\.R\. TABARANT 71,569\.59
A-69 C\.R\. KHEMIS-ZEMAMRA ASSAIN\. (IERE PHASE) 201,788\.41
A-7 C\.R\. D'IRHOUD 15,550\.04
A-71 C\.R\. BENI KHLOUG-AMENAGEMENT/SOUK TNIN 205,725\.62
A-72 C\.A\. BERRECHID-AMENAGEMENT/CONSTRUCTION 370,740\.94
A-73 20 MINIBUS PAR RATM 404,312\.39
A-76 MATERIEL ROULANT-RATMA 575,678\.30
A-78 LOTISSEMENT AIN EL ATARIS-SKHIRAT 203,100\.95
A-79 GARE ROUTIERE TANGER 420,861\.32
A-8 C\.R\. DE TAHALA (SOUK DE SIDI ABDELJALI) 236,492\.94
A-80 ASSAIN\. MEDINA/ETUDE SCHEMA MEKNES 398,957\.81
A-81 CAMIONS ORDURES MENAGERES - EL HAJEB 32,833\.44
A-82 AEP C\.R\. AIT YOUSSEF OUALI 287,950\.46
A-83 AEP C\.R\. BENI-BOUAYACH 154,920\.62
A-84 AMENAGE14ENT SOUR C\.R\. BENI AMMART 72,014\.56
A-85 MARCHE DE GROS - ESSAOUIRA 260,765\.91
A-87 MATERIEL ROULANT C\.A\. FQIH BEN SALAH 64,160\.81
A-88 A\.E\.P\. - C\.A\. TARGUIST 196,341\.63
A-89 TRANSFERT DU SOUR C\.R\. DEROUA 162,691\.47
A-9 CENTRE AUTONOME DE TAROUDANT 258,615\.99
A-91 AMENAGEMENT SOUR D'ARBAA C\.R\. KETAMA 98,291\.90
A-92 TRANSFERT SOUK C\.R\. TLET LOULAD 163,403\.48
A-93 10 BUS - AGADIR - RATAG 301,524\.54
A-95 TRANSFERT SOUR C\.R\. BZOU 76,877\.73
A-96 CAMPING-CARAVANING MUNCIP\. FES 476,184\.05
A-97 TRANSFERT SOUK/CONST\. FOUR-HAMMAM 88,404\.76
A-99 CAFE ET ENSEMBLE FOUR-HAMMAM C\.R\. KSAB 71,746\.23
FE FEE FRONT END FEE \.25% 39,900\.00
1 SUBLOANS, 50% OF EXPENDITURES FOR INVES 0\.00
2 EXPERT SERVICES AND FELLOWSHIPS TO FEC 318,020\.06
A-109 TETOUAN VOIRIE/ASSAINISSEMENT 297,371\.13
Total 16,000,000\.00
Table 8: FEC Activity 1981 - 1989
(UnitU - million DH)
Year 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
(1) Coeituents
TOTAL 103\.0 156,0 151\.3 90\.5 286\.4 382,S 521\.7 544,4 519\.6 962
1\.1 -jLocal Authorities 6 t49) (122) (71) (160) (310) (356) (512) (490) (898)
o Prefectures _- - 49 36 - - - 51
o Mieipelitds 34 12 83 40 60 217 291 301 307 488
o CoiRsnes Autonomes 15 17 22 22 16 22 38 48 36 144
o Coammunes rurales 25 20 17 9 35 35 27 162 148 215
1\.2 - Local Utilities J(9) (107) (29) (19) (126) (73) (165) (32) (30) (64)
o Water/Power 14 76 29 9 36 34 96 3 5 -
o Transport 15 16 - - 90 39 42 10 - 38
o Others - 15 - 10 - - 27 19 24 26
(2) Disbursements
TOTAL- 88\. 58\.1 127\.6 147,2 193,4 334,3 320,8 384,1 361,8 498
2\.1 - Local Authorities (55) (28) (72) (110) (95) (255) (243) (280) (332) (490)
o "Prefectures' - - - - 10 1B 29 7 a 21
o Miu:icipalit6s" 38 13 44 74 57 198 167 194 175 334
o "Coemunes Autonomes 15 6 17 21 13 19 24 37 30 42
o "Communes rurales" 2 8 12 14 15 20 23 41 119 93
2\.2 - Local Utilities (33) (30) (55) (38) (98) (79) (77) (104) (30) (8)
o Water/Power 18 17 52 37 35 28 50 35 19 8
o Transport 15 13 3 - 53 61 27 31 4 _
o Others - - - 1 10 - - 39 7 _
(3) Loans Outstandinx 494,8 469\.3 514,0 570,2 674,1 939,7 1\.139,4 1\.380,5 1\.575\.1 1\.875
(4) Average maturity of assets (yr\.) 11 11 10 10 11 9 _
Sources = Rapports dlActivit6s - FEC
Tab e 9: fEC Income Statements (19a8-1990)
(in M\. Oh)
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
INcWE
Interest on Long-Term Loans 32\.24 32\.06 35\.44 43\.40 51\.02 74\.64 96\.45 127\.54 157\.28 196\.48
Interest on Late Payments 0\.49 0\.84 1\.19 2\.24 2\.09 0\.92 2\.27 4\.46 6\.91 4\.64
Interest on Loans to Staff 0\.10 0\.10 0\.15 0\.19 0\.23
Niscellaneous 0\.10 0\.01 0\.02 1\.51 0\.13 0\.11 6\.13
Total Income 32\.73 32\.90 36\.73 45\.64 53\.12 75\.68 \.00\.34 132\.27 164\.48 207\.48
EXPENSES
Charge on Borrowings 4\.59 8\.45 9\.43 9\.57 11\.43 12\.79 48\.64 116\.17 128\.22 162\.86
Chares on FEC Bonds 18\.00 18100
Fets on rediscou u 21\.11 18\.70 20\.78 27\.37 34\.71 51\.70 45\.30 17\.23 13\.43 9\.57
Total Expenses 25\.70 27\.15 30\.21 36\.94 46\.14 64\.49 93\.94 133\.39 159\.65 190\.43
Provisions for Risks 0\.00 0\.00 0\.00 1\.14 1\.09 4\.87 0\.40 0\.00 0\.00 8\.01
NIscellaneom Fees 1\.41 1\.70 1\.95 3\.11 5\.06 4\.88 5\.37 7\.45 7\.28 8\.61
Total Fees 27\.11 28\.85 32\.15 41\.19 52\.30 74\.24 99\.71 140\.84 166\.93 207\.12
MET PROFITI(NET LOSSES) 5\.63 4\.05 4\.57 4\.45 0\.83 1\.44 0\.63 (8\.57) (2\.45) 0\.36
Table 10: FEC Sources and Arplication of Funds (1981 - 1990)
(in N Dh)
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
A\. StURCES OF FUNS
Sources of Funds generated bv Operations
Met Profit (Met Losses) 5\.63 4\.05 4\.57 4\.45 0\.83 1\.44 0\.63 (8\.57) (2\.45) 0\.36
Depreciation and Provisions 0\.08 0\.08 0\.13 1\.35 1\.31 5\.10 1\.15 1\.53 1\.74 10\.62
Sub-Total 5\.f1 4\.13 4\.71 5\.80 2\.13 6\.55 7\.78 (7\.04) (0\.71) 10\.98
Goverrnent Endowments snd Subsidies 20\.00 -- -- 20\.00 0\.00 0\.00
Sale of Fixed Assets 0\.06 0\.04 1\.13
Loan Repayment
Repayment of Advances for the
Financing of Studies 0\.13 2\.11 2\.28 2\.09
Repayment of Loans co Staff 0\.23 0\.23 0\.28 0\.55 1\.07
Equity Repayment of Loans 75\.98 83\.52 82\.91 93\.45 96\.02 98\.70 121\.06 142\.16 167\.89 198\.47
Sub-Totat 75\.98 83\.52 82\.91 93\.45 96\.02 99\.06 121\.29 144\.55 170\.71 201\.63
Foreign 8orrowigs4t
IBRO 0\.55 8\.81 3\.14 37\.49 74\.37 8\.66 3\.95
IDO + USAID 1\.60 2\.93 73\.61
Sub-Total 0\.00 0\.00 0\.00 0\.55 8\.81 3\.14 37\.49 75\.97 11\.59 77\.56
National Borrowings
in Bonds 50\.00 (0\.93) - -- 785\.20 -- 393\.60 393\.60
5-year Notes -- 200\.00 --
;ub-lotal 0\.00 50\.00 (0\.93) 0\.00 0\.00 0\.00 785\.20 200\.00 393\.60 393\.60
TOTAL SOURCES OF FUNDS 81\.69 137\.65 86\.69 99\.80 126\.97 108\.74 945\.82 433\.48 575\.24 684\.90 o
B\. APPLICATION OF FUNDS
Release of Fuids
Loan Payments 88\.80 58\.08 127\.63 147\.17 201\.35 364\.27 320\.80 383\.28 359\.48 496\.28
Loans for Refinancing of Studies 1\.00 1\.54 0\.46 1\.88 6\.01 4\.71 4\.92
Loans to Staff 2\.81 1\.47 0\.86 2\.10 1\.47
Sub-Total 88\.80 58\.08 127\.63 148\.17 202\.89 367\.54 324\.15 390\.15 366\.29 502\.67
Reiwbursement of Foreign Currency Borrowings
IBRD 6\.44 10\.08 10\.95
Other Borrowings
Sub-Total 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 6\.44 10\.08 14\.47
Reimbursement of National Borrowings
Bonds 3\.34 3\.34 3\.34 6\.68 6\.68 6\.67 6\.67 60\.07 ES\.06 86\.47
5-year Notes
Sub-TotaL 3\.34 3\.34 3\.34 6\.68 6\.68 6\.67 6\.67 60\.07 60\.06 86\.74
Reifbursement of Short-Term Borrowings
Fixed Assets 0\.43 0\.16 0\.04 0\.19 7\.35
Interest on unpaid Loans
TOTAL APPLICATION OF FUNDS 92\.14 61\.42 130\.97 154\.85 209\.57 374\.64 330\.98 456\.70 436\.61 611\.23
NET DIFFERENCE OF WORKING CAPITAL (10\.45) 76\.23 (44\.28) (55\.05) (82\.60)(265\.90) 614\.84 (23\.22) 138\.63 73\.67
Tobte 11: FEC Balance Sheets (1981-1990)
(in H Dh\.)
1981 1982 1983 1984 1955 1986 1987 1988 1989 1990
ASSETS
Short-Term Assets
UBnks w*d Cash 1\.48 2\.94 3\.66 5\.11 2\.94 5\.70 8:96 2\.68 4\.29 6\.44
Current Maturities 81\.83 81\.73 91\.94 94\.15 93\.96 119\.67 140\.54 167\.17 197\.70 233\.18
Current Maturities
(LoOs to Staff) 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.36 0\.45 0\.48
Maturities due on Short-Term Loans 23\.70 34\.70 37\.17 57\.85 57\.06 57\.63 87\.08 122\.03 165\.08 169\.09
Other Debtors 2\.21 2\.99 4\.61 7\.5S 19\.66 13\.76 19\.26 27\.88 20\.73 19\.98
Stb-Totat 109\.21 122\.36 137\.39 164\.72 173\.62 196\.75 255\.83 320\.11 388\.26 429\.17
Long-Term Loom 494\.76 469\.32 514\.05 567\.77 674\.09 939\.66 1,139\.40 1,380\.52 1572\.11 1869\.91
less Cturrent Maturities (81\.83) (81\.73) (91\.94) (94\.15) (93\.96) (119\.67) (140\.54) (167\.17) (197\.70) (233\.18)
Loans to Staff 2\.59 3\.83 4\.41 5\.96 6\.36
less Current Maturities (0\.36)
Lows for Prefinricing of Studies t\.00 1\.54 1\.87 3\.74 7\.65 10\.08 12\.91
tess Current Maturities
Fixed Assets 0\.43 0\.45 0\.38 0\.63 5\.61
tess Depreciation (0\.03) (0\.03) (0\.03) (0\.03) (0\.27) (0\.42)
Deferred Charges 0\.83 0\.75 1\.54 1\.66 1\.45 1\.25 15\.38 13\.95 18\.7'\. 24\.27
TOTAL ASSETS 522\.97 510\.69 561\.04 641\.00 756\.74 1\.022\.84 1\.278\.07 1559\.45 1 797\.36 2114\.16
LIABSLITIES
Short-Term Liabilities
Bants 407\.35 337\.41 385\.18 461\.66 552\.22 800\.32 203\.67 261\.51 140\.42 41\.69
Current Maturities 3\.34 3\.34 6\.68 6\.68 6\.67 6\.67 63\.95 69\.91 97\.36 124\.40
Regularization accoumts 3\.71 7\.49 8\.93 12\.32 15\.53 27\.27 50\.27 50\.00 70\.76 84\.58
Other Creditors 0\.00 3\.16 3\.07 3\.36 1\.28 4\.75 1\.78 4\.72 3\.95 20\.11
Sut-Total 414\.39 351\.40 403\.85 484\.02 575\.70 839\.02 319\.67 386\.14 312\.49 270\.78
Mediuiw- rd Long-Ters Debts
- Sorns 46\.66 93\.32 89\.98 83\.30 76\.62 69\.95 863\.28 803\.21 1\.143\.15 1456\.41
Less Current Maturities (3\.34) (3\.34) (6\.68) (6\.68) (6\.67) (6\.67) (60\.07) t60\.06) (86\.74) (113\.42)
- 5-ye w otes 200\.00 200\.00 (200\.00)
Less Current Maturities
- 1|10D 0\.88 9\.69 12\.83 50\.32 118\.25 116\.83 109\.83
Less Current Maturities (3\.88) (9\.85) (10\.62) (10\.98)
\. Other orrowings 1\.60 4\.53 74\.62
Less Current Maturities
Sub-Total 43\.32 89\.98 83\.30 77\.50 79\.64 76\.11 849\.65 1,053\.14 1\.367\.15 1716\.46
Provisions for Risks 1\.14 2\.23 7\.11 7\.51 7\.51 7\.51
Egtrity
Capitat social 51\.03 51\.03 51\.03 51\.03 71\.03 67\.75 66\.95 86\.51 84\.25 15\.52
Equity on Loows to Staff 3\.29 4\.09 4\.53 6\.78 81\.91
Reserves 10\.97 9\.12
ret Profit 8\.60 14\.23 18\.28 22\.85 27\.30 28\.13 29\.57 30\.20 10\.66 6\.08
Accuulated Retained Earnings 5\.63 4\.05 4 57 4\.45 0\.83 1\.44 0\.63 (8\.57) (2\.45) 0\.36
Sut-Total 65\.26 69\.31 73\.89 78\.34 99\.16 100\.61 101\.24 112\.66 110\.21 111\.40
TOTAL LIABILITIES 522\.97 510\.69 561\.04 641\.00 756\.74 1\.022\.84 1\.278\.07 1559\.45 1\.797\. 2114\.16
Table 12: FEC Financial Performance Indicators (1981-1989)
1981 1982 1983 1984 1985 1988 1987 1988 1989 1990
LIQUIDITY RATIOS
Current Ratio 0\.26 0\.35 0\.34 0\.34 0\.30 0\.23 0\.80 0\.83 1\.24 1\.58
FINANCIAL tATIOS
Long-Term Debt/Working Capital Ratio 0\.66 1\.30 1\.13 0\.99 0\.80 0\.76 8\.39 9\.35 12\.40 14\.52
Debt Service Cuverage Ratio 0\.76 2\.32 0\.76 0\.77 1\.01 0\.88 8\.98 2\.99 3\.32
Foreign Currency Debt as Z of Long-Term Debt 1\.13X 12\.17X 16\.86X 5\.92X 10\.67X 8\.28% 10\.01
IEIRD Debt as X of :ong-Teru Debt 1\.13X 12\.17X 16\.86% 5\.92X 10\.52X 7\.97X 5\.96
toxns/Equity Ratio 7\.58 6\.77 6\.9% 7\.11 6\.58 8\.59 10\.33 11\.42 13\.33 14\.81
PROFITABILITY RATIOS
Gross inccae/Average Totau Assets 6\.372 6\.85X 7\.59X 7\.60X 8\.51X 8\.72X 9\.32X 9\.80%
Financiat Expemes/Totat Assets 5\.58X 6\.00X 6\.8W2 7\.48X 8\.34X 8\.67X 9\.93X 9\.95X
Spread 0\.78% 0\.85X 0\.74X 0\.12 0\.16X 0\.05X -0\.60X -0\.15%
get Profit as : of Equity 8\.62X 5\.84% 6\.19X 6\.212 1\.97X 1\.86X 0\.51X -7\.42X -2\.43% 0\.28
Net Profit as S of Average Total Assets 0\.78X 0\.85X 0\.74X 0\.12X 0\.16X 0\.05X -0\.60X -0\.15%
Net Profit Margin
(Net rIncme as 2 of Releases) 6\.34X 6\.972 3\.58% 3\.002 0\.41X 0\.392 0\.19% -2\.20X -0\.67% 0\.07
Provisions as 2 of Short-Term Assets 0\.71X 1\.29X 3\.72X 3\.04X 2\.352 1\.93X
Met Profit before Taxes as X
of Average Equity 6\.0Z/ 6\.392 5\.85Z 0\.93% 1\.45X 0\.622 -8\.022 -2\.20%
Growth Rate of Assets -22 102 142 182 35X 252 222 15% 18%
Table 13: Lending Rates
1980 1984 7 avril ler juin
Maturity 1980 1987 1990
(in years) (1) (2)
1\. Local Authorities
1\.1 Urban Areas
- infrastructure (10) 8,5% 10% 12% 12,5%
- construction (10) all all 13% 13%
- vehicles ( 5) sectors sectors 10,5% 11,5%
1\.2 Rural areas
- all subsectors (12) 10% 10%
2\. "Rfties"
2\.1 Water, Electricity (10) 13% 13%
2\.2 Urban Transport (5) 11\.5% 12%
(1) Before Government subsidy\. This 3 point subsidy initiated in 1981, was paid directly to FEC, who
charged its borrowers only the net rate\. This subsidy was eliminated on January 1, 1987\.
(2) Commitment fee of 0\.75%\.
- 34
Table 14\.1: Accumulative Disbursements
Is
44
4' \.
I A 3\. 4 6 6 7 a X oi 1011 1l4 13 1bl7 18 9 20 Zl22 4 215 ZS27 (quarters)
anticipated + actual
- 35 -
Table 14\.2: Distribution of Loans Refinanced by IBRD
by Sector
(1 to 9, as listed in Table 4)
eo\. -
70 -
Ll4 40
0
I0
g I , ,,s_7\.
6 (11i )\i / af
Distribution of Bank's refinancing by sector\.
-36-
Table 14\.3 Distribution of Loans Refinanced by IBRD
by Type of Borrower
140
lao
Ito
lgo\.
44- \.
00
40
oo
C\.k C-fit m P7\. i
Pler Ct(= (I,
m0X4% | APPROVAL |
P009419 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 15823
PERFORMANCE AUDIT REPORT
BANGLADESH
DRAINAGE AND FLOOD CONTROL II PROJECT
(CREDIT 1184-BD)
June 27, 1996
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Currency Equivalents Name of Currency: Taka (Tk)
Rate of Exchange: End of Year
Appraisal (1980): USDI\.00= Tk 16\.3
Average (1981-88): USDI\.00 = Tk 27\.5
Completion (1989): USD1\.00 = Tk 32\.3
Abbreviations and Acronyms
Bank World Bank
BWDB Bangladesh Water Development Board
ERR Economic Rate of Return
FAP Flood Action Plan
FCD Flood Control and Drainage
FCD/I Flood Control and Drainage, and Irrigation
FDR Flood Damage Restoration Programme
FFW Food-for-Work Programme
HYV High Yielding Varieties
I Irrigation
IDA International Development Association
ICR Implementation Completion Report
I/O&M Improved Operations and Maintenance
IRRI International Rice Research Institute
O&M Operations and Maintenance
OED Operations Evaluation Department
PAR Performance Audit Report
PCR Project Completion Report
PIE Project Impact Evaluation
PPAR Project Performance Audit Report
PRA Participatory Rural Appraisal
RRA Rapid Rural Appraisal
SAR Staff Appraisal Report
SDR Special Drawing Rights
SRP Systems Rehabilitation Project
STW Shallow Tubewell
TA Technical Assistance
Fiscal Year Government of Bangladesh: July I to June 30
Weights And Measures Metric System
Borrower Government of Bangladesh
FOR OFFICIAL USE ONLY
The World Bank
Washington, D\.C\. 20433
U\.S\.A\.
Office of the Director-General
Operations Evaluation
June 27, 1996
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Performance Audit Report on Bangladesh
Drainage and Flood Control H Project (Credit 1184-BD)
Attached is the Performance Audit Report on Bangladesh, Drainage and Flood Control II project
(DFC II), prepared by the Operations Evaluation Department\. DFC 11 was supported by a credit for
US$27 million equivalent approved in FY82\. The credit was closed in FY 89, fully disbursed after two
extensions of the closing date\.
The objective of DFC II was to promote an increase in rice and other crop production by
providing flood control and drainage at three widely dispersed sites, Chalan Beel, Satla Bagda and Hail
Haor\. At the first two, embankments would be built to eliminate flooding from the surrounding rivers,
accompanied by improvements in gravity drainage through and out of the polders\. At the third, several
straight dikes would be built to direct floods away from dry and wet season crops\. Other changes would
include shifts to transplanted, high yielding rice varieties, less tolerant of deep flooding\. Small gated
inlets through the embankments would be provided at the first two sites to support dry season irrigation\.
Some damage to fisheries was anticipated at all sites, and for Hail Haor the project supported studies and
subsequent investments to help maintain the fish populations\.
Works at the Chalan Beel and Satla Bagda polders were completed behind schedule but
generally in accordance with appraisal proposals\. The completed embankments were challenged almost
immediately by the exceptional floods of 1987 and 1988, which caused substantial damage to all
structures and called for project and postproject repairs\. The embankments at Chalan Beel were also
subject to natural and deliberate breaches during lesser floods, a consequence of unexpected hydrologic
pressures on the western margin\. Works at Hail Haor were delayed and finally redesigned, again in
response to changes in local hydrologic forces\.
Agricultural impacts at the two polders were less than envisaged at appraisal but positive
nonetheless\. Falling rice prices depressed rate of return re-estimates everywhere, and these were further
undermined at Chalan Beel by indirect costs imposed on inadequately protected nearby areas and to
riverine fisheries\. These costs exceeded expectations and offset the economic gains from crops\. The
cropping benefits may also be reversed if standards are not substantially improved to safeguard the new
flood control assets\. Cropping gains and fishery losses at Hail Haor were minimal, since the principal
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
2
flood control structures were abandoned and the project financed by the credit resulted mostly in
improved roads\.
The outcome of DFC II is unsatisfactory, with negligible institutional development\. Indirect
costs have undermined the otherwise satisfactory outcome in agricultural production on the two major
polders, without eliciting any significant remedial measures\. Hail Haor further depresses the ratings\.
Sustainability is rated uncertain: dependent on very uncertain improvements in O&M\. These ratings are
in line with those in the Project Completion Report\.
Lessons that can be drawn from this project include: (i) well designed flood control investments
can have significant positive impacts on flood-sensitive crops in the wet season and, depending on the
location, in protecting maturing dry season crops as well; (ii) in unstable water regimes such as those in
Bangladesh, regional hydrological forces must be carefully taken into account when designing polders
and dikes; (iii) fishery losses to polder emplacement can be substantial in relation to agricultural benefits,
and remedial measures must enter the project design and be enforced; and (iv) the tendency to ignore
fanner organizations in flood control operations, as distinct from irrigation operations, must be reversed\.
The project demonstrates how the absence of participatory O&M threatens the sustainability of all
project works\.
Attachment
FOR OFFICIAL USE ONLY
Contents
Preface \. \. 3
Basic Data Sheets \. \. 5
Evaluation Summary\. \. 7
1\. Introduction and Background
A \. Introduction \. \. 13
B\. Flood Control and Drainage \. \. 13
C \. A udit of D FC I \. 15
2\. Project Objectives and Preparation
A \. O bjectives \. 16
B\. Preparation \. 16
3\. Project Im plem entation \. 19
4\. Operation and Maintenance \. 23
5\. Outcome
A \. General Rem arks\. 27
B\. Chalan Bee \. \. 28
C\. Satla Bagda\. 30
D\. Hail Haor\. 33
E\. Overall Rate of Return \. 34
6\. Findings and Lessons
A\. Findings
1\. Im pact on Cropping\. 36
2\. Regional Hydrology \. 37
3\. Fisheries\. 42
4\. Embankments \. \. 43
5\. Influence of O&M on Project Impact\. 43
B\. Lessons \. 44
This report was prepared by Edward B\. Rice (Task Manager), with support from S\.A\.M\.
Rafiquzzaman (Bank), Azharul Haq (IIMI), Jayantha Perera and Annemarie Brolsma (consultants),
who audited the project in October 1994 and July 1995\. Afi Zormelo and Megan Kimball
provided administrative support\. The report was issued by the Agriculture and Human
Development Division (Roger Slade, Chief) of the Operations Evaluation Department (Francisco
Aguirre-Sacasa, Director)\.
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Annees
1\. DFC II Infr tructr W orks \. 47
2\. Field Report on Chalan Beel and Satla Bagda\. 49
3\. Governments Comments on the Draft PAR
A\. M inistry of W ater Resources\. 53
B\. M inistry of Planning \. 57
Maps
I\. Bangladesh: Subproject Sites (IBRD 27713)\.end
2\. Chalan Beel Subproject (IBRD 27604)\.end
3\. Satla Bagda Subproject (IBRD 27605)\.end
4\. Hail Haor Subproject (IBRD 27606)\.end
5\. Hail Haor Subproject, Regional Perspectives\. 35
6\. Chalan Beel, the Green River\. \. \. 39
3
Preface
This is a Performance Audit Report (PAR) on the Drainage and Flood Control II Project,
involving an IDA Credit in the amount of SDR 24 million\. The credit was approved on October 27,
1981\. It was closed, fully disbursed, on June 30, 1989 after two extensions of the Closing Date\.
The PAR is based on the Project Completion Report (PCR) prepared by the Agriculture
Operations Division of the then Asia Regional Office and submitted to the Board on September 23,
1991, Government's final evaluation reports, the Staff Appraisal Report (SAR), the President's
Report, the Credit documents, a study of project files, and discussion with Bank staff\. OED
missions visited Bangladesh in October 1994 and July 1995 in connection with the audit of this
project, and discussed the effectiveness of the Bank's assistance and project execution with the
Bangladesh Water Development Board (BWDB) and other relevant agencies\. BWDB's kind
cooperation and valuable assistance in the preparation of this report is gratefully acknowledged\.
The PCR provides an adequate account of the operation of the project and the performance
of the Bank and project executing authorities\. The economic analysis has been updated, and the
subject of regional hydrologic regimes has been introduced based on subsequent work by
consultant teams under the auspices of the government's Flood Action Plan\.
Government's comments on the draft PAR are reflected in the text and also attached as
Annex 3\.

5
Basic Data Sheet
DRAINAGE AND FLOOD CONTROL II (CREDIT 11 84-BD)
Key Project Data
Appraisal Actual or Actual as % of
estimate current estimate appraisal estimate
Total project costs(US$ m) 41\.4 40\.0 97
Loan amount(US$ m) 27\.0 29\.2 108
Cancellation 0\.1
Economic rate of return (%) 23 Close to 10 43
Institutional performance Modest
Follow-on Operation Several Two (FYs85,87)
Cumulative Estimated and Actual Disbursements
81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 Total
Appraisal estimate (US$M) 1\.0 5\.0 13\.0 20\.5 25\.5 27\.0 27\.0
Actual (US$M) 1\.4 2\.1 3\.9 6\.9 16\.8 19\.8 27\.7 29\.2 29\.2
Actual as% of appraisal 28 16 19 27 62 73 102 108 108
Date of final disbursement: December 29, 1989
Project Dates
Planned Actual
Preparation 6/80
Appraisal (1) 6/80
(2) 2/81
Negotiations 1/81 8/81
Board Date 3/81 10/27/81
Signing Date 01/08/82
Effectiveness 02/08/82 07/14/82
Completion 06/30/86 06/30/89
Closing date 06/30/87 06/30/89
6
Staff Inputs
Task FY79 FY80 FY81 F782 F783 FY84 FY85 FY86 FY87 F788 FY89 FY90 Total
LENP Preparation \.4 4\.4 2\.8 \.1 7\.7
LENA Appraisal 3\.7 50\.9 6\.4 61\.0
LENN Negotiations 2\.0 2\.0
LOP Loan Preparation \.1 1\.6 6\.1 7\.8
SPN Supervision 4\.0 16\.3 19\.2 17\.5 10\.7 12\.5 1\.4 1\.1 \.1 82\.8
PCR PCR \.7 \.1 \.8
PAD Project Admin\. \.1 \.1 \.4 \.1 \.2 \.9
TOTAL \.4 8\.2 55\.3 18\.7 16\.3 19\.3 17\.9 10\.8 12\.7 1\.4 1\.8 \.2 163\.0
Mission Data
Mission Month/Year No\. of Days in Specialization Performance Type of
persons field Represented' Statusb problems'
Preparation 1979/80 BWDB assisted by foreign consultants
Appraisal - I Jun\. 80 3 EC, IE, AG
Appraisal - 2 Feb\. 81 3 EC, IE, IE
Appraisal -3 Apr\. 81 3 EC, F
Supervision - 1 Aug\. 82 4 8 IE, IE, IE, AEC 2 F
Supervision - 2 Jan\. 83 2 RMBd IE, CTE 2 F
Supervision - 3 June 83 1 6 AEC 1
Supervision - 4 Feb\. 84 2 RMBd IE, IE 2 M,T
Supervision - 5 May 84 2 7 AEC, AEC 3 M,T
Interim Supervision Oct\. 84 1 n\.a AEC n\.a n\.a
Supervision - 6 Jan\. 85 5 11 IE, IE, IE, AEC, EC 2 M,T
Supervision - 7 Oct\. 85 3 6 AEC, AG, ACT 2 n\.a
Review Jan\. 86 1 10 IE n\.a n\.a
Supervision - 8 July 86 3 RMBd IE, IE, AG 2 n\.a
Supervision - 9 Oct\. 86 n\.a n\.a n\.a 2 n\.a
Supervision - 10 May 87 3 RMBd IE, AG, DSB 2 n\.a
Supervision - 11 July 88 n\.a n\.a n\.a 2 n\.a
Supervision -12 Jan\. 89 2 RMBd IE, DSB e
Completion' May 90 3 10 IE, AG, EC
a\. Specialization: Ec = Economist; IE = Irrigation Engineer; AG = Agriculturist; AEC Agricultural Economist; CTE
= Contract Engineered; ATC = Accountant; DSB = Disbursement Officer; F = Fisheries Specialist
b\. Performance rating: I = Problem\. or minor problem; 2 = Moderate Problems; 3 = Major Problems
c\. Type of problems: F = Financial; M = Managerial; T = Technical\. Types of problems were not recorded in
supervision reports after January 1986 because of change in reporting format\.
d\. Supervision by Resident Staff, number of days spent not recorded\.
e\. No report available\.
f\. FAO/CP\.
7
Evaluation Summary
Introduction
1\. OED audited this project in association with a regional impact study of irrigation and
drainage projects in South and South East Asia\. The other projects selected for the regional
study were for gravity irrigation operations in Thailand, Myanmar and Vietnam\. The
Bangladesh project was included to provide a rough comparison of operation and maintenance
(O&M) performance on flood control works with the more detailed assessment of O&M
performance on irrigation works\. The regional impact study reports have been prepared in
tandem with this audit report\.
2\. The concern for flood control and drainage (FCD) operations in Bangladesh, vis A vis
irrigation (I) operations, is dictated by the geographic conditions of this largely deltaic country\.
About 90 percent of the schemes built and managed by the Bangladesh Water Development
Board (BWDB) are labeled FCD\. The Bank has supported seven projects dedicated to FCD, all
of them designed with low capital costs per protected hectare\. The project under audit is the
second in a series of four, out of the seven, aimed at one or a few medium-scale schemes\.
3\. In the aftermath of devastating floods in both 1987 and 1988, the world's aid donor
community proposed that a plan for developing a better strategy to control and manage floods in
Bangladesh be prepared\. This became the Government of Bangladesh's Flood Action Plan
(FAP), which commenced its work in 1990\. It comprises twenty-six separate studies, five of
which have particular relevance to this audit\. FAP-2, 4 and 6 are regional studies dealing
respectively with the Northwest, Southwest and Northeast regions of the country, where the three
subproject sites are located\. FAP- 12 and FAP- 13 deal with agricultural and O&M issues
respectively, from the national perspective\. For FAP- 12 the consultants selected 17 operating
FCD and FCD/I schemes for field survey, from all regions of the country, including one of the
three under audit (Chalan Beel)\. FAP-13 concentrated on the same schemes\. All five reports
(FAP-2, 4, 6, 12, and 13) provided useful background information for the audit, in addition to the
detailed work on Chalan Beel\.
Project Objectives and Preparation
4\. The primary objective was to promote an increase in rice and other crop production\. The
objective was to be met by providing flood control and drainage to three subproject areas\. These
were Chalan Beel Polder D in the northwest (38,000 ha), Satla Bagda Polders 1, 2 and 3 in the
southwest (21,000 ha), and an area referred to as Hail Haor (19,000 ha) surrounding the haor (a
depression with permanent standing water) by that name in the northeast (Map 1)\. The areas
would be empoldered by building embankments to eliminate or at least reduce flooding from the
surrounding rivers, accompanied by improvements in gravity drainage through and out of the
polders\. The embankments were expected to (1) reduce direct flood damage to standing crops,
(2) increase cropping intensities due to more land becoming available for double cropping during
the wet (monsoon) and dry (winter) seasons, and (3) increase crop yields due to the introduction
of improved varieties (with associated chemical inputs) that were less tolerant of floods and
required better control of water levels\. The emphasis everywhere was on the rice (paddy) crops:
8
Aus in the early wet (kharij) season, Aman in the main wet (kharij) season, and Boro in the dry
(rabi) season\. Varietal changes would include a shift from broadcast to transplanted Aus and
Aman, and from local to high-yielding (HYV) Aus, Aman and Boro\.
5\. Although the investments were aimed mostly at FCD, small, gated irrigation inlets
penetrating the embankments were included in the design for Satla Bagda, and added later for
Chalan Beel\. These works along with the improved control over early flooding were expected to
accelerate the expansion of Boro and other rabi cropping\. A fisheries study, and infrastructure
investments for fisheries development, were also approved for Hail Haor\. The Bank was
concerned about the potential adverse effects of project embankments on fish populations and
fishermen at all sites, but considered the threat at Hail Haor to be exceptional\.
Implementation Experience
6\. Chalan Beel and Satla Bagda were completed generally in accordance with appraisal
proposals, after substantial delays\. With the exception of peaty soils used for construction of
part of the embankment at Satla Bagda, Bank supervision staff generally reported reasonably
good quality for all works and structures, especially the main regulators\. The fact that the
western embankment at Chalan Beel held against the 1987 and 1988 floods, with only two
natural breaches, is cited in evidence\. At both sites the number of drainage structures in the
embankments proved inadequate and had to be increased\.
7\. The major obstacle to timely completion and operation at Chalan Beel, apart from delays
in land acquisition, was the practice of unauthorized cuts of the new embankment\. The pattern
that developed soon after the embankments were finished in 1986 was for "outsiders" to break
through the wall on the western side of Polder D, in order to reduce flood levels in the Sib River,
and for "insiders" to cut roadways inside the polder one after the other until finally breaking
through the dike on the eastern side of Polder D\. This action allowed the flood waters to sweep
across the polder along an west-east corridor from the Sib to exit into the Fakirni River\. These
hydrological pressures were not anticipated in any of the feasibility reports\.
8\. The Hail Haor subproject was changed appreciably from appraisal proposals, and
suffered even longer delays\. The major factor interrupting work, and leading eventually to
substantial redesign, downgrading of project works, and reallocation of funds, was the removal
of the "North Flood Embankment" from the flood control plans and the elimination of the one,
large regulator\. These had been the premier components of the Hail Haor plan from the time it
was first drafted\. What the Bank ultimately helped finance in the original project area is best
described as a roads project\. It included the North Flood Embankment, but this is now redundant
as a flood control structure and serves simply as a highway\.
9\. The fisheries study at Hail Haor was completed four years later than planned and did not
influence public expenditures on fisheries in that area\. The subproject had a minimal impact on
flood control, and no effect on fisheries\.
10\. In short, implementation achieved the project's major targets with varying levels of
success, viz: (1) nearly full protection of the three Satla Bagda Polders from river flooding, apart
from the two exceptional years; (2) partial protection of Chalan Beel Polder D, except where
natural breaches and unauthorized cuts occurred in response to unanticipated water pressure; (3)
flood control works of different alignment and substantially smaller import than planned within
9
the Hail Haor area, reinforced by a more effective dike that had not been contemplated at
appraisal, outside the project area at the immediate source of the floods; (4) shortfalls in drainage
work everywhere; (5) good roads leading to the project sites and along and within the
embankments; (6) a profusion of minor irrigation structures so far of modest use; and (7) an
ineffectual fisheries study\.
11\. In 1985, in anticipation of savings from the Bank's Credit due mostly to changes in the
rate of exchange of the Taka, the Bank agreed to reallocate SDR 4 million to support relief work
on other schemes damaged by flooding in 1984\. Subsequent reallocations against damage from
floods in each of the next four years, and a cyclone in 1985, brought total reallocations to
US$12\.1 million, or 30 percent of the Credit\.
Operation and Maintenance
12\. For over a decade the Bank has pressed government and BWDB to adjust its priorities
and expand its budget for operation and maintenance on all FCD/I schemes\. The ongoing
BWDB Systems Rehabilitation Project (SRP), approved in 1990, is a response to the Bank's
concern\. But it has not performed as expected\. FCD projects are at a disadvantage to irrigation
projects in O&M in two respects\. First, BWDB budget allocations to O&M for FCD schemes
are significantly smaller than to irrigation schemes, both by international standards and in
proportion to BWDB's own assessments of requirements\. The low budgets are reflected in the
deterioration of structures and equipment almost as soon as they are installed\. Second, whereas
BWDB in the last decade has promoted farmer organization for participation in O&M on irrigation
schemes, this activity has never been extended to FCD\. Bangladesh distinguishes itself, in the set
of countries selected by OED for the regional review of irrigation projects, by its relatively weak
institutional framework for participatory action by benefiting farmers\.
13\. With a growing number of its own senior staff convinced that O&M must be upgraded,
BWDB has substantially increased its commitments to O&M in recent years\. Nevertheless, the
response has been inadequate, and the Bank's confidence in BWDB's endorsement of SRP has
been shaken\. The three schemes of DFC II are not yet listed for rehabilitation\. But unless there
is a change in revealed preference at BWDB, and in the finance and planning ministries where
overall budget priorities are set, maintenance practices are unlikely to improve sufficiently and
the DFC II works will continue to deteriorate\.
Outcome
14\. Impacts of FCD projects are measured in the first instance by favorable changes in the
onset, depth and duration of flooding and, as a consequence, changes in cropping systems and
yields\.
15\. Chalan Beel\. FAP-12 found that over most of the project area the objectives of delaying
the onset and reducing normal depths of the flood had been achieved, though to a smaller extent
than expected\. It explained the shortfall from the quantitative targets established at appraisal
partly by the unanticipated hydrological forces which kept a significant fraction of the cultivable
area out of production in the monsoon season\. The expectation of similar flash floods explained
why farmers in that perilous corridor appeared to have voluntarily reduced cropped area and,
hence, intensities at the time of FAP's field investigations in 1991\. Nevertheless, because of
10
relatively low per-hectare investment costs, FAP calculated an ERR based exclusively on
agricultural benefits within the polder of 26 percent\. However, the overall rate of return to the
Polder D investments is lower due to indirect costs to other interested parties\. First, the FAP
report discusses in detail the injury caused by the embankments to the capture riverine fisheries
sector, losses in excess of those anticipated at appraisal and estimated at 40-60 percent of the
traditional catch\. Second, the report notes that the Project had major negative impacts outside
the Project area, on conditions in adjacent areas which subsequently suffered higher flood levels\.
FAP did not attempt to calculate those indirect costs; neither has OED\. For a global ERR that
incorporates all gains and losses, OED settles on the rough statement "a maximum of 10
percent\."
16\. Satla Bagda\. This audit supports the view that the most impressive increases have been
in the Boro crop harvested in lower-lying fields that were formerly flooded and out of production
all year\. The impact of the embankment on Boro cropping appears to be partly attributable to
project investments in irrigation inlets, despite the fact the majority of those installed are
currently out of use\. The functioning inlets provide control over twice-daily tidal flows into the
lower lying areas suited to Boro\. Control of river flooding has had a positive impact on wet
season cropping as well, and encouraged the shift from broadcast to transplanted Aus and Aman
predicted in the SAR\. OED was unable to re-estimate an ERR for Satla Bagda from field data,
as there is no survey study comparable to FAP's in Chalan Beel\. Thus, the audit calculates the
returns to a model of paddy cropping comparable to a conservative assessment of the Satla
Bagda investment, yielding an ERR of 11 percent\. This does not reflect indirect costs internal or
external to the polder, and can also be considered a maximum\.
17\. There is no dispute that the embankment at Satla Bagda has provided better control over
inundation levels\. There is dispute about who exercises control and who receives the benefits\.
One of the problems at Satla Bagda, common throughout the delta, is that due to the flat
topography small variations in surface water levels have a large effect throughout the polder, and
the resulting positive and negative benefits of any change to an individual farm are very sensitive
to its elevations\. What farmers on the lower lands call a flood, or congested drainage, is what
their neighbors on slightly higher ground need to adequately serve their crops\. This problem is
one of the reasons group action in what is ostensibly a single, small hydrological unit is so
difficult to organize\.
18\. At Satla Bagda an outspoken advocate of social justice, a bishop resident in Dhaka who
supervises a community of Protestant schools and a convent just inside the northern
embankment, has frequently protested the indifference of officials and donors to the indirect
costs brought by better flood control\. Among his complaints are some unique to his part of the
delta and some common to other parts of Bangladesh: (1) reduction in river transport; (2) loss of
fertility; (3) polluting of the soil by chemicals; (4) increase in the height of the river beds; and
(5) loss of river and flood fisheries\. The validity of these claims notwithstanding, the position of
government and the Bank, supported by the conclusions of FAP-4 (the study of the southwest
region), is that the benefits of poldering in this part of the region offset the negative effects\.
19\. Hail Haor\. The North Flood Embankment was never brought to completion as a dike
providing full flood protection\. The original project design was substituted by reconstruction
and extension of embankments along three other rivers north of Hail Haor\. These embankments
provide protection for both Hail Haor and the plains between it and the three rivers\. Internal
dikes in the haor do delay the onset of floods to ensure a safe Boro harvest, but the area affected
11
is much less than projected for the original scheme\. OED has not recomputed an ERR for Hail
Haor\. The fact that large landowners and laborers alike in the area (Moulvi Bazaar) have
alternative sources of income and are disinclined to rabi cropping made the original assumptions
about cropping impacts even more precarious\.
20\. Overall Rate ofReturn\. Given the rough character of the data base described above, and
the lack of information on many of the indirect costs, the audit does not provide a point re-
estimate for the project's ERR\. In any case it would only include 70 percent of project costs,
because the audit did not review the uses and results of the US$12 million that were reallocated
to flood damage repair throughout the country\. With a weighting that reflects proportional
representation in actual project costs (Chalan Beel - 47%, Satla Bagda - 45%, Hail Haor - 8%),
an overall rate of return in the range of 5-10 percent seems defensible\. Defensible, provided the
assets can themselves be defended against inadequate O&M\. The audit agrees with the PCR's
rating for overall outcome of "unsatisfactory\."
Sustainability
21\. The improved cropping systems will be sustained as long as the embankments serve
their purpose\. Those works are threatened by the inadequate O&M budget and lack of
organization of the farmers for self-help for maintaining FCD structures\. Thus sustainability
must be rated "uncertain," as it was by the PCR\.
Findings and Lessons
* The growth in national food production will continue to depend on expansion of dry
season farming based on shallow tube wells and low lift pumps\. However the
potential contributions of the Boro and monsoon crop-in response to FCD
investments-are also important considering both the ample scope for increasing
HYV coverage through reduction of flood depth, and the low cost of the
investments\. The project under review is not a good platform from which to make
that case\. Results at two of the three sites were well below expectations and
probably unrepresentative\. A full audit of the two other FCD projects now
completed through the ICR stages is desirable\. They offer a stronger base on which
to propose a sustainable, low-cost FCD strategy for the Bank\.
* The Bank should adjust FCD design to regional hydrological patterns\. The project
included two schemes, out of a total of three, whose designs were seriously
compromised by hydrological forces outside the range of normal concerns at
preparation and appraisal\.
* In future FCD operations the Bank must insist on remedial action to help offset
losses to the fisheries subsector\. Site-specific studies may be necessary to identify
appropriate responses\. To the extent FAP achieves a shift in FCD strategy toward
reducing and "living with," rather than deflecting, the flood, the pressure on riverine
fisheries will diminish\. But the breeding grounds inside the embankments will
remain at risk\.
12
* Government and BWDB's stubborn and slow response to the urgent need to radically
improve O&M must be accelerated\. They as well as the Bank should be alarmed at
the continuing erosion of FCD assets as a result of poor maintenance\. The decline in
the prospects of accomplishing the primary objectives of SRP is particularly
distressing\. The O&M shortfall applies to irrigation as well as FCD, two lines of
investment that the Bank should refuse to support until O&M (and particularly
maintenance) is given the attention everyone agrees it requires\. This means not only
securing BWDB's commitment but also changing the culture and skill mix at BWDB
so that the reforms can proceed\. BWDB's professional staff needs a better balance of
water management experts and civil engineers\. The recent trial organizational
reform establishing a separate field authority and staff for operations and routine
maintenance on one sub-project is a step forward and must be consolidated\.
Introducing the necessary cultural and organizational reforms are among the main
objectives of SRP, but BWDB must absorb them as its own\.
* The effects of the failure to organize farmers to help plan, manage and maintain the
FCD structures are self-evident\. Farmers in the polders have no tradition of
association at the community level on polder problems\. Consequently, the
introduction of participatory water management cannot appeal to traditional
processes of problem solving\. The "tragedy of the lowlands" is that FCD schemes
contain both winners and losers, and constructing organizations that bring them
together calls for skills in social engineering that BWDB does not possess\. Those
skills must be created, a lesson for both the Bank and BWDB\. The TA team
considers its pilot activities in local participation to be among its most important
contributions\. However, BWDB should not be expected to handle this job alone:
other government departments, specialized rural development consultants, and
NGOs with appropriate skills and concerns for polder communities should be
brought on board\.
13
1\. Introduction and Background
A\. Introduction
1\.1 OED audited this project and its three subproject schemes in association with a regional
impact study of irrigation and drainage projects in South and Southeast Asia\. The emphasis of
the regional study is on irrigation, on the performance of operation and maintenance (O&M)
services in irrigation schemes, and on the influence of O&M on the sustainability of agro-
economic impacts of irrigation projects\. The other projects selected for the regional study were
for gravity irrigation operations in Thailand, Myanmar and Vietnam\. The Bangladesh project
under audit was included to provide a rough comparison of O&M performance on flood control
works with the more detailed assessment of O&M performance on irrigation works\. The
regional impact study has been prepared in tandem with this audit report\.
B\. Flood Control and Drainage
1\.2 Bangladesh's 1971 war of independence from Pakistan gave the Bank a pause to
reexamine its strategy for rural development in the future Bangladesh\. The result was a nine
volume Land and Water Resources Sector Study-Bangladesh, prepared by the then Special
Projects Department and issued in 1972\. 1 It was and remains a basic document influencing
nearly all subsequent Bank operations\. The Sector Study recommended that development
attention shift from large-scale works for irrigation and full flood control to small-scale irrigation
and lower cost flood measures\. It recognized that the effectiveness of the existing portfolio
either in controlling rivers or on crop production had been overstated, and that the urgency of the
food crisis demanded direct interventions for quick responses in crop production\. The fact that
Bangladesh rests on one of the world's greatest, though untapped, rechargeable aquifers
prompted the Sector Study to give highest priority to investments in "minor" irrigation works that
would exploit that resource as well as surface waters\. The Sector Study called for continued
investments in flood control and drainage, but recommended these be limited to labor intensive
operations in shallow flooded areas without large scale pumping devices, with low costs per
hectare and with quick impact on cropping\. Thus the profile of Bank investments in
Bangladesh's rural sector in the 1970s shifted\. Tubewell and low lift pumping projects in the
pipeline were brought forward, large scale irrigation schemes were postponed indefinitely, and
flood control and drainage operations were selected according to the low-cost/high-impact
criteria\.
1\.3 The need for flood control and drainage (FCD) operations in Bangladesh, vis & vis
irrigation (I) operations, is dictated by the geographic conditions of this largely deltaic country,
at the confluence of two of the world's mightiest rivers (and a third of nearly equal import) in one
of the wettest sections of the monsoon belt in Asia\. Eighty percent of the cultivable area of the
country is subject to flooding and drainage congestion\. While some projects invest in both types
1\. Asia Projects Department, Report No\. PS-13\. December 1, 1972\. Includes: Volume la Sector Overview; Volume I
Detailed Sector Review; Volume VIII The Flood Problem\.
14
of operations (FCD/I) or mostly irrigation (I), about 90 percent of the schemes built and
managed by the Bangladesh Water Development Board (BWDB) are labeled FCD\.2
1\.4 The Bank has supported seven projects dedicated to FCD since the Sector Study was
issued, all of them approved since 1977 and designed for low costs per protected hectare\. The
project under audit is the second in a series of four, out of the seven, aimed at one or a few
medium-scale schemes\. The first two of these four projects were named Drainage and Flood
Control (DFC)\. The title was reversed for the next two projects to match the common acronym
FCD\. DFC I was audited in 1990;3 DFC II is the subject of this audit\. FCD III and IV were
completed in 1994 and draft Implementation Completion Reviews (ICR) have been submitted to
the Bank by FAO/CP \.4 Each of the three other FCD projects was aimed at construction or
rehabilitation of all or parts of a large number of small-scale schemes\.5 In addition, the Bank
approved three Flood Rehabilitation Projects in the period 1985-1989, a span of years covering
three major floods and damage to most functioning schemes as well as those under construction\.
Finally, in 1990 the Bank approved a new-style project emphasizing improved O&M
performance on all BWDB schemes, FCD, FCD/I and I alone\.6
1\.5 In the aftermath of devastating floods in 1987 and 1988, the world's aid donor
community proposed that a plan for developing a better strategy to control and manage floods in
Bangladesh be drawn\. This became the Flood Action Plan (FAP), inaugurated in 1990\. It
comprises twenty six separate studies\. By 1995 most of the reports had been issued\. Five of
them have particular relevance for this audit\. FAP-2, 4 and 6 are regional studies dealing
respectively with the Northwest, Southwest and Northeast regions of the country, where the three
subproject sites are located\. FAP- 12 and FAP- 13 deal with agricultural and O&M issues
respectively, from the national perspective\. The last two were carried out by the same
consortium of British and Bangladesh consulting firms, financed by the United Kingdom
Overseas Development Agency and the Japan International Cooperation Agency\. For FAP-12
the consultants selected 17 operating FCD and FCD/I schemes for field survey, from all regions
of the country and including one of the three under audit (Chalan Beel Polder D)\. FAP-13
concentrated on the same schemes\. All five sets of reports (FAP-2, 4, 6, 12, and 13) provide
useful background information for the audit, in addition to the detailed work on Chalan Beel\.8
2\. Which nevertheless might include some minor irrigation works\.
3\. PPAR: Bangladesh Drainage and Flood Control Project (Credit 864-BD), Report No\. 8805, June 29, 1990\.
4\. Drainage and Flood Control Project (Credit 864), approved in FY79 for US$19\.0 million\.
Third Flood Control and Drainage Project (Credit 1591), approved in FY85 for US$48\.0 million\.
Fourth Flood Control and Drainage Project (Credit 1784), approved in FY87 for US$20\.0 million\.
5\. Small Scale Drainage and Flood Control Project (Credit 955), approved in FY80 for US$25\.0 million\.
Water Development Board Small Schemes (Credit 1467), approved in FY84 for US$41\.5 million\.
Small Scale Flood Control, Drainage and Irrigation II (Credit 1870), approved in FY88 for US$81\.5 million\.
6\. BWDB System Rehabilitation Project (Credit 2099), approved in FY90 for US$53\.9 million\.
7\. FAP-2 Mott MacDonald International, and associates\. North West Regional Study\. In particular:
Draft Final Report Volume 2, Regional Data & Planning Units, October 1992
The Regional Plan Final Report, January 1993
Final Report Annexes: General Comments by FPCO
Supplementary Study Second Draft, December 1993\.
FAP-4 Sir Willian Halcrow & Partners Ltd\., and associates\. Southwest Area Water Resources Management
Project\. In particular:
15
1\.6 The word flood has different meanings\. Flooding in Bangladesh is normal and
widespread, a consequence of the spring melt in the Himalayas and the annual monsoon\.
Depending upon the location, it is attributable to varying mixes of river spillover and local
rainfall ("inundation" also refers to a mix of the two)\. In the delta, where one of the subproject
sites is located (Satla Bagda), the annual flood leaves only human habitation, roadways and
scattered other high ground above water for months\. Social behavior and cropping patterns are
adjusted to the flood\. But in some years exceptional floods occur, due to either or both abnormal
river stages or heavier than normal rainfall\. When farmers talk of the "floods," they usually refer
to these exceptional events\. Most of the project works in DFC II were completed in 1986, just
before two of the three subprojects sites were swamped by the two historic floods of the late
1980s\.
C\. Audit of DFC I
1\.7 The Project Performance Audit Report (PAR) on the Drainage and Flood Control Project
was issued in June 1990\. The massive library of material from the FAP study program was not
then available\. Nevertheless, the 1990 PAR provided a full review of Government, Bank and
other donor strategy for the water sector, leading up to and after approval and implementation of
DFC I in 1985\. The PAR is exceptionally rich in insights about the developing conceptual
context for FCD interventions, and the strengths and weaknesses of alternative proposals\. The
importance of the 1972 Sector Study in the progression of ideas is emphasized\. The PAR
assesses the resurgence of interest in large-scale solutions to prevent flooding, in response to the
1987 and 1988 floods, and that led to FAP, against the enduring logic of the Sector Study, with
its emphasis on food production rather than flood control (the devastation of the 1987 and 1988
floods notwithstanding)\. The PAR also challenges one of the basic assumptions of the DFC I
Project Completion Report (PCR) 9-that increases in dry season crop production are attributable
to FCD works and can be included in benefit streams for the analysis of rates of return\. These
and other issues highlighted in the 1990 PAR serve as useful reference points for this audit\.
Final Report Executive Summary, August 1993
Final Report Volume I Main Report, August 1993\.
FAP-6 North West Hydraulics Consultants, and associates\. Northeast Regional Water Management Plan\.
In particular:
Final Report Main Report, June 1994\.
FAP-12 Hunting Technical Services Ltd\., and associates\. FCD/1 Agricultural Study\. In particular:
Methodology Report Main Volume, September 1991
Final Report Volume I Main Report, February 1992
Final Report Volume 2 RRA and PIE Results, February 1992
Final Report Volume 3 Appendices E-J, February 1992\.
FAP- 13 Hunting Technical Services Ltd\., and associates\. Operation and Maintenance Study\. In particular:
Final Report Volume I Main Report, March 1992
Final Report Volume 2 Case Studies, March 1992\.
8\. FAP-12 Hunting Technical Services Ltd\., and associates\. FCD/IAgricultural Study\.
Project Impact Evaluation of Chalan Beel Polder-D, February 1992\.
9\. The PCR is packaged in the same volume with the 1990 PAR\.
16
2\. Project Objectives and Preparation
A\. Objectives
2\.1 The primary objective was to promote an increase in rice and other crop production,
consistent with food self-sufficiency and other goals of the Second Five Year Plan FY 198 1-
85\.10 The objective was to be met by providing flood control and drainage to three subproject
areas\. These were Chalan Beel Polder D in the northwest, Satla Bagda Polders 1, 2 and 3 in the
southwest, and an area referred to as Hail Haor surrounding the haor (a depression with
permanent standing water) by that name in the northeast (Map 1)\. The areas were to be
empoldered by building embankments to eliminate or reduce flooding from the surrounding
rivers, accompanied by improvements in gravity drainage through and out of the polders\. The
embankments were expected to (1) reduce direct flood damage to standing crops, (2) increase
cropping intensities due to more land becoming available for double cropping during the wet
(monsoon) and dry (winter) seasons, and (3) increase crop yields due to the introduction of
improved varieties (with associated chemical inputs) that were less tolerant of floods and
required better control of water levels\. These benefits to better water management were
enhanced by improvements to transportation on the dike roadways and village tracks\. The
emphasis everywhere was on the rice crops: Aus in the early wet (kharij) season, Aman in the
main wet (kharij) season, and Boro in the dry (rabi) season\. Varietal changes would include a
shift from broadcast to transplanted Aus and Aman, and from local to high-yielding (HYV) Aus,
Aman and Boro\.
2\.2 The main aim was protection from monsoon flood and drainage congestion\. But small,
gated irrigation inlets penetrating the embankments were planned for Satla Bagda, and added
later for Chalan Beel\. These works, along with improved control over early flooding, were
expected to aceJerate the expansion of Boro and other rabi crops\. No inlets were planned for
Hail Haor, though groundwater investigations were included in the project to determine the
potential for irrigation around the haor by shallow tubewells\.
B\. Preparation
2\.3 The project was prepared through the feasibility stage during the period 1978-80 by a
Dutch consultant firm in collaboration with the Directorate of Planning of BWDB\. Preliminary
studies had been carried out at all three sites during the late 1960s, and updated prior to the
Dutch consultancy\. Preparation for each site required new engineering studies and field
investigations, although the technology was conventional and full engineering design was not
called for\. The same firm had been recruited in 1976 to prepare the three subprojects covered by
DFC I, and was to continue with the preparation of FCD III and IV\. The consultant's feasibility
reports for each of the DFC 11 sites included options for large scale pumping of drainage waters\.
These would have significaitly increased the effectiveness of drainage but at substantially
higher costs\. The consultants (and presumably BWDB's) preference for the pumping option is
obvious from the text\.
10\. Published in May 1980 by the Planning Commission\.
17
2\.4 In each case the reports also provided for a substantial irrigation component\. This was to
support supplementary irrigation if required in the wet season, but was mainly intended for dry
season cropping\. For Chalan Beel, the consultant recommended the project finance 1,600
shallow tube wells (STW), but that installation be deferred for a second phase operation five
years after start-up of the FCD work, arguing that groundwater resources had not yet been
adequately mapped\. For Satla Bagda, the consultant recommended that 450 inlets and other
minor irrigation works to support gravity flow and lowlift pumping from rivers and drains be
incorporated in the original schedule of works\. For Hail Haor, the consultant proposed a single
gravity irrigation scheme diverting water from a river where it entered at the southern head of the
haor, to be constructed along with the FCD works\. In fact, the first 1976 project proposal for the
haor had been labeled an irrigation project\.
2\.5 The Bank considered the pumping and large scale irrigation options inconsistent with the
new strategy for low cost interventions\. A checklist of conditions applying to all FCD proposals
had been agreed in the 1980s\. Among others was the benchmark that FCD schemes costing
more than US$500 per hectare protected should be rejected (and irrigation schemes above
US$620 per hectare irrigated)\. Pumps for drainage were eliminated at all three sites, though the
Bank allowed that the economics of pumping might improve in the future as farmer practices
improved and/or rice prices rose, and the pumps could then be added\. For Hail Haor the
irrigation scheme was dropped, and the groundwater study substituted\. For Chalan Beel the
Bank did not agree to a second phase based on STW\. Nor did it include in project plans
irrigation inlets similar to those planned for Sata Bagda, though during project implementation it
accepted government's proposal to add inlets to the program\.
2\.6 The project as approved had the following major components:
Chalan Beel\. For an area of 38,000 ha, with a rural population of 307,000: construction of
134 km of embankment, drains and nine water control structures, and construction and
improvement of 145 km of roads (Map 2)\.
Satla Bagda\. For an area of 21,000 ha, with a rural population of 200,000: construction
and improvement of 121 km of embankment (including rehabilitation of Polder 3, already
developed under the Dutch-financed Early Implementation Project that started in 1976),
drains and 450 irrigation inlets and construction of 72 km of new roads (Map 3)\.
Hail Haor For an area of 19,000 ha, with a rural population of 84,000: construction of 13
km of embankment, drains and one major water control structure (regulator), and
improvement of 64 km of roads (Map 4)\. A fisheries study, and infrastructure investments
for fisheries development, were also approved for Hail Haor\. The Bank was concerned
about potential adverse effects of project embankments on fish populations and fishermen
at all sites, but considered the threat at Hail Haor to be exceptional\.
2\.7 In all cases the appraisal report emphasized the importance of strengthening agricultural
extension work and expanding access to agricultural inputs, in order for the farmers to take full
advantage of enhanced water control and irrigation facilities\. The economic analysis is based on
assumptions about varieties, yields and cropping systems that reflect improved performance of
these services, as well as the provision of credit\. Section 3\.08 of the Development Credit
Agreement required government to ensure that adequate credit and extension coverage would be
provided\. However, corresponding components were not financed by the project\. The project
18
was to be implemented over five years, except for the fisheries study which was to report in the
second year\.
19
3\. Project Implementation
3\.1 Chalan Beel and Satla Bagda were completed generally in accordance with appraisal
proposals, but after substantial delays\. At both sites the numbers of drainage and/or irrigation
structures in the embankment proved inadequate and had to be increased\. Irrigation inlets were
added at Chalan Beel\. The absence of participation by farmers in project design, for example in
siting the inlets, helps explain the underestimates and other revisions to design\. The Hail Haor
subproject was changed appreciably from appraisal proposals, and suffered even longer delays\.
These summary statements are elaborated below\. Annex I compares original estimates with
actual data on construction of major works\.
3\.2 Delays at the first two sites were largely attributed to (1) initial cuts in government
funding during a government-wide budget-cutting ("pruning") exercise in 1982 and 1983, that
interrupted the start-up years on project works,II and (2) the slow pace of land acquisition to
clear the right of way for the embankments\. Farmer resistance to involuntary loss of part of their
holdings seems to have been less important in explaining the delay in land acquisition than
untimely budget allocations for land purchase and bureaucratic inefficiency\. Affected farmers
initially allowed works to proceed on their property, but undervaluation of property prices
dampened their good will\. Only a few major cases of concerted resistance to construction of
sections of the embankments at Chalan Beel and Satla Bagda are reported in project files\. At
Chalan Beel the episodes were usually associated with a growing perception by persons inside
and outside the polder that the waters blocked by the embankments posed threats that had not
been anticipated\. At Satla Bagda the most notorious of the episodes seems to have been
politically inspired\. At Hail Haor land acquisition turned out to be unnecessary\.
3\.3 The only technical problem facing construction at the first two sites was the use of peaty
soils at Satla Bagda for construction and compaction of part of the embankment\. The
widespread presence of the peat had been recognized, but the Bank had not anticipated that local
BWDB supervisors and contract staff would permit its use in construction\. This prompted
debate about readjusting heights of the embankments, about projections of subsidence
subsequent to construction, and about methods and timing of compaction\. The Satla Bagda
embankments and sluices were completed before the 1987 flood, but that year and the next the
flood waters overtopped the dikes and did substantial damage\. According to BWDB the peat had
indeed made certain sections of the embankment vulnerable to the extraordinary flows of 1987,
giving way under pressure from the rising flood or after the crest had been overtopped\. With
that exception, Bank supervision staff generally reported reasonably good quality for all works,
especially the main regulators\. The fact that the western embankment at Chalan Beel held
against the floods, with only two natural breaches, is cited in evidence in an Evaluation Study\.12
Polder technology had to confront the complexities of drainage in enclosed areas due to varying
topography, but BWDB had long experience in building dikes and full engineering designs had
not been required\.
11\. It resulted also in Hail Haor being dropped altogether from government's plans for a period, before being restored\.
12\. Bangladesh Engineering & Technological Services Ltd\., and Associates\. Undated (about 1990)\. Evaluation Study
ofDrainage and Flood Control II Project, Final Report Chalan Beet Polder "D" Subproject\. Para 3\.05, p\. 111-2\.
20
3\.4 In 1985, in anticipation of savings from the Bank's Credit due mostly to changes in the
rate of exchange of the Taka, the Bank agreed to reallocate SDR 4 million to support relief work
on other schemes damaged by flooding in 1984\. Subsequent reallocations against damage from
floods in each of the next four years, and a cyclone in 1985, brought the total sum redirected to
US$12\.1 million, or 30 percent of the Credit\. The 1988 flood was particularly destructive of
recently completed works at Chalan Beel and Satla Bagda\. Breaks through the dikes included
not only natural breaches but unauthorized "public" cuts, where farmers outside and inside the
polders broke through to try to relieve the threat to their homes and fields\.
3\.5 At Satla Bagda there were 79 natural breaches and public cuts in 1988 alone\. Altogether
45 km of the 121 km total length of embankments around Polders 1, 2 and 3 required major
repair (resectioning)\. Nine of the 12 regulators were damaged, and all 216 km of drains had to
be re-excavated\.
3\.6 The major obstacle to timely completion at Chalan Beel, apart from delays in land
acquisition, was the frequency of public cuts in the new embankment\. The pattern that
developed soon after the embankments were finished in 1986 was for "outsiders" to break
through the wall on the western side of Polder D, in order to reduce flood levels in the Sib River,
and for "insiders" to cut roadways inside the polder one after the other until finally breaking
through the dike on the eastern side of Polder D\. This action allowed the flood waters to sweep
across the polder along a west-east corridor from the Sib to exit into the Fakirni River\. These
hydrological pressures had not been anticipated in any of the feasibility reports produced after
1968\. The implications of this situation are discussed in the Findings section of this report
(paras\. 6\.9-6\.16)\.
3\.7 Repair of 1987 and 1988 flood damage at Chalan Beel and Satia Bagda was partly
covered by project funds\. But the majority of the 1988 flood repairs, which took place after the
project was completed, were financed by the government's Flood Damage Restoration
Programme (FDR), supported in part by the Bank's Second and Third Flood Rehabilitation
Credits, and the Food-For-Work Programme (FFW)\.
3\.8 The problems of implementation at Hail Haor started with the government's economy
drive in 1982 (para\. 3\.2 and footnote 11) and were prolonged in the early years by what Bank
supervision considered poor on-site management by the BWDB staff at the local headquarters at
Mouivi Bazaar\. But the major factor interrupting work on this subproject, and leading
eventually to substantial redesign, downgrading of project works, and reallocation of funds, was
the removal of the "North Flood Embankment" from the flood control plans and the elimination
of the regulator\. These had been premier components of the Hail Haor plan since it was first
drafted in 1967\. The reasons for remodeling of the scheme are given in the Findings section
(paras\. 6\.18-6\.21)\. The actual structures and those currently planned to complete the Hail Haor
project are very different from those approved by the Bank in 1981\. What the Bank ultimately
helped finance in the original project area is best described as a roads project\.13 As such, it
includes the North Flood Embankment, which is now redundant as a flood control structure and
13\. In terms of credit funds allocated, the project was always dominated by roads\. The main flood control work, the
north flood embankment, was to be completed by topping off an existing village road\. Projected and actual costs of
that work, mostly carried out in 1981/82, were only US$700,000, three percent of total costs of civil works (other than
O&M)\. The regulator was another 18 percent\. The several roads planned for the project took 73 percent\. Nevertheless,
the north flood embankment was the anchor for all other project flood control activity, in the original design\.
21
serves simply as a road, a "submersible" dike on the right margin of the haor, which is almost
always above water and used for pedestrian traffic, the "village road" extending from Moulvi
Bazaar toward the haor, and the "main" road running along the western shore of the haor\. None
of the planned drainage works were undertaken before the Bank's project was completed\.
3\.9 BWDB is currently rehabilitating an older surface dike north of the haor that will protect
a section of the cropping zone within the project area, and rehabilitating and extending the
submersible dike (Map 4 shows the completed and ongoing roads and dikes)\. By 1995 BWDB
also had funds available to finally start clearing three major stream beds that serve as drains
crossing the area, and straightening some sections of the Gopla River\. These works all post-date
the Bank's project\.
3\.10 Although BWDB construction of the embankments at Chalan Beel and Satla Bagda was
delayed, this was the sort of work that BWDB does best and Bank supervision reports noted
reasonably good performance\. Progress on other components was less satisfactory\. Roads were
given lower priority at these two sites, and drainage works at all three\. In fact government had
already slashed the roads components during the pruning exercise in 1982\. The irrigation inlets
at Satla Bagda and Chalan Beel were also given low priority, and left till the end of the project
implementation period\. As late as 1987 Bank supervisions reported that none of the proposed
450 inlets at Satla Bagda had been installed\. When the OED mission visited Satla Bagda in
1995, 372 inlets had been installed but 172 were inactive and most of those inoperative (a
comparative study of the working and non-working inlets would of course provide valuable
lessons for future project design)\.
3\.11 The construction of drains (clearing and widening of natural channels) at Satla Bagda
and Hail Haor was not only deferred\. Some were shifted from the project to the Food-For-Work
Program\. At Hail Haor the choice of FFW for project drainage was particularly unfortunate\.
Whereas at appraisal it was assumed that a large supply of cheap labor was available at all three
sites, workers did not come forward in the Moulvi Bazaar area to work for FFW food wages until
the last years of the project\. Moulvi Bazaar has the distinction in Bangladesh of being the source
of the first major exodus of nationals to the United Kingdom\. Repatriated earnings have created
a landed aristocracy, that is noted for its London connections and interests outside agriculture\.
This, plus employment for local labor on nearby tea plantations, helped to keep wages well
above the value of the FFW daily wheat allotment\. The result was that FFW was largely
inoperative at Hail Haor, which explains why no drains had been cleared or expanded by the time
the Credit was closed\.
3\.12 The fisheries study at Hail Haor was finally completed, four years later than planned and
without any influence on public expenditures in the fisheries sector\. The funds allocated in
project documents for fisheries investments were never used for that purpose\. Since the project
up to that time had had only minimum impact on flood control, and no effect on the fisheries of
the haor, the futility of the component is easily explained\. The groundwater investigations at
Hail Haor were also aborted, soon after they were belatedly begun in 1987\. It was quickly
evident that the groundwater table was too deep for commercial drilling for shallow tubewells\.
3\.13 Government's commitment to support the project with "adequate" extension and credit
services was not respected\. The Project Coordinating Committee was largely non-functional,
BWDB made no effort to promote the use of these ancillary staffs, and no steps were taken by
22
the Department of Agricultural Extension or public and private banks to provide the subproject
areas with extra extension staff or credit supplies\.
3\.14 Finally, the plans for project evaluation were largely frustrated\. The Bank had not
allocated any Credit funds for this central activity, which left it to government to carry out the
plans to design, contract and finance a baseline ("benchmark") study and two, sequential post-
completion field surveys\. Requests to government for terms of reference for the baseline
contract begin to appear in Bank supervision files in 1983\. The delays that followed are mostly
explained by the project financing plan, since the project did not provide funding and the Bank
was not prepared to help fund the surveys from other Bank projects\. The deadline for any
effective baseline measures came and went\. The TOR were first drafted in 1987 for an impact
survey, and the contract was finally signed with a consortium of local consulting firms in 1989\.
The Bank should have called for postponement of their field activities, scheduled for 1989, at the
time, since farm interviews after two years of extraordinary floods were very unlikely to produce
useful information\. Nevertheless, the field surveys were carried out, the firms did a good job in
reporting from the data then available, and their three reports were used as the basis of the
analysis of outcome in the Bank's Project Completion Report\. A later chapter of this report
concludes that that analysis must be set aside, despite the thoroughness of the consultant's
presentation (para\. 5\.1)\.
3\.15 In short, implementation achieved the major targets with varying levels of success: (1)
nearly full protection of the three Satla Bagda Polders from river flooding, apart from the two
exceptional years; (2) partial protection of Chalan Beel Polder D, except where natural breaches
and public cuts occurred in response to unanticipated water pressure; (3) flood control works of
different alignment and substantially smaller import than planned within the Hail Haor area,
reinforced by a more effective dike that had not been contemplated at appraisal, outside the
project area at the source of the floods; (4) shortfalls in drainage work everywhere; (5) good
roads leading to the project sites and along and within the embankments; (6) a profusion of
minor irrigation structures so far of limited use; and (7) an ineffectual fisheries study\.
3\.16 This audit did not investigate the uses of project funds for rehabilitation works outside
the three subproject sites\. Thus the works associated with only 70 percent of Credit
disbursements have been evaluated\. Also, expenditures of FDR and FFW funds on flood
damage at project sites are not included in the project rate of return cost estimates\.
23
4\. Operation and Maintenance
4\.1 O&M The Bank has pressed government and BWDB for over a decade to adjust its
priorities and expand its budget for operation and maintenance (O&M) on all FCD/I schemes\.
The ongoing BWDB Systems Rehabilitation Project (SRP), approved in 1990, is a response to
the Bank's concern\. But it has not performed as expected\. Sluggish action with "improved
O&M" (I/O&M) activities under that project, and its rating since 1993 as a problem project,
reflect BWDB's continuing inability to bring these services to proper standards\. The PAR for
DFC I devotes its final paragraphs to this issue, asking "why is it that in an area where all are in
verbal agreement, so little progress has been made" (page 35)\. One has to recognize that
climatic conditions in Bangladesh are conducive to rapid deterioration of all masonry structures,
saddling the government with an extraordinary expense it can ill afford\.
4\.2 FCD projects are at a disadvantage to irrigation projects in O&M in two respects\. First,
BWDB budget allocations to O&M for FCD schemes are significantly smaller than to irrigation
schemes, by international standards and in proportion to BWDB's own assessments of
requirements\. Second, whereas in the last decade BWDB has promoted farmer organization for
participation in O&M on irrigation schemes, this activity has never been extended to FCD
schemes\. The difference in approaches to participation is mostly explained by the larger size and
character of most FCD structures, which BWDB argues should be controlled by engineers\.
There is no local component of FCD works comparable to tertiary canals and ditches, which
comprise the majority of the grid in irrigation schemes and are the usual point of entry for farmer
involvement in O&M\. Also, the consequences of system failure in flood embankments are
greater than in irrigation distribution canals\. BWDB cannot fully transfer responsibility for
surveillance and timely repair of FCD works\. Nevertheless, even when simple structures are
included in an FCD scheme, such as the irrigation inlets and smaller drainage sluices at Chalan
Beel and Satla Bagda, BWDB has made no effort to involve farmers either in planning or in
maintenance\.
4\.3 The low budgets are reflected in the deterioration of structures and equipment almost as
soon as they are installed\. FAP-13 was responsible for O&M issues within the FAP framework,
although the FAP- 12 field survey staff investigated O&M conditions on the ground\. For Chalan
Beel the report was alarming\. It claimed that 40 percent of the embankment was already
compromised by erosion, burrowing by animals and damage by humans\. It found that almost all
regulators were leaking, and that wood drop gates at the inlets were everywhere failing or
missing-three years after project completion\. It concluded:
"The Project is relatively recent and ought to be in good shape without requiring repairs of
regulators or major works on the embankment\. Of course the early years of the Project
have been marked by exceptional floods, but much of the damage appears to be recurrent
and not a result of high floods\."14
4\.4 Discussions with five groups of farmers in scattered locations at Satla Bagda during the
audit missions suggested that about half of the irrigation inlets were clogged or otherwise
14\. FAP-13 Operation and Maintenance Study, Final Report, Volume 2, Case Studies\. Op\. cit\., p\. 1-8\.
24
inoperative: some because they had been badly sited, some because farmers could not agree how
to use them, and some simply for lack of attention\.
4\.5 These findings at project sites are echoed in every other evaluation report\. Three
examples show the extent of the problem:
"it is difficult to be confident that the flood control works will be in adequate condition to
withstand future floods and storms" (PCR on DFC II (all sites), page 6 (1991));
"however most of the structures are now in poor condition, the network of drainage
channels has almost disappeared, and some of the access roads are severely damaged"
(FAP-12, Final Report (Kolabashukhali Polder), Volume 2, page B5-3 (1992))\.
"if the no-maintenance situation is allowed to continue, the polder would eventually
become a flood plain again and the investment would have been in vain; (draft ICR on
FCD IV Barnai Polder), Appendix 1, page 4 (1995);
4\.6 Under pressure from the Bank, and with a growing number of its own senior staff
convinced that O&M must be upgraded, BWDB has substantially increased its commitments to
O&M in recent years\. It is ahead of its obligations under SRP to finance O&M at increasing
annual levels\. It is also piloting, again under SRP, a reorganization of O&M field staff at the
level of one subproject that would put operation and routine/preventative maintenance functions
in one division and periodic maintenance/rehabilitation in another division, giving the first a
separate budget and staff\. This reform if extended can be expected to establish and stabilize a
cadre of staff experienced in O&M, and provide them some immunity from pressures to redirect
funds from ongoing maintenance to large reconstruction works\. Staff training programs for
O&M have also been expanded\. To that extent, BWDB can claim it has responded to the Bank's
exhortations\. Reacting to the criticism about poor O&M performance in the PAR for DFC 1, the
Bank's operational staff noted in 1990 that significant progress in securing government
commitment had been made, as reflected "in the agreements reached under the recently-
approved BWDB Systems Rehabilitation Project" (PAR, page 35)\. A year later the same staff, in
its PCR for DFC II, would claim "the Bank is addressing this problem under the BWDB's
Systems Rehabilitation Project" (PCR, page 6)\.
4\.7 But the response has been inadequate, and the Bank's confidence in BWDB's
endorsement of SRP unjustified\. The funding, while ahead of schedule, is reckoned by the SRP
Technical assistance team (TA) to be only 40 percent of BWDB's declared O&M expenditure
requirements\. Moreover, the components of SRP are progressing at different rates, with O&M
activities again falling behind rehabilitation works\. Variable progress gives strong signals about
relative priorities, even in a project ostensibly dedicated to O&M\. The attempts of the TA team
to promote "the improved O&M" components above the construction ("rehabilitation")
components have not succeeded\. BWDB still claims that investments in rehabilitation take
priority, that that was always the intention, that the Bank had acknowledged that preference
despite efforts later by the TA team and Bank supervision collaborating on SRP to turn the
priorities around\. Efforts to secure BWDB's commitment at least to put I/O&M into practice on
the schemes already rehabilitated by project funds, and to phase subsequent rehabilitation
according to progress at each stage with institutional reform, have not been successful\. SRP has
brought experiences from which valuable lessons may be learned with regard to approaching the
25
institutionalization of O&M in Bangladesh; nevertheless SRP's design is less than optimal for
that purpose\.
4\.8 This SRP activity does not affect the three schemes of DFC II, since they are not yet
ready for rehabilitation\. But unless there is a change in behavior at BWDB, and in the finance
and planning ministries where overall budget priorities are set, maintenance practices are
unlikely to improve sufficiently and the DFC II projects works will continue to deteriorate\.
Again quoting from FAP- 13 on Chalan Beel: "it is uncertain whether the Project will in future be
able to function with the low level of revenue budget funding or whether it will be perpetually
dependent on rehabilitation funds" (page 1-8)\. The PCR on DCF II makes the same point,
emphatically\.
4\.9 O&M performance must improve\. The problem for BWDB as well as the Bank is to get
the right answer to the question posed by the 1990 PAR quoted in para\. 4\.1: "why is it \. so little
progress has been made\." The 1990 PAR concluded that part of the answer was found in the
incentives of the BWDB bureaucracy, that create "an implicit preference for frequent
rehabilitation and reconstruction over periodic and routine maintenance" (page 35)\.
4\.10 Water Management Groups\. Among the countries selected by OED for the regional
review of irrigation projects (para\. 1\.1), Bangladesh has a relatively weak institutional
framework for participatory action by benefiting farmers\. There are Water User Groups in
irrigation schemes, although they lag behind the other countries in cohesion and performance\.
There are no such formal associations for FCD, except at SRP and other select donor- or NGO-
assisted sites\. Reasons mentioned in the audit interviews are: 1) BWDB's indifference; 2) the
physical characteristics of most FCD structures; and 3) the Bangladesh farmers' expectations of
government largesse, raised in part by years of foreign aid\. A fourth explanation is equally
plausible\. There has never been any concerted effort to group farmers around the FCD structures
where transfer of O&M responsibility makes sense: around the sluice gates that let water out of
the lowlands, and, in Chalan Beel and Satla Bagda in particular, the small irrigation inlets that
the project also built in the walls of the embankment\.
4\.11 The farmers do assemble for action when compelled, but these gatherings are usually
organized by elite landowners who need help in creating or defending private assets, or public
assets under their control\. If it is to strengthen an embankment under threat of collapse, then
community organization is informal\. For operation or repair of sluice gates and irrigation inlets,
however, those who act together are the farmers who stand to gain, at the expense of others who
do not\. These are not community associations, where all farmers expect to benefit as in
irrigation schemes\. In FCD projects in lowlands and deltas prone to waterlogging, where
different farmers have competing requirements for drainage and irrigation water, there are
winners and losers as the result of almost any local action\. The farmers in these polders have no
experience of organizing to take equitable advantage of FCD\. And neither BWDB nor local
governments have experience in helping them\. Thus, at Chalan Beel:
"People within the project appear to have cooperated towards the protection and
maintenance of the embankment\. Especially in medium and deeply flooded areas along the
15\. SRP TA staff argue that it is preferable to organize farmers around the khals, the natural streams that serve as
drains and which are usually deliberately blocked during the dry season to form a standing body of water for irrigation
and fishing (and to provide buffalo wallows)\.
26
Sib river, people fear breaches and cuts in the embankment\. There is evidence that people
did respond to BWDB's call and have participated voluntarily in watching the vulnerable
sections of embankment, and drop sand bags to protect the embankment during peak
floods\. However, this is on an ad hoc basis, rather than a systematic cooperative venture
between BWDB and local organizations" (FAP-13, op\. cit\., page 1-8)\.
While:
"The Project has not succeeded in involving local people in the routine operation and
maintenance of regulators, irrigation inlets or drainage outlets\. There are no local
committees for these structures and they are operated or not operated at the will of local
influential persons, some of whom were reported to have taken home some removable
components of the control structures" (page 1-5)\.
4\.12 An OED team member's field report on the anarchic conditions governing the uses of the
structures is attached to this report as Annex 2\.
4\.13 Other evidence of weak organizational structure at the farmers level is the failure of
BWDB to consult with any of them at the design stage\. The mis-siting of what some of the
farmers interviewed called a "majority" of the irrigation inlets at both Chalan Beel (77 inlets
built under the project) and Satla Bagda (347) could have been reduced had they been asked to
describe in detail the local hydrological sub-systems\.
27
5\. Outcome
A\. General Remarks
5\.1 The success of FCD projects is measured in the first instance by favorable changes in the
onset, depth and duration of flooding, and, as a consequence, changes in cropping systems and
yields\. The PCR provides inundation, agricultural and economic rate of return (ERR) data for
the three sites\. These are taken from the three Evaluation Studies carried out by consultants in
1989, financed by the project\. The original objective was to produce a baseline early in the
project period, against which future on-farm performance could be assessed\. Delays in the
contracting process, despite continued Bank pressure, resulted in a conversion of the study from
an ex-ante to an ex-post analysis\. The absence of a baseline is one reason to treat the study
results with caution\. The PCR makes that point\. But the results should be set aside, because of
two other methodological weaknesses which render all findings suspect\. First, the measurements
of flooding depth were recorded by the same consultant team not in 1989 but under another
contract in 1985, before the embankments with their regulators had been completed to full
protection at either Chalan Beel or Satla Bagda\.17 The fact that the Bank accepted the use of
these premature records is not mentioned let alone explained in the PCR\. Second, the field
research was performed in mid-1989, and, because cropping systems in the two previous years
had been compromised by exceptional floods, the consultants decided to ask farmers about
practices and results in the 1986 season\. This meant a three-year recall period, and information
on a season which coincided with completion of project works\.
5\.2 The PCR data is not necessarily wrong, although footnotes in the PCR recognize
inconsistencies in the tables as well as some of the methodological problems\. It is unreliable\.
Nevertheless, the "results" show significant reductions in inundation levels and increases in
cropping intensities at Chalan Beel and Satla Bagda, and practically no change in either indicator
at Hail Haor\. Reestimates of ERRs point in somewhat different directions, due to different cost
and disbursement profiles, and questionable methodological practice\. Thus, the ERRs
recomputed for the PCR were 11 percent for Chalan Beel, 0 percent for Satla Bagda, 8 percent
for Hail Haor and 7 percent for the project as a whole\. The project was rated unsatisfactory at
the time OED registered the PCR\.
5\.3 Neither BWDB nor any other agency reports on inundation data, so updates from the
1989 Evaluation Study depend on farmer interviews\. Cropping data is also almost impossible to
collect from routine official reports, because in all cases the project areas spread over more than
one primary administrative unit (thana) but do not encompass the whole of those units\.
Satisfactory data would have to be collected at the local "block" level (approximately the union),
one step below the thana (approximately ten unions), a job the relevant agencies avoid\.
16\. See citation in Pars 12\. The consultant, BETS, also produced Final Reports for the Satla Bagda and Hail Haor
Subprojects\.
17\. The consultant states in the report that by 1985 full protection had been achieved at Chalan Beel (and Satla
Bagda)\. Bank supervision mission reports show that was not so\. See BETS, Final Report Chalan Beel Polder "D,"\.
Op\.cit\., p\.S-9\.
28
5\.4 The FAP-12 surveys in 1991 help fill the gap\. They were divided into two groups: five
schemes were studied with a statistically-valid sample survey, following a rapid rural
(reconnaissance) survey; the other twelve schemes were studied only with a rapid survey (the
FAP consultants distinguished "project impact evaluations" (PIE) and "rapid rural appraisals"
(RRA))\. The PIEs sought to measure and compare changes in (1) the area protected by the
project embankments, (2) the adjoining areas impacted but not protected by those embankments,
and (3) a nearby control area with similar characteristics but no embankments or impacts\. They
assessed flood characteristics as well as agro-economic and income trends\. The five PIEs
fortuitously (for this audit) included Chalan Beel\. They included also Kolabashukhali, a polder
in the southwest financed by the Bank under DFC I with cropping characteristics not unlike
those at Satla Bagda and offering therefore corroborating evidence of probable impacts at the
latter site\. The OED field team followed up with "participatory rural appraisals" (PRA), of even
shorter duration than the FAP RRAs, at both Chalan Beel and Satla Bagda, and the resulting
information is used in the following paragraphs to complement that from the other sources\.
Special circumstances at Hail Haor render any ex-post measure of inundation levels, intensities
and ERRs unnecessary, though an ERR should it be calculated would almost certainly be close to
zero or negative, as explained below\.
B\. Chalan Beel
5\.5 FAP-12 found that over most of the project area the objectives of delaying the onset and
reducing normal depths of the flood had been achieved, though to a smaller extent than expected\.
FAP also identified a measurable though small increase in paddy production over the "without
project" scenario, based on parameters from the control survey\. It explained the shortfall from
the quantitative targets established at appraisal partly by the unanticipated hydrological forces
which keep a significant fraction of the cultivable area out of production in the monsoon season\.
This is explained by the breaches and cuts through the western embankment, and the consequent
surge of waters eastward across a drainage corridor through the middle of the polder, causing
severe damage to standing crops and homesteads in its path in the post-project period, especially
in 1988 and 1989, as well as from the congested drainage further east\. The expectation of
similar flash floods explains why farmers in that perilous corridor appear to have voluntarily
reduced cropped area and, hence, intensities at the time of FAP-12's field investigations in 1991\.
The addition of the experience of this unique and substantial group of losers, to the favorable or
neutral experience of residents elsewhere in the polder, led FAP to claim modest agricultural
impacts\.
5\.6 Nevertheless, because of relatively low per-hectare investment costs, FAP-12 calculated
an ERR based exclusively on agricultural benefits within the polder of 26 percent\. This was well
above the PCR estimate (11 percent), but FAP disregarded that analysis, as OED does now, for
the reasons mentioned in para\. 5\.1\. OED's information on agricultural performance is
consistent with FAP's, but it is based on informal interviews in 1994 and 1995 and cannot
compare with the statistical integrity of the FAP RRA and PIE surveys, carried out in 1991 and
reported in 1992\. OED accepts the 26 percent estimate as a more reliable measure of
agricultural impacts within the polder\.
18\. In addition to the reasons mentioned in para 5\.1, the consultants Evaluation Study claimed some shifts in cropping
patterns at Chalan Beel which are clearly incorrect (and which the PCR calls "inexplicable"-PCR page 26)\.
29
5\.7 If the FAP-12 surveys had been rerun in 1995, they would have come under the
influence of two offsetting factors that would push the 26 percent estimate both up and down\.
First, the impact within the polder would be better than that reported by FAP in 1992\. The
negative effects of the project on farmers living in the drainage corridor in the shadow of the
public cuts on the western embankment have not been repeated every year\. Most recently, 1993
and 1994 were years of relatively low rainfall and river levels, and cutting and natural breaching
were not experienced (with the exception of one breach in 1993)\. When OED visited the polder
in October 1994, these problems had receded in the memories of farmers and agency staff\. The
OED PRA surveys in July 1995 confirmed that the losses to this group of affected farmers were
not repeated in the years immediately following the FAP-12 surveys\. The implication is that the
amount of lower land planted in the corridor in the monsoon season in more recent years would
exceed the FAP estimate, yielding higher intensities and production\.
5\.8 Second, and working in the other direction, is a problem FAP-12 noted in 1991 that the
agricultural situation in the control area at the time of its surveys was less favorable than normal,
enhancing the apparent advantage of Polder D\. In a "normal" year, FAP said it would have
expected a lower advantage for Polder D, and consequently a lower ERR\. In the face of these
offsetting but unmeasured influences, OED sticks with the ERR as announced\. The level is
immaterial, because it has to be reduced by a substantial margin to incorporate negative external
impacts\. It should be recognized that estimating ERRs for FCD projects that limit flooding is
much more difficult than for irrigation projects which supply water\.
5\.9 The overall rate of return to the Polder D investments is lowered due to indirect costs to
other interested parties\. First, the FAP-12 report discusses in detail the injury caused by the
embankments to the riverine capture fisheries, losses in excess of those anticipated at appraisal
and estimated at 40-60 percent of the traditional catch\. Whereas FAP reckoned annual
agricultural benefits per hectare at 2,402 Taka (US$68 in 1991 dollars), it reckoned annual
indirect costs to fisheries at 1,488 Taka (US$43), canceling 62 percent of the former\. FAP
recalculated the ERR including the fisheries at two levels of estimated fisheries losses, resulting
in net ERRs for Polder D investments of 14 percent (lower estimate of losses) and 9 percent
(higher estimate)\.
5\.10 Second, the report notes that: "outside the Project area the Project has had major
negative impacts, on conditions in adjacent areas which suffer higher flood levels and
downstream where the combination of the Chalan Beel D polder with other middle Atrai
embankment systems leads to threats of catastrophic flooding\.If any quantification of off-site
impacts on non-Project areas could be made, these would further reduce the (ERR)\."19 FAP-12
did not attempt to calculate those indirect costs; neither has OED\. They do, however, further
lower the ERR, perhaps appreciably\. OED reckons the overall ERR does not exceed 10
percent\.
5\.11 That 10 percent figure is close to the PCR estimate of 11 percent\. But the bases for those
estimates are substantially different\. The Evaluation Study and the PCR assign the major part of
the benefits to an expansion of dry season cropping-in particular of HYV Boro, pulses, wheat
and jute\. These gains are attributed to the FCD project\. In the PCR tables, the increase in the
value of dry season production is 59 percent (over the "without project" level), while monsoon
19\. FAP-12, Project Impact Evaluation of Chalan Beel-Polder D\. Op\. cit\., p\. S-6\.
30
paddy production increases by only 21 percent\. FAP (and OED) rejects the assumption of a
significant causal relationship between the embankments and dry season cropping at Chalan Beel
Polder D, as explained later (paras\. 6\.1ff)\. But FAP found and OED agrees that the increase in
the value of wet season production attributable to the project is higher than stated in the PCR\.
The bulk of the estimated increment comes from increased yields of improved varieties,
especially the switch from broadcast Aman to transplanted Aman\. And, FAP indicates that
incremental production of the by-products from paddy (straw and bran) is as important as the
grain itself\. OED accepts, as does FAP-12, that there has been a remarkable increase in dry
season production, but largely independent of the project\.
C\. Satla Bagda
5\.12 OED's conclusions about the changes in cropping patterns consequent to empoldering at
Satla Bagda are closer to the PCR than they are for Chalan Beel\. The SAR had anticipated a
substantial increase (41 percent) in the incremental production of dry season crops related to the
investments in irrigation inlets included in project design\. In the SAR projections, the shift in
the dry season was all registered in wheat and other non-rice rabi crops\. No expansion of the
Boro rice crop was expected\. In fact, the SAR projected a slight decrease in total paddy cropped
area, together with a more substantial increase in paddy yields and production\. However, the
Evaluation Study concluded, the PCR accepted, and OED's PRA survey supports the view that
the most impressive increases have been in the Boro21 crop harvested in lower-lying fields that
were formerly flooded and out of production all year\. Increases in land values confirm that
finding\. In two separate locations OED was told that the price of irrigable, arable land within the
polder was about twice the value of unprotected land outside the polder, and that inside land
suitable for Boro was four times higher\. The impact of the embankment on Boro cropping is
attributable to the control, brought by functioning inlets, over twice-daily tides that used to flow
unimpeded over the lower lying areas suited to Boro\. Better control of river flooding has had a
positive impact on wet season cropping as well, and encouraged the shift from broadcast to
transplanted Aus and Aman predicted in the SAR and observed by the Evaluation Study22 If all
the inlets were brought into use, and if BWDB were successful in keeping the internal drains
clear and relieving drainage congestion at the southern boundary (when outside river levels
permit), the benefits would be commensurately higher\.
5\.13 OED was unable to reestimate an ERR for Satla Bagda from data available in the field,
as there is no survey or other study comparable to FAP- 12's in Chalan Beel\. The PCR estimate
of 0 percent must be disregarded for the same reasons as for Chalan Beel\. Another reason is that
in Satla Bagda the Evaluation Study predated the expansion of area planted with the Boro crop\.
Instead of a direct measure, OED has calculated the returns to a model of paddy cropping
comparable to the Satla Bagda investment\. The per-hectare costs of the project, based on full
costs reported by the PCR in 1991, were US$591\. Assuming that it was invested over five
years (the bulk of it was), and leads to increases in paddy yields of two tons per hectare over one
20\. And declines by 37 percent vis a vis the SAR projections\. The SAR did not anticipate any increase in Boro/rabi
cropping independent of non-project investments in minor irrigation schemes\.
21\. Local terminology refers to the traditional Boro rices as Boro\. and I lYV dry season as the IRRI" crop\.
22\. Early flooding prevents the young Aman seedlings from getting established\.
23\. Over two-thirds (71 percent) more than at Chalan Beel
31
quarter of the project area (and no increases in the rest), and that the new yield and production
levels are maintained for 30 years (the SAR/PCR assumption), the ERR is 11 percent\.24
5\.14 That is a conservative model of actual experience\. BWDB officials claim that the area
now planted to Boro, that was not planted at all in the dry season prior to the embankment,
already covers 3,000 ha (with only half the inlets operating)-that is about 15 percent of the
21,000 ha protected by the three polders\. A new Boro HYV crop yields about four tons (the PCR
estimates 4\.2 tons), not two, and this can all be attributed to better water control where crops
were not grown before\. Further, area and yield increases of other paddy crops are not included\.
Nor are the non-paddy crops\.
5\.15 FAP-12's estimate of the ERR for the Kolabashukhali polder project northwest of Satla
Bagda is 25 percent\. The expansion of Boro cropping has been much less aggressive at this site,
because of higher salinity levels in tidal flows as well as groundwater\. The higher rate of return
is attributable to the positive effects of the embankment on wet season cropping, an effect that
farmers at Satla Bagda can expect over and above the dry season effect reflected in the model\.
5\.16 Cropping benefits, however, are not equally shared\. At Satla Bagda (and throughout the
delta) the flat topography causes small variations in surface water levels to have large effects\.
The average height above sea level at the northern boundary of the embankment is only 1\.5
meters, and at the southern boundary seven miles away only 0\.5 meters\. With such a small
gradient, the absence of effective drainage means water runs from higher fields and sits in lower
ones that are usually nearby\. This is one of the reasons why group action in what is ostensibly a
single, small hydrological unit is so difficult to organize\. What farmers on the lower lands call a
flood, or congested drainage, is what their neighbors on slightly higher ground need to
adequately serve their crops\. One farmer told the OED mission that giving a farmer next to an
inlet an inch of water meant the tailend farmers in that hydrologic unit would be flooded with
seven undrainable inches\. This is a reversal of the usual relationship between headenders and
tailenders on irrigation canals, where the latter complain the former do not let enough water pass\.
The hydrology of the delta dictates another outcome\. Disputes over when and how to control
floods on these flat lands are compounded by fights in the depressions between farmers who
want to retain deep water and those that do not, and between farmers, shrimp farmers and
fishermen\.
5\.17 One possible explanation for the disuse of some of the project's irrigation inlets is that
they are invariably subject to the control of the farmer elite at the inlet sites\. BWDB staff are
responsible for adjusting the gates, on the instructions, in theory, of the local community\. Where
the elite can control the choice absolutely, it is usually at the expense of others\. Where they
cannot so dictate, the outcome is most often to do nothing, which in the case of the inlets means
they are left unattended with gates stuck open or missing\. Winners and losers are determined by
the position of their fields in relation to the gates\. Some observers feel this outcome is the result
of the lack of organization and collective action by the farmers, as well as the failure of BWDB
to involve the farmers at the time the system was designed\. Other observers see the outcome as
the inevitable result of the delta's flat topography\.
24\. Based on PCR costs (page 14) and rice prices in 1990 (page 32)\. A farm gate economic price of US$167 was used,
identical to the PCR price and related formally to the Bangkok rice price of US$250\. The model is for one hectare,
representing 21,000 ha at Satla Bagda\. Investment costs are $118 per year for five years, and net returns of $84 per year
thereafter for 30 years\. The $84 figure results from: 2 tons X $167 (per ton) X \.25 (of area)\.
32
5\.18 At Satla Bagda an outspoken advocate of social justice, a bishop resident in Dhaka who
supervises a model community of Protestant schools, service facilities and a convent just inside
the northern embankment, has frequently protested the indifference of officials and donors to the
negative benefits brought in along with better flood control\. Among his complaints are some
unique to his part of the delta and some common to other parts of Bangladesh:
* reduction in river transport, since the embankments obstruct traditional navigation
passages to rivers outside the polder, and block also the annual flood that used to
flush the natural channels of silt and water hyacinth inside the polder\. Before the
project roads were constructed, Satla Bagda was accessible only by boat, and it
remains the only means to reach most communities\. This is a rice exporting region,
and the increase in transport and trans-shipment costs has had a substantial negative
effect on the farmers' net profits;
* loss offertility provided by the sediments formerly deposited by the annual flood\.
FAP- 12 and other experts believe these losses have been exaggerated: that the
nutrient value of the deposits was small\. Farmers, and the bishop, insist otherwise;
* polluting ("poisoning") of the soil by agricultural chemicals: whose use has
expanded along with the adoption of improved cropping systems, which formerly
were flushed away by the flood, and which now have rendered many of the
erstwhile pastures unavailable to goats and other livestock;
* increase in the level of the river beds adjoining the polders, due to the confinement
of the rivers and the concentration of sediment deposits in these channels\. The
rising river bed levels imply the present embankments will eventually have to be
raised, increasing costs as well as the potential damage from embankment collapse;
* loss of river and flood fisheries, common to all polders\.
5\.19 The bishop's criticism is directed not only at Satla Bagda but at two neighboring polders
already built or proposed to be built on Satla Bagda's northern boundary\. The Bank has sent
missions to assess the extent of damage\. There is no dispute about the reality of the indirect
costs, especially the effects on river transport and fisheries\. Remedial measures are planned, for
example the provision of locks for boat passage at the embankment gates, and accelerated
clearing of clogged natural streams and drains inside the polders\.
5\.20 The validity of these claims notwithstanding, the position of government and the Bank,
supported by the conclusions of the FAP-4 team responsible for the study of the southwest
region, was that the benefits of poldering at least in this part of the region offset the negative
impacts\. Thus, FAP-4 recommends construction of embankments for the second polder north of
Satla Bagda as a priority investment, and for a large, proposed polder immediately south of Satla
Bagda for the medium term\. It should be noted that this northeasterly part of the southwest
region lies in a zone of relatively high annual inundation, caused by overspilling from the
Ganges, Padma and Lower Meghna rivers and heavy rainfall\. Conclusions about favorable net
benefits at and around Satla Bagda do not automatically apply to other polders outside the zone
of high inundation\.
33
D\. Hail Haor
5\.21 The North Flood Embankment was never brought to completion as a dike providing full
flood protection\. The original project design was substituted by reconstruction and extension of
embankments along the Manu, Kushiara and Shaka Barok rivers north of Hail Haor (Map 5)\.
These embankments provide protection for both Hail Haor and the plains between it and the
three rivers\. Some project funds were diverted to works along 11 kms of the Manu River, but it
would be impossible to associate any part of the flood relief and improved cropping
subsequently reported at Hail Haor uniquely to these diverted project funds\. Moreover, the
Evaluation Study found no significant increase in either average yields or double cropping in the
project area up to 1989, a finding which it explains by noting that no significant flood control
had yet been established and that "the farmers still do not consider their crops risk free at all\."
Not surprisingly, the consultants found none of the expected negative impacts on fisheries and
fishermen, in fact they reported an increase in the number of fisherman households per village\.
5\.22 The major impact of subsequent works on the northern rivers has been to substantially
reduce the threat of flash flooding in the early monsoon, and seasonal flooding as the monsoon
progressed, to the farmlands, opening the way to an expansion of the area planted each year to
broadcast and transplanted Aus and transplanted Aman rice\. If the spring flooding from the
north started as early as April, there could be damage to the standing Boro crop as well\. The
only zone within the Hail Haor project area to benefit directly and uniquely from project works
is the approximately 750 hectares protected by the submersible dike built late in the project
period along the east side of the haor\. This shields the Boro land in the dike's shadow from early
flooding from the haor itself, a movement of water independent of the main floods from the
north\. After project completion BWDB has extended the submersible dike to protect a total of
1,000 ha, compared with more than 19,000 hectares of cropland which were to have benefited
directly from the original design\. BWDB is currently reconstructing and extending another
internal (not submersible) dike, north of the haor, which will protect Aus and Aman crops in
between it and the North Flood Embankment from wave surges and other floods pushing north
from the haor (and pushing water hyacinth along as well)-another pattern in the regional
movement of surface water that is independent of the main direction of flooding from the north\.
Cropping will benefit from these works too, but they are not part of the Bank's project\. All in all,
very little improvement in flood control and cropping can be uniquely associated with the
project, and the project works themselves have been overtaken by subsequent works (north of as
well as in the basin) that make the main project-funded dike redundant\.
5\.23 OED has not recomputed an ERR for Hail Haor\. The Evaluation Study estimate of 8
percent was generous: inexplicable, in view of that same study's findings about minimal
agricultural progress\. The consultants were unaware that the main source of project flood
control as designed would be made redundant within three years\. An evaluation of returns to
recent investments along the Manu, Kushiara and Shaka Borak rivers might well have a
favorable ERR\. FAP- 12 conducted a PIE and an RRA on two other haors in the northeast, and
calculated ERRs of 65 and 40 percent\. The source of these positive benefits was control over the
same combination of flash and seasonal flooding that prompted investments at Hail Haor\. The
other two projects were completed as planned; Hail Haor was misidentified and aborted\. The
fact that large landowners and laborers alike in the Moulvi Bazaar area have alternative sources
of income and are disinclined to rabi cropping made the original assumptions about cropping
gains very precarious\.
34
E\. Overall Rate of Return
5\.24 Given the rough character of the data base described above, and the lack of information
on many of the indirect costs, a point re-estimate for the project's ERR would not be very useful\.
In any case it would cover only 70 percent of project costs, because the audit has not reviewed
the uses and results of the US$12 million that were reallocated to the repair of flood damage
throughout the country
5\.25 For Chalan Beel, a "maximum" of 10 percent was proposed, reflecting the major indirect
costs\. For Satla Bagda, a figure of 11 percent was given as a very conservative lower bound for
agricultural effects without adjustment for the indirect costs\. It is doubtful whether the costs to
the fisheries, which were large enough at Chalan Beel to undermine the favorable agricultural
results, were of the same importance at Satla Bagda\. Nevertheless, the other costs listed in para\.
5\.18 have a substantial aggregate effect\. For Hail Haor, no ERR for flood control was
recomputed because the project was transformed into a roads project and had no appreciable
impact on cropping\. Given these weak assertions, and a weighting that proportional reflects
representation in project costs (Chalan Beel-47%, Satla Bagda-45%, Hail Haor-8%), OED
estimates that the overall rate of return is positive, and probably in the range between 5 and 10
percent\. That range seems defensible, provided the assets can themselves be better defended
against inadequate O&M\.
5\.26 The audit agrees with the PCR's ratings of "unsatisfactory" for the project outcome and
"uncertain" for sustainability\. The indirect costs discussed above have undermined the otherwise
satisfactory outcome in agricultural production on the two major schemes, without eliciting any
significant remedial measures\. The fact that some of the Chalan Beel embankments will
probably have to be remodeled, the failure of the Hail Haor scheme, and the poor performance
on O&M contribute to these ratings\. The PCR did not explicitly rate institutional development,
which was "negligible"\.
35
Map 5: Hail Haor Subproject, Regional Perspectives
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36
6\. Findings And Lessons
A\. Findings
1\. Impact on Cropping
6\.1 The PAR on DFC I found no basis for appraisal expectations of a strong impact of flood
control measures on dry season cropping\. The audit of DFC II suggests the argument should be
reformulated\. For flood regimes atop the rechargeable aquifers in the northwest, such as at
Chalan Beel and the main scheme financed by DFC 1, where early flooding does occasionally
threaten the standing Boro crop, decisions about extending the area of Boro have been driven not
by that menace but by the incentives provided by groundwater resources and tubewell
technology\. As long as that frontier is open, the spread of STW and Boro will go ahead with
little regard for the early flood, the frequency of which is too low to materially affect farmer
decisions to plant Boro\. BWDB officers estimate the frequency of these recurring, prejudicial
floods to be about one in five years\. Average annual Boro yields of course would be
commensurately reduced\. Nevertheless FAP-2 and FAP-12 teams investigating the factors
explaining expansion of dry season cropping at Chalan Beel both concluded that the effects of
flood control were unimportant\.
6\.2 However, where the groundwater resource is fully exploited or inaccessible (Hail Haor),
or where early flooding is periodic and predictable (Satla Bagda and Hail Haor), then flooding is
the operative constraint on Boro production and flood control can induce an expansion of that
crop\. At Satla Bagda, for example, control over the tidal flows did allow farmers to plant more
of the lower land to Boro, land that hitherto had not been planted in any season\. That explains
why many farmers told the OED team that the primary benefit of the embankment was the
increase in Boro\. At Hail Haor the same situation exists, though this progress postdates the
project\. Farmers with low lying land adjacent to the haor have been able to secure and expand
their Boro crop now that the flood surges from the haor itself, and to a lesser extent from the
northern rivers, have been blocked\. In this respect the northeast presents a much different
scenario than the northwest, since in the former flooding starts early enough to routinely threaten
maturing Boro\.
6\.3 The PAR on DFC I was also unimpressed by the linkage between flood control measures
and wet season cropping, implying that the stream of production benefits uniquely attributable to
these measures was also unlikely to justify the cost of the works, at least at present prices\. The
PAR allowed that these could change:
"Intensification of wet season agricultural production may eventually become critically
important for food production in the future\. This would be manifested by increasing farm
gate prices for food production and increasing costs for dry season irrigated crop
production\. The incentives for wet season intensification would then be in place and the
proponents of wet season expansion would then have something to work with\."25
25\. PPAR, DFC 1, op\.cit\., page 34\.
37
6\.4 The audit of DFC II and other recent studies suggest that conclusion may also be
overstated\. At all three project sites one can identify increases in wet season production clearly
attributable to water control, at Chalan Beel and Satla Bagda because of the project and at Hail
Haor because of protection provided mostly by works started subsequent to the project\.
Increases in production have been due mostly to varietal changes, as farmers shifted from
broadcast to transplanted rice and from local varieties to HYV\. The SAR predicted an increase
in wet season cropping intensities as well, but progress in this dimension has been unimpressive\.
To the extent farmers have shifted from broadcasting a mix of Aus and Aman, which is reported
as double cropping, to a sequence of an early Aus followed by transplanted Aman, which is also
double cropping, the yield increase is substantial even though the intensity remains the same (at
200 percent)\. The CPR estimates that at Chalan Beel the total yield had increased from 2\.9 to
4\.6 tons/ha\.
6\.5 Eleven of the 17 schemes reviewed by FAP-12 had overall ERRs above 10 percent,
based mostly on wet season crop production, and another 4 fell short of that benchmark only
because of adverse effects on fisheries\. Chalan Beel is one of the four\. Thus, considering only
agricultural benefits, FAP- 12 found that all but two schemes could at least pass the 10 percent
test, and over half gave economic returns above 20 percent\. Those are impressive indicators of
the positive impact of flood control works on wet season cropping, and reason enough to modify
the conclusions of the previous PAR\.
6\.6 The PAR for DFC I correctly focuses on the expansion of minor irrigation for dry season
cropping as the engine of Bangladesh's food drive in the recent past and near future\. The Sector
Study gave it priority too\. But the Sector Study also called for expanded investments in low cost
flood control for sites with favorable conditions\. This audit supports that proposition\. The
economics of low cost flood control investments are promising\. Provided costs can be kept close
to or below $500 per protected hectare, the incremental production response required to justify
the investment is easily available (para\. 5\.12)\.
6\.7 A cluster audit of FCD III and IV would provide another opportunity to investigate the
linkages between flood control and wet and dry season production\. It would offer four case
studies: two from the region around Chalan Beel Polder D and one each from the east and
southwest\.
2\. Regional Hydrology
6\.8 The extraordinary complexity and dynamics of Bangladesh's waterways, coupled with
the absence in 1980 of adequate regional hydrological data, help explain the failure during
preparation to design optimal schemes for Chalan Beel and Hail Haor\. The problems that were
to emerge at Chalan Beel are obvious only with hindsight; the problems at Hail Haor should have
been anticipated\. Satla Bagda was also designed without due regard for regional hydrological
forces, but there the effects of inattention are less significant\.
6\.9 Chalan Beel\. The hydraulic pressure exerted on the western embankment at Chalan Beel
Polder D is attributable to the buildup of monsoon rains running eastward off the Barind Tract of
hills into the Sib River\. Whereas rainwater had previously been partly absorbed by gradual
overspill eastward into the depressions within the D polder, the embankment forced it all onto
the narrow band of unprotected lowlands to the west of the Sib that had previously never
experienced flooding\. The resulting pressure is relieved by public cuts by outsiders, particularly
38
on the middle reach of the western embankment near Tangrapara\. Before the embankment was
put in place, it would have been difficult to anticipate the points of maximum hydraulic pressure,
the severity of the outsiders' reaction, or the chain effects by insiders along the drainage corridor
across Polder D in response to the sudden and rapid inundation of supposedly protected areas\.
Senior BWDB staff who participated in the preparation of this subproject told OED that the
extraordinary threat to the embankment itself was never considered\.
6\.10 The FAP-2 team concluded the best strategy was to abandon the struggle for "full flood
control" along the section of the western embankment under maximum pressure\. It
recommended that BWDB accept the more modest benefits provided by "dwarf' dikes and
"controlled flooding\." The corridor would be open to flooding as the monsoon progressed\. The
rest of Polder D would be fully protected\. The proposal would require construction of new
internal dikes\. But the events in Polder D are described as only a part of a larger pattern of
extraordinary pressures and deliberate cutting of embankments along the whole of the Lower
Atrai River basin\. By 1995 BWDB has counted over 100 cuts into the four Chalan Beel polders
26
since the first of those embankments was completed in the mid 1980s\. Similar behavior is
common on the embankments north of the river\. Aggressive activity by outsiders is uncommon
in Bangladesh, and the consequence of the special regime of the Atrai River\. Public cutting is
common at Satla Bagda and other polders, but almost always it is by insiders and intended to
relieve congested drainage inside, and usually at the foot \.f, the polder\.
6\.11 FAP-2 insists it is essential to regard the Lower Atrai as an integrated system, and
promotes the concept of a "green river"---referring to the corridor through Polder D and a much
larger corridor downstream along the Atrai River\. Map 6\. taken from FAP-2's final report, shows
the boundaries of the proposed green river\. The strategy implies abandoning some of the high
embankments already constructed and substituting submersible dikes and other structures to
guide rather than divert the peak flood\. Sections of the western and eastern embankments of
Polder D would be remodeled, to provide control over the early phase of the flood and then to let
the peak pass\. It was beyond the reach of the preparation team in the period 1978-80, or the
appraisal teams that followed, to have fully anticipated the hydraulics of the Atrai basin, and the
lessons to be learned about the characteristics of the river system to be modified by Polder D\.
The fact that as late as 1992, the same year the FAP-2 Final Report was issued, another
consultant team proposed full protection for all the Chalan Beel Polders, a design diametrically
opposite to the "green river" concept, indicates that some persons remain unpersuaded of the
green river concept\.27
6\.12 The flood situation within Polder D is a special case\. But, apart from assuming
leadership for the FAP consortium at the end of the 1980s, the Bank has been slow to take any
action to offset or moderate the external impacts (on other polders and on unprotected areas) of
the embankments constructed under its FCD projects\. These externalities must be respected in
all regions with flood control systems, but they are crucially important in the Atrai Basin\.
26\. Chalan Beel Polders A, B\. C and D were designed as a unit in i 970\. Government embanked the first three in the early
1980s, mostly using labor financed by FFW\. IDA Credit 955 financed some of the control structures\. Not all of those
three polders have been fully protected, and the quality of some of the work is poor\.
27\. ACE and associates, June 1992\. The Assessment and Hydrological Studies of Chalan Beet Polders A, B, C, and
D-Main Report\.
0 Mohadevpur NAOGAO
NAOGAON
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40
6\.13 The SAR for DFC II (dated 1981) considered and discounted the potential effects of
Polder D on other areas:
"The effect of the construction of polders on flood levels outside the project areas is likely
to be negligible since the flood discharges in the affected rivers are vast compared with the
increased discharge volumes of the subproject areas as a consequence of the project" (SAR,
page 22)\.
6\.14 The SAR for FCD III (dated 1985), which included the Naogaon Polder immediately
north of Polder D (Map 6), is also largely silent on external impacts and remedial actions\. It
provided for aerial photography and hydrological investigations, but its concern was limited to
unprotected areas and not other polders\. Moreover, the Bank accepted BWDB's proposal, after
FCD III became effective, to raise the height of the embankments at Naogaon to afford better
protection within that polder, despite the certainty that such action would commensurately
reduce the level of protection of already existing neighboring polders\.28
6\.15 The SAR for FCD IV (dated 1987), pays more attention to externalities\. FCD IV
supports only one polder, the Barnai Polder immediately south and west of Chalan Beel Polders
D, C and B (Map 6)\. The SAR is concerned with the potential impact of the project embankment
to be constructed on the northern border of the Barnai Polder on the whole of the Chalan Beel\. It
suggests that government be prepared to fund additional works on the Chalan Beel
embankments, to compensate for the project embankments\. But FCD IV did not help finance
those works\. It did include funds for a hydrological study of Chalan Beel polders A, B and C\.29
This was the study which ended with a recommendation for full protection for all four polders, a
proposal that has subsequently been rejected by government (see para\. 6\.11)\.
6\.16 These Bank responses to the threat of external diseconomies now appear inadequate,
given the attention brought to the Atrai Basin by FAP and particularly by the North West
Regional Study\. The final report of FAP-2 warns about the potential negative effects of both the
Naogaon and Barnai embankments on Chalan Beel and other neighboring and downstream
polders\. It predicts an increase in the level of the Sib River during the monsoon of one meter,
enough to prejudice existing design parameters of Polder D\. The report calls for close
observation of those impacts as the new embankments take effect\. There is no reference to this
issue in the Bank's supervision reports\. It is mentioned in the draft ICRs\. The dissonance
between the complacency projected by the DFC II SAR in the passage quoted above
("negligible"-para\. 6\.13) and the alarm sounded for the whole Lower Atrai by FAP-12
("catastrophic"-para\. 5\.10) is a measure of the sea-change in perceptions about the efficacy of
embankments (see also para\. 6\.25)\.
6\.17 Satla Bagda\. The plans for Satla Bagda did not refer to effects on neighboring areas\.
Nor did they discuss adjustments to design to anticipate the impact on Satla Bagda of likely
construction of embankments around neighboring polders, although in the master plan developed
in the 1970s for polder construction in this part of the delta it was clear that Satla Bagda was the
first of several expected to be built\. Subsequently, embankments have been constructed on half
28\. The draft ICR on FCD III does a good job in exposing this aggressive behavior\.
29\. Polder D was not included in the original proposal, because its embankments were higher than those of the other three
polders\. It was added to the terms of reference later\.
41
the bank opposite the northern boundary of Satla Bagda (the Paisharhat-Ramsil Polder), and
FAP-4 has given priority to construction of another embankment along the rest of that northern
boundary (the Ramsil-Kafulabari Polder)\.30 BWDB intends to build it\. The bishop has objected:
to further construction and the additional negative impacts it will bring (para\. 5\.18)\. Plans for
the first embankment at Satla Bagda should have anticipated later works-assuming these were
justified-so that the desired minimum levels of protection could be maintained\. In technical
jargon, Satla Bagda was planned as an "unconfined" rather than a "confined" embankment, even
though BWDB and the Bank were at that time anticipating partial confinement\. Nevertheless,
unlike Chalan Bee!, the hydrological forces controlling water movement along the interlocked
rivers and streams of this heavily inundated part of the southwest delta are more forgiving than
in the northwest, and the consequences of inattention to externalities is less worrisome\.
6\.18 Hail Haor\. That is not the case for Hail Haor, where the consultants, government and
the Bank can be faulted for taking too narrow a view of the haor and its regional setting\. This
initial myopia was later corrected, which explains the discontinuity in implementation halfway
through the project period\. Government asked for a delay in execution to re-study the
requirement for the one large regulator on the Gopla River\. The Project Completion Report for
this project, issued in 1991, says that the subsequent elimination of the regulator and other
adjustments to design are evidence of poor preparation\. But the PCR can also be faulted for
taking too narrow a view\.
6\.19 The major structure in the design presented in 1980 was the North Flood Embankment,
terminated at its western end by the regulator on the Gopla River\. Together these structures were
to prevent flood waters from the Kushiara River to the north inundating the project area, as they
had been doing each monsoon\. The flood came across the plains north of the project area\. It
also pushed up the Gopla River, in a reverse flow created whenever the Kushiara rose above a
certain height\. In 1985 BWDB officers called attention to the fact that the reverse flows had
stopped, for several reasons including siltation of the Gopla\. That removed the justification for
building the regulator\. BWDB also called the Bank's attention to the possible superior effects of
closing off the flood at and near the Kushiara River, 13 miles north of the North Flood
Embankment\. A few years later, the Bank helped finance a small-scale FCD subproject along
the Shaka Barok River, a tributary of the Kushiara, under the Second Small Scale Flood Control,
Drainage and Irrigation Project (Cr\. 1870-BD)\. These new works, started in 1991 and completed
the next year, seal off the entire area north and south of the North Flood Embankment and make
that ridge redundant for flood protection\. There is no regulator at the end, the bridges have not
been fitted with gates, and, as mentioned above, the structure serves only as a roadway\.
6\.20 The scheme, in short, is very different from the appraised design, and some of the
constructed works in the original project area serve other purposes\. The main objective,
preventing the flood from the north, has been accomplished by the Shaka-Borak subproject\.
Completed three years after DFC II was completed, these new works protect an area half again
as large as the original Hail Haor scheme and were built for half the proposed cost of the North
Flood Embankment and regulator combined\. The superior benefits and lower costs of
construction on the Shaka Borak should have been identified in 1978, and put forward as the
preferred alternative\. Additional works, mostly reconstruction, would have been required on the
30\. Both of these polders to the north of Satla Bagda were to be financed under another Bank project (Water Development
Board Small Schemes Project (see para 1\.4 and para 5\.19)\. Because of delays in constructing the first one, the Bank
canceled plans for the second\.
42
Manu and Kushiara River embankments to complete the protective wall\. Some of that was
financed under the project, but not as part of a grand design to protect Hail Haor\. The change in
the flows of the Gopla River should also have been noted, though, as the SAR admits, there was
hardly any flow data available on the Gopla when the project was prepared\. The PCR criticizes
faulty planning for the Gopla; it does not consider the Shaka Borak option\.
6\.21 It should also be noted that the external impacts of the Shaka Borak embankment, on
embankments and unconfined areas on the Kushiara and Shaka Borak rivers, are not mentioned
in its feasibility report\. Nor, strangely, are the benefits finally brought to the Hail Haor area\.
The Shaka Borak feasibility report refers only to benefits from flood protection in the area
between the Kushiara and the North Flood Embankment\.31 Thus, both these subprojects can be
faulted for taking a narrow view of regional hydrology\. Like Chalan Beel, but unlike Satla
Bagda, this narrow view in the Hail Haor area puts project and downstream assets at risk,
because of the rapid flows of the northeastern rivers before their waters reach the delta\. BWDB
is concerned about the rise in siltation of the lower Kushiara, before it enters the Meghna River,
and the impact of the backup from that congestion on tributary rivers and embankments
upstream\. The final effects of all these structures cannot yet be anticipated\.
3\. Fisheries
6\.22 The failure of the government and the Bank to take remedial action to protect the
floodplain fisheries and fishermen incomes from polderization, or to offset the consequential
losses, is unacceptable\. The dikes prevent the free movement of different species from the river
system to the interior beels, khals and other depressions which are the natural spawning grounds,
jeopardizing the very existence of some species\. Bangladesh's fisheries provide 80 percent of the
country's protein-the very poorest families depend on common access to the flood plain fishing
resource-and these economic and environmental losses must be taken seriously\. The first PAR,
dated 1981, to report on a Bangladesh flood control project-the Chandpur Irrigation Project (the
project as implemented was converted to flood controlY-identified these losses as the only
important indirect costs of the scheme but thought them to be substantial enough to warrant
corrective action in subsequent operations\. That message has been repeated in all subsequent
evaluation reports on FCD projects\. Nevertheless, the successor projects have not been able to
deal adequately with the problem\. The government is more at fault than the Bank, which has
vigorously pushed during appraisal and throughout supervision for better monitoring of fisheries
impacts as well as remedial action\. The influence of this indirect cost on the analysis of project
results is seen in the FAP-12 reports already cited\. There the indirect fishery costs are rated
"substantial" in 11 of the 17 schemes surveyed, and significantly reduced scheme-wise ERRs on
six of them\.
6\.23 FAP-12 calls Chalan Beel the "loss leader" among the six\. This indirect cost was
underestimated at appraisal of that subproject\. The SAR predicted that negative fisheries
impacts at Hail Haor are likely to be greater than at the other two sites, and thus provided a
fisheries component to that subproject\. The component included a study of fisheries and likely
negative impacts in the project area, proposals for corrective action, and funds earmarked for
whatever infrastructure investments were recommended\. The study was eventually completed in
1986, three years later than planned, and after successive attempts by government to delete the
31\. Northwest Hydraulic Consultants, Ltd\. 1988\. Feasibility Report Subproject No\. 13\. Annex C\. Economic Analysis
43
component after the Credit became effective\. The study found that full flood control at Hail
Haor up to that time was ineffective and the fisheries had not been disturbed\. Funds were never
approved by government for infrastructure or any remedial steps\.
6\.24 To date, there has been no action to ameliorate the damage caused by FCD to the
capture-fisheries subsector, even though the losses have been recognized for over fifteen years
and are not disputed\. They are particularly distressing in the context of poverty reduction
because the impact on incomes is concentrated on an already disadvantaged minority group:
landless Hindu communities which provide the majority of the fishermen and are among the
poorest groups in the country\. It is not clear how much of the trend toward smaller fish
populations and species in the rivers and beels can be attributed to enclosure, and how much to a
secular trend reflecting overfishing, pollution and other factors\.32 It is also unclear how the
fishermen should be compensated\. It is the lack of any corrective action that invites criticism\.
4\. Embankments
6\.25 Questions have been raised about the long term efficacy of embankments for full flood
protection, given the indirect costs to neighboring shorelines and other upstream and downstream
impacts\. DFC II shows that those negative impacts can be real and substantial, though the
evidence is impressive in only one of the three project sites\. But DFC II also confirms that the
positive impacts of the embankments on water control and crop production are also appreciable\.
The ERRs presented earlier in this report do not incorporate the largely negative external
impacts, and are thus an incomplete measure of overall results\. And, to a lesser extent in these
polders but of central importance to some other embankments, the analysis does not pick up the
benefits of saving lives from sudden flood\. A complete measure at this stage is impossible,
given that the longer term effects of embankments on other embankments and polders are
unknown\.
5\. Influence of O&M on Project Impact
6\.26 What is certain is that the deterioration of embankments and other structures due to
inadequate maintenance makes the ERR calculus in Chapter 5 suspect\. All of the SAR and PCR
ERR cost/benefit streams include provisions for O&M expenditures at a certain, acceptable
level, and carry out the benefit streams for 30 years without factoring in either a decline in
production attributable to gradual degradation of works (clogging of drains, inoperable gates), or
sudden collapse (embankment breakdown)\. A maintenance program which defers action until
major corrective work is necessary will undermine the validity of the original calculations,
unless periodic, substantial expenditures on rehabilitation are also included\. At present the
polders get neither treatment: preventative and routine maintenance to avoid larger expenditures
later, or cyclical rehabilitation that is "just in time" to maintain the structures close to design
specifications to give the expected results\. The structures are being allowed to degrade beyond
that point: gates missing, drains blocked, and embankments compromised to the point where
breaks are likely under severe stress\.
32\. At one of OED's group interviews, village leaders insisted that the common perception of embankment damage to
fisheries was wrong\. They said that the culture fisheries industry inside the polders was expanding, and that the capture
fisheries business was on its way out anyway, due to developments elsewhere in the river basins\. It was the only
expression of this position the team encountered, but the depth of conviction of these informants was impressive\.
44
6\.27 It is this factor that underlies the concern about embankments\. The long term negative
externalities of embankments are potentially sufficiently serious to offset expected benefits
within the polders to the point where a very unsatisfactory rating will result\. Poor maintenance
and, as a consequence, the degradation of flood control services provided by embankments and
drainage, make that outcome almost inevitable\.
B\. Lessons
6\.28 The list of lessons is shaped by the issues brought up in the preceding paragraphs\.
* The growth in national food production will continue to depend on expansion of dry
season farming based on shallow tube wells and low lift pumps\. However the
potential contributions of the Boro and monsoon crop-in response to FCD
investments-are also important considering both the ample scope for increasing
HYV coverage through reduction of flood depth, and the low cost of the
investments\. The project under review is not a good platform from which to make
that case\. Results at two of the three sites were well below expectations and
probably unrepresentative\. A full audit of the two other FCD projects now
completed through the ICR stages is desirable\. They offer a stronger base on which
to propose a sustainable, low-cost FCD strategy for the Bank\.
* The Bank should adjust FCD design to regional hydrological patterns\. The project
included two schemes, out of a total of three, whose designs were seriously
compromised by hydrological forces outside the range of normal concerns at
preparation and appraisal\.
* In future FCD operations the Bank must insist on remedial action to help offset
losses to the fisheries subsector\. Site-specific studies may be necessary to identify
appropriate responses\. To the extent FAP achieves a shift in FCD strategy toward
reducing and "living with," rather than deflecting, the flood, the pressure on riverine
fisheries will diminish\. But the breeding grounds inside the embankments will
remain at risk\.
* Government and BWDB's stubborn and slow response to the urgent need to radically
improve O&M must be accelerated\. They as well as the Bank should be alarmed at
the continuing erosion of FCD assets as a result of poor maintenance\. The decline in
the prospects of accomplishing the primary objectives of SRP is particularly
distressing\. The O&M shortfall applies to irrigation as well as FCD, two lines of
investment that the Bank should refuse to support until O&M (and particularly
maintenance) is given the attention everyone agrees it requires\. This means not only
securing BWDB's commitment but also changing the culture and skill mix at BWDB
so that the reforms can proceed\. BWDB's professional staff needs a better balance of
water management experts and civil engineers\. The recent trial organizational
reform establishing a separate field authority and staff for operations and routine
maintenance on one subproject is a step forward and must be consolidated\.
Introducing the necessary cultural and organizational reforms are among the main
objectives of SRP, but BWDB must absorb them as its own\.
45
* The effects of the failure to organize farmers to help plan, manage and maintain the
FCD structures are self-evident\. Farmers in the polders have no tradition of
association at the community level on polder problems\. Consequently, the
introduction of participatory water management cannot appeal to traditional
processes of problem solving\. The "tragedy of the lowlands" is that FCD schemes
contain both winners and losers, and constructing organizations that bring them
together calls for skills in social engineering that BWDB does not possess\. Those
skills must be created, a lesson for both the Bank and BWDB\. The TA team
considers its pilot activities in local participation to be among its most important
contributions\. However, BWDB should not be expected to handle this job alone:
other government departments, specialized rural development consultants, and
NGOs with appropriate skills and concerns for polder communities have to be
brought on board\.

47 Annex 1
DFC II INFRASTRUCTURE WORKS
Chalan Beel Satla Bagda Hail Haor
SAR Actual SAR Actual SAR Actual
Embankment (Km)
Construction 134 132 89 120 - 14
Upgrade 32 28 13 12
Dikes, submersible (Km) - 3
Control Structures
Regulators 4 13 9 12 1 -
Closures - 29
Outlets (Flush/Drain) - 8
Dual Inlets/Outlets - 77
Irrigation Inlets - 22 450 372
Drainage Channels
(Km) 193 134 216
(ha) 12,150 8,800 -
Roads
Main 48 76 41 34 31 19
Village 97 26 31 31 32 11
Source: SAR; Evaluation Studies for CB, SB, and HH, Chapter III in each volume\. (See citation in Footnote 12\.)

49 Annex 2
OED Impact Study
Salta Bagda Polders and Chalan Beel Polder D
Drainage and Flood Control Project II
Bangladesh
Farmer Behavior (Excerpts from a Field Report by Jayantha Perera, November 1995)
Chalan Beel
* Farmers cannot operate the sluice to get irrigation water or control floods\. They do
not know who is responsible for the operation of the sluice\. There is no Sluice
Committee to supervise the operations\. A Kalasin (guard) is officially responsible
for operating a sluice\. According to farmers at several sluices Kalasins do not
operate sluices and live away from the sluice sites\. Farmers reported this to their
Union Councils\. The Councils do no have any authority over sluices or the
Kalasins\. Many sluice gates do not have handles\.
* Sometimes farmers take initiative to establish Farmer Groups to deal with heavy
siltation of drainage canals\. For example, farmers of the Mansinhapur Thana of
Chalan Beel met at a school to discuss the strategy\. They invited officials from the
BWDB and local Thana office to the meeting\. Farmers described their difficulties
to the officials and requested their assistance to desilt the canals\. The BWDB
officer and Thana officials told them that BWDB and Thana office were not
'mandated' to desilt the drainage canals\. They directed farmers to the Local
Government Engineering Department which too was unable to help farmers\.
Farmers do not want to clean the canals by themselves for various reasons\. The
main reason is the length of canals\. Land along canals belong to farmers of
different villages\. As a result, their mobilization is difficult for this purpose\. The
average distance of a canal is about 6000 metres\. At one village about 120 farmers
cultivated land by a canal which is about 5000 metres long\. If households are
willing to do the cleaning, each household has to clean only 50 metres\. When this
is pointed out to a village leader, he said "such things can happen in other countries;
not in Bangladesh as all villagers and officials are corrupt and selfish\."
* In Chalan Beel, 'insiders' usually do their best to protect and maintain the
embankment\. In fact in 1989 and 1990, when floods threatened the embankment,
they voluntarily protected the embankment by strengthening it with sand bags and
patrolling vulnerable sections of the embankment\. But such group activities are
often charismatic leader-driven programmes without any institutional backing\. In
fact, there is no institutionalized link between farmers and BWDB over the polder
operation and maintenance\. Kalashis are responsible for irrigation regulator
operations, not farmers or fanner groups\. Unlike Myanmar and Thailand,
Bangladesh is known for well-developed grass roots level farmer organizations\.
But in Drainage and Flood Control Projects, no beneficiary organizations have been
Annex 2 50
encouraged or established by the BWDB\. Perhaps this is due to the BWDB's
continuing emphasis on civil works in these projects\.
* An informal Sluice Committee comprised of farmers is expected to assist a Kalshi
in sluice O&M\. But as noted at several sluices, the Kalshis do not live in villages,
and leave sluice operations to farmers\. As a result, the operation of some sluices
has been taken over by large landlords\. This thwarts group formation among
irrigators and lends to prolonged exploitation of poor farmers by big landlords\. At
some sluices, powerful landlords sell water from BWDB sluices without paying any
taxes to the Government or doing any maintenance\.
* At many locations, especially along the south-western boundary of the polder,
farmers have their own associations to get water from the river or STWs sunken by
the river bed during the dry season\. For example, a group of farmers (60) in
Mansinhapur pump water from a STW outside the polder using a 4" pump to their
holdings inside the polder\. They first pump water to an unlined canal\. From the
canal each farmer gets water to his holding\. The canal is about 1\.5 km long\. It took
18 days for 60 people to dig it in 1986\. A large zamindar organized the scheme\.
Satla Bagda
* At Satla Bagda as well as in Chalan Beel farmers believe that drainage and flood
control structures are government property and therefore it is the government job to
do their maintenance\.
* There are informal cultivation groups and therefore it is difficult to say that there
are no Farmers Organizations (FOs)\. Some form of local committees are present to
control inlets and sluices\. The Kalashis, as at Chalan Beel, take no interest in
operating inlets and sluices\. Many farmers pointed out that they do not want to take
over the operation of sluices as there is no benefit for them from sluices\.
* Routine maintenance of the embankment is non-existent at present\. There is very
little evidence of maintenance work on regulators and sluices\. The desilting of
Khals are also neglected\. The BWDB has attempted to rehabilitate inlet sluices so
that farmers could use them as irrigation inlets and drainage outlets depending on
the water level of the river\. But in many places, water does not come in during the
dry season, when the water-level in the river is low\. In several villages, farmers
therefore have excavated deep canals to get more water from the river for their
lands\.
* If lowland farmers drain their lands, the highland farmers will have a water-stress
situation\. this conflict of interest often encourages the head-end farmers to gain
control over inlet gates and sluices\. Head-end farmers take water whenever
necessary from the inlets as their lands naturally drain excess water to lowlands\.
They sometimes pump or use swing-buckets to get water from canals for rice
cultivation\. In fact they could cultivate two or three crops a year, if irrigation water
is found\. At the same time, the lowland farmers could not cultivate their lands even
in the dry season due to excess drainage water that damages their crops\.
51 Annex 2
In April 1995, when the head-end farmers opened the sluices to irrigate their lands
the tail-enders blocked the canal with stones, etc\. to stop water coming to their
holdings\. This led to a clash between the two groups\. As inlets are located at higher
positions to save lands from floods and tidals, it is difficult to use them as drainage
canals for lowlands\. Separate outlets canals are needed to drain water from
lowlands\. This is particularly urgent as the Khals were blocked by the inlet canals
and other structures\.

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Annex 3A 54
C010(ENT
ODD 1m)2act study\. m&y 1,996
BACXGROUVD
The study was conducted oh a cluster of six gravity Irrigation' scheinets
-supp6rl-\.3d by the t4orld Bank iWB) in three countries of S6 thedivt i siaC
(Thaifand\. Myanmar and Vietham)\. The main objective was to assess' agFo-
economic impacts at least five years, after completion of the investment
operations -and the influence of operation and maintenanc ' e (0 rX ;M)
performance on the suatainabillt of ttiose impact3\. For comparative purposes\.
the study also assessed impact andt 0 & M at three schemes coverea b a
flood control project in Bangladiash4'-with irrigation as a minor component\.
SPECIFIC ISSUES
Annex-D
Para 11 and 12 While recognizing the SRP and enhtnced 0 & i M as a
positive response, the performance has een tarmed
inadequate and below expectation\. it sholild be noted
that at the very start\. up, initial mobillzaLion of a TA
component (EU) was delayed by over a,- year by a
Donor wMch led to subsequent poor performance\.
Furt ermo rd', it s ould be rea\.Uzed that basic, policy
changes i: iquire time to materialize\.
Para 14\.15 and 19 OED seem s to hav'a relied more an earlier,eval ations
I
by others to draw conclusions and less'on its owil
invesiigations and lack of BWDB's participad6n i In
the Mission is apparently conspic'Uoua: The
contribution of dyke in delaying onset Of flo da on
the plains io ensure sale Boro harvest ihould h ve
been sharply highlighted\.
\.Para 1 The conflict between farmers of different ele atio'ns
is not unique for Satla Bagda alone\. it is trUe for
all gravity drainage VCD pro3ects In the delta\.
55 Annex 3A
Para 2C The need for adequate 0 & M and farmers'
* -organization has been recognized and steps are
\. underwdy to address these issues\.
Findings and Lessonss The reliance on winter rice alone for 'continued
growth in national foodgrains production is no more
tenable as Boro production has stagnated around
34/35% over last five years indicating scarcity in
availability of water needed for bringing in new
areas\. The scope for vertical rise is also limited as
about 90% of Boro is HYV alFeady whereas there is
ample scope of increasing HYV coVerage from
present 35% through reduction of flood depeh\.
Apparently GED failed to recognize the fundamental
principle of FAP which is reduction of\. flood depth
through controlled flooding rather than elimination
of flood biiA not 'living with flood" as such\. Some of
the FAP pilot projects (FAP-G and FAP-20) have
already taken some Innovative steps 'towards
promotion of fisheries in FCD projects and involving
stakeholders\. The BWDB professionals have been
exposed to and gaining experience In\., 'social
engineering'\.
PERFORMANCE AUDIT RnPORT-rCD II
Para 1\.2 a The assumption by proponents\. of min#r irrigation
that Bangladesh rests on one of the world's
greatest, though untapped, rechargeable aqdilfers is
yet to be proven and perhaps a myth now\. Aecause,
in many of the STW areas (all private now) embargo
has been Imposed on new sinking and apoarently\.
sale of STW has also declined sharply\. The IBRD
sector study recommended low cost, quick ielding
FC6 projects in 'shallow flooded areas which has not
been mentioned\.
Para 1\.3 Geographical location of Bangladesh has been
depicted to be- 'at the confluence of two of the
world's mightiest rivers\. It should be rephrased as
'at the confluence of three mighty rivers: of the
world'\.
Annex 3A 56
Pars 2\.1 \. While describing the functions of embankment, the
report should have highlighted the b6nefAis from
use of dyke as road and also keeping the: village
tracks unable throughout the year due tb flood
reduction within the polder\.
Para 3\.3 * The Satla Bagda dykes were partly built with peat
soils no doubt, but the annual shrinka4e was
monitored carefully and free board allowance made\.
The 1987 flood was an unusual event, with higher
return period than the design (1 in 2d yearb)\.
Polder technology is not simple in gravity drainage
system as the hydrology becomes complex - in
enclosed area due to varying topography\.
Para 5\.11 Some parts of Chalan Beel (Polders A,B,C) are prone
to early flash floods that destroyed mature Boro
before harvest\. The dyke has ensured safe h\.arvest\.
Thus there is a causal relationship\.
GENERAL COMMENTS
Project planning of all aided scheme were
performed by consultant engaged by aid-giving
agencies\. Consequently review and appraLs4 were\.
made before financing\. BWDB only implemented as
per plan and design\. Participatory! planning,
enivironmental concerns etc\. are relstivel\. new
concepts and are being addressed' gradually\.
Theiefore, lapses in the past should be equally
attribUted to both Bark and BWDB\.
The report appears heavily reliant on i other
literature and the report admitted that platf6rm 'of
audit is not strong\. The ERRs presented seem to be
computed without sound basis\.
( A\.K\.M\. Shirmiul Anque)
chifr Rigineer, -
Planning,I)tibil, Dhaka
&
57 Annex 3B
Bangladesh Ministry of Planning
Mosr uzzarG
GjOVERNMENT OF THE PEOPLE'S REPUBUC OF BANGLADESH
MINISTRY OF PLANNING
Th0\.5 MIAmN\.M\.bl&EBYA LAl ")TTONIMA\.Im
No\. MoniBi-14150194(Part-4) Date:26-6-96
Subject: Comments on PAR Drainge and Flood
Ref : World Hank Lerter datcd 3/6/96
Please refer to the above mentioned letter\. In this connection the -iewsicommcnts
of Lhe IMED is enclosed\.
Thanking you \.
Yours faithfuy,
\.A\.M\. RhImquzzaman 4 ,
Projct oflkir (Md\. Remxul Kaim)
World Bank Deputy Dirctor
Resident MiNsion of Dangladcah Tel\. 329028
Fax: 863220
Ju
Annex 3B 58
GOVERNMENT OF THE PEOPLES REPUBLIC OF 3ANGLADY-Ski
IMNISTRY OF PLANNING
IM L1XNTATION MONITORING & EVAJATION DIVISBYON
Subjcct : Comments on Performance Audit Reports
(PAR) on )rainage and Flood Control 11 Project of
BWDB, Prepared by OED\. world Bank
COMMENTS ON IMPLEMENTATION EXPERIENCE:
The project aiied at protection of Chalan Beel, Satin Bagda and Iail 1or area
from monsoon flood and drainage congestion\. The project component of (a) Chalan
Bee[ IncludeA construction of 134 Km embaRnkment, drains and thirteen water control
structure% and construction and Improvement of 101 Km of roads in 31,000 ha\. area\.
The project component or (b) Satla Bagda Area Includes construction and
improvement of 145\.64 Km embanlunent, drains and 372 irrigation inlets,
construction of 84\.52 Km of new road; covering an area of 21,000 ha; while the -
component nf(c) flail Haor includes 24\.60 Km of embalanerint, drains and imajor
water control structure (regulator), Improvement of 30\. 18 Km of roads and 34 Nos of
13ridges of CuIlverts\. A flaheres study and infl*astructure Investniients for fiNherief
development were also Included in the Hail Haor project
Our CDnII/vIews on the Evaluation Summary of the above mentioned
projects prepared by the Operations Evaluation Department (0\. E\. D\.) is reflected
below:
Pake 2\. Articl-
(a) The Projcct under Chalan beel Polder-\.) is surrounded by Atrai, Fakirni\. Bamnai and
Shib rivers\. As a result of the inplemeitation of this project along with other projtcts
impleMened tround, all flood walers aro flown to unproLected lowlands thaL had
previously never experienced flooding\. Morcover, Sib and Fakirni rivers are partly silted
up\. A VUL bed area and 3arind bszin are situated at the wet site of the embankment, for
59 Annex 3B
which the west part of the project specially the embankmnwts are threacend during
monsoon cvery year \. Tlhe disatisfled frmenrs of the affected area cut many places in the
palders to ruduce water icvcl for their existence\. In the mean time, in 1995 about 1\.89 km
embankment have been damaged partly and 30 suucmrcs have either been partly or rully
damaged\. 1hose ocrwTenues are still continuing\. Perhaps, this needs a close look on the
de-sign of the etbanknent relating to the local hydrological pattern and may
nucassitate red esignino or the whole project\.
(b) Ebankrncns and structures of Satla 3agda project were heavily dsmaged by 1987
& 1988 Flood \. In the Chalan beel polder - 1) and Satle Bagda project, 394 Noa of LLP
inlet were constructed \. IL was proposed that part of the project area would be inigated by
these LUY inleit but most of the inlets were not properly funedoning for inigatin\. Ilis has
also caused concern particularly in respect to the; planned output of the project\. This fact
has not been m-antioned in the OED's report\.
2\. Pagg-a- Irtidle\. 7\.
Cornpletin of* thu project was delayed rol only Lfor land acquisition but delay in
detailed deign of the components, finalisation of tender, award of work, contractors
failures, re-fixation of alignment of the embankment made the implementation process
dilliculh Bencliciaies of the project werc not informed about the consequences of the
prqictl implementation and the probable changes in flood water courses\. They were scared
at initial water logging\. So their co-operation wa nor achieved to solvc rhc problems
quickly\.
(b) Sada Bagda\. project was dclared completed without re-excavating 54% af the
drainage channel \. As a result some of the areas werc facing drainage problers\. OED'n
report is sflent on this issue\.
Page-2- Article -8
(a) 54% of expendiLures was incurred against contructdon of roads, bridges and 4ulverts
under Hail Iao projuQt which were not at all rchaed to F C D prqjecL objectives \. Iter
sectoral transf±r of fund and proper pioritization was not perhaps done and project
selcction critena was also not followed properly during implementation of the project\.
Page-Z- Article-9,
No comments
Article -10
Annex 3B 60
No comments\.
Pauej- Article :11-12
Q!zr;ain and Maintenance:
(a) in the (\.halan bed polder-D project, 76\.00 Km of IBB road and 30 Nos of
BridgeS/culverm were constructed and in the Satlabagda project, 54\.65 km Of HBB road
and 1 Nos of Bridges/culvers worm constructed\. The roada weru Mlly or partly damaged
within 2-3 years of completion due to lack or operAtion & minatenance\. Responsibility of
rural comuunication developenM along with the 0 & M is ntusted to L Ga S )\. Due to
fund coDstraints ncither BWDD nor I \.6OFD could uaintain these rnada\. It is a factor that
underfies our concern for the embankment\. We however agree to the suggestions made
in the OED's report on the Issue of operation and maintenance\.
Page-3-Article-\.
(a) In the absence of the impact evaluation study by IMED we have no comments on
the ERIL In gencral, the value of ERR is less in the FCD project compare to the
irrigtion proj:c\.L Therefort we agree the value of ERR in pimciple\.
(b) We fuly vgae on the comments of the mensilivicy analysis as reflected in the report\. \.
MAP SECTION

l,,\.1 9?r
BANGLADESH
DRAINAGE AND FLOOD CONTROL Il PROJECT
SUB - PROJECT SITES
Th\.k\.,g\. PrRO)EC SI\IES
o rhe t MAJOR RIVERS
ROADS
o K\.di AILROADS
{0\. SELECTED TOWNS AND VILLAGES
D DISTRICT CAPTALS
c NAIONAL CAPITAL
E-- NTERNA1tONAL SOJNDARIES
IN D l A
\.s\.,,,r N o
BpuLro Nt,JQ-o
l AAN I I
Godg ga\. hog
RAJSHAHI 0 r Haka hN Habion\.
Ku\.hRo l N D I A
Chu\.jb -K YA
y\.<
Daa J\.n\.d\.h --
cooloonj ~ oo
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SN raSnr u,
darip
23- K u m a h ' 23°-
u BAGDA \
I N D A
f7 B
~ay 0 BnBaykIof Benga
I 1A -S A~ - 9 ______________2
YAMA
K\. 3 t I, \.d\.,,n
\ l Bay Ba oega Bengal
PAII AN s

IBRD 27604
BANGLADESH
DRAINAGE AND FLOOD CONTROL II PROJECT
CHALAN BEEL SUBPROJECT
PROJECT WORKS
EMBANKMENTS
NIYAMATPUR A REGULATORS
THANA,
THANA VILLAGE ROADS
\. IMPROVED ROADS
- EXISTING MAIN ROADS
RIVERS, BEELS, KHALS
0 , 2 4 5
I I I I I I
KILOMETERS
MANDA
\.:\. THANA
TANORE /
THANA :
/0
DURGAPUR INDIA
00 etTHANA
BO Area of
* Map Fe ea e
&RDJ 2'60
D
INDIA
The boundaries, colors, denominations F e
and any other informoho shown on
th's map do not impky, on the port of
PABA The World Bank Group, ony judgment
othe logo status of any territory, or
THANA ony e rn\. \. or cosPto,,c\. of Bey ef
boundones\. ANMAR
JANUARY 1996

BANGLADESH
DRAINAGE AND FLOOD CONTROL Il PROJECT
ForD e'
0 27n04 For Dero,, SATLA BAGDA SUBPROJECT
'RD 27 060
PROJECT WORKS
D
EMBANKMENTS
INDIA -\.- REGULATORS
-VILLAGE ROADS
CLOSURES
SRIVERS, BEELS, KHALS
By o
\.nyi -spdo-,,t iospI>r o o wc\. vota
b-ondones
POLDER 1
I/
POLDER 2
\-7 ihanihanic2Kho/
0 1\.2 3 4 5 HarKio hal
C KILOMETERS

-BRD 27606
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Cn | APPROVAL |
P151660 | PROJECT INFORMATION DOCUMENT (PID)
ADDITIONAL FINANCING
Report No\.: PIDA22700
Project Name Addl Financing - Kenya Water Security and Climate Resilience
Project (P151660)
Parent Project Name Kenya Water Security and Climate Resilience Project (P117635)
Region AFRICA
Country Kenya
Sector(s) General water, sanitation and flood protection sector (80%), Public
administration- Water, sanitation and flood protection (20%)
Theme(s) Water resource management (80%), Natural disaster management
(20%)
Lending Instrument Investment Project Financing
Project ID P151660
Parent Project ID P117635
Borrower(s) The National Treasury
Implementing Agency Ministry of Environment, Water and Natural Resources
Environmental Category A-Full Assessment
Date PID Prepared/Updated 08-Apr-2015
Date PID Approved/Disclosed 09-Apr-2015
Estimated Date of Appraisal 10-Apr-2015
Completion
Estimated Date of Board 25-Jun-2015
Approval
Appraisal Review Decision The review did authorize the team to appraise and negotiate
(from Decision Note)
I\. Project Context
Country Context
Kenya is emerging from a strong, but uneven, decade of growth\. Annual growth rates from 2000 to
2009 averaged 3\.9 percent, an increase from the previous decadeâs average of 2\.3 percent\. Post-
election violence throughout 2008, combined with a severe drought that started in 2007, the global
financial crisis, and high food and fuel prices resulted in a dramatic decline in the countryâs
economic performance and a negative per capita growth rate in 2008\. The economy recovered in
2010 and reached a growth rate of 5\.6 percent, underpinned by structural reforms, a new
Constitution and a spur in infrastructure investment\. In 2011, a series of domestic and external
shocks reversed the momentum, with the growth rate decreasing to approximately 4\.5 percent\.
While national absolute poverty has declined, it is still high in comparison with neighboring
countries such as Tanzania and Uganda\.
Page 1 of 5
The Kenyan profile also reveals strong regional disparities in the distribution of poverty (with the
lowest incidence in the Central province and the highest in the North Eastern province), as well as
rising inequalities in the distribution of incomes in urban areas\. With Tourism and agriculture
(followed closely by industry and services) the main drivers of growth, Kenyaâs economy is
vulnerable to erratic climatic patterns and a fragile natural resource base, including limited water
availability\. The World Bank estimates that climate variability costs the country an average of 2\.4
percent of GDP per year and water resources degradation, a further 0\.5 percent, which has seriously
affected the countryâs competitiveness\. Environmental threats are numerous â including
unsustainable water abstractions, poor land use practices, deforestation, encroachment in recharge
areas, and pollution â which have already seriously degraded many critical watersheds\. In 2007, the
Government of Kenya (GoK) released Vision 2030, its framework for addressing these challenges
and making Kenya a middle-income country by 2030\. Vision 2030 seeks nothing less than a
transformational change, achieving annual average GDP growth rates of 10% over the period in
order to make the âleap from poverty to widely shared prosperity and growth\.â Vision 2030 has
three pillars: economic, social, and political\.
Obtaining water security and reducing vulnerability to climatic variability and change are featured
prominently as cross-cutting issues affecting all pillars and are highlighted as prerequisites for
sustaining economic growth through increased production and tourism, as well as ensuring equity
and social stability\.
Sectoral and institutional Context
Water Security and climate resilience are critical issues for Kenya, given that its people and
economy are highly vulnerable to erratic climatic patterns and limited water availability\. Many key
sectors (agriculture, tourism, hydro-energy, etc\.) depend on rainfall and water availability\. From
1992-2012, Kenya topped Africa in terms of people affected by droughts (~46m people) and stood
fifth in terms of those affected by floods (~2\.8m people)\. Kenya has limited freshwater endowments
and is classified as a chronically âwater scarceâ country in absolute and relative terms\. It faces high
inter-annual and intra-annual rainfall variability\. Climate variability and hydro-climatic shocks
(droughts and floods) impact disproportionately on the poor, and climate change is projected to
exacerbate existing climate risks and water resource constraints\. Kenya has yet to adequately
manage its highly variable hydrology to improve climate resilience, as evidenced in decades-long
under-investment in water infrastructure\. The massive water infrastructure gap has been estimated
at US$ 5-7 billion\.
II\. Proposed Development Objectives
A\. Current Project Development Objectives â Parent
The project development objectives of KWSCRP-1 are to: (i) increase availability and productivity
of irrigation water for project beneficiaries; and (ii) enhance the institutional framework and
strengthen capacity for water security and climate resilience for thecountry\.
B\. Proposed Project Development Objectives â Additional Financing (AF)
The project development objectives of KWSCRP-1 are to: (i) increase availability and productivity
of irrigation water for project beneficiaries; and (ii) enhance the institutional framework and
strengthen capacity for water security and climate resilience in certain areas of the country\.
Within the PDO, âcapacity for water security and climate resilienceâ primarily includes improved
Page 2 of 5
water services, flood protection, and analytical capacity to understand and manage hydrological
variability\.
III\. Project Description
Component Name
Water Resources Development
Comments (optional)
This component sSupports climate resilience and water security for economic growth by financing
water investments and by building a longer-term investment pipeline\. Current component 1
includes: (i) implementation of an irrigation scheme in lower Nzoia, a flagship project of the Kenya
Agricultural Sector Development Strategy (ASDS) and of Kenya Vision 2030; and (ii) identification
and preparation of new investments\.
Proposed new activities through the additional financing and restructuring include: Lower Nzoia
Flood Protection through (i) repair and improvement of existing and new dykes and (ii)
strengthening of monitoring and community early warning mechanisms; watershed management in
the Nzoia river basin; and a Program for the Improvement of Water Services in Mombasa County\.
Component Name
Effective Water Sector Institutions
Comments (optional)
This Component supports the strengthening of current sector institutions, as well as reform
activities\. The component funds pre-reform transition and reform of the of the water sector to align
with the devolution processes mandated by the 2010 Constitution of Kenya, as well as to improve
the capacity and knowledge base for basin-level water resources management in Kenya\. This
component also includes strengthening the planning, analysis and licensing functions of the Water
Resources Management Authority\.
Component Name
Support for Project Implementation
Comments (optional)
Supports the PMU to provide for effective KWSCRP-1 implementation\.
IV\. Financing (in USD Million)
Total Project Cost: 65\.50 Total Bank Financing: 54\.00
Financing Gap: 0\.00
For Loans/Credits/Others Amount
BORROWER/RECIPIENT 0\.00
International Development Association (IDA) 54\.00
Free-standing TFs for Bank 3\.50
Bilateral Agencies (unidentified) 8\.00
Total 65\.50
V\. Implementation
The current project is rated Moderately Satisfactory with regard to Implementation Progress and
Page 3 of 5
Progress towards the Project Development Objective\. The project continues to take leadership in
moving forward the water sector reforms and devolution process, including through the engagement
of key stakeholders to advance the final draft of the Water Bill, which is undergoing a third reading
in Parliament\. Significant progress has been made in the water investment pipeline, where an initial
set of preparatory studies focused on the Coastal region is under development, and a list of priority
projects throughout the country has been developed for further consultations\. Project start-up was
slow, given the political and constitutional transition, as well as the uncertainty surrounding the
water sector in the devolution process and slow pace of Project Management Unit (PMU) formation\.
5\.43 percent of project funds have been disbursed to date\. However, the PMU is now more fully
staffed, with on-going procurements of several Implementation Support Consultant firms, which are
expected to increase the speed of implementation\. Implementation Progress is now being monitored
at the highest levels in the Ministry\. There have been no restructurings of the project prior to this
request\.
VI\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
Comments (optional)
VII\. Contact point
World Bank
Contact: Eileen Rose Burke
Title: Sr Water Resources Mgmt\. Spec\.
Tel: 473-7279
Email: eburke@worldbank\.org
Borrower/Client/Recipient
Name: The National Treasury
Contact: Principal Secretary
Title: Principal Secretary
Tel: 254-20-2252299
Email: ps@treasury\.go\.ke
Implementing Agencies
Name: Ministry of Environment, Water and Natural Resources
Contact: Engineer Robinson Gaita
Title: Director
Page 4 of 5
Tel: 254-20- 271-6103
Email: rkgaita@gmail\.com
VIII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Page 5 of 5 | APPROVAL |
P000834 | R E S T R I C T E D
RE<TURN r RETURIIED T ARCIIVES DIVSCP R e p o r t N 0\. TC-249a
REPORTS DlESK
WITH][N
ONYE EE:K E
-'IYPtrvu~m1 was prepared for use within the Bank\. It may not be published nor
mIiy it be quoted as representing the Bank's views\. The Bank accepts no
responsibility for the accuracy or completeness of the contents of the report\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PRELIMINARY APPRAISAL OF THE VOLTA RIVE'
HYDROELECTRIC PROJECT
GHANA
FILE CO PY
June 30, 1960
Departraent of Tethnical Operations
CURRENCY EQUIVALENTS
U\.S\. Cents 1 = Ghana Pence 0\.857
U\.S\. $1 = Ghana Shillings 7 Pence 3
U\.S\. $2\. 80 = Ghana I 1
U\. S\. $2\. 8 million = Ghana i 1 million
PvRELIiJNirtY A\.PP7,HAISAL OF TIE VOLTA RIVER HYDROELECTiIC PROJECT
GHANA
TABLE OF CONTENTS
Page No\.
SUTVIiARY i - ii
I\. INTRODUCTION 1
,-\.,- n \r4 ~ m M4- T' 4 m-r Mr'v rmr AmThMnTTnM A TT7h ,-nT:,j A Trr' nDCr T-nrTI 1
III\. POWER MARKET 2
Existing Installation 2
Proposed Transmission Network 2
The Non-Smelter Load in the Accra-Tema Area 3
The Smelter Load 4
Total Demand and Generating Capacity Required 4
IV\. THE PROJECT 5
The Volta Basin 5
Description of the Project 5
Engineering and Geological Studies 6
Water Requirements 6
Construction Schedule 7
Cost Estimates 8
Schedule of Expenditure 9
V\. FINANCIAL ASPECTS 9
Financing 9
Tariffs 10
Financial Projections 10
Ten-Year Return on the Investment 11
Long-Term Return on the Investment 13
Effect of an 80,000-ton Smelter 14
Effect of a 210,000-ton Smelter 15
General Considerations 16
VI\. ECONOMIC ASPECTS 18
VII\. CONCLUSIONS AND RECOSMENDATIONS 20
LIST OF ANNEXES
1\. Power Demand in Accra-Tema Area: (Estimated Maximum Demand and
Plant Capacity; and Estimated
Electricity Sales)
2 PowTer Station Tnstalled Capacity and Maximum Demand\.
3\. Construction Schedule
4\. Forecast Summary Income Statements and Cash Flows Based on a
Smelter Tariff of 2\.5 Mills\.
5\. Forecast Summary Income Statements and Cash Flows Based on a
Smelter Tariff of 3 Mills\.
6\. Forecast Summary Income Statements and Cash Flows Based on a
Smelter Tariff of 3\.5 Mills\.
7\. Alternative Thermal Power Station Costs\.
8\. Summary Estimate of Ancillary Investments\.
9\. The Effect of Power Prices on the Cost of Aluminum\.
I'\.) Calcala'tio of Long-Term Rate of Return\.
Map of Ghana
GHANA
PRZLYi!LWARAT APPRAISAL OF TIH\. VOLT)1A RI-v_R FIf-ROUS-U\.CTRIC PROJi1ECT
SUMMARY
The Government of Ghana asked the Bank to appraise the Volta
River Project as though it were considering financing the project and
to indicate the effects of various smelter tariffs on the returns that
might be expected from the project\.
ii\. The project comprises the Droposed AKosombo dam, a 539 i{ui
power plant (wfvith provision for 294 I\.T additional capacity) and trans-
mission lines to Accra and Tema to supply power to a proposed aluminum
smelter and to the Accra-Tema area\. The dam would be 370 feet high
above foundation level and 2,100 feet long, creating a reservoir 300
miles in length, with a total storage capacity of 120 million acre-feet\.
Excluded from the project, as appraised in this report, is a proposed
700 mile transmission netwrork, as the expected power demand it would
supply would not justify, for some years, the initial capital cost re-
quired\. The project has been investigated by consultants, Kaiser ,ngi-
neers & Constructors, Inc\., of the U\.S\.A\.
iii\. Based on average rainfall, adequate water from the catchment
area in Ghana would be available to operate the initial four unit (589 ISrT)
plant\. Since water from tributaries of the Volta River rising in neigh-
boring territories would be required to operate the project when fully
developed (883 1MW), steps should be taken to determine wThether sufficient
water could be diverted to affect the project seriously\.
iv\. The project, which would take about four years to construct,
is scheduled to be completed by December 1965 but, in view of possible
construction difficulties and the chance that two dry years in succes-
sion might be experienced during the reservoir filling period, the date
of beginning operations has been assumed as January 1, 1967, in this
report\.
v\. The project is estimated to cost fG 58\.3 million of which the
foreign exchange component would be apnroximately fG 40 million\.
vi\. For financing the construction of the project it has been
aosumed in this report that the Government's contribution would be
fG 30 million and the remainder would be borrowed at 651 interest for
a period of 25 years, including a 6 year grace period\.
vii\. The Government has established a secretariat to coordinate
general planning of the project\. The Government proposes to set up a
Volta River Authority to carry out all the steps necessary to construct
the project and to operate it after completion\. Consulting engineers
would design and supervise construction of the project\. Expatriate staff
would be required for key positions in the proposed Authority\.
- ii -
viii\. The power market would consist of the 120,000 ton aluminum
smelter requiring 303 MiW and other consumers (Accra-Tema area) requiring
59 MW in 1967 and 163 MW by 1976\.
ix\. The financial return on the project would not be attractive in
the initial years of operation, particularly when the cost of ancillary
invP\.tm-nt\.- is tikPn innto aeeoin1 aowpvv'r_ t\.hpe rptirn nve\.r t,hp longer
run is more substantial and benefits other than financial would accrue to
the Government and the economy\. It is for the Government to decide
whether the longer-term return and benefits outweigh the initial losses
and the uncertainties faced in so substantial an inv<stment\.
x\. If the Government decides to proceed with the project, it is
recommended that the measures set out in paragraph 82 be taken\.
I\. INTRODUCTION
This report presents an appraisal of the proposed Volta Ri"rer
hydroelectric project and has been prepared at the request of the Govern-
ment of Ghana\. The appraisal is concerned with the technical, financial
adf1 ecOnvoc soundncss of the proposPed nr6iect\. with the adequacy of the
organizational arrangements for its execution and management, and with
the assumptions and cost estimates upon which a decision to carry out the
project might be based\.
2\. The nroijet as presented to the Bank would include a dam at the
Akosombo site about 60 miles above the mouth of the Volta River; a power
plant with 589 Hdl installed; transmission lines to Accra and to the
port of Tema, where a proposed aluminum smelter wtould be constructed by
VALCO, a consortium of aluminum companies; and a 700 mile transmission
network to supply the principal cities, towns and mines of Southern Ghana\.
3\. Data on the technical features of the project and its estimated
cost have been obtained from a comprehensive engineering report prepared
by Kaiser Engineers and Constructors, Inc\., who are the Government's con-
sultants for the project, from a report prepared by Cooper Brothers and
Co\. on Kaiserts estimated costs, from an engineering report prepared for
the Volta River Preparatory Commission by Sir W~illiam Halcrow and Partners
and from a field trip made by Bank staff\.
II\. ORGANIZATION TO CONSTRUCT AND OPERATE PROJECT
4\. A secretariat with a small non-technical staff has been set up
by the Ghana Government to coordinate general planning of the project\.
The Government proposes to set up a Volta River Authority to carry out
all steps necessary to build the project and to operate it after comple-
tion\. Consulting engineers would design the project and supervise its
construction\.
5\. The successful execution and operation of the project will
depend, in large measure, upon the type and character of the authority
which the Government establishes to have responsibility for this impor-
tant project\. The authority should have the freedom, under broad
delegations of policy laid down in the legislation establishing it, to
make decisions and take the actions necessary for the success of the
project\. It should have the freedom necessary to conduct its affairs in
accordance WTith sound financial and public utility practices\.
6\. The most successful agencies of this type are governed by a
board of directors of several members\. It is irmportant that the board,
while being responsible for overall policy and programing, should appoint
adrministrative and technical staff to Thom the execution ofL work and
operation of facilities would be delegated\. Qualified senior staff,
having the experience nccessary to manage and operate a project of this
nature, are not available in Ghana and it iwould therefore be essential
to retain expatriate staff for many years\. It is important also that
the authority should have the power to fix tariffs and otherwise to main-
ain a sound fiinancial position\.
- 2 -
7\. U4hile in some cases authorities of this character are respon-
sible for both generation and distribution of po:Jer, it would seem
preferable that the responsibilities of the Volta River Authority should
be restricted to the generation and transmission of electricity, includ-
ing sales to the smelter, and that distribution should be the function
of the EThetrinity epnartmPent\. ifhich is fully conve'\.n± with fhe ,leal
problems involved in distributing electricity to the widely differing
types of consumer in Ghana\. In view of the important role which the
Electricity Department would have in selling the output of the project,
that Department should, as quickly as possible, bc put on an efficient
and economic basis\. Consideration should be given to the reorganization
of the Department as an autonomous public corporation\.
III\. POWER MARKET
Existing Installations
8\. All generation of electricity in Ghana at present is by diesel
plants located in the towns or at the mines which they serve\. The plants
supplying the public are controlled by an Electricity Department directly
responsible to the Ministry of Works and Housing\. The load on the plants
controlled by the Electricity Department was about 29\.2 NI at the end of
1959 and in addition the mines had a demand of about 36 YU\.
9\. It is not expected that the demand of the mlnes, all of which
are supplied from their own well maintained and operated power stations,
will change significantly in the forseeable future\. The mining companies
have expressed the view that they would not take power from the Volta
project unless they could be assured that the supply would be entirely
reliable and wiould show some savings compared with their own generating
costs, whlich are understood to range between 15 and 20 mills per kwh\.
Proposed Transmission Network
10\. In addition to the transmission lines from the Akosombo power
station to the smelter, Tema and Accra, a netwgork planned to supply a
demand estimated at 190 Ml has been proposed to serve southern Ghana
including Kumasi, Takoradi and the mining companies\. It must be assumed
that the mines would not purchase Volta power in the near future because
of the high cost shown in the following paragraph\. Exclusive of the
mines, the network beyond Accra and Tema would supply a widely distributed
demand estimated by the Bank to reach 36 N,1T in 1967, rising to 87 14W in 1976,
with annual energy requirements of 106 million kilowatt hours in 1967 and
304\.8 million kilowatt hours in 1976\. These estimates are lower than those
of Kaiser\. (See Annex I)\.
11\. The cost of this transmission network is estirmated by Kaiser to
be approximately 1G 11 million and, assuming interest at the rate of 6%
per annum, depreciation at 3% per annum and operation and maintenance at
;G 200,000 per a-nnum, the annual charges would amount to 26\.3 mills per
kwh sold in 1967 and 7 mills per kwh sold in 1976\. If the cost of genera-
tion is added to these costs it is clear that the price of potwer delivered
from the network Twould be uneconomic in 1967 and for some years afterwards\.
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12\. The construction of the proposed network beyond Accra and Tema
should therefore be deferred until development of the load justifies the
large capital expenditure required\. In this report only the transmissior
lines to Tema, Accra and the smelter are considered part of the project\.
The Non-Smelter Load in the Accra-Tema Area
13\. WTith so limited a history of power sales available the extent
to which the load in the Accra and Tema areas will increase in the
future is difficult to assess with precision\. Studies of the power
market have been made by the Electricity Department, their consulting
engineers, Preece, Cardew and Rider, and by the Kaiser Engineers and
Constructors, Inc\. These studies, which were made availaobe to the BDwk
mission, may be summarized as follows:
a) In February 1958, Preece, Cardew and Rider estimated the load
would increase from 5\.7 MW in 1956 to between 35 and 55 MW
through 1967, an annual increase during this period of 15% -20%\.
b) The Electricity Department estimated the load would increase
to 46 MW by the end of 1965, an annual increase of 20% per
annum through 1962 and thereafter an increase of 15% per annum
through 1965\.
c) Kaiser Engineers and Constructors, Inc\., agreed with the esti-
mate of the Electricity Department up to 1965 but estimated
the load thereafter would increase at an average rate of 21%
per annum through 1980\. The Kaiser estimate shows the total
load for the area covered by the transmission line network
and does not segregate individual towns and cities; it indi-
cates that the load will reach 88 MW by 1965, 210 MW by 1970,
500 MIW in 1975 and 1,200 MW by 1980, excluding the mining and
smelter loads\. On this basis the known hydro power potential
of the Volta basin, if developed, would be fully utilized by
1980 without any provision for the aluminum smelter or present-
ly known mining demand\.
1h\. For reasons given in Annex 1 the Kaiser estimate of a continuous
annual increase of 21% per annum for a period of 15 years is considered
by the Bank to be unduly high\. The projections proposed by the Electricity
Department have therefore been accepted up to 1965; and thereafter, to allow
for rapid increases of load in the new town and port of Tema, close to the
projected aluminum smelter, and in Accra, the center of Government and
commerce of the country, a rate of 12-1/2% per annum has been assumed until
1970\. After 1970, when the load in Accra would approximate 54 IMW and in
Tema 32 MT, the rate of growth has been reduced to 10% per annum through 1976,
when the load of Accra would be 96 1MW and Tema, 57 MW\.
15\. Including transmission losses the combined loads of Accra and
Tema on the power station, when it commenced operation in 1967, would be
63 Hl and would rise to 163 1MW in 1976\. The sales to the Electricity
Department for both cities would amount to 233 million kilowatt hours in
1967 and 603 million kilowatt hours in 1976\. The estimates loads and sales
are given in more detail in Annex 1\.
_4_
16\. The Electricity Department has ordered ten 3 MiW diesel units
for installation in the Tema power station as an interim measure to meet
the demand in the Accra-Tema area until the hydro station comes into
operation\. These uriLbs would then be transferred to up-country power
stations\.
The Smelter Load
Li\. As the initial and ultimate production capacities of the smelter
have not been finally decided, it has been necessary to make assumptions
as to the size of the smelter and of the smelter load to be supplied by
the project\. These assumptions, based on the best information available
at present, are that:
a) the capacity of the smelter would be 120,000 long tons of
aluminum per year, consisting of 4 pot lines each of 30,000
long tons;
b) the energy consumption (measured on the high voltage side of
the transformers) would be 10 kwh per pound of aluminum pro-
duced during the breaking in of each pot line and 9 kwh per
pound thereafter;
c) the project would not be ready to supply power before January
1967 (the reasons for this assumption are given in Para\. 36);
and that
d) each newpot line would be started up as the breaking in of
the previous one was completed; the first pot line would
start up on January 1, 1967, the second on October 1, 1967,
the third on July 1, 1968, the fourth on January 1, 1969 and
the plant would be in full operation after July 1, 1969\.
18\. On these assumptions the saelter demand at the power station is
estimated to be 78 MW in 1967, to reach 303 I@W in 1969 and to remain at
that level unless the smelter capacity were increased\. The energy consump-
tion would amount to 630 million kwh in 1967 and reach a level of 2,419
million in 1970\.
Total Demand and Generating Capacity Required
19\. The combined demand on the power station in 1967, inclusive of
transmission losses, of the smelter and of other consumers, would be 141 IVJ
and it would increase rapidly to 395 MDtT in 1970 when the smelter load
reached its maximum\. Thereafter until 1976, with a constant smelter load,
the relatively small annual increase of 10-15 MDJ would be due entirely to
the non-smelter demand\.
20\. As it would be essential for the supply to the smelter to be
firm, i\.e\. continuously available, it would be necessary to maintain in
the power station a reserve capacity equal to the largest generating unit
in operation\. Since it is proposed to install four units of 147\.2 IfJ
each, totalling 589 nil initially, there would be ample reserve capacity
- 5 -
in the station to supply the maximum demand of 141 MW in 1967 but by 1975
when the demand is expected to increase to 451 MW a fifth unit would be
required\. Because of the large size of units proposed there wouid be a
relatively large amount of capacity (and investment) idle\. The amount of
this capacity is shown year by year in Annex 1\. It would be advisable to
review the size of the generating units to be installed to determine
whether some savings could be made through use of smaller units, which
would leave smaller idle capacity\.
TV\. THE PROJECT
The Volta Basin
21\. The drainage basin of the Volta River above the Akosombo damsite
comprises an area of 152,000 square miles\. Of this 90,000 square miles, or
about 60%, lie in territories outside Ghana\.
22\. Records for 23 years show that the mean annual rainfall in the
basin is about 42 inches, the minimum being 37\.4 inches and the maximum
49\.1 inches\. The maximum recorded peak flow at the damsite between 1936
and 1959 was 393,000 cusecs and occurred in 1947\. The highest flood in
recent times, as determined from high water marks, occurred in 1917\. Its
estimated discharge was 520,000 cusecs\. The average flow of the river is
about 41,500 cusecs\. Although 60% of the area of the Volta River water-
shed lies outside of Ghana, more than two-thirds of the flow of the river
at Akosombo is contributed from the area within Ghana\.
Description of the Project
23\. The project, which would have an ultimate capacity of 883 1W,
would be a major undertaking judged by any standards\. It would consist
of a rockfill dam about 244 ft\. above low water (maximum of 370 ft\. above
foundations) with a crest length of 2,100 ft\. The reservoir, which would
be wholly within Ghana, would be 300 miles in length and would have a
total storage capacity of 120 million acre feetl/but because of the tur-
bine intake level, 50 million acre feet would be useful storage\. Also in-
cluded in the project would be a separate spillway 2,200 ft\. long; a rock-
fill saddle dam 1,100 ft\. long and 120 ft\. high; a power station on the
right bank of the river in which four generating units with a total capa-
city of 589 MLW/ would be installed initially; and four double circuit
1/ This compares with the 39 million acre feet in Lake Mead created by
the Hoover dam in the U\.S\.A\. and 120 million acre feet in the reservoir
of the Kariba dar on the Zambesi River in Africa\.
2/ In the Kaiser report the initial installation is described as 512 MW
comprising four units of 128 MW each\. As these units would have a
continuous overload capacity of 15%, their effective capacity would be
147\.2 MW each and four would provide 589 MW\.
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165 KV transmission lines, 44 miles long, to Tema and one double circuit
165 KV transmission line, 18 miles long, from Tema to Accra\. Provision
would be made in the power station for two additional units\.
24\. The proposed voltage of 165 KV for the transmission lines is
not a generally accepted standard and the use of one of the standard
operating voltages would seem to offer the opportunity for wider compe-
tition in tendering for high voltage equipment\. Kaiser proposed the 165 KV
line as being more economic than a standard voltage for a market demand of the
size it forecast\. Since that demand is not likely to be realized for
some years\. a reconsideration of the proposed design might show savings in
both the purchase price and construction costs\.
25\. Provision would be made in the spillway for crest gates by which
the level of the reservoir could be raised 11 ft\. for flood control and to
gain more storage\. These gates would not be required for the initial
stage of 589 MW; it has been assumed that they would be installed for the
fifth turbine (and their cost has been included in that of the fifth unit)\.
Without the gates the operating head on the turbines in the power plant
would be 209 ft\. The spillway is designed to discharge 560,000 cusecs
without exceeding the normal maximum controlled level of the lake\. The
spillway would also be able to discharge a flood of 1\.2 million cusecs
with a 10 ft\. rise above this level\.
Engineering and Geological Studies
26\. The engineering studies made by the consultants are adequate in
scope and detail for estimating the cost of the project and to serve as a
basis for its final designs\.
27\. Extensive subsurface investigations have been made to gain know-
ledge of the geological character of the damsite\. These studies show that
the rock in the foundations and abutments is satisfactory for the type of
dam and other structures proposed\.
28\. An independent board of consultants, selected by Kaiser with the
approval of the Government, inspected the site and studied the plan of
development as proposed by Kaiser\. It concluded that the design and layout
of the project are satisfactory and that the site is suitable for the type
of dam proposed\.
Water Requirements
29\. For the operation of the initial installation of four units of
147\.2 SW each in the power plant, about 26,000 cusecs would be required
from the reservoir\. The inflow into the reservoir in a year of average
rainfall is estimated to be 41,500 cusecs, which after evaporation would
provide an average discharge from the reservoir of about 38,500 cusecs\.
The very large capacity of the reservoir would provide pluriannual stor-
age and, unless an unprecedented succession of dry years were experienced
would be sufficient to maintain this discharge continuously\.
- 7 -
30\. If the power plant should be expanded to six units, the require-
ment of water Twould increase to 38\.000 cusecs\. This amount of water could
be obtained from the reservoir, provided no substantial diversion or con-
sumptive use of the water in the Volta drainage basin occurred\.
31\. Only about one-third of the water flowing past the Akosombo site
originates in the part of the watershed located in neighboring territories;
consequently the flow required for four units could be supplied from the
rainfall on the watershed lying wholly in Ghana and the operation of the
four units could be maintained even in the unlikely event that all of the
water from neighboring territories were diverted to other uses\. However,
if six units were installed in the power station the major part of the
,water nnt-ering Chanra ,-'-r -A--hbing torrittoies wrould be requ-i-red
32\. Since VALCO is expected to ask for an option on power for a
210,000-ton smelter, the Government must be sure that enough water will
be available to generate the required power\. Four units in operation
would provide enough power even for the enlarged smelter, but only at
the cost of reducing to virtually zero the amount of power that could
be sold to other consumers\. Hence the Government, before agreeing to
such an option, should investigate the extent to which water could be
economically diverted to other uses and not returned to the streams in
the neighboring territories, so as to determine whether the flows into
the reservoir would be adequate for operation of six units\. Judging
from the limited information now available about the topography of the
watershed, the type of land and other factors in neighboring territories,
the amount of water that could be diverted would probably be relatively
small\.
Construction Schedule
33\. The consultants estimate that the project could be completed in
about four years\. Assuming that contracts for the main civil works can
be awarded by April 1, 1961, so that mobilization of equipment and staff
for the construction of the project can begin shortly thereafter, the
scheduled date for completion would be December 1965\. (Rainy seasons
start in June and end in November\.) A major problem will be the removal
of a deposit of sand up to 100 ft\. thick overlaying the bedrock in the
7Test channel of the river between an island in the river and the '\.lest or
right bank\. The sand deposit, which must be removed before the rock and
earth fill for the dam can be placed, would have to be removed by dredging
during the first low water season\. (In order to maintain the proposed
construction program, orders for the dredges would have to be placed well
in advance of the award of the main civil works contracts\.) After the
removal of the sand deposit, the upstream and downstream rockfill coffer-
dams wrould be constructed\. The area between the cofferdams would then be
filled with impervious core material and rockfill and the cofferdams would
become an integral part of the dam\. !1hen the West channel had been closed,
the flow of the river would be diverted through the East channel\. Before
closure of the East channel wTith cofferdams, a tunnel 25 ft\. in diameter
would be constructed around the East or left abutment\. It would carry the
river flow after the East channel had been closed and provide water for
the downstream users until the power station came into operation\.
- 8 -
34\. To meet the completion date of December 1965, the West channel
cofferdams would have to be completed during the dry season November 1961
to June 1962; otherwise the construction schedule would be delayed auout
one year\.
35\. The important dates which must be met to assure completion of
the project by December 1965 are:
a) Award main civil works contracts by April 1961
b) Complete West channel cofferdams by June 1962
c) Start filling reservoir by June 1964
d) Complete filling reservoir by November 1965
36\. The above schedule has been based on a normal construction pro-
gram\. Power production would be delayed about one year if one or more of
the following contingencies were to arise:
a) failure to remove the river sand during the first low river
flow working season;
b) exceptional floods delaying construction or damaging coffer-
dams; or
c) two consecutive below-average rainy seasons occurring during
reservoir filling\.
In view of these contingencies, it would seem imprudent to assume that
power production would begin before January 1, 1967\. That date has been
assumed in this report\.
Cost Estimates
37\. The cost estimates shown below are based on figures prepared by
Kaiser and reviewed by Cooper Brothers\. Interest during construction was
computed (by the Bank) on the assumption that 1G 28\.3 million (US$79\.2
million) would be borrowed\.
Equivalent
Items LG US Dollars
Tthousands)
Reservoir clearance, resettlement,
health measures, site preparation: 4,950 13,860
Housing and access roads: 3,976 11,133
M'ain civil works: 16,795 47,026
Power plant equipment: 10,381 29,067
Transmission lines and substations: 4,500 12,600
Contingencies: 7,208 20,182
Engineering, overheads andworking
capital: 4\.,166 11,665
Interest during construction on
assumed borrowings -
1961 through 1966: 6,290 17,612
Total: 58,266 163,145
Of the above total, anproximately fG 40 million (US$112 million equivalent)
would represent the foreign exchange component\.
38\. In arriving at the above cost estimate for the project, the
Bank adopted, as being realistic, the Cooper Prothers estimate which was
some 10% above that of Kaiser\. The Cooper Brothers estimate was adjusted
by eliminating the transmission network beyond Accra and by calculating
total investment\.
39\. A contingency sum calculated at 2C; of the estimated total cost
of the works at Akosombo a-nd transrmiission lines to Accra, Tema and the
smelter has heen included\. This sum should be adequate to cover unfore-
seen difficulties with the project, exclusive of the transmission network,
as planned in the Kaiser report, and includes allowances for increases in
labor costs, plant and materials\.
Schedule of Expenditure
40\. The following table shows the estimated rate of expenditure on
the project in thousands of Ghanaian Pounds\.
Year £G
1959 418
1960 3,237
1961 11,596
1962 12,255
1963 10,158
1964 9,761
1965 7,530
1966 2,548
1967 763
Total 58,266
V\. FINANCIAL ASPECTS
Financing
41\. To meet the estimated capital requirements of the project,
EG 58\.3 million, it has been assumed the Government would provide
fG 30 million on a basis which would require no fixed return and indeed
no return at all in the initial years\. It has been assumed that the
balance would be met by 25-year loans at 65, interest\. On the basis of
the estimated loan withdrawals over the construction period and a 3/4,k
commitment fee on the unwithdrawn loan balances, the aggregate amount
of borrowings, including interest and commitment fees through 1966,
would total fG 28\.3 million\. Amortization would start in June 1967 and
would be completed in December 1985\.
- 10 -
42\. It has also been assumed that the Government's contribution of
fTG 30 il'lion would b paid in er structon peiod on a pro ratn
basis wgith the loan funds\. The Governmentts cash contribution of LG 30
million, w~ith interest capitalized at 5% through 1966, would be equivalent
to a total investment of approximately TG 36\.5; million\.2/
pari f\.s
43\. In considering the tariffs to be charged for electricity supplies
from the Volta River project, it should be borne in mind that the construc-
tion of the project at the present time could not be justified unless a
large- in1n-strJ al c1emanri- such as the demand of the proposed smelter, were
associated with it, Without the smelter load, the cost of generating the
relatively small supplies required by other consumers would be prohibitive\.
The appropriate development to meet these requirements alone would be the
construction of a modern steam powier plant at Tema with transmission to
Accra\. In annex 7 the costs of electricity produced from such a plant are
estimated to be about 15 mills (or l\.29d) per kwh\. Clearly this figure,
w-hich has been assumed in the financial forecasts in this report should be
regarded as the maximum price which the Ghana Electricity Department should
be called upon to pay for electricity supplies from the Volta River project\.
44\. It has also been assumed that the smelter tariff wiould have to
be in line with the price the aluminum industry is paying and can obtain
poWer for in other parts of the world\. (See Annex 9 for a discussion of
the effect of the price of power on the cost of aluminum\.) For purposes
of calculation three different tariffs, viz\. 2\.5, 3 and 3\.5 mills, have
been used\. On a kMh basis, the non-smelter tariff is about 5 times the
smelter tariff\. On a demand comparison, which takes into account a
smelter load factor of nearly 100% against a non-smelter load factor of
about 45%, the price per Klw supplied to the non-smelter load is still about
2-1/2 times the price per KJW supplied to the smelter\.
Financial Projections
45\. Annexes 4, 5 and 6, which assume a 120,000 ton smelter, show
ten-year forecasts of summary income statements and of cash flows starting
with 1967, the initial year of operation\. These forecasts are based on
smelter tariffs of 2\.5, 3 and 3\.5 mills per kwh, respectively, with the
non-smelter tariff remaining at 15 mills, as previously mentioned\.
46\. The revenues from the smelter would reach their peak after 2-1/2
years of operations\. The revenues from other consumers are based on the
load growth assumptions showqn in Annex 1\. The annual average revenue per
kTwrh sold, including both smelter and non-smelter loads, wrould decline some-
what during the first three years; thereafter it would slowly increase due
to the assumed steady growth of the non-smelter load\. The average revenues
per k,h sold emphasize the relatively high charges made for the non-smelter
load, and indicate the degree to -which the profitability of the project
depends on the size of the non-smelter load and on the tariff charged to
non-smelter consumers\.
1/ Five percent has been used because it approximates the rate of return
on the Governmentts present investments in London\.
- 11 -
47\. As sho-wn in the income statemrents, there would be losses; After
depreciation and interest only on the assumed borrowings (but without any
interest or dividends paid on the Ghana investment), in the first years of
operation, which on a cumulative basis would not be eliminated until the
seventh year in the case of the 2\.5 mill smelter tariff, the fifth year in
the case of the 3 mill smelter tariff, or Lv fouu±tvh year iJr\. th case of
the 3\.5 mill smelter tariff\.
48\. As shown in the cash flow statements, there would be cash deficits
in the first years of operation, which would require several years to be
ellmina-ted\. i^he "Jovernnmient wo- 'd tao & m--ke arran-embents to me-et thnsp-
temporary deficiencies\. The deficiencies result from the assumption used
here that the smelter would pay only for the power actually used for each
pot line until that pot line had been broken in, and only thereafter would
the power committed to it be paid for, whether used or not\. The deficits
would not occur if the power contract provided for full payment for the
entire block of power committed to the plant from the start-up of operations\.
In negotiating a power contract, therefore, the Government should try to get
agreement on payment from the start for the entire commitment to the plant
or, if that is not possible, should insist on the shortest possible breaking-
in period for each pot line\.
49\. The cash flow statements show that, by the end of the tenth year,
after providing JG 5 million for the installation of the fifth unit, there
would be cash accumulations of some fG 4 million, tG 8 million and £G 12 mil-
lion, with smelter tariffs of 2\.5, 3 and 3\.5 mills, respectively\. These
accumulations should not be taken to mean that the project would have earned
a satisfactory return\. As shown in subsequent paragraphs, the project would
earn a very low return\. The cash accumulations result (in accordance with
the assumption made in this report) because no provision has been made for
the Government to receive either interest or dividends on its contributions
to the cost of the project\. If the contribution were made on another basis
- for instance 5% cumulative preference stock - dividends (to Government)
woulld prevent cash accumulations for many years\. It is important, however,
to permit the accumulation of funds sufficient to cover a reasonable portion
of the cost of the expansion of the power system related to the project\.
50\. If the smelter remained at 120,000 tons no additional generating
capacity beyond the five units would be required until the early 1980's,
at which time cash surpluses would be large and would be accumulating rapidly\.
The authorities would thus be under pressure to reduce tariffs to the non-
smelter consumers\. The Government must bear in mind that the lowering of
such tariffs would make the project even less profitable than it already
appears and could well preclude the generation of the financial resources
required for future expansion of power facilities\.
Ten-Year Return on the Investment
51\. Annexes 4, 5 and 6 show the returns on net fixed assets in
operationl/and on Ghana's investment\.
1/ Gross income as a percentage of fixed assets in operation after de-
preciation,
- 12 -
52\. The return on net fixed assets in operat-on based on a 2 r\.ll
smfelter tariff would be negative in the first year of operation\.s and would
thereafter rise from about 1% in 1968 to somewhat less than 6% in 1976\.
With a 3 mill smelter tariff, the return would again be negative in 1967
but would rise from about 1-1/2% in 1968 to about 6-1/2% in 1976\. With a
Jo J S\.L IIe\.J\. ar-1 f II ee UU\. a, wa-LLU ±±±tO L It PgL \. \.LU \. £± , DL\.,
in 1967 to somewhat over 7% in 1976\.
53\. The following table shows the return on Ghana's investmentl/ during
the first 10 years of operations\. At the 3 mill smelter tariff there would
he no rntin'n in t\.he ini ti-l y re-<r and, as Shoie\. in colul mnt I net i as
a percentage of Ghana's investment would increase from about 2-1/2% in 1970
to just over 7% in 1976\. The cumulative losses of the first few years would
not be recovered until 1971; and at the end of the tenth year of operation,
as shown in column 2, the cumulative net earnings would be equal to the
earnings that Ghana would have realized if its contribution to the project had
been invested at the rate of 2\.6% compounded annually\. Of course, at the
2\.5 mill tariff the return to Ghana would be somewhat lower and, at the 3\.5
mill tariff, somewhat higher\. At all three tariffs, the equivalent annual
return for the ten year period, as shown in column 2, is obviously low\.
Returns on Ghana's Investment
(first ten years of operation)
Equivalent Compound Annual
Return on Ghana's Investment
Annual Return on Ghana's to Equal Cumulative Net Earn-
Investment (in year shown) ings through year shown
(1) (2)
Smelter Tariff of 2\.5 mills
1967 Negative Negative
1970 1\.3% Negative 2/
1973 3\.5% Negligible-
1976 5\.9% 1\.6%
Smelter Tariff of 3 mills
1967 Negative Negative
1970 2\.5% Negative
1973 4\.7% 1\.30%
1976 7\.1% 2\.6%
Smelter Tariff of 3\.5 mills
1967 Negative Negative 2'
1970 3\.7% Negligible-
1973 5\.9% 2\.2%
1976 8\.2% 3\.3%
1/ Including interest during construction at 5% (paragraph 42)\.
9/ Less than 1/2 of 1%\.
- 13 -
54\. The significance of these returns (on the Ghana investment) may
be illustrated by comparing the annual net earnings assuming a 3 mill
smelter tariff with the annual interest on the same sum invested at 5G\.
Dcficie\.ny ^r qm, iat-
Year Net Earnings Surplus (+) Deficiency
-------_____________ (fG 000) -----------
1967 (1,730) 3,556 3,556
Q68 ( 649) 2-475 6 o31
1969 594 1,232 7,263
1970 923 903 8,166
1971 1,166 660 8,826
1972 1,431 395 9,221
1973 1,720 106 9,327
1974 2,035 + 209 9,118
1975 2,198 + 372 8,746
1976 2,573 + 747 7,999
With a 2\.5 mill smelter tariff, the annual deficiencies would be some-
what greater and, conversely, with a 3\.5 mill smelter tariff the annual
deficiencies would be lower\. In addition, if the interest were higher
than the 5% assumed above, the deficiencies would be even greater\.
Long-term Return on the Investment
55\. The major significance of the forecasts made so far is that
they show that the earnings of the project would be very low for many
years after operation begins\. They also show that the project, at any
of the three tariffs tested, would face a problem of liquidity at the
start of operations and, on the basis of the 2\.5 or 3 mill tariffs for
several years thereafter\. Potential lenders for the project are bound
to take a serious view of these forecasts\.
56\. The return of the project to Ghana must, however, be considered
over the entire assumed 50-year life of the project\. Such a calculation
may be made on a discounted cash flow (or present worth) basis, using the
following principal assumptions: l/
a) Sales of power to the 120,000-ton smelter - stable after smelter
reaches maximum capacity in 1970; no power commitment for an
enlarged smelter\.
2J See Annex 10 for a fuller statement of methods and assumptions used
in calculating the return over the assumed life of the project\.
- 14 -
b) Sales to other consumers - volume increases 10% per annum until
average waterflow available for Akosombo is absorbed, estimated
to occur by 1986; rate maintained at 15 mills through 1980 and
reduced to 12 mills thereafter\.V1
c) Operating cost - Stable until the fifth unit comes into operation;
thereafter an increase of EG 80,000 to provide for costs of op-
erating an additional unit; then stable until the sixth unit comes
into operation when another EG 80,000 is added\.
57\. on these assumptions, the total project investmenrt would, with a
3 mill tariff for the smelter, earn a return of about 7-1/2% over a 50-year
operating period; it would have repaid the entire investment with compound
interest at 6% by 1994, an operating period of 28 years, or at 7% by 2004,
an operating period of 38 years\. On Ghana's investment, the return would
be 7\.7% with a 3 mill tariff and approximately one-half of one percent
higher or lower mith the tariffs of 3\.5 and 2\.5 mills\.
Effect of an 80,000-ton Smelter
58\. The forecasts discussed so far have been based on a smelter of
120,000 tons\. The outlook for the project would change substantially if
the smelter had a larger or a smaller capacity, and other important issues
would arise\.
59\. If the smelter were limited to a capacity of 80,000 tons, the
engineering of the power project would have to be reconsidered, particularly
the size of the generating units\. Assuming that capital requirements and
operating costs remained the same, tariffs for an 80,000-ton smelter would
have to be about 50% greater than those charged to a 120,000-ton smelter to
provide the project with comparable returns on investment during the first
ten years of operation\. Tariffs of 2\.5, 3 or 3\.5 mills to a 120,000-ton
smelter would have to be increased to 3\.75, 4\.5 or 5\.25 mills, respectively,
for an 80,000-ton smelter\. If, on the other hand, the same tariffs were
applied, the position during the first ten years of operation would be sub-
stantially worse than in the case of the 120,000-ton smelter, as may be seen
in the table in paragraph 62\.a below; and the returns over the entire assumed
50-year life of the project would also be lower\. The 80,000-ton smelter
would leave an additional 100 W of spare generating capacity which could
be taken up by non-smelter consumers at a tariff higher than the smelter
tariff; but this spare capacity would not be needed until about 1982, and
the additional revenues would thus come too late to of2l-et fully the low
returns of earlier years\.
/ Twelve mills would be the estimated cost (including a 6% return on
investment) of alternative thermal power for the then assumed size
of the market\.
- 15 -
6o\. This report does not include a detailed analysis of tne project
based on a srmelter of 80,000-ton capacity because it has been assumed that
the Government would find the returns too low to justify the project\. More-
over, the Bank understands that an 80,000-ton smelter would be considered by
VALCO only as a short-term interim facility, not as a permanent plant\.
Effect of a 210,000-ton Smelter
61\. If\. around 1972, the capacity of the smelter were increased from the
assumed 120,000 tons to 210,000 tons, the full development of Akosombo's
power potential would be required\. This would involve additional capital
expenditures of about EG 10 million\. It has been assumed in this report that
these outlays would be met as far as possible from cash surpluses and that
the balance would be obtained from 20-year borrowings at 6%\. On this basis,
the additional borrowings would aggregate EG 10 million, EG 7\.5 million or
EG 6 million on a 205, 3 or 3\.5 mill smelter tariff, respectively\. The
amount of borrowings would of course also depend on the timing of the ex-
pansion of capacity\.
62\. Assuming that such an expansion of capacity occurred in 1972, the
returns on Ghana's investment over the assumed 50-year life of the project
would be 6\.85! at the 2\.5 mill tariff; 7\.6% at the 3 mill tariff; and 8\.4%
at the 3\.5 mill tariff\.
62,a The returns which the Government might expect on its investment in
the project, assuming three different smelter capacities, are illustrated in
the following tables\. y The net earnings of the project over its first ten
years of operation, expressed in terms of equivalent compound annual return,
would be greatly improved the larger the smelter capacity, as shown below:
80,000-Ton 120,000-Ton 210,000-Ton
Smelter Smelter Smelter
at 2\.5 mills negligible 1\.6% 22%
at 3\.0 mills 1\.1% 2\.6% 3\.h%
at 3\.5 mills 2\.0% 3\.3% 4\.5%
As has already been noted in paragraphs 55 and 56, returns over the
first 10 years of operation and over the assumed 50-year life of the
project, which are shown in the tables, should not be compared with
each other\. They are calculated in different ways and serve quite
different purposes\. The method used here for calculating the long-
term return on investment is, of course, not the only one; but it has
the irnportant advantage that it makes the return comparable with the
return on Ghana's financial investments abroad\. The method used in
calculating the return in the first 10 years, i\.e\. the return on the
initial investment, would be inappropriate for calculating the return
over the assumed whole life of the project\.
- 16 -
However, the returns on the project over the long-run, expressed in terms of
present worth, would not vary substantially with the size of the smelter\.
This is shown below:
80,0Qn -Ton 120\.000-Ton 210,000-Ton
Smelter Smelter Smelter
at 2\.5 mills 6e9% 7\.2% 6\.8%
at 3\.0 mr-ills 7e2% 7,7% 7\.6%
at 1A mills 7\.6% 8\.2% 8\.4%
This smaller spread results from the fact that the larger smelter would
bring about an earlier commitment of the full capacity of Akosombo and hence
bring closer the day when sales of Volta power to non-smelter consumers, at
a higher tariff, would be limited and revenues would cease to grow\. The
earlier the smelter expansion took place, the greater the advantage to the
project; the later the expansion occurred, the smaller the advantage (if any)
of the 210,000-ton smelter would become\. Similarly, the lower the tariff
charged to the smelter, the more quickly the spread would narrow and, indeed,
disappear altogether\. At the 3\.5 mill tariff, the return on the project
with a 210,000-ton smelter (based on a present value calculation using a 6%
per annum discount factor) would remain greater over the entire assumed
50-year life of the project than in the case of a 120,000-ton smelter\. But
at 3 mills, the balance of advantage would remain with the larger smelter
only for 35 operating years; and at 2\.5 mills, only for 25 operating years\.
63\. The direct returns on the investment with various smelter capaci-
ties, measured in this and the preceding sections, would not of course be
the only benefit Ghana would receive from the project\. Other factors, cited
in Chapter VI of this report, must also be taken into account, particularly
tax revenues and the greater likelihood that, with a larger smelter, VALCO
or its associates would go into bauxite and alumina production\.
General Considerations
64\. Several suggestions emerge from the preceding assumptions and
calculations, which ought to be taken into account in negotiating arrange-
ments with VALCO\.
a\. The higher the tariff negotiated for sale of power to the smelter,
the higher would be the returns on the project and on Ghana's
investment\. Since the returns at any tariff likely to be attrac-
tive to the smelter would not be very attractive to Ghana, the
Government should make every effort to get the highest possible
tariff\. Another reason for seeking a higher tariff is to reduce
the number of years in which the project would operate at a loss
and the time required to achieve revenues large enough to cover
debt service\. Moreover, at some tariffs, for instance at 2\.5 mills,
power revenues from the smelter alone would never be large enough
to cover debt service\. These factors are bound to weigh heavily
with potential lenders\.
- 17 -
b\. If the smelter were to remain limited to a capacity of 80,000 tons,
it is doubtful that the Government would be justified in proceeding
with the project at this time\.
c\. The return on the project with a 210,000-ton smelter would, in the
early years of operation, be more attractive than the return with
a 120,000-ton smelter\. Over the entire life of the project, the
returns would be better with a 210,000-ton smelter only with
tarifffs of about 365 mills or better\. Noreover, the longer the
delay in expanding the smelter, the lower the returns would be\.
It follows that the Government should seek to cu,i-iint 'VALCO to a
smelter larger than 120,000 tons, only if VALCO commits itself
to an early build-up of capacity\.
d\. It is understood that VALCO, if it decided to build a 120,000-ton
smelter, would ask for an option on power to supply a 210,000-ton
smelter\. Ghana would not benefit from such an option unless it
were exercised\. The Government should therefore seek means of
pressing VALCO into an early use of the option\. One means might
be to limit the period during -which the option could remain un-
exercised and to charge a substantial commitment fee for its
renewal, beyond the initial period\.
e\. Both the Government and VALCO would have an interest in a long-
term contract\. It is doubtful, however, that Ghana would benefit
from a contract to supply power at a fixed tariff for more than
20 or 25 operating years\. Over so long a period the real value
of a fixed tariff is almost bound to decline\. Aside from this,
however, consideration should be given, in negotiating the
duration of the contract, to the size of the smelter and the
tariff that would be charged\. Thus, for instance, the earlier
the effectiveness of the commitment to increase the capacity of
the smelter, the longer the duration of the contract Ghana would
be justified in negotiating\. And, the higher the tariff agreed
upon, the smaller the risks of a long-term contract at a fixed
tariff\.
f\. Debt service charges on the project would be payable in foreign
exchange\. In the event of the devaluation of the Ghanaian pound,
the project authority would have great difficulty in servicing its
debt\. This danger could be avoided if the contract with VALCO
provided that power sold to the smelter would be paid for in
foreign exchange or if the tariff to the smelter were denominated
in foreign exchange and the power paid for in Ghanaian currency
at the exchange rate in force from time to time\. A provision of
this nature would safeguard the financial prospects of the Volta
authority in the event of devaluation and thus increase the
attractiveness of the project to potential lenders\.
- 18 -
\.T?r, 1,rr 1\Tr)1\IrTr AC!DODTpPr
Vt L ACOVl OI-V ASP-\.T-
65\. In addition to the investment in the project proper, dealt with
in the previous sections, there are substantial ancillary investments wnich
have to be made in order to carry out the project, such as resettlement,
compensation, housing, water facilities at Tema, and new dreedgiig aui purt
works\. These are all directly attributable to the project but not charge-
able to it and hence not included in its cost\. The cost of these ancillary
investments, and the returns to be realized on then, should be taken into
account in considering the return on Ghana's investment\.
66\. The cost of these ancillary investments is estimated at JG 11\.h
million, as shown in Annex 8\. At the present levels of port dues, water
rates and house rentals, these facilities would operate at a loss\. It is
the expressed policy of the Government to improve this situation, but there
is no firm information at the present time on which to base an estimate of
the rate of return, if any, that might be realized as a result of higher
rents and other charges\. It is safer to assume that revenues from port
dues, housing and water rents, will be merely sufficient to cover operating
costs and to amortize capital, but not to provide a return on the invest-
ment\. The effect of taking these ancillary investments into account in
assessing the return on the total investment and on Gnlanals investment is
to reduce the return (on a discounted cash flow basis) by about 1% per
annum over the assumed 50-year life of the project\. At the 3 mill rate,
this would mean a return of roughly 6-1/2% on the overall investment (in
money terms, say fG 2\.5 million in 1976), and fractionally less or more at
the 2\.5 mill or 3\.5 mill rates, respectively\.
67\. This return would be the largest single, but not the only, benefit
the economy of Ghana would obtain from the project\. Another substantial
benefit would be the income taxes collected from the smelter\. These would
of course depend on the profitability of the smelter and on the tax regime
still to be negotiated between the Government and the smelter consortium\.
If the present tax system, which includes a tax deferment of several years,
were to be applied, the tax receipts from a 120,000 ton smelter would be
somewhere between fG 1 and 2 million per annum, after the tax deferment is
over\. Not all this tax income would be clear gain; offsetting it would be
the additional Government services, such as schools, hospitals, police
protection, sewage, etc\., which would have to be provided for the increased
size of the community\.
68\. In addition, the national income would benefit from the expendi-
tures of the project, the smelter and associated services, on local labor
(to the extent not previously employed) and materials\. During the construc-
tion period the direct contribution of increased employment and purchases
of local materials would be greater than when the project facilities were
completed\. In the operational stage, the economy would benefit from the
employment by the smelter of an estimated 1,600 persons; the power plant
would require very few employees; additional employment in associated ser-
vices cannot be readily estimated\. If all these factors are taken together,
it is doubtful if they would add as much as fG 1 million per annum to the
national income\.
- 19 -
o9\. One deduction would also have to be made in estimating the effect
of the project on Ghana's national income, namely, the interest that would
be foregone on the capital Ghana invested in the project, which Ghana
might otherwise have continued to invest abroad\. If this were EG 40 million
including expenditure on ancillary facilities, Lhe apvprvi-a te deduction
would be about EG 2 million\.
70\. On all the assumptions and estimates made above, it appears un-
likely that the net contribution of the project to national income would
exceed EG 3\.-) miliurn per- yea, in say- --,-,nh -r of operation this
would be equivalent to about 1% of Ghana's present national income and
an even smaller percentage of the national income at that time\. The con-
tribution would be reduced if the power rate to the smelter were less than
3 mills\.
71\. There would also be some indirect benefits to the economy not
measurable in monetary terms\. It is possible that other industries in
which regularity of power supply is a significant consideration would be
attracted by the project to Ghana\. The project would bring an increase in
the general level of labor skills to the project area\. The presence in
Ghana of a number of important foreign industrial companies might lead them
to pursue other investment opportunities there, in aluminum fabricating,
for example\. Finally, although this report is based on the assumption of
a 120,000 ton smelter, using imported alumina, account should also be
taken of the possibility that at a later stage an alumina plant might be
built to use Ghanaian bauxite and that the smelter might eventually be
enlarged to a capacity of 210,000 tons\. These developments would increase
tax yields and employment opportunities, without a commensurate increase
in the cost of Government services\.
72\. Even taking all the intangible benefits into account, the overall
balance of costs and benefits is on the positive side to only a modest
extent at best\.
73\. One benefit frequently ascribed to the project would not be ob-
tained on the assumptions made here, namely, cheap power for non-smelter
consumers\. It has been assumed that the project would have to charge
these consumers as much as they would pay if they obtained power from the
best thermal alternative\. 'While this is less than present generating
costs (to which distribution costs must be added in computing rates to
final consumers), the same reduction could be gained, wiith far less capital
outlay, by adopting the thermal alternative\.
- 20 -
VII\. CONCLUSIONS AND RECOM]NDATIONS
74\. The Volta River project, including transmission lines to Accra
and Tema, is technically sound\. As presented to the Bank, the project,
if begun in April 1961, would be completed in December 1965\. However, i:
two successive low flood years occurred during the reservoir filling period,
scheduled in 1964 and 1965, operation would be delayed one year\. There-
fore, it would be prudent for Ghana to assume, as was done in this report,
that power would not becone available until January 1967\.
75\. The proposed 700-mile transmission network should be excluded
from the project because the expected power demands which it would serve
would not justify, for some years at least, the initial capital cost re-
quired\. On this basis, reasonable estimates of the capital costs of the
initial investment (589 SW) amount to EG 58\.3 million\. It has been
assumed that the Government of Ghana would make available fG 30 million
on a basis which would not require a fixed return and the rest would be
obtained through 25_year loans at 6p interest, with repayments of prin-
cipal starting in 1967\.
76\. The returns on Ghana's investment in the project, over its
assumed 50-year life and assuming a 120,000-ton smelter, would be of the
order of 7-8/, dependinv on the tariff charged to the smelter\. This is
not an attractive return\. Furthermore the financial position would be
very poor indeed in the first years of operation, a fact which would not
be an attraction to potential lenders\. The financial benefits of the
project would not begin to be appreciable for many years to come\.
77\. A full appreciation of the return must take into account the
ancillary investments which the Government must make, if the power and
smelter projects are to be carried out\. If these investments do not yield
returns adequate to meet operating costs, capital replacements and the
cost of capital, the overall return on total investment would be lowered
accordingly\. In the absence of evidence to the contrary it has been
assumed that housing and water rents, port charges, etc\., would be suffi-
cient to do no more than cover depreciation and operating costs\. On this
basis, it has been calculated that Ghana would earn on its investment in
the project and ancillary works, 6-7% per annum, about 1% less than the
return on its capital contribution to the project alone\.
78\. Taking into account its other contributions to national income,
including income taxes from the smelter at a rate still to be negotiated,
it anpears unlikely that the project would, in say the tenth year of opera-
tion, contribute more than about l$ of national income at today's level
and even less at the level then prevailing\. In addition it would provide
indirect benefits from increased employment, improved labor skills, the
diversification of industry and an increased and more reliable supply of
power\.
- 21 -
79\. The Government must decide whether these benefits would be suffi-
cient to outweigh the uncertainties faced and the income foregone when so
considerable wn i±1vus-tn-iew\. is iade in a singLe project\. IT i c' a that
there would be no net gain, and probably a net loss, during the first decade
of operation, when financial returns would be very low and net tax benefits,
if any, would be small\. However, the benefits in later years\.would be
greater, when the power capacity has been more fully utilized, when the tax
deferral period has expired nnd when (And if the al rmmnnl enterprise has
become a balanced and integrated operation\. A fuller evaluation of these
prospects would require more precise information than is now available\.
80\. The foregoing conclusion has been based on calculation which
assumed a smelter of 120,000-ton capacity\. If the smelter were to be built
and were to remain with a capacity of only 80,000 tons, the returns would
be lower, especially so in the first decade of operation\. On the other
hand, a larger smelter, of say 210,000-tons capacity, would bring larger
returns if the expanded capacity were brought into operation soon enough\.
Paragraphs 62\.a-64 of this report make certain suggestions with respect to
the interplay of tariffs, sizes of smelter and time, which the Government
should take into account in negotiating with VALCO\.
81\. The financial calculations have been based on three alternative
power tariffs to be charged the smelter, on which agreement still remains
to be reached\. The tariffs assumed for other users, as a group, represents
the estimated cost of alternative thermal generation\. The calculations
thus offer no cost advantage to non-smelter consumers of Vo2a power com-
pared with the alternative thermal development\. The assumed charge of 15
mills, until 1981, is probably lower than present costs, but power at this
price could be achieved without Volta, as could the assumed lowering of
the tariff to 12 mills in 1981\.
82\. If, after taking the foregoing into account, the Government of
Ghana decides to carry out the project, a number of steps should be taken
by the Government so as to provide a more definite basis for further plan-
ning and for arrangements for financing construction costs\. These may be
summarized a8 follows:
(a) A suitable organization should be set up to construct and
operate the project (paragraphs 5-7 inclusive)\.
(b) The Electricity Department should be placed on a sound
utility basis as quickly as possible and consideration
should be given to converting it into an autonomous
public corporation (paragraph 7)\.
(c) The construction of the proposed 700-mile transmission
network, for delivery of power other than to Accra, Tema
and to the smelter, should be postponed until the demand
justifies its cost (paragraph 12)\.
- 22 -
(d) Consideration should be given to the adoption of an inter-
national standard voltage for transmission of power so as
to obta4\. poosble eono\.iPc in npni\.tl costs (paragraph 2L)\.
(e) The size of the proposed generating units should be re-
examined with a view to determining Whether their size
could be reduced and hence reducing the amount of idle
nanacitv (narazraoh 20)\.
(f) The Government, before making a commitment to supply the
power needed for a 210,000-ton smelter, should investigate
whether upstream diversions of water in neighboring terri-
tories might seriously reduce the potential power output
(paragraph 31)\.
(g) The price of power for non-smelter use should be determined
by the full cost (including the cost of capital) of produc-
ing power from alternative thermal plants with capacities
appropriate to the size of the non-smelter demand (paragraph
143)\.
(h) The power contract with the smelter should provide for paynent
for the committed block of power for the entire smelter,
whether it is used or not\. Moreover, it would be desirable
that such payment be made from the outset, or if this is
not obtainable, the Government should insist on the shortest
possible breaking-in period for each pot line (paragraph 48)\.
(i) In negotiating with VALCO on the duration of the contract, the
size of the smelter, and other matters the Government should
take into account the considerations set forth in paragraph
64\.
ANNEX 1
Page ;i
VOLTA RIVER HYDROELECTRIC PROJECT
Power Demand in Accra-Tema Area
Estimated Maximum Demand andl Pla-dt Ca-pacity, and Ejstinatcd Electrjcity Sales
1\. The Kaiser report does not forecast ssparattely the demand of the
Accra-Tema area but applies to the entire area which w,xould have been served
by he 4 e-'arged nct-ilk,1 1-1 - thi - report (-in n granh 19 ) recommends post-
poning\.
2\. The Kaiser forecast is based on a series of assumptions involving
estimates of:
(a) Residential consumption - based on population growth, the
proportion of urban to rural population, the ratio of cus-
tomers urban and rural to total population, a rate of
growth of per capita consumption\.
(b) The proportion of industrial,commercial and other uses to
residential\.
3\. It is evident that the controlling assumptions are those for
residential consumers since the total for others is assumed to vary in
direct proportion for the years 1970-1980\.
4\. The following table shows the comparison between the actual sales
to domestic consumers in the netwgork area for 1958/59 and the Kaiser pro-
jections for 1970, 1975, 1980\.
Population of Residential Residential
Network Area kwh Sales kwh Sales
millions million Per Capita
1956/59 3\.15 40\.1 12\.7
1960 3\.25 n\.a\. n\.a\.
1970 4\.03 250 62\.1
1975 4\.42 600 135\.7
1980 4\.94 1,425 288\.5
Note: All data from Kaiser t'Electric Power Load Growth Report" March 1960
except the 1958/59 line, which the B,nk has inserted in order to
provide a link for comparing actual sales in 1958/59 with the Kaiser
projections\.
5\. No basis was offered for the assumption that the ratio of custom-
ers to population in the network area would increase from 1 to 20 in 1960
to 4 to 20 in 1980, but this does not appear to be unreasonable\. However,
Kaiser's estimate of 135\.7 kwih per capita residential sales in 1975 is about
equal to the level attained in France in 1958 when the gross national product
exceeded $1,000 per capita\.
ANNEX 1
Page 2
6\. It would be more realistic to assume that, when Ghana's per capita
income approached that reached by such developing areas as Argentina, Cuba
T and Venezuela in lQh)l (aholit &S00 per capita in 1950 dollars), Ghanats resi-
dential conslumption would approach their level of use, 80-100 kwh per capita\.
Uhana's per capita income is ==!isOly to reach such a level before 1975\. Even
if it reached this level in 19?5 the estimates of consumption in the Kaiser
report for that year should be reduced by as much as o0% and would result in
figures comparable with the estimates in this report\.
7\. Total consuimption (excluding the smelter) is assumed by Kaiser to
rise from 90 kwh per capita in 1960 to 258 kwh in 1970, to 98 kwh in 1975
and to 1,008 kwh in 1980\.
8\. The Kaiser estimate for 1980, excluding the smelter, exceeds the
present per capita consumption (including aluminum smelters) of Australia,
France, and West Germany, but does not reach that of the United States,
Canada, Sweden and Switzerland\. The maximum demand exceeds the hydroelectric
potential of the Volta river projects when fully developed\.
9\. The Bank's projections of maximum demand and electricity sales
in the Accra-Tema area are as shown in the attached table\.
VOLTA RIVER HYDROELECTRIC PROJECT L 1
Page 3
Estimated Maximum Demand and Plant Capacity (in megawatts')
YEAR 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976
Capacity 589 589 589 589 589 589 589 589 736 736
Non-smelter load 63 71 80 92 101 111 122 134 148 163
Smelter load 78 237 303 303 303 303 303 303 303 303
Total 141 308 383 395 404 414 425 437 451 466
Spare Capacity 448 281 206 194 185 175 164 152 285 270
Capacity above
required reserve 301 134 59 47 38 28 17 5 138 123
Note Smelter load includes transmission losses Akosombo-Tema
Non-smelter load includes Accra and Tema and transmission lossea
Capacity each generating unit = 147\.2 MW
Estimated Electricity Sales (in millions of Kilowatt Hours)
YEAR 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976
Non-smelter 233\.6 264\.9 300\.5 340\.8 374e9 412\.3 453\.6 498\.9 5h8\.8 603\.7
Smelter 630\.0 1434\.6 2367\.0 2419\.2 2419\.2 2419\.2 2419\.2 2419\.2 2419\.2 2419\.2
Total 863\.6 1699\.5 2667\.5 2760\.0 2794\.1 2831\.5 2872\.8 2918\.1 29,68\.0 3022\.9
ANNEX 2
GHANA
VOLTA RIVER HYDROELECTRIC PROJECT
Power Station Installed Capacity and Maximum Demand
MEGAWATTS
800 800
736 MW
700 L - 700
600 - Insta/led Capacity 589 MW 589 MW 600
500 - - 500
Firm Capacity 442 MW
400 - - 400
300 -Smelter Maximum Demand 300
200 _ - 200
loo r/-= loo
0 I I I I I I I I I 0
1966 '67 '68 '69 '70 '71 '72 '73 '74 '75 '76 77
YEAR
JUNE 1960 IBRD 692
G H A N A
VOLTA RIVER HYDRO-ELECTRIC PROJECT
CONSTRUCTION SCHEDULE
Year 1961 1962 1963 1964 1965 1966
High Water Season -
Place Main Contract April 1st, 1961
Mobilize
Open Cut and Drive Diversion Tunnel
Tunnel Lining Conduit and Gates
Remove Sand West Channel
Drive and fill sheet pile cells
West Coffer dam rockfill
Dewater Coffer Dam w
Prepare foundations, drill and grout
Place rockfill to El\. 290
Place core and filter material to E1\.290
Construct Saddle Dam
Remove sand East Channel
Drive sheet piles _
East coffer dam rockfill -
Prepare foundations, drill and grout _
Place rockfill to El\. 290
Place core and filter material to El\. 290 -
Concrete:
Power House -
Intake
Penstock anchors
Spillway -
Mechanical:
Penstocks _
Intake
Power House
Spillway
Transmission Lines and Substations
Reservoir Filling
December 1965 z
First Power Generated D e m
JUNE 1960 IBRD 693
V 0 L T A P I ' r R P P 0 J F C T
Yorecest Su-mary Income Statements asd Cash Flows
Based on a Smelter T\.aiff o^ 7,5 Mills
hears Ending Decease- 3i 1,67 1668 1969 1970 1971 1025 1973 197Th 1976 1976
Sales (;Sillioss of Kwh)
Smelter 630\.0 1,434\.6 2,367\.0 2?,19\.2 2,619\.2 2,419\.2 2,419\.2 2,619\.2 2,6,19\.2 2,419\.2
Sen-Smeltsr 233\.6 264\.9 300\.5 360\.6 376\.9 612\.3 453\.6 498\.9 648\.8 603\.7
Total 863\.6 1,699\.5 2,667\.5 2,760\.0 2,794\.1 2,631\.5 2,872\.8 2,918\.1 2,96e\.0 3,027\.9
Average Revenue per Kwh Sold
iulSills 5\.88 4\.49 3\.91 4\.04 4,18 4\.32 4\.47 4\.64 4\.81 6\.00
-------------------------------------------In Thousands of Ghana Pounds-------------------------------------------------
Operating Revenues
Smelter (2\.5 Mills/Kwh) 562 1,281 2,113 2,160 2,160 2,1i6o 2,160 2,160 2,160 2,160
Non-Smelter (15 Mills/Kwh) 1\.251 L419 l,6v 1 826 2 oo8 2 209 2 430 2 673 2 940 3 234
Tstal 1,813 2,700 3,723 6 , 9,100
Operating Expenses
Cost of Operations 620 620 620 620 620 620 620 620 700 700
Depreoiatios 1,360 jc 1,'S^ 1,3n 1,360 j -C _ ____
Total 1,970 119 1,970 1,970 1,97 1,970 1,970 1,970 2,;is 2,
Gross Inomse (157) 730 1,753 2,016 2,198 2,399 2,620 2,863 2,950 3,244
Interest 1,686 1,635 1,582 1,525 1,464 1,400 1,332 1,260 1,184 1,103
Net Earnings (1,893) (905) 171 491 734 999 1,288 1,603 1,766 2,141
Cumulative Net Earnings (1,843) (2,748) (2,577) (2,086) (1,352) (353) 935 2,538 4,304 6,445
Cash Generation
Net Earnings (1,343) (905) 171 491 734 999 1,288 1,603 1,766 2,l)1\.
Depreciation 1 350 1 350 1 350 1 360 1 360 1 30 1,30 1350 17450 1 450
Total (493) u4U t6 tE t; 26 t 3,216
Less: Amortization of Debt 830 881 936 991 1,062 1,116 1,134 1,256 1,332 1,413
Additions to Plant - - - - - -20 2 5 00 2- -
Total 930O 9-3 69 ! 1,052 1,116 3tE3 E 3,293 1,332 1,613
Cash Surplus or (Deficit) (1,323) (436) 587 856 1,032 2 233 (1,17) (S03) 1,884 2 178
Sim:ulative Cash Surplus or (Deficit) (1,323) (1,759) (1,172) (322) 710 1,943 897 94 1,978 46156
Gross Inoame as % of Set Fixed
Assete in Operation _ 1\.19% 2\.91% 3\.42% 3\.32;% 6\.27% 4\.78% 5\.36% 5\.17% 5\.896
Net Earnings as % of Onana' s
Investment - o\.47% 1\.34% 2\.01% 2\.74% 3\.53% 4\.39% 4\.84% 5\.8)6%
Times Debt Service Covered by
Internal Cash Generation - - 1\.23 1\.34 1\.I1 1\.69 1\.58 1\.67 1\.75 1\.87
P cipaal_sum8ptions:
Initial Plant: 669 I04 (foar 167\.2 MM units) Csost of Additiomal Unit: AG 6 million, financed sout of
internal mash generation
Plant in O ation Janpary 1, 1967
Smeltorize:120,010 too caaPoity
Start Up of Smelter: January 1, 1967
Smelter Prime: 2\.6 Mills (0\.711)
Capital Requirements: _G 58\.3 million1
Non-Smelter Price: 15 Mills (1\.26d)
Fsonsaamg 1AG 28\.3 million mroig
25 year loan Depreciation: Dam and power plant - 2f per ansam
6 yer graces,rioi Transmission facilities - 3% par amnun
67' interest
,nat,ring 1967-1985
AG 30 million coaatrib lt-d by Ghana
ANtIS 9
V O L T A R I V E R P R O J E C T
Forecast Summary Income Statements and Cash Flows
Based os a Smelter Tariff of 3 Mills
Years Bnding December 31 iyv6 196o \.t65y 1970 1971 1972 1973 1974 1575 1976
Sales (Millions of Kwh)
Smelter 630\.0 1,434\.6 2,367\.0 2,419\.2 2,419\.2 2,619\.2 2,419\.2 2,419\.2 2,619\.2 2,IJ19\.2
Non-Smelter 233\.6 264\.9 300\.5 340\.8 376\.9 417\.3 453\.6 498\.9 548\.8 603\.7
Total 83\.6 1,699\. 2,667\.9 2,760\.0 2,796\.1 T, 31\. 2,872\.8 2,918\.1 2,96\.0 3,022\.9
Average Revenue per Kwh Sold
in Hills 6\.24 4\.87 4\.35 4\.48 6\.61 4\.75 4\.89 5\.05 5\.22 5\.40
-Tm-------------_---------------------------In Thousands of Ghana Po-ands-----------------------------------------------
Operating Revenues
Smelter (3 Mills/Kwh) 675 1,537 2,536 2,592 2,592 2,592 2,592 2,592 2,592 2,592
mon-Smelter (15 MiLls/Kwh) 1,251 1 619 1,61 1 826 2 ,o0 2 209 2 630 2 673 2 960 3 236
Total 1,92 II,, 4,116 3 41O 4,5801 4353 t 3
Operating Expenses
Cost of Operations 620 620 620 620 620 620 620 620 700 700
Doprsaiailh\. 1,351 1,251 1,A351C 1\.351 1,351 1\.3501 li2 1 e O Em ||
Total 1,970 1,970 1,970 1,970 1,970 1,970 1,970 _2,20 _2,10
Gross Income (44) 986 2,176 2,648 2,630 2,831 3,052 3,295 3,382 3,676
Interest 1,686 1,635 1,582 1,525 1,464 1,400 1,332 1,260 1,184 1,103
Net Earnings (1,730) (649) 594 923 1,166 1,631 1,720 2,035 2,198 2,573
Cumulative Net Earnings (1,730) (2,379) (1,785) (862) 304 1,735 3,455 59490 7,688 10,261
Cash Generation
Net Earnings (1,730) (649) 594 923 1,166 1,431 1,720 2,035 2,198 2,573
Depreciation 1 350 1,350 1 3590 1,350 1 350 1r350 1,350 1 390 1 !50 1 450
Trotal (380) 701 1-4fi993 2,273 43516 2/70T 3,070 3,36 4g83
Less: Amortization of Debt 830 881 934 991 1,052 1,ti6 1,18b 1,256 1,332 1,413
Additions to Plant - - - - - - 2 500 2 500 _ _
Total 730 9391 1,092 1,116 4333 4756 1,332 ],113
Cash Surplus cr (Deficit) (1,210) (180) 1,010 1,282 1,464 1,665 (614) (371) 2,316 2,610
Cumulative Cash Surplus or (Deficit) (1,210) (1,390) (380) 902 2,366 6,031 3,12 3,066 9,362 7,972
Gross Incose as S of Net Fixed
Assets in Operation - 1\.60% 3\.61% 4\.16% 4\.57% 5\.04% 5\.57% 6\.16% 5\.93% 6\.61%
Net Earnings as % of Ghana's
Investment _ _ 1\.63% 2\.53X 3\.19% 3\.92% 4,71% 5\.57% 6\.02% 7\.o5%
Times Debt Service Covered by
Internal Cash Generation - _ 1\. 1\.51 1\.58 1\.66 1\.75 1\.85 1\.92 2\.06
Principal Assumptions:
Initial Plant: 589 MW (four 167\.2 MW units) Cost of Additional SnLt: 1G 5 million, financed out of
internal cash generation
Plant in Operation: January 1, 1967
Smelter Size: 120,000 ton capacity
Start Up of Smelter: January 1, 1967
Smelter Price: 3 Mills (0\.26d)
Capital Requirements: 1G 58\.3 million
Nom-Smelter Price: 19 Mills (1\.29d)
Financise: 1G 28\.3 million borrowings
25 year loan Deproiation: Da,n and power plant - 26 per ananu
6 year grace period Transmiosion facilities - 3S per coum
6% interest
Maturing 1967-1985
L0 30 million contributhd by Ghana
V0 1\.7 "I R IV EP R P 0RQJ 7 C T
Saoreoost S-wasry T-ose Stateo nto and _oon Flows
Based on a Smelter Tariff of 3\.5 Aills
Years Ending December 31 1007 ±6 196U9 ('y 1 97 \.71 7 o \. i9, ,
Sales (Millions of Kwlh)
Smelter 630\.0 1,434\.6 2,367\.0 2,419\.2 2,419\.2 2,419\.2 2,719\.2 2,719\.2 2,419\.2 0,11)3,2
Non-Smelter 233\.6 267\.9 300\.5 340\.8 374\.9 712\.3 1953\.6 1798\.9 57)\.8 603\.7
Total 6 3\.6 1,699\.5 2,667\.5 ,76 T 2,831\.5 ,872o 2,918\.1 3,9-0
Average Revenue per Kwh Sold
in Mills 6\.61 5\.29 \.90 1,\.92 5\.04 5\.17 5\.31 5\.46 5\.63 580o
-------------------------------------------In Thousands of Ghana Pounds---_-_________-__
operating Revenues
Smelter (3\.5 Mills/Kwh) 788 1,793 2,959 3,027, 3,024 3,024 3,027 3,027 3,202) 3,02),
Non-Smelter (15 Mills/Kwh) 1,251 1,719 1 610 1 826 2,008 2,209 2 430 2 673 970 3 231
Total 2,039 3,212 75j9 51735 5,032 5,233 5, 47 5,67 54555 sts
Operating Expenses
Cost of Operations 620 620 620 620 620 620 620 620 700 700
Depreciation 1,050 1,350 ;,35u ;,3Su 1,0)0 0,0203 AiSSO *l0 ±abm ±4i_"
Total 1,970 1,970 1,970 1,970 1,970 1,970 1,970 1,970 2 2,150
Gross Income 69 1,242 2,599 2,880 3,062 3,263 3,784 3,727 3,3\.4 7,108
Interest 1,686 1,635 1,582 1,525 1,467 1,400 1,332 1,260 1,184 1,103
Net Earnlogs (1,617) (393) 1,017 1,355 1,598 1,863 2,152 2,467 2,630 3,005
Camulative Net Earnings (1,617) (2,010) (993) 362 1,960 3,823 5,975 8,h42 11,072 7,3377
Cash Generation
Net Earnings (1,617) (393) 1,017 1,355 1,598 1,863 2,152 2,467 2,600 3,005
Depreoiation 1 350 1,350 1 350 1\.350 1 350 1,350 1 350 1 350 1 ,' i 15o
Total (267) 957 2,367 2,709 29457 3,213 J5028 3,1777 (117 1766
Less: Amortization of Debt 830 881 934 991 1,052 1,116 1,184 1,256 1,332 1,413
Additions to Plant - - - - - - 2 500 2 500 -
Total 830 P, 935 97 1,052f 1,116 31787B 3,256 1,332 67713
Cash Surplus or (Deficit) (1,097) 76 1,433 1,374 1,896 2,091 (182) 61 2,746 3,072
Comulative Cash Surplus or (Deficit) (1,097) (1,021) 412 2,126 4,022 6,179 5,937 5,958 3,746 13,738
Gross Income as % of Net Fixed
Assets in Operation 0\.11% 2\.02% 4\.31% 47\.89¢6 5\.3226 5\.61% 6\.35% 6\.972 6\.69% 7\.39'
Net Earnings as % of Ghanals
Investmant - - 2\.78% 3\.71% 7\.38% 5\.1i0 5\.89% 6\.76% 7\.20% 8,230'
Times Debt Service Covered by
Internal Cash Generation - 1\.03 1\.57 1\.68 1\.35 1\.83 1\.92 2\.02 2\.09 ?\.21
Principal AseanpDions:
Initial Plant: 589 MW (four 147\.2 units) Cost of Additional Unit: tO 5 millin, fInhanced not of
internal cash gewrration
Plant in Operation: January 1, 1967
Nmelter Dice: 120,000 tonl capacity
Start Up of Smelter: January 1, 1967
Smelter Price: 3\.5 M4ills (0\.30d)
Capital Requoirementa: EG 58\.3 nillion
Non-Smelter Price: 15 Mills (1\.29d)
Financing: EG 28\.3 million borrowings
25 year lan Depreciation: Dam and power plant - 27 per ann\.-i
6 year grace period Tra-saisoion facilities - 3-, per anr,t
6% interest
Moatoring 1967-1985
EG 30 million cantriboted by Ghana
VOLTA RIVER PROJECT
Altermtive Thernal Power Station
161 i2 12Th 1972 1272 127I5 19,76 127\. Total Averaze
Maxim Deaand MW 59 67 76 86 95 104 115 126 139 153 368
Installrd Capacity IW 75 75 105 135 135 135 165 165 195 19?5 195
Unit Sales khw x 106 233\.6 264\.9 300\.5 340\.8 374\.9 412\.3 453\.6 498\.9 548\.8 603\.7 663\.7 4,695\.7 426\.9
Capital Cost EG 5,330,100 7,310,100 8,300,100 8,300,100 9,290,100 10,280,100 10,280,100 11,270,100 12,260,100 12,260,100 12,26o,100
Interest }G 290,000 379,000 468,ooo 498,000 528,000 587,000 617,000 646,ooo 706,000 736,0o0 736,000
Operation and Maintenance lG 213,200 292,400 332,000 332,000 371,600 411,200 411,200 450,80o 490,400 490,400 49c,400
Depreciation EG 161,000 211,000 260,000 277,000 293,000 326,000 343,000 359,o0o 392,000 409,000 405,000
Fuel EQ 673,000 766,o0o 8_3_3,oo0 942\.000 1\.032,000 1,115\.000 1,227\.000 1\.34\.0_oo 1\.460\.000 1\.605,000 1,762,000
Total Annual Costs EG 1,337,200 1,648,400 1,893,000 2,o4g,000 2,224,600 2,439,200 2,598,200 2,804,800 3,048,400 3:,240,400 3,39,,400 26,680,6So0 2,425,509
Unit Costs - Rills 16\.0 17\.3 17\.6 16\.8 16\.7 16\.5 16\.0 15\.7 15\.6 15\.1 14\.3 15\.9
Interest Credit for
Depreciation E 5,000 16,000 30,000 46,ooo 63,ooo 82,000 101,000 123,000 146,000 169,000 191,,000
Annual Costs After Interest
Credit for Depreciation EG 1,332,200 1,632,400 1,863,000 2,003,000 2,161,600 2,357,200 2,497,200 2,681,800 2,902,400 3,071,400 3,203,400 25,705,600 2,336,873
Urnt Costs - Nills 16\.0 17\.2 17\.3 16\.4 16\.1 16\.0 15\.4 15\.0 14\.8 14\.2 13\.5 15\.3
1I
ANI3EX 8
SUMiARY ESTIJIATES OF ANCILLARY INVESTMENTS
;G million
Compensation and resettlement (excess over
the TG 3\.5 million that will be charged to
the project) 0\.7
Downstream compensation 0\.5
HIousing for smelter labor 4\.0
Water supply for smelter 0\.7
Port works allocable to project 5\.0
Extra dredging 0\.5
11ML
ANNEX 9
The Effect of Power Prices on the
Cost of Aluminum
1\. The amount that aluminum companies will be willing to pay per
±S-wLI Uepelaus I±a±gLy -X-uPO the UloetJvI of the llte±r _ 4l1-_V r t- -_
the raw materials supplies and to the market for aluminum\.
2\. Although the design of the pot line may change materials con-
sumption from plant to plant, broadly speaking the consumption of alumina,
coke and pitch, cryolite and other materials per pound of aluminum should
be about the same in any well-managed smelter\. However, the cost of these
materials will vary from plant to plant by the amount of the freight differ-
ential between the plants\. Naintenance and pot lining expenses and direct
labor costs also may vary somewhat from plant to plant depending upon labor
rates and labor efficiency\.
3\. The kwh consumption per pound of aluminum varies from plant to
plant depending upon the pot design and the type of rectifiers used
ranging from 10 kwh in older plants to less than 8 kwh in the most modern
plants, with an industrial average of about 9 kwh\. The cost of power is
one of the principal variable factors which could be used to offset any
disadvantages of location\. A change of 0\.5 mia in the price per kwh would
represent a change of 0\.450 per pound of aluminum; or if the snelter is
assumed to have a direct production cost of 12-15¢ per pound (excluding
interest and depreciation), a change of less than 4%\.
4\. The capital cost of a smelter would be about $0\.42 per annual
pound of capacity and on the assumption that it would be financed 50% with
equity and 50% with borrowed funds at 6% interest,depreciation charges and
interest would add about 2\.6¢ and 1\.2¢ respectively per pound to the cost of
aluminum\.
5\. If the smelter is to earn a 10-15% return on equity after taxes
of 40%, the margin between the net sales price and the total cost must be
3\.4-5\.2¢ per pound of aluminum\. On this basis an increase of 0\.5 mill in
the power cost becomes more significant, representing up to 13% of the
margin\. If the margin were reduced from 5\.2¢ to 4\.750 the return on equity
would be reduced to just under L4% after taxes\.
ANNEX 10
Page 1
Calculation of Long-Term Rate of Return
Method
1\. In this report, the long-term rates of return on the project have
been calculated by the discounted cash-flow (or present worth) method of
calculating investment returns\. This method deri-ves a single rate, showing
lehe -net yield of th proje+ to the iwrestor over the entire estimated life
of the project, after provision for repayment of the capital invested\.
2\. The principle used in this calculation of the rate of return is
the same as that used in calculating the present worth of an annuity\. First,
a stream of estimated cash outflows and inflows for the project is computed\.
Such a computation for the project is set out in Table 1, assuming a
120,000-ton smelter and a tariff of 3\.5 mills\. The assumptions underlying
these figures are set out in paragraph 3 below\. Next, a column of net cash
inflows or outflows is computed\. In the case of a calculation of the
return on the investment as a whole, total cash investment expenditure is
shown as an outlay, but-no account is taken of debt service\. On the other
hand, in the case of a computation of the return on the investment by Ghana,
only Ghana's cash expenditures are shown during the construction phase while
debt service is included as an outlay later on\. The stream of net cash
inflows and outflows related to Ghanats investment (including investment in
ancillary facilities) is shown in Column (3) of Table 2\. The problem now
is to find the rate of discount, which, when applied to these flows over the
applicable time periods, equates inflows and outflows\. The appropriate rate
is found by trial and error\. Table 2 presents an example of how this is
done\. In this example inflafs and outflows, on a present worth basis as
shown in Column (4), are approximately equated at a rate of 7%\.
Assumptions
3\. The calculations in Table 1 have been made on the basis of the
following assumptions:
Cash Investments in Fixed Assets and Working Capital - The entries in
Columns (1) and (2) indicate the cash outlays (shown in parentheses) to be
made for the purposes for the project\. They do not include interest during
construction\. Outlays from funds obtained from borrowing and funds provided
by Ghana are shown separately\. It is assumed that in 1961-65 the two
sources of finance will be drawn on pari passu\. The entries for the years
1959-67 represent the amount of initial outlays needed to build the project
and equip it with 4 generating units (147\.2 IW each) and an outlay of
EG 500,000 for working capital in 1967\. The entries for 1973/74 a d 1980/81,
amounting to a total of PG 5 million in each case, represent estimated
outlays to add one additional generating unit in each period\.
ANMNEX 10
Page 2
Cash Receipts - The entries in Columns (3) and (4) represent the amounts
to be received from the sale of power in each of the years\. Smelter receipts
are based on a rate of 3\.5 mills ere kwh\. I\Tnn-1mP\.ter receipts are based
on sales at 15 mills per kwh tlhrough 1980, and at 12 mills per kwh thereafter\.
The non-smelter receipts are expected to grow in accordance with the estimated
growth in demand through 1986, the year in which the project, with a
120,000-ton smelter, is expected to be fully loaded\.
Cash Expendi tures - Costs of operation in Column (5) include only cash
operating expen-_JanJd do not Mnclude debt service payments or non-cash
items such as depreciation\. Costs of operation are estimated at EG 620,000
for the four-unit plant, rising to IC 700,000 and EG 780,000 per year for
five and six units, respectively\. The debt service shown in Column (6) is
the estimated annual installrients of interest and amortization payable on
loans of fG 28\.3 million at 6% repayable in 19 years beginning in 1967\.
Ancillary Facilities - The figures for ancillary investments in
Colum ( 77T2epresent estimated cash payments by the Government for ancillary
investments (see Annex 8)\. Ancillary receipts in Column (8) are the
estimated net cash receipts of the enterprises operating the ancillary invest-
ments after deducting cash operating costs\. These net cash receipts have
been estimated to be 2% per annum of the ancillary investments on the
assumption that the investments would earn only enough to cover cash oper-
ating costs and amortization of the investment over a 50-year period\.
Possible Alternative Calculations
4\. The tables attached hereto show the calculations on one possible
combination of circumstances\. The figures given in the text of the report,
showing returns on an 80,000-ton and on a 210,000-ton smelter, at different
smelter tariffs, and for the returns without counting ancillary investments,
were computed by the same method\. The figures in the example given may be
modified to derive rates of return based on a wide variety of assumptions\.
TABLE 1
Cash Flows Resulting from 120\.000-Ton Smelter at 3\.5 Mill Tariff
(1) (2) (3) (4) (5) (6) (7) (8)
Cash Investments in Fixed Assets
Working Capital Cash Receipts Cash Erenditures
Ghana Non- Costs of Debt Pncillary Ancillary
Year Borrowings Contribution Smelter Smelter Oeeration Service Investments Receipts
- - ---- ---- - -------- --------In Thausards of Ghana Pounds----------------
1959 (418)
1960 (3,237)
1961 (5,400) (5,849) (4,500)
1962 (5,587) (6,020) (5,200)
1963 (4,330) (4,874) ( 200)
1964 (3,977) (4,551) ( 100)
1965 (2,682) (3,368) ( 700)
1966 ( 920) (700)
1967 ( 763) 788 1,251 620 2,516 228
1968 1,793 1,419 620 2,516 228
1969 2,959 1,610 620 2,516 228
1970 3,024 1,826 620 2,516 228
1971 3,024 2,008 620 2,516 Z28
1972 3,024 2,209 620 2,516 228
1973 (2,5CC) 3,024 2,430 620 2,516 228
1974 (2,500) 3,024 2,673 620 2,516 228
1975 3,024 2,940 700 2,516 228
1976 3,024 3,234 700 2,516 228
1977 3,024 3,557 700 2,516 228
1973 3,024 3,913 700 2,516 228
1979 3,024 4,304 700 2,516 228
1980 (2,500) 3,024 4,735 700 2,516 228
1981 (2,500) 3,024 4,167 700 2,516 228
1982 3,024 4,583 780 2,516 228
1983 3,024 5,042 780 2,516 228
1984 3,024 5,546 780 2,516 228
1985 3,024 6,100 780 2,516 228 H
1986-2016 3,024 6,711 780 228 0
(Inclusive)
ANNEX 10
Page 4
TABLE 2
Calculation of Return on Ghana's Investment in
Pr-oject and Aneiwlary Facilities with 120,000-Ton
Smelter and Tariff of 3\.5 Mills
(l) (2) (3) (4)
Cash Cash
Present Surplus Surplus
Years Value or or
frcn of 1 at (Deficit) (Deficit)
Base 7% Annual Current F rsu \. t
Year Year Discount Value Worth
1959 0 1\.000 ( 418) ( 418)
19i60 1 \.935 ( 3,237) (3,027)
1961 2 \.873 (-\.0,349) (9,035)
1672 3 \.816 (11,220) (9,156)
1963 4 \.763 ( 5,0743)
1964 5 \.713 ( 4,651) (3,316)
1965 6 \.666 ( 4,068) (2,709)
1966 7 \.623 ( 1,620) (1,009)
1967 8 \.582 ( 1,632) 950)
1968 9 \.544 304 165
1969 10 \.508 1,661 844
1970 11 \.475 1,942 922
1971 12 \.444 2,124 943
1972 13 \.415 2,325 965
1973 14 \.388 46 18
1974 15 \.362 289 105
1975 16 \.339 2,976 1,009
1976 17 \.317 3,270 1,037
1977 18 \.296 3,593 1,064
1978 19 \.277 3,949 1,094
1979 20 \.258 4,340 1,12D
1980 21 \.242 2,271 550
1981 22 \.226 1,703 385
1982 23 \.211 4,539 958
1983 24 \.197 4,998 985
1984 25 \.184 5,502 1,012
1985 26 \.172 6,056 1,042
1986 27 \.161 9,183 1,478
1987 28 \.150 9,183 1,377
1988 29 \.141 9,183 1,295
1989 30 \.131 9,183 1,203
1990 31 \.123 9,183 1,130
1991 32 \.115 9,183 1,056
1992 33 \.107 9,183 983
1993 34 \.100 9,183 918
1994 35 \.094 9,183 863
1995 36 \.088 9,183 808
1996 37 \.082 9,183 753
1997 38 \.076 9,183 698
1998 39 \.071 9,183 652
1999 40 \.061 9,183 615
2000 41 \.062 9,183 569
2001 42 \.058 9,183 533
2002 43 \.055 9,183 505
2003 44 \.051 9,183 468
2004 45 \.048 9,183 441
2005 46 \.044 9,183 404
2006 47 \.042 9,183 386
2007 48 \.039 9,183 358
2008 49 \.036 9,183 331
2009 50 \.034 9,183 312
2010 - 51 \.032 9,183 294
201 52 \.030 9,183 275
2012 53 \.028 9,183 257
2013 54 \.026 9,183 239
2014 55 \.024 9,183 220
2015 56 \.023 9,183 211
2016 57 \.021 9,183
TOTAL
3n 0
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P083094 | Page 1
INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: 33095
Date ISDS Prepared/Updated: 07/22/2005
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Poland
Project ID: P083094
Project Name: Poland: Hard Coal
Task Team Leader: John E\. Strongman
Estimated Appraisal Date: January 16,
2006
Estimated Board Date: March 30, 2006
Managing Unit: COCPO
Lending Instrument: Specific Investment
Loan
Sector: Mining and other extractive (100%)
Theme: Pollution management and environmental health (P);Small and medium
enterprise support (P);State enterprise/bank restructuring and privatization (P)
IBRD Amount (US$m\.):
150\.00
IDA Amount (US$m\.):
0\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER
150\.00
150\.00
B\. Project Objectives [from section 2 of PCN]
The proposed project development objective will help support the completion of the Hard Coal
Sector Reform by helping to (a) support any further restructuring needed for KW; (b) ensure that
the coal companies are offered for privatization; and (b) address the legacy of coal sector mining
damages (subsidence) liabilities at closed mines\.
The following performance indicators would be applied to assess the success of the project
(i)
each coal company continues to adhere to a hard budget constraint
(ii)
the restructuring of KW is completed such that KW can be offered for privatization
(iii)
each of the six major coal companies is (a) prepared for privatization (including
appointment of privatization advisor, preparation of pre-privatization analysis, and selection of
privatization method; and (b) offered for privatization (either through a trade sale or through a
public offering of a majority of shares in the company)
(iv)
a satisfactory plan is prepared and is under implementation to address the legacy of
subsidy at (a) closed and (b) operating mines
Page 2
The development objectives will be achieved by supporting completion of the implementation
of the Government's 2004-2006 Hard Coal Reform Program as well as implementation of the
Strategy for 2007-2010\. The Government?s approach of preparing the Program and the Strategy,
together with the recently approved Privatization Strategy are considered suitable\. The key
elements of the sector restructuring program are (i) closure of remaining excess capacity at KW
in an environmentally responsible manner (which is being supported in by the HCMC loan
which helps finance mine closure once the mines are transferred to SRK for closure); (ii) further
employment downsizing (especially for surface workers at KW) in a socially sustainable manner
-
which is being supported by the HCSM loan (which is due to close on December 31, 2005);
(iii) privatization; and (iv) improvement of environmental performance in keeping with EU
requirements, including land reclamation\. The proposed operation would support completion of
the Program with regard to (ii), (iii) and (iv) above, since the companion HCMC operation which
supports (i) is not expected to close until March 31, 2008\.
C\. Project Description [from section 3 of PCN]
The project would have three components as follows, with Bank funding provided only for the
second and third components:
(i)
Preparation and offering the industry for privatization including improving corporate
governance as part of the preparation for privatization\.
(ii)
Support for further employment downsizing in terms of (a) carryover payments for
underground miners who have taken early retirement packages and (b) payments for surface
workers taking severance packages\.
(iii)
(a) Support for repair/mitigation of past mining damages (in particular subsidence) at
mines that have been closed; and (b) establishment of measure to reduce/remediate subsistence
liabilities at operating mines being privatized\.
An investment loan is proposed because it provides direct linkages to disbursement of funds for
subsistence\. For the simplification of the implementation process it is proposed that the project to
be a SWAP type operation (like the HCMC operation), whereby the loan proceeds has been
pooled with Government funds provided to SRK\. As noted below, the operation may also be
suitable as a "Country Systems Pilot" with regard to environmental and social safeguard issues
(as well as possibly procurement and financial management systems)\. This will be addressed at
QER as well as subsequent the ISDS Reviews\. The main alternative considered was policy
development lending through an additional SECAL\. Development Policy lending is considered
less suitable because there is not a significant budget gap to be closed and Poland is a middle
income country\.
D\. Project location (if known)
The Project is located in the Silesia region of Southern Poland\. Silesia is highly industrialized
with coal fired power generation, steel and other industry in the region\. Total population of the
region is about 2 million, with the majority living in urban, suburban and semi-rural settings\. The
region does not have any unusual or unique environmental features\. The coal mines are not
located near any protected areas or sites, critical natural habitats, or any culturally or socially
sensitive areas\. There are 3 coal holding companies in the region (operating 37 mines) plus 3
independent mines (for a total of 40 operating mines)\. Total industry employment is currently
Page 3
about 140,000 people\. There are 22 mines where closure and rehabilitation have been completed
and another 3 mines where it is undergoing\. Over 100,000 workers have already left the coal
sector in the last 4 years\.
E\. Borrowers Institutional Capacity for Safeguard Policies [from PCN]
The borrower has a very good track record for carrying out environmental and social safeguards\.
A
Sector Environmental Assessment (SEA) was conducted under SECAL1 and mining
companies are implementing environmental improvements\. The Environmental Framework
prepared under HCMC Project has been an effective compliment to borrower procedures and
will applicable for any additional mines subject to closure and (b) the Involuntarily Resettlement
may be also be triggered in the event that repair of subsidence may require temporary relocation
of occupants of residential and commercial buildings while the buildings are repaired\. The
Borrower's institutions - Voivod Department of Environment, Higher Mining Authority (which
are responsible for overseeing environmental performance) and SRK, BSRK and the mining
companies (which undertake the environmental work) - have all demonstrated acceptable
institution capabilities under previous operations\. There have been no issues of safeguard
violations in the previous four loans and suitable steps will be taken during project preparation to
ensure that this remains the case\.
This is one of several operations being considered within the pilot program for the "Use of
Borrower Systems to Address Environmental and Social Safeguard Issues" under OP 4\.00
(March 2005) and specifically under the "EU pilot" provision approved by the World Bank
Board\. Pilot project approval will be done in parallel with the overall project approval, and will
hinge on the determination of the "equivalence and acceptability" of comparable Polish
environmental and social protection policies (taking into account needed "gap-filling"), as well
as continued Bank supervision during implementation\. Field work to prepare a draft
"Equivalence and Acceptability Assessment", a condition of Board review of pilots, is planned to
begin in mid-October, 2005\. The review will examine both the legal basis for due diligence, as
well as the past practice of Polish mining and environmental authorities under Bank-supported
and non-Bank-supported projects\.
Should any or all key components of the Polish system not be found "equivalent" and
"acceptable" to the Bank under OP 4\.00 (despite feasible "gap-filling"), the Bank's particular
safeguard policy or policies will apply\. For environment, as an expected Category B project this
would then be captured in an Environmental Management Plan, revised as needed from previous
EMPs\. Due diligence documentation as a country-system pilot (i\.e the "equivalence and
acceptability framework") or a conventional operation (i\.e the EMP) would be disclosed by
appraisal
Since OP 4\.12 may be triggered as a result of subsidence remediation, borrower systems for
meeting the objectives of OP 4\.12 will be reviewed as well\. If these are found "equivalent" and
"acceptable", Polish procedures may be followed and no specific policy framework will be
required\. If Polish systems are not judged as acceptable (despite "gap-filling"), then a
conventional policy framework for meeting OP 4\.12 will be prepared\.
F\. Environmental and Social Safeguards Specialists
Mr Bernard Baratz (QAG)
Page 4
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered
Yes No TBD
Environmental Assessment (OP/BP 4\.01)
X
The project supports remediation and repair of subsidence in the mining areas and this
safeguard policy is applicable\. Subsidence impacts in the region are relatively modest, generally
being limited to minor damage, such as cracks in walls of apartment buildings and are easily
mitigated\. They are repaired by the coal company responsible for the damage\. A survey of any
subsidence damage associated with the mines or parts of mines already closed or under closure
will be undertaken during project preparation as well as a plan developed to repair any damage\.
In addition, to improve overall sector performance, a survey will be undertaken of subsidence at
all existing mining operations to examine whether any serious problems exist and to ensure that
repairs are being made in a timely manner\. The Government will commit to ensuring that the
work to repair subsidence is undertaken by the companies in a timely manner\.
Natural Habitats (OP/BP 4\.04)
X
This is not anticipated but will be checked in advance of appraisal and due diligence suitably
included as needed\.
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Cultural Property (OPN 11\.03)
X
This safeguard may be triggered in the event that repair of mining damages will be required
for cultural property buildings\.
Indigenous Peoples (OD 4\.20)
X
Involuntary Resettlement (OP/BP 4\.12)
X
This safeguard may be triggered in the event that repair of mining damages may require
temporary relocation of occupants of residential and commercial buildings while the buildings
are repaired\. An Involuntarily Resettlement Policy will be prepared and disclosed before
appraisal\.
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
Environmental Category:
B
-
Partial Assessment
III\. SAFEGUARD PREPARATION PLAN
A\. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS
would be prepared: 08/31/2005
B\. For simple projects that will not require a QER, the target date for preparing the PAD-stage
ISDS: N/A
Page 5
C\. Time frame for launching and completing the safeguard-related studies that may be needed\.
The specific studies and their timing
1
should be specified in the PAD-stage ISDS\.
Field work to prepare a draft "Equivalence and Acceptability Assessment", a condition of
Board review of pilots, is planned to begin in mid-October, 2005\. Otherwise (and/or in
addition to) the framework, and EMP or resettlement instrument would be prepared
(including consultations) and disclosed by appraisal\.
IV\. APPROVALS
Signed and submitted by:
Task Team Leader:
Mr John E\. Strongman
07/21/2005
Approved by:
Regional Safeguards Coordinator:
Mr Ronald N\. Hoffer
07/21/2005
Comments: This PCN-stage ISDS is cleared for safeguards
Sector Manager:
Mr Peter A\. van der Veen
07/22/2005
Comments:
1
Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected
persons\.
Page 6 | APPROVAL |
P003735 |  | APPROVAL |
P115568 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB4662
Project Name
Additional Financing -Road Rehabilitation and Improvement II
Region
LATIN AMERICA AND CARIBBEAN
Sector
Roads and highways (100%)
Project ID
P115568
Borrower(s)
GOVERNMENT OF HONDURAS
Government of Honduras
Honduras
Implementing Agency
SOPTRAVI, Honduras
Fondo Vial, Honduras
Environment Category
[
]
A
[X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
May 4, 2009
Date of Appraisal
Authorization
April 16, 2009
Date of Board Approval
May 21, 2009
Please also refer to the PID of the parent project (Report No\.: AB3812) disclosed on 04/29/2008
1\. Objective:
The development objective of the Second Road Rehabilitation and Improvement Project
(PRMC-II) remains unchanged, namely, improve the quality of road network and of road
management in support of the Governments growth and competitiveness goals through: (a)
improved governance and enhanced road management capacity in SOPTRAVI and the Road
Fund (FV); (b) improvement
1
in selected road corridors; and (c) extension in the scope of the
maintenance of the unpaved road network\.
2\.
Rationale for Bank Involvement:
Reasons for the Additional Financing\.
Tropical Depression No\.16, which formed off the coast
of Honduras in mid October 2008, brought heavy rains and resulted in flooding, loss of life and
property damage in several Central American countries\. In Honduras, increasingly vulnerable to
the consequences of climate change in recent years, 320,000 persons in the northern, western and
central areas of the country were seriously impacted with damage estimated at $125 million
reported\. With the declaration of a national emergency, response mechanisms under the
Comision Permanente de Contingencias
(COPECO) were activated and international
humanitarian assistance from various agencies including PAHO/WHO, UNFPA and UNICEF
was mobilized\. The United Nations issued a Flash Appeal for Honduras in the amount of
US$17million\.
1
Road improvement includes engineering activities such as paving, shoulder work and drainage enhancement as
well as safety oriented activities such as proper road signage and markings
Page 2
As a result of damage sustained to the road network due to flooding, the Government of
Honduras specifically requested assistance from the International American Development Bank
(IADB) and the World Bank to help finance the needed the additional and unplanned
rehabilitation needs at an estimated total cost of $33 million
of
which on December 2, 2008 the
Government requested emergency assistance of US$25 million\. The flooding created significant
and potentially lasting damage to roads and bridges mostly in the departments of Colon, Yoro,
Francisco Morazán, Olancho and Cortes - due to one or more of: (i) excessive river flow and
storm water run off; (ii) land and earth slides; and (iii) opening up of geological faults\. The
proposed financing was to enable the Government to restore access and connectivity in affected
productive rural areas and also to minimize economic losses suffered\.
3\. Description:
Components\.
The Additional Financing supports the following scaled up activities to be carried
out under Components 1, 3 and 4 of the parent project as follows\.
Under
Component 1
,
there are three additional sub components as follows:
Sub-Component 1C: Restoration of damaged primary road infrastructure ($10\.0 million):
The highest priority in the program is to be accorded to four of the countrys main road corridors
where geological faults, either newly created or seriously exacerbated by the recent flooding,
have restricted transit in a number of specific locations\. In the absence of timely, remedial
action, there is a risk of road failure with serious economic consequences for the country\. The
corridors are as follows:
Tegucigalpa-Danli;
La Entrada-Copan Ruinas;
La Entrada-Santa Rosa de Copan-Ocotepeque; and
Santa Rita-Yoro
\.
Sub-Component 1D: Restoration of damaged bridges ($8\.0 million)
:
A
total of 8 bridges
have been identified for restoration, selective structural strengthening and improvement of
access\. In each case the bridges provide a major crossing point to a river or watercourse and the
damage or complete loss of the structure, sustained or exacerbated as a result of the flooding
create significant loss of access in the specific localities\.
Sub-Component 1E: Restoration of damaged secondary road infrastructure ($4\.5 million):
Large parts of the secondary road network - which provides essential connectivity for productive
rural areas to markets have been damaged, in particular in the following departments:
Atlantida; Colon; Yoro; Cortes; El Paraiso; Olancho and Valle\. The project would contribute
towards the rehabilitation of about 650 kilometers of affected roads in these departments\. The
works would be carried out under the supervision of the FV\.
Under
Component 3
,
a
new
Sub-Component (5)
would be added to cover the costs of design,
supervision and technical audit related to the mentioned additional rehabilitation works at an
estimated cost of
US$2\.0 million
\.
Page 3
Under
Component 4
,
there will be an additional sub-component as follows:
Sub-Component 4 VI: Institutional strengthening for disaster risk mitigation and planning
($0\.5 million):
The additional financing would support Government in the development of
policies and mitigation strategies to reduce vulnerability and strengthen risk management
capacity in the road sector; including the review of design and construction standards in view of
the potential for greater frequency and strength of climatic events of this nature in future\. The
component would support selective strengthening of the technical capacity in SOPTRAVI and
the Road Fund as well as provide training to the private sector (consultants and contractors)\.
COPECO would be involved in the detailed design and implementation of this sub-component\.
Outcomes\.
There are two changes in the final outcomes for the project as a consequence of the
additional financing that is: (i) creation of disaster planning and management unit in
SOPTRAVI; and (ii) up to 300 kilometers of primary and secondary roads and bridges restored
to good condition\. The following are the additional intermediate outcomes to be included: (a)
restoration of the primary road infrastructure damaged by flooding: Tegucigalpa-Danli; La
Entrada-Copan Ruinas; La Entrada-Santa Rosa de Copan-Ocotepeque; and Santa Rita-Yoro; (b)
construction of 8 bridges in various locations replacing damaged or destroyed structures (525
meters); (c) rehabilitation of up to 515 kilometers secondary road infrastructure in 6 most
affected departments; and (d) carrying out improvements to policies and procedures in relation to
disaster planning and management\.
4\. Financing:
Source: ($m\.)
BORROWER/RECIPIENT 0
International Development Association (IDA)
25
Total
25
5\. Implementation:
Project Performance to Date\.
The parent project PRMC-II has not yet commenced
implementation\. Substantial progress has been made however in the preparation of first year
activities which should commence shortly following the declaration of credit effectiveness on
April 27, 2009\. The activities comprise: (A) two of the primary road sections scheduled for
improvement that is: (i) San Lorenzo to Olanchito for which the design is essentially completed,
but for which specific advance conservation measures, set out in the Supplemental Letter dated
October 13, 2008 have still to be completed to the satisfaction of the Bank; and (ii) El Porvenir
to Marale for which a design review is to be carried out prior to finalizing the alignment of the
road improvement; (B) creation, orientation and equipping of up to 10 new micro-enterprises to
undertake routine maintenance under contract of already identified pilot sections of the unpaved
primary and secondary road network; and (C) carrying out of various measures to strengthen the
planning and implementation capacity of the units of SOPTRAVI and of the FV directly
involved in project implementation, with specific emphasis given to initiating the activities under
the sector governance program\.
Page 4
Implementation Arrangements\.
There are no proposed changes in that SOPTRAVI and the FV
are the appropriate institutions to manage the additional activities with the help of private
consultants and contractors\. These arrangements have been designed with a view to mitigating
the negative impact that staff turnover associated with the political transition at the end of 2009
might have on implementation capacity\. A technical assistance contract with a private consultant
to provide specific, technical expertise to complement SOPTRAVI capacity is expected to come
into effect by mid 2009 (bids were received April 23, 2009)\. However in recognition of the
additional work occasioned by the emergency response, there will be
some short term increases
in capacity in the project executing unit -
Unidad Ejecutora del Banco Mundial
(UEBM)
to
specifically manage the contracting, supervising and completion of the emergency works\. This
will comprise the following: the hiring of an additional coordinator to focus exclusively on the
emergency works program; and the hiring of an additional procurement specialist, with a strong
engineering background\. SOPTRAVI is giving consideration to the hiring of an international
engineering consultant on a short term basis to advise the UEBM on the planning and
implementation of priority works in 2009\. It has already been agreed that a full time monitoring
specialist will be recruited for the UEBM with immediate effect\.
6\. Safeguards
An environmental impact assessment
was recently completed and is in the process of being
reviewed\. All of the primary road infrastructure sections damaged were visited in January 2009
and assessed according to the Environmental and Social Management Framework (ESMF)
developed for the parent project\. The remaining bridges and the secondary network identified
for rehabilitation were assessed during the month of April 2009\. 3 of the projects were rated as
low environmental risk and only one (Santa Rita to Yoro) assessed as being of moderate
environmental risk\.
For the purposes of the Bank, the Environmental Category is expected to remain as B, as the
proposed works represent the restoration or improvement of existing infrastructure assets only,
with no significant adverse negative environmental impact expected\. Most of the proposed
works are not expected to adversely affect critical or other natural habitats
\.
In the specific case
of the replacement of a bridge spanning the River Aguan, the works fall close to a sensitive area
where the last remaining stands of endemic dry tropical forest are found\. Additional
conservation measures will apply during the preparation and execution of the required works\.
The AF will not in any event support infrastructure activities in such sensitive areas that might
require a change in environmental categorization\.
Damage to physical cultural resources
is unlikely since the roads and bridges to be rehabilitated
or replaced will follow existing alignments\. However specific attention will be paid in the case
of the La Entrada Copan Ruinas rehabilitation given the road passes through an area of unusual
richness in archaeological and anthropological artifacts\. The current ESMF includes a chance
finds procedure under its standard environmental rules for contractors\.
By mid May 2009 specific site visits will have been completed to verify whether any additional
Indigenous Peoples Plans (IPP)
will be required for the new road segments\. If the need is
Page 5
confirmed, the parent projects IPP will be updated and disclosed by SOPTRAVI after
appropriate stakeholder consultations have been conducted and documented, expected before end
July 2009\.
In terms of involuntary resettlement
,
although all the additional works are to be undertaken
within the existing right of way, SOPTRAVI will carry out a verification process by mid May
2009 after which the provisions of the Abbreviated Involuntary Resettlement Plan (AIRP)
drawn
up for the project will be updated as needed\. As in the case of indigenous peoples consultations,
the ones related to land acquisition and/or involuntary resettlement stakeholders will be carried
out and documented by the end of July 2009\.
The disclosure of any revisions required of the basic safeguard instruments for the project the
ESMF, the IPP and the AIRP as well as the specific social and environmental assessments
carried out for the specific sub-projects will be publicly disclosed not later than six months after
the date of the AF Board approval date\. However none of the additional works will start prior to
the disclosure of these said instruments and or the completion of any advance social or
environmental actions identified in the mentioned assessments\.
7\.
List of Factual Technical Documents
*
Letter from the Government requesting additional financing
*
Reports regarding Tropical Depression No\. 16 and its aftermath
*
Cost estimates
*
Economic Analysis
*
Environmental and Social Assessment
*
Operational Plan
*
Procurement Plan
8\. Contact
point
Contact: Stephen J\. Brushett
Title: Lead Transport Specialist
Tel: (202) 473-4153
Fax: 202-676-9594
Email:
Sbrushett@worldbank\.org
9\.
For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop
Page 6
wb337907
C:\Documents and Settings\wb337907\Desktop\HN Additional Financing -Road Reconstruction and Improvement II - draft PID appraisal
stage\.doc
03/04/2009 16:49:00 | APPROVAL |
P001512 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\.: 22414
PERFORMANCE AUDIT REPORT
MADAGASCAR
THE ANTANANARIVO PLAIN DEVELOPMENT PROJECT
(CREDIT 2117-MAG)
June 20, 2001
Sector and Thematic Evaluation Group
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Currency Equivalents
Effective December 15, 2000
Currency Unit: Malagasy Franc (FMG)
FMG1 = US$\.00016
US$1 = 6260 FMG
Abbreviations and Acronyms
AFD Agence Frangaise de D6v6loppement
APIPA Autorit6 pour la Protection contre les Inondations de la Plaine d'Antananarivo
CAS Country Assistance Strategy
FMG Madagascar francs
GDP Gross domestic product
GNP Gross national product
GR G6nie Rural
ICR Implementation Completion Report
IDA International Development Association
JIRAMA National Water and Electricity Company
OED Operations Evaluation Department
OP Operational Policy (of the World Bank)
PRSP Poverty Reduction Strategy Paper (of the World Bank)
SAMVA Service Autonome de Maintenance de la Ville d'Antananarivo
SSP Sector Strategy Paper (of the World Bank)
Fiscal Year
Government of Madagascar: January 1 - December 31
Director-General, Operations Evaluation : Mr\. Robert Picciotto
Director, Operations Evaluation Department Mr\. Gregory K\. Ingram
Manager, Sector and Thematic Evaluation : Mr\. Alain Barbu
Task Manager : Mr\. Klas Ringskog
FOR OFFICIAL USE ONLY
The World Bank
Washington, D\.C\. 20433
U\.S\.A\.
Office of the Director-General
Operations Evaluation
June 20, 2001
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Performance Audit Report on Madagascar
The Antananarivo Plain Development Project (Credit 2117-MAG)
The Antananarivo Plain Development Project was approved on March 29, 1990, and
closed on September 30, 1999, two years and\. three months after the original closing date of June
30, 1997\. Project implementation suffered from macroeconomic and politic instability in
Madagascar\. In addition, the project's co-financier, Agence Frangaise de Devloppement (AFD),
suspended disbursement for the 1993-97 period due to government debt service arrears, which
caused the IDA-financed project additional implementation problems and delays\.
OED rates the outcome of the project "moderately unsatisfactory" with its relevance
"high," but its efficacy and efficiency "modest\." Its sustainability is rated "unlikely" because of
the absence of sufficient financial and political support of the institutions in charge of operating
and maintaining the facilities built under the project\. The institutional development impact is
rated "negligible\." The Bank performance and borrower performance are both rated
"unsatisfactory\." The OED ratings agree with those in the ICR except for those of outcome and
borrower performance, both of which the ICR rated "satisfactory"\.
The audit confirms three lessons, all of which well-known from past projects and which
should have been incorporated in the project\. The first lesson is that a project has little chance of
orderly implementation and no chance of sustainability unless proper institutional arrangements
have been appraised and put in place\. For the Antananarivo Plain Development Project,
institutions and private companies to manage and maintain the flood control works, drainage and
sewerage works, and solid waste collection installations, respectively, were only notionally
identified in the project appraisal documents The credit agreement stipulated that the key agency
to manage the flood control works was to be established not until almost three years after Board
presentation\. In the event, the agency was not created until five years after Board approval and
was given insufficient financial and political support\. It would have been better to have decided
all institutional issues before negotiations which would have forced a proper preparation of the
institutional arrangements and would have revealed the degree of political support that actually
existed in favor of the institutional arrangements\.
The second lesson is that the relatively short period of implementation of a Bank project
is often insufficient to underpin and cement the reforms that projects often attempt\. The Bank
and its client countries require long, stable collaboration to change institutions and of policies\.
This speaks in favor of a series of Bank projects, matched to the growing capability of the
institutions created under the first operation\. In the case of the Antananarivo Metropolitan Area,
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
2
it would have been preferable to use the concept of an Adaptable Program Loan where the
successful completion of one component would trigger the financing of subsequent project
components\. Such a project design would have reduced the risks of failed project implementation
and operations due to weak institutions, the risks of which were underestimated by the Bank\.
The third lesson is that projects must carefully match ambitions and complexity with the
administrative and financial capacity of the country\. The audited project actually combined four
quite disparate sub-projects: (1) one to control flood damage; (2) one to expand drainage and
sanitary sewerage; (3) one to boost rice production through increased irrigation; and (4) one to
boost real estate tax collections in the Antananarivo municipality\. Each of these projects was
ambitious in its own right in the light of the country's previous stagnation and history of
economic and political challenges\. Again, an Adaptable Program Loan would likely have been a
more efficient instrument to reduce risks and encourage orderly project implementation through
carefully gauging and confirming the political support for each project component\.
In addition to the two general lessons, the audit makes a number of detailed
recommendations of follow-up financial and technical assistance\. In particular, sustainable
drainage, sanitary removal of sewage, and solid waste collection remain an unfulfilled aspiration
although the project was supposed to provide these essential services\. The solution to these
pressing environmental problems is urgent given the incidence of disease affecting the low-
income population residing in the project area\.
Attachment
Contents
Principal R atings\. iii
K ey Staff Responsible \. im
P reface\.v
1\. Country and Sector Background \. 1
2\. Project Background \. 1
3\. Project Objectives and Components\. 2
General Project Objectives \.2\. \.2
Physical Objectives \.3\. \.3
Project Components \. \. 3
4\. Project O utcom e \. 4
Relevance \. 5
Efficacy\.5
Efficiency\.6
Project Outcome\.7
Institutional Development Impact\. \.7
Sustainability\.8
Bank Performance\. 9
Borrower Performance\. 9
5\. Lessons and Recommendations \. 9
Annex A\. Basic Data Sheet \. 13
Annex B\. OED Project Evaluation Criteria \. 15
This report was prepared by Klas Ringskog, who audited the project in December 2000\. William
Hurlbut edited, and Helen Phillip provided administrative support\.

111
Principal Ratings
Madagascar The Antananarivo Plain Outcome Sustainability Institutional Bank Borrower
Development Project (Credit 2117) Development Performance Performance
ICR Satisfactory Unlikely Negligible Unsatisfactory Satisfactory
Audit Moderately Unlikely Negligible Unsatisfactory Unsatisfactory
Unsatisfactory
Permitted Ratings
Outcome Highly Satisfactory, Satisfactory, Moderately Satisfactory,
Moderately Unsatisfactory, Unsatisfactory, Highly
Unsatisfactory
Sustainability Highly Likely, Likely, Unlikely, Highly Unlikely, Not
Evaluable
Institutional Development Impact High, Substantial, Modest, Negligible
Bank Performance Highly Satisfactory, Satisfactory, Unsatisfactory, Highly
Unsatisfactory
Borrower Performance Highly Satisfactory, Satisfactory, Unsatisfactory, Highly
Unsatisfactory
Key Staff Responsible
Task Manager Division Chief Country Director
Appraisal Gerard Tenaille Marc Blanc Paul Isenman
Completion James Wright Jeffrey S\. Racki Michael N\. Sarris

V
Preface
This is the Project Performance Audit Report (PAR) of the Antananarivo Plain Development
Project (Credit 2117-MAG)\. The credit in an amount of US$30\.5 million equivalent was
approved on March 29, 1990, became effective on January 31, 1991, and closed on September 30,
1999, two years and three months after the original closing date\. At the time of closing the Bank
canceled an unused balance of US$7\.0 million\.
The PAR is based on the Staff Appraisal Report (Report 8152-MAG, February 23, 1990), the
Implementation Completion Report (Report no\. 20108), credit agreements, project documents,
and discussions with Bank staff\. In addition, an Operations Evaluation Department mission
visited Antananarivo in December 2000 for discussions with borrowers, project executing
agencies, and direct beneficiaries of the loan\.
Following customary procedures, copies of the draft PAR were sent to the relevant government
officials and agencies for their review and comments\.

1
1\. Country and Sector Background
1\. Since gaining independence from France in 1960 Madagascar has suffered economic
stagnation\. Madagascar is large - about 590,000 square kilometers- and has considerable
economic development potential and an unique but fragile ecology\. In spite of the possibilities,
economic mismanagement and political instability have led to an almost unmitigated decline
where per capita GDP decreased about 1\.5 percent per annum over the 1980-99 period\. Since
1997 an opening of the economy has produced total annual GDP growth rates of 5 percent, but
this export-led growth in free-trade zones is now facing constraints of insufficient trained
manpower and inadequate urban infrastructure\. Income is poorly distributed and in 1993 about 89
percent of the population was reported to be subsisting on less than US$2 per day - one of the
highest shares in the world\. Economic and social indicators are weak: gross domestic investment
has dropped to 12 percent of GDP, resulting in an aged and decrepit infrastructure; the under-five
mortality rate is high at 146 per thousand live births; and adult illiteracy is on the order of 35
percent\.
2\. The urban population accounts for about 28 percent of the total population of 15 million\.
The Antananarivo Metropolitan Area population has reached 1\.5 million, or 10 percent of
Madagascar's population and 40 percent of the country's urban population\. Over the 1990s the
share of the urban population with water supply house connections has stagnated at 35 percent, of
whom half reside in Antananarivo\. The parastatal JIRAMA, under the Ministry of Mines and
Energy, is responsible for the distribution of electricity and potable water in two-thirds of the
country's urban centers\. JIRAMA operates existing systems credibly, but lack of funding has
prevented rehabilitation and network extensions\. Municipalities are in charge of waste water
collection and disposal but lack the necessary financial and human resources to operate and
maintain existing rudimentary systems, most of which predate independence\. Sewerage is mostly
combined with the drainage of rainwater, and there is no treatment of the sewage collected\. The
consequences are what could be expected: sanitation-related diseases are endemic with at least
2,000 cases of cholera in 1999, and recipient waters suffer from the lack of wastewater treatment\.
The "brown" urban environmental problems can be expected to deteriorate significantly with
migration from rural to urban areas adding to urban growth\.
2\. Project Background
3\. The multipurpose Antananarivo Plain Development Project was designed to combine and
realize four separate project ideas: (1) a flood control project to mitigate the periodic flooding of
the plain; (2) a drainage and sewerage project to collect and remove the rainwater and sanitary
wastewater from part of the plain; (3) an agricultural project to increase rice production in the
irrigated areas on the plain; and (4) a fiscal reform project to increase real estate tax revenue in
the Antananarivo municipality\.
4\. The flood control component was needed because of the difficult hydrography of the
plain\. The city of Antananarivo is located on hills descending to a plain where the Ikopa River
and its tributaries drain the high seasonal rainfall\. (See Map\.) A 15-kilometer hard-rock threshold
where the river descends from the high-lying plain restricts the river flow and causes periodic
flooding when the river swells after heavy rains\. Successive French colonial administrations
made efforts in the early 20th century to blast a channel through the rock in order to augment the
river flow and remove the flooding risk\. The magnitude of the task was such, however, that the
effort was abandoned\. Subsequently, the environmental wisdom of permanently changing the
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water regime of the plain was questioned\. Instead, the idea arose to create a polder that would be
protected within raised riverbanks\. A disastrous flood in 1959 lent urgency to the project to
protect the polder areas against future floods\.
5\. The drainage and sewerage components were required because of the extremely low
hydraulic gradient of the plain, which caused flooding, environmental degradation, and a health
hazard\. The slope of the plain is only 1 per 10,000, which causes rainwater to drain very slowly,
if at all\. The precarious drainage has been worsened by an inoperative solid waste collection
system\. As a result, garbage has been dumped into surface drains which has further obstructed
drainage\. Because of the low slope and the blockage by garbage, the existing main drain, the
Andriantany Canal, silts up rapidly and must be dredged often\. Much of the city's incomplete
sewerage system collects both rainwater and untreated sewage\. When it rains heavily the silted up
Andriantany Canal quickly becomes a serious public health hazard because sanitary sewage will
flood populated areas and spread disease\. Cholera is endemic in Antananarivo and flares up with
each rainy season\. Plague is also endemic and is spread by rodents who thrive in the garbage\.
6\. The agricultural component aimed at raising the productivity of the rice growers on the
plain by guaranteeing adequate irrigation through a dedicated irrigation system\. Before gaining
independence in 1960 Madagascar had been the second-largest rice exporter worldwide, but
decades of economic mismanagement had turned the country into a rice importer by the late
1980s\. A new canal, G6nie Rural (GR), was built to meet the irrigation needs only and remove
the conflict between irrigation and drainage needs\. The conflicting needs had actually caused
flooding in 1982 when the irrigation department did not release water from reservoirs to retain
water for irrigation needs\. Continued rains then caused the reservoirs to overflow their banks and
flood inhabited areas\.
7\. The fourth project idea focused on updating the Antananarivo land taxation system,
which dated back to 1936, in order to raise revenue\. The generation of tax revenue was low,
inequitable, and unreliable and the project was designed to change all this\.
3\. Project Objectives and Components
General Project Objectives
8\. The general project objectives were set against the backdrop of economic stagnation and
a delicate political situation in the country\. The economic decline is illustrated by the fact that
GNP per capita was only US$250 in 1999, that private consumption in Madagascar had fallen an
average 2\.2 percent per annum over the 1980-98 period\. Accordingly, at the time of appraisal,
project objectives were set to try to reverse the economic miasma and renew the decayed physical
and institutional infrastructure\. In particular, the general objective in the appraisal was "to
improve the living conditions of the low-income population living in the low-lying areas of the
city (ofAntananarivo) and in the Plain\."
9\. Specific project objectives were set to accomplish the general objectives:
* To create an enabling environment for the resumption of private investment and
economic growth in the Antananarivo metropolitan area
* To consolidate the financial and managerial development of the regional municipalities,
already undertaken under an earlier First Urban Project (Credit 1497-MAG)
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* To set up an institutional framework for efficient operation and maintenance of the
structures and facilities provided by the project
* To make possible an integrated urban and agricultural development on the Antananarivo
Plain\.
Physical Objectives
10\. To help bring about the four separate project ideas that had been prepared in parallel over
a number of years and were now folded into the Antananarivo Plain Development Project,
physical project objectives were defined to:
* Provide 100-year flood protection to the suburbs of Antananarivo (on the plain), and
provide an efficient flood warning system
* Improve, rehabilitate, and expand the drainage and sewerage facilities to evacuate surface
runoff and sewage from the plain under all conditions, developing these facilities
consistently with, and in a manner fully compatible with other urban, agricultural, and
flood protection developments
* Rehabilitate and expand the irrigation system of the Ikopa River's Right Bank\.
Project Components
11\. To accomplish its general and specific objectives the project had 12 components:
To control flooding:
* Raising and reinforcing dikes of the Ikopa and confluent rivers in order to protect the
right bank of the Ikopa
* Implementing a flood warning system with hydrometric stations, radio links and tele-
metric systems
To drain away rainwater from the polder area on the plain:
* Dredging and enlarging the existing Andriantany Canal, construction of two retention
ponds; and constructing a new drainage canal, C3
* Constructing the Ambodimita pumping station with a capacity of 9 cubic meters/second
To provide sanitary sewerage from limited areas of the polder:
* Rehabilitating and expanding sanitary sewerage and rehabilitating and adding to the
capacity to pump sanitary sewage away from inhabited areas on the plain
To improve and extend solid waste collection and removal from areas of the plain:
* Improving and adding to the capacity to collect, transport and compost solid waste
To increase rice production:
* Constructing a new irrigation canal, GR, to irrigate rice fields on the plain and enable
the Andriantany Canal to become an exclusive surface water drainage canal
4
* Rehabilitating existing irrigation dikes and drainage canals on the right bank of the
Ikopa river
To increase tax collections in the Antananarivo Municipality:
* Updating the land registry, cadaster, of the Antananarivo Region
* Strengthening the Land Tax Department of the Antananarivo Municipality
* Creating institutions to manage and maintain the hydraulic facilities of the plain; to
operate and maintain the sewerage and drainage systems; to manage solid waste
collection in the project areas; and to create irrigation user associations
Consultancy Services:
* A number of technical studies to prepare the above investments (but no preparatory
institutional studies)\.
4\. Project Outcome
12\. A project with 12 components is complex and the project ran into severe difficulties
during implementation\. The IDA credit and co-financing from the Agence Frangaise de
D6v6loppement (AFD) were approved in 1990 but got off to a slow start due to political problems
in the country and, particularly due to problems with the acquisition of land necessary for the
drainage works and with the resettlement of people affected by the project\. Then, in January
1994, AFD suspended disbursement to the project following Madagascar's failure to service
previous debt\. The suspension lasted more than three years, until October 1997, which further
delayed project implementation\. The result was a excessively compressed implementation period
of between two and three years\. The IDA credit closed on September 30, 1999, and the AFD
financing closed on December 31, 2000, and the bulk of the flood control and drainage works had
to be implemented in only two years, 1998 and 1999\.
13\. The short implementation period and the reduced financing forced several objectives to
be scaled back\. New sanitary sewerage was not provided but about 45 km of existing sanitary
sewers were rehabilitated\. Only two of a planned total of five rainwater retention ponds were
built\. The solid waste management component was scaled back and although the cadastre and the
improvement of the land tax department was completed, political opposition from wealthy and
influential property owners thwarted its effective implementation\. The table below provides an
overview of the completion of the project components\. The reasons for any shortfalls in
completion and the achievement of the project objectives are analyzed more fully in the rating of
the five OED evaluation categories (see Annex B for a full description of this evaluation
framework)\.
51
Table 1: Completion and Sustainability of the Project Components
Component State of Completion Likelihood of Sustainability
Ikopa River Dikes Completed Unlikely
Early Warning System Completed Unlikely
Dredging Andriantany Completed Unlikely
Ambodimita Pumping Station Completed Likely
Sanitary sewerage rehabilitation Partially completed Unlikely
Solid waste collection Not completed Unlikely
Building irrigation canal GR Completed Likely
Irrigation canal rehabilitation Completed Likely
Updating land registry cadaster Completed but not implemented Unlikely
Strengthening Tana land tax dept Not completed Unlikely
Creating institutions for O&M Partially completed Unlikely
Technical studies Completed Not Applicable
Relevance
14\. Relevance, is defined as "the extent to which the project's objectives are consistent with
the country's current development priorities and with current Bank country and sectoral
assistance strategies and corporate goals (expressed in PRSPs, CASs, SSPs, OPs)\. "
15\. The general objective "to improve the living conditions of the low-income population
living in the low-lying areas of the city (ofAntananarivo) and in the Plain" was relevant and fully
consistent with the Bank's current sectoral assistance strategy and corporate goals and policies\.
Consequently, the project relevance is rated high\. The specific project objectives were also
consistent with the country CAS and for this reason as well the relevance is rated high\. The
project set out to improve the living conditions by resolving the problem of regional flooding
which arguably affected the low-income population of Antananarivo disproportionately since
they constituted the majority of residents in the flood-prone areas\. The project also attempted to
provide drainage of local rainwater and the collection of sanitary wastewater which remained a
serious public health hazard among the low-income population who suffered disproportionately
from the endemic cholera in Madagascar\. The third objective of raising agricultural productivity
was also of high priority to stimulate local economic development and raise income levels of the
farmers\. Finally, the fourth objective of increasing fiscal revenue, was highly relevant since in its
absence the sustainability of the project would riot exist\.
Efficacy
16\. 'Efficacy is defined as: "the extent to which the project's objectives were achieved, or
expected to be achieved, taking into account their relative importance\." The efficacy of the
project is rated modest since major objectives were met, or expected to be met, but with
significant shortcomings\. At project closing the principal project objective to improve the living
conditions of the low-income population had only been achieved partially as it related to the flood
control\. Two of the remaining specific project objectives to improve living conditions through
improved rainwater drainage and sanitary sewerage and extension and improvement of irrigation
works were achieved albeit with significant shortcomings\. The right-hand bank of the Ikopa River
now is enjoying improved flood control through the raised river embankment, but the left-hand
bank is more prone to flooding since the embankment on that side was not raised\. Similarly, the
rainwater drainage has been temporarily improved for a portion of the originally intended area but
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the rapid silting-up of the surface canals decreases the capacity of the canals to drain the
rainwater\. On a positive note, the new irrigation canal GR is operational, allowing the
Andriantany Canal to be used exclusively for drainage\. This is a considerable improvement over
the situation without the project where the Andriantany Canal had to meet the sometimes
conflicting needs of irrigation and rainwater drainage\.
17\. In contrast, other specific project objectives were not achieved such as the rehabilitation
of the sanitary sewerage system, the upgrading of the solid waste management system, and the
effective updating of the cadastre\. The sanitary sewerage is largely non-operational since sewage
cannot drain into the canals because silting has raised the canal bed above the level of the sewers\.
The problem has been compounded by the breakdown of solid waste collection, which has forced
the residents to use the drainage canals as garbage collection sites\. As a result, the canals have
clogged up and their drainage capacity has been further reduced\. The cadastre was updated as
planned, but strong political opposition from property owners prevented its implementation\.
Efficiency
18\. Efficiency is defined as: "the extent to which the project achieved, or is expected to
achieve, a return higher than the opportunity cost of capital and benefits at least cost compared
to alternatives\." The project efficiency is rated modest because the project fails to meet
sector/industry standards for cost effectiveness\. The efficiency is only relevant for those
objectives that were achieved and excludes those of providing reliable sanitary sewerage, of
providing sanitary solid waste removal, and increasing real estate tax collections\.
19\. The flood control component is the only one that lends itself readily to economic
analysis\. One common way of quantifying the higher productivity of the land and lower damages
to existing infrastructure is to quantify the rise in land value with the project as compared to the
situation (in comparable areas) without project investments\. The Implementation Completion
Report has used this method to estimate the economic rate of return of the flood control works at
17 percent, assuming that half of the reported rise in land values is attributable to the flood
control provided by the project\. But this calculation is likely to exaggerate the economic gains of
the flood control component for three reasons\. First, only about 170 hectares of flood-prone land
has been permanently protected by the construction of two retention ponds, while the ICR uses an
area of 390 hectares for its economic cost benefit calculation\. The remaining three planned
retention ponds could not be constructed due to the closing of the Bank loan on September 30,
1999\. As a consequence, about 220 hectares will likely experience lower rises in land value since
the flood protection cannot be guaranteed to the same degree as for the 170 ha\. Second, the rise in
land values attributable to the flood control project is real but imprecise\. There is anecdotal
evidence of tenfold increases in some areas but the effect from the flood control project is
difficult to disassociate from those resulting from a reactivation of economic activity in the plain,
brought about by mostly foreign investors building industrial plants\. However, such anecdotal
data are imprecise and suffer from the influence of speculation in land values\. Third, the rise in
land value in the protected areas of the plain is partially offset by the rise in economic damage to
areas on the left-hand side of the Ikopa River where flood control damage has risen after the
right-hand bank has been protected from flooding\. The reported damage is again anecdotal but
potentially affects about 10 of the 18 municipalities in the Antananarivo Metropolitan Area which
represent a population of some 260,000 inhabitants\. The affected populations are now demanding
equal flood protection to the right-hand bank\.
'7
Project Outcome
20\. The rating of the project outcome combines the sub-ratings of the relevance, efficacy, and
efficiency of the project\. Outcome is defined as "the extent to which the project's major relevant
objectives were achieved, or are expected to be achieved, efficiently\." Under this definition the
outcome of this project is rated moderately unsatisfactory since the project is expected to
achieve only some of its major relevant objectives of improving the living conditions of the low-
income population in the low-lying areas of Antananarivo\. The positive rate of return calculated
in the ICR exaggerates the benefits but likely remains positive\.
Institutional Development Impact
21\. 'Institutional development impact is defined as "the extent to which a project improves
the ability of a country or region to make more efficient, equitable and sustainable use of its
human, financial, and natural resources through: (a) better definition, stability, transparency,
enforceability, and predictability of institutional arrangements and/or (b) better alignment of the
mission and capacity of an organization with its mandate, which derives from these institutional
arrangements\."
22\. The project institutional development impact is rated negligible because the project is
expected to make little or no contribution to the region's ability to effectively use human,
financial, and natural resources\. (See Annex B for exact definition of rating\.) The rating of the
institutional development impact hardly surprises since the two institutions established under the
project, Autorit6 pour la Protection contre les Inondations de la Plaine d'Antananarivo (APIPA)
and the Service Autonome de Maintenance de la Ville d'Antananarivo (SAMVA) are severely
hampered by their lack of financial resources, political support, and adequate staffing\. No proper
institutional assessment was made at the time of appraisal and APIPA and SAMVA were only
created some four years into the project, far too late to stand a good chance of operating and
maintaining the facilities\. At present the funding of the two institutions is running about one-third
of needs\. As a result, APIPA cannot cope with the maintenance requirements and even less with
the future investment needs\. It is responsible for operating, maintaining, and extending the
hydraulic infrastructure that protects the polder area of the plain, but the task is beyond its
capacity\. Its administrative and financial weaknesses have prevented APIPA from protecting
existing infrastructure and the result has been destruction of the embankment in certain sections
by the theft of structural iron and protective rocks\.
23\. SAMVA is largely non-operational\. Its double mandate to collect and dispose of solid
waste and operate and maintain the rainwater drainage and sanitary wastewater exceeds
SAMVA's modest financial and human capacity\. Its ability to sub-contract solid waste
management with a private operator has failed because of insufficient reliable financing\.
Similarly, lack of financing has prevented it from taking over more than the operation and
maintenance of 32 km of rainwater drains and 15 km of sanitary sewers, as compared to another
128 km of combined sewers that continue to be under the nominal responsibility of the
Antananarivo Municipality\. In practice, neither the Antananarivo Municipality nor SAMVA are
up to the task of maintaining and extending the infrastructure entrusted to them\.
24\. In summary, the two institutions belatedly created under the project were not based on a
comprehensive institutional analysis and are unable to discharge their limited duties for lack of
political support, which has translated into insufficient resources\. The problem of insufficient
financial resources will remain until APIPA and SAMVA are given a clear mandate to bill and
collect sufficient user charges\.
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Sustainability
25\. Sustainability is defined as "the resilience to risk of net benefits flows over time\.
Assessments of sustainability take into account nine factors, including technical, financial, and
economic resilience\. " The sustainability of the project is rated unlikely since the project's net
benefits are unlikely to be sustained in the face of the insufficient administrative and political
support and insufficient financial and human resources provided the institutions responsible for
operating, maintaining, and extending the systems\. Table I on page 5 shows that 8 out of 11
project components are rated "unlikely" to provide sustainable net benefits\.
26\. The key determinant of likely sustainability is the level of financial resources provided\.
Table 2 compares the approved funding levels with the required levels\. The required annual
funding levels are in excess of 14 billion Madagascar francs (FMG) but only 4\.3 billion FMG
have been budgeted for fiscal year 2000\. Including an allowance for the necessary maintenance of
flood control works upstream of the project polder area, and of irrigation structures, domestic
funding of operations and maintenance is likely to be in the order of 20 percent of required
funding\. Over time, maintenance will become more costly as facilities age and the imbalance
between requirements and needs will worsen unless corrective measures are implemented\.
Table 2 - Annual Domestic Funding Levels Related to Key Institutions
(Billions of Madagascar francs, FMG)
Responsible Agency O&M Responsibility Required Funding Approved Funding
APIPA Ikopa River Dikes
Dredging Andriantany
Ambodimita Pumping
Sub-total APIPA 7\.5 2\.4
G6nie Rural Dikes upstream polder Undetermined 0
Meteorology Department Early warning system 2\.3 0
SAMVA Sanitary Sewerage
Solid waste collection
Sub-total SAMVA 4\.0 1\.9
Irrigation user associations Irrigation canals Undetermined 0
27\. In the case of APIPA, the approved revenue sources comprise a surcharge on the initial
investment costs of landfills and an annual fee thereafter\. These charges are costly to bill and
collect and are subject to considerable political influence\. APIPA's difficulties are exacerbated by
the fact that the Antananarivo Municipal Council determines the assessment percentages each
year\. The Municipal Council is not a strong supporter of local taxation and is less so now that it is
in direct political opposition to the national government with which APIPA is identified\.
28\. The sophisticated early warning system that was recently completed and is fundamental
to effective and timely flood control has up till now been operated by staff from El6ctricit6 de
France under French grant financing\. Madagascar cannot continue relying on foreign grants to
fund current expenditure and the four year cut-off in funding from Agence Francaise de
D6veloppement from 1993-97 is proof of the risks of continued reliance on outside financing\.
29\. SAMVA relies for its funding on a 10 percent surcharge on the Antananarivo water user
fees, billed and collected by JIRAMA\. It has been decided to increase the surcharge to the 15 to
25 percent range\. However, JIRAMA has little incentive to raise the surcharge because they
receive only a small fixed remuneration per bill collected\. This is poor compensation for the risks
that JIRAMA's consumers will resist the payment of the entire water bill\.
9
Bank Performance
30\. Bank performance is defined as "the extent to which services provided by the Bank
ensured quality at entry and supported implementation through appropriate supervision
(including ensuring adequate transition arrangements for regular operation of the project)\."
Here the Bank performance is rated unsatisfactory\.
31\. The identification of the project is rated unsatisfactory\. The project was excessively
complex in comparison to local implementing and financial capacity and the ownership was
doubtful\. There was also a poor match between the general objectives and the components of the
project\. The unsatisfactory quality of the identification was compounded by preparation that is
also rated unsatisfactory\. The institutional feasibility had not been analyzed and resolved at the
time of appraisal and second-best institutional solutions were not implemented until five years
into the project implementation period\.
32\. In contrast, the quality of Bank supervision was satisfactory but could not compensate
for the serious flaws in identification and preparation\. Finally, the follow-up of the project is rated
unsatisfactory because no follow-up to the project is planned that might correct the sub-optimal
project outcome, lack of sustainability, and lack of an urban strategy for the Antananarivo
Metropolitan Area\.
Borrower Performance
33\. Borrower performance is defined as "the extent to which the borrower assumed
ownership and responsibility to ensure quality ofpreparation and implementation, and complied
with covenants and agreements, towards the achievement of development objectives and
sustainability\. " The overall borrower performance is rated unsatisfactory\. The breakdown of the
borrower performance by component is as follows:
* Flood control component:
- Satisfactory for implementation of civil works
- Unsatisfactory for financial support of APIPA
- Unsatisfactory for political support of APIPA
* Rainwater drainage component:
- Unsatisfactory for implementation of civil works
- Unsatisfactory for implementing financial policies to provide SANVA with a
dependable source of revenue
* Sanitary sewage drainage:
- Unsatisfactory for implementing financial policies to provide SANVA with a
dependable source of revenue
* Updating of cadastre:
- Unsatisfactory for implementing the higher property values in the updated
cadastre\.
5\. Lessons and Recommendations
34\. The first, and obvious, lesson of the project is that projects are not sustainable without
viable institutions and supportive policies\. The project provided no institution to plan, operate,
maintain, rehabilitate, and extend the flood control, rainwater drainage, sanitary sewerage, and
10
solid waste management systems\. Without a follow-up urban infrastructure project, the civil
works financed under the project will likely fall into disuse and generate no benefits\.
35\. The second lesson is that it is unrealistic to expect far-reaching reforms to take root in
the limited period of project implementation of externally funded projects\. The two key
institutions, APIPA and SAMVA, were only created five years after the loan had been approved
and four years before the Bank loan closed\. In many ways their creation was perceived by certain
local political interests as an imposition and was therefore resisted\. It is unlikely that either one of
these institutions will prosper in the absence of follow-up support from within the country or
from external financing and technical assistance\.
36\. The third lesson is that project design must carefully match project ambitions and
design to the administrative and financial capacity of the country\. The audited project
actually combined four quite disparate sub-projects: (1) one to control flood damage; (2) one to
expand drainage and sanitary sewerage; (3) one to boost rice production through increased
irrigation; and (4) one to boost real estate tax collections in the Antananarivo municipality\. Each
of these projects was ambitious in its own right in the light of the country's previous stagnation
and history of economic and political challenges\. Again, an Adjustable Program Lending would
likely have been a more efficient instrument to reduce risks and encourage orderly project
implementation through carefully gauging and confirming the political support for each project
component\.
37\. The project-specific recommendations are for follow-up financial and technical
assistance to provide:
* Flood management works on the left bank of the Ikopa River to avoid loss of property
and life in the future, the likelihood of which has increased as a result of the flood control
measures undertaken under the project for the right bank of the Ikopa River
* Solid waste management to remove a grave health risk in densely populated areas where
cholera is recurring
* Sanitary sewerage and rainwater drainage rehabilitation and extensions to remove the
worst foci of cholera\.
38\. It is further recommended that autonomous agencies be created or strengthened to:
* Manage the hydraulic structures to protect against periodic flooding on both the right and
left banks of the Ikopa River upstream of the Bevomanga threshold\. The needed agency
would likely be an Ikopa River Basin Authority where all stakeholders in the Ikopa River
would coordinate their investments and operating decisions to ensure optimal use of the
river\.
* Manage solid waste collection and disposal for the entire Antananarivo Metropolitan
Area\. It is suggested that SAMVA could take on this role that it has dejure at present but
that it fails to fulfill defacto\.
39\. It is further recommended that in order to provide the autonomous agencies with a
dependable source of operating revenue that:
* APIPA and its successor broaden its revenue base by gaining access to the local real
estate tax, possibly to national budget support and possibly to a new kind of tax that
would capture, before and during the investment, a portion of the rise in land value that
would result from the flood control investments
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* SAMVA and its successor gain jurisdiction for solid waste collection and disposal in the
entire Antananarivo Metropolitan Area and that it gain the authority and capacity to levy
a separate solid waste management fee\.

13 Annex A
Annex A\. Basic Data Sheet
MADAGASCAR THE ANTANANARIVO PLAIN DEVELOPMENT PROJECT
(CREDIT 2117)
Key Project Data (Amounts in US$ million)
Appraisal Actual or Actual as % of
Estimate current estimate Appraisal estimate
Total project costs 68\.60 63\.28 92
Project Dates
Original Actual
Appraisal 06/23/89 06/23/89
Effectiveness 01/31/91 01/31/91
Credit Closing 6/30/97 9/30/99
Staff Inputs (staff weeks)
Actual Weeks Actual US$000
Appraisal/Negotiation 57\.20 131\.2
Supervision 213\.40 757\.7
Total 270\.60 888\.9
Mission Data
Performance rating'
Date No\. of Specialization
(month/year) persons represented Implementation Development
Status objectives
Identification/ 2/86 1 Eng N\.A\. N\.A\.
Preparation
Identification/ 12/86 1 Eng N\.A\. N\.A\.
Preparation
Identification/ 2/88 2 Eng, FMS N\.A\. N\.A\.
Preparation
Identification/ 10/88 4 Eng, UrbPlan, Econ\. N\.A\. N\.A\.
Preparation FMS
Identification/ 2/89 6 2Eng\. FMS, Urb Plan, N\.A\. N\.A\.
Preparation Econ, Ag
Appraisall 7/89 6 2Eng, Econ, 2 FMS, Ag N\.A\. N\.A\.
Negotiation
Appraisal/ 12/89 3 2Eng, FMS N\.A\. N\.A\.
Negotiation
Supervision 1 2/91 3 2Eng, FMS N\.A\. N\.A\.
Supervision 2 2/92 3 2Eng, FMS N\.A\. N\.A\.
Supervision 3 7/92 2 Eng\. FMS N\.A\. N\.A\.
i\. 1: Highly satisfactory; 2: Satisfactory; 3: Unsatisfactory; N/R; Not Rates\.
14 Annex A
Performance rating'
Date No\. of Specialization
(month/year) persons represented Implementation Development
Status objectives
Supervision 4 2/93 2 2 Soc N\.A\. N\.A\.
Supervision 5 3/93 2 Eng, FMS, Soc\. N\.A\. N\.A\.
Supervision 6 7/93 3 Eng, FMS, Soc, Research N\.A\. N\.A\.
Supervision 7 12/93 4 Eng, FMS, Res N\.A\. N\.A\.
Supervision 8 6/94 3 Eng, 2FMS S S
Supervision 9 11/94 4 Eng, 2FMS, Research S U
Supervision 10 5/95 3 Eng, 2FMS, Research U U
Supervision 11 10/95 4 2Eng, 2FMS U S
Supervision 12 6/96 4 Eng, Econ, FMS, U S
Research
Supervision 13 10/96 4 Eng, 2FMS, Econ, U S
Research
Supervision 14 3/97 5 U S
ICR 12/97 3 Egn, 2FMS U S
ICR 4/97 3 Planner, Eng, Soc U S
ICR 10/97 3 Planner, Eng, FMS S S
ICR 3/99 3 Planner, FMS, Research S U
ICR 10/99 3 Planner, Econ, FMS S U
15 Annex B
Annex B\. OED Project Evaluation Criteria
Definitions of Eight Key Criteria
1\. Relevance of Objectives
Definition: the extent to which the project's objectives are consistent with the country's current
development priorities and with current Bank country and sectoral assistance strategies and
corporate goals (expressed in PRSPs, CASs, SSPs, OPs)
Ratings
(i) Each type of objective will be rated as follows:
High Project objectives of this type play a key role in the country's current development
priorities and the Bank's current country assistance strategy, and are fully
consistent with the Bank's current sectoral assistance strategy and corporate goals
and policies
Substantial Project objectives of this type are mostly consistent (minor shortcomings only)
with the country's current development priorities, the Bank's current country and
sectoral assistance strategies, and the Bank's current corporate goals and policies
Modest Project objectives of this type have one or more significant inconsistencies with the
country's current development priorities, the Bank's current pountry and sectoral
assistance strategies, or the Bank's current corporate goals and policies
Negligible Project objectives of this type are mostly inconsistent with, and possibly
counterproductive to, the country's current development priorities, the Bank's
current country and sectoral assistance strategies, or the Bank's current corporate
goals and policies
(ii) Overall relevance will be rated as follows:
High Most of the major objectives were highly relevant
Substantial Most of the major objectives were at least substantially relevant
Modest Most of the major objectives were not highly or substantially relevant
Negligible Most of the major objectives were irrelevant or negligibly relevant
2\. Efficacy
Definition: the extent to which the project's objectives were achieved, or expected to be achieved,
taking into account their relative importance
Ratings
(i) Each type of objective will be rated as follows:
High Objectives of this type were fully met, or expected to be fully met, with no
shortcomings
Substantial Objectives of this type generally were met, or expected to be met, with only minor
shortcomings
16 Annex B
Modest Objectives of this type were met, or expected to be met, but with significant
shortcomings
Negligible Objectives of this type were not met, or expected not to be met, due to major
shortcomings
(ii) Overall efficacy will be rated as follows:
High Major objectives were fully met, or expected to be fully met, with no shortcomings
Substantial Major objectives were met, or expected to be met, with only minor shortcomings
Modest Major objectives were met, or expected to be met, but with significant
shortcomings
Negligible Most objectives were not met, or expected not to be met, due to major
shortcomings
3\. Efficiency
Definition: the extent to which the project achieved, or is expected to achieve, a return higher than
the opportunity cost of capital and benefits at least cost compared to alternatives
Ratings
High Project represents sector/industry best practice in terms of cost effectiveness, and
economic returns (if estimates are available) greatly exceed the opportunity cost of
capital
Substantial Project meets sector/industry standards in terms of cost effectiveness, and
economic returns (if estimates are available) exceed the opportunity cost of capital
Modest Project fails to meet sector/industry standards in terms of cost effectiveness, and
economic returns (if estimates are available) are near the opportunity cost of
capital
Negligible Project is well below sector/industry standards in terms of cost effectiveness, and
economic returns (if estimates are available) are significantly below the
opportunity cost of capital
4\. Sustainability
Definition: the resilience to risk ofnet benefits flows over time\. Assessments ofsustainability take into
account nine factors, including technical, financial, and economic:
* Technical resilience
* Financial resilience (including policies on cost recovery)
* Economic resilience
* Social support (including conditions subject to Safeguard Policies)
* Environmental resilience
* Government ownership (including by central governments and agencies, and availability
of O&M funds)
* Other stakeholder ownership (including local participation, beneficiary incentives, civil
society/NGOs, private sector)
* Institutional support (including supportive legal/regulatory framework, and
organizational and management effectiveness)
* Resilience to exogenous influences (including terms of trade, economic shocks, regional
political and security situations)
17 Annex B
Ratings
(i) Each factor will be rated as follows:
High The factor clearly is currently met and highly likely to continue, contributing to
sustainability of net benefits
Substantial The factor is currently met and likely to continue, contributing to sustainability of
net benefits
Modest The factor may currently be met, but it seems unlikely to continue, to the detriment
of sustainability of net benefits
Negligible The factor is currently not met and is highly unlikely to be met, to the detriment of
sustainability of net benefits
(ii) Overall sustainability will be rated as follows:
Highly Likely Project net benefits flow meets most of the relevant factors determining overall
resilience at the "high level", with all others rated at the "substantial" level
Likely Project net benefits flow meets all relevant factors determining overall
resilience at the "substantial"' level
Unlikely Project net benefits flow meets some but not all relevant factors determining
overall resilience at the "substantial" level
Highly Unlikely Project net benefits flow meets few of the relevant factors determining overall
resilience at the "substantial" level
Not Evaluable Insufficient information available to make a judgment
5\. Institutional Development Impact (IDI)
Definition: the extent to which a project improves the ability ofa country or region to make more
efficient, equitable and sustainable use of its human, financial, and natural resources through: (a)
better definition, stability, transparency, enforceability, and predictability of institutional
arrangements and/or (b) better alignment of the mission and capacity of an organization with its
mandate, which derives from these institutional arrangements\. IDI includes both intended and
unintended effects of a project\.
Ratings
(i) Each objective type will be rated as follows:
High Project objectives of this type made, or are expected to make, a critical
contribution to the country's/region's ability to effectively use human, financial,
and natural resources
Substantial Project objectives of this type made, or are expected to make, a significant
contribution to the country's/region's ability to effectively use human, financial,
and natural resources
Modest Project objectives of this type increased, or are expected to increase, to a limited
extent the country's/region's ability to effectively use human, financial, and natural
resources
18 Annex B
Negligible Project objectives of this type made, or are expected to make, little or no
contribution to the country's/region's ability to effectively use human, financial,
and natural resources
(ii) Overall institutional development impact will be rated as follows:
High Project as a whole made, or is expected to make, a critical contribution to the
country's/region's ability to effectively use human, financial, and natural
resources, either through the achievement of the project's stated ID objectives or
through unintended effects
Substantial Project as a whole made, or is expected to make, a significant contribution to the
country's/region's ability to effectively use human, financial, and natural
resources, either through the achievement of the project's stated ID objectives or
through unintended effects
Modest Project as a whole increased, or is expected to increase, to a limited extent the
country's/region's ability to effectively use human, financial, and natural
resources, either through the achievement of the project's stated ID objectives or
through unintended effects
Negligible Project as a whole made, or is expected to make, little or no contribution to the
country's/region's ability to effectively use human, financial, and natural
resources, either through the achievement of the project's stated ID objectives or
through unintended effects
6\. Outcome
Definition: the extent to which the project's major relevant objectives were achieved, or are expected
to be achieved, efficiently\. The outcome criterion takes into account relevance at the time of the
evaluation: whether the operation's objectives are consistent with the country's current development
priorities and with current Bank country and sectoral assistance strategies and corporate goals;
efficacy: whether the operation is expected to achieve its stated goals; and efficiency: the relation of
results to costs\.
Ratings
Highly Satisfactory Project achieved or exceeded, or is expected to achieve or exceed, all
its major relevant objectives efficiently without major shortcomings
Satisfactory Project achieved, or is expected to achieve, most of its major relevant
objectives efficiently with only minor shortcomings
Moderately Satisfactory Project achieved, or is expected to achieve, most of its major relevant
objectives efficiently but with either significant shortcomings or
modest overall relevance
Moderately Unsatisfactory Project is expected to achieve its major relevant objectives with major
shortcomings or is expected to achieve only some of its major relevant
objectives, yet achieve positive efficiency
Unsatisfactory Project has failed to achieve, and is not expected to achieve, most of
its major relevant objectives with only minor development benefits
Highly Unsatisfactory Project has failed to achieve, and is not expected to achieve, any of its
major relevant objectives with no worthwhile development benefits
7\. Bank Performance
19 Annex B
Definition: The extent to which services provided by the bank ensured quality at entry and supported
implementation through appropriate supervision (including ensuring adequate transition
arrangements for regular operation of the project)
Ratings
Highly Satisfactory Bank performance was rated as Highly Satisfactory on both quality at entry\.
and supervision, or Highly Satisfactory on the one dimension with
significantly higher impact on project performance and at least Satisfactory
on the other
Satisfactory Bank performance was rated at least Satisfactory on both quality at entry and
supervision, or Satisfactory on the one dimension with significantly higher
impact on project performance and no less than Unsatisfactory on the other
Unsatisfactory Bank performance was not rated at least Satisfactory on both quality at entry
and supervision, or Unsatisfactory on the one dimension with significantly
higher impact on project performance and no higher than Satisfactory on the
other
Highly Unsatisfactory Bank performance was rated as Highly Unsatisfactory on both quality at
entry and supervision, or Highly Unsatisfactory on the one dimension with
significantly higher impact on project performance and no higher than
Unsatisfactory on the other
8\. Borrower Performance
Definition: the extent to which the borrower assumed ownership and responsibility to ensure quality
ofpreparation and implementation, and complied with covenants and agreements, towards the
achievement of development objectives and sustainability
Ratings
Highly Satisfactory Borrower performance was rated Highly Satisfactory on at least two of
the three performance factors
Satisfactory Borrower performance was rated at least Satisfactory on two of the three
factors
Unsatisfactory Borrower performance was not rated at least Satisfactory on two of the
three factors
Highly Unsatisfactory Borrower performance was rated Highly Unsatisfactory on at least two
of the three factors | APPROVAL |
P162737 | \.
PROJECT INFORMATION DOCUMENT (PID)
IDENTIFICATION/CONCEPT STAGE
Report No\.: PIDC100512
\.
Project Name Solomon Islands Mining Governance
Region EAST ASIA AND PACIFIC
Country Solomon Islands
Financing Instrument IPF
Project ID P162737
Borrower Name Ministry of Finance and Treasury
Implementing Agency Ministry of Mines, Energy and Rural Electrification
Environmental Category B - Partial Assessment
Date PID Prepared 17-Jul-2017
Estimated Date of Approval 30-Jun-2017
Initiation Note Review The review did authorize the preparation to continue
Decision
\.
I\. Introduction and Context
Country Context
The Solomon Islands is a small, remote and widely dispersed archipelago in the South Pacific\. It is
classified as being low-income and Fragile, Conflict and Violence affected\. The population remains
predominantly rural-based (80%) and economic activity in the formal sector is narrowly based, heavily
concentrated on Guadacanal, especially in the capital Honiara\. The incidence of poverty remains high
- an estimated 25\.1% of Solomon Islanders live below the global extreme poverty line - and economic
opportunity is distributed very unevenly\. Plantation, logging and fishery based commercial activities
have dominated since Independence in 1978, with very little change observed in the structure of the
economy in over four decades\. Opportunities for new and diversified sources of growth are limited,
with tourism offering some potential, as well as mining\.
The country has endured years of fragility, with conflict manifesting itself in periodic civil strife, and
the economy has been vulnerable to external shocks, resulting from its dependence on imports of
critical commodities and fuel and volatility in the price of its commodity exports\. The Solomon
Islands has shown some improvement in the quality of governance since the period of civil strife,
however, government effectiveness and regulatory quality continue to be problematic\. There are
especial challenges that derive from the adaptation of traditional Melanesian governance structures to
deal with the imperatives of modern commercially driven activities, such logging and mining\.
Sectoral and Institutional Context
Development of the Solomon Islandsâ mineral resources has for over two decades been talked about as
a source of growth and economic diversification\. Yet today, even after the global mining sector
enjoyed several bumper years, the country has failed to take advantage of this opportunity\. The Gold
Ridge mine, which was the first significant mine to be developed in the country in the late 1990s, has
faced repeated social and economic challenges and land and community related disputes have, in
Page 1 of 5
conditions of weak sector oversight, stopped the progress of this and a number of other projects\.
Such is the mineral potential of the country, however, that even in these times of low mineral prices
there continues to be interest in the possibility of evaluating mineral deposits and developing mines\.
The Court of Appeal verdict on the dispute between Axiom and Sumitomo over nickel prospecting
rights on Isabel was published in March 2016, clearing the way for fresh applications (most likely
under a competitive tender) for rights to world class nickel deposits\. If investors were re-assured about
the conditions for launching a long-term mining project, substantial exports, government revenues and
local development opportunities could result\.
These mineral development prospects, while encouraging, test the ability of the Government to
oversee orderly and responsible mineral development\. There is an urgent need to get to grips with
some of the factors that have inhibited the development of the countryâs mineral sector on a
sustainable basis\. The articulation of a National Mining Policy (NMP) and consequential legislative
changes at this time has taken on greater importance\. A NMP was prepared by an Inter-Ministerial
Taskforce chaired by the Permanent Secretary of the Ministry of Mines, Energy and Rural
Electrification (MMERE) and during October 2016 underwent consultation at provincial level after its
public disclosure\. The Minister obtained Cabinet endorsement of the NMP in March 2017 and it was
given its public launch in June 2017\.
The NMP proposes measures to ensure that only reputable companies can apply to explore and mine
in the Solomon Islands (and imposes higher governance standards on existing right holders), so that
there is a framework in place to ensure a higher-standard of performance and ultimately company
accountability\. The Government must nevertheless also address serious weaknesses in the capacity of
MMERE, through the Mines Division, to regulate the mining sector\. It needs to be more strategically-
driven, undertake operationally considered budget planning, develop the skills of its staff and conduct
rigorous technical oversight of exploration and mining operations\. The NMP also proposes an
expanded role for provincial governments (in land identification and registration, and primary
responsibility for artisanal mining) for which capacity building will be necessary\. Finally, it contains
proposals to change the statutory basis on which Ministerial decisions are made concerning the award
of mineral rights and negotiation of investment terms so that decision making is more rules-based and
transparent\.
Such legislative and institutional strengthening is a major challenge and one for which MMERE has
repeatedly sought support both internally through requests for budget appropriations (in the last year
the appropriation was one-fifth of the request), and externally\. Moreover, communities confronted by
formal and informal mineral operations seek clarity as to the roles and responsibilities of government
agencies and miners, while demanding outreach and support-mechanisms so that their participation in
mineral development is more consensual and less prone to conflict\. Finally, reputable mining
companies seek a level playing field and assurance that investment can proceed with minimal delay
and predictable legal and commercial terms\.
By focusing on orderly mining by reputable companies, support-mechanisms for community
engagement and participation in benefit sharing arrangements and a coherent and implementable
regulatory framework, the NMP foresees mineral sector development that is more likely to spread
economic opportunity outside Honiara, diversify the economic base and thereby contribute to reducing
poverty and shared prosperity\.
Relationship to CAS/CPS/CPF
SIMGov will build on the existing World Bank executed (DFAT-funded) Catalytic Support for the
Mining Sector Development Project\. This project ($324,000) was launched in April 2015 with a focus
on i) facilitating stakeholder consultation leading to the finalization of a NMP and ii) identifying
measures needed to implement the NMP, including legislative and institutional reforms\. The funds
were fully committed to enable two advisers hired by the World Bank to continue to support
achievement of these objectives up to December 2016\. The NMP is informed by broader engagement
Page 2 of 5
of the World Bankâs governance and social development practices, especially in terms of landowner
and community engagement and benefit-sharing\. During preparation of SIMGov, the participation of
country team experts in these areas will be essential\.
A formal request for support through SIMGov was received in August 2016 from MMERE\. The CMU
supported the program financed by DFAT through the Catalytic Fund and has worked with the GP
team in seeking funding to sustain this support into 2017 and beyond\. No other donor has existing
commitments to support the Government specifically on mining sector development, other than the
above-mentioned support of DFAT\.
This proposal supports the objectives of the World Bank Country Partnership Strategy (CPS 2013-
2017), which specifically pledges to support the Solomon Islands to develop programs to maximize
sustainable growth and returns in the mining sector, and support opportunities for new economic
activities around mining, while addressing key constraints to inclusive growth\. (Outcome # 2 of the
CPS is "Enhanced regulatory framework, public sector capacity and community benefits in the mining
sector")\. The Systematic Country Diagnostic underpinning preparation of the next CPS is being
prepared\. Mining governance refrom is identified as a Tier 1 priority\.
\.
II\. Project Development Objective(s)
Proposed Development Objective(s)
The objective of the project is to provide key strategic support to strengthen governance, the
legislative framework, and community engagement in the mining sector in the Solomon Islands
Key Results
Indicator 1: Mining sector legislation submitted by MMERE for approval of the competent body in
line with the National Mining Policy [Yes/No - Act]
Indicator 2: Inspection guidelines and procedures conforming to good regulatory practices employed
by MMERE to conduct site visits to prospecting and mining licenses [% of licenses â 100% by
closing]
Indicator 3: Landowners and mining-affected communities able to obtain useful information and
advice in relation to their engagement in mineral development in at least one Province [Yes/no â
qualifying measure TBD] Gender disaggregated monitoring and suitable indicator TBD
Indicator 4: Numbers of training sessions or workshops carried out as part of MMERE staff
development program and numbers of persons trained by target groups, including gender
disaggregated [escalating targets by closing]
\.
III\. Preliminary Description
Concept Description
IV\. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment OP/BP 4\.01 X
Natural Habitats OP/BP 4\.04 X
Forests OP/BP 4\.36 X
Page 3 of 5
Pest Management OP 4\.09 X
Physical Cultural Resources OP/BP 4\.11 X
Indigenous Peoples OP/BP 4\.10 X
Involuntary Resettlement OP/BP 4\.12 X
Safety of Dams OP/BP 4\.37 X
Projects on International Waterways OP/BP 7\.50 X
Projects in Disputed Areas OP/BP 7\.60 X
\.
\.
V\. Financing (in USD Million)
Total Project Cost: 0\.4 Total Bank Financing: 0
Financing Gap: 0
Financing Source Amount
Extractives Global Programmatic Support 0\.4
\.
\.
VI\. Contact point
\.
\.
World Bank
Contact: Bryan Christopher Land
Title: Lead Oil and Gas Specialist
Tel: 5720+71276
Email: bland@worldbank\.org
\.
\.
Borrower/Client/Recipient
PHBORROWERSEC
TION
PHBORROWERSEC
TION
Name: Ministry of Finance and Treasury
PHBORROWERSEC
Contact: Mckini Dentana
TION
PHBORROWERSEC
Title: Under Secretary Economics
TION
PHBORROWERSEC
Tel: +67721058
TION
Email: mdentana@mof\.gov\.sb
\.
\.
\.
Implementing Agencies
PHAGENTPARTNER
SECTION
Name: Ministry of Mines, Energy and Rural Electrification
PHAGENTPARTNER
SECTION
Contact: Thomas Toba
PHAGENTPARTNER
SECTION
Title: Acting Director of Mines
PHAGENTPARTNER
SECTION
Tel: 67721522
PHAGENTPARTNER
SECTION
\.
Email: thomas@mines\.gov\.sb
\.
\.
VII\. For more information contact:
\.
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Page 4 of 5
Web: http://www\.worldbank\.org/projects
Page 5 of 5 | APPROVAL |
P093812 |  ICRR 13463
Report Number : ICRR13463
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 01/13/2011
PROJ ID : P093812 Appraisal Actual
Project Name : Transport Sector US$M ):
Project Costs (US$M): 225\.0 175\.1
Support Project
Country : Romania Loan/ US$M ):
Loan /Credit (US$M): 180\.0 123\.3
Sector Board : TR US$M):
Cofinancing (US$M ):
Sector (s): Roads and highways
(50%)
Railways (45%)
Central government
administration (5%)
Theme (s): Trade facilitation and
market access (40% -
P)
Regional integration
(20% - S)
Rural services and
infrastructure (20% -
S)
Injuries and
non-communicable
diseases (20% - S)
L/C Number : L4842
Board Approval Date : 02/11/2006
Partners involved : Closing Date : 12/31/2008 12/31/2009
Evaluator : Panel Reviewer : Group Manager : Group :
Peter Nigel Freeman Robert Mark Lacey IEG ICR Review 1 IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
The project development objective (PDO) as indicated in both the PAD and the Loan Agreement was to :
"Assist the borrower to reduce transport costs through improvement of the overall quality of national road and railway
networks during the first years of EU accession "\.
The PDO would be achieved through :
In the road sector:
Increasing the percentage of national roads in good condition
Providing sustainable funding for road maintenance, rehabilitation, and road safety through a coherent multi
year rolling program
Improving the capacity within the Romanian road administration (RNCMNR and others) to operate efficiently in
managing road maintenance and rehabilitation \.
In the rail sector:
Reducing the number of hazardous locations and the proportion of sections on the main lines subject to
temporary speed restrictions, through repair and rehabilitation of track infrastructure, signals and electrification
Providing sustainable funding for railway infrastructure maintenance, current and periodic repair and overhaul,
through a coherent multi year rolling program
Improving the capacity within the infrastructure railway company to operate efficiently and effectively in
managing railway maintenance and rehabilitation \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
Component A\. Road Sector Support\. (appraisal estimate US$112\.5 million; actual US$125\.4 million)
Periodic maintenance and current repair works on national roads \. The program was expected to last two years
covering a total of 2,909 km\., with works divided between asphalt concrete overlay for heavily trafficked roads
and single and double surface treatment for medium trafficked roads \.
Technical assistance to RNCMNR, consisting of a pilot for output -based, area-wide, multi year contracts; hiring a
technical advisor to improve management and technical capacity within the organization; conducting a road user
satisfaction survey; and the design of periodic and current repair works \.
Component B\. Railway Sector Support (appraisal estimate US$112\.5 million; actual US$49\.7 million)
Maintenance, current and periodic repair, and overhaul works on interoperable lines, and supply of necessary
goods\. The program consisted of overhauling public infrastructure (i\.e\. track, bridges, tunnels and
embankments), as well as interlocking and signaling and electrification systems; maintenance of the above
public infrastructure; and repair and maintenance of the interlocking, signaling and electrification systems \.
Technical assistance for Romanian National Railways (CFR) consisting of the design and inspection of
maintenance works; training on procurement and financial management; the development of an updated
business plan; the development of a five year maintenance plan based on an effective information technology
(IT) system; and provision of a track geometry car \.
The components were not revised \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The Transport Restructuring Project (TRP) and the Transport Sector Support Project (TSSP) were implemented in
parallel with each other\. Although TRP commenced two years earlier, the Government of Romania (GOR) had not
identified at that time who would be approached to finance the rehabilitation works \. TSSP was conceived as a fast
disbursing operation, and the Borrower did not want any conditionality through attachment to the technical assistance
project, even though a number of factors similarly affected both operations \. Both projects, however, were expected to
be completed at about the same time and to complement each other \.
The estimated project amount at appraisal was US$ 225\.0 million of which US$180 million took the form of a
fast-disbursing sector investment loan, with US$ 45\.0 million counterpart funds from the borrower \. Originally, a SWAP
was considered, but this was abandoned because of Bank dissatisfaction with national procurement regulations \. (A
SWAP arrangement would probably have led to a faster and smoother implementation )\. At closure the Bank had
disbursed US$175\.1 million, but the borrower increased its funding to US$ 86\.4 million\. Some US$35 million was
canceled\. The loan closing date was extended by a year in three stages \. The first three month extension was give
time to the to provide the GOR to take a view on the future of the TRP and TSSP projects, while the second, a one
month extension, was meant to provide the GOR with time to confirm the availability of funding for the extension
period\. The final eight month extension was intended to allow for completion of some of the outstanding work and
procurement\.
3\. Relevance of Objectives & Design:
Objectives
Improving the road and railway infrastructure and management was from the outset a priority in Romania \. Until 2009,
when the economy contracted under the global economic crisis, there had been steady economic growth in the
country and this had put pressure on Romania's transport system \. While the recession may have given a temporary
reprieve to this pressure, the economy is expected to swing back in 2010/2011\. The Country Partnership strategy of
2009, discussed the difficult task of reconciling short term fiscal consolidation with mitigating the social costs of the
crisis, but notes that it is important to put in place the basis for sustainable economic growth in the medium term,
which entails improving critical transport infrastructure and reducing the backlog of maintenance needs \.
The project formed part of GOR's Medium Term Expenditure Framework and was a commitment in terms of
accession arrangements to the EU \. The GOR, however, first considered funding from other sources such as the EU,
and wanted to keep separate the policy related technical assistance project from this investment project \. Talks with
the Bank about implementing organizational issues in the parallel project were making slow progress \. The fact that
the GOR appeared to have a goal to "graduate" from the Bank after accession (ICR p6) and imposed a ceiling on
IBRD projects, showed that at that time the Ministry of Finance was not as committed to this project as the
implementing agencies\. The relevance of the objectives on balance was substantial, but with caveats regarding the
commitment of the Government as a whole \.
Design
There were significant risks for the Bank to finance rehabilitation and maintenance separately from the support for
policy reforms\. In IEG's experience this seldom succeeds \. The dual operation approach significantly increased the
Bank's transaction costs and added to coordination difficulties \. For example, there was negligible achievement with
the third road sub objective because of a lack of progress with the TRP \. It may also have been preferable not to have
mixed the road and rail components in the same project \. Relevance of design was modest\.
4\. Achievement of Objectives (Efficacy):
The PDO was to:
"Assist the borrower to reduce transport costs through improvement of the overall quality of national road and railway
networks during the first years of EU accession \."Modest
This was to be achieved through :
In the road sector:
Increasing the percentage of national roads in good condition \. The proportion of national roads in good condition
improved from 61\.5 percent at the start of the project to 77\.6 percent at closing, exceeding the target of 70\.0
percent (2008)\. Not all of this can be attributed to the Bank project since there were road improvements financed
by other external partners\. (The ICR could, however, have at least roughly worked out the amount attributable to
the Bank project)\. The improvement in condition reflects in part the maintenance and rehabilitation works carried
out on 2,197 km under the project (end 2009) versus 2,909 km estimated at appraisal\. There was also a drop of
between 5 and 10 percent in vehicle operating costs \. The indicator that referred to a reduction in transport costs
was unusable since there is an attribution problem, and it was in any case extremely optimistic \. Nevertheless,
good progress was made in improving a substantial portion of the road network \. Substantial\.
Providing sustainable funding for road maintenance, rehabilitation, and road safety through a coherent multi
year rolling program\. Funding for periodic maintenance and repairs increased by 38\.6 percent exceeding the
target of 30 percent, which improved the sustainability of the network \. However, little is said about regular
attention to routine maintenance, which is equally important \. In 2010, no additional funding was made for road
maintenance reversing some of the progress made \. Modest
Improving the capacity within the Romanian road administration (RNCMNR and others) to operate efficiently in
managing road maintenance and rehabilitation \. Lack of progress under the TRP meant that negligible advance
was possible on reorganization \. The initial bid and draft contract documents for the performance based
maintenance pilot project were reviewed, but delays prevented launching the pilot until after loan closure \. The
capacity of the implementing agency and the contractors to undertake this work had been over -estimated, which
strengthens the concerns about sustainability \. Negligible\.
In the rail sector:
Reducing the number of hazardous locations and the proportion of sections on the main lines subject to
temporary speed restrictions, through repair and rehabilitation of track infrastructure, signaling and
electrification\. Even with the one year extension only about 44 percent of the foreseen value of the railway
component was implemented\. Only 30 percent of the works and 75 percent of the goods were effectively
delivered\. While some speed restrictions were eliminated, this had only a limited influence on achieving the
targets\. The network was severely affected by floods, but also by deferred maintenance \. Negligible\.
Providing sustainable funding for railway infrastructure maintenance, current and periodic repair and overhaul,
through a coherent multi year rolling program \. CFR prepared a draft business plan identifying infrastructure
investments required and this contained an economic evaluation methodology for preparing the annual
maintenance program\. However, it had not been approved by the Board of Directors at closure and funding from
government remains uncertain and unpredictable \. Negligible\.
Improving the capacity within the infrastructure railway company to operate efficiently and effectively in
managing railway maintenance and rehabilitation \. Studies have been carried out for the rationalization of the rail
network under the business process redesign component, and their recommendations are under review, their
actual implementation is uncertain\. Modest\.
5\. Efficiency (not applicable to DPLs):
At appraisal the PAD shows that the road rehabilitation projects yielded an NPV of US$ 165 million for nearly 3,000
km\. of road at a 12 percent discount rate, but no ERR is recorded\. The ICR evaluation, using the Highway Design
Manual (HDM-4) program, based its analysis on a selection of roads on a scenario basis, where the assets are said
to be representative, but the rationale for this selection is not provided \.The selected ERRs in the ICR range from 19
to 92 percent, but because this analysis uses a different methodology and does not substantiate the reasons for the
choice of roads, it cannot be used by IEG to compare appraisal with completion \. Nevertheless, based on available
data the ERR is likely substantial
For the railways the same methodology is used at appraisal and completion and the resultant ERRs are 22 percent
and 16 percent respectively\. Only these figures are shown below\. The lower figure at completion factors in the delays
and the partial cancelation of the loan \. However, it likely does not include the deferred maintenance costs or the
additional costs due to flooding \.
The railway component constituted 50 percent of the project cost at appraisal, but the portion actually completed was
only 28 percent\. The results of the road component, as explained above, are unclear, but are likely substantial
Efficiency, overall, is rated substantial\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 22% 44%
ICR estimate Yes 16% 28%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
While the objective and the sub -objectives were substantially relevant (with qualifications) the design was only
modestly relevant\. It was very risky for the Bank to finance rehabilitation and maintenance separately from policy
issues\. Government commitment to the Bank as a financier was low \. Only the physical road sub-objective was
substantially achieved\. The maintenance financing sub objective was modest since its sustainability was not
demonstrated and Government did not budget any additional funds for road maintenance in 2010\. The capacity
building objective was negligibly achieved \. Regarding the rail sub-objectives two were negligibly achieved and one
modestly\. Weighting the road and rail objectives implies a modest overall efficacy \. M&E was modest and efficiency
substantial with caveats, thus the overall outcome is accordingly rated moderately unsatisfactory \.
a\. Outcome Rating : Moderately Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
The improvements carried out under the project are subject to considerable risk due to uncertainty in the level of
funding and the capacity of the respective agencies \. In the case of roads, although there have been improvements in
the level of funding in recent years, the allocation in the 2010 budget was very limited\. The ICR says little on the
question of the adequacy of routine maintenance \. In the case of the railways the fall off in rail traffic due to the
recession has affected revenues, and hence there is also doubt about whether adequate funding for rail maintenance
can be made available, at least in the short -to-medium term\.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
Quality at entry
The concept of two linked projects using similar teams with the TRP focused on policy and institutional reforms
and TSSP on infrastructure and maintenance was risky \. The TSSP was conceived as a fast -disbursing specific
investment loan to be implemented over two and a half years in preparation for Romania's accession to the EU \.
Although EU grant funds were available for large scale capital investments, funding for maintenance and the
preservation of road and rail infrastructure was lacking \. The funding issue that affected the project during
implementation was to do with GoR's wish to rely on capital markets rather than IBRD loans, which led to caps
being imposed on the loan\. This could not have been foreseen in preparation \. Experience with past projects had
shown that the Romanian implementing agencies were competent in procuring and implementing civil works \. A
number of conditions were set to improve the quality at entry such as getting a written commitment from the
government to the reforms (although such reforms were mostly within the linked TRP project )\. The key PDO
target for the road component of TSSP, however, was badly conceived and could not be measured \. No Quality at
Entry assessment by the Quality Assurance Group was made \.
Supervision
Supervision visits were frequent and there was continuity in team composition, but following delays in
effectiveness and serious floods affecting the project four months into implementation, the prospect of dropping
the rail component was considered and reported to management \. No action, however, was taken by the Bank to
restructure the project at this point \. The issues were subsequently raised in an aide memoire to GOR stating,
inter alia, that lack of clear and consistent government mandates for transport institutions was leading to poor
transport sector performance \. The aide memoire listed seven recommendations (ICR p14)\. Given the financial
budget ceiling imposed by GOR on IBRD financed projects, however, it became impossible to follow these
recommendations and complete the project successfully in the time available \. As time went on the Government
found itself in an even more difficult financial position which worsened as the global crisis developed \. The Bank
team laid out the steps, including lifting budget ceilings that had been imposed by the GOR, that would have been
necessary to complete the project with an extended closure date, but the decision was taken to terminate the
project in the light of a deteriorating financial situation \. US$35 million (almost 20 percent) of the loan was
cancelled\.
at -Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
Government
The GOR appeared to strongly support the project during preparation, but shortly after approval the deteriorating
financial situation undermined commitment \. Annual budget limits or ceilings (both loan and government
contribution) were imposed on IBRD financed projects, constraining the amount to be spent on contracts \. The
ceilings contributed in large measure to the failure to achieve the development objectives \. According to the ICR
(page 15), these budgetary decisions also appeared to reflect the government's goal at that time of graduating
from the Bank and moving to raise debt in the international financial market, while at the same time seeking EU
support\. The fact that the budget ceiling occurred before the main onset of the economic crisis suggests that
while the project may have had strong support from the road and railway organizations, it did not have equivalent
support in the line ministry or with the central economic Authorities \. While the GOR did support additional funding
for road maintenance, this was reversed in 2010 and in that year no additional allocation was made \. The delays
in moving forward with the railway reforms under the parallel project, the TRP, also affected the rail component
under the TSSP\. Performance was unsatisfactory \.
Implementing agencies
RNCMNR performed well initially and also during the last year of the project \. The high staff turnover, especially in
management, was the cause of sub -optimal performance in the intervening period \. There were also qualifications
by the auditors, especially concerning valuation issues, when the entity assumed a new legal status as a joint
stock company\. No information is given as to how these issues were resolved \. There is also an absence of
information regarding audits of the project itself \. Lack of progress on the road classification and related
reorganization issues in the TRP hampered further improvement of the road management system that had been
developed\. Nevertheless overall the RNCMNR was able to progress substantially with the road maintenance
works\.
The performance of CFR was less satisfactory, and this is partly reflected in the lower proportion of the rail
component that had been implemented by closing date \. The 2007 floods impacted the scope of works, delayed
prioritization, and undermined timely completion \. CFR was unable to prioritize works in such a way that would
have maximized the benefits of what could be achieved \. CFR reportedly focused on rail track procurement, but
without linking this aspect to other works and installation activities that would have enabled these investments to
have been made usable\. The reluctance of the implementing agencies, whether through their own decisions or
under instructions from the Government, to utilize the project's technical assistance funds for maintenance
resulted in practically no training or other institutional strengthening activities being undertaken under the project \.
Implementing agency performance was moderately unsatisfactory \.
a\. Government Performance :Unsatisfactory
b\. Implementing Agency Performance :Moderately Unsatisfactory
c\. Overall Borrower Performance :Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
Design
The M&E framework included two project outcome indicators, one for roads - reduction in transport cost - and one for
railways - increase in operating speeds \. Whereas the railway indicator was well selected and simple, the road
indicator, as confirmed in discussions with the project team, posed a serious problem because transport costs are
influenced by many factors in addition to the condition of the roads \. Moreover, the target of a 40 percent reduction in
transport costs appeared highly optimistic \. A reduction in vehicle operating costs is the usual indicator deployed for
this kind of project\. The target value could then have been determined through a modeling exercise comparing the
baseline condition of the roads to the condition at completion \. In addition there were six intermediate outcome
indicators for roads of which three could be measured numerically and three were of the yes /no answer type\. For
railways there were another six of which only two could be measured numerically \.
Implementation
Monitoring data was regularly reported in the PMU's periodic reports to the Bank and discussed with the supervision
missions\. Major floods in 2007 damaged sections of rail track, effectively altering the baselines established, but the
targets were not adjusted\.
Utilization
The data were utilized only by RNCMNR and CFR for their own management control and monitoring purposes \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
The project was classified as environmental category "B"\. TSSP piloted the use of country systems under the
Bank's operational policy OP/BP 4\.00\. Equivalency analysis of the Bank's and Romania's procedures carried out in
2006 concluded there were no gaps between the two sets of procedures and therefore the project was carried out in
conformity with Romanian environmental legislation, (which were also compliant with EU practices )\. Thus no
additional burden was added to the implementing agencies \. The ICR reports that the works under the project were
within existing rights of way, there were no resettlement or land acquisition issues, and this safeguards policy was
not triggered\.
With regard to financial management, there were qualifications by the auditors of RNCMNR, primarily concerning
valuation issues, when the entity assumed a new legal status as a joint stock company \. The qualified auditors'
opinion raised questions about the suitability of the new entity's legal status and the broader issue of longer term
funding\. The ICR is silent about audits of the project \. With regard to procurement, the Bank agreed to use the Bank's
regional sample bidding document in the Romanian language to enable it to be used at RNCMNR's regional
directorates\. This proved to be a success \. The CFR on the other hand chose to develop its own bidding documents,
which took up valuable time and contributed to the delays on the railway component \.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Unsatisfactory Unsatisfactory
Risk to Development Significant Significant
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Unsatisfactory Unsatisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
Inter-dependency of projects raises the risks, thus requiring especial attention at the highest management
levels should issues occur \. An early restructuring in this project coupled with frank discussions with
government about the effects of the budget ceiling would have been appropriate \.
A clear and consistent government mandate for sector institutions is critical for success in project
implementation\. This would comprise a satisfactory financing framework; agreement between the ministries of
transport and finance on the medium term sector budgets; a clear division of responsibilities between the line
transport ministry and the implementing agencies; and stability in the management of those entities \.
When contemplating the design and launch of performance -based maintenance pilots it is important to take
into account the capacity of the local road agency, the capacity and experience of the contractors, and the
size of the pilot\. The project can be customized in accordance with the degree of complexity of design, the
local procurement rules, and staff available to oversee the implementation \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
This ICR is relatively concise and clear, but is harsher in apportioning blame for project failure on the Borrower than
on the Bank, which should have insisted on restructuring the project at an early stage, It could have been improved
with a better comparison between the economic evaluation at appraisal and completion, but this may not have been
worth the effort if the original calculations were no longer available \. Although the selection of roads re -evaluated is
useful, no rationale is given as to how the roads were selected, so it is difficult to know whether they really were
representative\. Also no conclusion is offered concerning the performance rating of the M&E and there was a lack of
discussion concerning the project audits and the follow up of issues raised during the audit of RNCMNR \.
a\.Quality of ICR Rating : Satisfactory | APPROVAL |
P001253 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Reprt No\. 5305
PROJECT PERFORMANCE AUDIT REPORT
KENYA INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1303-RE/CREDIT 650-KE)
October 25, 1984
Operations Evaluation Department
This docent hs a restrictd distributisn an may be used by recipients only in the performance of
their official duties\. Its contests may not otherwise be disclosed without World Bank autherlation\.
ABBREVIATIONS
AFC - Agricultural Finance Corporation
AI - Artificial Insemination
BADEA - Arab Bank for African Economic Development
CBK - Co-operative Bank of Kenya
CBS - Central Bureau of Statistics
CLSMB - Cotton Lint and Seed Marketing Board
CPCS - Co-operative Production Credit Scheme
DCA - Development Credit Agreement
FISS - Farm Input Supply Scheme
FTC - Farmers Training Center
HCDA - Horticultural Crops Development Authority
IADP I - Integrated Agricultural Development Project I
IADP II - Integrated Agricultural Development Project II
IBRD - International Bank for Reconstruction and Development
IDA - International Development Association
KCC - Kenya Co-operative Creameries
KFA - Kenya Farmers Association
KMC - Kenya Meat Commission
KNFC - Kenya National Federation of Co-operatives
MLD - Ministry of Livestock Development
MOA - Ministry of Agriculture
MOCD - Ministry of Co-operative Development
NCPB - National Cereals and Produce Board
OED - Operations Evaluation Department
PCR - Project Completion Report
PMED - Project Management and Evaluation Division
PPA - Project Performance Audit Memorandum
RMEA - Regional Mission in East Africa
SAR - Staff Appraisal Report
SPSCP - Smallholder Production Services and Credit Project
SRDP - Special Rural Development Program
T&V - Training and Visit
USAID - United States Agency for International Development
FOR OFFICIAL USE ONLY
PROJECT PERFORMANCE AUDIT REPORT
KENYA INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1303-KE/CREDIT 650-RE)
TABLE OF CONTENTS
Page No\.
Preface \. i
Basic Data Sheet \. 11
Highlights \. iii
PROJECT PERFORMANCE AUDIT MEMORANDUM
I\. PROJECT SUMMARY \. 1
II\. MAIN ISSUES \. 5
A\. Farm Budgets and Technology \. 5
B\. Co-operative Credit \. 7
C\. Project Organization and Coordination \. 8
D\. Livestock Development \. 9
E\. Conclusions \. 10
Annex 1 Comments from the Borrower \. 11
PROJECT COMPLETION REPORT
I\. Background \. \. 23
II\. Project Formulation \. * \. \. 24
III\. Implementation \. \. \. 33
IV\. Project Costs, Financing, Disbursements, and
Procurement \. 48
V\. Agricultural Impact and Rate of Return \. 50
VI\. Organization and Management \. 52
VII\. Follow-On Project \. 55
VIII\. Specific Issues, Bank Performance and Lessons Learnt \. 57
IX\. Conclusions \. 66
Tables
Appendices
Map
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
PROJECT PERFORMANCE AUDIT REPORT
KENYA INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1303-KE/CREDIT 650-KE)
PREFACE
This is a Project Performance Audit Report (PPAR) on the First
Integrated Agricultural Development Project (IADP I) in Kenya, for which Loan
1303-KE and Credit 650-KE, each in the amount of US$10\.0 million, were
approved in July 1976\. The final disbursement under the Credit was made in
April 1982, when the full amount of the Loan and US$3\.33 million of the
Credit were cancelled\.
The audit report consists of a Project Performance Audit Memorandum
(PPAM) prepared by the Operations Evaluation Department (OED) and a Project
Completion Report (PCR) dated March 30, 1984\. The PCR was prepared by the
Eastern Africa Regional Office\. The audit memorandum is based on a review of
the Appraisal Report (1002-KE) dated May 15, 1976, the President's Report
(P-1876-KE) dated June 15, 1976, and the Credit and Loan Agreements both
dated July 9, 1976\. Correspondence with the Borrower and internal Bank
memoranda on project issues, as contained in relevant Bank files, have also
been studied\. Bank staff associated with the project have also been inter-
viewed\. An OED mission visited Kenya in November/December 1983\. Discussions
were held in Nairobi with officials from the Ministries of Agriculture,
Finance and Planning, and Co-operative Development, and with the Cotton Lint
and Seed Marketing Board and the Co-operative Bank of Kenya\. A field trip
was made to Nyanza and Western Provinces where discussions were held with
officials working with agriculture and co-operatives and with staff from
co-operative unions and societies\.
The PPAM agrees with the conclusions and salient features of the
PCR, which provides a thorough and accurate analysis of the experience with
this project\. The project aimed to improve agricultural development in some
of the least well developed agricultural areas of Kenya\. Although these
areas were, and still are, much in need of assistance, the project was not
well designed and the outcome was unsatisfactory, especially for co-operative
credit, which was originally expected to be the main component of the
project\.
A copy of the draft report was sent to the Borrower and to the
cofinancier, the Arab Bank for Economic Development in Africa, in May 1984\.
Comments received from the Government of Kenya are included in Annex I\.
The audit gratefully acknowledges the assistance provided by many
Government officials and staff from the Co-operative Bank of Kenya, the
Cotton Lint and Seed Marketing Board, co-operative unions and societies\.
PRDJECT PERFORMCK AUDIT EPOAT
1nurA McRAME ACRICULTMAL DBVELOsuI PROJECr
(1OAN 1303-=/CRIT 650-RB)
BASIC DATA SHEEr
EY PRO3ECT DATA
Appraisal Actual or Actual As I of
Escimate sttmated Actual Appraisal Estimate
Total Project Cost (US$ million) 35\.7 19\.0 53
Credit Amount (US$ million) 10\.0 6\.67 67
loa Amount (US$ aillion) /a 10\.0 - 0
Date heard Approval 07101/76
Date Effectiveness 09/09/76 03/15/77
Date PhyaLcal Components Completed 06/81 12/81
Proportion then completed (I) 100 about 50
Closing Date 12/31/81 12/31/81 100
Economic Rate of Return (M) 37 about zero
Financial Performance Poor
Institutional Performance Uask
Agronomic Performance Poor
CUMLATIVE DISBURSEMENTS
FY77 F778 FT79 Ff80 Fr81 F182
Appraisal Estimate (US$ million) 0\.47 3\.05 7\.75 12\.91 17\.72 20\.00
Accual (USS million) 0\.01 1\.07 1\.28 4\.78 5\.79 6\.67
Actual as 2 of estimate 2 35 17 37 33 33
Date of final dLsburaeeat* April 1982
MISSION DATA
Date No\. of Mandays Specializations Performance Types of
Mission (no\. /Yr\. Persons in Field Represented t e Trend if Problem 8
Identification 1972/73/b
Preparation 1974/79
Appraisal 06/75 4 160
Subtotal 160
Supervision 1 01/77 2 10
Supervision 2 04/77 3 15 b,c 2 F,M,P
Supervision 3 07/77 2 45 2 2 M\.P
Supervision 4 /h 1 30 2 2 N\.P
Supervision 5 o7/78 3 30 a\.b,c 2 2 F,M
Supervision 6 04/78 2 10 a\.b\.c 2 1 H\.P,F
Supervision 7 10/78 1 10 2 2 F\.M
Supervision 8 05/79 1 15
Supervision 9 11/79 2 20 a,b,c 2 2 F\.M
Supervision 10 09/80 4 25 a,h\.c,d 2 2 F\.M
Supervis±on 11 08/61 4 60 a,b,c 3 2 X,F\.T,P
Supervision 12 lb 4 50
Supervision 13 NS 3 40
Supervision 14 7W 3 40
Supervision 15 oW63 1 30
Total 430
OTHER PROJECT DATA
Borrower Republic of Kenya
Executing Agency The Ministry of Agriculture li
Fiscal Tear July 1 to June 30
game of Currency (abbreviation) Kenya Shillings (K Shs)
Currency Exchange Rate:
Appraisal Tear Average US$1\.00 - K Sa 8\.05
Intervening Years Average US$1\.00 - K She 10\.00
Completion Tear Average US$1\.00 - K Sha 12\.00
Follow-on Project:
Name: Second Integrated Agricultural Development Project
Credit Number: 959-E
Credit Amount: USS46\.0 million
Date Board Approval: 12/04/79
la All of the Loan and USS3\.33 million of the Credit have been cancelled\.
75 Identified during the Bank Agricultural Sector Survey\.
Tc Preparation done by RHEA and Covernment\.
7-a Agriculturalist; b - Agricultural Economist; c - Flnancial Analyst; d - loan Officer\.
7e- 1 problem free; 2 - moderate problems; and 3 - major problems\.
7 1 - improving; 2 - stationary; and 3 - deteriorating\.
i F Financial; N - Managerial; T - Technical; P - Political; and 0 - Other\.
Ah Continual review and meetings with Covernment by MA\.
71 The Ministry of Agriculture had overall responsibility for Implementing the project\. Other agencies involved
included: NOCD, MD, AFC, CBK, MCPB, CL1SM, MNFC\. MCDA, some 90 cooperative unions and societies and, to a lesser
extent, INC and XCC\.
PROJECT PERFORMANCE AUDIT REPORT
KENYA INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1303-KE/CREDIT 650-KE)
HIGHLIGHTS
The Integrated Agricultural Development Project (IADP) was designed
to help develop several of the poorer agricultural areas of Kenya\. These
were areas which had been largely excluded from other successful Government
development programs, especially those associated with smallholder tea and
coffee production\. IADP was viewed as the first phase of a long term program
for development of smallholder agriculture\. The project aimed to assist
70,000 smallholders to increase production through improved farm planning,
provision of advice on crop and livestock production methods, increased
supplies of farm inputs and strengthening of marketing and co-operative
institutions\. Provision of farm credit was the leading edge of the project,
for 55% of projects costs were allocated for this component\.
The performance of the project has been disappointing and it has
had little sustained impact\. The PCR estimates that the economic rate of
return from the project is close to zero (PCR para\. 5\.06)\. All of the Bank
Loan and one-third of the IDA Credit have been cancelled\. The project
attempted to achieve too much too quickly, despite the fact that the initial
proposals for this project were based on the concept of a small pilot proj-
ect\. IADP was based on unattractive technical packages, the organizational
arrangements were complicated and unworkable, and most of the participating
co-operative societies were extremely weak and unable to administer credit\.
However, some components of the project, including training, livestock and
infrastructural development, have had significant beneficial impact\. The
experience from this project has also contributed to improving the design of
the present generation of agricultural projects in Kenya\.
Some of the lessons learned and other points of interest are as
follows:
- Although many of the participating co-operative societies were
known to be very weak, there was strong political pressure to mount
a large credit program in the project areas (PCR paras\. 8\.01-8\.02)\.
- The decision to allow lending through weak co-operatives, and not
insist on strict creditworthiness criteria, undermined rather than
helped the co-operative sector\. The project has left a legacy of
indebtedness and many of the co-operatives and unions which parti-
cipated are now insolvent (PCR para\. 6\.03)\.
- iv -
- The project design overestimated the strength of most project
implementing agencies, especially co-operatives\. The design would
have been better if it had concentrated on strengthening these
institutions instead of providing largely budgetary support\.
- The project was too complex and the coordinating ministry had
little control over other implementing agencies (PCR para\. 6\.01 and
8\.06)\.
- The technical packages promoted under the project provided insuf-
ficient margin to compensate for the risks involved, and they were
too dependent on the use of purchased inputs (PCR para\. 5\.04 and
8\.05)\.
- The project's monitoring and evaluation component was unsuccessful
(PCR paras\. 3\.27 and 3\.28)\.
- The artificial insemination and cattle dipping programs supported
under the project require large subsidies and they are a drain on
the Government budget\.
- Insufficient time was allowed for gaining experience with IADP I
before proceeding with a large scale second phase project (PCR
para\. 7\.02)\.
- The Government of Kenya (see the Government's comments in Annex 1)
also draws attention to the following lessons and points of
interest:
- The preparation of IADP was based on incomplete data gathered
under a time constraint\.
- There was pressure from both the Government of Kenya and within
the Bank to have a more ambitious project than was envisaged
earlier\.
- The recruitment time for project farmers was not long enough to
allow for proper selection and appraisal\.
PROJECT PERFORMANCE AUDIT MEMORANDUM
KENYA INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1303-KE/CREDIT 650-KE)
I\. PROJECT SUMMARY
1\. The Integrated Agricultural Development Project (IADP I) was the
twelfth agricultural project to be supported by the World Bank and IDA in
Kenya, although it was the first Bank supported project to adopt an
integrated approach to smallholder agricultural development\. The project was
identified first by the agridultural sector mission to Kenya in 1972\.
Project preparation was undertaken by the Ministry of Agriculture (MOA) with
support from the Bank's Regional Mission in East Africa (RMEA)\. The project
was appraised in June 1975 and it became effective in March 1977\.
2\. The total project cost was estimated at appraisal to amount to
US$35\.7 million (K Shs 288 million)\. This was to be financed with a Bank
Loan and an IDA Credit of US$10\.0 million each, a loan of US$5\.0 million from
the Arab Bank for African Economic Development (BADEA), US$6\.0 million from
the Government of Kenya, and farmers' contributions equivalent to US$4\.7
million\.
3\. Prior to the start of this project significant progress had been
made with development of smallholder agriculture in Kenya, but this had been
largely confined to the better agricultural areas, especially in Central
Province, where high value crops such as coffee and tea could be grown\. IADP
I was designed to bring about development in several less well developed
areas\. These included 14 districts in Central, Eastern, Nyanza and Western
Provinces\. The project was expected to encourage production of maize, beans,
cotton, potatoes, passion fruit, oil seeds, meat and milk by about 70,000
small scale farmers\. The project included components for agricultural
extension and training, co-operative development and farm input supply, farm
credit, livestock development, crop storage and improved crop marketing,
monitoring and evaluation, and project co-ordination\. However, emphasis was
given to farm credit and about 55% of the total project cost was allocated
for this purpose in the appraisal report\. In order to ensure that the bene-
fits from the project were evenly distributed throughout the project area,
the legal documents provided that not less than 40% of the farmers
participating in the project each year should be from West of the Rift Valley
and not less than 40% from East of the Rift\. The project involved most major
institutions dealing with agriculture in Kenya, including four Government
ministries, six parastatals and banks and up to 90 co-operative unions and
societies\. The Ministry of Agriculture was to be the lead agency responsible
for project co-ordination\.
4\. The project encountered many problems and the outcome has been
generally unsatisfactory\. Although accurate accounts of project expenditure
were apparently kept by government, the accounting system was not well
understood by project staff and an accurate estimate of expenditure under the
-2-
project was not available for the PCR (PCR para\. 6\.05)\. The PCR estimates
that total expenditure under the project was about US$19\.0 million,
equivalent to 53% of the total project cost estimated at appraisal\. This
underexpenditure was in part the result of the progressive devaluation of the
Kenya Shilling in relation to the US dollar over the project period\. The
estimated actual project cost in Kenya Shillings was about 67% of the
appraisal estimate\.
5\. When the final disbursement was made, total disbursements amounted
to US$6\.67 million, equivalent to 33% of the US$20\.0 million provided
originally under the Loan and the Credit\. This was all disbursed from the
Credit\. The undisbursed balance of the Credit (US$3\.33 million) and all of
the Loan (US$10\.0 million) were cancelled\. The PCR suggests that Government
would have been able to claim reimbursement of another US$3\.0 million if ade-
quate accounts had been kept for the project and all of the necessary
documents had been submitted to the Ministry of Agriculture by the agencies
responsible for project implementation\.
6\. Although at appraisal farm credit was expected to be the major
component of the project, serious problems were encountered with this compo-
nent and it was considerably scaled down\. Estimated actual expenditure on
farm credit was only K Shs 50\.6 million compared with the appraisal estimate
of K Shs 112 million\. These problems arose primarily because the credit
component was poorly designed, yet there were strong political pressures
during the course of project implementation to provide loans to large numbers
of farmers\. Many of the institutions through which credit was provided were
very weak, no effective sanctions were taken where debts were not repaid, and
the technical packages financed with credit were unattractive\. At appraisal
it was expected that most of the project credit would be channelled through
the Cooperative Bank of Kenya to co-operatives, although some would be
handled by the Agricultural Finance Corporation (AFC)\. In practice AFC
played only a small role in the project and most project credit was provided
through co-operatives\. The capacity of these co-operatives to administer
credit, especially those in Western Kenya, was seriously underestimated at
appraisal\. At the time of appraisal many of these co-operatives existed in
name only and they were not operationally functional\. Although the Credit
Agreement provided that co-operatives should be included in the project only
if they were adequately managed and financially solvent, enforcement of this
requirement was incompatible with another requirement in the Credit Agreement
that not less than 40% of the project farmers should be in Western Kenya (PCR
para\. 8\.13)\. In order to meet the latter requirement, the Bank agreed to the
inclusion of weak co-operative societies in the project\. The results were
unsatisfactory\. The number of farmers participating in the credit program
was never more than 25% of the appraisal target of 70,000 farmers, and few
farmers participated for more than one year\. Loan repayments under the
project have been only 21%\. The credit program started under the project has
now essentially collapsed and few, if any, new loans are being issued\. The
project has left behind a legacy of indebtedness and many of the co-operative
unions and societies which participated in the project are insolvent\.
7\. At appraisal livestock development was expected to be a relatively
minor component of the project with about 9% of project costs allocated for
-3-
this purpose\. In practice, livestock development became the largest single
component of the project; the scope of this component (especially dipping)
was expanded, livestock costs (dip operating costs) were underestimated at
appraisal, and other components, especially credit, were scaled down\.
Estimated actual expenditure on livestock was about four times as great as
the appraisal estimate and this accounted for 46% of total project costs\.
Most of these funds were used for artificial insemination and the cattle
dipping program, although a small amount was used for animal husbandry
extension\. The artificial insemination program was believed to have been one
of the more successful components of the project, although costs were
relatively high in some areas and the program was heavily subsidized\.
However, serious doubts have been raised about the effectiveness of the
cattle dipping program, for a significant proportion of the dips were
understood to have fallen into disrepair, or have been partially inoperative
or maintained understrength\. Higher costs for the dipping program accounted
for most of the increased expenditure on the livestock component\. This
increase occurred for two principal reasons\. First, the number of dips
included under the project was increased from the appraisal estimate of 1,000
dips to 2,400\. The latter included all of the dips established in the proj-
ect districts\. Second, an error had been made in the appraisal report in
calculating the cost of acaricides required and actual expenditure on
acaricides was much higher than originally estimated\.
8\. In addition to the major components for credit and livestock
development, about 13% of project costs were used for supporting project
activities in the Ministry of Agriculture, while another 9% went for develop-
ment of the co-operative sector\. The latter included the costs of
constructing 45 co-operative stores which were not included in the original
project design\. While these stores are potentially very useful, many have
not been used effeutively so far because the co-operatives which operate them
have not been well organized\. A small crop storage component for the
National Cereals and Produce Board (NCPB) was also completed under the
project\.
9\. Under the original project design the Kenya National Federation of
Co-operatives (KNFC) was given responsibility for supplying farm inputs to
co-operative unions and societies participating in the project\. However,
prior to the project KNFC had little experience in marketing farm inputs and
it was not able to do so effectively under the project\. The merchandising
section of KNFC became insolvent and ceased trading during the project\.
Fortunately, other more experienced agencies, notably the Kenya Farmers
Association, were able to arrange for the supply of farm inputs following the
demise of KNFC's input supply operations\.
10\. The project included a component for monitoring and evaluation, and
this was undertaken by the Ministry of Agriculture's Monitoring and
Evaluation Unit\. As far as monitoring was concerned, the aim was to provide
up to date information on project progress for management\. In practice this
did not work well, partly because MOA did not have the authority to insist
that other executing agencies provide the necessary data on time\. Evaluation
also suffered from many problems and was largely ineffective\. An ambitious
farm survey was started in order to evaluate the impact of the project\.
- 4-
However, this was too complicated and much of the data which was collected
could not be analyzed due to problems with the computerized analysis system\.
The survey design also proved to be unsuitable because few farmers
participated in the project on a continuing basis (PCR paras\. 3\.27-3\.28)\.
11\. Because of the problems encountered with project evaluation, data
is not available which would enable the impact of the project to be assessed
with any precision\. It appears that the project had some positive impact on
farm production during the project period, but little of this was sustained,
due to the collapse of the project's credit and farm input supply component,
the ineffective extension management system and the lack of viable extension
recommendations\. The PCR estimates that the project would show an economic
rate of return close to zero, and the audit agrees with this assessment\. In
addition to the difficulties experienced with administering credit, the
technological packages being offered to farmers under the project had serious
deficiencies\. In particular, the packages overemphasized the use of
relatively expensive purchased inputs, such as spray chemicals and
fertilizers\. This represented too risky a strategy, given the low income
levels of the project farmers\.
12\. Successful project implementation was also hampered by the compli-
cated project design\. Too many different organizations were involved and the
lead agency, the Ministry of Agriculture, did not have the authority to
exercise control over many of these institutions (PCR paras\. 6\.01 and 8\.06)\.
13\. When the original idea of IADP was first saggested during the 1972
agricultural sector study, it was proposed that this should be a small pilot
project\. During the course of preparation and appraisal there vas pressure,
from both Government and within the Bank, for a larger project, and the proj-
ect which was agreed eventually was very much larger than that proposed
originally\. It now seems clear that it would have been better if the scale
of the project had been kept more in line with the originally proposed pilot
project\. Experience has shown that the magnitude of the project attempted
was beyond the capacity of the institutions to implement, especially the
co-operatives, while the technology offered to farmers was not suitable for
widespread dissemination\.1/ A much larger follow-on project, IADP IT, was
approved in December 1979, two years before IADP I was completed\.
Preparation of IADP II was started during the early stages of IADP I\. It was
not strictly a second phase project but was an extension of the IADP concept
to a number of districts which were not included under LADP I\. This was a
large project with a tntal project cost of US$91\.7 million and an IDA Credit
of US$46 million\. The timetable for preparation of IADP II did not allow for
significant experience to be gained first with IADP I, although by the
time appraisal of IADP II had been completed it was clear that IADP I was
experiencing many problems (PCR para\. 7\.02)\. The design of IADP II was
influenced to some extent by this experience; in particular, less emphasis
was given to farm credit in IADP II while more emphasis was given to rural
infrastructure\. Nevertheless, experience with LADP II has been
1/ The audit accepts that the Government and the Bank share responsibility
for shortcomings in the project design\.
-5-
unsatisfactory and US$34 million of the US$46 million IDA Credit were
cancelled recently\. The Bank and Government have now agreed to disagglegate
IADP and focus in-depth on major components, possibly including extension,
credit and livestock\. Separate projects would be implemented for these
sub-sectors\. The first of these, the National Extension Project, has already
been started\. The audit agrees that this disaggregated approach holds out
more promise for success than the integrated approach adopted for IADP\.
II\. MAIN ISSUES
A\. Farm Budgets and Technology
14\. The project was based on the introduction of production packages
which, in the opinion of the audit, made unreasonably optimistic assumptions
about the ability of farmers to increase yields, and were not sufficiently
profitable or free of risk\. Two typical farm budgets for farms in the high
and low altitude zones of the project area were used in the appraisal report
to illustrate the agricultural developments being promoted under the project
(Appraisal Report, Annex 14)\. The crop yields used in these budgets are
shown below:
Crop Yields in Kgs/Ra
Crop High Zone Farmers Low Zone Farmers
Yield Yield Yield Yield
Before At Full % Before At Full Z
Project Development Increase Project Development Increase
Maize 1,000 2,700 170 800 2,300 188
Beans 540 1,100 104 540 1,100 104
Potatoes 5,000 18,000 260
Passion
Fruit 5,000 15,000 200
Cotton -- -- - 230 650 141
Groundnuts -- -- - 600 1,200 100
These yields were expected to increase progressively over a four-year
period\. A most important feature of the budget was that all of these enter-
prises would be improved simultaneously\. Although all of the above yields
are technically feasible, the audit feels that it was unrealistic to expect
that the average farmer would be able to obtain such large increases in
yields - they range from 100% to 260% - for all major enterprises on their
farms over the relatively short period of four years\. In practice the
project appears to have had a negligible impact on crop yields\.
-6 -
15\. The other major criticism of the technology being promoted under
the project concerns its inherent riskiness\. This technology placed heavy
emphasis on the increased use of relatively expensive purchased inputs, such
as fertilizers and spray chemicals\. Data on sales, cash expenses and net
incomes for the two farm budgets used in the appraisal report for the high
and low zone farmers are summarized below:
Cash Sales, Cash Expenses and Net Cash Income
(Shillings per Farm per Annum)
High Zone Farm Low Zone Farm
Before Increment Before Increment
the At Full Due to the At Full Due to
Project Development Project Project Development Project
Cash
Sales 2,379 5,628 3,249 2,037 4,605 2,568
Cash
Expenses 1,175 3,766 2,591 1,280 3,547 2,267
Net Cash
Income 1,204 1,862 658 757 1,058 301
If we accept the figures in these budgets at their face value - even though
it has been suggested above that the incremental yields expected were too
high - it can be seen that there is an unsatisfactory relationship between
incremental cash sales and incremental cash expenses\. A common rule of thumb
in farm budgeting is that incremental income should be at least twice as much
as incremental expenses if farmers are to find the innovation attractive and
worth the risks involved\. But the budgets above do not begin to approach
this ratio\. In the case of the high zone budget, incremental sales are 1\.25
times incremental costs, while for the low zone farmer the ratio is only 1\.13
to one\. The budgets represent risky and unattractive innovations\. If, in
the case of the low zone budget, a farmer spent the recommended amounts on
inputs, but his incremental production was only 12% lower than that expected
from an average farmer in an average year, he would obtain no increase in net
cash income at all\. With the recommended technology there would be a serious
risk that, even in an average year, many below average farmers would be worse
off if they adopted the proposed innovations, while in a poor year a high
proportion of farmers would be in this position\. Rather than place so much
emphasis on the increased use of expensive inputs, the audit feels it would
have been better to have given higher priority to less expensive improvements
such as the use of better seeds and increased plant populations\. This is now
being done under the new National Extension Project\.
-7-
B\. Co-operative Credit
16\. The inclusion of credit as the most important component of IADP is
open to criticism because it is doubtful if a lack of credit was a major
constraint to agricultural development in the project areas, and it should
have been clear at the time of preparation and appraisal that serious diffi-
culties would be involved in implementing this component\. In the less
developed areas which the project aimed to help, the most serious constraint
to development is probably the lack of attractive investment opportunities in
agriculture\. The PCR points out that during project preparation a cr -lit
specialist had advised that lack of credit was not a geo*rally binding
constraint\. Most smallholders would be able to find the necessary cash if
they were convinced that innovations were worthwhile, and the appropriate
infrastructure was in place to ensure that farm inputs and markets for farm
products were available (PCR, para\. 2\.06)\. However, opinions about the need
for credit were divided (and probably still are)\. Government strongly
supported the need for credit and this view wos shared by most of the Bank's
project staff, including the appraisal mission which increased the size of
the credit component so that more than 50% of project costs were allocated
for this purpose\.
17\. Before IADP was started a co-operative credit program known as the
Co-operative Production Credit Scheme (CPCS) had been developed by the
Ministry of Co-operative Development (MOCD), with assistance from technical
advisers provided by the Nordic Co-operative Project\. CPCS was a well
administered scheme with a high rate of loan repayment (over 90%)\. However,
this program had been largely restricted to the more developed parts of
Central and Eastern Provinces where there were well established coffee co-
operatives\. IADP aimed to extend the coverage of co-operative credit under
CPCS to less developed parts of the country, including Nyanza and Western
Provinces\. However, there were good reasons why it had not been possible to
extend CPCS earlier to these areas, and it appears that the appraisal mission
misjudged the extent to which these same factors would prevent the rapid
extension of CPCS-type credit throughout the IADP project areas on the scale
envisaged\. The basic requirements for CPCS to function properly were that
there should be well established co-operative societies and individual
farmers would be provided with credit based on their previous trading pattern
with these co-operatives; normally farmers were permitted to borrow up to
two-thirds of the value of their average crop deliveries over the previous
three seasons\. However, in many of the project areas, especially in Western
and Nyanza Provinces, there were very few established co-operatives; many of
those which participated in the project existed in name only prior to the
project and they were hastily resuscitated at the beginning of the project\.
18\. The existence of some weaknesses in co-operatives was acknowledged
at appraisal, and fu this reason, the Credit Agreement made provision that
no co-operative should be included in the project unless, inter alia, it was
financially solvent and adequately managed\. However, the Credit Agreement
did not require that all loans meet the stringent requirements normally
required for participation in CPCS\. The Credit Agreement also required that
annual plans should be submitted to the Bank for approval each year\. This
would permit considerable flexibility, while giving the Bank some control
- 8 -
over the project\. Although the idea of restricting participation to
co-operatives which were well managed and financially viable was sound, it
became apparent from the beginning of the project that it would not be
feasible to implement a credit program of the magnitude proposed originally
if this requirement was strictly adhered to\. Furthermore, there was serious
incompatibility between this requirement and the idea that not less than 40%
of the participating farmers should be 1n Western Kenya, which was also
required in the Credit Agreement\. When, through the process of approving
annual plans, the Bank attempted to reduce the scale of the credit component
and eliminate co-operatives which did not meet the requirement that they were
well managed and financially viable, Government expressed strong opposition,
probably because there was political pressure to mount a large credit program
in the project areas\. Eventually, the Bank agreed that the project should go
ahead, even though many very weak co-operatives were included\. However, the
overall program was scaled down in size\.
19\. One other factor which provided a further complication for the IADP
credit program was the existence of other donor-supported credit programs
being implemented through the same co-operative unions and societies\. The
most important of these was the Smallholder Production Services and Credit
Project (SPSCP) supported by the United States Agency for International
Development\. SPSCP, which was implemented on roughly the same scale as IADP,
was aimed at subsistence farmers, whereas IADP aimed primarily to help more
progressive farmers\. Although the design for these two projects expected
that they would be complementary, in practice, the same criteria were used
for recruiting farmers for both projects and they were eventually treated as
one project\. The combination of these two relatively large credit programs
overwhelmed many of the participating co-operatives\.
20\. The results of this attempt to administer credit through very weak
institutions and the failure to enforce sanctions for non-repayment of loans,
have been painfally clear\. Loan repayments have been extremely low (21%) and
the program has collapsed, leaving a legacy of bad debts and financially
troubled co-operatives\.
C\. Project Organization and Coordination
21\. IADP involved most major institutions in the agricultural sector,
including four ministries, six parastatals and about 90 co-operatives\.2/
Overall coordination was to be achieved through an interministerial coor-
dinating committee on which all of the main national institutions were
represented, while the Ministry of Agriculture would act as the lead agency
2! Including the Ministry of Agriculture, the Ministry of Livestock
Development (now combined with the Ministry of Agriculture), the
Ministry of Co-operative Development, the Ministry of Finance and
Planning, the Co-operative Bank of Kenya, the Kenya National Federation
of Co-operatives, the Agricultural Finance Corporation, the National
Cereals and Produce Board, the Cotton Lint and Seed Marketing Board and
the Horticulture Crops Development Authority\.
-9-
acting through a Program Head in its Project Management and Evaluation
Division\. This arrangement proved ineffective, because of its complexity,
because several of the participating agencies were weak (especially
co-operatives), and because Kenya's administrative system does not
accommodate integrated programs easily\. The interministerial coordinating
committee was too large and cumbersome and this met infrequently\. The
Ministry of Agriculture lacked the authority to control several key
institutions, especially those in the co-operative sector which reported to a
different ministry\. There also appear to have been significant differences
in attitude between the Ministry of Agriculture and the national institutions
in the co-operative sector\. The Ministry of Agiculture gave highest
priority to implementing the program as quickly as poss-le s that large
numbers of farmers were provided with farm inputs and credit\. While it is
understandable that MOA should want to promote agricultural development as
quickly as possible, it is also true that it did not have to accept financial
responsibility for the project's overambitious credit program\. On the other
hand, the Co-operative Bank of Kenya (CBK), which acted as the channel
through which all loans to co-operatives were made, demonstrated reluctance
to approve many loans which it felt were unsound\. Unfortunately, CBK was
prevailed upon to act against its better judgement\. The project would have
had a better chance of establishing a viable credit s stem (albeit much
smaller) if more weight had been given to CBK's viewpoint _/
D\. Livestock Development
22\. The livestock component of the project concentrated on providing
artificial insemination (AI) and cattle dipping services\. Although the Al
program was believed to have been fairly successful, serious doubts have been
raised about the effectiveness of the dipping program, due to inadequate
maintenance and operation of the dips\. However, the issue which is of
concern here relates to the cost of maintaining these activities\. The AI and
dipping programs funded under IADP formed part of larger national programs,
and data are not available separately for the IADP components\. For the
national programs data provided by the Veterinary Department indicate that
large subsidies are required to operate these programs each year, although
government is currently reviewing the amounts charged with a view to reducing
or eliminating these subsidies\. In the case of AI the average cost per cow
inseminated is estimated to be K Shs 75, whereas farmers are charged only one
Shilling for this service\. About 225,000 cows are inseminated each year
under this program and the overall subsidy amounts to about K Shs 16\.7
million (US$1\.2 million)\. Although separate data are not available for the
IADP areas, it is known that costs are much higher than average in some of
these areas\. The PCR suggests that in Western Kenya the average cost is
about K Shs 250 per cow (PCR, para\. 3\.24)\. This is more than three times the
3/ The Government of Kenya (Annex 1, paragraph 4) disagrees with these
comments and states that the plans for IADP were agreed jointly by all
participating Government miniezries and agencies\. However, the audit
notes that the CBK was only willing to participate fully in this program
after it had been given a guarantee that the Government would make good
any losses which it might incur under the project (see the PCR para\.
3\.18)\.
- 10 -
national average cost\. In these less developed areas the population of high
grade cattle is much more scattered and staff and traveling costs per
insemination are correspondingly higher\. It is doubtful if provision of an
AI service can be justified in these less developed areas\.
23\. Large subsidies are also involved with the dipping program\.
Farmers are charged 30 cents for each animal every time they are dipped,
although a significant proportion of these fees is not collected\. The actual
cost of providing this service amounts to about K Shs 2/80 per animal
dipped\. For the national program about 4 million cattle are dipped
throughout the course of the year\. The overall subsidy is therefore about K
Shs 10 million (US$735,000) per annum\. The combined subsidy for the national
Al and dipping programs is about US$2 million each year\. Apparently, about
30% of the animals included in these programs are in the IADP areas
(including IADP II), although IADP's share of the overall subsidy is probably
higher than 30% because of the higher unit costs in these areas\. It is
clear, therefore, that so long as government continues to charge highly
subsidized fees for AI and dipping, IADP will aggravate the recurrent cost
burden on the Kenya Government presented by these livestock programs\.
E\. Conclusions
24\. IADP aimed to promote agricultural development in some of the less
well developed areas of Kenya\. While this was a laudable goal, achievements
under the project were generally unsatisfactory\. Far too much was attempted
too quickly, there were serious deficiencies in the technology promoted under
the project, many of the institutions, especially co-operatives, were
extremely weak, and the project organization was too complicated\. The
project design should have paid more attention to organization and
management, particularly administrative mechanisms for coordination,
budgeting, flow of funds and reimbursement, as well as to institutional
capacity for implementation\. Too much emphasis was given to farm credit and
serious problems were experienced in implementing this component\. The
project's credit activities have been discontinued and the project has had
little sustained impact on crop production\. In the livestock sector the
project has had some success with its artificial insemination program,
although performance of the cattle dips has been less satisfactory\. While
the AI and cattle dipping programs have been sustained since the end of the
project, performance in both has been constrained by the limited recurrent
budget, while the fees charged for these services have been heavily
subsidized\. In the opinion of the audit the project would have had more
chance of success if, as proposed originally, it had been designed as a
smaller pilot project and more effort had been made to test alternative
technological packages before trying them on a wider scale\. More attention
should also have been given to developing institutions, especially
co-operatives\. However, it would seem that there are no easy solutions to
the problems of these areas, as has been demonstrated through several pilot
projects carried out under Kenya's Special Rural Development Program some
years before IADP was started\. The audit does believe that the experience of
IADP has helped to create a new generation of agricultural projects in Kenya,
including the National Extension Project, which is more clearly focussed,
simpler to implement, and more likely to have a lasting impact\.
- 11 --
Annex 1
BORROWER' S CMNTS Pagre 1
oAUS 14 1984
OFFICE OF THE PRESIDENT
DEVELOPMENT CO-ORDINATION AND CABINET OFFIC
Teleamm: ItL"\. Nairobi P\.O\. Box 62345
rlephone: Naimbi 27411 NAIROBI\. KENYA
Whe replying plae qAIore
Rd\. No\. OP/DCO14/41A
and date \.3rd Augus\.t\.19\.84
Mr\. Shiv S\. Kapur,
Acting Director - General
Operations Evaluation Department,
1818 H\. Street,
Washington DC 20433,
U\.S\.A\.
Dear RX - L ,C
PROJECT PERFORMANCE AUDIT REPORT:
KENYA INTEGRATED AGRICULTURAL DEVELOPMENT
PROJECT (Ln\. 1303 - KE/Cr\. 650 - KE)
In response to your letter dated 4th May, 1984 inviting
comments on the first draft of the Performance Audit Report on
the above project, I am pleased to attach herewith our comments\.
These comments include those from my colleagues in the Ministries
of Finance and Planning, Agriculture and Livestock Development
and Co-operative Development, the Agricultural Finance Corporation,
the Cotton Lint and Seed Marketing Board and the Co-operative
Bank of Kenya\.
In general, we appreciate the assistance the Bank is giving
us in implementing this project, and we agree that we should
reach balance conclusions concerning the experience of IADP I\.
Yours \.;
5\. NA E
CHIEF SE, ETARY
\. /2
-12- Annex 1
Page 2
cc\. H\. Mule, Esq\.,
Permanent Secretary,
Ministry of Finance & Planning,
NAIROBI\.
D\. Namu, Esq\.,
Permanent Secretary,
Ministry of Agriculture &
Livestock Development,
NAIROBI\.
A\. Githinji, Esq\.,
Permanent Secretary,
Ministry of Co-operative Development,
NAIROBI\.
J\. M'Rabu, Esq\.,
General Manager,
Agricultural Finance Corporation,
NAIROBI\.
J\. K\. Kimbui, Esq\.,
General Manager,
Co-operative Bank of Kenya,
NAIROBI\.
S\. B\. Rotich, Esq\.,
Chairman,
Cotton Lint and Seed Marketing Board,
NAIROBI\.
Encl\.
-13 - Annex I
Page 3
COMMENTS ON THE PROJECT PERFORMANCE AUDIT
REPORT: KENYA INTEGRATED AGRICULTURAL
DEVELOPMENT PROJECT (LN\. 1303 - KE/Cr\. 650-KE
1\. It is the Government's general opinion that the
A footnote has report has correctly addressed itself to the major
been added to issues and problems including poor design, lack of
paragraph 13 of
the PPAM and this guidance and large credit programme which led to the
states explicitly poor performance of IADP I\. We also concur in general
that the audit
accepts that the with the views expressed in the report including those
Bank and the in the highlights, project summary, specific issues,
Government share
re-ononsibility for Bank performance and lessons learnt as well as those
shortcomings in the conclusion\. However, we note that the detailed
in the project analyses and conslusions tend to put unproportionate
design\.
share of the blame on the Kenya Government\. Several
comments are unduly critical and undesirable, while
certain conclusions appear to be inconsistent with the
project objectives and are relatively subjective\. This,
perhaps, reflects lack of appreciating Kenya's political
and social-economic realities as at that time\.
2\. We know that there was a general enthusiasm in the
Bank to fight against rural poverty\. This is reflected
in the background to the project (page 1, PCR)\. The
See the note above*less previleged small farmers who had not benefited
The audit accepts
that there were much from the then on-going Government programmes
flaws in the became the highest priority, hence the need for the
appraisal of this
project\. project\. The experienced Bank staff were involved in
the appraisal and yet reasons for failure include
flaws in their appraisal\.
3\. We agree that a number of decisions for the project
were influenced by political factors rather than based
on economic, or financial grounds\. We also note that
\./2
14 - Annex 1
Page 4
The audit agrees the term "political pressure" has been capitalized on
it Is derstandabe the report\. The fact is that the project began
there should be y
strong political as part of a strategy to promoting agricultural
pressure supportin evelopment in areas that had previously been neglected
a project such a3 de
IADP\. However, and to assist weaker institutions\. It would therefore
the audit believes
these politicale be unrealistic to expect such a project without political
factors did expectations and pressures\. In view of this, we feel
contribute to the that the overreference to strong political pressure is
overambitious
project design\. unfortunate and does not help in analysing the problem\.
4\. Another aspect of the report that concerns us is
See the footnote the impression created to put various particiapting
to Paragraph 21 Ministries/Agencies on the defensive among or against
of the PPAM
each other\. This is reflected in various parts of the
report\. For example section 21, page 14-15 of PPAM
implies that MOA was the one which exerted pressure on
other institutions to push for more loanees\. We again
believe that this was done jointly and it was ti-e whole
GOK participating Ministries and Agencies which endorsed
those decisions after consultation among themselves
and with supporting views of the Bank\.
5\. It is also noted on page 37 paragraph 8\.06 of PCR
Paragraph 8\.06 that the report observes that the projects's failure was
of the PCR has partly because of the Office of the President was
been amended\. reluctant to be involved in project implementation\.
This is a misunderstanding of the function of the
Office of the President\. We wish to point out that some
Rural Development Programmes such as Machakos Integrated
Development Project have had a measure of success
and yet are not under the auspies of the OP\.
6\. While in fact, there are none in the PPAR itself,
there are six materials reference to the CLSMB in the
PCR i\.e\. paragraphs 2\.15, 2\.20, 3\.02, 3\.03, 3\.22, 8\.11
of pages 8, 10, 11, and 12, 22 and 39 respectively\.
-15- Annex 1
Page 5
7\. In general, we agree with the conclusion that
although IADP failed to reach its objectives, much
has been learnt from its experience\. We would add
that the project as designed and implemented has
also demonstrated fundamental mistakes and
contradictions among the parties involved in the
process of development through the integrated approach
thus making its type of approach unconvincing case to
be sustained\.
8\. Overall, the Government of Kenya appreciate the
role played by the Bank in the initiation and assistance
proviled in implementing the Integrated Agricultural
Development Project\.
We have focussed our general comments on the
major issues and points which figure in\.the report\.
However, we have also organized our specific comments
by page as elaborated in the attabhed annex\.
-16 - Annex 1
Page6
ANNEX
DETAILED COMMENTS
A\. HIGHLIGHTS
Page We propose that the following points be
Ve included in the lessons learned and other points
of interest\.
The audit agrees and these - The preparation of IADP project was based on
points have been included
in the Highlights\. incomplete data gathered under a time constraint\.
- There was pressure from both the Government
of Kenya and within the Bank to have a more
ambitious project than was earlier envisaged\.
- The recruitment time for project farmers
was not long enough to allow\.for proper
selection and appraisal\.
B\. PROJECT PERFORMANCE AUDIT MEMORANDUM
3 para\. 6 The statement that AFC did not participate
in the project is not correct\. The Corporation
participated by way- of a subsidiary agreement
Paragraph 6 of the PPA between herself and Cereals and Sugar Finance
has been amended to Corporation (CSFC) which was signed on
indicate that the At11
did administer a small
proportion of project was disbursed as credit to farmers although
loans\.
the total AFC's cotaitment to CSFC was
Kshs\. 2 million\.
6 para\. 10 The monitoring and evaluation component
was not undertaken by the Ministry of
aragrphn1db Agriculture s Economic Planning Division as
indicated\. It was undertaken by the Monitoring
and Evaluation Unit in MOA's Project Management
and Evaluation Division\.
\./2
- 17- Annex 1
Page 7
Page
11 Para\. 16 The report notes that the Government
strongly support the need for credit and
The audit agrees and
paragraph 16 has been
amended\. The report further notes in para\. 2\.07 page 5
of PCR that the Government's view was shared
by most Bank project staff\. A fair representation
therefore would be - the Government and most
of the Banks project staff including the
appraisal Mission supported the need for credit\.
12 para\. 18 The report states that the Government
expressed strong opposition to a reduction in
credit component "probably because there was
Paragraph 18 of the PPAM refers political pressure"\. This view is not
to Government's opposition to compatible with what is stated in page 4\.
reducing the scope of the credit
component during project para\. 2\.06 of the PCR i\.e\. "credit was considered
implementation\. Paragraph 2\.06 a key incentive to pursuading farmers to dopt
of the PCR is concerned with
decisions taken during project the proposed strategy\."
preparation\.
14 para\.21 We appreciate that there were some weak
institutibns\. However, we feel that the remark
Paragraph 21 has been amended to
indicate that the weaknesses that "several of the participating agencies
were most important with were weak institution" is too general without
co-operatives\.
giving specifics\.
C\. PROJECT COMPLETION REPORT
3 para\.2\.03 While we agree that senior staff in MOA
As noted earlier (PPA4para\. 13) provided little direction to those preparing
the audit accepts that Govern- the project, the reverse was also true - the
ment and the Bank share
responsibility for shortcomings GOK did appreciate the shortcoming and
in the project design\. therefore requested assistance from the Bank
which was readily provided\. In view of this,
the shortcomings cannot be blamed on the
Ministry of Agriculture alone\.
-18- Annex 1
Page 8
Page
3 para\. 2\.04 We find it hard to accept the conclusion
The PCR accepts that GoverUment that there was lack of Government commitment
was strongly committed
politically but feels that to the project\. This contradicts views in
insufficient resources were the preceding para\. 2\.02 and in para\. 9\.01
conenitted to project preparation\.
and 9\.04 i\.e\. the Government was committed to
the project except the project was complex
and there was lack of experience among those
involved\.
8 para\. 2\.16 We note that part of the paragraph is
This paragraph has been amended\. repetitive i\.e\. "Doutbs were -- (bottom of
the page) to -" support of the Project"
(top page 9)\.
20 para\. 3\.18 AFC did not stay out of the IADP credit
The PPAN (para\. 6) and the PCR altogether as pointed out in this para\. (refer
(para\. 3\.18) have been amended\. to our comment in relation to page 3 para\. 6
of the report)\.
32 para\. 6\.04 While we agree with observation that the
The PCR (para\. 6\.04) has been
amended and acknowledges that quality of MOCD audits of Co-operatives may
many co-operatives cannot afford not be up to standard, we have our reservations
to pay fees to private auditors\. concerning private auditors\. Many Co-operatives
cannot afford the fees\.
39 para\. 8\.11 The statement that CLSMB's performance
Although the CLSM has suffered was a continuing disappointment ts unduly
from several unfavorable critical\. The Board suffered badly from poor
external factors, the PCR
suggests that weak management loan recovery, problems related to cotton
was still a problem\. collection and ginning, reduced rate of
increase in the producer price (AR price rose
by only 35Cts in July, 82) and climatic
conditions\. The author did not seem to take
these problems into account\.
We are also concerned with the
- 19 - Annex 1
Page 9
implication that the delays in implementing
the new Cotton Processing and Marketing
Project (CPMP) were due to extreme weakness
on the Board's part\. This is an ill informed
comment\. On the contrary, the Board conceived
the CPMP in April 1979 and continues to
support it\.
c:
ris-
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
LOAN 1303-KE/cREDIT 650-KE
PROJECT COMPLETION REPORT
March 30, 1984
d~~AU /<
- 23 -
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
PROJECT COMPLETION REPORT
I\. BACKGROUND
1\.01 In the decade following Independence in 1963, Kenya was
successful in expanding its important agricultural sector--which provides
about 60% of total exports and the bulk of Kenya's employment-by an
average real annual growth rate of 4\.6Z\. Increases in smallholder
production (particularly coffee, tea, milk, and especially maize, through
rapid uptake of hybrid maize varieties) played an important part in
agriculture's growth\. Although a large part of Kenya's agricultural
output, particularly marketed output, came from private, large-scale
farming, smallholders were and are the backbone of the sector\. Government
interventions in smallholder agricultural development, however,
concentrated on a few commodities notably, export cash crops such as tea,
coffee and pyrethrum, and in the better agricultural areas, particularly
Central Province\. Early in the 1970s, concern within the Government of
Kenya and the Bank mounted on the position of less privileged small farmers
in other areas, who had, until then, largely bee= excluded from the
development process\. Kenya wanted to broaden both its production base and
the social impact of development so as to strengthen the economy, which was
beginning to suffer from a number of adverse international economic
factors\. Western Kenya was accorded a special priority because none of the
smallholder tea and other cash crop projects had been located there\.
1\.02 To meet these objectives, the Kenya Government prepared a new
program--the Integrated Agricultural Development Program--of which this
project was to constitute a first phase\. The program was to build on
previous smallholder programs, some of which had been successful, others
less so, but which had left many farmers and regions untouched\. Important
features of the new program were an increased emphasis on decentralized
planning and project implementation, and its aim of developing total farm
systems, rather than the promoting a single crop or farming activity\. In
both respects the proposed project represented a significant change in the
approach to smallholder agriculture\. The project--the Integrated
Agricultural Development Project (IADP)--was the twelfth agricultural
project in Kenya supported by the Bank\. The eleven previous loans and
credits, totalling US$71 million, had gone to assist Kenyan agriculture in
four main areas: settlement and farm credit (3 projects); livestock
development (2 projects); afforestation for pulp and saw wood production (2
projects); and development of smallholder tea and tea factories in high
potential areas, mainly Central and Rift Valley Provinces (3 projects)\. In
1976, a further US$15 million Loan/Credit was approved for rehabilitation
of group-owned farms\. For IADP the Bank provided a Loan (1303-KE) of US$10
million and a Credit (650-KE) of US$10 million to cover 56% of the
estimated project costs of US$35\.7 million\. The Arab Bank for African
Economic Development (BADEA) provided US$5 million to cover 14% of project
costs\. The Loan/Credit was signed on July 9, 1976\. The last IDA
disbursements were made in April 1982, four months later than anticipated,
at which time US$13\.3 million was cancelled (the full amount of the Loan
and US$3\.3 million of the Credit)\.
- 24 -
II\. PROJECT FORMULATION
Identification
2\.01 The origins of the project are complex, and can be traced back to
the late 1960s and early 1970s, when officials within the Government and
external agencies (including the Bank) embarked on a series of efforts to
design progams to reach the poorest segments of the rural population\. In
1967, the Special Rural Development Program (SRDP) was launched, financed
by several donors\. The SRDP was a series of pilot program designed to
bring together some aspects of rural development in a single program\.
The record of the SRDP was mixed, with some notable successes and clear
failures, but the effort to carry out integrated programs led to subsequent
reflection and project planning\. In 1972, the Bank mounted an agricultural
sector mission to Kenya to assist the Government in studying its strategy,
policies, programs, and projects for increasing agricultural production and
improving rural standards of living\. The mission's report, finalized in
December 1973, identified a number of investment possibilities, including
two with a primary focus on smallholders\. The strategy proposed for
smallholders was summarized as follows:I/
Kenya's extension service is large, although admittedly not very
productive\. There is some competence in cooperatives,
credit, marketing, and input distribution\. The need is not to
create institutions, but rather to make better use of those
which exist\. This means integration of activities\. The
farmer must have simultaneous access to advice, credit, inputs
and marketing channels; lack of one can nullify the value of
the others\. Simultaneous provision of closely integrated
services should be the core of the development programs\. One
way to do this is through "development centers\." These could
be under the control of the extension service, with each being
the operational headquarters for its locality\. Drawing upon
other agencies, these centers could improve markets, provide
credit and input supplies, help service local cooperatives,
and perhaps monitor the operation of other related service
agencies working in the locality\.
The strategy proposed by the sector mission differed in one marked
respect from that actually followed\. The sector mission proposed that
preparation start on the first phase of two area-based programs\. The
projects should start on a modest scale "because little information is
available on the smallscale farming sector"\.2/ It was proposed that the
first project start in two small areas - one district in Eastern Province
1/ Agricultural Sector Survey - Kenya (1973), Report No\. 254a-KE, Para\.
4\.49 of the General Report\.
2/ Agricultural Sector Survey, Annex 4, para\. 18\.
- 25 -
and one division of another district in Central Province\. The lessons
learnt could then be applied in other areas of Central and Eastern
Provinces\. The second project would similarly start in two small locations
in Western and Nyanza Provinces\. Each first phase project was expected to
cost about US$5 million over a four-year period\. In short, the strategy
proposed anticipated starting on a very small scale and expanding into new
areas on the basis of experience gained\.
Preparation
2\.02 In January 1974, Government stated that top priority should be
given to two new projects along the lines suggested (para\. 2\.01)\. Project
preparation was to be undertaken by the Ministry of Agriculture (MOA), with
assistance from the Bank's Regional Mission in Eastern Africa (REA)\. The
aim was to move quickly, and the original plan envisaged completion of
preparation by July, 1974\. However, project preparation got off to a slow
start, primarily because preparation work was held up until agreement was
reached within the Government on the proposed project areas\. When the
decision was finally taken it represented a dramatic change in strategy,
reflecting strong political pressures that the project should reach as many
of the poorest sections of the community as possible, in the shortest time
feasible\. The Government therefore proposed to implement the first of the
two projects in 21 divisions in 13 districts of Central, Eastern, Western
and Nyanza Provinces\. In Central and Eastern Provinces, the project would
aim at those pockets which had not benefited from previous coffee and tea
developments\. In the west, few farmers had benefited from earlier
developments, so nearly all would fall into the project's target group\.
All project components would start simultaneously in all 21 divisions\. The
idea of starting in one or two districts and expanding on the basis of
experience was lost\.
2\.03 Progress with project preparation continued to be slow for
several reasons\. First, senior staff in MOA provided little direction to
those charged with responsibility for preparing the project a (factor that
was recognized by GOK and which re ulted in a request for additional
assistance from the Bank - para 2 )\. Second, data on smallholders on
which to base project design were hard to come by; for example, mid-way
through preparation, it was clear that gathering data at the divisional
level would require far more time than anticipated and might not be
feasible even then\. And third, there was little experience with integrated
projects to use as a basis for project planning\. The experience that was
available was confined largely to two pilot projects then under
implementation: the Special Rural Development Program (SRDP) and the
Cooperative Production Credit Scheme (CPCS)\. The SRDP (para\. 2\.01) was a
pilot project implemented in one division in each of Kenya's Provinces
(typically, a Province is divided into about six districts, and each
district is divided into five divisions, showing that divisions are very
small units)\. The experience of SRDP was mixed but, more important, the
intensive management and technical assistance (in Vihiga division in
Western Province, for example, there were four to five expatriates under
SRDP) in relation to its small size meant that it could\.not be used as a
model for replication\. The CPCS had some relevant lessons and these are
discussed in para 2\.10\.
- 26 -
2\.04 To help speed progress, the Bank agreed to take a more active
role in project preparation\. A staff member was assigned virtually
full-time to assist Government in drawing up the proposals on credit\. In
September 1974, the Bank also recruited an economist for secondment to MOA
as an Agricultural Planning Advisor\. The preparation of the project,
complex by any standards, by Government in effect fell largely to one
technical assistance planner, who had other responsibilities to discharge
at the same time, and three freshly graduated Kenyan economists\. Not
surprisingly, the preparation report was only submitted to the Bank in May
1975, almost one year later than expected and almost two years from the
time when the possibility of the project was first tentatively broached
with Government\. As noted in para 3\.04, these delays were to have
significant repercussions on project implementation, because of
expectations that had built up among farmers and politicians\. The delays,
lack of guidance, and the assignment of a weak preparation team indicate
that the "priority" attached to the project by Government reflected
primarily the political wish to do something in previously neglected areas;
a real commitment by the Government as a whole to the specific project
concept was lacking\. This view is shared by many of those in Government
who participated in project preparation\. Others in Government, however,
reject the conclusion that there was lack of Government commitment during
the early project preparation stages\. As noted in paras 9\.01 and 9\.04, f
there was considerable Government commitment during the implementation
stages\.
2\.05 The preparation report proposals were in line with the
Government's intention to initiate a long-term rural development
program-the Integrated Agricultural Development Program-based on a
"whole-farm" approach\. The proposed project was to constitute the first
phase of the program\. It was scheduled to commence in early 1976 and cover
parts of 14 districts drawn from all four Provinces-yet a further
expansion in geographical coverage from that proposed earlier\. Government
anticipated that a second concurrent phase would commence in 1978 covering
the remaining smallholder areas of the country\.
2\.06 The project was designed to alleviate five major bottlenecks
identified during preparation as constraining smallholder development: lack
of good extension advice, farmer training, inputs, marketing, and credit\.
The intended "whole-farm" approach is well illustrated from an internal
Bank memo written during the final stages of project preparation\. Under
the project, it was proposed that farmers would first be contacted by the
extension service, who would explain the proposed project activities\. If
the farmer agreed, the subsequent sequencing of activities would be:
land-use planning so that both the farmer and extension service could be
aware of soil capabilities and potential crops, the drawing up of a farm
plan and budget, a credit application submitted through a strengthened
cooperative movement, the provision of inputs by cooperatives, extension
and farmer training, improved marketing, and finally credit recovery\.
Credit was considered a key incentive to persuading farmers to adopt the
proposed strategy\. During preparation, Bank staff became concerned about
the credit component, and a consultant, who had spent over two years in
Kenya conducting research on farm credit, was therefore recruited to review
smallholder credit issues\. His major findings, presented in early 1975,
were that:
- 27 -
- lack of smallholder access to credit was not a generally
binding constraint, and the inclusion of credit in a project
such as that proposed would be largely superfluous, except in
very special circumstances;
- smallholders had sufficient cash to adopt most suitable
innovations when they were convinced that they would receive
adequate returns; and
- smallholder access to inputs, markets, etc\. was largely a
question of infrastructure in the rural areas, and the
provision of credit would not ensure that adequate
infrastructure would be provided or created\.
2\.07 Following this consultant report there was some debate within the
Bank and between the Bank and the Government on the role of credit in the
proposed project strategy\. Views were expressed by Bank staff that the
consultant's findings cast doubt on a fundamental premise on which project
design was based, that credit was the main bottleneck to increased
production\. This view was not shared by Government's preparation team,
which felt that lack of financial resources was a major constraint in the
key target areas\. This view was shared by most Bank project staff and
preparation proceeded, with credit an important element; 35% of project
costs were for smallholder credit in the final preparation report\.
Following appraisal, smallholder credit assumed a still more important
place: 65% of project costs were for credit\.
Appraisal
2\.08 Preappraisal documents and discussions reflected a concensus
that the Government's project proposal suggested few dramatic departures or
innovations\. The preparation report proposed essentially an expansion of
existing support services-- in some respects, it was a request for
budgetary support akin to a sub-sector loan\. The appraisal mission also
considered that the preparation report was so vague as to exact methods to
be adopted in realizing project objectives that a considerable amount of
the appraisal team's time would have to be spent on preparation-type work\.
The appraisal mission visited Kenya in June and July 1975\. Much of the
early part of the mission was devoted to a discussion with Government on
whether or not to include (a) support for Government's tractor hire
services and (b) loans for the purchase of tractors\. Government felt
strongly that these components should be included on the grounds that land
preparation was often a constraint for smallholders\. The mission disagreed
and this component was deleted\. Other components were deleted with
Government's concurrence; these included:
- rural water development (not felt to be a constraint);
- rural access roads (covered by another project);
- ten railway wagons originally intended for the Maize and
Produce Board (no direct link to the project); and
- 28 -
- railway sidings (no sidings required for the project)\.
The following paragraphs summarize the major issues raised after the
return of the appraisal mission to Washington\.
2\.09 Uncertainties in Project Design\. The appraisal mission
recognized that for this type of project, some flexibility was required in
the appraisal report and legal documents\. The lack of definition of some
project components was discussed, and Bank management agreed that this was
appropriate\. To overcome this, it was agreed that Government would produce
annual work plans which would be submitted to the Bank for approval\. The
appraisal mission drew up some general criteria on which approval of the
proposed work plans would be based; these criteria were spelt out in the
legal documents\. Credit and loan proceeds were to be allocated for
disbursement through this process\. This instrument offered a mechanism to
allow progressive modification of project design to reflect the lessons of
experience\. The format used for IADP was an innovation for this type of
project at that time\.
2\.10 Choice of Beneficiaries\. The major focus of the internal Bank
review of the project following appraisal was the project's likely
beneficiaries and the extent to which this matched the desirable goal of
reaching smallscale, less privileged subsistence farmers\. Both the
preparation and appraisal missions had proposed to base the credit
component of the project--the key project component-on the existing
Cooperative Production Credit Scheme (CPCS) which had been in operation for
four years\. Under CPCS, some 15,000 loans had been given each year with a
recovery rate of over 90%\. Three crucial feature of CPCS contributed to
its high rate of loan recovery\. First, the funds for CPCS were largely
internally generated from within the cooperative movement and, as such,
there was strong internal pressure to repay (the loans were not
political)\. Second, farmers had to have a three-year record of marketing
their crop surpluses through a cooperative society\. Since it was mainly
the coffee farmers around Central Province that produced consistent crop
surpluses, CPCS operated almost exclusively in these areas\. The crop
surplus criterion necessarily excluded subsistence farmers since, by
definition, they would not have a crop surplus\. Third, the loanee was also
required to have two guarantors\. The Issues Paper explicitly stated that
95% of the project beneficiaries would be progressive smallholders who had
a proven three-year record of marketing their crop surplus through a
cooperative society\. The Bank's Decision Memorandum of August 1975
accepted the appraisal mission's recommendation that, with the exception of
a special fund for subsistence farmers (para 2\.11), all project credit
funds would be administered on the basis of existing criteria\. The
appraisal report indicated that agreement was reached at negotiations, that
criteria for selection of participants and procedures would be similar to
those of CPSC, but this was not reflected in sufficient detail in the legal
documents to provide effective operational guidance during implementation\.
In retrospect, this is unfortunate as it rendered the task of applying
criteria much more difficult\.
2\.11 To reach the subsistence farmer, the mission recommended building
on an existing Small Farmers' Credit Fund\. Under the fund, farmers who
owned less than 8\.5 ha and who did not have a record of marketable surplus
- 29 -
could borrow\. The CPCS criteria of a record of marketable surplus and two
guarantors did not apply\. The appraisal mission proposed to reserve a
small amount of project funds to cover about 5% of expected project
beneficiaries\. This proposal received strong support in the Bank and it
was agreed that the mission should explore possibilities of expanding the
number of subsistence farmers served by the fund\. Ultimately this did not
take place primarily because USAID had just initiated a Smallholder
Production Services and Credit Project (SPSCP) whose target beneficiaries
were to be the subsistence farmers\. This program was to serve farmers who
could not qualify for credit under normal criteria, but were thought to
have potential to become progressive farmers and participate in future IADP
activities\. The two loan programs--SPSCP and IADP-- were intended to be
complementary, with the USAID project financing the subsistence end of the
smallholder spectrum and the Bank Project catering to the more progressive
group\. Both projects were to operate in the same geographical areas and
through many of the same cooperatives\.3/
2\.12 To reflect the importance of reaching the poorest and most
neglected farmers, the appraisal report and legal documents included a
provision that not less than 40% of farmers participating in the project
each year should be from west of the Rift (not less than 40% should also be
from east of the Rift)\. This provision was introduced because it was
feared that otherwise most investments would continue to go to the
better-off farmers in Central Kenya\. While the intention of the covenant
was praiseworthy and reflected valid equity concerns, it was to have major
political implications (para\. 3\.04 ff\.)\.
2\.13 Geographical Coverage\. The appraisal mission endorsed
Government's proposal to include districts, drawn from four Provinces, in
the project area\. It stuck to the initial notion, set out in the 1973
Agricultural Sector Survey, of a two-stage program: a first phase in 1976
to cover the Central and Eastern Provinces, and a second phase (starting in
1978) for Western and Nyanza Provinces\. The mission did not, however,
present the project as the more slowly phased and smaller project
originally proposed\. The wider coverage which the appraisal mission
supported was justified by arguing, as the Government had, that an
intermingling of high and low productivity areas would ensure better
balance and prevent the discouraging failures that might occur if the first
phase was limited to the low productivity areas\. The mission also accepted
the political realities -- Western Kenya needed visible development
programs (para\. 3\.04)\.
2\.14 Institutional Aspects\. Another argument put forward by the
mission for the larger geographical coverage was that "because agricultural
services are already being aeministered in all the provinces along the
3/ A third smallholder credit program, the Farm Input Supply Scheme
(FISS), financed by DANIDA, was also under preparation at this time\.
The emphasis of FISS was to provide credit to cooperative unions and
societies to enable them to store inputs, purchase trucks, and build
stores\. A significant number of unions and societies would thus
participate in two or all of these programs at any one time\. It is
instructive to note that Government now believes that the proliferation
of these credit schemes has only added to the accounting and management
problems of the cooperatives\. Government is now proposing to unify the
different credit schemes\.
- 30 -
lines envisaged in the project, there seems to be little danger of
overstraining the coordinating capacity of the center" (para\. 7 of the
Issues Paper)\. The Issues Paper noted that at least thirteen institutions
and five Ministries were likely to be involved in project implementation\.
It concluded that "this sounds extraordinarily complex, but merely reflects
the integrated approach"\. The mission felt that most institutions were
functioning with moderate success, and what was required was budgetary
support\. This conclusion was, with hindsight, clearly overoptimistic, and
the assumptions that Kenya had the capacity to handle the complex
administrative demands of the project were plainly founded on a poor
understanding of institutional capacity and weaknesses, and the demands
entailed in the project proposals (Chapter VIII)\.
2\.15 The Issues paper pointed out that some of the cooperatives and
the Cotton Lint and Seed Marketing board (CLSMB) were weak\. It was noted
that "half of the project area would not have adequate cooperative outlets
for credit\. In view of the desire to provide equal opportunity for
obtaining credit throughout the project area, further development of the
cooperative system would be required in these deficient areas in the early
stages of the project"\. The mission sought guidance from Bank management
on the use of technical assistance to help strengthen the cooperative
unions and societies\. Government was opposed to further technical
assistance, given the substantial technical assistance provided in the
cooperative sector by the Nordic countries at that time--about 30
expatriates per year for 15 years\. The conclusion in the Bank was that
this would be adequate, taken in conjunction with the proposed support to
the Ministry of Cooperative Development (MOCD) and the staff to be provided
to participating unions and societies,4/ again a decision that was proved
overoptimistic (Chapter VIII)\. The mission also pointed out that CLSMB was
badly managed and had serious financial problems\. It was to be an
important marketing and input supply channel for Western Kenya where the
cooperative movement was recognized as being especially weak\. As cotton
was the traditional cash crop in many of the IADP areas, and because CLSMB
had a monopoly position in marketing and processing, reliable service from
CLSMB was essential for project success\. Accordingly, a post-appraisal
mission visited Kenya in September specifically to look at the cotton
industry\. The recommendations of this mission primarily involved improved
staffing\. This was discussed at negotiations (para\. 2\.20) and staffing
provisions formed part of the conditions of effectiveness (para\. 3\.02)\.
2\.16 Even with these assurances on CLSMB, the internal Bank review
focused on concerns about the capability of Government institutions to
provide the required services\. Following review of the draft appraisal
report, there was recognition in internal Bank memoranda that substantial
supervision would be required for successful implementation of this
project\. Doubts were expressed that neither RMEA or Government had
adequate resources to provide the necessary technical back-up support\.
This issue was to be raised with Government, in a proposal that project
funds be used to engage a technical assistance agency to provide support
/ Cooperative unions are made up of a number of cooperative societies\.
- 31 -
for the project\. This suggestion was rejected by Government, and the Bank
did not pursue the issue\.
2\.17 Other Issues\. In addition to the above issues and deletions from
the preparation report, the appraisal mission very correctly proposed a
considerably expanded monitoring and evaluation effort to provide timely
data to management so that design changes could be made to the project over
time\. Other amendments included the addition of an inter-ministerial
committee and considerable increased staffing, vehicles, and operating
costs for the Ministry of Cooperative Development\. Finally, concerns about
agricultural price policy and about the cost to the Government of project
developments were reflected in, respectively, a covenant specifying that
the Government would set up a unit in the Ministry of Agriculture to review
and publish agricultural prices annually and that recurrent budget
implications of all agricultural projects would be reviewed regularly by
the Government; these two vital issues remain central to the Bank's
agricultural strategy for Kenyans, but did not figure prominantly in
discussions on the IADP project\.
Negotiations
2\.18 Because of the large number of agencies involved in the project,
negotiations were held in Nairobi in March 1976\. This was an exception to
normal procedure at that time, and reflected an appreciation of the special
circumstances and demands of IADP\. Also participating in the negotiations
were representatives of the Arab Bank for African Economic Development
(BADEA), which had tentatively agreed to finance the livestock components
of the project\. The Government of Kenya delegation waa headed by the
Permanent Secretary, MOA, and between fifteen and thirty senior ministry
and institutional representatives participated in the negotiations\. Three
major issues were discussed: management arrangements, CLSMB's
effectiveness, and annual work plans\.
2\.19 Project Management\. A key issue, on which decisions at
negotiations had lasting repercussions, was the organizational position and
status of the project coordinator\. The appraisal mission and subsequent
reviewers had expressed concerns as to whether the authority of the
proposed project coordinator, who was to be an official within the normal
MOA hierarchy, would be adequate, but above all as to how he would fit in
the ministry structure\. The appraisal mission had proposed that he report
to the head of MOA's Land and Farm Management Division; as such, he would
be rather low in Government's hierarchy\. During negotiations a compromise
was worked out\. It was agreed that the project coordinator would be in the
same job group as the head of the Land and Farm Management Division, but
administratively, he would be part of that division\. This arrangement did
not prove workable because the coordinator's status was ambiguous and his
authority patently inadequate to discharge his responsibilities\. The
appraisal proposals and the compromise agreed upon reflected a poor
understanding of the realities of Kenya's administrative system and
particularly the difficulties of interministerial coordination\.
- 32 -
2\.20 Organization of CLSMB\. At negotiations, the Bank reviewed with
Government the post-appraisal mission's findings on strengthening CLSMB\.
It was noted that Government had appointed a new and dynamic general
manager\. Following agreements reached during the post-appraisal mission,
CLSHB was in the process of appointing an internationally recruited Chief
Accountant (recruited by the Bank using its Agricultural Development
Service)\. Government also agreed to recruit internationally an experienced
financial controller and a marketing officer (para\. 3\.02)\.
2\.21 Annual Work Plans\. Details of the operation of the proposed work
plan system were also discussed at negotiations\. It was agreed that work
plans would be prepared each year by the Project Management Unit and
submitted to the Bank for approval\. In brief, it was intended that the
work plan would provide a mini-reappraisal of the project on an annual
basis\. The DCA spelt out the intended content of the work plans and
conditions to be met before specific project components could be included
in the work plan\. For example, cooperative unions and societies could only
be included in the work plan--and therefore receive project funds-if they
were financially solvent and adequately managed (para 3\.05 ff)\.
2\.22 Project Description\. There were no major disagreements between
Government and the Bank at negotiations, and no major changes were
introduced at that stage\. The project was to be the first phase of a new
long-term program for the development of smallholder agriculture based on
the "whole farm" approach\. The program was also to encourage the
development of project planning and implementation responsibilities at the
district level\. The project was thus to represent a change trom the
"vertical- to the "horizontal" approach\. The above objectives were to be
met through the provision of inputs and the strengthening of extension
services and institutions to meet the needs and support required for a wide
range of crop and livestock activities within fourteen districts of four
provinces\. While the precise definition of the project's scope and
activities was to be the subject of work plans to be agreed upon annually,
the project was expected to encourage the production of maize, beans,
cotton, potatoes, passion fruit, oil seeds, meat and milk by about 70,000
small farmers operating some 56,000 holdings\. Specifically the project
provided for:
(a) the establishment of a Project Management Unit;
(b) staff and support services for extension;
(c) cooperative staffing tor input supply;
(d) staff and storage facilities for marketing;
(e) staff and support for credit institutions;
(f) physical input requirements (through credit to farmers);
(g) on-farm hired labor (through credit to farmers);
(h) staff and facilities for livestock production and health;
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(i) project evaluation; and
(j) staff training, technical advice and studies\.
The basic planning and management unit was to be the administrative
di3trict, and project implementation, the responsibility of MOA\.
2\.23 The appraisal report provided that MOA was to have overall
responsibility for implementing the project\. Under KOA's overall
direction, those aspects of the project involving the Cooperative Bank of
Kenya (CBK), the Kenya National Federation of Cooperatives (KNFC), and the
participating cooperative unions and societies were to be carried out by
MOCD, which itself would be strengthened\. To ensure proper coordination at
the highest level, the Government agreed to establish an Inter-ministerial
Coordinating Committee\. In addition to the ministries and agencies
mentioned above, other institutions participating in the project were also
to be represented on the Committee: the Ministry of Finance (the Cereals
and Sugar Finance Corporation), the Ministry of Livestock Development
(MLD), the Agricultural Finance Corporation (AFC), the National Cereals and
Produce Board (NCPB), CLSMB, and the Horticultural Crops Development
Authority (HCDA)\. In short, with the exception of irrigation, the project
involved most major institutions dealing with agriculture in Kenya -- a
total of four implementing ministries, six parastatals and banks, and a
total of 160 cooperative unions and societies\.
2\.24 The project was estimated to cost US$35\.7 million, to be financed
as follows:
IDA Credit USS10 million
IBRD Loar US$10 million
BADEA Loan US$5 million
Government Contribution US*6 million
Farmers' Contribution US$4\.7 million
The project was approved by the Executive Directors on July 1, 1976, two
and a half years after formal project preparation commenced\.
III\. IMPLEMENTATION
3\.01 Even before the Loan and Credit became effective, it was clear
to Bank staff that major changes would have to be made in project design\.
Several assumptions made at appraisal proved to be incorrect; these are
discussed in this and subsequent chapters of the PCR\. This chapter is
divided into three sections\. The first deals with effectiveness and
project start-up, when Bank supervision missions identified the major
problems and helped change the design\. The second deals with
implementation performance by project component\. The third reviews the
final stages of the project\.
A\. Effectiveness and Start-up
Conditions of Effectiveness
3\.02 There were two major conditions of effectiveness (apart from
-34 -
the usual legal steps and specific conditions relating to the BADEA Loan
Agreement):
- strengthening CLSMB through employment of a financial
controller, a marketing officer and a chief accountant
satisfactory to the Bank; and
- drawing up and signing the Subsidiary Loan Agreement,
which was to spell out the terms for credit funds to be
onlent by Government to the Cooperative Bank of Kenya (CBK)
and the Agricultural Finance Corporation (AFC)\.
3\.03 Government requested the Bank to assist with the recruitment of a
financial controller and marketing officer for CLSYB\. The first post was
filled in late 1976, after a postponement of the effectiveness date\. CLSMB
recruited an accountant on their own\. By December, it became clear that
there would be lengthy delays while CLSMB attempted to recruit a marketing
officer\. The Bank decided to drop this recruitment as a condition of
effectiveness\. The Loan and Credit were declared effective on March 15,
1977 when all other conditions were finally met\. The marketing officer's
post was never filled\. However, in retrospect it appears unlikely that his
recruitment would have affected the project's outcome; the problems of
CLSMB were and remain more fundamental than could have been resolved by
recruitment of a few technical assistants (Chapter VIII)\.
Project Start-Up
3\.04 After the project was approved by the Bank's Board, Government
started work on the preparation of the first work plan, which was completed
in December 1976\. Immediately thereafter (January 1977), the Bank mounted
a mission to review the work plan and assist with project start-up\. The
appraisal report envisaged that the 1976/77 work plan would consist mainly
of start-up activities; instead, the work plan presented by Government
provided that some 70% of expenditures would be for credit\. This was
discussed during the supervision mission, but ultimately the Bank did not
disagree with the change (para\. 3\.06)\. Given the weaknesses of most credit
institutions (paras\. 3\.06-3\.09), this was to prove an important decision\.
The reason for the emphasis on credit is well understood\. Three years had
elapsed since project preparation began; during this time considerable
enthusiasm was generated in the rural areas for the forthcoming project\.
Several rural politicians joined the promotion and informed their
constituents of the benefits that the program would bring them\.5/
Considerable emphasis was put on what was seen as the -leading edge" of
crop development--the availability of credit in cash and kind\. Not
surprisingly, those responsible in MOA for preparing the work plan felt
that the provision of mere startup activities (staff, training, etc\.) after
lengthy delays would be politically unacceptable, so funds had to be
5/ A second consequence of the political buildup is that maay farmers
may have understood that the credit would not have to be repaid\.
- 35 -
provided for credit\. Accordingly, they proposed that credit be channelled
to about 16,200 farmers through ninety-ove cooperative societies\. MOCD
classified thirty-eight (42%) of the ninety-one societies as weak; they
would probably not meet the criteria in the DCA specifying that societies
must be adequately managed and financially solvent\. MOCD staff made it
clear to the Bank that they felt these societies were not a suitable
vehicle to channel credit\. However, they were under strong political
pressure from other parts of the Government, especially MOA, to include
them in the program\.
3\.05 These weak societies were also participating in the\. jSAID
financed SPSCP program for subsistence farmers\. Thus, the same societies
were to handle IADP loanees as well as an additional 12,300 loanees under
SCSCP\. The appraisal mission had clearly over-estimated the implementation
capacity of participating unions and societies, and specifically had failed
to take into account that the societies would be handling two separate
programs\. USAID pointed out at the time that the societies, particularly
those in the west, were operating at their maximum capacity to extend and
recover loans and that they would not be able to handle additional
loanees\. Preliminary results of the first year of the SPSCP program were
just becoming available at this time\. They showed recovery rates to be
lower than expected, about 50 to 60%\. The initial reaction of Bank staff
supervising the project was that lending through weak societies could not
be justified as it would only further weaken those societies that failed to
repay their debts and would violate the financial viability covenant in the
DCA (participating unions ind societies had to be financially solvent and
adequately managed)\. However, if the Bank did not agree to lending through
weak societies, the covenant requiring that not less than 40% of farmers
should be from west of the Rift would also be violated\. Clearly,'the two
covenants were contradictory since strict application of the financial and
management covenants would exclude many of the unions and sociaties in the
west, where most of the weak cooperatives were located\. Moreover, had the
CPCS criteria been applied as spelt out in the SAR (but not incorporated
into the legal documents), farmers in the west would also have been
ineligible since they did not have a three-year record of crop surpluses
marketed through a cooperative society (para\. 2\.10)\.
3\.06 In an attempt to reach a compromise, the Bank mission recommended
that a consultant acceptable to Government be employed by the Bank to
review the status of each of the thirty-eight weak societies, including
their record with SPSCP\. Pending the outcome of the consultant's report,
the societies were kept in the work plan because of the proximity of the
planting season\. If the consultant report concluded that a cooperative met
the criteria in the DCA, the Bank was to disburse retroactively; if the
consultant confirmed MOCD's assessment that a society was weak, the Bank
would consider disbursing an amount equivalent to the credit recovered by
CBK\. This proposal was a significant concession by the Bank since the
clear intention was that weak societies should not receive any credit
funds\. However, Government expressed their dismay at the mission's
proposal during a donor's meeting (on another project) held in March 1977\.
At the meeting, the Bank team, which did not include any project officer
familiar with the project, agreed to adhere to the requirement that at
- 36 -
least 40% of participants should be from Western Kenya\. Any society with a
recovery rate above 60% would be eligible for credit funds\. These
decisions were tantamount to endorsing Government's proposal to include the
weaker societies\.
3\.07 In April 1977, a joint Bank/Government mission, including the
consultant, visited some of the thirty-eight weaker societies\. The mission
reached two major conclusions\. First, these cooperative societies did not
exist as financial entities\. Second, problems relating to the use of
credit, credit recovery, the large number of loanees, input supplies,
marketing, technical packages, hasty project implementation, and
coordination with the SPSCP and FISS programs were more fundamental to the
success of the project than the initial concern about the financial
viability of these societies\. As a result, the April mission was expanded
into a major review of the project which took place over the subsequent
five months\.
1977 Review Mission
3\.08 Cooperative Societies\. The review mission found that most
societies in Western Kenya had been dormant since the late 1960s because of
failure to generate sufficient business\. With the implementation of SPSCP,
the societies were being reactivated but, at that time (aid-1977) they did
not exist as financial entities with balance sheets and books of accounts;
hardly any had up-to-date audited accounts\. Few societies in Western
Kenya, therefore, could meet the DCA requirement requiring competence of
management and financial solvency\. To overcome this problem, the mission
recommended assessing the performance of unions rather than societies,
since the union, and not the society or farmer, would borrow from the
Cooperative Bank of Kenya (CBK)\. The mission's next task was to define
specific criteria of financial solvency (not spelt out in the SAR) to
determine whether a union or society should be eligible for credit\.
The mission proposed that any union be excluded if one or more of the
following criteria applied: an operating loss in each of the past two
years, an unsatisfactory rate of credit recovery (suggested at not less
than 80%) by the union, or evidence of serious mismanagement\. Using these
criteria, the mission looked at ten unions, which incorporated the
thirty-eight weak societies\. It found that six failed to meet the
financial and management criteria\. By this time, the final results of the
first year of SPSCP were also available\. Credit recoveries averaged not 50
to 60% as thought earlier, but only 26%\. Based on these results, the
mission made two recommendations\. First, to help strengthen the unions and
societies, the mission recommended expanding infrastructural and staffing
support through provision of many more management and accounting staff than
envisaged at appraisal (on the same terms: 100% grant in the first year,
50% in the second)\. It also proposed that unions and societies be provided
stores and vehicles, to enable them to transport inputs and crops, and that
a considerable part of their operating costs be financed by Government
through the project\. These proposals were accepted by Government\. Second,
the mission recommended that the credit component, which Government
intended to expand in the project second year, be cut back since any
- 37 -
eLxpansion would only lead to a further deterioration in the financial
status of participating unions\. Because of political pressures, Government
did not accept the latter proposal and this issue became a major bone of
contention between Government on the one hand, and USAID and the Bank on
the other\.
3\.09 The first work plan had planned for 16,200 loanees (para\. 3\.04)\.
The second, completed in late 1977 while the review was underway,
suggested: (a) a combined total of 45,600 loanees for IADP and SPSCP
together against an appraisal target of 33,000; and (b) to do away with the
distinction between the two programs\. These proposals were made despite
the poor record in the first year and USAID's firm conviction that the
unions and societies could not handle more loanees\. The PCR mission
concluded that the distinction between progressive and subsistence farmers,
which was originally proposed as the basis for separating the two programe
would have been difficult to apply in practice since CBK made (or rejected)
loans on the basis of the performance of unions or societies, not
individual farmers\. The distinction would have had validity only if IADP
had focused on the better unions and societies, with SPSCP focusing on the
weaker cooperatives\. Indeed, to have three programs (IADP, SPSCP and FISS)
aimed at the same societies only complicated accounting and brought few
benefits\. There was, however, the DCA stipulation that 40% of IADP loanees
be from Western Kenya, which made it difficult to admit that IADP could not
operate there\. Had the fact that many societies in the west did not exist
as financial entities, and that most of these societies did not have
financial records, accounts or audits been better appreciated at appraisal
and if specific criteria of financial solvency had been defined, it would
have been easier to resist pressures from Government\. During the PCR
mission, a senior Government official involved with project implementation
observed that administrators within Government would have been in position
to exclude the weaker societies from the project's credit component only if
the appraisal report and legal documents had spelt out specific criteria a
society had to meet to be eligible for credit (for example, no society
would be eligible unless it had 70% recoveries, and accounts and audits no
more than six months in arrears); with such criteria, there could be no
dispute about whether a society was financially solvent\. The appraisal
report should also have detailed, say, a two-year program aimed to
strengthen accounts, staffing, storage, and the like\. Societies would thus
have known that they were ineligible for credit, but there was hope in the
future if they followed an improvement plan\. Instead, largely because of
the 40% covenant and the view conveyed to Government at the March 1977
donor meeting (para\. 3\.06) a supervision mission in September 1977
reluctantly accepted, as a fait accompli, the merger of the two programs,
and recommended that the overall management of SPSCP be transferred to the
IADP umbrella\. This represented a major change in project concept since
only 5% of IADP funds were intended for subsistence farmers\. It implied
also that CPCS criteria, which did not apply to SPSCP, would no longer be
applied to IADP loanees\.
- 38 -
3\.10 Loanee Targets\. The issue of the target number of loanees was
the subject of active and acrimonious debate between the Bank and the
Government during 1977\. In preparing work plans, MOA staff established the
target number of loanees for each cooperative society and union\. The
cooperatives were then expected to conform to these targets and had little
authority to veto the number of loanees (para\. 3\.19)\. In particular, CBK
was expected to follow loanee targets even if they thought the union or
society was not creditworthy\. In short, CBK and the unions and societies
became Government agents\. The focus on quantity targets versus quality of
loanees emerged as a major difference of opinion between Government and the
Bank during the review and thereafter\. Supervision staff recommended in
reviewing the 1978 work plan that, given the poor performance of SPSCP, the
combined number of SPSCP and IADP loanees in the second year-proposed in
the work plan at 45,600-should not exceed the number in the first year\.
This proposal was rejected by Government and instructions were issued that
unions and societies should adhere to the work plan targets\. Government
argued "that credit was necessary to enable a take-off by subsistence
farmers\. Shutting off credit, for whatever reason, would produce a delay,
possibly of 4 or 5 years\. Such a delay would be unacceptable to
Government\.6/ Government thus proposed to push ahead with the credit
component irrespective of the financial and management status of the
cooperatives, arguing that credit was necessary to strengthen the union or
society; this view was shared by several Bank staff working on IADP at the
time though not by the PCR mission\. Government implied that the Bank was
standing in the way of its stated policy to help the weaker sections of the
rural community\. Unable to reach agreement with the implementing
ministries, the Bank raised the issue with the Treasury later in the year\.
It was decided to mount another joint Government/Bank mission to review the
matter\. As a result, agreement was reached to reduce the number of loanees
to 36,000 and subsequently to 27,000\. This agreement was not fully
accepted by MOA, the ministry responsible for project implementation, and
the large target numbers of loanees continued until the latter stages of
the project\. Further, the discussions with the Treasury did not resolve
the issue of lending to poorly managed and financially weak unions and
societies\. The Bank did not insist that these be excluded and so credit
continued tc flow to them, although not at the rate Government wanted\. The
PCR mission believes that the issue of number of loanees was less important
than reaching agreement (or insisting) that IADP credit funds not be
channelled to weak cooperatives\.
3\.11 Non-Credit Aspects\. The review mission also stressed the need
to strengthen non-credit aspects of the project, particularly:
6/ Meeting on July 20, 1977\. Record of meeting is contained in an
internal Bank memo of July 29\.
- 39 -
- Input Supplies: The mission supported Government's policy to
develop the Kenya National Federation of Cooperatives
(KNFC), an apex cooperative institution, as the principal
supplier of inputs\. It recommended increased support to
KNFC (para 3\.21); and
- Produce Marketing: The mission recommended that the Bank
consider "any reasonable proposal from Government for stores
for cooperatives and the National Cereals and Produce
Board (NCPB)\." At a meeting on July 25, 1977, it was agreed
that there was a need to provide stores for many of the
cooperative societies, all the unions, KNFC, NCPB, and CLSMB
(paras\. 3\.20 and 3\.22)\.
The mission emphasized the importance of improving the performance of KNFC,
NCPB, and CLSMB (para\. 3\.20)\.
3\.12 Status at end of 1977\. To recapitulate on the start-up phase of
the project: even before Loan/Credit effectiveness, the Bank identified the
need for a major review of project design\. The review mission recommended
that fund- allocated for credit be reduced and infrastructure components of
the project expanded\. These recommendations later (October 1979) resulted
in a formal amendment to the DCA, reducing the credit category from US$
11\.2 million to USS 4 million\. The PCR mission finds that the review
mission generally identified the major problem areas, although it has
reservations that the provision of more infrastructure (staff, stores and
equipment) in the context of inadequate credit policies and weak
institutions would suffice to strengthen the institutions concerned
(Chapter VIII)\. Government's strong and negative reaction to some\.of the
review mission's proposals came as a great surprise to Bank staff and
management\. In their formal response in October 1977, Government noted
that "in general, the review is unduly critical and somewhat negative,
reflecting a basic misconception of underlying causes which lead to
underdevelopment\. The Review Report fails to analyse the project based on
any systematic data collection and does not appear to have come to grips
with the mechanism of loanee recruitment on the ground or the target
figures in the districts \. The letter was also very critical of a
comment in the report about the efficiency of the extension staff\. USAID
ioncurred in the Bank mission's diagnosis and proposals, and felt
sufficiently strongly that issues were being inadequately discussed and
resolved that they wrote to Government on January 23, 1978 reaffirming an
earlier statement that "USAID is unwilling to agree to release any project
monies until Government meets with us to examine and resolve outstanding
issues"\. In retrospect, Government's reaction can be easily explained\.
Political expectations had been built up and had to be met\. Another factor
mentioned as very important by Government officials interviewed during the
PCR mission was that Kenya was not short of money in 1977/78\. The coffee
boom had started and, once again, benefitted farmers in Central and Eastern
Provinces; something still had to be done in the west\. Since resources
were not a constraint, an apparent short-term problem of poor credit
recoveries was felt to be a small cost to pay to benefit these otherwise
- 40 -
neglected areas\. In brief, Government was not overly concerned about the
poor recovery rates (this attitude changed only in the last stages of the
project when Kenya was hit by a serious financial crisis)\. Elections were
looming on the horizon and the west was becoming increasingly important\.
3\.13 While the Bank continued to press for changes, especially less
credit and more infrastructure, neither the Bank nor Government succeeded
in getting the project back on track and, the integrated program as it had
been designed was never effectively launched\. From the end of 1977, there
were few basic changes in project design, despite successive efforts to
address the project's difficulties\. IADP continued essentially as a number
of separate activities (storage, cattle dipping, provision of staff and
vehicles) loosely grouped under the management of MOA\. For the sake of
clarity, the PCR report examines each component in turn\.
B\. Implementation by Project Component
Technical Packages and Crop Extension
3\.14 The credit, input supply, and agricultural extension components
of the project were tied to various technical packages\. For example, in
the first project year, a typical "package" comprised 1 acre of maize, 1
acre of cotton and 1/2 acre of sunflower, beans or groundnuts\. MOA's farm
management specialists worked out the cost of such a package, including
land preparation, seed, fertilizer and insecticides, say Ksh-1,000, and
IADP farmers were given credit on this basis\. Once the target number of
loanees was set in any district, MOA extension staff recruited potential
loanees; farmers were trained, and then given the cash and physical inputs
which formed the package\. Throughout the project period, there were
continued discussions about the appropriate crop mix, whether to include an
anchor crop (such as cotton which had to be marketed through cooperatives,
thereby helping to overcome problems of poor credit recovery), and the
amount of credit to be given in cash or kind\. The PCR mission concluded
that the package approach is not well suited to the needs of subsistence
smallholder farmers, especially in areas where the risk of crop failure is
significant\. First, it assumes that lack of financial resources was the
major constraint faced by smallholders\. There are strong indications that
this was not the case, including the consultant's report on credit issues
completed at the preparation stage (para\. 2\.06)\. The PCR mission holds
that, while lack of financial resources is certainly a constraint to
production, it is not necessarily the major constraint (paras\. 8\.04 and
8\.09)\. Second, the package approach tended to focus attention on the
provision of purchased inputs-seed, fertilizer and insecticides-- rather
than on improved crop husbandry\. And third, ic assumed that the main
objective of smallholders was to maximize gross returns\. The two last
issues are related to unattractive crop packages and are discussed in
Chapter V on agricultural impact\. Supervision reports repeatedly noted
that farmers did not find the packages attractive and that the farmers sold
fertilizer supplied against credit\.
3\.15 The extension service played a vital role in the recruitment of
loanees (para\. 3\.10)\. The introduction of a measure of management by
- 41 -
targets certainly helped remotivate the extension services to a limited
degree; it gave extension staff a sense of purpose\. Its impact on
production, however, was small particularly when compared to changes
recently introduced through the National Extension Project (para\. 8\.09)\.
Farmers (loanees) recruited by extension staff attended a three to five day
training course at a nearby farmer training centre (FTC)\. Completion of
the course guaranteed eligibility for a loan\. Farmer training has been
cited by some Government staff as one of the more successful project
components\. The PCR mission finds that while farmer training had an
impact, the FTC training was classroom oriented and somewhat theoretical\.
IADP also provided for (a) upgrading training of junior field staff through
short in-service training courses to re-orient extension agents from the
past single-crop approach to the whole-farm approach, and (b) more vehicles
and operating funds to enhance staff mobility\. The training and increased
mobility undoubtedly helped but, in the absence of an analysis of the real
constraints in MOA's extension service-the lack of an effective management
sytem--the full benefits of these inputs were not realized (Chapter VIII)\.
Indeed, a Mid-Term Evaluation Report (para\. 3\.28) revealed that during 1978
over 55% of participating IADP farmers were not visited by extension staff;
this increased to 66% in 1979\.
Cooperative Credit
3\.16 Cooperative credit proved a grave disappointment throughout the
project's life\. Despite MOA efforts to expand the number of loanees in the
early years, the actual number of loanees remained small (para\. 4\.01), and
credit recoveries averaged only 21%\. Moreover, apart from 1977 when about
70% of those who borrowed in 1976 became repeat loanees, generally some 80%
of farmers who participated in one year, dropped out the next\. Thus,
instead of achieving a cuaulative impact as intended at appraisal, new
farmers were selected each year, only to drop out\. There were several
reasons for the low reparticipation rate, notably failure to repay
outstanding loans, which excluded farmers from borrowing in subsequent
years\. Also, farmers felt that the returns from the crop packages were not
sufficiently attractive, which in turn was partly a function of the late
arrival of credit each year\.
Status of IADP I Loans aven by CBK as of March 30, 1983
(KSh '000)
Total
Loans Loans Principal Principal Repayment
Year Approved Disbursed Repaid Arrears Rate (%) a/
1977/78 21,955 14,317 2,299 12,020 16
1978/79 10,094 5,418 1,225 4,193 23
1979/80 14,690 9,021 3,011 6,009 33
1980/81 12,743 5,848 812 5,036 14
Total 59,522 34,604 7,347 27,258 21
a/ Principal repaid as percentage of arrears of principal\. This
excludes arrears of interest which would reduce the repayment
rate further\.
- 42 -
3\.17 Late Arrival of Credit\. The system of credit administration was
very complex and cumbersome, which resulted in chronic problems of late
arrival of credit\. In 1981/82 Government identified some 17 steps that
were involved from the time that a farmer was recruited through the loan
application, loan approval by the district, provincial and headquarters
cooperative officers, loan approval by CBK, the release of funds by
Government to CBK, the release of funds by CBK to the union and thence to
the society, and finally the release of funds to the farmer\. Steps have
recently been taken to streamline the process\. Another reason for the late
arrival of funds was CBK reluctance to release funds: it really did not
want to lend to what it considered weak societies (para\. 3\.18)\.
Consequently, each year it resisted\. M0A generally overcame the
resistance, but the delay meant that credit reached farmers late\. In the
latter years of the project, Bank missions felt that the late release of
funds might be the major factor contributing to poor credit recoveries\.
Consequently, a Bank staff member was assigned to work with Government to
ensure that loan funds arrived on time\. His input was very significant
and, in many areas, credit thereafter becamc available in a timely manner,
but this had little impact on recovery rates\.
3\.18 CBK's Role in Fulfilling Government's Credit Objectives\. The
bulk of the project's credit funds were onlent to unions and societies by
CBK\. As noted, throughout the project CBK and AFC (which was to handle
part of the onlending under the project) made their position clear: they
did not want to lend to weak unions and societies\. Indeed, AFC managed to
keep their role small and provided little credit to farmers under IADP\.
CBK, however, comes under the Cooperatives Act and, as such, it must do as
instructed by its parent Ministry, MOCD\. In 1977, without the knowledge of
the Bank, Government gave CBK a guarantee for losses incurred in operating
IADP\. That is, Government would cover CBK for loans that were not
recovered\. With the guarantee, CBK felt that it could do little more than
act as an agent of Government\. The Bank learnt of the guarantee only in
May 1978\. After considerable internal discussion, the guarantee was
approved retroactively but for a two-year period only\. This decision
should be considered in the context of the acrimonious discussions that had
taken place throughout 1977 and attempts to mend bridges\. Given the
substantial increase in physical support to the unions and societies and
the decline in the volume of credit agreed after the 1977 review mission,
the Bank appears to have taken the view that it would be wrong to stop
credit flowing to the weaker societies\. Moreover, since the Bank was
disbursing against incremental credit and the amount oi credit funds
released in the first year exceeded those in any subsequent years, the Bank
was no longer disbursing against this component\. Nevertheless, the PCR
mission concluded that without the guarantee, CBK would have acted in a
more responsible manner; this has, in fact, been the case under the ongoing
IADP II, where no such guarantee applies\. This view was generally shared
by Bank staff responsible for supervising the project\.
3\.19 The Role of Unions and Societies in Credit\. The table in para\.
3\.16 gives the volume of credit released to and repaid by the unions and
societies\. Unfortunately, there are no aggregate data available on the
amount of these funds that actually reached the farmers, or the farmer
- 43 -
repayment rate\. The Bank asked Government repeatedly to provide this data
but it was not forthcoming because of poor record keeping\. In the latter
stages of the project, however, MOCD looked at a sample of eleven unions
(Appendix 2)\. The sample showed that unions generally onlent about 67% of
the funds they received from CBK\. Farmers repaid 16% of the funds they
received (other reports indicate higher farmer repayment rates)\. The
unions were thus in a position to repay about 44% of the funds they
borrowed from CBK\. They actually repaid about 19% and retained about 25%\.
It is not possible to determine the extent to which these funds were
misallocated, for example, to meet salaries and unions' operating expenses,
or misappropriated\. Financial records of unions and societies are
frequently poorly kept (para\. 6\.05)\. Most unions and societies are only
too well aware of their financial plight\. However, many do not feel they
are fully to blame for their poor performance under the project\. For
example, the Chairman of the Machakos District Cooperative Union notes that
the "Government formulated the Work Plan, lending procedures and advised on
the aspects of the loans\. \.All the 17 participating societies were
hurriedly revived and/or registered during 1975/76 simultaneously with the
introduction of the program\. \. Neither the union nor the societies had
adequately trained staff to administer the program"\. As with CBK, unions
and societies felt that they were acting as agents of Government\. In this
context, it is interesting to note that the stronger unions and societies
east of the Rift became increasingly disenchanted with the credit program\.
In 1976, some 56% of loanees were from east of the Rift\. This fell as
follows: 1977, 40%; 1978, 16%; 1979 22%; and 1980, 0%\. The reason for the
decline in numbers of loanees east of the Rift was that the strong unions
and societies had access to the much larger and better managed CPCS scheme,
financed through cooperative savings\. The weaker societies had no such
funds available and, therefore, they continued to borrow through IADP and
other Government-financed programs which applied few, if any, sanctions if
past loans were not repaid\.
Cooperative Unions and Societies: Physical Aspects
3\.20 Expenditures for increased staff for cooperative unions and
societies and for storage facilities were substantially above appraisal
estimates\. Following the 1977 Bank review mission, considerable funds were
allocated in work plans for the provision of management and accounts staff,
vehicles, operating costs, and stores for the unions and societies\. The
appraisal report provided for an additional fourteen staff for unions and
societies; over 200 were recruited (Table 4)\. Regarding vehicles,
supervision m\.ssions cited the inability of cooperatives to transport their
own produce and inputs as a major constraint\. The PCR mission concludes
that the constraint was not so much shortage of transport but the inability
of the cooperatives to pay for transport by pr4vate haulers\. The appraisal
report did not provide for stores for cooperati7es\. Instead, it provided
for some twenty-eight village stores to be run by NCPB agents\. The 1977
review mission saw lack of facilities for cooperatives to store inputs and
crop surpluses as a constraint preventing them from building up their
volume of business\. It was therefore agreed that stores should be built
- 44 -
for selected unions and societies, instead of village stores\. Some
forty-five cooperative stores--intended as multipurpose stores--were built
(Appendix 1), all on a grant basis\. While support for staff and stores
certainly helped strengthen some of the unions and societies, benefits are
not commensurate with costs\. The experience illustrates clearly that the
provision of physical inputs must be accompanied by policy and
institutional changes if full benefits are to be realized (Chapter VIII)\.
Input Supplies
3\.21 Under the project, inputs were to be purchased on credit and
provided to farmers by unions and cooperatives\. Inputs were, in turn, to
be procured and transported by the Kenya National Federation of
Cooperatives (KNFC), the apex cooperative organization\. To this end,
KNFC's merchandising arm was to be strengthened through the provision of
staff, stores and vehicles\. KNFC lacked experience in the operation of an
essentially commercial activity\. Despite support under the project, KNFC's
merchandising section went into receivership as a result of mismanagement
and liquidity problems (para\. 8\.18)\. Fortunately, this did not have a
marked impact on input supplies under the project since cooperatives
generally procured inputs from KFA or other private distributors\.
Storage and Maketing Facilities
3\.22 The project provided for stores, vehicles, staff, and operating
costs for the National Cereals and Produce Board (NCPB), the parastatal
responsibLe for marketing grain and selected other crops\. The NCPB stores
envisaged at appraisal were constructed, although at much higher cost than
anticipated\. The construction of additional storage did help NCPB in its
expanding grain marketing activities, which involve an official monopoly on
marketing\. However, the major institutional and policy problems of the
NCPB were not addressed at all through the project (para 8\.18)\. The Cotton
Lint and Seed Marketing Board (CLSMB) was to play a crucial role in
marketing anticipated incremental cotton\. CLSMB's capacity to fulfill this
role had been a major issue following appraisal and steps were recommended
to strengthen it (para\. 2\.15)\. While CLSMB is stronger today than at the
inception of the project, cotton production is lower than it was in the
late 1970s\. The principal reason is late or non-payment of farmers,
related to the inefficiency of the cooperatives, the cooperatively owned
ginneries, and CLSMB (para\. 8\.11)\.
Livestock Production and Health
3\.23 The project's livestock component comprised three major programs:
tick control through cattle dipping, artificial insemination, and animal
production including extension and provision of milk handling facilities\.
In the mid-seventies, Government believed that cattle dipping was
a prerequisite if Kenya were to upgrade its cattle stock\. It was decided
that this goal could best be achieved through dipping in public dips\.
Accordingly, all "harambee" dips (communal and local authority dips often
built on a self-help basis) were to be taken over and run by Government\.
The project supported Government's plans to take over, rehabilitate and
- 45 -
operate some 1,000 dips\. Following the 1977 review and the agreement to
expand infrastructure investments under the project, it was decided in 1978
to cover all dips in the IADP districts; the number of dips was increased
to 2,420\. Accordingly, an increase in the financial allocation for
livestock from US$2\.7 million to US$6\.7 million was agreed on (this
included an added provision required because of an arithmetic erro: in the
appraisal report in estimating funds required for acaricides)\. In 1978,
Bank supervision missions reported that this component of the project was
progressing well\. In terms of funds spent on rehabilitation and operating
costs (acaricides and staff), this was true\. Some 1,000 staff were
recruited to operate the cattle dips against an appraisal estimate of about
500 (Table 4)\. In terms of impact, however, benefits were not commensurate
with cost3 apart from some high potential areas where demand for dipping is
high\. Cattle dips were frequently not well operated, dip strengths were
often incorrect, and trekking cattle to the dips resulted in milk forgone
and added exposure of animals to disease\. A recent (1983) livestock review
mission found that many dips taken over by Government have fallen into
disrepair or are partially inoperative\.
3\.24 Under IADP, artificial insemination services (AI) were to be
opened up in eleven new areas\. This component comprised: the construction
of an AI laboratory, crushes, offices, and stores; vehicles; equipment; and
operating costs\. In practice, this component primarily comprised
additional vehicles, staff and operating costs\. Implementation started
well; Government's entire AI program was a success in the mid-to-late
1970s\. The cost, however, was substantial, with actual expenditures
running up to KSh 250 per insemination in Western Kenya where the demand
was low, compared to an average of KSh 19 in Nyeri, a high potential area\.
Charges collected from farmers were small\. Since 1980, Government's AI
service has been in decline, primarily because of lack of operating funds\.
3\.25 Little was achieved in the area of animal production through
extension, primarily because of the formation of a separate Ministry of
Livestock Development (MLD), which split from MOA in 1979\. Most extension
staff, bar range management staff who were not part of IADP, remained with
MOA, so livestock extension work overall languished\. Finally, because of
budgetary constraints and the hiatus when MOA was split, most construction
components of the livestock program were not undertaken\.
Project Monitoring, Evaluation and Reporting
3\.26 The appraisal mission correctly attached considerable importance
to the establishment of a quick but reliable management information system
and a more long-term evaluation system\. Therefore, a Bank mission visited
Kenya in August 1976, six weeks after the project was approved, to work out
details\. Discussions were also held on means to evaluate simultaneously a
new Rural Access Roads Project\. The mission recommended setting up a unit
within Government's Central Bureau of Statistics (CBS) which would provide
data collection and preliminary analysis support to both projects\. This
did not happen for two reasons\. First, CBS lacked the resources, especially
staff\. And second, shortly after the Bank's approval of IADP but unrelated
to the project, MOA entered into a contract with the Harvard Institute for
- 46 -
International Development to provide a technical assistance team\. One of
the team members was located in MOA's Economic Planning Division\. He took
a lead in establishing IADP's monitoring and evaluation system and
recommended bypassing CBS and making MOA fully responsible\. Government
accepted this proposal and two surveys were drawn up: a pro forma
reporting survey, and a farm survey\. The pro forma report comprised a
questionnaire directed to the various ministries and agencies involved in
IADP including: MOA (Land and Farm Management Division, Planning and
Agricultural Extension), MOCD (including cooperative unions and societies),
CBK, AFC, KNFC, CLSMB and NCPB\. The questionnaire aimed to provide
up-to-date management information and was well conceived\. However, a
special mission to supervise the project's monitoring and evaluation system
in April 1978 noted that, although the agencies were supposed to have begun
reporting in August 1977 (on a monthly basis), no analysis or aggregated
information was available\. MOA prepared and submitted a number of reports
over the next three years\. Unfortunately, MOA lacked authority to obtain
regular and detailed information from other agencies (para\. 6\.02)\. As a
result, other agencies rarely completed the questionnaire in a timely
manner so that the reports were generally of limited use as a management
tool\.
3\.27 MOA's evaluation unit concentrated primarily on the continuous
farm survey, which was considerably expanded in concept by the Harvard
specialist\. He wanted to fit a production function to determine
causalities as well as to determine the project's effects on project
beneficiaries, provide an early indicator of project constraints, indicate
areas where the project needed to be changed, and provide an input in the
preparation of future work plans\. The survey was overly complicated and
failed on most counts\. The basic premise behind the survey, which was
carried out in one location in each of fourteen districts, was that farmers
would borrow in one year, increase their yields, repay their loans, and
borrow again; yields were projected to increase over time\. The survey was
designed to follow the same farmers over the project's life, geLerating
information over eight crop seasons\. Most farmers, however, dropped out of
the program (para\. 3\.16) and rarely did they borrow for more than two
consecutive years\. Consequently, there was no continuous upward trend\.
Rather, enumerators continued to collect data from farmers who no longer
borrowed under IADP\. In addition to the conceptual problems, data
processing \.and analytical bottlenecks were never resolved\. Only data
relating to the 1977 long rains crop were analysed and written up\. The
report was not available until December 1980 by which time the findings
were largely irrelevant\. In 1980, two years of data was taken to the
United States for processing, under the supervision of the Harvard
specialist\. Unfortunately, the data have still not been provided to
Government, and may not even have been processed\.
3\.28 In the latter stages of the project, Bank supervision missions
initiated three major attempts to salvage something from the project's
evaluation system\. First, MOA, at the Bank's request, completed an adhoc
survey (mid-term evaluation) to determine the impact of IADP\. The survey
relied on interviews with farmers covering the years 1977, 1978 and 1979;
it was not based on the quantitative data provided by IADP's enumerators\.
- 47 -
Smallholder farmers have difficulty estimating yields per unit area,
although they are excellent at estimating production from a given field\.
The data collected (Table 3) therefore, are only indicative of major
trends\. Second, RMEA engaged two consultants to assess IADP's impact\. The
consultant surveys helped build up data on numbers of loanees and drop-out
rates\. Findings on project impact are discussei in Chapter V\. And third,
RMEA engaged a consultant to review the design of the farm survey and make
proposals for changes\. The consultant's report was good, but by the time
it was available (May 1981), IADP was in its final stages and
recommendations were not followed through\. Government regards the
experience with project evaluation with concern\. It was costly and there
is little to show for work undertaken\. As a result, evaluation proposals
in the future are, understandably, likely to be greeted with caution\.
C\. Later Stages of Implementation
3\.29 The project, because of its grave problems, was intensively
supervised throughout its implementation\. Bank supervision missions
wrestled again and again with the basic issues of project concept and
organization, as well as specific operational issues related to
implementation of various project components\. Diagnosis of problems and
proposed solutions were reflected in aide-memoires prepared by supervision
staff in both 1979 and 1980\. The response from the Government was, on each
occasion, that necessary measures were underway, but in practice action was
slow and too partial to have such impact\. The PCR mission concluded, in
retrospect, that the task of carrying out the recommended actions,
involving numerous components which needed integration and strong
management, and depending on so many agencies, was simply impossible (this
view is shared by many but not all staff involved)\.
3\.30 In mid-1981, with the closing date approaching (December 1981), a
new phase of discussions began to determine how to proceed with the
project, since most credit and loan funds were unspent and in many respects
implementation had barely begun\. The Government's initial preference was
to pursue implementation largely along previous lines, with an extension of
the cltsing date\. The Bank position was quite clear, however: given poor
performance, no continuation could be contemplated without major surgery
and evidence of improved performance\. Another alternative considered was
to subsume IADP activities in IADP I areas under the on-going IADP II which
was also moving very slowly\. A final proposal, advanced by Bank staff, was
essentially to stop implementation of both IADP I and II and redesign the
program as smaller, simpler interventions focusing on the key problem areas
of research, extens!on, cooperative credit and management, smallholder
livestock, and marketing\. This disaggregation might be accomplirhed either
by redesigning the project or by cancelling the Loan and Credit and
starting afresh with new projects\. Discussions of these various options
with the Government extended over many months, and various documents oere
exchanged\. Notable was a letter from the Bank in October 1981 outlining a
ten point action program to address project issues (Appendix 3)\.
Government's responses indicated a desire to pursue the project;
essentially, Government argued that the IADP had had "tremendous" impact
when looked at in total, so the drastic action implied by cancellation of
Loan/Credit funds and design of new projects was not justified\. With the
- 48 -
benefit of hindsight it is clear that many Government officials were fully
aware of the problems of IADP, but they were deeply concerned about the
prospect of losing credit and loan fundb and about the uncertainty of
prospects for new projects to substitute for IADP\.
3\.31 Exchanges of view continued on how to handle the project through
1981, without a clear outcome; the discussions were broadened to address
issues affecting the ongoing IADP II, which also faced problems which
appeared insurmountable\. An important turning point in the Government's
approach to IADP was the initiation of work on a new agricultural extension
program\. This began following a December 1981 seminar on agricultural
extension and visits by senior MOA officials to training and visit
extension projects in India, and led to a very succesful extension pilot
project in Kenya that started early in 1982\. The closing date for IADP I
was not extended, and the Government agreed to the cancellation of
remaining funds, which amounted to the entire Bank loan (US10 million),
and one third of the IDA credit\. The BADEA loan (for the livestock
component) was extended for a further two years\. The IADP program
continued, in a reduced and somewhat halting fashion, after the closing
date, but with virtually no external support\. The success of the extension
pilot project, leading to preparation of a five-year extension project,
prompted a review of IADP II by the Bank and Government\. In September
1982, at a Country Implementation Review meeting in Nairobi, formal
agreement between Government and the Bank was reached on a new approach to
IADP, involving a disaggregation of the program, cancellation of most
external financing committed to it, and preparation of a series of new,
smaller, and simpler projects designed to achieve the initial objectives
defined for IADP\. The first such project was the National Agricultural
Extension Project, approved by the Executive Directors in June 1983\.
IV PROJECT COSTS, FINANCING, DISBURSEMENTS, AND PROCUREMENT
Project Costs
4\.01 Project costs were estimated at appraisal at KSh 288\.2 million
(US$ 35\.7 million) over a five-year development period\. Unfortunately, it
has not been possible to obtain complete and reliable data on project
expenditures because project accounts were not kept\. An estimate of actual
expenditures can be made from the amount of funds budgeted in Government's
annual Development Estimates\. Table I shows that Government budgeted
KSh 242 million over the project period, or 84% of appraisal project costs,
as summarized below:
- 49 -
Funds Budgeted for IADP I
Funds Estimate Actual
Appraisal Budgeted of Actual as % of
Estimate by Government Expenditure Appraisal
KSh million - -
Agriculture a/ 31\.5 34\.8 26\.1 83
Livestock b/ 21\.9 119\.3 89\.5 409
Cooperatives
Credit to farmers c/ 149\.7 50\.6 50\.6 34
Cooperative Stores 1\.4 3\.6 2\.7 192
Support for Cooperatives d/ 0\.6 14\.1 10\.6 1766
Support for MOCD 9\.0 4\.8 3\.6 40
Other
NCPB 7\.7 9\.2 6\.9 90
KNFC 4\.4 4\.2 3\.1 70
Other 8\.4 1\.5 1\.1 13
Sub-total 23W\.6 242\.1 194\.2
Contingencies 53\.6 - -
Total 288\.2 242\.1 194\.2 67
------- (US$ '000) )-
Total e/ 35\.7 23\.6 19\.0 53
a/ Includes extension, project management, and project monitoring
and evaluation\.
b/ Tick control, artificial insemination and animal production\.
c/ Credit from CBK to unions and societies\. About 67% of this was
onlent to farmers\.
d/ Vehicles, staff and operating costs\.
e Based on actual exchange rate at time estimate was made or
expenditure was incurred\.
Underapending of budgeted funds has been a common occurence in Kenya, and
has particularly affected the agriculture ministries\. For example, in
1977/78, MOA spent 68% of its Development Budget; in 1978/79 it spent 79%\.
If other Ministries and agencies performed similarly, it is reasonable to
assume that actual project expenditures were about 75% of the amount
budgeted\. 7/ On this basis, actual project expenditures were about
KSh 194\.2 million (US$ 19 million)\. The table shows that the two largest
items of expenditures were livestock and credit\. Expenditures on livestock
were over 300% higher than projected\. Most of this increase resulted from
the tick control program and was related to an error in calculaticn of
acaricide requirements at appraisal and an increase in expeaditure on
acaricides agreed with the Bank (para\. 1\.23)\. Although expenditures on
7/ With the exception of the figure shown for credit to farmers, which is
the actual figure taken from CBK's records\.
- 50 -
credit were only 34% of appraisal estimates, credit constituted 26% of
total project expenditures (against an appraisal estimate of about 65%)\.
Expenditures were also significantly higher than expected at appraisal for
support to cooperative unions and societies, mainly for staff, stores,
vehicles, and operating costs\.
Financing, Disbursements and Procurement
4\.02 The Bank disbursed a total of US$6\.7 million from the US$10
million IDA Credit and none of the US10 million Loan; thus US$13\.3 million
was cancelled (US$ 3\.3 million of the credit and the full Loan)\. The Bank
thus financed 35% of project costs in contrast to the 56% expected at
appraisal (based on the exchange rate at the time expenditures were
incurred)\. BADEA disbursed about USS 3\.3 million from its loan of USS 5
million; the balance was to be cancelled on December 31, 1983\. Total donor
assistance was thus US$ 10 million, so that some US$ 9 million was provided
by Government\.
4\.03 The Kenyan shilling was devalued by about 50% over the project
period\. It is not surprising, therefore, that part of the Credit and Loan
had to be cancelled\. However, based on an average disbursement rate of 56%
of project costs, Government should have been able to claim some US9\.7
million8/, and thus could have drawn down an additional US$3 million\. The
reasons for the underdisbursement were the inadequate project accounting
system (para\. 6\.06) and the inability of the project's management unit in
MOA to obtain data from other ministries and agencies (para\. 6\.01)\. A
schedule of disbursements is at Table 2\.
4\.04 Procurement procedures for project goods and services were
generally satisfactory and no major issues arose\.
V\. AGRICULTURAL IMPACT AND RATE OF RETURN
Numbers of Beneficiaries
5\.01 The principal project beneficiaries were expected to be some
70,000 farmers who were to receive intensive extension advice and modern
farm inputs\. Given the effective merging of the IADP and SPSCP programs
(para\. 3\.09), it is not meaningful to distinguish IADP loanees from SPSCP
loanees\. The table below shows that the total number of loanees never
exceeded 18,000 (25% of the final target of 70,000)\. At the end of the
project period, only 3,000 to 4,000 farmers were borrowing under these two
programs\.
8/ Includes an adjustment because Bank the disbursed against incremental
credit\. Since the volume of credit declined over the years, there was
no incremental credit requirement after the first year\.
- 51 -
Numbers of Beneficiaries
1976 1977 1978 1979 1980
Appraisal Estimate
New Loanees - 152500 17,500 17,500 19,500
Cumulative 15,500 33,000 50,500 70,000
Work Plan
IADP and SPSCP 5,500 28,500 45,600 32,500 25,600
Of which IADP 0 16,200 25,900 26,000 20,300
Actual
IADP and SPSCP 3,900 17,900 12,700 n/a n/a
Of which IADP 0 8,000 3,500 3,500 1,200
Incremental Crop Yialds
5\.02 For the typical farmer, yields were expected to increase
cumulatively, reaching the projected peak in the fourth harvest following
the farmer's first introduction to project services\. In the high potential
areas yields were expected to improve over four years as follows: maize
from 1 ton/ha to 2\.7 ton/ha, beans from 0\.54 ton/ha to 1\.1 ton/ha, and
potatoes from 5 ton/ha to 15 ton/ha\. For farmers in the low potential
areas, yields were expected to increase as follows: maize from 0\.8 ton/ha
to 2\.3 ton/ha; beans from 0\.54 ton/ha to 1\.1 ton/ha, and cotton from 0\.23
ton/ha to 0\.65 ton/ha\. Projected yield increases were in the range of 103%
to 200%\. MOA's mid-term evaluation report shows some yields increasing a
little in some years and decreasing in others\. Overall, the yield changes
are probably not significant (Table 3)\. The evaluation survey did show,
however, that input use and consequently yields increased significantly in
the year the farmer received the loan but that in the year following,
farmers who dropped out went back to previous levels of input use\. This
would indicate that provision of credit generally led to a one-shot
increase in production but had little sustained impact\.
Incremental Crop Production and Farm laact
5\.03 Because of the paucity of data, it is not possible to estimate
incremental production resulting from project activities\. Certainly
production increases, particularly sustained increases beyond the project
period, were small in relation to appraisal estimates\. Based on one of the
consultant impact reports, IADP has helped promote new technologies to a
small extent\. That is not to say that there were no benefits from the
project for reasons suggested in para\. 9\.04\. Also construction of stores,
and the provision of vehicles and operating costs have brought indirect
benefits to farmers through somewhat improved marketing and input
supplies\. The benefits from the infrastructural components are, however,
limited (Chapter VIII)\.
5\.04 It is not surprising that farmers were reluctant to adopt
recommended packages on a sustained basis\. The appraisal report includes
two farm budgets, one for a typical high zone farm, the other in the low
zone\. In the high potential zone, the model shows that a farmer's cash
- 52 -
outflow, as a result of the recommended crop package, would increase by
KSh 2,590\. This would generate an incremental cash inflow of KSh 3,250, a
cost-benefit ratio of 1:1\.3\. Thus his net return on an incremental
investment of KSh 2,590 would be KSh 660 (25%)\. In the low potential area,
his net return on an incremental investment of KSh 2,260 would be KSh 300
(13%), a cost-benefit ratio of 1:1\.1\. What farmer or investor would invest
such substantial sums, at considerable risk, to obtain such a small
incremental income? Given that yield increases under the project were very
much smaller than projected, it is apparent that appraisal packages were
unattractive\. Much work was done on crop packages during the life of the
project and some packages were nore attractive than those shown in the
SAR\. They would have been even more so Lad it not been for a small
relative decline in agricultural prices over the project period (which, it
is felt, did not have a significant impact on the project)\. The PCR
mission concluded that an extension methodology concentrating on farm
husbandry largely without credit would have been (and is being shown to be)
a more feasible approach (para\. 8\.09)\.
Impact from the Livestock Program
5\.05 Probably the most successful project component was artificial
insemination\. By 1980, IADP I and II were supporting about 165,000
inseminations a year, representing about 30% of the national program
(data are not available on either program separately)\. The number of
crossbred animals owned by smallholders is now very significant\.
Unfortunately, because of marketing problems, this has not been translated
into an increase in the quantity of milk marketed\. The dipping program was
less successful and very costly\. Government records show that only 139
head of stock died from tick borne diseases in 1979 and 1980 in IADP
areas\. They also show increased incidence of both anaplasmosis and red
water\.
Economic Rate of Return
5\.06 Because of the failure of the monitoring and evaluation
systems and the consequent lack of data, it is not possible to estimate
the economic rate of return\. The two major components of the project (in
financial terms)--credit and tick control-have brought only small
benefits\. A comparison of these benefits against projected appraisal
benefits and actual project expenditures indicates a rate of return close
to zero or possibly negative\.
VI\. ORGANIZATION AND MANAGEMENT
Overall Management
6\.01 The proposed integration of activities of the several ministries
and institutions involved in project implementation to "ensure simultaenous
provision of closely integrated services so that the lack of one did not
nullify the value of the others" did not generally materialize, except
during preparation of the annual work plans (para\. 6\.06)\. The Coordinating
Committee was established but was so large that it proved ineffective and
- 53 -
met less and less frequently as time progressed\. More important, it was
not possible for MOA to assume "overall responsibility for implementation
of the project", as intended\. Early in project implementation, it was
realized that the appraisal proposal to establish a new program unit within
an existing division of M0A would mean that the head of the program would
be too low in Government's hierarchy to be effective\. Accordingly, a new
division was set up in MOA to manage the project, the Project Mnagement
and Evaluation Division (PHED)\. Despite this change, the Program Head did
not have the authority to direct other ministries and agencies\. His role
was that of a coordinator\. Where other implementing ministries or agencies
failed to comply with his requests, for example, to provide accounting data
to enable Government to submit disbursement requests, there was little that
could easily be done apart from requesting that the Permanent Secretary,
MOA, take the matter up formally with the concerned Permanent Secretary or
General Manager\. In short, there were too many lines of communication but
few clear lines of authority (para\. 8\.06)\.
6\.02 Despite the plethora of institutions involved in the project and
the lack of real authority of the ministry held responsible for
implementation, the project could have succeeded had a basic assumption of
the appraisal mission been correct: that most project institutions were
already functioning with moderate success (Appraisal Report, para\. 5\.04)\.
This issue is discussed in Chapter VIII, which also includes a review of
the Bank's analysis and recommendations for MOA, MLD, NCPB, and CLSMB, four
of the main project entities\. This chapter, therefore, focuses on the
performance of MOCD and the cooperative unions and societies, the major
channels for project credit funds\. Work plans and audits and accounts are
also discussed\.
Cooperative Management
6\.03 It was envisaged at appraisal that 65% of project costs would be
for credit and another 7% for strengthening participating unions and
societies (1%), MOCD (4%), and KNFC (2%)\. Thus over 70% of project costs
were related to the cooperative sector\. Even after the 1977 review, when
the amount of credit funds was reduced and infrastructure support to
cooperatives increased, the cooperative sector remained crucial to the
success of the project\. Yet at the conclusion of the project many
cooperative unions and societies that were targets for institutional
strengthening under the project were still not viable or self-financing,
and they were certainly more heavily in debt\. Why have they performed so
indifferently? In 1980, RMEA employed consultants to review some seventeen
cooperatives--one-third strong, one-third average, and one-third weak\. The
objective was to identify common factors that might account for relative
weaknesses or strengths\. The study found that the most critical problem
affecting the performance of the unions and societies was the intrusion of
politics in the management committee\. In an attempt to remedy this
situation, Government recently announced that no politician may hold a
position in a cooperative union or society; it is too early to assess the
impact of this decision\. The study confirmed much that had been reported
on weak cooperative ma\.-agement during project supervision missions\. Of the
seventeen cooperatives visited, only two were assessed as being well
- 54 -
managed; six had reasonable management but were experiencing problems, and
the remaining nine faced major -nanagement problems\. The main problems
were \.mproper accounting for funds received, serious delays in preparation
of audits (three to four years), accounts that did not reconcile with CBK,
extremely heavy arrears, and frequent misallocation of funds\. What was
extremely difficult to assess was the extent to which mismanagement was a
result of political interference or, conversely, given weak management, the
union or society became an easy target for manipulation\. Whatever the
cause, there is an overriding need to insulate the cooperative movement
from outside Influences (paras\. b\.14 and 8\.15)\.
Audits and Accounts
6\.04 The appraisal report called for the annual submission of audited
accounts of the following institutions: MOA, MOCD, MLD, NCPB, CBK, AFC,
KNFC, HCDA, and all participating cooperative unions and societies\.
Reports were to be submitted within six months of the close of the fiscal
year\. On this basis, the Bank should have received almost 100 audits a
year\. It should have been apparent at appraisal that this provision was
highly unrealistic\. The administrative problems involved in coordinating
submissions and monitoring reporting dates far outweighed the benefits
likely to be derived from securing the reports\. It was quite unrealistic
too for the Bank to assume that it would have the interest or the capacity
to analyze and review all these reports each year\. A recent exercise by
Bank staff and Government that has reviewed this question concluded that in
future the monitoring and review of audit reports from cooperatives
benefitting from project support should be done by the intermediary
institutions (usually MOCD or CBK) which would then provide a single
summary certificate\. This approach does not, however, address the
fundamental problem of very weak accounting by many cooperatives\.
Extensive technical assistance has failed to resolve the problem and the
conclusion to be drawn is that only the cutting off ot project finance to
poor performers can encourage them to prepare proper, timely accounts\. A
more difficult problem is the quality of MOCD audits of cooperatives\.
Examination of a sample of such audits by supervision missions revealed
that the audits are sometimes incomplete and frequently substandard\.
Depite many hundreds of manyeaiSof technical assistance the problems of
improving the quality of MOCD audits remains and recent projects (e\.g\., the
Cotton Processing and Marketing Project) have sought to rely on independent
audits by commercial firms\. Even the use of commercial firms is, however,
not without its problems both in terms of quality and price, since many of
the weaker cooperatives simply cannot afford their fees\.
6\.0S The Project Unit's financial controller was to maintain books of
accounts to reflect IADP's assets, liabilities, receipts and payments\.
Supervision missions and the PCR mission were unable to obtain accurate
statements of expenditures under the project\. Supervision missions were
informed that these data were not available\. In recent years the Bank has
focused on Government's budgeting and accounting system\. Ouring these
reviews, it became evident that Government does have an adequate accounting
system which is computerized and this could have been used to extract
expenditure records, at least from participating ministries\. It would
appear that MUA staft were simply not aware of the use that could be made
of the computer system and the data that could be extracted trom it\. This
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demonstrates three things\. First, that when problems start to emerge in a
project such as IADP, with its many components and institutions, neither
the Bank nor Government is equipped to follow up on all aspects requiring
attention (para\. 8\.17)\. For example, it was only after considerable
in-depth discussion on the accounting system proposed for the National
Extension Project (para\. 8\.08) that the potential of Government's
accounting system was fully realized\. Second, it demonstrates that the
lack of project accounts was a direct casualty of the location of the
project unit in MOA without authority over other ministries and agencies\.
And third, it is clear that accounting and auditing capabilities were not
fully analysed at appraisal\.
Annual Work Plans
6\.06 The concept of a work plan to modify a projeCt IL light of
experience is very useful\. In practice, however, the IADP work plan system
did not work well\. Plans tended to focus on quantitative targets and
financial requirements, such as numbers of loanees and numbers of stores,
rather than on the administrative, policy, budgeting and institutional
issues that were the major bottlenecks\. Work plans did not, for example,
include an assessment of the capabilities of each participating cooperative
union and society nor of other participating institutions\. Also, as
Government's budgetary situation deteriorated over the project period, the
gap between IADP work plan requests for financing and actual funds budgeted
by the Treasury became increasingly large, a reflection of the weak
budgeting process in 1MDA (para\. 8\.16)\. For example, in 1978/79 the IADP
work plan requested KSh 86 million (US$ 10\.5 million)\. The appraisal
report envisaged expenditures of KSh 73 million including contingencies\.
Government budgeted KSh 65 million (76% of the work plan estimates)\. In
1980/81 the figures were: work plan-KSh 87 million; Appraisal Report-KSh
83 million; and Development Estimates-KSh 48 million (55% of the work
plan)\. The gap became so large that the work plans no longer provided a
blueprint for project ectivities\. Because plans were broken down for
presentation to Treasury by implementing agencies, they were not reviewed
in an integrated manner and cuts were based on divergent criteria; the
resemblance between requests and approved plans was thus limited\. Recently
(with IADP II), work plans have been computerized so that, as the Treasury
made cuts, the work plan could be modified accordingly\. Despite its
drawbacks, the preparation of annual work plans has been one of the more
successful project components\. A joint MOA/MOCD/CBK team would visit each
district to discuss targets and plans\. It engendered a team approach to
planning that has been lacking in Kenya\. By 1981 and subsequently, the
planning process has worked better and will stand Government in good stead
for the proposed district focus\.
VII\. FOLLOW-ON PROJECT
7\.01 When the concept of an integrated smallholder project was first
--nceived in 1973, two separate projects were recommended -- one in Central
and Eastern Province, the other in Western and Nyanza, each costing about
US$ 5 million\. The initial intention was not to await the results the
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first smallholder project before embarking upon the second, so the two
would proceed in parallel\. The approach of starting on a small scale in
each project, and expanding on the basis of experience, was abandoned at
the project preparation stage when it was agreed to start all components in
14 districts simultaneously\. A project brief was prepared for the second
project (IADP II) in October 1976, five months before IADP I was
effective\. The brief noted "as IADP II is an extension of IADP I without
significant changes in project concept, no major obstacles should be
encountered in preparation of 1ADP II\. There will not, however, be any
chance to gain experience from IADP I before completing preparation of the
second phase"\. The PCR mission concludes that the proposal to initiate an
almost concurrent IADP II should have been reassessed then\. In any event,
preparation was completed by September 1978, with appraisal in December
1978\. By this time, the Bank had completed its major review of 1977 which
called for a reduction in the amount of credit and an expansion in
infrastructural and staff support\. The appraisal report for LADP II noted
that IADP I had problems, but its flexibility permitted adjustments in
light of experience\. The report noted "at IADP I appraisal, for instance,
it was estimated that, for every shilling spent on smallholder credit, 0\.56
shillings would be spent for infrastructure development including livestock
services, marketing, and cooperative development\. It is now estimated
that, for every shilling spent on smallholder credit in IADP II, nine
shillings would be spent on infrastructure development\. This change in the
IADP II investment mix is probably the most important practical lesson
learned from IADP I"\.
7\.02 The IADP II appraisal mission believed that the Bank had
identified the major constraints affecting the IADP I Project, and that
these were being resolved\. What were some of the major problems
recognized? Credit recoveries under IADP I were known to be low, at about
30-50%\. The Bank had not received any project accounts or audits under
IADP I, including from the cooperative unions and societies, and it was
evident that most cooperative audits were three to four years in arrears\.
Moreover, when IADP II went to the Board in December 1979--three and a half
years after IADP I--disbursements under IADP I were only US$1\.3 million
(13% of the appraisal target, giving a rate of disbursements of about
US$450,000 per year)\. Clearly, the hope of the Bank staff and Government
officials concerned was that because of the shift in focus to
infrastructural development, the major problems would be overcome in both
the on-going and new projects\. Therefore, the Bank went ahead with the
IADP II project\. The design of the second project differed from the first
in several important respects, largely to reflect the experience of IADP I
up to that point\. It also included several new components: rural access
roads, domestic water supplies, soil conservation and reafforestation,
rehabilitation of five smallscale irrigation schemes, agricultural
research, and coconut rehabilitation\. The total cost was US$91\.7 million,
thus substantially larger than IADP I\. The subsequent record makes clear
that the hopes for improved performance were not justified, and
implementation of old and new projects alike was painfully slow,
constrained primarily by enormous management problems\. As of September
30, 1983, IDA disbursements under IADP II were US$3\.0 million against an
appraisal target of US$24 million (12\.5% of target)\. In late 1983, a large
part of the IDA credit for IADP II was cancelled after the Government and
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IDA agreed that the project was unimplementable as originally designed\.
The PCR mission appreciates the difficulty of foreseeing, with information
available at the time, that IADP II would run into such major problems that
Government would eventually stop implementation\. Nevertheless it is
reasonable to conclude that the approval of IADP II should have been
delayed and the size of the project reduced, given the grave problems
already apparent at the time of appraisal\.
VIII\. SPECIFIC ISSUES, BANK PERFORMANCE AND LESSONS LEARNT
A\. Project Design and Appraisal
General Comment
8\.01 Scope of the Project: At an important early stage in project
design, the Government, for politic-l reasons, decided against a gradual,
phased approach to project implementation\. The desire of the Kenya
Government to speed development to previously neglected areas is highly
commendable\. Kenya was among the first countries in the East Africa region
to try to translate such objectives into reality\. But did the institutions
charged with achieving the project's objectives have the proven ability to
do so? In sum, was the Bank right to approve such an ambitious project,
followed in a short space of time by an even larger project? The PCR
mission concludes that a smaller, less ambitious project, along the lines
suggested by the preparation mission, would have been wiser and would have
contributed less to unrealistic expectations for a risky program\. In the
event, IADP was looked upon as a project that was expected to have a major
impact on smallholder production and incomes from the start\. Once
political expectations were raised, Government felt obliged to meet then at
all costs\. But would it have been politically acceptable to the Kenya
Government if the Bank had insisted on a reduction in the project's scale
at appraisal; that is, would the Government have rejected the appraisal
mission's findings? Also, would such a recommendation have been consistent
with the Bank's high priority to help rural Africa (para\. 8\.19)?
Discussions during preparation of the PCR indicate that most Govqrnment
staff feel that a reduction in project scope would not have been feasible
in the climate of the times\. Government staff do feel, however, that the
project should not have started with credit (which would necessarily have
reduced the project's size)\. Government staff indicate that this strategy
would only have been possible had the appraisal report made it clear that
no credit could go to societies that failed to meet specific criteria which
could be readily interpreted (not just that societies be "financially
viable")\.
8\.02 It was evident at a very early stage of project implementation,
once the first year's results of SCSCP were available (with their 26%
recovery rates) that the project, especially the credit component, needed
substantial changes\. Government was unwilling to make these changes,
essentially for political reasons\. Government simply did not see poor
credit recovery as a particularly crucial issue in any event\. Kenya was in
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the midst of the coffee boom and this seemed a small price to pay to meet
political objectives--to be seen to be assisting Western Kenya\. If the
project had been smaller, the Government's position would probably have
been more flexible, and some fairly acrimonious discussions might have been
averted\.
8\.03 Major Design Weaknesses: The appraisal mission noted the
weakness in project preparation, and hence the lack of specificity in
definition of investment proposals\. To overcome these problems, annual
work plans were a central project management feature, allowing the
necessary flexibility to define and adapt programs during implementation\.
In practice, work plans tended to focus unduly on quantitative targets and
financial requirements\. One lesson that emerges from IADP is that too much
rel4qnce should not be placed on annual work plans\. They help, but they
canr\.ot substitute for good project design and appraisal, or clear
identification of fundamental issues\. The PCR mission concluded that the
major weaknesses of the appraisal were: (a) the unattractiveness of the
crop packages; (b) the premise that the major constraint to increased
production was lack of financial resources; (c) the failure to understand
how the Government machinery works in terms of lines of authority; (d) the
failure to identify just how weak the existing institutions were; and (e)
the failure to question whether solutions proposed in the preparation
report addressed the symptoms of perceived problems rather than the
causes\. These issues are addressed below\.
Crop Packages and the Need for Credit
8\.04 A consultants' report prepared in 1976 concluded that lack of
smallholder access to credit was not generally a critical constraint
(para\. 2\.06)\. As staff involved in preparation and appraisal did not
accept this premise, credit was a pivotal project component, with 65% of
project costs allocated for smallholder credit\. During preparation of the
PCR, it became cleam that there are substantial differences of opinion on
this issue within the Bank\. Several Bank and Government staff have argued
that credit is required to enable poorer farmers to make the quantum jump
to become market-oriented progressive farmers\. Others contend that
projects such as the Nacional Extension Project (para\. 8\.09) have
demonstrated that credit is not crucial to raising smallholder yields and
incomes, at least initially\. The PCR supports the latter point of view and
concludes that lack of financial resources was a relatively minor
constraint, less important than policy, institutional, and budgetary
issues\.
8\.05 More fundamentally, the crop packages proposed at appraisal would
not have induced farmers to adopt them, even had farmers achieved the yield
increases projected at appraisal\. Yields in low potential areas were
expected to increase by a minimum of 100% and up to 200%, which was not
likely\. Overestimation of yield increases is frequently noted in Bank
PCRs\. An effective way to avoid this trap is to finance small projects to
test whether assumptions are valid\. Farmers in the low potential areas had
to invest an additional KSh 2,260 to get additional income of KSh 2,560,
a cost benefit ratio of 1:1\.1\. Farmers normally require a ratio of about
1:2 before they will adopt new recommendations\. Crop packages were better
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than indicated in the SAR, although they suffered from a relative decline
in crop prices over the project period\. In practice, farmers adopted the
packages for one season and then dropped out for reasons explained earlier\.
Project Complexity and Organisation
8\.06 LADP was a multicomponent project involving a large number of
agencies\. The appraisal mission issues paper acknowledged the project's
complexity and noted "some concern about the capacity of the agricultural
institutions to handle the number and size of agricultural services
envisaged since at least thirteen institutions and five ministries are
likely to be involved in project implementation\. This sounds
extraordinarily complex but merely reflects the integrated approach
Also, in many instances, the institutions are already handling greater
inputs and services than are envisaged under the project, but need more
equipment and personnel to operate more efficiently\. These would be
provided under the project"\. The IADP program did not depend entirely on
effective coordination of all these agencies\. Nevertheless, the major
component in terms of potential impact--crop packages backed up by
credit--would have required coordination of MOA, MOCD, CBK and
articipating cooperative unions and societies\. Even where effective
coordination was not required, a single entity needed to direct the work of
other project agencies\. The appraisal report noted that MOA would be that
agency, with "overall responsibility for implementing the project", but it
lacked the authority to do so\. The Permanent Secretary of MUA stated
recently (correctly, we believe) that he could not be held responsible for
project components that were not implemented by his ministry\. /He also
noted that the only ministry or agency in Kenya with the authority to pull
together a project such as IADP is the Office of the President\. The role
of the Office of the President is, however, one of policy and coordination
and not implementation\. It would not, therefore, have been feasible to
make it responsible for project implementation\. The inevitable
ineffectiveness of the Interministerial Coordinating Committee and the
inability of PMED to direct other ministries and agencies was partly
responsible for the project's failure\. In particular, MOA was unable to
obtain project management (monitoring) information from other ministries
which would have enabled much earlier problem identification\. It was also
unable to obtain data on project expenditures necessary for MOA to produce
project accounts and claim disbursements from the Bank\. The PCR mission
met with all Government staff who had headed IADP\. They generally felt
that the organisational structure of IADP did not adequately reflect the
way Government ministries work in Kenya, where authority runs vertically,
not horizontally\. They commented that one consequence of the location of
the project in MOA was that only MOA felt it was really "their" project\.
When meetings were called, other ministries and agencies frequently sent
only junior staff to attend\. It is interesting that Government staff
generally did not feel that the project would have worked better had the
project management unit been located elsewhere, suggesting that it would
9/ Hence project design failed to take into account a major conclusion in
the Bank's Rural Development Policy Paper (1975) which noted that
effective planning and implementation of rural development programs
require, inter alia, "a strong organization at the national level to
coordinate vertically organized, central government sector departments"
(p\. 33)\.
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have been difficult for such a multi-agency, national project to succeed\.
In particular, they indicated that the two other likely contenders, MOCD
and the Ministry of Planning, had been consciously rejected during project
preparation: MOCD was felt to be too weak to be a lead ag,ncy and Planning
was not an "implementing" ministry\.
Institutional Weaknesses and Proposed Remedies
8\.07 The appraisal mission noted that "most institutions are
functioning with moderate success" and implied that what was required was
largely budgetary support: more staff, equipment, vehicles, and operating
costs\. It noted that the cooperatives were weak but, apart from the
provision of fourteen staff for the few project unions and societies which
initially were deemed to be unable to pay from their own resources, little
support was provided to the unions and societies other than reliance on the
Nordic technical assistance program\. There is little doubt that appraisal
overestimated the capacity of the cooperatives to channel credit funds to
farmers (para\. 8\.13 ff)\. Indeed, the policy and institutional issues in
most project institutions were, and remain, so complex that the Bank now
finds that each needs to be examined in considerable depth--far more
analysis than could have been achieved with the broad- brush approach under
a multi-agency project such as IADP (para\. 8\.17)\. This conclusion is
reflected in the decision to disaggregate IADP into separate projects, each
now involving as few agencies as possible so lines of responsibility and
accountability are clear (para\. 3\.30)\.
8\.08 The following paragraphs review how the Bank now proposes to
tackle institutional and other issues that arose during IADP
implementation\. They demonstrate two important conclusions: first, that
participating institutions had fundamental problems that were not
adequately addressed at appraisal\. And second, that many crucial lessons
were learned and followed up as a result of the IADP experience -- an
important positive outcome of the project\.
8\.09 Agricultural Extension\. IADP provided financial and physical
support for the extension service, primarily vehicles and operating costs\.
Under the proposed strategy, MOA extension agents recruited a target number
of farmers in each district to receive loans; these farmers were then
trained at a Farmers' Training Center\. Farmers should subsequently have
received further extension advice\. The FTC training was rather theoretical
and extension agents visited few loanees after they received loans\.
Nevertheless, the introduction of some measure of management by target
(through numbers of loanees) helped MOA staff build up a sense of purpose\.
Full benefits from these investments were not, however, realized since LADP
did not adequately address two major constraints: the lack of an effective
management system, and the appropriateness of the "package" approach\. In
early 1982, Government initiated a pilot Training and Visit (T & V)
extension Project in two districts\. This was successful and led to the
National Extension Project which has introduced a system of regular and
pre-scheduled visits to farmers and fortnightly in-service training\. With
the introduction of an effective management system, extension agents now
visit farmers on a regular basis\. Equally important, extension agents have
something appropriate to recommend to the farmers\. The -package- approach
has been dropped because of a tendency to focus on the provision of cash
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inputs only\. Most smallholder farmers have sub-optimal plant populations
(say 25,000 plants of maize per ha instead of some 45-55,000)\. Under these
circumstances, the return to fertilizer is very small\. kecommendations
must aim to make best use of farmers' available financial and physical
resources\. Under the pilot T & V project, if a farmer did not have the
cash or access to credit, recommendations focussed on improved crop
husbandry to achieve a full plant population\. Only thereafter was he
encouraged to buy fertilizer\.
8\.10 It is instructive to examine the manpower involved to prepare and
appraise the new National Extension Project\. First, two consultants were
recruited to get the pilot off the ground, supported by some nine weeks of
Bank staff time\. The preparation involved one Bank staff member for about
three months\. This was followed by a relatively large appraisal mission
(seven persons)\. Bank management has recognized that this apparently
straight forward project should have intensive supervision\. Among numerous
issues raised at appraisal, coordination between research and extension
stood out, yet this involved two arms of the same ministry\. This effort
proved necessary to ensure the success of a simple extension project, so it
is perhaps not surprising that, as a small parL of IADP, the extension
component did not realize full benefits\. It is also instructive that the
pilot T & V project achieved substantial production increases for nearly
6,000 farmers, almost as many as were reached under IADP (excluding
SPSCP), at a fraction of the cost and without an integrated, multi-agency
approach\.
b\.11 Cotton Marketing and Processing\. A major concern at appraisal
was the poor performance of CLSMB, and a special post-appraisal mission
examined this institution in more detail\. Even so, CLSHB did not play the
role expected of it at appraisal\. There were a variety of reasons for this
including: weak management, poor loan recovery, problems related to cotton
collection and ginning, poor producer prices, and late and low payments to
farmers by cotton cooperatives\. Subsequently, a separate project was
prepared, with appraisal in April 1980, designed to tackle some of these
problems, in particular to improve the post-harvest handling of cotton by
improving the cotton c,llection and marketing systems, rehabilitating and
expanding cotton ginning, and strengthening the technical/financial
management of CLSMB and cotton cooperative unions and societies\. because
the issues were complex, several follow-up missions were required before
the project was finally approved by the Executive Directors in April 1982\.
Again, the experience illustrates both the weakness of one of the IADP
institutions and the magnitude of effort required to identify the problems
and recommend solutions to rectify the situation 10/\.
8\.12 Marketing\. Under the project, the National Cereals and Produce
board (NCPB), the parastatal handling major food grains, was to be
strengthened\. The actions proposed were tiny in relation to NCPB's
operations and had little impact\. More important, inclusion of NCPB
complicated project management by adding another implementing agency, but
the basic institutional and policy issues affecting NCPB and grain
marketing were not addressed\. These issues were a central focus of the
Second Structural Adjustment Operation (approved in July 1952); a
IU/ In their comments on the PCR, Government indicated that it did not
agree with the implication that the delays in implementing the new Cotton
Processing and Marketing project were due to weakness on the Board's part\.
- 62 -
comprehensive consultant study on the topic has just been completed, and an
action program for far reaching reform of grain marketing policy and
institutions is being prepared\.
8\.13 CBK, Cooperative Credit, and Cooperatives\. The main channel for
IADP smallholder credit was to be CBK (limited credit funds were also to be
channelled through AFC)\. The credit program was based on an existing
Cooperative Production Credit Scheme (CPCS)\. Under CPCS, credit was
channelled to strong cooperative societies and onlent to progressive
farmers who had (a) a three-year record of marketing their crop surpluses
through the society and (b) two guarantors\. The appraisal mission
recommended initially that 95% of credit funds under TADP be allocated on
these criteria, but criteria were not spelt out in the DCA\. Also, the DCA
had an important internal contradiction, requiring, on the one hand, that
financing be restricted to cooperatives that were financially solvent and
well managed and on the other that 40% of participating farmers be from
Western Kenya (where there were few strong cooperatives)\. Most cooperative
societies in the west were dormant in the early 1970s and were only then
being reactivated under the USAID-financed SPSCP scheme; they did not meet
the criterion of financial solvency\. Indeed, the 1977 review mission found
that the societies did not even exist as financial entities with books of
accounts and audits\. Also most farmers in the west could not meet the CPCS
criteria requiring that they had marketed a crop surplus through a
cooperative society for three years\. It is clear that insufficient time
was spent at appraisal on the issue of cooperative finance and management\.
8\.14 The solutions to the problem of cooperatives and cooperative
credit are not easy or clear\. A sector review of agricultural credit is
now underway\. It concludes that CBK has the potential to perform well
provided it is allowed to do so\. CBK, as a cooperative, falls under the
Cooperatives Act\. As such, MOCD can instruct CBK to lend to certain unions
and societies\. To function effectively, however, CBK must act as an
independent institution, authorized not to lend to utL;i\.Able or poorly
managed societies\. Two other factors should be taken into account in
assessing CBK's record under IADP\. First, the Governmeant guarantee
undermined what little independence the institution had\. Thereafter, CBK
acted largely as Government's agent, lending where told by KOA and MOCD\.
In retrospect, the Bank's retroactive approval of the guarantee was an
important mistake (para\. 3\.09)\. The approval was given partly because
Government felt so strongly that loans should continue, and partly in the
belief that credit would allow the weak unions and societies to increase
their volume of business and, thus, be in a position to help themselves\.
8\.15 With regard to the unions and societies, there are no easy
solutions\. The Nordic countries have provided almost 500\.manyears of
technical assistance to the cooperative movement\. Projects such as IADP
and SPSCP have provided staff, vehicles, stores and operating costs\. Yet
the movement remains weak\. The solution partly lies in the application of
strict financial criteria, for example, that to borrow, a union must have
repaid 75% of all loans due and must have a set of recently audited
accounts\. If cooperatives continue to receive support and funds
irrespective of their performance, there will be no long-run improvement\.
In future Bank operations involving cooperatives, specific lending criteria
should be defined in the legal documents\. This has the added advantage
that it would help isolate the institutions from political pressure\. The
above strategy would, however, only address issues of cooperative credit\.
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It does not address the issue of how to strengthen the cooperatives, or
how IADP might have strengthened cooperatives before chanelling credit to
them\. Cooperatives in many African countries are weak desp'te often
massive external support in the form of cash, infrastructure, and technical
assistance\. Intrusion of politics is often cited as a major problem\. But
can an external donor isolate cooperatives from political interference?
The PCR mission concludes that a cross-country study of cooperatives in
Africa would be useful to draw lessons for the future\. It may be that
under certain political circumstances, the Bank cannot support cooperatives
effectively\.
8\.16 Monitoring and Budgeting\. Government officials and supervision
missions lacked up-to-date quantitative data to back their "feel" that the
project was performing badly\. Another important problem was the difficulty
in presenting and defending budget requests for a project involving several
agencies, and in channelling budgeted funds to operations\. These financial
problems affected many projects and as a result Government and the Bank
reviewed the issues and established a Budget and Financial Management Task
Force for agriculture in 1982, in conjunction with the Second Structural
Adjustment Operation\. The Task Force has had an important impact in
focusing attention on key issues such as policy orientation in the budget
estimates process, management of the forward budget process, flow of iunds
to field level, district budgeting, multi-agency budgeting, training of
finance and budget staff, and use of micro processers to aid financial
management\. The design of IADP was based on the assumption that those
processes already worked well, an important conceptual flaw\.
8\.17 Conclusions on Institutional Design Aspects\. The project
involved essentially budgetary support to existing instituions\. At the end
of the project period and even today, many of these institutions are weak\.
In retrospect it is clear that the apprainal mission underestimated just
how weak the institutions were, and subsequent events have intervened to
aggravate their problems\. The decision of the 1977 zevLew mission to
provide more infrascracture and staff is questionable as it did not address
basic institutional constraints\. The problems in most institutions were of
such magnitude that they required intensive study, followed by policy and
institutional changes, as well as investment support\. Each institution
involved in IADP merited such treatment, posing _a task of enormous
complexity\. In preparing the PCR, a recurring question posed by Government
staff was whether the Bank was -quipped to deal with large multi-agency
projects in Africa? Theoretically, the staff inputs required for appraisal
and supervision L \.Ld be mobilized by the Bank, but in practice unusually
large efforts for particular projects are very difficult to organize\. It
is interesting that several Government staff noted to the PCR mission that
the Bank is at its most constructive when analysing institutional, policy,
and budgetary problems in depth, as can be done with single entity projects
such as the National Extension Project\. This raises the important issue of
project complexity; the experience of IADP suggests that it may be wiser to
limit the number of implementing agencies for such projects\.
- 64 -
Government Monopoly and the Private Sector
8\.18 A broad issue affecting project design and implementation was its
implications for Government's role in providing farmer services\. In
several ways, the project supported an expansion in Government's direct
responsibilities, without careful evaluation of either the consequences or
possible alternatives, notably reliance on the private sector\. Three
examples are the IADP components for farm inputs, cattle dips, and grain
marketing and storage\. When IADP I was appraised, input distribution in
smallholder areas was inadequate, so provisions to support KNFC efforts to
provide inputs to farmers were included\. However, it is clear with
hindsight that the reasons for poor input distribution were primarily
insufficient fertilizer price margins, while the Kenya Farmers Association
(KFA) and private traders already had an excellent network, well equipped
to supply inputs\. In the event, the KNFC component did not work; the
merchandising arm of KNFC, supported under the project, went bankrupt
because of mismanagement and liquidity problems\. In livestock, the project
supported Government's takeover and management of community cattle dips
(this component was expanded following the 1977 review mission)\. A
significant number of these dips are now not operating effectively\. Are
Government-run dips the best means of reducing tick-borne diseases? There
are certainly alternative solutions such as small hand-sprayers that
smallholders can operate themselves\. Finally, the project expanded the
number of marketing stores owned by the cooperatives and the NCPB, without
exploring whether the private sector could have handled this better\.
B\. Bank Supervision and Subsequent Performance
8\.19 The PCR has commented extensively on project design and
appraisal; essentially, the project was overambitious, and the appraisal
mission overestimated Government's institutional capacity\. It has also
commented on the ability of any Bank appraisal mission to appraise
effectively the large number of institutions involved in a project like
IADP, especially where there are major outstanding policy, institutional,
and budgetary issues\. It should be borne in mind, however, that appraisal
took place at a time when Bank policy emphasized targeting projects
directly to the rural poor\. When Government wanted to expand the project
and use credit to reach previously neglected farmers as quickly as
possible, this orientation was completely in line with Bank thinking of the
time\. Senior Bank staff associated with project processing have commented
on internal Bank pressures to expand the project scope to achieve equity
objectives\. Hence efforts to lend to poorer farmers in Western Kenya
overrode financial management criteria for the credit component\.
8\.20 There were fourteen formal supervision missions during the
project period, but this understates the large supervision effort
undertaken\. Because the Bank's RMEA is located in Nairobi, there were times
- 65 -
when discussions with Government were almost continuous; thus he number of
supervision missions recorded is misleading\. In 1977, for example, 43
staffweeks were recorded for project supervision and in 1978, 31
staffweeks\. The average annual supervision input over the project life was
26 weeks\. Clearly even this input-double the normal supervision
coefficient --was not sufficient\. Supervision missions certainly helped to
improve project design and performance, particularly through efforts to
reduce the project's credit component and focus on institution building\.
The PCR mission believes, however, that with the multitude of agencies
involved, each with major policy and institutional issues that needed to be
resolved, it would not have been possible to make the project a success\.
The design was overly complex, and redesign and disaggregation into
separate simple projects were probably necessary\. This view, while shared
by many Bank staff, is disputed by some individuals, particularly those
associated with the project's early stages\. They argue that the project
was implementable, and that it got off to a bad start from which it became
increasingly difficult to recover\. Those involved with supervision in
1977/78 felt that the Bank's unwillingness to stop credit to weak societies
made it impossible thereafter to instil credit discipline\. Others believe
that more and better placed technical assistance would have helped\. A
basic, probably more important issue is whether the experience of IADP has
led to better design of more recent projects in Kenya\. As the discussion
in paras\.8\.09-8\.16 shows, the PCR concludes that it has\.
8\.21 An issue that emerges from many PCRs, including this one, is at
what point should the Bank take a firm stand with Government or, indeed,
when should the Bank consider closing a project? Frequently supervision
missions identify problems early in the project cycle but these are put
down as initial teething problems\. For example, in 1979, three years after
IADP I had gone to the Board, the appraisal report for IADP II provided the
following insights into IADP I: 30-50% credit recoveries, late delivery of
credit and inputs, problems of crop marketing, overambitious appraisal
targets, and the weak status of most cooperatives\. Yet the Bank felt
sufficiently confident that these issues were being resolved to approve a
further closely related project\. Supervision missions remained reasonably
optimistic about IADP until the fall of 1980, when a decision was made
(despite a staff recommendation to the contrary) to wait for another
season's results before reporting the project to Bank management as a
problem project\. There were fairly acrimonious discussions in 1977 when
Government implied that the Bank was standing in the way of their
development objectives (para\. 3\.10); Bank staff sought to avoid such
tensions\. The PCR concludes that the Bank should nonetheless have insisted
that credit funds not be channelled to weak societies\. Finally, the Bank
should have taken a firmer and more consistent stand on the need for better
financial and physical reporting\. Towards the end of the project period,
the Bank made it clear that it would not agree to extend the closing date
without substantial changes\. This led again, to a round of difficult
discussions with Government\. In the long-run, however, all parties now
agree that it was best to halt the project\.
- 66 -
IX\. CONCLUSIONS
9\.01 IADP represented a major and exciting shift in Government policy
in the early seventies--to assist the poorest sections of the rural
community who had not benefited from other Government programs, such as
developments associated with smallholder coffee and tea\. Through IADP,
Government tried to translate objectives into action\. The project clearly
failed to achieve appraisal targets\. The number of beneficiaries was only
about 25% of appraisal projections (70,000)\. More important than the
number of beneficiaries, the project had little sustained production impact
as most beneficiaries dropped out of the program because of the
unattractiveness of crop packages, late arrival of credit, and loan
default\. The project was not, however, devoid of developmental impact
albeit limited\. The most successful component was support for Government's
artificial insemination program, although the quality and quantity of this
service has recently declined\. Farmer training also had some impact\.
Regarding infrastructural components, the project helped build up storage
facilities and a number of cattle dips, although benefits from both are not
commensurate with costs\. As for institutions, the attempt to integrate
activities brought some benefits and has allowed each institution to gain a
better understanding of problems faced by other ministries and agencies\.
The work plan and associated targets helped engender a sense of management
by objective, particularly by MOA's extension service\. Benefits, however,
are small when compared to the level of inputs involved\. Credit recovery
rates averaged about 21%, and many participating cooperative unions and
societies have yet to be established as viable and self-sustaining
entities\. CBK now has a portfolio that comprises a significant proportion
of bad debts\. The merchandising arm of KNFC vent bankrupt and it is
doubtful whether other institutions benefited in relation to costs
incurred\.
9\.02 IADP was designed on the assumption that most institutions were
"functioning with moderate success"\. In fact, the project demonstrated
that many participating institutions were much weaker than assumed\. The
appraisal mission did not adequately identify and address the policy,
management, budgetary, and institutional issues that have emerged as
critical constraints to development\. It also under-estimated the
difficulties of implementing such a complex multi-agency project\. The
project involved virtually every major institution in the agricultural
sector, bar irrigation\. MOA, the lead implementing agency, was responsible
for project implementation but had authority only for those activities
which fell under its direct jurisdiction, an untenable situation\.
9\.03 Supervision missions wrestled with the many problems the project
encountered\. In 1977, there was a major change of direction-increasing
the project's infrastructure and staffing aspects at the expense of
credit\. In retrospect, it is evident that it simply was not enough to turn
the project around; the PCR mission concludes that the design was
fundamentally not well suited to Kenyan conditions-a view not shared by
all Bank staff associated with the project\. Performance could, however,
have been significantly improved had the Bank enforced stricter adherence
to legal and particularly audit covenants\. The PCR Mission cannot answer
- 67 -
the question: what would Government's reaction have been had the Bank
actually applied the financial covenants spelt out in the DCA? Political
pressures were enormous; aspirations had been raised during the lengthy
preparation and appraisal process which the Government felt obliged to
meet\. It was probably a case of going with the tide or getting off the
boat\. The Bank tried to follow an intermediate course, with unsatisfactory
results\. It is interesting to note that most Government staff involved
with the project now feel that the project should not have started with
credit\.
9\.04 The project was very much a product of the mid-1970s\. It was a
concerted effort by both the Bank and Government to redirect Kenya's
agricultural strategy to areas that had previously been neglected\.
Although it failed to reach its objectives, much has been learnt from the
experience\. The IADP reflects many of the problems affecting Kenya's
agricultural sector broadly, and difficulties in implementing investment
projects effectively\. Partly as a result of the project experience,
problems have now been well identified, and many solutions proposed\.
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1303-KE/CREDIT 650-KE)
PROJECT COMPLETION REPORT
Comparison of Appraisal Project Costs with GoK Budget Allocations
(KSh '000)
1976/77 1977/78 1978/79 1979/80 1980/81 TOTAL
Appraisal G o Appraisal Co pa lKpraisl oK Appraisal GoK Appraisal C o K
Agriculture
Project Management 348 ) 2051 ) 2430 ) 2312 ) 2400 ) 9581 )
Extension and Training 451 ) 5000 2257 )6782 2697 ) 6211 3149 ) 11231 2398 ) 5604 10952 ) 34828
Research and Training ) 2012 ) 2013 ) 2012 ) 2013 ) 8050 )
Evaluation 807 \. 529 )_529 ) 529 ) 529 ) 2923 )
Sub-Total 1606 5000 6849 6782 7669 6211 8002 11231 7340 5604 31466 34828
Livestock
Tick Control2/ ) 33952 )22221 )
A\. ) 476 ) 0 4698 ) 15144 5953 ) 34379 5346 ) 1559 5457 ) 2265 21930 )119339
Animal Production ) ) ) ) ) ) 3355 )
Project Cord\. Unit ) ) )_) ) 200 _ 2234 )
Sub-Total 476 0 4698 15144 5953 34379 5346 39741 5457 30075 21930 119339 1
Cooperatives 0o
Loans to Farmers 1/ 0 16000 27240 14317 37329 5417 39953 9021 45205 5849 149727 50604
Cooperative Stores 0 0 250 0 300 2350 350 600 500 600 1400 3550
Support for Coops
(staff, vehicles, op) 0 0 104 4452 203 4830 187 2853 111 1932 605 14067
Support for OC0 1010 0 1846 0 2260 3257 2012 0 1697 1580 9025 4837
Sub-Total 1010 16000 29440 18769 40092 15854 4250! 12474 47713 996 160757 73058
Others
Support for CBK 160 0 160 160 96 623 48 0 0 443 464 1226
NCPB including stores 36 0 1634 0 4093 7200 98d 0 951 2000 7702 9200
Support for KNFC 80 0 2536 2492 1031 851 387 851 395 0 4428 4194
Support for AFC 185 0 1367 0 1317 \.0 1862\., 0 1744 0 6475 0
Support for HCDA 0 0 0 0 429 250 463 0 495 0 1357 250
Sub-Total 461 0 5697 2652 6966 8924 3741 851 3585 2443 20456 14870
TOTAL w/o Contingencies 3553 21000 46684 43347 60680 65368 59598 64297 64095 48083 234610 242095
Contingencies 298 - 17047 - 12506 - 14654 - 19052 - 53557 -
GRAND TOTAL 3851 21000 53731 43347 73186 65368 74252 64297 83147 48083 288167 242095
Rese emem rmm mee \. sum, \.,pgg \. pWWs asee g4mms mue mmme mmm
1/ Government's budget allocations are taken from Government's AnnVal Development Estimates 'r
vith exception of loans to farmers which are actual credit funds released by CUK\.
2/ The appraial report includes an arithmetic error which underestimated the\.amount of
funds required to implement the tick control program\.
-69- Table 2
KENYA
INTBGRATED AGRICULTURAL DEVELOPMENT PROJECT
COMPLETION REPORT
Schedule of Cumulative Disbursements
Fiscal Actual Appraisal Actual as I of
Year Total Estimate appraisal
US$ million - estimate
1976/77
September
December
March 0\.23 -
June 0\.01 0\.47 2
1977/78
September 0\.01 0\.70 1
December 0\.02 0\.94 2
March 0\.23 1\.99 12
June 1\.07 3\.05 35
1978/70
September 1\.08 4\.10 26
December 1\.09 5\.15 24
March 1\.10 6\.45 21
June 1\.28 7\.75 17
1979/80
September 1\.28 9\.05 14
December 1\.32 10\.35 13
March 1\.33 11\.63 11
June 4\.78 12\.91 37
1980/81
September 5\.40 14\.18 38
December 5\.67 15\.46 37
March 11 5\.72 16\.59 34
June 5\.79 17\.72 33
1981/82
September 5\.86 18\.86 31
December 2/ 6\.28 20\.00 31
March \./ 6\.29 31
June 6\.67 33
1/ Project expected to be completed by March 1980\.
2/ Disbursements expected to be completed and project closed in
December 1981\.
3/ Last disbursement was in April 1982\.
- 70 -
Table 3
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
PROJECT COMPLETION REPORT
Crop Yields
The following presents crop yields over four project years
based on the--aid-term evaluation report\.- Crops are those
included in IADP packages\. The data were based on a
questionnaire in which farmers were asked to recall information
relating to earlier years\. It cannot be taken as more than
broadly indicative\.
Changes in Yields from Base Year
1976 1977 1978 1979 17
Maize 100 108 104 78
Cotton 100 99 87 71
Sunflower 100 119 146 6
Finger Millet 100 58 56 121
Groundnuts 100 101 110 87
Beans 100 65 77 92
Sorghum 100 72 81 68
1/ Drought year; yields fell in many areas of Kenya\.
71\. Table 4
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
PROJECT COMPLETION REPORT
INCREASE IN NUMBER OF STAFF ATTRIBUTABLE TO
THE PROJECT
Appraisal Projection Actual (1980)
Sr\. Staff Other Total Sr\. Staff Other Total
MOA 1/ 21 646 667 61 1163 1224
MOCD 21 54 75 23 52 75
Unions/
Societies 14 - 14 16 196 212
KNFC 3 10 13 0 0 0
CBK 4 - 4 4 2 6
AFC 7 45 52 n\.a\. n\.a\. n\.a\.
MPB - 34 34 - 0 0
HCDA - 6 6 - n\.a\. n\.a\.
Total 70 795 865 104 1413 1517
1/ Includes Livestock\. Dip attendants accounted for 933 of the
increase of 1124 attributed to MOA\.
-72 -
Appendix I
Page 1
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
COMPLETION REPORT
Stores Constructed for Cooperative Unions and Societies
Cost Capacity
Union/Society Store Site (KSh) (90-kg bags)
1\. Kakamega DCU 1\. Xakamega Union 155,450 6,000
2\. Seremi 75,510 2,000
3\. Shinyalu 75,532 2,000
4\. Matete 82,915 2,000
5\. Navakholo 79,767 2,000
6\. Majengo 149 300 6 000
Sub-total 2 W
2\. Bungoma DCU 1\. Bungoma Town 165,700 6,000
2\. Sirisia 87,097 2,000
3\. Ximilil 84,036 2,000
4\. ximaleva 39,000 2,000
5\. Bungoma (temporary) - -
Sub-total 375,833 2
3\. Luanda FCS 1\. xuandA Union 173,915 6,000
2\. zwamani 90,382 2,000
3\. Funyula 195,000 6,000
Sub-total 459,297 iTSW
4\.Xalaba/Malakis1 1\. X/Malakisi 168,550 6,000
PCU 2\. Amagoro-Jairos 87,159 2,000
3\. Harambee-Husampa 79,752 2 000
Sub-total 335,461 ,
5\. Nabale Union 1\. Nambale 173,900 6,000
2\. bmgatsi 81,376 2,000
3\. xuangamur 82,825 2,000
Sub-total 338,101 10,000
6\. South Nyanza 1\. Homa Bay 208,884 6,000
DCU 2\. Ranen 73,358 2,000
3\. Xmabwai 74,884 2,000
Sub-total 357,126 10,000
7\. Victoria FCU 1\. Victoria Union 208,000 6,000
2\. Rocha 2,000
3\. Magunga 93,500 2,000
Sub-total 307,000 10,000
- 73 -
Appendix I
Page 2
Cost Capacity
Union/Society Store Site (KSh) (90-keg BaRs)\.
8\. KisuNU DCU 1\. Kisumu 149,711 6,000
2\. Holo \. 65,512 2,000
3\. Abero 74,400 2,000
4\. Kodingo 75,1000 2 000
Sub-total 364,723 å2,00
9\. Slaya DCU 1\. ädere 6,000
2\. Aram 95,121 2,000
3\. Bondo 86,500 2 000
Sub-total 181,627
10\. Rochwanyo PCU 1\. Kndu Bay 168,652 6,000
2\. Kodula 81,679 2,000
3\. Cngauo 88,577 2,000
4\. Pala 119,000 2,000
Sub-total 457,908 12,000
11\. Kiaii 1\. KisI± TOA 77,868 2,000
2\. Knyoro 77,662 2,000
3\. Nyaia 835 2 000
Sub-total 239,030
12\. Maeh~s DCU 1\. MNachakos 449,033 10,000
2\. Methetheni 74,000 2,000
3\. Kandoo 74 000 2 000
Sub-total 59,033
13\. Embu DCU 1\. Ea 72,250 2,000
2\. Karurumo 72 250 2,000
Sub-total 4,000
14\. Sare PCU 1\. MariMa 200000 2000
Total 45 4,709,215 146,000
NB: An additional 7 larse and 10 8=l11 store* were alma constructed
in Machkos under X\.I\.D\.P\.
- 74 -
Appendix 2
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
PROJECT COMPLETION REPORT
IADP Credit Funds Channelled Through a Sample of Unions \.1/
FY 1977 31 FY 1978 FY 1979 FY 1980 TOTAL
Number of Loanees \. 3,847 3,360 6,097 1,859 15,163
Amounts received from CBK 41
- ('000 KShs) 10,848 4,830 5,731 2,839 24,248
Amounts onlent by unions to
farmers (through Societies)
- ('000 KSh) 7,204 2,619 4,411 2,060 16,294
- Percentage 66% 54% 772 73% 67%
Amounts repaid by Farmers to
unions (through Societies)\.
- ('000 XSh) 1,048 780 590 214 2,636
- Percentage 2/ 15% 30% 13% 10% 162
Amounts repaid to CBk by the
unions ('000 KSh), 2,274 1,540 405 446 4,665
- Percentage A/ 21% 32% 7% 16% 192
1/ The unions included in this survey were: South ]Nyanza District
Cooperative Union, Siaya DCU, Kisi DCU, Rachuonyo Fazamers'
Cooperative Union, Kisuu DCU, Bungoma DCU, Malaba/Malakisi FCU,
Nambale FCU, Kakamega DCL, Victoria FCU, Meru Cotton FCU and Luanda
FCU\.
2/ Number of loanees is only an approximation since some of the unions
could not produce complete data on loanee participation\.
3/ Financial year ended June 30, 1977\.
4/ According to the records of the unions which do not n-zessarily
agree with those of CBK\.
5/ As a percentage of amount lent to the farmers\.
6/ As a percentage of amounts released by CBK to wnions\.
- 75 -
Appendix 3
Page 1\.
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1303-KE/CREDIT 650-KE)
PROJECT COMPLETION REPORT
EXTRACT FROM LETTER TO GOVERNMENT DATED
OCTOBER 16, 1981 CONTAINING SPECIFIC PROPOSALS
FOR STRENGTHENING OF PROJECT
The following ten measures, constiLute, in tur opinion, some of
the basic and necessary elements in an aetion plan to redirect project
efforts to the agreed objectives of the IADP program\. These points touch
upon four areas of project activities: credit, research and extension,
marketing, and monitoring and evaluation\.
Credit
1\. Many of the participating unions and societies have not proved
to be financially and managerially capable of supplying sufficient and
timely inputs, administering credit delivery and enforcing loan recovery\.
We are convinced that the lack of qualified management staff at union and
society levels (including records clerks, bookkeepers and stores managers)
is largely responsible for these failings\. To date, neither MOCD nor KNFC
have been able to mount an effective training and supervisory program\.
We believe that a more intensive training program, stressing stricter
financial discipline, is required to turn these cooperatives into effective
participants of the IADP program in the next several years\. We are
proposing that a highly specialized management firm be contracted to work
directly with unions and societies to strengthen essential management
functions in the areas of input supply and credit administration\. In the
process, it would be expected that the ma\.iagement firm would reinforce and
help develop MOCD and KNFC capac\.ty to provide a similar level of highly
skilled professional management services\.
2\. We support the development of CBK as a viable financial
institution and feel that, in this regard, IADP must help to promote
self-sustaining credit programs through cooperative societies and unions\.
We would like to propose that: (i) CBK be required to establish two
categories of all IADP cooperative societies and unions: those that would
qualify for credit under CBK's normal lending criteria (i\.e\. without
guarantees) and those for which CBK would not lend without some form of
guarantee; and (ii) that a phased program of assistance be formulated to
strengthen weaker societies/unions under a technical assistance program
referred to under point 1\.
3\. It follows from the above two points that we would not support
any blanket guarantees to CBK for IADP loans: they are detrimental to
credit discipline and, as a consequence, proper institution building\.
No guarantees would be required for loans to cooperatives on CBK's list
of qualified borrowers\. However, we would support specific guarantees
for a limited period (say two years) for those cooperatives which are
in the technical assistance program referred to under point 2\. At the
Appendix 3
Page 2\.
end of the specified period, the Government guarantee would end, and the
credit-worthiness of the particular union or society would again become
the determination of CBK according to its normal criteria\.
4\. Consistently low repayment rates and lack of enforcement of
collection has had the result of eroding fundamental principles of
credit and weakening of financial institutions\. In the absence of
strict enforcement of these principles, a "credit" program becomes
a grant program, while contributing to the collapse of the financial
institutions mandated to administer such a program\. We feel that it is
essential that Government take immediate measures to enforce repayment
and that it clarify its financial responsibility for credit institutions
currently burdened with large outstanding arrears on Government-promoted
credit schemes\. To this end, we request that Government define its policy
on delinquents, and in particular, decide which group(s) of existing
delinquents should be considered priority targets for collection
enforcement\.
5\. Under IADP I, the Bank reimburses incremental credit requirements
of the program\. Under IADP II, credit is not a disbursement category, and
instead, it was provided that the Bank would reimburse participant unions
or societies' incremental fertilizer and other input requirements\. However,
the rationale behind the IADP II disbursement mechanism has been largely
superceded by recent elevelopments, including the collapse of the KNFC
merchandising activities and the decision to develop domestic fertilizer
production capacity\. As a result, the arrangements under IADP II are
likely to prove difficult to implement because of the difficulty in
centralizing claims and certifying that input purchases were linked to
participant farm,2rs\. We propose that Government consider requesting an
amendment of the legal documents to revert to the simpler IADP I system
and redefine project costs to allow the Bank to reimburse incremental
credit requirements\. This arrangement will effectively broaden the base
for Government reirbursements, since it will cover not only inputs, but
also provide for the financing of land preparation and other labor inputs\.
Research and Extension --
6&7\. As noted by the Director of Agriculture, it has become
increasingly evident that the technical packages need improvement\. We
believe that there has been insufficient consideration for tiie economic
factors, including risk, affecting the promotion of new or improved
technologies\. We think it is critical that the original staffing
requirements for four breeder/agronomists and two senior agro-economists
be met as soon as possible\. Candidates for the economist positions must
have extensive field experience in innovative and adaptive farms systems
research, and be prepared to supervise the field work of junior economists\.
We understand that timely recruitment of these persons and provision of
housing and vehicles may require that extraordinary measures be taken, and
the Bank is prepared, through the exercise of special disbursement
procedures, to assist Government in responding to these urgent needs\.
1/ Comments regarding the breeders/agronomists relate to IADP II\.
- 77 -
Appendix 3
Page 3\.
Marketing
8\. The improvement of marketing arrangements for smallholder
production was intended to ve a major thrust of the "integrated"
approach\. With the exception of the construction of a number of
cooperative stores, we believe that progress with this component has
been very limited\. While the marketing of maize and cotton has been
problematic, the matter is being dealt with in the cotton and maize
marketing projects already under discussion\. The situation with
regard to sunflower has proved unworkable, and for this reason, and
without effort to improve the marketing arrangements, sunflower has
been dropped from the recommended crop package\. We believe that
renewed attempts to diversify the crop packages beyond cotton and
maize are critical\. We, therefore, urge that IADP project management
explore concrete proposals for reintroducing sunflwer and re-opening
negotiations to bring East African Industries back into the marketing
program\.
Monitoring and Evaluation
9\. The present Farm Survey developed five years ago to monitor
the impact of IADP is no longer relevant, since high dropout rates
have reduced the representation of current participants in the sample to
a insignificant number of farmers\. We recommend that the Farm Survey
be dropped, its data base be given lower priority in the schedule of
the Monitoring and Evaluation Unit's activities, and that a new smaller
survey be designed to be supplemented with specific problem-oriented
surveys\.
10\. To direct the redesign of monitoring and evaluation, two experts,
one in ME systems design and \.a second in computer programming, should be
internationally recruited to complement the existing expertise in the Unit\.
- 78 -
Appendix 4
KENYA
INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT
COMPLETION REPORT
Non or Partial Compliance with Major Covenants
Section Status
3\.01 (a)
The Borrower shall carry out the Financial operaticns of unions
Project or cause it to be carried and societies were
out in conformity with unsatisfactory\. Audited reports
appropriate agricultural, were 2-4 years in arrears,
financial and engineering accounts were not properly kept
practices and provide funds and there were frequent instances
promptly as needed\. of misallocation of funds\.
Government budgeted about 85% of
the funds required for Project
implementation\. In 1980/81,
Government allocated only 58% of
appraisal estimates\. There were,
therefore, insufficient funds to
implement the project as
appraised\.
Credit funds were generally
provided late\.
3\.01 (b) (iii)
By March 31, Borrower shall Work Plans invariably submitted,
submit to IDA proposed Work Plan but schedule not complied with\.
covering the year commencing the In 1981, for example, Work Plan
following July 1\. submitted in July, i\.e\. 3 months
late\.
3\.01 (b), (v)
Borrower shall submit with each Not caplied with; in particular,
Work Plan information described 1 (g) information related to
in Part B of Schedule 4\. financial status, management and
auditing arrangments for
participating societies and
unions, and (3) quarterly reports\.
- 79 -
Section Status
3\.01 (b) (vi)
Evaluation and approval of Work See comments under Schedule 4
Plans\. below\.
3\.01 (c)
Project shall be satisfactorily Evaluation not satisfactory\.
evaluated and results submitted Survey data collected since start
to IDA\. of project has not been
analysed\.Bank has not received
reliable quantitative information
or assessment of Project impact\.
3\.01 (d)
Subsidiary Loan Agreement (SLA) Satisfactory SLA entered into at
between Government and CBR shall start of Project\. Subsequently,
be satisfactory to IDA\. GOK agreed to incorporate a
guarantee to CBK for all losses
under IADP loans\. Bank agreed
retroactively, on condition that
Guarantee apply for two years
only: 1977/78 and 1978/79\.
Guarantee arrangements have not
been revoked, with tacit Bank
approval\.
3\.02 (b)
The Program Management Unit shall PHU, which was also responsible
be adequately staffed\. for carrying out four other Bank
agricultural Projects in Kenya,
was not adequately staffed\. For
example, staff of the accounting
unit spent much of their time on
non-IADP activities and were
unable to submit claims for
reimbursement in a timely
manner\. As a result, some US$ 3
million of eligible expenditures
were not claimed\.
- 80 -
Section Status
3\.03 (a)
Interministerial Coordinating Committee does not meet as
Committee should (1) be chaired frequently as required and
by the P\.S\. Agriculture, (ii) attendance and chairmanship
meet quarterly, (iii) include, generally not complied with\.
inter alia, the Commissioner of Quarterly progress reports
Cooperatives and the General infrequently prepared and were
Manager of CBK, and (iv) approve then not approved by Committee\.
quarterly progress reports\.
3\.08 (b)
The Borrower shall (i) maintain Records to reflect progress on
records to record the progress of the major component of the
the Project and (ii) furnish such project were not adequate\. For
information as the Bank shall example, Bank frequently
reasonably request\. requested data on number of
loanees, number of repeat loans,
recovery rates, and flow of funds
from CBK to unions, societies,
and thence to farmers, and from
farmers back to CBK\. This data
was not supplied despite efforts
by MOCD and CBK, because of
inadequate state of accounts\.
4\.02 (a)
1he Borrower shall cause, inter See Comments under 3\.01 (a)\.
alia, cooperative societies and
unions to maintain adequate
financial records\.
4\.02 (b)
Borrower shall cause (i) MA, Not complied with\. No audit
MOCD, CBK, cooperative societies reports received\. Sample of some
and unions, AFC, M B, KNFC, and audit reports from unions and
CLSHB to have their accounts societies were reviewed by the
audited'annually, and (ii) Bank but they were not formally
furnish such audit reports to IDA submitted\. As mentioned in 3\.01
not later than six months after (a), accounts of unions and
end of fiscal year\. societies were often not properly
kept; most audits were 2-4 years
in arrears and the quality of\.the
audits (by MOCD) was mostly
unsatisfactory\.
- 81 -
Section Status
Schedule 4 Part C (2 (d)
Suitability of cooperative Because of absence of up-to-date
societies and unions to audit reports and financial
participate (as condition of information, the Bank was unable
approval of the Work Plan) would to determine the number of
be determined on basis of (i) societies and unions that were
their capability to supply inputs financially solvent (apart from
and provide marketing services the review under taken by a Beak
(ii) financial solvency and consultant in 1977)\. On the
(iii) adequacy of management\. basis of the little information
that did exist, it was felt that
a number of the unions/societies
did not meet required criteria,
in particular, with regard to
financial solvency and adequacy
of management\.
Schedule 4 Part C (2) (h) (iii)
Participation in the SFCF When PMED changed the focus of
(Subsistence Farmers Credit Fund) the target group from progressive
would be reserved for farmers who farmers to subsistence farmers,
do not qualify for conventional most farmers qualified for
Cooperative or AFC loans\. loans\. The Bank was not
consulted on the change\.
Schedule 5, Para 5
Funds relent to farmers shall be More than 50% of the credit
utilized to provide farmers, on provided in the 1976/77 crop year
average, 75% of the variable cost was given as cash\.
of planting, cultivating,
harvesting and transporting ot
crops in respect of which credit
is sought\. Not more than 25% of
the amount to be loaned will be
provided in cash\.
Schedule 5, Para 3
Loans to farmers shall be kepayment rates by the farmers
repayable in the shortest period was low, probably less than 30%
consistent with the farmers' bu;: there were no reliable data
rbility to repay for the crop for to estimate with any degree af
which credit is extended\. accuracy\. CBK were repaid cn-ly
21% of the principal they lent to
the unions/societies\.
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Ãrlo&dboun~arG | APPROVAL |
P157241 | COMBINED PROJECT INFORMATION DOCUMENTS / INTEGRATED
SAFEGUARDS DATA SHEET (PID/ISDS)
ADDITIONAL FINANCING
Report No\.: PIDISDSA16109
Date Prepared/Updated: 23-Feb-2016
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Samoa Project ID: P157241
Parent P143408
Project ID
(if any):
Project Name: Samoa Aviation Investment Project Additional Financing (P157241)
Parent Project Samoa Aviation Investment Project (P143408)
Name:
Region: EAST ASIA AND PACIFIC
Estimated 24-Feb-2016 Estimated 30-Mar-2016
Appraisal Date: Board Date:
Practice Area Transport & ICT Lending Investment Project Financing
(Lead): Instrument:
Sector(s): Aviation (92%), Public administration- Transportation (8%)
Theme(s): Regional integration (46%), Trade facilitation and market access (46%), Other
public sector governance (6%), Natural disaster manage ment (2%)
Borrower(s): Ministry of Finance
Implementing Samoa Airport Authority
Agency:
Financing (in USD Million)
Financing Source Amount
BORROWER/RECIPIENT 1\.24
International Development Association (IDA) 16\.62
Total Project Cost 17\.86
Environmental B - Partial Assessment
Category:
Appraisal The review did authorize the team to appraise and negotiate
Review
Decision (from
Decision Note):
Other Decision:
Is this a No
Repeater
Page 1 of 10
project?
B\. Introduction and Context
Country Context
Samoa is a small Pacific Island Country (PIC) comprised of the islands of Upolu, which hosts the
capital Apia, Savai'i, and seven smaller islands\. More than 75 percent of its population of 186,000
lives on Upolu, with 20 percent in Apia\. Samoa's inhabitants are 90 percent Polynesian, around
seven percent are Euronesian, and the balance are either European or of mixed Asian-Polynesian
descent\.
Samoa is located in the "cyclone belt" near the earthquake generating "Tonga Trench"\. The
majority of the population (some 80 percent) lives on a narrow coastal strip surrounding the two
main islands\. Since 1990, there have been five extreme cyclone events (hurricane strength), four
of which caused massive damage, and a major tsunami\. In general, Samoa's small and compact
surface area (total of 2,820 sq\. km) makes it particularly vulnerable to natural disasters and the
impact of each event is likely to affect a large proportion of the country and population\.
Gross national income per capita (current US$) in 2012 was US$3,260\. In 2012 the service sector
contributed some 63\.2 percent to the country's gross domestic product (GDP), and the primary
sector (agriculture) contributed 9\.9 percent of GDP\. In spite of its small size relative to GDP, one
third of Samoa's employment base is in agriculture\. Although it has the smallest Pacific exclusive
economic zone, fishing is also an important source of employment and livelihoods\. Remittances,
averaging around 24 percent of GDP over the last 10 years, are a key contributor to economic
livelihoods\.
At more than 20 percent of GDP, tourism makes a significant contribution to Samoa's economy\.
With the exception of 2009 and 2010, when arrivals dropped slightly due to the impacts of the
September 2009 cyclone, international tourism arrivals have increased steadily over the past
decade, and were 38 percent higher in 2011 than in 2000\. The vast majority of these visitors
arrive by air\. In 2011, accommodation and restaurant services directly engaged almost six percent
of the employed population in the island of Upolu, and almost four percent in Savai'i\. Visitor
demand for agricultural, fishing and other food products, crafts, internal transport and other
services underline the importance of tourism to the country and its people, and thus of efficient
and functional aviation services to facilitate tourism\.
Sectoral and institutional Context
Aviation plays a vital economic and social role in Samoa's development\. Most visitors, tourists
and the crucial VFR (visiting friends and relatives) segment, rely predominantly on air transport\.
Furthermore, air connectivity is essential to meeting Samoa's educational and medical needs, and
enables effective regional integration with its Pacific neighbors\. Its geographic distance from
main markets means that efficient air services are integral to the Government of Samoa's (GoS)
drive to increase exports, especially those of low volume and high value that depend on fast
delivery\.
Air transport in Samoa suffers from the challenges facing all smaller PICs: long routes with thin
traffic and low freight levels constrain airline and airport profitability, placing high demands on
professional management and regulations in an environment where highly specialized human
Page 2 of 10
resources are not readily available\.
Samoa's remoteness, limited size, coastal settlement patterns and susceptibility to a host of
natural disasters, make aviation crucial for effective disaster risk management, particularly in the
delivery of relief aid\. In emergency situations, air transport can effectively and efficiently bring in
humanitarian cargo and aid workers to reach cut-off communities\. Aircraft and helicopters also
have the advantage of being able to survey large areas, scan affected zones for victims and assess
damage on the ground\. Ensuring the availability of resilient and appropriate air transport
infrastructure is therefore critical\.
Three national airlines currently operate scheduled and non-scheduled domestic and international
air services: Polynesian Airlines; Virgin Samoa (which is a joint venture between GOS, Virgin
Blue, Aggie Grey's Hotel, and Virgin Australia); and the privately owned Samoa Air\. In addition,
Air New Zealand, Fiji Airways (formerly Air Pacific) and Inter Island Airways have been granted
Foreign Air Operator Certificates for flights to and from Samoa\.
The Samoa Airport Authority (SAA) operates Faleolo International Airport, the main
international gateway, and the Asau and Maota airports on Savai'i\. In addition, SAA is currently
in the process of acquiring another small international airport, Fagali'i, located in Apia,
previously owned and operated by the state-owned airline Polynesian Airlines that primarily
provided short-haul services to American Samoa, as well as a limited number of domestic flights\.
Aerodrome upgrades at Faleolo International Airport were completed in 2000 under the IDA-
financed Samoa Infrastructure Assets Management Project (SIAM) to comply with International
Civil Aviation Organization (ICAO) operational standards\. The level of SIAM investment was
anticipated to meet a 10-year service life before further rehabilitation would be required, and this
10-year life has now been exceeded\.
C\. Proposed Development Objective(s)
Original Project Development Objective(s) - Parent
The project development objective is to improve operational safety and oversight of international
air transport and associated infrastructure\.
Key Results
Project outcomes will be monitored through four indicators: (i) Regulatory Certification of Safety
and Security at Faleolo Airport; (ii) State requirements for safety, measured by Universal Safety
Oversight Audit Programme (USOAP) reaching global ICAO average; (iii) Modernization of air
traffic management, as measured by installation of Automatic Dependent Surveillance-Broadcast
(ADS-B) and a Very Small Aperture Terminal (VSAT) system; and (iv) Implementation of a
regional safety and security levy for departing international passengers\.
D\. Project Description
The project is investing in key international aviation infrastructure (on the airside only),
navigational and communication equipment, as well as providing technical assistance and support
capacity development for regulatory oversight, and operation and management of Samoa's
aerodromes\.
In December 2011 IDA approved the Pacific Aviation Investment Program (PAIP), a regional,
Page 3 of 10
horizontal Adaptable Program Loan that consists of a series of projects designed to ensure that
critical aviation infrastructure meets operational safety requirements, as well as to measures to
strengthen regulatory compliance of international air transport of the participating PICs\. Major
elements of the US$155 million program focus on the upgrading of airport infrastructure and
aeronautical equipment, and the strengthening of policy and regulatory capacity\. Phase I of PAIP
included projects in Kiribati, Tonga and Tuvalu\. Samoa entered the program in April 2014 as
Phase 2, and IDA has since approved Phase 3 with Vanuatu in March 2015\. IDA also approved a
Pacific Aviation Safety Office (PASO) Reform Project in September 2013 in support of the
regional entity's regulatory mandates\.
The Samoa Aviation Investment Project(SAIP) was approved by the Board of Executive
Directors on April 8, 2014 and became effective on August 6, 2014, with total IDA grant
financing of SDR 16\.3 million (US$25 million equivalent)\. The IDA funding comprises of a US
$5 million national IDA grant and a US$20 million regional IDA grant\. A counterpart
contribution of approximately US$5 million is in the form of foregone taxes\. The Pacific Region
Infrastructure Facility (PRIF) is contributing US$300,000 for the direct engagement of the Pacific
Aviation Safety Office in regulatory advisory services\. It was originally envisaged that the EIB
would contribute US$8\.34 million equivalent in concessional loans and grants, for a total project
cost of US$38\.34 million\.
In September 2014, the Government of Samoa (GOS) disclosed that it had committed to
upgrading the terminal, car park and other infrastructure at Faleolo International Airport and
awarded a US$56 million design-build contract to Shanghai Construction Group to be financed by
a China EXIM Bank loan\. The terminal investment decision is driven by Samoa's development
strategy of attracting a more robust aviation market and enabling a direct economic impact
through the Samoan tourism industry\. In light of the concurrent implementation timeframes, the
terminal building project is considered to be a linked project, as defined by the World Bank policy
on Environmental Assessment (OP4\.01)\. The implications for the GoS and World Bank are that
management of the environmental impacts associated with the terminal upgrades (expected to
include issues such as traffic and pedestrian management, workplace safety, materials sourcing,
and other construction related impacts) will need to meet the World Bank's environmental
safeguard policies\. To meet this requirement, an Integrated Environmental and Social
Management Plan will outline requisite mitigation measures for Contractor's Environmental
Management Plans for both SAIP and the terminal project\. The IESMP will be jointly supervised
for both projects to ensure compliance and coordination\.
Rationale for Additional Financing
As a result of the GOS terminal investment decision, additional civil works are required between
the terminal and airside pavement interfaces, including an expansion of the apron and taxiways,
reconfiguration of the fuel hydrant infrastructure to accommodate aircraft parking positions, and
modifications to airfield drainage\.
The effective integration of the airside pavement works under SAIP with the separate landside
terminal project will require significant technical coordination\. To interface with the terminal
building, new pavement assets and operational parameters will require revisions in the apron
pavement strength design, as well as apron and taxiways expansion by approximately 9,000m2 to
enable safe aircraft operations\. The new terminal interface, which includes passenger air bridges,
Page 4 of 10
also requires a reconfiguration of fuel hydrant infrastructure to accommodate new aircraft parking
patterns, and modifications to the airfield drainage\. This change to project scope increases the
investment cost of airside pavements\.
The GOS has requested additional financing on IDA Credit terms in an amount of US$16\.62
million equivalent to ensure that SAIP meets its development objectives\. The proposed additional
credit and associated level II restructuring would finance the costs associated with modified
activities included as part of a project restructuring in response to circumstances that arose during
implementation\. It enables the Government to use IDA financing for all airside investments\.
Furthermore, GOS has requested that IDA credit resources be used to meet the capital investment
requirements for all SAIP activities, including those that were previously to be financed by the
European Investment Bank (EIB)\.
Component Name
Component A: International Airport Infrastructure Investments
Comments (optional)
Carrying out of aviation infrastructure investments at the Faleolo airport, including: rehabilitation
of airport runways, taxiways, and expansion of the apron; installation of new navigation aids,
automatic weather monitoring, safety and security equipment, and air traffic control equipment;
upgrading of generator capacity; provision of water storage tanks; and fire rescue equipment\.
Component Name
Component B: Strengthening Policy and Regulatory Capacity, and Training
Comments (optional)
Carrying out of technical assistance and training designed to improve aviation sector
management, policy, safety and security oversight; development of a national aviation policy; and
safety and security oversight audits\.
Component Name
Component C: Strengthening airport operations and management capacity
Comments (optional)
Carrying out of activities to strengthen airport operations and management capacity, including
among other things: studies to assess the current conditions of the aviation sector and airports;
development of a strategic business plan; and training on aviation policy, management, and
operations\.
Component Name
Component D: Project Support
Comments (optional)
Provision of support required for the project, including, among other things: technical, advisory,
and administrative support to the PAIP Technical and Fiduciary Services Unit (TFSU) and the
Project Support Team; and annual subscriptions for the operation of the VSAT infrastructure
during project implementation\.
E\. Project location and salient physical characteristics relevant to the safeguard
analysis (if known)
Page 5 of 10
The current scope of the project is limited to the existing physical footprint of Faleolo Airport,
which is situated on, and surrounded by a buffer of Government-owned land\. No new land or
asset acquisition is envisaged\. The impacts are all site-specific and none of them irreversible\. The
majority of environmental impacts relate to the transport and construction impacts of runway and
apron re-surfacing at Faleolo\. Impacts during this phase include dust and noise emissions, heavy
traffic between the site and the quarry and landfill, disposal of the milled material not reused in
the project, management of storm water, and health and safety of workers and bystanders\. The
land disturbances will all occur within the footprint of the airport; however noise, dust and
vibration may be experienced by those living and working on or near the airport and the transport
route\. Discharges of stormwater will occur to ground and / or via sediment ponds to existing
surface drains that lead to the sea\.
Detailed design can avoid or mitigate many of the potential impacts, and otherwise there are
standard practices and procedures that will satisfactorily mitigate impacts during construction and
airport operations are addressed in the Environmental Management Plan (EMP) and have been
discussed during consultation\.
Aggregates for construction will be sourced from one of six basalt quarries on Upolu Island\.
Some of the milled surfaces will be recycled into the new surface with the remainder being
disposed as fill in an approved landfill or reused by other contractors\.
F\. Environmental and Social Safeguards Specialists
Ross James Butler (GSU02)
II\. Implementation
Institutional and Implementation Arrangements
The recipient will be the Ministry of Finance (MOF)\. Pursuant to the Project Implementation
Agreement, the project will be carried out by the Samoa Airport Authority (SAA), which is a legally
autonomous State-owned Enterprise\. Other line Ministries (Ministry of Works, Transport and
Infrastructure - MWTI; Ministry of Natural Resources and Environment - MNRE; Ministry of
Women, Community and Social Development - MWCSD; and potentially others) are directly
involved, performing roles and implementing activities within their respective mandates\. A National
Steering Committee (NSC), comprising these and other key government stakeholders, is overseeing
coordination and monitoring of project implementation, as well as advising GoS on any concerns or
issues that may arise with regard to project implementation\. To complement the existing capacity of
SAA during the implementation period, a project support team (PST) is in place to support project
activities within the Ministries and SAA\. The PST is providing the services of a project manager, a
project accountant and a project assistant\.
The project is also benefiting from regional implementation arrangements that have already been
established and operationalized as part of PAIP\. This includes a Program Steering Committee, which
includes representatives from the National Steering Committees of participating countries\. The TFSU
based within Tonga Airports, Ltd\. (TAL) is providing additional capacity to support project
management, procurement and financial management, including expertise in the areas of planning
and budgeting, engineering and equipment specification, contract management, adhering to World
Bank safeguards policies, monitoring and evaluation, and reporting requirements\. The TFSU will
Page 6 of 10
coordinate directly with SAA to ensure that the proposed additional project activities are
implemented efficiently and in accordance with program objectives\. A Service Agreement between
MOF, SAA and TAL that outlines the roles and responsibilities of TFSU was signed and is under
effect as part of the current project\.
III\. Safeguard Policies that might apply
Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment Yes Project impacts primarily relate to the transport and
OP/BP 4\.01 construction impacts of runway and apron expansion/
re-surfacing at Faleolo, and the transport of materials
from the quarry to site\. Impacts will be mitigated
through the use of an Integrated Environmental and
Social Management Plan (IESMP), from which a
contractors Environmental Management Plan will be
developed\. The IESMP consistent with the Samoa
Codes of Environmental Practice 2007\.
Natural Habitats OP/BP 4\.04 No
Forests OP/BP 4\.36 No
Pest Management OP 4\.09 No
Physical Cultural Resources No All earthworks will be in already disturbed
OP/BP 4\.11 environments\. Any chance finds will be handled
under procedures in the Environmental Management
Plan\.
Indigenous Peoples OP/BP No Under the World Bank's Environmental and Social
4\.10 Safeguard Instruments for the Pacific Island
Countries this policy is not ordinarily triggered in
Samoa\.
Involuntary Resettlement OP/ No The investment activities are limited to the existing
BP 4\.12 physical footprint of Faleolo Airport, which is
situated on, and surrounded by a buffer of
Government-owned land\. No new land or asset
acquisition is envisaged\.
Safety of Dams OP/BP 4\.37 No
Projects on International No
Waterways OP/BP 7\.50
Projects in Disputed Areas OP/ No
BP 7\.60
IV\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify
and describe any potential large scale, significant and/or irreversible impacts:
There are no changes to the current Environmental Category B classification\. No significant
environmental issues or impacts have been identified\. All issues can be managed within standard
good practice for construction-related impacts (traffic management, limits to noisy work, waste
Page 7 of 10
management etc\.), and in the design phase (drainage, source of aggregates, percentage recycled
content of the new surface)\. No significant cultural, resettlement or gender impacts have been
identified\. No resettlement is expected and if any resettlement issues emerge, they will be
addressed through a resettlement plan developed on the basis of the policies and principles
outlined in the Environmental and Social Management Framework developed for the overall
Program\. Gender sensitivity is assured through participation of the Ministry of Women
Community and Social Development in consultations and information dissemination\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities
in the project area:
Improved safety and security will be beneficial to both travelers and residents in the vicinity of the
airports\. The investments are not expected to directly increase air operations, but may indirectly
change the frequency or timing of flights\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts\.
Community consultations will invite consideration of impacts, and suggestions for alternative
improved impact management will be incorporated in the EMP\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an
assessment of borrower capacity to plan and implement the measures described\.
In broad terms, Samoa has demonstrated its capacity to manage safeguards having previously
implemented the Bank-financed Samoa Infrastructure Assets Management project\. For this
investment project, the SAA has the capacity to undertake the preparation and implementation of
the EMP\. For in-country processes, the SAA will submit a Preliminary Environmental
Assessment Report to the Planning and Urban Management Agency (PUMA) in the Ministry of
Natural Resources and Environment (MNRE)\. PUMA will advise of any conditions pertaining to
Development Consent, and on Government of Samoa consultation and documentation
requirements\. SAA will ensure that conditions are included in the EMP and that the EMP is
binding upon any subcontractor\. The SAA is supported by the PAIP Technical and Fiduciary
Services Unit (TFSU), with safeguards experience from other PAIP projects\. A local consultant,
together with the TFSU, assisted with the preparation of the EMP\.
A Social Assessment was undertaken around the project areas to identify any distinct vulnerable
groups amongst Indigenous Peoples, who are the vast majority of the population\. Strong levels of
public acceptability were ascertained in community consultations in the project areas subject to
environmental management and benefit sharing\. SAA also undertakes stakeholder consultations
through its Facilitation Committee\.
The project will only consider the use of existing, licensed quarries for sourcing of materials\.
MNRE has advised that any further use of the Olo Quarry is prohibited due to the pollution risk to
potable water supplies\. Furthermore, due to the complexities of the linked landside and airside
projects, a local safeguards consultant will be hired to support SAA and PUMA in monitoring
safeguards issues, including site visits and contractor compliance with the IESMP\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure
on safeguard policies, with an emphasis on potentially affected people\.
Institutional stakeholders in safeguards compliance are the implementing agency (SAA), the
regulatory authority MNRE and the Ministry of Women, Community and Social Development
(MWCSD)\. Local stakeholders are the communities surrounding the Government owned buffer
zones around the airports\. Local stakeholders were informed and consulted during the social
Page 8 of 10
assessment, at the time of the preparation of the draft EMP, and at a meeting coordinated by the
MWCSD to consult airport neighbors\. Stakeholders will continue to be consulted at other times
during implementation (for example to announce the start of works, or to advise of traffic
management plans during the construction phase)\. Neighboring communities will be made aware
through these media of the procedure for registering any complaints or grievances in relation to the
project\.
B\. Disclosure Requirements
Environmental Assessment/Audit/Management Plan/Other
Date of receipt by the Bank 24-Jan-2016
Date of submission to InfoShop 31-Jan-2016
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
"In country" Disclosure
Samoa 05-Feb-2016
Comments:
If the project triggers the Pest Management and/or Physical Cultural Resources policies, the
respective issues are to be addressed and disclosed as part of the Environmental Assessment/
Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please explain why:
C\. Compliance Monitoring Indicators at the Corporate Level
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) Yes [X] No [ ] NA [ ]
report?
If yes, then did the Regional Environment Unit or Practice Yes [X] No [ ] NA [ ]
Manager (PM) review and approve the EA report?
Are the cost and the accountabilities for the EMP incorporated Yes [ X] No [ ] NA [ ]
in the credit/loan?
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the Yes [ ] No [ X ] NA [ ]
World Bank's Infoshop?
Have relevant documents been disclosed in-country in a public Yes [ ] No [X] NA [ ]
place in a form and language that are understandable and
accessible to project-affected groups and local NGOs?
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional Yes [X] No [ ] NA [ ]
responsibilities been prepared for the implementation of
measures related to safeguard policies?
Have costs related to safeguard policy measures been included Yes [ X ] No [ ] NA [ ]
in the project cost?
Page 9 of 10
Does the Monitoring and Evaluation system of the project Yes [X] No [ ] NA [
include the monitoring of safeguard impacts and measures
related to safeguard policies?
Have satisfactory implementation arrangements been agreed Yes [ X] No [ ] NA [
with the borrower and the same been adequately reflected in
the project legal documents?
V\. Contact point
World Bank
Contact: Christopher J\. De Serio
Title: Transport Specialist
Borrower/Client/Recipient
Name: Ministry of Finance
Contact: Mr\. lulai Lavea
Title: CEO
Email: iulai\.lavea@mof\.gov\.ws
Implementing Agencies
Name: Samoa Airport Authority
Contact: Mr\. Hoe Viali
Title: CEO
Email: hoe\.jerome@airportssamoa\.ws
VI\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
VII\. Approval
Task Team Leader(s): Name: Christopher J\. De Serio
Approved By
Safeguards Advisor: Name: Peter Leonard (SA) Date: 23-Feb-2016
Practice Manager/ Name: Michel Kerf (PMGR) Date: 23-Feb-2016
Manager:
Country Director: Name: Franz R\. Drees-Gross (CD) Date: 23-Feb-2016
Page 10 of 10 | APPROVAL |
P131353 |  INTEGRATED SAFEGUARDS DATA SHEET
APPRAISAL STAGE
Report No\.: ISDSA2422
Date ISDS Prepared/Updated: 7-Dec-2013
I\. BASIC INFORMATION
1\. Basic Project Data
Country: Africa Project ID: P131323/P131353
Project Name: Senegal River Basin Multi-Purpose Water Resources Development
Project 2 (P131323); Senegal River Basin Climate Change Resilience
Development Project (P131353)
Task Team Leader: Shelley Mcmillan
Estimated Appraisal 14-Sept-2013 Estimated Board 4-Dec-2013
Date: Date:
Managing Unit: AFTN2 Lending Instrument: Investment Project
Financing
GEF Focal Area: Multi-focal area
Sector(s): General water, sanitation and flood protection sector (30%), Irrigation and
drainage (25%), Health (20%), General agriculture, fishing and forestry
sector (15%), General public administration sector (10%)
Theme(s): Water resource management (40%), Regional integration (30%), Malaria
(15%), Climate change (10%), Gender (5%)
Is this project processed under OP 8\.50 (Emergency Recovery) or OP 8\.00 No
(Rapid Response to Crises and Emergencies)?
Project Financing Data (in USD Million)
Total Project Cost: 240\.50 Total Bank Financing: 221\.50
Total Cofinancing: Financing Gap: 0\.00
Financing Source Amount
BORROWER/RECIPIENT 12\.00
International Development Association (IDA) 212\.50
IDA Grant 0\.00
Global Environment Facility (GEF) 4\.00
Least Developed Countries TF for Climate Change Activities 12\.00
Total 240\.50
Environmental A - Full Assessment
Category:
Is this a Repeater No
project?
Is this a Transferred No
project?
2\. Project Development Objective(s) / Global Environmental Objective(s)
A\. Project Development Objective(s)
The overall Program Development Objective is: to enhance regional integration among the riparian
countries of the Senegal River Basin through OMVS for multi-purpose water resources development
to foster improved community livelihoods\.
The MWRD2 Project Development Objective is: to improve coordinated management of water
resources for socially, environmentally and economically sustainable development in the Senegal
River Basin\.
Responding to the needs of OMVS and the riparian states, MWRD2 will have broadly similar
components to MWRD1 as follows: (i) consolidating and further strengthening the institutional, legal
and technical framework of the Senegal River Basin to better serve all four riparian countries, (ii)
expanding the scope and coverage of concrete water resources development activities at the local level
that generate significant income to reduce poverty, and (iii) supporting water resources development
and planning, both by developing and maintaining water infrastructure, and in supporting future
planning within the basin\. MWRD2 activities will primarily be located in the priority zones defined by
studies in MWRD1\. Each component will scale-up activities started under MWRD1, incorporating
lessons learnt and taking forward successful elements for further development\. Climate resilience will
also be strengthened through the activities supported by GEF funding\.
B\. Global Environmental Objective(s)
Strengthen trans-boundary water resources management in the Senegal River Basin including climate
change adaptation and implementation of priority actions of the Strategic Action Plan\.
3\. Project Description
Overview of the program design:
The project design aims to simultaneously increase the productive uses of water and enable
macro-economic growth while safeguarding the health and livelihoods of vulnerable communities in
the river basin\. The regional integration process establishes the inter-related parameters for sustainable
water resources development across all sectors and the project components provide mutually
reinforcing interventions at regional, local and national levels\.
Specifically, MWRD2 will support the update the partition of costs; improve the knowledge base in
the Senegal River Basin; and build capacity at OMVS, national cellules, national executing agencies
and local community organizations for sustainable management of water infrastructure\. MWRD2 will
also support interventions to raise household income, safeguard the existing hydropower supply
through essential maintenance works and build a pipeline of water infrastructure investments for future
financing\. With GEF financing, climate resilience in the Senegal River Basin will be improved\.
Building on the achievements from MWRD1, support will be provided under MWRD2 to initiate
fisheries activities in Guinea and scale-up in the remaining states, incorporating new elements of
aquaculture\. MWRD2 will continue to address the public health risks from water related diseases,
incorporating treatment for new NTDs\. The treatment of the 5 critical NTDs will be incorporated into
the health sub-component of the project\. In addition, the project will continue to contribute to
achievement of universal LLIN coverage and improved malaria control in the river basin\. Following
the increased and visible impacts of climate change, MWRD2 also incorporates additional measures to
improve planning for climate resilience in the future\.
The focus for increasing resilience to climate risks is on improving the knowledge base and future
planning including identifying the climate resilience needs, how these should be factored into future
planning and identifying methods to make local livelihoods more climate resilient\. Resilience to
climate risks is supported through improved monitoring of flows; an update of the water resources
model to take into account climate variability; and piloting projects for climate resilience\.
MWRD2 builds on several regional to local level experiences in addition to consolidating thirty years
of cooperation and joint development in the Senegal River Basin, including; (i) the successful
completion of MWRD1; (ii) the development of jointly-owned energy infrastructure in the Manantali
and Diama dams; (iii) the Inclusive Framework that encouraged the full involvement of Guinea in the
joint management of the Senegal River Basin; (iv) the GEF-funded Senegal River Basin Water and
Environmental Management Project which laid the foundation for more integrated land, water and
environmental management in the Basin; (v) the ongoing Felou Hydropower Project; and (vi) the
Bankâs current and previous experience internationally in transboundary river basins\. MWRD2 is also
closely linked to the national sector level interventions in the member states, especially the agriculture
interventions\. In Mali, Mauritania and Senegal the project will coordinate with the Sahel and West
Africa World Bank/GEF Program in support of the Great Green Wall Initiative\.
Lessons and experiences from the above, coupled with the Bankâs long standing involvement in the
Senegal River Basin, clearly demonstrate that regional integration fosters more effective sustainable
development and multi-sectoral investments\. Therefore, the Project provides a unique comparative
advantage to mainstream close collaboration between institutions working on water resources
management of the Senegal River Basin at regional, national and local levels while consolidating
donor interventions through a coherent framework of actions\.
A\. Project Components
The project will have three inter-related components supporting the project development objective: (1)
Institutional development; (2) Multi-purpose water resources development and (3) Infrastructure
management and planning\.
Component 1: Institutional Development (USD$19\.11 million)
The overall objective of Component 1 is to build capacity for cooperative management\. This first
component will support both institutional development and project implementation through the
following sub-components:
(a) 1\.1 - Updating the Inclusive Framework and strengthening the role of Guinea within OMVS
(b) 1\.2 - Modernizing and reinforcing the institutional capacities of OMVS and related agencies
(c) 1\.3 - Strengthening the capacity of OMVS and national agencies to lead climate adaptation
efforts in the region [GEF funded]
(d) 1\.4 - Strategic management of the project
Component 2: Multi-Purpose Water Resources Development (USD$174\.23 million)
The overall objective of this component is to promote income-generating activities and to improve
livelihoods for the basin population\. This component includes a number of core multi-sectoral
activities related to the development of water resources in some sub-basins\. Sub-components are:
(a) 2\.1 - Hydro-agricultural development and water resources protection
(b) 2\.2 - Sustainable fisheries management and aquaculture
(c) 2\.3 - Reduction of the incidence of water-borne diseases
(d) 2\.4 - Pilot Approaches to improve climate resilience [GEF funded]
Component 3: Infrastructure Management and Planning (USD$29\.62 million)
68\. The overall objective of Component 3 is to advance climate resilient water resources planning
and development in the region\. There are three main sub-components:
(a) 3\.1 - Dam management and hydropower development
(b) 3\.2 - Planning for climate resilience
(c) 3\.3 - Development of navigation along the Senegal River Basin
Project Financing
Project financing in the amount of US$212\.5 million will be provided by IDA and US$16 million
provided from the GEF and LDCF (Least Developed Countries Fund)\. Counterpart funding of US$12
million will be provided to support the implementation of discrete activities which are high priorities
for member states\. As such, and as agreed with member states, the counterpart funding is allocated to
increase the coverage of interventions to reduce the incidence of water-related diseases, development
of sustainable fisheries and aquaculture, in addition to some project management costs\.
In line with OMVS and member state priorities, approximately 40% of the IDA financing will go
towards infrastructure; around 20% to design and supervision; approximately 20% to institutional
strengthening; and approximately 20% to the purchase of goods and equipment\. At mid-term, the
project will assess the extent to which activities are adequately implemented and make needed
adjustments\.
OMVS has previous experience working with the GEF and the activities supported by GEF/LDCF will
build upon previous engagement and will be complementary to the IDA-funded activities\.
The Dutch Government is planning to finance a parallel project to MWRD2 with OMVS\. Proposed
activities include addressing the problems of invasive aquatic species and support for water users
associations\. The Agence Française de Développement (AFD) has also expressed interest to provide
parallel financing to support OMVS in activities related to further development of the Schéma
d'Aménagement et de Gestion des Eaux (Comprehensive Senegal River Basin Master Plan - SDAGE),
such as development of country level planning tools and for sanitation improvements in the basin\.
4\. Project location and salient physical characteristics relevant to the safeguard analysis
(if known)
The proposed Project involves all the riparian countries (Guinea, Mali, Mauritania and Senegal) of the
Senegal River basin\. The Senegal River basin covers a surface area of about 300,000 km2\. The high
plateau in northern Guinea represent 31,000 km2 (11 percent of the basin), 155,000 km2 are situated
in western Mali (53 percent of the basin), 75,500 km2 are in southern Mauritania (26 percent of the
basin) and 27,500 km2 are in northern Senegal (10 percent of the basin)\. The basin has three distinct
parts: the upper basin, which is mountainous, the valley (itself divided into high, middle and lower)
and the delta, which is a source of biological diversity and wetlands\. Topographical, hydrographic and
climatic conditions are very different in these three regions and seasonal temperature variations are
extensive\.
5\. Environmental and Social Safeguards Specialists on the Team
Robert A\. Robelus ( AFTA1 )
Salamata Bal ( AFTCS )
6\. Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment OP/BP Yes The MWRD2 involves a significant number of
4\.01 construction and environmental and social
management activities related to the
sub-projects\.
These subprojects cover rehabilitation of
irrigated areas for rice production and
vegetable farming for women groups, a health
component financing pesticide impregnated
mosquito nets and medicines to control 5
neglected tropical diseases, including
Schistosomiasis and an inland small-scale
fisheries component\.
The environmental and social management
activities of the fisheries and irrigation
sub-components include environmental and
social management actions, which also would
trigger OP/BP 4\.01\.
An evaluation will be carried out with regard
to the environmental and social dimensions of
the Balassa dam\. An Environmental and Social
Advisory Panel will be established to provide
advice on the TORs and environmental and
social studies to be carried out\.
MWRD2 has prepared an ESIA, instead of an
ESMF, since most sub-projects have already
been identified\.
Natural Habitats OP/BP 4\.04 Yes Stocking of natural water bodies with
indigenous fish species might be one of the
sub-project activities\. This activity could upset
the natural balance in existing fish stocks if
not done according ecological principles\. This
potential activity triggers OP/BP 4\.04 and is
addressed in the ESIA\.
Forests OP/BP 4\.36 Yes OP/BP 4\.36 is triggered by the reforestation
activities carried out in the Fouta Djallon, a
very sensitive ecological area in the
headwaters of the Senegal River, which has
been and is subject to significant deforestation
as a consequence of agricultural expansion\.
The ESIA includes measures for addressing
the reforestation activities\.
Pest Management OP 4\.09 Yes The Pest and Pesticide Management Plan
(PPMP) was not implemented under MWRD1,
since there was no production in the
rehabilitated irrigation systems\. Presently the
rehabilitation is being finalized and production
will start during the implementation of
MWRD2\. The updated PPMP will be
implemented during MWRD2\. Intensification
of irrigated agricultural production, as
envisaged during MWRD2 might increase the
use of pesticides and chemical fertilizers\. The
implementation of the updated PPMP will
mitigate the health and environmental impacts
of the increased use of pesticides and chemical
fertilizers\. MWRD2 will not finance the
procurement of pesticides\.
Physical Cultural Resources OP/BP Yes OP/BP 4\.11 is triggered by the feasibility
4\.11 studies for the new Balassa dam and by the
construction activities associated with the
sub-projects\. An archaeological survey will be
carried out in the reservoir and dam areas for
the new dam\. This is addressed in the ESIA; a
Chance Find Procedure will be included in all
Contractor Contracts\.
Indigenous Peoples OP/BP 4\.10 No There are no indigenous people in the Senegal
River Basin as defined by OP/BP 4\.10\.
Involuntary Resettlement OP/BP 4\.12 Yes No physical resettlement is anticipated due to
the nature of the intended rehabilitation works
to be carried out under the various
sub-projects\. There might be a need to
compensate for the loss of crops, trees or
property caused by the rehabilitation of the
irrigation schemes\. The lack of definition
around specific subprojects will be addressed
through the preparation and disclosure of the
updated Resettlement Policy Framework
(RPF)\.
OP/BP 4\.12 might be potentially triggered as a
consequence of the restriction of access to
certain fishing grounds needed as spawning
areas, temporary closure of fishing areas for
biological recovery of fish stocks\. It is not yet
certain that these activities will be carried out\.
In case OP/BP 4\.12 will be triggered a Process
Framework (PF) will be prepared, disclosed
and implemented\.
Any sub-project, including construction, can
only start if Project Affected People (PAPs)
have been compensated in compliance with
OP/BP 4\.12\. The eventual RAPs or PFs
prepared for subprojects will need to be
cleared by the Bank and consulted upon with
stakeholders\. These RAPs and PFs also will be
disclosed in-country and in the World Bankâs
Infoshop prior to the start of any subproject
construction activity\.
Safety of Dams OP/BP 4\.37 Yes OP/BP 4\.37 is triggered by the feasibility and
environmental and social studies for the new
Balassa dam\.
This policy is also triggered by the fact that the
irrigated agricultural subprojects are dependent
for their water from the Manantali and Diama
Dams\. The dam safety reports for the
Manantali and Diama Dams have been
recently reviewed by the World Bank and no
dam safety issues have been identified\.
A Dam Safety Advisory Panel will be
established to manage the dam safety aspects
of the MWRD2\.
Projects on International Waterways Yes The governments of the four riparian countries
OP/BP 7\.50 were notified of the Project through the
OMVS, in which all four countries are
represented\. A letter regarding this notification
has been sent to the Bank\.
Projects in Disputed Areas OP/BP 7\.60 No There are no Disputed Areas in the Senegal
River Basin\. Therefore OP/BP 7\.60 is not
triggered\. OMVS has the mandate to
implement and manage sub-projects in the
Senegal River Basin with the support of the
four riparian countries\.
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the Restructured project\. Identify
and describe any potential large scale, significant and/or irreversible impacts:
The program (MWRD1 and MWRD2) is classified as category A in the Environmental Assessment
classification of the World Bank, the main reason being that MWRD2 finances preparatory studies for
Balassa dam and rehabilitation for Diama dam in the Senegal River Basin\. An independent dam safety
panel will be formed to review these studies and the works at Diama dam\. The TORs will be prepared
before project effectiveness\.
MWRD2 covers a similar range of activities as MWRD1 over an extended geographical area, the
Senegal River Basin in four countries, and therefore requires a substantive level of due diligence\. The
table above gives details on the safeguards issues associated with the project\.
MWRD2 sub-projects: rehabilitation of irrigation schemes, health component and fisheries and
aquaculture component will have very limited environmental and social impacts, similar in nature as
the impacts under MWRD1\. These impacts and mitigation measures have been described in the ESIA
prepared for MWRD2\.
MWRD2 will also finance the rehabilitation of existing or development of new small-scale fish farms
and hatcheries for the production of juvenile fish, which will be used to stock natural water bodies\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities in
the project area:
N/A
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts\.
N/A
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an
assessment of borrower capacity to plan and implement the measures described\.
The capacity of OMVS and the member states for environmental and social management has been
strengthened under the Senegal River Basin Water and Environmental Management GEF Project and
even more so under the MWRD1 project\. This included building a core group of transboundary
environmental management expertise\.
During the preparation of MWRD1, OMVS prepared an Environmental and Social Management
Framework (ESMF), a Resettlement Policy Framework (RPF) and a Pest and Pesticide Management
Plan (PPMP) in compliance with the requirements of the World Bank Safeguard Policies\. These
instruments have been reviewed and updated for use in MWRD2\. MWRD2 has prepared an ESIA,
instead of an ESMF, since the most of the project activities to be financed are known\. The RPF and
PPMP have been updated\. The updated ESIA, PPMP and RPF have been consulted upon and disclosed
in-country and at the Infoshop prior to appraisal\.
At the start of the implementation of MWRD1, the ESMF was used to screen all sub-projects\. The
majority of sub-projects were found to pose very low environmental and social risks, mostly related to
environmental and social management during construction\. One of the reasons for this low risk was
that irrigated agriculture sub-projects involved rehabilitation of irrigation systems rather than new
construction\. For these low risk sub-projects only an Environmental and Social Management Plan
(ESMP) was prepared and implemented, which was based on the ESMP in the ESMF\. An
Environmental and Social Impact Assessment (ESIA) was only prepared and implemented for those
sub-projects with potentially high impacts\. The only sub-project for which a specific ESIA and
associated ESMP and a Resettlement Action Plan (RAP) were prepared and implemented was the
construction of the Krankaye canal, a new main irrigation water supply canal, in the Senegal River
Delta\. The Krankaye sub-project did not physically displace any households, but did have an impact
on property\. Project Affected People (PAPs) have been compensated in compliance with OP/BP 4\.12\.
Community level measures taken to mitigate or compensate for impacts in the Krankaye sub-project
included flood protection, foot bridges for continued access to irrigation schemes at the other side of
the canal and a siphon to continue to supply water to private irrigated areas\. None of the other
sub-projects triggered OP 4\.12\.
The various ESMPs for sub-projects included a wide range of mitigation measures\. These mitigation
measures included among others social compensation measures, for example the construction of
laundry and bathing areas, ramps for cattle to have access to water, foot bridges to provide access to
irrigation areas and so on\. All the ESMPs included construction related environmental and social
management measures, including prevention and management of hydrocarbon spills and health and
safety measures during construction\. Component specific measures were also taken, for example
improving hygiene and solid waste management at the new fish markets financed under MWRD1\.
The Pest and Pesticide Management Plan (PPMP) was not implemented during MWRD1, since the
rehabilitation of all the irrigation systems financed under MWRD1 is only now being finalized\. There
was no increased agricultural production under MWRD1\. The updated PPMP will be implemented
under MWRD2\.
MWRD2 has prepared an ESIA, since most sub-projects have already been defined, and updated the
RPF and the PPMP from MWRD1\. It is not expected that OP 4\.12 will be triggered during the
implementation of MWRD2, but if there is any involuntary resettlement, a RAP will be prepared,
consulted upon, and disclosed in-country and in the World Bank Infoshop\. RAPs will need to be
cleared by the Bank\. Construction can only start after Project Affected People (PAP) have been
compensated in compliance with OP/BP 4\.12\. The ESIA and the RAP were consulted upon by
February 2013\. The ESIA and PPMP have been disclosed in-country and in the World Bank Infoshop
on 26 March 2013\. The RPF was finalized and cleared for disclosure on 10 June 2013\. These
instruments will be implemented and monitored by the Safeguard Specialist at the PCU as was done
for MWRD1\. Executing agencies will also be responsible for implementing and monitoring safeguards
for specific activities and for oversight of contractors\.
The main area of institutional support, which OMVS will require during the implementation of
MWRD2 is in advancing the feasibility studies of the new Balassa dam and the evaluation of the
environmental and social dimensions of this new dam\. It has been agreed with OMVS that a Dam
Safety and an Environmental and Social Advisory panel will be established as needed, so that the
panel can provide advice on the TORs for the feasibility studies and the environmental and social
studies and on these studies themselves\. The TOR for the ESIA of the new dam will need to be cleared
by the Bankâs Regional Safeguard Coordinator for the Africa Region\.
There are no other environmental and social risks, which are outside the scope of the World Bankâs
safeguard policies\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on
safeguard policies, with an emphasis on potentially affected people\.
The principal stakeholders of this Project are identifiable at three levels-regional, national, and local:
The regional stakeholders are the institutions involved in managing the Senegal River (the OMVS) and
its infrastructure (SOGENAV, SOGEM and SOGED)\. These stakeholders have defined the project in
discussion with national counterparts\.
Nationally, the principal stakeholders are the four national governments and the four national OMVS
cellules\. Through performance management contracts, four executing agencies: Société
dâAménagement des Terres du Delta (SAED, Senegal), Société Nationale de Développement Rural
(SONADER, Mauritania), Direction Nationale du Génie Rural (DNGR, Guinea), and L'Agence de
Developpement Rural de la Vallee du fleuve Sénégal (ADRS, Mali) will implement the agriculture and
related sub-components\. It is important to note that all four governments have endorsed the Project\.
OMVS has demonstrated a continued interest in applying a participatory approach to the Project
design\. National Project Planning Committees (NPPCs) were established in each riparian country and
these committees have participated actively in Project preparation\. National officials also provide
continual assistance and participate in national and regional workshops, steering committees and other
stakeholder consultations during project preparation\.
At the local level, the stakeholders include the local government, local decision-makers, rural
communities, womenâs groups, and schools\. Local level consultations were held by OMVS in
December 2012 for all locally implemented activities; including fisheries improvements, agroforestry,
river bank protection and development or rehabilitation of irrigated areas\. Meetings were held in each
zone of intervention and facilitated by local committees\. Photographs and meeting records were
provided by OMVS\.
B\. Disclosure Requirements
Environmental Assessment/Audit/Management Plan/Other
Was the document disclosed prior to appraisal? Yes
Date of receipt by the Bank 18-Mar-2013
Date of submission to InfoShop 26-Mar-2013
For category A projects, date of distributing the Executive Summary of 23-Apr-2013
the EA to the Executive Directors
"In country" Disclosure
Guinea 28-Feb-2013
Comment:
Mali 28-Feb-2013
Comment:
Mauritania 28-Feb-2013
Comment:
28-Feb-2013
Comment:
Resettlement Action Plan/Framework/Policy Process
Was the document disclosed prior to appraisal? Yes
Date of receipt by the Bank 28-Mar-2013
Date of submission to InfoShop 14-Jun-2013
"In country" Disclosure
Guinea 28-Feb-2013
Comments:
Mali 28-Feb-2013
Comments:
Mauritania 28-Feb-2013
Comments:
Senegal 28-Feb-2013
Comments:
Pest Management Plan
Was the document disclosed prior to appraisal? Yes
Date of receipt by the Bank 18-Mar-2013
Date of submission to InfoShop 26-Mar-2013
"In country" Disclosure
Guinea 28-Feb-2013
Comments:
Mali 28-Feb-2013
Comments:
Mauritania 28-Feb-2013
Comments:
Senegal 28-Feb-2013
Comments:
If the project triggers the Pest Management and/or Physical Cultural Resources policies, the
respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please explain why:
C\. Compliance Monitoring Indicators at the Corporate Level
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) Yes [ X ] No [ ] NA [ ]
report?
If yes, then did the Regional Environment Unit or Sector Yes [ X ] No [ ] NA [ ]
Manager (SM) review and approve the EA report?
Are the cost and the accountabilities for the EMP incorporated Yes [ X ] No [ ] NA [ ]
in the credit/loan?
OP/BP 4\.04 - Natural Habitats
Would the project result in any significant conversion or Yes [ ] No [X ] NA [ ]
degradation of critical natural habitats?
If the project would result in significant conversion or Yes [ ] No [X ] NA [ ]
degradation of other (non-critical) natural habitats, does the
project include mitigation measures acceptable to the Bank?
OP 4\.09 - Pest Management
Does the EA adequately address the pest management issues? Yes [ ] No [ X] NA [ ]
Is a separate PMP required? Yes [X ] No [ ] NA [ ]
If yes, has the PMP been reviewed and approved by a Yes [X ] No [ ] NA [ ]
safeguards specialist or SM? Are PMP requirements included
in project design?If yes, does the project team include a Pest
Management Specialist?
OP/BP 4\.11 - Physical Cultural Resources
Does the EA include adequate measures related to cultural Yes [ X ] No [ ] NA [ ]
property?
Does the credit/loan incorporate mechanisms to mitigate the Yes [ ] No [ ] NA [ X ]
potential adverse impacts on cultural property?
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy Yes [ X ] No [ ] NA [ ]
framework/process framework (as appropriate) been prepared?
If yes, then did the Regional unit responsible for safeguards or Yes [ X ] No [ ] NA [ ]
Sector Manager review the plan?
OP/BP 4\.36 - Forests
Has the sector-wide analysis of policy and institutional issues Yes [ ] No [ ] NA [ X ]
and constraints been carried out?
Does the project design include satisfactory measures to Yes [ ] No [ ] NA [ X ]
overcome these constraints?
Does the project finance commercial harvesting, and if so, does Yes [ ] No [ X ] NA [ ]
it include provisions for certification system?
OP/BP 4\.37 - Safety of Dams
Have dam safety plans been prepared? Yes [ ] No [ ] NA [ X ]
Have the TORs as well as composition for the independent Yes [ ] No [ X ] NA [ ]
Panel of Experts (POE) been reviewed and approved by the
Bank?
Has an Emergency Preparedness Plan (EPP) been prepared and Yes [ ] No [ ] NA [ X ]
arrangements been made for public awareness and training?
OP 7\.50 - Projects on International Waterways
Have the other riparians been notified of the project? Yes [ X ] No [ ] NA [ ]
If the project falls under one of the exceptions to the notification Yes [ ] No [ ] NA [ X ]
requirement, has this been cleared with the Legal Department,
and the memo to the RVP prepared and sent?
Has the RVP approved such an exception? Yes [ ] No [ ] NA [ X ]
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the Yes [ X ] No [ ] NA [ ]
World Bank's Infoshop?
Have relevant documents been disclosed in-country in a public Yes [ X ] No [ ] NA [ ]
place in a form and language that are understandable and
accessible to project-affected groups and local NGOs?
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional Yes [ X ] No [ ] NA [ ]
responsibilities been prepared for the implementation of
measures related to safeguard policies?
Have costs related to safeguard policy measures been included Yes [ X ] No [ ] NA [ ]
in the project cost?
Does the Monitoring and Evaluation system of the project Yes [ X ] No [ ] NA [ ]
include the monitoring of safeguard impacts and measures
related to safeguard policies?
Have satisfactory implementation arrangements been agreed Yes [ X ] No [ ] NA [ ]
with the borrower and the same been adequately reflected in the
project legal documents?
III\. APPROVALS
Task Team Leader: Name: Shelley Mcmillan
Approved By:
Regional Safeguards Name: Alexandra C\. Berezedi Date: June 10, 2013
Advisor:
Sector Manager: Name: Jonathan S\. Kamkwalala Date: June 6, 2013 | APPROVAL |
P006222 | }-AI-J i3 /T\.O\.-31-c
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This report is restricted to use within the Bank\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TECHNICAL REPORT
on the
BRAZILIAN TRACTION, LIGHT AND POWER COMPANY LTD\.
PIRATININGA THERMAL GENERATING STATION
in
BRAZIL
February 9, 1954
Technical Operations Department
Public Utilities Division
CURRENCY EQUIVALENTS
At the present official rate of exchange:
$1\.00 - 18\.82 Cruzeiros
1 Cruzeiro - $ 0\.0531
1 million Cruzeiros - $ 53,100
At the present free market rate:
$ 1\.00 - 51\.28 Cruzeiros
1 Cruzeiro - $ 0\.0195
1 million Cruzeiros - $ 19,500
The rates of exchange, where referred to in
this report as applicable to any specific trans-
action, are the actual rates charged by the
Brazilian foreign exchange authorities\.
B R A ZI L
ERAZILIAN TRACTION, LIGHT AND PCMER GCMPANY\. LIMTTED
PIRATININGA THRMZAL DGEffRATING STATION
I\. Purtoge and Scope of this Report
1\. An application for a loan of US$18\.79 million has been received
from the Brazilian Traction, Idght and Power Company, Ltd\., to cover the
foreign exchange requirements for the construction of the Piratininga
generating station\. The Piratininga generating plant, when completed, will
be owned and operated by the Sao PauIo Iight and Power Company, Ltd,s which
is a subsidiary of the Brazilian TractionA Light and Power Company, Ltd\.,
and is the only electric utility generating and distributing power within
the city of Sao Paulo and its suburbs\.
2\. The Joint Brazil-United States Economic Development Commission
reviewed the project and included it among those submitted to the Bank with
recommendations that it be carried out\. The Brazilian Government has
Indicated its willingness to guarantee a loan for the project\. The project
is appraised below from the technical, financial, economic and organizational
aspects\. Since the project is a part of the Brazilian Traction, Light and
Power Company's long range program, the company's operations and future
prospects are also dealt with\.
3\. This appraisal is based on studies made by the Joint Commission
and the Stone and Webster Engineering Corporation, on information obtained
in the field by staff members of, and consultants to, the Bank, and on data
supplied by the applicant\.
II, The Borrower
4\. The Borrower would be the Brazilian Traction, Light and Power
Company, Ltd\. (hereinafter referred to as "the Company"), a corporation
established under the laws of Canada\. The loan would be guaranteed by the
United States of Brazil\.
III\. The Pro\.ect
5, The project consists of a thermal generating station located at
Piratininga, near the city of Sao Paulo, The station capacity of 160,000
kw will consist of two 80,000 kw hydrogen cooled generators, each driven
by a tandem compound condensing steam turbine\. The plant is designed to
follow the unit\.principle of one boiler per turbino generator, the boilers
being of the semi-outdoor type\. Conservative steam conditions of 850 psi
pressure and 925oF total temperature have been selected,
- 2 -
6\. The boilers are being designed to burn either oil or pulverized
coal\. However, coal would only be used in the event of a national emergency\.
Two fuel oil storage tanks, each having a capacity of 100,000 barrels, are pro-
vided at the site and have fuel storage sufficient for approximately ten weeks\.
Oil will be delivered to the tanks by means of the Santos-Sao Paulo pipeline\.
7\. Each main generating unit will be connected to a bank of three
40,000 kva, 13\.2/80 kv transformers\. Switchgear will be totally enclosed, of
the metal clad type and located in a separate building\. The plant will be
connected to the primary transmission system by a short 80 kv line,
8, Steam will be extracted from the turbine at five points at suitable
pressures to heat the boiler feed water to a temperature of about 4000 F\.
IV\. Engineering and Construction
9\. In March, 1951, the Company retained the services of the Stone and
Webster Engineering Corporation of Boston, Massachusetts, to design and con-
struct the project, Qonstruction was started in November, 1952, and it is
estimated that the first unit will go into operation in August and the seeond
unit in October 1954\. All equipment has been purchased on a negotiated basis
from American and Canadian suppliers and the main items have been delivered\.
Approximately 80% of the equipment is being supplied from the United States
and about 20% from Canada\.
10\. The plant is well engineered and follows modern practice in plants of
this kind, Savings in fuel of about 10% could have been obtained by using
higher temperatures and pressures\. If, however, the plant is to be eventually
used as a standby unit then the choice of steam conditions is in line with
good practice\.
V\. Estimated Cost
11\. The estimated total cost, broken down into foreign exchange and
local currency components, is as follows:
Foreign Currency Local Currency
Equivalent Cruzeiros
Item to U\.S A(,oo
-(19000) ~ 7(1,000c)
Plant site 15 35,000
Plant building 240 54,289
Boilers 6,104 55,465
Turbo-generator units 6,801 62,456
Auxiliary electrical equipment 1,144 19,118
Step-up transformers and switching station 1,210 10,000
Transmission facilities 465 23,956
Construction equipment 150 7,000
Sundry auxiliary equipment 379 2,492
Temporary construction buildings 50 5,620
Contingencies 2\.228 40\.LO4
Totals l8,786 316\.325
Total Cost of Project 669,877 2
T/ Based on an exchange rate of crz, 18\.82 = U\.S\.$1\.
-3 -
12\. The above estimates of costs are based for the most part on firm
orders and on construction costs experienced to date\. The Company is now
engaged in an extensive construction program which is scheduled to be com-
pleted by the end of 1955\. The Piratininga project is included in this
program which is being financed primarily from earnings\. A careful analysis
of the Companyts present financial position indicates that it is not likely
to have difficulty in completing the Piratininga project, provided it
receives the proposed loan from the Bank\.
VI\. Market
13\. Power is now being rationed in Sao Paulo and is a problem of growing
concern in this community, The Billings reservoir, which is the major
storage reservoir used by the Sao Paulo Light and Power Company for its hydro
plants, has not been fun for the past three years and is now almost at its
lowest point since the beginning of company operations\.
14\. Power consumption in this area has been increasing at an average
cumulative rate of 11\.2% per year\. This rate would probably have been higher
had more power been available\. Until the outbreak of the Second World War
the Sao Paulo Light and Power Company not only had been able to meet all
power demands but had succeeded also in anticipating normal growth require-
ments\. During and since the war, however, the situation has reversed and
the company has been unable to accept new consumers without limitation\.
15\. The new plant will increase the generating capacity of the Sao
Paulo Light and Power Company by approximately 25% which at best will do
no more than raise the generating capacity to estimated demand at the time
the plant goes into operation,
VII\. Fuel Clause\. Generating Costs and Rates
16\. Fuel oil will be purchased in cruzeiros from the Government-owned
refinery at Santos\. Although it is reported that the refinery will start
operations in July 1954, the Company believes it is unlikely that fuel oil
will be produced in any quantity this year\. To take care of its fuel oil
requirements for 1954 the Company has entered into a contract with the
Standard Oil Company which, after allowing for pipe line charges, will
result in a price of 751 cruzeiros per ton delivered at the plant\. It is
not yet known what price will be charged for fuel oil from the Government
Refinery\.
17\. Costs of generating power, depending on annual load factors, are
given below:
Cost per K\.W\.H\.
Annual based on fuel oil at
Load Factor % Cr\. 751 per ton delivered
(Cruzeiros)
40 \.46
60 438
80 \.34
100 \.32
Present retail or distribution cost of power averages Crz, 0\.33 per kwh,\. The
costs in the table do not include costs of distribution or company overheads,
-4-
18\. Portaria No\. 577 of June 8, 1951, authorized an automatic rate
increase resulting from the use of new thermal facilities, which will
protect the Company against increases in generating costs\. Under this
"fuel clause" the higher cost of thermal generation is spread over the
total energy sales of the Sao Paulo system\.
19\. In 1955 if Piratininga is used as a base load plant, the
average selling price per k\.w\.h\. in the System would be raised (on the
basis of the "fuel clause") from Crz\. \.33 to Crz, \.408, an increase of
23%\. In subsequent years, if the growth in demand were met by additional
hydro capacity, the average rate could probably be reduced\.
20\. If Piratininga were operated as a standby plant there would
normally be no fuel costs but there would be certain fixed charges which
would have to be absorbed in the tariff rates applicable to the whole
system\. The resultant increase in tariff rates would, in effect, be the
premium paid for the insurance obtained by the whole system against
drought or other emergencies and in 1955 would amount to about 6\.5%\.
VIII\. Justification of the Project
21\. As will be seen from paragraph 33 below, the generating capacity
of the Company is being expanded and, if its present preliminary plans
are carried out\., the Sao Paulo Light and Power Company's generating
facilities will be tripled by 1960, reaching a maximum of 1\.5 million kw\.
Without the Piratininga thermal plant all of this capacity would be
hydro\. A long period of dry weather, which is always a possibility,
would undoubtedly bring about great economic loss to the large industrial
city of Sao Paulo if it were to depend exclusively on hydro power in the
amount contemplated\. When the Piratininga plant beoomes available as a
standby it could be brought into full operation in the event of a long
dry season permitting a reduction of 22% in normal rainfall before the
rationing of power became necessary\.
22, The Company is likely to have difficulties in carrying out an
expansion program within the foreseeable future which would eliminate
the present power shortage\. Because of this continuing shortage of
power, Piratininga will probably have to be operated as a base load
plant\. If the plant is used for base load purposes, it would, of course,
give no reserve to the system in the event of a drought or other
emergency\. Also, as a base load plant it will require the importation
of fuel, equivalent to about US$7\.3 million annually at present c\.i\.f\.
fuel prices and its operation will result in higher average generating
costs, thus necessitating increased power rates, To the extent that
Piratininga becomes a standby plant, need for fuel, and the corresponding
burden on the balance of payments would be reduced\.
23\. The justification of the project therefore lies in the relatively
shorter time required to put the plant into service compared to hydro and,
therefore, in the quick relief which it would bring to the present power
shortage\. If the hydro generating capacity could subsequently be increased
to meet the whole demand, PiratiWninga could give a measure of protection
to the Company and the conmunity against great economic loss in the event
of a severe drought\. The Company has confirmed that it is its policy to
reach this situation as soon as possible\.
IX, The Commany
24\. Since the loan would be made to the Company, it is necessary to
review the present and prospective position of the Company as a whole\.
Present Position
25\. The value of the Company's properties and other assets has been
closely examined by the Bank's consultants, who came to the conclusion that
the accounts show a conservative and prudent valuation of assets and
liabilities and a sound financial position\. A copy of the Consolidated
Balance Sheet as at September 30, 1953, is attached as Annex A,
26\. It will be seen that long-term debt, which is covered more than
four times by fixed assets, amounts to only some 25% of total capitaliza-
tion, a very satisfactory ratio\.
27\. The earned surplus has built up to 107% of share capital, which
reflects the policy which the Company has followed of expanding its system
largely from retained earnings\. According to the last Balance Sheet
available, as of September 30, 1953 the Company's current position was
satisfactory\. Current assets amounted to 103\.5 million, current
liabilities to $65\.3 aillion so that net working capital was $38\.2 million\.
Although this position was satisfactory, the Company subsequently decided
to pay a stock dividend and only a token cash dividend to conserve its
cash resources, in the light of the difficulties confronting the Company
which are outlined in paragraph 34 below\.
Historical Earnings
28\. The Company's historical earnings trend has been characterized
by substantial growth, not only in operating revenues but also with
respect to net earnings which have risen considerably and are at present
at a level of about $49 million_J\. The coverages for interest requirements
have been satisfactory in all periods\. During the twelve months ended
October 31, 1953, the group's income deductions, including interest on
the existing I\.B\.R\.D\. loans were earned 9\.9 times before and 8\.S3 times
after income taxes\. There is attached hereto as Annex B a statement
showing consolidated income of the Company and all of its subsidiaries for
the years 1939, 1942, 1945, 1948-1952 inclusive and for the twelve months
period ended October 31, 1953\.
I/ On basis of official rate of Crz\. 18\.82 = 1 U\.S\. dollar
-6 -
Status of Construction Program Covered by Bank Loan of EU$9O million
29\. The Bank made a loan of US$90 million to the Company in two
instalments in January 1949 and in January 1951 to cover the foreign
exchange costs of a postwar construction program which the Company had
undertaken for the purpose of expanding its electric power and telephone
services\. The program is made up of several projects, the most important
being:
a) Transmission line, including frequency changer
station, between Sao Paulo and Rio;
b) The Cubatao generating station;
c) The Forcacava underground generating station;
d) Diversion of the Paraila-Pirai Rivers, including
the Santa Cecilia and Vigario pumping stations;
e) The purchase of a floating power plant; and
f) Extensive expansion of the Company's telephone
system\.
30, The final disbursement on the $90 million Bank loan was made
on December 18, 1953\. As of October 31, 1953, the Company had made a
total capital expenditure of US $277\.7 million equivaleit out of an
estimated amount of US 4297 million equivalent required to complete the
program, The foreign exchange costs have remained very close to original
estimates, However, local currency costs have greatly exceeded the
original estimates, primarily because of much higher labor and material
costs\. The Company, however, has had no financial difficulty in
carrying out the program and all projects should be completed prior to
December 31, 1954, which is the closing date of the loan\.
Frther Development Program
31, Although doubts have been expressed regarding the desirability
of a continued concentration of industrial development in the Sao Paulo
area, the Company, if it is to meet fully the steadily growing demand
for power and telephone services in its service area, will be faced with
the necessity of carrying out a very large expansion program during the
next ten years\.
32\. The funds which would be required for the execution of such a
program have been estimated to be of the order of US $1,500 million,
based on present prices and a rate of exchange of Crz\. $18,82 - US$ 1\.
J See Annex C for detailed breakdown of costs,
- 7 -
33\. The Company's present construction program provides for the com-
pletion as at present schedules of the three major generating projects now
underway, i\.e\. Forcacava, Piratininga and Cubatao, but makes no provision
for future hydro-electric expansion\. To carry out this program and to
provide some reserve for contingencies, the Company with the assistance of
the Government has negotiated or is negotiating loans with the National
Development Bank and the Bank of Brazil totalling some 1,300 million
cruzeiros (equivalent to about $70 million at the exchange rate of Crz\. 18,82)\.
The Company is also proposing to borrow $10 million from the Canadian Bank
of Commerce on a three-year basis\. Withdrawals under these loans during
1954 are presently estimated at the equivalent of about $28 million\. In
addition, the Company would have available the proceeds of the proposed
Bank loan for the Piratininga plant\. About half of this loan would be
used to reimburse the Company fQr expenditures made prior to 1954, the
other half for expenditures on equipment during 1954\. In order to meet
demand after 1956, when the major projects now under construction are
scheduled to be completed and in service, work ought shortly to be commencing
on new generating projects\. The Company, however, in view of the present
uncertainties of the financial situation does not feel that any expenditures
for such future projects can be included in the 1954 Budget\.
34\. It is obvious that the Company is going to be confronted with a
serious problem in making the investments necessary to meet the requirements
of the market\. The major difficulties, which are closely interrelated and
with which the Company is faced, are listed below:-
1\. Convertibility of Cruzeiro Revenues into Foreign Exchange
To finance its future construction program the Company
must rely to a large extent on its cruzeiro resources
accruing from operations, and in addition from borrowings
and sales of securities in Brazil\. At best only a small
portion of the foreign exchange component of the large
construction program necessary to meet demand could be
financed abroad in view of Brazil's limited ability to
repay external loans and Brazil's need for foreign
financing in other fields\. The amount of cruzeiros
obtained from operations and from local financing, which
the Company would have to convert into foreign exchange,
is so large as to present a major problem in the allocation
of Brazilts limited exchange resources,
2\. Possibility of Further Cruzeiro Depreciation
The present official rate is Crz\. 18\.82 to the U\.S\.
dollar and for 1954 arrangements have been made with the
Brazilian authorities under which the Company will be
allowed to purchase the dollars for its debt service and
dividend requirements at this official rate\. An arrange-
ment has also been made that the dollars required to cover
the Companyls imports of equipment and materials for 1954
may be purchased at the official rate plus a premium (agio)
- 8 -
of Crz\. 7 per dollar\. Since the Company is likely to have
enough cruzeiros to purchase the necessary dollars, these
arrangements would seem to take care of the Companyts
foreign exchange requirements for 1954 and perhaps a part
of 1955\. Beyond this it is impossible at present to make
any useful forecast\. If the Company has to pay higher
rates in the future for its foreign exchange requirements,
the problem of financing its further expansion program will
become so mich the more acute since this would increase to
an unforeseeable degree the amount of cruzeiros required to
cover the foreign exchange cost of additional imported equip-
ment\. Such an increase in foreign exchange rates would
strengthen the case for tariff increases referred to in the
following paragraph\.
3\. Marketing of Securities and Rate of Return
It is clear that a substantial portion of the additional
finances which will be required to carry out further large
scale development will have to be acquired through the sale
in Brazil of shares in the subsidiaries of the Brazilian
Traction Company\. The Company is actively going ahead with
the transfer of the nationality of the Sao Paulo Light and
Power Company, Ltd\. and expects that this action will be
completed by about June 1954, by which time this company will
be able to proceed with the sale of securities\. The Company
is reasonably optimistic about the possibilities of selling
such shares in the light of its recent experience with the
Minas Telephone Company, in which shares to the value of
130 million cruzeiros have been sold\. The extent to which
the new companies will be successful in selling ehares
locally is likely to te unfavorably affected by the fact that
higher returns can be obtained from other investments in
Brazil than the companies will be able to pay under present
average power rates\. For a number of years the Company has
not obtained any increases in tariffs for power to compensate
for anything apart from inoreased labor costs\. There seems
to be no immediate likelihood of any general tariff increase
and any possibility of such increase will undoubtedly be
seriously affected by the Government's proposal to impose a
surcharge on all power sold in order to raise funds for the
Electrification Scheme\. This surcharge, if approved by
Congress, would probably come into effect at the beginning
of 1955 and would have to be collected by the operating
companies\. It is expected that the surcharge would be on a
sliding scale, which would be very high (in some instances
about 70%) in the case of some industrial users\. On the
other hand, the funds derived from this surcharge are
intended to be used to finance the development of electric
power companies, both public and private, and thus constitute
a possible source of finance for Brazilian Traction\. Whether
the Company would wish to borrow from this source would depend,
of course, among other things, on the question whether such
borrowing would be consistent with sound financial policy and
a healthy financial structure\.
- 9 -
X\. CONCLUSIONS
35\. The Piratininga project is technically sound and feasible, For
the present it will have to serve as a firm source of power, but as soon
as possible it should be used as a stand-by plant\. It could be made the
basis of a loan of U\.S\. $18\.79 million, with a term of 20 years and a
grace period of one year, and with the following conditions;
(a) substantially the same security as the previous loan
made to the Company;
(b) substantially the same provisions regarding the
rights of the Company and its subsidiaries to incur
long-term indebtedne8s as are set forth in the
Collateral Trust Indenture between the Company and
National Trust Company, Limited\.
36\. As far as the Company is concerned, its past operations have
been successful, and its present financial condition may be regarded as
satisfaotory\. There is little doubt that the expansion program financed
by the BankWs present loan can be completed by the end of 1954, and if
the Bank makes a loan for Piratininga that project can also be completed\.
As for the remainder of the projects now being constructed, the arrange-
ments made for cruzeiro loans and for converting cruzeiros into foreign
exchange appear to take care of the situation for 1954 and part of 1955\.
No arrangements have yet been made to cover the foreign exchange require-
ments of these projects for the balance of 1955 and for 1956\. Their
completion may be delayed if all the necessary exchange cannot be obtained
as soon as it is needed; the amount of cruzeiros needed may be increased
if foreign exchange rates rise; but unless there is some unforeseen
emergency, they will in due course be completed\.
37\. The problem is how well and how soon the Company can meet the
growth in demand after 1956\. The situation requires that this be done by
developing hydro generating resources\. Work on new hydro generating
capacity should be started in the near future if the capacity is to be
available soon after 1956\. The Company, however, cannot prudently begin
work on such new capacity unless it can be reasonably sure of finding
the finance, and obtaining the exchange, needed for a new expansion
program\. In present circumstances, the Company cannot foresee how many
cruzeiros will be available for this purpose, or at what rates they can
be converted into foreign exchange\. The amount of cruzeiros available
will depend partly on the efficient management of the Company, and
partly on factors outside the Company's control: the permitted level
of rates for power and the state of the capital market in Brazil\. The
future exchange rates at which cruzeiros can be converted are altogether
outside the Company's control; they will depend on how the balance of
payments develops and what policies the Brazilian Government follows\. If
developments in these fields are not favorable, the Company will be unable
to meet the growing demand for power in its service area} and may suffer
from growing public criticism with possible pressure for governmental
intervention,
February 2, 1954
Annex A
BRAZILIAN TRACTION\. LIGHT AND POWER COMPANY, LIMITED
AND ITS PRINCIPAL SUIBSIDIARIES
Consolidated Balance Sheet as at September30 1953
Asst-ts
Property, plant and equipment - at cost $717,368,673
Less:
Reserve for depreciation 165\.6L1\.676
Net book value 551,726,997
Rights, franchises, contracts and goodwill 1
Current and accrued assets 103,458,751
Prepaid expenses and sundry assets 31\.2183\.L8
Total Assets 686\.403\.827
Liabilities
Long-term debt (including $19,334,194 of subsidiaries) 124,500,661
6% preferred, $100 par, 3,934 shares 393,4co
Coumon equity:
Conmon, no par, 14,231,283 shares W1l1t391,433
Earned surplus 195\.610,232
Total common equity p77,001,665
Minority interests in subsidiaries 3,096,550
Current and accrued liabilities 65,279,149
Reserves:
Amortization of revertible property $ 50,396,927
General reserves 47,432,000
Reserve for foreign exchange 9,561\.070
Total 107,889,997
Deferred credits to income 8,242,405
Total Liabilities 686,403,827
LRAZILIAN TRACTION, LIGHT AND POWFR CCOPAHY, LIMI2TED Annex B
AIiD SL'BSIDIARIPS
Consolidated Income Statements for the Periods Shown BP1ow
In Thoursnds of Dollars
* 12 Months
ended Calendar Years
10/31/83 1952 1951 1950 1949 1948 1945 1942 1"9
Operating Revenues 183,202 16,947 149,806 131,998 123,884 lo,945 65,l81 46,570 37\.199
Operating Expenses:
Operation 82,345 76,251 64,764 54,495 50,423 40,557 22,620 14,125 12,557
Maintenance 23,485 21,635 20,531 19,258 17,598 13,550 8,028 4,500 3,666
Depreciation 17,043 16,858 13,903 11,883 8,843 8,136 5,528 6,839 6,929 °
Amortization of Revertible Properties 2,014 1,983 1,876 1,854 1,807 1,789 1,680 1,519 1,4Z99
General Taxes 2,220 2,005 795 544 559 951 1,286 1,591 957 ° -
Income Taxes 6,676 5,479 8,716 10,o33 10,161 8,456 3,286 1,757 997 h
Total 133,783 124,61 i10,585 98,387 89,391 73,439 42,428 30,131 26,538 5
Net Operating Income 49,419 45,36 39,221 35,611 34,493 28,506 22,723 16,239 10,664 ,,
Other Income 6,4081 195 266 1,447 481 232 1,029 L,050 1ZS c
Gross Income 86,300 47,290 39,987 37,058 314,974 28,738 23,752 17,689 11,089 ,,
Income Deductions:
Interest, Dividends and Other Charges cf Subsidiaries 1,691 1,7Q8 864 1,057 1,445 1,652 1,539 1,623 1,923 h
Interest, and Carrying Charges on Long-Term Debt of
Parent 4 ,558 4,367 3,245 2,371 1,164 - - -
Debt Discount and Expense of Parent - - 64bi 585 606 - - - -
Foreign exchange adjustments 1,094 (-)9S - - - - - - -
Total 7,343 5,120 4,7! 5 2 ,013 3,215 1,652 1,'39 1\.6z3 1,9232
Consolidated Ret Income 48,957 4Z,170 35,234 33,045 31,759 27,086 22,213 16,066 9,166
Preference Dividends 24 24 22 22 23 24 21 21 23 C
Balance for Common and Surplus 48,933 42,146 35,212 33,023 31,736 27,062 22,192 16,045 9,143 s
Common Dividends 7,25 14,543 13, 26 33\.065 13,422 114,054 12,-69 ,9! - \.0 a
Balance to Surplus Z17 27,603 21\.786 19558 14 3008 _03 _9,651 j,143 oa c
Times Income Deductions (excluding foreign exchange o -;
adjustments) earned before income taxes 9\.90 8\.84 10\.25 11\.81 14\.04 22\.51 17\.57 11\.98 6\.28 c
Times Income Deductions (excluding foreign exchange
adjustments) earned after income taxes 8\.83 7\.94 8\.41 9,23 10\.88 17\.40 15\.43 10\.90 5\.77
Earned Per Common Share $3\.44 $2\.96 $2\.08 $4\.70 $4\.51 $3\.85 $3\.16 $2\.28 $1\.30
Number of Shares Conmon (in Thousands) 14,231 14,229 14,216 7,030 7,030 7,030 7,030 7,030 7,030
% of Operating hievenue:
0-perali ng ~xpense s Before Deur\. , An,ort\. aad Taxes ~6 '4 ' : \. \.o5 1 ool 36
C3er ,ing Expenses 3fter iaep \., mcort\. ad Taxess 33: 2 0% Y 471 3
Net\. Income 26,72 24,81 23-5 Z4\.7 25\.( 26,6 34,1 3 \.5 214\.6
Annex C
TOTAL ESTIMATED CCSTS OF AND TOTAL INVESTED IN
PRCGRAM BEING FINANCED WITH PRESENT
IBRD LOAN OF $90 MILLION
(as of October 31, 1953)
Total Estimated Total
Cost / Invested I/
(in million dollars)
First Instalment of Loan -
I\. T!ansmission and Distribution:
Rio system 39\.0 37\.6
Sao Paulo system 51\.3 45\.0
2\. Hvdro-electric Construction: 123\.2 117,1
3\. Telephone Program 64\.6 64\.3
278\.1 264\.0
Second Instalment of Loan -
1\. Transmission and Distribtion:
Rio system 1\.7 \.5
Sao Paulo system 8j9 6\.2
2\. Uydro_electric Constr-uetion: 8,\.4 7\.0
19\.0 13\.7
GRAND TOTAL 297\.1 277\.7
Total Electric Development 232\.5 213\.4
Total Telephone Program 64\.6 64\.3
Notes: J Including foreign exchange and equivalent of local currency\.,
v/ Foreign exchange only; equivalent of local currency costs
inclded under Hydro-electric construction for first
instalment\. | APPROVAL |
P104900 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB2922
Project Name
Pakistan: Additional Financing Credit for the Second Partnership
for Polio Eradication
Region
SOUTH ASIA
Sector
Health (100%)
Project ID
P104900
Borrower(s)
ISLAMIC REPUBLIC OF PAKISTAN
Implementing Agency
ISLAMIC REPUBLIC OF PAKISTAN
Economic Affairs Division
Government of Pakistan
Pakistan
Tel: +92 51 920 3815 Fax: +92 51 921 8976
Expanded Program on Immunization, National Institute of Health
Ministry of Health, Chak Shehzad,
Islamabad\. Pakistan 41000
Tel: 92 51 9255101
Drrehan@Mail\.Comsats\.Net\.Pk
Environment Category
[
]
A
[
]
B
[X] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
February 27, 2007
Estimated Date of
Negotiations
Authorization
April 30, 2007
Estimated Date of Board
Approval
June 7, 2007
1\. Key development issues and rationale for Bank involvement
Pakistan has made steady progress in the health, nutrition, and population (HNP) sector during
1990s but rate of progress has remained slow and HNP indicators lag those of its neighbors e\.g\.
Pakistans total fertility rate, at 4\.5, is 50% higher than Indias and Bangladeshs\. Hence,
Pakistan faces significant challenges to achieve the health related Millennium Development
Goals\. Poor health outcomes and high fertility will remain an obstacle to its economic growth
and, contribute significantly to high levels of poverty\. Pakistan also faces a real threat from
AIDS\. Recent surveillance findings indicate that the country is facing a concentrated epidemic
among injecting drug users (IDUs) with HIV prevalence rates ranging between 3 to 27 percent
within this vulnerable group among major cities across the country\. The health outcomes are a
reflection of inadequate resources and weak management of public health services\. Public
expenditure on health constitutes about 0\.6% of GDP, which is amongst the lowest in the world\.
Pakistan has seen recent improvements in intermediate health outcomes with increasing
immunization coverage (77%) and antenatal care attendance (50%)\. There is considerable scope
for improvement which can be achieved through organizational and management innovations to
improve in the delivery of publicly funded health services\.
Page 2
Pakistan has made good progress towards Polio eradication through sustained and intensified
efforts\. As a result, the numbers of confirmed Polio cases decreased from 324 in 1999 to 104 in
2003 and to only 28 in 2005\. Despite effective implementation of supplementary immunization
activities (SIAs) with high coverage of the targeted population in 2006, the number of Polio
cases increased from 28 in 2005 to 40 in 2006\. There is epidemiological evidence that virus
transmission has been further restricted and the probability of eradication remains reasonable,
but transmission of the virus continues in four geographical zones in Pakistan and neighboring
Afghanistan\. Supplemental Immunization Activities need to be further intensified by increasing
the number of sub national and case response campaigns, enhancing coordination with
Afghanistan, and increasing the use of type specific monovalent vaccine for specific rounds\. The
increased numbers of rounds have increased requirements for OPV, placing additional financial
burden on the program\. Given the limited resources and other competing priorities, the
Government of Pakistan (GOP) requested the Bank for additional financing for the procurement
of OPV\. IDA will finance the procurement of OPV through a normal credit that will be reduced
to a grant through the innovative financing mechanism -
IDA Buy Down, as used in the parent
project\.
The IDA buy-down mechanism converts a normal IDA Credit to grant terms through provision
of additional external donor resources under clearly defined performance criteria\. The resources
for the buy-down are being made available as a result of an agreement between IDA and the
United Nations Foundation with funding from the Center for Disease Control\. The partners will
provide funds to an IDA-administered trust fund (the Polio Eradication Trust Fund) to buy down
the debt incurred for successful implementation of the project\. In addition, the fund will make
commitment and service charge payments to IDA on behalf of the recipients during project
implementation, and upon successful project implementation, buy down the net present value of
the principal amount of the credit\. The first Partnership for Polio Eradication project was
successfully converted to grant through triggering of IDA buy down mechanism based on results
of performance audit\.
2\. Proposed objective(s)
The purpose of the project is to assist Government of Pakistan in eradicating poliomyelitis from
Pakistan\. Pakistans Polio Eradication Initiative is part of the World Health Organization (WHO)
led, multi-country effort to a global public good i\.e\. eradication of polio from the world\. The
objective is to support the procurement and supply of Oral Polio Vaccine (OPV), needed during
2007, for Supplemental Immunization Activities (SIAs) for immunizing all children up to five
years of age\. The proposed additional financing would contribute to the initial project objectives
by financing the procurement of additional OPV required for additional SIAs in August-
December 2007\. The proposed credit is consistent with the original project development
objective\.
3\. Preliminary description
Page 3
The proposed additional financing as the parent project will have one component, i\.e\.,
procurement and supply of OPV to immunize all children up to five years of age as part of SIAs\.
IDA support will ensure timely procurement and supply of the needed quantities of OPV during
second half of 2007 through UNICEF, as in the parent project
The on-going IDA supported Polio Eradication Initiative (PEI) has three components: (i) the
procurement of OPV; (ii) supplemental operations including cold chain, social mobilization and
training; and (iii) surveillance\. All the elements of an effective program are working
satisfactorily in Pakistan including quality surveillance; logistics for procurement, distribution
and administration of quality OPV; micro-planning etc\. The project supervision missions in
February 2007 rated the development objective and the implementation progress satisfactory\.
Pakistans polio initiative is guided by TAG, a group comprised of global and national polio
experts\. Based on review of the surveillance data and available epidemiological evidence
indicates that virus transmission has been further restricted to four geographical zones in
Pakistan and the probability of eradication remains reasonable\. The program in consultation
with TAG has modified its strategy with a focus on ensuring maintaining good quality SIAs,
increasing the number of sub national and case response campaigns, enhancing coordination with
Afghanistan, and increasing the use of type specific monovalent vaccine for specific rounds\. The
increased number of rounds has increased requirements for OPV, placing additional financial
burden on the program\.
The programs additional OPV requirement for August December 2007 is 140 million doses, at
a
total cost of US $ 21\.14 million equivalent\. The proposed project will finance US $ 21\.14
million equivalent for procurement of OPV\. The additional financing will be executed by July
15, 2007 and closed in June 30, 2008 as envisaged in the original project\.
4\. Safeguard policies that might apply
Safeguard Policies Triggered by the Project
Yes
No
Environmental Assessment
(
OP
/
BP
/
GP
4\.01)
[ ]
[ X]
Natural Habitats (
OP
/
BP
4\.04)
[
]
[
X]
Pest Management (
OP 4\.09
)
[
]
[
X]
Cultural Property (
OPN 11\.03
,
being revised as OP 4\.11)
[
]
[
X]
Involuntary Resettlement (
OP
/
BP
4\.12)
[
]
[
X]
Indigenous Peoples (
OD 4\.20
,
being revised as OP 4\.10)
[
]
[
X]
Forests (
OP
/
BP
4\.36)
[
]
[
X]
Safety of Dams (
OP
/
BP
4\.37)
[
]
[
X]
Projects in Disputed Areas (
OP
/
BP
/
GP
7\.60)
*
[X ]
[ ]
Projects on International Waterways (
OP
/
BP
/
GP
7\.50)
[
]
[
X]
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Page 4
5\. Tentative financing
Source:
($m\.)
BORROWER/RECIPIENT 0\.00
International Development Association (IDA)
21\.14
Total 21\.14
6\. Contact point
Contact: Inaam ul haq
Title: Sr\. Health Specialist
Tel: 5722+155
Fax: 92 51 2279641
Email: ihaq@worldbank\.org
Location: Islamabad, Pakistan (IBRD)
7\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P161538 | COMBINED PROJECT INFORMATION DOCUMENTS / INTEGRATED
SAFEGUARDS DATA SHEET (PID/ISDS)
ADDITIONAL FINANCING
Report No\.: PIDISDSA21099
Date Prepared/Updated: 07-Feb-2017
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Armenia Project ID: P161538
Parent P127759
Project ID
(if any):
Project Name: Additional Financing Irrigation System Enhancement Project (P161538)
Parent Project IRRIGATION SYSTEM ENHANCEMENT PROJECT (P127759)
Name:
Region: EUROPE AND CENTRAL ASIA
Estimated 09-Feb-2017 Estimated 31-Mar-2017
Appraisal Date: Board Date:
Practice Area Water Lending Investment Project Financing
(Lead): Instrument:
Borrower(s): Ministry of Finance
Implementing State Committee of the Water Economy, Water Sector Projects Implementation
Agency: Unit State Agency
Financing (in USD Million)
Financing Source Amount
Borrower 0\.50
International Bank for Reconstruction and Development 2\.00
Total Project Cost 2\.50
Environmental B - Partial Assessment
Category:
Appraisal The review did authorize the team to appraise and negotiate
Review
Decision (from
Decision Note):
Other Decision:
Is this a No
Repeater
project?
B\. Introduction and Context
Page 1 of 11
Country Context
The 2008 crisis revealed vulnerabilities in Armeniaâ¢â¨ s growth model: up till then, Armenia
experienced remarkable growth, which led to overall improvement of living conditions for all,
especially for the poor\. The economy grew primarily based on non-tradable sectors, especially
construction, fueled by capital inflows and remittances\. Once the inflows stopped, construction
collapsed: The gross domestic product (GDP) growth was -14 percent in 2009 compared to nearly
7 percent in 2008\. The policy response to the crisis â¢â¨ a significant increase in public spending
â¢â¨ tested Armeniaâ¢â¨ s macroeconomic resilience to external shocks as fiscal and external
headroom was quickly eroded\. While the fiscal stimulus had an impact and growth started to
recover, crossing 7 percent in 2012, the economy started to slow down significantly by 2013,
mainly because of modest regional and global momentum, limited progress on competitiveness
enhancing reforms, and sluggish investment\. The dramatic fall in oil prices starting in 2014-15,
which led to a sharp depreciation in the ruble and slowdown in Russia, was the next shock to hit
Armenia, transmitted through declining remittances, exports and foreign investment\. In 2016 the
Armenian economy continued its modest, export-driven recovery\. However, fiscal pressures
remain elevated due to the negative impact on revenues of a decline in both imports and nominal
GDP\. Growth remains sensitive to external conditions and internal political shifts, including the
government change in September 2016, as well as legislative and presidential elections planned
for in 2017-18\. Modest but positive growth projections for agriculture and industry, combined
with an increase in real wages in both the public and private sectors, are likely to support
continued poverty reduction during 2017-18\. As a result, poverty in 2014 (30\.0 percent) is still
higher than that pre-crisis (27\.6 percent in 2008) and the poverty rate is projected to decline from
24\.9 percent in 2016 to 23\.2 percent in 2018\.
Sectoral and institutional Context
Over recent decades, though the agriculture sector has added more value in absolute terms to the
economy, its overall share of GDP has steadily decreased (around 19\.3 percent in 2015)\. Yet,
Armenia is still an agrarian society with the agriculture sector providing around 40 percent of
total employment\. Moreover, with important links to the growing food processing industry,
agriculture will continue to play an important role in the Armenian economy\. Agriculture in
Armenia is heavily dependent on irrigation\. More than 80 percent of the gross crop output is
produced on irrigated lands\. High value crops such as fruits, vegetables, and vineyards claim 84
percent of the total irrigated arable land\. Total irrigable area in Armenia is around 208,000
hectares\. In 2005, the net income per hectare for wheat was 65,000 Armenian drams (US$156),
twice as much as on rain-fed lands in the mountainous areas\.
Agricultural water management is still subject to various inefficiencies\. Most of the irrigation and
drainage infrastructure built during Soviet times has not been adequately maintained\. The budgets
for rehabilitation and further infrastructure development decreased significantly from about 50
billion Armenian drams (US$120 million) per year during the Soviet era to 4 billion Armenian
drams (US$10 million) per year on average in the period 1994â¢â¨ 2011, including donor
assistance\. Operation and maintenance budgets have been reduced from 25 billion Armenian
drams (US$60 million) per year in the Soviet era to 8-10 billion Armenian drams (US$20â¢â¨ 25
million) per year now (World Bank 2013a)\. As a consequence, water conveyance losses have
gradually increased, to around 59 percent in 2012\. Rehabilitation of irrigation canals is needed
and water-saving technologies, such as drip irrigation, need to be adopted where economically
and technically justified\.
Page 2 of 11
Widespread high-lift pump irrigation systems built during Soviet times are now uneconomical
due to the high cost of energy in the country\. Electricity, which was heavily subsidized during
Soviet times, is now supplied at market price to agricultural water users\. Pump irrigation systems
are now being substituted with more energy-efficient gravity schemes\. As a result, electricity
spending by water supply agencies has decreased from 129 million kilowatt-hours to 25 million
kilowatt-hours (84 percent reduction)\.
C\. Proposed Development Objective(s)
Original Project Development Objective(s) - Parent
The PDO is (i) to reduce the amount of energy used and to improve the irrigation conveyance
efficiency in targeted irrigation schemes; and (ii) to improve the availability and reliability of
important sector data and information for decision makers and other stakeholders\.
Key Results
The AF activities will support improvements to the overall conveyance efficiency of the
Baghramyan-Norakert Gravity Scheme\. The existing tertiary system was not in sufficient
condition to reliably deliver irrigation waters directly to the farmer plots\. It appeared that
conditions had worsened since the time of the original project appraisal\. As such, supporting the
rehabilitation of the tertiary system will ensure that the benefits from the investment in the main
and secondary system are realized\. This system will provide irrigation waters to 570 ha benefiting
635 farmers\.
D\. Project Description
The AF will finance construction of the tertiary canal system for the Baghramyan-Norakert
gravity scheme under the Irrigation System Enhancement Project (ISEP)\. The Baghramyan-
Norakert gravity scheme is originally included under â¢â¨ Component 1: Irrigation System
Enhancementâ¢â¨ of the ISEP, but only included financing of works related to the main feeder
canal system\. This AF will also provide financing for the additional project management
associated with these works under â¢â¨ Component 3: Project Management and WUAsâ¢â¨
Supportâ¢â¨ \.
Component Name
Component 1\. Irrigation System Enhancement
Comments (optional)
Component Name
Component 2\. Management Information
Comments (optional)
Component Name
Component 3\. Project Management and WUAsâ¢â¨ Support
Comments (optional)
Page 3 of 11
E\. Project location and salient physical characteristics relevant to the safeguard
analysis (if known)
The Baghramyan-Norakert scheme serves lands in the Armavir Marz and partially in the
Aragatsotn Marz\. Beneficiary communities are in the Baghramyan and Norakert communities and
more specifically, the Ashtarak water user association (WUA)\.
F\. Environmental and Social Safeguards Specialists
Darejan Kapanadze (GEN03)
Sophia V\. Georgieva (GSU03)
II\. Implementation
Institutional and Implementation Arrangements
The proposed AF to ISEP will be managed by the same Project Implementation Unit (PIU) operating
the original ISEP under the SCWE, which has more than a decade of experience in implementing
water projects financed by the World Bank\. Environmental and Social Impact Assessments (ESIA)
were carried out for all four gravity irrigation schemes under the original ISEP, including for the
Baghramyan-Norakert scheme (main feeder system)\. While the initial quality of reports from the
consultants was weak, the PIU has managed to upgrade the quality of these documents with hands-on
support from the Bank team\. Draft final ESIA reports were disclosed and public consultations held to
the satisfaction of the Bank team\. Compliance with on-going Environmental Management Plans has
been satisfactory\. New safeguard documents (ESIAs/ESMPs as applicable) will be produced for the
new investments to be funded by the AF\. These will follow the procedures outlined in the ISEP
environmental and social safeguard framework documents for ISEP (both the Environment
Management Framework -EMF - and the Resettlement Policy Framework -RPF)\.
III\.Safeguard Policies that might apply
Safeguard Policies Triggered? Explanation (Optional)
Environmental Yes Additional Financing (AF), like the original ISEP, will support
Assessment OP/BP rehabilitation of irrigation infrastructure and, therefore, triggers
4\.01 OP/BP 4\.01 Environmental Assessment\. Based on the nature
and scope of the planned physical works, the AF Project falls
in the same environmental Category B as the original Project
and does not trigger any additional safeguard policies\. Works
to be undertaken on the proceeds of the AF are limited to
rehabilitation of the existing tertiary canals of the Baghramyan
irrigation scheme and have smaller potential environmental
impact than those financed under the ISEP\. An Environmental
and Social Impact Assessment (ESIA) of the reconstruction of
the Baghramyan scheme (main feeder) was carried out\. The
draft ESIA report was disclosed, discussed with stakeholders,
finalized and re-disclosed through the web page of the Project
Implementation Unit (PIU) and the electronic database of the
World Bank\.
An Environmental Management Framework (EMF) was
Page 4 of 11
developed during preparation of ISEP in 2013 because detailed
designs and site-specific documents for all individual
investments planned under the Project had not been available
at that stage\. The EMF provides sufficient information on the
expected impacts and needed mitigation measures of all types
of physical activities that the Project might support\. The EMF
is fully relevant for the purposes of the AF as well, because the
nature of works to be performed within the scope of the AF
Project does not differ from those covered by ISEP\. The EMF
carries guidance on the preparation of various types of site-
specific environmental documents depending on the nature of
individual investments, ranging from a full-scale
Environmental and Social Impact Assessment (ESIA) to the
simplified Environmental Management Checklist for Small
Construction and Rehabilitation Activities\. Site-specific
safeguard documents for activities under the AF Project will
follow this guidance\.
EMF was disclosed, discussed with stakeholders, finalized and
published in-country and through the Bankâ¢â¨ s electronic
database\. It has been updated to reflect expanded scope of
works covered by the AF and re-disclosed through the same
media\. EMF establishes disclosure and stakeholder
consultation rules applicable to site-specific safeguard
documents\. Disclosure and consultation procedures for ESIA
reports and/or Environmental and Social Management Plans
(ESMPs) to be developed for activities under the AF Project,
will adhere to these rules\.
Natural Habitats OP/ No
BP 4\.04
Forests OP/BP 4\.36 No
Pest Management OP Yes The AF Project aims at improving water availability for the
4\.09 service area under the Baghramyan scheme\. It is anticipated
that because of improved irrigation services agriculture will
intensify in the coverage areas and higher value crops may be
cultivated, which could entail more intensive usage of
pesticides\. Hence, OP 4\.09 Pest Management is triggered\.
While there is no need of developing a Pest Management Plan,
promotion of good pest and pesticide management practices is
included into the project design\. A library of brochures, fliers,
and posters on the sound and safe handling of pesticides,
including information on Integrated Pest Management, has
accumulated as a depository of outputs from a number of rural
development projects implemented in Armenia with support of
the Bank and other international/bilateral financiers\. This
material is readily available for reproduction for the needs of
ISEP\. Water User Associations will also play a pivotal role in
Page 5 of 11
promotion of good agricultural practice to farmers\.
Physical Cultural No Rehabilitation works to be undertaken on the existing tertiary
Resources OP/BP canals of Baghramyan scheme will not affect any known
4\.11 physical cultural resources\. In an unlikely case of chance finds
during small-scale earth works, provisions for the course of
action in such cases given in the EMF will be followed\. They
call for immediate suspension of activity by works contractor
and notification of the State Agency for Protection of
Historical and Cultural Monuments by the PIU\. Further action
will follow the national legislation and the main principles of
OP/BP 4\.11\.
Indigenous Peoples No
OP/BP 4\.10
Involuntary Yes OP/BP 4\.12 Involuntary Resettlement is triggered, due to the
Resettlement OP/BP possibility of temporary or permanent land acquisition\. It is not
4\.12 expected that the Project will cause any resettlement impacts\.
Activities include the rehabilitation of an existing tertiary canal
network\. However, given that this network has not been
operational in decades, land ownership of all canals needs to
be verified with the state land cadaster\. The presence of any
crops, structures, or other assets that may potentially interfere
with construction also needs to be verified prior to beginning
of works\. This will be done by the PIU in the process of
environmental and social screening and preparation of ESMPs\.
The RPF prepared under ISEP will apply to the AF as well\.
The RPFâ¢â¨ s title and content (scope of project activities) has
been amended and it has been re-disclosed in English and
Armenian by Armenia Water PIU and the World Bank
Infoshop\. In the event of resettlement impacts a RAP/
abbreviated RAP will be prepared in accordance with the RPF\.
Safety of Dams OP/ Yes OP/BP 4\.37 was triggered for ISEP, because of the conversion
BP 4\.37 of the Geghardalich pumping scheme to gravity\. This required
the switching of water abstraction from the Azat reservoir to
the Geghardalich reservoir and expansion of the latter to be
achieved by increasing the height of the existing dam from
13\.9 m to 15\.5 m\. The policy remains triggered for the AF
Project although is not directly applicable to works to be
supported under it\.
Projects on Yes OP/BP 7\.50 was triggered for ISEP, because the Meghri
International scheme rehabilitated under it abstracts water from the Meghri
Waterways OP/BP and Araks rivers, the latter being an international waterway
7\.50 shared by Armenia, Turkey, Iran, and Azerbaijan\.
Communication between the riparian states on the ISEP
interventions had been deemed unnecessary and a waiver on
Page 6 of 11
notification was granted by ECAVP\. The policy remains
triggered for the AF Project although is not directly applicable
to it\.
Projects in Disputed No
Areas OP/BP 7\.60
IV\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify
and describe any potential large scale, significant and/or irreversible impacts:
No significant or irreversible impacts are expected given that the Project will mainly rehabilitate
an existing tertiary irrigation network\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities
in the project area:
No negative indirect or long-term social impacts are anticipated\. The Project is likely to have a
positive impact on economic opportunities and farmersâ¢â¨ mobilization to expand activities in
newly-irrigated areas\. Risk of potential resistance or dissatisfaction with the project may arise
from surrounding communities who will not benefit from project activities\. This risk should be
mitigated by proactive public information to explain the rationale for focusing investments in the
selected areas\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts\.
Detailed designs of site specific interventions have not yet been prepared\. Alternatives will be
considered in the process of design preparation with the view to avoided or minimize negative
environmental and social impacts\. Any alternatives that have been considered or adopted will be
described in the respective ESMPs\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an
assessment of borrower capacity to plan and implement the measures described\.
The AF Project envisions a smaller scope of activities than the original ISEP\. In the course of
implementation of ISEP, the PIU has demonstrated sufficient and growing capacity to identify and
manage social and environmental risks, including: preparation of ESIA and ESMP documents,
organizing and conducting public consultations, establishing and maintaining a grievance and
redress mechanism, addressing unexpected and small scale cases of temporary private land
acquisition\. Capacity constraints may arise from the growing project portfolio of the PIU, which
now includes EDB, KfW, and World Bank-financed projects\. Additional staffing of the PIU
safeguard unit (now consisting of one Environmental and one Social Specialist) should be
considered\.
Some initial consultations and preliminary social and environmental screening in the communities
who will benefit from and on whose lands the current project will take place, were conducted
during preparation of the ESIA for the Baghramyan gravity irrigation (main feeder only) scheme
under the ongoing ISEP\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure
on safeguard policies, with an emphasis on potentially affected people\.
The most directly affected Project stakeholders include water users in the 2 communities
Page 7 of 11
(Baghramyan and Norakert) which will benefit from restored on-farm irrigation infrastructure, as
well as staff and management of the Ashtarak Water User Association (WUA)\. Local residents
who are not engaged in farming also have a stake being in proximity to construction works, and
potentially members of household of active farmers\. It is expected that restoring the tertiary
system may provide incentives for local resident to restart or expand agricultural activities\.
Residents of WUA members from neighboring communities should also be engaged as project
stakeholders\. It is likely that not all farmers within this WUA will benefit from the current project\.
These communities should also be engaged in public information and consultation activities, and
the rationale for selecting the specific locations for investment should be made clear\.
The Borrower updated the EMF and RPF documents used for the purposes of ISEP
implementation to cover the additional scope of works supported by the AF Project, and re-
disclosed these framework documents in Armenian and English languages\. Site-specific safeguard
documents to be developed for operation covered by the AF will be subject to disclosure and
consultation with the project affected people\. In addition, the PIU will prepare public information
materials, and organize additional public consultations as required to cover proactively any
sensitive aspects of the Project implementation\.by way of sharing information in addition to
disclosing all safeguard documents on PIU website\. An ongoing Grievance Redress M mechanism
will be provided via local focal points and PIU staff (phone and email)\.
B\. Disclosure Requirements
Environmental Assessment/Audit/Management Plan/Other
Date of receipt by the Bank 26-Jan-2017
Date of submission to InfoShop 02-Feb-2017
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
"In country" Disclosure
Armenia 03-Feb-2017
Comments:
Resettlement Action Plan/Framework/Policy Process
Date of receipt by the Bank 26-Jan-2017
Date of submission to InfoShop 02-Feb-2017
"In country" Disclosure
Armenia 03-Feb-2017
Comments:
Pest Management Plan
Was the document disclosed prior to appraisal? NA
Date of receipt by the Bank NA
Date of submission to InfoShop NA
"In country" Disclosure
Page 8 of 11
Comments:
If the project triggers the Pest Management and/or Physical Cultural Resources policies, the
respective issues are to be addressed and disclosed as part of the Environmental Assessment/
Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please explain why:
C\. Compliance Monitoring Indicators at the Corporate Level
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) Yes [ ] No [ ] NA [ ]
report?
If yes, then did the Regional Environment Unit or Practice Yes [ ] No [ ] NA [ ]
Manager (PM) review and approve the EA report?
Are the cost and the accountabilities for the EMP incorporated Yes [ ] No [ ] NA [ ]
in the credit/loan?
OP 4\.09 - Pest Management
Does the EA adequately address the pest management issues? Yes [ ] No [ ] NA [ ]
Is a separate PMP required? Yes [ ] No [ ] NA [ ]
If yes, has the PMP been reviewed and approved by a Yes [ ] No [ ] NA [ ]
safeguards specialist or PM? Are PMP requirements included
in project design?If yes, does the project team include a Pest
Management Specialist?
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy framework/ Yes [ ] No [ ] NA [ ]
process framework (as appropriate) been prepared?
If yes, then did the Regional unit responsible for safeguards or Yes [ ] No [ ] NA [ ]
Practice Manager review the plan?
Is physical displacement/relocation expected? Yes [ ] No [ ] TBD [ ]
Provided estimated number of people to be affected
Is economic displacement expected? (loss of assets or access to Yes [ ] No [ ] TBD [ ]
assets that leads to loss of income sources or other means of
livelihoods)
Provided estimated number of people to be affected
OP/BP 4\.37 - Safety of Dams
Have dam safety plans been prepared? Yes [ ] No [ ] NA [ ]
Have the TORs as well as composition for the independent Yes [ ] No [ ] NA [ ]
Panel of Experts (POE) been reviewed and approved by the
Bank?
Has an Emergency Preparedness Plan (EPP) been prepared and Yes [ ] No [ ] NA [ ]
arrangements been made for public awareness and training?
Page 9 of 11
OP 7\.50 - Projects on International Waterways
Have the other riparians been notified of the project? Yes [ ] No [ ] NA [ ]
If the project falls under one of the exceptions to the Yes [ ] No [ ] NA [ ]
notification requirement, has this been cleared with the Legal
Department, and the memo to the RVP prepared and sent?
Has the RVP approved such an exception? Yes [ ] No [ ] NA [ ]
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ]
World Bank's Infoshop?
Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ]
place in a form and language that are understandable and
accessible to project-affected groups and local NGOs?
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ]
responsibilities been prepared for the implementation of
measures related to safeguard policies?
Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ]
in the project cost?
Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ]
include the monitoring of safeguard impacts and measures
related to safeguard policies?
Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ]
with the borrower and the same been adequately reflected in
the project legal documents?
V\. Contact point
World Bank
Contact: Winston Yu
Title: Sr Water Resources Spec\.
Borrower/Client/Recipient
Name: Ministry of Finance
Contact: Artak Marutyan
Title: Deputy Head of State Debt Servicing Division
Email: artak\.marutyan@minfin\.am
Implementing Agencies
Name: State Committee of the Water Economy
Contact: Arsen Harutyunyan
Title: Chairman
Email: scws@scws\.am
Name: Water Sector Projects Implementation Unit State Agency
Contact: Feliks Melikyan
Title: Director
Email: FMelikyan@wsdp\.am
Page 10 of 11
VI\. For more information contact:
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
VII\. Approval
Task Team Leader(s): Name: Winston Yu
Approved By
Safeguards Advisor: Name: Brandon Enrique Carter (SA) Date: 08-Feb-2017
Practice Manager/ Name: Michael Haney (PMGR) Date: 08-Feb-2017
Manager:
Country Director: Name: Laura E\. Bailey (CD) Date: 09-Feb-2017
Page 11 of 11 | APPROVAL |
P057770 |  ICRR 13135
Report Number : ICRR13135
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 06/08/2009
PROJ ID : P057770 Appraisal Actual
Project Name : Cultural Heritage US$M ):
Project Costs (US$M): US$5\.70M US$3\.94M
Project
Country : Ethiopia Loan /Credit (US$M):
Loan/ US$M ): US$5\.70M US$3\.94M
Sector Board : FPD US$M):
Cofinancing (US$M ):
Sector (s): Other social services
(36%)
General industry and
trade sector (36%)
Central government
administration (28%)
Theme (s): Other financial and
private sector
development (67% - P)
Participation and civic
engagement (33% - S)
L/C Number : C3632
Board Approval Date : 04/17/2002
Partners involved : Closing Date : 01/15/2007 10/15/2008
Evaluator : Panel Reviewer : Group Manager : Group :
Ashok Khanna Rene I\. Vandendries Ismail Arslan IEGCR
2\. Project Objectives and Components:
a\. Objectives:
The main objective of the Cultural Heritage Learning and Innovation Loan (CHLIL) to Ethiopia was to test and
develop, on a pilot basis, good practice for integrating conservation and management of cultural heritage sites
into local and national economic development \. This would be accomplished by : (a) developing approaches to
conserving archeological sites and historic buildings through site planning and implementation and establishing
a computerized cultural heritage inventory to provide information for future planning and mitigating threats \. Site
planning would integrate conservation and management of cultural assets into local and national development
by involving local communities, the private sector, NGOs and international organizations; and (b) supporting the
revitalization of craft skills by improving product design and extending markets to increase local incomes \. These
objectives were consistent with the Interim Support Strategy for Ethiopia that focused on institution and capacity
building complemented by activities to revive the private sector \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
CHLIL had four components:
( Appraisal Cost US$ 1\.73 million, Actual Cost US$ 1\.48 million ): The
(a) Site Planning and Conservation : (Appraisal
project provided funds for site planning and conservation in two pilot sites, Gondar (including the fortress of Fasil
Ghebbi) and Axum (including the museum) and for improving site interpretation for visitors \. Also, training would
be provided for site planning and interpretation and community involvement in conservation and management of
sites would be strengthened \.
( Appraisal Cost US$ 1\.07 million, Actual Cost US$ 0\.48 million ): Project
(b) Inventory and Documentation : (Appraisal
funds would be used to build capacity for establishing better information on cultural assets for planning,
conservation and threat mitigation with pilot inventories completed in three regions \. Capacity would be built in
the Authority for Research and Conservation of Cultural Heritage (ARCCH) and workshops held to develop a
consensus on core national standards and methodology \.
( Appraisal Cost US$ 1\.74 million, Actual Cost US$ 1\.44 million ): The project
(c) Artisan Craft Development : (Appraisal
sought to provide artisans with design guidance, technical skills, business training and market links to generate
sales in domestic and export markets \. It would help establish three artisan centers in renovated historic
buildings and facilitate NGO involvement in craft development and marketing \.
d) Project Management : (Appraisal
(d ( Appraisal Cost US$ 0\.40 million, Actual Cost US$ 0\.54 million ): The project would
fund the establishment and operations of a Project Coordination Unit (PCU) and help develop monitoring and
evaluation capacity\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The amounts allocated to components at appraisal do not include US$ 0\.76 million for contingencies\. The
project was delayed because it took a year after effectiveness for the PCU to become functional and a further 20
months to contract technical assistance \. As a result, the project was extended thrice, in September 26, 2006 to
Jan 15, 2008, in October 2, 2007 to July 15, 2008 and in July 1, 2008 to October 15, 2008\. The third request for
an extension was approved for less time than had been asked for because project implementation was slow and
the Bank did not want to extend beyond the ongoing and proposed new contracts \. The project closed 21
months after the original closing date \.
3\. Relevance of Objectives & Design:
The Interim Support Strategy (2000) for Ethiopia emphasized reconstruction and recovery following the
hostilities with Eritrea\. It proposed a lending program focused on institutions, capacity building and service
delivery complemented by activities to revive the private sector to generate employment and growth \. As the
project sought to develop capacity and institutions and increase tourism and craft sales, its objectives were
consistent with and relevant to Ethiopia's situation and the Bank's strategy and remain so currently \.
Project design drew on international expertise in cultural assets management while addressing the social and
economic concerns of local communities \. Thus, the project's design was also relevant to the country's situation
and the Bank's strategy\. However, implementation arrangements were less well formulated, including the
cooperation between local and technical assistance teams, coordination between the two agencies involved and
procurement \.
Although the relationship between bank funding and outcome is clear and the results framework includes many
output indicators and project reports, they are of a general nature and not time -bound\. While it is difficult to
measure capacity building, specific outcomes such as development of conservation plans and pilot data bases
could be time-bound\.
4\. Achievement of Objectives (Efficacy):
(a) Establish good practice for cultural heritage conservation and management : Substantial
For the first time in Ethiopia, site management plans were completed and implemented for Gondar and Axum ,
both classified as World Heritage Sites \. This achievement provided experience and a model for the country's
other heritage sites\. Gondar and Axum have public space for local residents and facilities for tourists that also
provide employment and revenue \. Partnerships have developed between the tourism and archeology
departments at local universities to provide technical support and train workers \. UNESCO and NORAD were
involved in project activities and stakeholder committees were established to oversee future development \.
Moreover, these plans were well integrated into the urban planning framework and local and national economic
development\. A computerized inventory system for managing heritage sites has been piloted in four sites and
initial steps taken to integrate regional bureaus with central data management to establish a national data base \.
Finally, ARCCH and the Ministry of Tourism were merged to provide integrated policy and management in the
future\.
(b) Artisan Craft Development : Substantial
Two approaches were adopted to develop artisan crafts, which had experienced declines in sales \. First,
responsibility for craft development was devolved to local tourism and cultural bureaus, which were also linked
to each other\. These linkages extended the market for products as artisans participated in exhibitions in several
pilot sites\. Second, artisans were linked to private middlemen who suggested new designs, which boosted sales
in Addis Ababa and abroad\. As artisans gained confidence, they developed new products to further extend their
markets and increase their income \.
5\. Efficiency (not applicable to DPLs):
Not applicable\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The project achieved its objectives \. It increased capacity in all aspects of cultural heritage conservation and
management and invigorated artisan crafts, generating a source of income and economic growth \. The first site
planning and implementation experience in Ethiopia established a "good practice" approach for the future\. A
comprehensive computerized inventory of historic sites was initiated to improve future planning and
management of cultural assets\. Because of cooperation in project implementation, Culture and Tourism were
merged into one ministry and coordination with regional and local administration was improved as their roles
were clarified\. The training provided under the project built sufficient confidence to cooperate with the Bank in
developing a new tourism project \. Finally, partnerships were established between government agencies,
universities, international agencies and the private sector for developing tourism \. The project also benefitted
artisans by training men and women to improve the use of equipment and design and by establishing links to
regional, national and international markets \. Evidence suggests that artisan incomes have already increased \.
The project had some shortcomings \. Its very slow start left some funds unused and activities incomplete \.
Although the activities were final touches, such as putting up signs for visitors, they had a significant impact on
visitors' experience\. Also, project funds could have extended much needed technical assistance \. Finally, the
project's community outreach was weaker than expected mainly due to country conditions \. For these reasons,
even though the objectives were achieved, IEG rates the outcome as moderately satisfactory \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The project's pilot site planning and implementation have laid the groundwork for future investment in
conservation of heritage sites \. Similarly, the pilots for a computerized inventory of heritage sites led to
establishing national standards and guidelines \. The merger of Culture and Tourism under one ministry, the
improved communication with regional and local administration and cooperation with a range of other
organizations auger well for conservation and management of cultural assets \. Moreover, the capability
developed through training, technical assistance and experience with the project have led to designing a
follow-on project also funded by the Bank \.
Nevertheless, future financial flows to the sector are not predictable \. The government does not view investment
in heritage sites as contributing directly to a reduction in poverty \. In addition, although donor agencies are
active in the sector, the scale is small and may not be sustained \. Finally, economic and political instability can
have a significant impact on tourism and social development \. Thus, IEG rates the risk to development outcome
as moderate\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
QAG reviewed the project's quality at entry and rated it as satisfactory overall, but with some elements as
highly satisfactory\. The review found project preparation was participatory and its design was appropriate for
and responsive to the country's needs \. It identified partnerships with organizations and the linkage with job
creation as strong features \. It also rated the performance indicators as highly satisfactory because they
were tailored to project activity outputs and outcomes \. The overall rating was downgraded to satisfactory to
reflect the long delay in starting activities after project effectiveness \. IEG rates quality at entry as
satisfactory\.
The Bank fielded 15 supervision missions at a cost of US$ 330,000\. Light supervision in the first two years of
the project and five task managers was not conducive to successful implementation \. Task managership was
transferred to the field to a person who was inexperienced and lacked knowledge of the sector during a
critical period for the project, from 2004-2006 when implementation had begun and was progressing \. The
Bank was not proactive when progress in implementation was slow and relied on the project's technical
assistance for quality control \. Moreover, the ISRs were rated as satisfactory for implementation for the first
three years when few activities had started and disbursement was low \. Supervision became more intensive
and proactive after 2006, taking actions mainly to ensure procedures and processes were followed \.
Technical expertise was still missing partly because of budget constraints \. Procurement was a bottleneck
throughout the project's life because of inflexible procedures and weak support from Bank staff, negatively
impacting disbursements\. IEG rates supervision as moderately unsatisfactory \.
Although project design was exemplary, its implementation in the early years suffered from inappropriate and
inexperienced supervision \. This situation was mitigated in the later years to help the project achieve its
objectives\. Procurement for CHLIL was a problem, as it is for projects in Ethiopia, but further complicated by
the unfamiliarity with cultural heritage issues \. IEG rates overall bank performance as moderately
satisfactory\.
at -Entry :Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Unsatisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
The government was committed to the project's objectives and involved in its identification, preparation and
design\. However, limited management capacity at ARCCH and the Ministry of Tourism, tensions between
the two agencies and coordination difficulties between national and regional administrations, impeded
implementation\. IEG rates government performance as satisfactory \.
A Steering Committee was established to address the tensions between the two implementing agencies,
ARCCH and the Ministry of Tourism, but it was not effective \. Other agencies on the committee were not
active participants and decentralization measures reduced the influence of national agencies \. Later in the
project cycle, an Executive Steering Committee was established with a few members from the two
implementing agencies\. Although it expedited decisions, tensions between the staff of the agencies
remained, even after the agencies had been merged \.
Although the Project Coordination Unit (PCU) was headed by a respected and experienced former
government officer, its performance was less than satisfactory \. Delays occurred in filling key staff positions
and in recruiting technical assistance consultants \. PCU staff was not fully qualified, especially in
procurement, and the quality, discipline and continuity of regional staff posed a challenge to consultants \.
Site supervision was sloppy \. Finally, monitoring and evaluation reports were uneven \. Good performance by
the technical assistance consultants helped to overcome some of these shortcomings and achieve the
project objectives\.
IEG rates implementing agency performance as moderately unsatisfactory \. Giving equal weight to the
government and implementing agency ratings, IEG rates borrower performance as moderately satisfactory \.
a\. Government Performance :Satisfactory
b\. Implementing Agency Performance :Moderately Unsatisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
Despite QAG's rating the performance indicators as highly satisfactory, changes were made during
implementation\. The original output indicators were linked to component activities and would have assisted
monitoring implementation had they been incorporated regularly in supervision reports \. At the behest of sector
management, four outcome indicators were replaced by numerical targets \. But these targets were also not
suitable as they did not capture meaningfully the outcomes or capacity building \. Later, all end of project
indicators were transformed into intermediate project outcomes, further confusing the framework for evaluation \.
Moreover, the first M&E officer was recruited late in the project cycle and the position was left open for long
periods\. Finally, the reports issued were incomplete and not consistent with the agreement or from one period to
the next\. Because of weaknesses in the amended design, implementation and utilization of the monitoring and
evaluation framework, IEG rates its quality as modest \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
The project was rated as C for safeguards, but that was incorrect \. Project implementation involved the
involuntary relocation of a printing press and shifting of ten households \. A resettlement audit was done on the
households that led to improvements to meet World Bank standards \. The local municipality agreed to move the
press, but it had not been moved when the project closed \. Thus, although the Cultural Property Safeguard
(OPN 11\.3) was not triggered, actions complied with the guidelines \. In the same vein, an Environmental
Assessment (OP 4\.01) should have been triggered for the construction of the Axum Museum, but environmental
concerns were addressed adequately \.
While overall fiduciary compliance was satisfactory, the financial management systems were weak \. The PCU
lacked a dedicated accountant, creating a lacunae in regular financial analysis and reporting \. Formal financial
monitoring reports were not submitted on time in the early years of the project and then not at all after 2006\.
However, external audits were completed in a timely manner \.
The project resulted in several positive unintended consequences \. The merger of ARCCH and the Ministry of
Tourism could lead to improved policies for conserving cultural heritage sites while developing tourism \. Several
civil works were added, including at Gondar, Axum and Harar \. Government staff gained experience from
applying safeguard procedures \. Project implementation contributed to creating more openness in Ethiopia's
business systems\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately Equal weight to quality at entry and
Unsatisfactory Satisfactory supervision
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
The ICR draws many useful findings and lessons from the experience of CHLIL \. Salient among them are:
The Bank should include a cultural resource specialist as a core team member to engage with technical
assistance consultants and maximize project impact;
The Monitoring and Evaluation framework should include indicators for cross -cutting themes as these
aspects of outcomes are often omitted from indicators for specific components or objectives; and
Procurement for all projects in Ethiopia is a problem, but especially for cultural heritage projects, because
it is specialized and the number of suppliers is limited \. The Bank's and national guidelines lack the
flexibility to cater for this sector \. Adapted procurement thresholds and methods should be incorporated
for these projects\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR follows the guidelines and provides enough evidence and analysis for evaluation \. The information is
not, however, always consolidated in the appropriate section of the report \. For example, although the ICR has
enough material to assess the achievement of project objectives and outcome, that section concentrates on
component outputs\. IEG agrees with the ICR's findings and lessons \.
a\.Quality of ICR Rating : Satisfactory | APPROVAL |
P114782 | Page 1
INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I\. Basic Information
Date prepared/updated: 04/14/2011
Report No\.: AC5124
1\. Basic Project Data
Original Project ID: P097201
Original Project Name: Regional and
Domestic Power Markets Development
Project (Southern Africa Power Market
Project: APL-1b)
Country: Africa
Project ID: P114782
Project Name: Additonal Financing for the Regional and Domestic Power Market
Project
Task Team Leader: Philippe J-P\. Durand
Estimated Appraisal Date: April 19, 2011
Estimated Board Date: June 28, 2011
Managing Unit: AFTEG
Lending Instrument: Adaptable Program
Loan
Sector: Renewable energy (67%);Power (25%);Central government administration (8%)
Theme: Rural services and infrastructure (25%);Infrastructure services for private sector
development (25%);Export development and competitiveness (24%);Corporate
governance (13%);Regional integration (13%)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
288\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER/RECIPIENT
11\.00
African Development Bank
32\.00
GERMANY: KREDITANSTALT FUR WIEDERAUFBAU (KFW)
54\.00
97\.00
Environmental Category: B - Partial Assessment
Repeater []
Is this project processed under OP 8\.50 (Emergency Recovery)
or OP 8\.00 (Rapid Response to Crises and Emergencies)
Yes [ ]
No [X]
2\. Project Objectives
The development objectives of the additional financing have been re-stated as follows: to
improve operational efficiency in the electricity sector and expand renewable generation,
transmission and distribution capacity in order to better serve domestic power demand
and to support regional power market integration\.
3\. Project Description
The PMEDE Project first approved in May 2007, consists of five main components: (i)
Generation - rehabilitation of Inga 1 and Inga 2 hydropower stations; (ii) Transmission -
construction of a new 400 kV transmission line from Inga to Kinshasa; (iii) Distribution-
Page 2
rehabilitation, reinforcement and expansion of the power distribution system in
Kinshasa; (iv) Capacity building - strengthening of SNEL's operational capabilities
including activities regarding the governance within the utility specifically and in the
sector generally; and (v) Project Implementation - provision of consulting services for
engineering, management and supervision of implementation, procurement and financial
management services\. The Project provides the required resources to develop GoDRC's
goal of quickly improving the governance of the sector and of SNEL's performance
through a management contract\. Some of the benefits of the Project depend on the proper
execution of the ongoing Southern Africa Power Market Transmission Project (SAPMP)\.
The Additional Financing request is for an additional grant of US$288 million
equivalent to cover increases in costs due to under-estimation at appraisal, financing gap
on specific components, expansion of the power distribution component, and
unanticipated additional works of degraded energy facilities\. The Project Paper also
seeks approval for formal restructuring of the Project for the following changes:
(i)
Modification of the Project Development Objective;
(ii)
Extension of the Grant's Closing Date from December 31, 2012 to June 30, 2016,
to enable completion of Project activities;
(iii)
Increase in the scope of the distribution component to alleviate congestion and
increase power supply to households, particularly in Kinshasa;
(iv)
Changes in the results framework, including mainly new indicators and targets to
reflect the new Project implementation schedule, the project restructuring and capture the
additional focus on corporate governance\.
4\. Project Location and salient physical characteristics relevant to the safeguard
analysis
There are three locations at which physical activities relevant to the safeguard analysis
will be undertaken as a result of the Project:
(i)
The Inga site on the River Congo, situated approximately 125 miles downriver
from Kinshasa where the works to be undertaken will be at the Inga 1 and Inga 2
hydroelectric facilities and intake canal for both facilities;
(ii)
The route of the new transmission line from the Inga site to Kinshasa ending at
the Kingatoko substation: the alignment is being optimized and a draft resettlement action
plan has been prepared\. The transmission line from Inga to the Kingatoko substation in
Kinshasa passes mostly through agricultural land\. A sensitive forest area near the Inga
Hydropower station has been avoided;
(iii)
In Kinshasa, activities to strengthen the power distribution system: these will
include rehabilitation activities at two key substations (located at Liminga and Lingwala),
the extension of the grid into currently un-electrified areas of Kinshasa (namely 30,000
Page 3
new connections in the Kimbanseke area located to the east of the city, with the
associated erection of a new substation) and 20,000 new connections in the Kisenso,
Mpasa 1/2/3 and Malweka areas\. The alignments of grid extension have yet to be
finalized\.
5\. Environmental and Social Safeguards Specialists
Mr Paul Jonathan Martin (AFTEN)
Mr Antoine V\. Lema (AFTCS)
6\. Safeguard Policies Triggered
Yes No
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Physical Cultural Resources (OP/BP 4\.11)
X
Indigenous Peoples (OP/BP 4\.10)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\.
Identify and describe any potential large scale, significant and/or irreversible impacts:
The AF focuses on the rehabilitation of Inga 1 and Inga 2 power stations, (i\.e\. turbines
and related equipment), the building of a new transmission line and grid extensions\. The
environmental and social impacts of the rehabilitation of the Inga 1 and Inga 2
hydropower plants are expected to be moderate and manageable; likewise the building of
the new transmission line and the grid extensions\. Adverse environmental and social
impacts will be mainly related to the construction of the transmission line and the grid
extensions, and the impacts will therefore be site specific and controllable\. Only a
fraction of the water from the Congo River is diverted into Inga 1 and Inga 2 intake canal
for hydropower production and there is very little effect on the hydrological regime of the
Congo River as a result of the Project\. The transmission line from Inga to the Kingatoko
substation in Kinshasa passes mostly through agricultural land\. A sensitive forest area
near the Inga hydropower station has been avoided, and the transmission lines pose
manageable environmental and social impacts\. An Environmental and Social
Management Framework, Environmental and Social Impact Assessment, including an
Environmental and Social Management Framework and Plan, were prepared, consulted
upon, and disclosed in December, 2006\. An Addendum to the ESIA and ESMP based on
the changes to the transmission line has been disclosed in April 2011\.
Pest Management
Page 4
The project includes control of black flies, a vector for onchocerciasis in the project
area, through the use of the pesticide permethrine\. A pest management plan was
developed and disclosed in March 2007\.
Physical Cultural Resources
A
framework for managing cultural property was prepared and disclosed at the Infoshop
in January 2007\. Potential sensitive sites include caves of potential cultural significance
in the vicinity of the project area\.
Involuntary Resettlement
OP/BP 4\.12 were triggered as civil works of the transmission line will require land
acquisition\. A resettlement policy framework (RFP) was prepared and disclosed in-
country 18th January 2007, and at Infoshop also on the same date\. A draft resettlement
action plan (RAP) for the transmission from Inga to the Kingatoko substation in Kinshasa
has been prepared (see above), and it includes impacts of the extension of the grid\. A
draft resettlement action plan (RAP) has been prepared, consulted upon and disclosed in
April 2011 for the transmission from Inga to the Kingatoko substation in Kinshasa; the
RAP includes impacts of grid extension and mitigating actions\.
Safety of Dams
Consistent with OP 4\.37, and according to ToRs developed in consultation with the
relevant Bank specialist, a review of dam safety at the Inga site was completed in June
2007\. No significant concerns were identified, and a draft program of maintenance,
monitoring, and emergency preparedness was prepared\. A covenant requiring the
preparation and adoption by SNEL of an Emergency Preparedness Plan (EPP) by
December, 2007, was included as a covenant in the legal agreement for the Project;
however, to-date no such Plan has been adopted\. A Bank technical mission in March
2010 did not find significant dam safety risks and agreed with SNEL on the terms of
reference for the finalization of the EPP\. The consulting firm that had prepared the draft
EPP in 2007 has been recruited to revise and complement the EPP by June 2011\. A panel
of experts on dam safety has been appointed, with five experts on geotechnical,
electromechanical, dams, sedimentology and concrete, and will initiate its mandate in
April 2011\.
Projects on International Waterways
OP7\.50 applies to Projects that involve the use of international waterways\. The Inga
rehabilitation component (Component 1) will involve the use of the River Congo, an
international waterway that DRC shares with 8 countries and, as such, OP7\.50 does
apply\. However, the Inga dam is a "run of the river" plant, and the proposed activities
(rehabilitation of the dam, dredging and reprofiling of the intake canal) will not modify
the water volume nor its quality\. On this basis, and as set out in paragraph 7(a) of
OP7\.50, this Project is exempt from the requirement to notify other riparian states about
the Project, as the activities will alter neither the quality nor the quantity of the water
flowing to other riparian states, nor will the Project be adversely affected by the other
riparians's possible water use\.
Page 5
2\. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
None anticipated\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts\.
The only potential relevant alternatives that were considered in Project design relate to
the routing of the transmission line from Inga to Kinshasa\. The line passes mostly
through agricultural land and the alignment is being optimized to avoid densely populated
areas\. A sensitive forest area near the Inga site has been avoided\. The transmission lines
poses manageable environmental impacts which will be mitigated by the actions
described in the Environmental and Social Management Plan (ESMP) and draft RAP\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide
an assessment of borrower capacity to plan and implement the measures described\.
Social, environmental and resettlement issues are addressed in the context of the Project's
ESRP, including the set of seven documents relating to environmental, social and
resettlements aspects of the project, namely: (i) the Environmental and Social Impact
Assessment (ESIA) (ii) Environmental and Social Management Plan (ESMP), (iii) the
Environmental and Social Management Framework (ESMF), (iv) the Resettlement Policy
Framework (RPF), (v) the Management of Cultural Heritage Framework (MCHF), (vi)
the ESIA Executive Summary (French); and (vii) the ESIA Executive Summary
(English), as supplemented by (viii) the Pest Management Plan (PMP)\. These documents
set out the measures to be taken by the borrower to manage relevant safeguard policy
issues, at the level of individual Project components, including applicable environmental
and social regulations\. For the implementation of the Resettlement Action Plan (RAP) for
the Inga-Kinshasa transmission line (currently in draft), the client has opened a special
account with an installment of US$1\.3 million\. The adoption by SNEL and appropriate
disclosure of the final RAP for the Inga-Kinshasa transmission line is a condition for
appraisal of the additional financing\. Finalization and adoption by SNEL of an EPP is a
condition for effectiveness of the proposed additional financing\.
The borrower has laid a solid institutional foundation for managing and monitoring
adverse environmental and social impacts\. SNEL has established an Environmental and
Social Management Unit which will monitor safeguards compliance of the project\. The
unit (Unité de Gestion Environnementale et Sociale [UGES]) is composed of eight staff
(5 environmentalists and 3 social scientists)\. The project is supporting the training of
UGES staff on Bank safeguards policies\. The day to day monitoring of safeguards
compliance will be ensured by the supervision consultant of the civil works\.
The contractors will prepare their own Environmental and Social Management Plan,
which will be based on the Environmental and Social Management Plan prepared for the
project\.
Page 6
5\. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people\.
The preparation of the PMEDE and additional financing has been participatory at several
levels\. Key stakeholders, in addition to SNEL management and staff are the Ministry of
Energy, the Ministry of Environment, project affected persons (PAPs) and the European
Investment Bank (EIB) and the African Development Bank (AfDB)\. A second group of
stakeholders are the people living at Inga neighboring communities, including the six
clans that owned the land acquired by SNEL for the construction of the Inga 1 and Inga 2
hydropower sites, and the inhabitants of Camp Kinshasa, a workers' camp built at the
time of the construction of Inga 1 and Inga 2\. This group of stakeholders was extensively
consulted in conjunction with the preparation of the safeguards instruments, particularly,
the ESIA, ESMF, and the RPF\. Safeguards documents prepared for the project were
disclosed in country, and at the Infoshop at the Bank\. Copies and summaries of
safeguards instruments were distributed to relevant local government offices in project
affected areas\. Consultations with local communities will be continuously organized
during the implementation of all stages of the civil works, to minimize conflicts, enhance
cooperation, and improve social benefits and performance of the works contracts\.
B\. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other:
Was the document disclosed
prior to appraisal?
Yes
Date of receipt by the Bank
12/15/2006
Date of "in-country" disclosure
01/18/2007
Date of submission to InfoShop
04/13/2011
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
Resettlement Action Plan/Framework/Policy Process:
Was the document disclosed
prior to appraisal?
Yes
Date of receipt by the Bank
12/15/2006
Date of "in-country" disclosure
01/18/2007
Date of submission to InfoShop
04/13/2011
Indigenous Peoples Plan/Planning Framework:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Pest Management Plan:
Was the document disclosed
prior to appraisal?
Yes
Date of receipt by the Bank
03/27/2007
Date of "in-country" disclosure
04/10/2007
Date of submission to InfoShop
04/13/2011
*
If the project triggers the Pest Management and/or Physical Cultural Resources,
the respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
Page 7
If in-country disclosure of any of the above documents is not expected, please
explain why:
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report?
Yes
If yes, then did the Regional Environment Unit or Sector Manager (SM)
review and approve the EA report?
Yes
Are the cost and the accountabilities for the EMP incorporated in the
credit/loan?
Yes
OP 4\.09 - Pest Management
Does the EA adequately address the pest management issues?
No
Is a separate PMP required?
Yes
If yes, has the PMP been reviewed and approved by a safeguards specialist or
SM? Are PMP requirements included in project design? If yes, does the
project team include a Pest Management Specialist?
Yes
OP/BP 4\.11 - Physical Cultural Resources
Does the EA include adequate measures related to cultural property?
Yes
Does the credit/loan incorporate mechanisms to mitigate the potential
adverse impacts on cultural property?
Yes
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy framework/process
framework (as appropriate) been prepared?
Yes
If yes, then did the Regional unit responsible for safeguards or Sector
Manager review the plan?
Yes
OP/BP 4\.37 - Safety of Dams
Have dam safety plans been prepared?
Yes
Have the TORs as well as composition for the independent Panel of Experts
(POE) been reviewed and approved by the Bank?
Yes
Has an Emergency Preparedness Plan (EPP) been prepared and arrangements
been made for public awareness and training?
No
OP 7\.50 - Projects on International Waterways
Have the other riparians been notified of the project?
N/A
If the project falls under one of the exceptions to the notification
requirement, has this been cleared with the Legal Department, and the memo
to the RVP prepared and sent?
Yes
Has the RVP approved such an exception?
Yes
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's
Infoshop?
Yes
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
Yes
Page 8
groups and local NGOs?
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
policies?
Yes
Have costs related to safeguard policy measures been included in the project
cost?
Yes
Does the Monitoring and Evaluation system of the project include the
monitoring of safeguard impacts and measures related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
documents?
Yes
D\. Approvals
Signed and submitted by:
Name
Date
Task Team Leader:
Mr Philippe J-P\. Durand
04/14/2011
Environmental Specialist:
Mr Paul Jonathan Martin
04/14/2011
Social Development Specialist
Mr Antoine V\. Lema
04/14/2011
Additional Environmental and/or
Social Development Specialist(s):
Approved by:
Regional Safeguards Coordinator:
Ms Alexandra C\. Bezeredi
04/14/2011
Comments:
Sector Manager:
Mr Subramaniam V\. Iyer
04/14/2011
Comments: | APPROVAL |
P036382 | R E S T R I C T E D
Report No\.P-123
FILE COPY
This document was prepared for internal use in the Bank\. In making
it available to others, the Bank assumes no responsibility to them for
the accuracy or completeness of\. the information contained herein\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATIONS OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS CONCERNING
A PROPOSED LOAN TO THE
AGRICULTURAL LAND DEVELOPMENT MACHINERY PUBLIC CORPORATION
JAPAN
November 30, 1956
INTERNJATIONAL BANK FOR R 7CONSTRUCTIOH AND DEVELOPENT
REPORT AND RECO`7rFBND!TI3NS OF THE PRESIDENT
TO THE EXECUTIVE D1RTECTORS CONCERNING
A PROPOSED LOAM TO THE
AGRICULTTJRAL TAND DEVELOP?EI T MAICHTIERY PUBLIC CORPORATION
1\. I submit herewith the following report and recommendations on a proposed
loan in an amount in various currencies equivalent to $4\.3 million to the
Agricultural Land Development Machinery Public Corporation to help finance
projects for land reclamation in Northern Japan and for import of dairy cattle\.
PART I - HISTORICAL
2\. An agricultural mission organized by the Bank at the request of the
Japanese Government visited Japan in July and August of 1954\. Among other
things the mission recommended that pilot schemes to test the applicability of
modern mechanical methods in Japan's land reclamation program would be desirable
and would constitute an appropriate field for Bank lending\. It also noted the
importance of importing dairy cattle in order to permit the extension of mixed
farming in areas not suitable for rice cultivation\.
3\. Early in i955 the Bank communicated these views to the Japanese Government
which has since applied for a Bank loan to finance the foreign exchange cost of
machinery for reclamation of waste lands in three areas in Northern Japan and
for import of breeding cattle\.
4\. Detailed field investigations of the projects involved have been carried
out by Bank technicians and at Japan's request the Bank has advised from time
to time as to methods and equipment to be employed, and concerning certain
organizational problems\. Four projects and three separate Govermnent agencies,
the Agricultural Land Deve'opment Machinery Public Corporation, the Hokkaido
Development Bureau and the Livestock Bureau of the M1inistry of Agriculture are
concerned in the proposed loan\. Preliminary discussions have been held from
time to time in 17ashington and Tokyo since the fall of 1955\. Loan negotiations
began on October 16, 1956 and were concluded on November 21, 1956\.
5\. If the proposed loan and the $20\.0 million loan to the Japan Development
Bank for the Kawasaki steel strip mill project which is also under consideration
were made, the total loans to Japan would be increased to $76,077,000 equivalent,
net of cancellations\. The loans previously made are as follows:
Amount
Year Serial No\. (net o-F &cSellaHi&s)
1953 89JA Electric Power Development 21,500,000
1953 90JA if if 10,690,000
1953 91JA is n 6,500,000
1955 133JA Steel Plate mill 5,200,000
1956 136JA Industrial projects 7,887,000
51,777,000
As of October 31, 1956 no repayments had been due; $10,503,355 remained undisbursed\.
The first repayment wi'll fall due on January 1, 1957\.
- 2 -
PART II - DESCRIPTION OF THE PROPOSED LOAN
6\. It is proposed that the Bank make a loan to provide foreign exchange
needed for
(a) the importation of modern land reclamation machinery; some of it
is to be used by the Borrower in the execution of upland recla-
mation beginning with two pilot projects, Kamikita and Konsen;
the remaining portion is to be leased to the Hokkaido Development
Bureau for carrying out in the Shinotsu area part of a program
for the reclamation of peatland in the Ishikari Valley; and
(b) increasing the import of dairy cattle breeding stock by the
Livestock Bureau in order to foster the development of mixed
farming\.
Borrower: Agricultural Land Development Machinery Public
Corporation
Guarantor: The Government of Japan
Amount: The equivalent in various currencies of $4\.3 million
Amortization: 25 semi-annual installments, November 1, 1959 to
November 1, 1971
Interest Rate: 4-3/4% per annum including 1% commission
Commitment Charge: 3/4% per annum
Payment Dates: May 1 and November 1
PART III - LEGAL INSTRUMENTS AND LEGAL AUTHORITY
7\. Attached are drafts of the following legal instruments which would give
effect to the proposed loan:
(a) Loan Agreement between the Bank and Agricultural Land
Development Machinery Public Corporation (Nochi Kaihatsu
Kikai Kodan) (No\. 1)
(b) Guarantee Agreement between Japan and the Bank (No\. 2)
(c) Letter from Japan to the Bank re Shinotsu lease and cattle (No\. 3)
Also attached is the report of the Committee provided for in Article III,
Section 4 (iii) of the Articles of Agreement of the Bank (No\. 4)
8\. The prospective Borrower is a public corporation authorized by the law
which constitutes its charter (Law No\. 142 of 1955) to borrow from the Bank\.
That law also authorizes the Government to guarantee any such loans\.
9\. Japan has proposed that a single loan be made to the Corporation covering
all the projects even though the Corporation itself will carry out only two of
them\. As to the other two, it would be acting only as an intermediary\. To prevent
the Corporation from becoming involved too deeply financially and administratively
in projects which are to be executed by others, loan arrangements are proposed
which would produce much the same result as three separate loans\.
10\. Regarding the Borrower's own use of equipment, the Borrower would undertake
to carry out the Kamikita and Konsen Projects plus additional agreed projects to
be carried out with the imported machinery when the initial projects have been
completed (all such projects being defined as the "Kamikita and Konsen Programs"'),
to keep books and records, permit inspection, etc\. (Loan Agreement, Section 5\.01)\.
The Guarantor would give what is essentially a guarantee of performance (Guarantee
Agreement, Section 3\.01), and would be required to keep the Corporation in funds
needed to enable it to carry out the programs (Guarantee Agreement, Section 2\.02)\.
The Guarantor would, in addition, undertake to settle farmers on the lands comprised
in these projects (Guarantee Agreement, Section 3\.05)\.
11\. As to the Shinotsu Project, the Corporation's only function is to procure
equipment and to lease it to Hokkaido Development Bureau on compensatory terms
satisfactory to the Bank (Loan Agreement, Sections 5\.01 (a) and 5\.02)\. The lease
w uld be on a one-year renewiable basis\. Its initial execution would be dependent
on Japanese budgetary authorization and such execution would be a condition of
effectiveness as to the Shinotsu part of the loan\. If the lease is not renewed or
if the required rental payments are not made to the Corporation, Hokkaido Develop-
ment Bureau would be obliged to purchase the ] ased machinery at a price equivalent
to that portion of the Bank's loan relating to the Shinotsu Project ihich is then
outstanding and unpaid (Loan Agreement, Section 5\.02)\. If any such purchase is
made, the Corporation may, at the Bank's option, be required to make a corresponding
prepayment of the Bank's loan (Loan Agreement, Section 5\.10)\.
12\. The Guarantor (not the Borrower) would undertake that the Shinotsu Project
would be carried out through its agency, the Hokkaido Development Bureau\. Hence,
as to this project, the Guarantee Agreement contains the protective covenants
usually folnd in loan agreements concerning plans and specifications for the Project,
operation and maintenance of the machinery, maintaining books and records, etc\.
(Sections 3\.03, 3\.04, 3\.07)\. The Guarantor vould also undertake to settle farmers
on the lands comprised in the Shinotsu Project (Guarantee Agreement, Section 3\.05)\.
13\. The Japanese Government is satisfied of its authority to implement these
undertakings\. However, in order to provide against the possibility that further
legislation might be needed to carry out the Shinotsu Project, or to provide funds
for the projects and programs or for the settlement of farmers in the project areas,
it has been agreed to include a provision authorizing the Bank to premature the loan
"if any action which in the Guarantee Agreement is expressed to be performed or
caused to be performed by the Guarantor shall not be so performed" (Loan Agreement,
Section 6\.01 and Schedule 3, paragraph (e))\.
- h -
1i\. In respect of the Cattle Importation Project, the Corporationts only
obligation would be to enter into appropriate arrangements with the Livestock
Bureau of the Ministry of Agriculture and Forestry for importation and with
prefectural governments in Japan for sale of cattle (Loan Agreement, Section 5\.01)\.
The Guarantor would undertake to carrv out the Project, to keep books and records,
permit inspection and so forth\. The Guarantor would in a separate letter (No\. 3)
state its intention to seek necessary budgetary authorizations and, subject to the
granting of such authorizations, to make sufficient funds available to cover the
Corporation's out-of-pocket and administrative expenses in connection with the
project to the extent that they are not fully covered in the Corporation's contracts
with prefectural governments\.
15\. Prepayments of principal associated with any one project or group of projects
would be applied pro-rata to all outstanding maturities\.
PART IV - APPRAISAL OF THE PROPOSED LOAN
16\. A report on "Mechanical Land Reclamation Project, Japan", No\. T\.O\. 100-b,
dated November 22,1956 is attached (No\. 5)\.
Justification of the Project
17\. General - Japan at present must import about 20% of her food requirements,
and her population is increasing at a rate of about one million annually\. Each
year substantial areas of arable land are destroyed by natural causes or taken
out of cultivation for other essential uses\. Only by vigorous efforts toward
better utilization of presentlv cropDed lands and by cultivating lands not now
used for agriculture can Japan hope to avoid a growing food deficit\. In order
to prevent deterioration in her position, Japan must increase her agricultural
production by 15% within ten years\. This is well understood in Japan and in
recent years the Government has been devoting about 12% of its total expenditure to
the support and increase of agricultural production\. The projects which would be
partly financed by the proposed loan are in furtherance of this overall program\.
18\. Reclamation of Waste Upland (Kamikita and Konsen) - Japan possesses several
hundred thousand hectares of potentially arable land which for a variety of reasons
has not hitherto been brought under cultivation\. Japan's recent efforts to reclaim
portions of these areas had been confined to settling new farmers on these lands
and supporting them while they attempted to clear and prepare the lands for
agriculture by their own hand labor\. The Kamikita and Konsen Projects located in
Northern Honshu and Hokkaido respectively, are pilot projects which would test the
feasibility of large-scale and rapid reclamation of this type of land by the use
of modern land clearing and earthmoving equipment\. If, as expected, mechanized
land reclamation proves successful, the methods developed should be applicable on
a larger scale in many other areas in Japan\.
19\. The amount allocated to these projects is $1 million\.
20\. Shinotsu Project - Some 140,000 hectares of reclaimable peatlands are located
in the Ishikari Valley on the island of Hokkaido\. Climatic conditions are such that
when these lands have been properly drained and top dressed, good rice crops can be
produced\. An extensive program for reclamation of these lands is already underway
under the direction of the Hokkaido Development Bureau, an agency of the Japanese
Government\. It is believed, howuever, that the use of modern earthmoving and
construction equipment on this Project will reduce costs and will enable the work
to be carried out more rapidly\.
21\. The amount allocated to this project is about $2\.4 million\.
22\. Dairy Cattle - As part of its program of increasing domestic food production
Japan has been encouraging the growth of dairying particularly on farms which have
been or will be established as a result of its general land reclamation program\. Muc
of this land is best suited to mixed farming in wrhich dairying must play an important
part\. Neither the natural increase of the cattle already in the country nor the
government's existing cattle import program have been sufficient to meet demand\.
It is therefore proposed that the import program be enlarged\. The loan requested
would finance the import of 5,000 head of dairy cattle breeding stock over a period
of two or three years\.
23\. The amount allocated to this project is about $0\.9 million\.
Economic Situation
2h\. Japan's economic situation as of October 1955 was reviewed in a report
entitled "Japan - Recent Economic and Financial Developments in Japan" (A\.S\.-44a)
submitted to the Board on October 17, 1955\. Economic developments in Japan since
that date have continued favorable\.
25\. During the past 12 months gross national product and industrial production,
attained the highest levels in Japan's history\. Harvests have for the second
consecutive year been well above average\. Substantial increases in the labor
force have been successfully absorbed and unemployment is at near record low levels
despite increase in labor productivity generally\. Consumption has increased notably,
but not as rapidly as production, and the rate of saving has remained high\. Record
corporate profits have permitted a larger measure of self-financing of capital
expenditures\. As full utilization of industrial plant has been approached in many
fields, major capital expansion has been widely undertaken, and industrial and
comm\.rcial construction has set new records\.
26\. Wholesale prices, having been stable throughout 1955, increased by 6% in the
first nine months of 1956, mainly because of steep increases in iron and steel
prices\. There has as yet been no substantial increase in the consumer goods index\.
27\. During the first half of the teeriod credit bocame easter, intere9t rates
declined and commnrcial banks were able to retire most of their loans from the Bank
of Japan\. The trend has been reversed during recent months, but interest rates
and Bank of Japan loans to commercial banks are still below last year's levels\.
28\. The financial policy of the national government continued to be based upon
a balanced budget\.
29\. For the first time in many years Japan achieved a small favorable balance
in visible trade during the fiscal year ended March 31, 1956\. There was a deficit
in normal invisible transactions which, however, was far outweighed by receipts from
U\.S\. troop and special expenditures\. As a result of this, Japan had a balance of
payments surplus of more than $500 million\.
- 6 -
30\. For the current fiscal year Japan has budgeted for large increases in imoorts,
principally of industrial raw materials, and now appears to be planning upon a rough
balance between foreign trade receipts and expenditures\. During the first six
months of the fiscal yrear a further surplus of receipts of A132 million has been
realized, but an additional sharp increase in imports during the second half of
the fiscal year is contemplated in the foreign exchange budget, and it seems
possible that for a number of months to come Japan's international accounts will
be in deficit\. Foreign exchange reserves at present exceed $1,500 million, of
which nearly $1,000 million are in dollars\.
31\. It seems questionable whether the spectacular rate of progress of the past
twelve months can be maintained in the coming year\. In view of the shortage of
iron and steel, and existing demands on industrial capacity generally, any further
large increase in output can only follow the completion of extensive capital
expansion programs\. The execution of such programs, however, may well generate
inflationary pressure\. In the field of public finance it may become more difficult
to hold the line\. The Government is faced with a strong pressure for reduction
in income taxes, while at the same time there are large unsatisfied needs for
capital expenditures in the public sector, particularly for transportation, and
strong demands for an improved social securitv system\. As to exports, Japan's
recent successes are leading to strong resistance in receiving countries against
further expansion of Japanese trade in certain lines\. The effects of the iron
and sheet shortage and the increase of wholesale prices, neither of which have
yet been fully reflected in domestic or exDort prices, could also influence Japan's
exports adversely\.
32\. The Japanese Government appears to feel that despite the rapid advance of
the past year over-confidence rust be avoided\. The Bank of Japan has been alert
to possible inflationary dangers\. Steps have been taken to tighten bank credit
through increasing the discount rate and by calling for the same sort of informal
and voluntary credit restriction by the commercial banks which was effectively
employed in 195h\. The Finance Minister has recently reaffirmed the Government's
adherence to a balanced budget policy for the coming fiscal year\. The raising of
rigid barriers against Japanese goods has so far been prevented by prudent retreat
and voluntary restrictions wher- protectionist objections of other countries have
become strong\.
Prospects of Fulfillment of Obligations
33\. The Borrower is a newly established agency of the Japanese Government\. It
has been provided with sufficient working capital and has adequate access to funds\.
The Borrower's revenues derived from its reclamation work at Kamikita and Konsen
and from its contractual arrangements both with the Hokkaido Development Bureau
in regard to the Shinotsu Project and the prefectures concerned as to cattle sales,
should more than cover its expenses and permit the punctual servicing of the
proposed loan\.
34\. As to management the Borrower is staffed by civil servants with a
commendable record of accomplishment in the field of land reclamation, and the
Hokkaido Development Bureau and the Livestock Bureau of the Ministry of
Agriculture and Forestry are well organized government agencies which have been
operating on a successful basis for some years\.
- 7 -
35\. Japan has a good record of meeting its debt obligations\. It has previously
been noted that payment has been resumed on all prewar obligations except two
comparatively small French franc issues as to which disputes regarding the
applicable exchange rate have been outstanding since the French franc devalu-
ation of the 'Thlirties'\. On one issue settlement has now been reached between
the parties, subject to ratification by the Japanese Diet and approval by
foreign bondholder groups which have ne-otiated previous sttlements with Japan
and Germany\. The settlement is scheduled to be submitted to the Diet of Japan
in February 1957\. As to the second and smaller issue, the City of Tokyo franc
loan, negotiations have recently been resumed\.
36\. In May 1956 Japan and the Philippines reached an agreement in regard to
war reparations calling for deliveries of goods and services valued at an ave-
rage of i27\.5 million per year for 20 years\. The addl-itional burden on Japan's
balance of payments is less than 1 of its 1955 foreign exchange receipts\.
Deliveries under the reparations agreement with Burma and the war claims settle-
ment with Thailand are proceeding, and there is no indication that these oblig-
ations are proving unduly burdensome\. Indonesia's reparations claims are under
discussion between the parties\.
Method of Procurement
37\. All procurement has been and will be based, to the extent practicable,
on international competition\.
PA'RT V - COI^PLIAI'TCE WITH ARTICLES OF AGREEMENT
38\. I am satisfied that the proposed loan complies with the requirements
of the Articles of Agreement of the Bank\.
PART VI - RECC;-- 7XDATTC1TS
39\. I recolmmend that the Bank grant a loan to the Agricultural Land Develop-
ment Machinery Public Corporation in various currencies equivalent to 041\.3
million for a term of 15 years at an interest rate of 4-3/4% per annum with
the guarantee of Japan, and on such other terms and conditions as are speci-
fied in the draft Loan and Guarantee Agreements attached, and that the
Executive Directors adopt a Resolution to that effect in the form attached
(No\.6)\.
Eugene R\. Black
Attachments
Washington, D\.C\.
lNovember 30, 1956 | APPROVAL |
P002715 | FiLE '' B MvDocument of
The World Bank
FOR OFFICIAL USE ONLY 3
Report No\. P-2 173-TA
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
TO THE
TANZANIA INVESTMENT BANK
WITH THE GUARANTEE
OF THE
UNITED REPUBLIC OF TANZANIA
November 21, 1977
CURRENCY EQUIVALENT
Tanzanian Shilling = US$0\.12
US$1\.00 = TSh8\.30
(As the Tanzanian Shilling is officially
valued at a fixed rate of 9\.66 TSh to
the SDR, the US Dollar/Tanzania Shilling
exchange rate is subject to change\.
Conversions in this report were made at
US$1\.00 to TSh8\.30 which is close to the
recent average exchange rate\.)
ABBREVIATIONS
ADS - Agricultural Development Services
BIS - Basic Industrial Strategy
CCM - Chama Cha Mapinduzi
EADB - East African Development Bank
EAC - East African Community
NBC - National Bank of Commerce
NDC - National Development Corporation
NIC - National Insurance Corporation
SIDO - Small Industries Development Organization
TANU - Tanganyika African National Union
TDFL - Tanganyika Development Finance Company, Ltd\.
TIB - Tanzania Investment Bank
TRDB - Tanzania Rural Development Bank
TIB's Fiscal Year: July 1 - June 30
FOR OFFICIAL USE ONLY
TANZANIA - TANZANIA INVESTMENT BANK
LOAN AND PROJECT SUMMARY
BORROWER: Tanzania Investment Bank (TIB)
GUARANTOR: United Republic of Tanzania
AMOUNT: US$15\.0 million equivalent
TERMS: Repayable substantially in conformity with the
aggregate amortization schedule for sub-loans
and investments for which withdrawals from the
loan account are approved or authorized\. Interest
rate would be 7\.9 percent per annum\.
RELENDING TERMS: TIB would relend the proceeds of the loan at a
minimum interest rate of 11 percent per annum\.
The maximum maturity of sub-loans will be 15
years including adequate grace periods\. The
exchange risk would be assumed fully by sub-
borrowers\.
PROJECT DESCRIPTION: The purpose of the proposed project is to meet
part of TIB's foreign exchange requirements to
cover its commitments through December 31, 1980\.
More specifically, the project will enable TIE
to finance the planned increase in and diver-
sification of its operations\. In addition to
its traditional financing of manufacturing enter-
prises, TIB expects to increase its work in agro-
industries, transport and tourism\.
FINAL DATE FOR
PROJECT SUBMISSIONS: December 31, 1980
FREE LIMIT: $800,0000 equivalent for individual sub-loans;
$7\.0 million equivalent aggregate limit\.
DEBT COVENANTS: Maximum debt/equity ratio of 3:1\.
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties, Its contents may not otherwise be disclosed without World Bank authorization\.
PROJECTED TIB PERFORMANCE
Year Ending June 30 1978 1979 1980 1981 1982
----(TSh Million)-----------
Projected Approvals:
Loans 242\.0 278\.0 320\.0 368\.0 423\.0
Equity 2\.0 2\.0 2\.0 2\.0 2\.0
Total 244\.0 280\.0 322\.0 370\.0 425\.0
Projected Income Statements:
Total Revenue 44\.8 60\.4 86\.0 113\.1 138\.8
Financial and Admin\. Expenses 16\.0 20\.4 28\.3 40\.1 56\.8
Provisions 2\.7 4\.2 6\.8 6\.6 6\.9
Income Tax 13\.0 18\.0 26\.0 32\.9 36\.9
Net Income 13\.1 17\.8 24\.9 33\.5 38\.2
As % of net worth 3\.8 4\.0 4\.2 4\.8 5\.1
Projected Balance Sheets:
Current Assets 185\.2 218\.4 260\.9 331\.3 412\.8
Net TIB Loans 329\.2 464\.4 676\.3 852\.6 10208
Equity Investments 34\.5 42\.4 44\.4 46\.4 48\.4
Fixed Assets (net) 2\.1 2\.1 2\.1 2\.1 2\.1
TOTAL ASSETS 551\.0 727\.3 983\.7 1232\.4 1484\.1
Current Liabilities 32\.9 40\.4 56\.7 72\.4 103\.9
Long-term Debt 171\.9 237\.0 334\.2 462\.7 629\.5
Net Worth 346\.2 449\.9 592\.8 697\.3 750\.7
TOTAL LIABILITIES
AND NET WORTH 551\.0 727\.3 983\.7 1232\.4 1484\.1
Debt/Equity Ratio 0\.6 0\.6 0\.7 0\.8 1\.0
ESTIMATED DISBURSEMENTS: FY79 FY80 FY81 FY82 FY83
------- ----(U $ Millio)
-------------
Annual 1\.3 3\.9 5\.6 3\.5 0\.7
Cumulative 1\.3 5\.2 10\.8 14\.3 15\.0
APPRAISAL REPORT: Report No\. 1730_TA, dated November 21, 1977
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATION OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS
ON A PROPOSED LOAN
TO THE TANZANIA INVESTMENT BANK
WITH THE GUARANTEE OF
THE UNITED REPUBLIC OF TANZANIA
1\. I submit the following report and recommendation on a proposed
loan to the Tanzania Investment Bank (TIB) with the guarantee of the United
Republic of Tanzania for the equivalent of US$15 million to help finance
the foreign exchange component of investments of this development finance
company in Tanzania\. The interest on the loan would be 7\.9 percent per
annum\. Amortization will conform substantially to the aggregate of the
amortization schedules applicable to the specific investment projects
financed out of the loan\.
PART I - THE ECONOMY
Introduction
2\. While the last full economic report on Tanzania (AE-26) was
distributed to the Executive Directors in 1972, an updating report on the
economy was included as Annex V to the President's Report on a Proposed
Program Credit (No\. P-1781a-TA dated February 22, 1977) and was distributed
to the Consultative Group Meeting (held in Paris in May 1977)\. This report
summarized the findings of the Basic Economic Mission which visited Tanzania
in July - August 1976\. The draft of the Basic Economic Report was sent to
the Government in July and was reviewed in November 1977\.
3\. Tanzania has experienced a degree of continuity and stability in
political structure, leadership and objectives which is virtually unrivaled
in Africa\. The TANU11 party, under the leadership of President Nyerere, has
been the unifying force in Tanzania's political evolution since the early
1950s\. For the past decade, following the Arusha Declaration of early 1967,
Tanzania has pursued the objectives of social equality, self-reliance, the
eradication of absolute poverty and economic and social transformation\. The
1/ TANU (the mainland political party) was merged with the Zanzibar political
party (the Afro-Shirazi Party) in February 1977\. The new party is now
called Chama Cha Mapinduzi (CCM)\.
fundamental strategy underlying Tanzania's development has emphasized rural
development, social ownership of the principal means of production, and full
participation of all regions and population groups in the development pro-
cess\. Economic growth has been an important objective but the leadership
has been willing to forego short-term income gains for longer-term structural
change and more equitable distribution\. In restructuring the political,
economic and social life of the country the leadership has introduced a series
of far-reaching institutional reforms\. The most important of these measures
are well known: most large-scale units in manufacturing, finance and whole-
sale trade have been nationalized; the Government has sharply increased its
share of revenue in GDP through progressive taxation; a significant portion
of public expenditure control has been delegated to the regions and districts;
and incomes policy has prevented a further widening of the urban-rural gap
and has narrowed wage differentials within the formal urban sector\.
4\. With per capita income of $180 Tanzania is classified
as one of the least developed countries as defined by the United Nations
(country data are provided in Annex I)\. Between 1967 and 1973 Tanzania's
GDP at factor cost was growing at an annual rate of 4\.5 percent\. With
population growing at 2\.7 percent per annum,per capita output was rising
at only 1\.8 percent per year on average\. Domestic savings reached 18 percent
of GDP while gross investment was sustained at between 20 to 25 percent of
GDP, extremely high rates for a country at Tanzania's low level of per capita
income\. The growth rate of GDP was not commensurate with the magnitude of
the investment effort, however, in part because of the high proportion of
investment which was directed into slow-gestation infrastructure and social
services projects but also because of sluggish growth in the agricultural
sector and stagnant or declining productivity in parastatal enterprises\.
During this period Tanzania's overall balance of payments situation was
generally satisfactory, despite a disappointing performance in the export
sector\. The rapid growth in imports was more than compensated by increasing
capital inflows, largely from bilateral sources on soft terms\. The overall
balance of payments was in surplus in most years during 1969-73, resulting
in a modest buildup in net foreign exchange reserves to slightly over $150
million at the end of 1973, the equivalent of almost four months' imports\.
The Economic Crisis of 1974
5\. In 1974 Tanzania was suddenly confronted with a severe economic
crisis\. Failure of rains in late 1973 and early 1974 caused a massive decline
in production and marketing of the major foodgrains\. In response the Govern-
ment was compelled to import large quantities of grain, particularly maize,
on commercial terms in order to alleviate the hardships inflicted by drought\.
Tanzania's main export crops were also affected by the drought, and the re-
sultant declines in export volumes prevented Tanzania from taking advantage
of the commodity price boom during 1974\. On the import side, total cost of
merchandise imports rose by over 50 percent between 1973 and 1974, despite
a slight decline in volume\. As a result of these factors the trade deficit
- 3 -
widened from $158 million in 1973 to $340 million in 1974 while the overall
balance of payments moved from a surplus to a deficit of $140 million\. This
balance of payments gap was financed largely through drawings from the IMF
(gold tranche, first credit tranche and 1974 Oil Facility) and by a rapid
depletion of reserves which fell to $60 million (net) at the end of 1974,
equivalent to only one month's import requirements\. Industrial production
also stagnated in 1974 due to shortages of imported raw materials resulting
from the growing foreign exchange constraint and interruptions in power and
water supplies\. While production declined,domestic demand increased rapidly
because of expansionary fiscal, monetary and wage policies\. The imbalance
between domestic demand and supply, combined with the sharp escalation in
import prices, resulted in severe pressure on the domestic price level\.
6\. Although the severity and suddeness of the crisis were largely
the result of forces outside Tanzania's control, many of the problems were
foreshadowed by longer-term economic trends which, at least partially, were
subject to Tanzanian control\. One important adverse trend was in the com-
position of growth; the rate of growth of material production had been
falling for several years and the overall GDP growth rate had been maintained
only by an acceleration in the growth of services, particularly of public
administration\. While much of the slump in agricultural production in 1974
was due to poor weather, the average growth rate of agricultural output had
failed to exceed the rate of growth of population for the six years prior
to the harvest failure\. In addition, the mass villagization program inevi-
tably caused some disruption in agricultural production, in part because
of inadequate planning and preparation\. In the modern sectors many enter-
prises experienced declining labor productivity which has been attributed
to lack of incentives, poor discipline and ineffective management\. Further-
more, while the ratio of domestic savings to GDP rose during the 1960s,
reaching a high of 18 percent in 1970, it had declined to 15 percent by
1973\. Public savings were also falling as a share of GDP, mainly due to
the slow growth of parastatal enterprises' surpluses and the rapid increase
in Government recurrent expenditures\.
The Government's Response to the Economic Crisis
7\. Once the extent of the problems facing the country was realized,
the Government formulated a comprehensive package of policy actions to
bring the balance of payments under control while maintaining the pace of
the development effort\. The principal elements of the package included a
reallocation of investment in favor of directly productive sectors, measures
to raise agricultural output, and constraints on wages and on public and
private consumption\. This package was reviewed with the Bank at the time
of appraisal and negotiation of the Program Loan in late 1974, and approval
of that Loan was based on the Bank's agreement with, and support for, the
proposed package\. The Government has, over the past two years, successfully
carried out most of this policy package\.
- 4 -
8\. From mid-1974 the Government tightened import controls, parti-
cularly for consumer goods and industrial raw materials\. Imports were
curtailed drastically and liquor and tobacco imports were banned\. Import
licensing was further tightened in 1975, leading to sharp volume declines
in imports of consumer goods, industrial raw materials and spare parts\.
In addition, the Government took further politically difficult steps to
slow down the rate of growth of private consumption demand\. Retail prices
of basic foodstuffs were raised sharply in late 1974\. Indirect taxes on
textiles, beer and cigarettes have been progressively increased since 1975
to absorb excess consumer demand for these items\. User charges for water
and electricity were also raised\. An extremely restrictive wage and salary
policy has been followed since May 1974\.
9\. On the production side, the Government has made significant progress
during the last three years in reallocating public investments in favor of the
directly productive sectors of agriculture and industry\. Special emphasis
has been placed on agricultural production\. The share of Government develop-
ment expenditure allocated to the agricultural sector has increased from
16 percent in 1973/74 to 23 percent in 1976/77\. During late 1974 the Govern-
ment urged farmers to grow more food under the campaign "farming as a matter
of life and death\." The Government also announced substantial increases in
agricultural producer prices in May and November 1974 and established an
agricultural price review unit in the Ministry of Agriculture\. Producer
prices were again increased in 1975 and 1976\.
Economic Performance in 1975 and 1976
10\. The major macroeconomic indicators have generally improved since
1974, reflecting both improved weather conditions and the effects of the policy
measures which were introduced to deal with the crisis\. Agricultural pro-
duction increased by 6\.6 percent in 1975 compared to a decline of 3\.3 percent
in 1974, while total GDP grew by 4\.6 percent compared with only 2\.2 percent
in 1974\. This was despite the fact that during 1975 production of cotton
and some other cash crops still suffered from disorganization due to
villagization\. In 1976 some of the problems of villagization were being
rectified through "operation correction" and since rains were once again
favorable, agricultural production was generally good\. Preliminary estimates
are that agricultural production increased by about 4\.7 percent in real
terms in 1976, industrial production expanded 6\.2 percent and GDP grew 5\.2
percent\.
11\. The goods and services account of the balance of payments con-
tinued to deteriorate in 1975 due to continuing production difficulties,
declines in some agricultural export prices and the continuing need to
import food for part of the year\. The trade deficit increased from $340
million in 1974 to $400 million in 1975, and even after allowing for a high
level of project-related capital inflows and a huge increase in grant
assistance and concessional food aid, there was a residual deficit of
-5-
almost $75 million\. Whereas the 1974 residual deficit vas filled almost
entirely through a combination of IMF assistance and reserve depletion
(para 5), the 1975 deficit was met through foreign assistance from a variety
of sources, including a $30 million Program Loan from the World Bank (para 7)\.
In 1976 the balance of payments picture improved\. The trade deficit dec-
lined due to strong export performance, especially for coffee and cotton, and
to a slight fall in the value of imports occasioned by a greatly lessened need
for foodgrain imports and continuing tight restrictions on all other cate-
gories of imports\. The overall balance of payments surplus was about $35
million for the year and net foreign exchange reserves increased to $115
million\., This is equivalent to two month's import requirements at the 1976
level, a modest improvement over end-1975 level but less than optimal\.
Because of the very concessional terms on which aid has been given to Tanzania
and the Government's refusal to use higher cost commercial loans and suppliers'
credits, the overall debt service ratio has remained low -- including a
notional 40 percent share of the debt of the East African Community Corpo-
rations, it was less than 8 percent in 1976\.
East African Community (EAC)
12\. The 1967 Treaty for East African Cooperation made provisions for
far-reaching and comprehensive economic cooperation arrangements among
Kenya, Tanzania and Uganda\. In its initial years the EAC had set up
institutions, policies and procedures for operating the common market and
the large infrastructure services, and encouraging progress was achieved\.
It has been followed, however, by a period of tension and mutual suspicion
concerning the distribution of net benefits derived from the Community\.
The infrastructure services were hampered by restrictive tariff policies;
services declined, and Pattner States subventions were required for the
Railways from time to time to keep the services running\. The poor perform-
ance of the common services in transport and communications also impaired
trade and general movement of goods within the countries, affecting the
general economic development program\. These difficulties were aggravated
by the severe budgetary and balance of payments constraints faced by all
three Partner States in the past few years\. As a consequence, there has
been a continuous diminution in the authority of the Community institutions\.
13\. In 1975 the Partner States recognized that their fundamental
political and economic differences had so affected the working of the
Community that a review of the 1967 Treaty was called for\. A Commission
was appointed for this purpose in November 1975 but it adjourned in
November 1976 without being able to make agreed recommendations regarding
the future structure of the EAC\. Meanwhile, the continuing deterioration
in Community relationships led to a further dismantling in the headquarter
staffs of the corporations responsible for Community services\. In the past
year the regional corporations for Railways, Posts and Telecommunications
and Harbours have assumed on an ad hoc basis effective control over these
services and in early 1977 a series of problems led to the collapse of the
East African Airlines\. In view of these events it became quite clear that
an effort would have to be made to establish a rational basis upon which
- 6 -
the future of the former EAC Corporations could be resolved\. This issue was
reviewed during the Bank's Annual Meetings where all three Partner States
agreed on the appointment of an independent mediator and consultants to
assess the assets and liabilities of the Corporations and make recommendations
as to how these should be allocated between the Partner States\. The Bank
agreed to assist by identifying potential mediators and help prepare terms
of references for this work\. It had also been agreed, subject to the Executive
Directors' approval, to amend existing loan documents to reflect the present
situation\. Existing arrangements would remain in force until these changes
were agreed and approved\.
14\. The difficulties facing the EAC and the common services have affected
the Bank's lending to the Community\. Because of failure to meet debt service
obligations in a timely manner, the Bank has had to suspend disbursements in
the past\. However, since the May 1976 debt service agreement between the
Partner States was finalized, all service payments to the Bank with respect
to EAC loans have been promptly met\. Except for a second line of credit to
the EADB in March 1976, the EAC Corporations have received no new loans from
the Bank since 1973\.
PART II - BANK GROUP OPERATIONS IN TANZANIA
15\. Tanzania joined the Bank, IDA and IFC in 1962\. Beginning with
an IDA credit for education in 1962, 30 IDA credits, 12 Bank loans and two
Third Window loans amounting to $491\.0 million have so far been approved
for Tanzania\. In addition, Tanzania has been a beneficiary of 10 loans
totalling $244\.8 million which have been extended for the development of
the common services and development bank operated regionally by Tanzania,
Kenya and Uganda through their association in the East African Community\.
The only IFC investments in Tanzania to date, totalling $4\.7 million, were
made to the Kilombero Sugar Company in 1960 and 1964\. This Company en-
countered financial difficulties and in 1969 IFC and other investors sold
their interest in the Company to the Government\. Annex II contains summary
statements of Bank loans and IDA credits to Tanzania and the East African
Community organizations as of October 31, 1977, and notes on the execution
of ongoing projects\.
16\. In keeping with Tanzania's overall development strategy, Bank
lending operations are increasingly focusing on the rural sector and
directly productive projects\. Up to the end of FY72, 10 out of 14 loans
and credits made individually to Tanzania had been for infrastructure\.
The overwhelming majority of the operations approved since then have
been for directly productive projects\. Furthermore, a number of the Bank
Group supported infrastructure projects have been closely linked with
specific productive activities\. For example, the Urban Water Supply Pro-
ject (Loan No\. 1354-TA) approved in January 1977, will support the recently
approved Industrial Complex in Morogoro (Loans No\. 1386-TA and 1385T-TA)\.
The directly productive projects are supporting both the agricultural and
industrial sectors, including the Kigoma Integrated Rural Development Pro-
ject (Credit No\. 508-TA), the National Maize Project (Credit No\. 606-TA),
the Fisheries Development Project (Credit No\. 658-TA), two previous Tanzanian
Investment Bank Projects (Credit 460-TA and Loan No\. 1172-TA), and the Mwanza
Textile Project (Loan No\. 1128-TA)\. The first Bank Group assisted project
in the forestry sector, the Sao Hill Forestry Project (Loan No\. 1307-TA),
was approved last year and will provide the raw materials for Tanzania's
first paper and pulp plant, also under preparation for consideration by
the Bank Group for financing\. A Program Credit, which would provide
essential imports, a Trucking Industry Rehabilitation and Improvement
Project (Credit No\. 743-TA) and a Second National Sites and Services
Project (Credit No\. 732-TA) were also recently approved by the Board\.
Projects which have recently been appraised include a Rural Development Pro-
ject in Mwanza and Shinyanga, a Second Cashewnut Processing Project and a
Second Textile Project\. A Fifth Highway Project, a Rural Development Project
in Mara, an Agricultural Services Project, a line of credit to the Tanzanian
Rural Development Bank and a Tourism Project are also under preparation\.
17\. Although the comparatively high proportion of undisbursed loans
and credits, detailed in Annex II, page 1, is in large part a reflection
of the recent approval of many of these projects, it also reflects the fact
that overall project implementation has been less than what was projected\.
It is clear in retrospect that both the Bank and the Tanzanians have been
optimistic regarding Tanzania's absorptive capacity\. The causes of the dif-
ficulties in implementation are varied\. Some stem from the scarcity of
suitably trained and experienced manpower, some reflect difficulties in
identifying agronomic input packages appropriate to the needs of small farmers
while others reflect the strains inevitably associated with attempting a
"frontal attack" on poverty\. These problems have been compounded by frequent
and drastic administrative changes, which -- though perhaps essential to trans-
late the Tanzanian vision of the appropriate organization of society into
practice and potentially the source of long-term benefits -- have certainly
disrupted orderly execution of projects and made parts of earlier project
concepts obsolete\. In general, these difficulties have been most severe in
agriculture, particularly in the smallholder rural sector\. As our lending
program -- as well as those of other donors -- increasingly concentrates on
this sector, these problems have become correspondingly more apparent and
severe\. By contrast, the "modern" sector projects have tended to fare better\.
The Tanzania Investment Bank, Mwanza Textile, Urban Development, and Cashew-
nut Processing Projects, for example, are proceeding well\. Furthermore,
the causes and solution of the problems in non-agricultural sectors have
been easier to identify e\.g\., implementation of education projects has
improved markedly now that required technical assistance has been recruited\.
18\. As the Bank's lending program has expanded, increasing attention
has been given to measures designed to improve project implementation\. A
course was conducted in Dar es Salaam in 1973 on the Bank's procurement
policies and procedures with the relevant Government officials\. A special
project implementation unit, supported by a seconded Bank adviser and an
ADS (Agricultural Development Services) staff member was set up in the
Ministry of Agriculture and eight other ADS staff are assigned to Bank
projects\. The need to establish a close and continuous working level
dialogue between the responsible Tanzanian officials and Bank staff on
following up implementation problems was one of the prime reasons for
the expansion of the Resident Mission to two professionals in October
1976\. In February 1977 a regular Government/Bank review of project imple-
mentation was established\. Discussions, chaired by the Ministry of Finance
and attended by Bank staff and officials from implementing agencies, were
held in Dar es Salaam on the entire Bank Group program\. Steps to strengthen
this review procedure were taken in August 1977 when these meetings were
shifted to a monthly basis\. The Government also agreed that every third
such review will be conducted on an "in-depth" basis to discuss in detail
individual problem projects and problems which are affecting project im-
plementation across a number of sectors\. As a result of this initiative
a number of positive steps have been taken\. Most of the actions agreed to
both during the reviews and intervening supervision missions were completed\.
The reviews have also proven effective in improving coordination and
communication; they provided a unique opportunity for project agencies
to discuss their problems with all the ministries involved and with high
level officials\. During the first in-depth review in October a series of
general implementation issues were discussed with senior Tanzanian officials
and follow-up actions or investigations agreed upon\.
19\. The Government has also become increasingly conscious of this
implementation issue\. President Nyerere has been personally involved
on a number of occasions, taking senior civil servants and parastatal
officials to task for inadequate performance on specific Bank projects\.
In addition to fully supporting the project implementation review system,
the Treasury has now decided to set-up a special internal unit to over-
see project performance and assist the implementing agencies with bottle-
necks and other problems\. Furthermore, there is a more consistent response
to Bank suggestions and a willingness to openly discuss problems raised
by Bank staff\. For example, an earlier reluctance by the Government to
recruit technical assistance has been replaced by the endorsement of such
help when it can be clearly demonstrated that it is required\. As a conse-
quence project disbursement performance has improved somewhat over the
last two years across a number of sectors\. However, it is obvious that
even with the continued emphasis on project implementation, progress can
only be expected to be gradual and new problems will continue to emerge
particularly in the newer sectors of Bank involvement\. The wide scope of
the Bank's lending program and its increasing focus on the more difficult
and complex sectors and issues can be expected to cause new difficulties
which will need to be addressed as they arise\.
- 9 -
PART III - THE INDUSTRIAL SECTOR
20\. At independence Tanzania had an extremely limited industrial
sector dominated by private firms\. Three major features have characterized
the sector since that time: rapid expansion, an impressive diversification
in products produced, and a major shift in ownership from private to
public hands\. The contribution of manufacturing to GDP more than doubled
by 1976 as the number of jobs in the industrial sector tripled\. Furthermore,
the limited range of products produced in 1961 has been significantly ex-
panded as new plants producing a wide range of consumer goods and some inter-
mediate and capital goods were completed\. Finally, following the Arusha
Declaration in 1967, the Government systematically transferred the control
and ownership of the large private and foreign-owned industrial enterprises
to publicly-owned parastatals\. By 1974, the public sector accounted for
about 50 percent of manufacturing value-added and employment\. Presently,
four ministries control 17 holding companies which have a total of 97 sub-
sidiaries in various productive sectors\. It must, however, be noted that the
private sector still remains an important participant in industry (430 of 500
factories with over 10 employees are in private hands)\.
Performance and Problems
21\. Aggregate manufacturing production grew rapidly between the mid-
sixties and the onset of the economic crisis in 1974\. The average annual
real growth of the manufacturing sector was 7\.8 percent between 1964-75
compared to an average growth rate of 4\.8 percent for total GDP\. However,
while this record of increasing output would seem to indicate satisfactory
industrial performance, a detailed analysis of Tanzania's record in the
manufacturing sector indicates that productivity has been low and output
has been far less than warranted by the level of investment\.
22\. The problems underlying the suboptimal performance in the sector
are many\. At the macro level, the Government has not yet developed the
administrative capability to monitor and coordinate effectively the opera-
tions of the control systems which were instituted along with the increased
public ownership of manufacturing enterprises\. Important components of this
control system include centralized decision-making on investments, detailed
allocations of foreign exchange through import licensing, an extensive
regime of price controls and rules of procedure operated by the National
Pricing Commission, and wage-setting by the Permanent Labor Tribunal and the
Government\. While the Government feels these controls are needed to achieve
its development goals, their effect has largely been to insulate public enter-
prises from the discipline of market forces\. At the micro level two additional
sets of problems operate\. First, performance indicators consistent with the
macro control systems and clear guidelines for evaluating performance are
still lacking\. Managers and workers, therefore, have few motivating incentives
in Tanzania\. Second, there is a scarcity of trained mana-
gerial personnel and skilled labor, and most enterprises have to live with
periodic shortages of other key inputs\.
-10-
23\. These issues have been raised in various Bank reports on the
Tanzanian industrial sector\. The Government is well aware of them and
considerable discussions have taken place among Tanzanian economic and
enterprise managers on possible solutions\. The Bank Group has participated
in these discussions within the context of both general economic work
and specific projects in the industrial sector\. These issues were
a particular focus of the recent review of the Basic Economic Report in
November\. While decisions on any major macro policy changes dealing with
the incentive system for workers and managers, parastatal organizations
and the price and import control systems will take time because of their
importance and breadth, at the firm level a number of improvements have been
made\. These include staff retrenchment in overmanned parastatals, an
eight percent limit on allowable increases in overhead costs of manufacturing
firms which approach the National Price Commission for price increases and
the hiring of a foreign consultant group to advise on operational/managerial
improvements for the subsidiaries and associate firms of the major indus-
trial holding company, the National Development Corporation (NDC)\. Speci-
fically, as a result of the NDC sponsored efficiency studies,its operating
companies have been able to improve their operations and correct problems
in management, maintenance, inventory control, excess receivables, unbalanced
process lines, and worker skills\. This approach could be repeated with
success in additional parastatals; in fact, the more active among them are
already contemplating approaching TIB for assistance under the IDA Technical
Assistance Credit (para 29 below)\. Furthermore, TIB, on its own initiative,
has asked the Bank for assistance in locating one or more experts to study
the operations of the major industrial enterprises and lay down production
norms in the light of the social and technical conditions prevalent in the
country\.
Basic Industrial Strategy and the Third Five-Year Plan
24\. Future development of the sector will be based on the Basic Indus-
trial Strategy (BIS) adopted in 1974 by the Government, The two main goals
of this strategy are structural transformation and self-reliance and its
main emphasis is on the use of domestic resources for domestic needs\. This
involves giving top priority in investment allocations to industries supplying
(i) basic needs of food, shelter, health, education and transport, and (ii)
producer goods which contribute to production of a wide range of industrial
products\. However, as it has emerged BIS will also permit expansion of
export-oriented production, especially that based on domestic raw materials
(for example cashew processing, sisal spinning, textile manufacture, and
meat and leather processing)\. A potential problem with the BIS is that
attempts to restructure the economy too quickly during thisperiod of resource
stringency may ultimately frustrate both growth and structural change\. A
too rapid expansion of particular sectors may lead to excessive reliance
on external finance, know-how and markets, and the massive investment
coordination required by the strategy may overburden the country's already
weak planning capacity\. Moreover, effective implementation of the strategy
- 11 -
will require specific changes in the macro policy framework towards a pro-
tection and tariff structure which does not discriminate against backward
linkage import substitution, discourage domestic production of capital goods,
or confer high and widely varying effective rates of protection to the pro-
duction of consumer goods\.
25\. Preliminary indications are that the Third Five-Year Plan under
preparation (FY77-81) envisages an investment program of about TSh 23 billion,
of which about 21 percent will go to manufacturing\. Projects earmarked for
development/implementation under the Plan are mainly based on Tanzania's
domestic resources\. Among the sizeable Tanzanian projects currently under
implementation in the industrial sector with Bank Group support are the
industrial estate at Morogoro, the cashewnut processing factories and the
textile mill expansion at Mwanza\. In addition, NDC is presently implementing
five other major projects: a tannery, a bicycle plant, a farm implements
factory, a detergents factory, and a pharmaceutical plant\. A pulp and paper
mill project and another textile plant are in advanced stages of preparation
for Bank Group financing (para 16 above)\.
Small-Scale Industry
26\. The overall responsibilities for small-scale industry development
has been given to the Small Industries Development Organization (SIDO)\.
SIDO's activities include providing technical and managerial consultancy
services, establishing industrial estates, conducting training programs,
providing marketing services and supplying machinery on a hire-purchase
basis\. SIDO's performance thus far has been mixed: in some areas impressive
work has been completed while in others little is being done\. Specifically,
while its project preparation skills are satisfactory, managerial and marketing
problems are common\. A number of other major issues face the Government in
this sector; the coordination of SIDO's work with other participants in
small-scale industry is weak, and the role of the private sector has not been
clarified\.l/ The Bank Group has become involved in a pilot effort in the
sector under the Second National Sites and Services Project (Credit No\. 732-TA)
and anticipates working closely with the Government in attempting to address
these problems\.
The Financial Sector
27\. In terms of appropriate institutions, Tanzania's financial system
is relatively well developed\. In addition to TIB (discussed below) and the
central bank of Tanzania (which is responsible for the overall monetary
policy), there are eight other financial institutions: a state-owned com--
mercial bank, a state-owned insurance corporation, a national provident fund,
three development banks (two dealing with the modern sectors of manufacturing,
transport, etc\., and one with rural development) and two other state-owned
specialized institutions (a savings bank and a housing bank)\. Of these,
the commercial, savings, and housing banks are authorized to mobilize savings
directly from the public through deposit accounts\. The two development banks
1/ Although in a recent statement President Nyerere has indicated that private
involvement in small-scale industry will be supported by the Government\.
- 12 -
dealing with the modern sectors of manufacturing, agro-business, tourism,
transport, are the East African Development Bank (EADB) and the Tanganyika
Development Finance Co\., Ltd (TDFL)\. EADB, an East African Community Corpo-
ration,whose majority shares are held by the Governments of Kenya, Tanzania
and Uganda, is allowed by its charter to make 38\.75 percent of its invest-
ments in Tanzania\. Therefore, its work in Tanzania is limited to some
extent\. TDFL is owned in equal amounts by TIB and donor agencies of the United
Kingdom, West Germany, and the Netherlands\. TDFL has been particularly
active in the past in financing private enterprises and in making equity
investments, but is now also financing parastatal enterprises\. The Govern-
ment perceives TDFL's role as complementary to that of TIB\. TDFL's share-
holders have been providing it with resources in the form of subscription
to its income notes\. In keeping with the socialist orientation of the Govesn-
ment policy, Tanzania has no active private capital market and the bulk of
equity investments is provided by the Government directly through the budgetary
process\. Overall, the respective roles and functions of the financial insti-
tutions are clearly defined and there is no costly duplication of effort\.
28\. In spite of this well developed institutional framework, the
impact of the financial sector on domestic resource mobilization and
allocation has not been as substantial as it could have been\. The decline in
domestic savings after 1971 from an impressive level coupled with the am-
bitious investment targets of the Third Five-Year Plan,will require that
Tanzania's economic managers address the question of reviving domestic
savings\. The Bank's Basic Economic Report concludes that while interest
rates will remain less important in resource allocation in Tanzania's eco-
nomy than in a less controlled economy (because of the centralized decision
making on investments) they could still play a role on the mobilization side\.
With the Government now a dissaver, the parastatal sector will remain the
major saving entity in the economy, and hence will bear primary responsi-
bility for rebuilding savings\. For maximum results, however, the private
sector will also need to be tapped\. The recommended role for a more active
interest rate policy is thus to stimulate monetary savings from these sectors\.
Specifically, on private savings it is felt that the existing interest
rates on savings deposits which vary according to term between 4 percent
and 6\.5 percent are on the low side, considering the substantial inflation
rates in the recent past (although inflation averaged only 4 percent per year
in 1967 to 1973 it rose sharply to 20 percent in 1974 and 26 percent in 1975;
in 1976 it fell below 15 percent)\. Therefore, while there is no empirical
basis for judging what the exact response to more attractive interest rates
on bank deposits might be, a case exists for increasing deposit rates\.
With regard to parastatal savings, the evidence shows that the financial
parastatals are better savers than many manufacturing and commercial paras-
tatals\. Thus there also appears to be justification for allowing financial
parastatals to generate more surpluses by increasing their lending rates\. The
Bank's views in this area were discussed with the Government during the
review of the Basic Economic Report\.
- 13 -
PART IV - THE PROJECT
29\. The proposed loan would be the third line of credit to TIB by
the Bank Group; the first two projects were approved in 1974 and in 1975
(a$6 million Credit, No\. 460-TA, and a $15 million Loan,No\. 1172-TA)\. TIB
also administers an IDA Technical Assistance Credit of $6 million (No\. 601-TA)
for financing feasibility studies, capacity utilization investments and
training in the industrial sector\. A report entitled "Appraisal of the
Tanzania Investment Bank," dated November 21, 1977 is being distributed to
the Executive Directors separately\. The project was appraised in March/
April 1977\. Negotiations were held in Washington in October 1977 and the
Tanzanian Delegation included representatives of Treasury, TIB and the
Attorney General\. A loan and project summary is at the front
of this report\.
Ownership and Role
30\. Established in 1970, TIB is wholly owned by the Tanzanirn Govern-
ment\. It has an authorized capital of TSh 200 million of which TSh 100
million was paid-in as of June 30, 1977\. The Government holds 60 percent
of the issued capital, the National Bank of Commerce (NBC) 30 percent, and
the National Insurance Corporation (NIC) 10 percent\. Both NBC and NIC are
wholly owned by the Government\. Within the institutional framework of
Tanzania, TIB's main role has been to provide financing to projects in the
directly productive sectors in the form of medium- and long-term loans\. As
almost all sizeable projects are now promoted and implemented by the various
public sector parastatals, equity financing is usually provided directly
through the budgetary process\. Through its independent appraisal and invest-
ment decision-making process TIB has provided a critical independent check
on the technical, financial and economic feasibility of parastatal invest-
ments which come to it for financing, thereby exerting a useful influence
on the quality of resource allocation in Tanzania\. Having built up a good
reputation, TIB is gradually extending its activities from loan financing
to include project identification and promotion\. It is also working in
conjunction with SIDO and others in drawing up a strategy for the develop-
ment of small industries\. In addition, it is devoting increasing attention
to the operational problems of existing projects\. Its rolethere has been
to use its influence as a major financier of projects to get holding com-
panies to undertake efficiency studies which would help improve the perform-
ance of their ongoing operations\.
Board of Directors, Management and Organization
31\. TIB's Board is chaired by its Managing Director, who is appointed
by the President, and has eight other members\. They include the Deputy
Principal Secretary of Finance and Planning, the Personal Assistant to the
President, a representative of CCM, the General Manager of NIC, a member of
Parliament and representatives of NBC\. TIB's Board is actively involved in
- 14 -
TIB's work with the sole power of approving loans and equity investments\.
A General Manager assists the Managing Director in averseeing TIB and its
organizational structure consists of four departments: Operations, Planning
and Development, Finance and Secretary's and Administration\. Tanzanians
head all these departments\. In November 1976, TIB established a Feasibility
Studies Unit to administer IDA's Technical Assistance Credit (para 29)\. This
Unit is now functioning within TIB's Operations Department and maintains
close liaison with TIB's appraisal and follow-up activities\. As of March
1977, TIB's total professional staff numbered 41, of which eight were expa-
triates\. TIB has developed an excellent training program for its staff,
making good use of overseas training programs and its expatriate staff in
training Tanzanians\.
Operations and Portfolio
32\. Since its founding TIB's operations have grown rapidly\. During
FY77 TIB approved (net of cancellations) 20 loans for a total of TSh 238
million and four equity investments for a total of TSh 3\.8 million\. Including
these operations TIB's cumulative loan approvals as of June 30, 1977 amounted
to 106 loans and 14 equity investments for TSh 677\.5 million and TSh 38\.5
million, respectively (all net of cancellations)\. This expansion in opera-
tions has been accompanied by improvement in the speed of project processing
without lowering the overall quality of projects\. The average lag between
loan approval by TIB's Board and the formal commitment of funds (through a
legal agreement between TIB and its borrower) has been reduced to two months,
which is satisfactory\. As of June 30, 1977, TIB had disbursed TSh 347\.8 million\.
By further improving its follow-up during project implementation, a current
focus of its concern, TIB should be able to increase this disbursement rate
appreciably\. The average size of TIB's loans approved increased from TSh 7\.6
million in FY76 to TSh 11\.9 million in FY77\. TIB assists a broad range of
economic sectors and most TIB-assisted projects utilize domestic raw materials\.
The most important sectors of TIB investment are food and food processing,
transport, chemical and rubber products, tourist development, textiles and
metals\. Projects approved during the two years ending March 1977 are expected
to create new jobs at an average investment cost per direct job created of
about $12,000, which is reasonable given TIB's primary focus on medium- and
large-scale industry\. These projects have an average estimated financial
rate of return of 21 percent and economic rate of return (incorporating
shadow wage and shadow foreign exchange rates) of 36 percent\.
33\. As of June 30, 1977 TIB's loan portfolio consisted of 58 projects
involving TSh 294\.9 million, of which TSh 114\.5 million (39 percent) out-
standing in 22 projects was affected by arrears of over three months\. While
this represents an improvement from the level outstanding at the time of the
second TIB line of credit (53 percent), this change does not fully reflect
the emphasis TIB has placed on addressing its portfolio problems\. Over the
past two years, TIB has considerably strengthened its follow-up capacity\.
It has conducted comprehensive reviews of each problem project, made
specific recommendations for resolving the causes of the problems and used
- 15 -
its influence as a financier to ensure that appropriate steps are taken in
response to these recommendations\. During appraisal, TIB's efforts in problem
follow-up were assessed in detail and were found to be adequate\. At nego-
tiations the status of each problem project was reviewed and it was confirmed
that TIB would continue its increased emphasis on problem projects\. In
addition, TIB has begun actively to promote use of the Technical Assistance
Credit (Para 29 above) for studies of capacity utilization probleums\. Of the
22 projects with arrears of over three months, in 12 projects (about 15 percent
by value of the portfolio) the arrears are likely to be collected in the near
future\. Four more projects (involving 10 percent of the portfolio by value) were
under implementation and needed extensions of grace periods due to delays in
project completion\. The remaining six projects (involving 14 percent of the
portfolio by value) were facing difficulties due to technical and marketi-ng
problems\. While four of these projects are classified as having moderate
problems with a reasonable chance of overcoming their difficulties, two
(totalling TSh 19\.1 million) are in poor condition and TIB may lose a portion
of its investments in them\.
34\. TIB's equity portfolio was TSh 26\.7 million as of June 30, 1977 in-
cluding investments in the common stock of three companies (Tsh 10\.6 million)
and the preferred stock of seven companies (TSh 16\.1 million)\. Its major
investment (TSh 19\.0 million) is in the common and preferred stocks of TDFL\.
While the TDFL investment has been paying interest on its income notes, TIB's
other investments yield no return because the projects are experiencing
various degrees of problems or are under implementation\.
Financial Condition
35\. As a result of the rapid growth of its operations, TIB's total
assets had increased from TSh 134\.5 million in 1972 to over TSh 474 million
by June 30, 1977\. This increase has been financed mainly through grants
from bilateral donors, long-term borrowings, and increased equity\. TIB's
net worth during this period increased from TSh 52 million to TSh 302\.4
million, mainly due to grants (TSh 182\.8 million) and increased paid-in
capital and retained earnings\. This rapid increase in TIB's equity base
has resulted in an improvement of its long-term debt to equity ratio from
an already sound position of 1\.8:1 in 1971 to 0\.5:1 in 1977\. Because of
the low leverage in TIB's capital structure, the return on TIB's average
worth, as of June 30, 1977 was only 2\.9 percent, which (in view of the
low leverage) is adequate\. TIB's administrative expenses were
reasonable at 1\.8 percent of the total assets\. TIB's liquidity situation
concinues to be sound and the debt service coverage at 1\.7 is adequate\.
After TIB's auditors had reservations about the adequacy of TIB's provi-
sions for losses in 1976 (TSh 2\.5 million), TIB's management agreed to carry
out a project-by-project review at the time of the 1977 audit\. After comple-
tion of this review, provisions were made to the satisfaction of the auditors
(they now total TSh 5\.1 million)\. Considering its strong equity base, TIB
would continue to be creditworthy even if it were necessary to write off a
sizeable portion of its loans and equity investments having serious problems\.
- 16 -
Bank Group Experience with TIB
36\. Since its formation, TIB has developed rapidly into a well organ-
ized and professional financial intermediary\. Its pragmatic willingness
to identify and resolve institutional problems and its continuous efforts
at increasing its effectiveness in guiding Tanzania's industrial develop-
ment has earned it considerable respect within Tanzania and with bilateral
and multi-lateral agencies\. TIB's project appraisal work has considerably
improved over this time and it now has the ability to undertake comprehensive
financial and economic analysis of potential investment proposals\. In res-
ponse to implementation and operational difficulties with some of its
investments TIB has expanded and improved its follow-up activities\.
37\. The Bank Group has been extensively involved with TIB since its
founding and has worked closely with TIB in developing its potential as a
key participant in Tanzania's industrial development\. In particular through
its review of the larger sub-projects submitted for approval, Bank Group
staff have been able to assist TIB in improving the overall quality of its
project analysis work\. Under the initial IDA credit of $6 million to TIB
(Credit No\. 460-TA), TIB financed five sub-projects with an average size of
TSh 10 million\. These sub-projects include leather tanning, textiles,
farming and marketing of navy beans, cashewnut processing and detergent
manufacture\. One of these sub-projects is in operation and four are still
under implementation\. The only one in operation (navy beans) has operating
problems and TIB is following this sub-project adequately\. Under the
second line of credit, a loan of $15 million (Loan No\. 1172-TA), TIB has
financed 14 sub-projects, of which nine are still under implementation\.
These projects involve agro-processing, leather tanning, textiles, steel
rolling and fabrication of automotive bodies and spare parts\. Both the
initial IDA credit and the Bank loan are fully committed\. The 18 sub-
projects 1/ financed under the Bank Group's lines of credit are estimated
to have an average rate of return of about 39 percent and upon completion
will create employment for over 7500 persons\.
TIB's Future Strategy
38\. In formulating its investment strategy, TIB has been guided by
the Third Five-Year Plan's investment priorities (para 25)\. Over the
medium-term, TIB's strategy is proposed to be as follows:
(a) to increase gradually its share of financing invest-
ments in the industrial sector from the present
20 percent to 25 percent, particularly by financing
the types of projects recommended in the Basic
Industrial Strategy;
(b) to increase its efforts in project identification and
promotion by getting more involved in the formulation
of the specific investment plans of the parastatals;
1/ One sub-project has received financing under both the loan and the credit\.
- 17 -
(c) to pay more attention to the operational problems of
the projects it has already financed and to make funds
available for studies aimed at identifiying and re-
solving technical problems of operating companies; and
(d) to build up an adequate cadre of technical staff by re-
cruiting and training engineers in different specialties\.
39\. We consider this strategy appropriate for TIB; it is consistent
with the Government's development priorities, fits well into TIB's role in
the Tanzanian economy and within its administrative capability\.
Projected Operations, Resource Requirements and Financial Results
40\. During the next five years (1978 to 1982) the level of TIB's
lending is expected to increase by 15 percent per annum while its portfolio
of equity investments increases marginally: TIB is expected to approve
about TSh 1\.6 billion in loans and TSh 10 million in equity investments in
various subsectors\. Of the expected loan commitments of TSh 1\.8 billion
during this period about TSh 1\.3 billion will be disbursed\. These medium-
term operational targets are within TIB's administrative capability and
its objective of financing 25 percent of Tanzanian industrial investment\.
41\. TIB's projected resource requirements in foreign currency from
July 1977 through December 1980 will amount to TSh 608 million ($73\.3)\. To
meet these requirements TIB will utilize TSh 440 million presently available
for commitments leaving a gap of TSh 168 million (about US$20 million)\. As
bilateral aid is expected to provide further US$5 million to TIB, a Bank
loan of US$15 million is proposed to finance the remaining 75 percent of the
gap\. TIB expects to meet its domestic resource needs through funds generated
from operations and from funds provided by the Treasury\.
42\. TIB's return on average net worth is expected to increase from
2\.9 percent in 1977 to about 5\.3 percent by 1982\. This level of profit-
ability would enable it to consider dividend payments to shareholders
after 1981 when its retained earnings will reach TSh 100 million, the level
which must be reached according to TIB's Charter before dividends can be
declared\. TIB is projected to hold its administrative expenses below 2 per-
cent of its average total assets although its financial expenses are expected
to rise as TIB resorts to increased borrowing\. While TIB has a sound equity
base adequate to meet any portfolio losses, the projected return on its
equity is rather modest owing to the large amount of grants in the equity
base\. TIB's long-term debt to equity ratio of 0\.5:1 in 1977 is expected
to increase to 1:1 by 1982\. During negotiations assurances were obtained
that TIB's long-term debt to equity ratio would not be allowed to exceed
3:1 (Section 4\.06 of the draft Loan Agreement)\.
- 18 -
Mobilization of Domestic Resources and Interest Rates
43\. TIB has not been active in mobilizing domestic resources directly
as its paid-in capital and various grants have provided adequate domestic
currency resources\. Moreover its concern with improving its capability in
its primary areas of responsibility has not allowed the expansion of TIB's
activities into direct resource mobilization\. While Bank staff do not see
an expanded role for TIB at the moment in this area, this is an issue which
will be closely watched in future sector and project work\.
44\. TIB's lending rates are among the highest in Tanzania and, although
they have not been positive in real terms in the past years, given Tanzania's
experience with inflation (para 28), they have been sufficient to provide TIB
with a reasonable spread\. In view of the fact that its present rate of interest -
11 percent is expected to be positive in real terms with the lowering of the
inflation rate, Bank staff views TIB's present interest rate acceptable\. Further-
more, since TIB charges a one percent commission, a commitment fee of one percent
on undisbursed balances and passes on the foreign exchange risks to the Borrower,
the effective rate of interest is considerably higher than 11 percent\.
Terms of the Loan
45\. The proposed loan would be disbursed against foreign exchange
requirements, i\.e\., 100 percent c\.i\.f\. cost of direct imports, 65 percent
of the invoice price of goods previously imported into Tanzania and 40
percent of the cost of civil works (Section 2\.02(b) of the draft Loan
Agreement)\.
46\. The loan would be repaid according to a flexible amortization
schedule, conforming to the aggregate amortization schedules of TIB's sub-
loans, which will have a maximum maturity of 15 years including adequate
grace periods (Section 2\.08 of the draft Loan Agreement)\. TIB will need
the Bank's prior approval of each project using more than $800,000 equi-
valent of the proposed loan and will not be able to approve more than an aggre-
gate of $7 million equivalent through this procedure without the Bank's approval
(Section 2\.02(c) of the draft Loan Agreement)\. Under the last Bank loan these
limits were $400,000 and $3 million, respectively; the proposed increases are
in recognition of the improved quality of TIB's appraisal work\.
Project Justification and Risks
47\. TIB is a well organized and competently managed institution which
is making positive contributions to the economic development of Tanzania
through the selection and financing of economically justified, financially
viable and technically feasible projects, and through provision of technical
- 19 -
assistance for the management of such projects\. It has an appropriate medium-
term strategy involving, among other things, increased lending to the productive
sectors in accordance with the Basic Industrial Strategy\. Furthermore, it is
helping improve the operational efficiency of parastatal enterprises by its
willingness to fund consultants to carry out efficiency studies and to pro-
vide training opportunities under IDA's Technical Assistance Credit\. To meet
the lending targets it has set under this strategy, it will need foreign
resources\. This proposed loan has, therefore, been recommended to provide
funds for TIB to meet part of its foreign resource requirements through
December 1980\. While there are no major institutional risks involved in lend-
ing to TIB, the general policy and operational problems in the industrial sector
affect TIB financed projects\. These are, however, general sectoral problems
which are being addressed by the Government in that context and they are not
expected to endanger TIB's viability or prevent it from operating as a financial
intermediary\. Therefore, while recognizing these general problems, it is felt
that TIB is creditworthy for continued Bank Group lending\.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
48\. The draft Loan Agreement between the Bank and the Tanzania Invest-
ment Bank, the draft Guarantee Agreement between the United Republic of
Tanzania and the Bank, the Report of the Committee provided for in Article III,
Section 4(iii) of the Articles of Agreement and the text of a resolution
approving the proposed loan are being distributed to the Executive Directors
separately\. The draft Agreements conform to the no-mal pattern for loans
to development finance companies\.
49\. Special features of the draft Loan and Guarantee Agreements are
reflected in Part III of Annex III\.
50\. I am satisfied that the proposed loan would comply with the
Articles of Agreement of the Bank\.
PART VI - RECOMMENDATION
51\. I recommend that the Executive Directors approve the proposed loan\.
Robert S\. McNamara
President
Attachments
WashinRton\. D\.C\.
November 21, 1977
AN1 I
TABLE 3A Page 1 of 4 pages
TANZANIA - SOCIAL INDICATORS DATA SHEET
LAND AREA (THOU KM2- TANZANIA REFERENCE COUNTRIES (1970)
TOTAL 945\.1 MOST RECENT
AGRIC\. 517\. 1960 1970 ESTIMATE KENYA 1UEA, 3ZF\. CF MALAYSIA**
GNP PER CAPITA (USS) 6 1\.o*A loo\.o*A 180\.0*ab 140\.0* 260\.0 440\.0*
POPULATION AND VITAL STATISTICS
POPULATION (MIO-YR, MILLION) 9\.6/a 12\.9A a 15-1-ab 11\.2 32:2 10\.8
POPULATION DENSITY a
PER SQUARE KM\. 11\.0 14\.0 17 \. 19\.0 321\.0 33\.o
PER SQ\. KM\. AGRICULTURAL LAND 18\.0 25\.0 29\.0 Ka 113\.0 1371\.0 115\.0
VITAL STATISTICS
CRUDE BIRTH RATE (/THOU\. AV) 51\.Y 50\.5 47\.0 49\.0 35\.0 42\.2
CRUDE DEATH RATE (/THOU,AV) 27\.1 23\.0 s0\.l 17\.0 11\.4 12\.9
INFANT MORTALITY RATE U/THOU) 190\.0 160\.0-165\.0/D 137\.0 60\.0 1! 40\.8
LIFE EXPECTANCY AT BIRTH (YAS) 3J\.7 41\.8 IC4\.5 49\.1 65\.0 56\.7
GROSS REPRODUCTION RATE \. 3\.2 3\.2 3\.4 2\.6 2\.6 /
POPULATION GROWTH RATE (%) a
TOTAL 2\.3A 3\.0O&L 2\.7_ 3\.1 2\.3 2
URBAN 5\.0 5\.6 7\. 0 6\.3 6\.4 3\.?
URBAN POPULATION (% OF TOTAL) 4\.6 5\.5d 7\.3 9\.9 41\.2 26\.9
AGE STRUCTURE (PERCENT)
0 TO 14 YEARS 42\.5a & 44\.4 4 48\.4 42\.1 44
15 TO 64 YEARS 555\.Las \. 53\.0L 2 \. 48\.0 54\.5 52\.1i8
65 YEARS AND OVER 2\.0 2\.6\. 3\.6 3\.4 3\.2a
AGE DEPENDENCY RATIO 0\.8O/a-1\.1 0\.9 \./
ECONOMIC DEPENDENCY RATIO 1\.2 \.a\. 1\.1 / 1\.4 1 -
FAMILY PLANNING
ACCEPTORS (CUMULATIVE, THOU) 4\. \. \. 66\.1 4424\.7 222\.2
USERS (x OF MARRIED WOMEN) \. \. \. ,, 42\.0 9\.0
EMPLOYMENT
TOTAL LABOR FORCE (THOUSAND) 4900\.0 5600\.0 i 8300\.0 L 50o0\.0 10200\.0 2900\. a
LABOR FORCE IN AGRICULTURE (t) 9\.0ag 91\.0o \. 90\.0 S0\.5 43\.90a
UNEMPLOYED (x OF LABOR FORCE) \. \.- 16\.o f\. 4\.5 6\.0 a b
INCOME DISTRIBUTION
% OF PRIVATE INCOME RECDO BY-
HIGHEST 5% OF HOUSEHOLDS \. 33\.5 \. 20\.2 2 17\.1 28\.3
HIGHEST 20% OF HOUSEHOLDS \. 63\.3 \. 52\.6 44\.5 56\.0
LOWEST 20% OF HOUSEHOLDS \. 2\.3 3- 7 1 3\.5
LOWEST 40% OF HOUSEHOLDS \. 7\.8 \.117 17\.9 11\.2
DISTRIBUTION OF LAND OWNERSHIP
_ _ _ _ _ _ _ _ _ _ _ - _ __---
t OWNED BY TOP 10% OF OWNERS \. \. \. \. 28\.0
t OWNED BY SMALLEST 10% OWNERS \. \. \. \. 2\.0
HEALTH AND NUTRITION
_ --- - -_ - -- - _-
POPULATION PER PHYSICIAN 21750\.0A k21570\.A 20800\.0 l 7830\.0 /d 2180\.0/
POPULATION PER NURSING PERSON 9240\.0 or4890\.0/a 3180\.07 1470\.07d 2170o /a\.
POPULATION PER HOSPITAL BED 570\.0 a 700\.07E \. 770\.0 1900\.0 270\.01!\.
PER CAPITA SUPPLY OF -
CALORIES (% OF REQUIREMENTS) 69\.0 73\.0 86\.o 101\.0 103\.0 110\.0
PROTEIN (GRAMS PER DAY) 42\.0 43\.0 63\.0 Le 71\.0 65\.0 49\.0N
-OF WHICH ANIMAL AND PULSE 22\.0 & 23\.0 \. 29\.0 19\.0 20\.0
DEATH RATE (/THOU) AGES 1-4 \. \. \. 1\.9 \.5\.5
EDUCATION
ADJUSTED ENROLLMENT RATIO
PRIMARY SCHOOL 24\.0 35\.0 41\.0 64\.0 104\.0 B9\.0^
SECONDARY SCHOOL 2\.0 3\.0 3\.0 9\.0/e 41\.0 34\.0
YEARS OF SCHOOLING PROVIDED
(FIRST AND SECOND LEVEL) 13\.0 13\.0 13\.0 t3\.0 12\.0 13\.0/il
VOCATIONAL ENROLLMENT
(X OF SECONOARY) 23\.0 10\.0/C \. 2\.01e 16\.0 3\.0/2
ADULT LITERACY RATE (X) 17\.0 - 49\.0 d 30\.0 87\.0 55\.0
HOUSING
PERSONS PER ROOM (URBAN) 1\.6& \. \. \. 2\.7 2\.3A!
OCCUPIED DWELLINGS WITHOUT
PIPED WATER (X) 3 oA d* 80\._Old 65\.0_ad
ACCESS TO ELECTRICITY
(X OF ALL DWELLINGS) \. \. \. \. 50\.0 43\.0a
RURAL DWELLINGS CONNECTED
TO ELECTRICITY (X) 30\.0 30\.0 /3
CONSUMIPTION
RADIO RECEIVERS (PER THOU POP) 2\.0 11\.0 16\.0 48\.0 126\.0 41\.0
PASSENGER CARS (PER THOU POP) 3\.0 3\.0 3\.0 9\.0 2\.0 27\.o
ELECTRICITY (KWH/YR PER CAP) 16\.0 31\.0 43\.0 68\.0 307\.0 302\.0
NEWSPRINT (KG/YR PER CAP) 0\.1 ! 0\.1 0\.1 0\.5 3\.5 4\.0
SEE NOTES AND DEFINITIONS ON REVERSE
AMESC I
Page 2 of 4 pages
Unless otherwise noted, data for 1s60 refer to NUw yewr between 1959 and 1961, for 1-970 between 1968 and 1970 and for Moto Recent Estimate between
1973 and 1973\.
O N? per capita data are based 00 Vorld Best Atlas methabDlifl (1974-76 basis)\.
04Malasoia has been selected as an objectiVe cainbs beosasMe its population is congprable in size sand Its economic dewelopoent is severs), steps
ahead of Tanzania\.
TANZAARCA 1960 A\. Mainland Tanzania; Ab 1957, African Population only; Ac Ratio of popuxlation under 15 and 65 and over to tots\.)
labor force; /d 1965 ; fe 1962; /f Registered, not all practicing in the country; 4E 1961-63;
/h 1958, Zanzibar only\.
197 A\. Mainland Tanzania; Ab 1967; 14 1965; 1d As percentage of urban households\.
M:ST RECEIT ESTIMATE: /a i976; Ab Mainland Tanzania; /c 1967-73; 14 1972; /e 1969-71 aveage; If Urban\.
RERA 1970 /a Ratio of population under 15 sand 65 and over to labor force age 15-59 years; lb Labor force age 15-59 years;
Ac Urban; /d Registered, not all practicing in the country; Tots)\. secondary includes teacher traininig
at the third level\.
KOREA REp\. OF\. 1970 /a Government estimate is 38\.0; lb As percentage of employment, /t Registered, not all Practicing in the country;
1d Water piped inside\.
MALAYSIA 1970 /\. West Malaysia; lb Registered applicants for work; ft 1964-66; 1d Piped eater inside only\.
llgfINITIONSO OP SOCIAL I1(OICATOIiS
Land Ares (thou ;=2) PsPulatisn Per sursie Peron - Popoistion dioided by n,nbsr of pratictng
Total -Totsal surface ares snaprisiag land ares sod island watars\. mals and feast "rsd\.ato nuss"troi-ed or 'certifisd" cusa,ad
sAris\. -moat recess estimate of agrisoltuu'a area usad temporarily or peena- s-Miliry persesie with training or eoperfsne\.
measly for crops, pastursa, market & kitchen gsrdsas or to lie fallms Pp\.plstism par hospital bad - Papulation dividsd by n,mhar of hospital beds
svilsble in public sad private gea\.ral and specialised bospito1 and
G? poar c,pit, (US$) - iNP per capita s-iatiosis at current starket prices, rehabilitation cantata, encludas nursing bomss and establishoente for
\.calculted by sam conerio- method sWorld Beak Atlas (1973-75 basis); custodial\. and preosotive care\.
1960; 1970 asd 1975 data\. per rasito sunPly Of caore of s requirementss) - Composed from energy
sqoiv-lest of ass food sopplies -wliable is \.-utry Par capita psr day;
Pop\.l\.tion end vital -ta-i-nn svaist ople npriss doassnis pradustion, iapcrts less sepcrre\. and
Ppslastion (old-yea r million) Oso uyfrt\. if cot avaislabl, avarage s\.ge is stock; set supplies s-ctde aslnal fsed, seeds, quatities used
of two end-year estimates; 1"60, 1970 and 1975 data\. in fond processing and mess\. in distribution; requirenets were setiosted
by FA0 base\.d on physiological needs for macoat ac-tivity and health tons,id-
Population density -\. pr square ho - Mid-year peputation per square kilometsr sting enviroosntal temperatore, body weights, age and se\. distributions of
(100 hectares) of total area\. popolation, and all1ing lit for wate as bousehold is-a\.
Population doenity -par square ho of osric\. leand - Conputed as shor for per capita supply of protsia (Orso ear day) - Pronsin contest of per c\.,'ta
agrisoltora1 land only\. set supply of food per dey; met supply of food is defined as shave; reqttr-
ments for all oustcries establisbed by USDA Economic Riese-tch Services
Vital statistics provide for a ninian allowsma of 60 grase of total pronais per day, and
Crude birth rats oar thousad\. averaRs - Ansels live births per thousand of 20 grams of animal and poise pronsin, of which 10 gras, should ho animal
mid-past popslation, te-year rithettic averges ending is 1960 sad 1970, protei\.; those standards are laser than thone of 75 grase of total prsnsio
an feayer a"eig ensding is 1975 f- orsts recent eatiastie\. and 13 gras of saisial protein as an average for tho -Ied, proposd bly FAO
Crude dastb rate per tho;send\. averass - Annual deaths per tosusend of mid-year inroTrd oldPdlray
population; tao-year arithmetir averages ending in 1960 and 1970 and five- Per capita Protein supply from animal and poles - Protein supply of food
year average ending in 1975 for onst recent estimate, derived from aninls and pulses in grase per day\.
Infant onrst\.ity rate C/thou) - A-\.u\.I deaths of infants onder on year of age Death rate C/thou) aits\. 1-4 - Annua desths par thousand ins\. sgrcop 1-4
per thoueaad live births\. years, to childrees in thia age grou\.P; suggested as on indicator of
Lifa enopctanuy at birth Cons) - Averege numehr of years of life remaining at mal-tsrition\.
birth; usually five-yea averages ending Is 1960, 1970 end 1971 for develop-
ing omatries\. Education
irons reproduction rate - Average number of live daughters \. oa will hoar Adjusted enrollment ratio - srimary school - Esr0limet of alt ages as por-
is hor normal reprod-ctive period if ehe separiencts present age-speifis ceniage of primary school-age population; includes children, aged 6-11 year
fertility rates, usually five-year evergago ending in 1960, 1970 and 1975 but adjuated for different lengths of primay education; for coutries with
for deveoping conries,,ya universal sduition, enrolmet may \.osd 100\. since some pupls are balm\.
Popultion sr_ed rat ) - total - Compood nmausi growth rates of aid-ya or savew the official school age\.
population for 1910-60, 1960-70 sod i970-75\. Adjusted enratlo t rantco-sononrdsr school - Conputed as shoes; secondary
Pop\.ltison oroseth rans (%) - orban - Computed like growth rate of total education requires at leas\.t foor years of approved primary inettuoisa;
popoletion; differest definitions of arban ores may affect comparability of provides gene\.ral, vonatlonal or teac\.her training instructions for pupils
data easing emantries\. of II so 1~~~~~~~~~~7 year of age; nrepdnc c-rsas are generallynecluded\.
Urban ontation C of total) - Ratio of urban so total population; different Yass oetm rvdd(is n sodlvl)-Ttlpaso
definitions of orbsnaress may affect comparability of dat\.amsong contries, schooling; an \.e\.ondary leve, vonational instrution may ha partially or
completely secluded\.
All: strcture Eer"ent) -Children (0-1i years), working-age (15-64 yearn;, Vonational esro11lnet CX of secondary) - V-tonalicoinlooitotione include
end retired (65 years ad aver) as peorcetges of nid-year pspulation\. techeial, Industrial or tshor prgras which operate independently or as
A\.Ss dependenc\.y ratio -Ratio of population under 15 sod 65 and over to those depert\.tra of secondary institotions\.
of ages1 throog An duicttaitere-y rate\.CX)t-Lliterate adults (ship so read and wire) as pe-
Economic de5pendencyhraris - Ratio of population under 15 and 65 sod ovr to retg ftotal adul poplation aged 15 years and over\.
the labor force in\.ge greP of 15-4 years\.cH \.in
Fotill Plannino - accennOgre Coonutsive tbou - Co1mltice numbe of acceptors asn
of birth-control deic ce under aus pices of national femily planing progrom Pereasear room (urban) - Average number of persons Per room in oncupied
since inception\. conventioma dwellings in urban areas, dwellings enclude so-permanet
family plasins - ruer C of maried women) - P-erntagee of married women of structoree ad noncupid Parts\.
child-bearing ae(54yer)wouebirch-control devices so all married Occupied dlIns w ithout ptad water C) - Occpied so-entiona1 dwellings
sass in eas age group\. is urban and rure1 areas withou inside or outside piped water facilities
Employment Acces to electricity I%o alII llns Convetional dwellings witb
Tast1 labor force- (thousand) - Economic-lly active persos, including somed electricity is living quaters as percen t of total dwelling is urban -nd
forces and seepleped but necrlding house,wivee, students, etc\.; definitions rural -ara\.
in vriou cootrme arsass omprable\. Rural Ueliss coneested to electricity f%) - Computed as above for rura
labr or c i aricusr it) c- g istura labor force (in farming, forestry, dwlig ony
buntiagdand fishig as pernentage of total labor force\. n h\.on-tn
Olnemelovy CX of labgor force) - Olnemployed are usualy defined as persoswo Cosnt
aer able and willing to take a Job, out of a Job on a gives day, rasind sot Radio r\.civ-rn (oar thou nap) - All ty-pes of receivers for radio broadcasts
of a job, and seeking sorb for a specified mninksm period net e\.ceediog one to general public Per thousand of population; eocludes unlicensed r-e _esor
week; may not be comparable betwseen countries due to diff-eret definitions is coutries and in years when registratIon of radio sets was in effect;
of unmlyed sod source of datseg\., eponn office statistic, sample data for recen\.t yeare nay not be comp-rsle since noes coutries abolished
surveys, sompalsory unemployment leuac\.licensing\.
Pesse:n,eerca\.rs (oar thou eon) - Pass\.enger cars cumprine vontor earn eassting
incas dIstributio - Percentsge sf private incase (bosh in cash and kind) les tha eight preona; seclu\.des ombula\.c\.s, hearses and nilisary
received by richesn 5X, richest 2OX, psornas 2OX, and poorest 40% of house- vehicles\.
hods\. Electricity Ckhb/yr per can) - Annual cnm-psion of industrial, sasme-cia1
publ ic and private electricity in kilowatt hours per capita, generally
Ditetribution of land ownrship - Perce\.tages of land ossed by weslthlest 10% basedon production data, withouc alloanc for leases is grids but allow-
and poorest lOX of land owers\. leg for imports and eaportsof \.ecetr1isiy\.
NReyprint (kg/yr per can) -Per c\.pits annual consumption is bilograse
Health and Nutrition estimated from doneotic production pius net imports of newprint\.
Populaition orphysician - Population divided by snumer of practising
physicians qulified from a medical school as university level\.
TAN*ZANIA page 3 of 4 pages
Lome m ilonsoLdf7fI
Actual Projected 1967 - 1973 - 1975 - 195 173 1975 19-
1973 1974 2\.7 197T6 197 -10 1972 1975 1977 1980 9 97 16
KATIGIA,L ACCOUNTS
At 1973 Prices & Exchange Rates Average Annual Growth Rates As Percent of GDY
Gross Domestic ProduCt 1BIUT 1917\.6 1966\.7 2065\.1 2168\.3 2510,1 6\.0 2\.7 5\.0 5\.0 100\.0 102\.0 101\.0
Gains frome Terms of Trade Fr ___ -20\.5 -38\.4 +19\.7 -3\.0 -24\.9 -2\.0 -1\.0
Gross Domestic Income 1866\.4 1897\.1 1-928\.3 2084\.8 2163\.32s5r -5\.0 1\.8 5\.9 5,2 1O00\.0 1o00\.0 100\.0
Import (incl\. NSr) 545\.1 508\.4 474\.6 427\.4 464\.1 549\.1 7\.4 -6\.7 -1\.1 3\.0 29\.2 24\.6 22\.1
Exports c (import capacity) 417\.2 304\.1 273\.5 328\.2 324\.1 436\.8 2\.7 -18\.7 8\.5 9\.7 22\.4 14\.3 17\.6
Re-source Gap 127\.9 204\.3 19 9\.1 99\.2 140\.0 112\.3 69 1\. \.
Consumption Expenditures 1586\.8 1654\.2 1669\.1 1719\.0 1829\.1 2062\.5 5\.5 2\.5 4\.7 4\.3 85\.1 66\.6 83\.0
Investment "(mine\. stocks) 405\.5 447\.2 458\.3 465\.0 474\.2 535\.0 9\.7 6\.3 1\.7 3\.1 21\.7 23\.8 21\.5
sIlo savings ~~~~277\.6 242\.9 259\.2 363\.8 334\.2 422\.7 2\.5 -3\.3 13\.5 10\.3 14\.9 134 7\.
Natuonal\. Savings 271\.3 269\.5 309\.7 402\.1 375\.1 447\.5 3\.2 6\.8 10\.0 7\.6 14\.5 16\.1 \.18\.0
MERCHANDIISE TRADE Annual Data at Current Prices As Percent of Total
1973 1974 1975
Imports
Cspit\.al goods 116\.0 149\.6 199\.8 309\.4 23\.9 20\.8 27\.3
intermediate goods ~3\.fue1s) 180\.7 228\.7 213\.7 455\.9 37\.2 31\.6 29\.2
Fuel\.s and related materials 41\.8 74\.8 87\.8 156\.2 8\.6 10\.4 12\.0
of wbd\.ch: Petrolewns (41\.8) (74\.8) (87\.8) (156\.2) (6\.6) (10\.4) (12\.0)
Consumpti'on\. goods 147\.2 266\.0 230\.5 __ 279\.5 \.3L 17 naz 'Al \.3L5\.
Tua I\.e Mar\.Thorts (cif) 4Ir irr nrr1\. 69T\. 83T5\.0 1200\.9 100\.0 100\.0 100\.0
Exports
primary products bni\.l\. fuels) 261\.3 304\.9 259\.4 381\.6 79\.7 90\.1 79\.0
Fuels and related materials 12\.5 18\.3 18\.1 36\.0 3\.6 4\.6 5\.5
or whichb: Petroleum (12 5) (18\.3) (18\.1) (36\.0) (3\.8) (4\.8) (5\.5)
Manufacturd goods 54\.1 57\.5 50\.9 __ 132\.9 16L5 15\. \.±L\.
ToalMehb Eprts (fob) 3ir JT! =F 4 3F 480\.0 750\.5 100\.0 100\.0 100\.0
Tourism and Border\. Traae \. \.
Merchandise Trade IndiCeis Average 1973- - 10
Exort Price IndeX 10\.0 14 14 14\. 891 17\. 1\.6
lImport Price Index 100\.0 159\.0 168\.4 178\.6 195\.3 239\.7
Teroms of Trade Index 100\.0 91\.5 84\.3 105\.9 96\.2 91\.2
Exports Volume Index 100\.0 79\.8 70\.5 70\.7 77\.9 104\.2
VALUE ADDED BY SECTOR Annual Oats at 1973 - Prices and Exchange Rates Average Annual Growth Rates As Percent of Total
1967-72 1973-75 1975-80 1975 1975 1980
Agriculture 645\.1 624\.1 666\.7 700\.0 724\.5 808\.4 2\.6- 1\.5 3\.T9 3-9\.4 36-\.1 36\.2
industry and Mining 306\.2 306\.2 299\.2 314\.2 329\.9 295\.3 5\.0 -1\.2 5\.7 18\.7 17\.1 17\.7
Service 686\.1 742\.8 783\.9 823\.0 874\.7 1029\.5 6\.1 6\.8 5\.6 \.41\.9 \.44\. \.A-L\.
Total 1637\.4 1673\.1 1749\.8 1-837\.2 1929\.1 2233\.2 4\.5 3\.2 5\.0 100\.0 100\.0 100\.0
Prelim\. Est\.,
PUBLIC FINANCE SY 73 FY 74 FY 75 SE 76 As Percent of GDP
(Cenm-tral Gover-nment) 1973 1974 1975
Current Receipts 2284 3022 3900 3994 20\.1 !TTK T- !2-
Crrent Exenditures 2066 2695 3991 5630 18\.1 21\.1 20\.5
hdgtar Savilngs 2118 3727 --91 364 2\.1 0\.o7 71\.4
Other Public Sector 564 75 3\.9 4\.7
Public Sector Investment 956 1642 2352 2309 9\.9 12\.6 12\.5
cuIPRRENT EXPENIDITURE DETAILS Actual Prelim\. Est\.
As % Total Current Expend\. Sr92 nl1974 sYn975 ni1976
Education ' n =7T 113U =77
Other Social Services 14\.5 15\.5 12\.2 14\.4
Agriculture 8\.9 12\.1 13\.3 7\.0
Other Economic Services 12\.4 12\.2 10\.3 9\.2
Administration and Defense 36\.2 35\.1 30\.9 31\.9
Other 10\.3 7\.9 18\.3 20\.4
Total Current Expenditures 100\.0 100\.0 100\.0 100\.0
RELECTED INDICATORS 1965- 1973- 1975- 1975-
(Calculated from 5-year averaged data) 1972 1975 1977 1978
Average ICOR -FT -rW 4TY rTT
Import Elasticity 1\.6 -2\.5 -0\.2 0\.6
Marginal Ibsestic Savings Rate 0\.1 -0\.2 0\.4 0\.3
Marginal National Savings Rate 0\.2 0\.6 0\.3 0\.2
LABOR FORCE AND Total Labor Force Value Added Per Worker (Crrn Pries
OUTPUTr PER WOPKER In ldf-lions 5 6o oa In IJ\.S\.Dollara Pecn fAege
191Mr 1971 1971
Agriculture 5\.3 91 98 43
Industry 0\.1 2 1590 694
Service 0\.4 7 2170 948
Total 5\.8 10029 0
not applicable -nil or negligible
not available --less than half theEACI
smallest unit shasm FebA CPIA 7
~~~4AiI~~~~~ I _* , 0* 1 W
b C~ ~~~ ~ ~ ~ _1 N N \. 0 \.4 AN At 0\.-
12 ~~~\. \. \., 0 > n,
a ~ ~ o !f°@_o r1 f N N G _3e
i
31~~~~~~~~~~ o N\. _ N 0\. NN\.tIO ~ e 3
S fiN o i 0° Ni1C I Alo
r N J Fe=o I^
C O I N * i3 i' , ' g n i i 0 i M ih53:0 Igs3#l3^?E
ANNEX II
Page 1 of 14
A\. STATEMENT OF BANK LOANS AND IDA CREDITS TO TANZANIA
As of OCTOBER 31, 1977
(US$ million)
Amount less cancellation
1/
No\. Borrower Purpose Bank IDA- Undisbursed
Four loans and ten credits fully disbursed 70\.2 72\.0
586-TA 1969 Tanzania Roads 7\.0 1\.4
217-TA 1970 Tobacco 9\.0 0\.2
232-TA 1971 Education 3\.3 0\.2
265-TA 1971 Roads 6\.5 0\.6
287-TA 1972 Smallholder Tea 10\.8 2\.1
371-TA, 1973 Education 10\.3 5\.8
382-TA'/ 1973 Livestock 18\.5 6\.9
454-TA 1974 Cotton 17\.5 14\.2
460-TA 1974 Tanzania Investment Bank 6\.0 1\.3
1014-TA 1974 Cashewnut 21\.0 9\.7
495-TA 1974 Sites and Services 8\.5 4\.0
507-TA 1974 Highway Maintenance 10\.2 7\.1
508-TA 1974 Rural Development 10\.0 7\.2
1041-TA 1974 Sugar 9\.0 3\.4
580-TA 1975 Dairy 10\.0 8\.2
1128-TA 1975 Textile 15\.0 6\.0
1172-TA 1975 TIB Tanzania Investment Bank 15\.-0 8\.0
601-TA 1976 Tanzania Technical Assistance 6\.0 5\.8
606-TA 1976 " National Maize Program 18\.0 15\.0
607-TA 1976 if Education 11\.0 10\.3
1306T-TA 1976 Power 30\.0 27\.0
1307-TA 1976 Forestry 7\.0 6\.7
652-TA 1976 Fisheries 9\.0 8\.8
658-TA 1976 Tobacco Processing 8\.0 7\.0
1354-TA 1977 Urban Water Supply 15\.0 15\.0
1385T-TA 1977 Morogoro Industrial Complex 11\.5 11\.4
1386-TA 1977 Morogoro Industrial Complex 11\.5 11\.4
703-TA-1 1977 Rural Development (Tabora) 7\.2 7\.2
732-TAp\. 1977 Second Sites and Services 12\.0 12\.0
743-TA-' 1977 Trucking 15\.0 15\.0
TOTAL 212\.2 5/278\.8 238*\.9
of which has been repaid 2\.6- 5\.8-
209\.6 273\.0
Amount sold 0\.1
of which has been repaid 0\.1
Total now outstanding-/ 209\.6 273\.0
Total undisbursed 100\.0 138\.9
1/ Net of exchange adjustments\.
2/ Includes Norwegian participation of $6\.2 million which has been fully disbursed\.
3/ Not yet effective\. Amount excludes Canadian participation of $4\.8 million\.
4/ Not yet effective\.
5/ Includes repayments through September 30, 1977\.
ANNEX II
Page 2 of 14
B\. SUMMARY STATEMENT OF BANK LOANS FOR COMMON SERVICES GUARANTEED
BY KENYA, TANZANIA AND UGANDA AS OF OCTOBER 31\. 1977
(US$ million)
Amount less cancellation
No\. Year Borrower Purpose Ban Undisbursed
Five loans fully disbursed 93\.4
638-EA 1969 EAHC Harbours 35\.0 1\.3
674-EA 1970 EARC Railways 42\.4 5\.3
865-EA 1972 EAHC Harbours 26\.5 2\.0
914-EA 1973 EAPTC Telecommunications 32\.5 5\.8
1204-EA 1976 EADB Development Finance 15\.0 14\.7
Total 244\.8 29\.1
of which has been repaid 39\.82/
Total now outstanding 205\.0
Amount sold 24\.4
of which has been repaid 24\.4 0\.0
Total now held by Bank / 205\.0
Total undisbursed 29\.1
1/ Net of exchange adjustments\.
2/ Includes repayments through September 30, 1977\.
ANNEX II
Page 3 of 14
C\. PROJECTS IN EXECUTION"/
(As of October 31, 1977)
There are currently 28 projects under execution in Tanzania\.
AGRICULTURAL SECTOR
Credit No\. 217-TA - Tobacco Project: $9\.0 million
Credit of October 9, 1970; Date of Effectiveness -
February 1, 1971; Closing Date - December 30, 1977
Project infrastructure investments are 95% complete, all 15 com-
plexes and 114 villages are established and water development has improved\.
Only 314 km of roads have been established compared with appraisal estimates
of 1,104 km, but the reduced road construction program is considered suffi-
cient for present production\. A total of 11,300 farmers, about 81% of
appraisal estimates, have been recruited\. However, only about 6,900 are
growing tobacco\. The area under tobacco is 2,170 ha, and with an estimated
yield for 1976/77 of 774 kg/ha, production is expected to be 1\.68 million kg
The Tobacco Authority of Tanzania (TAT) will intensify their efforts to
encourage more farmers to grow tobacco in the project area, and to improve
extension and cooperative services\. There are still middle-management
gaps in TAT, but steps have been taken to improve financial control and
bring the accounts up to date\.
Credit No\. 287-TA - Smallholder Tea Project: $10\.8
million Credit of March 3, 1972; Date of Effectiveness -
July 26, 1972; Closing Date - December 31, 1978
After initial serious management problems,the Tanzania Tea
Authority (TTA) has finally reached a satisfactory level of senior
staffing and this has had a clear impact on the working of TTA and an
improvement in the control over field activities\. Because of weak
extension and farm practices in the past, about 1,600 ha of the 9,671 ha
planted since 1971 will have to be infilled or rehabilitated, and yields
have been lower than anticipated\. Bank recommendations regarding crop
yields, husbandry techniques, field organization, TTA structure and
extension activities are now being implemented\. Furthermore, market
trends in tea have taken a favorable turn\. Progress on the project is
expected to continue to improve\.
1/ These notes are designed to inform the Executive Directors regarding the
progress on projects in execution and in particular to report any problems
which are being encountered and the action being taken to remedy them\. They
should be read in this sense, and with the understanding that they do not
purport to present a balanced evaluation of strengths and weaknesses in
project executions\.
ANNEX II
Page 4 of 14
Credit No\. 382-TA - Second Livestock Development Project:
$18\.5 million Credit of May 23, 1973; Date of Effectiveness -
September 28, 1973; Closing Date - December 31, 1979
This project was the subject of an indepth review in November
1976\. Since the review, significant progress has been made in alleviating
the financial problems of the meat processing parastatal (TPL), in
correcting some of the deficiencies in the livestockmarketingparastatal
(TLMC), and adopting some of the decentralized management recommendations
in the ranching parastatal (NARCO)\. However, TPL needs to improve its
overall efficiency, and NARCO's financial situation is unsatisfactory\.
A financing proposal for NARCO is currently being prepared for present-
ation to Treasury and the two financing institutions (TRDB and NBC) in
order to return NARCO to financial viability\. The village livestock
development component continues to have the same organizational problems
evident during the review and the seriousness of the situation has been
brought to the attention of the Prime Minister's Office\. In summary,
significant progress has been made since the review but major problems
remain and require continued attention\.
Credit No\. 454-TA - Geita Cotton Project: $17\.5 million
Credit of January 17, 1974; Date of Effectiveness - April 5,
1974; Closing Date - December 31, 1982
Project implementation continues to be frought with difficulties
and the project continuesto face serious staffing problems\. The Government
is taking steps to fill these vacancies and a new Project Manager was
recently approved by IDA\. The credit recovery rate remairndisappointing
and while fertilizer is being used on approximately 20% of the cultivated
hectarage, yield responses to the input package appear to be low\. Few
field trials or extension demonstrations have been implemented\. The main
project achievements are land consolidation and the building construction
program\. Analysis of research data by RMEA and the Bank-financed project
preparation team in Mwanza raised questions about the technical package
originally recommended for this project\. This matter is receiving close
examination by Bank supervision missions\. In addition, a technical review
mission visited Tanzania in March and the recommendations of that mission
were endorsed by the Government\. Actions based on those recommendations
are being kept under close review\.
Loan No\. 1014-TA - Cashewnut Development Project: $21\.0
million Loan of June 24, 1974; Date of Effectiveness -
September 26, 1974; Closing Date - December 31, 1981
The project has been progressing satisfactorily and the original
completion target dates are likely to be achieved in spite of an initial delay
of about two months\. The Cashewnut Authority (CATA) take over of the industry
and the consolidation of its activities are proceeding slowly as its
ANNEX II
Page 5 of 14
management capabilities are limited\. Therefore, while the Government's
consultants have effectively supervised construction and the project
includes provision of technical assistace for factory operation, the
development of CATA is important to future progress and is receiving
close attention\.
Credit No\. 508-TA - Kigoma Rural Development Project: $10\.0
million Credit of August 21, 1974; Date of Effectiveness -
November 20, 1974; Closing Date - December 31, 1980
Substantial progress has been made on the construction of
infrastructure during the past six months as a result of the arrival of
project-financed transport equipment, the overcoming of problems related
to the procurement of construction materials, improved organization at
the district level and impressive mobilization of village self-help
resources\. On the other hand, progress in the agriculture sector has been
less than expected, particularly for cotton\. During the past crop season,
the usage of agricultural inputs in project villages was lower than antici-
pated, principally due to late procurement of inputs by the procurement
and credit institution\. The trials established were limited in number, but
should give useful information regarding crop responses to technical
recommendations\. Standards of village bookkeeping and the level of credit
repayment in project villages have improved\. A total of 57 villages are to
be included in the investment for this fiscal year, and disbursements are
expected to improve\.
Credit No\. 513-TA and Loan No\. 1041-TA - Kilombero Sugar
Development Project: $9\.0 million Credit and $9\.0 million
Loan of September 27, 1974; Date of Effectiveness -
February 14, 1975; Closing Date - December 31, 1979
The sugar factory related to this project is now operating and
estate and outgrower development continues satisfactorily\. Due to lower
cane yields an area of 13,890 acreas will be established instead of the
11,900 acres envisaged at appraisal\. Planting will be completed in the
1977/78 season\. All buildings and roads are completed\. Kilombero Sugar
Company suffers from cash flow problems because there have been delays in
providing counterpart funds\. A new Advisory Management Agreement has been
concluded with HVA of Amsterdam with effect from May 1\. The policy of
sugar growing has been clarified and the ex-factory price of sugar has
been raised from TSh2,200 per ton to TSh2,500 per ton with effect from
July 1\. The first stage of the National Sugar Survey has been completed
and the report is being reviewed\.
ANNEX II
Page 6 of 14
Credit No\. 652-TA - Fisheries Development Project: $9\.0
million Credit of July 12, 1976; Date of Effectiveness -
October 12, 1976; Closing Date - December 31, 1981
Progress achieved so far in implementation of the village
fisheries program on Lake Tanganyika and of the market and pollution
studies is satisfactory\. To eliminate further delays in establishing
the commercial fishing centers both on the coast and on Lake Tanganyika,
the Government appointed a Chairman for the Tanzania Fisheries Corporation
(TAFICO) in August\. This should strengthen TAFICO's management so that it
can play its intended role in commercial aspects of the project\.
Credit No\. 606-TA - National Maize Project: $18\.0 million
Credit of January 29, 1976; Date of Effectiveness - May 28,
1976; Closing Date - June 30, 1980
Although the project has made some satisfactory progress with
regard to village participation, delivery of inputs, and concentration
on high potential maize regions, at its mid-term it is beset by a number
of problems which must be overcome if the project is to achieve its
primary objective\. The project's extension services are seriously under-
staffed, and the deficiencies of extension services and the Government's
continued indecision on its reorganization are constraints affecting
project implementation\. Motorcycles and landrovers delivered to the
Regions have greatly increased mobility of supervisory staff; however,
other essential equipment and aids will not be available before mid-1978
because of considerable procurement and administrative delays\. Farmers'
contributions to the financing of project inputs vary from Region to Region;
in areas of high maize potential about 80% of the inputs have been dis-
tributed in the agreed manner, but in the remaining Regions contributions
have ranged from 13% to 42%\. A recent decrease in the subsidy element
from 75% to 50% for all inputs has doubled the cost to the farmers of
fertilizer\. Many of the difficulties experienced result from limited
cooperation between the central ministry responsible for the overall
project and the regional authorities in charge of local implementation\.
Proposals to improve project implementation by modifying authority for
input financing and by increasing regional responsibility for assessing,
ordering and distributing input requirements are under preparation\. Another
problem is the tendency for villages to place undue emphasis on mono-
culture of maize production\. A joint RHEEA/Headquarters mission recently
reviewed the above difficulties and its recommendations are expected shortly\.
ANNEX II
Page 7 of 14
Credit No\. 580-TA - Dairy Development Project: $10\.0
million Credit of August 15, 1975; Date of Effectiveness-
November 13, 1975; Closing Date - April 30, 1981
Development of the large scale parastatal dairy farms continues
to proceed ahead of schedule but the lack of occupancy rights has resulted
in the Tanzania Rural Development Bank suspending reimbursement on most
farms\. This, however, has apparently been resolved during the indepth
project implementation review in October\. Planning continues for the
ujamaa component but village response continues to be poor\. The milk
processing component continues to make good progress\.
Loan No\. 1307-TA - Sao Hill Forestry Project: $7\.0
million Loan of July 12, 1976; Date of Effectiveness -
October 12, 1976; Closing Date - June 30, 1982
Progress on the project has been slow so far\. About 1100 ha (63%
of the appraisal target) were planted during the first year\. The survival
rate of these plantings is low, but nursery and plantation techniques are
being improved, and future results should be much better, particularly
since the 1977 planting season was climatically erratic and atypical\. There
are some serious management problems, which are in the process of being
solved\. All key posts are now filled, except that of the Roads/Mechanical
Engineer which is expected to be filled very shortly\. The road construction
program is on schedule, but the building program has barely begun, and is now
expected to take 3 - 4 years to complete, instead of the appraisal estimate
of 2 years; however, this delay will not materially affect the production
aspects of the project\. Procurement and disbursements have just started\.
Credit No\. 658-TA - Tobacco Processing Project: $8\.0
million Credit of September 16, 1976; Date of Effectiveness -
February 15, 1977; Closing Date - December 31, 1981
Retroactive financing was authorized in January 1977 in order to
commence work on the improvements to the existing processing line and stores
at Dar es Salaam, but because of delays in shipping and import formalities,
installation of equipment for the processing line can now be completed only
in time for the 1978 processing season\. Work on the Dar es Salaam store
was also delayed due to sub-contractor problems, but these problems have now
been resolved\. Workshop equipment and machinery for the new processing line
has been ordered\. However, as the new line will occupy twice the space
envisaged at appraisal, the building program under the project may be more
extensive than anticipated\.
ANNEX II
Page 8 of 14
Credit No\. 703-TA/Credit No\. 703-TA-5 - Tabora Rural
Development Project: $12\.0 million Credits 1/ of May 11,
1977; Closing Date - June 30, 1983
These credits are expected to be declared effective shortly\. In
mid-November, an initial supervision mission is scheduled\.
EDUCATION SECTOR
Credit No\. 232-TA - Third Education Project: $3\.3 million
Credit of February 5, 1971; Date of Effectiveness - May 10,
1971; Closing Date - December 31, 1977
The Closing Date for this project was extended to December 31,
1977 to provide ample time for its completion\. Ineffective project unit
management, failure to utilize the technical assistance component of the
project, and shortages of construction materials all contributed to the
delays in completion\. All civil works, furniture and equipment contracts
have now been awarded and civil works are approaching completion\. Procure-
ment of remaining equipment, finalization of accounts, and disbursement of
the remaining funds by the Closing Date will be closely monitored\. Transfer
of the nine rural training centers (now called Folk Development Colleges)
from the administration of the Ministry of Agriculture to the Ministry of
National Education appears to have significantly improved the management of
the centers; training objectives and the target group intended for the
original centers have been retained\.
Credit No\. 371-TA - Fourth Education Project: $10\.3 million
Credit of April 13, 1973; Date of Effectiveness - July 2, 1973;
Closing Date - June 30, 1978
The project is being implemented with assistance from DANIDA\.
Projected estimates of project cost overruns have been reduced within
manageable limits as a result of curtailments of the project (deletion of
three secondary schools) and more favorable than anticipated bids on civil
works\. Civil works contracts have been awarded on all project institutions
and construction is proceeding on 12 of 15 sites\. The experimental self-
help construction project item (eight Community Education Centers) continues
to require special attention to help overcome problems of supply, distribu-
tion and control of building materials and supervision of construction
standards\. Recruitment of technical assistance specialists in health
1/ Credit No\. 703-TA-5 ($4\.8 million) is financed under the special CIDA
arrangement; Credit No\. 703-TA is an IDA Credit of $7\.2 million\.
ANNEX II
Page 9 of 14
included in the project has been slow but arrangements are now being made
with WHO to recruit these specialists\. Disbursements are now 40% of
appraisal estimates, and implementation is, in general, proceeding
satisfactorily\. It is likely that the closing date will require a
postponement of up to eighteen months\.
Credit No\. 607-TA - Fifth Education Project: $11\.0 million
Credit of January 29, 1976; Date of Effectiveness - March 23,
1976; Closing Date - June 30, 1982
The project made a good start with respect to the Village Manage-
ment Technicians (VMT) Training Program\. Five Rural Training Centers have
been rehabilitated, instructional staff have been trained, and courses have
commenced\. However, delays are now being experienced due to the limited
availability of local resources and some problems have emerged with respect
to the utilization of the VMTs\. Expansion of the capacity of 15 secondary
schools is slightly ahead of schedule\.
TRANSPORTATION SECTOR
Credit No\. 265-TA - Third Highway Project: 1/ $6\.5 million
Credit of August 6, 1971; Date of Effectiveness - October 12,
1971; Closing Date - December 31, 1978
Project implementation has been slow and the Closing Date of the
project has been postponed twice\. The new construction on the Mikindani-
Mingoyo section of the Mtwara-Mingoyo road was virtually completed in
December 1976\. A more detailed investigation of pavement, subgrade and
material services is required before work can commence on repair, improve-
ment and resealing of the road from Mtwara to Mikindani\. The Mara Better-
ment and Maintenance Unit has completed its work and except for a small
maintenance unit, the equipment and personnel have been sent to assist the
Geita unit\. We have received one of the two pre-investment studies financed
under the project\. Project completion is now estimated by the end of 1978\.
Credit No\. 507-TA - Highway Maintenance Project: $10\.2
million Credit of August 21, 1974; Date of Effectiveness -
November 20, 1974; Closing Date - June 30, 1979
Orders have been placed and deliveries are well advanced for
about US$4 million worth of equipment, and-tenders for a further US$1\.8
million worth have been approved\. A contract for 634 man-months of
technical assistance has been signed and 18 of the 21 experts have commenced
1/ The Second Highway Project included Loan 586-TA which was for US$7\.0
million\. In 1975, surplus funds of US$1\.9 million were allocated to
the Third Highway Project, and the Closing Date was extended to December 31,
1978\.
ANNEX II
Page 10 of14
their duties in the country\. Construction of road camps, deployment of
equipment and training of maintenance personnel is in hand\.
Credit No\. 743-TA - Trucking Industry Rehabilitation and
Improvement Project: $15 million Credit of November 3,
1977; Closing Date: June 30, 1983
An initial supervision mission has just completed its discussions
with the Government on project start up\. The Project Coordinator has been
appointed and this should assist in initiating project execution\. The
credit is not yet effective\.
URBAN SECTOR
Credit No\. 495-TA - National Sites and Services Project: $8\.5
million Credit of July 12, 1974; Date of Effectiveness -
October 3\. 1974: Closing Date - December 31, 1978
Construction of all the sites and service areas has been completed
and the sites handed over, and upgrading works are nearing completion\.
Overall progress and standards of work have been satisfactory\. The take-up
rate of housing loans was initially poor, but the Government has now approved
more flexible lending criteria that are within the reach of the target popu-
lation and the situation is expected to improve\. Lack of qualified personnel,
and shortcomings in the organization structure of the implementing unit have
led to difficulties in management of the project\. Organizational changes
agreed for the Second National Sites and Services Project are aimed at
addressing these problems\.
Credit No\. 732-TA - Second National Sites and Services Project:
$12\.0 million Credit of November 3, 1977; Closing Date -
June 30\. 1982
The conditions of effectiveness for this project are presently
being addressed\.
WATER SUPPLY SECTOR
Loan No\. 1354-TA - Urban Water Supply Project: $15\.0 million
Loan of January 5, 1977; Date of Effectiveness - March 2, 1977;
Closing Date - June 30, 1981
The project is expected to be commissioned in May 1980,(compared
to the original target date of October 1979),as a result of delays which
occurred during detailed design and exploratory works for construction of
ANNEX II
Page 11 of 14
the Mindu Dam\. However, new arrangements proposed by the Bank for construc-
tion of works would still allow the project to match the water demand of the
industrial estate (Loan No\. 1385-T-TA and Loan No\. 1386-TA)\. Delays occurred
in recruiting the three senior advisors to be financed by the loan\. Suitable
candidates have now been identified, but two of them will take up duty more
than three months behind schedule\. Establishment of the urban water supply
unit in Morogoro is also delayed because of these problems\. Discussions
are underway with the Government regarding the Bank's requirement that
water tariffs be adjusted periodically to maintain charges in line with
actual costs\.
POWER SECTOR
Loan No\. 1306-T-TA - Kidatu Hydroelectric Project Phase II;
$30 million Loan on Third Window Terms of August 12, 1976;
Date of Effectiveness - March 1, 1977; Closing Date -
December 31, 1981
Bids have been received for all major components and revised
cost estimates are 45% above the appraisal estimate\. Regular consultants
and temporarily engaged consultants separately reviewed tenders received
for the contract (civil works in Mtera) where most of the overruns occurred\.
They concluded that the project cost was underestimated and that the lowest
bid warranted negotiations with the bidders\. Bank staff recommended that
TANESCO obtain alternative offers for the main civil works, after modifying
designs to reduce cost, revalue all the tenders on the basis of new offers
and open negotiationswith the final lowest bidder instead of rebidding\.
These negotiations have now been completed, and all major construction
supply contracts have been awarded\. The contract for the consulting
engineer in relation to supervision is being negotiated\. Although total
foreign funds available would still cover most of the foreign exchange
requirements, a total financing gap of about $40 million remains\. The
most important issue facing TANESCO is mobilizing adequate financial
resources\. This is presently under discussion between the Government and
TANESCO\.
INDUSTRIAL SECTOR
Credit No\. 460-TA - Tanzania Investment Bank Project: $6\.0
million Credit of February 13, 1974; Date of Effectiveness -
April 18, 1974; Closing Date - June 30, 1978
This Credit has been fully committed\.
ANNEX II
Page 13 of 14
EAST AFRICAN COMMUNITY
There are currently five projects under execution in the EAC\.
Loan No\. 638-EA - Second Harbours Project: $35\.0 million
Loan of August 25, 1969; Date of Effectiveness - December 16,
1969; Closing Date - December 31, 1977
Loan No\. 865-EA - Third Harbours Project: $26\.5 million
Loan of December 18, 1972; Date of Effectiveness - April 16,
1973; Closing Date - June 30, 1978
Considerable delays have occurred in implementing the project
financed partly by Loan 638-EA\. However, construction is now more than
95% complete\. The Closing Date has been postponed from December 31, 1976
to December 31, 1977\. The major civil works financed partly by Loan 865-EA
were completed in September 1975, six months behind schedule\. All loan
funds are now committed\. Some smaller project elements intended to be
financed under Loan 865-EA will have to be deleted\. Cost overruns for
cargo handling equipment, tugs and lighters financed by CIDA have occurred,
and their credit has been increased accordingly from Can$26\.0 million to
Can$33\.5 million\. Port labor productivity has stagnated in Mombasa where
general cargo throughput has declined considerably\. General cargo through-
put has increased above appraisal forecasts\. for Dar es Salaam, where the
three berths financed under Loan 865-EA have been completed and are being
used\. Cargo handling productivity here has improved with increasing through-
put\. The Closing Date of Loan 865-EA has been extended from June 30, 1977
to June 30, 1978\.
Loan 674-EA - Third Railways Project: $42\.4 million Loan
of May 25, 1970; Date of Effectiveness - October 30, 1970;
Closing Date - June 30, 1978
The physical execution of the original project has been seriously
delayed due to political problems within the Community\. In November 1974,
the Executive Directors approved a reallocation of the uncommitted invest-
ments\. Agreement was reached in July 1975 for the hiring of consultants
to assist EARC with outstanding organizational and financial issues\. Coopers
and Lybrand (financial consultants hired by ODM) completed their asset
studies in early 1976 and CANAC (technical consultants) have submitted
a report on decentralization of the railways\. The Closing Date has been
extended to June 30, 1978\.
Loan No\. 1204-EA - East African Development Bank: $15\.0
million Loan of March 1, 1976; Date of Effectiveness -
June 7, 1976; Closing Date - March 31, 1980
Eight subprojects have so far been approved for a commitment of
$8\.9 million against this Loan; one remaining project is under review\.
ANNEX II
Page 14 of 14
Loan No\. 914-EA - Third Telecommunications Project: $32\.5
million Loan of June 22, 1973; Date of Effectiveness -
September 19, 1973; Closing Date - December 31, 1979
All major works other than microwave or UHF/VHF system
construction have now been completed despite initial delays caused by
staffing and other problems associated with the relocation of the head-
quarters\. Because of the long lead time required for the microwave
equipment, the project is expected to be fully completed by mid-1979\.
The Closing Date has accordingly been postponed to December 31, 1979\.
ANNEX III
Page 1 of 1
TANZANIA
THIRD TANZANIA INVESTMENT BANK PROJECT
Supplementary Project Data Sheet
1\. Timetable of key events
(a) Time taken to prepare: Not applicable
(b) Preparation by: Not applicable
(c) Initial discussion with Bank: June 1976
(d) First Bank mission: June 1976
(e) Appraisal mission departure: April 1977
(f)) Negotiations: October 1977
(g) Planned date of Effectiveness: February 1978
2\. Special Bank Implementation Actions
None\.
3\. Special Conditions
(a) TIB's debt to equity ratio would not be allowed to
exceed 3:1 (para 42)\.
(b) TIB would seek prior apptoval of all subprojects in excess
of $800,000 and aggregate approvals under the free limit
would not be in excess of $7 million (para 46)\. | APPROVAL |
P171683 |  The World Bank
Electricity Sector Transformation and Resilient Transmission (P171683)
Project Information Document (PID)
Appraisal Stage | Date Prepared/Updated: 26-Apr-2021 | Report No: PIDA31120
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Electricity Sector Transformation and Resilient Transmission (P171683)
BASIC INFORMATION
OPS_TABLE_BASIC_DATA
A\. Basic Project Data
Country Project ID Project Name Parent Project ID (if any)
Uzbekistan P171683 Electricity Sector
Transformation and
Resilient Transmission
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
EUROPE AND CENTRAL ASIA 27-Apr-2021 29-Jun-2021 Energy & Extractives
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Ministry of Finance JSC "National Power
Networks of Uzbekistan",
Ministry of Energy
Proposed Development Objective(s)
The Project development objective is to strengthen the performance of the National Electricity Grid of Uzbekistan
(NES) and improve the capacity and reliability of the power transmission system to integrate large scale renewable
energy sources\.
Components
COMPONENT 1: Digitalization of the electricity transmission sector
COMPONENT 2: Power grid strengthening and renewable energy integration
COMPONENT 3: NES institutional development and project implementation support
COMPONENT 4: Electricity market development
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 500\.00
Total Financing 500\.00
of which IBRD/IDA 380\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
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Electricity Sector Transformation and Resilient Transmission (P171683)
International Development Association (IDA) 380\.00
IDA Credit 380\.00
Non-World Bank Group Financing
Counterpart Funding 73\.00
Borrower/Recipient 73\.00
Trust Funds 47\.00
Green Climate Fund 47\.00
Environmental and Social Risk Classification
Substantial
Decision
The review did authorize the team to appraise and negotiate
B\. Introduction and Context
Country Context
1\. Uzbekistan is a lower-middle-income, mineral-rich, landlocked country\. With more than 34\.5
million people as of 2021, it is the most populous of the Central Asian countries\. It has maintained high
and stable economic growth over the past two decades\. Between 2000 and 2019, per capita gross
domestic product rose at an average pace of 5 percent per year, climbing from US$ 2786 to 6999 (in terms
of 2017 USD PPP)\. Official poverty estimates declined commensurably, from 27\.5 percent in 2001 to 11
percent in 2019\. This progress was also accompanied by equity gains\. Over the period from 2008 to 2019,
the incomes of the poorest 40 percent of the population consistently grew faster than those of the upper
60 percent\. However, Uzbekistanâs economic achievements have largely relied on a model driven by the
stateâs dominance in the economy, limited economic freedoms, and a restricted private sector\. As a result,
for decades the country has struggled to reach its full economic potential and generate full employment\.
2\. The COVID-19 pandemic dealt a severe blow to economic growth in 2020, causing poverty and
unemployment to rise\. GDP growth slowed sharply in 2019 to 1\.6 percent in 2020, from 5\.8 percent in
2019, due to COVID-19ârelated lockdowns and trading disruptions\. Uzbekistan was one of the few
countries in the region to record an economic expansion in 2020\. Economic conditions have weakened
due to restrictions on mobility and economic activity, weaker external demand, and lower remittance
inflows\. Investment has contracted substantially amid dampened demand prospects at home and abroad\.
The expansion of private consumption has slowed sharply, as increased government transfers to
householdsâpart of the GoUâs COVID-19 response (contributing to a larger budget deficit)âare only
partially expected to offset reduced labor incomes and remittances\. The share of households with at least
one working member fell by more than 40 percentage points following stringent lockdown measures in
April 2020\. Although a swift employment recovery began in June 2020, World Bank estimates of the
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Electricity Sector Transformation and Resilient Transmission (P171683)
poverty rate rose to between 8\.7 and 9\.8 percent in 2020, compared with pre-crisis projections of 7\.4
percent\. As a result, up to 900,000 people at least temporarily fell into poverty, with many more facing
considerable hardship and falling incomes\. Social transfers launched under the governmentâs COVID-19
response only partially offset reduced labor incomes and remittances, and the downturn led to the most
significant slowing in the pace private consumption growth since independence\.
3\. An economic rebound is projected in 2021, backed by gains from structural reforms, COVID-19
response and recovery spending, and a revival in trading partner growth\. GDP growth is projected to
recover to 4\.8 percent in 2021\. However, this forecast is subject to uncertainty surrounding the global
recovery and the potential pace of the countryâs COVID-19 vaccination campaign\. A gradual resumption
of trade and investment flows, a bountiful agricultural harvest, a recovery of remittances, and vaccine
distribution will support the recovery and spur further reductions in poverty and unemployment\. Stronger
GDP growth of 5\.5 percent is projected in 2022 as vaccination efforts accelerate and global disruptions
ease further\.
4\. Removing infrastructure bottlenecks has become even more important for creating jobs and
increasing labor productivity during COVID-19 and its recovery period\. According to the World Bankâs
Growth Diagnostics for Uzbekistan study, ensuring uninterrupted supplies of electricity, natural gas, and
fuel remains a key priority for small and medium firms to thrive and grow\. A large amount of
manufacturing output, estimated at 24 percent among large firms and 38 percent among small firms, was
lost in 2016 due to interruptions in physical infrastructure services, including electricity and gas\.
Moreover, the policy of suppressed input prices for fuel and electricity had promoted capital- and energy-
intensive industries at the expense of labor-intensive industries that would create jobs for the rapidly
increasing workforce\. Provided above, as the reform deepens, it is important for the GoU to address the
next step of binding constraints for businesses and people, including an uninterrupted supply of electricity
and gas\.
5\. As a partner of choice, the World Bank Group (WBG) is providing lead support to the GoU on
economic and energy reforms\. The WBG program hence aims to capture the new opportunities by
focusing on (a) sustainable transformation toward a market economy, (b) reform of select state
institutions and citizen engagement, and (c) investment in human capital\. This proposed Electricity Sector
Transformation and Resilient Transmission Project (ESTART or the Project) is part of the WBGâs
engagement in the energy sector that places strong emphasis on improving energy service delivery,
institutional and market development financial sustainability, clean energy deployment, and private
sector participation\.
Sectoral and Institutional Context
6\. Uzbekistan is one of the most energy-intensive countries in the world\. While Uzbekistanâs energy
intensity declined by about 45 percent during the last 15 years, the countryâs energy use per unit of GDP
is still 3\.1 times higher than the average for the Europe and Central Asia region\. Despite efforts to improve
efficiency, the electricity demand is expected to continue growing steadily in conjunction with the
economic growth (projected at about 6 percent over the next 5â10 years)\. The demand for electricity is
expected to grow annually at approximately 4 percent from 2018 to 2030,1 increasing from 61\.2 TWh to
1 According to the World Bank Least Cost Generation Expansion Plan (base-case scenario)\.
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Electricity Sector Transformation and Resilient Transmission (P171683)
101\.6 TWh, respectively\. In terms of electricity consumption, the industrial sector represents the largest
customer segment (41 percent) followed by residential (24 percent), agriculture (21 percent), commercial
(11 percent), and others (3 percent)\.
7\. The energy sector is less diversified and highly dependent on natural gas\. Natural gas accounts for
86 percent of the total primary energy consumption and 82 percent of the electricity mix2 and is a major
source of commodity exports but is getting depleted (at the current pace of consumption, the existing
proven gas reserves will be depleted within about 20 years3)\. The system is therefore vulnerable, and the
country is taking actions toward sustainable energy transition pathways\. The price of natural gas for
domestic consumption is kept at about 50 percent of the prevailing rate for international export, thus
entailing significant implicit subsidies across the economy\.
8\. The financial standing of the power sector has deteriorated over the past few years\. Before its
unbundling in early 2018, Uzbekenergo (UE), the former state-owned vertically integrated electric utility
and by extension the power sector was not financially viable\. UE experienced a sustained cash deficit
generating around 85 percent of the electricity sector revenues supported mainly by gradual increase of
the end-user tariffs and partially by demand growth\. The sector cash deficit was mainly caused by (a) high
technical and commercial losses in the sector, which are not fully recouped through the normative
thresholds of losses established in tariff reviews; (b) relatively low collection rates (ranging between 83
percent and 93 percent of revenue invoiced) until 2017, when the utility bill collection responsibilities
were temporarily transferred to the Bureau of Forced Execution with enforcement authority; (c)
increasing indebtedness in foreign currencies and foreign exchange risk materializing after the currency
devaluation in September 2017; and (d) below-cost recovery tariffs\.
9\. The COVID-19 outbreak has been adversely affecting Uzbekistanâs economy as well as its energy
sector\. An early assessment identifies that COVID-19 has been affecting the energy sector due to a drop
in demand linked to a slowdown in economic activities; change in demand profile (industrial versus
residential) affecting the weighted-average tariff; operational challenges to utilities; weakened collection
efficiency due to increasing payment delinquency; supply chain disruptions, mobility restrictions, and
delays for maintenance and infrastructure works; and as a result, a worsening financial position of the
utilities\. The assessment suggests that in 2020, COVID-19 would cause around US$80 million cash deficit
in the power sector, including US$26 million at Joint-Stock Company National Power Networks of
Uzbekistan (NES)\.
10\. With the obsolete sector infrastructure, electricity losses are high, estimated at 20 percent of net
generation and it cannot sustain high penetration of renewable energy\. This level is more than twice
higher than commercial and technical losses in high-income and some middle-income countries\. The
electric utilities are also incurring additional operations and maintenance (O&M) expenses to source spare
parts that are no longer easily available and to cope with frequent outages of equipment\. Furthermore,
the condition of the electricity networks puts the sustainability and quality of the energy supply at risk\.
Both frequency and duration of electricity outages are high by the regionâs standards\. According to the
World Bankâs Growth Diagnostics for Uzbekistan Study, large and small manufacturing firms experienced
around 24â29 days of electricity blackouts in 2017/2018\. Aged transmission infrastructure is also
2 Hydro and coal account for around 10 percent and 8 percent of generation mix, respectively\.
3 BP Statistical Review, 2019\.
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Electricity Sector Transformation and Resilient Transmission (P171683)
considered as a bottleneck to implement the GoUâs large-scale renewable energy development program
that aims to develop 8,000 MW of solar- and wind grid-connected power generation by 2030\.
11\. The GoU has initiated ambitious energy sector reforms that envisage introducing competitive
market principles in the sector management and operations\. Key recent and ongoing reform measures
include the following: (i) adoption of a five-year Development Strategy for 2017â2021 that stipulates a
broad market-oriented reform in all key areas of the economy; (ii) sector oversight functions have been
consolidated under the Ministry of Energy (MoE) that was established in February 2019; (iii) Presidential
Resolutions decided in 2019 on the unbundling of the vertically integrated Uzbekenergo (state owned
electricity companies) and Uzbekneftegaz (state-owned oil and gas company); (iv) Cabinet of Ministers
adopted a new electricity tariff methodology and established a separate tariff commission; (v) tariff
adjustments4 in 2018â2019 collectively brought the weighted-average tariff from 70 percent at the
beginning of 2018 to 92 percent of cost recovery level in 2019; (vi) the GoU and NES have also initiated
development of transmission expansion and rehabilitation plans to 2030 aimed at improving the grid
reliability, facilitating grid integration of large-scale renewable energy planned for development, and
strengthening regional connectivity\.
12\. Clean energy transition\. Recognizing the countryâs huge renewable energy potential for
diversification of the energy mix and emphasizing the need for clean energy transition, the GoU has taken
initial measures for the development of renewable energy\. In April 2020, the Government approved its
2020â2030 Generation Expansion Plan, which calls for development of about 15 GW of net generation
capacity (at an estimated investment cost of US$14\.7 billion) by 2030, of which 5,000 MW and 3,000
MW solar and wind power, respectively\. Furthermore, a renewable energy law was enacted in May 2019
to enable creating environment for renewable energy development and\. A Presidential Decree issued in
October 2018 created a PPP Development Agency under the Ministry of Finance (MoF) tasked with
structuring PPP projects including in the power sector\. The first 100 MW Navoi Solar Independent Power
Producer (IPP) project (P170598) has been developed under the WBG Scaling Solar Program and yielded
a competitive Power Purchase Agreement (PPA) tariff of US¢2\.67 per kWh\.
13\. Building on this success, the GoU entered into agreements with the WBG to support preparation
of additional 900 MW solar and 1,500 MW gas-fired IPPs as well as with ADB and European Bank for
Reconstruction and Development (EBRD) on preparation of additional 1,000 MW solar and 1,000 MW
wind IPPs, respectively\. In the longer run, Uzbekistan has a target to get its power sector carbon-free by
2050\. In this regard, the GoU will further prioritize the development of renewable and low-carbon
technologies and align its power sector development with its commitments under the Paris Agreement\.
The GoU, with support from the EBRD, has developed a Carbon Neutrality Action Plan for the Uzbek
Electricity Sector\. The plan suggests several actions for achieving a carbon-free power sector by 2050\.
14\. However, rapid expansion of solar and wind energy is being constrained by the limitations of the
power grid\. The existing grid network has not been able to keep pace with the private sector-led
renewable energy deployment and will fall further behind the planned scenario unless urgent investments
are carried out\. The main challenges related to the integration of renewable energy include the limited
power transfer capacity and flexibility of the grid from production to consumption locations, as well as
4First tariff increase occurred in November 2018 and made up 45 percent increase for non-residential consumers and 9 percent
for residential consumers\. The subsequent tariff increase that became effective in August 2019 raised the electricity tariffs by up
to 36 percent and 18 percent for non-residential and residential customers, respectively\.
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Electricity Sector Transformation and Resilient Transmission (P171683)
ability of the grid operators to forecast and balance the intermittent nature of the renewable energy
supply with automated tools and ancillary arrangements\. Public investment, supported by the proposed
Project, in grid capacity augmentation and new technologies are required to support the transition into a
more ârenewable energy-friendlyâ grid, necessary for enabling integration of large scale renewable energy\.
15\. The proposed Project is part of the World Bankâs comprehensive clean energy transition support
program\. It mobilizes much-needed public financing to address the grid capacity constraints specifically
targeted to sustainably increase the penetration of renewable energy\. These investments lay a strong
foundation for renewable energy-friendly orientation of the transmission investments\. The technical
assistance support of the World Bank has influenced the reprioritization of planning and reinforcement of
the grid toward long-term development focusing on Uzbekistanâs clean energy transition\.
16\. Under the new sector structure, NES will be maintained as the government-owned central utility
responsible for the planning and operation of the power transmission system as well as the single buyer
of electricity in Uzbekistan\. The company will also be the operational backbone of a new electricity market
to be put in place in Uzbekistan\. Further, with the rapid expansion of the power system in Uzbekistan,
including large-scale renewable energy and efficient gas-fired projects financed by the private sector,
investments in modernization, expansion, and digitalization of the aged transmission infrastructure will
also need to be accelerated to keep pace with power generation expansion and growing electricity
demand and to facilitate cost-effective integration of large renewable energy capacities planned for
development by 2030\. NES will also need to operate based on commercial principles equipped with
modern corporate governance and management structure and tools to ensure its efficient, transparent,
and stable operation and effective transition to wholesale electricity market in Uzbekistan\.
17\. The proposed Project aims to support the GoUâs priorities in improving the reliability of electricity
supply and energy sector market and institutional reforms\. The GoU has requested the World Bankâs
continued support to energy sector market and institutional reforms including modernization of
transmission grid and commercialization of the newly established grid company (NES) as the backbone for
ensuring the reliability of electricity supply in Uzbekistan\. To this end, this proposed Project will provide
financing support and technical assistance for strategic areas as follows: (a) implementation of energy
reforms and transformation of the new grid company (NES) into a modern company run on a commercial
basis; (b) financing priority investments for grid enforcement, expansion, and digitalization to improve the
reliability of electricity supply, facilitate grid integration of large-scale renewable energy planned for
development by private sector participation, and enhance capability of Uzbekistan regional electricity
connectivity and trade with neighboring countries; (c) transitioning to the wholesale electricity market;
and (d) financial recovery of NES to enable the companyâs access to commercial financing in the long term\.
C\. Proposed Development Objective(s)
Development Objective(s) (From PAD)
18\. The Project development objective is to strengthen the performance of the National Electricity
Grid of Uzbekistan (NES) and improve the capacity and reliability of the power transmission system to
integrate large scale renewable energy sources\.
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Electricity Sector Transformation and Resilient Transmission (P171683)
Key Results
19\. The following PDO-level indicators are proposed:
(a) Indicator 1 (Core): Increased capacity of the national power transmission system (kVA)\.
(b) Indicator 2 (Custom): Average interruption frequency per year in transmission network
(SAIFI, number)\.
(c) Indicator 3 (Custom): Grid integration of large-scale renewable energy enabled (MW)\.
(d) Indicator 4 (Custom): Avoided GHG5 emissions (mtCO2) [direct]\.
D\. Project Description
20\. The proposed Project has the following four components: (a) Digitalization of the electricity
transmission sector, (b) Power grid strengthening and renewable energy integration, (c) NES institutional
development and project implementation support, and (d) Electricity market development\.
21\. Component 1: Digitalization of the electricity transmission sector\. The proposed Project will take
advantage of the modern digital technologies to support the enhanced monitoring, automation and control of
the power system\. Digital technologies would comprise Supervisory Control and Data Acquisition (SCADA),
Energy Management System (EMS) and substation Remote Terminal Units (RTUs)\. This component will also
support an upgrade of NESâs digital telecommunication network to enable those systems to be fully functional\.
22\. Component 2: Power grid strengthening and renewable energy integration\. The proposed investments
under the Component 2 will support: (a) modernization of 22 priority transmission substations that were
commissioned in 1940/1950s; and (b) construction of a new greenfield substation Koltsevaya 500 kV as well as
associated transmission lines to meet increasing demand and improve the reliability of electricity supply for
residential, industrial, commercial and public consumers in the Central part of Uzbekistan, where the
transmission networks are currently overloaded\.
23\. Component 3: NES institutional development and project implementation support\. This component will
support improving the institutional capacity, financial substantiality and technical capabilities of NES to ensure
it can effectively carry out its functions of reliable operation of the transmission system and electricity market in
Uzbekistan\. The component will include the following sub-components: (i) Modernization of NES business
process; (ii) NES financial sustainability and preparatory work to access commercial financing; (iii) NES
institutional capacity building and project implementation support; and (iv) Technical supervision consultancy\.
24\. Component 4: Electricity market development\. This component will provide technical assistance for the
design and implementation of the sector transition to a wholesale electricity market and will include preparation
of secondary legislation, market rules, institutional capacity building, design and implementation of systems
required for market operation\. Specific activities will include: (i) establishment of an Energy Market Regulatory
Authority; (ii) development of a Wholesale Electricity Market; (iii) establishment of a Central Buyer; (iv)
establishment of a Balancing Market; and (v) implementation support to Ministry of Energy and its Project Office\.
\.
\.
5 GHG = Greenhouse Gas\.
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Electricity Sector Transformation and Resilient Transmission (P171683)
Legal Operational Policies
Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
Summary of Assessment of Environmental and Social Risks and Impacts
\.
E\. Implementation
Institutional and Implementation Arrangements
25\. The proposed Project will be implemented by NES\. NES supervisory board and management board
appointed by the GoU provide overall oversight of the company\. The companyâs management board is an
executive body, consisting of the chairman and four other members\. For Component 4, the MoE and its
Project Office would support NES as the key policy focal point and coordinating body, while the
procurement of activities would be conducted by NES and its PMU\.
26\. NES and its PMU core teams have experience in implementing World Bank projects\. Previously,
UE has implemented two World Bank-financed projects and a number of projects financed by other
international financial institutions (IFIs)\. The core UE team and PMU, which have been implementing the
World Bank-financed projects, have moved to NES and will be preparing and implementing the proposed
Project\. The same teams have also been implementing the World Bank ongoing Modernization and
Upgrade of Transmission Substations Project\. The PMU core team comprises a qualified project manager,
an economist, a procurement specialist, a financial manager, and a project accountant\. NES is in the
process of hiring financial management and social specialists to further strengthen the PMU capacity\.
27\. Day-to-day supervision and management responsibility for the proposed Project will be assigned
to the PMU established within NES\. The PMU will be responsible for the preparation and implementation
of this proposed Project, including preparation of project plans, procurement documents, and progress
reports and management of all consulting and investment contracts\. NES management board will be
responsible for monitoring the proposed Project outcomes\.
28\. A Tender Commission has been established within NES and will make procurement-related
decisions for the contracts financed through the Project, including approval of bidding documents, bid
evaluation reports, and contract awards in line with the World Bank procurement Regulations\.
\.
CONTACT POINT
World Bank
Apr 13, 2021 Page 9 of 11
The World Bank
Electricity Sector Transformation and Resilient Transmission (P171683)
Ferhat Esen
Senior Energy Specialist
Husam Mohamed Beides
Lead Energy Specialist
Maksudjon Safarov
Senior Energy Specialist
Borrower/Client/Recipient
Ministry of Finance
Timur Ishmetov
First Deputy Minister
TIshmetov@mf\.uz
Implementing Agencies
JSC "National Power Networks of Uzbekistan"
Dadajon Isakulov
Chairman of Board
grp_modern@mail\.ru
Ministry of Energy
Sherzod Khodjaev
Deputy Minister
khodjaev\.sh@minenergy\.uz
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Ferhat Esen
Task Team Leader(s): Husam Mohamed Beides
Maksudjon Safarov
Apr 13, 2021 Page 10 of 11
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Electricity Sector Transformation and Resilient Transmission (P171683)
Approved By
Practice Manager/Manager:
Country Director: Marco Mantovanelli 26-Apr-2021
Apr 13, 2021 Page 11 of 11 | APPROVAL |
P002041 | Doat of
The World Bank
FOR OFFICUL USE ONLY
MICROFICHE COPY
Report No\. 10328-UNI Type: (PCR)
BLACKWOOD,/ X31752 / T9 053/ OEDDI RtN10328
PROJECT COMPLETION REPORT
NIGERIA
OYO NORTH AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1838-UNI)
-FEBRUARY 14, 1992
Agriculture Operations Division
Country Department IV
Africa Regional Office
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EOUIVALENTS
Currency Unit: Naira (N)
Exchange Rate: At appraisal: US$1 = N 0\.65
Intervening Year Average: US$1 = N 2\.19
Completion Year (1988) Average: US$1 = N 4\.54
WEIGHTS ANP MEASUR
I metric ton (mt) = 2,205 pounds (bs) or
0\.9842 long ton
I hectare (ha) = 2\.4711 acres (ac)
I acre (ac) = 0\.4047 hectare (ha)
1 kilometer (km) = 0\.6214 miles (mi)
I mile (mi) = 1\.6093 kilometers (km)
ABBREVIATIONS
ADP Agricultural Development Project
AISU Agricultural Inputs Services Unit
APMEPU Agricultural Projects Monitoring, Evaluation and Planning Unit
ARMTI Agricultural and Rural Management 1 raining Institute
ASP Advanced Service Package
BPCC Budgeting and Planning Coordinating Committee
BSP Basic Service Package
CSD Commercial Services Division
EA Extension Agent
ERR Economic Rate of Return
FACU Federal Agricultural Coordinating Unit
FDA Federal Department of Agriculture
FDRD Federal Department of Rural Development
FGN Federal Government of Nigeria
FMAWR Federal Ministry of Agriculture and Water Resources
FSC Farm Service Center
IITA International Institute of Tropical Agriculture
LG Local Government
MANR Ministry of Agriculture and Natural Resources, Oyo State
MDT Manpower Development and Training
MSADP Multi-State Agricultural Development Programme
M&E Monitoring and Evaluation
OFAR On-Farm Adaptive Research
ONADE3P Oyo North Agricultural Development Project
ONPMU Oyo North Project Management Unit
ONTCC Oyo North Technical Coordinating Committee
OSG Oyo State Government
OSWC Oyo State Water Corporation
OYSICC Oyo State Investments and Credit Corporation
PCR Project Completion Report
PMU Project Monitoring Unit
SAR Staff Appraisal Report
T&V Training and Visit (Extension System)
FISCAL YEAR
April 1 - March 31 (until January 1, 1981)
January 1 - December 31 (from January 1, 1981)
THE WORLD BANK FOR OFCIL USE ONLY
Washington, D\.C 20433
U\.S\.A\.
O0ace of D,rectcv-GeeaI
Opetatmon EvalkatHmo
February 14, 1992
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
5-UBJECT: Project Completion Report on NIGERIA
Ovo North Agricultural Development Project (Ln\. 1838-UNI)
Attached, for information, is a copy of a report entitled "Project
Completion Report on Nigeria - Oyo North Agricultural Development Project
(Ln\. 1838-UNI)" prepared by the Africa Regional Office\. This project has
not been audited by the Operations Evaluation Department at this time\.
Attachment
This document has a restricted distribution and may be used by recipients- only in the performance
Of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
FOR OFFICIAL USE ONLY
PROJECT COMPLErION REPORT
NIGERIA
OYO NORTH AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1838-UNI _
TABLE OF CONTENTS
PREFACE \. i
EVALUATION SUMMARY \. Lii
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE
1\. Project Identity \.1,\. \. l
2\. Background\. 1
3\. Project Objectives and Description\. 2
4\. Project Design and Organization\. 3
5\. Project Implementation\. 4
6\. Project Results\. 7
7\. Project Impact on the Environment\. 8
8\. Project Sustainability\. 8
9\. Bank Performance\. 8
10\. Borrower's Performance\. 9
1I\. Project Relationship\. 9
12\. Consulting Services\. 9
13\. Project Documentation and Data\. 9
14\. Findings and Lessons Learned\. 9
PART 11: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 1/
PART III\. STATISTICAL INFORMATION
1\. Related Bank Loans \. \. \.1\. \.3
2\. Project Timetable \. \. \.13
3\. Disbursements \.4
4\. Follow-on Project \. \. \.14
5\. Project Implementation Indicators \. \. \.15
6\. Project Cost and Financing
A\. Total Project Costs \. \. \. 17
B\. Projeca Financing \. \. 17
C\. Allocation of Loan Proceeds \. \.18
7\. Project Results \. \. \.18
8\. Status of Covenants \. \. \.18
9\. Use of Bank Resources
A\. Staff Inputs \. \.20
B\. Mission Data \. \.21
Attachment 1 \. 23
MAP: IBRD 14027R
1/ The Borrower was sent a copy of the draft PCR but no comments were received\.
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorizatin
PROJECT COMPLEIION REPORT
NIGERIA
OYO NORTH AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1838-UN)
PREFACE
This is the Project Completion Report (PCR) for the Oyo North Agricultural Development
Project in Nigeria, for which Loan 1838-UNI in the amount of US$28\.0 million was approved on
April 29, 1980\. The original closing date for the Loan was September 30, 1985\. The Loan was
closed on September 30, 1988, after three one-year extensions\. The final disbursement was on
July 27, 1989\. US$24\.1 million w2s disbursed, and US$3\.9 million was canceled\.
The PCR was prepared by the Agriculture Operations Division, Africa Country
Department IV (Preface, Evaluation Summary, Parts I and m) with the assistance of the
FAO/IBRD Cooperative Programme (CP)\. A draft Project Completion Report, Parts I and III,
was sent to project management in February 1991 with a request that Part II be prepared, but no
response was received (Attachment 1)\.
Preparation of this PCR is based, inter alia, on a field completion mission conducted in
March-April 1990 and the Staff Appraisal Report; the Loan, Guarantee, and Project Agreements;
supervision reports; correspondence between the Bank and the Borrower; ir'temal Bank
memoranda; and the Project's financial statements and audit reports\.
- lBw -
PROJECT COMPLETION REPORT
NIGERIA
OYO NORTH AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1838-UNI)
EVALUATION SUMMARY
Objectives
1\. The project sought to increase agricultural production and to improve incomes and
living standards of about 55,000 smallholder families in the northern part of Oyo State\. The
project was intended to provide a package of farm support services and physical
infrastructure, including extension advice, improved seeds, fertilizers, and construction and
maintenance of feeder roads\. The project included construction of 17 farm service centers
and training facilities for agricultural and other staff\. Consultant services were to be engaged
to assist in staff training, the introduction of new technologies, and hydrogeological and cost
recovery studies\.
Implementation Experience
2\. Implementation start-up was delayed substantially and the pace of execution remained
slow throughout the project life\. There was no objective monitoring and evaluation system\.
The agricultural program was decidedly optimistic\. The project formally started after a 19-
month delay due to slow fulfillment of loan effectiveness conditions; with late recruitment of
key staff, it became operational only about one year afterwards\. The international recruitment
process was delayed by a Federal Government (FGN) personnel policy change which reduced
expatriate staff salaries, forcing OSG to restart the recruitment operation anew\. Delays also
occurred in establishing the Project Budgeting and Policy Coordinating Committee (BPCC),
probably due to political instability in the country at the time\. The initial implementation
period was marked by conflicts, caused by the creation of a dual command, as a Nigerian co-
manager, not foreseen in the SAR, had been appointed as a compromise solution to having an
expatriate manager\. It was followed by a high management turn-over (4 managers in 12
months)\. These factors weakened the Borrower's loan absorption capacity during the three
initial implementation years\. Consequently, loan disbursement at the planned closing date
(September 1985) was only 31 % of the expected amount\. Reallocations between loan
categories were approved once in 1982 and again in 1985 when the Bank agreed to finance
local staff salaries, denoting concern with the Borrower's emerging financial difficulties\.
Counterpart funding whilst not a major constraint overall did slow down project activities and
inhibited staff recruitment as there were frequent delays in the Borrower's quarterly
contributions\.
3\. Progress improved after 1985 with more stable management arrangemenes\. T'he
execution rate, however, continued to be slow\. An important contributing factor was the
difficulty in getting staff because of the project's remote location, which was not helped by
- 4v -
the slow pace of infrastructure construction\. OSGs and LGs failed to carry out
complementary and maintenance works fcr roads and water supplies, and this further delayed
infrastructure construction\. The losses incurred on inputs sales, seeds distribution and tractor
hire, reduced the funding available for other project activities\. Residual loan funds in the
final year were used, with Bank agreement, for preparatory actions to advance the
implementation of the follow-on State-wide ADP under the third Multistate Agricultural
Development Project (MSADP III - Cr\. No\. 2035-UNI)\.
4\. The inappropriateness of the SAR-proposed technological packages to the financial
realities of the farm economy, disadvantaged by unfavorable macro-economic conditions,
raised serious doubts over the project's conceptual foundations\. The overvalued Naira made
exports uncompetitive and food imports cheap, drastically affecting domestic production
incentives\. The minimum tillage (MT) techniques - to be the project's innovation - proposed
by the SAR on the basis of successful experiences in the United States, and on IITA research
results in Ibadan, turned out to be unfeasible at farm level\. Fertilizer and improved seeds, the
main elements had a satisfactory impact on yields, especially after 1986 when macro
economic reforms induced higher prices for crops\. The project's adaptive research while
conducted objectively, contributed little to supply the extension service with sound
technological messages relevant to to the farming systems\. Trials with yams and cassava -
two major crops - were not fruitful, while relevant findings on impact of micronutrients on
yields could not be addressed through the Federally-determined fertilizer formulations\.
5\. The extension staff, although qualified and motivated, were, in numbers, generally
below 50% of SAR projections\. The final extensionist/farmer ratio was 1:1070 instead of the
foreseen 1:600 target but this ratio is consistent with the now generally accepted national ratio
of 1:1000\. The project's production of improved maize seeds was substantial (450 tons in
1988), but only one third of the output became available to the project for distribution to other
farmers\. Other seed production was less impressive, and was insignificant for yams and
cassava\. Most of the project's production increases are attributable to the extensive use of
fertilizer which the project promoted, helped by a very substantial (70%) price subsidy\.
Fertilizer distribution was, however, hampered by the generally late and irregular supply from
the Federal Government\. Fertilizer sales generated constant losses to the project, as transport
and distribntion costs were not reimbursed by OSG or FGN, nor recoverable through sale
prices which were predetermined by FGN\.
6\. The Farm Management (FM) and Land Use Planning (LP) units were created late due
to recruitment difficulties and made no practical contribution to improving existing farming
practices\. Staffing levels were below SAR expectations\. The FM unit made some surveys
which overlapped with M&E activities, denoting lack of coordination\. It made no impact in
assisting farmers with better management methods\. The LP unit did not succeed in
introducing the soil conservation method proposed at appraisal\. Farm mechanization, on the
other hand, was enhanced and private tractor services were encouraged\. Most of the tractors
of the Tractor Hire Unit were transferred to private operators towards the end of the project\.
7\. The project's Monitoring and Evaluation Unit (M&E) was not able to generate
adequate baseline data to overcome the lack of reliable agro-socioeconomic databases at
preparation/appraisal\. The unit also failed to implement an objective yields and production
monitoring system in the project area\. An unclear differentiation between beneficiaries and
overall producers, plus inconsistencies in the yield data itself, rendered the M&E project
- NV -
implementation statistics unreliable for quantitative analysis and evaluation\. Nonethless, these!
d"ta do indicate a significant expansion in the cropped area and together with a much wider
^ of fertilizer, imply productior increases which could be significant\.
b\. The implementation of tho infrastructure component, although delayed by technical
and tendering difficulties, was one of the project's best achievements\. The Project
headquarters, as well as stores and farm service centers were satisfactorily built; the feeder
roads target was surpassed, and the water supply target was achieved with some changes to
allow for hydrological constraints; fewer but larger dams were constructed, while the number
of wells sunk by the project was over 400% of the SAR target\. The project also established
water purification plants and reticulation schemes, a responsibility which the State Water
Corporation failed to fulfill\.
Results
9\. The project attempted to find more realistic technologies than those proposed by the
SAR, in order to improve smallholder farming systems\. The introduction of soya, rice and
groundnuts, although modest in scale, is a clear result of these efforts\. However, while the
project's role in the process was important, incremental production of the traditional crops
(maize, sorghum and yams) must be attributed primarily to area expansion and iincreased use
of cheap fertilizers, rather than to project initiatives\. Inconsistencies in existing data do not
allow the estimation of farmers' financial gains and economic returns\. Financial gains have
come from expanded use of fertilizer, which has been widely accepted because of the
substantial subsidy and of the overall favorable farmgate input/output ratios, especially after
1986\.
10\. The project, however, represented a major development effort in the state\. It
mobilized important resources in the construction of rural feeder roads and farm service
centers that facilitated farm-to-market transport and the distribution of fertilizer\. While
physical indicators of infrastructural development show better performance against original
targets, no institutional arrangement was created to guarantee maintenance of the facilities\.
Manpower development through the assumption of managerial responsibility by the Nigerians
after the departure of the expatriate staff, is an achievement of the project\. The accumulated
experience in the project management unit became instrumental in the state-wide expansion of
activities under the follow-on project MSADP III\. TI' h organizational structure and the
experience acquired in the delivery of extension and other services should prove of great
value in the continuation of extension and other support activities to the benefit of
smallholders\.
11\. The project's impact on the environment was mixed\. Macro and sector policies and
improved access with project constructed roads encouraged farmers to clear more lan(, thus
exerting a negative impact on the environment\. Conversely, expanded use of fertilizer
produced more vigorous crops and increased yields, and therefore contributed to reducing
further land clearing and soil erosion\.
Sustainabil ity
12\. Unfavorable macro-economic conditions prevented adoption of technological packages
to increase and sustain yields and production\. No arrangements were made for local
vi -
gover\.iments to take over maintenance of rural infrastructure with the poor finances of the
State and Local Governments being a major factor\. Any gains achieved at the completion of
the project would have been lost without the infusion of resources of the follow-on MSADP
III which provides funds anid training for strengthening the institutlonal capacity of the LGs to
maintain the project buildirgs, roads and waterworks\. On the positive side, most of the
project tractors were transferred to private operators who are now providing an effective and
sustainable service\.
Findings and Lessons Learned
13\. The main lessons derived from the ONADEP experience, some of which are common
to other ADPs, include:
(i) Political commitment, translated into regular funding and institutional
support, is a key element for successful project planning and
implementation\.
(ii) In projects where success is dependent on farmers adopting new
technologies on a large-scale, such technologies should not only be
adequately tested in the field before introduction but also be
appropriate to the financial circumstances of farmers\.
(iii) Dilution of the authority of the Project Manager by setting up a dual
command should be avoided, and involvement of Ministry officials
shouid be only in policy and program coordination and not in project
management\.
(iv) The project should focus first on the development of an
implementation capacity, and full-scale delivery of agricultural
services should wait until the capacity has been developed and
relevant technological packages are available\.
(v) Contracting a specialized firm or institution to manage the project
from start-up through completion, by means of a concentrated
presence initially and through punctuated interventions subsequently,
could be a better alternative to the hiring of individual experts\.
PROJECT COMPLETION REPORT
NIGERIA
OVO NORTH AGRICULTURAL DEVELOPMENT PROJECT
(LOAN 1838-UNI)
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE
1\. ProJect Identitv
Project Name : Oyo North Agricultural Development Project (ONADEP)
Loan No\. 1838-UNI
RVP Unit : Atrica
Country : Nigeria
Sector Agriculture
Sub-Sector : Area Development
2\. Background
2\.1 During the oil boom of the 1970s, agricultural production in Nigeria stagnated,
growing at about 1% per year while population annual growth was around 3%\. From 1970
to 1982, the contribution of the agricultural sector to GDP fell dramatically from 45% to 27%
and its share of exports dropped from 70% to 2% over the same period\. The p^rf-rmance of
agriculture was, at that time, undermined by disincentives created by the oil boom, which
included: (i) appreciation of the exchange rate; (ii) the enhanced profitability of investments in
non-tradeable commodities and services; (iii) rising wages in the public sector and the urban
private sector that drained labor from rural areas; and (iv) a corresponding downgrading of
the profitability of agriculture\.
2\.2 It was expected that, as a consequence of rising oil prices, Nigeria would be in a
comfortable financial position in the 1980s, while the post-oil era would depend on the
success with which imports were replaced by domestic production and non-oil exports were
stimulated\. Consequently, according to the Fourth National Development Plan, then under
preparation, the next five years would be used to consolidate the nation's economic base and
to lay the foundations for balanced long-term economic development\. In the agriculture
sector the Government's main objective was to improve the domestic price stability of basic
food crops and to ensure food self-sufficiency\. Longer-term objectives included the creation
of a prosperous and efficient agriculture, through inter alia, the development of irrigation and
the expansion of an ADP-based strategy to improve rural infrastructure, promote modern
farming techniques and improve inputs supplies to smallholders\.
2\.3 This agricultural strategy was built on the experience of ongoing enclave ADPs,
whose apparent success encouraged the Nigerian authorities and the Bank to extend similar
packages of extension, inputs and feeder roads to other states\. However, it was not
accompanied, at the time, by policies conducive to agricultural growth which came into effect
only in 1986 when the Nigerian Government launched its Structural Adjustment Program
(SAP)\. These included principally the introduction of a market-determined exchange rate and
- 2 -
the elimination of the commodity marketing boards\. A ban on food imports also improved
the incentive environment for domestic farming though it did not promote long-term
efficiency\.
3\. Project Objectives and Description
(i) Project Objectives
3\.1 The primary objectives of the project, in accord with Federal and State government
policies, were to increase agricultural production and farm incomes and to improve the
welfare and standard of living of the farming population\. The project, designed to be
implemented over five years, was to benefit some 55,000 smallholding families on 43,000
hectares\.
(ii) Components
3\.2 The project had the following main components:
(a) Farm and Crop Development
Increasing production of the major crops grown by smallholders on about
33,000 ha through the introduction of a Basic Service Package (BSP)
involving improved farming practices, strengthened extension services and
provision of improved seeds, fertilizer, crop protection measures, higher
planting densities, and improved manual and mechanized techniques, including
some expansion of both state and private tractor services; introducing a more
Advance Service Package (ASP) based on techniques of weed control
including minimum tillage, which due to the advanced nature of the techniques
required would be limatpd in area to no more than 12,500 ha; establishing a
farm management service with planning capability to assist group and
individual farrners in their operations; and establishing a reliable and efficient
farm input supply system\.
(b) Civil Works
Constructing 550 km of new feeder roads, improving 250 km of existing
roads and maintaining these roads for three years u\.itil they are handed over to
Local Government; constructing 40 small to medium dams; constructing 300
wells; and constructing project offices, workshops, farm buildings, stores,
staff houses, and 17 Farm Service Centers\.
(c) Institutional Support
Providing for a management structure with the required technical and
administrative staff, logistical support and funds to implement the project,
evaluate project progress, and provioc guidelines for future projects; providing
integrated in-service and formal training schemes for all levels of staff
together with such courses for farmers as may be necessary; assisting the
Agricultural Inputs Services Uniit (AISU) to operate an efficient input supply
- 3 -
and distribution system; and providing funds for the international recruitment
of the Project Manager and 11 other key staff\.
(d) Consultancy (36 man-months)
Assisting MANR in start-up operations for the project; providing technical
consultancy on agricultural management and introduction of new techniques;
carrying out a hydrogeological survey of the project area; assisting in
establishing management training; and evaluating a potential tax base for
Local Government Areas (LGAs)\.
4\. Project Desig-n and OrI!anization
4\.1 The project's strategy was centered on the zisseinination of "basic service packages"
(BSP) involving improved farming practices and inputs (particularly plarnting densities, seeds
and fertilizer), and "advanced service packages" (ASP), consisting of minimum and zero
tillage techniques\. These innovations were to be promoted by an organized system of
agricultural services and rural infrastructure was to be constructed\. To overcome initial
managerial constraints of existing state institutions, staffing included an important inout of
expatriate experts\. The optimistic design, in terms of implementation targets and timetable as
well as agricultural production and technology adoption forecasts, reflected the optimism of
the oil-boom\. Appraisal of the project, however, failed to properly assess the macro-
economic situation facing the agriculture sector and the impact of an over-valued currency on
domestic food production\.
4\.2 The SAR assumptions relied on a weak database\. The number of farmers and farm
sizes were based on rough estimates\. Technical parameters could have been more rigorously
reviewed\. Pre-project yields may have been underestimated, while the project's advanced
package yields were clearly overestimated with adoption rates, consequently being unrealistic\.
Due to a lack of reliable hydrological data, most of the planned water supply dams were not
built\. Counterpart funding, that was soon to be affected by the oil price crash, as well as
bureaucratic processes, was not realistically assessed\.
4\.3 The project created the Oyo North Project Management Unit (ONPMU) to overcome
institutional constraints arising from operating a complex and wide range of activities
involving several state Ministries\. As a semi-autonomous management unit under the state's
Ministry of Agriculture (MANR), ONPMU was answerable to the Budgeting and Policy
Coordinating Committee (BPCC)\. Originally ONPMU was responsible for overall policy,
budget and program planning for all Bank-assisted projects in Oyo State; later, however, with
Bank agreement it limited its coverage exclusively to ONADEP\. The Oyo North Project
Technical Coordination Committee (ONPTCC), which included representatives of LGCs,
other relevant agencies and selected farmers, was to serve as ONPMU's coordinating unit at
the local level\. Its role included the siting of roads and farm service centers, coordinating
project and non-project activiti-s, and reviewing project related disputes\. To compensate for
the lack of experienced local staff, the project provided for the hiring of an internationally
recruited Project Manager (PM) and other key staff\.
4\.4 The proposed organizational structure was basically sound and adequately adjusted to
the existing institutional situation\. Difficulties, particularly in the initial years, resulted not so
- 4 -
much from the proposed structure as from insufficient Government commitment,
:implementation omissions and deviations from the original scheme\. For political reasons,
Oyo State Government (OSG) appointed, together with an expatriate manager, an indigenous
project co-manager not foreseen in the SAR, generating conf\.icts within the project
management\. Strained personal relations between the expatriate PM and MANR Permanent
Secretary, as well as delayed BPCC meetings are further examples of organizational
difficulties\. They lasted for over two years but were resolved after the replacement of the
MANR Permanent Secretary with the State Commissioner of Agricu!ture as chairman of
PBCC, the replacement of the expatriate PM by a national, and the abolition of the post of
project co-manager\.
5\. Project Implementation
5\.1 Project start-up was delayed substantially and subsequent execution was slow\. An
objective monitoring and evaluation system was not developed\. The agricultural program was
unrealistically planned without regard to the macro-economic situation\. Actual project
implementation took over 8 yearb instead of the 5 years estimated at appraisal\.
5\.2 Implementation started after a 19 months delay, due to slow fulfillment of loan
effectiveness conditions\. and because of late recruitment of key staff\. OSG was initially
reluctant to hire an internationally-recruited manager as required by the Loan Agreement\.
Subsequentlv, the international recruitment process was delayed by a FGN personnel policy
change which significantly reduced expatriate staff salaries, forcing OSG to start the
recruitment operation anew\. Ti,, project execution was also delayed by procrastinated BPCC
meetings which approved the project work program and budget\. The initial implementation
period was mrarked by constant decision conflicts caused by the project's dual manage,-\.ent\.
A Nigerian co-manager, not foreseen in the SAR, had been appointed as a compromise, in
addition to an expatriate manager\. There was also a high management turn-over (4 managers
in 12 months)\. These weakened the Borrower's loan absorption capacity during the three
initial implementation years\. Project implementation progress improved after 1985, with the
establishment of a stable management headed by a competent Nigerian PM\.
5\.3 Frequent delays in the payment of the Borrower's quarterly contributions led to slow
down of project implementation\. However, in spite of the government's financial constraints,
the project's requirements, adjusted to the existing recruitment and technical constraints, were
invariably honored by the Borrower, and the project had enough funds at the end of each
,'isco! year\. Therefore, counterpart funding was not such a major implementation issue as in
other ADPs at that time\. Project cost was $57\.8 million against an SAR estimate of $69\.4
million reflecting lower use of inputs and Naira devaluation\. The Bank funding ratio was as
anticipated but FGN contributions were about 30% higher to offset lower state funding\.
5\.4 There were other factors which served to restrict activities and slow down the
disbursement pace in the later years of the project\. MANR seconded staff were difficult to
transfer to remote locations in the project area\. New recruits were difficult to obtain as more
attractive job opportunities were available to qualified applicants in Ibadan (the State capital)
and elsewhere; besides, the suspension of construction of water supply infrastructure,
following the first extension of the loan closing date further increased the hardship factor\. In
fact, one of the conditions for loan extension was that infrastructure works would be
suspended until arrangements were made (i) with the State Water Corporation (OSWC) to
- 5 -
implement water purification and reticulation schemes related to the project-constructed dams;
and (ii) with the Local Government Areas (LGA), to maintain project feeder roads\. Due to
financial and institutional difficulties, OSWC and LGAs failed to fulfill their responsibilities,
and the project eventually had to undertake both complementary water-supply works and road
maintenance activities\. Losses incurred on inputs sales, seeds distribution and tractor hire,
reduced the funding available for project activities\. Fertilizer sales generated constant losses
to the project, as transport and distribution costs were not reimbursed by FGN, while project
seeds and tractor services were sold at highly subsidized prices\.
5\.5 The inappropriate technological packages were amongst the most limiting factors in
achieving the aims of the ONADEP agricultural program\. The inapplicability at the farm
level of the SAR-proposed advanced technological packages (ASP), and the difficulty in
setting up acceptable high yielding improved packages (BSP) was a major set-back to the
project's concept and strategy\. The ASP packages were to be centered on zero and minimum
tillage (MT) techniques, desirable for soil conservation and cropping sustainability reasons, as
well as, theoretically, for promoting higher yields at lower production costs\. MT was
proposed by the Bank for ONADEP and other ADPs based on successful experiences in the
USA and on encouraging preliminary IITA on-station research results in Ibadan, Oyo State,
Nigeria\. However, adaptive trials conducted in the project area demonstrated the
inapplicability of MT farming under the local agroecological conditions\. This confirmed
similar results in other tropical countries, where it was shown that with insufficient crop
residues, associated with the rapid oxidization of organic matter, it was not possible to build
up the mulch layer necessary to form the desired soil conditions and to control weeds\. This
resulted in expensive chemical weed control, while yields were significantly lower than in
conventional tillage\. The impact of fertilizer and improved seeds (the BSP main elements) on
yields was satisfactory, particularly in the period subsequent to 1986 1/ when farmers
received better prices and had the incentive to improve their cultural practices\.
5\.6 The project adaptive research (AR) activities contributed less than expected to supply
the extension service with sound technological messages acceptable to farmers\. Most of the
efforts in the initial years were directed at sole cropping, even though multiple cropping was
the predominant farming system in the area\. The trials concentrated on maize and helped to
determine the varieties to be promoted in the project area\. Experiments were mainly carried
out on research stations\. Only 15% were on-farm trials\. The project's yams and cassava
seeds were not attractive to the farmers who preferred to use their own supply of locally
adapted varieties\. Relevant findings on impact of micronutrients (Zn and S) on yields could
not be incorporated in the formulation of fertilizer compounds distributed to the farmers\.
Fertilizer formulations and procurement were in the hands of FGN\. One of the most
important achievements of AR was the ASP minimum and zero tillage (MT) validation trials
mentioned in the previous paragraph\.
5\.7 The extension staff, although qualified and motivated, was in numbers generally
below 50% of SAR projections\. The final EA/farmer ratio averaged 1:1070 instead of the
foreseen 1:600 target but this ratio is consistent with the now generally accepted national ratio
of 1:1000\. The T&V system seems to have been successfully introduced by the project and
I/ FGN introduced macro-cconomic rcfonns under a Structural Adjustment Program (SAP) the main thrust of which
was the liberali7ation of priccs and markets and a morc realistic foreign exchangc valuc for the Naira\.
-6 -
its effectiveness increased after 1986 when farmers started receiving better prices for their
crops\. Extension promoted technical messages included the use of fertilizer, the general
acceptability of which was facilitated by its highly subsidized price (about 70% subsidy) and
by the project established inputs distribution network; the intensification of planting densities,
which was adopted to a lesser extent; and the introduction of improved seeds\.
5\.8 The project's production of improved maize seeds was substantial (over 450 tons in
1988, of which 300 t were produced by outgrowers), although only one third of the output
became available to the project for distribution to other farmers\. Other seed production was
less impressive, and insignificant for yams and cassava\. The farmers already possessed high-
yielding local cassava seeds, and the project's yams mini-sets which took a long time to
mature were not attractive to the farmers\. As foreseen at appraisal, seed production started
on the State-owned farms under project management and was progressively transferred to
outgrowers who were producing over 50% of the output at project completion\. There was,
however, no proper quality control, and overall impact of improved seeds on farmers' yields
is questionable\.
5\.9 Most of the project's production increase is attributable to the extensive use of
fertilizer which the project helped to promote through its extension service and its Farm
Service Centers\. It is quite possible that some amount of fertilizer leaked across the country's
borders given the heavy subsidy on fertilizer in Nigeria\. Average fertilizer distribution was
about 65% of SAR targets\. Distribution was hampered by frequently late and irregular supply
provided by FGN\. The project made some, efforts to gradually transfer the inputs distribution
activities to local cooperatives on a cash-and-carry basis, with promising results\.
5\.10 Recruitment difficulties resulted in the Farm Management (FM) and Land Use
Planning (LP) units being started late\. These units made no practical contribution to
improving the existing farming practices\. Manning was below SAR expectations\. The FM
unit made some surveys that overlapped with M&E activities, denoting lack of coordination,
and was ineffective in assisting farmers with better management methods while LP failed to
introduce the soil conservation practices proposed at appraisal\. Farm mechanization was
enhanced, in spite of the poor efficiency of the Tractor Hire Unit (THU)\. Private tractor
services were encouraged and most tractors were sold off to private operators\.
5\.11 The project's Monitoring and Evaluation Unit (M&E) was not able to generate
adequate baseline data to overcome the lack of reliable agro-socioeconomic database
encountered at project preparation/appraisal\. The unit also failed to implement an objective
yields and production monitoring system in the project area\. An unclear differentiation
between beneficiaries and overall producers together with yields and production data
inconsistencies, rendered project implementation statistics unreliable for quantitative analysis
and evaluation\. These, however, do point to a significant expansion in the cropped area
which, taken together with extended use of fertilizer, implies important production increases\.
5\.12 OSG, which had agreed to provide the Oyo State Investments and Credit Corporation
(OYSICC) with funds for short-term credit to farmers, estimated at N 1\.5 million per year,
failed to do so\. The project instituted some credit support through the local cooperatives, and
commercial banks also provided some loan funds to farmers\. It is worth mentioning that
farmer credit handled through their cooperatives achieved near 100% recovery in the final
years of the project\. The project's training program took off only two years after project
-7-
start-up, due to lack of personnel\. At completion the project's Manpower Development and
Training Division (MDT)'s total staff was only 44% of the SAR predicted 32, implying a
lower than expected concern with this important activity\. However, in-house as well as off-
site and overseas courses were provided for project technical and administrative staff, with
variable results\. Training was also organized for farmers and LG staff\.
5\.13 The implementation of the infrastructure component, although delayed by technical
and tendering difficulties, was one of the project's best achievements\. Project headquarters,
as well as stores and farm service centers although reduced in number, were satisfactorily
built; the feeder roads target was surpassed, and the water supply target was achieved with
some changes to allow for hydrological constraints: 12 medium/large dams, instead of the
expected 40 small dams, were constructed, while the number of wells sunk by the project,
were over 400% of the SAR target (1,391 instead of 300)\. However, only 48 instead of the
planned 300 hand pumps were installed, reportedly due to lack of reliable pumps on the
market\. The project also established a number of water purification plants and reticulation
schemes, as the State Water Corporation failed to do so owing to financial constraints\. Road
and water supply infrastructure maintenance was also carried out by the project, as the LGs
were then not ready to undertake these operations\. The project infrastructure is now being
maintained by the follow-up state-wide ADP, which is also providing funds for the training of
staff and for strengthening the institutional capacity of the LGs to ensure future mainenance of
the infrastructure\.
6\. Project Results
6\.1 The project attempted to find more realistic technologies than those proposed by the
SAR, in order to improve smallholder farming systems\. The introduction of soya (30 ha),
rice (85 ha) and groundnut (3,000 ha), although on a modest scale, is a clear result of these
efforts\. However, while the project's role in the overall development of the area was
important, incremental production of the traditional crops such as maize (40%), sorghum
(15%) and yams (40%), must be attributed primarily to expanded crop land and increased use
of fertilizer encouraged by price subsidies\. A supervision mission in 1986 estimated the
financial return to fertilizer use for sorghum, which has a low yield response to fertilizer, to
be 2:1 including incremental labor costs, and for fertilizer alone, 4:1\.
6\.2 While physical indicators of infrastructural development show some resemblance to
the original targets, institutional arrangements could not be created during the project period
to guarantee maintenance\. Because of inconsistencies in project management records,
available data do not allow a reliable estimation either of financial gains of the farmers or of
the economic returns to the overall investment\. Farm income increased in response to
expanded use of fertilizer (because of the substantial subsidy) and to overall post-1986
favorable farmgate input/output price ratio, created by the SAP macroeconomic reforms\.
6\.3 In spite of its weaknesses, however, the project had the effect of initiating rural
development efforts in the state\. It mobilized important resources for the construction of rural
feeder roads and farm service centers that facilitated farm-to-market transport and the
distribution of fertilizer\. Manpower development through the assumption of managerial
responsibility by the Nigerians after the departure of the expatriate staff, was a significant
achievement of the project\. The accumulated experience of the project management unit
provided an institutional foundation for the state-wide expansion of activities under the follow-
- 8 -
on MSADP III project\. The organization structure and the experience acquired in the
delivery of extension and other services is bound to prove of value in the continuation of such
essential activities ,o the benefit of smallholders\. Recent Bank missions have reported that the
overall performance of the management of the state-wide ADPs is very satisfactory, though
adequate and regular release of counterpart funds has yet to be achieved\.
7\. Project Impact on the Environment
7\.1 The project's impact on the environment seems to have l,en mixed, and must be
considered in the context of macroeconomic policies affecting the rural sector in general\.
Favorable farm price ratios, better access to the markets through project feeder roads and
subsidized tractor hire services encouraged expanded land clearing, with a probable negative
impact on the environment\. Conversely, the extended use of fertilizers stimulated by their
low prices, produced more vigorous crops and increased yields, reducing the need for further
land clearing\. However, sustainable farming in the long run will require improved soil/water
conservation practices and better fertilizer formulations to address location and crop-specific
nutrient requirements, both of which the project failed to achieve\. Fertilizer formulations
continues to be determined by FGN which also undertakes the procurement and distribution to
states\. The lack of private sector activity in this area will remain a major drawback in
promoting sustainable agricultural growth\.
8\. Proiect Sustainahility
8\.1 The project was unable to produce technological packages to increase and sustain
yields and production, and State-Local Government take-over of maintenance of rural
infrastructure was not set in place\. However, with the infusion of additional resources under
MSADP III, the existing infrastructure is being maintained and staff training and institutional
development is being financed to ensure future maintenance on a sustainable basis\. Witl
regard to tractor services, the project was able to transfer most of its tractors to private
operators who are now providing an effective and sustainable service\.
9\. Bank Performance
9\.1 At appraisal, the Bank did not anticipate the Borrower's eventual financial difficulties
and, confident in Nigeria's projected prosperity, did not properly assess the Borrower's
counterpart funding risks\. Project design was ambitious and agricultural technology
assumptions were not based on rigorous tests\. Risks were thus not properly assessed and
adequately addressed\. Bank supervision missions detected early the main political, technical
and financial issues and problems\. Improved criteria on cost-effectiveness and other
conditions were eventually introduced as a basis for agreement of reallocations of
disbursement categories and loan closing extensions, but their enforcement was not carried out
with sufficient rigor\. It should be noted that the Bank did not provide the full complement of
mission staff with the required technical skills mix for its missions\. The supervision missions
in the initial difficult years consisted usually of one or two persons for very short visits\.
-9-
10\. Borrower's Performance
10\.1 Borrower's performance was characterized by an extremely delayed fulfillment of loan
effectiveness conditions; slow procurement proceedings and staff recruitment; and in the
initial years, frequent interventions by OSG in project management\. OSG's commmitment to
the project initially was questionable but improved in later years\. It should be mentioned here
that in spite of the irregular release of funds, particularly by the OSG, overall the project's
funding constraints were less severe than that of other ADPs in Nigeria\. In the later years of
the project, ONADEP performed quite well benefitting from a competent and a homogenous
team of Nigerian senior staff\.
11\. Project Relationship
11\.1 Loan closing, extensions and reallocations of disbursement categories, as well as
necessary organizational and management modifications, were conducted by the Borrower and
the Bank with a common understanding of project problems and constraints, and a shared
objective of accelerating implementation\. The change of government in Nigeria during the
project period did not affect the relationship; if anything, it improved the official climate in
which the project was operating\. Both the project management and the Bank were given
adequate support by the new Commissioner for Agriculture (who was appointed to chair the
BPCC) in resolving the project's problems\.
12\. Consulting Services
12\.1 Total loan disbursement for consultancy services reached US$3\.0 million, or o5% of
the expected US$4\.6 million at appraisal\. Although data on actual utilization by man-months
were not provided, a lower unit cost than foreseen in the SAR could be the case with some
local consultants having been employed in the later phase of the project\. The proposed
hydrological studies were not carried out due to insufficiency of funds allocated in the Loan\.
Instead, the project management decided to collect and analyse available Landsat imagery and
other hydrological information relating to the project area, with the assistance of specialised
foreign consultants\.
13\. Project Documentation and Data
13\.1 Project covenants as well as the project organization and management scheme were
clearly stipulated for effective implementation\. The project and its SAR were, however,
based on deficient baseline data which diminished the usefulness of the document for project
implementation\.
14\. Findings and Lessons Learned
14\.1 Some lessons that can be derived from the ONADEP experience, of relevance to both
the Borrower and the Bank, are summarized below:
(a) Political commitment, translated into regular funding and institutional support,
is a key element for successful project planning and implementation\.
- 10-
(b) Dilution of the authority of the Project Manager by setting up a dual
command should be avoided\. Involvement of Ministry officials should only
be at the policy and program coordination level and not in project
management\.
(c) Technological packages should not only be based on farm tested technologies
but should also be appropriate to the financial circumstances of farmers\.
(d) The project should focus first on the development of an implementation
capacity, and full-scale delivery of agricultural services should wait until the
capacity has been developed and relevant technological packages are available\.
(e) Project monitoring and evaluation shouid be carried out systematically\.
(f) Contracting a specialized institution with recognized experience in project
management, to manage the project from start-up through completion, by
means of a concentrated presence initially and through punctuated
interventions subsequently, could be a better alternative to the hiring of
individual experts\.
- 11 -
PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE
(No comments were received)
- 13 -
PART III: STATISTICAL INFORMATION
1\. Related Bank Loans
YEARS OF
LOAN TITLE/PURPOSE APPROVAL STATUS
1099-UNI Funtua ADP 1975 Completed
1099-UNI Gusau ADP 1975 Completed
1164-UNI Gombe ADP 1975 Completed
1667-UNI Bida ADP 1979 Completed
1668-UNI llorin ADP 1979 Completed
2988-UNI Multi-State ADP 11 1989 Ongoing
2035-UNI Multi-State ADP III 1989 Ongoing
2\. Project Timetahle
Date Planned Date Actual
Identification October 14-23, 1975
Preparation April 1976
Feasibility Study Jan\.-May 1977
Appraisal Mission October 1978
Staff Appraisal Report Feb\. 27, 1979 March 1980
Loan Negotiations April 1979 November 7, 1979
Board Approval April 11, 1980 April 29, 1980
Loan Effectiveness November 25, 1980 March 31, 1982
Completion March 31, 1985 1/ September 30, 1988
Loan Closing September 30, 1985 1/ September 30, 1988
J/ Loan closing date was extended three times, for a total of 36 months\.
- 14 -
3\. Disbursement
Cumulative Estimated and Acttal Disbursemnets
(USS Nillion)
FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89
Appraisal
Estimate 8\.3 14\.5 18\.5 24\.0 28\.0
Actual 0\.0 0\.2 1\.4 F\.4 8\.8 11\.2 14\.1 15\.8 23\.6 24\.1
Actual as 2
of estimate X0 1 7X 22X 31X 40X 502 562 85X 86X
Date of Final Disbursement: July 27, 1989
4\. Follow-on Project
Name: Multi-State Agricultural Development III
Credit No\.: Cr\. 2035-UNI
Credit Amount: US$100\.9 Million
Project Costs: US$159\.4 Million
Dates of Board Approval: June 13, 1989
Date of Effectiveness: February 2, 1990
Comments on Follow-on Project: The project will facilitate increased agricultural
production in the Southern States of Ondo, Oyo, Lagos and Rivers, while enabling the
rural population to increase income levels and fostering conservation of natural
resources\. It will also strengthen the National Seed Service, create new and maintain
existing infrastructure, and assist in rural credit delivery\. FACU and APMEU will
receive support to provide technical assistance to the four states\.
- 1J -
5\. Project Implemjentation Indicators
Appraisal
I\. Farm and Crop Development Estimate Actual
- Improved Farming Practices 34,500 *49,600
(Basic Service Package)
Area Developmcnt (ha)
- Advanced service package 11,500 0
Area development (ha) _ __ \.
-Project beneficiaries
BSP small farmer families (No\.) 51,500 *13,700
ASP medium farmer families (No\.) 3,500 0
- Average farm size: (BSP) (ha) 2\.0 3\.6
(AS?) (ha) 3 to 6 -
- Extension agent/farmer ratio: From 1:2000
To 1:600 1:1070
- Crop yiclds (t/ha)
BSP From To
Maize 0\.8 1\.5 *1\.7
Sorghum 0\.5 0\.8 * 1\.2
Yams 7\.0 11\.0 *15\.8
Cassava 7\.0 9\.0 *11\.5
Cowpeas 0\.1 0\.5 *0\.4
ASP
Maize 0\.8 2\.4 0
Cassava 7\.0 14\.0 0
Cowpeas 0\.1 0\.5 0
- Research
Applied Research 3 3
Stations (No\.) - 32
On-station trials 6
On-farm trials
- Seed Multiplication
(tons per year at full development)
Maize - 454
Rice - 5\.3
Cowpeas - 10\.6
Soya - 8\.8
Groundnut - 2\.7
*Data may not be accurate\.
(cont'd) _______________________ SA1, Actual
- Inputs Distribution (t)
(incremental, year 5)
Fertilizer 9,025 5,200
Insecticides 220 2\.0
Herbicides 31\.5 1\.2
Improved seeds _ 264\.6
2\. Civil Works
- Roads (km)
Feeder road construction 550 650
Road Improvement 250 264
Road maintenance 4,800 697
- Water Supply
Dams construction (No\.) 40 12
Dam capacity ('000 m3) 2,600 5,700
Wells 300 1,391
Pumps 300 48
- Staff House Construction
Scnior staff 16 6
Intcrmediate 28 7
Junior staff 16 5
Guest house 1 3
Recreation center 4 1
Farm service centers 17 10
Stores 0 12
Headquarters (including offices, 1 I
workshops, stores, etc\.)
Maizc cribs 0 69
3\. Staff Development and Training
- Project Staff Training
Trainees (No\.) 4,390
Courses (No\.)
Local 350
Overseas 45
Farmer training (No\.) 3,151
- 17 -
(cont'd) SAPA Actual
4\. Consultant Services (Man-Months)
- Basic agricultural management 10 n\.a\.
- Management training 6 n\.a\.
- Hydrogeological studics 14 0
- Start-up operations 3 n\.a\.
- Tax/fee policy study 3 n\.a\.
n\.a\. = not available
6\. Proiect Cost and Financina
A\. Total Proiect Cost
(US$ Million)
SAR Estimated Costs Actual Costs
Local FE Total Local FE Total
Project Cost 41\.4 28\.0 69\.4 33\.7 124\.1 57\.8
(Percent) T (60%) (40%) (100%) (58%) (42%) (100 %)
1$\. Proiect Financina
(USS Million)
Perccnt Estimated Actual
Federal Government 17\.4 (25%) 18\.8 (32%)
State Government 24\.0 (35%) 14\.9 (26%)
World Bank 28\.0 (40%) 24\.1 (42%)
Total 69\.4 (100%) 57\.8 (100%)
C\. ALLOCATION OF LOAN PROCEEDS
(US$ Million)
Estimated % First Second Actual %
Amount Revised Revised Amount
Amount Amount
Category (Jan\. 1983) (June 1985)
1\. Buildings, civil works,
Furnishing 6\.2 (22%) 6\.2 6\.5 3\.4 (14%)
2\. Vehicles, equipment,
tractors, spares 9\.9 (35%) 9\.9 10\.8 14\.0 (59%)
3\. Inicrnational consultant
and staff salaries, 4\.6 (17%) 4\.6 3\.2 3\.0 (12%)
overseas training
4\. Fertilizer, chemicals,
other farm inputs 4\.5 (16%) 1\.2 1\.6 1\.7 (7%)
S\. Local staff salaries - 0%) 4\.S 4\.6 1\.8 (8%)
6\. Unallocated 2\.8 (10%) 1\.5 1\.3 0\.0
Total 28\.0 (100%) 28\.0 28\.0 24\.1 (100%)
Note: Figures may not add up because of rounding\.
7\. Project Results
No consistent data are available on direct project impact\.
8\. Status of Covenants
I\.A\. I P\.A\. Covenant Status
1\. Loan Effectiveness
6\.01(b) (b)2\.02 FGN and OSG to open bank
account for ONPMU with initial Satisfactory
deposit of N 1\.0 million each\.
6\.01(a) Borrower to ratify/authorize Serious delay in achieving
Subsidiary Loan Agreement effectiveness conditions
6\.01(c) 2\.01(b,c,e) OSG to create BPCCC, ONPMU,
ONTCC
6\.01(d) OSG to appoint Project Manager
and Chief Accountant
6\.01(e) 2\.03 OSG to contract consulting firm to
recruit and administer expatriate
staff
2\. fituding l
3\.01 2\.01 OSG to implement project in Inadequate, initially\.
conformity with administrative, Improvcd in thc last 3 years\.
financial and agricultural
practices; and provide
prompt/adequate
funds/resources required by the
l_____________ project\. l
3\.02 2\.02(iii) FGN and OSG to pay quarterly Ultimately, but not critical\.
contributions 3 months in FGN compensated for OSG
advance, based on approved shortfalls\.
ONPMU's annual budgets\.
2\.02(ii) OSO to authorize/guarantee Never needed in practice due
overdraft facilities for 6 months to project liquidity\.
l___________ expenditures of ONPMU\.
2\.02\.a(v) OSG to maintain pre-project Inadequate\. Pre-project staff
level of financing in project was paid with project funds\.
area, in addition to project
l__________ requirement\.
2\.02\.a(iv) OSG to provide OYSICC with Inadequate\. Instead the
funds to meet cash credit project financed some farmers
requirements of project assisted with project funds\.
farmers\.
3\.03 2\.10(a) OSG to advance ONPMU by Inadequate, but not critical\.
Sept\. 30 each year estimated
subventions to cover next
year's cost of farm
inputs/services subsidies\.
2\.10(b) Project to provide inputs and Inadequate, minimum cost
tractor services to farmers at recovery\.
full cost recovery prices\.
3\. Procuremnetit
2\.03 Fertilizer procurement for the Project discontinued its direct
project to be separate, fertilizer procurmment
indentifiable, govemed by programme at an early stage\.
IBRD's approved procurements
procedur\.s; to be monitored by
FMG and the Bank to avoid
slippage; within 2 years after
the loan signature FGN and
IBRD to review procurement
procedures\.
2\.05(b) ONPM to request promptly
project's fertilizer requirements
to Central Fertilizer Unit of
FMAWR, and to procure
directly other farm inputs\.
2\.06(a) OSG to insure project imported Satisfactory
goods against acquisition and
l__________ transportation hazards\.
- 20 -
4\. Staffing
2\.03 a OSG to employ a consulting Delayed selection and hiring
firFn acceptable to the Bank to
recruit expatriate staff\.
2\.04 OS to employ experienced Satisfactory
and qualified consultants in
accordance with principles and
procedurs satisfactory to the
_ _____ Bank\.
2\.03 b i OSG to promptly recruit Recruitment delayed and short
ONPMU ataff, and ensure of project's requests
MANR seconding of ONPMU
requested staff\.
2\.11 b OSG to transfer to ONPMU all Satisfactory
agricultural extension work in
the project area\.
S\. Project Review/Monitoring and Evaluation
3\.04 2\.13 FMA, OSG and IBRD to Complied with one year delay
review project irnplementation
and recommend follow-up (by
31 December 1984)\.
2\.07 6 OSG to cause implementation Project recording inadequate\.
of adequate project progress, Accounting statements
monitoring system; accounting satisfactory\.
system identifying loan
financed goods and services;
and auditing scheme acceptable
to the Bank\.
9\. Use of Bank Resources
STAFF INPUTS
(staff weeks)
FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FYC9 FY90 FY91 TOTAL
PreappraLsal 3\.9 3\.9
Appraisal 54\.4 0\.4 54\.8
Negotiations 5\.3 5\.3
Supervisiou 0\.2 2\.8 7\.7 10\.5 7\.6 8\.2 14\.8 13\.7 7\.2 2\.7 0\.5 0\.6 76\.5
Subtotal 58\.3 5\.9 2\.8 7\.7 10\.5 7\.6 8\.2 14\.8 13\.7 7\.2 2\.7 0\.50 0\.6 140\.5
B\. Mission Data
Date Number of Man-days Specializations' Perfornance Trcnd Types of
(mo/year) persons in field represented a/ Rating b/ c/ Problems d/
Identification 10/77 1 2 a
Preappraisal e/
Appraisal 10/78 4 116 a\.b,c,d \.
Supcrvision 1 6/80 I 2 c 1 2
Supervision 2 10/80 I I c 1 2
Supcrvision 3 3/81 1 1 c I I
Supervision4 2/82 2 6 a\.b 3 1 P
Supervision 5 10/82 2 8 c 2 2 P
Supervision6 4/83 3 15 a,b,c 2 I P
Supervision 7 9/83 1 4 c 2 2 M,O
Supervision 8 3/84 I 4 c 2 2 M
Supervision 9 10/84 1 4 c 2 2 F
Supervision 10 3/85 3 6 a,b 2
Supervision II 8/85 I 5 c 2 fl \.
Supervision 12 2/86 5 35 a,b,c 2 f/
Supervision 13 10/86 2 10 a,f 2 f/
Supcrvision 14 5/87 3 9 a\.b 2 f/
Supervision 15 11/87 F a1 7 2 a 2 f/
a/a = Agnculturist b = nancil Alyst;c=AgriculturAl Economist; d = laguneer;
c = Credit Specialist; f = Operations Assistant\.
b/il = problem free or minor problems; 2 = moderate problcms; 3 = major problems\.
c/I = imnproving; 2 = stationary; 3 = deteriorating\.
d/F = 1:inancial; M = Manugement; T = Tcchnical; P = Political; 0 = Othcr\.
e/ Preparation/preappraisaldone by goverrunent-paid consultants\.
fU New Form 590 in use that shows rating for overull status\.
- 23 - Attachment 1\.
The World Bank 168 sHtt, N\.W\. (203 477\.12S
4TUONAIONAL BANK FOR R9EONTftUCTION AND DEVELOMENT Wuonte"\. D\.C\. 204*8 Cabl Ad** s INUI?AFAD
INTONATNAL DEVELOPMENT ASSOCIATION U\.SA\. C\.b Addm: IDEVAS
February 14, 1991
Mr\. J\.0\. Abe
Program Manager
Oyo State ADP
Saki, Oyo
Nigeria
Dear Mr\. Abe,
I am enclosing three copies\.of a drafti Project Completion Report
Parts I and III, for Oyo North ADP Ln 1838-UNI prepared by the FAO/World Bank
Cooperative Program of the Investment Centre\. The Bank's new procedures for
preparation of Project Completion Reports require a three part report of whioh
Part II is to be prepared by the Borrower, and parts I and III by the Bank\. I
am attaching a copy of & draft letter to the Government describLng the new
procedures and sets out the Borrower's responsibilities\.
I am accordingly asking that you have the Part 1I of the Oyo
Agriculture Develolpment Project prepared and submitted to us at the earlLoet\.
The PCR for Oyo ADP is alresdy long overdue and whatever you can do to
expedite the preparation of this Part II will be greately appreciated\.
Kindeat Regarde,
Le jCaVbell
Sr\. Rural Engineer
ecl Mr\. 0\. Edache, Director, FDARD, Abuja
Prof\. mijindadi, Head, FACU, Ibadan
Dr\. T\. Turtiainen, Group Leader, Agriculture, RMN
Director General, Federal Ministry of Finance and Economic Development
cc: J\. Barrientos
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NOVEMBER 19 | APPROVAL |
P007331 | R E S T R I C T E D
Re\.port No\. P\.-102
This document was prepared for internal use in the Bank\. In making
it available to others, the Bank assumes no responsibility to them for
the accuracy or completeness of the information contained herein\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATIONS
of the
PRESIDENT
to the
EXECUTIVE DIRECTORS
on a
PROPOSED LOAN
to
THE REPUBLIC OF HONDURAS
for
HIGHWAY MAINTENANCE
December 14, 1955
Department of Operations
Western Hemisphere
INTITINATIO!JAL BALNK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOIME11DATIONS OF iiE PRBSIDENT TO THE
EXECUTIVE DIRECTCRS ON A ?ROPOSUD LOAN TO THE
REPUBLIC OF HONDURAS FoR HIGITHWAY MAINTENAINCE
1\. I submit the following report and recommendations on a proposed
loan of lp4,200,000 to the Republic of Honduras to finance the foreign
exchange costs of a highway maintenaice project\.
PART I - IIISTORICAL
2\. Background information on the Bankts relations with Honduras is
contained in memorandum R-923 which was distributed to you on October 21,
1955\. After consultations on the constitutional issue discussed in R-923
a letter was addressed to tiie Chief of State of Honduras informing him
that the Bank would be ready to consider a loan application from his
Government to finance the foreign exchange costs of a highway maintenance
program\. The Government's application was received shortly thereafter\.
3\. His Excellencr Carlos Izaguirre, Honduran Ambassador in WVashington,
and Messrs\. Pedro Pineda IIadrid, Secretary of Economy and Finance, Roberto
Ramirez, President of the Central Bank, Jorge Bueso, Secretary of the
National Economic Council and Jorge hartinez, Under Secretary of the
Ministry of Fomento were appointed by the Goveri-nent to negotiate the
loan\. Negotiations were initiated in 1\.ashington on Noverber 23, 1955,
and have been successfullyr completed\.
PART II - DESCRIPTION OF THE ?ROPOSI'D LOAN
Bo rro-vier
4\. The Borrower -would be the Republic of Honduras, a2 member of the
Bank\.
Amount
5\. The loan would be in the anolnt of $4\.2 million or its equivalent
in other currencies\.
Purpose
6\. The proceeds of the loan would be u3ed to finance the foreign
exchange costs of establishing, equipping and training a highway maintenance
organization in HIonduras and of preparing preliminary studies for the re-
habilitation and completion of the so-called lIorthern and ;'\.estern Roads\.
Amortization
7\. The loan would be for a period of 9 years with a two year period
of grace\. This term would be in line with other loans made by the Bank
for highway maintenance\. The two year period of grace corresponds to the
period required to set up the maintenance organization and get the
maintenance operation well under way\.
Interest, Commission and Commitment Charges
8\. The loan would bear interest at the rate of 4h per annum,
including the statutory commission of 1%\. The coriomitmrent charge would
be 3/4 of 1%\. per annum, and would accrue from the effective date of the
loan agreement or a date 60 days after signature, whichever is the earlier\.
Legal Instruments and Legal Authority
9\. There is attached a draft loan agreement between the Bank and the
Republic of Honduras (No\. 1)\. It has no unusual features\. Hoiever, the
following points may be of interest\. The Borrower is to employ the
services of consulting engineers mutually satisfactory to the Borrower
and the Ban1c on terms and conditions mutually satisfactory to the
Borrower and the Bank (Section 5\.01(b))\. Withdrawals from the loan
account in respect of goods are to be made only after the con-sultants
have recommended the use of such goods in the project (Section 2\.02)\.
10\. Before the Loan Agreement becomes effective, it is to be
approved by the Consejo de L-stado of the Republic of Honduras\. It is
expected that this approval will be obta-ned Twjithout undue delay\.
PEAT III - A?FRAISAL OF TiE PROPOSED LOAN
11\. A technical report on the project (T\.O\. 99-a) (No\. 2) and a
report on the "Economy of Honduras" (-;\.H\. 41-D) (No\. 3) are attached\.
Justification of the Project
12\. The lack of an adequate transportation system has been one
of the main obstacles to the development of the Honduran economy\. The
topography of the country and poor tranLsportation facilities have left
a large number of isolatea communities with little or no communication
with eacn other and with thle outside iorld\.
13\. A Highway Department was established in the Ministry of Develop-
ment about five years ago to assist in remnedying this situation\. However,
limited teclhnical and administra-tive personnel, the lack of all adequate
organization and limited amuounts of equipment have impaired its efficient
operation\. Before any major construction can be undertaken, it will be
necessary to develop an organization capable of carryin, out the work\.
Also it will be necessery to establish an efficient maintenance organiza-
tion to preserve past and future investrments in the highway system\. First
priority, t7nerefore, has rightly been assigned by the Honduran Govern-
rnent to the reorganization of the Highway Department and to the setting
up of an adequate maintenance organization\.
-3-
14\. These purposes would be served by the loan now proposed\. As
improved maintenance of roads results in mnore reliable and cheaper trans-
portation, production would be given an important stimulus and government
revenues wiould increase\. These benefits would greatly exceed the addition-
a! costs of maintaining the roads to proper standards\.
15\. This initial operation would take about two years to complete
and the equipment, materials and supplies would be limited to those that
could be properly tiandled by the tighway Department during this reorganiza-
tion period\. Further investment in capital equipment would be necessary at
a later date to meet the mainternance needs of the entire country\. These
investments should only be made after an organization has been established
which is capalDle of handling the larger job\.
16\. The principal arteries of Honduras' highway network are: the
so-called Inter-Oceanic Road co\.nsisting of a southern branch from Tegucigalpa
to the Pacific which has now been rebuilt; a northern branch (the "Northern
Road") from Tegucigalpa to Puerto Cortes on the Caribbean Coast (370 Kms\.)
which has to be reconstructed; and the "Western Road" from San Pedro Sula to
the Salvadorean border (270 Kms\.), giving access to Honduras' populous
western provinces, which has to be reconstructed and extended\. As
mentioned in paragraph 6 above, part of the funds under the proposed loan
would be used to finance preliminary engineering surveys of the Northern
and WTestern Roads\.
Execution of the Project
17\. The project will be carried out by the Ministry of Development
through its Highway Department with the assistance of consulting engineers
who are now being engaged\. The Government has funds available to meet the
local currency costs up to June 30, 1956 and has undertaken to provide such
funds as may be necessary in subsequent years to insure the prompt execution
of the project\.
Economic Situation
18\. The report on "The Economy of Honduras" describes the country's
economic position and prospects\. This report, completed in September 1955,
concluded that the inflationary development induced by the floods and other
adversities of the year 1954 had been checked and that former production
and export levels were likely to be exceeded Tit+hin two years\. Since the
report was written, the Honduran economy has shown contilued signs of
recovery and stability\. The new corn crop comiing on the market in September,
combined with the termination of monetary expansion, brought prices down
sharply, and in October the cost of living index stood only 3% higher than
a year earlier\. During the period January - October 1955 the -overnment ran
a surplus of 2 million lempiras compared with a deficit of 3 million lempiras
in the sane perioc of 1954\. Some deficit is likely to be incurred for the
fiscal year ending June 1956, but the Government intends to prevent it from
reaching proportions which could upset the present economic stability\.
- 4 -
19\. Recent events thus strengthen the mnain conclusion of the
economic reoort, thlFt althougih H-onduras over the longer run is likely to
find it difficult to achieve rapid economic growth, good fiscal and
rnonetary policy and good development planning could enable a much higlier
level of investment to be undertaren without placing undue strains upon
the economy and the balance of payme\.nts\. These conditions, together -wlith
ample foreign reserves and the absence of foreign debt, offer considerable
scope for the absorption of external loans\.
20\. The events that brought Dr\. Lozano into power in December of last
year are dealt with in R-923\. The administration has continued to enjoy
popular support and poli-tical conditions have remainied stable during tne
last ten months\. The next few moniths wiill be marked by increasing
political activity and pressures will no doubt be e-xerted to accelerate
investrrients in new developpment projects\. HTowever, there is no indication
that the political situation is like'y to give rise to serious disturbances
or to lead to any substartial deoarture from i,ondurasl traditional economic
and financial conservatism\.
Prospects of Fulfillment of Obligations
21\. The prooosed project has been soundly prepared and the Government's
readiness to avail itself of the services of engineerin- consultants
experienced in maintenance work gives good reason to believe that it will
be carried out successfully\. The Government should be able to provide the
required local currency funds wJithout undue strain on 1tls budgetary
resources\.
22\. The service of this loan wiould not impose a heavy burden on
Honduras' budget, and the country's economic position and prospects give
assurance that the foreign exchange required to service the proposed loan
can be made available without undue strain to the economy\.
PERT IV - CO,-IiIANCL 11TH 1`J!TICIZS OF \.AGRL'H7ENT
23\. The report of the Cormittee provided for in Article III, Section
4 (iii) of the Articles of Agreerment of the Bank is attached (No\. 4)\.
24\. I an satisfied that the proposed loan w\.7ould comply with the
reouirernents of the Articles of A11greement of the Bank\.
P`i-2T V - RECOIUfLIED-'TIONS
25\. I recommend that the Bank make a loan of 4\.2 million, or the
equivalent in other currencies, to the Republic of 1onduras on such terms
and conditions as are specified in the attached draft Loan Agreement, and
that the Executive Directors adopt a Resolution to that effect in the
form of the attached (NLo\. 5)\.
Eugene R\. Black
Wxashington, D\.C\.
December !4, 1955\. | APPROVAL |
P170185 |  The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
Project Information Document (PID)
Concept Stage | Date Prepared/Updated: 11-Apr-2019 | Report No: PIDC26452
Apr 11, 2019 Page 1 of 10
The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Serbia P170185 Serbia Accelerating
Innovation and Growth
Entrepreneurship
(P170185)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
EUROPE AND CENTRAL ASIA Oct 10, 2019 Oct 01, 2019 Finance,
Competitiveness and
Innovation
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Republic of Serbia Ministry of Education,
Science and Technological
Development
Proposed Development Objective(s)
The projectâs development objective is to increase innovation activities of individuals and businesses, through: 1)
increased excellence and relevance of scientific pursuits, and 2) improved access of early stage companies to funds,
markets, and knowledge necessary for their growth\.
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 48\.00
Total Financing 48\.00
of which IBRD/IDA 48\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Bank for Reconstruction and Development (IBRD) 48\.00
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The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
Environmental and Social Risk Classification Concept Review Decision
Low Track II-The review did authorize the preparation to
continue
Other Decision (as needed)
B\. Introduction and Context
Country Context
1\. Following years of recession and slow growth, the Serbian economy expanded by 1\.8 percent on average
over the 2015-2017 period, with a stronger growth of 4\.2 percent in 2018, prompting the need to rethink
the overall growth model for the country\. Growth started to recover on the back of higher investment
(average annual growth of 8\.3 percent annually) and strong growth of exports (up 10\.7 percent annually
in real terms)\. Consumption recovered as well, but at a slower pace (at 1 percent annually in real terms)\.
Growth of the industry and services sectors contributed most to the overall growth of the economy
between 2015 and 2017, while agriculture had a negative contribution to growth in 2015 and 2017\. In
2018, growth was broad-based with all three major sectors rising faster than in the previous year\. Despite
the generally positive economic outlook in the near-term, challenges remain\. Growth will depend on the
pace of ongoing structural reforms and progress toward EU accession\.
2\. Labor market performance has improved\. Labor force participation rate increased to 54 percent in 2017,
the highest level since 2005\. The average 2017 employment rate reached 46\.7 percent, led by services,
which created 33,000 new jobs (a quarter of them in wholesale and retail trade), spurred by higher
consumption and fast-growing services exports\. By the fourth quarter of 2018, the employment rate was
47\.4%, while the unemployment rate was 12\.9%\.
3\. Strong revenue performance and spending controls led to the budget surplus in 2017 and 2018\. In 2017,
Serbia had a surplus of 1\.2 percent of GDP, underpinned by strong revenue collection, spending controls
(including savings from interest payments), and, to some extent, due to under-execution of public
investment\. In 2018, the budget recorded a surplus of 0\.6 percent of GDP despite some relaxation in
spending controls\. As a result of prudent fiscal policies, public debt continued to decline and stood at 54\.3
percent of GDP at the end of December 2018, with further, albeit slower, declines expected during 2019\.
4\. As Serbia positions itself for EU membership, increasing competitiveness in the European market remains
a priority\. A structural shift in Serbiaâs growth model, driven by increased productivity and higher-value
added production, is needed to boost competitiveness and spur economic growth\. This can be achieved,
in part, through enterprise innovation facilitated by increased and more efficient investments in applied
research and development (R&D), and, support for research commercialization, enterprise formation, and
growth of innovative small and medium enterprises (SMEs)\.
Apr 11, 2019 Page 3 of 10
The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
Sectoral and Institutional Context
5\. Innovation-related indicators show that Serbia has 1) low levels of R&D expenditures, 2) a science financing
model that results in inefficiencies, due to its largely non-competitive structure, and 3) low levels of public-
private research collaboration, which results in low levels of commercialization of research results that
could support economic growth\. Around 0\.9 percent GDP is invested in R&D, well below EU average of
2\.03 percent, with most of the funding coming from the Government\.
6\. To address these challenges, the Government, supported by the World Bank and the European Union
Delegation to the Republic of Serbia (EUD), has committed and initiated significant reforms of the
countryâs research and innovation system\. The reforms aim to reduce challenges recognized in the
Research for Innovation Strategy 2016-2020\. The Strategy also envisions a series of measures to boost
innovative entrepreneurship in the country, including through improved access to financing and
knowledge necessary for enterprise founding and growth\.
7\. A key element of the reforms is changing the model of financing R&D activities in the country, including a
transition to competitive financing through the introduction of a new funding instrument, the Science
Fund of Serbia\. To this end, a new Law on the Science Fund was adopted by Parliament in December 2018\.
8\. To create a more effective R&D financing model, a new institutional framework is being developed\. Based
on good international practice, Serbia has established an independent and professional government
institution to implement research funding (comparable to Science Funds, Councils or Agencies in EU
member states)\. The Science Fund (SF) addresses the above-mentioned barriers, as a vehicle for 1)
increasing R&D funding as a percentage of GDP, 2) improving the effectiveness of public spending on R&D,
by fostering competitive funding that sparks excellence, and 3) improving business-academia collaboration
and, in turn, greater commercialization rates of research\. In addition, a model for providing institutional
base funding will be introduced (this does not exist today)\.
9\. The new Science Fund will conduct competitive calls for proposals for R&D grants and rely on independent
and expert decision-making based on international peer-review\. By supporting high quality basic and
applied research, the Science Fund will leverage public R&D spending to forge business-academia linkages
and encourage private sector R&D investments\. Furthermore, a recent set of tax breaks for R&D
investment could further boost private R&D spending\. Based on regular monitoring, reporting and
evaluation, the Science Fund instruments will be adjusted over time to improve their effectiveness and
impact\.
10\. Financing for innovative businesses in Serbia is low\. According to USAIDâs Serbia Business Survey 2017, 84
percent of SMEs are financed from their own sources\. Micro-financing and venture capital investment are
impeded by an unclear legal framework, high costs of deal discovery for investors, and persisting
information asymmetries between entrepreneurs and investors about opportunities for investment\.
Meanwhile, bank loans are accompanied by high requirements for collateral or long history of operations,
neither of which young, innovative firms typically possess\. Lack of affordable financing, coupled with
Apr 11, 2019 Page 4 of 10
The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
limited training and mentoring, is preventing Serbian companies to modernize their production and invest
in innovation and commercialization, with young firms and SMEs particularly affected by this\.
11\. A 2016 Word Bank analysis shows that the Serbian entrepreneurship ecosystem is growing, but the
momentum could be lost due to:
ï Constrained supply of IT, managerial, and creative skills,
ï Lack of âsmart money,â? i\.e\., training and mentoring coupled with financing for innovative early -
stage and growth-stage enterprises, with a gap especially prominent in the $500,000-$1,500,000
range,
ï Low rates of commercialization of inventions and innovations, and
ï Challenging business environment for entrepreneurs\.
12\. While the Government is working on an extensive reforms agenda addressing the first, third and fourth
constraints, the second deficiency is proving particularly challenging to resolve\. In 2017, the total
venture capital investment in Central and Eastern Europe (CEE) was approximately â¬108 million\. In
Serbia, the amount was only â¬1\.5 million, compared to â¬5\.6 million in Romania, â¬4\.8 mil lion in Bulgaria,
â¬3\.6 million in the Czech Republic, â¬2\.6 million in Croatia, and â¬28\.6 million in Hungary\. Thus, adjusting
crudely for GDP, we can estimate that, with a better business environment, the average venture capital
investment in Serbia could increase by several fold, â¬7-20 million annually\.
13\. In fact, Serbia received the lowest amount of venture financing in the CEE region (with the exception of
Ukraine, which received â¬1\.47 million, and other countries where negligible amounts were recorded --
Bosnia & Herzegovina, Macedonia, Moldova, and Montenegro), despite positive upward trends in
business formation generally, and in innovative technology sectors specifically\. Further, studies show
that citizens of Serbia have positive entrepreneurial attitudes compared to many other European
countries, with nearly half of the population reporting confidence in their ability to start a business,
based on availability of expertise, funds, perseverance, and commitment\.
14\. Interest rates are significantly higher in Serbia than in benchmark countries, (4\.25 percent in December
2018 compared to 1\.4 percent in Czech Republic and Hungary), making debt financing prohibitively
expensive to many early-stage entrepreneurs\.
15\. The restricted supply of early-stage funding, coupled with limited mentoring and training, are frequently
cited as a barrier to innovation and entrepreneurship in most ecosystems around the world; in Serbia,
interview data indicates a particularly acute situation:
ï Consultations with existing and aspiring angel investors conducted by the World Bank in 2016, 2017,
2018 and 2019 indicated that the incentives equity and early-stage investments are inadequate,
which negatively impacts the supply of private early stage equity capital\. This finding was
corroborated by interview and survey responses by entrepreneurs, very few of whom reported
receiving equity investments\.
Apr 11, 2019 Page 5 of 10
The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
ï A small number of experienced angel investor groups is active in the country (approximately five in
total, with low levels of activity) and very few startups have received equity investments so far\.
Over half of the interviewed entrepreneurs indicated finding investors, especially those with valuable expertise,
as a challenge\.
16\. Finally, a World Bank Public Expenditure Review (PER) on SME Support (forthcoming, 2019) shows that
there is a lack of selectivity in which SMEs are provided with support\. The strong global evidence is that
most SMEs do not grow\. As Serbian programs rarely have selection processes that are based on any
qualitative assessment of applicant firmsâ growth orientation and strategy (the Innovation Fund {IF}
programs being a welcome exception), most funding is probably going to firms that are unlikely to grow
and contribute substantially to the governmentâs policy objectives\. This means that at best, resources are
being provided to SMEs that will not grow (although the resources may make them more efficient), and at
worst, that the funding is not even impacting their productivity\. In fact, these resources may be keeping
SMEs in business that would otherwise leave the marketplace\. Although such businesses could be sources
of employment - thus justifying support - they may not ever grow\. Meanwhile, growth-oriented businesses
may not be receiving the support that would most benefit Serbia in terms of income growth and job
creation\.
Relationship to CPF
17\. The proposed operation is fully congruent with the World Bank Groupâs Country Partnership
Framework (CPF) for FY16-201 focus areas (Focus area 1: âEconomic Governance and the Role of the
Stateâ? and Focus Area 2: âPrivate Sector Growth and Economic Inclusionâ?)\. Both focus areas are aligned
with the Governmentâs Strategy of Scientific and Technological Development of the Republic of Serbia for
the period 2016â2020: Research for Innovation\. The operation specifically responds to the second focus
areas Objective 2a: Contribute to priority business climate improvements\. An important intervention
under this objective is continued support to building Serbiaâs innovation and technology transfer system
based on promising results yielded from pilot efforts in these two areas and a need to scale them up to
create a broader impact on employment generation\. All three components of the Project directly and
jointly contribute to the Research for Innovation Strategy, with activities of the Science Fund supporting
primarily public research and development, activities of the Innovation Fund supporting primarily
innovation in enterprises, and the diaspora-related activities supporting innovation generated by both
public and private entities\.
18\. The proposed operation also has links to the first CPF focus area, Economic Governance and the Role of
the State, specifically Objective 1b: More Effective Public Administration & Service Delivery\. Establishing
and maintaining the appropriate governance of the Science Fund and improving governance across the
public research organizations would allow these entities to improve the efficiency and effectiveness of
1
Report No\. 94687-YF discussed by the Board of Executive Directors in June 2015
Apr 11, 2019 Page 6 of 10
The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
the scientific research system, more effectively stimulate the supply of excellence and relevance of
scientific research, as well as link these institutions and the private sector more effectively\.
19\. The proposed operation is a continuation of decade-long and successful cooperation between Serbia, the
EU and the World Bank on research, innovation and entrepreneurship\. From 2011 to 2016, the World
Bank administered the first EU IPA financed Serbia Innovation Project (SIP) aiming to assist the
Government of Serbia (GoS) in building the institutional capacity to stimulate innovative activities in the
enterprise sector by supporting the operationalization and institutional capacity building of the Serbia
Innovation Fund, piloting financial instruments for technological development and innovation by
enterprises, and encouraging selected public RDIs to engage in applied R&D and technology transfer and
assisting Government in formulating the RDI sector reform policy\.
C\. Proposed Development Objective(s)
20\. The projectâs development objective is to increase innovation activities of individuals and businesses,
through: 1) increased excellence and relevance of scientific pursuits, and 2) improved access of early
stage companies to funds, markets, and knowledge necessary for their growth\.
Key Results (From PCN)
(i) Number of international scientific publications in top 10 percent of recognized journals
(ii) Number of innovative companies financed
(iii) Number of innovative products or services introduced to the market
(iv) Number of joint R&D projects between public research organizations and private sector
D\. Concept Description
The Project will consist of the following three components and subcomponents:
Component 1: Research Sector Reforms
21\. Subcomponent 1\.1: Serbia Science Fund (indicative amount US$30 million) â This subcomponent will
finance the Science Fund programs/activities that include competitive basic science grants, applied
research grants with incentives for promoting linkages between the private sector and R&D community,
incentives for enhancing collaboration with EU (e\.g\., Horizon 2020, Horizon Europe) and other
international programs, and Smart Specialization Strategy (S3) and infrastructure support for public
research institutions\. Activities under this component will support the operationalization of the Science
Fund, including governance, organizational structure, monitoring and evaluation (M&E) and other key
components\. In addition, the project will support designing the Science Fund programs based on
international best practices\. Finally, an activity focused on skills of researchers to access international
financing and collaboration opportunities will be designed and integrated into the programs of the
Apr 11, 2019 Page 7 of 10
The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
Science Fund\. A Serbian diaspora program, described in Component 3, will be closely connected to the
Science Fund\.
22\. Subcomponent 1\.2: RDI Reforms Pilot (indicative amount US$6 million) â This subcomponent supports
piloting of RDIs sector reforms by providing appropriate incentives for undertaking institutional reforms
by RDIs on a voluntary (opt-in) basis\. This will include providing financing to a select group of RDIs (2-4)
who are willing and able to reform\. The pilot will build upon the successful experience under the Serbia
Innovation Project where several RDIs initiated important institutional reforms, consistent with the
Research for Innovation Strategy 2016-2020\.
Component 2: Enterprise Acceleration
23\. The acceleration program will build on existing enterprise support instruments offered by the Serbian
Innovation Fund, and will focus on supporting a) early (idea) stage, and b) growth (scale-up) stage
companies with innovative offerings, through a combination of mentoring and tailored capacity
building, in addition to investment co-funding alongside private sector investors\. The goal of the
program will rapidly advance development and valuation of each company\. If, throughout the program,
market feedback on a companyâs product, service, or strategy, does not indicate high growth potential,
mentors will work with company founders to âpivot,â? or adjust strategy to market demand, if that is
possible\. Companies participating in the growth-stage stream will have already demonstrated âmarket
traction,â? i\.e\. evidence of demand, through the presence of users or paying customers, and thus, it is
expected that most of these companies will be able to advance their growth during and after the
program\. Companies participating in the early stage stream may also need to reexamine the basic idea
and assumptions behind the company, and, in some cases, decide not to pursue the idea further;
however, founders will still benefit from an intensive course that will cover project and people
management practices, strategy development and execution, market entry, partnership development,
fundraising, and so on\. The focus will be on businesses based on digital technologies, and specialized
sub-groups could be considered (e\.g\. ICT, food and agriculture, health, biotech, education and gaming,
etc\.)\. Companies would receive non-dilutive investment (through a co-financing facility) and extensive
technical assistance in negotiating with individual investors or early stage funds, which may be equity-
based\.
Component 3: Serbian Diaspora Facility
24\. The proposed project will support the launch of a Serbian Diaspora Facility (SDF) to leverage the strengths
and desire of its diaspora community and benefit from this immense potential in the development of
innovation and entrepreneurship in Serbia\. The SDF will aim to attract promising scientists, researchers
and entrepreneurs from the Serbian diaspora community to transfer knowledge and skills back to Serbia
through a variety of activities, such as a diaspora network, collaboration in scientific and applied research
and technology transfer, participation in innovative entrepreneurship mentoring and angel investments,
and participation in policy making, governance, program management, advisory bodies and networking\.
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Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
Legal Operational Policies Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
Summary of Screening of Environmental and Social Risks and Impacts
The project is classified as Low Risk taking in account the low impact and predictable nature of the interventions, the
experience of the implementing agency in managing similar activities and the application of new and energy efficient
technologies\. Project will not directly fund civil works and no adverse impacts such as involuntary land acquisition,
impacts on biodiversity, on cultural heritage, are expected\. The environmental risks will be small in magnitude, of
temporary nature and directly associated with the listed investments and TA activities under the Project\. In few cases,
the mitigation activities will need to be designed to deal with disposal of wastewater, communal, industrial or hazardous
waste\. Any activities that may have moderate and significant environmental and social impacts, including involuntary
impacts on land or assets, and unpredictable risks for the environment, community health and safety will be deemed
ineligible through the Projectâs Environmental and Social Screening Procedure to be used for defining grant eligibility\.
Any minor impacts will be identified by the ESMF and addressed in activity-specific ESMPs\. The ESMF will ensure that the
grant selection procedures are fair, transparent and merit based\.
Note To view the Environmental and Social Risks and Impacts, please refer to the Concept Stage ESRS Document\.
CONTACT POINT
World Bank
Maja Andjelkovic
Senior Private Sector Specialist
Borrower/Client/Recipient
Republic of Serbia
Implementing Agencies
Apr 11, 2019 Page 9 of 10
The World Bank
Serbia Accelerating Innovation and Growth Entrepreneurship (P170185)
Ministry of Education, Science and Technological Development
Mladen Sarcevic
Minister
kabinet@mpn\.gov\.rs
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Maja Andjelkovic
Approved By
APPROVALTBL
Practice Manager/Manager:
Country Director:
Apr 11, 2019 Page 10 of 10 | APPROVAL |
P006505 | Document of
The World Bank
FOR OFFICIAL USE ONLY
MICROFICHE COPY
Report No\. 10402-BR Type: (SAR) Report No\. 10402-BR
CO7 ROLO, L/ X31820 / I6 005/ LAlAG
STAFF APPRAISAL REPORT
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
JUNE 1, 1992
Environment and Agriculture Operations Division
Country Department I
Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EOUIVALENTS
(as of September 30, 1991) 1/
Currency Unit = Cruzeiro (Cr$)
Cr$ 550 - US$1\.00
Cr$ 1\.00 = US$0\.0018
Cr$ 1 Million = US$1,818\.2
WEIGHTS AND MEASURES
The metric system is used throughout the report\.
FISCAL YEAR
State of Mato Grosso = January 1 to December 31
Project = January 1 to June 30
1/ Appraisal mission
FOR OMCIL USE ONLY
BRAZ ;
MATQ GROSSO AURA RESOURCE MANAGEMENT PROJECT
GLOSSARY OF ACRONYMS
BEMAT Banco do Estado de Mato Grosso
(State Bank of Mato Grosso)
CASEMAT Companhia de Armazens e Silos do Estado de Mato Grosso
(State Warehouse and Silo Company)
CEAP Conselho Estadual para Administragao de Projetos
(State Council for Project Administration)
CEMAT Centrais ElJtricas Matogrossonses, S\.A\.
(Electricity Company of Mato Grosso)
CODEMAT Companhia de Desenvolvimento do Estado de Mato Grosso
(State Development Company)
CONDEMA Conselhos Municipais de Defesa do Meio Ambiente
(Municipal Councils for Environmental Defense)
CONSRMA Conselho Estadual do Meio Ambiente
(State Council for the Environment)
DTN Departamento do Tesouro Nacional
(National Treasury Department, Federal Ministry of Economy,
Finance and Planning)
EMPAER Empresa Matogrossense de Pesquisa, AssistOncia e Extensao
Rural, S\.A\.
(State Research, Technical Assistance and Extension
Enterprise)
FEMA Fundaglo Estadual do Meio Ambiente
(State Foundation for the Environment)
FUNAI FundagAo Nacional do fndio
(National Indian Foundation)
FUNDAGRO Fundo de Desenvolvimento Agroambiental de Mato Grosso
(Mato Grosso State Agricultural Credit Fund)
IBAMA Instituto Brasileiro do MLio Ambiente e dos Recursos Naturais
Renov&veis
(Brazilian Institute for the Environment and Renewable Natural
Resources)
This document has a restricted distribution and may be used by recipients only in the performnance
of their offcial duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
ICB Licitaqao Internacional
(International Competitive Bidding)
ICM Imposto Sobre a Circulaq&o de Mercadorias
(Federal Sales Tax)
INCRA Instituto Nacional de Colonizagao e Reforma Agr&ria
(National Institute for Colonization and Agrarian Reform)
INDEA Instituto de Defesa Agropecuaria
(Institute for Agricultural Protection)
INTERMAT Inatituto de Terras de Mato Grosso
(Mato Grosso State Land Institute)
LCB Licitagao Local
(Local Competitive Bidding)
NGO Organismos N&o-Governamentais
(Non-Governmental Organizations)
PCU Gergncia Estadual do Projeto
(Project Coordination Unit)
PMF-MT Policia Militar Florestal de Mato Grosso
(Forest Military Police of Mato Grosso)
POLONOROESTE Programa Integrado de Desenvolvimento do Noroeste do Brasil
(Integrated Development Program for Northwest Brazil)
SANEMAT Companhia de Saneamento do Estado de Mato Grosso
(Mato Groeso State Sanitation and Sewerage Company)
SDR-PR Secretaria de Desenvolvimento Regional da Presid&ncia da
Repdblica
(Secretariat of Regional Development of the Borrower's
Presidency)
SEAAF Secretaria de Estado de Agricultura e Assuntos Fundi&rios
(Mato Grosso State Secretariat for Agriculture and Land
Affairs)
SEC-MT Secretaria de Estado da Educagao e Cultura
(Mato Grosso State Secretariat for Education and Culture)
SEMA-NT Secretaria de Estado do Meio Ambiente
(Mato Grosso State Secretariat for the Environment)
SEPLAN-MT Secretaria de Estado de Planejamento e Coordenaglo Geral
(Mato Grosso State Secretariat for Planning and Coordination)
SES-MT Secretaria de Estado da Saade
(Mato Grosso State Secretariat for Health)
SUDAM Superintend&ncia de Desenvolvimentc da Amaz8nia
(Superi\.ntendency for the Development of the Amazon)
UCAC Unidade Central de Apoio A ComercializagAo
(Central Marketing Support Unit)
UAPT Unidade de Armazenagem, Processamento e Transformaglo
(Storage, Processing and Transformation Unit)
BRAZIL
MATO GR3SSQ NATURAL RESQURCE MANAGEMENT PROJECT
TABLE OF CONTENTS
I\. LOAN AND PROJECT SUMMARY \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 1
II\. AGRICULTURAL AND ENVIRONMENTAL POLICIES AND THE STATE OF MATO GROSSO 4
Agricultural and Environmental Policies \. \. \. \. \. \. \. \. \. 4
Experience with PLut Bank Lending \. \. \. \. \. \. \. \. \. \. \. \. \. 5
The State of Mato Groseo \. 6
Main Lessons Learned Under POLONOROESTE \. \. \. '\. \. 8\. \. \. a
III\. THE PROJECT \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 10
origin and Rationale for Bank Involvement \. \. \. \. \. \. \. \. \. \. \. O
Project Objectives \. \. 10
Environmental Policy Framework \. \. \. \. \. \. \. \. \. 11
Agro-scological Zoning \.-ecolo\.gic\. \.i g\. 12
Project Components \. \. \. \. \. \. 13
A\. Agro-Ecological Zonin7j and Land Tenure Regularization \. \. \. 14
B\. Management, Protectir Ar Monitoring of Natural Resources 15
C\. Agro-Forestry Develc\. ,t \. \. \. \. \. 20
D\. Socio-Economic Infras-ructure and Services \. \. \. \. \. \. \. \. 23
E\. Project Administration \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 25
Project Organizati\.on \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 26
Project Costs \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 30
Financing Pia n \. \. \. \. \. \. \. \. \. \. \. 30
Procurement \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 31
Disbursements and Special Account \.'\. \. \. \. \. \. \. \. 33
Project Benefits and Justification \. \. \. \. \. \. \. \. \. 34
Project Risks \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.# \. \. \. \. \. \. \. 36
IV\. SUMMARY OF AGREEMENTS REACHED AND RECOMMENDATIONS \. \. \. \. \. \. \. \. \. 38
The project is based on the findings of a Bank appraisal mission which visited
Brazil from September 30 to October 22, 1991\. The mission was comprised of
Messrs\. L\. Coirolo (Mission Leader, Agricultural Economist), F\. Vita
(Economist, FAO/CP), J\. Wiles (Envirormentalist, Consultant, World Wildlife
Fund), P\. Hazelton (Environmentalist), J\. Dubois and J\. Rezende (Forestry,
Consultants), J\. Landers (Tropical Agriculture Specialist, Consultant), J\.
McKenna (Resource Planning Specialist), J\. Barbosa (Land Titling Specialist),
E\. Velez-Koppel (Credit and Marketing Specialist, Consultant), D\. Gross
(Anthropologist), V\. Bellia (Transport Specialist, Consultant), A\. Rabelo
(Environmental Protection Specialist, Consultant), M\. Tabanez (Environmental
Protection Enforcement Specialist, Consultant), M\. de Lima (Small-scale Mining
Specialist, Consultant), and V\. Baladao (Consultant, from the Center for
Indigenous Work - KOO)\.
- i$ -
bBLE OF CONTENTS (Continiued)
Page 2
ANXES:
Annex 1: Matrix of Main Environumental Policy Issues, Measures and Actions 42
Annex 2: Environmental Management, Protection and Monitoring \. \. \. \. \. 44
Anngx 3s Agro-Forestry Development \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 50
annex 4: Support to Indigenous Communities \. \. \. \. \. \. \. \. \. \. \. \. 53
Annex S: Farm Models and Financial Analysis \. \. \. \. \. \. \. \. \. \. \. \. \. 59
Annex 6: Table 6\.1: Estimated Project Costs by Component \. \. \. \. \. 64
Table 6\.2: Annual Phasing of Copts by Components,
including Contingencies \. \. \. \. \. \. \. \. \. \. \. \. \. \. 65
Table 6\.3: Summary Accounts by Project Component \. \. \. \. \. \. \. 66
Table 6\.4: Estimated Schedule of Bank Disbursements \. \. \. \. \. 67
Table 6\.5: Financing Plan \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 68
Table 6\.6: Allocation of Loan Proceeds \. \. \. \. \. \. \. \. \. \. \. 69
Table 6\.7: Implementation Schedule: Estimated Annual
Contractual and Other Payments \. \. \. \. \. \. \. \. \. \. 70
Annex 7: Table 7\.1: List of Executing and Collaborating Agencies \. \. \. 71
Table 7\.2: Project Physical Targets and Schedule of
Implementation \. \. \. \. \. \. \. \. \. \. \. \. 72
Chart: Project Organizational Chart \. \. \. \. \. \. \. \. \. \. \. 76
Annex 8: Project Supervision \. \. \. \. \. \. \. \. \. \. \. \. \. 77
Annex 9: Documents Available in Project File \. \. \. \. \. \. \. \. \. \. \. 80
Map; IBRD 23466
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
I\. LOAN AND PROJECT SUMMARY
4orrower: Federative Republic of Brazil
Executina Agenciest Secretariat of Regional Development of the Presidency of the
Republic/Secretariat of Planning of Mato Grosso
Amount: US$205\.0 million equivalent
Terms: Repayable over 15 years, including 5 years of grace at the
Bank's standard variable interest rate\.
8eneficiaries: Some 16,000 Amerindians living in 38 existing reserves would
benefit directly from the demarcation and protection activities
of the project\. About 18,000 smallholders would have their
land titles regularized\. Some 32,100 low-income smallholder
families in those areas which are suitable for sustainable
agriculture would benefit directly from the strengthening of
agricultural services\. Much of the rural community in those
same areas would also benefit from improved socio-economic
infrastructure and services\. Finally, current and future
generations of Mato Grosso would benefit from actions taken to
arrest deforestation and degradation of the state's natural
resource base and to conserve biogenetic diversity\.
L_\.,ect Objectives The principal objective of the proposed project would
and Description: be to implement an improved approach to natural resource
management, conservation and development in the State of Mato
Grosso\. The project would assist the Government to:
(a) support changes in policies, regulations, and investment
programs, to provide a coherent incentives framework for the
sustainable development of Mato Grosso; (b) guarantee
conservation of the rich biodiversity of the state, while
creating the basis for sustainable utilization of its renewable
natural resources for the direct economic benefit of the local
population; (c) develop integrated agro-forestry farming
systems in areas suitable for permanent agriculture; and
(d) consolidate the technical operational capacity of state
institutions, particularly those responsible for management of
natural resources support services, the protection and
management of forests and indigenous reserves, and agricultural
services\. The project, to be implemented over a five-year
period, would support agro-ecological zoning and land tenure
regularization; priority environmental management, protection
and monitoring activities; agro-forestry development;
socio-economic infrastructure and services; and project
administration and technical cooperation\.
-2-
Project BenefLts: The main impact of the project would be a significant reduction
ln the rate of destruction of Mato Grosso's remaining natural
rain forest, and effectlve conservation of bLodiversity and
protection of the envlronment and indlgenous communlties
rights\. Although techniques for quantifying environmental
benefits are still quite rudlmentary, the galns from
preservation of the forest cover of the State would be
sLgnificant\. In addition, the consolidation and strengthenlng
of agriculture in areas with sustainable agricultural potential
would generate incremental net revenues of about US$35\.0
million per year at full development\. Other important project
beneflts lnclude poverty alleviation and improvement of the
health and well-being of beneficiaries\.
Proiect RLsks: In the past, lnadequate technical knowledge, an unsuitable
policy framework and weak institutions led to occupation of
lands with little sustainable development potential, rapid
deforestation and other forms of natural resource depletion in
Mato Grosso\. The availability of agro-ecological zoning, and
the Government's commitment to comply with the zoning
recommendations in its investment programming, will reduce the
risk of continued occupation of fragile areas\. The various
policy and regulatory reforms recently adopted, and others
being undertaken in connection with this project, should
address the basic incentives issues which have also encouraged
resource degradation in the State\. To help miniiaize the risk
that unforeseeable factors (e\.g\., unexpected weather or
economic problems in other parts of Brazil that could once
again spark heavy migration to the Northwest) might undermine
the impact of the project-related environmental policy reforms
and investments, appropriate monitoring and evaluation
arrangements would be put in place at project start-up\. In
this regard, the State's field information system would be
strengthened by the use of satellite imagery to permit the
immediate detection of forest burning and other forms of
invasion\. Also, an independent evaluation committee, including
NGO representatives, would convene annually to review progress
and recommend necessary refinements of project strategy, and
joint Government-Bank implementation reviews would be
undertaken yearly\. Finally, to address the risk that Brazil's
fiscal problems might threaten the planned strengthening of the
project's relatively young environmental, land and agro-
forestry institutions, the State would present during
negotiations an acceptable strategy to ensure that these
agencies would be able to recruit and retain qualified
technical and managerial staff\. The project also includes
comprehensive technical assistance and staff training to
support institutional development, and progress would be
monitored closely by the Government and the Bank throughout the
life of the project\.
ESTIMATED PROIECT COSTS AND FINANCING PLMN
Loam moe Totld
(USS Million)
Esdmated Prolect Costs
A\. A4ro-Ecolozdcal Zoning and Land Tenure Renularizatlon 27\.4 12\.6 40\.0
B\. Management\. Protection and Monitorina of
Natural Resources 47\.9 6\.5 S4\.4
C\. Agro-Forestry Develonment and Suvnott Services 60\.4 9\.8 70\.2
D\. Socio-Economic Infrastructure and Services 48\.7 16\.7 65\.4
E\. Pro*ect Administration and Technical Cooneraton 11\.4 O\.S 11\.9
Total Baseline Costs 19Sa8 46\.1 241\.9
-Physical contingencies 10\.8 4\.4 IS\.2
-Price contingencies 23\.8 4\.8 28\.6
Total Proiect Costs 23 S5\.3 285\.
Financing Plan
Mato Grosso State Government 40\.0 - 40\.0
Federal Goverment 40\.7 - 40\.71/
IBRD 149\.7 SS\.3 205\.0
Total SS\.3 28S\.7
Estimated Disburaements
Bank FY: 1993 1994 1 1997 1998
Cam USS million)
Annual 40\.02/ 34\.0 S8\.0 41\.0 27\.0 5\.0
Cumulative 40\.0 74\.0 132\.0 173\.0 200\.0 205\.0
Rate of Retum: N\.A\.
Maps: IBRD No\. 23466
I/ Including US$11\.7 million in locai taxes\.
21 Including initial deposit of US$15\.0 million into the Special Account, and USS20\.5 million of retroactive financing\.
-4-
II\. AGRICULT?RAL AND ENVIRONMENTAL POLICIES 2D THE STATE OF MATO GROSSQ
Agricultural acnd Environmental Policies
2\.01 Government policies have had an important impact on the
performance of the agricultural sector\. Probably the most importint action in
this regard was Brazil's decision in the postwar era to embark on an import
substitution-led industrialization strategy\. This strategy was pursued
through a variety of measures, including an overvalued currency, restrictive
trade policies, and from time to time, outright bans and quotas on
agricultural exports\. The effect was to implicitly tax agriculture\. To
partially compensate for this, subsidized r'tral credit was introduced\. This
created further distortions a'- ;nefitted mainly larger producers\. But the
era of massive government in intion in agriculture in Brazil is now over\.
The Government initiated reforms of the last administration have been extended
and deepened under ':he present administration\. The Bank has supported these
reforms under the Credit and Marketing Reform Project (Loan 2727-BR)\. With
respect to rural credit, the Government moved towards reducing the
availability of official (subsidized) credit and relying on private finance at
market interest rates\. A Bank loan for the Agricultural Credit Project (Loan
2971-BR) is assisting the Government to achieve this objective\.
2\.02 While the Government policy agenda during the 1980s has been
dominated by macroeconomic stabilization concerns, policies with respect to
agriculture and the environment were not neglected\. The government assigned a
high priority to protecting the environment and became aware of the effect
that some agricultural policies were having on the environment\. Changing
policies to place agriculture on a more market - driven basis is having a
positive effect on the environment, although farmers and the farming community
are bearing the brunt of these changes\. Farmers, faced witn increasing
production costs and fallirg commodity prices, have begun to seek more cost-
effective technologies and to intensify the use of existing farm land and
rural infrastructure\. This is already evident in the country's major
agricultural areas in the South and Southeast\. There is growing interest in
irrigation, soil conservation, environmental protection, livestock disease
control, more efficient marketing and storage and more widespread application
of the results of agricultural research\. This, along with the Government
initietives to withdraw various fiscal incentives that encouraged expansion
into areas which are less suitable from an agro-ecological standpoint,
suggests that the growth of the land frontier may be coming to a close\.
Instead, agricultural development in the future is expected to derive
increasingly from more land-intensive production methods\.
2\.03 As a result of the increased environmental awareness and a growing
commitment to confront environmental issues at the federal level, the
government undertook several important initiatives on the environment\. Among
these ares (a) the new national constitution, which was adopted in October
1988, incorporates an advanced chapter on the environment; (b) also in October
1988, the Government launched a special program (Nossa Natureza), which
included emergency measures to protect the Amazon region and other endangered
ecosystems in the country; (c) the Government partially suspended the special
fiscal incentive programs which had directly promoted extensive ranching and
deforestation in the Amazon; and (d) a National Institute for the Environment
(IBAMA) was created in February 1989 to help coordinate environmental
protection sttivities, aid an Environmental Secretariat was established,
headed by an internationally prominent environmentalist reporting directly to
the President of the Republic\.
2\.04 Along with the strengthened regulations, and more neutral
agricultural incentives the Government has also prepared several ma4-r
environmentally oriented investment programs for Bank financing, including the
National Environmental Project, a Rond8nia Natural Resources Management
Project and the proposed Mato Grosso Natural Resource Management Project\.
Other environmental projects, aimed at controlling industrial and urban
pollution, are also under preparation\. Finally, the Government has also
recently prepared a comprehensive pilot program to conserve the Amazon rain
forest, which will be supported by a group of industrialized countries and
administered by the Bank\.
Experience with Past Bank Lending
2\.05 As of March 31, 1992, the Bank had made 58 loans, totalling
US$5,179\.6 million (net of cancellationa), for agricultural and rural
development and environmental protection in Brazil\. These loans include: one
agricultural credit and export loan for US$303\.0 million; one agricultural
credit loan for US$300\.0 million; two supplemental loans for US$30\.3 million
under the 1983 Special Action Program for Brazil; four loans for US$785\.8
million for agro-industries; three for US$111\.5 million for livestock,
including an animal disease control project of US$51\.0 million; one for
US$18\.2 million for grain storage; three for US$147\.0 million for agricultural
research; two for US$255\.0 million for agricultural extension; one for
US$100\.0 million for land tenure improvements; one of US$495\.0 million for
credit and marketing reform; one for US$48\.5 million for forestry development;
one for US$196\.0 million f': the irrigation subsector; one for US$117\.0
million for a national environmental project; one for US$167\.0 million for a
natural resource management project; and 35, totalling US$2,103\.6 million, for
various settlement, irrigation, land management and rural development projects
in the Northeast, in Minas Gerais (the Southeast), Parana (the South), and in
the North and Northwest\.
2\.06 With regard to the Northwest Region, the POLONOROBSTE Program
(para\. 2\.12) has been financed by five Bank loans, including three which
supported primarily the agricultural, rural development and environmental
objectives of the Program\. The Agricultural Development and Environmental
Protection Project, known as Northwest I (Loan \.060-BR, of US$67\.0 million,
approved in 1981), was designed to upgrade existing agricultural settlements
in central Rond8nia\. The Agricultural Development and Environmental
Protection Project-Northwest II (Loan 2116-BR, of US$26\.4 million, approved in
1982) financed similar activities in Mato Grosso\. The flew Settlements
- 6 -
Project-Northwest III (Loan 2353-BR, of US$65\.2 million, approved in 1983)
supported colonization of unoccupied lands in Rond8nia\. In addition, a
Northwest Health Project (Loan 2061-BR, of US$13\.0 million, approved in 1981)
was designed to improve and maintain health conditions in the settlement areas
of Rond8nia and Mato Grosso, and a Northwest Highway Project (Loan 2062-BR, of
US$240\.0 million, approved in 1981) helped to finance the paving of Federal
highway BR-364 between Cuiab& and Porto Velho and the construction of feeder
roads to that highway\. In 1983, under the Special Action Program (SAP) for
Brazil, the Bank also approved US$22\.8 million of supplemental financing for
the Northwest I Project\. Project Completion Reports have been prepared for
all but the last agricultural project (Loan 2353-BR), for which the loan was
closed on March 31, 1992\. Experience under the agricultural operations in
Mato Grosso is discussed in paras\. 2\.12 - 2\.15\.
The State of Mato Grosso
2\.07 Overview\. Mato Grosso is a frontier state encompassing 18% of the
Amazon Basin of Brazil\. It is Brazil's third largest state, with an area of
901,000 km2, equivalent to the combined size of France and Italy\. Mato Grosso
is a transition area between the cerrados (savannahs) to the east and south,
which cover some 33% of its territory, and humid tropical jungles to the west
and south which cover some 57%\. The remaining 10% is part of the largest
wetland in South America, the Pantanal\. Migration, mainly from the
south/southieast, caused annual population increases of about 6\.5% during
1970-80 and 7% (4% in the south, 13% in the environmentally fragile north)
between 1980-89, bringing the total state population to a currently estimated
2\.1 million inhabitants\.
2\.08 Agriculture, the most important sector in the State economy, grew
substantially during the last 10 years\. This was accompanied by extensive
deforestation, with forested areas (low and sparse, transition and Amazonian
forest) declining from 55% of the State area in 1970 to 25% in 1989, and soil
erosion/siltation and contamination of the Pantanal watershed from
ferti" zer/pesticides and mercury (from mining)\. Inadequate knowledge of the
State's natural resource base, increased migration, limited institutional
capability to direct and enforce desired land use patterns, and the prevailing
regulatory framework all contributed to the State's inability to support
viable smallholder settlements using suitable tgricultural and soil
conservation practices in the southern areas where the best soils are
concentrated\. Hence, livestock development flourished in the environmentally
fragile west, and slash and burn cultivation by subsistence farmers spread
into the Amazonian areas of the north\.
2\.09 Land Tenure, Farm Size and Land Use\. The land tenure situation in
Mato Grosso is complex, reflecting the various stages of migration over the
last 15-20 years\. In 1960, according to census data, the state had about
12,900 farms which occupied an aggregate area of 7\.8 million ha\. By 1970
these had grown to about 45,000 farms and 17\.3 million ha\. Owing to the
strong colonization during 1970-80, the number of farms increased sharply to
around 78,300 by 1990, representing a total occupied area of about 38 million
ha, or 43% of the state\. However, land data, apart from revealing some major
inconsistencies and overlaps, also indicate large areas which have conflicts
of ownership\. Based on information from the Ministry of Agrarian Reform and
Development (MIRAD/INCRA), approximately 95\.0 million ha (i\.e\., equivalent to
104% of the state) were occupied and registered in 1987, of which about 14\.5
million ha (15%) were occupied without legal title (posseirosl\.
2\.10 According to the Hato Grosso State Technical Assistance and Rural
Extension Enterprise (EMATER-MT), there are presently about 73,300 small
farmers in Mato Grosso with less than 200 ha\. The parts of the State which
have been identified as being suitable for some agricultural activities (para\.
3\.06) include about 64 municipalities and contain some 48,780 farmers\.
Average farm size in these areas is about 47 ha, of which about 13 ha are
usually cultivated: 9 ha are generally under rice, maize and beans, and 4 ha
are under coffee or bananas\. The remaining area is left under natural pasture
(9 ha) or secondary forest and fallow land (caooeira)\.
2\.11 Agricultural Development\. Agriculture is the dominant productive
sector in Hato Grosso\. It employs about 37% of the labor force, followed by
services (32%), industry (16%) and commerce (15%)\. The agricultural sector
continued to develop rapidly during the period 1980-89, with agricultural GDP
growing by approximately 10% per year to about US$500\.0 million in 1989\. The
rapid development was mainly due to increases in planted areas of crops such
as soybeans, maize, cassava, cotton and sugar cane, and the axpansion of the
livestock sub6ector from 5\.2 million head in 1980 to 8\.0 million head in 1989\.
The most important crops in 1989/90 were soya (1\.6 million ha), rice (366,600
ha) and maize (273,600 ha)\. The area planted to perennial crops, especially
coffee and rubber, increased to a total of about 130,000 ha in 1989/90\.
Yields of food crops in Mato Grosso are comparable to the overall averages for
Brazil, although in most parts of the state they are sustainable only with
high levels of inputs\. From 1980 to 1990, there has been a substantial
increase in the production of annual crops, primarily through slash and burn
cultivation supported by continued forest cutting\. Perennial crops such as
coffee and banana have been grown for some time; rubber and cocoa have been
introduced only recently and are just coming into production\. High yielding
clones of rubber and cocoa are being planted under improved cultural practices
using fertilizers and plant protection chemicals, and their production
prospects appear promising\.
2\.12 Experience of POLONOROESTE\. In 1980, in recognition of the
growing socioeconomic problems caused by accelerating migration, the Brazilian
Government launched a program of major investments in the northwest
agricultural frontier areas of Rondonia and Mato Grosso\. The POLONOROESTE
aimed to absorb the human influx in an orderly and sustainable manner\. The
centerpiece of the program was the completion and asphalting of the main
federal highway in the northwest region (BR-364) between Cuiaba and Porto
Velho and the construction of feeder roads\. The strategy of POLONOROESTE was
to steer migrants away from the extensive areas which were ecologically
fragile and/or occupied by indigenous groups\. Non-exploitative systems of
agricultural and forest production were to be promoted, with a view to
- 8 -
achieving permanent land occupation by the new settlers and reversing the
trend of felling the tropical forest and abandoning it to low grade pasture or
scrub after only a few seasons of food cropping\. The technical strategy was
based on support for permanent smallholder agriculture or, farms of adequate
size to generate reasonable annual incomes\.
2\.13 POLONOROESTE, financed by the Federal Government and the Bank, was
coordinated by the Federal Government and executed by Federal and state-level
institutions\. Implementation encountered many technical, institutional and
financial difficulties, and in its initial phase POLONOROESTE seemed to be
failing in many respects\. Only pavement of the BR-364 highway proceeded on
schedule, while agricultural and social support services, and environmental
and Amerindian protection programs fell behind\. The program was widely
criticized for having a questionable effect on reversing the destructive
development patterns set in motion in the 1970s; the pace of occupation
accelerated and deforestation increased\.
2\.14 A mid-term review of POLONOROESTE in 1984 highlighted the
differences between the assumptions under which the program was planned and
those under which it was being implemented\. The circumstances were largely
beyond the planners' control: inadequate and late disbursements of counterpart
funds because of the difficult fiscal situation in Brazil, the virtual
disappearance of investment credit needed to establish perennial crops,
ineffective integration of participating agencies, and unexpectedly high
migration, resulting in unchecked deforestation and continued encroachment
into unsuitable areas of marginal soil fertility\.
2\.15 The Mato Grosso Rural Development Project (Loan 2116-BR), which
closed in December 1988, also suffered from these shortcomings\. According to
the Project Completion Report (PCR NO 9382 of February 26, 1991), the proj-_t
reached its physical targets for road construction and partially met the
targets for the storage component\. However, there was no specific initiative
or project activity to contain deforestation\. Implementation of the
agricultural development strategy was also disappointing, particularly with
regard to perennial crop cultivation, the creation of incremental agricultural
employment, and the improvement of incomes and living standards of project
beneficiaries\. Nevertheless, the project did help to strengthen the social
infrastructure in the area and the institutional capacity of some of the
implementing agencies\.
Main Lessons Learned Under POLONOROESTE
2\.16 As outlined in the Project Completion Report, the following are
the main lessons learned in the course of implementing the Northwest II
Project in Mato Grosso, which have been taken into account in the design of
the present project:
(a) The design of a project for a frontier area with a fragile natural
environment should be based on better technical information about
its sustainable development potential than that which was
available at the start of the project\. Agro-ecological zoning
-9-
should be done in order to delineate clearly the agricultural
frontier, stabilize the land tenure eituation and demarcate areas
which are, or should be, reserves\. Government commitment to
implement the agro-ecological zoning should be a condition eJi
aua non of future development projects in such areas\.
(b) When an important objective of a project is to alter land use
patterns in an area, a thorough analysis should be undertaken of
the policy and regulatory framework governing those patterns, to
determine what complementary actions may be needed, in addition to
investments in infrastructure and services, to stimulate the
desired results\. The success or failure of a program like
POLONOROESTE rests not only on its technical quality and the
political support ic receives, but also on the overall policy
framework (e\.g\., land regulations and fiscal incentives) to
stimulate proper land use and natural resource protection\.
Otherwise, investments made to protect the environment may be
underXiined by stronger incentives working in the opposite
direction\.
(c) When the success of the agricultural production objectives of a
project depends significantly on credit, a careful analysis needs
to be made with respect to credit availability, accessibility, and
the appropriateness of terms and conditions\. In the event that
prevailing conditions are not suitable and not amenable to change
in the short term, the Bank should either make special provision
for credit in the project itself (only in exceptional
circumstances warranted by significant environmental or poverty
alleviation objectives) or it should not proceed with the project\.
(d) Project organization and management arrangements, especially when
a multitude of implementing agencies are involved, should provide
sufficient authority (including control over budgetary resources)
over implementation\.
(e) In projects with greater than normal risks, the elements of
institutional strengthening, training and technical assistance
should be carefully planned to directly address these risks\.
2\.17 In response to these lessons, in 1987-88 the Federal and state
Governments expressed their political commitment to implement an agro-
ecological exercise in Mato Grosso\. Preliminary studies were completed with
FAO and UNDP aosistance, and a draft project proposal was prepared in 1989
with the assistance of the FAO/CP\. The project would be based on agro-
ecological zoning, which is used to distinguish areas capable of sustainable
development from those which are without any known long-term agricultural
potential or which have special ecological (biological reserves and forestry
reserves) or social (Amerindian lands) significance and therefore need to be
protected\.
- 10 -
III\. THE PROJECT
Oriain and Rationale for Bank Involvement
3\.01 The Bank's assistance strategy for Brazil has three long-term
objectives to stimulate developmentt (a) private sector development and public
sector reform; (b) increasing the productivity and improving the living
conditions of the poorl and (c) protecting the environment and local
populations\. The proposed project would contribute primarily to the third
objective, but would also help to strengthen public sector management and to
improve productivity and living conditions of poor rural smallholders\.
Considerable experience has been gained under the earlier POLONOROESTE
projects, both in the Northwest Region in general and Mato Grosso in
particular, and new technical knowledge has been developed which today makes
it possible to identify and implement more appropriate strategies to
discourage environmentally destructive development patterns, and promote more
sustainable forms of land use\. The Bankls participation in the proposed
project would be instrumental in helping Mato Grosso to prevent destruction of
its remaining northern tropical rain forest (about 225,000 km2), protect
critical watersheds of the Pantanal wetlands in the Southwest, and intensify
imallholder cultivation in those already deforested areas which have soils
suitable for permanent agriculture\. It would also be important in helping to
reduce spontaneous migration to neighboring Rond8nia and other Amazon states\.
3\.02 A Bank identification mission in 1988 reviewed preparation
documents and reached preliminary agreement with the Federal and State
Governments on a development strategy based simultaneously on the need to
implement agro-ecological zoning and on the reform of land tenure and
environmental policies and regulations\. Under the leadership of the Minister
of Interior, a series of meetings took place during 1988/89 among
representatives of concerned Federal Ministries and the State Government of
Mato Grosso\. They identified and agreed on the principal elements of a new
framework to promote a transition from the prevailing extensive agricultural
development scenario, towards greater intensification of land use in selected
areas in accordance with the state's agro-ecological zoning\. At the same
time, recognizing that such a strategy would not succeed in isolation, the
Government also proposed investments for: (i) environmental conservation,
management and enforcement in those areas of Mato Grosso that should be
protected or remain under forest cover; and (ii) a medium-term agro-forestry
development program and supporting infrastructure and services to encourage
sustainable productive activities in those areas where the population should
ideally remain concentrated\. The project was appraised in September/October
1991 and loan negotiations took place in late April 1992\.
Proiect Obiectives
3\.03 The principal objective of the proposed project would be to
implement an improved strategy for natural resource management, conservation
and environmental protection and sustainable development in the State of Mato
Grosso\. The project would assist the Government to:
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(a) support changes in policies, regulations and public investment
programs to provide a coherent incentives framework for the
sustainable development of Mato Grosso;
(b) improve the knowledge of the natural resource base, by providing
more detailed data on land capability and land tenure to establish
criteria for improving land management and for biodiversity
protection in the various agro-ecological zones of the state;
(c) reduce environmental degradation and ensure the long-term
preservation of the biodiversity of the State of Mato Grosso,
through the conservation of ecologically significant samples of
its territory;
(d) protect and enforce the borders of all conservation units,
indigenous reserves, public forests and control and prevent
illegal deforestation, wood transport and forest fires;
(e) develop sustainable agriculture in areas suitable for permanent
agriculture, promoting integrated agro-forestry farming systems,
and systems for sustainable forest management in areas which
should remain under natural forest cover;
(f) support priority Investments in socio-economic infrastructure and
services in those areas where population should remain
concentrated, in order not to undermine the delicate ecological
balance of the state; and
(g) strengthen the technical and operational capacity of the State
institutions responsible for the agro-ecological zoning, the
protection and management of the environment, and agricultural and
forestry support services\.
Environmental Policy Framework
3\.04 A suitable environmental policy and regulatory framework is
essential to ensure that future development of the State of Mato Grosso is
sustainable\. In this regard, the Federal and State Governments have
undertaken a series of reforms over the past two years, the implementation of
which would be supported under the project\. Additional complementary measures
would also be undertaken under the project\. The relevant reforms and their
main features are summarized in Annex 1\. They include:
(a) institutionalization of the State's agro-ecological zoning by State law;
(b) the adoption of suitable land regularization policies and practices,
including the elimination of deforestation as a criterion for obtaining land
title, and the adoption of new State land legislation; (c) elimination of
economic and fiscal incentives which encourage inefficient resource
allocation, non-sustainable private investment and environmental degradation;
(d) adoption of new State environmental legislation (to complement existing
Federal legislation), providing inter alia for improved forest protection and
control of mining activities; (e) adoption of suitrable policies concerning the
- 12 -
interdiction, delimitation, demarcation and protection of indigenous areas and
provision of key services to their inhabitants; and (f) revision of the
medium-term State and Federal investment programs for Mato Grosso, to reflect
land use capabilities and ecological considerations\. Commitment to the policy
reforms, known as the Mato Grosso Environmental Action Plan (EAP), would be
reflected in a letter from the Borrower and the State to the Bank\. The
contents of the letter were discussed and agreed during negotiations\.
Compliance with the EAP would be monitored throughout the life of the project\.
During negotiations, the Borrower and the State provided assurances that the
policy reforms under the Nato Grosso EAP would be enforced throughout the
duration of the project\. They also provided assurances that their investment
programs for Mato Grosso, which currently take into account land use
capabilities, ecological and agro-ecological zoning considerations, would be,
at each annual updated thereof, maintained consistent with such considerations
and compatible with such zoning; and by September 30 each year during the
execution of the project they would furnish to the Bank, for its review and
comments, any intended update of such investment program for the forthcoming
year (para\. 4\.02 (a))\.
Acro-ecoloaical Zonina
3\.05 The State of Nato Grosso has experienced rapid and, generally
unplanned territorial occupation\. Hence, agricultural activities are now
carried out in some areas where soil fertility is not suitable for sustainable
development; gold mining and forest exploitation are practically uncontrolled;
and only limited actions have been taken to conserve critical ecosystems\.
Some agro-ecological zoning work was supported under the POLONOROESTE II
project, which included US$1\.3 million to finance zoning of approximately of
55,000 km2 around Caceres and part of the Guapore Valley\. In 1989, the
C&ndido Rondon Foundation completed a soil capability study of the entire
State\. Based on this, the Foundation has since completed a first
approximation of a statewide socio-economic/agro-ecological zoning for Mato
Grosso, which delineates seven macro zones based on soil fertility, slope,
precipitation and socio-economic factors (see Map IBRD 23466)\.
3\.06 The main features of the seven zones are summarized below:
(a) Zone 1 (approximately 76,000 km2) - The fertile soils in the
cerrados of central Mato Grosso are suitable for large-scale
mechanized agriculture\. For the most part these are already
occupied by larger farmers, and no project interventions are
envisaged in these areas\.
(b) Zone 2 (41,000 km2) - The fertile soils in the southeast and
southwest of the state have a high concentration of small farmers
and are suitable for diversified agriculture\. The project would
encourage further agricultural intensification and consolidation
in this zone\.
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(c) Zone 3 (227,000 km2) - Soils in the north of the state are of
moderate to poor quality\. The project would encourage farming
systems based on agro-forestry, only in those areas which are
already deforested and occupied by concentrations of small
farmers\.
(d) Zone 4 (175,000 km2) - This zone covers the Pantanal wetlands,
which are periodically flooded and are therefore suitable only for
conservation and/or extensive animal production\. As support for
the Pantanal is included in the on-going Bank financed National
Environmental Project (Loan 3173-BR), no project actions are
envisaged for this area\.
(e) Zone 5 (33,000 km2) - These are areas under forest cover in the
north of the state\. The project would encourage the use of more
sustainable practices in areas which are under private ownership,
and the creation of forest reserves in public lands\.
(f) Zone 6 (237,000 km2) - This zone includes areas in the north of
the state where the ecosystems are so fragile or unique that
conservation and protection is the most appropriate course of
action\. The project would therefore support the creation and
implementation of conservation units (state biological reserves
and ecological stations)\.
(g) Zone 7 (112,000 k1m2) - This zone comprises indigenous reserves,
which would be protected under the project\.
Proiect Com2onents
3\.07 The project has been tailored to the sustainable development
potential of each of the major agro-ecological zones\. It would include five
components, to be implemented over a five year period, as follows:
(a) Refinement of aaro-ecological zonina and land tenure
reaularization (USS40\.0 million or 17% of total baseline costs):
including land zoning, mapping and land regularization activities,
with priority assigned to those areas where establishment of
conservation units and indigenous reserves will occur, and areas
where the need for land tenure regularization is more acute or
where tenurial conflicts have already started;
(b) Manacement\. protection and monitorina of natural resources
IUSS54\.4 million or 22% of total baseline costs): including
establishment, management/protection of conservation units and
forestry reserves, protection of indigenous reserves;
environmental protection, pollution control, strengthening of
forestry police and monitoring of protected areas, training and
technical assistance;
- 14 -
(c) Aaro-forestrv develonment IUSS70\.2 million or 29t of total
baseline costsl: including rural extension, agro-forestry
research, rural credit, and market information systems;
(d) Socio-economic infrastructure and services (USS65\.4 million or 27%
of total baseline costs): including strengthening of the
infrastructure related to health, education, water supply, rural
electrification, and maintenance and rehabilitation of rural
rcads; and
(e) Proiect administration and technical cooperation (USS11\.9 million
or 5% of total baseline costs): including installation and
operating costs of a Project Coordination Unit (PCU) in Cuiab&,
supported by an independent technical cooperation group
responsible for advising the PCU with respect to project
monitoring and evaluation, and for recommending any needed changes
in project strategy and content\.
A\. Aaro-Ecolooical Zonina and Land Tenure Reaularization
3\.08 The overall objective of this component is to support comp)etion/
implementation of the agro-ecological zoning and clarification of the complex
land tenure structure of the State, as a basis for other project activities
and future development planning and administration\.
3\.09 Aoro-ecoloaical 2onino and Matxina\. The available maps of Mato
Grosso are at a scale of ll,000,000, except for some soil maps developed
during the implementation of POLONOROESTE\. While these have been adequate for
general planning purposes, small scale maps are now needed for more detailed
planning and implementation (e\.g\., for proper border control of zones and
reserves; agro-forestry planning for specific areas within Zones 3), and all
maps need wider dissemination\. The project would support the refinement of
the agro-ecological zoning, including the preparation and distribution by the
State Secretariat for Planning and Coordination (SEPLAN-MT) of statewide agro-
ecological, climatologicLl, soil and topographic maps, and training of SEPLAN-
MT staff\. The project would also support the cartographic work necessary for
the creation, management and protection of conservation units, forest reserves
and indigenous reserves\.
3\.10 During negotiations, the State Government provided assurances that
by June 30, 1994, agro-ecological, soil and topographic maps of its territory
would be prepared, in consultation with the Secretaria de Assuntos
Estrat6aicos of the Borrower's presidency, and furnished to the Bank, in
accordance with terms of reference satisfactory to the Bank (para\. 4\.01 (a))\.
These maps would be at a scale of 1:50,000 for Zones 2 and 3 in the south of
the State and Zone 2 in the north, and 1:250,000 for other areas in the south
of the State and the project area in the north, considering for this purpose
the parallel 13 degrees South Latitude as the division between north and
- 15 -
south\. Aerial photography covering 100,000 km2 in Zones 2 and 3 would also be
supported under this project, to asist in zoning surveys, land tenure
regularization and soil and water conservation programs undertaken by the
agricultural extension service\. In addition, in some critical areas from an
environmental point of view, topographic, soil and agro-ecological maps would
be produced at scales of 1:10,000 and 1:25,000\. Agro-ecological zoning was
legally instituted by Nato Grosso State Law of May 1992\.
3\.11 Land Tenure Reaularlzatton\. The land tenure structure in Mato
Grosso is uncertain, with many overlapping claims to use rights and ownership\.
Clarifying this present situation and developing and enforcing appropriate
iegal measures, policies and regulations, are essential\. The project would
provide funds to INTERMAT for physical facilities, equipment, materials and
contractual services for the: (a) delimitation, demarcation and cadastral
registration of approximately 41\.3 million ha of public and private lands,
equivalent to 45% of the total area of the state; (b) discriminatory action on
about 19\.2 million ha to identify public and private lands, resolve pending
questions regarding indigenous areas and identify land for the creation of
conservation areas; (c) demarcation of about 1,000 kms of conservation areas;
and (d) issuance of titles on land currently occupied by about 18,000 families
with legitimate rights of possession\.
3\.12 INTERMAT would administer and supervise this subcomponent,
contracting out part of the cartographic and photographic work\. A draft
agreement between INCRA and the State Government on land regularization
policies and practices which are to be observed in the state, consistent with
the recommendations of the agro-ecological zoning, was reviewed during loan
negotiations, and the signing of this agreement, if not completed earlier,
would be a condition of loan effectiveness (para\. 4\.03 (a))\. At negotiations,
assurances were obtained that by September 30, 1992, the State would prepare
and present to its Legislative Assembly, for approval, legislation on land
use, in form and substance satisfactory to the Bank, and would take all
actions necessary to have such legislation approved by its Legislative
Assembly, as soon as possible (para\. 4\.01 (b))\.
B\. Management\. Protection and Monitorina of Natural Resources
3\.13 This component would help conserve the State's biodiversity, while
creating the basis for sustainable natural resource utilization and management
for the direct economic benefit of the local population\. It comprises eight
sub-components, described below\.
3\.14 Manaaement and Conservation of Forest Resources\. In order to
conserve the State's renewable forestry resources in Zone 5, the project would
support: (a) the identification, creation and demarcation of nine State Forest
Reserves (RFE) covering an estimated 4\.0 million ha\.; (b) the preparation of
an overall study for each of the nine reserve areas, including forest
inventories, and the development of management plans and detailed action
programs for the RFB; (c) implementation of a forestry awareness campaign; and
- 16 -
(d) training of foresters\. FEMA would be responsible for the implementation
of this sub-component, following demarcation by INTERMAT\. The project would
finance civil works and basic infrastructures for the RFE and law enforcement
posts, equipment, vehicles, training, and awareness campaign material\.
3\.15 The State Government is committed to the delimitation and
iemarcation of private and public lands, the creation of forest reserves in
public lands and the preparation of a plan of action for the sustained
management of private lands in Zone 5\. During negotiations, the State
provided assurances that by June 30, 1994, it would establish and thereafter
maintain forest reserves in areas identified as unoccupied public lands
through the discriminatory works carried out during the first year of the
project in Zone 5; and by June 30, 1995, it would establish and thereafter
maintain forest reserves in all other areas in Zone 5 identified as unoccupied
public lands through the discriminatory works, provided that at least nine
reserves would be established by June 30, 1995 (para\. 4\.01 (c))\. For
privately owned areas in Zone 5, a satisfactory plan of action, to encourage
the sustainable management of private forests, consistent with the agro-
ecological zoning recommendations, would be completed no later than June 30,
1993, and put into effect thereafter (para\. 4\.01 (d))\.
3\.16 Mining Activities Rationalization\. Although difficult to
quantify, the consequences of the different forms of mining (aarimDaaem)
practiced in Mato Grosso are becoming a serious threat to the State's
enviroiment\. The effects include destruction of the riverine vegetation of
critical watersheds, erosion of fertile alluvial soils and river banks,
changes in river bed topography, water pollution and encroachment into
conservation units and indigenous areas\. Federal legislation was passed but
is not effectively enforced, and few efforts have been made to rationalize or
control mining activities in Mato Grosso\. The project would support:
(a) preparation of an inventory and mapping of mining activities in the State,
with particular attention to environmentally more fragile zones; (b)
preparation of a study on mining standards and on licensing of gold mining;
(c) establishment of mining standards and licensing requirements for gold
mining; (d) research on the applicability of environmentally more benign
mining technology and establishment of demonstration projects/sites using new
technology for gold extraction; and (e) implementation of health, education
and other assistance programs for small mining communities\. This sub-
component would be implemented by FEMA in the northern areas of Mato Grosso
where the oarimvaaem problem is most acute\. The project would finance
infrastructure, experimental sites, vehicles and equipment, training courses,
consultancies and technical assistance, and operating costs\. To reinforce
Federal environmental legislation, the State provided assurances during
negotiations that by September 30, 1992, it would prepare and present to its
Legislative Assembly, for approval, proposed legislation on environment,
satisfactory to the Bank, and would take all necessary actions to have the
legislation approved by its Legislative Assembly as soon as possible (para\.
4\.01 (b))\. The legislation would provide, inter alia, for stronger State
regulatory powers over mineral and forestry extraction\.
- 17 -
3\.17 Establishment of Conservation Areas\. Only about 217,000 ha in
Mato Grosso are protected by small federal conservation units, of which two
are national parks and two are ecological stations\. in addition, there is a
very small state ecological reserve (3,900 ha) and a municipal park (15 ha) in
the city of Cuiaba\. The ecological representativeness of the federal
conservation units are very low, as a consequence of their relatively small
size and geographical distribution\.
3\.18 The State Government is committed to the establishment of
additional conservation units in all unoccupied public lands in Zone 6\. After
clarification and demarcation of the boundaries of public and private lands
under the Land Tenure Regularization sub-component, the project would supports
(a) ecological assessment of the proposed areas, preparation of management
plans for each new conservation unit, essential infrastructure, and equipment
needed to implement the management plans; (b) institutional strengthening of
FEMA; and (c) public awareness canipa4gns to sensitize communities living in
and around the conservation units\. 'rht\. areas targeted for establishment of
conservation units include some 4\.A m\.llion ha: Chaoada dos Guimaraes - '0,000
ha (extension of an existing rese:ve), gabeceiras do Rio Cuiaba - 300,000 ha,
Rio Madeirinha - 800,000 ha, Rio Ronura - 700,000 ha, Serra Ricardo Franco
400,000 ha, Serra de Santa Barbara - 800,000 ha, Pantanal do Rio das Mortes -
800,000 ha, Serra do Cachimbo - 500,000 ha and ADiacas - 477,000 ha\. The
project would finance surveys, construction of offices and control posts in
the units, vehicles, training, technical assistance, and incremental salaries\.
In addition, evidence of the recent creation of the Pontal State Biological
Reserve, in the municipality of Apiacas was presented by the State during
negotiations\. FEMA would be responsible for implementation\. During
negotiations, the Federal and State Governments provided assurances that:
(a) by December 31, 1992, they would carry out a study on the feasibility of
the enlargement of the existing conservation unit located in the Chaoada dos
Guimaraes in Mato Grosso; and if so recommended by such studies, promptly take
all action necessary to enlarge, and thereafter maintain as enlarged, such
conservation unit (para\. 4\.02 (b)); and (b) by June 30, 1994, the State would
establish and thereafter maintain conservation units in lands identified as
unoccupied public lands through the discriminatory works carried out in the
first year of the project in Zone 6, and by June 30, 1995, it would establish
conservation units in all remaining lands identified as unoccupied public
lands through the discriminatory works in Zone 6, provided that at least 16
conservation units are established (para\. 4\.01 (c))\. For privately owned
areas in Zone 6, a satisfactory plan of action to encourage the sustained
management of private forests, consistent with the agro-ecological zoning
recommendations, would be completed no later than June 30, 1993, and put into
effect thereafter (para\. 4\.01 (d))\.
3\.19 Informal Environmental Education\. The main objective of this sub-
component is to sensitize the public in Mato Grosso to existing environmental
problems and their effects, and to build community support for conservation
and sustainable land use\. Project activities would promote the establishment
of Municipal Councils for Environmental Defense (CONDEMAs) in each district
and non-governmental organizations (associations, NGOs, foundations and clubs)
- 18 -
concerned with environmental issues\. This sub-component would be implemented
by FEMA through meetings, seminars and use of audio-visual materials\. The
project would finance seminirs and training courses, consultants, and
trainers' honorariums, trainlng of FEMA personnel, and other operating costs\.
Mass media would be us6d to disseminate the messages on issues of public
interest, including relevant Federal and State legislation\.
3\.20 Enforcemen_Activities\. The main aim of this sub-component is to
ensure that the protected areas and conservation units are not encroached upon
by settlers and/or illegal logging activities, hunting or predatory fishing\.
The State Forestry Police (PMF-MT) would be strengtherid to enforce State
environmental legislation and support FEMA's licensing operations and
monitoring of mining, pesticide use and othar polluting activities\. The
project would finance equipment (radio transmitters, refueling equipment,
generators and battery chargers), vehicles (boats powered by 25 HP engines, a
launch with a 60 HP engine, one helicopter and one ultralight aircraft), and
office furniture; headquarters buildings and outposts; incremental salaries of
foreat police, travel costs, maintenance and other operating costs, and
training, technical assistance and special studies\.
3\.21 Support to Indigenous Communities\. The project would help to
safeguard the areas occupied by indigenous groups against illegal encroachment
and use by outsiders, and to strengthen health services for these groups\. It
would provide for: (a) the border demarcation of 9 indigenous reserves with an
aggregate area of about 1\.14 million ha and about 1,424 km of boundaries;
(b) renewal of the boundaries of some sections of 38 reserves previously
demarcated, encompassing an area of about 10\.3 million ha; (c) identification
and protection of isolated indigenous groups not iet officially contacted and,
where appropriate, identification and demarcation of their areas;
(d) strengthened FUNAI's monitoring and enforcement activities to protect
indigenous reserves from illegal encroachment through the provision of fixed
and mobile monitoring units equipped with communications equipment and through
increased cooperation with the State Military Police and the Federal\.
Environmental Agency; and (a) upgrading the health services available to
indigenous groups, including visiting medical teams at the post level,
specialized training of medical personnel and indigenous health monitors\.
Through an agreement with the State Government, additional health
professionals will be hired to staff FUNAIX's mobile health teams\. The project
would also finance a study and a few small-scale experiments for developing
sustainable income-producing activities in indigenous communities\.
3\.22 Administration of the ind enous component would be carried out by
a specialized team within FUNAI, including a general coordinator and sectoral
coordinators for: (a) demarcation and boundary renewal; (b) protection of
isolated Indians; (c) monitoring and enforcement; and (d) health services\.
This team would be assisted by an indigenous specialist (already hired) within
the UNDP technical assistance mission and by short-term consultants\. Draft
operating agreements have been agreed in principle between the Military
Police, FUNAI, IBAMA and the State of Mato Grosso to ensure effective
protection of the indigenous reserves; between the State Health Agency and
FUNAI for cooperation in staffing mobile health teams for indigenous
- 19 -
communities and adequate hoopiti\.1 care and diagnostic services to indigenous
patients; and between FUNAI, INTERMAT and INCRA for cooperation in all matters
of land settlement, disputes or titling near indigenous areas\. The signing of
these and all other operating agreements between the State and each project
execution agency would be a condition of loan effectiveness (paras\. 3\.46 and
4\.03 (d))\. A specific FUNAI proposal for the protection of the Zor6
Indigenous area was reviewed during negotiations; completion of removal of all
squatters living within the boundaries of the Zor6 Indigenous area would be a
condition of loan effectiveness (para\. '\.03 (b))\. The State Government has
removed most miners and other illegal occupants from within and around the
Sarare Indigenous area; completion of removal of all min?rs and other illegal
occupants from within and around the Sarare Indigenous area and presentation
to the Bank of a satisfactory action plan (the Sarar6 Action Plan) to prevent
future illegal occupations of the Sarar6 Indigenous area and to recuperate the
area from any environmental damage caused by the mining, would be a condition
of loan effectiveness (para\. 4\.03 (c))\. The Borrower and the State Government
provided assurances during negotiations that the Sarar6 Action Plan would be
carried out in accordance with a timetable satisfactory to the Bank (para\.
4\.02 (c))\.
3\.23 Monitorino and Remote Sensina\. A Forest Cover Monitoring Unit
would be created as part of the project coordinating unit and physically
located in SEPLAN-MT\. The forest unit would work closely with FEMA, PMF-MT,
the Brazilian Instit te for the Environment and Renewable Natural Resources
(IBAMA), FUNAI, the Brazilian Agricultural Research Company (EMBRAPA) and
INTERMAT on land use and environmental monitoring activities and harmonize
activities among different agencies executing zoning activities\. In addition
the unit would monitor the location and surface changes in mining and logging
activities in order to assist in inspection and enforcement activities of
FEMA\. The maps produced would be sent to the State and Federal agencies
responsible for the control of illegal intrusion and deforestation\. The
project would finance the servicas and project-related travel of four remote
sansing technicians; image analysis equipment for aerial photography and
satellite imagery; cartographic reproduction facilities; statewide Landsat
imagery coverage; and related operating costs\. During negotiations, the State
provided assurances that by January 1, 1993, and by January 1 of each year
thereafter until project completion, it would prepare a report on the
satellite monitoring of the rate and location of deforestation that occurred
in its territory during the preceding year, and the results would be made
available to the Bank and the public (para\. 4\.01 (e))\.
3\.24 Institutional Strenathenino\. The State's capacity to implement
environmental conservation and protection activities is constrained by the
weakness of the existing legislation and by the lack of presence at field
level of FEMA, responsible for its implementation\. FEMA is relatively young,
created in 1987, and state environmental legislation (Law 4984), although
comprehensive, did not adapt to local realities the Federal legislation from
which it originated\. In addition, the State Council for the Environment
(CONSEMA) has no environmental master plan to be used for strategic planning\.
The proposed new environmental legislation (paras\. 3\.16 and 4\.03 (c)) and
- 20 -
activities to be financed under the project would provide state agencies with
additional regulatory powers and enforcement capacity, and would improve their
strategic planning capability\. The State is currently undergoing a
reorganization/decentralization of all public agencies and services which
would improve, in the long run, the presence of FEMA at field level\. A State
Government proposal on the organizational and staffing modifications of FEMA
to ensure suitable capability to implement the environmental component of the
project was reviewed during negotiations\. The project would finance the
recruitment of a specialized consultant to assist FEMA in the preparation of a
strategy plan; a special program "Mutirao Para a Natureza" which will award
grants for projects elaborated at municipal level by legally recognized non-
governmental groups; and construction of office facilities, purchase of
vehicles, and other FEMA incremental operating costs to support
decentralization to the field level\.
C\. Acro-Forestrv Development
3\.25 The overall objective of this component is to support the
Government's effort to transform traditional extensive farming systems into
permanent sustainable agro-forestry in the Northern part of the State (Zone
3); intensify agricultural production in the Southern fertile soils (Zone 2);
and initiate the privatization of agricultural support services\. The project
would support a series of interventions designed to: (a) concentrate
agricultural support services in the most productive and fertile areas of zone
2; (b) promote the cultivation of suitable perennial crops, excluding coffee
and cocoa; (c) support expansion of cropped area on fallow land or abandoned
pasture land, and initiate a program of fallow enrichment and sylvipastoral
activities; (d) diversify the existing crop mix by promoting viable new crops,
including trees, developing mixed cropping systems and introducing crop
rotation techniques; (e) reinforce efforts to retain forest reserves and
recuperate degraded land through the promotion of woodlots at farm level;
(f) support two pilot projects to stimulate privatization of the extension
service; and (g) encourage private investment in small-scale agro-processing
and storage activities\.
3\.26 Aaro-forestry Research\. Specific objectives of the research sub-
component would be to widen and accelerate the availability to farmers of
financially and ecologically sustainable farming systems, emphasizing tree
crops diversification, agro-forestry, and re-forestation; transfer at least
half of the research activity to on-farm technology validation trials; and
achieve effective integration with extension in technology transfer and
research feedback\. The applied research program, while continuing on-going
activities of selection and adaptation testing of new high-yielding varieties,
would focus on perennial crops, agro-forestry and forestry research\. The
perennial crops research topics will include selection and adaptation of new
clones and improved planting materials of rubber, bananas, aniunha, acerola,
and others for tolerance to acid soils and diseases and ability for
sustainable, low-cost production; introduction and evaluation of available
germoplasm and planting material; and definition of control measures for
important pests\. In agro-forestry mixtures, short- and long-duration
perennial species would be intercropped with annual crops in their early
- 21 -
years\. This mixed cropping system would improve sustainability of yields and
productivity and maintain soil fertility by conservation of soil and moisture\.
Forestry research would concentrate on enrichment planting in secondary forest
(tree fallow) regeneration of degraded areas and reforestation with
plantations of timber species\. Only basic evaluation of species would be
carried out on-station; all subsequent testing would be on-farm technology
validation trials which would later serve as demonstrations and for training
purposes\.
3\.27 In total, the adaptive research program, to be implemented by
EMPAER, would support about 260 experiments for perennial crops and 80 for
agro-forestry, forestry, animal production and conservation of natural
resources\. Transfer of technology would be facilitated by a new regional
organization based on an interdisciplinary research-cum-extension team headed
by a subject matter specialist, to ensure the maximum flow of information to
farmers through on-farm technology validation trials\. The project would
finance construction of offices and field laboratories, agricultural and
laboratory equipment, consultancies and incremental operating costs, except
salaries which would be financed by the State Government\.
3\.28 Rural Extension\. The State agricultural extension services
expanded rapidly under the previous POLONOROESTE projects\. However, its
effectiveness has been limited due to inadequate research back-up, excessive
administrative tasks, insufficient attention to field work, concentration on
specific crops rather than on overall farm planning, and lack of rural credit\.
At present, extension services are provided through a system of individual
contact, resulting in relatively higher costs per beneficiary and limited
coverage\. The State Government of Mato Grosso has reorganized its extension
services and consolidated them with agricultural research under only one
institution, EMPAER\. In the future, EMPAER would operate in 9 administrative
regions and 62 local offices\. A group extension methodology would support:
specialized training for about 1,545 farmers who would assist with
implementation of on-farm demonstrations and terhnology validation trialst re-
training of about 420 EMPAER staff in agro-forestry and forestry, marketing,
small-scale processing and farm management; and about 2,070 on-farm
demonstrations and 690 technology validation trials\. The project would also
finance mass-media communication programs, the preparation of field manuals,
and the establishment of a forestry and perennial crops seed bank\. Some
32,100 farmers would be assisted\. The target would be to establish a network
of 1 agent per 300 farmers by year 5 of the project period (compared to the
present of 1 to 70)\. The project would finance offices, training facilities,
equipment, per diem and other incremental operating costs except staff
salaries to be financed by the State Government\.
3\.29 Finally, to foster eventual privatization of agricultural services
for small farmers, ENPAER will carry out two pilot projects: (a) in Year 1 of
the project, fees would be introduced for individual extension visits in 10
municipalities, with an evaluation carried out in Year 2; (b) in three
municipalities EMPAER would reimburse farmers the cost of private technical
assistance, decreasing annually from 100% to 15% in year 4\. The results of
- 22 -
the pilot projects would be used to expand the privatization of extension
services throughout the State\.
3\.30 Rural Credit\. The volume of rural credit in Mato Grosso decreased
during 1986-91 from US$641\.0 million (41,500 loans) to US$381\.0 million (8,850
loans), while -\.he average loan size increased three-fold\. Furthermore, 1990
statistics indicate that 80% of short-term credit financed rice and soybean
crops, traditionally grown by larger farmers\. The lack of smallholder credit
has contributed to slowing down the development of perennial crops in Mato
Grosso, and slash and burn shifting cultivation of annual crops has increased\.
Recognizing the need for credit services as means of stabilizing rural
settlement and modifying production systems, the State introduced in 1988 a
barter form of credit in kind whereby borrowers received and repaid loans with
their products\. This pilot operation, administered by the Secretariat of
Agriculture and Land Affairs (SEAAF) has been well accepted by farmers, and
loan recovery has been satisfactory\.
3\.31 While over the longer term commercial banks should increase
lending to farmers in Mato Grosso, presently this occurs only in sporadic
cases because of high transaction costs and concentration of small farmers
without definitive land title or any other type of collateral guarantee\.
Access to credit is a critical requirement for the success of the project's
agricultural/environmental strategy\. The availability of credit through the
pilot "in kind" system has already proven its usefulness, but as credit demand
grows, management of the collection and storage of in-kind payments will
present increasing logistical problems and costs\. The State has, therefore,
decided to convert this into credit which is still denomine\.ted in-kind, but
based on monetary transactions\. The new system would be legally established
through a specially regulated fund (FUNDAGRO) to be administered by the Mato
Grosso State Bank, although other banks, acceptable to the Bank, could also
participate\.
3\.32 Under the operating conditions of FUNDAGRO, the loan principle
would be adjusted by the annual variation in product prices with interest
charged in accordance with the formula applied under the Agricultural Credit
Project (Loan 2960-BR)\. Although there may be short-term differences between
inflation and product reference prices, these are not expected to be
significant over the long run\. To safeguard FUNDAGRO against possible erosion
of value due to short-term variations, a small special fund would be
ecstablished\. FUNDAGRO would finance investments and essential inputs (seeds,
seedlings, fertilizers and chemicals) for diversification into perennial
crops, other than cocoa and coffee; enrichment of secondary growth/forest
fallow with valuable wood species, and other on-farm investments such as
storage facilities, equipment and fish culture activities\. FUNDAGRO would not
finance the large livestock breeding and fattening operations, but would
support small scale milk/meat operations in the southwest of the State\.
Activlties financed would be in accordance with the State's agro-ecological
zoning\. Some 15,000 farmers would benefit\.
3\.33 Presentation of satisfactory evidence of the establishment of
FUNDAGRO and adoption of a satisfactory operating manual for FUNDAGRO would be
- 23 -
a condition of disbursement of the credit category of the loan (para\. 4\.04
(a))\. During negotiations, the State provided assurances that: (a) it would
maintain FUNDAGRO, under terms and conditions satisfactory to the Bank, and
would cause FUNDAGRO to carry out its operations in accordance with the
FUNDAGRO operating manual, satisfactory to the Bank; and (b) by June 30, 1993,
and by June 30 of each year thereafter until project completion, the State
would prepare and furnish to the Bank for review a report evaluating the
performance of FUNDAGRO during the preceding year, under terms of reference
satisfactory to the Bank (para\. 4\.01 (f))\. The report would be prepared by
the Project Coordination Unit, and an Inter-institutional Credit Group,
comprising representatives of SEPLAN-MT, SEAAF, BENAT and EMPAER\.
3\.34 Croy Storaae\. Processinq and Marketing Information\. The project
would support the State Government's efforts to privatize marketing activities
like storage and processing\. Drying, storage and processing facilities would
be financed through the new FUNDAGRO rural credit line\. Therefore, state
agencies like EMPAER, the State Warehouse and Silo Company (CASEMAT), and the
Institute for Agricultural Protection (INDEA), reporting to SEAAF, would
provide only support services in the planning/supervision of marketing
infrastructure and training of farmers\. ENPAER would identify
storage/processing marketing projects, while CASEMAT would prepare the
technical projects; BEMAT would assist farmer groups in supervising
construction and would train farmers in storage/drying procedures\. To assist
in these efforts, the project would finance the establishment of a Central
Coordinating Marketing Unit (UCAC) to provide data collection, analysis and
dissemination of marketing and price information; support services to
facilitate contacts between sellers and buyers; and support services to
farmers' associations regarding the construction and overall management of the
storage units\. UCAC would be located in SEAAF and would report directly to
the Secretary of Agriculture\. The project would also finance the
establishment and equipment of seven classification posts for the grading of
farm products\. INDEA would implement this component and would train UAPT
personnel in grading and classification procedures\. INDEA would also prepare
information on grading and pre-classification at farm level for further
dissemination by UCAC\.
D\. Socio-Economic Infrastructure and Services
3\.35 One of the objectives of the project strategy is to encourage the
concentration of population in those areas which have the potential for
permanent agriculture, to mitigate the pressure on other areas which should
remain under forest cover\. Adequate and well-maintained, socio-economic
infrastructure and basic social services are important incentives for
retaining smallholders in Zones 2 and 3\. At the same time, the State's
commitment not to provide such infrastructure and services elsewhere should
serve as a strong disincentive to encroachment of forested areas in Zones 5
and 6\. The project would, therefore, finance a five-year time slice of
essential activities in health, education, water supply, rural
electrification, and maintenance and paving of existing rural roads\. These
- 24 -
activities would be concentrated in Zones 2 and 3 in southern Mato Grosso and
in three selected areas in the North, around the municipalities of Juina and
Castanheira, Juara and Novo Horizonte, and Colider and Terra Nova do Norte,
where high concentrations of population and good soils are coincidental\.
3\.36 Health\. The project would support the consolidation and expansion
of the health system in the Zones 2 and 3 through: (a) construction of about
27 new health posts, enlargement of 15 posts and restoration of 3 posts;
(b) equipment for the newly constructed and expanded posts; (c) five
ambulances and one vehicle for the coordination office; and (d) training of
health instructors, newly recruited health assistants and complementary
refresher training for existing personnel\. The project would finance
construction, vehicles, equipment and materials, and incremental operating
costs\. The State of Mato Grosso Health Secretariat (SES) would be responsible
for implementation\. During negotiations, the State provided assurances that
it would enter into contractual arrangementrs with each municipality before SES
start health investments in such municipality\. Such arrangement would include
inter alia the obligation of the municipality to provide maintenance required
for works performed under the project, starting one year after execution
(para\. 4\.01 (g))\.
3\.37 Education\. Only about 29% of the rural school-age population in
the target areas currently have access to schools, and dropout and repeater
rates are very high\. Among the main problems are: the shortage of classrooms,
poor qualification of rural teachers, lack of equipment and educational
material, and poor supervision\. The project would, therefore, support a five-
year slice of the Government's educational program, including:
(a) construction, restoration, or expansion of about 200 rural schools,
identified through a school mapping exercise; (b) training of about 400
uncertified teachers; (c) vehicles, equipment, and incremental operating
costs; and (d) a pilot program on environmental education in about 15 schools\.
A coordinating unit within the Secretariar of Education (SEC) would supervise
and coordinate implementation of the sub-component\. During negotiations, the
State provided assurances that it would enter into contractual arrangements
with each municipality before SEC start education investments in such
municipality\. Such arrangement would include inter alia the obligation of the
municipality to provide maintenance required for works performed under the
project, starting one year after execution\. (para\. 4\.01 (g))\.
3\.38 Water Sugoly\. The project would support the establishment of
simple water supply systems, including perforation of 55 artesian wells,
construction of 290 km\. of distribution network, and training of 55 well
operators\. Funds would be provided for construction, equipment and training\.
The Water Supply and Sewage Company of Mato Grosso (SANEMAT) would be
responsible for the implementation\. During negotiations, the State provided
assurances that SANENAT would establish the water supply systems only after
signing contractual arrangements with the municipalities, and would maintain
the systems for one year after their establishment and train one well operator
per community during this period\. After the first year, the maintenance of
the water supply system would be a municipality responsibility (para\. 4\.01
(g))\.
- 25 -
3\.39 Rural Electrification\. Zone 2, where agro-industrial and
processing activities are to be promoted by the State, has a limited power
distribution and the quality of service is poor\. The project would support:
(a) adaptation of the installations in the Cfceres and Quatro Marcos
substations, and establishment of about 527 km8 of distribution network;
(b) adaptation of the installation in Rondon6polis substation and
establishment of 155 kms of distribution network\. The Electricity Company of
Mato Grosso (CEMAT) would implement this component, which would be executed by
private contractors following Bank procurement guidelines\. CEMAT would hire a
consultant to help in the preparation of bidding documents and procurement
procedures in general\. During negotiations, the State provided assurances
that it would provide adequate maintenance for the works and equipment
financed under this sub-component (para\. 4\.01 (h))\.
3\.40 Rural Transport\. Adequate road rehabilitation and maintenance is
critical to ensure timely input supply and marketing in Zones 2 and 3\. The
project would support rehabilitation of 3,000 kms of State roads, and 4,500
kms of municipal roads; paving of the existing 69 km\. of gravel road from
Arapuntanga to Jaurd (MT 248) and 55 kms of the gravel road from Lambadi to
Salto do C6u - Vila Progresuo; training of personnel in road management and
administration; training and establishment of an environmental impact
assessment unit; and a study of the legal/institutional arrangements needed to
establish a permanent road maintenance system\. The Company for the
Development of Mato Grosso (CODEMAT) would administer the state and municipal
road programs\. During negotiations, the State provided assurances that before
starting rehabilitation of municipal roads, it will sign contractual
arrangements with each municipality providing for the obligation for such
municipality to maintain the municipal roads improved by the project (para\.
4\.01 (g)); and that the State would provide adequate maintenance of State
roads improved by the project (para\. 4\.01 (h))\. Paving of the two roads would
be carried out through ICB according to Bank procedures\. Presentation of
satisfactory Environmental Impact Assessments, including mitigating actions,
if necessary, for the paving of the roads between Araputanga-Jaurd and
Lambadi-Salto do C6u-Vila Progresso, would be a condition of disbursement for
related expenditures (para\. 4\.04 (b))\.
E\. Proiect Administration
3\.41 The project would help to strengthen the State and Federal Project
Coordination Units, with particular emphasis on improving their monitoring and
evaluation capabilities through training, technical assistance, and
consultancies\. Specifically, the project would finance: (a) the installation
costs of the State Project Coordination Unit, including administrative
offices, equipment and operating costs; (b) the operating costs of the Federal
National Coordination Unit in the National Secretariat for Regional
Development in the Presidency of the Republic (SDR-PR)i (c) technical
assistance; and (d) the implementation of a monitoring system based on
- 26 -
satellite imagery for the immediate detection of illegal deforestation and
invasion of protected areas\.
Proiect Organization
3\.42 Institutional Strenathenino\. The proposed institutional and
administrative arrangements for the project are based on detailed analyses of
the lessons learned under the previous POLONOROESTE projects\. An effort was
made to distinguish problems attributable to lack of institutional capacity
per so, from those which were due to inadequate or untimely release of
counterpart funds\. Funding problems were chronic under POLONOROESTE; when the
funding situation improved during the last two years, implementation
accelerated and state agencies managed to execute almost 100% of their
physical targets\.
3\.43 The principal institutional problems of the earlier POLONOROESTE
projects included: (a) overcentralization of decision-making and
implementation responsibility at the Federal level; (b) inexperienced State
institutions; (c) inadequate technical assistance and training, especially for
some of the more innovative activities in environmental protection,
conservation and agro-forestry development; and (d) the absence of adequate
personnel policies to allow key project agencies to hire and retain suitably
qualified staff\. For each of the main project agencies, organizational
structure, staffing, operating practices and budget were reviewed\. Taking
into account activities to be implemented, provision has been made under the
project for institutional strengthening of the main agencies through increased
staffing, training, technical assistance and consultancies; and for
redefinition of lines of responsibility for project Implementation between the
Federal and State Governments and among some executing agencies\. The main
proposals for institutional strengthening under the project include:
(a) decentralization of responsibility and accountability for the execution of
most project activities from the Federal to the State Government; (b) primary
reliance on the private contracting out of project works; (c) reliance on
existing Government structures, rather than the creation of special entities;
(d) extensive training, technical support and consultancy services,
particularly in fields requiring greater innovation or in areas in which a
major impact is expected in a short period of time; and (e) improvements in
personnel policies\.
3\.44 Coordination Arrangements\. The Secretariat for Regional
Development within the Presidency of the Republic (SDR-PR) has federal
responsibility for program coordination\. Interministerial decrees describe,
in general terms, the way in which the Federal Ministries and State
Governments would collaborate, as well as the various programming, budgeting
and funding procedures to be used\. In addition, SDR-PR and the Secretariat of
Planning of Hato Grosso (SEPLAN-MT) would conclude a separate Subsidiary
Agreement defining their respective roles\. The draft Agreement between the
State (through SEPLAN-MT) and the Lorrower (through SDR-PR), outlining
respective responsibilities for project implementation, including agreed
mechanisms of flow of project funds from the Federal Government to the State,
was reviewed during negotiations\. The Agreement would emphasize the State's
- 27 -
responsibility for project implementation, with a view to fostering a self-
sustaining development process in Mato Grosso\. A satisfactory signed
Subsidiary Agreement between the Borrower and the State would be a condition
of loan effectiveness (para\. 4\.03 (d))\.
3\.45 A State Council for Project Administration (CEAP), presided by the
Governor, would be responsible for overall project guidance and policy
direction, as well as for approval of the annual project budget and for
ensuring and guaranteeing adequate allocation of counterpart funds in the
state annual budget\. CEAP would be comprised of representatives of SDR-PR,
SEPLAN-MT, state implementing agencies, FUNAI, state offices of INCRA and
IBAMA, the municipal Mayors' Associations and NGOs\. SEPLAN-MT would function
as the Executive Secretariat of the Council\. It would be assisted on a day-
to-day basis by a State Project Coordination Unit (PCU) which would be formed
by a Director, 2 sub-directors (in charge of the technical and financial
control units), 5 Area Chiefs (Supervision, Monitoring, Financial Control,
Administrative Support, Documentation and Information), 7 Area Supervisors, 8
sectoral monitors, 4 technicians in financial control and auditing, and
support staff\. The Technical Unit would be responsible for the technical
review and consolidation of the work programs of the executing agencies, with
separate sections in charge of environmental control, forest development,
agro-forestry, credit and marketing, Amerindian support, and socio-economic
infrastructure and services\. Technical staff would spend a minimum of one
week per month on field supervision in order to ensure close contact with
field staff and project beneficiaries, and effective response to local
problems\. The Financial Control Unit would handle budgeting, disbursements
and accounting matters\. The satisfactory staffing of the PCU would be a
condition of effectiveness (para\. 4\.03 (d))\. During negotiations, the State
provided assurances that it would maintain within SEPLAN-MT the PCU, with
satisfactory organization, structure, functions and staffing (para\. 4\.01 (i))\.
3\.46 Implementation Arrancements\. The principal implementing agencies
would include those for land regularization (INTERMAT, INCRA); agro-ecological
zoning (SEPLAN-MT); environmental conservation, forest protection and
management (FEMA, IBAMA, PMF-MT); support to indigenous communities (FUNAI,
IBAMA, INTERMAT, INCRA, PMF-MT); rural extension and agricultural research
(EMPAER); rural credit (BEMAT); rural transport (CODEMAT); marketing support
services (SEAAF, EMPAER, CASEMAT, INDEA); rural electrification (CEMAT);
health (SES-MT); education (SEC-MT); and water supply (SANEMAT)\. These
agencies would be directly responsible for budgeting and implementation, and
they would be accountable for the application of funds and the results
obtained\. To overcome the poor inter-agency coordination of the previous
project, the various agencies would formalize the arrangements governing their
form of cooperation, clearly identifying the distribution of tasks, and they
would maintain an updated organization chart with job descriptions of all key
field personnel financed by the project\. Draft Operating Agreements
(convenios) between the State (through SEPLAN-MT/PCU) and the project
executing agencies, for each component, were reviewed during negotiations, and
the signing of satisfactory agreements would be a condition of loan
effectiveness (para\. 4\.03 (d))\. During negotiations, the State Government
- 28 -
provided assurances that these agreements would be maintained throughout
project implementation (para\. 4\.01 (1))\.
3\.47 Annual Plans and Budgets\. Draft Annual Operating Plans (POAs),
prepared by SEPLAN-MT, i *uld be based on the multi-annual targets of the
project, and corrected according to experience gained in the previous year,
and submitted to the Bank each year, together with the estimated total State
and Federal funding allocations (both counterpart fvnds and the amount of
external funds budgeted)\. During negotiations, Federal and State Governments
provided assurances that they would provide to the Bank: (i) by July 15, 1992,
and by July 15 of each year thereafter, the annual budgetary allocation
proposal for the project for the next calendar year; and (ii) for review and
comments, by November 15, 1992, and by November 15 of each year thereafter,
the draft POA including the physical targets, budget, staffing, training and
procurement targets for project activities for the next calendar year\. It
would also provide the Bank with a copy of the final budget and POA as soon as
they have been approved, and would take all necessary action to ensure that
the project is implemented in each year in accordance with the POA (para\. 4\.02
(d))\.
3\.48 Proiect Monitoring and Environmental ImvacL Assessment\. Physical
and financial monitoring of project implementation, and on-going assessment of
project impact, would be carried out through routine supervision by each of
the project executing agencies and by the state Secretariat of Planning
through its PCU/M&E unit and the Federal Government through SDR-PR\.
Monitoring and project coordination would be strengthened and information
systems streamlined through technical assistance and training\.
3\.49 Executing entities would regularly collect and analyze data on key
project indicators to assess progress, compare results obtained with initially
expected target levels, and identify possible problems to be discussed with
SEPLAN/PCU personnel at least on a monthly basis\. A quarterly review of
activities would be prepared by each institution and submitted to SEPLAN/PCU\.
SEPLAN/PCU, based on the quarterly progress reports, would conduct a technical
review before presentation to the State Project Council\. During negotiations,
the State Government provided assurances that, based on the regular quarterly
agency reports, State Council proceedings, and ad hoc reports on specific
subjects carried out during project implementation, it would produce every six
months project progress reports, and that copies of these semi-annual and
annual progress reports would be sent to the Bank, through the SDR-PR, no
later than three months after the end of each semester/fiscal year (para\. 4\.02
(e))\. The semi-annual reports would: (i) describe the progress, or the lack
of progress, in project execution and the degree of success in implementing
agro-ecological policy; and (ii) identify possible implementation problems and
describe plans to resolve them\. These reports would be analyzed by Bank
supervision missions\.
3\.50 Lessons learned from the previous POLONOROESTE projects indicate
that there is a need to strengthen the monitoring and supervision of projects
which have significant human or physical environmental consequences\.
Therefore, in addition to Federal Government/Bank supervision missions, a mid-
- 29 -
term review and final assessment of the project at the time of completion
(PCR), an Independent Evaluation Committee would be invited yearly to monitor
the environmental and social performance of the project\. The Federal and
State Governments provided assurances during negotiations, that: (i) a mid-
term review of the project would take place through an exchange of views among
the Bank, the Borrower and the State, no later than June 30, 1995, on the
basis, inter alia, of a report by the Borrower submitted to the Bank at least
30 days prior to the review (para\. 4\.02 (f) (ii)); (ii) each year the State
would invite an Independent Evaluation Committee to monitor the implementation
of the environmental policy and regulatory reforms undertaken in connection
with the project, the compatibility of annual Federal and State investment
programs in Mato Grosso with the recommendations of the agro-ecological zoning
and the impact of the project in the State; the composition of the Committee
would include representatives of relevant local Brazilian Non-Governmental
Organizations (NGOs); and the findings of the Committee would be made
available to the Bank by June 30, 1993, and by June 30 of each year thereafter
(para\. 4\.01 (j)); and (iii) A final assessment of the overall project
implementation performance would be carried out within six months after the
project completion date (para\. 4\.02 (f) (iii))\.
3\.51 In the past, monitoring activities have placed an excessive
administrative burden on field staff, in particular, through the use of
multiple repetitive questionnaires and frequent visits of various
institutions\. Under the project, information requirements would be
streamlined, and requests for statistical information on project progress and
developments in the field would be channelled through the management staff of
the participating agencies and the PCU\. During negotiations, the Borrower
provided assurances that by September 30, 1992, it would furnish to the Bank
for review draft performance indicators and operating procedures for the M & E
of project activities, and by December 31, 1992, would adopt indicators and
procedures satisfactory to the Bank (para\. 4\.02 (f) (i))\. These activities
and project M & E during implementation would be supported by technical
assistance\. The Government has already entered into an agreement with UNDP to
field a team of six sectoral technicians and one administrative assistant
which would strengthen the SEPLAN/PCU capacity in monitoring and evaluation
through "on the job training" of the PCU technicians\. The above technicians
would be locally recruited according to UNDP rules and regulations\. Finally,
since the main measure of success of the various project interventions would
be their effectiveness in reducing the rate of deforestation in Mato Grosso,
the project would provide for the establishment of a forest cover monitoring
unit within SEPLAN-MT (para\. 3\.23)\.
3\.52 Accounts and Auditing\. Each of the federal and state implementing
agencies would maintain separate accounts for project expenditures, which
would be audited annually by independent private or public auditors acceptable
to the Bank\. This audit report would also convey the auditor's opinion and
comments as necessary on the methodology employed in the compilation of the
Statements of Expenditures, their accuracy, the relevance of supporting
documents, eligibility for financing in terms of the project's legal
agreements and standards of record keeping and internal controls related to
the foregoing\. The Special Account to be opened for this project would be
- 30 -
audited by independent auditoru satisfactory 'o the Bank (para\. 3\.62)\. During
negotiations, the Federal and State Governments provided assurances thats
(a) the Special Account and the project accounts would be established,
maintained and audited annually according to standards and procedures
satisfactory to the Bank; (b) terms of reference for the auditors would
include, inter alia, detalled procedures for the examination and verification
of the Statements of Expenditures (SOEs) of the project accounts; and
(c) copies of the audit reports would be submitted to the Bank within six
months of the close of each fiscal year (para\. 4\.02 (g))\.
Proiect Costs
3\.53 The total project cost, lncluding taxes, physical and price
contingencies, is estimated at US$285\.7 million, with a foreign exchange
component of US$55\.3 million, or about 19% of the total cost (Loan and Project
Summary and Annex 6)\. Project baseline costs amount to US$241\.9, including
$11\.7 million equivalent in local taxes\. Physical contingencies of US$15\.2
million, or about 6% of total baseline cost, have been estimated at 10% for
civil works, 15% for road construction, 10% for equipment and furniture,
vehicle maintenance costs and personnel field allowances\. Price contingencies
of US$28\.6 million or 12% of baseline cost were includr\.d and are based on
estimated international inflation rates of 3\.9% p\.a\. t-rough 1997\. It was
assumed that periodic currency adjustments, estimated on a purchasing power
parity basis, would compensate for differences between the rates of the US
dollar and local currency inflation\. Recent experience indicates that this
assumption may not be valid in some cases; increases in local currency costs
for civil construction over some of the last years have exceeded the rate of
devaluation of the local currency\. Therefore, project costs would be
carefully monitored throughout the project implementation period\. In the
event that this trerd continues, it would become necessary for the Government
to finance these cost overruns, and the Bank, if needed, would reduce its
disbursement percentages to maintain participation through project completion\.
Financina Plan
3\.54 The proposed Bank loan of US$205\.0 million would finance 75% of
total project costs net of taxes, or 72% of costs including taxes (Annex 6,
Table 6\.4, and Loan and Project Summary)\. The share of Bank financing is
justified because of the strong environmental focus of this operation\.
Significant policy actions have already been undertaken in preparation for the
project, to which commitment is high at both Federal and State levels\.
However, the severe fiscal situation in the country also makes it difficult at
this point in time to carry out the kinds of environmental initiatives planned
under the project because the benefits, although substantial in economic
terms, would materialize only in the long term and largely in the form of
foregone losses\. The proposed share of Bank financing would also help to
reduce implementation risks caused by inadequate or untimely counterpart
funding\. Counterpart funds would be provided by the Federal (US$40\.7 million
or 14% of costs including taxes) and State Governments (US$40\.0 million or 14%
of costs including taxes)\. The Bank loan would finance 100% of foreign
exchange costs and 65% of local costs\. It would be repayable over 15 years,
- 31 -
including a five-year grace period\. The Federative Republic of Brazil would
be the Borrower of the loan and would assume the foreign exchange risk\. To
enable the early start-up of project activities, retroactive financing would
be provided up to a maximum of US$20\.5 million in respect of eligible project
expenditures incurred in between the end of project appraisal (October 1991)
and loan signing, expected in mid-1992\.
Procurement
3\.55 Procurement arrangements are summarized in the following table:
Procurement Arrancements
(US$ Million)
Procurement Method
TOTAL
Category ICB LCB OTHER NBF COST
Civil Works 17\.6 41\.5 6\.0 I/ - 65\.1
(12\.7) (29\.9) (4\.3) - (46\.9)
Equipment, Machinery, 9\.0 20\.5 4\.2 0\.5 2/ 34\.2
Vehicles ar\.d Furniture (6\.5) (14\.8) (3\.0) - (24\.3)
Contractual Services 17\.3 L/ 12\.8 1\.0 - 31\.1
(17\.3) (12\.4) (0\.7) (30\.4)
Technical Assistance, - - 22\.2 - 22\.2
Training and Studies (22\.2) (22\.2)
Salaries and Benefits - - 58\.0 - 58\.0
(16\.8) (16\.8)
Other Operating Costs - - 41\.0 - 41\.0
(39\.8) (39\.8)
Investment Credit - - 34\.1 - 34\.1
(24\.6) (24\.6)
TOTAL 43\.9 74\.8 166\.5 0\.5 285\.7
(36\.5) (57\.1) (111\.4) - (205\.0)
Figures in parenthesis are the respective amounts expected to be financed by
the Bank\.
1/ Includes only materials for small civil works to be executed under force
account\.
2/ Computer equipment to be acquired as reserve procurement item and not to
be financed under the proposed Bank loan\.
3/ Aerial photography and land zoning operations\.
- 32 -
3\.56 Civil works would include road paving and rehabilitation, well
perforation and buildings\. Road paving contracts exceeding US$5\.0 million
would be awarded through International Competitive Bidding (ICB) following
Bank procurement guidelines\. For road rehabilitation, well perforation and
buildings, because of the dispersed nature and relatively small size of most
of these works, and for which the largest single contract is not expected to
exceed US$5\.0 million, i\. is unlikely that foreign contractors would be
interested\. Accordingly, Local Competitive Bidding (LCB) procedures,
satisfactory to the Bank, would be used, although interested foreign bidders
would be allowed to participate\. For all componerts other than roads, force
account would be permitted for very small works which cannot be grouped into
c ntracts of at least US$150,000, provided the aggregate value of such works
does not exceed US$6\.0 million\. For these works, the Bank would finance only
the cost of materials\. Total civil works procurement under the project would
be US$65\.1 million, of which about US$17\.6 million would be procured through
\.CB and about US$42\.5 million through LCB\.
3\.57 Contracts for goods ex-eeding US$500,000 for a cumulative total of
US$9\.0 million, would be awarded through International Competitive Bidding
(ICE) following Bank procurement guidelines\. Contracts for goods and
equipment expected to cost between US$25,000 and US$500,000, and long-term
helicopter and light aircraft leasing and maintenance contracts, not exceeding
an aggregate amount of US$20\.5 million, would be procured under LCB\. Office
equipment, furniture, and other similar goods required by several of the
executing agencies over the project implementation period, estimated to cost
less than US$25,000 per contract, would be awarded on the basis of evaluation
of price quotations invited from at least three suppliers in accordance with
procedures acceptable to the Bank, provided they do not exceed an aggregate
amount of US$4\.2 million\. Computer equipment manufactured in Brazil and
required by the project, as reserve procurement items, would not be financed
under the proposed loan\. With respect to goods and equipment financed under
the investment credit sub-component of the project, since the majority of
these operations are expected to average less than US$1,000-2,000 and no
individual operation would exceed USS50,000, established commercial
procurement practices would be followed\.
3\.58 Contract services for aerial photography and land zoning
operations amounting to about US$17\.3 million, and exceeding US$5\.0 million
per contract, would be awarded through ICB, according to Bank procedures\.
Other services not expected to exceed US$1\.0 million dollar per contract and
US$12\.8 million in the aggregate, would be procured through LCB procedures
satisfactory to the Bank\. Consultant services would be procured in accordance
with Bank guidelines for the use of consultants\.
3\.59 Civil works contracts over US$3\.0 million, and contracts for rural
electrification equipment, aircraft leasing and contract services over
US$250,000, would be subject to prior Bank review of bidding documents, bid
evaluation, award proposals and final contracts\. In total, Bank review would
cover about 60% of the value of contracts financed under the project\. During
negotiations, the State and Federal Governments provided assurances that the
above procurement arrangements would be followed (para\. 4\.01 (k))\.
- 33 -
3\.60 The Project Implementation Schedule and Estimated Annual
Contractual and Other Payments are summarized in Annex 6, Table 6\.6\. The loan
closing date would be December 31, 1997\.
Disbursements and Special Account
3\.61 The proceeds of the proposed loan would be disbursed against
eligible project expenditures at the rates of: (a) 100% of costs incurred in
the natural resource management and protection sub-components, land zoning,
land regularization, training costs, studies, and Technical Assistance;
(b) 75% of all incremental costs for rural extension, agro-forestry research,
rural credit and project administration at Federal and State level; and
(c) 50% of all socio-economic infrastructure costs and roads paving and
maintenance\. Disbursement for civil works not exceeding US$3\.0 million,
contracts for goods and equipment below US$250,000, works carried out by force
account and operating expenses would be made against Statements of
Expenditures prepared by the various executing agencies and the PCU and
certified by SDR-PR\. Supporting documentation would be retained by the PCU\.
Conditions of disbursement would be: (i) for rural credit expenditures, that
the final legal documents establishing FUNDAGRO and a satisfactory FUNDAGRO
operating manual have been presentcd to the Bank; and (ii) for road paving
expenditures, that satisfactory Environmental Impact Assessments, including
mitigating actions, if necessary, had beer presented to the Bank (paras\. 3\.33,
3\.40 and 4\.04 (a)-(b))\.
3\.62 To facilitate Bank disbursement and reduce Government prefinancing
requirements for local currency expenditures, a Special Account would be
opened in the Central Bank with an initial deposit of US$15\.0 million\.
Withdrawals from the Special Account would be supported by the required
documentation or Statements of Expenditures (SOEs)\. Loan disbursements are
expected to be completed within about 5-1/2 years (Loan and Project Summary
and Annex 6, Table 3)\. The Bank standard disbursement profile for this type
of project is about 8-1/2 years\. However, the previous POLONOROESTE project
in Mato Grosso (Ioan 2116-BR) took only 7 years to complete, including a
period of loan suspension of 9 months, related mainly to non-compliance under
another POLONOROESTE project (Loan 2060-BR)\. Furthermore, the State has now
acquired extensive experience in implementation, reflected in the fact that
during the last year of Loan 2116-BR project performance was good, exceeding
targets in some areas of production and service delivery (see PCR Report No\.
9382)\. Finally, Bank financial participation of 75% of the overall project
costs, excluding taxes, would help to minimize counterpart funding shortages
and delays which have played a large role in past implementation delays\.
Consequently, the proposed five and one-half year disbursement pr iiod is
realistic\.
- 34 -
Proiect Benefits and Justification
3\.63 The main benefits of the project, i\.e\., reduction of wasteful
deforestation, conservation of biodiversity, protection of the environment and
of indigenous communities' rights do not, for the most part, yield direct
financial returns\. Nevertheless, the establishment of conservation units and
state forests would help to preserve the lorewt patrimony and ensure genetic
resources for agriculture, forestry, medical and other scientific and
industrial uses\. Because much of the protected area would be on steep
terrain, they would also protect critical watersheds by influencing water
flows and decreasing soil erosion\. Project enforcement actions would benefit
the population as a whole by reducing the risk of water pollution and
providing a safer environment\. In addition, some 16,000 indigenous people
living on 38 existing reservations and at least nine more to be created would
benefit from increased protection from encroachment, boundary demarcation and
improved health services\. Finally, about 32,100 low-income farm families
would benefit directly from the strengthening of technical services in those
areas of the state which allow sustainable agricultural development\. A large
part of the rural community in those same areas would also benefit from
4\.mproved socio-economic infrastructure and services\.
3\.64 Farmers' Benefits\. The project technical strategy, which would be
promoted by extension messages based on adaptive research, would stress
adoption of improved cultural and husbandry practices (timing, plant spacing,
and weeding) and modern inputs (seeds, fertilizers and pesticides);
utilization of improved genetic material and certified seeds; improved soil
conservation activities on farmers' fields; and reduction in crop losses due
to improved on-farm storage and drying\. Eight illustrative farm models, five
for Zone 2 and three for Zone 3, have been analyzed to verify the returns and
production increases expected to come from the farmers who would adopt the
proposed practices\. Average assumed yields at full development are 20% to 40%
below those already being obtained by the most progressive farmers in the area
and are therefore considered to be conservative estimates for the typical
farmer\. Overall, the project would support an agricultural development
program which would result in: (a) decreases in the area of annual crops by
34,900 ha and of cotton by 8,500 ha; (b) diversification with perennial crops
on about 47,300 ha; and (c) enrichment of 20,000 ha of secoadary growth/forest
follow\. The additional output from the project would represent only a
relatively small share of total domestic production of these crops, and no
significant marketing problems or price effects are foreseen\.
3\.65 At present, the average family income of project beneficiaries is
estimated at an equivalent of about USS1,930/year\. It is projected that this
would increase to an average of about US$5,155/year at full development,
reprenenting an increase of 170% over the present level\. This level would be
sufficiently attractive for the farmers to adopt the technical strategy
encouraged by the project\. The returns to labor would increase from
US$7\.4/worker-day to US$11\.9/worker-day\. The estimated financial rates of
return of the models vary from 13% to more than 50% for the various farm
models\.
- 35 -
3\.66 Economic Return to Aaricultural Pevelooment\. An economic rate of
return has been estimated only for the agricultural development component\.
The cost stream used in the economic evaluation of productive agricultural
activities included: (a) all on-farm incremental investment and operating
costs (based on the phased aggregation of the different farm models);
(b) off-farm investments and incremental operating cost for agricultural
extension, storage and drying facilities, and access roads, and 30% of the
cost of project coordination and management; and (c) recurrent costs of
services and maintenance of infrastructure after the five years of project
implementation\. The benefits of the agricultural development component would
be the increased production generated by 20,200 low-income farm families
(estimated to adopt the proposed practices) presently living in Zones 2 and 3\.
The benefit stream used in the economic rate of return analysis includes all
the incremental production (and reduced losses) that these farmers would be
expected to achieve\.
3\.67 The prices used in the economic analysis for internationally traded
commodities have been estimated on the basis of World Bank price projections,
which were brought to farmgate to take into account transport, handling and
insurance costs\. All other commodities are valued at farmgate prices\. Labor
was priced at the on-going market wage adjusted by a standard conversion
factor of 0\.80\. Brazil is also a net importer of fertilizer for which a
similarly adjusted border price was calculated\. Physical contingencies at 15%
for roads construction, 10% for buildings, office equipment and furniture, and
vehicles running costs and personnel field allowances have been added to
costs\. Any transfer payments such as duties and taxes were excluded from the
costs streams\. The local currency portion of the costs has been adjusted by a
standard conversion factor of 0\.80\. Based on these assumptions the ERR was
estimated at 15%\. To measure the impact of possible changes in the project's
benefits and costs streams, several sensitivity tests were conducted to
reflect possible variations in output and prices\. However, even under the
most conservative assumption (total costs increased by 20%), the ERR was still
about 13%\. Finally, the ERR was calculated assuming that only 50% of roads
costs are directly related to the agricultural development component of the
project, which resulted in a slightly higher 18% return\.
3\.68 Employment Benefits\. The proposed project would improve the
incomes and living standards of those families who are already in the project
area on existing holdings, without having to migrate to other areas\. It is
estimated that the development of perennial crops in the project area would
create requirements for approximately an additional 17,000 fully employed
laborers per year at full development, of which about 19% would be provided by
hired labor\. In addition, the economic activities generated by the
incremental agricultural production would increase the number of job
opportunities in the intermediary processing industries\.
3\.69 Fiscal Imoact\. While the long-term fiscal impact of the project
would be positive, this is not likely to be the case during the years
immediately following project completion\. Total recurrent costs in project
year 5 (i\.e\., the final year of project implementation) would be about US$18\.0
million, equivalent to approximately 5% of the total 1990 State budget\. By
- 36 -
full development (project years 12-15), selected project activities should
provide the State with annual incremental tax revenues at least sufficient to
cover that amount\. These revenues would derive from the federal tax on the
circulation of goods (ICM) that would apply to the incremental marketable
production, and they would be retained by the State Treasury and
municipalities\. However, in the first years after project completion, there
would probably be a negative gap, and the State may require continued fiscal
support from the Federal Government for a few years\. To a certain extent,
such support would be justified given that most of the deforestation and othe_:
natural resource degradation in Mato Grosso over the last ten to fifteen years
has been caused by migration from other parts of Brazil\.
Proiect Risks
3\.70 Inadequate knowledge of the State's natural resources led to the
occupation of some lands with little or no sustainable potential, accompanied
by rapid deforestation and resource depletion\. However, given current
technical knowledge, particularly the availability of agro-ecological zoning,
the prospects for achieving sustainable development, and environmental
protection, in Mato Grosso are much better\. The Government's commitment to
comply with the zoning recommendations in its investment programming would
reduce the risk of continued occupation of areas without sustainable
potential\.
3\.71 The project would support the identification, creation and border
demarcation of conservation units and indigenous reserves\. However, such
measures would not, by themselves, be sufficient to prevent illegal
encroachment and deforestation of these areas\. Protection of environmentally
fragile areas in Mato Grosso has been weak in the past, both because of the
economic and financial incentives framework which often encouraged use of
those areas, and because of the State's limited enforcement capacity and
inadequate knowledge of the situation in the field\. Various environmental
policy and regulatory reforms which the Government has taken in the last few
years and other being undertaken in preparation for this project should help
to redress the basic incentives/disincentives problems\. Those project
activities designed to intensify land use in suitable areas and to develop
sustainable forms of extractive production in areas which should remain under
forest cover would also help to reduce pressure on the forests by small,
shifting cultivators\. Finally, the environmental protection subcomponent
would strengthen the institutional capacity of key agencies to enforce the
State's environmental policies and legislation and to protect the borders of
its conservation unite and reserves\. The field information system would also
be strengthened and supplemented by the use of satellite imagery, permitting
immediate detection of forest burning and other forms of invasion\. However,
given the extensive areas to be protected, it must be recognized that even
these measurec may not eliminate all illegal activities during the project
period\.
3\.72 The Mato Grosso EAP would be maintained throughout the project
period, and would address the most important known causes of environmental
degradation in Mato Grosso\. However, there is always a risk that
- 37 -
unforeseeable factors could undermine the impact of these reforms\. For
instance, unexpected weather or economic problems in other parts of Brazil
could once again accelerate spontaneous migration to the Northwest Region\.
Unanticipated diseases could undermine the viability of some important
agricultural and agro-forestry activities in those parts of the State which
are currently capable of sustaining production\. To mitigate these risks,
appropriate monitoring and evaluation devices are being put into place at
project start-up; an Independent Evaluation Committee, including NGO
representatives, would convene annually to review progress and recommend
corrective actions or refinements to project strategy as necessary; and a
joint (wvernment-Bank implementation review would be undertaken annually\.
3\.73 Another possible risk stems from the fact that current fiscal
difficulties in Brazil have led the State Government to place severe
restrictions on etaff recruitment and compensation, which could threaten the
necessary strengthening of Nato Grosso's environmental, land and agro-forestry
institutions\. The State Government presented during negotiations a strategy
to ensure that project executing agencies would be able to recruit and retain
qualified technical and managerial staff, and the agreements reached (e\.g\.,
acceptable personnel plans, providing for recruitment, career development and
adequate remuneration of essential staff) would be closely monitored\. The
project also includes considerable technical assistance and staff training to
support the development of key institutions\. Also, Bank and Federal
Government supervision of the project would be intensive throughout the
project period (Annex 8)\.
3\.74 Although the potential problems mentioned above should not be
minimized, the alternative of inaction would pose far greater risks\.
Accelerated migration to the frontier areas of Mato Grosso and Rond8nia did
not start with POLONOROESTE\. Rather, the program was established in 1980 to
try to cope with a process which was already underway: during the 1970s, the
population of these States more than quadrupled, socio-economic problems
increased, deforestation was uncontrolled, and the security and well-being of
the State's indigenous inhabitants were being threatened\. POLONOROESTE did
not succeed in reversing these trends during the first few years, but its
accomplishments have been significant\. Today, the State and Federal
Governments are far better poised to confront the enormous challenges of
reducing the inflow of migrants to the State and channelling them into
sustainable economic activities\. Without active intervention, the continued
uncontrolled spread of low-cost, extensive and itinerant agricultural
production svstems would eventually destroy the remaining natural forests\.
The project represents a major new initiative on the part of both the
Government and the Bank to begin to reverse this trend\.
- 38 -
IV\. SUMMARY OF AGREEMENTS REACHED AND RECOMMENDgTIONS
4\.01 During neaotiations, the State of Mato Grosso provided assurances
&tha2
(a) By June 30, 1994, agro-ecological, soil and topographic maps of the
State of Mato Grosbo would be prepared, in consultation with the
Secretaria de Assuntos Estrat4aicos of the Borrower's presidency,
and furnished to the Bank, in accordance with terms of reference
satisfactory to the Bank (para\. 3\.10);
(b) By September 30, 1992, it would prepare and present to its
Legislative Assembly, for approval, proposed legislation on land
use and on environment, in form and substance satisfactory to the
Bank, and it would take all necessary action to have such proposed
legislation approved by its Legislative Assembly as soon as
possible (paras\. 3\.12 and 3\.16);
(c) (i) By June 30, 1994, it would establish and thereafter maintain
forest reserves and conservation units in areas identified as
suitable (all unoccupied public lands) through the discriminatory
works carried out in the first year of the project in Zones 5 and 6
of the agro-ecological zoning respectively; and (ii) by June 30,
1995, it would ustablish and thereafter maintain forest reserves
and conservation units in all remaining areas, identified as
suitable (all unoccupied public lands), through the discriminatory
works in Zones 5 and 6 of the agro-ecological zoning, respectively,
provided that the minimum number of forest reserves and
conservation units established by June 30, 1995 would be nine and
16, respectively (paras\. 3\.15 and 3\.18);
(d) By June 30, 1993, it would prepare, and put into effect thereafter,
a satisfactory plan of action to encourage the management of
privately owned forest areas in Zones 5 and 6, consistent with the
agro-ecological zoning (paras\. 3\.15 and 3\.18);
(e) By January 1, 1993, and by January 1 of each year thereafter until
project completion, it would prepare and report on the satellite
monitoring of the rate and location of deforestation that occurred
in its territory during the preceding year, and the results would
be made available to the Bank and to the public (para\. 3\.23);
- 39 -
(f) (i) it would maintain FUNDAGRO, under terms and conditions
satisfactory to the Bank, and would cause FUNDAGRO to carry out its
operations in accordance with the FUNDAGRO Operating Manual,
satisfactory to the Bank; and (ii) by June 30, 1993, and by June 30
of each year thereafter until project completion, the State would
prepare and furnish to the Bank for review a report evaluating the
performance of FUNDAGRO during the preceding year, under terms of
reference satisfactory to the Bank (para\. 3\.33);
(g) It would enter (through SES, SEC, SANEMAT and CODEMAT,
respectively) into contractual arrangements, satisfactory to the
Bank, with each municipality in which health, education, water
supply and road rehabilitation programs would be carried out,
before starting such part of the project in each such municipality,
each agreement to contain, inter alia, the obligation of the
municipality to provide the maintenance required for the works
performed under the project, starting one year after its respective
execution (paras\. 3\.36, 3\.37, 3\.38 and 3\.40);
(h) It would provide maintenance for the works and equipment included
under the Rural Electrification and Rehabilitation of State Roads
components of the project (paras\. 3\.39 and 3\.40);
(i) It would maintain within SEPLAN-MT the PCU with satisfactory
organization, structure, functions and staffing (para\. 3\.45);
(j) It would invite each year an independent evaluation committee to
monitor the implementation of the environmental policy and
regulatory reforms undertaken in connection with the project, the
compatibility of annual Federal and State investment programs in
Mato Grosso with the recommendations of the agro-ecological zoning,
and the impact of the project in the State\. The composition of the
committee would include the representatives of relevant local
Brazilian NGOs\. It would make the findings of the committee
available to the Bank by June 30, 1993, and by June 30 of each year
thereafter (para\. 3\.50 (ii));
(k) Procurement procedures would be as specified in paras\. 3\.55 - 3\.59;
and
(1) It would maintain the Operating Agreements with the various project
executing agencies throughout the life of the project (para\. 3\.46)\.
4\.02 Durina neootiations\. the Borrower and the State of Mato Grosso
orovided assurances that:
(a) (i) Policy reforms under the Mato Grosso EAP would be enforced
throughout the duration of the project; (ii) Federal and State
investment programs for Mato Grosso, which currently take into
account land use capabilities, ecological and agro-ecological
- 40 -
zoning considerations, would, at each update thereof, be maintained
consistent with such considerations and compatible with much
zoning; and (iii) by September 30 of each year during the execution
of the project, furnish to the Bank, for its review and comment,
any intended update or such investment program for the forthcomlng
year (para\. 3\.04);
(b) By no later than December 31, 1992, a study on the feaslbillty of
the enlargement of the existing conservatLon unit located in the
Chacada dos GuimarAes ln Mato Grosso would be carried out; and lf
so recommended by such studles all action necessary to enlarge, and
thereafter maintain as enlarged, such conservation unit would be
promptly taken (para\. 3\.18);
(e) The Sarar6 Actlon Plan (to prevent future lllegal occupatlons of
the Sarar4 Indigenous Area and to recuperate the area from any
environmental damages caueed by minlng) would be carried out in
accordance wlth a timetable satisfactory to the Bank (para\. 3\.22);
(d) The Borrower would provide to the Bank: (i) by July 15, 1992 and by
July 15 of each year thereafter, the annual budgetary allocation
proposal for the project for the next calendar year; and (LL) for
revLew and comments by November 15, 1992, and by November 15 of
each year thereafter, the draft POA, includlng the physlcal
targets, budget, stafflng, trainlng and procurement targets for
project actlvltles for the next calendar year\. It would also
provlde the Bank wlth a copy of the flral budget and POA as soon as
they have been approved, and would take all necessary actions to
ensure that the project is implemented each year ln accordance with
the respectlve POA (para\. 3\.47);
(e) Satlefactory project progress reports would be prepared by the
State and furnlshed to the Bank, through the SDR-PR, no later than
three months after the end of each semester of the fiscal year
(para\. 3\.49);
(f) (i) By September 30, 1992, the Borrower would furnish to the Bank
for review, draft performance indicators and operating procedures
for the M&E of project actlvlties, and by December 31, 1992, would
adopt indicators and procedures satlsfactory to the Bank
(para\. 3\.51); (LL) a mld-term revlew of the project would take
place through an exchange of vlews among the Bank, the Borrower and
the State, no later than July 31, 1995, on the basis, lnter alia,
of a report by the Borrower submltted to the Bank at least 30 days
prlor to the revlew (para\. 3\.50 (i)); and (iii) a flnal assessment
of the overall project implementation performance would be carried
out within 6 months after the project completion date (para\. 3\.50
(liL)); and
- 41 -
(g) (i) The Special Account and the project accounts would be
maintained and audited annually according to standards and
procedures satisfactory to the Bank; (ii) terms of reference for
the auditors would include, inter alia, detailed procedures for the
examination and verification of the Statement of Expenditures for
project accounts; and (iii) copies of the audit reports would be
submitted to the Bank within six months of the close of each fiscal
year (para\. 3\.52);
4\.03 Conditions of loan effectiveness, if not completed earlier, would
be:
(a) the signing of the INCRA/State of Mato Grosso agreement mentioned
in para\. 3\.12;
(b) completion of removal of all squatters living within the boundaries
of the Zor6 Indigenous area (para\. 3\.22);
(c) (i) completion of removal of all miners and other illegal occupants
from within and around the Sarar6 Indigenous Area; and (ii)
presentation to the Bank of a satisfactory plan (The Sarar& Action
Plan) to prevent future illegal occupations of the Sarare
Indigenous Area and to recuperate the area from the environmental
damages caused by mining (para\. 3\.22); and
(d) satisfactory staffing of the Project Coordination Unit (para\.
3\.45), the signing of a satisfactory Subsidiary Agreement between
the Borrower and the State (para\. 3\.44), and the signing of
satisfactory Operating Agreements between the State and each
project execution agency (para\. 3\.46)\.
4\.04 Conditions of loan disbursement would be:
(a) for credit expenditures, presentation of satisfactory evidence of
the establishment of FUNDAGRO and that FUNDAGRO has adopted a
satisfactory Operating Manual (paras\. 3\.33 and 3\.61); and
(b) for road paving expenditures, presentation of satisfactory
Environmental Impact Assessments, including mitigating actions if
necessary, for the paving of the roads between Araputanga-Jaurd and
Lambadi-Salto do C6u-Vila Progresso (paras\. 3\.40 and 3\.61)\.
4\.05 Subject to the above agreements and conditions, the proposed
project would be suitable for a Bank loan of US$205\.0 equivalent with a term
of 15 years, including a 5-year grace period\.
June 1, 1992
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Matrix of Main Environmental Policy Issues Measures and Actions
Pmblem Reomble for Actions Taken Since First Identification Actions to be Taken Moigtorin Actions and Tins
EnviuxunetaI Deerfdtion Mission (October 1988'
I \. eIppropria exploitation of Development of socio-economic- - Further detailing of zomng and - Completion of agro-ecologiod
area due to absence of zoning ecological zoning which identifies land soil maps slc 1:50,OO in zoning not later than June 30,
nd bad use controls, suitabe for stinable development Zone 213, 1:250,000 other 1994\.
fiom those which do not have that zones of the State\. - Contimous monitoring of
poial or which have special - Enforcement of zoning\. complance with zoning by
ecological or social (Indigens executing agncies by men of
eerves) significance and need to be satelite imagery to detec
prtcted\. State Law of May 1992 illegal defotation and
legalizig the agro-ecologica zoning\. ecroachment\.
- Continuous enforcemeat of
zoning by Stat Forest
Polie/NlTERMAT/FEMA\.
- Yeady independ review of
compla nce with zoning\.
Results available to Bank by
May 30 each year\.
2\. Increased deforesion by lNCRA agreemet with the State of - Enforcement by State Forestry - Decrease in deforestation and
settlen tying to gain title to Mato Groso, not recogniig Police - FEMA\. small-scde gold mining, as
land since ad regubtions deforestation as evidence of land - Envimentd legislation to be monitored annually by FCR
require deforstation as occupation for titling purposes in the presented to Stat Legisative and FEMA\.
evidence of bad occupancy/ context of Mato Grosso's agro- Asembly by Septmber 1992\.
development; deforestation in ecological zoning law of May 1992\. - FEMA to prepare susined
areas without sudainable Stateeromentl legislation, under managemeno plan for Zone5
development potential and prpartion, to control deforestation and areas and a pln of icentives
illega deforeation; nd wild mining in the State\. for private forest a- to be
cat gold mining\. completed during Year 1\.
3\. Weak capability at State level Preparation by State of a draft land kLn gislation to be - No new seulements, no new
with respect to development legisation and regulations determining presented to State Legislative titling of land in areas that do
ad enforcement of lad policy NITERMMATINCRA compiance with Assembly by September 30, not have sustinable
and contwl of land occupation\. r afions of zoning\. 1992\. development po al as
Implemenitation of land identified by zoning\.
legistion and regulatios - Annual joint BankIGoven,-ent lb
together with INCRA (draft review of proj pre PM >
agreement to be presented at! F
ncgotiations) to ensue hat all 0
land activities in the State are
consident with bocio-
econom-eologicd zoning\.
-43- ANNEX 1
Page 2 of 2
Idt til 'ii:*i
~Th s*l 1 107igi
p SIJ~~~~~~~~~~~~~~~~~~~~~~~2
5-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-
iE~~~~~~~~~~~~~~~~~~~5
a a 3~55113 H *lt
, ~ ~~~~~ I
t 1iS- 'j 11\.0s
Elgl\.[ 1} 1jI
- 44 -
ANNEX 2
Page 1 of 6
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Environmental Management\. Protection and Monitorina
Background
1\. Mato Grosso contains the headwaters of two very large river basins,
the Amazon (which includes the Araguaia River Basin) and the Paraguay\. Also
within its boundaries are parts of the world's largest contiguous wetlands, the
Pantanal and the Amazon, and part of the world's most biologically diverse
savannah - the Cerrado\. Development in the state, particularly agricultural
development, has been based on extensive cultivation, with little concern for
sustainable land use\. As a result the ecological balance of all three important
ecosystems is today threatened\. Current environmental legislation, if enforced,
could do much to arrest deforestation, gold mining, pollution and other
environmentally harmful activities\. With regard to biodiversity, there are few
significant protected areas in the S,tate, and the creation of conservation units
is hampered by the chaotic land ienure situation (according to the State's Land
rnstitute - INTERMAT - titles have been granted for more than 104% of the State's
territory)\.
2\. Sound environmental maragement, conservation and protection is
essential for sustainable development\. The environmental sector of Mato Grosso
needs urgent technical and financial assistance to adequately provide such
services\. Awareness of environmental issues within the public and private sectors
of Mato Grosso is quite low and the viability of long-term sustainable practices
has yet to be demonstrated\. This points to the need for Mato Grosso's public
service and their private counterparts to jointly educate the state's leaders and
citizens\.
3\. The design of the project is based on finding solutions to those
problems which are most detrimental of the state's natural resource base, while
also providing the misusers with education and options for shifting into more
sustainable uses\. Given the high unemployment and underemployment in Mato
Grosso, and the lack of good unoccupied land on which to "homestead", people
need, more than ever, assistance in utilizing the resources they currently
exploit in the most productive and environmentally benign ways possible, while
also improving their standard of living\. There is also a tremendous need to
establish some protected areas in order to preserve to the maximum extent
possible the state's rich biodiversity, and to foster better management systems
in other areas which are not within the state's domain and which the state cannot
afford to purchase\.
Obiectives and Scons
4\. The environmental management, protection and monitoring activities
will collectively: establish a state system of nine ecologically important
- 45 -
ANNEX 2
Page 2 of 6
protected areasl establish forest reserves on public lands and foster sustainable
forest management practices on private lands; require and assist gold miners to
alter their extractive practices, reclaim degraded areas, and improve their
standard of living; build community support for conservation and sustainable land
use in the state, public environmental education, and work with other local,
state and national programs to ensure that the citizen receive the necessary
tools to conserve and sustainably utilize their resources; improve law
enforcement, monitoring, licensing and control of illegal activities using
satellite imagery, on the ground monitoring and aerial surveys; and build a
strong state conservation agency which works effectively with other state
agencies and non-governmental groups working on state conservation issues, and
which services the environmental needs of Nato Grosso\. The specific sub-
components are described below\.
5\. Forestry Conservation and Sustainable Manacement\. The preliminary
agro-ecological zoning for Mato Grosso identified nine areas (Zone 5) which
should be maintained or managed as State Forests\. INTERKAT will research the
titles/land ownership situation in all Zone 5 areas\. Public lands will be
decreed and established as State Forest Reserves and 3ubsequently FEMA's Forestry
Division will prepare guidelines and a strategy for these reserves management;
FEMA will also prepare management plans for some privately held production areas\.
Presently, all forestry activities and mineral extraction are subject to control
by federal institutions only, but the State has drafted its own environmental
legislation which, after final review by the Bank, will be presented to the State
Legislative Assembly by September 30, 1992\. Outside of the nine State Forest
Reserves, the new legislation will enable the state to enforce, license and
control the use of forestry resources\.
6\. In preparing the management plan for each State Forest Reserve, an
overall study of the RFE will be done, all forestry types will be described and
mapped, an overall administrative management plan will be created, and homogenous
subdivisions of the RFEs will be delineated\. Based on a detailed vegetation and
soil map of the RFEs, silvicultural inventory and detail description for selected
subdivisions In the RFEs will be produced and management plans prepared for these
areas\. Limited experimentation will be undertaken to test the sustainability of
alternative harvesting techniques, with continual inventory and monitoring
carried out\. This should generate information on future adjustments and
revisions to the management plan\. Finally, a manual on sustainable forestry and
agro-forestry would be jointly produced by FEMA and EMPAER\.
7\. Mining Activities Rationalization\. The objective of this
sub-component is to minimize environmental impacts on Mato Grosso's hydrologic
resources caused by mineral extraction, mainly by small-scale wild cat gold
mining (aarimoaaeml\. This will be done by establishing mining standards for gold
miners and through licensing and monitoring (based on existing federal and state
legislation), and regulating those standards\. This project will assist the gold
miners, the municipal prefects and appropriate organizations through the
I Support to indigenous communities is discussed in Annex 4\.
- 46 -
ANNEX 2
Page 3 of 6
establishment of demonstration projects for mining, and educational programs on
the use and adaptation of proper (mitigation) technology for extractlon and
reclamation\. Social services and financing will be made available to support
these changes\.
S\. By December 31, 1992 FEMA will survey mining actlvities Ln
ecologically fragile areas in Mato Grosoc, and by March 31, 1993, the State will
prohibit mining in these fragile areas (as well as in Zones 5,6,7)\. The location
of these fragile areas will be incorporated into the agro-ecological zoning maps,
which will be published and available for public access\. The Bank has
recommended that the state incorporates mining technicians and materials from the
State Mining Company (METAMAT), which was recently abolished, into the FEMA
program for regulating and managing mining in Mato Grosso\.
9\. Conservation Areas\. There are currently four significant2 protected
areas in Mato Groeso:
Pantanal National Park 135,000 ha
Chapada dos Guimaraes National Park 39,000 ha
Serra das Arar&s Ecological Station 28,700 ha
Taiama Ecological Station 14,225 ha
TOTAL \. 216,925 ha
None of these areas is well protected, and the Chapada dos Guimarles National
Park has not yet been decreed\. Through the National Environmental Project (Loan
3173-8R), Mato Grosso will support management of Taiama Ecological Station and
Serra das Arar&a Ecological Station, and will demarcate and implement the Chapada
dos Guimaraes National Park\.
10\. The preliminary agro-ecological zoning for Mato Grosso delineates the
existing conservation areas, proposes extension to some of these areas and
identifies areas which should be created\. The project will support the extension
of the Chapada dos Guimaraes National Park (which will entail adoption of a
decree for a state protected area extension to the federal conservation unit),
and the establishment of eLght other areas targeted to become state conservation
units\. Including the Chapada dos Guimarses (state-owned) extension, this should
total 4,847,000 ha\. These areas, in the order of priority for action are as
follows:
1\. Chapada dos GuimarAes 700,W00 ha
2\. Cabeceiras do Rio Cuiab& 300,000 ha
3\. Rio Ronura 700,000 ha
4\. Serra Ricardo Franco 400,000 ha
5\. Serra de Santa Barbara 800,000 ha
6\. Rio Madeirinha 800,000 hni
7\. Pantanal do Rio das Mortes 800,000 ha
8\. Serra do Cachimbo 500,000 ha
9\. Apiacas (Pontal) 477,000 ha
2 Recently, Ique Ecological Station was transferred to FUNAI to be
protected as an indigenous area\.
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ANNEX 2
Page 4 of 6
11\. These nine areas (out of 16 actvally identified in the zoning) were
chosen for priority attention by the Conservation Data Center in 1989 using the
following criteriat high biological diversity, endemism occurrence, vegetation
representation, headwaters areas, and zones of exceptional characteristics with
regard to geology and geomorphology, paleontology, archaeology and history\.
Also, the degree of human intervention in the area and the environmental
integrity were, and will continue to be, factors which weigh into the type of
management and the priority which the area receives with regard to demarcation
and establishment\. All 16 areas on the map will be studied by INTERMAT as new
and potential areas for conservation, but INTERMAT will focus on the nine above
order in the order shown\.
12\. The following methodology for study/establishment of the nine areas
will be used:
1\. Conservation Unit Team training in park planning and management;
2\. Acquisition of equipment and material necessary for field work;
3\. Permission from IBAMA to collect botanical and zoological specimens
from the area for more accurate identification;
4\. Rapid ecological assessment training at one-site (which will prepare
the team for work at other sites) to assess the current ecological
and socioeconomic situation of the area;
5\. Determination of the conservation unit park limit& and dIiscussion on
the management type most appropriate for the area;
6\. Demarcation of the area;
7\. Preparation of management plan I
8\. Implementation of the management plan and park establishment (which
will include park staff training and hiring, preparing housing and
visitor's centers as necessary, etc\.);
9\. Building community orientation and collaboration (this should be
done as early as possible and continued throughout the life of the
project)\.
13\. Privnte Reserves\. Due to the poor financial state of Mato Grosso,
the state must find ways to secure important protected lands for the state's
genetic stock and heritage\. The State of Mato Grisso will present to the Bank
by September 30, 1992 a plan to provide incent\.ves to private land owners to
maintain and protect natural (and preferably primary) forests, savannas and
waterways on their land\. This strategy would be espacially applicable in zones
5 and 6, yet other possible areas should be considered for their high ecological
importance\. All proposals would have to be evaluated by FEMA's technical staff\.
14\. Informal Environmental Education\. The public in Mato Grosso needs
to be made more aware of existing environmental problems and their effects, in
order to build community support for conservatIon and sustainable land use in the
State\. This proposition is based on the not in that It is imperative that the
citizens understand that they are vital elemt\.tts in, say, a watershed ecosystem
(whether it be the Paraguay River watershed, the Amazonia watershed or the
Araguaia) and that their land use practices and development programs have an
impact on that drainage area\. Radio and television will be utilized, as well -s
other appropriate means, to comnunicate important and helpful messages\. The
- 48 -
ANNEX2
Page 5 of 6
program will start by training and building a competent FEMA education staff\.
Their training will be heavily field oriented, so that during training FEMA is
also receiving and cataloguing information about the state's natural resource use
and problems at the municipal level\.
15\. One of the fundamental training-field activities will focus on public
attitudes and environmental awareness in the Upper Paraguay River watershed, with
FEMA (and CONSEMA members) preparing a plan of action and major education program
for appropriate land use and recovery in this region\. FEMA's Environmental
Education Team will work with an experienced consultant to achieve the following
objectives under the project: (a) identify community leaders and influential
policy makers in the majority of the municipalities of the Upper Paraguay River
Basin; (b) catalogue conservation NGO's; (c) catalogue membership institutions
and associations and their objectives related to land use and development in the
region; (d) identify the important means of communication throughout the
watershed; (e) collect and disseminate information on projects in the region; (f)
identify the principal socio-environmental problems in the Upper Paraguay River
watershed of Mato Grosso; and (g) prioritize actions according to their political
and economic importance, size, geographic location, and ecological problems\.
This process will call upon the use of existing data and people with diverse
expertise\. The plan of action will also include measures for program evaluation
and decentralization (sub-contracting) of groups to help carry out the action
plan\. The initial focus is on the most densely populated areas of Upper Paraguay
River watershed in Mato Grosso, however other important areas in the other two
watersheds will be included once the methodology has been firmly established\.
FEMA's Environmental Education Department will receive technical assiatance from
a long-term consultant who has had several years experience in fostering
community interest in conservation of natural resources in the neighboring Mato
Grosso do Sul\.
16\. Enforcement Activities\. The project will help to establish a system
of licensing and control, monitoring and law enforcement for the state of Mato
Grosso\. In particular, the Forestry Police will be assisted to effectively
protect Zones 5,6 and 7, control illegal deforestation, burning, hunting, fishing
and transport\. The operational strategy includes thorough training for the
Forestry Police and their use of satellite images, helicopters and airplanes for
law enforcement and monitoring\. FEMA will also be strengthened and supported to
license and regularly monitor mining, pesticide use and pollution activities\.
In an attampt to conserve the hydrological resources of the state, FEMA will
register, license and monitor all industrial activities in the state, and will,
in coordination with those working on the gold mining rationalization
sub-component, map the activities in the Teles Pires River Basin which have an
environmental impact\. The licensing work requires that FEMA decentralize and set
up monitoring outposts throughout the state\.
17\. Institution Strengthenina\. The Mato Grosso state government is
currently undergoing a reorganization which will affect FEMA and SEMA\. A Special
Secretary for the Environment will oversee FEMA, and FEMA will be directly linked
to the Governor's cabinet\. As some of the specifics are still being worked out,
flexibility has been incorporated into project planning\.
- 49 -
-ANNEXL
Page 6 of 6
18\. There are currently over 110 staff employed at FEMA, many of whom do
not work regularly, while others find it difficult to determine their specific
job responsibilities\. At the same time, there are many dedicated individuals who
work diligently on planning of environmental programs, and who will continue to
strive to make FEMA a strong state agency\. Nonetheless, the programs which are
presented by the institution are often not well thought out, lack justification,
or are not cohesive in their objectives and methodology\. The project will
therefore, support development of a strategic plan for halting and preventing the
rapid destruction of Mato Grosso's natural resource base and will support
mechanisms for discovery and dissemination of information to the government and
private community on eco-development\. To this end, during the first year FEMA
will focus its efforts on strategic planning and determination of the most
efficient and effective manner to implement its decentralization throughout the
state\. FEMA will contract a strategic planning firm to rapidly bring to light
many of the questions which the institution should address\. In addition, it will
contract two experience staff in human resources development, an ecologist and
two accountants (to work specifically with the project accounts), and will
purchase essential equipment for FEMA's headquarter's in Cuiaba\.
- 50 -
ANNEX 3
Page 1 of 3
BRAZIL
MATO GROSSO NATURAL RESOURCES MANAGEMENT PROJECT
Aoro-Forestrv Develooment
Present Aaricultural Production Situation
1\. In the past, much of the land in Mato Grosso was brought under
cultivation by a combination of officially sponsored settlement schemes and
private initiatives, applying low cost, extensive and itinerant production
systems which resulted in unnecessary deforestation and pasture burning\. The
majority of the smallholder producers (below 200 ha) in areas where the soil and
climatic conditions are favorable are producing subsistence crops like rice,
maize, beans and manioc, which are treated as cash crops\. In the project area,
located in the Northern, Eastern and Southwestern parts of the State, about
400,000 ha is devoted to rice, maize and beans cultivation\. Since 1984 cotton
is grown on about 38,000 ha and manioc on about 11,000 ha\. Rice and maize yields
have increased by 19% and 32%, respectively, as a result of the increased use of
hybrid seed coupled with higher fertilizer use\. Yields of other crops like
cotton and beans have remained stagnant\.
2\. The present agricultural development strategy has not sufficiently
encouraged cultivation of perennial crops because of the lack appropriate
technological support from extension and research, and adequate rural credit\.
In the total project area, there are about 133,000 ha of coffee, cocoa, rubber
and banana\. Virtually no new areas have been brought under tree crop cultivation
since 1988, and in many locations production has declined because of low yields
in old plantations, inadequate cultural practices, and low prices\. Improved
rubber clones have been planted under improved cultural practices, and their
production prospects are considered promising with projected yields of up to
2,000 kg/ha, (traditional clones have a ceiling of about 1,400 kg/ha)\. Bananas,
especially the favorite Maca variety, suffer from "panama" wilt and debilitation
from root borers which result in low yield and short life\. Citrus, which is the
next important perennial crop, is grown in small areas and is free of the
serious "decline" disease\. Small but lncreasing areas of other perennial crops
are also planted in the project area (papaya, pineapple, Brazil nut, Ammatto,
guarana, black pepper, coconut and others)\.
Aaro-Forestrv Develooment Procosal
3\. The project would support Government efforts directed at ibtaining
a gradual transformation of the extensive agricultural system to a permanent
sustainable system in the Northern fragile areas of the State (Zone 3), and the
intensification of agricultural production in the Southern fertile soils
(Zone 2)\. The main objective of the component would be to recuperate the vast
area currently under fallow in Zones 2 and 3 through a productive exploitation
system by providing farmers with an effective practical option for
- 51 -
Page 2 of 3
diversification, reducing the pressure on forest clearing, and training farmers
in better soil and fallow management\. The component would, therefore, involve:
(a) the diversification of the existing crop mix by promoting viable new crops,
including timber trees; (b) the development of mixed cropping/intercropped
systems (consorciol; (c) the introduction of crop rotation techniques; and in
order to reduce the pressure on expansion to existing forest areas, support for
the expansion of the cropping area to the oxisting fallow or abandoned pasture
land; and (d) initiation of a program of fallow enrichment\.
4\. The fallow enrichment program would comprise of three basic lines of
action: (a) introduction on already cultivated land of consorcios of short
maturing crops (for example banana/papaya) or long maturing with short maturing
crops (for example cupuacu/maracuja and rubber/banana); (b) recuperation of
degraded lands with timber species or long maturing fruit crops (pupunha); and
(c) enrichment of capoeira with consorcios of long maturing timber species
("capoeira melhorada" teak and pinho cuiabano)\. While the introduction of
consorcios in already cultivated land is relatively well known among farmers, the
introduction of timber species in degraded land or the enrichment of capoeira is
not advanced\. However, by using appropriate fallow management and enrichment
techniques (i\.e\., proper cropping mix, soil enriching shadow trees, and proper
inter-planting of shadow and timber trees) it would be less expensive for the
farmers to clear forest fallow land than to clear natural forest, while still
maintaining good soil fertility\. Additional incentives to the small farmer to
use fallow rather than natural forest land will include the possibility of
preparing the land for animal traction, which is very important for the small
farmer, and the timely inter-planting of trees and planting of hedges for
mulching\. Lack of adequate technical assistance, agricultural research and
credit have prevented the dissemination of these practices, which could improve
crop yields and are sustainable over time (in contrast to deforestation of new
land, where soil fertility decreases after only a few years)\.
Research on Forestry and Aqro-Forestrv
S\. Research on forestry and agro-forestry in Mato Grosso has been
traditionally neglected in favor of adaptation and selection of annual crop
varieties, fertilizer levels and other cultivation technique\. Only during the
last four years has EMPA-MT (now EMPAER) started to work on perennial crops such
as rubber, coffee, banana, other tree crops and timber species\. However, there
is still an acute lack of research on sustainable agro-forestry, re-forestation
and recuperation of degraded lands\. For these reasons the project would support,
within the general objectives of the research sub-component, specific research
activities on financially and ecologically sound farmer systems, emphasizing tree
crop diversification, agro-forestry and re-forestation\. The forestry research
program would be subdivided into enrichment planting in secondary forest (tree
fallow), regeneration of degraded areas, and re-forestation with plantation
timber\. As part of the agro-forestry research, cons6rcios of short and long
duration perennial species will be intercropped in their early years with annual
crops\.
- 52 -
ANNEX 3
Page 3 of 3
6\. Since both agro-forestry and forestry research involve costly
pluri-annual experiments, only basic evaluation of species would be carried out
on-station\. All other work, such as technology validation trials (TVTs), will
be carried out on-farm and wouvld later be used for demonstration and training
purposes\. Under the project a total of 16 trials on species will be conducted
(11 for forestry and 5 for ag\.ro-forestry) and 352 TVTs (46 forestry and 306
agro-forestry) will be done\.
7\. In the Northern Reaion of the State there would be a heavy reaearch
emphasis on sustainable small farming systems employing agro-forestry and re-
forestation techniques, secondary forest management, regeneration of degraded
areas, and future tree crop diversification to widen market potential\. The
research stations of Juina and Alta Floresta would focus mainly on agro-forestry
and forestry research, while the station in Sinop would carry out agro-forestry,
forestry (including seed technology) and agricultural research focusing on
systems for Zone 3 soils\. The Sinop station would house the Forestry Seed Bank
(funded under the extension budget) and part of the facilities would be available
for seed technology research\.
S\. In the Southern Reaion more emphasis will be placed on rubber (S&o
Jos6 do Rio Claro and Canarana), citrus and bananas (Rondonopolis, Caceres,
Quatro Marcos), which have already developed markets, and fruits such as avocado,
mango, pineapple and others which can be produced out-of-season\. Forestry
research in the South will focus on regeneration of degraded areas, and will be
concentrated in Quatro Marcos in the Southwest and Canarana in the Southeast\.
Table 1: Suagested Fruits and Forestry Species to be Utilized
Short Maturina Fruits Forestry Soecies
Abaxi (Anans sativa) Teca (Tectona grandis)
Banana (Musa spp\.) Ameixa (Protium heptaphyllum)
Mamao (Carica papaya) Pinho Cuiabana (Schizolobium)
Maracuj& (Passiflora edulis) Inga (Inga edulis)
Acerola (Malpighia sp\.) Frejo (Cordia goeldiana)
Pupunha (Bactris gasipaes) uso multiplo
Lona Maturing Fruits Castanheira (Bertholettia)
Cerejeira (Torresa acreana)
Citros (Citrus app\.)
Coco Arnao (Cocos nucifera)
Caju Anao (Anacarcium occidentale)
Carambola (Averhoa carambola)
Araca b6i (Psidium spp\.)
Capuacu (Theobroma grandiflora)
Manga (Mangifera indica)
Pupunha (Bactris gasipaes) palmito
Urucum (Bixa orellana)
53 -
ANNEX 4
Page 1 of 6
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Sup wrt to Indigenous Communities
Background
1\. Approximately 16,000 indigenous people live in Hato Grosso,
accounting for lesa than one percent (0\.77%) of the State's estimated (1989)
population of 2,065,000\. Two thirds of the State's indigenous population (69%)
live on fully legalized reservations protected by the National Indian Foundation
(FUNAI)\. An additional 4,171 indigenous people (26%) live on areas of land
demarcated as indigenous reserves, but not yet fully legalized, while about 5%
live in non-demarcated areas\.
2\. Demarcated indigenous areas occupy a total of 9\.5 million hectares,
an additional 1\.3 million ha has been identified but not yet demarcated, and
about 13 percent of the land officially identified as indigenous land remains to
be demarcatAd\. The combined total of 10\.8 million ha is equal to roughly 12
percent of the total land area of the state\. However, there are still several
indigenous groups in Mato Grosso which are substantially out of contact with
national society\. Their numbers and precise locations are unknown\. Still other
indigenous people lives on the fringes of the national society as rubber tree
tappers or fishermen\. Nearly all the indigenous groups in the state are highly
susceptible to introduced disease, especially respiratory diseases such as
tuberculosis, influenza, pneumonia etc\. Malaria, diarrhea, and other preventable
diseases are frequent causes of death, especially among infants\.
Government Efforts to Protect Indigenous People
3\. Since 1910, the Indian Protection Service and its successor, FUNAI,
have provided assistance to indigenous groups in the form of reservations,
intermediation with national society, health and educational services\. Perhaps
the most important role FUNAI has played is the creation of Reservations for the
exclusive use of indigenous groups\. FUNAI is organized at the local, regional
and national level\. There are five local administrations (ADRs) in Nato Grosso,
based in Cuiab&, Rondonopolis, Tangara da Serra, Barra do Gargas and Xavantina\.
Each ADR has an administrative staff with responsibility for a number of Indian
Posts\. Indian Posts (Postos Indlaenas) are generally located on Indigenous
Reserves and staffed by a FUNAI Agent\.
4\. Despite its inefficiency and allegations of corruption, FUNAI has
demarcated a total of 9\.5 million ha of indigenous reserves in the State\. From
1982 to 1988, the POLONOROESTE Program provided a major impetue and financial
support for the demarcation of 5\.7 million ha of indigenous reservations in Mato
Grosso through the Special Amerindian Project\. This Project was designed to
protect indigenous people from the negative effects of economic growth following
* 54 -
AKNEX 4
Page 2 of 6
construction of the BR 364 Highway from Cuiab& to Porto Velho\. This project wau
part of the POLONOROESTE Program, but financed exclusively by local counterpart
funds at the request of the Brazilian Government\.
S\. FUNAI and the POLONOROESTE program were less successful in protecting
indigenous people from disease\. Levels of infectiouo disease on indigenous
reservations are very high\. Mortality is high especially among children\.
Regular visits to indigenous reserves by Mobile Health Teams partially supported
under POLONOROESTE have not been maintained\. Vaccination programs have not been
kept up to date\. There has been little systematic training of FUNAI health
personnel or indigenous healtn monitors\. In Mato Grosso, FUNAI has only a
handful of full-time health professionals on its staff\. Most of the physicians
and nurses are on half-time contracts making it impossible for them to take
entire days to visit the indigenous communities\. Even those on half-time
contracts do not work the full period for which they are paid\. In addition, the
pharmacies on Indian Posts are haphazardly stocked, often with inadequate
storage, and not subject to careful controls\.
indicenous Sub-Component
6\. The indigenous sub-component is an integral part of the project
agro-ecological zoning and environmental protection program\. It will invest
primarily in providing support to FUNAI and the State of Mato Grosso for actions
aimed at improving health and land security of indigenous peoples in the state\.
Consequently, the sub-component will provide for: (a) demarcation and boundary
renewal of indigenous Reserves; (b) assistance to isolated indigenous people in
Mato Grosso; (c) monitoring and enforcement in indigenous Reserves; and
(d) support for health care and disease control\.
7\. It is not intended that Bank funding replace FUNAI's regular budgeted
programs in the region, but rather that it support enhancement of a selected
subset of activities\. FUNAI has agreed that it would maintain its programs and
funding levels in Mato Grosso, independently of the project\. The project will
not assume personnel or ccher FUNAI basic operating costs, nor will it add
significantly to FUNAI's physical infrastructure as have previous special
projects in the POLONORESTE region\.
Demarcation and Boundary Renewal
8\. Fully legalized reservations with clearly demarcated boundaries are
essential for the maintenance of secure indigenous reservations in Brazil\. There
are 37 demarcated indigenous reserves in Mato Grosso (Table 1)\. Al Saluma has
been approved for demarcation but has not yet been physically demarcated\. Three
additional reservations were approved for demarcation by the Interministerial
Work Group (Al's Estivadinho, Figueiras, Juininha) and are awaiting only an
interministerial order (gportaria) authorizing their physical border demarcation\.
Nine additional areas have been delimited or interdicted by FUNAI, but have not
yet been brought before the Interministerial Work Group\. Finally, during the life
55 -
ANNEX 4
Page 3 of 6
of the project, FUNAI will engage, in locating and assessing the needs of several
isolated indigenous groups in Mato Grooso\. It is possible that some of these
groups will be eligible for reservation status\.
9\. In order to -support unimpeded access of indigenous people to the
land, the project will support the demarcation of new indigenous reserves and the
renewal of boundaries on existing reservations specifically, it will finance the
boundary demarcation of the various reservations indicated above totalling at
least 1,138,452 ha with 1,424 km of boundaries\. As much as possible, the work
will be done with the participation of the indigenous people of each area\. The
actual demarcation will be carried out by specialized topographical firms
contracted by FUNAI and accompanied by FUNAI personnel\. The State of Mato Grosso
would need to take action to remove non-indigenous people from indigenous land
where they are present, but the project will not finance land purchases or
compensate squatters living illegally on indigenous reservations\. The submission
of an acceptable plan for the removal of all illegal squatters on Al Zor6 would
be a condition for negotiation\.
Assistance to Isolated Indigenous People
10\. Although the State of Mato Grosso is heavily cettled, with a
considerable network of urban settlements, there are still several isolated
indigenous groups, without regular contact or only sporadic contact with the
national society\. FUNAI has a special unit established to investigate the
location and situation of these groups\. Some of them appear to be located on
existing indigenous reserves, while others are in areas not under FUNAI
protection\. The latter groups will receive priority attention by FUNAI\. The
project will equip and support four teams, adding two new teams to the two now
in existence\. These teams will work in the field, setting up base campa for the
purpose of learring as much as possible about the isolated groups, fending off
non-indigenous settlers, prospectors, etc\., and making contact if necessary\.
They will bring health services to the isolated indigenous people and attempt to
provide vaccination and other services as soon as feasible\. As their work
evolves, these teams will identify areas traditionally used by these isolated
groups and, where appropriate, set procedures in motion to demarcate indigenous
lands\. The indigenous component will finance acquisition of equipment, supplies,
per diem for field teams as well as construction of base camps in the Juina area
where many of the isolated groups are located\.
Monitorina and Enforcement of Indicenous Reserves
11\. One of the persistent problems on indigenous reserves in this region
is the entrance of unauthorized non-indigenous people as squatters, loggers,
prospectors for gold and other minerals, rubber tappers, hunters and fishermen\.
FUNAI has inadequate resources for monitoring and protecting the indigenous
reserves\. It has few vehicles, little use of aircraft, and only incipient
arrangements for cooperation with Federal and State enforcement agencies\.
12\. Therefore, FUNA1 has signed an agreement with IBAMA and the Military
Police to collaborate in monitoring and enforcement on indigenous lands\. A
- 56 -
Page 4 of 6
special division of the State Military Police will be responsible for monitoring
and enforcement of the zoning laws, together with the Federal Environmental
Agency (IBAMA)\. The State of Mato Grosso has enacted a law raising the forestry
police from battalion to company strength, with a total of over 600 staff\. Under
the project, the Military Police Forestry Battalion will receive support in the
form of aircraft, technical assistance, communications equipment, etc\. for use
in stepped up enforcement activities\. In particular, the Police will set up a
monitoring Eystem capable of detecting incursions into protected land (including
indigenous reserves) by sawmills\. The police will also have jurisdiction over
prospecting on protected areas, as well as activities, such as prospecting, that
may contribute to the pollution of waterways flowing through indigenous areas and
other protected areas\.
13\. FUNAI itself will receive support under the project in the form of
vehicles, watercraft, communications equipment, training and operating expenses
for two mobile units, one based in Cuiaba, another in Juina\. In addition, the
project will support construction and equipping of a fixed support unit in Juina,
an area undergoing rapid economic expansion and strategically located near number
of indigenous areas\. The fixed station will help to coordinate monitoring and
enforcement activities with the military police detachment planned for this
locality\. It will also serve as a logistics and communications hub for
activities relating to isolated indigenous reserves in the same region, health
activities (Juina is also the site of a state hospital facility under
construction), and regular services to indigenous areas in the vicinity\.
Health Care and Disease Control
14\. The key to improving the health of indigenous people in Mato Grosso
is to return the focus of prevention and primary care to the indigenous
community\. Thio means upgrading the facilities and retraining personnel at the
Indian Post level, providing for regular visits by health personnel to the
indigenous villages for preventive and curative care\. The mission determined
that it would be counterproductive to invest further in the casas do indio as
health-care facilities, because it would continue to divert indigenous people
needing care away from their own communities\.
15\. However, returning the focus of health care to the community will not
be sufficient\. Secondary and tertiary care facilities must continue to be
provided\. Since FUNAI does not have sufficient personnel and resources to
provide quality hospital care and diagnostic services, and the potential patient
population is not large or concentrated enough to warrant substantial investment
in these services, FUNAI has reached an agreement with the State of Nato Grosso
for the latter to assume more responsibility for hospital care and diagnostic
services\. Since the State of Mato Grosso itself lacks an extensive hospital
network, it subsidizes admissions by indigenous people to private hospitals
through AIH (Authorizations for Hospital Admissions) under the Federal Health
System\. In some cases, FUNAI has had difficulty getting indigenous patients
admitted to State subsidized hospitals\.
- 57 -
ANNEX4
Page 5 of 6
16\. The agreement between FUNAI and the State of Mato Grosso provides for
(a) an increase in the number of AIHs, (b) an allocation of a specific number of
beds in a State Hospital, (c) training and recycling for health professionals
involved in caring for indigenous people, (d) additional health professionals to
be contracted by the State and seconded to FUNAI, and (e) cooperation by the
State Health Department in the coordination and evaluation of the indigenous
component of the PRODEAGRO\. Under item (d), the State Health Department would
contract physicians and nurses in various locations on fixed-term contracts where
FUNAI lacks sufficient manpower\. These professionals would be hired on a full-
time, exclusive basis and would be made available to FUNAI as needed to work on
mobile health teams in the indigenous communities\. There would be special ealary
supplements to equalize any differences between state and FUNAI salaries\. This
provision must clearly obligate medical personnel to field assignments and would
be subject to careful supervision\. The contrects would be canceled if such
personnel did not lend themselves to work in indigenous communities\.
17\. Support will be provided for upgrading FUNAI's medical personnel\.
This will be accomplished by means of recycling for FUNAI's nursing assistants
(atendentes de saude), nurses aides (auxiliares de enfermacem), nurses and
doctors\. FUNAI has agreed to create the post of Head Nurse in accordance with
existing legislation that requires this structure\. The head nurse, rather than
physicians, will be responsible for programming, staff assignments and
supervision of field staff\. FUNAI's field staff will be reassigned from urban
sites to locations on indigenous reserves\. Resources will be allocated to
improve communications between villages, Indian Posts, and regional centers, by
the acquisition of solar recharged batteries, and additional radio transceivers\.
Living accommodations for health personnel stationed in the field will be
upgraded\.
18\. There will also be a major upgrading of the pharmacy facilities and
practices in FUNAI health facilities\. Specialized consultants will be brought
in to design a standard list of pharmaceuticals for Indian Posts and other
facilities\. The project will support implementation of adequate storage
facilities plus proper inventory and control systems\. A medical information
system will be developed through the purchase of microcomputers, development of
procedures, and training\. In addition, FUNAI and CAIEMT will also carry out a
survey of health facilities and health conditions in the indigenous reservations
administered by religious missions\. These areas will be eligible for
participation in the project to the extent feasible and necessary\.
-58-
ANNE2; 4
Page 6 of 6
Table 1
DEMARCATED tNDIGENOUS AREAS IN NATO GROSSO
Al ETWW!C Pop AREA(XA) P6MR z9oo DEL GR DM0C NML CR1 SPU
APIAKA/KAIABI APIAKA, KAIABI 248 109245 162 99 0 87 87 99 88 88
ARIPUANA CINTA LARGA 107 75649 565 99 0 85 85 0 0 0
BAKAIRI BAKA RI 461 61405 135 99 0 85 85 91 61 87
CCPOTO/JARINA KAYA;O 217 634915 415 99 0 0 99 99 87 87
JAPUIRA RIK3AKTSA 90 152509 193 99 0 85 88 0 0 0
JARUOORE SCRCRO 0 4706 39 99 0 0 99 99 87 87
KARECHAL RONOCN XAVANTE 235 98500 200 0 0 0 99 1 0 0
MENrJ MYKY 35 47095 92 99 74 0 77 99 87 87
MERURI B-R0RO 402 82301 169 99 0 0 99 99 0 87
NAMISI KJARA NAMSIKWARA 249 1011961 533 99 83 84 84 99 87 87
PARABU8URE XAVANTE 2543 224447 294 99 0 0 99 91 87 87
PARECI PARC1d 578 563587 373 99 68 0 84 91 87 87
PERIGARA SCRCRO 71 10740 62 99 0 0 99 0 0 0
PIMENTEL BARBOSA XAVANTE 754 32S966 340 99 0 0 86 99 88 87
PIRINEUS 0E SOUZA NAMS3KWARA 135 28212 83 99 81 99 83 85 84 0
R!K3ATSA CANCEIROS 630 79935 198 99 0 86 83 99 87 87
RIO FORMOSO PARES; 79 19747 90 99 85 85 86 99 99 99
SANGRAOORO/VOLTA GRANDE 6CRCRO, XAVANTE 546 100250 208 99 0 0 99 91 83 0
SANTANA 6AKAIRt 189 35470 105 99 99 99 84 0 2 0
SAO DCMINGOS CARAJA 93 5705 37 99 0 0 88 0 0 0
SAO MARCOS XAVANTE 1234 188478 237 99 0 0 73 0 0 0
SARARE MANAIRISU 66 67420 132 99 81 84 83 85 85 87
SERRA MORENA CINTA LARGA 138 147836 184 99 99 85 85 0 0 0
SETE 0E SETEMBRO SURUI 461 247270 205 99 99 99 85 85 85 85
TADARIMANA CR2-RO 143 9785 51 99 45 87 85 91 64 87
TAP!RAPE/KARAJA TAP!RAPE/MARAJA 399 66166 110 99 0 0 99 99 84 87
TEREZA CRISTINA SCRCRO 211 26237 134 99 0 0 85 0 0 0
TIRECATINGA PAR2CI,NAMBI,ME9KU,1 348 180575 208 99 83 86 83 91 87 87,
UMUTINA UMlTINA,PARECI,NAMBI 205 29120 122 99 15 86 84 0 60 99
UTIARITI PARECI 117 412304 429 99 83 86 82 91 87 87
VALE 00 GUAPORE NAMNIKWARA 367 2425i3 552 99 81 84 84 85 85 87
VOLTA GRANDE XAVANTE 27 11640 69 99 0 0 87 0 0 0
xNNGU (Pal) TXUKARRAMAE,SUYA,MAT 2688 2642003 898 99 0 0 99 99 87 87
ZCRO ZCRO 236 355789 304 99 87 85 87 91 87 87
TOTAL
INDIGENCUS AREAS IN MATO GROSSO TO SE DEMARCATED UNOER PRC0EAGRO
Al ETHNIC POP LANCAREA PMR 100 DEL GRP OMC HML CRI SPU
ARARA BEIRAOAO A?ARA 160 242776 224 87 0 0 0 0 0 0
AREOES' XAVANTE 643 218515 266 99 99 99 73 0 0 0
ESCONDIO RIKPAKTSA, APIAKA 30 275100 220 85 85 0 0 0 0 0
ESTIVADINHO PARECI 20 1970 1G 82 99 84 0 0 0 0
FIGUEIRAS PARECI 16 10000 65 82 99 88 0 0 0 0
IRANTXE' MYKY, PARECI,IRANTXE 150 46790 104 99 77 87 86 0 87 87
JUININHA PARECI 20 70500 150 99 85 88 0 0 0 0
PEOUIZAL ALANTESU 0 3186 28 87 0 0 0 0 0 0
PIRIPICURA KAwAHIS 0 0 0 0 0 0 0 0 0 0
SALUMA2 SALUMA CEnauene-Naue) 156 752000 700 84 87 87 0 0 0 0
TOTAL
POSSIBLE INDIGENOUS AREAS TO BE IDENTIFIED UNDER PROOEAGRO
Al ETHNIc POP LANDAREA PMR 100 DEL GRP DMC HML CR2 SPU
APIAKA BOCADO UNKNOWN UNKNOWN
APIAKA SAO TOME UNKXOWN UNKNOWN
ARIKEM(CACH\.DO SERINGAL) KARITIANA M?) UNKNOUN
CABIXt UNKNOWN UNKNOWN
CAPITAO MARCOS PARECI 16 0 0 0 0 0 0 0 0 0
CHIQUITANCS CHIQUITANOS UNKNOWN
ESTACAO RONOON PARECI 15 600 10 86 0 0 0 0 0 0
LAGO GRANDE KARAJA UNKNCWN
MORERU UNKNOWN UNKNOWN
PARECI UIRAPURU PARECI 9 480 9 8U 60 0 0 0 0
RtO 005 PEIXES UNKNOWN UNKNOWN
TAIHANTESU NAMBIKWARA 0 4700 32 0 0 0 0 0 0 0
TATUI KAYABI\.APIAKA\.MUNDUR 256 109000 0 0 0 0 0 0 0 0
ThIs area previously decreed, but not yet physicalty demarcated\.
2 Authorfzatfon to demarcate has already been given by Interministerial Order\.
CODES\. POPupepulatCion; PMRspermimeter; 100Iidentified; DELzd*limited; GRPulnterministerial Croup Approval;
OMCzdemarcated; MML-confirmed by decree; CRIt-ocat land registry; SPUzfederat registry;
Nlspresence of invaders; 99uection compteted, date unknown\.
- 59 -
ANNEX S
Page 1 of 5
BRAZIL
MATO GROSSO NATURAL RESOURCES MANAGEMENT PROJECT
Firm Models and Financial Analysis
1\. Based on the results of agro-ecological zoning the State has been
divided into seven zones\. Development of agricultural production will be
concentrated in Zones 2 and 3\. Zone 2 includes areas of good soil fertility
with high concentration of smallholder producers in the South, where the
project would aim at increasing production of annual (rice, beans and maize),
and perennial (rubber, banana, fruits and consorcios of fruit tree species),
crops, and introduction of forestry species\. In the Northern Zone 3 the
project would encourage farming systems based on enrichment of ncavoeira" and
recuperation of degraded land with forestry species, perennial crops (rubber,
banana, and long maturing species) and "consorcios" of perennial crops (See
Annex 3)\.
2\. Eight farm mcdels, five for Zone 2 and three for the Zone 3
illustrate the production conditions under the project and have been used for
the financial analysis\. A summary table for the models showing individual
cropping patterns and crop yields is presented in Table 5\.1\. Detailed price
data and crop budgets are presented in the working papers on file\.
Southern Areas - Zone 2
3\. Farm Model 1 - Cotton ExPansion\. This illustrates area, presently
under old coffee, where farmers would be encouraged to reduce the -\.ea under
coffee and diversify to other labor intensive cash crops like cott \.n\. As few
farmers would be willing or able to make a wholescale change, son\. coffee
would remain and this would need to be rehabilitated by cutback construction
of contour bunds and use of fertilizer\.
4\. Farm Model 2A - Fruit Short Cycle and Forestry Species\. This
represents areas which presently cultivate only semi-mechanized annual crops
(rice and maize), but which have suitable land for cultivating fruit trees\.
At full development farmers would reduce the area of annual crops, diversify
to a consorcio of, say, banana/papaya, and plant an area of fallow with
forestry species\. Farmers will use mechanized land preparation, improved and
treated seeds 6f high yielding varieties, fertilizers and plant protection
measures\. Contour ridging will aid soil and moisture conservation in the
annual crop area\.
5\. Farm Model 2B - Citrus\. This illustrates other areas which
presently cultivates only annual crops using semi-mechanized technology, but
which \.'uld diversify their cropping pattern towards perennial citrus fruits
cultivation while still retaining some annual crops\. Farmers will use
mechanized land preparation, improved and treated seeds of high yielding
- 60 -
ANNX 5
Page 2 of 5
varieties, and plant protection measures for maize\. Soil conservation
measures will be applied to the annual crops areas to control erosion\.
6\. Model\. 3 - Dairy Imorovement\. Thie represents areas presently
engaged in a small-scale extensive dairy operations, where farmers who each
presently own a small cattle herd of about 40 animals maintained on 40 ha of
natural pasture, would adopt more appropriate veterinary measures to improve
llvestock health\. Fertilizer will be used on annual crops and pasture, in
addition to improved treated seeds\.
7\. Model 4 - Rubber/Banana\. Thiu illustrates areas presently
cultivating annual crops (rice/beans/maize), and bananas maca with very low
production due mainly to "panama" disease\. Farmers would replace the existing
stand of banana with the disease resistant variety "mysore", and would
diversify to rubber intercropped with banana during the first three years\.
The area under annual crops, cultivated manually, is expected to decrease
slightly\. Fertilizers would be used only on banana and rubber, while erosion
control measures would be introduced to the annual crop area\.
Northern Areas
8\. Model 5 - CuDuacu, Maracuia plus Enrichment of caooeLrg\. This
model illustrates areas presently cultivating coffee, annual crops, with small
amount of cotton, by manual methods\. Farmers would diversify and reduce the
coffee and annual crop area with a "consorcio" of maracuja-cupuacu, and will
gradually adopt a fallow enrichment technology and plant small woodlots to
satisfy home consumption requirements for fuelwood\. Farmers will use improved
and treated seods, fertilizer and chemical products\.
9\. Model 6 - Lona Maturina Fruits Plus Enrichment of CaDoeira\. This
illustrates areas presently cultivating only annual crops on land suitable for
fruit trees\. At full development farmers would have reduced their annual
crops area and their fallow land on which they would be cultivating pupunha or
enriched capoeira, in addition to small woodlots for home consumption\.
Cultivation of annual crops will require improved seeds and fertilizer\.
10\. Model 7 - Rubber and Banana\. This model represents areas
presently cultivating annual crops, but with land suitable for rubber
cultivation\. At full development farmers would have introduced rubber
initially intercropped wLth bananas and annual crops\. Fertilizer will be used
on annual crQps\.
Aaricultural Production
11\. Based on a total of 20,200 farmers who are expected to adopt the
technologies supported by the project, the projsct incremental agricultural
production has been estimated at full development in year 11 as follows: (a)
annual crops for subsistence: 19,700 tons of maize, 6,000 tons of rlce, 4,200
tons of beans; (b) annual cash crops: 1,825 tons of coffee, 7,170 tons of
cotton, 44,300 tons of bananas, 29,300 tons of papaya, 11,800 tons of citrus,
- 61 -
ANNEX 5
Page 3 of 5
22\.7 million liters of milk, and 27,632 heads of cattle\. In addition,
forestry production will reach about 42,300 m3 and about 41,200 of fence posts
in year 15\. Incremental production of more exotic crops in year 11 will be
about 900 tons of rubber, 3,000 tons of maracuja, 32,200 tons of cupuacu, and
17\.9 millions of palmito\.
Financial Analysis
12\. The models analyzed show the present situation and the possible
development of farmers who are already established in the Northern area using
animal traction or using semi-mechanized equipment, and farmers in the
Southern area depending mainly on their family labor\. Each model assumes a
present situation estimated to remain the same under "without project"
conditions, which may overstate the potential in areas with poorer soil, where
productivity could well fall in the absence of increasing fertilizer use\. The
analysis is focussed, in particular, on investigating the return to labor and
the return per family, both of which are considered important motivators of
small farmer behavior\. Financial rates of return have also been calculated to
measure the return on farm investment\.
13\. The farm budgets include: (a) on-farm investments for land
clearing, pasture improvement (only in the South), tree crops establishment,
minor :farm tools and equipment; and (b) operating and maintenance costs
including improved seeds, fertilizers, soil conservation, and disease control\.
They exclude non-cash expenses such as family labor\. Prices for inputs and
production output were assumed to be at the average level prevailing over the
last year, in real terms\.
14\. Results of the analysis are shown in Table 5\.2\. The present
average family income of the project beneficiaries is estimated to be the
equivalent of about US$1,932/year\. This would increase to an average of
US$5,155/year in year 15 of the project and corresponds to an increase of
about 170% over the present level\. The return to labor would increase from
US$7\.4/person-day to US$11\.9/person-day\. These levels are expected to be
sufficiently attractive for the farmers to adopt the technical innovations
encouraged by the project\.
15\. The estimated financial rates of return of the models vary from
13% in the case of the dairy model, to more than 50% for Modele 2 and 7
(fruits and citrus and rubber/banana, respectively)\. For all models except
dairying, the financial rate of return would still average 11\.5% if
incremental production decreases by more than 15% or if incremental total
costs increase by more than 17%\. The dairy model is more sensitive to changes
in costs and revenues (a minor change of only 5% would drop the internal rate
of return to 11\.5%) and therfore extension service will need to exercise
special care in selecting the circumstances in which it should be promoted\.
M , i \. SIj- u !I ji I r f
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It ! i\. \. \.I ;£ \., ', ii, \.
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- 63 -
ANNFX S
Page 5 of 5
Table 5\.2
BRAZIT
NATO GROSSO NATURAL RESOURCES MANAGEMENT PROJEC"'
Farm Model Indicators
MODELS NET INCOME (USSIYEA) NEr MANDAY (US$/PERSON\.DAY) I\.R\.R
W/o A/ W/P b/ W/oP b/
Southem States
I - Comma Bxp\. 3381\.0 3790\.0 7\.0 7\.6 2' 4
el 2A - Fuit Sh\. Cy\. 1192\.0 5357\.0 6\.5 14\.7 >S0\.0
ei 2B- Citnu IS0\.0 5571\.0 7\.2 8\.9 >50\.0
ei3 - Diying 2031\.0 5290\.0 11\.5 18\.2 13\.0
'1 4 - Ambber 2211\.0 SS43\.0 10\.7 12\.4 27\.0
Noithern States
Model S - Rubber/Mmc\. 2705\.0 8688\.0 5\.5 17\.4 28\.0
Model 6 - FnAit Er\. Cep\. 1217\.0 2269\.0 5\.3 5\.3 23\.0
Model 7 - Rubber/B_m 1217\.0 4728\.0 5\.3 10\.4 >50\.0
Avet4e 1931\.8 S5S4\.S 7\.4 11\.9
W/O - VWitout Pjeea
W/P - With PNojCtIn year t5
-64-
ANNEX 6
Table 6\.1
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Estimated Pmoiect Costs by Conwonent
Local Foreinge Tota
(USS Million)
Estimated Proiect Costs
A\. Agro-Ecolo2ical Zonine and Land Tenure
Regularization 27\.4 1216 40\.0
Agro-Ecological Zoning 6\.2 12\.0 18\.2
Land Tenure Regularization 21\.2 0\.6 21\.8
B\. Management\. Prot,ction and Monitorin of
Natural Resources 47\.9 6\.5 54\.4
Forestry Conservation and Sustained
Management 10\.2 0\.4 10\.6
Mining Activity Rationalization 5\.8 1\.1 6\.9
Conservation Areas 2\.3 0\.2 2\.5
Informal Environmental Education 1\.4 0\.1 1\.5
Enforcement Activities 15\.8 2\.5 18\.3
Institutional Strengthening 4\.9 0\.8 5\.7
Protection Indigenous Reserves 6\.6 1\.2 7\.8
Monitoring and Remote Sensing 0\.9 0\.2 1\.1
C\. Aero-Forestry Development 60\.4 9\.8 70\.2
Agricultural Research/Meteorological Stations 10\.4 1\.7 12\.1
Rural Extension 25\.2 1\.9 27\.1
Agricultural Credit 24\.2 6\.1 30\.3
Market Information System 0\.6 0\.1 0\.7
D\. Socio-Economic Infrastructure and Services 4 7 6S\.4
Health 4\.7 0\.5 5\.2
Education 7\.9 1\.7 9\.6
Water Supply 4\.5 1\.7 6\.2
Rural Electrification 6\.3 2\.7 9\.0
Rural Transpout 25\.3 10\.1 35\.4
E\. Proiect Adminisration 11\.4 025 IL
Project Admninistration (State) 6\.3 0\.2 6\.5
Project Adfninistration (Federal) 2\.3 0\.1 2\.4
Technical Cooperation 2\.8 0\.2 3\.0
Total Baseline Costs 19 461 241\.9
-Physical contingencies 10\.8 4\.4 15\.2
-Price contingencies 23\.8 4\.8 28\.6
Total Proiect Coas 7230 55\.3 285
-65- ANNEX 6
Table 6\.2
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Annual Phasing of Project Costs by Components, including Contingencies
(US$ '000)
Year 01 02 03 04 05 Total
A\. Agro-Ecotogical Zoning and 5==u===== ============= ================
Land Tenure Regularization
1\. AgroecologicaL Zoning 6687\.0 7537\.5 5971\.2 638\.1 641\.7 21475\.5
2\. Land Tenure Reg\. 2625\.6 6492\.4 7090\.7 6083\.9 3900\.4 26193\.0
,\. \. \. \. \.
Sub-Total 9312\.6 14029\.9 13061\.9 6722\.0 4542\.1 47668\.5
S\. Nat\. Res\. Mgmt\./Protect\.
1\. Protect\. Indigenous Res\. 2640\.1 1865\.3 1880\.5 1593\.1 1164\.5 9143\.5
2\. Conservation Areas 277\.4 506\.5 564\.1 688\.7 883\.0 2919\.7
3\. Mining Activ\. Procedures 460\.7 1152\.3 1919\.3 2191\.1 2662\.5 8385\.9
4\. Forestry Police 4155\.9 6396\.6 3641\.5 3402\.9 3538\.6 21135\.5
S\. Nanag\. Cons\. Forest Res\. 1176\.2 2257\.2 2929\.2 3081\.3 2898\.4 12342\.3
6\. Instit\. Strengthening 1114\.9 1763\.1 1400\.2 1213\.2 1062\.2 6553\.6
7\. Informal Educ\. 391\.4 315\.3 311\.5 323\.6 334\.3 1676\.1
8\. Remote Sensing 749\.2 109\.9 145\.3 114\.4 162\.2 1281\.0
~~~~\. \. \.
Sub-Total 10965\.8 14366\.2 12791\.6 12608\.3 12705\.7 63437\.6
C\. Agro-forestry Dev\.lopment
1\. Rural Extension 6309\.6 6930\.5 5390\.0 5567\.9 6578\.5 30776\.5
2\. Agric\. Res/Neteo\. Std\. 5030\.0 3583\.6 1664\.4 1748\.3 1796\.7 13823\.0
3\. Agric\. Credit 3648\.8 8352\.3 11326\.6 9780\.1 1994\.6 35102\.4
4\. Price Info/System 366\.7 91\.0 94\.6 98\.3 102\.1 752\.7
\. \. \. \.
Sub-Total 15355\.1 18957\.4 18475\.6 17194\.6 10471\.9 80454\.6
D\. Soclo\. Econ\. Info\./Services
1\. Health 587\.8 1167\.8 1304\.6 1438\.5 1612\.6 6111\.3
2\. Education 562\.5 2547\.7 3673\.6 2856\.7 1841\.7 11482\.2
3\. Water Supply 1369\.6 2069\.8 2150\.6 1489\.5 820\.7 7900\.2
4\. Rural Roads 9075\.2 14811\.4 13468\.4 5209\.0 2055\.4 44619\.4
S\. Rural ELectrification 4546\.9 2657\.0 3450\.8 0\.0 0\.0 10654\.7
\. \. \. \. \. \. \. \. \.
Sub-Total 16142\.0 23253\.7 24048\.0 10993\.7 6330\.4 80767\.8
E\. ProJet AdcinJNgnt\. State 1663\.5 1356\.0 1412\.7 1450\.3 1506\.9 7389\.4
F\. ProJ \. Admin\. Federal 535\.1 535\.7 535\.9 550\.4 568\.9 2726\.0
G\. Technical Cooperation 1517\.5 854\.8 876\.9 0\.0 0\.0 3249\.2
\. \. \. \.
TOTAL PROJECT COSTS 55491\.6 7353\.7 71202\.6 49519\.3 36125\.9 285693\.1
*-u------u----u#__ mu= a-
BRIAZIL
GAO ROSSO NATURAL RESOURCE MANAGEMENT-PROJECT
Summuary accounts by Proiect component
(US$-OOO)
saga sss ii- Id\. \.3\. ~ I-Sq e\.g\. i-k\. 0\.2\. SIMS, $Wk\. a" 3d \.01-I91p gn\.l-s\. ai fd\. C310WS WO "
a\. i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~wsm ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o\. M$ I"\.IWv00
m\. e\.m taga OM"a\. g 0\. C 0\.5 g\.e La* CCI CA0 4\. \. \. \. 0\.0 e\. UCil 34Ull\. 0\.5 *\.: 4\.1 s\. s1\.is\. \. '\.31
C\.e\.t~ so\. is\. Wis n\. A aae \. SC GMS A MA?01 \. \.25 \. Nl 351\. g ie s \. C C 121 a Ue us isL
L\. \.1 4SA MAs SA MA\. Ls\. CA '4\.0 : g\.e ma\. n\.e u,es 4aA S\.a e'\.g g\.el "s\. Sl\. S\. C C16\.C S\. g\.e e\. \. g,, us i\.
W\. \.ta gag "'m CA iA C \. C \.i\.:C \. e\. A *\. 35 \. \. A ea \.g e\. fIge \. ggA3\. CA 3519\.C 513\.
C\. met 5iMI 1153 CA CA CA NS CA C CA C3\.9 1U\.C C31s S\.C e\. e\. C \. A so\.C g\.e g\. e\.g f5SA Me\. 9113\.5 \. 55
43\. It\."m 11\.2 10EA gm\.C lIA elA \.e UAt CA S\.C 123C M3\. \. A C i\., 482\.5 ,* M's 0\.0 CA CA we\.ef stat\. g\., Mss U9\. MAs
NM\.POS u\.t\.C 3215\.4 61\.1 U2SIA 531\.4 in1\.m *MC 6\.10e an\.7,,g m5\.4 USA eA31 M\.43\.0SCA 0\.4 CA g\.e ' \.? USA \. i NU;i\.3 \.C A iA
1\.P10-11UdmaI S\. INS\.1 nu1\. CUI Mo IU\. #30\.4 I S\.C USA A WS\.C 44 1 5MI\.4 54\.4 CA0 e\. U C \.0 C IA 1\.4 S\.C M \.1 1206i g\.g g\.g is\., on\.,
Af-d MSsIA UNA NIVA 38\.1 6110J MA\. iA P" gIlS tie\. UiiA no" CC CA U\.SA g\.e OA CA gLg 406\.1 "OA gg\., S1691\. SA6 we i
,\. sae\. S I\. I4 U\. 3\. 5\. S013 iA U\. \. \. \. lA CA4 g\.g CA SC 5612 5\.5 2r USA1 KA1 15i\. MA's CLs
C\. IMIewS i\.,\.4g 85A CA~w m\.0 sm CA , CA 111 La "A C1\.0 41,A 16\.g g\.e *\.tAa91 0 \. S C e\. I 6\. 165 es eI ue a
5\.Wle m\. SA e\.e CIL LoC USA CA0 CA0 e0 m\. NiR e A g\. \. 3\. \. \. \. A S\. A 3\. 65 eg C S a
s\. sir\. 1 WA C\. g\.g CA CA CA CA U C\.C S\.C *A m\.i CA 31\.4 S\.C S\.C i\.e eg g\.g g11 0A S\.C 146\.9 LA 4AS U\.S ID
C\. Cdi\. WA CA \.C 215 CA 5\. g\. 555 SiA 3\.DNlA MAWIUNS\.CI5UA Sug \.S g~ O 05 155 e \. 1 C A 2\. 1\.
awe a mis 4s11\.e US 1 841 6 5213\.0 USIA SA~~~u GAS 18\.1 ilI i n18\. Mo\.1\. FIC CA 4l:us\. \. \.C C\. 04 C01e 15 VAs,s\.e n a\. i\.i USA\. H\.g MA
SC\. M0a" 1 W D Le LO\.5LM Sa 551 CS, OAl\. aCll IN, sA\. in\. US s\.e 4ig, SI\. 11\. USA W3\.I 5\.5 1M\. 55l:C Cs C\.g e\. MA\.
Isle\. (USigat US I 253 35\. W2\.C O5\. A IIC OA MAn we, 1 127 lISA 2Sli 65\.? 110\. OA1\. a54 Cl 1\. M\. 35 S\. \.SA 11 US SC
ms W -C US MA, 29 \. U C 0A5 11 asS M55I N S sigi OA21 Mi\. VA59 510\. 5\. Cii 4\.1 N 015\.2 35\. 19\. Z1A 31-49\. 4C 5\.5 2217\. "N IMM
O\.m v 55 11 in\. aw, la 015 COANu 14 d\.mus 9 i\.S 51\.4 24\. 24\.6C1 221\. 110\.4 m\.s t4\.C 54ij W\.2A 44 gA1 ov,:
i-isp gs 01)1\.1 MA 155\.1 USSS GlUe 555\.525\.6 166\.6 3501\.1 85\.1 urn\., isit\., 10\.2 C55 1614 C US 7 5191 SISi USA 3\.3 USALe O\.: "' \.63\.C\. \.
\. ww \. \. \. \. ! \.
"M 89DAMM aps "S" OM\.r 61\.6 sulLs SORIA OPPIA $11\.9 36\.1 11"M 2622\.1 "M\.r ""A A 421\.9 M33\.0 \.0 8\.0 ww ;;;~d IMA ;w 050" LS JMA 11\.1 it93
Sam a m C"" " v:' mn: maii ows m e MR\. ouL simA was\.s SSW\. am 3119,5 ONA, M: " 6hl\. "41111 VA U00 aVKA am\. a 04 \.1 Isl00 IA A"
"A SW 464\.9 MA 416\.1 as MA no\.$ NWA 4nf 101 stu: u\.o ns: u ai S' igco isit\. onA w\.1 15\.9 n 0\.0 0\.0 0\.0 DA~~~~~~~~~I-
1419\.9 a 'A~~~~~~~~~~~~~~~~~~~
- 67 -
MNNEX ,6,
Table 6\.4
ATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Estimatid schedulte of Bank Disbursements
(US$ million)
Bank Quarter Disbursement Cuiulative Disbursement Balance
Fiscal Year Ending During Quarter Amoumt I Total of Loan
1093 Sept\. 30, 1992 205\.0
Dec\. 31, 1992 25\.0 1/ 25\.0 12\.2 180\.0
March 31, 1993 10\.0 1/ 35\.0 17\.1 170\.0
June 30, 1993 5\.0 1/ 40\.0 19\.5 165\.0
1994 Sept\. 30, 1993 5\.0 45\.0 21\.9 160\.0
Dec\. 31, 1993 6\.0 51\.0 24\.9 i54\.0
March 31, 194 9\.5 60\.5 29\.5 144\.5
June 30, 1994 13\.5 74\.0 36\.1 131\.0
1995 Sept\. 30, 1994 14\.0 88\.0 42\.9 117\.0
Dec\. 31, 1994 15\.0 103\.0 50\.2 102\.0
March 31, 1995 15\.0 118\.0 57\.6 87\.0
June 30, 1995 14\.0 132\.0 64\.4 73\.o
1996 Sept\. 30, 195 12\.0 144\.0 70\.2 61\.0
Dec\. 31, 1995 10\.0 154\.0 75\.1 51\.0
March 31, 1996 10\.0 164\.0 80\.0 41\.0
June 30\. 1996 9\.0 173\.0 84\.4 32\.0
997 Sept\. 30, 1996 9\.0 182\.0 88\.7 23\.0
Dec\. 31, 1996 8\.0 190\.0 92\.6 15\.0
March 31, 1997 5\.0 195\.0 95\.1 10\.0
June 30, 1997 5\.0 200\.0 97\.6 5\.0
1998 Sept\. 30, 1997 3\.0 203\.0 99\.0 2\.0
Dec\. 31, 1997 2\.0 205\.0 100\.0 0\.0
[/ Including initial deposit of USSlS\.0 million into the Special Account and USS20\.S million of retroactive financing\.
-68-
ANNEX 6
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Financing Plan
(US$ million)
STATE FEDERAL
IBRD GOVT GOVT TOTAL
A\. AGRO-ECOLOGICAL 20NING AND
LAND TENURE REGULARIZATION 46\.8 0\.1 0\.8 47\.7
Agro-Ecological Zoning 21\.1 0\.1 0\.3 21\.5
Land Tenure Regularization 25\.7 -- 0\.5 26\.2
B\. NATURAL RESOURCES MANAG/PROT\. 59\.5 -- 3\.9 63\.4
Protection Indig\. Reserves 8\.9 -- 0\.2 9\.1
t-onservation Areas 2\.7 -- 0\.2 2\.9
Mining Activ\. Procedures 7\.8 -- 0\.6 8\.4
Forestry Police 19\.8 1\.3 21\.1
Manag\. Conserv\. Forest Rec\. 11\.4 -- 0\.9 12\.3
Inst\. Strengthening 6\.2 -- 0\.4 6\.6
Informal Educat\. 1\.6 -- 0\.1 1\.7
Remote Sensing 1\.1 -- 0\.2 1\.3
C\. AGROFORESTRY DEVELOPMENT 47\.7 28\.4 4\.4 80\.5
Rural Extension 13\.0 15\.6 2\.2 30\.8
Agric\. Research/Meteo St\. 9\.2 3\.9 0\.7 13\.8
Agric\. Credit 25\.0 8\.7 1\.4 35\.1
Market Information 0\.5 0\.2 0\.1 0\.8
D\. SOCIO-ECONOMIC INFRASTRUCTURE 41\.1 9\.5 30\.2 80\.8
Health 2\.4 2\.6 1\.1 6\.1
Education 7\.5 2\.0 2\.0 11\.5
Water Supply 3\.7 2\.1 2\.1 7\.9
Rural Roads 22\.5 -- 22\.1 44\.6
Rural Electricity 5\.0 2\.8 2\.9 10\.7
E\. PROJ\. ADMIN/MGT\.STATE 5\.0 1\.9 0\.5 7\.4
F\. PROJ\. ADMIN/MGT\. FEDERAL 1\.9 -- 0\.8 2\.7
G\. TECH\. COOPERATION 3\.0 0\.1 0\.1 3\.2
TOTAL 205\.0 40\.0 40\.7 285\.7 1/
1/ Including about USS11\.7 million in local taxes not financed by IBRD\.
- 69 -
ANNEX 6
Table 6\.6
BRAZIL
MATO GROSSQ NATURAL RESOURCE MANAGEMENT PROJECT
Allocation of Loan Proceeds
CATEGORY ITEM AND % OF EXPENDITURES TOTAL
(NET OF TAXES) AMOUNT
(USs M)
1\. (a) Agro-ecological Zoning and Land Tenure 41\.0
Regulari\.ation
100% of expenditures
(b) Management, Protection and Monitoring of Natural 46\.8
Resources
100% of expenditures
(c) Extens'\.on, Research and Marketing Information 16\.3
75% of expenditures
(d) Health and Education 4\.7
50% of expenditures
2\. Roads Paving and Maintenance, Water Supply and 27\.2
Rural Electrification
50% of expenditures
3\. Rural credit\. 22\.2
75% of expenditures
4\. Training, consultancies, studies and 16\.9
consultants\.
100% of expenditures
5\. Project administration 6\.2
75% of expenditures
6\. Unallocated 23\.7
TOTAL 205\.0
- 70 -
ANNEX 6
Table 6\.7
BRAZIL
MATO GROSSO NATURAL RESOURCES MANAGEMENT PROJECT
Implementation Schedule
Estimated Annual contractual and Other Payments
(US$ Million)
Pasment Years Total
1 2 3 4 5 Payment Remarks
Civil Works
Road Paving - 8\.8 8\.8 17\.6 ICe
Other 6\.0 8\.5 14\.0 8\.0 5\.0 41\.5 LCB
1\.0 1\.2 1\.2 1\.3 1\.3 6\.0 Force Acc\.
Equipment, Machinery
Vehicles and
Furniture
Rural Electri'efatfon
Equipment 1\.5 4\.9 2\.6 - 9\.0 ICB
Other 4\.1 4\.1 8\.2 4\.0 0\.1 20\.5 LCB
0\.8 0\.8 0\.9 0\.9 0\.8 4\.2 Shopping
0\.2 0\.3 - 0\.5 NSF il
Contractual Services
Aerial Photogr&\.phy
and Laud Zoning
Operatfons 5\.7 11\.6 - - - 17\.3 ICe
Other 2\.5 2\.5 2\.6 2\.6 2\.6 12\.8 LCB
0\.2 0\.2 0\.2 0\.2 0\.2 1\.0 Shopping
Technieal Assistncee
Training, Studles 4\.4 4\.4 6\.7 6\.5 0\.2 22\.2
sltaries and Benf it 16\.8 10\.3 10\.3 10\.3 10\.3 58\.0
Other Operational Costs 8\.2 8\.2 8\.2 8\.2 8\.2 41\.0
Investment Credit 4\.1 7\.5 7\.5 7\.5 7\.5 34\.1
TOTALS 55\.5 73\.3 71\.2 49\.5 36\.2 285\.7
Bank-Financed (51\.0)1/(52\.0) (51\.0) (36\.0) (35\.6) (205\.0)
1/ NBF Not Sank-Financed\.
I/ Includes retroaetive financing for USS20\.5 milion\.
-71- ANEX 7
Table 7\.1
BRAZL
MATOGROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Llit of Executing and Collabortingl Anencies"
Project Activity Main Executing Agency Main Colaborating Agenciecs
Agro-Ecological Zoning SEPLAN nTERMAT
FEMA, FUNAI
LAd Tenurc Regularization INTERMAT, INCRA
Management and Conservation FEMA
of Foret Resources PMF-MT
Mining Activities Rationalization FEMA
Establishment of Conservation Areas FEMA
InforMal Environmentl Education FEMA
Control of Forestfy and FEMA, SEPLAN,
Mining Activities PMF-MT, FUNAI
Support tO Indigenous Communities FUNAI IBAMA, FUNAI,
SES-MT, INTERMAT, INCRA
Monitotun of Deforettion Forest Cover Monitoring Unit SEMA/FEMA, PMF-MT, IBAMA,
to be established within SEPLAN FUNAI, EMBRAPA, INtERMAT
Agro-forestry Reserch EMPAER
Rural Extension EMPAER
Rural Credit BEMAT EMPAER, CASEMAT, SEAGRI\.
SEPLAN
Storage, Ptocessing and EMPAER, SEAAF
Marketing Informtion
Health SES-MT
Education SEC-MT
Water Supply SANEMAT
Rural Electrification CEMAT
Maintenence and Paving CODEMAT
of Rural Roads
Prject Adminisration SDP-PR, SEPLAN/PCU
I/ In addition to these pubic agencies, relevant interlational and national non-governAental organizations have participated in project prepation and would
be encouraged to patticipate actively In impletntation as well\. Tatee will be NOO reprstenation In the State Counci for Ptoject Administrtion (Par\.
3\.45)\. NOOs will also participate in the Annaul Independent Evaluation Commitee which will monitor environental and ocial perormance of the
project (par\. 3\.5), nd In such other project activities as are agreed in the couree of each annual opeatinW plan exercisc (pars\. 3\.47)\.
HATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Proiect PhyaLcal Taraets and Schedule of Irpflomentgtion
\.
Units 1 2 3 4 5 Total
A\. LAWD 20NXCG NPPhIG REILARIZAT HIC
\.
0elhfftation\. Desarcation Cadustral Rillion Xs\. 0\.2 12\.4 12\.4 8\.3 41\.3
iswAnc\. of Ttless f_ilies 4500\.0 4500\.0 4S00\.0 4500\.0 1h000\.0
Dcsreatlon of Cons\.rv\. Arms K\. 104\.0 264\.0 264\.0 264\.0 104\.0 1000\.0
2oning 2nd 4pril_ tlon NilIfon No\. 8\.0 10\.8 8\.0 26\.8
0\. hNUREIEG T/PIOTECTION EWVIEW\.
\.
1\. Iduitlfication State Forests CfEPS) No\. 1\.0 3\.0 3\.0 2\.0 9\.0
\.
fEPSAre iIlifon Nm\. 0\.4 1\.3 1\.3 1\.0 4\.0
Prep\. fEPS Land Nanag\. Plans o\. 1\.0 3\.0 3\.0 2\.0 9\.0
Prep\. P"IV\. tend "wooa\. Pine NiKiohn Na\. 0\.2 0\.3 0\.3 0\.3 1\.1
2\. NIning Activitles Rstfonatizalion
\.
Preparation Strategic Study No\. 1\.0 1\.0
Establish\. Densrtration Site N2 - 200\.0 -2000
Fnp of Frgi t Armas Set 1\.0 - - 1\.0
Training In Niningll\.firon\. Lte No\. 1\.0 1\.0 - - 2\.0
3\. Conservation Units
\. \. F
Conservation Area Names Nam Chap\. Culamres Rio Naderihua S\. BEarbra Rio Nortes
Apiacas Rio Culabs Rio Ronr Ricardo Franco Cachibo
Conservation Ares 000 Na\. 547\.0 B10\.0 1500\.SU 1200\.0 500\.0 4647\.0
_ agament Plans No\. 2\.0 2\.0 2\.0 2\.0 1\.0 9\.0
4\. informl Enviroi\. Education
\.
Study Environ\. Assesseent No\. l 0 - - 1\.
Train fENA Tecniciam Days 10\.0 30\.0 30\.0 30\.0 30\.0 130\.0
Training Coumities Oays 20\.0 20\.0 20\.0 20\.0 20\.0 100\.0
5\. Control Forestry and Nining Activ\.
\.
Training bsic forestry Policy Courses 3\.0 2\.0 1\.0 6\.0
Training Nelicopter Pilot Persons 6\.0 - - 6\.0
Training Fix\. Ming Persons 6\.0 - - - - 6\.0
Satellite ismeery Interpretetlon Courses 3\.0 3\.0 3\.0 1\.0 - 10\.0
Special Studies Rioteles No\. 1\.0 - - 10
Routirn Inspect\. FEN Grad\. Days 630\.0 SO \.0 S00\.0 500\.0 500\.0 2630\.0
Routine Inmpect\. Forestry Police Days 20000\.0 20000\.0 20000\.0 20000\.0 20000\.0 100000\.0
Aerial Reconessaince Days 900\.0 900\.0 900\.0 900\.0 900\.0 4500\.0
inspections Days 900\.0 900\.0 900\.0 900\.0 900\.0 4500\.0
00t
no:
I-\.9
o- S
III_
fl&ZIL
NATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Proiect Physical Targets and Schedule of Imglementation
\. \.
units 1 2 3 4 5 Total
6\. Suppwort Indigenots Comuities
\.
Dee rcetion New loundries KIu e39\.0 34a\.0 443\.0 - 1630\.0
et*abilitation of loundries Ka\. 305\.0 600\.0 600\.0 490\.0 1995\.0
Training Health Nnitors Deys 141\.0 141\.0 141\.0 141\.0 564\.0
Adveced Trg\. Pubtic Health Pays 240\.0 - 220\.0 220\.0 680\.0
edium evel frg\. Public gea1th Days - 750\.0 - 750\.0 1500\.0
Health et\. Serv\. Diagnostic Days 200\.0 300\.0 200\.0 100\.0 100\.0 900\.0
T\. onitoring Deforestation
\.
Training Progrmin No\. 2\.0 2\.0 - 4\.0
onit\. visits in State Craduate Days 60\.0 60\.0 60\.0 60\.0 60\.0 300\.0
Nonit\. Visits in State nediLa Days 40\.0 40\.0 40\.0 40\.0 40\.0 200\.0
S\. Institutionsl Strengthening
\.
Study Strategic Plaming No\. 1\.0 - - - 1\.0
Vorkshop on Conflict Rosolution Ho\. 1\.0 1\.0 1\.0 1\.0 1\.0 5\.0
Autirso Pare Hatureza Projects Days 50\.0 50\.0 50\.0 50\.0 50\.0 250\.0
C\. AGROFORESTRT DEWELOPNENT W
\. \. \. :I"
1\. tesearch
\. \. \.
Anmual Crop Trials no\. 35\.0 70\.0 70\.0 139\.0 139\.0 453\.0
Peremisl Crops Trials go\. 7\.0 31\.0 64\.0 80\.0 80\.0 262\.0
Forestry Trials No\. 5\.0 3\.0 2\.0 1\.0 11\.0
Agroforestry Trials No 1\.0 3\.0 1\.0 - 5 0
Test of Product\. System On-Fore No 30\.0 30\.0 30\.0 30\.0 120\.0
Test of Product\. System On-Station no\. 12\.0 12\.0 12\.0 12\.0 - 48\.0
forestry IVTs -o\. - 21\.0 33\.0 42\.0 46\.0 46\.0*
Agroforestry TVTs No\. \. 44\.0 176\.0 220\.0 220\.0 220\.0*
2\. Extension
\. \. \.
5 Na\. Dem\. Fields Estab\. No\. 3 6 - - 9\.0
1 Ns\. Deamn\. Fields Estab\. No\. 45 45 45 45 - 180\.0
Specialized Farmers Courses Events 200 350 350 350 295 1545\.0
Courses form leaders Events 15 15 15 1S 60\.0
Other Farmer Courses Events 400 700 700 700 700 3200\.0
Exter ion asic Coursees/Tech\. Persons 214 50 50 50 50 414\.0
Refresher Extensio Cours Persons 214 304 304 304 304 1430\.0
forestry Cmwou l/Technician Persons SQ 50 50 50 50 250\.0
Other Speciatix\. Coures/Techn\. Persons 6\. 6 6 6 6 30\.0
*cu u\.lstlve '
a s
'Oi
BRAZIL
NATO GROSSO NATURAL RESOURCR MANAGEMENT PROJECT
Proiect Phvaical Taroeta and Schedule of Imtplementation
Units 1 2 3 4 5 Totel
2\. Extensmin (contd\.)
\.
Deonstrations Events 270 450 450 450 450 2070\.0
TVTs Events 90 190 200 200 190 870\.0
on- farm Deonotrations L\.ents - 36 71 71 71 249\.0
Field Days Deys 90\.0 180\.0 180\.0 180\.0 180\.0 810\.0
Excursiaons Days 180\.0 280\.0 280\.0 270\.0 270\.0 1280\.0
Seminars Days 2\.0 27\.0 27\.0 27\.0 27\.0 110\.0
Total farmrs Attendwace ho\. 15090\.0 17520\.0 19950 0 27240\.0 32100\.0 32100\.0*
Farmers Adoptnq lechnotogy No\. 2020\.0 6060\.0 12120\.0 18180\.0 20200\.0 20200\.0*
Farmers us\.rg IUWQAGUO No\. 1435\.0 4305\.0 8610\.0 12915\.0 14350\.0 14350\.0*
forarmersjlasen%s\.rn\.sm tRatio No\. 120\.0 150\.0 180\.0 270\.0 330\.0 -
3\. Rural Credgi
\. \.
Fsrmrs for Seasonal ad Invest\. Loans No\. 1435\.0 4305\.0 8610\.0 12915\.0 14350\.0 14350\.0*
Onfoare Seasonal Loan lillion USS 13\.7 14\.9 1S\.2 15\.6 16\.2 16\.2*
On-Form Invest\. Loans Million USS 1\.8 3\.7 S\.5 SS 1\.8 18\.3
Projectos Piscicucturs No\. 50\.0 100\.0 100 0 100\.0 50\.n 400\.0
Agroindustris Comuniteris No\. 5\.0 5\.0 5\.0 15O0
Armazen IMPY 700 Tons Ho\. 2\.0 2\.0 - - - 4\.0
Armazen WAPT 1000 Tons no\. 1\.0 1\.0 2\.0 j
4\. Crop Storage
\. \.
Cotrzl Coord\. Unit No\. 1\.0 - - 1\.0
Classification Posts No\. 7\.0 - - - - 7\.0
D\. S0CIO-ECOh0MIC INFRASTRUCTURE
\.
1\. Health
\. 7\.
new Health Posts No\. 5\.0 5\.0 5\.0 5\.0 20\.0
Health Posts for INCRA Schems No\. 2\.0 2\.0 2\.0 1\.0 7\.0
Enlarged Health Posts No\. 3\.0 5\.0 5\.0 2\.0 - 15\.0
Restored Health Posts No\. 3\.0 a - - - 0
Axblunces No\. 1\.0 4\.0 - - - 5\.0
Study on Health Study No\. 1\.0 - - - 1\.0
Training Health Assistants Persons - 30\.0 30\.0 27\.0 27\.0 114\.0
Refresher Training Courses Persons 100\.0 100\.0 100\.0 100\.0 100\.0 500\.0
2\. Edwcation
\.
Construc 1 Room Schwol No\. - 10\.0 20\.0 13\.0 - 43\.0
Construc 2 Room School No\. - 20\.0 17\.0 10\.0 47\.0
Extensmon Exist\. Schools No\. 20\.0 30\.0 20\.0 20\.0 20\.0 110\.0
Pilot Environ\. Educ No\. Schools - 14\.0 14\.0 14\.0 14\.0*
,\.
cumulative
oI-
HATO GROSSO NATUPAL RESOURCE MANAGEMENT PROJECT
Proiect Physical Targets and Schedule of Implementation
Units 1 2 3 4 5 lotal
2\. Edustien Ccontd)
\. \.
Eniron\. Teachers Trg\. Courses Days - 19\.0 920\.0 920\.0 939\.0 2798\.0
Uncert\. Teachers Courses Days 210\.0 1800\.0 1800\.0 1800\.0 - 5610\.0
3\. Water Supply
\. \. 5\.
welts No\. 10\.0 15\.0 15\.0 10\.0 S\.0 55\.0
Distribution Network Km\. 52\.0 78\.0 78\.0 52\.0 29\.0 289\.0
House Linkages No\. 1760\.0 2640\.0 2640\.0 1760\.0 900\.0 9700\.0
4\. Rural Electrification
\.
Sub-Sta:ion laprovement No\. 2 - - 2\.0
Electr\. Branh Caceres \. 121 158\.0 300\.0 - 579\.0
Electr\. Branch Rondonopolis KM\. 73 82\.0 - - - 155\.0
S\. Rurol Transport
\.
State Roods Conservation 000 Km\. 3\.0 3\.0 2\.0 2\.0 1\.0 11:0
ansilcipal Roads Conservation 000 Km\. 4\.5 4\.5 3\.0 2\.0 1\.0 15\.0
Paving Araputaen-Jury Km\. 39\.0 30\.0 - - 69\.0 1
Paving Ladi-Villa Progreso Km\. 33\.0 22\.0 s55 0 4
Institutional Sttud No\. 1\.0 3 3 3 3 170\.0
Total Trg\. of Persouei Days 350\.0 350\.0 350\.0 3500 350\.0 1750\.0
E\. ADIIIISTtATIN AID NOUITORINC
\.
1\. Monitoring Ind\. Cminttee Unit 1\.0 1\.0 1\.0 1\.0 1\.0 5\.0
\.
2\. Evaluation Nidtern/Ex-Post Wnit - 1\.0 - 1\.0 2\.0
\.
3 Tedmnical Assistance
\.
Internatiaml Crnsultant Person/Month 3\.0 3\.0 - 6\.0
Local Consultant Persaon/onth 24\.0 24\.0 - 48\.0
Professionais Person/Month 8\.0 8\.0 8\.0 - - 24\.0
AdbInistrative Person/Month 1\.0 1\.0 1\.0 - 3\.0
\. \. \. \.
4 'U~~~~~~~~~~~~~~m1
0 0- 2:
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Proiect Organizational Chart
SDR-PR Federal
National Coordination - - - - - - - - - - - - - Executing
Unit Agniesj
State
Governor
Directing SEPLAN- State Representation
C o u n e i l M r _ _ _ _ _ _ _ _ _ _ _ _ _ _ _A g e n cie s
as
|Technical| Administration and|
|Unit l| Finance Unit l
Administrative Financial Documentation and
Programming and Monitoring and Support Unit Control Unit Information Unit
Supervision Unit Evaluation Unit
wtX
State Executing
Agencies
77 -
ANNEX8
Page I of 3
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Proiect Su2ervision
1\. Supervision of the Mato Grosuo Natural Resource Management Project will take
place on several levels, and will be very intensive throughout the implementation
period\. In broad terms, the principal responsibilities for supervision will rest with
the State Government (through the Project Coordination Unit, PCU, of the State
Secretariat of Planning), the Federal Government (through the Secretariat of Regional
Development of the Presidency of the Republic, SDR-PR), and the Bank (through LA1EA)\.
Non-governmental organizations (NGOs) and a UNDP technical assistance team will also
play important roles\.
2\. At State leveL, the PCU will routinely supervise the work of the project
executing agencies, based on quarterly monitoring and evaluation (M&E) reports which
will be received within one month of the close of each trimester of the calendar year\.
The content and format of the M&E reports is being modified, as discussed in para\. 9
below\.
3\. The PCU will include a Forest Cover Monitoring Unit which will monitor the
location and surface changes in mining and logging activities throughout the State, on
the basis of satellite imagery obtained at 18-day intervals\. This will provide an
extremely powerful instrument for the continuous monitoring of project impact, and will
help to direct the State'e enforcement activities in support of the Mato Groess EAP\.
The findings will be aggregated each year into an annual Satellite Monitoring Report,
which will be submitted to the Bank for review by January 1, 1993 and each January 1
thereafter\.
4\. The PCU will also enjoy the full-time support of six UNDP techrical
assistance specialists with internationally recognized credentials (as well as the
equivalent three full-time specialists, to be used for short-term inputs as necessary),
to support and monitor project implementation\. Three of the full-time specialists have
been recruited, and selection of the remaining three is at an advanced stage of
processing\.
The State Council for Project Administratic\. (CEAP), chaired by the State
Governor, will meet at least once quarterly (or more often, as needed) to review
project implementation progress and take decisions on outstanding issues\. Quarterly
progress reports, annual operating plans, the report of the Annual Independent
Evaluation Committee, the annual Satellite Monitoring Report, and the mid-term
evaluation report will be discussed and reviewed by the CEAP\.
At Federal level, the SDR-PR will supervise the project at frequent
lntervals\. The 8DR-PR will receive all quarterly progress reports; conduct such
independent field visits as it considers necessary, and participate with the Bank in
all major supervision missions to Nato Grosso\. The SDR-PR will also pay particular
attentlon ti any issues which may arise concerning the performance of Federal executing
agencies under the project\.
- 78 -
ANNEX 8
Page 2 of 3
7\. Within the Bank, LAIZA will coordinate all supervision efforts for the
project, which will be allocated higher supervision coefficients than normal\. The Bank
will receive two consolidated semestral progress reports each year, based on the
quarterly progress reports compiled by the PCU\. The timing of supervision inputs may
vary over the course of any one year, depending on the specific needs of individual
project components, but normally three main supervision missions would be mounted in
February/March, July and November/December\. The first would, inter al", review the
findings of the Annual Satellite Monitoring Report (due January 1) and the semestral
report for the second semester of the preceding calendar year\. The July mission,
intended to be a full annual joint Bank-Government implementation review, would
consider the findings of the Annual Independent Evaluation Committee (due to the Bank
by June 30), the annual audit report on the use of loan and counterpart proceeds (also
due by June 30) and the proposed annual budgetary allocation for the project for the
succeeding year (by July 15)\. The third mission would be timed to coincide with review
of the draft Annual Operating Plan for the succeeding calendar year (due to the Bank
by November 15)\. To support its periodic Headquarters inputs, the Bank will station
one full-time staff member in Mato Grosso to provide continuous supervision of the
project\. Specialized staff of the Bank's Recife Office in Northeast Brazil may also
be called upon to provide occasional inputs and advice, as needed\.
S\. NGa have parttcipated in project design and will also be actively involved
in monitoring implementation\. NOos would be represented on the State CEAP (para\. 5)\.
Through their participation in the CEAP, NGOe will have the opportunity to review and
approve all annual operating plans for the project, review and discuss all quarterl,
supervision reports and other M&E reports and materiale which come to the CEAP, and
participate in all major project-related decisions\. Selected NGOs will also
particJpate as members of each Annual Independent Evaluation Committee (para\. 10)\.
9\. The State has a format for quarterly reporting, which focusses heavily on
physical and financial targets, and which is too complex to facilitate timely decision-
making and identification of problems\. A detailed proposal hs been prepared to
simplify the monitorina and evaluation indicators, and improve the design and quality
of the M&E reports\. Thie was reviewed during loan negotiations and understandings were
reached as to the type of indicators which would be central to the assessment of
performance of individual components and the overall project\. With assistance from the
UNDP specialists, and after further discussions with each of the executing agencies,
a revised set of indicators will be submitted to the Bank in draft by September 30,
1992, for review, with a view to adopting a final version by December 31, 1992\. All
quarterly reports beginning with the January 1-March 31, 1993 report, will be based on
the new format\.
10\. Annual, Mid-term and Final Proiect Reviews\. An Independent Evaluation
Committee (IEC) would be invited yearly to monitor the environmental and social
performance of the project\. Specifically, the IEC would monitor implementation of the
environmental policy and regulatory reforms undertaken in connection with the project,
the compatibility of annual Federal and State investment programs in Mato Grosso with
the recommendations of the agro-ecological zoning and the impact of the project in the
State\. The IEC would include representatives of relevant NO0s, and the report would
be available by June 30 of each year, beginning June 30, 1993\. A mid-term review of
the project, by June 30, 1995, would provide an opportunity for full stock-taking and
exchangc of views among the Bank, the Borrower and the State about project performance
- 79 -
ANNEX 8
Page 3 of 3
and the need for redirection of any activities during the remaining years of the
project\. A final assessment of the overall project implementation performance and
impact would be carried out within six months of the project completion date\.
11\. The following would be key dates each year, from the standpoint of project
supervisiont
Date Activitv/Report Due
January 1 Annual Satellite Monitoring Report due to the Bank
January 30 Fourth Quarterly Report covering the period October 1-December 31,
compiled by the State PCU
March 31 Second Semester Report for the preceding year (July 1-December 31)
due to the Bank
(FULL BANK SUPERVISION MISSION IN FEBRUARY/MARCH)
April 30 First Quarterly Report covering the period January 1-March 31,
compiled by the State PCU
June 30 Annual Independent Evaluation Committee Report due to the Bank
June 30 Annual Project Audit Report on preceding financial year due to the
Bank
July 15 Annual budgetary allocatlon for succeeding year presented to the
Bank
(FULL DANK SUPERVISION MISSION/ANNUAL JOINT BANK-GOVERNMENT
IMPLEMENTATION REVIEW IN JIJLY)
July 31 Second Quarterly Report coverlng April 1 - June 30, compiled by
the State PCU
September 30 First Semester Report for current year (January 1-June 30) due to
the Bank
October 31 Third Quarterly report covering the period July I-September 30 due
from the PCU
November 15 Draft Annual Operati Plan for Succeeding Year due to the Bank
for review
(FULL BANK SUPERVISION MISSION IN NOVEMBER/DECEMBER)
- 80 -
ANNEX 9
BRAZIL
MATO GROSSO NATURAL RESOURCE MANAGEMENT PROJECT
Documents Available in Proiect File
WORKING PAPERS
1 SOCIO-ECONOMIC-ECOLOGICAL ZONING, ENVIRONMENTAL PROTECTION
AND ENVIRONMENTAL MONITORING COMPONENTS
2 ACAO FUNDIARIA
3 ENVIRONMENTAL COMPONENT
4 MANAGEMENT AND CONSERVATION OF FOREST RESOURCES
5 PRODEAGRO: AMERINDIAN COMPONENT
6 AGRICULTURAL RESEARCH AND RURAL EXTENSION
7 COMPONENTEt TRANSPORTES
8 RURAL CREDIT COMPONENT
9 PROJECT COSTS TA3LES
10 ECONOMIC ANALYSIS
11 FARM MODELS AND ACRICULTURAL PRODUCTION
MAP SECTION
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I ARGENTINA MATO BOLVIAROSSO10 1O0S00L17
I ~~~~~ C IDJA& | APPROVAL |
P170025 |  The World Bank
Additional Financing to the Flood Risk Management Project (P170025)
Combined Project Information Documents /
For Official Use Only
Integrated Safeguards Datasheet (PID/ISDS)
Appraisal Stage | Date Prepared/Updated: 19-February-2020 | Report No: PIDISDSA26866
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
BASIC INFORMATION
A\. Basic Project Data
Country Project ID Project Name Parent Project ID (if any)
Guyana P170025 Additional Financing to P147250
the Flood Risk
Management project
Parent Project Name Region Estimated Appraisal Date Estimated Board Date
GY Flood Risk Management LATIN AMERICA AND 24-Feb-2020 15-June-2020
CARIBBEAN
Practice Area (Lead) Financing Instrument Borrower(s) Implementing Agency
Social, Urban, Rural and Investment Project Co-operative Republic Agriculture Sector
Resilience Global Practice Financing of Guyana Development Unit (ASDU),
Ministry of Agriculture
For Official Use Only
Proposed Development Objective(s) Parent
The objective of the project is to reduce the risk of flooding in the low-lying areas of the East Demerara\.
Components
Priority Works for Flood Risk Reduction
Institutional Strengthening for Flood Risk Reduction
Project Management and Implementation Support
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -N e wFi n1
Total Project Cost 26\.00
Total Financing 26\.00
of which IBRD/IDA 26\.00
Financing Gap 0\.00
DETAILS -Ne wFi nE nh1
World Bank Group Financing
International Development Association (IDA) 26\.00
IDA Credit 26\.00
February 19, 2020 Page 2 of 14
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
Environmental Assessment
Category
B-Partial Assessment
B\. Introduction and Context
Country Context
For Official Use Only
1\. With a gross domestic product (GDP) per capita of US$4,655 in 2017, the Co-operative Republic
of Guyana (Guyana) has a relatively high level of poverty compared to other countries in the Latin
American and Caribbean region\. Guyana has a low population density, with 90 percent of its 800,000
inhabitants living on the narrow coastal plain, which represents 10 percent of the countryâs area\. This
coastal plain area, much of which lies below sea level, is crucial to the economy of the country as it
supports most of the population, including the nationâs capital, Georgetown, and agricultural areas that
account for approximately 27 percent of the nationâs GDP\.
2\. The coastal plain area is flood prone, making the national economy and the population susceptible
to the impacts of high seasonal rainfall and storm events affecting the country\. In January 2005, extreme
rainfalls caused widespread flooding in the coastal lowlands and resulted in an estimated US$465 million
in damages, which amounted to 59 percent of Guyanaâs GDP at the time\. Other more recent severe rainfall
events have caused economic and livelihood losses, further highlighting the importance of reducing
Guyanaâs vulnerability to flooding to foster shared prosperity as an engine for equitable economic growth,
job creation, and poverty reduction\.
3\. The GY Flood Risk Management (FRM) Project focuses on the coastal lands of the East Demerara
area, where most of Guyanaâs Region 4 population is located\. Region 4 is bound by the Demerara River to
the West, the Mahaica River to the East, the Atlantic Ocean in the North, and the Guyana highlands to the
South\. The East Demerara area is protected from coastal flooding by a seawall along the Atlantic Ocean
and from fluvial flooding by an inland water reservoir, the East Demerara Water Conservancy (EDWC), a
large, shallow water storage system with a catchment area of 571 km2, dammed on three sides\. The
reservoir dams prevent stormwater from the inland area from entering the reclaimed coastal land\. In
addition to flood control, the EDWC provides agricultural lands and urban areas with irrigation and
drinking water\. During rainfall events, flood protection in Region 4 is dependent both upon the integrity
of the EDWC dams and effective drainage in the coastal areas\. A series of drainage channels controlled by
sluices reduce water levels by draining the EDWC, thus avoiding stressing the dams and increasing the risk
of structural failure\. A separate network of drainage and irrigation channels and pumps drains the water
from this area into the Demerara and Mahaica Rivers and the Atlantic Ocean to prevent and reduce the
risk of flooding that would occur because of rainfall and runoff of stormwater\.
Sectoral and Institutional Context
4\. In the decades leading up to the 2005 and 2006 floods, the operational capacities of the EDWC
and coastal drainage systems declined because of insufficient physical investments and inadequate
disaster preparation and management capacity\. Following the floods, the Government of Guyana (GoG)
reemphasized the importance of flood risk management to Guyanaâs economic, social, and political well-
February 19, 2020 Page 3 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
being, increasing the budget for the National Drainage and Irrigation Authority (NDIA) of the Ministry of
Agriculture (MoA) to undertake investments, maintenance, and future planning\. Moreover, because the
GoG recognized the need for medium- and long-term planning for flood prevention, planning tools were
developed under the Conservancy Adaptation Project (CAP) using financing from the Global Environment
Facility Special Climate Change Fund\. The CAP study, which lasted from 2008 to 2013, helped identify
priority interventions in the EDWC dams, the EDWC channel and sluice system, and the coastal drainage
system\. The CAP study identified priority interventions and activities for over US$123 million\. Financial
support from the World Bank and other international donors provides an important source of financing
to implement investments and undertake strategic planning activities according to the priority planning
of the GoG identified through the CAP study\.
C\. Proposed Development Objective(s)
Original PDO
5\. The objective of the GY FRM Project is to reduce the risk of flooding in the low-lying areas of the
East Demerara\.
Current PDO
6\. The objective of the additional financing (AF) to the GY FRM Project is unchanged: to reduce the
risk of flooding in the low-lying areas of the East Demerara\.
Key Results
7\. The GY FRM Project was designed to address several priority interventions identified by the GoG
through the CAP study and consists of three components: (1) Priority Works for Flood Risk Reduction, (2)
Institutional Strengthening for Flood Risk Reduction, and (3) Project Management and Implementation
Support\. The status of the specific components is as detailed in the following paragraphs\.
Component 1: Priority Works for Flood Risk Reduction
Subcomponent 1\.1\. Upgrading critical parts of the EDWC dams
8\. The rehabilitation of 4 km out of the 67 km of the EDWC dam has been ongoing since August
2016\. Within the conservancy, the rehabilitation of small existing irrigation structures will commence once
additional resources are made available\. \.
Subcomponent 1\.2\. Investments in the East Coast Demerara Drainage System
9\. The priority flood risk reduction investments in the East Coast Demerara Drainage system have
been successfully completed in 2018, in particular, the construction of three pump stations at Buxton,
Hope/Enmore, and Lusignan\. Overall, the pump stations cover an area of 7,800 ha and serve more than
60,000 people directly in Region 4, thereby reducing their exposure to recurrent floods\.
Component 2: Institutional Strengthening for Flood Risk Reduction
Subcomponent 2\.1\. Dam Safety Improvement
February 19, 2020 Page 4 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
10\. The âConstruction Supervision and Quality Assurance Planâ, the âInstrumentation Planâ, and the
âOperations Maintenance and Surveillance Planâ have been completed and are currently in use to guide
and supervise project works\. The installation and improvement of instruments to monitor and record the
dam behavior and the purchase of instrumentation to expand the hydrometeorological data in the EDWC
to include upstream watershed data, part of the Installation Plan, have been completed\.
Subcomponent 2\.2\. Communications
11\. The Project Implementation Unit (PIU) of the Agriculture Sector Development Unit (ASDU) is
preparing a video to support the MoA in its ongoing efforts in disaster risk management and the drainage
and irrigation sectors, highlighting the works carried out under the GY FRM Project and its impact on the
population (before and after approach)\. The revised Emergency Preparedness Plan (EPP), the flood
modeling and capacity-building activities, and the communication and outreach activities will commence
when additional resources become available\.
Component 3: Project Management and Implementation Support
12\. The operational costs have been efficiently used by sharing resources with other projects
implemented by the World Bank in Guyana\. In particular, the PIU has been also implementing the Cunha
Canal Rehabilitation Project, a US$3 million recipient-executed grant financed by Guyanaâs REDD+1
Investment Fund, which was closed in June 2019\.
D\. Project Description
13\. Overall the GY FRM Project is progressing well, as most of the activities have been completed and
some of the project objectives, as measured by framework indicators, have been achieved on time\. The
project funds are fully committed\. The project has been extended to July 20, 2020 to complete the EDWC
contract that experienced delays\.
14\. However, completing the project as originally planned and achieving its PDO and indicators in the
Results Framework in full would require an AF because of a financial gap caused by fluctuation in the
Special Drawing Right (SDR) and US Dollar exchange rate\. The proposed additional IDA credit of US$26
million will cover the financial gap and allow a scale up of flood risk management activities financed under
components 1\.1 and 1\.2, in particular to extend the reconstruction works of the EDWC dam and scale up
the rehabilitation of the East Coast Demerara Drainage System\. The overall approach, objectives, and
scope of the AF to the GY FRM Project are in line with those of the parent project\.
15\. Finally, the parent projectâs closing date will be aligned with the AFâs proposed closing date\. A
preliminary time estimation to implement the activities supported by the AF is about 30 months\. Adding
six months of contingency time, the proposed timeline for the AF is therefore 36 months\. Hence, the
duration of the AF is from the proposed Board date of June 2020 to June 2023\.
E\. Institutional and Implementation Arrangements
Institutional and Implementation Arrangements
1 Reducing Emissions from Deforestation and Forest Degradation in Developing Countries\.
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The World Bank
Additional Financing to the Flood Risk Management Project
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16\. The institutional and implementational arrangements for the GY FRM AF Project are the same as
those under the parent project, with the exception of using the latest World Bank procurement
regulations\. The MoA is the lead implementing agency for the project and will have overall responsibility
for reporting on fiduciary matters and overall project progress to the Ministry of Finance (MoF) and the
World Bank\. Within the MoA, the ASDU functions and responsibilities will be carrying out (a) monitoring,
coordination, and supervision of project activities; and (b) fiduciary, procurement, safeguards, and
administrative aspects of the project\. The ASDU will continue to provide the technical oversight of the
drainage and dam works\. Once these works are complete, the NDIA will take over operations and
maintenance in accordance with its mandate\. In some cases, the works will affect or require upgrading of
roads or sea defenses which are under the responsibility of the Ministry of Public Infrastructure (MoPI)\.
In these cases, the ASDU will manage the fiduciary, safeguards, and administrative tasks and the MoPI will
provide technical oversight, including construction design approval\. Supervision will be undertaken jointly
with the ASDU\. Once the works are complete, the MoPI will take over operations and maintenance in
accordance with its mandate\.
17\. The agreed financial management arrangements for the parent project for planning and
budgeting, funds flow, accounting, reporting, internal controls, and external auditing will continue for the
project under the AF\.
18\. Procurement under the project will be carried out in accordance with the âWorld Bank
Procurement Regulations for IPF Borrowersâ dated July 2016 and revised in November 2017 and August
2018 (âProcurement Regulationsâ)\.
February 19, 2020 Page 6 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
F\. Project location and Salient physical characteristics relevant to the safeguard analysis (if known)
The project is located in Guyanaâs Region 4 (Demerara-Mahaica) which is an area of 1,843 km2 (711 m2),
contains the country's capital Georgetown, and is home to the majority of Guyanaâs population\. It is
bounded on the north by the Atlantic Ocean, on the west by the Demerara River, and on the east by the
Mahaica River and Region 5\. The EDWC is a large, shallow water storage system with a catchment area
of 571 km2 (220 m2)\. It is drained by a system of canals, sluices, and pumps\. This system, combined with
a dense network of drainage and irrigation canals in the lowland areas along the East coast and Demerara
River, provides flood control that is crucial for the protection of property, life, and economy in the
country\. In addition to flood control, the EDWC serves as habitat to migratory fauna, as well as to aquatic
endemic flora and fauna and provides agricultural lands (rice and sugar production especially) and urban
areas with irrigation and drinking water\.
The rehabilitation works under the AF will be undertaken in an area owned by the Government, where
the pumping station to be rehabilitated has been built in a section of this area, which is properly fenced
and isolated from the nearby urban occupation\.
G\. Environmental and Social Safeguards Specialists on the Team
Paula Dias Pini, Social Specialist
Francisco Xavier Geraldes Siragusa, Environmental Specialist
Fabiola Mercado Jaldin, Environmental Specialist
SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment OP/BP 4\.01 Yes
Performance Standards for Private Sector
Activities OP/BP 4\.03 No
Natural Habitats OP/BP 4\.04 Yes
Forests OP/BP 4\.36 No
Pest Management OP 4\.09 No
Physical Cultural Resources OP/BP Yes
4\.11
Indigenous Peoples OP/BP 4\.10 No
Involuntary Resettlement OP/BP Yes
4\.12
Safety of Dams OP/BP 4\.37 Yes
Projects on International
No
Waterways OP/BP 7\.50
Projects in Disputed Areas OP/BP No
7\.60
For Official Use Only
February 19, 2020 Page 7 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
Safeguard Policies Triggered Explanation (optional)
Environmental Yes This project is classified as Category B\. The project is expected to have a
Assessment OP/BP positive environmental impact as it aims to reduce the risk of flood damage
4\.01 to infrastructure, agricultural, and urban land\. The project is also expected to
have a positive impact on health through the reduction in mortality and
morbidity rates arising from flooding events\.
The project will finance civil works related to the rehabilitation of existing
infrastructure (EDWC dam) and as various complementary interventions
aimed at reducing the risk of flooding in the Liliendaal area, as a scale-up of
Component 1\. The complementary potential interventions in this area include
removal of bottlenecks in the drainage system, adding more retention
capacity, and adding extra pump capacity to the existing pump station\. The
project is expected to have moderate negative environmental impacts, and
these impacts are expected to be localized, temporary, and readily mitigated\.
Some of the key environmental impacts will include vegetation and soil
removal, construction waste generation, air emission, and noise\. Because the
project activities will be located within the EDWC area, all civil works will be
scheduled to avoid key breeding and nesting periods of local fauna\. In addition,
all construction sites will be rehabilitated and revegetated with native species\.
Revegetation will be undertaken along embankments and contiguous areas
after the works are completed\.
The Environmental and Social Management Framework (ESMF) from the
parent project was updated to include all the activities under the AF\. The ESMF
provides specific measures to prevent and mitigate potential environmental
and social impacts and are in line with general and specific best practices from
the World Bank Group Environmental Health and Safety Guidelines\. The ESMF
also includes a Dam Safety Plan (DSF), a Resettlement Policy Framework (RPF),
and a Grievance Redress Mechanism\.
Natural Habitats Yes This policy is triggered because the EDWC has an extensive surface area
OP/BP 4\.04 adjacent to natural habitats along the adjoining rivers\. Appropriate mitigation
measures will be followed to limit the impact on local fauna\. The proposed
project will not result in significant degradation or conversion of natural
habitats\. The works (and impacts) will be localized and will be limited to the
upgrading and rehabilitation of existing structures\.
The project will follow a specific schedule to undertake all civil works to avoid
key breeding and nesting periods of local fauna, and all construction sites will
be rehabilitated and revegetated as needed\.
Forests OP/BP 4\.36 No This policy is not triggered given that the project will not support forest
management activities, neither will it involve changes in forest management,
forest protection, or utilization of natural forests or plantations\.
Pest Management No This policy is not triggered, given that the use of pesticides and chemicals is
OP/BP 4\.09 not expected during project implementation\.
Physical Cultural Yes This policy is triggered as a precatory measure\. The project´s activities will be
Resources OP/BP carried out on existing and operational working sites\. Thus, it is not expected
4\.11 to encounter any physical and/or cultural resources\. However, because some
civil works will involve soil removal at different layers there is a possibility of
chance finds occurring\. To address this, the ESMF includes a generic chance
finds procedures\.
Indigenous Peoples No This policy is not triggered because no indigenous communities are present in
OP/BP 4\.10 the area targeted by the AF\. They were also not present in the parent project\.
February 19, 2020 Page 8 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
Safeguard Policies Triggered Explanation (optional)
Involuntary Yes Impacts associated with OP 4\.12 are not expected\. Given the nature of the
Resettlement works financed, an RPF was prepared to allow the application of the OP 4\.12
OP/BP 4\.12 requirements in case unforeseen events make it necessary\. The execution of
the financed works under the parent project, which are close to completion,
did not cause any impact covered by OP 4\.12\. In addition, the social safeguards
aspects were properly monitored during project implementation and have
been rated Satisfactory for the last three consecutive implementation years\.
The AF, besides providing for a cost overrun, will support scaling up the project
scope by financing the rehabilitation of an additional pumping station\. Similar
to the three previous pumping stations financed by the GY FRM Project, the
additional one is located in a large parcel of land formally owned by the
Government\. It occupies a fraction of the large land parcel and is segregated
between the sea and a main road\. The land where the pumping station has
been built is fenced, and rehabilitation works are envisaged to be executed in
the same area\. Nonetheless, the RPF has been updated, consulted upon, and
disclosed following the appropriate requirements before appraisal, and it will
apply in case any unforeseen impact associated with OP 4\.12 occurs during the
AF implementation\. In addition, the activities financed under the AF do not
For Official Use Only
require raising the social safeguards category or triggering any safeguards risks
that were not covered in the GY FRM Projectâs most recent Integrated
Safeguards Data Sheet
Safety of Dams Yes This policy is triggered because the project will include rehabilitation works in
OP/BP 4\.37 the embankment dams for the EDWC\. The project will finance a review of the
dam safety instruments developed by the parent project, including lessons
learned and updating the EPP based on the works completed\.
Projects on No This policy is not triggered given that the project does not take place on or
International involve international waterways\.
Waterways OP/BP
7\.50
Projects in No This policy is not triggered given that the project is not located in an area with
Disputed Areas known territorial disputes as defined under the policy\.
OP/BP 7\.60
KEY SAFEGUARD POLICY ISSUES AND THEIR MANAGEMENT
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify and
describe any potential large scale, significant and/or irreversible impacts:
There are no potential large-scale, significant, and/or irreversible environmental impacts associated with
the proposed project AF activities\. The project will have largely positive social and environmental
(including health and safety) impacts\. Benefits expected to accrue from the flood risk reduction
investments include reduced risk of flood damage to infrastructure, agricultural land, residential, and
commercial property; and reduced mortality and morbidity arising from flooding\.
Although the EDWC is a man-made structure, it serves as a habitat for aquatic endemic flora and fauna
(for example, caiman, giant otters, and bats) as well as migratory fauna (numerous species of birds nest
in or migrate through the EDWC, including muscovy ducks, blue-winged teal, pied-billed grebes,
cormorants, stripe-backed bitterns, egrets, vultures, snail kites, and great kiskadees)\. Nevertheless, given
February 19, 2020 Page 9 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
the vast area of the uninhabited EDWC, the localized and short-term works proposed will not significantly
affect fauna, as there are large areas providing refuge for endemic species away from project works\.
Importantly, the proposed project will not result in significant degradation or conversion of natural
habitats, given that the works are limited to the upgrade and rehabilitation of existing structures\. Specific
measures will be taken to schedule civil works to avoid key breeding and nesting periods of local fauna\.
All construction sites will be rehabilitated and revegetated with native species as needed\. Revegetation
activities are expected to be undertaken along embankments and contiguous areas after works are
completed\.
The rehabilitation of the pump station at Liliendaal and Ogle aim at improving and making more efficient
the drainage of an urban area of some 30 km2\. The proposed works will be applied to increase the existing
pumping capacity through rehabilitating and modernizing the existing pumps, the pump basin, and its
drain pipes\. The activities for Liliendaal will be localized to the pump station site and isolated north to the
Ruper Craig Highway and adjacent to the Georgetown Seawall\. The activities for Ogle will be localized to
the pump station site (south of the East Coast Public Road) and isolated north to the East Coast Public
Road and adjacent to the East Coast Demerara Seawall\. The types of works are expected to include
excavation, installation of cranes, concrete hammering and pouring, and installation of large pipes\. No
intervention in the nearby shores nor in the highway are expected, so those potential expected impacts
will be site specific and temporary\.
For the proposed scale-up activities, the rehabilitation of the Ogle pumping station involves social issues\.
These require appropriate procedures associated with OP 4\.12 â Involuntary Population Resettlement\.
The rehabilitation of the pumping station might generate an impact on the anchorage of fishermenâ boats,
as well as on the availability of the canal boarders for their cooling boxes\. The magnitude of these impacts
will depend on the technical solutions proposed for the rehabilitation of the pumping station\. A
construction works execution plan and a Resettlement Action Plan (RAP) will be developed to inform the
proper resolution of the social issues\. An existing GRM in the MoA will be further improved at project level
during early stages of the AF implementation\. The AF will also include specific activity and identifying
actions that could address any gender issues\.
Because the specific technical design for this particular activity of the project is still pending, a specific
Environmental Assessment (EA) and ESMP will be prepared to address any potential environmental
impacts and propose adequate mitigation measures\. At this stage, no displacement of population or land
acquisition is anticipated are expected; however, the updated ESMF includes specific measures to address
these issues if necessary\. The project is not expected to have negative impacts on physical or cultural
resources, as these will be located on existing and operational working sites\. Some project activities will
require soil removal; thus, chance finds could be possible\. To address this, the updated ESMF includes
For Official Use Only
chance finds procedures\.
2\. Describe any potential indirect and/or long-term impacts due to anticipated future activities in
the project area:
There are no long-term indirect impacts because of this project\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts:
Given the importance of the EDWC in flood vulnerability reduction, there are no appropriate project
alternatives\.
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Additional Financing to the Flood Risk Management Project
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4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an
assessment of borrower capacity to plan and implement the measures described\.
The project will follow the same implementation arrangements outlined under the parent project\. The
MoA will continue to be the leading implementing agency for the project, and the ASDU, which is within
this ministry, will continue to be responsible for safeguards aspects of the project\. Technical staff from
the ASDU will be assigned to the project to supervise and oversee the implementation of project activities\.
The ASDU has gained experience in implementing World Bank-financed projects in compliance with the
World Bankâs Investment Project Finanacing environmental and social safeguards policies through the
implementation of the parent project\. Civil works under the project will be carried out by contractor firms
and supervised by a separate consulting firm\. These firms will be directly in charge of the environmental
and social management aspects related to the civil works and will be supervised by the ASDU staff for
compliance with the projectâs safeguards instruments\. The terms of reference for these firms will include
specific requirements to ensure that safeguards considerations and capacity issues are included in their
contracts\.
As part of the parent project, an ESMF and an RPF were prepared\. The ESMF included an environmental
baseline, a screening process, and mitigation measures\. In addition, an EA and an Environmental and
Social Management Plan (ESMP) were prepared and disclosed for the ongoing EDWC dam rehabilitation
financed under the parent project\.
The ESMF was updated to reflect all additional project activities to be financed, specifically for the
complementary interventions aimed at reducing the risk of flooding in the Liliendaal and Ogle areas
(rehabilitation of the existing pumping station at Liliendaal and Ogle)\. A specific EA and ESMP will be
developed for this additional activity according to the procedures of the ESMF\. The World Bank will
supervise the proper implementation of the ESMF including the quality of the ESMP as part of regular
implementation support\. All applicable mitigation measures identified in the EA and ESMP will be
incorporated into the bidding and contract documents\. A firm will supervise the works, including
compliance with the safeguards requirements\. Technical staff from the ASDU will be assigned to the
project to oversee the implementation of the RPF and supervise activities carried out during preparation
and implementation of the civil works, including an environmental specialist as part of its team to
supervise the implementation of the provisions related to the mitigation measures\.
The Resettlement Action Plan (RAP), triggered by the rehabilitation of the Ogle pumping station, will be
implemented by the MoA, and works will commence only after subproject RAP has been cleared by the
World Bank and implemented\. In addition, the borrower will address any deficiencies identified in
contractorsâ meeting specific EMP and standard HSE requirements through introducing corresponding
remedies in the course of project implementation\. The rehabilitation works under the AF, except for the
rehabilitation of the Ogle pumping station, are not expected to entail impacts associated with the social
safeguards\.
The capacity to prepare safeguards documentation and adequately report on safeguards implementation
is Satisfactory\. However, surveys of ongoing works during preparation of the parent project indicated that
appropriate environmental mitigation measures were largely followed\. The Guyana Amazon Tropical Birds
Society and the Environmental Protection Agency also confirmed during preparation that, in their opinion,
the Conservancy Dam was sustainably managed\. During the implementation of the parent project, both
environmental and social safeguards issues were managed accordingly and in compliance with the ESMF
and related ESMPs\.
February 19, 2020 Page 11 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on
safeguard policies, with an emphasis on potentially affected people\.
Key stakeholders include the residential, commercial, and industrial communities in the vicinity of the
drainage systems; local environmental nongovernmental organizations such as Conservation
International and the Tropical Birds Society; the Environmental Protection Agency; and relevant line
ministries\. Thereafter, the ESMF and RPF for the parent project were disclosed in the World Bankâs
InfoShop and on the MoAâs website before the start of appraisal\. An updated ESMF and RPF for the AF
have been prepared, consulted on July 17, 2019, and published by the Government on July 19, 2019
(https://asdu\.gov\.gy/frmp-project-documents)\.
February 19, 2020 Page 12 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
B\. Disclosure Requirements (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
Environmental Assessment/Audit/Management Plan/Other
For category A projects, date of
Date of receipt by the Bank Date of submission for disclosure distributing the Executive Summary of
the EA to the Executive Directors
Jun-21-2019 Jul-19-2019
"In country" Disclosure
Jul-17-2019
Resettlement Action Plan/Framework/Policy Process
Date of receipt by the Bank Date of submission for disclosure
Jun-20-2019 Jul-19-2019
"In country" Disclosure
Jul-17-2019
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project
decision meeting) (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
OP/BP/GP 4\.01_- Environment Assessment
Does the project require a stand-alone EA (including EMP) report?
No
Are the cost and the accountabilities for the EMP incorporated in the credit/loan?
Yes OPS_NH_COM P_TABLE
OP/BP 4\.04 - Natural Habitats
Would the project result in any significant conversion or degradation of critical natural habitats?
No
If the project would result in significant conversion or degradation of other (non-critical) natural habitats, does the
project include mitigation measures acceptable to the Bank?
NA OPS_PCR_COMP_TABLE
February 19, 2020 Page 13 of 16
O P S _I R _ C O MP _ T A B LE
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
OP/BP 4\.11 - Physical Cultural Resources
Does the EA include adequate measures related to cultural property?
NA
Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on cultural
property?
NA OPS_IR_COM P_TABLE
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been
prepared?
Yes
If yes, then did the Regional unit responsible for safeguards or Practice Manager review the plan?
Yes
OPS_ PDI_ COMP_TAB LE
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank for disclosure?
Yes
Have relevant documents been disclosed in-country in a public place in a form and language that are
understandable
and accessible to project-affected groups and local NGOs?
Yes
CONTACT POINT
World Bank
Hadji Huseynov
Senior Infrastructure Specialist
Borrower/Client/Recipient
Co-operative Republic of Guyana
Winston Jordan
For Official Use Only
Minister of Finance
Implementing Agencies
Agriculture Sector Development Unit (ASDU), Ministry of Agriculture Ms\. Delma Nedd
Permanent Secretary (ag), Ministry of Agriculture ps\.moagy@gmail\.com
FOR MORE INFORMATION CONTACT
The World Bank 1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
February 19, 2020 Page 14 of 16
The World Bank
Additional Financing to the Flood Risk Management Project
(P170025)
Task Team Leader(s): Hadji Huseynov
Approved By
Safeguards Advisor:
Practice Manager/Manager:
Country Director:
For Official Use Only
February 19, 2020 Page 15 of 16 | APPROVAL |
P151462 | PROJECT INFORMATION DOCUMENT (PID)
IDENTIFICATION/CONCEPT STAGE
Report No\.: PIDC33490
Public Disclosure Copy
Project Name LK: Improving poverty estimation
Region SOUTH ASIA
Country Sri Lanka
Sector(s) Public administration- Information and communications (100%)
Theme(s) Economic statistics, modeling and forecasting (100%)
Lending Instrument Lending Instrument
Project ID P151462
Borrower Name Ministry of Finance
Implementing Agency Sri Lanka Department of Census and Statistics
Environment Category C - Not Required
Date PID Prepared 14-Sep-2015
Estimated Date of Approval 22-Jul-2014
Initiation Note Review The review did authorize the preparation to continue
Decision
I\. Introduction and Context
Country Context
Sri Lanka is in many respects a development success story\. Economic growth has averaged over 7
percent a year over the past five years, following an average growth of 6 percent the preceding five
Public Disclosure Copy
years\. Sri Lanka has made notable strides in reducing poverty and promoting shared prosperity\. The
national poverty headcount ratio declined from 22\.7 to 6\.7 percent between 2002 and 2012/13\.
Consumption per capita of the bottom 40 percent grew at 3\.3 percent a year, compared to 2\.8
percent for the total population\. Other human development indicators, such as educational and
health outcomes, are also impressive by regional and lower middle income standards\. Finally, Sri
Lanka has succeeded in ending decades of internal conflict in 2009 and taking steps towards lasting
reconciliation\. Sri Lanka's track record of solid economic growth, strong poverty reduction,
overcoming internal conflict, effecting a remarkable democratic transition in recent months, and
overall strong human development outcomes would make any country proud\.
However, there are strong indications that the drivers of past progress are not sustainable moving
forward, and the country faces several key challenges\. The recently completed systematic country
diagnostic identifies competitiveness and social inclusion as major issues that hinder further
progress in raising living standards\. To better monitor Sri Lanka's future performance along these
dimensions, timely and accurate labor market and poverty statistics are critical\.
Sectoral and Institutional Context
Sri Lanka's poverty and labor market monitoring system is managed by the Department of Census
and Statistics\. While strong by regional standards, there is room for improvement\. Poverty figures
Page 1 of 4
are derived from the Sri Lanka Household Income and Expenditure Survey, which is conducted
every three to four years\. However, the 2012/13 data, was not released to the Bank until October
2014\. Though completed in June 2013, a number of factors including slow processing led to this
Public Disclosure Copy
delay in releasing the data\. Labor Force Survey Statistics are published every quarter, but reports
are published six months after data is collected\. Data is still collected by pen and paper and often
cleaned and processed by hand\. Investing in more modern methods of data collection and
processing will help improve the accuracy of timeliness of the data, while also reducing cost\.
Relationship to CAS/CPS/CPF
In the context of the Bank's new goals for reducing extreme poverty and boosting shared prosperity,
statistics measuring poverty and living standards are paramount\. The 2012-2016 CPS recognizes
this and its statistical assessment recommends building capacity in DCS through training and ICT
enhancement\. More effective use of technology to collect and process household survey data on
tablets will help improve data quality, reduce delays associated with collection, and provide a
building block for potential future efforts to implement an annual welfare survey that can track
annual changes in poverty\. Expert opinion on questionnaire design will help improve the ability of
DCS' household surveys to accurately capture changes in well-being and labor market outcomes\.
Finally, the definitions of Sri Lanka's urban, rural, and Estate sector date back to the 2001 census
and need to be updated to better understand the role of urbanization in Sri Lanka's development and
as well as poverty in the tea plantations that comprise the Estate sector\.
II\. Project Development Objective(s)
Proposed Development Objective(s)
The objectives of the Project are to improve poverty measurement through piloting the use of
technology to improve data collection, improve the sampling and questionnaire design of the Labor
Force Survey (LFS) and the Household Income and Expenditure Survey (HIES), and update
definitions of residential sectors as appropriate\.
Public Disclosure Copy
Key Results
1\. An assessment of the technology needs of the Sri Lanka DCS completed\.
2\. The procurement of tablets or other electronic equipment designed to improve data collection
3\. An assessment of questionnaire quality for Sri Lanka's LFS and HIES surveys completed\.
4\. The production of a paper analyzing urbanization, infrastructure, and recommendations for
updating sectoral definitions\.
III\. Preliminary Description
Concept Description
The project is a grant funded by the Trust Fund for Statistical Capacity Building (TFSCB)\. It has
three components:
1\. The provision of technical assistance to improve household survey design and implementation,
including the effective use of technology to improve data collection, the questionnaire, and the
sampling frame\.
2\. The procurement of technology, potentially tablets, designed to improve data collection or
processing\.
3\. The analysis of spatial patterns of urbanization, infrastructure, and recommendations for updating
sectoral definitions\.
Page 2 of 4
IV\. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the Project Yes No TBD
Public Disclosure Copy
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
V\. Financing (in USD Million)
Total Project Cost: 0\.16 Total Bank Financing: 0
Financing Gap: 0
Financing Source Amount
Borrower 0
Trust Fund for Statistical Capacity Building 0\.16
VI\. Contact point
World Bank
Contact: David Locke Newhouse
Title: Senior Economist
Tel: 473-5266
Public Disclosure Copy
Email: dnewhouse@worldbank\.org
Borrower/Client/Recipient
Name: Ministry of Finance
Contact: Dr R H S Samarathunga
Title: Secretary
Tel: 94112484500
Email: sf@mo\.treasury\.gov\.lk
Implementing Agencies
Name: Sri Lanka Department of Census and Statistics
Contact: HR Dias
Title: Director, Sample Survey
Tel: 940714413226
Email: hrdias@statistics\.gov\.lk
Page 3 of 4
VII\. For more information contact:
The InfoShop
The World Bank
Public Disclosure Copy
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Public Disclosure Copy
Page 4 of 4 | APPROVAL |
P152975 | PROJECT INFORMATION DOCUMENT (PID)
ADDITIONAL FINANCING
Report No\.: PIDA26242
Project Name Afghanistan Power System Development Project Additional
Financing (P152975)
Parent Project Name Afghanistan Power System Development Project (P111943)
Region SOUTH ASIA
Country Afghanistan
Sector(s) Transmission and Distribution of Electricity (91%), Public
administration- Energy and mining (9%)
Theme(s) Urban services and housing for the poor (100%)
Lending Instrument Investment Project Financing
Project ID P152975
Parent Project ID P111943
Borrower(s) Islamic Republic of Afghanistan
Implementing Agency Da Afghanistan Breshna Sherkat
Environmental Category B-Partial Assessment
Date PID Prepared/Updated 21-Jun-2015
Date PID Approved/Disclosed 23-Jun-2015
Estimated Date of Appraisal 22-Jun-2015
Completion
Estimated Date of First Grant 06-Jul-2015
Approval
Appraisal Review Decision The review did authorize to proceed with Negotiations, in principle
(from Decision Note)
I\. Project Context
Country Context
Afghanistan is a country with a total population of approximately 28\.1 million\. The Government of
Afghanistan's (GoA) authority and capacity are weak, and continue to be affected by fragility and
conflict, undermining its efforts in development, attaining self-reliance and reducing poverty\.
Furthermore, corruption is widespread and all signs indicate that the levels have increased in recent
years\. Afghanistan remains highly dependent on international aid (45 percent of GDP in 2013)\. The
national development budget has been entirely donor-financed, with donors also financing a
significant share of the Government's recurrent operating budget\. Afghanistan's domestic revenue to
GDP ratio continues to remain very low\.
Unprecedented political, security, and economic challenges since 2012 have affected Afghanistan's
economic growth, resulting in a fiscal crisis\. Domestic revenues fell to 8\.4 percent of GDP in 2014
from a peak of 11\.6 percent in 2011\. Economic growth has also fallen sharply from an annual
Page 1 of 5
average of 9\.4 percent during 2003-12 to 1\.5 percent in 2014\. By 2021/22, the Government of
Afghanistan's financing gap is projected to be 25% of GDP\. Unemployment and underemployment,
already at 8 percent and 48 percent respectively in 2009/10, is projected to rise just as the labor
force is expanding by 300,000 new entrants per year\.
The new Government has declared its commitment to address these challenges as outlined in its
paper âRealizing Self Reliance: Commitments to Reforms and Renewed Partnershipâ, that was
presented at the London Conference on Afghanistan in December 2014\.
Sectoral and institutional Context
Afghanistan is at the bottom 10% globally in electricity consumption per capita and only 28% of its
population is connected to the grid, making it one of the lowest rates of electrification in the world\.
Three decades of war damage and a fragmented power grid drive this energy scarcity; the wars
destroyed 65% of the power lines\. In June 2015 Afghanistanâs access to electricity rate is estimated
at about 25% with about 1 million residential connections\. This is a significant increase to the levels
around 2005, when the rate of electrification was only at 6%\. Discrepancies with under-served rural
areas remain\. Due to the interconnection in place with Uzbekistan and Tajikistan, load shedding and
outages have been significantly reduced in the past five years\.
Overall the Afghan power system remains small, fragmented and underdeveloped but demand is
growing rapidly\. Grid-based electricity is estimated to meet the needs of about 25% of
Afghanistan's population, mainly in the urban areas and along a few transmission corridors\. About
80% of electricity is imported from Iran, Tajikistan, Turkmenistan and Uzbekistan, and accounts for
about 1000 MW of the capacity available in the country\. Domestic diesel generators, thermal and
hydropower account for about 519MW across the country\. The transmission system consists of
islands linking the different generation sources to the loads\. The peak load has grown from 245
MW in 2006 to 628 MW in 2011 and stands close to 850 MW today\.
Sector institutions are evolving, with a gradual separation of policy and operations\. The main
government department responsible for the power sector in Afghanistan is the Ministry of Energy
and Water (MEW)\. It is increasingly focused on policy, strategy and planning issues and has taken
the lead on preparation of the National Energy Supply Program (NESP) and the Power Master Plan\.
Given Afghanistan's dependence on imports and external financing, MEW also has a significant
role in dealing with its neighbors and donors\.
Operations and investment are increasingly devolved to Da Afghanistan Breshna Sherkat (DABS)\.
Until 2009, the entity responsible for power supply, Da Afghanistan Breshna Mossesa (DABM),
was a department of MEW\. Subsequently, DABM was converted into DABS, which is now focused
on developing into a fully commercial power utility while remaining under state ownership\.
Initially responsible for day to day operation of the transmission and distribution system, DABS is
increasingly carrying out its own investment program\. DABS financial performance has improved
significantly since it was spun off from MEW, and in 2014 DABS has not needed subsidies from
the Government to support its operations\. Over the past 7 years energy losses were reduced from
54% to 26%\.
The World Bank has in the past provided significant support both in terms of IDA and ARTF
financing and technical assistance\. The APSDP project is a cornerstone project aimed at
Page 2 of 5
rehabilitating and expanding electricity infrastructure in secondary cities\. This project built on the
earlier Emergency Power Rehabilitation Project (EPRP)\. The proposed Additional Financing is to
cover cost overruns of the APSDP project\.
II\. Proposed Development Objectives
A\. Current Project Development Objectives â Parent
The development objective of the project is to increase the number of electricity connections for the
urban centers of Charikar, Gulbahar and Jabul-es-Seraj and Pul-e-Khumri in an institutionally
efficient way\.
B\. Proposed Project Development Objectives â Additional Financing (AF)
The development objective of the project is to increase the number of electricity connections for the
urban centers of Charikar, Gulbahar and Jabul-es-Seraj and Pul-e-Khumri and to improve the
availability of power from Naghlu and Mahipar switchyards\.
III\. Project Description
Component Name
Component A: Distribution System Rehabilitation
Comments (optional)
This component includes rehabilitation of the distribution systems in Charikar, Gulbahar and Jabul-
es-Seraj in Parawan province and in Pul-e-Khumri\. In the parent project the main rehabilitation
work for Charikar, Gulbahar and Jabul-es-Seraj is covered by a single responsibility contract for
supply and installation\. The installation work under the contract has been near completed, and so
has the rehabilitation work in Pul-e-Khumri\. The service drops for individual connections were not
included in the original supply and install contracts of either of the two distribution systems\. Under
the Additional Financing (AF), MEW will transfer the distribution systems to DABS which will
then be responsible for the procurement and installation of the service drops\.
Component Name
Component B: Rehabilitation of Transmission Switchyards associated with Naghlu and Mahipar
Hydropower Stations
Comments (optional)
Under the parent project, this component is covered by a single responsibility supply and install
contract\. Equipment for both plants was procured and shipped at the same time and is now on both
sites\. The construction installation testing and commissioning work was completed at Mahipar at the
end of December 2014\. Work at Naghlu is targeted for completion by early 2016\. The AF will be
used to cover the incremental cost of this rehabilitation contract under this component\.
Component Name
Component C: Institutional Capacity Building, Energy Efficiency and Project Management Support
Comments (optional)
Under the parent project a Project Management Firm (PMF) manages the project on a daily basis\.
Under the AF, Afghanistanâs power utility DABS as the new implementing agency will select a
consultant to support the technical supervision and monitor the implementation of the remainder of
the switchyard rehabilitation contract (Component B)\.
IV\. Financing (in USD Million)
Total Project Cost: 15\.00 Total Bank Financing: 0\.00
Page 3 of 5
Financing Gap: 0\.00
For Loans/Credits/Others Amount
Borrower 0\.00
Afghanistan Reconstruction Trust Fund 15\.00
Total 15\.00
V\. Implementation
Implementation Summary of the Parent Project
The original grant amount of the parent project is US$60 million financed from the Afghanistan
Reconstruction Trust Fund (ARTF), which was approved on October 22, 2008 and became effective
on March 19, 2009\. As of June 21, 2015, 93\.27% of the US$60 million has been disbursed\. The
parent project comprises of the same components as described in III\. Project Description above\. So
far, for Component A rehabilitation of the distribution systems in both Charikar, Gulbahar and
Jabul-es-Seraj in Parawan province and in Pul-e-Khumri are close to completion, and will be
completed and handed over to DABS within the current project\. This includes construction/
rehabilitation of in total 626 kilometersâ of distribution lines, accounting for about 40,000 kilo Volt-
Ampere (KVA)âs distribution capacity\. In the additional financing, DABS will procure and install
the services drop at both sites and connect the consumers to the electricity\. Under Component B:
Rehabilitation of Transmission Switchyards associated with Naghlu and Mahipur Hydropower
Stations, equipment has been procured and shipped to both sites\. Installation at Mahipar has also
been completed\. Work at Naghlu is expected to be completed under the AF by early 2016\. Under
Component C, technical assistance activities including institutional capacity building of the
implementation agencies, establishment of a unit for promotion of energy efficiency and demand
side management, a study on electricity pole design, and collection of baseline energy usage
information for the urban centers under the project etc\. have all been completed\.
Transfer of Implementation Agency in the Additional Financing
Currently, the Ministry of Energy and Water (MEW) is the project implementation agency\. Under
the additional financing implementation responsibilities are transferred from MEW to Afghanistan's
power utility DABS\.
VI\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
Page 4 of 5
Comments (optional)
VII\. Contact point
World Bank
Contact: Fanny Kathinka Missfeldt-Ringius
Title: Senior Energy Economist
Tel: 458-9645
Email: fmissfeldt@worldbank\.org
Contact: Jie Li
Title: Environmental Specialist
Tel: 473-4716
Email: jli4@worldbank\.org
Borrower/Client/Recipient
Name: Islamic Republic of Afghanistan
Contact: Moheb Arsalan
Title: Aid Coordination Speciallist, Minister of Finance
Tel: 0093-790850761
Email: moheb\.jabarkhail@budgetmof\.gov\.af
Implementing Agencies
Name: Da Afghanistan Breshna Sherkat
Contact: Eng\. Shekeeb Nessar
Title: Chief Operations Officer
Tel: 0093-700294722
Email: shekeeb\.nessar@dabs\.af
VIII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Page 5 of 5 | APPROVAL |
P006688 | T\.O\.- l0b
RESTRICTED
RETURN TO
REPORT< T mS x<
WITHIN
ONE WEEA l
This report is restricted to use within the Bank\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
APPRAISAL OF REVISED
HIGHWAY PROJECT
in
COLOMBIA
September 2, 1953
Technical Operations Department
EXCHANGE RATE
One U\.S\. dollar : Z\. 5 Colouibiaa Peso*
One Colombion Peso - U\.S\. $0\.40
TABLE OF CONTENTS
Page
Sumnary and Conclusions
I\. Darpose and Scope of this Report 1
II\. The Present Situaticn 1
III\. Description of the Revised Construction Fro4ect 3
IV\. Troposed 1Kaintenance Pro'ram 5
V\. Suniraryv of the Total Fund Requirements 7
VI\. Justification of' the Project 8
VII\. Reconrmendations 9
Appendices\.
APPRAISAL OF REVISED H?IGHT\.AY I;ROJECT - COLOLIBIA
Summary and Conclusions
The Government of Colombia in 1951 began a three-year emergency
construction project for rehabilitating about 3,061 kilometers of the
countryts principal highways\. On April 10, 1951, the Bank made a loan of
416\.5 million to Colombia for this purpose\. This was the first step in a
larger highway program recommended by the Colombian Economic Development
Committee\.
The urgent need for improved roads did not permit making surveys,
plans, detailed estimates and construction schedules before beginning work\.
Experience has shown that both the time required for completing the project
and necessary equipment were substantially underestimated\. Therefore,
additional equipment should be provided in order to complete the project to
adequate standards, and to cut down the time required for completion\. Addi-
tional foreign exchange of about S7\.L4 million would be needed for this
purpose and for related costs\.
In June 1952 the Bank agreed to increase the percentage of paved
roads in the project from 155 to 50%\. The higher dollar requirement of
\.>860,000 for this change was transferred from the contingency item in the
List of Goods\. Further experience has shown that it would be desirable
that the percentage of roads to be paved should be further increased to
about 82 g and that some new roads should be added to the project\. This
additional work will require about \.3\.57 million in foreign exchange\.
These above changes would increase the original foreign exchange
estimates of the project by 410\.71 million (from 46\.5 million to "27\.21
million) v;ith a corresponding increase in local currency requirements of
about 67 million pesos\.
It has been increasingly evident that there must be a drastic
reorganization of Colombiats highway maintenance facilities and practices\.
To implement this reorganization, it is proposed that any additional high-
way loan include an amount to provide additional road maintenance equipment,
shops, shop equipment and, for an initial period of at least tlTo years,
trained and experienced outside engineers\. The amount of foreign exchange
required lor this purpose wrould be \.,jl0\.l million, of iwWhich the Bank is
asked to provide 2\.1J1 million in the proposed loan,
The above foreign exchange estimates, with the addition of an
amount for contingencies, would total 421\.35 million, of wjhich '4\.35 million
is nowv requested by Colombia as a supplementary highasy loan\.
The project is sound and it is recommended that the Bank favorably
consider an additional highvray loan to Colombia in the amount of "lh4\.35
million\. This loan would have a term of 10 years ';ith a grace period of
two years on amortization payments\.
A?PLATSj1 OF REVrSED HIGHWAY PROJECT - COLC131A
I\. Purpose and Scope of this Report
1\. The Goverrment of Colombia has requested a supplementary loan of
J1I\.35 milion for the following purposes:
(a) to complete the uroject financed by Loan i3 CO to adequate
standards;
(b) to provide additional equipment to accelerate cornstruction,
to add new roads, and to increase the percentage of roads
to be paved;
(c) to establish a comprehensive maintenance program for the
entire nati'onal highaay system\.
2\. The proceeds of the supplementary loan vrould be used to purchase
additional construction equipmr\.ent and materials, to meet increased administra-
tive costs and contractors, fees and maintenance and shop equipment, and to
empioy foreign personnel to direct the planning of the maintenance program
and to assist in carrying it out\.
3\. T"he purpose of this report (wrhich supplements the previous technical
report of lMarch 20, 1951) is to appraise the proposals of the Colombian
Goverrment\.
II\. The Present Situation
4\. The original loan, made April 10, 1951 in the amount of y0l6\.5 million,
was for the purpose of enabling the Government of Colombia to proceed \.;rith a
three-year emergency project for the rehabilitation of Colornbia's principal
highigays, as the first step in a larger program recommended by the Colombian
Economic Committee\.
The total cost of the project was originally estimated to be 103\.6
million pesos, of -which 70\.6 million pesos (including a contingency allowance)
was to be in local currency\. The project consisted of:
(a) the construction of arproximately 155 kilometers of nevw high-
w-ays to provide connecting links in the trunk highwnay system;
(b) the actual reconstruction and rehabilitation of about 2,834
kilometers of existing trunk highways; and
(c) the establishment and maintenance of repair shops for ser-
vicing the construction equipment to be purchased with the
proceeds of the loan and for training Colombian personnel in
the repair and use of the equipment and in the function of
highw\.ay maintenance\.
1/ The original project included, by designation, an additional 72 Km of
roads which did not require construction, reconstruction or rehabilitation\.
(See Table II, index)\.
-2-
6\. The urgent need to provide improved highway service did not allow
time, before initiating work, to make detailed surveys and prepare plans,
speci\.fications and construction schedules for the project\. The general speci-
fications agreed upon required the construction of roads of good standards and
fitted to Colombian needs\. Provision was made for carrying on final surveys,
preparing plans and revising cost estinates as work progressed\. The initial
cost estimates wvere based on the best available information and, with the
inclusion of a 15% contingency allowance, were considered sufficiently reali-
istic\. The Bank therefore proceeded wvith the Loan in the expectation that the
semi-annual revisions of the estimates which the contractors were required to
make would provide progressively better cost estimates as construction
advanced\. To provide the peso requirements for the project, the Colombian
Government agreed to appropriate 23\.5 million pesos each year for three years
beginning in 1951, Five (now reduced to four) foreign contractors have been
carrying out the project, including the training of Colombians in the
operation and maintenance of the equipment\.
7\. In June 1952, the Colombian Government requested and the Bank agreed,
that the Loan Igreement be amended to increase the amount of paving from 15%
to 50% of the total roads in the proiect\. Such an increase was considered
technically desirable\. As a result of this change, and a change in the exchange
rate from 1\.95 to 2\.50 pesos per dollar, the total cost of the project
expressed in pesop increased from 103\.6 million pesos to 142\.8 million pesos\.
The local currency requirements increased by 31 million pesos from 70\.6 million
to 101\.5 million which the Government agreed to appropriate\. The higher
dollar requirements of :G6o,ooo for the additional work were obtained from
the contingency item in the List of Goods\.
8\. Soon after the original loan was signed, the Bank employed and
stationed in Colombia a resident highway engineering consultant\. The original
Consultant, and his successor, have advised and otherwise assisted the
11inistry of Public '$orks and the contractors in carrying out the project and
have reported to the Bank on the progress of the vrork\. Early this year the
Consultant reported that the contractors were running into unexpected diffi-
culties\. These resulted from difficult terrain and the lack of sufficient
heavy equipment to meet the problems encountered, particularly in slide
removal\. The consultant advised the Bank that, if the entire project mss to
be completed, the contractors would either have to make a drastic reduction
in engineering standards or obtain a substantial increase in dollar and peso
funds\. He therefore recornmended that the Bank consider a supplemental loan
for the purchase of the necessary additional equipment\. The Iiiinistry of
Public lorks had also requested that the percentage of highwvays to be paved
be increased from 50 to about 80\.
9\. In April conferences were held in Colombia with the then Iiinister of
Public li;orks and with the contractors\. It vras clear that additional equipment
was needed and that the requested increase in paving would add greatly to the
value and life of the roads\. In addition, the M\.linister agreed that a compre-
hensive program for maintenance of the national highwvay system of Colombia
should be adopted\. Shortly after these conferences, a new Government came
into power, including a new IMlinister of Public '4orks\. This caused delay and
necessitated additional conferences in Bogota\. Considerable additional
-3-
exper-ence wisas then available particularly in paving, and the loss of a dry
season since the first conferences necessitated a review of equipment needs\.
A new study was therefore made of construction standards, additional equip-
ment reeded to meet those standards, and the amount and types of paving best
suited to the roads and the traffic\. The project wvas then revised to reflect
the results of the study and to incorporate mutually acceptable revisions
proposed by the new Minister of \.'ublic l,orks who indicated full accord with
the project as revised\.
10\. Taking into account the difficulties which have been encountered,
progress of work on the project has been satisfactory\. As of J-uly 1, 1953,
grading work had been completed on 0o% of the roads in the original project\.
Although this is somewhat behind the original schedulq the work completed in
terms of Quantities of earth moved and materials used has been much greater
than the original estimates\.
ill All wYork, including paving, has been completed on 224 km of roads\.
In addition, the full base has been completed on 835 lkm and grading has been
completed on a further 356 km\. In addition to their construction work, the
contractors are maintaining 2,887 hm of tne roads in the original project\.
12\. Two permanent repair shops, located at Bogota and Bucaraznga ;4ave
been completed and are teing utilized for the maintenance of construction
equipment,
III\. Description of tne Revised Construction Project
13\. Estimates have been prepared by the contractors,reviewed by Banm
representatives and approved by the l\.inistry of Public Uorks for the revised
proiect\. The estimate5 provide for additional conotruction equipment and
materials and an increase in the roads to be paved to about 82-% of the
total mileage, and are based or more realistic calc-lations of the amounts
necessarxy to meet required engineering standards\. The total estimated cost
of the revised project for construction work exclusive of contingencies, is
236\.6 million pesos, of which the foreign exchange costs would be :\.27\.2 millicn
(68 million pesos) and llocal currency costs 168\.6 million pesos (see
Table I)\.
14\. Of the increased expenditures to carry out the revised project,
about 27\.1 million and 38\.7 million pesos are required to complete the
original project to satisfactory standards, and to prepare the base for
paving\. The cost of inc;easing the paving from 50 i to 822-, and for the new
roads added to the project is about i3-6i million and 28\.4 million pesos\. The
two amounts comprise the 2;l0\.7 million and 67\.1 million pesos, the estimated
additional required f=zds for the proiect\. Thlese amounts are exclusive of
contingencies, and without regard to the salvage value of the additional
equipment\.
-4-
15, It was originally estimated that the project could be completed by
mid-1954, but due to delays in equipment deliveries, frequent mountain
slides, the added time needed to pave more of the roads, and delays caused
by the recent change in Government, the revised project, except for the
Thnja - Barbosa road, is nowg scheduled for completion by the end of 1955\.
Extension of the construction period to about the end of 1956 would reduce
expenditures for additional equipment by about QL million\. However, addi-
tional contractors' fees and administrative costs payable in dollars wvould
be about 92 million, The salvage value of the additional equipment at the
end of the project would be about Q2\.0 million\. The shorter construction
period therefore represents no additional cost and provides for the com-
pletion of these important highways at a much earlier date\.
16\. The revised Droject will require about 70,000 tons of liquid and
solid asphalt\. About 29,000 tons of road asphalt is produced in Colombia
annually but requirements outside the project for local street construction
and maintenance total about 21,000 tons annuallvy, leaving a net balance of
8,000 tons\. However, many of the roads in the project are favorably
located with reference to the sources of local asphalt and it is logical
that these should be suppl'ed Prom local production\. The lengthened onfl-
struction period may make possible a greater4use of local asphalt than was i
originally contemplated\. Furthermore, some of the imported asphalt can be
paid for wqith pesos\. In addition, some of the asphalt currently used is
being paid for 1with dollars acquired wvith pesos\. For these reasons, and
because of the size of the proposed loanj and because the borrower is
wvilling to assure the conversion of pesos to the necessary foreign exchange
for asphalt purchases, out of a total estimated cost of asphalt of the
equivalent of h\.4 million, all but 9864,0o0 is included as peso costs\.
17\. The revised project includes approximately 3,151 km of roads,
an increase of 162 km over the original project of roads to be constructed
or reconstructed\. Of these 2,599 km, or 822P will be paved\. Attached as
Table II is a list of the roads in the proJect showing types of paving
proposed\.
-5-
IV\. Proposed MJaintenance Program
18\. From the outset of its participation in the Colombian highwvay
project, the Bank has been concerned about the inferior quality of highway
maintenanace\. Provisions were made in the original loan for setting up main-
tenance shops and for the training of Colombian personnel in the use,
servicing and repair of equipment\. But it is increasingly apparent that
these neasures snould be supplemented by a major reorganization w-rithin the
Miinistry of Public liorks to set up an effective maintenance organization
and program to assure that the new Bank-financed highways, once built, will
not be allowed to detieriorate\. The l;1inistry recognizes the inadequacy of
its maintenance organization and of its current maintenance expenditures to
care for the highlways as they are placed in service\.
19\. Discussions with the ;Iinister of Public aorks and his staff have
led to the preparation of a long-range comprehensive program for maintenance
of national highways in Colombia\. The program would provide that roads once
constructed or reconstructed would be kept in first class condition by
constant routine maintenance\. It would require that the road ?unds budgeted
annually be adequate for the maintenance of all such roads, and an adequate
proportion of the budget be exclusively reserved for such purposes\. The pro-
gram provides for a complete reorganization of the maintenance section in the
1\.1inistry of Public Works, an adequate perrmanent staff, and for an initial
period of au least two years, an experienced provisional director of main-
tenance and eight additional engineering consultants from abroad\. The program
provides for the establishment in the M\.1inistry of Public viorks of a Department
of Highways to have overall responsibility for highway planning, construction
and maintenance\. The program also provides for setting up a modern Department
of Highways and engaging a foreign Advisor on Highways wiho would advise and
assist the Colombian Director of Highways for a minimum period of two years
in organizing and operating the Department of Highways\.
20\. At present, funds for maintenance are combined in a budget item
with funds for reconstruction, together amounting to approximately 19 million
pesos in 1953\. A disproportionate share of this amount is being used for
such purposes as the reconstruction of unimproved roads, the removal of
slides, bridge repairs, and the construction of new roads or the improvement
-of roads for access of military personnel to remote areas* Under the plan
proposed in the iaaintenance program, the budget would include an amount
exclusively for routine maintenance of the serviceable roads, which would be
based on the mileage of all such roads to be maintained, and wvould thus
assure, so far as possible, the availability of adequate funds to preserve
the country?s investment in its roads\. The amount calculated to be necessary
for maintenance in 1954 is 23\.6 million pesos, and by 1957, it is estimated
that the annual amount required, including equipment replacements, will
level off at about 36\.5 million pesos\.
21\. It is estimated in the program for maintenance that foreign exchange
in the amount of o$10\.1 million will be required\. These funds would be used
for:
(a) purchase of additional maintenance equipment and parts;
-6-
(b) purchase of additional shop equipment; and
(c) payment of foreign personnel during the initial two
years of the program\.
The Bank will be asked to provide $3\.1 million of foreign exchange needed to
start the program; the remaining 4$7 million required in 1954 plus the Local
currency requirements will be provided from budget appropriations to the
Ministry of Public -iorks\. The division between what the Bank and the Ministry
is expected to provide is as follows:
IBRD Miinistry
Item Dollars Pesos
Shops
Shop buildings, including contingencies 3,210,000
Shop equipment 525,000
Spare parts 50,000
Freight and insurance 290,000
Maintenance equipment
Equipment and spare parts 2,200,000 17,500000 (1)
Freight and insurance 4,000,000
Highway Scales 80,000 200,000
Personnel
Foreign staff 245,000 300,000
TOTAL 3,100,000 25,500,000
22\. The peso cost of shop construction and of freight and insurance on
Bank financed equipment is included in the estimate of maintenance cost for
1954 and will be included in the national budget for that year\. Similarly,
the national budgets for 1954, 1955 and 1956 will include provision of pesos
for the additional equipment, spare parts, and freight and insurance required
to meet the expenditure schedules established in the maintenance program,
23\. There is serious need in Colombia for the adoption and enforcement
of weight limitation regulations on vehicles using the Orlombian highways\.
Overloading is prevalent particularly on trucks of lo\.^er capacities and many
commercial haulers are carrying gross loads far in excess of the capacity of /
roads and bridges\. Regulation measures are provided for in the maintenance
program and funds are earmarked for the purchase of highway scales\.
(1) Budget appropriation in pesos to be converted to 07 million for purchase
of maintenance equipment ($6\.1 million) and spare parts ($900,000)\. The
Colombian authorities have agreed to this conversion,
V\. Summary of the Total Fund Requirements
Estimaterl Addit-Ional Funds Reauired
Foreign Exchange Local Total Cost
millions Peso expressed
Peso Cost in pesos
$ Eauivalent 1illions miIl\.ions
Revised construction cost
estimates 27\.21 68\.02 168\.59 236\.61
Present loan funds and peso
appropriations 16\.50 L4\.25 101\.50 142\.75
Ad,ditional construction funds
required 10\.71 26\.77 67\.09 93\.86
`unds required for maintenance
program 3\.10 7\.75 25\.50 (1) 33\.25
Contingencies on construction
items and equirment 5% 0\.54 1\.35 _3\.35 4\.70
lotal new funds required 14\.35 35\.87 95\.94 131\.81
24\. - The allowance for contingencies of 5% on road construction costs in
the estimate is less than that usually provided in projects of this nature\.
The low contingency amount is justified by the fact that the estimates for
equlpment, both in quantity and in price, in themselves, contain a contin-
gency\. An unallocated balance of approxiraately p221,000 remains in the
original project and the 550 contingency is thus increased by that amount\.
Furthermaore, the construction estimates are based on actual cost eXperience
and are considered to be conservative\. The contingency as included, therefore,
would provl-ide an overall margin against an overrun of the funds available for
any part of the constriantion project\.
25\. It is proposed that 114\.35 million of the additional foreign exchange
costs wovld be provided by a su-plementary loan\. The remaining foreign
exchange costs and the additional peso requirements would be made available
through supplementary allocations to the budget for this project in 1953, and
by budget allocations in 1954 and 1955\.
26\. Expenditures on the five major construction contracts for the project
to June 30, 1953 amounted to about $12\.7 million and 52\.8 million pesos\. The
schedule of ex-ected expenditures, excluding the cost of maintenance opera-
tions, for the rerainJer of the construction period is estimated as follows:
(1) Represents foreign exchange and peso costs of new maintenance equipment,
shops and shop equipment to be borne by the lainistry of Public Works but
does not include cost of maintenance operations\.
Phased Construction Expenditures for Completing
Bank Financed ighwa-vy Construction
Dollar Expenditutres Peso Expenditures
Year millions millions
1953 from July 1 7\.26 29\.C6
1954 4\.96 54\.74
1955 2\.32 25\.82
1956 0\.01 4_01
Totals 14\.55 113\.63
27\. Table III gives the annual\. Colombian peso budget for highways by
amounts for (1) original appropriation for the project financed by the Bank,
(2) supplenent to increase the pavIng in the Bank project to 50% of the roads,
(3) the proposed expanded construction program, providing funds for completing
the Bank project and increasing the paving to 82-Q$ of the roads, (4) mainte-
nance, shops, equi-pment and operations, (5) constructJ\.on outside the roads
included in the project financed by the Bank, and (6) supervision and suirveys
for the perioA 1951 - 1956\.
VI\. Justification of the Prolect
28\. The accompanying graph shows the growth of motor vehicle registration
in Colombia in the period 1942 to 1951 inclusive\. This graph indicates an
increasing trend in trucks using Colombian highways of about 15% per year, and
also that trucks in 1951 comprised about 39% of the total motor vehicles\.
Iraffic counts in sectors included in the project where traffic is primarily of
a corn\.ercial nature reveal that automobiles represent 22% of the traffic,
busses about 13% and trucks about 65%\.
29\. The present coTnmercial rate for freight hauling by truck, wihile it
varies widely from location to location, is approximately 0\.15 pesos per ton
kilometer (equiivalent to about 6{ per ton kilometer) where the typical haul is
between 100 and 150 kilometers and where the retail price of gasoline is 0\.57
pesos\. Experi'ence of the Public Works Department in Colombia has shown that
transportation of highway materials for distances of from 10 to 30 kilometers
costs 0\.27 pesos per ton kilometer on highways in poor condition, and 0\.23
pesos on paved highways\. Since the cost of the vehicle itself and its repair
constitute important elemerAs of cost in such transportation, it is expected
that improvements in aligiraent and paving will contribute d\.irectly to a reduc-
tion in these costs also by extending the useful life of the vehicles\.
30\. Even though there are insuffficient data to provide accurate forecast-
ing of benefits to be expected from the present highway project, it should be
expected\. to decrease the cost of vehic'le operation\. If this saving were
estimated at only 0\.04 pesos per ton-kilometer per year, whlch is in line with
experience in other countries under comparable conditions, it would represent
a saving of 8 million pesos per year for the 200 million ton kilometers esti-
mated as the total tonnage to be transported over the 3,000 kilometers in the
project\. Furthermore, it could be considered that the paving of these roads
would cut\.the depreciation costs of trucks hy 0\.02 pesos\. Such a reduction,
aprlied to the 82g% of paved roads in the project, would represent an ad\.ditionaW
saving to truck owners of 3\.2 rmillion pesos per year\. These savings are in
addit,on to the substantial reduction in road maintenance costs which will
result from paving\.
31\. By placing in service a network of national highways, such as thiat
included in the project, and as a consequence of the expanded national trans-
port, the tax revenues from gasoline have already increased greatly and this
trend mav be expected to continue\. These revenues are at present just about
sufficient to pay the annual anticipated expenditures of the Government for
ordinary maintenance purposes\. The present tax on gasoline in Colombia is 0\.O8
pesos per U\.S\. gallon, the retail price ranging between 0\.45 and 0\.67 pesos per
gallon\. The gasoline tax yields have been as follows:
Gasoline Tax Revenues
First 6 months
1951 1952 of 1953
Gasoline tax (imillions of pesos) 3\.3 12\.6 8\.0
VII\. Recormendations
32\. The revised road construction and maintenance project proposed by the
Colombian Government is sound\. It is recolmmenaded that a supplementary loan be
consi\.3ered for completion of this project in the amount of $14\.35 million,
having a term of 10 years with a grace teriod of 2 years\.
33\. Further Dank particiration in this project should be conditioned upon
agreernent of the Government to adopt a comprehensive maintenance programl for
the Colombian ITahtional highways satisfactory to the Bank, and to provide suffi-
cient money to carry it out, including the adoption and enforcement of weight
limiiitation regulations, satisfactory to the Bark, for Colombian highways\.
34\. It is recommended that the pre3ent arrangement Qf having a resident
highway engineer represent the Bank in Colornbia for this special project be
continued until construction is completed\.
August 28, 1953
APPENDIX
TAB1LE I
_STUMATED CONSTRUJCTION COSTS OF PROJECT -000omittedl)
iBRD LOAN - DOL1AR COSTS
Local Total Cost
E<!uip- Total Currency (expressed in
Unallo- ment and Adminis- Contractor Bank Costs local currency -
-________ _ Ecated Parts Mate rials tration Fees Loan (nesos) pesos)
I\. Original Project (includes \. ' \.
pavin- 15% of mileage) 1,211 8,302 1,872 3,237 1,878 16,500 70,600 103,600
II\. Project as previously amended
to include increase in paving 221 9,329 1, 815 3,251 1,884 16,500 101,500 142,750
from 15% to 50%
III\. Additional cost of completing
original project (50% paving),
improving standards of con-
struction, increasing pavement
from 50% to 82-1/2%p and of 0 5,927 1,534 1,889 1,359 10,709 67,087 93,859
additional roads
IV\. Estimated total cost of revised
project (includes additional
cost of original Project,
(82-1/2% paving and additional 221 15,256 3,349 5,140 3,243 27,209 168,587 236,609
roads) (II plus III)
I/ Estimate does not include funds for the maintenanice program or any addition for contingencies\.
TABLE II
ROADS ITOT UDED IT PROJECT
A\. Roads included in the project on
which pavinp will be corstructed
Length Paving Paving
Kilo- Type of Width Thickness
_ rcrq To meters Surfacing Ieter Trnhes
Tun-Ja Barbosa 75 Surface treatment 6\.1 3/4
Parbosa Guespa 12 Surface treatment 6\.1 3/4
Oiba Socorro 32 Surface treatment 6\.1 3/4
Socorro San Gil 26 Seal Coat 6\.0 Seal
San Gil Piedecuesta 87 Surface treatment 6\.1 3/4
Piedecuesta Bucaramanga 22 Seal Coat 6\.0 Seal
Buoaramanga Parplona 130 Surface treatment 6\.1 3/4
Parnpiona Cucuta 75 PneAraHtlon 6\.1 2
Cucuta Venezuela border 16 Seal Coat 6\.0 Seal
Cucuta By - pass 5 Penetration 6\.1 2
ibague Girardot 78 Road mix 7\.0 2
Girardot Arbelaez Jct\. 63 Penetration 7\.0 2
Arbelaez Jct\. Fusagasuga 6 Penetration 7\.0 2
Fusagasuga Soacha by-pass 44 Seal Coat 6\.0 Seal
Soacha by-pass 6 Not mix 7\.0 22
Soacha by-pass Bogota 10 Seal Coat 7\.0 Seal
Facatativa Los Alpes 12 Seal Coat 7\.0 Seal
Los Alpes Sasaira 31 Surface treatment 6\.1 3/4
Sasaira Km\. 84 5 Penetration 7\.0 2
lm\. 8,4 Villeta 4 Surface treatment 6\.1 3/4
Villeta Honda 72 Surface treatment 6\.1 3/4
Hoonda La Dorada 35 Penetration 7\.0 2
Murillo Calarca 90 Penetration 6\.4 2-2
Armenia Ibague 96 Peretration 6\.7 avg\. 21
Cartago Pereira 27 Penetration 6\.3 arg\. 2
Pereira (Km-\. 4) ianizales 53 Penetration 6\.2 2-4avg\.
ianizales (Km\. 8) Km\. 37 29 Surface treatment 6\.2 3/4
Km\. 80 Honda 62 Road mix 6\.2 1t
Taraza Sincelejo 256 Surface treatment 5\.5 3/4
Sincelejo Ovejas 46 Road mix 5\.5 2
Ovejas Sincerin 100 Surface treatment 5\.5 3/4
Sincerin Cartagena 48 Road m\.ix 5\.5 2
Cartagena (Caim\.an) Barranquilla 127 Road mix 6\.5 22
Dinal Sabaleta 22 Hot mix 6\.1 3
Saladito Km\. 4 8 Hot mix 6\.1 3
Cali Palmira 26 Hot mix 6\.7 2
Palmira Amaime 9 Hot mix 6\.7 2
Amaime Tulua 69 Surface treatment 6\.7 1
Tulua Cartago 95 Hot mix 6\.7 2
Cerritos Cauya 62 Hot mix 6\.7 2
Cauya Versalles 161 Surface treatment 6\.7 3/4
Versalles \.edellin 56 Hot mix 6\.7 2
Medellin Hatillo 35 Hot mix 6\.7 2
Hati'jlo Yarumal 103 Surface treatment 6\.7 3/4
Yarumal Taraza 117 Surface treatment 6\.7 3/4
Cauya Arauca 28 Surface treatment 6\.7 3/4
Arauca Km\. 10 28 Hot mix 6\.3 3
Total paving 2,599 km\.
TABIU II (COITT\.)
ROADS IITCT7UDED ITV PROJECT
B\. Roads included in the project on which
base only will be constructed
Length Paving Paving
Kilo- Type of Width Thickness
From To meters Surfacing \.seters Inches
Guespa Oiba 63
Gam\.arra Ocana 82
Platinal Bucaramanga 1\.80
lVanizales Km\. 37 Km\. 80, Honda 43
Sabaleta Km\. 34 82
Km\. 34 Saladito 22
Loboguerrero Km\. 34 28 (Cali - Buenaventura road)
Loboguerrero Buenaventura 52
Armenia Pereira (Viaintonance only)
Total base only 552 Km\.
C\. Roads included in original project, which
requiired only maintenance, incidental work,
or no work, and omitted from revised\. pro\.iect\.
Bogota Facatativa 42 paved, no work
Sal-adito Cali 4 t' 111
llanliales, Em\. 10 1iKanizales 10 " it "
Pereira Km\. 4 4 "I It "
Fanizales Km\. 8 8 " "i
Buenaventura Pinal 4 " ii
Total 1iliscellaneous roads 72 Km\.
Recapitulation
Tota' of roads included in original
and revised projects (A, B, and C) 3,213 Km\.
Total of roads included in revised
project (A and B) 3,151 Km\.
Percent pa7,ed roads in revised project 82-le\.
TABLE\. III APPENDIX
A'\.TAL PESO BUDGET FOR HIGHWAYS 1/
1951 - 1956
(M4illion of Pesos)
1922 1953 1954 19-5 1956
1\. Appropriations for Original Loan 19\.5 21\.0 16\.3 13\.7 -
2\. Supplement to increase Paving to 50%O - 5\.4 10\.6 15\.0 - -
3\. Proposed Expanded Construction Program
(Completion of Project with 82 1/2' Paving) - - 32\.52\./ 39\.010/ -
4\. Maintenance (Shops, Equipment and Opera-
tional Costs) 18\.6g/ 23\.05 18\.9t/ 23\.6 36\.4 36\.5
5\. Construction Outside Project I\.B\.R\.D\. is 1
Helping to Finance 19\.7 8-A/ 13- 10\.0 n\.a\. n\.a\.
6\. Supervision and Surveys _ 43\.7 2\.7 2\.7 n\.a\. n\.a\.
TOTAL 57\.8 61\.8 914\.3 104\.0 36\.4 36\.5
n\.a\. = not available
1/ Includes actual appropriations in 1951 - 1953, total highwiay budget for 1954 and maintenance budget for
1955 and 1956\.
2/ Includes 17\.6 million pesos for maintenance and improvements and 1 million pesos for erjuipment\.
3/ Includes supervision end surveys but excludes 2\.4 million pesos for Autopista, the cost of which is
being met from taxes on lands adjacent to the new highway and from tolls\.
/ Niot available\. Included in Item 5\.
j Includes 22 million pesos for maintenance and improvements, and 1 million pesos for equinment\.
6| Excludes 3 million pesos for the Autopista\.
Z/ 2\.5 million pesos of this amount has alreatd been ap-,ropriated\.
8/ Includes 16\.9 million pesos for maintenance and improvements, and 2 million pesos for eauipment\.
91 includes 2\.3 million pesos from apnropriation for maintenance, additions and improvements and 11 million
pesos from direct appropriation for construction and reconstruction\. Excludes Li million pesos for the
Autopista\.
1O/ Includes 3 million pesos for the Tunja - Barbosa Highway and 1 million pesos for the 3uenaventura\. -
Lobo Guerrero Hi7hway\.
NUMBER OF MOTOR VEHICLES
USING COLOMBIA HIGHWAY SYSTEM
40,000 - - 7
38,000_ _I_
36,000 I -_-
34,000 __/
32,000 ___
30,000 l a obi/7
28,000 _
26,000
24,000
22,000 _
20,000 --__ __
18,000
16,000
14,000 ____
12,000
10,000 __ _-
04oo t- 9
6,000
41°000 i-}2
2,000 _
1940 1941 1942 1943 1944 1945 1946 1947 1948 199 1950 1951 t952
RE PU B L I C O F C O L O M B I A
M\.4 INgT I S T R Y O F P U B L I C \. 9 R K S
MNT-JI-P,TTCE DOC"lTi,NT No\. 1
P :ROGO 77 -:Th T_17'iWE
OF
NIA TIgOU' HIGi, AYS IN'4 COLOMBIA
August 19, 1953
TMBLL\. OF CON\.'EN TS
Page
I\. Introduction 1
II\. Objective 1
III\. A Basic Policy 1
IV\. Organization 1
V\. Personnel and Staff
Relationships 3
VTI\. Operations and Financial
Requirements 6
I\. Introduction
1\. The lack of an adequate national transportation netwvork has been
the greatest impediment to Colombia's economic grow^rth and integration\. A
fundamental step to overcome this handicap is no'r being taken in the recon-
struction of the most important highways of the country and by some new
construction\. Colombia is investing a great deal of money in this program\.
But these expenditures, like many such expenditures in the past, will be
wasted if the highwrrays are allowed to deteriorate\. Roads start to deteriorate
as soon as they are completed\. It is therefore imperative that a sound
program for continuing maintenance be adopted and put into effect immediately\.
This requires an efficient organization, a clear conception of its functions
and duties, an appropriate allocation of responsibilities, adequate staffing,
proper equipment and the assurance of funds necessary -to carry out its work\.
2\. The following Program has been developed to accomplish these
purposes\.
II\. Objective
3\. The rmajor objective of this program is to provide an appropriate
organization and an effective method of maintenance operations by wrhich
Colombia may secure adequate, continuoas and lasting service frorn its national
highways\.
III\. A Basic Policy
4\. It is a fundamental principle of sound highwvay managernent that
sufficient funds be provided for the conservation of improved highways and
that conservation take precedence over new construction and reconstruction\.
In conformity writh this principle, highway maintenance budgets wvill always
be adequate and will not be diverted to other highway operations\. Only after
adequate funds to rmeet all maintenance requirements are assured, will funds
be allocated to new construction and reconstruction\.
IV\. Organization
5\. 4\.11 highway construction and maintenance operations in the Ministry
of Public w7orks will be carried out by a Department of Highways\. The organi-
zation and functions of the Mlaintenance Division of the Department of Highways
are set forth below\. The organization and functions of the other Divisions
of the Department of Highways shall be determined by the Iinister of Public
W~orks\.
6\. All highway maintenance operations of the Ministry of Public VTorks
will be carried out by a Maintenance Division in the Department of Highways\.
The organization of the Mfaintenance Division will be as follows:
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>ETNISMRY OF ?UBLIC1C'ORYS
IDERAWMENT OF I1IGIRTAYS
L'i I e,~I )
|M0INTET\.VT DIVISIOIj|
ECQ;UIPI,E\~TT SE~CTION1 P LWLNTFIG; r2TIONx DT~RTF E I~ PCU SEcrol
______I I' ___
< I Lt:NE B zrltxl~~17, IT E1 5 ci rE>i'° SCUF
7 O1'' ES
1HTOPS j OPT AIONS ACCOU1T,TET
7\. The Central office of the '-aintenance Division will be responsible
for planning and supervising all the operations of the Division\. The Central
Office will have four sections:
,A\. Equipment
3, Plenning
C\. Administrative, and
D\. \.ccounting\.
8\. The Eauipment Section will be responsibole for establishing standards
and procedures for the efficient operation\.,repair and maintenance of' equip-
ment and the operation of shops\. Jointly with the Administrative Section,
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it will also be responsible for training personnel in the operation, repair
and maintenance of equipment and in the operation of the shops\. It will
prepare specifications for, and supervise the purchase of, equipment, spare
parts and suoplies for equipTnent\. It will conduct field inspections to
ensure the efficient use and maintenance of equipment and shops, and proper
control of inventories\.
9\. The Planning Section will be respons-Lble for long-range planning
of maintenance operations and for preparing maintenance budgets\. It will
maintain an accurate and current list of national roads which will include
data by appropriate section lengths on type of construction, condition,
character and volume of traffic and other pertinent information\. It will
formulate for issuance by the M1inistry regulations governing the use of the
national highways, including limitatior4s on the speed and weight of vehicles
and other traffic controls\.
10\. The Administrative Section will be responsible for all personnel
and administrative activities of the Division\. Jointly with the interested
Sections, it will be responsible for all training act>vities of the Division\.
11\. The \.9ccounting Section ,will be responsible for establishing and
maintaining an accurate system of financial records and accounting controls
of all expenditures by the Division\.
12\. The national highwr,!ay system will 'De divided into Zones, each with
a specified headquarters\. The number of Zones and the location of Zone head-
auarters may be -raried as necessary to insure maximum efflciency and effective
utilization of personnel and equipment\.
V\. Personnel and Staff Relationships
A \. Director of Higxhwayrs
13\. The Director ot' Highwvays will be responsible for and supervise all
highway activities in the Ministry of Public W"orks and report directly to the
:Anister of Public iborks\. The heads of the Construction, M\.1aintenance and
other Divisions of Tle Department of Highaways w^ill report to the Director
of Highways\.
14h In order that the Ministry of Public Works may benefit from the
experience of other countries in organizing and operating a modern Department
of Highways, an outside Provisional Advisor on Highways will be engaged for
a minimum period of twFo years\. The Provisional Advisor on Highways, who will
be obtained as soon as possible to help organize the Department of Highways,
will be selected on the basis of wide experience and indicated ability in
highrway administration, planning construction and maintenance\. He will work
closely with the Director of Highways in the organization and operation of
the Department of HighwArays and w\.ill report directly to the Miinister of Public
tiorks\.
B\. Maintenance Division
15\. There wvill be a Permanent Staff and a Provisional Staff in the
,aintenance Division\. The head of the ?ermanent Staff will be a Chief
Engineer of M\.Iaintenance\. The head of the Pro-visional Staff will be a Provision-
al Director of lb\.-aintenance\.
Permanent Staff
16\. The Chief Engineer of Mfaintenance will report to the Director of
Highways and will be responsible for the general administration and operation
of the Maintenance Division\. Chile there is a Provisional Director of M,ainten-
ance, the Chief Engineer of 11aintenance till cooperate v;ith, and be directed
by, the 'rovisional Director of M1\.aintenance in budgeting and allocating the
Division's funds, setting maintenance standards and preparing programs for
maintaining and improNing national roads\.
17\. The Equipment Section will be under the direction of an Equipment
Engineer\. He will report to the Chief ,ngineer of 'Maintenance and be respon-
sible for (1) establishing standards and procedures for the efficient operation,
repair and maintenance of equipment and the operation of shops, (2) training
personnel to onerate, repair and naintain equipment and operate shops, (3)
preparing specifications for, and supervi\.sing the purchase of, equipment,
spare parts and supplies for equipment, (4) conducting field inspections to
insure the efficient use and maintenance of equipment and shops and (5) main-
taining adequate records of inventories of equipment,' spare parts and supplies,
and the depreciation of equipment\.
18\. The Equipment Fngineer will be assistecd by two Assistant Equipment
rEngineers, vho will report to him\. The t\.ssistant Engineers will make periodic
field inspections of shops, equipment, spare parts, and supplies for equipmelnt\.
They will aid in planning procedures for efficient shoo operations and advise
tne Equipment Engineer of equipment needs\.
19\. The Planning Section wvill be under the direction of a Plmnning
Engineer\. He will report to the Chief Engineer of Maintenance and be respon-
sibole for (1) planning a long-range progranl of maintenance operatioins,
(2) preparing maintenance budgets, (3) maintaining records of each section of
th'e national highvay system and (1) formulating for issuance by the ifnistry
regulations governing the use of the national highways, including limitations
on the speed and weight of vehicles and other traffic controls\.
20\. rhe Administrative Section wlill be under the direction of an
Engineer in Charge of tdministration\. lie vrill report to the Chief Engineer of
Taintenance, be responsible for all personnel and administrative activities
of the Division, and act for the Chief 'ngineer of M\.1aintenance in his absence\.
21\. The lccounting Section ill be tnder the direction of a Chief
Accountant\. He will report to the Chief Engineer of M\.aintenance and be
responsible for establishing and maintaining an accurate system of financial
records and accounting controls of all expenditures by the Division\.
22\. At least two Field Sngineers will be attached to the Central Office
and report to the Chief 3rgineer of M4aintenance\. They will make periodic field
inspections and aid and advise field personnel in carrying out effectively the
prograras and policies of the Division\.
23\. Each Zone will be under the supervision of a Zone Engineer who will
report to the Chief Engineer of M\.1aintenance\. He will be responsible for all
operations of the Division in his Zone in accordance with the programs and
policies of the Division\.
Training
24\. For the purpose of disseminating new ideas in the field of highway
maintenance, promoting the exchange of ideas and reviewing problems, the
T5aintenance Division will conduct semi-tnnual maintenance meetings\. All Zone
Engineers and selected engineers from the Central Office will be required to
attend\. Tne 1eaintenance Division will prepare and distribute an agenda at
least two weeks before the meetings are scheduled to begin, based on, but not
limited to, problems submitted by persons scheduled to attend the meetings\.
25\. The TMaintenance Division will also conduct a job training program for
equipment operators, mechanics and shop foremen which will include a central
training center and field training\.
Provisional Staff
26\. In order that Colombia may benefit from the experience of other
countries, a group of nine outside highway engineers will be engaged for a
irnimum period of two years\. These engineers, *\.ho will be obtained as soon as
possible to help plnce this maintenance program into effect, will be selected
on the basis of their experience in highway maintenance and their indicated
ability to aid the permanent mnembers of the staff of the MIaintenance Division
in carrying out their duties\. The provisional engineers who will be emp'oyed
are:
1 Provisional Director of Maintenance
1 Maintenance Consultant
2 Equipment consultants
5 Field Maintenance Consultants\.
27\. The Provisional Director of ::Iaintenance will advise and work in close
cooperation with the Chief Emngineer of T\.Iaintenance in all matters relating to
the wvork of the Maintenance Division\. The Provisional Director of MIaintenance
will report to the Provisional Advisor on Highways\. He will have primary
responsibility for programming maintenance operations, fixing maintenance
budgets and setting performance standards for the Division\. He will have access
to all the Division records and will receive from the Mlinistry of Public V;orks
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any other information he needs for the satisfactory performance of his duties\.
28\. The Maintenance roisultant vill report to the Provisional Director
of `!Maintenance and act for him in his absence\. He will advise and work in
c'\.ose cooperation wvith both the Planning Enrigineer and the Engineer in Charge
of Idministration and otherwise assist the Provisional Director of MKaintenance\.
29\. The two Equipment Consultants will advise and work in close cooper-
ation with the E'quipment Engineer and the Assistant Equipment Engineers\. They
will report to the Provisional Director of Maintenance and will make periodic
visits to the various zones to assist Zone Engineers in improving the operation
of shops and equipment\. They will also confer with Field Maintenance Consult-
ants on mutual problems\.
30\. The five Field Mfaintenance Consultants will report to the Provisional
Director of Mxlaintenance\. Each Field Maintenance Consultant vwll be stationed
at a Zone headquarters\. He will be assigned a group of Zones in which he will
advise and work in close cooperation with the Zone Engineers in planning and
carrving out maintenance operations\.
VI\. Ooerations and Financial ReauIrements
31\. The Iaintenance Division will do several types of work, some of
which wTill be performed simultaneously and usually with the same equipment
and crews\. Good management reauires, however, that the planning, budget and
cost records of each major category of work be separated from the others,
For this purpose, the work of the M;I?intenance Division till be aivided as
followfs:
A\. Ordinary Maintenance, rhich will include two major categories:
(1) Routine MIaintenance
(2) Improve-ment of Roads under Routine Mlaintenance\.
B\. Special Miaintenance, vihich wvill include +hree major categories:
(1) Pavement Resurfacing and t!Major Surface Repair\.
(2) Improve-ment of Unimproved Roads by M4aintenance Forces\.
(3) Emergency I-ork\.
A\. Ordinary Haintenance
32\. Routine :\.r\.taintenance will include such wrfork as the leveling of
aggregate road surfaces, patcning of paved surfaces, repair of shoulders and
the cleaning of side ditches, drainage structures and right-of-way\. Such work
wrill be the normal day-to-day task of small maintenance crewrrs of three to
ten laborers, who wiill be provided with tile necessary tools and equipment\.
iach crew vill be under the direction of a forenan who will be responsible for
maintaining a fixed section of road of ten to fifty kilometers, the length of
which will depend on the type of road and terrain, the amount of traffic and
other factors w\.hich affect the condition of the road\.
PRINCIPAI PROVISIONAl ANT PEY1-A,E1TT STAFFS OF Tli I A DIVISION
MINISTER OF lUBT IC W0i-i,fS
I
I PROVISIONAL AiVISOR ON HIGTHUAYS DI CTOR OF HIGE-\.,AYS |
I_________________________
a I
__ e 3?Field
I PROVISIONAL LIRECTOR OF k'AINT12iTAITCE CHIIEF BlIOTI1TER OF MAINTFNANCE Rineeers\.
\. _ _ _ _ _ _ _ _ _ _ <_ _ _ _ _ __ \. __
cI
__ - - - -
__ ___ _ _ __, _ \. - _ __
12 Eouipment 1f:\.quipment Plaruning i \.ainterance Ewngineer in Chief
IConsultants j fElngineer Enginleer - r-Consultazt C - -| harge of Accountant
- -_-_-_-_-_L - _ - - - j -aoministration
1 5 Field Maintenance I\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. Zone Engineersl/
C onsultants
_ - - - - - - I - -
Note: Broken lines in boxes indicate Provisional Staff; other broken linies indicate cooperation between
Provisional and Permanent Staff\.
l/ Will also work with Section Chiefs in Central Offices\.
-8-
33\. Improvement of Road8s Under Routine Taintenance will include such
things as widening and improvement o-r ihagi eya'Ethe instalation of small
structulres and the construction of side ditches\. This wtrork will be done by
re-ular maintenance crews and equipment, but only in periods when it will not
interfere with routine Maintenance operations,
1\. Special i14aintenance
34\. Pavement Resurfacing and 'Major Surface Repair will be done according
to a plan designed to prevent deterioration of road surface\. Such work will be
done by special crews and equipment working out of the aone headquarters\. On
bituminous surfaces constructed to lowy standards, resurfacing will be planned
to add to the pavement thickness so as ultimately to provide a higher type
pavenment\.
35\. Improvement of Unimproved Roads with :','aintenance Forces will be made
by either ordinary or special =naintenance crews only in periods when it wrill
not interfere with other maintenance operations\.
36\. Emnergency Work Xwill include such work as the removal of large land-
slides, the repair of major flood amaages, and the replacement of structures
damaged in other ways\. Although specific work of this kind cannot be predicted,
a good maintenance program must provide resources to permit regular maintenance
forces to take care of situations likely to arise,
37\. Neither Ordinany nor Spec1al YM;aintenance includes major new construc-
tion or reconstruction of highways by contract or as a special project by
maintenance forces\.
Inventory and rlassification of Roads
33\. In order to facilitate the planning of operations and the preparation
of maintenance budgets, a current inventory of all national roads and trails
w,ill be maintained by the Planning Engineer\. The roads, but not the trails,
will be classified according to importance and grouped according to condition
as follows:
Class I roads will include all the trunk highways in the national
system\.
Class II roads will include all highways, other than trunk routes,
which are important to the countryts econory\.
Class ITI roads will include national highwrays of only local
importance\.
39\. A road may be moved from a lower to a higher Class only in exceptional
circumstances when its basic importance increases; a road will be moved from a
higher to a lower Class wihen its national importance decreases sufficiently\.
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40\. The maintenance and improvement of local roads in the national system
(Class III roads) now place an excessive burden on the M4inistry of Public '\.7orks,
which has neither the funds nor the staff to maintain or improve them properly\.
This Program makes only limited provision for suich roads in view of the other
demands on the National Government for highways\. A more effective job could be
done on these roads by local governments and consideration should therefore be
given to removing these roads from the national highway system and placing the
responsibility for them on the local governments\.
41\. Condition 1 will refer to roads which have been improved to generally
accepted standards and require principally routine maintenance to keep them in
good condition\.
42\. Condition 2 vill refer to roads which are open to traffic, but require
minor improvements m addition to routine maintenance to keep them in good
condition\.
43\. Condition 3 w,\.rill refer to roads which are not open to traffic in
some seasons and which require improvements and reconstruction before they
can be kept in good condition by routine maintenance\.
44\. Roads may be moved from a lower to a higher Condition only when they
sati\.sfy the requirements of the higher Condition\. X'ith a good maintenance
progran, roads need to be moved from a higher to a lower Condition only in
exceptional circumstances\.
Financial Requirements for iIaintenance
45\. Funds appropriated for Ordinary 11aintenance will be used only for
roads in Condition 1 or 2 in all classes of roads; no part of such funds will
be used for any roads in Condition 3, which wmill be serviced from funds
appropriated for Special iMaintenance\.
46\. In January 1953, national highways comprising 11,502 kilometers were
in condition for routine maintenance (see attached map)\. It is estimated that
this will be increased by 600 kilometers in 1954, by an additional 1,000
kilometers in 1955 and by another 1,756 kilometers in 1956 as construction is
completed on roads included in the project which the International Bank is
helping to finance\. In 1953 there vwere 636 kilometers of trails requiring
some mairtenance\.
47\. Experience gained by the Mi,Lnistry of Public '7orks and by contractors
indicates that the annual cost of routine maintenance per kilometer averages
1,200 pesos for Class I roads, 1,000 pesos for Class II roads, and 700 pesos
for Class III roads\. The trails are normaelly kept open during certain seasons
of the year by an inferior type of routine maintenance averaging 300 pesos per
kilometer\.
48\. From these figares, it is possible to estimate the total annual peso
cost for routine maintenance of the national highuay system in 1954 through
1956, as shown in Table I on the next page\.
TABLE I
ROUTI1 E MAITEEANCE COST FST'IMTAS FOR NTATIOYAL FflG1WAYS
BY CIASS-AND COFDITION
1954 - 1956
Roads 19L3 12L4 i2u 1956
by Type & Condition (Kilometers) (Kilometers ( (E lometers) (Peso Cost) (Kilometers3 (Peso Cost)
CLASS ,I 1\.759 4-J59 4\.990\.800 5\.3'9 5! 6\.310\.800 \.115 3\.£1^_
Cond\. 1 544 1,348 1,61?,600 2,648 3,177,600 4,804 5,764,800
Cond\. 21 2,911 2,811 3,373,200 2,611 3,133,200 2,311 2,773,200
Cond\. 3- 304 200 100 _ - --
GI\.ASS II 313\. 3 335 000 213\.5 2\.V35\.0Q0 3 311 \. 2a5£020QO
Cona\. 1 46 385 385,000 735 735,000 1,135 1,135,000
Cond\. 2 2,241 2,000 2,000,000 1,800 1,800,000 1,600 1,600,000
Cona\. 31/ 1,0OS8 950 600
CL\.ASS III 377?2 3\.722 1,4o\.4oo 3\.772 2\.Q80J400 1772 2\.Z20\.400
Cond\. 1 20 350 245,000 750 525,000 1,150 805,000
Cond\. 2 2,593 2,422 !,695,400 2,222 1,555,400 2,022 1,415,400
Cond\. 311 1,159 1,000 - 800 - 600 -
TRAILS 636 \. 1900O\.8O0 Q6 190\.800
GRaMD TOTAL\. flS0 12\.1202 j50700 \.2,jQ2 11\.117Q,00Q 14\.858 13,684\.20o
1/ ITot subject to routine maintenance\.
TABE ITI
ESTIMATED 1AINTXIANTCE COSTS TO BE MET EROM EYATIONIT\. 3UDGET 1/
1954 - 1956
(Thousands of Pesos)
ORLINARY M STE5CE 1954 i52 l9'6
Routine Maintenance 9,500 11,100 13,700
Maintenance Equipment, Spare parts, Freight and Insurance 1,0O00- 13,5003/ 8, OOC4/
Supplies and miscellaneous repair parts 2,000 2,000 2,000
Shop eonstruction Program 3,500 - _
Improvement of Roads under Routine Maintenance 2,000 3,100 4,000
Administrative Costs _ J000 2\.000
TOTAL 2800 31,700 29\.200
SPECIAL 14AINTENANCE
Paving, Resurfacing and Major Surface Repair 600 600 1,800
Improvement of Unimproved Roads with Maintenance Forces 2,100 2,000 2,000
Emergency Work 1,000 2,000 3,000
X-ighway Scales 100 100 = _\.
TOTAL\. 12800 4_200\. 6\.80_
TOTAL MAITA17CE -2600 6\.400 36O00
l/Excludes ntajor improvements and reconstruction by contract or as special projects with maintenance forces\.
2/Freight ancd insurance only\.
3/Equipment LO million pesos, spare parts 1\.5 million pesos, and freight and insurance 2 million pesos\.
4/Equipment 5 \.25 million pesos, spare parts 750,000 pesos, freight and insurance 1 million pesos and equipment
replacements 1 million pesos\.
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49\. Table II, which follows Table I, indicates the probable cost of
adequate ordinary and special maintenance in 1954 through 1956 which will have
to oe met from the national bud-et\. IWhile the estimttes for 1954 are reasonably
accurate, and will be the basis for maintenance appropriations for that year,
the e5timate= for later years may have to be modifieds
IJeight Control
50\. In order to prevent severe damage to highways by cverloaded vehicles,
the Government will prohibit the use of the nationel highways by such vehicles
and will impose effective sanctions against violations\. To protect the highways
against overloading, a minimaum of twenty checkpoints, each writh a permanent
scale and manned by competent enforcement personnel, will oe placed at strategic
points on the most important highways, the first ten oy July 31st, 1954, and
the second ten by July 31st, 1955\. In addition to other sanctions, the excess
load will be removed from overloaded vehicles before they are permitted to
proceed from the checkpoint*
Shops and Shop Equipment
51\. Before an expanded maintenance program can be put into full operation
additional shop facilities must be established, according to standardized plans
prepared by the ~1aintenance Division\. These shops wrill be classified according
to the kind of facility as follows:
Type of Chops Approximate Cost of
Shop Building Equipment
(Pesos) (Dollars)
Class I 250,000 35,000
Class II 200,000 25,000
District 100,000 15,000
52\. Class I Shops nill be located at the headquarters of the larger and
more important zones; Class II Shops wiill be located at the headquarters of
the remaining zones; District Shops will be located in areas remote from
zone headquarters\. Some shops have already been partially constructed boy the
M1inistry and two have been completed by the contractors w,orking on the project
which the International Bank is helping to finance; others are still to be
built by these contractors as part of their present contract obligations\.
additional shops vwll be built by the contractors, to whom additional funds
will be appropriated for this purpose, and others will be constructed by the
Maintenance Division\. By the end of 1954, a total of 28 shops rill be in
operation, of which 9 wrill be Class I Shops, 12 Class II Shops and 7 District
Sho'os\. Following is a list of these Shops by type, location, builder, the
peso cost of constructing shops and dollar cost of shop equipment:
-ll-
Additional Cost of
Type of Shops Shops Equipmen-
and (Thousands 7Thousf
Location To be constructed by Remarks of pesos) of dollan
CLASS I
Pasto Ministry Partially constructed 100 35
Neiva Ut n 100 35
Cali Ra\.ymond New appropriation needed 100 35
Armenia Utah In present contract - -
Ibague Morrison-Knudsen II Newi appropriation needed l00 35
Bogota Vt " Completed - -
viedellin Raymond New aporopriation needed 100 35
Bucaramanga MIorrison-Knudsen I Completed - -
Cartagena A\.Tinston New appropriation needed 100 -
CLASS II
Tuquerres MJinistry Partially constructed 100 25
Popayan " " !I 100 25
Garzon n To be constructed 200 25
lianizales Utah Nevw appropriation needed 150 10
Villavicencio Mlinistry Partially constructed 50 25
Tunja i " " 100 25
Duitama To be constructed 200 25
Barbosa 14orrison-Knudsen I Partial appropriation needed 150 25
Cucuta\. it it I" t n 200 10
Ocana " " " I " 100 20
Valledupar Ministry Partially constructed 100 25
Fundacion "T To be constructed 200 25
DISTRICT
Cartago Raymond Newv approoriation needed 100 15
Hionda Utah Partial a9propriation needed 50 15
Riosucio Raymond New appropriation needed 100 15
Bolombolo iMlinistry To be constructed 100 15
Caucasia 1YTinston Partial appropriation needed 50 10
Pamplona Mlinistry Partially constructed 30 15
Sincelejo inston New appropriation needed 130 -
TOTAL 2,810 525
Spare Parts 50
Freight and Insurance for
Shop Equipment 290
Contingencies 0oo _
GFtND TOT\.L: 3,500 575
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MAaintenance ERuipment
53\. -According to available information in the lMlinistry7 of Public V\.Yorks
an adequate maintenance program xill also require about ',8 million of mainten-
ance equipment before the end of 1956 as follows:
Before the end of 1954 $#1\.9 million
During 1955 4\.0
During 1o56 2\.1
TOTAL $ 8\.0 million
54\. The International Bank will be asked to finance the foreign ex-
change cost of equipment to be acquired before the end of 1954 (including
spare parts, the proposed loan for this purpose uould amount to \.2G2 million)\.
The peso cost of freight and insurance for this equipment, estimated at 1 millio;
pesos, will come from the 1954 budget (see Table II, footnote 2)\. The cost of
the 84 million of equipment to be purchased during 1955 will be provided for by
an appropriation of 13\.5 million pesos in the 1955 budget, of which 10 million
pesos will cover the cost of the G';4 million of equipmnent, 1\.5 million pesos
will be for 'oOO,O000 of spare parts and 2 million pesos will be for freight
and insurance (see Table II, footnote 3)\. 7he cost of the S2\.1 million of
equipment to be purchased during 1956 wErill be provided for by an appropriation
of 7 raillion oesos in the 1956 budget, of which 5\.25 million pesos will cover
the cost of j2\.1 million of equipment, 750,000 pesos wvill be for ',300,000 of
spare parts, and 1 miiil2ion pesos 'will be for freight and insurance (see Table II,
footnote 4)\.
55\. Following is a list of equipment to be purchased before the end of
1954 with the proceeds from the proposed International Bank loan\.
No\. of Unlt Price Total
TJnits (Dollars) (Dollars)
Pickups 4, 1100 49,500
Dump Trucks, 3 yard 100 3000 300,000
Durmp Trucks, 5 yard 10 6000 60,000
Tank Trucks 17 4500 76,500
Gasoline Trucks 16 6000 96,000
Distributors 3 6000 18,000
Trailers 9 20000 180,000
Rollers 10 7000 70,000
Motor Graders 22 14000 308,000
Tractors (D-6) 35 12000 420,000
Front End Loaders 32 10000 320,000
TOTPL 1,898,000
Spare parts 302,000
GRATYD TOTAL $ 2,200,000
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56\. The equipment now being used by the contractors on the project
which the International Bank is helping to finance vwill be used for new
construction and reconstruction after the project is completed\. HowTever,
after the completion of each contract, the Ministry wvill retain each
contractor's equipment required for maintenance of roads covered by his
contract until other adequate maintenance equipment has been provided for
that purpose\.
57\. The total dollars and pesos for new shop facilities, maintenance
equipment, highway scales and provisional personnel needed for this Program
will be as follows:
I TEM
Dollars Pesos
Shops
Shop Buildings (including contingencies) 3,210,000
Shop equipment 525,0oo
Spare parts 50,000
Freight and Insurance 290,000
Maintenance Equipment
Equipment and spare parts 2 200 000 7;500;Q00_
Freight and Insurance 4,000,000
Highway Scales 80,000 200,000
Provisional Staff 245,000 300,000
TOTKL 3,100,000 25,500,000
l/Peso equivalent of 86\.1 million of maintenance equipment and $900,000 of
spare parts\.
58\. The annual dollar and pogo requiremesnts for thin Progrnm, from
1954 through 1956 will be as follows:
Year Dollars Pesos
1954 2,940,00i / 4,750,00 3
1955 160,O00T 13,750,000
1956 __ 7,000,00OZ/
3,100,000 25,500,000
l/Includes t52\.2 million for maintenance equipment, $Tt,000 for shop equipment
and spare parts, 1h0,000 for highway scales and -125,000 for Provisional Staff
salaries\.
2/Includes ,K40,000 for highway scales and -120,000 for Provisional Staff salaries\.
3/Includes 3,210,000 pesos for shop buildings, 290,000 pesos for freight and in-
surance on shop equipment, 1 million pesos for freight and insurance on main-
tenance equipment, 100,000 pesos for highway scales and 150,000 pesos for
Provisional Staff allowrances*
-14-
h/includes 10 nillion pesos (ecuivalent to $4 million) for maintenance
equipment, 1\.5 million pesos (equivalent to :600,000) for spare Darts,
2 million pesos for freight and insurance, 100,000 pescs for highway
scales and 150,000 for Provisional Staff allowances\.
5/Includes 5\.25 million pesos (equivalent to 2\.1 million) for maintenance
equipment, 750,000 pesos (equivalent to $300,000) for spare parts and
1 million pesos for freight and insurance\.
59\. This is a new program and wvill require periodic reappraisal
and modification as experience is gained\. On the basis of such experience,
the Minister of Public 7orks will from time to time make such additions
to and changes in organization, functions and operations of the Ainistry
as are needed to accomplish the objectives of this program\.
SCHEMATIC MAP OF
COLOMBIAN NATIONAL HIGHWAYS
Sta M airt a;o/ \.
BARRANQUIL Cuesteci \ /
CARTAGENA on
A 72§ ANT/C 067544' ~~~~~~~~~~~~~~~iriguani
ATLAIVTIC OCEAIV led I, 1
(Tou Z !
IQ // ~~~M A G DAL EoN /
/~~~~~~~~mgn \ I Ba9ngse
Sincefic
Monteria W
Necocli It / 80 LIVA R NORTE \ V
/\ t f (|V:a~~~~~lneta_Rica _SA NTAND8
A / )t tTurbo, \ > Gamor a
\ t / y 1jR 2~~~~~~~~ C O R D 0 8 A cOIcslo\ t
\c~' y' 's-~ I / II // ) _ /i |GCUCUTA
7~~~~~~~~~~~7
\\.AMA
X ( \ y~~~~~~~~~~~~~~Yarumal \ iaronca A-
/ \ ~~~A N T I Ql/A ,ROoya Snt l~
EDELLIN S A TANDER/1 , 4 --t
Bo~ombolo
A qU;bdOS_8\KSSVIUe@ )b CASANARE
\ | r, Riasucio1 ki NDoraod nqSv JA \ -
/uibdaL- CALI 'into to - |
K~~~~~~~~~~~~
CAUCAi _Conditio
Q/CN0A Q ~A
/ /\\ | _ 8 \ /Q8u ii- ConditionL2VClassI
~~ 1 ,/ | \ a~~~~~~~~~~m rlg C ondtoI
N1f I TAoIM
NARIPo / nIzmira C di 3
CAOS U CAr Condition I
} < g-> - > lB ' t<FIorencia ~~~~~~~~~~~Condition 2 Cbass m
I 1 17 u st/- Condition 3
| as8 Mocca k C A QU ETA ====___ BenitiRon IJce
I TOLIM ~ ~ ~ -- Tril
olmin]~ ~ ~ ~ ~~~~~~~~~eigRcnsrce
C A U C A Co' _ Under Construction
TulconO lpiales I PUTl)lAYO TrCito I | APPROVAL |
P008110 | R E S T R I C T E D
R e p o r t N o\. T\.O\. 40-b
This docuiment was prepared for internal use in the Bank\. In making
it available to others the Bank assumes no responsibility to them for
the accuracy or completeness of the information contained herein\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
THERMAL POWER PROJECT
URUGUAY
August 19, 1955
Department of Technical Operations
CURRENCY EQUIVALENTS
I U\.S\. dollar = 1\.9 pesos
1 peso = U\.S\. $0\.53
1,000,000 pesos = U\.S\. $526,316
MIERAL POWER PROJECT, URUGUAY
INDEX
Summary
Intro duction 1
Existing Bank Loan to UTE 1 - 2
Present Capacity and Age of UIEts Generating
Facilities 2 - 3
Market for Energy 3 - 4
Ul1Ets Current Expansion Program 4 - 5
The Project 5 - 6
Organization and ivlanagement 6 - 7
Financial Aspects 7 - 13
Conclusionsand Recoimendations 13
Annexes A, B, C, D and E
Map
THERMAL POWER PROJECT, URUGUAY
SUMMARY
This report covers an appraisal of a project, submitted as
as basis for a loan of $5\.5 million (equivalent) for the addition of
a 50,000 kw thermal generating unit to an existing 100,000 kw steam
power plant in Montevideo owned and operated by UTE,, n autonomous
Government Agency established in 1912, which supplies practically all
electric energy and telephone service in Uruguay sold to the public\.
A loan equivalent to $33 million was made t) UTE in August,
1950, for the expansion of its power and telephone facilities\. The
local currency costs were estimated to be the equivalent of 412 million\.
The prog,ram consisted of the addition of a 50,000 kw generating unit to
an existing steam plant in Montevideo to bring its total capacity up to
100,000 kw, the installation of about 18,000 kw of diesel generating
capacity in the Interior, the construction of abmut 625 miles of trans-
mission lines, the expansion of primary and secondary distribution
systems in Montevideo and in the Interior and various improvements in
the telephone system throughout the country\. At the end of July, 1955,
both the power and telephone programs were practically complete and
most of the facilities including the 50,000 kw generating unit, were
in operation\. Withdrawal from the Bank loan as at the same date totaled
the equivalent cf ,31\.3 million\.
The completion of the program is about eighteen months behind
the oriainal schedule, owing partially to a nine-month delay in the
ratification of the loan by Parliament\. In addition there were delays
in getting work under way caused largely by the complex legal and pro-
cedural requirements in placing contracts; as a consequence construction
did not gain much momentum until 1952, Largely because of the Korean
War, prices and wages increased considerably after the loan agreernent
was signed\. As a result, the original estimates of cost will be exceeded
by about the equivalent of $2\.6 million in foreign exchange and $11\.3
million in local currency\. The excess in cost to date has been met from
UTEts own resources as will the relatively small remaining unexpended
balances\.
In 1953 the Uruguayan Parliament authorize(d the issuance of
bonds to finance UTE's proposed new six year expansion program estimated
to cost the equivalent of about $87 million\. The Bank was a9kad to
finance $40 million of the foreign exchange cost of the program, The
Minister of Finance was advised on December 4, 1953, that the management
of the Bank was prepared in principle to recoiwiend that the Bank partic-
ipate in financing the equivalent of $30 million of the foreign exchange
cost of the program after the currencies became known\. Loans to UTE in
two or more tranches were suggested with the first covering the foreign
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exchange costs of the further expansion of the thermal pLant in
Montevideo\.
The foreign exchange cost of the thermal unit which the
Bank has been asked to finance is estimated at the equivalent of
$5\.5 million and the local currency cost at the equivalent of
$800v,0C0 The foreign exchange required will be principally in
Swiss francs and Italian lire\. The awardsof the contracts were made
after international bidding on the equipment for thl unit and its
erection\. The unit is expected to be in full operation during the
last quarter of 1957\.
UTE is administered by a Board of five directors appointed
by the Government\. Its staff numbers about 10,400, of which 5,100 are
in the power division\. This staff is too large by normal standards
but, as all government employees in Uruguay work only 5b hours a day,
the excess staff is required to carry on operations at a normal pace\.
The Management, however, works longer hours and is reasonably efficient\.
The technical staff of UTE is adeqxate for the execution of the project
but it will need strengthening before any large amount of additional
work is undertaken\.
The balance sheet as of December 31, 1954, shcwed a totalcapital-
ization of about 264 million pesos, of which 52\.5 per cent was long
term indebtedress\. Current assets were 1\.3 times current liabilities\.
The operating record of the company has been good and it has earned a
net profit in each of the past ten years except one (1951) when a very
small deficit was incurred\. Rate increases instituted late in 1951
provided substantial profits since then\. Net earnings in 1954 amounted
to 1h\.6 million pesos\. In recent years, electric power has accounted
for about 80% of the total income and more than 90% of ithe net income\.
It is estimated that the demand for power on the UIE system
w\.ill increase by 1L\.5% in 1956 and 8% annually thareafter at least
until 1961 or 1962\. On this basis the load on the system is estimated
to increase from 200,000 kw in 1955 to 337,000 in 1961\. Additions to
the steam plant recently completed will probably covertjU increased
demand through 1956 and a part of 1957, provided no droughts occur\.
The total capacity of the new thermal unit proposed for financing under
the loan will be absorbed before the end of 1959\. In 1960 a new hydro
development with an installed capacity of 103,000 kw ani a firm capacity of
about 67,000 kw is scheduled for completion\. Bids for this plant have
been received and are being analysed\. Construction is scheduled to begin
as soon as financing, which contemplates a Bank loan, can be arranged\.
The proposed thermal project is urgently needed and is suitable
for a loan of the equivalent of $5\.5 million\. The term of the loan
should be 20 years including a grace period on amortization payments of
about 2-1/2 years\. UTE should be the borrower\.
THERMAL POWER PROJECT, URUGUAY
1\. Introduction
1\. This report covers an appraisal of a project for the addition
of a 50,000 kw thermal generating unit to an existing 100,000 kw steam
power plant in Montevideo owned and operated by UIE, 1/ an autonomous
Government agency established in 1912, which has the Tight to supply
all electrlc energy and telephone service in Uruguay\. The project is
estimated to cost the equivalent of about $6\.3 million\. The Bank has
been requested to finance the foreign exchange costs of the project,
estimated at the equivalent of about $5\.5 million\. UTE would be the
borrower\.
II\. Existing Bank Loan to UTIE
2\. A loan of $33 million equivalent (Loan 30 UR) was Ade to
UTIE in August 1950 to meet the foreign exchange requirements_bf a four-
year expansion program for both power and teleplhones\. Of the total,
$26\.4 million was for power and $6\.6 million was for telephones\. The
local currency cost&/were estimated to be the equivalent of $10\.2 mil-
lion for the power program and $1\.8 millicn for telephones\.
3\. Although the loan was made in August, 1950, it was not rat-
ified by Parliament until MIay, 1951\. Partially because of the long
delays in processing the loan and in letting contracts on many items,
during which prices of equipment and labor costs increased as a result
of the Korean liar, the cost of the program increased by the equivalent
of $2\.6 million in foreign exchange and 1l1\.3 million in domestic cur-
rency above the original estimates\. These additional costs are being
met from UTEls own resources\.
4\. In 1950 prior to the start of work on the expansion program
financed by the Bank, UIE owned and operated power facilities with a
total installed capacity of 213,485 kw\. Of this, 189,000 kw installed
in two steam plants and a hydro plant served Montevideo and an area
within 100 km thereof and 24,485 kw in fifty independently operated
diesel plants served the remainder of the country\. The two steam plants
(Batlle of 50,000 kw and Calcagno of 25,000 kw), located in Montevideo,
and the hydro plant (Rincon del Bonete of 114,000 kw), located on the
Rio Negro, a hundred and forty miles north of Montevideo, were connected
by a high tension transmission line\. These inter-connected stations are
known as the Miontevideo-Bonete System\. They supply 90% of the energy
consumed in Uruguay\.
1/ Administracion General de las Usinas Electricas y los Telefonos del
Estados\.
2/ Exclusive of interest during construction\.
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5\. UIEts program financed by the previous Bank: loan included
expanding the 50,000 kw Batlle steam plant in Montevideo by 50,000 kw
to bring its total capacity to 100,000 kw; installing about 18,000 kw
of diesel generating capacity in the Interior to supplement some
existing units and replace others; constructing 416 miles of 110 kv
and 209 miles of 15 kv to 60 kv transmission lines to serve twenty
communities, now supplied by diesel plants, with transmitted energy;
expanding its primary and secondary distribution systems in Montevideo
and in the Interior; increasing its telephone switchtboard capacity;
replacing its obsolete long distance toll board; installing new under-
ground cables in Montevideo; constructing 818 miles of new pole lines;
reconstructing 148 miles of existing lines and making other technical
improvements\. At the end of July1 1955, $25\.3 million had been dis-
bursed for the power program and $6,O mlllion for telephones or a
total of $31\.3 million, leaving only $1\.7 million sti11 to be dis-
bursed\.
6\. Both the power and telephone programs are at least eighteen
months behind their original schedules, due partially to the delay in
ratification of the loan\. Although recent progress has been satis-
factory, initially there were delays in getting work under way largely
caused by the complex legal and procedural requirements in placing con-
tracts\. As a consequence of these and other delays resulting from the
cumbersome procedures UTE is required by law to follow, the construction
program did not gain much momentum until 1952\. At the end of June, 1955,
the expansion of the Montevideo steam plant was compLeted and the plant
was in operation; the installation of diesel generating units in the
Interior was complete except for the transfer of some units to other
locations after the transmission lines are put into operation; the con-
struction of the transmission lines was practically complete except for
a number of substations and 201 miles out of the total of 625 miles of
lines were in operation; the expansion of the distrilDution system in
Montevideo was complete and also in most towns in the Interior\. The
few remaining items of work to complete the power program (chiefly
transmission line substations) will be finished in October and the en-
tire transmission system should be in operation shortly thereafter\.
The telephone program was practically complete and imzst of it was in
operation\.
III\. Present Capacity and Age of UT-ts
Generating Facilities
Capacity of Facilities
7\. The present capacity of the Montevideo-Bonete system under
normal rainfall conditions is 239,000 kw, but under drought conditions
it is only 203,000 kw\. The installed capacity in the fifty-four diesel
stations operated by UEE on June 30, 1955, was 43,568 kw; their effect-
ive capacity, however, was only 26,281 kw\. There will be a progressive
decrease in diesel capacity in 1955 as the transmittAd energy displaces
the diesel stations\. The diesel units in good condition will be moved
to other localities and the older diesel units will be scrapped\.
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Age of Facilities
8\. The Rincon del Bonete hydro plant was completed in 1948 and
is in good condition\. Of the 100,000 kw in the Batlle steam plant,
50,000 kw was constructed in 1932 and is in reasonably good condition;
the new 50,000 kw unit went into operation in February 1955 and, of
course, is in excelJlent condition\. The 25,000 kw Calcagno steam plant,
which consists of four generating units and bighteen boilers, installed
at various times between 1906 and 1922, is obsolete and should be aban-
doned, but because the demand for power has been so acute it is kept
in usable condition as a reserve plant and is used from time to time\.
It uses 50% more fuel per kilowatt hour and requires four to five times
as much operating and maintenance labor as a modern plant\. Most of the
fifty-four diesel plants which will remain after the new transmission
lines are in operation are fairly new and on the whole they are in
reasonably good condition\.
IV\. Market for Energy
9\. Electricity consumption in Uruguay has increased steadily for
decades\. The average rate of increase from 1914 through 1942 was 8\.0%
in Montevideo, 11\.8% in the Interior 1/ and 8\.4% for the country as a
whole\. During the war years there waS a decrease because of rationing
owing to the lack of adequate fuel supplies 2/\. From 1947 through 1954
the total number of kwh sold by UTE increased at an aLverage rate of
9,6%, although sales in the Interior (which in the paLst was supplied by
diesel units)increased at an average rate of 17% per annum\. This re-
flects the increasing growth of industry in the Interior, as industrial
sales in the Interior have doubled in the past five rears\. During the
entire period 1947-54 UIE had applications on its bociks for connections
both in Montevideo and in the Interior which it coulcd not serve\. The
sales to various classes of consumers in 1954 in Montevideo and in the
Interior are showm in the following table:
1/ All areas outside of the Department of Montevideo
2/ Uruguay has no indigenous fuel supplies\. Explorations for oil have
'Thus far been unproductive\. All fuel must be imported\.
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Sales in 1000 kwh
Class of
Consumer Montevideo & Interior % Total %
Residential 1744,210 31\.3 51,422 34\.9 225,632 32\.0
Commercial 39,396 7\.0 12,525 8\.4 51,921 7\.4
Industrial a/ 286,379 51\.5 51,595 35\.0 337,974 48\.o
Government 1/ 42,357 7\.6 24,435 16\.6 66,792 9\.5
Municipal c/ 14,506 2,6 7,437 5\.1 21,943 3e1
556,848 100\.0 147 414 100\.0 704,262 100\.
10\. In 1954 the Montevideo-Bonete system supplied over 90% of the
energy consumed in the country\. With the completion of the 110 kv trans-
mission system, it will supply an even larger proportion of the con-
sumption as it will then serve in addition to Montevideo and surrounding
territory, most of the larger cities and towns in the country\.
11\. Sales in the period 1955-62 are estimated by UTE to increase at
an average rate of 9% per annum\. This is somewhat less than the average
rate of 9\.6% from 1947 to 1954 and is conservative\. Based on the records
for the first five months of 1955, UTE estimates its 1955 sales at about
11% above 1954\.
12\. The peak load on the Montevideo-Bonete system has increased
at an average rate of 9\.1% from 1947 to 1954\. The peak occurs during
the winter months (June, July, August)\. on June 21, 1955, the peak on
the system was 188,000 kw 1/ (about 11\.6% above 1954), but it is
estimated to reach 200\.,00(fkw (23% above 1954) before the end of the
year primarily as a result of the \.dditional loads to be picked up pro-
gressively as the various sections of the new 110 kv transmission lines
are put into operation\.
13\. UTE estimates the load will increase about 11\.5% in 1956 and
8% annually thereafter at least until 1961\. This is am average rate for
the period of 8\.6% and is reasonable\. At this rate the load is expected
to reach 337,000 kw in 1961 (see chart following page 4)\.
V\. UIE's Current Expansion Program
14\. To meet the demands for power UIE has formulated an expansion
program which has been approved by parliament\. This program includes:
the installation of an additional unit of 50,000 kw in the Batlle steam
plant in Montevideo to bring its total capacity to 150,000 kw; the
construction of a 103,000 kw hydro plant on the Rio Negro at Baygorria,
55 miles downstream from Rincon del Bonete and additional high trans-
a/ Includes tramways in Montevideo
E/ Includes port facilities and waterworks in Montevideo
c/ Mostly street lighting
1/ Faults in distribution cables temporarily prevented the system
complying with the full demand which was somewhat higher than this
figure\.
URUGUAY
ESTIMATED LOAD & AVAILABLE CAPACITIES
MONTEVIDEO-BONETE SYSTEM
390 _ W 384 MW
380 _
370I
CAPACITY MW 1
360 YEAR ESTIMATED DROUGHT NORMAL \.
360 ==AS DEMAND MW CONDITIONS RAINFALL \.
350 _ 195Ei 200 203 239 _ I ,:'
1956 230 223 259
1957' 248 253 289
1955 268 253 289 \.
1959 289 253 289 \.
330 - 1960 312 320 384 \.
1961 337 320 384 3
320 - 1962! 364 320 384 \ -
310 -
300
290 289 MW -_ 67MW fIRM CAPACITY
280 --EBAYGORRIA HYDRO PLANT
280 _i\. -
270 -|-
260 259 MW
^50 | _ ~ ~ ~~ \./ 253 MW\.
250 4-
240 239 MW - - - )
230 - \.-50 MW STEAM IN
2\. 73 MW BAT LLE PLANT
220 - -
* 20 MW WI/TH
2,0 * STEAM FROM
210 -2 M EXISTING BOILERS
203 MW, J
200
\. | __\.-- CAPACITY, NORMAL RAIN CONDITIONS
190 _ CAPACITY, DROUGHT CONDITIONS
180 _ ,\. l @-@*-@@@\.ESTIMATED LOAD
180
170 '95 I I I L\. I \.
170 _,
: JAN JAN JAN JAN JAN JAN JAN JAN
94UL 955 60
160 -15
1954 1955 1956 1957 1958 1959 1960 1961 1962
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mission lines to inter-connect the Baygorria plant with the existing
plants in the Montevideo-Bonete system; the construction of about 264
miles of new transmission lines of varying voltages to serve addition-
al towns in the Interior; the construction of a "collector ring" and
substations at Montevideo to improve the connections between the various
hydro and steam stations and the transmission lines radiating from
Montevideo and the installation of additional diesel generating units
in the Interior\. The Bank was asked to finance $40 million of the
foreign exchange cost of this program\.
15\. The Staff Loan Committee considered this request on November 6,
1953, On December 4, 1953, the management advised the Minister of Finance
that it was prepared in principle to recommend to the Board of Directors
that the Bank participate in financing $30 million of the foreign exchange
cost of the power program after the currencies required became known\. The
letter suggested proceeding with loans to UTE in two or more tranches:
the first to cover the foreign exchange costs of proJects such as the
thermal plant in Montevideo, for which the foreign currencies were
partially known, and at a later date undertake rmgotiatiions on addition-
al loans when the currencies involved could be determined for the projects
desired\.
VI\. The Project
Description
16\. The project consists of the installation and inter-connection
with existing generating facilities in the existing Batlle Station in
Montevideo of one 50,000 kw 3-phase, 50 cycle enclosed alternating curr-
ent turbo-gererator with the necessary boilers and aux-iliary equipment
including fuel and ash handling equipment in order to increase the capac-
ity of the station to 150,000 kw\. The boilers will normally use imported
fuel oil, but the fuel handling equipment to be installed will be capable
of preparing and delivering to the boilers either pulverized coal or fuel
oil or both simultaneously\.
17\. As stated in paragraph 7, the present capacity of the Mont-
evideo-Bonete System under normal rainfall conditions is 239,000 kw and
203,000 kw under drought conditions\. As the demand on the system is
estimated to reach 230,000 kw in 1956 and 248,000 in 1957, the existing
capacity will be insufficient in 1956 and 1957 if a drought should occur\.
The additional capacity is, therefore, urgently needed\. It will bring
the capacity of the system up to 253,000 kw under drought conditions and
289,000 kw under normal rainfall conditions\. By the end of 1959, however,
the demand is expected to reach 289,000 kw at which time the new hydro
station at Baygorria on the Rio Negro is planned to be completed\. 1/
It will have a capacity of 67,000 kw under drought conditions and 103,000 kw
under normal rainfall conditions\. Owing to losses in transmission, the
capacity in Montevideo will be about 10% less\.
I/ UTE is now in the process of analysing bids on this project and
expects to award a contract for its construction before the end of 1955
provided the necessary financing can be arranged\. A Bank loan for the
foreign exchange cost of the project is desired,
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Cost of the Project
18\. The project is estimated to cost the equivalent of $6\.3 million,
$5\.5 million of which will be in foreign exchange\. Contracts for supply-
ing and erecting both the turbo-generators and boilers have been placed
(after international bidding)\. A contract for the turbo-generators was
placed in Switzerland in 1953\. Bids for the boiler were opened in June,
1954, but all were rejected\. New bids were invited and opened in
January 4, 1955\. A formal contract for the boiler was placed in April,
1955\. Supervision of the erection will be undertaken by UIE's engineer-
ing staff\. It is capable of performing this work as it supervised the
erection of a similar unit which went into operation in February, 1955\.
The estimated cost includes freight, insurance and about 10% for price
escalation\. The estimate is reasonable\. Interest during construction,
estimated at the equivalent of about $300,000, is not included in the
amount of the loan requested,
19* Concurrently with this expansion in its generating facilities
UIE will continue to expand its distribution facilities from its own
resources\. As will be seen in paragraph 38, UTE can finance this
expansion without difficulty\.
Schedule of Construction
20\. The delivery of the 50,000 kw turbo-generator began in may,1955\.
Commercial operation of the generator with steam from existing boilers is
scheduled for March 1956\. The capacity of the generator under such con-
ditions will be 13,000 kw continuously, but for two hours the output can
be raised to 20,000 kw\. As the contract for the boiler for this unit
was not awarded until in April, 1955, it will not be completed until the
latter part of 1957\. The project, therefore, cannot be placed in full
operation until the last quarter of 1957\.
VII\. Organization and Management
21\. At present UTE is administered by a Board of five direc-tors\.
Three members of the Board, including the president, are appointed from
the majority party in Parliament, and two from the minority party\.
Under the president there are managers for power, telephones, administra-
tion and accounting\. UIE's staff now numbers about 10,400 of which 5,100
are in the power division, 2,700 in the telephone division and 2,600 in
the administration and accounting division\. This staff is too large by
normal standards but as all Government employees in Uruguay work only
5-1/2 hours per day, the excess staff is required to carry on operations
at a normal pace\. The management, however, works lornger hours and is
reasonably efficient\. UTE's administrative procedures are rather cumber-
some, but this is largely due to the need for compliance with Government
regulations\.
22\. UTE's engineering staff was very small before the expansion
program under the existing IBRD loan was initiated and UTE was slow in
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adding the necessary technical personnel to supervise the program\.
The technical staff was expanded to an adequate size for the present
program but some of the new employees were relatively inexperienced\.
The technical staff as presently constituted, however, will be able
to supervise the construction of the proposed thermal unit, but it
will need strengthening before any large amount of additionaliork is
undertaken\.
VIII\. Financial Aspects
Rate Structure
23\. Charges for energy apply uniformly throughout the country\.
This has resulted in net losses in the Interior\. As revenue from sales
in Montevideo has more than offset the losses in the Interior, UTE has
shown a net profit on its power operations fairly consistently in
recent years\. When the transmission lines now under construction are
completed, the losses in the Interior should drop or disappear as the
average cost of transmitted power is about 3\.8 centavos per kwh as com-
pared with 8\.4 centavos per kwh for diesel generation\. UTE has the
authority to change its tariff schedules, with the approval of the
Executive Council\. No parliamentary action is required\.
24\. The following rates have been in effect sinice 1951\. Rates
for the principal classes of consumers are shown below:
Centavos U\. S\. Cents
Class From To From To
Residential 5j 12 - 2\.9 - 6\.3
Commercial 5 18 - 2\.9 9\.5
Industrial 4 9 - 2\.1 - 4\.7
Government 42 9 - 2\.4 - 4\.7
Municipalities 7 15 - 3\.7 - 7\.9
Tramways 3\.85 2\.0
25\. On August 2, 1955, UTE received authority to increase its
power and telephone rates\. The magnitude and effective date of the
increase are not known in detail\. Part of the higher revenues expected
from the rate increase will be offset by expected increases in wages and
salaries but it is probable that sore additional revenue will be available
for financing the expansion of power and telephone facilities\. As full
information concerning the rate increase is lacking, the effect of the
increase in rates has not been taken into consideration in the financial
analyses in this report\.
Earnings Record
26\. UTE's earnings' record has been satisfactory, although widely
fluctuating\. In every year during the past ten years except one UIS
has earned a net profit\. In la51 there was a small de,Eicit of about
500,000 pesos\. At the end of that year UTE increased :Lts industrial
tariffs about 40% and its residential tariffs about 325%\. The gross
revenues increased from 51\.3 million pesos in 1951 to 70\.4 million
pesos in 1952 and the small deficit changed to a net profit of 1194
million pesos\. Net earning for 1953 and 1954 emounted to 12\.4 and
14e6 million pesos respectively\. At present interest charges are
covered by net income from operations about 4\.7 times\. Electric power
in recent years has accounted for about 80%o of total revenues and more
than 90% of net operating income\. For details see Annex A (Significant
Earnings Figures) and Annex B (UTE Income Statements)\.
Present Financial Position
27\. The equity financing of UTE has been confined largely to the
investment of retained earnings and is expected to be Limited to such
funds in the future\. An exception has been the assurption by the
Government of a part (one third) of the service requirements on the
debt incurred by the Rione Hydro Electric agency 1/ at the time (in 1950)
this agency was merged with UTE\. This can be considered as an equity
contribution by the Government in UTE\. The balance of UTE's long term
capital requirements, with the exception of the first 13ank loan of
$33 million 'UR-30), have been met by Government bond issues, the
proceeds of which are transferred to UTE with the obligation that UIE
must service such issues from its own resources\. UIE carries funds
obtained in this way as long term debt\.
28\. Condensed balance sheets as of the end of 1952, 1953 and 19544,
compiled from data supplied by UTE are given in Annex C\. The 1954 balance
sheet showed long term debt of 167\.3 million pesos\. 0? this amount, about
86\.2 million pesos represented the balance of Rione obLigations\. As
indicated in the preceding paragraph the Government hais assumed one third
of the service requirements on this debt\. Hence, the net long term debt
of UTE at the end of 1954 was actually about 138\.6 million pesos\. UTEIs
capital structure might therefore be summarized as follows:
Capital Structure as of Dec\.31,1954
Mllions of Pesos Per Cent
Long Term Debt 167\.3
Less: Amount of Rione debt
to be serviced by Government 28\.7 138\.6 52\.5
Government Equity
Reserves and Surplus 96\.5
Rione debt to be serviced by Government 28\.7 125\.2 47\.5
263\.8 100\.
1/ The Government agency now liquidated which constructed
the hydro plant at Rncon del Bonete\.
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29\. The net working capital position of UTE at the end of 1954
was reasonably satisfactory\. Current assets of 54\.1 million pesos
were 1\.3 times current liabilities of 42\.1 million pesos\. These
figures indicate a substantial improvement in UTE's current financial
position since the end of 1949 1/ when the agency reported a large work-
ing capital deficit, but a detsrioration as compared with 1952 when the
current ratio was about 2\.4 to 1\. About half of the current liabil-
ities are due to the Government and represent accumulated service pay-
ments made by the Government on UTE's funded debt during the last years\.
The Government has not required cash settlements by UV; for these pay-
ments\. The results has been that UTE was able to use a larger part of
its operating revenues for construction than would otherwise have been
the case\. This procedure may be continued in the future\. There is no
risk that on this account UIE at some future date would be faced with a
liquidity problem, because the Government has agreed to defer the collec-
tion of debt service owing by UTE whenever funds would be needed to carry
out the project or to enable UTE to meet any of its other obligations\.
The Government has further agreed that any deferred payments would be
funded on a long term basis or would be capitalized from time to time\.
In view of the commitments obtained from the Government, no limitation
of UTEts debt in relation to its equity is recommended\.
Method of Financing the Project\.
30\. As this project is a part of the much larger power expansion
program described in paragraph 14, the financing of the whole program
must be analysed in order to rake a realistic appraisal of UTE's ability
to finance the project, as it cannot be considered independently of the
larger program\.
31\. The entire power expansion program is estimated to cost the equiva-
lent of 146 million pesos ($76\.8 million) over a period of about six years
including 11\.9 million pesos ($6\.3 million) for the project\. The foreign
exchange cost of the program (including the project) is estimated by UTE to
cost the equivalent of 62\.8 million pesos ($33 million)\. UTE proposes to
finance 26\.5 million pesos (<14 million) of the program from its own
resources and 119\.5 million pesos ($62\.8 million) from borrowing\.
32\. It has been assumed in the financial forecasts presented in
this report that the equivalent of 57\.0 million pesos ($30\.0 million) of
the amount to be borrowed would come from Bank loans and the remainder
62\.5 million pesos would come from the sale of peso bonds in the local
market\. UTE is assuming an average sales price of 83\.5 for these bonds
which is considered conservative\. Recent price quotations for UTE bonds
have ranged from 85 to 89 with few transactions reported\. On the basis
17 Because of the poor financial condition of UTE in ]\.949, the Bank re-
quired, as a condition of the existing loan, that UJE put into effect a
financial plan satisfactory to the Bank\. As part of -this plan UTE
issued 30 million pesos in bonds, to cover a part of the local currency
cost of the expansion program and to improve its working capital position\.
The bonds were sold as funds were required in the local market at an average
price of about 92e
-10-
of an average sales price of 83\.5 the amount (nominal value) of bonds
to be sold would be 75 million pesos\. Most of the sales, about 75%
(57 million pesos),will have to be made during the next three years\.
There is some doubt whether the local capital market could absorb
bonds for this amount during this period\. If bonds could not be sold
as fast as now scheduled UTE probably would have to defer the con-
struction of some items of less priority included in its program\. The
financial forecasts indicate, however, that UTE could service without
difficulty borrowing of the 132 million pesos (57 million foreign and
75 million local)\.
33\. Of the 11\.9 million peso ($6\.3 million) expenditure on the
project, 10\.5 million peso equivalent ($5\.5 million) would be financed
from the proceeds of the proposed Bank loan and 1\.5 million pesos
($\.8 million) for the local currency requirements would come from UTE s
own resources\.
Rate of Expenditures and Currencies Required
3k\. The estimated rate of withdrawal of the proposed loan, ex-
pressed in U\.S\. dollars is shown below:
1955 1956 1957 Total
Bank Loan in iMillions U\.S\.$ 1\.87 2\.28 1\.35 5\.50
The ammunt shown in 1955 includes a reimbursement of the equivalent of
$140,000 spent in 1954 on the project\.
35\. The currencies required will be:'
Rates of U\.S\.$
Amount in Exchange Equivalent
Currency Thousands per U\.S\.$ in thousands
U\.S\.Dollars 284 - 284
Swisss Francs 9,655 4\.2975 2,247
S Sterling 2\.9 0\.3571 8
Italian Lire - 1,500,000 625\.0 2,4o00
Contingencies
equivalent in
U\.S\.$ 561 - 561
Total $ 5,500
Future Financial Position
36\. The financial forecasts presented in this report are as
previously mentioned not limited to the project for which a loan is
proposed, but comprise the entire power expansion program as planned
by UTE for the next six year period as outlined in paragraph 14\. on
the expenditure side all the capital investments required to complete
this program have been included, and on the receipt side all the resources
enumerated in paragraph 32 for the financing of this program have been
taken into consideration\. The forecasts, however, do not include any
- 11 -
major expansion of UTE?s telephone facilities\. If such teLephone expansion
would be undertaken, details of which are not known at present, it would
be the subject of a separate financing plan\. One of the main resources
of such a plan would likely consist of additional revenues to be obtained
from the recent increases in both power and telephone rates by the Government\.
As already mentioned in paragraph 25, the recent increases in rates have not
been taken into consideration in this report\.
Estimated Future Earnings
37\. A forecast of operating results for the period 1955 to 1962
is given in Annex D, shovwng satisfactory net earnings\. In each year
interest charges on existing and proposed indebtedness would be covered
by net income from operations by an ample margin (4 times in 1958 and
4\.4 times in 1962)\. As already indicated the forecast is based on
present rates and price levels\. A growth of 9% annually in sales has
been assumed, which as an anmual average for the period, is consialered
conservative\.
Forecast of Cash Flow
38\. The forecast of receipts and expenditures for the period
1955-1962 is given in Annex E\. In addition to the investrients for the
power expansion program as described in paragraph IL the\. forecast shows
a re-investment of the full depreciation aIlowanoos\. fiom which the in-
crease in UTE's distribution facilit-ies wi)' be financed, These allow-
ances, which total to some 74 nmillion pesos (639 imillion) during the
construction period 1955/1960, are iiore than sufficient for thlat purpose\.
Moderate cash balances are shown during the construction period\. These
balances will depend upon the timing of bond sales\. After completion of
construction substantial annual cash accruals are shown in the forecast,
which in actual practice are not lil2ely to occur, because they probably
will be needed to finance further expansion\.
Pro Foama Balance Sheet
39\. UTEts future financial position after completion of the project
in 1957 and thre position after conmpletion of the entire program in 1960
is shown in thae pro fonna balance sheets given in Anmex Ei\. UTE's capital
structure at the end of 1960 is expected to be as follows:
-12-
Millions of pesos
Long Term Debts 1/ 269\.6
Less 1/3 part of Rione debt out-
standing for account of Govern-
ment 22\.5
Net debt for account of UTE __4__ 50\.3
Government Equity
Reserves and Surplus 222\.2
Rione debt for account of Govern- 22\.5
ment 2474\.7 49\.7
Total 491\.8 100\.-
4Go This is a satisfactory position\. In spite ofS the considerable
borrowing to be undertaken for the expansion prograi kba net long term
debt for account of UTE would represent a somewhat lver proportion of
total capitalization in 1960 than at the end of 19524\. During the period
1955/1960 the equity would increase by 119\.5 million pesos ($63 million)
whereas the net increase in long term debt would be 108\.5 million pesos
($57\.1 million)\. The large increase in equity is based on the assumption
that the Government will allow UTE to retain all net profits during the
period estimated at 105 million pesos ($55\.3 million)\. The Govez\.nment
has expressed its intention that it will do so\. The remainder of the
increase in equity of 14\.5 million pesos ('07,7 million) represents a
foreign exchange profit, as explained in footnote 2 to Annex C, to be
recorded on dollar debt\.
41\. The capital structure as calculated for the end of 1960 assumes
that no additional major construction work beyond the proposed program
will be started before that date\. Actually, if the power market develops
as expected, new generating and transmission works will have to be started
during 1960 which may necessitate additional borrowing\. Additional borrow-
ing may also be required for any major telephone expansion which would be
started during the period to the extent that such expansion could not be
financed from higher revenues from rate increases\.
Debt Service Coverage
42\. Annual debt service, including amortizationjon the proposed
IBRD loan of 55\.5 million for the 50,000 kw unit to be installed in the
Batlle Steam Station would amount to $h67,0o0 on the assumption that the
loan would be for a term of 20 years including about 2-1/2 years of grace,
and the interest rate would be 4-3/4% per annum\.
1/ For the purpose of this calculation the deferred Government accounts
of 18\.1 million pesos have been included as long -term debt\.
- 13 -
43\. Total annual debt service on all debt (existing and proposed)
would amount to approximately 20 million pesos in the immediate years
after completion of the program and would be covered by net receipts
from operations (before deduction of depreciation and interest) about
2\.2 times in 1961 and 2\.5 times in 1962\. This ratio would increase
gradually in later years as debt was amortized\.
IX\. Conclusions and Recommendations
44\. The project is urgently needed to meet the demand for power in
Uruguay\. It is sound and the cost is reasonable\.
45\. UTE's organization and management is capablT of executing and
operating the project\. UTE's financial position is souind and UTE aSbu1 be
the borrower\.
46\. The project is suitable as a basis for a loan of $5\.5 million\.
A term of 20 years, including a grace period of about 2-1/2 years
on amortization payments, is appropriate for the proposed loan\.
U\. T\. E, Annex A
Significant Earnings Figures
Years 1943 - 1952
(All Peso Figures in Millions)
Net
Profit
Available Available
Gross Net Legal for Times for
Reven- Operating Contri- Interest Interest Interest Workers? Reserves
Year ues Income 1/ butions Charges Charges Earned Bonuses etc\.
1943 19\.1 d 2\.0 0\.5 d 2\.5 0\.8 - _ d 3*3
1944 21\.6 1,2 Oel 1\.1 0\.8 1\.4 0*2 0\.1
1945 23\.3 3,1 0\.5 2\.6 0\.7 3\.6 o\.6 13
19146 26\.1 5r2 0\.5 4\.7 0\.7 6,,6 Oo8 3n2
1947 27\.1 2,,7 0\.5 2\.2 0\.7 3X 0\.9 o\.6
1948 32\.5 2\.9 1,1 1\.8 1\.0 1,8 o\.6 0,3
1949 1405 4\.5 1\.1 3\.3 0\.9 3\.6 1\.4 1\.0
1950 44\.8 8\.4 1\.1 7\.3 3\.9 1\.9 197 1,7
1951 51\.3 7\.4 1\.1 6\.3 4\.9 1\.3 1\.9 d 0\.5
1952 70\.4 19\.6 1\.1 18\.5 4\.9 3\.8 2,2 11\.4
1953 76\.5 20\.8 1\.1 19\.6 4\.9 4\.1 2,4 1214
1954 83X8 23\.- 1\.1 21\.8 4\.f 4\.5 2\.4 14\.6
Note: Figures do not necessarily add to totals due to rounding
d m deficit
1/ After depreciation charges
CONflENIS: Gross operating revenues of U\.T\.E\. increased in each year during
the past twelve years but net operating income fluctuated widely\. The
operating loss of 2\.0 million pesos in 1943 reflects the shortage of fuel in
that year which necessitated restrictions on power sales and resulted in un-
usually high operating costs\. Net operating incore increased in the years
immediately following, but declined in 1947, partially because of rate re-
ductions in the Interior\. Earnings resumed their upward trend in 1948 when rate
increases averaging 23% for both power and telephones were effected in the
middle of the year\. In 1951, a dry year, earnings again s]Lumped due to
increased reliance on thermal plant generation\. New rate lncreases effected
near the end of that year were fully reflected in the sharp increase in gross
revenues and net operating income reported for 1952*
Annex B
U\. T\. E\. Condensed Income Statements
(in millions of Pesos)
1949 1950 1951 1952 1953 1954
Electric Power
Gross Revenues 32\.49 35\.82 41\.05 56\.90 62\.12 67\.44
Operating Expenses 28\.61 25\.34 30\.90 33\.89 37\.39 40\.32
Depreciation 1\.05 2,89 2\.93 4\.57 5\.09 5\.87
Net Operating Income 2\.83 7\.59 7\.22 1\.J44 19\.64 21\.25
Telephones
Gross Revenues 8\.01 9\.02 10\.20 13\.47 14\.39 16\.37
Operating Expenses 5\.85 7\.65 9\.34 10\.98 11\.91 13\.20
Depreciation \.52 \.54 \.64 1\.30 1\.33 1\.43
Net Operating Income 1\.64 \.-53 \.22 1\.19 1\.15 1\.74
Totals (Power and Telephones)
Gross Revenues 40\.50 44\.84 51\.25 70\.37 76\.51 83\.81
Operating Expenses 34\.46 32\.99 40\.24 44\.87 49\.30 53\.52
Depreciation 1\.57 \.43 3\.51 5\.87 6\.42 _*L°
Net Operating Income 4\.47 8*42 7-44 19\.63 20\.79 2Z\.99
less: Legal Contributions 1\.14 1\.14 1\.14 1\.14 1\.14 1\.14
Available for Interest Charges 3\.33 7\.28 6\.30 18\.49 19\.65 21\.85
less: Interest charges *93 3\.89 4\.87 4\.90 4\.85 4\.83
Net Income 2\.40 3\.39 1\.43 13\.59 14\.80 17\.02
Workers bonuses 1\.38 1\.65 1\.94 2\.21 2\.41 2\.44
Net Profit 1\.02 1\.74 d \.49 U\.38 12\.39 14\.58
% Electric Power Revenues;of Total Revenues 80\.2 79\.9 80\.1 80\.9 81\.2 80\.5
% Electric Power Division Net Operating Income
of Total Net Operating Income 63\.3 90\.1 97\.- 93\.9 94\.5 92\.4
d a deficit
Annex C
U\. T\. E\. Condensed Balance Sheets
(in mill oins or Pesos)
As of December 31 1952 1953 195l4
Assets
Fixed Assets (net book value) 146,8 146\.5 147\.9
Construction in Progress
(including advance payments) 310\.- 64\.5 101\.8
177\.8 2UJ- 249,\.7
Current Assets:
Cash 4\.1 4\.6 1,7
Inventories 23\.6 24\.5 28\.3
Accounts Receivable, etc\. 16\.1 20,9 24\.1
Total Current Assets 15\.8 50\.o 54\.1
Government Accounts Receivable (deferred) 1/ 6\.7 6\.7 6\.7
oOther (bond discounts, etc\.) 12\.8 12\.7 14\.5
Total Assets 241\.l 280\.4 325\.0
Liabilities and Equity
Long Term Debts 2/ 3/ 144\.6 155\.9 167\.3
Current Liabilities:
Accounts Payable, etc\. 8\.8 11*3 17\.-
Due to Govermrent for debt service 7\.3 14\.5 21\.7
Unpaid Legal Contributions 1,7 2\.6 3\.4
17\.8 28\.4 42\.1
Government Accounts Payable - deferred 1/ 18\.1 18\.1 18\.1
other \.8 1\.1 1,-
Equity (Reserves and Surplus) 59\.8 76\.9 96\.5
241\.1 280\.4 325\.-
Net Current Assets 26\.- 22\.6 12\.
Current ratio 2,4:1 1\.8:1 1\.3:1
Notes :-
1/ Payment of these accounts was deferred by Government decree\.
After the completion of U\.T\.E\.'s expansion program they will
probably be offset and the remaining balances paid off over
a number of years\.
Page 2
Annex \.C
Notes:-
2/ Includes external debt, which as of Lecember 31, 1954
ramounted to about $36 million, of which $27\.2 million
represented withdrawals from IBRD Loan No\. 30 UR, and
$8\.8 million the balance of an Export-Import Bank Loan\.
The IBRD loan is recorded on the books at the rate of
1\.519 pesos per dollar, whereas the Export-Import Bank
loan is recorded at 1,90 pesos per dollar\. The rate of
1\.90 is the rate which has been and is being applied to
the imports purchased with the proceeds of these loans\.
However, debt service payments (principal\. and interest)
are made at the official rate of 1\.519 pesos established
for the service of external Government debt\. The dif-
ference of \.381 pesos represents a book profit, which
is transferred directly to Reserves and does not appear
in U\.T\.E\.'s Income Statements\.
3/ Includes obligations of RIONE, the Goverrment Agency
- w-hich constructed the hydro plant at Rincon del Bonete
and which was absorbed by U\.T\.E, in 1950\. U\.T\.E\. carries
the full amount of these obligations (862 million pesos
as of December 31, 1954) on its books, al\.though by law
one-third of the service requirements are paid by the
Natiornal Ireasury\.
Annex D
U\. T\. E\. Forecast of Operating Results: 1955-1962
(in millions of Pesos)
1955 1956 1957 1958 1959 1960 1961 1962
Electric Power
Gross Revenues 73\.51 80\.13 87\.34 95\.20 103\.77 113\.11 123\.29 134\.38
Operating Expenses 45\.63 47\.62 53\.03 57\.82 64\.71 62\.34 I/ 70\.04 75\.71
Depreciation 5\.91 9\.19 9\.47 10\.12 10\.44 15\.18 15\.55 15\.95
Net Operating Income 21\.97 23\.32 24\.84 27\.26 2F\.62\. 35-59 37\.70 42\.72
Telephones
Gross Revenues 17\.84 19\.44 21\.20 23\.11 25\.18 27\.45 29\.92 32\.62
operating Expenses 14\.60 15\.63 17\.23 18\.4lZ 20\.27 21\.65 23\.79 25\.39
Depreciation 1\.44 2\.24 2\.3 2\.38 2\.45 2\.54 2\.63 2\.73
Net Operating Income 1\.80 1\.57 1\.67 2\.31 2\.46 3\.26 3\.50 4\.50
Totals (Power and Telephones)
Gross Revenues 91\.35 99\.57 108\.54 118\.31 128\.95 140\.56 153\.21 167\.00
Operating Expenses 60\.23 63\.25 70\.26 76\.24 84\.98 83\.99 93\.83 101\.10
Depreciation 7\.35 11\.43 11\.77 12\.50 12\.89 17\.72 18\.18 18\.68
Net Operating Income 23\.77 z4\.89 26\.51 29\.57 31\.08 38\.85 41\.20 47\.2Z
less: Legal Contributions 11-14 1\.-14 1\.14 1\.14 1\.14 1\.14 1\.14 1\.14
Available for interest charges 2\.63 23\.75 25\.37 20\.43 29\.94 37\.71 40\.06 40
less: Interest 4\.73 6\.67 6\.81 7\.10 7\.48 11\.16 10\.73 10\.43
Net Income 17\.90 17\.05 21\.33 22\.46 26\.55 29\.33 3565
Workers bonuses 2\.68 2\.82 3\.10 3\.25 3\.58 3\.76 4\.14 4\.34
Net Profit 15\.22 14\.26 15\.46 18\.00S 1s\.8 22\.79 25\.19 31\.31
Times Interest Earned: 4\.8 3\.6 3\.7 4\.- 4\.- 3\.4 3\.7 4\.4
I/ The decrease in operating expenses in 1960 is due to a decrease in fuel costs
as a result of the coming into operation of the Baygorria Hydro plant\.
Annex F
U\. T\. E\. Forecast of Receipts and Exoenditures
(in millions of Pesos)
i21 Z1966 17 19S8 1959 1960 1961 1962
RECEIPTS
1\. Net Profit 15\.22 14\.26 15\.46 18\.08 18\.88 22\.79 25\.19 31\.31
2\. Depreciation allowances 7\.35 11\.43 11\.77 12\.S0 12\.89 17\.72 18\.18 18\.68
3\. Receipts from Operations 22\.57 25\.69 27\.23 30\.58 31\.77 40\.61 43\.37 49\.99
4\. Borrowing:
a) Withdrawals balance IBRD Loan (30 UR) 10\.70 \.37
b) Proposed IBffD Loan for Second Thermal
Unit Battle Steam Station 3\.55 4\.33 2\.57
c) Proposed additional borrowirg
(net proceeds of peso bond issues and
expected future borrowring from IBRD) A/ 12\.54 24\.97 34\.i4 32\.44 6\.01 \.13
5\. Other Receipts (short term bank loans, etc\.) 3\.-
6\. Total Receipts 52\.36 \.36 63\. 6 7\.78 40\.64 43\.37 49\.9
EXPENDITURES
7\. Capital Expenditares: /
a) to complete IBRD Project (Loan No\. 30 UR) 25\.03 3\.45
b) Second Unit Battle Steam Plant 3\.44 4\.97 2\.90 0\.06
c) Other Power Expansion Program
(Baygorria Rydro Plant, Transmission Lines, etc\.) 10\.17 25\.28 38\.75 40\.49 17\.64 1\.59
d) Other Capital expansion:
(i) reinvestment of depreciation allowances 7\.35 11\.43 11\.77 12\.50 12\.89 17\.72 18\.18 18\.68
(ii) other 2\.17 * 07
Total 48\.16 45\.13 53\.42 53\.03 30\.6o 19\.31 18\.18 18\.68
8\. Repayment of debt (principal)
a) IBRD Loan 30 UR 2\.51 2\.51 2\.51 2\.51 2\.51 2\.51 2\.51 2\.51
b) Proposed IBRD Loan for Second
Unit Steam Battle Plant \.31 \.32 \.34 \.36 \.38
c) Other long term debts (existing and proposed) 2\.60 2\.86 3\.21 3\.54 3\.78 5\.80 5\.96 6\.13
9\. Repayment of short term borrowing Z\. 0 3\.-
10\. Total Expenditures 53\.27 53\.00 62\.14 37\.21 27\.96 27\.01 27\.70
11\. Excess (t) or Deficit (-) of Receipts over Expenditures () \.91 2\.36 1\.80 3\.61 1\.57 13\.68 17\.36 23\.29
12\. Cash Balance\. December 31, 1954 1\.71
13\. Cash Balance at end of year \.80 3\.16 4\.96 7\.57 8\.14 20\.82 37\.18 59\.47
i Includes expected future borrowing fromi IBRD of $24\.5 million (eqcuivalent to 45\.6 million pesos) and sales of
75 million 5p peso bonds at an average sales price of 83\.5; the current market for U\. T\. E\. bonds is around 8&\.
W Includes interest during construction period not charged to operations\.
UTE
ARTIGAS THERMAL\. POWER PROJECT
URUGUAY
i RIVERA
aSlto Grande Falls V t
gSALTO X (urc/ (
3t = \ t~~~~~~~~~~~~~~~~~~~Minaus de Corraules
§11 ~~~~~~~~TACUAREMBO )\)Vt
LLJs,\\\d r '
8aPAYSANDU t
~MELO
{ ~~ ~ ~ Pa\.o de -' W <
\ >} (~~~~Site of f,,t,re, Rincon Ier 4
t1 * H~~~~~~ydro De'v e oet3/ ){ 5
FRAY BENTOS ASO OE PUERTO
j<~~~~MERGEDES URAZNO e/_J
-0/, TRINtDAD ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ RENT TE
5 ( Dolores8t / o~~~~~~~~~~~~~~~~~~~~STIIAD1Suce del Yi P\.P Vorelo<9
~Chuy
PokmIro 2KKV
Carmnelo FLORID CrJsupo i
Sue z 6OEV Punt del Este
\ M~~~~~~~~~~~~~~TANSMISSION LINES
0 20 40 60 80
MILES
0 20 40 60 80 THevFINNCED
EILMEEileRS EXISTING HYDRO STA ION IBRD FUNDS
JUNE,1955
IBRD 201 | APPROVAL |
P009691 | Dos aumatf
The World Bank
FOR OFmFCIAL USE ONLY
Report No\. 6258
PROJECT COMPLETION REPORT
INDIA
RAJASTHAN CANAL COMMLAD AREA DEVELOPMENT PROJECT
(CREDIT 502-IN)
June 17, 1986
South Asia Regional Office
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otnerwise be disclosed without World Bank authorization\.
ABBREVIATIONS
ADC - Area Development Commissioner
ARDC a Agricultural Refinance and Development Corporation
CAA m Command Area Authority
CAD = Command Area Development
CB = Commercial Banks
CD - Colonization Department
CCA - Cultivable Ctmmand Area
ERR Economic Rate of Return
GOI - Government of India
GOR - Government of Rajasthan
ICB = International Competitive Bidding
ID - Irrigation Department of CAA
IFAD = The International Fund for Agricultural Development
LCB = Local Competitive Bidding
OFD - On-Farm Development (lining of watercourses and
landshaping)
O&M = Operation and Maintenance
PCR = Project Completion Report
PRED - Public Health Engineering Department
PWD = Pvublic Works Department
RCC = Rajasthan Canal Command
RCP * Rajasthan Canal Project
RCP-I a Rajasthan Canal Command Area Development Project (Cr\. 502-IN)
RCP-II Rajasthan Command Area and Settlement Project (IFAD Ln\. 32-IN)
RLDC Rajasthan Land Development Corporation
SLA Sp"cial Loan Account
T&V T -ining and Visit
YEW - Village Extension Worker
GLOSSARY
Chak - Area served by a watercourse, about 120 ha
Kharif m Wet season (June to September)
Rabi Dry season (October to February)
WEIGHTS AND MEASURES EQUIVALBNTS
1 meter (m) m 3\.28 feet (ft)
1 kilometer (km) m 0\.62 miles (mi)
1 hectare (ha) a 2\.47 acres (ac)
M = million
I ton (t) 5 2,205 pounds
FOR OMCIAL USE ONLY
THE WORLD BANK
Washington\. D\.C\. 20433
US\.A\.
Office of Dictorw-eeual
Operatkm Ev1jutkM
June 17, 1986
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report: India - Rajasthan Canal Command
Area Development Project (Credit 502-IN)
Attached, for information, is a copy of a report entitled
"Project Completion Report: India - Rajasthan Canal Command Area
Development Project (Credit 502-IN)" prepared by the South Asia Regional
Office\. Under the modified system for project performance auditing,
further evaluation of'this project by the Operations Evaluation Department
has not been made\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
poR OFFIAL US ONLY
INDIA
RAJi8THAN CANAL COIOWID A-UI DEVELOPWMEM PROJECT
(Credit 502-IN)
PLOJECT COMPLETION RVPORT
Table of Contents
Paige No\.
BASIC DATA SHE\.
EVALUATION SEEARY \. \. iii
Is INTRODUCTION I\.00 \. \. 1
Background \. 1
Identification, Preparation and Appraisal \. 2
XI\. THE PROJECT AT APPR_ISAL \. 2
The Project Area \. \. 2
Project Descriptiou \.* \. 3
Cost Estimates \. \. \.*\. \. 4
Financing \.4\. \. \. 4
Procurement \. \. 5
Benefits \. \. \. 5
III\. PROJECT IMPLEMENTATION \. 5
General ¢**¢¢**v*e@¢*BB**+¢ 5
Project Works \. 6
Project Cost \. \. \. \. \. 10
Disbursement \.40000000000440000000000 10
Compliance With Covenants \. 11
IV\. INSTITUTIONAL PERFORMANCE \. **\. 11
Project Implementation \. \. 11
Rajasthan Land Development Corporation \.* \. 11
Agricultural Extension Service \. 12
Water Management \. 0000000\.0\. 12
Cost Recovery \.*** \. ***\. \. 12
Accounts and Audits \. 13
V\. AGRICUITURAL IMPACT \. \. \. \. 13
Cropped Area and Crop Yields \. 13
Agricultural Production \. 15
Inputs Use \. 15
This document hs a striktd distrbution and may be ouWd by reipients only in th pefomanc
of thek offci duties Its contents may not otrwoe be dbckod without Word BDnk auworution\.
VI\. ECONOMIC REEVALUATION \. * 16
Economic Rate of Return 16
VII\. THE BANK PERFORMANCE \., \. 16
Appraisal \.S 16
Supervision 17
VIII\. LESSONS LEARNED AND CONCLUSIONS \.17
Finance of Watercourse Lining 17
The Timing of Phase II \. 18
Conclusions 18
LIST OF TABLES
Tables 1 Summary of Physical Progress
2 Details of Canal Lining
3 Demand and Supply cf Coal and Cement
4 Summary of Project Expenditures
5 Actual and Estimated Disbursement Schedule
6 Changes in Irrigated Area
7 Irrigation Intensity for Lined and Unlined Watercourses
8 Area, Yields and Production of Major Crops
9 Economic Cost and Benefit Streams
ANNEX I Compliance with Credit Conditions
Supplement: Borrower's Comments
Map: IBED 10883
-i-
INDI
RAJASTHAN CANAL CAD PRQJECT
(Credit 502-IN)
This is a project completion report (PCR) for the Rajasthan Canal
Command Area Development Project (Credit 502-IN) in India for which a credit
of US$83\.0 million was extended to the Government of India in July 1974\. The
credit closing date was extended twice by one year each to June 30, 1983\.
The credit was fully disbursed by January 6, 1984\.
Information sources used for the PCR include the Rajasthan Canal
Project I appraisal report (Reporr\. No\. 447-IN); the draft PCR prepared by the
Government of Rajasthan (GOR); supervision reports and correspondence files\.
A specific field trip in connection with the PCR was not made\.
Following a review of the PCR by OED staff, it was decided not to
audit the project and the PCR was sent to the Borrower for comment on
March 7, 1986\. Comments received have been appended to the report as a
Supplement\.
-ft-
RAJASITH CNAL UID DEWPMET PROJECT
(Credit 502-IN)
USIC DATA$BU
KEY PROJECT DATA
Actual or Actual *a 2 of
AUg iaal Estimate a1 Apraial Etiae
Praiect Costs (USS million) 176\.Q 176\.0 100
Credit Amount (US$ million) a3\.0 83\.0 100
pste Board Approval 7/16176
Date Sianirna 7113174
Date Effectivenase 12130174
Date PhyVical Compoents Completed 6130180 6/83
kroportion tLbn complete,d_ (U)
Closint Date 6/30/81 6/30183
JiSonomjgSetj\. nf Return (%) 25 30
Financial Rato of Return n\.a\. b a\. _
Institatignal Perforgance _ood,atiafac7tor7
Aeronoiic Perfornec good Satiafattor-
Number of Direct 0 neficiariee (farm families) 33\.000 33,000 100
ASZ,EF IRNPU (Staff Weeks)
Identification and
Preparation 12\.2 -- - 12\.2
Appraisal 85\.6 ,1 ---------- 85\.5
negotiations 6\.1 \.9 - 7\.0
Supervision _ AI 1LI 4 L, JAIl 25 I1 Ll 9 I JUI ILI 1 IA
TOTAL 103\.7 15,3 16\.4 18\.7 2\.2 25\.1 8\.1 7\.2 7\.9 19\.2 3\.7 10\.2 238\.3
E=7 aZi FY7 I=Z nu I= nu8 FY84 i
Anoraisal estiate (USS million) 3 32 42 56 69 79 83 - - -
Actual (USS million) - 20\.4 25 37 46\.2 4696 56\.5 60 69\.6 83
Actual as I of sstimto 0 64 60 66 66 63 66 72 86 100
Date of final disbursement J ry 6\. 1984
MIUAILON AT
No\. of landay\. Specializationa Perforeance Typee of
Mission | Ets Peragms Ia Fiea1 \.Jruaag l \.4Raing ilUd /1 Probl 1a
(go\./yr\.)
Identification 11/72
Preparatiow 9/73
Aparisal 11/73 11 4 2b, 6c\. Id, la
SU,Drwision 1 11/74 1 5 2 2 T
Supervision 2 3/75 2 12 c\. c 2 2 T\. 0
Supervision 3 10/75 1 4 2 I N\. 0
jv:rvision 4 3/76 3 9 c c, d 2 1 M\. 0
\.,8ervision 5 11/76 1 5 N M\. 0
lunervision 6 3/77 1 12 1 -
,lupet,ision 7 3/78 1 25 c1 -_ -
S\.narvision 8 10/78 3 12 C\. C\. a 1
Sunarvision 9 8/79 2 1 c\. d l 2 O
supervision 10 2/80 3 27 b\. c\. c 2 2 O
Supervision 11 12/80 2 12 c\. d 2 2 IL 0
Suervision 12 4181 5 20 b\. h\. b\. c 2 1 K
Supervigion 13 12/81 2 10 c\. c 2 1 H
Supervision 14 4/82 2 10 c2 c 2 , H \.F
Superviaion 15 10/82 3 15 A , c 1 2 F
Supervision 16 4/83 2 8 c , c 2 3 -\.F
Total Supervision 206
OTHER PROJMC DATA
Borrower Governmwnt of India
Excutins Atency Government of Ytia tban
Fiscal Year April I - Narch 31
Name of Currency: Rupees (Ra)
Currency Sxchange Bate;
Appraisal Year Average USS 1\.00 - 8\.0
Intervanina Y ara Averase 1S8 1\.00 - 8\.5
Cosuletion Yeor Averaeg - US8 1\.00 5 10\.2
Follov-on Project;
Name: Raipatban Command Area Development and Settlement Proiect
Loan/Credit Number IFAD Loan 32-IN
LaSnlC*dit Amount CUSS N): 55\.0
Date Board Approval:
a * a*riculturist; b * economist; c - ongineer; d * road engineer; a * forest\.
/2I - problem-free or minor problema; 2 - moderate problems; and 3 - major problem\.
31 1 improving; 2 * stationary; and 3 * deteriorating\.
/4 F - financial; N * managerial; T - technical; P - political: and 0 - other\.
-iii-
INDIA
RAJASTHAN CANAL COMMAN) AREA DEVELOPMENT PROJECT
(Credit 502-IN)
EVALUATION 8UMMARY
Introduction
1\. The Rajasthan Canal Command Area Development Project (RCP I) vas the
first IDA-assisted ^ommand area development project in India and the first
project in whicb lining of the irrigation systems to the individual farm
boundary was introduced\. The project is unique in its opening up desert
lands for cultivation\.
Objectives
2\. The project covered 244,000 ha of Cultivable Comand Area (CCA)\. The
main objective was to provide for improved irrigation facilities and roads,
land development works, and sapporting agricultural services but institu-
tional strengthening was also an important objective\. Project cost was
estimated at Re 1,392 N (US$174 M) and an IDA credit of US$83 M was made\.
Land development works were to be financed through institutional credit\. The
credit became effective at the end of 1974 and its closing date was June 30,
1981\.
Implementation Experience
3\. Progress on most project components was satisfactory\. Actual total
project cost was about Rs 1,469 M, about 6% more than the appr&isal
estimates\. The physical appraisal targets were achieved by June 30, 1983,
except for watercourse lining\. This component suffered mainly from shortage
of key construction materials like coal and cement and from the sharp
increases in cost of implementing this work\. Landshaping and leveling were
largely done by the farmers themselves without resorting to institutional
credit\. Original targets of canal lining, roads, afforestation and village
water supply components were achieved\.
4\. Disbursements of credit funds lagged behind appraisal estimates
throughout project implementation\. The slow disbursement was mainly due to
delays of watercourse lining arising from the shortage of construction
materials and adequate funding\. The credit was fully disbusred by January 6,
1984\.
5\. Under the project, Command Area Development Water Utilization
Department (CAD & 'WU) at state level and Command Area Authority (CAA) at the
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project level have been created\. Although, initially, there were some delays
in positioning the staff, CAM has developed into one of the strong command
area organization in India\. The Rajasthan land Development Corporation
(RLDC) was established in 1974 to ensure smooth flow of institutional credit
for the works of on-farm development (OFD), and their performance has been
steadily improving\. The project reorganized and strengthened agricultural
extension services in five of 26 administrative districts in the state, based
on Training and Visit (T&V) methodology\.
Results
6\. It is estimated that as a result of project works, the net irrigated
area increased by about 109,000 ha\. The water management system in the
project area--warabandi--is among the best in India and ensures a reliable
and equitable water supply to farmers\. An estimated 33,000 farm families
benefitted directly from irrigation and safe drinking water supply\. In
addition, all-weather access to villags faciliates flow of modern inputs and
crop marketing service in the project area\. Estimated production increases
are about 200,000 tons of foodgrains about 76,000 tons of cotton, about
44,000 tons of pulses and 34,000 tons of oilseeds\. The actual economic rate
of return (ERR) is estimated at 30X compared with appraisal estimate of 251\.
Sustainabilitv
7\. Given that the water management system is among the best in India and
that substantial institutional development has taken place, sustainability
seems to be assured (and this could be tested five years hence through an
impact evaluation)\. Also some of the lessons and findings have been incor-
porated in the Bank executed IFAD financed second phase project (see basic
data sheet)\.
Findinftl and Iessons
8\. The project was successful, achieved most of its targets and has
contributed to agricultural development in the state\.
9\. Other lessons include:
- early start of the second phase project delayed completion of the
first phase project (PCR para\. 8\.04);
- complicated credit procedures had to be simplified considerably (PCR
paras 8\.01-8\.03); and
- whatever the credit procedures they cannot resolve the inequity of
benefits which make it vulnerable to poor recovery (PCR para 8\.03)\.
IN=I
RAJASTHAN CANAL COMMAND AREA DEVELOPNENT PROMECT
I\. NTRODCTION
Background
1\.01 Rajasthan is the second laigest state in India, with an area of 34 M
ha but with only 75 people per km compared to an Indian average of 178 per
km \. It is one of the least densely populated states in India with a popula-
tion of about 34\.3 M (1981), of whom 802 are rural\. The northwestern part of
the state is arid, with annual rainfall less then 300 tm, and drains towards
the Indus River\. The southeastern part, with annual rainfalls of 800 to
950 mm, is semi-aria and drains mostly to the Chambal River and then to the
Ganges system\.
1\.02 About 372 (13 M ha) of the state is desert, and is largely uncul-
tivated\. Forests cover 1 M and 14\.3 M ha are under rainfed crops, mainly
millet, sorghum and gram\. About 2\.1 M ha are irrigated, 55X from dug wells,
35X from public canal systems and 101 from tanks\. Irrigated crops include
paddy, wheat, cotton, sugarcane, oilseeds, millet, pulses, and fruits and
vegetables\. The desert is among the harshest environments in India\. Intense
heat and sandatorms make the area difficult for any form of permanent settle-
ment without irrigation, afforestation, and roads\. Rowever, several large
irrigation schemes, notably the Rajasthan Canal Project (RCP), which the
project discussed in this PCR (the Rajasthan Canal Command Area Development
Project, Cr\. 502-IN) is part of, are opening up desert lands for cultivation\.
1\.03 The RCP, a long-term program for development of the northeastern part
of the Rajasthan desert, is located along the border with Pakistan and is one
of the largest irrigation projects in India\. It was initiated following the
Indus Water Treaty, which establisbed the division of waters between India
and Pakistan\. The project was designed to irrigate about 1\.15 M ha of cul-
tivable command area (CCA) and receives its share sf the Indus water through
a lined canal having a discharge capacity of 530 m /sec\. The development of
the RCP area is divided into two stages:
State I - comprising 540,000 ha of the northeastern area
incorporating Phase I - 244,000 ha, the project
discussed in this project completion report (PCR);
and Phase 2 - 296,000 ha, including 50,000 ha of
area unallocated to projects; and
State II - covering 610,000 ha of the southwestern area\.
1\.04 In 1977, GOI requested the International Fund for Agriculture
Development (IPAD) assistance in financing the second phase of development
works (about 246,000 ha) in the first stage of RCP (RCP II)\. This follow-on
project was appraised in 1978 by the Bank on behalf of IFAD\. The main
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investment components of the Rajasthan Command Area and Settlement Project
(IFAD LT\. 32-IN) are the same as RCP I\. The project incorporated lessons
frow RCP I\.
1\.05 Infotmation sources used for the PCR include the RCP I appraisal
report (Report ?Io\. 447-IN); the draft PCR prepared by the GOR; supervision
reports and correspondence files\. A specific field trip in connection with
the PCR was not made\.
Identification\. Preparation and Avpraisal
1\.06 The soils and water management aspects of irrigation development in
the RCP area were studied by a UNDP/FAO team between 1966 and 1971\. Many of
the results obtained in that study, particularly the soil surveys, were used
in formulating the project\. The project was prepared by the Government of
Rajasthan (GOR) and presented in a feasibility report dated May 1971\. In
November 1972, a Bank Group irrigation reconnaissance mission visited India
to review the need for command area development (CAD)\. The FAD/IBRD coopera-
tive program was asked to assist in the further preparation of the Rajasthan
Canal Command Area Development Project 1j\. The project was appraised in
November 1973\. Negotiations were held in Washington, May 24-28, 1974\. Board
presentation took place July 16, 1974, and the credit became effective Decem-
ber 30, 1974\.
II\. THE PROJECT AT APPRAISAL
The Proiect Area
2\.01 The project, located in the northern desert region of Rajasthan
state, is part of Stage I of the ongoing RCP (para L 03)\. The agroclimatic
conditions in that area are difficult\. Intense heat and violent sandstorms
make the area difficult for any form of permanent settlement without water
for irrigation dcvelopment, large scale afforestation and the leaching of the
saline soils\. Initially, the project area covered about 200,000 ha of
irrigable land in two blocks within Stage I of RCP\. In 1982, an additional
area of some 44,000 ha was added to the project at the request of GOR (para
3\.02)\. The area developed for irrigation was being settled by landless
farmers from nearby areas in uniform farm units of 6\.32 ha\. Settlers were
charged an average of Rs 29,000 per unit repayable over 15 years without
interest\. At appraisal, it was estimated that about 17,000 farm families had
been settled on irrigated areas\. Cropping intensity at appraisal was
1/ A project preparation report (No\. 29/73 IND 17) dated September 29, 1973
was prepared by FAD/IBRD CP
-3-
estimated at 64%\. The project area by block and irrigation/reclamation
status is summarized in the following table:
Block A Block B Other Total
----------------- (ha)
------------------
(a) Already irrigated 36,000 72,000 - 108,000
(b) Flood plain soils 34,000 - - 34,000
requiring reclamation
(c) Low sand dunes 30,000 28,000 - 58,000
requiring leveling
and shaping
(d) Extension area _ _ - 44\.000 44\.000
TOTAL 100,000 100,000 44,000 244,000
Proiect Description
2\.02 The project included the following components:
(a) Land develoDment\. Leveling and shaping of some 58,000 ha of sand
dunes for irrigation of which 26,000 ha was to be leveled by the
farmers and 32,000 ha by the GOR\. Reclamation of some 17,000 ha
of the seriously affected saline soils was to be undertaken by
GOR, using heavy equipment; additional 17,000 ha of less seriously
affected saline soils were to be reclaimed by the farmers, using
their own equipment\. Lining of some 5,800 km of watercourses in
the command area of about 200,000 ha 1/ was to be carried out
concurrently with land leveling;
(b) Linin_ of the canal system\. Lining a total of 915 km I/ of canals
to increase canal carrying capacities a-d reduce seepage and
operational losses;
(c) Afforestation and-Stabilization\. About 5,700 km of canals and
roads to be provided with shelter belts to stop windblown sand from
clogging and covering them; some 35,000 ha of high sand dunes
bordering the irrigated land to be stabilized and planted with
shrubs and grasses; establishment of 1,800 ha or irrigated village
firewood plantations;
I/ At the request of GOR, appraisal target of 200,000 ha watercourse lining
was revised in 1982 to include additional 15,000 ha in the extended area\.
2/ At the request of GOR, a work plan for the canal lining was revised in
June 1983 to include additional 400 km of minors and small dis-
tributaries\.
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(d) Roads\. Construction of 431 km of major market, feeder and village
roads;
(e) Domestic water suply,\. Construction of filtered and disinfected
water supply units in 100 villages;j/
(f) ejtilite-ri\. Provision for import of 46,000 nutrient tons of
fertilizers to offset soil fertility loss caused by land leveling;
and
(g) Other comgonents\. Provision of vehicles and equipment for project
administration, construction of the force account portions of the
work, and for agricultural supporting services\. Financial provisions
for project administration, extension services, and the O&M of the
physical facilities during the project implementation\.
Cost Estimate
2\.03 Total project cost was estimated at US$174 N with a foreign exchange
component of Us$47\.1 M, 27% of total project cost\. Project implementation
was to take place over six years and be completed by June 30, 1980\.
Financinn
2\.04 The IDA credit of US$83 M amounted to 48% of the total cost, financ-
ing the foreign exchange costs and about 28X of the local cost\. GOR/GOI was
to contribute the balance (US$ 91 M equivalent)\. GOR was to finance canal
lining, village water supply, roads, and afforestation\. Fertilizer purchases
was to be financed directly by the credit\. On-farm works was to be financed
mainly by the farmers, using credit funds provided by the commercial banks
which were to be refinanced by the Agricultural Refinance and Development
Corporation (ARDC) _/\. Disbursements for on-farm works were to be made
against ARDC refinance of the participating banks\. The credit was expected
to be disbursed by June 30, 1981\.
jj In 1982, 15 more villages were added to the appraisal target of 100
villages in the extended area\.
;/ Presently the National Agricultural Bank for Agricultural and Rural
Development (NABARD)\.
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Procurement
2\.05 As it was neither feasible nor economic to combine categories of
civil works into contracts sufficiently large to attract international com-
petitive bidding (ICB), civil works, (canal lining, roads, village water
supply, OFD works) were to be carried out by local contractors following
local competitive bidding procedures, or when the use of machinery was
required, through force account\. Fertilizer procurement was to be combined
with the regular bulk fertilizer procurement by the GOI's India Tender Board
based on ICB\. Out of US10\.2 X, estimated for vehicles and equipment,
US$6\.3 M was to be procured through ICB\. About US$1\.0 X worth of equipment
and vehicles, consisting of groups of contracts costing less than US$100,000
each, was to be purchased through normal GOR procurement procedures\. The
balance of US$2\.9 M, consisting of field vehicles were to be reservea for
local procurement and were not eligible for reimbursement out of the proceeds
of the credit\.
Beuefits
2\.06 Upon completion, the project was to provide year-round irrigation to
200,000 ha 1J, including 92,000 ha of new land developed under the project\.
It was anticipated that at full development (1989), the incremental produc-
tion resulting from the project would amount to about 238,000 tons of
foodgrains, 12,000 tons of pulses, 92,000 tous of seed cotton and 460,000
tons of fodder\. The cropping intensity in the project area was to increase
from 90% at appraisal to 130X at full development\. Farm employment was to
increase by about 21 M mandays a year\. The project was to improve the income
of about 33,000 farm families by Rs 11,200 over a tea-year period and gener-
ate about 70,000 farm jobs\. The economic rate of return (ERR) for the
project was estimated at 25%\.
III\. PROJECT IMPLEM NKATION
General
3\.01 During its iuitial period, project implementation was delayed by (i)
slow organizational build-up; (ii) insufficient fund allocations (para 3\.05);
and (iii) shortage of construction materials (para 3\.03)\. These problems
were gradually overccnme but the project implementation period had to be
extended by three yearo frJm June 1980 to June 1983\.
V Increased in 1982 to 244,000 ha\.
-6-
Project Works
3\.02 The following table summarizes the main components and the physical
progress (see table 1 for details):
ComDleted by Dec\. 1983
Appraisal Revised X of Revised
Taraet Tarftet Physical Tartet
Canal lining - km 915 1,313 1,323 100
Watercourse lVning - ha 200,000 215*000 a/ 187,000 87
Land shaping - ha 58,000 14,000 30,000 214
Land reclamation - ha 34,000 34,000 3,,000 94
Roads - km 431 430 425 99
Afforestation:
Plantations - ha 8,000 8,000 8,000 100
Pastures - ha 35S,000 35,000 35,000 100
Village water supply - unit 100 115 112 97
f/ Of the revised CCA of 244,000 ha, only 215,000 ha was planned for lining\.
The above data indicate that the project achieved most of its investment
targets\. As a result of project works, about 1,300 km of canals have been
lined (table 2), the canal irrigated area increased from 108,000 ha in
1974/75 to about 244,000 ha in 1983/84 (compared to 200,000 ha targetted at
appraisal)\. All weather rural road network increased by 425 km (para 3\.09)\.
The targets for efforestation (para 3\.08) and village water supply (para
3\.11) were achieved\.
3\.03 Watercourse Linin2\. Acute shortage of coal 1/ and cement throughout
the implementation period of the project constrained the progress of civil
works, particularly canal and watercourse lining\. During the implementation
period (1974-1983), average supply of coal was only 46% of the demand and the
average supply of cement was only 602 of the demand (table 3)\. In 1979, for
¶xample, the project received only 6,500 tons of coal against an annual
requirement of 83,000 tons\. These shortages were largely a result of a
country-wide shortage and railway transport difficulties, problems which
could not be resolved by GOR alone\. To correct the situation, GOI and GOR
convened in March 1981, a high level review meeting to search the steps to be
taken for improving the supply of coal and cement\. At the time the meeting
was held, only about 116,000 ha or 582 had been lined out of the target area
1/ Coal is used for manufacturing bricks and tiles which are used for
lining\.
-7-
of 200,000 ha\. Following that meeting, there were some improvements, though
some material shortages (especially coal) persisted\.
3\.04 An issue encountered during the implementation of watercourse lining
were GOR attempts to offset the rising cost of watercourse construction by
reducing the extent of lining\.l/ The issue was raised in 1976 2/ and 1981\.
In July 1981, a government order was actually issued limiting the extent of
lining to 75% of the length of watercourses\. The Bank's response was to
express its concern that there was insufficient evidence which would justify
reduction of watercourse lining and that such a measure would effectively
reduce water availability for the RCP II area\. The Bank also indicated that
the increased costs and labor inputs of operating and maintaining an unlined
watercourse and the social impact on tailend farmers who share in the costs
in lining but receive their water supply through an earthen channel needs to
be determined\. The Bank indicated that any unilateral decision by GOR to
reduce the watercourse lining would not be acceptable and that disbursements
would uot be made against partially lined watercourses\. The Bank provided,
however, guidelines for a detailed analytical study of 75% vs 100% lining of
watercourses to be undertaken by GOR\. The studies were carried out but not
in time to effect Phase I\. The main reason was that observations of irriga-
tion in partially lined watercourses indicated that partial lining was not a
viable alternative for the sandy soils of RCP\. In June 1982, the GOR decided
to retain to lining the full length of the watercourses\.
3\.05 Finance for watercourse lining was provided by commercial banks (CB)
which were to be refinanced by the Agricultural Refinance and Development
Corporation (ARDC)\. Works on the land of farmers ineligible for commercial
credit was to be financed from a Special Loan Account (SLA) established by
ARDC, GOR and GOI and managed by ARDC\. The Rajasthan Land Development
Corporation (RLDC, para 4\.02) provided interim finance to the construction
authorities (CAD) for execution of OFD works and assisted the CB with collec-
tion and screening of individual loan applications\. The watercourses, which
are located along farm boundaries are a communal investment\. The cost of
lining was to be levied equally on every ha of the chak CCA and each farmer's
share is proportional to the size of his farm\. However, the charge was to be
based on a calculation of the actual cost of lining for each outlet\.
1/ GOR reported that the cost of 100% watercourse l ning increased from
Rs 1,150 per ha in 1976 to Rs 2,350 per ha in 1981 mainly due to higher
prices of labor, transport, coal and cement\. Lining of 75% of the
watercourses was estimated at Rs 1,990 per ha\.
2/ By the Chief Engineer\. The Bank disagreed and indicated that there was
insufficient data to justify such a proposal\.
-8-
However, due to chronic accounting backlogs at CAA, this delayed determina-
tion of the actual loan amount for farmers\. For example, although lining of
watercourses in a number of chaks was completed in 1977, many of the farmers
concerned were not informed of the exact amount of their loans for some
years\.l/ Furthermore, RLDC could not receive from the Banks full reimbursement
of the funds it advanced before the accounts for the respective works were
finalized\. This resulted in increasing burden on its resources\. This was an
undesirable situation which could create serious difficulties at loan
recovery time\. Consequently, the Bank recommended in 1981 that finance of
watercourse lining be organized according to the "Haryana Model" (para 8\.02)\.
3\.06 Land ShaDina\. At appraisal, it was estimated that about 58,000 ha
of sandy soils would require landshaping and leveling, of which 26,000 ha
were to be leveled by farmers without project assistance and 32,000 ha were
to be done by the Command Area Authority (CAA)\. However, at an early stage,
it became clear that due to the relative ease of the work, and the fact that
farmers could immediately irrigate their entire farm (6 ha), most of them
prepared to landscape on their own\. Consequently, this component was reduced
from 58,000 ha to 14,000 ha\. However, as seen in the following table, area
covered by landshaping from all sources was at completion higher than expec-
tations and reached about 52% of total appraisal estimate\.
Appraisal Revised At
Tarsetu \. Target Com=letion
______ --_---(ha) -
-
Land Shaping by CAA 32,000 6,000 -
Land Shaping by Farmers 26\.000 8\.000 30\.000
Total 58,000 14,000 30,000
3\.07 Soil Reclamation\. At appraisal, it was estimated that about 34,000
ha of flood plain soils were afflicted by moderate to severe salinity, of
which about 17,000 ha was seriously affected requiring reclamation\. The
Agricultural Extension Wing of the CAA recommended the following practices
for the reclamation of soils: (i) addition of sand and deep plowing; (ii)
green manuring; (iii) application of gypsum; (iv) flooding and leaching; and
(v) addition of farm yard manure\. The farmers having medium soils adopted
leaching and addition of sand while the farmers having fine soils carried
out deep plowing, leaching, green manuring and adding farm yard manure\.
These methods were reported to be successful\. The reclamation work was
carried out at farmer's cost\. Out of 34,000 ha needing reclamation, about
32,000 ha have been reclaimed\. It is noted that there is no systematic
method of monitoring the results of reclamation\.2/ Salinity could reappear
after a few years unless long term control is exercised\. A periodic soil
testing program of each chak should be carried out to check on the soil
health after reclamation treatment\.
1/ See item (i) of the Borrower's comments in Supplement\.
2/ The Borrower has indicated that periodic soil testing is being carried
out to monitor a level of salinity (item (ii) of Supplement)\.
-9-
3\.08 AffoMe&tagign\. The plantation works along 220 km of roadside, 5,500
km of canalside, 1,800 ha of village firewood, and the development of 35,000
ha pasture were carried out according to the plan\. Pasture planning lagged
initially but soon recovered its pace\.
3\.09 Bads\. Construction of roads was satisfactory in all respects except
for the initial delays which are directly attributable to lack of coal for
brick manufacture\. As a result, the w,rk was delayed by a year from the
estimated time of completion\. The project constructed 425 km of district and
village roads against 431 km of appraisal target\. To facilitate the con-
struction of roads in later years, Public Works Department (PWD) used
imported stone to replace brick on the unfinished sections of road for soling
and hard shoulders\. As result of the project, a reasonable provision of road
\.-cess has been achieved, serving almost all parts of the project area, and
vAthout which development of the irrigation potential would have been
impossible\.
3\.10 Encroachment onto the road reserve took place in a number of places\.
There were two forms of encroachment\. In the first, farmers who have not yet
been paid compensation for land surrendered by them for road construction,
continued to cultivate these areas\. To overcome this difficulty, GOR
strengthened the staff of the land acquisition office to speed up compensa-
tion payments\. The second form of encroachment was the construction of shops
and other buildings close to the edge of the road pavement\. The Bank
expressed its concern demanding to stop the road encroachment, which endanger
road users and cause serious congestions\. However, although GOR has the
necessary powers to evict the offenders, the problem appears to be politi-
cally sensitive and no adequate actions have been taken\./
3\.11 VillAge Water SuRply\. All of the 115 village water supply units were
installed as planned\. After installation of the facilities by PWD, the units
were handed over to the village panchayats, who are to operate and maintain
these facilities with technical assistance from the PWD, However, the 7il-
lage panchayats were not able to maintain the units due to financial con-
straints\. Some of the completed witer supply units became inoperable due
to shortage of filter material insertion and other minor deficiencies\.2/ For
example, IDA's supervision report of December 1981 pointed out that out of
the 96 completed, 15 units were inoperable\. In order to improve O&M, GOR has
transferred the responsibility for providing periodic maintenance and sup-
plies to the Public Health Engineering Department (PRED)\. PHED now plans to
establish one division with three or four sub-divisions to be located within
the command area\. The task of these units is not only to take over the
responsibilities of supervising, operating and maintaining all new systems
installed under the project, but also all existing village water system in
the command areas\.
1/ The Borrower has indicated that steps are being taken to provide alter-
native sites to encroachers for their resettlement (see item (ii) of
Supplement)\.
2/ See Borrower's comments (item (iv) of Supplement)\.
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Proiect Cost
3\.12 Project cost as estimated at appraisal is compared below with actual
expenditures:
Actual Expenditure
Comnonents Annraisal v/ Actual / As X of ARDraisal
--(Re 14)-----
Canal lining 455\.6 519\.6 vi 114
Afforestation 72\.9 71\.9 99
Roads 101\.4 108\.0 106
Village water supply 26\.7 18\.9 71
OFD works 452\.4 396\.9 88
Fertilizers 189\.9 147\.6 78
O&M 93\.1 206\.1 221
Total 1,392\.0 1,469\.0 106
A/ Including price increases\.
b2/ As at December 31, 1983\.
c/ Includes cost (Rs 51\.3 M) incurred for lining about additional 400 km
of canal under revised work plan\.
A detailed breakdown of the actual project expenditures by year against the
appraisal estimate is presented in table 4\. The higher than estimated
exchange rate of US dollars to rupees and the lower than estimated contingen-
cies provided the project with substantially more rupee funds than that
estimated at appraisal and enabled to finance a larger volume of physical
works\.
Disbursement
3\.13 Disbursements lagged behind appraisal estimates throughout project
implementation (see comparison in table 5)\. This was attributed to the
following factors: (i) acute shortage of cement and coal during most of
implementation of the project did not permit rapid progress on civil works
and the expenditures remained low; (ii) lower than expected price and physi-
cal contingencies; and (iii) land shaping and land reclaation were not
carried out as a pre`ect cost as anticipated during appraisal but at farmer's
expense\. The credit was fully disbursed by January 6, 1984, compared with
the original credit closing date of June 30, 1981\. 1/
11 Credit closing date was extended twice by one year each, to June 30, 1983\.
-11-
ComDliance With Covenants
3\.14 GOR complied with most of the important covenants\. However, it bas
not furnished to IDA the following: (i) annual O&M estimates for the irriga-
tion systems, roads, and village water supplies jj; and (ii) accounts and
financial statements certified by accountant general for the years 1979/80,
1980/81, 1981/82 and 1982/83\. Audit reports of these expenditures have also
not been furnished (Annex 1)\.2/
IV\. INSTITUTIONAL P3RFORM&NCE
Proiect Imvlementation
4\.01 Since the project was to be the first in a series of similar CAD
projects, there had been concerns both at central and state levels to devise
organizational arrangements which can be duplicated in other projects\. In
1975, GOR created a Command Area Development and Water Utilization Department
(CAD & WU) at state level and CAA at the project level\. The CAD & WU, headed
by a secretary, was guided on policy matters by a coordination committee for
CAD chaired by the chief minister\. The CAA is headed by an Area Development
Commissioner (ADC) who has been vested with the powers of chief engincr
(irrigation), director of agriculture, revenue commissioner and registrar
of cooperative societies\. The ADC has been supported by four departments:
agriculture, irrigation and land development, town planning and cooperatives,
public works and forest\. Although there were some delays in drawing staff
from the concerned departments to implement the project, the CAA has
developed into one of the stronger command area organization in India\.
Raiasthan Land Development CorroratLion
4\.02 Under the project, the Rajasthan Land Development Corporation (RLDC)
was established in 1974 to: (i) undertake programs of OFD works;
(ii) operate as an agency for financing these programs; and (iii) recover
the amounts spent on development programs from the land owners\. RLDC advan-
ces funds to ID and obtains credit from participating banks on behalf of the
farmers\. It also screens farmers' loan applications on behalf of the CB and
facilitates an uninterrupted flow of funds for finance of OFD works\.
However, RLDC did not received an adequate return for its services\. The
I/ Such estimates were to be provided by February 15 of each year covering
the following year\. However, GOR may have had difficulties in providing
these estimates, since these are considered confidential prior to
approval by the legislature\.
2/ See Borrower's comments (item (v) of Supplement)\.
-12-
interim finance it provided was interest free and it did not receive any
return for its services to the CB\. Moreover, as indicated (para 3\.05),
accounting backlogs at CAA delayed disbursements by the Banks for completed
works\. As a result, RLDC's financial situation has aeteriorated\. In
1977/78, it suffered a financial loss of Re 1\.4 M and a further loss accrued
also in 1978/79\. RLDC did not have sufficient staff for adequate technical
screening of OFD plans and for supervision, but at the same time, some of its
functions were duplicated ty other agencies\. Under RCP II, GOR undertook a
systematic assessment of RLDC's functions and certain improvements were
introduced\.
Agricultural Extension Service
4\.03 Under the project the Training and Visit (T&V) extension system was
introduced thoughout the project area\. After two years of successful
experience, the GOR decided to spread this approach to other districts so as
to bring benefits to a much larger proportion of the state's farming popula-
tion\. The Rajasthan Agricultural Extension and Research Project (Cr\. 737-IN)
was appraised in October 1976, and became effective on February 6, 1978\.
Since then, the project's extension functions have been integrated into the
state-wide extension network\. The extension activities in the RCP area are
under the control of CAA but the Department of Agriculture is responsible
for implementing the T&V system\. The project extension services are effec-
tive, comprising five district extension officers (DEO), 15 subject matter
specialists (SMS), 50 agricultural extension officers (AMO) and 327 village
extension workers (VEW)\. Extension staff ratio in the RCP area is generally
based on one VEW per about 1,000-1,200 ha, one AXO per about 7 VEWs, one DBO
per 6 AEOs, and one team of two SMS for about 47 VEWs, which is considered
adequate\. Presently, many of the VEWs serve only about 160-180 farm families
and their activilies have been very satisfactory\. During the appraisal of
the RCP 11 in 1979, it was felt that more SMS for teaching water management
be required and provisions for that were included in that project\.
Water Management
4\.04 Water management in RCP follows the Warabundi system which is
dominant in Northwest India\. According to this system, each farmer is allo-
cated the same amount of water per ha of CC&\. The water is delivered at the
same day and hour and these are predetermined for a period of 12 months\.
Warabundi has been introduced to all the areas brought under irrigation in
RCP\.
Cost Recovery
4\.05 The Project Agreements stipulated that GOR would establish a commit-
tee to recommend arrangements for the recovery of project costs\. The commit-
tee was established in March 1978\. It recommended that Rs 2,950 per ha be
recovered fron the beneficiaries over 30 years at 12% interest\. This amount
-13-
represents the actual investment cost of canal lining, village water supply
and 0&M costs during the implementation period\. Investment cost excluded
from the calculation are: (i) OFD expenditures as this cost is actually a
loan to be recovered directly from the farmers; (ii) afforestation costs,
as this cost is not directly attributable to the cultivators alone, and sale
of firewood would go to state revenue\. The recovery of these costs over 30
years at 12% interest would require an annual repayment of about Rs 150 per
ha\. The committee recommended that the repayment of investment cost of
Re 2,950 begin only after farmers have repaid the loan for the construction
of OFD works which means after 15 years from the receipt of their loans\.
4\.06 The Project Agreements also stipulated that GOR would levy qnd col-
lect water charges in amounts sufficient to cover O&M costs\. The committee,
established in connection with the project cost reco-ery (para 4\.05), also
carried out an 0&M cost study\. They found that O&M cost at full development
was estimated at Rs 68 per ha\. In Rajasthan, fixed water rates per ha are
charged for each crop\. The rates, which were increased by 151 in 1979 and by
anothar 25% in 1982, range from Rs 35 per ha for bajra to Rs 72\.5 per ha for
cotton\. For a typical cropping pattern, the water charge averages about
Re 72 per ha per annum\. Thus, these increases in water charges have been
adequate to cover O&M costs\.
Accounts and Audits
4\.07 The ID (for canal and watercourse lining), PWD (for roads) and Forest
Department (for afforestation), all maintained separate accounts on project
expenditures\. Submission of the disbursement applications was centrally
coordinated by the Chief Accounts Officer\. The required annual audit reports
submitted to IDA at a considerable delay and were incomplete\. These reports
related to expenditures on tLe entire Ra\.jasthan Canal Project including
operations financed entirely by GOR, anI were not IDA project specific\.
Financial statements of expenditures ce?tified by the state accountant
general for the years from 1974/75 to 1978/79 were received in January 1984\.
The statements for the years from 1979/80 to 1982/83 are still awaited\.
V\. AGRICULTURAL IMPACT
CropDed Area and Crog Yields
5\.01 A farm survey unit was established under the project to assess the
project benefits\. A benchmark agroeconomic survey of a random sample of RCP
I farmers was conducted in 1974, followed by annual sample surveys\. The
sample siae has ranged from 200-500 cultivators\. The surveys has covered the
following main subjects: cropping pattern, crop yields, fa-ming practices
and farm incomes\. Yield estimates are based on crop cutting experiments\.
-14-
The results of the surveys indicate a continuous improvement in crop inten-
sities, farming practices and yields since the project began\. A comparison
of the cropped area changes in 1974/75 and 1982/83 is shown below:
1974/75 1982!83
Z of % of
Rharif `000 ha 2/ CCA '000 ha CCA
Cotton 20\.4 8 62\.3 26
Paddy 0\.9 - 0\.5 -
Chickpea 23\.3 10 34\.7 14
Groundnut - - 0\.3 -
Bajra - 3\.1 1
Others 1/ 15\.4 _i 17\.0 7
Sub-total 59\.1 24 117\.9 48
Rabi
Wheat 23\.0 9 66\.6 27
Gram 52\.5 22 52\.6 22
Mustard 15\.7 6 21\.2 9
Others 1/ 4\.& 2 11\.6 5
Sub-total 96\.0 39 152\.0 63
Total 155\.1 64 269\.9 111
:/ Includes vegetable, fruit, fodder and some sugarcane\.
2/ Area includes 44,000 ha of extended area over the
original CCA of 200,000 ha at atpraisal\.
The above data shovs that in the project CCA of about 244,000 ha, the total
cropped area has increased from about 155,000 ha in 1974/75 to 270,000 ha in
1982/83, an average annual rate of about 9% per year\. During the same
period, the cotton area increased about three-fold and the wheat area nearly
tripled\. The changes in irrigated area up to 74 km of the Rajasthan canal
area (CCA of about 383,700 ha), of which the RCP I forms a part, from 1974 to
1980 are shown in table 6\.
5\.02 The completion of OFD works, including lining of watercourses,
resulted in a considerable increase in irrigation intensity (table 7)\.
During 1980/81, the irrigation intensity in areas where lined watercourse had
been constructed was 134X as against only 83% in areas where unlined (or
partially lined) watercourses were operative\.
5\.03 A comparison between the crop yields in 1975/76 (beginning of
project) and 1982/83 is shown below:
-15-
CXoD Yielts
Crop 1975L/6 1982/83
-
~~--(t/ha)------
Cotton 0\.8 1\.2
Paddy 2\.3 3\.8
Chickpea 0\.7 0\.9
Groundnut - 1\.5
Wheat 1\.4 2\.8
Gram 0\.9 0\.9
Mustard 0\.4 1\.0
Yields of major crops such as wheat and cotton have shown a markedly upward
trend (table 8)\. The increase in yields is attributeble to the shifting of
low yielding local varieties to high yielding varieties (both paddy and
wheat), increased use of fertilizers (para 5\.05) and intensified extension
activities (para 4\.03)\.
Agricultura-1 Production
5\.04 Based o-n the expected future cropping patterns and yields levels, the
crop production is projected for the future with project in table 8 and
suimarized below:
At Future Incremental
APDraisal With Proiect Production
--
~~----( '000 tons)--_________
Cotton 16\.3 92\.3 76\.0
Chickpea and Gram 63\.6 107\.9 44\.3
Wheat 32\.2 232\.4 200\.2
Oilseeds 6\.3 40\.3 34\.0
InRut Use
5\.05 The surveys indicate that the proportion of wheat area planted with
high yielding varieties (RYV) increased from 171 in 1974j75 to 94X in
1982/83\. The surveys also indicate that the use of improved seeds is high:
cottou 83X, groundnut 100%, mustard 77X and gram 75X\. The supply of fer-
tilizer jj to the project area has increased almost six-fold from 1,500
jj As provided under the project, GOI procured fertilizers in the amount
of Rs 147\.6 M\. Fertilizer was procured to offset soil fertility loss
caused by land leveling\. Although no detailed fertilizer aistribution
records were made available at the time this PCR is prepared, the project
authorities have indicated that the project received adequate amount of
fertilizer from GOI's fertilizer pool throughout the project period\.
-16-
nutrient tons in 1974/75 to 8,400 tons in 1982/83, as shown in the following
table:
Fertilizer 1!e
1274L75 1982/83
Nitrogen (ton) 1,120 7,363
Phosphorus (ton) 360 823
Potassium (ton) 23 216
Total 1,503 8,402
Cropped Area (ha) 155,100 269,900
Fertilizer Use (kg/ha) 9\.6 31\.1
VI\. ECONOMIC EVALUATION
Economic Rate of Return (ERR)
6\.01 The project ERR has been reassessed, taking into account the actual
implementation schedule, actual incurred costs, and present estimates of
agricultural benefits\. Since the project components are interdependent (para
7\.01) and are difficult to separate, the ERR was calculated for the whole
project\. The cost streams include the economic cost of all civil works,
administration and engineering and incremental OEM costs\. Basic assumptions
for the analysis are identical to those made for the appraisal of the
RCP II, the Rajasthan Command Area and Settlement Project (Report No\.
2712-IN)\. Discounting cost and benefit streams over 50 years results in an
ERR of 28% compared with the appraisal estimate of 25%\. The higher than
estimated at appraisal ERR is mainly a result of extending the project area
by about 18% without additional cost incurred\. The cost and benefit streams
are presented in table 9\.
VII\. THE BANK PERFORMANCE
AD1araisal
7\.01 Overall the appraisal report outlined a well-balanced development
plan consisting of closely interdependent project components\. For example,
watercourse lining reduces seepage and operational losses, provides more
reliable water supply and ensures equitable distribution of water within the
watercourse command and thus would increase the areas irrigated and crop
yields\. However, without the provision of roads to reduce transport cost and
facilitate movements of inputs and marketable produce it would be impossible
to attain the level of production required to justify the investment in
watercourse lining\. For appropriate functioning, the roads and the water
-17-
distribution network require good maintenance, which can be provided only if
they will be protected from dune invasion through the afforestation and dune
sta\.'ilization program\. The problems encountered with the implementation of
watercourse lining, land leveling, land shaping and land reclamation throulgh
institutional credit, could not have been foreseen at appraisal due to the
more limited data and experience available at that time\.
Sui-ervision
7\.02 Sixteen supervision missions visited the project at an average inter-
val of about six months\. Since 1979, when the implementation of RCP II
picked-up its pace, supervisions of RCP I and RCP II have been carried out
concurrently\. The size of a mission ranged from one to five and averaged
2\.1\. In addition, a number of special missions visited the project to
provide specific technical assistance\. Following each mission, letters
summarizing the main findings and indicating corrective actions required were
sent to GOI and GOR\.
7\.03 During the later years of the implementation period, the supervisiou
missions were concerned primarily with reporting shortage of coal and cement
(para 3\.03), slow disbursement of credit funds (para 3\.13), reduced length
of watercourse lining (para 3\.04)\. Supervision missions were very helpful
in persuading GOR to meet the need of coal and cement, in effectively com-
municating with the project staff and government officials to revert to full
lining of watercourses, and in expediting the disbursement of credit funds\.
The Bank was flexible in adjusting appraisal targets\. When it became clear
that the land development (land leveling, shaping, and reclamation) target
could not be achieved as designed, and that the allowauce for contingencies
and the savings incurred from this land development and others (para 3\.13)
would not be fully utilized, the Bank agreed to GOI's proposal to increase
the project CCA by nearly 20% (para 3\.02)\.
VIII, LESSONS LEARNED AND CONCLUSION
Finance of Watercourse Linin2
8\.01 At the time of appraisal, GOI and the States (throughout India)
considered institutional credit a suitable way to finance the constructiou
of watercourses, without burdening the limited States' development resources\.
In retrospect, it is clear that two main factors were not given sufficient
consideration: (i) the complex credit procedures and the need to obtain
agreements of the majority of farmers; and (ii) although the costs per ha
served were to be equal, the benefits were not, and for some of the farmers
(especially at the head of the watercourse) benefits were not sufficiently
higher than the costs to make it an attractive creuit undertaking\.
-18-
8\.02 Simplification of credit procedures can be achieved by using the
"Haryana Model" as following: (i) the credit is given by the banks to a
corporation responsible for construction (e\.g\. RLDC); (ii) the corporation
maintains individual account for each farmer and transfer these on completion
to a government revenue department for recovery; (iii) the reveaue department
pays the amount collected to the corporation and the latter repays to the
banks; and (iv) any deficit is covered by the government\. This system has
been adopted by GOR for RCP areas since 1982\.
8\.03 While the above system simplifies credit procedures and transfer the
responsibility for recovery as well as the financial burden of poor
recoveries to the State government, it cannot resolve the inequity in
benefits which make it highly vulnerable to poor recovery\. In fact, most of
the states now finance construction of watercourses from the development
budget\. This would be the most suitable method of finance also in Rajasthan
Canal Project\.
The TiiUai of Phase_II
8\.04 A follow-up project, Rajasthan Command Area and Settlement Project
(IFAD Ln\. 24) was appraised (by the Bank) and became effective before
Phase I was complete\. Although there was an understanding (unrecorded) that
Phase II work will not commence prior to the end of Phase I, GOR was under
pressure to initiate activities also under Phase II\. This aggravated the
delay in completion of Phase I\. In retrospect, it appears that the Bank
should have negotiated with GOI and IFAD a delay in the appraisal/start of
the Phase II project by two years\.l/
C&1cluaioDs
8\.05 The project was implemented successfully, achieved most of its
targets and has contributed to furthering the state's agricultural sectoral
policy objectives\. While materials supply difficulties persisted throughout
the project implementation period, the volume of lining works achieved per
annum was among the largest in India\. The quality of works was good\.
Finally, the water management method used--warabundi-is among the best in
the country\.
1/ The Borrower disagrees with these statements (see item (viii) of Supple-
ment)\.
-19-
Table I
INDIA
RAJASTRAN CANAL COMMAND AREA DEVELOPMENT PROJECT
Summary of Physical ProAress
Tarnet Achievement (Dec\. 1983)
ComDonent Unit AR Revised Physical As Z of Revised
A\. Orininal Area (200\.000 ha)
Canal lint km 915 1,313 1,323 100
Afforestatiou
Plantation '000 ha 8 8 8 100
Pasture development '000 ha 35 35 35 100
Roads
District roads km ibO 177 177 100
Village roads km 251 248 243 98
Village water suDplV No\. 100 100 100 100
\.PD works
Survey 6 planning '000 ha 200 200 225 113
Land-shaping (by CCA) '000 ha 32 6 - - IA
Land-shaping (by farmers) '000 ha 26 8 30 375
Land reclamation '000 ha 17 34 32 94 1k
Watercourse lining '000 ha 200 200 177 89
B\. Extended Area (44\.000 ha)
Afforestation
Canalside plantation km - 1,750 1,750 100
Roadside plantation km - 300 180 60
R-oads km - 5 5 100
Village water suDDlv No\. - 12 12 100
OFD works
Survey i planning '000 ha - 44 37 84
Watercourse lining '000 ha - 15 10 67
/| GOR abandoned the scheme\. Works were done by farmers\.
/b Work done by farmers\.
-20-
TSsble 2
INDIA
RAJASTUhN CANAL COMWIUD AELA DEVELOPMENT PROJECT
Details of Canal Linina
(km)
Lining Done
Irrigation Total Before Balance Appraisal Revised Additional 5/ Actual
xsnte Length Proiet IZaing la _ tet Tarset Lning Achievement
(1) (2) (3)-(2)-(1) (4) (5) W6"5-M-M (7)
Rawatoar
Main Dist\. 36 4 32 32 32 - 32
Other Channels 193 89 104 99 104 5 104
Naursadtesar
Main Dist\. 40 - 40 40 40 40 40
Other Channels 126 69 57 52 56 4 56
Suratsarh
Branch 103 - 103 96 96 - 96
Other Channels 359 93 266 211 265 54 265
Anuosarh Shakra
Branch 134 5 129 128 128 - 128
Other Channels 668 155 513 184 500 316 510
Direct Dist\. 191 95 96 87 92 35 92
(upto 74 km)
Total 1,850 510 1,340 915 1,313 414 1,323
J Length of lining was revised to include about 400 km of minors and small
distributaries which were not taken up at the time of appraisal\.
-21-
Table3
INDIA
RAJASTHAN CANAL COMKAMD A&EA DEVJL0PS PROJECT
Demand and Suuv1y of Cement and Coal
Cement Coal
Year Demg SUPDhY Demand SUDD1v
-- -(ton 8)--- (Z) - -(ton8)---- (X)
1974/75 18,000 10,801 60 13,800 1,149 8
1975/76 82,000 77,325 94 75,000 65,198 87
1976/77 59,950 57,000 95 70,000 34,336 49
1977/78 77,340 48,327 62 60,000 28,206 47
1978/79 131,000 63,225 48 83,000 37,590 45
1979/80 105,000 66,400 63 83,000 6,530 8
1980/81 96,500 33,861 35 70,000 16,551 24
1981/82 80,000 35,097 44 75,000 42,741 57
1982/83 110,000 32,186 29 140,000 58,622 42
1983/84 1109000 _6\.218 87 120\.000 60\.833 51
Total 869,790 520,440 60 789,800 351,756 46
Source: GOR's draft PCR dated July 4, 1984\.
INDIA
RJASTHAN CARL COIA*ND AREA DZR LOWW? PROJlCT
Burvnt of Proiect RIneaditures
(as K)
Appraisal Sxpenditures as
timate 1974 1 1976 197I 1978 1L9 1, 99 1981 It= 111 Siotal S of Anuraisal
Canl lining 455\.6 20\.8 40\.0 76\.1 75\.0 75\.0 49\.7 25\.0 17\.8 37\.1 103\.1 I/ 519\.6 114
Afforestation 72\.9 3\.0 5\.8 8\.7 10\.3 12\.2 11\.2 5\.1 6\.1 5\.3 4\.2 71\.9 99
Roads 101\.4 2\.6 10\.6 23\.6 21\.0 18\.2 15\.3 12\.4 3\.1 1\.2 - 108\.0 106
Village Water Supply 26\.7 0\.9 2\.8 4\.0 2\.6 3\.9 1\.1 1\.2 0\.5 0\.9 1\.0 18\.9 71
OFD Works 452\.4 2\.6 10\.9 22\.9 30\.0 48\.5 54\.4 31\.8 78\.6 62\.7 54\.5 396\.9 88
011 (during
implemeation) 1b 93\.1 9\.2 11\.1 12\.6 16\.5 19\.6 22\.7 25\.7 27\.4 30\.9 30\.4 206\.1 221
Pertilizer 189\.9 _ 14\.6 - 147\.6 100
TOTAL 1,392\.0 39\.1 228\.8 147\.9 155\.4 177\.4 154\.4 101\.2 133\.5 138\.1 193\.2 1,469\.0 106
- - _ m _s _o _ - _ _ ___
IL End of Decesiber 1983\.
1k/ lcnludes OAK costs for canal and costs incurred for agricultural research and extension
during iplaenmtatioa period\.
/I Includes Re 51\.3 K, additional cost incurred for lining of about 400 kum of canal
(as 51\.8 Kl Rs 51\.3 K) beyond appraisal target\.
Source: GMt's draft PCR dated July 4, 1964\.
-23-
,Table 5
INDIA
RAJASTHAN CANAL COMMAND AREA DEVELOPMENT PROJECT
Actual and Estimated Disbursement Schedule /a
IBRD FY and Appraisal Revised Actual Disbursement
Semester Soimate Schedule /I Cumulative /£ as Z of Revised
(cumulative)
-- --------(Us$ M)-----
1975 2nd 3\.0
1976 1st 23\.0 20\.4
2nd 32\.0
1977 1st 37\.0 25\.0
2nd 42\.0
1978 1st 48\.0 28\.0
2nd 56\.0 37\.0
1979 1st 62\.0 38\.3
2nd 69\.0 45\.0 44\.2 98
1980 1st 74\.0 50\.0 46\.3 93
2nd 79\.0 55\.0 49\.6 90
1981 1st 82\.0 60\.0 51\.1 85
2nd 83\.0 65\.0 54\.5 84
1982 1st 70\.0 55\.2 79
2nd 75\.0 60\.0 80
1983 1st 80\.0 61\.4 77
2nd 83\.0 69\.4 84
1984 1st 81\.0 98
2nd 83\.0 100
/a Closing date was originally June 30, 1981\. It was extended twice by one
year each to June 30, 1983\.
/b Revision due to formal extension of project\.
/c Credit is fully disbursed by January 6, 1984\.
-24-
Table i
INDIA
EAJASTMAN CANAL COMMAND AREA DEVELOPMENT PROJECT
C,ana2s in Irriasted Area
(Up to 74 km of Rajasthan Canal)
!Karif 1 19 7 5 1976 1977 1978 1979 198
_ _ ___ _ ______---(ha)
- -~~
Paddy 6,655 7,716 7,887 7,633 8,025 8,513 6,881
Cotton 23,090 33,303 32,614 50,600 57,936 71,222 68,616
Pulses 1,524 1,254 359 312 596 928 1,100
Bajra 14,635 13,734 10,363 10,040 8,927 2,770 3,278
Gowar 38,859 54,426 41,897 36,212 39,698 36,327 56,994
Vegetables 529 717 1,142 1,276 1,568 118 100
Sugarcane 2,028 2,127 2,457 2,317 1,848 1,222 1,281
Others 2\.7 1\.911 10\.200 2\.142 \.2,L612 9\.454 9\.391
Sub-total 92,712 118,946 110,361 113,472 125,315 134,754 152,520
Kharif Irrigation
Intensity (S) 24 31 2 3 3 A
Wheat 49,748 67,426 70,164 74,119 80,172 77,562 63,980
Betar j/ 9,571 5,037 2,822 983 1,464 173 189
Gram 66*655 69,273 68,133 61,466 70,172 79,234 87,371
Mustard 32,795 18,996 14,531 31,859 26,975 26,463 27,627
Vegetables 685 923 1,252 1,639 2,117 344 574
Fodder 1,695 1,970 1,833 2,706 2,596 2,573 3,896
Pulses 82 149 248 453 611 351 269
Others 3\.2 2\.4_47\. 4\.691 - 846 1\.629 8\.950 4\.434
Sub-total 164,496 166,221 163,674 174,071 185,736 195,650 188,340
Rabi Irrigation
Intensity (Z) 43 44 AX Ai 49 51 50
Total Irrigation
Intensity (X) 67 75 72 76 82 86 90
m, mmm- mno
jJ A mixed crop of barley and gram\.
Source: Supervision report dated February 12, 1982\.
INDIA
RAJASTHAN CANAL COMMAND AREA DEVELOPMENT PROJECT
Irrigation Intensity for Lined and Unlined Watercourses a/
(Up to 74 km of Rajasthan Canal)
Fully Lined Unlined or Partially Lined Total
Area Irrigation Area Irrigation Area Irrigation
Canal System CCA Irrieated Intensity CCA Irrizated Intensitv CCA Irritated Intensity
(ha) (ha) ()(ha) (ha) (1) (ha) (ha) Z
RMC direct outlets
upto Lakhuwali - - - 13,370 12,342 92 13,370 12,342 92
Ravatsar 12,647 18,247 144 27,013 27,328 101 39,660 45,575 115
Naurangdesar 12,034 18,090 150 16,296 22,197 136 28,330 40,287 142
North Ghaggar Canal - - - 9,820 15,347 156 9,820 15,347 156 N
Suratgarh Branch 6,417 7,320 114 93,013 82,186 88 99,430 89,506 90
Direct channels and
outlets of RMC below
Lakhuvali 5,165 7,028 136 17,325 17,619 102 22,490 24,647 110
Anupgarh Branch 13\.319 15\.571 117 154\.041 97\.585 Q 167\.360 113\.156 68
Total 49,582 66,256 134 330,878 274,604 83 880,460 340,860 90
pj For 1980/81 crop year\.
Source: Supervision Report dated February 12, 1982\.
-26-
Table 8
INDIA
RAJASTHAN CANAL COMMAND AREA DEVELOPMENT PROJECT
Area\. Yield and Production
Future With
At ADDraisal At Present b/ Project
_harif Area Yiel Aea Yiel Prod\. A Yield Prod\.
Cotton 20\.4 0\.8 16\.3 62\.3 1\.2 74\.8 65\.9 1\.4 92\.3
Paddy 0\.9 2\.3 2\.1 0\.5 3\.8 1\.9 4\.9 3\.8 18\.6
Chickpea 23\.3 0\.7 16\.3 34\.7 0\.9 31\.2 34\.2 1\.1 37\.6
Groundnut - - - 0\.3 1\.5 0\.5 7\.3 1\.5 11\.0
Bajra - - - 3\.1 1\.2 3\.7 12\.2 1\.4 17\.1
Fodder 15\.4 30\.0 462\.0 17\.LQ 30\.0 510\.0 12\.2 35\.0 427\.0
Sub-total 59\.1 117\.9 136\.7
Rabi
Wheat 23\.0 1\.4 32\.2 66\.6 2\.8 186\.5 83\.0 2\.8 232\.4
Gram 52\.5 0\.9 47\.3 52\.6 0\.9 47\.3 58\.6 1\.2 70\.3
Mustard 15\.7 0\.4 6\.3 21\.2 1\.0 21\.2 29\.3 1\.0 29\.3
Fodder 4\.8 20\.0 96\.0 11\.6 20\.0 232\.0 9\.8 30\.0 294\.0
Sub-total 96\.0 152\.0 180\.7
Total 155\.1 269\.9 317\.2
Net CCA 244\.0 aJ 244\.0 244\.0
Cropping
Intensity X 64 111 130
Area: '000 ha
Yield: t/ha
Prod\.: 000 ton
a/ Extended from 200,000 ha at appraisal to 244,000 ha\.
/ At the time this PCR is prepared\.
664691W camt cameANA 64v6tWpl6I a\.oac
Lco\.w*c Cost eqd psw0t Stre\.wn
*914 ISIS Isis *911 *197 t979 *960 196* l96t *,983 *94 *969 196 *6"? *986 *989 It"0 193 *2 *293 096 199 19962023
s 6*101 OF 606*C1311U66 #8001C1006 k1lI*0l P62\.*CI
GRSs 96100 61T*01l P60\.1C1 9600 5960 co94000 929\.00 9*4\.00 33900 994 00 594\.00 972\. 00 96300 919 00 S1600 171\.00 518 00 S79\.00 $91900 979 00 916\.00 673\.00 911\.00 917 00 7100 sit\. 00
PRODUCTION COST 1*11600 660401 100160 006t5 co 6SO00 It900 to6000 *81\.00 162 00 161 00 162\.00 *64 00 16400 '69 00 166 00 196\.00 *15\.00 *6e600 *66 00 *6600 ts\. 00 166 00 166\.00 *6600 166\.00
611 06000 hItHour P0040cr S 406\. 00 sogO 02600 3700 SO374 00 318\.00 292 00 363 00 4t*000 41900 41900 413 00 41t 00 412 00 4*2\.00) 411*00 All 00 4*0-00 400\.00 40900 409 00 409 00 40900
6\. VALUE 01 6061CU*1t1168 P806001*6 51l1* P804t0
GROSS yahoO mill 660JE01 966 00 914 00 997 00 SYS300 621 00 100\. 00 ale\. 00, as 00 101100*2MS0 *397co004 040 *9900 TOO000*09 00 7900114 00 to3"\.00 to"4608lost00 loss00*66o000 *661\.00
6600*CtiN OST09 111*11 0904fe1 15000 *62\.00 1610C0 *17 00 19S800 272\.00 "S\.900 266\.00 32*0 of 614500 404 00 438 00 461\.00 491*00 S*3\.00 534\.00 94600 S900 992\.00 999\.00 99900 991-00 99,00
NET v*0110*11tl*PROJECT 406 00 4*200 39 0003600 43*0 4711OR9Sol00 6'00 79S900860o00 953\.00 *026 001089\.00 1*4900 1*9\.022\.06\.00 02620 ts\.o m00 21*\. 00 29601200 01300 *mO 304,00
1C61166161Ta 6060011s \. 3 00 *0\. 00 26\. 00 37 00 99 00 *6900 2*9\.00 349 00 46* 00 936\.00 4*700 618 00 731 00 164\.00 824\.00 697 00 622\.00 601 00 691\. 00 69000 694 00 69900
C\. 0496S76661 LI0S1S
COIAI 4*4*66 t6\.694 32200 60\.68 60\.00 60\.00 29176 20 00 *4 24 26\.66 66 16 \. \. \. \. \. \. \. \.
60006S1*1l0IO 2\.40 4 64 6 96 6 24 9 76 a696 4\.06 A66 4 24 376 \. \. \. \. \.
ROM ~~~~~2 08 644 1 *866 *660 It96 12 24 6 92 2 46 0 96 \. \. \. \. \. \. \. \.
on VA" OEVEtavft*f ~~~~~~~~~~~~~~~~~2\.08 6 72 *6\.22t 24\.00 36\.60 492 529 44 6266 SO0*6 63\.97
1061*11f6E /4 \. 14 60 \. \. \. \. \. \. \. \. \. \. \.
SRI 10161 23\.20 20*\.44 105 04 *00\.04 123\.1 *1064 99 "44 84\. 46 89 04 153\. 26 \. \. \. \. \. \. \. - \.
0 OPERAT10N 66D *1AI61I6**C M0Y
h6C66*16181 9\.16 *99S2 26\.60 26 60 36\.66 24\.40 12\.20 9 76 I *00 41to 41*48 41*48 4*\.46 41 46 446 41 46 61\.46 4t\.4 4t\.46 4*468 4* 46 4* 46
10*61 00915 23\. 20 2*1120 t24\.956 1499 *919\.12 *41*08 6364 96 940g 8g 0 *70 44 4*\.48 41*46 4* 46 4*\.46 41\.461 4*\.48 41*48 41\. 48 41 46 4*\.46 4*40 41\.48 di 48
E\. 61? 060661006781 8ENEFITS
NET *606016978 MIMS*1 -23\.20 -206\.20 -1*49 SS**19\.64 -102 72 -42 08 69 IS 122 32 2902 290\.956 44092 971\.92 8632 S 69n\. 52742\.92t 762\.52 6*9\.92 620\.92 62\.S2 849S2 84692 6922 S? 69 29
*1066*1 66RAT09OF 11*66 * 28\.096S
I sdto co-669t@ o d0* P8190* 10*1 e*'t,1\.tY 6i*0 *44** Of I\.r\.d 10IgolDg1
-28- ANNE 1
Page 1
INDIA
RAJASTHAN CANAL COMMAND AREA DEVELOPMENT PROJECT
Compliance With Credit Conditions j
A\. Conditions fullv comnlied with
Credit Agreement
5\.01(d) GOR to establish RLDC with Complied with before
capitalization, board member- January 1976\.
ship and powers satisfactory
to IDA\.
5\.01(e) GOR to establish CAA with organiza- Complied with before
tion, board membership and powers January 1976\.
satisfactory to IDA\.
Proiect Agreement
2\.09(a)(c) GOR shall, not later than June GOR increased water charges
30, 1976 levy and collect by 15% from March 1, 1979
irrigation charges from farmers and by another about 25%
in the Project area in amounts in March 1982\. These
sufficient to cover the annual increases in water charges
O&M costs and adjust these have been adequate to cover
charges periodically\. O&M costs\.
2\.09(b) GOR to establish a Committee not Coumittee was established
later than December 31, 1977 to in March 1978 and its report
recommend by December 31, 1978 submitted to IDA in Febraury
arrangements for the recovery 1980\.
of project costs\.
4\.02(a)(b) Rajasthan shall cause RLDC to Report covering the period
furnish to IDA certified copies 1974/75 to 1980/81 received on
of audited financial statements November 16, 1981\. Director's
for each year not later than and auditor's reports for the
4 months after the end of each years ended on June 30, 1980
year and auditor's report\. and 1981 have been received\.
Reports for 19bl/82 and 1982/83
are still awaited\.
1/ Usual covenants where compliance is satisfactory are not included\.
-29-
Page 2
B\. Conditious not fully comRlied with
Project Agreement
2\.08(b) GOR shall furnish to IDA by No reports furnished\.
February 15 every year estimates
of O&W costs of project facilities
for the following years\.
4\.04(a)(b) GOR shall send the accounts and Financial statements certified
financial statements of CAA of IDA by AG Rajasthan for the years
not later than 4 months after the 1975-76 to 1978-79 have been
end of each year and a report of received\. AG's audit reports
audit by AG of Rajasthan\. have not been received nor the
certified expenditures state-
ments for the subsequent years\.
ctz
-31- 8u1ftOt
k P, 3oFt,-h
Uw0e Sirqt8ry(F6),4"/XfW -1Sth PzytI9g6\.
tel\.Sol-5936 St \.
Dear MIr,\.Grishewp
r,e Ytkinori Watnanbo, OLsectort Operation
Evaluation Dapartmenlt has souDht ate ciimments vide his
lettur of March 7*9 i96 an the oraf\.t Project\.Completion
Report of the closed Rajasthan Canal C'ommandl Area
Development ProJect (Credit 502-IN4) for consideration in
formulating final concluvions bofore distributincj te
report to the Bnlk's Eecutive Directors
23 'While we generally agroo with conclusions of the
Proj}ect Corfletion Report,, our comments on somne of the para\.
graphs are *liven in the attactiment\. We shall be grateful
ifyou kindly paus on out commients to MNr\. Yo*inori
Wtanafr in t O ataion Ealuation Dpartment of the
Bank by JgSrr
With regard*,
Yours sinCcrbly\.,,
G\. \.P_
Mr\., Richatd G\. Grimshowi\. tz8
Ciealu Agriculture Division, our C en i hi3
The obfld tah, da
21 Jot ttagh, Now U ehtiv r,
Bark by ~ ~ ~ ~ Ada b
With regards,h t
,, \.
- 32 -
Comments on iwjisact co&pliation teport - s ilA_
Rajecthen Canal Command Arse UJevolopment Project
(Credit_Sn2-1M\. -
The PCR agrees with this comment\. (1) Parg \.5ls finalization of chak accounts i8 an intticate process
and has to pO55 through many stages which led to Some delays initially\.
This process has been streamlined ln Pinse l\.l,
The PCR accepts that OR is undertaking (ii) ParA 3-n?s The results of reclemations are being monitorec throuh
periodic soil testing to monitor a fs field extension workers\. Periodic soil tootinqbeirng carried out by
level of salinity\. soil survey unit of Agriculture Research Wing of CAGA\. There have
been no r\.ports of reappearence of salinity CG fer\.
The PCR accepts that GOR is taking (iii) a\.tnt4J i The problem of esnroachment of roads is oonfined to a very
steps to provide alternative sites smell section, about log yards only\. The probles is rmae humen than
to encroachers for their resettlement\. political, Efforts are being made to provi ,e alternatige site\. to
ancroachers for\.ttlur rasettlament\.
The PCR agrees that GOR is taking steps (iv) Part^ 3,11 Although aome of the water supply unite sre *eunu tAbu
to bring about improvement\. Lnapere- blot problem were Identified and swift remdial actioN%,sey'
for example, fil-tor material was rsploed teareever tcusrl defective
as a part of routins maintenance\. Maintenance work Is being carried
out by the PHD)\.
At the time this PCR was prepared (v) Pars3\.141 Accounts and financial statements certified by Accountant
(January 1985), certified copies of CGanrel for the years l9796eq to 19824a3 have long since been turnished
accounts and financed stateneats for byGovornment of Rajasthan, The lat of the raporti\. tor the year
1982/83 were not received\. 1982833, wae sent throuoh the Neo uslhi Office of the Bank on 19\.4\.85\.
See coment on Item (v) above\. (vi) Po& 4\.C As agairst 3\.14\.
The PCR said that the "model" was (vii) EBL\.LA The 'Haryne PMedel was adopted In 1982\.
adopted in 1982\.
(vill) P Lara a-\. It is not correct to conclude that the delay in Phase\.I
rre PCR agrees in principal the was aggravated because of initiation of work an phase-Il of the project\.
advantages of overlapping the aucceesive On the contrary, we feel that ovwwlp in the successive stege of
stages as comented by 002\. Novever, uch projects Is desirablo from the point of view of optimun uttiliatio
PCR does not share the view that the of available marpowmr and materiasa as also that of Continuity\. asaed
delay in completion of the Stage I wae on these consideration, Govt\. of Rajasthen deliberately utdortook
attributable to only scarcity of materials\. some preparatory work on Phoas-Il in the cloiang stageso'ot Phase \. Th\.
delay in corpletlon of the letter Is attributable to sorcity, of materials
and not to uok on Phase-Il\.
/ *2* 41°lt0iste s i gi 'i t/ i M A C H A L
Development Project t +0_ ,_
F,U _ :-~'
THIS PCR MAP IS SASED ON ISRO 108M, \.- rb5 1 - ' \.
~~~~~~~~~~~~~~~~~T A
THSr P R MA J BASE ON IBO783
APRI 197 THEINSE HAS BEE REOVD 149 *2 4 *>9979R 0I
_~~~~~~_
G Uw )J) i)! U :t '/' '
St e X t X '-- '~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'
INCANAL - d441M \ A t R A J AX TF W A N \ t sk N \~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1
B\.L~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 | APPROVAL |
P160014 | COMBINED PROJECT INFORMATION DOCUMENTS / INTEGRATED
SAFEGUARDS DATA SHEET (PID/ISDS)
ADDITIONAL FINANCING
Report No\.: PIDISDSA19748
Date Prepared/Updated: 09-Oct-2016
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Bangladesh Project ID: P160014
Parent P098151
Project ID
(if any):
Project Name: Clean Air and Sustainable Environment Project - Additional Financing
(P160014)
Parent Project Clean Air and Sustainable Environment Project (P098151)
Name:
Region: SOUTH ASIA
Estimated 10-Oct-2016 Estimated 09-Jan-2017
Appraisal Date: Board Date:
Practice Area Environment & Natural Lending Investment Project Financing
(Lead): Resources Instrument:
Borrower(s): Economic Relations Division, Ministry of Finance
Implementing DEPARTMENT OF ENVIRONMENT
Agency:
Financing (in USD Million)
Financing Source Amount
BORROWER/RECIPIENT 1\.62
International Development Association (IDA) 35\.00
Financing Gap 0\.00
Total Project Cost 36\.62
Environmental B - Partial Assessment
Category:
Appraisal The review did authorize the team to appraise and negotiate
Review
Decision (from
Decision Note):
Other Decision:
Is this a No
Repeater
project?
Page 1 of 13
B\. Introduction and Context
Country Context
Bangladesh has achieved steady economic growth of about 6 percent annually since late nineties
with relatively low inflation, fairly stable domestic debt, interest, and exchange rates\. Population
growth rate has declined from 2\.5 percent in the 1980s to 1\.7 percent in 1990-2010\. While the
overall population growth rate has declined, the urban population has been growing quite rapidly\.
The average decadal urban population growth is 2\.92%; while for Dhaka it is around 5%\. More
than one-third of Bangladesh's population is urban and this share is expected to grow substantially
given the growth rate\. Bangladesh's Gross Domestic Product (GDP) is estimated at US$130
billion in 2013 with a share of industry at 17\.3% (US$22 billion)\. The country aims to achieve
middle income status by 2021 and substantially reduce poverty, which would need even higher
growth rate\. Even with the current rate of growth, the GDP is estimated to be US$278 billion in
2021 with a share of industry at 28% (US$78 billion)\. Most of the income growth is likely to
come from the growth of Small and Medium Enterprises (SMEs)\. These growths are expected to
be faster in urban areas and the major cities are expected to grow even faster than the other urban
areas\.
At the current growth trends, the cost of environmental pollution is estimated at 4\.3% of the GDP
out of which 23% is caused by urban air pollution\. It is estimated that a reduction of urban air
pollution by 20% to 80% could save between 1200 to 3500 lives annually and up to US$230
million cases of respiratory diseases could be avoided every year\. In economic terms, this is
estimated to be equivalent to US$170 to US$500 million in savings per year due to reduced health
care costs and increased productivity\. In the absence of planned approach to pollution abatement
and management, the present environmental condition in Bangladesh is likely to deteriorate even
further\. Pollution burden is also expected to disproportionately impact the poor\. Systematic
planning for abatement of air pollution for the next 5-10 years especially in and around the major
urban centers is thus essential to minimize health impacts and also achieve targeted economic
growth of Bangladesh\.
Sectoral and institutional Context
The main objectives relating to environment, climate change, and disaster management as
identified by the 7th Five Year Plan of Government of Bangladesh (GoB) are: (i) ensure
appropriate environment management systems for sustainable development; (ii) enhance
enforcement for pollution control; and (iii) enhance, preserve, conservation of natural resources\.
These objectives are to be pursued along with attainment of better environmental governance\.
Among the above overall objectives of 7th Five Year Plan, air quality management has been
identified as one of the high priority issue by GoB and specific actions have been planned to
improve air quality in Dhaka and other large cities\. In addition, enactment of Clean Air Act has
also been identified as one of the priority policy initiative by the Government for better
management of air quality in Bangladesh\.
GoB also is in the process of major restructuring/expansion of its capacity to effectively monitor
and enforce environmental regulations, in order to achieve the 7th Five Year Plan objectives of
improving overall environmental management and reducing the pollution levels in the country\.
The main constraints in this endeavor are, availability of resources and technical capacity of
various executing and regulatory agencies\. Financial and capacity building support from
development partners, hence is needed to address these constraints\.
Page 2 of 13
Dhaka is known as one of the most congested cities in the world, where the cost of congestion is
estimated at US$3\.8 billion a year\. The road congestion can be attributed to various factors, such
as inadequate road network, poor public transport services, high mode mix (non-motorized and
motorized traffic together), poor road manners and driver discipline, non-transport occupancy of
road space, and ineffective traffic control\. In terms of modal mix, about 41 percent of people walk
or use bicycle, about 23 percent people opt for public transport and about 24 percent use cycle
rickshaws\. Investments to improve the situation have been made through the development of the
first Metro line with support from Japan International Co-operation Agency (JICA), Bus Rapid
Transit (BRT) line with support from Asian Development Bank (ADB), and several flyover
projects by GoB\.
C\. Proposed Development Objective(s)
Original Project Development Objective(s) - Parent
To improve air quality and safe mobility in Dhaka through the implementation of demonstration
initiatives in urban transport and brick making
Key Results
All four PDO indicators of the project are on track to achieve the targets\. While, the PDO
indicators on pedestrians using Foot Over Bridges (FOBs) and side-walks have achieved the End
of Project (EOP) target, the indicators on brick kilns and vehicular traffic flow are on track to
achieve the EOP targets\. As part of the AF, a new PDO indicator to monitor the impact of
operationalization of traffic signals has been included\. In addition, end targets for the indicator on
pedestrian usage is proposed to be revised to monitor the additional locations supported through
AF\.
Three additional intermediate indicators to capture the outputs due to piloting the non-fired brick
technologies, formulation of Clear Air Act and piloting measures for better mobility of disabled
are being included\. The end target of air quality monitoring stations and new sidewalks is also
being increased to capture the additional activities proposed through AF\.
D\. Project Description
The activities under the AF are essentially a continuation of the parent project, which are
primarily aimed at sustaining the initiatives supported in the parent project and enhancing some of
the results\. The activities proposed through AF are summarized below\.
Component 1: Environment (US$17\.00 million)
a) Infrastructure Development to meet growing requirements of environmental compliance and
monitoring (US$11\.30 million)
i) Expansion of the continuous air quality monitoring network and portable low cost monitors for
wider monitoring of ambient air quality: A network of air quality monitoring stations (11 stations
across eight major cities) is now fully functional\. However, there are about 31 more cities to be
covered and the CAMS density of coverage remains minimal\. Installation of additional five
standard CAMS and 20 low cost CAMS are planned through AF\.
ii) Establishment of central air quality laboratory with modern facilities: Existing laboratory
Page 3 of 13
requires upgrade\. The central laboratory capacity will be strengthened through modern equipment
and facilities\.
iii) Introduction of mobile air quality lab at divisional offices: In addition to the modernization of
central air quality laboratory, eight divisional/regional laboratories of DoE will be strengthened
through purchase of mobile air quality vans equipped with stack monitoring instruments (for
monitoring suspended particulate matter and gaseous emissions)\.
iv) Completion of DOE's new office building: To help improve DoE's management capacity to
deliver better results, original financing supported construction of seven stories of the new office
building for DoE, using green building concepts\. Construction of remaining four floors including
an international conference center, and construction of wastewater treatment plant will be
financed through AF\.
b) Policy development and strengthening institutional capacity for environmental management
(US$1\.4 million)
i) Development of Clean Air Act: In order to strengthen the regulatory regime for air quality
management, enactment of Clean Air Act has been envisaged by GoB in the 7th Five Year Plan
(2016-20)\. AF will help draft this act through a wider consultative process and incorporate best
practices based on a review of international experience\.
ii) Enforcement of the new Brick Manufacturing Law: Dissemination of three cleaner designs for
brick kilns piloted through parent project will be continued\. A database for all the brick kilns in
the country will be prepared for better environmental compliance monitoring and regulatory
control\. Additional mobile emission monitoring equipment will be purchased to strengthen
enforcement\.
iii) Establishment of mechanisms for institutional coordination for urban air quality management:
Based on the collaboration across various stake holder agencies (such as MoEF, DoE, MoRTB
and DSCC/DNCC, DMP) demonstrated in the parent project, the AF will support establishment
of an Institutional Coordination Mechanism for managing urban air quality issues to manage new
regulations/rules\.
iv) Capacity Building: The Air Quality Wing (AQW) has been established in the DOE as a focal
point for air quality management related activities in the DOE\. The AF will continue to support a
capacity building program to address the capacity gaps in institutional knowledge through; (i)
consultancy support; (ii) training; (iii) conference and study tour; and (iv) longer term academic
collaboration\.
c) Knowledge Management (US$2\.4 million)
i) Pilot of non-fire brick (alternative building material) manufacturing technologies: This is an
extension of the earlier brick initiative in the project for emission and energy use reduction\. Two
non-fired brick technologies will be piloted under AF\.
ii) Communication campaign: AF will continue to promote communication campaign to highlight
the impact of local and global emissions from key transport and industrial sources, and the co-
Page 4 of 13
benefits of addressing those issues\.
About US$ 1\.90 has also been allocated for project management activities of environment
component\.
Component 2: Transport (US$18\.00 million)
a) Improvement of signal and intersection infrastructure (US$13\.8 million)
i) Signal infrastructure: Deteriorated old signal infrastructure at 62 intersections will be either
repaired or removed to avoid frequent breakdowns of newly installed traffic signal system\. A
maintenance contractor will be appointed for all 92 intersections\. Equipment and facility for
effective maintenance will also be procured\.
ii) Traffic signs, marking, lane separators: The signalized intersections will have traffic signs,
road markings and lane separators so that the vehicles can be better informed on the traffic rules
and road direction information, and be safely guided as they approach the intersections\.
iii) Sidewalk improvement and bus stops: It is proposed to have about 18km of sidewalk
improvement along with drainage and repaving where necessary so that pedestrians can enjoy a
safer walking environment while approaching intersections and FOBs\. About 20 bus stops will
also be constructed or renovated, aiming to prevent unorderly stops of buses near and within
intersections\.
b) Capacity building on traffic management activities (US$1\.00 million)
i) Traffic management equipment for DMP: To fill the gap in the capacity of DMP, traffic
management equipment will be provided, including hand-held transceivers, hand-held devices
that issue tickets, Variable Message Signs (VMS), portable gates, portable speaker systems, and
other miscellaneous items\.
ii) Capacity building and training: Domestic and international training opportunities will be given
to key staff at relevant institutions to help build staff capacity\.
c) Traffic studies, awareness campaign and Design, Supervision and monitoring (US$1\.60
million)
i) Transport and institutional development study: Technical and institutional solution options to
improve the traffic management of Dhaka will be proposed\.
ii) Awareness campaign: An awareness campaign will be conducted targeted for clean and safe
mobility in Dhaka\.
iii) Design, Supervision and Monitoring (DSM) consultant: A civil engineering firm will be
mobilized to support the PIU in designing the civil work contracts, supervising construction
activities, and monitoring the progress and impact of the project
d) Piloting mobility improvement for disabled (US$1\.20 million)
Page 5 of 13
i) Study to identify mobility improvement needs: Challenges and difficulties of the mobility of the
disabled people are studied, and an area for pilot improvement initiatives will be identified\.
ii) Pilot improvement works: Following the recommendations of the study, pilot improvement
work, such as on sidewalks, ramps, zebra crossings, hand rails, tactile tiles, street lightings, road
markings, and signs, will be implemented\.
About US$0\.40 million and saving from parent project will be utilized for project management
expenses of AF activities\.
Component Name
Environment
Comments (optional)
The activities to be financed through AF, are essentially a continuation of activities of parent
project which will enhance the geographical coverage of the Continuous Air Quality Monitoring
Stations (CAMS) and address the financing gap for the completion of on-going activities such as
DoE building\. The AF will also support further capacity building activities and also the initiatives
towards the development of non-fired bricks, aimed at reducing the pressure on the use of top soil
for clay fired bricks\.
Component Name
Transport
Comments (optional)
AF will provides additional resources for the (a) improvement of signal and intersection
infrastructure, (b) capacity building, particularly of DMPâ¢â¨ s traffic management activities, and
(c) traffic study and awareness campaigns\. The AF will also support initiatives to analyze the
measures required to address the mobility needs of the people with disabilities and
implementation of a small scale demonstration pilot\.
E\. Project location and salient physical characteristics relevant to the safeguard
analysis (if known)
Similar to parent project, the activities under transport component of AF will continue to focus on
Dhaka City and support construction of additional sidewalks and improvement of signals\. In case
of environment component, the activities will involve mainly the construction of remaining four
floors of 13 storied DoE building and establishing continuous air monitoring station in additional
five locations in the country\. The construction for DoE building and five new air monitoring
stations will be carried out in urban areas and in government owned lands\. Considering the urban
character of these locations and lands being owned by the government, no environmental / social
sensitivities are expected at these locations\. Appropriate measures to avoid construction phase
impacts during the execution of these activities, however would need to be implemented as per
the ESMF applicable for the project\.
F\. Environmental and Social Safeguards Specialists
Dr\. M\. Khaliquzzaman (GSU06)
Iqbal Ahmed (GEN06)
Page 6 of 13
Sabah Moyeen (GSU06)
II\. Implementation
Institutional and Implementation Arrangements
The overall institutional arrangements for the AF will remain same as that of the parent project with
Project Implementation Units (PIU) at DoE and DSCC each led by a Project Director (PD) being
responsible for the implementation of environment and transport components respectively\. PIU at
DTCA will be implementing only the activities under parent CASE Project, as no activities are
envisaged for this agency under the AF\.
MOEF will continue to be responsible for the overall coordination of the project and a Project
Coordination Unit (PCU) headed by a Joint Secretary, will be responsible for project coordination
and monitoring\. Overall project oversight will be ensured by a Project Steering Committee (PSC)\.
The PSC will be chaired by the Secretary of MOEF and include members of all implementing
agencies as well as relevant stakeholders\. The implementing agencies will provide reports on overall
progress, including safeguards, procurement and financial management, to the PCU on a regular
basis\.
III\.Safeguard Policies that might apply
Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment Yes Similar to the parent project, the associated
OP/BP 4\.01 safeguards risks for the additional financing activities
are low and overall the project is likely to have a
positive impact\.
As part of the preparation of AF activities, a
comprehensive review of safeguard issues and
instruments (ESMF including Resettlement Policy
Framework) of the parent project was carried out to
(i) identify any significant outstanding issues; (ii)
compile lessons learned during in implementation;
(iii) determine whether proposed AF activities
warrant change in project categorization or triggering
new policies and (iv) determine whether any new
requirements or updates are needed to comply with
safeguard policies\. The review concluded that, the
safeguard risks for the AF are low and that the same
safeguard category can be retained\. The
implementation of ESMF and overall safeguard
performance of the parent project has been
satisfactory\.
Based on the above review and considering the fact
that the parent project is classified as 'Category B' in
accordance with OP 4\.01, same category is proposed
to be retained for additional financing activities also\.
Page 7 of 13
The project activities also, does not entail any new
environmental safeguard policies\. Similarly,
considering the fact that the activities proposed
through AF are of similar nature to that of parent
project (with no major construction activities and no
land acquisition), the ESMF of the parent project will
be followed for the AF operation also\.
Natural Habitats OP/BP 4\.04 No There are no natural habitats at or surrounding of the
project locations\. It is highly unlikely that any
natural habitat formed largely by native plants and
animal species will be affected or modified due to
the project activities\. Hence, OP 4\.04 is not triggered\.
Forests OP/BP 4\.36 No The project is expected to have no impacts on the
management, protection, or utilization of natural
forests or plantations\. Hence, the policy has not been
triggered\.
Pest Management OP 4\.09 No The project is not expected to finance any synthetic
chemical pesticides, activities that encourage their
use and hence the policy has not been triggered\.
Physical Cultural Resources No No impact is anticipated on landscape with
OP/BP 4\.11 archaeological, paleontological, historical,
architectural, religious, aesthetic, or other cultural
significance\. OP 4\.11 hence has not been triggered\.
Indigenous Peoples OP/BP No No tribal/indigenous people will be affected due to
4\.10 the project activities in the project influence area\. OP
4\.10, hence has not been triggered\.
Involuntary Resettlement OP/ Yes There is no requirement for land acquisition\. The
BP 4\.12 construction for five new stations and the low
emission kilns will be carried out on government
owned land\. Temporary displacement of people and/
or minor adverse livelihood impacts is anticipated
due to the project activities, especially those related
to improving sidewalks and pavements\. The parent
project has a full-fledged RPF (titled "Guidelines for
Using Private & Public Lands and Impact
Mitigation") that includes principles, policies and
guidelines to identify social safeguard impacts, and
prepare and implement impact mitigation plans\. The
RPF was reviewed and found that the framework,
provides adequate coverage for all activities under
the AF\. The original RPF prepared as part of ESMF,
will be relevant and will be applied for AF operation\.
Safety of Dams OP/BP 4\.37 No The project will not finance any dams, nor project
activities depend on any existing dams\. Hence OP
4\.37 has not been triggered\.
Projects on International No The project activities will not take place along
Page 8 of 13
Waterways OP/BP 7\.50 international waterways which are shared with
riparian countries\. Hence, OP 7\.50 will not be
applicable for the project\.
Projects in Disputed Areas OP/ No The project activities are not located in the disputed
BP 7\.60 areas or in their influence are\. OP 7\.60 will not be
applicable for the project\.
IV\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify
and describe any potential large scale, significant and/or irreversible impacts:
The overall compliance of safeguards management under the parent project has generally been
satisfactory\. The social and environmental issues arose mainly during construction phase of sub-
project activities and included issues such as generation of dust, construction waste, workers
health and safety, traffic congestion, etc\. Implementation review by the task team, progress reports
by the implementing agencies and the review of safeguard management aspects during the
preparation of AF activities, indicate that such issues were well managed\. The activities proposed
through Additional Financing are essentially a continuation of the parent project and include
expansion of the existing air quality monitoring network, promoting cleaner technology in the
brick industries, completing the construction of green building of DOE, improving traffic signals
and sidewalks\. As in the case of parent project, some of the physical interventions could have
construction related environmental issues that will impact the workers as well as the local traffic
and the neighborhood\. These impacts are minor, temporary and localized in nature and can be
mitigated through appropriate management measures\. Other than these, no potential large scale,
significant and/or irreversible impacts are anticipated due to the project\.
As to social safeguards, the land-based physical works proposed in one of the transport
subcomponents on the improvement of signal and intersection infrastructure, are expected to
trigger the Bank's OP 4\.12 on Involuntary Resettlement\. However, no activities involving land
acquisition are expected in the sub-projects\. All five new stations and the low emission kilns will
be built on government owned land\. Construction for road junctions and sidewalks etc\. may
involve displacement of public land users\. The magnitude of the nature and scale of adverse
impacts will not be known until specific subproject locations are selected and designed, but as
demonstrated by the parent project, the impacts are expected to be temporary and minor in nature\.
Regarding foot-over-bridge (FOB) construction, a local NGO raised the need for a study on the
needs and priorities of disabled users of the roads, zebra-crossings, transport services and existing
transport infrastructure\. A joint site visit with the NGO and a group of people with disabilities was
conducted where the PIU and task team have learned the unserved needs and the importance of
addressing the mobility of disabled people\. Accordingly a sample based study will be undertaken
through AF to identify measures to address the mobility needs of disabled\. Based on the findings
of the study, requisite measures will be planned and implemented in consultation with disabled
target users and beneficiaries (and/or groups representing them)\.
A gender action plan will be prepared based on a sample study of women users of the current
available facilities and services to understand and incorporate their needs and priorities, as best
possible, into the project design\. The improvements sought in brick making will have positive
gender impacts especially from a health perspective, as there are large number of women engaged
Page 9 of 13
in this sector\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities
in the project area:
The project will have positive environmental benefits, as its objective is to abate air pollution,
reduce greenhouse gas emissions and bring about energy savings through interventions in the key
polluting sectors - urban transport and brick making\. The initiatives to improve the mobility of
people with disability to be piloted in a selected area will have long term benefits if this concept
can be mainstreamed\. The project will have positive gender outcomes as well if the transport
needs and challenges of the large chunk of female users can be understood and addressed\.
Improvements in brick making technology and reduction in pollution will benefit women involved
in the sector\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts\.
Since, sub-project locations are not known at this stage, no alternative analysis was carried out\.
However, alternatives will be analyzed during the finalization of sub-project locations such as
side-walks, air quality monitoring locations, etc\. following the principles laid out in the ESMF for
the project\. Based on this analysis sub-project locations and designs will be finalized incorporating
appropriate mitigation measures\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an
assessment of borrower capacity to plan and implement the measures described\.
Through the implementation of the parent project, the implementing agencies have developed
institutional capacities to handle the safeguards issues competently\. The institutional capacity
developed will be retained during the additional financing phase of the project\. The activities in
the additional financing phase constitute only a subset of activities in the parent project\. A
comprehensive review of safeguard instruments (ESMF including Resettlement Policy
Framework) of the parent project was carried during the preparation of AF activities to (i) identify
any significant outstanding issues; (ii) compile lessons learned during in implementation; (iii)
determine whether proposed AF activities warrant change in project categorization or triggering
new policies and (iv) determine whether any new requirements or updates are needed to comply
with safeguard policies\. The review concluded that, the safeguard risks for the AF are low and that
the same safeguard category can be retained\. The implementation of ESMF and overall safeguard
performance of the parent project has also been satisfactory\. In view of the above and also
considering the fact that the activities proposed through AF are of similar nature to that of parent
project (with no major construction activities and no land acquisition), the ESMF of the parent
project will be relevant for the AF operation also\.
Further, the parent project and the AF includes only one moderately large subproject which is the
DOE building construction\. The Environmental and Social Assessment (ESA) prepared for DoE
building under the parent project has considered all the floors and infrastructure (including
wastewater treatment plant envisaged in the original plan\. In view of the above, no separate ESA
would be required for the additional floors proposed to be financed through AF\. However, DoE
will review the Environmental Management Plan (EMP), after designs are finalized for these
additional floors and update the EMP, if needed\. Similarly, safeguard management plans for the
new CAMS, sidewalks, signal and intersection improvement works shall also be updated based on
the designs and site specific conditions\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure
on safeguard policies, with an emphasis on potentially affected people\.
Page 10 of 13
In addition to various project implementation agencies and ministries (Ministry of Environment
and Forests; Department of Environment; Dhaka South City Corporation; Dhaka North City
Corporation; Ministry of Local Government, Rural Development and Co-operatives; Dhaka
Metropolitan Police; Ministry of Home Affairs; Dhaka Transport Co-ordination Authority; and
Ministry of Road Transport and Bridges), the key stakeholders for the project includes the brick
manufactures, employees and workers in the brick industry, road users / commuters in Dhaka City
and the population of Dhaka City in general\.
The ESMF developed for the project, which will also be followed for the Additional Financing
activities, was developed through series of consultations and was disclosed locally and also at the
info shop\. The ESMF also includes measures for grievance redress mechanism for all the
stakeholders\.
B\. Disclosure Requirements
Environmental Assessment/Audit/Management Plan/Other
Date of receipt by the Bank 18-Jun-2008
Date of submission to InfoShop 15-Jul-2008
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
"In country" Disclosure
Bangladesh 18-Jun-2008
Comments: Disclosed during the appraisal of the parent project
Resettlement Action Plan/Framework/Policy Process
Date of receipt by the Bank 18-Jun-2008
Date of submission to InfoShop 15-Jul-2008
"In country" Disclosure
Bangladesh 18-Sep-2008
Comments: Disclosed during the appraisal of the parent project
If the project triggers the Pest Management and/or Physical Cultural Resources policies, the
respective issues are to be addressed and disclosed as part of the Environmental Assessment/
Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please explain why:
C\. Compliance Monitoring Indicators at the Corporate Level
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) Yes [ ] No [ ] NA [ ]
report?
If yes, then did the Regional Environment Unit or Practice Yes [ ] No [ ] NA [ ]
Manager (PM) review and approve the EA report?
Page 11 of 13
Are the cost and the accountabilities for the EMP incorporated Yes [ ] No [ ] NA [ ]
in the credit/loan?
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy framework/ Yes [ ] No [ ] NA [ ]
process framework (as appropriate) been prepared?
If yes, then did the Regional unit responsible for safeguards or Yes [ ] No [ ] NA [ ]
Practice Manager review the plan?
Is physical displacement/relocation expected? Yes [ ] No [ ] TBD [ ]
Provided estimated number of people to be affected
Is economic displacement expected? (loss of assets or access to Yes [ ] No [ ] TBD [ ]
assets that leads to loss of income sources or other means of
livelihoods)
Provided estimated number of people to be affected
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ]
World Bank's Infoshop?
Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ]
place in a form and language that are understandable and
accessible to project-affected groups and local NGOs?
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ]
responsibilities been prepared for the implementation of
measures related to safeguard policies?
Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ]
in the project cost?
Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ]
include the monitoring of safeguard impacts and measures
related to safeguard policies?
Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ]
with the borrower and the same been adequately reflected in
the project legal documents?
V\. Contact point
World Bank
Contact: Harinath Sesha Appalarajugari
Title: Senior Environmental Specialis
Contact: Lia Carol Sieghart
Title: Program Leader
Contact: Shigeyuki Sakaki
Title: Sr Transport\. Spec\.
Borrower/Client/Recipient
Page 12 of 13
Name: Economic Relations Division, Ministry of Finance
Contact: Guillermo Galvan
Title: Director, Territorial Development
Email: ggalvan@presidencia\.gob\.sv
Implementing Agencies
Name: DEPARTMENT OF ENVIRONMENT
Contact: Guillermo Galvan
Title: Director, Territorial Development
Email: ggalvan@presidencia\.gob\.sv
VI\. For more information contact:
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
VII\. Approval
Task Team Leader(s): Name: Harinath Sesha Appalarajugari,Lia Carol Sieghart,Shigeyuki
Sakaki
Approved By
Safeguards Advisor: Name: Maged Mahmoud Hamed (SA) Date: 14-Oct-2016
Practice Manager/ Name: Abdelaziz Lagnaoui (PMGR) Date: 14-Oct-2016
Manager:
Country Director: Name: Rajashree S\. Paralkar (CD) Date: 19-Oct-2016
Page 13 of 13 | APPROVAL |
P005273 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 15714
PERFORMANCE AUDIT REPORT
JORDAN
SECOND URBAN DEVELOPMENT PROJECT
(LOAN 2587-JO)
June 10, 1996
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Currency Equivalents
Currency Init = Jorditi Dinar (ID)
1985 US$1\.00 JD 0\.394
1986 US$1\.00 JD 0\.350
1987 US$1\.00 JD 0\.339
1988 US$1\.00 JD 0\.372
1989 US$1\.00 JD 0\.570
1990 US$1\.00 JD 0\.664
1991 US$1\.00 JD 0\.681
1992 t is$ 1\.00 JD 0\.680
January 1993 US$1\.00 JD 0\.689
Abbreviations and Acronyms
ECA/MENA [urope and Central Asia/Middle East and North Africa Regions
ERR Economic Rate of Return
GDP Gross Domestic Product
GOJ (lovernment of Jordan
HB Housing Bank
IC Former Housing Corporation
HUDC Housing and Urban Development Corporation (Formerly UDD and HC)
IBRD international Bank for Reconstruction and Development (World Bank)
LIHRF Low Income Housing Revolving Fund
MMRAE Ministry of Municipalities and Rural Affairs and Environment
MPWH Ministry of Public Works and Housing
NGO Non-Governmental Organization
PA Project Aoreement
PCR Project Completion Report
SAR Slaff Appraisal Report
UDD Former Urban Development Department
UDPI First Urban Development Project
UNDP ( Inited Nations Development Programme
UNRWA United Nations Relief and Works Administration for Palestinian
Refugees
Fiscal Year
Government: January I - December 3 1
FOR OFFICIAL USE ONLY
The World Bank
Washington, D\.C\. 20433
U S\.A
Office of the Director-General
Operations Evaluation
June 10, 1996
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Performance Audit Report on Jordan
Second Urban Development Project (Loan 2587-JO)
Attached is the Performance Audit Report (PAR) on the Jordan Second Urban Development
Project (Loan 2587-JO, approved in FY85) prepared by the Operations Evaluation Department\.
This project was the second Bank-financed urban development project in Amman, and it
followed loans for seven urban water and sewerage projects, and loans for low-income housing, urban
transport, solid waste management, and municipal technical assistance\. Project objectives were to
improve shelter for low-income people, encourage sound urban development patterns, and strengthen
institutional capacity\. The project reduced the squatter population through the provision of affordable
housing and helped to ensure that squatting on government lands in Amman did not expand\.
The project's impact on the urban development of Amman has been highly positive\. It
developed new neighborhoods where commercial property and the more desirable housing sites on main
streets were sold at market prices to cross-subsidize lower-cost plots on walk-ways for low-income
beneficiaries, and thus, created mixed income communities and provided them with the full range of
infrastructure, public buildings, and urban and social services which they would require\. Project sites
exhibit extraordinary attention to construction details and adherence to design standards\. The schools,
health centers, and other community facilities provide exemplary levels of service\.
The Audit supports the conclusions of the Project Completion Report (PCR)\. The performance
of the fund maintained to limit credit risks should have been revisited during implementation and
necessary modifications made\.
The Audit also points out project management lessons learned\. Staffing community facilities
with project beneficiaries lowered their operating costs and led to services better targeted to
neighborhood needs\. Construction supervision arrangements recognized that maintaining neighborhood
design standards required a long-term commitment, and the use of on-site offices by construction
supervisors was very successful\. Loan disbursement following important construction phases increased
the beneficiaries' financial stake in design compliance and led to voluntary additional consultations with
supervisors\.
The Audit rates the project outcome as satisfactory, sustainability as likely, and institutional
development as moderate\. These ratings coincide with those in the PCR except for institutional
development which was upgraded because of the development of important community organizations,
the good working relationship which evolved between the Housing Bank and the Housing and Urban
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Development Corporation, and because the latter, which was created out of the merger of two urban
development institutions, is working well\. The Bank's performance is rated as satisfactory\.
Attachment
FOR OFFICIAL USE ONLY
Contents
Preface 3\.
Basic Data Sheet\. \.5
Evaluation Summary \. 7
1\. Project Description \.11
Country and Sector Context\. \. 11
Bank Involvement\. 12
Project Design \. 12
2\. Project Implementation and Results\. 15
PCR Findings\.I5
Compliance with Building Requirements\. \. \. 15
Problem Sites \. 16
Institutional Development and Poverty Alleviation \. \. 17
Borrower Performance\. \. \.1 8
3\. Points of Special Interest \. \. 19
Economically Mixed Neighborhoods\.19
Excellent Cost Recovery\. \. \. 19
Priority Given to Housing in the Middle East\.20
4\. Conclusions \. 23
Ratings \. 23
Lessons Learned \. \.23
Annex
Borrower Comments\. 25
This report was prepared by Mrs\. Alcira Kreimer (Task Manager) and Mr\. Ronald Parker
(Consultant) who audited the project in January - February of 1996\. Ms\. Stacy Ward provided
administrative support\. The report was issued by the Infrastructure and Energy Division (Yves
Albouy\. Chief) of the Operations Evaluation Department (Francisco Aguirre-Sacasa, Director)\.
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.

3
Preface
This is a Performance Audit Report (PAR) on the Jordan Second Urban Development
Project, involving a World Bank loan amounting to US$28\.0 million equivalent to the
Government of Jordan\. The loan was approved in June 1985; US$16\.7 million was disbursed by
June 1993; the actual total project cost was US$61 million\. The loan was closed on June 30,
1993, following three cancellations and a two extensions\.
The PAR was prepared by the Operations Evaluation Department (OED)\. It is based on
the President's Report, Staff Appraisal Report, sector and economic reports, special studies,
Country Strategy and Policy Framework Papers, the loan documents, study of the project files,
and discussions with Bank staff\. A Project Completion Report (PCR\. Report No\. 13288\. dated
August 12, 1994) was prepared by the Middle East and North Africa Region\. An OED mission
visited Jordan in January 1996 and discussed the effectiveness of the Bank's assistance with
Government officials, management of private, state and local enterprises, United Nations
agencies, bilateral donors, beneficiaries, and stakeholders\. Their kind cooperation and
invaluable assistance in the preparation of this report is gratefully acknowledged\.
The PCR provides a satisfactory account of the Project experience with regard to design,
implementation, the role of the Bank, achievements and sustainability\. The PAR discusses
briefly the initial conditions in the municipal sector, assesses the quality of the design of the
intervention approach, including its consistency with the problems identified: considers the
effectiveness of the Bank and Borrower dialogue; reflects on the Borrower's ownership,
consensus and commitment: and determines the effectiveness of the various project
subcomponents\.
Copies of the draft PAR were sent to the relevant Government officials and agencies
concerned for their review and comments\. Comments received have been attached as an annex
to the Report\.

5
Basic Data Sheet
Second Urban Development Project (Loan 2587-JO)
Loan Position (Amount in US$ million)
Loan No\. Original Disbursed Canceled Outstanding
2587-JO 28\.0 16\.72 11\.28 -
Cumulative Estimated and Actual Disbursements
FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93
Appraisal Estimate 2\.00 10\.30 21\.60 27\.10 28\.00
Actual (US$M) 0\.53 2\.30 8\.34 10\.76 12\.96 14\.98 16\.72 16\.72
Actual as % of Appraisal 26\.5 22\.3 38\.6 39 7 46\.2 53\.5 59\.7 59\.7
Date of Final Disbursement: June 1993
Project Dates
Original Actual
Identification 03/82 03/82
Preparation 10/82 06/84
Pre-Appraisal 12/82 11/84
Appraisal 12/84 12/84
Negotiations 05/85 05/85
Board Approval 06/85 06/85
Signing 07/85
Effectiveness 11/85 06/86
Loan Closing 06/91 06/93
6
Staff Inputs (Staff Weeks)
FY82 - FY84 FYS5 FYS6 - FY93 FY94
Preappraisal 30\.2 13\.7
Appraisal - 37\.0-
Negotiations - 4\.8 -
Supervision - - 86\.2 -
PCR - - 7\.0
Mission Data
Mond/ No\. of No\. of
Year iteeks persons
Preparation 06/84 6 3
Appraisal 02/84 14 4
Supervision 1 05/87 3 1
Supervision II 11/87 3 3
Supervision III 05/87 6 2
Supervision IV 11/87 21
Supervision V 05/88 3 2
Supervision VI 10/88 10 3
Supervision VII 05/89 9 3
Supervision VII 03/90 12 2
Supervision IX 12/90 1
Supervision X 06/91 9 3
Supervision XI 12/91 5 2
Supervision XII 06/92 5 2
Supervision XIII 05/93 15 5
Supervision XIV 06/93 6 2
Other Project Data
Borrower: The Government of Jordan
7
Evaluation Summary
Introduction
I\. This Audit evaluates the impact of the Second Urban Development Project (Loan 2587-
JO) implemented in Jordan since !986 through detailed observations in Amman and Zarqa\. At
the time of the loan, the Bank had made loans for seven urban water and sewerage projects, a
low-income housing project, a loan to support the Cities and Villages Development Bank, a loan
for the construction of a motorway between Amman and Zarqa, and a Municipal Development
loan to ameliorate traffic problems, upgrade solid waste management, and to strengthen the
planning and management capacity of municipalities\. The circumstances of urban
demographics and municipal development which led to the genesis of this housing endeavor are
detailed in paras\. 1\.1-1\.3\. The Audit highlights good practices in urbanization, site design, and
construction supervision (paras\. 2\.4), explores the reasons for implementation delays (para\. 4\.3)
and reviews the project experience with women's groups, vocational training and income
generation (para\. 2\.14)\.
Objectives, Strategy, and Instruments
2\. The objectives of the project were to improve shelter for low-income people, encourage
sound spatial patterns, and strengthen institutional capacity\. One of the goals of the project was
the reduction of squatter population through the provision of affordable housing\. The rapidly
growing Amman region contains over half of the national population\. The Government of
Jordan (GOJ) was anxious to ensure that squatting on government lands in Amman did not
expand to involve more people and, given the cultural importance of home ownership, keeping
the problem under control meant increasing the affordable housing supply\. By developing new
neighborhoods where commercial property and the more desirable housing sites on main streets
were sold at market prices to cross-subsidize lower-cost plots on walk-ways for low-income
beneficiaries,' the project attempted to create economically heterogeneous communities and to
provide them with the full range of infrastructure, public buildings, urban and social services
which they would require\. Project funds were channeled through the Housing Bank, which held
the mortgages on serviced sites and upgraded plots\. The Housing Bank financed part of the
project cost from its own resources, under circumstances where its risks were limited because of
the existence of a Low Income Housing Revolving (default) Fund (LIHRF)\.
Implementation Experience
3\. During the first months of the project, as the result of a governmental reorganization, the
Municipality of Amman was eliminated from the project, and a new entity, the Housing and Urban
Development Corporation (HUDC), was created to manage the project\. Progress in implementing
the project was satisfactory in most areas, but small plots and badly located plots did not sell as well
as anticipated\. There were three cancellations during the implementation of the project: US$1\.4
million was canceled in August 1987; US$5\.0 million was canceled in October 1989; US$4\.8
1\. In its comments attached to this PAR, HUDC notes that many beneficiary plots were located on roads when sites
were available after the best sites were sold at market prices\.
8
million was canceled at the time of the final loan closing, on June 30, 1993\. There were two
extensions for one year each\. Construction of schools, community centers, health clinics and other
public buildings was timely, but marketing of the plots was constrained by delays in the
introduction of urban services caused by other government agencies not living up to their
agreements\. The Low Income Housing Revolving Fund received 5 percent of their individual loan
payments, which represented a significant sacrifice for a low-income borrower, especially
considering that only \.014 percent of borrowers were three months late as of February 1996\. In
terms of the LIHRF, there was a major discrepancy between actual and projected risk: arrears (of
over four months) at the time of the Audit were negligible-they amounted to 1\.318 percent of the
outstanding balance\.
Ratings
4\. In spite of the fact that not all project components were completed, and the implementation
delays which required the loan to be extended for two years, the Audit rates the project outcome as
satisfactory, its institutional development as moderate, and its sustainability as likely\. The Bank's
performance is rated as satisfactory and so is the borrower's performance (para\. 4\.1)\.
5\. These ratings coincide with those based on the PCR except for institutional development
which is upgraded from negligible, because of the development of important community
organizations, the good working relationship which evolved between the Housing Bank and the
Housing and Urban Development Corporation and because HUDC, which was created out of the
merger of two urban development institutions, is working well (para\. 4\.2)\.
Lessons Learned
6\. Delays in the Introduction of Basic Services Were Foreseeable\. In Jordan, the demand for
urban services exceeds the supply, and basic services tend to be introduced in response to inter-
agency negotiations/accommodations, themselves a response to mounting pressures related to pent
up popular needs\. Project risks consequently went beyond the implementing agency's ability to
"manage multi-faceted operations" as noted in the SAR, and they could not be mitigated by the
training given to this agency (para\. 4\.3)\.
7\. Other related lessons include:
* The use of on-site offices by construction supervisors provided opportunities for
owners and builders to make frequent and voluntary consultations above and beyond
what was required;
* Tranching credit disbursement to beneficiaries according to important construction
milestones can lead to better compliance with design standards;
* Staffing community facilities with project beneficiaries lowered their operating costs
and led to services better targeted to neighborhood needs;
9
* Eligibility criteria and funding to limit credit risks could have been revisited during
implementation and modifications made when necessary to increase credit access
while maintaining good cost recovery;
* Cross-subsidization within economically mixed neighborhoods only worked well
where the better-off wanted to locate (Al Manara) and conversely, the less well-off
resisted moving to areas where they would predominate to such an extent that there
would be an element of stigma attached (Ruseifa) (para\. 4\.4)\.

11
1\. Project Description
Country and Sector Context
1\.1 Periods of growth in Jordan's urban population have been the result of migration caused
by economic and political events in the region\. The Gulf War and other periods of instability in
neighboring countries have had a profound impact\. At the time of the project around I I percent
of the urban population lived in refugee camps administered by the United Nations Relief and
Works Administration for Palestinian refugees (UNRWA)\. The Amman region contains over
one half of the national population\. and in spite of government efforts to slow growth in the
capital, it has continued to grow more rapidly than other parts of the country\. In 1979, the
average number of persons per room in Amman was around 2\.6: 41 percent of the urban
population was housed at a density of four or more persons per room, and crowding was
undoubtedly higher in the low income areas\.
1\.2 Amman suffers many of the problems typically associated with rapidly growing cities,
including traffic congestion and urban sprawl, and these will inevitably get worse\. Most urban
population growth during the next decade will inevitably occur in the Amman region\. The
slackening of aid flows, reduction in growth of the Gulf countries' demands for Jordanian labor,
and a decrease in remissions from Jordanians employed abroad increase the challenges facing
urban sector institutions\.
1\.3 The housing which is available is often not suitable to the budgets of those who need it\.
Over-investment in luxury housing coupled with the unwillingness of owners to rent their houses
(due to the Jordanian landlord and tenant legislation which gives tenants permanent tenure at the
original rent) has led to an inventory of about 1 3\.000 vacant luxury housing units while lack of
suitable shelter remains a significant problem for low-income groups\. Thus the "shortage" of
shelter identified by the Government during appraisal as a major problem was the direct result of
high land and housing costs, building regulations which required measures not affordable to the
shelter-needing population\. the desire of potential tenants to own their own home, and
speculative withholding of urban land from the market, which inter alia forced families to live in
overcrowded conditions at the urban periphery, while vast tracts of urban land remained vacant
and off the market\.
1\.4 In 1984\. a time when slum clearance was still in vogue with urban developers, some 7
percent ol Amman's population lived in low-income squatter settlements\. and 11 percent of
households had annual incomes below the urban poverty threshold (US$2400)\. The GOJ was
anxious to ensure that squatting on government lands in Amman-mostly a result of urban
renewal in the city center and overflows from the nearby refugee camps-did not expand to
involve more people\. Given the cultural importance of home ownership, keeping the squatter
problem under control meant increasing the affordable housing supply\. Squatter settlements
usually consisted of multi-storied steel reinforced concrete buildings\. characterized by some
deficiencies in infrastructure and social services\. Overall living conditions in Jordan's poorer
urban neighborhoods are vastly superior to those in comparable areas of Africa\. Latin America\.
or even nearby Turkey, however\.
12
Bank Involvement
1\.5 Over the last twenty years, the Bank has financed projects in water supply, sanitation,
low-income housing, urban transport, shelter, and municipal development in Jordan\. Eight urban
water and sewerage projects have been undertaken\. The first Urban Development Project (a loan
of US$21 million approved in 1980), was designed to provide improved housing and associated
services for low-income people\. Also in 1980, a loan of US$10 million was approved to support
the Cities and Villages Development Bank (CVDB) to increase the capacity of local
governments\. CVDB2 (US$15 million) and UDP3 (US$26 million) followed in 1985 and 1987,
respectively\. The Bank financed four urban transport projects, including the construction of the
motorway between the country's two main cities, Amman and Zarqa (a US$6 million loan
approved in 1971)\. The Amman Transport and Municipal Development Project (US$30 million
loan approved in 1983) helped the Municipality to: (i) reduce traffic problems; (ii) upgrade solid
waste management, (iii) commence systematic investment programming; and (iv) to upgrade the
planning capacity of municipal departments\. The Bank has carried out extensive economic and
sector work: studies include the Urban Sector Review, the Regional Development Study and the
Water Sector Review\.
Project Design
1\.6 Objectives\. The objectives of the project were: (i) to improve shelter for low-income
people in the Amman region without Government subsidy; (ii) to encourage sound spatial patterns
through urban planning and stimulating urban growth in appropriate locations at lower costs of
infrastructure than under traditional practice; and (iii) to strengthen institutional capacities in Jordan
to undertake low-income shelter and urbanization projects\. Appraisal took place in December
1984\.
1\.7 Issues in Preparation\. Jordan did not have a well-defined low-income housing policy, in
part because no specific agency was responsible for this\. Most housing in the lower and middle
income areas in Amman is provided by the private sector, and consists of one to three story
detached buildings, often with exposed steel bars which permit subsequent vertical extension\.
Within a short commute of the city center, the minimum-sized single family detached house
allowable under planning and building regulations is unaffordable to the lower two thirds of
households in terms of income, and small apartments are unaffordable to the lower forty percent\.
This situation is exacerbated by inappropriate zoning which forced the shelter program to
operate at the geographic fringe of Amman\.
1\.8 There was concern that the availability of housing sites in the project areas would lead to
un-meetable levels of demand from beneficiaries without financial means to pay for their plots
and the project tried to make plots more affordable by marketing some plots at a profit to cross-
subsidize those reserved for members of the target beneficiary group\. After the project was
designed to meet the affordability requirements of the target population as much as possible,
regulations were changed increasing minimum plot size and doubling footpath width\. There was
heated debate on whether to sell housing plots all at once or each tranche individually (the option
finally chosen)\. Commercial property and vehicle-accessible residential property were to be sold
at market rates, with profits used to subsidize prices of plots for low-income families along
footpaths and dead-end streets\. There was discussion regarding whether to use fixed prices or
auctions, and whether to sell blocks of plots or limit sales to one per customer\. While multiple
plots went to a few developers, generally sales were to individuals\. The Government was
hesitant to upgrade areas containing large percentages of foreign workers\.
1\.9 Institutional Arrangements\. Project implementation was going to be handled by the
Lord Mayor of Amman, who held ministerial rank, through the Municipality's Urban
Development Department (UDD)\. Additional key institutions included the Jordan Housing
Corporation (JHC) which traditionally developed housing for public sector employees and
housing cooperatives; and the Housing Bank, a partially state-owned institution which mobilizes
private savings to finance housing construction\.
1\.10 In the early months of the project, as a result of a merger between UDD and JHC, the
Housing and Urban Development Corporation was established to carry out the project, and the
municipality ceased all involvement\. The rationale for the merger was that, in the opinion of tie
Government, neither the Jordan Housing Corporation nor the Ministry of Municipal and Rural
Affairs and Environment (MMRAE) had the capacity to execute UDP2 in a timely and
economical fashion\. Under the new structure, project funds were still channeled through the
Housing Bank (HB), as originally planned\. HB held the mortgages on serviced sites and
upgraded plots, and it financed part of the project cost from its own resources\. HB's credit risks
were limited because of the existence of the Low Income Housing Revolving Fund as well as
several other provisions discussed in more detail below\.
1\.11 Financial Arrangements\. Of the US$88\.5 million total project cost, the Government was
to provide US$20\.0 million to cover the cost of schools and other community facilities and
training for UDD staff, the Housing Bank was to provide US$22\.3 million to finance costs
recoverable from property sales; cash payments from the beneficiaries was to contribute
US$17\.0 million\. The Bank loan of US$28\.0 million was to finance 31\.6 percent of total project
cost and 85 percent of the foreign exchange cost\.
1\.12 The Government was to onlend US$12\.5 million of the proceeds from the Bank loan to
the Housing Bank (for a period of fifteen years with 3 years of grace) and the remaining US$15\.5
of the Bank loan was provided as a grant to UDD to finance the social facilities\. A subsidiary
loan agreement between the Government, the Municipality of Amman and the Housing Bank
was a condition of effectiveness, and the Government was committed to review interest rates
with the HB annually to make sure it was earning a reasonable spread\. In order to make loans to
project beneficiaries at 8\.5 percent, the Housing Bank relied on its own resources, Central Bank
refinancing, and L1HRF deposits\. Funds remaining in the LlHRF are to be returned to HUDC
after all outstanding loans have been canceled, and they are supposed to be used for further work
in low-income housing\.

15
2\. Project Implementation and Results
PCR Findings
2\.1 The PCR for this project mentions that the loan was extended for two years because of
delays, and it explores the extent that these were caused by organizational changes at UDD\.
contractor problems, cumbersome procurement procedures\. the decline of the local economy during
the Gulf War, the cancellation of one upgrading component because of beneficiary unwillingness to
participate, and design changes resulting from unforeseen site conditions and negligible market
demand for small plots\. The PCR rated the project outcome as satisfactory, sustainability as likely,
and institutional development as negligible\.
2\.2 PCR lessons\. The main lesson learned identified by the PCR was that the project was
unduly complex, which made implementation difficult to manage and coordinate\. Other PCR
identified lessons include:
* staff dealing with procurement and disbursement needed more technical support than they
received;
* more streamlined and consistent contract evaluation processes should be required for Bank-
financed projects:
* the lack of adequate pre-qualification criteria made it difficult to discourage the participation of
financially weak contractors, and
* private sector participation in the more commercial aspects (marketing and sales) of new
neighborhood development should be encouraged\.
2\.3 The Audit reports on beneficiary compliance with building regulations, progress in
construction and sales (including details on problem sites), the current state of cost recovery
including the results of the loan guarantee program, institutional development, and conditions in the
new neighborhoods\. It reports on community facilities and poverty alleviation aspects not covered
in the PCR, as the PCR mission did not visit the community centers or report on their poverty
reducing achievements\. Lessons learned highlight good practices in project management, and note
cultural traits not adequately taken into account in project design\.
Compliance with Building Requirements
2\.4 The HUDC-supervised sites exhibit extraordinary attention to siting, construction details
and adherence to design standards\. In stark contrast with low-income urban neighborhoods in
many other countries, setbacks from roads and neighboring dwellings have been observed, and
additions have respected good construction practice\. Where any additional stories have been built,
it is within the design capacity of the original steel reinforced concrete below\. Such a noteworthy
end result begs the question, how was it accomplished\. The secret lies in the way three important
aspects (design\. supervision and finance) were handled\. A few families built their own homes
themselves, many others assisted the builders which they hired to economize\. HUDC was
determined that, given the country's vulnerability to earthquakes, all buildings be structurally
sound, and designed with an added margin of safety\. It required all beneficiaries to build their
16
homes according to proper engineering designs\. While any design that met siting plan standards
was acceptable, HUDC provided free plans for three basic designs\. Those who wanted something
else had to invest in expensive professional design services\. HUDC maintained an office on the
sites, and construction supervisors approved the plans and monitored construction\.
2\.5 Two rules that made supervision more effective and efficient had to be gradually relaxed
during implementation due to the worsening economic situation of the beneficiaries\. These rules
were: (i) all beneficiaries had six months to build on vacant land once it was purchased; and (ii) any
addition to a finished and approved core unit had to be completed six months after it was begun\.
While the impacts on the economy of the Gulf War made it impossible to be strict with the above
standards, their existence and the fact that communities had followed these rules gave supervisors
some leverage to move things along, even after deadlines had passed\.
2\.6 A minimum of 5-6 inspections were made during construction to ensure that structural steel
was tied and placed properly, and that the requisite number of stirrups were included in the beams
and columns\. In order to foster compliance with the approved designs, individual beneficiaries
received funds at three stages during the construction: (i) when the below-ground substructure was
prepared; (ii) when the above ground superstructure was complete, and (iii) when plastering has
been finished\. Each of these activities, which represent sizable expenditures were completed with
the borrowers' funds, and only when the components were inspected and approved were they
reimbursed with the applicable loan proceeds\. Since failure to gain approval usually meant that
there would be no more money forthcoming to finish the house, the beneficiaries tended to seek out
the supervisors more often than required to ensure that what they were doing would pass\.
Problem Sites
2\.7 Due to a series of delays involving the introduction of water and electricity, and contractor
non-performance, the Mustanda community center sits empty and lifeless\. HUDC staff believe
they will be utilized during the next academic year\. Future prospects for the site are more
promising\. A major industrial area is going up nearby, and workers will be interested in housing
that offers an easy commute\. Mustanda lots are beginning to sell briskly, so the fact that the
Mustanda site is still unoccupied several years after the loan closed is not due to lack of market
demand\. About half the lots had been sold (49 percent) according to the last quarterly report and
HUDC noted that more than 10 percent have been sold since then\.
2\.8 Problem sites are the result of inter-connected vicious circles\. Families are unwilling to
bring small children to a place miles from the nearest school\. Two large and modem schools sit
empty and unused in Mustanda (their windows smashed) because there are no teachers, but teachers
will not be assigned until there are students\. Students will have to be transported from quite a
distance, as there are no occupied dwellings in the site, and for several kilometers in all directions
there are but a few isolated houses\. Similarly, people can't move to the Mustanda site until there is
bus service, but the bus company will not provide buses until there is a large pool of riders\. Up
until recently there was no water\. In spite of written agreements with other government agencies,
the introduction of water was years late, and electricity was introduced a year and a half after loan
closing, just a few months before the OED Audit mission\.
17
2\.9 Another cause of problem sites was insufficient consultation with the intended
beneficiaries\. It was thought that low-income families would like the option of buying smaller and
lower cost lots\. They sold poorly\. Ruseifa sites 2-4 are not in Amman but in Zarqa, a less desirable
and lower-income community\. Ruseifa 4 is only 37 percent sold, even though all the lots are on
sale as lower-cost "beneficiary" plots\. Sales of homesites are extremely slow, and indications are
that the demand for property there is saturated, and is unlikely to improve in the near future because
the target low-income families aspire to live in higher status areas\.
Institutional Development and Poverty Alleviation
2\.10 Institutional Development\. Under the previous project (UDPI) technical assistance
included advice on project planning, facilities design, marketing and finance\. These activities
continued under UDP2\. During project preparation it was anticipated that UDD might experience a
status change, perhaps leaving the Amman Municipality, and during implementation it was
combined with the Jordan Housing Corporation to form the Housing and Urban Development
Corporation\. Within HUDC, the staffs of UDD and JHC\. two agencies with different client groups
and ways of doing business, eventually learned how to work well together, although staff still
identify themselves by where they came from\. Institutional development was hampered by UDD's
labor arrangements with its staff\. Many were on a contract basis, at pay scales lower than those
offered by the private sector, which allowed great flexibility but led to high turnover in skill areas
where there was commercial demand\.
2\.11 Community Facilities\. Four community centers were built under UDP2\. Three of them
were completed between 1988 and 1990 and have been active with the surrounding communities: a
fourth (Manara 2) was completed only in 1994 and is still hardly used, perhaps because one of the
more active centers (Manara 3) is located a few blocks away\. The Centers follow programs
determined by the neighborhood women who serve on Community Base Committees, and are
staffed and operated by other women from the community\. Their (low) wages and the Centers'
operating expenses are covered by the income they generate\. Center staff make periodic home
visits to the lower-income families in the UDP2 areas to keep up on local conditions and to provide
services which deal with current problems and aspirations\. All four centers provide
kindergarten/day-care at rates 50-65 percent below commercial competitors\. The three more active
centers have provided literacy classes for women since they opened: this activity is winding down
as the number of illiterate women in the community has been gradually reduced\. About 115
families (women) participate in seasonal income generation activities including food processing
and handicrafts/embroidery\.
2\.12 Vocational Training Centers, usually constructed adjacent to the community centers,
provide unemployed young men and women with job-related skills\. The most popular courses are
in weaving and textiles because there are job openings in nearby factories for all the graduates\.
Since the Training Centers follow a strict schedule, many individuals either drop out or never sign
up because of other commitments\. The Community Centers provide an opportunity for this group
to finish the textile courses on a more flexible schedule, and provide machinery for practice
sessions, which also allows women to make clothes for their own families or for sale\. Other
activities run out of the centers include: vaccination and neighborhood clean-up campaigns, sports
activities, day-long courses on varied topics, lectures, movies, and cultural enrichment programs for
adults and children\.
18
2\.13 The health clinics are fully staffed and well utilized\. The one visited by the OED Audit
mission saw about 50 ambulatory patients a day, in addition to providing maternal/child health
monitoring and about 10 daily dental appointments\. The schools are reputed to be equipped far
better than average, and the one visited by the OED mission had well-stocked laboratories, music
rooms, a computer lab, and a library\. Studying in an above-average institution may improve the
economic prospects of children from lower-income families\. Other poverty alleviation impacts are
largely the result of the various social activities undertaken through the community facilities
(principally the health centers, community centers, vocational training centers, and to a lesser
degree schools and emergency response centers)\. Project staff noted that when the Bank team
preparing the PCR did not seem very interested in the social aspects of the project\. HUDC began to
de-emphasize them\.
Borrower Performance
2\.14 Staff from the Housing Bank noted that early misunderstandings between it and HUDC
were long in the past, and the agencies had developed an easy camaraderie and a lot of faith in each
others' abilities\. HB considers its experience under the project as both a social and economic
success, and staff noted progress in the following areas in their relationship with HUDC: eligibility
criteria were now agreed upon, supervision was better documented, there was a better flow of
information between the two agencies, and unnecessarily complicated procedures have been
simplified\. HUDC staff from the main office spend time in their outlying offices and in the
community centers, the project offices are frequented by the community, and there is no question
that construction supervision was a notable success\. While HUDC is expected to continue to advise
the GOJ in the area of low-cost housing, it is anticipated that it will no longer be involved in
implementation because the private sector has lower costs\. It would seem that some way might yet
be found to maximize on HUDC's credibility with potential beneficiaries, and the staff experience
upon which it can draw\.
2\.15 Compliance with Covenants\. Apart from the standard covenants of a typical loan/credit
agreement there were few specific covenants applied to the loan and these fell into the following
categories:
(a) Covenants specifying actions to be taken by the Municipality of Amman were no
longer applicable because the Municipality was not involved with the project
following a Governmental reorganization during the first year of project
implementation\.
(b) Covenants specifying procedures for the management of beneficiary loans through
the Housing Bank were met\.
19
3\. Points of Special Interest
Economically Mixed Neighborhoods
3\.1 Two interrelated aspects of project design are worthy of wider application: cross
subsidization and economically mixed neighbornoods\. By marketing the more desirable housing
and commercial plots (primarily those on the broader avenues and vehicle-accessible streets) at a
profit, it was possible to cross-subsidize the beneficiary plots reserved for members of the low-
income target group along the foot paths and down cul de sacs\. Aside from making the
beneficiary plots affordable, the policy had the additional impact of establishing economically
mixed but well integrated neighborhoods, far better for urban development than low-income
"ghettos\."
3\.2 Further study would be needed to determine the degree to which low-income families
benefited from the cross-subsidy on the housing component\. Although HUDC has detailed
records, and it has reported the degree to which low-income families have benefited from the
project in general (77 percent of all beneficiaries had incomes below JD 220, the upwardly
revised income target), it has not reported on the extent to which low-income families benefited
from the lower-cost beneficiary plots\. HUDC agreed to provide the Audit with this information
(i\.e\. how many of the beneficiary plots that have been sold as of the last reporting period actually
went to the originally targeted and new (upwardly revised) standard income groups, it ultimately
failed to make this information available\.
Excellent Cost Recovery
3\.3 Because of sustainability and replicability considerations, it had been deemed important
that the Housing Bank make a positive return from its participation in the project\. While 35\.8
percent of all the purchasers paid cash, all of those beneficiaries who took out loans from the HB
(64\.2 percent of all purchasers, the HB having an effective monopoly) contributed to the Low
Income Housing Revolving Fund\. LIHRF is a fund created to protect the HB from credit risks:
whenever a family fell three months behind in payments, their arrears were covered with money
from the LIHRF, basically a very good idea\. Thirty percent of household income was the
maximum allowable installment, both because it was project policy and because one interpretation
of the usury law might make loan balances in excess of this limit difficult to collect\. In many cases
payments were taken directly out of salary, and each borrower had to provide either collateral or a
cosigner not a member of the nuclear family\.
3\.4 Cost recovery is excellent\. Actual arrears (of over four months) at the time of the Audit
were negligible: they amounted to 1\.3 percent of the outstanding balance\. Only 2 or 3 homes had to
be repossessed during the life of the project, and only \.014 percent of borrowers were three months
in arrears as of February 1996\.
3\.5 Beneficiaries were never told that 5 percent of their individual loan payments went into the
LIHRF, however, and there was a major discrepancy between actual and projected risk\. Although
the Bank did revisit the operation of the LIHRF during implementation, modifications were of an
20
administrative nature-such as requiring the Housing Bank to undertake reasonable measures to
collect arrears before claiming losses from the fund\. In the opinion of the Audit the Bank should
have attempted to reduce the level of provisions in light of the repayment experience in UDP I and
2\.3 Clearly a 2 percent reserve would have more than fulfilled the LlHRF's objectives while not
placing an undue burden on families that could ill afford it\.
Priority Given to Housing in the Middle East
3\.6 Visiting Amman for the first time, someone familiar with poverty in other regions would
be surprised to hear that the IIUDC project sites were considered low-income housing\. Most of the
housing units in Amman are clad with ornamental limestone blocks, they have elaborate wrought
iron work and a few have car ports\. Improvements to the houses are ongoing everywhere\. In one
randomly selected block which the OED Audit mission visited, 50 percent of the (fully occupied)
units had additions still under construction\. Often any money a family has left over at the end of
the month is invested in construction materials, which are stored until enough are gathered to justify
bringing in the builders again\.
3\.7 The first floor structure is designed to hold three stories\. Less than 5 percent have built that
high, most settle for two stories and a small utility room on the roof, the additional unit thus created
is either used to house the extended family or, more commonly, rented out\. Thus, because of
dwelling expansion, the size of the occupying family will increase, and/or a rental income from a
unit built for that purpose will be forthcoming\.
3\.8 Many project beneficiaries are public employees\. It would be easy to draw the conclusion
that the low-income target population missed their chance at participation, and that these desirable
urbanized sites were "captured" by the middle class\. A look at unsold property tells a different
story, however\. Smaller and less expensive plots had to be withdrawn from the market due to lack
of demand, and Ruseifa has a backlog of unsold (less expensive) beneficiary plots\.
3\.9 The consensus of expert opinion consulted is that, in much of the Middle East, housing and
children's education are the two most important family priorities, and that consumption in all other
areas will be sacrificed to build the best and most impressive dwelling possible\. This
"disproportionate" investment in the home (many have little furniture) is both a status statement
and an economic coping strategy-a sensible decision in a country where the rising value of a real
estate market (a one-way market which to date has never fallen) and steady increases in the price of
construction materials shut many families who rent out of ownership for good\.
3\.10 Given the above, and the extremely low rates of default and arrears, it would seem that
future projects could safely allow loans requiring payment of more than 30 percent of current
family income by taking either the projected rental income or the likely increase in household
members (and therefore household income) into account\.4 From the outset it should be also
3\. Any change in this percentage would have to be agreed by all parties including the World Bank\. Involved Bank
staff did not revisit this issue in the belief that the Housing Bank would not accept a change\. The Housing Bank sent
comments to the effect that HUDC would not accept a change as any excess accumulated will ultimately be transferred
to finance future HUDC projects\.
4\. In its comments to this PAR (attached) the Housing Bank notes, "the Bank has relaxed its credit terms to the
maximum\. as the Bank grants loans to HUDC beneficiaries at the maximum possible multiple of their monthly income,
21
recognized that, in Jordan, even low-income groups want the very largest and best lots they can
afford, and they prefer the more prestigious (that is, mixed income) neighborhoods\.5
and allows them the maximum repayment period in accordance with the Ottoman By-Law so as to ensure that interest
not exceeding the principle\. Furthermore it is possible to increase the payment to income ratio over 30 percent only in
case of free-earning income (non-fixed salaries), while the Bank cannot deduct more than 30 percent of the monthly
income to pay back loans granted to beneficiaries with fixed income in compliance with local laws\." The Audit
believes that the additional risk involved can be adequately covered by funds such as the LIHRF, given the payback
experience to date\.
5\. HUDC reports (see attached comments) that plot sizes have been increased for UDP3\.

23
4\. Conclusions
Ratings
4\.1 In spite of the fact that not all project components were completed, and the implementation
delays which required the loan to be extended for two years, the Audit rates the project outcome as
satisfactory, its institutional development as moderate, and its sustainability as likely\. The Bank's
performance is rated as satisfactory\. So is the borrower's performance\.
4\.2 These ratings coincide with those based on the PCR except for institutional development
which is upgraded from negligible, because of the development of important community
organizations, the good working relationship which evolved between the Housing Bank and the
Housing and Urban Development Corporation and because HUDC, which was created out of the
merger of two urban development institutions, is working well\.
Lessons Learned
4\.3 Delays in the Introduction of Basic Services Were Foreseeable\. In Jordan, the demand for
urban services exceeds the supply, and basic services tend to be introduced in response to inter-
agency negotiations/accommodations, themselves a response to mounting pressures due to long
unmet needs\.6 Project risks consequently went beyond the implementing agency's ability to
"manage multi-faceted operations" as noted in the SAR, and they could not be mitigated by the
training given to this agency\.
4\.4 Other related lessons include:
* The use of on-site offices by construction supervisors provided opportunities for
owners and builders to make frequent and voluntary consultations above and beyond
what was required,
* Tranching credit disbursement to beneficiaries according to important construction
milestones led to better compliance with design standards;
* Staffing community facilities with project beneficiaries lowered their operating costs
and led to services better targeted to neighborhood needs:
* Eligibility criteria and funding to limit credit risks could have been revisited during
implementation and modifications made when necessary to increase credit access
while maintaining good cost recovery,
* Cross-subsidization within economically mixed neighborhoods only worked well
where the better-off wanted to locate (Al Manara) and conversely, the less well-off
6\. The project was appraised and negotiated in its entirety with the Ministry of Planning which controls the
development budget\. Bank staff note that these negotiations could reasonably have been expected to substitute for the
less formal interagency negotiation process, even though they ultimately did not\.
24
resisted moving to areas where they would predominate to such an extent that there
would be an element of stigma attached (Ruseifa)\.
25
Annex
Borrower Comments
HASHEMITE KINGDOM OF JORDAN
Ministry of Planning
Amman - Jordan
Tel: (962) 6-644466 Fax: (962) 6-649341
FACSIMILE COVER SHEET
Country U\.S\.A\.
Institution World Bank
Attention Mr\. Yves Albouy
Chief, Infr\. & Energy Div\.,
OEDD3
Fax No\. : (202) 522-3125
From : Yousef Batshon
Director of Infrastructure Dept\.
Ministry of Planning
Date : 5 June, 1996
Pages including
this cover page: (3)
Subject: Second Urban Development Project
(Loan No\. 2587- JO) - Performance
Audit Report\.
Dear Mr\. Albouy,
Attached herewith, please find the comments of each of (HUDC) and the
Housing Bank on the Performance Audit Report for the Second Urban
Development Project prepared by your department\.
Best Regards,
26
Annex
THE\.MOUSING BANK
1 7A 7 Ref: 12/1/2
19 Q ~ Date: May 26,1996
Mr\. Yves Albouy,
Chief of Infr\. & Energy Div\.,
Operation Evaluation Dept\.
The World Bank,
1818 H Street N\.W\.,
Washington , D\.C\. 20433,
U\.S\.A\.
Subject: Second Urban Development Project
Draft Performance Report
Dear Sir,
We refer to the above subject, and pleased to inform you that upon our review of the draft
report we have the following comments :
1- The report concludes that funding criteria could have been revised during the implementation
and modifications made when nccessary to increase access while maintaining good cost recovery\.
In this rcard, we would like to emphasize that the Bank has relaxed its credit terms to the
maximum, as the Bank grants loans to HUDC beneficiaries at the maximum possible multiple of
their monthly income, and allows them maximum possible repayment period in accordance with
the Ottoman By-Law so as to ensure that interest not exceeding the principle\. Furthermore, it is
possible to increase the monthly payment to income ratio over 30 percent only in case of free-
carning income (non-fixed salaries), while the Bank cannot deduct more than 30 percent of the
monthly income to pay back loans granted to beneficiaries with fixed income in compliance with
local laws\.
2- The report concludes that the contribution by beneficiaries of 5 percent to the Low Income
Housing Revolving Fund (LIITRF) could have been lowered to 2 percent as a result of the excellent
cost recovery in the due course of the project\. In this regard, we would like to draw your attention
to the fact that this current percentage was agreed upon between all parties involved including the
World Bank, and any reduction in this percentage need to be approved by them\. Any decision
taken to reduce the current percentage should take into consideration future trends in arrears ,the
level of which is not expected to remain constant throughout the project\. Moreover any excess
accumulated in the LIHRF over the actual arrears at the end of the project will ultimately be
transferred to finance future HUDC projects\.
Hoping that the above comments will be taken into consideration in the final rcporl\.
Yours Sincerely
The Genera e
Jordan - Arnann - Abdufl Parlamensutr\.Facsium: 47121 Cabe Add\. tSKA? T\.*4 21M\. 22061, 23460 ISKAN JO P\. 0\. Box 7593 Pool COS 1111 Tot\.:60?15
27
Annex
According to the performance Audit Report on Seconed Urban Development
Project ( loan 2587 - Jo)
Our comments are :-
1\. Missing pages in the report No: 2,4,10,14
2\. Page 5 third Line wrong loan number ( 2678 - Jo) the light No ( 2587 - Jo)
3\. Page 6 - Borrower is the Government of Jordan not HUDC\.
4\. Page 7 - to add Default Fund to the ( LIHRF )
5\. Page 8 - in the second Line to delete " without the beneficiaries knowledge as
most of the beneficiaries know that it is part of the cost of borrower\.
6\. List of officials to receive
The name of minister of public works and housing should be corrected to\.
H\.E\.Eng\. Abdul Hadi Majali
Par\. 3\.1 (Mixed Neighbor hoods)
1\. The locating of market plots on the main roads and the beneficiary plots on the
walkway was not that much precise In fact the criteria which was followed is 30 -
35 % of total plots are market plots and should be given the best location , then the
highest price to subsidy the lower income beneficiaries in the target group \. This
percentage left space for many beneficiary plots to, be located on roads ( whether
main or else ) \.
2\. The preferable plots by the beneficiaries are the largest ones which lead ( HUDC)
to change the plots size in ( UDP3)\.

I


(Do
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T-\.
O- | APPROVAL |
P001703 | Document de
La Banque Mondiale
A N'UTILISER Qu t A DES FINS OFFICIELLES
FilE COpy
Rapport No\. 2444 MLI
MALI
!'ROJET DE DEVELCPPEMENT URBAIN
21 '0141 1979
\
Departement des Projets Urbains
,
TRADUCTION NONOFFICIELLE A TITRE DTNFORMA TION
Le present document fait I'objet d'une diffusion restreinte\. et oe peut etre urilise par ses
destinataires que dans I'exercice de leurs fonctions officieUes\. Sa teneur ne peut etre
autrement dhulauee sans \'autorisation de I~ B:mque Mondiale\.
- i
TAUX DE CONVERSION
L'unite monetaire nationa1e est 1e franc ma1ien (FM)
1 dollar EU = FM 440
FM 1 million \. US$2\.273
POIDS ET MEstTRES
Systeme metrique
EXERCICE BUDGElAIRE
ler janvier 31 decembre
SIGLES
BADEA Banque Arabe pour 1e Deve10ppement Economique de l'Afrique
BDM Banque de Deve10ppement du Mali
BMET Bureau Municipal d'Etude
CAFOBA Caisse Fonciere de Bamako
CEAO - Communaute des Etats de l'Afrique de,l'Ouest
DNAFUC - Direction Nationa1e de l'Amenagement Foncie\.r de l'Urbanisme
et de 1a Construction (called "Habitat")
DHE - Direction de l'Hydrau1ique et de l'Energie
EMD Energie du Mali
FED Fonds Europeen de Deve10ppement
KfW Kreditansta1t fuer Wiederaufbau
IDA International Development Association
MTTP - Ministere des Transports et des Travaux Publics
SNHPA Service National d'Hygiene Pub1ique et d'Assainissement
WAPEW Western Africa Projects - Energy and Water Supply Division
\.,
POUR USAGE OFFICIEL - 11 - CONFIDENTIEL
MALI
PROJET DE DEVELOPPEMENT URBAIN
TABLE DES MATIERES
\. Pages
I\. HISTORIQUE 1
A\. Developpement urbain \. 1
B\. Bamako: Ie milieu urbain \. 3
C\. Autres villes du projet : Mopti, Gao, Kayes 6
D\. Comment les autorites repondent aux
besoins urbains \. \. 7
II\. DESCRIPTION DU PROJET 8
A\. Le projet \. 8
B\. Description detaillee 10
III\. ESTIMATIONS DES COUTS, PLAN DE FINANCEMENT ET EXECUTION 18
A\. Estimation des coOts 18
B\. PIan de f inanceme nt \. 18
C\. Passation des marches et decaissements \. 22
D\. Calendrier d'execution \. 24
E\. Questions diverses relatives a l'execution
du projet 24
F\. Comptabilite, revision comptable, suivi
et supervision \. 25
Le present rapport est base sur les conclusions d'une mission d'evaluation
qui s'est rendue au Mali en octobre 1978\. Faisaient partie de la mission :
MM\. B\. Veuthey (chef de mission), D\. Graham (BIRD), I\. Nahmias, D\. Ossen,
H\. Houben, L\. Godin et M\. Baron (consultants)\. Le rapport a ete etabli par
MM\. B\. Veuthey, D\. Graham et Ms\. C\. Tager\.
Le present document fait l'objet d'une diffusion restreinte\. II ne peut ~tre
utilise par ses destinataires que dans l'exercice de leurs fonctions officielles\.
et sa teneur ne peut @tre divulguee sans l'autorisation de la Banque mondiale\.
Table des matieres (suite) - iii
Pages
IV\. AGENTS D'EXECUTION ET GESTION DU PROJET \. 26
A\. La reforme administrative 26
B\. Execut ion \. \. 26
C\. Le District de Bamako \. 28
D\. Le Bureau du Projet \. 28
E\. Services regionaux 28
F\. Services propres du District 30
G\. Autres services 32
V\. RECOUVREMENT DES COUTS ET POSSIBILITES DE REPETITION
DU PROJET \. 33
A\. Recouvrement des coats \. 33
B\. Accessibilite; distribution des revenus 36
C\. Taxes municipales \. \. 39
D\. Possibilites de repetition du projet \. 39
VI\. JUSTIFICATION ET RISQUES DU PROJET \. 40
VII\. RECDMMANDATIONS \. 44
ANNEXES
1\. Couts detai11es
2\. Ressources et emplois des fonds
3\. Flux de couts et de benet ices
4\. Impact sur 1a pauvrete urbaine
5~ Documents a disposition dans 1es dossiers du projet
Plan: Elements du projet
Photographies: Conditions typiques a Bamako
Cartes
MALI
PROJET DE DEVELOPPEMENT URBAIN
I\. HISTORIQUE
A\. Developpement urbain
1\.01 Le Mali, un des pays les plus pauvres (PNB par habitant : 114 dol
lars en 1977) et des plus ruraux du monde, assiste a une croissance urbaine
de plus en plus rapide\. En 1978, pres de 14 % de sa population de 6,6 mil
lions d'habitants vivait dans les villes contre 9 % en 1960\. D'ici a l'an
2000, on compte qu'il verra doubler l'importance relative de son secteur ur
bain\. Tandis que l'accroissement demographique est de 2,5 % par an, pour
l'ensemble du pays, il est de 4,5 % dans les villes\. La capitale, Bamako, a
maintenant 470\.000 habitants, soit pres de la moitie de la population urbaine
du pays et s'est agrandie depuis 1965 a raison de 8,7 % par an\. Bamako pour
rait bien compter 2 millions d'habitants d'ici a l'an 2000, soit cinq fois sa
population actuelle\.
1\.02 La croissance des centres secondaires au Mali est egalement rapide\.
Bien que petites par rapport a Bamako, plusieurs de ces villes pourraient
jouer un rOle important dans l'accroissement de la productivite des regions
dotees d'un bon potentiel agricole\. Six zones urbaines, avec une population
de plus de 30\.000 personnes, progressent a raison de plus de 4,5 % par an :
Segou (72\.000), Mopti (62\.000), Sikasso (52\.000), Kayes (50\.000), Gao (33\.000)
et Koutiala (30\.000) (voir Carte I)\. Si l'on en croit les tendances actuelles,
la population de ces villes doublera d'ici allan 2000 \. Parmi ces six villes,
les pouvoirs publics s'interessent particulierement au rOle joue par Mopti,
Kayes et Gao dans Ie developpement economique national et ont demande qu'elles
soient incluses, avec Bamako, dans Ie premier projet de developpement urbain\.
1\.03 Bien que l'amelioration de la productivite agricole soit la pierre
angulaire de la croissance de l'economie malienne, l'urbanisation sera alimen
tee par une forte migration; approximativement la moitie de la croissance ur
baine sera Ie fait des migrants provenant des zones rurales qui viendront
disputer aux citadins les rares possibilites d'emploi ainsi que les autres
services urbains\. Jusqu'ici, les pouvoirs publics ont augmente les depenses
effectuees dans la capitale sans se preoccuper ni du rOle que joue Ie sec
teur urbain dans la strategie du developpement agricole a long terme ni des
rapports qu'ils creent entre ces deux secteurs, ni des repercussions d'une
croissance urbaine debridee dans un contexte national prive de ressources\.
Ces questions ont ete examinees de fa~on plus approfondie dans un document de
travail de la Banque mondiale relatif a une strategie operationnelle de deve
loppement urbain dans Ie Sahel (Document No 315)\.
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1\.04 La Banque mondiale propose les objectifs ci-apres pour une politique
de developpement urbain dans les pays du Sahel : a) contenir la croissance des
villes principales et develop per les liens economiques et institutionnels
entre les secteurs urbain et rural; b) mettre au point de nouvelles methodes
pour la fourniture de services urbains bon marche; c) recouvrer les coOts d'in
vestissement pour que Ie projet puisse etre repete; d) renforcer les insti
tutions nationales et municipales de fa~on a ce qu'elles puissent assurer la
gestion urbaine; et e) stimuler la participation des collectivites aux pro
grammes de developpement urbain\. Ce sont ces questions que Ie pro jet propose
recouvre\.
Bamako dans l'histoire et l'espace
1\.05 Pendant plusieurs siecles, Bamako a ete un important centre commer
cial dans l'Afrique au Sud du Sahara, situe a la croisee de deux anciens grands
axes commerciaux : a) du Nord au Sud, reliant Ie Senegal et la Mauritanie a la
cate d'Ivoire, Ie Nigeria et la Ghana et b) d'Ouest en Est aboutissant a
l'antique ville strategique de Tombouctou et a la Guinee\. Situe sur les rives
du Niger, Bamako a vu sa croissance facilitee du fait qu'il etait un important
poste avance pour nombre de groupes d'explorateurs remontant Ie fleuve dans
les annees 1800\. Quand Ie siege du Gouvernement a ete deplace de Kayes a
Bamako en 1908, que lion a construit une liaison ferroviaire jusqu'a Dakar et
que lion a ouvert les services de navigation vers Gao, la croissance commer
ciale et l'expansion de la ville ont reprise Bien qu'Abidjan soit devenu un
pale d'attraction grandissant en tant que site commercial, Bamako a poursuivi
son developpement apres l'independance en 1960, principalement parce que s'y
trouvaient concentres 11 infrastructure administrative et les emplois du sec
teur public\. Aujourd'hui, Bamako, premier centre urbain du Mali, est, avec
son arriere-pays, la region la plus peuplee du pays apres Mopti\.
1\.06 Initialement, la croissance a ete confinee a la rive Nord, coincee
entre les monts Mandigues et Ie Niger; toutefois, la ville slest etendue rapi
dement vers la rive Sud lorsqu'un pont a ete construit sur Ie Niger en 1960\.
De nos jours, Ie District de Bamako occupe environ 7\.000 ha dont 3\.000 sont
urbanises (voir Carte 2)\. La densite de population est d'environ 150 habi
tants/ha pour l'ensemble de la ville, a l'exception du centre ou elle va de
80 habitants/ha dans les zones affluentes et administratives a 400 habitants/ha
a Bozola, Ie plus vieux quartier commercial de la ville\. En l'absence d'une
politique de developpement et d'investissement appropriee en matiere d'infra
structure et de logement, Bamako a vu se proliferer rapidement les quartiers
spontanes a la peripherie, principalement sur la rive Sud et souvent jusqu'a
10 km du centre de la ville\. En 1976, les "squatters" representaient environ
25 % de la population totale, chiffre qui pourrait atteindre 50 % pendant la
prochaine decennie\.
- 3
B\. Bamako Le milieu urbain
1\.07 L'augmentation rapide de la population de Bamako s'est produite en
l'absence d'un cadre institutionnel viable\. Cette carence s'est traduite par
la qualite mediocre des services et dans certains cas par l'abandon de l'en
tretien des investissements passes\. II s'ensuit que la croissance de la popu
laton urbaine n'a pas ete assortie d'une augmentation parallele de logements
et de services\. Avant 1960, Ie Gouvernement reagissait aux pressions exercees
par l'expansion urbaine en concevant, selon les besoins, de nouveaux quartiers
de part et d'autre du centre de la ville\. Un plan directeur sommaire fut eta
bli en 1963 et revise en 1968; il n'a plus ete mis a jour depuis, compliquant
gravement l'orientation et la coordination de la croissance de la ville\. Une
premiere version d'un schema directeur sur laquelle repose Ie present projet
a ete elaboree en 1978\. Le projet propose prevoit Ie financement necessaire
a l'achevement de ce schema directeur\.
1\.08 Les pouvoirs publics, qui se sont preoccupes pendant longtemps du
developpement rural, eprouvent maintenant des difficultes a fournir des ser
vices a la population urbaine en expansion rapide, notamment, en ce qui con
cerne l'utilisation des terrains et de leur affectation, la construction de
logement et d'infrastructure ainsi que la creation d'emplois\. L'absence d'une
politique coherente, en matiere de gestion fonciere notamment, a contribue aux
difficultes actuelles\. Traditionnellement, plusieurs services de l'adminis
tration ont distribue et vendu des terrains publics dans la region de Bamako
pour des usages et a des prix ne refletant pas toujours l'inter@t public\. Ces
dernieres annees, environ 1\.500 parcelles ont ete distribuees annuellement dans
Ie District de Bamako amenant des controverses quant aux titres de propriete\.
Ces evenements se sont compliques du fait d'un systeme foncier depasse qui
doit resoudre, entre autres, la question delicate des droits coutumiers\. En
outre, quelque 18\.000 parcelles a 15 km environ du centre de la ville ont ete
vendues pour financer la construction du nouveau Gouvernorat de Koulikouro\.
Cette situation a aggrave Ie developpement speculatif eparpille et disperse
de Bamako compromettant la capacite des pouvoirs publics de mobiliser des res
sources financieres et de fournir des services urbains m@me rudimentaires
aux habitants\.
Logement
1\.09 La faiblesse des institutions et les contraintes financieres ont aussi
emp8che Ie Gouvernement malien d'intervenir dans Ie secteur du logement\. II
n'existe pas de programme public de logement, a l'exception d'environ 400 loge
ments construits pendant les annees 1960 par la SEMA\. Pres de 80 % des loge
ments a Bamako sont de simples structures en banco\. Les investissements prives
dans les nouveaux logements ont ete limites par Ie faible revenu de la popula
tion et l'absence de credits\.
- 4
1\.10 Bien que la penurie de logements touche toutes les couches de reve
nus, elle frappe surtout les habitants pauvres\. Les logements construits a
titre prive dans Ie secteur structure sont uniquement a la portee des groupes
de revenus superieurs et il ne s'en batit pas en nombre suffisant pour faire
face a la demande, ce qui intensifie la speculation particulierement a la pe
ripherie de la ville\. La cherte des materiaux de construction importes, no
tamment du ciment et des toitures en tOle ondulee, sont d'autres elements qui
decouragent l'augmentation du patrimoine de logements prives\. Ces derniers
temps, Ie Gouvernement a cherche a resoudre la situation en promouvant l'uti
lisation de materiaux de construction locaux\.
Services urbains
1\.11 L'insuffisance des services a Bamako est decrite en detail en 1973
dans une etude OMS/PNUD (Balfour) sur la base de laquelle Ie projet de l'IDA
a ete prepare\. Cet important probleme se retrouve dans toutes les vilIes du
Mali\. A Bamako, il y a des differences marquees entre les conditions de vie
dans les quartiers residentiels affluents et dans les quartiers modestes; la
majorite des citadins re~oivent des services mediocres au en sont totalement
priv8s\. II en resulte un environnement degrade et gravement insalubre\.
1\.12 Les habitants de Bamako sont mal desservis en eau\. En 1978, 50 % de
la population environ avait acces a l'eau courante par Ie biais de 7\.000 rac
cordements individuels et de 125 bornes-fontaines\. Par contraste, Ie reste
des habitants de Bamako, vivant principalement a la peripherie, n'ont acces a
aucune source d'eau potable, et dependent de puits dont l'eau est mauvaise et
souvent dangereuse\. Le reseau d'egouts dessert mains de 10\. % de la population,
et est concentre dans les quartiers residentiels ainsi que Ie centre adminis
tratif\. Le reste de la population utilise des latrines a Fosse\. Le fait
qu'il n'y ait pratiquement pas d'installations sanitaires collectives dans la
ville pose un grave probleme\. Leur absence dans de nombreuses ecoles et sur
les marches represente un danger preoccupant pour l'hygiene du milieu\.
1\.13 L'enlevement des dechets solides est lui aussi tres insatisfaisant\.
3
La population de Bamako produit annuellement environ 270\.000 m de dechets
solides alors que les services du District ant une capacite d'enlevement de
3
90\.000 m seulement par an et desservent avant tout les quartiers affluents\.
Les dechets non enleves sont deverses dans les rues au dans les fosses de drai
nage, formant des monceaux d'ordures qui donnent naissance a de nombreuses
maladies\. Le deversement des ordures pres des echoppes des marches constitue
une menace particulierement grave pour la sante publique\. En outre, a quelques
exceptions pres, toutes les routes de Bamako sont en tres mauvais etat, ce qui
g@ne Ie ramassage des ordures, si minime soit-il\.
1\.14 Le drainage des eaux d'orage est assure par un reseau bien con~u,
mais mal entretenu, de fosses lateraux a ciel ouvert dans Ie vieux quartier de
la ville; ce reseau ne dessert pas du tout les quartiers neufs\. L'etat dange
reux du systeme associe a l'insuffisance de l'evacuation des eaux interviennent
pour beaucoup dans la deterioration progressive de la qualite de la vie dans
- 5 -
Ie milieu urbain\. Les fosses sont souvent utilises pour l'evacuation des de
chets soli des qui bouchent les drains et provoquent la stagnation de l'eau\.
II en resulte une forte incidence de paludisme, principale cause de deces
parmi les enfants de mains de cinq ans\.
1\.15 La production et la distribution de l'electricite ne sont pas satis
faisantes\. La construction du barrage de Selingue a quelque 100 km de Bamako
et la preparation d'un projet combine adduction d'eau-energie par l'IDA devrait
ameliorer cette situation\.
Services sanitaires et educatifs
1\.16 Bien que les depenses par habitant consacrees a la sante et a l'edu
cation soient plus elevees a Bamako que dans les zones rurales, la qualite des
services fournis est souvent insuffisante\. Plusieurs organisations inter
nationales elaborent actuellement des projets dans ce secteur\. Les autorites
ant recemment demande l'aide de l'IDA dans Ie secteur sanitaire et l'Associa
tion examine actuellement la faisabilite d'un premier projet dans ce domaine\.
Quant aux ecoles et au personnel enseignant, la qualite n'est guere meilleure\.
Les ecoles primaires sont surpeuplees et mal equipees\. Le niveau de l'ensei
gnement varie beaucoup d'un quartier a l'autre, Ie nombre de classes par
1\.000 habitants allant d'une unite dans les zones peripheriques a 4 dans les
zones affluentes\.
Pauvrete et emploi dans les villes
1\.17 Le seuil de pauvrete urbaine au Mali est estime a fM 30\.250 (69 dol
lars) par menage et par mois\. Bien que les chiffres soient rares et imprecis,
ils montrent que 40 % environ des menages de Bamako ant un revenu inferieur a
ce niveau\. La fonction publique et les differentes entreprises d'Etat four
nissent la majorite des emplois urbains\. Toutefois, les effectifs de fonc
tionnaires sont deja tres lourds et il est peu probable que les emplois dans
Ie secteur public augmentent assez rapidement pour absorber Ie nombre crois
sant de personnes en qu@te d'un gagne-pain\. En l'absence d'un important et
vigoureux secteur prive organise, Ie secteur informel, qui entre pour pres de
50 % dans Ie marche dutravail, offre un champ potentiellement attrayant, mais
limite, a l'augmentation du nombre d'emplois\. Les facilites de credit et l'as
sistance technique offrent aux petites entreprises certaines possibilites pour
Ie developpement de leurs affaires\. Dans cette perspective, Ie Gouvernement
allemand (KfW) a finance trois lignes de credit pour les moyennes entreprises\.
Dans un projet recemment evalue, l'IDA se penche sur les problemes des entre
prises d'Etat, des moyennes entreprises et des petits entrepreneurs\. Jus
qu'ici, toutefois, l'on ne s'est guere interesse au secteur artisanal\.
Administration du District
1\.18 Le District est responsable a) de l'entretien des rues et des cani
veaux et de la construction des ecoles primaires et des dispensaires; b) de
l'hygiene du milieu et notamment de l'enlevement des ordures menageres et de
la pulverisation des insecticides; c) dela protection en cas d'incendie; et
- 6
d) de certaines reglementations sur Ie developpement urbain et la construction
des habitations\. Le District a eu de serieuses difficultes a accomplir ces
tAches, a cause de ses faibles ressources budgetaires (cf\. Reforme administra
tive, par\. 4\.01)\.
C\. Autres villes du projet ; Mopti, Kayes et Gao
1\.19 A mesure que les centres secondaires se developperont, il y aura une ,
augmentation parallele de la demande d'emplois, de logements et de services
urbains\. Toutefois, etant donne la situation serree de la main-d'oeuvre et
des finances, Ie developpement d'une strategie pour la gestion de la crois
sance urbaine devra en un premier temps ~tre necessairement axe sur la capi
tale\. Dans Ie projet de l'IDA, les vi lIes retenues par les autorites en vue
d'une intervention limitee montrent que les pouvoirs publics reconnaissent Ie
rOle que ces centres commencent a jouer dans la promotion de la croissance
productive de leurs regions respectives\.
Mopti
1\.20 Mopti, qui compte 62\.000 habitants, est situee sur la rive Nord du
Bani pres de son confluent avec Ie Niger, approximativement au centre du pays
(voir Carte 1)\. L'assainissement est Ie probleme Ie plus urgent auquel Mopti
soit confronte eu egard a son extr~me pauvrete et aux ressources publiques
limitees\. Le reseau de drainage des eaux d'orage ne dessert que 30 % de la
ville, et est a l'origine de fortes inondations pendant la saison des pluies\.
Quand l'eau du Bani monte, les vieux et les nouveaux quartiers de la ville
deviennent deux lIes reliees par une route\. Les dechets solides ne sont pas
enleves sauf dans la zone commerciale, ce qui oblige la plus grande partie de
la population a deverser ses ordures en dehors des limites de Mopti ou dans
les bas quartiers de la ville, situation qui menace gravement la sante publi
que lors des inondations\. II n'y a pas de systeme d'egouts et la plupart des
bAtiments modernes sont dotes de fosses septiques videes, periodiquement mais
peu frequemment, par Ie service d'assainissement municipal\. Dans les autres
maisons faites de banco, on utilise des latrines a fosse\.
Kayes
1\.21 Kayes, troisieme ville du Mali avec 50\.000 habitants, est situee
a l'extremite Ouest du pays sur la voie ferree Bamako-Dakar (voir Carte 1)\.
L'insuffisance de l'adduction d'eau pose un probleme particulierement grave
que la recente panne des ouvrages de prise d'eau nla fait qu'empirer\. Pres
de 15 % de la population de Kayes vit dans Ie quartier de Kayes Ndi en expan
sion rapide, demuni d'eau potable\. Le Gouvernement desire vivement rectifier
cette situation\.
- 7
Gao
1\.22 Gao, l'ancienne capitale de l'empire Songhay et maintenant la capi
tale de la septieme region, la plus aride du Mali (voir Carte 1), connatt aussi
une situation difficile pour ce qui est de l'approvisionnement en eau, aussi
bien sur Ie plan de la production que de la distribution, l'afflux de popula
tion flottante et de betail vers la ville pendant la saison seche ne font
qu'aggraver cet etat de chose\. Cette migration temporaire fait doubler la po
pulation de la ville, la portant a 33\.000 habitants\. Un tiers seulement des
citadins ont acces a l'eau courante qui, dans Ie meilleur des cas, arrive par
, intermittence\. Le reste de la population n'est pas du tout desservi par Ie
reseau et est oblige de chercher de l'eau dans les quelques puits de la ville\.
D\. Comment les autorites repondent aux besoins urbains
1\.23 Etant donne Ie niveau de croissance urbaine projete et la pauvrete
extr@me du Mali et comme il n'est guere possible de renverser ces tendances a
court terme, les autorites sont tres embarrasees quand il leur faut repondre
aux besoins de la population urbaine\. Dans cette perspective, elles en sont
venues a comprendre que Ie secteur urbain ne peut pas disputer les maigres
ressources aux autres secteurs mais doit appuyer et promouvoir la croissance
productive des zones rurales\. Aussi, sont-elles maintenant disposees a exami
ner les normes en matiere de recouvrement des coats et la capacite de paiement
des menages urbains\. En une premiere etape, ce projet explorera les solutions
peu coOteuses a la fourniture des services urbains, pouvant @tre repetees ail
leurs\. Les pouvoirs publics ont aussi reconnu que les institutions responsa
bles des services urbains ont de graves difficultes financieres et de person
nel qui doivent @tre attenuees si elles veulent pouvoir repondre a une demande
grandissante\. C'est en vue de renforcer ces institutions qu'une reforme est
actuellement en cours d'execution (voir par\. 4\.01)\.
1\.24 Afin de combler l'absence de politique urbaine et de pourvoir aux
besoins de logements, Ie Gouvernement lance plusieurs initiatives qui aideront
Ie District de Bamako a faire face a ses responsabilites\. II s'agit : a) de
terminer Ie schema directeur de la region de Bamako; b) de reviser les lois
sur Ie regime foncier et d'elaborer une politique de gestion des terrains; et
c) d'executer une etude detaillee des institutions existant dans Ie secteur
En ce qui concerne les services urbains, on procede actuellement a l'identifi
cation et a la preparation de projets routiers, d'adduction d'eau et d'elec
tricite pour lesquels les autorites ont demande Ie concours financier de plu
sieurs organisations bilaterales et de l'IDA\. Des etudes sur les questions
financieres se posant dans ce secteur ont ete entreprises\. Dans ce contexte,
Ie KfW finance une etude sur Ie tarif de l'eau\.
1\.25 Le projet propose a ete prepare par des consultants dont les ser
vices ont ete finances par l'IDA, au moyen d'une avance du mecanisme de pre
paration des projets; toutes les institutions interessees, particulierement
- 8
la Direction de l'habitat, ont etroitement collabore a cette tAche \. Dans un
pays ou l'experience et les ressources sont extr@mement limitees, l'incidence
de ce premier effort d'investissement a ete examinee avec soin eu egard part i
culierement a la strategie operationnelle de developpement du Sahel d~nt il
est question au paragraphe 1\.04\. Les modestes objectifs du present projet sont
d'aider les autorites a prendre les premieres mesures conduisant a : a) amelio
rer la situation sanitaire dans l'ensemble de la ville; b) demontrer une solu
tion abordable pour la fourniture de logements selon un modele qui peut ~tre
repete; c) renforcer Ie cadre institutionnel pour Ie rendre apte a assumer ses
fonctions de gestion urbaine\. r
II\. DESCRIPTION DU PROJET
A\. Le Pro jet
Objectifs
2\.01 Le projet a pour principal objectif d'aider Ie Gouvernement a four
nir des services urbains a un prix abordable aux populations urbaines a faible
revenu, notamment en ce qui concerne l'habitat, l'approvisionnement en eau,
l'enlevement des ordures menageres, Ie drainage, les ecoles et les soins de
sante\. Pour que les divers elements du projet puissent ~tre reproduits et
pour que l'entretien des installations soit assure convenablement, une grande
importance sera accordee au recouvrement des coOts, en particulier pour l'ha
bitat et les services municipaux, dont les coOts sont traditionnellement re
couvres dans des proportions insuffisantes\.
2\.02 Les objectifs particuliers du projet seront a) de fournir un habitat
et des installations communautaires connexes pour faire face a la moitie de la
croissance de la demande des populations a faible revenu de Bamako, b) d'ame
liorer les conditions de sante et d'hygiene a Bamako, c) de stimuler l'emploi
productif par une assistance financiere au secteur non structure et la promo
tion des materiaux de construction locaux, d) de fournir les services essen
tiels d'approvisionnement en eau et d'assainissement aux villes secondaires,
et e) d'etablir de nouvelles institutions et de renforcer les institutions
existantes du secteur urbain, en particulier les directions regionales de
l'Habitat et des Imp6ts de Bamako, la Caisse fonciere de Bamako et la Direction
du Logement du District ainsi que la Direction Technique\.
Principaux elements du projet
2\.03 Pour permettre la realisation des objectifs mentionnes ci-dessus,
les elements ci-apres seront inscrits au projet :
- 9
Coat en % du
millions de dollars coat total
a) Services du logement, Bamako
Amelioration du quartier spontane
de Magnambougou (dont la popula
tion atteindra 22\.000 habitants\.
en 1983); creation de parcelles
amenagees sur un site adjacent,
pour une population qui atteindra
,
22\.000 habitants en 1983; equipe
ments collectifs 5,0 40
b) Amelioration des conditions
sanitaires a Bamako
Fourniture de vehicules et de
materiel pour l'enlevement des
ordures menageres, entretien
des fosses de drainage et equi
pements collectifs, reparation
et extension du reseau de bornes
fontaines publiques et construc
tion d'edicules publics 2,1 17
c) Aide au secteur non structure,
Bamako
Construction de marches; par
celles et credits "artisans"; et
promotion de l'emploi des mate
riaux de construction locaux 0,5 4
d) Fourniture des services essen
tiels aux villes secondaires
Fourniture de materiel pour la
collecte des eaux usees et de
l'enlevement des ordures mena
geres a Mopti et ameliorations
des reseaux d'eau de Gao et Kayes 0,6 5
e) Assistance technigue pour l'exe
cut ion du projet
Fourniture d'une assistance
technique au Bureau du projet
pour les leves cadastraux aeriens,
et pour la revision des comptes
du projet 2,7
21
- 10
coat en % du
millions de dollars coat total
f) Etudes
Fourniture de services de con
sultants pour i) l'etude de
factibilite, ii) une etude sur
la programmation des invest is
sements, et iii) la preparation
d'un second projet 0,9 8
g) Aide aux institutions
Fourniture de vehicules et de
materiel pour i) Ie Bureau du
projet, ii) la CAFOBA, et
iii) la Direction regionale
des impOts 0,6 5
Total 12,4 100
2\.04 Le projet preconisera des solutions peu coateuses pour ameliorer la
qualite des services publics a Bamako et dans trois villes secondaires\. Les
programmes de rehabilitation et d'amenagement de parcelles neuves du projet
demontreront la faisabilite des formules preconisees pour ameliorer les condi
tions de vie des populations pauvres des zones urbaines\. L'aide au secteur
non structure permettra aux petits commer9ants et artisans des perimetres vises
de jouir d'un emploi permanent et viendra s'ajouter a l'aide plus large qu'il
est prevu d'accorder aux petites entreprises et aux artisans dans Ie cadre du
futur projet lDF\. La promotion de l'utilisation de materiaux de construction
locaux et la formation des artisans du secteur du b~timent seront integrees
a la construction de logements et d'equipements collectifs, ce qui permettra
de reduire Ie coat de ces elements\. Enfin, Ie renforcement des institutions
facilitera, dans l'immediat, l'execution du projet, et augmentera les possibi
lites de realiser un programme de developpement urbain peu coateux susceptible
d'8tre repete\.
B\. Description detaillee
a) Amelioration de l'habitat a Bamako
i) Amelioration du quartier spontane de Magnambougou
2\.05 Ce quartier spontane, qui a commence a se former en 1965 est situe
sur la rive sud du fleuve Niger, dans l'un des secteurs de la peripherie de
Bamako au developpement Ie plus rap ide (voir Carte 2)\. Le choix de ce site a
- 11
ete determine apres analyse des caracteristiques de la population, des services
dont elle dispose et de son implantation par rapport a l'infrastructure pri
maire et aux possibilites d'emploi\. Les habitants de ce quartier ant un revenu
moyen d'environ 40 % inferieur a celui de l'ensemble de la population de la
ville et ils n'ont aucune garantie contre Ie risque d'expulsion\. La proximite
du perimetre choisi pour l'operation parcelles neuves et des quartiers a ame
liorer simplifiera egalement la conception et l'execution du projet, reduira
les coats de fourniture de l'infrastructure hors site et minimisera la g@ne
causee au petit nombre de menages du quartier a ameliorer qui devront @tre
deguerpis (voir par\. 3\.14)\.
2\.06 En 1976, ce quartier comptait 9\.061 habitants qui formaient environ
1\.725 menages installes sur 1\.550 parcelles d'une superficie moyenne de 375 m 2
La population est aujourd'hui de 12\.000 habitants vivant sur 1\.700 parcelles,
et on compte qu'elle doublera environ d'ici a la fin de la periode du projet\.
2
La tail Ie des parcelles varie de 100 a 600 m Cette colonie s'etend sur un
terrain d'une centaine d'hectares qui descend en pente douce (2 %) vers Ie
fleuve Niger\. Les habitants ant construit des maisons en banco sur un sol de
laterite, Ie long de rues etroites\.
2\.07 Les normes de conception de l'infrastructure prevue pour Ie site
m@me sont minimes, en raison du peu de moyens dont dispose la population\.
Les ameliorations prevues constituent une premiere phase d'un travail qui
pourra @tre poursuivi progressivement, a mesure que Ie revenu des habitants
s'ameliorera\. Ces normes sont determinees en partie par les conditions exis
tant a l'exterieur du site, notamment en ce qui concerne l'approvisionnement
en eau et l'alimentation en electricite, ainsi que par Ie faible revenu des
habitants de ce quartier\. Environ 80 % de la superficie brute est subdivisee
en parcelles fermees par des murs d'enceinte, sur lesquelles on ne songe pas
a decouper des parcelles de remplissage en raison de la complexite des proce
dures de remembrement, de problemes de coutumes sociales et de difficultes
d'indemnisation\. On prevoit que les menages loueront des chambres au subdi
viseront leurs parcelles, par exemple, a l'intention de parents\. Les amelio
rations ci-apres sont proposees (voir Cartes 3, 4 et 5) :
Voirie : Travaux simples de debroussaillement au de nivellement de
6 km de voies tertiaires (emprise existante, 5 m de nivellement); 2 km de voies
second aires en laterite (emprise 12 m, 7 m de chaussee) et 850 m de voies
d'acces goudronnees au marche (emprise 20 m, chaussee 7 m)\.
Alimentation en eau : Construction d'un reseau d'alimentation : ca
nalisations d'un diametre de 80 a 200 mm; installation de 16 bornes-fontaines
publiques destinees a apporter l'eau a mains de 200 m de toutes les parcelles
(un robinet pour une centaine de menages)\.
Drainage : Construction de fosses de drainage en terre et de fosses
de drainage en ma~onnerie avec ponceaux en cas de besoin\.
- 12 -
Electricite : Installation de cAbles aeriens alimentes par un trans
formateur de 160 KVA\. A l'origine, l'electricite sera limitee a l'eclairage
de la rue principale et a des raccordements pour les equipements collectifs\.
Eguipements collectifs : Construction de 12 classes et d'un marche a
l'aide de materiaux de construction locaux ameliores (voir par\. 2\.23)\. Les
principes de conception appliques aux equipements collectifs et aux services
fournis seront semblables a ceux de l'operation "parcelles neuves"\. Durant
les negociations, des assurances ont ete donnees qu'un nombre suffisant d'en
seignants seront affectes aux nouvelles ecoles\.
Des refinancements de 125 dollars chacun pourront @tre consent is aux
occupants de toutes les parcelles pour l'amelioration de leurs habitations\.
Une assistance technique sera egalement dispensee pour aider a ameliorer la
construction a l'aide des materiaux de construction locaux (voir par\. 2\.23)\.
Securite fonciere : Les terrains du quartier de Magnambougou appar
tiennent a l'Etat\. Lors des negociations, des assurances ont ete obtenues que
ces terrains seront transferes au District de Bamako\. Des baux d'un maximum
de 20 ans de location-vente seront accordes aux residents\.
ii) Operation "parcelles neuves"
2\.08 L'operation "parcelles neuves" sera realisee a Magnambougou sur un
terrain adjacent au quartier a ameliorer, et couvrira environ 100 ha\. On pre
voit que cette operation touchera 22\.000 personnes (2\.600 menages) en 1983\.
Ce site se trouve a proximite de possibilites d'emploi et les conditions du
sol se pr@tent a l'amenagement d'un quartier d'habitations\. L'amenagement de
ce site a ete con~u de maniere a assurer une utilisation judicieuse du terrain
et de l'infrastructure (voir Cartes 3, 4 et 5)\. L'utilisation du sol est de
crite au Tableau 11-2 ci-dessous\.
Tableau 11-1 UTILISATION DU TERRAIN
Superficie % du
(ha) total
l\. Habitations
( 1\.310 parcelles de Type A (16 m x 20 m : 320 m2~ 41,9 44
(ou 2\.620 parcelles de Type Al (16 m x 10 m : 160 m )
(ou une combinaison de type A et Al
221 parcelles de Type 2
B (17 m x 22 m : 374 m ) 8,3 9
50 parcelles de Type C (15 m x 30 m 2
: 500 m ) \.-b1 3
Sous-total 52,7
2\. Equipements collectifs 8,6 9
3\. Espace ouvert 8,4 8
4\. Circulation des vehicules et des pietons 25,5 27
95,2 100
- 13
2\.09 Les beneficiaires auront la possibilite d'acquerir des parcelles
2 2 2 2
A (320 m ), Al (160 m ), B (374 m ) et C (500 m )\. Les acquereurs de par
celles A pourront en revendre la moitie a la Direction du logement s'ils ne
peuvent payer leur layer\. La taille des parcelles, qui varie de 160 m a2
500 m2 , et Ie niveau des services ant ete determines par l'analyse des avan
tages et des inconvenients correspondant a divers niveaux de densite de popu
lation et a divers coOts d'infrastructure calcules en fonction de leur acces
sibilite pour la population visee\. Les differentes solutions envisagees ant
ete examinees avec Ie Gouvernement et les normes proposees approuvees comme
representant des niveaux de services accessibles aux groupes aux revenus les
,
plus faibles sur les plus petites parcelles, etant entendu que l'ensemble des
parcelles plus grandes permettrait la creation d'une communaute equilibree\.
2\.10 Les services prevus comprennent des bornes-fontaines publiques, des
fosses de drainage, l'eclairage des rues et un reseau de voies compose pour la
plupart de voies non goudronnees\. Toutes les parcelles seront situees dans un
rayon de 200 m d'une borne-fontaine publique et il est prevu un robinet pour
80 menages\. L'evacuation des eaux usees se fera par des latrines a fosses\.
II n'est pas prevu de raccordements electriques pour les particuliers, les
seuls raccordements devant desservir les equipements collectifs, et assurer
l'eclairage des rues principales et secondaires\. II est prevu une voie d'ac
ces goudronnee au marche et aux autres equipements collectifs a seule fin de
permettre Ie passage de vehicules de transport public et l'enlevement des or
dures menageres\. Les voies secondaires seront en laterite, tandis que les
voies tertiaires seront simplement defrichees au nivelees\. La plupart des
parcelles seront dotees d'un simple chemin debroussaille pour l'acces des pie
tons\. Les equipements collectifs prevus camp rend rant 12 salles de classe, un
centre de sante et un marche\. Des refinancements a la construction d'un mon
tant de FM 260\.000 a FM 720\.000 seront consentis aux occupants des parcelles
2
louees en location-vente\. Les beneficiaires des lots de 500 m vendus aux
prix du marche n'auront pas droit a un refinancement\.
2\.11 Le coat total du projet par menage pour toutes les ameliorations
s'elevent en moyenne a fM 312\.000 dans Ie quartier existant et a FM 485\.000
pour les parce11es neuves (sur la base de la population prevue pour 1983)\.
Les coats par habitant sont respectivement de FM 39\.000 et FM 61\.000 dans cha
cun de ces cas\.
2\.12 Le terrain qui servira a l'operation "parcelles neuves" appartient
a l'Etat et sera transfere au District de Bamako\. Les parcelles des Types A,
Al et 8 seront en location-vente avec des baux de 20 ans\. Le prix des par
celles variera selon leur emplacement, leur accessibilite et leur regime
fancier (voir par\. 5\.04)\.
- 14
iii) Infrastructure hors site
2\.13 L'infrastructure hors site necessaire a l'amelioration du quartier
de Magnambougou et a l'operation "parcelles neuves" comprennent
1\.550 m de voies d'acces goudronnees de 7 m de large;
1\.500 m de fosses de drainage en terre et en mat;onnerie;
2\.000 m de cAbles electriques moyenne tension;
3\.500 m de canalisation d'eau de 300 mm de diametre\.
b) Ameliorations des conditions sanitaires dans le District de Bamako
2\.14 Cet element vise a ameliorer les conditions de sante et d'hygiene
dans le district par des reparations et par la programmation de l'entretien du
materiel existant en ce qui concerne l'enlevement des ordures menageres, le
drainage, les bornes-fontaines publiques et les edicules publics et par la
construction de nouvelles installations\. Le coOt total de ces elements par
habitant, calcule sur la base de la population actuelle de la ville, est d'en
viron cinq dollars\. Ces elements du projet ont pour but d'assurer :
l'enlevement regulier des ordures menageres dans toute la ville et
leur dep6t en des points fixes,
un meilleur drainage des eaux d'orage; et
une meilleure utilisation du reseau de bornes-fontaines publiques et
de plus grandes possibilites d'acces a ce reseau\.
2\.15 Enlevement des ordures menageres : La degradation de l'environnement,
causee en partie par des difficultes de collecte des ordures menageres, fait
peser une menace serieuse sur la sante publique et fait obstacle au bon fonc
tionnement du reseau de drainage des eaux d'orage\. Le projet prevoit l'achat
de neuf camions et de 85 bennes\. Les services d'entretien de la municipalite
seront reorganises, les operations d'entretien programmees (par\. 4\.15) et
trois sites seront designes comme lieux de decharge\. Le projet prevoit egale
ment le financement des coOts de demarrage (carburant et pieces de rechange)
de ce programme pour les deux premieres annees de son fonctionnement, jusqu'a
ce que les nouvelles taxes municipales procurent des recettes suffisantes pour
couvrir ses coOts de fonctionnement (par\. 5\.10)\. Lors des negociations, des
assurances ont ete obtenues que le montant correspondant a l'amortissement des
vehicules et du materiel sera verse sur un compte special\.
2\.16 Nettoiement et refection des fosses de drainage : cet element est
etroitement lie aceux de l'enlevement des ordures menageres et des bornes
fontaines publiques\. Le projet prevoit le nettoiement et la refection des
250 km de fosses existants puis l'application d'un programme d'entretien regu
lier\. 11 prevoit egalement le betonnage d'environ 25 km de radiers des cani
veaux d'evacuation de l'eau des bornes-fontaines\. Des credits seront accordes
- 15
pour l'achat de quatre camions, de 30 brouettes, de pelles et de pioches,
ainsi que de ciment, de sable et de gravier pour Ie rev@tement des radiers\.
Le projet couvrira egalement les coOts de demarrage des installations pen
dant leurs deux premieres annees de fonctionnement\.
2\.17 Bornes-fontaines publigues : Cet element du projet vise a amener
l'eau potable dans un rayon de 200 m de la majeure partie de la population de
Bamako\. II prevoit l'installation de 20 nouvelles bornes-fontaines (coOt, y
compris leur raccordement, Ie compteur, la dalle de beton, etc\.), la repara
tion de 98 bornes existantes et Ie deplacement de 22 autres Ie long de cani
veaux betonnes\. Ces bornes-fontaines seront installees sur des dalles de be
ton de 3 m sur 3 pour y faciliter l'acces et pour que les recipients puissent
@tre remplis dans de bonnes conditions d'hygiene, ainsi que pour permettre et
accelerer l'ecoulement de l'eau perdue\. Le cas echeant, certaines bornes
auront deux ou trois robinets\.
2\.18 Edicules publics : Ie projet prevoit la construction de dix edicules
publics\. Ces edicules fonctionneront selon Ie principe de fosse a eau\. lIs
seront situees dans les principaux marches et dans certaines ecoles\. Leur
entretien sera assure par la
Direction technique du District\.
2\.19 Construction d'exutoires a Niarela et Bozola\. Cet element doit ser
vir de complement au nettoiement et a la reparation des fosses de drainage
mentionnes ci-dessus et vise a eviter les inondations dans la partie basse de
ces quartiers centraux a forte densite de population\. Ces mesures devraient
permettre d'ameliorer considerablement les conditions d'hygiene a Bozola et
Niarela (qui sont parmi les quartiers les plus denses de la ville)\. Le projet
prevoit des travaux de nettoiement et de reparation ainsi que la construction
de 1\.000 m de fosses en ma~onnerie et l'ouverture d'une tranchee de 2,3 km de
long en direction du fleuve Niger (voir Carte 2)\.
2\.20 Locaux pour la Direction techni~ue du District : Le pro jet prevoit
la construction de nouveaux locaux (850 m d'ateliers de reparation et d'en
2
trep8t et 150 m de bureaux) pour la Direction qui sera chargee de l'execution
et de l'entretien des ouvrages mentionnes ci-dessus\. II comprend egalement
2
2\.500 m de parcs de stationnement pour les vehicules existants et les nouveaux
vehicules et l'achat d'outils, de materiaux et de materiel pour les ateliers
d'entretien et de reparation ainsi qu'un programme de formation pour Ie person
nel\. En outre, il comprend l'assistance d'un mecanicien et d'un ingenieur VRD
(voir par\. 2\.27)\.
c) Aide au secteur non structure
2\.21 Le projet fournira des installations, du credit et de l'aide au sec
teur non structure :
Quatre marches seront construits, l'un dans Ie quartier a ameliorer,
un autre dans Ie quartier des "parcelles neuves" et les deux derniers en ville,
sur des emplacements ou existent deja des marches, mais qui ne disposent d'au
cun arnenagement (Bako-Djikoroni et Sogoninko - voir Carte 2)\. Chacun de ces
- 16
marches regroupera sur une place goudronnee de 120 a 480 etals, de 10 a 30 bou
tiques (comprenant uniquement des murs et une toiture) et de 5 a 10 emplace
ments pour l'amenagement d'ateliers d'artisan\. Chaque marc he sera egalement
equipe d'une borne-fontaine publique, d'un edicule public et d'une benne a
ordures\. Les emplacements seront loues aux commer~ants et artisans par Ie
District\.
2\.22 Credit aux artisans\. Le projet prevoit deux types de pr~ts aux
artisans beneficiaires de lots: i) 50 pr~ts pour la construction d'ateliers,
d'un montant maximal de FM 275\.000 chacun, pour les artisans qui loueront des
emplacements sur les marches, et ii) 400 prats pour l'achat de petit materiel
et de materiaux, de FM 55\.000 chacun, pour les artisans du quartier des par
celles neuves et du quartier a ameliorer\. Ces deux types de prats seront admi
nistres par la Direction du logement qui disposera deja de dossiers individuels
de demande\. En subordonnant la demande de credit a la demande de parcelIe , on
compte reduire tres sensiblement Ie risque que comporte Ie recouvrement de ces
credits, car les personnes qui en feront la demande auront deja ete selection
nees\. Autrement dit, Ie credit sera accorde aux artisans sur la foi de leur
honorabilite, la parcelle tenant lieu de caution (voir par\. 4\.17)\.
2\.23 Materiaux de construction locaux\. Le projet comprend egalement un
programme de promotion et de developpement de l'emploi de materiaux de cons
truction locaux (principalement de pierres et briques de banco stabilise) cen
tre au depart sur les zones du projet\. Cet element a pour objectifs : a) de
favoriser l'emploi de materiaux de construction locaux ameliores accessibles
aux\. populations a faible revenu; b) de reduire les importations de ciment
(actuellement subventionnees par l'Etat); et c) d'enseigner aux artisans et
entrepreneurs locaux les principes et l'utilisation de techniques appropriees\.
D'une fa90n plus precise, Ie projet prevoit i) une assistance technique
(l'affectation d'un expert en materiaux de construction locaux pour une pe
riode de deux ans); ii) la formation d'homologues maliens; et iii) la fourni
ture de l'equipement et de materiaux\. La Direction de l'habitat du Ministere
des travaux publics utilisera les ressources du laboratoire d~nt dispose ce
ministere et fera porter au depart ses efforts sur l'aide aux beneficiaires de
l'operation parcelles neuves et du quartier a ameliorer, pour la construction
de leurs maisons, ainsi qu'aux entrepreneurs qui seront charges de construire
les equipements collectifs prevus par Ie projet\.
d) Villes secondaires
2\.24 Dans les villes secondaires, Ie pro jet ne portera que sur les mesures
d'urgence dec rites ci-apres\. Des etudes et investissements plus complets sont
envisages a la suite de l'identification/preparation d'un pro jet d'approvision
nement en eau dont Ie financement a ete demande a la Banque\. II s'agit d'un
premier pas vers l'evaluation du r61e de ces villes face aux perspectives
offertes par leurs regions sur Ie plan de l'agriculture\. A Mopti, Ie Fonds
europeen de developpement (FED) a finance recemment la construction d'un re
seau complet d'alimentation en eau de l'ensemble Mopti-Sevare (production,
stockage, distribution)\. Le pro jet propose traitera des problemes d'assainis
sement et d'enlevement des ordures menageres par: i) la fourniture de deux
- 17
camions, et l'amenagement de 18 espaces cimentes pour l'enlevement des or
dures; Ii) la fourniture de deux camions-vidange; et iii) la construction d'un
edicule public\.
2\.25 A Gao, la Communaute economique de l'Afrique de l'Ouest (CEAO) a re
cemment accorde une subvention pour la reparation et l'amelioration des puits
et de la station de pompage\. Le present projet permettra l'extension du reseau
de distribution d'eau (environ 12 km de canalisations d'un diametre variant de
50 a 150 mm)\.
2\.26 A Kayes, Ie projet s'efforcera de remedier a l'insuffisance de
l'alimentation en eau de la ville par i) Ie remplacement de la prise d'eau
provisoire et des canalisations connexes; ii) l'achat de pompes et de materiel
d'une capacite totale de 300 m3/h; iii) la construction d'une conduite de
200 mm de diametre traversant Ie fleuve Senegal pour alimenter Ie quartier de
Kayes-Ndi; et iv) l'extension du reseau de distribution d'eau (environ 1 km de
canalisations d'un diametre variant de 80 a 250 mm)\.
e) Services de consultants pour l'execution du projet
2\.27 Des services de consultant seront dispenses dans les domaines indi
ques ci-apres\. Des mandats detailles (termes de reference) acceptabIes par
l'IDA et Ie Gouvernement ont ete etablis pour les services decrits aux ali
neas (i) et (ii) ci-dessous\.
i) A l'intention du Bureau du projet, conseils en matiere de conception
et d'execution de projet, notamment en ce qui concerne la coordination, la
gestion et la conception du projet\. 11 est prevu six experts (un administra
teurchef de projet, un ingenieur municipal, un mecanicien, un analyste de
systemes, un expert en gestion municipale et un expert en materiaux de cons
truction locaux) pour aider les services interesses dans l'execution du pro
jet; les services de ces experts seront finances dans Ie cadre du projet\.
ii) Photos aeriennes du District de Bamako necessaires a la preparation
"cadastrage" en vue de l'application d'un nouveau systeme de taxes municipales
(voir par\. 5\.10)\.
iii) Revision des comptes du projet\. Le Bureau du projet sera respon
sable de la coordination et de la verification des comptes du projet d~nt Ie
coOt est compris dans Ie projet\.
f) Etudes
2\.28 Les etudes comprennent : i) l'etude de factibilite du projet propose
(IDA, avance consentie en 1977 au titre du financement de la preparation des
projets)\. Cette etude a eta entreprise par les consultants du Groupe 8
(Tunisie), en collaboration avec la Direction de l'habitat du Ministere des
travaux publics; ii) preparation d'une etude de programmation a court et moyen
terme des investissements pour Ie District de Bamako, y compris l'achevement
d'un schema directeur de la ville; et iii) etude pour la preparation d'un
second pro jet urbain\.
- 18
g) Aide aux institutions
2\.29 Un bureau du projet sera cree au sein du Ministere de l'interieur
pour aider, coordonner, superviser et surveiller l'execution du projet, avec
l'aide d'assistants techniques (voir par\. 2\.27)\. A l'intention de ce bureau,
Ie projet prevoit l'acquisition de trois vehicules et de materiel de bureau
(photocopieur, machines a ecrire, etc\.); il couvrira egalement les coOts de
fonctionnement de ce bureau et de ces vehicules\.
2\.30 La Caisse fonciere de Bamako (CAFOBA) sera creee pour accelerer la
fourniture de terrains appartenant a l'Etat pour l'habitat et pour d'autres
usages\. La CAFOBA relevera du Ministere des finances et sera la seule insti
tution habilitee a distribuer des terres appartenant a l'Etat dans la region
de Bamako et a en recevoir Ie paiement conformement a la politique d'adminis
tration fonciere de l'Etat\. Cette institution sera creee par etapes, comme il
est indique au paragraphe 4\.11\. Le projet prevoit de lui fournir des bureaux,
des vehicules et du materiel de bureau pour son demarrage\.
III\. ESTIMATIONS DES COUTS, PLAN DE FINANCEMENT ET EXECUTION
A\. Estimations des coats
3\.01 Le coOt total du projet, y compris les imprevus, est estime a
6,7 milliards de FM (15,3 millions de dollars); la part en devises serait
de 2,9 milliards de FM (7,3 millions de dollars) soit 47 % du coOt total du
projet\. Ces estimations de coOt sont recapitulees au Tableau 111-1 et pre
sentees de fa~on detaillee a l'Annexe 1\. La valeur des terrains qui seront
fournis par l'Etat, qui est de 420 millions de FM (0,95 million de dollars) au
prix officiel, e~t incluse dans Ie coOt du projet\. Les coOts de base sont
estimes en prix de juin 1979 et sont fondes sur a) l'avant projet d'execution
des travaux de genie civil, b) des devis de fournisseurs pour Ie materiel et
c) l'experience acquise a propos d'autres projets au Mali pour les services
de consultants (estimes a 11\.000 dollars par homme-mois)\. Les depassements de
quantite ont ete estimes a 15 % pour les travaux de genie civil et a 10 % pour
les b~timents, Ie materiel et les services de consultant\. II n'a pas ete in
clus de provisions pour depassements de quantite pour les pr~ts pour l'amelio
ration de l'habitat et les credits aux artisans\. Les provisions pour hausse
des prix sont fondees sur les dernieres directives de l'IDA en ce qui concerne
Ie materiel (6,0 % en 1979 et pour les annees suivantes) et sur les estimations
donnees par les missions de l'inflation a venir dans Ie secteur de la construc
tion pour les travaux de genie civil (10 % par an en 1979 et pour les annees
suivantes\.
B\. Plan de financement
3\.02\. Le credit de 12 millions de dollars (5,280 milliards de FM) envisage
par l'IDA couvrira 85 % du coOt total du projet, ou 88 % de ce coat, taxes
non comprises\.
\.,\.
PkOJET URIlAIIi DU MAll
Tableau HI-l I HECAPl'l'llIATION Dl:S L'OU'l'S OU PllOJh'T
------- M11Uon\. de J1M --------- 1-----\.MIllion\. de <1011ara -----'1 'J au
_ \.ie
, , 1\. d\. tot\. l
I Monnaie I l'6U'\.'mt du co(it
nationale TlUCe\. ~ ~ ll4tlonale 1!!!\.! !!!\.!!\.!!!\. ~ I en devises initial
I\. Wlioratto9 de 1"lb\.b1tat a BaJIIIIlto
\. ) Am<!l1oratIon, MagpwWougou !I
bl Parceiles n~uv lhIgnaabougOIL Y
HI \.
390\.5
\.)U\.5
12\.6
156\.8
2010\.0
630\.10
667\.1
0\.99
0\.89
0\.08
0\.11
0\.36
0\.116 1\.~31
1\.52
2J
30
116
12\.2
c) Infr"" tructure her\.-51 te 1310\.8 29\.6 11\.6 236\.0 0\.31 O\.W 0\.16 0\.53 30 1,\.3
<I) In\.tailat1OO11 de sante 79\.2 ll\.~ 21,\.2 114\.8 0,18 0\.02 0\.06 0\.26, 23 ~\.l
e) Ecole\. 66\.8 6\.9 -2\.2 73\.7 0\.15 0\.02 0\.17 -
-
L4
1') Prilt\. a 18 con\.truction 477\.3 0\.6 1j&)\.1 1\.08 - - 1\.09 8\.8
Total partie! 1,5;\.;5,'( J(" \.0 45<3,6 ;~~ 3\.60 _ 0\.)6 1\.01+ 5,00 ZI - \. lfD\.4
II\. Amelioration des condition\. /I'liDi"'" Ii\. B-\.ko
a) EnHov\.nt de\. ordure\. m6Jl1ij!er"\. 71\.8 89\.1 2'12\. It "33\.3 0\.16 0\.20 0\.62 0\.98 6) 7\.9
b) Netto1\.""t et rep\.t1on de\. foo\. de drat"""" 12\.1 13\.1 1dI\.6 13\.8 0\.03 0\.03 0\.11 0\.17 6S 1\."
0)
d)
Approv1aiollllement ell _U, bornea-tontalne\. publ1'l\.ues
Ed1cule\. public\.
11\.9
39\.5
1\.3
12\."
It\."
61\.0
11\.6
112\.9
0\.03
O\.~
-
0\.03
0\.01
O\.llt
0\.04
0\.26\.
2S
S4
0\.3
2\.1 \.
l8:~ 50\.8 o\. 0\.01 O\.W 0\.12 58 0\.9
e)
r)
Exutoire\., 1I1are18
Services _1c1paUlt\. d"pilt et \.t \. 1e1 101\.
5\.0
3"\.3 ~:5
\.0 21'1\.0 0\.23 0\.08 0\.11 0\.48 35 3\.9
Total partiel 225\.' 155\.2 IjQQ\.Q 901\." 0,58 0\.35 1\.12 2\.05 S5 16\.5
III\. Aide \.u sect-v aon \.truct~ de Bem8lt0
\.l Mo\.rcl1e\.
a""
~\.7 11\.0
5\.0 110\.
6 0\.22 0\.03
-
0\.01 0\.26
-
4 2\.0
b Credit arU\.
c) Prowtioll de 1'_101 de\. _teriaw< de COO8truCUOO locaw< ~~:8
2 \.6 1\.6 ,;\.5 3':7
64\.
0\.08
0\.06 - 0:13
0\.08
0\.19 68
0\.7
1\.6
\.
Total partiel 1>;6\.1 12\.6 62\.2 231\.2 0\.36 0\.03 0\.1" 0\.53 26 ~ '"
,
IV\. Services essentleb pour Ie\. villea aeconda,ll'cUI
\.) iIoptt\. \.1n1\.nt et enlltv_t des Ordure\. ~I:re \. 1"\.5 18\.8 56\.6 89\.9
0\.03 0\.04 0\.13 0\.20 65 1\.1
b) aao\. "Pl'rovia1onn\.nt en eau 25\.6 56\.5 0\.06 0\.01 0\.06 0\.13 46 1\.0
ol Kayea\. approvhtonn\.nt en eau ~\.1 5\.2
\.5 1~2 61\.0 121\. It 0\.10 0\.04 0\.1" 0\.28 50 2\.2
Total partie! alt\.? lQ\.Q 1"l\.2 267\.8 0\.19 0\.09 0\.33 0\.61 54 10\.9
v\. Services de confJu\.ltants pour 1 'e~'cutlon du pl"olet I
\. ) A\.o1\.tance tecl1nlque pour l'edcution du projet
b) Led\. par pIlotoaralble \.Adenne
~ll,~\.
,
- 1l4~\.8
33\.0
1\.056\.3 0\.1<8
0\.08
-
0\.01
1\.92 2\.1<0
0\.17 '
I 80
41
19\.0
1\.3
e) Audit
33\.0
9\.6
5\.1
- 3\.8
11\.7
7\.3 0\.02 - S:8lI 0\.10 ~Il I\.~
Total p \. tiel
1i!'3\.8 5\.1 915\.8 1,115\.3 0\.56 0\.01 2\.08 2\.61 I 1/1 21\.5
VI\.~
Td\.abllit6, progr_ d'lnvestI\.s_t, \.con<1 pr<ljet - - 1015\.0 1015\.0 - - 0\.910 o\.~\ IIl0 7\.6
VII\. Aide 8W< institutions
32\.0 15'\.9 51\.1 105\.6 0\.01 0\.04\. 0\.1l 0\.241 54 2\.0
Il) Burellu du proJ"t 55\.0 10\.1 35\.8 101\.5 0\.13 0\.02 0\.08 0\.23 ]S 1\.9
b) Dlrection de l'adII1ni\.tr&Uon tonc1i'rti l2\.0 10\.4 30\.1
c )Dlrect1on dalona1e de\. lapOu
~2\.~ I !\.l\.O} 0\.02 ~l\.!H 0\.12 ; S!l 0\.9
Total partiel
99\.0 37\.0 12~\.6 259,6 0\.23 0\.08 0\.28 0\.59 1 £1 4\.8
I
Total des couts initial 21034\.6 1008\.<' 2\.609\.6 5 ~5:?" 5\.53 0\.93 5\.93 12\.39 "U Ivv\.O
VHr\. n6paa\.nt\. de qll8Jlti U 183\.8 ":i\.O 272,1 504\.9 0\.42 0\.11 0\.62 1\.15 54
IX \. 1Itt\.lltule de\. e1:1: ]94\.4 64,2 3059 \.
761 , 0\.69 0\.15 0\.10 1\.11< i 40
Totel partiel 51 6 2 ilJ,2 :178,0 1,269\.4 1\.31 0\.26 1\.32 2\.69 "6
eout tot"l du proJet 1, 012 8 521\.2 3,l87\.1l 6,721\.8 6\.8, 1,18 1\.25 1'j,2d \. \.7
!J Y cOIIIjlrla uno provision d \. i'M UlO \.tUlo\. (0\." \.tillon de dol\.l\.t\.r\.) pour 1\. tendn\.
y Y coor\.pr1s un\. pruvision de rN 240 \.tlllollB (0,6 \.tUlon de 4olla\.l:s) pour 1e terrain\.
- 20 -
Le credit couvrira 100 % des coats en devises (estimes a 7,3 millions de
dollars) et 78 % des depenses en monnaie nationale, taxes et terrains non com
prise Le Gouvernement malien fournira Ie solde de 3,3 millions de dollars,
soit 20 % du coOt total du projet\. Le plan de financement est resume au
Tableau 111-2 ci-dessous\.
Tableau 111-2 PLAN DE FINANCEMENT DU PROJET
---------- Millions de MF--------- -------- Millions de dollars ----
Monnaie ttlnnaie
nationale Taxes Devises Total nationale Taxes Devises Total
IDA 2\.092 3\.188 5\.280 4,7 7,3 12,0
Mali 921 521 1\.442 bl hl \.2J1
Total 3\.013 521 3\.188 6\.722 §\.J! hl 7,3 15,3
3\.03\. Le Gouvernement malien mettra Ie montant du credit de l'lDA et de sa
propre contribution a la disposition des divers agents d'execution sous forme
de pr@ts ou d'allocations budgetaires (subventions), comme il est indique au
budget du projet presente au Tableau 111-3\. Les subventions budgetaires sont
allouees a des elements pour lesquels il n'existe traditionnellement aucun re
couvrement direct des coOts\. En plus de l'accord de pro jet entre Ie District,
Mopti et l'lDA, des accords de pr@t subsidiaire seront conclus entre Ie Gou
vernement, Ie District et Mopti\. Ces pr@ts subsidiaires seront assort is
d'un taux d'inter@t de 7,5 % et seront remboursables en 23 ans, avec un dif
fere de 3 ans\. L'accord de pr@t subsidiaire avec Ie District portera sur
l'ensemble des fonds retrocedes par Ie Gouvernement, notamment pour les ele
ments parcelles neuves et amelioration de Magnambougou, ainsi que pour l'ame
lioration des services municipaux, dont les coOts peuvent @tre recouvres par
les methodes indiquees au paragraphe 5\.02\. Le solde des coOts du projet, qui
a trait a des elements dont les coats ne sont generalement pas recouvres direc
tement aupres des beneficiaires, a savoir l'assistance technique, les etudes,
l'infrastructure primaire, les installations de sante et les equipements sco
laires ainsi que l'approvisionnement en eau de Gao et Kayes, sera remis aux
agents d'execution sous forme d'allocation budgetaire, a l'exception d'un pr@t
de 102 millions de FM (portant inter@t a 7,5 % et remboursable en 23 ans) a
la Municipalite de Mopti pour l'achat de materiel d'enlevement des ordures
menageres\.
3\.04 Pour que les fonds de contrepartie puissent @tre rapidement utili
sables, il est propose que Ie Gouvernement du Mali cree un fonds de roulement
de 250\.000 dollars au debut du projet\.
- 21
PROJET URBAIN DU MALI
Tableau 111-3 : BUDGET DU PROJET
Montant des prAts
ou des sUbventions/ l
(millions de FM)
Agent d'execution Element du projet Pr@ts Subventions
- Ministere de Bureau du projet,
l'interieur assistance technique 1\.433
- Gouvernorat de Bamako Parcelles neuves, Magnambougo ll / 2 657 180
Amelioration, Magnambougo~ 529 240
Infrastructure hors-site 316
Centre de sante 165
\. Ecoles 106
PrAts a la construction 604
Ordures menageres 538
Fosses de drainage 92
Bornes-fontaines 24
Edicules publics 154
Exutoires de drainage 64
DepOt voirie 259
Marches 151
Credit aux artisans 46
Nouvelles taxes 137
CAFOBA 121
Total partiel 3\.175 1\.208
- Municipalite de Mopti Assainissement et enlevement
des ordures menageres 105
- Direction de
l'hydraulique
et de l'energie
Oeme Region) Approvisionnement en eau, Gao 65/ 3
- Direction de
l'hydraulique
et de l'energie
(lere Region) Approvisionnement en eau, Kayes 145/ 3
- Direction nationale Promotion de l'utilisation des
de l'urbanisme materiaux de construction locaux 109
Etudes 482
Total 3\.280 3\.442
TOTAL 6\.722
/1 Y compris les provisions pour depassements de quantite et pour hausse des prix\.
72 Non compris la valeur du terrain fourni par l'Etat\.
/3 Les coOts seront recouvres aupres des beneficiaires par l'application de
tarifs de consommation d'eau\.
- 22
C\. Passation des marches et decaissements
3\.05 Des marches representant un montant total de 4,7 millions de dollars
seront passes par appel a la concurrence internationale, selon les directives
de l'IDA, pour:
a) les achats de materiel et de vehicules destines i) a l'amelioration
des services municipaux de Bamako (1,5 million de dollars), ii) aux
services municipaux de Mopti (0,2 million de dollars), iii) a l'ap
provisionnement en eau de Kayes (0,1 million de dollars), et
b) les travaux de genie civil relatifs i) a l'amenagement de l'infra
structure necessaire a l'operation parcelles neuves de Magnambougou
(1,4 million de dollars), ii) a l'amenagement de l'infrastructure
necessaire a l'amelioration du quartier de Magnambougou (1,0 million
de dollars), iii) aux installations d'adduction d'eau a l'exterieur
du site de Magnambougou (0,5 million de dollars)\.
Une marge preferentielle correspondant a 15 % du montant des offres au au mon
tant des droits de douane applicables, Ie plus faible de ces deux montants
etant retenu, sera accordee aux soumissionnaires locaux dont l'offre portera
sur des fournitures de fabrication locale\. Les entreprises locales benefi
cieront d'une marge preferentielle de 7,5 % lars de depouillement des offres
relatives aux travaux de genie civil\.
3\.06 On envisage la passation d'un grand nombre de petits marches (repre
sentant un total d'environ 2,5 millions de dollars) qui ne seront pas de nature
a attirer des fournisseurs ou des entrepreneurs etrangers, pour les elements
services municipaux, equipements collectifs et villes seconda~res\. Ces marches
seront passes selon les procedures en vigueur pour les appels a la concurrence
locale\. Les travaux de nettoiement et de reparation des fosses de drainage,
et les travaux de reparation des bornes-fontaines publiques (200\.000 dollars)
seront executes en regie par les services techniques du district\. Les achats
de petit materiel d'un coOt inferieur a 50\.000 dollars chacun, dont Ie total
ne depassera pas 800\.000 dollars, seront effectues sur demande de devis adres
see au mains a trois fournisseurs\. Les pr~ts pour l'achat de materiaux de
construction et les credits aux artisans, dont Ie total atteindra 1,5 million
de dollars, seront accordes en especes\. Les marches relatifs aux services de
consultants (representant un total d'environ 4,7 millions de dollars)seront
passes selon les directives de l'IDA\.
3\.07 Les decaissements du montant du credit de l'IDA seront effectues sur
la base suivante :
a) 70 % des depenses afferentes aux travaux de genie civil,
b) 100 % des depenses en devises afferentes aux achats de materiel,
de vehicules et de materiaux importes;
- 23
c) 100 % des depenses afferentes aux pr~ts accordes pour des travaux
de construction et aux credits aux artisans, et
d) 100 % des depenses afferentes aux services de consultant\.
3\.08 Les decaissements relatifs aux depenses mentionnees a l'alinea (c)
ci-dessus seront effectues sur presentation d'etats de depenses et l'agent
d'execution conservera des pieces justificatives pour en permettre l'examen
par les missions de supervision\. Une avance de 240\.000 dollars a ete consen
tie en 1978 au titre du mecanisme de financement de la preparation des projets,
et une autre avance de 240\.000 dollars a ete demandee par Ie gouvernement pour
permettre a la preparation du projet de se poursuivre dans les derniers mois
de 1978 et en 1979
\.
3\.09 Pour permettre a la preparation du projet de se poursuivre sur sa
lancee, Ie gouvernement a demande l'approbation d'un financement retroactif
pour couvrir des depenses en rapport avec Ie projet\. Ces depenses, qui re
presentent un total de 450\.000 dollars, sont destinees a financer Ie coat de
services d'assistance technique et d'achat de vehicules et de materiel neces
saires au Bureau de projet avant l'entree en vigueur du credit pour l'execu
tion du projet\.
3\.10 Un calendrier estimatif des decaissements du credit de l'IDA est
presente au Tableau 111-5\. Tout solde non decaisse a la fin de la periode
d'execution du projet sera annule\.
Tableau 111-5 : CALENDRIER ESTIMATIF DES DECAISSEMENTS
Montant cumule
Exercice financier Trimestre se Decaissements des decaissements
de 1 'IDA terminant au (mUliers de $) (mUliers de $)
1980 31 decembre 1979 150 630/1
31 mars 1980 250 780
30 juin 1980 300 1\.180
1981 30 septembre 1980 420 1\.600
31 decembre 1980 600 2\.200
31 mars 1981 750 2\.950
30 juin 1981 900 3\.850
1982 30 septembre 1981 1\.100 4\.950
31 decembre 1981 1\.300 6\.250
31 mars 1982 1\.500 7\.750
30 juin 1982 1\.400 9\.150
1983 30 septembre 1982 1\.200 10\.030
31 decembre 1982 900 11\.250
31 mars 1983 450 11\.700
30 juin 1983 300 12\.000
/1 Y compris les decaissements effectues avant septembre 1978 au titre du
mecanisme de financement de la preparation des projets\.
- 24
D\. Calendrier d'execution
3\.11 Dans son ensemble, l'execution du projet prendra environ quatre ans
(voir Graphique Ill-I)\. Les etudes d'avant-projet, y compris les estimations
de quantite, ont ete effectuees avant l'evaluation\. Le projet d'execution a
commence dans Ie courant du troisieme trimestre de 1979\. L'amelioration de
l'habitat par les beneficiaires constituera une activite permanente une fois
que les parcelles auront ete allouees\. Les decaissements seront etales jus
qu'a mi-1983 et la date de clOture sera Ie 30 decembre 1983\.
E\. Questions diverses relatives a l'execution du Projet
Procedures d'attribution
3\.12 Pour l'operation parcelles neuves, les conditions d'eligibilite des
demandes seront que Ie demandeur de Lots A, Al et B
a) soit chef de famille et qu'il reside dans la ville;
b) ne possede pas d'autres terrains dans l'agglomeration de Bamako
(titre foncier ou permis d'occuper);
c) donne des assurances qu'il vivra sur la parcelle;
d) ait un revenu, avec les autres membres de sa famille, compris entre
15\.000 FM et 55\.000 FM par mois en prix de 1978\. Ces montants se
ront revises periodiquement\.
Ces conditions seront publiees sous forme d'avis officiel par les services du
District de Bamako\. Des assurances ont ete obtenues au cours des negociations
que telles seront bien les conditions de selection des candidats\. On prevoit
que les parcelles seront allouees selon un systeme de loterie\.
3\.13 Regime foncier, cession des parcelles et eviction\. Les services du
District accorderont des contrats de location-vente aux beneficiaires de par
celles des types A, Al et B et des titres de propriete aux proprietaires de
parcelles de type C\. Les echoppes et les etals des marches seront loues aux
usagers\. Les terrains consacres a l'amenagement d'equipement collectifs seront
detenus par Ie District\. Les beneficiaires de l'operation parcelles neuves et
de l'amelioration du quartier de Magnambougou seront tenus d'habiter sur leurs
parcelles, mais ils pourront offrir des chambres en location\. Le bail exigera
qu'une maison soit erigee sur les parcelles et specifiera la periode au cours
de laquelle devra avoir lieu la construction (un an), et il exigera egalement
du beneficiaire qu'il vive sur sa parcelle\. Les beneficiaires qui desireront
vendre ou ceder leur parcelle dans Ie perimetre de l'operation parcelles neuves
au cours des cinq premieres annees d'occupation retourneront leur parcelle a
l'ROJU URBAIN I)U HA1\.1
CRAPHlQUE 111-1 CALENDRIER D'EXECUTION
1979 1980 1961 1982 1983
I-- ,
1 2 3 4 1 2 3 4 I 2 3 4 1 2 3 4 1 2 3 4
l\. BAMAKO - PARCELLE~ NEUVES ET AMELIORATION
Parcellea neuvea, Kagnaabougou
volde ~* \. * \.
- - eeee xxx\. SXla"" xxx XXXlUC xxx
-
- drainale ++++++ e\.eeeli ~ l[lU(XX)\. xxx xxx xxxxx xxxx xxxxx \.
- ilectrlctte \.++i eeee xxxx xxxxx xxxx xxxxxx
- eau em:e:ee xxxxxx XXXXXll XKXXX xxxx xxxxx
AIoil1o\.ation, Kagn\.b""IOu
~-
- volrle XXXXX xxxx xxxxx l£:)Cxx
++++ ++++++ eeee"",
~-
XXX)(
- dralnase ++++ \.+++* ee\.eee xxx-x xxxx xxxxx
\.
ltl(XXX
- electr!dtii ++ \. ++++++ eeee xxxx xxxxx xxxx XXXXXx
- eau \. +\. ++++++ eeeeee xxxx xxxxx
Infra\.t \.ucture bora alte
!mo
J
- vol\. le t++++ eeeee I\. XXXXXX xxxxxx xxxxx: XXXxX
- d \. inage +++++ eeeee \. Ixxxxxx xxxxxx xxxxx xXXXx
\.
\.
- Uectrlc1te +++++ eeeee XXX"" XXltX
- eau eeeee: ~ xxxxxx x:xxxxx xxxx
Equipe\.cnta de \.anti eece xxxx XXJ\.XX'X
In\.tallation8 8c01"ire\. eeee xxxx xxx xxx
Pr'ta a 1\. conatruction/bureau du 10lement t+t+ I+t+H+ +i-H++ +I-H+ t+t+ xxxxx xxxx xxxxx xxxx xxxxxx XXXXXX lUUUl\.X XXXXX: xxxxx
- -~
2\. AMELIORATION DES CONDITIONS SANITAIIlES
A IWW(O
\.
Enlivement de8 ordure a \.enagi \.e8
Hettolement et r6paratioo des tos86a de drainBse
Revetement en biton d8B f088~8 d" drain81e
Approviaionnement eQ eau, bornes-tontainea publi\.ua\.
Edlcule\. publica *+++"'\.' eeeee
eeeee::
+++++ \.eae I - XX)UUtX
-
eeeea
I
xxxxxx xxoxx
I-:xxxx xx,\.,\.
xxxxx ,,*,x xxxxx "XXX xXXXx xxx¥\.
XX)UUt xxxx xxXx\. xxxx
xxxxx lUUC:X xxx xx XXXX xxxxx xxx\.
xxxxx xxxx xxxxx xxxx xxxxx xxxx xxxxxx
XlCXXX\.X '"
\.
Ii:'
Exutoi \.e8, Niarila ++\. eeea xxx\.xxx xxxxX
Depot\. - 8ervices municipaux ++++++ eaeee ~-\. XXXXXJ[ XXXXXX xxxX)C: xxxx
-~
1\. PRONOTION DE L 'EKPLOI\. IIAHAlO
Ka\.-ehb t++'" eeee ~ xxxxxx xxx-xx xxxx xxxxx xxxx xxx\.:x xxxx xxxxxx
Credit aux art18ana ++++\. ++++++ \.
++++ xxxxx xxxx xxxxx xxxx xxxxxx xxxxxx xxxxx xxx\.XJ( lUUI:XX
4\. VILLES SSCONDAIRES
Hopt! -t+++++ aeee xxxxxx xxxx>
Cao \.+t++ eeee xxxxxx xxxx>
Kayes \.++ eeee \.,
IIIlIIWWID
xxxxxx xxxxx
~\. ASSISTANCE TECHNIQUE, TAXES, ETUDES
Bureau du protet :
Chef du p~!,j!lt ----_ \. \. -\. --_ --- \.-\. ---- \. --_- -- \. --_ \.- --- ---- ---
\. -- -_ \.
\. ----- -----
\._ \.
\. --- \. _- ---
\. -- --_ \. ----- --- \. _ -- \. - --- -\. -- _\.
Andlyste de 8yettme8
Exp~rt en geation \.unicipale
Inl\~nieur civil --- \. _- \. --- \. _ ---- \. --- ---_\. --_ \.
--- --- \. _-- ---- \.- -\.- --- \. _-- --- --_\. --- -\. --- -_\. _- ----
Hi!canlc1en
--- --_ \.- --- ---- \. _- ----- \. _--- ----
Expert en aateri8UX loc\.ux
ELabl18aemant de nouvelle8 taxe8
Creation d'une direction de l'\.d\.1oi8t \.ttoo tonciere
---~ --~ --~~ - - - \. -\.- - - - \. -\. ----~--- \.
++++++ *tt\. ++ ""u> XXXx Xx\.xxxx
\.+\. \.++++
-~
xxx\.xx
\. """"'''"t
XXlIX\.
*++\.+
-
*\. + **+++ \. + -t\. \. \. TH-'-++
11vrai8on de v6biculea
trav\.ux priparatoire8
~ proJet d'exicution
appel d'oft \.ea
x con8trucfion/ex~cution
a8\.i8tan"" t \. chnique
- 25
la Direction du logement et seront indemnises pour les ameliorations apportees
(sur la base des coOts des materiaux et de l'apport en main-d'oeuvre)\. Cette
condition ne s'appliquera pas aux menages vivant dans Ie quartier a ameliorer\.
Les contrats de refinancement individuels a la construction contiendront une
clause permettant a la Direction du logement de reprendre possession des par
celles et des b~timents en cas de defaut de remboursement\.
3\.14 Quelques menages du quartier a ameliorer devront ~tre deguerpis pour
permettre la construction de nouvelles routes et d'equipements collectifs\. Le
nombre exact de ces menages ne sera connu que lorsque Ie projet d'execution
sera pr~t, mais il ne devrait pas depasser 5 % des familIes qui vivent actuel
lement dans ce quartier\. Les familIes ainsi touchees seront indemnisees pour
les travaux qu'elles ont effectues et seront servies en priorite lors de l'at
tribution des parcelles neuves\.
3\.15 Participation de la communaute\. La version definitive du projet
d'execution des travaux du quartier a ameliorer, notamment en ce qui concerne
l'alignement exact des rues et l'implantation de l'infrastructure et des equi
pements collectifs sera examinee avec les residents actuels de ce quartier\.
L'association du quartier et son chef seront egalement consultes a propos de
l'elaboration de procedures pour Ie recouvrement des redevances afferentes
aux parcelles\.
3\.16 Ce projet devant ~tre Ie premier du genre a ~tre realise au Mali,
les attributions et cessions de parcelle seront suivies de tres pres par Ie
Bureau du projet\.
F\. Comptabilite, revision comptable, suivi et supervision
3\.17 Lors des negociations, des assurances ont ete obtenues que chaque
agent d'execution tiendra des comptes separes a propos du projet, et que Ie
Bureau du projet regroupera l'ensemble de ces comptes\. Des assurances ont ega
lement ete donnees que, six mois au plus tard apres la c18ture de chaque exer
cice financier, des etats financiers satisfaisants, comprenant des rapports
ayant trait aux mouvements de tresorerie et des bilans rendant compte des ope
rations et de la position financiere des principales institutions participant
au projet seront mis a la disposition de l'IDA\. Ces etats financiers s'accom
pagneront d'un rapport sur la comptabilite de chacune des ces institutions
etabli par un expert comptable juge acceptable par l'IDA et remis a l'IDA au
plus tard huit mois apres la c18ture de chaque exercice financier
3\.18 Le Bureau du projet surveillera Ie deroulement du projet et a) veri
fiera si ses divers elements peuvent ~tre reproduits et sont a la portee
financiere des beneficiaires vises, et b) suggerera des moyens de pallier les
insuffisances observees lors de l'execution du projet\.
3\.19 Supervision\. II faudra programmer quelque 96 hommes-semaine de su
pervision du projet par des agents de la Banque au cours des quatre annees de
son execution (24 hommes-semaine par an)\. La supervision des elements relatifs
aux villes secondaires sera minime car Ie projet ne prevoit d'achats de mate
riel que pour Mopti, et parce que Ie Departement des projets Afrique de l'Ouest
participera a la supervision lors de la preparation de son propre projet\.
- 26
IV\. AGENTS D'EXECUTION ET GESTION DU PROJET
A\. La reforme administrative
4\.01 Le Mali est divise en huit regions\. Chaque region a ~ sa tete un
Gouverneur qui est Ie representant permanent du gouvernement et Ie chef de
tous les fonctionnaires en poste dans la region\. Le statut de region a ete
confere au District de Bamako en aoOt 1978\. Par ailleurs, les responsabilites
des gouverneurs se sont trouvees sensiblement accrues par la decision recente
du Gouvernement de decentraliser et de regionaliser les ministeres techniques
avant la fin de 1978\. Alors que les services nationaux conservent leurs fonc
tions de planification et de programmation, Ie personnel regional, sous l'au
torite des gouverneurs, sera charge d'executer les projets\. Du fait de cette
reforme, Ie Gouverneur a desormais sous son autorite les services propres du
District et les directions regionales\.
B\. Execution
4\.02 La responsabilite d'ensemble de l'execution du projet ~ Bamako sera
confiee au gouverneur du District de Bamako qui, en tant que gouverneur de la
region, dirige a la fois les services administratifs de la region et les ser
vices du District\. Un accord de projet devra etre conclu entre Ie Gouvernorat,
l'IDA et Mopti\. Un bureau de projet sera cree au sein du Ministere de l'inte
rieur pour coordonner et superviser tous les aspects techniques de l'execution
du projet\. Le directeur du projet relevera directement du ministre et diri
gera une equipe qui travaillera au sein des services administratifs regionaux
et des services du District\.
4\.03 Le Gouverneur de Bamako sera donc Ie principal responsable de tous
les travaux qui seront effectues a Bamako dans Ie cadre de l'execution de ce
projet\.
4\.04 L'execution des elements du projet relatifs aux villes secondaires,
dont Ie coat ne represente que 5 % du coOt total du projet, sera coordonnee
par Ie Bureau du projet\.
4\.05 Pratiquement tous les travaux seront executes ~ l'entreprise et su
pervises par les agences d'execution mentionnees ci-apres\. Les responsabilites
relatives aux divers elements du projet sont resumees ci-apres :
- 27
Agent d'execution Elements % du total
1\. Ministere de l'interieur Bureau du projet, assistance technique\. 23,0
2\. District de Bamako
a) Services administratifs
regionaux
i) Direction regionale Supervision des travI~x d'infra 29,3
de l'habitat structure, ecoles,-t equipements
de santel7 et marches\.
ii) Inspections des Enregistrement des titres, creation 3,3
impOts et des de la CAFOBA et de nouvelles taxes
domaines municipales\.
iii) Direction regionale Eau, electricite et drainage hors 5,2
de l'hydraulique site, exutoires de Niarela\.
et de l'energie
b) Services propres du District
i) Direction de la Reorganisation des services de vo~r~e 15,6
voirie du District, enlevement des ordures
menageres, nettoiement et repara
tion des fosses de drainage, repara
tion des bornes-fontaines publiques,
edicules publics, et voirie hors-site\.
ii) Direction du logement Preselection des beneficiaires, re 9,5
du District couvrement des redevances afferentes
aux parcelles, prats a la construc
tion et du credit aux artisans\.
2\. Municipalite de Mopti Assainissement et enlevement des 1,7
ordures menageres\.
3\. Direction de l'hydrauligue Approvisionnement en eau, Gao\. 1,0
et de l'energie (7eme Region)
4\. Direction de l'hydrauligue Approvisionnement en eau, Kayes\. 2,2
et de l'energie (lere Region)
5\. Direction nationale de l'habitat Preparation du projet, etude de la 9,2
Ministere des travaux publics programmation des investissements
et etude relative a un deuxieme
projet; promotion de l'emploi des
materiaux de construction locaux\.
Total 100
11 Les directions regionales de l'education et de la sante seront consultees au sujet
des normes en ce qui concerne les ecoles et les centres de sante et seront chargees
de pour voir ces etablissements en personnel\.
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4\.06 Le cadre institutionnel propose a ete con9u en fonction des recents
changements administratifs\. La mission estime que, avec l'assistance technique
du Bureau du projet, ces institutions pourront executer Ie projet propose\.
C\. Le District de Bamako
4\.07 Ce district est administre par un Conseil de district preside par
Ie Gouverneur\. Les responsabilites de ce Conseil sont definies dans la loi
d'aoat 1978 et portent notamment sur: l'entretien de la voirie, l'enlevement
des ordures menageres, l'assainissement et Ie drainage, l'eclairage public,
l'approvisionnement en eau, les transports publics, les impOts locaux, l'admi
nistration fonciere et les marches\. Le Gouverneur du District est nomme par
Ie Conseil des ministres\. II est Ie representant permanent du Chef de l'Etat
et du Gouvernement et il a sous son autorite : a) les services regionaux des
ministeres, et b) les services propres du District\. Les elements du projet
relatifs au District de Bamako relevent de ces deux categories de services et,
par consequent, du Gouverneur\.
D\. Le Bureau du projet
4\.08 Le Bureau du projet sera place sous la responsabilite directe du Mi
nistere charge de l'interieur\. Outre Ie personnel local, comprenant deux inge
nieurs, deux comptables, deux dessinateurs et deux secretaires, Ie directeur
sera assiste de six experts (un administrateur qui exercera les fonctions de
chef du projet, un ingenieur civil, un analyste de systemes, un expert en ges
tion municipale, un mecanicien et un expert en materiaux de construction 10
caux) qui seront affectes aupres de lui dans Ie cadre du programme d'assistance
technique\. La description des fonctions et les qualifications de ces experts
ont ete examinees lors de l'evaluation et approuvees avec Ie Gouvernement\.
4\.09 Le Bureau du projet aura pour tftche d'aider les services responsa
bles de l'execution du projet\. En particulier, Ie Bureau du projet assurera
a) la planification, la coordination et la supervision de l'execution du pro
jet, b) la gestion des aspects juridiques et financiers du projet (marches,
demandes de decaissement); et c) Ie contrOle de l'execution des elements du
projet\.
E\. Services regionaux
Direction regionale de l'habitat
4\.10 Dans Ie cadre de la reforme administrative decrite au paragraphe 4\.01,
la Direction regionale de l'habitat est creee au sein du Gouvernorat du District
de Bamako et dotee d'un personnel experimente, dont plusieurs membres ont tra
vaille avec les consultants a la preparation des projets, et proviennent de la
- 29
Direction nationale de l'habitat du Ministere des travaux publics et du Bureau
d'etude municipal\. Cette Direction sera chargee, avec l'assistance technique
du Bureau du projet, de superviser les travaux relatifs aux elements ameliora
tion et parcelles neuves\. Avec l'assistance technique dont beneficiera Ie pro
jet, on estime que cette Direction regionale sera a m~me d'executer les taches
qui lui seront confiees dans Ie cadre du projet\.
Inspection regionale des impOts
4\.11 L'Inspection regionale des impOts sera une emanation de l'actuelle
Direction nationale des impOts du Ministere des finances\. Elle aura pour fonc
tions d'evaluer Ie montant des impOts et d'immatriculer les terrains\. Elle
sera chargee de preparer Ie registre des nouvelles taxes municipales, pour
lequel des photographies aeriennes seront executees au debut de 1979\. Ces
elements serviront de base a une etude cadastrale de la ville qui doit ~tre
entreprise avec l'appui de l'assistance technique fournie au projet\.
La Caisse fonciere de Bamako (CAFOBA)
4\.12 Outre Ie renforcement des institutions dans Ie secteur du logement,
il sera cree une Caisse fonciere de Bamako qui aura pour fonctions d'adminis
trer l'ensemble des terres de la region de Bamako appartenant a l'Etat\. Une
des principales responsabilites de l'Inspection regionale des impOts sera la
creation de cette institution (voir par\. 2\.30) qui se deroulera par etapes
echelonnees au long de la periode d'execution du projet, comme suit:
a) Premiere phase (devant s'achever Ie 30 juin 1980) : l'Inspection
regionale des impOts creera une bureau d'immatriculation des ter
rains (Cellule fonciere) au sein de son Service des domaines, qui
sera charge de l'enregistrement des terrains dans les zones du pro
jet et de l'etablissement des titres de propriete et droits d'occu
pation au nom des beneficiaires\. Au cours de cette periode, la
Direction nationale de l'habitat executera et publiera un schema
directeur de Bamako, qui servira de base a l'etablissement de la
politique fonciere au sein du District, et elle fixera les direc
tives preliminaires pour l'utilisation des terres\.
b) Deuxieme phase (devant s'achever Ie 30 juin 1981) : l'Inspection
regionale des impOts etendra 1 'application des procedures elaborees
par la Cellule fonciere a l'attribution des parcelles de terrain
dans tout Ie district, tandis que la Direction nationale de l'habi
tat fera proceder a l'etude de la programmation des investissements
envisagee dans Ie cadre du projet, et dont les resultats permettront
d'etablir un plan detaille pour l'utilisation des terres et l'amena
gement de l'agglomeration de Bamako, ainsi que les procedures admi
nistratives et les projets de decret portant creation de la CAFOBA\.
- 3D
c) Troisieme phase (devant s'achever Ie 3D juin 1982) : creation de la
CAFDBA en tant qu'institution autonome sous la tutelle du Ministre
des finances\. La CAFDBA jouira de pouvoirs exclusifs en ce qui con
cerne l'administration des terres a l'interieur du perimetre d'urba
nisation de Bamako\.
4\.13 Cette creation par etapes de la CAfDBA sera SU1Vle par Ie Bureau
du projet, qui fournira l'assistance technique aux services interesses\.
Direction regionale de l'hydrauligue et de l'energie
4\.14 La Direction de l'hydraulique et de l'energie (DHE) du Ministere
de l'industrie est chargee des grands travaux d'infrastructure relatifs a
l'approvisionnement en eau et a l'alimentation en electricite\. La Direction
regionale de la DHE supervisera l'execution des elements du projet relatifs
a l'eau, a l'electricite et au drainage hors-site ainsi qu'aux exutoires de
Niarela\.
F\. Services propres du district
Direction de la voirie
4\.15 Le service de la vOlrle, qui est charge de la fourniture de services
publics et de l'entretien des ouvrages d'infrastructure, ne pouvait, depuis de
nombreuses annees, s'acquitter efficacement de ses fonctions, de sorte que les
services essentiels etaient gravement negliges et que les normes d'hygiene
s'etaient deteriorees au point que de nombreux quartiers de la ville compor
taient des risques pour la sante\. Cela etait dO en partie a l'insuffisance
d'installations d'entretien de materiel et de vehicules, mais aussi a la rigi
dite de l'organisation, qui decourageait toute delegation de pouvoirs et n'in
citait guere les subordonnes a accepter des responsabilites\. Pour resoudre
ces problemes, Ie service de la voirie sera reorganise et renforce; a ce titre,
i l sera dote d'installations suffisantes pour l'entretien des vehicules, et
des procedures seront elaborees a l'intention de son personnel technique, qui
beneficiera en outre de programmes de formation\. Cette Direction comprendra
essentiellement trois grandes sections :
a) Une section des etudes, de la planification et du contrOle;
b) Une section des operations, subdivisee comme suit : i) enlevement
des ordures menageres et nettoiement des lieux publics; ii) assai
nissement; iii) entretien des rues; et iv) entretien des batiments\.
c) Une section entretien et ateliers, subdivisee en : i) entretien des
vehicules; ii) entretien mecanique general; et iii) menuiserie\.
- 31 -
Cette Direction sera egalement do tee d'un petit service administratif\. Elle
elle traitera presque exclusivement d'activites d'exploitation et d'entre
tien, plutOt que de l'execution de nouveaux ouvrages, qui sera confiee a des
entreprises locales\. Un effect if de 470 personnes, ce qui correspond sensi
blement a l'effectif actuel du service de la voirie, devrait suffire a cette
direction\.
4\.16 Cette reorganisation, qui sera executee avec l'aide de l'ingenieur
VRD et du mecanicien affectes au projet, aura lieu au cours de la premiere
annee de l'execution du projet, afin que la nouvelle organisation et les nou
velles installations fonctionnent efficacement avant la livraison du nouveau
materiel d'enlevement des ordures menageres et de nettoiement de fosses de
drainage (prevu pour la fin de 1980)\. Lors des negociations, des assurances
ont ete obtenues que cette reorganisation sera terminee d'ici au 30 juin 1980
et que des programmes appropries seront institues pour permettre une formation
reguliere du personnel, par la suite; et qu'un fonds special d'amortissement
sera cree au sein du District pour assurer Ie remplacement des vehicules et du
materiel\.
Services de perception
4\.17 Ce service sera charge de percevoir les nouvelles taxes municipales
(para\. 5\.10), sur la base des roles qui seront prepares par l'Inspection re
gionale des impOts (par\. 4\.11)\. La perception des impOts laisse beaucoup a
desirer dans Ie District; au cours de ces dernieres annees, 60 % seulement des
montants fixes ont ete per~us a temps\. Pour ameliorer cette situation, ce
service beneficiera de l'assistance technique fournie dans Ie cadre du projet,
qui lui dispensera des conseils sur les procedures de perception et sur les
besoins en personnel et les programmes de formation de percepteurs\. L'equipe
ment et Ie materiel necessaire a l'accomplissement de ces tAches sont inclus
dans Ie projet\.
Direction du logement
4\.18 L'actuel Service du logement sera reorganise et dote notamment d'un
directeur, d'un personnel comptable (7 personnes) et de 4 collecteurs; une
assistance technique lui sera dispensee pour lui permettre de mener a bien les
taches qui lui incombent dans Ie cadre du projet\. II disposera d'une compta
bilite separee pour les ressources et les depenses relatives au projet\. La
Direction du logement sera charge : a) de constituer et de tenir les dossiers
individuels de demande et les dossiers des beneficiaires de parcelles du quar
tier a ameliorer et de l'operation parcelles neuves, ainsi que ceux des com
mer~ants et artisans des marches; b) de preselectionner les beneficiaires sur
la base des criteres d'eligibilite decrits au paragraphe 3\.12; c) d'adminis
trer Ie programme de refinancement a la construction; d) de percevoir, avec
l'aide du service de perception des impOts, les redevances afferentes aux
parcelles et les remboursements des pr@ts a la construction accordes dans Ie
cadre des elements operation parcelles neuves et amelioration ainsi que Ie
remboursement du credit aux artisans\.
- 32
4\.19 Cette Direction accordera des refinancements et attribuera les par
celles en se referant a la decision du Comite d'attribution auquel il sera
charge de fournir les donnees necessaires\. II servira de liaison entre
l'Inspection regionale des impOts et Ie Service des domaines (para\. 4\.11) pour
les questions relatives a l'etablissement des titres de proprietes foncieres
et a la reconnaissance des droits d'occupation, qu'il transferera aux benefi
ciaires sous forme de baux lars de la signature des contrats\. Lars des neg 0
ciations, des assurances ant ete obtenues que les excedents financiers de la
Direction du logement seront verses sur un compte special, dont l'utilisation
sera examinee chaque an nee par Ie Gouvernement et l'IDA\.
G\. Autres services
4\.20 Les ministeres ant preserve la centralisation de leurs fonctions
de planification et de programmation\. A ce titre, c'est la Direction nationale
de l'habitat qui devra proceder a l'etude de la programmation des investisse
ments pour Bamako et a l'etude preparatoire du second projet\. Elles sera ega
lement chargee de promouvoir l'utilisation des materiaux de construction locaux
(par\. 2\.23)\.
4\.21 Les Directions regionales de l'hydraulique et de l'enerqie de Kayes
et de Gao seront placees sous la responsabilite administrative des Gouverneurs
de ces regions\. Elles seront responsables des elements approvisionnement en
eau du projet (par\. 2\.25)\. Elles seront aidees par l'ingenieur VRD prevu par
Ie projet (par\. 2\.27)\.
4\.22 La Municipalite de Mopti a un service municipal de la V01r1e qui est
responsable de la construction et de l'entretien des b~timents municipaux,
ainsi que de l'entretien des rues\. Elle dispose egalement d'un service d'hy
giene charge de l'enlevement des ordures menageres et de la collecte des eaux
usees\. Ce service sera responsable des elements ordures menageres et assai
nissement prevus dans Ie cadre du projet\.
4\.23 Avec l'assistance technique prevue, la mission estime que ces ser
vices peuvent s'acquitter des t~ches qui leur sont confiees\.
- 33
V\. RECOUVREMENT DES COUTS ET POSSIBILITES DE REPETITION DU PROJET
A\. Recouvrement des coOts
5\.01 Les principes de recouvrement des coOts enonces ci-apres seront
appliques aux divers elements du projet
a) les coOts qUi sont recouvres d'ordinaire par les pouvoirs publics,
par Ie biais de redevances, seront recouvres de la m~me maniere (par
exemple, coOts d'infrastructure primaire des ouvrages d'approvision
nement en eau et d'electricite et des marches);
b) Ie coOt des services urbains fournis par Ie District sera recouvre
au moyen de taxes speciales (enlevement des ordures menageres, net
toiement des rues et consommation d'eau aux bornes-fontaines
publiques);
c) tous les coOts lies a l'operation parcelles neuves et a l'ameliora
tion de quartiers (travaux d'infrastructure sur Ie site m~me, pr~ts
a la construction, projets d'execution et supervision) seront sup
portes directement par les beneficiaires\.
5\.02 Les sources de recouvrement des coOts afferents aux divers elements
du projet sont les suivantes :
- 34
Coat ~6du
El'ment du pro jet Millions de FM Mode de recouvrement total
a) Recouvre
1\. Terrain 420 Charges
2\. Travaux d'infrastructure 1\.155 Charges
sur le site meme
3\. Infrastructure hors site 308 Redevances de consommation
d'electricite et eau
4\. Ecoles primaires 103 Fonds scolaire
5\. Refinancements a la construction 603 Remboursement
6\. Enlevement des ordures 522 Nouvelle taxe d'enlevement
menageres des ordures menageres
7\. Nettoiement des fosses de drainage 89 Nouvelle taxe d'entretien
8\. Bornes-fontaines publiques 23 Nouvelle taxe d'entretien
9\. Marches 146 Location des boutiques
10\. Credits aux artisans 45 Remboursement
11\. Enlevement des ordures Mopti 102 Taxes municipales
12\. Approvisionnement en eau, Gao 63 Redevances de consommation d'eau
13\. Approvisionnement en eau, Kayes 141 Redevances de consommation d'eau
14\. CAFOBA 127 Recettes procurees par la
mise en valeur des terres
Sous-total 3\.919 60 %
b) Non recouvre\. Assistance technigue, etudes
15\. Photographie aerienne 72 Non recouvre
16\. Assistance technique, 1433 Non recouvre
Bureau du projet
17\. Inspection regionale des impOts 58 "
18\. Etudes 482 "
Sous-total 1973 " 30 % \.
c) Non recouvre
19\. Centre de sante 165 "
20\. Edicules publics 154 "
21\. Exutoires 64 "
22\. DepOt de la voirie 259 "
23\. Promotion des materiaux 107 "
de construction locaux
Sous-total 751 10 0'
10
TOTAL 6\.722 100 01
10
- 35
5\.03 Dans Ie cadre de ce projet, Ie niveau de recouvrement des coOts sera
beaucoup plus eleve que les niveaux atteints auparavant au Mali\. Tous les
coOts affferents aux elements amelioration et operation parcelles neuves
seront recouvres directement aupres des beneficiaires\. Cela signifie que 60 %
du total des coats du projet seront directement recouvres au moyen des charges
prelevees sur les parcelles et des remboursements de pr~ts, des redevances
usagers ainsi que de la nouvelle taxe d'enlevement des ordures menageres et
la nouvelle taxe municipale d'entretien\. Les coOts non recouvres ont trait
principalement a l'assistance technique et aux etudes (30 %) et a l'infra
structure primaire et aux equipements collectifs (10 %)\.
5\.04 Les charges prelevees sur les parcelles neuves seront differenciees
en fonction de l'emplacement de ces parcelles, de leur facilite d'acces et
du regime d'occupation (titre de propriete ou location-vente) applicable aux
differentes parcelles\. Quatre categories de prix ont ete etablies : i) les
2 2
parcelles A et Al (320 m et 160 m ) sont les plus petites et seront louees a
2
un prix environ 10 % inferieur au coat; ii) les parcelles B (374 m ) seront
louees a un prix environ 15 % superieur a leur coat; et iii) les parcelles C
2
(500 m ) seront vendues en pleine propriete au prix du marche\. Le produit net
de la vente des parcelles les plus grandes, qui a ete estime par rapport aux
prix en vigueur a Bamako, sera utilise pour reduire Ie prix des parcelles les
plus petites, qui seront offertes aux groupes de la population clientele aux
revenus les plus bas\. Les actions qui doivent ~tre entreprises dans Ie cadre
du projet, a savoir l'amenagement du perimetre qui sera consacre a l'operation
parcelles neuves et la creation d'une Caisse fonciere, permettront d'accroltre
grandement l'offre de terrains a batir et, par consequent, d'en faire baisser
les prix\.
5\.05 Un acompte de 10 % du prix total sera demande pour les parcelles
neuves en location-vente\. Le paiement de cet acompte permettra egalement aux
beneficiaires d'obtenir un refinancement a la construction, dont Ie montant
variera selon l'aptitude du beneficiaire a payer a la fois les mensualites
afferentes a la parcelle et a ce pr~t a la construction, mais qui sera limite,
en tout etat de cause, a un plafond de 165\.000 francs maliens, montant suffi
sant pour l'achat des materiaux necessaires a la construction de deux pieces
en banco\. II ne sera pas demande d'acompte pour les parcelles du quartier a
ameliorer\. Le solde du pr~t accorde a la fois pour la parcelle et pour les
achats de materiaux de construction sera paye par mensualites sur une periode
maximum de vingt ans, moyennant un taux d'inter~t de 12 % par an\. Ce taux de
12 % est destine a couvrir Ie taux de retrocession de 7,5 % plus une redevance
de 2 % pour la constitution d'une reserve contre les risques et une autre re
devance de 2,5 % pour couvrir les frais administratifs\.
5\.06 La redevance qu'il est propose de demander aux beneficiaires est po
sitive en termes reels par rapport aux taux d'inflation passes et prevus pour
l'avenir, qui sont en moyenne de 10 % par an\. II n'existe pas de sources re
gulieres de financement de l'habitat au Mali, depuis que la BDM a mis fin, en
1976, a son programme subventionne a l'intention des groupes aux niveaux de
- 36
revenus les plus eleves (programme de pret port ant interet a 6 % l'an et rem
boursable en vingt ans)\. Les banques commerciales pretent a court terme a des
taux variant actuellement entre 10 et 12 %\. Le taux propose est acceptable
pour Ie Gouvernement\.
5\.07 Le recouvrement des coats afferents aux marches se fera au moyen des
redevances per9ues pour l'occupation d'emplacements couverts sur la place du
marche et des loyers preleves sur les boutiques et les parcelles pour arti
sans\. Les redevances per9ues pour l'occupation d'emplacements sont fondees
sur les tarifs actuels qui, de meme que pour les loyers des boutiques et des
parcelles, suffisent a assurer Ie recouvrement des coats en dix ans, moyennant
un taux d'interet de 12 %\. Des credits seront accordes aux artisans, dans Ie
cadre du projet, pour la construction d'ateliers sur les 50 parcelles pour ar
tisan situees en bordure des marches, a concurrence de 275\.000 francs maliens
par parcelle, ce qui est suffisant pour la construction d'un atelier\. Quatre
cents credits supplementaires d'un montant pouvant atteindre 55\.000 francs ma
liens seront offerts aux artisans pour financer les achats de materiaux ou de
petit materiel et outillage\. II a ete convenu que les credits aux artisans
seraient accordes a des conditions analogues a celles offertes actuellement par
les banques commerciales, c'est-a-dire que ces prets porteraient interet a
12 % et seraient remboursables en dix ans pour les prets a la construction
et en trois ans pour les achats de materiel et d'outillage\. Lors des negocia
tions, des assurances ont ete obtenues que Ie recouvrement des coats aupres
des beneficiaires se fera selon les conditions indiquees ci-dessus\.
B\. Accessibilite; distribution des revenus
5\.08 Dans Ie perimetre de l'operation parcelles neuves, l'option minimale
d'une parcelle et d'un refinancement a la construction suffisant pour permet
tre a l'occupant de construire lui-meme deux pieces en banco serait accessible
a environ 85 % de la population de Bamako\. La population clientele les diffe
rents types de parcelIe et l'accessibilite sont indiques au Tableau V-I\. La
moitie des beneficiaires seront choisis parmi les menages dont les revenus sont
situes entre Ie 15eme et Ie 35eme pourcentile de la distribution des revenus
a Bamako, et 85 % des beneficiaires auront des revenus inferieurs au revenu
median des habitants de la ville\. Les groupes aux revenus les plus faibles
n'auront pas a consacrer plus de 18 % de leurs revenus a leur logement\. L'une
des conditions d'eligibilite des beneficiaires (voir par\. 3\.12) sera que Ie
revenu soit situe dans les fourchettes de pourcentage indiquees au Tableau V-I\.
5\.09 Les redevances afferentes aux parcelles dans Ie quartier a ameliorer
et l'accessibilite aces parcelles sont indiquees au Tableau V-2\. Les mensua
lites representeront environ 7 % du revenu, ou 8 % si un pret est accorde pour
l'amelioration de l'habitat\. Les charges des parcelles les plus petites seront
accessibles aux personnes dont Ie revenu se situe au 5eme pourcentile de la
distribution des revenus de la ville\.
- 37
PROJET URBAIN DU MALI
Tableau V-I : OPERATION PARCELLES NEUVES, DIFFERENTS TYPES DE
PARCELLES, REDEVANCES ET ACCESSIBILITE (PRIX MI-1979)
Type de parcelle Al A B C
Nombre de parcel1es 2\.620/1 1\.310 221 50
Superficie (m 2 ) 160 320 374 500
Dimensions (m) 10x16 16x20 17x22 20x25
CoOt par m2 (FM) 1\.445 1\.445 1\.445 1\.445
Conditions d'occupation -----------Location-vente---------
2
Prix de vente par m net (FM) 1\.285 1\.285 1\.650 3\.300
\. Prix total de la parcelle,
y compris Ie terrain,
l'infrastructure et
l'interet pendant la
construction (FM) 205\.600 411\.200 617\.100 1\.650\.000
Acompte (10 %) (FM) 20\.560 41\.120 61\. 710 1\.650\.000
Avance pour le lot (FM) 185\.000 370\.000 555\.390
Refinancement pour Max\. (FM) 165\.000 165\.000 165\.000
l'achat de materiaux
de construction Min\. (FM) 77\.000 77 \.000 77 \.000
Montant total du pret
"parce11e et materiaux Max\. (FM) 350\.000 535\.000 720\.390
de construction" Min\. (FM) 262\.000 447\.000 632\.390
Mensualite Max\. (FM) 3\.880 5\.930 7\.984
(12 %, 20 ans) Min\. (FM) 2\.900 4\.950 7\.000
Pourcentage du revenu a
consacrer au logement 18 20 22
Revenu mensue1 necessaire Max\. (FM) 21\.550 29\.650 36\.292
Min\. (FM) 16\.100 24\.700 31\.860
Niveau de revenu minimum
en points de pourcentage
de 1a population 15eme 30eme 42eme
Fourchette des revenus pour
la selection des benefi- Max\. 25\.000 38\.500 55\.000
ciaires (en FM par mois) Min\. 16\.000 25\.000 32\.000
Fourchette des revenus en Max\. 35eme 50eme 65eme
points de pourcentage Min\. 15eme 30eme 42eme
/1 Au cas ou tous 1es lots A sont vendus par moitie en lot A1\.
Note
-=-Voir Annexe 1, page 6, pour le ca1cu1 des redevances afferentes aux parce11es\.
- Le seui1 de pauvrete a ete estime a 30\.250 francs ma1iens par menage et par
mois en 1979\.
- 38 -
MALI - PROJET D'URBANISME
Tableau V-2 REDEVANCES PRELEVEES SUR LES PARCELLES ET ACCESSIBILITE
- QUARTIER A AMELIORER (PRIX DE 1978)
coats : Millions de FM
2
Terrain (au prix officiel de 300 FM Ie m )
240,0
Leves topographiques
33,0
Projet d'execution
15,8
Dedommagement
16,9
Infrastructure sur Ie site :
Voirie
39,5
Bornes-fontaines publiques
43,0
Eclairage public
30,5
Drainage
211,7
Total partiel 324,7
Total du coat initial 630,4
Depassement des quantites 58,6
Total des coats a recouvrer 689,0
2
Marches: 3\.500 m a 1\.715 FM/m 2 6,0
coat net a recouvrer au moyen de redevances sur les
parcelles destinees au logement
Coat moyen par m net (800\.000 m ) = 854 FM/m 2
2 2 683,0
REDEVANCES PERCUES SUR LES PARCELLES ET ACCESSIBILITE - QUARTIER A AMELIORER
Revenu mensuel ~inimal Niveau de
Mensualite par menage/ 3 necessairei! revenu
Ie plus bas
Sans pr@t Avec pr~t Sans prtH Avec pr~t atteint
a la cons a la cons a la cons a la cons en points de
Superficie Prix truction truction truction truction pourcentage/ 5
FM FM FM FM FM
75-125 85\.400 522 859 5\.220 8\.590 5
126-175 128\.100 784 1\.120 7\.840 11\.200 7
176-225 170\.800 1\.045 1\.381 10\.450 13\.810 8
226-275 213 \.500 1\.306 1\.642 13\.060 16\.420 10
276-325 256\.200 1\.567 1\.904 15\.670 19\.040 17
326-375/ 1 298\.900 1\.829 2\.164 18\.290 21\.640 25
376-425 341\.600 2\.090 2\.426 20\.900 24\.260 28
426-475 384\.300 2\.350 2\.687 23\.500 26\.870 32
476-525/ 2 427\.000 2\.612 2\.948 26\.120 29\.480 35
/1 2
La superficie mediane est de 375 m
/2 2
La superficie moyenne est de 490 m
73 1,8 menage par parcelle, 3\.000 menages en tout\. Termes: 12 %, 20 ans maximum\.
74 Compte tenu d'une provision de 10 % du revenu a prevoir pour Ie logement\.
75 61 % du total de l'investissement du quartier a ameliorer va aux groupes les plus
pauvres\.
- 39
C\. Taxes municipales
5\.10 La fiscalite municipale tire son revenu principalement (65 %) des
taxes per~ues sur les activites commerciales\. II est propose que les coats
afferents aux ameliorations apportees aux services municipaux soient recouvres
par l'etablissement d'une taxe de voirie et d'une taxe d'enlevement des ordures
menage res calculees sur la valeur locative des proprietes de l'ensemble de la
ville, qui comprend quelque 50\.000 proprietes residentielles et un millier de
fonds de commerces et industries\. Ces nouvelles taxes seront progressives,
c'est-a-dire qu'elles etabliront une distinction entre les categories et la
taille des maisons et entre trois secteurs, les quartiers peripheriques etant
assujettis a une taxe moins elevee que les quartiers centraux en raison du ni
veau plus faible des services fournis\. Le montant de ces taxes sera egal a
2 % de la valeur locative des proprietes residentielles et des fonds de com
merce pour la taxe d'entretien et a 3 % de la valeur locative des proprietes
residentielles pour la taxe d'enlevement des ordures menageres\. L'introduction
de ces taxes sera echelonnee sur une periode de trois ans : il sera d'abord
procede a l'execution de photographies aeriennes en 1979, puis a l'etablisse
ment des registres des biens et a l'evaluation de leur valeur locative, et Ie
recouvrement des taxes commencera en 1981\. Lors des negociations, des assu
rances ont ete obtenues que les taxes seront instituees et mises en application
de la maniere decrite ci-dessus\.
5\.11 Les recettes que procureront ces nouvelles taxes serviront a couvrir
Ie service de la dette et les coats de fonctionnement afferents aux ameliora
tions apportees aux services municipaux finances dans Ie cadre du projet m~me
si ces taxes ne sont recouvrees quIa 60 %\. Tel est actuellement Ie niveau
atteint dans Ie District et tel est Ie niveau que lIon a suppose pour la pre
miere annee de recouvrement, c'est-a-dire 1981\. Par la suite, Ie taux de re
couvrement devrait augmenter\.
D\. Possibilites de repetition du pro jet
5\.12 Les mecanismes de recouvrement des coats decrits dans les precedents
paragraphes apporteront au Bureau du logement du District des recettes (qui
devraient atteindre un total cumule de 1 million de dollars d'ici a 1985); ces
recettes font l'objet d'une clause stipulant qu'elles devront ~tre utilisees
pour financer des projets analogues a l'avenir\. Cela servira de base a l'exe
cut ion d'un programme d'expansion des services essentiels dans Ie District\.
Durant les negociations Ie Gouvernement a accepte de soumettre a la Banque pour
commentaire tout nouveau programme de logement\. En 1978, l'agglomeration de
Bamako comptait une population de 470\.000 ~mes, qui augmente au rythme d'envi
ron 9 % par an, soit d'environ 40\.000 personnes ou 5\.000 familIes par an\. Si
un programme public de logement devait ~tre lance pour repondre aux besoins
des familIes se trouvant en de~a du seuil de pauvrete (40 % de la population),
il faudrait distribuer environ 1\.500 parcelles par an\. En plus de ces besoins,
- 40
il faut egalement prevoir un programme d'infrastructure afin d'ameliorer les
conditions de vie des quelque 25 % de la population qui vivent actuellement
dans des quartiers spontanes\. Ce programme pourrait @tre finance par divers
moyens, y compris a l'aide de l'excedent de recettes du Bureau du logement,
qui sera fonction du degre de recouvrement des coats aupres des beneficiaires\.
Le solde pourrait @tre fourni par Ie Gouvernement, notamment par Ie biais du
Fonds national du logement, ou par une aide exterieure supplementaire\. Si
cette analyse est tres provisoire, elle montre quand m@me que Ie Gouvernement
pourrait jouer un rOle important pour ameliorer Ie logement des groupes aux
revenus les plus faibles, sans avoir a prelever trop de fonds sur Ie budget
national\.
VI\. JUSTIFICATION ET RISQUES DU PROJET
6\.01 Le projet aura un important effet de demonstration, notamment pour
ce qui est des politiques qu'il contribuera a introduire en matiere de :
i) recouvrement des coats pour la plupart de ses elements; ii) solutions au
moindre coat pour les services fournis; iii) encouragement de l'utilisation de
materiaux de construction locaux; et iv) amelioration de l'assiette fiscale du
pays\. Le fait que 75 % des coats du projet profiteront a des menages dont Ie
revenu est en dessous du seuil de pauvrete, prouve que Ie projet a ete con~u a
un niveau approprie\.
6\.02 Les avantages directes du projet propose se traduiront par : a) la
fourniture de services essentiels a bon marche dans les nouvelles parcelles
et dans les zones ameliorees a l'intention de quelque 45\.000 personnes dont
70 % ont un revenu inferieur au seuil de pauvrete urbaine; b) l'amelioration
des conditions sanitaires pour l'ensemble de la population de la ville de
Bamako mais surtout pour les secteurs pauvres de la collectivite; c) les em
plois crees par les elements II credits aux artisans et materiaux de construc
tion locaux"; et d) llamelioration de l'adduction d'eau et des conditions
sanitaires dans les villes secondaires\.
6\.03 A long terme, des avantages seront aussi tires du developpement des
institutions propose dans Ie cadre du projet notamment : a) la creation d'une
Caisse fonciere qui facilitera la fourniture de terrains pour Ie developpement
urbain; b) l'extension des impOts fonciers progressifs dans toute la ville afin
de recouvrer Ie coat de l'amelioration des services urbains et d'augmenter les
ressources du District de Bamako; et c) Ie renforcement des services du Dis
trict, notamment la Direction du logement et la Direction de la voirie\.
6\.04 Le fait que lIon insiste sur Ie caractere abordable des coats et sur
leur recouvrement devrait permettre de demontrer la possibilite de reproduire
ce projet concernant la fourniture de services urbains essentiels\.
6\.05 Le taux de rentabilite economique des elements de nouvelles parcelles
et d'amelioration, qui representent 42 % du coat du projet, est evalue a 22 %
(par\. 6\.06-6\.08)\. Les taux de rentabilite n'ont pas ete calcules pour les
- 41
autres elements du projet, etant donne la difficulte qu'il y a a chiffrer les
avantages dont ils sont assortis\. Aux paragraphes 6\.09 a 6\.12 ci-apres, on
examine les autres justifications de ces elements\.
Nouvelles parcelles et amelioration
6\.06 Les avantages afferents aux nouvelles parcelles et aux zones amelio
rees ont ete chiffres sur la base des estimations relatives a l'augmentation
de la valeur fonciere attribuable aux ameliorations effectuees dans Ie cadre
du projet\. Les valeurs locatives dans la zone du projet ainsi que dans les
quartiers ayant les m@mes caracteristiques d'emplacement ont ete basees sur
des enqu~tes realisees pendant la preparation du projet\. Pour Ie calcuI des
avantages, on a utilise les valeurs locatives ci-apres
Valeurs locatives
(FM par piece par mois)
Sans Ie pro jet Avec Ie pro jet
Nouvelles parcelles, Magnambougou sans objet 3\.100
Amelioration, Magnambougou 625 3\.100
6\.07 Les coats ci-apres du projet ont ete inclus dans l'analyse
a) coat de l'amenagement du site, y compris celui des releves et des
plans, coOt de l'infrastructure du site, la part des coOts d'infra
structure hors sites imputable a chacun de ces derniers, coOt de la
supervision et provisions pour depassement des quantites;
b) coOt des materiaux de construction et coOt estimatif de la main
d'oeuvre pour l'edification et l'amelioration des logements;
c) coOt annuel d'exploitation et d'entretien evalue a 3 % du coOt
total de l'amenagement\.
6\.08 Les taux de rentabilite economique estimatifs sont de 19 % pour
l'element nouvelles parcelles et de 26 % pour l'element ameliorations\. Le
taux de rentabilite combine des deux elements sera de 22 %\. L'analyse de sen
sibilite montre qu'une augmentation de 10 % des avantages ou une baisse de
10 % des coats relevent les taux de rentabilite de 2 ou 3 % pour les nouvelles
parcelles et l'amelioration respectivement\. Une baisse des avantages de 10 %11
ou une augmentation des coOts de 10 % fait baisser les taux de rentabilite de
2 % pour les nouvelles parcelles et de 3 % pour l'amelioration\.
11 Correspondant a la chute des valeurs locatives engendree par l'augmen
tation de l'offre attribuable directement a l'assainissement et aux
trames d'accueil prevus par Ie projet, si l'elasticite de la demande
est unitaire\.
- 42
Aide au secteur non structure
6\.09 On compte que 900 emplois au total seront crees dans la zone du pro
jet au titre de cet element\. Le coOt supplementaire moyen par emploi est eva
lue a 760 dollars, chiffre inferieur au ratio capital/main-d'oeuvre dans les
villes au Mali (900 dollars)\.
Services du District
6\.10 Les elements du projet correspondant a l'enlevement des ordures, au
drainage, a l'adduction d'eau et a l'assainissement public amelioreront consi
derablement la qualite de l'environnement de la ville\. De leur cOte, la reor
ganisation et Ie reequipement des services techniques accroitront fortement la
capacite du District a maintenir ces services\. Les solutions proposees ont
ete choisies apres une comparaison avec des options plus intenses en capital
et ce sont les variantes au moindre coOt qui ont ete adoptees\. Bien que ce
soit l'ensemble de la population qui beneficiera de l'amelioration des condi
tions sanitaires, les secteurs pauvres de la collectivite en profiteront da
vantage etant donne que l'expansion des services se produira principalement
dans les quartiers a faible revenue
Villes secondaires
6\.11 Les mesures proposees amelioreront les conditions sanitaires et
l'approvisionnement essentiel en eau dans ces villes contribuant a reduire la
mortalite de la population et du betail, particulierement pendant la saison
seche\.
Incidence sur la pauvrete urbaine
6\.12 Les elements amelioration et trames d'accueil du projet engloberont
environ 32\.000 personnes sur les 100\.000 pauvres de Bamako ayant besoin d'un
abri\. Approximativement, 80 % des beneficiaires de la zone des trames d'ac
cueils et 60 % de ceux de la zone amelioree vivent en dessous du niveau de
pauvrete de menages urbains (evalue a FM 30\.250 par mois par menage en 1979,
soit environ Ie 40e pourcentile dans l'echelle des revenus des menages a
Bamako)\. En outre, l'amelioration des services municipaux toucher a largement
les pauvres de la ville qui representent 50 % des beneficiaires de cet element\.
Selon les estimations, 75 % du coOt total du projet ira directement aux groupes
pauvres des villes pour ce qui est des fournitures et des services\. Sur Ie
montant du credit de 12 millions de dollars, 75 %, soit 9 millions de dollars,
visent les couches pauvres\.
Risques du pro jet
6\.13 Comme ce projet est Ie premier interessant Ie developpement urbain
au Mali, il compte un certain nombre de caracteristiques nouvelles qui presen
tent un risque bien que les autorites aient pris l'engagement de prendre les
- 43
initiatives qu'elles jugent ~tre en rapport etroit avec la reforme administra
tive en cours dans Ie pays (par\. 4\.01)\. Les trois principaux domaines presen
tant des risques sont les suivants : a) dispositions institutionnelles pour
l'execution du projet; b) recouvrement des coats; et c) identite entre les be
neficiaires du projet et la population initialement visee\. Ces trois points
sont examines aux paragraphes 6\.14-6\.16\. Les risques potentiels ont ete mini
mises dans les autres domaines grAce a des entretiens detailles et a un accord
entre Ie Gouvernement et les autres parties touchees par Ie projet\. Les carac
teristiques techniques relatives aux nouvelles parcelles et a l'amelioration
ont ete determinees apres une analyse approfondie d'une gamme d'options; elles
sont officiellement acceptables, sont a la portee des beneficiaires et sont
conformes aux besoins exprimes par la population visee au cours des enqu~tes
sur Ie terrain\.
6\.14 Pour ce qui est des dispositions institutionnelles, la complexite et
la nature multisectorielle du projet exigeront une gestion efficace et une
coordination etroite entre les differents organes d'execution\. La mutation
des fonctionnaires des services centraux vers les services regionalises se
fait progressivement\. En vue d'assurer l'efficacite de la gestion, Ie projet
prevoit un bureau du projet rattache directement au Ministre de l'interieur
et qui sera appuye par l'assistance technique appropriee de maniere a renfor
cer et a developper les institutions participant a l'execution du projet\.
6\.15 Deux de ces institutions, Ie Service de perception et la Direction
du logement du District ont un rOle essentiel a jouer dans Ie recouvrement des
coats et tout manque d'efficacite de leur part compromettrait les possibilites
de repetition du projet\. La Caisse fonciere de Bamako, bien que n'etant pas
indispensable au succes du projet lui-m~me, est capitale au plan de ses possi
bilites de repetition etant donne qu'elle relevera l'offre de terrains\. II
est donc extr~mement important que Ie Gouvernement consacre une attention sou
tenue a ces institutions\.
6\.16 La possibilite de reproduire Ie projet depend de l'introduction ef
ficace des mecanismes de recouvrement des coats decrits au Chapitre V\. L'in
troduction de redevances sur les parcelles et du remboursement de pr~ts a la
construction est un element relativement nouveau pour les secteurs de la popu
lation desservis par les elements parcelles neuves et amelioration\. Toutefois,
les enqu~tes et les entretiens avec les collectivites couvertes par Ie pro jet
montrent que les beneficiaires sont disposes a payer pour la securite fonciere
et les services essentiels\. La Direction du logement devra travailler en col
laboration etroite avec la collectivite locale pour assurer Ie recouvrement des
coats\. Quant aux services du District, s'ils manquaient de percevoir les im
pOts proposes, ils ameneraient une baisse de la qualite des services, seraient
incapables de faire face a leurs obligations en matiere de remboursement de
leurs dettes et auraient besoin d'une subvention du Gouvernement central\. On
ne peut donc trop insister sur la necessite d'introduire rapidement de nou
veaux impOts\. Toutefois, Ie risque vaut la peine d'~tre pris etant donne que
les interesses se disent disposes a payer pour de meilleurs services et que
cette source de nouveaux impOts permettra de reduire les sUbventions publi
ques au secteur urbain\.
- 44
6\.17 Quant a l'identite des beneficiaires du projet et de la population
initialement visee par l'element trames d'accueil, Ie projet est con9u de
fa90n a reduire les risques a un niveau acceptable par Ie biais de mesures
aussi bien a) a court quIa b) long terme\. a) Pour ce qui est du court terme
i) l'emplacement (aussi bien social que spatial), la surface de la parcelle,
Ie niveau de services et les types de regime foncier, con9us de fa90n a repon
dre aux besoins de la population a faible revenu et qui ne sont pas suscepti
bles d'attirer les groupes plus affluents; ii) Ie projet propose permettra de
couvrir environ la moitie de la demande de nouveaux terrains nee pendant
l'execution\. b) A long terme, Ie renforcement des institutions propose dans
Ie cadre du projet aidera considerablement Ie Gouvernement a augmenter l'offre
de terrains viabilises\.
VII\. RECOMMANDATIONS
7\.01 Lors des negociations, des assurances ont ete obtenues sur les points
suivants
a) la cession par l'Etat au District de Bamako du terrain necessaire a
l'operation parcelles neuves et des terrains des quartiers a amelio
rer (par\. 2\.07 et 2\.13);
b) la creation de la CAFOBA, Caisse fonciere, pendant l'execution du
projet; les procedures, attributions et responsabilites de la CAFOBA
devront ~tre jugees satisfaisantes par l'IDA (par\. 4\.12);
c) Ie montant du credit sera retrocede au District de Bamako et a la
Municipalite de Mopti a des conditions jugees satisfaisantes par
l'IDA (par\. 3\.03);
d) les ecoles et Ie centre de sante prevues par Ie projet beneficieront
de dispositions budgetaires appropriees et seront dotees d'un per
sonnel suffisant (par\. 2\.07);
e) les lots et les niveaux de services seront tels que decrits dans ce
rapport (par\. 2\.07-2\.10);
f) i) chaque agent d'execution tiendra des comptes separes pour Ie
projet et Ie Bureau du projet etablira un comptabilite d'en
semble du projet; ii) des etats financiers et rapports de veri
fication comptable relatifs a chaque agent d'execution seront
presentes a l'IDA au plus tard huit mois apres la clOture de
chaque exercice financier et les comptes de chacun de ces
agents d'execution seront revises par des experts-comptables
juges satisfaisants par l'IDA (par\. 3\.17);
g) tout nouveau programme de logement finance par Ie Gouvernement sera
presente a la Banque pour commentaire et avis (par\. 5\.12);
- 45
h) la selection des menages, les criteres d'attribution des parcelles
et les conditions de vente des parcelles devront ~tre jugees sa
tisfaisants par l'IDA et organises de la maniere suivante :
i) un systeme de redevances mensuelles sera institue pour Ie re
couvrement des coats afferents aux ameliorations d'infrastruc
ture et pour Ie remboursement des pr~ts au logement (par\. 5\.04
et 5\.05);
ii) les excedents en depOt sur les comptes du Bureau municipal du
logement seront deposes sur un compte separe (par\. 4\.18);
iii) Ie coat de l'enlevement des ordures menage res et des ameliora
tions des conditions sanitaires sera recouvre au moyen de nou
velles taxes foncieres municipales (par\. 5\.10);
i) etablissement d'un compte special d'amortissement au sein du District
pour assurer Ie financement du renouvellement des vehicules et du
materiel (par\. 2\.15)\.
7\.02 Comme condition de presentation du projet au Conseil d'administra
tion de la Banque, il est propose que soient signes : i) l'Ordonnance inter
ministerielle autorisant les nouvelles taxes municipales (par\. 5\.10); et
ii) Ie decret portant creation des directions regionales du Ministere des
travaux publics pour Ie District\.
7\.03 Comme condition de l'entree en vigueur du credit, il est propose que
l'accord de pret subsidiaire entre Ie Gouvernement et Ie District de Bamako
soit signe (par\. 3\.03), et que Ie Gouvernement depose une fraction des fonds
de contrepartie maliens sur une caisse d'avances (par\. 3\.04)\.
7\.04 Sous reserve des assurances ci-dessus, Ie projet justifie l'octroi
par l'IDA d'un credit de 12 millions de dollars au Gouvernement malien\.
- 46 - ANNEXE 1
Page 1
PROJET URBAIN DU MALI
Tableau 1: DETAILS DES COUTS
Parcelles neuves et rehabi11tatio~Magnambougou
Nouvelles oarcelles Rlihabilitation
(millions PM) (mUlions PM)
A\. Terrain 180,0 240,0
B\. Conception 32\.7 48,8
C\. Indemnite 16,9
D\. Infrastructure (sur le site)
1 Voirie 91,4 39,5
2\. Eau 63,2 43,0
3\. Eclairage public 57,6 30,5
4\. Drainage 242\.2 211,7
Sous-total D 454,4 324,7
Sous-total A-D 667,1 630,4
E\. Refinancement a la construction 390,4 89,7
F\. Infrastructure (hors site) 1/
1\. Voirie 18,4 18,3
2\. Eau 83,0 83,0
3\. Electricite 7,3 7,4
4\. Drainage 9,3 9,3
Sous-total F 118,0 118,0
G\. Equipements collectifs )J
1 Sante 57,4 57,4
2\. Eco1es 36,9 36,8
94,3 94,2
Couts de base A-G 1\.269,8 932,3
Depassement de quantite 100,2 85,8
Hausse de prix 251,9 157 ,1
1\.621,9 1\.175,2
1:\.1 Ces couts ont ete repartis egaleaent sur les parcelles neuves et 1a
rehabilitation atant donne 1es chiffres de popula\.tions affectees\.
- 47
ANNEX! 1
Page 2
PROJET URBAIN DU MALI
Tableau 2: DETAILS DES COUTS
Amelioration des conditions sanitaires a Bamako
millions de FM
A\. Enlevement des ordures:
Vehicules et equipement (9 camions multi-bennes
et 85 bennes) 377,0
Materiaux 56,3
Sous-total 433,3
B\. Nettoiement et reparation des fosses de drainage:
Vehicules et equipement 39,1
Materiaux 34,7
Sous-total 73,8
C\. Fontaines publiques:
Reparation de 98 fontaines et deplacement
de 22 fontaines et construction de 20
nouvelles fontaines 17,6
D\. Edicules publics:
Construction de 10 toilettes publics 112,9
E\. Exu toires, Niarela:
Construction de fosses et de tranchees 50,8
F\. Dep8t du Service de la Voirie:
Equipement et outillage des ateliers 71,5
Station service (gas oil) 28,6
Construction des ateliers d'entretien 112,9
213,0
Cout total de base
901,4
Depassement de quantite
104,7
Hausse des prix 125,2
Cout total 1 131,3
- 48
ANNEn 1
Page 3
PROJET URBAIN DU MALI
Tableau 3: DETAILS DES COUTS
Aide au secteur informe1 de Bamako
millions de FM
A\. Marches:
Bako-Djikoroni, 480 eta1s, 31 boutiques
et 20 parce11es pour artisans 55,2
Sogoninko, 120 eta1s, 12 boutiques et 10
parce11es pour artisans 19,0
Magnambougou, rehabilitation, 120 eta1s,
12 boutiques et 10 parce11es pour artisans 19,0
Magnambougou, parce11es neuves, 120 eta1s, 10
boutiques et 10 parce11es pour artisan 17,5
Sous-tota1 A 110,7
B\. Credit artisan:
50 credits pour refinancement a 1a construction
de 275\.000 FM cbacun 13,8
400 credits de 55\.000 FM cbacun pour materiel
et equipement 22,0
Sous-total B 35,8
C\. Deve10ppement de materiaux de construction locaux:
Materiaux et equipement
15,3
Assistance technique et formation
69,4
Sous-tota1 C 84,7
Cout de base total 231,2
Depassement de quantite 19,5
Hausse des prix 54,0
Cout total 304,7
- 49
ANNEX\.E 1
Page 4
PROJET URBAIN DU MALI
Tableau 4: DETAILS DES COUTS
Vi11es Secondaires
millions de FM
A\. Mopti: Enlevement des ordures:
2 camions-bennes
33,5
Construction de 18 tremies
4,1
1\.000 poube1les, et outillage 4,4
2 camions-vidange 40,0
Construction d'un edicule public 7,9
Sous-total A 89,9
Depassement de quantite
9,0\.
Hausse des prix
6,4
Total Mopti 105,3
B\. Gao: Adduction d'eau:
Renforcement et extension du reseau
de distribution
56,5
Depassement de quantite
8,5
Hausse des prix
Total Gao 65,0
C\. Kayes: Adduction d'eau:
Construction d'une prise d'eau 46,9
Pompes et equipement 21,4
Conduite d'amenee d'eau a Kayes-Ndi 22,6
Renforcement du reseau de distribution 30 t 5
Sous-total C 121,4
Depassement de quantite 17,1
Hausse des prix 6,5
Total Kayes 145,0
Total Villes Secondaires 315,3
- 50 - ANNEXE 1
~ \.j i
Page 5
PROJET URBAIN DU MALI
Tableau 5: DETAILS DES COUTS
Bureau du Projet, Assistance technique, Nouvelles Taxes, Etudes
millions de FM
A\. Bureau du Projet et Assistance technique:
Directeur du Projet et staff local 44,0
Vehicules (3) et equipement 44,0
Materiel et cout d'exploitation 17 ,6
Assistance technique:
Chef du Projet~ 36 hemmes~ols 174,2
Analyste de systeme, 24 homme-mois 116,2
Gestionnaire municipal~ 24 hommes-mois 116,2
Ingenieur VRD, 24 hommes-mois 116,2
Mecanicien, 36 hommes-mois 174,2
Revision des comptes, Audit, 9 hommes-mois 43,6
Non-alloue, 75 hommes-mois 363,0
Sous-total A 1\.209,2
B\. Etablissements des nouvelles taxes:
Photographies aeriennes et photo-plans 71,7
C\. Etablissement de la CAFOBA:
Bureaux, vehicules et equipement 101,5
D\. Assistance a l'inspection des ±mpats;
Vehicules et equipement 52,5
E\. Etudes:
Etude de factibilite (PPF) 140,0
Preparation d'un programme d'investissement 110,0
Preparation d'un deuxieme projet 165,0
Sous-total E 415,0
Cout de base total 1\.849,9
Depassement des quantites 160,1
Hausse des prix 163,4
Cout total 2\.173,4
- 51 -'
ANNEXE 1
Page 6
PROJET URBAIN DU MALI
Ca1cu1 des redevances pour 1es nouvelles parce11es: (Prix mi-1979)
millions de PM
Couts:
Terrain 180,0
Leve topo 10,6
Conception 22,1
Infrastructure (sur Ie site)
Voirie 91,4
Fontaines pub1iques 63,2
Ec1airage public 57,6
Drainage 242,2
Sous-tota1 454,4
Cout total de base:
Depassement de quantite 667,1
Inter@t durant construction 73,1
Coat total a recouvrir ' 26,9
Coat moyen par m2 (537\.313 m2) 1\.428 PM/m2 767,1
Attribuab1e au marche, 3\.430 m2 a 2\.870 PM/m2 9,8
Cout net a
recouvrir des parce11es 757,3
2 2
Coat moyen par m (533\.883 m ) 1\.420 PM
Recouvre de 1a fa~on suivante:
Vente des parce11es C, 50 parce11es de 500 m2 a 3\.300 ~/m 2 82,5
Location vente des parce11es B, 221 parce11es de 374 m
a 1\.650 PM/m2 136,4
Location vente dZs parce11es A, 1\.310 parce11es de 320 m2
a 1\.285 PM/m 538 2 6
Total 757,5
Prix des parce11es:
Type Al 205\.600 PM
Type A 411\.200 PM
Type B 617\.100 PM
Type C 1\. 650\.000 PM
'2
1'!OJIt guwr AI! !!ALI
WSO!l!5IS U !I!PLOts nR FE' (I!Jl\.LIO!!!! OE I'Ml
I'r:l\.:& ILl - 1979
I\.J
1\.
Z\. :IA\."ec\.n\._ C\.cral
1'1:'~ "
T\. _~ c\.ac\.:al
1\.83$\.5
UO\.O
93\.1 192\.5
~20\.0
810\.1 m\.'
1\. Ap'porh iD:1t1&_ at: v_e\. 5\.1 36\.2 28\.8
4\. _r-\.a 1WICa11aa 84\.9 200\.5 210\.8 210\.8 210\.11 210\.8
5\. - ' : - - u \.aw:d\.oIl 25\.1 69\.0 81\.7 87\.1 81\.7 87\.7
\. t\. c:d41t8 aa\.
6\. )\.0 11\. U\.S 12\.5 '\.S 3
917 841\.3 1 010\.5 848\.3 314 0 lU\. 30$\.0 301\.3
!:!2!\.2!!\.
1\. AIIoIl:IArad\.oll,
(\.) tarraw 240\.0 - -
244\.0 -
\. \. - -
- - t\./
-
-
- - -
1-*a\._~
- -
(b) 56\.1
l\.ofr\.aw:\.
_dol
(0)
(d)
451\.3
U\.3
-
56\.1
- 80\.6
U\.l
- \. - - - -
281\.0 113\.1 -
-
2\. ~\. puc\.u\.
Cal tarraw
~~ t:r'\.::-"",:c1ao
W _ _U \.u\.:c1ao
180\.0
31\.6 -
\.
37\.6
180\.0
- - - - - -
- - - - -
- -
3\.
5\. Cdd1U \.u _
4\.
n,_
61'\.3
604\.4 -
-
287\.4
138\.1
346\.2
n\.7
113\.8
2\.18\.2 -
- -
- -
- -
\.
6\.
t _ _
traut\. 1 _ _c:\.Ia
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\.
4$ \.1
- -
\. 19\.0 U\.S
23\.8
33\. 36\.0
\.
ll\.5 :'1\.1 44 \. 1
1\. 1\.,\.,--1: du\.
Tow \. ~ta\.
'me \. - -
l
\.
24\.0 37\.2
\. 18~:~ 1800 18~\.n 18~\.O
"'\.' '/3,1 832\.3 868\.5 610\.4 HO\.7 U8\.S 2U\.l 224\.1
Sllrplual (l)U1c1\.1
'\.0 142\.0 231\.' 93\.3 92\.6 8l\.9 71\.7
s\.11>1ua cuaU
9\.0 131\.0 l8a\.9 482\.2 514\.8 \.58\.7 136
a\. ~S d\. !!!lIE! \. g __ta \.111 rroS\.S ue c!!!!EUUt 2\.U la D:!£_ du
\.l:!\.I!!!!!!5\.
~!! l2I1 !lli\. 1!ll \.l!!! \.ill! !!!i !\.2ll !!!!
\.re\.
tl
1\. 1'1:1 4" _we
2\. ~ 4" _ \. e\.al
t c\.,=-t l,33I\.a
188\.2 137\.0
351\.7
274\.1
120\.9
63
226'~1
313\.1
3\. -\.ulaa __ ~\. 158 211\.9 272\.0 2'1\.1
4\. <mI,\.,\.u\.~
1\.2 1fo:; 167\.a 215 230\.5
\.
4\. t\.oc\.od\.oll at \._ _ \. _1160 3;\.1 !l\.a 57,$ 61\.6
i\. "" n '" " \.,\. 184' "'\.9 334\.1 433\.5 544\.' sa3\.2
!:!2!\.2!!\.
1\. B'alft-c 4\. \. ordlaM '37\.8 500\.9 36\.9 1\.1 42\.4 4\.5\.l 48\.5 u\.s
2\. 10\. 4\. "a1aap n\.s 8~\.J S\.l 5\.9 6\.;1 6\.1 7\.:3
3\. YcmC&l\.Me ~ 23\.9 8\.4 12\.2 3\.3 46\.2 49 5 ' n\.l
4\. ToU\. pub~ 154\.4
64\.2
57 \.2
64\.2
62\.' 34\.3 0\.2 0\.2 0\.3 0\.3
5\. !::mUir_\. 1Ita"'la
6\. D'v4\. VoU'ia 259\.5 25'\.5
7\. lIUc:bh 150\.7 26\.6 5a\.6 65\.5 6\.6 7\.0 1\.6 a\.l
8\. ~\. (plio\. )
37\.0 131\.0 22\.0 2:1\.] 25\.2 21\.0
9\. CArO\. 121\.0 W\.O 41\.5 50\.8 53\.4 '8\.2
10\.
W\.
Il\.
!qU_\.
W \.tTlJ<:\. bora 01
ZI:ol\.
d\. _ta
316\.2
165\.3
105\.'
209\.9 10\.3
28\.7
24\.4
96\.0
~~:~
14~\.O 1\.4~\.0
13\. htIa_t d\. ~ du _t I 140\.0 1';\.0
TOul \. \. \. _lota I 2\.127\.0 I 137\.0 625\.8 184\.3 579\.9 310\.8 322\.7 349\.S
SVIl>1ua/Ol&f1A;U)
I i 23\.l uO\.a 334\.6 233\.7
SVIl>lu CIIIO&l'
13\.3 134\.1 468\.7 702
C\. Gw,\. S Cem\.!\. '" !l!U
TOW!! ill! !lli\. 1!ll !2!!\. 1m\. !!!i \.ill! !!!!!
Ra!SUFs\.,
jJ
\.
1\.
2\.
1\.
1'1:1t 4\. l'm"
AJ\.locet1oaa du l!tad\.~ c\."al
T\.lo d" ec\.n\._ \. C\.l
5,280\.0
l,OU\.8
420\.0
708\.1 1,441\.2
92\.2 367\.2
420\.0
1\.397\.S
339\.:'
1\.233\.2/
m\.o -
\.
no\.o
,\.
4\. ' _ 1 _ t dl1 ~ pu 10 111\.0\.,1A;\.
~_\. d" p\.'\. _
Ho\>U 10\.3
320\.0
to\.3
320\.0
10\.3
320\.0
10\.l
!otal\. d\. ralUlOUl'c: 6 721\.8 800\. \ \.t :%8\.4 2 236\.' 1 456\.1 330\.1 130\.3 ))0\.1 nO,3
~ ______ ~_\.:11
1\. PTIU \. l)1\.ocnc~ r3~174\.l
105\.3
93\.7
105\.3
aoa\.aj
\. ,
2\. 1'1:1\. i !(cpU
3\. Su\.Irf'-\.t1ou 4\1 nt\.t:r1c:t i 7a8\.2 137\.0 274\.1 63 ltJ\.7 '
I 420\.0
4\.
5\.
DoG riu, terra\.1a au Ducrkt
S\.-1\. i c:\.o I
420\.0
\.5\.0 65\.0 \. ,
6\. ilta\.,\.
s\._ 145\.0 69\.4 15\.6
1\. ~dr1\.uz 4e c:~t1oQ loc\.au I lOS \.1
482\.3 140\.0
40\.2 \.;\.31
108\.01
m:~
S\. ftu<l\. \. 64\.1
1,\.33\.3 29S\.l S95\.1 16LIj!
9\. _ \. 1'1:0j\.~ hchlW\Ull)
(A\.u1a~\.
Total 4 _loU, '6\.721\.8 ~!l!l\.3 2,ll9\.4 l\.236\.9 1,456
L\.,\. " \. - _ - - - - - \. - - - - :;:- \.J )30\.J lJO\.1 )30\.3 130\.J
Su:r\llu\.1 (D4Ud\.1
Surplua C_U 330\.) 660 990\.9 1,321\.2
11 ~ """I'l"-qua 1 U _ f11wll::_ dana 1\. ?roJ\.~\.
It 12: d\. , - ' r s _ u J _ ' l \., de 3% d_ rllf1DaDc_u \.cconl\. «2100 o1U1I>U 4\. P!!\.l\.
- 53
ANNEXE 3
PROJET URBAIN DU MALI
Tableau 1: ANALYSE ECONOMIQUE, NOUVELLES PARCELLES ET REHABILITATION
Flux de couts et de b'n'fices
(millions de FM)
Couts d'in- Couts d 'en- Cotits de Coat
Ann'e Terrain vestissement tretien construction Total B'n'fices
A\. Nouvelles parce11es
1 1979 45,6 45,6
2 1980 180,0 241,6 421,6
3 1981 101,2 277,3 378,5 95,5
4 1982 120,5 277,3 397,8 234,2
5 1983 13,8 277,3 291,1 286,5
6 198'4 13,8 13,8 286,5
7 1985 13,8 13,8 286\.5
8-24 1986-2002 13,8 13,8 286,5
25 2003 (180\.0) (180,0) 286,5
\. B\. R'hab l1i ta tion
1 1978 61,7 61,7
2 1980 240,0 124,9 364\.9 12,8
3 1981 191,2 175,5 366,7 131\.1
4 1982 68,6 108,0 176,6 240,7
S 1983 11,4 108,0 119,4 278,0
6 1984 1l,4 ll,4 278,0
7 1985 1l\.4 11,4 278,0
8-24 1986-2002 11,4 11,4 278,0
25 2003 (240,0) (240,0) 278,0
Taux de rendement interne et analyse de sensibi1it'
TAux Augmentation Diminution Augmentation Diminution
de des couts des codts des b'n'fices des b'nefices
\.12!\.!!\. de 10% de 10% de 10% de 10%
11\. Parcel1es neuves 19,0% 16,9% 21,5% 21,2% 16,7%
B\. Rehabilitation 26,4% 23,8% 29,6% 29,3% 23,5%
C\. Combin' (A + B) 22,3% 19,9% 25,1% 24,8% 19,7%
\. \. \.
PROJET URBAIN DU MALI
Tableau 1: IMPACT SUR LA PAUVRETE URBAINE
----- % de b"ene- Nombre de
% du coOt Sommes Nombre de Pauvres ficiaires benefici- Pauvres
CoOt dea depense depensees CoOt pauvres ayant Nombre de au dessous aires au- pas
element, pour les pour les unitaire dans la besoin de bene- du seuil de dessous du encore
El&ients (US$m)~ pauvres pauvres ~I (US$) zone dU services ficiaires pauvrete seuil de servis
projet -dl pauvrete _ __
(1) (2) (3 )-(l)x (2) (4) (5) (6) (7) (8) (9)"'(7)x(8) (10)-(6)-(9)
Rehabilitation 2,67 61 1,63 980/me~~) ) 24\.000 61 14\.640 )
b/) ) ) 67\.980
Nouvelles parcelles 3,69 79 2,92 1\.342/men-- ) 180\.000 ) 100\.000 22\.000 79 17 \.380 )
) )
Assistance au secteur 0,69 100 0,69 767/em-sj) ) 900 10#-1
informel ploi ) )
V1
~
Amelioration des conditions
sanitaries de Bamako 2,57 73 1,88 51
Vilies secondaires 0,72 74 0\.53 74
Assistance technique\.
institutions\. etc\. ~ 73 2zll n\.a\.
Total Projet 15,28 74 11,26 n\.a\.
al Le coOt de chaque el&ient comprend les imprevuB pour depassements de quantite et augmentation de prix (voir Annexe I,
- pag~s] I 5)\.
bl Coat unita:lre ~ coOt de l'el&ient divise par Ie nombre de menages beneficiaires\.
£1 Cofit unitaire ~ coOt d'investissement direct divise par Ie nombre d'emplois crees\.
~I Sur la base du seuil de pauvrete pour 1978: 30\.250 FM/menage/mois\. VOir Annexe 4\. tableau 2 pour la distribution des
revenlls\.
~I ealcul reposant sur un ratio capital/travail de 990 (Estimation de 1979)\.
~I~ ~
::\.~
- 55 -
ANNEXE 4
PROJET URBAIN DU MALI Page 2
Tableau 2: ~istribution des revenus des beneficiaires
90
60
Q)
QJ
bO
a:I
=
\QJ
e
Q)
QJ
'"
\All
\.
~
CJ
QJ
\.
"I"l
::j\.J
=
QJ
,\.
CJ
:s
0
p\.
10,000' 20,000 30,000 40,000 50,000
Revenu mensuel par menage (PM)
- 56 -
ANNEn 5
PROJET URBAIN DU MALI
Documents et rapports a disposition dans les dossiers du projet
A\. Rapports generaux
1\. "Nettoyage de Bamako" - WHO/Balfour, septembre 1973
2\. "Plan Directeur d'assainissement de la ville de Bamako" - WHO/Balfour,
septembre 1973
3\. L'etude sectorielle de l'eau - WHO/Balfour, septembre 1972
4\. Bamako - The Provision of Urban Services - Desmond McNeill, juin 1976
5\. Mali Background to Urban and Regional Development - S\.A\. Agunbiade,
aout 1976
6\. Etude socio-economique de six quartiers de Bamako - Paul Saada, avril 1977
7\. Situation et perspectives de l'emploi au Mali - ILO, decembre 1976
B\. Documents pour la preparation du projet
1\. Etude de factibilite - rapports preliminaires - Groupe Huit
2\. Rapport final - Groupe Huit, octobre 1978
3\. Atlas - Groupe Huit, octobre 1978
4\. Report on review of proposed infrastructure system - Dirk Ossen, GITEC,
consultant BIRD, novembre 1978
5\. Restructuration des Services Techniques du District de Bamako et de la
Commune de Mopti - Isaac Nahmias, ORT, consultant BIRD, juillet 1978
6\. Promotion de materiaux de construction locaux - Hugo Houben, ADAUA,
consultant BIRD, octobre 1978
7\. Aide-memoire - Mission de pre-evaluation - IDA, juillet 1978
8\. Aide-memoire - Mission d'evaluation - IDA, octobre 1978
9\. Promotion de l'artisanat et des petites entreprises de production et de
services en milieu urbain - AFCOPA, septembre 1978
C\. Documents de travail internes
1\. Fiches projet
2\. Depassements quantites et prix
3\. Termes de reference de l'assistance technique
4\. Marches, couts, cash flows
5\. Budget du projet et part de l'IDA
PROJET URBAIN DU MALI
EXEMPLES DE PARCELLES TRADITIONNELLES
BOGAOAOJI
6 Inhabitants
250m 2
No Water
BAOIALAN
No Electricity
~: ~\. ~'
== ,," : ~'\.
: ",
11 Inhabitants
400 m'
, \. "\. -" t \. Toilet Storage
'" \. ~ '0 No Weter
:: \. '; ,":\. :3 No ElectricitY
", ",\ I"\. \. \.
Well - \. -~ "
0\.//'':'::
, '\. ~ ,\.l , ,\.
\.,\.- \. \. "\." , ,\.
: '\. \.w':,\.
\. , \.' Oaughte
\. \. -\.
\.'"
:1
\. ~
Kitchen '':' \.
:::-: {;
\.Well Kitchen,\
,
\.' '\. \.
,,' : \. - ~ \.I'
19 Inhabitants
,-:: :',,/-\.0
140m 2
\. ", '\.' I I I '
"" 0" "\. :
No Water
No ElectrictY
NIARELA
Toilet
14 Inhabitants
140m 2
No Water
No ElectrictY
_ _ _"7!~--~~-Corrugated Iron Floof
Corrugated I ron
Sheet
Wooden L\.intel
~~:::e:::::::::::::::\\. ~-:::=~_ _- Ceiling
r::"~~"'rt-- Concrete L\.intel
Wood - Metal Sheet Door
Metal Door
7""'---Mud Brick Wall
\:::::=:::oo\.:r-- Foundations
77'-----~\.~ud Brick Floor
\.""~:\.--Cement Floor
TYPE A
Cernent block wall
SEL\.F HEL\.P MUDBRICK HOUSE
MF\. 70,000 ($170)
TYPE B
SMAL\.L\. CONTRACTOR CEMENT BL\.OCK HOUSE
MF\. 450,000 IS1100)
World Bank -19973
MALI URBAN DEVELOPMENT PROJECT
Typical conditions of drainage ditches in Bamako
MALI URBAN DEVELOPMENT PROJECT
Typical conditions of retail markets - Bamako
MALI URBAN DEVELOPMENT PROJECT
Upgrading and Sites and Services Areas
Typical conditions in Magnamhougou
Aerial view of Magnamhougou (upgrading area) and
the sites and services area
MALI URBAN DEVELOPMENT PROJECT
Typical solid waste problems in Bamako
Broken skip
Garbage allover the city
Transportation of garbage Overflowing skip
across the city
MALI URBAN DEVELOPMENT PROJECT
Typical conditions of the informal sector
Mat maker
Weaver
Local furniture Spinner
Re-use of scrap Radio repair
\. \.
This map ntis 00en prepit1'ftd by' the
World Bank's staff exclusively (01'
(he cmrvenience of the readers of
the I'1JIXNf to which ir is sttached,
The riMomimtiilfl$ vsed and the
REPUBLIC OF MALI boundiNies shown on this map
do nat imply, on the pan of the
World Bitnt and i~s affiliates, >YJy
/udgm8llt on the legal stMUS of
MALI URBAN PROJECT
~
any telTitory Of any endwsem8(t/
O( tlcr:eptance of such boumJ/Nies\.
MOPTI o
~
CITY PLAN
\. "
,\.
~~~\. o~
/r", ,) Q
Areas permanently flooded
~ ~
Areas flooded during rainy season
t
~ 2qO 4qo
METERS
Z(')NE: INHH: PD(\.Wrn LB HIIUfE:S £AUl
( EN cutTtAE EN MI50H EHE)
BAS fOND
,
" ALGER IA
"
,
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r~!S ~-1(!\.f
\. '"
\. "! I MAURITANIA '"\. "\.'~
~ [t!"tOt 2$1' S}
c,(
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r
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P001116 | \.
Document de
FilE COpy
La Banque Mondiale
A N'UTILISER QU'A DES FINS OFFICIELLES
Rapport No\. 1204-IVC
\F '1'- , 71
Ol\JE
EVALUATION D'UN QUATRIEME PROJET
DE PALMIERS A HUILE ET DE COCOTIERS
COTE D'IVOIRE
Le 2 Ma:rs 1977
Departement regional des projets
Bureau regional de l'Afrique de l'ouest
TRADUCTION NONOFFrCIELLE A TITRE D'INFORMATION
Le present document fait I'objet d'une diffusion restreinte, et ne peut etre utilise par ses
destinataires que dans I'exercice de leurs fonctions officielles\. Sa teneur ne peut etre
autrement divulguee sans I'autorisation de la Banque Mondiale\.
EQUIVALENTS MONETAIRES
1 dollar = 245 FCFA
1 FCFA = 0,004 dollar
1 million de FCFA = 4\.444 dollars
POIDS ET MESURES
systeme metrique
,\.
ABREVIATIONS
ARSO Autorite pour l'amenagement de la region du sud-ouest
BNDA Banque nationale pour le developpement de l'agriculture
BSIE Budget special d'investissement et d'equipement
CAA Caisse autonome d'amortissement (institution publique
ivoirienne chargee du service de de l'amortissement de
la dette publique de la COte d'Ivoire)
CFAF Communaute financiere africaine du franc
CSSPPA Caisse de stabilisation et de soutien des prix et des
productions agricoles
FER Fonds d'extension et de renouvellement pour le develop
ment de la culture du palmier a huile
IRHO Institut de recherches pour les huiles et oleagineux
RMWA Mission regionale de la Banque Mondiale, Afrique de l'Ouest
SODEPALM Societe pour le developpement et l'exploitation du
palmier a huile
EXERCICE FINANCIER
Du ler octobre au 30 septembre
A\. N-UTILISER QUA\. DES fiNS OfFICI ELLIS
COTE Dl IVOlRE
EVALUATION DU
QUATRIEME PROJET DE PALMIERS A BUlLE ET DE COCOTIERS
TABLE DES MATIERES
Page
RESUHI:<: c_'J' CONCLUSIONS l\.-Vl\.l\.l\.
\. \. \.
\.
I\. INTRODUCTION \. 1
II\. APERCU DI ENSEMBLE 2
A\. Generali tee \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 2
B\. Le secteur agricole \. \. \. \. \. \. \. 3
C\. Institutions \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 3
D\. Strategie du developpement \. 5
E\. Le secteur des palmiers a huile et des cocotiers 5
F\. Resultats des projets anterieurs de palmiers huile
a
et de cocotiers \. \. \. \. \. \. \. \. \. \. \. \. 9
G\. La region du sud-ouest \. 10
III\. LE PROJET \. \. 12
A\. La zone du projet \. 12
B\. Description sommaire du projet 13
c\. Details du proj et \. \. \. \. \. \. \. \. \. \. 14
IV\. ORGANISATION ET GESTION \. 17
A\. Direction du projet \. 18
B\. Gestion du projet \. : \. 18
C\. Selection des planteurs, dimension des plantations
individuelles, dispositions en matiere de credit 19
D\. Situation financiere de la SODEPALM 19
Ce rapport d'evaluation est base sur les observations d'une
mission de la Banque, composee de MM\. G\. Losson, R\. Simsolo et
T\. Winston, qui s'est rendue en Cote d'Ivoire en janvier 1976\.
Le present document fait l'objet d'une diffusion restreinte et
ne peut Stre utilise par ses destinaires que dans l'exercice de
leurs fonctions officielles\. Sa teneur ne peut Stre autrement
divulguee sans l'autorisationdde la Eanque Mondiale\.
Lepresent _ument faU I'Hje' d'uDe diffusi\. resem\.'e, eI lie petI\. ilre \.tilise \. ses
destinatalres q\.e dans I'exen:ice de leurs fond\. \.melelles\. Sa teneur ne pr ilre
autrement diYulluee sans I'autoris\.tion de la a\.e Mendi\.le\.
- 2
V\. DEVIS ET FINANCEMENT \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 20
A\. Devis \. It 11 11 20
B\. Plan de financement envisage \. 23
C\. Financement retroactif \. 24
D\. Passation des marches ,\. 24
E\. Versements \. 25 11\.
F\. Comptabilite et verification \. \. \. \. \. \. \. \. \. \. 26
VI\. RENDEMENTS, PRODUCTION, DEBOUCHES ET PRIX \. 26
A\. Rendements et production \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 26
B\. Traitement \. It It 26
c\. Debouches et prix \. It 27
VII\. AVANTAGES FINANCIERES ET PERSPECTIVES \. 29
A\. Marge brute d'autofinancement \. 29
B\. Avantages des planteurs villageois \. 29
VIII\. AVANTAGES ECONOMIQUES ET JUSTIFICATION \. 30
IX\. ACCORDS ET RECOMMANDATIONS \. 31
ANNEXES
I\. Avancement des projets agricoles finances par la Banque
II\. Evolution de la situation fananciere du Groupe de la
SODEPALM
Tableau 1\. Bilan du Groupe de la SODEPALM
au 30 septembre 1975
Tableau 2\. SODEPALM - Marge brute d'autofinancement des
secteurs palmiers a huile et cocotiers
III\. Caracteristiques techniques
Quatrieme projet de palmiers a huile et de cocotiers:
Appendice 1\. Amenagement de la region du sud-ouest
Appendice 2\. La maladie de Kaincope
Piece jointe 1\. Note de l'IRHO sur la maladie de Kaincope
Appendice 3\. Problemes du regime foncier en Afrique de
1 'Ouest
Tableau 1\. Echelonnement du projet et besoins en personnel
Tableau 2\. Rendements prevus
Tableau 3\. Previsions concernant les regimes palmiers a
huile et les palmistes
- 3
Tableau 4\. Previsions pour les noix de coco, copra et
charbon de coque
Tableau 5\. Production d'huile de palme et de palmistes en
Cote d'Ivoire de 1970 a 1985
I ,T
, \. Programme de plantations villageoises
Partie 1\. Plantations villageoises de palmiers a huile
Partie 2\. Plantations villageoises de cocotiers
Tableau 1\. Palmeraies villageoises - Previsions concernant
la marge brute d'autofinancement et Ie revenu
Tableau 2\. Cocoteraies villageoises - Previsions concernant
la marge brute d'autofinancement et Ie revenu
V\. Investissements industriels et couts du traitement
Tableau 1\. Couts de transformation - secteur huile de palme
Tableau 2\. Couts de transformation - secteur cocotier
VI\. Couts du projet
Tableau 1\. Recapitulation des couts du projet
Tableau 2\. Couts de la preparation du terrain et de
developpement - Plantations de cocotiers
Tableau 3\. Couts de la preparation du terrain et de
developpement - Plantations de palmiers a huile
Tableau 4\. Couts d'exploitation des plantations i~dustrielles
Resume
Tableau 5\. Couts d'exploitation des plantations industrielles -
Couts du personnel, GLIKE
Tableau 6\. Couts d'exploitation des plantations industrielles -
Couts du personnel, NERO
Tableau 7\. Couts d'exploitation des plantations industrielles -
Couts du personnel, IEOKE
Tableau 8\. Couts d'exploitation des plantations industrielles -
Couts du personnel, DE\\fAKE
Tableau 9\. Investissements - Resume
Tableau 10\. Investissements - Vehicules
Tableau 11\. Investissements - Programme et couts de construction
Tableau 12\. Nombre d'ouvriers agricoles necessaires sur Ie
terrain et de logements a construire - Cocoteraies
industrielles
Tableau 13\. Nombre d'ouvriers agricoles et de logements -
Palmeraies industrielles
Tableau 14\. Investissements - Materiel et installations
Tableau 15\. Programme des plantations villageoises - Couts
detailles
Tableau 16\. Programme des plantations villageoises - Service
de vulgarisation et couts d'investissements
- 4-
Tableau 17\. Gestion de la region du sud-ouest - Frais
de fonctionnement de la Direction Regionale
du sud-ouest
VII\. Marge brute d'autofinancement du nrojet
Tableau 1 Marge brute d'autofinancement
Tableau 2\. Couts du projet, entretien et investissements
supplementaires
Tableau 3\. Valeur de l'huile de palme en prix courants
Tableau 4\. Valeur de l'huile de palmistes en prix courants
Tableau 5\. Valeur du copra en prix courants
Tableau 6\. Prevision des prix pour le charbon de coque
Tableau 7\. Valeur prevue pour les exportations en charbon
de coque aux termes courants
VIII\. Calendrier estimatif des deboursements
IX\. Perspectives du marche et prix
Tableau 1\. Prix d'huiles et graisses selectionnees
Tableau 2\. Production mondiale en graines oleagineuses,
graisses et huiles selectionnees
Tableau 3\. Exportations mondiales en graines oleagineuses,
graisses et huiles selectionnees
X\. Calcul du taux de rendement economioue
Tableau 1\. Production annuelle envisagee
Tableau 2\. Prevision des prix d'huile de palme en termes
constants de 1976
Tableau 3\. Prevision des prix d'huile de palmiste en termes
constants de 1976
Tableau 4\. Prevision des prix de copra en termes constants
de 1976
Tableau 5\. Cocoteraies industrielles - Avantages economiques
et flux des couts
Tableau 6\. Palmeraies industrielles - Avantages economiques
et flux des couts
Tableau 7\. Palmeraies villageoises - Avantages economiques
et flux des couts
Tableau 8\. Cocoteraies villageoises - Avantages economiques
et flux des couts
Tableau 9\. Avantages economiques et flux des couts pour
l'ensemble du projet
XI\. Besoins de surveillance
Tableau 1\. Preparation des rapports d'activite - Secteur
des cocotiers
Tableau 2\. Preparation des rapports d'activite - Secteur des
palmeraies
- 5
CA\.q\.TES
BIRD 12157 Zone du projet dans Ie sud-ouest
BIRD 12185 Pa1miers a huile de la SODEPAL~ a l'est de
la Sassandra
J
COTE D'IVOIRE
QUATRIEME PROJET DE PALHIERS A HUILE ET DE COCOTIERS
RESt\.J1-1E ET COnCLUSIONS
AperGu d'ensemble
i\. Le gouvernement de la Cote d'Ivoire a demande l'assistance
financiere de la Banque mondiale pour un programme de developpement
de palmeraies et de cocoteraies dans la region du sud-ouest\. La
mise en valeur de cette region largement inhabitee a ete entamee
avec la construction d'une infrastructure de base, l'exploitation
de la foret tropicale et, a present, des plantations\. Le caoutchouc,
Ie palmier a huile et Ie cocotier representent les seules opportunites
possibles pour developper l'agriculture de cette region, tout en
offrant l'avantage de la diversifier\. Moyennant des investissements
consacres aux palmeraies, les pouvoirs publics comptent reproduire
la reussite qui a caracterise Ie secteur dans Ie sud-est et apporter
une precieuse contribution au progres economique de la region\. Le
projet envisage a ete elabore par la SODEPAh~ qui, a la suite de
son operation dans Ie sud-est du pays, a acquis une grande experience
dans Ie secteur des palmiers a huile et des cocotiers\.
La zone du pro!~et et description sommaire
ii\. La region du sud-ouest, ou aura lieu Ie projet envisage,
s'etend entre Ie fleuve Sassandra et la frontiere du Liberia; sa
limite septentrionale etant l'axe Guiglo/Assia\. La region, qui
consiste surtout en forets, a des conditions favorables a l'arbori
culture\. Le projet fait partie d'un programme de plantation
quadriennal entame fin 1975\. Ce projet couvrira une tranche de
trois ans dont Ie debut est la preparation des terres entreprise en
1975 pour des pl~~tations achevees apres la mi-1976\. II consistera
"
a:
(a) preparer environ 18\.500 ha destines a la creation de
palmeraies et de cocoteraies industrielles;
(0) amenager en plantations industrielles quelque 8\.000 ha
de palmiers a huile et 7\.500 ha de cocotiers;
(c) assurer l'infrastructure necessaire aux deux sortes
de plantations industrielles, y compris les routes de
desserte, les logements, les batiments sociaux,
medicaux et administratifs, les hangars de stockage,
les vehicules et Ie materiel;
(d) mettre en place un programme de plantations villageoises
couvrant pres de 2\.000 ha de cocotiers et 500 ha de pal
miers a huile, les terres ayant ete defrichees par les
cultivateurs;
- ii
(e) fournir aux cultivateurs le credit, les services de
vulgarisation et l'infrastructure necessaires; et
(f) assurer une Direction du projet, y compris les bureaux,
logements, vehicules, materiel et fonds de gestion\.
Le projet ne comprendra pas les installations de traitement Qui
seront construites durant le programme Quadriennal et financees
par l'Etat\.
iii\. Les plantations industrielles initiales fourniront l'infra
structure materielle et sociale voulue pour faciliter la mise en
place des plantations villageoise~\. Les objectifs propres aux
plantations industrielles seront ajustables, de faqon a permettre
une plus grande expansion de l'element plantations villageoises
si les conditions le permettent\. Ceci affect era surtout les
cocoteraies pour lesQuelles les cUltivateurs villageois devraient
planter un minimum de 2\.000 ha, durant la periode du projet\. Au
cours du programme quadriennal, le but sera d'obtenir que l'element
plantations villageoises represente 30% de l'entierete du programme\.
A la longue, on s'attend a ce que le programme soit comparable a
celui du sud-est ou les plantations villageoises couvrent environ
40% du total\.
Execution du projet
iv\. Le projet sera realise par la SODEPAL~\. Le departement
du genie civil de la SODEPAU4 effectuera le defrichement et la
preparation des terres pour les plantations industrielles etant
donne qu'il possede le materiel necessaire\. La Direction du projet,
actuellement situee a Abidjan, sera etablie dans la region du
sud-ouest apres consultation avec la Banque\. Le titulaire du poste
de Directeur du projet est Qualifie pour exercer ces fonctions\.
Institutions
v\. La SODEPALM, entreprise d'Etat, a ete creee en 1963 afin
de mettre en oeuvre les programmes gouvernementaux de developpement
des secteurs palmiers a huile et cocotiers\. Lorsque les premieres
plantations seront sur le point d'entrer en rapport et qu'il fallait
consacrer d'important3 investissements pour l'usinage, les pouvoirs
publics ont decide de proceder a des changements des structures pour
interesser les investisseurs prives\. Deux nouvelles societes ont
ainsi vu le jour en 1969, Palmindustrie, chargee du complexe
industriel, et Palmivoire, societe gestionnaire, chacune comprenant
des interets etrangers et ivoiriens\. Les trois societes furent
liees par un contrat d'''Association de participation" et elles se
firent conna!tre comme le Groupe SODEPAL\1\.
- iii
vi\. Le gouvernement decida, en 1974, de confier a nouveau
toutes les operations a la SODEPALH et de racheter les interets
pr~ves dans Pa~mindustrie et Palmivoire, ce qui representait en
viron 15% des fonds propres globaux au Groupe de la SODEPAU,1\. Il
fut convenu d'une formule de compensation satisfaisante en 1976\.
Palmivoire a ete recemment dissoute; Palmindustrie a ete maintenue
comme societe proprietaire d'installations industrielles, de
transport et de traitement, toutes louees a la SODEPAL~\. Les
dispositions juridiques sont a present arretees et sont satisfaisantes\.
vii\. En vertu d'un decret recent, les pouvoirs publics ont
trans les responsabilites de SODEPALM en matiere de commercialisa
tion a la Caisse de Stabilisation et de Soutien des Prix des Pro
ductions Agricoles (CSSPPA)\. Les nouvelles dispositions sont satis
faisantes et devraient assurer un financement suffisant aux activites
de la SODEPALM/Palmindustrie: la CSSPPA financera l'exploitation
et la mise en valeur des secteurs des palmiers a huile et des coco
tiers au moyen des revenus provenant de ces secteurs\. Le gouvernement,
par l'entremise du BSIE, n'interviendra que si les ressources obtenues
des secteurs palmiers devaient ne pas suffire au financement de
nouveaux investissements\. Les prix pour les produits de la SODEP~~
seront etablis a l'avance par rapport a l'annee culturale en fonction
de l'approbation des budgets SODEP~~/Palmindustrie par leurs Conseils
respectifs et les ministeres responsables\. Ces comprendront les
couts d'exploitation, des provisions pour le renouvellement courant
des actifs et le service de la dette\. En outre, la CSSPPA devra
egalement fournir les montants necessaires, en plus des ressources
proven ant du secteur palmier a huile et cocotier, pour financer les
programmes d'investissement de la SODEPALM/Palmindustrie\. lesquels
auront egalement ete approuves par leurs Conseils respectifs et les
ministeres responsables\. La base et le niveau initial de paiement
qu'a fixe le gouvernement pour le niveau initial de paiement qu'a
le gouvernement pour l'huile de palme correspondant a Ia campagne
agricole de 1976/77 ont ete analyses et juges satisfaisants\. En vertu
du meme decret, la CSSPPA doit deposer des fonds dans un compte tenu
par la CAA pour Ie renouvellement des actifs de la SODEPAL~ d~nt la
duree de vie depasse cinq ans\. La SODEPAL~ disposera des montants
verses a ce compte lorsque son Conseil et les ministeres responsables
auront decide que de tels renouvellements sont necessaires\. Le
gouvernement fera en sorte que la SODEPAL~ disposera, soit par l'in
termediaire de la CSSPPA ou toute autre ressource, des fonds necessaires
a la mise en oeuvre des programmes d'investissement, en cours ou futurs,
se rapportant aux activites auxiliaires confiees a la SODEPAU1\.
viii\. Ces modifications apportees a la structure des societes
et aux arrangements relatifs a la commercialisation ont longue~ent
examinees avec les differents cofinanciers\. y compris la Banque,
durant les deux dernieres annees\. Le principal souci des cofinan
ciers etait de s'assurer que l'efficacite operationnelle de la
SODEPAL~, qui n'avait ces de repondre a des normes elevees, ne
serait pas alteree\. lls ont egalement che:::-che a s'assurer que
- iv
l'integrite financiere de l'entreprise resterait valable, en vertu
de quoi la SODEPAlJ4 serait en mesure tant de continuer a assumer
ses obligations relatives au service de la dette en cours que de
conserver sa qualite d'emprunteur habilite a beneficier d'autres
credits\. Bien que la Banque et les autres cofinanciers aient
initialement eu certaines reserves quant aux nouvelles dispositions,
ils estiment a present que les mesures adoptees, telles qu'arretees
par un decret presidentiel recent, permettront a la SODEPA!J1 de
repondre aux criteres d'un emprunteur viable\. Les modifications
qui devaient etre apportees aux documents juridiques regissant
les relations existant entre la Banque et la SODEPAU1 ont ete in
corpores dans le projet d'Accord qui modifie les accords anterieurs
et a fait l'objet d'un agrement en substance avec les autres
cofinanciers\.
Main-d'oeuvre
ix\. Les besoins du projet en main-d'oeuvre seront relative
ment modestes et atteindront leur maximum a l'annee 3, avec en
viron 1\.600 ouvriers\. Lerecrutement initial de la main-d'oeuvre
provenant de la region a depasse les previsions et environ 500
ouvriers etaient deja employes au debut de 1976; ceci est favorable
au projet\. Neanmoins, etant donne que la region est peu peuplee
et que le projet en concurrence, sur le de la main-d'oeuvre,
avec d'autres plantations, il est possible de ne pouvoir satisfaire
a tous les besoins sur place\. Comme il s'est avere dans la plu
part des amenagements de plantations industrielles en Cate d'Ivoire,
les ouvriers devront peut-etre etre attires des pays avoisinants\.
Ces dernieres annees, il est devenu plus difficile de recruter
et garder les ouvriers, aussi les plantations industrielles devront
etablir des logements et des facilites sociales d'une qualite
qui a ete adoptee pour les plantations industrielles recem
ment etablies ailleurs dans le pays\. Les pouvoirs publics prendront
les mesures necessaires pour assurer qu'un nombre suffisant d'ou
vriers soit disponibles a temps pour le projet\.
Devis et financement
x\. Les couts du projet correspondant aux trois annees de
la periode d'investissement sont evalues a l'equivalent de 36,2
millions de dollars, net de taxes (40,6 millions de dollars, taxes
comprises)\. L'element devises se chiffrera a 25,3 millions de
dollars, soit 62% des couts globaux\. Le devis est base sur les
prix de janvier 1976\. Les provisions pour imprevus representent
22% des couts nets globaux du projet\. Nous proposons qu'un pret
de la Banque de l'ordre de 20 millions de dollars so it consenti
a la SODEPAL~ pour un terme de 20 ans, y compris un differe de
paiement de quatre ans et demi\. Le pret financera 55% des couts
nets du projet et couvrira environ 88% des couts payables en devises
supportes durant les trois &~ees de la periode du projet\. Cepen
dant, aux fins des versements, le Pret de la Banque financera 100%
- v
du cout en devises durant les deux dernieres du et (voir
par\. xii ci-dessous)\. Les pouvoirs publics ont l'intention d'au
toriser la Banque nationale pour Ie developpement de l'agriculture
(BlIDA) de contribuer au financement dtune partie du projet moyennant
un pret equivalant a 2 millions de dollars, consenti a la SODEPALM\.
Le reste des couts du projet (18,6 millions de dollars) sera finance
par Ie gouvernement par l'intermediaire du Budget d'inves
tissement et d'equipement (BSIE)\.
xi\. Les prets agricoles octroyes aux villageois
seront par la SODEPAil1\. Comme dans Ie cadre des trois
projets precedents pour l'huile de palme, les villageois
bene , a titre personnel, de credits sans s aupres
de la SODEPALM\. Toutefois, les prix a la production seront fixes
de a permettre a l'Etat d'obtenir de sa contribution un
rendement financier raisonnable\. Sur la base des hypotheses retenues
dans Ie calcul de la marge brute d'autofinancement du et, Ie
rendement qu'obtiendra l'Etat de l'investissement pour Ie
programme des plantations villageoises est a environ 18%\.
xii\. Le gouvernement a finance les couts incombant a la
SODEPALH en 1976 (environ 10 millions de dollars), essentiellement
pour Ie defrichement effectue la premiere annee de plantation\. Toute
fois, Ie gouvernement a demande que les depenses contractees au
titre du projet avant la signature du pret de la Banque et apres Ie
ler janvier 1977 fassent l'objet d'un financement retroactif\. Par
consequent, Ie projet comprendra un financement retroactif limite
a 500,000 dollars au titre des depenses apres Ie ler
janvier 1977 de fa~on a couvrir les couts des batiments, materiel,
vehicules, services de vulgarisation et credits
xiii\. Tous les marches, equivalant a 100\.000 dollars ou davan
, a l'acquisition des vehicules et du materiel (to
talisant environ 3,1 millions de dollars) s'effectueront par appel
d'offres international conformement aux direct de la Banque\.
Les marches relatifs aux biens et services dont Ie cout est inferieur
a la contrevaleur de 100\.000 dollars pourront etre passes par appel
d'offre local, selon des procedures acceptables par la Banque, a
condition que l'ensemble des couts de tous les biens et services
ainsi ne depasse pas l'equivalent de 1 million de dollars\.
Les concernant les batiments, d~nt la valeur totale atteint
5,2 de dollars et qui impliquent operations
diss a travers la region du projet, ne sont pas suffisamment
importants pour attirer des firmes etrangeres et seront attribues
sur la base d'appels d'offres publies localement et conformement aux
proc nationales, accept abIes par la Les travaux de
- vi
genie civil qui consistent a defricher les terres et routes de desserte
pour les plantations industrielles (19,1 millions de dollars au total)
et la preparation des terrains, s'elevant a 1,8 millions de dollars,
seront executes par la SODEPALM en regie directe et rembourses au
vu des certificats d'achevement des travaux; la SODEPALM possede le
mat&riel pour cette tache et a demontre qu'elle peut la mener a
bien plus efficacement et a moindre cout que d'autres entrepreneurs\.
Les autres couts du projet (5,4 millions de dollars) concerneront
essentiellement le personnel, la main-d'oeuvre, les prets aux planteurs
et les frais d'exploitation\.
xiv\. SODEPAlJ4 a ete choisie pour executer le defrichement des
terres en regie directe a cause des offres excessivement elevees
re~ues de soumissionnaires internationaux pour le second projet de la
SODEPAL~ (Pret 160-IVC) en 1911\. Dans le cadre des second et troisieme
projets (Prets 160 et 1036-IVC), apres recommandation de proceder
en regie directe, la SODEPALM a defriche environ 15\.000 ha moyennant environ
500 dollars par ha; ce qui est pres de la moitie des offres inter
nationales re~ues en 1911\. Pour le projet envisage, la SODEPALM prevo it
que ses couts seront encore inferieurs a ceux offerts en 1911\. La
SODEPAL~jouitd'un avant age inherent par rapport aux soumissionaires
internationaux dans la mesure ou elle dispose sur place d'un materiel
specialise, defriche des terres dans le cadre d'autres mandats gou
vernementaux et possede une vaste experience dans ce domaine\. De
surcroit, le defrichement des terres pour les plantations industrielles
de caoutchouc gerees par des entreprises privees continue d'etre effec
tue en regie directe\.
Versements
xv\. Le pret de la Banque sera verse en deux ans et couvrira
15% des couts du defrichement des terres, y compris la construc
tion des routes de desserte (1,5 millions de dollars)\. Le cout du
defrichement des terres ne depassera pas des montants maximaux fixes
par ha (203\.000 FCFA pour les palmeraies industrielles et 192\.000
FCFA pour les cocoteraies industrielles, en prix constants de 1916)\.
Le pret couvrira egalement 60% des couts agricoles, c'est-a-dire la
main-d'oeuvre et le materiel vegetal des palmeraies et cocoteraies
industrielles, pour les annees deux et trois (3 millions de dollars);
65% des depenses totales soit 100% des couts en devises correspon
dant aux vehicules, batiments et materiel connexe destines aux pal
meraies et cocoteraies industrielles (3,5 millions de dollars); 80%
des couts relatifs au programme des plantations villageoises, y
compris des prets en nature et en especes (1,1 million de dollars),
ainsi qu'a la Direction du projet (0,4 million de dollars); et 4,5
millions de dollars ne seront pas affectes\.
Commercialisation et prix
xi\. Les exportations devraient absorber 60% de l'huile de
palme (environ 20:000 tonnes), tous les pal~istes (quelque 1\.500 tonnes),
- vii
et le gros du copra et du charbon de noix de coco produit dans le
cadre du projet\. Lorsque les plantations du projet atteindront leur
pleine maturite, l'huile de palme representera moins de 1% du commerce
mondial prevu pour cette epoque\. L'huile de palme ivoirienne jouit
d'une excellente reputation en raison de sa faiole teneur acide et
se vend a prime au-dessous des cours mondiaux\.
krantages economiques et ,justification
xvii\. Les avantages essentiels a retirer des plantations
du projet seront la production d'huile de Palme et de palmistes,
de copra et de charbon de noix de coco\. Les recettes en devises
annuelles nettes imputables au projet devraient atteindre en 1986
environ 40 millions de dollars\.
rriii\. Par ailleurs, le projet mettra en place une infrastruc
ture sociale et physique qui permettra a des nouveaux cultivateurs
de s'etablir dans la region pratiquement non arnenagee du sud-ouest\.
11 creera egalement 1\.600 emplois supplementaires a plein temps
pour les ouYriers des plantations industrielles et aug:nentera con
siderablement les revenus d'environ 600 cultivateurs locaux\.
xix\. Dans Itanalyse economique, les valeurs des productions
sont basees sur les cours mondiaux attendus, le cout de la main
d'oeuvre d'apres les salaires d'efficience estimatifs, et les couts
non associes a la main-d'oeuvre ont ete evalues a leur valeur
commerciale, net de taxes (en termes de 1975)\. Les taux de rende
ment economique qui en sultent se chiffrent a 17% pour le projet
entier, 16,5% pour les palmeraies et les cocoteraies industrielles
et a 30% et 23% respectivement pour les palmeraies et les cocoteraies
villageoises\. Si les couts et profits avaient ete ajustes en fonc
tion des distortions douanieres et commerciales au moyen d'~ facteur
de conversion, le taux de rendement econoI:lique d efficienc e a:lrait
f
" l!
ete de 20% pour Ie projet entier\. Tous les taux de rendement sont
peu sensibles a des changements apportes au niveau des couts ou
des pro:~hs\. La rentabilite plus ele'Tee estimee dans le cas des
plantations villageoises resulte en grande partie du fait que les
couts d''J1le ceI'"taine infrastructure centrale et de services sont
entierement attribues aux plantations industrielles\. Des efforts
seront consent is durant la mise en oeuvre du projet en vue de maxi
miser la taille des elements plantations villageoises si les resul
tats obtenus sur celles-ci do~~ent satisfaction\. Les rapports de
surface pour les quatre elements :iu projet ont, cependant, ete
detennines d' l'administration du projet et les disponibilites
en main-d'oeuvre, sur la base de l'experience acquise a la suite
d'autres projets d'arooriculture en Cote d'Ivoire\.
Risaues
xx\. L'IREO, qui fournira les semences hybrides de palI:1iers
a huile et de cocotiers a~~ plantations individuelles et villageoises,
a etudie la maladie de Kaincope, "jaunissement ll mortel qui affecte
- viii
les varietes de cocotiers dans les pays producteurs d'Afrique de
l'Ouest et pourrait eventuellement contaminer la region du projet\.
Bien que le danger ne puisse etre ignore, les chercheurs de l'IRHO
estiment que la resistance a la maladie caracterisant les varietes
hybrides suffit a minimiser le risque au point d'etre plus que
compense par les profits potentiels du projet\.
xxi\. Il se peut que le projet ait a faire face a des diffi
cultes de recrutement de main-d'oeuvre\. Toutefois, ses besoins
en main-d'oeuvre sont modestes et les pouvoirs publics prendront
les mesures voulues pour assurer la disponibilite d'ouvriers
agricoles\. Si, en depit de ces assurances, l'Emprunteur ne
reussissait pas a recruter suffisamment d'ouvriers, le program
me de pl~~tation devrait etre ajuste en consequence\.
xx~~\. Le deboisement effectue dans la region du sud-ouest,
ou d'autres plans d'amenagement sont en cours ou prevus, pourrait
avoir une incidence ecologique negative s'il n'etait pas conven
ablement echelonne\. Aussi le gouvernement soumettra a la Banque un
plan d'utilisation des terres un an apres la signature du pret\.
Recommandation
xxiii\. Sous reserve des assurances et conditions mentionnees
au Chapitre IX, le projet justifie l'octroi d'un pret de la Banque
de l'ordre de 20 millions de dollars pour un terme de 20 ans, y
compris un differe de paiement de quatre ans et demi\.
COTE D'IVOIRE
QUATRIEME PROJET DE PAL\.'HERS A HUILE ET DE COCOTIERS
1\. INTRODUCTION
1\.01 Le gouvernement de la Cote d'Ivoire a demande l'assis
tance financiere de la Banque pour un programme de developpement
concernant les palmiers a huile et les cocotiers dans la region du
sud-ouest\. L'objectif est de poursuivre le developpement graduel
de cette region fort peu peuplee a savoir: Phase 1 - importants
investissements relatifs a l'infrastructure des ports et des routes;
Phase 2 - exploitation des ressources forestieres; et a present,
la suite logique, Phase 3 - developpement agricole\. Moyennant des
investissements au niveau des palmeraies, les pouvoirs publics
esperent reproduire le developpement tres reussi de ce secteur dans
le sud-est et creer ainsi l'axe de developpement necessaire au
progres economique de la region\.
1\.02 La Banque a evalue un programme de plantation quadriennal
couvrant 22\.000 ha de palmiers a huile/cocotiers\. 11 s'agit
la d'un "Programme d'Urgence" sanctionne par le Ministere du
Plan et autorise par un dec ret de Loi Programme datant de decem
bre 1974\. La quatrieme annee de plantations etait exclue de fa~on
a etablir un equilibre entre les fonds disponibles et une par
ticipation valable au projet de la part de la Banque\. Aussi le
projet sera-t-il limite a trois annees de plantation couvrant
15\.500 ha d'exploitations industrielles et 2\.500 ha de parcelles
villageoises\. De surcroit, le gouvernement a l'intention de
realiser la quatrieme annee de plantation et de creer des usines
de traitement pour les produits de palmistes et ceux des noix de
coco une fois que les arbres seront arrives a maturite\. Le
gouvernement se chargera d' entretenir la zone plantee dans le
cadre du present projet et de fournir les installations de traite
ment\.
1\.03 La Banque a deja consenti trois prets pour le devel
oppement des palmiers a huile/cocotiers a l'est du fleuve
Sassandra, sous la responsabilite du groupe SODEPALM\. Ce programme
COQvre quelque 100\.000 ha de palmiers et implique une activite
substantielle au niveau du traitement et du point de vue commer
cial; le gouvernement est donc convenu que le programme du sud
ouest devrait avoir une Direction de projet separee\. Neanmoins,
en vue de tirer profit de l'expertise et des ressources dispon
ibles de la SODEPAL~, le gouvernement a charge cette societe
d'elaborer le Programme du sud-ouest et d'en prefinancer l'exe
cution\. Ce rapport d'evaluation est base sur les observations
d'une mission de la Banque qui s'est rendue en Cote d'Ivoire en
janvier 1976 et se composait de N}!J\. G\. Losson, R\. Simsolo et
T\. Hinston\.
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1\.04 La Ban~ue a consenti 10 prets au developpement agricole
en Cote d'Ivoire: trois totalisant 17,1 millions de dollars, en
1969, pour le developpement des palmiers a huile et des cocotiers
(Prets 611, 612 et 613-IVC); un pret de 7,5 millions de dollars,
en 1970, pour la production de cacao des petites exploitations
(Pret 688-IVC); deux prets atteignent un total de 7 millions de
dollars, en , pour les palmiers a huile et les cocotiers (Prets
759 et 760-IVC); un pret de 8,4 millions de dollars, en 1973, pour
un projet de caoutchouc (Pret 938-IVC); et un pret de 2,6 millions
de dollars, en 1974, pour le developpement des pamiers a huile sur
petites exploitations et plantations industrielles (Pret 1036-IVC)\.
Un second et pour le cacao des petites exploitations, a raison
de 20 millions de dollars (Pret 1069-IVC) et un projet pour le de
veloppement rural des zones cotonnieres, de l'ordre de 31 millions
de dollars (Pret 1077-IVC) ont ete octroyes en 1974 et 1975, respec
tivement\. En de certaines difficultes initiales, tous ces
projets se sont acheves ou evoluent de fa~on satisfaisante - a l'ex
ception d'un seul, le projet de caoutchouc de Grand-Bereby (Pret
938-IVC) dont l'avancement a ete serieusement entrave par des penur
ies de main-d'oeuvre et la hausse des couts (voir le Memorandum du
President au Conseil R\.76-240 en date du 29 septembre 1976)\.
I I\. APERCU D' ENSBfBLE
A\. Generalites
2\.01 La Cote d'Ivoire couvre une superficie d'environ 324\.000
km2 \. La foret tropicale humide s'etend sur la moitie meridionale
du pays, suivant une ceinture ~ui s'avance sur ~uel~ue 200 kID a
partir de l'Ocean Atlanti~ue\. Plus au nord, la foret est graduelle
ment remplacee par la savane ~ui occupe l'autre moitie du pays\.
2\.02 La population, estimee a 6,7 millions d'habitants (mi-1975),
s'est accrue au rythme d'environ 3,8% par an, y compris 1,3% dfi a
1 'immigration\. La croissance du PIB a ete forte, s'etablissant a
une moyenne annuelle de 7% en termes reels, au cours de la derniere
decennie\. L'economie du pays, et son progres rapide, ont repose
sur la production de cafe et de cacao, d'huile de palme, de bananes
et d'ananas, sur l'exploitation des ressources forestieres et une
industrie en expansion (~ui represente actuellement 12% du PIB)\.
Toutes ces sont concentrees essentiellement dans le sud
ou se situe Abidjan, capitale et centre industriel\. La savane du
nord ~ui compte la moitie de lasuperficie du pays et 35% de sa popu
lation est de ressources naturelles moins avantageuses et
les moyens d'existence dependent du coton, des cultures vivrieres
et, dans une certaine mesure, de l'elevage\. Dans l'ensemble, le
revenu par habitant s'etablit actuellement a environ 500 dollars\.
2\.03 Les revenus ruraux par habitant s'elevent en moyenne a
130 dollars, mais il existe d'importantes disparites regionales\.
Le revenu moyen se 220 dollars dans le sud-ouest; tombe a
- 3
environ 110 dollars au centre ou les structures de production parti
culieres a la foret et a la savane se superposent; tombe en dessous
de 70 dollars dans le nord; et, dans le sud-ouest, les esti~ations
relevent le chiffre approximatif de 80-90 dollars\. Ces disparites
des revenus sont en responsables de la migration rurale vers
les centres urbains, de la savane vers la foret\. 11 est prevu que
la croissance demographique de la prochaine decennie se chiffrera
annuellement a environ 8,5% dans les villes, et pres de 4% dans la
zone forestiere cependant que la savane enregistrera un dec lin annuel
de quelque 0,5%\.
B\. Le secteur agricole
2\.04 L'agriculture et l'exploitation forestiere representent
environ 90% des exportations du pays et 25% de son PIB\. Elles
constituent le moteur principal de la croissance ivoirienne et le
resteront pendant de nombreuses annees a venir\. Des terres abondantes,
un bon approvisionnement en main-d'oeuvre et des marches ~ondiaux
generalement favorables a ses produits ont assure a la Cote d'Ivoire
une croissance ole acceleree\. Environ 70% de la population
vivent de l'agriculture et de l'exploitation forestiere\. Le revenu
par habitant de ce secteur se chiffrait, en 1975, a 150 dollars\.
La valeur estimative de la production agricole de 1974/75 s'etabli
ssait a 500 millions de dollars dont les cultures industrielles
couvraient environ millions de dollars, les culture vivrieres
191 millions de dollars et l'elevage 31 millions de dollars\. De
1970 a 1974, les exportations annuelles se sont chiffrees a 90 millions
de dollars dont les trois produits de base principaux -- le cafe
(27%), les sc (26%) et le cacao (22%) -- representaient environ
75%\.
2\.05 Jusqu'a une periode recente, les efforts visant a ameliorer
la productivite se sont concentres sur certaines cultures
d'exportation\. La promotion de ces cultures par des societes publiques
specialisees et autonomes a tres bien reussi\. La production des
cultures vivrieres n'a, en general, pas ete avantagee par cette promo
tion intensive mais, sant aux besoins du marche, a fortement
progresse\. Au debut des annees soixante-dix, le gouvernement a porte
son attention sur des problemes etroitement lies: la pauvrete rurale
et les regionales des revenus\. 11 a entrepris des pro-
pour l'huile de palme au titre de son plan
regional\. Bon nombre de ces programmes sont con9us
de fa90n inc lure les cultures vivrieres dans les regions propres
au developpement des cultures de rente\. Un exemple a citer est
l'important programme de developpement du coton combine avec celui
des cultures vivr~eres, con9u pour la region des savanes et entame
en 1974 avec l'aide de la Banque\.
C\. Institutions
2\.06 La fication generale du developpement inccmbe au
- 4
~'finistere
de la planification cependant que les Ministeres de l' agri
culture et d'elevage se chargent des programmes detailles pour le de
veloppement agricole\. L'execution de ces programmes est generalement
confiee a des agences autonomes, constituees par le gouvernement en
vue de promouvoir une ou plusieurs cultures\. Les principales agences
sont: SATMACI (cacao et cafe), SOCATCI (caoutchouc), SODEFEL (fruits
et legumes), SODERIZ (riz, marecageux et irrigue), CIDT (coton et
cultures vivrieres) et SODEPALM (palmiers a huile et cocotiers)\. Une
description plus detaillee de la SODEP~1 figure a la Section E (Secteur
des palmiers a huile et des cocotiers)\.
2\.07 La Caisse de stabilisation et de soutien des prix des
productions agricoles (CSSPPA) se charge de mettre en oeuvre les poli
tiques de soutien qu'adopte le gouvernement en matiere de prix agricoles\.
Elle soutient les prix a la production du coton, du cacao et du cafe
de maniere conventionnelle, en payant un prix garanti minimum, fixe
annuellement, en vendant les produits de base sur le marche mondial et
en absorbant les profits et pertes qu'enregistrent ses operations\.
Les excedents de la CSSPPA ont en partie servi a financer de nouveaux
investissements, essentiellement dans le secteur agricole\. Voir la
Section E en ce qui concerne le role que joue la CSSPPA dans le secteur
des palmiers a huile et des cocotiers\.
2\.08 Le Fonds d'extension et de renouvellement (FER) a ete
mis sur pied, en conjonction avec le programme pour le developpement
des palmiers a huile, a la demande du Fonds europeen de developpement
(FED)\. Son objectif initial etait de financer des logements modernes
pour les employes des palmeraies industrielles et de contribuer au
developpement de la production des palmiers a huile des plantations
villageoises\. Sa principale source de revenu se compose de transferts
de la SODEPAL~, bases sur les regimes de fruits frais produits sur les
palmeraies industrielles, en guise de repaiement d'un don du FED au
gouvernement\. Le FER continuera a jouer un role important dans le
financement des futures plantations villageoises\.
2\.09 Recherche agricole\. La recherche sur les cultures in
dividuelles est effectuee par des instituts specialises sous la super
vision de l'Etat\. Les instituts concernes par le cafe et le cacao
(IFCC), les cultures oleagineuses (IRHO) et le coton (IRCT) ont obtenu
d'excellents resultats en etroite coordination avec les agences de
developpement correspondantes\.
2\.10 La Banque nationale pour le developpement agricole (BNDA),
principale source du credit agricole, a jusqu'ici fonctionne par l'entre
mise des agences de developpement autonomes (par\. 2\.06) lesquelles se
chargent de la distribution du credit et du recouvrement des prets\.
La BlIDA a utilise, a ces fins, ses fonds propres et une ligne de reescompte
aupres de la Banque centrale des Etats de l'Afrique de l'Ouest (BCEAO)\. La
BNDA s'occupe activement d'etablir des branches dans les zones rurales
dans le but de traiter directement avec les cultivateurs et les groupes
- 5
de cultiyateurs\. La Banque examine actuellement la possibilite d'aider
la BiIDA a atteindre ce but, peut-etre au moyen d'un projet FD~\.
2\.11 Deux organismes regionaux autonomes, l'Autorite pour
l'amenagement de la Vallee du Bandama (Av~) et l'Autorite pour l'
ment de la du sud-ouest (ARSO), ont ete institues essentiellement
l'un pour les cultiyateurs deplaces du fait du lac Kossou et
l'autre pour mettre le sud-ouest en valeur\. Ces deux agences deyraient
influencer totalement la planification du deyeloppement dans leur
region respective\.
D\. Strategie du deyelonnement
2\.12 L'objectif du gouyernement est de maintenir le taux de
croissance de l'economie, estime moyenne 7% par an au cours de la
derniere decennie (par\. 2\.02)\. L'agriculture figure en haute
etant donne que l'economie est tres dependante du commerce
de meme que de quelques importants produits de base d'
(par\. 2\.02) et que la production alimentaire n'a pas eyolue au meme
rythme que les dem~~des croissantes qui ont resulte de 1 'urbanisation\.
Pour l' elle-meme, les objectifs du en matiere
de deyeloppement sont: (a) augmenter tant la productiYite que la super
ficie des cultures d'exportation de fagon a majorer les ressources en
devises et a maintenir leur position concurrentielle sur les marches
d'exportation; (b) diversifier la production des cultures d'exportation;
(c) releyer la production des cultures yivrieres, notamment de celles
dont les importations se sont rapidement accrues; et (d) repartir ses
di programmes entre les regions de fagon a releyer les reYenus
et les niveaux de vie dans les parties les moins fayorisees du pays
et a les disparites des reyenus entre ces regions\. Pour atteindre
ces objectifs, la strategie gouYernementale consiste a: (a) mettre en
oeuvre des projets destines a augmenter la production et la productiYite
du cacao et du , comme le second projet de cacao apprOUye par la
Banque en (par\. 2\.05); (b) adopter des mesures propres a ameliorer
la gestion des reserves forestieres; (c) executer des projets de deyeloppe
ment rural affectant des regions entieres dans les parties demunies
du pays; et (d) realiser des projets de diversification tels que le pal
mier a huile, le caoutchouc, le sucre et le riz\.
E\. Le secteur des palmiers a huile et des cocoteirs
Le deyeloppement du palmier a huile
2\. Au debut des annees soixante, le gouyernement a lance
un programme pour le deyeloppement des palmiers a huile, concentre dans
le sud-ouest du pays\. Le Groupe de la SODEPP111 a ete cree en 1963 pour
le mettre en oeuvre\. Ce programme etait appuye par le Fonds europeen
de (FED), la Banque europeenne d 'inyestissement(BEI) , la
Caisse centrale de cooperation economique (CCE) et la Banque (Prets 611,
612, 613, 759, 760 et 1036-IVC)\. Le pays compte actuellement environ
81\.000 ha de plantations de pa~ers a huile dont quelque \.000 ha ont
- 6
ete plantes dans le cadre du programme\. La production annuelle d'huile
de palme est passee de 52\.000 tonnes en 1969 a 162\.000 tonnes en 1975;
les exporatations ont ete portees de 2\.000 tonnes a 108\.200 tonnes durant
la meme periode\. 1985, la Cote d'Ivoire devrait produire pres de
325\.000 tonnes d'huile de palme par an, dont elle en exporterait les
deux tiers environ ce qui represente approximativement 4% de tout le
commerce mondial en huile de palme\.
2\.14 Tant pour son programme de palmiers a huile que pour celui de
cocotiers, le gouvernement a etabli un principe voulant que les plan
tations industrielles, installations de traitement comprises, soient mises
en place puis completees par des plantations villageoises\. Les plantations
industrielles procurent aux plantations villageoises l'infrastructure
necessaire et les services essentiels permettant une production efficace\.
En vertu de ce principe, neuf districts de developpement ont ete ses
a l'est du fleuve Sassandra, chacun d'eux groupant un ensemble de planta
tions industrielles, representant environ 60% du total, les plantations
villageoises le reste, ainsi qu'une huilerie\. Le gouvernement a l'in
tention d'appliquer, en fin de compte, le meme principe a son plan de
developpement pour la region du sud-ouest\.
Le developpement du cocotier
2\.15 1969, le developpement du cocotier a ete en meme
temps que celui du palmier a huile et avec une aide financiere provenant
de sources exterieures (par\. 2\.13)\. La SODEPAU~realiseun programme de
cocotiers sur 20\.000 ha conformement au calendrier envisage lors des
evaluations de la Banque en 1969 et 1971\. Les plantations dans le cadre
du projet v~nt epuiser presque entierement le potentiel de la zone situee
a l'est du fleuve Sassandra\. Au debut, l'execution du programme des
plantations villageoises s'est heurtee a des difficultes; mais celles-ci
ont ete largement surmontees en offrant davant age d'incitations aux cul
tivateurs\. L' ssement des cocoteraies industrielles est s~tisfaisant,
les couts d'investissement etant generalement proches des estimations de
1 'evaluation\. La production a demarre sur une petite echelle en 1974 (660
ha) et, en 1985, la production devrait atteindre l'equivalent de 130\.000
tonnes de copra, pourcentage negligeable du commerce mondial pour les
noix de coco\.
Institutions concernees par Ie secteur
2\. La SODEPALM (Societe pour Ie developpement et l'exploitation
du palmier a huile), entreprise d'etat, a ete creee en 1963, pour mettre
en oeuvre les plans gouvernementaux relatifs au developpement du sec
teur du palmier a huile et du cocotier\. Son capital initial entierement
souscrit par l'Etat se chiffrait a 50 millions de FCFA\. Durant ses trois
=lU~~O, la SODEP~~ a ete uniquement interessee au
et des cocoteraies, a la fois ses propres plantations
industrielles et les plantation villageoises associees\.
- 7
2\.17 En 1966, alors que les prenleres plantations approchaient de leur
maturite et qu'il fallait consentir a d'importants investissements pour
le traitement des recoltes, le gouvernement a pris la decision de proceder
a une modification des~ructures Juridiques pour repondre a trois objectifs:
(i) interesser les investisseurs prives a l'entreprise; (ii) creer une
entite separee chargee du traitement et d'acqu~rir l'expertise voulue
dans ce domaine; et (iii) faire en sorte que l'operation s'accompagne
d'une conscience plus poussee des profits a tirer\. Des lors, en 1969,
deux societes furent mises sur pied et rattachees a la SODEPALM:
PAL~INDUSTRIE, element industriel, et P~~IVOIRE, element gestionnaire\.
Les investisseurs prives furent introduits par la vente des actions
des deux nouvelles societes a la fois a des societes etrangeres et ivoi
riennes et a des personnes privees\.
2\.18 La SODEPft~~ est restee l'unique proprietaire de toutes les
plantations industrielles, mais a confie leur gestion a PALMIVOIRE;
PALivlDmUSTRIE est devenue 1 'unique proprietaire de toutes les huileries
et autres installations industrielles tout en charge ant PAL~IVOIRE de
leur gestion; il incombe a PALMIVOIRE de fournir le personnel capable
de mener a bien l'execution de ses mandats\. Cette reciprocite a pris
la forme d' un contrat, appeHf "Association de participation"\. L' eHiment
plantations villageoises de la SODEPAL~, tant les cocoteraies que les
palmeraies, est reste en dehors de cette Participation, etant la respon
sabilite exclusive de la SODEPAL~\. Une formule fut mise au point pour
proceder a la repartition des profits\. La Pft\.llHVOIRE recevait des deux
autres societes une commission de gestion fixe, avant toute di~tribution,
ainsi qu'un petit pourcentage des profits en question\.
2\.19 En 1976, la structure propre aux capitaux des societes se presen
tait comme suit:
PAI1~IVOIRE PAL\fINDUSTR:;:E SODEFALM
----------Millions de FCFA----------
I\. Gouvernement
ivoirien 26,8 (40%) 2~430 (72,4%) 400 (100%)
II\. Societes privees et
interets bancaires
prives 26,8 (40%) 620 (18,4%)
III\. Groupes prives
ivol\.rl\.ens (principa
lement la SOllAFI) 13,6 (20%) (9,2%)
Total en millions
de FCFA 67\.2 400
2\.20 En meme temps, les pouvoirs publics interessaient la CSSPPA (Caisse
de stabilisation et de soutien des prlx des productions agricoles) au
- 8
secteur du palmier a huile\. La CSSPPA a applique une formule unique
en son genre, la "Stabilisation des revenus", qui a ete en vigueur
jusqu'en 1975et avait pour but de niveler les fluctuations de prix
d'une annee a l'autre, sans garantir de prix minimum\.
2\.21 Le groupe de societe s'est avere une reussite\. En septembre
1975, date de leur dernier bilan verifie, les investissements ses
auraient atteint un total de 46,4 milliards de FCFA (189 millions de
dollars)\. Le financement provenait du capital (dons et subventions
inclus): 15%; de l'autofinancement (profits et fonds d'amortissement):
32%; et de prets a long et moyen terme: 53%\. Depuis la formation du
groupe, on estime que le gouvernement a regu de ce groupe de societes
environ 10 milliards de FCFA (40 millions de dollars), sous forme de
profits, taxes et dividendes; et, de plus, 10 milliards de FCFA par
l'entremise de la CSSPPA (para\. 2\.20)\.
2\.22 A la lumiere de cette experience, le Gouvernement est arrive
a la conclusion que le role des interets prives - leur partie ion
financiere et technologique - avait negligeable\. Les accomplisse
ments dans le secteur du palmier a huile ont ete dus, plutot, d'une
part, a 1 'action de la SODEPAk~, appuyee par les travaux de recherche
de l'IRHO, tant avant qu'apres la creation de la SODEPPJW~, et, d'autre
part, au niveau auquel se sont maintenus les prix mondiaux de
l'huile de palme\.
2\.23 Afin de renforcer son contrale au secteur, le gouvernement
prit la decision, en 1974, de charger a nouveau la SODEPALM de toutes
les operations du groupe\. La PAL~IVOIRE fut dissoute et les actions
privees entierement rachetees par l'Etat selon des termes negocies
qui furent juges satisfaisants par les divers cofinanciers impliques
dans les operations de la SODEPALM\. Les interets prives de la PP~~
INDUSTRIE furent aussi entierement rachetes, mais la societe, a present
detenue a 100% par l'Etat, gardera la propriete des installations in
dustrielles et de traitement qui seront louees a la SODEPAL~\.
2\.24 Parallelement a ces modifications de structures, les pouvoirs
publics deciderent de transferer les responsabilites qu'assumait la
SODEPAL~ en matiere de commercialisation a la caisse de \.stabilisation
(CSSPPA)\. En vertu des nouvelles dispositions, tous les revenus que
retire la CSSPPA des secteurs palmiers a huile et cocotiers seront
reserves a l'exploitation et a l'expansion de ces sous-secteurs, y
compris toute activite secondaire que peut exercer la SODEPAL~\. La
CSSPPA tiendra un compte special au credit duquel seront portees les
recettes du secteur palmier a huile et cocotier\. Le paye par la
CSSPPA pour les produits de la SODEPALM sera etabli d'avance par rapport
a l'annee culturale et couvrira les couts d'exploitation, y compris
l'amortissement correspondant au renouvellement des actifs dont la
duree de vie est inferieure a cinq ans, et le service de la dette qui sera
garanti par l'Etat, quels que soient la production et les cours
mondiaux\. Ces derniers montants seront payes par la CSSPPA a la SODE
PAU~ deux fois par an de faGon a permettre la SODEPAl01 d'assumer ses
- 9
obligations du service annuel de la dette; le coat d'exploitation
sera acquitte au moment de la fourniture de l'huile a la CSSPPA\. Le
prix comprendra egalement une prime de qualite, basee sur la difference
entre le prix reel et le prix de la qualite courante\. L'amortissement
des actifs dont la duree de vie depasse cinq ans sera portee par la CSSPPA
au credit d'un compte d'amortissement tenu par la CAA et mis a la disposi
tion de la SODEPAU1/PALMINDUSTRIE, sur des decisions prises par leurs
Conseils respectifs et les ministeres responsables dans le cas ou de
tels fonds sont necessaires aux depenses d'equipement\.
2\.25 Ces modifications apportees a la structure des societes et aux
dispositions concernant la commercialisation ont ete examinees en detail
avec les differents cofinanciers, y compris la Banque, durant les deux
dernieres annees\. Le souci principal des cofinanciers etait de s'assurer
que l'efficacite operationnelle de la SODEPALM, laquelle a traditionnelle
ment atteint des normes elevees, ne souffrirait pas\. Ils ont egalement
cherche a s'assurer que l'integrite financiere de l'entreprise resterait
saine de fa~on a permettre la SODEPAU1 tant de continuer a assumer ses
obligations relatives au service de la dette en cours que de continuer
a etre consideree comme un emprunteur valable pour de futurs prets\. Bien
qu'au debut, la Banque et les autres cofinanciers aient eu certaines
reserves au sujet des nouveaux arrangements, ils estiment a present que
les nouvelles mesures, telles que les arrete un recent decret presiden
tiel, permettront a la SODEPALM de repondre aux crit~res d'un emprunteur
viable\. Les changements necessaires a apporter aux documents juridiques
regissant les relations exist antes de la Banque avec la SODEPALH ont ete
reunis en un projet d'Accord modifiant les Accords anterieurs, agree en
substance par les autres cofinanciers\. Les conditions de mise en vigueur
seront que (i) le decret soit publie et en vigeur; et (ii) le gouverne
ment, la SODEPALM et la PALMINDUSTRIE aient signe l'accord modifiant
les accords de pret anterieurs\.
2\.26 Les prix etablis pour la campagne 1976/77 devrait etre suffisants
pour equilibrer les finances du Groupe SODEPALM: ils sont fixes a 70\.723
FCFA (289 dollars) FOB pour l'huile de palme et 83\.555 FCFA (337 dollars)
pour le copra\. Le coat total incombant au fonds de stabilisation, y com
pris le service de la dette et les provisions pour amortissement, equi
vaudrait a 400 dollars la tonne d'huile de palme et 1\.317 dollars la tonne
de copra\. Sur la base des cours mondiaux actuels, la perte encourue
pour la petite production de copra (8\.200 tonnes) serait largement com
pensee par l'excedent produit pour les ventes d'huile de palme (160\.000
tonnes) \.
F\. Bilan des nrojets anterieurs
de nalmiers a huile et de cocotiers
2\.27 La Banque a finance trois projets avec la SODEPALM depuis 1969,
avec six prets (611, 612 613, 759, 760 et 1036) dont le total atteint
26,7 millions de dollars\. Les investissements effectues au titre des
Prets 611, 612 et 759 sont maintenant acheves et ont recemment ete evalues
par l'ODE\. Quatre de ces prets assurent le financement de 9\.520 ha de
palmeraies, de 11\.500 ha de cocoteraies, de 21\.500 ha de plantations villageoises
- 10
de palmiers a huile et de 7\.500 ha de cocoteraies villageoises; deux
prets (612,759) ont finance deux nouvelles huileries a Ehania et Dabou,
dont les capacites respectives s'elevent a 50 et 40 tonnes de
par heure\.
2\.28 L'execution des projets a ete extremement satisfaisante et
tous les objectifSmateriels du depart ont ete realises ou
Les programmes de plantation effectues dans le cadre de ces projets
s'acheverontcomme prevu en 1977; les deux huileries ont ete receptionnees
en 1971 et 1972 et fonctionnent convenablement\. Les projections de
rendement prudentes ontgeneralement ete depassees et, en depit de de
passements de couts dus a l'inflation et a certains investissements sociaux
indispensables, les taux de rendement theoriques sont plus que
prevu lors de l'evaluation (environ 13% pour les plantations villageoises
de palmiers a huile)\.
2\.29 Ces resultats satisfaisants ont plusiers raisons: la disponibi
lite de terres libres; un solide appui de la part d'un remarquable
organisme de recherche; et l'excellente gestion du Groupe SODEP~f\.
Dne autre cause importante de la reussite des projets etait la base com
merciale sur laquelle le gouvernement a permis de faire fonctionner la
societe\. Bien que ce point ait recemment ete modifie (voir para\. 2\.25),
les resultats obtenus a cette date n'en ont pas ete Cette
reussite confirme la validite du choix du gouvernement, a savoir, le
developpement de plantations industrielles pour assister le developpement
des petites plantations villageoises environnantes\. Ce choix doit etre
maintenu dans le cadre du projet\.
2\.30 Administree par un Directeur general ivoirien depuis 1975 seule
ment, la SODEPALM continue d'utiliser un grand nombre de cadres etrangers\.
Au debut de 1974, la SODEPALM a mis en place un programme de formation
destine a promouvoir l'ivoirisation graduelle de son personnel\. Depuis
lors, la proportion d'etrangers aux positions administratives et techni
ques s'est regulierement restreinte sans affecter la reussite generale
de l'operation et les efforts de formation sont poursuivis\.
G\. La region du sud-ouest
2\.31 La strategie de developpement qu'applique le gouvermement pour
la region en question decoule de la planification effectuee par l'ARSO
(para\. 2\.11)\. L'amenagement de cette region pratiquement non habitee
a demarre avec la creation de l'infrastructure as soc au port de San
Pedro afin de creer un pole d'attraction supplementaire a celui
d'Abidjan\. Les plans de developpement comprennent des dispositifs visant
a ameliorer l'exploitation de la foret tropicale et a creer des plantations
agricoles en meme temps que se met en place une infrastructure sociale
destinee a attirer des familIes de cultivateurs, en particulier celles
de la region des savanes deplacees par la construction du barrage de Kossou\.
Le caoutchouc, l'huile de palme et la noix de coco constituent les seules
opportunites immediates de developper une agriculture dans cette region,
jusqu'a ce que ces developpements aient attire suffisamment d'habitants
- 11
qui pourront alors etre assistes par de futurs projets de developpement
rural\. Les caracteristiques de la region et un aper~u des projets
d'occupation des sols en cours d'execution figurent a l'Annexe III,
Appendice I\.
- 12
III LE PROJET
A\. La zone du projet
Conditions naturelles dans la zone du projet
3\.01 La zone du projet couvre une superficie d'environ 50 km de long sur
30 km de large, exactement au nord de la ville de Tabou, dans la region du
sud-ouest (Annexe III, Appendice 1)\. La vegetation varie de la brousse et de
la foret clairiere, generalement pres de la cote, a la foret humide a l'interieur\.
Les essences selectionnees de la zone ont ete exploitees par Ie passe et il
n'apparait pas qu'il y existe encore du bois en quantite suffisante pour en
justifier a nouveau l'exploitation\. Le terrain est essentiellement collinaire,
pour ce qui est des zones pouvant etre mises en culture, et est divise en un
grand nombre de parcelles allongees, limitees par des pentes, des ravins, des
bas-fonds marecageux et des sols impropres a la culture\. Les terrains sur
lesquels on se propose de planter des cocotiers, qui sont les plus proches de
la cote, contiennent une proportion de sables lessives qui ne conviennent qu'au
cocotier, cependant que les sols dans les zones reservees au palmier a huile
tendent a etre plus argileux\. La fertilite des sols sera amelioree par des
engrais (dont les semences hybrides de cocotiers, en particulier, demandent
des doses importantes)\. La region a ete reservee a la culture du cocotier et
du palmier a huile parce que la pluviometrie, de l'ordre de 2\.000 mm par an
en moyenne, y est favorable et bien repartie; la saison seche ne dure habituelle
ment qu'un mois (janvier) et l'ensoleillement est convenable\.
Transports et communications
3\.02 La zone du projet se trouve des deux cote des deux pistes existantes
du reseau routier qui relie Tabou au nord du pays\. Si ce reseau etait
ame1iore, il pourrait assurer commodement Ie trafic des vehicules et du materiel
a proximite des plantations incluses dans Ie projet\. Au cours des negociations,
1e gouvernement a donne l'assurance qui s'engagera a fournir les fonds
necessaires pour l'amelioration des acces aux zones de plantations avant 1e
30 juin 1978\. L'amenagement de certainssentiers forestiers existants, par
ailleurs inutilises, a ete compris dans Ie projet, limitant au minimum la
necessite de creer de nouvelles percees\. Les services centraux, comme les
installations d'entretien lourd, seront installes dans la plantation de
cocotiers de Glike (par\. 3\.10), qui sera la premiere cocoteraie a etre mise en
place, parce que voisine de Tabou et du reseau de communications existant\.
Tabou n'a pas de port a proprement parler, mais il est possible, dans une
certaine mesure, d'utiliser la plage pour un trafic d'embarcations legeres\.
Le port de San Pedro, a environ 90 km dans l'est, possede deja les installations
necessaires a la manutention des produits palmiers des plantations de la
SODERIM, au nord de cette localite; les pouvoirs publics ont l'intention de
developper ces installations pour leur permettre d'assurer Ie trafic de la
production du projet envisage\. Le reseau routier public assurera la desserte
du projet, y compris Ie transport des recoltes a San Pedro\. Les installations
de traitement seront placees a proximite du reseau routier existant\. Un
aerodrome convenable existe a Tabou; il assurera la desserte du projet\. On
prevoit un emploi considerable du transport aerien pour l'acheminement du
personnel et du materiel leger\. Dans Ie cadre du projet, les quatre plantations
seront dotees d'un materiel radio qui les reliera au reseau radio de la SODEPALM\.
- 13 -
Planification du developpement agricole
3\.03 La zone du projet se trouve dans la region du sud-ouest, dans laquelle
d'autres projets de developpement agricole sont soit en cours d'execution, soit
envisages (Annexe III, Appendice I)\. L'attention du gouvernement a ete attiree
sur la necessite de defricher la foret de fa~on satisfaisante, en tenant compte
en particulier du plan d'utilisation des terrains et des imperatifs ecologiques\.
Au cours de negociations, l'assurance a ete obtenue que le gouvernement soumettra
a la Banque, dans l'annee qui suivra la signature de l'accord de pret, un plan
de developpement agricole du sud-ouest ivoirien, base sur ces principes\.
B\. Description sommaire du projet
3\.04 Le projet couvre trois ans d'un programme quadriennal de developpement
visant a creer des plantations de palmiers a huile et de cocotiers hybrides
dans la region du sud-ouest; il comprend la preparation des sols effectuee en
1975 et leur plantation, achevee apres juin 1976\. Le projet inclut:
(a) la preparation d'environ 18\.000 ha en vue de la plantation
des palmiers a huile et des cocotiers;
(b) la creation d'une plantation industrielle de palmiers a
huile, couvrant pres de 8\.000 ha et d'une plantation
industrielle de cocotiers couvrant quelque 7\.500 ha;
(c) l'infrastructure necessaire aux deux plantations, telle que
routes de desserte, logements, infrastructure medicale et
sociale, batiments administratifs, hangars de stockage,
vehicules et equipement;
(d) la mise en place d'un programme de plantations villageoises
couvrant environ 2\.000 ha de cocoteraies et 500 ha de palmeraies
sur des terrains defriches par les paysans;
(e) l'appui a ce programme de plantations villageoises par un
systeme de prets aux paysans, des services de vulgarisation
agricole et l'infrastructure necessaire;
(f) la creation d'une Direction du projet ayant autorite sur le
projet; les batiments administratifs, logements, vehicules
et equipement de la Direction, ainsi que les fonds permettant
son fonctionnement\.
Le projet ne comprendra pas les usines de traitement, qui sont comprises dans
le programme quadriennal\. Au cours des negociations, l'on a obtenu l'assurance
que le gouvernement mettra en place les installations industrielles de
traitement lorsque les plantations entreront en rapport\.
- 14
3\.05 Dans le cadre du programme du gouvernement, les objectifs de plantation
seront souples, de fa~on a permettre des transferts soit en provenance) soit en
faveur du programme de plantations villageoises en fonction de la participation
des paysans\. Pendant la duree d'execution du projet, cette possibilite ne
concernera que les plantations de cocotiers; en ce qui concerne ces derniers)
les previsions les plus sures envisagent un minimum de 1\.000 ha en trois ans,
qui pourrait etre porte a 3\.000 au detriment des plantations industrielles\. Au
total, le programme quadriennal a pour but d'obtenir que 30% des plantations
soient des plantations villageoises\.
3\.06 Les terrains dans la zone du projet etant decoupes, (par\. 3\.01), les
plantations industrielles et les plantations villageoises seront plus imbriquees
les unes dans les autres que ce n "est generalement le cas dans des projets de
ce genre\. Dans l'ensemble, les plantations se feront sur des parcelles plus
ou moins contigues le long de la Cavally) sur l'axe Tabou-Ologuio\. Les
exploitations industrielles seront groupees en quatre plantations\.
C\. Details du pro,j et
Plantations industrielles
3\.07 Programmes de plantation\. Les palmiers a huile et les cocotiers seront
plantes dans quatre plantations, les palmiers a l'interieur des terres a Iboke
et Dewake et les cocotiers a Glike et Nero, pres de la cOte, ou les sols sont
plus favorables aces derniers\.
Annees du nrojet Palmiers a huile Cocotiers
ha
Iboke Dewake Nero
Annee 1 2\.000
Annee 2 3\.000 1\.500 1\.750
Annee 3 2\.500 2\.500 2\.250
Les objectifs fixes pour les cocotiers sont bases sur le rythme moyen de
developpement des plantations villageoises indique dans le paragraphe 3\.12 et
les ajustements necessaires se~ont operes au vu des resultats obtenus avec les
plantations villageoises (par\. 3\.05)\.
3\.08 Regime foncier\. Les terres devant etre amenagees en plantations
industrielles seront mises a la disposition du projet par les pouvoirs\. Les
plantations industrielles n'empieteront pas sur des terres actuellement en
culture\. Au cours des negociations, l'on a obtenu l'assurance que les terres,
les titres fonciers ou les droits d'exploiter necessaires a la mise en oeuvre
et a l'exploitation du projet seront fournis dans l'annee de l'entree en vigueur
du pret\.
3\.09 Investissements et entretien\. Les travaux de plantation et d'entretien
seront sensiblement les memes pour les palmiers a huile et pour les cocotiers\.
Les terrains_seront defriches mecaniquement, les arbres et debris seront
andaines et brfiles pour eviter que les jeunes plants ne soient attaques par des
insectes parasites\. La SODEPALM fera le defrichement en regie, de la meme
fagon que sur ses plantations de l'est de Sassandra\. L'unite du genie civil
de la SODEPALM possede deja un materiel approprie et a mis au point la technologie
voulue, en particulier pour eviter d'endommager l'humus\. L'experience indique
que le defrichement en regie est moins onereux qu'avec des entrepreneurs, la
plupart d'entre eux etant speciali en construction routiere plutot qu'en
defrichement\. De surcroit, ce procede permet une meilleure coordination des
travaux sur le terrain (defrichement et voies d'acces en premier, plantation
et amenagement routier ensuite)\. Les semences seront produites dans les pepinieres
de l'IRHO; la germination se fera soit a l'IRHO, so it sur la pepinieres du projet\.
Les jeunes plants seront mis en sac plastique pour etre manipules plus
commodement et plantes a raison d'un plant par trou\. Chaque plant sera ensuite
entoure d'un grillage pour le proteger des rongeurs\. Une couverture de pueraria,
dont les graines seront fournies par la SODEPALM, sera semee pour assurer une
protection du sol contre l'erosion\.
3\.10 Les jeunes plants mis en terre chaque annee doivent etre entretenus
pendant 3 ans\. Les fonds necessaires a cet entretien ne seront assures par le
pret que pendant les annees au celui-ci sera decaisse\. Les arbres demandent
peu d'entretien, mais celui-ci est important: elimination des mauvaises herbes
par sarclage en rond autour du plant; remplacement des plants morts; epandage
d'engrais et soins insecticides\. Les engrais seront epandus chaque annee,
conformement aux resultats de l'analyse foliaire\.
3\.11 Plants\. Les plantations industrielles et les plantations villageoises
utiliseront les varietes ameliorees de palmiers a huile, mises au point par
l'IRHO et qui donnent d'excellents resultats dans le sud-est\. Pour ce qui est
des cocotiers, les unes et les autres utiliseront les varietes hybrides
selectionnees et developpees par l'IRHO dans son etablissement de Port Bouet\.
Le croisement de base est opere entre le cocotier nain et le grand cocotier
donnant un hybride de caracteristiques tres interressantes\. La question s'est
posee recemment de savoir si ces varietes hybrides resistaient a la maladie de
Kaincope, "jaunissement" mortel qui attaque les grands cocotiers; cette maladie
constitue une difficulte pour les producteurs de noix de coco d'Afrique
occidentale, comme le Ghana qui se trouve en fait a une grande distance
de la zone du projet envisage\. Le jugement qu'on peut formuler sur les
risques existants depend de l'opinion des chercheurs de l'IRHO qui ont suivi
de pres toutes les donnees qui ont pu etre reunies sur la resistance des hybrides
a la maladie\. Le risque ne peut certes etre ignore ou evite, mais il est minime
et il vaut la peine d'etre pris, si on met en balance les avantages a tirer du
projet\. L'Appendice 2 a l'Annexe III donne les indications necessaires a
cet egard\.
- 16
Plantations villageoises
3\.12 Programme de plantation et emplacement des plantations\. Le programme
de plantation sera reparti de la fa~on suivante entre planteurs de palmiers a
huile et planteurs de cocotiers\.
Annee 1 Annee 2 Annee 3
----------------ha-----------------
Palmiers a huile 200 300 500
Cocotiers 200 550 1\.250 2\.000
La programmation du projet favorise l'incorporation des planteurs de cocotiers
sur une periode de trois ans\. Concernant le rytbme de participation des paysans
au programme de plantations villageoises, les chiffres indiques pour les
cocotiers representent les "moyennes" sur lesquelles on compte\. Une certaine
souplesse etant necessaire, compte tenu du fait qu'on n'est pas sUr de pouvoir
attirer aisement les paysans d'une region ecartee vers un programme agricole
d'une nature nouvelle, certaines parcelles ont ete declarees "a option", au
profit soit des plantations industrielles, soit des plantations villageoises\.
La mise en place des plants se fera conjointement avec les plantations
industrielles voisines, c'est-a-dire de palmiers a huile aux environs de
Dewake et d'Iboke et de cocotiers pres de Glike et de Nero\. En supposant que
chaque famille plante un hectare, le projet de trois ans concernera de 500 a
1\.000 familles, qui agrandiront finalement leurs plantations jusqu'a une moyenne
de 4 ha environ\.
3\. Terres\. La plupart des terres seront fournies par les pouvoirs publics
conformement aux dispositions prevues au paragraphe 3\.08; le reste sera fourni
par des cOllectivites qui se verront reconnaitre un droit d'usufruit sur des
parcelles determinees\. Ce foncier qui est decrit dans l'Appendice 3
de l'Annexe III a fait ses preuves avec succes dans le cadre des precedents
projets de palmiers a huile et de cocotiers finances en Cote d'Ivoire par
la Banque\.
3\.14 Communications, infrastructure et equipement\. Comme les plantations
villageoises seront imbriquees sur le terrain avec les plantations industrielles,
il ne sera pas necessaire d'ouvrir de nouvelles routes pour leur seule desserte\.
Le projet devra inclure les logements et les equipements necessaires au
personnel de la SODEPALM responsable de l'encadrement des planteurs villageois\.
3 Creation et entretien des plantations\. Seules seront acceptees comme
terrains de plantations villageoises les parcelles se pretant a cet usage\.
Tant en ce qui concerne les palmeraies que les cocoteraies, le terrain sera
defriche par le paysan\. Les plants et l'entretien seront les memes que pour
- 17
les plantations industrielles (par\. 3\.09)\. Les besoins en main-d'oeuvre
(Annexe IV) ne seront pas excessifs en ce qui concerne la main-d'ouvre
familiale; les paysans auront du reste la possibilite d'engager de la main
d'oeuvre necessaire avant la premiere recolte (evalues a 265 FCFA ou 1,10 dollar
par journee-hommes) seront avances au planteur par la SODEPft~M (Annexe IV);
la SODEPALM exercera Ie controle de toutes les operations d'exploitation\.
Main-d'oeuvre
3\.16 Les besoins en main-d'oeuvre du projet seront relativement modestes,
Ie maximum de 1\.600 ouvriers etant atteint a la troisieme annee\. Le demarrage
du recrutement dans la region a depasse les esperances et, au debut de 1976,
pres de 500 personnes etaient deja au travail, ce qui est de bon augure
pour l'avenir du projet\. La region est cependant peu peuplee et, comme les
besoins en main-d'oeuvre du projet v~nt entrer en concurrence avec ceux des
autres plantations de la region, il sera peut-etre impossible de trouver sur
place toute la main-d'oeuvre necessaire\. Comme dans Ie cas de la plupart
des projets de plantations en Cote d'Ivoire, il sera probablement necessaire
d'attirer des travailleurs des pays voisins\. Le recrutement et Ie maintien
sur place de travailleurs sont devenus plus difficiles au cours des annees
recentes et les plantations devront offrir des logements et des amenagements
sociaux d'une qualite comparable a celIe offerte dans les plantations les
plus recemment creees dans Ie pays\. En general, les ouvriers arrivent sans
famille et retournent chez eux un an plus tard environ pour aller chercher
leur famille ou pou se marier\. Un taux eleve de rotation de la main-d'oeuvre
est par consequent normal pendant les premieres annees, puis la situation se
stabilise au fur et a mesure que Ie pourcentage de famille augmente par rapport
a celui des celibataires\. II demeure cependant un certain degre d'incertitude
quant a la fourniture de main-d'oeuvre; les besoins des plantations en ouvriers
agricoles seront les suivants:
1976 1977 1978
500 1\.500 1\.600 2\.000
Au cours des negociations, la Banque a obtenu du gouvernement l'assurance
qu'il prendra les mesures necessaires pour assurer un nombre suffisant de
travailleurs pour Ie projet, sans toutefois entraver l'execution des autres
projets implantes dans la region\.
IV\. ORGANISATION ET GESTION
A\. Direction du projet
4\.01 Le projet sera execute par la SODEPALM (par 2\.16) dans Ie cadre d'une
administration composee d'une Direction du projet consistant en un Directeur
du projet, un cadre administratif, un personnel administratif et technique
suffisant\. Le cout de la construction de batiments administratifs permanents
est inclus dans les couts du projet\.
- 18
4\.02 La structure des services dans la gestion du sud-ouest et ses relations
avec l'organisation generale de la SODEPALM sont decrits dans l'organigramme
du Tableau 6 de l'Annexe III\. La direction du projet utilisera a plein le
service des approvisionnements et marches de la SODEPALM pour effectuer aux
meilleures conditions des achats en gros\. Elle se servira egalement des
services du genie civil de la SODEPALM qui assurera le defrichement de la
preparation du terrain dans les zones destinees a etre plantees dans le cadre
du projet\.
B\. Gestion du projet
4\.04 Chacune des quatre plantations industrielles sera dirigee par un
Directeur de Plantation, place sous les ordres immediats du Directeur du
projet\. Dans la phase initiale, la premiere plantation sera dotee de deux
directeurs, l'un responsable et l'autre se preparant a prendre en mains une
autre plantation\.
4\.05 Le programme de plantations villageoises sera confie a deux Chefs
de division ivoiriens, places eux aussi sous les ordres directs du Directeur
du projet\. Au fur et a meSure du developpement du programme de plantations
villageoises, des Chefs de section ivoiriens seront nommes pour exercer leurs
fonctions sous les ordres et sous le contrale des Chefs de division\.
4\.06 Les pepinieres saires ont deja ete creees et sont sous la
responsabilite au Directeur du projet qui supervisera egalement tout programme
de recherches et d'essais utile\.
4\.07 Un cadre administratif dont les conditions d'emploi et les qualifica
tions devront etre acceptables a la Banque sera nomme\. Tout changement de
personnes dans les postes de Directeur du projet et/ou de cadre administratif
sera soumis a l'agrement de la Banque; au cours des negociations, le
gouvernement a fourni les assurances necessaires sur ce point\.
4\.08 Un atelier de mecanique generale, mis en place par le Departement
du genie civil de la SODEPALM dans le cadre des operations de defrichement, sera
transforme en atelier central pour assurer le service de toute la zone du projet\.
Ses couts sont inclus dans le projet\.
4\.09 Chacune des quatre plantations industrielles aura un village central
et deux villages secondaires; toutes les habitations de ces villages seront
financees dans le cadre du projet\. Chacun des villages centraux aura un marche
de meme qu'un centre social et medical; chaque village secondaire aura un poste
medical et social\. Une sera construite dans chacun des quatre villages
centraux\. Dans les couts du projet sont inclus les batiments des centres
medicaux principaux\. les postes medicaux et sociaux, y compris les logements
des enseignants et des medecins d~nt le gouvernement assurera la mise en
place\. Le cout pour les infirmiers, les in:rirmiers adjoints et les assistants
'sociaux (ainsi que celui de leurs logements) sont compris dans les couts du projet\.
- 19
4\.10 Tous les services sociaux et medicaux inclus dans le projet seraient
mis a la disposition des planteurs villageois et de leurs familIes et, comme
il est d'usage en Cate d'Ivoire, de la population de la zone du projet\.
c\. Selection
des planteurs, dimension des plantations
individuelles, dispositions en matiere de credit
4\.11 Pour qu'un paysan soit admis a participer au programme de plantation,
il devra etre d'accord pour suivre, pendant toute la periode de developpement,
les conseils techniques que donnera la SODEPALM\. L'accord qui sera passe
a ce sujet entre les parties interessees sera pratiquement similaire aux
accords de meme nature deja approuves par la Banque\.
4\.12 Les habitants des villages existants seront encourages a devenir
planteurs eton s'attend a ce que des paysans deja installes sur place forment
un noyau permettant le demarrage du programme\. Les participants au programme
seront choisis par l'agent local de la SODEP~M en consultation avec le chef
de village\. La participation n'empechera nullement un village de poursuivre
d'autres activites, telles que les cultures vivrieres (la riziculture, par
exemple), pour autoconsommation ou pour revente aux plantations, ainsi que la
fourniture de main-d'oeuvre aux plantations ou autres debouches\. Certains
notables de village ont deja manifeste leur interet a l'egard du programme\.
Les details des dispositions qui seront prises en matiere de choix des
participants, tels que la dimension maximale des plantations individuelles,
seront agences en fonction des conditions locales, y compris la nature de la
participation du village, et compte tenu egalement de l'experience considerable
acquise par la SODEPALM a l'est de la Sassandra\.
4\.13 De meme que dans le cadre du Troisieme projet palmier a huile, les
planteurs se verront consentir par la SODEPALM, a titre personnel, des prets
sans interets\. Les details du programme de financement des planteurs sont
donnees dans l'Annexe IV\. Le principe de base sera que les prix a la
production seront fiXes de fagon a ce que les pouvoirs publics tirent un
revenu convenacle de leur investissement dans le programme de plantations
villageoises\. Sur la base des hJ~otheses de prix utilises dans le calcul du
cash flow du projet, les pouvoirs publics obtiendront une rentabilite de 18%
sur leur investissement\.
D\. Situation financiere de la SODEFALM
4\.14 La situation financiere de la SODEPAL~ a ete satisfaisante jusqu'en
septembre 1975 (voir Annexe II, Tableaux 1 et 2)\. Jusqu'a cette epoque, le
Groupe de la SODEPALM avait obtenu des excedents de l'ordre de 51 millions de
dollars qui ont servi a financer une partie de son programme d'investissement
(48,1 millions de dollars) et a augmenter de 15,4 millions de dollars a 18,3
~illions de dollars\. Depuis lors, les nouvelles dispositions prises par les
pouvoirs publics en mati de commercialisation et de versements de fonds a
la SODEPAlJ~ (par\. 2\.25 et 2\.26) ant change la position financiere de la SODEP~M\.
Quoique acceptables en principe, ces mesures n'avaient pas encore ete entiere
ment mises en vigueur a la fin de l'exercice 1976: le Fonds de stabilisation
devait encore pres de 10 millions de dollars sur l'exercice 1975/76 et 8 millions
- 20
de dollars sur l'exercice 1976/77\. Les arr~eres, de meme que les delais et la
BIRD en vue du financement d'une usine de trituration de palmistes et de coprah
ainsi que du plan palmiers/cocotiers du sud-ouest, se sont traduits par des
contraintes financieres pour la SODEPALM\. Le bilan provisoire de la societe,
au 30 septembre 1976, montre l'emploi de facilites bancaire (24,7 millions de
dollars) pour Ie financement de ses operations, y compris Ie prefinancement
des investissements ci-dessus (7,6 millions de dollars)\.
4\.15 Neanmoins, Ie Fonds de stabilisation a maintenant acquitte toutes les
dettes en suspens de la SODEPALM et Ie gouvernement s'est engage a assurer Ie
financement retroactif des depenses du projet encourues durant les exercices
1975 et 1976, a raison de 4,2 milliards de FCFA (environ 17,1 millions de
dollars), y compris Ie financement du projet envisage (10 millions de dollars)
(par\. 5\.09)\. Ces paiements, ajoutes au montant du pret envisage par la BIRD,
suffiront pour permcttre a SODEPALM d'executer son programme d'investissement
jusqu'en 1980\. Les Secteurs du palmier a huile et du cocotier ne commenceront
qu'en 1978 de produire suffisamment de fonds que pour financer les investissements
inscrits au programme sur la base des cours mondiaux conformement aux previsions
du Departement de l'economie\.
4\.16 A la lumiere de ces informations, Ie gouvernement a fourni des
assurances que des fonds de ce genre seront disponibles, ou qu'un financement
satisfaisant sera obtenu, aux fins de nantir la SODEPALM des fonds necessaires
pour lui permettre d'achever ses programmes d'investissement\. y compris ses
activites n'ayant pas trait aux palmiers a huile\. Ce plan d'investissement
applicable a la SODEPALM pour les quatre prochaines annees et faisant mention
des sources de financement a ete presente a la Banque par Ie gouvernement et
juge acceptable (Annexe II, Tableau 2)\.
4\.17 Le gouvernement a publie ses prix d'achat pour 1976/77 en ce qui
concerne les produits des palmiers a huile et ceux des cocotiers\. Ces prix
ont ete juges satisfaisants par la Banque\. Les pouvoirs publics ont donne
l'assurance qu'ils feront en sorte que Ie produit des ventes relatives aux
palmiers a huile et aux cocotiers suffira a couvrir tous les frais d'exploita
tion et les services de dette ayant trait a ces deux secteurs respectifs et
que par ailleurs ce produit ne servira qu'a ces seules fins\. De plus, la
Banque sera informee de ces prix avant qu'ils n'entrent en vigueur\.
V\. DEVIS ET FINANCEMENT
A\. Devis
5\.01 Le devis estimatif des couts du projet, pendant la periode
d'investissement de trois ans, est evalue a 10 milliards de FCFA (40,6 millions
de dollars) dont un montant en devises de 6,2 milliards de FCFA (25,3 millions
de dollars), soit 62% du total\.
5\.02 Le gouvernement a fait conna1tre son intention de continuer a exempter
de droits de douane toutes les importations necessaires au projet pendant la
periode d'execution\. Le devis, base sur les en janvier 1976, comprend des
taxes indirectes s'elevant a 1\.076 millions de francs CFA (4,4 millions de
dollars), soit 11% du cout total du projet; il contient egalement les imprevus
suivants:
- 21
(a)_ prov~s~on pour imprevus physique de 10% sur le defrichement
et les couts de construction et 5% sur tous les autres elements
du cout, sauf la main-d'oeuvre;
(b) provision pour hausse des couts, comme suit: pour les travaux
de genie civil, la construction et le defrichementpar moyens
mecaniques, 13% en 1976 et 12% en 1977 et 1978; et pour tous
les autres couts, y compris les prets aux planteurs~ 10%
chaque annee; ces provisions ont ete calculees sur les couts
de base estimatifs, augmentes des provisions pour imprevus
physique pour chaque annee, en tenant compte des indices de
hausse de prix estimes pour les annees precedentes et la moitie
de l'indice de hausse de prix pour l'annee envisagee\.
Le total des imprevus, calcule sur les bases mentionnees ci-dessus, s'eleve
a 22% du cout total du projet ou 28% du cout de base\. Les provisions pour
hausse des prix atteignent 19% des estimations relatives aux couts de base
et des provisions pour imprevus\. Le devis detaille est donne a l'PJillexe 6
et il est resume au tableau qui suit:
- 22
COTE D I rIoIRE
Quatrieme ~rojet ~almiers a huile et cocotiers
Estimation des couts du ~ro\.1et
Millions de FCFA Millions de $EU %de
locaux devises total locaux devises total devises
PLk~TATIONS DE COCOTIERS
Pre~aration du terrain
Dei"richement et
ouverture des pistes 352 1,056 1,408 1\.4 4\.4 5\.8 75
Couts des amenagements
agricoles 1\.1 476 317 793 1\.9 1\.3 3\.2 40
Couts de Fonctionnement de la 123 133 256 0\.5 0\.5 1\.0 52
Investissements \Plantation
Vehicules 8 76 84 0\.1 0\.3 0\.4 90
Biitiments 108 163 271 0\.4 0\.7 1\.1 60
Installations
et materiel _\.:\.4\.;,\.7 III 158 0\.2 0\.4 0\.6 70
TOT\.b\.L l\.t\.lli 1,856 2,970 4\.5 \.
7\.6 12\.1
==-=
63
=
I\. PLk~TATIONS DE PAL\1IERS A HUILE
P~e~aration du terrain
'i:Jefrichement et
ouvert~e des pistes 559 1,674 2,233 2\.3 6\.8 9\.1 75
Couts des amenagements
agricoles 11 477 205 682 1\.9 0\.9 2\.8 30
Couts de Fonctionnement de la 128 154 282 0\.5 0\.6 1\. 1 54
Investissements \Plantation
Vehicules 23 212 235 0\.1 0\.9 1\.0 90
3iiti:ents 269 403 672 1\. 1 1\.6 2\.7 60
Install at ions
et materiel 45 104 149\. 0\.2 0\.4 0\.6 70
TOTAL
PROGR\.A1,1NE DE PLflljTATIONS VILLAGEOISES
Vulgarisation: Personnel
1,501
22
2,752 4,253
22
- - -
6\.1
0\.1
11\.2 17\.3
0\.1
65
Investissements 21 21 42 0\.1 0\.1 0\.2 50
Frets: ?acteurs de production 116 77 193 0\.5 0\.3 0\.8 40
Credit en especes E E 0\.3 0\.3
v\.
?OTP\.~
DIRECTION DU PROJET
Personnel
-256
25
\.2!
47
- -
354
72
1\.0
0\.1
-0\.4
0\.2
-1\.4
0\.3
ll\.
65
Investissements 35 54 89 0\.2 0\.2 0\.4 61
Depenses de fonctio~~ement 11 10 21 0\.1 0\.1 48
TOTAL
~OTAL DES COUTS DU PROJET
CoUts de base du projet 2,942
71
- -
III
4,817
182
7,759
0\.3
-==
11\.9
0\.5
=
19\.7
-0\.8
31\.6
-
63
62
::pre-vus d' ordre
::ateriel 203 397 600 0\.9 1\.6 2\.5 64
E:ausse attendue
des ':Jrix ~ 998 1,592 2\.5 4\.0 6\.5 62
':'Z'VISIOllS JU COt]T TO':'AL DU PROJET 3,739 6,212 9:951 15\.3 25\.3 40\.6 62
II Cout de plantage y compris la main-d'oeuvre et l'entretien pendant la
periode du projet\.
- 23
5\.03 Le gouvernement a l'intention d'autoriser la BNDA (Banque nationale
de developpement de l'agriculture) a contribuer au financement du projet
moyennant un pret de 500 millions de FCFA (2 millions de dollars) consenti
a la SODEPALM (Annexe 7)\. Des assurances satisfaisantes de :La part du gou
vernement au sujet de cette disposition constitueront une deB conditions de
mise en vigeur du pret de la Banque\.
B\. Plan de financement envisage
5\.04 Le projet serait des lors finance a la fois par leB pouvoirs publics,
la BNDA et la Banque; le plan de financement (net de taxes) Berait le suivant:
BIRD B1T])A Pouvoirs TOTAL
publicl~
----millions de dollars----------
Cocoteraies industrielles
Defrichement et routes 1,9 3,2 5,1
Mise en culture 1,5 0,8 0,6 2,9
Frais d'exploitation 0,9 0,9
Batiments, materiel et 1,1 0,7 1,8
vehicules
Palmeraies industrielles
Defrichement et routes d'acces 5,6 2,4 8,0
Mise en culture 1,5 0,8 0,3 2,6
Frais d'exploitation 1,0 1,0
Batiments, materiel et 2,4 1,4 3,8
vehicules
Programme de plantations
villageoises 1,1 0,2 1,3
Direction du projet ~ \.Q\.,J\. 0,7
Total des couts de base 15,5 1,6 11,0 28,1
Non affecte ~ ~ ~ ~
TOTAL 20,0 R,\.Q 14,2 36,2
Pourcentage du total,
net de taxes 55% 6% 39% 100%
5\.05 La Banque consentira a la SODEPALM un pret de 20 millions de dollars
sur vingt ans, y compris un differe d'amortissement de quatre ans et demi,
au taux d'interet en vigueur, estime a 8,5%\. Le pret financera 55% des couts
du proj et net de taxes et 49% du total des cout s du proj et; il couvrira 80%
des couts en devises\.
5\.06 On prevoit que le pret de la Banque sera decaisse sur trois ans\.
Le reste des couts du projet sera fourni par le gouvernement sur une base
annuelle; des assurances ont ete donnees sur ce point; le financement effectif
de la premiere annee sera une des conditions de mise en vigueur du pret de
la Banque\.
- 24
5\.07 Les contributions des pouvoirs publics au financement du projet,
de meme que tous les fonds requis pour l'entretien des plantations apres
la periode couverte par Ie projet et jusqu'a l'entree en rapport (par\. 5\.06)
seront des dotations du Tresor a la SODEPALM\. Celle-ci, sous la reserve
des dispositions financieres prises a partir de 1976 (par\. 4\.17), sera respon
sable de l'amortissement des prets de la BNDA et de la BIRD\.
5\.08 Les prets aux paysans seront decaisses par la SODEPALM dans Ie cadre
des dispositions prevues pour les credits aux planteurs, d~nt les details
sont donnes dans l'Annexe IV\. Cette annexe montre ce que seront les echeanciers
de remboursement pour chaque groupe de planteurs\. La SODEPALM deduira les
montants dUs par les planteurs des sommes qu'elle leur paiera pour les achats
de regimes et de noix de coco\.
C\. Financement retroactif
5\.09 Le gouvernement financera les depenses encourues par la SODEPALM
en 1976 (environ 10 millions de dollars), essentiellement pour Ie defrichement
effectue pour la premiere annee de plantation\. Toutefois, Ie gouvernement
a demande que toutes les depenses concernant Ie projet, effectuees avant la
signature de l'accord de pret avec la Banque et apres Ie ler janvier 1977,
soient financees retroactivement\. Aussi a-t-on prevu Ie financement retroactif
d'un montant maximum de 500\.000 dollars au titre des depenses survenues apres
Ie ler janvier 1977 et destinees a couvrir les coUts des batiments, du materiel,
des vehicules, des services de vulgarisation et du credit agricole\.
D\. Passation des marches
5\.10 Taus les marches d'un montant egal au superieur a la contrevaleur
de 100\.000 dollars, pour l'achat de vehicules et de materiel (s'elevant a
environ 3,1 millions de dollars), seront passes par voie d'appels d'offres
internationaux conformes aux directives de la Banque\. Les marches de fournitures
et de services d'un montant inferieur a 100\.000 dollars pourront etre passes
par appels d'offres\. conformement a des regles nationales acceptables a
la Banque, a condition toutefois que Ie montant total de ces marches de
fournitures ~t de services ne depasse pas la contrevaleur de 1 million de
dollars\. Les marches de construction, dont Ie montant total s'eleve a 5,2
millions de dollars, concernent plusieurs chantiers disperses dans la zone
du projet; ils sont peu susceptibles, parce qu'insuffisamment importants,
d'attirer des soumissionnaires etrangers; ils seront attribues sur la base
d'appels d'offres locaux, conformement a la reglementation ivoirienne des
marches qui est acceptable a la Banque\. Les travaux de genie civil portant sur
Ie defrichement et la construction des routes de desserte des plantations
representent 19,1 millions de dollars et la mise en culture 7,9 millions de
dollars; ces deux elements seront executes en regie par la SODEPALM et
rembourses sur presentation de certificats de services faits; la SODEPAL~
possede l'equipement necessaire et a demontre qu'elle peut travailler mieux
et a meilleur compte que les entreprises\. Tous les autres coUts du projet
- 25
(5,4 millions de dollars) correspondent essentiellement aux couts du personnel
d'encadrement, de la main-d'oeuvre, des credits aux paysans et aux depenses
de fonctionnement\.
5\.11 La proposition de confier a la SODEPALM Ie defrich~ent des terres
en resulte des offres excessivement elevees rec;ues de ~;oumissionnaires
internationaux en 1971 pour Ie premier projet SODEPALM (Pret 6ll-IVC)\. Dans
Ie cadre des second et troisieme projets (Prets 759, 760 et 1036-IVC), lorsqu'il
fut recommande d'executer les travaux en regie, la SODEPALM a defriche les
terres pour 500 dollars par ha, pres de la moitie des offre~; internationales
rec;ues en 1971\. Pour Ie projet envisage, la SODEPALM dispose d'un avantage
inherent par rapport aUx soumissionnaires internatinaux dans la mesure ou
elle possede un materiel specialise, disponible sur place, defriche des terres
dans Ie cadre d'autres mandats gouvernementaux et jouit d'une vaste experience
en la matiere\. En outre, Ie defrichement effectue pour les plantations de
caoutchouc gerees par des entreprises privees continue d'etre en regie\.
E\. Versements
5\.12 Le pret de la Banque sera verse de fac;on a couvrir:
(a) 75% des couts de defrichement et de construction des routes d'acces
aux plantations industrielles de palmiers a huile et de cocotiers
pendant les annees 2 et 3, sur la base du cout maximum par ha, de
192\.000 FCFA et 203\.000 FCFA pour les plantations cle palmiers et de
cocotiers respectivement, aux prix de 1976 (7,5 millions de dollars);
(b) 60% des couts agricoles des plantations industrielles de palmiers
a huile et de cocotiers (3,3~millions de dollars);
(c) 65% des depenses totales ou 100% du cout en devise~; etrangeres, des
constructions, materiel et vehicules destines aux plantations
industrielles de palmiers a huile et de cocotiers (3,5 millions
de dollars);
(d) 80% de tous les cout s des programmes de plantat ion~; villageoises,
y compris les prets en nature et en especes (1,1 million de dollars);,
(e) 80% de tous les couts de la Direction du projet (0,4 million de dollars);
(f) 4,5 millions de dollars non affectes\.
Les previsions de decaissement sont a l'Annexe VIII\. Les versements effectues
au titre des articles (a), (b), (d) et des couts de gestion (e) seront regles
au vu des etats de reglement dont les documents ne seront pas remis pour examen,
mais conserves par la SODEPALM et contr6les par les missions de supervision des
projets c\.e la Banque\. Les versements effectues au titre de l'article (c)
se feront en regard de l'entiere documentation\.
- 26
F\. Comptabilite et revision des comptes
5\.13 La SODEPALM tiendra une comptabilite conforme aux usages de l'industrie
et du commerce et refletant correctement ses operations et sa situation
financiere\. Cette comptabilite montrera separement les comptes des differents
elements du projet et la situation des prets aux planteurs, y compris 11 eta~ \.
de leurs amortissements\. Les pouvoirs publics ivoiriens nommeront des comm1ssa1res
aux comptes acceptables a la Banque et leurs rapports seront aussi etendus
et detailles que la Banque l'estimera necessaire, dans la limite des usages
a cet egard\. lIs devront etre envoyes a la Banque, au plus tard quatre mois
apres la fin de l'exercice\. Pendant les negociations, les assurances necessaires
a cet effet ont ete obtenues\.
VI\. RENDEMENTS, PRODUCTION, DEBOUCHES ET PRIX
A\. Rendements et production
6\.01 Les plantations villageoises de palmiers a huile devraient obtenir
un rendement moyen de 16 tonnes de regimes par ha a maturite, neuf ans apres
avoir ete plantes\. Les resultats reels que donnent des plantations villageoises
de palmiers a huile existantes confirment la validite de ces estimations\. Pour
ce qui est des plantations industrielles, de nombreux essais effectues par
l'IRHO portent a en attendre des rendements moyens d'au moins 18 tonnes/ha
a maturite\. Les deux rendements correspondent a des teneurs de 22% en huile
et 4,4% en palmistes\. Ces rendements, eleves par rapport aux normes mondiales,
sont possibles du fait que llIRHO a reussi a produire et a tester des hybrides
de haut rendement\. Lorsque les plantations du projet auront atteint leur
pleine production, vers 1984, leur production s'etablira en moyenne a 31\.600
tonnes d'huile et 6\.360 tonnes de palmistes par an, soit moins de 1% du commerce
mondial prevu pour cette epoque au niveau de ces produits de base (Annexe IX)\.
6\.02 Les plantations villageoises de cocotiers devraient atteindre, a
leur pleine maturite, un rendement moyen de 20\.500 noix/ha\. Arrives a leur
pleine maturite, les cocoteraies industrielles devraient enregistrer un rendement
de 23\.000 noix/ha\. II est possible d'obtenir ces rendements, eleves par rapport
aux normes mondiales, du fait que l'IRHO a reussi a produire et tester un
hybride de haut rendement\. Llutilisation continue d'engrais permettra de
maintenir des rendements eleves; il s'agit la d'une pratique courante sur
les plantations industrielles et villageoises\. La production de coprah se
chiffrera a une tonne metrique pour 5\.000 noix et 250 kg supplement aires
de charbon de bois obtenu des coques\. Lorsque les plantations du projet
auront atteint leur pleine production, vers 1987, elles donneront en moyenne
environ 42\.700 tonnes de coprah et 10\.675 tonnes de charbon de bois par an;
la production de coprah represente pres de 1,6% du commerce mondial prevu
pour cette date, soit l'equivalent de 27\.500 tonnes d'huile de noix de coco\.
B\. Traitement
6\.03 Le gros des installations de traitement necessaires aux plantations
du projet ne sera pas requis durant la periode de deboursement du pret consenti
par la Banque\. Le calendrier des cocoteraies financees dans Ie cadre de
projets anterieurs prevoyait leur maturite en 1976\. Un plan valable de traite
ment et de commercialisation a recemment etepresente a la Banque\.
- 27
6\.04 Aux fins de determiner la valeur nette du produit ~inal (coprah
et charbon de noix de coco), les couts de traitement ont ete estimes sur la
base de methodes artisanales dont les chiffres correspondants sont disponibles
(Annexe v)\. Les investissements industriels consacres au traitement de la
production d'huile de palme ne seront pas realises avant 1980 et Ie cout des
installations voulues est inclus dans les calculs fin~~ciers et economiques\.
Les couts de traitement ont ete estimes sur la base des cout!> de fonctionnement
reels qu'enregistrent les huileries existantes, en y ajoutant les couts d'~or
tissement bases sur les investissements que necessite Ie sud-ouest\. Les
details figurent a l'Annexe V\.
C\. Debouches et prix
6\.05 Huile de palme et nalmistes\. Environ 60% de l'hui:~e de palme et
tous les palmistes produits par les plantations du projet seront absorbes
par Ie marche d'exportation en croissance\. II est estime que la production
mondiale totale en huile de palme s'accroit au rythrne annuel d'environ 9,5%
entre 1975 et 1980 (7,1% - 1975-85) et l'on s'attend qu'en 1985, la production
mondiale atteigne pres de 5,9 millions de tonnes et les exportations 4,7
millions de tonnes\. De ce total, la Cote d'Ivoire exportera environ 200\.000
tonnes, soit 4,3%\. Les analystes de la Banque pour les produits de base
estiment que les prix de l'huile de palme devraient passer de 380 dollars/tonne,
Ie prix actuel moyen, a 737 dollars/tonne CIF Europe en 1985 - un prix equi
valent a 390 US$ en prix constant 1976 - hypothese retenue pour la production
du projet (Annexe IX)\.
6\.06 Selon les estimations, Ie prix de l'huile de palmiste, qui presente
des caracteristiques similaires a celles de l'huile de noix de coco, devrait
etre porte, de 360 dollars/tonne CIF Europe a 564 dollars/tolme en 1985\.
Aussi estime-t-on que les prix des palmistes passeront de 170 dollars/tonne
CIF Europe des 1985, en termes de 1976\. Ce dernier prix a ete utilise aux
fins du present projet\.
6\.07 Coprah et huile de noix de coco\. Cependant qu'une petite quantite
de coprah produite par Ie projet sera consommee localement, :\.e gros sera exporte,
essentiellement vers l'Europe, soit comme huile de noix de coco, soit comme coprah
non traite\. L'huile de noix de coco et Ie coprah (en tonnes equivalentes
d'huile) ont couvert environ 6,4% de la production mondiale de matieres
grasses et d'huile en 1971-1973\. La production s'est lentement accrue (1,3% de
1954-57 a 1971-73, en comparaison de 2,6% par an pour la production globale
de matieres grasses et d'oleagineux)\. En general, les cocot:~ers sont une
culture de petits exploitants, mal organisee et comportant Wle forte pro
portion de cocotiers trop ages, et ils n'ont guere fait l'ob~iet d'une serieuse
mise en valeur, sauf aux Philippines et dans Ie cas des modestes projets
que finance la Banque en Cote d'Ivoire\. La Banque prevoit qu'en 1980, les
exportations mondiales de coprah et de noix de coco (en equivalent d'huile)
passeront de 1,5 million de tonnes, volume actuel, a environ 1,6-1,7 million
de tonnes, principalement a la suite de la hausse qu'enregistrera la production
- 28
philippine\. Aux fins de l'analyse economique du projet, lIon a retenu, pour
Ie coprah, Ie prix de 397 dollars/tonne CIF Europe, en prix constants de 1976\.
Ce chiffre equivaut a 580 dOllars/tonne (termes de 1976) pour l'huile de noix
de coco, ce qui est legerement inferieur au prix moyen (8,6%) enregistre
par ce produit de base durant les trois dernieres annees\.
- 29
VII\. AVA\.1'iTAGES FDIAi"l'CIERS ET PERSPECTIVES
A\. Marge brute d'autofinancement du projet
7\.01 La marge brute d'autofinancement correspondant au programme du sud
ouest, consideree comme une entite separee, a ete evaluee independamment des
operations que gere la SODEP~~ a l'est du fleuve Sassandra\. La marge brute
d'autofinancement (Annexe VII) accuse un bilan positif des l'annee 8 du
projet\. Tous les couts du projet auront ete rembourses a l'annee 11, trois
ans apres que toutes les plantations auront atteint leur maturite, et
il restera un excedent de 1 milliard de FCFA (4 millions de dollars)\. A
partir de l'annee suivante et durant les 18 annees subsequentes, les revenus
a attendre de l'exploitation du projet atteindront environ 4,3 milliards de
FCFA (17,5 millions de dollars) par an, a des termes correspondant aux prix
courants attendus\. Le gouvernement retirera un revenu supplementaire du
fait de taxes indirectes et de droits a l'exportation pergus sur les produits
exportes\. Les revenus annuels globaux suscites par Ie projet, en termes
courants, se presenteront comme suit:
Millions de Millions de
FCFA
Provenant de l'exploitation du projet 4\.282 17,5
Provenant des taxes 638 2,6
Provenant des droits d'exportation 366 1,5
Total 5\.386 21,6
La marge brute d'autofinancement etablie pour une peri ode de 30 ans, enregistre
un taux de rendement financier de 16%\.
B\. Avantages des planteurs villageois
7\.02 Les avantages a attendre du projet pour les plantations villageoises
ont ete evalues a partir de modeles sep\.ares concernant les cultivateurs de
palmiers a huile et de cocotiers (Annexe IV)\.
7\.03 Planteurs villageois de palmiers a huile\. Dans son operation de
plantations villageoises, la SODEPAIJ~ a, jusqu'a present, paye aux planteurs
villageois un prix de base fixe, 4 FCFA/Kg par kilo de regime, en y ajoutant
un systeme de prime qui permettait aux planteurs d'atteindre, en 1975, un
prix moyen de 8 FCFA/kg\. Un prix moyen de 8 FCFA/kg a ete suppose dans Ie
cas du projet\. La production d'une exploitation de planteurs villageois
debuterait a la quatrieme annee apres la plantation, lorsqu'il faudra 32 jours
de travail pour entretenir et recolter un hectare de palmiers a huile; Ie
revenu par journee-homme sera de 852 FCFA (3,5 dollars)\. Ce montant passera
a 1\.845 FCFA (7,5 dollars) par journee-homme pour 46 jours de travail, une
fois la dette acquitteea l'annee 5 du projet, et atteindra un maximum de
- 30
2\.339 FCFA (9,5 dollars) par journee-homme, pour 52 jours de travail, apres
que Ie service de la dette ait pris fin a l'annee 13\. Le revenu qu'obtient
la main-d'oeuvre employee est satisfaisant en comparaison du salaire agricole
officiel de 315 FCFA/jour (1,3 dollar), indemnites comprises\. De nombreux
planteurs villageois associeront probablement les palmiers a huile au cacao,
au cafe et aux cultures vivrieres\. Le revenu qu'obtient la main-d'oeuvre se
compare aussi favorablement avec Ie revenu obtenu de la culture du cacao,
arboriculture qui se pratique dans la plupart de la zone du pays propices
au palmier a huile, a savoir environ 940 FCFA (3,8 dollars) par journee
homme pour les plantations traditionnelles et 1\.200 FCFA (4,9 dollars) pour
les plantations amenagees\. Une exploitation villageoise moyenne de 4 ha
produira un revenu total annuel, apres service de la dette, se chiffrant a
environ 486\.600 FCFA (1,980 dollars), a partir de l'annee 13, lorsque la
dette est entierement remboursee\. En outre, une famille typique de dix
meffibres, comptant l'equivalent de 2-1/2 adultes, retirera quelque 106\.000
FCFA (430 dollars) d'une exploitation traditionnelle\.
1\.04 Planteurs villageois de cocotiers\. Dans Ie cadre de son programme
actuel, a l'est du fleuve Sassandra, la SODEPAL~ garantit aux planteurs
villageois un prix de 1 FCFA par noix de coco et ce prix a ete applique au
projet du sud-ouest\. La production caracterisant une exploitation villageoise
debutera a la cinquieme annee apres la plantation, lorsqu'il faudra neuf
jours de travail pour entretenir et recolter un ha de noix de coco et que Ie
revenu par journee-homme s'elevera a 333 FeAP (1,40 dollar)\. Le revenu par
journee-homme sera porte a 1\.619 FCFA (6,6 dollars) pour 32 jours de travail,
apres service de la dette a l'annee 1, et a 2\.406 FCFA (9,8 dollars) pour
50 jours de travail, une fois Ie service de la dette termine a l'annee 11\.
Le revenu qu'obtient la main-d'oeuvre employee est satisfaisant pour les
raisons citees au paragraphe 1\.03\. Peu de planteurs villageois etablis,
prenant part au programme de la SODEPALM, ne cultivent que des cocotiers
etant donne que la plupart les associent au cacao, au cafe et aux cultures
vivrieres; la meme chose devrait se produire dans Ie sud-ouest\. Une
exploitation moyenne de planteur villageois, couvrant 4 ha, produira un
revenu total annuel, apres service de la dette, d'environ 480\.500 FCFA (1\.960
dollars) a partir de l'annee 11, une fois la dette entierement remboursee\.
1\.05 Conclusion\. Dans les deux cas, les revenus sont juges satisfaisants
pour inciter les cultivateurs a participer au programme de plantations
villageoises et ameliorer leur niveau de vie\.
VIII\. AVANTAGES ECONOMIQUES ET JUSTIFICATION
8\.01 Les avantages de base a retirer du projet sont la production accrue
destinee a l'exportation pour ce qui de l'huile de palme et des palmistes,
du coprah et du charbon de noix de coco, d'oll il resulte une hausse des
recettes annuelles en devises, se chiffrant a quelque 40 millions de dollars
- 31
en 1986 (termes courants)\. Le projet entre dans le cadre du progr~e gouverne
mental visant a diversifier l'agriculture et a developper le sud-ouest\. Environ
1\.600 emplois seront crees au niveau des plantations industrielles et pres de
600 cultivateurs locaux verront leurs revenus s'accroitre de fa~on considerable\.
8\.02 Dans l'analyse economique (Annexe X), les valeurs attribuees a la
production sont basees sur les cours mondiaux prevus, le cout de la main-d'oeuvre
aux salaires estimatifs par rapport a la productivite et les couts non associes
a la main-d'oeuvre ont ete calcules d'apres le cout commercial net de taxes
(en termes de 1976)\. Les taux de rendement economiques obtenus correspondent
a 17% pour le projet entier, 16,5% tant pour les palmeraies que pour les cocoteraies
industrielles, enfin 30% et 23% pour les palmeraies et les cocoteraies villageoises
respectivement\. Si les couts et les profits avaient ete ajustes en fonction
des distortions douanieres et commerciales en utilisant un facteur de conversion,
le taux de rendement economique "d'efficience" aurait ete de 20% pour l'ensemble
du projet\. Tous les taux de rentabilite sont peu sensibles a des changements
affectant les couts ou les profits -- par exemple, le taux de rendement du
projet entier, 21,1% tombe a 17,2% ou 17\.9% respectivement, au cas ou 1~
survient une baisse de 20% au niveau des profits ou une hausse de 20% au niveau
des couts\.
8\.03 Les taux de renaement plus eleves estimes pour les planteurs villageois
sont principalement dus a l'affection de l'infrastructure centrale et aux
services aux plantations industrielles\. Ainsi qu'il est examine a l'Annexe X,
une majoration de la taille des programmes pour les plantations villageo~ses,
et en particulier dans le cas des palmiers a huile, serait justifiee\. Les
rapports de superficie des quatre elements propres au projet ont, toutefois,
ete determines en fonction de la gestion du projet et des disponibilites en
main-d'oeuvre, des contraintes et de l'experience acquise a la suite d'autres
projets d'arboriculture realises en Cote d'Ivoire\. Des efforts seront fournis
durant la mise en oeuvre du projet en vue de maximiser la taille des elements
relatifs aux plantations villageoises pour autant que les resultats obtenus sur
ces plantations soient satisfaisants\.
IX\. ACCORDS ET RECOMMANDATIONS
9\.01 Au cours des negociations, des assurances ont obtenues sur les
points suivants:
(a) Les fonds necessaires seront disponibles pour ameliorer les
routes d'acces rendues aux plantations de fa~on a permettre,
par tous les temps et avant le 30 juin 1978, l'acces a la zone
du projet (par 3\.02);
(b) La Direction du projet, actuellement situee a Abidjan, sera
etablie dans la region du sud-ouest que requis, en consul
tation avec la Banque (par 4\.03);
(c) Les pouvoirs publics mettront a la disposition de la SODEPALM les
fonds necessaires aux programmes d'investissements, en cours ou
ulterieurs, relatifs aux activites connexes qui lui sont confiees
(par\. 5\.03);
- 32
(d) Le prix fixe chaque annee, auquel la CSSPA achetera a la
SODEPALM l'huile de palme et les produits et sous produits
derives de la noix de coco, sera suffisant pour permettre de
couvrir les frais de production et Ie service de la dette
afferant aces secteurs\. De surcroit, la Banque se verra donner
la possibilite d'exprimer son opinion sur ces prix avant qu'ils
ne soient rendus publics (par\. 4\.17);
(e) Le financement de ce proJet sera assure de man~ere satisfaisante
par Ie gouvernement sur une base annuelle (par\. 5\.06)\.
9\.02 Les conditions de mise en vigueur du pret seront les suivantes:
(a) Le decret presidentiel aura ete publie et mis en vigueur
(par\. 2\.25);
(b) Le gouvernement, la SODEPALM et la PALMINDUSTRIE auront signe
l'Accord modifiant les accords de prets anterieurs (par\. 2\.25);
(c) La Banque aura re~u des assurances satisfaisantes au sujet du
pret BNDA/SODEPALM (par\. 5\.03)\.
(d) La contribution des pouvoirs publics au financement du projet
aura ete assuree par Ie budget de developpement pour la premiere
annee (par 5\.06)\.
9\.03 Moyenant l'obtention des assurances ci-dessus et sous reserve des
conditions mentionnees, Ie projet justifie l'octroi d'un pret de la Banque\.
a raison et 20 millions de dollars, amortissable en 20 ans, y compris un
differe de paiement de quatre ans et demi\.
AN'NEXE I
Page 1
COTE D'rvOlRE
QUATRIEME PROJET DE PAL~lERS A HUlLE ET DE COCOTlERS
Avancement des projets agricoles finances par la Bangue
A\. Pret 6ll-lVC - Palmivoire, equivalent de 3,3 millionsde dollars
(13 juin 1969)
1\. Le projet consistait a mettre en place et a entretenir 4\.000 ha de
palmiers a huile faisant partie de la plantation industrielle d'Ehania en
vue d'en faire une exploitation de 10\.000 ha de palmiers a huile\. Le pret
est entre en vigueur Ie 30 decembre 1969\. La plantation s'est achevee en
1972 et son entretien a donne satisfaction\. Les coUts de plantation ont
ete legerement inferieurs a ceux estimes lors de l'evaluation et Ie projet
est a present arrive a terme\.
B\. Pret 612-lVC-Palmindustrie e uivalent de 4 8 millionsde dollars
13 juin 1969)
2\. Le projet a finance la construction d'une huilerie destinee a
desservir la plantation industrielle de palmiers a huile d'Ehania, couvrant
10\.000 ha, et quelques plantations villageoises\. Le pret est entre en vigueur
Ie 30 decembre 1969\. L'huilerie a ete construite avec une capacite initiale
de 40 tonnes/heure de fruits frais, en deux lignes de traitement qui fonctionnent
de maniere satisfaisante a pleine capacite\. Les couts etaient proches du
devis de l'evaluation\. Un supplement de 20 tonnes/heure au niveau des lignes
de traitement etait prevu dans Ie projet, mais Palmindustrie a demande a
la Banque d'approuver une modification des plans, comprenant installation de
deux huileries satellites de 20 tonnes/heure chacune et d'unekernellerie
centrale au lieu du supple~ent prevu\. Le changement de plans a ete approuve,
mais etant donne que Palmivoire disposait de fonds plus importants, la Banque a
limite sa participation aux fonds restants (700\.000 dollars)\. Le projet
est maintenant termine\.
C\. Pret 613-IVC - SODEPAL~, equivalent de 9 millions de dollars
(13 juin 1969)
3\. Le projet consistait a creer et entretenir de 12\.000 ha de palmiers
a huile villageois, a mettre en place et entretenir jusqu'en 1974 3\.500 ha
de cocotiers industriels et 3\.000 ha de cocotiers villageois, a fournir des
services de credit et de supervision pour les palmeraies et cocoteraies
villageoises ainsi que l'infrastructure necessaire associee aux 3\.500 ha de
cocoteraies industrielles\. Le pret est entre en vigueur le 30 decembre 1969\.
Les plantations requises pour les cocoteraies industrielles du projet devaient
s'achever en 1971\. Etant conne une penurie du materiel vegetal de plantation
(pour cause de maladie), la Banque est convenue de prolonger la periode de
ANNEXE I
Page 2
plantation jusque 1972\. Toutes les plantations industrielles sont a present
achevees\. Afin de permettre une selection plus stricte des planteurs villageois,
la Banque est egalement convenue, a la demande de l'Emprunteur, d'etendre
jusque 1972 la periode de plantation correspondant au programme de palmeraies
villageoises dont Ie terme etait initialement prevu pour 1970\. Toutes les
plantations se sont a present terminees\.
4\. Les trois prets mentionnes ci-dessus ont ete les prem~eres operations
quIa effectuees la Banque pour appuyer Ie secteur des palmiers a huile en Cate
d'Ivoire\. Apres un demarrage relativement lent, les versements des prets de la
Banque se sont acceleres et sont a present tous effectues\. Par ailleurs, la
realisation des projets a ete tres satisfaisante\. La production de palmiers
a huile, qui s'accroit maintenant de fag on reguliere, a atteint environ 70%
de son potentiel et les rendements des plantations industrielles aussi bien que
villageoises enregistrent des niveaux fort comparables aux previsions de
1 'evaluation\.
D\. Pret 686-IVC - Projet cacao, eguivalent de 7\.5 millions de dollars
(5 juin 1970)
5\. Le projet a consiste au depart a planter 18\.800 ha de cacao et a
rehabiliter environ 38\.000 ha de plantations de cacao existantes; il est entre
en vigueur en novembre 1970\. Le projet a ete amende en juillet 1973 afin de
reduire l'element rehabilitation a 15\.500 ha; ce programme revise est termine\.
Approximativement 10\.000 ha ont ete amenages dans Ie cadre du nouveau programme
de plantation a la fin de 1973 et environ 6\.000 ha en 1974\. Le projet a evolue
de fagon satisfaisante hormis des problemes administratifs qui ont retarde la
presentation des demandes de remboursement\. Neanmoins, l'administration de
ce projet et du second projet cacao recemment approuve sera combinee et l'on
estime que 3\.200 ha seront plantes dans Ie cadre du second projet\. Des
economies de l'ordre de 2,2 millions de dollars entrainees par l'amendement et
la fusion des deux projets ont ete resiliees a la date de la signature du
second proj et \.
E\. Prets 759-IVC - SODEPALM et Palmindustrie, equivalent de 7 millions de
dollars (22 juin 1971)
6\. Le projet consiste a (a) planter 4\.500 ha de palmiers a huile villageois,
(b) 8\.000 ha de cocotiers villageois, (c) 8\.000 ha de cocotiers sur des plan
tations industrielles d'Etat et (d) construire une huilerie\. Les prets sont
entres en vigueur Ie 15 novembre 1972\. L'huilerie a ete commandee en decembre
1972 et fonctionne de maniere satisfaisante\. L'avancement des progr~es de
plantation donne satisfaction et correspond au calendrier\.
F\. Pret 938-IVC - SOCATCI, Plantation industrielle de caoutchouc, equivalent
de 8,4 millions de dollars (23 octobre 1973)
7\. Le but du pret est de financer, de pair avec la CCCE et Ie FED, la
plantation de 13\.500 ha d'exploitations industrielles de caoutchouc et la mise
en place de services auxiliaires sous la direction de l'Etablissement Michelin,
ANNEXE I
Page 3
un fabricant fran~ais de pneus\. Au demarrage, le projet s'est immediatement
heurt~ a des problemes d'infrastructure et a egalement ete retarde par une direction
inefficace\. Lorsqu'une solution a ete apportee aces contraintes, de s
penuries au niveau de la main-d'oeuvre ant reduit le rythme de plantation
prevu et les objectifs du projet ont du etre restreints de fa~on ales faire
correspondre au devis original\. La plantation devrait a present couvrir
environ 7\.000 ha et s'achever en 1978\.
G\. Pret 1036-1VC - SODEPALM et Palmivoire, equivalent de 2,6 millions de dollars
(31 juillet 1974)
8\. Le pret est entre en vigueur en aout 1975\. 11 s'agit du suivi de
prets de la Banque anterieurement octroyes pour les palmiers a huile\. Le
projet assure la plantation de 5\.000 ha de palmiers a huile par des planteurs
villageois et de 5\.500 ha de plantations industrielles de la SODEPALM\. La
mise en oeuvre du projet progresse de maniere satisfaisante\.
H\. Pret 1069-IVC - Gouvernement ivoirien, Second projet cacao, equivalent de
de 20 millions de dollars (10 janvier 1975)
9\. Ce qui est entre en vigueur en septembre 1975 constitue le
suivi du premier projet de cacao (Pret 686-1VC)\. Sa realisation s'effectue
de maniere satisfaisante et conformement au calendrier\.
I\. Pret 1077-1VC - Gouvernement ivoirien, nrojet de develonpement rural des zones
cotonnieres, equivalent de 31 millions de dollars (17 janvier 1975)
10\. Ce pret est entre en vigueur en juin 1975\. Son but principal est
de porter les zones cotonnieres de 57\.000 ha a 80\.000 ha et de faire passer
d'environ 9\.000 ha a 71\.000 ha les zones ou les cultures vivrieres se pratiquent
en rotation avec le coton\.
ANNEXE II
Ta\.bleau 1
Page 1
BILAN DU GROUPE DE LA SODEPALM
au 30 seutembre 1975
1\. Actifs
Une analyse des bilans de la\. SODEPALY\. pour les 3 dernieres annees a
demontre que le groupe a\. accumule des actifs qui s'elevaient au 30 septembre
1975 a 52,780 millions de FCFA (234,58 millions de $EU)
Le detail de ces actifs est le suivant:
miilions --FCFA millions $EU millions FCFA millions $EU
A\. FRATS D'ETABLISSEMENT ET IMMOBILISATIONS 1,055 4\.69
INCORFORELLES, BREVETS ETC
3\. D1MOBILISATIONS CORPORELLES: Terrains 157 0\.70
Infrastructure vegetale 10,835 48\.16
Infrastructure industrielle 8,586 38\.16
Constructions et logements 5,328 23\.68
Materiel et outil1age 689 3\.06
~I!ateriel roulant 3,532 15\.70
Mobilier 466 2\.07
Agencements, installations VRD 2,188 9\.72
et adduction d'eau,etc\.
INVESTISSE!1:E~rTS ACTUELS
Agricoles
3,459 15\.37
Autres
2,507 11\.14 37,747 167\.76
,\.
"\. Au'"TRES ifALEURS n,1MOBILISEES
Prets aux planteurs: palmiers a huile 1,558 6\.92
cocotier 1,468 6\.52
Subventions du FER pour l'huile de palme
Plantations vil1ageoises 1,215 5\.40
Autres 139 0\.62
4,3&) 1§':45"
CertLeicats FNI
509 2\.26
0\.16 4,924 21\.88
Autres certificats
35
--
D\. ifP~~S D'EXPLOITATION
Matieres premieres et pieces detachees 1,427 6\.34
Travaux de genie Civil 236 1\.05
Stocks d'huile de palme et de palmistes 997 4\.43 2,660 11\.82
1;;'
VALEL~S P\.EALISABLES OU DISPONIBLES
Fournisseurs 9 0\.01
Clients 2,362 10\.50
Autres 1,312 5\.84
Comptes temporaires
179 0\.80
Depots a tert:!e
1,232 5\.50
Effets a recevoir
563 2\.50
Banques
684 3\.05
Caisses
52 0\.23 6,393 28\.43
Total FCFA 522780 234\.58
ANNEXE II
Tableau 1
Page 2
BILAN DU GROUPE DE LA SODEP~~
au 30 sentembre 1975
2\. Passifs
Les actifs mentiannes precedemment ont ete finances par:
millions FCFA oil1ions $EU oi1lions FCFA millions $~u
A\. FO:;:mS PROPRES
Capital 3,539 15\.72
Reserves 636 2\.83
Benefices cumules 1\.Jl2\. 8\.16 6,010 26\.71
3\. DONS ET SUBVEnTIO~S
Dons de 1a Repub1ique
de Cote d f Ivoire 2,878 12\.79
Subventions du Gft aux planteurs
vil1ageois de palmiers a hui1e 109 0\.48
Subventions
de CFP'\.P 138 0\.61
Subventions du F&~ 136 0\.60 3,261 14\.48
C\. DE~TES ET PRETS
Dotations ReI rem
boursab1es au FER 7,228 32\.13
Subvention du FER pour
1es p1anteurs vi11ageois 308 1\.36
Etat dividende de
gar~ntie 554 2\.46
Emprunts a long et court te~e 16,310 72\.1\.9 24,401 108\.44
D\. AUTRES CRED ITETJRS
Fournisseurs 583 2\.59
Autres 700 3\.12
CSSPPA 4,086 18\.17
Gft (impots sur le revenu) 417 1\.86
Frais a payer et autres
comptes transitoires 4\.62 6,826 30\.36
12\.282 54 \.59
TOTAL FCFA 52,780 234\.58
,
con: Il' IVO!/l~:
QIJA'l'Hu:r4E I'ltOJE'1' l'AI\.MllmS A WITl\.E E'I' CuClJ'I'11::1 n
HAAG/:: llRL'C]" IJ' Aln'()~'J tlAIIGEtolliN'J' D~:S Sr:C1'EllKS I'AI\.!lMIl Po 1,1,11_ IS COi:tfill;;;
\. (millioll:lf'Cl"JI)
1976 1971 1918 1979 1980
CUSSr: DE STAI!II,lSATIOII;
I'Rl!:VlSIOR DE I\.' AII1'Ot'INAIICEMEN'l'
Revenug !!\.U secteur du !Jalmier i )mile et du cocotier
Total des rt!'vc!HIlS 14,275 20,126 22,838 24,615 26,946
Cont de production 8\.263 11\.609 13,304 14,402 15\.912
Service de la dttte 1,909 2,226 2,979 3,230 2,167
Provisions pour amortissement 2,168 2,936 3\.264 3,467 3\.563
Recherche 1,076 40 91 264
Achat d'actions ]}riVeC6 1\.17<'
FEll 306 375 384 388 390
Tota\.! 13\.818 18,222 19,971
---
21,578 23\.296
Stlrplu» CSSI'I'A h51 1\.904 2,867 3,037 3,650
All'l'OFINANCUoIEII'\.l' COH:lOr,Hl~:
A\. GROIWE SOI)~;PAI\.M
SOIlEPALM (2,931) 1,106 1\.949 (320) (696)
PAU41NDUSTRIE 1,415 1115 898 940 635
PALMIVOIRE 112
GROUPE SODEPALM (1,339) 1\.291 2,847 620 --m>
B\. GROUPE BOIJEPALM + CAISSE DE S'rA\.BII,ISATIOIi (862) 3,195 5,714 3,657 3,789
(SEC'l'lllR) dont contribution du Gouvernement 3\.415 925
C\. SECTEUk; AIJ'l'Ot'INAIICj,){ENT CUMUI\.E NET (MlJ (1195) 4,094 7,nl 11,540
II PAUHNIlUSTR!E:
(1\.:'\. :> ) 3\.,,67 7\.3 1
\.h 11,133
Res8ourct:a
Augmentation du capital 140
Su rpl us c waul e 1\.843
Fonda dto\.mortissement 1,614 1,717 1,920 1\.995 2,030
Contribution du Gouvernement 500
financement exterieur
lIuilerie pour palmiste\. 2\.422 742
Vulgarlaation de l'huilerie (S\.O\.) 510
Prlts en coura 144
---
Totlll 4,201 4,779 2\.662 1,995 2,540
Depenses
EXpflllS!OIl du S\.t:\. 1,934 815 905 905 i~&
Uuilerie pour palmi:3lcs
Emmagaainage
1\.631 2,660 349
600 150 150
>"!9H
!\I""
Huilerie» (S\.O\.) 850
Tota\.! 2,726 4,594 1\.764 I,OS5 1\.905
SurpluB (d~ricit) 1\.475 185 898 940 63S
== == ==
,
C;)'l"'~ ~l'l()I\.ftI?
9'\.lA'~IJ,:Mt: Plln\.T~;'r PALMa:ll:! A Inlnt: t;'j' eoco'rn:I<!!
HAiti;" OUlI'l't: If- All'l~lt'INANI:~:In:N'r m;s nt:G1'EIIWl PAUll t:1I A IIlIllJo: I'~I' e(j('O'Pl ~1l
1916 1971 19111 1919 1900
III ~:
Ih~fU"OlJrc~n
11) PIWlttttiuulj de I'fllmit:ra 8\. buile et de cocot;«:ni
I} Revenu (574) 11 404 356 410 441
ii) ~'ond6 d f 8J:lB()rlitu:lelDt'!nt H\.E\. 1,496 'lJ 1,10) 1,140 1,211 1,239
f
Fonds d l1\.lllOrlitiBement S\.O~ 192
ronda d t \.tWIDrti88t'!ment coprllh
459 5H it? ita
iii) Contribution du GouverneJlienl 2,715 925
ty) fiua\.ncemt:lIt exte\.rieur
Pret\. en \."urs ("st) 1,089 323
PI~ts du S~o \. negociea
BUill 1,151 2,5011 141
COC/IlNDA 4110 700 120
D&,nques loctlles 1,450
Prft8 sdditioncls 392 361 262
Sous total 2,203 8\.147 6,63) 3,)20 2,656
u) Ac\iyi tea diyerm;s
i) fteVt!flU 129 276 324 191
ii) rinWlcefllltmt eJ\.lerieur ---L1!tL ~ -llL 115
1,378 550 446 --so6
Total des
~ ~ -lJll\.
rt;'S8ourCt:8
\.It\.l2l\. \.z\.!\.!L
a hui] e ct de cocotiers
l} Inveatiasewents dtUllJ le Sud Eat 2,055 1,887 1,450 1,197 1,035
if) Invt:'sti tHtt:'DH\.:nta dtU1S le Sud OUtiut 2,086 5,052 3,214 2,180 1,883
Bous total 4,141 6,939 4,664 3,171 2,918
SerYice de itt\. dette 83 166 456 423
( \.t \. icl duGeni" Civil)
b) Di vt\.'rai ric&tior~
Deta\.il 317 218 112 189 164
(coco rape) SlCOR 35 551 86 1)
(Gellie Civil) D~Hl --ti4L -Ul!lL
993 1,866 258 204 164
Hervice de 111 dette III 148 249 353
Total des_ dep~n:seB 5,134 9,019 5\.236 4,286 3,858
Surpluo (dHlcit l ~ ~9~ _(320} ~
dont
i) 8ecteura J2fllbliers i\. huile et coeotiers
Sud ouest 148 1,780 1,310 (1,215) (1,140)
Sud eat (2,086) (55) 485 902 1\.055
Ii ) DberoiticAU!W\. (993) (619) 154 (7) ( 11)
!7 -~~rte de51~ \.nuone de FCFIt '!n 1976 esl dut\.' AU deficit du aecteur cocotier
11 COlllprt'uJ l'amortltmelUcnt Ju maU~r1e1 jle genie civjl non priH en chargt~ par Ie (onus lie stabil iualian
ll~l~
:~'a
" \.
fvlt--i
ANNEXE III
Appendice 1
Page 1
COTE D'lVOlRE
QUATRlEME PROJET DE PALMIERS A BUlLE ET DE COCOTlERS
Amenagement de la region du sud-ouest
1\. L'importance economique de la region s'est accrue ces dernieres
annees grace a la mise en place de plantations de caoutchouc a Grand Bereby
au fait que les trois plantations de la SODEPALM (Soubre, Okrouyo et Bolo) qui
dependent de l'unique port de la region, San Pedro, pour acceder aux navires
trans-oceaniques\. Ce port a ete agrandi pour pouvoir absorber l'exportation
des produits provenant des projets en question; les pouvoirs publics ont
l'intention d'amenager davantage le port de fa~on a decharger Abidjan du fret
issu des pays du nord sans littoral (la distance de Bamako a San Pedro est
de 100 km plus courte quIa Abidjan)\. Le projet envisage se situera plus a
l'ouest, dans la prefecture de Bas Cavally jusqu'ici non amenagee et d~nt le
centre administratif se trouve a Tabou, petite ville catiere de 8\.000 habitants\.
2\. Des etudes techniques de la region du sud-ouest ont ete effectuees
par l'1RHO depuis quelques annees et l'emplacement general de m@me que la
la taille des futures plantations arboricoles ont ete identifies avec un degre
raisonnable d'exactitude\. Les plantations de palmiers a huile et de cocotiers
couvriront environ 50\.000 ha en blocs plus ou moins contigus\. Aux alentours,
du caoutchouc sera plante en quantite egale et formera quatre blocs separes\.
Enfin, a partir de 1980, quatre grands blocs seront defriches pour y realiser
des plantations destinees a l'industrie de la pate a papier\. Alors qu'un plan
de developpement de ce genre est techniquement faisable et, sous reserve
d'une etude plus poussee, pourrait etre recommande, il semble qu'une mise en
valeur non coordonnee risque d'entrainer, en quelques annees, le depouillement
excessif de la couverture forestiere\. 11 se pourrait que le regime pluvial soit
modifie (evapo-transpiration, deplacement des nuages, etc\.) au point de nuire
fortement a certaines plantations et/ou cultures viv\.rie~es locales\. Des
lors, il y aura lieu de prendre des mesures en vue de limiter la superficie
des blocs defriches une annee quelconque et d'espacer les emplacements
(defrichement en domino")\. Le rythme de la mise en valeur ne devrait probable
ment pas depasser l'echelonnement prevu dans le cadre du projet envisage,
la plantation de quelque 7\.000/8\.000 ha qui requiert le defrichement de 20\.000 ha
de foret par an\. Une condition du pret envisage sera que, dans l'annee qui
suivra la signature de pret, les po~voirs publics feront en sorte qu'un plan
de developpement agricole soit elabore ou les differents projets tiendront
compte des risques ecologiques\. En outre, le cadre de reference particulier
a l'effort de planification devrait inclure un plan d'utilisation des terres
par rapport a l'exploitation forestiere (par exemple, la delimitation des
reserves forestieres) et la conservation des betes sauvages existantes\. A
cet egard, on peut mentionner le fait qu'une etude concernant l'utilisation
des terres pour la region du nord-ouest, situee au nord de la zone du projet,
devrait bientat etre entamee sous l'egide d'un Comite inter-ministeriel
pour l'utilisation des terres a instituer, cette etude etant plus particulierement
concernee par une grande industrie pour le traitement du bois\.
3\. Les avantages que retire la region du prograwne du developpement
gouvernemental, y compris Ie projet envisage, devraient etre d'ordre social
aussi bien qu'economique\. Dans les conditions actuelles, les perspectives
d'une amelioration du niveau de vie dans le district de Bas Cavally sont
faibles a moins d'arriver a susciter de nouvelles sources de revenu regulier\.
Aussi est-il tres important de creer un "pole de developpement"\. Les cocoteraies
et palmeraies ont l'avantage de combiner un besoin d'emploi salarie sur les
plantations industrielles, a satisfaire surtout a partir des nations demunies
du nord, a la mise en place des plantations villageoises\. Ces deux elements
sont interdependants en ce sens que les plantations industrielles sont indis
pensables pour appuyer la production des plantations villageoises, mais celles-ci
accroissent la rentabilite des investissements consacres aux plantations
industrielles centrales et aux huileries\. Il offre egalement aux villages,
et eventuellement aux ouvriers des plantations industrielles, l'opportunite
de s'ador:ner aux cultures vivrieres afin de desservir les plantations industrielles\.
De plus, l'exploitation des peches c6tieres trouverait la une bonne base de
developpement\. L'on a craint, au debut, qu'une serieuse opposition ne se
manifeste a l'egard d'une "intrusion" de l'Etat dans une region jusque la
sans restrictions quant a l'utilisation des terres\. Aussi l'agence d'execution
veille-t-elle a ce que se tiennent des reunions consultatives au niveau du
village\. Jusqu'ici, les reactions ont ete particulierement positives en ce
qui concerne la mise en place de dispensaires et de meilleures ecoles\.
ANNEXE III
Anpendice 2
COTE D'IVOIRE
QUATRIEME PROJET DE PALMIERS A HUlLE ET DE COCOTIERS
Maladie de Kaincope
1\. La maladie de Kaincope est parue pour la premiere fois en Afrique
occidentale au debut des annees trente (Togo et Ghana)\. L'agent causal n'a
pas ete identifie, mais parait associe a la presence de mycoplasmes\. II
semble apparente au jaunissement mortel rencontre en Jamaique et en Floride
ainsi quIa la maladie de Kribi sevissant au Cameroun\. Les arbres cont"amines
se caracterisent par la chute de leurs noix et Ie jaunissement graduel de
leur feuillage, qui seche ensuite completement a commencer par les feuilles
externes\. Finalement, les arbres meurent et la maladie se repand parmi les
arbres avoisinants a la maniere dtune tache d'huile\. Les nouveaux plants
mis en terre infectee sont bientat attaques\. Au Togo, sur quelque 5\.000 ha,
la maladie a affecte environ 4\.000 ha en 40 ans\.
2\. La maladie a ete signalee Ie long de la frontiere ivoirienne
catoyant Ie Ghana, a pres de 800 km de la zone du projet dans Ie sud-ouest\.
Le materiel vegetal de plantation a utiliser sera un hybride dont la mere
est de la variete naine reputee pour sa tres forte resistance a la maladie
de Kaincope et on peut raisonnablement esperer que l'hybride heritera de
cette resistance a un degre significatif\. En vue d'evaluer la menace pesant
eventuellement sur Ie projet, une reunion a ete convoquee a la station de
l'IRHO situee a Port Bouet et des representants d'agences interessees, y compris
la Banque, sly sont rendus\. Une note elaboree par l'IRHO au sujet de la
maladie est jointe a la presente annexe\. L'on estime que Ie risque est
suffisamment minime que pour etre acceptable\. Lors de la reunion de Port
Bouet, il fut recommande qu'un programme de recherche international soit mis
sur pied des que possible qui comprenne des plants de divers pays cotiers
d'Afrique occidentale ou se produit la maladie et ait pour but de determiner
plus precisement la resistance de l'hybride\. La conception de ce programme
de recherche est effectuee par l'IRHO et les fonds necessaires a son demarrage
au Togo doivent etre fournis par un Credit de developpement approuve par
l'IDA\.
PlrNEXE II!
Piece jointe 1
Note sur la maladie de Kaincone
nubliee a l'occasion de la reunion
BANG,UE - SODEPALM - IRHO du 9 ,janvier 1976
Station de Port-Bouet
1\.- GENERALlTES
La maladie de Kaincope a ete observee pour la premiere fois au
Togo en 1932\. La maladie se propage en tache d'huile\. Elle a progresse
d'Ouest, en Est et atteint maintenant la frontiere du Benin sans toutefois
s'etre developpee dans ce pays\.
Des phases d'extension rapide sont su~v~es par des accalmies\. Toute
la cocoteraie du littoral du Togo a ete ravagee par cette maladie\. En 1974,
on ne constatait plus de foyers de maladie sur les vieux cocotiers sur
vivants, par c~ntre des foyers existent, iaoles, jusqu'a une vir~taine de
kilometres a l'interieur des terres\.
Au Ghana, la maladie du Cap Saint-Paul s'etend de la frontiere
Togolaise au Cap Trois Pointes\. La maladie, connue des 1932 dans la region
du Cap Saint-Paul, a fait son apparition en 1968 au Cap Trois Pointes\.
Au Cameroun, un deperissement semblable est cor~u dans la region
de Kribi\.
Au Benin, contrairement a\. ce qu I ecrivent JOfu"JSOtr et F\.ARRIES, la
maladie n'existe pas\.
Rors d'Afrique, la maladie qui s'en rapproche Ie plus est Ie
jaunissement mortel du cocotier a\. la Jamaique et en Floride\.
Actuellement, il semble bien etabli que Ie jaunissement martel
et Ia maladie de Kaincope sont en relation avec la presence de mycoplasmes\.
Les remissions de sympt6~es obtenues e~ injectant de Ia Tetracycline dans Ie
cocotier confirment la nature mycoplasmique de la maladie\. L'agent vecteur
de ces mycoplasmes n'est pas connu\. La maladie n'a jamais ete reproduite\.
L'identite des differentes maladies en Afrique de l'Ouest et a\. la Jamaique
n'a pas ete etablie d'une maniere certaine\.
ANNEXE III
Piece jointe
Page 2
11\.- RESISTANCE VARIETALE
Au Togo, 42 cocotiers du tYI>e "Grands de Malaisie", plantes en 1959
a Baguida, sont indemnes de maladie, alors que dans la meme region les
cocotiers "Grands Ouest Africain" deperissent\. Au Togo egalement, des
Nains plantes de 1961 a 1963 (Nains Jaunes de Malaisie - Nains Rouges
Cameroun et Nains Verts Bresil) sur des zones devastees par la maladie
ne presentent, apres 12 ans de plantation que 2 cas de mortalite, ce qui
semblerait prouver une meilleure resistance de ce tYI>e de materiel vegetal\.
Une experience avec des cocotiers Nains a ete realisee pres du
Cap St-Paul au Ghana avec des cocotiers Nains de Malaisie en 1957, et des
cocotiers Nains de Malaisie et du Cameroun importes de Cote d'Ivoire et de
la Jamaique en 66-67\. Presque tous ont disparu et leur mort a ete attribuee
a la maladie\. Mais la mortalite peut etre aussi, imputee a la rigueur du
milieu naturel dans la region du Cap St-Paul (sol pauvre, pluviometrie annuelle
de l'ordre de 850 mm avec un deficit hydrique de 800 a 1 000 mm); conditions
peu favorables au developpement du cocotier Nain, qui, plus encore que le
Grand, est sensible a la secheresse\.
Dans de telles conditions et compte tenu du faible nombre d'arbres
testes (de 8 a 14 dans l'experimentation de 66-67), il est difficile de se
referer aces resultats pour juger de la resistance du Nain\.
Au Cameroun, un foyer de maladie a ete observe en 1975 sur Nains
Rouges ages d'une dizaine d'annees a EBOME\.
A la Jamaique, le Nain de Malaisie est tolerant a la maladie
(4 %de mortalite) compare au Grand de Jamaique (85 %de mortalite)\. Les
Grands de Malaisie, de Thailande et du Cambodge sont moins resistants (mor
talite comprise entre 20 et 30 %) et les Grands de Ceylan ou de Panama
peuvent etre consideres comme sensibles\. L'hybride Grand de Panama X Nain
de Malaisie est tolerant (13 %) et l'hybride Nain de Malaisie X Grand de
Jamaique (22 %) l'est un peu moins\. Tous ces resultats ont ete obtenus dans
un contexte tres favorable a la maladie et OU la "pression" du Grand Jamaique
(particulierement sensible) est une cause determinante des pourcentages
Heves\.
La tolerance de ces deux derniers hybrides, dont un des parents
est sensible a la maladie, montre qu'il est possible d'obtenir un materiel
vegetal tolerant a partir de cocotiers sensibles croises avec des cocotiers
assez resistants\. Bien qu'il n'y ait aucun test serieux au Togo sur l'hybride
Nain Jaune X Grand Ouest Africain, il est permis d'esperer, sur la base
des observations de la Jamaique, que cet hybride NJ X GOA est tolerant a
la maladie de Kaincope\.
Al'INEXE I II
Piece jointe
Page 3
III\.- DISCUSSIONS - CONCLUSIONS
En Afrique de l'Ouest, les foyers de maladie sur cocotiers sont
toujours tres localises\. lIs s'etendent sur une soixantaine de kilometres
au Togo et sur 70 km environ au Ghana (pluviometrie 850 a 1 200 mm)\.
Au Cameroun, dans la region de Kribi, la maladie s'etend sur une centaine de
km au Nord de la frontiere de Guinee Equatoriale\.
Les limites entre les zones saines et les zones malades sont toujours
tres nettes\. Dans le cas ou un agent vecteur est en cause, cela signifie
qu'une modification imperceptible du biotope (conditions microclimatiques,
direction et force des vents, vegetation adventice, ecran, forestier, riviere,
proximite d'un site urbain, etc \. ) peut etre un obstacle au developpement
de l'insecte et a l'etablissement de la maladie\.
La distance qui separe le front Ouest d'avancee de la maladie de
Kaincope au Ghana et la grande cocoteraie situee a l'Est de la Cote d'Ivoire
est d'environ 150 km, c'est-a-dire une distance comparable a celIe qui a
ete parcourue par la maladie du Cap St-Paul au Cap Trois Pointes en une
quarantaine d'annees\. A moins d'une apparition ponctuelle de la maladie, les
risques d'apparition de la maladie dans Ie Sud-Ouest de la Cote d'Ivoire,
distant de 600 km de la frontiere Ghaneenne, par progression de proche en proche,
sont infimes et certainement tres faibles d'ici une cinquantaine d'annees;
periode qui, au niveau de la Selection, est suffisante pour trouver ~~e
materiel resistant\. De la reconversion prochaine de la cocoteraie du
littoral Est ivoirien en hybrides NJ X GOA plus resistants que Ie GOA constituera
un obstacle a la progression de la maladie\.
11 est donc raisonable de penser que la ~aladie de Kaincope ne peut
ni empecher la realisation, ni compromettre Ie developpement du projet cocotier
dans Ie SUd-Ouest de la Cote d'Ivoire et que la mise en place de champs de
comportement suivis avec serieux au Ghana, au Togo et au Cameroun apportera
d'ici 10 a 15 ans une solution au probleme\.
ANNEXE III
Appendice 3
Page 1
COTE D'IVOIRE
QUATRIEME PROJET DE PALMIERS A HUILE ET DE COCOTIERS
Note sur le probleme du reg~me
foncier en Afrique occidentale
1\. Traditionnellement, en Afrique de l'Ouest, la terre n'appartient
pas aux individus, mais a l'autorite en place\. Le chef lui-meme detient
la terre du peuple en tant que mandataire\. Si pour une raison quelconque,
ce dernier cesse d'etre chef, il ne peut plus regir l'occupation des terres
comme "Terres de la Maison", conquises par ses ancetres suivant des procedes
guerriers\.
2\. La tradition veut egalement que l'occupation des terres revienne
a celui qui la cultive\. En general, un heritier peut escompter acquerir
l'exploitation familiale lorsque le chef de famille disparait; en tous cas, il
existe presque toujours un proche parent desireux de reprendre l'exploitation\.
Neanmoins, a supposer que l'heritier s'en aille a la ville et que s'exercent
des pressions au niveau des terres de son village, l'exploitation peut etre
donnee a quelqu'un d'autre, parfois un immigrant qui a choisi de vivre dans
ce village du fait qu'il est un cultivateur actif et doue (ceci se produit,
en general, apres que l'''etranger'' ait reside plusieurs annees dans le village
en question)\. Mais ce genre d'alienation est tres rare\. De surcroit, lorsqu'une
parcelle de foret est defrichee par un paysan pour sly adonner a l'arboriculture,
les arbres sont consideres comme etant la propriete du planteur\. Dans les
zones urbaines, des lois modernes regissentbien entendu la propriete fonciere\.
3\. Ce theme general vaut pour toute l'Afrique de l'Ouest, avec certaines
variations regionales\.
4\. Un pouvoir gouvernemental particulier se rencontre dans les terri
toires administres par la France avant l'independance\. Dans les annees
vingt, les vastes zones forestieres pratiquement inoccupees ou incultes
avaient ete declarees "Propriete d' Etat" ou "Domaniales"\. Ceci a eu lieu
avec l'agrement des chefs avoisinants qui n'ont pas revendique l'occupation
de ces forets ou ne le pouvaient pas\.
5\. Lorsque dans un territoire ex-fran~ais, comme la C6te d'Ivoire,
l'Etat desire faire d'une zone rattachee a des terres d'appartenance publique
une exploitationarboricole industrielle, il peut aliener ces terres et delivrer
un titre de propriete a une societe (publique ou non) instituee a cette fin
en vertu de la loi qui regit les concessions\. (L'accord de propriete requiert
en general que soit amenage un certain pourcentage des terres ainsi affectees\.)
6\. Dans le cas des blocs situes sur des terres d'Etat a affecter au
developpement de plantations villageoises, comme pour le projet envisage,
le gouvernement peut egalement emettre des titres de propriete a l'intention
de paysans individuels\.
k"lNEXE III
Appendice 3
Page 2
7\. Dans le cas de petits exploitants qui, en ayant recours au credit
bancaire, plantent des arbres sur une partie de leur exploitation d~nt le
sol est regi par le droit coutumier, le gouvernement peut garantir la propriete
des arbres\. Ceci implique que la terre ne peut etre prise au proprietaire
des arbres tant qu'ils existent; mais le gouvernement ne peut emettre des
titres de propriete'qui entraineraient une alienation des terres appartenant
a\. la communaut e \.
8\. La meilleure garantie de recouvrement monetaire que la Banque
puisse obtenir est la responsabilite commune d'un groupe de paysans dont le
nombre ne soit pas inferieur a\. cinq, egalement responsables de leurs s
et de leurs cultures respectives\.
COTE Df IVOIRE ANNEn: III
Ta\.bleau 1
QUATRIEME PROJET PALMIERS A HUILE ET COCOTIERS
Echelonnement du nroJet et Besoins en perso~nel
APl AP2 AP3 Total
Programme de nlantation (en ha)
(a) Plantations de cocotiers 2,000 3,250 2,250 7,500
(b) Plantations de palmiers a huile 3,000 5,000 8,000
(c) Plantations villageoises de coco\. 200 550 1,250 2,000
(d) Plantations villageoises de pal\. a h\. 200 300 500
Total 2,200 7,000 8,800 18,000
Gestion du Sud ouest
Directeur regional * 1 1 1 1
Directeur financier * 1 1 1
Comptable 1 1 1 1
Secretaire 1 1 1 1
Employes de bureau 5 7 7 7
Chauffeurs 2 2 2 2
Gardiens 2 2 2 2
Total 12 15 15 15
Plantations de cocotiers
Chef de la plantation * 2 2 2 2
Assistants 2 4 4 4
Surveillants 2 3 5 5
Chefs d'equipes 8 18 22 22
Assistant administratif 1 2 2 2
Chef mecanicien 1 1 1
Employes de bureau, magasiniers 4 8 8 8
Infirmieres, assistantes sociales 8 16 16 16
:1ecaniciens et chauffeurs 12 27 27 27
Cuisiniers, gar~ons de menage, gardiens 12 21 21 21
Travailleurs sur Ie terrain 204 449 540 540
Total 255 551 b48 648
Plantations de na\.lmiers a huile
Chef de la plantation * 2 2 2
Assistants 2 6 6
Surveillants 2 8 11 11
Chefs dfequipes 12 41 55 55
Assistant administratif 1 2 2
Chef d fatelier 1 2 2
Employes de bureau, magasiniers 5 10 10
Infirmieres, assistantes sociales 8 16 16
~;1E;caniciens et chauffeurs 13 53 81 81
Cuisiniers, gargons de menage, gardiens 12 24 24
Travai!leurs sur Ie terrain
Total
300
327
1,oH
1,1
1,074
~
1,074
1,283
=
Pro~am\.me de ~lantations vil1a~eoises
Chefs de groupe 2 4 10 10
Chefs de section 1 2 2
Chauffeurs, mecaniciens 4 6 6
Gardiens 1 2 2
Total 2 10\. 20 20
* :ndique Ie personnel e~atrie
A\.1fNEXE I I I
Tableau 2
COTE D'IVOIRE
QUATHIEME PROSET PAL~EHS A EUILE ET COCOTIERS
Rendements Prevue !I
I\. PALMIEBS A h'UlLE
A\. Plantations industrie11es B\. Plantations vil1ageoises
Annee apres
la :p1a\."ltation M tonnes/ha ffb
4 4\.0 3\.5
C;
10\.0 9
fi
12\.0 12
7 16\.0 14
~ 18\.0 16
Q ainsi de suite 18\.0 16
II\. ~TO:r\.{ DE COCO
'000 noix/ha
5
0\.750 0\.'500
6
5\.0 1\.;\.500
7
14\.0 12\.500
8
18\. '500 17\.0
q 21\.0 18\.500
10 ainsi de suite 23 20\.500
IlOna suppose que 1es rendements eventue1s obtenus p~ 1es p1anteurs
~llageois seront d'environ 10% plus faib1es que dans les plantations
industrie1les a cause des standards d'entretien et de recolte moins
rigoureux\.
COrrE DI lVOlRE
QUA'l'RlEMlO: PROJET PALMlERS A BUlLE E'l' COCOTlERS
Rendements et Production annuelle
Previsions concernant les palmiers a huile et lea palmistes
Rende- Production Production Production
ment annuelle totale Rendement annuelle Production
nombre fob conformement annuelle de tot ale de totale de
Annee cUIDule dlha tonnes/ aux annees de en tonnes palmistes palmistes palmistes
plantee en production ~ plantation fob par t/ha en tonnes fob en tonnes
1\. PLANTA'l'IONS
1980: 3,000 ha 1911 3,000 4 ] 2 \.000 12,000 0\.150 lL5a 450
1981: 3,000 ha 1911 10 30,000 0\.410 1,230
5,000 ha 1918 8,000 4 20 ,000 50,000 0\.150 liO\. 1,980
1982: 3,000 ha 1911 12 36,000 0\.515 1,545
5,000 ha 1918 8,000 10 50,000 86,000 0\.410 2\.Q5Q 3,595
1983: 3,000 ha 1911 16 40,000 0\.690 2,010
5,000 ha 1918 8,000 12 60\.000 108,000 0\.515 ~ 4,645
1984: 3,000 ha 1911 18 51~ ,000 0,195 2,385
5,000 ha 1918 8,000 16 80,000 131 ,000
0\.690 1\.lli 5,835
1985: 3,000 ha 1911
5,000 ha 1918 8,000 18 144,000 0\.195 6,360
et ainsi de suite
jusgula 2005
II\. PLAN'l'ATlONS VlLLAGEOlSES
1980 200 3\.5 \.1illL 100 0\.130 2\.6\. 26
1981: 200 ha 1911 9 1,800 0\.310 14
300 ha 1918 500 3\.5 J\.Q5\.Q 2,850 0\.130 32\. 113
1982: 200 ha 1911 12 2,400 0\.490 98
300 ha 1918
500 9 \.2\.1ilil 5,100 0\.310 ill 209
1983: 200 ha 1911 14 2,800 0\.625 135
300 ha 1918 500 9 2\.700 5,500 0\.490 ill 282
1984: 200 ha 1911 16 3,200 O\.no 142
300 ha 1918 500 Ih ~ 1,400 0\.625 187 329
1985: 200 ha 1911
300 ho\. 1918 500 16 8,000 8,000 0\.110 355
et ainsi de suite
~
t-:I
jusquln\. 2005 ~
\.
ID
III
~
a
H
W H
H
ftJ;TNEXE I II
Tableau 4
COTE D'IVOIRE
QUA~IEME PROJET PAL~ERS A HUILE ET COCOT!ERS
Rendements et Production annuelle
Previsions pour 1es noix de coco, conra et de charbon de cooue
Production Production
Rende- annuelle sui7ant annuelle Production Charbon
nombre ment l' annee de tot ale en de copra de coque
d 'ha cumules '000 de plantation en :mi11iers a 1 tonne! a 250
e!; 'O~o\.:;\.uc"':\.; O~ '"" \. v %'/ \. '0
-'-x - ~ X'
~illie~~ ~~ ~Q~~ \.a o '"\.,\.: \.
\.
,Ot')f'\ !lob 5('\('\() no;",
I\. Plantations
1980: 2000 he\. 1976 2000 0\.750 1500 1500 300 75
1981: 2000 he\. 1976 5 10000
3250 he\. 1977 5250 0\.750 2438 12438 2487 622
1982: 2000 he\. 1976 14 28000
3250 he\. 1977 5 16250
2250 he\. 1978 7500 0\.750 1688 45938 9188 2297
1983: 2000 he\. 1976 18\.500 37000
3250 he\. 1977 14 45500
2250 he\. 1978 7500 5 11250 93750 18750 4688
1984: 2000 he\. 1976 21 42000
3250 he\. 1977 18\.500 60125
2250 he\. 1978 7500 14 31500 133625 26725 6681
1985: 2000 he\. 1976 23 46000
3250 ha 1977 21 68250
2250 he\. 1978 7500 18\.500 41625 155875 31175 7794
1986: 2000 he\. 1976 23 46000
3250 he\. 1977 23 74750
2250 he\. 1978 7500 21 47250 168000 33600 8400
1987: ~ ~~"::1JI:i t~ 75CO 23 172500 34500 8625
II\. Planta:ticns 'rillageoises
1980: 200 he\. 1976 200 0\.500 100 100 20 5
1981: 200 he\. 1976 4\.500 900
550 he\. 1977 750 0\.500 275 1175 235 59
1982: 200 he\. 1976 12\.500 2500
550 he\. 1977 4\.500 2475
1250 he\. 1978 2000 0\.500 625 5600 1120 280
1983: 200 he\. 1976 17 3400
550 he\. 1977 12\.500 6875
1250 he\. 1978 2COO 4\.500 5625 15900 3180 795
1984: 200 he\. 1976 18\.500 3700
550 ha 1977 17 9350
1250 he\. 1978 2000 12\.500 15625 28675 5735 1434
1985: 200 he\. 1976 20\.500 4100
550 he\. 1977 18\.500 10175
1250 ha 1978 2000 17 21250 35525 7105 1776
1986: 200 he\. 1976 20\.500 4100
550 he\. 1977 20\.500 11275
1250 he\. 1978 2000 18\.500 23125 38500 7700 1925
1987: e maturite 2000 20\.500 41000 8200 2050
PJl-:r:rEXE III
Tableau 5
COTE D' IVOIRE
QUATRIEME PROJET Pill-1IERS A HUILE ET COCOTIERS
Production d'huile de ualme et de ualmistes en COte d'Ivoire
de 1970 a\. 1985
Production de ffb
--1000 tonnes---
1/ 11
121Q\. J:2li 1980 1985
Plantations SODEPALL\1 95 473 613 901
Plantations villageoises hO 161 288 441
Total SODEPAL\1 135 634 901 1,342
Plantations privees 120 130 140
Total ffb 235 754 1,031 1,482
Euile industrielle I/ 43 162 227 326
Graines industriel1es 1/ 10\.6 33\.2 45\.4 65\.2
Note: Ia production en provenance de palmiers sauvages n'a pas ete prise e~ con
sideration etant donne que des chiffres exacts n'ont pu etre obtenus\.
1/ Comprend le projet actuel\.
2/ A un taux d'extraction de 21\.5% en 1975, 22% en 1980, 1985\.
l! A un taux d'extraction de 4\.4%\.
k\.'lJNEXE TV
Page 1 (a)
COTE D'IVOIRE
QUATRIE4E PROJET DE PALMlERS A BUlLE ET DE COCOTlERS
Le urogramme des ulantations villageoises
1\. Un systeme permettant de financer les plantations villageoises,
moyennant des prets a titre personnel consentis sans interets, fut introduit
dans le secteur des palmiers a huile au debut des annees soixante-dix\. Dans
le rapport d'evaluation du troisieme projet de palmiers a huile, il etait signale
que ce systeme n'etait pas destine a remplacer ou entrer en concurrence avec
un systeme de credit conventionnel, ne creait pas de precedents indesirables,
en raison de sa nature specialisee, et etait simplement une methode de
financement choisie par Ie gouvernement en vue d'atteindre le double but de:
(a) fournir des incitations suffisantes aux exploitants pour les induire a
diversifier leurs cultures en y ajoutant les palmiers a huile et (b) assurer
que Ie gouvernement obtienne un rendement raisonnable de son investissement
dans Ie programme de plantations villageoises\. Ces deux objectifs ont ete
atteints avec satisfaction; un element de don restreint, anterieurement
considere necessaire, a ete elimine du projet du sud-ouest\. Dans Ie cadre du
projet, les planteurs doivent vendre leurs produits a la SODEPAL~ et Ie prix
a la production est fixe a un niveau qui laissera une marge raisonnuble
u:\.le fois ces produits vendus sur le marche d' exportation\. Etant donne
qu'il est souhaitable que des conditions similaires soient appliquees a
toutes les pl~~tations dans le cadre du projet, Ie meme systeme vaudra
egalement pour les plantations villageoises de cocotiers\.
2\. Le credit consenti par la SODEPALM couvrira les couts directs
entiers correspondant a la mise en place des plantations villageoises, y
compris des avances monetaires a titre de compensation pour le travail que
fournit Ie cultivateur des annees 1 a 3, comme suit:
Plantations villageoises de
palmiers a huile cocotiers
------------FCFA!ha---------
Credit total 141\.000 208\.000
dont avances
monetaires 60\.000 50\.000
3\. La periode de remboursement s'etendra sur huit ans pour les
palmeraies villageoises, avec un differe de paiement de quatre ans; et sur
onze ans pour les cocoteraies villageoises, avec un differe de paiement de
cinq ans\. Ces termes refletent la difference entre les mouvements de fonds
propres aux deux types de plantations villageoises (voir Tableaux 1 et 2) et,
en particulier, la courbe de production plus lente enregistree par les coco
teraies villageoises\.
ANNEXE IV
2 (b)
COTE D'IVOIRE
QUATRIEME PROJET DE PALMIERS A BUlLE ET DE COCOTIERS
DISPOSITIF DE CREDIT
I\. PALMERAIES VILLAGEOISES
1\. Le tableau ci-dessous indique Ie cout de l'amenagement des terres
et la distribution du credit en nature et en especes a prevoir pour la
periode de quatre ans dans Ie but d'amener les palmeraies a huile villageoises
au stade de production:
Cout de developpement Annee 1 Annee 2 Annee 3 4
--------------(FCFA/ha)-------------
(a) Credit en nature 2\.400 2\.400
Cul~ure de couverture 2\.400 2\.400
Treillis metallique 14\.875 14\.875
Engrais 1\.925 5\.530 2\.800 4\.200 14\.455
Plants 39\.182 1\.918 41\.100
Transport 5\.200 240 240 240 5\.920
Main-d'oeuvre 1\.250 250 250 250 2\.000
Divers 250
Total 65\.082 7\.938 3\.290 4\.690 81\.000
(b) Credit en especes 38\.000 14\.000 8\.000 60\.000
Cout total 103\.082 21\. 938 11\.290 4\.690 141\. 000
Calendrier de remboursement
FCFA par annee Total partiel
Annee 6 4\.800 4\.800
Annee 7 17\.400 22\.200
Annee 8 a 13 19\.800 u8\.800 141\.000
2\. Les couts estimatifs totaux du developpement, etablis a 141\.000
FCFA/ha, sont a comparer a 76\.710 FCFA/ha pour Ie troisieme projet de palmiers
a huile (Pret 1036) ainsi que 117\.220 FCFA et 102\.050 FCFA pour les deux
projets precedents\. La hausse traduit la nature ardue du terrain qui
necessite davantage de journees-homme de travail pour la preparation des
terres (c'est-a-dire l'element credit en especes) et la majoration des
couts correspondant aux facteurs de production\.
3\. Les planteurs villageois defricheront les terres et fourniront
les outils necessaires a un cout estimatif de 3\.000 FCFA l'annee 1 du projet,
1\.500 l'annee 2, puis 750 FCFA chaque annee d'entretien suivante\. lIs se
chargeront egalement de la main-d'oeuvre requise pour l'entretien et la recolte\.
ANNEXE IV
Page 3
4\. A l'annee 5, les planteurs villageois acheteront des engrais de
leurs propres fonds, a raison de 4\.200 FCFA, et a partir de l'annee 6,
ils consacreront aux engrais la somme annuelle de 5\.600 FCFA\. Ces paiements
ajoutes au coat des outils (par\. 3) devront etre effectues a partir des
revenus obtenus du rendement (voir marge brute d'autofinancement et
previsions sur les revenus pour les palmeraies villageoises, Tableau 1)\.
5\. Les cultivateurs rembourseront des lors 141\.000 FCFA des annees
6 a 13\. Les plantations villageoises ne beneficient plus de la subvention
appliquee aux projets precedents\.
Affectations des recettes
6\. De 1973 jusqu'a recemment, la SODEPALM a accorde aux plantations
villageoises une prime de 4 FCFA par kg de fruits frais, ce qui, ajoute
au prix garanti de 4 FCFA/kg, procurait aux cultivateurs un revenu total
de 8 FCFA/kg\. Dans Ie cadre du projet envisage, Ie prix theorique s'etablit
a 8 FCFA/kg\.
7\. Le tableau ci-apres fait etat des estimations concernant les affectations
moyennes annuelles de la valeur d'un kilo de fruits frais, sur la base des
previsions de la Banque quant aux prix correspondant aux produits des palmiers
a huile:
Teneur des fruits frais
des palmiers (kg) (!\.g) (FCFA)
Teneur en huile 0,220 16,28
Palmistes 0,043 2,12
Revenu brut 18,40
Taxes d'exportation ~
Revenu net a la SODEPALN 17,53
Couts de la SODEPALM
Investissements et supervision 2,13
Collecte 1,21
Traitement et transport 3,41
Charges financieres 0,77
Disponibilite nette 10,01
Prix nour les n 1 anteurs villageois
Excedent FCFA 2,01
ANNEXE IV
Page 4
II\. COCOTERAIES VILLAGEOISES
L'element credit
9\. Le tableau ci-apres indique Ie cout correspondant a l'amenagement
des terres et la distribution du credit en nature et en especes durant la
periode de cinq ans que necessite la montee en production des cocotiers
villageois:
Cout du developpement Annee 1 Annee 2 Annee 3 Annee 4 Annee 5 Total
(a) Credit en nature
Culture de couverture 3\.000 3\.000
Treillis metallique 17\.000 17\.000
Engrais 4\.748 8\.544 16\.480 22\.656 18\.272 70\.700
Plants 41\.600 2\.080 43\.680
Transport 4\.295 2\.678 2\.678 2\.678 2\.678 15\.007
Main-d'oeuvre \. 2\.500 500 500 500 500 4\.500
Petit outillage et
divers 1\.000 1\.000 1\.000 800 500 4\.300
Total 74\.143 14\.802 20\.658 26\.634 21\.950 158\.187
(b) Credit en especes 34\.000 7\.000 5\.500 3\.000 50\.000
108\.643 21\.800 26\.158 29\.634 21\.950 208\.187
Calendrier de remboursement
FCFA par annee 'I'otal Dartiel Total en FCFA
A\.nnee 7 12\.500 12\.500
Annee 8 J\.7\. coo \.300
AImee :; 18\.500 48\.000
Annee 10 20\.500 68\.500
Annees 11 a 21\. 500 129\.00 197\.500
Annee 17 10\.500 208\.000
10\. Les couts estimatifs globaux du developpement, 208\.00C FCFA/ha
sont a comparer a 188\.100 FCFA/ha pour Ie second projet de palmiers a
huile (Pret 759), eva1ue en 1971\. La hausse reflete la nature diffici1e
du terrain qui requiert davantage de journees-homme de travail pour la pre
paration des terres (c'est-a-dire l'element credit monetaire) de meme que
l'accroissement de coat des facteurs de production\.
11\. Les planteurs villageois de~richeront les terres, fourniront les
outi1s necessaires a raison d'un cout estinatif de 1\.000 FCFA des annees
1 a 3, 800 FCFA a l'annee 4, puis 500 FCFA chaque annee d'entretien suivante\.
lIs assureront egalement la main-d'oeuvre requise pour l'entretien et la
reco1te\.
A\.1rrfEXE IV
Page 5
12\. A ir de l'annee 6, les planteurs villageois consacreront 22\.628
FCFA de leurs propres fonds aux engrais a acquerir pour chacune des annees
suivantes\. Ces paiements, joints au cout des outils (par\. 3), se fe~ont
a partir des revenus obtenus du re~ceEent\. (Voir Previsions de la marge
brute d'autofinancement et des revenus pour les eurs villageois de
cocotiers, Tableau 2)\.
13\. Les cultivateurs rembourseront cette fois 208\.000 FCFA de l'annee
7 a l'annee 17\. 11 n'y a plus de subvention aux planteurs villageois comme
lors du projet anterieur\.
Affectation ces recettes
Lors du second projet de cocotiers, la SODEPALM avait prevu de paye~
les planteurs villageois 5 ?CFA par noix de coco\. Le prix est passe depuis
a 7 FCFA/noix; dans le cadre du projet envisage, le prix de 7 FCFA/noix a
ete retenu\.
15\. Le tableau ci-apres indique l'affectation estimative, annuelle et
:t:loyenne, de la valeur de 1\.000 noix de coco, sur la base des previsions de
la BIRD concernant les prix du coprah:
Valeur economiaue de 1\.000 noix de coco
(y compris la collecte et le traitement)
CoUts de la SODEPALM
Investissements et supervision 1\.662
Charges financieres 585
2\.247
8\.696
Prix garanti aux ulanteurs villageois 7\.000
Excedent
Voir Tableau 4, Annexe X (Valeur nette d'une tonne de coprah, 54\.715
FC::')\., divisee par 5\.000 noix)\.
CO'!'E J)' IVOIRI!:
QUATRIEME PHOJE'I' PAI\.MIEIlS A HUILE ET COCOTTERS
Plantatj OilS villageoises de palmiers Ii huile
Previsions concernant 111\. marge brute d'autofinancement et de revenu (1 ha\.)
(en FeFA)
Annees !Dnlies
Annee 1 !Dnlie 2 !Dnee 3 Annee 4 !Dnee 5 !Dnee 6 !Dnee 1 8 a 13 14 il\. 28
A\. Revenu
(a) Credit en especes 38,000 14,000 8,000
(bl Ventes a SODEPALM (tonne en ffb) \.hL ~ lL_ 14\.5 16
\.H
Valeur a 8 FCFA/kg ffb 28 1 °00 76,000 96 aQQ\.Q Hl)\.OOO !g8,goo 'l2& \.QOQ
Revenu Total 38~qOO 14,000 8\.0011 28\.000 76,000 96,000 11~00\.R 1&~LOOO 121hQ\.Q\.1l
B\. Decaissements
(al Petit~ outils 3\.000 1\.500 750 750 750 750 750 750 750
(bl Engrais 4\.200 5,600 5\.600 5,600 5,600
(cl Remboursement du credit 4\.800 17\.400 19,800
TOtal des decaissements
C\. HEVI!:NU HE'l' EN ESPECES
3,000
=--==
35\.000
1,500
=-
12\.500
-=-
750
7,250
~
14m
750 4,950
-===-
71\.050
11,150
z:::=a
84,850
23,750
---\.22 \. 2~9
26\.150
lal\.SSO
-
6,350
l\.21\.C>SO
D\. Hombre de Jours de travail necessaires
(a) Defrichement des terrains 100
(b) Plantation 21 3
(c) Entretien 24 48 30 25 22 22 21 21 21
(d) Recolte __7 29 31
\.-!2\. ---1i 31
'I'otal du nombre de Jours de travail
E\. Hevcnu par hOIllllle Jour
145
==-==
241
==-=
51
245
===
30
242
- 32
852
~
41
1,733
-- 46
1,845 1,845
50
1\.959
52 52
2,339
l»"t
fa
\. !;;/
C(1f'F: l)' I VO lll~;
y!1A'1'1l11'~'IE I'HO\.JJ,\.'r I'AU~l EIIB A IU) I Lt E'I' COCOTI F;H~;
Plunto\.t\.ioH!:1 villu\.l3;eojst:ti de cocotiers
,rrevislons Cvnce~nant lR h,nr£~e ttrut\.e ~,&"to"'~nt'lnrem';n\. t":": "'e :--~venu (J hu\.)
(en Fcn)
Annees Anne"\.
Annee 1 Annee 2 AImee 3 Auuee It Ann~<: 5 Annet! /) Anne~ '( AImee B Anoe" 9 Annee 10 11 ii 1(, Anne\., 1'/ l6 ii 29
A\. R~vt:ou
WCredit en "SpeC,," 34 ,500 1,000 5,500 3,000
(h) V"nt\.,a Ii\. SODt:I'AJJ4 (1000 nob) 500 4,500 12,500 17 ,000 18,500 20,500 to~ 1°,500 20500
Valeur ii \.( FCfA/noh ),500 n,soo 87,500 119,000 129,500 143,500 1 ~3,500 1 3,500 1 &3:500
Rtlvcnu 'j'ollil 7,000 5,500 1,000 3,5QO 31,500 87 \. 500 119,000 129\.l22 143,500 lli500 !~3,500 I ~J, 500
Il\.
1,000 1,000 1,000 800 500 500 500 500 500 500 5000 500 500
(I,) Bugr«ia 22,688 22,688 22,688 22 ,688 22:,688 22,688 22,688 22,688
(e:) Hcmvourtiemcut du credit 12,500 17 ,000 18,500 20,500 21,500 10,500
1'olt;\.] d~s decai sfU:mcnt6 1,000
~ ~ -\.!!22 ~ 23,188 35,688 40,188 41,688 43,688 44,688 n,688 23,188
c\. IIEVI!:NU NJ,\.'r I!:N I!:SI'J,\.~:t;1l 31,500 6,000
~ ~ ~ ~ \.11\.!!ll 78,812 87,812 99,812
~ ~ 120, lI2
0, Hombre dt: Joura de travail neceasai rea
(6\.) D6rrjcherru:!nt des terrains 100
(h) PlftIltaUon 20 10 5
(e) Entret 'en 12 15 12 8 8 8 1 7 7 7 1 7 7
(d) Recoite et transport 9 25 3~ 38 41 43 4) 43
"-'-
TotlLl du uOUlbre de J',Ul'9 de tr"vail--22: ~ --22\. 8
--!\. 11 42 48
~ ~
1<:\. !tevenu par RQaat Jour 254 265 3H 1,619 1,996 ~ 2,406
:;~
tr ~\.'"
:8
I:
"
r\.) ~
ANNEXE V
Page 1
COTE D'lVOlRE /
QUATRlEME PROJET DE PALMIERS A BUlLE ET DE COCOTlERS
Secteur des palmiers a huile
lnvestissements industriels et couts du traitement
A\. Production
1\. Le tableau ci-dessous indique la quantite en tonnes de fruits frais
qui devrait etre traitee chaque annee:
Palmeraies Pa1meraies
industrie11es villageoises Total
1980 \.12\.000 700 12\.700
1981 50\.000 2\.850 52\.850
1982 86\.000 5\.100 91\.000
1983 108\.000 5\.500 113\.500
1984 134\.000 7\.400 141\.400
1985 et ensuite 144\.000 8\.000 152\.000
2\. La production de 1980 (12\.700 tonnes) ne sera pas traitee etant
donne qu'elle ne justifie pas d'avancer l'investissement industriel
considerable d'un an pour une si petite quantite\. Comme il n'est pas
faisab1e de la transporter a une autre huileri~ de 1a SODEPALM (les
fruits frais doivent etre traites dans les 24 heures qui suivent leur recolte)
et, en tous cas, elle ne justifie pas 1es couts du transport, elle sera
vendue sur le marche local\. Sa valeur, ou revenu obtenu de sa vente, n'a
pas ete prise en consideration\.
B\. Investissements industriels
3\. Deux hui1eries sont prevues, l'une a Iboke et la seconde a Dewake\.
La premie~e huilerie dont le fonctionnement debut era en 1981, aura pour commencer
une ligne de 20 tonnes/heure (c'est-a-dire 66\.000 tonnes de fruits frais
par an)\. Une ligne supplementaire de 20 tonnes/heure y serait ajoutee en
1982\. L'annee et les couts correspondant a ces deux lignes se presentent
comme suit:
Premiere ligne: 1980, cout de 1\.000 millions de FCFA 11
Deuxieme ligne: 1981, cout de 600 millions de FCFA
La seconde huilerie de Dewake fonctionnera en 1983, dotee d'une seule ligne
de traitement a raison de 20 t/h\. La capacite totale de traitement sera
-lI En termes courants de 1980\.
Mm~EV
Page 2
par consequent de 198\.000 tonnes/an lors de la pleine production et couvrira
la production globale de la zone du projet\. Au cas ou Ie gouvernement devait
realiser l'amenagement additionnel de 4\.500 ha en 1979 (3\.000 ha de plan
tation industrielles et 1\.500 ha de plantations villageoises), une seconde
ligne de traitement, a raison de 20 t/h, serait alors ajoutee a l'huilerie
de Dewake\. L'investissement de 1\.000 millions de FCFA a consacrer a l'huilerie
de Dewake est prevu pour 1982\.
4\. Ces deux huileries ont une duree de vie de 12,5 annees, mais cette
periode a prudemment ete reduite a 10 ans\. Les couts de traitement ont
ete majores, a partir de la dixieme annee de fonctionnement, de fa~on a
inclure une provision pour renouvellement\.
C\. Couts de traitement
5\. Le cout moyen par tonne de fruits frais traites dans diverses
huileries de la SODEP~~ s'est etabli a 2\.000 FCFA, atteignant 2\.500 FCFA
dans les huileries plus anciennes pour tomber a 1\.737 FCFA a Dabou et 1\.722
FCFA pour l'huilerie d'Ehana, la plus recente\. Le cout moyen de 2\.000 FCFA
a ete retenu pour les nouvelles huileries du sud-ouest, ce qui donne 9\.000
FCFA par tonne d'huile traitee\.
6\. Le taux de rendement economique, a partir de 1989, tient compte
d'une somme de 6\.500 FCFA par tonne d'huile traitee de fa~on a couvrir
une prOV1S10n pour renouvellement des huileries ce qui donne comme cout
de traitement total 15\.500 FCFA par tonne d'huile\. 11
II L'investissement de 2\.600 millions de FCFA et 45\.000 tonnes d'huile
annuellement traitees pendant 10 ans, plus les charges d'interet\.
ANNEXE V
Tableau 1
COTE D' IVOIRE
QUATRIm,1E PROJET PALHIERS A HtfILE ET COCOTIERS
COUTS DE TRANSFORMATION
Nb\.tota1 Cout Nombre Cout Total des
de tonnes a 9000 total a 13,750 couts vus
d'hui1e FCFA/t de tonnes FCFA/t d'usinage d'ordre
de \.palme
\.,
(en m\. de \.copra
\.,
(en m\. m\. de
Annee us~nee de FCFA) us~nee de FCFA) FCFA riel TOTAL
1980 320 4 4 2 6
1981 11,627 105 2,722 37 142 91 213
1982 20,042 180 10,308 142 322 195 527
1983 24,970 225 21,930 302 527 264 791
1984 31,108 280 32,460 446 726 609 1,335
1985 33,440 301 38,280 526 827 800 1,627
1986 33,440 301 41,300 567 868 959 1,827
Taxes locales: 10%
11 Ca1cule a 7%/an commengant en 1976
ANNEx:E V
Tableau 2
COTE D' IilOIRE
QUATRIEME PROJET PAL\.\fIERS A BUlLE ET COCOTIEFS
SECTIDR COCOTIER
Couts de transformation
I\. Copra
,
Un four tr~~sforme 11,000 noix/jour, pendant 300 jours/~~ ce qui donne
un total de 3,300,000 noix et qui produisent 660 tonnes de copra\.
Les investissements sont les suivant:
Cout du four a copra 5,750\.000
H~~gar pour 1'emmagasinage 2,000,000
Logement pour 1e chef 815,000
8,565,000
Vie =15 annees donnant une production de 9,900 to~~es de copra
Cout/tonne de copra produit FCFA 865
Mai!l d'oeuvre 1 chef, FCFA/an 550,000
30 ~oeuvres a 180,000 FCFA/an 5,400,000
TOTAL 5,950,000 = par tOIL\.'1e 9,015
Trans'Dort Ito!"\.!!e 2,000
Outils machettes, bicyc1ettes, etc\./tonne 350
Frais de :onctionne:::nent y compris l'e!ltretien 330,000 FCFA/c\.n 500
~ifise en sac :8 sacs/tonne a 50 FCFA 900
TOT\.~/~onnes en FCFA 13,630
\.41ITlEXE V
Tableau 2 (suite)
Arrondi a l3\.750/tonne
II\. Charbon
Un four transforme environ 2500 coques par jour, qui produit envircn
120 kg de charbon ou 35 tonnes/an\.
Le coUt d'un four s'eleve a 300,000 FCFA et durera 3 ans\.
Le cout d'investissement par tonne de charbon est done: FCFA 3,000
Le transport et les petits outils s'elevent par tonne a~ FCFA 1,500
La main d'oeuvre est estimee a 10 \.
hommes jours/tonne a ; FCFA 6,000
La mise en sac de 50 kg a 240 FCFA/sac s'eleve ~ar t ?CFA 4,800
L'e~agasinage et autres frais divers FCFA 1,134
Cout total/tonne ?CFA 16,434
curt: Il' I vo I~'t~:
Q!lA'J'IlH~ ~
I'HOJ\. r I'ALMH:Rl; A !lUlI\.!-; E'I' cocO'rn!!!!\.
ReCtil') tul tit ion de:\.! Cfiuts au pro\.lct
(mi1lionti \.'C\.'JI)
ill!\. 1971 1978 Total lltli\.lH~:I
API Al~" AP3 l\. Coat
j PI,AN'rA1'1 OMS [)~ COf'(),],IERS
Pre-parH-tion dt!9 terrainl\.i el dt:ti pi:it\.eH d'ucce::s: 775,630 480,690 151,620 1,408,140 75 1,056,105 12 168,911
CoOts du develoPPclQcnt du terrain 166,506 113,710 312,269 792,485 40 316,994 9 11,124
CoUte ,h\. devdoppeUient deB plaullltions 51,694 98,114 104,482 256,490 52 132,120 8 19 ,509
InveatissenteuL6
( \. ) U/illm"nta 213,438 37,438 270,816 60 162,526 15 40,631
(I» Vehicules 33,800 42,500 8,100 84,400 90 75,960
(" ) Mlitiiri el !P,BOO 74,600 158,400 70 110,880 15 \. 21,160
Sou\. total l\.llJ,43!! \.u~4~\.4n V:l70\.791 II 1 \.855,185
l!\. 124,201
11\. "[\.AN'rA'rIOHS I'E I'AI\.MfERS A HlJlU:
Preparation dea terrainu: et deB Plbl\.ea d,'f:1('ces 405,900 819,450 '47,100 2,232,450 75 1,614,338 12 261,/194
CoUta du deveJoppement du 88,863 292,429 300,447 681\.739 30 204,522 1 47,722
CoUtu du develolipement des pltultatJOna 10,270 104,065 167,340 281,615 54 151,591 8 21,917
lnvetitis\.uements
lI!i\.timents 77 ,563 357,375 237,500 672 ,438 60 401,461 15 100,866
Vehiculeu 42,300 113,500 79,400 235,200 90 211 ,680
70 104 440
1ii~'~~
M teriei
\. 74\.600 74\.600 149,200 15
Ill,
Vulgaris6tion
SoUB total
PHOGHAMMf: DE 1'1JlNTA"IOlIS VILl\.Am:OfS\.-,S
Personnel
624\.896
1,200
l\.!l?! \.~19 1\.197,531
6,745 14,170
m,7b7
22,115
!? 2,'~!:O;&
-
it ---'-
I, 106
S
loveetiss'f1'I:ents 19,000 17,625 36,625 :;0 10,113 12 4,'95
Prete auX plltnt-eurs - fl\.tcleurs de production
- avances en
total
eSpeCtl'B
11,,929
6,800
56\.755
27,975
126,065
62,275
220,13S
197,149
\. 91,050
40
'78'
79,559 9
lzm
SOUH 22,929 110,475 353,519 97,812 \.1\. 21,440
I V,, GE~WlON Oil SUD OUt:!>")'
Pertionnel 20,930 25,500 25,500 11,930 65 46,150 5 3,591
Depcnstl'tI de fonct\.ionnement 5,000 7,000 9,000 21,000 50 10,500 15 ~,150
Invt\.;'stiasementa
( \. ) Bl!\.timentB 21,150 41,750 6,000 69,500 60 41,700 15 10 ,425
(1)) V'hicuJe\. et materiel 7,900 9,900 2,000 19,800 60 11\.820 15 2,970
55,580 84,150 42,500 182,2JO
Sou\. totd !! 110,110 l!\. 20\.142
1,816,835 3,259,496 2,682,931 7,75',262 61 4,815,861 n 626,561
1/ 151,637 254,920 192,964 599,521 66 196,586 12 11, 94~
""'H,se attendu" dea prix £7 \.l\.!!!\.lli 616,322 1111,273 l,522\.!t16 63 998\.0:11 11 1 15,172
Ill' 1,075\.682
EfiTlMA'l'WII COUT 'I'UTAI, I)IJ I'RO"lt"r ?,O1!6,651 4\.150,738 l,l11,!lAQ 9,9~!,W\.! 11 ~1i!Uh!IDIJ l!\.
17~ pour 1"8 i \.paVUB d'ordre materiel Bur 1 \. prepar"Uoll du terrain\. piBteti d':tcces t:t
- Latimenls\. ~~ sur lOllS jt'!> tlutres coOt\.s a sauf les salalttHi\.
~)I Leu lmpr'evuu pour hausse des prix ont eU~ calculchl sinal;
- (a) J'rel1arttlion du terrain, rOlltes el 1Iitimente 11% eo 19"(6 t:l 12:: erwuite;
(l» Vel\.1cul"\. et materiel 9:t en 1916 tot B:t Cflsuit"i
(c:) Pour tOUB 1~6\. autre\.:> coOt:> IO%/ttn\.
~~
J->,l!
Cf!S irupreV\14 ant eli~ caleuJ es ::iour J t:8 estirnutions du cout de ba\.se J\.ilu~ les ililprevu::;
d1nrdr f fhtlteriel d r&:i&OJI fill pu\Jl'ct!ntttt(e t\.ota} dl" chuque annee lUultiplie pur 50%
: f;j
du ,O<JllrCc'lIttt\.,u:\.e de 1 t~\.nnet~ prece\.icnte\.
"
i"' ~1
COTE D'IVOIRE
QUATRIEME PROJET PALMIERS A BUlLE ET COCOTIERS
Couts de la Preparation du terrain et du deve10ppement
I\. PLANTATIONS COCOTIERS
Devises Taxes
Cout par ha (en FC}<'A) Ie Annee 2e Annee 3e Annee TOTAL L Coilt % Coat
-
A - Defrichement 6es terrains 141\.690
B - Pistes d' acces 44,460 6,000
Sous total 186\.150 6,000 192,150 15 11~4 \.1l3 12 23\.060
Couts annuels Eour 1a EreEaration des AP 1 AP 2 AP 3 TOTAL
terrains (en millions de FCFA)
1916: 2000 ha 312\.300 12\.000 384\.300
1911: 3250 ha 403\.330 201\.658 604\.988
1910: 2250 ha 212\. 2 32 139\.620 418\.852
Total des coUts pour la pre
paration des terrains 112\. 630 480\.890 151\.620 1,408\.140 15 1,056\.105 12 168\.977
C - Couts de deve\.1oppement par ha Ie Annee 2e Annee TOTAL
3e Anne\.e -
(a) Main d'oeuvre sur Ie terrain 13,150 8,000 8,000 29,150 5 1,488
(b) Cout de transport 1,010 945 945 2,960 80 2,368 10 296
(c) Plants 41,600 2,080 43,680 15 6,552 10 4,368
(d) Engrais 4,148 8,5 1
14 16,480 29,112 85 25,306 10 2,911
(e) Grillage 11 ,000 11\.000 85 14,450 10 1,100
(r) Plants de couverture 3,000 3,000
(g) Petit materiel, etc\. _2~OfJ5 _2,000 2,000 6,0 8 5 15 4,565 15 913
Sous total 83 2 253 21 2 569 212425 132 z241 40 53 1 241 9 1l,142
Couts annuels de deve10PEement (en AP 1 AP 2 AP 3 TOTAL
I"illions fte 1i'('li'JI\.)
--
1916: 2000 ha 166\.506 43\.138 54\.850 264\.494
~
1-3
1911: 3250 ha 210\.512 10\.099 340\.611 ~
1918: 2250 ha 181\.320 181\.320 \.
/l)
III f;1
~
'l'otal des coilts de developpement 166\.506 311_110 312\.219 192\.485 40 316\.994 9 11\.324 I\)
<
H
COTE D'IVOmE
QU!l\.-'rHll~M[': PRO,JE'r PAr\.Mn~HS A BUlLE E'l' COCO'l'IlmS
coats tie 1a Preparation du terrain et du deve10ppement
II\. PLAN'I'A'l'IONS m~ PALMn!nS A IHIILJt;
Devises Taxes
_Ie Annee 2e Annee 3e Anne~ TOTAL % Coflt % CoUt
Cout par lin (~n FCFA)
A - Del'riehement des terrains 102,1100 ,200 153,600
B - PisLes d' 32,900 16,h5 0 119,350
Sous total 135,300 61,650 202,950 15 152,213 12 21t ,354
Cants annuels pour ] a preparalion des AP 1 2 \.AP\.l 'l'OTAL
terral ns (ell millions de FC:F'A)
1977: 3000 ha 405\.900 202\.950 608\.850
1978: 5000 ha 616\.500 318\.250 1\.014\.750
1979: 3000 ha 608\.850 608\.850
Sous total 1
105\.900
i
947 100 \.
2 , 232 It5 15 12
C - Couts de ,leveloppement par lia Ie Annee ~'e
\.:\.:\.;;\.;\.=:\.:\.;\.::: 1e Annee 'fOTAL
(a) Main d 'oeuvre sur Ie terrain 13,500 23,000 10,000 "6,500 5 2,325
(b) Coflts de transport 1,156 5,638 2,291 9,085 80 7,268 10 909
(c) Plan ts ' 11',505 1,918 16,1123 15 2,lt63 10 1,6112
(d) Grillage 1",875 II, ,815 85 12,61 lt
t 10 1,1188
(e) Engrais 1,925 5,530 1,455 85 6,331 10 1"6
(i') Plants de couvertlire 2,ItOO 2,ltOO
(g) Petit materiel, et\.c\. 460 230 15 120 15
Sous total 118,108 19,969 9'(,698 30 29,"32 1 1,254
Coflts annuels de AP 1 AP 2 'l'OTAT\.
1977: 3000 ha 88\.863 11t11\.3211
AP 3
~
t-3
,I-'
ro
§
59\.901 {ll f;j
1978: 5000 ha 11,8\.105 21
10\.540 r::
--- WH
-4
']'otal des caflts de developpelrlellt 88\.863 292,1129 300,11 681\. 30 204 7 41\.122
COlrE D' IVOIRE
QUA'l'RmMl'~ PRO\.JET PALM:nmS A nUILE ET COCOTIEI'S
':::oilts d' exp10itat ion des plantations industrie11 es
(en '000 FCFA)
Devises Taxes
API \.AP2 AP3 Total % Coilt % Cout
I PLJ\wrA'\.rIONS DE COCOII'IERS
(a) Salaires du personnel
(i) GLlKE 1/ 36\.810 30,600 30,195 91,605 40 39,042 5 I\. ,880
(i i ) NERO 2\.7 32,055 34,100 66,155 40 26,462 5 3,308
(b) Transport 9,52 2 21,128 21,128 51,178 80 41,422 10 5\.118
(c) Divers 7,362 12\.531 12,859 32,152 15 24,564 15 I\. ,913
(d) Entretien des batiments 21 2,000 6,200 8,200 15 1,230 15 1,230
'rotal des couts 53,694 98,314 101 \.482
, 256 2 490 52 1322120 8 19\.509
II PLANTATIONS m: PALMIERS A HUILE
(a) Salaires du personnel
( i) IIlOKE 3/ 6,100 53,540 49,835 109,415 40 43,190 5 5,414
(ii )DE'WAKE-\.!!/ 5,510 49,"90 55,060 40 22,024 5 2,153
(b) Transport 2,950 32,235 42,450 17,635 80 62,108 10 1\.164
(c) Divers 1,220 11,820 19\.865 32,905 15 24,619 15 4,936
(d) Entretien des batiments i/ 900 5 2 1 00 6 1 600 \.!2\. 990 15 990
~
'-3
Total des couts 10,210 104,06~ 161,340 2~:L,615 54 153,591 8 21,911 ~
I-' ~
~
(I)
~
<:
1/ Voir tableau 5 pour Ie detail des coilts de la plantation de GLlKE +:" H
2/ Voir tableau 6 pour Ie detail des coilts de la plantation de NERO
3/ Voir tableau 1 pour Ie detail des coilts de la plantation d'IBOKE
4/ Voir tableau 8 pour Ie detail des coilts de la plantation de DEWAKE
if Suppose ~tre 1% des coUts des batiments
annee et 3% pour les annees suivantes\.
1a premi~re annee, 2% Ie 2e
COTE D'IVOIRE
Quatri~me projet palmiers i huile et coco tiers
CoOts ~exploitation des plantations industrielles
CoOts du Personnel (en 1000 FCFA) - Glike
I
Cocoteraie de Glike "
Type de Salaire
Description logement annuel API CoOt AP2 CoOt AP3 CoOt Total
Chef de plantation A 6,500 2 13,000 1 6,500 1 6,500 26,000
Assistant B 3,500 2 7,000 2 7,000 2 7,000 21,000
Surveillant E 550 2 1,100 2 1,100 2 1,100 3,300
Chef d'equipe F 135 8 1,080 11 1,1185 8 1,080 3,6 4 5
Adjoint administratif B 3,500 1 3,500 1 3,500 1 3,500 10\.500
Employe de bureau F 1110 3 1,230 3 1,230 3 1,230 3,690
Magasinler E 320 1 320 1 320 1 320 960
Inf:1\.rmier D 8110 1 8110 1 81,0 1 8ho 2,520
Aide infirmier E 600 3 1,800 3 1,800 3 1,800 5,1,00
Assistantes soeiales D 240 I, 960 I, 960 4 960 2,880
Mecanieiens et Chauffeurs F' 260 12 3,120 14 3,640 14 3,640 10,400
Cuisiniers F' 330 2 660 1 330 1 330 1,320
Gart;ons tie menage (boys) G 305 5 1,525 I, 1,220 II 1,220 3\.965
Gardiens G 135 5 675 5 675 5 675 ~025
CoOt total ('000 FCFA) 36,810 30,600 30,195
212 60 2
0-3 i;;
~
I-'
ro
~
III ~
~
\J1
-<
H
AJ\.'rnEXE VI
TableR\.ll 6
COTE D'IVOlRE
guatrieme 2rojet 2a1miers a hui1e et coco tiers
Couts d'e!E1oitation des 2lantations industrie1les
Couts du Personnel (en 1000 FCFA) - Nero
Cocoteraie de Nero
Ty-pe de Sa1aire
Description Lo~ement \.Annuel AP1 Cout AP2 CoOt Total
'000
Chef de plantation A 6,500 1 6,500 1 6,500 13,000
Assistant B 3,500 2 7,000 2 7,000 14,000
Surveillant E 550 1 550 3 1,650 2,200
Chef d'~uipe F 135 7 945 14 1,890 2,835
Adjoint administratif B 3,500 1 3,500 1 3,500 7,000
JiecanicienR c 2,500 1 2,500 1 2,500 5,000
Employe de bureau F 410 3 1,230 3 1,230 2,460
Magasinier E 320 1 320 1 320 640
Infirmier D 840 1 840 1 840 1,680
Aide infirmier E 600 3 1,800 3 1,800 3,600
Assistantes socia1es D 240 4 960 4 960 1,920
Mecaniciens et Chauffeurs F 260 13 3,380 13 3,380 6,760
CUisiniers F 330 1 330 1 330 660
Gar90ns de menage (boys) G 305 5 1,525 5 1,525 3,050
Gardiens G 135 5 67 2 5 675 1 2 350
Cout total ('000 FCFA) 32,055 34,100 66,155
COTE n'IVOIRE
Q~atrieme projet palmiers a huile et cocotiers
Couts d'exEloitation des Elantations industrielles
Couts du Personnel (en 1000 FCFA)- Iboke
d'IBOKF\.
Type de Salaire
Description logement annuel API Cout APZ Gout Al'3 Cout Total
Chef de la plantation A 6,500 2 13,000 1 6,500 19,500
Assistant B 3,500 2 7,000 3 10,500 17,500
Contremaitre E 550 2 1,100 6 3,300 5 2,750 7,150
Chef d'equipe F 135 12 1,620 31 4,185 26 3,510 9,315
Adjoint administratif B 3,500 1 3,500 1 3,500 7,000
Chef d'atelier B 3,500 1 3,500 1 3,500 7,000
Employe de bureau F 410 4 1,640 4 1,640 3,280
Magasinier E 320 1 320 1 320 640
Infirmier D 840 1 840 1 840 1,680
Aide infirmier E 600 3 1,800 3 1,800 3,600
Assistantes sociales D 240 4 960 4 960 1,920
Mecaniciens et Chauffeurs F 260 13 3,380 41 10,660 43 11,180 25,220
Cuisiniers F 330 1 330 1 330 660
Gar~ons de menage (boys) G 305 6 1,830 6 1,830 3,660
Gardiens G 135 5 675 5 675 ~350
Cout total ('OOO FCFA) 6,100
53,540
49,835
l09~475
~
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III
~
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COTE D' IVOlRE
Quatrieme projet palmiers a huile et cocotiers
Couts d'e!ploitation des plantations industrielles
Couts du Personnel (en 1000 FCFA) - Dewake
Palmeraie de Dew-ake
Type de Salaire
Description logement annuel AP2 Cout AP2 Cout Total
'000
Chef de la plantation A 6,500 1 6,500 6,500
Assistant B 3,500 3 10,500 10,500
Contremaitre E 550 2 1,100 6 3,300 4,400
Chef d'equipe F 135 10 1,350 29 3,915 5,265
Adjoint administratif B 3,500 1 3,500 3,500
Chef d'ate1ier B 3,500 1 3,500 3,500
Employe de bureau F 410 4 1,640 1,640
Magasiner E 320 1 320 320
Infirmier D 840 1 840 840
Aide infirmier E 600 3 1,800 1,800
Assis tantes sociales D 240 4 960 960
Mecaniciens et chauffeurs F 260 12 3,120 38 9,880 13,000
Cuisiniers F 330 1 330 330
Garc;ons de menage (boys) G 305 6 1,830 1,830
Gardiens G l35 5 675 675
Cout total ('000 FCFA) 5,570 49,490 55,060
COTE D'IVOIRE
Quatrieme projet palmiers a huile et cocotiers
INVESTISSEMENTS - RESUME
(en '000 FCFA)
Devises Taxes
~ AP '3 Total % Cout % Cout
I Plantations de Coco tiers
(a) Vehicules 33,800 42,500 8,100 84,400 90 75,960
(b) Batiments 233,438 37,438 270,876 60 162,526 15 40,631
(c) Installations et materiel 83\.800 74\.6QQ 1,58,40Q 110,880 li 23\.760
TOTAL 117,600 350,538 ~5, 538 513,676 68 3~2~366 12 64,391
II OIL PALM ESTATES
(a) Vehicules l12,300 113\.500 79,400 235,200 90 211,680
(b) Batiments 77 ,563 357,375 237,500 672,438 60 403,463 15 100,866
(c) Installations et materiel 74,600 7ll,6Qo 200 70 104,440 1 22,380
TOTAL 119,863 545,475 391,500 1,056,838 68 719,583 12 123,2 l16
=
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COTE D'IVOIRE
Quatrieme projet palmiers a huiles et cocotiers
INVESTISSEMENTS
1 I\. V!h_~c;ule~
( en I O(jO FCFA )
Camion 617t Tracteurs 6,)1IP St~1ti()n (-:;::<)'on I\lI1iJul:mce Berlines
FCFA 4,100 FCFA2,700 FCFA 1,8(10 FCFA 2,500 FCFASOO 11)76 1~78
,
\.;: ';\. ~
Plantations de cocotiers
(3) GLlK\.E 1976 4 3 2 1 4 33,800
1977 2 5,400
(L) ~mhQ 19n 5 3 2 1 3 37,100
i (n 8 3 _~\.l\.!OO\.
SOlls-total 9 11 4 2 7 42 500
_:::-2\. _ _ ~ \.LI00
=
B\. Plantations de palmiers a huile
(a) IBOKE 1976 9 2 42,300
1977 8 12 2 1 5 75,300
1978 1 1 6,500
(b) DEWAKE 1977 8 2 38,200
1978 11 2 5
SOlls-total l\. 10 1\.2 1 300
TOTAL If 3 39 8 L~ 7~10Q '!_~\.90Q ~7 ,5l10
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lI'A'II!!!s:1!"_!Jf\.~1Ll' f\. !\.:: i_I_F_\.H_0_\.6\.llC!\.!\.I~\. -"f\.,-,"I'--"l'",O",C;;:\.O'c:,1 !:~\.'l
\. ~!~!\.~~1':'~e t!t cu(:U; ~~::\.j~H\.trwtj\.f\n
(~fl hlilli6nu JA t:VA)
Cout P!\.MI1ATIOlIS DE PAU>HERS A lIUH,!':
1ll:~;CH lI"j' HIli tmit\.nire PI\.ANTATTOII 1)'lI'OKE rl\.A\.N'l'ATIOtI DE DFWAICE
'i)"impCFA A!' AP 19TH AP 1 19'76 IJ' 2 1917 AI' 2 1971 AP 3 1976
A~ UAt\.iJrI~!~1 ~;\. ;k:> _rJ\.~~tld\. i,(2!:'~
Uuntuuy\. 6,000 6,000 6,000 6,000 6,000
HUUCl:lTU POUI' 1 CJffifltlt:tlsiHltCt: 15,000 15,hOO IS,OOO 15,000 15,000
II\. 1\.~\.G!?lilf~h t\.::~
Me\.itH\.'rn; tYJ){~ A 13,000 1 11,000 I 11,000 I ll,OOO 11\.000
Mo\.i~wJllJ t),I'(~ U 11,500 1 34,500 4 46,000 4 46,000 57,500
t4hi SOU!\. tYlli~ e lI,no 1 8,l~0
t-1ultWu:J lYl"-' n l,a1S 7 D,125 7 13,125 7 D,125 7 )) ,125
Mfl\.J !iUIIH lY!j(' 1<: 812\.5 6 4,815 5 4,~61 2 1,625 2 1,615 8 6,500 2 1,625 8 6,~00
MlLlt::('UD typf:~ ~~ 562\.5 25 14\.061 4 2\.250 24 n,500 1 1,9111 25 1/',061 52 29,250 22 12,115 50 28,125
Ml1i!HJn~; type G 175 121 46,125 16 13,500 108 40,500 115 n,875 165 61,875 260 105,000 118 51,750 lOB 40,500
C\. Hd~~~-'J~~~~
Cthtrc !j(J(:;io ~fIl0\.djc£tl 12,500 1 12\.500 1 12,500 12,500 12,500
AHt~:nH("r: Il(elu--m[djcnlt"f\.; 6,000 2 12,000 2 12,000 12,000 12,000
"~coJt,!, (t~ t'lh~HiNj) 11,500 I 17,500 17,500
f:""l"" Cl c1"",,,,") 1,000 2 14,000
Ifl!\.itullltli(lm; :-\. wtit\.uires vilh1t',t:oiaeu 1,500 1\ 12,000 8 12,000 8 12,000 8 12,000
Il~ !~~~!'~~l!{~~ 1,150 ~5U 1,1511 1,750 1,750
1/
'j'" till {\. (jOO ~'G,\.,\.) 200,938 - 15,750 ,217,6118 11\.4111 1l\.lli 291,625 65,lS0 nu!!!!\.
21J ,4l!!\. 157,l75
y Leu ('(}filn dc:; bfd\.,lflleut!i ell l),16 pour GJ \.IJ{I': tWIll IIH\.:ntionncs 6 Litre dio!'G!7_!~~:(;'
UCU\.l\.l'I:lcllt\. ljs n~ont 111l:J j:\ ih~ltltl d&dl~ \.l( coOt LoLul du l!och:l etflnt '!~:!\.::~ ,;-\.;,!:
let:\. C{)JlU'Jlt:;; ouL eli; httl",itn:{>s\. t:t til clln!\.llJ"~h\. ti(;n fort f1Vul:';e~ tlU r::\.CW\.lt;ot je >-3>
}t(vulwd\.iou\. "
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COTE D'IVOIRE
Quatrieme projet palmiers a huile et cocotiers
Nombre d'ouvriers necessaires sur Ie terrain
et Unites de logement a construire
Plantations de coco tiers
hommes jours Tot\. d'hommes jours necess\. Total d'unites de logement n~~essaires
Iha~ API AP2 AP 3 API AP 2 AP J
1\. Plantations de cocotiers
1\. GLIKE 2,000 ha 1976 27\.5 55,000
2,000 ha 1977 16 32,000
2,000 ha 1978 16 32,000
1,500 ha 1977 27\.5 41,250
1,500 ha 1978 16 24aOOO
Total 55,000 73,250 56,000
Nb\. de travailleurs necessaires a 270 jours 204 271 207
=
Nb\. d'unites pour les travailleurs maries (401:) 82 108 83
Nb\. d'unites pour les travailleurs celib\. (4/unite) 31 41 31
Total 113 149 114 113 36 1/
= =
2, NERO 1,750 ha 1977 27\.5 48,125
1,750 ha 1978 16 28,000
2,250 ha 1978 27\.5 61 1 875
Total 48,125 89,875
Nb\. de travailleurs necessaires a 270 jours 178 333
=
Nb\. d'unltes pour les travailleurs maries (40%) 71 133
Nb\. d'unites pour les travailleurs celib\. (4/unite)______ 27 50
Total 98 183 98 85 1/ ~-3 !Do
~~
~i:3
1/ Cumulatif ~ <:
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I\\.)
COTE DtIVOIRE
Quatrieme projet palmiers a huile et cocotiers
Nombre d'ouvriers necessaires sur Ie terrain
et Unites de logement a construire
Palmeraies industrielles
hommes jours Tot\. d'hommes jours necess\. Total d'unites de logement necess\.
/ha AP 1 AP 2 AP3 AP] AP2 AP3
II\. Palmeraies industrielles
1\. IBOKE 3,000 ha 1977 27 81,000
3,000 ha 1977 46 138,000
3,000 ha 1977 20 60,000
2,500 ha 1978 27 67,500
2,500 ha 1978 46 115 zOOO
Total 81,000 205,500 175,000
Nb\. de travailleurs necessaires a 270 jours 300 761 648
Nb\. d'unites pour les travailleurs maries (qO%) 120 304 259
Nb\. d'unites pour les travailleurs celib\. (ii/unite) 45 98
Total 165 357 165 254 1/
2\. DE\'[AKE 2,500 ha 1978 27 67,500
2,500 ha 1978 46 115 zOOO
Total 67,500 <115 zOOO
Nb\. de travailleurs necessaires a 270 jours 250 426
Nb\. d'unites pour les travailleurs maries (40%) 100 171
Nb\. d'unites pour les travailleurs celib\. (4/unite) 38 64
Total 138 235 138 97 11
11 Cumulatif
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ANNEXE VI
Tableau 14
COTE DI IVOIRE
Quatrieme projet palmiers a huile et cocotiers
Investissements
Materiel et Installations
Plantations de Coco tiers Plant\. d'huile de Palme
GLIKE AP 2 NERO AP3 !BOKE AP2 DEWAKE AP3
A\. Installations
Energie, eau, egouts et pistes de desserte
pour Ie centre de la Plantation 10,500 10,500 10,500 10,500
De meme pour ~haque village 22,000 22,000 22,000 22,000
Puits 15\.20 m h 5,000
Puits pour les centres de Plantation 1,000 1,000 1,000
Chateaux d'eau 50m 3 6,000
Chateaux d'eau 20m3 3,000 3,000 3,000
Hangars pour les generateurs 3,100 2,400 2,400 2,400
8 puits pour les villages 8,000 8,000 8,000 8,000
Sous Total 54,600 46,900 46,900 46,900
B\. Materiel
Generateur 200 Kva 7,000
2 generateurs 90 Kva 6,000
3 generateurs 90 Kva 9,000 9,000 9,000
8 pompes a eau 2,000 2,000 2,000 2,000
pompes electriques et tuyeaux 1,000 1,000 1,000
Materiel d'atelier 2,500 2,500 2,500 2,500
Reseau de radio L 43 1,200 1,200 1,200 1,200
Sous Total 18,700 15\.700 15,700 15,700
C\. Mobilier
Mobllier de bureau 2,500 2,500 2\.500 2,500
Mobilier pour logement 6,000 7,500 7,500 7,500
Mobilier pour depot 2,000 2,000 2,000 2,000
Sous Total 10,500 12,000 12,000 12,000
TOTAL 83%800 74,600 74,600 74,600
1\./ Chaque plantation aura 3 villages: un central et 2 secondaires\.
con: D'IVOIRE
~trieme IlI;"Qjjit pa}miers il huile et coco tiers
ProllrslIUlle de clsnlations V1l1s\.§\.eoises
Couta detaillee en 000 de FCFA
Devises 'Taxes
AP 2 AP 3 Total J' CoGi: J Cout
I\. Plantations vil1ageoises cocotieres
(a) Cout des facteurs de productiy?
200 ha 197~ 14,929 2,960 4\.132
550 ha 1977 1,0\.119 6,141
1,250 lIa 1978 92619
Sous Total 2 l!i\.9 9 113\.139 ~01l;952 1b3 zh20 40 65,h08 9 !it1l1
(b)Trav8ux de vulgarisstion!1 L£QQ 1!\.2iQ ~ lLlll 5 !ll2\.
(c)Investissement~ ~ l!t\.J\.QQ 2\.2\.lQQ\. 50 14\.550 12 3,492
(d)Prets 200 hs 1976l\./ 6,600 1\. 1
,00 1,000 9,300
550 ha 1977 18,915 3\.850 22\.825
1,250 ha 1978 ll\.ill\. ~
Sous Total 6\.J~22 IlB,075 15,250
=
fotal pour lea plantations
vl11ageoisea cocotieres ~ 84 ,061, n 8 ,S5 2 28 1,')116 28 ~ 1 ]9\.088
11\. Plan tations vl11ageoises d' huile de J\.lalrne
(a) Cout des facteurs de producti~? ----
200 lIa 1977 13,016 1,588 14,604
300 hs 1978
~
19,525
Sous Total \.!\.h0l6 21,113 3 122 40 Ih ,157 9
(b) Travaux de vulgariaatio~1 1 \.,95 2! 7 1
,5 I, ,51,0 5 221
(c) Investissementa!1 ~QQQ 3,525 50 3 ,'l63 12 903
~
(d) Prika 200 hs 19771/
,~ ~
~
1,600 2,800 10,ijOO I-'
300 ha 1978
Soua Total
f
1 ,1, 00
I\. z200
11 zijOO
21 1800
CD
!
Total pour les plantations
1\.600 ~ ::\.~
\\.Jl
v1l1ageoia'es d' huile de palme 26,1111 4],583 61\.994 25 }L914 6 \.J435 2
GRAND TOTAL 28
22,929
--- 110,415 220,135 353\.539 97,8'72 7 £\.3, 439
Notes: 11 Voir page 4 de l'annexe IV\.
21 Voir Tableau 16
11 Voir page 1 (b) de l'snnexe IV
AHNEXE VI
Tableau 16
COTE D'IVOIRE
Quatrieme projet palmiers a huile et coco tiers
Prosra==ede ?lantations villa peoises
Services de vulgarisation et couts d'investissements
(~n '000 de FCFA)
Salaire
annuel
'000 FCFA AP 1 AP2 AP 3
1\. Travaux de vulgarisation:
Prog\. de plantation de coco tiers 200 550 1,250
Prog\. de plant\. de palmiers a huile 200 300
Total pour le programme (en ha) 200 750 1 2 550
Programme cumule en hectares 200 950 2,500
Nb\. d'hectares suvervises par 1e chef
de groupe 100 240 250
No\. Cout No\. Cout 'No cout
chefs de groupes 600 2 1,200 4 2,400 10 6,000
Chefs de secteur 3,000 1 3,000 2 6,000
Chauffeurs/mecaniciens 260 4 1,040 6 1,560
Gardiens 305 1 305 2 610
Total du cout des travaux de vUlgarisation1 200 6 74') 14 170
A etre attribue au:
Secteur coco tier
1,200 4,950 11,425
Secteur palmier a huile
1,795 2,745
Total 1,200 14,170
2\. Investissements CoGt unitaire
(a) Batiments: bureaux de secteur 4,500 4,500 4,500
Logements-Chefs de secteur 6,750 6,750 6,750
Logements-Type F 562\.5 2,250 1,125
Logements-Type G 375 750
Sous -Total 13,500 13 ,125
(b) Installations: Puits 1,000 1,000 1,000
Chateaux d'eau 1,000 1,000 1,000
Sous Total 2,000 2,000
(c) Materiel - Pompes 500 500
Mobilier de bureau 1,000 1,000
Mobilier pour logements 2,000 1 ,000
Sous Total 3,500 2,500
Total des Investissements 21,000
17,625
Doit etre reparti au:
Secteur coco tier 15,000 1 4 ,100
Secteur palmier a huile 4 ,000 3~25
2)
Total 19,000 17,625
COTE D'IVOIRE
Quatri~me projet palmiers i buile et cocotiers
Gestion de 18 region du Sudouest
Couts de fonctionnement
Salaire
annuel Devises Taxes
'000 APl AP 2 A~l 'l'oto\.l !\. Cout r-~
A\. Personnel de gestion
Directeur regional 10,000 10,000 10,000 10\.000 30,00\.0
Directeur financier' 7,500 3;{5\.o 1,500 1\.500 10\.75\.0
Comptable 3,500 3\.5\.00 3\.500 3\.5\.0\.0 1\.0\.500
Secretaire 1,200 1,20\.0 1,200 1,20\.0 3,600
Caissier hlO 111\.0 "10 41\.0 1,23\.0
4 employes de bureau 320 1,260 1,260 1,200 3,6h\.o
4 aides comptable 1&10 {\2\.o 620 1 ,6 1,0
2 chauffeurs 260 52\.0 ~)?\.o 52\.0 1\. ')6\.0
2 gardiens 135 2"(0 270 2'{0 lII0
Sous Total 20,930 25,500 25\.500 71,930 65 ~6\.150 5 _-1~91
D\. tissements
(i) Batiments: Bureaux 2\.0,000 20,000 60 12\.000
Logements 21;r')0 21;{5\.o 6,000 1'9\.500 60 29\.100
(ii) Vehicule::l 2,4(;0 2,40\.0 I, ,Hoo 90 I, \.32\.0
(iii) Materiel et mobllier 2, 30Q _ _ l, 5(;0 2 ;000 15,OOG SO 1\.500 ______ _
Sous Total 29,65 0 -----,} ,650 B,oO\.o B2\.3~tl ____ hO 53\.52\.0 15' \.____)3 3[6 \.
_ ~ r_L
C\. Depenses de fonctionnement ~OOO _ 1,000 9\.00\.0 2LO\.oO 50 1\.0\.500 1~_\._ 3,1 ;;0
TOTAL )5,5(\0 0",150 42,50018 2 ,230 61110\.110 n 20,142
~~
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ANNEXE VII
Page 1
COTE!)' IVOIP,E
gUATRIEME PROJET DE PALMIERS A HUILE ET DE COCOTIERS
Marge brute d'autofinancement du projet
Le tableau 1 indique la marge brute d'autofinancement du projet
en termes courants\. Les paragraphes qui suivent sont des notes decrivant
le modele utilise et la fa~on dont les differents chiffres ont ete atteints\.
I\. RESSOURCES
A\. Financement
Pret de la BNDA: interet de 9%, capital a debourser en deux ans
durant lesquels seuls les interets sont dus, le principal etant rembourse
en cinq echeances par an a raison de 100 millions de FCFA, a partir de la
quatrieme annee\.
Pret de la BIRD: commission d'engagement a 3/4 de 1%, interet
a 8,50% ou le taux prevalant au moment de l'agrement du prete Differe
de paiement de quatre ans et demi durant lesquels seuls les interets sont
dus ainsi que la commission d'engagement sur tous les montants non verses\.
Remboursement sur une periode de 15 ans, entamee immediatement apres le
differe de paiement\.
B\. Revenu provenant des ventes
Tous les revenus sont calcules en termes courants\. Les tableaux
3 et 6 indiquent la valeur courante en FCFA correspond ant a
chaque produit de
base\. La base utilisee pour ce calcul est la derniere prevision de la BIRD,
datant de novembre 1976, en ce qui concerne les prix des produits de base\.
II\. IMPUTATION DES FONDS
Tous les couts sont exprimes en termes courants\. Pour les annees
1976-78, les provisions pour depassement des quantites et hausse des prix
sont celles qui ont ete appliquees au cout du projet; a partir de 1979,
elles ont ete majorees a 7% cumules annuellement\. Au tableau 2 figure le
detail de ces couts pour ce qui est de l'amenagement agricole et des couts
d'entretien\. Les investissements industriels et les couts de production
sont ceux que donnent l'Annexe V\.
III\. RESULTATS
La marge brute d'autofinancement du projet deviendra positive
en 1983, deux ans apres que les premiers arbres aient commence de porter
des fruits\. Tous les couts du projet auront ete entierement rembourses en
1986, deux ans apres que toutes les plantations auront atteint leur maturite\.
A partir de cette date et durant les 19 annees suivantes, les revenus a
attendre du projet seront de l'ordre de 4,3 milliards de FCFA par an, en
termes courants de 1986 (environ 17 millions de dollars)\.
ANNEXE VII
Page 2
Ces resu1tats ne tiennent pas compte des revenus supp1ementaires
qu'obtient l'Etat de taxes indirectes et de droits d'exportation 1esque1s
atteignent une moyenne de un milliard de FCFA par an a partir de 1985
(4,1 million de dollars),
COTE D'IVOIKE
!l!ultrtl!me'l'rojet l'almier8' ii huile et cocotiera
HarRe brute d'Autofinance81ent du ProJet
(an millions FCFA)
!ill\. 1911 ill!!\. 1979 1980 !2\.!!1 !ill\. !ill 1984 ll!l ill!
Rt:VENUS
(a) Flnancement extlrleur
het BNDA 250 250
Pret BIRD 1,750 2,500 650
Sous Total 2,000 2,nO 650
(b) Re81boursement des (!dits des cultivateurs 1 10 26 52 61 65
Sous Total I 10 26 52 61 65
(c) Revenu a l'artlr des Vtn~~8
(i) huile de palme 1,247 2,327 3,173 4,160 4,757 4,751
(11) pal\.1stes 135 273 390 533 700 700
(111) coprah
23 218 921 2,156 3,489 4,466 4\.818
(tv) charbon de coqua 2 18 74 169 266 \.:\.Jll 359
Sous Total II 1,618 3,595 5\.888 8,448 10\.256 10,634\.
Total des revellus 2\.00~ 650 25 1,619, 3,605 5\.914 8\.500 19,317 M699
=
Attrlbution des fonds
(a) Plantations de cocotlers 1\.486 1,591 846 489 612 113 838 919 1,017 1,192 1,233
(b) Plant\. de pal\.1en 1 buile 726 2,365 2,557 469 599 986 1,256 993 1,092 1,357 1,~41
(c) Gestion du Sud-ouast 62 106 57 104 III 135 127 136 155 \. 155 166
(d) Prog\. de plant\. vl11ageoises 26 135 293 410 52 108 188 273 639 881 1,021
(e) Investiaaements industrials 1,000 650 1,150
__ 6
(f) Couts de transformation -ill -1!1\. -1\.ll !\.ill l,62i 1,821
\.L\.1!!Q\. 4,203 3,153 1\.532 2\.380 2\.865 4\.076 3,112 4,238 \.L\.W\. 5,800
II\.:mbouraement dea (!rets at Interet\.
BNDA i 23 45 45 136 127 118 109 100
BIRD 142 325 404 411 411 720 695 669 635 610 ~
\.i ~
Total du Service de 1a dettc 165 370 449 553 544 838 \.
804 769 635 610
::
s:
Total de I'attribution des fonds i\.~68 2,933 1,409
\. ;:1
!,111 3\.916 5,007 5\.841 6,410 I H
Surplus (Deficit) (2,300) (2,368) (1,313) (1,331) (2,908) (1,190) (1,309) 1,998 3\.493 4,470 4,289
Harge brute d'autofinancewent cumuli (4,668) (6,041) (1,372) (lO,280) (12,070) (13,379) (11,381) (7\.888) (3,418) 811
11 Comprend Ie coOt total du projet pour 1916 pris en charRe par Ie gouvernement; !I comprend lea couta d'\.chat de production das petita plantaurs\.
C01'l<; J)'JVOHlB
qUA'I'RIl;:I\.fE PROJl':T I'AJ\.MH:BB A IIUJLr\. F:'l' COCO'l'U:RS
Cants du pro,let, etillvestiancmcnts suppl;:mclltnires
(en mill ions de FCI'A)
I\. 1'1 \.AN'I'lI'l'] orw m~ COGO'l'l EHS
12'(6 !2J1 12J!!\. !212\. 12/10 !2!!!\. 19t12 12(\3 1!IOlo 19115 !~
Dcfricliemcllt du terrain et pistes d' acces'n6 ~81 152 )2 t\.5 "5 "5 1,2 36 32 ';j2
CoUts agricolas 161 ]lq ]12 201 :\.'19 2:\.'2 22" 2)1 228 226 220
l<'rui B des plantulior,s 51! 98 lOll 115 lIb 12~ 1]0 139 1t\." )I;b 150
He<:olte ) 12 ]1 t\.6 56 66 12
Investin;;elOents _ll2 3;1 1,6 25 l\.'i )12 9(~ _12 ~l 132 101,
CoUts de hasc l,31b 1\.21ili tiill "31'j hl 515 ~22 535 553 bOb 5£
Imj,revuu d 'ordrc Dlilteriel ct de prix 1/_!'1Q ~i5'\.l "]2 n6 !'Hi ~Ii\. _316\. -\.-3UIL _La ~ _&1\.
Total des coUts - !\. ~Ob I\.~~i 6116 ~fi'l ~12_ 'tl\.:\.L =!l:ltl --\.9\.19\. !JOU !Jl?l\. ~\.!?J]
JJ \. l'l\.AN'I'A'I'lnrm N; PAlJ4U;HS A IIUILl<;
Ilcfricilement de\. terrain et pistes d'acecsqo6
Conts agrieoles 119
0'19
29~
941
300
21
151
~6
)1j1 01
56
12]
~\.6 56
125
56
116
35
115
"5
113
~'l'fli s des plantlltions IO HIli 16'( 16'( 16'1 )/;'1 J6'( 161 )61 161 161
W;"ol te et trausport 29 l~~O 1111, 11\) 196 )96 188
I nvcs Li ~B\.(:ru~hts 1::0 :,>115 19 'it\. 1'1'1 2~2 59 l'f:l 131 222
~ -h
CoUts de base 625 l\.1ifO 1,806 35lJ ~~I 7\.lil L~ W W\. Wc> -1lL
Imprcvlls u'ordrc Jlluteriel et de prix 11 101 ~\.l~ ---\.11!\. Iii 11~ \.1! 'C) ~:l!t Xll\. TI!lIl L661 \.-&11
'I'utal des couts\. - j26 g,\.}~ 2,551
=
i;(\.i)
=--= ~~i2\. ~
C)liG 1 ~)I \. ~
;;';!A-\.::,:,,:::+ m !\.fl'l2\. LJg l$!i!ll
11 J \.m:f)'I'J ON \.1l1L r:ull mn2s!\. ~ 81, I,] '19 '(<) ')0 '(<) '19 90 19 19
6 ')J)
11, 2~ 1" 1'2 lin \.21 ~ 11ft\. -8l\.
llnl'revLls d' ordl'C maUldel ct de l'l'i x!J 62 lilT\.
= it ]nlL ~IL fi2, 12~ ~ H5\. 155\. 166\.
IV, PH(}GRMIt4~: m: I'I\.AII'PA1'lONtl VI!\.r\.I\G~:OIflr:S 2) 110 2~0 359 3'1 12 111 159 ';j'12 1,/,0 "'\.16
)mprevUli d'ordre'muteriel et de prix 3 2~ fi\. III !2 ,6 11 nl, :>61 t\.'n _rn,
2(;
\. m m ~1Q\.
=
52 ~
ton ThCi ;nI 'ffi\. :!!Bl ~021 in'!
u' !\.
t-\. I'
f: i;j
<!
I\} "
\.
V ~'el que cll1cu](i sur le~ couts du proJct JIJsqu'cn 1'r{6 (Anncxe 6, tllhleuu 1)\. H
cntlLlite n
'1% co\.lcule 1\.l!1!luellclII"nt\.
ANNEXE VII
Tableau 3
COTE n'IVOIRE
Quatrieme projet pa1miers a hui1e et coco tiers
Valeur de l'hui1e de Pa1me en prix courants
Sur 1a base des previsions de 1a
BIRD de novembre 1976
1980: $ 509/tonne 1985: $ 737/tonn~1
y
1981 $ 554 eq\. CFAF/ tonne 107,227
1982 $ 600 II
116,130
1983 $ 645 124,840
1984 $ 691 II
133,743
1985 $ 7 II
142,259
Valeur actuelle de 1a production d'hui1e de pa1me
Annee tonnes de ffb tonnes d 'huile(a 22%) Valeur en m\. de FCFA
1981 ,850 11,627 1,247
1982 91,100 20,042 2,327
1983 113,500 24,970 3,173
1984 141,400 31,108 4,160
1985 and 152,000 33,440 4,757
on
11 Cif Europe\.
~ Ca1cu1e a 245 FCFA =
l$EU, moins 21%
pour 1es depenses d'exportation:
Assurance et commission 3\.6%;
fret et manutention 12\.8%; et
taxes d'exportation 4\.6%
(Voir Annexe X, tableau 2)
ANNEXE VII
Tableau it
COTE D'IVOlRE
QUATRIEME PROJET PALMIERS A BUlLE ET COCOTIERS
Valeur des Pa1mistes en prix courants
Sur 1a base des previsions de 1a BIRD de novembre 1976
1980: $ 323/tom\.e 1985 $ 531/tonne
1981 $ 365 eq\. to FCFA/tonne 64,386
?!
1982 $ 407 If
71,795
1983 $ 449 " 79,204
1984 $ 490 " '36,436
1985 $ 591 " 104,252
Valeur actuelle de 1a production des pa1mistes
Annee Tomes de Ea1mistes Valeur en M\. de FCFA
19B1 2,093
135
1982 3,804 273
1983 4,927
390
1984 6,164 533
1985 et suite 6,715 700
1I Cif Europe
~ Calcu1e =
a 245 FCFA l$EU, moins 28 % pour 1es
depenses d'exportation:
Assurance et commission 3\.6%;
fret et manutention 18\.8%; et
taxes d'exportation 5\.6%
(Voir Annexe X, tableau 3)
k'1NEXE VII
Ta\.blea\.u 5
COTE D' IVOlRE
gUATRIEME PROJET PALMIERS A HUILE ET COCOTIERS
Valeur du Coprah en prix courants
Sur 1a base des previsions de 1a BIRD de novembre 1976
1980: $ 457/toIll'le 1985 $ 751/tonne\.Y
2}
1980 $ 457 eq\. a FCFA/tonne70,986
1981 $ 516 80,150
1982 $ 575 89,315
1983 $ 633 98,324
1984 $ 692 107,488
1985 $ 751 u6,653
and on
Valeur actuelle de 1a production du coprah
Annee Production de noix de dont 20% Valeur du Coprah
Coco en milliers de noix est coprah en M\. de FCFA
1980 1,600 320 23
1981 13,613 2,722 218
1982 51,538 10,308 921
1983 109,650 21\.,930 '2,1\.56
1984 1\.62,300 32,460 3,489
1985 191,400 38,280 4,466
1986 206,500 41,300 4,818
1987 et suite 213,500 42,700 4,981
!I Cif Eurolle
gj Ca1cu1e a FCFA 245/1$EU, moins 36\.6% pour 1es
depenses d'exportation:
Assurance et commission 3\.6%;
fret et manutention 12\.0%;
traitement 15\.4%; et
taxes d'exportation 5\.6%\.
(Voir Annexe X, tableau 4)
\.LUWEXE VII
Tl;\hleau 6
COTE D'lVOlRE
QUATRlEME PROSET PAL~lERS A HUlLE ET COCOTlERS
Prevision des prix pour Ie charbon de coque
1\. Le prix du charbon de co que cocotier s'est stabilise en 1975 aux ~
environs de £ 110\.00/tonne cif port Europeen\. Les importations provenaient
du Sri Lanka, qui produisait 90% des importations mondiales de charbon de coque\.l/
2\. Etant donne qu'il n'y a pas de commerce a l'echelle mondiale de ce
produit, ce prix equivalent a 200 $EU/tonne, a ete conserve comme prix de reference\.
3\. La valeur d'une tonne de charbon de coque se detaille de la fa~on
suivante:
$ /J:IT\. Cif Europe 200\.-
Eq\. en FCFA/tonne 1/ 49,000\.-
Couts variables:
Assurance 1\.25%
Commission 2\.35% 3\.6% '" 1,701
Frais fixes
Fret 8,800
Transit 550
Chargement/dechargement 300
Frais bancaires 80 9,730
---
Transport interne 13,051
Valeur hors-plantation 35,949
Moins Couts de transformation 1/ 16,434
Valeur hors plantation i/ 19,515
Valeur hors plantation (Rendement 1/ 22,881 FCFA/tonne
1/ Source: Sodepalm: Etude du marche Charbon de coque
1/ a 245 FCFA = 1\.00$EU
11 Voir tableau 2, Annexe V\.
if Chiffres utilises a l'annexe X, tableau 4,7, et 8\.
1/ Avec ajustements de manutention locale et couts de transformation par les
facteurs de conversion conventionnels\. La valeur est utilisee dans Ie taux de
rentabilite economique\.
ANNEXE VII
Tableau 7
COTE D'IVOIRE
guATRIEME PROJET P~~IERS A HUILE ET COCOTIERS
Valeur prevue pour 1es exportations en charbon de coque aux termes courants
Sur 1a base des previsions de 1a BIRD de novembre 1976
1976 - FCFA 16 ~2~ltonne FOB 1:\./
1980: FCFA 24,814
Y
1985: FCFA 34,799
1980 = FCFA 24,814
1981 == 26,811
1982 = 28,808
1983 == 30,805
1984 == 32,802
1985 == 34,799
Valeur actuelle des exportations
Tonnes e1~rtees Valeur en million FCFA
1980 2
1981 681 18
1982 2,577 74
1983 5,483 169
1984 8,115 266
1985 9,570 333
1986 10,325 359
1987 10,675 371
1/ A partir du tableau 6; 19\.515 FCFA moins 1es taxes d'exportation de 5\.6%\.
~I Cif Europe\.
A\.J\.'l'NEXE VIII
Tableau 1
D" IVOIRE
QUATRIEME PROJET PALMIERS A BUlLE ET COCOTIERS
Calendrier Estimatif des Deboursements
('000 $EU)
Deboursements
Pendant Ie Montant non debourse
Annee fisca1e Trimestre Trimestre Cumu1es a 1a fin du trimestre
1977 Quatrieme 500 19,500
1978 Premier 3,000 3,500 16,500
Deuxieme 3,000 6,500 13,500
Troisieme 3,000 9,500 10,500
Quatrieme 3,000 12,500 7,500
1979 Premier 3,000 15,500 4,500
Deuxieme 3,000 18,500 1,500
Troisieme 1,500 20,000
ANNEXE IX
Page 1
COTE D'IVOIRE
QUATRIEME PROJET DE PALMIERS A HUILE ET DE COCOTIERS
Perspectives concernant les debouches et les prix
de l'huile de palme et de noix de coco
1\. Du point de vue de leurs origines, les graisses et huiles peuvent
etre groupees en huiles vegetales et en graisses animales (huiles marines
comprises)\. Les huiles vegetales peuvent encore se subdiviser en huiles
provenant de cultures annuelles de graines oleagineuses, telles que Ie soya,
l'arachide ou Ie tournesol, et en huiles que produit l'arboriculture
vivace comme les huiles de noix de coco, de palme et de palmiste\. Les huiles
du premier groupe sont liquides a temperature ambiante (en climats temperes)
et prennent done l'appellation d'huiles fluides\. Les huiles du second
groupe, appelees huiles concretes, enregistrent un point de liquefaction
plus eleve et sont generalement a l'etat solide\. Les huiles concretes
contiennent un plus fort pourcentage d'acides gras satures que les huiles
fluides\.
2\. Durant la derniere decennie, il s'est produit un deplacement signi
ficatif au niveau de la consommation en matieres grasses et en huiles, l'accent
etant passe des graisses animales aux huiles vegetales et, parmi celles-ci,
des huiles concretes aux huiles fluides\. Cette evolution traduit en partie
la hausse des approvisionnements en huiles vegetales et, en partie, Ie fait
que les consommateurs sont de plus en plus conscients des risques potentiels
que representent pour leur sante la consommation de graisses et huiles
fortement saturees\.
3\. Techniquement, la plupart des graisses et huiles sont assez
similaires\. Neanmoins\. Ie coat du raffinement et certains besoins concernant
des utilisations finales specifiques limitent la gamme de substitution
pouvant s'appliquer a des graisses et huiles individuelles\. En dehors de
cette gamme, des quantites supplementaires ne peuvent etre commercialisees
qu'en augmentant Ie rabais des prix correspondant a d'autres graisses et
huiles\. Ceci affectera les prix relatifs des huiles concretes et fluides\.
Selon les projections effectuees par les services de la Banque, la demande
en huiles vegetales fluides (huile de soya, de graines de coton, de mais, etc\.)
devrait s'accroitre plus rapidement que la demande en huiles concretes\.
Cependant que des approvisionnements accrus en huile de soya peuvent etre
commercialises sans exercer de pressions significatives dans Ie sens d'une
baisse au niveau des prix de l'huile de soya par rapport a d'autres graisses
et huiles, une majoration des quantites d'huile de palme ne trouvera de
debouche qu'en fonction d'une augmentation des rabais imposes aux prix\.
4\. En raison de leur composition chimique ou des caracteristiques
physiques, certaines graisses et huiles jouissent d'un avantage concurrentiel
sur Ie plan de certaines utilisations finales\. L'huile de noix de coco, par
exemple, prolonge la duree en rayonnage des produits de boulangerie et donne
aux savons leur qualite moussante\. Vu que ces utilisations finales requierent
une huile specifique, celle-ci est confrontee a une demande fortement in
elastique au niveau d'un tel debouche\. Pour des utilisations finales ou
ANNEXE IX
Page 2
elle entre en concurrence avec d'autres graisses et huiles, sa demande est
tres elastique\. Puisque la demande totale correspondant a une huile quelconque
represente la somme des demandes individuelles pour ses differentes utilisations
finales, la courbe particuliere a la demande totale se compose de deux
parties: un segment inelastique (qui represente Ie marche ne disposant pas
ou peu de produits de substitution) et une partie fortement elastique au
niveau de laquelle cette huile entre en concurrence avec d'autres graisses
et huiles\. Cette " courbe nouee de la demande" explique la hausse soudaine
souvent observee au niveau des differences de prix entre les graisses et les
huiles, phenomene qui se produit chaque fois que les approvisionnements
tombent au-dessous des quantites correspondant a la partie plus elastique
de la courbe representative de la demande\. Les structures propres a la con
sommation regionale en graisses et huiles refletent generalement les structures
de la production regionale et les conditions naturelles du magasinage\. La
protection economique et des couts de transport inferieurs jouent un role
important pour ce qui est des preferences a l'egard des graisses et huiles
produites localement\. La plupart des graisses (margarine, matieres grasses
a cuire) consommees en pays industrialises de zone temperee est fabriquee
a partir des huiles de soya, graines de coton et tournesol\. L'huile de
noix de coco et l'huile de palme dominent la consommation en huile vegetale
des pays tropicaux et semi-tropicaux\.
5\. La demande en graisses et huiles depend largement des niveaux
du revenu par habitant\. L'elasticite de la demande en fonction du revenu
est elevee pour des niveaux de revenu faibles et presque nulle aux niveaux
actuels du revenu par habitant enregistres dans les pays industria1ises\.
La consommation annuel1e par habitant de graisses et huiles a atteint dans la
plupart des pays developpes un niveau approchant 25-30 kilogrammes; dans de
nombreux pays en voie de developpement, elle est inferieure a 5 kg\. Etant
donne l'importance demographique de ces pays, une hausse meme modeste de
leur consommation par habitant en huiles et graisses absorbera une part
substantie1le des approvisionnements mondiaux en graisses et huiles\.
6\. Entre 1974 et 1980, il est prevu que la demande mondiale en graisses
et huiles s'accroitra au rythme annuel de 2,3%\. Cette croissance sera
legerement plus lente entre 1980 et 1985, pour deux raisons\. En premier,
la demande par habitant en graisses et huiles qu'enregistrent les pays
industrialises aura presqueattient son niveau de saturation\. En second
lieu, il a ete suppose que les nouveaux pays importateurs majeurs (en voie
de developpement) devront faire face a des contraintes sur le plan des
devises; des lors, la consommation par habitant de ces pays ne s'accroitra
que faiblement\. Durant cette periode, la demande tota1e passera de 3,2 a
4,7 millions de tonnes, a un rythme annue1 moyen legerement superieur a
celui de 1a croissance demographique\.
Farine a haute teneur proteique
7\. En raison de leur forte teneur proteique, les tourteaux servent
de plus en plus a alimenter le betail\. La demande en produits destines
a l'e1evage est etroitement liee aux revenus par habitant\. Lorsque les
ANNEXE IX
Page 3
revenus augmentent, la demande en tourteaux continue de s'accroitre longtemps
apres que la consommation en graisses et huiles a atteint son niveau de
saturation\.Les perspectives concernant les debouches a long terme s'averent
donc plus prometteuses pour les graines de coton dont la farine possede
une haute teneur proteique que pour celles dont la teneur est tres oleagi
neuse\. Les tourteaux de coprah et de palme se situent du cote inferieur
de la balance pour ce qui est de leur teneur proteique qui enregistre
22-23% au lieu des 40% ou davantage qui caracterisent des huiles telles
que Ie soya, les graines de coton et l'arachide\.
8\. La demande en tourteaux devrait s'accroitre durant la prochaine
decennie, hausse qui traduira Ie retablissement economique des pays de
l'QCDE\. Ces pays couvriront probablement Ie gros de la demande en farine,
mais leur part s'attenuera a mesure que la proportion de concentres fortement
proteiques contenu dans les rations alimentaires des animaux se rapproche
des niveaux optima\. II pourrait survenir d'autres debouches en Europe de
d'Est, en Union Sovietique et dans certains pays en voie de developpement\.
9\. Une menace potentielle qui risque d'affecter les marches reserves
aux farines hautement proteiques est la proteine unicellulaire CPU),
principalement fabriquee a partir de gaz naturel ou de produits a base de
petroIe et donc insensible aux facteurs saisonniers\. La haute valeur
nutritive des PU devrait compenser tout risque de toxicite des produits
servant a l'alimentation des animaux\. La part du marche que se tailleront
les PU dependra surtout de leur prix par rapport aux prix des proteines
obtenues a des sources existantes\. Bien que plusieurs usines fonctionnent
actuellement, on ne peut encore prevoir comment les PU affecteront les
marches auxquels s'adressent les graisses et les huiles\.
Approvisionnement
10\. L'approvisionnement en graisses et huiles est fortement inelastique
quant aux prix et ce pour deux raisons\. Tout d'abord, l'approvisionnement
en huiles provenant de l'arboriculture, comme l'huile de palme, l'huile
de noix de coco et l'huile de palmiste, est tres inelastique\. En second
lieu, de nombreuses graisses et huiles sont recuperees comme sous-produits
lors du traitement de matieres oleagineuses\. Les huiles marines s'extraient
en meme temps que la poudre de poisson des animaux marins\. Les graisses
animales sont un sous-produit de la production de viande et lait\. Bien que
les demandes s'adressant a chacun de ces produits sont independantes et
affectees par des forces de marche differentes, leur approvisionnement
reflete la demande pour les deux produits a la fois\. Par consequent, la
croissance rap ide de la demande relative a un produit, les farines a haute
teneur proteique par exemple, entraine une hausse au niveau des approvisionne
ments correspondant a l'autre produit, l'huile vegetale\.
11\. La production mondiale de graisses et huiles a augmente en
moyenne de 2,6% par an depuis 1955-57, en passant de 28,04 a 42,27 millions
de tonnes metriques en 1971-73\. L'approvisionnement en huiles provenant de
cultures annuelles de plein champ s'est accru le plus rapidement, essentielle
ment a cause de l'expansion qu'a enregistree la production de soya (Etats
Unis, Bresil), la production d'huile de graines de tournesol (URSS, Europe
de l'Est) et celIe de l'huile de colza (Canada, France)\. La hausse qui a
affecte les huiles concretes, notamment l'huile de palme, vient en second
lieu\.
ANNEXE IX
Page 4
12\. Dans la qecennie a venir (1975-85), la production de graisses et
d'huiles devrait s'accroitre a un rythme annuel moyen de 2,6%\. La forte
demande en produits destines a l'elevage entrainera la continuite de la
forte demande en farine de haute teneur proteique\. La plupart de l'appro
visionnement en huile proviendra par consequent de graines oleagineuses
broyees pour en faire de la farine\. Le soya, etant donne la forte teneur
proteique de sa farine, devrait faire face a la demande la plus forte\. Le
Bresil est recemment devenu un important producteur et exportateur de soya et
devrait continuer a etendre sa production dans la decennie a venir\.
L'approvisionnement en graisses et huiles sera encore releve du fait de
l'expansion survenant au niveau de l'huile de palme a mesure que de nom
breuses plantations atteignent le stade productif\. L'expansion prevue
dans le domaine de la production de l'elevage augmentera par ailleurs la pro
duction des graisses animales\. Les huiles marines devraient enregistrer
une croissance de 1,7%\.
Previsions
13\. La demande en graisses et huiles a ete prevue individuellement
par les analystes de la Banque pour 145 pays sur la base des revenus (reels)
anticipes par habitant, de la population et d'un indice des prix pour
les graisses et huiles\. Les prix correspondant a des graisses et huiles
individuelles ont ete simultanement determines par les approvisionnements
de toutes les graisses et huiles et le rapport existant entre les stocks
et la demande\. Le PIB prevu a determine la demande en farine de haute
teneur proteique\. Etant donne que l'huile et la farine se recuperent dans
des proportions presque fixes, le prix de la matiere premiere (graine
oleagineuse) est determine par la valeur combinee de l'huile et la farine
extraites moins la marge de trituration\.
14\. Les prix appliques aux graisses et huiles (en termes reels)
n'ont pas enregistres une nette tendance entre 1960 et 1972\. En 1973, les
prix ont amorce une forte hausse a la suite surtout d'une insuffisance des
approvisionnements en huiles de laurier\. Les prix ont encore monte en 1974
en raison d'une baisse de 20,4% survenue dans la production de soya americaine,
laquelle n'a ete que partiellement compensee par le relevement de la production
bresilienne; les prix appliques aux tourteaux ont evolue d'apres une structure
similaire\. En 1974, les prix des farines a haute teneur proteique sont
tombes vu la recession mondiale et la baisse affectant la production de
soya assortie de bonnes recoltes obtenues des aut res cultures de graines
oleagineuses durant les annees soixante\. Les prix de la plupart des tourteuax
ne se sont que legerement contractes\.
15\. A moins de reductions venant affecter les approvisionnements
prevus, les prix (en termes reels) appliques aux graisses et huiles devraient
diminuer durant la derniere moitie de la periode couverte par les projections
(1976-80) par rapport a leurs niveaux extremement eleves de 1974\. Pour la
seconde moitie de la periode consideree, la croissance demographique et
le relevement des revenus par habitant dans les pays en voie de developpement
feront probablement augmenter leur consommation domestique en graisses
ANNEXE IX
Page 5
et huiles\. Des lors, les prix pour les huiles vegetales et les graisses
devraient amorcer une nouvelle hausse entre 1980 et 1985\. Les projections
concernant leur niveau exact varient d'apres les hypotheses etablissant
l'importance relative des facteurs approvisionnements et demande\.
16\. Les projections sur les prix, la production et les exportations
figurent aux Tableaux 1, 2 et 3\.
\.A1I1TEXE IX
Ta-oleau 1
Tableau 6: PRIX D'HUILES ET GRAISSES SEtECTIONNEES
ACTUELS 1975, ENVISAGES 1976-85
(aux conditions de 1974 en $EU constants)
\.Graisse/Huile 1975 1976 ) 977 -,
1070, 10710
" ' /
J <->50 lOE5
actuel 619 376 it17 h62 507 5"/
;0 931l
§EY\.a 322
constant 5ul 300 307 315 330 395
Tournesol actuel 739 600 616 630 646 6Su 1, ("/\.:1
constant 645 h79 it54 1\.130 1\.110 J8B hha
Arachide actuel 857 6"'''-
I) 712 71\.19 788 B19 1 J-?)
1"'~
constant 7ha 5~o
), '--"'5
)<:\. 512 500 hS5 - -'
c;'7<
:
Coton sraine actuel 726 1'\ (""
OH~
\. "" 61\.17 6it ;J 61\.15 61,1
'-'~ 1,159
constant 631\.1 515 h77 41\.12 1\.110 yJO L90
Huile de colza actuel 551 390 419 ith8 e77 506 856
constant hB1 312 309 306 303 300 362
Oli'fe actuel ,
2,h36 2,350 2,171 -, CC~ 1, AJl 1,669 / ",-\. 2,8<$0
constant 2,128 1,877 1,600 1,363 1,162 990 1,212
Palmier actuel h3J 370 399 1\.129 uS? 489 7-" ,
-'\.,
'-\.
constant J7g 296 29h 293 "'0'-
(\. \.
"'Q'"
Co / v 320
Noix de coco actuel 393 JuO hOi 476 567 666 1,123
constant 3h3 271 300 325 360 395 h7S'
Palmiste actuel h39 360 !\.:21 un 567 658 1,O3~
constant 383 283 310 335 360 J90 h6C
SOU:'Cel: BIRD
EPD/CE mars 1976
PRODUCTION MONDIALE EN GRAINES OLEAGINEUSES, GRAISSES ET lruILES SELECTIONNEES
ACTUEL 1960\. MOYENNE 1967-69\. 75, ENVISAGE 1980-85
(en '000 de tonnes metriques)
----r~6IJde 1a ------r967=-69 de 1a 1975 de 1a 1980 de 1a 19B5 de 1a
Graisse/huile 1000 I-IT \. % part 1000 lIT % part 1000 NT % part 1000 Ml' %part 1000 Uf %Dart
Soya 3,295 12\.3 5,358 15\.5 8,550 19\.2 11,900 22\.4 13,500 23\.2
Tournesol 1,665 6\.2 3,652 10\.5 4,010 9\.2 5,200 9\.8 5,400 9\.3
Graine de coton 2,165 8\.1 2,310 6\.1 3,005 6\.8 3,400 6\.4 3,100 6\.4
Arachide 2,555 9\.6 3,248 9\.4 3,245 1\.3 3,600 6\.8 3,800 6\.5
Colza 1,105 4\.1 1,655 4\.8 2,495 5\.6 2,800 5\.3 3,000 \. 5\.2
Olive I
1,180 4\.4 1,301 3\.8 1,500 3\.4 1,600 3\.0 1,100 2\.9
Palmier; 1,250 4\.1 1,382 4\.0 2,925 6\.6 4,600 8\.1 5,900 10\.1
Noix de coco 1,955 1\.3 2,072 5\.9 2,515 5\.1 3,000 5\.6 3,200 5\.5
Pa1miste 440 1\.1 383 1\.1 695 1\.6 900 1\.1 1,000 1\.1
Poisson' 462 1\.1 1,058 3\.0 1,250 2\.8 1,300 2\.4 1,400 2\.4
Beurre '3,855 1L\.4 4,011 11\.6 5,135 11\.5 5,300 10\.0 5,500 9\.4
Suit 3,050 l1\.h 4,228 12\.2 5,085 11\.4 5,500 10\.2 5,900 10\.1
Lard 3,733 1L\.l 3,988 11\.5 3,950 8\.9 4,100 1\.1 4,300 1\.3
'\.OOTAL 26,110 100\.0 34,658 100\.0 44,420 100\.0 53,200 100\.0 58,300 100\.0
Sources: USDA: 1960-69
BIRD: 1915-85
Division des Projections sur les produits de la base et les exportations
Dipartement de l'ana1yse et des projections economiques
Services de 1a Po1itique du deve10ppement
~
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Ie 5 mars 1976 I--'
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TABLEAU 2: PRODUCTION MONDIALE EN GRAINES OLEAGINEUSES\. GRAISSES ET HUILES SELECTIONNEES
ACTUEL 1960\. MOYENNE 1967-69\. 75\. ENVISAGE 1980-85
(en '000 de tonnes metriques)
1960 1967-69 1975 19Ao 1985
Gralsse/huile 1000 MT '( de 1a 1000 MT % de la 1000 HT %de 1a 1000 MT ~ de 1a 1000 HI' c! de 1a
\.e art eart \.eart part part
Soya l,LOO 19\.8 1,991 19\.8 3,565 21\.1 4,900 28\.0 5,700 27 \.8
Tournesol 21\.:5 3\.3 1,138 11\.3 765 5\.8 1,250 7\.2 1,;00 6\.3
Graine de coton 294 4\.1 226 2\.3 425 3\.2 L60 2\.6 510 2\.5
Arachide ' 826 11\.4 1,037 10\.3 745 5\.7 9LO 5\.L 950 L6
Colza 92 1\.3 439 4\.4 7L5 5\.7 920 5\.3 1,020 5\.0
Olive 69 1\.0 82 0\.8 63 0\.5 100 0\.6 110 0\.6
Palmier 587 B\.1 607 6\.0 1,800 13\.7 3,050 17 \.5 4,590 22\.9
Noix de c~co 1,152 15\.9 1,182 11\.8 1,L25 10\.8 1,650 9\.4 1,750 8\.5
Palmiste L07 5\.6 299 3\.0 396 3\.0 L20 2\.1\. L35 2\.1
Poisson 222 3\.1 672 7\.1 600 4\.6 7LO 4\.2 79J 3\.9
Beurre h26 5\.9 5lh 5\.1 117 ' 5\.5 790 4\.5 8:;0 L\.1
Sulf -1,076 14\.9 1,447 14\.4 1,Loo 10\.7 1,820 10\.L 1,9;0 9\.5
Lard I L07 5\.6 409 4\.1 L90 3\.7 Lto 2\.5 4f\.o 2\.2
TOTAL 1,243 100\.0 10,043\. 100\.0 13,136 100\.0 11,480 100\.0 :W,L95 100\.0
Sour::!?!: : USDA: 1960-69
BIRD 197~-8S
,
EPOCE
Ie 9avril 1976
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ANNEXE X
Page 1
COTE D'IVOIRE
QUATRIEME PROJET DE PAL~IERS A HUlLE ET DE COCOTIERS
Calcul du taux de rendement economique et resultats
1\. Les taux de rendement ont ete calcules moyennant une "analyse
d'efficience"\. 1/ Cette technique applique un prix theorique a la main
d'oeuvre de maniere a refleter le cout d'opportunite de l'emploi associe
aux activites du projet et ajuste les couts et profits en fonction des
distortions douanieres et commerciales en utilisant des facteurs de
conversion\. Elle est analogue en principe a la pratique courante de la
Banque consistant a appliquer un prix theorique a la main-d'oeuvre et
a se servir d'un taux de change theorique\.
A\. Methodologie et hypotheses
2\. LIon trouvera ci-apres des notes succintes sur la methodologie
relative aux calculs\.
(1) Duree de vie du pro\.j et - 30 ans
(2) Base des valeurs - termes constants de 1976 en prix franco
frontiere ajustes au besoin en utilisant un facteur de conversion
type (FCT) etabli a 0,83\.
(3) Rendements - Comme a l'Annexe III, Tableau 2\. Ces rendements
refletent l'experience acquise en Cote d'Ivoire sur des planta
tions similaires\.
y Concernant la theorie fondamentale, voir "Analyse economique des projets"
par L\. Squire et H\. van der Tak, Publication de recherche de la Banque
Mondiale, 1975\. Les details complets de la methodologie et des hypotheses
relatives aux donnees dont slest servie l'analyse d'efficience pour ce
projet figurent dans l'Analyse socio-economique et d'efficience du quatrieme
projet de palmiers a hllilc et de cocotiers, Etude de cas, K\. Oblitas,
jUin 1976\. L'etude de cas calcule egalement les taux de rendement "sociaux"
qui, outre les ajustements contenus dans l'analyse d'efficience, tiennent
aussi compte des couts ou avantages sociaux nets correspondant aux modifi
cations survenues dans la consommation des participants du projet, estimes
par rapport aux objectifs du pays en matiere de croissance et distribution
des revenus et aux niveaux de revenu propres aux participants\. Les re
sultats de l'analyse sociale se limitent au rapport de l'etude de cas\.
AtlNE::cE X
Page 2
(4) Valeurs unitaires de production - Les valeurs de production
attribuees a l'huile de palme, aux palmistes et au copra sont
basees sur les previsions de la Banque concernant les cours
mondfaux, (memo du DPE en date du 23 novembre 1976) dont les
calculs figurent aux Tableau 2, 3 et 4\. Les perspectives com
merciales sont examinees a l'Annexe IX\. La valeur du charbon
de noix de coco correspond a celle de l'Annexe VII, Tableau 6\.
Les va\.leurs de production sont donnees aux prix douaniers, les
couts de la manutention et du traitement domest etant ajustes
au moyen du FCT\. Pour chaque element du projet, les prix de
production sont calcules au niveau de la manutention et du
traitement dont tiennent c les couts\.
3\. Couts\. Les couts tiennent des couts des amenagements
au ni'leau de l' exploitation et des investissements supplementaires
consacres aux installations de traitement et de transport\. Ils tiennent
compte ega\.lement des depenses renouvelables associees au traitement et
au transport de la production du projet durant la duree de vie du projet\.
Les prix des facteurs de production sont bases sur les prix observes et
mis a jour en fonction des conditions de 1976 et comprennent des
abbattements au titre du transport au site du projet\. Les couts men
tionnes sont nets de taxes identifiables\. L'element domestique de couts
n'ayant pas trait a la main-d'oeuvre est ajuste au moyen du PCT\.
4\. L'infrastructure sociale (installations scolaires et medicales)
et les logements figurent dans leurs couts entiers nets de taxes\. Cette
procedure traduit le jugement de la mission quant au fait que ces articles
sont des elements necessaires du projet destines a attirer les partici
pants du projet vers cette zone\.
5\. Tous les details concernant les hypotheses et donnees utilisees
pout etablir les couts d'effi~ience de la main-d'oeuvre sont compris dans
l'etude de cas\. Les etrangers et les cadres du projet ont un cout corres
pondant au salaire net d'impots (ce dernier etant ajuste au moyen du PCT)\.
Le cout de la main-d'oeuvre manuelle ivoirienne employee sur les planta
tions industrielles et sur les pl~~tations villageoises est calcule d'apres
leurs couts d'opport~~ite estimatifs ajustes par Ie FCT\. Le coat de la
main-d'oeuvre manuelle non ivoirienne employee sur les plantations indus
trielles est etabli en fonction des transferts de revenu a l'etranger
et de la consommation locale ajustee par Ie FCT\. Les couts d'efficience
annuels qui en resultent, 83 dollars et dollars pour la main-d'oeuvre
ivoirienne des plantations industrielles et celIe des plantations villa
geoises, s'etablissent a 14% et 8% respectivement des couts imputes aux
taux salariaux du marche et refletent les faibles couts d'opport~~ite
estimatifs de ces categories de main-d'oeuvre\. !I
Presentation de l'analyse
6\. Le calcul des valeurs unitaires de la production aux
Voir note 1 a la page precedente\.
ftJ\TNEXE X
Page 3
Tableaux 3 a 7 de l'Annexe VII\. Le flux de couts et d'avantages se
a
trouve aux Tableaux 5 9 et les resultats du taux de rendement economique
sont a la page J\. Dans ces flux de couts-avantages, les chiffres corres
pondant aux couts et avantages sont d'abord donnes nets de taxes et sans
ajustements en fonction des distortions douanieres et le cout de la main
d'oeuvre correspond au taux salarial du marche, net de taxes\. Au-dessous
de chaque ligne de total figure un "total ajuste" qui est le flux de
couts ou avantages calcule en se servant de l'analyse d'efficience\.
Les totaux ajustes ont servi a calculer les taux de rendement economiques\.
Cette presentation a ete utilisee de fa~on a illustrer une ventilation
plus complete des categories de cout qu'il ne pouvait etre obtenu de
l'analyse contenue dans l'etude de cas\.
B\. Repartition des couts et criteres de decision
7\. Outre la rentabilite du projet entier, des taux de rendement
separes ont ete calcules pour chaque element du projet: les palmiers
a huile industriels, les cocotiers industriels, les palmiers a huile
villageois et les cocotiers villageois\.
8\. Un nombre d'hypotheses differentes peuvent etre avancees au
sujet de la repartition des couts entre les elements du projet, chacune
d'elles utile dans son contexte de decision particuliere\. La procedure
de repartition des couts utilisee ici etait basee sur un cadre de deci
sion portant sur un "changement marginal" - c'est-a-dire que l'analyse
visait a repondre a la question: "Etant donne l'existence de plantations
industrielles, quel supplement de couts et avantages resulte-t-il de
l'addition d'un programme de plantations villageoises, etant de taille
relativement modeste, ou d'une petite modification apportee a la taille
d'un programme de plantations villageoises existant et quels sont leurs
taux de rendement?" (\.Toute allusion a ce point est representee ci-apres
"Dar la mention flcritere de decision un"\.) Ce cadre de decision reflete
le jugement de la mission qu'une plantation a grande echelle dans cette
region ne pourrait s'effectuer entierement en fonction des plantations
villageoises ,~ les cont~intes relatives a la disponibilite de la
main-d'oeuvre et qu'il serait necessaire d'avoir un programme de planta
tion base, du moins au depart, sur les plantations industrielles\. La
mission estime que la taille relative du programme des plantations
villageoises par rapport aux plantations industrielles de la fagon dont
les parcelles villageoises sont melees aux parcelles industrielles produisent
une situation ou les couts de la gestion centrale, de l'infrastructure
et des routes d'acces seraient peu affectes meme si les elements plantations
villageoises n'existaient pas\. Les couts de toute la gestion centrale,
les routes d'acc et une certaine infrastructure centrale ont par con
sequent ete attribues aux plantations industrielles et les programmes de
plantations villageoises ne s'assortissent que de couts directs tels
que les services de vulgarisation, les engrais, les outils ainsi Que
des couts et investissements specifiques du projet, s'adressant aux plan
tations villageoises en particulier\.
runrEXE x
Page 4
9\. Une approche de rechange qui sera des comme II critere de
~s~ondeux" effectuerait l'analyse en vue de repondre a la question:
"En l'absence de contraintes concernant 1 'administration, la disponibi
lite de la main-d'oeuvre, la politique du pays et autres s'exergant
sur le processus de decision, quel equilibre entre les elements plan
tations villageoises et plantations industrielles la conception initiale
du projet devrait-elle refleter?" (La decision qui en resulte pour~ait
bien entendu ne choisir que l'un des quatre elements du projet et la
situation risque en fait d'etre plus compliquee du fait de core
plimentarites existant entre les elements du projet\.) Pour ce calcul,
il faudrait repartir tous les couts de fagon a ce que chaque element
figure independamment\. Un calcul complet correspondant a l'analyse
d'efficience en vue de donner reponse a cette question n'a pas ete effec
tue ici, mais une indication de l'effet que les differentes ~epartitions
des couts en fonction des criteres de decision ont sur les taux de rende
ment figure au tableau Les couts des elements Direction du
sud-ouest et routes d' sont, pour le critere de ision un, entiere
ment attribues aux plantations industrielles\. Pour le critere de i
sion deux, ces elements sont attribues aux quatre composantes du projet,
proportionnellement aux superficies plantees\. Les taux de rendement
que specifie le tableau sont calcules en utilisant ce qui sera nomme,
pour la facilite de designation, "analyse du marche ajuste en fonction
des taxes": le cout de la main-d'oeuvre a ete etabli au salaire commer
cial net de taxes (la main-d'oeuvre villageoise sur une base quotidienne
au salaire journalier, net de taxes, des ouvriers affectes aux planta
tions industrielles), les couts n'ayant pas trait a la main-d'oeuvre
sont exprimes nets de taxes sans ajustement par le FCT et les profits
sont calcules comme pour l'analyse d'efficience mais sans ustement
par le FCT pour le traitement et la manutention\.
10\. Si lIon utilise le critere de decision un, la presence des elements
plantations villageoises dans le projet et une expansion marginale de la
taille des elements plantations villageoises paraissent ees\. Les
taux de rendement calcules pour le critere de decision deux correspondent
davant age l'un a l'autre\. Ce resultat a ete obtenu moyennant la simple
reaffectation des couts attribues aux routes d'acces et a la Direction du
sud-ouest et peut encore etre incomplet etant donne que certains couts
d'infrastructure sont encore entierement imputes aux plantations industri
elles\. Relever les couts des plantations villageoises de 10% rend les
taux de rendement propres aux elements du projet assez similaires bien
que les palmeraies villageoises gardent leur position favorable\.
Taux de rendement de l'''analyse du marche ajuste en fonction
des taxes!! d'apres differents criteres de decision Y
Palme Coco Palme Cocote Projet
raies teraies raies raies entier
indo indo ville
Critere de decision "un"
Plantations industrielles deja
presentes ou dont la creation
est decidee\. La decision
concerne l'opportunite des ele
ments petites plantations
villageoises et/ou de modifications
marginales de la taille des elements
des plantations villageoises\.
(Les couts des routes d'acces, de la
Direction du S\.O\. et d'une certaine
infrastructure centrale sont ent
rement attribues aux plantations
industrielles\.)
Estimations en points 16,0 16,9 30,5 22,6 17,1
Critere de decision "deux"
La decision au stade initial de
la conception du projet ou au
et d'une modification majeure
dans les tailles des elements du
projet\. Aucune contrainte au
niveau du choix entre les pal
meraies et les cocoteraies et
entre les plantations indus
trielles et les plantations
villageoises\.
(Les couts des routes d'acces
et de la Direction du S\.O\. sont
repartis proportionnellement a
la superficie des terres\.)
Estimations en points 16,4 17,1 25,0 19,4 17 ,1
Couts des plantations
villageoises + 10%
23,3 ,9
CoUts des plantations
villageoises + 20%
21,7 16,7
Les couts et avantages sont exprimes nets de taxes, ma~s sans ustements
en fonction des distortions du change\. La main-d'oeuvre est etablie aux
taux salariaux du marche, nets de taxes\.
jI_l',mEXE x
Page 6
C\.
11\. Les taux de rendement d'efficience et les epreuves de sensibilite
analyses en vertu du critere de decision "un" figurent au tableau ci-apres\.
Tous les taux de rendement enregistrent des niveaux acceptables et se
caracterisent par de faibles sensibilites aux changements de couts ou
d'avantages\. Les elements plantations villageoises ont des taux de
rendement considerablement plus eleves que les plantations industrielles
indiquant par la qu'il est souhaitable de conserver une approche souple
a l' des rapports entre les elements du projet et peut-etre d'augmenter
la des programmes de plantations villageoises durant la mise en
oeuvre du projet\.
12\. La decision qu'a prise la mission quant aux rapports entre les
elements du projet a ete aeterminee par des contraintes affectant la
main-d'oeuvre et l'administration et par l'experience acquise a la suite
d'autres projets d'arboriculture en C6te d'Ivoire\. La mission reconnait
les avantages potentiels d'une augmentation de la taille des elements
du projet correspondant aux plantations villageoises et recommande que
l'on tienne compte de considerations de ce genre durant la realisation
du projet et la planification de tout developpement ulterieur des palmiers
a huile et des cocotiers dans la region (para\. 3\.05)\. D'autres considera
tions ayant trait aux rapports entre les elements du projet et egalement
a la politique tarifaire relative aux plantations villageoises sont
contenues dans l'analyse sociale de l'etude de cas concernant ce projet\.
ANNEXE X
Page 7
TAUX DE RENDEMENT 1/
Palm\. Cocot\. Palm\. Cocot\. Projet
indo indo vill\.
Estimations en points '9 19,4 21,0 ,6 28,3 21
Sensibilite:
Baisse de 10% des
avantages 17,3 17,3 40,0 26,5 ,2
Hausse de 10% des
couts 17,5 17,5 40,0 26,7 ,4
Baisse de 20% des
avantages 15,0 15,0 ,2 24,5 17,2
Hausse de 20% des
couts 15,8 15,8 38,2 25,2 ,9
Hausse de 10% des
avantages 21,3 21,3 45,1 30,0 22,7
Baisse de 10% des
couts 21,5 21,5 45,3 30,2 22,9
Hausse de 20% des
avantages 23,1 23,1 47,3 31,5 ,3
Baisse de 20% des
couts 23,9 23,9 48,4 32,3 ,0
'3::\./ Analyse d'efficience, critere de decision "un"\. (Les couts des routes
d'acces, de la Direction S\.O\. et d'une certaine infrastructure centrale
sont entierement attribues aux plantations industrielles\.)
£/ Le taux de rendement du projet entier calcule un uti1isant les taux
salariaux du marc he et sans ajuster les couts et avantages au moyen
de facteurs de conversion s'etablirait a 17,1%\. Les taux de rendement
correspondant a chaque element du projet, calcules d'apres cette
methode d'analyse, figurent p\. 5\.
COTE 1)' IVOnU~':
QUATRlEME PROJET PALMlERS A HUlLE ET COCOTIERS
Production annuelle envisagee (tonnes)
Hui1e de pa1me Pa1mistes CQllr~\.h Charbon\.dj;LcoQue
A\. Plantations
1980 300 75
1981 11,000 1980 2487 622
1982 18,920 3595 9188 2297
1983 23,760 4645 18750 4688
1984 29,480 5835 26725 6681
1~85 31,680 6360 31175 7794
1986 31,680 6360 33600 8400
1987 (a maturite) 31,680 6360 34500 8625
B\. Plantations villageoises
1980 20 5
1981 627 113 235 59
1982 1122 209 1120 280
1983 1210 282 3180 795
1984 1628 329 5735 1434
1985 1760 355 7105 1776
1986 1760 355 7700 1925
1987 (a maturite) 1760 355 8200 2050
TOTAL
C\. \.-
1980 320 80
1981 11,627 2093 2722 681
1982 20,042 3804 10308 2577
1983 24,970 4927 21930 5483
1984 31,108 6164 32460 8115
1985 33 ,4'10 6715 38280 9570
1986 33,440 6715 41300 10325 8 ;;;
1987 (8 maturite) 33,440 6715 42700 10675 ~ ~;l
i--' t;:j
CD
lJl &a
r::
M
\-"
ANNEXE X
Ta\.b1eau 2
COTE D' IVOIRE
gyATRIEME PROJET PALMlERS A HOIU ET COCOTIERS
Previsions des 2rtx d'huile de ~a1me
en termes constants de 1976
(en FCFA/t\.)
1980 1981 1982 1983 1984 1285 on
A\. HOlLE DE PALM!
Prevision des prix en 1976 ];\./
Conditions constantes
$/MT Cif Europe 378 380
FCFA/t\. ]j 92,610
======
93,100
=====
d ~
385
~
388
d
======= z=a!lilt':a::
=- ==-=a=
Couts variables en % de
la valeur Cif
Assuranc\.e 1\.25%
Commission 2\.35% 3\.6% 3\.334 3\.352 3\.378 3,396 3,422 3,440
Couts fixeslt\.
Fret 8,000
Transit 550
Chargement 100
Dechargement 200
Frais bancaires --1Q\. 8,930 8,930 8,930 8,930 8,930 8,930
Transport local 1\.620 1,620 1,620 1,620 1\.620 1,620
Total des couts 13,612 13,628 13,652 13,663 13,693 13,710
Valeur hors usine 1/ lo:lA
~l\.~~?\. 70
~==-
70 "07
==\.6== ~~!~l~ Ql OQQ
=:cA:c= ><1 ""'0
==tt:_=
Valeur hors usine(rendement) !:J 79\.126 79,598 80,307
\. ~ \.,\.,\.
80,779
-==
81,488
===-==
81,960
-=--==
B\. HUILE DE PAk~ (P~~ATI0NS VILLAGEOISES)
Valeur hors usine/tonne d'hulle de palme 79\.198
Moins 1es frais de transformation ~/ 18,7'211 79\.907 80,379 81,088 81,0:;1;'0
Valeur nette de l'hui1e de pa1me avant uaine 6 I~
15\.500 ~ ~ 15\.500 12,;00
- '6 3f226 63,698 fit, hQT 6lt\.'!l~ ~~§, ~£~
Valeur nette de l'huile de palme avant uaine
(Rendement) 11 66,733
=-=-=
1/ Source: Tableaux de EDP Commodity Forecast, novembre 1976\.
21 Au taux de l$EU = 245 FCFA\.
l/ Ce chiffre est utilise pour les tableaux 6 et 9 des benefices et couts\.
il Avec les ajustements des coGts locaux de manutention et de transpor~ par les facteurs
de conversion conventionne1s\.
51 Voir Annexe V, tableau 1\.
!/ Ces chiffres ont eta utilises dans 1es tableaux 7, 8 et 9 de coGts et benefices des
plantations vi11ageoises\.
II Avec les ajustements ces couts locaux de manutention et de transport par FCC\. La valeur
a ete utilisee dans les calculs du taux de rentabi1ite economique\.
,
,
\. f'
-\.'
'j
" '\.
AlINEXE X
Tableau 3
COTE DI IVO IRE
QUATRIEHE PROJE'!' ?AL\fiERS A HUILE ET COCOTIERS
Prevision des prix dthuile de pe\.lm\.i:::te en te\.r:t!\.es constants de 1976
(en FCFA/tonne)
1/ Source: tableaux de previsions denrees de base\.
2/ !l\.u taux de 1 :BEU
= 245 FCFA
3/ La valeur est utilise pour les tableaux 6,7 et 9 des benefices et couts\.
~ ~,:"ec les ajuste~ents des couts locaux de manutention et de tra\.rLsport par les
tacteurs de ~onversion conventionnels\. La valeur a ete utilisee dans le calcul
du taux de rentabilite economique\.
ANNEXE X
Tableau 4
COTE D' IVOlRE
QUATRIEME PROJET PALMIERS A HUlLE ET COCOTIERS
Prevision des 'OriX de--conrah -en t-ermes constants ere 1976
(en FCFA/tonne)
1985 on
Prevision des prix en 1976 Y
Conditions constantes
$/MT Cif Europe 332 3~1 362 374 385 327
FCl"A/tonne Y 8~\.055 G5,9 Q5 ~~:?:~~~ ~~:?:g~~ 2~~~~~ ~Z~~g~
====== ======
Cof\.i'!ts variables en % de
Ia valeur CIF
Assurance 1\.25%
Commission £:12! 3\.6% 2\.990 3\.096 3,193 3,297 3,396 3\.502
CcUts fixes/tonne
Fret 8,000
Transit 1,100
Dechargement 800
Frais bancah'es 80 9,980 9,980 9,980 9,980 9,980 9,980
Transport local 1,620 1,620 1,620 1,620 1,620 l,620
Total des couts 14,590 14,696 14,793 14,897 14,996 15,102
Valeur hors quai 68,465 71,299 73 ,897 76\.733 79\.329 82\.163
====== ====== ------ ====== ====== ======
!o1oins les frais de 13~750 13 2 750 13 1 750 13 2 7 50 13 2 750 13 1 750
transformation '1\./
Valeur hors plantation, '=l 54,715 57,549 60,147 62\.983 65,579 68,411
====== ------
------ ------ ====== ------ ------
(FCFA/tonne)
g&:?:~~~ g~d~~~ 71,227
Valeur hors plantation 21 57,529
===== ~£:?:~£~ 65,797
====== =====:
(rendement)
1/ Source: tableaux de ~revisions des ~eurees de base\.
2/ Au ta~~ de 1 $EU = 245 FCFA\.
3/ Voir tableau I, Annexe V
~ Ce chiffre est utilise pour les tablea~~ 5,8 e~ 9 des benefices et couts\.
21 Avecles ajuste~ents des couts locaux de manutention et de transport par les
facteurs de conversion conventionnels\. La valeur a ete utilisee d~~s Ie calcul
du taux de rentabilite economique\.
COTE D'IYOIRE
gUA'I'RIEM}~ PROJE'f PALMIERS A IIUILE E'f COCO'I'IERS
\. ~aies industriel1es
Avanta~es ~eonomi9ues et flux des eo~ts
(en mi1iions de'FCFA)
1990
1916 19H 1918 1919 1980 '981 1982 1983 1984 1965 1986 1987 1988 1989 2005
A\,AN'l'AGJ<\.:::j
Yaleur de l'huile de palme A,U 1512 1910 2390 2584 2584 2584 2584 2584 2584
Valeur des palmistes 93 _176 236 307 ~ 348 348 348 2!!t\. --\.l!LR
COUTS
'I'ota1
'1'ota1 ajuste
Defri'Chemen:t des terrains
!l
fl\. 964
;,;;\.::;:::
970
"\. ----= -----
1686
====
1696
2146
====
2157
a::==
2697
====
2711
2932
2947
=-== ==-
2932
===;:;
2947
=-=
_
2932
;:;-===
\.
2947
2932
;;:;:=\.=
294?
2932 2932
===a :;;=:::::::;;;
294\.? 2~~ 7
"'==- =
et pistes de desserte 357 n4 833 18 49 49 49 49 31 40 40 40 40' 40 40
CoG'ts agrico1es 83 272 279 140 131 127 114 116 108 107 105 105 105 105 105
Dt;penses de plantations 9 96 15 11 15 1
, 154 154 154 154 154 154 154 154 154 154 154
Heco1te et ramassage 27 111 111 170 182 184 115 175 161 195 194
Investissements 105 480 3~5 11 30 155 222 116 50 154 195 66 150 150 150
Gestion du Sud Ouest 25 37 19 35 35 40 35 35 40 35 35 40 35 35 35
mm
Investiasements industriela 120 450 720
CoG'ts d' uainuge
~IiH 192
~
251
~
442 442
'fatal m 1\.659 ~ l2! 1\.146 ~ !\.l\. ~
-
22 222 9 1 92 1\.121 1,120
Total
!l
aJuat~ !l
~
51
11
-
1,526 1,404
-==-='
Utilise pour le taux de rentabilite economique\.
\.255
-=- - -
1,1)11 1,032
-- --
Yair Al{NEXE X, para 6\.
1\.41'5 715
--,
106
-- -- -
Rt');:> 1\1Q 742
-
MA
-- --
,1\6 "\.,\.
>-3i~
ria
",1'1
cafE n' IVOlRE
S@'l'RU:ME PflO\.rET PAl\.MH\.'RS A HUII\.E E\.'r COCO'rIERS
\."
Pnlmeraies Vi11aaeoises
Avo\.ntages econoroiquel> et flux des coUts
(en millions de FCFA)
19'76 1971 InB 19'{9 1980 1981 1982 1983 1981
, 1985 1986 to
2005
AVAN'fAGES !I
Valeur de l'hui1e de palme 40 72 78 107 116 116
Valeur de palmistes 5 10 li --11\. -12\.
45 82 92 124 135
Total
=-=--;::\.
Total aj uatE ?J 86
=~ \. ==
96
="\.
\.=
)30
\.-a;:::::IC':
142
==;
142
t==~\.
~
CoUts du proJet-et autres
investillsements 23 36 36 2 2 2 3 3
Trnvaux de vulgarisf1tion pendent l'entretien 6 6 6 6 6 6 6
'l'ravaux d' exploitation
l'eti ttl onti1s
Bnt;rais
6
1
11
2 "
4
1 "
1
5
1
2
5
2
5
1
2
5
2
5
1
2
5
1
2
'fota1 ajuate
1
--
1 _\.
23
40
3-
1,1
34
- -1
!L
-
10
- - - - --
10
14
9
15
10
11
=;::
12
l'!
12
!/ Lea coUts de trans format jon ont ete deduits\.
Y Utilise pour Ie taux de rentabilite economiqne\. Voir Annexe X\. para 6\.
~g
:H
COTE D'IVOIRE
QUA'l'HIEME PHOJE']' PAl14IEHS A IruILE l!:T COCOTIERS
Cocoteraies Vil1ageoises
Avantages economiques et flux des coOts
(en millions de FCFA)
1976 1917 1916 1919 1980 1961 1962 1963 196~ 1965 19116 1967
2005
AVAN'i'AGES !I
Vt\.t\.lellr du eoprtlh 1 14 67 200 376 486 521 561
Valeur du charbon de coque 1 5 ~ --1!!\. \.l1 ~ 40
'f'ota1 1 15 72 216 404 521 565 601
== == == =:= :::== ::=
COu'l'S
CoO~s
Total aJuste
du proJet et autrea
investissements
Y
21
j
80 166 173 82
1
;;:===
16
61
77
==;;;:;;
31
228
:;;;;::\.:==
2
426
===:;::;:
11
550
=:::0:;:::;;
11
5<11
::o:wz:==
11
- \.,
634
4
-
Traval~ de vulgarisstion pendent 1'entretien 19 19 20 20 21 21 21 21 21
Travaux d'exp1oitation 5 16 24 7 4 3 ~ 8 11 15 16 16
I'eti'teB outils 1 1 1 1 1 1 1 1 1 1 1 1
Engrsis ~ ~ ~ 12\. l2\. l2\. l2\. l2\.
'rotal
Total ajuste
£L
2L 1
21\. 193
\.!22\.
200
178
1~5
131
124
113
\.22
86 61
~
62
80
~
81
-ll\.
81
&\.
,
-- --------- --- \.
Les coUts de trwlllformation ont ete deduits\.
£/ Utilise pour le taux de rentubilite economique\. Voir Annexe X\. Dara 6\.
~6
~ x
0>
"'"_\.- \. _\.
CO'l'B D'IVOIRK
QUA'l'RIEME PRO\.JE'I' PAJ\.MnRS A HurLE E'r COCO'I'IF:ns
Avantae;es econolni!,lues et flux des (loUts Eour I' ensemble
(en' millions de l<'CF'A)
1990
to
1976 1977 1976 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1969 2005
Rev<::nus
Valeur de l'huile de palme 911 15811 1988 2497 2700 2700 2700 2700 2700 2700
Valeur des palmistes 98 186 250 321, 367 367 367 367 367 367
Valeur du coprah 17 151 620 1381 2129 2619 2826 291
11 2941 291
11 2941
Valeur du charhon de coque 1 13 50 108 158 187 202 20B 20B 208 208
'1'ot111 113 1172 21
,,,0 ~727 ~QI3 6095 6216 6216 6216 6216
'rota!' aJuste 1} 19 1195 3811
----
5239 60\.33
--
6265 6391
--
b39l 6391
==== ===\.:= ===== ;===:= ===== ===== ==;:::;:= -~ "'--_\.
_\.;\.
Couts :;::;=:::::;;
Plantations de palllliers
Ii huile 579 1,659 1,6:10 3611 1,146 1,175 1,618 832 822 922 961 657 928 1,121 1,120
Plantations de
cocotiers 1,189 1,143 572 374 429 506 506 522 544 585 556 560 617 617 617
Pluntations vi11ageoises
de ptdillier a hui1e or 36 40 41 11 15 14 15 17 17 17 17 17 17 17
Plantations de cocotiers 27 ~ 200 124 -22\. --1\.1\. ~ ~ 81 ~ --\.Jl\.!\. 81 81
i-3
'i'olal "~2~~ 1l2\. la\.!!l2\. -\.Wa ~ 1,633 hQ12\.
~
1\.131 1,820 2\.236 1,604 1,836
'rota! aJuste II 1,05'(
==::::
<!,b58 2,089
==:1== --=;;:;;= \.
'(82 1,523
a __c _~-\.::n:I
1,594
-=x:::=_
1,960
~==
1,234
=====
l,21J6
===:;:;;z::::
1,382 1,390 1\. 296
===-=-= ====== ===\.;:;;::\.=
1\.416
_=====
1\.590
==-~=\.
1\.59~
=====m
0>
II'
~
6
><
'0
1/ Utili se pour Ie taux de rentabil i te econoroique\. Voir Annexe X, para 6\.
COTE D'lVOlRE
QUA~Rlil'ffi PROJET DE PALMlERS A BUlLE ET DE COCOTIERS
Suivi
1\. La Direction du sud-ouest tiendra un rapport annuel des resultats
et appreciera les realisations en fonction des estimations etablies par
1 'evaluation\. Ces donnees serviront a la fois d'instrument essentiel de
gestion pendant la duree de vie du projet et pour l'elaboration eventuelle
de tout projet ulterieur\.
2\. Des tableauxindicatifs ont ete proposes (Tableau 1 pour Ie
secteur cocotiers et ~ableau 2 pour les palmiers) et seront definitivement
mis au point avec l'agence d'execution durant la premiere mission de
supervision\.
3\. Pour chaque article, pour chaque element et pour chaque annee
du projet, les tableaux indiquent les resultats reels (A), l'estimation
etablie lors de l'evaluation (E) et une troisieme colonne pour A en tant
que pourcentage de E\. Les resultats seront compares compte tenu des
facteurs d'inflation, appliques aux couts de base plus les provisions
pour depassement des quantites comme l'indique le ~ableau 1 de l'Annexe
VI\.
h La Direction du sud-ouest redigera\. en outre, des rapports
trimestriels sur l'avancement des travaux et les depenses, rapports qui
seront soumis a la Banque\. La presentation de ces rapports sera elaboree
et examinee avec l'agence d'execution au cours de la premiere mission
de supervision\.
\.
COTE ll'IVOlllE
Q!JA:rl! n:ME PRD\.JEfPATilTrRSX In) lI\.t! ET COCOTlf\.RS
fl-{earatiofl des r81)po['ts d t \.actlvlte'
AII' 1 AP 2 Ali' )
Un I Lei' Rende:Qwnt (A) list !malton (1::) A RendwlW::o[ tli) Ib<tn",[ Ion (Il) A MondtHl)unt 'A) Kot h \. tton (I,:) !
4cluel au moment 'i IIcLu~l 4u UWf1ent: E actuel au """",ot I!
de J '';vuluation de 1 \.~a lUilL Ion de l'cvalu4t ion
It\. St:CnmR COCOnF:1I
(M) PI\.oLlllioRt)
n:frJcht:lllo~nL des terrains pour Ml ba 2000
U;frichem\.ent dt!s terraina\. pOOl:' AP2 b\. 2000 1250
HefcicheIlH!,)\.t dt!8 terra tn\. pour APJ b_ 1500 150
PSantage h_ 2000 3250 2250
11
Cnute pour 14 pre-partition du terrain ~'CF"'" 116 481 152
coiles pour Ie tI'veloppement du terr\.-In FCFilln 161 314 312
o:~enaea ~our lee elantationa
Salel en ~'CI'''''' )7 63 64
frats de transport FCy\. 10 21 21
Fey\.
AuLTC$ 7 15
l!
Sou\. totsl S4 99 104
I~K~~e[1 ~t batimcnt& FC1'\. 201 2ll 37
Y\.!~~ FC'\. 34 42 8
Installatlon\. at materiel \.'C,\. \. 84 75
Pt:ramme I , ,
Uow\.bre d'cWV1oye6 oece:u:alrea, 2S~ 551 648
done, travailleura Bur 1~ tert_in 204 449 540
(b) "1;\."11"-'" de ~la018t 10\. \llllol\col \.
d:elrfchemll!nt et plantase h\. 200 550 1250
peet"! facteur\. de product ion rCFAm 15 44 105
eape<::ea fcr"", 1 20 48
!I Tous lea coile\. aant de\. c\.O:t" de baa\.; Ie rC!lodement aera cowparl apr\.!a addlt ion d' hBPr:vua tel 'IU'!l\dlque au tableau 1 de l'Annexa VI\.
!!
\.
COTE f)'IVOII!!(
OllAT" lliMf\. PMOJIIT PAi"MTER\.'iA!iU H\.E n COmTiERS
Preparation de\. rapports d'actlvH\.a'"
"I' 1 AP 2 liP 1
Unit: Ran\.!ement (A) Ellt iulat 10n IE) A R<iriJement (A) Est !mati\.,\. (E) lend_ant (A) Est !mat Ion (E)
~ccu\.l (II) au lIDmeat
de plvaluation
!
p\.
u\.ctuel au IIUOWtmt
de 1'/valuat Ion
A
i
Betuel
\.
au lIu:\.nent
de Itcval, t~
It\.
-
A\. S~C'fJiUIl I'Al\.l1IElt!i A IflllLI!
(a) Planun; 1\.m\.
DefrJchomenl dt::M turrttlmt p()ll1r AP2 \. 2000 1000
JSOO 1500
Utffrtclu:nwm\. des terrain\. pour APJ ha
PltlHl age I JOOO 5000
Cutiltl puu'r 14 IJr\.;'partlt loa du terrain 1/ FCF"'" 406 879 lJ8
Cuota pour Ie develoPPt:\.Io\.cnc du terral~ FeF"'" 89 292 Joo
,
DepefltU!$ pour h\.l8 planCations
SaJaJrea rCF"'" Ii 59 99
Fr\.uJail de tCdnsport
AulrCd
rCF"'"
FCfAIR
1
1
J2
II ,Ii
42
Sous total 10
1\.o,Kt::Ia\.eot:8 et b!t Jnwnt \. FCFAIR 18 )51 238
vAlle \. !=\.! \.'CF"'" 42 114 79
InstdillathHu, et lAftterfel fCFAa 15 75
Peraonne 1 ,
Nomt\.re d'eutpluycB neee aires\. 311 1144 1283
dont" travdllleurB lur Ie terrain JOO 1011 1014
(0) ~uBr4lRtQ,t!: de platktatloluJ vl11aseoie\.,
de ~r ic\.heu,en[ \. t pl4intage lia 200 )00
pret\.: fucteura de production reFAIR 13 21
cupiceJt 'C~'Am ]8 14
11 'roue lea coote BQut de\. couts de b -e\. ie rend~mc::llt »er" compaee'" apre» add1\.tlo,,~d' bnpr:v\u:J tel qullndlqu~ au tableau I de l'Annexe VI\.
~~
I'!
N
\. \.
IVORY COAST
SODEPALM OIL PALM
EAST OF SASSANDRA
SQDEPALM PLANTA TlONS
Existing 0\.- in the Course of Establistlm(,\.'flt
«
z
«
'"
"
OTHrfiS
State ond Private E'lfatl\.>S
OIL PALM OUTGROWERS
Outgrower Sector ( 0\.$\. , Radius fr()lT! Mills
Main Roads:
Secondary Roads
OCEAN
I
I
I
" \.
r t~-~/--,
---)
\. --\. \.
,,;
,,- \./ i
~GBOVILlE
Lal-\.otil -~
\
\
\
'~ \.
"
"
\.\ \. \
"
-:'-/\. \
/
I
\ DAM
\
"
\
J
I
\
\ "~j"'~~
~~~ GHANA
Grand Bassan\
"Grand Lahou
,ASSANDRA
~ij)
:n'"
r O
~'"
"'
ad'l:
B RD 12157
APRIL 1976
VORY COAST
FOURTH OIL PALM AND COCONUT
PROJECT
SOUTHW
~ J ESTATE PLANTINGS
L __ --\.JI OUTG"OWER PLANTINGS
~l OPTIONAL PARCELS
DEWAK= AREAS UNDER INVESTIGATION
1978 2, GOO /Iii
1979 3,000 hil 8 SECTOR NUMBERS
rolAL 5,500 h;! MAIN EARTH ROADS
, SECONDARY EARTH ROADS
TRACKS
_ _ _ _ INn RNATIONAL BOUNDARIES
7
f
1918 2,500 hil
t
TOT AL 5~500 hi!
«
5
~'ERO COCm,UT
"\
'" ESTNE
!977 1,750 ha
" 1978" 2,250 rd 6
UJ "TOTAL 4,000 h3
)
<0 (
\
')
3
,
\.,
'I I
),\.?~ i01 ,1 )¥--
- ""f )('">-'
::\. 'u\.,\.-_~)I?n (\.;:}i
\.is\.
-\ I,;rcf(\),( "'_::,'J~~
\" \.
-\.)
2
\\.
rP'VO
'-\.'\,\. OSvullre
_\.-\. 03bO~ Ii
ABIDJAN
~ 4' | APPROVAL |
P004688 | Document of
The World Bank
FOROt omcLL uSE ONLY
Repot No\. 5710
PROJECT COMPLETION REPORT
THAILAND - FOURTH EDUCATION PROJECT
(LOAN 1271-TH)
June 14, 1985
Education Division
East Asia and Pacific Regional Office
Tis documet bh a resuictd ndbtom god may be mod by reciet only in the perfoace of
dtir olcal dull s ecmonts may not othewise be dislosed withot Wold Bnk ntorlztion\.
FOR oMCIAL USE ONLY
GLOSSARY
AED Adult Education Department, subsequently re-named Non-Formal
Education Department
AVCs Area Vocational Centres
CIDA Canadian International Development Agency
CPU Central Project Unit
DSS Diversified Secondary Schools
EMISC Educational Management Information System Centre
ERTV Educational Radio and Television
GED General Education rDepartment
LEC Lifelong Education Centre
NEC National Education Commission
NESDB National Economic and Social Development Board
NFED Non-Formal Education Department
NISD National Institute for Skill Development
OSP Office of Special Projects (the project unit in the Department of
General Education)
PPERCs Provincial Primary Education Resource Centres
TMC Training and Maintenance Centre
II docaent haa restricted distbution and may be used by reipients ony in the performance of
tbi of S duue Its ounts may not otrwise be disdosed without World Bank authorization\.
TABLE OF CONTENTS
Preface
Easic Daa t-i )4iv)-
Project Highlights (-}(vii)
CHAPTER k h PROJECT BACKGROUNND
- Socio-Economic Setting 1
- Education 2
The System and its Philosophy 2
Statistical Data 3
Non-Formal Education 3
Educational Achievements and Perspectives 4
Educational Finance 5
- The Project 5
Project Generation 5
Project Objectives 6
Project Components 6
CHAPTER II: PROJECT IMPLEMENTATION
Overall Implementation Schedule 9
- Project Implementation Mechanism 9
Secondary Education Project Implementation
Sub-Unit 9
Adult Education Project Implementation
Sub-Unit 9
- Sites 10
- Professional Services 10
Architectural Designs 11
- Construction 11
- Furniture and Equipment 12
- Technical Assistance 14
- Other Components 14
CHAPTER III: PROJECT COSTS
- Appraisal Estimates versus Actual Costs 15
- Construction Costs and Areas 15
Professional Services 16
- Furniture and Equipment Costs 16
- Technical Assistance Costs 16
- Disbursement Schedule 17
- Other Components 17
TABLE OF CONTENTS (Coot\.)
CHAPTER IV: ATTAINMENT OF PROJECT OBCECTIvYES
- Diversified Secondary Schools 19
The Process of Diversification 19
CurriclAa of the Project Schools - A Proposal
for Rationalization of Secondary Education 20
Reassessing the Role of the Diversified Schools 21
Enrolments and Output 21
Adequacy and Use of Practical Facilities 22
Staff Development and Technical Assistance 22
The Cost of Diversification 22
DSS Evaluation Surveys 23
- Training and Maintenance Centre (TMC) 23
- Adult Education Component 24
Project Objectives - Targets and Achievements 24
UMajor Issues 24
Overlapping and Duplication 25
Limited Coverage and [nadapted Programmes
and Premises 26
The Technical Assistance Impact 28
- Fellowships 28
- Expert Services 28
Evaluation Surveys 29
- Primary Education Studies 29
- The EMISC Computer System 30
ANNEXES
-1i - 1/10 Educational Statistics, Enrolment Projections
and zucartion Finances (31-42)
11/1 Project Implementation Schedule 43
11/2 Project Implementation Sub-Units' Tasks 44
111/1 - III[4 Project Costs and Disbursement Schedule (45-53)
IV/1 Special Covenants 54
IV/2 - IV/3 Secondary School Curricula (55-56)
IV/4 Reassessing the Role of the Diversified Schools 57
IV/5 DSS Evaluation Survey (Summary of Results) 60
IV/6 Adult E-dcation - Functions of the Regional
and Provincial Centers 61
IV/7 Primary Education Study IL 62
A lTAQ lEHT I: Coments from the Borrower 63
PROJECT COHPLETION REPORT
THAIAND - FOURTEI EDUCAION PROJECT
(LOAN 1271-T21)
PREFACE
This is a project completion report (PCI) ou the Fourth Education
Project in Thailand, for which Loan 1271-TK was approved on May 27, 1976 in
the sum of US$31\.0 million\. At the request of the Government, a total of
US$4\.7 million (about 15% of the loan) was cancelled in October 1982 and
March 1983\. The undisbursed balanee of US$910,185\.51 was cancelled on
September 6, 1984, vhen the loan was officially closed\.
The PCR was prepared by a UNESCO project completion mission under
the auspices of the World lank-UNESCO Cooperative Program\. The mission
visited Thailand in December 1983\. Prior to the field visit, the mission
made a study of the project files in the Bank's East Asia and Pacific
Regional Office\. While in the field, the mission consulted relevant draft
documents prepared by the authorities and held discussions with Government
officials involved in the implementaiton of the project\. Following a Bank
review of the draft PCR in February 1984, UNESCO completed the PCR in August
1984\. The PCR was further updated in November 1984 by the Education Projects
Division of the East Asia and Pacific Region, particularly the Basic Data and
project costs based on the final disbursement figures provided by the Loan
Department\.
In accordance with the revised procedures for project perfor-
mance auditing, this Project Completion Report was read by the Operations
Evaluation Department (OED) but the project was not audited by OED staff\.
The draft PCR vas sent to the Borrower and its agencies and comments received
have been taken into account in finalizing the report and are reproduced as
Attachment I\.
l(v)
PROJECT COMPLETION REPORT BASIC DATA SHEET
THAILAND FOURTH EDUCATION PROJECT\. LQAN 1271-TH
KEY PROJECT DATA
Item Appraisal Actual or
Expectation Current Estimate
Total Project Cost
- in US$ (million) 78\.3 60\.3
- in Baht (milliou) 1,566\.8 1,244\.6
Cost Underrun
- in USS (million) 18\.0
- in percentage 23\.0Z
- in Baht (million) 322\.2
- in percentage 20\.6%
Loan Amount (USS million) 31\.0 31\.0
Disbursed 25\.39
Cancelled 5\.61
Repaid to Bank (as of Oct\. 31\. 1984) \.70
Outstanding 24\.69
Date Physical Components Completed Sept\. 1980 March 1982
Proportion Completed by Above Date 100% 70\.0Z
Proportion of Time Overrun 32\.0Z
Final Performance: Cost - better than appraisal expectation
Time - worse than appraisal expectation
Institutional Performance: Better than appraisal expectation
OTHER PROJECT DATA
Item Original Plan Revisions Actual/Estimate
First Mention in Files August 7, 1973
Government's Application July 1974
Negotiations April 21-26, 1976
Board Approval May 27, 1976
Loan Agreement Date September 13, 1976
Effectiveness Date February 9, 1977
Closing Date June 30, 1982 June 30, 1983
Dec\. 31, 1983
July 31, '984 September 6, 1984
Borrower The Royal Government of Thailand
Executing Agency The Ministry of Education, Thailand
Fiscal Year of Borrower Oct\. 1 - Sept\. 30
Follow-on Project Name Fifth (Multipurpose) Education Project
Credit 913-TH
Amount (USS million) 35\.0
Creait Agreement Date June 28, 1979
MISSION DXA&
Item Sent MoutbhYear No\. of No\. of Man- Date of
by Weeks Persons Weeks Report
Identification/
Reconnaissance Bank May 1974 4\.3 1 4\.3 06/28174
Appraisal Bank Aug/Sept 1974 7\.3 7 A 51\.1 10/09174
Post-Appraisal I Bank Jan\. 1975 2\.0 1 2\.0 02/12175
II - Aug\. 1975 2\.8 1 2\.8 09/09/75
III Aug/Sept 1975 2\.2 1 2\.2 09/29175
IV Jan/Feb 1976 4\.9 3 14\.7 02/18176
Total 23\.5 14 77\.1
Bank Supervision Month/Year No\. of Mission Members
Missions Days Architect Educator Economist Other
I Aug\. 1976 29 1
2 Nov\. 1976 10 1
Z1H May 1977 5 1 1
4 Sept\. 1977 1 1
5 Nov\. 1977 10 1
6 May 1978 16 1
7 May 1979 23 1
8 May 1979 7 1
9 July 1979 4 1
10 Oct\. 1979 13 1
11 Dec\. 1979 10 1 1l
12 July 1980 10 2 1 1 b
13 Feb\. 1981 4 1 2 l°
14 Dec\. 1982 14 1 1
15 May 1983 2 1 1
Completion
Mission/Unesco Dec\. 1983 20 1 1
Total 178 12 12 1 2
/a Comprising two economists (one of whom was mission leader), and one
each of the following: mass media specialist, architect, educator,
broadcasting engineer and accounting specialist\.
lb Mass media specialist\.
(iv)
WITHDRAWAL OF THE PROCEEDS OF THE LOAN
Category Planned Allocation Actual Disbursements
(USS °mio) (US$)
(1) Civil Works 10\.4 11,693,787\.34
Professional Services 0\.6 862,544\.91
(2) Furniture and Equipment 8\.5 10,669,078\.34
(3) Specialist Services and
Fellowships 2\.0 2,164,403\.90
(4) Unallocated 9\.5
Total 31\.0 25,389,814\.49
Cancellations
Effective October 7, 1982 $3,500,000\.00
Effective March 28, 1983 1,200,000\.00
Effective September 6, 1984 910,185\.51
Total $5,610,185\.51 S 5\.610 185\.51
Original Loan Amount S31\.000,000\.00
COUNTRY EXCHANGE RATES
Name of Currency Baht
Year:
Appraisal Year (1974) Average Exchange Rate: US$ - 20 Baht
From 1981 (for project accounting) US$ - 23 Baht
7AfA - FaM EDUCE= PRO WM I(271-
7fe Project and its Oblective
1\. 1 le Fourth E&rnatix Project in Thailand m estiimatd t et the equlent of US$78\.3
mdlnio\. It is fiuixed In part by To 1271-M fw IUS$31\.0 mil1io, signd on September 13, 1976\.
fle low bee effective an February 13, 1977 and c3osd an Septemer 6, 94 wEth 26 tlSw
delay, doe party to tie scarcity ofcounxterpart fiuxls and staffkrg problem lu tie a&it efh~tedon
project 1-b t 2\.1 and 2\.6)\. Odhe cztaf mee related to
tie Mirdstry of E&icm s reI ,est, r nPb the Buk, to me sw of tie project's lefove
fiuds for asditfml i not coered in tie orgiml get Se ral t ese mere m
initiated uti after the crigiral cbsr g date and all but (we 6e not c1eted uth me 6-15
mrrotis r it (p\. 7 and Am 1;14)\.
2\. lIe project's objectis anx tie proposed to sttan than (project oziptuots) :e
(i) to eeid the pronsim of dEveE\.fied secu Isxy educadoo In p es o thzq
pratcal faciliies aid tebmiil asit fr 50 secxxxkry sdioJs (Diversfied Secmxxay
Sdxols or DS&), and the Trazxi arx! Caere eIIC); and (ii) to estwaih a mdtimmide
ado t e&hxatim system tbrough crxetractimg, furnisbiga equipplng fowr regnml and 24 promv-
ctal ailt educaticntrs aid proiddxg the emsic al
3\. here Ys a 23\.0 per project und i In doll valu (2D\.6 p in Babt value)
bec3se of lager site deoeipmet casts for tie DUSs, o prvfemal few md qxuipmelc
cos;ts ad a reduction rin tecl a_r paragapbs 3\.1-3\.12)\. At G iuent reue saw 15
percet of the low (US$4\.7 mUinon) m c leda Oc tb 7, 1982 aid Is 284 , 2983, aIix the
uodisbursei balaxE US$910,185\.51 s caneled on September 6, 1984 w1m the low rur officaUly
cloed\.
l-e Project's Oveal Impact
4\. 7Ie project c be definitely csidezd as sai sful with Its qtantitative targets readied
or larely surpassed: tie Diversified Sdiools =iked a I in provldirg diversified
educaton in proinces outside BEgC and the adilt e&xetio sygte is weU-estalbiied and
effecively frirctiwi:g\. Bxevw, projects of this i are not imt to solve all the
probleis of a particular au-sectwr bit :xoy to catdbte to this effect and/or to sere as model
fcr futher action\. , sefal sectoal problem, afwdy Ideitifled at appraisal, still edst;
in addition, there are certain directly axumcted sdth tie project\. mhe foUovig
pmmgraphs sm up the obeevatiosad conclusionI of the missim\.
le n Process
5\. here were no rejor iulazde ataon problem\. The shortoouimp obseere Indide: delays in
cdonbecause of budget cuts (paragcapbs 2\.18 and 2\.19); pmrob esumlt frms
uiDrairg the AduLt Education Di'visim into a Dertment and the cx,seqet- dispersim of the
tecbrnial staff of teieg pmject i sub-uldt severl div'iorg
(p 2\.6 aoxd 2\.7); quality acd desig of furaiture for the -:,lt edxaticn xup2t beca
of aof the private firm which udertock the emctim (p 2\.24-2\.26); aox
diffiz:uldes In the prepar of equipzet lits and defimitin of for the adult
eucation component for ladc of eyperiece In this area\.
-(vi)-
6\. Conclusions drawn suggest that: (i) the CPU's eKtension of
authority yielded positive results and reduced delays considerably
(paragraph 2\.3); (ii) although the centralized pattern of the secz!d-
ary education sub-unit say have definite advantages over the decentral-
ized one of the adult education sub-unit, a crucial fact remains the
competence and degree of involvement of high-ranking administrative
officials and technical staff of the unit; in additi-i, several key
NEED personnel involved in the project feel that there are definite
advantages in the decentralized pattern, such as closer coordination
between project and non-project components, smoother transfer of work
after project completion to regular operating units and opportunity to
upgrade staff in all sections of the Department rather than in the pro-
ject unit alone; aid (iii) desig of furniture should be oetrusted to
e perienced staff directly involved in the Implementation of the pro-
ject aid that quality control at delivery is of the utmost importance\.
The Diversiied Secondary Schools (DSSs)
7\. Obervations on this compcnent are the DSSs offer mainly the
compulsory part of the diversified curriculum which is a rational deviation irom
the educational reform and the appraisal proposals (paragraphs 4\.9 to 4\.12); the
facilities proviked are adequate for the programmes offered and the staff is
well trained; enrolments surpassed by 18 per cent the target which created
over-crowding in Lertain workshops (paragraphs 4\.13 to 4\.16); practical
facilities are fully utilized during regular school hours but, so far, rarely for
adult education activities which are among the appraisal proposals (paragraphs
11\.17 to 4\.20)\.
S\. Conclusions are: (i) the present practice of- offering only the
compulsory practical part of the curriculum is sound and it is in line with the
proposals for rationalizing secondary education (paragraphs 4\.11 and 4\.12 and
Annex IV/4) (ii) the fact that enrolments surpassed the target did not seriously
affect the quality of education as it is to a large extent offset by the revised
programmes which offer little or no specialized subjects (paragraphs 4\.9 to
4\.12); (iii) the programmes are well structured and organized which reflects the
beneficial influence of the technical assistance programme for the DSSs
(paragraphs 4\.21 and 4\.22); and (iv) now that the regular programmes are well
organized and functioning, attention should be turned to organizing adult
education programmes\.
The Adult Education Experience
9\. The adult education component provided for a pioneer programme in
this area intended as the first in a series of interventions in this respect\.
Highlights in this component are: the impressive performance of the Non-
Formal Education Department (NFED) surpassing by far the targets (paragraphs
4\.31 and 4\.32) and it's awareness of the several problems and shortcomings
manifested by corrective action in the right direction (paragraphs 4\.40 and
4\.47)\. Most of the problems observed were identified at the appraisal stage and
the project had been designed to contribute to their solutions\. They can be
summed up as follows: (i) weaknesses in inter-agency coordination, resulting in
overlapping and duplication, particularly in skill development programmes
(paragraphs 4\.34 to 4\.40); (ii) inadequate collaboration between regional and
provincial centres because of unclear definitions of their respective roles and
staff weaknesses (paragraphs 4\.37 to 4\.39); (iii) insufficient coverage of the
rural areas because of a limited number of provincial centres, financial
constraints, scarcity of qualified staff, and, in retrospect, provision of facilities
encouraging "in-centre" rather than field activities (paragraphs 4\.41 to 4\.43);
and (iv) programmes not adequately suited to the specific needs of the
community because of difficulties in micro-planning and in securing the
services of competent staff (paragraphs 4\.44 to 4\.46)\.
- (vii) -
10\. Recommended action involves: (i) strengthening the inter-agency
coordination (paragraph 4\.36); (ii) delineating further the role of the regional
and provincial centres, improving the quality of their staff, and reassessing the
staff requirements of the regional centres (paragraphs 4\.38 and 4\.39); (iii)
i \.creasing the number of the provincial centres and restructuring their
iacilities to enable them to focus on field activitVes (paragraphs 4\.46 and 4\.47);
and (iv) establishing intermediary (between province and village) support
services for the provincial centres so as to increase their coverage and to
facilitate planning at community level thus providing the necessary elements
for programrne adaptation\. Action in the last two recommendations is already
under way as can be concluded from proiect VII preparation document which
reflects the official position of the NFED (paragraph 4\.47)\.
Technical Assistance
II\. On the whole, the technical assistance component was successfully
implemented and contributed substantially to the smooth implementation of the
project and the operation of the project institutions\. There were cuts in expert
services for the secondary education component which, apparently, did not
affect the programme, and considerable delays with the long-term degree
fellowships for the adult education component due to changes in the selection
criteria and the involvement of the Teachers' Council in the selection process
(paragraph 4\.50)\.
12\. Of the 12 who received degree fellowships, four are working in
the regional centers and the three who are pursuing doctoral studies are
expected to return to their regional center positions upon completion of
their studies\. The graduates from the degree fellowships have contributed
significantly to the technical competence of the system and have been key
figures in the development of research and evaluation, training materials
developent and the radio correspondence project\.
Evaluation of Projects and Studies on Primary Education
13\. Among the additional components of the project, there are two
evaluation studies included, one for the DSSs, the other for the adult education
component (paragraphs 4\.51 and 4\.52)\. A general observation is that in such
studies, there is a tendency to ignore the results of other studies on the same or
similar subjets already existing\. Also, at times, two or more different agencies
undertake at the same time to evaluate one and the same project without
coordinating their efforts or consulting with each other\. In the view of this
mission, the NEC should undertake the overall responsibility for organizing and
coordinating evaluation studies as this is among its principal tasks\. Setting up
special groups or hiring outside agencies proves costly and is, in general, less
effective\.
14\. Among the same additional project components, there are also two
studies on primary education (paragraphs 4\.56 to 4\.60)\. In the view of this
mission, Study I which deals with primary education in general did not take
sufficiently into account the results of existing studies (school mapping, sub-
sector survey study on primary education as part of the Education Sector
Survey Study, and other relevant NEC studies)\.
CM^APTER I
SOCIO-ECONOMIC SETTING
1\.1 Thailad, with a total area of S14,000 sq\. km\. is divided into fow main
geographical regions: Central Plain, North, North East, and South, and 12
educational regions\.
1\.2 The majority of the population, now estimated at some 47 milion, belongs
to the Thai ethnic group\. However, there are several minority groups - includig
the Lao, Khmer, Mao, Karen, Malay and several hill tribes - who speak different
dialects and laguages\.
1\.3 Table 1\.1 below illustrates the socio-economic situation of the country at
the time of the formulation of the project (1975176) as compared to that towards
the end of its implementation (1980/81), expressed in certain basic socio-economzc
indicators\.
Table 1\.1 :Basic SocioEcom- a
1975/76 1980/81
Pooulation
Total, estimated (million) 42 *7
Growth rate 1975/80 - 1\.9%
Non-municipal (rural) 86% 82\.7%
Literacy rates 82% 85%
Apparent participation rate 85\.5% 101%
in primary education (7-13 age group) (6-12 age group)
Economy
GDP growth (per cent p'er annum) 6\.2 6\.4
(1972/76) (1977/81)
Contribution of 31% 25%
agriculture to GDP
GDP per capita (US$ equiv\.) 350 760 (1982)
Finance
Recurrent exp\. as % of 20 % 19\.3%
total public expenditure ' \.
Total\.for public education 2\.9% 3\.4% (1981)
expenditure 1s % of GDP
Labour Force
Persons, million 20 23\.3
% in agriculture 73i 70\.6%
-2-
1\. By the cosing date of the project (end of 1983) the country had completed
its Fourth Development Plan (1977181) and was in the second year of the Fifth Plan
(1982186)\. Evidently, there was a remarkable progress, particularly in terms of
economic growth, during the Fourth Plan (Tabe 1\.1 above)\. However, rapid
economic growth has also brought financial instability, balance of payments
deficits, widening income disparity and environmental problems, such as
deforestation and soil erosion\. As a result, the Fifth Social and Economic
Development Plan reflects the Government's concem for better income
distribution, employment, and restructuring of the economy\.
EDUCATION
The System and its Philosophy
1\.5 Under the National Education Chart approved by the National Education
Commission in 1977, education is conceived as a continuing life-long process which
promotes the quality of life of the citizen enabling him to live a useful life in
society\. An educational reform was launched in 1978 aiming at introducing more
flexibility and diversity into the system, providing more equitable opportunity and
preparing students better for entry to the labour force\.
1\.6 The salient features of the Reform include: (i) unification of all
educational administration under the Ministry of Education and decentralization of
administrative responsibility to the provinces; (ii) resucturing of the education
system below university level as shown in Table 1\.2 below arid the diagram in
Annex 1/1; (iii) integration of separate specialized secondary schools into single
comprehensive schools; (iv) abolition of entrance examinations to secondary schools
and adoption of a geographical quota system and; (v) consolidation of fragmented
curricula subjects around a flexible national core with regional variations\.
Table 1\.2 : The Structure of the Education System
Prior to the Reform After the Reform
Level No\.of Grades Level No\.of Grades
Lower primary 4(P1-P4)- Primary 6(P1-P6)
Upper primary 3(P5-P7)
Lower secondary 3(MSI-MS3)2/ Lower sec\. 3(MX -M3)
Upper secondary Upper sec\. 3(M4-M6)
\. Acadermic 2(MS4-MS5) (Diversified)
\. Vocational 3(MS4-MS6)
1\.7 Among the major weaknesses of the education system, as detected by the
Appraisal, were: {i) only about half of the age group 11 to 13 is enrolled beyond the
fourth grade, (ii) the quality of education is low in provincial towns and rural areas
mainly due to poorly trained teachers, irrelevant curricula, and inadequate
instructional materials and supervision; (iii) secondary and higher education are
heavily concentrated in Bangkok which, with 10% of the nation's population, has
some 60% of total upper secondary and 95% of higher education enrolments and;
(iv) less than two per cent of the adults have access to non-formal educational
programmes related to their needs\.
t/ J P = abbreviation of the Thai word Prathom (primary)\.
2/ MS (Maw Saw) = abbreviation of the words Mathayom Suksa (secondary
education)\.
-3-
Statistical Data
1\.8 Enrolment trends and growth rates for the several levels and types of
education for the period 1970-1932 are summarized in Table 13 below, while the
most recent available statistical data are given in Annexes 1/2-116\.
Table-1\.3: Enrolment Trends - Public and Private
Level of Enrolments C_OOs Growth Rates uaverage)
education 1970 1975 1982 1970/5 75/82 1970-82
Pre-primary 134\.4 203\.6 408\.7 8\.7 10\.5 9\.7
Primary 5,634\.8 6,609\.2 7,413\.6 3\.2 1\.7 2\.3
Lower secondary 449\.8 850\.5 1,190\.9 13\.6 5\.0 8\.5
Upper secondary 185\.6 320\.9 947\.3 10\.3 17\.7 14\.6
(mnd\. vocational)
Higher (incl\. Open 53\.6 123\.4 300\.6 18\.2 13\.6 15\.5
University)
TOTAL 6,128\.1 8,389\.6 10,261\.1 5\.7 3\.4 3\.4
1\.9 The percentage of students enrolled in private institutions dropped from
18% in 1970 to 16% in 1975 and to 14% in 1982, distributed as shown in Table 1\.4
below\.
Table 1\.4: Participation of the Private Sector in Education
(in % of total)
Levels 1975 1982
Pre-primarv 40 42
Prunary 11 8
Lower secondary 33 15
Upper secondary 38 30
Higher secondary 10 20
TOTAL 16 14
Non-Formal Education
1\.10 There are several agencies dealing with non-formal education activities the
most important among them being the Department of Non-Formal Education, the
Department of Vocational Education within the Ministry of Education, and the
Ministries of Agriculture and Cooperatives, Public Health, and Interior
-4-
(Department of Public Information, Department of Community Development and
the National Institute for Skill Development)\. At the time of the Appraisal, the
Department of Non-Formal Education was only a Division under the General
Education Department; it has been upgraded in April 1979\.
1\.11 Table 1\.5 below summarizes the activities of the Adult Education
Divisior\.iNon-Formal Education Department\.
Table 1\.5: Non-Formal Education
Number of Participants in Str:ictured Cour6es by Program Type (OOOs)
Adult Education Division Non-Formal Education Dept\.
1974 1975 1978 1980 1982
Functional Literacy 5\.1 9\.1 32\.1 33\.0 42\.4
Adult Education, general 119\.6 139\.6 107\.2 214\.4 290\.7
Adult Education, 40\.9 54\.0 76\.8 78\.6 89\.3
vocational
Special interest groups 1\.9 - 17\.7 40\.2 99\.5
Radio correspondence - - 3\.3 5\.5 13\.5
In addition, the Non-Formal Education Department initiates a large number of
audio-visual activities, operates public libraries and village newspaper reading
centres and has under its jurisdiction the Centre for Educational Technology\.
Educational Achievements and Perspectives
1\.12 Quantitative achievements during the Fourth Social and Economic
Development Plan (1977-81), whose implementation period coincided for the most
part with that of Project IV, fell short of the targets for all levels and types of
education except for teacher training and higher education where, with the open
universities, growth got out of proportion\. Table 1\.6 below substantiates this
statement\.
Table 1\.6 Education Growth - Targets and Achievements
(197"81)
Level Target Achievements
Pre-Primary 11\.5 10\.5
Primary 5\.7 1\.0
Secondary 20\.0 11\.0
Post-Secondary, 22\.5 16\.3
Vocational
Teacher Training 1\.9 52\.0
University 4\.0 27\.5
-5-
Educational Finance
1\.13 Details on central Government expenditure and education expenditures are
given in Annexes I/7-1/10\. According to these data, the share of the educational
expenditures in the central Government budget has been fluctuating between 19\.6
and 21\.5 per cent since 1977; it was 19\.8 per cent in 1981\. Central Government
education expenditures absorbed some 3\.4 per cent of GDP in 1981\.
1\.14 The share of primary education in total central Government expenditures
for education has stabilized around 55 per cent since 1978 having risen from 48 to
57 per cent between 1970 to 1976, while that of secondary education is now 16 per
cent as against 12 per cent in 1976\.
THE PROJECT
Proiect Generation
1\.15 The first three Bank education projects in Thailand, with two loans and one
credit totalling some US$ 41 million, dealt with secondary and higher education\.
Pursuing the main objectives of manpower development, quality imnprovement and
more equitable coverage, the projects succeeded in strengthening the Govemment's
institutional capacity for trade and industrial and agricultural training (First
Education Project, Loan 471-TH); expanding and relocating part of KasetsarE
(Agricultural) University and developing various departments of the MOE (Second
Education Project, Loan 822-TH); and developing teacher training, rural secondary
schools, a national curriculum development centre and the Prince of Sonkla science
faculty (Third Education Project, Credit 369-TH)\.
1\.16 The first mention of a fourth education project was made in August 1973,
in connection with the Government's interest in deve!oping educational radio and
television (ERTV)\. Ad hoc preparations for the project were made by the
Government which, in July 1974, submitted to the Bank a request for a loan to
finance the fourth project\. Originally the proposal comprised four main
components, namely: ERTV; non-formal education; secondary schools; and training
of accountants\. Following an appraisal in September 1974, the appraisal mission
recommended three major changes: (i) to establish one-half of the proposed
educational radio network and defer the remainder to a possible second phase
project; (ii) to reduce the investment in educational television to an experimental
programme; and (iii) to focus investment in secondary schools on the provision of
equipment rather than large-scale construction\. The appraisal mission also
recommended that the Government approach multilateral and bilateral agencies
for the technical assistance component of the project\. In particular, since the
training of accountants largely involved technical assistance, it was suggested that
UNDP be requested to support the whole of the accountant training request\.
1\.17 The Bank proceeded to process the project on the basis of the above
recommendations\. In February 1975 the Bank invited the Government to negotiate
a loan of US$ 24\.5 million to help finance the Fourth Education Project\. In April
1975, the Government informed the Bank that it was withdrawing its request for
Bank financing for a modified request involving the remaining project components\.
The modified request was received by the Bank in early August 1975\. A post-
appraisal mission was in Thailand during 18-30 August, 1975 to review the modified
request, which included non-formal education, secondary schools and the training
of accountants\. The post-appraisal mission recommended that the Bank support
the project, subject to certain modifications to the non-formal education and
-6-
secondary school components and relegation to UNDP support of the accototant
training component\. However, the Ministry of Education then declared that it was
uncertain whether to request Bank financing for the project at the "hgh cost' of
8\.5% interest rate\. Following further discussions between the Government and the
Bank in October 1975, a Bank 'technical review' mission went to Thailand in
January 1976 to complete the appraisal of the modified proposed project, which
finally comprised two major components: non-formal education and secondary
schools\. Negotiations were held in 21-26 April, 1976, and the project was
presented to the Board on 27 May, 1976\. The project became effective on 9
February, 1977\.
Project Objectives
1\.18 As specified in the Appraisal Report, the Fourth Project is designed to
assist the Government in implementing the education reform in two key areas,
namely: (i) to extend the provision of diversified secondary education in provinces
outside Bangklok and; (ii) to establish a nationwide adult education system\.
Project Components
1\.19 The project items can be grouped under four major components as follows:
Component A: Secondary Education
(i) Training and Maintenance Centre (additiol construction, furniture
and equipment);
(ii) 50 diversified secondary schools (extension, furniture and
equipment)\.
Component B: Adult Education
(i) one coordinating unit (establishment through technical assistance);
(i) four regional adult education centres, (construction, furniture and
equipment);
(iii) 24 provincial (or life-long) adult education centres, (construction,
furniture and equipment)\.
Component C: Technical Assistance (2,382 man/months) distributed as
shown in Table 1\.7 below\.
Table 1\.7: Technical Assistance (in man/months)
Fellowships Foreign Experts & Local
Consultant Services Experts
(i) Secondary education 600 42
(ii) Adult education 46K8 108 840
(iii) Project Unit support &
preparation of - 84 240
future projects
TOTAL 1,068 234 1,080
-7-
Component D: Additonal Project Items
G) primary education studies (I and 11
(ii) evaluation of the diversified secondary scols (DSS) component;
(i evaluation of the adult education component;
(ivr) provision of a main frame computer for the (Education
Mnagement Information System Centre), Ministry of Education;
and
(v) provision of a microcomputer for the Project Implementation
Unit\.
t~~~~~~~~~~~~~~~~~~~~~~~~
-9-
CHAPTER E
PROJECT IMPLEEI£TATION
OVERALL IMPLEMENTATION SCHEDULE
2\.1 The diagram in Annex ill presents the overall project implemetion
schedule, actual and estimated\. There were delays in the mplemetion of both
the Diversified Secondary Schools and the Adult Education components mainly For
scarcity of funds because of budget cuts to counter financial constraints\. Delays
were more important in the Adult Education component because of staffing
problems of the respective Project Implementation Sub-Unit (paragraph 2\.6)\.
2\.2 X amlymd in mizer I, the Project adal witt a aderble -s usezm\. At
9tinr request, US$3\.5 uiflli ad$1\.2 1l1immel2ad onOber 7, 19 d
Mauch 28, 1983 re;ctivly\. Tlb a_date laplintaton delays, the CloUt rate u
pistpoad fu the appraisal -arg of \.bx 30, 1982 to hae 3D, 1983 ad to I ^d- 31,
1983\. The actw3 CLod Date mm Setmber 6, 1984 srm the izdiubxurd lam bd1nc of
US$910,185\.51 Ms cileAd\.
PROJECT IMPLEMENTATION MECHANISM
2\.3 The Ministry of Education through its Central Project Unit (CPU) was the
implementing agency for Project IV\. The CPU was strengthened with additional
staff and a full-time expatriate advisor and assumed responsibility for overall
coordination of the Project, liaison with other agencies, and correspondence with
the Bank\. To simplify time consuming procedures, the strengthened CPU was
granted authority to review and arrange for the approval of tender documents, bid
invitations and evaluation of contracts\.
2\.4 At the operational level, two sub-project units were resporsible for the
implementation of the project, one each for the Secondary Education and the Adult
Education Components\. The major responsibilities of the sub-project units are
summarized in Annex 1112\. (Section A)\.
Secondary Education Project Implementation Sub-Unit
2\.5 The sub-project implementation unit in charge of the Rural Secondary
School Component of Project m was reinforced to take charge of the DSS
Component\. This sub-project unit operated within the Office of Special Projects
(OSP) which is a service of the General Education Department established with the
purpose of supervising the operations of pioneer project institutions for limited
periods\. The Unit had six sections (Administration, Architectural, Operations,
Planning, Contracts, Accountancy, and Materials) and it was headed by a Project
Director, assisted by a Deputy Director\.
Adult Education Project Implementation Sub-Unit
2\.6 For the Adult Education Component a second sub-project implementation
unit was established within the Adult Education Division under the name of the
"Office of the Non-Formal Education Development Project" (Project Office)\. For
the first two and-a-half years of operations, this Office was directly responsible
for the implementation of the project; it was headed by a Director, assisted by a
deputy director and had a professional staff of 15 persons\.On March 22, 1979 the Adult
-10-
Education Division was upgraded to a departm-nt (the Non-Formal Education
Department - NFED) and the "Project Ofiice" ceased to have the sole
responsibility of the implementation of the project\. In fact, its staff was dispersed
among the several divisions/sections of the newly-established department where
they continue to carry out their project-related activities in addition to the
functions corresponding to their new post\. The Project Office continued to
function but assumed the role of a coordinating rather than an implementing unit\.
Details on the structure and functions of the Project Office before and after the
above-mentioned changes are given in Annex UI2 (Section B)\.
2\.7 The changes in the Project Office created serious gaps in the Project
implementation mechanism and the attention of the authorities to this effect was
drawn repeatedly by the the supervision missions\. Finally, changes of personnel in
higher posts within the Department, including the director, and assignment of
project implementation tasks to truly devoted and hardworking staff compensated
to a large extent the shortcomings of the new arrangement\.
SITES
2\.8 All new building facilities for the 50 DSSs included in the project were
constructed within the property of the existing schools (extensions) and those for
the Training and Maintenance Centre were built inside the property of existing
similar facilities and warehouses of the Ministry of Education\.
2\.9 The sites selected for the three Regional Adult Education Centres are from
5 to 20 kms outside the municipal area of the provincial capital, all accessible by
paved roads\. The fourth Centre (Ubon) is located within the municipal area of the
capital and it took over the site of the Thai-Unesco Fundamental Education Centre
(established over 20 years ago)\. The areas of the sites vary from 57 hectares
(Central Region) to 227 hectares (Northern Region)\.
2\.10 Of the 24 Provincial Centres, nine are located within the municipal area of
the Province's capital city, twelve within 10 kms from such municipal areas and
three still farther\. The area of their sites varies from 9 to S1 hectares\. Follow up
of the activities of the centres indicates that those located more than ten
kilometres away from the municipal boundaries encounter difficulties in
communicating with other governmental agencies, have high public utility costs
and present numerous inconveniences to the users\.
PROFESSIONAL SERVICES
2\.11 The overall responsibility for planning, design and execution of civil works
(including furniture) of all project components was with the General Education
Department (GED) of of the Ministry of Education\. After the establishment of the
Non-Formal Education Department (NFED), responsibility for the Adult Education
Component was assigned to the new Department\.
2\.12 The planning, design and preparation of the architectural and engineerng
drawings, as well as supervision of the construction, were carried out by the Office
of Special Projects (OSP) of the GED\. Private consultants were used to carry out
land surveys and special studies related to soil and foundations\.
2\.13 A private consulting firm was hired to prepare the design studies (including
architectural and engineering surveys as well as furniture design) of all the items
included in the Adult Education Component\. The Project Office's Construction
Section and, later, various sections of the NFED coordinated the work and assured
the supervision of the construction\.
- 11 -
ARCHITECTURAL DESIGNS
2\.14 Standard designs were prepared for the new buildings of all Diversified
Secondary Schools providing facilities for Academic Teaching; Science
Laboratories; Agricultural, Home Economics, and Industrial Arts workshops; Multi-
Purpose Hall; Nursery; Staff Houses; and Sanitary Areas\. Built-areas vary from
school to school\. In 31 schools, these were above the Appraisal estimates but in 19,
they were below\. The total built-area, including the Training and Maintenance
Centre (TMC),is only 4\.7 per cent above the appraisal estirnateld\.
2\.15 The design of standard types of buildings is an improvement over previous
designs but the use of the same type of building in different regions of the country
has not given the best results concerning the local climatic conditions and the
functional and aesthetic aspects\. The TMC design study provided for specially
designed buildings for warehouses, conference rooms, agricultural power
mechanics, metal shops, boarding facilities and staff houses for an area of some
five per cent below the Appraisal estimates\. The design is simple and appropriate\.
2\.16 Standard designs were prepared for all types of buildings of the new
Regional and Provincial Adult Education Centres\. Facilities for the regional
centres include: classrooms, library offices, workshops, a dormitory, housing units
for some staff, a cafeteria and a small printing facility\. Facilities for the
provincial centres include: five classrooms, four multi-purpose workshops, a
library, a meeting hail and boarding accommodation for 12 persons\.
2\.17 The following observations concern both the Regional and Provicial
Cen Eres (i) separate buildings create inconvenience in communication,
particularly during the rainy season; (ii) standard designs do not adapt to local
climatic conditions and environment; (iii) the design and details in certain
categories of buildings such as the ibrary (mezzanine with no natural ventilation
and lighting) and the workshops and laboratories for the Regional Centres (designed
for teaching students and not for teaching teachers and instructors), are
inappropriate; (iv) buildings for storage, animal sheds etc\.,are over-designed\. Use
of simpler and less expensive structures adapted to local practices is advisable; and
[v) staff houses have minimal space and lack of certain facilities\.
CONSTRUCTION
2\.18 There were considerable delays in the construction for both components for
the following reasons: (i) an initial three-month clelay in signing the Loan
Agreement and a two-month postponement of the effective date; ;ii)budget cuts
because of financial constraints resulting, at times, ira cancellation of contracts;
and (iii) long 'red-tape' procedures and personnel problems as explained in
paragraph 2\.6\.
2\.19 For the Secondary Education Component, civil works contracts were
distributed in 51 packages (50 schools + one Training anc Maintenance Centre) to be
executed in three phases\. In fact, two schools were constructed in two phases,
hence the final number of the packages was 53\. Construction was executed in
three phases, as foreseen, but there was an 'advanced' phase added to counter
urgent needs\. The timing is presented in Table 2\.1 belo-w:
11 See Annex IV/3 for details on areas and unit costs\.
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Table 2\.1: Construction in the Secondary Education Component
Started Ended
(as compared (as compared
to Appraisal) to Appraisal)
Advanced Phase 4 schools 13 months ahead 12 months ahead
(1st phase) (1st phase)
Phase I 17 schools 2 months behind 6 months behind
& T\.M\.C\. (lst phase) (Ist phase)
Phase II 22 schools 12 months behind 14 months behind
Phase mI 1o schools 9 months behind 10 months behind
Overall 10 months behind
2\.20 For the Adult Education Component, civil works were also planned in three
phases parallel to those of the Secondary Education Component\. In practice, the
three phases were broken into two sub-phases each and were executed as shown in
Table 2\.2 below:
Table 2\.2: Construction in the Adult Education Component
Started Ended
(as compared (as compared)
to Appraisal) to Appraisal)
AED
Phase I (a) 8 centres) 4 months 12 months
(b) 5 centres) behind behind
Phase II (a) 2 centres) 13 months 29 months
(b) 1 centre ) behind behind
Phase II (a) 5 centres) practically 15 months
(b) 7 centres) on schedule behind
Overall 17 months
behind
FURNITUR' AND EQUIPMENT
2\.21 Furniture for both project components were procured through local
competitive biddings and equipment through international biddings according to
Bank procedures\.
2\.22 For the Secondary Education Component, lists, design, specifications and
cost estimates for f umiture were prepared by the architect of -the Office of
Special Projects (OSP)\. Contracts were awarded to local manufacturers and were
effected in packages, one per school, from 1978 to 1981, starting one year after
civil works\. Fumiture procurement was achieved 100 per cent according to plans\.
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2\.23 Master lists and specifications for equipment for the Secondary Education
Component were prepared by OSP in collaboration with other competent divisions
of the General Education Department\. Procurement was effected item by item
between 1977 and 1979\. After delivery and inspection, equipment was handed over
to the Division of Supplies and Educational Materials which would then despatch it
to the Project schools\. A total of 117 items, mainly snall equipment and tools
(total value Baht 2\.65 million), were not procured because of unsuccessful bids or
contract cancellations\.
2\.24 Problems encountered with regard to the quality and procurement of
furniture and equipment for the Secondary Education Component are: (i) low
quality of furniture and certain equipment (e\.g\. typewriters); and (ii) difficulties in
the procurement of equipment because of cumbersome approval procedures and
ineffective biddings due to inadequate specifications and tendering procedures\.
There were long delays in the procurement of certain items and some had to be
changed\. In fact, a batch of lathes has just been delivered\.
2\.25 Furniture design, cost estimates and specifications for the Adult Education
Component were prepared by the architects of the consulting firm which designed
the buildings\. Contracts for furniture were awarded to local manufacturers and
were effected in packages corresponding to the needs of the centres by region\.
Furniture procurement was achieved 100 per cent according to plans\. Master lists
and specifications for equipment were prepared by work groups established by the
Project Office with the assistance of an expatriate procurement expert\.
2\.26 Three major shortcomings have been observed in the quality and
procurement of furniture for the Adult Education Component: (i) the initial design
prepared by the consulting firm had certain limitations regarding durability and
design\. For certain furniture design had to be revised and furniture already
manufactured had to be modified\. Also, furniture designs were mostly new to the
market which increased the cost in comparison to similar furniture already on the
market; (ii) built-in furniture was not included in the civil works\. This created
problems of installation in cases where the civil works were behind schedule with
the result that some furniture had to be modified or redone; (iii) delays in the civil
works created also problems of delivery and storage and; (iv) shortage of qualified
technical staff in the new NFED created difficulties in reception, quality control
and installation of furniture\.
2\.27 With regard to the provision of equipment for the Adult Education
Component, the master lists were revised after the first year of project operations\.
Changes were also introduced during the second and fourth years\. Towards the
end of the project, funds were used for the purchase of supplementary books,
audiovisual equipment and other training materials for the centers (para\. 1\.91D)\.
2\.28 Major problems encountered with regard to equipment for the Adult
Education Component are: i) in preparing the lists it was difficult to determine in
detail the required equipment, because the institutions were new to the country\.
Initial lists had to be adjusted several times; (ii) inflexibility of procedures to allow
for local purchases, specific regional and provincial requirements could not be
reflected in the lists; (iii) initial specifications were for high quality, durable and,
therefore expensive, equipment\. Budget allowances for the first biddings were
based on lower standards and bids had to be cancelled so that specifications could
be adjusted\. This caused considerable delays and led to the purchase of certain
low quality items; (iv) the change in the administration with the creation of the
new Non-Formal Education Department created staff problems (paragraph 2\.6) and
consequent delays in the procurement and the processing of claims for
reimbursement and; (v) storage facilities were not adequate and some of the
equipment awaiting shipment suffered loss and breakage\.
TECHNICAL ASSISTANCE
2\.29 There were delays in the implementation of Technical Assistance
particularly for the fellowships for the Adult Education Component (Annex WIII)\.
The main reasons for the observed delays were cumbersome procedures in the
selection of candidates and the application -of disputable criteria\. Such selection
was entrusted to the Teachers' Council and the Adult Education Division had little,
if any, involvement\. Initially the selection criteria applied were not in conformity
with those agreed upon wnth the Bank and the Supervision missions repeatedly had
to draw the attention of the competent authorities to this fact\.
OTHER COMPONENTS
2\.30 Other components include assistance for the preparation of future projects
foreseen in the Appraisal and the items which were added towards the end of the
project (paragraph 1\.20 D)\. The implementation schedule of these itens
is shown in Annex III14 together with their costs\.
APPRAISAL ESTIMA YS VERSUS ACTUAL COSTS
3\.1 A XApsal a txtal e puoject cost l3 atIl\.34 md ___ f*esV
ant m $31\.16 111k, zui e 40 rpx of the toal Ioecc- cost\.
mrI 111 gies i) ti nctdQjct cot by' oect _o lCb1eeA); (ii) tde
est\.tl lQjCtcamt by cMWa7c oe 1mUt CEO&l 3) =4 (tEl) tim Mdit AUIOCuIM
by~ catB)y of (we1ize (M1e C)
3\.2 The actual project cost expressed in US dolar values was 60\.32 million or
77 per cent of the total stimated cost\. However, coverted into Baht values (US$
I = 20 Baht up to 1981 ard lS$ 1 = 23 Baht thereafter), the actual cost (Baht
1,244\.4 millio represents 79\.4 per cent of the estimated cost CBaht 1,566\.9
million)\. Table 3\.1 below surmmarizes the cost dlifferences between the Appraisal
estimates and the actual cost by category of expendiue\. Details can be found in
Annex M12\.
Table 3\.1: Aoraisal Estimates and Acual Costs
(tncluding continecies)
in E4s1t(nn £ipim In USS (millon
Category of Appraisal Actual 2 as % Appraisal Actual 2 as % 2 as %
Expenditure Estimates Cost of I Estimates Cost of I of total -
Cost
1 2 3 1 2 3 4
Civil Works 1,136\.93 873\.95 76\.8 56\.85 42\.38 74\.5 70\.3
Furniture 71\.93 95\.32 132 3\.59 4\.61 128 7\.6
Equipment 299\.15 233\.96 78 14\.96 11\.26 75 18\.7
eas hnic 58\.85 1\.45 70\.4 2\.94 2\.07 70\.4 t\.4
TOTAL 1,566\.86 1,244\.68 79\.J 78\.3k 60\.32 77 100
3\.3 The main reasons for overall lower costs can be summarized as follows: C)
a change in the exchange rates as shown in the preceding paragraph; (i) site
development cost for the DSS Component and professional fees for both
components were overestimated; (iii) equipment costs were lower after the revision
of the original lists and a small part of the equipment for the DSS Component were
not purchased and; (iv) Technical Assistance funds were not fully utilized\. Details
are discussed under the appropriate headings in this Chapter\.
CONSTRUCTION COSTS AND AREAS
3\.4 The actual construction costs, including site works and cost escalation,
amounted to 70\.2 per cent of the total project cost and represented 76\.6 per cent
of the Appraisal estimates in US dollar values and 78 per cent in Baht values\. For
Component A (DSS) construction cost was far below the estimates (69 per cent in
Baht values), while for Component B (Adult Education) such cost was 118 per cent
higher than the estimates\.
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3\.5 The relatively low construction cost of the DSS Component is due mainly
to the lower than estimated site development cost, as all buildings were erected in
existing school sites where additional site development work was minimaL
3\.6 Reasons for the high construction costs in the Adult Education Component
are: (i) site development costs were much higher than estimated (for certain items
up to 200 per cent); (ii) during the second phase of constuction, costs went up by 30
to 40 per cent in comparison to the first phase construction costs and; (iii)
variation of materials cost from one province to another were far more important
than those estimated\.
3\.7 A comparison of planned and actual gross areas by project component and
item is given in Annex E11/3\.
Professional Services
3\.8 The actual cost of the professional services amounts to only 40 per cent of
the Appraisal estimates and involves professional fees for civil works and services
for the preparation of future projects (V and VI) as foreseen in the Appraisal
(Component C (iii)), as well as services for some of the additional items
(Component D)_\. Professional services costs related only to the original project
represent 29 per cent of total project cost and correspond to only 11\.6 per cent of
the estimates\.
3\.9 Reasons for the low cost of professional services are: O estimates were
based on the total construction cost which was lower than estimated (paragraph
3\.4); (ii) construction involved mainly standard type of buildings; ii design, study
and supervision of the DSS Component were carried out by the Ministry of
Education's technical staff with consultant services limited to soil surveys and
other minor studies\.
FURNITURE AND EQUIPMENT COSTS
3\.10 Total expenditure for furniture was US$ 4\.61 million or 28 per cent higher
than estimated, ( 32 p-r cent in Baht values)\. Price increases, faulty design and
design not conforming to current designs on the market (paragraph 2\.26) were the
main reasons for the observed cost overrun\.
3\.11 Total expenditure for equipment was US$ 11\.26 million or 75 per cent of
the estimated Appraisal costs with 16 per cent representing additional items not
included in the Appraisal\. It appears that the main reason for this relatively low
cost is a simple overestimate of the equipment for the Adult Education Component
because of lack of experience in equipping this type of institutions, new in the
country; see paragraplh 2\.28\. Also it appears that the price excalation was
overestimated\.
TECHNICAL ASSiSTANCE COSTS
3\.12 The cost of the Technical Assistance programme amounted to 70\.4 per cent
of the estimates because of cuts in both expert services and fellowships\. Details
on this matter are given in Chapter IV (Project Outcomes) under the appropriate
headings\.
1/ See project components in Chapter 1, paragraph 1\.19\.
r
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DISBURSEMENT SCHEDULE
3\.13 The disbursement schedule, actual and estirmated, is given in Table 3\.2
below and it is presented graphically in Annex U/I together with the overall
Implementation Schedule\.
Table 3\.2: Disbursement Schedule - Actual (as in February, 1984)
World Bank Actual Total Actual
Fiscal Year Disbursements Appraisal Disbursements
and Semester (Cumulative) Estimates as % of
Appraisal
Estimates
1977
1st 0\.9 0\.2 450
2nd 2\.5 0\.5 500
1978
1st 5\.1 1\.0 510
2nd 8\.1 3\.0 270
1979
1st 10\.2 6\.5 157
2nd 13\.0 10\.5 123\.8
1980
1st 16\.4 14\.5 113\.10
2nd 19\.8 19\.0 104\.2
1981
1st 22\.2 24\.0 92
2nd 23\.1 29\.0 79\.6
1982
lst 23\.4 30\.0 78
2nrd 23\.8 31\.0 76\.7
1983
1st 24\.0 77
2nd 24\.3 78\.4
26 July, 1984 25\.4 82\.0
- CancelJed 4\.7 15\.1
- Undisbursed balance 0\.9 2\.9
TOTAL 31\.0 100\.0
OTHER COMPONENTS
3\.14 Under this heading there are two groups of items included, namely: A -
Project Unit Support and preparation of future projects and; B - Additional items
ir&uded in the project at a la stae\. The total estimated cost of these items is US$2\.2
mllin\. Aec I11/4 gives detals of the cost and i ti scedue\.
I
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CHAPTER IV
ATTAINMENT OF PRO3ECT O3ECTIES
4\.1 The overall objectives of the project "to extend the provision of diversified
secondary education in provinces outside Bangkok and to establish a nationwide
adult education systemu, have been achieved\. The contribution of the project to
the diversification proces has been substantial and the adult education system is
well established and functionug\. The fact that the Adult Education Division was
upgraded to a department during the project implementation, despite serious
difficulties at the outset (paragraph 2\.6) contributed greatly at the end to the
success of the project because of the dynamic approach and personal involvement
and hard work of the staff of the new department\. NaturaUly, in retrospect, there
are gaps and shortcomings and lessons to be learnt\. A brief account of the
observations of the Mission is given in the following paragraphs of this Chapter\.
4\.2 The major agreements reached between the Government and the Banlc
during the Appraisal Mission are referred to as "specal covenants", in the
supervision reports\. Although with certain delays, aUl these agreements were
eventually fulfilled as shown in Annex IV/1 which is reproduced from the
Supervision Report of February, 1931\.
DIVERSIFIED SECONDARY SCHOOLS
k\.3 The degree of success of a project can be assessed only within the overall
context of the education system and its evolution during the implementation of the
project\. The introduction of new concepxs and experimentation may reveal
alternative ways for resolving a particular issue and may lead to modification of
the expected outcome of the project without, however, implying failure\. It is on
the basis of this thnking that this component is reviewed\.
4\.4 For a number of years among the Government's major policies has been the
emphasis given to rural development so as to combat rural poverty and to redress,
as far as possible, the inequitable distribution of income\. Responding to this
concern, the Ministry of Education has assigned new roles to the secondary schools
as reflected in the educational reform proposals\. These roles can be summarized
as folows: (i) to give general knowledge and practical instrction to its students to
enable them to develop favourable attitudes towards manual work and equip them
for self-development and social advancement; (ii) to educate the communitiese out-
of-school population through non-formal education and; (iii) to provide public
services for the community by disseminating general and vocational knowledge to
the local population informing them of innovative and technological changes which
are relevant to their daily experiences\. The three DSS project objectives were:
(a) to improve the educational quality of provincial schools on a par with
those schools in Bangkok Metropolis with a view to upgrading general educa-
tion and increasing semi-skilled -anpover to the provinces where these
schools are located; (b) to provide education suitable for the aptitude,
interest and ability of the learner; and (c) to provide pre-occupational
training activities as an integral part of general education\.
The Process of Diversification
4\.5 The diversification of secondary education is among the major object-
ives of the educational reform and aims at providing the schools with the nec-
essarv facilities and persounel to enable them to adapt their curricula to
everyday needs and to prevailing local conditions thus fulfilling the import-
ant functions mentioned in the preceding paragraph\.
4\.6 Diversification is well under way through the implementation of a
number of projects, namely: the comprehensive schools project supportedby
CIDA (20 schools) and the World Bank projects III through VI\. Upon completion
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of the projects under way (V and VI), there will be 644 secondary schools
diversidfied out of a total of some 1,500 public schools\. In Project V there
are 12 Area Vocational Centres included, under the Vocational Education
Department, to provide services for some 50 satellite schools in the area\.
All other schools have been diversified tbrouth the provision of lndividual
facilities\.
4\.7 Annex IV12 presenEs the curriculum outine and programme time-table for
the lower secondary schools (grades Ml-M3)\. According to this Annex, practical
subjects constitute a large part of the programme and are: (i) compulsory, under
the heading work experience and; (ii) optional, under the heading occupational
education\. Work experience includes courses in agriculture, home economics,
industrial arts and business education, depending on the facilities of the school and
the availability of teaching staff\. Four periods per week in each grade or some
11\.4 per cent of the total instruction time is devoted to work experience in schools
included m Bank projects\. Optional subjects cover some 23 per cent of the
instruction time, namely, six periods each in grades Ml and M2, and 12 periods in
grade M3\. In theory, students can select any subject in the school curriculum as
optional, which suggests an idealy flexible and malleable programme\. In practice,
however, there are restrictions which unveil a different picture\. Namely, in grades
Ml and M2, all students have to choose to take at least four periods of Engtish as
"optional", which leaves only two periods for other choices\. Also, in grade M3,
students who plan to continue their studies in M4, that is the vast majority of
them, have to oDt for six periods of English and six periods of mathematics, which
leaves none for other subjects\.
4\.8 At the upper secondary level, the reform curriculum is at its final year of
implementation (grade M6)\. Annex IV13 presents a general outline of this
curriculum\. Although it is too early to draw conclusions on the effectiveness of this
curriculum, it appears that: (i) its flexibility is remarkable with some 60 per cent
of the instruction time devoted to elective subjects; (ii) there is a large variety of
electives with relatively few restrictions and; (iii) practical subjects constitute a
considerable portion (1/3) of the compulsory part of the curriculum under the
heading foundation of vocational education\. As the large variety of elective
subjects in the curriculum risk leading to small classes, which are uneconomical to
run, schools offer pre-structured programmes with fixed major and minor electives
in accordance with the type, size and level of their facilities and the availability of
teaching staff\.
Curricula of the Proiect Schools - A Proposal for Rationalization
of Secondary Education
4\.9 The Diversified Secondary Schools, as conceived at the Appraisal stage,
were expected to offer both the compulsory and the elective vocational subjects,
the latter being far more specialized\. At the same time the educational reform
provided that the general and vocational schools should merge into a unified type
of institution, the diversified secondary school\. However, this integration never
took place and the latter continue to offer specialized training in conjunction with
their general subjects\. With the Education Project V a new type of institution was
introduced, the Area Vocational Centre (AVC)\. Although the AVCs are adequately
equipped to offer specialized courses, their facilities are widely used to provide the
compulsory practical part of the curriculum for students in the satellite schools\.
4\.10 In practice, the project schools as well as other diversified schools rarely
offer among their pre-structured programmes (paragraph 4\.9), specialized practical
subjects as major electives\. Understandbly so, as the universities towards which all
secondary schools aim, do not require such subjects for entry\. On the other hand,
all project schools of fer the compulsory vocational part of the curriculum as
described in t aragraphs 4\.7 ar,d 4\.8 above\.
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Reassessint the Role of the Diversified Schools
i\.11 A lesson learnt from the implementation of this project and subsequent
experiences is that there is- a need for rationalization of the secondary education
and of clear delineation cof the role of each general and vocational education
institution\. This issue is dealt with at length in the recent Sector Survey Report
(January, 1983); the proposal included in this report is reproduced in Annex IV/4\.
4\.12 In sum, the diversified schools should offer only the compulsory practical
part of the curriculum (as most of them do), leaving the optional specialized part
to specialized institutions such as vocational schools, Area Vocational Centres,
polytechnics, etc\. To diversify small secondary schools for which provision of
individual facilities and permanent specialized staff would be uneconomical,
consideration should be given to providing "extension services" from larger "base
schools" in the area or Area Vocational Centres as described in dhe Annex\.
Experimentation in this respect is proposed in Project VII now at the post-appraisal
stage\.
Enrolments and Output
4\.13 According to the Appraisal Report, enrolments in the 50 project schools
were expected to rise from 82,000 in 1975 to 98,000 upon completion of the
project\. In reality, enrolments surpassed the target by some 18 per cent
approaching 116,000 in 1983\. In part this is due to the extension of the upper
secondary cycle from two to three years as foreseen by the educational reform\.
Indeed, the proportion of students in the upper cycle increased from about 20 per
cent of the total in 1975 to 46 per cent in 1983\.
4\.14 Increase in enrolments far beyond the Appraisal target created problems of
overcrowding particularly in certain workshops\. The tendency for overcrowding
became evident from the early stages of the implementation of the project and the
attention of the authorities to this fact was drawn repeatedly by the supervision
missions\. The problem still remains although it is compensated, to a large extent,
by the fact that most of the facilities are used mainly for the compulsory part of
the curriculum\.
'\.15 Only from the lower cycle of project schools are graduates from cohorts
who entered after completion of the project\. Conforming to a special agreement
in the Appraisal (Annex IV/1), a tracer study unit has been established within the
General Education Department to follow up the graduates of project schools\.
Information available so far on the 1978/82 cohort reveals that of the lower
secondary cycle graduates, less than 10 per cent take up jobs\. Average salaries are
Baht 1,000 per month (in line with the Ministry's target) for 4 per cent and higher
for 3\.6 per cent of them\. Of the rest, some 90 per cent continue their studies in
the upper secondary cycle\. Of the upper cycle graduates, some eight per cent take
up jobs with a wide range of monthly salaries (Baht 200-7,500)\. Of the rest, the
vast majority enter universities or other post-secondary institutions\.
4\.16 On-the-spot investigations during the mission came to a similar conclusion
as to the percentage of students who seek employment after graduation\. Also, an
initial tracer study by the Ministry of Education for the period 1974/78 concluded
that 6 to 9 per cent of the lower cycle and 8 to 14 per cent of the upper cycle
graduates take up employment\. This suggests that, so far, the diversified ctrricula
have not influenced the graduates' attitudes in this respect\. However, there are
definite indications that there is a favourable tum towards vocational studies,
confirmed by the fact that since the introduction of the diversified curricula in the
lower secondary cycle, the proportion of students entering the upper vocational
cycle kept constantly increasing\.
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Adequacy and Use of Practical Facilities
4\.17 The extensions included in the project were built in accordance with local
standardized designs\. Although further research on the design and building
materials rmay yield certain savings, the approved standardized construction is
functional and can be considered satisfactory\.
4\.18 The equipment provided is adequate and appropriate for the programmes
offered at present (compulsory practical part of the curriculum)\. However, more
sophisticated equipment would be needed for the schools to be in a position to run
effectively the specialized part of the curriculum (vocational electives)\. This
supports the view set forth in paragraph 4\.12, that specialized courses should be
left with the specialized institutions\.
4\.19 The fact that certain equipment was not procured (paragraph 2\.23) did not
affect the teaching process as it involved minor items (total value Baht 2\.65
million) and, to a large extent, were replaced by local purchases\. However, delay
in the delivery of lathes, (paragraph 2\.24) caused inconvenience and had some
repurcussions on the implementation of the programme\.
4\.20 All practical facilities are fully used (between 25-30 periods per week)
during school hours but in very few instances do schools use their facilities for
adult training or other out-of-school activities as foreseen in the reform and the
project\. Among the reasons for this appear to be: (i) existence of other adult
training facilities in the area; (ii) lack of specialist teachers; and iii) the fact that
the school directors gave priority to organizing the complicated diversified
programmes rather than to what they consider as side activities\.
Staff DevelcDment and Technical Assistance
4\.21 About 20 per cent of the teacting force are trained practical subject
teachers which, in global terms, can be considered satisfactory\. A staff
development programme, proposed at Appraisal, included 600 man/months of
fellowships for key personnel for the project schools\. The programme was reduced
to 400 man/months and it was executed by the University of Alberta (Edmonton,
Canada) which had undertaken a similar programme for Project HIl (Rural
Secondary Schools)\. The training consisted of a four-month intensive course in the
philosophy and administration of comprehensive high schools\. One hundred persons
(the directors and assistant directors for academic affairs of the 50 project
schools) attended the programme which proved to be very effective\. The
programme was executed in four stages (four groups of 25 each) between
September 1977 and May 1979, slightly behind the Appraisal schedule (January 1977
to September 1976)\.
4\.22 There were 36 man/months of foreign advisory services foreseen at
Appraisal for the implementation of the DSS Component\. However, the Office of
Special Projects, which had the overall supervision of the project, felt that with
the experience gained during the implementation of the Rural Secondary Schools
Project, such services were not indispensable\. Hence, this part of technical
assistance was not implemented\.
The Cost of Diversification
4\.23 Past experience shows that the cost per student place for a non-divrersified
secondary school is of the order of Baht 11,700 (1980 prices), including furniture
and elementary equipment\. For a diversified school, the cost per place, calculated
on the basis of the actual DSS project cost is some Baht 14,000 or 25 per cent
-23 -
hiher\. Elements used for this calculation are: (i) the cost of the Project (Baht 501
million); (ii) initial (1975) enrolments in the 50 project schools (2,000) and; (iii)
final enrolments as being 107,000 which lies between the Appraisal esfimates
(93,0) and the actual (116,000) and it is oonsidered appropriate if the school
offers only the compulsory practical part of the crrioculum\. Calcuations based on
diferent data and presented in the Sector Survey Report (Januay 1983, page 12)
gave similar results\.
4\.24 OveraRl recurrent unit costs for the Secondary Schools are of the order of
Baaht 2,400 per student per year (Annex 1/10)\. Calculations effected during Project
VI preparation and the Sector Survey Mission show that such costs are some 24 per
cent higher in diversified through individual facilities schools, which is somewhat
higher than Appraisal estimates (20 per cent)\. Actual recurrent costs separately
for the project schools are not on hand at present\. The Sector Survey Report
suggests that additional recurrent costs can be dropped to about 17 per cent with
alternative ways of diversification (cf\. extension services as suggested in Annex
IV/4)\. Workshop materials and maintenance costs are covered, to a large extent,
by students' fees which vary from school to schooL On the whole, they are
between Baht 600-700 per annum for diversified schools\.
DSS Evaluation Surveys
4\.25 The Loan Committee requested, in August 1981, that an\.evaluation of the
already completed DSS project be carried out\. The World Badc approved this
request and a sum of Baht 310,000 from the surplus project funds was allocated to
tis activity\. A 15-member Committee composed of representatives of the NEC,
the NESDB, the Budget Bureau, the Central Project Unit and the General
Education Department was established to carry out the Survey\. The final report
was expected to be submitted to the Bank by January 1984\. At the time of the
Completion Mission, only a Thai version was available in draft form\. A summary of
the conclusions of the draft report (translated during the Mission) is presented in
Aneex IV/5\. According to these conclusions, the project had positive results with
an above average rate of success (between average and good)\.
4\.26 Other evaluation studies on diversified schools include: (i) a study en the
DSS project undertaken by the OSP and expected to be completed shortly; Gi) a
study on Community Secondary Schools (still under way) undertaken by the NEC;
and (iii) a comprehensive study on the Rural Secondary Schools executed by the
University of Alberta and published in 1980 (a summary is included in the Project
m Completion Report)\.
4\.27 Evaluation is of course, indispensable\. However, it should be rationalized
and each additional study on a given subject should be linked firmly to the previous
ones\. In principle, evaluation of educational projects should be among the regular
tasks of the NEC and should be carried out in close collaboration with the agencies
involved\. Although financial support might still be necessary, it would be more
economical and effective than setting up special groups or contracting outside
agencies\.
TRAINING AND MAINTENANCE CENTRE (TMC)
4\.28 Extension of the TMC forms part of the Secondary Education Project
Component\. The TMC started functioning in 1970 as a teaching aids production
unit with the comprehensive schools project and moved to its new premises near
the Bangkok Airport in *:975\. The Centre is unde; the General Education
Department and has a staff of some 100 persons of whom 30 are technicians\.
There are three sections, namely: teaching aids production; in-service training in
equipment and building maintenance; and equipment supply\.
-24 -
4\.29 Production of teaching aids is done with the assistance of the supervisory
unit and involves the preparation of teaching manuals, slides, filmstrips and other
teaching aids\. Training is focused on the maintenance of equipment and buildings
and consists of short courses (5-10 days) for practical subject teachers, other
schools employees (storekeepers, procurement officers, etc\.) and janitors
(maintenance of buildings)\.
4\.30 The facilities provided by the project (paragraph 2\.15) helped substantially
the Centre in improving and extending its activities\. Throughout last year there
were 840 persons trained in the Centre and five training courses were organized in
the provinces by the Centre's technicians
ADULT EDUCATION COMPONENT
Proiect Obiectives - Targets and Achievements
4\.31 The overall purpose of this project component "to develop the institutional
capacity of the Government to manage and operate a national programme of Adult
Education' (Appraisal Report, paragraph 4\.10) has been achieved to a large extent\.
The specific objectives of the project were to: (i) improve planning and
administration by strengthening the Adult Education Division; (ii) provide
programme support services in curriculum development and evaluation, and in the
training of adult educators by establishing four Regional Adult Education Centres;
(iii) unify adult education activities by establishing 24 Provincial Adult Education
(or Lifelong Education) Centres; and (iv) develop an infrastructure to serve as an
outlet at the level of the community for non-formal education by providing
services necessary to establish 8,400 village newspaper reading centres and their
supporting committees\.
4\.32 The quantitative targets of the project were reached or supassed\. Examples
are: (i) there are 8,405 village newspaper reading centres functioning at pesent;
(ii) there are 19 provincial centres operating (six in temporary buil4ings) at the
Govemment's initiative in addition to the 24 provided by the project!l; (iii) radio-
correspondence reached 3,500 youths and adults in 1982 as against 2,800 targeted;
and (iv) a total of over 535,000 persons benefited in 1982 from direct services
(literacy, general and vocational education, special interest groups and radio-
correspondence (see table in paragraph 1\.1)) and over three million if audio-visual
activities, public libraries, etc\. are included (Appraisal target 1\.8 million),
Maior Issues
4\.33 Despite the success of the project and the impressive performance of the
Non-Formal Education Department (NFED), certain shortcomings, already
identified at Appraisal, still persist in the area of adult education; understandably
so, as the project was intended as the first in a series of interventions aiming at
initiating action in this area and at setting the necessary framework for an
effective long-term programme\. The major issues, as they appear at present, can
be grouped under two headings: (i) overlapping and duplication of services; and (ii)
limited coverage linked with insufficiently adapted programmes and premises\.
These issues have been discussed at length in the Sector Survey Report (January
1983) and the solutions proposed have been adopted in formulating the non-formal
education component of Project VII\.
1 The final 1990 target is to establish a total of 73 provincial centres to
cover all provinces\.
-25-
Overlapoin and DutpUcation
4\.34 There is a large number of public and private agencies involved in non-
formal education and training activities\. Among the functions of the Non-Formal
Education Department is to act as the secretariat to the National Commission on
Non-Formal Education whose purpose is to coordinate the organization and delivery
of the non-formal education and traiing programmes\. At the provincial level,
there are branches of the National Commission but they act as steering
committees for the provincial education centres rather than as coordinating
agencies\.
4\.35 The most significant and costly duplication occurs in the skill development
prograrnmes where a number of institutions offer programmes addressed to the
- ie clientele without adequate coordination\. The same human and physical
resources could be used to reach a greater number and spectrum of people and
provide a more eftective training adapted to the needs of the individual\. Another
area in which overlapping creates problems is the programme of trainig villagers as
group leaders or resource persons\. Oftentimes, several agencies choose the same
person thus limiting the participation opportunities and overloading the individual\.
4\.36 The problems of inter-agency coordination is far too complex and can only
be resolved at the national policy making leveL This project intended to contribute
to this end through the creation of the Adult Education Coordinating tJnit whose
functions included "helping to provide the coordination and planning of adult
education which presently is lackirg"\. [ndeed, the NFED placed much importance
on coordination and achieved a great deal at the operational level: centres were
able to work in close cooperation with field staff at other agencies, particularly at
the district and sub-district levels-, coordinated needs assessment, operation and
follow-up have been shared; several centres developed systems promoting
integrated vilage level operations\. The next step towards achieving overall
coordination should consist of strengthening the coordination mechanism at the
national level and converting the provincial branches of the National Non-Formal
Education Commission into sub-committees of the Provincial Development
Committees with terms of reference to oversee and coordinate all non-formal
education activities in the Province (Sector Survey Report, paragraph 3\.31)\.
4\.37 In addition to the inter-agency coordination problems there have been
considerable internal difficulties stemming mainly from unclear delineation of the
roles of the regional and provincial centres\. The problem of coordination was
noted by the supervision missions during the implementation of the project and the
attention of the authorities was drawn to this effect\. Specifically, the Supervision
Report of February 1981 states, among others, that "the NFED should define more
clearly the role of the RECs (Regional Education Centres) and LECs (Lifelong
Education Centres) to reduce duplication and take further steps to coordinate LEC
activities with those of other development agencies in the area and with the formal
school system"\.
4\.38 According to the functions attributed at appraisal to the regional and
provincial centres, the former can be considered as overall planning and resource
mechanisms for provincial centres including training of adult educators and
production and distribution of teaching aids\. Annex IV/6, extracted from the
appraisal, shows the intended function of the two institutions\. In practice, it
appears that often regional centres were involved directly in adult training
activities while provincial centres tended to ignore the guiding role of the regional
centres\. According to the comments of the NFED on the draft version of this
report, the above-cited problems belong to the past\. However, the Department
agrees "that there is a need to delineate further the role of the two types of
centres, to strengthen the quality of staff and equipment and to find ways to
achieve closer working relations"\.
-26-
4\.39 Shortcomings in the functioning of :he regional and provincial centres
identified by the mission with the assistance of NFED officials include: (i)
weaknesses in key staff of some of the regional centres creating difficulties in
grasping the importance of the guiding role of their institutions; (ii) regional
centres appear over-staffed for their principle role, especially in terms of teachers
and instructors\. Side activities help keep their staff occupied; (iii) regional centres
are over-equipped in terms of conventional workshops and under-equipped in terms
of teaching aids production facilities\. As adult educators are not trained for skills,
the need for conventional workshops is minimal\. On the other hand, printing
facilities are inadequate and there is no multi-purpose workshop where teachers
can practice in the production of their own improvised aids and equipment; and (iv)
the provincial centres are not linked adminstratively to the regional centres; as a
result, the former tend to ignore their existence\.
4\.40 In order to solve the physical facilities problem, the NFED started
converting some of the conventional workshops into workshops and laboratories for
the development of teaching materials and into seminar rooms and offices\. In
addition, the Department "plans to develop, in the near future, the regional centres
into sub-centres for information and data systems, as well as assigning them with
the responsibility for reviewing the provincial plans arkd their implementation"1/\.
This, if properly implemented, would elevate the status of the regional centres into
that originally intended by the project\. In the view of the report which, in the
overall, is in line with that of the NFED, further action in the area of coordinating
the functions of the regional and provincial centres should be based on the results
of a thorough study of the actual situation and should involve: clear delineation of
the role of each institution; enlightenment of key personnel of both institutions
through conferences and study tours; possible changes in the overall administration
mechanism and the staffing and equipping of the regional centres\. Project Vll now
under consideration, provides a good opportunity for studying and launching the
appropriate changes\.
Limited Coverage and Inadapted Pro2rammes and Premises
4\.41 Despite the multitude of agencies involved in non-formal education
activities and the impressive progress in the number of participants in major
programmes achieved by the NFED through the project, the population reached
constitutes only a small proportion of the target population\. As an example, in the
1970 Census, over four million people were found to be illiterate\. Within 1971 and
1980, only some 124,000 of these were reached; if the target of the Fifth Plan to
reduce illiteracy from 14\.5 per cent in 1981 to 10\.5 per cent in 1986 is to be
achieved, literacy programmes should be enormously expanded and, possibly, the
whole approach should be revised\.
4\.42 Although definite attempts are being made, particularly by the NFED, to
penetrate the rural areas, the majority of the non-formal programmes offered by
the several agencies are still confined to municipalities and are, to a large extent,
inaccessible to the rural masses\. A survey on non-formal education programmes
carried out by the NFED in 1980, claims that over 70 per cent of the Government's
non-formal education programmes are organized on a nationawide basis and some
56 percent of them are addressed to the general public\. This greatly hampers
aEtempts to reach specific target groups and to provide for specific local needs
which are among the main objectives of the non-formal education strategy\. On the
other hand, while the population reached constitutes a small number of the
total target, a ?Tational Education Commission analysis of participant pro-
files indicates that the programs do reach rural and educationally disad-
vantaged persons\.
1/ Extracted from the NFED comments on the draft of this report\.
-27-
4\.43 The programmes of the provincial centres do reach the rural masses but
there is still much to be desired; a large number of provinces are without centres
and there are budgeting, equipment and staff limitations hampering a massive
expansion of the rural programmes; also, many courses are not designed for the
rural peoplel'\. In addition, the structure and nature of the facilities provided by
the project, encourage "in-centre" activities which attract mainly urban and sub-
urban populations who have access, anyway, to a number of similar training
programmes\. It should be noted that originally the provincial centres were
designed to serve urban and sub-urban areas as well\. However, subsequent
Governments' policy to expand the polytechnics and to introduce the Area
Vocational Centres diminished the importance of the role of the provincial centres
in this respect\.
4\.44 Linked to the problem of reaching adequately the appropriate target
groups, is that of the nature and structure of the programmes: (i) many of the skill
development programmes deal with standard industrial skills which, at times, are
irrelevant to the needs of the rural community; (ii) iniufficient stress seems to
be placed on using locally relevant instructional materials; (iii) a dis-
proportionate program emphasis is placed on general education rather than
on skills more directly related to employability and income generation\.
4\.45 Efforts of the regional centres to relate the programmes to the specific
needs of the target population include assessment surveys of the needs at
provincial level; revision of the functional literacy and second choice general
education curricula; introduction of the modular approach in skill training; and
production of printed material, radio programmes and educational slides and tapes\.
4\.46 The efforts of the NFED in this respect are hampered by: (i) difficulties in
identifying specific needs at community level and/or translating such needs into
concrete programmes; (ii) the qualifications of the staff available\. Staff are
usually trained in traditional skills and teaching techniques\. It is difficult to secure
the services of competent staff with the flexible and imaginative approach
necessary for this particular purpose; and (iii) the nature of the facilities provided
(paragraph 4\.43)\. Staff finds it easier to work in the centre with the facilities
available than to organize courses in the field\. An outstanding example to combat
this attitude is that of -he management of the Nakhon Sawan Centre who
convinced its permanent staff to work exclusively in field activities using part-
time staff for "in-centre" ones\. However, it should be borne in mind that reduced
"in-centre" activities would result to under-utilization of the installed capacity,
which is already happening and the Department is being accused of this\.
4\.47 All the above-cited shortcomings are not unknown to the NFED as can be
concluded from the 1983 Sector Survey Reporti/ and the Project '!11 preparation
document which reflects the official position of the Department in this respect\.
The proposal irf Project VII to establish provincial centres in all provinces and to
i/ In a centre visited by the mission, the main clientele for home economics
courses were wives of Government employees in the province\.
2/ This Report was prepared jointly by Unesco and the NEC on the basis of
Sub-Sector Studies carried out with the participation of officials of the
departments concerned\.
- 28 -
support their activities by providing simple infrastructure at the district level,
answers the limited coverage problems, enhances the capacity of the Department
to reach the rural masses and facilitates the response to specific needs at
community level\. The simplified structure proposed for the accommodationh' of
the new centres, supplemented by the attachment of light mobile units, places the
accent on field activities thus further supporting the coverage of rural areas and
limiting the possibility of duplication in "in-centre" skill development activities\.
With regard to the existing provincial centres, consideration should be given to
establishing ciose collaboration with specialized vocational training agencies (e\.g\.
Vocational Education Department and National Institute for Skill Development) in
utilizing fully the available capacity\.
The Technical Assistance Impact
4\.48 The Technical Assistance foreseen at Appraisal for the Adult Education
Component included: (i) 468 man/months of fellowships for 46 Dersons (four for
Ph\.D\., eight for Master Degrees and 34 for short training); (ii) 108 man/months of
foreign expert services in seven areas (project technical consultant, radio-
correspondence, correspondence education training, materials production training,
curricula development training, research and evaluation and programmes materials
training); and (iii) 840 man/months of local expert-services (staff training, course
development and research and evaluation)\.
4\.49 A private organization the "World Education Inc\." was hired to provide the
foreign expert services necessary and to place the recipients of fellowships for
Study\. The World Education Inc\. has been working with the Adult Education
Division since 1971 on programme development\. Its services proved fully
satisfactory\.
FellowshiPs
4\.50 Although the long-term degree fellowship programme has certainly
contributed to the promotion of Adult Education, there are doubts as to its overall
effectiveness in this particular case\. Selecti3n criteria set by the Teachers'
Council focused on English language ability and written examination skills which
precluded most of the experienced staff of the Adult Education Division\. All
trained personnel (12) were placed at the regional centres upon corrpletion of their
studies, which was the original purpose of the exercise\. At present\. there are only
four in one of the regional centres\. Out of the rest, three work in the NFED in
Bangkok, three continue their studies and two have left the Ministry of Education\.
Expert Services
4\.51 Foreign expert services were provided in 11 areas, instead of the seven
requested, to cover urgent unforeseen needs in the Project Office (paragraph 2\.6)\.
The total man/months provided were 129 as against the 108 foreseen at the
Appraisal\. There were no additional costs, as the World Education Inc\. secured free
services through the British Council, Colombo Plan (24 man/months) and other
bilateral sources\.
1/ These include: administration building, multi-purpose hall, work
preparation place for 15 instructors, storage for the mobile equipment,
garage for the transport units and maintenance workshop for the mobile
units and equipment\. Total surface: 880 square meters\.
-29-
4\.52 Local expert services also had the expected impact\. There were nine long-
term experts hired for a total of some 430 man/months and several short-tern-, nes
for a total of 410 man/months\.
Evaluation Surveys on the Adult Education Component
4\.53 In 1980, a limited evaluation survey of non-formal education programmes
was carried out by the NEC and the report was published in English in 19821/\. The
survey covered only the subject of typing and sewing and focused on: (i) measuring
the skills gained by the participants in courses of different duration; (ii) identifying
variables having an effect on the achivements of the participants; (iii) investigating
whether the graduates rook up employment within six months of the end of the
course; and (iv) discussing how participants utilized the skills acquired\.
4\.54 The report ends with the following summary of conclusions "for sewing it
would appear that the important variables which affect the work of the centres are
teacher training, both pre- and in-service, the quality of facilities, the shif E
(morning shift performed better) and the length of the course (150 hour course
participants performed better than the 200 hour course participants and earned and
saved more)\. It would be unwise to comment on typing because it was impossible
to evaluate it accurately partly because so many of the participants are still
studying"\.
4\.55 A full evaluation report a expected to be PUsblisd in Febrary 1984\. 7be views Of
t\.his kLcisIos on the evaluatim process are expressed in pararaph 4\.27\. It a be added
that tde -prema¢re or partial evaluation as the o untioned in pararaph 4\.50 above
camot yield reliable results for the assessmen of a project\.
PRIMARY EDUCATION STUDIES
4\.56 Tihere were two studies on Primary Education (Study I and Study 1)
financed from the surplus funds of this project (Annex [11/4)\. The original idea, as
expressed in the Preparation Report for Project VI, was )o carry out a simple
practical study to help identify the needs in buildings and equipment of the
provincial primary education offices with a view to conver zing them to resource
centres to support the quality improvement effort (Project VII)\. After the study
was launched, the original idea was abandoned and the study took the dimension of
a fully-fledged overall research and evaluation project\. As a result, a second study
(Study II) had to be launched to answer the initial questions\.
4\.57 Study I is divided into three parts as follows: Part I deals with enrolments
and enrolment projections\. It has been undertaken by NIDA and only a draft Thai
version had been completed at the time of the completion mission; Part II is a
sample study of existing facilities and it is undertaken by the Teacher Training
Department\. It has been completed but not yet published; and Part In deals with
trends and current issues and proposes guidelines for development\. It was
undertaken by the ONPEC-2\. It is complete and was published in May 1983\.
1/ In the magazine, Evaluation of Eduation, 1982, Vol\.6\.
2/ Office of the National Primary Education Commission\.
- 30-
4\.58 tudy II is designed to lead to a pilot prmject quality fzIrovitl- of primary educatin
arx couprises: (i) Identifiration of the physical and li\.i esorc u azy to estabish tw
Provincial Piimry FAdaca Resouce Ceatre (PPR), am each in Sri Saket aid Pattei and to
eqt\.p 162 school cluste in these provimi ; (ii) costructim of the tso PP1Cs md 324 classrooas
(ti for each sciool cluster) to acmmidate the necssaxy uterlal ar equipmnt, d ) pwvi-
simn of the rmessary uateals ain equpment\.
4\.59 The construction of classroonr and of the Sri Sdket PPERC mms coleted in Apri 1983 with
Gommerrnt- bxdet while the Pattani PPEC is eected to be aMpled sotly\. The phase of
equipme was undertaka acrdirg to scbehle\. The equipmen iwa purbaed in Septre 1983,
delivered to the provine inn February 1984 and handed over to sdxool clusters in April 1984\.
Sixty-five percen of the cost thereof ias cDvered by the World Bark loan\. With regard to the staff
development, seen training projects were ilemeneted in accordae with the pla with the targeted
umiber of traics\. The najor problem in the iwpltt s the srtage of operatirg hbdget of
te Provia Edatio ntes and the sdil duters in these provinces\. For the ealuatin of
the project iact l the iprovemet of students' adiievem\.t, NEC is am preparing the asmmry
report on the project evaluation which is expected to be copleted in May\. Tte necsary finds have
been omiitted but not entirely paid as yet (hknx M/4)\. Amex IV/6 presents the schdule for the
study and the inpenta of this pilot project\.
4\.60 Study II is of partLalar Importarm for the pmwtim of primary education In the ccatry
as it wud provide the bsis for the massive quality improveme effort to be supported by Project
VII\. Althoug the importance of Study I shuld not be t ed, in the vie of this Mission
such a study cojd bave dran heavily on edstirg ad material, (e\.g\. the sdhool mapping exercise,
the subsector study or primary educatio carried out as part of the EFucatim Sector Survey and
several NEC stdies o primary edcatio) to save both in tine and funds\.
ME EKSC C4MSYSI
4\.61 The Educatioal Magemr Informatin Systn Centre (ElISC) as established within the
Ministry of Education in early 1980\. In 1982, 4EMSC obtained the an of the World erk to
use US$1\.3 milioki fram Fducation Project IV (additioal ites) wit\. the Bark financin 65 percet
of the total costs for the purchase a&d installatfo of a omputer systen\. The EMlSC secured also
(floor space 350 m2) within the Ministry of Eduartio to use for the installati of
the system and for office space\.
4\.62 This project item had rot been crpleted at the time of the Cmpletion Mission, mainly
because of delays in the rehabiLtation of the preiLses\. Its iWlemntation scbedule is presented
in Table 4\.1 below\.
Tabe 4\.1: E1ISC Computer Systm ile ion Schedule
Rdhabilitation of premises : Early Janurary 1984
Installation of data entry system : Early February 1984 (+ 30 days testing)
InstalUation of the coaxter system : Early April 1984 (+ 30 days testing)
4\.63 The importance of this project item is evident\. It suLports the effort of strengtheting the
Managemet Informatimn System, which is an essential part of the Goverrimlts request for Project
VIa\. Ihis project includes a second phase for the EESC (purchase of 20 temlnals and 12
tdni-copu-ers for the Regional Education Offices); additional equipment for the National Education
Commissio system ard for the Irstitute for the Development of Eution Administrators and a study
for the installation of a system within thE Ministry of 'idversity Affairs\.
- 31 -
ANNEX I11
THAILAND - FOURTH EDUCATION PROJECT
PROJECT COMPLETION REPORT
THE SYSTEM4 OF EDUCATION
depee
lgh± fr educatLon
first degre ad loer
\.-4 0-
- - - - - - ---- - -
lower sconda \.y _
1 " tucr _ E \.8
-* 4- _
11 educsti _ <
t t
*emantaz
\.0-s 5uac
,\. \. | , \. , b - e | \. C C @ @ 0 * \. \. \. \. \. \.
ENROLMENT TRENDS BY LEVEL AND TYPE OP EDUCATION\. 1977-1982 ii
1977 1978 1979 1980 1981 1982
Level and Grade Total of which Total of which Total of which Total of which Total of which Total of which
Public Public Public Public Public Public
Pre-Primary 253 102 102 524 304 304 131 748 333 538 143 308 359 992 152 997 331 984 158 322 476 421 241 937
K l 94,191 10,317 14,783 122,200 13 026:13 f2 17 145192 f4758
K2 80,107 13,803 84,358 10,801 94,036 12,930 101,401 13,226 109,206 14,373 114,439 14,397
Nursery 78,404 78,404 106,164 106,164 117,352 117,352 126,251 126,251 130,065 130,065 212,290 212,782
PrimarY 77024 137 6,305 139 7,002,879 6 377 123 7,257,938 6 635 048 7 442 615 6 81S 910 7 308 4466 680 022 7377 669 6 741 519
Pl~~~ ~ ~ ~ 1,581,927 l,390j654 1:648t730 1:469t74S 1,502j9311 11335;142 1;471 S&19 I30603S11 1:399:834 VT32;S72 1368,257 1;201;tO3
P2 1,309,817 1,206,796 1,321,503 1,215,876 1,406,282 1,296,612 1,318,424 1,214,757 1,237,528 1,232,407 1,222,851 1,112,2t9
P3 1,276,898 1,179,113 1,312,750 1,216,655 1,299,446 1,200,075 1,368,844 1,265,565 1,239,279 1,142,412 1,207,791 1,111,035
P4 1,135,291 1,044,045 1,168,106 1,079,106 1,182,330 1,093,346 1,227,582 1,136,869 1,302,923 1,205,565 1,214,055 1,122,248
P5 712,250 629,177 963,716 883,067 1,060,072 978,100 1,132,185 1,049,845 1,160,620 1,074,389 1,318,764 1,226,031
P6 544,489 466,953 588,074 571,960 807,525 731,773 910,615 833,377 953,954 876,069 1,045,951 963,113
P7 463,565 388,401
Secondary 1,110,245 841 928 1,476,004 1,138 714 1 567 840 1249 742 1 605 838 1,299,426 1,564 552 1 318 066 1 669,205 1427 896
ro-wer 923,370 698,S43 1, 2640,099 973,936 1,320,1S9 1,043,760 1,343,631 T, 1573 rN 1,O98 35t '913:300 1:171,312 '"00016
Ml_ - 331,194 255,815 342,501 277,372 382,092 315,459 408,214 343,474 618,689 336,640
MSI 335,489 263,594 336,751 257,473 - - -
M2 - - 327,640 255,329 332,038 269,913 367,281 305,469 393,406 332,995
MS2 311,053 236,330 307,939 242,189 337,337 263,182 -
M3 - 352,596 256,025 322,863 264,357 359,217 300,375
M53 276,828 198,919 288,215 218,919 312,717 249,877 303,905 233,727 -
Upper 186,875 143,085 211,905 164,778 247,651 203,982 262,302 224,302 467,094 404,766 497,893 437,886
M4- - - -- 174,882 151,666 184,453 164,406
MS4 79,605 115,714 91,151 141,612 119,877 140,515 121,157 160,027 138,964
MS5 63,480 96,191 73,627 106,039 84,105 121,692 103,145 131,285 114,136 152,395 132,432
Vocational 161 045 141 095
Secondary/Upper 196,061 89,466 221,479 109,779 260,872 137,200 295,796 156,408 417,210 231,403 27 3tJ0i
Post-Secondary 32,602 3,636 37,097 4,493 40,088 5,098 50,254 12,061 59,548 16,383 75,843 4S,070
1/ Excluding Teacher TralninIg and Universities,
- 33 -
AN= 1/3
THALAND
FOURTH EDUCATION PROJECT
Number of Schools, Teachers and Enrollments, 1982
Schools Teachers Enrollments
Rest of Rest of Rest of
Bangkok Thailand Bangkok Thailand Bangkok Theiland
Ministry of Education
General Education
Primary - - - 30 - 704
Secondary 99 1,409 12,943 69,468 219,174 1,197,419
Special 4 29 180 685 3,041 9,936
Vocational Education 16 133 1,140 9,962 34,460 110,770
Technical Colleges 1(11) (17) 1,244 1,407 21,523 20,872
Teacher Training Colleges 6 30 1,194 4,086 10,217 49,175
Fine Arts 2 5 295 241 2,462 1,650
Physical Education 1 12 34 577 100 4,849
Private Schools 856 1,526 20,644 35,116 437,037 685,543
Other than \.inistry of Education
Bangkok Municipal Authority 406 - 12,265 - 226,337 -
CA&-NLnistry of Interior /a - 29,701 - _ - 6,087,492
Municipalities - 439 - n\.a\. - 225,511
Border Patrol Pblice Schools - 121 - 553 - 9,047
Ministry of Uni\. Affairs 20(7) 11(4) 12,352 3,989 81,915 28,699
Total 1,445 33,409 66,889 441,738 1,065\.293 8,389,052
/a CAO - Caangwat Administration Authority\.
Source: Ministry of Education\.
- 34\.-
THAAND FOURIK EDUCATION PROJECT (LOAN 1271-Ta) (&' I ;of 3)
Blo EDUCATION
Enrolments ln Puble and Prlvate Institutions by rvel
-(1977, \.197b, \.1951)
A\. Non-degree level
Authority/Region 1977 1978 1981
I\. Goverment Universities 2\.074 2a
Central Plains:
- Bu_ kok Metrcpolis 2\.074 2\.634 6\.387
- Outsde Bazgkok - _ -
North _ _
North-Est - - -
South - _
II\. Private Colleges 3\.0 b\.n2 6S835
Central Plain
- Bargkok Metropolis 3\.451 4,49) 5\.774
- Outside Bankok - _
North 206 239 213
North-East - - 8m8
III\. Government Colleges 93,692 92,071 98,247
College of Tecinology and
Vocational Education 20\.218 20960 25\.001
PbysVcal Educatior\. Colleges 3\.143 4,434 9,81c
Teachers' Colleses 61,905 55\.223 36\.587
Vocational Eucatiors 8,42 \. 11,554 26,817
Total 99\.4242 99\.437 111\.513
B\. Degree level
Authority/Reglon
I\. Governmer\.t UniversItles 188,212 285,303 665\.625
Central Plains
- Banckok 150\.525 256\.575 620\.161
- Outside Bangkok 5\.487 5,479 4,7O
North 10,594 11,175 12,\.15
North-East 5\.758 c, 19O 6\.974
South 5\.845 58814 7,T352
II\. Private Cclleges 14,\.B1 i5,125 23,175
Central Plains
- Bangkok 12\.654 12,665 18,365
- Outside Eangkok 1,337 1,648 2,391
North 69G 792 1,6:2
North-East _ St-
- 35 -
ANNEX 1/4
(Page 2 of 3)
Authorlty/Region 1977 1978 1981
III\. Government Colleges 3,613 6,836 30,028
1\. College of Technology and
Vocational Educati on 1,128- 2,53 3 003
Central Plains
- Bangkok 912 2,173 2,546
- Outs\.de Bangkok 215 Y;3 457
2\. Teachers' Colleges 2,485 4,300 27,025
Central Plains
_ Bangke 1,170 1,390 7,803
- OutsIde Bangkok 272 675 6,407
North 373 445 3\.904
North-East 434 1,115 5,794
South 238 475 3\.117
Total 206\.505 307,264 706,828
C\. Post-degree level
AuthorityARegion 1977 1978 1981
Government Universities
1\. Central Plains
- brgkok Metropolis 8,005 8,128 11,350
- OutsIde Bangkok 106 129 211
2\. North 245 280 404
3\. North-East - - 127
4\. South - - 87
Private Colleges _
Government Degrce-Granting
Colleges _
Total 8,35E 8,537 12,179
- 36 -
ANNEX 1/4
(Page 3 of 3)
EnrrLments in Governmentt Institutions by
F\.eld Of Studies (19E1)
\. | Undergraduate
Fieldls of Studt Nurber Per Cent
Huranities 30, 523 4T\.7
Edu2ation 136\.650 20\.8
Fine Arts --1,644 0\.2
Social Sciences 264,103 40\.4
Law 180\.956 27\.6
Science 21,419 3\.3
Engineering 6,106 0\.9
Health Sciences 7,891 1\.2
Agriculture 5,562 0\.5
Total 655,354 100\.0
THAILAND FOURTH EDUCATION PROJECT
PROJECT COMPLETION REPORT
NON - FOnAI\. EDUCATION
Department of Non-VurmaL Education - Number of Participants by the_Type at Proarae (91-1982)
Tlypo Year 1977 1978 19/9 1980 1981 1982
\. \. \. -\. - - - - \._ _ - - , - \. ,_\. -\.* ,
1\. Futictional LILteacy 18,064 32,087 22,638 32,964 35,812 42,400
(11,99S)
2\. General Adult Education 205,214 107,225 200,636 214,446 211,175 290,720
(43,992) (41,200)
3\. Vocational Adult Educatlos 47,327 76,782 65,429 78,637 82,533 89,280
(46,107) (47,601)
4\. Interest Groups 84,169 17,726 33,083 \.0,1M3 104,215 99,525
(25,752) (34,341)
5\. Audlo-Visual Activities 1,157,803 2,999,513 2,327,758 2,270,408 2,281,500 2,310,200
6\. I'ublic LIbraries 4,508,254 5,816,360 - (308)L/ 361 369
7\. Village newupaper reuding
Ceutre 3,979 5,094 6,900 8,405 8,034 9,513
8\. Contre for 3ducationaal
Technology
- General Education through 7,836pro&ra 9,020progr\. 11,241proara\.
radio 2,792 hours 2,804 hours 2,044 hour\.
- TV EducatLon 227progr 165 hours 104 hours
97 ltours
- Sciaece a uceum 243,186 235,851 300,000
- Planetarium 390,919 196,454 300,000 1n
9\. Radio Correspondence
&rograme 9,,5 40441 5,480 _ 00 13,500
Source a Department of Non-Fqrmal Education
jln bracketsa Number of graduates; V Number of unties (70 pruvincial, 291 district and 27 mobile)
- 38-
THAnLAND POURTEH EDUCATION PROJECTAN 16
PROJECT COMPLETION REPORT
ENROLTWJ ER,JECTI0N8
_Enrolments Average AnaMl
Growth Rate
1982 1986
Pre-Primary Education 5597000 40\. 000 8\.1 7\.3
Priury Education Looo 7\.i468,ooo -0\.5 -\.0\.5
Secondary Edsucation 2,052,000 2,72_,500 8\.2 7\.4
- Iover (General) 1,184,000 1,612,000 9\.0 8\.0
- Upper 86B,200 1,117,500 7\.2 6\.5
- General 46,1400 598,700 7\.4 6\.7
- Vocational 372\.000 170,000 6\.6 6\.0
- Others (nurses, soldiers 33,800 48,800 11\.1 9\.6
and policemen)
Higher Educations 262,00 327100 6\.1 5\.7
- Diploma 96,240 110,890 3\.8 3\.6
- Vocational 68,440 91,290 8\.3 7\.6
- Teacher Training 27T,0 19,600 -7\.5 -7\.0
- Bachelor Degree and RLgher 150\.900! 184\.900 5\.6 5\.2
- Others (nurses, soldiers 15,260 31,310 26\.2 19\.7
and policemen)
Total 10,506,600 11,264,600 1\. 8 1\.8
-I
3/ A As calculated in the Flifth Pan\.
* 2/ B: Corrected\.
,/ Excluding open universities\.
y/ nLcluding those under other headings\.
- 39 -
ANNEX 1/7
THAILAND FOURTE EDUCATION PROJECT
PROJECT COMPLETION REPORT
EDUCATIONAL FINANCE
Relationship of Central Government Educational Expenditures
to its Total Expenditures and GDP
(Billion Baht)
FY 1977 FY 1978FY 1979 FY 1980 FY 1981
1\. Current Expenditures on Education 10\.0 11\.2 12\.7 16\.0 20\.8
2\. Capital Expenditures on Education 4\.8 5\.2 5\.3 6\.8 6\.9
3\. Current and Capital Expenditures 14\.8 15\.4 18\.0 22\.8 27\.7
on Education
ff Total Current Expenditures 53\.4 63\.3 72\.6 83\.2 111\.7
5\. Total Capital Expenditures 15\.4 17\.7 19\.4 25\.8 28\.3
6\. Total Expenditures 69\.9 81\.0 92\.0 109\.0 140\.0
7\. GDP at market prices 393\.0 469\.9 556\.2 883\.7 803\.1
(1) as percent of (4) 91\.4 17\.9 17\.8 19\.5 18\.7
(2) as percent of (5) 32\.0 29\.4 27\.4 26\.4 24\.6
(3) as percent of (6) 21\.5 20\.2 19\.6 20\.9 19\.8
(3) as pc -cent of (7) 3\.8 3\.5 3\.2 3\.3 3\.4
Go
\.-m 167
am1 ;" uwIuL9 ;;ii Am ;910ii on TI19 ;v-, MM1S R ! 0MM91 i ui 't R tUSi fl WIT al'rot 1
t'*mot WIt :t tl'l is t't stl t l 1u1 toot in n MM 11 £l otGM 1 GA S_
Owlt $£W I W9£ III1 M 1901 oil 0! SLS 501 011 t 999 W I Sltt ( a_
two A" Is n§ O"'5 aill'till lol toll' A'tollt' s&til 1 cZ t Clt' fullt eu t'tl 1Z1 Ctl {wF tto IVP l
wool 59I1 Wlis "I Ain 1is OIn m nt 9 oil on g st O in us
asll $,101s fe53' Kct'1 Su tie "I's mt Ild to9 Wi v" on "I
m tl# 01159 SK g91 9Et 1911 6001 0190 319 KS'S IU,£ U i * _ B
ow0 "to1 a' mo"t onl eel@ It tol IX'lt stff' 1" t "II SI stl "I' its'I Mel mes' su all' _ _m Aq
ml" given le'sbg ff"l6 "VI ids'l1 mllsE {00' Oll'* EAG* will tt@i '1 Otil'l t66 la's Um's 'PM
sot w16t\. 31 i\.a tgw0u a* twin tw,1 a4a 1uaea s\.alud Om wa wadso ah a ln r"if WA "14
1361-1641 1091 01 "11 161 £
3DNVNIA IVNolLvDflas
mAoadI NLouIJHmoO 1-oa-roid
Loaro! NoiLvonas Ia-Lnoa auViIV}L
-41-
TRATTANn FOURTH EDUCATION PJCTX I9
PROJECT COMPLETION REPORT
EDUCATIONAL FINANCE
Percentage breakdown of Central Government recurrent educational
expenditures by level of education and type of expenditure
1977 1978 1979 1980 1981 1982
Preprimary & Primary Ed\. 100 100 100 100 100 100
Personnel 80\.1 83\.4 84\.1 84\.1 85\.9 85\.3
Materials 0\.9 0\.9 0\.9 1\.1 1\.0 1\.9
Utiities * * * 0\.1 0\.1 0\.S
Others 19\.0 15\.7 15\.0 14\.7 13\.0 12\.3
Secondary Education 100 100 100 100 100 100
Personnel 91\.9 92\.4 93\.7 94'\.8 95\.2 93\.2
Materials 1\.8 1\.9 1\.7 1\.5 1\.4 3\.2
Utilities * * * 0\.9 0\.7 0\.8
Others 6\.3 5\.7 4\.6 2\.9 2\.7 2\.8
Vocational Education 100 100 100 100 100 100
Personnel 91\.9 92\.4 93\.7 94\.8 95\.2 93\.2
Materials 1\.8 1\.9 1\.7 1\.5 1\.4 3\.2
Utilities * * * 1\.3 3\.7 3\.5
Others 26\.6 26\.4 28\.3 19\.2 19\.4 22\.4
Teacher Training Education 100 100 100 100 100 100
Personnel 85\.9 86\.2 86\.4 86\.1 86\.1 82\.6
Materials 20\.6 21\.4 23\.0 21\.4 20\.6 24\.3
Utilities * * * 2\.8 3\.7 4\.6
Others 9\.4 9\.1 8\.9 6\.5 6\.0 7\.3
Universities 100 100 100 100 100 100
Personnel 67\.0 66\.3 66\.0 66\.9 68\.2 58\.3
Materials 16\.9 17\.4 18\.1 17\.0 15\.3 16\.3
Utilities 5 * * S\.1 5\.6 5\.6
Others 16\.1 16\.3 15\.9 10\.7 10\.9 19\.8
Included in others\.
Source: Worked out by the Sector Survey Mission (July 1982) on the basis of information
provided by the Budget Bureau and the Central Planning Office of the Ministry
of Education\.
- 42 -
ANNEX 1/10
THAILAND FOURTH EDUCATION PROJECT
PROJECT COIPLETION REPORT
UNIT COSTS BY LEVEL AND TYPE OF EDUCATION (1975-1982)
(Baht per head per annum)
1975 1977 1979 1980 1981 1982
1\. Primary, Total 1,108 1,379 1,472 1,814 2,247 2,608
-recurrent 883 1,007 1,127 1,382 1,819 2,143
2\. Seco, dary, Total 2,018 2,516 2,289 2,833 3,475 3,793
r-ecurrent 1,205 1,418 1,420 1,818 2,397 2,463
3\. Vocational, Total 4,786 6,655 7,633 8,156 7,854 8,515
-recurrent 3,197 3,991 4,986 5,171 5,304 5,775
1\. Teacher Training, Total 3,541 8,435 6,829 8,224 8,819 8,339
r-ecurrent 1,438 3,829 4,646 5,809 6,244 6,471
5\. Universities
5\.1 Restrsicted Admission 15,434 22,448 25,849 32,681 34,850 41,739
Universities, Total
-recurrent 10,570 13,255 14,426 17,442 21,334 27,243
Source: Worked out by the Sector Survey Mission (July 1982) on the basis of
information provided by the Budget Bureau and the Central Planning Office
of the Ministry of Education\.
- 43 -
ANNEX II/1
THAILAND FOuRTH EDuCATION PROJECT (LOAN 1271-TH)
PS20J ECT I M PL F ME NTATION SCU EDULE
r\.~-A\.I~L o G\.m\.gz-- BAPPeAl SAL A4ND ACTVAL CLOS"G CpAV^Er IaC
r\. it p r_____- fr\. | IL | "70 L\. \. sea 2 I ' - I I
ALE VA It 2Q76 1977 T Q78 1Q79 1980 | 1981 T Q2 | _ab\.
\.T'sp\. M- Wu IC';^\.Ll''\.,141's1'1'1' z2-2
a'\.~ wC -- - L11 1[11[ I Ll -t
--\.--_-__<=I - - - I
Le'",-0 P\.s- l -t- -- - t t- - 1- i- - 1 -T-1
lL_\._ \.~_-___: ! -- 71 2 4 - ;- Tt ¢i _
W C\. - \.;
I I~ ~ ~~~~~~~~~~~~~~~~
&\.C\. v-_-\. _ ACJ-- \.
-SL\.g> --c '' ' 1 1 f t ti i
?&CI~~~~~~~~C\.A&\. Afl'STA\.C ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Se\. 1
\. _ a -- - - ---- it------
__ ^o \. ' - \.1l sini \. - t ! -1 llL ic
o'L -- ~t' ' ''' e=_=Li*
AC\.fJa ,\.-\. 5r\.___ A _\.&Sab__
ACt\.*\.A, L , auu J A -A
- 44 -
THAiND FOURTH EDUCATION PROJECr ANNEX 1/2
PROJECT COMPLETION REPORT
PROJECT IPLEMENTATION Su-NIs
SECTION A: Tasks of the Sub-Units
The major responsibilities of each on of the sub-project units for the
respective component were as follows:
- Selection and acquisition of sites;
- Preparation of the Building Requirements (architects' brief);
- Selection and contracting of private consultants;
- Supervision of -he work concerning Buildbig Designs, Cost
Estimates, Tender Documents, etc\. prepared by DGE staff or
private consultants;
- Preparation of Master Lists for furniture and equipment;
- All necessary steps for international and local competitive bidding
for civil works, and for the procurement of funiture and equipment
including the preparation of bidding and contract documents, the
evaluation of oids and making recommendations regarding the award
of contracts;
- The \.Axpervision of construction and procurement and installation
pr-ocedures for furniture and equipment and the regular inspection of
construction work-
- The selection, briefing, coordination and supervision of local and
expatriate consultants to be employed for the purposes of the
project including the establishment of their terms of reference, the
administration of their agreements and arrangements for the review
of their work by appropriate authorities;
- The organization, coordination and control of the fellowship
programmes micluded in the Project\.
SECTION Br Office of the Non-Formal Education Development Project
(i Under the Adult Education Division
During the initial period the Project Office was divided into the following
seven sections: Regional Centres, Provincial Centres, Radio-Correspondence
Education, Administrative, Construction, Equipment and Technical Assistance\. The
Director of the Adult Education Division was the Project Director\.
(ii) Under the Non-Formal Education Department
During the second period changes were made in the organization and
functioning of the Project Office\. Under the new arangement, matters relating to
construction and procurement passed from tfie Project Office to the new
Department's Office of the Secretary\. Project Office personnel previously
responsible for these matters were transferred to the Office of the Secretary
where they were to handle all construction and procurement work for the new
Department\. Repsonsibilities for the regional and provincial centres and the radio-
correspondence education programme were assigned to the two separate sections in
the new Department's Operations Division\. The responsibilities for coordination
with the Bank and matters related to foreign experts remained with the personnel
who had handled them originally although they were now assigned to the Operations
Division\. Normally, such responsibilities would be assignwd to the Planning and
Research Division\. The Project Office remained as a coordinating unit responsible
for\. handling relations regarding project matters within the' Department and with
the Bank and the external consulting and technical assistance firms\.
- 45 -
ANNEX IIIJl
(Page 1 of 3)
THAILAND FOUiR EDUCATION PROJECT
A\. PROJECT COST BY PROJECT COMPONENT: APraisal Estimates\.
-_______________ -Local Foreir Total Local Fordin Total
A\. Secondary Education
1 Training 6 Main-
tenance Center 9\.7 4\.7 14\.4 0\.48 0\.24 0\.72
50 Diversified
Secondarv Schools 456\.9 270\.1 727\.0 22\.84 13\.51 36\.35
Sub-total 466\.6 274\.8 741\.4 23\.32 13\.75 37\.07
B\. Adult Education
1 Coordinatisg UtIt 0\.3 0\.5 0\.8 0\.01 0\.03 0\.04
4 Regiomal AE\.Cs 33\.0 29\.5 62\.5 1\.66 1\.48 3\.14
12 LECs, first phase 53\.4 40\.5 93\.9 2\.67 2\.02 4\.69
12 LECs, last phase 53\.4 40\.5 93\.9 2\.67 2\.02 4\.69
Sub-total 140\.1 111\.0 251\.1 7\.01 5\.55 12\.56
C\. Technical Assistance
Secondarv Education 2\.4 13\.5 15\.9 0\.12 0\.67 0\.79
Adult Education 8\.9 17\.1 26\.0 0\.45 0\.85 1\.30
Project Unit Support
and Preparation
Future Education
Projects 2\.9 6\.7 9\.6 0\.14 0\.34 0\.48
Sub-total 14\.2 37\.3 51\.5 0\.71 1\.86 2\.57
Total Base Cost 620\.9 4623\.1 1,044\.0 31\.04 21\.16 52\.20
D\. Contineencies
Physical 62\.1 42\.3 104\.4 3\.10 2\.;2 5\.22
Price 260\.9 157\.7 418\.6 13\.05 7\.88 20\.93
Sub-total 323\.0 200\.0 523\.0 16\.15 10\.00 26\.15
j TOTAL PROJFCT COST 943\.9 623\.1 1,567\.0 47\.19 31\.16 78\.35
- 46 -
ANNEX III/I
(Page 2 of 3)
B\. POJBT COST BY CABGORY OF E UMlmnl: A bpraisal Estimats
Bal4t tizilionr 'Us CTi7llo7)
Local Fore tri To tal Local ForeiLrn Total
Civil Works
Site Developmern\. 815\.1 37\.0 123\.1 !j\.32 1\.B5 6\.1-1
Construction 3905\., 169\.3 56h\.5 19\.7 147 28\. 22
Professior,al Services 37\.2 i\.1 W \.3 1\.86 0O\.? 2\.0-
Sub-tota2 518\.6 210\.h 72t 25\.92 1 \.53 36\.16
Furniture and E2upiment
Furr\.itture 3li \.& 1L\.E\. 1JS\. 1\.72 \.7Lz 2\.1j6
Equipnen- 53\.5 16D\. 2-14\.1 2\.66 E\.03 10\.71
Sub-total E7\.9 175\.l, 263\.3 lj\.IO 6\.77 13\.17
Technical Assistan:e
Foreigni Exe-ts 3\.3 18\.2 21\.5 0\.16 0\.91 1\.07
Local Experts 7\.7 0\.9 E\.6 0\.39 O\.OLj 0\.4i3
Fell\.oships 3\.2 1 E\.2 21\.LL 0\.16 0\.91 1\.07
Sub-tota2 11L\.2 37\.3 51\.5 0\.71 1\.56 2\.57
Bass Costs 620\.9 b23\.1 1,01,! \.0 31\.01 21\.16 52\.20
Conr ingencies
Piiy S i ~-_Hl 62\.1 L\.2\.3 10O\.I\. 3\.10 c\.12 5\.22
Inr,rease 260\.9 1 57 \.7 J4s1 E \. E 13\.05 7?\.8E 20\.93
S\.-to al 3234\. 0 2C\. 0\. 523\.0 16\.15 10\.0:0 26\.15
TDTAL 9L\.3*9 623\.1 1,567\.0 \.7\.19 31\.16 7F\.35
- 47 -
ANNEX III/1
(page 3 of 3)
THAILAND FOURT EDUCATION PROJECT
PROJECT CONLETION REPORT
C\. ALLOCATION OF PROCEEDS OF CREDIT
Appraisal Estimates
(in US$ millions)
P>roject Total D\.S\.S\. AED Other
Actual APPR3/ Actual APPR Actual APPR Actual APPR
Civil Works 12\.794 11\.000 8\.048 8\.600 4\.007 2\.400 0\.73911
Fumiutureand 10\.622 8\.500 5\.788 5\.400 3\.761 3\.100 1\.072
Equipment
Technical 1\.977 2\.000 0\.823 0\.814 0\.775 0\.850 0\.379 \.366
Assistance
Base Costs 25\.393 21\.500 14\.659 14\.814 8\.543 6\.330 2\.210 \.336
Contingencies 0\.9072/ 9\.900 - 4\.972 - 3\.574 - \.954
Cancelled 4\.700
Project Total 31\.000 31\.000 14\.659 19\.786 8\.543 9\.924 2\.210 1\.290
1/ Professional services\.
2/ Balance from the remaining funds which will be returned to IBRD\.
3/ According to the Loan Agreement\.
THAILAND FOURTH EDUCATION PROJECT
PROJECT COMPLETION REPORT
CAPITAL COM
SMPYARI Of WNAn D0 ALi VAL CAnITAL KIPUXDITURE
(in BIWt oxus) US$I * b It n until 191
MCI - Ikbt 2) itrez 11'X011 on)
Construction and Site Develop\. untilure t4Equilpbnt rror,easnal Services Technical Asslitance Total Costs
Appatsal Estin\. A Appolsal latin\. Appraisal latIn\. - - Appraisal latin\. App_osal _stin, APpirtaal atio,\.
Aotual *-Lsu\. nld Actual AculActual *SAcUal Acua r
Loclud Inolud\. Colstoa aou\.Inld Cots Csa__ AII nldts s lA Kalu\. noud Cot\. * WMlu\. noad to ate
cocitln comtlna\. _ eon:llntI @qittg_ Owtlsnt6 ronthSl\. _conina\. enhln\. _ ontlog" ocotIln"\. ' toontrAc citIng\. _ _ \.,"\.
I 2 A 5 6 7 a 9 to it la 13 II IS 16 IV 18 19 90 2a a2 1) at s5
A\. Second&rZ I,iucatlon
A\.1 Traioning and
aIntercance 1t,&'43 18,00`1 11\.791 903 1,391 I1,200 1\.677 I 97 98
MContra s
I 196,171 - 929274 -) 2,11 65,85 e21,7 _ _ _
3\.condary 8SIhala 526315 816,9 M 563,923 3934 575 1 1109 440)-
Sub\.Tntal )7,92) 63 82 ) 571,n\.C1 69 *0,243 58,88 Bo,81n I 139 130,895 182,869 92,27A 50 )' 9Yt A5,151 2,I1 P\.6 15,850 21,7187 16,776 77 757,211 U11A,) 7?8d,l5 67 61\.7
8\. Adult 1d4catIon
B\.1 CoOrlnatina 1thlt |32 3i |) 63* 878
B\.2 P\.-t\.giorcai Adult ~Ol\. 20998\.
I Ed\. Cmires 33,700 52\.208 |47,922 92 2\.045 2,992 _ 2t1800 $\.6P\.7 14 2\.0n 9
B,) Lltr-long l l l | | |' - - - l - | - g \. ,1,663 )35,98 \. | 5\.710
\.3Life-Ions I I
gd\. C*ntres 116,256 W8\.309 \.227,453 126 6,636 9,709 - 57,8t0 80,806 1 6,976 9,831 1 1 )I
Sub-\.Ttal 1"9,956 232\.,71 ?15,P45 l8D 8,913 1),IJ40 13,P6 10) 8),2%0 1160291 _%414 89 8,99802,680 *,66) 36 V5\.980 35,710 16,915 "5 2 17Minn P\.10,F9 01,11 t100o\. 33)2
Pvjnct Unit lupprt
a Prsparatlon of
Putur\. Pajsots I 9,620 |1,2) 1 #,05 |
Additional Items - - - - I - - 16,700 6, 15
Sub\.Total _____7_ - - - 116,700 9,6au 1 ,9) | 4 *,P\.58 IA )O U3,39 \.0\.4P\. 479 '\.1
,u9~ 78 41\. 19411114 - - - \. , \., - - * I \. 1
0 D8 AL __6L 687\.87911l[ -M_1850\.259TO r49,156 |18920 95,)l 13 21P\.,1X5 t\.160 II95 , 40 1 5 450 1 70,720| F w Fn j
_ | ~~~~~~~~~~~~~~~~~~~H
THAILAND FOURTH EDUCATION PROJECT
PROJECT COMPLETION REPORT
COMPARISON OP PLANNED AND BUILT AREAS AND OF COST PER M2 AND STUDEN r PLACE
A\. Diversified Seconday Schools (Rate USS I * Baht 20)
Cost per Student Place (US$)
Gross Area Cost per sq\.m\.
In sq\.m\. In US$ Civil W% iks Furniture Equipmeuit Total
Appr\. Actual Appr\. Actual Appr\. Actual Appr\. Actual Appr\. A\.iual Appr\. Actual
Ct\.iang Mal 4,200 4,106 138\.00 113\.84 194\.77 177\.87 34\.87 33\.20 48\.32 34\.56 277\.96 245\.63
Lampang 3,700 3,891 118\.30 102\.41 166\.04 148\.92 47\.29 29\.43 48\.32 33\.94 261\.65 212\.29
Phitsanuloke 2,500 2,307 106\.51 110\.51 106\.23 95\.34 46,92 21\.41 48\.32 33\.97 201\.47 150\.72
Songkla 3,600 2,334 115\.47 116\.10 112\.92 96\.20 63\.54 18\.72 48\.32 32\.24 224\.78 147\.16
Songkla 3,900 2,506 127\.10 256\.58 334\.90 305\.32 41\.64 35\.14 60\.40 43\.13 436\.94 383\.59
Udon-Thanl 3,900 4,062 118\.73 99\.95 187\.96 116\.50 40\.40 21\.78 53\.68 26\.06 282\.04 164\.34
Phrae 3,600 3,009 122\.01 108\.84 151\.62 131\.00 52\.36 29\.38 53\.68 36\.33 257\.66 196\.71
Slsaket 2,400 3,228 150\.39 99\.81 191\.79 132\.37 72\.97 27\.53 69\.02 37\.32 3J1\.78 197\.22
Chonburl 3,600 3,714 122\.03 105\.81 204\.69 182\.88 49\.00 28\.94 60\.40 42\.27 314\.09 254\.09
Phuket 4,600 3,765 137\.63 129\.13 225\.09 212\.59 34\.28 33\.15 53\.68 39\.72 313\.05 285,46
Tak 5,700 5,534 99\.40 100\.28 330\.36 252\.16 37\.60 35\.73 69\.02 41\.27 436\.98 329\.16
Tak 3,400 4,280 118\.94 87\.14 222\.02 213\.75 49\.55 40\.83 G9\.02 52\.03 340\.59 306\.63
Maha 3,200 3,379 143\.38 106\.39 166\.44 127\.03 41\.67 22\.44 53\.68 32\.10 261,79 11\.57
Chalyaphum 3,800 3,822 117\.91 90\.25 205\.33 149\.72 53\.55 27\.99 69\.02 39\.42 327\.90 217\.13
Burlram 4,800 4,293 139\.05 121\.81 217\.90 167\.34 34\.56 27,10 43\.32 29\.07 300\.78 223\.51
Kanchanaburl 5,000 4,656 118\.53 107\.28 297\.32 254\.33 40\.04 35\.29 69\.02 46\.25 406\.38 335\.87
Uthal-Thanl 4,800 5,487 119\.38 101\.14 289\.06 295\.37 61\.46 48\.02 60\.40 4t\.34 410\.92 391,73
Srisaket 4,400 3,621 102\.27 121\.51 229\.17 156\.70 55\.24 32\.13 60\.40 32\.35 344\.81 221\.18
Loel 3,800 3,963 126\.42 117\.20 215\.05 170\.65 49\.28 33\.15 53\.58 33\.37 318\.01 237\.17
Nan 4,800 3,701 96\.36 130\.11 286\.64 222\.84 64\.26 41\.75 69\.02 42\.03 419\.92 306\.62
Lopburl 4,300 4,528 126\.99 136\.92 322\.92 360\.67 49\.14 52\.49 60\.40 52\.84 432,46 466\.00
Chainat 5,300 7,152 171\.16 200\.94 443\.75 421\.45 55\.35 35\.71 48\.32 35,94 547\.42 493\.10
Nakhon Pathom 4,600 4,800 125\.85 137\.50 30\.1\.56 258\.32 49\.22 35\.31 53\.68 35,55 408o46 329\.18
Trang 6,000 6,302 95\.83 121\.00 353\.03 325\.60 46\.34 38\.53 53\.6S 38\.78 453\.05 402\.91
Surln 5,100 6,227 133\.71 11S\.69 3S4,95 294\.23 41\.90 35\.92 60\.40 36\.16 487\.25 366,31
SIrin 4,100 5,269 152\.30 123\.63 339\.30 279\.83 34\.87 33\.76 60\.40 39\.02 434\.57 357\.61
Utaradlt 1,500 1,967 149\.90 134\.72 157\.74 122\.40 34\.93 41\.67 69\.02 41\.95 261\.69 206\.02 0
Photburl 4,500 3,796 107\.21 127\.09 223\.36 199\.28 37\.07 37\.27 53\.68 37\.52 314\.11 274\.07
Cost per Student Place (US$)
Gross Area Cost per sq\.m\.
In sq\.m\. In U3B Clvil Works Furniture Equipment Tota!
Appr\. Actual Appr\. Actual Appr\. Actual Appr\. Actual Appr\. Actual Appr\. Actual
Satun 8,200 8,340 61\.83 110\.80 385\.05 471\.97 47\.99 46\.08 98\.32 46\.39 481\.36 564\.44
Kalasln 5,000 4,470 129\.40 148\.91 356\.77 268\.73 48\.06 3S\.40 60\.40 35\.63 465\.2) 339\.76
Phatalung 4,500 6,247 190\.29 150\.47 489\.18 374\.20 28\.14 35\.92 60\.40 36\.16 57S\.12 446\.28
Suphanburl 4,000 4,811 126\.33 103\.26 295\.81 315\.23 34\.26 57\.25 69\.02 57\.63 399\.09 430\.11
Chantaburl 5,000 5,747 120\.96 115\.58 385\.39 347\.77 35\.33 47\.24 69\.02 47\.56 499\.74 442\.57
Yala 5,300 4,937 103\.58 109\.38 326\.19 323\.69 38\.55 53\.29 69\.02 13\.65 433,56 430\.63
Narathlwat 5,400 5,396 115\.90 172\.50 554\.08 669\.68 37\.14 64\.91 69\.02 65\.35 660\.24 799\.94
Chumphon 3,400 4,345 145\.97 114\.22 295\.41 308\.06 44\.44 56\.01 69\.02 56\.38 408\.37 420\.45
Pattanl 4,000 5,160 166\.96 150\.67 462\.80 482\.32 35\.39 55\.97 69\.02 56\.35 567\.21 594\.64
Krabi 3,900 4,115 129\.12 136\.20 263\.89 285\.43 45\.32 45\.18 53\.68 45\.41 362\.89 376\.09
Prachup 4,000 4,299 131\.96 140\.73 360\.12 352\.98 91\.41 52\.64 69\.02 52\.99 520\.55 458\.61
Plchit 3,126 5,360 118\.51 113\.33 231\.25 231\.96 41\.26 34\.45 53\.68 34\.68 376\.19 301\.09 O
Kampaengpet 2,100 3,307 193\.52 129\.84 198\.80 177\.66 37\.50 37\.33 53\.68 37\.58 289\.91 252\.57
Mae-Hongson 4,900 3,093 102\.12 132\.07 189\.12 156\.04 50\.72 34\.46 53\.68 34\.70 293\.52 225\.20
Yasothorn 5,707 6,341 115\.01 103\.43 341\.59 226\.39 42\.91 31\.14 60\.40 31\.3 44\.90 288\.88
Trat 3,300 4,730 149\.75 110\.00 310\.24 41\.37 52\.07 71\.21 69\.02 71\.69 431\.33 554\.27
Payao 3,700 4,741 136\.09 121\.00 299\.50 258\.31 43\.05 40\.35 60\.40 40\.80 402\.95 339\.64
Bangkok (T & M 5,100 4,846 117\.65 121\.71 (600\.00) (589\.800)* (58\.127)0 (58\.100)' - 0 (658\.127) (647\.900)*
Centre)
Note: Total cost In parenthesls Instead of cost per student place\.
1Q
O H
O-I
w~~~~~~~~~~~~~~~~~~~~
- 51 -
ANNEX III/3
(Page 3 of 3)
B\. Adlt Education
No\.of 2 Cost per
Training Gross Area i-- sq\.m\.
Places (Baht)
Actual Planned Actual Diff\. Actual
Regional Adult Education Centres
1\. Lampang (North) 185 3,800 3,620 -47 - 3\.106
2\. Ubon Ratchathuni (N\.East) 185 3,800 1,0481/ -27\.6 3\.500
3\. Rat Buri (Central Plains) 185 3,800 3,620 -4\.7 4\.242
4\. Songkhla (South) 185 3,800 3,620 -4\.7 4\.895
Lifelong Education Centres
1\. Clhachoengsao 315 2,200 1,744 -20\.7 4\.759
2\. Rat Buri 315 2,200 2,308 +4\.9 2\.852
3\. Phetchabun 315 2,200 2,308 +4\.9 2\.651
4\. Ubon Ratchathani 315 1,700 1,744 +2\.5 3\.330
5\. Yala 315 1,700 2,308 +37\.7 2\.965
6\. Chiang Mai 315 1,700 1,744 +2\.9 3\.574
7\. Sisaket 315 2,200 2,308 +4\.9 3\.252
8\. Phichit 315 2,200 2,308 +4\.9 5\.337
9\. Nakhon Ratchasima 315 2,200 2,308 +4\.9 2\.950
10\. Ayuthaya 315 1,700 2,308 +35\.7 6\.325
11\. Trang 315 1,700 1,744 +2\.5 3\.813
12\. Khon Kaen 315 1,700 2,308 +35\.7 2\.855
13\. Nakhon Sawan 315 2,200 2,308 +4\.9 4\.439
14\. Samut Sakhon 315 2,200 2,308 +4\.9 5\.440
15\. Surin 315 2,200 2,308 +4\.9 5\.372
17\. Ang Thong 315 2,200 2,308 +4\.9 4\.118
18\. Phathalung 315 2,200 2,308 +4\.9 4\.982
19\. Nan 315 1,700 1,744 +2\.5 5\.252
20\. Chaiyaphum 315 1,700 2,308 +35\.7 5\.199
21\. Satun 315 1,700 1,744 +2\.5 6\.008
22\. Roi Et 315 1,700 2,308 +35\.7 5\.004
23\. Kamphaeng Phet 315 1,700 2,308 +35\.7 5\.738
24\. Uthai Thani 315 1,700 2,308 +35\.7 3\.994
Total Lifelng Education Centres 8,300 6,800 51,144 +9\.92
Note: 1/ Use of existing buildings for auditoriums, etc\.
THAILAND FOURTH EDUCATION PROJECT
PROJECT COMPLETION REPORT
OTHER PROJECT ITEMS
Implementation Schedule and Overall Costs
Original Payments Remaining
Started Completed Estimated up to now to be Id
cost (Baht) US$ USto
A\. Project Unit Support and
Preparatlon of Future Projects
CSS -/ (ProJect V) 8/1979 4/1980 2,350,000 114,885 completed
ProJect (proect V) 223,8S1 10,967 completed '
CPU Expert Salary 5/1977 5/1977 2,080,909 99,741 completed t
LSSII Phase I (Project VI) 4/1982 12/1982 10,250,000 446,142 completed
LSS Phase 11 (Project VI) 5/1983 1/1984 4,100,000 130,365 47,826
B\. Additional Items
DSS Evaluation 10/1981 9/1984 310,000 9,006 4,466
AED Evaluation 1/1981 1/1981 160t000 7t661 \. completed
Sector Survey 3/1982 1/1983 500,000 21,644 completed
Primary Study I ) ONPEC 1/1982 9/1983 1,194,300 31,971 completed
Primary Study 11) NPEC 1/1982 6/1984 16,789,580 173,611 361939
MOE Main Frame computer 9/1983 6/1984 25,643,000 - -
CPU Microcomputer 8/1983 10/1983 190,000 8,269 completed
1/ Community Secondary Schools\.
7/ Lower Secondary Schools\.
ONH
Mh0
Cost by Category of Expenditure
Professional Services Equuipment Technical Assistance
Foreign Exch\.Comp\.100% Foreign Exch\.Comp\.65% Forelgn Exch\.Comp\.100%
Cost in IBRD In Cost in IBRD In Cost in IBRD In Total Cost Total IBRO
Baht (000) US$ Baht (000) US$ Baht (000) US$ Baht (000) US$
A\. Project Unit Support and
Preparation of Future Items
CSS (Project V) * 2,350 114,884 2,350 114,884
School Mapping, Pilot Project ** 224 10,967 223 10,967
(Project V)
CPU Expert Salary **2,081 99,714 2,080 99,714
LSS Phase I Project VI **10,250 446,142 10,250 446,142
LSS Phase !! Project VI ** 4,100 178,191 4,100 178,191
Sub-Total 16,700 739,217 - - 2,304 110,681 19,004 849,898
B Additional Items
DSS Evaluation ** 310 13,472 310 13,472
AED Evaluation ** 100 7,661 100 7,661
Sector Survey ** 500 21,649 S00 21,649
Primary Stury I) **1,194 51,971 1,194 S1,971
Primary Study )ONPEC **12,128 324,748 **3,990 173,611 16,118 516,359
MOE Main FrameComputer **25,643 724,693 25,643 724,693
CPU Microcomputer - 190 5,369 190 5,369
Sub-Total - - 37,961 1,072,811 6,094 246,737 44,056 1,319,548 r'21
__ ~ ~ ~~ ___ S
TOTAL 16,700 739,217 37,961 1,072,811 8,398 357,418 63,059 \.2,169,446
Exchange Ratest * I 2 °h
FOURTH EDUCATION PROJECT - LOAN 1271-TH, JANUARY 1981 REVIEW MISSION
Status of SEecial Covenants
Loan Loan
Agreement Agreement
reference Covenant Status reference Covenant status
3\.02 Employ suitably qujalified apecisltstn (in Conerally eatirfae- 3\.09 by September 13, 1971, submit to the WN- hulIilled\.
"ccordance with Anne% D to Schedule 2 of tory\. tonal Rducitian Council (NEC) far its
the Agre*aent) and suitably qualified oeview, and to the sank fat its intern-
consultant fire()\. The terso and con- tion, the proposed operational and teach-
ditlonp of eeployeont of sold specialists Ing proltr? of the LUCa\.
and firfC() shall be agreeAhIe to the
Borrower end to the Bank\.
3\.06 By September 13, 1971, ubhmit to the Bank Fulfilled\.
for its review a comprehensive plan, In- 3\.09 By larch 13, 1979, cause the InC to e"&l- hFutilled\. A ce
eludineg chedule for the implementation uate the proposed operatileal emd teach- ceoueted tollowp
thereof, for coordinating (1) the curri- ing program of the LUCs and send the qvaluatite Is iI
culue development activities of NCDC wlth Barrower and the Sank a copy of the eval- pwrgreo n
the AECa, end (11) the activities of thu uationo *
ACD with other Interested aeencies of the
Covoernment, tncluding the HIntstries of
Agriculture and Cooperatives, Pubile 3\.10 (a) Establihb a tracer systers Cb) subilt Fulfilled\.
Health and Interior and keep the Sank In- to the Ketk for Its cement by Septee-
farmed of any changes in the procedures ber 13, 1977 its design for the tracer
for such coordination\. iorteo including an iople\.entation nched-
uM\.g and (e) turntsh to the Bank annually
3\.07(e) For the purpoee of steaffin the Project Fulfilled\. for etx coneecutive learn Its usisury
Unit and thr hSitl /a and MMn, ensure that analyasi of inforintion docket\.
persons with qualifications and expert-
onee acceptable to the Borrower and the
Dank are appointed to fill ach of the
poestions specified in Schedule 5 to
thi Agree \.ent
Schedule Prior to wtibdowal (too the Loan for ex- hlIilled\.
3\.0 BO y March 13, 1977\. submit to the lank for Fulfilled\. I peadituree related to the last 12 IXCS
Its review a study on procedures for re- Article (i) prepage a detailed recruitment and
view of pfocurement in maternally tl- A trueing plan agreeable to the kub tor
nenced education projects\. adult educetion staff te Lmplement the
omnformal esueotlen part of the Prdject
and (if) furnish evidence eutleleetety to
the Sink thet qulified staff hr be en
hired for key poeitione In the e4dit odi5-
cation coordinating unit within the Adult
Education Division, li the tour regional
ceneera, ed In the fieet 12 LCe\.
/a Office of Special projects In mos Deportoment of Conceal Education\.
- 55 -
THAILD 'FOURTH EDUCATZOR\.FJ £ _l1Z7l) - PROJECr CONMLETION REPORT
SECONDR EDUCKTION
Canrlaului Wtline - ier ed_w-, Level\. 978 AMNEU IV12
ImtrcUm hriods pw Weak (5Cr' ach)
&abj Oct Ares XLI -0 T3
_ani Optional W;
_\. ~ ~~ - _4 2 4 X
-'Fweiuz - 6 _ 6 8
language (4\.2) (43 \. (4+24e)
2\. Sciece ad
-science 4-4-
- lbtbmtica 4 _ 4 _ 4 6
(1-42)
3\. 300c± StI2des 5 _ 5 _ 5 4
(2\.2)
4\. Peral
Deye1opont
- Cs l 3 2(2) 3 (2) 3 4
Eduestion (2+2)
- Pi=Arts 2 2(2) 2 4 - 6
(24e+2)
- OaherV 3 _ 3 _ 3 _
I~~~~~~~~~~~~ 3
5\. Work and
Education
Ocaupat±oDmI I 6 6 _ 32
Education (2z6)
Toa j 29 6 29 6 23 t I
1 35 -35 35
Notes: y Students can select optLon wit2da several of the ares offered\. Bawevez,
there px a and UIn of periods pe week for each subject as
ahown In braktats In ,tio calm\. Par Instance, a student In Gade 1\.2
who would opt for English and ccupational education an -to take 4 periods
of English and 2 of ocaupational educatiom
2/ Guidance (i), rmdja (1)\. libr(} and other activities (1)\.
\.f Schools offer a ari ety of courses in the areas of agicultue, hoe eco-
no-cs, inurtriajl arts and businss education dependIng on thefr facili-
tSes\. the availability of teachers and the speciAl lnterst of the yrmncipa1
and the canity\. n prnciple, students in N\.I take ientatiton cowrses
In as many subjects as prLatically possIble\. Hevwr, ln -proJect
schools two of the frow periods Iu PLl-\.3 ae deoted to e ageme=t
for all studets\. Students in [\.2 aen L3 an select ny of the courses\.
/ Students who pla to conti-,e their tudaes (enter N- 4 srde) bave to
take 6 periods athectlcs and 6 periods E-g1ish\.
- 56 -
ANNEX IV/3
THAILAND FOURTH ED)UCATION PROJECT
PROJECT COMPLETION REPORT
SECONDARY EDUCATION
General Curriculum Outline - Upper Secondary Lvel, 1981
Subjects TearnaDu Udito j
(a) Required
1\. hai language 6
2\. Social Studies 6
3\. Health and Physical Education 6
4\. Science2/ 6
5\. Foundation of Vocational Educatinr/ 1;2
(b) Elective (major study areas) 5 (average)-
6\. Foreign Ianguages
7\. Science and Mathematics
8\. Vocational Subject\.VY
(c) Free ElectiveYs (not necessarily within the 6 (average)y"
mLJor study ares)
Total learning Unit 96
Notes: E Each learning unit (or credit) corresponds to two 50-minute periods
of instruction per week per semester\. Students are required to
take a minimum of 84 learning units, within six semesters, and they
have to complete successfully at least 75 units in order to graduate\.
i/ Subject matter varies with the areas selected for major studies
(see examples of study programmes In pages 2-4 of this Annex)\.
y Students chose from among: home economics, business industrial arts,
agriculture, arts and crafts\.
/ Vary with the field of study\.
S/ Same as in footnote 2/\. Students specializing in industrial arts,
for instance, also bave to take industrial arts under the required
part of the programme (item 5 In the Table)\.
6/ E\.g\. music, general law, western dances, basket ball, etc\. (see
examples of study programmes in pages 2-4 of this Annex)\.
- 57 -
ANNEX 1V14
THAILAND FOURTHI EDUCATION PROJECT Age 1Vf3
PROJECT COMPLETION REPORT
REASESSING THE ROLE OF THE DIVERISED SCHOOLS
(extracted from the Sector Survey Report, January 19S3)
RATIONALIZING THE VOCATIONAL TRAINING SYSTEM
4\.39 This topic involves a number of agencies and it is connected to several on-
going programmes\. It is for this reason that the relevant analysis and the rationale
leading to the formulation of this proposal are found scattered under several
headings of Chapter Two (paragraphs 2\.47, 2\.48, 2\.52 to 2\.57 and 2\.70 to 2\.72) and
Chapter Three (paragraphs 3\.27 to 3\.32)\.
4\.40 ln sum, there is a multitude of institutions offering practical courses either
as part of the diversified secondary school curriculum (diversified schools and Area
Vocational Centres - AVCs) or as preparation for a vocational occupation
(vocational schools, polytechnics, AVCs, Non-Formal Education Centres, National
Institute for Skill Development, and Community Development Centres)\. InadequRite
delineation of the area of responsibility of eachi institution and lack of coordinatici\.
cause confusion and duplication resulting in unnecessary spending and waste in
human and financial resources\.
4\.41 The diagram which forms the last page of this annex, is intended mainly to
serve as a basis for discussions on this sensitive issue\. It ilustrates an attempt to
rationalize the process of practical training taking into account that: () as a result
of the educational reform, the role of vocational schools and that of the diversified
schools would eventually become practically identical; (ii) only a modest
percentage of the output of the vocational schools take up jobs as skilled workers;
(iii) there is much difficulty in mobiLizing the whole school population of several
schools in order to take the cmpulsory practical part of the curriculum in nearby
AVCs; (iv) it appears to be uneconomical to equip each secondary school with
individual pract;--l facities and specialist staff to achieve diversification and; (v)
there are several advantages in training skilled and semi-skilled workers through
short intensive courses\.
4\.42 To simplify the presentation in the diagram, the general structure of the
diversified curriculum is shown as composed of four basic parts as follows:
Part I Theoretical subjects Compulsory
Part II Science subjects Compulsory
Part III Work Experience Compulsory
Part IV Vocational (or other) Specialization Optional
4\.43 According to the diagram, parts I and II of the curriculum would be offered
by all general secondary schools, Part III by the secondary schools with individual
practical faciities and by other institutions/means whose effectivness could prove
satisfactory as a result of the proposed experimentation (paragraphs 4\.454\.49) and
Part IV by specialized institutions dealing with skilled worker training such as
AVCs, polytechnics, NISD centres and restructured vocational schools (paragraph
4\.50)\.
Experimenting with Alternative Ways for Diversification
4\.44 Pursuing further the rationale of the preceding paragraphs and taking into
account that completion of diversification of secondary education is among the
principal objectives of the educational authorities, this Report suggests that, at
this stage, vigorous experimentation would be necessary if the most effective, and
at the same time, most economical ways for completing diversification were to be
- 58 - ANNEX IVA4
(page 2 of 3)
found\. The problem lies mainly in the diversification of relatively small secondary
schools for which provision of individual facilities and full-time specialist staff
would be uneconomical (private schools also face financial problems)\. With the
envisaged expansion of secondary education with priority given to under-privileged
areas, the number and proportion of such schools will be increasing constantly for a
number of years to come\. The proposals that follow are intended to serve as a
basis for initiating discussions with a view to selecting the areas of
experimentation\.
4\.45 The AVC (Area Vocational Centres) experience Proved so far that the
latter should rather use their premises exclusively for specialized courses at skilled
and semi-skilled worker level open to both students in satellite schools who opt for
the vocational part (Part IV) of the curriculum and to out-of-school youths
(paragraph 2\.26)\. The compulsory practical part of the curriculum (Part it) in the
satellite schools should be served by providing "educational extension services"
through: (i) attaching light mobile units to the AVCs; (ii) providing elementary
equipment to the satellite schools and using the AVC specialist staff for teaching
on a part-time basis and; (iii) combining the two above-mentioned formulae\.
4\.46 The proposed reconsideration of the functioning of the AVCs brings them
close to the polytechnics which, at present, offer only specialized courses open to
out-of-school youths\. Broadening the scope of the polytechnics to accept students
who opt for Part IV of the curriculum and arranging for them to offer Part III of
the curriculum as well, as mentioned above, makes their role identical to that of
the AVCs and thus augments the possible inputs into the diversification effort
considerably\.
4\.47 Accepting that it would be practically impossible to provide each
secondary school with equipment for adequate diversification, in addition to the
AVCs and polytechnics, other inputs would be necessary if diversification is to be
completed within a reasonable time span\.
4\.48 To this end, a similar type of experimentation is proposed using as a base
for prcviding "extension services" large diversified schools in the place of AVCs
and polytechnics\. Light mobile units could be attached to such schools to serve
several satellite schools and/or elementary equipment could be provided to serve
all the satellite schools which would be served by mobile staff from the base
school\.
4\.49 It should be made clear that the proposed experimental mobile units are
different from the old MTTUs (Mobile Trade Training Units) which were finally
"iimmobilized" and converted into stationary training centres (Provincial Non-
Formal Education Centres) under the Department of Non-Formal Education\. They
are conceived as light transport units intended tX carry equipment for one or two
areas at a time (e\.g\. woodwork and audio-visual) arna spe:ialist staff to satellite
schools\. Such equipment would be left with the school for a pre-determined period
of time, after which they could be exchanged with equipment for other areas (e\.g\.
electricity and home economics)\. The satellite schools will be provided with a
multi-purpose area suitable for the acommodation of the equipment on loan\.
Because of the proximity of the satellite schools to the base schools and the AVCs,
the "mobile" staff would have a permanent residence which was not the case with
MTTUs\.
TlAIAhD' You~T BDUCATION PR JCT1 - PROJ SC~ i
'UtJhi7jAYOff OP D1M oaati 1~IW 14W03 'A
ONMR10ju-JR~~~~~~~~~~~~~~tO YPR
t Orr r>||< \.ctlouh@@1 youth wt ult
pintt I wnOe\. al Om% BAist6 gubjoOt$ s\.rvoe
part I cset Subjecti We
part ItI Work 3rpWl'"O
p a rt I I I v r i v o c a t i o n a l P r t I V , onwi th S d I S W S
M LGt"1O P o rt part I yooattI OPSl ? rSMfl
OIGer,IBsh Secondary ch |tl serOOI I
I Pert I,s part IIt__
lbrt S, plrttI
lvm 4°po{trt IIS
\ P r~~~t nVA¢e"s /v \.* T \.At:f
\w Pr6r-Bcourles fo rose"
- 60 -
AIREX IV/5
THAIIAND FOURTH EDUCA-TION PROJECT
PROJECT COMPLETION REPORT
DSS EVALUATION SURVEY
Concdluions of the Draft Report
Objecive I Evaluation Results
"To improve the quality of provincial In general, the DSS schools are equal or
secondary schools, so that they can be better in quality than the average Bangkok
equal to that of Bangkok schools in schools but still inferior to Bangkok
their capacity to organize education\. Government schools\. The DSS schools are
The development of these schools will more successful than non-project schools in
improve general educational standards training students in vocational skills\.
and increase skilled manpower for
the provinces"\.
Objective 2
"To provide an education adapted DSS schools offer the opportunity to
to the aptitudes, interests, students to discover their particular
abilities and future plans of the interests, aptitudes and abilities in
individual students"\. the first secondary grade (M\.1) and to
choose the programme of their interest
thereafter\.
Non-project schools do not offer this
opportunity\.
Objective 3
"To organize appropriate activities DSS students, according to their own res-
in basic vocational training as part ponses, claim that they have an averaage
of general education for every opportunity to have practical training in
student"\. the practical subject of their choice\. Non-
project school students responded that they
had little or no opportunity\. High-ranking
administrators were of the opinion that the
DSS curricula played, to a large extent, the
role of a catalyst in the implementation of
the 1978 lower secondary curriculum\.
- 61 -
ANNEX lV/6
THAILAND FOURTH EDUCATION PROJECT
PROJECT COMPLETION REPORT
ADULT EDUCATION
Functions of the Re ional and Provincial Centres
(Reproduced from the Appraisal Report)
Regional Centres
Four regional centres would be established each having rtsponsibility
within their region:
(i) to identify non-formal education target groups and their learning
needs and develop appropriate curriculum materials;
(ii) to train adult education; and
(iii) to provide feedback and evaluation on non-forma; eduction
activities\.
Present adult education programmes suffer since these functions have been ignored
or treated in an ad hoc manner\. The regional centres would design materials to
suit the specific learning needs within their regions, while the national coordinating
unit, with the support of other units of the AED, would develop these core
materials which could be used nationally\. Training of personnel conducted at each
centre would be aimed ar supporting adult education services within the region\.
Through the training programme, the centres would serve to coordinate non-formal
education activities within each region, and they would provide a means for regular
interaction between adult educators involved in various programmes\. The fc"r
regional centres proposed are:
Lifelong (Provincial) Education Centres (LECs)
During the project period, it is proposed that 24 LECs be establish;-d in
three phases\. Each LEC would:
(i) promote education extension activities, particularly the on-going
special interest group and village reading centre programmes by
providing villagers with appropriate training and field support;
(ii) operate a film truck to show films at villages within the changwad
(iii) accommodate mobile units to provide skill training to villages
throughout the changwad, and offer skill training at the LEC;
(iv) organize functional literacy and second-chance education courses at
meeting places within the changwad and at the LECs; and
(v) house a public library and serve as a local community centre\.
The specific operational programme for the LECs would be formulated by the
national coordinating unit of the AED in cooperation with the regional AECs\.
1t ~~~~~~~~~~~~~1962 1963 19* 95
PRWJU IAI:NZQZI IW III
It Settixg W thei worktrg gma\. -5,11
2\. m- first pcup'\. itus a 20, 1962
3\. a ti th rjc hb\. 1-20\. 1962
4\. f sec\. d gmaip's metirg Feb\. 20, 1962
S\. X cIdrgmterial dequ \. mm nts krdh 1 - Nov\. 33 \.19_ 2
6\. _I M m\.tr list Om\. I, 191 - itb\. 26\. 1963
7\. 1tizdIrg ad deliverk Marc* m hnh, LIS3 -Febo,28, 19M
a\. SettIrg up the evalimtlio staff omwe 1-10\. 1913
9\. aDm& up the -4-Lfutrstivm m\.12,1
ard wrgm stnc
for Pq w aS s5U
10\. 1'1awArg the £zrmsw±\.m ttalniEh 21\. 196 * \.m\. 31, 1994
Ii If-uUviZe tiddr \.M off toal &be I Much 30, 199
12\. SdoorvLci t eraiir MM off s 1
ad teacher fromuuhol cluster
13\. 1 flt ad & SC startkrg theUkm1 LS
14\. Mbmitorirg ad evaluatirw parod * * m m JUNa Io 1964 - Nudi 30\. 1965
15\. o\.uutzir a smimr to evaliteA 1iL 1-30\. 1963
16\. i'Wiu findl pper jApriL 15 - may is, 1913
F - PnNwlzaa rlmry Educattim Pamaows outer
SW~ - Sdiool CMuster cente
-63-
CONHBUT 1FROM THE BORROE AI T I
(Page 1 of 7)
of So t
12317 Tdl an-,7 W
\.April 1 8 , 1985
Operations Evaluation Department
IBRD
1818 H Street, N\.W\.
Washington, D\.C\. 20433
U\.S\.A\.
Attn: Mr\. Yukinori Watanabe
Director
Dear Sirs,
Re: Thailand Education Project 4\. Loan 1271-T
Project Comple tion Report
We refer to you letter of 20th February and forward herewith comments
received from the following project components\.
1) Non Formal-E8ucation Deiartment
2) Deparnt of Genera- \.-ducation
3) National Education Commig ula-,
With kind regards,
Yours sincerely,
f/'\.
(Suradej Visessurakarn)
Inspector General for the Kinistry of Education
for Project Director
Enc'U5tas above
HNVC/vk
64
ATT&CW4KNT I
(Page 2 of 7)
NFE: Coimments on the Project Completion Report of the
Fourth Education Project (Loan 1271-TH)
Introduction
The following comments are directed to specific sections of the
Completion Report that deal with the Adult Education Subproject\. The relevant
sections are identified by chapter heading, subheading, and the paragraph and
page numbers\.
Comments
1\. Project Highlights, the Project and its Objectives, paragraph #1, p\.v\.
Issue
"\.closed on September 6, 1984 with 26 months delay, due mainly to
the scarcity of counterpart funds and staffing problems in the adult education
project implementation subunit (paragraphs 2\.1 and 2\.6)\."
Comment
The reasons given for the 26 month delay in the project closing date
are misLeading if not inaccurate\. Moreover, the latter reascn seems to
contradict a statement made several paragraphs below (#5) that "there were no
major implementation problems," unless, of course, a 26 month delay in project
closing is not considered `major\." Finally, it does not appear to be
supported by the data found in "Annex II/I, Project Implementation Schedule
Appraisal and Actual\." This data indicates that, if the project closing date
is 12 months after the project completion date and if AED construction and
procurement were the delaying factors, the project could have closed at the
end of the first quarter of calendar 1983, 9 monLhs later than the date set in
the Appraisal\. If AED fellowships, not even mentioned here, are taken into
account, the project could have closed with a dela;7 of 15 months\.
While not denying that the scarcity of counterpart funding and
"changes in functions in" or, as used later in the report, "the decentraliza-
tion of the adult education project implementation subunit" contributed to
some delays, they were certainly not the main reasons or the only main reasons
why the closing date was delayed so long\. Other critical factors were related
to the request by the Ministry of Education, approved by the Bank, to use some
portion of the project's leftover funds for matters not covered in the
original agreement\. These matters are referred to in the Completion Report as
"additional" or "other" project items (cif\. p\. 7 and Annex III/4)\. As the
report itself indicates, several of these "additional items" were not
initiated until after the original closing date and all but one were not
completed until 6 to 15 months after it (clf\. Annex III/4)\.
2\. Project Highlights, The Implementation Process, paragraph 6, p\. vi\.
- 65 -
ACMENT I
(Page 3 of 7)
Issue
"\.the centralized pattern of the secondary education subunit has
definite advantages over the decentralized one of the adult education sub-
unit\."
Comment
It is understood that the intention here is to emphasize the import-
ance of the "competence and degree of involvement of the ranking administra-
tive officials and technical staff of the (implementation) unit\." However, it
is unfortunate that at no place in the report are the gains achieved by and
potential benefits of the "decentralized pattern" discussed\. There are
several key NFED personnel who were involved throughout the project who feel
that there are several advantages in the decentralization pattern such as
closer coordination between project and nonproject components, smoother
transfer of work after project completion to regular operating units and
opportunity to upgrade staff in all sections of the Department rather than in
the project unit alone\. Discussion of issues such as the centralized vs\.
decentralized implementation subunit concepts would make the Report more
valuable to future projects\.
3\. Project Highlights, Technical Assistance, paragraph 12, vii\.
Issue
" \.the initial selection criteria for the adult education comr-
ponent\.could have helped to keep the trained persons longer at their posts
(eight of the twelve had left their posts in the regional centers for which
they were trained) or perhaps short-term practically oriented studies couild
have yielded better results than degree fellowships (as in the case of the
four month fellowships for the DSSs)\."
Comments
The initial criteria may have !Lad some advantages, but the best may
have been a combination of the two, i\.e\., the initial criteria for the
doctoral fellowships and the revised criteria for the MAs (to secure some
"fresh blood")\. In any case there is no strong indication that grantees who
had previously worked in adult education were less likely to request transfers
out of the regional centers than those who had not\. Moreover, the reasons for
such requests vere personal (generally family hardships, frustrated idealism,
and stifled ambition due to the inequities perceived by younger staff between
opportunities for advancement in civil service Department positions vis-avis
teacher service regionaL center positions)\.
This highlight's use of numbers is misleading\. While it is true
that at present only 4 grantees are working in the regional centers, the 3 who
are pursuing doctoral studies have worked at and still hold regional center
positions and are expected to return to them upon completion of their studies\.
- 66 - ATTAMUMT I
(Page 4 of 7)
It is unjustified to conclude, even with the use of the modifier
"perhaps," that short-term, practically oriented studies could have yielded
better results than the degree fellowships\. For those who are familiar with
the development of the regional nonformal education centers and the Department
of Nonformal Education, it is clearly evident that the graduates from the
degree fellowships have contributed significantly to the technical competency
of the system\. With no exception, they have been key figures in the develop-
ment of research and evaluation, training material development and the radio
correspondence project\.
4\. CHAPTER 1 - PROJECT BACKGROUND, Statistical Data/Nonformal
Education, paragraph 1\.11, p\. 4
Issue
Table 1\.5 is a summary of the NFEM's structural "course type"
programs only and it is not clear if all such activities are included (e\.g\.,
short term vocational courses, rural adult training programs, etc\.) and, if
so, under which program-type\.
Comnent
Despite the clarification provided by the sentence which follows the
table, it would perhaps be more helpful if the table heading was changed along
the following Lines; "\.Number of Participants in Structured Courses by
Program Type\."
5\. CHAPTER II - PROJECT IMPLEMENTATION, Adult Education Project
Implementation Subunit, paragraph 2\.6, p\. 9\.
Issue
"In April 1979 the Adult Education Division was upgraded\."
Comment
The date was March 22, 1979\.
6\. CHAPTER IV - Attainment of Project Objectives/AduLt Education
IssuelCowment
In general, the revised draft presents a more in depth and under-
standing description of the situation\. A few observations, however, must be
made on the following issues:
7\.1 Nowhere in this chapter was there any mention of the NEC's
participant's profiles analysis\. The analysis, carried out in response to the
suggestion by a World Bank Mission, would clearly indicate the extent to which
NFED programs are reaching the rural and educationally disadvantaged group\.
-67- ATThU1UIENT I
(Page 5 of I7
7\.2 The conclusion "not enough emphasis is placed on the importance
of using local raw materials" (paragraph 4\.44) should be based on analysis of
the curriculum not on a visit to one isolated lesson\.
7\.3 The statement "much emphasis is given to general education
programs to the extent that they risk becoming competitive with the formal
general school programs", reflect a general lack of understanding of the
situation\. SureLy the intention here is not to suggest that given equal
options many individuals would choose UFE program over the regular school pro-
gram\. Even if such a situation should occur, where is the risk? Monformal
education curricula are now providing functional education with equivalency
certifications at a lower cost for both the students and the organizing
agencies\. Finally, should nonformal education not provide individuals who
lack access to school programs with a viable option?
- 68 -
AIIACEMENT I
Pageb G- 7)
DGE: Comments on the Project Completion Report of the Fourth
Education Project (Loan 1271-TH)
1\. On page 19 No\. 4\.4 the three DSS Project Objectives
should be included
(a) To improve the educational quality of provincial schools on a
par with those schools in Bangkok Metropolis with a view to upgrading general
education and increasing semi-skilled manpower to the provinces where these
schools are located; (b) to provide education suitable for the aptitude,
interest and ability of the learner; and (c) to provide pre-occupational
training activities as an integral part of general education\.
2\. ANNEX I/3 under DGE-part should be revised as follows:
Rest of Rest of Rest of
Bangkok Thailand Bangkok Thailand Bangkok Thailand
GeneraL Education
SpeciaL 4 29 180 685 3,041 9,936
- Primary - - - 30 - 704
- Secondary 99 1,409 12,943 69,468 219,174 1,197,419
- 69 - ATACHMENT I
(Page 7 of 7)
NEC: Comments on the Project Completion Report of the Fourth Education
Project (Loan 1271-TH)
4\.59 The construction of classrooms and of the Sri Saket PPERC was
completed in April 1983 with Government budget while the Pattani PPERC is
expected to be compLeted shortly\. The purchase of equipment was undertaken
according to the schedule\. The equipment was purchased in September 1983,
delivered to the provinces in February 1984 and handed over to school clusters
in April 1984\. Sixty-five percent of the cost thereof Twas covered by the
World Bank loan\. With regard to the staff development, 7 training projects
were implemented in accordance with the plan with the targeted number of
trainees\. The major problem in the implementation was the shortage of operat-
ing budget of the Provincial Education Centers and the schooL clusters in
these provinces\. For the evaluation of the project impact on the impro-ement
of students' achievement, NEC is now preparing the summary report on the
project evaluation which is expected to be completed at the beginning of May
1985\. The necessary funds have been committed but not entirely paid as yet
(Annex III/4)\. Annex IV/6 presents the schedule for the study and the imple-
mentation of this pilot project\. | APPROVAL |
P176478 |  The World Bank
South Tarawa Sanitation Project (P176478)
Project Information Document (PID)
Concept Stage | Date Prepared/Updated: 13-Aug-2021 | Report No: PIDC32395
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South Tarawa Sanitation Project (P176478)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Kiribati P176478 South Tarawa
Sanitation Project
(P176478)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
EAST ASIA AND PACIFIC Jan 17, 2022 Mar 23, 2022 Water
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Ministry of Finance and Ministry of Infrastructure
Economic Development and Sustainable Energy
Proposed Development Objective(s)
The Project Development Objective is to increase access to sanitation services in selected areas of South Tarawa and to
improve efficiency in sanitation service delivery\.
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 15\.00
Total Financing 15\.00
of which IBRD/IDA 15\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 15\.00
IDA Grant 15\.00
Environmental and Social Risk Classification Concept Review Decision
Moderate Track II-The review did authorize the preparation to
continue
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South Tarawa Sanitation Project (P176478)
Other Decision (as needed)
B\. Introduction and Context
Country Context
1\. Kiribati is one of the smallest and most remote countries in the world, and one of the most exposed to climate
change\. It consists of 21 inhabited islands with a total land area of only 810 square kilometers, spread over a vast ocean
area of some 3\.5 million square kilometers\. Over half of the population of about 120,000 people1 lives on the densely
populated main island and capital, South Tarawa, while the rest of the population resides in rural villages across the other
islands\. South Tarawa is the countryâs only urban center and spans a string of densely populated coral islets connected
by several causeways\. Its population is expected to grow from 63,000 (2020) to 116,000 (2040)\. Kiribati is more than
4,000 kilometers from the nearest major economies of Australia and New Zealand, but these countriesâ temporary labor
schemes still represent some of the best employment opportunities available to I-Kiribati workers\. Severe infrastructure
deficits in utilities, transport and communications compound the constraints imposed by distance and dispersion\. Kiribati
is amongst the most vulnerable nations to climate change on Earth\. The countryâs islands are extremely isolated and rise
little more than 1\.8 meters above sea level on average, and therefore face considerable risk from climate variability and
sea-level rise\. Increasing sea temperatures are already placing strain on the coastal marine habitats that many I-Kiribati
rely on for food security and livelihoods\. Poor access to fresh water is also being compounded by climate change and
poses severe challenges for public health and poverty reduction\.
2\. There has been variability in GDP per capita in recent years, and human development indicators remain low\. After
a peak GDP per capita in 2012 estimated at US$1,788, by 2020 GDP per capita was estimated at US$1,671\. Similarly, GNI
per capita has shown variability in recent years; after a peak in 2015 of US$3,470, 2020 World Bank data estimates it at
US$3,010 (Atlas method)\. Kiribati is one of three Pacific Islands countries on the UN Least Developed Countries list as of
February 2021\. Fishing license revenues from foreign tuna fishing fleets are the main source of public revenue and
national income, and the economy is dominated by the public sector, small-scale fishing and coconut farming\. Kiribati is
almost entirely dependent upon imported food and fuel\. The only major sector of greenhouse gas (GHG) emissions for
Kiribati is energy (including transport)\. Human development outcomes are relatively low: Kiribati was ranked 134th out
of 189 countries in the 2020 Human Development Index and has a Human Capital Index score of 0\.49\.
3\. The economic impact of COVID-19 in Kiribati has, to date, been less severe than in some other Pacific countries
but the country remains vulnerable to a future spread of the disease\. Kiribati remains one of the few countries in the
world that is COVID-19 free\. The Government of Kiribati declared a State of Public Emergency in March 2020, closing its
international borders to all travelers as part of its efforts to keep COVID-19 out of Kiribati\. Given population density and
sanitary conditions, the capital city South Tarawa would be vulnerable to a fast spread of this or similar diseases\. The
Asian Development Bank (ADB) reported GDP growth at 0\.6 per cent in 2020 but forecast GDP to contract 0\.2 per cent in
1
2020 Kiribati Population and Housing Census: Provisional figures, Kiribati National Statistics Office,
https://nso\.gov\.ki/population/kiribati-2020-population-and-housing-census-provisional-figures/
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South Tarawa Sanitation Project (P176478)
2021, and a significant rebound in 2022 if construction activities can resume\.2 There is evidence of rising poverty and
hardship, with a reported drop in remittances from seafarers and other overseas workers and commodities prices
increases due to supply chain disruptions\.3
4\. More than one in five people in Kiribati are living in poverty\. The poverty rate in Kiribati for 2019-20, based on the
national âcost of basic needsâ? poverty line4 was 21\.9 percent\. One and a half percent of the population live below the
extreme poverty line of US$1\.90 per person per day and around 18 percent of the population live below the international
poverty line of US$3\.20 per person per day for lower-middle income countries\. The highest rates of poverty are in the
Southern and Northern divisions\. The poverty rate in South Tarawa is 19 percent, which, given the concentrated
population, corresponds to almost half of Kiribatiâs poor\.5 On South Tarawa, the average monthly household income is
US$975, however, variations in the income level by quintile range from US$146 to US$2,4406\.
5\. Sanitation will be critical to support child development and health\. World Bank data from 2019 reports that the
under-five mortality rate as 51 per 1,000 live births\. The Kiribati Social Development Indicator Survey 2018-19 (SDIS)
reports that 6\.5 percent of children under five in South Tarawa are moderately and severely underweight, and 14 percent
are stunted\. The underlying causes of the high child mortality rates relate to poverty, overcrowding, lack of family
planning, poor diet and limited access to improved water and sanitation facilities7\. Diarrhea accounts for about 9\.5
percent of deaths in under five-year olds\. Inadequate water and sanitation services and poor hygiene practices are closely
associated with diarrhea, environmental enteric dysfunction leading to malnutrition, and other waterborne diseases\.
Expanding access to sanitation services is therefore critical to improve public health and human development\.
6\. Gender differences are strongly embedded in Kiribatiâs culture and tradition\. Kiribati society is generally
patriarchal\. Unimwane, traditional male elders, still play an important role in community decision-making, but womenâs
political representation at the national level is improving\. Women spend from three to eight hours per day on domestic
work8, and husbands hold considerable authority over the types of activities their wives can exercise and womenâs
reproductive health rights are limited\.9 At 33\.6 percent, womenâs labor force participation in Kiribati is significantly lower
than menâs (53\.3 percent)10, which has, at least in part, been attributed to womenâs responsibility for the major share of
unpaid care and household work\.11 Rural and urban women producers participate in small scale inter-island and
international trade but they are limited by many constraints such as time poverty (due to the disproportionate
2
https://aric\.adb\.org/kiribati
3
Australian Government DFAT, 2019, PACIFIC COVID-19 RESPONSE PACKAGE â KIRIBATI ANNEX,
https://www\.dfat\.gov\.au/sites/default/files/covid-response-plan-kiribati-annex\.pdf
4
The cost of basic needs poverty line is constructed using the 2019-20 Household Income and Expenditure Survey and is based on
an annual per adult equivalent consumption of AUD1,705 (USD4\.32 per day)\.
5
World Bank, 2021, Prosperity and Resilience in the Pacific: Pacific Poverty Assessment 2021\.
6
Public Utilities Board of Kiribati, 2019, Water and Sewerage Tariff Review and Cost of Service Study
7
United Nations Childrenâs Fund, 2017, Situation Analysis of Children in Kiribati, UNICEF, Suva
8
Dr Tanya Caulfield, 2018, Womenâs Economic Empowerment Feasibility Study, Kiribati
9
ADB, 2017, TA-9200 KIR: South Tarawa Water Supply Project (49453-001) â Project Preparatory Technical Assistance (PPTA)
Gender and Social Inclusion Action Plan
10
ILO\. 2015\.
11
A qualitative study of men and women from nine villages across Kiribati identified that womenâs responsibility for the major
share of unpaid care and household work significantly limits their time spent in income generating activities\. Source: Caulfield,T\.
(2018)\. âWomenâs Economic Empowerment Feasibility Study, Kiribatiâ?\. Prepared for Pacific Women Shaping Pacific Development\.
Jun 28, 2021 Page 4 of 17
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South Tarawa Sanitation Project (P176478)
responsibility for domestic tasks), poor self-esteem, and lack of access to finance, the internet, and technology\.12 Rates
of gender-based violence in Kiribati are high, 56 percent of women aged 15-49 have experienced physical violence since
age 15 and 30 percent have experienced sexual violence at some time in their life13\. Overcrowding in many areas of South
Tarawa is contributing to stresses faced by women and girls\. Women are generally responsible for fetching water from
local sources\. They are responsible for household hygiene and sanitation, and for the care for household members
afflicted by waterborne diseases such as diarrhea\. Womenâs involvement in political, social and economic activities is
promoted through many gender equality commitments by the government\. Kiribati is a signatory to the Convention on
the Elimination of All Forms of Discrimination Against Women (CEDAW) and has committed to achieve gender equality
and advance women, including through the Kiribati 20-Year Vision\. The Gender Equality and Womenâs Development
Policy 2019-2022 was launched in 2019 with five priorities: (i) mainstreaming gender in government policies, programs
and activities; (ii) improving the economic empowerment of women; (iii) supporting stronger families; (iv) improving
womenâs political representation and leadership; (v) eliminating sexual and gender-based violence\.
7\. The countryâs development aspirational statement (Kiribati 20-year Vision 2016-2036), views fisheries and
sustainable tourism as key productive sectors on the long term\. The provision of adequate water supply and sanitation
services, and as a result the cleaning of urban and coastal environments, will be critical to the development of sustainable
tourism\. Kiribatiâs Government Development Plan (2016-2019) commits to improve population health, and to improve
access to quality climate change resilient infrastructure in urban and rural areas\. The strategies to achieve these goals
include: (i) increase access to, and use of, safe water and basic sanitation services, and promote improved hygiene; and
(ii) the promotion and implementation of sanitation programs\.
Sectoral and Institutional Context
8\. Water access is limited but expected to significantly improve in South Tarawa\. Access to basic water supply in
Kiribati is 82\.3 percent, with 38 percent of people having access to piped water supply (Kiribati SDIS, 2018-2019)\. South
Tarawa has a reticulated water supply system operated by the Public Utility Board (PUB), covering 60 percent of
households, on an intermittent basis\. Supplied water is generally inconsistent with national quality standards\. The World
Bank is co-financing the South Tarawa Water Supply Project which will deliver an average of 50 liters per capita per day
to the entire population of South Tarawa and address the current service quality and continuity issues\.
9\. South Tarawaâs freshwater resources are scarce and require careful management \. South Tarawa has two
groundwater lenses located in protected water reserves and suitable for drinking water production\. Their yield is
insufficient to meet water demand, and desalination will be delivered under STWSP\. Given the chronic water stress,
households are well practiced at several water scarcity management principles, such as diversification of water resources
including rainwater harvesting, fit-for-purpose water use from shallow wells for non-potable use, and thrifty water
12 Women producers engage in both inter-island and international trade\. While rural producers mostly engage in inter-island trade,
urban producers are more likely to participate in international trade\. Women rural producers mostly sell traditional goods such as
agricultural products and handicrafts to urban areas through family, friends, registered agents and church outlets\. Urban producers
export virgin coconut oil, smoked fish and mauri blouses mainly through family abroad and through the help of international
development organizations, though in small quantities (UNCTAD 2020 https://unctad\.org/system/files/official-document/
ditc2020d4\.pdf)
13
Kiribati National Statistics Office, 2019, Kiribati Social Development Indicator Survey 2018-19, Survey Findings Report\. South
Tarawa, Kiribati: National Statistics Office\.
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South Tarawa Sanitation Project (P176478)
consumption\. Maintaining wells water at acceptable quality levels for non-potable uses is an important aspect of
householdsâ resilience to water scarcity\.
10\. These water scarcity challenges will be aggravated by the effects of climate change\. As a very low-lying island
country, Kiribati faces considerable risk from climate variability and sea-level rise with the potential risk of permanent
inundation and land ecosystem degradation\.14 South Tarawa is located in the relatively dry equatorial climate zone and
its climate is highly influenced by the El Niño-Southern Oscillation, a global coupled ocean atmosphere phenomenon\.
Average annual rainfall in Tarawa is 2,100 mm, however, it is highly variable and in the driest years as little as 150 mm of
rain has fallen15\. Climate projections for Kiribati show very high confidence that El Niño and La Niña events will continue
to occur with continued variations in rainfall,16 annual mean and daily high temperatures will rise, and sea level will
continue to rise17\. This is likely to exacerbate drought events related to La Niña conditions and increase saltwater
intrusion, deteriorating the quality of water lenses\. Water scarcity and water quality challenges on South Tarawa are
increasing and they underline the need to protect the quality of existing water sources for adaptive strategies of water
use, which this project proposes to achieve through improved sanitation solutions\. With more intense rainfall events
susceptible to cause unimproved latrines overflow and increased occurrence of waterborne disease, improving
infrastructure and sanitary conditions will also be an important project contribution to climate adaptation\.
11\. Sanitation services are critically underdeveloped in Kiribati\. Access to improved sanitation across Kiribati is 61
percent, while those using unimproved facilities or practicing open defecation are 5 percent and 34 percent respectively18
Access to improved sanitation across South Tarawa is 71 percent, while those using unimproved facilities or practicing
open defecation are 4 percent and 15 percent respectively\.19 There are notable inequalities in access between wealth
quintiles, with more than two thirds of the poorest households having no access to any sanitation facilities\. There is no
wastewater treatment system in Kiribati: all sewage is discharged, uncontained into the environment or into the sea
through submarine outfalls\. Inadequate sanitation services and poor hygiene practices are closely associated with
diarrhea, environmental enteric dysfunction leading to malnutrition, and other waterborne diseases\.
12\. South Tarawa has three sewerage systems coupled with seawater supply networks for flushing in the historical
settlement centers of Betio, Bairiki and Bikenibeu\. Connection rate to the sewerage networks has remained low (only 18
percent of the population is served) due to the lack of financial support or incentive to facilitate household connections\.
Lack of standards, regulation and training on design and construction has led to many poorly constructed on-site
sanitation systems\. Many of these systems are unable to be emptied due to poor structural integrity, lack of a sealed
base or no access for a vacuum truck; these households may resort to burying their waste or making a new toilet with a
drum, which poses a risk to groundwater quality\. For households close to an access road, PUB offers a vacuum truck
service for emptying septic tanks\. All sewage (from sewerage systems and from septic tanks) is discharged untreated
14
https://climateknowledgeportal\.worldbank\.org/country/kiribati, accessed on July 28, 2021
15
Pacific-Australia Climate Change Science and Adaptation Planning (PACCSAP) Program, 2011, Current and future climate of
Kiribati, https://www\.pacificclimatechangescience\.org/wp-content/uploads/2013/06/11_PACCSAP-Kiribati-11pp_WEB\.pdf
16
Most global climate models point for the project area to an increase in average rainfall but the level of uncertainty is high and
predictions span between a decrease by up to 11 percent and an increase by up to seven percent by 2050\.
17
Australian Bureau of Meteorology and Commonwealth Scientific and Industrial Research Organisation, 2014, Climate Variability,
Extremes and Change in the Western Tropical Pacific: New Science and Updated Country Reports
18
Kiribati National Statistics Office, 2019, Kiribati Social Development Indicator Survey 2018-19, Survey Findings Report\. South
Tarawa, Kiribati: National Statistics Office
19
Finnish Consulting Group and Fraser Thomas, 2020, South Tarawa Shit Flow Diagram Desk Study Report
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South Tarawa Sanitation Project (P176478)
through ocean outfalls (up to 900 meters long), recently upgraded under STSISP to diffuse sewage 30 meters deep,
beyond the reef edge, based on the findings of a pollution diffusion modeling study\. There is no management of
greywater\. Households generally discharge greywater locally, taking advantage of coral sandâs high infiltration capacity\.
13\. Saltwater flushing and sludge management have been recurrent technical challenges for PUB\. Since the
construction of the saltwater flushing sewerage system between 1978-83 there have been long periods of breakdown
due to lack of maintenance, unavailability of spare parts and low capacity within PUB to maintain the system\. The
saltwater flush system avoids the need for the abstraction of freshwater resources, however, it has complicated
maintenance requirements and pipe leakages would increase the salinity of freshwater lenses\. Many saltwater
standpipes are not operable, and communities often resort to using groundwater from private wells for flushing\. A
septage receival unit was installed in Betio as part of the recent ADB-financed South Tarawa Sanitation Improvement
Sector Project (STSISP), but PUB maintenance staff have found that it is expensive to maintain, and parts take months to
arrive in Kiribati once ordered\. The lack of options to valorize sludge (such as in agriculture) has also disincentivized the
development of such systems\. In reality, the vacuum trucks have instead been depositing unscreened septage into the
nearest sewer maintenance hole\. Other sludge treatment options such as drying installations have been ruled out due to
a lack of space in South Tarawa\.
14\. The operational efficiency of both water and sewerage services is mediocre\. The level of efficiency of water supply
services provides an indication of PUBâs general capacity\. The water distribution network is in a state of disrepair\. Physical
losses are estimated to exceed 60 percent but no detailed assessment is possible given the lack of meters\.20 The sewerage
system and the saltwater flushing networks have recently been refurbished under STSISP but according to PUB, their
maintenance remains challenging due to seawater corrosion on pipelines\. IB-NET data from 2019 showed that PUB
operates with 8 staff per 1,000 sewerage connections in the sewerage business branch, a staff ratio significantly higher
than usually found in efficient water utilities\. As part of ADB-funded STSISP a maintenance fund was established (with
long-term funding yet to be secured) and a position established for an international operations and maintenance
technical advisor, initially on a short-term basis\.
15\. Following recent tariff and subsidization policy decisions by GoK, efforts to improve operational efficiency will be
critical to achieve PUB financial sustainability\. The Government of Kiribati approves fees and charges proposed by PUBâs
Board on a case-by-case basis, since there is no regulation guiding their formulation and periodic revision\. In the past,
water and sanitation tariffs were not applied due to concern about the adverse impact of higher charges on household
welfare\. Until 2017, the only revenues accrued from non-residential water supply services and from on-demand services
were: water supply of non-domestic customers by tanker trucks and emptying of septic tanks\. PUBâs water and sewerage
revenues recovered only 58 percent of its operations and maintenance (O&M) costs associated to water and sewerage
(WSS) services\. 21 The financial gap has been covered by limited operational subsidies from the Government of Kiribati
(GoK) and through the non-payment of the national fuel provider, in effect relying on cross-subsidy from its profitable
power and electricity business\. Within the water/sewerage branch, sewerage services represented 44 percent of O&M
costs but only 3 percent of revenues (though septic tanks emptying services)\.
16\. GoK now recognizes the need to change public attitudes toward utility payment in South Tarawa as service are
upgraded\. It adopted in 2018 of a volumetric water tariff for residential water services, and of a sewerage tariff per
20
IB-Net\.org
21
Public Utilities Board of Kiribati, 2019, Water and Sewerage Tariff Review and Cost of Service Study
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South Tarawa Sanitation Project (P176478)
fixture\. In 2020, GoK approved a 10-year water tariff plan balancing affordability, equity and sustainability (cost recovery)
objectives by including a schedule of subsidy payment representing US$15\.8 million over 10 years in order for PUB to
remain financially solvent\. Strengthening PUBâs financial viability will require: (i) enforcing the recently adopted water
tariff plan and including the sewerage tariff into this long-term plan, (ii) improving service quality and expanding PUBâs
efficient electricity billing and customer management capacity to the water and sewerage sides of the company, and (iii)
improving services efficiency and asset management to minimize operating costs\. STWSP will aim to achieving that goal
on the water side of PUBâs business\.
17\. While recurrent tariffs are generally affordable, connection charges and sanitation hardware costs represent a
barrier to access sewerage services\. With an average water usage level of 50 liters per capita per day, the monthly water
bill would represent 1\.9 percent of the median household income, and among households of the first income quintile
just slightly exceed the 5 percent water bill to income ratio threshold recommended per international practices\. In terms
of recurrent sewerage charges, a US$3\.80 monthly bill would represent 0\.4 percent of the median householdâs income
and 1\.8 percent among households the first income quintile\. The Sanitation Roadmap Addendum (2021) notes that the
poorest households also had difficulty affording the required sanitation hardware (estimated at US$750-1,500) and
sewerage connection fee\. STSISP did not finance any of these costs\. Within the existing sewered service areas, only 52
percent of the households are connected, which suggests that the previous connection fee of US$150 may have been
prohibitive\.
18\. The environmental sustainability is fragile, under the combined pressures of inadequate sanitation and water
abstractions\. The quality of groundwater as well as seawater both in the lagoon and the intertidal reef flat area, which
are used by people of South Tarawa for bathing and collecting shellfish, is influenced by sewerage discharge, poor on-
site sanitation, illegal dumping of solid waste and the practice of open defecation\. A groundwater study undertaken in
2011, mapping water quality of the lens, detected concentrations of microbial contaminants beyond acceptable
standards at all well sites\. Monitoring of lagoon and ocean waters in 2019 showed presence of fecal coliform at six of
eight sites22\. The limited freshwater availability on South Tarawa threatens the sustainability of flushing toilet systems\. A
review of toilet flushing options in 2021 recommended that saltwater or greywater be used for flushing, with local
groundwater as a supplementary option with appropriate monitoring23 â an approach to be followed under the project\.
19\. The sector institutional framework is clearly defined but lacks effective regulation\. The institutional framework
provides PUB management autonomy\. The Ministry of Infrastructure and Sustainable Energy (MISE) plays a policy,
planning and regulatory role within the water, sanitation and hygiene (WaSH) sector\. The Ministry of Health and Medical
Services (MHMS) is responsible for drinking water quality monitoring, but water quality analyses are not carried out on
a regular basis\. The Ministry of Environment, Land and Agricultural Development (MELAD) has oversight of environmental
requirements relating to water and sanitation\. PUB is a state-owned enterprise (SOE) responsible for delivering power
generation and distribution â mainly based on imported fossil fuels, water supply and sewerage services in South Tarawa
on a commercial basis\. Its Board is chaired and appointed by MISE\. In the absence of effective technical regulation, PUB
has faced limited performance incentives and has rarely been held accountable for the quality of service delivery\. On-
site sanitation systems are regulated by MISE, however, confusion exists on the mandate of the local councils, the process
for issuing building consents that cover provision of plumbing and drainage and the process for inspection and approval
22
UK Centre for Environment Fisheries and Aquaculture Science, 2019, Kiribati Water Quality Monitoring Data - March 2019,
http://data\.cefas\.co\.uk/#/View/20538
23
Tony Falkland, 2021, Review of toilet flushing water options for South Tarawa piped sewerage systems
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South Tarawa Sanitation Project (P176478)
of completed works\. The National Infrastructure Development Steering Committee (NIDSC), 24 chaired by Cabinet
Secretary, coordinates implementation across Ministries and report to Cabinet on progress of implementing relevant
sector policies\.
Relationship to CPF
20\. The proposed project will contribute to the achievement of development objectives of GoK and the World Bank\.
Goal 6 of the Kiribatiâs Government Development Plan (2016-2019) commits to improve access to quality climate change
resilient infrastructure in urban and rural areas; and the strategies to achieve this Goal include the promotion and
implementation of sanitation programs\.
21\. Under the World Bank's Regional Partnership Framework (RPF) (100997-EAP) for nine Pacific Island Countries
(including Kiribati) for the period FY17-FY21, Objective 4\.2 focuses on the increase of access to basic services and
improved connective infrastructure\. The development of water and sanitation services in Kiribati is one of the key
activities identified to achieve this objective\. By helping address water pollution with the most feasible low-carbon
options and protecting freshwater resources, which are at threat from the effects of climate change, the proposed project
will support Objective 3\.1 of the RPF, which focuses on strengthened resilience to natural disasters and climate change\.
22\. Support for improved sanitation services is a core contribution to the Bankâs twin goals of eliminating extreme
poverty and sharing prosperity, by (i) reducing the incidents of waterborne diseases caused by contact with contaminated
water, (ii) diminishing absenteeism from work and school and the costs associated with these, including lost income and
opportunities, (iii) contributing to reducing malnutrition and stunning, since poor access to water, sanitation and hygiene
is one of their underlying causes and iv) reducing GHG emissions to the extent possible, considering national
circumstances and policies\. The care for the sick and the responsibility of water collection and safety concerns also falls
disproportionally on women and girls\. Hence, improved access to water and wastewater services will help to address
gender inequality, in line with Objective 2\.3 of the RPF\.
23\. By improving the coverage, efficiency, and resilience of urban sanitation, the proposed project will be aligned with
the Green, Resilient and Inclusive Development (GRID) framework and Climate Change Action Plan (CCAP)\.
C\. Proposed Development Objective(s)
The Project Development Objective is to increase access to sanitation services in selected areas of South Tarawa and to
improve efficiency in sanitation service delivery
Key Results (From PCN)
⢠People provided with access to improved sanitation services (male/female)
⢠Number of communities certified Open Defecation Free
⢠Improved septage management: volume of fecal sludge from onsite sanitation facilities safely collected and
disposed of
⢠Operating Ratio for PUB sewerage operations
24
Members of the PSC include Secretaries or their delegated representative from the following ministries: Office of the President
(Chair); Ministry of Finance and Economic Development (Deputy Chair); Ministry of Public Works and Utilities Ministries of
Environment, Lands and Agriculture Development; Ministry of Communications, Transport and Tourism\.
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D\. Concept Description
24\. Governmentâs long-term vision\. The proposed project will support the GoKâs long-term vision for a wealthy, healthy
and peaceful nation25 by improving access to essential sanitation services and safeguarding fresh water sources\.
Moreover, it will support GoK to achieve SDG 6\.226 and SDG 6\.327\. It aligns with the sector priorities outlined in the Tarawa
Water Master Plan (2010), National Water Resources Policy (2010) and the National Sanitation Policy (2010), which
include: improved access to effective sanitation; reduction of death and illness from water-borne disease; protection of
fresh groundwater sources and lagoon waters from fecal pollution; improving community understanding of sanitation
issues and protection of water sources; improved knowledge of appropriate sanitation options for Kiribati\.
25\. The Project will focus on increasing access to sanitation services and strengthening sector capacity to construct,
monitor and maintain appropriate sanitation solutions\. It will take place in the same location and concomitantly with
STWSP, which will allow synergies of activities\. It will also help confirm low-cost, low carbon and climate proof sewerage
and sanitation models and toilet flushing options for further replication across the capital\. The proposed project will seek
to cooperate and coordinate with other government and development partners, aiming towards jointly providing
comprehensive and aligned support to the sector\. Additionally, as Kiribati is extremely vulnerable to climate change and
exposed to extreme rainfall events, droughts, storm surge and sea level rise, this project is designed to help protect from
increased water scarcity the fragile groundwater populations rely on for non-potable water use, to reduce the impacts
of floods on sanitary conditions and to reduce GHG emissions through improved fecal sludge management\.
26\. Project Cost, Duration and Financing\. The estimated total project cost is US$15 million, financed by an IDA Grant\.
The Project will be implemented over a period of six years to allow sufficient time for successful achievement of the PDO,
given the COVID-19 related travel restrictions and the limited capacity in-country to sustain a fast pace of
implementation\. The lending instrument for the proposed Project is Investment Project Financing (IPF)\. Selection of the
IPF structure was based on the IPFâs flexibility and suitability to incorporate financing for a broad range of activities,
including several specific investments, technical assistance, and capacity enhancement measures\. I-Kiribati people living
in selected areas of South Tawara, including the densely populated centers of Betio, Bairiki, and Bikenibeu are expected
to benefit from access to sanitation services through the project\. According to the Sanitation Roadmap Addendum (2021),
extending improved sanitation coverage to all of South Tarawa would require investments of more than US$38 million\.
27\. Project components\. To achieve the project Development Objective (PDO), the proposed project will have four
components\.
Component 1: Increase access to sanitation services ($10\.0m)
28\. This component will aim to improve access to sanitation services in South Tarawa and protect fresh water sources\.
The estimated number of direct beneficiaries from services expansion is 32,000, which would increase safely managed
sanitation coverage across South Tarawa to 60 percent from the 18 percent baseline\. In addition, 11,000 current users
of PUBâs sewerage system will benefit from improved quality of service (customer management, assets maintenance)
25
Government of Kiribati, Kiribati 20-year vision, 2016-2026
26
By 2030, achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special
attention to the needs of women and girls and those in vulnerable situations
27
By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and
materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse globally
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South Tarawa Sanitation Project (P176478)
and approximately 5,500 users of onsite sanitation facilities in areas not targeted by the project will benefit from PUBâs
increased capacity to collect and dispose of fecal sludge on demand\. It will include:
Subcomponent 1\.1 Increase connections to the existing sewerage system (US$2\.0m)
29\. This subcomponent will support increased connections in sewered areas of Betio, Bikenibeu and Bairiki to all
households not yet connected\. The subcomponent will finance: (i) household sewer connections; and (ii) retrofit of the
saltwater flushing system to dispose of current standpipes and connect directly to toilets\. This subcomponent will include
community engagement to promote connection to the sewer network\. Given the documented issues with saltwater
standpipes, the system will be retrofitted to connect directly to toilet cisterns or to a tap within the toilet superstructure,
which is expected to minimize leakage and misuse\. It is expected that about 11,000 people will gain improved sanitation
access under this sub-component\. The termination of rudimentary sanitation facilities with uncontrolled anaerobic
treatment conditions will help reduce GHG emissions\. Access to saltwater flushing systems will help reduce abstraction
from freshwater lenses, which are critical for the populationâs non-potable water use but are increasingly impacted by
climate change\.
Subcomponent 1\.2 Construction of on-site sanitation systems (US$8\.0m)
30\. This subcomponent will finance the construction of on-site sanitation systems, decentralized sanitation systems and
communal toilets in the islets of Nanikai, Teaoraereke west, Bikenibeu East, Bikenibeu West and part of Bikenibeu Central
South, and associated community mobilization activities\. These areas are prioritized as they are the most densely
populated islets in South Tarawa, outside of the sewered areas\. Households will be the focus for on-site systems, while
the sanitation needs at health care facilities and schools will also be considered\. The subcomponent will include the
construction of toilets, septic tanks, soak-away pits, and the toilet superstructure\. According to the guiding principles in
the National Sanitation Roadmap Addendum, it is proposed that infrastructure in each village will include a mixture of
private toilets with septic tank, cluster sewage systems and communal toilets with considerations of feasible low-carbon
options\. Initial community focus groups have shown support for communal toilets, particularly in areas with rocky
conditions and limited land\. MISEâs standard design will be updated to ensure communal toilet blocks are female friendly,
28
child friendly and accessible for the disabled and elderly\. Technical standards will be revised based on local supply
market capacity and material availability and training will be provided to local suppliers accordingly\. Multifunctional
communal toilet blocks with shower facilities will be piloted in each village\. This subcomponent will also confirm the
technical and social acceptability of the direct use of greywater for flushing and supplementary use of local groundwater
for flushing where greywater is not feasible\. As with Subcomponent 1\.1, the termination of rudimentary sanitation
facilities with uncontrolled anaerobic treatment conditions will help reduce GHG emissions\. New onsite sanitation
facilities will be designed to be flood-proof, to prevent risks of septage overflow and spread of waterborne disease during
extreme precipitation events\. Access to greywater reuse systems will help reduce abstraction from freshwater lenses,
which are critical for the populationâs non-potable water use but are increasingly impacted by climate change\. It is
expected that about 21,000 people will gain access to improved sanitation access under this sub-component\.
28
âFemale-friendlyâ? includes separate and clean male and female toilets; doors and interior locks to ensure privacy, lighting in toilet
cubicles; bins to dispose of used menstrual materials; clean water and soap for washing hands and body after changing sanitary
pads\.
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South Tarawa Sanitation Project (P176478)
Component 2: Sector capacity building and performance improvement (US$2\.0m)
31\. This component will aim to strengthen the capacity of PUB and MISE to manage sanitation services and to ensure
the sustainability of the systems implemented under Component 1\.
32\. PUB will be supported in the operation and maintenance of the sewerage assets by an international private operator
(PO) hired through a private sector partnership arrangement to be clarified during project preparation\. One option to be
considered is to include the sewerage system in the scope of responsibilities of the operator which will have been selected
on a competitive basis under STWSP to support PUBâs water supply operations under a five-year management contract\.
The project will also improve PUBâs capacity to provide sanitation facilities emptying services and to operate and maintain
communal toilets\. Capacity building will be an important component of this private sector assistance\. The operator will
directly manage, mentor and train PUB operatives so that PUB can acquire the required capacity to oversee operation
and maintenance of all assets at the end of the 5-year contracts\. Technical assistance support will also be provided to
strengthen PUB capacity on areas such as sewerage billing, customer management and assets management, in
complement of STWSP\.
33\. MISE will be supported to establish a regular seawater and groundwater quality monitoring system, which will help
assess the impacts of sanitation activities and climate change, and adjust design/construction standards if needed\. The
project will also support the establishment and maintenance of a register of on-site sanitation installations\. The project
will deliver a technical training and awareness program on the requirements for on-site sanitation facilities (toilets, septic
tanks, soak-away pits, and superstructure) for hardware store staff, builders/plumbers, NGO technical staff, and
MISE/PUB staff\. The training will be complemented with educational material and establishing a national standard for
flood-proof septic tanks (for both concrete constructed tanks and HDPE welded tanks) adapted to the constraints of local
supply market, publicity of the standard, setting up an inspection procedure for new tanks including standard surveys
and a database and incorporating low-carbon criteria in design\. Finally, training will be provided to MELAD and protocols
established to strengthen its regulatory capacity with regards to the potential environmental impacts of sanitation
activities\.
Component 3: Sanitation and Hygiene Awareness and Education (US$1\.0m)
34\. This component aims to support significant transformations in the populationâs sanitation behavior that are key to
project success\. It will carry on from the Water, Sanitation and Hygiene (WaSH) Awareness Program (WAP) that will be
initiated under STWSP\. The WAP activities are focused on: a) restoring confidence in PUB; b) deterring unsafe water
consumption; c) increasing awareness of the water tariff; d) water conservation; and e) WaSH (including to mitigate
COVID-19 spread risks), menstrual hygiene management and solid waste management related behavior change\. STSP will
complement the activities by specifically targeting behaviors related to connecting to the sewer system, reducing open
defecation, maintaining communal systems and managing animal waste\. An international NGO will be recruited under
the project and will implement the awareness campaigns with the support of local Civil Society Organizations at the
community level\. It is anticipated that, by the time the request for proposal for this contract will be finalized, lessons
from the first year of WAP implementation will be available to inform the design of this activity\.
Component 4: Project management and institutional strengthening (US$2\.0m)
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35\. This component will also support MISE in project management and supervision\. This will include, but not limited
to, the operating cost of the PMU, supervision consultant, and consultants that will support the design of sub-projects
and related studies\.
36\. The project will also support an update of the 2019 tariff study reviewing sewerage tariff and onsite sanitation
maintenance costs, with a focus on balancing PUB financial sustainability and affordability to lower income households\.
The component will also support the provision of studies and technical assistance to clarify the sector legal framework,
in particular the role of local councils in sanitation, and to strengthen sanitation sector regulation, including in the areas
of water quality monitoring and compliance of on-site systems\. Pro-poor funding mechanisms such as revolving funds
will be established and managed by MISE to enable poor households to retrofit internal plumbing for greywater reuse,
to purchase toilets\.
Other project features
37\. Collaboration with donor partners\. Future co-financing opportunities have been discussed with NZ MFAT, which
have funded the South Tarawa Sanitation Roadmap Addendum and have expressed a strong interest to co-finance the
implementation of the roadmap\. MFAT operates on three-year budget cycles with the next starting 1 July 2021\. Funding
for that cycle is fully committed, although there may be some limited opportunity to further technical assistance to MISE\.
GoK will have the opportunity to seek significant funding for construction in the following budget cycle starting 1 July
2024\. The Bank team will maintain communication with MFAT as a key stakeholder\.
38\. Citizen engagement\. To optimize the potential benefit of the project, citizen engagement through consultation will
be conducted to ensure the needs of men, women and children are addressed in the project\. Initial focus groups
conducted by the Sanitation Roadmap Addendum consultant and lessons learned from previous projects have shown the
need for active programs promoting sewer connections, and long-term behaviour change campaigns and community
engagement\. Further consultation through public fora and/or focus group discussions are planned to be conducted
before the infrastructure is put in place to identify the optimal design and management of onsite systems, and to assess
options for pro-poor financing mechanisms\. As part of Component 2, the project will support the development of MISE
and PUBâs capacity and systems in terms of customer relationship, which will include maintaining an active grievance
collection and redress mechanism\.
39\. Gender\. A gender analysis was conducted as part of STWSP preparation, which identified relevant gender gaps to
the water and sanitation sector\. Women play a limited role in decision making in public affairs, have a proportionally
much lower rate of employment than men, and female-led households are over-represented in the lowest three
expenditure deciles\. Obesity is more than twice more prevalent among women than men and gender-based violence is
among the highest in the world\. In the household, women play traditionally the main roles in water-related chores such
as cooking, washing and cleaning, but men are more often involved in purchasing and carrying rainwater to the
household\. During the development of the Sanitation Roadmap Addendum, focus group discussions showed women
generally have responsibility for collecting water to flush toilets and have difficulty safely defecating in the open or
accessing public toilets due to lack of lighting29\. They are also in charge of caring for household members afflicted by
waterborne diseases such as diarrhea\. A complementary analysis and action plan will be developed to cover activities
supported by the other project components\. By improving access to clean water and sanitation, the project will address
29
Finnish Consulting Group and Fraser Thomas, 2021, Sanitation Market Report
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womenâs safety and disproportionate time and care burden in the household30, which has the potential to enable women
to engage in income-generating activities\. A proposed indicator would track the percentage of women reporting
improved safety and reduced time in water-related chores\. The project will also ensure womenâs equal participation in
awareness and community consultation campaigns, as well as in PUB capacity building activities\. A complementary
analysis and action plan will be developed to cover further activities supported by the other project components\.
40\. Climate change and disaster risk screening\. Kiribatiâs considerable exposure to climate change risks are outlined in
the Country Context section\. South Tarawa is exposed to extreme rainfall events, seasonal drought, storm surge and sea
level rise\. Notable inter-annual variability associated with the El Niño-Southern Oscillation is evident in the observed
rainfall records for Tarawa and climate predictions have very high confidence that El Niño and La Niña events will continue
to occur in the future, therefore maintaining risk of flood and drought events\. Flooding of coastal areas is likely to be
exacerbated by sea level rise, storm surges and sea water ingress into the freshwater lens\. The project has been designed
to accommodate these projected water quantity and quality impacts and has incorporated appropriate mitigation and
adaption measures, such as use of greywater for flushing and establishing groundwater monitoring systems\. In terms of
mitigation, greenhouse gas (GHG) emissions will be reduced through collection and appropriate disposal of wastewater
and fecal sludge therefore reducing fugitive GHG emissions from waste degradation in the environment\. In terms of
adaptation, the project will establish use of greywater for flushing toilets in addition to saltwater and groundwater\. This
diversification of water sources for flushing will allow to reduce abstraction from the freshwater lens, which can be kept
by households as alternative nonpotable water source, even in case of detrimental climate impacts on the centralized
water supply system\. The planned non-physical components of the project will also seek to address climate change risk
including capacity building for construction of on-site sanitation systems that meet technical standards therefore
minimizing the impact of flooding, storm surge events and sea level rise\.
Legal Operational Policies Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
Summary of Screening of Environmental and Social Risks and Impacts
\.
Environmental Risk Rating Substantial
41\. The project is expected to result in a positive environmental outcome\. The Tarawa environment (including the
groundwater lens, coastal waters and lagoon) is deteriorating with high fecal coliform counts from septic tanks, pit
30
A number of studies have found that improved access to water leads to sizeable reductions in time spent fetching water (Devoto
et al\., 2012), and could potentially also increase time allocated to productive activities (Meeks, 2017)\.
Sources: Devoto et al\. 2012\. Happiness on Tap: Piped Water Adoption in Urban Morocco\. American Economic journal: Economic
Policy, 4(4):68-99;
Meeks, R\.C\., 2017\. Water works: the economic impact of water infrastructure\. Journal of Human Resources, 52(4),
pp\.1119-1153\.
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South Tarawa Sanitation Project (P176478)
toilets, leachate from solid waste, and organic and inorganic pollutants from congested and developed areas\. The
Project will result in improved coastal, lagoon and groundwater lens water quality through i) the provision of safe
sanitation facilities to reduce open defecation; ii) increased connectivity to the sewage system iii) increased capacity
of both MISE and PUB for sewage and sanitation operation and maintenance including the adaptation of a national
standard for septic tanks to the local supply market, development of an inspection procedure for new tanks and
onsite systems compliance verification; iv) the establishment of a receiving environment monitoring system including
groundwater and the coastal environment; v) targeting of WaSH awareness focusing on behaviors related to reducing
open defecation, maintaining communal systems, and managing animal waste; and vi) activities such as capacity
building, developing a register of on-site sanitation installations and increasing the septic tanks vacuum system fleet\.
Potential risks relate to i) increased waste entering the sewerage system; ii) groundwater contamination due to
inadequate controls around septic tank and soak pit design, installation and management; iii) risks and impacts
associated with minor construction works such as dust, noise and sedimentation and minor occupational health and
safety risks to workers (potentially including the transmission of COVID-19 when completing works in areas with a
high population density); and iv) the use of water for flushing which is a finite and scarce resource in Kiribati\. The
Environmental Risk Rating is considered âSubstantialâ\. Risks are expected to be mitigated in a predictable manner
through the implementation of the environmental and social impact assessment/environmental and social
management plan (ESIA/ESMP)\.
Social Risk Rating Moderate
42\. The social risk rating is set as moderate\. The project will benefit the population of Kiribati especially those on
the main island of Tarawa\. Under component 1, the increased connections in sewered areas of Betio, Bikenibeu and
Bairiki to all households not yet connected, this service is a positive impact to the community as it contributes to
increase community sanitation and health\. The social risk remain moderate, due to minor civil works that will be
undertaken with the set up of household on-site sanitation system, the construction of toilets, septic tanks, soak-
away pits, and the toilet superstructure\. Land is limited on Tarawa, and the plan to build communal toilets may pose
some risk, such as tension among the community, in terms of shared facilities\. The project does not anticipate any
land acquisition, however there may be some risk to land access or land use, as project activities may require access
to communal space for the construction of communal toilets\. Since the risks to land impact are low, the ESIA/ESMP
will capture the impacts on land and land access/use, at site specific areas including the islets of Nanikai, Teaoraereke
west, Bikenibeu East, Bikenibeu West and part of Bikenibeu Central South, and associated community mobilization
activities, where the construction of household on-site sanitation systems, decentralized sanitation systems and
communal toilets are planned\. Social tensions that may arise among beneficiaries who may have different views on
behavioral changes for health and sanitation practices proposed since the project locations have many traditional or
makeshift houses with difficult access; limited space for new infrastructure; and community acceptance of open
defecation As there will be common areas, the risk of transmission of diseases related to unsanitary practices or the
risk of SEA/SH may rise despite the projectâs aim to improve sanitation and MISEâs standard design ensuring
communal toilet blocks are female friendly, child friendly and accessible for the disabled and elderly\. Kiribati has high
background rates of Gender-based Violence and SEA/SH, however the projectâs SEA/SH rating is low due to a
moderate scale of construction activities, limited labor influx, and location of civil works in an urban area\. The
Projectâs ESIA/ESMP will include a SEA/SH risk assessment and preventive measures included in the ESIA/ESMP\. There
are functional GBV & SEA/SH services operating in South Tarawa (the Kiribati Family Health Association)\. A key social
risk is that marginalized, vulnerable or remote social groups are unable to access facilities and services in a way that
undermines the central objectives of the project\. COVID-19 could pose challenges, and lockdown measures would
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South Tarawa Sanitation Project (P176478)
directly interrupt the implementation of project activities and result in delays in the results timelines\. To mitigate
these risks, theES instruments including the SEP, ESIA/ESMP, commits to ensuring access to and allocation of Project
benefits in a fair, equitable and inclusive manner, taking into account disadvantaged or vulnerable groups and those
in remote areas\. As a mitigation measure, a social screening checklist is to be used to assess potential ESS 5 related
impacts and prepare mitigation measures as appropriate , outreach and awareness under\. The awareness campaign
described in component 3, is a positive social and behavior change activity for the project and is likely to benefit the
community\. This component aims to support significant transformations in the populationâs sanitation behavior that
are key to project success\. This will be an extension of the current Water, Sanitation and Hygiene (WaSH) Awareness
Program (WAP) that will be initiated under STWSP\. An international NGO will be recruited under the project and will
implement the awareness campaigns with the support of local Civil Society Organizations at the community level\.
The Environmental and Social Commitment Plan (ESCP) will commit MISE to the implementation of a Code of Conduct
for MISE staff and contracted workers including provisions for SEA/SH prevention e\.g\. via training curricula, campaign
awareness\.
Sexual Exploitation and Abuse/Sexual Harassment (SEA/SH) Risk Rating Low
43\. Kiribati has high background rates of Gender-based Violence and SEA/SH, however the projectâs SEA/SH rating
is low due to a moderate scale of construction activities, limited labor influx, and location of civil works in an urban
area\. The Projectâs ESIA/ESMP will include a SEA/SH risk assessment and preventive measures included in the
ESIA/ESMP\. There are functional GBV & SEA/SH services operating in South Tarawa (the Kiribati Family Health
Association)\.
\.
CONTACT POINT
World Bank
Stephane Raphael Dahan, Raghava Neti
Senior Water Supply and Sanitation Specialist
Borrower/Client/Recipient
Ministry of Finance and Economic Development
Implementing Agencies
Jun 28, 2021 Page 16 of 17
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South Tarawa Sanitation Project (P176478)
Ministry of Infrastructure and Sustainable Energy
Terry Lancashire
Director Engineering Services
director@mise\.gov\.ki
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Stephane Raphael Dahan, Raghava Neti
Approved By
APPROVALTBL
Country Director: Stephen N\. Ndegwa 18-Aug-2021
Jun 28, 2021 Page 17 of 17 | APPROVAL |
P004660 | RESTRICTED
Report No\. TO-355a
This report was prepared for use within the Bank and its affiliated organizations\.
They do not accept responsibility for its accuracy or completeness\. The report may
not be published nor may it be quoted as representing their views\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
APPRAISAL OF A
NATIONAL HIGHWAY PROJECT
THAILAND
May 16, 1963
Department of Technical Operations
Currency Equivalents
Free Exchange Rate (recent average)
Baht 20\.80 = US$ 1\.00
Baht 1,00 - US$ 0\.05
Baht 1,000,000 = US$M8,100
Fiscal Year
October 1 to September 30
THAILAND
APPRAISAL OF A NATIONAL HIGHWAY PROJECT
Table of Contents
Page
SUYMARY i-ii
I\. INTRODUCTION 1
II\. BACKGROUND INFORPMTION 1-2
A\. Geographic and Demographic 1
B\. Modes of Transportation 2
III\. THE HIGHWAY SYSTEM 3-6
A\. General Classification and Condition of Roads 3
B\. Highway Responsibilities and Management 3
C\. Growth and Characteristics of Vehicle Fleet 4
D\. Future Highway Development Plans 5
IV\. THE PROJECT 6-14
A\. General Description 6
B\. Project Road Description, Design, Execution
and Costs 7
C\. Highway Maintenance Requirements and Miscellaneous
Items 10
D\. Consulting Services and Costs 12
E\. Summary of Costs and Financing 13
F\. Loan Components and Probable Annual Disbursements 14
V\. ECONOMIC JUSTIFICATION 14-19
A\. General 14
B\. The Assessment of Economic Benefits 15
C\. The Project Roads 16
D\. Further Road Studies and Engineering 19
VI\. CONCLUSIONS AND RECON7ENDATIONS 20
ANEXES
Annex A: Assessment of Economic Benefits
Annex B: Roads to be Studied and Engineered for Future Bank Consideration
Tables
1: The National Highway System, 1962
2: Design Standards for Highways
3: Proposed Organization for Department of Highways
4: Expenditures and Appropriations, Department of Highways, 1958-63
5: Motor Vehicle Registrations Composition and Growth
6: Proposed Eight-Year Highway Development
7: Tentative Bank Portion of Eight-Year Highway Development Program
8: Cost Estimate for Typical Road Construction
9: Estimated Costs of Construction
10: List of Maintenance Equipment Required
11: Estimated Costs of Engineering and Training
Map 1: Thailand: Physical and Political
Map 2: Thailand: National Highway System
ThIULND
APPRAISAL OF A 1NATIONAL HIGHWADY PROGRAM
SUM4kRY
i\. The Government of the Kingdom of Thailand has requested the Bankts
assistance in financing the following highway project:
a) the improvement of existing and the construction of
new primary national roads totaling 628 km in length;
b) the purchase of mechanical equioment to improve and
modernize the highway maintenance organization;
c) the purchase of accounting machines, instruments,
and other miscellaneous items of technical equip-
ment;
d) consulting engineering services in connection with
the project, -nd the technical training of Thai
person-nel\.
ii\. The total cost of the project has been estimated at about US$62\.6
million equivalent of which the foreign exchange costs total about US434\.1
inillion equivalent including an allowance for construction contingencies\.
A Bank loan of US035 million is proposed to cover the estimated foreign ex-
chaange costs and to provide for possible further unforeseen contingencies\.
Tlis willbe the first Bank loan for highways in Thailand\. The executing
agency will be the Department of Highways of the Ministry of Communications\.
iii\. Cost estimates and the foreign component of costs are only approxi-
mate; they will be checked in the early stages of the project by consulting
engineers\. Substantial deviations in the assumed foreign exchange costs are
not expected; however, arrangements have been discussed auring loan negotiations
for adapting the proposed loan amount to revised estimates and for ensuring the
adequate financing of the project\.
iv\. rhe registration of motor vehicles in Thailand has more than tripled
over the past 10 years\. The present trunk highway network, although fairly
extensive in length, is below desirable technical standards, with less than
25% paved\. Vehicle operating costs are high over the majority of roads\.
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V\. With a view to improving the countryts road network, the Government
is embarking on an 8-Year Highway Development Program and has asked the Bank
to consider financing a substantial part of the development program on a long-
term basis\. The part of the program presented to the Bank for consideration
totals some 1,662 km of road improvement and construction at a total cost of
approximately US$110 million equivalent\. The road works included in the present
project constitute the first and most important phase of the program presented
to the Bank\.
vi\. Further Bank investment in subsequent phases of the highway develop-
ment program has been tentatively discussed with the Government and would pro-
vide for possible future loans totaling about US$30 - 35 million equivalent\.
vii\. The road works included in the proposed project are economically
sound and can be justified by the reduction in vehicle operating costs alone
over the improved roads compared with the existing roads\. The justification
would still be satisfactory if there were a substantial increase in construc-
tion costs\. Additional economic benefits will accrue from the stimulus to
agricu'tural production\.
viii\. Consulting engineers, satisfactory to the Bank, will be retained by
the Government to undertake the design, contract documentation and supervision
of the 628 km of project works\. Their services will also include the engineer-
ing and economic studies of a further 1,034 km of roads with a view to possible
future B?nk financing as mentioned in paragraph (vi) above\.
ix\. Contracts for construction of the road works included in the project
will be awarded on the basis of international coinpetitive bidding\. The probable
duration of the works will be about four years commencing early 1964\.
x\. The proposed loan includes an amount of US$6\.8 million equivalent for
the purchase of new ilighway maintenance equipment and spare parts\. Consulting
engineers will be advising the Department of Highways on general reorganization
with particular emphasis on highway maintenance\.
xi\. Agreement was reached during loan negotiations on the points detailed
in paragraph 100 of the appraisal report\. The project is suitable for a Bank
loan of US$35 million equivalent with a 20-year term including a 5-year period
of grace\.
THAILAND
APPRAISAL OF A NATIONAL HIGHWiAY PROJECT
I\. INTRODUCTION
1\. The Government of the Kingdom of Thailand has requested the Bank's
assistance in financing a highway project comprising the improvement and ex-
pansion of the national road network, the purchase of field and office equip-
ment, and the services of consulting engineers\. The project is described in
greater detail in Section IV of this report\. A Bank loan of USV,35 million
equivalent is pronosed to cover the estimated foreign exchange costs, and
wiould be the first Bank loan for highways in Thailand\.
2\. The road wTorks included in the proposed project total 628 km and
constitute the first and most important phase of a larger highway development
program presented by the Government to the Bank for consideration in July
1962\. The larger program provides for the improvement and construction ul-
timately of seven roads totaling 1,662 km in length, with an estimated total
cost o-f annroximately USllO million, and in turn forms part of the Govern-
ment's proposed eight-year highway development program commencing 1963 and
estimated to cost around US'hIOO million equivalent\.
3\. This appraisal report is based on the findings of a Bank mission to
Thailand in July-August 1962, and upon material prepared by the Department of
Highi"ays and the National Economic Development Board of the Government follow-
ing advice and assistance given by a previous Bank mission in 1961\. The
present nroject details and the tentative phasing of the balance of the Bank
portion of the development Drogram were confirmed in correspondence between
the Government and the Bank during December 1962\.
II\. BACKGROUND INFORTMATION
A) Geographic and Demographic
4\. Thailand covers an area of approximately 510,000 km2 (almost as large
as France) between latitude 60 N and 200 N\. It is bordered by Burma in the
west, Laos in the north, Cambodia in the east, and by the Gulf of Thailand and
Malaya in the south (see Map 1)\.
5\. Geographically, economically, and politically, Thailand is divided
into four regions: Northern, Northeastern, Central and Southern\. The Northern
region is generally characterized by mountain ranges running roughly north-
south; it is rich in agricultural products, timber and minerals\. The North-
eastern region is a relatively flat plateau forming part of the catchment basin
of the Hlekong river\. Although largely underdeveloped it produces a substantial
quantity of mixed agricultural products and livestock\. The Central region in-
cludes the wet lowland plains of the Chao Phya river and constitutes one of
the major rice nroducing areas in the world\. The Southern region includes the
major part of the isthmus linking Thailand with lMalaya, and produces large
quantities of tin and rubber\.
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6\. Thailand's climate is generally tropical, but the uplands of the North-
ern region enjoy a somewhat more temperate climate\. There is a pronounced rainy
season between June and October throughout most of the country; road construc-
tion, especially earthwork, is difficult during the height of the rainy season\.
7\. The present population of Thailand has been estimated at approximate-
ly 28 million and is increasing at about 3% annually\. Apart from a noticeable
concentration around Bangkok and the central plains, the population is fairly
well distributed throughout the country\. About 85% of the wiorking population
is employed in agriculture\.
B) Modes of Transportation
8\. Few statistics are available to indicate the distribution of passenger
and freight traffic between different modes of transportation\. The State-owned
railway and highway systems appear to carry the major share of traffic, the
former handling mostly long-haul bulk goods and the latter the shorter haul of
miscellaneous commodities\. A diversion of less-than-carload goods from rail to
highway has been increasingly noticeable from 1957\.
9\. Individual modes of transportation are already operating at a high
capacity, and lack of capacity in one mode cannot easily be compensated for by
inereased use of other facilities\. All modes of transportation appear in need
of some improvement or expansion to meet future traffic requirements, but more
especially the highway system\.
10\. The highway system will be described in detail later\. Briefly, the
netwyork comprises about 9,000 km of trunk highways (of which only 2,500 km are
paved) and some 7,000 km of low standard intra-provincial and rural roads\.
MlIotor vehicles number 110,000, about half of which are trucks and buses\.
11\. The Thailand State Railway system consists of about 3,500 km of meter-
gauge mainline track radiating from Bangkok and connecting with the Cambodian
and Malayan rail systems\. A six-year improvement program was started in 1961 to
increase the carrying capacity and operating efficiency of the railway\. The pro-
gram is scheduled for completion in 1966, and is being partially financed by a
Bank loan of US'`14\.6 million (Loan No\. 280-TH)\. The West German Government is
assisting financially in the construction of 188 km of new line near Korat\.
12\. Thailand has an extensive inland waterways system of about 1,600 km in
length concentrated largely in the flat Central region of the country\. This
mode of transnort is particularly suitable for the movement of bulk cargo such
as paddy, rice, petroleum products, timber and construction materials within the
area, where soil conditions would make road construction difficult and expensive\.
13\. Coastal shipping is used extensively along the 2,000 km coastline of
Thailand, particularly in the southern part of the isthmus\. The development of
a modern highwJay system is somewhat reducing the amount of general cargo trans-
norted by coastal shipping, particularly from areas within convenient truck-
haul distance of Bangkok\.
14\. The Government is aware of the need for effective transport coordina-
tion, particularly between the competing road and rail systems\. A Transport
Board has been established within the Ministry of Cormunications and some regu-
latory measures have already been introduced with a view to providing an orderly
and coordinated development of the principal modes of transportation\.
III\. THE HIGHWAY SYSTEM
A\. General Classification and Condition 9\. Roads
15\. A distinction is drawn betweef highways of national importance and
provincial highways, Responsibility for, the two classes is vested in dif-
ferent Government authorities, the former in the Ministry of Communications,
and the latter in the Ministry of Interior\.
16\. The national highway system is roughly sub-divided into a primary
and secondary system (see Map 2); a breakdown of the total length by regions
and type of surface is given in Table 1\.
17\. For design purposes, national highways are classified into five
types according to anticipated future traffic volumes (see Table 2)\. Only
few, however, of the present roads conform to these standards\. About 75%
of the national system is at present unpaved, a typical road having a narrow
loose laterite surface, with poor alignment and weak timber bridges\.
B\. Higt2way Responsibilities end Management
18\. The construction, improvement and maintenance of the national highway
system is the responsibility of the Department of Highways within the IvMinistry
of Communications\. Most highway construction work is undertaken by contract,
some departmentally\. Plainten\.nce activities suffer from inadequate central
control and coordination, a lack of trained engineers, insufficient modern
maintenance equipment, and too much activity in new construction\. A reorgan-
ization of the DepErtment is expected to commence in early 1963 and be com-
pleted within a period of two years with the assistance of foreign consultants\.
The proposed scheme for reorganization is satisfactory and is indicated in
Table 3\.
19\. Total annual expenditures of the Department of Highways, excluding
financing by USAID, increased from a level in 1958 of around US$14 million
equivalent, which included USQt4\.5 million for maintenance, to about US$25
million equivalent in 1962, including US$5\.6 million for maintenance (see
Table 4)\. The 1962 figure for highway expenditures represented about 6%-7%
of the total Government budget\. USAID funds expended on road and bridge con-
struction averaged about US$8 million annually over the five years ending 1961,
and are believed to have increased substantially in more recent years\.
20\. The Public Works Depcrtment (PWD) of the IJinistry of Interior is re-
sponsible for the construction, improvement and maintenance of provincial roads,
public buildings, wpter supply and other public works in the 71 provinces of
the country\. Past expenditure of the PIND on provincial roads and bridges is
believed not to have exceeded about US$3-4 million equivalent annually over
recent few years\. Maintenance of the provincial road network is extremely
poor or non-existent\.
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21\. A reorganization of the P'0D was recently instituted with the ultimate
object of creating nine regional highway centers throughout the country, each
with its own equipment pool, workshops, warehouses, office buildings, etc\. One
such center has been established at Khonkaen in the northeast and plans are in
hand for establishing the next two centers, one at Songkhla in the south and
the other at Chiengmai in the north\. The Government is currently preparing an
application to the Bank for assistance in financing these two regional centers\.
Their establishment would complement the proposed national highway project by
enabling the PWD to improve and expand the provincial road network in the
vicinity of tlfo of the project roads\.
22\. The Irrigation Department of the Ministry of Agriculture constructs
limited lengths of low standard service roads, which are usually open to the
public, but whose primary function is to provide access for the operation and
maintenance of irrigation canals and headworks\. Expenditures of the Department
on this class of road are believed not to exceed about US$1-2 million equiva-
lent annually\.
C\. Growth and Characteristics of Vehicle Fleet
23\. Records of vehicle registration in Thailand indicate that the number
of vehicles has more than tripled in the past ten years (Table 5)\. At the end
of 1961 the total number of vehicles registered in the country, excluding motor
cycles and motor tricycles, was about 109,000, almost half of this number in
the Bangkok area\. The present vehicle fleet is composed of about 51% cars, 12%
buses and 37% trucks; more than three-quarters of the total nmmber of cars,
however, is registered in the Bangkok area\. The trend in composition over the
past ten years has been for cars to continue making up approximately one-half
of the total vehicle fleet, while buses have reduced proportionately and trucks
have increased\. Gross revenues from road-user taxes currently yield about
US$25 million equivalent annually, an amount substantially higher than road
maintenance expenditures\.
24\. The present growth rate of the total vehicle fleet is about 9% per
annuum\. An estimated projection of the numbers of motor vehicles in different
classes is indicated in Table 5, conservatively resulting in a doubling of the
vehicle fleet in the next 10-year period\.
25\. Trunk roads in provincial areas carry a high proportion of truck and
bus traffic, normally ranging from 60% to 90% of the average daily traffic\.
Trucks are typically of the two or three-axle type with capacities of about
5 to 7 tons, and are often adapted for carrying passengers in addition to
freight\. Roads in the vicinities of towns and villages also carry large num-
bers of bicycles\.
26\. Satisfactory legislation for the regulation of motor vehicle weights
and dimensions w\.s introduced in 1960\. Dual-tired axle loads are limited to
eight metric tons and vehicle widths to 2\.50 meters\. Some initial difficulties,
however, are being experienced in implermenting the regulations\. So far, three
check weighing stations have been set up near Bangkok and more are proposed
throughout the country in the near future to ensure better implementation\.
- 5 -
27\. There is a strong current trend towards greater Governmental control
of highway transportation in Thailand, At present, however, trucking and
passenger transport are still carried out predominantly by private companies
or by small independent owner-operators usually with only one or two vehicles,
and subject to no regulption except vehicle registretion\. Keen competition
for freight and passengers often results in an inadequate level of transport
charges, in turn reflecting in low standards of vehicle maintenance and con-
sequential poor and unreliable service to the shipper or traveler\.
28\. With a view to controlling and improving public trucking facilities,
the Government introduced regulatory measures at the end of 1962 which included:
(i) a comprehensive freight tariff schedule intended to cover true costs, (ii)
the proviso that trucking companies should own not less than ten trucks, and
(iii) a requirement that truckers should apply to the Ministry of Communica-
tions for a license to operate over any particular route\.
29\. There are two well-organized motor transport companies based in
Bangkok, the Express Transportation Organization (ETO) and the Transport
Compcny (TC), both Government-owned autonomous agencies\. The Government was
advised recently on their reorganization and operation by foreign transport
experts provided under the auspices of the Colombo Plan and the International
Labor Office (ILO)\. The ETO was established in 1953; it operates a public
trucking service with about 500 vehicles, a few buses, an inland waterway
service, gasoline stations, a printing press, and an insurance business\. The
ETO has a monopoly on certain trucking activities, for example: cargo pick-up
and delivery at 96 railway stetions; through freight to Laos; transportation
of tobacco and cigarettes for the Government Tobacco Monopoly, etc\. Other
public truckers may participate in these activities only under contract with
ETO and upon payment of a fee\.
30\. The Transport Company (TO) was established by the Government as early
as 1932 for the stated purpose of providing intercity highway passenger trans-
portation and controlling bus fares throughout the country\. Present fares,
charged in accordance with a published tariff, are about the same as third
class rail fares\. The activities of the TC have expanded considerably since
its inception; passenger transport facilities in thirty provinces around Bang-
kok have now been nationalized under the company and there are indications of
an even wider nationalization soon to come\.
D\. Future Highway Development Plans
31\. The Depsrtment of Highways, in cooperation with the Bureau of Budget
and the N2tional Economic Development Board, has prepared an overall 8-year
national highway development program commencing 1963 which provides for the
improvement of about [,000 km of existing highway and the construction of 1,500
km of new highways at a total cost of about US$h00 million\. The program was
formally approved by the Government in July 1962\. Although possibly too am-
bitious, particularly with regard to the 8-year estimated completion period,
it nevertheless constitutes the first comprehensive, long-range, highway devel-
opment plan in Thailand designed to meet the country's future economic, polit-
ical, social and military recluirerrients\.
- 6 -
32\. A ten to twelve year period instead of eight for completion of the
program would be more realistic and would require an average annual construc-
tion expenditure of about US$30-36 million equiivalent\. This annual level of
highway construction expenditure, although higher than that of the Department
of Highways during recent years, is considered to be within the capacity of
potentially available technical resources for the following reasons: (i) a
proposed reorganization of the Department should provide for relatively greater
efficiency and higher capacity; (ii) a technical training program is expected
to increase substantially the number of skilled personnel; (iii) consulting
engineering firms will be employed to undertake the bulk of the technical
studies, design and supervision of the program, thus relieving to some extent
the work load on the Department; (iv) construction forces in Thailand are ex-
pected to be strengthened by widely publicizing parts of the program for bid-
ding on an international basis\.
33\. A summary of the highway development program with estimated costs and
anticipated sources of funds is given in Table 6\. It will be noted that
foreign lending agencies are expected to play a major role in financing the
program\. The Bank is being requested to consider the financing of 1,660 km
of road construction or improvement totaling about US$110 million over a
period of some eight years (see Table 7)\. The present project constitutes
the first phase of the suggested Bank program and includes the engineering and
construction of 628 km of road and the engineering of the balance with a view
to poss-ble further Bank lending\. Further Bank investment in subsequent
phases of the highway development program has been tenatively discussed with
the Government and would provide for possible future loans totaling about
US$30 - 35 million equivalent\.
IV\. THE PROJECT
A\. General Description
3h\. The project comprises the following:
a) The improvement of existing and the construction
of new sections of three national primary highways
totaling 628 km; the estimated cost of the work is
US$46\.9 million equivalent of which the foreign
component is US$21\.1 million\. The foreign costs of
consulting services in connection with this work will
be approximately US$3\.0 million equivalent\.
b) The purchase of mechanical equipment to improve and
modernize the national highway maintenance organi-
zation, involving a foreign currency outlay of
US$6\.8 million equivalent\.
c) The purchase of accounting machines, instruments
and other miscellaneous items of technical equip-
ment, at a foreign cost of US$0\.3 million equivalent\.
- 7 -
d) Other consulting engineering services, including
the engineering and economic studies of a further
1,034 kmn of roads (see Map 2) with a view to possible
future Bank-financing, and the technical training
abroad of selected Thai personnel\. The foreign
costs are estimated at US$2\.9 million equivalent\.
B\. Project Road Description, Design, Execution, and Costs
35\. The project provides for constructing or improving the following
three roads to the standards indicated:
Class Length
(Table 2) (km)
1) Chiengmai-Lampoon-Lampang I, II 105
2) Songkhla-Klong Ngae-Naradhiwat I, II 257
3) Nakorn Pathom-\.Huahin-Prajuab I, II 266
628
Chiengmai - Lampang Highway
36\. Chiengmai, with a population of about 100,000, is the second
largest city in Thailand, and an important agricultural, commercial and
cultural center\. It is separated from the proposed and partially completed
international trunk route leading northward from Bangkok throuLgh Lampang and
Chiengmai into Burma by two parallel mountain ranges running roughly north-
south\. The project road will connect Chiengmai with the international trunk
road by the shortest practical route\.
37\. The existing road between Chiengmai and Lampoon, 27 Ion in length, is
narrow, poorly aligned and heavily built up on both sides\. Under the project,
it will be widened and improved to Class I standard and will be re-located
entirely to by-pass heavily congested villages\. The section from Lampoon to
Lampang is of entirely new construction, 78 km in length, crossing the two
mountain ranges in an east-westerly direction to make a connection with the
international trunk road at Lampang\. It will be built to Class II standards\.
Construction of a 16 Ikn length eastwards from Lampoon is now nearing completion
by the Department of Highways' own forces; the balance of the works will be
completed by contract\.
Songkhla - Naradhiwat Highway
38\. Songkhla, Pattani and Naradhiwat are three thriving community centers
and seaports in southern Thailand which lack good road facilities\. The exist-
ing main road linking these ports and serving parts of their hinterlands is
narrow, poorly aligned, and for the most part, unsurfaced or surfaced only
with laterite\. A load limit of six tons for trucks is enforced over most of
its length\. Construction and improvement work now in progress with the Depart-
mentfs own forces on a 30 Im section of road would be phased out and completed
by contract if a Bank loan were forthcoming\. Under a USAID-financed project,
local contractors are replacing old wooden bridges with modern reinforced
structures over a 204 km length of the road\. The 53 Im section south frs;n
Songhkla carries ovjer 1\.000 vehicles per day and will be built to Class I
standards) the remaining length to Class II staLdards0
Nakorn Pathom - Prajuab Highway
39\. The existing highway linking Bangkok with areas to the southwest is
inadequate for the heavy traffic using it, particularly at its northern end\.
Improvement to the 55 km section from Bangkok to Nakorn Pathom is expected
to commence in 1963 with financial assistance from the U\.S\. The section of
highway included in the project extends southward from Nakorn Pathom, a dis-
tance of 266 km over low flat terrain\. Old timber bridges have recently been
replaced with modern concrete structures under a USAID project, but the earth-
works, roadway width, and surfacing are still substandard\.
40\. The project provides for improving the 175 km length south from Nakorn
Pathom to Class I standard and the following 91 km down to Prajuab to Class II
standard\. Further studies of the cost and justification for extending the road
improvement beyond Prajuab are also included in the project with a view to pos-
sible Bank-financing at a later stage\.
Design and Execution
41\. Available engineering studies are limited and only of a preliminary
nature for the bulk of the road improvement work included in the project\.
Designs in some detail, however, were prepared originally for the new construc-
tion work between Lampoon-Lampang and for a part of the Songkhla road, totaling
about 100 km\. These designs need thorough review and revision to adapt them
to the new highway design standards introduced in 1962 (see Table 2)\.
42\. The project studies and designs so far have been made by the Depart-
ment of Highways with some assistance from a foreign consulting firm whose con-
tract has now lapsed\. The Department intends to appoint new consulting engi-
neers to undertake the revision and completion of designs, the preparation of
bidding documents, and the supervision of project works\.
43\. The proposed design standards of Table (2) are generally satisfactory
but somewhat extravagant if the so-called "desirable" standards are used for
the traffic volumes indicated in the respective classes\. The Department has
agreed to construct the project roads to the lower or "Minimum" standards, with
the earthworks of Class II roads being built to "desirable" widths in order to
facilitate future pavement widening as traffic increases\. These standards
are considered adequate for the traffic volumes forecast; they were con-
firmed during loan negotiations\.
44\. Bidding and contract documentation for the Bank-financed construction
would be similar to that currently in use on highway works financed by USAID
under the supervision of U\.S\. consulting engineers\. The documentation is bas-
ically satisfactory; details would be subject to approval by the Bank prior to
advertising for bids\. Bidding would be on a unit price basis and open to in-
ternational competition; the approximate size of individual contracts was
discussed during negotiations with a view to ensuring their being sufficiently
attractive to foreign construction companies\. The construction period is ex-
pected to be about four years, commencing early 1964\.
- 9 -
45\. There are about thirteen qualified domestic bridge construction com-
panies in Thailand capable of both designing and constructing complicated
bridge structures\. Most of these firms developed over the past six or seven
years since the inception of the USAID bridge replacement program\. About
five or six domestic highway construction companies have the capacity and ex-
perience to undertake major works similar to those included in the project\.
Three foreign contracting companies are currently working on highways in Thai-
land\. iHore foreign companies will be needed, however, to undertake the high-
way development program; it would be beneficial to the domestic construction
industry if these foreign companies were to work in joint venture with the
smaller local counterparts\.
Construction Cost Estimates and Foreign Component
46\. The Department's cost estimates for highway construction and improve-
ment are only preliminary\. They are considered sufficiently accurate for the
purpose of commencing lending operations for highway financing in Thailand
since a) ample contingency allowances have been included in the cost of the
project, and b) an undertaking has been sought from the Government to finance
any shortfall in both local and foreign currency cost\. As will be shown later,
the economic justification is ample enough to allow for a substantial increase
in construction cost without prejudicing the justification\.
47\. Estimates of the principal quantities of work to be executed have
been based upon original engineering drawings for new construction (with some
allowance for the changes in design standards) and upon recently compiled road
inventories for the imDrovement of existing roads\. The quantities for such
items as sub-base, base and paving lend themselves to fairly accurate estima-
tion\. These items account for about 60% of the estimated project cost net of
contingencies\. A further possible variable has been virtually eliminated,
since major bridges have already been completed on 470 km, or 75% of the proj-
ect road length\.
48\. The unit 'orices used in estimating are realistic; they are based upon,
but slightly higher than, the average unit )rices recently submitted by domestic
and foreign construction companies for similw- highway work in Thailand\.
49\. A typical construction cost estimate for a section of project road
is given in Table 8\. Incorporated in the cost estimates are provisions of 10%
on the principal work items for such minor miscellaneous work as land clearing,
minor betterments, traffic signs, etc\., and also a contingency allowance of
25% for possible additional quantities of trork or other cost increases\. No
specific allowance has been included for escalation or possible inflationary
trends during the construction period since general cost indices have been
re'sonably stable in Thailand over the past 5 years\.
50\. Construction costs per km for highway improvement in the flat and
rolling terrain traversed by the major length of the project roads averages
around US,60,COO, including contingencies but excluding the cost of engineering
and supervision\. The average cost of newr construction over the difficult moun-
tainous Lampoon - Lampang section is estimated at about US:200,000 per km,
almost half of which is accounted for in heavy earthworks\.
- 10 -
51\. No detailed study has yet been made of the foreign component of cost
of highway construction in Thailand\. Construction equipment, fuel, steel,
asphalt, explosives and many other important highway construction elements must
be imported; only cement is now produced locally in sufficient quantities to
meet the country's requirements\. Inquiries among highway contractors and con-
sulting engineers in Thailand, and a comparison with similar conditions in
other countries, suggest that an appropriate foreign component of cost of con-
struction would be somewhat more than 50% if executed by foreign contractors
and about 40% by domestic companies\. It has been assumed that from one-half
to two-thirds of the work would be carried out by foreign companies, and a
corresponding proportion of 45% of total cost has been tentatively used in
assessing foreign currency requirements\.
52\. On the above basis, the foreign component of construction cost for
the three project roads is US$21\.1 million equivalent, including the contin-
gency allowance\. Estimates of total construction cost with a breakdown into
probable annual local and foreign currency requirements are given in Table 9\.
The annual requirements assume construction work to commence early in 196h,
the intervening period being taken up with engineering and bidding of the most
important sections of road\.
53\. As mentioned above, the loan amount has been based upon construction
cost estimates and a foreign component of construction cost which are only ap-
proximate\. These two factors will be determined more accurately by the con-
sulting engineers in the early stages of the project\. It was emphasized to
the Government delegation during loan negotiations that if after a check by
the consultants of cost estimates and foreign component:
a) the proposed loan amount proves too large, then the
surplus amount either be cancelled or, with the Bank's
approval, applied to a subsequent phase of highway
construction; and
b) if the proposed loan amount proves too small, then the
percentage of Bank participation in project expenditures
shall be reduced accordingly and the Government shall
make good arny shortfall in foreign or local currency as
required\.
C\. Highway M4aintenance Requirements, and 1iscellaneous Items
54\. Highway maintenance operations in Thailand have never been highly
mechanized; the maintenance equipment presently available is mostly old and
inefficient in operation\. The purchase of US$6\.8 million of new maintenance
equipment and spare parts (see Table 10) is included in the loan amount for
the purpose of replacing existing itemis of old equipment and mechanizing main-
tenance operations to a higher degree\. Procurement procedures were discussed
and agreed during loan negotiations\.
- L\. -
55\. Field forces of the Department of Highways maintain the national
network and also engage in some new construction and improvement\. They are
organized into about 50 Districts which in turn are grouped into 12 Field
Divisions\. Technical and financial supervision of the Field Divisions is
only loosely exercised through a central I1aintenance Division in Bangkok\.
Central Workshop and Equipment Divisions in Bangkok undertake major over-
hauls of equipment for those Field Divisions not having adequate repair
facilities of their own\.
56\. A proposed reorganization of the Department over the next twTo to
three years with the advice of consulting experts is expected to correct the
present lack of headquarter control and guidance\. Field Divisions will
gradually withdraw from all construction work and will concentrate upon high-
way maintenance\. Surplus heavy road construction equipment, unsuitable for
maintenance, will be made available to contracting companies\.
57\. With little change, the existing field organization forms a suitable
basis for developing the highvay maintenance effort of the Department\. There
are already small workshops for performing routine servicing of equipment and
simple mechanical repairs in each Field District; ten of the twelve Field
Divisions have more substantial and better equipped workshops, three of Tihich
are capable of handling heavy repairs of construction and maintenance equip-
ment\. U\.S\. aid funds amounting to almost US7'200,000 have been expended on
mechanic's hand tools and shop machinery during recent years\. An effort has
also been made to initiate a training program for maintenance engineers,
mechanics, operators and supervisory personnel with the advice of the Depart-
mentts previous consulting engineers\.
58\. The Department is in the process of appointing competent consulting
engineers acceptable to the Bank to help draw up and implement an adequate
future highway maintenance program\. The consultants' scope of work will in-
clude advice on organizing Ilaintenance and Equipment Divisions within the
Department, a review of and recommendations for improving present maintenance
procedures, and the continuation of the training program for personnel\. This
work forms part of the general consulting services directed toward reorgan-
izing the whole Department and referred to again in para 63 below\.
59\. The Government is fully cognizant of the need for an increased
maintenance effort if the full benefit of an improved highway network is to
be realized\. This is reflected in the planned future allocations to highway
maintenance by the Budget Bureau\. Past expenditures and planned operational
budget allocations show a rise from the level of $500-600 equivalent per kil-
ometer of road maintained during the past few years to around ^1,000 per kil-
ometer in five years' time\. The relatively high increase is partly accounted
for by allowances for deferred maintenance and betterments\.
6o\. Included in the loan amount is the sum of US"300,000 equivalent for
the purchase of mechanized accounting machines to improve the present ineffi-
cient manual methods of budget control, contracting, warehouse and cost ac-
counting, and to provide also for the purchase of surveying and other tech-
nical equipment\.
- 12 -
D\. Consulting Services and Costs
61\. Consulting engineers were assisting the Department of Highways from
1959 under an agreeraent with the U\. S\. Government\. The engineering contract
was allowed to lapse in mid-1962\. The scope of work covered advice and assist-
ance to the Department in planning a national highway system compatible with
the economic needs of the country\. Only a few improvements are noticeable
from thlese services, however--mainly in the fields of soil mechanics, equip-
ment repair and servicing, and with some slight improvement in planning opera-
tions\. It is desirable that consulting engineering advisory services be con-
tinued along similar but more effective lines\.
62\. In 1962, under the auspices of USAID, a U\. S\. consulting firm, Public
Administration Service (PAS), made a study of the organization and administra-
tion of the Department of Highways with particular reference to the financial
and administrative aspects\. The PAS report contains many useful recommlenda-
tions for improving highway management by the Department, and could be accepted
as a basis for introducing such improvements as are desirable in connection
with Bank lending to Thailand for highways\. The report proposes in essence,
the institution of three Deputy Directorates of Administration, Engineering,
and Operations (see Table 3)\.
63\. USAID has contracted and will finance the servicesof PAS for an
initial period of two years commencing January 1963 to advise on the organiza-
tion of the Deputy Directorate of Administration\. The Department will appoint
a further conpetent consulting engineering firrn, acceptable to the Bank, to
complement the services of PAS and advise on the organization of the Deputy
Directorates of Engineering and Operations, with particular enphasis on high-
way maintenance\. The Government has requested the Bank to assist in financing
the cost of such services\. In liaison with USAID, the Bank has already assist-
ed the Government in drawing up suitable terms of reference\. During loan nego-
tiations, it was confirmed that a reorganization of the Department of IHighlways
will be carried out along the lines of the PAS recommendations\.
64\. The Department proposes appointing further consulting engineers
acceptable to the Bank to undertake highway studies, design, documentation, and
the supervision of construction work included in the project; the Bank has
also assisted in drawing up suitable terms of reference for this work\. Sub-
sequent phases of any Bank financing for highway construction in Thailand, would
be decided after consideration of the interim engineering and economic studies
of the five additional sections of road to be carried out under the present
project (see Annex B)\.
65\. The sum of US$5\.9 million equivalent has been included in the loan
amount to cover the estirnated foreign costs of the various engineering services
described, and also to provide for the technical training outside Thailand of
selected local personnel, at an approximate foreign cost of about USUl00,000
equivalent\. The latter item has been included at the request of the Govern-
ment and indicates an awareness of the greater future need for properly quali-
fied and trained Thai engineers in the implementation of its highway develop-
ment program\. It is felt that such a training program will be useful and
should be encouraged\. The total sumfor engineering and training is composed
of the following items;
- 13 -
(i) US$3\.0 million equivalent for the studies, engineering
and supervision of construction and improvement of the
three project roads (totaling 628 km and estimated to
cost US$46\.9 million) included in the first phase of
the program (reference para 42);
(ii) US$2\.3 million equivalent for the studies, engineer-
ing and contract documentation for a further 1034 km
roads (estim,ated at $53\.8 million) to be constructed
in subsequent phases of the program (reference para 64);
(iii) US$0\.5 million equivalent for a firm of consulting en-
gineers to advise the Department of Highways for an
initial two-year period in its reorganization program,
with particular emphasis on the development of an
efficient highway maintenance organization (reference
para 63);
(iv) US$100,000 equivalent to finance the cost of sending
selected Thai engineering graduates abroad for tech-
nical training courses with approved State Highway
organizations in Europe or the U\.S\.A\.
66\. The costs of engineering services are only approximate; they have
been assessed mainly on a percentage of construction cost basis and checked
roughly against anticipated man-months of work required\. They are comparable
with the cost of similar work and are considered reasonable\. For details and
a breakdown into annual amounts see Table 11\.
E\. Summary of Costs and Financing
67\. A summary of the project costs is given below:
US$ million equivalent
Total Local Foreign
1) Road construction and
improvement 46\.9 25\.8 21\.1
2) Road maintenance equipment 6\.8 1/ 6\.8
3) Accounting machines,
instruments, etc\. 0\.3 - 0\.3
4) Engineering services and
training 8\.6 2\.7 5\.9
TOTAL: 62\.6 28\.5 1/
1/ Planned allocations to the Department's operational budget for highway
maintenance 1963 through 1966 total approximately US$34 million equivalent\.
- 14 -
68\. The foreign costs of the project constitute the subject of the
Governmentts application to the Bank for financing\. The local costs of the
project, including construction, maintenance and engineering, would be fi-
nanced from regular annual budget appropriations to the Department of High-
ways\. No difficulties are envisaged, and an assurance of the prompt applica-
tion of funds and other resources to the project was given during loan
negotiations\.
F\. Loan Components and Probable Annual Disbursements
69\. The proposed loan would provide for financing the following items,
with an appropriate additional allowance for unforeseen contingencies:
US$ million equivalent
1) Road construction and improvement 21\.1
2) Road maintenance equipment 6\.8
3) Accounting machines, instruments, etc\. 0\.3
4) Engineering services and training 5\.9
5) Unallocated contingency allowance 1/\.9
TOTAL 35\.O
1/ An allowance applicable to any item and additional to the 25%
contingency allowance included in item 1)\.
70\. Assuming the loan to be declared effective in the first half of
1963, the annual disbursement rate would probably be as follows:
1963 1964 1965 1966 1967 Total
3\.6- 9\.7 r79 7\.1 5\.9 35\.0 $ million
V\. ECONOMIC JUSTIFICATION
A\. General
71\. Over the ten years ending 1960, the annual increase in Thailand's
Gross National Product was about 5% at constant prices; there is evidence of
a somewhat higher growth rate in more recent years\. The country's present
principal export commodities are rice, rubber and tin\.
72\. The index (1953 - 100) of total agricultural production, including
forestries and fisherires, has increased by about 50% over the past ten years;
spectacular increases have taken place in the production of maize, cassava,
and kenaf (jute), while future prospects appear good for increased rubber out-
put\. The value of manufactured goods and mining products has also shown a
steady increase over the past five years, while over the same period the value
of private capital invested in construction increased by about 50%\.
- 15 -
73\. The economy is expected to continue expanding at a high rate and
will create even greater demands on existing transportation facilities\. There
are grounds to believe that demands for highway transportation are increasing
at a more rapid rate than for alternative modes, the principal of which are
rail and inland waterway\.
74\. The proposed project represents a major effort on the part of the
Thai Government to make good the deficiencies in the country's highway facil-
ities\. The three roads to be constructed or improved under the project are
considered by the Government to be among those of highest priority in con-
tributing to the economic and social integration of the country\.
B\. The Assessment of Economic Benefits
75\. The benefits accruing to the national economy from the construction
or improvement of the project roads are many and varied\. They include, among
others: increased output and improved quality in agriculture and industry;
the opening up of new areas for population settlement; the reduction in trans-
portation costs, travel time, and accident rates; the longer life and quicker
turn-around of motor vehicles resulting in greater usage of the vehicle fleet;
the social integration of isolated communities, particularly in the south near
the Malayan border; facilitating administration, and a general broadening of
the economic and social horizons of the population\.
76\. General qualitative impressions on the economic justification of the
project have been confirmed by comparing those benefits most easily quantifi-
able over some future period with the proposed capitel investment in each road\.
The two principal benefits which have been considered are the savings in trans-
portation costs and the value of increased agricultural production stimulated
by the project works\. Available basic data are scanty but permit a reasonable
assessment of transportation benefits; agricultural benefits are more difficult
to assess\.
77\. Estimated reductions in vehicle operating cost range from about 18%
to about 26% after completion of the project works\. Conservative estimates of
traffic growth generate sufficient benefits from reduced vehicle operating
costs alone to provide satisfactory returns on invested capital over the
assumed economic lives of the project roads\. Part I of Annex A indicates the
method of comparing the present values of vehicle operating savings with total
capital investment, and includes a summary of the basic data used\.
78\. Because of the approximate nature of the construction cost estimates,
further economic analyses have been made to check the effect of increased costs\.
If the construction contingency allowance is increased from 25% to 50%, the
rate of return from savings in vehicle operating costs alone is still satis-
factory for all project road improvements, although only marginal at around
7%-8% for the Chiengmai-Lampoon section\. However, additional benefits from
reduced accidents, property damage and travel time for production workers,
would satisfactorily enhance the justification for this section, which is now
heavily built-up and congested wgith cyclists and pedestrians\.
- 16 -
79\. Supplemental benefits deriving from the stimulus to agricultural
production upon completion of the project roads contribute further to their
economic justification\. Part II of Annex A gives an indication of the esti-
mated additional area brought under crop within a period of 8-10 years after
completion of the project roads\. Although the project investment is not the
only investment required for a full realization of the expected increases in
agricultural production, these increases are dependent to some extent, upon
adequate trunk highways through the regions concerned\.
C\. The Project Roads
Chiengmai-Lampoon-Lampang Highway
80\. The area around Chiengmai supports a higher concentration of persons
per arable hectare than any other part of the country\. The relative isolation
of the community from the rest of the country because of inadequate transpor-
tation facilities has tended to deprive the people of the marketing opportuni-
ties existing outside the region and has also hindered the development of in-
dustry in the area\. In addition to producing typical upland crops such as
vegetables, fruits and tobacco, the immediate service area of the highway is
one of the most important centers of livestock in the country, accounting for
nearly one fifth of the pig production\. The forests of this region also have
large timber resources including teak\.
81\. The proposed 27 Im highway improvement between Chiengmai and Lampoon
traverses a fertile river valley which is well-developed; the 78 km section
between Lampoon and Lampang crosses mostly mountainous terrain with some
undeveloped fertile valleys betwqeen high mountain ridges\. In addition to
serving these potentially productive agricultural areas, the new road section
would provide a more convenient and economic connection with the international
trunk route running nortlhwards from Bangkok to the northern provinces and
Burma\. It would eliminate the necessity of traversing the extremely diffi-
cult mountainous terrain on the presently existing track via Thern, the im-
provement of which to satisfactory standards is impracticable within reasonable
cost limits\.
82\. The railway from Bangkok terminates at Chiengmai, running between
Lampang and Lampoon although on a different alignment from the proposed high-
way\. The railway in this section has many steep grades and sharp curves,
making operating conditions difficult and restricting the size of trains\.
Improvement of the existing alignment would be difficult and costly, and no
major investment in this respect is proposed in the State Railway's 6-year
Improvement Program, 1961 - 1966\. Construction of the highway would help
meet the growing and diversified transportation requirements of the region\.
It is likely that the railway would retain most of its present category of
long-haul bulk freight originating in the area, such as lumber, rice, crushed
stone, charcoal, sugar, cement, etc\., while the more flexible highway facility
is expected to attract traffic in soft fruit, short-haul freight and passengers,
in addition to generating traffic from new activities such as upland cropping\.
An important social and administrative benefit would be a closer integration
than now exists of the three large population centers of Chiengmai, Lampoon
and Lampang\.
- 17 -
83\. The average traffic volume in 1962 on the Chiengmai-Lampoon section
of road was 670 vehicles a day, about 60% of which were trucks and buses\. Nor-
mal traffic has been assumed to grow at a declining annual rate which would re-
sult in a doubling of traffic volume over the next ten years--a reasonable
assumption for a region with such high development potential\. Savings on ve-
hicle operating costs of about 18% are expected after completion of the im-
provement and are alone sufficient to provide a return of about 9%, on the
total investment in the road, including the cost of land, engineering, and
interest during construction (see Annex A)\.
8h\. Construction of the new 78 km Lampoon-Lampang section of road is
justified as an essential link in the development of Thailand's modern high_
way system\. It will comrlement the existing railway facility and will
result in a closer integration than now exists of large and important commu-
nity centers, in addition to facilitating the exploitation of new agricultural
and forest lands\. It is reasonable to expect that about 300 vehicles per day
will use the road immediately after opening\. A meaningful quantitative analy-
sis of the resulting economic benefits from this road section is not possible
with available statistical data and the justification has therefore been based
more upon a broad qualitative judgment\.
Songkhla-Naradhiwat Highway
85\. This project road, 255 km in length, joins three important towns and
seaports, namely, Songkhla, Pattani and Naradhiwat\. Its service area includes
the four largest rubber producing provinces of the country, which in themselves
account for almost two-thirds of the country's total rubber production\. Other
products of the area are fruit, coconut, rice and fish\.
86\. Almost one million people live within 10 km of the existing road,
only half of which is open to traffic throughout the year\. The improvement
of the existing road and its completion to all-weather standards would greatly
facilitate the movement of commodities between the ports and their hinterlands,
thereby contributing toward reduced production costs of agricultural cornmodi-
ties, particularly of rubber, from within the area\. Two irrigation projects
have recently been completed in the Pattani province and others are under way
in the provinces of Songkhla and Naradhiwat\. Improvement and expansion of the
feeder-road system in the Songkhla area is now under active consideration\.
Completion of these schemes will substantially increase the demand for better
trunk highway facilities\. The existing railway in the south does not serve
the area traversed by the project road except near Songkhla\.
87\. A re-planting program for rubber is already underway in the area\.
This program, together with the expansion of new planting stimulated by the
construction of the project road and proposed feeder-roads is likely to re-
sult in a doubling of rubber output in about 15 years' time from the four
provinces served; further details are given in Annex A\.
- 18 -
88\. Traffic volumes in 1962 on the existing road between Songkhla and
Klong Ngae ranged from about 1,200 to 800 vehicles per day, about 55% of which
were heavy trucks and buses\. The remainder of the road carried traffic rang-
ing from about 360 to 220 vehicles per day\. Average savings of about 26% in
vehicle onerating costs are expected after completion of the project road im-
provement\. A modest traffic growth over the assumed economic life of the road
will r-sult in a return on total capital investment of about 15% from savings
in vehicle operating costs alone (see Annex A)\. Supplemental agricultural
benefits, mainly from increased rubber output, provide additional justification\.
Nakorn Pathom - Prajuab HighTray
89\. The Government places high priority in improving the highway connec-
tion between Bangkok and the southern region of Thailand\. Improvement of the
55 km section between Bangkok and Nakorn Pathom will be commenced shortly with
the financial assist-'nce of USAID\. The project provides for a continuation of
the high-Tay improvement southw-ard from Nakorn Rathom for 266 kE in the first
phase of Bank-financed operations\.
90\. The region is presently served by both road and rail systems which
run rou ghly parallel for about 500 km south from Bangkok\. In earlier times,
goods and passenger traffic moved almost solely by rail, and consequently the
larger community centers are all located at fairly regular intervals along
the railway\. The road system appears to have developed essentially as a series
of feeders to these railheads, the feeders ultimately becoming connected at
their extremities to form a continous route\. As highway transport developed
and became more efficient, rail transport gradually gave way to competitive
truck and bus services over an ever expanding area from Bangkok as center\.
91\. It is significant that although alternative rail transport is avail-
able, even the present poor road facility carries traffic volumes (80% of which
are trucks and buses) ranging gradually down from about 1,300 vehicles a day
100 km from Bangkok to about 400 vehicles a day near Prajuab, 300 km from
Bangkok\. A large proportion of this traffic is through traffic to or from
Bangkok, indicating the high demand for a trunk road facility in addition to
a rail facility within an approximate radius of 300 km from Bangkok\. Near
Drajuab and further south, the highway traffic pattern changes, with much less
through traffic but with a marked build-up near railheads, indicating an in-
creasing preference for rail transport beyond this approximate radius at the
present time\.
92\. The project road between Nakorn Pathom and Prajuab (and also the
alternative rail facility) is occasionally flooded and impassable over low-
lying sections during the rainy season, causing delays of up to three or four
days\. The project works provide for raising the road in these sections and
generally strengthening and widening the pavement and earthworks\. Savings in
road vehicle operating costs of at least 18% are expected after improvement\.
These savings applied to projected traffic over the useful economic life of
the road would alone provide a return of about 17% on total investment (see
Annex A)\.
- 19 -
93\. In December 1962, the Bank loaned US$3\.4 million to the Government
to assist in financing an irrigation project near Petchburi, with the prime
objective of increasing the output of paddy, bananas, fruit and vegetables\.
The bulk of this produce will probably be transported over the project road
for absorption in the Bangkok market or for export\. The proposed road im-
provement will further increase the benefits deriving from the irrigation
project, in addition to providing an incentive for greater agricultural
activity in other parts of its service area (see Annex A)\.
D\. Further Road Studies and Engineering
94\. In addition to the three sections of road reviewed-above, the pro-
posed project includes the field survey, engineering studies, design and
preparation of bidding documents by consulting engineers for five other road
sections totaling 1,034 km in length\. All the roads are open to traffic, al-
though some for only part of the year; the necessary works generally involve
improvement of the existing road to appropriate standards with the possible
relocation of some sections\.
95\. The roads are considered by the Government to have a high priority
and are all proposed for construction in the 8-year Highway Development Pro-
gram\. The consulting engineers would prepare interim reports, including all
relevant economic and cost data, which would be presented to the Bank for
consideration in connection with the possible financing of subsequent phases
of the highway program\.
96\. Scarcity of statistical data at present precludes anything more
than a broad qualitative judgment to be made concerning the economic justifica-
tion for individual road investment\. Rough estimates of construction costs
are given in Table 6, and a brief description of each road with a summary of
agricultural and traffic data in Annex B\. A review of these data, supported
by field inspections of most of the roads, indicates reasonable prospects of
their suitability for future Bank financing, and justifies their inclusion in
the project for further study and design\.
97\. In view of the scarcity of statistical data and of the importance
of such data in determining priorities of construction within the 8-year
highway development program and in facilitating further Bank lending opera-
tions, assurances were sought from the Government during negotiations that
adequate arrangements would be made within the Department of Highways for
the collection, processing and recording of statistics relevant to the economic
and technical aspects of the highway development program\. The Government
will be assisted in developing such arrangements by the consultants referred
to in paragraphs 63 and 64\.
- 20 -
VI\. CONCLUSIONS AND REOMIYENDATIONS
98\. Although engineering is only preliminary and cost estimates approxi-
mate, the project is considered suitable for commencing Bank lending opera-
tions for highways in Thailand\. No serious deviations are expected from the
estimates presented in the appraisal report but adequate measures for adjust-
ing to any such deviations and for ensuring adequate project financing were
discussed during loan negotiations\.
99\. The project is economically justified from the resulting reduction
in vehicle operating costs over the improved roads; additional economic bene-
fits will accrue from the stimulus to agricultural production\. The justifica-
tion is still satisfactonr with an allowance for substantial increases in the
cost estimates\. An important social and administrative aspect of some of the
project roads is the closer integration of relatively isolated communities\.
100\. Agreement was reached during loan negotiations on the points men-
tioned below:
a) design st,andards for the project roads (paragraph 43);
b) procurement procedures and contract documentation; the
size of individual construction contrac-ts, and the tenta-
tive program of construction (paragraphs 44, 54);
c) the measures to be taken for adjusting the loan amount to
revised cost estimates and foreign component (paragraph 53);
d) that the Government would promptly provide adequate funds
and other resources required in connection with the project
(paragraphs 53, 68);
e) the highway maintenance equipment items, the accounting
machines and other technical equipment to be purchased
from the proceeds of the loan (paragraphs 54,60);
f) the appointment of consulting engineers with appropriate
terms of reference for the different categories of project
work (paragraphs 58, 61-66);
g) the reorganization of the Department of HighIrays along the
lines recormmended in the PAS report of 1962 (paragraph 63);
h) arrangements for the collection of statistical data relevant
to the economic appraisal of highway projects (paragraph 97)\.
101\. The project is considered suitable for a Bank loan of US$35 million
equivalent; a suitable term would be 20 years with a 5-year period of grace\.
ANNEX A
Page \.
THAILAND
NATIONAL HIGHIWAY PROJECT
Assessment of Economic Benefits
I\. REDUCED TRANSPORTATION COSTS
A\. General
1\. The Highway Department in Thailand has only recently started
compiling statistical data relating to traffic volumes, transportation costs,
volumes and values of commodities moved, etc\. Existing data are scanty, but
nevertheless, are considered sufficient to give some meaningful quantitative
impression of the economic benefits accruing to the economy from savings in
transportation costs over the newly constructed project roads compared with
existing unimproved roads\.
B\. Vehicle Operating Savings
2\. Wgith the assistance of consulting engineers, the Department has
drawn up a comprehensive table of motor vehicle operating costs at different
running speeds on roads with different surface conditions, widths, gradients,
curvature, etc\. The table is based upon a U\.S\. AASHO(-) publication ac½pted for
conditions and costs in Thailand\.
3\. Data pertinent to the existing and improved conditions of the
project roads have been extracted from the table and, with some slight adjust-
ments based upon additional data collected in the field, are given in Table
(i) to this Annex; they are summarized below:
Paved
Poor in Good
Road Surface: Earth Gravel Blacktop Condition
Operating Cost: 108\.0 93\.7 83\.6 68\.3
(-LAoo B3/kin)
4\. rThe operating costs above relate to an "equivalent passenger car",
the unit into which traffic volumes are converted by the Department for the
purpose of determining design standards (see Table 2) and for reviewing
economic priorities\. Trucks and buses are rated as equivalent to three passen-
ger car units, which is within tho: range su--ested by \.'/A\.SIO for economic
c-lc-leti½ns\. The costs orc considered rcasona-ly representative of actual
conditions on the project roads before anJ after improvement\.
5\. Toble (ii) of t!lis lxnex dives the operatin- sInrin--s for an equiva-
lent c r ir t travel'in- the length of the Droject roads before snd after
imnrovement; the percent -e savings ran-e irom 18'4 to 26;; dependent upon the
present condition of the various sections\.
(K-) AASHO: American Association of State Highway Officials\.
ANNEX A
Page 2
C\. Traffic Projections
6\. Basic data are insufficient to enable future traffic growth to be
estimated by combining individual increases in different traffic categories
such as normal, generated, diverted or development\. Considerations have been
limited therefore to only the probable normal traffic growth, perhaps an overly
conservative approach, since after completion of the project, additional traffLc
will undoubtedly be developed by intensified agricultural production or will
be diverted from alternative transport modes\.
7\. Traffic counts are available at different points along the project
roads for the past two years, but do not provide a sufficient basis for extra-
polation\. Normal traffic growth over the project roads has been assumed to be
slightly higher than the average growth of the country's vehicle fleet taking
into account the relatively greater importance to the national economy of these
roads and the regions they serve compared with others in the highway network\.
1962 traffic volumes have been projected at a linear rate with absolute annual
increments equal to 10% of the 1962 figures (compared to 9% for the 1962
country wide vehicle growth)\. The resulting growth rates in various years
compared with the projected country average are summarized below:
1962 1965 1970 1975 1980
Country average (%); 9 7 5 4 332
Project roads (%): 10 72 51 42 32
D\. Estimation of Benefits
8\. The savings in vehicle operating cost by way of longer life of
vehicles and tires, reduced fuel consumption, fewer repairs, etc\., multiplied
by the traffic forecast for any one year during the economic life of a project
road, gives a current measure in that particular year of the benefits occruing
to the national economy\. Allowance should also be made for any change in
annual current expenses such as road maintenance\. Here, it has been assumed
that there will be no substantial change in maintenance costs per km - a
conservative assumption since any change would probably result in a further
saving\.
9\. The annual benefits over a twenty year period (the assumed useful
economic life of the improved project roads) have been reduced to present
values at a discount rate determined by trial and error such that the cumula\.
tive totals balance the total capital investment including construction costs,
interest, engineering, land, etc\. A typical calculation of the internal rate
of return for one of the project roads is shoiTn in Table (iii) of the Annex; a
summary o-f the data used and tho results of tho 3nalysis are given in Table (iv)\.
10\. Because of the approximate nature of the cost estimates, it is
desirable to consider the effect on the economic justification should con-
struction costs increase appreciably\. Current cost estimates already include
ANNEX A
Page 3
a 25% contingency allowance for possible increases; if this allowance were
increased to about 50% the effect on the economic justification would be as
follows:
Approximate Return on Investment (%)
Ref\. Section of Road Cost Estimates Cost Estimates
including 25% including 50%
contingency contingency
1 Chiengmai - Lampoon 9 7-8
2 Songkhla - Naradhiwat 15 12
3 Nakorn Pathom - Prajuab 17 14
II\. AGRICULTURAL BENEFITS
A\. General
11\. The proposed highway project will be an important factor in inducing
production from the service areas of respective project roads\. Limited agri-
cultural statistics have been collected by local and foreign experts in the
National Economic Development Board of the Government with a view to assess-
ing roughly the amounts and values of the resulting increased production due
to intensification of present production, diversification of crop patterns,
and cultivation of new areas\. With the information available, the reliability
of these data is difficult to check, but they are believed to be accurate
enough to give an idea of the expected agricultural benefits\.
12\. Details of areas under crop, gross farm values in 1959 and the
expected increases in 1975, are given in Table (v) of the Annex for the pro-
vinces through which each project road passes\. The percentage increase in
areas under crop does not necessarily reflect the expected increase in gross
farm production due to probable change in crop patterns; generally, values of
production will be greater because of the greater incentive to grow the higher-
valued perishable and soft produce\. The postulated increases and changes in
pattern of agricultural production are highly dependent upon the improvement
(or construction) of the main trunk roads through the regions considered\.
B\. Project Roads
Chiengmai - Lampoon - Lampang Highway
13\. The climate and soil conditions in the general service area of this
road are ideal for raising such upland crops as vegetables, fruit, onions,
garlic, chili, tobacco, etc\., for which there is a large market domestically
and to a lesser extent for export\. Cash crops such as highly perishable
fruits (lum-yai) and vegetables appear to be particularly promising as high-
income yielding produce for the region\.
ANNEX A
Page 4
1h\. Estimates prepared by Government experts indicate that, after the
road improvement and construction, the cultivated area in the Chiengmai -
Lampang region wou\.d expand over 50% to about 416,QOO hectares by 1975 and
the gross value of agricultural production would increase by about 75% (L)
compound per annum) over 1959 values\. The estimates appear to be rather
conservative but may be used to illustrate the order of magnitude of resulting
benefits\. The latest available figure of the gross value of farm production
(1959) is Baht 517 million; taking this as base and assuming 50% of gross
production to represent net production, a rough calculation suggests that the
cumulative current value of the annual increase in net agricultural production
of the region would equal the total cost of highway improvement and construc-
tion in less than 9 years\. Furthermore, the increase in agricultural produc-
tion would be supplemented by increases in industrial output and other
activities within the service area for whiich no quantitative estimate is
possible at this time,
Songhkla - Naradhiwat Highway
15\. The Governmentts program for planting new and re-planting existing
areas with rubber trees of an improved quality, and for increasing the
efficiency of operation by establishing estate-type management, is expected
to increase substantially the output of rubber from the four provinces
benefiting directly by the construction and improvement of this project road\.
16\. The current average annual yield per hectare in Uhis region is
estimated to be less than 500 kilos; yields from re-planted areas might be as
high as 1,000 kilos per hectare\. Rubber output from the region might well
double fron its present level of 120,000 tons by the mid-1970's, accompanied
by a fall in the cost of production\. lio major problem of marketing the
increased rubber output is expected\. The relatively marginal position of
Thailand as supplier to the world rubber market improves somewhat the country's
opportunity for successful marketing\. Though the third "largest" producer
of rubber in the world, Thailand only produces about 9% of the world supply,
the other two larger producers, Malaya and Indonesia, accounting for about
70M of the total world output\.
17\. The assumption has been made that the commencement of the project
road works would stimulate the re-planting and expansion of the rubber
producing areas\. Making due allowance for the fact that newly planted rubber
trees do not begin producing for about 7 years, and assuming that 50, of
gross production would represent net production, the increase in net produc-
tion of rubber alone would eoual the total cost of road improvement in about
10 to 12 years after completion of the improvement works depending upon the
price level of rubber in the world market\.
18\. The production of other main crops of the area, coconuts and rice,
is also expected to increase, while recent study shows promise for palm oil
production\.
ANNEX A
Page 5
Nakorn Pathom - Prajuab Highway
19\. The agricultural produce from the general service area of this pro-
ject road consist principally of paddy, fruit, sugar cane, bananas, pineapple
and vegetables\. The value of production is expected at least to double in a
15-year period after completion of the highway improvement, equivalent to an
annual growth rate of about 5%\. Taking as base the 1959 figure of gross value
of farm production at Baht 570 million approximately, and assuming 50% of gross
production to represent net production, the increase in net production would
equal the total cost of improving the highway in about 8 years after completion\.
20\. The projected increase in production is dependent also on proposed
irrigation projects in the area, such as the Bank-financed Petchburi scheme,
in addition to the road improvement\. It is not possible to assign specific
portions of the resulting benefits, one to irrigation and another to highway
improvement\. However, the efficient transportatlon of agricultural products
within the region and a realization of the full benefits from such irrigation
projects is dependent to a high degree upon the proposed trunk road improve-
mnent\.
ANNEX (A)
Table (i)
THAILAND
NATIONAL HIGHiAY PROJECT
Estimated Operating Cost of an 'Eqaivalent Passenger Car" 1/
(Satang or 1/100 Baht per km)
Road Surface: Earth Gravel Black Top Pavement
in unsatistactory in good
condition condition
Assumed Average Running
Speed (kmph) 4o 55 55 65
Cost of Operation:
Fuel 36\.0 33\.5 30\.5 27\.7
Tires 13\.0 11\.3 8\.5 5\.6
Oil 3\.3 2\.9 2\.6 2\.0
Maintenance 26\.8 21\.3 17\.3 13\.0
Depreciation 18\.9 16\.6 lo\.6 13\.0
Drivers' wages 10\.0 8\.1 8\.1 7\.0
Total 108\.0 93\.7 83\.6 68\.3
(us5\.40¢) (4\.70) (4\.2¢) (3\.4¢)
1/ Trucks and Buses are rated equal to three "equivalent car" units\.
2/ An allowance equivalent to the cost of driver's and assistant's
wages for commercial vehicles with an appropriate weighting for
the average proportion of such vehicles in project road traffic\.
THAILAND
NATIONAL HIGItIAY PROJECT
Comparison of Operating Costs
Before and After Project Road Improvement
Unit Cost of Total Cost
Traffic Origin Operation of Pas- Length of of Operation %
Ref\. and Destination Condition senger car (per km) Section per Vehicle-trip Saving
(1/100 Baht) (km) (Baht)
1\. Chiengmai - Lampoon Before improvement 83\.6 27 22\.6
After improvement 68\.3 27 18\.4
Saving 4\.2 18%
2\. Songkhla - Naradhiwat Before improvement 83\.6 107 89\.5
93\.7 100 93\.7
108\.0 50 54\.0
257 237\.2
After improvement 68\.3 257 175\.5
Saving 61\.7 26%
3\. Nakorn Pathom - Prajuab Before improvement 83\.6 266 222\.4
After improvement 68\.3 266 181\.7
Saving 40\.7 18%
CDX
ANNEX (Al
TABLE (iii)
THAILAND
NATIONAL HIGHWAY PROJECT
Songkhla - Naradhiwat Highway
Economic Return from Vehicle Operating Savings
Equivalent Annual Savings
Daily Volume Current Discounted Cost of
Year of Traffic/ Value at 15% Improvement -
----------- Baht million -----------
1 1967 '/ 1,900 42\.7 42\.7 428
1968 2,030 45\.6 39\.6
1969 2\.,160 48\.6 36\.8
1970 2,290 51\.5 33\.9
5 1971 2,420 5h\.4 31\.2
1972 2,550 57\.3 28\.5
1973 2,680 60\.2 26\.1
1974 2,810 63\.2 23\.8
1975 2,940 66\.1 21\.6
10 1976 3,070 69\.0 19\.6
1977 3,200 71\.9 17\.8
1978 3,330 74\.9 16\.1
1979 3,460 77\.8 14\.6
1980 3,590 80\.7 13\.2
15 1981 3,720 83\.7 11\.8
1982 3,860 86\.8 10\.7
1983 4,000 89\.9 9\.6
1984 4,140 93\.1 8\.6
1985 4,290 96\.5 7\.8
20 1986 4,440 99\.9 7\.0
421\.0 428
1/ weighted average over whole length in equivalent passenger cars\.
2/ including construction, engineering, land, and 6% interest during
construction\.
3/ expected year of completion for whole 257 km length; vehicle
operating benefits accruing from partial lengths prior to total
completion have not been included\.
T,HIIAND
NATIONAL HIGHWAY PROJiCT
Summary of Economic Data
(Vehicle Operating Savings Only)
Traffic Data % Trucks Equivalent Passenger Cars 2
Ref\. Road Section Length 1962 Traffic & Buses 1962 1967 1972 198O
1 a) Chiengmai - Lampoon 27 670 57 1,440 2,200 2,950 4,15o
b) Lampoon - Lampang 78 0 (70) 0 (6OCL700 C
2 Songhkla - Naradhiwat 257 1,200 -220 55 -85 1,250 1,900 2,550 3,590
3 Nakorn Pathom - Brajuab 266 1,800 - 400 55 - 80 2,500 3,750 5,000 7,000
1 Vehicles per day over different sections\.
Weighted average over whole length\.
7/ The equivalent of 250 - 300 vehicles/day likely after opening\.
Financial Data (B million) Assumed
Road Approximate
Above Construction Engineering Interest during Land Total Maint\. Internal Rate
Ref, Construction CaDital Savings of Return ()
1 a) 32 3 3 9 47 0 9
b) 288 29 41 5 363 - -
2 318 32 48 30 428 o 15
3 337 34 53 37 461 0 17
g/ Statistics inadequate for a meaningful determination\.
ANNEX (A)
Table (v)
THAILAND
NATIONAL HIGHWAY PROJECT
Past and Projected Agricultural Production
in the Zones of' Influence of the Project Highways
Actual Projected
1959 1975
Provinces Total Area Gross Area under crop
Beneiting Land Area Under Farm Value
1,0 100 1,000 1,000 X increase
hectares hectares million hectares over 1959
1) Chiengmai - Lampang Highway (105 km)
Chiengmai 2,300 137 302 208 52
Lampoon 44° 51 92 83 61
Lampang 1,250 79 123 125 58
Total 3,990 267 517 416 56
2) Songhkla - Naradhiwat Highway (257 kcm)
Songhkla 670 167 456 292 79
Pattani 200 102 370 167 64
Naradhiwat 420 118 505 250 112
Yala 470 83 374 208 150
Total 1,760 470 1,705 917 95
3) Nakorn Pathom - Prajuab Highway (266 lcm)
Nakorn Pathom 220 127 176 167 31
Ratburi 510 114 233 167 46
Petchburi 630 64 78 83 31
Prajuab 390 20 85 26 30
Total 1,750 325 572 443 36
ANNEX B
Page 1
THAILAND
NATIONAL HIGHWAY PROJECT
Roads to be Studied and Engineered for Future Bank Consideration
A brief description follows of the physical and economic features of
roads included in the project for further study and engineering with a view to
possible Bank financing in subsequent phases of the highway construction pro-
gram\. A tabular summrary of agriculture and traffic data is presented at the
end of this Annex\.
(1) Prajuab - Chumphorn (171 km)
1\. The Governmentts main objective in improving this road is to provide
a better highway connection with the rich southern regions of Thailand\. The
existing road is narrow and unsurfaced\., and is sometimes unusable during parts
of the year\. Old timber bridges have already been replaced by modern rein-
forced concrete structures as part of the USAID - financed bridge replacement
program\. In 1962, traffic volumes ranged from about 350 vehicles per day at
the northern end near Prajuab to about 100 vehicles per day at its southern
end; trucks and buses make up about 70% of traffic\.
2\. The road passes through relatively dry and barren land with Foor
agricultural prospects unless irrigated\. Some pineapple is grown, but at
present the produce is carried to local railheads for transport by rail\. Fish
is the chief produce of this area, particularly around Chumphorn\. A fast
truck service to Bangkok would facilitate marketing of the fish, but it would
seem more logical to consider express refrigerated cars on the railway\.
3\. The trunk highway network to the south of Chumphorn is under con-
struction beyond Ranong, and in the planning stage along the gulf coast\. The
southern region may be regarded as potentially the richost in the country, but
the demands for through truck traffic between this region and Bangkok are
difficult to assess on the basis of available data, and need further study
taking into consideration products best transported by the alternative railway
facility\.
(2) Saraburi - Nakorn Sawan (235 km'
h\. The feasibility study for the improvement or re-location of this road
will be undertaken without Bank financial assistance, but final engineering
and design is included in the project\. The road is part of the main interna-
tional trunk route north from Bangkok to Burma; the section of road northward
from Nakorn Sawan to the Burmese border is currently under study with funds
supplied by USAID\. In 1962 traffic volumes ranged from about 1,400 vehicles
per day just north of Saraburi to 550 vehicles per day near Nakorn Sawan, with
about 65% to 75% trucks and buses\. About 200 km of the present road is poorly
paved and sub-standard in width and alignment; the rest is only roughly
surfaced with gravel\.
ANNEX B
Page 2
54, This region of Thailand is very fertile and is part of the principal
rice producing area of the country; cattle, fruit, and vegetables are secondary
products0 In Decer\.ber 1962 the Bank made a loan of US$506 million to assist in
the further irrigation of the region, The full realization of benefits deriv-
ing from the irrigation project depends to some extent on adequate trunk highway
facilities for the efficient transportati-on of agricultural produce from the
region\.
(3) Loey - Chuinae Khonkaen (215 km)
6s The Loey - Chumphae section (127 km) crosses high ground with many
fertile valleys, a large number of which are not present-ly cultivated\. 1962
traffic was around 80 to 160 vehicles per day, about 80% of which were trucks
and buses\.
7\. The existing poor road is the only means of transportation for this
area where production of fruits and vegetables is greatly in excess of require-
ments for local consumption; lack of good transportation facilities consider-
ably inhibits further development\. The area is expected to become the center
of the Governrent's drive to increase production of improved quality cotton\.
Assuming good road facilities, it is estimated that the cotton product-ion
from thle area could probably be increased fourfold to about 60,000 tons in a
10-year period,
(L) Udorn - Nakorn Panomn (2h4 km)
8\. This highway serves a relatively densely populated area where the
existing road is the only means of transportation\. The poor quiality of the
existing earth and gravel road hampers communication within the region, and
consequently each cormunity is obliged to maintain a considerable degree of
eccnomic self-sufficiency\. 1962 traffic volumes ranged from about 180
vehicles per day at the western extremity to about 110 vehicles per day near
Nakorn Panom; trucks and buses made up about 80% to 90% of this traffic\.
9\. The area contains extensive areas of undevelopod Land and enjoys a
relatively ample and well-distributed rainfall throughout the year in contrast
to the re,st of the north-east region, where concentration of rainfall in a
short rainy season hampers agricultural development\. Flood control and irriga-
tion projects in the area are in an advanced stage of preparation under the
sponsorship of the Mffekong Committee and the Royal Irrigation Department\. The
Department of Agriculture, with technical assistance from the Colombo Plan, is
promoting a cotton development program which should bring a substantial increase
to the cash income of the provinces served by this road\.
(5) Nakorn Srithamaraj - Kantang (162 km)
10\. This road cuts across the southern isthmus almost laterally\., joining
the important coastal towns and seaports of Nakorn Srithamaraj on the east coa-,M'
and Kantang on the west coast; it serves mostly fertile land, with great
potential for development of rubber, rice and fruit\. Several irrigation pro-
jects have recently been started in this area, completion of which wi,Ll re,2iult
in more land availaole for cultivation\. Tin is an important mining prnduct of
the area\.
AtU~lX F3
11\. The condition of the road is poor, but nevertheless traffic vhurx'es
in 1962 ranged from a minimum of 250 vehicles per day to about 670 vehicles
per day, about 80% of which were trucks an( buses\. The number of ships
calling at Kantang in recent years has numbered over 1,600 annually, about
20% of which were foreign-going and the rest coastal, Statistics are not
available for the larger, more important port of Nakorn Srithamaraj\.
THAILAIND
NATIONAL HIGHWAY PROJECT
Agricultural and Traffic Data for Additional Roads
to be Studied and Engineered
Present ana Projectea Agricultural Frocauction
1959 1975
Area under Gross farm Area under Average
Length crop value crop % increase Daily % Trucks
-(km) 1,000 hectares B -m ilion 1,000 hectares over 1959 Trafric ana buses
1\. Prajuab-Chumphorn 17 8 55 193 72 30 350-1oo 70
2\. Saraburi-Nakorn Sawan 235 -- no data availa'ble - ----------- 1,400-550 65-75
3\. Loey-Chumphae-Khonkaen 215 320 385 460 45 80-270 80
4\. Udorn-Nakorn Panom 244 510 522 670 32 180-11o 80-90
5\. Nakorn Srithamraj-Kantang 162 260 669 440 70 250-670 d0
1,034 1145 1,769 1,642 43
Souroe: Niational Econoric Developmernt Board, Goverm-ent of Thailand\.
Source: liational r-icoriorrL Ij rir~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tr
Table (1)
7:T\.-HAILA D
NATIONAL HIGHWAY PROJECT
The ISationn Rhway ystem, 1962
(Dy Regions and Types of Surface; in Kilometers)
r?egion TP?ved Unpaved Tot\.al Under Const\. Total
(Unpaved)
Northern 555 1155 21 537 2,547
Northeastern 207 2,883 3,090 823 3,913
CentraL 1, 297 782 2,079 - 2,079
Southern E445 ____ 1,753 365 2,118
Tota! 2,'C1) 6,428 8,932 1,725 10,657
Source: Department of Highways
THAILAND
NATIONAL HIGHWAY PROJECT
DESIGN STANLARDS FOR HIGHWAYS
(Adopted by the Department of Highways, January 1962)
A n n u a I E q u i v a 1 e n t A v e r a g a D a i l y T r a f f i C V o 1 u m e
Below 100 100 to 400 401 to 1000 1001 to 2000 2001 to 800O
Minimum Desirable Minimum Desirable Minimum Desirable Minimum Desirable MLnimum Desirable
CLASS V IV III II I
Design Speed (kph)
Flat (F) 60 - 70 85 80 95 90 105 100 115
Topographyl Rolling (N) 45 - 55 70 65 80 75 90 85 100
Mountainous (M) 30 - 40 55 50 65 60 75 70 85
Minimum Radius (m) /
F 150 - 200 290 260 360 330 440 400 530
Topography: R 80 - 120 200 170 260 230 330 290 400
M 5o - 70 120 100 170 150 230 200 290
Maximm Gradient ( 1) /
F 8 5 8 5 7 5 5 4 4 3
Topographyt R 12 7 10 7 8 6 7 6 6 5
M 15 10 12 9 10 8 9 7 8 7
Non Passing Sight Distance (m)
F 80 95 95 120 110 140 130 165 150 190
Topography: R 60 70 70 95 85 UO 100 130 120 150
M 40 50 50 70 65 85 80 100 95 120
Superelevation E - 0\.004 V2/R; Maximum E - 0\.10 M/M of Roadway Width
Width of Pavement (m) 4\.5 5\.0 5\.5 6\.o 6\.o 6\.5 6\.5 7\.0 7\.0 7\.5
Width of Shoulders (i)
TopograpbytF and R 1\.0 1\.5 1\.5 2\.0 2\.0 2\.5 2\.5 2\.5 2\.5 3\.0
M 1\.0 1\.5 1\.5 2\.0 1\.5 2\.5 1\.75 2\.5 2\.0 2\.5
Width of Roadbed (m)
F and R 6\.5 8\.0 8\.5 10\.0 10\.0 11\.5 11\.5 12\.0 12\.0 13\.5
Topography: M 6\.5 8\.0 8\.5 10\.0 9\.0 11\.5 10\.0 12\.0 11\.0 12\.5
Width of Right-of-Way (m) 20 30 30 40 400 60 60 80 60 100
Class of Surface \. Te
\. / -/
(\./\. _Intermediate _T -e _
( Laterite or Dast Palliative
(/
Single Surface Treatment_
Suggested Types of Surface /------Douue Surface Tre0tmen
( ~ ~ ~~~~~~~/ Penetration Macadam /
H/ Nighway designed for the volume of equivalent passenger cars estimated to exist in the next 15 years\. Bus and truck traffic are converted to
equivalent, p -en-r cars in the -sti\. of one bus or truck equals three passenger cars\.
| Based on maximum superelevation of 0\.10 meter per meter of width in formula E - 0\.004 V2/R (V in kph, R in m, E in mrm)
J Grades to be compensated as follows: " for every 5 degrees of curvature over 30 degrees the ruling grade shall be reduced by 0\.1 percent"\.
The degree of curve is defined as the central angle subtended by 100 meter of arc\. Example: assumed ruling grade = 6%, the allowable
inaximun grade for 40 degree curve is 6\.0 - 0\.2 - 5\.8%\.
Source: Planning Division, Department of Highways
T H A I LA N D
HI G HWA Y PROSE CT
Proposed Organization
Department of Highways
|DIECTOR GENERAL|
HIGHWAY
W __ ______ _ _____ ___________ _______ _ _EIGRWPLANNING
r __BOARD
DEPUTY DIMRCTOR GENERAL FOR ADMINISTiATION DEPU7Y DIRECTOR GENERAL FOB ENG( I -
GENERAL SEBVICES DIVISION t FINANCE DVISIO PBOCURENT DIVISION |ICUT-OF-WAY MATERIAL DIVISION LOCATION k DESIGN PLANNING DIVISION,
GENERAL BERVI ~ ~ ~ ~ ~ IDIVISIONi DIVISION
Personnel Management Budgeting & 0 & N Purchasing Land Appraisals, Testing Laboratory Field Surveys Planning &
Records Management I Services Warehousing Negotiation, & Field Tests & Location Programming
Mail & Mesgenger Services I Accounting Contracts and Pre-Qualifi- i Acquisition Inspections Road Design Research & Statistics
Custodial Services | Payrolls & Pre-Audi- cation of Contractors Land Records & Materials Research Bridge & Structure Mapping & Blueprinting
ting Inventory Control of I Management Design Traffic & Safety
Cash ManagelGent Buildings & Building Legal Services Standards
Equipment Library
DEPUBT DIRECTOR GENERAL FOR OPERATIONS
F- -- --j--
CONSTRUCTION DIVISION 1 MAINTENANCE DIVISION EQUIPMENT DIVISION
Field Layout Maintenance Inspection Shops
Construction a end Supervision Parts Storage and
Supervision Operational Records Supply
Operational Records Equipment Manage-
Contractor Evaluation | aent & Records
snd Performance Building
Reports Maintenance
F I F L D 0 N G A N I Z A T I 0 N
| ~ ~ ~ ~~~ R E A - - -- - - -- -- -----
O I V I S T E N S
DISTRICT O FF I CS N F IF L D F 0 C E S
> - } ,, | 4 { ! ~~~~~ ~ ~ ~~~~~~~~~~~~~~~~~ource:
Kingdom of Thailand
Ministry of Con:unications
Department of Highways
OCTOB1R 1962 ImRD-1068
THAILAND
NATIONAL HIGHWAY PhOJECT
Expenditures (and Appropriations), Department of Highways\. 1958-63
(US$ million equivalent)
(excluding financing by USAID)
19 8 1959 1960 1961 2/ 1961/62 2/ 1962/63 2
1 Administration 0\.3 1\.9 1\.4 2\.4 (3\.2) 4\.5 5\.9
2 Road Construction 5\.1 4\.3 4\.0 5\.5 (7\.4) 9\.5 (
( 17\.8
3 Road Improvement 2\.9 2\.9 1\.8 2\.7 (3\.6) 4\.8 (
4 Bridge Construction 0\.5 0\.8 0\.5 0\.9 (1\.2) 1\.0 1\.1
5 Toll Roads and Bridges 0\.3 0\.4 0\.4 0\.2 (0\.3) -
6 Maintenance 4\.5 3\.9 3\.5 4\.7 (6\.3) 5\.6 7\.4
13\.6 14\.2 11\.6 16\.4 (22\.0) 25\.4 32\.2
/ The relatively low expenditures in fiscal 1960 (only 77% of appropriations)
are not considered typical; they are the result of:
a) the fear of a general budget deficit (which did not materialize), and
b) the stringent measures adopted by the newly created Budget Bureau\.
aJ In 1961 the fiscal year changed from a calendar year to the period October 1 - September 30\.
The figures indicated are for the first 9 months expenditure in 1961; those in parentheses
are prorated for a whole year\.
2 Indicating amounts appropriated\. (Note: excepting fiscal 1960, expenditures have almost
equalled or exeeeded appropriated funds)\.
Table (5)
THAILAND
NATIONAL HIGHWAY PROJECT
Motor Vehicle Registration, Composition and Growth
1) Registration and Composition
Year Cars Buses Trucks Total (*)
1950 1io1h0 5,000 6,350 21,490
1951 13s830 ( 4 ) 6,640 (23%) 9,3h0 (29%) 28, 810 (100%)
1952 18,L30 7,940 11,550 37,920
1953 22,240 (4975) ,560 (19%) 14,440 (32/) 45,160 (100%)
1o54 19,950 8,250 16,350 414,550
1955 214,290 (18P%) 9,2 40 (19)) 17,330 (335) 50,860O (100%)
1956 27,620 10,730 17,080 55,,4:30
1557 30,e90 ( 49%) 10,950 (17%) 20,670 (335) 62,510 (100%l )
1958 35t,390 1?,390 22,630 70,110
1959 4?,780 (51%) 1?,760 (155) 28,)450 (345') 83,990 (100%)
1960 54,530 12 600 334,880 102,0:10
1961 (*') 5< 805 M )51 13,1490 (12^) 39,560 (375) 108,850 (100%)
roJ ec ted
1965 78,o000 16,000 58,000 152,000
1970 106,000 (52%) 19,000 (9%) 50,000 (39/) 205,000 (100%)
1980 163,000 24,000 125o000 312,000
°) Average Annual Growth Rates (%)
Actual Projected
1960 1962 196r 1970 1975 1980
Cars 1? 9 7 5 4 312
Buses 5 14 31- 3 21 2)L
Trucks 16 10 8 5- :4 3y
Total 13 9 7 5 14 31
(*) Excluding motorcycles and motor tricycles, which in 1961 numbered
about 37,000\.
Table (6)
THAILAND
NATIONAL HIGHWAY PROJECT
Proposed Eight-Year Highway Development Program, 1963-1970
Anticipated Sources of Funds
or Class of
Ref\. Participants in Financing Highway Work Lengith Estimated Total Cost
(km) (US$ million)
1 I\.B\.R\.D\. ( Improvement and
( New Construction 1,662 111 (29%)
2 EXIM Bank Improvement 388 30 (7%)
3 Other lending agencies a) Improvement 648 9 (26%)
b) New Construction 728 55
4 USAID Improvements already 462 32 (8%)
in hand
v Thai Budget a) Improvements 822 42 A
b) New Construction 731 56 ) (30%)
c) Special Projects ? 20 '
(political & strategic)
5,441 395 (100%)
1/ Including 10% for engineering and supervision
Source: Department of Highways
Table (7)
THAILAND
NATIONAL HIGWJIAY PROJECT
Tentative Bank Portion of Eight-Year Highway Development Program
Class Total
Ref\. Road\. Section Length of± Road / Construction Cost
(km) (B mill) ($mill)
@ 20\.8
Phase (1): Present Project
1\. Chiengnai - Lampang 105 I, II 320 15\.4
2\. Songkhla - Naradhiwat 257 I, II 318 15\.3
3\.(a) Nakorn Pathom - Prajuab 266 I, II 337 16\.2
Subtotal, Phase (1): 628 975 46\.9
Phases (2) and (3): Possible Future Projects
3\.(b) Prajuab G Chumphorn 178 II 218 10\.5
4\. Saraburi - Nakorn Sawan 3/ 235 I, II 272 13\.1
5\. Loey - Khonkaen 215 III 227 10\.9
6\. Udorn - Nakorn Panom 244 III 196 9\.5
7\. Nakorn Srithmaraj - Kantang 162 II 203 9\.8
Subtotal, Phases (2) and (3): 1,034 1,116 53\.8
Total Construction 1,662 2,091 100\.7
Engineering and Supervision @ 10% 209 10\.3
TOTAL 2,300 111\.0
1/ See Table (2); ail designs are to the lower or "minimum" standards
in each class\.
2/ Including a 25% provision for contingencies\.
3/ A feasibility study for an alternative route is included within the
scope of the present project; if the alternative route proves justified,
the length of this section will increase by about 50 km and the cost
will increase by about B 130 million (US$6\.3 million)\.
Table (8)
THAILAND
NATIONAL HIGHWAY PROJECT
Cost Estimate for Typical Road Construction
Project Road: Nakorn Pathos - Prajuab\. Total Length: 266 km
Road Section: Rajburi - Petchburi\. Section Length: 57 km
1962 Traffic: 1,300 veh/day (67% trucks and buses)\. Design Standard: Class I (min)
Ref\. Item of Work Unit Quantity Unit Price (B) Cost (B mill)
1 Unclassified excavation cu\. m\. 300,000 22 6\.6
2 20 cm\. laterite sub-base cu\. m\. 142,000 60 8\.5
3 20 cm\. gravel or crushed rook base cu\. m\. 142,000 125 17\.8
4 5 cm\. asphaltic concrete surfacing sq\. m\. 399,000 50 20\.0
5 604100 cm\. diameter pipe culverts lin\.m\. 2,800 500 average 1\.4
6 Reinforced concrete bridges Recently completed with USAID funds -
Sub-total 54\.3
7 10% provision for miscellaneous items 5\.4
(clearing, grubbing, overhaul, signs, etc\.) 59\.7
8 25% contingency allowance 14\.9
Total Construction Cost 74\.6
9 Engineering, contract documentation
and construction supervision \. @\. 10% construction cost 7\.5
10 Land (assumed 20 m\. widening @ B 7 per m2 - 57,000 x 20 x 7) 8\.o
Total Construction, Engineering and Land Costs 90\.1
Source: Department of Highways
THAILAND
NATIONAL HIGHWAY PROJECT
Estimated Costs of Construction
Probable Annual Requirements (B mill) Total
Ref\. Road Section Length Class 1963 1964 1965 1966 1967 Cost
(k ) - -
1 a) Chiengmai - Lampoon 27 I - - 16 16 - 32
b) Lampoon - Lampang 78 II - 72 72 72 72 288
Subtotal: 105 _ 72 88 88 72 320
2 a) Songkhla - Klong Ngae 53 I - - 30 30 16 76
b) Kiong Ngae - Naradhiwat 204 II - 60 61 61 60 242
Subtotal: 257 - 60 91 91 76 318
3 a) Nakorn Pathom - Huahin 175 I - 60 60 60 45 225
b) Huahin - Prajuab 91 II - 16 32 32 32 112
Subtotal: 266 - 76 92 92 77 337
TOTAL: 628 - 208 271 271 225 975 (B mill\.)
LOCAL COMLFONENT: _ 114 149 149 124 536 (B mill\.)
FOREIGN COI'PONENT: - h\.5 5\.9 5\.y) 4\.8 21\.1 ($ mill\.)
CD
fcbJ\.e (";
THAILAID
NxIATIONAL HIGT4AY PROJECT
List of Maintenance Equipment Required
No\. Estimated Cost Estimated
Ref\. Specification Required C\.I\.F\. Bangkok Total CosI
(USm per unit) (
1 Motor grader, 12' blade 115 H\.D\. class 35 15,200 427,ooo
2 Tractor crawler D 7 class w/Bull grader
and rear P\.C\.U\. 2 32,000 64,000
3 Light rubber-tired tractor, 50 H\.P\. class 331 2,400 7594,400
b\. Rubber-tired roller, towtype 13 w\.heel or
equivalent (to be matched with Item 3) 56 2,200 123,200,
5 Rear blade Frading unit (to be matched with
Item 3) 100 750 '56,ooo
6 High-Teay Mower, reciprocating blade type,
general purpose, 4? size (to be matched
with Item 3) 175 800 140,000
7 Eighway 1Mlower, rotary rear unit (to be
matched with Item 3) 175 1000 17;5,00
8 Asphal-ic Concrete iiixing plant portable
20 \.2m\.:\. 12 32,000 384,0oc
9 Asphaitic Concrete Mixing plant portable
8 T\.P]H 38 6,coo 220),0orO
10 Rotavy tiller (Pulvinixer) self propelled 6 24,00 1)44,000
11 PneumatLc fronL\. end loader 1 - yd\. bucket 6 14,0CO 64,Cco
12 Rotary broom, tow-type, 61 broom 6 2,400 :14,hOo
14 Asphalt Distributor 1000 U\.S\. gallons,
truck mounted 36 14,000 504, 000
l5 Asphalt kettle 400 U\.S\. gallons (to be
used with Item 14) 144 2,000 288,900
16 Dump truck 5 yds\. capacity- 24 14,000 336,o00
117 Aggregate Box spreader 6 2,400 14, Ito
]9 Flat bedtruck 4 5 T 200 4,000 800,O0O
20 Pick-up truck 170 3,200 544,o0o
21 I;ater truck 1000 U\.S\. gal\. capacity 60 6;40r 384,00o
22 Concrete mixer 9 cu\.ft\. 12 1,200 14,400
23 Striping M1achine, self contained unit,
truck mounted 12 11,2C0 134,400
2, Traffic counter, pulsatirg-type 165 800 126,00
26 Station wagon, 4-wheel drive 68 4,,8o0 26
Sub-Total 5,990,200
Allow 15,2 approximately for Spare
Parts and Contingencies CO9,^
TOTAL: USq6,6C00ono
THAILLN)
NATIONAL HIGH_vAY PROJECT
Estimated Costs of Engineering and Training
(A) FOREIGN AND LOCAL COIMPONENTS
E n g i n e e r i n g C o s t
Road Ref\.No\. Construc- As % of Foreign Local Foreign Local
Ref\. Item (Table 7) tion Cost Const\.Cost Component Component Cost Cost
1 a) Engineering and contract
documentation 1,2,3(a) 46\.9 a) 5 75% 25% l\.b 12
b) Construction supervision 1,2,3(a) 46\.9 b) 5 5o% 50% 1\.2 24
2 Engineering, interim reports,
and contract documentation 3(b),4,5,6,7 53\.8 6 75% 25% 2\.3 16
3 Advisory services - - Assumed 72 man-months average per 0\.5 3
year for 2 years
4 Technical Training - - Assumed 6 - 8 persons annually 0\.1 2
over 2-year period for a
course outside Thailand _
TOTALS 5,9 B 56
(B) ESTIMATED ANNUAL REQUIRi14ENTS
1963 1964 1965 1966 1967 Total
Foreign Local Foreign Local Foreign Local Foreign Local Foreign Local Foreign Local
(US$ mill) (B mill)
1\.5 12 1\.7 17 1\.3 12 0\.7 8 o,y 5\.9 56
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j~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~BD 1087egb ,
I iSChumpo~~rn
f t' ', 9 ~~~~THAILAND
0- 0 ~~~POLITICAL AND PHYSICAl
tt ¢ Srith9mrtti < ~~~~ELEVATIONS
2 g \ ~~~~~~~~~~1 5 00 _200 D 49Z1 _ 6 562j
0~ ~ ~ ~ ~rn $\ W _ Q \000-IO 656-3281-4
< L \ X~~~Songkhhl o:a 5638
<;'P\\.L S Scrs~No,dhiwat Ht= 25 5 7 :,K\.
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h 0Q g00~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~" | APPROVAL |
P000347 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 10068
PROJECT COMPLETION REPORT
REPUBLIC OF CAMEROON
SECOND LIVESTOCK DEVELOPMENT PROJECT
(CREDIT 1010\.CM)
NOVEMBER 15, 1991
Agriculture Operations Division
Occidental and Central Africa Department
Africa Regional Office
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Units - FCFA
AVERAGE ANNUAL EXCHANGE RATES
1980 226 FCFA = US$1\.00
1981 287 FCFA - US$1\.00
1922 33E FCFA - US$1\.00
1983 417 FCFA - US$1\.00
1984 480 FCFA = US$1\.00
1985 378 FCFA = US$1\.00
1986 323 FCFA US$1\.00
1987 267 FCFA - US$1\.00
1988 303 FCFA - US$1\.00
1989 289 FCFA = US$1\.00
ABBREVIATIONS AND ACRONYMS
ERR = Economic Rate of Return
FONADER Fonds National de D6veloppement Rural
IDA International Development Association
IMF International Monetary Fund
KFW Federal Republic of Germany
MINEL Ministere de I'Elevage et des Industries Animates
MINEPIA Minist6re de L'Elevage, des P&ches et des Industries
Animales
PCR Project Completion Report
PCU Project Coordination Unit
SAR - Staff Appraisal Report
SEDA Soci6t6 D'Etudes pour le Deveoppement de L'Afrique
SODEPA Soci6t6 de Developpement et d'Exploitation Animale
FISCAL YEAR OF TH_ BORROWER
July 1 - June 30
FOR OMCIAL USE ONLY
THf W ORlD SANK
Washington, DC\. 20433
U\.S\.A\.
O0laC Of DfuF,KtcW4GnV&I
O9w\.aX hlJtK
November 15, 1991
MEMORAND_M TO THE EXECUTTVE nl"iECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report - Republic of Cameroon
Second Livestock Development Proiect (Credit 1010-CM)
Attached, for your information, is a copy of a report entitled
"Project Completion Report on Republic of Cameroon - Second Livestock
Development Project (Credit 1010-CM)", prepared by Africa Regional Office
with Part II of the report contributed by the Borrower\. No audit of this
project has been made by the Operations Evaluation Department at this time\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
FOR OFFICIAL USE ONLY
PROJECT COMPLETION REPORT
REPUBLIC OF CAMEROON
SECOND LIVESTOCK DEVELOPMENT PROJECT
(CREDIT 1010-CM)
TABLE OF CONTENTS
Fage No\.
PREFACE \. \. \. \. \. \. \. \. \. 1
EVALUATIONSUMMARY \. \. \. \. \. \. \. \. \. \. \. *0\.* * \. \. \.ii
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE \. \. \. \. 1
A\. Project Identity \. \. \. \. \. \. \. \. \. \. \. \.1
B\. Background \. \. \. \. \. \. \. \. \. \. \. \. \.1
C\. Project Objectives and Description \. \. \. \. \. 2
D\. Project Design and Organization \. \. \. \. \. \. 3
E\. Project Implementation \. \. \. I \. \. \. \. \. \. 4
P\. Project Results \. \. \. \. \. \. \. \. \. \. \. \. \. \. 5
G\. Project Sustainability \. \. \. \. \. \. \. \. \. \. 11
H\. Bank's Performance \. \. \. \. \. \. \. \. \. \. \. \. 12
I\. Borrower's Performance \. \. \. \. \. \. \. \. \. \. \. 12
J\. Consulting Services \. \. \. \. \. \. \. \. \. \. \. \. 13
K\. Project Relation \. \. \. \. \. \. \. \. \. \. \. \. \. \. 13
L\. Project Documentation and Data \. \. \. \. \. \. \. 13
PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE \. \. \. 14
PART III: STATISTICAL INFORMATION \. \. \. \. \. \. \. \. \. \. \. \. 22
ANNEX: Response to the Borrower's Perspective to the Project
Completion Report \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 35
MAP\. IBRD 14521R
This document has a restricted distribution and may be Lused by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
PROJECT COMPLETION REPORT
REPUBLIC OF CAMEROON
SECOND LIVESTOCK DEVELOPMENT PROJECT
(CREDIT 1010-CM)
PREFACE
This is the Project Completion Report (PCR) for the Second
Livestock Development Project in Cameroon, for which Credit 1010-CM in the
amount of US$16 million equivalent was approv6d on April 22, 1980\. The Credit
was closed on December 31, 1988, four years behind schedule\. It was fully
disbursed and the last disbursement was in February, 1989\.
The Federal Republic of Germany (KFW) cofinanced the Project with
a grant of US$1\.0 million and a credit of US$8\.0 million on terms similar to
IDA\.
Parts I and III of the PCR were prepared by the Agricultural
Division of the Technical Department of the Africa Region and Part II was
provided by the Borrower\. The KFW was requested to comment on the PCR and we
have not received any comments\. The PCR is based inter alia on the Staff
Appraisal Report, credit and project agreements, supervision reports, Bank
correspondence files and interview with staff involved in project\.
- iii -
PROJECT COMPLETION REPORT
REPUBLIC 0\. CAMEROOF
SECOND LIVESTOCK DEVELOPMENT PROJECT
(CREDIT 1010-CM)
EVALUATION SUMMARY
Obiectives
1\. Despite its la:ge livestock herd, Cameroon was in the 1960s
importing about 10,000 metric tons of meat annually\. This was about 13% of its
total consumption, but import of meat was projected to increase to 25,000 tons
by 1985\. The main reasons for the meat shortage were the low productivity of
the national herd and constraints i\.n the marketing system\. In the early 19708,
Government had prepared a long term strategy, the "Plan Viande", for the
development of the livestock sub-sector\. The main objective of this project
was to continue the implementation of the "Meat Plan" begun under the First
Livestock Development Project financed by the Bank\. Specifically, the Project
aimed at: (a) increasing meat production and the income of livestock
producers; (b) freeing more land from tsetse infestation; and (c)
strengthening the implementation capacity of government agencies promoting
livestock development and (d) completing construction of the Yaound6 and
Douala slaughterhouses begun under the first project\. Emphasis would be placed
on promoting smallholder production of livestock, espeL>:l1y pig and poultry\.
(paras 1,4)\.
Implementation
2\. Start-up of the Project was delayed by 9 months due to problems
ins (a) preparing the subsidiary loan agreement between Government and the
credit agency and submitting the required legal opinion to the Bank; and (b)
recruitment of technical assistance\. Effectiveness of the cofinancing credit
from KFW was delayed for more than three years, which constrained the quality
of credit administration and supervision\. Lack of counterpart funds for the
veterinary and extension components further delayed project implementation\.
Consequently, the Closing Date for the Project was postponed four times and
the Project closed in December 1988 (paras 11-12)\.
Results
3\. The Project achieved most of its objectives\. However, it failed
in making significant progress in increasing meat production in state owned
and private ranches on a sustainable basis and in strengthening the
institutional capacity of government agencies in promoting livestock
development in the country\. Four of the seven project components were
successfully completed\. These were: (a) strengthening of SODEPA; (b) the
- iv -
tsetse eradication campaign, (c) training staff; and (d) preparing a successor
project (para 17)\.
4\. The tsetse eradication campaign of this and the previous project
freed 1\.3 million ha\. as intended\. It was responsive to the environmental
impact of the insecticides used\. Government commissioned consultants to study
the environmental impact and discontinued the use of Ensodil and Dieldrin on
their advice\. It started experimenting with alternative low cost and less
damaging methods of tsetse control using traps and attractants (para 37)\.
5\. SODEPA managed to complete the two slaughterhouses started in
Yaound6 and Douala under the first project\. The number of cattle slaughtered
per d\.ay is 260 and 180 for Yaound6 and Douala respectively\. This surpasses
the expectationa of the SAR by 73 and 20 percent, respectively\. Cameroonian
staff were trained in sustainably operating them without financial loss\. On
the other hand it did not establish the 12 improved private butcheries in
Yaound6 and Douala\. However, it opened two butcheries, which it had to close
as they were making eubstantial financial losses\. Unacceptably low technical
and financial results continued to plague the three parastatal ranches
operated by SODEPA until the fifth year of the project's seven year life due
to lack of proper management\. SODEPA failed to effectively carry out a task
delegated to it, i\.e\. rendering extension services to cattle ranchers in the
areas where it operated cattle ranches (paras 30-35)\.
6\. The credit agency, FONADER, gave loans to 1079 producers (83% of
that foreseen in the SAR)\. The monetary value of the loans surpassed that
allocated in the SAR by 23%\. However, this component did not succeed in
achieving the expected increase in meat production and producers income as the
institutional capacity to supervise and support smallholders with extension,
veterinary and supervised credit services were not sufficiently developed\.
The overall recovery rate of the credit that was due for repayment (about US$
2\.3 million) as at June 30, 1986 was 70%\. However, this varied from province
to province\. The lowest credit recovery was in Adamoua (61%) followed by West
(70Z) and North-west provinces (75%)\. The global recovery rate may
deteriorate substantially as FONADER was dissolved and replaced by an
agricultural development bank after a two year hiatus (paras 20-29)\.
7\. Strengthening of MINEL's veterinary field services to ensure
adequate disease prevention and control was not effectively carried out\. The
Project Coordination Unit (PCU) was established\. However, it failed to
coordinate project implementation\. It did not set up any management
information system that could enable MINEL to effectively monitor and evaluate
the diverse activities of the Project and it did not develop institutional
capacity to undertake such coordination for the successor project\. It did not
prepare the Project Completion Report as stated in the SAR ard the Credit
Agreement (para 38)\.
8\. Calculating the ERR was not attempted as there is no sufficient
data on the benefits and costs of livestock production by the private sector
project beneficiaries\. The ERR estimated in the SAR was 18%\. Considering the
poor performance in the credit an d livestock services components which were
reflected in marginal impact on productivity, the continued unviability of the
-v -
parastatal ranches, and the uncertainty with respect to use of the tsetse
cleared areas the ERR is likely to be less than 10%\.
Sustainabilitv
9\. Although 10% of the tsetse cleared area (about 150,000 ha\.) was
reinfested and had to be resprayed, the tsetse eradication program was
sustainable, especially with the utilization of less costly and less
environmentally hazardous methods of tsetse control introduced under the
Project\. Sufficient Camerooniane wero trained to continue the progrsn on a
sound footing\. The two slaughterhouses can be sustainable, especially if
slaughter fees are charged in accordance with prevailing economic
circumstances\. The experience with the management of the three ranches and the
two slaughterhouseb by SODEPA showed that they could not be financially viable
under paras\.atal management\. Efforts are being made under the successor
project to privatize them\. The livestock ministry did not develop its
capacity (a) to effectively extend veterinary and extension services; and (b)
to supervise and monitor development projecti under its wing, a problem still
plaguing the successor project (paras 39-41)\.
Performance of IDA\. the Consultants, and Government Agencies
10\. Bank advice contributed significantly to improvements in project
design and implementation\. Close supervision was maintained throughout
project implementation\. Bank staff were instrumental in discontinuing the use
of chemicals toxic to non target fauna in the tsetse eradication campaign\.
The low performance of SODEPA ranches, the poor supervision of the credit
program and the inadequate support of extension and veterinary services to
project beneficiaries were brought to the attention of Government\. Bank staff
could have expedited the RFW credit by putting pressure on both Governments\.
The objection of Moslem butchers to stunning animals with pistols prior to
slaughter could have been handled with better diplomacy (paras\. 42-44)\.
11\. The performance of Government agencies involved in the execution
of the projects was variable\. The Tsetse Eradication Unit executed its
program extremely well\. It trained its staff properly to take over the
functions of the technical assistance\. Although the SODEPA management was
trying its best to implement the Project, it was constrained by its public
nature and structure\. While its physical achievements improved substantially
towards the end of the Project, it could not be financially viable due to its
high overhead costs and overstaffing in its headquarters\. FONADER was unable
to institute a carefully scrutinized and adequately supervised credit program\.
Consequently, a substantial part of the credit for ranching operations were
utilized for other purposes and credit recovery became a difficult task\.
MINEL failed to support its own veterinary and extension program and to
supervise the Project Coordinating Unit in discharging its functions with
adverse effects on the overall efficiency of project implementation\. In
general, Government was supportive of the Project despite delays in releasing
counterpart funds and processing procurement of goods and services (paras 46-
47)\.
- vi -
12, The performance of most of the technical assistance consultants
was satisfactory (para 49)\.
Overall Assessment
13\. On balance, the project must be rated as unsatisfactory\.
Findings and Lessons
14\. The Project demonstrated that a large area of tsetse infested land
can be freed and maintained at reasonable cost\. It also showed that the lack
of participation of the beneficiaries in the planning and implementation of
tsetse eradication became a constraint in safeguarding tsetse freed areas from
reinfestation\. The Project showed that a good potential exists for the
development of small livestock in Cameroon and that credit could accelerate
this development\. Unfortunately, FONADER was dissolved and the momentum
generated under the Project was dissipated\. The Project amply demonstrated
once again the difficulty of SODEPA, a public enterprise encumbered with
inflexible financial and personnel procedures, to successfully manage a
commercial operation\. Assigning to SODEPA extension functions, not only
duplicated the responsibility of the livestock ministry, but also detracted
SODEPA management and resources from its commercial operations\.
15\. The non-synchronization of the credit effectiveness of the
cofinancing agency constrained the efficiency of FONADER and prevented the
release of IDA funds that were tied to disbursements of the cofinancier\.
PROJECT COMPLETION REPORT
REPUBLIC OF CAMEROON
SECOND LIVESTOCK DEVELOPMENT PROJECT
(CREDIT 1010-CM)
PART I: PROJECT REVIEW FROM BN_K'S PERSPECTIVE
A\. Prolect Identity
Project Iuume: Second Livestock Development Project
Credit No\.: 1010-CM
RVP Unit: Africa
Country: Cameroon
Sector : Agriculture
Subsector: Livestock
B\. Back&round
1\.1 Despite its large livestock herd (2\.3 million cattle, 2\.9 million
sheep and goats) compared to a population of less than 6 million people,
Cameroon was in the 1960s importing about 10,000 metric tons of meat
annually\. This was about 13% of the total consurption, but import of meat
was projected to increase to 25,000 tons bz 1985\. The main reasons for the
meat shortage were the low productivity of the nati-nal herd and constraints
in the marketing system\. In the early i970s, Government prepared a long term
strategy, the "Plan Viande", for the development of the livestock sub-sector\.
IDA's involvement in tha subsector started with a credit of US $11\.6 million
equivalent to finance the first phase of the "Plan Viande" under the First
Livestock Development Project (1975-80)\.
1\.2 The first project aimed to: (a) free 800,000 ha\. of highly
productive pasture from tsetse infestation; (b) establish three 20,000 ha\.
state cattle ranches; (c) develop 150 private cattle ranches and farms; (d)
construct and operate two slaughter plants; (e) modernize 12 butcheries; and
(f) provide technical assistance for (i) a nascent livestock extension
service; (ii) training of slaughterhouse and credit managers; and (iii) the
establishment of the Government parastatal, Soci6t6 de D6veloppement et
d'Exploitation Animale (SODEPA), to implement the state ranch and
slaughterhouse components of the project\.
1\.3 The first project met most of its physical targets except the
slaughterhouses, which were to be completed under the second project\.
However, the project's impact on national meat production fell far short of
appraisal expectations (2000 versus 4,300 tons p\.a)\. The economic and
financial performance of the parastatal ranches was disappointing\. By
contrast the performance of the private producers that participated was
-2-
beyond expectations\. The tsetse eradication had the greatest impact as an
estlmated 60,000 head of cattle moved into the area and produced an
incremental 1,000 tons of meat p\.a\. The economic rate of return of the
comp;leted project was calculated at 42 compared to 13% at appraisal\.
C\. roiect Obiectives and Description
1\.4 The objective of the Second Livestock Development Project, planned
for implementation during 1980-84, was to complete some of the components not
fully completed during the first project and to implement the second phase of
the "Plan Viande4' aimed at increasing meat production and the income of
livestock producers\. The necond project would complete construction of the
two slaughterhouses, expand the tsetse free area and implement a revised
trainin&: proeram began under the first project\. Emphasis would be placed on
promoting swallholder production of meat, especially pig and poultry and
stre_gth-ari\.ng the implementation capacity of government agencies promoting
livestoc3: development; i\.e\., the MinistAre de I'Elevage et des Industries
Animates (MINEL), SODEl'A and the agricultural credit agency, Fonds National
de D6veloppement Rural (FONADER)\.
1\.5 Pro1ect Descriptions The Second Livestock Development Project
would provide for:
(a) i\.nvestment credit and working capital through FONADER: for pig
breeding and fattening (200 loans), broiler production (100 loans),
eggs and cockerel production (100 loans) and cattle production on
small mixed farms (500 loans), private cattle breeding and
fattening ranches (140 loans) and small-scale cattle production
(800 producers in 40 group loans) in the tsetse cleared areas and
small ranches in the North-West province (30 loans);
(b) strengthening SODEPA through provision of needed civil works,
equipment and vehicles and technical assistance to: (i) complete
the construction of and manage the two slaughterhouses; (ii)
improve its financial control capacity through a financial
controller; and (iii) improve its mangement capacity through a
ranch management specialist;
(c) completing the program of eradication of tsetse flies in the
remaining 276,000 ha\. of the target area of 800,000 ha\. under the
first project, further expanding the tsetse cleared area by an
additional 163,000 ha\. and preventing the infestation of some
900,000 ha\. of area jeopardized in the southern slopes of the
Adamoua Plateau;
(d) strengthening MINEL's veterinary field services in the Adamoua
Plateau to ensure adequate disease prevention and control;
3-
(e) improving the program of formal and in-service training for: (i)
MINEL veterinary field dervice staff; (ii) SODEPA agents in
slaughterhouse management and operation; (iii) FONADER agents in
credit supervision and monitoring; and (iv) MINEL staff assigned to
the Special Mission in tsetse eradication, survey and perimeter
maintenance;
(f) establishing a Project Coordination Unit (PCU) under MINEL with
overall responsibilities for project coordination, headed by a
Project Coordinator; and
(g) providing funds for the 'paration of a possible follow-up
project\.
D\. Project-Design and Organization
1\.6 While the project design was not innovative, its scope and scale of
operations were appropriate\. The Project was well prepared and its design
took full account of the experience gained under the first livestock project\.
Its objectives conformed with `overnment's strategy of increasing livestock
production for domestic consumption\. The emphasis of production investment
markedly shifted away from state operations to private activities\.
Parastatal investment in the second project was planned for only $ 4\.6
million or 15% of base cost\. Moreover, the tsetse eradication and improved
animal health and extension services components (55% of total base costs) was
to support mostly private sector production\.
1\.7 In retrospect, assigning SODEPA a combined function of commercial
activity and a development activity not related to its commercial interests,
i\.e assisting FONADER in its ranch loans and providing extension services to
pzivate ranchers, was a mistake\. In the event, SODEPA proved incapable of
discharging this responsibility, which should have been borne by the regular
extension services of MINEL\.
1\.8 The first project was totally financed by the Government and
project beneficiaries ($ 4 million, or 26Z) and IDA ($ 11\.6 million or 74%)\.
The second project was expected to cost US$ 36 million net of taxes, out of
which Government and livestock producers would finance $11 million (30%)\.
The Federal Republic of Germany would finance $ 9 million (25%) and IDA the
remaining $ 16 million (45%)\.
1\.9 The Project would mainly be executed within the institutional
arrangements developed during the first project\. The operational capability
of MINEL, SODEPA and FONADER was to be strengthened through establishing
direct lines of authority and clear definitions of responsibilities and by
providing all three institutions with sufficient resources and support to
carry out the Project\.
1\.10 FONADER would administer the credit component of the program
promoting increased livestock production by the private jector\. SODEPA would
4-
oversee the completion and operation of the two slaughterhousee and the
operation and management of the three parastatal ranches as w"ill as provide
extension services to private ranchers in the tsetse cleared areas\. MINEL
would be responsible for veterinary and animal production extension services
and the tsetse eradication program\. The PCU established under MINEL would be
responsible for overall coordination, monitoring, evaluating and advising the
agencies executing the various components of the Project\.
E\. Project Implementation
1\.11 Credit Effectiveness and Prolect Start-up: The Credit was approved
on April 22, 1980 and signed on June 20, 1980\. It became effective on May
12, 1981\. Credit effectiveness was postponed twice due to (a) delays in
getting the subsidiary loan agreement between Government and FONADER prepared
and signed and the necessary legal opinion on it submitted to IDA; and (b)
delays in recruiting the technical assistance specialists\.
1\.12 Implementation Schedule: The Project was originally scheduled to
be completed by December 31, 1984, but most of the project components were
completed three and half years later in December 1987\. The Closing Date was
extended four times to December 31, 1985; December 31, 1986; December 31,
1987 and December 31, 1988\. The final extension was made to allow an orderly
completion of the physical expansion of the Yaound6 slaughterhouse\. The main
reasons for the delay were: (a) the late start-up of the Project; (b) late
effectiveness of the KfW credit in 1984, three years after project start-up;
(c) lack of counterpart funding, especially for the veterinary and livestock
extension component; (d) ineffectiveness of the first project coordinator, a
technical assistant; and (e) lack of interest by MINEL ia the implementation
of the Project during 1981-84\.
1\.13 Procurement: Procurement for the execution of the components under
SODEPA and the Tsetse Eradication Unit were by and large done on schedule and
smoothly, while those for the veterinary and livestock extension were
inordinately delayed and caused problems of reimbursement due to lack of
compliance with Bank procurement procedures and guidelines\.
1\.14 Project Costs\. The estimated cost of the Project at appraisal was
about US$ 39\.9 million\. The final cost was about xx as shown in Table 5\.
1\.15 Disbursement\. The estimated and actual disbursement of the Credit
is given in Table 3\. Disbursement was delayed due to the late start-up of
the Project\. Government was slow in allocating counterpart funds co the
project, especially to the infrastructural development of MINEL's veterinary
services\. Government funding for this component was released only in the
middle of 1983, two years after credit effectiveness\. The KfW credit was
sig\.ed in April 1983 and became effective about 9 months later\. This
prevented the release of IDA funds for reimbursement of FONADER expenditures\.
This contributed to the slow rate of disbursement in the first three years of
-5-
the Project\. Disbursement was made till February 27, 1989 when the total
Credit amount was fully disbursed\.
1\.16 Credit Allocation\. The original, revised and actual allocations of
the Credit are shown in Table 4\. The original allocation was revised on
February 28, 1986 to reflect changes in cost estimates\. The allocation to
SODEPA was increased by nearly 75% to cater for the expansion of the Yaound6
slaughterhouse and purchasing of more cattle to enhance the viability of the
ranches\. The allocation to FONADER for private sector credit was
significantly reduced (by 31%) because FONADER had used its own resources in
the early life of the Project when it was ineligible for IDA disbursement due
to delays in the effectiveness of the RFW credit\. The allocation to *MINEL
for veterinary and extension services and to the PCU also reduced by 25% and
33%, respectively, due to slowness in implementing those components\.
F\. Project Results
1\.17 Project Objectives\. The Project achieved some of its objectives\.
However, it failed in the major objective of increasing meat production in
state-owned and private ranches on a sustainable basis and in strengthening
the institutional capacity of government agencies in promoting livestock
development in the country\. Four of the seven project components were
eventually completed successfully\. These were: (a) strengthening of SODEPA;
(b) the tsetse eradication campaign; (c) staff training; and (d) preparing a
successor project\. The credit component managed to disburse more funds than
originally allocated but the program was not implemented as foreseen in the
project design (See para\. 22-24)\. Strengthening of MINEL's veterinary field
setvices to ensure adequate disease prevention and control was not
effectively carried out\. The Project Coordination Unit (PCU) was
established\. However, it failed to coordinate project implementation\. It
did not set up any management information system that could enable MINEL to
effectively monitor and evaluate the diverse activities of the Project and it
did not develop institutional capacity to undertake such coordination for the
successor project\.
1\.18 SODEPA managed to complete the two slaughterhouses started in
Yaound6 and Douala under the first project\. Cameroonian staff were trained
in sustainably operating them without financial loss\. On the other hand,
unacceptably low technical and economic performance continued to plague the
three parastatal ranches operated by SODEPA due to lack of proper management\.
1\.19 The tsetse eradication component was successfully implemented and
Cameroonian staff obtalned sufficient training and experience to sustain the
operation on their own after project completion\. Smallholder production of
meat was promoted but meat production was not substantially increased because
the institutional capacity to support smallholders with extension, veterinary
and supervised credit services were not sufficiently developed and sustained
after project completion\. FONADER has been liquidated under Government's
-6-
banking reform program with no bank yet adequately assuming its function of
making credit available for omallholders\.
Physical Results
1\.20 The credit component, with an allocation of $9\.1 million (30% of
base costs) succeeded in achieving 96% of the number of loans targetad in the
SAR\. The monetary value of the Loans surpassed that allocated in the SAR as
shown in Table 4\. However, this component did not succeed in achieving the
expected increase in meat production and producers' income as the
institutional capacity to support smallholders with extension, veterinary and
supervised credit services were not sufficiently developed\.
1\.21 The technical assistance for the credit component wa3 delayed so
much that most of the credit had already been granted and disbursed with
little technical plannirng, support and supervision\. Upon arrival of the
technical assistants, much of their time was spent in crisis management of
how to effectively increase loan recovery than in training FONADER staff the
arts of responsible agricultural portfolio management\.
1\.22 The Project enabled FONADER to expand its livestock credit
operations from one province, Adamoua, to two others, the North-West and the
West\. Although the total target of loans was largely met, there was a
significant variation in reaching the targets set for the different types of
producers\. Whereas the number of loans for egg production and cattle ranches
were overachieved by 14 and 101 percent, respectively, those for pig breeding
and cattle production in mixed farms were respectively 27 and 88 percent of
the SAR targets\. No loans were given to two categories specified in the SAR;
i\.e\., for broiler production and cattle production for groups of farmers to
be settled in tsetse cleared areas of the Adamoua Plateau (See Table 4)\.
1\.23 The variation was much more accented in terms of the value of the
loans\. According to the SAR, credit for cattle ranching was only 39% against
the actual which was 60% of the total credit\. Total credit given for poultry
production was 23%, which is only 3% more than that allocated in the SAR for
broiler and egg production\. While the value of credit allocated for pig
production in the SAR was 25%, that realized by the Project was only 6% of
the total credit given under the Project\.
1\.24 There are several reeaons for this significanit variation\. First,
loans for pig production were suspended following outbreaks of the African
Swine Fever disease, a major killer for which there is no vaccine nor an
effective cure\. Second, the importation of cheap frozen poultry and the lack
of an organized marketing system that could purchase, dress and transport
broilers from the North-West and West provinces to urban centers in Douala
and Yaound& were major disincentives to investment in broiler production\.
Producers opted for egg production and sold cockerels and old layers for meat
instead of producing broilers\. Third, the 40 group loans to 800 farmers
never materialized as settlement in the tsetse cleared areas became difficult
-7-
due to problems of land tenure and difficulties in organizing farmers into
groups\.
1\.25 The overall recovery rate of the credit that was due for repayment
as at June 30, 1986 was 69\.8 2%\./ However, this varied from province to
province\. The lowest credit recovery was in Adamoua (61%) followed by Waest
(70%) and North-west (75%)\. The global recovery rate may deteriorate
substantially as FONADER has been dissolved and replaced only by the Cr6dit
Agricole du Cameroun, an agricultural bank after a two year hiatus\.
Impact of Credit
1\.26 Although one can discern that the Credit had a positive impact on
improving somewhat the technology of livestock production and thus on
increasing meat production, it is difficult to estimate the incremental
amount produced because neither MINEL nor FONADER kept production records\.
Moreover, the production plans proposed in the credit applications were not
followed properl\. In the case of cattle production loans, which were 60% of
the loan portfolio, only 38% of the borrowers actually invested the loan in
cattle production\. Even then only half of these followed the proposed plan
in their credit application\. The others implemented the approved proposal at
various degrees below the targets in their applications\. This situation would
make estimating the incremental production on the basis of loan amounts given
highly conjectural\.
1\.27 Several factors contributed to the non-realization of the plans\.
These were: (a) inexperience of the borrowers with livestock rearing; (b)
shortage of breeding and fattening cattle; (e) weakness of MINEL's extension
and veterinary services; and (d) inadequate supervision, lack of discipline
and lack of tachnical skills in livestock production on the part of FONADER
field staff\.
1\.28 According to the SEDA study 2/, a majority of the borrowers for
cattle ranches (62x) had no previous experience with cattle production\. They
had other interests like trading, transport, the civil service, etc\. They
became interested in cattle production only because of the opportunity the
Project created for acquiring land and cattle via the tsetse eradication
program and the credit facility\. These town dwellers used their influence in
obtaining what was communal land from the traditional chiefs\. In some cases
the fenced ranches blocked access of local communities to water points thus
*X/ The credit due for payment was FCFA 752\.7 million (USs 2\.3
million), which was about 40% of the total credit disbursed by FONADER
under the Project\.
2/ Soci6t6 D'Etudes pour le Developpement de L'Afrique (SEDA)\. 1987\.
Etude sur le Cr6dit aux Eleveurs\. Programme CMR 85/004\. Ministere de
L'Elvage, des Pgchee et des Industries Animales, Yaound6\.
-8-
disrupting herd movements and hampering the traditional management of grazing
resources\. This often created a conflict between the ranchers and the local
communities\. The few producers that tried to raise cattle had gross
difficulty due to lack of experience in cattle raising, unavailability of
breeding and fattening stock and lack of supervision and assistance from
MINEL and FONADER\. The SEDA study estimates that only 27% of the borrowers
were authentic producers that were serious and could implement a ranching
development plan\. Moreover, there was a serious general drought during
1983-84 and a major outbreak of Rinderpest\. This not only increased
mortality of the cattle that the borrowers had at the time, but also made it
difficult to restock in subsequent years\.
1\.29 In contrast to Adamoua, most of the borrowers in the two other
provinces attempted to seriously implement the proposed plans in their credit
application for poultry and pig production\. About 67% of the borrowers for
pig production were farmers in contrast to only 14% of borrowers for poultry
production\.
1\.30 SODEPA Results\. slaughterhouses: The slaughterhouses at Yaound6
and Douala, whose construction was started during the first project were
completed in 1984 and 1985, respectively, with technical assistance from a
third consulting firm and with a total delay of 7 years\. The slaughterhouse
offering to butchers custom slaughter service in good hygienic conditions are
used to full capacity\. The Yaound6 slaughterhouse which was expanded in 1987
is processing about 260 head of cattle per day with a throughput of about
11,000 tons of meat per year\. The Douala plant is smaller, processing about
180 head of cattle per day with a throughput of almost 8,700 tons of meat per
year\. This throughput represents about 60-65 percent of the weat consumed in
the two cities\. In addition the two plants are producing annually about 150
tons of blood, meat and bone meal\.
1\.31 The slaughterhouses would have been commercially viable were it not
hor the high overhead costs of SODEPA, which are about 30% of the operating
costs of the ranches and abattoirs\. Operating results of the two
slaughterhouses for the financial year 1986-87 showed a gross profit of FCFA
119 million (about US$ 446,000) before depreciation\. The net profit reduced
to FCFA 2 million ($7,500) after accounting for depreciation\. Profit was
dampened by Government control of slaughter fees, which had not increased
since the opening of the slaughterhouses\.
1\.32 SODEPA did not achieve its target of modernizing 12 butcheries in
Yaounda and Douala as foreseen in the SAR due to lack of interest of
butchers\. However, it set up and operated two butcheries in Yaound& to
demonstrate how modern butcheries operate\. The butcheries generated high
demand, particularly because their prices were about 20% lower than those
charged by private butcheries\. Consequently, the operation could not be
sustained as it lost about FCFA 6\.8 million ($25,500) during its first year
of operation and the butcheries were closed dcwn\.
-9-
1\.33 SODEPA Ranches\. Unacceptably low technical and economic
performance continued to plague the four ranches operated by SODEPA until the
fifth year of the project's seven year life\. Calving rates were below 652
and mortality rates were high, particularly for adult cattle at about 7% p\.a\.
(see Table 7b)\. In addition, there were too many cases of cattle
disappearance due to theft and going astray\. Emergency slaughterings, to
allegedly save sick animals from dying and being wasted, were too frequent\.
This low performance was a result of the poor management provided by
inexperienced ranch managers and indiscipline of ranch staff\. Moreover,
supervision from SODEPA head quarters in Yaounds was not frequent and
rigorous\.
1\.34 A change in the top management of SODEPA in 1984 instituted
improved management techniques and discipline in the work routine of the
ranch staff\. By 1987, calving rate increased to 74% and adult mortality
rates declined to 3%\. However, the rates quickly deteriorated in 1988 to 65%
and 4\.3%, respectively\. The total ranch population of cattle increased from
26,880 in 1984 to 34,261 in 1987 and sales from 3,400 to 4,445 head\. The
ranches became self supporting, though with very low returns of 4% p\.a\.
1\.35 SODEPA Extension Service\. In 1985, SODEPA established three
extension units in the Northwest and Adamoua Provinces in an effort to
disseminate modern ranching techniques and improved breeding stock to cattle
producers in the areas where its ranches are located\. Although some
livestock and range management techniques were imparted to few producers,
this task proved to be beyond the capacity of the management of the ranches
at that time\. It only served to detract the attention of SODEPA's management
from the commercial objectives of the company\. Moreover, it introduced an
undesirable duplication of livestock extensior channels in the country\. This
function was appropriately transferred to the livestock ministry under the
successor project\.
1\.36 SODEPA Financial Results\. The cumulative loss sustained by SODEPA
at the end of the 1986/87 financial year was FCFA 625\.66 million ($1\.9
million) as shown in Table 7c\. This loss may be as high as FCFA 900 million
if depreciation of the infrastructure is rigorously accounted for\. The net
worth of SODEPA as at June 1986 was calculated as FCFA 5\.7 billion vis a vie
a cumulative capital investment of FCFA 6\.6 billion\. High overhead costs of
the central headquarters of SODEPA, incompetent management of the ranches in
the early years, and inflexible personnel policies and administrative
procedures ill suited to a commercial operation contributed to its poor
financial performance\.
1\.37 Tsetse Eradication\. This component of the Project was successfully
implemented\. A total of 1\.55 million ha of land was sprayed, out of which
548,800 ha represented areas, which were sprayed eiuring the first project but
were reinfected by tsetse flies\. This favorably compares to the target of
960,000 ha of spraying in the SAR, but did not increase the total area
intended to be freed by the campaigns under the two projects which was 1\.3
ha\. The Project used external consultants to monitor the environmental
- 10 -
effect of the insecticides used on the fauna of the region\. The use of
Dieldrin was discontinued and concentration rates of Decamethrin adjusted to
avoid environmental damage\. Towards the end of the Project, a safer method
of tsetse control using traps and attractants was introduced with encouraging
results\. A chronic problem of the program was the lack of regulated land use
in the tsetse eradicated area and effective means of controlling the movement
of cattle from tsetse uncleared to cleared areas, making maintenance of
tsetse eradicated areas difficult\. The major reason for this problem was the
failure of the Project to involve the local community in its tsetse
eradication program through educational campaigns and participatory planning
and execution of the eradication campaign\. The cost of tsetse eradication
was estimated at US$ 15 per ha with a favorable ERR of 202 by Cuisance et al
(1987), assuming the tsetse cleared area was fully stocked\.3/\.
1\.38 Strengthening of Veterinary Services in the Adamoua Plateau\. This
component of the Project showed little progress due to non provision of
counterpart funds and lack of interest by MINEL in its implementation\. In
1983, Rinderpest broke out in 5 Departments of the Northern Province and
MINEL refused to launch a vaccination campaign in time despite the advice of
Bank staff\. The bids for building the veterinary infrastructure and for
procuring equipment and vehicles were delayed substantially due to lack of
government funds\. The contract for building veterinary clinics, vaccination
parks, offices and staff housing was signed in the fourth quarter of 1985,
more than 4 years after effectiveness of the Credit\. Five cars purchased for
this component were diverted elsewhere\. About three fourths of the
veterinary infrastructure built was completed at the end of 1986 and the
remaining at the end of 1987\. While the vaccination parks were used
regularly, the offices space provided was in excess of what was required\. In
1990, only half of these offices were being utilized\.
1\.39 Studies\. Four important studies were concluded during project
implementation:
(i) A socio-economic study of traditicnal livestock production systems
was conducted to shed light on the major constraints of these
systems and possible solutions\. The results of the stud) were used
in designing the Third Livestock Development Project, which
emphasizes forming producers' associations and strengthening
extension and training services to these producers\.
(ii) A study of the impact of the tsetse eradication program was
conducted to find out the environmental and economic impact with
the purpose of making recommendations on how the tsetse freed areas
could be maintained and how the campaign would further be expanded
under the successor project\. The study influenced the design of
3/ Cuisance, D\. et al (1987)\. Lutte Contre les Glossines: Bilan et
Perspectives\. HiniBtare de L'Elevage\. des P6ches et des Industries
Animales\. CMR85/004\. Yaound6\.
- 11 -
the campaign for the Third Livestock Development Project\. It
recommended that the beneficiaries be fully involved in the
planning and execution of the campaign to improve the maintenance
of the tsetse freed areas and to facilitate cost recovery for this
maintenance\. It also recommended a less costl method of tsetse
eradication\.
(iii) An evaluation was made on the investment and operations
of SODEPA's ranches and slaughterhouses and how it should be
restructured to make it financially viable\. The evaluation
properly analyses the ills of the SODEPA; but its recommendation
was a complex proposal to involve SODEPA in establishing more
slaughterhouses in the provinces and taking over an existing
fattening ranch and establishing new ones in association with
village organizations (10% share), private sector (252) and SODEPA
(65Z), which made it unattractive to incorporate in the design of
the successor ptoject\.
(iv) A study of the impact of the credit program on livestock producers
was carried out\. While it characterized the shortcomings of the
program and how they could have been avoided, it failed to quantify
the benefits and costs realized by the credit beneficiaries\.
G\. Proiect Sustainability
1\.40 Although 15% of the tsetse cleared area (about 150,000 ha\.) was
reinfected and had to be resprayed, the tsetse eradication program was
successful and is sustainable, especially with the utilization of less costly
and environmentally hazardous methods of tsetse control introduced under the
Project\. Sufficient Cameroonians were trained to continue the program on a
sound footing\. It was shown that the participation of the beneficiaries in
the planning and implementation of tsetse eradication is important for
safeguarding tsetse freed areas from reinfestation\. The Project showed that
there exists a good potential for the development of small livestock in
Cameroon and that credit could accelerate this development\. Unfortunately,
FONADER was dissolved and the momentum generated under the Project was
dissipated\.
1\.41 The two slaughterhouses are sustainable, if slaughter fees are
charged in accordance with prevailing economic situations\. The experience
with the management of the three ranches and the two slaughter houses by
SODEPA showed that they could not be financially viable under parastatal
management\. Efforts are being made under the successor project to privatize
them\.
1\.42 Under the Project, the livestock ministry did not develop its
capacity: (a) to effectively extend veterinary and extension services; and
(b) to supervise and monitor development projects under its wing, a problem
still plaguing the successor project\.
- 12 -
H\. Bank's Performance
1\.43 Despite delays in implementation, Bank assistance and advice
contributed to improvement in project design and in implementation,
particularly implementation with respect to the tsetse eradication,
strengthening SODEPA and the provision of technical assistance components\.
Close supervision was maintained on the environmental effects of tsetse
eradication and Bank staff were instrumental in banning spraying with Ensodil
and Dieldrin from the program\. Bank supervisors repeatedly pointed out the
unacceptably low technical and economic performance of the SODEPA ranch
operations, which together with the change in the management of SODEPA led to
some temporary (see table 7b) improvement in the performance of the ranches\.
Bank staff gave valuable counsel in the arrangements for the completion of
the Yaound6 and Douala slaughterhouses\.
1\.44 On the other hand Bank staff could not effectively influence the
credit operations of FONADER and the veterinary and extension services of
MINEL\. The Bank could have expedited project implementation by recognizing
the ineffectiveness of the Project Coordinator and arranging for his removal
much earlier than October, 1984\. The Bank could also have pressurized GTZ,
KFW and the Government to expedite the preparation, signing and effectiveness
of the KFW credit\.
1\.45 Bank staff could have been more diplomatic and avoid a
confrontation over their insistence that cattle be stunned with gun shots for
slaughtering at the Yaound6 slaughterhouse\. Although they were right on
grounds of efficiency and the practice in other Islamic countries, Bank staff
could have been more sensitive to the request of the Moslem butchers who
wanted the traditional gorging of the animal without stunning\.
1\.46 The Bank adequately supervised the Project fielding 12 supervision
missions in the 7 year life of the Project\. The missions were technically
strong and there was good continuity between missions\.
I\. Borrower's Performance:
1\.47 The Borrower's performance in executing the project components was
variable\. The tsetse eradication program was smoothly executed with
excellent dialogue between the Borrower and IDA\. Although the SODEPA
management was trying its best to implement the Project, its public nature
and structure did not augur well for efficient commercial management of its
enterprises\. The opening of the new Yaound6 slaughterhouse was delayed
because Government was very slow in closing the old unhygienic abattoir\.
MINEL did not effectively supervise the Project Coordination Unit, which
failed to carry out its monitoring and supervision functions properly\.
Moreover, it failed to prepare a Project Completion Report, which is clearly
stated in the SAR, and is an obligation of Government in the Credit
Agreement\. MINEL did not give adequate suspport to strengthening its own
13 -
extension and veterinary services\. FONADER granted and disbursed loans
without adequate project preparation and it failed to properly supervise the
implementation of the investment\.
1\.48 The Bank had to resort to notifying Government on December 8, 1983
that it would suspend disbursements by February 15, 1984 unless it would: (a)
second nine technicians and recruit a small livestock specialist for the
credit component; (b) recruit a training specialist to strengthen veterinary
services; (c) close the old Yaound6 municipal slaughterhouse; and (d) present
a strategy on how to improve the management of the three SODEPA ranches\.
These conditions were met by March 15, 1984\. The 'laughterhouse was closed
by Presidential decree\. IDA did not accept the strategy for the financial
viability of the three ranches and asked for their privatization or closure\.
The notice of suspension drew the attention of Government to the problems of
the Project a9-A aroused interest in accelerating its implementation\.
J\. Consulting Services
1\.49 A number of consulting services were provided by various
institutions and individual consultants\. The performance of most of the
consultants was satisfactory\. The exceptions were the first two technical
assistants appointed as Project Coordinator and a consulting firm for
supervising the construction of the Douala slaughterhouse\.
K\. Project Relation
1\.50 Despite delays in project implementation and the notice of
disbursements suspension, a cordial re'lationship prevailed between IDA and
Borrower staff throughout the implementation of the Project\.
L\. Prolect Documentation and Data
1\.51 The Credit and Project Agreements and the SAR provided adequate and
appropriate guidance for project implementation\. No amendment was effected
to the Credit Agreement\. A management information system was not instituted
by the PCU\. Consequently, data was not available on the benefits and costs
of private sector beneficiaries of the Project nor data that enable accurate
estimation of overall project benefits\. FONADER, SODEPA and the Tsetse
Eradication Unit kept well organized records\. No information was available
on the activities of the veterinary and extension service\. Consequently, no
attempt was made to calculate the ERR of the Project\. Considering the poor
performance in the credit and livestock service components which were
reflected in a marginal impact on productivity, the continued unviability of
the parastal ranches, and the uncertainty regarding the extent to which the
investment in tse tse eradication is being utilized, the ERR is likely to be
less than 102\.
- 14 -
PROJECT COMPLETION REPORT
REPUBLIC OF CAMEROON
SECOND LIVESTOCK DEVELOPMENT PROJECT
(CREDIT 1010-CM)
PART II\. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 1/
2\.1 While the evaluation of those components regarded as
successful (Part I, para\. 17), the findings of the others, such as
sustainable increase in meat production and the strengthening of the
capacity of governmental organizations to develop livestock farming, are
more nuanced\. As regards the increase in meat production, there was
undeniable growth in the poultry farming sector, thanks to the loans
distributed by FONlADER\. The constraints cited: such as competition from
imports or the lack of marketing channels, are temporary and, in the
case of the second, always a factor in the development of increased
production\. The increases in cattle and hog production were constrained
by the occurrence of two epidemic diseases which the project did little
to counter\. Consequently, it is difficult to assess whether an increase
in meat supplies brought about by the Project was not temporarily
affected by these two epidemics, which, as witnessed in other countries
are difficult to control\.
2\.2 The average results obtained in extension services are
closely associated with the fact that this component of the Project had
been entrusted to agencies for which it was not their primary activity\.
The efforts of SODEPA suffered from a lack of necessary funding, brought
about by the financial and economic crisis, and the IMF and World Bank
recommendations with respect to a halting of subsidies to public and
parapublic entities\. FONADER was unable to devote all the attention
required to extension activities with stock farmers because of their
other different tasks such as credit and monitoring\. Closer attention
to these aspects during the appraisal stage of the Project might have
made it possible to propose other alternatives to implementing extension
services\.
2\.3 The strengthening of veterinary services in Adamaoua was
delayed not by budgetary problems, but because of constraints assoctated
with the construction of the requisite infrastructures: selection of
locations, awarding of contracts, shortcomings of some contractors\. As
a result, the buildings could not be completed until after successive
extensions of the Project\. After the close of the Project, budgetary
constraints arising from the economic and financial crisis made it
I1/ See Annex: Response to the Borrower's Perspective to the Project Completion
Report\.
- 15 -
impossible to make use of these facilities which explains the low rate
of utilization\.
FONADER
2\.4 The credit component experienced difficulties\. These were
partially overcome, and were ultimately reflected in greater flexibility
in the distribution of subloans, as compared with the projections of the
appraisal report\. Despite the Bank's support on this matter, the
agreement between FONADER and KWF could not be signed until 1984, the
date initially planned for the end of the Project\. In the meantime, at
the Bank's insistence, MINEPIA had seconded technicians to FONADER who
were unable to obtain maximum benefit since they were hired rather late\.
The involvement of two cofinancers, together with the existence of
different implementing strategies (FONADER and MINEPIA) who did not
share the same degree of interest in the distribution of subloans, led
to intra-institutional constraints which resulted in considerable
delays\.
2\.5 The occurrence of Rinderpest and African swine fever had
varying repercussions on the distribution of loans\. Swine fever
appeared in the provinces of Western Cameroon, where the project had
made no plans (as in the case of Adamaoua), for strengthening veterinary
services to combat the epidemic\. However, Rinderpest was not the only
reason for the lack of purchase of young breeding stock or cattle for
fattening\. The difficulties encountered were rather structural, as
shown by the experience of SODEPA, which ran into the same constraints\.
The Rinderpest epidemic only accentuated the other problems for a period
of time\.
2\.6 There were two reasons why the extension agents made
available to MINEPIA by FONADER were not as effective as expected in
monitoring and extension\. On the one hand, the late hiring of the two
technical assistant experts caused by intra-institutional difficulties,
meant that the extension agents could not take full advantage of their
experience\. Moreover, the stress placed during supervision missions on
the objectives of recovering loans certainly prompted the managers
concerned to devote greater attention to this aspect of their activities
than to extension services\. On the positive side, the recovery rates
distributed under the Project are among the best by far ever obtained by
FONADER\.
2\.7 Above all, it bears noting that the credit did not take into
consideration the operating costs of the extension structure\. IBRD's
disbursements were limited to the subloans, to the purchase of vehicles
and equipment, and to training and technical assistance\. From the
outset, the very design of the financing plan entailed the risk that the
necessary funds would not be available\. The Third Livestock Project
deals with this aspect more realistically, on the one hand by entrusting
the provision of extension services to stock farmers to a single
extension agency, and on the other, by providing funds to cover the
operating costs of that agency\.
- 16
SODEPA
2\.8 Slaughterhouses, The technical and financial performance of
these slaughterhouses are surely cne of the Project's major successes\.
The slaughtering fees were set when the slaughterhouses first went into
operation at a level considerably higher than the Bank had recommended
(CFAF 4,000 instead of CPAF 2,500)\. Subsequently the directors, who are
the parties responsible for setting these rates, not the Government,
sought constantly, as did supervision missions, to improve the
profitability of the slaughterhouses by improving productivity rather
than by taking the easy path of increasing fees; the latter solution
also risked inciting users to turn their backs on the slaughterhouses
and use clandestine facilities\. Accordingly, productivity in terms of
tonnage of meat slaughtered per worker-month rose from 5 metric tons to
over 11 metric tons in Yaound6, and from 3 metrie tons to nearly 14
metric tons in Douala\. Concomitantly, gross profits before amortization
amounted to CFAF 137 million 1987/88, or 70 percent higher than the
results for 1986/87\.
2\.9 The installation of modern butcher shops, as might have been
expected, met the obstacle of the deep-seated conservatism of this
powerful guild\. Similarly, the buying habits of virtually all consumers
show that more importance is attached to the price of meat than to the
modernity of the store where it is purchased and the technical skills of
the vendor\. Nevertheless, SODEPA did a good job of providing
professional training needed to 12 traditional butchers in both Yaound6
and Douala\. Despite the closing of the credit on 12/31/86 as far as
Category 1 is concerned, FONADER and SODEPA signed a protocol of
agreement on June 3, 1987 on the modalities for their collaboration with
a view to the distribution of credits to modern butchers\. Because
PONADER was dissolved shortly thereafter, continued collaboration in
this area was not possible\.
2\.10 Ranches\. Factors other than those mentioned explain the
average performance of the ranches:
(i) the quantitative problems of gathering sufficient numbers of
animals made it impossible to stock these units at the
planned pace\. The good results obtained since 1989 reflect
the reality of the operation;
(ii) the animals available on the market are those that are put
up for sale because they are deemed unsatisfactory\. This
problem and the preceding one, as also indicated by the
recipients of FONADER credits, show that this was a
structural problem, since private operators acting directly
in their own interest found it just as difficult as Ministry
officials to find a solution\.
(Iii) specialists are of one mind in acknowledging that mixing
animals from different sources cannot but lead to high
- 17 -
mortality rates; this view, which is well known in poultry
farming and swine raising as reflected in the adage of "all
in, all out" is also valid for ruminants\. In the case of
the stocking process excessive mortality was observed until
the normal rate of operations was achieved;
(iv) the sometimes contradictory changes requested by supervisory
missions in the general approach (breeding ranch, fattening
ranch, mixed) or in the short-term management (ratio of
heads of cattle to ranch employees) did not permit SODEPA to
develop and implement a long-term policy; moreover, when the
first Project Coordinator, with the tacit approval of the
Bank, played a key role in the redefinition of certain
objectives, he ended up not devoting as much intsrest as
might have been desirable in carrying out the mandate for
which he had been hired\.
2\.11 SODEPA's extension operations were carried out by qualified
personnel, who were specially seconded by -INEPIA and had participated
in training and research missions devoted to the essential features of
the Project\. Thus there was no intervention by the ranch management
personnel, who were not directly involved in these operations\. However,
the dual aims of the activities proposed for SODEPA came to light quite
rapidly, when the company was asked at one and the same time to provide
this extension work and to make all its activities profitable, to
conduct its business with an eye on the bottom line\. Thus, after having
used its own funds for two years, without any subsidy to finance the
operation of the extension activities, SODEPA virtually halted all
activities in this area\. At roughly the same time, the Third Livestock
Project appraisal suggested that this activity should be withdrawn from
SODEPA, which also influenced its short-term decision\.
STRENGTHENING OF VETERINARY SERVICES
2\.12 The delays noted in this component do not stem specifically
form the causes cited\. For example, the lack of counterpart funds
cannot be advanced, since, quite the contrary, the Government had paid
its entire share (40 percent) in the financing of the construction by
disbursing it for the startup of the enterprises; this met with the
Bank's approval, moreover, as a result of which credit was subsequently
to provide 100 percent of the costs up to the initial ceiling\. The
delays actually were caused by the choice of sites for buildings, the
Bank's refusal to finance renovations only, the complexity of the
contracting procedures, and, finally, the difficulties experienced by
certain enterprises in completing their construction work\.
2\.13 The sites to be selected for developing infrastructures were
not clearly identified during the Project preparation and identification
phases\. It was therefore necessary to carry out thia lengthy
preliminary work before issuing calls for bids, in order that bidders
would have the maximum possible amount of information not only about the
type of structures desired, but their location in relation to their
- 18 -
decision-making center or supply points\. The first Coordinator played a
significant role in carrying out this preliminary work, as well as in
producing the documentation materials for the call for bids\.
2\.14 Once the sites were identified, it appeared that some
existing infrastructures, which were already rather old, could be
restored to complete functionality if they were renovated and
rehabilitated\. The Bank rejected this proposal, for which the drafting
of a construction contract would have been quite simple from the
standpoint of design, execution, and technical and financial control\.
These exchanges of views and the decision-making process not only added
to the delays, but also to an unfortunate duplication of infrastructures
in the field\.
2\.15 The signing of contracts for the construction involved the
work of two separate administrations: MINEPIA, a technical department,
and the Ministry of Government Procurement, the only authority under
national regulations which is empowered to award contra 's in such large
amounts\. This structure raised problems, caused slowdowns, and led to
delays, which the Bank repeatedly stressed in its Project reviews and
which negatively affected this component\. In July 1986, however, a
Decree was issued which, inter alia, adjusted the thresholds required
for review by Government Procurement from CFAF 10 million to CFAF 50
million, with the technical departments retaining financial authority
for lesser amounts\. In November 1988, a second Decree established the
DGTC, whose responsibilities include the procedure for announcing and
awarding government contracts\. These two measures, in particular the
first of them, have made it possible to simplify and speed up the
contracting process\.
2\.16 The procedure of calling for open bids resulted in the
awarding of contracts to enterprises which certainly offered the best
guarantees from the national standpoint, but which were probably not the
best equipped to carry out construction Projects spread over an entire
province\. In hindsight, they underestimated the conditions under which
they were involved withir the very framework of their bids\. Moreover,
the distances to and scattering of the more than 20 construction sites
from their head offices significantly impeded the execution of
construction, and in the case of one of the bidders led to considerable
delays\. SODEPA experienced the same type of problems for the
construction of the extension services building in Adamaoua\. In future,
it would be preferable to limit the calls for bids to enterprises that
are located nearby in the same province, and even, by splitting up the
bid lots, within the same department\.
2\.17 The buildings were finally delivered at the planned closing
date for the Project\. However, the Project had failed to provide
funding againsi the Credit for equipping the facilities, and because of
the economic and financial crisis, it was not possible to equip them
completely using domestic funds\. The equipment is being obtained
gradually, when budgetary constraints permit, and should make it
possible to use the offices constructed in their entirety\.
- 19 -
2\.18 The Rinderpest epidemic broke out at a time when the
infrastructures were unfinished which would have been the case
regardless of the procedural rigidity of MINEPIA\. Moreover, the
veterinary health authorities are constantly on a watch to minimize
vaccinations in order to establish animal populations which are
definitely identifiable as serologically immune, so as to maintain
export potential\. The EEC has just forbidden vaccination against foot-
and-mouth disease within Community for the same reason\. The combination
of these two facts thus explains the "delays" in carrying out the
vaccinations\. However, the Government undertook, following this
epidemic and when budgetary appropriations so permitted, to establish
mobile prophylaxis teams equipped with vehicles and ample equipment of a
suitable quality to enable them to intervene as rapidly as possible
whenever there were new outbreaks of epidemic diseases\. The use of the
term "strengthening of veterinary services" by MINEPIA\. The latter
interpreted the expression broadly, i\.e\., strengthening throughout the
entire national territory, whereas the Bank obviously stuck to the terms
of the Project documents, which limited the purchase of goods (vehicles
and equipment) to the province of Adamaoua; after the Bank made these
observations, the vehicles were returned or replaced in Adamaoua\.
PROJECT COORDINATION UNIT
2\.19 As the project records bear out, the first Coordinator,
immediately upon taking up his duties, performed the important task of
translating the Project documents into understandable technical,
financial, and budget ry programs\. The subsequent delays noted in the
implementation of mob\. components of the Project, for the various
reasons indicated above (especially in paragraphs 4 and 12), prompted
him to embark on various studies and activities (ranch reorganization,
the extension component of SODEPA, the establishment of veterinary
infrastructures in Adamaoua) which were beneficial to the Project in
general terms, but probably harmful to the Project Coordinator in
particular\. It must be noted, however, that the Bank never reported
this change in the Coordinator's activities, which obviously did nothing
to correct the situation\. The second Coordinator was responsible for
the creation of a concertation arrangement involving all the players in
the Project and set up a system of follow-up indicators\. As he left
Cameroon after only six months for professional reasons, he was unable
to implement this system\. The third Coordinator took up his duties at a
time when the major concern of the Government and the Bank was shifting
to preparation of the Third Livestock Project; he therefore played an
active role in preparing and pushing forward all ;hese studies,
including, on the Bank's recommendation, the drafting of the proposals
relating to the development of the raising of small ruminants in the
feasibility study for the following Project\.
2\.20 The introduction of a coherent monitoring and evaluation
system was thus compromised by the fact that three different technical
assistants held tha Coordinator position, as well as by the nature of
the most pressing tasks confronting them\. It should be added that the
design for project coordination was probably not the most appropriate\.
- 20
Even more thani the project direction itself, coordination depends as
much if not more on the human relations the Coordinator is able to
establish than it does on his technical capacities\. These relations
also depend on those with whom he is dealing, persons who may also
change over time\. Thus, for a project with multiple components and
calling for the involvement of various different persons, and sometimes
inivolving different supervisory structures (as was the case with FONADER
in the Project), simple coordination was probably not enough\.
2\.21 Similarly, the task assigned to the project coordinator of
drafting the Project Completion Report (PCR) six months after the final
disbursement, was inadequate, not to mention inconsistent with the terms
of the Loan Agreement, there was no way to finance this work after the
Project wae shut down\. Moreover, despite repeated verbal requests to
this effect, the Bank never communicated the Terms of reference or
drafting plan of the PCR\. The Third Livestock Project provides for the
establishment of a Project Monitoring and Evaluation Unit, which will
speed up the drafting of the PCR; it should be noted, however, that the
provisions of Section 7 of the general guidelines on the preparation of
PCRs were not formally agreed jointly\.
BANK PERFORMANCE
2\.22 The Bank's recommendations and observations both during the
supervisory missions and from its headquarters, basically allowed for
the implementation anid improvement of the technical aspects of the
Project\. Tthe successive changes in Project leadership were nevertheless
harmful because of proposals, in particular as regards ranch
reorganization or management, that were contradictory, with each new
person responsible for supervision having his own notion of how things
should go\. The institutional aspects, whether internal or external,
even if clearly perceived, did not result in any apparent improvements
following interventions by the Bank\. The fact that recommendations were
issued on speeding up the awarding of contracts, the need for which
MINEPIA was already convinced of, did nothing to bring about improvement
at the level of the other departments concerned\. In such a case, more
direct intervention predicated on the evidence of problems experienced
by a number of projects would have been more convincing\. Internally,
the Bank did not stress when it should have the extent to which the
Project Coordinator had departed from the activities set forth in his
mandate; likewise, it did nor communicate the guidelines on preparing
the project completion report in a likely manner\.
2\.3 The Bank made a great contribution to the secondment of the
MINEPIA specialists to FONADER; however, subsequently insisting on the
loan recovery rates to be achieved\. This prompted officials to devote
more energy to that objective than to organizational i8sues and
extension services\. On the other hand, however, the recovery rates for
the Project are among the best recorded by FONADER\.
2\.24 The Bank's officials made themselves readily available for
helping to resolve even the most unforeseeable problems standing in the
- 21 -
way of the project's proper functioning\. This great flexibility made it
possible, for example, for SODEPA to finance trips by religious leaders
into muslim areas, but with the animals slaughtered after they were
first stunned\. The acceptance of this procedure by the islamic
community of Douala following this trip resulted in better productivity
at that city's slaughterhouse than at the one in Yaound6 (14 metric tons
per employee month as compared to 11 metric tons)\.
2\.25 The approach adopted by the Bank to provide SODEPA with the
resources necessary for extension activities was inconsistent with the
foreseeable approach for the Third Livestock Project, i\.e\., returning
the extension function to MINEPIA staff\. The buildings constructed by
the project are oversized and inappropriate for this new approach, and
will require the managers of the Third Livestock Project to make the
necessary adjustments in the first stages of project implementation\.
PERFORMANCE OF BORROWER
2\.26 Finally, the performance of each component roughly reflected
the degree of autonomy enjoyed by each implementer in carrying out his
part of the project\. The components placed under single responsibility,
and which also had the benefit of experience accumulated in the
preceding project, such as the tse tse eradication, are unsatisfactory\.
Those depending on a cofinancer (FONADER), the awarding of contracts by
another agency (strengthening of veterinary services), or decisions from
a higher level in the hierarchy (closing of the municipal
slaughterhouse) suffered from the delays inherent in such intra-
institutional relationships\. In order to avoid these delays, the Third
Livestock Project should have provided for single and simple channels
for decision making\.
BANK-BORROWER RELATIONS
2\.27 Generally speaking, the relations between Bank officials and
the supervisors of the Project were marked by the common concern with
finding a consensus view on the most appropriate ways and means of
advancing the project\. As indicated above (paragraph 26), this
objective was more easily attained when it depended on just a single
institution in the borrowing country\. The single notification of the
possible suspension of disbursem6nts, which occurred in December 1983,
was triggered mostly by cases in which several players were involved\.
In the event, it helped speed up intra-institutional procedures and
decision making\.
- 22 -
PROJEC CDNPLE REPO
EPUBLIC OF-CA-NEROOM
(CR98 010-CO12\.sM)
SEON LIVESTOCK DEVELOPMENY PROJECT
PART III; STATISTICAL INFORMATIO
TABLE 1\. RELATED BANK LOANS AND/OR CREDTIT
Title Approvat Purpose status
1\. Caowroam Livestock 1974 To assist Goverrment fn the impLementatIon of completed
covelopmmt the first phase of its "lmeat plan", which was
Project (L*oan 983-CM) designed to increase meat produtifon in order
to reduce substantiatLy the level of meat
Imports of 10,000 metric tons p\.a\. projected
to increase to 25,000 mewtric tons p\.a\. by 1985\.
This objective was to be achieved mainly through
(a) clearing 800,000 ha\. of tsetse infested area,
Cb) establishing 3 state and 150 private ranches
and Cc) providing technical assistance for
livestock extension, training of officers of the
credit agency and SOCEPA, the parastatal involved
in managing the cattLe ranches and the two
abattoirs at Yaounde and Doumla to be btilLt under
the project\.
2\. Carieroon Livestock 1989 The project follows-up on its two predecessor Ongoing
Sector Oeveotnent and alms to increase meat ard miltk production,
Project CLoan 3014-CM) raise producers' income, in particular for poor
herders, and reduce the financial burden of the
sector on govermtent budget, through Ca) policy
reforms aiming at privatization of input
distribution and veterinary services and the
optimization of public services; and (b)
investments in CO) institution building In
extension services and herder organizations;
Cif) range improvement; and Clii) credit for
private producers and heatth service agets\.
Table 2\. Proieet TiS_met_ablea
Item ~~Planned Revised Actual
- identifLcatton IdentLfied as a follow-up of a predeesgor
projoct
- PreparatLon 02-05/78 03-06/78
- Appraisal Mission 02/79 02/79
- Loan Negotiations 10/79 12/79 04/80
- Board approval 12/79 01/80 04/22/80
- Loan signature 06/20/80
- Loan Effectiveneus 09/22/80 12/31/80 05/12/81
-Project Completion 06/30/84 12/31/88
- Loan Closing 12/31/84 12/31/85 12/31/88
12/31/86
12/31/87
-------------------- -
f-
- 23 -
TABLE 3\. CUMMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS
(US S 1,000)
Estimated SAR Actual Actual Cumul- L-ate
Bank Fiscal Diubur- Cumul- Disbur- Cumul- ative As % of of Flnal
Year Quarter mOment atlve sement ative Total SAR DLaburs\.
1981 1 - - - - -
2 1550 1550 0 0 0 0
3 950 2500 119 119 1 5
4 1070 3570 1147 1266 8 35
1982 1 970 4540 240 1506 9 33
2 1130 5670 92 1598 10 28
3 1200 6870 972 2570 16 37
4 900 7770 134 2704 17 35
1983 1 1070 8840 132 2836 18 32
2 1030 9870 1414 4250 28 43
3 1030 10900 478 4728 30 43
4 1030 11930 263 4991 31 42
1984 1 1030 12960 114 5105 32 39
2 1030 13900 609 5714 36 41
3 775 14765 870 6584 41 44
4 645 15410 151 6735 42 44
1985 1 295 15705 216 6951 43 44
2 295 16000 531 7482 47 47
3 - - 125 7607 45 -
4 - - 140 7647 48 -
1986 1 - - 543 8290 52 -
2 - - 563 8853 55 -
3 - - 120 8973 56 -
4 - - 1136 10109 6\.3 -
1987 1 - - 789 10898 68 -
2 - - 1298 12196 76 -
3 - - 964 13160 82 -
4 - - 618 13779 86 -
1988 1 - - 1108 14887 93 -
2 - - 539 15426 96 -
3 - - 239 15665 98 -
4 - - 192 15857 99 -
1989 1 - - 143 16000 100 - 02/27/89
- 24 -
TABLE 4\. PROJECT IMPLEMENTATIONJ
KEY INDICATORS
A\. Credit Agreement
Number and Value of loans
SAR Estimate Actual
Loan in Loan in Actual as
Million Million X of SAR
Indicators No\. FCFA No\. FCFA No\. FCFA
1\. Pig breeding & Fattening 200 400 55 120 28 30
2\. BroiLer Production 100 150 0 0 0 0
3\. Egg S Cockerel Production 100 150 228 477 228 318
4\. Livestock Production in
mixed farms 500 188 442 232 88 123
5\. Cattle ranches 170 610 348 1240 205 203
5\. Group loan in tsetse
cleared areas 40 68 0 0 0 0
B\. SODEPA Component
SAR Actual as
Unit Estimates Actual % of SAR
1\. Slaughterhouse
Cattle slaughtered/day no\.
Yaounde 150 260 173
Douala 150 180 120
Butcheries modernized no\. 12 0 0
2\. Rsnches
Calving Rate (X) 73 65\.2 101
Mortality (M) 3\.0 5 90
Emergency slaughter
& stray losses (%) 0 1\.7
C\. Veterinary Services
1\. Construction (%) 100 100 100
2\. Building Utilization (M) 100 50 50
3\. Improved veterinary
Services (No\. of herdsmen) 1,100 ? ?
D\. Tsetse Eradication
1\. Area cleared (000 ha) 960 1,500 156
J/ The rates are for 1987/88\. See Table 7b for other years\.
- 25 -
TABLE 5\. PROJECT COS\.TS
(USS '000)
Category SAR Estimate Act al
Total % Total t
1\. Private Sector Credit 13600 36 83i£ 25
- sub-loans 5835
- vehicles G equipment 200
- specialist services 541
2\. SODEPA 00 15 iX2J1 34
- civil works 1706
- vehiclea, equipment
vaccines, vet\. supply 4268
- specialist services 1734
3\. MINEL
- Tsetse Eradication 11300 30 29
- civil works
- vehicles, equipment
& aircraf'\. hire 2275
- insecticides' 4221
- Vet\. Field Services 3400 9 2821 8
- civil works 1989
- vehicles & equipment 615
- specialist services 217
- Project Coord\. Unit 370" 10 13 4
- vehicles & equipment 121
- specialist services 1375
Sub-total 37600 100 34219 100
Unallocated 2300
Total 39900 34219
- 26 Table 6
Page 1 of 2
TABLE 6\. PROJECT FINANCING
(USS '000)
IA and Federat A nbi o emny Financinq
SAR Actual as % of
Category Estimate Revised Actual SAR Revised
A\. IDA Financing
1\. Private Sector Credit 3200 22C0 2160 68 98
- sub-loans 2300 1400 1459 63 104
vehicLes & equipment 100 250 160 160 64
- specialist services 800 500 541 68 108
2\. SODEPA 3000 5200 6171 206 123
-civil works 650 1500 1023 157 68
- vehicles, equipment
vaccines, vet\. supply 1250 2500 3414 273 136
- specialist services 1100 1200 1734 158 144
3\. MINEL 8300 7300 7668 92 105
-Tsetse Eradication 4300 4500 4271 99 95
- civil works 100 0 0 0 0
- vehicles, equipment
& aircraft hire 300 100 51 17 51
- insecticides 3900 4400 4221 108 96
- Vet\. Field Services 2400 1800 2164 90 120
- civil works 1500 1050 1193 80 114
- vehicles & equipment 500 500 492 98 98
- speciaList services 400 250 479 120 191
- Project Coord\. Unit 1650 1000 1233 75 123
- vehicles & equipment 1250 750 754 60 Thi
- specialist services 400 250 479 120 192
4\. Unallocated 1450 1350 0 0 0
Sub-total 16000 16000 16000 100 100
8\. Federal Republic of Germany Financing
1\. Private Sector Credit 3700
2\. Tsetse Eradication 5300
Sub-total 9000
- 27 -
Table 6
Page 2 of 2
TA,Lg 6\. PRgJECT FINANCING
(USS '000)
99veraMlen and Rnfesis iacn
Category SAR Estimate Revised Actua S Revs
C\. goyerrit Finerinin
1\. Private Sector Credit 4400 2734 62
* sub-loans 3200 1960 2042 68 109
- vehicles & equipment 25 62,5 40 160 69
- specialist services 200 -
2\. SOOEPA 2600 5530 213
- civil works 433 1000 683 158 68
v ehicles, equipment
vaccines, vet\. supply 312 500 854 274 171
*speciatist services 275
3\. NINEL 4800
- Tsetse Eradication 1700 1700 1917 113 113
civil works 67
* vehicles, eqipment
& aircraft hire 300 100 51 17 51
insecticides
\. Vet\. Field Services 2140
- civil works 1000 700 795 80 114
- vehicles & equipment 125 125 123 98 98
- specialist services 100
- Project Coord\. Unit 700
* vehicles & equipment 312 188 183 60 1\.1
- specialist services 100 * *
4\. Unallocated 800
Sub-total 1260-0- 11,282
D\. £ i i c
1\. Private Sector Credit 2300 1120 1157 50 103
- 28 -
TABLE 7A\. \.PODTT PR S
Emergency
Slaughter
Calving Rate Mortality & Loss Sales
Year SAR Actual SAR Actual SAR Actual SAR Actual
Percent Percent Percent Cattle No\.
1980/Si 53\.0 ? 4 ? 0 ? ? ?
1981/82 60\.0 58\.0 4 6\.1 0 4\.7 ? 1363
1982/83 55\.0 56\.7 3 8\.6 0 3\.3 ? ?
1983/84 70\.0 61\.7 3 7\.5 0 3\.7 ? 2529
1984/85 73\.0 60\.2 3 6\.9 0 4\.7 4180 3040
1985/86 73\.0 72\.2 3 3\.9 0 1\.6 4180 2535
1986/87 73\.0 74\.4 3 3\.4 0 1\.2 4180 3459
1987/88 73\.0 65\.4 3 4\.3 0 1\.7 4180 4326
1988/a9 73\.0 64\.1 3 4\.7 0 1\.6 4180 5040
1989/90 73\.0 62\.8 3 5\.9 0 2\.0 4180 5704
TABLE 7B\. FINANCIAL RESULT OF SODEPA OPERA&TIO-NS
- ~~Ge~neral
Total Operations
Directorate Ranches Abattoirs Annual
Year Mil\. '000 Mil\. '000 Mul, '000 Mil\. '000
FCFA USS FCFA USS FCFA US$ FCFA US$
1984/85 (197) (521) (167) (442) (19) (50) (383) 1013
1985/86 (252) (780) 293 907 (192) (594) (151) (467)
1986/87 (245) (918) (9) (34) 140 524 (114) (427)
1987/88 (249) (822) (160) (528) 331 1092 (108) (356)
Table 8
29- Page 1 of 4
SECOD LIESTOC -DE-VEOM TPRJC
TABE \. CMPIANCE WniT CREDI-T COVENlANT
Ievelanment Credit Agreement
2\.02 Fonader stiall employ (a) a pig and poultry a/ specialist; Full
and (b) a catte production specialist
3\.01 lb) Without any limitation or restriction upon any of its other
obligations under the development Credit Agreement, the
Borrower shall cause FONAOER and SODEPA to perform
in accordance with the provisions of the FONADER
Project Agreement and the SOOEPA Project Agreement all
their respective obligations therein set forth, shall take
and cause to be taken all action, including the provision
of funds, facilities, services and other resources,
necessary or appropriate to enable FONADER and
SODEPA to perform such obligatlors, and shall not take
or permit to be taken any action which would prevent or
interfere with such performance\.
3\.01 Ie) The Borrower shall make available to SOOEPA on a grand Full
basis the funds required for Part B of the Project\.
including the proceeds of the Credit allocated tnereto\.
3\.01 (f) The Borrower shall provide the funds to be made available Full with substantial delay\.
pursuant to this Section to MINEL (including the Special particularly to MINEL's
Mission), FONADER and SODEPA\. respectively, in semi- veterinary and extension
annual advances based on the approved Project budgets component
of said entities so as to ensure that, at the beginning of
each half Vear\. each of them has available sufficient liquid
funds to cover Project expenditures during such half year
(except those expected to be covered through application
to the Association for direct payment to suppliers or
contractors from the Credit Account)\.
3\.02 (a) In order to assist MINEL in carrying out Part C of the Full with substantial delay\.
Project, the Borrower shall employ, or othervise secure
the services of tha following specialists and consultants
whose qualifications, experience and terms of reference
shall be satisfactory to the Borrower and the Association
and whose services shall be made available to the Special
Mission: (il en operations controller; (ii) a veterinarian; and
(iii) a tsetse fly ecologist, an insecticide spraying
consultant and a fixed-wing spraying consultant\.
Table 8
_30- Page 2 of
F CLAMEQQM
SECONQ LIOES fgCK DEVELOPMEB N PlJE
T COMPLIAC WT COENANTS
Deelgonmnt Credit 6Areement
Ssetlgni Subiect ConglDancel
3\.02 (b) In order to assist MINEL in carrying out parts 0 and E of IDA agreed with Government
the Project, the Borrower shall employ tha following In March 1984 and October
specialists and consultants whose qualifications, 1985, respectively, that land
experience and terms and conditions of employment shall use specialist and training
be satisfactory to the Borrower and the Association: (i) a coordinator for PCU were not
livestock training specialist for the Jakiri training center, longer needed\.
iiil a land use planning specialist: (iii) a training
coordinator for the PCU; and (iv) consultants for assisting
in the preparation work under Part E lii) of the Prolect\. l
3\.03 (a) The Borrower undertakes to insure, or make adequate Ful
provision for the insurance of, the imported goods to be
financed aut of the proceeds of the Credit allocated to
Parts C, D and E of the Project against hazards incident ot
the acquisition, transportation and delivery thereof to the
place of use or installation, and for such Insurance any
indemnity shall be payable in a currency freely usable by
the Borrower to replace or repair such goods\.
3\.03 (b) Except as the Association shall otherwise agree, the Full
Borrower shall cause all goods and services financed out
of the proceeds of the Credit allocated to Parts C, 0 and
E of the Project to be used exclusively for the Project\.
3\.04 In respect of Part C of the Project, the Borrower shall Full
cause the proposed work program, including estimates of
the cost thereof, of the Special Mission for each fiscal
year to be furnished to the Association, for review and
approval, not later than three monghs before the
beginning of such fiscal year\.
3\.05 (a) The Borrower shall furnish to the Association, promptly Full
upon their preparation, the plans, specifications, reports,
contract documents and work and procurement scheHulaes
for Parts C, 0 and E of the Project, and any material
modifications thereof or additions thereto, in such detail
as the Association shall reasonably request\.
\. \. \. \. \.
31 ~~~~Table 8
SECONO LIVESTOCK OEVELOPHENT PRO~JEC
TBLE 8\. CMPetNC UIHCREW? COVNANT
Develoosent Credit Aaresment
ComUlance
3\.05 (b) The Borrower; (f) shall maintain records and procedures fELL
doquate to record nd monitor the progress of Parts\. C,
D an E of the Project (including their cost and the
beefits to be derived from them), to Identify the goods
and services financed out of the proceed of the Credit
alltcated thereto, and to disclos, their use in said
Parts of the Project; (1i) shalt enabte the
AssoclationSe accredited representatives to visit the
fociltites and construction sites included in said Parts
of tho Project and to examine the good financed out of
the proceeds of the Credit allocated thereto and any
roelvant records and docusants; and (it) shalL furnish
to the Association at regultr intervals alt such
Inforc tion as the Association shall renonably requeot
concerning said parts of the Project, their cost and,
where appropriate, the benafits to be derived from them\.
the expenditure of the proceeds of the Credit allocated
thersto and the goods and services financed out of such
_proceeds\.__ _ _ _ _ _ _
3\.05 Cc) Promptly after coqpletion of the Project, but In any Rone
event not later than six mnths after the Closing Osto
or such later date as my be agreed for this purpose
between tvh Borrower ad the A"soition, the Borrower
shall prepare and furnish to the Association a report,
of sumc sope and In such detail as the Association
tshlL reasonobly request, on the execution and initial
operation of the Project, its cost ond the benfits
derived and to be derived frm It, the performnce by
the Borrower, the Association, FONADER and SODEPA of
their respective obligations under tho Developnent
Credit Agremnt, the FOADER Project Agrement and the
SODEPA Project Agrement, and the acconplishdent of the
purp"o of the Credit\.
3\.06 The Borrowr shall second nine technicaL agents to Full with 2 years delay
F_ONADER\.
3\.07 The Borrower shall take sil action necary to esure Necesity did not arise
that FONADER has the opportunity to procure, if
ecesary by direct importation from abroad, vaccines,
drugs ad other voterinary supples in the quantities
and at the times required for purposes of Part A t1) of
the Project\.
3\.08 The Borrower shalt prepare not later than Jwue 30, 1980 Docusnt subitted in
a dotailed progrm for a more economic use of SOEPA February 1984 reJected by
ranch resources DA\. Anothor report
____________________________ _____________________________________________ subitted bd Septer 1984\.
Table 8
32- Page 4 of4
REPUBLIC OF CANEROON
SECONDLIVESTOCK DEVELOPMENT PROJECT
1 :~~~(8 101 Im
TABLE 8\._COMPLIA WITH CREDIT COVENA_TS
Section S ef iU
3\.09 (a) In order to carry out Part C Cf) of the Project, the Full
Borrower shall: Cii) make available to MINEL veterinary
field service staff and facit (including their cost and
the beefits to be dorived from them), to Identify the
soods and services financed out of the proceeds of the
Credit allocated thereto, nd to disclose their use in
said Parts of the ProJect; (if) shall enable the
Association's accredited representatives to visit the
facikities and construction sites included in said Parts
of the Prnject nd to axoeino the goods fifanced out of
the proceeds of the Credit allocated thereto and any
reolevant records and documents; and Ciii) shall furnish
to the Association at regular intervals all such
Informealon as the Association shall reasonably request
concerning said parts of the Project, their cost and,
where appropriate, the benefits to be derived from them,
the expnditure of the proceeds of the Credit allocated
thereto and the gorx and services financed out of such
___ ___ __ ___ __ ___ __ ___ _ oroceeds\.
if Included fn Project Agriesment\.
Table 9A: Staff inputs (Staffweeks)
7o
TASK FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 TOTAL
Preparation 6\.6 - -- -- -- -- - - -- 6\.6
Appraisal 54\.7 33\.2 -- -- -- -- -- - -- -- -- -- -- 87\.9
Negotiations/Board -- 4\.5 -- -- -- -- -- -- -- -- -- -- -- 4\.5
Loan Processing (LOP) 1\.4 11\.5 -- -- - -- -- -- -- -- -- -- -- 12\.9
Sib-totat 62\.7 49\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 111\.9
Supervision - 0\.8 11\.4 13\.2 10\.1 22\.8 14\.4 14\.6 9\.8 5\.5 1\.3 -- -- 103\.9
Project Achinistration (PAD) -- 2\.2 2\.2 0\.4 0\.4 1\.6 0\.2 0\.1 -- -- - -- 7\.0
Project Comptetion Report -- -- -- -- -- -- -- 0\.2 -- -- 1\.1 1\.6 0\.9 3\.8
Sub-total 0\.0 3\.0 13\.6 13\.6 10\.5 24\.4 14\.4 15\.0 9\.9 5\.5 2\.4 1\.6 0\.9 114\.7
TOTAL 62\.7 52\.2 13\.6 13\.6 10\.5 24\.4 14\.4 15\.0 9\.9 5\.5 2\.4 1\.6 0\.9 226\.7
October 11\. 1991
O F-
0
Tame 9B\. W missions
Staff Isuzt
Specisllation-
stag of Date no\. of Nandays repre- Perfoiwcee
Project Cycle No\./Yr\. Persona in Field sented I Ration Issues raised
Supervision 1 091O 1 1 12 liv 2 Low productivity of SaDEPA ranches\. Delays in start of tsetse cpe1pgn\. iack of progress in abattoir
conlstructionl\.
supervfsion 2 IIfat 1 12 liv 2 Uviability of SWEPA ranches\. Negative enwfronental effect of Dieldrin\. Delays In abettoir constrction\.
Supervision 3 03182 1 14 tiv 2 Leck of progres on KFU credit agrement\.
suwervfsion 4 1182 I 11 liv 2 Iradequac of report on SWEPA rancbes to address issue of viability\. Negative envirer entat effect of
DecamLthrin\. Lack of coutterpart funding for veterinary conponent\. Slow disbursefnt of credit\.
supervision 5 03G83 1 14 liv 3 tack of technical support to prodocers by FONADER t HIlEL\. Counterpart furding\. KEU credit mgreeent\.
SUPervision 6 9-1O/83 1 21 lIv 3 tack of progress KPF credit agrreoent\. Butchers boycott of Taounde abattoir\. unaeceptabty low perforance of
SWEPA ranches\. Poor perforomce of veterinary service\. Lack of teadership of Project Coordination Unit\.
Suspension of disbiursement due to lack of adequate progress on Goverrtnt coui twents\.
Supervision 7 03WM4 2 So fa liv 3 Hanagement of SWDEPA\. Cost recovery on veterinary services\. Alternative *ethods of more economical and less
hazardous tsetse control\.
Supervision 8 09184 1 t9 liv 2 Expansion and manageft problem of staughterhouses\. tate start of tsetse controt campaign\. Stricter control of
access to tsetse cleared areas\. Inadequate loan adcinistration\.
Supervision 9 03/85 1 12 tiv 2 Recruitment of expatriate slaughterhouse manager for Taourde abattoir\. Poor technical supervision of FONADER
loans\. Extension of ctosing date by one year\.
Supervision 10 11185 2 58 liv 2 tLad temnre problem in Adawua\. Poor ranch management\. Reatlocation of credit\. Extension of credit by one year\.
Supervision 11 4-5/86 1 13 liv 2 Poor mangemeLnt of Douala abattoir\. Rising cost of SOOEPA sataries\. Poor credit supervision for cattle in
Adamou\. Slow procurent and disbursement processing by Govern ent\. Lack of supervision of civil w rks
construction for veterinary component\. Closing date extension by one year\.
supervision 12 10/86 2 20 ec liv 2 overstaffing of SOWEPA\. Extension activities of SOGEPA\. Preparation of Livestock Ill\. Cancellation of
urcmimitted funds\. Extension of closing date by a year\.
TOTAL
TABLE9TI\.IEE/CACIt
mI3
0o
CD
t " - _
Iar Ikawc wbfia
fl \. wi uah
- 35-
AEX
Page 1 of 2NE
RESPONSE TO _THE BORROWER_'S PERSPECTIV TO THE
PROJECT COMPLETION REPORT
1\. ~The Bank reviewed Cameroon's comments on the Project
Completion Report\. In general, The Bank finds the comments relevant and
to the point\. In a number of instances, they strengthen the conclusions
of the PCR\. While in some instances critical (in other more
complimentary), the project treats the Bank fairly\. As can be expected,
the project does not critically assess MINEPIA's performance\. The
Bank's commtents on some of the individual statements are as follows;
Introduction
Para 1\. The Bank agrees with the Project's substantial impact
on poultry production and the harmful effect of the African Swine Fever
on pork production\. To blame the project's lesser impact in beef
production on the occurrence of Rinderpest is too easy, as is later
acknowledged in para S\. In the beef sector, there are a lot of other
factors which have affected project performance\.
Para 2\. To blame the poor performance of the extension
component on inappropriate institutional arrangements, again is too
easy\. The main extension effort was to be with MINEPIA, through its
Livestock Service, which is the appropriate service to do extension\.
The livestock Service part never came off the ground, mainly because of
bureaucratic inertia at MINEPIA\. The infrastructure was only finished
at project completionut (para 3)\. The extension effort with SODEPA and
FONADER wag only for very specific and limited areass (i) with SODEPA to
provide a back-up service for the livestock farmers who purchased stock
from the SODEPA ranches; and (ii) with FONADER to prepare the loan
applications of a limited number of farmers to be covered under the
project's credit program\.
FONADER
Par 3-7\. The Bank agrees that the very late signature of the
co-financing agreement with FONADER was one of the main factors
affecting the delay, and that the loan repayment (at about 75-80
percent) was the beat ever in FONADER\. The idea that the late arrival
of the TA affected ,'--~raining was not correct\. The FONADER extension
staff became only avai&able in 1984, after the Bank threatened to cancel
the project; the TA was then already sur glace on the Adamaoua and was
recruited shortly afterwards in the NW province\.
SODEPA
Para 8-9\. The Bank agrees with the very good performance of the
slaughterhouse component and the role of the Bank in improving their
efficLency\. This was the first necessity\. Moreover, with the reference
in the PCR about the need to give the slaughterhouse mactagemsnt now the
authority to net the fee levels\. Present efficiency is good and cannot
be expected to be improved much more (it approaches the outputs
registered in Europe) and with escalating energy, water and labor costs,
price increases are necessary\.
Para 10\. The main problem with the SODEPA ranches is that they
are not economical and financially viable, because ranching in Africa,
and certainly parastatal ranching, is not viable\. This has been
acknowledged by all subsequent Bank supervision missions, and they have-
-contrary to Cameroon's comments--be very consistent in advising
ANNEX
- 36 - gae2o
Government to sell these ranches or their assets to the private sector\.
As government absolutely refused to sell those ranches, the changes
proposed (para 10, lv) were all second best solutions\. The use of the
N'dokayO ranch as fattening ranch (the main inconsistency alluded to in
10 iv) had boen discussed during the appraisal, and was only implemented
after a study, requested in the DCA was carried out (with about three
years delay) by lovernment\.
Para 11\. See the previous comments on extension in SODEPA\.
Veterinary Services
Para 13\. The location and functions of the new veterinary
infrastructure was indeed not well established during appraisal\. As
since appraisal the views and policies changed in the Bank (more
emphasis on private--producer led--veterinary services, not requiring
this infrastructure), several supervision missions proposed to drop this
component\. Howaver, the coordinator spent considerable time on drawing
up the appropriate plans (see para 19), and these plans were strongly
supported by the Minister personallye who could not be convinced to drop
the component\. The very poor implementation, lack of supervision and
tha duplication of facilities was thus clearly a weakness of the
Borrower\.
Coordination Unit
Para 19-21\. As far as it can be remembered, the Coordination Unit
was supposed to carry out also the studies, and the Unit was certainly
expected to do the M 6 E\. The Bank therefore did not object against the
coordinator's increasing involvement in studies, as this was a
legitimate task\. Though, the Bank could have insisted more on the
establishment of a good H 6 E system\. However, the main reason for the
ineffectiveneso of the Coordlnatlng Unit, especially in the first three
years of project implementatlon, was the lack of interest and the
bureaucratic inertia of MINEPIA ln implementing the project and the
incapability of the coordinator-TA during that period to bring the
parties together\. An outline for the preparation of PCR's was given to
the Coordinator in an early stage (before Project Completion), however
no PCR was produced\. The criticism on the Bank is thus not correct\.
The delay referred to might concern the revised PCR format, which was
announced, but probably not directly forwarded to the Coordinator\.
The Bank's Performance
Para 22-26\. The performance of the Bank is positLvely rated in the
Government's document, with some remarks on the consistency and the lack
of attention to Lntra-institutional aspects\. However, unlike the
impression given in the Government's document, the supervision was
consistent\. During the project implementation period, only two tasks
managers were involved, the flrst one also being involved in the
appraisal\. Between these two task managers there was a good consistency
of views\.
The Bank agrees that the intra-instLtutional aspects dld not
get enough attention Ln the normal supervision mLssions of thLe project\.
However, these Lesuoe of procurement authority etc\. were transcendlng a
normal supervision mission and were already addressed on a more central
levOl among others through Structural Adjustment Operations towards
project completLon\. IndLvidual interventLons would thus have been of
limLted value\.
2~~~~~~~~~~~~~~~~~~~~~~~~~
NG E A (A0D ? KE CA
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f N G E N AAoAN'0,A\.NA
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AT/ANY/C CO
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_______________ '--'--0--li~ ~ ~~~~~~~~~~~~~~
CAME ROON
SECOND LIVESTOCK DEVELOPMENT PROJECT \.--
LOCATION OF PROJECT ACTIVITIES Y
0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0
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N IG E RI A obo\. '0
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pg~ ~ ~ ~ ~ - EQUATORIAL GUINEA CAB0N S E\.O Qo~ | APPROVAL |
P005366 | CIRCULATING COPY
FILE E C O PY \.TQ BE RETURNED TO REPORTS DESK
DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
Not For Public Use
Report No\. P-1449-MOR
REPORT AND RECOMMENDATION
OF THE
PRESIDENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
TO
MAROC PHOSPHORE
WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO
FOR A PHOSPHATE FERTILIZER PROJECT
May 17, 1974
| This report was prepared for official use only by the Bank Group\. It may not be published, quoted |
or cited without Bank Group authorization\. The Bank Group does not accept responsibility for the
accuracy or completeness of the report\.
Currency Unit I'
US$1 = Dh 4\.42
Dh 1 = US $ 0\.23
lEh 1,000 US $ 230
Dh 1,000,000 US $ 230,000
jJ Adjusted as of Februaxy 1974
EFscal Year: January 1 to December 31
Clearing $ 1 Dh 4\.195
I1 = Dh 1 \.58
Dh 1 DMo\.63
US$1 = DM 2\.80
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE
DIRECTORS ON A PROPOSED LOAN TO MAROC PHOSPHORE
WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO
FOR A PH0PHATE FERTILIZER PROJECT
1\. I submit the following report and recommendation on a proposed loan
to Maroc Phosphore, with the Guarantee of the Kingdom of Morocco, for the
equivalent of US$50 million to help finance a project for a phosphoric acid
and mnono-ammonium phosphate plant\. The loan would have a term of 14 years,
including 4 years of grace, with interest at 7\.25 percent per annum\. The
Government of Morocco would charge a guarantee fee of 1\.75 percent per annum
on the outstanding amount of the Bank loan, bringing the cost of the loan to
Maroc Phosphore to 9 percent per annum\. The project would be financed jointly
with Kreditanstalt fur Wiederaufbau (KFW) which, through relending by the Guar-
antor, would contribute DM 75 million (US$26\.8 million equivalent) on the same
terms and conditions as the Bank Loan\. Also, the Moroccan Banque Nationale
potur le Developpement Economique (BNDE) would lend Maroc Phosphate US$8 mil-
lion, on the same terms and conditions as the Bank loan\.
PART I - THE ECONOMY
2\. An economic report entitled "Current Economic Position and Prospects
of Morocco" (R329 MOR, dated February 7, 1974) was distributed to the Executive
Directors on March 6, 1974\. The report is based on the findings of an economic
mission which visited Morocco in September 1973 and completed its analytical
work in December 1973\. The impact on the Moroccan economy of more recent in-
creases in the prices of crude oil, which Morocco has to import, and phosphate,
which is the country's main export, is assessed in a preliminary way in para\.
11\. Country data sheets are attached as Annex I\.
Past Developments
3\. The overall performance of the Moroccan economy improved during the
Second Five-Year Plan (1968-72), despite difficult political circumstances in
1971 and 1972\. Aided by favorable weather conditions and good crops in 1968,
1971 and 1972, real GDP growth accelerated from an average annual rate of
about 3 percent in 1960-67 (barely above the rate of population growth) to
5\.6 percent in 1968-72, thus exceeding the modest Plan target of 4\.3 percent,
and permitting real gains in private consumption of about 2 percent a year\.
At the same time, the implementation of prudent fiscal and monetary policies
contributed to a significant improvement in Morocco's domestic and external
financial situation, despite shortfalls on planned capital inflows from of-
ficial external sources\. Government saving and investment exceeded slightly
the modest Plan targets, while price stability was maintained\. Following a
decade of recurring deficits, the balance of payments registered sizeable
surpluses in 1969-72, mainly because of sharply rising receipts from merchan-
dise exports, tourism and Moroccan workers in Europe\. At the end of 1972,
- 2 -
MIorocco had accumulated net foreign assets equivalent to 3\.5 months' imports
of goods and non-factor services\.
4\. Although the acceleration of GDP growth in 1968-72 was in part
cue to generally favorable weather conditions, it appears that the economy
has moved onto a path of more rapid long-term growth\. Agriculture, export
industries, tourism and sectors with derived demand (energy, transportation,
communications and modern services) seem to have acquired a capacity for
sustained growth, in large part because of past investment and training\. In
agriculture, expansion of irrigation, increased use of key inputs in rainfed
areas (improved seeds, fertilizers and timely ploughing) and a larger number
of trained extension personnel have caused faster output growth\. In the
export sector, the phosphate company (OCP) has regained leadership in the
world market as a result of internal reorganization and investment carried
out during the Second Plan and the export company (OCE), which has a monopoly
over Morocco's exports of fresh and processed foodstuffs, has acquired con-
siderable dynamism in management and marketing\. Further, a broad range of
industries, including sub-contracting companies, have emerged with a good
competitive position and sizeable sales on external markets\.
I) These achievements should not detract attention, however, from the
serious difficulties which Morocco still had to overcome at the end of the
Second Plan period\. There was a need to revive private investment, which had
stagnated in 1971 and 1972 mainly because investors took a wait-and-see at-
titude in the light of political developments and the expectation of new in-
centives and new regulations regarding the association of Moroccan and foreign
capital in business ventures (Moroccanization laws)\. There was also a need
to raise private saving which remained at an insufficient level in part because
of the relatively low returns on domestic financial assets\. Finally, the
Government would have to increase investment capacity in the public sector by
appropriate changes in staffing and organization\.
6\. Difficult social problems also had to be tackled\. Unemployment
relaained at a high level, averaging 9 percent of labor force nationwide and
ranging between 12 and 16 percent in large urban centers\. The urban popula-
tion in substandard housing was large and rising\. Wealth and income differ-
ences between cities and villages, among regions, and between rich and poor
were widening, while about one third of the rural population in the less fer-
tile agricultural areas were experiencing a slow decline in real consumption\.
Lotg-term Development Prospects
7\. Recognizing these difficulties and problems, the Government began
in 1971 to revise its\.development policies, paying increasing attention to
social objectives\. Reflecting the changed orientations, the Third Five-Year
Plan (1973-77) aims at:
sustaining real GDP growth of 7\.5 percent a year from 1973
to 1977, mainly through a 10 percent a year rise in exports
and,a doubling of investment over the Plan period; and
- 3 -
improving distribution of growth benefits, mainly through
further land distribution to poor farmers and more emphasis
on rainfed farming in agriculture, the association of Moroccan
nationals with foreigners in services and several industrial
sub-sectors, large increases in Government spending on social
services and low-cost housing, a more progressive tax system,
and appropriate changes in wages and in the prices of basic
agricultural commodities\.
Departing from past financial orthodoxy, the Plan calls for an expansionary
fiscal policy and a liberal credit policy, accepting the risk of less price
stability\. It recognizes that, in spite of faster economic growth, an in-
creased public works program and continued emigration, unemployment may rise
in absolute, and perhaps also in relative, terms because the growth of the
working-age population is accelerating (from 2 percent a year in the 1960's
to 4 percent a year in the 1970's)\.
8\. In accordance with its export-oriented strategy, the Plan gives
priority to sectors contributing to exports (agriculture, fishing, mining,
food processing, sub-contracting industries, transportation and tourism)\.
This priority is reflected in the allocation of Government resources to in-
vestment in these sectors, as well as in the new measures taken in August
1973 to encourage industrial exports and private investment\. Achievement of
the Plan's export target will depend on further improvements in some export
sectors (fresh and processed foodstuffs, tourism and sub-contracting), and
also on continued external demand\. While external demand for phosphate is
expected to remain strong, demand for other Moroccan goods and services may
weaken over the next few years as a result of the economic slowdown in
developed countries following the recent increases in petroleum prices\. On
balance, real export growth, which exceeded Plan expectations in 1973, will
probably be somewhat below Plan targets during most of 1974-77\.
9\. The Plan proposes significant changes in the investment strategy
to increase labor intensity, and improve the situation of less favored groups
of society and less developed areas of the country\. Education, health and
housing, together receive a significantly higher share of planned Government
investment (23 percent) than during the Second Plan (11 percent)\. Among
sectors, the main change concerns agriculture, for which the Plan de-
emphasizes dam construction, and favors equipment of existing irrigation
areas, intensification of rainfed cropping, improvement of animal husbandry
and implementation of land reform\. New incentives for private investment are
less biased in favor of imported equipment than the previous system and en-
courage efficient operations and location in less developed areas\.
1(\. In changing its investment strategy, Morocco is breaking new ground,
and significant shortfalls on planned investment could well be experienced
in new priority sectors as a result of staffing and organizational constraints,
which can only be relieved progressively\. Shortfalls will probably affect
mainly rainfed cropping, livestock production, low-cost housing and tourism
infrastructure\. In addition, most of 1973 was lost for the revival of pri-
vate investment, since the new incentives were introduced only in August, and
- 4 -
the start of new public investment programs was delayed, since the Plan was
issued only in July\. Finally, measures taken in 1973 to complete the recovery
of foreign-owned farms and "marocanise" business imply management changes
which may temporarily restrain production and investment\. For these reasons,
investment may fall short of the Plan's target, and GDP growth may not exceed
7 percent a year in 1974-77\. The attainment of the Plan's income distribution
objectives will to some extent be compromised by the investment shortfalls
affecting programs designed to increase the productive capacity and situation
of less favored groups in rural and urban areas\.
11\. Financial resources are not expected to be a constraint in the
medium term provided increased inflows of official assistance are achieved\.
The strengthening of the balance of payments since 1969 has continued in 1973,
and in 1974 Morocco will benefit from a tripling of the price of phosphate
rock\. Increased earnings from this source will exceed the increase in the
country's petroleum import bill due to higher prices by an estimated $300
million in 1974\. This net gain may be eroded in later years, since the price
of phosphate is likely to level off due to increased world supply while prices
of imports and import requirements will keep rising\. Nonetheless, until the
end of the Plan period, phosphate and other exports, workers' remittances and
capital inflows should provide enough foreign exchange to meet import require-
ments and maintain reserves at a sufficient level\. On the domestic side, the
phosphate company (OCP) will be able to make large, additional remittances to
tthe Government, which will help finance the planned level of public investment\.
However, the Government will have to proceed with planned tax measures in
order to make the tax system more responsive to economic growth and more
equitable, and with planned improvements of the capital market to facilitate
the mobilization of private saving and the financing of private investment\.
12\. The financial situation may become more difficult beyond 1977, if
the predicted trends in exports (with no further gains from phosphate prices)
and import requirements continue\. To prepare for this eventuality, M4orocco
needs to increase, as planned, the level of external borrowing on favorable
terms from official sources, and this will require improved project prepara-
tion\. At the end of 1973, Morocco's external debt amounted to an estimated
$890 million excluding undisbursed amounts\. Service payments represented only
8 percent of goods and non-factor services exports\. Although long-term pros-
pec ts are for more pressure on the balance of payments than at present and a
rise in the debt service ratio, Morocco can service substantial additional debt\.
PART II - BANK GROUP OPERATIONS IN MOROCCO
13\. Bank and IDA lending to Morocco has supported 20 projects with fi-
nancing totalling $378\.0 million (net of cancellations), of which $146 million
was lent over the last two years\. Four projects have been financed under
IDA credits totalling $36\.8 million\. IFC investments amount to $2\.9 million\.
Implementation of projects is often slow to start, frequently due to cumber-
some Government disbursement procedures, but with time performance usually
improves\. The Sebou irrigation project (Loan 643-MOR of November 13, 1969
for $46 million) showed little progress for a long time, because of initial
management difficulties, slow processing of iecessary land reforms and a
flood of unprecedented magnitude in 1970\. At present, however, the project
is showing satisfactory progress\. The water supply project (Loan 850-MOR of
July 19, 1972 for $48 million) suffered from initial difficulties and delays
in implementing a number of basic measures aimed at reorganizing the major
agency in the sector\. Following substantial efforts by the Government, pro-
gress is now satisfactory\. Project implementation by the three autonomous fi-
nancial institutions in agriculture, industry and tourism to which the Bank
lends, is generally satisfactory\. Annex II contains a summary statement of
Bank loans, IDA credits and IFC investments as of March 31, 1974, and notes
on the execution of on-going projects\.
14\. The Bank Group strategy is generally to support achievement of
selected objectives of the third Five-Year Plan in connection with (a) proj-
ects whose primary justification is in terms of their contribution to produc-
tion and the balance of payments but through which the Bank can make a major
coitribution in terms of institution building and sector development, and
(b) programs geared more directly to,attacking the fundamental problems of
poverty in Morocco\. Particularly in agriculture and urbanization and to a
lesser extent in industry, our approach will be to design projects which
yield substantial benefits in traditional economic terms and at the same
time contribute directly to improving income distribution\. The program in-
cludes several projects, mostly in agriculture, which might serve as pilot
schemes for repeater projects\. Because the pace at which Bank Group lending
can be carried out will continue to depend largely on the speed at which the
Government prepares projects and takes related policy decisions, special
efforts will be made to help prepare projects and programs\.
15\. In the financing of agricultural projects the Bank has up to now
helped develop large-scale irrigation schemes and agricultural credit\. The
Bank now stresses the importance of efficient organization of the ssector, of
land reform and of the development of small farms with emphasis on attacking
the problem of rural poverty\. The Government has recently accelerated land
distribution to small-holders and landless laborers and is presently prepar-
ing projects for small farmers, mostly in rainfed areas, for which it has
sought Bank financing\.
16\. Education is a critical bottleneck in Morocco's development\. Two
IDA credits have been made to improve technical and vocational training\. A
UNESCO project identification mission, in the framework of the Bank UNESCO
cooperative program, visited the country in September 1973 to review the
sector's development and to help formulate future Bank projects\.
17\. Industry and tourism development has so far been financed through
the two DFC 's (Banque Nationale pour le Developpement Economique and Credit
Immobilier et Hotelier)\. These DFC's are expected to continue to be main
channels for Bank lending in these sectors\. However, as Executing Agency
for a UNDP financed study, the Bank is helping to prepare a tourism infra-
structure project which would alleviate the scarcity of improved land for
- 6 -
hotel development\. Projects in these sectors as well as the project pres-
ently prfoposed help Morocco to raise its foreign exchange earnings and provide
an opportunity for the Bank to help improve sectoral policies\. The Bank
supported a study now completed of the interest rate structure in Morocco and
the recent enactment of a new investment code\. The latest loan to BNDE (Loan
890-MOR) signed in May 1973 also aimE at improving the employment effects of
BNDF\. financing\.
1i\. The first transportation loan, a $14\.6 million Bank/IDA blend, was
for a highway project and included financing of a sector review which served
as ca basis for a second loan of $29 million recently approved, as well as
recommendations on transport policy\. A proposed third loan would permit to
continue the dialogue on policy and be a vehicle for further efforts to im-
prove maintenance and administration of the highway system\.
19\. The first Bank financing of public utilities in urban areas was the
$48 million Water Supply loan signed in July 1972\. A second loan of $25 mil-
lion for a power project was signed in October 1973\. Both projects try to
improve the organization of public utilities\. The social problems due to
rapid urbanization are also expected to be tackled through a site and services
project presently being prepared by the Government, in line with the emphasis
on urban housing and infrastructure in the Third Plan\.
0\. A consultative group for Morocco was formed in April, 1967 under the
chairmanship of the Bank\. It includes Belgium, Canada, France, Germany, Italy,
Japani, Kuwait, Spain, the U\.K\., the U\.S\., IMF, UNDP, OECD/DAC, the African
Development Bank and the European Investment Bank\. The last meeting of the
Grouip, on March 28 and 29, 1974, expressed satisfaction with the improvement
in Morocco's economic performance in recent years, and the emphasis in the
Third Five-Year Plan (1973-77) on improving the distribution of growth bene-
fits\. The gross inflow of official loans and grants to Morocco rose from
$129 million in 1966 to $159 million (of which $18 million in grants) in 1971,
but temporarily fell to $138 million in 1972 and $115 million in 1973\. The
major sources of aid were the U\.S\., Germany, the Bank Group and France\.
21\. At the end of 1973, the Bank Group's share in Morocco's external
public debt was estimated at 13\.4 percent on a disbursement basis\. The
share of the Bank Group in debt service was 11\.2 percent in 1973\. By the
encl of the 1970's the Bank Group's share in public debt and debt service
is expected to rise to about 20 percent\.
PART III - MINING AND MINERAL, PROCESSING IN MOROCCO
Geimra 1
2h'\. Morocco is endowedi with varied1 mineral resources\. It possesses the
world's largest reserves of phosphate rock (an estimated 40 billion tons) of
g,,ood quality that can be easily extracted and are close to the Atlantic coast\.
-7-
In 1973, it was the world's third main producer of phosphate rock after the
USA and the USSR, and the largest exporter with more than one third of world
trade\. Morocco also has sizeable reserves of coal, iron ore and pyrrhotite,
as well as several other minerals, such as lead, zinc, manganese and copper\.
Dtie to obsolescent mining equipment or depletion of known deposits, their
exploitation is often not competitive\.
23\. Minerals are state property and the Government plays a dominant
role in mining and processing since\. The Office Cherifien des Phosphates
(OCP), a state-owned company, mines and sells phosphate rock, and exercises
control over phosphate processing through affiliates (Maroc Chimie and Maroc
Phosphore)\. The Bureau de Recherches et de Participations Minieres (BRPM)
is responsible for prospecting, mining and processing other minerals either
alone, or in partnership with private firms\. The Government grants various
fiscal and other incentives to encourage private investment in the mining
and processing of minerals other than phosphate\.
24\. Morocco continued to export most of its minerals in unprocessed
forn during the Second Five-Year Plan (1968-72), despite a Plan objective of
increasing export value through processing\. The growth of mineral exports
averaged only 3 percent a year in current prices during the Plan period, and
came entirely from phosphate\. OCP invested $125 million and underwent an
internal reorganization which enabled it to increase phosphate rock exports
from 9\.3 million tons in 1967 to 13\.6 million tons in 1972\. However, because
of a 10 percent decline in the price of phosphate, its share in total export
earnings fell from 25\.4 percent in 1967 to 22\.8 percent in 1972\. Exports of
other minerals, stagnated in volume and value mainly because of weak external
demand\. The Plan's processing objective was implemented in the case of
phosphate-based fertilizer production and pelletisation of iron ore\. Maroc
Chimie, which was set up to produce fertilizer, increased its intake of phos-
phate to 600,000 tons in 1972 and raised its fertilizer exports from $10 mil-
lion in 1967 to $14 million in 1972, despite serious technical difficulties\.
Production of high-grade iron ore pellets began in 1972\. In 1972, mineral
processing was still a small sub-sector, contributing less than 7 percent of
value added in the manufacturing sector\. While mining and mineral processing
continued to be of great importance for the balance of payments (32\.2 percent
of merchandise exports in 1972), their contribution to GDP (about 5 percent)
andl employment (about 2 percent) remained small\.
lnvestment Program
25\. The Third Five-Year Plan (1973-77) puts heavy emphasis on mining
and mineral processing for export\. To increase exploration, efficiency and
domestic processing, it calls for investment totalling about $850 million
during 1973-77 for phosphate and other minerals; it expects that the mining
sector will grow by 13 percent and mineral exports by 12\.5 percent a year,
and that mineral processing will become an increasingly important industrial
sub-sector\. This would represent a considerable improvement over past
results, and seems justified on the basis of export prospects for phosphate,
other minerals and their derivatives\.
- 8 -
26\. The investment program of OCP during 1973-77 amounts to an estimated
$550 million\. This comprises $250 million for expanding and modernizing phos-
phate rock mining, $225 million for the production of phosphoric acid and
mono-ammonium phosphate (MAP) and $75 million for transport facilities\. Maroc
Chimie plans to invest about $55 million to expand output and exports of sul-
furic acid, phosphoric acid and phosphatic fertilizers, based on local phosphate
and pyrrhotite\. OCP expects to raise exports of phosphate rock to 26 million
tons in 1977 up from 16 million tons in 1973, and to meet the local demand of
Maroc Chimie and Maroc Phosphore estimated at about 2\.5 million tons in 1977\.
OCP and its two affiliates have the managerial and technical expertise needed
to implement this program\. The expansion program seems justified by external
demand prospects since over the long run, world demand for phosphate rock is
expected to rise by about 7 percent a year\. A current shortage, bringing
about a sharp price increase (see para 28) and a rise in quantity are estimated
tentatively to bring earnings from phosphate rock exports to about $750 million
in 1974 as compared to $202 million in 1973\. While the high phosphate price
may not last for the remainder of the 1970's due to likely increases in world
production it will nonetheless provide OCP with ample financial resources to
meet investment requirements\.
27\. The Third Plan calls for investment totalling about $300 million
during 1973-77 in minerals other than phosphate, of which $125 million would
be for oil exploration\. Private participations are expected to be about $200
million\. In August 1973, the Government introduced new measures to encourage
private investment in mining and mineral processing\. Nonetheless, implementa-
tion of this program seems less certain as private participations are not yet
firmed up\.
Phosphate and Fertilizer Market
28\. World production of phosphate rock rose from 40 to 90 million tons
between 1960 and 1972, with the US (42 percent), the t1SSR (22 percent) and
Morocco (16 percent) as leading producers\. World export trade increased from
29\.2 to 43\.5 million tons between 1965 and 1972, with about two thirds of the
trade going to Western and Eastern Europe; the main exporters were Morocco
(31 percent of world exports), the US (29 percent) and the USSR (14 percent)\.
The world rock supply/demand situation moved from a world wide over-supply
in the late 1960's and early 1970's to a tight balance in early 1973 and a
serious shortage by late 1973 as a result of increased world-wide demand; the
same trend applied to phosphoric acid based high grade fertilizers\. Prices
reflected this development; export prices for 1974 are 2\.5 times to more than
3 times higher ($45 for the highest commercial grade) than those prevailing
in early 1973\. The sharp increase in prices is also explained by a necessary
price recovery following a depressed price situation over most of the last
decade\. World rock prices are expected to remain at their present (early
1974) high levels through late 1975 because of an expected continuing tight
supply\. The world rock capacity/demand coverage is, however, likely to improve
from 1976 onwards; long-v-rm FOB equilibrium prices are therefore forecast to
stabilize--by 1976/77- it about 20 percent below the 1974 price levels\.
-9-
29\. Major structural changes have also occurred in production and trade
of phosphate fertilizers in the past 10 years\. Increased demand for high grade
fertilizers has induced a rapid growth in the production and trade of inter-
mediate products, such as phosphoric acid, in which developing countries are
more and more participating\. The emerging trade pattern will combine increas-
ing quantities of intermediate and finished products with raw materials, rock
phosphate and sulfur\. This new trade pattern favors large units which, as it
is the case in Morocco, are close to sources of raw materials and favolably
located for exporting\. The shortage of phosphoric acid based high grade fer-
tilizers in recent years, combined with the increase in rock prices, resulted
in a sizeable upward adjustment in prices of finished products, about 50 per-
cent for phosphoric acid between mid-1973 and early 1974\. However, the supply
demand situation is likely to improve from 1976 on, bringing a stabilization
in long-term prices at a level somewhat below the current level\.
PART IV - THE PROJECT
30\. A report entitled: "Appraisal of the Maroc Phosphore Phosphoric
Acid and Mono-ammonium Project" (No\. 351 MOR of April 19, 1974) is being
distributed separately\. A loan and Project summary is attached as'Annex III\.
The project was presencted to the Bank in June 1971 and a formal request to
help finance the project made in December 1972\. The proposed project was
appraised in February and October 1973; a follow-up mission took place in
March 1974\. Negotiations were held in W4ashington beginning January 28, 1974\.
The Borrower was represented by Mr\. Guessous (Financial Director, Office
Chierifren des Phosphates), and the Guarantor by Mr\. Belghiti, of the Directorate
of Economic Affairs, Prime Minister's Office\.
Description
31\. The project consists in the erection of a plant near the port of
Safi on the Atlantic coast, about 200 km south of Casablanca, to produce for
export 371,250 tons per year of phosphoric acid (P205) and 225,780 tons per
year of monoammonium phosphate (MAP) at full capacity\. These products are key
intermediates in the manufacturing of high grade phosphate fertilizers which
are in great and increasing demand in world markets\. The project is sponsored
by the OCP, and will be implemented by Maroc Phosphore\. The proposed project
is a key link in the Government's and OCP's strategy to participate in the
rapidly emerging world trade in intermediate products used in manufacturing
high grade fertilizers\.
32\. In 1971, the Government of Morocco and OCP requested, and the Bank
agreed, that the project be executed as a lump sum turnkey contract\. The
early conclusion of a turnkey contract was necessary to: (i) increase poteri-
tial buyers' confidence in the project; and (ii) obtain firm project costs
essential for determining a sales strategy and starting sales negotiations;
otlher reasons were the advantages of single responsibility in project execu-
tion and the acquisition of technical expertise in phosphoric acid production
which was lacking in OCP\. OCP signed a first plant construction contract in
- 10 -
June 1973 for about two-thirds of the project capacity, and project execution
has commenced\. This first contract included provisions for project expansion\.
Following favorable market developments, and to take advantage of an unchanged
price offer, OCP, in April 1974, completed negotiations witlh the same supplier
for a supplementary contract based on identical terms to cover together with
the first contract the overall construction of the project's main facilities
andl related infrastructure\.
13\. International competitive bidding was used to select the consortium
which is to execute the project at a fixed lump sum price including an ade-
quate escalation formula\. OCP invited bids from several consortia of special-
ized firms, each under the leadership of one firm (the contractor) who was to
have responsibility for the entire project\. The Bank agreed to a three-phase
selection procedure: (i) prequalification of consortia after international
advertising; (ii) invitation to prequalified consortia to submit unpriced
technical offers conforming to detailed tender documents; and, (iii) after
clarification and technical adjustments of offers; call for a lump sum price
for most of the project work which, together with the technical offer, was to
serve as the basis for bid evaluation\. Out of thirteen responsive bids, five
consortia were prequalified and asked to present price proposals\. The five
contractors were from the US, Belgium, France, Germany, and Japan\. The lowest
evaluated bid was submitted by a consortium headed by Friedrich Uhde GmbH
(Uhde) of Germany\. Uhde and the other members of the consortium are well
known and qualified firms: Polimex-Cekop (Polimex) of Poland; Lurgi Gesells-
chaft fur Chemie and Huttenwesen GmbH (Lurgi); Siemens A\.G\. (Siemens), Nissan
of Japan, and Fisons of the UK\. The contract is based on a lump sum price
with payments in Dirham for local cost, in clearing dollars for the Polimex
part as per a sub-contract between Uhde and Polimex, and in Deutsche mark for
the remaining foreign exchange balance\. A payment schedule in the three cur-
rencies was agreed, and payments are specified at intervals and in amounts
proportional to the contractor's expected cash outlays and work progress\.
Project Execution
34\. "Maroc Phosphore" was formed to build and operate the project\. The
Company functions as a "Societe Anonyme" under Moroccan commercial laws\. Its
initial authorized share capital is DH 1 million and will be increased to
provide for additional equity subscriptions as execution of the project
proceeds\. OCP will own all of MP's shares\. MP sales, finance and accounting
functions will be managed by OCP\. Plant and production management will be
autonomous\. OCP's General Manager is also Chairman of the MP board\.
35\. Engineering, construction, erection and start-up of the plant are
the responsibility of the turnkey contractor\. Following completion of the
first part of the project scheduled for October 1, 1975, cormnercial operations
are expected to begin in January 1976, after a 3 months testing period\. Fa-
cilities corresponding to the second construction contract are expected to
stairt operations in Aug\.w: 1976\. OCP and MP are assisted bv an experienced
technical advisor, Ila Jr Topsoe A/S of Denmark\. A satisfactory organization
for project execution nias been developed and includes: the MP project team,
the nucleus of the new company; the various OCP departments involved; the
technical advisor Topsoe; the Contractor's team; and an OCP group of engineers
working on future intermediates manufacturing projects\. These organizational
arrangements are expected to ensure efficient project execution\. Furthermore,
given the expected difficulties in recruiting Moroccan chemical engineers,
Topsoe and the Contractor, as part of their contracts with OCP, will assist
in the recruitment and training -- in Morocco and abroad -- of key personnel,
including expatriates if needed\.
36\. Since the plant will be adjacent to an existing chemical plant
(Maroc Chimie), the company will benefit from existing infrastructure, with
resulting cost savings\. Certain additional infrastructure facilities needed
for, but not part of, the project and estimated to cost about DH 36 million
(US$8 million), will be built by the appropriate Government agencies closely
supervised by OCP and MP; the necessary budget allocations have been made\.
These facilities include: the supply of freslh water through modification of
a canal, heightening of a small dam and installation of a conduit or pumping
facilities; installations for handling of sulfur at the port; and railroad
equipment and siding\. Service tariffs, to be paid by MP, have been agreed
upon with the agencies involved\. Workers' housing will be provided by the
regional authorities\. A schedule for construction of these facilities to
meet the requirements of the project has been agreed upon with the Govern-
ment\. (Guarantee Agreement Section 2\.04 and the Schedule thereto)\.
37\. Of the principal raw materials: (i) phosphate rock will be supplied
by train from OCP's Youssoufia mine, under a long-term supply contract with
OCP the draft of which was found satisfactory by the Bank and the signature
of which is a condition of effectiveness of the proposed loan (Loan Agreement
Section 9\.01 (e)); (ii) sulfur will be imported in dry lump form under long-
term contracts; and (iii) small quantities of ammonia will be bought from
various sources on a spot basis\. Catalysts and chemicals will all be imported\.
Known rock reserves at Youssoufia are adequate to supply the project with the
same grade over more than its expected economic life of 12\.5 years\.
38\. Phosphoric acid will be shipped from Safi to delivery points in
Europe, India and Brazil in three specialized self-unloading, ocean-going
ships, equipped with rubber-lined or stainless steel tanks\. A shipping
company, Marphocean, has been formed -- with an initial share capital of D1 4
million -- to purchase and operate the ships under Moroccan flag; Marphocean
is jointly owned by the Moroccan National Shipping Company COMANAV (45 per--
cent) which already owns 11 ships and has a leading role in ship chartering
and sea transport of Moroccan goods, and by OCP (25 percent)\. The balance
(30 percent) will be owned by the French ship engineering firm, Gazocean,
one of the world's leading firms in the shipping of liquified or pressurized
gases and chemicals\. The Bank is not financing the shipping facilities, but
a condition of effectiveness of the loan, as OCP will enter into a long-term
charter agreement with a carrier acceptable to the Bank\. (Loan Agreement,
Section 9\.01 (d))\.
Cost Estimates
39\. Total investment costs for the project, summarized in Annex IIT,
aro estimated to be DH 657 million (IJS$148\.6 million)\. Total financing,
- 12 -
including interest during construction, is DH 687 million (US$155\.5 million)\.
Cost estimates include the lump sum price of DH 405 million (US$91\.6 million)
for the turnkey contract\. Cost estimiates for all major items outside the
turnkey contract have been prepared ly OCP and MP were reviewed by the Bank
and have been found acceptable\. A price escalation clause based on a formula
with reasonable estimates for increases of component prices is included in
the contract\. In addition, an overall contingency (18 percent of project cost
excluding working capital and interest during construction) is included to
c:over unforeseeable expenditures\. This is considered adequate in view of the
short construction time\. The foreign exchange costs include DH 55 million
(USS12\.6 million) for goods and services subcontracted and to be paid for in
clearing dollars for Polish deliveries\. Local costs include DH 18 million
for taxes and registration fee\.
Financing Plan
40\. External financing for the project is to come jointly from the Bank
and Kreditanstalt fur Wiederaufbau (KfW)\. While the proposed Bank loan would
be made directly to MP, the KfW loan equivalent to $26\.8 million will be made
to the Government following KfW's usual practice and on-lent to MP\. The Bank
and the KfW Loan are linked by cross-effectiveness provision (section 9\.01(b),
Loan Agreement) and cross default provisions (section 8\.02(a) and 8\.03(a),
Loan Agreement)\. Debt financing for the project would be completed by an $8
million loan from BNDE\. The three loan totalling $84\.8 million would finance
55 percent of project costs\. $70\.7 of equity financing would be provided by
OCP\. The equity would finance the local costs, the costs of Polish supplies
(US$12\.6 million) which will be paid for in clearing dollars, and also US$2\.7
million equivalent convertible foreign exchange costs\. MP has agreed to
maintain a 55:45 debt equity ratio (Loan Agreemnent Section 5\.08)\.
41\. The proposed Bank loan would cover 32 percent of project costs and
57 percent of convertible foreign exchange expenditures\. It would be for 14
years with 4 years of grace\. NP would pay to the Government a guarantee fee
at the rate of 1-3/4 percent (Guarantee Agreement Section 2\.05), bringing the
total cost of Bank funds for MP to 9 percent\. The KFW loan would be made to
the Government at 2 percent for 30 years including ten years of grace and would
be on-lent to MP for the same maturity and grace period, and at the same ef-
fective rate of interest as the Bank loan\. The BNDE loan will also be made
at the same effective interest rate and conditions as the Bank loan\. OCP has
agreed to subscribe for, and pay in, the increased share capital of MP accord-
ing to an agreed schedule (Shareholders' Guarantee Agreement, Section 2\.01)\.
In the event of a cost overrun, OCP and the Government guarantee to provide
additional funds, both foreign and local, necessary to complete the project,
on terms and conditions acceptable to the Bank (Guarantee Agreement, Section
2\.03; Shareholders' Guarantee Agreement Section 2\.02)\.
Disbursements
42 Disbursement, of the Bank and KFW portions of the loan financing
the turnkey contract will be made pro-r;tta against lump sum invoices submitted
- 13 -
by MP and in agreement with the contracts payment schedule\. The Bank will not
finance goods and services procured in Poland\.
43\. OCP has so far made US$12\.8 million advance payments to the contract-
or in convertible foreign exchange\. These payments are proposed to be retro-
actively financed by the lenders, the BNDE Loan being fully disbursed first\.
The proportionate Bank share will be US$3\.1 million, representing about 6 per-
cent of the Bank loan\.
Financial Position
44\. The Company is to maintain a debt service coverage of at least 1\.4
and not to incur any debt that would increase its debt equity ratio beyond
55:45 throughout the forecast period of 12 years\. The project's financial
rate of return would be 16\.9 percent after corporate income tax, under con-
servative estimates regarding capital, and operating cost and revenue\. Tech-
nical risks of plant design and operations and risks of substantial delays or
major cost overruns are considered low, owing to the contracting procedure
followed and the employment of a qualified technical advisor (Topsoe)\.
45\. OCP (shareholders' Guarantee Agreement, Section 2\.03) and the Govern-
ment (Guarantee Agreement, Section 2\.03) will guarantee MP's sound liquidity
and financial position through financial covenants\. Furthermore, MP has agreed
to inform the Bank prior to undertaking any major new capital investment in
manufacturing of intermediate and finished phosphate fertilizers (Loan Agreement
Section 5\.06)\. Finally, MP has agreed to have its accounts audited independently
(Loan Agreement Section 5\.02)\.
Marketing Arrangements
46\. MP's sales strategy, covering the first five years of the project's
operation is to establish itself in key and expanding consumption areas\. Sales
would concentrate in four major zones: Eastern and Northwestern Europe, India
and Brazil\. Sales contracts are being finalized that cover virtually the
entire plant output during the first two years of operation and about 85 percent
thereafter\. Sales arrangements satisfactory to the Bank and covering at least
50 percent (in 1976) and 60 percent (in 1977 through 1979) of the estimated
annual plant capacity, would be made as a condition of loan effectiveness
(Loan Agreement, Section 9\.01 (c)\. The expected average 1976 prices for MP's
sales, US$210 per ton of acid and US$150 per ton of MAP FOB Safi, is in line
with the forecast long-term equilibrium price in world markets\.
Economic Rate of Return
47\. The economic rate of return of the project is expected to be 21\.2
percent\. It is highly sensitive to output prices (a 5 percent increase in
revenues adds nearly 3 percentage paints) and to phosphate rock prices (a 10
percent drop in rock prices adds 2 percentage points); it, however, remains
satisfactory (19\.2 percent) if the market price rather than the opportunity
cost for rock phosphate is used and if the price of sulfur is increased by
more than 5 percent\.
- 14 -
43\. In addition to its directly quantifiable economic benefits, the proj-
ect will generate substantial external benefits\. It will: help increase em-
ployment levels in the Youssoufia mines which are using labor-intensive tech-
niques in a region where employment alternatives are low; develop manufactur-
ing activities in line with the Moroccan policy for iTidustrial decentralization
and compensate for the decline in fishing activities of the Safi regiQn help
OCI participate in the world trade in intermediate fertilizers; provide edu-
cation opportunities through training of personnel; and constitute a trainigr
center for future siilar projets in Morocco\.
49\. Appropriate measures to control effluents are provided for in the
project\. Waste from the sulfuric acid unit will be delivered to the neigh-
boring Maroc Chimie plant to be reprccessed; gypsum will be repulped in sea
water and disposed of into the ocean\. This method, used since 1965, has
not created any pollution problem\. Storage and handling installations for
solids will receive de-dusting equipment\.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
50\. The draft Loan Agreement between the Bank and Maroc Phosphore, the
draft Guarantee Agreement between the Kingdom of Morocco and the Bank, the
draft Shareholders' Guarantee Agreement, among the Bank, the OCP and Maroc
Phosphore, the Report of the
Committee provided for in Article III, Section 4(iii) of the Articles of
Agreement and the text of a resolution approving the proposed loan are being
distributed to the Executive Directors separately\.
51\. Features of the Agreements of special interest are described in
paragraphs 33, 36, 40, 41 and 42 of this report\. (Loan Agreement, bection 9\.01)
52\. Special conditions of effectiveness of the Agreements would be that
the effectiveness of the KfW loan and relencding arrangements and the conclusion
of long-term contracts by Maroc Phosphore for the sale of its products, for the
shipping of products to be exported and for the purchase of phosphate rock\.
53\. I am satisfied that the proposed loan would comply with the Articles
of Agreement of the Bank\.
PART VI - RECOMMENDATION
54\. I recommend that the Executive Directors approve the proposed loan\.
Robert S\. McNamara
President
Attacthments
ANNEX I
Page 1 of 3 pages
rWWURY DATA - MOROCO
ARIA POPUIATION MiNSITy
5QO570/\. knD 15z llion (mid-1971) 30 Per knt
Per ke2of arable land
SOCIAL DCDICATORS
Refereno Countries
M'o-o ,6ethid3d hgse tfChina Tan,a ai
GI PER CAPITA US) (ATLAS ReSIS) e 200/b 230 2,430 390 1O
CNRAPHIC
Crude birth rate (per thoueand) 47 /c 50 18\.3 28 47
Crude death rate (per thousand) i 72\.r 17 8\.4 6 2]
In-fnt ortality rate (per thousand live birth\.) 149 /dle 150 12\.7 18 /f 160-165 /n
Life expectancy at birth (yeara) 50 50 74 68 43
Orose reproduction rate 2 \. 1\.3 2\.2 3\.2
Population growth rate Q 2\.7 1\.3 2\.9 2\.7
Population growth rate - urban 5\.3 /A i 2\.5 / 7
Age structure (p rcent)
0-14 44 46 /h 27\.3 240 44
15-64 52 49 7W 62\.6 57 53
65 and oe,r 4 57W 10\.2 3 3
De,,endency ratio h 1\.7 2\.4 7k 1\.0 /k 1\.3 /k 1\.1 /k
Urban population ,,s percnt of total 29 /I 35 /h\.l 78 /n 61 If 6/g
Family planing: No of cceptors cumoulative (thoua\.) 67 979
No\. of users (S of married woien) 3 4\.
DWLDCIT
Total labor force (thousands) 3,300 L,000 /h 4,700 4,600 5,800
Percentage employed in agriculture 56 55 71 7\.2 /n 91
Percentage uneOmplyod 9 9 71 1\.2 4
INOCdM DISTRIBUTION
Percent of national jocose received by highest 5% 22 I
Percent of nationat income received by highesat 20% 49 75
Percent of national iacose received by lowest 20% 3 7e
Percent of nationaL income received by los\.t 40% 14 7
DISTRIBUTION OF LAND OYZgRS3IP
1 owned by top 10 of owrnrs
% owned by smallest 10% of wners
HEALTH AND NUTRITION
Population per phy icin 9,700 /d 13,160 If 820 If 3,170 If 21,570 Ic
Population par nursing person 7,350 7-d 2,760 7p 210 71f 42,170 71 2,980 7? c
Population per hospital bed 620 __ 6dO 7j 190 7T 29802 ?7h7t
Per capits cslorie upply as % of re-oiresents \. 91 It 121 I 111 If 69
Par capita protein supply, total (grass per day) & \. 58 7T dS 7 66 7? 43
Of which, animal end puls 14 7t 57 T\. 31 7r 23
Death rate 1-4 years /7 0\.8 3\.3 7?
EDUCATION
Adjusted /8 primary school enrollmant ratio 49 55 If 102 If 98 37
Adjustod F secondary school enrofl1ent ratio 5 12 7r 71 7? 50 2
Tears of schooling provided, first and second level 12 12 12 12 13
Vnoational enrollment as % of sec\. school nrollmsnt 30 3 /f b If 16 6
Adult literacy rote S 17 /Irw 24 7h v\.w 99 71f, y 73 -
hOUtSING
Average No\. of persons per roo (urban) 2\.1 In 2\.8 /h \. 2\.6 Iou
Percent of occupied units wIthout piped water 41 7Oib 48 7h,b,2 ,d \. 51 ie 20 a
Access to electricIty (sa % of total population) 7 7W2 68 7n,a cad - 3
Percent of rural po;louLtion connected to electricity 32 77/
CONSUMPTION
Radio re-sinors per 1000 population 46 60 316 If 103 If 1]
Passenger cars per i000 population 12 15 200 3 7? 2 /f
Electric power consaumption (kwh p\.c\.) 87 132 3,178 823 77 29 __
Newsprint consumpti-n p\.r\. kg per year 0\.2 0\.2 29\.1 1\.7 7f 0 1
Note-s Fige'es refer either to the lateat periods or to account of environmental temperature, body eights, nd
the latent yara\. Lateot periods refrr in prinoiple to diatribotion by age nd sa of national populations\.
the years 1956-60 or l196-7p; the latest year in prin- A Protein standards (requirenents) for all countriae as estab-
cipie to 1960 and 1970\. Only significantly different lished by USDA Economic Research Service provide for a lmnimom
perlodo or years are foctncted aeperately\. allowce of 60 graas of total protein per day, and 20 grams of
/1 The Per Capita 3NP estimates for pre\. other than 1960 anial and pole protein, of which 10 grams should be animal
is at ,arket prices, calculated by the name conversion protein\. These atandards are soewhat lower than those of 75
techniq\.s as the 19'12 irld bnlk Atl\.a\. grams of total protein and 23 gra of animal protein as an
/2 Average number of dughters per noean or reproduotive average for the world, proposed by FAO in the Third World Food
age\. Survey\.
/3 Population growth rAte are fbr the dRads endirng in A Soe,e studies have suggested that crude death ratea of children
1960 and 1976\. ageo 1 through 4 cay be used as a firat approximation index of
A Ratio of under 15 and 65 ad over age brackets to mrlnutrition\.
tho\.s in labor force bracket of age 15 through 64\. @ Peroentage enrolled of corresponding population of school age
i FhO reference standards represent physiological re- as defined for e ch country\.
qoiraeente for normial activity and health, taking
Ftntl"tv: /b Computed by applying to the 1970 figure the growth rate of the GNP/cap\. in real tors fron 1960 to
1970; /' UN nsniiar,e; /d 1962; I Eitimate, based on sample sunny; /f 1969; La 1967; /h 1971; Ai Definition
oumoguoeneo with 19iS c Jnsus; /i 175-70; /k Ratio of population undor 15 and 65 and over to totl IaborTorn*
/1 Urb-an c-Otern - per onuserution (1960 and 1971 nomenclatures being difforont); /m Over 2,000 population- In An u per-
cernige of total ospicyment; /0 Tangunyika only; /p Including nidaie- und unsistant nursn\.; /q Including midwives
and materoity uoni\.tants; /r 7968; /n Goveoroent only; /t 1964-66; /u 1966-68, /v Road and writs; I/ Over 5 years
old /c lS yearn Lcd over /y DlnifTtioc of lit\.r\.cy unknown; /z UN s" tuititol offiTn e istmte; /Ia Trban and rural;
/ib bode; /ac Uoan only; /ad Percent of hous\.holds; las 1966; 7af P-rcont of dwellings with eleltWtEity\.
R3 February 21, 1974
ANNEX I
Page 2 of 3 pages
""RIICCO - ECOhsoIC 0EV!WPMENT DATA SHEET
(Atounts In Million, of US Dolla\.-)
Actual P-olnoted 1963- 190 194
NATIONAL ACOI3II 1970 1972 173 1974 197 90 197 1979 1963 1970 1979
3-Year Anara-nor1(7-1969 Polo\. and EahneRtsA-sroa Annual GrothRae - At Par-at of COY
Grss ioos ItPrduct 2561 3249 3535 3691 3877 1436 4\.9 5\.0 7\.0 13 1\.5 101\.1 192\.4
Gan rtTr,o rd \. -39 -34 \.17 45 42 -129 -2\.3 -1 5 -1\.1 -2 4
Ina Sosl Ino 13 3214 3518 3736 3919 5307 3\.0 3\.63 100 100 100
Iors(looludlog NYS) 504 772 932 996 973 1673 8\.9 6\.6 11\.4 20\.03 24\.0 31\.3
turorts (lorludlno NTlllIaaort Cacauttyl 3~18 67 76 89 99 1353 5\.3 \.8\. 6,\.6 205 20\.9 ;\.2\.
O nsouroe Gap -~~ ~ ~~~~ ~~ ~ ~~~14 101 65 -2 -13 318 \. \.-os5 3\.1 6\.0
Cnoptn ondltu-s22198 2800 2995 3191 334 5 4501 4\.8 4\.6 6\.1 \.97\.9 87\.1 94\.8
n\.t,n oedi Stta(Icuin -ok\.) 291 313 568 553 362 1175 12\.5 3\.4 14\.9 11\.3 16\.0 21\.2
Dotatl lacng 301 414 322 5780 607 :007 6\.3 11\.3 5\.9 12\.31 12\.91 15\.2
Nalol aIg 259 432 570 630 661 852 10\.9 1\. 2 2 0\.3 13\. 16\.0
MERCAAtDISR TRADE ANDO 87S Aa~nal Data at Current PrIce an\.d Ea-hag Ostas As P-\.aat of To,tal
Eup-ros
Phosphaco, fob 113 113 144 203 '22 780 0\.0 41\.0 1\.6 :!1\.2 16\.2 23\.6
Ot her ilooda\. 'ob 333 375 490 699 \.909 1610 3\.0 19\.7 14\.8 0o\. 5 53\.7 48\.3
oN-f-aoo OStoosa 98 210 296 369 429 9!5 16530!1\.483 \.Ql \.IJ
Totnl faporo\. ~~~~ ~~~~ ~~~~534 698 930 1271 1960 335 5\.3 23\.8 11\.0 11\.0\.0 100\.0 100\.0
Pelrlnie\. dr23 37 55 75 269 64 9\.9 32\.0 19\.1 4\.5 4\.3 15\.8
OcherGos- I 406 6449 7'12 1038 1233 26842 9 9\.8 16\.6 18\.0 1\.2 76\.0 69\.4
Non-factor Inrolcas ~~~ ~~~~ ~~~77 148 197 245 21 62 16\.9 14\.9 15\.A1\.3 10\.7 1\.
Total loports ~~~~ ~~~~ ~~~~506 054 964 1358 1793 4075 11\.0 19\.0 17\.9 11\.0\.0 100\.0 100\.0
rieIndices: A-asan 197-69- 10
foor rIce mdno 102 88 128 13,3 :80 203 -0\.8 13\.2 1\.5
uponPlaIde 118 13 11 27 13 24 -2\.8 9\.5 5\.9
T-ano Trade 8on6 95 109 lO 123 100 2\.0 33 -\.
fopor Vluo_ tndao 90 116 123 139 151 2307 5\.2 7\.0 9\.4
VALUE ADDED BY StCToA Macel Dat an 1967-69 Pric- and Eorhauc laoa Aar\.os Annual Gro-th Ratsa - A\. Pnroast f Total
Agriculture 755 091 980 921 994 1101 3\.4 2\.9 3\.5 29\.2 27\.4 21\.8
Iud\.-tr 630 807 903 942 '012 1410 5\.1 6\.5 9\.7 24\.3 24\.9 29\.7
-rlc- 1204 1547 1688 1755 801\.3 2635 5\.1 5J4 J, 46~\.5 47\.7 48\.6
Total 2389 5245 3571 3610 3884 5426 4\.6 3\.0 6\.9 100\.0 100\.0 100\.0
CE NTRA L AVERONMMF0 rInAiEf Annual Data a-C-rrat ~Pro\.s As Pson f GDP
Ciirn Reeps374 446 7 31 979 13465 2346 11\.A 18\.7 11\.4 714\.4 r 20\.1
Curen foediun90 544 684 910 103 250 4\.9 16\.9 15\.0 15\.0 16\.2 17\.8
Budgetary -rpiut 16 102 47 65 533 2466 \. 0\.6 3\.1 23
Set V oterna I Oorronlng ~~~~ ~~~104 69 98 54 100 350 08\.5 12\.6 23\.0 4\.0 2\.1 2\.6
ocentorot focendi turaa ~~~~ ~~~125 226 255 263 395 1500 12\.5 16\.4 22\.3 4\.8 ~ 6\.7 9\.3
CLOIITN0 EXPENDITURE DETAILS A-tua f\.t\. " SI"-l T\.r\.oE Psio La ~Peno- of ~Totl
IAn 'E,o Corsl C-r--n tp-ndl\.fre-) 1965 1970 1972 1975 1968-72 1973-77 1968-70 1973\.77
DETAIL 04 GOEVRNME0OT INVEOSTMENfT aotual PIla-oed actual rla\.d
f\.Iuoatioo ~~~~~ ~~~~~ ~~~24\.5 28\.2 31\.1, 27\.4 ___
O\.or Soil\. r e 11\.3 7 \. \. Social Sec-or 121 635 10\.7 22\.7
ugriro trure 7\.7 7\.2 7\.1 4\.5~~~~~~~~~~~~~~~~~~~~~ 3lrru r 462 79 40\.9 28\.51
DiVor toananic Sernioss 6\.5 ~~ 4\.0 4\.5 Industry and Miotog5141 2'88 12\.5 10\.
Ad\.-icicrti-c agO Secant7 30\.7 30\.0 31\.82 20\.9 uia30 67 2\.7 2\.4
LI 0cr 19\.3 10\.7 16\.6 24\.4 ronat4Cansiunoan\.s 187 247 10\.6 80\.
Total Corr-on t\.npadiltr- 100\.0 102\.0 100\.0 100\.5 Othar -188 765 16\.7 27\.3
Total 1129 2800 100\.0 100\.0
'ELECTED I9ODICATORS 1960\. 1945- 1970- 1973\. F, ISACI\.NC,
(Calu-Ia-d Iron S-Year A-a-gad D\.ta) 1965 1970 1925 1970 Current Sur1plus 313 1013 27\. 326\.
A-oroo ICOR 5\.1 20 3,2 2\.5SontlBrrwn 588 1152 52\.1 41\.1
Unyrr Elanic Iy 0\.05 1\.90 I\.746 1\.50 I\.a:Cpta Oeate -126 -279 -11\.1 - 9\.
Marina Domesti Sa1iogs Rate 0\.7 0\.14 0\.15 0\.12Toa iaun 1129 2800 10\.0 10\.
Margi-nol 1- SaE -a aing\. Rare -00\.02 5\.24 0\.10 0\.10
Toa -ao oce Value Added \. Aerker 11967-69 frI\.tea and Exthanse tR\.,\.,
LABOR cORCF AD OIITPTT PER WORKER in Millio-a Co oa ruhct \. " olr Paret- of Aneraa Ocoth Rate~ %na
1960 1971 1960 1971 1960-71 1960 1971 1960 1971 1960-71 "
A-Aoi,,Iu- 2\.2 - 55\.T 430 \.50\.3
Indunltry - 0\.6 \. 5L\. 1410 \.165\.1
S---uc \.- 1\.2 \. 00\. 1353 \.158\.4
Tarol 3\.3 4\.0 100\.y 150\.0 1\.0 - 854 100\.0 100\.0
nat 0001ilain" 080ENA CP II
March 4, 1974
ANNEX I
Page 3 of 3 pages
f 0DROCCO - L4(CR 07 PA DOTfTS\. bErnAI\. ASSISTANCE AfM D88T PEDJECrIGS
(Affo00t In wIllOon\. of U\. dollar a t current prIe\.*)
AVtAM#ul CGfff7t R-t\.
Act"al Ctaitrced Proltetad ProJanttd 1974- 9-
1969 1970 1971 1972 1973 1974 197 197 1977 1978 1979 1989 1979 19f9
30K40RX bALANCE 0 PAY8KETS
foponta lInvlodIn8 67S1 667 698 737 930 127\. 1960 2044 2126 2139 2883 3301 11220 11\.0 13\.0
lecort, (incloding 1s0 709 b54 858 964 1357 1793 2036 2388 2882 3342 4074 13220 17\.8 12\.6
R tourre Belanc- (X-H) -42 -156 -121 -34 U 7 T W -MT w -|7 li
In tcros et -63 -52 -56 -71 -79 -64 -0 -48 -52 -65 -82 -873 5\.1 26\.5
Irot Inocacoent Into\. -23 -25 -25 -29 -36 -37 -38 -40 -43 \.47 -52 -135 7\.1 10 0
Worloac\. R~\.lt ntnce\. 60 f3 95 137 160 168 176 185 196 205 216 351 5\.1 5\.0
Content Ican\. f\.ralp_t) 29 26 30 24 29 31 c 33 2 3 3 0 0 0\.0
'alance on ,Cu rcent,,,Alccn 32 '44 -77 \. \. -l 2615 129 -32 -209 5 5T
PrIcatc Dlrect lnve\.teent 4 19 20 20 14 19 17 19 24 30 35 142 13\.0 14\.9
(IltIclal Ceplnal Cram\. 27 20 I 17 14 12 12 12 12 12 12 25 0\.0 7\.6
Public H6LT Loana
-DIsb= rcenle 67 129 141 121 101 192 237 268 296 315 458 4566 19 0 25\.5
_Rfnroa nt\. -36 -35 -49 -49 -67 -74 -62 _90 -99 \.114 -135 -1689 12\.8 29\.0
Eet Di\.bura\.t ent 30 94 92 72 34 118 155 178 198 20l 32T T
Otcht H6LT Lo\.n-
-0,sbocaennnta - - - - - 10 21 22 23 24 25 82 20\.1 12\.6
-Ortavonenno - - - - - - - -3 -6 -9 -12 -66 \. 18\.6~~~~~~~~~~~~~~~~~~~~~~~ 6 9 1 -6 i \.
Net Dlobocoroaottn - - 1 - 7 10 21 19 17 15 13 54 6
CepItel Traneeci Ion\. nor \. -I 47 18 -63 40 19 12 2 -I 5 80
Clenuc In Sot Seservre (-\.tnor\.e^^a -21 -36 -71 -74 \.109 -304 -31_ -104 -40 76 266 -416
GRANT A2D LOAN COHOH12KEIt S
Offl\.i\.1 Ccantl and GUnt-like Lo-n 27 20 16 17 14
P\.blc 84LT Loan\.
IR0 53 25 35 87 49
IDA 7 _ 9 10 _
lD:,r Nnltllatccal - 3 - -
GDv rnntonta 31 67 74 73 49
SoppI lrr 3 12 2 -
Finan- al In\.ittiton\. 3 25 32 1
donde I
To-al Pblit K\.LT Loan\. 93 253 151 151 98
Actual Debt Ont-\.andin- on Deccrbor 31\. 1972
ACTUAL AND PROJECTED EXTERNAL DEBT D-ibuceed clyv P-\.cent
18RD 85 10\.0
20A 15 i8
Dth-r H Itil\.terul 3 0\.3
Governnents 602 70\.6
luppli-ro 49 1\.0
Finan--lW I-n\.ttution- 65 7\.7
-ondo 29 3\.4
P\.bl:t Debt n i\. 4 0,4
Total P\.blt H6LT Debt 852 100\.0
Noc appllcablt 090190 CI' 1E
NIl o- -nRligibl F\.ebru-" 208 1974
ANNldE II
Page 1 Of 4 pages
T'HE STATUS OF BANK GHGUF Q;PERATIONS IN MOROCCO
A\. bTATIiRENT OF BANE LGANS AND IDA CREDITS (as of March 31, 197 )
Loan or US $ Million
Credit Amount (less cancellaticns)
Numl;er Year Borroiwer Purpose Bank IDA Undisbursed
Six loans fully disbursed 79\.1
¢'' 19u65 Kingdom of Moroccc Education 1 1 \.0 1\.6
1f0)/ i969 Kingdom of Morocco Highways 7\.3 ---
614?^ 1969 Kingdom of Morocco Highways 7\.3 6\.0
fJ4;3 1'?6,>; Kingdom of Morocco Irrigation L6\.o 30\.8
(C4: 1979O CIH DFC (Tourism) 10\.0 2\.8
73c: 1'71 BNDE DFC 35\.0 5\.°
26O 197i Kingdom of Yorocco Educat±-on 6\.5
14k 1972 CIH DFC (Tourism) 1i\.0 114\.
1) 72 ONEF Water Supply 146\.0
33,, 1''72 Kingdom of Morocco Agriculture\. 1C\.0 2\.5
&i'1 1t72 CNCA Agriculture 24\.0 21h\.0
090 1973 BNDE DFC 2L\.0 15\.9
936 1973 oCIE Power 25\.0 22\.3
>e595 19h7 Kingdom of Norocco Highwas 29\.0 29\.0
Total 3141\.2 36\.6 198\.6
of' whi ch has been repaid 42\.3
Total now outstanding 298\.9 30\.8
Amount sold 1\.3
of which has been repaid 1\.3
Total now held by Bank\. and IDA* 298\.9 3b \.8
Tctal undisbursed 186\.0 12\.6 198,6
:I4i1\.or tc exchange adjustment
" Not yet effective
\. TAT'6RSEN!T OF IFO INVESTMENTS (as of March 31, 1971L)
Amount in US $ MilLion
Year Obligor Type of Business Loan Eouity Total
1i62 BNDE Development Bank 1 1\. 1\.5
106( CIL Canning Factory 0\.9 0\.5 1\.,4
Total gross cormittments 0\.9 2\.0 2\.9
less cancellations, terninaticns,
repayments and sales 0\.5 0\.6 1\.1
Tetal cormTitments now\. held by IFC 0\.4 1\. 1\.
T\.tal undisbursed -
ANNEX II
Page\. 2 of 4 pages
C\. PROJECTS IN EXECUTION -/
Cr\. No\. 79 First Education Project: US$11 million Credit of October 11, 1965;
Closing Date: September 3(), 1974\.
Considerable delays have affected the implementation of the project,
which has been considered a problem project since 1968\. However, performance
inas improved significantly since September 1972; construction and equipmenit
of all schools (except industrial equipment in two schools) has been complcted,
and all schools are in use, project mainagement is now satisfactory, construc-
tion accounts have been brought up-to-date, local funds have been released
for the project and the Association's procurement procedures for internationlal
bidding for furniture and equipment are being followed\. In 1968, as a result
of educational reforms, construction of three agricultural schools was dis-
continued with IDA's approval\. The Closing Date has been extended three times
fronm the original date to September 30, 1974, to allow for rebidding of the
industrial equipment and comiplete disbursements; a further postponement to
December 31, 1974 will be necessary to complete procurement\.
Cr\. No\. 266 Second Education Project: US$8\.5 million Credit of August 18, 1971;
Closing Date: April 30, 1976\.
The project included the expansion and improvement of specific
sections of the secondary, vocational and higher educational systems of the
Borrower, and technical assistance for project administration and school main-
tenanice\. Subsequently the Association agreed not to finance two Vocational
Training Centers and the Department of Veterinary Medicine\. Accordingly, an
estimated amount of about US$1\.0 million or 11 percent of the credit, repres-
entinig the financing of the above-mentioned project itemrs, has been transferred
to the unallocated category for future reallocation and/or cancellation\. The
project unit has made significant effort to catch up with initial delays (about
ten months) in the appointment of consultant architects and in the recruitment
of local personnel and technical assistance experts for the Project Unit\.
Implementation has progressed significantly but it is forecast that an exten-
sion of the Closing Date by about one year will be necessary\.
1, These notes are designed to infnrr the i xecutive Directors regarding
thie progress of irojects in execuL`on, and in particular to report any
problems whiich are being encountered, anid the action being taken to
remedy them\. Thev sbould be read in this sense, and withi the under-
standing that they ao niot purport to present a balanced evaluation of
strenL ths and wea\.Liesses in project execution\.
ANNEX II
Page 3 of 4 pages
n\. No\. 642, Cr\. No\. 167 Highway Project; US$14\.6 million of November 13, 1969;
Original Closing Date: February 28, 1974;
Current Closing Date: August 31, 197L\.
The project suffered from initial delays; however, it should be
completed physically early in 1974 and within the estimated cost\. By February,
1977, $6\.0 million was still undisbursed out of the combined credit/loan,
mainly because of cumbersome Government disbur8ement procedures\. Ways of ex-
pediting payments were discussed by the last supervision mission in July 1973
and at the negotiations for the Second Highways Project\. The original closing
date was extended to August 31, 1974\.
Ln\. No\. 643 Irrigation Project: US$46 million Loan of November 13, 1969;
Closing Date: November 30, 1978\.
After initial management difficulties, the progress in implementing
the project is now satisfactory and on schedule\. In 1970 a flood of unpre-
cedented magnitude occurred causing delays in project implementation while
also indicating the need for additional flood protection work\. The distri-
bution to small farmers of foreign-owned lan(ds to be expropriated proceeded
slowly as Government revised its policy on land reform on a national basis\.
In March 1973 it decided to nationalize all foreign owned lands and a schedule
for land distribution in the project area is now under preparation\. Experience
gained in the course of project implementation has shown that the cultivation
of sugar cane and sugar beet in the project area would require the construc-
tion of a new sugar cane factory and reinforcement of the road network\. A
second project to provide for the additional investment now required has now
been appraised\.
Ln\. No\. 704 First Hotel Development Project; US$10\.0 million of August 12, 1970;
Original Closing Date: December 31, 1973;
Current Closing Date: December 31, 1974\.
Disbursements have been lagging behind commitments as construction
of some hotels ran into difficulties in 1971-73\. The closing date was extended
to December 31, 1974\. About $1\.2 million was cancelled out of the amount of
the loan\. Projects for 1974 have substantially improved and the Loan is likely
to be fully disbursed by the end of 1974\.
Ln\. No\. 736 Fifth BNDE Project; US$35 million of May 30, 1971;
Closing Date: June 30, 1975\.
The Terminal Date for the submission of projects was postponed once
from June 30, 1973 to December 30, 1973, because of likely cancellations of
present commitments\. Due mainly to sluggish investment activity, disburse-
ments fell behind commitments in 1971 to 1973, but with the return of in-
vestors' confidence disbursements are expected to pick up the lag shortly\.
ANNEX II
Page 4 of 4 pages
Lni\. No\. 648 Second llotel Development Project; US$15 million of June 30, 1972;
Closing Date: December 31, 1976\.
Commitments have initially been lagging behind expectations as in
che case of Loan No\. 704 due to sluggish investment activity, but the loan
should be fully committed bv the end of 1974, as against original estimates
of year-end 1973\. With the improved investment climate and with the publica-
tion of the investment code, commitments are already picking up\.
Ln\. No\. 850 Water Supply Project; US$48 million Loan of July 19, 1972;
Closing Date: December 31, 1977\.
The project includes a number of institution building measures\.
Only when these were substantially implemented was the loan declared effec-
tive on Hay 2, 1973\. After initial difficulties, substantial efforts have
been made by the Government to clarify ONEP's functions, strengthen its finan-
cial autonomy, and enforce water tariffs applicable to distribution agencies\.
Difficulties arose in the course of 1973 concerning procurement procedures for
a major contract which have now been solved satisfactorily\.
Ln\. No\. 861, Cr\. No\. 338 Second Agricultural Credit Project; US$34\.0 inillion
of October 10, 1972; Closing Date: August 31, 1976\.
The project has been progressing satisfactorily and disbursements
had reached US$10 million by the end of February 1974 in line with the appraisal
forecast\. Progress under the Loan/Credit is satisfactory\.
Ln\. No\. 890 Sixth BNDE Project; US$24 million of May 14, 1973;
Closing Date: December 31, 197G\.
The original date of effectiveness which was August 20, 1973 was
extended to September 10, 1973, to allow time for the transmittal of necessary
documents\. The loan was declared effective on that date\.
Ln\. No\. 936 Power Project; US$25 million of October 5, 1973;
Closing Date: December 31, 1975\.
This loan has been made effective on January 23, 1974\.
Lii\. No\. 955 Second highway Project; US$29 million of January 11, 1974;
ClosinL Date: June 30, 1977\.
This loan is not yet effective\.
ANNEX III
Page 1 of 3 pages
MOROCCO
MAROC PHOSPHORE
Phosphoric Acid and Mono-ammonium Phosphate Project
Loan and Project Summary
Borrower: Maroc Phosphore
Guarantor: Kingdom of Morocco
Amount: US$50 million in various currencies\.
Terms: 14 years, including 4 years of grace with interest at
7-1/4 percent per annum\. In addition a fee of 1-3/4
percent would be charged by the Guarantor\.
Co-Financing: Kreditanstalt fur Wiederaufbau of Germany is providing
DM 75 million (US$26\.8 million equivalent) towards the
financing of the project\. This amount is lent to the
Government of Morocco at 2 percent for 30 years includ-
ing 10 years of grace, and relent to the Borrower by
the Government as Guarantor on the same terms and at
the same interest rate as the Bank Loan\. Also, the
Moroccan Banque Nationale pour le Developpement Economique
(BNDE) will lend Maroc Phosphore US$8 millions under a
separate agreement at thesame effective rate of interest
and conditions as the Bank Loan\.
Project The proposed project consists of:
Description:
(a) The erection of a plant, near the port of Safi,
to produce for export 371,250 tons per year of
phosphoric acid and 225,780 tons per year of mono-
ammonium phosphate\.
(b) Facilities at the plant and at the port of Safi
for the supply of utilities, the transportation
and storage of raw materials and finished products\.
ANNEX III
Page 2 of 3 pages
Estimated Cost: The cost of the project is estimated at about,
us$18\.6 million equivalent, and is sunmwarized as follows:
Yillions of US$
Local Foreign T_tal
Turnkey Contract 20\.6 71\.0 91\.6
bpare Parts - \.8
Taxes \.0 -4\.0
Project Infrastructure 3\.7 - 3\.7
Pre-Operational Expenses 3\.7 1\.3 5\.0
Price Escalation 3\.1 13\.5 16\.9
Additional Contingency 1\.3 44\.8 6\.
Work-ing Capital 16\.5 - 16\.5
Total Capital Cost 52\.9 95\.7 1L8\.6
Interest During Construction 2\.5 6\.4 6\.9
Total Financing Required 55\.4 100\.1 155\.5
Financing Plan: Millions of US$
Debt: IBRD - 50\.0 50\.0
KfW 26\.8 26\.8
BNDE _ 8\.0 8\.0
jub-total - 84\.8 84\.8
Equity: Local Costs 55\.1 - 55\.4
Clearing Currency Costs - 12\.6 12\.6
Convertible Currency Costs _ 2\.7 2\.7
nub-total 55\.4 15\.3 70\.7
Total Financang 55\.4 100\.1 155\.5
1/ Fbr goods supplied from Poland\.
ANNEX III
Page 3 of 3 pages
Estimated
Disbursements: All in fore:!gn exchange
Millions of US$
FY75 FY76
Annual 35\.9 14\.1
Cumulative 35\.9 50\.0
Procurement The project is being executed on a lump sum turnkey basis\.
Arrangements: Bids were invited from consortia of specialized firms
with the leadership entrusted to one firm (the Contractor)
who was to have the responsibility for the entire project\.
The Bank agreed to a three phase procedure for selecting
the consortium\.
(i) Prequalification of consortia after international
advertising;
(ii) invitation to prequalified consortia to submit
unpriced technical offers conforming to detailed
tender documents; and, after clarification and
technical adjustments of offers;
(iii) call for a lump sum price for most of the project
work which, together with the technical offer, was
to serve as the basis for bid evaluation\.
Five consortia were selected by OCP on the basis of their
technical offers to present price proposals\. The lowest
evaluated bid was submitted by the consortium headed by
Friedrich Uhde GmbH (Uhde) of the Federal Republic of
Germany\. The contracts include a lump sum price to be
paid according to an agreed schedule corresponding to
expected cash outlays and work done by the Contractor\.
Advance pavements in convertible foreign exchange by the
Borrower will be financed retroactively by the lenders\.
The share of the Bank will be US$3\.1 million\.
Technical The project was prepared by Office Cherifien des Phosphates
Assistance: and Haldor Topsoe of Denmark as technical advisor\.
Financial Rate of
Return: 16\.9 percent
Economic Rate of
Return: 21\.2 percent
Apraisal Report: Report No\. 351-MOR, dated April 19, 1974
Industrial Projects Department
10'
TANGIFR t
/%Asilrah
MOROCCO
35' MAROC PHOSPHORE PROJECT / Ksor ElKebr,
PORTS, RAILROADS AND PHOSPHATE ROCK DEPOSITS
/k el A, du Rhorb
e 4 SbSID~~~~~~~~~I KACEM 10/
4o Ports A RABA ale' FEZ
II Roilroods Skhi,ot MEKNES
,4 CASABLANCA MEKNESEDI
Phosphate Rock Deposits C \.oAMMEDIA
\ / } ~~~~~Nouosseur
/ S,di El Aidi RosEI Ain A,r Amor
0 50 100 ISO 200 0usd Zem p\.
I I I I Ben Abbou KHOURIBGA
KILOMETERS
SAFl j4 BessoungueHrr
/RA SHWN
/ IN INSET;
MARRAKECH
PROJECT WORK SHOWN IN RED 7b,h h hidarira n /hiIIp 7- ' ost
OTHER NEW WORK SHOWN IN GREEN -d a\.rraX \. ri \.h!I
G W-4/ /BHkh'aHdBr-oliad ffi fiiiats
H __ ___ __ _ _ _ _ _ __/_ _ _ __SPAIN
A/Ilcn fc I( Sea
\ 5 \.v\. gf Reservo,r -30° , -1 A L G E R I A
MARO L I Y
o ~~~~~~~~~S Moa,ekbou Guedro
MAROC To Youssoufa MAURITANIA >~
CHIMIE71
oc ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ MI - IE CHADO
PHOSPHORE Goe | APPROVAL |
P003426 | Documni tft1j j' j : i :jY
The World s, \. 0
FOR OFFICIAL I
Report No\. 9735
PROJECT PERFORMANCE AUDIT REPORT
CHINA
FIRST RAILWAY PROJECT
(LOAN 2394-CHA)
JUNE 24, 1991
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Unit Yuan (Y)
Appraisal (1983) US$ 1\.00 - Y 1\.98
1984 US$ 1\.00 - Y 2\.32
1985 US$ 1\.00 = Y 2\.94
1989 US$ 1\.00 - Y 3\.80
From Dec\. 1989 US$ 1\.00 - Y 4\.71
ABBREN'TATIONS
BN Burlington Northern Railway
CTC Central Traffic Control
EAAMS Economic Analysis of Aluminum Milling in
Shanghai
ERR Economic Rate of Return
FOB Free On Board
GDP Gross Domestic Product
GNP Gross National Product
KWh Kilowatt-Hour
MOR Ministry of Rail
NPV Net Present Value
PCR Project Comnletion Report
PPAR Project Performance Audit Report
R&D Rcsearch and Development
SAR Staff Appraisal Report
Ton-Km Metric Ton-Kilometers
FISCAL YEAR: January 1 - December 31
FOR OFFICIAL USE ONLY
THE WORLD BANK
Washington, D\.C\. 20433
U\.S\.A\.
Office oecto-Cetral
Opations Ivakiation
June 24, 1991
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Performance Audit Report on China First Railway
Project (Loan 2394-CHA)
Attached, for information, is a copy of a report entitled
"Project Performance Audit Report on China First Railway Project
(Loan 2394-CHA)" prepared by the Operations Evaluation Department\.
Attachment
\.v7
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FOR OFFICIAL USE ONLY
R-WEJPrF 9FMANGE AUDIT REPORT
FIRST RAILMAY PROJECT
(LOAN 2394-CHA)
TABLE OF CONTENTS
Pane No\.
PREFACE \. i
BASIC DATA SHEETS \. ii
EVALUATION SUMMARY \. iv
PROJECT PERFORMANCE AUDIT
I\. Introduction \. 1
II\. China Railways\. 1
III\. Project Objectives, Definition and Design \. 9
IV\. Project Implementation \. 12
V\. Project Economics \. 17
VI\. Findings and Issues \. 21
Annex I Economic Cost of SS3 (4800kw) Electric Locomotives\. 35
Annex II Issues in Technology Transfer \. 40
Annex III The Axle Load Issue \. 47
Annex IV Borrower Comments \. 49
PROJECT COMPLETION REPORT
I\. Project Review from Bank's Perspective \. 51
II\. Project Review from Borrower's Perspective \. 62
III\. Economic Impact and Statistical Information \. 69
MM IBRD 17096
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
i
PROJECT PERFORMANCE AUDIT REPORT
FIRST RAILWAY PROJECT
(LOAN 2394-CHA)
EFACE
This is the report of the performance audit of the First Rail
Project in China\. It was partially financed by a Bank loan of US$ 220\.0
million which was approved by the Board on March 27, 1984\. The loan was
fully disbursed and closed on December 31, 1990\.
The PPAR is based on the Project Completion Report (PCR)
prepared by the China Department, Asia Regional Office and issued on June
28, 1990 1/ The PCR was supplemented with a revised set of economic
analyses prepared in February 1991 by the Transport Operations Division of
the China Department\. In addition, the PPAR is based on the Staff
Appraisal and President's Reports, the loan documents, the transcripts of
the Executive directors' meetings at which the project was considered, on a
review of project files, and on discussions with Bank staff\. An OED
mission visited China in November 1990 to discuss the effectiveness of Bank
assistance and to make field visits to the completed subprojects\.
The PCR provides a satisfactory account and assessment of the project
experience\.
Following standard OED procedures, copies of the draft PPAR were
forwarded to the government and executing agencies on April 9, 1991 for
comments\. Comments from the borrower's Foreign Capital and Technical
Import Offics were received on June 20, 1991 and are included herein as
Annex IV\.
1/ Protect Completion Report China Railway Project (Loan 2394-CHA),
China Department, Asia Regional Office, The World Bank, June 28,
1990\.
ii
PROJECT PERFORMANCE AUDIT REPQRT
0815
(LOAN 2394-CHA)
BASIC DATA SHEET
Key Project Data
Appraisal Actual or Actual as %
IlLn Expctation Current Estimate Appraisal
Total Project Costs
(US$ million) 692\.2 806\.4 116
Loan Amount
(US$ million) 220\.0 220\.0 100
Date of Effectiveness 06/84 07/84
Date of Completion 12/87 12/90
Months for Implementation 42 77 183
Economic Rate of Return 17-89 17-82
(Percent)
Cumulative Estimated and Actual Disbursements
(US$ millions)
ESA BA 9\.1 EA 82 E990 EM1
Appraisal
Estimate 45 170 220 220 220 220 220
Actual 73 136 169 179 204 212 220
Actual as %
nf Estimate 163 80 76 77 93 96 100
Project\.Dates
Original Pln Actual
First Mention in Files 09/80 ----
Appraisal 02/81 03/83
Negotiations 02/84 02/84
Board Approval 03/84 03/84
Signing 04/84 04/84
Effectiveness 06/84 07/84
Closing 12/87 12/90
Lit
Stalf Inputs
(staff-weeks)
M181 EXAZ EM X FM EM EMZ EEY8 EY89 lotal
Preappraisal 3 7 60 70
Appraisal 58 30 88
Negotiation 31 31
Supervision 2 19 17 14 8 4 64
Other 1 3 1 5
Total 3 8 121 64 19 17 14 8 4 258
Mission Data
Mission Tvme MonthfYear No\. Persons Staff-Weeks
Preparation 06/82 1 1
Preparation 07/82 2 6
Preparation 10/82 5 15
Preappraisal 03/83 6 18
Appraisal 06/83 9 36
Supervision I 07/83 1 2
Supervision II 10/84 7 21
Supervision III 10/85 3 12
Supervision IV 10/87 1 3
Supervision V 03/88 2 1
Supervision VI 05/89 2 1
Supervision VII 05/90 3 8
Other Project Data
Borrower: People's Republic of China
Executing Agency: Ministry of Railways
Follow-on Projects: Second Railway Project 1985, Third Railway Project
1986, Fourth Railway Project 1988, Inner Mongolia Local Railway Project
1989\.
iv
PROJECT PERFORMANCE AUDIT REPORT
FIRST RAILWAY PROJECT
(LOAN 2394-CHA)
EVALUATION SUMMARY
1\. Introduction fabricated bridge elements,
construction equipment, reinforced
The intention is to audit the concrete sleepers etc\. The
First Project in the context of remaining seven percent operate
the entire line of lending (five the 11 universities and colleges,
projects) and associated transport 49 technical schools, 86 skilled
sector work to date\. The First worker training schools, a primary
Project was prepared with the idea and secondary education system for
that it was to be an initial the children of staff, and a
learning experience for the Bank health system for staff and
and the Ministry of Railways that families\. Assuming four
would lead to increased dependents per employee China
cooperation in subsequent lending Railways is a sub-economy of 12\.8
operations\. Subsequent lending million inhabitants with an annual
and increased couperation have investment budget of about US$ 2\.0
transpired in the six years billion per year\. If the Bank
following the signing of thi First continues to lend at a rate of US$
loan agreement\. The new analyses 200 million per year this would
and studies that have been carried account for about ten percent of
out in the process of preparing the annual investment budget\.
the Zollow-on projects greatly
enrich the retrospective There is no question that
examination of the initial effort China Rail is a serious and
in the five loan series\. generally efficient physical
operation by most standards\.
2\. Setting However, one question hangs over
the Ministry of Rail and thet of
China Railways has the fifth the entire transport sector: why
largest network in the world and does the Chinese economy require
carries the second highest level &U Fauch frZIght tranc-port *a---
of freight and passenger traffic In 1987, the Chinese economy
after the Soviet Union\. It has generated the need for 4\.77 ton-
its own ministry with 3\.2 million km of transport per $US of GNP\.
staff\. About sixty percent of the For the USSR it was 3\.51\. For
staff work at providing \. India it was only 1\.4, while for
transportation\. Another twenty the USA it was only 0\.86\.
percent are organized into the 19
construction bureaus that are In late 1980, when the Bank
continuously providing new track first began considering the
and facilities\. Thirteen percent project under audit, the
man the "industrial sector" of 66 preparation mission members faced
factories producing locomotives, a curious combination of seemingly
rolling stock, signalling, efficient, very high volume, very
V
high density, financially The 305 km\. Xinxiang-Yanzhou
profitable rail operations in an line was also a part of the larger
economy where price distertions Shanxi Province-Shijiusuo Port
and perverse incentives were so project in which Japanese
great that the rail system could financing was also involved\.
have been carrying (at a high Single line capacity of 17 million
level of physical efficiency) as tons per year to the Port of
much as double the freight traffic Shijiusuo was the original design
a market oriented economy of the objective\.
same size would require\.(PPAR
Paras\. 3-21)' The Zhuhou Electric
Locomotive Factory component
3\. Objectives evolved from the desire of the
Chinese to import electric
The best extended definition locomotives to operate with the
of the First Rail Project major new line electrification
objective is found in a memo in investments being undertaken\.
the files dated February 3, 1983: After examining the then existing
Zhuzhou electric locomotive works,
our objective in the first project Bank staff were convinced that,
will be to build the basis for a with appropriate investments in
good dialogue with China on the the existing manufacturing
railway subsector for the longer facility, annual production could
term\. This objective and be increased from 40 units per
implementation of a more year to 120 units, obviating the
substantive transport policy- need for imports\.
oriented dialogue with the
Ministry of Railways is likely to A technical assistance and
take some years and several training package was also included
project to achieve\. in the project description\. The
basic idea was to transfer
Thus, the First Project was technoloy for locomotive design
conceived as part of a series that and manufacturing from the
would allow the Bank to eventually developed countries to China\.
widen and deepen its participation
in support of China's transport The need for a costing study,
sector\. Specific subprojects became apparent to the economists
undertaken were: and financial analysts\. The
railway investment plan was (and
The 355 km\. Datong-Taivuan still is) dominated by simple
line inproverent was an extension physi-- l-plannln m-es-uesdriven
of the Datong-Beijing-Qinhuangdao by the objectives of the State
project which was to cater almost Planning Commission and by the
wholly to unit trains of Shanxi presence of obvious bottlenecks\.
coal moving on a double track to Neither true economic nor
the Port of Qiahiangdao\. The financial analysis figured heavily
Datong-Qinhuangdao project, into in investment decisions\. Thus,
which the Bank-supported project while Bank railway engineers were
was to feed, was to be increased generally impressed with the
from 42 million tons capacity to operational and implementation
60 million tons per year\. This abilities of China Railways, Bank
latter investment was to be financial and economic analysts
financed by the Japanese\. had little to work with\. This
component was to begin to repair
vi
that deficiency\.(PPAR Paras\. 22- possibility of heavier axle loads
30) for the design of major structures
and (iii) local control of
4\. Implementation Experience automated switching investments\.2
The Datong-Taiuan line was The Zhuhou Electric
redesigned after loan signing to Locomotive Works component was
handle a flow of 60 million tons part of a larger planned expansion
per year of coal rather than the of the Zhuzhou works\. 7t was to
original 33 million ton objective\. be Phase 1 of the expansion but
A redesigned Datong-Beijing- the Chinese accelerated Phase 2 at
Qinhuangdao integrated coal export their own expense, implementing it
operation (into which the Datong- concurrently with the Bank-
Taiyuan line was to feed) was financed Phase 1 which was delayed
increased from 60 million tons per by about two years because of
year to 100 million tons per year\. procurement problems\. In 1989 the
When the State Planning Commission nearly-completed Zhuzhou facility
issued these new design objectives produced 167 locomotive units that
the scope of the project was appear to be of acceptable quality
approximately doubled over that - considerably beyond the SAR
expected in the SAR\. There is no objective of 120 units from 1987
record in the Bank files of a on\.
revised engineering or economic
analysis to define and justify the Generally speaking the
expanded scope\. technology transfer was successful
only in terms of the use of the
In 1989, about 44\.5 million new machine tools\. The real
tons of coal were transported over problem for the Chinese that has
the new line to the Port of not been solved is how to keep
Qinghuangdao\. The SAR originally their electric locomotive designs
anticipated 38\.8 million tons to and manufacturing techniques
the port by 1989 so actual traffic abreast of the latest technology\.
to date is running about 15
percent above appraisal estimates\. The costing study report was
Civil works implementation was compleLtd by Lhe Chinese in
observed to be good\. September 1985\. By March 1989 the
proposed costing procedures were
The Xinxiang-Yanzhou line being pilot-tested at sub-
subproject went according to administrations in Shanxi and
schedule in both cost and timing\. Shanghai\. The Chinese have been
It was completed in 1987 and diligent in puLsulug the beginning
carried coal traffic of 13 million of an acceptable system\. The
tons in 1989 compared to the 9 Audit was unable to determine the
million tons projected in the SAR\. extent and usefulness of their
Implementation was observed to be accomplishments to date\.(PPAR
generally good\. Peras\. 31-44)
IL: only technical 5\. Results
shortcomings the Audit could
identify with the two line A comparison of the Staff
components were: (i) the use of Appraisal Reports for Rail I and
jointed rail instead of welded Rail V show how far the Bank-
rail for the track and (ii) the Chinese relationship has matured
failure to consider the in less than ten years\.
vii
Substantial progress has been made developed world\. Going the other
in documenting and understanding 20 percent is largely a question
the operation of this compiex of adapting for China the latest
system and this is currently being technologies and methods in
reflected in the most recent management information,
lending operation\. communications and industrial
engineering\.
The coal transDortation
investments were subjected to a Possibly the sirgle most
retrospective economic analysis in serious price distortion at the
a very comprehensive PCR in which agr level is underpriced
the latest conversion factors were electric power (conversion factor
used to estimate economic costs of about 4\.0) for the industrial
and benefits associated with the sector\. Since the bulk of the
partly redesigned projects\. The coal to be transported over the
best estimate of the ERR for both two project lines was *ar
lines was slightly less than 20 producing electric power for
percent, indicating the economic domestic use, the coal-electric
viability of both subprojects\. power nexus was critical for
analyzing the economic goodness of
The electric locomotive the associated power and transport
manufacturing investment was investments\. Had the pricing of
judged to be a success\. The PCR domestic electric power for
analysis utilizes a locomotive industry rather than the
price conversion factor of 2\.0 and international price of coal been
capital costs 36 percent higher more of an element in the economic
than the SAR to reflect the Phase analysis, the right questions
2 investment\. The ERR for the concerning the economics of power
combined Phase I and Phase 2 is production would have been asked\.
then estimated to be 82 percent,
confirming the high return on the There is merit to asking the
investment in locomotive right questions concerning the
manufacturing and the gains to be ultimate use to which the
had from scale economies\. This transported coal will be put\.
would also appear to establish the However, the question is how much
Chinese as a major potential of the distortion at the macro
competitor for sales in the world economic level can be taken into
market\.(PPAR Paras\. 45-55) consideration when preparing a
rail investment project\. Is it
5\. Findings, Lessons and reasonable to expect the railway
Sustainability managers to "\.simuiate markets
within a framework of planning and
Efficiency gains to be made collective ownership\."? Or is
at the macro economic level are it more reasonable to require
probably more substantial than railway managemen: to continue
those at the micro technical making investment, operational and
level\. This is because China Rail pricing decisions based on current
is generally a well-run technical financial incentives and leave the
operation compared to railroads in changing of those financial
other developing countries\. The incentives to those managing the
Chinese have already achieved economy at large?
about 80 percent of the operating
and manufacturing standards of the The Audit believes that the
best rail operations in the formal economic analyses of
viii
subprojects in Rail I were little promoting the use of such
more than pro forma exercises done management tools by using them in
after the engineering and their own Staff Appraisal
investment decisions were made\. Reports\.3
It was an administrative
requirement associated with a Relevant international
1-rld Bank loan that was a minor experience based on good economic
element of the overall operation\. or financial analyses in a
i'hia may have been excusable in competitive environment can be
the early years but it continues useful as a check on investment
to be the case, despite heavy and operational decisions in China
emphasis by the Bank on formal in the absence of market prices
economic analysis using conversion and accurate financial costs\.
Zactors to shift from financial However, there are examples of bad
figures to economic figures\. A international experience tnat the
careful examination of the ongoing Chinese would be well-adviied to
electrification, locomotive and avoid and there are some areas
rolling stock and permanent way where the Chinese themselves
studies indicate that almost no represent the best international
economic (or financial) thinking experience\.
or concepts are being explicitly
integr-\. I into the exercises\. The question of
gustainabilitXr rarely becomes a
While formal nomic serious concern in China Railways\.
analysis may not be making rapid Unremitting rapid growth in
headway in the HOR, there is no demand, very high density train
reason why the much easier traffic, and constantly recurring
fiUancial analysis of projects and bottlenecks have shaped the
operations should not be thinking of Chinese railway
undertaken\. Computing the net planners in a way that has
increases in value of coal for happened in few railways of the
domestic use because of the developing world in the late
existence of adequate rail twentith century\. Building,
capacity is a difficult task\. maintaining and operating a
Computing the additional revenues physical activity as potentially
associated with moving the coal is dangerous as high density train
conceptually much more operations requires skilled
straightforward\. Associating a pragmatic operators and managers
net revenue stream with the and this the Chinese have
investments required to make it provided\. Without having to worry
possible is the sort of analysis about marketing services, China
that rail managers should be Rail has been able to maintain
encouraged to undertake given the existing capacity by developing a
commercial direction in which maintenance ethic that is rarely
public entities are expected to found In the developing world\.
move\. This was done by Bank staff The commitment to protection and
in the SAR of the Third Railway maintenance of capital investments
Project but has since been is manifest and laudable\.(PPAR
abandoned in favor of economic Paras\. 56-85)
analyses employing conversion
factors, despite the stated Dealing with the railways of China
commitment to a railway financial has required the provision of an
cost accounting system in the Rail extraordinary array of technical
I project\. The Bank should be skills by the Bank ranging from
ix
those conversant with the macro-
micro linkage to those concerned
with specific industrial
engineering applications\. So far,
the Bank has managed to stay on
top of developments by bringing in
a variety of international experts
to assist in the task\. However,
as the number of disbursing
lending operations increase and
the numerous outstanding studies
reach critical junctures the task
is becoming more difficult and
complex\. The achievement of the
ambitious Rail I project objective
has raised the question of whether
or not the Bank can keep up the
pace with an institution as
formidable as China Rail\. The
more we succeed with sophisticated
clients, the more high quality
resources we must allocate to deal
with the fruits of success\. (PPAR
Paras\. 86-90)
1\. For the Region's comment on this matter see footnote 20 on page 8 of
the main text\. For the Borrower's comments see paragraph 7 of Annex
IV\.
2\. For the Region's comments on these issues see footnotes 35 and 37 in
the main text and Annex III\. For the Borrower's view see paragraph 2
of Annex IV\.
3\. For the Region's position on this issue see footnotes 41 and 62 in
the main text\.
1
PROJECT PERFORMANCE AUDIT REPORT
FIS RAILWAY PROJECT
(Loan 2394-CHA)
I\. Introduction
1\. Between 1984 and 1990 the Bank has supported five lending
operations to China Railways\. 1/ The First in 1984 was a loan for US$ 220
million for various new line construction and upgrading subprojects plus
expansion of an electric locomotive factory\. The most recent Fifth Rail
Project in 1991 is to be a US$ 330 million loan for system-wide line and
terminal upgrading\. In seven years the Bank will have committed a total of
US$ 1\.2 billion for investments estimated to cost about US$ 3\.5 billion\.
This will be the audit of the first project\.
2\. The intention here is to audit the First Project in the context
of the entire line of lending and associated transport sector work to date\.
This is because the First Project was prepared with the idea that it was to
be an initial learning experience for the Bank and the Ministry of Railways
(MOR) that would lead to increased cooperation in subsequent lending
operations\. Subsequent lending and increased cooperation have transpired
in the six years following the signing of the First loan agreement\. The
new analyses and studies that have been carried out during preparation of
the follow-on projects greatly enrich the retrospective examination of the
initial effort in the five loan series\. Much of this information and
analyses is integrated and summarized herein in a fashion that goes beyond
the requirements of a conventional audit report\. The extra commitment of
resources by OED is seen as appropriate given the uniqueness of the China
Rail experience and the extent of Bank involvement, both intellectually and
financially\.
I\. China Railways
3\. China Railways has the fifth largest network in the world and
carries the second highest level of freight and passenger traffic after the
Soviet Union\. It has its own ministry with 3\.2 million staff (of which
720,000 are female)\. About sixty percent of the staff actually work at
providing transportation\. Another twenty percent are organized into the 19
construction bureaus that are continuously providing new track and
facilities\. Thirteen percent man the "industrial sector" of 66 factories
producing locomotives, rolling stock, signalling, fabricated bridge
1/ In 1989 a US$ 150\.0 million loan and credit was also made for the
Inner Mongolia Local Railway which was not an all-purpose system-
wide operation\.
2
elements, construction equipment, reinforced concrete sleepers etc\. The
final seven percent operate the 11 universities and colleges, 49 technical
schools, 86 skilled worker training schools, a primary and secondary
education system for the children of staff, and a health system for staff
and families\. Assuming four dependents per employee China Railways is a
sub-economy of 12\.8 million members with an annual investment budget of
about US$ 2\.0 billion per year\. If the Bank continues to lend at a rate of
US$ 200 million per year, this would account for about ten percent of the
annual investment budget\.
4\. Like virtually all railways, China Rail has its roots in the
19th century\. Beginning in 1876 and until the Second World War, 22,000 km
were constructed\. In 1949, after the war and the revolution, only 11,000
km were in operation\. For this reason, the history and development of the
system is nearly always treated in two phases - pre and post 1949\. Since
1949, the system has been steadily expanded in geographic coverage until it
reached its present route length of about 56,000 km\. This relatively
recent expansion of the system has allowed the Chinese to benefit from the
experience of other countries\. The track gauge, curvature and gradients
plus the design and size of rolling stock have been of post 1945 vintage
and, in general, both modern and apprciriate for Chinese circumstances\. 21
5\. Given the relatively compact habitable area of China between the
sea coast and the mountains and deserts of the west, and the huge
population and associated economic activity in this area, the derived
demand for transport of all kinds is both large and dense\. With highway
transport only recently coming onto the scene, the railways have been
called on to provide the bulk of transport services\. As recently as 1977
China Rail carried 73 percent of intercity ton-km\. and 64 percent of
intercity passenger-km\. 2/ Since that time the rapid growth of highway
transport has shifted the rail share in 1988 to 59 percent of freight
traffic and 53 percent of passenger traffic\. Such a dramatic shift in
market shares would normally be disastrous for the finances of an
enterprise, not to mention the negative psychology associated with being a
declining industry\. This has not been the case for China Rail because of
the large suppressed demand for transport and the rapid growth of the
economy in the last ten years which has generated a demand for freight
transport growing at an annual rate of 8\.9 percent between 1980 and 1988\.
With road freight output growing from a low base at an unheard of annual
rate of 20 percent for the same period, rail-ay freight still grew at an
annual rate of 7\.1 percent, only l\.'J percent below its 1952-1977
performance\. Thus, the shift in market shares that troubled so many other
railways of the world in the 1950s and 60s is taking place today in China
without the usual attendant traumas\.
2/ They do not, for instance, have the oversized wheels or two-axle
wagons characteristic of much of the low capacity rolling stock of
Indian Railways\.
2/ This discussion is based on the data found in the Staff Appraisal
Report of the Fifth Railway Project, Report No\. 8439-CHA, April 5,
1990, Table 1\.3, p\. 121\. This source in turn is based on the
Statistical Yearbook of China\.
3
5\. Unremitting rapid growth in demand, very high density train
traffic, and constantly recurring bottlenecks have shaped the thinking of
Chinese railway planners in a way that has happened in few railways of the
developing world in the late twentieth century\. Building, maintaining and
operating a physical activity as poter\.: lally dangerous as high density
train operations requires the skilled pragmatic operators and managers the
Chinese have developed\. Without having to worry about marketing services,
China Rail has been able to organize to maintain existing capacity by
developing a maintenance ethic that is rarely found in the developing
world\. Organizing to expand track and rolling stock capacity has led to
vertical integration in the area of civil works construction and industrial
production of most rail inputs\. Such vertical integration has been
constrained only by the boundaries of other ministries such as the Ministry
of Energy and the Ministry of Coal\. Otherwise the production of electric
power and coal would certainly have been added to the activities of the
Ministry of Rail\.
Physical Productivity
6\. The performance of China Railways has been impressive in terms
of measurable physical results\. Of four large railway systems of the world
(China, USSR, USA Class I, and India) the Chinese have the second highest
freight density (USSR has the highest) in ton-km per route-km\. A/ It is
triple that of the U\.S\., and five times that of India\. Low density lines
are not a problem for Chinese managers\.
7\. In terms of freight tonnage per car loaded, the Chinese in 1988
were second only to the U\.S\., were on a par with the USSR, and were two and
a half times greater than that of India\. 5/ It is however in the area of
wagon productivity that the Chinese are unsurpassed\. If the freight
tonnage per car loaded is used as a surrogate for average wagon capacity on
the five systems, then dividing this figure into the ton-km per freight car
ow-ep cttiatic yields a physical productivity measure of annual ton-km per
ton of wagon capacity\. k/ The Chinese were tops in this category in 1988
with 53\.6 thousand ton-km per ton of capacity, followed by the USSR with
41\.0 thousand, India with 30\.0 thousand and finally the U\.S\. with 12\.0
thousand\. 2/ The Chinese performance with wagons is an extraordinary
4/ Much of this discussion is based on the data found in the Staff
Appraisal Report of the Fifth Railway Project, Report No\. 8439-CHA,
April 5, 1990, Table 2\.6, p\. 132\.
2/ The poor Indian showing is because of the small capacity of their two
axle wagons as opposed to the four axle technology used by the
others\.
g/ The term "tons" or "tonnage" in this report refers to metric tons\.
2/ The low figure for the U\.S\. Class I railroads as a group is due to
the large number of specialized wagons owned by leasing firms and
shippers - not the railroads\. These wagons allow the U\.S\. railroads
to provide services and frequencies that are not offered by the other
4
achievement despite the fact that it implies less than satisfactory levels
of service to the users of the Chinese railways in terms of foregone
movement and/or long waiting time for wagons and inconvenient loading and
unloading times\.
8\. The MOR does not keep or publish regular records on locomotive
availability by type of locomotive, a key figure for the managers of most
railways\. I/ The data for China are fragmentary and that which exists
indicates that the Chinese have been much less successful in utilizing
their locomotives intensively than they have been with line and wagon
assets\. The SAR for Railway IV shows a single entry for availability of
the fleet of 2000 diesel locomotives of 84 percent in 1979\. The large
fleet of 8000 steam locomotives had an availability of 93 percent\. 2/ The
SAR for Railway V has an estimate for freight locomotives for 1987 of about
82 percent and indicates in the text that the availability of diesel
locomotives varies between 77 and 82 percent depending on the locomotive
model\. 1O/ By this time (1987) the steam fleet was down to 7,700 and the
diesel fleet was up to 7,501\. The electric fleet was at 2,028\. With the
rapid growth of the vastly more complicated and costly diesel and electric
locomotive fleet one would expect a careful monitoring of the use of this
asset\. The figures that do exist indicate something around the 85 percent
availability level\. This is respectable for a developing country railway
but about eight percentage points below developed country standards\. The
probable reason for this relatively low performance is set forth in the
audit proper\.
9\. The productivity of labor can be approached in a physical sense
by dividing the combined output of freight and passenger services (one ton-
km equivalent to one pass-km) by the labor force directly engaged in
providing that output\. In China in 1987 it was estimated that 1\.93 million
workers provided 987\.8 billion ton-km and 326\.0 billion pass-km for a
combined total of 1313\.8 billion traffic units\. This comes to 0\.68 million
traffic units per employee\. In India in 1988 the figure was estimated at
C3 Tn ho the 1 \.ls T railwav it- wan 6\.06 million while for the
three railroads\. The Burlington Northern in its coal operations is
able to achieve wagon productivities in excess of 70\.0 thousand ton-
km per ton of wagon capacity\. This is a long haul, high capacity,
unit train, shuttle operation which probably represents the upper
boundary of physically achievable wagon utilization rates\.
L/ See: Managing Locomotive Availability and Utilization,
Infrastructure Notes, Transport No\. RW-1, The World Bank, March 1990\.
2/ SAR Fourth Railway Project, Report No\. 7148-CHA, June 2, 1988, Table
2\.1, p\. 53\.
1/ SAR Fifth Railway Project, Report No\. 8439-CHA, April 5, 1990, Table
4\.3, p\. 161, and para\. 2\.13, p\. 8\.
5
Burlington Northern in 1988 it was 10\.11 million\. 11/ Thus, China Rail
uses about six times as much labor per unit of rail output as the U\.S\.
Class I railroads and fifteen times as much as the Burlington Northern\.
Given the differences in wage levels this may be an appropriate use of
labor by the Chinese but the possibility of serious overmanning for some
operations should not be dismissed at this level of generalization\.
Financial Productivity
10\. While it is possible to make international comparisons of
physical measures of productivity, it is much more difficult to make sense
out of financial information\. In a centrally planned economy where
administered prices are frequently unrelated to costs or scarcity,
financial statements give scant indication of how well-managed an
institution is\. According to its profit and loss statements, China Rail
appears to be a successful institution financially and provides by far the
lowest cost rail transport in the world\. It had operating ratios
fluctuating between 67 and 82 percent between 1985 and 1989 while its
average freight revenue per ton-km in 1989 was estimated to be 0\.6 U\.S\.
cents\. 12/
11\. The Class I U\.S\. railroads currently average revenues of about
2\.0 cents per ton-km, while the extremely efficient Burlington Northern
long-haul coal railway averaged 1\.3 cents per ton-km in 1988\. India
averages about 1\.8 cents per ton-km, while European railroads are in the
range of 5\.0 to 8\.0 cents\. Thus, Chinese unit freight revenues are about
46 percent of those of the most efficient U\.S\. railroad, one third of those
of India, and one fifteenth those of Europe\. It in extremely unlikely that
the real resource unit cost of operating the Burlington Northern in the
U\.S\. is 2\.2 times that of Chinese Rail given the longer hauls, higher wagon
loads, higher locomotive availability, and the fact that the BN has by far
the highest output per man hour of the U\.S\. system and does not have to
cater to passenger transport\. This is not to denigrate the Chinese
achievement, it is only to make the important point that the financial
statements of China Rail are not comparable to those of a railroad
competing in a free market economy\. The lack of relevance of financial
data in the Chinese context is a continuous problem in assessing the
goodness of proposed investments as well as assessing performance and this
will become evident in the audit proper\.
The Transport Intensity Problem
12\. While there seems to be little question that China Rail is a
serious and generally efficient physical operation by most standards, there
is one question that hangs over the Ministry of Rail and that of the entire
transport sector\. That is: why does the Chinese economy require so much
JI/ The figures for the Burlington Northern are based on The Analysis of
Class I Railway Statistics, The American Association of Railroads,
Washington, D\.C\., 1990\.
1J/ Based on the data in SAR Railway V\. April, 5, 1990; Table 5\.1, and an
exchange rate of 3\.80 Yuan per US$\.
6
freight transport at all? In 1987, the Chinese economy generated the need
for 4\.77 ton-km of transport pe- $US of GNP\. For the USSR it was 3\.51\.
For India it was only 1\.4, while ior the USA it was only 0\.86\. 11/ The
Soviet and especially the Chinese economies are extraordinarily transport
intensive\.
13\. The low figure for the U\.S\. is because in 1988 the service
sector, which generates little demand for freight transport, was 65 percent
of GDP with industry at 33 percent and agriculture at 2 percent\. In India
the comparable figures were 38 percent, 30 percent and 32 percent\. In
China the figures are estimated to be 21 percent, 46 percent and 32
percent\. 14/ While India and China have equal shares for agriculture (32
percent) the Chinese emphasis on industry (46 percent as opposed to India's
30 percent) would explain why the Chinese economy is more transport
intensive but not why it is almost three and a half times more transport
intensive than India\.
14\. An adjustment can be made here by assuming that the service
sector makes no significant demand for freight transport\. By deleting the
service sector from GNP, the freight intensity for the non-service sectors
of GNP (ie\. agriculture and industry) can be computed\. This yields 2\.44
for the U\.S, 2\.25 for India and 6\.03 for China\. The adjustment brings
Indian transport intensity for the major freight generating sectors roughly
into line with the U\.S\., but the Chinese figures for freight generated by
one $US of non-service sector GNP are still 2\.5 times those of India and
the U\.S\. Clearly something unusual is happening in China that cannot be
explained by the relatively small size of the service sector\. An attempt
at explaining this phenomenon was made by Bank analysts in 1985 based on
1981 data\. At that time the adjustment made by deleting the service sector
from GNP brought the Chinese transport intensity below that of the U\.S\.,
but still well above India\. J/ The most recent (1987) data presented
above do not yield the same result and the issue needs to be addressed
again with more care since the explanation is of great moment for transport
planners in China\.
j1/ SAR Railway V, April 5, 1990, Table 1\.1, p\. 119\.
1\./ worid vevelopmeiL Rpot 1990, The 'orld , Thble 3, pp\. 182183\.
The estimate of non-service GNP is made by applying the sectoral
breakdown given in the GDP accounts to the GNP figure\.
15/ China: The Transport Sector, A World Bank Country Study, 1985, pp\.
2-20\. There is a discrepancy in the time series for U\.S\. freight
transport output in the 1985 study ( Table 2\.2 p\. 45) and that used
in the Rail V SAR (Table 1\.1 p\. 1\.19)\. While both cite the same
source, the 1985 study appears to have converted the short ton-mile
figures to short ton-km - not metric ton-km, thus overstating the
U\.S\. figures by about ten percent\. The SAR for Rail V has made the
conversion correctly\. A more serious problem with the 1985 analysis
is that the Chinese GNP figure for 1981 is very large compared to
recent estimates used in the Rail V SAR\. This could have resulted
from uncertainties of Chinese GNP estimates in the early 1980s\.
7
15\. The most common explanation for the high degree of transport AD-
energy intensity in China is the relative importance of the heavy "smoke
stack" industries in the industrial sector\. J/ The moit recent economic
report by the Bank on China makes the following observation: 11/
Heavy industry absorbs far too much capital, provides below-average
returns, and its appetite for energy is one of the root causes of
chronic (energy) shortages\.
16\. The linkage between heavy industry, coal-fired electricity (76
percent of energy production in 1988) and rail transport has been further
examined in a recent comprehensive study of transport in Guandong Province\.
The shadow price or conversion factor for electricity in Guandong Province
is estimated at 3\.7, that for steam coal at 1\.4, while that for diesel fuel
is only 1\.1\. 1_/ Severely underpriced electric power encourages
inefficient and excessive use of electric power by heavy industries\. The
resulting excessive demand for electric power leads to an excessive demand
for steam coal which is also underpriced\. The excessive and uneconomic
demand for steam coal leads to an excessive demand for rail transport of
steam coal which is also underpriced\.
For the typical long hauls (of coal) involved, present railway
tariffs appear to recover only about 65 to 75 perczint of long run
incremental social cost\. Such severe underpricing of the
transportation of coal, a commodity in which transportation is a
major component of the delivered price, invites excess demand end
uneconomic use of both transportation and energy, two of the scarcest
goods in the Chinese economy\. 12/
Thus, consistent and mutually reinforcing price distortions in the economy
at large have encouraged excessive and inefficient demand for the most
important rail freight commodity, coal, which the railroad transports at an
\.lj/ In 1980 it was estimated that the energy requirement of the Chinese
Pennomy per $ of GDP was three times that of the U\.S\., and 1\.6 times
that of India\. See: China: The Energy Sector, A World Bank country
Study, 1985, Table 1\.7, p\. 12\.
17/ China: Country Economic Memorandum - Between Plan and Market, The
World Bank, Report No\. 8440-CHA, May 8, 1990, p\. 35\.
1/ Guandong Province Comprehensive Transport Study, The World Bank,
Draft Report No\. 7708-CHA, June 28, 1990, Volume II, Table A3\.12, p\.
49\. The figures in this report are based on an unpublished staff
paper by Peter Dittus - "Economic Prices for Project Evaluation in
China", China Dept\., World Bank, June 1988\.
12/ Guandong Province Comprehensive Transport Study, The World Bank,
Draft Report No\. 7708-CHA, June 28, 1990, Volume I, p\. 46\.
8
economic loss but (to its credit) with considerable physical
efficiency\. 2Q/
17\. Another complementary explanation for the high transport
intensity conccrns the lack of incentives for processing raw materials to
reduce weight before shipping\. About 30 percent of raw Chinese coal is
made up of rocks, clay and other materials\. Only about 20 percent of all
coal is processed (virtually all for export) to remove this material before
shipping\. Thus, about 24 percent of the coal ton-km in China could be
avoided if all coal were washed\. Since coal makes up about 30 percent of
rail freight ton-km, preprocessing would reduce rail freight ton-km by
about 7 percent\. Coal is probably equally important in the road and water
sector so preprocessing of this single commcdity could reduce national
freight ton-km by about 7 percent\. Moving concentrated iron ore instead of
raw ore, sawn timber instead of logs, and fertilizer of high nutrient level
are other examples of weight reducing and transport intensity reducing
initiatives common in the developed world but not yet common in China\.
Given the physical efficiency of China Rail and rail freight rates well
below economic costs, there is no large incentive to do the preprocessing
as there is in market economies\.
18\. The other promising explanation for the high transport intensity
of China is the array of incentives for cross hauling of commodities of all
kinds\. The allocation of so called "plan" cement and steel to various
industries at highly subsidized "state" prices, together with rail freight
rates which are well below economic costs makes "plan" inputs transported
over long distances financially less costly than nearby "non plan" inputs
selling at "market" prices\. W1/ The very long average rail hauls for
cement in China (450 km in 1988) is just one manifestation of the cross
hauling phenomenon\. 22/ In virtually every market economy of the world
cement plants are located close to their markets to minimize transport
2-0/ The Region notes that the dominance of coal and the relatively low
energy efficiency of coal-fired boilers in China are key reasons for
the high transport intensity figures\.
22/ For the most recent treatment of the problems associated with dual
pricing and the move toward price reforms in the Chinese economy see:
China: Country Economic Memorandum - Between Plan and Market, The
World Bank, Report No\. 8440-CHA, May 8, 1990, pp\. 59-78, and China;
Industrial Policies for an Economy in Transition, The World Bank,
Draft Report No\. 8312-CHA, June 29, 1990, pp\. 53-77\.
22/ In 1988, the "state" price for a ton of "plan" cement was 90 Yuan
while the "market" price for an ton of "non plan" cement was 193
Yuan\. China: Industrial Policies for an Economy in Transition, The
World Bank, Draft Report No\. 8312-CHA, June 29, 1990, Table 3\.2, p\.
57\.
9
costs and average hauls are usually well below 200 km\. leading to truck -
not rail- delivery\. 231
19\. The other institution that promotes cross hauling is the
excessive vertical integration of industries and ministries in China in
which trade tends to take place between subsidiaries within the industry or
ministry without concern for transport costs\.
20\. It is sometimes suggested that the unusual size of China and the
location of its raw materials explains much of the transport intensity of
the economy relative to other continental economies\. This would certainly
be a factor in the case of the USSR and its Siberian-based raw materials
but not so for China\. For the size of its population and its economy,
China is surprisingly compact\. Though its total land area is about the
same size as the U\.S\.; the eastern monsoon district, which contains about
45 percent of the land mass, accounts for 90 percent of its cultivated land
and 95 percent of the population\. Z/ This helps explain the extraordinary
intensity of transport network utilization but not the extraordinary
transport intensity of the economy\. Clearly this matter needs to be dealt
with in considerable detail in any future transport sector work\. 22/
21\. In late 1980, when the Bank first began considering the project
under audit, the preparation mission members faced a curious combination of
seemingly efficient, very high volume, very high density, financially
profitable rail operations in an economy where price distortions were so
great that the rail system could have been carrying as much as double the
freight traffic a market oriented economy of tne same size would require\.
23/ The Borrower notes that the dual pricing system for cement has
recently been abolished\. See paragraph 7, Annex IV for the
Borrower's views on the general issue of dual pricing\.
2A/ Atlas of China, Rand McNally, Chicago, New York, San Francisco, 1990,
p\. 4\. This also includes most of the major coal deposits, especially
the high grade and economic Shanxi deposits on the western edge of
the region\.
L5/ The only other explanation for the extraordinarily high transport
intensity calculated for the Chinese economy is that the numerator
and/or the denominator in the fraction is wrong\. If, for instance,
the transport intensity of the non-service sectors of the Chinese
economy were in line with that of India or the U\.S\., say 2\.25 ton-km
per $US of non-service sector GNP, and the ton-km estimates are
correct, this would imply a 1987 GNP for China of US$ 859 billion
rather than the official estimates of US$ 320 billion\. Neither the
GNP nor the ton-km estimates are likely to be incorrect enough to
explain away the excessive demand of the Chinese economy for freight
transport\.
10
III\. Proiect Objectives Definition and Design
22\. The best extended definition of the First Rail Project objective
is found in a memo in the files dated February 3, 1983:
Our objective in the first project will be to build the basis for a
good dialogue with China on the railway subsector for the longer
term\. This objective and implementation of a &ore substantive
transport policy-oriented dialogue with the Ministry of Railways is
likely to take some years and several project to achieve\. This first
project addresses the movement of a key commodity - coal - and covers
a wide range of railway investments\. It should give us the
opportunity to develop a better understanding of part of the Chinese
transport sector and to gain the confidence of the Chinese in the
Bank as an agency which can provide developmental advice and
assistance as well as finance\. This should eventually enable us to
contribute in subsequent projects to the development of transport
policies in China\.
Thus, the First Project was conceived as part of a series that would allow
the Bank to eventually widen and deepen its participation in support of
China's transport sector\.
11
The Rail I through Rail V Series
23\. The table below illustrates the basic nature of the lending
series Lo daLt\.
Project Costs Rail I through Rail V 21/
(millions of US $)
1984 1985 1986 1988 1990 W2/ 1904-90
1U&m Rftil I Rail 11 Rail-II Agil I2 Rail V Total
Line
Improvement 508\.4 202\.1 250\.5 320\.6 926\.5 2208\.1
Electrifica-
tion 82\.3 201\.6 200\.1 66\.1 --- 550\.1
Manufacturing 41\.4 8\.5 12\.9 148\.2 --- 211\.0
T\.A\. & Tng\. 1\.3 16\.9 0\.3 3\.0 10\.9 32\.4
Baseline Cost 634\.1 429\.1 463\.8 537\.9 937\.4 3002\.3
Contingencies 58\.8 140\.0 113\.7 62\.1 79\.4 454\.0
Total Cost 692\.9 569\.1 577\.5 600\.0 1016\.8 3456\.3
Bank Loan 220\.0 235\.0 160\.0 200\.0 330\.0 1145\.0
Of the roughly US $3\.5 billion of Rail I-V investments undertaken with Bank
support, the Bank has financed US $1\.1 billion or 33 percent of the
expected total cost\. About 74 percent of the investments to date have been
for line capacity improvements; eighteen percent have been for line
electrification and seven percent for manufacturing facilities\. The
remaining one percent was for technical assistance and training\.
24\. There is considezfble sillarity in the prtftles nf the first
four lending operations\. Rail V is an obvious departure from the profile
of the others\. This is bacause it contains no support for investments in
electrification or manufacturing\. Virtually all of the Rail V investments
are for maintenance equipment, rehabilitation, and expansion of line and
terminal capacity\. There is also an uncharacteristically large allocation
2&/ The source of the cost estimates are the Staff Appraisal Reports for
the respective projects\. Excluded from the series is a US$ 150\.0
million loan and credit in 1989 for the Inner Mongolia Local Railway\.
22/ The SAR for this project is in draft form with the project yet to be
negotiated\.
12
for technical assistance, studies and training\. ZA/ This reflects the
effort of the Bank to get away from the specific sub project and bottle-
neck removal orientation of the early efforts to a more general support for
the entire system\. This, in turn, requires a more in-depth dialogue about
the larger issues affecting the system from rail pricing and costing to
management information and the larger rationale for electrification and
investments in manufacturing\. Hence, much more emphasis is placed on a
series of large-scale studies before supporting more investments in
electrification and manufacturing and before shifting to a sector lending
format\. 22/
25\. At the time Rail I was being prepared the information available
to Bank staff was, for the most part, limited to the specific subprojects
being considered, and the Chinese were extremely reluctant to use loan
funds for studies of any kind\. A comparison of the Staff Appraisal Reports
for Rail I and Rail V show how far the Bank-Chinese relationship has
matured in less than ten years\. Substantial progress has been made in
documenting and understanding the operation of this complex system and this
is currently being reflected in the most recent lending operation\.
The First Railway Pro1ect
26\. The line improvement aspects of Rail I were ?repared by the
staff of China Rail and submitted to the Bank as subprojects to be
considered for the first lending operation\. The basic idea was to
facilitate the flow of coal from Shanxi Province in the western mountains
to ports on the east coast (about 900 km) for export and for coastal ship
movements to the south (see Map IBRD 17096)\. The 355 km\. Datong-TaLyan
line improvement was an extension of the Datong-Beijing-Qinhuangdao project
which was to cater almost wholly to unit trains of Shanxi coal moving on an
electrified double track to the Port of Qinhuangdao\. By December 1982, the
idea was to increase the capacity of Datong-Taiyuan from 8 million tons of
coal per year to 33 million tons\. JW The Datong-Qinhuangdao project, into
which the Bank-supported project was to feed, was to be increased from 42
million tons capacity to 60 million tons per year\. This latter investment
was to be financed by the Japanese\.
27\. The 305 km\. Xinxiang-Yanzhou line was also a part of the larger
Shanxi Province-Shijiusuo Port project in which Japanese financing was also
Z/ Rail II has a larger allocation for this category (US $16\.9 million)
but US $14\.6 million is for construction and equipment of a Railway
Academy - not the soft support usually associated with this item\.
22/ Separate stufies are being undertaken for: (i) permanent way, (ii)
locomotives and rolling stock, (iii) electrification, (iv)
telecommunications, (v) network analyses, and (vi) coal flows\.
\.Q/ Based on data in the December 1982 Railways I Project Report\. In the
March 1984 SAR the capacity objective was reduced to 22 million tons
in the text but remained at 33 million tons in the economic analysis
in Annex 5\.
13
involved\. Single line capacity of 17 million tons per year to the Port of
Shijiusuo was the original design objective\. 1/
28\. The Zhughou Electric Locomotive Factory component evolved from
the origin! Aesirp of the Chinese to import electric locomotives to
operate with the major new line electrification investments being
undertaken\. After examining the then existing Zhuzhou electric locomotive
works, Bank staff were convinced that, with appropriate investments in the
existing manufacturing facility, annual production could be increased from
40 units per year to 120 units, obviating the need for imports\.
29\. A technical assistance and training package was also included in
the project description\. 2/ The basic idea was to transfer techoJgy for
locomotive design and manufacturing from the developed countries to China\.
30\. The need for a costing-study, very quickly became apparent to
the economists and financial analysts\. The railway investment plan was
dominated by simple physical planning measures driven by the objectives of
the State Planning Commission and the presence of obvious bottlenecks\.
Engineering solutions were put forward and implemented efficiently, but the
concept of demand management through cost-based pricing was completely
absent at this stage\. Managers were rewarded for traffic and capacity
increases which were assumed to be desireable at any cost if they were part
of the Plan\. Neither true economic nor financial analysis figured heavily
in investment decisions\. Thus, while Bank railway engineers were generally
impressed with the operational and implementation abilities of China
Railways, Bank financial and economic analysts had little to work with\.
This component we\.s to begin to repair that deficiency\.
IV\. Project Implementation
31\. The overarching objective of improved dialogue and understanding
as set forth in paragraph 22 above has certainly been achieved\. The
quality of the sector work undertaken by the Bank and the Chinese has been
good as evid :cd by the published information this audit had access to\. A
comparison o\. the SARs for Rail I and RAil V also gives an indication of
how the relationship between the Bank and the Chinese has matured during
the preparation and implementation of the lending series\.
32\. The Datong-Taiyuan line was redesigned after loan signing to
handle a flow of 60 million tons per year of coal rather th\.n the original
33 million ton objective\. A redesigned Datong-Beijing-Qinhuangdao
integrated coal export operation (into which the Datong-Taiyuan line was to
U1/ Based on data in the December 1982 Railways I Project Report\. In the
March 1984 SAR the capacity objective was increased to 22 million
tons\. This 30 percent increment in capacity was made possible by the
adoption of a Bank-suggested design concept at a modest increment in
cost\. It involved placing a siding on the single-line bridge over
the Yellow River to avoid this section becoming the ruling bottle-
neck in the entire operation\.
I2/ SAR Rail 1, Annex 2, pp\. 33-37\.
14
feed) was increased from 60 million tons per year to 100 million tons per
year\. When the State Planning Commission issued these new design
objectives the scope of the project was approximately doubled over that
expected in the SAR\. The original objective of moving coal in 3,000 ton
(gross) trains (up from 1,400 ton trains) was changed dramatically to
eventually moving unit trains of 5,000 tons\. This was to be achieved with
double track, more mechanized coal loading sidings, more powerful
locomotives, better signalling, and heavier axle loads requiring heavier
track design\. The cost of the revised project approximately doubled and
completion was delayed two years because of the redes"&gn and the problems
of reconstructing a line that was already carrying heavy traffic\. There is
no record in the Bank files of a revised engineering or economic analysis
to define and justify the expanded scope\. I2/
33\. In 1989, the Shuoxian-Datong portion (see Map IBRD 17096) of the
TaLyuan-Datong line fed approximately 23\.2 million tons of coal into the
Datong-Beijing-Qinghuangdao line\. The Shuoxian-Yuanping and Taiyuan-
Yuanping portions of the Taiyuan-Datong line fed 8\.2 and 13\.1 million tons
respectively into the Yuanping-Beijing line which fed the entire 21\.3
million tons into the Beijing-Qinghuangdao section\. At Beijing the two
streams of coal came together forming 44\.5 million tons to go on to the
port of Qinghuangdao\. 14/ The SAR originally anticipated 38\.8 million tons
to the port by 1989 so actual traffic to date is running about 15 percent
above appraisal estimates\. Civil works implementation was observed to be
good\.
34\. The Kinxiang-YaJo line subproject went according to schedule
in both cost and timing\. It was completed in 1987 and carried coal traffic
of 13 million tons in 189 compared to the 9 million tons projected in the
SAR\. Implementation was cserved to be generally good\.
35\. The only technic 1 shortcomings the Audit could identify with
the two line components wete\. (i) the use of jointed rail instead of
welded rail for the track an4 (ii) the failure to consider the possibility
of heavier axle loads for th\. design of major structur-As and (iii) local
control of automated switching investments\.
36\. The use of jointed rail led to repetitive dynamic loads at the
joints and that in turn has led to considerable damage to the cross ties at
the joint and displacement of ballast\. This leads to increased maintenance
costs for the rolling stock and track as well as increased fuel consumption
by locomotives\. Welded rail is being used on the Datong-Qinhuangdao
I/ The Borrower notes that all these decisions were made jointly by Bank
staff and Ministry of Rail personnel\. See paragraph 2 in #nnex IV\.
AA/ This rather complicated double stream flow of coal from the Shanxi
coal fields to Beijing to the port is not clear from the SAR but it
is well explained in the PCR economic analysis and can be understood
by studying Map IBRD 17096\.
15
section of the larger project and should have been used on both the Datong-
Taiyuan and Xinxiang-Yarnhou sections\. I/
37\. Given the huge capacity constraint China Railways has,
increasing wagon capacity with greater axle loads is an obvious direction
to move in\. Unfortunately, new structures with fifty year useful lives
(including those being financed by the Bank) are still being designed for
25 ton axle loads\. For a relatively small increment in cost the structures
could have been designed to handle the heavier axle loads that are very
likely to come in the future (especially for dedicated coal lines)\. This
important but complicated technical issue is addressed in Annex III\. HV
38\. On both line improvements the Chinese installed what for all
intents and purposes could be a CTC technology\. Yet, the switches are
being operated from individual stations with no central dispatcher\. The
infrastructure has been modernized but not the operation\. Operating the
new lines with CTC or even a dispatcher will be particularly important with
the advent of mechanized track maintenance\. 21/
39\. The Zhuzhou Electric Locomotive Works component was part of a
larger planned expansion of the Zhuzhou works\. It was to be Phase 1 of the
expansion but the Chinese accelerated Phase 2 at their own expense,
implementing it concurrently with the Bank-financed Phase 1 which was
delayed by about two years because of procurement problems\. In 1989 the
nearly-completed Zhuzhou facility produced 167 locomotive units that appear
to be of acceptable quality - considerably beyond the SAR objective of 120
units from 1987 on\. 18/ The future annual output is expected to be about
200 units annually\.
jA/ The Region notes that the Appraisal Mission recommended additional
wodiiTg equipment in the project for this purpose but it was not
endorsed at the time by the State Planning Commission\. Since then
the equipment has been purchased and the benefits to be derived from
using long welded rail are now recognise\.:
Ag/ The Borrower expands on the complexity of this issue in paragraph 2
UZ MUA& V\.*
2Z/ The Region notes that very short headways coupled with multiple and
frequent shunting operations in the station areas are formidable
obstacles to full CTC operations\. Even foreign experts have been
unable to provide a workable system under these conditions\. Another
attempt is now being made on the Zhengshou-Vuhan line under Rail II\.
Mainline CTC is, however, being used on many sections\.
2j/ The question of quality is difficult to answer since locomotive
availability statistics are not systematically collected and nothing
more than locomotive maintenance log books are maintained\. Records
of maintenance and repairs unrelated to the type and intensity of
locomotive use can tell us little about the actual quality of
locomotive performance\.
16
40\. The machinery selection for the Zhuzhou production lines appears
to be appropriate and they are well-installed in adequate buildings\.
However, from an industrial engineering point of view there is much that
could be done in terms of overall layout and materials handling between
machines\.
41\. The major observation of the Audit concerning the Zhuzhou
facility is that it could expand its capacity another fifty percent to 300
units annually should this output be required, making it one of the largest
(and possibly the most efficient because of scale economies) electric
locomotive factories in the world\. To do this it would be necessary to
invest only US$ 3-5 million in machinery and improved factory lighting and
go from a one-shift operation co one-and-a-half or two shifts\. It would
also be necessary to introduce conventional industrial engineering
practices into the manufacturing process, principally a quality assurance
system, a cost accounting system, and other software innovations to plan
and manage an effective multi-shift operation\. This would be the low cost
alternative to a proliferation of smaller single shift electric locomotive
manufacturing operations which seem to be a real possibility in the future
as the older steam locomotive manufacturers in China seek to shift to
manufacturing the new tractive technology\.
42\. The danger of this sort of fragmentation has been noted in the
1985 Country Economic Report\.
Failure to exploit economies of scale has also denied - and continues
to deny China an important source of productivity growth and product
improvement\. \.Consolidation of production could have a major impact
on product cost and quality even without sophisticated machinery and
automated production, by standardizing parts, allowing longer
production runs for individual parts, and introducing more
specialized machine tools\. 2/
With the Zhuzhou facility the costs of fragmentation have been avoided and
the benefits of scale economies captured\. Diesel locomotives, on the other
hand, are manufactured in six factories which clearly are not benefitting
from scale economies as the section on "economics" below indicates\.
43\. Related to the above is the technology transfer objective
pursued undpr the loan\. Generally speaking, it was successful only in
terms of the use of the new machine tools\. The outstanding problem for the
Chinese is how to keep their electric locomotive designs and manufacturing
techniques abreast of the latest technology\. None of the major
manufacturers of electric locomotives in the world is going to give away or
sell cheaply the fruits of their costly R&D programs, especially to such a
2/ China: Long-Term DeveloRnment Issues-and Qptions, A World Bank
Country Economic Report, Johns Hopkins University Press, Baltimore
and London, 1985\. p\. 112\.
17
formidable potential competitor\. AJ/ Part of the solution for the Chinese
in the future is to undertake their own R&D - leading to their own designs\.
This is being approached with the development of the nearby Zhuzhou R&D
institute which the Bank supported under this project\. However, the
independent Zhuzhou R&D facility is responding to other financial
imperatives by engaging in revenue generating manufacturing activities
rather than the unremunerative R&D activities\. Unless the incentives
facing the R&D facility are changed, the required design and manufacturing
innovations are unlikely to be developed\.
44\. The costing study report was completed by the Chinese in
September 1985\. A draft costing manual was prepared and by December 1986 a
seminar attended by foreign experts had been held in China to discuss its
merits\. By January 1987 the consensus of the foreign experts was that the
manual, fully implemented, would be an improved reporting system but that
the fundamental notion of cost allocation, as opposed to accounting for
expenditures, was still missing\. By March 1989 the proposed costing
procedures were being pilot-tested at sub-administrations in Shanxi and
Shanghai\. The Chinese have been diligent in pursuing the beginning of an
acceptable system\. However, the Audit was unable to determine the extent
and usefulness of their accomplishments to date\. 41/
V\. Project Economics
Project Analysis in China
45\. The fundamental problem with performing economic analyses in
China revolves around economic (or shadow) prices as opposed to
administered (or financial) prices\. AZ/ In a competitive, market-oriented
environment we can, in the absence of major externalities, expect financial
prices to bear some resemblance to economic prices after corrections are
made for taxes\. Under such circumstances, financial analyses generally
arrive at the same conclusion as economic analyses\. Not so in China\.
Virtually every sector report produrad by thA Rank for China takes on the
difficult issue of how to "get the prices right" after many decades of
centralized physical planning\. The section above on the transport
intensity problem sets forth the nature of some of the distortions
obtaining in the coal-energy-transport nexus\.
kO/ Both the Alsthom and G\.E\. designs and working drawings were included
with large equipment purchases\. Large-scale imports are unlikely in
the future, foreclosing this avenue of technology transfer\.
41/1 The Region notes that, under the proposed Rail V project, a plan of
action for implementation of the costing system is included\. The
costing system should help improve the tariff structure eventually,
especially for the faster growing high quality services\.
/ Economic Evaluation of Investment Proiects: Possibilities and
Problems of ARolving Western Methods in China, by Adrian Wood, World
Bank Staff Working Paper No\. 631, 1984\.
18
Coal Transport Investments
46\. The international price of coal is an important assumption for
the economic analyses of Rail I because the benefit streams of the two line
improvements are based on the net increases in the value of coal production
that are allowed by the expansion of dedicated rail and port carrying
capacity\. The international border price of coal is used in computing the
value of the net increases in coal production associated with the project
even though some 80 percent of the coal is for domestic use in the south\.
The international price for coal was high through the mid 1980s, when Rail
I was being prepared\. By 1987 the international price had fallen by close
to forty percent and it is now expected to remain at relatively low levels
until the year 2000\. &l/ Thus, the primary benefit stream for the two
line improvements had been reduced by more than 80 percent with this
unforseen development\. This would normally be an indication that the
project in retrospect was economically unjustified because of an unforseen
drop in the value of the commodity for which it was constructed\. However,
there were offsetting decreases in the cost streams, as well as an increase
in traffic levels and these have been reflected in the economic analyses in
the PCR for this project\. Actual coal production costs are now estimated
to be about 18 percent less than assumed in the SAR, while transport costs
by rail are now estimated to be 21 percent less than the SAR estimate\.
Factoring all these into the PCR retrospective analysis, together with the
higher capital costs, still yields an estimated ERR of 19 percent\. To the
extent that the international border price of coal is the appropriate value
to place on Shanxi output for domestic use, the rail transport capacity
investments are economically justified\.
Rail Electrification Investments
47\. The prices of electric power and diesel fuel are also
fundamental to the economic analysis undertaken in association with the
electrification investment of the Datona-Taivuan line undertaken in Rail I\.
The basic options were to continue using coal-fired steam traction (as was
and remains the case on the Xinxiang-Yanzhou line), switch to diesel
tractive power or switch to electric power\. There were good technical
reasons to consider electric traction, but these needed to be quantified in
an economic analysis since the choice between diesel and electric traction
ig by no means obvious even at the volumes of traffic under
consideration\. A-/ The frustration of the project economist at analyzing
f)/ Revision of commodity Price forecasts and Quarterly Review of
Commodity Markets, The World Bank, December 1989, Table 1, p\. 6\.
AA/ The major technical reasons usually cited for considering
electrification are: (i) steep gradients in mountainous terrain
(Electric locomotives can provide the temporary power beyond rated
capacity required to negotiate gradients without damage to the
engine\. Diesels cannot do this), (ii) very heavy traffic flows (in
excess of 20 million gross tons annually), (iii) high speed
requirements (especially for passenger trains), and (iv) high train
frequencies\.
19
the choice (which had already been made on technical grounds) is reflected
by this 1982 observation from the files:
We have made good progress in the preparation of the economic
analysis with the information submitted to the mission\. However, the
method used by the railways is aggregated and difficult to
understand\. In particular, we have not been able to identify the
major savings usually associated with electrification projects\. The
savings usually obtained when shifting from steam or diesel to
electric traction are in energy, labor and maintenance costs\.
48\. In the end, the Datong-Taiyuan subproject was analyzed as part
of the much larger Datong-Beijing-Qinhuangdao investment\. 5/ The
electrification decision was said to be the least cost solution compared to
diesel traction\. k6/ The basic capital cost assumptions were that the
electrification option would require US$ 48 million in infrastructure
investment and US$ 35 million initially in locomotives\. The diesel option
would require US$ 9 million in depot capital costs and US$ 60 million
initially for locomotives\. Thus, in capital cost terms, the diesel option
was cheaper by only US$ 14 million\. The interesting question here is why
the diesel locomotives required were estimated to be 58 percent more costly
than their electric equivalent when both technologies are manufactured
domestically\. Major savings in the capital cost of electric locomotives is
generally not in line with international experience with electrification\.
It seems to be the case in China because of government policy to fragment
diesel locomotive manufacturing capacity in factories that do not benefit
from scale economies\. 4/
49\. The major oerating cost savings for electrification were
assumed to come from reduced locomotive maintenance costs of about US$ 2
million per year and reduced fuel costs of US$ 5 to 8 million per year\.
The maintenance cost assumption is in accordance with international
experience but not that for energy savings\. The fuel cost saving in the
SAR comes from the assumption that an all-diesel operation would have an
annual energy bill roughly double that of the all-electricity option\. The
international evidence indicates that a thousand gross ton-km requires
about 6 liters of diesel fuel or 23 kWh of electricity\. In 1982,
J5/ The Bank-supported Datong-Taiyuan investmenL wab oly about eleven
percent of the total investment in the rail and port expansion\.
Ag/ See: SAR Rail I, March 7, 1984, Annex 5, p\. 52\.
A\.Z/ Even though the Dalian diesel factory is producing about 186 units
per year single shift (comparable to the Zhuzhou electric output)
diesel scale economies commence at a level of output of around 400
units per year largely because of the more expensive machinery
required for diesel production as opposed to electric production\.
This observation is based on the costs of a Canadian factory
producing 400 units per year compared to the largest European
factories producing no more than 200 units per year\. European unit
cost are about 50 to 100 percent above the Canadian levels for
comparable diesel units\.
20
international prices for diesel were US$ 0\.26 per liter; that for electric
power was US$ 0\.05 per kWh\. Applying these prices to the physical
consumption yields US$ 1\.50 per thousand gross ton-km for diesel traction
and US$ 1\.15 per thousand gross ton-km for electric traction\. This would
be a savings for electric energy over diesel energy of about 30 percent,
not the 100 percent implied in the SAR analysis\. A/
50\. The PCR did not reexamine the decision to electrify, but the
Audit has adjusted the cost streams in the SAR economic to reflect a fuel
savings for electrification of 30 percent rather than 100 percent\. In
addition it has added to the electrification capital costs a figure of US$
29 million (in 1984 prices) to cover the cost of high voltage transmission
line construction by the Energy Ministry to serve the rail
requirements\. &/ This important element of the capital costs of
electrification was excluded from the original analysis\. The results of
these two adjustments on the original economic analysis showed that the Net
Present Value (NPV) of the total cost of the electric option was slightly
less than that of the diesel option at a discount rate of 5 percent\. At a
10 percent discount rate the results are reversed and the diesel option is
the least cost\. This is not to state that the electrification decision was
obviously wrong\. It is only to say, at this stage, that the economic
information and analysis in the SAR, the PCR, and in this audit is not
sufficiently detailed to remove doubt about the goodness of the tractive
technology choice\.
51\. It is not difficult to find plausible assumptions that help
justify the investment in electrification for any line that is expected to
carry in excess of 20 million gross tons per year since the international
experience supports this\. The big unknowns specific to China are the extra
capital cost for high voltage transmission line construction to serve the
railway system, the subsequent transmission losses, and the geographic
distribution of power plants where the short run marginal cost of electric
power is well in excess of the average cost of the system\. /
g/ The international experience with electritcation is caken ZLOm\.
Railways and Energy, by Liviu L\. Alston, World Bank Staff Working
Paper Number 634, 1984, pp\. 18-46\.
A_9/ Taken from the PCR economic analysis Table 5, Annex 2, page 4\.
Although the economic analysis in the PCR did not treat separately
the economics of electrification it did (correctly) include the costs
of high tension line construction in the total capital investment for
the Taiyuan-Datong-Qinhuangdao rail and port investment\.
IQ/ The Burlington Northern, for instance, despite its very high density
long haul coal operations (up to 100 million gross tons per track)
has never been able to justify electrification because of the low
density and inadequate capacity of power stations in the territory
through which its high density rail lines pass\.
21
Electric LocoMotive ManufactSIXing Inve tmentl
52\. The decision to electrify the Datong-Qinhuangdao and Datong-
Taiyuan lines led to an initial decision by the Chinese to import the
required electric locomotives\. An examination by Bank staff of the
existing electric locomotive works at Zhuzhou led to the decision to
upgrade and expand the facility to manufacture the locomotives rather than
import them\. The economic analysis justifying this decision is set forth
in Annex 6 of the SAR\. 11/ The domestic price of an electric locomotive
was then estimated to be about US$ 500,000\. By applying a conversion
factor of about 1\.15, the economic cost was estimated to be about
US$575,000\. The imported price of an equivalent electric locomotive was
estimated at US$ 1,500,000\. There was then a saving of about US$ 925,000
for every unit that could be manufactured domestically rather than
imported\. An investment of US$ 45 million was to allow domestic production
to increase from 40 units per year to 120 units per year\. At full
production the annual benefits would be about US$ 75 million a very good
return for a marginal investment in modern machine tools\.
53\. The Audit attempted to make an independent estimate of an
appropriate conversion factor for the Zhuzhou electric locomotives by using
two different approaches (See Annex 1)\. The first approach was to attempt
to adjust the individual labor and material accounts of the Zhuzhou
factory\. This yielded a conversion factor of about 2\.4\. The second
approach was to use an international physical production function and then
value the inputs with international prices, in the case of materials, and
local labor costs adjusted for fringe benefits\. This yielded a conversion
factor of about 2\.5\. The same analysis confirms that the economic cost of
a Zhuzhou electric locomotive is still far below the comparable world
market price because of the extraordinarily low cost of Chinese labor and
the high volume of output over which capital, overheads and R&D costs can
be distributed\. So low is the economic production cost that the unit
saving for avoiding imports in 1990 is about US$ 650,000 ppr unit, With
production now approaching 200 units annually, even considering the
additional Phase 2 domestic investment there appears to be no question that
the "make" option was much superior to the "buy" (foreign) option for
electric locomotives\.
54\. The PWR performs a similar anaisa -v vith a locemntiv-e convsiv n
factor of 2\.0 and capital costs 36 percent higher than the SAR to reflect
the Phase 2 investment\. The ERR for the combined Phase 1 and Phase 2 is
then estimated to be 82 percent, confirming the high return on the
investment in locomotive manufacturing and the gains to be had from scale
economies\. This would also appear to establish the Chinese as a major
potential competitor for sales in the world market\.
,1/ SAR Rail I, March 7, 1984, pp\. 55-57\.
22
55\. The big unanswered question is why can the Chinese at Zhuzhou
manufacture an electric locomotive of an acceptable quality for such a low
cost compared to international prices but cannot do the same thing for
equivalent diesel locomotives at the Dalian and February 7 factories and
four others\. The fragmentation of production and the loss of scale
economies are likely to be part of the answer\. Given the extraordinary
importance diesel traction is playing and will continue to play in the
future, a Zhuzhou-like concentration and effort seems warranted in the
diesel traction area also\.
VI\. Findings and Issues
56\. A major lesson that comes out of an examination of the
experience to date is that a comprehensive analysis of the problems and
potentials of China Rail requires extraordinarily detailed study at the
micro technical Level and the macro economic level with a subsequent
attempt at integrating the two\. It has taken time and patience and five
lending operations to arrive at the point where this is possible in China\.
For this reason, it is important to view Rail I as only the first step in
the process\.
57\. In the Audit's opinion the efficiency gains to be made at the
macro economic level are probably more important than those at the micro
technical level\. This is because China Rail is generally a well run
technical operation compared to railroads in other developing countries\.
The Chinese have already achieved about 80 percent of the operating and
manufacturing standards of the best rail operations in the developed world\.
Going the other 20 percent is largely a question of adapting for China the
latest technologies and methods in management information, communications
and industrial engineering\.
The Macro-Micro Linkage
58\. In the last five years, comprehensive Bank sector studies have
been completed in energy, transport, industry, agriculture, banking, and
coal\. These recent studies have transformed our knowledge of these sectors
and their relation to the larger economy\. Only recently has there been
much emphasis on dealing with the practical transitional problems
associated with actual attempts to shift from plan to market:
China has brought plan and market together under one roof but the
relationship is proving more stressful than was anticipated\.
Simulating markets within a framework of planning and collective
ownership has yielded mixed results; and seeking enterprise autonomy
through administrative decentralization has proven problematic\.
Market and plan pull in different directions and when efficiency
collides with employment security and the imperatives of annual
production targets, the market is the one made to yield\. 52/
W2/ China: Country Economic emorandum - Between Plan and Market, The
World Bank, Report No\. 8440-CHA, May 8, 1990, p\. 102\.
23
59\. In the early 1980s, neither the sector linkages with the macro
economy nor the transitional problems of moving from plan to market were
\. fully appreciated\. This is evident from a critical comment of Loan
Committee in November 1983 when the Rail I proposal was being considered:
The current (project) description makes it sound almost as if the
Bank is supporting an energy project\.
In the Audit's view, it was entirely appropriate for the project staff to
present the Rail I project in \.his light and unfortunate that the energy
emphasis was subsequently downplayed at the Loan Committee's behest\.
Possibly the single most serious price distortion in the Chinese economy is
that for electric power for the industrial sector\. 53/ Since the bulk of
the coal to be transported over the two project lines was for producing
electric power for domestic use, the coal-electric power nexus was critical
for analyzing the economic goodness of the associated powe and transport
investments\. 54, Had the pricing of domestic electric po- ir for industry
rather than the international price of coal been more of an element in the
economic analysis, the right questions concerning the economics of power
production would have been asked\.
60\. That, however, would have created a serious administrative
problem since the loan funds were to be utilized by the Rail Ministry - not
the Coal or Energy Ministry\. While there is merit to asking the right
questions concerning the ultimate use to which the transported coal will be
put, the question is how much of the distortion at the macro economic level
can be taken into consideration when preparing a rail investment project\.
Is it in fact reasonable to expect the managers of the railways to
"simulate markets within a framework of planning and collective
ownership\."? Or is it more reasonable to require railway management to
continue making investment, operational and pricing decisions based on
current financial incentives and leave the changing of those financial
incentives to those managing the economy at large?
%A/ Electricity rates for household consumption are much closer to
economic costs than those for industry\.
L4/ In 1986, China produced 894 million tons of coal of which 9 million
tons was erported, with 3\.5 million tons going to Japan\. Total world
coal trade in 1986 was about 320 million tons so China's exports were
about 3 percent of the world market and 10 percent of domestic
production\. Of the 894 million tons produced in 1986, about 531
million tons was moved on the railways and 55 million tons by water\.
So about 59 percent of coal production moved on the railways with 6
percent moving by water\. An unknown residue of the remaining 35
percent moved by truck, probably the bulk of it since mine mouth
production is relatively insignificant\. See: China: Coal Pricing
StUft, The World Bank, Draft Report No\. 7377-CHA, February 16, 1989,
pp\. 13, 30, 65\.
24
61\. It is certainly unrealistic to ask rail managers to posit an
economic scenario where the prices of electric power for industry are
trebled, that of coal increased by 50 percent and that of rail freight
transport increased by 60 percent with a future freight transport intensity
eventually approaching half 1988 levels\. The physical bottlenecks created
in the rail system with the existing set of macro economic incentives are
certainly real and it is understandable that when "\.efficiency collides
with employment security and the imperatives of annual production targets,
the market is the one made to yield\." A rail management that refused to
triple or quadruple Shanxi coal transport capacity on the grounds that far
too much unwashed and underpriced coal was being moved to far too many
inefficient users at far too low a freight tariff as a result of uneconomic
physical planning assumptions would quickly find itself in "employment
security" difficulties\. A Bank transport economist who voiced the same
concern in 1982 in the face of tremendous traffic growth and capacity
constraints would find himself in similar circumstances since the only
statistic he could cite to make his case was the extraordinarily high level
of freight transport intensity relative to other continental economies\. 5-/
62\. It is clear to the Audit that the formal economic analyses of
subprojects in Rail I were little more than pro forma exercises done after
the engineering and investment decisions were made by the Chinese\. They
were an administrative requirement associated with the World Bank loan
which was a minor element of the overall operation\. This was to be
expected in the early years\. The most recent project analyses undertaken
in China indicate that things have improved in some areas\. In terms of
economic analysis, the recently completed Guangdong intermodal provincial
transport study is probably the most advanced application of practical
analytical techniques extant - in or out of the Bank\. 5_/ Critical to its
effectiveness is the use of conversion factors designed to transform
financial prices into economic prices\. Yet, these conversion factors are
based on an unpublished Bank staff paper that is not generally available
for scrutiny\. Z/ Previous to this recent effort, the only source of
conversion factors for project analysis in China was a 1983 study of
Aluminum Milling in Shanghai, the so called EAAMS Study\. M/ Given the
extent of the pricing distortions in the Chinese economy and the existence
now of a dual pricing system, it is not an easy empirical effort to derive
these conversion factors and keep them updated nor is it an easy task to
apply them\. It is the sort of effort that might be undertaken by a
55/ The Borrower's views on the general issue of economic reforms are set
forth in paragraphs 5 and 6 of Annex IV\.
51/ Guandong Province Comorehensive Transport Study, Two Volumes, The
World Bank, Draft Report No\. 7708-CHA, June 28, 1990\.
5j/ Economic Prices for Project Evaluation in China, Unpublished Staff
Paper by Peter Dittus, China Department, The World Bank, June 1988\.
5/ Economic Analysis of Aluminum Milling in Shanghai, by Shinji
Ichishima and Adrian Wood, The World Bank, Annex II, 1983\.
25
sophisticated provincial or central planning group, but not by a modal
ministry\.
63\. At the level of the Ministry of Rail, some advanced large scale
systems analycic techniqipn Are currently being introduced to assist in
modelling coal flows (The Coal Transport Study) on the rail network under
different scenarios, and to examine network systems effects for all freight
traffic (The Railway Investment Study)\. At the corridor level, computer
simulations are being undertaken to examine the impact of various policy
and technological interventions on passenger and freight flows in the most
heavily trafficked lines\. Thus, the most advanced analytical techniques
for transport planning are now being brought to bear on the problems of
China Rail\. 52/
64\. None of these were available for the first four lending
operations and it will probably be several years before they begin to have
an impact on the future investments undertaken by China Rail and financed
by the Bank\. In the meantime, decisions are being influenced by external
events and developing bottlenecks\. By Rail V electrification was not being
financed by the Bank, because of the severe physical shortage of electric
power for rail use (implying very high short run marginal costs for
electric power), technical problems with maintenance and harmonic
interference, and the existence of a viable technical alternative that
most energy-starved industrial establishments did not have, ie\. the use of
steam and diesel traction\. This has led to a slow-down of the
electrification initiative and a special study of electrification
undertaken by China Rail\. However, eighteen of the nineteen pages of the
background paper for this study deal with engineering design problems while
the nineteenth and last page is devoted to the issue of economics\. No
mention is made of distorted prices for domestic electric power\. AQ/ The
introduction of economic analysis and macro economic linkages into the
thinking of MOR planners is not obvious from the approach used with the
electrification issue\. /
65\. While formal economic enalysis may not be making rapid headway
in the MOR, there is no reason why the much easier financial analysis of
projects should not be undertaken\. Computing the net increases in value of
coal production for domestic use because of the existence of adequate rail
capacity is a difficult task\. Computing the additional rpnenues associated
with moving the coal is conceptually much more straightforward\.
ssociain a riat revcnuc stre- with the 4mwotmantca required to make it
possible is the sort of analysis that rail managers should be encouraged to
A2/ It is significant to note that most of these imported analytical
efforts have been paid for with Japanese grants, a point that is
expanded on in Annex 2\.
AQ/ China: Ministry of Railways Electrification Study\. Background Paner
on Technical Issues, The World Bank, Asia Technical Department, March
12, 1990\.
&]/ The same point can be made by scrutinizing the inception reports for
the permanent way study and the locomotive and rolling stock study\.
26
undertake given the commercial direction in which public entities are
expected to move,
66\. This exercise was not undertaken in Rail I or Rail II\. It was
carried out in Rail III and the results are illuminating\. According to the
Rail III SAR, the Chongqing-Guiyang and Yingtan-Xiamen line upgrading and
electrification subprojects generated financigl rates of return of 7
percent and 3 percent respectively\. Yet, because the economic returns were
said to be so high (23 percent and 33 percent respectively) the projects
were undertaken\. This conflict between investments that are economically
good for the country yet financially bad for the railway is a little
unusual\. Normally for Bank-financed railways, the situation is reversed
and rail managements wish to undertake projects (electrification at low
traffic volumes is a typical one) that are financially good but
economically bad\. The inclusion of subproject financial analyses and their
juxtapositinn with the economic analyses in the Rail III SAR naturally
raised questions\. But, they are questions that abould be raised because
they focus in a very practical way on the impact of price distortions in
the economy at large and the railway tariff structure\. Unfortunately, this
innovation was not continued in the Rail IV and Rail V SARs despite the
stated commitment to a railway financial cost accounting system that was to
be approached under the Rail I project\. Presumably a functioning railway
costing system is to provide financial data to allow the railway management
to make rational investment and operating decisions based on financial
considerations\. The Bank should be promoting the use of such management
tools by using them in their own Staff Appraisal Reports\. jZ/
Going for the Othe,r Twenty Percent
67\. At the beginning of this section it was stated that China Rail
has already achieved a standard of performance about 80 percent of that
achieved by the best railways in the developed world\. Achieving the other
20 percent is largely a question of adaptation of the industrial
engineering practices of the developed world, chiefly facility layout and
materials handling for manufacturing operations, and production planning,
costing, maintenance procedures and quality assurance systems for both
manufacturing and transportation operations\. The 1985 Country Economic
Report devotes an entire chapter to this general issue and gives numerous
examples of successes and failures in the Chinese manufacturing sector\. WA/
The Audit has attempted to do the same for the Rail subsector (See Annex
II) since Rail I included a component for the improvement of the design and
methods of manufacture of locomotives\.
2/ The Region notes that they are fully aware of the need to conduct
this type of analysis and intend to do so in the future when the
costing system is in place\.
A/ See Chapter 7, "Managing Industrial Technology" in China: Long-Term
Development Issues and Options, A World Bank Country Economic Report,
Johns Hopkins University Press, Baltimore and London, 1985\. pp\. 110-
122\.
27
68\. The lessons that can be derived from the attempts to date at
technology transfer in the rail and rail manufacturing subsector can be
summarized as follows: (i) there is a misperception on the Chinese side as
to what technology is; (ii) the initiative for successful efforts has come
from non-Chaluesb 6ouces, and (iii) there in a formidable language barrier\.
69\. The misperception about the nature of technology springs from
the fact that industrial engineering is a new subject in China\. The
traditional branches of engineering are well developed and well represented
in China Rail\. However, the study which brings human psychology\.
information technology, and engineering processes together is almost
totally absent from the Chinese scene\. For example, an industrial complex
as advanced as the Zhuzhou works will have skilled operators running
million dollar precision machinery without safety glasses and without even
a reasonable degree of illumination, putting both the worker and the work
in process at risk for want of very minor expenditures\.
70\. The most obvious manifestation of lack of industrial engineering
information is the obsolete system of record keeping in the locomotive
maintenance sheds or the railway manufacturing facilities\. Such record
keeping makes it virtually impossible to turn over work in process to a
second shift with any degree of certainty that the new shift will be able
to pick up exactly where the old left off\. Inappropriate records also make
it impossible to analyze the performance of different locomotives under
different operating regimes and different pieces of manufacturing equipment
in different configurations - basic tools of industrial engineering\. One
long term solution to this set of problems is to encourage the development
of industrial engineering studies at the university and technical school
level\.
71\. The successful short and medium term attempts at dealing with
the soft technology issue have all required major initiatives on the part
of foreign groups, individuals, or institutions, at little or no cost to
the Chinese\. China Rail has been reluctant to go after the "soft" aspects
of toreign rechnoluiy because they are not ccnvinced of the cost-
effectiveness of paying for methods and approaches as opposed to hardware\.
72\. The language barrier has also been a formidable obstacle\.
Industris\. ingineering requires an unusually good grasp of language because
of the p\.aological and problem formulation dimensions which can require a
great deal of subtle and complix language\. Few translators have the
facility to pass on the entire message\. The obvious approach to this
barrier is to have engineers from China Rail study industri&l engineering
in a Mandarin-speaking environment\. The most likely places to find such
environments outside China are in the advanced industrial concerns in Hong
Kong, Taiwan, and Singapore\. The "soft" elements of industrial engineering
are being successfully transferred from Hong Kong and Taiwan to small
industrial firms through joint ventures, but an enormous public sector
organization like China Rail has no obvious counterpart in these small
Mandarin-speaking enclaves\. There are, however, likely to be industrial
processes such as ship building or the manufacture of earth moving
equipment where relevant industrial engineering principles are applied\.
Sending Zhuzhou engineers to such enterprises to learn industrial
engineering principles is likely to be more productive than sending the
28
same people for short periods to electric locomotive factories where
Swedish, English, or French is the language of instruction\.
73\. In its attempt to go for the "other 20 percent", China Rail will
also have to deal with the rationalization problem\. Steam locomotive power
in China led to a great number of maintenance depots which were the "home"
sheds of a small fleet of steam locomotives\. To move a train across China
was like a relay race in which a steam locomotive and crew pulled a train
100 to 150 miles to the next steam shed where it handed the train over to
the next locomotive and crew, refueled and rewatered and prepared for the
trip back to the home shed\. This relay race mentality still dominates
China Railways and its administrative boundaries even though modern diesel
locomotives can travel more than a thousand miles with a single train
without "handing over"\. The Bank-financed Xinxiang-Yanzhou Line is part of
the larger Shanxi-Shijiusuo Port coal export operation\. Over this line of
alo ut 800 km there are five locomotive changes as the unit trains pass
through each administration\. This is wasteful, both in train time (it
takes up to six hours to make the switch) and locomotive time\. Wj/ To have
a locomotive ready and waiting at each changeover means a great deal of
locomotive waiting time\. Given the high capital cost of modern tractive
power (one to three million US$), this is something to be avoided\. The
simple steam technology with its limited range and the very low capital
cost made this an unavoidable and reasonably economic procedure\.
74\. Even more wasteful of capital is the maintenance of costly
diesels and electrics in the old network of modified steam sheds\.
Originally these sheds worked a single eight hour shift and, in addition to
performing the normal maintenance function, manufactured many of the spare
parts required for steam locomotives\. There has been a tendency in China
to maintain the steam maintenance facilities and procedures even though the
switch to diesel and electric traction is well-advanced\. W/ The single
eight hour shift has been retained, which means that when a US$ 1\.4 million
diesel locomotive goes in for periodic maintenance it is worked on for a
maximum of eight hours and then left standing for sixteen hours before it
receives attention again\. When this procedure is combined with a general
tendency to "overmaintain" locomotives, a large percentage of the
locomotive fleet is tied up at any one time waiting for maintenance\.
W/ In addition there is an almost overpowering tendency for yard staff
to add cars to unit trains during the locomotive handover\. In
general, the fewer the yards a train must negotiate the more rapidly
it completes its trip\.
AW There is still much to be said for retaining a fairly large fleet of
steam locomotives in China to operate on the low density lines and to
be used where a great deal of idle time is unavoidable\. A steam
locomotive is wasteful of energy (about ten percent efficiency as
opposed to twenty-five percent efficiency for electric and diesel-
electric) but it is a low capital and maintenance cost operation and
can be efficient in situations where a locomotive is required on
station but utilized very little\.
29
75\. Related to this wasteful use of capital is the widespread small-
scale manufacture and overhaul of spare parts for diesel and electric
locomotives as was the case for steam\. Since modern locomotives are vastly
more complicated and demanding of clean precision work than steam
locomotives, the attempt to manufacture spare parts and overhaul assemblies
in the old steam sheds has led to a large investment in underused machine
tools and testing equipment\. The problem here is how to rationalize the
system for the new technologies\. That is how to close down most of the old
steam sheds and concentrate locomotive maintenance in two to three shift
depots where the emphasis is on getting the locomotive back onto the system
- not on manufacturing spare parts\. This means the use of a unit exchange
system in which all spare parts and major components are manufactured and
overhauled in a few very good central workshops\. The maintenance depots
would merely replace spares and major components from their stock and send
the components to the central workshops for overhaul\. Such has been the
general tendency for all railroads the world over and the process has
almost always been painful because of the impact of rationalization on the
labor force\. Concentrating labor in three shift central workshops to
maximize the use of costly machine tools and special clean rooms makes good
economic sense but requires many people to shift their location of work and
dwelling, as well as their working hours\.
76\. The Chinese have hardly begun to face up to these difficulties\.
However, they have one very great advantage: Their economy has been
growing at the rate of seven to ten percent per year for the last ten years
while their total labor force has been growing at only three percent per
annum over the same period\. Thus, there are potential alternative uses for
displaced labor ia China provided the physical mobility of labor is
enhanced\.
77\. The Bank did not formally support the idea of rationalization
until Rail V when a study was commissioned\. This study should be
facilitated so that future lending operations do not finance machine tools
going into machine shops that do not make long-term economic sense\. The
Bank should ideally restrict its support to those Clements of the
maintenance and manufacturing facilities identified in the rationalization
study\. The Chinese may choose to retain certain facilities for regional or
political reasons but the Bank need not support these transitional
arrangements\. There should be a clear notion of the rationalization
destination - how long it takes to arrive is another matter\.
The Importance of International Experience
78\. The extent and complexity of China Rail combined with financial
data incorporating enormous economic distortions can be so overwhelming
that it is easy for the analyst to lose his way\. The engineer can be
forgiven for his concentration on the physical nature of the operation and
the removal of obvious bottlenecks\. There are, however, a series of
touchstones or international bench marks that the analyst is well-advised
to turn to in making initial assessments of the desirability of certain
investments or operational practices\. Most of these have been utilized in
this report\.
30
79\. The first is the notion of the transport intensity of the
economy\. Contemplation of this statistic can only lead to the conclusion
that successful macro economic policy changes will and should lead to a
lessening of the demand for freight transport, especially rail freight
transport in China\. The desirability of less freight traffic or, more
likely, lower growth rates is foreign to the thinking of most railway
planners and the achievement of such a goal would not generally be
considered a success\. It needs, however, to be kept in the foreground of
discussions lest the short term bottleneck argument be projected into the
indefinite future and prevail to the point that serious overinvestments in
capacity take place\. This is likely to be a problem with the railways of
Eastern Europe and the Soviet Union and their progress, or lack thereof,
should be monitored for potentially useful lessons for the Chinese\.
80\. The second piece of international evidence that needs to be
referred to from time to time is that of the Burlington Northern privately
owned railway in the U\.S\. In the last ten years, this large (46,000 route
km) freight railroad has made extraordinary progress in capital and labor
productivity in a macro economic environment where private financial
decisions are likely to be consistent with decisions based on economics\.
The fact that their revenues per ton-km in a competitive environment are
three times those of China Rail cannot be explained by the differences in
wage rates and is the most convincing external proof that the financial
statistics associated with China Rail are badly distIrted\. The BN's
technological decisions based on financial analyses also bear examination
principally their decisions: (i) when and where to electrify (ii) to go to
heavier axle loads and larger capacity wagons (iii) to go to double stack
container operations, (iv) to adopt automatic car tracking systems and (iv)
to contract with their locomotive manufacturers for locomotive performance
guarantees that involve the manufacturers in maintenance subsequent to
manufacture\.
81\. While the BN's decisions concerning electrification may be
relevant for certain sections of China Rail, the European experience with,
and justification of, electrification of high density lines carrying both
freight and passenger traffic provides a rich source of experience provided
appropriate adjustments in wage rates can be made\. The general rule of
twenty million gross tons per year of traffic as the electrification
threshold in flat terrain is a useful one to apply in an environment where
the results of financial analysis is not likely to make economic sense\. /
it may not be an elegant approach to the i--"" but it assures that major
misallocations of resources do not take place\.
jg/ Mountainous terrain and the availability of 50,000 volt power
(instead of 25,000 volt power) might reduce the threshold as low as 5
millior\. gross tons annually\.
31
82\. In the manufacturing area, the sort of analysis done in Annex I
is useful\. It draws on the physical productions functions of the best
producers in the developed world to get some reasonable notion of what it
actually costs the Chinese to produce an electric locomotive\. While the
results verify the "%\.ke" rather than the "buy" option, the difference in
costs is nowhere near what the financial accounts show\. This gives a much
more reasonable perspective to the decision to invest\.
83\. In the area of rationalization of locomotive maintenance the
international experience of centralization and specialization incorporating
a unit exchange system is almost certainly the way in which China will
eventually go\. Here, the recent Bank-supported experience in India with
attempts to begin the transition may be more relevant than that of the
developed world\. The most recent statistical evidence (1989-90) indicates
that the Indians have, in the space of three years managed to lift their
locomotive availability (diesel and electric) from around 80 percent to 90
percent\. fY This would be an extraordinary achievement if it is sustained
and would certainly merit study by any railway interested in doing the
same\.
84\. International prices for traded commodities such as coal can be
usefully incorporated into the decision to invest in coal movement
capacity\. This was the approach used in the SAR and the PCR in the
economic justification of the line capacity expansions\. The case is made
in the audit report that a more correct approach would be to analyze the
rail capacity investment as part of a national energy project since most of
the coal is to be used domestically and could not in any case be exported\.
Since a national power model is not a tractable analytical tool for a
transport economist seeking to explore the economic justification of the
coal transport capacity expansion, the recourse to a narrower approach in
which the rail investments are considered as part of a coal mining export
operation is justified\. It has the merit of considering something larger
than the immediate rail investment and places an international competitive
value on the coal rather than the distorted financial price\.
85\. Relevant international experience based on good economic or
financial analyses in a competitive environment can be useful as a rough
check on investment and operational decisions in China in the absence of
market prices and accurate financial costs\. However, there are many
examples of bad international experience that the Chinese would be weil-
advised to avoid and there are some areas where the Chinese themselves
represent the best international experience\. The European experience with
high speed passenger trains is an area that should be approached with great
caution since neither the economics nor the finances of these innovations
have weighed heavily in the decision to go forward\. Potentially
competitive bus and air operations have sometimes been restricted to ensure
a ridership for the new technology which is attractive for its own sake\. A
similar caution applies to operational innovations undertaken in the U\.S\.
railroads and those of Japan pre deregulation\. In general, a highly
§V/ Prolect Comletion Renort\. India Railway Modernization and
Maintenance Project II, The World Bank,, January 1991, p\. 37\.
32
subsidized rail operation with restrictive labor practices i& unlikely to
provide the sort of model relevant for the Chinese\. In the area of
container transport there are many worthwhile developed country models to
emulate\. For the transport of large volumes of low income passengers it is
unlikely that the Chinese will find anyone to turn to for inspiration
except themselves and possibly the Indians and the Soviets since no other
country has had to face the volume of low income intercity ridership that
the Chinese must increasingly come to terms with\.
The Task Facing the Bank
86\. Dealing with the railways of China has required the provision of
an extraordinary array of technical skills by the Bank ranging from those
conversant with the macro-micro linkage to those concerned with specific
industrial engineering applications\. So far, the Bank has managed to stay
on top of developments by bringing in a variety of international experts to
assist in the task\. However, as the number of disbursing lending
operations increase and the numerous outstanding studies reach critical
junctures the task is becoming more difficult and complex\. The Rail I
project alone involved procurement of 447 items under 352 contracts with an
average size contract of US$ 0\.6 million\. This is an enormous
administrative task for Bank staff to supervise and practically ensures
that the single railway engineer assigned to China Rail supervision (the
same engineer has responsibility for the equally complex Indian Rail
supervision) has little time left for addressing the wealth of issues
coming forth from the numerous studies and project preparation exercises\.
The success of the Bank in achieving its objective of widening and
deepening its understanding of China Rail threatens to overwhelm the staff
assigned to assimilate and integrate this new knowledge into future lending
operations\.
87\. Only sixty percent of China Rail employees are engaged in
providing transportation\. The rest operate a major national construction
-*yA IrAiiatrial manufacturinp conglomerate\. The management and
workers of the Burlington Northern Railway, on the other hand, have the
enormous advantage of being largely concerned with providing and selling
transportation services alone while contracting with other firms for
construction services or hardware\. An obvious direction for China Rail in
the future is to work toward divestiture of construction and manufacturing
functions and concentration on transportation of passArgera and freight\.
In the interim, the Bank's problem in China becomes the mirror image of the
management problem of China Rail - it is too large, complex and vertically
integrated to be handled effectively by the normal manpower coefficients of
the Bank or the planning office of the Ministry of Rail\.
88\. Part of the answer for the Bank is said to be sector lending to
what is, after all, a much better than average third world rail operation\.
By rising above the multitude of detailed and confusing technical
considerations and leaving those to the Chinese, a small team of Bank staff
with the requisite diplomatic skills could effect a major transfer of
resources at a very low cost\. Such an approach was used with India
Railways from the start and was abandoned after thirty years and thirteen
lending operations when it was determined that little progress was being
made with measurable improvements in Indian Rail performance\. The audits
33
of the last three sector lending operations with India Rail indicate how
superficial the Bank's involvement was in the sector\. MA/ It was only
after the project-specific Modernization Series was undertaken in India
that come underct-nAin nf the !ntrnml constraints to progress was gained
and difficult steps were taken to effect improvements\. O2/ A form of
sector lending patterned after that undertaken initially in India is
clearly not the model to follow in China if the Bank wishes to perform its
role as a development institution\.
89\. In China the Bank has, from the outset, approached rail lending
from the project specific point of view with the idea of evolving into
sector lending, the opposite strategy to the India experience\. The early
project specific approach has been responsible for the rapid development of
knowledge of the detailed problems and potential of China Railways\. The
challenge now is to shift to a form of sector lending that does not
sacrifice in-depth technical understanding to achieve low cost resource
transfers\. The unique niche of the Bank in an increasingly sophisticated
system for international lending for development is the concern for lending
for technically and economically feasible public investments\. There is no
way to maintain the requisite technical understanding in China and, more
importantly, use it effectively without making a major expenditure for a
wide range of high quality technical expertise, expertise that is
frequently not available within the Bank\.
90\. Assuming the ability of the Bank to make the resources
available, the problem of managing the requisite resources effectively
remains\. Only the highest quality leadership combined with a substantial
increase in Bank resources can hope to keep up with the initiatives that
have been set in motion under the first five rail lending operations in
China\. The temptation to retreat to a superficial form of sector lending
will be great since neither the management skills nor the enhanced staff
resources would be necessary to effect the resource transfer\. 2/ The
difficult, time-consuming, and sometimes contentious interaction required
to efiect miounagful change can also be avoided with a resurrected Indian
Rail sector lending approach\. Yet, the Bank's long term credibility with
clients as sophisticated as the Chinese will depend heavily on continued
wide-spectrum technical excellence\. Without it the Bank's special niche is
eroded and it begins to blend into the existing and non differentiated
international system of commercial banking and bilateral aid\. The
Eg/ PPAR India Rail XI and XII (Credits 280 and 448-IN), OED Report No\.
1658, June 30, 1977, and PPAR India Rail XIII (Credit 582-IN), OED
Report No\. 6055-IN, January 10, 1986\.
J2/ See: PPAR India MOD1, OED Report No\. 7020, November 30, 1987, and g
IndiA\.MOD2, Transport and Energy Operations Division, Country Dept\.
IV, Asia Region, January 1991\.
20/ The last sector lending rail operation in India (Rail XIII) required
only four supervision missions and a total input of 161 staff-weeks\.
The recently completed MOD2 operation in India required 16
supervision missions 381 staff-weeks to completion\. Rail I in China
required seven supervisions and 258 staff-weeks\.
34
achievement of the ambitious Rail I project objective has raised the
question of whether or not the Bank can keep up the pace with an
institution as formidable as China Rail\. The more we succeed with
sophisticated clients, the more high quality resources we must allocate to
deal with the fruits of success\.
35
Annex I
Page 1 of 5
ECONOMIC COST OF SS3 (4\.80 kw) ELECTRIC LOCOMOTIVES - AS MANUFACTURED BY
ZHUZHOU LOCOMOTIVE WORKS
SUMMARY: Zhuzhou Electric Locomotive Works has indicated it costs
1,546,670 Yuan (US$309,300 at 5 Yuan - $1 U\.S\.) to manufacture an SS3
electric locomotive\. Due to the various subsidies on material, power,
labor, and methods of accounting, this is not an economic cost\. For
example; steel is sold to the factory at about 45% of the true cost of
production\. Research and development for locomotives is undertaken by the
Research Institute, and the warrantee cost is borne by the railway\.
Therefore these costs are also not included in the domestic price of
locomotives\.
Using two methods of adjustment, the "true" cost of an SS3 locomotive has
been determined to be between $731,000 and $787,000\. This implies a
conversion factor from financial to economic cost of about 2\.4 and can be
compared with the PCR's estimate of 2\.0
A comparative world market price for a locomotive similar in design and
quality would be in the region of $1\.4 million\. If the Chinese were
selling their locomotives abroad, additional marketing and warrantee costs
would have to be included, probably amounting to an additional $150,000 to
$200,000\. A comparable export price would then be about $ 1,000,000 for
the Zhuzhou product\.
THE LABOR PROBLEM: Logically two of the most significant factors in
attempting to determine the economic cost of a locomotive is the true
hourly wage rate at Zhuzhou and the actual direct labor hours involved in
manufacturing a locomotive\. It appears that there are no job numbers\. All
hours (direct, indirect and supervision) are lumped together and assigned
by the accounting department on an estimate basis\.!/
Vm"lnyap fring benefits usually consist of vaeation\. health and welfare\.
pension, disability insurance, etc\. In addition, in the Chinese case,
fringe benefits would also include subsidized housing and schools\.
1/ It is interesting to note that the labor cost for a SS3 locomotive is
22,258 Yen and a SS4 (essentially 2 SS3 locomotives), is 130,406 Yen,
or nearly six times as much\.
36
Annex I
Page 2 of 5
An estimate of the Zhuzhou employees' definable benefits as a percentage of
their official wage are as follow:
Vacation - only 2 weeks/year for senior management
employees, less than 2%
Paid Holidays - approximately 3%
Pension - probably less than 15%
Disability - 3% ?
Health, Education etc\. - 11\.5%+ 2/
Estimated total - 34\.5%
Typical U\.S\. fringe benefits are in the 40-50% range, while in Western
Europe they are 90-100% of the wage or salary\. A detailed study of the
Burma Railways, which has an almost identical benefit package to that of
the Chinese Railway, indicated a fringe benefit of 70%\. Since the fringe
benefits appear better on the Chinese Railway, it is reasonable to assume
that they must be greater than 70%\. If a comprehensive study were made, it
is reasonable to assume that the benefits would be at least 100% and may be
as high as 200%\.
The average pay for a factory employee must take into consideration
productivity bonus, etc\., and is about 1 Yuan per hour, or, with fringe
benefits, about 2 to 3 Yuan per hour (U\.S\. $0\.40 to 0\.60)\. Therefore, to
ensure all benefits and other subsidies are covered, a labor cost of $0\.60
per hour has been used for the economic and comparative analysis\. In
comparison to developed country skilled labor wages of about $25 per hour,
a $0\.60 per hour wage is insignificant\. It can be seen from the following
analysis that whatever the multiplier or direct labor cost is used, it
makes little difference to the cost of the locomotive\.
2/ At the February 7 Locomotive Works there is a labor force of 7698, of
which
Workers Direct and indirect 5573
Technicians and management 1329
Medical, teachers, etc\. 796
Based on the employees involved, 11\.5% are providing health and
education benefits, this is very low because many workers, are
probably involved in, for example, maintaining the schools, housing,
etc\.
37
Annex I
Page 3 of 5
ADJUSTED ZHUZHOU ACCOUNTS METHOD: The following analysis is an attempt,
with the data available, to develop an economic price by applying
conversion factors to the basic elements of the Zhuzhou accounts:
Accounting Costs Economic Costs
Yuan('000) S('000) Yuan('000) S('OQ)
Materials-Based on prices paid 1,264\.0 252\.8
by Feb\. 7 loco works for steel
and copper, material costs
reflect about 60% of economic
cost\.21/ 2,106\.0 421\.0
Laor-Employees receive, on 25\.1 5\.0
average, 1 Yuan/hour\. Typical U\.S\.
benefits are 50% labor cost\. In
China, benefits include health,
education, and housing; therefore
must be at least 200% of wages\. 75\.3 15\.0
Fuel & PowFr-electricity 22\.3 4\.5
is sold at 25% economic price 89\.2 17\.8
Welfarefund-Assuming 2\.2 0\.4
underpriced by 50%\. 3\.3 0\.7
Workshop Expenditure-This data 82\.9 16\.6
probably reflects the maintenance
onat- of marhinerv that was
either simple or new should be
increased by at least 100%\. 165\.8 33\.2
Administrative Expense-The 150\.1 30\.0
majority of this cost is
probably labor and; therefore,
should be multiplied by
200% to reflect benefits\. 450\.3 90\.0
Sub-Total (per factory) 1546\.7 309\.3 2889\.9 577\.7
2/ Planed price for steel and copper is 45% China market price, and the
market price is comparable to the world market price\. Based on
February 7th\. Loco\. works data about 60% of steel and copper is
purchased at the planned price, which would indicate a weighted
average material cost at about 60% economic cost\.
38
Annex I
Page 4 of 5
Additional Items -
Research & Development-(Research
Institute has separate accounts)
assume 10% of cost of production
(Usually about 8% of gross revenue)-- -- 289\.0 57\.8
Warrantee-Costs borne by railways
assume 5% -- -- 144\.5 28\.9
Total Cost of Manufacture 1546\.7 309\.3 3323\.4 664\.4
Profit 10% -/ 154\.7 30\.9 332\.3 66\.4
Total Price 1701\.4 340\.2 3655\.7 730\.8
ADJUSTED FOREIGN MFG ACCOUNTS METHOD: According to suppliers, a US$ 1\.4
million electric locomotive comparable to the Zhuzhou SS3 would have the
"World Market" cost breakdown for the various physical inputs as given
below\. The "China" column indicates the adjustment of the world market
element to reflect Chinese conditions\.
From this analysis it can be seen that the overwhelming advantage of the
"make" option is the cost of labor\. An imported locomotive has about
$375,000 worth of skilled labor embodied in it, whilst the Chinese version
has only $15,000 - this despite the fact that the Chinese lccomotive
requires 25,000 man-hours of labor as opposed to 15,000 for the import\.
Labor costs for the import are about 27 percent of the selling price while
they are only 2 percent for the Chinese\. Chinese skilled labor at Zhuzhou
is about half as productive as their foreign counterparts but foreign labor
gets paid 42 times as much\.
4/ Profit is not included in the Zhuzhou cost accounts, but the price
the factory charges the railway does include a ten percent profit of
which fifty percent is for employee bonuses with the remainder paid
as taxes to the government\.
39
Annex I
Page 5 of 5
Cost h\. akdown (S'00O)
World Mairket Cling
Material V/
Basic (Steel, Copper)§/ 84 80
Other 362 326 Z/A/
Direct and Indirect Labor
World 15,000 hours/loco($25/h) 375
China 25,000 hours/loco ($0\.60)2/ 15
Equioment maintenance, depreciation,
power etc\."/ 149 112 11/
arrantee (5%, I2/) 64 96
Marketing (10%, China 0%) 127 2 1-/
R&D (8% of gross revenue) 112 84 14/
Sub Total 1273 715
Profit 10% 127 72
Selling Price $1400 $787
\.5/ Material costs are in the range of 35-45% of the selling price, 35%
assumed\.
j/ There are about 130 tons of steel ($400/ton) and 8 tons of copper
($4000/ton) in this type of locomotive\.
\./ Chinese material costs, due to lower labor costs, assumed to be 95%
for basic material and 90% for other material of world market prices\.
g/ While labor is cheaper, machinery is operated in such a manner that
more labor is required offsetting the labor cost savings in
manufacture of other material\.
9/ Labor cost includes all fringe benefits and management cost\.
\.jQ/ This cost depends considerably on annual production and is assumed to
be the value after all other cost components have been deducted from
selling price\.
f1/ Assumed to be 75% that of World Market to account for reduced labor
cost and simpler machinery\.
12/ For a world market product of this type, 3% is normal\. In China,
7\.5% is used because of technology, reliability, and the inability to
keep track of components\.
L1/ Marketing cost assumed to be a minimal $2000 in China\.
1A/ Research and development cost assumed to be 75% of the world market
due to reduced labor cost\.
40
Annex II
Page 1 of 7
ISSUES IN TECHNOLOGY TRANSFER
SUMMARY: A component of the Railway I loan was technical assistance for
the improvement in design and methods of manufacture of electric
locomotives\. While there was considerable technical assistance associated
with the workshop, it was restricted to the installation, operation, and
maintenance of the new machinery purchased under the loan\. The technical
assistance for design and industrial engineering were not undertaken for
what appear to be the following reasons:
The refusal of the world's locomotive builders to allow
representatives of the Chinese Railways into their facilities
for proprietary reasons - especially since Zhuzhou will be,
potentially, a major competitor\.
Major research organizations wanted substantial payment for what
would be their time, and were unwilling to give away information
that had been very expensive to develop\.
An unwillingness on the part of the Chinese to pay $10,000 to
$15,000 per month to a foreign consultant, who may be working
with a counterpart earning less than $100 per month\.
Language problems associated with technology transfer,
especially in the softer engineering subjects; such as costing,
material handling, plant layout, etc\.
A brief tour of the Datong, Zhuzhou, and February 7th factories, as well as
several workshops and depots, indicated that while the organization and
operation of the railways is probably superior to most, if not all,
developing country railways, it is significantly behind the developed
countrics in locomotive design and the whole field of industrial
engineering\.
Industrial engineering is a new subject in China and, unlike the other
engineering subjects, it requires a much better understanding of a foreign
language when studying the subject\. In comparison to a mechanical or
electrical engineer, language ability must be about twice as good to study
Industrial Engineering\. Therefore, unless an engineer is very familiar
with the foreign language, the study tour approach will not be effective
for quality assurance, costing, plant layout, etc\. Long term training is
the only viable approach, with the initial study being in the foreign
language\.
Chinese Railways seem to have a large number of well educated professional
personnel, and they are eager for the staff to achieve international
recognition\. It would, therefore, be logical to develop a barter agreement
for exchanging the very low cost professional labor in exchange for non-
41
Anno II
Page 2 of 7
proprietary technology that is available from the other railroads and
research institutions\. This has elready worked relatively well during the
mid 1980s with approximately 10 engineers working for the Association of
American Railroads (AAR)\.
With respect to proprietary technology, it appears that while there are a
large number of options, at the present there seem to be only two that are
realistic\. For stand alone technologies that do not involve a large
continuing research expenditure (such as concrete ties) the Bank should
assist in the outright purchase of that technology\. For the complex
technology where there is a large continuing research effort that is
required, the joint venture appears at present to be the most logical
option\. A precedent for this approach has already been set with the five-
year-old joint venture between General Railway Signals (GRS) and the
Railways Signal and Communication Corporation\.
A review of the history of the successful technical assistance programs to
date has one common feature: one or more non-Chinese people have
spearheaded the effort\. Dr\. Harris was responsible for the AAR program;
Bank personnel were the moving force behind the RIS and CTS Project; the
GRS firm put in 18 months of continuous effort for the signals project\. It
is likely that any significant future improvement in complex technology
transfer will require an extensive effort on the part of the Bank or
others\.
PROBLEMS WITH CONSULTANTS: A Western consultant on assignment in China
will cost, with expenses, $10,000 to $15,000/month\. His Chinese
counterpart will probably be earning about $80 per month\. As a result,
there is an understandable reluctance to retain consultants\. While a
consultant could save investment or increase production many times his
cost, it is difficult to prove, and the ability to see the possibility of
che savingb would indicate that the person already has a detailed knowledge
of the subject\. Many consultants are reluctant to contract with the
Chinese for various reasons, but the requirement to guarantee results is
the most problematic to anyone in the "soft" engineering industry\.
The effectiveness of the consultant can also be questioned because of
problems of language\. There are very few Mandarin speaking consultants,
particularly in specialized fields\. As a result, the consultant must
either have a translator, or be working with a counterpart who understands
his language\. This, in itself, is a problem because the translator or
counterpart would need to have familiarity with the technical language\.
PROBLEMS WITH INDUSTRIAL ENGINEERING: A brief review of several railway
factories, workshops, and depots indicates that the machinery for
manufacture, overhaul, and maintenance of locomotives is appropriate and,
in many cases, state of the art\. However, the layout of the facilities,
material handling, and the "software" systems such as production planning,
costing, and maintenance procedures and quality assurance (classic
42
Annex II
Page 3 of 7
industrial engineering) are either very elementary or entirely lacking\.
These conclusions have been corroborated by representatives of General
Electric locomotive company and GRS\.
The GE locomotive purchase and technology transfer had provisions for
transfer of a range of engineering technologies (some 600 people visited
Erie)\. The "hArd" engineering appears to have been transferred
successfully, but the industrial engineering has met with little success\.
There are probably seveial reasons for this:
Industrial engineering has historically always followed
manufacturing (first you design a product, make sure it works,
and then determine how to make it economically and of high
quality)\.
Industrial engineering is a brand new subject in China and its
benefits are probably not yet recognized by management\. It has
only recently been introduced as a discipline in Chinese
universities\.
To study industrial engineering requires a much better knowledge
of the language than needed for study of a hard science\. In
mechanical engineering, for example, a formula or an engineering
drawing can be understood with very little language familiarity\.
However, industrial engineering has very few formulas and
requires understanding of human psychology and, therefore, a
much greater understanding of language\.
According to the Dean of Industrial Engineering at the
University of Illinois, for an undergraduate degree, language
skill must be at least twice as good as with a mechanical
engineering degree\.
The primary emphasis in China is plan-driven quantity\. There has
been very little emphasis on producing high quality products
economically\. The terms "quality" and "economically" are used
but there is a lack of the necessary data systems to determine
the true cost and quality of a product\.
With simple technology, maintenance is not critical\. However,
with the more advanced technology that China is now developing
and the high capacity demands of the raRlway, the software
aspects of maintenance technology is becoming increasingly
important\.
TECHNOLOGY TRANSFER - PROPRIETARY: There are several approaches that can
be used to obtain proprietary technology for, among other things, design
and manufacturing methods\. These are reviewed below:
Retain a consultant specialized in a specific technology such as the one
43
Annex II
Page 4 of 7
who specialized in the design and manufacture of concrete ties: This
method would cost $10,000-15,000 per man month, and, therefore, would face
the problems menTioned above\. The Chinese have been using this approach
when the consultant is funded by some form of grant or aid\. A better
approach may be a fixed fee for a defined technology\. (For concrete tie
technology the fixed fee cost would be about $85,000)\.
Contract with an independent research and development company such as
Ricardo and Co\., a diesel engine R & D company: To a limited extant this
approach is being used\.
Acquire a technology as part of a large hardware purchase: The GE Dash 8
technology was included in the purchase of 220 Dash 7 locomotives, a $275
million purchase\. Unfortunately, it is unlikely there will be any further
large locomotive purchases and, if there were, the technology might not be
in the areas where it is most needed\.
Outright purchase of the locomotive technology from a manufacturer is
conceptually straight forward\. This method is expensive because the
manufacturer is primarily interested in manufacturing and not in aiding a
potential competitor\.
Licensing of a technology: Western companies are reluctant to license
technology in China because it is difficult to control the use of the
technology, enforce the royalty payments, and obtain hard currency\.
Acquisition of a technology through a joint venture: Electric locomotive
manufacturing has too many suppliers operating in a generally declining
marketplace\. An appropriate joint venture benefits both partners\. A
foreign partner would potentially benefit from extremely low cost skilled
Chinese labor and scale economies which would help expand the world market
share for his technology\. The Chinese would receive the technology and R&D
support as well as an international marketing -ytem\. The big problem is
in preparing a public sector Chinese entity for intimate cooperation with a
private sector non-Chinese organization\.
TECHNOLOGY TRANSFER - NON-PROPRIETARY: An example of a relatively
successful technology transfer was during the period 1982-1987, when about
10 Chinese Ratiways engineers wvrked at eithCr the- Pueblc Tranupnrtation
Test Center or the Chicago Research Facility of the AAR\. The main points
of the agreement between the AAR and China Railways were that the railway
would pay transportation expense to and from China and pay the engineers a
salary which would be supplemented by $1000/month from the AAR\. The
engineers were to be proficient in English and were expected to work as
employees of the AAR\. Expenses incurred on assignments for the AAR were
paid by the AAR\.
A review of the success for this approach indicates that the engineers
performed between 50-80% as efficiently as an American engineer, primarily
depending on their proficiency with English\. The program was originally
designed as an exchange\. However, when the AAR engineers went to China,
44
Page 5 of 7
their program (ranging from 4-6 weeks) was not that well-organized and they
questioned if their time was usefully spent on behalf of the AAR and the
Chinese Railways\.
Unlike many other railways, the approach to the promotion and job transfer
in China is such that it appears than an individual trained abroad in a
specific subject will be retained within that field for sufficient time to
make use of the training and transfer his knowledge to others\. It is,
therefore, worthwhile for the Chinese to spend a long time training an
individual\.
There are organizations such as the AAR and various Universities where
there is little proprietary information\. They would probably welcome
qualified Chinese engineers for long term work-training\. The British,
French, Germans, and Russians operate similar research facilities\. Also,
there are a number of railways that may well welcome Chinese engineering
talent in exchange for access to methods and technology\.
A possible approach could be for V engineers the Chinese will pay W percent
of salary and travel expenses to the host organization and the host
guarantees Y man hours of training over a period of Z months\. By varying
V, W, Y and Z some agreement could probably be worked out\. The Chinese
engineers would be actively involved in research and development programs
that would be of mutual interest\.
This approach may have merit because Chinese rail appears to have many well
qualified engineers and it is eager to have international recognition of
their knowledge and skill\. In effect, they would be bartering professional
services for technical training\.
There are a number of other possible alternatives for non-proprietary
technology transfer:
Utilization wherever possible of Mandarin speaking consultants\.
It is possible there are industrial engineers in Hong Kong,
Taiwan or Singapore\.
Study tours, but they should be restricted to "hard" engineering
unless one or more of the participants is fluent in the
appropriate technical language of the countries being visited\.
Consulting firms are sometimes willing to undertake fixed fee
training or technology transfer; such as the Line Capacity Study
being undertaken by ALK of Princeton\. The Chinese appear to be
willing to use this approach only when the funds are from a
grant\. They also they tend to drive very hard bargains with the
consultants - to the point where the enthusiasm of the
consultant for the initiative it vitiated\.
45
Annex I I
Page 6 of 7
Wherever possible training/technology transfer should be of the format
where several Chinese engineers would:
learn the language of the host country prior to the departure
from China,
spend 4-5 months for additional language study in the host
country while familiarizing themselves with the technical
subject in question,
spend 3-5 months working on the technical subject to perfect
their knowledge,
towards the end of the working period a delegation of relevant
senior railway officials should make a study tour with the
appropriate technology being explained by the Chinese engineers
who have been working and are now familiar with the new
technology\.
This approach appears to have been successfully used for the Railway
Investment and Coal Transportation Investment Studies\.
For these approaches to work at least the following are required:
An individual willing and in the position to promote, negotiate,
arrange, and, if possible, continuously review\. The successful
AAR training was primarily arranged by the head of the AAR
research department\. The successful Line Capacity, Coal
Transport and Railway Investment studies were also formulated by
World Bank staff\. Also, Bank staff have played an active role
in supervising/reviewing these studies\.
The receiving organization should (as with any potential
employee) be able to have the right of final selection\. The
Chinese would make a preliminary selection\.
A language proficiency examination would be given as part of the
selection process\. Should improvement be required, additional
language training would take place in the host country at the
Chinese expense\.
THE ORGANIZATION OF TECHNOLOGY TRANSFER: The Chinese are hard bargainers
when they are the buyers and they have the money in hand to pay for
engineered products\. With respect to technical assistance, training, etc\.,
they are buying a "soft" product and they are not sure of its production
capacity or overall benefit\. They may be unwilling to purchase because of
the hypothetical benefits and the tremendous pay difference between a
consultant and his counterpart\. There also seems to be a lack of
confidence in their ability to master the soft technology as well as fears
of being held responsible in case of lack of success\.
46
Annex II
Page 7 of 7
In the railroad field there have been a number of assistance/transfer
training projects\. A review of these projects indicates that those that
have been generally successful (the AAR exchange, the RIS and CTS projects,
and - to a certain extent - the line capacity study) have always had a non-
Chinese person or persons who put the various packages together and made
them work\. In the case of the GRS joint venture, it required an 18 month
effort on the part of GRS, who, unlike most potential joint venture
companies, persisted to the end\.
These observations lead to the conclusion that lack of marketing
experience, cultural and language problems, reluctance to invest hard
currency for a benefit of hypothetical value, and in many cases, lack of
understanding of the benefits of the technology, makes it difficult for the
Chinese to take charge of their technology transfer efforts\. It appears to
be vital that a third party promoter be involved for technical direction
and as a negotiator\.
47
Annex III
Page 1 of 1
1HE 6AiLE LQAD 15GSUE
THE AUDIT POSITION: China Railways, as a general policy, used 21 ton axle
loads for bric'ge and track design starting in 1973\. By 1986 the axle load
for design pur\.oses was raised to 23 tons\. Twenty-five ton axle loads are
being used "experimentally" with coal trains on the Datong-Qinhuangdao
line\. The Yellow River Bridge that the Bank financed on the Xinxiang-
Yanzhou subproject (the longest bridge in Asia) has been designed for 25
ton axle loads\. In the last ten years, research and development in the USA
has shown that 30 ton axle loads are both technically and economically
feasible and 36 ton axle loads are being actively considered\. 1/ Given the
huge capacity constraint China Railways has, increasing wagon capacity with
greater axle loads is an obvious direction to move in\. Unfortunately, new
structures with fifty year useful lives (including those being financed by
the Bank) are still being designed for 25 ton axle loads\. For a relatively
small increment in cost the structures could have been designed to handle
the heavier axle loads that are very likely to come in the future
(especially for dedicated coal lines)\.
The Chinese argument against the use of heavier axle loads is that the
entire rail network would have to be upgraded rapidly to handle this new
technology\. Given the huge number of wagons with 23 ton maximum axle loads
in the fleet, introducing 30 ton axle load wagons now would be a very
gradual process (as was the shift from 21 to 23 ton loads in 1986) taking
place over many years and most such wagons would be consigned to unit
trains operating on well-defined corridors\. The internal Bank argument
against the innovation cites the European experience which prefers high
speed light axle load freight wagons that do not conflict so much with high
speed passenger trains on the same lines\. They also assert that the U\.S\.
move into heavy axle load freight wagons is based on the benefits of
avoiding restrictive high cost labor practices that do not exist in China\.
The matter could be easily settled by considering the economics of the
proven U\.S\. technology in the Chinese context - an analysis that has not
yet been undertaken\.
1/ Seminal research reports on this issue are: "Higher Axle Loads are
Feasible - Economics and Technology Agree", by S\. Marich and U\.
Maass, a paper presented at the Fourth International Heavy Haul
Conference, 1986; and, "Burlington Northern's Assessment of the
Economics of High Capacity/Heavy Axle Load Cars", by R\. Newman, A\.
Zarembski, and R\. Resor, American Railway Engineering Association
Bulletin No\. 726, Washington, D\.C\., May 1990\.
48
Annex III
Page 2 of 2
THE POSITION OF THE REGION: China Rail was tied by national standards to
which it had to adhere\. In China, freight cars are assigned system-wide,
any car can go anywhere\. 2/ This stems from the acute national shortage of
freight cars and partly explains why the Chinese have achieved a world
record in the utilization of their fleet\. China Rail was facing the
chicken and egg dilemma\. The standards could not be changed as long as
there was no plan to increase the capacity of new freight cars being built
and heavier cars could not be built because they would not be used
efficiently as long as axle load limitations were not lifted on most lines\.
Beyond the time and coordination that would be required to introduce such
change, there is concern that the safety of the rail operations could be
jeopardized\. That being said, China Rail is interested in getting help
from the Bank to do an en-Sineering economic life cycle cost analysis to
determine the optimal rail technology for China, taking the safety issue
explicitly into account\. One of the key parameters involved would be the
wagon size and related axle loading\.
2/ The only exception is the new Datong-Qunghuangdao line with a captive
fleet of unit train equipment\.
49 Annex IV
Page 1 of 2
COMMENTS FROM THE BORROWER
FOREIGN CAPITAL AND TECHNICAL IMPORT OFFICE
MINISTRY OF RAILWAYS ,PRC
in Fuxing Road, Beijing, China
Te'ex, 222224 )TSRB CN Tel\. 86-42757; 86-44327
Attn\.: Mr\.Graham Donaldson
Chief
Agriculture\. Infrastructure and Human Resources Division
Operation Evaluation Department
The World Bank
Re : Comments on your PPAR for China Railway I Project with
Loan No\. 2394 CHA
Date : June 18\. 1991
Dear Sir:
1\. I as very pleased to read your Project Performance Audit Report
for China Railway I Project with Loan No\. 2394 CHA together with
your letter dated April 9\. 1991\. I should say it is an
excellent report both with abundant contents and with frank
views\. through which, we can see the good cooperation between
NOR and the Bank in past many years and deepened mutual
understanding have established a sound base for futher expanded
and continuous cooperation between us in future\.
2\. 1 basically agree with your audit opinions expressed on the
report for Railway I Project with Loan No\.2394 CHA\. However\.
what I would like to mention is that for three issues related to
two lines ( see your para\. 32)\. all these decision were made
jointly by the Bank and NOR after discussion during the
Drolect Preparation and appraisal and were met with the design
standard of our country \. compatible with the technicai
conditions of adjacent lines ( except Datong - Ginghuansdao
line)\. For the question why not considering the possiblity of
using heavier axieload wagon in future \. it has been explained
somewhat in your para\.37 and footnote 33\. Except Datong -
Qinghuangdao line, all our railway lines are not run by special
wagons for increasing axieload of wagon will involves the
technical upgrading on infrastructure of entire railvay network
and It Is a complicated issue\. So\. it seemed to us that It was
not appropriate to address this problem in the construction of
these two lines\. We hope you would consider this situation in
your final report\.
3\. As mentioned in your para\. 2\. besides auditing Railway 1, the
report also sumaarized the new analysis and studies of onioing
five projects in last six years\. We feel the scope involved in
the report Is extensive\. For many Issues, although they were
only discussed preliminarily on the report, but touched quite
deeply to their points\. In which, many views on the report could
be quite beneficial to Improving our future operation \. We are
Annex IV
50 Page 2 of 2
going to have thorough study on those issues and identify what
can be addressed by MOR and what needs to get coordination with
other ministries and will be addressed step by step in the
course of deepening reform ind wiLh cutsideation of China's
actual situation\.
4\. For the PPAR is prepared by your department and submitted to
the Bank's Board of Directors, we are not going to make too many
comments on your report\. However, I would like to make some
brief explanation on the issues related to our national economic
reform\.
5\. For our economic reform mentioned in your para\.58 and other
relevant para\. the reform adopted by our government is
Stick to reform and open door policy; promote the
development of planned commodity economy; address
newly emerged contradiction and problems by rectifing
and reform\.
6\. At present, the economic order has been obviously improved, the
whole national economy looks good on its development\. In next
ten years, we will preliminarily establish the new system of
socialist commodity economy and economic institution of planned
economy combined with market regulation, thus, the advantages
of both could be fully played\.
7\. For the issues related to dual price system and price
distortion mentioned in para\. 18 ,21 and other relevant
sections, the reform of our government is that a reasonable
price system is always required no matter for planning or
for management\. Price reform will ba carried out under the
situation of basic balance between the total supply and total
demand\. Along with the changes of relationship between supply
and demand, appropriate and necessary adjustment will be
applied on the price to cause the price relation tends to be
more reasonable , and realize th tstadual tiansition from dual
price system to single price system\. But\. the step of price
reform should be both stable and appropriate\. At present, the
types of commoditiy under dual price system are reduced, the
price differences are diminished \. Not long ago, dual price
system for cement had been cancelled\. We hope that our ongoing
econamic reform could be better reflectd on your final report\.
8\. Last but not least, please accept my high respects and
appreciation to the gentlemen who involved the report
preparation\.
Sincere ours,
Zhong hon Ben
Direct
Foreign Capital and Technical Import Office
Ministry of Railways\. PRC
CC: RMC
51
CHINA
RAILWAY PROJECT (Loan 2394-CHA)
PROJECT COMPLETION REPORT
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE
1\. Project Identity
Name: : Railway Project
Loan Number : 2394-CHA
RVP Unit : Asia Region
Country : China
Sector : Transportation
Subsector : Railways
2\. Background
2\.1 The project was the first in the railway subsector\. During project
preparation, major reforms were introduced in the national economy and a spe-
cial emphasis was given to transportation in general and railway transporta-
tion in particular\. A shift in policy turned railway development away from
its traditional role of opening up new economic areas in the interior of the
country to the expansion and modernization of the main rail network, concen-
trated in the easzern coastal areas, where most of the economic activities
were taking place\.
2\.2 The Government objectives were, and still are, to increase the
volume of passengers and freight (especially coal, in support of energy pro-
duction) transported by rail, by increasing the carrying capacity of track
sections and marshalling yards, increasing the production and use of locomo-
tives, passenger coacnes and freight cars, and moderniziag signaling and com-
munications\. A start was also made in the modernization of management prac-
tices, streamlining the chain of command and providing the various echelons
with more modern and efficient means, including computers\.
3\. Project Objectives and Description
3\.1 The objectives of the project were basically the same as the overall
Government objectives mentioned above\. Specifically, of the four components
of the project, three were geared at directly increasing the carrying capacity
of the railways, and the fourth was geared at improving management efficiency\.
These components are:
3\.2 The Xinxiang-Heze-Yanzhou Line\. There was no rail connection
between Xinxiang and Heze because the Yellow River represented a formidable
obstacle\. This critical missing link hampered coal and other freight trans-
port between central China and industrial areas and ports on the eastern
coast\.
3\.3 The decision to go ahead with the project was made on the basis of a
broad master plan, which included the expansion of existing mines and the
development of new mines in coal-rich southern Shanxi and Shaanxi provinces\.
52
partly with Bank assistance\. Rail capacity increases included, on the western
side, the doubling of the feeder line from Jiaozuo to Xinxiang, and on the
eastern cide, the construction of a new line from Yanzhou to Shijiusuo, a city
on the Yellow Sea coast, where a deep water port was to be built\. Japanese
financing was secured for the construction of both the Yanzhou-Shijiusuo rail
link and the Shijiusuo port\.
3\.4 Also as part of the overall plan\. the middle section between Heze
and Yanzhou was to be upgraded\. This section had been built with very low
standards, adequate for the local traffic but inadequate for the through coal
traffic which was to be carried on the new Xinxiang-Shijiusuo route\.
3\.5 The first component of the Bank railway project was thus made of two
subcomponents: the construction of a new 165-km single-track line between
Xinxiang and Heze, including a 10-km bridge over the Yellov River, and the
upgrading of the 140-km Heze-Yanzhou section\.
3\.6 The Datong-Taiyuan Line\. Another facet of the master plan for
increasing coal production and transportation was the expansion of mines in
the Datong area and the construction of a new, modern rail link between Datong
and the eastern deep water sea port of Qinhuangdao\. This was the first
Chinese attempt at establishing a dedicated heavy haul rail link for massive
coal transport, running unit trains of up to 10,000 net tons\. The target
capacity of the new line was set at 60 mtpy (later increased to 100 mtpy,
para\. 5\.3)\.
3\.7 The second component of the Bank project was to expand carrying
capacity on the Datong-Taiyuan line, serving the many coal mines located south
of Datong\. The northern section of the line would act as a feeder to the
Datong-Qinhuangdao line, while the southern section would carry coal to the
Taiyuan area, and east via the newly electrified Taiyuan-Shijiazhuang line\.
The work consisted of double-tracking two bottleneck sections totaling 127 km,
lengthening the existing 34 crossings from 650 to 850 m to allow for longer
trains, building four additional crossing points, and electrifying the whole
355 km section\.
3\.8 The Zhuzhou Electric Locomotive Factory\. The Zhuzhou Factory was,
and still is, the only factory in China producing electric locomotives\. Its
output had to be increased to meet the overall demand for locomotives needed
by the project as well as other electrification projects under construction
and planned\. With a modest influx of $20 million in foreign exchange provided
by the Bank loan, the factory would import modern machine tools not available
domestically, and launch a program of technical assistance and training in the
use and maintenance of the imported machine tools, as well as in areas of
mechanical and electrical technology and management practices\.
3\.9 Costing Study\. There was a need to update and improve MR's existing
costing methodology and thereafter install a costing system that would improve
railway operations and management\. The study was to be carried out in sepa-
rate phases over several years, mainly by MR staff\. However, contacts with
the outside world would be provided by visits of Chinese costing specialists
to foreign railways and by foreign experts providing advice to the Chinese
team on an ad-hoc basis\.
53
4\. Project Design and Organization
4\.1 The design of the project, Aq described above, was appropriate and
timely (see paras\. 8\.1 to 8\.5 for Bank cottribution to improvements in the
design of Lvo components)\. There was little doubt that increased energy pro-
duction and rail transportation would significantly contribute to the develop-
ment of the Chinese economy, and the Bank agreed with the priority given by
GOC to these sectors\. The three infrastructure components included in the
Bank project had very favorable rates of return\. a fact which was confirmed by
the ex-post economic reevaluation (para\. 6\.5)\.
4\.2 It must be noted, however, that the Bank had practically no role in
the selection of the components earmarked for Bank financing\. It was a
strictly enforced Government policy to allow discussions with foreign lenders
only in regard of those specific projects for wiich financing was sought, and
no overall analysis of the full investment program and needs was permitted\.
The Bank reluctantly accepted this edict in view of the high economic returns
of the proposed components, showing some understanding for the Government pol,
icy of restricting the provision of information to foreigners\. As a conse-
quence, the Bank could not satisfy itself that the project components had the
highest priority, nor that no other components included in the railway invest-
ment plan had an unacceptably low justification\.
4\.3 The unwillingness of the Chinese side to provide the Bank with basic
financial and operational information made the appraisal more difficult and
less meaningful than it should have been\. For example, the only financial
data provided were in relation to the particular entities which were to use
Bank financing, preempting any broader analysis of the general financial situ-
ation of the Ministry of Railways\. On the operational side, even the number
of locomotives in service was considered restricted information not to be com-
municated to foreigners\.
4\.4 With hindsight, it can be said that the decision by the Bank to go
ahead with the project even on those unusually restrictive conditions was
right\. A relationship was built over the years, and simultaneously with the
opening up of China to the outside world, the collaboration between the Bank
and the Ministry of Railways became closer and deeper\. Today, there is hardly
any restriction to the type and scope of information exchanged with the Bank,
and the Chinese side initiated in several cases discussions oLL *"bjects of
particular interest\.
5\. Project Implementation
5\.1 Loan Effectiveness and Start-up\. The loan was approved on March 27,
1984, signed on April 13, 1984, and declared effective on July 10, 1984, which
is very satisfactory (subsequent railway loans were handled much slower)\.
Implementation Issues
5\.2 Xinxiang-Heze New Line\. Construction was started and completed on
schedule, including the 10-km bridge over the Yellow River\. Procurement
delays occurred, which did not affect actual implementation, because the con-
struction units were able to "borrow" what they needed (cement, steel, etc\.)
54
from other units, and "reimburse" them once the Bank-financed goods were
delivered\.
5\.3 Datong-Taiyuan Line\. The start-og construction was delayed by
almost two years, because of a major change in design imposed by the Govern-
ment soon after the loan was approved\. The design capacity of the Datong-
Qinhuangdao line was increased from 60 mtpy to 100 mtpy, and the design capa-
city of the feeder Datong-Taiyuan line was similarly increased from about
30 mtpy to 60 mtpy\. This called for a complete revision of the construction
design, which took over a year\. When construction actually started, progress
was slower than planned, because less time was allocated to the construction
teams in light of the higher than expected traffic which had to pass on the
existing line\. Procurement delayt also played a role in the completion delay\.
The Bank agreed with these changes in principle because they would greatly
benefit the Chinese economy\. It would have been less disruptive, however, if
MR had adopted the higher traffic levels from the beginning\.
5\.4 For the Zhuzhou factory, it is difficult to quantify the progress
made in implementing the "Bank component" which was defined at appraisal as
the first of two phases\. The first phase consisted of procuring, with Bank
financing, a set of modern machine tools to boost production from 60 locomo-
tives per year in 1983 to 120 in 1987\. Simultaneously, workshops would be
expanded but the corresponding civil works were to be financed locally\. A
second phase (with or without additional Bank financing under a following
project) would subsequently bring the annual production to 200 units, with
more facility expansion and additional acquisition of production means\.
5\.5 Procurement of the sophisticated machine tools under the first phase
took much longer than expected, and spveral items had to be tendered two or
three times before a satisfactory supplier could be found\. In the meantime,
the factory went ahead with the civil works of both phases, so that adequate
working space was provided\. It also advanced the procurement of the second
set of machine tools, most of which could be purchased locally\. In reality,
the two phases were combined by necessity, and one could even say that the
second phase was implemented before the first phase was completed\. The net
result, however, is very satisfactory, since the production of locomotives
reached 174 units in 1989, equivalent to 184 units of the type considered at
appraisal\.
Costing Study
5\.6 In 1984, MR formed a task force to carry out the various stages of
the costing study, with staff from MR's Accounting Bureau, Science and Tech-
nology Bureau, and Foreign Capital and Technical Import Office\. This task
force studied current procedures, their weaknesses, and areas for future
improvement in costing methodology, and prepared a report on "Introduction to
China's Railway Costing"\. Study tours were conducted by MR staff in 1984 in
Canada, USA, and UK to learn about the western system of railway costing\.
Foreign railway experts were invited to give lectures on costing\.
5\.7 Based on the knowledge and experience gained\. MR's Science and Tech-
nology Bureau, together with the task force, issued a railway costing manual
in January 1987\. An improved version of the classification of accounts was
also introduced in January 1988\. Following this, MR decided to carry out
55
pilot testing of the costing manual in the ShaAghai railway subadministration
and on the BeitongpiA (Datong-Taiyuan) line in the Datong and Taiyuan subadmin-
istrations\. The testing is delayed, however, because of a shortage of compu-
ters, which are being purchased under ICB\.%- The testing and the beginning of a
program to implement the costing system on the entire railway network may be
about two years later than the target date of December 31, 1989\.
5\.8 The Bank has simultaneously sought expert opinion from foreign rail-
way costing specialists on the quality and comprehensiveness of MRs costing
manual\. The experts made some recommendations to improve the manual which
were accepted by MR and the Bank\. During negotiations of The Fifth Railway
Project, scheduled for the second half of 1991, the Bank will formalize with
MR a time-phased action program to complete the implementation of the costing
system on the whole net work\. Although the costing study was started under
this project, it now has become closely linked to studies under subsequent
railway projects\.
Procurement
5\.9 Internal procedures for procurement under ICB were very new to the
Chinese side when the project started\. Successive authorizations and checks
at various levels inside and outside the Ministry of Railways are cumbersome
and time-consuming\. Also, not until 1987 was a central department in Beijing
assigned to externally-financed projects, so that the various implementation
units were acting in a very uncoordinated way up to that time\. Procurement is
probably the only area in this project where progress can be said to have been
unsatisfactory\. This caused three successive one-year extensions of the Clos-
ing Date, from December 31, 1987, ,o December 31, 1990\.
5\.10 It must also be said, however, that the original Closing Date was
too optimistic\. The Chinese request was to set it as of June 30, 1987\. They
assured the Bank that all procurement work would be handled fast, because all
the goudb wece urgently needed, and bercniqe the Government had instructed all
executing agencies to minimize payment of commitment fees\. Since the Bank had
no previous experience of procurement in China, it was eventually agreed,
after protracted discussions, to set the Closing Date at December 31, 1987,
which proved totally unrealistic\. Following railway projects benefitted from
this experience, and the Bank later mandated the use of standard disbursement
profiles, so that Closing Dates are now set more realistically\. If the Bank
standard disbursement profiles had been adopted for this project, the Closing
Date would have been set as of Farch 31, 1991 (Table 3\.25 of the Appraisal
Report) and there would have been no need for extensions\.
5\.11 The second extension of the Closing Date was made about six months
after the Closing Date of December 31, 1988 (which had been extended
previously from the original Closing Date (December 31, 1987)\. Prior to the
second Closing Date (December 31, 1988), it was understood between MR and the
Bank that no further extension would be needed, and that the Bank would honor
disbursement applications up to June 30, 1989, for commitments made before
December 31, 1988\. In May 1989, however, the supervision mission in China
found out that there had been delays in obtaining export licenses by suppliers
for completing the procurement of machinery and equipment, and this would
cause the delivery of several items to be delayed beyond June 30, 1989\. The
decision to extend the Closing Date retroactively was granted by the Regional
56
Vice President after receiving a memorandum from the China Department Director
(dated June 1\. 1989) explaining the delays in getting export licenses and that
the disbursement profile estimated in the SAR was too optimistic given the
lack of experience with international proeurements on the part of the
Borrower\.
5\.12 Although a later Closing Date could have been set, the fact remains
that procurement was a problem during implementation of this project, and con-
tinues to be a problem for subsequent railway projects\. Progress was made\.
however, and although the Second Project is still way behind schedule, the
Third is on schedule and the Fourth is ahead of schedule\.
5\.13 As for the handling of procurement matters, except for the inordi-
nate amount of time taken at all stages, work was very satisfactory\. Bid
evaluation was carried out in a professional manner, and placement and execu-
tion of contracts went on very smoothly\. Sporadic problems occurred in rela-
tion to the granting of export licenses by some Part I countries, but all were
eventually rerolved in a satisfactory manner\. There were no complaints from
suppliers\.
5\.14 Project Costs\. The Xinxiang-Heze-Yanzhou line component was comple-
ted on time and almost within the original budget\. The cost of the Datong-
Taiyuan line was about twice the appraisal estimate, because the design was
significantly amended and because construction took two to three years longer
than planned (para\. 3\.3)\. However, since benefits more than doubled with the
new design, the ERR turned out to be higher than expected (para\. 6\.4)\. For
the Zhuzhou factory\. actual costs are not comparable to appraisal estimates
because there was no appraisal estimate for the second phase, while in reality
the two phases were lumped together during implementation (para\. 5\.4)\. An
added difficulty for a meaningful comparison comes from the fact that the
exchange rate between the Chinese Renminbi and the US dollar varied from 2\.0
at appraisal to 4\.7 today\. A comparative table of appraisal and actual cost
is shown on page 18\.
5\.15 Disbursements\. As a consequence of the delays in procurement admin-
istration, disbursements were much slower than expected\. The table on page 18
summarizes the disbursement process, and compares the appraisal estimates with
actuals and the standard disbursement profile\. When the loan is closed on
December 31, 1990, about $6 million is expected to remain unused and this
amount will be cancelled\.
5\.16 Loan Allocation\. There was no reallocation of funds between loan
categories, other than the transfer of unallocated funds to Category 1, Equip-
ment and Materials\. At MOF's request, an amendment to the Loan Agreement was
granted on December 24, 1987, increasing from $1\.0 million to $2\.5 million the
total aggregate cost of items and equipment to be procured on the basis of a
comparison of quotations received from at least three suppliers eligible under
the Guidr'4s, while the maximum value of contracts placed in this way remai-
ned uncb\.a;d at $100,000\. The amendment was granted because, since MR had no
other source of foreign exchange, they had to use Loan funds to buy small off-
the-shelf items\. many costing only a few thousand dollars, for which ICB was
not appropriate\.
57
5\.17 In February 1989, another amendment to the Loan Agreement was made,
replacing the MRs obligation to furnish the Bank audited financial statements
for the project subunits with the obligation to furnish audited project
accounts only\. A major reason for the amendment was the limited usefulness of
audited financial statements for the project subunits\. This amendment was
subject to understandings explained in the agreed minutes of negotiations for
the Fourth Railway Project, in which MR agreed to provide the Bank on a reg-
ular basis with its consolidated income statement and confirm its intention to
develop its accounting systems to a point where consolidated financial state-
ments (including balance sheets, and fund flow statements) can be produced
routinely\.
6\. Project Results
6\.1 Project Objectives\. Overall, the project was successful in meeting
its principal objectives of increasing traffic capacity\. The Zhuzhou factory
surpassed the most optimistic forecasts, and the quality of the locomotives
produced has been confirmed recently by a delegation of Japanese experts\.
This came about after a tender for electric locomotives financed under an
untied Japanese credit, which was easily won by the Zhuzhou factory against
the Japanese competition\. Subsequently, the Japanese Government sent an
enquiry group of experts to Zhuzhou, in order to confirm the quality of the
locomotives manufactured\. The group returned to Japan, endorsing the decision
to place the order with the Zhuzhou factory\.
6\.2 Physical Results\. The physical targets were achieved on schedule
for the first component, the Xinxiang-Heze-Yanzhou line\. The Datong-Taiyuan
line experienced delays which were only partly the responsibility of the Min-
istry of Railways (paia\. 5\.3)\. The Zhuzhou factory, both phases combined,
more than achieved the expected targets\.
6\.3 Economic -formance\. The economic analysis presented in this
report is based on a :eevaluation of data on traffic, operational performance,
project costs, coal mine development costs, and project benetits for each
project component since the SAR estimates were made\. The methodology used in
the economic analysis for the PCR is similar to that used in the SAR and
incorporates 1990 conversion factors\. A substantial revision of the Datong-
Taiyuan railway was the major cause of the delay for completion and the cap-
ital cost --errun of the project\. The economic analysis was therefore read-
justed accordingly\.
6\.4 There are four major factors which positively influence the ERR:
(a) the lower cost of coal mine development; (b) increase in traffic capacity
expansion on Datong-Taiyuan line; (c) increase in traffic on Xinxiang-Yanzhou
line; and (d) the locomotive factory has been put into operation one year
ahead of time\. On the other hand, these factors were offset by the negative
effects of: (a) increase in economic capital cost; (b) the major delay in the
project completion of the Datoi\.1-Taiyuan line; (c) a substantial reduction of
net coal value-added (more than 41 percent) resulting from a 38\.3 percent drop
of coal price in real terms; and (d) manufacturing cost and maintenance cost
savings for locomotives\.
6\.5 A comparison of the economic impact of the project, between the PCR
aiid the SAR\. for each major project components in terms of the economic rate
58
of return is given in the table below\. The reevaluated economic rates of
return (ERR) for the two railway lines (17 percent and 19 percent) turned out
to be the same as the SAR best estimates; and a slightly lower ERR on locomo-
tive factory facilities (82 percent vs\. 84-percent)\. Detailed analyses are
presented in Annexes 1\. 2 and 3\.
ECONOMIC RATE OF RETURN (Z)
Zhuzhou
Xinxiang-Yanzhou Line Datong-Taiyuan Line Factory
SAR estimates PCR SAR estimates PCR SAR PCR
Low/a Best High/b Ex-post Lowa Best High/b Ex-post Best Ex-post
12 17 19 17 14 19 22 19 89 82
/a Lowest ERR calculated in the SAR sensitivity analysis, based on 20 per-
cent reduction in coal prices\.
/b Highest ERR calculated in the SAR sensitivity analysis, based on 20 per-
cent reduction in the cost of coal mine development\.
6\.6 Financial Performance\. This PCR deals with the financial perfor-
mance of MR as a whole, the four individual subadministrations and the Zhuzhou
Electric Locomotive factory\. MR's financial condition has been quite satis-
factory and its financial performance is better than most other railways in
the world\. The Government policy on railways is also moving in the right
direction by making them responsible for their financial results and obliga-
tions\. In 1986, The Government set performance targets for the railways and
abolished corporate tax on railway profits with the objective that MR will be
solely responsible for its future debt obligations including self financing of
at least a good part of its future investments without any contribution from
the State\. The appraisal forecast and the actual working and operating ratios
of MR are shown in (Table 1) and swinmarized as follows:
1983 1984 1985 1986 1987
Working Ratios (M)
Appraisal forecast 54 49 49 50 51
Actual 51 47 53 54 56
Operating Ratios (M)
Appraisal forecast 69 62 64 65 66
Actual 67 61 67 67 70
During 1985-87 the working costs and depreciation increased at a faster rate
than revenues due to inadequate tariffs in the face of rising inflation and
5)
investments\. Tariffs changed very little between 1950-87\. Inspite of this,
actual revenues were higher than forecast for all years, because of higher
than expected traffic increases\. The profit transfers from MR to Government
were higher during 1983-87 than the government capital contributions to MR for
investments\.
6\.7 The Zhuzhou Electric Locomotive factory has shown a superior finan-
cial performance than other components of the project (Table 2)\. The Finan-
cial Rate of Return substantially improved from 24 percent in 1982 to 54 per-
cent in 1987---much higher than the appraisal targets of about 30 percent
during 1983-86 and 27 percent during 1987\. However the substantially higher
rates of return are also due to low investments up to 1987 and the absence of
revaluation of fixed assets\. Net profits were increasing and the working and
operating ratios remained at satisfactory levels even though they were some-
what worse than the appraisal forecast\. By surpassing the target capacity
production of 120 electric locomotives per year to 180 locomotives in 1989,
Zhuzhou factory has substantially strengthened its working capital position\.
MR however, has taken no action to increase the sale price of locomotives in
response to cost increases\. The following cost and price analysis of SS3-type
locomotives highlights this point:
1988 1989
Cost(Y) - Materials 1,000,598 1,151,212
Wages 20,872 20,025
Other (fuel supplies
and admin\. cost 255,198 246\.371
Total Manufacturing Cost 1\.276,668 1\.417,608
Selling Price 1,500,000 1,500,000
Profit 223\.332 82,392
2 of Profit to Sales 14\.9Z 5\.52
Ever since the SS3-type locomotives were put into production in 1984, the
sales price has been kept constant\. Recently the Zhuzhou factory has
requested MR to increase the price by 20 percent to Y 1,800,000/locomotive\.
6\.8 The performance of the four project subadministrations (Taiyuan,
Datong, Jinan and Xing Xian) was also satisfactory (Table 3)\. Xin Xiang and
Datong subadministrations have shown a faster increase in financial rate of
return compared to Taiyuan and Jinan\. The profit per CTK 10,000 (ton-km +
Pass-km) has also been rising for all subadministrations (Table 3) and the
working and operating ratios are within acceptable range\.
6\.9 Impact of the Project\. The project made a major impact on rail
transportation capacity in its areas of influence\. The additional mining and
transportation of coal made possible by both the new west-east connection over
the Yellow River and the capacity expansion of the Datong-Taiyuan line, in
conjunction with other related investments (most notably the Datong-
60
Qinhuangdao line, the Yanzhou-Shijiusuo line, and the Shijiusuo port) played a
major role in the increase in energy available to the Chinese -economy\. The
availability of hundreds of new electric locomotives manufactured by the
Zhuzhou factory helped this traffic to materialize\.
7\. Project Sustainability
7\.1 The infrastructure investments supported by the project will con-
tinue to provide benefits for many years to come, provided adequate care and
budget is made available for their maintenance\. The Ministry of Railways has
a good record in this respect, and later Bank projects provide some help in
these areas\.
8\. Bank Performance
8\.1 Although the Bank had no role to play in the selection of the com-
ponents to be included in the project (para\. 4\.2), a significant contribution
was made in regard to the actual design of two major items, the Yellow River
Bridge and the Zhuzhou factory\.
8\.2 Given the great potential for coal transport from west to east of
the Yellow River, the appraisal team made a thorough review of the design
characteristics of the Xinxiang-Heze line\. A single-track rail line is a suc-
cession of sections between loops, where trains coming from opposite direc-
tions can cross each other\. All other things being equal, the capacity of
such a line is determined by the length of its longest section\. This was the
case for the new line, which was to be built on a relatively flat terrain\.
The Yellow river Bridge was to be itself about 10 km long, and because it was
impractical to build crossing loops on the slopes in the immediate vicinity of
the river embankments, the two crossing loops on each side of the river were
to be 14 km apart, making the bridge and its accesses the critical section on
the whole line\.
8\.3 Hence came the idea of building a double-track bridge, in anticipa-
tion of a possible future double-tracking of the line, but this alternative
was quickly discarded as too expensive\. Instead, the Bank team proposed to
build a crossing loop somewhere on the bridge, so as to reduce the length of
the critical section\. This proposal was rejected outright by the Ministry of
Railways, but at the Bank team's insistence, was submitted to the engineering
bureau in order to perform a benefit-cost analysis\. When the mission returned
to China several months later, it was advised that the proposal was found not
only feasible\. but highly beneficial since it would increase the total design
capacity by 30 percent from 17 to 22 mtpy, at a relatively low cost\. The
bridge was eventually built, incorporating a crossing loop\.
8\.4 For the Zhuzhou factory, the Bank contribution was even more signi-
ficant, because the initial request by the Ministry of Railways \.:as actually
for the Bank to finance 118 imported electric locomotives\. The Bank team
requested to visit Zhuzhou, the only electric locomotive factory in the
country\. This was, apart from a normal engineering curiosity, to ascertain
the level of domestic technology and the possibility of local manufacture of
spares in the future\.
61
8\.5 After a detailed visit of the installations, the Bank team proposed
a different project to the Chinese authorities\. Instead of importing
locomotives, the prnarr would consist of modernizing and expanding the fac-
tory itself\. which showed a great potenti&l\. had a dedicated and competent
management, but was badly in need of more working space, and more modern
machine tools and handling equipment in order to improve the accuracy of the
parts produced, reduce rejects, and increase the output\. The layout of the
factory was suboptimal, resulting in unnecessary movements of work in
progress\. There was also not enough protected space for storing semifinished
products\. This proposal was eventually accepted by the Ministry of Railways,
and the Bank later sent a team of five among the best experts in the world to
Zhuzhou, to review in detail the investments to be made and the type of
machine tools best suited to each individual operation in need of improvement\.
The results were quick to materialize\.
9\. Borrower Performance
9\.1 Overall, the performance of the Borrower was quite good, except for:
procurement administration (para\. 5\.7)\. Construction units and the Zhuzhou
factory found innovative ways to compensate for the delay in receiving Bank-
financed goods, so that by and large there was no adverse effect on project
implementation\.
10\. Project Relationship
10\.1 Bank relationship with the Government and the Ministry of Railways
has been good\. In spite of frictiona and frustrations in the early stages,
because of the extreme difficulty of obtaining adequate information (paras\.
4\.2 to 4\.4), the rapport between Bank staff and their local counterparts
improved steadily over the years and has now reached a very good level\.
11\. Consulting Services
11\.1 The training program agreed during appraisal called for about 45
Chinese to be trained abroad for about six months each\. This was eventually
vetoed by the authorities, and a total of 86 trainees were sent abroad, for
shorter periods\. Instead of 13 foreign experts expected to visit China, a
total of 146 foreign engineers and technicians actually came\. All these
training activities were related to the Zhuzhou ElecLric Locomotive Factory,
for training on imported machine tools and other equipment\. The training
program was very successful\.
12\. Project Documentation and Data
12\.1 The Loan Agreement was adequate and appropriate for achieving proj-
ect objectives\. The Staff Appraisal Report provided a useful framework for
both the Bank and the Ministry of Railways for review of project implementa-
tion\.
62
PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE 1/
A\. Xinxiang-Heze-Yanzhou Line
2\.1 Objectives of the Project\. The Xin-He-Yan railway is a single line,
starting at the new South Xinxiang Station, 5 km to the north of Xinxiang
marshalling yard, crossing the Yellow River through Heze, Jining, connecting
Yanzhou station at Yanzhou North on the Jin-Pu line\. It continues alongside
the Jin-Pu line to the north, through Beijiadian, and connects the Taolu South
Station on the Yan-Shi line, totaling 337 km\. The construction of the project
has promoted the international trade and development in the coastal areas, and
industrial and agricultural deveillpmluet lai east Henan and south-west Shandong\.
It has actively increased the capacity of the whole network\.
2\.2 Evaluation on Decision Correctness\. In November 1985, the leader
member of the State Council delivered a speech during a visit to the newly
opened Xinxiang-Heze railroad\. He said that it was in 1981 that the decision,
was made to build Yan-Shi line and Shijiu Port for coal export, to be financed
by bank loans\. However, coal mined in Yanzhou was found not sufficient
besides the local consumption and the part to be shipped to the East China via
Jin-Pu line and the Grand Canal\. The State Council, therefore, immediately
decided to build Xin-He line and upgrade He-Yan line which would be connected
with Yan-Shi line\. This had proved correct\. If there were no Xing-He line
connecting Shanxi and Yan-Shi line, the Shijiu Port would have been very
upset\. The Ministry of Railways responded quickly by an early completion of
the line, providing a corridor for Shanxi, Henan, and Shandong provinces
accessing the sea port of Shijiu\. On the same line, the Shijiu Port would
develop soon into a multipurpose port, not only as a coal port, and conven-
tional port\. but also as a container port\. This would diverse foreign trade
traffic from Xingjiang\. Gansu, Shaanxi, Shanxi, Henan, Shandong, North Anhui,
and North Jiangsu, etc\., to the Shijiu port and release the heavy burden in
Qingdao and Lianyungang ports, as well as Longhai and Jin-Pu lines\.
2\.3 Since the open of this line, traffic in heavy load train direction
reached 4\.41 million tons in temporary operation in 1986\. It reached 5\.95
million in 1987 when it was officially open to traffic, and it reached 12\.0
million in 1988 and 15\.0 million in 1989\. The traffic on the He-Yan line was
5\.527 million in 1986, 7\.Q million in 1987, 1Z\.; ai,1lion in 1989, and 15\.1
million in 1989\.
2\.4 Such a high traffic growth rate has been very rare among new single
lines developed during the recent three decades\. The project has also added
18 pairs of trains to the capacity of Xinxiang-Qiliying section of Beijing-
Guangzhou line because of the new Xinxiang South Station\. All the above has
demonstrated that the decision of the project is correct\.
2\.5 Procurement\. Contract management was a very careful and hard job\.
In order to well manage a great number of contracts and provide with instant
1/ Since the Borrower's report was too lengthy, a summary was prepared in
the Bank and included here\. The original documents are in AS3TP Division
files\.
63
service to review contracts, an expert was positioned to be responsible for a
complete set of contract card account\. This has centralized the management
and enabled procurement planning\. contract implementation and disbursement to
well cooperate with each other\. It has bnn proven satisfactory\.
2\.6 There were issues and problems in procurement, and the key issues
were too many red tapes and long period of procurement\. Due to the fact that
it was the very first time to use foreign funds, and the first year materials
and equipment procurement was lag behind the Project which had been substi-
tuted by materials of other projects, the procurement once could not meet the
demand of the construction\.
2\.7 Equipment Management\. All the equipment financed by the World Bank
had been well taken care of the machinery division of the Major Bridge Bureau,
which has a strong functioning department, Equipment imported was usually
technically sophisticated and very expensive, considering the technical capa-
bility and managerial level\.of the field contractors, centralized management
had been adopted\. The equipment was leased to contractors, replacing the
traditional use which had no charges\. A special Machinery Leasing Division
was set up under the Bureau and the major imported equipment was managed to
make sure the implementation of leasing system\.
2\.8 Completion of Infrastructure Works\. The Xing-He line was completed
on schedule by end-1986\. The Yellow River bridge was completed ahead of sche-
dule with rail to meet by end 1985 instead of end-1986\. The Heze-Yanzhou
upgrading was given lower priority and was completed two years later than the
original plan, in 1988 instead of 1986\.
2\.9 Construction Quality Evaluation\. The design of the Xing-He line was
done up to Class I trunk line standards\. The design and construction of the
whole line had been satisfactory\. The design and general layout of the Yellow
River Bridge and selection of location were well done too\. The MR nominated
the bridge as a first class good construction work\. The alignment and loca-
tion of stations and yards were well allocated with proper station facilities\.
2\.10 Major Factors in Project Implementation\. As one of the urgent pro-
jects, Xing-He line construction period was very short\. Although all the
parties concerned in the construction tried their best, there still had been
difficulties in provision of design document, conctruction general arrangement
and examination between parties A and B, etc\. Materials supply to the con-
struction of the He-Yan line was not always on time and once affected the
construction\. For instance, two months was delayed in construction of Yanchou
North and Taolu South connecting line due to delay of rail supply\.
2\.11 Economic Reevaluation\. The economic analysis of the three project
comopnents, furnished by MR tvo the Bank, was not acceptable due to the lack of
sufficient qualitative analysis to support its result (ERR)\. The Bank sent a
mission to Beijing on November 6-9, 1990 to discuss the issues\. Besides veri-
fying the input data and tht methodology used in the economic analysis, the
discussion focused, particularly, on the following two conceptsissues:
(i) current prices vs\. constant prices; and (ii) economic costs vs\. financial
costs\.
64
2\.12 Following the discussion, both parties (the mission and the Bor-
rower) agreed on the results pertaining to the ERR of each project comonent
presented in Part I, para\. 6\.5\.
2\.13 Evaluation on Borrowing Policy iid Work\. The priorities of the
World Bank lending policies to its member countries on medium and long term
are to strengthen infrastructure of energy and transportation so to help econ-
omy develop, which have been coincided with the requirement of China\. The
implementation of this project has demonstrated that the policies are feasi-
ble\. The way of collecting commitment charges, however, should be considered
to be further improved as more flexible\. For example, it may charge 15 per-
cent of the total undisbursed funds in the first year, and increase to 45 per-
cent, 85 percent, and 100 pervent II LtIe second and third and fourth years,
respectively, which would be more properly\.
2\.14 Staff sent by the World Bank in various missions including preap-
praisal, appraisal, and supervision and project completion assessment, etc\.,
have been proven very serious and hard working\. Some of the staff have been
working even regardless of their health\. This manner has been highly appreci-
ated\.
2\.15 The Bank staff have also put forward very justified suggestions
during the appraisal, which have helped improve the project\. For example, a
suggestion was made by the Bank staff that a station of meeting be set up on
the Yellow River Bridge which would elevate the annual design capacity from 17
to 22 mt\. This suggestion has been adopted in the project\. The Bank staff
also keep regular supervision visits, once or twice a year, which have been
demonstrated very helpful in maintaining construction schedule, bidding and
procurement, contract implementation, and management and disbursement, etc\.
B\. Datong-Taiyuan Line
2\.16 Purpose and Significance of the Project\. Starting from Pingwang
station at Datong terminal in the north and ending at Tonyuanbei marshalling
yard of Taiy%san terminal in the north, the then existing Datong-Taiyuan rail-
way was a single-track railway\. The total length of the railway upgraded by
electrification accounts for 329 km\.
17 natnng-Taiyuan railway is a principal railway main line in northern
Shanxi area and serves as one of the major routes for transporting coal from
Shanxi province\. During the Sixth and Seventh FYP, the railway traffic volume
was doubled and redoubled\.
2\.18 Coal deposits in Shanxi province occupy some one-third of the total
amount in the country\. The coal output in 1987 was 231 mt of which 137 mt ras
hauled out\. The completion of Datong-Taiyuan electrification has effectively
solved the problem of transporting coal from the northern part of Shanxi prov-
ince and supported the construction of the Datong-Quighuangdao line, Pingsu
open cut coal mine as well as the construction of local coal assembly stations
along the railway\. With the railway being electrified, it is possible to
operate heavy-haul unit trains, which has made a direct contribution to energy
supply industry badly needed in the development of the country's national
economy\. It\. addition, the railway also transports a large variety of other
materials\. Ever since the completion of the project, as a result of the
65
increased transport capacity, the goods exchange passages within the network
of Shanxi province\. Inner Mongolia, Beijing, Tianjin, and Hebei are widened\.
CARRYING CAPACITY
(mtpy)
Pingwan- Suxian Yuanping-
Suxian Yuanping Taiyuanbei
Before the project 9\.70 5\.20 7\.00
In 1985 with partial
project 35\.00 12\.00 19\.32
With project as of
1990 70\.00 14\.00 19\.00
2\.19 Principal Construction Items\. To meet the needs of traffic volume
increase and to improve the section carrying capacity, 172\.6 km of the line
was double-tracked; 38 stations were extended from 650 m to 850 m\. 1,050 m,
and some to 1,700 m; steam traction wac replaced by electric traction; signal-
ing and communications were improved; the Hanjialing station was improved; and
the Daxing division station was built between Shentou and Suxian\.
2\.20 Important Design Alteration\. The upgrading of the Datong-Taiyuan
line was totally revised when it was decided to increase the design capacity
of the Datong-Qinghuangdao line from 60 mtpy to 100 mtpy\. The Hanjialing
station was built 1\.5 km south of the designed one\. Some stations were
tz 1,050 M insteA0 of A90 m and four stations were extended to
1,700 m to accommodate 10\.000 ton unit trains\. The signaling system was
changed from semi-automatic to automatic with 10-minute train intervals\. The
power supply for the electrified railway and various other related equipments
were also upgraded accordingly\.
2\.2i Between Suxian and Yuanping, copper vira waR used for the catenary\.
And between Yuanping and Tonyuanbei, two additional sections totaling 9\.6 km
were double-tracked\.
2\.22 These design alterations resulted in a higher cost\. compared with
the original estimates\. The implementation period was also extended from end-
1987 to end-1990\. During this period, materials, and labor costs increased
sharply in China\. which contributed to the overall cost increase\.
2\.23 Procurement\. Since operation, all the imported equipment have been
highly appreciated by operators for their good performance, high reliability
and easy maintenance\. The outdoor electric isolating switches made in Japan
and the indoor electric isolating switches made in West Germany are particu-
larly welcomed for being small in size, nice in appearance, and smooth and
easy in operation\. At present, technology transfer in this field is underway
in China\. In the near future\. China will see a production of high quality
66
switches\. Like electric switches, other modern equipment imported for the
project will also contribute to a further development of electric products in
China\. Failures have never occurred on the vacuum circuit breakers imported
from Japan\.
2\.24 Appraisal of the Redesigned Project\. The project actually imple-
mented is much taore comprehensive than planned\.
2\.25 Pingwang-Shouxian Section\. The hauling tonnage is raised from
1,500 tons to 3,500 tons\. The Huairen station is 1\.700 m long and has capac-
ity to handle 7,000-ton trains which run to Datong and then directly to
Qinghuangdao\. The actual traffic carried was increased form 5\.47 mtpy in 1984
to 18\.18 mtpy in 1988\. In these four years, 28\.6 mt more of coal were car-
ried\. As a result, not only the demand of traffic has been met, but also
great economic benefits have been gained\.
2\.26 Yuanping-Taiyuanbei Section\. The hauling tonnage is raised from
1,500 tons to 3,500 tons\. Extension of sidings from 650 m to 850 m started at
seven stations in 1984\. Capacity was increased by doubling some sections and
constructing some more stations\. The actual traffic increased from 8\.66 mtpy
in 1984 to 12\.8 mtpy in 1988\. In these four years, 12\.42 mt more of coal was
carried\.
2\.27 Shouxian-Yuanping Section\. The Duanjialing Tunnel (3,532 m long)
was doubled and a new station was built\. Actual traffic carried increased
from 4\.01 mtpy in 1984 to 8\.05 mtpy in 1988\. In these four years, about 10 mt
more coal was carried\.
2\.28 After the line was completely electrified and opened to traffic in
1988, the actual traffic has exceeded the designed figures\.
2\.29 Reasons for Higher Costs
(a) higher cost for land acquisition (more land) and demolition and
remodel;
(b) more earth/stone work with the new design;
(c) bridges and tunnels: a new double-track bridge (not planned) has
been built and additional work was done to remove defects in tun-
nels;
(d) because of the higher traffic, 43 kg/m rails were replaced by
50 kg/m rails;
(e) because of upgraded signaling, a 10 kV power line and a main power
transformer have been added;
(f) the signaling system was upgraded to automatic, with 10-minute
intervals; and
(g) electrification: copper catenary was used on the middle section\.
67
Other additional expenses were incurred for buildings, temporary works, and
immunization\. The power supply had to be increased\.
2\.30 Economic Reevaluation\. Please see Part II, paras\. 2\.11 and 2\.12\.
2\.31 Appraisal of the Loan Policy and the Work of the World Bank\. All
the visiting experts from the World Bank are very much appreciated for their
conscientious attitude and high working efficiency in preappraisals\. apprais-
als, intermediate inspections and postappraisals after the completion of the
project\. During appraisal, experts proposed many valuable suggestions for
improvements\. For example, 118 electric locomotives were previously planned
to be imported for this project, which might cost about $110 illion\. After
site investigations, experts from World Bank proposed some investments in the
modernization of a locomotive plant in China\. The suggestion has been
accepted through careful studies\. Experts of World Bank came once or twice
each year to inspect the progress of project, tendering and procurement per-
formance of the contracts, control of the contracts, and payment of loans\. We
are all very appreciated to their great and valuable contributions\.
C\. Zhuzhou Electric Locomotive Factory
2\.32 Objective of the Loan Project\. To improve product quality, save
energy and raw material consumption, and increase annual output of electric
lucomotives from 40 sets to 120 sets by 1987\.
2\.33 Project Construction Period and Executive Situation\. According to
the World Bank preestimated report, ZELF should basically finish modernization
engineering in 1986 and install the mechanical equipments in 1987\. But in
comparison with the report, execution was del2yed about two years\. The main
reasons are as follows:
(a) We have not arranged the bidding and contract negotiations on sche-
dule\.
(b) Domestic railway transport for the contracted goods took a long
time, because the dimension of some packages have exceeded the limi-
tation of railway transport\.
%c) Some manufacturers have not ser\. their experts in time, therefojre\.
some equipments had to wait a long time for installation\.
(d) We had to wait up to five years before obtaining an export license
from the US Government\.
2\.34 Project Costs\. The World Bani appraisal considered only the first
phase of the factory modernization, witb L\.e target of 120 locomotives by 1987
at a total cost of Y 32\.574 million\. It reality, the first and second phases
were combined, and the factory achieved 174 sets in 1987 at a total cost of
Y 167\.557\. The production was 100 units in 1985, so it was 74 percent higher
in 1989\. But in terms of tractive power produced, it was 82 percent higher
because more recent types are more powerful\. The SS1 type produced at
appraisal had 3,900 kW, the SS4 type produced now has 6,400 kW\.
68
2\.35 Training\. The appraisal report estimated that 45 staff wouAd go
abroad for training, about six months each\. We have sent our staff abroad far
shorter periods, but 86 trainees participated in the program\. We also
received 146 foreign experts and engineersfor equipment installation and
commissioning, much more than estimated earlier\.
2\.36 Results of the Project\. The project was very beneficial, much more
than the figures of increased production would indicate\. The equipment
imported from foreign countries enabled the factory to increase the level of
technology of the locomotives produced\. Without the World Bank equipment and
related training, the factory could not produce the types 8K and SS6\.
2\.37 Under international tendering financed by Japan, the factory won a
contract for 50 SS6 locomotives, at a total price $40 million lower than the
price of the next bidder\. This would not have been possible without the World
Bank project\. The Ministry of Railways is, thus, saving about twice the
amount invested by the World Bank\. This is a very substantial benefit\.
2\.38 Economic Reevaluation\. Please see Part II, paras\. 2\.11 and 2\.12\.
69
PART III: STATISTICAL INFORMATION
Table 1: PROJECT TIMETABLE
Executive Project Summary no record
Appraisal Mission 03-18-83
Loan/Credit Negotiations 02-13-84
Board Approval 03-27-84
Loan/Credit Signing 04-13-84
Loan/Credit Effectiveness 07-10-84
Planned Closing Date 12-31-90
Actual Closing Date 12-3\.1-90
Flanned Date of Project Completion 06-30-90
Actual Date of Project Completion 06-30-90
Table 2: CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS
($ million)
FY85 FY86 FY87 FY88 FY89 FY90 FY91
Estimated 45\.0 170\.0 220\.0
Actual 73\.3 135\.7 169\.2 179\.3 204\.3 211\.9 220\.0
Actual/Estimated (2) 162\.9 79\.8 76\.1 NA NA NA NA
Table 3: PROJECT IMPLEMENTATION
Appraisal
Indicators Estimate Actual
Borrower Good Good
Executing Agency Good Good
Institutional Performance
Burrower Good Good
Executing Agency Good Slow
Procurement
Completion of construction/upgrading
of the track sections 1986 1986
Electrification of the Datong-
Taiyuan line 1987 1989
The Zhuzhou factory modernization plan 1986 See para\.
5\.4
Machine tools installed 1987 1990
70
Table 4: PROJECT COSTS AND FINAVJING
A\. rovect Cost
Appraisal Estimate PCR Actuals
Items Yuan $ Yuan $
---------- million ------------------
Xiuxiang-Yaazhou 851\.9 425\.9 1,263\.4 451\.2
Datong-Talyuan 329\.4 164\.8 826\.9 295\.3
Zltuzsiou Factory 85\.5 42\.7 167\.6 59\.9
Base Cost (March 1994) 1,266\.9 633\.4 2,257\.9 806\.4
Physical Contingencies 65\.2 32\.6 - -
Price Contingencies 52\.4 26\.2 - -
Total Project Cost 1,384\.5 692\.2 2,257\.9 806\.4
Front-end Fee 1\.1 0\.5 1\.1 0\.4
Finance Charge on use of
Foreign Capital 200\.8 100\.4 200\.8 71\.7
Total Financing Required 1,586\.3 793\.1 2,459\.8 878\.5
B\. Project Financing
Source Planned Final
-------------$ thousand---------
IBRV/ ID\.A\.
Equipment/Haterials 201,331\.0 219,087\.4
Consultants Services 400\.0 0\.0
overseas Training 700\.0 162\.8
Special Account 200\.0 200\.8
Fee 549\.0 549\.0
Unallocated 16,820\.0 0\.0
Total 220\.000\.0 220,000\.0
No Cofinancing involved\.
71
Table 5: PROJECT RESULTS
(Indicators on project arbievements estimated and actual, and comments on
factors affecting project results\.) -
A\. Direct Benefits
Indicators Appraisal Estimates Estimated Actual
(at full develop\.)
165km track between 1986 Completed on tar-
Xinxiang and leze, get\.
including 10-km bridge
over Yellow River; and
upgrading of 140 km
Heze-Yanzhuu section
DaLong-Taiyuan Line to 1986 capacity
haul trains of up to increased
10\.000 net tons\. The to 100
target capacity was mtpy\.
60 mtpy Experienced
delays in
completion
Datong-Taiyuan Line 1987 successfully
- electrification of 355 km completed
Zhuzhou Electric Locomotive achieved
Factory to increase production above
to ZOU units per year 1986 target
Machine Tools to boost 9Ome
locomotivi productions from as
60 1983 to 120 in 1986 1986 above
R\. Economic Impacts (ERR)
SAR Best Estimate PCR
Xinxiang-Heze Line 17Z 17?
Datong-Taiyuan Line 19? 19?
Zhuzhuu Locomotive Factory 892 82?
Underlying Assumptions
Project Life
Full Development
72
C\. Financial Impact
R: 1983 1984 1985 1986 1987
Working Ratios (Z)
Appraisal forecast 54 49 49 50 51
Actual 51 47 53 54 56
Operating Ratios (Z)
Appraisal forecast 69 62 64 65 66
Actual 67 61 67 67 70
ZIIUZHOU LOCOMOTIVE:
Working Ratios (Z)
Appraisal forecast 69 70 68 63 63
Actual 69 68 73 75 76
Operating Ratios (Q)
Appraisal furecast 76 77 76 71 71
Actual 74 75 78 80 81
0e
73
Table 5\.C1
aible D\.Ce: INC~M STAT~4' POR MNSTRY OP RAILWAY, 192\.87
(in mil l ion curronf jumn)
193 1904 1985 1986 1987
A\. Actuel Aspo\. Actual Apor\. Actuei Asp\. Actu* Aoor\. Ac\.ual
VO~ME (9ILLIM)
FREIT (TonKm) 633 663 649 724 66 809 63 870 705 936
PA58~f (P\.M) 168 177 176 203 164 241 192 258 200 283
TOTAL (C\.TonKM> 801 840 825 927 850 1\.050 675 1\.128 905 1\.219
FREICw 9\.201 10\.017 10\.903 13,215 11\.189 15\.773 11\.474 17\.707 11\.84 19,186
PASSEWC 2\.890 3,156 3,027 3\.663 3\.166 4,545 ,3ar2 4,999 3\.440 5\.563
0T 637 720 656 a71 s75 1\.072 696 1\.205 716 1\.463
CROSS REVEJES 12\.728 13\.693 14,586 17\.749 15,029 21\.390 15\.472 23\.911 16\.000 26\.212
LUSS MUS\. TAX 1\.909 2\.04 2\.188 2\.662 2\.254 3\.368 2\.321 1\.215 2\.400 1\.389
TOTAL REV\. AFPT TAX 10\.819 11\.809 12\.398 15,087 12\.775 19,022 13\.151 22\.146 23\.500 24\.923
OPERATINC EXP4SUES(Mi II \. Yuan)
PAYROLL 1\.166 1\.177 1\.201 1\.291 1\.237 1\.571 1\.273 2\.582 1,317 2\.897
MATERIALS 945 925 974 1\.067 1\.003 1\.361 1\.032 1\.553 1\.068 1\.620
ENEROY 1\.169 1\.469 1\.205 1\.781 1\.241 2\.14 1,277 2\.290 1,321 2\.644
ELECTRICAL 146 161 177 239 195 306 215 3t9
POOV POR MAJ\.REPARS 1,916 1\.670 2\.000 2\.159 2\.140 2\.510 2\.268 2\.993 2\.440 3\.314
0TNERS \. &58 589 481 721 505 1\.946 530 2\.437 556 2\.912
TOT\. WORKINO EXPUENS 5,600 6\.030 6,022 7\.019 6\.303 9,641 6\.595 12\.161 6\.917 13\.976
OEPRECIATION 1\.642 1\.669 1\.714 2\.9 1 1\.635 2\.510 1\.962 2\.993 2\.091 3\.314
TOT\. OPERAT EXPENSS 7\.442 7\.899 7\.736 9\.178 8\.138 12\.151 8\.557 15\.154 9\.00 17\.290
NET OPERATINO REVOJE 3\.377 3,910 4\.662 5,909 4\.637 5\.871 4\.594 7\.492 4\.592 7\.533
REV\.SUB/cACTRS\. (383) (424) (400) (506) (420) 525 (430) 849 (450) 199
NET REVeWES 2\.994 3\.486 4\.262 5\.403 4,217 6\.396 4\.164 8\.341 4\.142 8\.532
OEET SERVICE
INT 4 REPAÂ¥\. 992
REVEIJE OEFORE TAX 2\.994 3\.486 4\.262 5\.403 4,217 6\.396 4\.164 8\.341 4\.142 7,540
INCOME TAX 1\.646 1\.917 2\.344 2\.971 2\.319 3\.817 2\.290 2\.278
TRANSPERS TO COVT\. 746 750 1\.065 765 1\.054 1\.200 1\.041 1\.036
REV\.AFTER TAX 4 TRANSPS 600 819 853 1\.667 844 1\.679 83 8\.341 828 7\.540
OP WHICH:
CAP CONSTR\. RDS 600 852 643 633 7,368 828 6\.121
SPECIAL RO 619 1,667 1\.679 973 1\.419
WORKING RATIO 54 51 49 4' 49 s3 50 54 51 56
OPffATINO RATIO 69 87 62 et 64 67 85 67 66 70
ss 9NCL10E NM OPERATDO EXPS6E, P490N PAYmelTS, STATISO N0 TRALN 5EuITY\.
Sourcu: 1R\.
Mgy 1990
74
Table 5\.C2
Table S\.C2: CONSOLIDATED INCOME STATEMENT FOR Z4UZHOU LOCAMOTIVE
FACTORY FOR 1982-87
(in Y'000)
1982 1983 1984 1985 198 1987
Net Sales After Tax
- Locomotive Production 40,246 67,900 90,405 122,371 140,809 188,838
- Overhauls A Major Repairs 8,703 9,975 4,276 4,047 3,322 1,694
- Work for Third Parties 11,474 16,797 13,718 15,594 19,649 27,813
Total 60\.423 94,672 0 142\.012 163\.760 198\.345
Working Cost (Loco\. prod\. * over-
hauls * Third Parties) 42,913 84,816 74,112 108,858 122,281 151,218
Depreciation (Loco\. prod\. * over-
hauls + Third Parties) 6,146 6,421 6,740 7,044 8,391 8,587
Operating Cost (Loco\. prod\. + over-
hauls + Third Parties 48,059 70,237 80,852 110,902 130,652 159,800
Net Operating Revenue 12,364 24,436 27,644 31,110 33,128 88,545
Net Non-0oerating Revenues
(Fjrenses) (1,899) (2,471) (2,400) (3,544) (3,418) 8,277;
Interest Charges on Short-Term
Local Loans (120) (579) (1,072) (1,445) (2,199) (2,462)
Net Profit Before Tax 10,346 21,386 24,072 26,121 77,511 30,606
Income Tax (552) NIL (11,762) (13,650) (18,364) NIL NIL
Profit After Tax 10,346 9,623 10,522 9,767 27,511 30,806
Profit Transferred to the State (7,936) (6,434) (4,338) (462) (17,479) (19,020)
Factories Share of Profit 2,409 4,189 6,184 9,316 10,032 11,780
Working Ratio (%) 71 69 8 73 75 76
Operating Ratio (%) 80 74 75 78 80 81
Average Net Fixed Assets (ANFA)
in Use 51,707 63,69 55,707 568,936 63,124 71,033
Return on ANFA In Use (N) 24 46 49 65 63 64
Appra'tal Target of Return on ANFA
in so - 3 28 31 27
Source: MR and SAR\.
Date: June 19\. 1990
Table 5\. C3
Table \.4Ca: ACTUAL PROFIT AND COST STATEMENTS FOR FOUR SUBADMINISTRATIONS
(Y million)
V?2 e14 1985 1986 1987
Taiyuan-Subadministration
Revenues 112\.88 184\.49 219\.23 249\.36 276\.11 848\.66
Operating Costs 6\.23 110\.28 131\.23 148\.33 177\.30 200\.44
Net Operating Revenues 46\.60 74\.21 89\.00 101\.02 98\.81 146\.12
Profit After Tax, incl\.
subsidiaries 27\.07 39\.38 48\.21 56\.66 48\.41 107\.3
Operating Ratio (S) 69 60 60 59 64 \.8
CTk 10,000 839,600 887,497 1,048,120 1,16,467 1,2S4,180 1,335,748
Unit Cost (Y) 78\.89 124\.26 125\.57 127\.14 141\.37 150\.06
Rate of Return (5) 2\.2 2\.5 2\.9 8\.3 2\.5 6\.6
Datong Subadminstration
Revenues 108\.43 136\.80 143\.2 186\.43 212\.37 288\.74
Operating Costs 68\.78 73\.48 79\.48 98\.53 121\.80 168\.06
Net Operating Revenues 51\.86 62\.32 63\.72 67\.90 90\.67 133\.68
Profit After Tax incl\.
Subsidiaries 48\.49 38\.65 42\.04 42\.30 61\.63 114\.841
Operating Ratio (1) 62 54 66 69 67 68
CTK 10,000 1,136,083 1,246,326 1,336,665 1,610,283 1,723,177 1,871,994
Unit Cost (Y) 49\.98 58\.98 69\.80 66\.26 70\.88 81\.76
Rate of Return (3) 10\.3 8\.0 7\.6 6\.2 8\.0 18\.3
Jinan Subadministration
Revenues 273\.7 312\.9 343\.5 390\.8 608\.9 680\.7
Operating Costs 173\.2 193\.9 212\.6 231\.3 314\.6 387\.7
Net Operating Revenues 100\.6 119\.0 130\.9 169\.5 194\.3 213\.3
Profit After Tax Inel\.
Subsidiaries 67\.0 84\.6 71\.7 95\.1 106\.7 169\.3
Operating Ratio (X) 63\.2 61\.9 61\.9 69\.2 81\.8 68\.3
CTK 10,000 2,061,766 2,267,516 2,474,886 2,774,908 3,244,666 3,573,649
Unit Cost (Y) 84\.04 85\.91 86\.89 88\.35 96\.95 102\.93
Rate of Return (X) 0\.57 0\.61 0\.44 0\.67 0\.58 0\.85
Xin Xianq Subadministration
Revenues 206\.8 167\.5 172\.5 212\.8 323\.9 La
Operating Costs 122\.6 86\.3 97\.1 121\.6 216\.6
-*u nn\.stinn Revenues 83\.3 71\.2 76\.4 91\.3 108\.3
Profit After Tax Incl\.
Subsidiaries 47\.9 44\.7 45\.1 66\.2 84\.7
Operating Ratio (X) 60 55 56 57 67
CTK 10,000 1,473,873 1,547,936 1,669,921 1,982,168 2,174,168
Unit Cost (Y) 83\.11 65\.75 58\.80 61\.3 99\.16
Rate of Return (X) 7\.7 6\.9 6\.7 8\.6 12\.4
La Merged into Zhengahou Subadministralon In 1987\.
Source: MR\.
Date: June 18, 1990
1982 1983 1984 1985 196 1987
---------------Profit per CTK 10,000 (Y)----------------
Talyuan 82\.25 44\.87 46\.13 48\.67 37\.00 80\.20
Detong 42\.68 31\.01 31\.45 28\.01 36\.77 81\.38
Jinan 27\.85 28\.62 28\.97 34\.27 32\.88 47\.87
XIn Xiang 32\.50 28\.88 27\.17 29\.36 38\.98 La
La Merged iA Zhengzhou Subadminttration\.
Sources MR\.
Dates June 18, 1990
76
Table 6: STATUS OF LOAN COVENANTS
Covenant Subject Deadline Status
Section 4\.01(b)/a The Borrower shall cause As required Complied but
MR: (i) to have the needs improve-
accounts and financial ments\.
statements of the Project
Subunits for each fiscal
year audited, in accord-
ance with appropriate
auditing principles con-
sistently applied by inde-
pendent auditors accepta-
ble to the Bank;
(ii) furnish the Bank (a) No later Complied
certified copies of such than six
financial statements for months of
such year as so audited; that fiscal
and (b) the report of such year\.
audit by said auditors\.
of such scope and in such
detail as the Bank shall
have reasonably requested\.
(iii) furnish the Bank As requested Complied
such other information
concerning the accounts
and financial statements
of the Project Subunits
and the audit thereof as
the Bank shall from time
to time reasonably request\.
Section 4\.04 Consult with Bank on rail- By July 1 of Consultations
way finances and financial each year have occurred
performance and procedures\. during super-
vision mi44iof\.
Section 4\.05 Carry out a study of As required Phase I comple-
Railway Costing\. ted\. Phase II
ongoing under
Railway III proj-
ect\.
a The original audit clause in Section 4\.02 of LA was amended to limit the
audit report to only operations and resources and expenditures of the
project subunits in respect of the project including Special Account and
SOEs\.
77
Table 7: USE OF BANK RESOURCES
Number of Staffweeks -
Identification through Board Presentation - 169\.10
Number of Staffweek,
Board Approval through Effectiveness - no record
Number of Staffweeks
Supervision - 71\.40
Date of No\. of Total Date of
Mission Persons No\. of Staffweeks Report
06107/82 1 1 no record
07/01/82 2 6 08/04182
10/03/82 5 15 11/29/82
03/21/83 6 18 04/20/83
06/27/83 9 36 Draft YC SAR
prepared
07/12/83 1 2 08/23/83
10/13/84 7 21 no record
10/13/85 3 12 12/30/85
10/19/87 1 3 11/06/87
03/21/88 2 1 03/25/88
05/08/89 2 1 05/17/89
05/15/90 3 8 To be prepared
June 4, 1990
78
CHINA
PROJECT COMPLETION REPORT
RAILWAY I PROJECT (LOAN 2394-CHA)
PART I ECONOMIC PERFORMANCE
1 The economic analysis presented in this report is based on a reeval-
uation of data on traffic, operational performance, economic cost, and project
benefits at each project components since the SAR estimates were made\. The
methodology used in the economic analysis for the PCR is similar to that used
in the SAR and is summarized below\. Briefly:
(a) all capital investments and coal mine development costs have been
revised to 1990 prices and included in the costs stream;
(b) the benefit stream, also in 1990 prices, is mainly the value added
to the additional amount of coal produced and transported in the
railway system and import cost savings for locomotives;
(c) a project life of 25 years has been assumed for all railway con-
struction facilities\. For the Zhuzhou locomotive factory, the proj-
ect life is assumed to be 15 years to reflect the average economic
life of locomotives\.
2 There was a substantial revision in the design of this Datong-
Taiyuan railway line after loan negotiation which resulted in the delay of the
construction as well as the cost overrun\. This factor is taken into consider-
ation in the economic analysis for this PCR\.
3 After reassessing these revised data, the overall reevaluated eco-
nomic rates of return (ERR) for the two railway lines turned out to be the
same as the SAR estimates (17 percent and 19 percent respectively); and a
slightly lower ERR on locomotive factory facilities (82 percent vs\. 89 per-
cent)\.
4 Looking at the three railway components together, there are four
major factors which positively influence the ERR: (a) the lower estimate of
coal mine development cost; (b) increase in traffic capacity on Datong-Taiyuan
line; (c) increase in traffic on Xinxiang-Yanzhou line; and (d) the locomotive
factory had been put into operation one\.year ahead of time\. On the other
hand, these factors were offset by the negative effects of (a) increase in
economic capital cost; (b) the major delay in the project completion of the
Datong-Taiyuan line; (c) a substantial reduction of net coal value-added (more
than 41 percent) resulting from a 38\.3 percent drop of coal price in real
terms; and (d) increase in manufacturing cost and maintenance cost for locomo-
tives\. Detailed analyses are presented in Annexes 1\. 2, and 3\.
5 A comparision of the economic impact of the project, between the PCR
and the SAR, for each major project components in terms of the economic rate
of return, sensitivity analysis and not present value (NPV) is given below:
79
ÃCM~IC ~9 Cf
(S IN 1\. WW in mill ion Yun *t 12%)
E NP NPV mR NV Uf NP kl
\.Se astia\. 17 g\. 1? 1\.894 19 n\. 19 4\.s$8 8e i,\. 82 sel
Projctc inv\.*t\.ent M20\. 16 øn\. 1o 1\.59? 19 \.a\. \.832
Coi min* devaeoeøt \.201 n 9\. 15 1\.457 17 R\. 4\.287
-20 19 \. e 1 2\.330 22 "\.a\. 19 5\.026
Pjact bonefit
cilyed I res, 15 Mn\. 1S 1,164 17 n\.9\. le 3\.222
Delued 2 yeors L& n\.a\. 13 S13 15 n\.*\. 14 1\.943
Co*, grice -101 15 n a\. 13 473 le n\.&\. 15 1\.758
-20 12 n\.&\. 9 -896 14 f\.i\. 10 -1\.048
80 ANNEX 1
Page 1
CHINA
PROJECT COMPLETION REPORT
RAILWAY PROJECT (Loan 2394-CHA)
Economic Analysis
Xinxianq-Yanzhou Railway Line
Project Capital Costs
1\. All the capital costs have been revised to 1990 prices for both the
PCR's and the SAR's figures\.
2\. The development of a conversion factor for the PCR's project capital
costs is shown in Table 1\. The resultant conversion factor for this project
component is 1\.38 (it was 1\.00 in the SAR)\.
Table 1: CALCULATION OF PRICE CONVERSION FACTOR FOR PROJECT CAPITAL COSTS
(in million Yuan)
Financial
Local Foreign Conversion Economic
Amount x mount Tota I factor /a Loca I Total
Land 134\.86 12\.8 134\.06 1\.00 134\.86 134\.90
Labor:
UnskIIled 75\.80 7\.2 75\.80 0\.64 48\.51 48\.50
Semiskilled/Technician 74\.84 7\.1 74\.84 1\.61 113\.01 113\.00
Supervisor 52\.58 6\.0 52\.68 2\.00 105\.16 106\.20
Materials:
Steel 31\.28 8\.0 118\.07 55\.8 149\.3 2\.19 68\.50 186\.60
Timber 13\.76 1\.3 12\.26 6\.8 26\.01 0\.93 12\.79 26\.00
Cement 27\.25 2\.6 25\.90 12\.8 53\.16 3\.53 96\.19 122\.10
Others 118\.40 11\.1 0\.71 0\.3 117\.12 2\.00 232\.82 233\.50
Fuel:
Diesel 7\.89 0\.7 7\.89 1\.13 8\.92 8\.90
Gas 10\.96 1\.0 10\.95 1\.56 16\.97 17\.00
Others 6\.57 0\.8 6\.67 1\.00 6\.57 6\.60
Electricity 26\.83 2\.6 26\.83 5\.00 133\.16 133\.20
Construction 144\.70 13\.8 144\.70 1\.30 188\.11 188\.10
Mechanical equipment 137\.68 17\.6 64\.48 25\.6 242\.16 1\.40 262\.75 317\.20
Others 140\.82 13\.4 140\.62 0\.70 96\.57 98\.60
Total 1,0200 U\.0 211\.40 100\.0 1,283\.40 1,526\.90 1,738\.30
Overall conversion factor 1\.38
/a Memo\. *Financial and Economic Prices" from Mr\. Shahid Yusuf, Lead Economist, AS3CO, July 12\.
1990; Economic Prices for Project Evaluation in China, AS3CO, June 1988; and the mission
estimates\.
3\. Comparing the PCR's economic project capital costs with the SAR's\.
in 1990 price level, the cost of the former is 72\.5 percent higher than the
latter\. The details in Table 3\.1(a) are summarized as follows:
81
ANNEX 1
Page 2
Table 2: ECONOMIC PROJECT CAPITAL :OST
(1990 prices\. Y million)
SAR PCR
1983 194\.0 275\.0
1984 970\.1 651\.9
1985 351\.3 768\.4
1986 517\.3
1987 285\.2
1988 116\.9
Total 1\.515\.5 2\.614\.7
Change in Z +72\.51
Other Canital\. Costs
4\. This railway development is part of a whole coal production and dis-
tribution system\. Therefore all coal-related capital costs should be consid-
ered within the cost stream\. These are summarized as follows:
(a) Coal Mine Develooment Costs\. The economic cost is calculated at
Y 207\.5/ton/year, on the basis of estimates of development costs
used in the latest Inner Mongolia Local Railway project (April 1989)
and revised to 1990 prices\. The corresponding figure used in the
SAR was Y 349\.6/ton/year (at 1990 prices) or 68\.5 percent more than
the PCR estimate\. fhis difference is mainly due to the "high sideo
estimate as it was described in the SAR\. Coal mine development, the
same as the SAR\. is assumed to take five years with the following
annual distribution of investments in percent of total cost: 10,
15\. 30, 30, and 15\. As a result, the total coal mine development
cost in the PCR is 15\.5 percent lowet Liha Lh 'A': c:timite\. The
details in Table 3\.2(a) are summarized as follows:
82
ANNEX 1
Page 3
Table 3: COAL TRAFFIC AND COAL MINE DEVELOPMENT COSTS
Traffic (million tons) lb
Change Mine Development Costs (million Yuan)
SAR PCR /a in Z SAR PCR
1981 139\.8 81\.6
1982 234\.2 207\.9
1983 484\.2 458\.7
1984 562\.8 638\.6
1985 440\.5 649\.0
1986 7\.0 3\.93 -43\.9 290\.2 445\.9
1987 7\.7 8\.06 4\.6 316\.4 241\.0
1988 8\.5 12\.18 43\.8 351\.3 203\.3
1989 9\.3 12\.60 35\.2 389\.8 313\.3
1990 10\.2 12\.00 17\.1 424\.7 340\.3
1991 11\.3 13\.67 21\.2 409\.0 323\.7
1992 12\.4 15\.33 23\.6 367\.1 229\.3
1993 13\.6 17\.00 24\.6 230\.7 115\.2
1994 15\.0 19\.60 30\.6 78\.7 46\.7
1995 16\.5 18\.70 13\.3 - 46\.7
1996 16\.5 19\.00 15\.2 - 28\.0
1997 16\.5 19\.30 17\.0 - 9\.3
1998 16\.5 19\.60 18\.8 - *
Total 4\.719\.4 4\.378\.5
Change in Z -7\.2Z
/a Actual = 1986-89; forecast after 1990\.
/b In 1990 prices\.
The total coal mine development cost in the PCR is 7\.2 percent less
than the cost estimated in the SAR\. This cost differential in coal
mine development costs does not have a great impact on the economic
rate of return (ERR) because, based on the sensitivity analysis, a
20 percent increase in the coal development costs could only down-
size the ERR by about 2 percent\.
(b) Yanzhou-Shijiusuo Line and Shijiusuo Port\. All the economic costs
of these two costs streams have been converted from 1983 price level
to 1990 price level\. The details in Table 3\.1(a) are summarized as
follows:
83
ANNEX 1
Page 4
Table 4: ECONOMIC COSTS FOR OTHER RAILWAY AND SHIJIUSUO PORT
million Yuan)
Yanzhou - ShiJiusuo Shiiusuo Port
1983 1990 1983 1990
prices prices prices prices
1981 30 '2\.4 24 42\.0
1982 45 78\.7 36 62\.9
1983 90 157\.3 72 125\.9
1984 90 157\.3 72 125\.9
1985 45 78\.7 36 62\.9
Total 300 524\.4 240 419\.5
Project Benefits
5\. Traffic\. The annual actual traffic performance, except for the
first year (1986), were better than the SAR's forecast\. The maximum capacity
of the railway line is estimated at 18\.8 percent higher than the original
forecasts (19\.6 Mt vs\. 16\.5 Mt)\. Except for 1990 and 1995, the traffic is
estimated to grow steadily and reach its maximum capacity in 1994 anc 1998\.
The reasons for this decline is the traffic after those two years are (a) the
rippling effect of rapid financial policy adopted by the State in early 1989
for better control of domestic inflation has caused the lower traffic demand
in 1990; and (b) the expected decline in traffic demand of this railway line
rn 1A\.7 M! in 1995 due to the comaletion of Beijing-Jiujiang railway line in
that year (para\. 4\. Table 3)\.
6\. Coal Value-Added\. Most of the coal traffic to the port, estimated
at about 80 percent, are delivered to the domestic users, especially to power
plants located along the southeast coast\. The volume of Chinese coal exports
h: been under 20-3r million tons in the past several years, or less than 2-3
percent of its total annual production, which now has exceeded one billion
tons per year\. A significant increase in this volume of coal exports from the
present level is likely to depress the international prices of coal\. Coal
(especially steam coal), therefore, is not consideced to be a traded good for
China\. However, given the severity of the energy shortage in the country, the
economic contribution of coal is considered to be greater within the domestic
economy than as an export to the international coal market\. The economic
benefit of the increase in coal traffic as a result of this project is, there-
fore, conservatively measured in terms of its international border price\. A
complete new set of coal value-added calculations has been established in this
PCR in comparison with the SAR's estimates\. Based on the latest available
data, the international price of coal is estimated at $42\.0/ton, a drop of
38\.3 percent compared with the estimate of $68\.1/ton in the SAR at 1990 con-
stant price level\. The cost of coal (inclusive of production, transportation
and real/sea transfer costs) has also been decreased by 35\.3 percent to
$23\.1/ton (the PCR) from $35\.7/ton (thR SAR)\. Net coal value-added for the
84
ANNEX 1
Page 4
railway is estimated to have an overall decrease of 41\.7 percent to $18\.9/ton
(the PCR) in comparison with $32\.4/ton (the SAR)\. The detailed calculation of
inputs and sources of data are summarized below\.
Table 5: COAL VALUE ADDED ($/ton)
SAR PCR
1983 1990 1990 Percentage
prices prices prices change
Coal price /a 49\.0 68\.1 47\.0 -38\.3
Costs
Production /b 15\.0 21\.8 17\.8 -18\.3
Transport /c 3\.0 5\.2 4\.1 -21\.2
Rail/sea transfer 5\.0 8\.7 1\.2/d -86\.2
Subtotal costs 23\.0 35\.7 23\.1 -35\.3
Net coal value added: S/ton 26\.0 32\.4 18\.9 -41\.7
Y/ton 98\.8
!a (1) SAR - From $68\.1/ton in 1986 to $81\.2/ton in 1995 and increasing at
1 percent pe: annum thereafter (in 1990 price)\.
(2) PCR - "Revision of Commodity Price Forecasts and Quarterly Review of
Commodity Markets--December 1989," Ron Duncan, Chief, IECCM, Janu-
ary 26, 1990, pp\. 6-8; and apply this price until 2000, increasing at
1 percent per annum thereafter\.
/b PCR - Qinhuangdao LRMC of Datong Coal; China--Coal Pricing Study, AS3,
February 16, 1989, p\. 41\.
/c Destination - Shijiusuo Port\.
(1) SAR - 800 km x 0\.8 fen/tkm - Y 6\.4/ton; or about $3\.0/ton\.
(2) PCR - 693\.5 km x 3\.LO fen/tkm - Y 21\.5/ton, or about $4\.1/ton and
where: 3\.10 fen/tkm (economic)\. 1\.82 fen/tkm (financial) x 1\.7 (eco-
nomic conversion factor)\. (Source: same as b\. pp\. 83-84\.)
/d Source: same as /b, p\. 84\.
Economic Rate of Leturn (ERR) and Sensitivity Analysis
7\. Based on all the inputs stated above, the detailed reevaluated ERR
and sensitivity analysis of this railway line is shown on Table 3\.3(a) and
summarized as follows:
85
ANNEX 1
- Page 6
Reevalua ted
ERR in Z
Best estimate 17
Project investment +ZOZ 16
Coal mine development +20Z 15
-zoz 18
Project benefits:
Delayed 1 year 15
Delayed 2 years 13
Coal price -10Z 13
-20 9
86 ANNEX 2
Page 1
CHINA
PROJECT COMPLETION REPORT
RAILWAY PROJECT (Loan 2394-CHA)
Economic Analysis
Datona-Taiyuan Railway Line
Project Capital Cost
1\. The calculation of the conversion factor for this railway's capital
cost is shown on Table 1\. The resultant conversion factor is 1\.19 (it was
1\.00 in the SAR)\.
Table 1: CALCULATION OF PRICE CONVERSION FACTOR FOR PROJECT CAPITAL COSTS
(in mill;on Yuan)
Financial
Local Foreign Conversion Economic
Amount x Amount x Total factor La Local Total
Land 32\.49 5\.0 32\.49 1\.00 32\.49 82\.49
Labor:
Unskilled 40\.10 6\.2 40\.10 0\.64 25\.88 25\.66
Semiskil[ed/Technician 39\.67 8\.1 39\.67 1\.51 59\.90 69\.90
Supervisor 27\.73 4\.8 27\.73 2\.00 55\.48 S\.46
Materials:
S6o*l 30\.95 4\.8 49\.98 27\.8 80\.83 2\.19 87\.78 117\.68
Timber 19\.22 3\.0 30\.96 17\.2 60\.18 0\.93 17\.87 46\.83
Cement 10\.64 1\.4 17\.18 9\.5 27\.79 3\.58 37\.56 54\.71
Fuel:
Diesel 6\.94 1\.1 0\.94 1\.13 7\.84 7\.84
Gas 7\.47 1\.2 7\.47 1\.65 11\.8 11\.66
Heavy oil 1\.66 0\.2 1\.66 1\.76 2\.76 2\.76
Others 1\.39 0\.2 1\.89 0\.69 0\.96 0\.6
Electricity 14\.88 2\.3 14\.88 6\.00 74\.40 74\.40
Construction 41\.93 6\.5 41\.93 1\.80 54\.61 64\.51
Mechanical equipment 134\.30 20\.7 31\.08 17\.3 165\.88 1\.40 188\.02 219\.10
Others 238\.00 36\.8 50\.68 28\.2 288\.58 0\.70 186\.80 217\.18
Total 647\.27 100\.0 179\.66 100\.0 826\.92 808\.40 983\.00
Overall conversion factor 1\.19
/a Memo: 'Financial and Economic Prices* from Mr\. Shahid Yusuf, Lead Economist, AS3CO, July 12,
1990; Economic Prices for Project Evaluation in China, AS3CO, June 1988; and the mission
estimates\.
2\. dJecause a substantial revision of the original design had been made
after loan negotiations\. the detailed discussion of the total project cost
between the SAR and the PCR will be meaningless\. The calculation is in Table
3\.1(b) and summarized as follows:
87
ANN'\.X 2
Page Z
Table 2: ECONOMIC PROJECT CAPITAL COST
(1990 prices, Y-million)
SAR PCR
1983 66\.4 21\.9
1984 274\.4 116\.1
1985 162\.6 \.03\.9
1986 94\.4 298\.7
1987 288\.8
1988 1$0\.5
1989 74\.4
1990 115\.2
Total 597\.8 1,299\.5
Change in Z 117\.4
Other Capital Costs
(a) Coal Develooment Costs
3\. A Y 207\.5/ton/year has been used for this analysis (see Annex 1\.
para\. 4(a)]\. The resultant total coal development cost in the PCR is
23\.8 percent lower than the SAR 's estimate and listed as follows:
88
ANNEX 2
Page 3
Tab 113: COAL TRAFFIC AND COAL MINE DEVELOPMENT COSTS La
(in 1990 prices)
Traffic (million tons) Mine Development
SAR PCR (b Change Costs (million Yvn)
North\. South Total North Middle South Toal in X SAR FR
1981 5\.6 6\.0 11\.6 5\.0 - 0\.0 11\.6 0\.0 291\.9 135\.8
1982 8\.6 S\.S 13\.1 6\.6 - 6\.8 13\.1 0\.0 545\.4 299\.4
1983 7\.6 7\.2 15\.0 7\.8 - 7\.2 16\.0 0\.0 832\.0 677\.2
1964 9\.2 7\.9 17\.1 S\.5 4\.0 8\.7 18\.1 8\.0 1,490\.7 1,017\.4
1985 10\.9 6\.6 19\.5 7\.2 4\.0 9\.5 21\.3 9\.0 1,291\.7 1,180\.4
196 12\.6 9\.6 22\.3 11\.5 5\.9 11\.2 23\.6 23\.3 1,393\.1 1,164\.9
1987 15\.2 10\.4 2S\.6 13\.7 7\.4 13\.5 34\.7 85\.4 1,436\.1 1,091\.7
198 17\.9 11\.4 29\.3 18\.2 0\.1 12\.8 39\.0 33\.2 1,309\.2 920\.7
1989 21\.2 12\.6 33\.8 23\.2 8\.2 13\.1 44\.5 31\.7 1,130\.9 767\.4
1990 25\.0 13\.8 38\.8 26\.0 9\.5 13\.5 49\.0 26\.3 1,069\.7 769\.9
1991 26\.8 14\.8 41\.6 27\.6 10\.3 13\.8 51\.6 24\.0 1,017\.3 729\.3
1992 28\.6 15\.8 44\.4 29\.2 11\.1 14\.1 54\.4 22\.4 896\.7 643\.4
1993 30\.6 18\.9 47\.6 31\.0 12\.0 14\.1 57\.3 20\.7 555\.8 402\.2'
1994 32\.8 18\.1 50\.9 32\.8 12\.9 14\.7 60\.4 18\.7 188\.8 136\.8
1995 36\.1 19\.4 54\.6 34\.9 14\.0 15\.0 63\.9 17\.2 - -
Total 13\.046\.0 9948\.2
Change in X -23\.8
/a Since a substantial revision of the original design had been made after negotiations, the
traffic calculation and coal mine development cost, therefore, in the PCR has been divided
into three sections (north: Shuoxian-Oastung-8eijing-Qinhuangdao; middle: Shuoxian-Yuanping-
8;jing-Qinhuangd&o; south: Talyuan-Yuanping-Beijing-Qinhuangdao)\. In the SAR, only two
sections had been used (north: Datong-Sonjiazhuang; south: Xixin-Taiyuan)\.
b Actual: 1981-89; forecast= after 1990\.
(b) Datong-Beiiing-QD Pailway cost and QHD Port Cost
4\. The capital costs for each construction component has been converted
to unify economic cost at 1990 prices\. In addition, the capital construction
cost for the main line between Datong and Qinhuangdao port has also been added
into the cost stream for this economic analysis (the SAR excluded this art of
the cost) \. The detailed calculations are shown in Table 3\.1(b) and summarized
as follows:
89
ANNEX 2
Page 4
Table 4: ECONOMIC COSTS FOR OTHER RAILWAYS AND QINHUANGDAO PORT
(million Yuan)
Beijing- Quinhaungdao
Datong-Qinhuangdao la Qinhuanadao Port
Main Connection 1983 1990 1983 1S90
line /b ne I Total price price price price
1981 35\.0 35\.0 15 26\.2 14 24\.5
1982 50\.7 50\.7 24 42\.0 22 38\.5
1983 103\.1 103\.1 46 80\.4 43 75\.2
1984 230\.1 103\.1 333\.2 46 80\.4 43 75\.2
1985 895\.8 48\.9 944\.7 23 40\.2 22 38\.5
1986 867\.2 867\.2
1987 670\.5 670\.5
1988 513\.8 513\.8
Tota' 3\.177\.4 340\.8 3,518\.2 154 269\.2 144 251\.7
Ia 1990 economic prices\.
b This cost is not covered within the SAR's economic analysis\.
c Includes the cost of Fengshada connection line\.
(c) Other Infrastructure Investments
5\. The capital costs to build the cable networks to serve the railway
line were paid by the power sector\. For the economic analysis, these costs
should be included (the SAR excluded this part of costs)\.
Table 5: OTHER INFRASTRUCTURE INVESTMENTS FOR THE RAILWAY
(million Yuan)
Current 1990
financial economic
costs costs
1986 15\.9- 27\.3
1987 21\.2 34\.1
1988 10\.6 15\.7
1989 5\.3 7\.2
Total 53\.0 84\.6
90
ANNEX 2
Page 5
Project Benefit
6\. Traffic\. In the SAR, the economic analysis of the project for this
railway line had been divided into two sections: (a) north: Datong-
Sungjiazhuan and (b) south: Xinxiang-Taiyuan on the basis of its original
design\. In the PCR\. with the major revision of transport capacity, the proj-
ect railway line has been divided into three sections to keep the economic
analysis in line with the new design (north: Datong-Shouxian, middle:
Shouxian-Yuanping and south: Yuanping-Taiyuan)\. Based on the new design, the
annual transport capacity of the railway line (the south section of Datong)
will be 63\.9 million tons, which is 17\.2 percent higher than the original
design of 54\.5 million tons per year\. The actual coal traffic in 1989, on
this section\. was 44\.5 million tons, a 31\.7 percent increase from the SAR's
estimate of 33\.8 million tons\. The detailed traffic demands, by sections, for
the SAR and the PCR are shown in para\. 3, Table 3\.
7\. Coal Value-Added\. The methodology and inputs used for the calcula-
tion of coal value-added have been described above (see para\. 6, Annex 1)\.
The main difference between the SAR and the PCR is that a separate calculation
of transport cost for each of the three sections (north, middle and south), by
transport distance, has been applied for the PCR instead of one unified input
used in the SAR\. The outcome of these calculation is summarized as follows:
Table 6: COAL VALUE ADDED (S/ton)
3AR PCR /a
1983 1990 North Middle South Average Percentage
prices prices ------- (1990 prices) --------lb change
Coal price 49\.0 88\.1 42\.0 42\.0 42\.0 42\.0 -38\.3
Costs
Production 15\.0 21\.8 17\.8 17\.9 17\.8 17\.8 -18\.8
Transport 3\.0 5\.2 4\.8 5\.0 5\.1 6\.0 -4\.5
Rail/sea transfer 5\.0 8\.7 1\.2 1\.2 1\.2 1\.2 -86\.2
Subtotil costs 23\.0 35\.7 23\.8 24\.0 24\.1 24\.0 -32\.9
Net coal value added: S/ton 28\.0 32\.4 18\.1 18\.0 17\.9 18\.0 -44\.3
Y/ton 95\.4 94\.3 93\.6 94\.4
/a Transport cost (Destination - Qinhuangdso) by sectors:
North: 808 km x 3\.1 fen/tkm a Y 24\.9/ton or 14\.8/ton\.
Middle: 938 km x 3\.1 fen/tkm a Y 26\.0/ton or 35\.0/ton\.
South: 860 km x 3\.1 fen/tkm = Y 26\.7/ton or 85\.1/ton\.
Lb Simple average\.
Economic Rate of Return (ERR) and Sensitivity Analysis
8\. The reevaluated ERR and sensitivity analysis is shown in Table
3\.3(b) and summarized as follows:
91
ANNEX 2
Page 6
Reevaluated
ERR (2)
Best estimate 19
Project investment +20Z 18
Coal mine development +20% 18
-202 19
Project benefits
Delayed 1 year 16
Delayed 2 years 14
Cow\. price -102 15
-202 10
92
ANNEX 3
Ptage 1
CHINA
PROJECT COMPLETION REPORT
RAILWAY PROJECT (LOAN 2394-CHA)
Economic Analysis
Zhuzhou Electric Locomotive Factory
Project Caoital Costs
1\. Econcmic costs of the project have been evaluated by applying cor:-
version factors to domestic prices and market prices for imported item which
are shown in Table 1 as follows:
Table t: CALCULATION OF PRICE CONVERSION FACTOR
FOR PROJECT CAPITAL COSTS /a
(in million Yuan)
Financial
LocaI Foreign Conversion Economic
Amount x Amount 5 Total factor L Loca I Total
Land 2\.42 4\.0 32\.49 1\.00 2\.42 2\.42
Labor:
Unskilled 3\.08 5\.1 3\.08 0\.6 1\.97 1\.97
Semi skilled/Technician 4\.13 6\.8 4\.13 1\. 6\.24 6\.24
Supervisor 8\.08 8\.1 3\.08 2\.00 8\.16 6\.16
Materials:
Steel 4\.60 7\.8 4\.60 2\.19 10\.07 10\.07
Timber 1\.15 1\.9 1\.15 0\.93 1\.07 1\.07
Cement 8\.75 9\.5 5\.78 3\.53 20\.30 20\.30
Fuel:
Diesel 0\.04 0\.1 0\.04 1\.13 0\.06 0\.06
Gas 0\.01 0\.0 0\.01 1\.56 0\.02 0\.02
Heavy o1l 0 \.00 0\.0 0\.00 1\.76 0\.00 0\.00
Others 0\.01 0\.0 0\.01 1\.76 0\.02 0\.02
Electricity 0\.06 0\.1 0\.06 5\.00 0\.30 0\.30
Co*I 0\.06 0\.1 0\.00 2\.12 0\.13 0\.13
Construction 19\.78 32\.7 19\.78 1\.30 25\.71 28\.71
Mechanical equipment 16\.15 25\.0 70\.22 100\.0 86\.37 1\.40 21\.21 91\.43
Others 1\.18 2\.0 1\.18 0\.70 0\.83 0\.83
Total 6n\.50 109\.0 70\.22 1L20 199\.72 X6\.48 166\.70
Overall conversion factor 1\.28
LA In the SAR, the conversion factor for construction and equipment was 1\.06 and 1\.34 respec-
tively\.
b Memo\. 1Financial and Economic Prices' from Mr\. Shahid Yusuf, Lead Economist, AS3CO, July 12,
1990; Economic Prices for Project Evaluation in China, AS3CO, June 1988; and the mission
estimates\.
2\. Comparing the PCR's economic project capital costs with the SAR's,
at 1990 prices, the cost of the former is 36\.1 percent higher than the latter\.
93
ANNEX 3
Page 2
(The PCR's economic project cost, however, includes the Chinese financed
Phase II Construction\.) The details in Table 3\.1(c) are summarized as fol-
lows:
Table 2: ECONOMIC PROJECT CAPITAL COST
(Y million)
SAR PCR
1983 1990 1990
prices prices prices
1984 10\.1 17\.7 24\.4
1985 31\.5 55\.1 33\.0
1986 43\.4 75\.9 43\.2
1987 4\.6 8\.0 68\.6
1988 14\.2
1989 14\.4
1990 15\.4
Total 89\.6 156\.7 213\.2
Change in 2 +36\.1
Project Benefits
3\. The main project benefits can be categorized as (a) manufacturing
cost savings, (b) import cost savings, and (c) maintenance cost savings and
summarized as follows:
(a) Manufacturing Cost Savings
4\. The economic cost of producing one locomotive with and without proj-
ect has been estimated on the basis of a detailed cost b\.ceakdown provided by
the factory (Table 3)\.
94
ANNEX 3
Page 3
Table 3: CALCULATION OF PRICE CONVERSION FACTOR
FOR MANUFACTURING COSTS OF LOCOMOTIVES
('000 Yuan)
Financial Conversion Economic
cost factor La cost
Materials:
Steel 884\.8 2\.19 1,937\.7
Timber 63\.2 0\.93 58\.8
Others 316 0 2\.00 632\.0
Fuel:
Diesel 7\.8 1\.13 8\.8
Heavy oil 2\.8 1\.76 4\.9
Gas 0\.5 1\.55 0\.8
Electric!ty 10\.0 5\.00 50\.0
Water 1\.2 1\.00 1\.2
Labor:
Unskilled 7\.6 0\.64 4\.9
Semi skilled/Technician 93\.9 1\.51 141\.8
Supervisor 16\.9 2\.00 33\.8
Equipment 139\.7 1\.40 195\.6
Otner 2\.2 0\.70 1\.5
Total 1,546\.6 3,071\.8
Overall conversion factor 1\.99
/4 Source: same as footnote Lb of Table 1\.
5\. For locomotive manufacturing costs, CIF prices have been used for
tradeable goods after due adjustment for inland transport costs\. Taxes have
been excluded\. The overall economic conversion factor of 1\.99 was applied;
the results, compared with the SA, are summarized below (Table 4)\.
95
ANNEX 3
Page 4
Table 4: MANUFACTURING COST FOR ONE LOCOMOTIVE
('000 Yuan at 1990 prices)
Without With Cost
project project saving
A\. PCR: Financial cost 1,901\.6 1,546\.6 353\.0
Economic cost 2,223\.6 3,071\.1 -848\.2
B\. SAR: Financial cost 1,901\.6 1,649\.9 251\.7
Economic cost 2,223\.6 1,862\.4 361\.2
C\. Change in 2 (A/B):
Financial cost +41\.0
Economic cost * -334\.8
6\. Manufacturing cost for one locomotive, at 1990 prices, will yield a
financial savings of Y 355,000 per unit; in economic terms, after applying the
shadow pricing factor of 1\.99\. the saving is minus Y 848,200 per unit\. The
locomotive manufacturing cost comparison, however, for the PCR with project
case is the much more advanced SS3 model; other figures are the cost of the
old and discontinued SS1 model; and the shadow price factors used in the SAR,
without project and with project, were 1\.17 and 1\.13 respectively\.
(b) Import Cost Savings
7\. The cost of an imported locomotive would be about Y 5\.30 million;
and the cost saving per locomotive would Y 2\.23 million (SAR: Y 1\.94 million
in 1983 prices; or Y 3\.81 million in 1990 prices)\.
(c) Maintenance Cost Savings
8\. Based on the actual maintenance record in 1990 prices, the annual
maintenance cost saving is minus Y 1,800 per locomotive (Y 27\.000/year without
project; Y 28\.800/year with project)\. The SAR's figure is Y 1,300/year in
1983 price; or Y 2,272/year in 1990 price\. Again, the a:aintenance cost for
the case of witht project and the case with project in the PCR arr! based on
the SSl and SS3 model respectively\.
Locomotive Production
9\. The current locomotive production capacity of the factory is about
165-170 units per year\. This 3xceeds the original annual pro4!uction capacity
of 120 (includes the capacity of Phase II Construction) is due to the continu-
ous capital investments from other ongoing renovation projects\. For the pur-
pose of the economic analysis in the PCR, the original annual production
capacity has to be applied since the excess production capacity has been
brought about by other ongoing renovation project\. In addition, with the
project, the factory had been put into operation one year ahead of time\.
96
ANNEX 3
Page 5
After making those adjustments, the list of annual locomotive production, with
and without project, is shown belowt -
Table 5: ANNUAL LOCOMOTIVE PRODUCTION (set)
With Project
Without SAk PCR
Year project Total Incre\. Total La Incre\.
1983 40
1904 40
1985 40 60 20
1986 40 80 40 81 41
1987 40 120 80 102 62
1988 40 120 80 120 80
1989 40 120 80 120 80
1990 40 120 80 120 80
1991 40 120 80 120 80
1992 40 120 80 120 80
1993 40 120 80 120 80
1994 40 120 80 120 80
1995 40 120 80 120 80
1996 40 120 80 120 80
1997 40 120 80 120 80
1998 40 120 80 120 80
1999 40 120 80 120 80
2000 40 120 80 120 80
/a Actual * 1985-89; forecast * after 1990\.
Economic Rate of Return (ERR) and Sensitivity Analysis
10\. The PCR's ERR is 82 percent compared with the SAR's estimate of
89 percent\. The detail calculation of ERR is shown in Table 3\.3(c) an(\. suum-
rized as follows:
97
ANNEX 3
Page 6
Reevaluated
ERR in Z
Best Estimate 82
Project Investment A50% 54
Import Cost Savings -502 24
Project Benefits
Dvlayed 1 year 53
Delayed 2 years 40
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1 162 VW SIZO 0,068 ZI#66 6,898' 961t6 £11£6 6,011 £*£l£ £1511 010 6961
V6tt zoý19 119 VW BM6 £lite 816£8 ZIM $Otozl 1,01r 1,101 6,911 esbi
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z *Di- i * 199- 196- £96- BOM- 1 1*99- t 19£9- 6**2- t lest z 1t96 6,50 010 010 VITS 9861
4£?- UP- MI- UV- 61tI- 6991- Vll- MI- 016£Cl 0 IW VP Vei t 19L £661
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104
Table 3\.3 (b)
990JEC? \.8!!31 RiPGA r
RAI\.6DA M0JUt k,an 2394-\.AI
Iconosic Rate 04 efturs tEM no eftf~t:vit¥ ansivsis
\. \. \. \. \. \. \. \. \.e\.is------- \. :a\. an Ie\.s C\.aa \.e:\. \.
rh* -0tor ft1194 Uftm~ Â(~ n at g \. ÂÂÂÂÂ, sett1@   Nt P*t1it mt -t-veato§t fse IZ ~ et 4v66 3 1¢r o ee s
prosec, gan, oatse Sn a :9 98 Gatofs quain9n raimas Elee\. öktone flydnin9 IalvaÃ¥ caa cost ÂÂÂÂÂÂ-----ÂÂÂÂÂÂÂÂ-
fear rasav -WH Cfaoet\. -90 #er, kImr*\. ÂitvR !fostqa nir, tal fom mftltuckepf u isomtj kul ilo *1201 *20 ~\.=31 I vett I vers -!i? -20t
1985 0\.0 0\.0 35\. 2*\.: 24\.4 84\.2 27\.4 18\.7 0\.0 :20\.4 \.220\.9 -220\.9 Â20\.3 Â21:\.7 -220\.9 -220\.9 -2\. Â220\. 9
1992 0\.0 0\.0 50\.7 42\.> 35\. 10\.5 73\.2 46\.7 0\.0 40\. -410\. Â430\.! Â454\.1 -406\.j -40\.5 -430\.5 -430\.5 -430\.5
1983 21\.9 0\.0 103\.1 10\.' 15\.2 430\.7 141\.1 104\.3 0\.0 957\.1 -457\.8 -42\. 2 -to0 -08\.5 -18 Â458 -98 Â4$2
1984 1l1\.1 230\.1 103\.1 80\.4 75\.2 W\.4 199\.2 1W1\.1 0\.4 L622\.3 -1922 -14 Â1a9 -:\.49 -1s22 Â1a2L -1ö22 Â!34e
1985 203\.9 D91\.8 48\.9 40\.2 8\.5 767\.2 204\.7 208\.6 0\.0 2407\.7 234\.0 234\.0 \.2174 -22! -225 Â2091 -2408 -2408 Âq29 -22=3
1986 298\.7 167\.2 0\.0 0\.0 0\.0 781\.0 150\.9 223\.8 27\.3 2348\.1 167\.0 6\.8 3 93 Ã¥32\.7 -1115 Â1715 Â1710 Â:341 +2114 -2:48 Â193 Â2010
1987 288\.8 610\.5 709\.1 150\.2 232\.4 34\.4 2085\.4 381\.6 210\.3 612\.1 1204\.0 -81\.4 -439\.2 -457\.9 -04\.9 -1453 -1851 -1161 -1441
1988 180\.5 113\.8 515\.a 116\.9 22\._ 15\.7 1630\.7 909\.0 268\.8 542\.9 1620\.6 Â10\.1 -4\.2 -41\.1 70\.9 -426\.7 -998\.1 -385\.6 Â761\.1
1999 74\.4 380\.2 18e\.2 221\.0 7\.2 869\.0 1287\.9 282\.9 571\.0 2141\.8 1272\.7 5257\.9 1191\.3 1354\.2 751\. 333\.0 777\.4 282\.0
1990 11$\.2 361\. 182\.1 22&\.2 0\.0 88\.1 1555\.0 403\.5 608\.4 228\.9183\.8 1660\.8 602\.2 !765\.5 1256\.7 3\.5 1089\.8 495\.8
199 340\.8 173\.7 214\.8 729\.3 1703\.8 477\.2 634\.6 2815\.6 2086\.3 2086\.2 2006\.6 2164\.0 1839\.6 1412\.5 145\.3 794\.3
1992 299\.4 554\.1 189\.9 643\.4 1961\.3 554\.5 661\.8 3077\.S 2434\.1 2434\.1 23ö3\.3 2:02\.9 2112\.2 1925\. I722\.6 1411\.0
1993 97\.1 96\.8 18\.3 402\.2 2029\.2 638\.4 689\.8 37\.4 2935\.2 2933\.2 2912\.2 29^\.3 265\.3 2413\.4 2179\.1 1402\.9
1994 64\.1 33\.# 40\.5 t1\.8 2205\.6 721\.0 717\.9 3651\.6 o512\.7 3 ;s2\.7 2097\.9 :527\. 3218\.6 28\.7 2668\.6 1824\.
5995 2404\.1 829\.8 748\.8 3982\.7 3992\.7 3982\.7 3912\.7 3982\.7 31\.6 3357\.4 3062\.1 2141\.4
1994 2404\.1 829\.8 748\.8 3982\.7 3912\.7 3982\.1 3982\.7 3982\.1 3982\.7 3651\.4 3062\.1 2141\.4
1997 2404\.1 829\.8 148\.8 3982\.1 2982\.7 3982\.7 3982\.7 3982\.7 3982\.7 3982\.7 2062\.1 2141\.4
1998 2404\.1 829\.8 748\.8 3912\.7 29M213982\.7 312\.7 3932\.7 39~2\.7 3042\.1 2141\.4
1999 2404\.1 829\.8 49\.8 3982\.7 3912\.7 3982\.7 3982\.7 392\.7 3982\.7 3932\.7 302\.1 2141\.4
2088 /\.1 2404\.1 829\.8 748\.8 3982\.7 32\.7 3982\.7 3982\.7 9 2\.7 3982\.7 392\.7 062\.1 2141\.4
288 2428\.1 838\.1 756\.3 4022\.3 4022\.5 4022\.5 4022\.5 4022\.5 992\.7 390\.7 3062\.1 2141\.4
2092 2452\.4 844\.5 163\.9 402\.8 4062\.8 402\.8 4042\.8 4042\.8 4022\.5 3982\.7 3062\.1 2141\.4
2003 2416\.9 853\.0 771\.3 4503\.4 4103\.4 403\.4 4103\.4 4103\.4 4062\.8 4022\.3 3062\.1 2141\.4
2904 2501\.7 86\.5 779\.2 4144\.4 4144\.4 4144\.4 4144\.4 4144\.4 419S\.4 462\.8 3%2\.1 2141\.4
2005 22\.7 872\.2 787\.0 418\.9 485\.9 48\.9 418\.9 485\.9 4m4\.4 402\.4 302\.1 24\.4
2006 2232\.0 888\.9 794\.9 427\.7 4227\.7 427\. W \.1 4227\.7 4185\.9 4144\.4 3062\.1 2141\.4
2007 2577\.5 889\.7 02\.8 4270\.0 4270\.0 4270\.0 4270\.0 4270\.0 427\.7 4185\.9 3062\.1 2141\.4
20M8 2603\.3 891\.6 810\.8 4312\.7 4312\.7 4312\.7 4312\.7 4312\.7 4270\.0 4227\.7 3062\.1 2141\.4
2009 2629\.3 9M7\.b 819\.0 435\.1 4355\.8 4355\.8 4353\.8 4355\. 4312\.7 4270\.0 3062\.1 2541\.4
208 2655\.6 916\.7 827\.1 4399\.4 4399, 4399\.4 4399\. 4 4399\.4 4335\.8 4312\.13M2\.5 2141\.4
7otså 1299\.5 3177\.4 340\.8 269\.2 251\.7 578\.3 1948\.6 :24\.2 4\.6 15\.371
M Â 192 11 18: 92 162 141 is: 101
9 (52U3Â 4\.656 4\.332 4,287 5\.036 3,222 1,943 1\.7138 11\.048)
\.< 1\. i2 \. \. \. \. 0 00 \.ue\.
uite# 1\.4\. ormsaf at 1% 0\.&\. k" 2IM #liv*r\.
105 Table 3\.3 (c)
CHINA
PROJECT COMPLETION REPORT
RAILWAY PROJECT (Loin 2394-CHA)
Economic Rate oi Return (ERR) and Sensitivity Analysis
--------------------
Zhuzncu Electric Locomotive Factory Moderniation
(Y billion)
-----------?est estimate---------- ---Senslt:vitv analysis---
- -Benefits---------- Total Wscort Benefits
Total Manafact\. Import Aint\. Net project cost delayed by
project cost cost cost cash cost saving
Year cost saving saving saving Total flow +450%) -(50%) 1 year 2 years
1984 24\.40 -24\.40 -36\.60 -24\.40 -24\.40 -24\.40
1995 33\.00 -33\.93 44\.56 -0\.036 10\.59 -22\.41 -38\.91 -44\.69 -33\.00 -33\.00
1986 43\.20 -33\.93 91\.36 -0\.074 57\.36 14\.16 -7\.44 -31\.52 -32\.61 -43\.20
1997 68\.60 -33\.93 138\.15 -0\.112 104\.11 35\.51 1\.21 -33\.57 -11\.24 -58\.01
1998 14\.20 -33\.93 178\.26 -0\.144 144\.19 129\.99 122\.89 40\.96 69\.91 43\.16
1999 14\.40 -33\.93 178\.26 -0\.144 144\.19 129\.79 122\.59 40\.66 129\.79 99\.71
1990 15\.40 -33\.93 179\.26 -0\.144 14\.19 128\.19 121\.09 39\.66 129\.79 128\.79
1991 -33\.93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1992 -33\.93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1993 -33\.93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1994 -33,93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1995 -33\.93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1996 -33,93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1997 -33\.93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1998 -33\.93 179\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
1999 -33\.93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
2000 -33\.93 178\.26 -0\.144 144\.19 144\.19 144\.19 55\.06 144\.19 144\.19
Total 213\.2 -542\.9 2591\.5 -2\.094 2046\.5 1833\.3
ERR a 82Z 54% 24% 53% 40%
NPY (12%) ' 559\.3 486\.9 101\.3 465\.1 381\.0
ene\.e\.-m\.-\.eeme me e eo e eee\.eme ew m e e emme
IBRD
CHINA 1 10o Hohihot
FIRST RAILWAY PROJECT
PROJECT COMPONENTS
RAILWAYS
UNDER
EXISTING CONSTHUCTION BANK PROJECT ,EMING Âinh\.engdao
DOUBLE LINE
SINGLE LINE
\. \. \. \. \. \. \. \. Â \. Â \. Â \. \. \. \. \. ELECTRIFICATION
\.e\." UPGRADING huoxian
RIVERS Tiin
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES Baoding
Yuanping
Heb,an
0 50 1?0 1?0 200
KILOMETERS Canghu
MILES 50 100 120 Shijiaihuart
Zlhench-ngdi Uyo \. \. \.Â
Baljiazhuang y\. Yngua Hengshui DogigYantal
Yangquanqu
Jiexiu
Zhongdian WBif\.ng
Sein ,Handan Zibo cun
p // A N 4 0 N G
Lif\. Ch-nghi HudunOiga
K\.bi Xintoi
Houmna Jincheng Yanzhou
- O Shijiusuo
iaozuo H e
Xinxiang
__Y~han For Detil Se
I f,"%- -- 18RD 17097
~t\. \.~uyag - Zhengzhou Uanyungang
KaMfng
Ba'oji Tongguanan Mixian U\. 5\. s\. R\.
xivShangqiu f "
xi'anXuzhou -1A NGCS
Xuchang MONGOLIA
Pingdingshan\.k\.
Thsmpha en pae yTh o9-Bn' tafeoive fohe GengbuCHNA
conerenc o rede od i - lsvly for'he int~rnl \.e ofT Wrd
"\.nk Grou\. ede~~mion\. \.s\.d \.nd the bo\.ndaries n -n thi\. Fuyang
m,p d\. not-ip, ~n th« p-r -f The oc ae ru,aygdmn HuBinan\.
on th\. ega status of any t-ritor or any endors-met or -ccetanc~o
u bo\.ndarie
SETE | APPROVAL |
P004652 | 1IV 65/54/3 71 (H
L-1 06
This report is restricted to use within the Bank\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
SUPPLEMENTS
TO THE
TECHNICAL RE-PORTS ON THAILAND
October 18, 1950
Loan Department
SUPPLE1vEMITS TO 1HE TECHNICAL REPORTS ON THPLAND
Revisions in the Projects -
(a) Railways, Rehabilitation and Improvement PIroject,,
(b) Irrigation, Drainage and Communications Project,
(c) Project for the Development of the Port of Bangkok\.
(a) Railw:ays Project -
The foreign exchange requirements for the rehabilitation of the
Royal State Railways wrere estimated by the E3ngineering Staff at the equiva-
lent of ¢k22\.78 million, This amount included such items as purchase of new
rolling stock, bridges and rails for which orders had already been placod
in Japan and the UeK\., or which could be supplied from\. Japani t\.rough the
mechanism of the barter agreement, These items as wrell as certein spare
parts and machine tools w-ihich can be purchased in Japan were excluded from
thie loan application\. The request for assistance in the financing of the
constraction of the Korat Line has been postponed until the Thai Govermment
will have supplied adequate information to justify this newri corstruction\.
The balance in the amolnt of 73,O00,000 :for the re-equipment of the Ilak-
kasan Workshops, for signalling eqaipment and for spare parts, has been
found suitable for financing by the Bank\.
1\. Signallirg Equipment - During the current negotiations
the Bank vas inaTormned by the Thai representatives that
certain items of equipment -which had been previously in-
cluded in the loan request had been ordered in Lurope
to be paid for out of their o-vn resources\. The project
has therefore been modified to include signalling equip-
ment for a number of additional stations, The cost of
this equipment is based on prevailing prices for pur,
chases from Western Germany rith the exception of gal-
vanized wire which the borrower Proposes to purchase
ini the U\.S\. The total estimated foreign exchange re-
quirement of the project remains unchanged\.
2\. I,akkasan 17orkshops - In accordance with the Bank recom-
mendation, the Thai Government agreed to retain a con-
sulting firm for the layout of the Kakkasan Shop, Ne-
gotiations are being conducted vith engineering firns
and an estimated fee of d>25,Oo for consulting services
is included in the estimated cost of the project\. The
total requirements in foreign currency for the re-
equipment of the Ihakkasan Shop have been rounded out
- 2 -
to C,l\.8 million based on the original Thai estimates\.
The equipment specification and cost estimates wfill
be revised after the consultant has submitted his
report\.
3\. Spare Parts for Rolling Stock - An amount of (; 80,000
was allowed fQ the purch=ase of the most urgently
needed spare parts for rolling stock\. This item
remains unchanged\.
The enclosed table No\. I gives the revised figures and the break-
down\. in foreign and local currencies for the railway project\.
() Trrigation Project -
During the current negotiations wi\.th Thai representativxes concern-
i=ng the subject loan, a number of exceptions were taken by the Director
General of the Royal Irrigation Department, I,r\. Chqchat Zhambu, w-th the
recori\.endations of the Bank's consultant, which were the basis for tne
Technical RZeport of the Engineering Staff, (DocumentR -\.514- Loen 90)\. As
the result of discussions held on this project, the 23ngineering Staff feels
that certain of the changes proposed oy the Thai representatives are Ju3-
tified and should be approved by the Bank, These changes are sumnarized
as follows:
1\. Design and Construction of the Barrage - The Thai
representatives nave accepted the Bankls condition
that a consultant be retained to review\.r and approve
a design for the barrage\. For this purpose, arrange-
ments have been made by the Thai Government vrith the U\.S\.
Bureau of Reclamation to do this work for a fee es-
t5maued at $25,Oo0\. This compares with the original es-
timate of 4'i2O00000 for this purpose which assumed the
employment of a private consultant\.
It was originally recommended by the Bankts consultant
that the construction of the barrage should be carried
out by a foreign contractor using his umn construction
equipment\. Thle Thai representative has contacted a
number of UI,S\. contractors for the purpose of determin-
ing their interest in this construction and has found
no one interested in a proposition wherein he would provide
the construction equipment as wvell as operating personnel,
Certain contractors, how-;ever, have expressed a wiilling-
ness to bid on this work on the basis of providing super-
visory personnel only, a d are wailling to assuLme full
responsibility for the construction\. This arrangement
-3-
means that the Thai Government must purchase all of
the construction equipment required for thie job\.
This method will reduce the estimated contractor's
fees from $,1600o,000 to about 500,000, but will at
the same time increase the cost of construction equip-
ment to be provided from the proceeds of the loan from,
$1491,000 to \.'l),813,000, resulting in an esti,nated net
increase of about P322,000 in the cost of construction
of the barrage, assuming no value Cor the construction
equipment after completion of the work\.
The foreign exchange cost for the extension of tha bar-
rage, construction of penstoecs and folndations as part
of the future construction of a power planst, estimated
at the equivalent of (Xl million, have been included in
the cost of the barrage\.
2\. Irrigation Works and Equipment for Work Shops - It ap,
pears advisable to inrexase the e#jendUtures for th-ie
equipment required to build the canals, ditches and
other items in the irrigation system by an armount of
%,868,ooo over that recommended by tne Bank consultant\.
Thnis increase is justified on the basis that construc-
tion work will be carried out at 9 or 10 sites simul-
taneously and some dup'licate eouipment will be required
at each of these locations0 If this increase in expen-
ditures for equipment is not made, the project cannot
be completed on the proposed schedule\. A sibstantial re-
arrangement of plans for purchasing tihis equipment has
been adopted wherein 130 barges originally included in
the irrigation project vwill be purchased fron Japan with
other funds and the saving will be used along with addi-
tional funds for the purchase of more narrow-gage loco-
motives, cars and work shop equipment\.
The estimated cost of equipping a central work shop
for the repair of construction machinery and the fabrica-
tion of some items required in the construction of the
irrigation rsytems has been increased by ,;327,000 over
the estimate previously submitted\. This increase comes
largely as a result of the increased amount of construc-
tion equinment wrhich appears to be justi'ied on tbis pro-
ject and also from the fact that it is proposed to fab-
ricate control gates, valves and other articles for irri-
gation systems in the shop,
3\. Materials and Permanent Equipment - inor changes in the
cost of materiiTW Tpe a e-i-quipmept for this pro-
ject have been made, these changes largely compensating
one another in value\.
The chianges vrhich are recoimmended in the project have resulted in
a net increase in the estirmiated cost amounting to `362,000\. In addition,
the estimated cost of the project has been revised on the basis of present-
day quotations received in Washington by the Thai Delegation resulting
in a further increase of the cost by an amount of t535,000 due to increases
in prices and adjustments of errors made in estimating, bringing thus the
total increased cost of the project to '897,OO0 (6,2%) over the estLmates
submitted in the report of June 14th\.
At the request of the Thai Delegation, interest duri-ng construction
amounting to 1\.2,6o0o000 has been added to thle foreign currency requirements
of the project\. The attached Table No, II shows a comparison of estimates
submitted in the report of June 141, 195, with those whichi are currently
recommended for approval\. Cost estimate in foreign exchange and local cur-
rency are tabulated in Table I-a\.
(c) Port Project -
1, Dredging of the Bar - Current negot-ations with the Thai repre-
sentatives reveaadthtaute present depth o; t4e Bangkok Bar at Mean High
Water is not great enough to float a fully loaded dredge of tnie contemo-
plated type such as the dredge "1,\.anhattan" of the U\.S\. Corps of Engineers\.
By operating at the beginning two such dredges during the high stages of
the tide only, the time required to complete the chanmnel would be extended
from 2-1/2 to approximately 4-1/2 years and the cost of the project wiould
be thus considerably increased\.
It was therefore found advantageous to have this work done under
contract\. Competitive offers have so far been received from two specialized
dredging contractors,
The Bank has been informed that tlhe Thai Government accepts in prin-
ciple to enter into a contract with a commercial firzn for the dredgi-ng o'
Bangkok Bar on the basis of international competition\. It is proposed to
have the contractor dredge approximately 10 million cubic meters of r\.ate-
rial in the inner reaches of the port and to dredge the remaining 2 million
cubic meters outside the lighthouse by means of government-owned dredges,
For this purpose the Thai Government expects to have the assistance of the
ECA in supplying them with the dredge "Manhattan" and the necessary tank
boats and a tug\. The envisaged operation is considered to provide an ap-
propriate solution for the dredging of the bar\. It would reduce by about
two years at least the completion of the channel as compared to the ini-
tial plans\. Moreover, apart from tlhe reduced costs in operating and main-
taining the '"Sandon't and '1IIanhattan" which are estinated at the equivalent
of S>800,000 per year, the indirect profit in savings in lighterage and
cargo handling are estimated by the Thai at 50,0o0,O00 Baht per year\.
2\. Port Equipment - During the current negotiations on the sub-
ject loan, cenrtan changes have been made in agreement with the Thai Delega-
tion to estimates submitted by the Engineering Staff on Juune 21\. These are:
i) One 25 ton crane for the quay - deleted\.
ii) Four semi-portal cranes - deleted\.
(Four similar cranes have already been ordered
in Japan and therefore the remaining cranes
should be of the same type and be purchased
directly in Japan by the Thai Government)\.
iii) Crane rails and feeder lines for cranes - 'deleted\.
iv) Powver plant reduced from $30000 to $200,000\.
v) One dredge "Manhattant" - deleted\.
The total cost in foreign currency for the project of the development of the
port is thus reduced from the previous estimate of $2\.4 million to UI,h
million, including 10% contingencies\.
A total loan in the amount of $4h4 million covering V3 million for
financing the foreign currency cost of the dredging contract and $14
million for port equipment can now be recommended on the condition that the
contract for the dredging of the Bangkok Bar must be approved by the Bank,
The enclosed Table No\. ITI gives the estimate of costs and the
breakdovm in foreign and local currencies for the port project\.
S u PI t a r v
The revised estimated costs of the projects are as follows:
Foreign Currency Local Currency
$ Baht
Pailways Project 3,000,000 W06,000,000
Irrigation Project 18,000,000 729,000,000
Port Project -404o000 108,000,000
Total 25,h40o0o0 l 2L3,000\.000
A\. II\. Saitzoff
TABLE 1E, I
RAIIY\.AY RrEABILITATION AN\D I?PROVEHENT PROJECT-THAIIAI\D
Foreign and Local Currency Requirements
Foreign Local
Currency (<) Currency(Baht)
Makkasan Workshop l,800,000 66,3L7,o00
Signalling Equipment 1,120,000 5,200,000
Spare Parts for Rolling Stock
Repairs 80,000 10,537,00O*
Total 3,000,000 82,084,000
Foreign Currency
makkasan Vfforkshop -
\.machinery and equipment to be revised
by consultant firm , \. \. \. \. \. \. \. \. 1 l,775,000
Consultant firm fee \. \. \. \. \. \. \. \. \. \. 25,000 G 128002000
Signalling Equipment -
Mechanical signalling equipment
for 85 stations \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. , 1,018,000
Spares l0% \. \. \. \. \. \. \. \. \. \. 101,800
l1,2l3,800
Say total - 1,120,000
$Zre Parts for Rolling Stock Repair -
Different types of spare parts making
a total sum of \. \. \. \.,\. 80,000
* Includes spare parts and services not covered by loan\.
US\.fl = 12\.5 Baht - official rate\.
TABLE NO\. II
IRRIC-ATION PPOJECT
Revised Estimates of ign Currency Requirements Compared
with Estimates Submitted June 11,th, 1950
Thousands U\. S\. Dollars
Revised Sub-
Estimates mitted June lLth
I\. Barrage and Power House -
a) Construction Plant (includes
transportation equipment) 1,877* 728
b) Permanent Equipm\.ent (gates and
other accessory equipment)
1\. Barrage 453 i/65
2\. Power House 60 oO
a) Materials:
1, Barrage 973 1,029
2, Poaver House 340 340
d) VTorkshop Eq'\.ipment 90 98
II\. Distribution System -
a) Construction Plant (includes
transportation equipment 6,108* 6,195
b) Permanent Equipment (gates
aid other accessory eouipment) 603 636
c) MIaterials 1,3L7 1,209
d) Workshop equipment 218 170
MII\. Equipment for Central Workshops 867 540
IV\. Consulting and Contractors Fees 640 10815
V\. Contingencies on Items I,II and III 1,295 b22
V;,871 *7 14,5o9*'>^¢
VI\. Increase in price for construction
plant derived from quotations re-
ceived end of September 1950 535*H* -
15,406
VII\. Interest during construction 2,600oo
18,oo6
Say; 18,OC0 1b,500
* The cost of the barges estimated at $,1,197,000, including con-
tingencies, is not included in these estimates\.
** Includes the estimated cost of 11 mirllion for extension of the
barrage, penstocks and powerhouse foundations for the future
construction of a power plant\.
iw* To be incorporated in Item II(a)
TABLE NO\. II(a)
IRRIGATION PROJECT
Estimated Cost of the Project
Foreign Cur- Local Cur- Total Cost
rency Cost rency Cost In thou- In thlou-
in thousands in thou- send alde
Itemi Description U\.S\.$ sanids(Bahts) U\.SX Bht
I Barrage and Power-
house 3,793 76,700 9,920 121,000
IT Distribution System 8,,811 267,000 30,210 377,600
III Equipment for Cen-
tral 7rorkshop 867 8,4oo 1,h50 19,300
IT Consulting and Con-
tractors Fees 640 3,500 920 11,500
V Contingencies 1,289 23,000 3,130 39,100
VI Interest during
construction 2,600 - 2,600 32,500
VII Iliscellaneous (Land
Appropriation, etc) 54oco 4,320 54,ooo
VIII Overhead charges - 38,000 3,0h0 38,000
IK Maintenance during
Construction 33,000 2,640 33,000
Total 18,000 5(3?600 580320 729,000
US$1 = 12\.5 Baht - official rate,
TABLE NO\. III
PORT PROJECT
Esti\.ate of Costs
Foreign Cur- Local Cur- Total Cost
rency Cost in rency cost in In thou- In thou-
Item thousands USa thousands Bahts sands USV, sands BantE/
1) Dredging of Bangkok
Bar 3,000 33,000 5,640 70,500
2) 8 semi-portal
cranes & crane rails
& feedi;ng lines 375 1\.,700 511 6,387
3) Povrerhouse, 1500 kvT\. 200 2,000 360 14,5oo
h4) 187 shuttle doors 248 860 317 3,963
5) 28 scales 35 120 45 558
6) Shunting track and
equipment 225 4',500 585 7,313
7) Aids to navigation 400 1,000 480 6,300
8) 1 tug boat 160 5O0 200 2,500
9) 10% conitingencies 127-/ 14 320 472 5,90l
4,770?-/ 43 LOOO00Q 5,61D _107_,625
1/ On iwems 3 to 8\.
2/ The loan of ,;14\.14 million covers all items except 2\.
3/ US$1 = 12\.5 Baht - official rate\. | APPROVAL |
P084596 | Document of
The World Bank
Report No: ICR00001193
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-39270)
ON A
CREDIT
IN THE AMOUNT OF SDR 8\.2 MILLION
(US$ 12\.0 MILLION EQUIVALENT)
TO
BOSNIA AND HERZEGOVINA
FOR A
SECOND EMPLOYMENT SUPPORT PROJECT
September 29, 2009
South East Europe Country Unit
Human Development Sector Unit
Europe and Central Asia Region
1
CURRENCY EQUIVALENTS
(Exchange Rate Effective July 1, 2009)
Currency Unit = KM
1\.00 KM = US$ 0\.66
US$ 1\.00 = 1\.51 KM
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
ALMPs Active Labor Market Programs
BH Bosnia and Herzegovina
CAS Country Assistance Strategy
DEF Development and Employment Fund
ECA Europe and Central Asia
EMSAC Economic Management Structural Adjustment Credit
FBH Federation of Bosnia and Herzegovina
IDB Investment and Development Bank
ILO Economic Management Structural Adjustment Credit
LIP Local Initiatives Project
MTDS Medium Term Development Strategy
OECD Organization for Economic Cooperation and Development
PAD Project Appraisal Document
PES Public Employment Services
PERLP Pilot Emergency Labor Redeployment Project
PRSP Poverty Reduction Strategy Paper
PSAC Programmatic Structural Adjustment Credit
PTAC Privatization Technical Assistance Credit
RS Republika Srpska
SITAP Social Insurance Technical Assistance Project
SESER Socio Economic Support, Education and Redeployment Unit
SESP Second Employment Support Project
SOSAC Social Sector Adjustment Credit
SOTAC Social Sector Technical Assistance Credit
QAE Quality at Entry Assessment
QAG Quality Assurance Group
Vice President: Philippe H\. Le Houerou
Country Director: Jane Armitage
Sector Manager: Kathy A\. Lindert
Project Team Leader: Maniza B\. Naqvi
ICR Team Leader: Zorica Lesic
2
BOSNIA and HERZEGOVINA
Second Employment Support Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring (if any)
I\. Disbursement Profile
1\. Project Context, Development Objectives and Design \. 4
2\. Key Factors Affecting Implementation and Outcomes \. 9
3\. Assessment of Outcomes \. 12
4\. Assessment of Risk to Development Outcome \. 17
5\. Assessment of Bank and Borrower Performance \. 17
6\. Lessons Learned \. 20
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 20
Annex 1\. Project Costs and Financing \. 21
Annex 3\. Economic and Financial Analysis \. 26
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 27
Annex 5\. Beneficiary Survey Results\. 28
Annex 6\. Stakeholder Workshop Report and Results \. 29
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 30
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 45
Annex 9\. List of Supporting Documents \. 46
MAP IBRD 33375R
3
A\. Basic Information
Bosnia and Employment Support 2
Country: Project Name:
Herzegovina Project
Project ID: P084596 L/C/TF Number(s): IDA-39270
ICR Date: 09/30/2009 ICR Type: Core ICR
GOVERNMENT OF
Lending Instrument: SIL Borrower: BOSNIA AND
HERZEGOVINA
Original Total
XDR 8\.2M Disbursed Amount: XDR 8\.2M
Commitment:
Revised Amount: XDR 8\.2M
Environmental Category: C
Implementing Agencies:
The RS IDB-Development and Employment Fund
PIU SESER - Ministry of Labor FBH
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 02/12/2004 Effectiveness: 12/17/2004
Appraisal: 04/01/2004 Restructuring(s):
Approval: 06/15/2004 Mid-term Review: 10/30/2006 10/30/2006
Closing: 09/30/2008 03/31/2009
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Moderately Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Satisfactory
Implementing
Quality of Supervision: Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem Project Quality at Entry Moderately
No
at any time (Yes/No): (QEA): Unsatisfactory
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 10 10
Other social services 85 85
Sub-national government administration 5 5
Theme Code (as % of total Bank financing)
Education for the knowledge economy 20 20
Improving labor markets 40 40
Social risk mitigation 20 20
Social safety nets 20 20
E\. Bank Staff
Positions At ICR At Approval
Vice President: Philippe H\. Le Houerou Shigeo Katsu
Country Director: Jane Armitage Orsalia Kalantzopoulos
Sector Manager: Kathy A\. Lindert Hermann A\. von Gersdorff
Project Team Leader: Maniza B\. Naqvi Maniza B\. Naqvi
ICR Team Leader: Zorica Lesic
ICR Primary Author: Zorica Lesic
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
Provision of employment services for an estimated 10,000 people who are either recently
retrenched and above 45 years of age and/or those who are actively seeking jobs for two
or more years in Republika Srpska (RS) and Federation of Bosnia and Herzegovina
FBH); and
ii
Further reform agenda to bring behavioral change and business change in the
employment services by focusing the Public Employment Services (PES) on providing
effective job brokerage services; employment assistance programs including counseling
services; programs to assist the unemployed; analytical and information services
including disseminating labor market information\. The Second Employment Support
Project (SESP) would use its financial resources to leverage significant non financial
outcomes of change in focus and approaches for the employment services\.
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Indicator 1 : Job brokerage services and ALMP measures for 10,000 persons
Less than 1000 persons
Value
employed through
quantitative or 10,000 10,836
ALMPs by the
Qualitative)
Employment services
Date achieved 12/31/2005 03/31/2009 03/31/2009
Fully achieved and slightly exceeded its primary development objective by
Comments
providing job counseling and employment services to 10,836 persons in the
(incl\. %
target group of 40 years of age and above, who were actively seeking jobs and
achievement)
were socially vulnerable\.
PES expenditures, revenues, procedures, databases for registered unemployed;
Indicator 2 : labor market information; and staffing would indicate a shift to primarily
focusing on effective employment services measures\.
Formal registration
of farmers/workers
as employed
persons
Accurate Rule book on
No systematic criteria or
registeration of registration of
policy for selection of
unemployed\. unemployed and
beneficiaries\. Lack of
Focus of EIs on employed by
Value networked data bases
job brokerage\. employers
quantitative or amongst EIs nationwide\.
Networked Standardized
Qualitative) Low allocation of
databases\. operations of the
financing for ALMP and
Demand driven PESs
job brokerage
services in ALMPs Private sector job
and job brokerage brokers
participation
through sub-
contracting for the
provision of
iii
ALMP
Date achieved 12/31/2005 03/31/2009 03/31/2009
Partially achieved\.
Comments
PES expenditures, revenues, procedures, databases for registered unemployed
(incl\. %
and labor market information indicate a shift to primarily focusing on effective
achievement)
employment services measures\.
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Adoption and implementation of job brokerage and ALPMs by employment
Indicator 1 :
services\.
10,836 active job
seekers placed in
PES beneficaries in jobs and income
Value ALPMs and credit earning
(quantitative programs in year 2004 10,000 oportunities, 70%
or Qualitative) less than 4,000 of which remained
individuals\. in their jobs one
year after being
placed\.
Date achieved 12/31/2005 03/31/2009 03/31/2009
Comments
Fully achieved\.
(incl\. %
achievement)
Development and delivery of transparent small grants programs based on annual
Indicator 2 :
minimum wage index, instead of credit scheme\.
Reduced usage of
Value non transparent
(quantitative Not availabe Not available loans by
or Qualitative) employment
services\.
Date achieved 12/31/2005 03/31/2009 03/31/2009
Comments Substantionaly achieved\.
(incl\. % PESs have adopted project approach to transparent ALPMs and job brokerage,
achievement) costs for job brokerage and ALPMs show decrease in costs annualy\.
Recognition of all legal income earning opportunities (such as farming and
Indicator 3 :
agribusiness) as jobs\.
The Law on
Workers in agricalture not
Value Agriculture has has
recognized as employed\.
(quantitative Not available been drafted in the
Farming not recognized
or Qualitative) FBHand has been
as employment\.
adopted in the RS\.
Date achieved 12/31/2005 03/31/2009 03/31/2009
Comments Partially achieved\.
(incl\. % There is an evident interest amongst people working in agriculture, and listed as
iv
achievement) unemployed in the employment service records, to be registered (more than
1,000 persons in the first two years of the project implementation)\.
PES expenditures reflect primary focus on employment services and not on other
Indicator 4 :
tasks\.
Value More than 60% of
(quantitative expenditures on non- Not available\. Not available\.
or Qualitative) employment services\.
Date achieved 12/31/2005 03/31/2009 03/31/2009
Partially achieved\.
Comments
Although there is no figure provided in the Bank or PIUs documents to evidence
(incl\. %
the achievement of this indicator related to stated baseline - there is an evidence
achievement)
of achievement based on number of client served by PESs
Social Insurance Benefit payments such as Health Insurance Benefits/Pension
Indicator 5 :
Benefits and cash benefits transferred to an appropriate agencies\.
Although the
project provided
evidence that unless
health insurance
benefits were
delinked from
Value
unemployment
(quantitative Not available Not available
benefits - the
or Qualitative)
numbers of persons
registered as
unemployed would
remain high; this
was not done due to
political reasons\.
Date achieved 12/31/2005 03/31/2009 03/31/2009
Comments
Not achieved\.
(incl\. %
achievement)
Indicator 6 : Updated Research and Information Data base on Labor Markets\.
Value
(quantitative
or Qualitative)
Date achieved
Comments
(incl\. %
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 06/30/2004 Satisfactory Satisfactory 0\.00
2 12/16/2004 Satisfactory Satisfactory 0\.00
v
3 03/02/2005 Satisfactory Satisfactory 0\.00
4 06/03/2005 Satisfactory Satisfactory 1\.17
5 11/03/2005 Satisfactory Satisfactory 1\.30
6 03/09/2006 Satisfactory Satisfactory 1\.47
7 11/08/2006 Satisfactory Satisfactory 3\.23
8 05/03/2007 Satisfactory Satisfactory 5\.60
9 08/09/2007 Satisfactory Satisfactory 7\.01
10 05/09/2008 Satisfactory Satisfactory 10\.43
11 12/24/2008 Satisfactory Satisfactory 12\.61
12 03/26/2009 Satisfactory Satisfactory 12\.62
H\. Restructuring (if any)
Not Applicable
I\. Disbursement Profile
vi
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
Country and sector issues
Destruction and displacement caused by war as well as transition have led to the high
rates of unemployment in Bosnia and Herzegovina (BH)\. In addition, the necessary
reforms of state owned enterprises, public sector and corporate restructuring, and
privatization led to retrenchment of employees and therefore additional short to medium
term unemployment\. Pre-war industry in the region, as well as in BH, was organized
around heavy metal enterprises, mining, construction and other industries that primarily
fed into the defense industry of the former Yugoslavia\. Employees held jobs for life and
worked five days a week\. However, the mainstay or second job of the mostly rural
population was in agriculture\. With the loss of jobs in the formal sector, most of the
population has returned to agriculture not as a primary source of income but as a safety
net\. The agribusiness sector also provides viable income generation opportunities\.
At the time of Project design, the formal labor force in BH which was listed as employed
in the state run enterprises was in the age group of 40 and above, while the younger
population was employed mainly in the unregistered firms in the informal sector, which
included agriculture\. Retrenchment envisaged therefore affecting the older population
and their households, making them vulnerable given that they were less likely to find new
employment\. The slow pace of job creation in the formal sector due to a lack of new
investments in the country continued to affect younger job seekers and provide them with
a disincentive to remain in the country\. Remittances from family members working
abroad constituted a significant share of households' income\.
The Medium Term Development Strategy (MTDS/PRSP), adopted by the Government of
BH in 2004, recognized that an increase in employment could be expected mainly in the
private sector and that employment would be best generated through measures for
encouraging entrepreneurship and reform across all sectors including in the provision of
employment and job brokerage services\. The MTDS set its context for the labor market
in the implementation of vital reforms in the public sector between 2004 and 2007 which
would, in the short term, cause a reduction of jobs\.
In support of this strategy the World Bank 2004 Country Assistance Strategy (CAS,
Report No: 29196-BA) focused its support on reforming the public sector, furthering
privatization, revitalizing enterprises, improving corporate governance, while at the same
time reforming social protection and labor market policies\. This was to be achieved
through the adjustment and technical assistance operations of: the Second Social Sector
Adjustment Credit (SOSACII; Credit 3926 BOS); the Economic Management Structural
Adjustment Credit (EMSAC; Credit 3925 BOS); the Social Insurance Technical
Assistance Project (SITAP; Credit 3778 BOS); the Privatization Technical Assistance
Credit (PTAC; Credit 3531 BOS); as well as investment lending operations such as the
Second Employment Support Project (SESP)\.
4
Major findings of the labor market study and the experience of earlier Bank supported
projects, such as the Pilot Emergency Labor Redeployment Project (PELRP) which
successfully provided cost effective job brokerage services to 8,000 ex-soldiers,
confirmed that the country's labor markets remained distorted due to continued and
accumulating institutional and administrative imbalances caused by the war and transition
as well as residual rigidities of the previous system\. Key findings included:
Data on registered unemployment vastly exaggerated true prevalence of
unemployment\. The actual unemployment rate was estimated more likely to be in
the range of 16-20 percent\. According to the 2001 labor force survey, out of the
total registered unemployed in BH, only slightly less than a quarter qualified as
unemployed under the standard definition of the Economic Management
Structural Adjustment Credit and the Organization for Economic Cooperation and
Development (ILO-OECD)\. The rest were either employed (another quarter) or
inactive (51 percent)\. The main reason for unemployment registration appeared
to be access to free health services upon registration\.
Job creation and reallocation of jobs in the formal sector was slow, particularly in
Republika Srpska (RS), and the formal sector workforce had become considerably
older, while young workers were denied access to formal sector jobs\. This
contributed to a large informal sector in BH with most of informal employment,
including for the young and women, taking place in small-scale
agriculture/farming (47 percent), construction (17 percent) and manufacturing (9
percent)\. The majority of informal workers were employed by private employers,
28 percent were self-employed, and about one-fifth were contributing family
members\.
Workers in agriculture were not considered as employed\.
Worker mobility was modest due to constraints in relocation within and between
entities and restructuring of state enterprises and housing availability\.
Despite the overall context of a stagnant labor market, private firms and agri-
business were much more dynamic in all aspects of job flows, including net
employment growth\.
A rigid wage determination system stood in the way of job creation and worker
mobility\.
Taxes and contributions accounted for 69 percent of labor costs in the Federation
BH and 52 percent in the RS which were a disincentive for registering as
employed\.
The number of persons registered as unemployed with the Public Employment
Services (PES) in 2004 did not and still does not reflect the actual number of
unemployed persons in BH\. The PES main function is the usage of unemployment
insurance contributions and the provision of health insurance benefits and other cash
benefits for those registered as unemployed\. This still provides a key incentive for
persons to remain registered as unemployed\.
Persons registered as unemployed with PESs (2004)
5
Regions Population Registered Informal Estimate Informal Estimate
(estimate) Unemployed of Active Job of Most
Seekers Vulnerable
RS 1,400,000 138,000 118,000 29,119
Federation BH 3,015,420 296,686 160,442 70,000
Expenditures of PESs indicated that job brokerage services and Active Labor Market
Programs (ALMPs) were not the primary function of these public agencies\. ALMPs
constituted over 50 percent of expenditures by the PES in the RS and less than 30 percent
of the PES expenditures in the Federation BH\. A major portion of expenditures was on
the provision of health insurance to the registered unemployed\. Graduates upon
completion of secondary or university education were eligible to register and receive
health insurance\. In addition, the PES in the Federation BH allocated a major portion of
funds for credit programs\. A functional review of the PES in the Federation BH
concluded that these credit programs were non-poor targeted, lacking in transparency,
and ad-hoc in client identification\. Credit programs, health insurance and cash benefits
constituted the major portion of the PES operations while job brokerage and ALMPs
were negligible or non-existent\. Income earning activities such as agricultural work or
agri-business/farming were not considered as a job or as employment\. Farmers were
therefore registered as unemployed\. This was due to the employment services orientation
which, to a large extent, remained geared towards a pre-transition economy of supplying
labor to state owned enterprises\.
Rationale for Bank involvement
Starting in 2004, the BH was likely to experience, as a result of adjustment, privatization
and corporate restructuring, significant movements in its labor market which included
substantial job shedding in the corporate and government sectors (the latter including, but
not exclusively, defense)\. The Bank played an important role in labor market policy
formulation, based on its analytical and operational work on labor markets, including
ALMPs, and labor redeployment in BH and in South Eastern Europe\. The Bank had
gained experience addressing such issues through its work on: (i) the Pilot Emergency
Labor Redeployment Project (PELRP) which constituted a significant portion of all
ALMP experiences in BH; (ii) the functional review of the PESs conducted under the
Social Sector Technical Assistance Credit (SOTAC) and the reform policy dialogue
furthered by the Second Social Adjustment Credit (SOSAC II); and (iii) the micro-
finance operations under the first and the second Local Initiatives Projects (LIP I and LIP
II)\.
The Bank's involvement, through the SESP, in furthering the reform agenda of
transforming the PES and of mitigating the affects of retrenchment was highly relevant
with respect to both timing and substance\. Addressing labor markets and the poor
performance of institutions active in them was an important objective of the CAS and this
project was consistent with this objective\. As such, the Project sought to build on the
experience of the PELRP and to contribute to the formulation and implementation of
social risk mitigation policies, which the Government was under high pressure to
establish\. The SESP envisaged furthering the reform and changing the employment
6
services towards effective job brokerage and ALMPs\. The likely wave of retrenchments
was planned as a direct or indirect result of policies supported by other Bank operations:
- Economic Management Structural Adjustment Credit (EMSAC) supporting reform
of public administration to reduce its share in the economy;
- Privatization Technical Assistance Credit (PTAC) to facilitate transparent
privatization of selected state owned enterprises;
- Business Environment Adjustment Credit (BAC) in the context of strengthening the
business environment by facilitating business entry, operation and exit
- Second Social Sector Adjustment Credit (SOSACII) supporting the establishment of
better targeted and more efficient safety nets\.
- Programmatic Structural Adjustment Credit (PSAC) facilitating enterprise
restructuring and improved corporate governance\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators (as
approved)
The SESP development objectives, as defined in the Project Appraisal Document (PAD),
were:
(i) provision of employment services for an estimated 10,000 people who were either
recently retrenched and above 45 years of age and/or those who were actively seeking
jobs for two or more years; and
(ii) furthering reform agenda to bring behavioral and business changes in the employment
services by focusing the PES on providing: effective job brokerage services;
employment assistance programs including counseling services; programs to assist the
unemployed; analytical and information services including disseminating labor market
information\.
The SESP was expected to use its financial resources to leverage significant non financial
outcomes of change in focus and approaches for the employment services\.
SESP key indicators included the following outcome indicators:
1\. The successful delivery of ALMPs and job brokerage services to an estimated
10,000 active job seekers and the most vulnerable groups of unemployed;
2\. PES expenditures, revenues, procedures, databases for registered unemployed;
labor market information; and staffing would indicate a shift to primarily focusing
on effective employment services measures\.
As well as intermediate results per components:
1\. Adoption and implementation of job brokerage and ALMPs by employment services\.
2\. Development and delivery of transparent small grants program based on annual
minimum wage index, instead of credit scheme;
3\. Recognition of all legal opportunities (such as farming and agribusiness) as jobs;
7
3\. PES expenditures reflect primary focus on employment services and not on other
tasks;
4\. Social Insurance Benefit payments such as Health Insurance Benefits/Pension
Benefits and cash benefits transferred to appropriate agencies; and
5\. Updated Research and Information Data base on Labor Markets\.
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators,
and reasons/justification
There were no changes in the Project Development Objectives or key indicators during
the implementation of the Project\.
1\.4 Main Beneficiaries
The SESP's target group of beneficiaries included individuals who were: (i) registered as
unemployed with the PES; (ii) active job seekers for more than two years; (iii) over the
age of 45 (this threshold was lowered during the course of the project to 40 due to a
flexible approach which re-assessed annually the demand and vulnerability criteria); (iv)
had no other income earning family member; and (v) were unskilled\. These criteria
largely eliminated the so-called "creaming off" effect when the most employable job
seekers may be selected into the programs\. In particular, 34 percent of beneficiaries had
primary or lower education level; 31 percent graduated secondary school with three-year
course, and 30 percent with four-year course; 61 percent of beneficiaries were males and
39 percent were females\.
1\.5 Original Components (as approved)
Active Labor Market Programs and Job Brokerage Services (US$9\.0 million
equivalent)
The objective of this component was to focus the PES on matching employers with job
vacancies to appropriately skilled active job seekers; and on providing, through private
sector service providers, income earning opportunities to active job seekers and to the
hardcore unemployed based on the experience of the PELRP\.
Activities under this component included: counseling services; on the job training;
support for self employment in agriculture, agribusiness, small businesses; job fair and
public works; business advisory services and skills enhancement training\.
Institution Building and Technical Assistance to the PES (US$1\.5 million
equivalent)
This component aimed to upgrade and strengthen the PES capacity to provide and
outsource job brokerage services through the development of effective procedures, clear
guidelines and regulations, staff training and the piloting of analytical labor market
8
information systems including introducing labor market research units in the Ministries
of Labor\.
Project Management (US$1\.5 million equivalent)
The objective of this component was to support project implementation and coordination
between all partners in the SESP\. The Project was to be managed by the Project
Implementation Units (PIUs) and included supervision and monitoring of all components
under the Project as well as the knowledge transfer to and training of participating
agencies (PES)\.
1\.6 Revised Components
The Project components were not revised during implementation\.
1\.7 Other significant changes
There were no significant changes during project implementation\. The Development
Credit Agreement for the Project was signed on July 21, 2004, and the Project became
effective in December 2004\.
The Project was scheduled to close on September 30, 2008\. However, in response to a
Government request to extend the Closing Date for an additional six months, the closing
date of the Project was extended until March 31, 2009\. The reason for the extension was
that project effectiveness had been delayed by six months, due to the lengthy procedures
of ratification of the Credit Agreement and Subsidiary Credit Agreements by the state
and entities parliaments\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
The Project was identified on the basis of a consultation workshop held in September
2003 with key partners from the employment services and was based on the experience
and lessons learned from two previous employment support projects, including the
PELRP, as well a technical assistance loan which covered in depth the functional review
of the PESs (SOTAC)\. However, these lessons were not adequately analyzed and project
design did not include an alternative approaches to providing employment services to
different groups\. In addition, there was no detailed description of what the employment
services were doing and how the expected institutional change was going to be carried
out\.
Project design suffered from a short preparation time\. Initially, the Project was expected
to replicate successful approaches related to training and job placement that had been
developed under the PELRP\. Following the suggestions of reviewers who participated in
the Project Concept Note review and the Quality at Entry Review, the team agreed to
expand the Project's objectives beyond the originally proposed scope\. The final project
9
design contained several new and ambitious institutional reform objectives and a
completely new target group and selection criteria, which were not articulated in detail in
the PAD\.
Although, there was no evidence of active consultation with other donors, the Project
appeared to be in line with activities pursued by other donors\.
The Bank's Quality Assurance Group (QAG) reviewed the Project in 2005\. This was a
two stage assessment\. The first stage review was conducted in May 2005 and was rated
as moderately unsatisfactory, due to: technical aspects, appropriateness and realism of the
institutional capacity building measures, and arrangements for monitoring and impact
evaluation\. Both the sector and the country management in the ECA Region differed
from QAG's assessment, considering the Quality at Entry Assessment (QEA) for the
SESP to be satisfactory\. In particular, the Region differed from QAG on their assessment
of the technical, financial and economic aspects and the implementation arrangements for
the Project\.
The second stage review was conducted in July 2005\. The panel reviewed the
shortcomings identified by the Stage 1 panel, the response from the task team and the
subsequent comments in the final assessment\. After considering the Region's comments
and the additional information presented during the interview the panel found no basis for
changing the write-up or ratings of the previous panel\.
2\.2 Implementation
Although project effectiveness was delayed due to lengthy process of parliamentary
ratification of international agreements (including International Development Association
credits) which at the time included an adjustment credit (SOSAC II) and a technical
assistance credit (PTAC), this did not have a negative effect on the SESP implementation
and performance in terms of achieving its development objectives\. Project
implementation was smooth with disbursements on target\.
Both implementing agencies, the Socio Economic Support, Education and Redeployment
Unit (PIU SESER) in the FBH and the Development and Employment Fund (DEF) in the
RS, had sufficient capacity\. Project teams in both entities were experienced and did not
have any turnover of staff; therefore the performance of the implementation teams
including financial management and procurement remained satisfactory throughout
project implementation\. Project ownership and the close cooperation of PIUs staff and
line Ministries were key factors leading to a smooth implementation despite the changes
of Ministers\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
The Results Framework and Monitoring in the Project Appraisal Document (PAD) are
assessed as moderately satisfactory\. While the indicators for monitoring progress toward
PDOs are considered adequate baseline information and target values were missing\.
10
In terms of implementation, the ICR team noted a discrepancy between the second
outcome indicator listed in the PAD and the indicator monitored during implementation
and reflected in the Implementation Status and Results Reports (ISRs)\. Furthermore, the
PAD includes several intermediate indicators that were not included and/or monitored in
the ISRs\. Fortunately, regular PIU reports and the Monitoring and Evaluation system for
the overall project activities included indicators from the original results framework, thus
providing the ICR team with the data required to evaluate Project outputs and outcomes1\.
Despite the poor information included the ISRs, the overall M&E implementation and
utilization are assessed as moderately satisfactory given that the PIUs and Monitoring and
Evaluation systems were able to produce the data to monitor progress toward achieving
PDOs\. As previously mentioned the system was based on the originally designed results
framework in the PAD and regularly monitored those indicators\.
2\.4 Safeguard and Fiduciary Compliance
The environmental category for this project was C\. There were no major environmental
issues during the project implementation; furthermore, it is likely that the Project affected
the environment positively through the activities that included short term public works
such as garbage collection, particularly alongside the rivers\.
As mentioned earlier, the Project was managed by the Socio Economic Support,
Education and Redeployment Unit (PIU SESER) in the Federation BH and the
Development and Employment Fund (DEF) in the RS\. After October 2007, the DEF
became an integral part of the newly established RS Investment and Development Bank
(IDB)\. The financial management arrangements have been transferred to the accounting
department of the IDB and continued to be supervised by the previous financial
management specialist\.
Both implementation units had appropriately experienced staff, capable to maintain up to
date accounting records and prepare financial management reports on time\. The financial
manuals for the Project were regularly updated in order to reflect recommendations given
by the Bank team\.
1
Specific to the outcome indicator mentioned above, the second PAD indicator was: PES expenditures,
revenues, procedures, databases for registered unemployed; labor market information; and staffing would
indicate a shift to primarily focusing on effective employment services measures\. The corresponding
Results Indicators for the Component 2 included: (i) Recognition of all legal income earning opportunities
(such as farming and agribusiness) as jobs; (ii) PES expenditures reflect primary focus on employment
services and not on other tasks; (iii) Social Insurance Benefit payments such as Health Insurance
Benefits/Pension Benefits and cash benefits transferred to an appropriate agencies; and (iv) Updated
Research and Information Data base on Labor Markets\. However, the corresponding indicator in the ISR
is: Strengthening of institutional capacity of employment offices for job brokerage\. The corresponding
Results Indicator monitored in the ISRs was (i) Employment Institutes capacity for job brokerage and
ALMPs\.
11
The Project's financial statements were audited on an annual basis by independent
auditors and all audit reports were unqualified\.
Procurement and financial management activities performed under the project were done
in accordance with agreed procurement methods and were considered of satisfactory
quality during implementation\.
2\.5 Post-completion Operation/Next Phase
The Project has played a significant role in moving policy direction on employment
services towards a focus on job brokerage and job counseling\. The SESP supported
legislative changes in encouraging even more active involvement of private sector in the
provision of labor market services such as training and job brokerage as an integral part
of PES reform\. In the RS the usage of private brokerage firms has been adopted, while in
the Federation BH the project supported drafting of legislation which is currently under
consideration by the Government\.
Additionally, the Project supported an extensive training for PESs staff in both entities,
including training for counselors to apply techniques for active job seeking, general
computer literacy training for the employment offices' staff, and training on monitoring
and evaluation\. The capacity for implementation built under the SESP has been
instrumental in the work underway on social safety nets and the rationalization of non
insurance social benefits\.
Finally, The Social Safety Net and Employment Project currently under preparation will
include a component to further support job brokerage and ALMPs\. As proposed, this
component would support provision of job brokerage services to 15,000 vulnerable
unemployed persons\. The proposed Project would also facilitate further improvements of
efficiency, effectiveness, and targeting of job brokerage services by the PESs; while at
the same time promoting the role of private job brokerage agencies\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
The Project objectives of direct delivery of services and institutional development were
and remain highly relevant and consistent with the country's development priorities, as
well as the PRSP objectives of improving livelihood opportunities for the citizens of BH,
and the 2004 CAS objectives, and (social sustainability, fostering private sector led
growth and strengthening institutions and governance), the current Country Partnership
Strategy (CPS FY08 - FY11, Report No\. 41330-BA) approved in 2007 (improving the
quality of public spending and the delivery of public services for the vulnerable)\.
Addressing labor market deficiencies and the poor performance of institutions active in
them was an important objective at the time of project preparation, as stated in the CAS,
and the Project fitted in well with this theme and other efforts in the sector\. Project
objectives responded to the problems of large scale unemployment resulting from
demobilization, displacement, and economic restructuring\. They also responded to the
12
longer term needs to rebuild and restructure the employment services infrastructure so as
to respond to the challenges of the developing economy and the EU Employment
Strategy, as well as rebuilding networks disrupted by the conflict\.
The SESP has made a significant contribution in strengthening capacity of the PESs in
the country\. Transparent and well targeted ALMPs became an integral part of the PESs
activities\. The SESP took a flexible approach and focused its activities on the provision
of ALMPs (on the job training and employment; self employment; job counseling, public
works, skills enhancement) to the most vulnerable groups in the labor market\.
The SESP also provided evidence and demonstrated to the Government the
administrative, legislative and institutional bottlenecks, contradictions and complexities
which made it next to impossible to reduce registered unemployment numbers without
introducing legislative and institutional changes\. For example: unless health insurance
benefits were removed from the PES and delinked from unemployment benefits - the
numbers of persons registered as unemployed would remain high\. Unfortunately, the
political climate was not in favor of eliminating these bottlenecks\.
3\.2 Achievement of Project Development Objectives
Project objectives were:
Objective I: Provision of employment services for an estimated 10,000 people who were
either recently retrenched and above 45 years of age and/or those who were actively
seeking jobs for two or more years\.
The achievement level of this objective is satisfactory, as evidenced by fully achieved
first outcome indicator (Job brokerage services and ALPM measures for 10,000 persons),
as well as fully achieved intermediate indicator 1 (Adoption and implementation of job
brokerage and ALPMs by employment services) and substantially achieved intermediate
indicator 2 (Development and delivery of transparent small grants programs based on
annual minimum wage index, instead of credit scheme)\.
The Project slightly exceeded its primary development objective by providing job
counseling and employment services to 10,669 persons in the target group of 40 years of
age and above, who were actively seeking jobs and were socially vulnerable and low
skilled persons\. Of these, 3,524 persons were in the RS and 7,145 persons in the
Federation BH\. In the Federation BH, PIU SESER received financing from the entity
budget to provide SESP type employment services to 167 disabled persons\. All these
brought the total number of beneficiaries under the project to 10,836\. A summary of
project activities in provision of ALMPs is presented in the Table below:
13
Federation BH RS BH BH
Activity No\. of No\. of No\. of Costs per beneficiary (KM)
beneficiaries beneficiaries beneficiaries
On-the-job training 5,225 2,038 7,263 2,407
Skills enhancement 95 8 103 1,240
Self-employment 1,478 1,478 2,756 2,934
Public works 181 181 586
Job counseling 166 166 600
Services to disabled 167
persons
Total 7,312 3,524 10,836 2,474
Objective II: Furthering reform agenda to bring behavioral and business changes in the
employment services by focusing the PES on providing: effective job brokerage
services; employment assistance programs including counseling services; programs to
assist the unemployed; analytical and information services including disseminating
labor market information\.
The achievement level of this objective is moderately unsatisfactory\.
This objective is closely related to the second outcome indicator in the PAD: PES
expenditures, revenues, procedures, databases for registered unemployed; labor market
information and staffing would indicate a shift to primarily focusing on effective
employment services measures\.
This outcome indicator was partially achieved as evidenced by progress made against the
following indicators intermediate indicators:
Partially achieved indicator 3 - Recognition of all legal income earning opportunities
(such as farming and agribusiness) as jobs\.
There was an evident interest amongst people working in agriculture, and listed as
unemployed in the employment service records, to be registered (more than 1,000
persons in the first two years of the project implementation), however the law on
Agriculture was only adopted in Republika Srpska, while in the federation of BH the Law
has been drafted but not yet adopted\.
Partially achieved indicator 4 - PES expenditures reflect primary focus on employment
services and not on other tasks\.
Although there is no concrete figure provided in the documents produced by the Bank
team or PIUs to evidence the achievement of this indicator, there is a clear evidence of
number of persons served by PES\.
Not achieved indicator 5 - Social Insurance Benefit payments such as Health Insurance
Benefits/Pension Benefits and cash benefits transferred to appropriate agencies\.
Although the project provided evidence that unless health insurance benefits were
delinked from unemployment benefits - the numbers of persons registered as unemployed
would remain high; this was not done due to political reasons\.
14
Not achieved indicator 6 - Updated Research and Information Data base on Labor
Markets\. RS initiated development of employment services management information
system\. Employer survey has been piloted for the first time to obtain information on labor
demand\. However, the Public Employment Services in BH still need to develop a system
which will provide data on labor markets\.
Given that the Project fully achieved its first PDO indicator, and partially achieved its
second PDO indicator, its overall achievement is rated as Moderately Satisfactory\.
3\.3 Efficiency
The SESP's demonstration effect for cost effective job brokerage services and ALMPs is
yielding positive results\. A comparison of costs between the SESP financed and other
services by the PES in the Federation BH shows that the average cost per
beneficiary/placement was KM 5,343 for general programs while for those employed
through the SESP was KM 2,810\.
Within the contingent of job seekers served by the SESP, employment sustainability of
Project beneficiaries is also considered satisfactory\. A beneficiary survey of 1,763
persons whose SESP brokered 12 month contracts had expired was conducted in 2007\.
In the Federation BH, 77 percent remained in their jobs after their SESP contracts had
expired and remained off the list of the registered unemployed\. In the RS, 89 percent of
people kept their jobs while 11 percent returned to the lists of unemployed\.
15
3\.4 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
The overall outcome is rated moderately satisfactory for the following reasons\. First, at
the time of design the Project was highly relevant in terms of country priorities, including
the Government's overall strategy and objectives and the CAS\. Additionally, the Project
has maintained high strategic and substantive relevance throughout implementation,
particularly during the recent and current crisis context\. Second, the Project has
contributed to institutional capacity building\. However, in terms of achieving its stated
objectives, Project performance was moderately satisfactory\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
As already stated, the Project successfully reached its target group: registered active job
seekers over the age of 45, later lowered to 40 years of age, and within this category
considered the most vulnerable and hard core unemployed because they had been
unemployed for a period of more than 6 months\. In particular, 34 percent of beneficiaries
were with primary or lower education level; 31 percent graduated from secondary school
with a three-year course, and 30 percent with a four-year course; 61 percent of
beneficiaries were males and 39 percent were females\.
(b) Institutional Change/Strengthening
The SESP has made a major contribution in strengthening of the employment services in
the country\. Capacities of the PESs in both entities have been significantly strengthened
under the Project; transparent and well targeted ALMPs became an integral part of PES's
activities\. In the Federation BH, for example, after much publicized non-transparent and
poorly targeted activities in the previous period, the PES has had unqualified audit reports
for 2006, 2007 and 2008\. However, given the current labor market situation in BH, an
unfinished agenda of further reforms in employment and labor market policies still
remains\.
(c) Other Unintended Outcomes and Impacts
The Project has played a significant role in moving the policy agenda on employment
services towards a complete focus on job brokerage and job counseling\.
16
The Ministries of Labor agreed that reform of the employment services was a key issue
for improving the employment situation in the country\. In partnership with the SESP, the
PES in the Federation BH was able to remove 130,000 persons off the lists of registered
unemployed due to their non eligibility and inactivity\. However, these actions were
overturned in the Federation BH when incentives were provided by the Government to
re-register as unemployed demobilized soldiers\. The new legislation provided new cash
benefits for demobilized soldiers and prescribes that a condition to obtain other non-cash
benefits requires confirmation by the PESs that a demobilized solider is registered as
unemployed\.
Providing additional co-financing of 44 percent in the FBH and 28 percent in RS, the
Project was able to finance job coverage and employment services to a slightly larger
group than originally anticipated\. It also supported the introduction of sustainable
employment approaches in ALMPs for unemployed persons who belong to vulnerable
categories with lower cost per capita grants, thus replacing the non transparent loans
which were earlier provided by the PES\.
The Project also supported the implementation of the following activities which were not
part of the original project scope but had a direct impact in achieving PDOs:
PESs have piloted new and cost effective labor market interventions, such as vacancy
and job fairs\.
The implementation of new standards, procedures and processes in provision of
employment services in compliance with ISO 9001:2000 in the Federation BH\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
There is strong evidence that priorities supported by the Project will remain government
priorities in the future\. Indeed, some of the key project benefits have already been
mainstreamed to legislation adopted during project implementation, as outlined above\.
However, the PESs in BH still need to develop a fully-fledged Performance Information
and Management System (PIMS) to evaluate and assess the impact of ALMPs\. The PIMS
should provide real time information on key performance indicators, such as (i) program
enrollment by client characteristics, (ii) expenditures by program category, (iii) job
placement rates after program participation, (iv) cost per participant, and (v) cost per
placement, in regional disaggregation\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
17
The Bank's performance in ensuring quality at entry is rated as moderately satisfactory\.
On the positive side, the Bank's team had extensive experience in social protection and
related areas in Bosnia and Herzegovina via investment and adjustment lending\. The
team was also broad based, incorporating needed expertise\.
At the same time, the ICR team found some shortcomings in preparation\. The ICR team
believes that the project development outcomes and indicators could have been better
developed to be more consistent and more directly linked to the activities supported by
the project\. Additionally, project preparation should have included a solid evaluation of
the results of the Pilot Emergency Labor Redeployment project (PERLP); and a clearer
path of how the employment services should change\. Finally, once the original project
proposal was changed as the result of recommendations made by the QER, the team
should have further developed the new component that was added to the project and
related baseline standards against which to monitor progress\.
As mentioned before, the quality at entry was reviewed by the World Bank internal
Quality Assurance Group (QAG) in 2005 and was rated as Moderately Unsatisfactory\.
Both the sector and country management in the ECA Region considered that the quality
at entry of the SESP was satisfactory\. The Region's perspective on the quality at entry
was based on the fact that (i) there was a history of employment projects in BH which,
compared to other experience in BH and globally, had been both effective in placing
people and relatively cost-effective; (ii) under previous projects, employment services
were provided on a pilot basis for hundreds of the target group identified under the SESP,
and there was every reason to believe the flexible menu of support options would be
successful; (iii) the monitoring systems for beneficiaries was rigorous, and would enable
tracking over several years; and (iv) the Project had high ownership within the PES,
which was key to introducing and institutionalizing reform within the services\. The
Region considered that the technical aspects of the Project were well prepared,
particularly in regards to labor markets and employment\.
(b) Quality of Supervision
Rating: Satisfactory
Bank's performance in ensuring quality of supervision is rated as satisfactory\. During
Project supervision, the team assured a smooth implementation, including maintaining a
high level of policy dialogue in the social sector in general and its impact on the labor
market in particular\.
Supervision inputs and processes were adequate\. Supervision visits were undertaken at
least 4 times a year and ISRs prepared twice a year\. Regular procurement and financial
management reviews were carried out\. There was an adequate support from Bank
procurement and financial management specialists, which resulted in quick turnaround
time and responses to the requests\. The continuity of team members, in particular of the
Team Leader, as well as permanent presence of the team member in the World Bank
18
country office provided for continuity, helped to support ongoing supervision as well as
continuous policy dialog with main counterparts\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
Although, the project outcomes and the Bank's performance at supervision were assessed
as satisfactory, the overall Bank performance is rated as moderately satisfactory due to
the shortcomings identified during project preparation\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
Despite the initial delays caused by lengthy ratification process, the overall Government
performance is considered satisfactory\. The Governments of the Federation BH and the
RS have demonstrated strong commitment to the objectives of the SESP and its
successful completion\. This is reflected in co-financing arrangements of the Project,
where governments contributed over three times the original counter-part estimate\. In the
Federation BH, the Government and the PESs have co-financed 44 percent of the relevant
project costs, and in the RS, 28 percent\. The close cooperation of PIUs staff and line
Ministries, as well as ownership were the key factors of smooth implementation despite
the changes of Ministers\.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
The implementing agencies in the Federation BH and the RS were part of the ministries
of labor (and the ministry of finance in the RS)\. Both implementing agencies, the Socio
Economic Support, Education and Redeployment Unit (PIU SESER) in the FBH and the
Development and Employment Fund (DEF) in the RS, had sufficient capacity\. The
Project teams in both entities were experienced and did not have any turnover of staff\.
Both implementing agencies managed the Project well and provided effective
communication between the World Bank and relevant ministries, as well as the PESs\.
Procurement and financial management activities performed under the project were done
in accordance with agreed procurement methods and were of satisfactory quality\.
The capacity for implementation built under the SESP has been instrumental in the work
underway on social safety nets and the rationalization of non insurance social benefits\. In
the Federation BH, the PIU SESER has been tasked by the Government to support
persons with disabilities who were able to work with employment creation opportunities\.
(c) Justification of Rating for Overall Borrower Performance
19
Rating: Satisfactory
Overall, the Borrower's performance is rated as satisfactory\.
6\. Lessons Learned
Reflecting on the overall project, the key lessons that have been learned and/or reinforced
during project implementation are as follows:
Job creation and employment projects must be opportunistic and flexible in their
selection of target groups and approach to job brokerage services in order to be able
to take advantage of the changing realities of a country's labor market context\.
Assistance and advice in connecting employees to employers and matching skills to
opportunities is often more effective than providing a grant\.
Partnerships between public sector employment services and private sector job
brokerage firms can be cost effective\.
Monitoring and following up with employees and employers who have been matched
contributes to sustainability of employment and job placements\.
Proactive and intensive supervision by the Bank's team is crucial for the project
success\.
Through the provision of timely technical assistance during implementation, the
Bank's team can constructively and substantively engages with the Government in
policy reform dialogue\. Investment lending operations provide an opportunity to
understand sector policy issues and forge a close relationship with the Government if
supervision during implementation is frequent and if project design reflects
Government ownership\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
There are no issues raised by the implementing agencies\.
(b) Cofinanciers
Not applicable
(c) Other partners and stakeholders
(e\.g\. NGOs/private sector/civil society)
Not applicable
20
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
ACTIVE LABOR MARKET
PROGRAMS AND JOB 10\.50 16\.99 162
BROKERAGE SERVICES
INSTITUTIONAL BUILDING
AND TECHNICAL
1\.65 0\.78 47
ASSISTANCE TO THE
EMPLOYMENT SERVICES
PROJECT MANAGEMENT 1\.85 2\.26 122
Total Project Costs 14\.00 20\.03 143
(b) Financing
Appraisal Actual/Latest
Type of Estimate Estimate Percentage of
Source of Funds
Cofinancing (USD (USD Appraisal
millions) millions)
Borrower 2\.00 7\.19 360
International Development
12\.00 12\.84 107
Association (IDA)
21
Annex 2\. Outputs by Component
Component 1: Active Labor Market Programs and Job Brokerage Services (actual cost
US$16\.99 million equivalent)
The objective of this component was to focus the PES on matching employers with job
vacancies to appropriately skilled active job seekers; and on providing, through private
sector service providers, income earning opportunities to active job seekers and to the
hardcore unemployed based on the experience of the Pilot Emergency Labor Redeployment
Project (PELRP)\.
Activities under this component included: counseling services; on the job training;
support for self employment in agriculture, agribusiness, small businesses; job fair and
public works; business advisory services and skills enhancement training\.
The Project provided job counseling and employment services to a total of 10,836 people
of which 10,669 persons were in the target group of 40 years of age and above, who were
actively seeking jobs and were socially vulnerable and low skilled persons, and 167 were
people with disabilities\. Of those in the target group, 3,524 persons were in the RS and
7,145 persons in the Federation BH\. In the Federation BH, PIU SESER received
financing from the entity budget to provide SESP type employment services to 167
disabled persons\. A summary of project activities in provision of ALMPs is presented in
the Table below:
Federation BH RS BH BH
Activity No\. of No\. of No\. of Costs per beneficiary (KM)
beneficiaries beneficiaries beneficiaries
On-the-job training 5,225 2,038 7,263 2,407
Skills enhancement 95 8 103 1,240
Self-employment 1,478 1,478 2,756 2,934
Public works 181 181 586
Job counseling 166 166 600
Total 7,145 3,524 10,669 2,474
The most popular program supported by this component was the on-the-job training at
the existing vacancies, with incentives for employer for training, and payment of part of
the salary for a limited period of time\. A list of candidates eligible to participate in
training was established based on the records from an existing database, by using search
criteria of age, length of period of waiting for employment and length of years of
insurance\. Data on potential employers were collected by local employment bureaus\. The
contracts were signed between the Employment Service, the SESP and employer,
followed by a contract between the employer and the employee\. Since the contracts were
performance-based, in order to receive the final payment local employers proposing on
the job training were not only obliged to show evidence of demand for the training but
also to agree on a negotiated job placement rate of a minimum of 70 or 80 percent of
attendees for at least 6 to 12 months \.
22
sample 4381 user in the FBH
Returned to
unemployment evidence
28%
Did not returend to
unemployment evidence
72%
The vocational training and skills enhancement activity was much less popular, mostly
due to lack of job offers after graduation, and only 103 participants showed interest and
passed various courses\. The beneficiaries were provided with a range of trainings from
which to choose, including higher education, vocational training, professional training
specialization or advanced training; foreign languages, computers etc\. Training was
implemented by the institutions accredited by relevant ministries, and resulted in
obtaining of certificate (diploma) recognized in BH\. The beneficiaries were required to
submit the diploma or completion certificate to receive the final payment\.
Self-employment activities were also very popular among the target group of job seekers\.
Support in self-employment in agriculture and small business meant provision of
counseling services, training and professional assistance, purchase of initial resources for
establishment of agriculture or small business activity and monitoring\. Selection of
unemployed persons for this component was a complex process\. Every interested person
for small business was sent for a 3-5 day course in order to get familiar with the legal
aspects of the registration and opportunities\. An important part of the program was the
development of a business plan wherein the potential beneficiary laid out an idea, and
provided information that such idea was a good basis to be successful\. At the training,
they reviewed other aspects of money flows and learned how to prepare documents for
applying for the loan at commercial bank\. Upon course completion, the costs of the
inputs (livestock, agricultural machines, polythene greenhouse, seeds, and the like) were
paid directly to the suppliers previously selected according to a pre-established
procurement procedure\.
Public works and specialized job counseling programs (provided by private consultants)
did not gain popularity among the target group\. Perhaps the financial incentives (payment
of KM 600 for 60 days of work) were not seen as sufficient or potential beneficiaries
might have had other sources of income\.
Component 2: Institution Building and Technical Assistance to the PES (actual cost
US$0\.78 million equivalent)
This component aimed to upgrade and strengthen the Public Employment Services'
(PES) capacity to provide and outsource job brokerage services through the development
of effective procedures, clear guidelines and regulations, staff training and the piloting of
23
analytical labor market information systems including introducing labor market research
units in the Ministries of Labor\.
The main outputs of this component were:
Creation of the Book of Rules on Keeping Basic Records in the Field of Employment
in the Federation of BH
The purpose of creating a Book of Rules on Keeping Basic Records in the Field of
Employment was to standardize data and procedures in the Public Employment Offices
and Municipality Labor Bureaus\. The Book of Rules on Keeping Basic Records in the
Field of Employment provides legal conditions to begin the review of unemployed
persons registered with the Employment Offices\. At the same time, the rights and
responsibilities of registered unemployed people still tend to be unbalanced\. This is
largely a political issue and goes beyond the authority of the SESP\. For example, the only
obligation of the unemployed person, if active job-seeking programs such as counseling
or training are not available, according to the rulebook, is to regularly re-register at the
PES2\.
Implementation of Public Campaign with goal to prepare public for the forthcoming
reform in field of employment
In 2006 a public campaign was launched with the goals of: (i) informing the public on
regulations defined by the new Law on Employment Mediation and Social Security of
Unemployed Persons; and (ii) promoting a new active labor approach\. The public
campaign focused on providing clear and succinct informing on the following: (i) what
was new in the field of employment; (ii) who can be considered unemployed; (iii) when
does the status of unemployment terminate; and (iv) what is active search for a job\. The
campaign contributed to changing the attitude of unemployed persons in terms of their
own responsibilities for job search\. The campaign also informed of the work and
functions of the Employment Offices: active approach toward employers; active approach
to unemployed persons, who are searching for a job (counseling, informing, workshops,
etc\.); and employment incentive programs\.
Representatives of the Federal Ministry of Labor and Social Policy and Federal
Employment Institute, all employees of the Cantonal Employment Offices and
Municipality Labor Bureaus in FBH played an active role in the public campaign
implementation\.
Standardization of operations of the Public Employment Services
Introducing of ISO 9001: 2000 - SESP initiated and supported the process of Quality
Management System Organization in 10 cantonal and the Federation of BH level PESs in
2
Minimum once in 30 days if he/she receives unemployment benefit and pension and disability insurance (for example,
in the RS less than four percent of registered unemployed receive such benefits); once in 60 days if he/she receives
health care entitlement, and once in 90 days if he/she receives no such entitlements\. A person can be deleted from
unemployment records if he/she rejects offered by PES adequate job without defining what is "an adequate job"\.
24
order to establish new standards, procedures and processes in compliance with ISO 9001
and 2000\.
Private sector involvement
SESP supported legislative changes in encouraging even more active involvement of the
private sector in the provision of labor market services such as training, job brokerage
and other services, as an integral part of PES reform\. In the Republika Srpska the use of
private brokerage firms has already been adopted\. The Project supported drafting of
legislation in the Federation BH and the proposed law is currently under consideration by
the Government\.
Reduction and termination of non transparent loans by employment services
The Project supported the introduction of sustainable employment approaches in ALMPs
for unemployed persons who belong to vulnerable categories through lower cost per
capita grants (replacing the non transparent loans which were earlier provided by the
PES)\.
2005 / 2008 SESP Employment Services index
Number of users 6703 11\.061 165
Financial resources 18\.956\.900 59\.098\.212 312
(konvertibilna marka)
Average per user 2828 5343
In the RS, the SESP supported investments into developing an employment services
management information system based on job seeker and job vacancy databases\.
However, the PES in BH still needs to develop a fully-fledged Performance
Information and Management System (PIMS) to evaluate and assess the impact of
ALMPs\. The PIMS can provide real time information on key performance indicators,
such as (i) program enrollment by client characteristics, (ii) expenditures by program
category, (iii) job placement rates after program participation, (iv) cost per participant,
and (v) cost per placement, in regional disaggregation\. Also employer surveys have
been piloted for the first time to obtain information on labor demand\.
Component 3: Project Management (actual cost US$2\.26 million equivalent)
SESP has provided an extensive staff training for PES in both entities, including training
of counselors to apply techniques for active job seeking, general computer literacy
training for the employment offices' staff, and training on monitoring and evaluation\.
25
Annex 3\. Economic and Financial Analysis
(including assumptions in the analysis)
Not applicable\.
26
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Jasmina Hadzic Communications Asst\. ECCBA
Nikola Kerleta Procurement Analyst ECSPS
Carmen F\. Laurente Senior Program Assistant ECSHD
Imelda Mueller Operations Analyst ECSHD
Maniza B\. Naqvi Sr\. Social Protection Specialist ECSHD
Goran Tinjic Senior Operations Officer ECCBA
Sanjay N\. Vani Lead Financial Management Spec OPCFM
Supervision/ICR
Nicholay Chistyakov Senior Finance Officer LOAFC
Olav Rex Christensen Senior Public Finance Specialist HDNED
Lamija Hadzagic Financial Management Specialist ECSPS
Nikola Kerleta Procurement Analyst ECSPS
Sreypov Tep Program Assistant ECSHD
Maniza B\. Naqvi Sr Social Protection Specialist ECSHD
Senad Sacic Team Assistant ECCBA
Goran Tinjic Senior Operations Officer ECCBA
Lead Financial Management
Sanjay N\. Vani OPCFM
Specialist
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY04 25 98\.12
FY05 n\.a\. 0\.14
FY06 n\.a\. 0\.00
FY07 n\.a\. 0\.00
FY08 n\.a\. 0\.00
Total: 25 98\.26
Supervision/ICR
FY04 0\.00
FY05 25 75\.08
FY06 25 76\.30
FY07 30 91\.20
FY08 29 106\.81
FY09 16 0\.00
Total: 125 349\.39
27
Annex 5\. Beneficiary Survey Results
(if any)
Not applicable\.
28
Annex 6\. Stakeholder Workshop Report and Results
(if any)
Not applicable\.
29
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
Second Employment Support Project
Implementation Completion Report
Federal Ministry of Labor and Social Policy
Republika Srpska Ministry of Labor
I SESP OBJECTIVES
The basis for the Project design and setting up of the project development objectives was
the need to reduce poverty in the country caused by the war and the transition processes\.
Furthermore, the poverty reduction strategy in Bosnia and Herzegovina, adopted by the
entities and the state Government at the beginning of 2004, identified increase of
employment as one of the key measures\. Employment generation should be expected
primarily in the private sector through measures to stimulate entrepreneurship and
reforms in all sectors, including employment and job-brokerage services\.
On the basis of:
1\. Experiences acquired under the Pilot Emergency Redeployment Project (PERLP)
which, back in 2004, formed significant part of experiences in active labor market
programs in BiH; the SESP used the experiences gained under the PERLP and aimed at
transferring these experiences to public Employment Bureaus;
2\. Results of labor market studies which confirmed that national labor markets still have
accumulated misbalances caused by the war and transition, residual rigidities of the
previous system, presence of discrimination at work, and poor labor force mobility\. The
data on registered unemployment significantly exceeds the actual unemployment\.
Opening and allocating jobs in the formal sector has been slow, labor force in the formal
sector has been aging and young people have had no access to jobs\. This supports the
existence of a large informal sector, especially in the field of small agriculture, civil
engineering and small-scale production\.
3\. Findings of the Functional review of the public Employment Bureaus, showing that:
(i) Expenditures of the public Employment Bureaus do not reflect focus on job-
brokerage services and active labor market programs, which are the primary
functions of these public institutions\. Expenditures for these programs were less
than 30 percent of the overall expenditures in most of the Employment Bureaus\.
(ii) Employment Bureaus in the FBiH allocated a large share of funds for credit
programs that were not implemented in a transparent manner, with limited or non-
existent care about solvency, liquidity and creditworthiness of applicants\. These
programs were not aimed at the poor\. Instead, an ad hoc identification of clients
was made\.
Credit programs, health insurance and payments of unemployment benefits were the main
activities of the Employment Bureaus, while job-brokerage services and active labor
market programs were negligible or non-existent\.
30
Project design for SESP was adequate, and relevant project goals were set\.
The first project activity was focused on the active labor market programs and job-
brokerage services\.
The SESP goal was provision of employment services for estimated number of 10,000
vulnerable and hard-to-employ individuals in BiH, aged over 45 / 40;
The second project activity was focused on institutional strengthening and support for
public Employment Bureaus\.
The overarching goal of the SESP was the reform program to deliver behavioral change
in the Employment Bureaus by focusing their activities to efficient job-brokerage
services\. The SESP was supposed to use its financial resources to achieve significant
non-financial effects in terms of shift of focus and approach of the Employment Bureaus\.
Persons older than 40 / 45 were identified as the hard-to-employ group of unemployed
persons\. Significant portion of beneficiaries within this target group were people who
worked in the industries that no longer existed, whose skills were obsolete, and whose
mentality showed lack of trust in the private sector, denying the fact that the state cannot
provide lifetime jobs\. As the immediate post-war situation was replaced by problems
arising from a transition to market economy and importance of active labor market policy
increased, reforms planned under the Project as well as the SESP target group were
carefully and correctly identified\.
II MAIN FACTORS AFFECTING THE IMPLEMENTATION
Federation of Bosnia and Herzegovina
Public Employment Bureaus in the FBiH function as extremely complex system, with
weak vertical and horizontal links between institutions\. Employment Bureaus and the
Federal Employment Institute do not have an effective information management system
for tracking the unemployed persons which could meet the requirements of a modern
labor market\. Under competence of the Federal Employment Bureau, terms of reference
for establishing such system for municipal and cantonal bureaus were drafted in 2003\.
However, five years later the system is still not in place\.
Employment Bureaus and Federal Employment Institute did not have the appropriate
active labor market program, and monitoring process was inadequate\. The focus was
primarily on the program of subsidies instead on training of unemployed persons in
active job-search and general training for qualification in accordance with demands of the
labor market\.
It is obvious that the SESP Project generally affected reduction in actual amount of
subsidies for active labor market programs in the FBiH, and that, after four years of
implementation of the SESP Project, it was agreed that further correction of subsidies
should be made so that the existing amounts of support could be reduced to more
acceptable significantly lower level which will be in line with international practice\.
31
However, the factor that significantly influenced implementation of the SESP Project was
the attitude of staff in the Employment Bureaus and huge skepticism shown regarding
active measures of the Project as well as the amounts of subsidies foreseen within these
measures\. On the other hand, it was believed that much higher amounts foreseen in the
programs of the bureaus for the year 2005 were justified\. The staff of the Employment
Bureaus accepted refusal of unemployed persons to participate in the Project as normal
and justified due to the "amounts offered"\. Similar situation was seen in their relationship
with employers, since they believed that an employer will never hire a person from the
SESP target group with such an incentive and that it was a waste of time to animate
employers to take part in the SESP Project since Bureaus' programs offered much better
incentive\. It should be noted that the SESP supported active labor market programs were
implemented in parallel with programs of the Employment Bureaus in the FBiH\.
Labor market in BiH is characterized by lack of flexibility and high rate of
unemployment\. Number of long-term unemployed persons is extremely high\.
Employment Bureaus in BiH have 655,902 unemployed persons recorded\. However,
results of the Labor Force Survey (2007) showed that the actual number of unemployed
persons in BiH was about 303,329\. In this regard, about 350,573 persons should not be
clients of the Employment Bureaus, meaning that they were not unemployed according to
the ILO definition of unemployment\. Legislation in the FBIH defining organization of
social protection during temporary unemployment is inadequate, and as such had
significant effect on the project implementation\.
Legal framework that is currently in force states that a worker who lost a job has the right
to material remuneration in duration of 24 months which is extremely long period of time,
and the amount of support provided is linked to the average salary instead of contribution
history\. This stimulates employed persons with low income to register as unemployed, i\.e\.
this solution actually deactivates their status of active job seekers\. The Law on job-
brokerage services does not contain precise definition of the status of unemployed person,
procedures of acquiring the `unemployed' status, and procedures of monitoring during
the period of temporary unemployment\. Therefore, Employment Bureaus offer
inadequate registration process for unemployed persons\. This is important since large
numbers of unemployed persons are not looking for jobs and are not available for work
(being either employed in the informal sector or inactive)\. Also, relationship with
employers is inadequate, i\.e\., relations and intensity of contact between employers and
Employment Bureaus in the FBiH should be much stronger\. Establishing new registration
procedures and better monitoring of unemployment status of registered unemployed
persons would result in reduction of burden to the Employment Bureaus in the FBiH,
thus creating significant resources for active job seekers\.
Public Employment Bureaus are responsible for paying health insurance\. This is often the
main motivation for people to register as unemployed\. Right to health insurance can only
be acquired upon registration in Employment Bureaus in the FBiH\. Registration for the
purpose of health insurance and request for verification of rights to health insurance in
the Employment Bureau every two months represents additional burden to the staff
preventing them from providing standard services to their clients\.
32
In September 2006, during the implementation of the SESP, at its 169th session, the
Government of the FBiH defined and sent to urgent parliamentary procedure the draft
Law on Rights of Demobilised Veterans and their Family Members\. This law provided
definitions of the term veteran, as a participant in defence of BiH, volunteer in organising
the resistance, as the category that has the right to: financial support during
unemployment, rights resulting from reduced working ability, etc\. The basis for all forms
of financial support resulting from this law was the average monthly net salary in the
FBiH of the previous year, according to the report from the Federal Office of Statistics\.
These forms of financial support included support for demobilised veterans during
unemployment which was 25 percent of the average salary in the FBiH for the previous
year\. Depending on the time spent defending BiH, this form of support would be paid
during the period of one to three years\. Amendments to this law prescribe that funds used
for such purposes should be provided by cantonal employment bureaus in the amount of
50 percent of their total income realised on the basis of contributions for unemployment
insurance, and the remaining amount should be provided by the FBiH level and cantons
(budget)\.
Processing and provision of services for such a large number of people (financial support
during unemployment, health insurance, war veterans' support) burdened resources of
Employment Bureaus that would otherwise be used for job-brokerage services and active
labor market programs\. Furthermore, the current structure of social benefits in the FBiH
is an important generator of registered unemployment\.
In order to ensure uninterrupted implementation of the project it was necessary to ensure
timely and regular involvement of co-financiers, in line with the project agreements, and
that was actually achieved\. In the FBiH, the project was co-financed by the Government
of the FBiH and the Federal Employment Institute (FEI) , participating with 6\.73 million
$, or 46% of the total project expenditures of 14\.73 million $\. Out of this amount,
financing from the FEI was 6\.4 million $, and from the Government of FBiH 0\.33
million $\.
It is important to point out that in the FBiH, co-financing for the project was
significantly larger than foreseen in the project document, (projected ratio was 80% IDA,
20% co-financiers), which shows borrower's commitment to support reform initiative of
the Project\.
Application and implementation of the World Bank procedures definitely reduces the
project implementation risks\. Financial reports according to Special Account (SA) and
reports on use of IDA credits (SOEs) and funds provided by the Government of FBiH
and Employment Bureaus, constituted the report on project implementation which was
reviewed by independent auditors, and shared with the World Bank and the Government
of FBiH\.
Republika Srpska
Implementation period of the SESP project was characterized by a large number of
persons recorded as unemployed by the Employment Bureau of Republika Srpska (RS)\.
33
Chronologically, number of persons recorded as unemployed was 142,462 persons in
2004, 142,331 in 2005, 144,106 in 2006, 134,207 in 2007, and 133,074 in 2008\.
Target group, unemployed persons over 45 year of age was huge\. The group included
36,610 persons in 2004 and finally reached 42,266 in 2008\. The number of unemployed
increased in 2009 due to recession (in July 2009, number of unemployed persons over 45
year of age reached 45,748 and it is forecasted that the rise will continue by end of 2009,
even more rapidly)\. In addition to this, 19,000 persons aged 40-45 were also eligible to
receive services under the project (as decided during the mid-term review in 2006)\.
Participants in the project implementation, along with the project implementation team of
the World Bank and members of the local project implementation unit, were the
Government of the RS (Ministry of Labor and Veteran Affairs and the Ministry of
Finance) and the RS Employment Bureau, as one of the key factors in the project
implementation\. The Ministry of Labor and Veteran Affairs participated in the project
implementation from the very beginning\. In consultation with representatives of the
ministry, additional criteria for target group was defined (within the requested limits) and
amounts of subsidies for certain planned operations were harmonized\. This process also
involved the management of the RS Employment Bureau, and they have been providing
their support since the beginning\.
In order to ensure more operational implementation of the project, a team was formed to
deal with all resulting problems and other issues (representative of the Ministry of Labor,
the RS Employment Bureau and the Project Implementation Unit)\.
The RS Employment Bureau is organized through six regional branch offices, with the
main office located in Pale\. There was one person in each branch office responsible for
implementation of the project\.
Operation of the RS Employment Bureau is quite burdened by a large number of people
registered as unemployed\. Activities of employees of the Employment Bureau mainly
deal with keeping records, not so much with job brokerage\. Significant amount of time is
spent on administration of health insurance and cash benefits for unemployed persons\.
In order to take some pressure off the bureaus, regulations dealing with records were
changed\. Reporting once a month was modified into once in two months, and later on,
double-entry records keeping was introduced\. The first group included active job seekers
who must report to the bureau once in 60 days\. The second group included people who
were not actively looking for a job\. These people have the obligation to report once in six
months\. This group is made of people who are listed as unemployed mainly for health
insurance and other rights resulting from the status of an unemployed person\. After
detecting the misuse of the double-entry records, a change in these regulations was
initiated so people from both groups would report once in 60 days\. Misuse was mainly
related to those who are not actively looking for a job, and their employment in informal
sector or abroad\.
The RS Employment Bureau implements active labor market programs financed by the
Government\. These programs are financed by various ministries and amounts are
determined separately for each program\. It was detected that for certain categories of
34
unemployed persons (interns with university degree) much higher amounts were
allocated than those determined by SESP\. However, it was shown that such modest funds
can be used to successfully employ (average amount for employment on SESP was 1,335
KM, interns were employed for 6,222 KM)\. Larger sums were also determined for
veterans, returnees and Roma people (2\.000 KM)\. Having in mind age and qualifications
of these people, results achieved with the SESP funds are quite satisfactory\. Also, it
should be considered as an option to have one centre (for example, Ministry of Labor and
Veteran Protection) determining amounts for certain categories of unemployed persons in
order to harmonize award criteria and amounts\.
III OUTPUTS BY COMPONENT 1
Evaluation of the first Project objective implementation is "very good"
FBiH RS RS BIH BIH
Number of Number of Average in Number of Average in
Active labour market programs
beneficiaries beneficiaries KM beneficiaries KM
On-the-job-training and
5,225 2,202 1,335 7,427 2,407
employment
Self-employment 1,478 1,337 3,090 2,815 2,934
Vocational training 95 8 825 103 1,240
Public works 181 - 181 586
Counselling services 166 - 166 600
7,145 3,547 1,997 10,692 2,474
Program of the Ministry of Labour
and Social Policy FBiH 169 10,861
Disabled persons
Realization index for the first project goal of the SESP is 109\.
In reaching the desired employment rate for persons aged 45 / 40, the project
demonstrated completely new approach to active labor market programs, that is, tested
possibilities to employ persons that are very difficult to employ using funds that are much
smaller than actual amounts used as incentives in other programs for employment in BiH\.
Number of beneficiaries of the SESP in Bosnia and Herzegovina, in 10 cantons in the
FBiH, and 6 regions in the RS:
Canton / Region Number of beneficiaries % share in total number
Una-Sana 872 8%
Posavina Canton 200 2%
Tuzla Canton 1451 14%
Zenica-Doboj Canton 1274 12%
35
Bosnian-Podrinje Canton 58 1%
Central Bosnia Canton 853 8%
Herzegovina-Neretva Canton 591 6%
West Herzegovina Canton 145 1%
Sarajevo Canton 1398 13%
Canton 10 137 1%
Banja Luka region 1066 10%
Istocno Sarajevo region 563 5%
Doboj region 546 5%
Prijedor region 323 3%
Trebinje region 424 4%
Bijeljina region 625 6%
7,427 beneficiaries or 69% of total number of beneficiaries were trained and employed\.
The Project did not create jobs but it was allocating funds to employers who would
primarily employ persons from the SESP target group on the jobs which were already
vacant\. Average funds spent for professional training and employment were 2,407 KM\.
70% of this amount was for covering the costs of professional training and employment,
and 30% represented stimulation for the employer for priority employment of the persons
from the target group\. Activities of the beneficiaries were various: sales, catering,
production of toys, wood processing, textile industry, civil engineering, production of
furniture, etc\.
Number of self-employed persons in agriculture and small entrepreneurship is 2,815 or
26% of the total number of beneficiaries; in the FBiH, the project supported unemployed
persons who had basic requirements for agriculture or small business to register their
independent business of choice (cattle breeding, poultry breeding, beekeeping,
greenhouse farming, small crafts, sales, catering, etc\.)\. Amounts allocated for self-
employment in the RS were 3,090 KM on average\. Having in mind that these funds were
primarily planned for persons already active in these fields (working in informal sector)
and that they were used for legalization of their work, the amounts were not small\.
Total number of beneficiaries for employment in small businesses was 825 persons, and
funds available were 2,325,631 KM, or 2,819 KM per each unemployed person\.
512 persons were employed (registered business activity) in agriculture, and the allocated
sum was 1,806,290 KM, or 3,528 KM per beneficiary\. Difference between amounts
36
allocated for agriculture and entrepreneurship is a result of prioritization of
underdeveloped and highly underdeveloped municipalities with a purpose of stimulating
start-up businesses\. This mainly relates to Herzegovina region since the agriculture there
dominates over other business activities\.
Average amount spent per beneficiary, in whole BiH, was 2,934 KM\.
Additional training (re-qualification or additional qualification) was provided to 95
beneficiaries (1%)\. Training should support competitiveness of unemployed persons in
the labor market and faster employment on jobs offered on that market in BiH and abroad\.
Within these contracts, interests were very dispersed, i\.e\.: continuation of already
commenced elementary and high-school education, foreign language courses and
computer courses, driving courses for B, C, D, E categories, training for welders,
continuation of university education, specialist trainings, etc\.
Average amount spent per beneficiary was 1,240 KM\.
In the FBiH public works were organized for 181 beneficiaries, which is 2% of the total
number of beneficiaries\. Public works were organized in form of cleaning and
maintenance of public zones, rivers, monuments of cultural or historical value\.
In the FBiH there were also counseling services for unemployed persons and the
Program for employment of disabled persons\. Based on the counseling services of the
SESP "training in active job-search", 166 beneficiaries from the target group were
employed\. Using the SESP methodology, FBiH budget funds allocated for the year 2008
were used to employ or ensure self-employment of 167 disabled persons\.
Qualification structure of Project beneficiaries was as follows: 33% non-qualified
workers, 1% semi-qualified workers, 31 % qualified workers\.that is 65 % beneficiaries
with 3 grades of high school or less\.
In the FBiH, on a very representative sample of 4,381 beneficiaries (sample included
100% of beneficiaries with expired contracts), the research showed that 72%
beneficiaries did not return to the list of unemployed persons\. In the RS, within a sample
of 3,425 beneficiaries, 78% remained employed even after expiry of their contracts\.
These indicators were very positive\. High percentage of project beneficiaries who kept
jobs after the contract for service delivery expired proved that an individual approach in
providing job-brokerage services taking into consideration capability of target
beneficiaries was the right choice\.
IV OUTPUTS BY COMPONENT 2
Evaluation of the first Project objective implementation is "satisfactory"
Federation of Bosnia and Herzegovina
Adoption of the Rulebook for Keeping Basic Records in the Field of Employment:
37
At the proposal of the FBiH Government, the Parliament FBiH passed the Law on
Amendments to the Law on Job-brokerage services and Social Security of Unemployed
Persons published in the Official Gazette FBIH No\.: 22/05 of 6 April 2005, whereby all
necessary preconditions were created for the commencement of the application of this
Law\. The most important question that affected the Project implementation in 2005 and
2006 were expressed ambiguities in relation to the commencement of the application of
the Law on Amendments to the Law on Job-brokerage services and Social Security of
Unemployed Persons\. The need arose to draft by-laws for specific provision within the
law\. At its session held on 28th of September 2005, the SESP Coordination Committee
adopted the harmonized SESP Guidelines for 2006 which among other envisaged
adoption of the Rulebook for Keeping Basic Records in the Field of Employment\.
Implementation of this task within the SESP Project resulted in the development of the
Rulebook for Keeping Basic Records in the Field of Employment which became effective
on the date of publishing in the Official Gazette FBiH No\. 24/06\. Adoption of the
Rulebook was aimed at standardization of information and procedures in Public
Employment Bureaus and Municipal Employment Bureaus\.
Implementation of the Public Awareness Campaign in order to prepare the public for
the forthcoming reform in the field of employment:
On the basis of the SESP Guidelines for 2006, the Project included design and
implementation of the Public Awareness Campaign which was conducted with an aim to
inform the public about the provisions of the Law on Amendments of the Law on Job-
brokerage services and Social Security of Unemployed Persons, as well as to promote
new approaches in the employment\. In a clear and simple way, the public campaign
presented the following: What is new in the field of employment? Who is an unemployed
person? When does the unemployment status cease? What does active job searching
mean? The campaign should have contributed to the change of awareness of unemployed
persons about the fact that they are primarily responsible to look for a job; etc\.
Development of the operating manual and procedures for application of the Rulebook
and implementation of the program of re-registration of unemployed persons in FBiH:
The SESP Project is the initiator of the Program of the Government of the FBiH ,,Re-
registration of unemployed persons", within which 79,524 persons were erased from the
records of unemployed persons in the period 1 January 31 August 2008\. By the
Decision of the Government of the FBiH, the approval was given for the program of re-
registration of unemployed persons in the FBiH, V\. No\. 85/08 of 23 January 2008
(,,Official Gazette FBiH", No\. 08/08 of 20 February 2008)\. For the purpose of the
implementation of the program of re-registration of unemployed persons in the FBiH, as
well as the need for additional clarifications regarding the consistent application of the
Rulebook on records in the field of employment (,,Official Gazette FBiH", No\. 24/06 of
17 May 2006), the selected consultant developed an operating manual for application of
the Law on Job-brokerage services and Social Security of Unemployed Persons and the
Rulebook on records in the field of employment, as well as the procedures for monitoring
the status of registered unemployed persons\.
According to the last submitted report from January 2009, the total number of
unemployed persons erased from the records of unemployed persons, on all bases, in
38
2008 was 127,149 persons\. Likewise, 98,222 persons were registered as unemployed in
the same period\.
In the FBiH in 2008 a positive trend was recorded in the labor market, i\.e\. decrease in the
number of the unemployed and increase in the number of the employed persons, while in
November and December an increase was noticed in the number of registered
unemployed persons, which was related to the application of the Law on Income Tax,
since the certificate on the status of unemployed person was necessary proof for tax
exemption\.
Similarly, in the context of the Program implementation, cooperation, data and
information exchange was intensified and improved with relevant institutions (Tax
Administration, FBiH PIO/MIO Fund, universities, municipal and cantonal
administration bodies and courts, social work centers and relevant financial departments
of the municipalities, BiH Agency for Labor and Employment) which represented the
basis for further overcoming of the systemic incompliance and inconformity of actions of
the institutions with influence to realization of unemployment status, and this will in the
next period become a regular activity, which will contribute to the establishment of
reliable indicators in the labor market\.
Drafting of the proposal of the Decree on Private Agencies for Mediation in
Employment:
Since the Law on Job-brokerage services and Social Security of Unemployed Persons
("Official Gazette of the FBiH, No\. 55/00, 41/01 and 22/05) envisaged that, in addition to
the employment bureaus, job-brokerage services may also be exercised by other legal
persons, or private agencies, the purpose of the implementation of this activity was to
develop the regulations that would regulate in details the methods and conditions for
establishment of private job-brokerage agencies , a system for operation of private
agencies in the labor market and their relationship with public employment bureaus\.
After a series of expert discussions with representatives of the FBiH Ministry of Labor
and Social Policy, SESER PIU, FBiH Employment Bureau, cantonal employment
bureaus, private organizations, associations of the unemployed, associations of employers
and unions, a proposal of the Decree on Private Agencies for Job-brokerage services was
agreed upon, and adopted on 9th of April 2009 at 97th session of the Government FBiH\.
Introduction of the quality management system in the Federal employment bureau and
cantonal employment bureaus according to the international standard ISO 9001:2000:
For the purpose of preparing the employment bureaus for introduction of quality
management system in accordance with the international standard ISO 9001:2000, three
consulting companies were engaged, which in the period of 18 months provided advisory
services and helped the bureaus establish the quality management system (establishment
of the situation, defining goals, developing a study on introduction of the quality system,
determining the action plan for implementation, drafting of the quality rules of
procedures, procedures and documents of the quality system, implementation of the rules
of procedures and procedures in practice, checking of the functionality of the quality
system-internal audit, corrective actions after checking of the system functionality,
preparations for certification)\.
39
Certification control and issuing of the certificate ISO 9001:2000 to the Federal
employment bureau and cantonal bureaus:
The selected certification company performed the pre-certification and certification
control (audit), which included the review of the quality system documentation, control
of compliance with the requirements of the standard and checking the level of
implementation of the system in practice\. After it was established that all necessary
requirements were met and that the system was documented, introduced and being
applied, on 19 February 2009 the certificate ISO 9001:2000 was officially handed in to
the Federal employment bureau and all cantonal employment bureaus in the FBiH\.
The issued certificate is valid for three years after the date of issuance, and during the
period of validity of the certificate it is important to perform the optimization of the
system due to which two supervisory audits are necessary\.
Since a proper quality management system includes the process with constant measuring,
system controls, corrective and preventive actions, and continuous improvements, it is
necessary that the employment bureaus in the FBiH, after being issued the certificates,
continue with building and continuous improvements in order to preserve it\.
The introduction of the standard ISO 9001; 2000; - Organization of the quality
management system includes application of defined procedures, standardization and
application of documents on quality, a systemic and organized approach, team work and
mutual coordination, client orientation, processes and outcomes monitoring, constant
surveys on client satisfaction in order to improve services, improvement of working
conditions and infrastructure, harmonized quality and speed of solving client requests,
availability of timely information, transparency, arrangement of a main counter room,
continued training of employees, monitoring and evaluation\.
Pilot Project ,, Active Job seeking" and ,,Research of open marketplaces":
Within the SESP project, a Pilot Project was prepared and implemented active job
seeking, which aimed at testing new active labor market programs as well as the new
approach towards unemployed persons\. Research of markets and marketplaces was also
implemented, on the pilot basis in Canton Sarajevo and Tuzla, including analysis related
to the persons working at open marketplaces, who were at the same time registered as
unemployed persons\.
Implementation of employment bureau personnel trainings at all levels as a permanent
activity within the SESP:
Constant building-up on the successful approaches tested within the PERLP through
transfer of its implementation experiences to the employment bureaus;
SESP enhanced the capacities of the employees of municipal employment bureaus to
provide a range of job-brokerage services including organizing meetings with
unemployed persons and meetings with employers as a regular practice of the municipal
bureaus\. With support from the staff of the implementation unit, 56 meetings were held in
41 municipal bureaus in the FBiH, and discussions were held with about 350 employers
and about 350 unemployed persons, which rendered possible the employment of
unemployed persons that had difficulties to find jobs through active labor market
programs\. It is important to note that the SESP supported active labor market program
was entirely implemented at the municipal and not only at the cantonal level, which was
the practice for programs supported by the bureaus\.
40
The training of employees of the employment bureaus at all levels was aimed at
enhancing their capacity to effectively apply the law and the rulebook\. The training was
conducted in September 2006\. This training contributed to a quality work engagement in
the process of updating of the records in terms of Articles 3, 3a and 3b of the Law\.
The European Computer Driving License (ECDL) program of training of employees of
the employment bureaus in the FBiH was also supported under the project\.
In 2006, within the SESP, a testing of the employees of employment bureaus in FBiH
was conducted to obtain the information on the current level of general computer literacy
among the personnel of the bureaus, as well as in order to obtain the information on the
needs for additional training in different areas\. The testing included 250 employees in all
ten cantons in the FBiH and results of the testing showed that the current level of the
computer literacy was not satisfactory\. The implementation of the ECDL program of
training for the employees of employment bureaus in the FBiH within was planned and
commenced based on the findings of the testing conducted in 2007\.
Training of the employees of the bureaus in the process of monitoring and evaluation;
The training of the employees of the bureaus in the process of monitoring and evaluation
aimed at establishing a regular monitoring and evaluation practice in the further work of
the bureaus\.
The first workshop ,,monitoring and evaluation" was held from 17 - 19 December 2007\.
Participants of the workshop showed a notable interest in the subject area, and acquired
the basic knowledge on categories of monitoring and evaluation\. They participated very
interactively in all exercises and at the workshop they prepared four ,,Employment
Subvention Program Evaluation Plans", which were chosen as case studies\. After the
completion of the workshop, all participants assumed the obligation to implement in their
respective cantonal employment bureaus one of four ,,Evaluation Plans" prepared at the
workshop, and they took the obligation to evaluate the Employment Program in practice\.
The second workshop primarily focused on certified employees of the bureaus as leaders
of the activities\. The second workshop included presentation, analysis and assessment of
the evaluations of the employment programs prepared by the participants employees of
the bureaus\. The subject of assessment was not the successfulness of the subject program,
but the application of the theoretical methodology to the specific program by the leaders
of the evaluation\.
In the RS, the SESP Project initiated, indirectly, the procedures based on which the
instructions for keeping of records of unemployed persons (time of reporting) were
changed in order to disburden the clerks who work with unemployed persons and to
direct their work on job-brokerage\. For that purpose, the term "active job search" was
introduced as well as the term "persons not actively searching job" in order to place
emphasis active job search\. Systematization of jobs in the bureau gave a greater
significance to this function\. For now, it has not been developed enough and should be
further developed in the coming period\.
In order to monitor results of the Project, the instructions were defined to monitor the
implementation\. Every bureau regularly submitted the required information to the central
bureau\. The established procedures made a good basis for the bureau to monitor the
implementation of their own programs as well\.
41
In order to improve the records, the development of the information system of the bureau
was agreed upon\. To date system was developed on DOS basis\. The number of data in
the database, although growing, did not guarantee that the system will be able to meet the
requirements posed to it\. A new system was developed on SQL basis\. The delivery of the
system was performed only partially\. The module of records was delivered and is
currently being tested in the bureau\.
V BANK AND BORROWER PERFORMANCE
Bank performance during the Project preparation and during the Project supervision is
rated as highly satisfactory\. The Project was regularly supervised by the Bank staff
located at the headquarters and in the Country Office in Sarajevo\. Bank staff was
constantly contacting the PIUs and provided close support for many different aspects of
the project implementation, including financial issues and procurement\. Communication
was strong and open\. Overall Bank performance is rated as highly satisfactory\.
FBIH:
Borrower performance is rated as satisfactory\. PIU performance is rated as satisfactory\.
FBiH PIU management was focused on Project implementation and establishing
coordination between all partners in the Project\. PIU regularly reported to different
institutions on both, the Federal and the state level\.
RSDEF:
Borrower performance is rated as satisfactory\. PIU performance is rated as satisfactory\.
PIU management was focused on Project implementation and establishing coordination
between all partners in Projects\. PIU has regularly reported to different institutions on
both the entity and the state level\.
VI LESSONS LEARNED
Federation of Bosnia and Herzegovina
Required reform activities in the following areas and issues:
(1) Development of regulations for disburdening employment bureaus from the burden of
the administration of health insurance, as an important generator of the informal sector;
(2) Support to the development of an integrated MIS system and an interactive portal of
employment bureaus;
(3) Inclusion of private employment agencies in provision of job-brokerage services;
(4) further correction in subsidizing of active measures in the coming period so that the
existing amounts of support are further reduced to a more acceptable level significantly
lower level, and in accordance with the international practices;
(5) Change of the active labor market program focus towards the training programs for
unemployed persons for active job search and general training for work qualification
according to the demands of the labor market, instead of the subvention programs; (6)
Establishment of an information system for monitoring and evaluation of active labor
market programs; (7) Amendment of the Law on Job-brokerage services: shorten the
42
terms of right to cash compensation and relate the amount of them to the amount of
contribution payments instead of the average salary, as well as arrangement of social
support during temporary unemployment (in terms of more precise defining of the status
of an unemployed person, procedures to acquire the status of unemployed, as well as the
procedures to follow during the temporary unemployment)\.
Republika Srpska
Required activities in the following areas and issues:
- Disburdening employment bureau from administration of health insurance of
unemployed persons and payment of compensation in case of unemployment;
- Improvement of mediation function of employment bureaus;
- Completion of the information system development, including an improvement of
operations;
- Introduction of private job-brokerage agencies;
- Introducing legal framework for pre-qualification and additional qualification of the
older persons, equipping the centers for pre-qualification and additional qualification\.
43
44
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable\.
45
Annex 9\. List of Supporting Documents
Country Assistance Strategy Report No\. 29196-BA
Project Appraisal Document Report No\. 28835-BH
Development Credit Agreement (3927 BOS)
Seventh Quality at Entry Assessment Report
Peer Review Comments
Implementation Status Reports
Aide Memoires following World bank missions
SESP Mid-Term Report - Federation of BH Ministry of Labor
SESP Mid-Term Report Ministry of Labor and protection of veterans and disabled,
Republika Srpska
Project Concept Note for the proposed Social Safety Nets & Employment Support
Project
46
IBRD 33375R
B O S N I A A N D H E R Z E GO V I N A
SELECTED TOWNS MAIN ROADS
NATIONAL CAPITAL RAILROADS
MAIN RIVERS DAYTON AGREEMENT LINES
MUNICIPAL BOUNDARIES
This map was produced by the Map Design Unit of The World Bank\. INTERNATIONAL BOUNDARIES
The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of The World Bank
Group, any judgment on the legal status of any territory, or any
endorsement or acceptance of such boundaries\.
To Zagreb
16°E 17°E To Bjelovar 18°E 19°E
To Osijek
CROATIA
To Un a
Karlovac
Bosanska Gradiska Sa Bosanski Brod
Bosanska Novi
(Srp\. Gradiska) va
(Srp\.Brod) To Belgrade
(Novi Grad)
as
45°N Prijedor 45°N
Vbr
Cazin Derventa
Derventa
Derventa
sna Sava
Bo
Bosanska
Brcko
Bihac´ Krupa
Banja
a
Sanski Most Luka Bijeljina
Drin
Gracanica
To Belgrade
To S
Sveti Rok U
an
na
a
Bosanski Varos
Kotor Varos
Petrovac
´
Teslic
Teslic
Tuzla
Tuzla
SERBIA
Kljuc
Maglaj
REPUBLIKA SRPSKA
CROATIA
^
Spreca
To Medak Drvar
rvar
Drvar ´ Mts\.
Vlasic Mts \. Kri
va
ja To Valjevo
Jajce
Travnik
Travnik
Zenica
D
To Obrovac Kladanj
Vlasenica
Vares
Vares
i
i
i
Vr
s Bosna
ba
Srebrenica
n
Bugojno Visoko
Visoko REPUBLIKA
a
44°N D ri 44°N
na
FEDERATION OF SRPSKA
r
r
r
To Kraljevo
iii
To
Zadar BOSNIA AND SARAJEVO
c
c
c
Livno Pale
HERZEGOVINA ^ Visegrad
Visegrad
Jablanicko
jezero
A
A
A
Gorazde
Jablanica Konjic im
lll
L
To Sjenica
Ne
p
p
p
Foca
retv
(Srbinje)
s
a
Mostar
Ta
ra
Gacko
Piv
Stolac
a
43°N 43°N
´
Bileca
MONTENEGRO
Trebinje
Trebinje
To Podgorica
BOSNIA and
HERZEGOVINA Ad r iat i c Sea
To Shkodër
0 10 20 30 40 50 Kilometers
ALBANIA
0 10 20 30 Miles
16°E 17°E 18°E 19°E
JULY 2006 | APPROVAL |
P010210 | Doazmt of
The World Bank
FOR omaAL USE ONLY
Repwt No\. 12893
PROJECT COMPLETION REPORT
PAKISTAN
BALUCHISTAN AGRICULTURAL EXTENSION AND ADAPTIVE
RESEARCH PROJECT
(CREDIT 1533-PAK)
MARCH 31, 1994
Agriculture Operations Division
Country Department III
South Asia Region
This document has a restricted distribution and may be used bv recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Currency Equivalents
Currency Unit - Pakistan Rupees (PRs)
Appraisal year (1984): US$1 = PRs 14\.0
Average 1985-1991: US$1 = PRs 19\.1
Completion year (1992): US$1 = PRs 25\.1
Fiscal Year of Borrower
July 1 to June 30
Weights and Measures
Tons are metric tons of 1,000 kg (2,204 pounds)
Abbreviations
ADA Assistant Director of Agriculture
AO Agricultural Officer
ARF Adaptive Research Farm
ARI Agricultural Research Institute
ARO Agricultural Research Officer
ATI Agricultural Training Institute
AZRI Arid Zone Research Institute
BAC Balochistan Agricultural College
CF Contact Farmer
CWD Communication and Works Department
DDA Deputy Director of Agriculture
DGA Director General of Agriculture
DOA Department of Agriculture \.
DTC District Technical Committee
EADA Extra Assistant Director of Agriculture
EEC European Economic Community
FA Field Assistant
GOBAL Government of Balochistan
OFWM On-Farm Water Management
PARC Pakistan Agricultural Research Council
SMS Subject Matter Specialist
SSMS Senior Subject Matter Specialist
FOR OFFICIAL USE ONLY
THE WORLD BANK
Washington, D\.C\. 20433
U\.S\.A\.
Office of Director-General
Operations Evaluation
March 31, 1994
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Pakistan - Baluchistan
Agricultural Extension and Adaotive Research Proiect (Credit 1 533-PAK)
Attached is the Project Completion Report on Pakistan - Baluchistan Agricultural
Extension and Adaptive Research Project (Credit 1 533-PAK) prepared by the South Asia
Regional Office\. The Borrower contributed Part II\. The Ministry of Agriculture was more
favorably impressed with the project than Bank staff, and commented on the good relations
with the Bank's resident mission staff\.
The project aimed to increase agricultural production in four districts (containing
most of the irrigated land in the state) in Baluchistan\. This was to be achieved by introducing
T&V, improving research-extension linkage, and supporting adaptive research\. The T&V
system was installed and most of the physical implementation targets were achieved\. Serious
problems, however, arose in trying to make both the extension and adaptive research work
effectively\. There was little evidence that the project was having any impact on uptake of
improved technology, and it has been rated as unsatisfactory\. Institutional development was
partially achieved, but major changes are necessary to improve performance\. Operational
problems and lack of demonstrated impact, as well as major difficulties in funding recurrent
costs subsequent to the project, make sustainability uncertain\.
The Project Completion Report provides a good account of project implementation
and performance\.
The project may be audited in conjunction with a similar project in the states of
Punjab and Sindh (Extension and Adaptive Research II) after its completion\.
Attachment
This document has a restricted distribution and may be used by recipients only In the performance of
their official duties\. Its contents may not otherwise be disclosed without Wodd Bank authorization\.
i
FOR OFFICIAL USE ONLY
PROJECT COMPLETION REPORT
PAKISTAN
BALUCHISTAN AGRICULTURAL EXTENSION AND ADAPTIVE
RESEARCH PROJECT
(Cr\. 1533-PAK)
TABLE OF CONTENTS
PREFACE \. i
EVALUATION SUMMARY \. ii
PARTI \.1\.
1\. Project Identity \. 1
2\. Background \. 1
3\. Project Objectives and Description \. 2
4\. Project Design and Organization \. 3
5\. Project Implementation \.5: \.- 5
6\. Project Results \. 10
7\. Project Sustainability \. 11
8\. Bank Performance \. 12
9\. Borrower Performance \. 12
10\. Lessons Learned \. \. 13
11\. Consulting Services \. \. \. 15
12\. Project Relationship, Documentation and Data \. \. 16
PART II \. \. 17
This document has a resticted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
PART III \. 22
1\. Related Bank Loans and IDA Credits \. 22
2\. Project Timetable \. 24
3\. Credit Disbursement \. 24
4\. Project Implementation - Key Indicators \. 25
5\. Project Costs and Financing \. 27
A\. Project Costs (Including Contingencies) \. \. 27
B\. Project Financing \. 28
6\. Project Results \. 29
A\. Direct Benefits \. \. 29
B\. Economic Impact \. 30
C\. Financial Impact \. \. 30
D\. Studies \. \. 30
7\. Status of Covenants \. 31
8\. Use of Bank Resources \. \. 33
A\. Staff Inputs \. 33
B\. Missions \. 34
ANNEXES
Annex 1 Staff Positions and Recruitment
Annex 2 List of Higher Level Staff Training
Annex 3 List of Equipment Purchased for Use in Training
Annex 4 Wheat Output in Balochistan 1984-1991
Map: IBRD 18315R1
ii
PROJECT COMPLETION REPORT
PAKISTAN
BALUCHISTAN AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH
PROJECT
(Cr\. 1533-PAK)
PREFACE
1\. This is the Project Completion Report (PCR) for the Baluchistan Agricultural Extension and
Adaptive Research Project for which Credit 1533-PAK in the amount of SDR 8\.2 million (US$8\.3 million
equivalent) was approved in December 1984\. The credit closing date was extended twice by one year
each to June 30, 1992, and the credit account was kept open four months beyond the final closing date\.
Total credit disbursement amounted to SDR 7\.09 million (86 % of the credit), and the undisbursed balance
of SDR 1\.11 million was cancelled as of November 25, 1992\.
2\. Parts I and III of the PCR were prepared by an FAO/World Bank Cooperative Program
mission " that visited Pakistan in November 1992, and reviewed by the Agriculture Operations Division,
Country Department III, South Asia Region\. Preparation was based on the Staff Appraisal Report,
Development Credit Agreement and Project Agreement, IDA supervision reports and project files,
documentation provided by the implementing agency, field visits to all four project districts, and meetings
with project staff and IDA staff associated with the project\. Part II was prepared by the Borrower\.
" C\.J\. Bevan, agronomist and mission leader; J\. Cook, extension specialist (consultant); and A\.F\. Zagni, irrigation engineer
(consultant)\.
i
PROJECT COMPLETION REPORT
PAKISTAN
BALUCHISTAN AGRICULTURAL EXTENSION AND ADAPTIVE
RESEARCH PROJECT
(Cr\. 1533-PAK)
EVALUATION SUMMARY
Project Objectives
1\. The objective of the project was to achieve sustained increases in agricultural production in
four districts of the Province of Balochistan through the strengthening and reorganization of the extension
service on the lines of the Training and Visit (T&V) System of extension, and the widespread adoption by
farmers of proven and recommended improved farming practices\. The proposed plan to reorganize the
Department of Agriculture (DOA), together with the establishment of better research-extension linkages,
was expected to have a beneficial effect on non-project districts and to provide a basis for future expansion
of extension and research activities to the rest of the Province\. The project was based on the provision
of housing, offices, laboratories and training centers, vehicles and motorcycles, specialist equipment for
research and training, staff training and technical assistance\. The project also provided for recurrent costs
associated with incremental staffing, travel allowances and demonstration trials\.
Implementation Experience
2\. With the exception of some of the training, all key performance indicator targets were met
or exceeded\. The IDA credit became effective some seven/eight months after signing and, initially,
implementation began more or less as scheduled\. However, delays in release of local funding, the need
to relocate a number of construction sites, and poor liaison between the Civil Works Coordinator and DOA
resulted in substantial delays in the building program, the largest single project component\. These
problems were ultimately resolved, but overall the civil works program is estimated to have been
completed four years behind schedule\. Fewer problems were experienced with vehicle purchase, although
there were some delays in providing all field agents with motorcycles\. Most of the specialist equipment
was provided, although little of the scientific equipment had been utilized at project completion because
of the delays in construction of the adaptive research laboratories\. The technical assistance component
began as scheduled, the signing of a technical assistance contract being a condition of credit effectiveness\.
The initial technical assistance input was completed, although the extended input (utilizing savings arising
from currency movement against the SDR) was curtailed owing to contractual problems between the
consultants and the tax authorities in Pakistan\. The training was completed more or less as planned,
although the local MSc program did not fully get under way until the project's fifth year, and the pre- and
in-service training of field staff was interrupted by changes in the structure and programs offered by the
Agricultural Training Institute\. The credit was extended twice, for a total of two years, to allow extra time
for the completion of the civil works program and the MSc training program\.
ii
3\. At credit closing, 86 % of the credit was disbursed, with an undisbursed balance of SDR 1\.11
million to be cancelled\. However, actual project expenditure, as estimated from data supplied by DOA,
was US$13\.0 million, or US$1\.48 million more than anticipated at appraisal\. This additional expenditure
was possible largely because of depreciation of the US dollar against the SDR over the project period, but
also because of a larger than anticipated contribution from the Government of Balochistan (see Part III/SB)\.
The successful implementation of the project is attributed to good supervision by IDA, good management
by project staff, and to the fact that there were few changes in senior project management staff during
implementation\. This management achievement should not be underestimated, given the shortage of
trained staff and general lack of experience of DOA in implementing such projects at the time\.
Results
4\. The project was successful in meeting its physical targets, the credit was largely disbursed,
and there is now a more organized extension service operating on a more structured basis in the four
project districts\. In these areas field staff are making regular visits to farmers, demonstrations are being
laid out and regular training sessions for field staff are being held\. Many, if not most of the project
supplied motorcycles are still operational, providing field workers with mobility, and the revolving fund
established to provide for motorcycle replacement has accumulated some PRs 4\.0 million\. Sadly, however,
there is little evidence to date that the service is resulting in the uptake of new or improved technologies
by farmers thereby increasing agricultural production as intended\. An analysis of wheat output in the
Province (see Annex 4) indicates that yields and production have increased at roughly similar rates over
the project period in both project and non-project areas\. This failure to bring about the use of new or
improved technologies is attributed to a shortage of appropriate extension messages, inadequate training
of Field Assistants (FAs), a high turnover of all higher level district staff, and ineffective use of contact
farmers\. The adaptive research component has only been successful in so far as the physical targets for
facility construction have largely been met, and a number of trials have been set up on both the three
Adaptive Research Farms (ARFs) and in farmers fields\. The program has not, however, generated
significant results, mainly due to the shortage of suitable staff and the high turnover of staff actually
recruited\. The links between research and extension, though initially good, appear to have been weakening
toward the end of the project; and during the last year of the project the District Technical Committees
and Provincial Technical Committee did not meet\. Neither local trainin'g nor overseas training, with the
possible exception of the study tours, has had much of an impact\. The local training has generally been
too theoretical, and the academic standard of FAs was too low\. Overseas training has been ineffective,
largely because of inappropriate selection of staff and high staff turnover on return\. Demonstrations have
had some impact, but the contact farmers have rarely met the selection criteria, and there appears to have
been little spread of messages beyond the larger farmers - even where appropriate messages for smaller
farmers have been promoted\. Monitoring and evaluation (M&E) has been carried out throughout the
project, but since this has been done by the Department itself (as intended by the project), some of the
results are questionable\. More importantly, the monitoring surveys are now more than one year behind
schedule which means that much of the relevance of findings is lost due to the rapid recent changes in the
Department\. Media use both for training and extension has been inadequate\.
5\. Whilst the project, with the exception of the physical targets and organizational structures,
has achieved significantly less than anticipated at appraisal, overall it should not be considered as too
disappointing\. Since the project was appraised, experience elsewhere has led to the recognition that it takes
longer than one single project period to reorganize and make functionally effective an agricultural extension
service\. The adaptive research and training achievements of the project do, however, give cause for
particular concern\. The adaptive research activity largely duplicates the work of the Agricultural Research
Institute at Sariab, whilst the failure to adequately train staff has severely hindered the effective
iii
development of the service\. The poor performance of these activities can be attributed to poor project
design that failed to adequately develop and build on institutions and facilities existing within the Province
at the time of appraisal, and partly to shortfalls in the Government's implementation of the project\.
Project Sustainability
6\. The sustainability of the project depends, in the first instance, upon the continued payment
of staff salaries, allowances and maintenance of the regular staff training programs\. It is, therefore,
encouraging that over 50 % of the staff recruited under the project have been transferred from development
budget posts to established posts funded by the regular budget\. The balance of the staff will, it is
understood, be similarly transferred in the next financial year\. In the meantime, it is expected that their
costs, and that of the travel and daily allowances of all field agents will be met by development budget
funds\. Providing these funds are forthcoming, there is every reason to believe that the regular training
program will continue, and that in the short to medium-term the project initiated activities will be
sustained\. Long-term sustainability will, however, depend not only on regular funding, but on the service
becoming demand driven, that is by integrating farmers into the planning and evaluation of extension
programs\. This, in turn, will require a significant upgrading of field agent training and a more responsive
way of delivering better extension messages than regular visits to poorly selected contact farmers\. If this
does not happen, field agents will loose their motivation and will revert to undertaking routine data
gathering and monitoring activities, and providing subsidized demonstrations for larger farmers\.
Lessons Learned
7\. On the downside, the main lessons learned deal largely with project design\. In the first
place, insufficient attention was paid to rationalizing the structure of the DOA extension service, leading
to considerable inefficiencies and inconsistencies\. Secondly, the project has demonstrated the need to
undertake a detailed preparation study that pays full attention to aspects such as the nature and extent of
local resources and circumstances, as well as extension delivery methods appropriate for different areas
and the location and types of civil works required\. Thirdly, T&V extension systems, which are heavily
dependent on manpower to disseminate information, are expensive to run, especially in sparsely populated
areas such as Balochistan\. Fourthly, insufficient consideration was given to the capabilities of available
staff and the demands the project would make on them\. Finally, the project timeframe was probably over-
ambitious, as it was unrealistic to expect a reorganization and retraining of a field force, and the
introduction of an adaptive research program to be effective within the five-year project period\. On the
positive side, the project has demonstrated the capacity of line managers of DOA to introduce a relatively
complex extension system over a large area, and secondly that providing field agents with motorcycles
purchased on an instalment basis is an effective way of increasing staff mobility and morale\. Any second
phase initiative must take into consideration the above lessons\.
iv
PROJECT COMPLETION REPORT
PAKISTAN
BALUCHISTAN AGRICULTURAL EXTENSION AND ADAPTIVE
RESEARCH PROJECT
(Cr\. 1533-PAK)
PART I
1\. Project Identity
Project Name : Baluchistan Agricultural Extension and Adaptive Research Project
Credit No\. 1533-PAK
RVP Unit South Asia Region
Country Pakistan
Sector : Agriculture
Sub-sectors Agricultural Support Services
2\. Background
2\.1 Balochistan is the largest but least populated province of Pakistan\. Of its 35 million ha,
some 19 million ha are cultivated, of which some 0\.6 million ha are irrigated from a number of sources\.
Rainfall is low throughout the province, averaging 200 rrnm per annum but rising to 400 mmn per annum
in parts of the hills in the north\. Major crops include wheat, rice, sorghum, fodders and deciduous fruits\.
At the time of project preparation yields were among the lowest in Pakistan, reflecting the low rainfall,
relatively low use of irrigation, low cropping intensities, and low input usage (especially fertilizer)\.
Despite this low productivity some 65% of the provincial population depend on agriculture, which
accounted for over 55% of provincial GDP in the early 1980s\.
2\.2 Agricultural Extension\. At the time of project appraisal the provincial extension service
consisted of some 800 staff responsible to a Director of Agriculture (Extension) who, in turn, reported
to the Secretary of Agriculture\. The field service consisted of a hierarchy of 4 Deputy Directors of
Agriculture (DDA) at the divisional level, 17 Extra Assistant Directors of Agriculture (EADA) at the
district level, 71 Agricultural Officers (AO) at the tehsil level, and 437 Field Assistants (FA) at the
village level\. Each FA was assigned to some 12-20 villages covering some 500 widely scattered farm
families, and was assisted by one or two field workers (beldars)\. There was no organized system of
agricultural extension, and field staff were required to perform tasks not directly related to extension,
such as selling and applying pesticides, seeds and fertilizers, especially in remote areas\.
2\.3 Agricultural Training\. Training of field staff in Balochistan has not, in general, received
the support and attention it deserves\. Until 1970, when the Agricultural Training Institute (ATI) was
taken over by the Agricultural Research Institute (ARI), one-year pre-service training was provided for
FAs\. However, the institute being located in Quetta, the course was biased towards orchard crops and
1
provided limited training in cash crops\. Subsequently, until the construction and equipment of a new ATI
under the Third Education Project (Cr\. 678-PAK) in the early 1980s, there was no facility for training
FAs\. For the training of agricultural graduates, the Government of Balochistan (GOBAL) traditionally
depended upon the universities of the other three provinces\. More recently, the new ATI has been
reconstituted as an agricultural training institute and college, known as the Balochistan Agricultural
College (BAC), to provide undergraduate training in agriculture, and at present little, if any, FA training
is being done as almost all facilities are needed for undergraduate student training (see para\. 5\.16)\.
2\.4 Agricultural Research\. Before Balochistan became a province in 1970, the ARI was a
substation of the main research institute of the Province of Sind\. It suffered from financial constraints
and was never fully developed\. In 1984, ARI had an establishment of 130 scientists, but some 55 posts
were vacant\. The institute had sections covering economics, entomology, plant pathology, agricultural
chemistry, food technology, wheat, potatoes and vegetable botany, but most of its work was in connection
with deciduous fruits\. In addition to ART, the Pakistan Agricultural Research Council (PARC) established
an Arid Zone Research Institute (AZRI) just outside Quetta in 1974 " to develop more productive
technologies and cropping systems for arid areas, and coordinate national programs on wheat, pulses,
sorghum, millet, fodders, and medicinal plants\. At the time of project appraisal only a limited range of
appropriate technologies had been developed for Balochistan, and there was no recognized program of
adaptive research being carried out at district or farm level\. Linkages between extension and research
were almost non-existent\.
2\.5 In the above situation, and encouraged by the results of two other provincial projects
(Punjab Extension and Agricultural Development Project, Cr\. 813-PAK; and Sind Agricultural Extension
and Adaptive research Project, Cr\. 922-PAK) and other information about the operation of the Training
and Visit System, GOBAL requested IDA assistance in introducing reorganized agricultural extension and
adaptive research services into Balochistan in 1983\.
3\. Project Objectives and Description
3\.1 Project Objectives\. The main objective of the project was to achieve sustained increases
in agricultural production in four districts (Loralai, Kachhi, Nasirabad and Lasbela) of high agricultural
potential in Balochistan, through strengthening and reorganization of the extension service on the lines
of the T&V System 2' and widespread adoption by farmers of proven and reconmmended improved
farming practices\. The reorganization of the Department of Agriculture (DOA), together with
establishment of better research-extension linkages, was also expected to have a beneficial effect on non-
project districts, and to provide a basis for future expansion of extension and research activities to the
rest of the Province\. The project period was to be five years\.
3\.2 Project Description\. To achieve its objectives, the project included redeployment of
existing and recruitment of new staff; provision of necessary physical inputs; establishment of adaptive
research farms (ARF); and staff training and technical assistance\. Specifically, the project included the
following: (a) establishing a single line of command between FA and extension headquarters and
eliminating non-extension activities from FA duties; (b) introducing a systematic fixed schedule for
" No effective research started until the early to mid-1980s\.
21 The principles of the system have been described in Benor and Harrison, "Agricultural Extension - The Training
and Visit System", World Bank, May 1977, and more recently in Benor and Baxter, "Training and Visit
Extension", World Bank, March 1984\.
2
regular and frequent visits by FAs to farmers and for FAs' in-service training; (c) intensifying extension
work by providing an additional 46 FAs, 7 AOs, 18 Subject Matter Specialists (SMSs) and 4 Senior
Subject Matter Specialist (SSMSs); (d) improving the mobility of extension staff by providing 2 cars,
17 4WD vehicles, 7 pickups and 233 motorcycles, together with vehicle operating costs and staff travel
allowances; (e) building extension offices and training facilities and constructing staff houses where
required; (f) developing packages of improved farming practices by improving the linkage between
research and extension and establishing ARFs and field trials to adjust research findings to meet farmers'
needs; (g) introducing a monitoring and evaluation (M&E) system; and (h) providing necessary
incremental operating funds and equipment for the extension service and ARFs in project districts\.
3\.3 Of the total estimated project cost (see Part III/SA) of US$11\.52 million (PRs 161\.25
million), US$5\.63 million (49%) were for civil works construction, and a further US$3\.94 million (34%)
for recurrent expenditure (salaries and allowances, O&M)\.
4\. Project Design and Organization
4\.1 The project was prepared by local consultants with some assistance from the FAQ/World
Bank Cooperative Program in late 1983, and was appraised by IDA in April 1984\. It was designed to
address a number of recognized weaknesses in the provincial extension service -- heavy burden of non-
extension duties, inadequate staff numbers, inadequate offices and housing, poor mobility, insufficient
pre- and in-service training, poor research/extension linkages, and inadequate generation of new
appropriate technologies by research workers\. As already noted (para 2\.5), the design was based on
similar projects in Punjab and Sind that appeared to be making good progress\. The main features were:
(a) Introduction of a Systematic Extension Methodology\. The FAs were to
disseminate key messages on a regular (monthly) basis to groups of leading or
contact farmers (CFs)\. Each CF in turn was expected to pass on the messages to
six of his peers so that in total each FA would cover about 400 farm families\.
Once a month, when not visiting farmers, the FAs would receive training that
would form the basis of their next farmer visits\. This FA training was to be
provided at district training centres by SMSs or AOs\. In addition, FAs were
responsible for demonstrations on farmers' fields\. The AOs in the project
districts were responsible for supervision of and technical support to FAs and for
provision of advice to larger farmers\.
(b) Provision of Mobility, Office and Housing Accommodation\. Given the large
distances and the need for FAs and AOs to travel regularly, the project provided
motorcycles to be purchased by users on an instalment basis, through regular
deductions from their salaries\. These payments went into a revolving fund to be
used to finance motorcycle replacements\. Offices and housing were required as
such facilities were considered to be extremely modest or non-existent in most
districts\.
(c) Introduction of Adaptive Research Farns and Programs\. Three ARFs were
to be established, one in each of the principal agro-ecological zones of the project
area\. They were to be the focal point for a program of on-station and on-farm
adaptive research designed to develop appropriate new production technologies\.
3
(d) Provision of Additional Staffing\. The project was to add a substantial number
of staff, especially SMSs and FAs needed to provide the appropriate
farmer/extension agent ratio\.
(e) Provision of Additional Staff Training\. This included the re-introduction of
pre-service training for FAs and the introduction of monthly technical training
(see (a) above)\. In addition, training in the operation and management of a T&V
system was to be provided for senior management\.
4\.2 The main organizational arrangements called for: (a) appointment of a Director General
of Agriculture (DGA) to oversee all Directorates within DOA, reporting directly to the Secretary of
Agriculture; (b) supervision of the civil works program by a Coordinator located in the Communications
and Works Department (CWD); (c) a Project Steering Committee chaired by the Additional Chief
Secretary, Planning and Development Department (P&D), with the Secretary of Agriculture as secretary;
(d) a Project Review Committee within DOA, chaired by the Secretary of Agriculture, to review progress
seasonally and make recommendations for the forthcoming season; (e) District Advisory Committees,
chaired by the District Deputy Commissioner, to review and oversee project operations; (f) a Provincial
Technical Committee, chaired by the DGA, to review research and field trials and extension
recommendations made by District Technical Committees at the start of each season; and (g) District
Technical Committees, chaired by the Deputy Director of Agriculture of the district, to review twice
yearly agricultural recommendations, research priorities, and adaptive trial needs\.
4\.3 Given available experience at the time, the state of extension in Balochistan, and
government priority under the Sixth Five-Year Plan (FY84-88) to raise yields, the overall project concept
was appropriate and timely\. Nevertheless, some of the problems experienced later can in part be
attributed to insufficient consideration at the design stage (see paras\. 5\.2 and 5\.3)\. In the first place, the
problems experienced with recruiting graduate staff (SSMSs, SMSs and AOs) could have been predicted
from experience in Punjab and Sind, and from the recruitment difficulties experienced by ARI\. Greater
consideration should, perhaps, have been given to paying special allowances to such staff or minimizing
the number required\. The design was, perhaps, modelled too closely on similar projects in more densely
populated parts of Pakistan, where staffing had been less of a problem and where a relatively large
number of farmers live close together so that groups of contact farmers can easily be assembled\. Greater
attention should have been given to the use of low cost means of delivering extension messages, such as
radio, rather than relying so heavily on a large number of staff; and more attention should have been
devoted to introducing methods of developing specific priority impact point messages rather than general
messages\.
4\.4 It was also, perhaps, optimistic to expect the effective development from scratch of an
adaptive research service capable of generating new extension messages and the effective retraining of
staff within the five-year project period\. Experience elsewhere since appraisal suggests that a period of
10-15 years is needed to introduce and make effective new extension systems\. More consideration
should, perhaps, have been given to broadening the scope of research at ARI instead of introducing a
parallel adaptive research service\.
4
5\. Project Implementation
5\.1 Variances\. The main variances, apart from delays (see paras\. 5\.7 and 5\.11), between
planned and actual project implementation resulted from failure to: recruit and retain an adequate number
of staff (SSMSs, SMSs and AOs; see Annex 1); provide adequate pre-service training of all FAs,
especially more recent recruits; develop ARFs quickly enough, with the result that few new technologies
have been generated; develop appropriate local extension messages for FAs and farmers; use all civil
works, especially service buildings, as planned (see para\. 6\.2); and maintain and use organizational
structures and committees\.
5\.2 While some of these variances could have been avoided or minimized by better project
design (e\.g\. better use of ARI staff and less dependence on new graduate recruits), the main ones can be
attributed to political and structural factors which are outside the scope of influence of DOA\. The DGA
has done his best to recruit on merit, but at times he was unable to prevent appointment of people at the
request of politicians\. Retaining staff in post has also been difficult, partly because of the lower
allowances paid to staff in most districts outside Quetta ", and partly because of the existence of transfer
allowances which encouraged officers to move as frequently as possible\. The PCR mission was informed
that the Civil Service Commission has recently altered the regulations regarding transfers to make annual
or more frequent transfers impossible\.
5\.3 The failure to adequately train FAs, after the establishment of BAC, can partly be attributed
to DOA, which should have made a greater effort to keep the FA diploma course operational\. However,
it should be remembered that political pressure calling for Balochistan to produce its own agricultural
graduates was very strong during the late 1980s\. This was especially the case given the poor security
situation at the agricultural university at Tandojam in Sind where most students from Balochistan were
trained in the past\. Slow ARF development, particularly in Loralai, might have been avoided if (a) an
appropriate site had been selected at preparation, (b) staffing problems had not been so severe, (c) the
Director of Adaptive Research had been able to devote his time exclusively to adaptive research, rather
than to the project as a whole, and (d) cooperation between ARI and the Directorate of Extension had
been better\.
5\.4 Initially, the organizational requirements of the project were met by the creation of the post
of DGA and the establishment of the various committees\. However, the Project Steering Committee does
not appear to have played a significant role either in providing overall guidance to the project, or in
coordinating the activities of the various Departments involved\. Similarly, the Project Review Committee
has been less effective than anticipated, largely because it did not meet regularly before the beginning of
each cropping season\. The Provincial and District Technical Committees have functioned more or less
as planned, although contrary to the SAR proposals the DTCs have not played their intended role in the
direction of adaptive research\. The District Advisory Committees have tended to meet rather infrequently
and to discuss general district development rather than specific project issues\. Placing the Civil Works
Coordinator within CWD was not effective\. However, during the project the post was transferred to
DOA with an engineer being seconded from CWD; this worked well and serves as a good model for the
future\. Since July 1992 the position of DGA has been downgraded, and once again each Director reports
directly to the Secretary of Agriculture\.
Quetta allowances are reported to be some 40% more than for most districts\.
5
5\.5 Project Risks\. The main risk identified at appraisal was shortage of well educated and
trained staff within DOA\. To reduce this risk considerable emphasis was placed on training and use of
consultants early in the project period\. A second risk identified at the time was delay in local funding\.
However, financing arrangements made on the government's and IDA's side were expected to minimize
this risk\. Implementation experience shows that these risks were correctly identified\. Inadequate and
inappropriate training of field staff is almost certainly the main reason for the failure of the project to
bring about changes in farm productivity\. There were some local funding delays, but they were not too
serious\.
5\.6 Project Area\. The project was executed, by and large, as planned in the areas of the four
districts selected\. However, some administrative complications regarding district staffing and location
of facilities arose as a result of decisions to increase the number of districts in Balochistan\. The main
changes from the SAR are: (a) transfer of the ARF complex from Murga Kibzai to Loralai; and (b)
development of two ARFs in Lasbela district, one at Wayaro and the other at Uthal\. With hindsight, it
appears somewhat wasteful that one of the ARFs was sited at Usta Mohammed in Nasirabad district,
given the recent completion of the Japanese funded demonstration and seed farm complex between Usta
Mohammed and Jhatpat\.
5\.7 Credit Disbursement\. Credit 1533-PAK was signed in January 1985 and became effective
in September 1985, five months later than expected\. This was due to delays in: project approval by
ECNEC; release of funds by the Finance Department which prevented timely appointment of key project
staff (DGA, Project Coordinator and Civil Works Coordinator) called for as a condition of effectiveness;
opening of Special Account and Sub-Accounts; and ratification of the Project Agreement by GOBAL\.
Disbursement was substantially lower than anticipated\. At the original closing date (June 30, 1990), it
amounted to SDR 4\.52 million (55 % of the appraisal estimate); at credit closing, it had reached SDR 7\.09
million (86 %), and the undisbursed balance of SDR 1\.11 million was cancelled as of November 25, 1992,
the date of the final disbursement (see Part 111/3)\. This development was due largely to delays in the civil
works program (see para\. 5\.10) and the devaluation of the Rupee and US$ against the SDR--actual
disbursement in US$ totalled 9\.29 million (112% of appraisal estimate)\.
5\.8 Project Cost\. Estimated and actual project costs are shown in Part III/5A\. Actual cost
amounts to PRs 281\.6 million (US$13\.0 million)\. This represents a cost overrun of 75% in PRs, but
only 13% in US$ terms\. The highest absolute increase occurred in civil works costs (+ PRs 53\.4
million, or 44% of the total cost overrun)\.
5\.9 Procurement\. As specified in Schedule 1 of the Project Agreement, civil works were to
be carried out by force account or contracts awarded on the basis of local competitive bidding\.
Equipment, tools, materials, agricultural inputs, books and furniture were to be procured in accordance
with the standard procedures of the Province, whilst purchase of motorcycles was to be in accordance
with procedures satisfactory to IDA that allowed staff an opportunity to select brands of their choice,
including those to be procured from international sources\. Because of difficulties associated with
obtaining import clearance, it was agreed that GOBAL would procure all other vehicles with its own
funds\. Consultants were to be selected following the "Guidelines for the Use of Consultants by World
Bank Borrowers and by the World Bank as Executing Agency" dated August 1981\. Signing of contracts
for consulting services was a condition of credit effectiveness\. No difficulties were experienced with
procurement during the project period as all procedures outlined above were satisfactorily followed\.
5\.10 Civil Works\. A total of 182 buildings (48 service and 134 housing units) were to be
constructed between 1984/85 and 1987/88 at a cost of PRs 78\.8 million (49% of total costs; Part III/5A)\.
6
By the final credit closing date (June 30, 1992), 182 buildings (53 service and 129 housing units) had
been completed (Part III/4), although many of them required finishing in terms of decoration and
installation of essential services such as water and electricity\. Implementation started more or less on
schedule, with the award of some 100 construction contracts, but it was only during 1988/89 that
construction of the first lot of buildings was completed\. The main reasons for this four-year slippage
were slow release of funds from the Finance Department to CWD, need to relocate a number of sites
(e\.g\., ARF complex from Murga Kibzai to Loralai), and poor liaison between the Civil Works
Coordinator and DOA\.
5\.11 By the end of 1987 the building program was at a virtual standstill and the supervision
mission recommended that the Civil Works Coordinator be outposted from CWD to DOA, and the civil
works Special Account be similarly transferred\. This change resulted in a considerable upturn in civil
works performance, although two credit extensions were required largely to enable completion of the
program\. By mid-1992, the cost of civil works was estimated at PRs 132\.17 million, some 68% more
than the appraisal estimate\. However, the cost in US$ was actually 5% less than estimated at appraisal\.
The cost escalation in PRs is attributed " to a gross under-estimation of price and physical contingencies
at appraisal\.
5\.12 The general quality of the basic building construction is considered to be sound\. Some poor
finishing of brick work, poor installation of doors and windows, and poor painting is reported, and some
roofs are said to be leaking\. The main construction weaknesses concern electrical, water and sanitary
service installation\. Poor workmanship and fittings are frequently in evidence\. This is particularly
serious in the case of washing and toilet facilities, and overall can be expected to lead to considerable
repair and maintenance costs\. Designs for housing followed standard government regulations and few
problems were encountered\. However, major problems were encountered with some of the service
buildings\. For example, the DOA media centre in Quetta lacks a suitable work area, a number of the
ARFs have inadequate laboratory facilities, and a number of buildings were poorly sited with regard to
access to services\.
5\.13 Staffing\. Project funds were specifically allocated to cover hicremental staff salaries and
travel allowances\. Requirements for key staff to operate the reorganized extension system were to be met
partly by redeploying existing staff and partly by recruiting new staff\. Incremental requirements and
actual recruitment are given in Annex 1\. A majority of the incremental posts have been filled, although
SMSs and AOs were particularly difficult to hire and retain, and for much of the project period there
have been a number of SMS and AO positions vacant\. Since the success of all extension services depends
essentially on their staffing, it is disappointing that throughout implementation there have been severe
problems in recruiting and retraining staff, except in the most junior (FA) and senior headquarters
positions\. In particular, the inadequate capabilities of SSMSs and the shortage of SMSs has had a serious
adverse effect on the adaptive research program and the development of appropriate messages for farmers
such that the program has produced only very modest results to date\. The shortage of SMSs has also
affected the training of FAs and AOs\. On the other hand, it is encouraging that DOA has succeeded in
transferring the majority of project posts from the development to the non-development budget, which
is essential to retain staff in the long term\. Another neglected area was the technical positions in the
media unit\. With vacant posts for script writer, program producer and cameraman it is not surprising
that few attempts were made to produce new training and publicity materials since the departure of the
project consultants\.
" See memo from RMP to Washington dated 4/6/1989\.
7
5\.14 Vehicles\. SMSs shared 7 pick-up trucks, while higher level staff (DDAs, EADAs and HQ
staff) received a total of 3 cars and 20 four-wheel drive vehicles\. A total of 263 motorcycles were
provided to FAs under an instalment plan\. The motorcycles contributed substantially to FA mobility and
facilitated the program of visits\. It is therefore particularly encouraging that most of the motorcycles
have been paid for, many are still operational (after seven years of use under difficult conditions), and
that there is some PRs 4\.0 million in the revolving fund set up for purchase of replacements [para 4\.1
(b)]\. Procurement of vehicles is also given in Part III/4\.
5\.15 Travel Allowances\. In the early years of the project, payment of travel expenses (TADA)
caused particular difficulty as payments were frequently delayed by up to 12 months owing to late release
of local budget funds to DOA\. However, there was some improvement over the years, and there were
fewer reports of non-payment of TADA in the final years of the project\.
5\.16 Training and Demonstrations\. The training program has had mixed success\. Higher level
training (MSc and overseas short courses) was conducted as planned (see Annex 2)\. However, few of
the staff sent on overseas courses remained in post on their return, and of those who have, few if any
made much use of what they have learned\. This may have been partly due to inappropriate selection of
staff for training, but stricter controls on transfers following training need to be implemented, together
with better follow-up, if such training is to have any significant effect on the operation of project services\.
Three-month induction training courses for FAs were held at ATI during the first three years of the
project and 169 FAs attended between October 1986 and December 1988\. However, since the merger
of ATI and BAC in 1988 " no induction courses were held\. The curriculum developed under the
project, with assistance by the consultants, had a practical basis, though the course location in Quetta was
questionable for staff working in other very different agro-ecological zones, especially given the emphasis
on orchard crops in Quetta district\. But the training did not appear to significantly improve the FAs'
skills, probably because of the poor teaching standards of the trainers, and the very low basic education
of the FAs\. Two-year diploma courses were also taught at ATI, and the intention was ultimately for all
FAs to become diploma holders\. Courses commenced in 1984 with 13 students and a further 77 students
were enroled in 1987\. Since 1988 no diploma courses have been taught\.
5\.17 Regular T&V training of FAs and AOs has in general taken place monthly\. Its quality
however left much to be desired, as it appears to have consisted almost entirely of lectures with the
occasional use of slides produced by the project consultants\. There has been very little practical training
and virtually no use of handouts or other training aids, despite attendance by senior DOA staff of a
number of overseas courses on training methods and use of media\. With the exception of a few
headquarters produced leaflets (see para\. 5\.20) no new training materials were produced after the
departure of the consultants\. Since few FAs have much agriculture training other than the three-month
course taught at ATI (para\. 5\.16), lecture based training is completely inappropriate\. This was pointed
out by supervision missions on a number of occasions, and is borne out by the limited staff attendance
at the monthly training sessions (generally around 50%)\.
5\. 18 Under the project, ten District Training Centres were constructed (three each in Loralai and
Nasirabad, two each in Kachhi and Lasbela)\. The original design for the centres had to be abandoned
BAC was expected to use the ATI building on a temporary basis, until a new college was built at a nearby site with
EEC funding\. However, it has recently been confirmed by the EEC commission in Islamabad that BAC will not
now be funded and that EEC sees little need for a BSc awarding institution which will only have an intake of around
100 students per year\.
8
and a new design approved, which caused delay in construction and use of the buildings\. The new
training centre at Loralai appears to have been built following the old design, and is significantly smaller
than the other units\. Each training centre received a slide projector with screen and a radio-cassette
recorder\. Some centres have also been provided with an overhead projector and stencil duplicator\. A
list of training equipment purchased is in Annex 3\. The majority of the equipment seen by the PCR
mission was in working condition, though almost none of it appeared to be in regular use, largely because
of shortage of slides and pre-recorded tapes\.
5\.19 In general, FAs appear to have visited their contact farmers (CFs)\. However, in most
instances CFs have not disseminated information to other farmers, nor was much done to promote transfer
of information from CFs to other farmers\. Unfortunately, many CFs are large farmers (zamindars) and
are not representative of the majority of smaller farmers\. These larger farmers are usually landlords who
traditionally only associate with smaller farmers on a landlord/tenant or landlord/share-cropper basis\.
It would seem that they do not consider it appropriate or worthwhile to try to inform or educate their
tenants, as decisions on what crops to grow and what inputs to use rest with them\. Part of the problem
derives from the fact that few FAs have better technical knowledge than their CFs, and so have little
advice to give\. The original intention of the project was that AOs would work with separate CFs and
that these "AO contact farmers" would be the larger farmers while the "FA contact farmers" would be
more representative small farmers\. Due to the small number of AOs and the great influence of zamindars
in many areas, this has not been the case in practice\. The result has been that large farners have
continued to monopolize the services of DOA\. Instead of using CFs, future extension development
should work with natural or existing farmer groups or organizations to disseminate information\. These
groups, for example, could be an organization of water users, a sub-watershed, a village, or a clan\. The
extension service must strengthen, if necessary, the farmer organizations with which it works, and bring
them into the planning, design and review of extension programs\.
5\.20 Minimal use has been made of audio-visual aids\. The establishment of the HQ media unit
was only completed in November 1992 and the equipment, provided through USAID ", was moved in
during the PCR mission's visit\. This equipment is for video editing only, and the new media centre is
adequate only for video editing and possibly some graphic art work, but not for video production or
sound recording as the roof is too low for video lighting and there is no provision for sound proofing\.
The media unit was intended to play a major part in production of materials for monthly training sessions
and farmer field days, and to back up the extension messages\. Partly due to lack of technical staff during
most of the project period, but perhaps also due to lack of management emphasis on this aspect of
extension, virtually no new training or publicity materials have been produced, other than those produced
initially by the consultants' team\. A few printed leaflets have been produced by the publicity unit and
used in training of FAs\. Their usefulness and quality could have been greatly improved by simpler text
and greater use of graphics, as recommended in supervision and assessment reports\. The quarterly
magazine Zaraat Balochistan has apparently not been produced for the last two years\. An attempt has
been made to produce a small number of video films on general aspects of agricultural production, though
as yet there are limited facilities for use of video outside the DOA headquarters\.
5\.21 Properly laid out demonstrations represent one of the most effective methods of extension,
and wherever they fulfil needs, farmers are quick to respond\. While the scheduled number of
demonstrations has largely been achieved, they have not been used to their full potential\. There are no
control plots, demonstration plots are too large and are usually on large farmers' fields\. DOA provides
The graphic equipment called for in the SAR was not purchased\.
9
all inputs and most of the labor, and work on the plots has not been integrated into the normal FA
schedule of visits\. In addition, results are not compared with other demonstrations, costs and returns are
not calculated, and most FAs are not aware of the results of other FAs' demonstrations and so cannot use
them in their discussions with farmers\.
6\. Project Results
6\.1 As outlined above, project results have been mixed\. Physical targets have largely been met
and the credit was largely disbursed\. Compared to non-project districts, the extension service in the four
project districts is now organized and operating on a more structured basis: Field staff are making
regular visits to farmers in some areas, some demonstrations are prepared, and regular training sessions
appear to be held in most cases\. These are important achievements\. However, there is little evidence
to date that the service is resulting in the uptake of new or improved technologies by farmers\. This can
be attributed largely to a shortage of appropriate, relevant, impact point extension messages, inadequate
training of FAs, and a high turnover of all higher level technical staff\. At appraisal it was stated that
although research results were not available on which to base extension messages, some farmers were
using better technologies, and the aim was to extend the use of these technologies to more farmers\.
Unfortunately, attempts to develop appropriate extension messages in this manner failed\. This was partly
because of the difficulties in recruiting and retaining SMSs in the districts which severely hindered the
development of suitable local extension messages, and partly because of insensitivity to farmers' real
extension needs\. Greater emphasis should have been placed on developing priority impact point messages
that are of direct interest to farmers, and on producing messages specifically for identified
recommendation domains, that is, for groups of farmers with roughly similar practices and socio-
economic backgrounds for whom a given recommendation would be broadly appropriate\. In addition,
problems with recruiting and retaining suitable SSMSs restricted both the development of the adaptive
research program and extension messages with the result that, overall, relatively few new ideas and
messages became available for transmission to FAs and farmers\. In retrospect, it might have been better
to have involved the research staff of ARI in the development of extension messages, either through joint
research/extension technical committees, or by contracting research workers on a seasonal basis\. This
would have been quicker, not being dependent on recruitment of SSMSs\. It would also have been more
efficient and cheaper, as specialists would then have been hired as and when needed rather than
permanently\. Some two years into the project, extension staff, with the assistance of the consultants,
undertook diagnostic surveys of the project area\. This produced a considerable amount of new
information concerning cropping systems, production constraints and recommendation domains, and
helped in planning the extension and adaptive research programs\.
6\.2 The adaptive research component has also been only partly successful\. Physical targets
for facility construction have largely been met, and a number of trials have been set up on the three ARFs
and in farmers fields\. But the program has not generated significant results, mainly due to high
turnover/shortage of staff, and because the initial emphasis has been more on verification trials\. Links
between research and extension, though initially good, have shown signs of weakening toward the end
of the project, and the Provincial and District Technical Committees did not meet in the last year\.
Neither local nor overseas training, with the possible exception of the study tours, has had much of an
impact\. Local training has generally been too theoretical, and the academic background of field staff (FA
matriculate) too low\. Overseas training has been ineffective largely because of inappropriate selection
of staff and high staff turnover on return\. Demonstrations have had some impact, but contact farmers
rarely met selection criteria, and there appears to have been little spread of messages beyond the larger
farmers--even where appropriate messages for small farmers have been promoted\. Monitoring and
evaluation has been carried out, but since this was done by the Department itself (as intended by the
10
project), some of the results are questionable\. More importantly, the monitoring surveys are now more
than one year late, which means that much of their relevance is lost due to the rapid recent changes in
DOA\. In general, the service buildings are being used for the purpose originally intended, but it is
doubtful if all are really needed\. The ten training centres are only used once a month, whilst many of
the ARF offices and laboratories are not used at all\.
6\.3 Benefits\. Quantifying the benefits of this type of project is not possible since the benefits
arising from adaptive research and extension cannot be separated from those arising from the associated
use of additional inputs or other factors\. Therefore, no attempt was made at appraisal to calculate an
economic rate of return for the project\. However, the SAR estimated that overall yield increases of 2%--
equivalent to 35 kg/ha of wheat, for example--were required to justify project expenditure\. In the
absence of reliable pre- and post-project production data for the project districts it is almost impossible
to determine whether or not the project has resulted in such increases in output\. According to GOBAL
agricultural statistics, crop production has increased over the project period, but not significantly more
in the project than in the non-project areas\.
6\.4 A simple analysis of wheat output in project and non-project districts over the project period
is presented in Annex 4\. It shows that for project districts yields and production have increased on
average by 17% and 66%, respectively\. This would suggest that incremental production in project areas
was more than sufficient to cover project expenditure\. However, yields and production in non-project
districts have similarly increased by 28% and 75%, respectively\. This suggests that factors such as the
expansion of tubewell irrigation " have had much greater influence on output levels than extension\. The
virtual lack of any difference between T&V districts and non-T&V districts can partly be attributed\.to
the fact that, as indicated in para\. 4\.4, it takes time to introduce new systems, and at present few T&V
area FAs have any better training and knowledge to impart than non-T&V area FAs--who basically supply
inputs, spray crops, and collect agricultural data, but give little systematic advice to farners\. If the level
of training and knowledge of FAs in T&V areas was raised, it is likely that there would in future be a
greater improvement in farm production in these areas compared to non-T&V areas because of the more
targeted direction of extension messages\. Nevertheless, the overall conclusion must be that the
introduction of the T&V system has taken longer than expected and the production results to date have
been modest\. In view of the pressures on the Government's recurrent or operating budgets, consideration
must be given in the future to finding more cost effective ways of helping farmers improve their
productivity, based on the use of mass media and fewer, better trained field staff\.
7\. Project Sustainability
7\.1 In the project areas, the potential for an extension service capable of responding to farmers'
needs now exists\. Long-term sustainability of the extension and adaptive research service will depend
on: (a) adequate funding for operating expenses including staff pay, TADA, inputs for trials and
demonstrations, and production of training and publicity materials; and (b) substantial improvement in
the quality of the services offered to farmers\. This can only be achieved through improved staff training,
reduction in staff transfers, and more appropriate adaptive research\. The latter would require closer links
between farmers, research scientists and extension workers\.
" Provision of electricity in much of Balochistan over the last ten years has encouraged a rapid expansion of tubewell
irrigation in many districts\.
11
7\.2 As regards staff costs, most senior posts have now been moved to the non-development
budget\. This should make it easier to recruit and retain staff\. However, the FAs recruited under the
project still remain under the annual development budget, because of insufficient funds\. TADA also
remains a problem as unlike during the final years of the project no funds have been allocated for the
purpose since project closing in June 1992 \. Unless regular funds can be found for FA salaries, travel
and other operational expenses, the future of the T&V program remains in jeopardy\.
7\.3 Provided funding constraints can be overcome, two other factors will affect the
sustainability of the program\. First, there must be full integration or at least collaboration between the
different extension activities being carried out under DOA\. There are at least three other extension
initiatives supported under other projects, i\.e\., On-Farm Water Management (OFWM), Baluchistan Minor
Irrigation and Agricultural Development (BMIAD), and the Deciduous Fruit Development Centre
(DFDC)\. Long-term sustainability of an effective extension service in Balochistan will depend upon
streamlining the service into a single line agency within DOA\. Second, re-establishment of the lines of
authority so that all Directorates report to the Secretary of Agriculture through the DGA must be ensured\.
This is particularly important if a unified extension service is to be developed\.
8\. Bank Performance
8\.1 The Bank's main weakness was in assessing critically the project design which was
insufficiently adapted to the particular conditions of Balochistan (see paras\. 4\.3 and 4\.4)\. This is
attributed largely to the shortcuts taken in project preparation and appraisal\. There was no formal
identification, and the appraisal was based on an incomplete preparation report\. The appraisal mission
was unable to determine the actual need for housing and service buildings in the project districts and had
to use what proved to be rather unreliable estimates, and it under-estimated the problems of recruiting
graduate staff in Balochistan\. It also failed to incorporate the existing research service in a constructive
and cooperative way, which led ultimately to conflicts within DOA between the original research
Directorate and the adaptive research initiative promoted by the project\. Further, it failed to adequately
prove the existence of technologies used by leading farmers waiting for dissemination to a wider audience
(see para\. 6\.1)\.
8\.2 The Bank's main strength was the effective and close supervision of the project\. Missions
were very regular, every six months on average, and had a remarkable degree of staff continuity, with
the same agriculturalist and agricultural economist for most of the project period\. The missions played
a major role in resolving problems regarding release of funds, establishment and use of Special Accounts,
and initial functioning of the Civil Works Coordinator\. The missions were less successful in affecting
the staffing and training problems (see paras\. 5\.13, 5\.16 and 5\.17), and in ensuring that the M&E
program was pursued as planned\.
9\. Borrower Performance
9\.1 While it is true that the project experienced considerable delays, that there were particular
staffing problems, and that few new messages have been developed and transmitted to farmers, the
borrower's performance should not be rated as unsatisfactory, particularly as almost all key physical
targets were met (see Part III/4)\. Also, the project has been more successful than a similar
contemporaneous project in Sind which for a time had come to a virtual standstill due to lack of adequate
local funding\. Given the political and tribal influences in Balochistan, and the relative inexperience of
DOA with Bank projects at the time, considerable credit should be given to GOBAL and DOA for what
they have achieved\. Strengths to be noted are willingness to seek assistance from and, where possible,
12
to act on the advice of Bank supervision missions; and continuity of many of the senior staff involved in
the project at DOA headquarters in Quetta\. Other strong points are the performance of the CWD
Coordinator seconded to DOA; the operation of the motorcycle revolving fund, and interaction with and
use made of the technical assistance consultants\. Major weaknesses during implementation were failure
to: develop enough appropriate extension messages; address the issue of staff recruitment and retention
early enough; ensure that ATI continued to provide diploma courses for FAs; and operate the various
committees established under the project (Part III/7)\. Also, no meaningful baseline survey was
undertaken at the inception of the project\. The two credit extensions were necessary to complete the civil
works program--delayed by poor initial performance of the CWD Coordinator--and the senior staff
training programs\.
9\.2 The many legal covenants (Part III/7) were by and large adhered to\. There were certain
delays in the release of local funds in most years\. A number of covenants, such as those calling for
establishment of the various committees and carrying out of annual M&E surveys, were technically
complied with\. However, in many cases once complied with, the purpose of the covenanted action was
ignored or forgotten, or it was complied with in a mechanistic rather than functional way (see para 5\.4)\.
Non-compliance was observed in regard of two covenants, namely Project Agreement, Sec\. 2\.10, calling
for the streamlining of the organization of DOA, and Sec\. 2\.12, calling for T&V staff to be given priority
training at ATI\. More recently, compliance with Sec\. 2\.07 (a), calling for the creation of the post of
DGA, could be called into question as the DGA no longer has responsibility for all Directorates within
DOA (see para\. 5\.4)\. Some problems and delays were experienced with audit reports, but by project
closing all queries raised by the Auditor General, GOBAL, were reported to have been resolved and there
were no audit reports outstanding\.
10\. Lessons Learned
10\.1 Lessons from project experience are:
(a) The need for the GOBAL to unify and rationalize the structure of the DOA
extension services\. The proliferation of agricultural projects with their own
extension components has led to considerable inefficiencies\. In particular, it has
encouraged staff to move from project to project regardless of their skill and
experience, has resulted in an uneven distribution of extension agents, with some
areas having virtually no staff and others having both regular DOA staff and
project staff, and has engendered an overall apathy with regard to developing a
consistent approach to extension\. Failure to develop a unified extension service
is largely due to lack of concern on the part of donors to coordinate their
agricultural project aid and jointly persuade DOA to develop a unified system\.
Until this happens, DOA may maximize its access to resources by securing
support for as many extension initiatives as possible\. Future support should,
therefore, be geared to rationalizing and improving DOA structure, and the
unification of its extension services; together with support for the development of
private extension services\.
(b) The need to develop extension messages and delivery systems appropriate to the
13
needs of all classes of farmers including women, paying particular attention to
aspects such as the nature and extent of local resources and circumstances\.
Further extension messages and their delivery systems should address specific
recommendation domains and problems; and extension agents should be trained
to respond to individual problems and situations and not merely be equipped to
deliver standardized messages\.
(c) The importance of minimizing recurrent costs and organizational complexity in
order to maintain long term sustainability of the extension service\. Given that
conventional T&V extension systems are heavily dependent on manpower and are
expensive to run, especially in sparsely populated areas such as Balochistan, the
emphasis under a future operation should be on using fewer, but better trained
staff combined with a highly mobile field force, working with natural farmer
groups and the use of audio-visual and other mass communication techniques, and
a simpler organisational structure (e\.g\., the number of committees should have
been limited to the Project Review Committee and the Technical Committees)\.
(d) The use of contact farmers to spread extension messages is ineffective\. As
already stated, the extension system needs to work with natural farmer groups or
farmer organizations\. In fact, the extension system should promote viable farmer
organizations which can have an effective input into planning, implementing and
reviewing the extension program\.
(e) Greater use could perhaps have been made of ARI and AZRI resources\. While
neither of these institutions had much to offer in the way of adaptive research
results at the project start, their staff were a potential resource for development
and use under the project\.
(f) The time frame was too ambitious\. Thus, it was over-optimistic to expect the
adaptive research program to become established, generate significant research
results, and derive extension messages for farmers within a five-year period\.
(g) Too much was expected from poorly trained staff, with little emphasis being
placed on recruiting and training the right people for the right job\. FAs in
particular need a solid grounding in all aspects of practical farming in their area\.
With their actual educational background, they could hardly be expected to be
respected givers of advice to farmers\. Similarly, SMSs' and AOs' own training
was largely theoretical with no emphasis on training skills, hence the monthly FA
training sessions have been of very limited use\. EADAs have frequently been
transferred and, along with DDAs, appeared to have little understanding of their
role within the system\. It appeared practically impossible to obtain suitably
trained staff to fill SSMS positions\. In short, without a practically trained, well
motivated staff, the T&V extension system adopted by the project could hardly
be expected to work well\.
(h) The building program was also too ambitious, and at least partly unnecessary\.
Many of the staff houses are unused and in practice probably not required since
many staff (FAs in particular) would prefer to have a rent allowance and make
their own arrangements rather than get free accommodation\. A more detailed
14
survey of building needs, especially service buildings should have been
undertaken\.
(i) The scheme whereby motorcycles were purchased on an instalment basis by FAs
and AOs and their payments returned to a revolving fund has worked well\.
11\. Consulting Services
11\.1 Most of the technical assistance (TA) was provided by a UK consulting company\. The
company's technical performance in providing practical guidance and operating manuals for the extension
system was generally good, and there is no doubt that the consultants made a major contribution to
project implementation\. They also did much to develop early extension messages based on existing
knowledge and information\. It is therefore regrettable that because of a contractual dispute beyond the
control of GOBAL the consultants did not complete the extension of their assignment, with some 12 staff-
months remaining unutilized\. Through the TA, training courses were designed, field worker manuals
and adaptive research plans prepared, and general guidance through a resident consultant given for
management and operation of the project\.
11\.2 The project originally provided for 77 staff-months of consultancy which was augmented
by a further 20 staff-months as shown below:
\. Original Proavision \. \. Extended Provision
Consultancy Staff-Months | Staff-Months Staff-Months Staff-Months
Budgeted Utilized Budgeted Utilized
Resident Consultant 20 20 12 3\.57
Input Consultant - - 1\.37
Training and Media 20 20 - 1\.47
Weed Consultant - - - 0\.40
Adaptive Research 14 14 -
Media/Information 5 6 -
Monitoring and Evaluation 6 6 -
Management Organisation 3 3 -
Extension Methodology 3 3 -
Tropical Crops - - - 0\.93
Unallocated 6 5 8
Total 77 77 20 7\.74
Unutilized - - 12\.26
15
Funds remaining in the consultancy budget due to the withdrawal of the consultants were used for training
of some project staff in the UK\.
12\. Project Relationship, Documentation and Data
12\.1 Throughout the project,the relationship between the Borrower and the Bank was generally
good as a result of regular communication between the senior staff of DOA and the Bank, and continuity
of Bank staffing\. Some minor difficulties and delays can be attributed to frequent changes of Secretaries
in the Agriculture and P&D Departments, and more recently to GOBAL's inability to appoint a Minister
of Agriculture\. From the Bank's side, continuity of staffing contributed substantially to the good
relationship\. The SAR, Development Credit Agreement and Project Agreement provided a very useful
framework for the Bank and the Borrower during project implementation\. The Borrower generally kept
good records, detailing the nature, time and cost of almost all expenditure\. These records were available
to the PCR mission and contributed substantially to the preparation of this report\.
16
PART II
Introduction
1\. Agriculture being the mainstay of economy of Balochistan was experiencing certain
shortfalls as regards agriculture production in the province\. The crop yields were not only low when
compared to other parts of the world but were low even as compared to the other three provinces of
Pakistan\. The quality of the produce was also not up to the mark\. The agriculture extension service
being the main vehicle for dissemination of knowledge, technology and information was not only weak
but traditional in its performance\. The old system of Agriculture Extension was invogue and was not
education oriented but providing actual services\. The approach towards improving the crop production
was of project type and not programme type\. Resultantly whatever resources were made available those
were utilized by preparing special type of projects on adhoc basis and trying to overcome the bottlenecks
on short term approach\.
2\. The Government of Balochistan approached the World Bank in 1983 when IDA was
considering the implementation of the second phase of the Agriculture Extension and Adaptive Research
Programme in the Punjab and Sind, to provide similar assistance to Balochistan for improving the
agriculture extension service in this province with the ultimate objective of improving crop production\.
The World Bank appraised the project in 1984 and decided to implement it in 4 districts of the province
on pilot basis\. The districts selected for the implementation of the project were Nasirabad, Kacchi,
Loralai and Lasbela which have now been multiplied into 8 districts i\.e\. Jaffarabad, Nasirabad, Jhal
Magsi, Bolan, Loralai, Musakhel, Barkhan and Lasbela\. Having established the guidelines with the
assistance of the World Bank, the project was prepared\.
Project Objectives
3\. The main objective of the project was to achieve sustained increase in agriculture production
in four districts of high agricultural potential in Balochistan through strengthening and reorganization of
the extension service on the lines of T&V system, by developing the package of improved technology and
quicken its transfer to the farmers through field demonstrations, trials, regular meetings and extension
training\. The project period was five years in the first phase\. The project was restricted to four districts
only in order to see its applicability under Balochistan conditions and then replicate it in other parts of
the province with certain adjustments or maybe as such\.
Project Description
4\. To achieve the above objectives, the project included reorganization and strengthening of
agriculture extension service through providing additional staff, necessary physical inputs, establishment
of Adaptive Research programme, staff training and technical assistance\. It was also envisaged that
developing and introducing training and visit system in the project districts to develop regular and closer
links with the farmers would also be instrumental in motivating the farmers to adopt improved agricultural
practices\. This was planned through establishment of a single chain of command whereby all the related
disciplines would work under one umbrella, introducing a systematic fixed schedule for regular and
frequent visits by Field Assistants to farmers and for Field Assistant in-service training, intensifying
extension work by providing additional staff wherever felt necessary, improving the mobility of the staff,
providing office, residential and training facilities wherever required, developing package of improved
17
farming practices and its dissemination, introducing a monitoring and evaluation system and providing
necessary operational funds and equipment\.
Project Implementation
5\. The IDA credit became effective on September 30, 1985 and was closed on June 30, 1992\.
To accommodate final disbursements the project account was kept open up to November 25, 1992\. The
disbursement was lower than the planned rate i\.e\. it was 86% at the time of the close of the project\. It
was largely due to delays in the civil works programme and the devaluation of the Rupee and US$ against
the SDR\.
6\. Except for implementation of the training and visit system more empirically almost all the
other performance indicator targets were not only met but exceeded\. However, substantial delay occurred
in the construction of buildings which could hardly be completed even with the reduction in scope of
works by 30th June, 1992\. Since the civil works were not completed according to schedule, therefore,
all other activities of the project got dragged inevitably\. The major constraint was the recruitment of the
staff in time and for the project life\. The frequent turnover affected the development and mobilization
of the project philosophy\. It consumed more than half of the project life to understand and back up the
T&V methodology\. The Adaptive Research programme was also delayed due to late establishment of
the Adaptive Research Farms\. However, four Adaptive Research Farms, 12 training centres, 129
residences, 29 offices of various levels have been established in the four project districts\. Besides, field
and office machinery and teaching aids etc were provided\. 20 departmental employees did their M\.Sc
in the Agriculture University Faisalabad\. Besides, 100 Field Assistants were given three month short
courses in order to give them basic training on the agriculture\. The overall successful implementation
of the project is certainly attributed to a very good supervision, cooperation and guidance by IDA, by
the project staff and very few changes in the senior project management\.
Project Results
7\. Not only that project was successful in meeting its physical objectives but has been able to:
(a) Strengthen agriculture extension service in the pilot districts\.
(b) Devise a modernized line of action for carrying out effective agriculture extension service\.
(c) A substantial change in the crop production took place which according to the final area
production and yield figures released by the Agriculture Department when compared with
the baseline figures in case of wheat comes to 45\.97% in Nasirabad, 107\.37% in Kacchi,
44\.83% in Loralai and 112\.5% in Lasbela i\.e\. on an average there has been an increase of
77\.66% in the project districts and not 45\.45% as indicated by the World Bank in PCR
Part-I\. " Similarly in case of non project districts the average increase in wheat
production has been 58\.35% and not 45\.86% thus it will be observed that the percentage
increase in project districts has been substantially more as compared to non project districts\.
Comment refers to earlier text version\. SA3AG\.
18
(d) The project districts showed a faster change in the adoption of technology and response to
the advanced techniques as compared to the non project areas some of which are still as
back as they were in 1983-84\.
(e) The awareness in the farmers on one hand and confidence in the field staff on the other
have again been the two major achievements in the project districts\.
(f) A sustained increase has taken place in crop production\.
8\. Undoubtedly the effects did trickle down to other parts of the province as well\. The main
reasons being:
(a) All the areas fall under the same organizational setup and were getting the benefits of
improved approaches\.
(b) A better start by the beginner farmers on the receipt and development of infrastructure such
as electric power, road network, pricing policy and the departmental efforts\.
9\. Yet it is strongly believed that results of agriculture extension service cannot be
instantaneous but are always seen over a longer period of time\. For example in the Punjab it is during
the implementation of the third phase of the project that the results of agriculture extension could be
observed visually\. Therefore, to rate the project as partially successful would not be fair\. The overall
achievements must be visualized in the complete perspective of the circumstances, conditions and the
facilities under which the project was implemented\. However, the weak performance could not be
attributed to poor project design because the project design was based on experience gained in other parts
of the country as well as other countries\. It can be attributed to the managerial and executional problems
which were somehow beyond the control of the executing and the implementing agencies\. In fact
Department of Agriculture having been encouraged by the results of the Phase-I project has very strongly
requested the implementation of the Second Phase throughout the province\.
Project Sustainability
10\. As regards the objectives of the project it has certainly been able to develop a sustainable
agriculture in the project districts where people have become technology minded and are more responsive
and eager to increase their crop production through better and judicious use of inputs and management\.
11\. Insofar as sustainability of the project is concerned more than 50% of the staff have been
taken on the regular roll of the department and additional funds are being provided to pay the salaries of
the remaining project staff through the development budget\. It is believed that the remaining project staff
will also be picked up by the Department very soon\. However, it may be added that again the fact that
necessary infrastructure has to be developed to sustain the developmental activities, there is hardly any
choice left but to absorb the project activities in the department permanently\. Long term sustainability
is only possible when
(a) its importance is appreciated
(b) regular funding is done
19
(c) significant upgrading of field staff training and a more responsive way of delivering better
extension messages to the contact farmers are undertaken\.
If this does not happen the field staff may loose their motivation and revert back to routine type of
activities\.
Project Design
12\. The project was designed based on the experience in the Punjab and Sind in Pakistan and
other countries of the world\. The main features were:
(a) Introduction of a systematic extension methodology\.
(b) Provision of mobility, office and housing accommodation\.
(c) Introduction of Adaptive Research programme\.
(d) Provision of additional staff\.
(e) Provision of staff training in the project districts\.
(f) Establishment of demonstration blocks, demonstration plots and conduction of trials on the
farmers' fields\.
13\. No need was felt at any stage to bring any change in the project design\. It was observed
that except for the regular visit programme by the Field Assistants to the Contact Farmners which was
more of a mechanical nature and both farmers and Field Assistants could not stick to the visits schedule
due to multifarious and unforeseen activities, the rest of the programme sailed very smoothly and had
generated a sense of demand and keenness among the farmers for adoption of new practices with a view
to have more returns\.
14\. The Department of Agriculture Balochistan feels that the remaining components such as
regular training of the field staff, adaptive research activities, establishment of demonstration blocks and
conduction of trials on farmers' fields, establishment of Adaptive Research Farms, formation of technical
messages, highlighting critical points of crops, holding technical advisory committee meetings regularly,
provision of mobility and housing and office accommodation, played much significant role in bringing
a substantial change in the attitude and temperaments of the farmers\.
Bank Performance
15\. The Bank performance may be summarized as follows:
(a) Overall cooperation of the Bank with the borrowing agencies remained highly satisfactory\.
Efficient release of funds and extension of the credit closing date were the chief points of
strength and extending on the part of the Bank\. The amounts of initial deposits into the
fixed account by IDA were lower than the optimum requirements of the province\.
(b) The Bank mission has always been flexible during its appraisal, follow up and evaluation
visits and has been accommodating the requests of the Department very generously which
20
helped the Agriculture Department to move forward and fill in the gaps which could not
be foreseen at the time of inception of the project\.
(c) Procedural problems were faced with the World Bank following its accounting procedures\.
Some difficulties were also faced during the early two to three years due to delayed
reimbursements which occurred as a result of faulty preparation of reimbursement
applications by the immature and inexperienced staff\. No sooner the staff was trained and
had understood the procedures of the World Bank this problem was overcome\.
Borrower Performance
16\. The Borrower performance has neither been extremely good nor extremely poor\. There
were certain areas and certain tiers where the Borrower performance was above the mark while serious
problems were faced in two major areas i\.e\.
(a) The release of counterpart and provincial funds in time and according to the requirements\.
(b) Recruitment of technical staff particularly of Grade 17 and 18 in time and according to the
need of the project\. At times frequent turnover of staff was also experienced which was
mainly due to the political pressures and was inevitable because it normally trickled down
from the top\.
Project Relationship
17\. A fairly cordial relationship existed between the Borrower, the Bank and the Consultants\.
However, towards the end of the project the Consultants withdrew due to some tax problem with the
Government of the Punjab\. Thus the remaining amount outstanding against the Consultants got adjusted
by utilizing the balance amount against the training of the project staff abroad\.
18\. It has been observed that so far the borrower comments on the draft PCR 1 and 3 have not
been taken into account by the Bank improving some of the impressions expressed by the Bank in their
draft of PCR Part 1 and 3\. l
Comment appears to refer to earlier text version\. SA3AG\.
21
PART III
1\. Related Bank Loans and IDA Credits
Loan/Credit Title Purpose Year of Status Conunents
Approval
Cr\. 813-PAK To reorganize and strengthen the 1978 Completed Despite initial problems, the
Punjab Extension and extension service through introduction project established a sound basis
Agricultural Dev\. Project of the Training and Visit (T&V) for an improved extension service,
(US$12\.5 million) system in 5 of the 21 districts of with staff receiving fortnightly
Punjab\. The project included a training and visits to farmers
staffing program, housing and service being carried out regularly\.
buildings, adaptive research farms, Performance audit report issued
equipment, and vehicles to increase June 1988\.
staff mobility\.
Cr\. 922-PAX Similar to Cr\. 813-PAK, covering 5 of 1979 Completed Overall, the project experienced
Sind Agricultural Extension Sind's 13 districts\. similar delays to that in Punjab,
and Adaptive Research but the basis for an improved
Project (US$9\.0 million) extension service was established\.
However, the adaptive research
program made little headway, and
there were major problems in the
civil works program--poor design
and construction, under-utilization\.
Performance audit report issued
June 1988\.
Cr\. 1762-PAK To achieve sustainable increases in 1987 On-going Punjab: Progress reasonable in
Punjab and Sind agricultural production by completing (closing date establishing and operating T&V
Extension and Adaptive the introduction of the T&V system June 1993) system, but doubts exist regarding
Research - Phase II Project and strengthening adaptive research in effect on agricultural production\.
(SDR 35\.5 million) Punjab and Sind\. Sind: Security situation has
retumed to normal; field
operations were restricted by
insufficient funds, but funds have
recently been allocated and
operations are expected to
improve soon\.
Cr\. 678-PAK To increase the quality of professional 1977 Completed This was an umbrella project
Third Education Project and technical manpower in agriculture, involving all 4 provincial
(US$15\.0 million) and improve basic education\. Project Departments of Education and
activities included reconstruction of the Agriculture\. Physical targets were
Agricultural Training Institute in achieved albeit with considerable
Quetta\. delay, and design weaknesses\.
Technical Assistance input was
unsatisfactory, and inadequate
staffing and support resulted in
failure to fully utilize facilities at
the time of the performance audit\.
The audit also found course work
too pedagogic and insufficiently
practical\. Performance audit
report issued June 1990\.
22
Loan/Credit Title Purpose Year of Status Comments
Approval
Cr\. 1163-PAK To increase agricultural production by 1981 Completed The project was successful in
On-Farm Water Management improved management of water saved achieving civil works targets with
(OFWM) Project (SDR 33\.4 through watercourse renovation and strong farmer interest and support\.
million) cleaning, precision land levelling, However, its impact on
construction of water storage tanks, agricultural production is difficult
and establishment of demonstration to quantify due to lack of data,
plots in the 4 provinces\. and may be less than anticipated
indicating a need for greater
emphasis on extension\. PCR
issued June 1988\.
Cr\. 1603-PAK To consolidate gains achieved under 1985 Completed With 3 one-year extensions the
Second On-Farm Water Cr\. 1163-PAK and improve OFWM project substantially surpassed
Management Project (SDR programs in the 4 provinces to enable physical targets\. However, its
34\.8 million) them to realize their potential\. Project agricultural and institutional
also emphasized coordination between achievements were less than
provincial OFWM and Extension anticipated\. Draft PCR issued
Directorates and strengthening of water February 1993\.
management advisory capability of
Extension Services\.
Cr\. 2245 / Ln\. 3327-PAK To expand the OFWM program to 1991 On-going Satisfactory start has been made\.
Third On-Farm Water remaining areas of the 4 provinces as (closing date
Management Project (SDR well as FATA and Northern Areas, Dec\. 1995)
33\.4 million / US$36\.3 with increased emphasis on barani
million) areas, irrigation agronomy, and
strengthening of water users
associations\.
Cr\. 1243-PAK To increase agricultural production and 1982 On-going The project started very slowly
Baluchistan Minor Irrigaion farm incomes through improvement of (closing date and by 1991 only 2 schemes were
and Agricultural 28 minor irrigation schemes (3,800 ha) Dec\. 1993) complete\. Since then progress has
Development Project (SDR including renovation of watercourses improved and by the final closing
12\.5 million) and channels, land levelling, and date 42 schemes are expected to
introduction of improved water be completed\. This will be
management practices\. Also to achieved in part by extensive
strengthen the Departments of technical assistance involving local
Agricultural Extension and Irrigation\. and expatriate consultants\.
Institutional strengthening and
agricultural development to date
have been disappointing\.
23
2\. Project Timetable
Item Date Planned Date Revised Actual Date
Identification/Preparation September 1983 - September 1983
Appraisal April 1984 - April 1984
Negotiations 2/ September 1984 - September 1984
Board Approval December 1984 - December 13, 1984
Credit Signing January 1985 - January 30, 1985
Credit Effectiveness April 30, 1985 - September 30, 1985
Project Completion June 30, 1989 - June 30, 1992
Credit Closing June 30, 1990 June 30, 1992 3/ November 25, 1992 4/
" FAO/World Bank Cooperative Program assisted GOBAL in preparation\.
2/ No major issues needed to be resolved\. Agreement was reached on financial/accounting
procedures, procurement of motorcycles, and establishment of project committees\.
3/ Second of two revisions\.
4/ The credit account was kept open four months beyond the final closing date and the last withdrawal
application was received October 21, 1992, and paid November 25, 1992\.
3\. Credit Disbursement (Cumulative, in Million)
IDA Fiscal Year Appraisal Estimate Actual '/ Actual as % of
Appraisal Estimates
SDR US$ SDR US$ SDR US$
FY 85 0\.7 0\.7 0 0
FY 86 2\.2 2\.2 0\.75 0\.81 34 37
FY 87 4\.1 4\.2 1\.59 1\.87 39 45
FY 88 6\.1 6\.2 2\.82 3\.53 46 57
FY 89 7\.5 7\.6 3\.89 4\.93 52 65
FY 90 8\.2 8\.3 4\.52 5\.73 55 69
FY 91 - - 5\.30 6\.81 65 82
FY 92 - - 6\.37 8\.27 78 100
FY 93 - - 7\.09 9\.292/ 86 112
Higher disbursement in US$ terms due to depreciation of US$ against SDR\.
2/ Date of Final Disbursement: November 25, 1992\.
24
4\. Project Implementation - Key Indicators
\. Appraisal Estimate \. \. Actual \.
Quantity Cost Quantity Cost
PRs '000 PRs '000
A\. CIVIL WORKS
Service Buildings
-Director General Office 1 1,311\.3 1 1,338\.0
- Publicity Office - - 1 273\.0
- Audio-visual Complex - - 1 2,535\.0
- DDA Office - - 2 1,650\.6
- EADA Office 5 2,148\.8 5 2,401\.2
- AO Office 28 8,178\.2 26 7,791\.3
-SMS Office 1 92\.5 2 1,095\.2
- Training Centers 10 1,620\.6 12 3,577\.7
- ARF Complex " 3 7,619\.8 3 5,861\.8
Housing
- Director General 1 959\.5 1 1,315\.0
- Project Coordinator 1 528\.3 1 583\.0
- Deputy Director AR 1 528\.3 1 583\.0
- SSMS 1 528\.3 1 583\.0
- Assistant Directors (HQ) 3 1,584\.9 3 1,749\.0
DDA 3 2,520\.0 3 3,036\.9
- EADA/ADA 6 3,155\.2 5 3,166\.2
- SMS 13 6,998\.2 13_ 9,017\.5
- AO 29 15,736\.4 28 19,630\.7
- ARO 6 3,180\.6 6 4,057\.2
- FA 64 17,096\.1 61 20,306\.3
- Mechanic 3 1,194\.0 3 873\.3
- Driver 3 499\.6 3 663\.4
Subtotal 75,480\.6 92,088\.3
Misc\.: Building Works and
Connection of Services 3,162\.3 25,882\.7
Land Acquisition & Devel\. 113\.3 14,199\.0
TOTAL CIVIL WORKS 182 78,756\.2 182 132,170\.0
B\. VEHICLES
- Four-wheel Drive 17 4,152\.0 20 4,615\.0
- Cars/Vans 2 389\.8 3 557\.5
- Pick-up Trucks 7 1,249\.5 7 1,700\.6
- Motorcycles 233 3,510\.2 263 7,297\.0
TOTAL VEHICLES 9,301\.6 14,170\.1
25
\. \.* Appraisal Estimate \. \. \.Actual \.
Quantity Cost Quantity Cost
PRs '000 PRs '000
C\. EQUIPMENT & MATERIALS
- Agric\. Training Institute Set 611\.9 Set 683\.0
- Media Center v Set 163\.2 Set
- Office Equipment " Set 1,479\.4 Set
- Training Centers Set 248\.0 Set 6,669\.0
- Adaptive Research Farms 4' 3 Sets 1,594\.2 3 Sets 9,266\.0
TOTAL EQUIPMENT & 4,096\.8 16,618\.0
MATERIALS
D\. TECHNICAL ASSISTANCE
- Expatriate Consultants 74 staff-months 12,050\.0 81\.7 stf-mos 17,170\.0'
- Local Consultants 3 staff-months 90\.9 3\.0 stf-mos 120\.04
TOTAL TECH\. ASSISTANCE 12,141\.0 17,290\.0
E\. TRAINING
- Short Courses
a) FA Training 150 individuals 176\.0 100 individuals 326\.0
b) Senior Staff Training 160 individuals 166\.1 33 individuals 18\.0
- Visits to Other T&V 20 individuals 337\.3 15 individuals 1,574\.4
Systems "
- Other Visits Overseas 15 individuals 110\.0 11 individuals 2,588\.8
- MSc Scholarships 20 individuals 985\.4 20 individuals 1,344\.7
TOTAL TRAINING 1,774\.7 5,851\.9
Including building works and connection of services\.
v Equipment largely provided by USAID\.
" Includes projectors, tape recorders, screens and fumiture for training centers\.
4' Includes one 50 hp; three 45 hp and three 10 hp tractors and matching implements\.
" Includes PRs 964,200 paid as an advance to the consuitants but actually spent on training of five staff by the
consultants in the UK, following the withdrawal of the consultants from Pakistan\.
' PCR mission estimate\.
" Turkey, Thailand and Philippines\.
Note: Appraisal figures may not add to totals due to rounding\.
26
5\. Project Costs and Financing
A\. Project Costs (Including Contingencies)
\. \.Appraisal Estimate \. \. \. Actua\.
Local F\.E\. Total Total Local F\.E\. Total Total
\. USS Mllion PRs Million \. U Million \. PRs Mllion
Investment Cost
Civil Works 4\.73 0\.90 5\.63 78\.76 4\.50 0\.84 5\.34 132\.17
Vehicles 0\.39 0\.27 0\.66 9\.30 0\.48 0\.34 0\.82 14\.17
Equipment 0\.15 0\.14 0\.29 4\.10 0\.43 0\.40 0\.83 16\.62
Technical Assistance 0\.17 0\.70 0\.87 12\.14 0\.18 0\.73 0\.91 17\.29
Training " 0\.03 0\.10 0\.13 1\.77 0\.09 0\.23 0\.32 5\.85
Recurrent Cost
Staff Salaries 1\.45 - 1\.45 20\.34 2\.14 - 2\.14 42\.80
Travel Allowances 0\.61 - 0\.61 8\.52 0\.72 - 0\.72 14\.36
Operation & Maintenance 1\.41 0\.47 1\.88 26\.32 1\.35 0\.57 1\.92 38\.32
Total 8\.94 2\.58 11\.52 161\.2S 9\.89 3\.11 13\.00 281\.S8
Overseas training trips considered to be 100% F\.E\. Cost\.
Note:
Actual foreign exchange (F\.E\.) expenditure estimates based on those at appraisal (e\.g\., civil works 16%, vehicles
41 %, equipment 49%, technical assistance 80%, training 6%, O&M 30%)\. Actual US$ expenditure on buildings
construction and vehicles based on exchange rates at the time of purchase; other USS expenditure estimated on the
basis of a weighted average exchange rate for the period\. The high average exchange rate, i\.e\., US$1\.0 = PRs
24\.7, for civil works reflects the late completion of the program, with most work finished between 1989 and 1992\.
There were no major changes causing formal revision of project costs\. Due to some modest changes in the building
program there were some cost revisions, and there was also an increase in the expenditure on technical assistance\.
However, most of the latter was as a result of savings arising from the depreciation of the US$ against the SDR
rather than a reallocation of funds\.
27
B\. Project Financing
Planned " (US$ million) \. \. Actual (US$ million) \.
Expenditure Category Govt\. IDA Total Govt\. IDA Total
Civil Works 1\.13 4\.50 5\.63 0\.62 4\.72 5\.34
Vehicles 0\.41 0\.25 0\.66 0\.53 0\.30 0\.82
Equipment 0\.01 0\.28 0\.29 0\.51 0\.32 0\.83
Technical Assistance 0\.00 0\.87 0\.87 0\.00 0\.91 0\.91
Training 0\.00 0\.13 0\.13 0\.01 0\.31 0\.32
Staff Salaries 2' 0\.73 1\.33 2\.06 1\.36 0\.77 2\.14
Travel Allowances 3' \. \. \. 0\.07 0\.65 0\.72
Operation and Maintenance 0\.94 0\.94 1\.88 0\.62 1\.30 1\.92
Total 3\.22 8\.30 11\.52 3\.72 9\.28 13\.00
" SAR, Table 4\.5 (Procurement)\.
v In SAR including travel allowances\. See footnote 3/\.
F Financing not separately available in SAR (allowances, totalling US$0\.61 million, are part of
'Incremental Salaries and Allowances' in Table 4\.5)\.
28
6\. Project Results
A\. Direct Benefits
SAR Estimate PCR Estimate
Jobs Created (Number)
- Director General of Agriculture 1 1
- Project Coordinator " 1 0
- Civil Works Coordinator 0 1
- Deputy Director Adaptive Research 1 1
-Deputy Directors (Field) 3 3
-Senior Subject Matter Specialists 4 4
- Economist (Monitoring and Evaluation) 1 1
- Assistant Directors/Extra Asst\. Deputy Directors 9 9
- Subject Matter Specialists 14 7
- Accounts/Admin\. Officer 1 1
- Publicity Officer 1 1
-Agricultural Officers 7 4
- Assistant Research Officers 6 6
- Field Assistants, Research 9 9
- Field Assistants, Extension 37 37
Total 95 85
Staff Training (Number)
- ATI training of FAs (3 months) 150 1692'
- Senior staff update training (20 days) 160 54 3'
- Visits to other T&V systems in Pakistan (15 days) 20 10'
- Visits to other T&V systems abroad (1 month) 10 941
- Visits to int\. res\. centers/short courses abroad (1 week) 15 519'
- MSc course in Pakistan (2 years) 20 17
= estimated\.
' Post deleted on project completion\.
21 150 FAs trained during 1985-88; no subsequent training at ATI\.
31 Some 15 DDAs and EADAs attended 2 week course in Quetta on project objective and
organisation in March 1991; 39 senior staff (AOs, SMSs and EADAs) attended 5 week
course at Faisalabad University in mid-1991\.
4 Two-week visit to T&V project in Turkey and second visit to T&V project in Thailand\.
Also visit to Philippines\.
51 Some unspent funding for technical assistance consultancy was used to send 5 staff on a
3 week course in the UK in 1991\. Six other staff also attended short courses or visited
educational institutions in the UK during the project\.
29
B\. Economic Impact
Not Applicable
C\. Financial Impact
Not Applicable
D\. Studies
Title Purpose Status and Impact
Project Monitoring and Establishment of benchmarks for farm output, 200 farmers interviewed in each district,
Evaluation and Baseline/ farmer practices and input use, against which by 20 trained FAs\. Implementation of
Benchmark Survey Design, to monitor increase in output over the project survey ran into data collection problems
August 1986 period\. largely due to poor FA understanding of
their role\. No subsequent data collection
and assessment\.
Diagnostic Study of Farming To determine farmers' major production Used to design the adaptive research
Systems in Loralai, Kachhi\. problems, to be incorporated into basic, program and give general information on
Nasirabad and Lasbela Districts, applied and adaptive research trials\. project area farming systems\.
1987
Baseline Study and Message Provision of baseline data on output and Completed early in project period and
Analysis, April 1986 extension impact indicators including formed basis for all subsequent annual
infrastnucture, vehicles and staffing\. M&E surveys\.
Project Monitoring and Evaluation To provide regular information on project Supported Baseline Study and
Progress and Procedures, 1987 progress\. M&E methodologies\.
Adaptive Research Report To identify priorities for the Adaptive Used to some extent in design of Adaptive
No 1\. University College of Research Program\. Research programs\.
N\. Wales
Farming Input Supply in Assessment of farmer input use and input Completed, usage uncertain\.
Balochistan - Situation and supply difficulties\.
Recommendations, 1989
Evaluation of Impact Point To develop and improve basis for preparation Used in planning of FA training programs\.
Messages for Different Crops in of extension messages\.
Loralai and Lasbela Districts,
1989/90
Annual Progress Report of To provide management with information on Generally followed pattem established by
M&E Unit strengths and weaknesses of project\. Baseline Study; emphasis on monitoring
mechanisms, e\.g\., visits by FA, rather
than achievements in terms of farmer
uptake of new technologies\.
Note:
In addition to these studies and surveys a number of ad hoc monitoring surveys were undertaken by the M&E Unit\. The most
important are: District Level Training in Lasbela Kachhi and Nasirabad; and Situation Analysis/Diagnostic Study of Project
Districts\.
30
7\. Status of Covenants
Agreement Section Description Compliance Remarks
Date
DCA 2\.02 (b) (c) Borrower/Province to open and 04/30/85 Complied with\.
maintain a Special Account/Sub-
Accounts in the State Bank of
Pakistan\.
DCA 3\.01 (a) Borrower to cause Province to Complied with\.
perform in accordance with Project
Agreement, and to provide funds and
other resources necessary to enable
Province to fulfill such obligations\.
DCA 3\.02 (a) Borrower to employ consultants to 04/30/85 Complied with\.
assist in carrying out project\.
DCA 3\.04 (d) Prompdy after project completion, Complied with\.
Borrower to furnish to IDA a project
completion report\.
DCA 3\.05 Borrower to acquire all land and land Partially complied with\. IDA
rights required for the project\. was to be formally notified by
GOBAL as and when Agriculture
Dept\. authorized land transfers\.
Proj\. Ag\. 2\.07 (a) Not later than effective date, Province 04/30/85 Complied with\.
to appoint Director General of
Agriculture\.
Proj\. Ag\. 2\.07 (b) Not later than effective date, Province 04/30/85 Complied with\.
to appoint Project Coordinator\.
Proj\. Ag\. 2\.07 (c) Not later than effecdve date, Province 04/30/85 Complied with more or less on
to appoint Civil Works Coordinator\. time\. Initial location of
Coordinator within CWD proved
unsatisfactory, and in 1988 a
CWD executive engineer was
deputed to DOA\.
Proj\. Ag\. 2\.08 (a) (i) Province to establish a Project Complied with\.
Steering Committee\.
Proj\. Ag\. 2\.08 (a) (ii) Province to establish a Project Review Complied with\.
Committee\.
Proj\. Ag\. 2\.08 (a) (iii) Province to establish District Complied with\.
Advisory Committees\.
Proj\. Ag\. 2\.08 (b) (i) Province to establish a Provincial Complied with\.
Technical Committee\.
Proj\. Ag\. 2\.08 (b) (ii) Province to establish District Complied with\.
Technical Committees\.
Proj\. Ag\. 2\.09 Province to ensure that staff/vehicles In progress\. Mosdy complied
will be appointed/provided in with\.
accordance with program sadsfactory
to IDA\.
Proj\. Ag\. 2\.10 Province to streamline organisationof 12/31/85 Not fully complied with\.
Department of Agriculture, furnish
plan to IDA for review nd comment\.
31
Agreement Section Description Compliance Remarks
Date
Proj\. Ag\. 2\.11 Province to release all project agric\. In progress\.
ext\. staff in direct contact with
farmers from all responsibilities not
directly related to agric\. ext\. work\.
Proj\. Ag\. 2\.12 Province to give project staff priority Not fully complied with,
for training at the Agric\. Training especially after merger of ATI
Institute (ATI), Quetta\. with Bal\. Agric\. College\.
Proj\. Ag\. 2\.13 (a) Province to establish a vehicle Complied with\.
revolving fund for replacement of
motorcycles\.
Proj\. Ag\. 2\.13 (b) Province to deposit in the vehicle Complied with\.
revolving fund amounts required to
pay for replacement of motorcycles
provided to project staff\.
Proj\. Ag\. 2\.14 (a) Province to set and maintain travel Generally complied with\.
allowance and vehicle O&M
allowance for project staff\.
Proj\. Ag\. 2\.14 (c) Province to make adequate budgetary Generally complied with\.
allocations for above travel allowance
and vehicle O&M allowance\.
Proj\. Ag\. 2\.15 (a) Province to carry out benchmark 07/31/86 Complied with\.
surveys in each project district\.
Proj\. Ag\. 2\.15 (c) In FY 86 and each year thereafter, Partially complied with\.
Province to prepare M&E studies on
the project\.
Proj\. Ag\. 3\.02 (a) Province to have accounts and Generally complied with\.
financial statements for each FY
audited by independentauditors\.
Proj\. Ag\. 3\.02 (b) Province to furnish to IDA not later Some delays occurred due to
than 6 months after end of each FY queries by auditor general, but at
audit reports, including separate closing date all audit reports due
auditor's opinions in respect of SOEs\. had been submitted\.
32
8\. Use of Bank Resources
A\. Staff Inputs (Staff weeks)
Stage of FY82/
Project Cycle FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 Total
Preappraisal 0\.3 26\.5 26\.8
Appraisal 31\.0 11\.4 42\.4
Negotiations 2\.8 2\.8
Supervision" 5\.1 6\.7 13\.0 11\.5 4\.6 6\.1 8\.7 1\.7 1\.4 58\.8
PCR v 23\.0 23\.0
Total 0\.3 57\.5 19\.3 6\.7 13\.0 11\.5 4\.6 6\.1 8\.7 1\.7 24\.4 153\.8
Excluding PCR\.
V PCR mission also responsible for preparing inception report for possible follow-up project (about 10 staff weeks)\.
33
B\. Missions
Date No\. of Days in Speciallsation" Performance Types of Problems
Persons Field Rating " SI
Preparation October 1983 \. \.No data available \.
Appraisal April 1984 4 17 2A, AE, Ex
Supervision
I January 1985 2 4 E, A 2Sta F2
2 April 1985 2 4 AE, A 2Sta M2
3 November 1985 1 4 A 2 M2
4 May 1986 2 -6 AE, A 2 M3
5 Oct/Nov\. 1986 4 29 AE,E, A, DDC 2 F2, M2
6 Mar/Apr\. 1987 2 13 A, CE 3 F3, M3
7 October 1987 3 10 AE, A, CE 3 F3, M3, 12
8 Mar/Apr\. 1988 2 13 AE, A 2 F3, M2, 12
9 Nov/Dec\. 1988 2 9 A, Ac 2 F2, M2, 12
10 May 1989 2 8 AE, A 2 M3, C2,12
I I FeblMar\. 1990 3 11 AE, 2A 2 M3, C2, I2
12 Nov/Dec\. 1990 2 7 Ex, A 2 M2, 12
13 May/June 1991 5 17 AE, Ex, 2A, CE 2 M2, 12
14 May/June 1992 2 18 A, CE 2 M3, 12
PCR November 1992 3 21 A, Ex, CE
" A = Agriculturalist; Ac - Accountant; AE Agricultural Economist; CE = Civil Engineer; E = Economist;
Ex = Extension Specialist; DDC - Deputy Division Chief\.
2' Status: I = problem free or minor problems; 2 = moderate problems; 3 = major problems\. Sta = situation
stationary\. Same ratings apply to types of problems\.
" C - compliance with covenants; F - financial; I = development impact; M - managerial\.
4 Mission also responsible for preparing inception report for possible follow-up project\.
34
Project Completion Report
PAKISTAN: 8aluchistan Agricultural Extension and Adaptive Research Project
Arwex 1\. Staff Positions and Recruitit
| ~~~~~~~Posts Fitted
Post Title Target 1985 196 1987 19 19 1990 1991 1992 Vacant To on-Devt\. Budget To Det\. Budget
QETTA HEADARTERS
DGA 1 1 1 1 1 1 1 1 1 0 1
Project Coordinator 1 1 1 1 1 1 1 1 1 *
CiviltUorks Coordinator 1 1 1 1 1 1 1 1 1 0 1
WA Adapt\. Research 1 1 1 1 1 1 1 1 1 0 1
Agricultural Econrlist 1 0 1 1 1 0 1 1 1 0 1
SSmS 4 0 0 3 3 4 3 3 4 0 4
ADA M L E 2 0 0 1 1 1 2 2 2 0 2
ADA (Trg\. nd Pub\.)" 2 0 0 1 1 1 0 1 2 0 2
SS (Training) 1 1 1 1 1 1 0 1 1 0 1
Accounts Officer* 1 0 1 1 0 0 0 0 0 0
AG (Publicity) 1 1 1 1 1 1 1 1 1 0
Office Superintendent" 2 1 1 1 1 0 0 2 2 0 2
Progrm ProducerI 1 0 0 0 0 0 0 0 0 1
W CCoputer Progr_r 1 0 0 0 1 1 1 1 1 0 1
un' Investigator 3 3 3 3 3 3 3 3 3 0 3
Private Sec\." 1 0 0 0 0 0 0 1 1 0 1
Cmerman" 1 0 0 0 0 0 0 0 0 1 1
Adin\. Officer 0 0 0 0 1 1 1 1 1 0 1
Draftsn 1 0 0 0 0 0 0 0 0 1 1
Electr\. Engineer" 1 0 0 0 0 0 1 1 1 0
Script Writer" 1 0 0 0 0 0 0 0\. 0 1
DISTRICTS
DOA 3 3 3 3 i 3 3 3 3 3 0 3
EADA 5 0 4 5 5 5 5 5 5 0 5
SIS 13 0 10 12 12 11 8 6 6 7 13
AO 7 0 6 6 6 6 7 7 4 3 7
ARO 6 0 3 2 2 0 5 5 6 0 3 3
Office Superintendent 3 3 3 3 3 3 3 3 3 0 2 1
Mechanic 3 0 3 3 2 2 3 3 3 0 3
FA (Ext\.) 37 16 37 37 37 37 37 37 37 0 37
FA (Res\.) 9 0 6 9 9 9 9 9 9 0 9
Tractor Driver 3 0 3 3 3 3 3 3 3 0 3
TOTAL: 117 32 90 100 100 96 100 103 103 14 58 54
As amerded in revised PC-I (1990-91)\. SAR total waS 108\. 2' These posts have not yet been transferred to the non-development budget\.
* Position abolished\. ** Accounts Officer redesignated as Aciinistrative Officer in 1988\.
Project Completion Report
PAKISTAN: Bsluchistan Agricultural Extension and Adaptive Research Project
Annex 2\. List of Higher Level Staff Training
MSc course (2 years) at Agricultural University, Faisalabad: 20 students of which 18
have since returned\.
Short course (3 wks) for 33 SMSs, AROs and AOs at Agricultural University, Faisalabad, July 1991\.
Two week course on project organization, objectives and implementation for DDAs and EADAs, March
1991, Quetta\.
Two week training in accounting methods at Railway Accounts Academy, Quetta for accounts staff of
project HQ and districts, Febmary 1991\.
OVERSEAS TRAINING
Study Tour to Turkey
1\. DDA (Adaptive Research) Mohd Riaz Khan
2\. SSMS (Economics) M\. Tariq
3\. SMS (Agronomy) Mohd Syed
4\. SMS (Agronomy) Mohd Azhar
Study Tour to Thailand
1\. DDA Utal A\. Samad
2\. DDA DM Jamali G\. Jan
3\. DDA Loralai M\. Shameen
4\. SSMS M\. Naqibullah
S\. SSMS Mohd Ishaque
Study Tour to Philippines
1\. Deputy Secretary Agriculture M\. Saddat
2\. DDA PP cell M\. Arshad
3\. Economist (M & E) M\.G\. Rasool
4\. ADA (M& E) M\. Bahauddin
5\. SMS (Training) M\. Wazir
Philippines Training Course: Field and Middle Level Management and Supervision
Project Coordinator Pir Mohd
Visit to UK Educational Instltutions
Principal ATI/BAC Mumtaz Ali Khan
UK Training on M & E plus Computer Use
Economist (M & E) M\.G\. Rasool
UK Training on Training Methods & Media
1\. Instructor ATI/BAC Mohd Ahmed
2\. Instructor ATI/BAC Javaid Ahmed Khan
3\. Instructor ATI/BAC M\. Khalil
4\. SMS (Training) M\. Wazir
36
Project Completion Report
PAKISTAN: Baluchistan Agricultural Extension and Adaptive Research Project
UK Training on Extension Management
1\. Director of Extension A\. Salam
2\. DDA Saido Khan
3\. Project Coordinator Pir Mohd
4\. DDA DM Jamali Mohd\. Afzal
5\. DDA Uthal Zafar Iqbal Awan
37
Project Completion Report
PAKISTAN: Baluchistan Agricultural Extension and Adaptive Research Project
Annex 3\. List of Equipment Purchased for Use in Training
Itemi SAR Estimate Purchased Difference
1\. Slide projector 12 12
2\. Screen \. 12 12
3\. Radio/cassette 16 16
4\. Overhead projector 2 5 +3
5\. PA system 1 1
6\. Video cassette recorder 1 1
7\. Video cassette player 0 1 +1
8\. Generator 2 2
9\. Television set/monitor 1 5 +4
10\. Video camera M7 1 1
11\. Camera 4 4
12\. Drawing table 1 0 -1
13\. Light table 1 1
14\. Drawing equipment (set) 1 0
Office Equipment
15\. Electric typewriter 1 1
16\. Photocopier/photostat 2 9 +7
17\. Manual typewriter 10 15 +5
18\. Stencil duplicator 5 +5
19\. Fax machine 6 +6
20\. IBM computer and printer 1 +1
21\. Amstrad laptop 3 +3
22\. Desk top calculator 5 5
23\. Pocket calculator 48 50 +2
24\. Printer calculator 7 +7
38
Project Completion Report
PAKISTAN: Baluchistan Agricultural Extension and Adaptive Research Project
Annex 4\. Wheat Ouput in Balochistan 1984-1991
1\. Using data " collated by the Statistics Wing of DOA, a comparison has been made of the
area and yield of wheat produced in the project and non-project districts of the Province over the project
period\. The data are presented in the following table\.
2\. Only districts for which comparable data exist over the full project period have been
included\. It should be noted that the comparisons are based on simple averages that do not take account
of special production circumstances such as intercropping within orchards in the northern districts\.
Nevertheless, it is clear that most of the increased production can be attributed to the increase in the
irrigated area in all districts except Zhob, and that yields have increased similarly in both project and non-
project areas\.
" Agricultural Statistics of Balochistan - Statistics Wing DOA Quetta\.
39
Project Completion Report
PAKISTAN: Baluchistan Agricultural Extension and Adaptive Research Project
I I I I I I ~~~~~~~~~~~~~~~Inc\. %
Distrkt | 84/85 | 85/86 86/87 1 87188 | 88/89 | 89190 90/91 85/91
WHEAT PRODUCTION: IRIUGATED AREA (ha)
Projed Areas
- Nasirabad 101\.600 106,400 120,000 96,380 124,110 72,100 138,590 36\.4
- Kachhi 6,400 5,400 6,700 9,700 10,000 11,200 13,970 118\.3
- Lasbela S00 870 870 800 1,000 700 800 60\.0
- Loralai 8,000 9,500 9,600 10,000 10,000 10,500 11,000 37\.5
NonPoet:t Area : sI :
-Pishin 10,500 10,430 10,510 l1\.000 12,700 10,600 11,300 7\.6
-Chagai 1,250 1,160 1,200 1,090 1\.500 1,700 1,550 24\.0
-Zhob 4,200 3,060 5,000 4,000 4\.800 1,340 1,200 -71\.4
-Sibi 9,230 10,850 10\.810 13,700 12,810 12,900 14,100 52\.8\.
- Kht1zdar - I 9,40Q 10,5(0 13,840 12,930 16,510 18,000 18,270 94\.4
- Kalat 10,00 8,20D 12,000 12\.020 11,550 14,500 14,800 41\.8
-Trubt -290 110 150 400 390 690 5 70 96\.6:
WHETF PRODUCTION (latow)
Proje Areas
- Nasirabadb 213,600 232,200 276,000 227,350 290,600 168,100 342,200 60\.2
- Kacdhi 11,380 10,570 13,400 18,550 21,600 24,300 30,400 167\.1
-Lasbela 1,000 1\.530 1,740 1,600 2,000 1,400 1,680 68\.0
- Lorili 16,120 15,550 18,280 18,500 22,700 23,800 27,400 70\.0
Average Project Area' 65\.9
Non-Project Areas
- Pishin 20\.910 20,620 27,620 28,600 34,700 30,900 34,060 62\.9I
- Chgapi 2,100 1,700 2,400 2,200 3,200 3,60( 3\.150 50\.0
- Zhob 7,610 4,930 9,600 7,800 9,300 2,570 2,860 -62\.4
-Sibi 18,290 21,550 21,430 26,700 25,150 25,610 34,200 87\.0
- Khuzdar 17,090 19,100 25,070 25,600 31,000 35,120 42,550 149\.0
- Kalat 20,130 16,010 23,200 20,600 20,750 26,400 33,600 66\.9
-Turbat 510 190 295 700 760 1,370 1,180 131,4
Ave\. Non-Ptoject Armas 75\.0*
WHEAT YEELDS (tons/b1)
Project Areas
- Nasimabad 2\.10 2\.18 2\.30 2,36 2\.34 2\.33 2\.47 17\.6
-Kachhi 1\.78 1\.96 2\.00 1\.91 2\.16 2\.17 2\.18 22\.5
- Lasbela 2\.00 1\.76 2\.00 2\.00 2\.00 2\.00 2\.10 5\.0
- Loralai 2,01 1\.64 1\.90 1\.85 2\.27 2\.27 2\.49 23\.9
Avenge Project Areas 2\.08 2\.13 2\.26 2\.28 2\.32 2\.30 2\.44 17\.3
Non Project Areas
- Pishin 1\.99 1\.98 2\.63 2\.60 2\.73 2\.91 3\.01 51\.3
- Chagai 1\.68 1\.47 2\.00 2\.02 2\.13 2\.12 2\.03 20\.8
- Zhob 1\.81 1\.61 1\.92 1\.95 1\.94 1\.92 2\.38 31\.5
- Sibi 1\.98 1\.99 1\.98 1\.95 1\.96 1\.98 2\.43 22\.7
- Khuzdar 1\.82 1\.82 1\.81 1\.98 1\.88 1\.95 2\.33 28\.0
- Kalat 1\.93 1\.95 1\.93 1\.71 1\.80 1\.82 2\.27 17\.6
-Turbat 1\.76 1\.73 1\.97 1\.75 1\.95 1\.99 2\.07 17\.6
Ave\. Non-Project Aras 1\.91 1\.90 2\.05 2\.03 2\.07 2\.10 2\.45 28\.3
* 88\.2% excluding Zhob\.
40 | APPROVAL |
P107757 | Page 1
INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: AC3659
Date ISDS Prepared/Updated: 07/07/2008
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Lao People's Democratic
Republic
Project ID: P107757
Project Name: Lao PDR Treasury Modernization Project
Task Team Leader: Saiyed Shabih Ali Mohib
Estimated Appraisal Date: July 31, 2009
Estimated Board Date: September 30, 2009
Managing Unit: EASPT
Lending Instrument: Specific Investment
Loan
Sector: Central government administration (100%)
Theme: Other public sector governance (P);Public expenditure, financial management
and procurement (P);Debt management and fiscal sustainability (S)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
7\.50
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER/RECIPIENT
0\.00
0\.00
B\. Project Objectives [from section 2 of PCN]
The project development objective (PDO) is to enhance institutional capacity of the Ministry of
Finances Treasury Department to perform key treasury functions"\. By improving budget
execution and reporting, via implementing a modern treasury systemâ
the Treasury Information
Management System (TIMS) , the Project wouldcontribute towards: (a) improving the timeliness
of budget execution; (b) enhance the quality and increasing coverage of budget reporting; and (c)
strengthening financial controls in budget execution\.
C\. Project Description [from section 3 of PCN]
The project will assist the Government in deploying an automated Treasury Management
Information System nationwide for improved budget execution\.
This will entail putting end-user computers at all Treasury departments and linking them to the
central Ministry of Finance via commercial leased lines services which already exist\.
Page 2
The project will not conduct any civil works, nor will it deploy any external communication
systems
D\. Project location (if known)
Treasury Department at the Ministry of Finance\.
E\. Borrowers Institutional Capacity for Safeguard Policies [from PCN]
Satisfactory\.
F\. Environmental and Social Safeguards Specialists
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered
Yes No TBD
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Physical Cultural Resources (OP/BP 4\.11)
X
Indigenous Peoples (OP/BP 4\.10)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
Environmental Category:
C
-
Not Required
III\. SAFEGUARD PREPARATION PLAN
A\. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS
would be prepared: N/A
B\. For simple projects that will not require a QER, the target date for preparing the PAD-stage
ISDS: 06/20/2009
C\. Time frame for launching and completing the safeguard-related studies that may be needed\.
The specific studies and their timing
1
should be specified in the PAD-stage ISDS\.
As required\.
1
Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected
persons\.
Page 3
IV\. APPROVALS
Signed and submitted by:
Task Team Leader:
Mr Saiyed Shabih Ali Mohib
07/07/2008
Approved by:
Regional Safeguards Coordinator:
Mr Panneer Selvam Lakshminarayanan
07/07/2008
Comments:
Sector Manager:
Ms Barbara Nunberg
07/07/2008
Comments: | APPROVAL |
P007389 | Docnment of
The World Bank
FOR OmCIAL USE ONLY
Report No\. 13573
PROJECT COMPLETION REPORT
HONDURAS
SOCIAL INVESTMENT FUND PROJECT
(CREDIT 2212-HO)
SEPTEMBER 30, 1994
Human Resources Operations Division
Country Department II
Latin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY AND EQUIVALENT UNITS
Currency Unit = Lempira
Average Exchange Rates
1991 L 5\.31 = US$ 1\.00
1992 L\. 5\.53 = US$ 1\.00
1993 L\. 6\.30 = US$ 1\.00
1991 SDR 1\.0 = US$ 1\.43
FISCAL YEAR
January I - December 31
PRINCIPAL ABBREVIATIONS AND ACRONYMS USED
BMI Maternal Child Coupon Program
BMJF Women Head of Household Coupon Program
CBH Central Bank of Honduras
EEC European Economic Community
FHIS Honduran Social Investment Fund
FHIS-I First Honduran Social Investment Fund Project
FHIS-II Second Honduran Social Investment Fund Project
FINCA Foundation for International Community Assistance
GDP Gross Domestic Product
GNP Gross National Product
GECO General Statistical and Census Office
GOH Government of Honduras
IDA International Development Association
LCB Local Competitive Bidding
LSMS Living Standards Measurement Survey
LWSB Local Water and Sanitation Board
MHS Multiple Purpose Permanent Household Survey
MOE Ministry of Education
MOH Ministry of Health
NGO Nongovernmental Organization
PRAF Family Assistance Program
RUTA Regional Unit for Technical Assistance
SECPLAN National Planning Secretariat
UNDP United Nations Development Programme
UNICEF United Nations International Children's Emergency Fund
USAID U\.S\. Agency for International Development
FOR OFFICLAL USE ONLY
THE WORLD BANK
Washington, D\.C\. 20433
U\.S\.A\.
Office of Director-General
Operations Evaluation
September 30, 1994
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Honduras
Social Investment Fund Project (Credit 2212-HO'
Attached is the Project Completion Report on Honduras -Social Investment Fund Project
(Credit 2212-HO) prepared by the Latin America and the Caribbean Regional Office\. Part II was
prepared by the Borrower\.
This project developed and funded a social fund to mitigate the social costs of adjustment by
financing a large number of small-scale subprojects providing social and economic infrastructure\.
Nearly all indicators of outcome -employment, focus on poorest areas, gender, etc\. -were positive, and
the early success of the project attracted additional funds to expand its scope\. The project outcome
is rated as satisfactory; sustainability as likely; and institutional development is rated as substantial\.
The PCR is of good quality\. As an innovative project and the first of its kind in the country,
an audit is planned\.
Robert Picciotto
by H\. Eberhard Kopp
Attachment
This documernt has a restricted distribution and may be used by recipients only in the performance of
their officlal duties\. Its contents may not otherwise be disclosed without Wordd Bank authorizatlon\.
FOR OFFICIAL USE ONLY
PROJIECT CONIPLETION REPORT
HONDURAS
SOCIAL INVESTMENT FUND PROJECT
(CREDIT 2212-HO)
TABLE OF CONTENTS
PREFACE \. \.
EVALUATION SUMMARY \. ii
PART 1: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE \. \.- 1 -
A\. Project Identity \.- \. -
B\. Project Background \. - I -
C\. Project Objectives and Description \. -2-
D\. Project Design and Organization \. - 3 -
E\. Project Implementation \. _ _ \.- 4 -
Variations in Project Implementation \. \. - 4 -
Parallel financing \.-\. \. \. \. \. \. -
Procurement \. \.- 5 -
Subprojects Preparation \. \. - 6 -
Project Risks \. - 7 -
F\. Project Results \. - 8 -
Approved Subprojects \. 8 -
Infrastructure Subprojects \. - 8 -
Basic Needs Subprojects \. - 8 -
Informal Sector Subprojects \. - 9 -
The Family Assistance Program (PRAF) \. \. - 9 -
Living Standards Management Survey (LSMS) \. \. - 9 -
FHIS' Macroeconomic Impact \. \. - 10 -
Employment \. I \. \. 10 -
Institutional Impact \. - 11 -
Poverty Alleviation \. \. - 11 -
Impact on Women \. - 12 -
The Family Assistance Program (PRAF)\. -\. \. 12 -
Environmental Impact \. \. - 12 -
G\. Project Sustainability \. - 12 -
H\. IDA Performance \. - 13 -
This report is based on the recommendations of an evaluation study of PRAF food coupons
program undertaken in November 1991 (Report No\. 10488-HO) and on the findings of a
project completion mission, which visited Honduras in March 1994\. The mission was
composed of Messrs\./Mmes\. A\.M\. Sant'Anna, Mission Leader, and M\. Romero (CONS)\.
Messrs\./Mmes\.Messrs\. de St\. Antoine, Vinh Nguyen and B\. Hyatt-Allen contributed to the
report at headquarters\. Edilberto L\. Segura (LA2DR) and Kye Woo Lee (LA2HR) are the
Department Director and Division Chief, respectively\.
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
I\. Borrower Performance \. \. \. \. \.- 1 3 -
J\. Project Relationship \. \. \. \. - 13 -
K\. Project Documentation and Data \. \. \. \. \. \. \. \. - 13 -
L\. Lessons Learned \. \. \. - 14 -
PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE - 17 -
A\. Comments on Parts I and III \. \. \. \. - 17 -
B\. IDA Performance \.-\. \. 17 -
C\. Borrower Performance \. \. \. \. \. - 18 -
D\. IDA - Borrower Relationships \. I\. \.-I \. \. \. \. \. 19 -
PART III: STATISTICAL INFORMATION \. \. \. \. \. \. \. - 20 -
1\. Related Credits \. \. \. \. \. \. -20 -
2\. Project Timetable \. \. \.- 21 -
3\. Credit Disbursements \. - 22 -
4\. Project Implementation: Indicators for FHIS Programs \. 23 -
5\. Project Costs and Financing \. \. \. \. \.- 23 -
A\. Project Costs \.-\. 23 -
B\. Project Financing \. \. - 24 -
C\. FHIS Financing \. \. - 24 -
D\. Credit 2212-HO by Methods of Procurement \. \. - 24 -
E\. Allocation of FHIS Investments by Type of Subproject (1990-
1993) \. \. \. - 25 -
F\. Allocation of the Proceeds of Credit 2212-HO by Type of FHIS
Subproject \. - 25 -
G\. FHIS Investment by Municipal Poverty Index \. \. \. - 26 -
6\. Project Results \. \. \. \. \. 27 -
A\. Direct Benefits \. \. - 27 -
B\. Studies \. e\. \. \.,\. - 28 -
C\. Audit Recommendations \. \. \. \. - 29 -
7\. Status of Covenants \. - 30 -
8\. Use of Bank Resources \. - 30 -
A\. Staff Inputs \. \. - 30 -
B\. Use of IDA Resources: Missions \. - 31 -
BIBLIOGRAPHY \. - 32 -
PROJECT COMPLETION REPORT
HONDURAS
SOCIAL INVESTMENT FUND PROJECT
(CREDIT 2212-HO)
PREFACE
This is the Project Completion Report (PCR) for the Social Investment Fund Project in
Honduras, for which Credit 2212-HO in the amount of SDR 14\.3 million (US$20 million
equivalent) was approved on February 28, 1991\. The Credit was closed on March 31, 1994,
three months beyond the original schedule\. The last disbursement was made on June 13, 1994\.
The PCR was prepared by the Human Resources Operations Division of Department II
of the Latin America and the Caribbean Regional Office (Preface, Evaluation Summary, Parts
I and III) and the Borrower (Part 11, with significant contributions to Part III)\.
Preparation of this PCR was started during the Association's final supervision mission
of the project in February 1994, and is based, inter alia, on the Staff Appraisal Report; the
Development Credit Agreement; supervision reports; mid-term project review; evaluation studies
prepared by the Borrower; correspondence between the Association and the Borrower; and
internal Bank memoranda\.
ii
PROJECT COMPLETION REPORT
HONDURAS
SOCIAL INVESTMENT FUND PROJECT
(CREDIT 2212-HO)
EVALUATION SUMMARY
Introduction
I \. This project was the first social sector project that supported the Government of Honduras'
economic stabilization and adjustment program which started in March 1990\. This program was
designed to correct distortions resulting from past macroeconomic mismanagement, and to lay
the foundation for sustained economic growth over the medium term\.
2\. The Social Investment Fund Project was appraised in October 1990, approved by the
Board in February 1991, signed on March 14, 1991, and became effective on June 25, 1991\.
At appraisal, total costs were estimated at US$68 million, of which US$20 million would be
financed by an IDA credit\. Other contributions included US$33 million from donors, US$8
million from the Government of Honduras, and US$7 million from the project beneficiaries\.
The credit was closed on March 31, 1994, three months beyond the original schedule, the last
disbursement was made on July 29, 1994, and the undisbursed balance of SDR 17,767 was
canceled in August 1, 1994\.
Project Objectives
3\. The objectives of the project were to mitigate the social costs of adjustment, establish the
basis for a decentralized program of direct support for the poor and malnourished, and support
improvements of service delivery in the social ministries\. The project was to meet these
objectives through implementation of four components: (a) financing of the Honduran Social
Investment Fund (FHIS); (b) supporting a pilot targeted nutrition assistance program carried out
by the Family Assistance Program (PRAF); (c) providing technical assistance to help design a
program for improving the efficiency and equity of the services of the Ministry of Health (MOH)
and the Ministry of Education (MOE); and (d) establishing a monitoring and evaluation system
of the government's social policy interventions by using a Living Standards Measurement Survey
(LSMS), administered by the Ministry of Planning (SECPLAN)\. The FHIS, which accounted
for 98\.3 percent of total project cost, was established as a short-term mechanism to transfer
resources to poor urban and rural communities to: [i] create employment and income among the
poor segment of the population whose living conditions would be more severely affected by the
macroeconomic adjustment; [ii] improve social infrastructure, satisfy basic needs such as water
supply and sanitation, and promote microenterprises\.
Implementation Experience
4\. The implementation of Credit 2212-HO complied with the Credit Agreement in its
fundamental aspects\. FHIS exceeded appraisal expectations in mobilizing international support
iii
from 16 bilateral donors and international agencies\. Combined with national funds, the
additional external resources permitted a 65 percent expansion of the program as appraised\.
5\. Minor variations were observed between actual and planned implementation: (i) the
average size of subprojects financed by FHIS was smaller than planned (US$18,600 instead of
US$20,000); (ii) the average time required for subproject appraisal and execution was shorter
than expected, leading to faster credit disbursement; (iii) single-source contracting was the most
used method of procurement, reaching 68 percent of the total rather than 30 percent as
anticipated at appraisal\. Single-source contracting followed transparent albeit simplified
procurement guidelines, supported by a computerized cost control system and quarterly
concurrent audits which ensured least cost solutions and competitive subproject contract awards;
(iv) the contribution of beneficiaries to project financing was estimated at appraisal at US$7
million, or about 10 percent of the original project cost; actual contribution of beneficiaries was
made mostly in kind, and has not been monetized as part of the total project cost\. Nevertheless,
it is estimated to account for an additional 12 percent of the cost of FHIS subprojects, and (v)
FHIS administrative costs, estimated at appraisal at 6\.5 percent of total FHIS financed, averaged
8\.1 percent during the 1990-1993 period, which is not excessive given the size and diversity of
its portfolio\.
6\. Project implementation successfully overcame the risks identified at appraisal\. Through
its subproject menu and resource allocation procedures, FHIS subprojects were well targeted,
benefitting more than proportionally the poorest communities\. Over time, subproject
sustainability improved through the creation of local water boards for operations and
maintenance of water supply and sanitation subprojects, local education and health committees
for the maintenance of schools and health centers, and community training for the use of latrines\.
These programs were carried out by specialized non-government agencies (NGOs) working
under contract with FHIS\. The risks of inadequate targeting and misuse of resources by the
PRAF pilot nutrition assistance program were also avoided; PRAF achieved the planned
coverage and complied with targeting criteria for the Maternal Child Food Coupon Program
(BMI), with positive impact on the nutrition status of the most vulnerable groups consisting of
pregnant and nursing women and children under five\.
Project Results
7\. The results of the project can be assessed by focusing on the following aspects:
macroeconomic impact, employment and targeting, infrastructure, social services, institutional
impact, poverty alleviation, impact on women, and environmental impact\. FHIS activities
during the 1990-1993 period resulted in the execution of 5,474 subprojects providing social and
economic infrastructure, basic needs and informal sector credit at a total cost of about US$97\.2
million including administrative costs, compared with about US$66\.8 million estimated at
appraisal\. FHIS had a favorable impact on Honduras' macroeconomic indicators by contributing
to Government investment and direct employment\. Following the economic crisis of the late
1980s, when investment in social infrastructure practically came to a halt, FHIS was able to
channel investments to small economic and social infrastructure which in 1992, amounted to 18
pe;cent of total Government's capital expenditures and 28\.3 percent of direct government
investments\. Direct employment generated by FHIS subprojects reached 59,000 job-years during
the 1990-1993 period, corresponding approximately to 12 percent of the estimated unemployed
and underemployed workers in 1991\. Over 85 percent of the created employment related to the
construction of community facilities such as roads; education facilities such as repair of schools;
and health and sanitation facilities such as expansion of health centers and construction of water
iv
supply, latrines and sewage systems\. Average wages paid under FHIS contracts ranged between
94 percent and 104 percent of the minimum construction wage\. Because FHIS was able to
gradually increase its activities in areas of high incidence of poverty, tiere has been an increase
in the percentage of jobs in the poorer municipalities from 65 percent to 80 percent during the
1990-1993 period\.
8\. The impact of FHIS subprojects has been significant, especially in meeting long neglected
social infrastructure needs\. In the education sector, FHIS rehabilitated and/or expanded 2,708
schools, or 30 percent all primary and pre-primary school in the country and provided 360,836
school desks serving approximately 80 percent of all students enrolled in primary schools\. In
the health sector, FHIS rehabilitated and/or expanded of 303 health centers, thus improving 32
percent of national health centers network, provided health services to about 37,121 persons, and
trained 14,788 community health providers, including most of the country's traditional
midwives\. FHIS raised the coverage of safe water supply by 16 percent in rural and urban
areas, and practically eliminated basic sanitation deficit in urban and peri-urban (slum) areas
through the construction of 57,507 latrines and septic tanks, and 244 water and sewerage
subprojects\. Through financing of 6,112 family gardens, 3,635 small livestock subprojects, and
over 100 maternal enterprises, FHIS contributed to improving food security and child nutrition
in rural areas\. FHIS informal sector credit program supported the creation of 254 community
banks, benefitting 7,219 persons without access to credit and financed about 3,753 micro-
enterprises\.
9\. The PRAF pilot nutrition assistance program tested the feasibility of distributing food
coupons targeted to groups at risk of malnutrition through primary health care centers and
primary schools\. The pilot program was successfully implemented, benefitting 56,000 poor
pregnant and nursing women and children under five in 3 of 16 departments nationwide\. it
provided the basis for an expanded nutrition assistance program which IDA is now supporting
under Credit 2452-HO (Nutrition and Health Project)\.
10\. The project has contributed to alleviating poverty and to improving the social and
economic conditions of women\. Through FHIS subprojects and the pilot nutrition assistance
program of PRAF in particular, the project led to the creation of an effective safety-net for the
most vulnerable groups with insufficient incomes to buy the basic food basket\. An important
aspect of the project impact on women has been the improvement of their access to credit and
productive activities, through participation in the FHIS informal sector credit program\. Women
represent 53 percent of the beneficiaries of this program, accounting for 79 percent of
community banks' members and 63 percent of training program participants\. Six of 21 NGOs
providing micro-credit with FHIS financing catered exclusively to women\.
11\. The majority of FHIS subprojects have had neutral impact on the environment\. Some
subprojects were designed to have a positive impact on the environment\. These innovative
subprojects focused on restoration of historic monuments and support to indigenous communities\.
FHIS water supply and sanitation subprojects improved environmental conditions in many rural
and poor urban areas, by reducing soil and water contamination through improved disposal of
waste water and human excreta, appropriate watershed management practices and provision of
sanitary land-fills, latrines and septic tanks\.
12\. The FHIS program had a strong institutional impact\. The high visibility, efficiency and
credibility of the program helped strengthen the government's capacity at both the central and
local levels\. FHIS fostered inter-agency collaboration and instituted an effective mechanism for
v
coordination with the line ministries for investment planning and subprojects implementation\.
FHIS also brought innovation to the style of governance and contributed to the process of
decentralizing government decision-making, by responding effectively to local demand for small
scale investments in several sectors, and by relying largely on the private sector for subprojects
implementation\. As a result, FHIS strengthened the capacity of municipalities to promote,
prepare, supervise, execute and maintain small-scale investment projects\. FHIS contributed to
the development of the private sector and NGOs, by actively engaging their participation in
subproject preparation, execution and supervision, thereby achieving excellent working relations
with NGOs and over 1,800 small private contractors\. Through FHIS contracts, many
individuals were able to grow and form private construction and consulting companies, and many
NGOs expanded the scope of their activities and improved service quality\. Thus, FHIS
succeeded in mobilizing additional private resources in aid of community development\.
13\. The Living Standards Measurement Survey was developed, tested and incorporated as a
module of the multi-purpose annual household surveys conducted by SECPLAN; three such
surveys have been conducted, leading to improved data collection of social indicators and
providing useful statistics to measure the impact of the FHIS program\. However, data analysis
is still less than satisfactory, and SECPLAN plans to strengthen its social indicators analysis unit,
to achieve the intended project objective of systematically monitoring the impact of targeted
government social programs\. The social sectors restructuring component, financed by a
Japanese Grant to Honduras, contributed to the preparation of the nutrition and health project
currently under implementation with IDA financing (Cr\. 2452-HO)\.
14\. FHIS's operational policies ensured the sustainability of the subprojects it financed\. In
the case of the expansion of schools and health centers, the assurances of staff appointments by
line ministries (Ministries of Education and Health) was a condition for approval of the
expansion subprojects\. Similarly, in the case of water supply and sanitation subprojects, FHIS
required the creation of local water boards or special municipal units in charge of collection of
user fees and system operation and maintenance, as a condition for subproject approval\. To
complement the construction of latrines, FHIS introduced an innovative program to train every
beneficiary household on how they should use and maintain the latrine to ensure sustainability\.
To maintain continued efforts in this area, IDA recommended that FHIS, in cooperation with
line ministries and municipalities, carry out an operations and maintenance census of all
completed subprojects\. The results of this census would serve to identify additional measures
in support of subproject sustainability\.
Summary of Findings and Key Lessons Learned
15\. Integration with Macroeconomic Program\. An important aspect of FHIS' success was that
it became an integral part of the Government's high priority economic policy; i\.e\., a social
program to cushion the social costs of the economic adjustment program\. This policy
framework provided FHIS with sustained, high level political support and the budgetary
resources to start the program even before external financing could be mobilized\. Strong
governmental support was combined with restraint from political intervention in the FHIS daily
operations\.
16\. Management Autonomy and Operational Efficiency\. Its semi-autonomous institutional
form allowed FHIS to adopt more efficient management and operational procedures than those
used in line ministries\. Combined with a strong manager's leadership, usually coming from the
private sector, streamlined management procedures resulted in rapid disbursements and good
vi
quality subprojects\. Implementation experience has shown that management efficiency could be
further strengthened, by enhancing the existing management information system (MIS) and
improving inter-departmental coordination within FHIS\.
17\. Exception from Central Government Procurement and Salary Regulations\. The special
Presidential Decree allowed FHIS to use simplified procurement procedures and to pay its staff
at competitive market rates\. These two factors were instrumental in ensuring the efficiency of
FHIS, leading to a high volume of operations and accelerated disbursements without
compromising the quality of subprojects\. These positive features need to be reinforced by
periodic reviews of the salary scale, integration of management information systems, continuous
attention to supervision of subprojects under execution, and improved evaluation of completed
subprojects\.
18\. Simple and Effective Targeting and Promotion\. FHIS allocated its funds transparently,
according to a poverty map and a set menu of subprojects which received ample publicity\. This
system represents a significant improvement over traditional revenue-sharing formulas based
exclusively on population, since it allows for allocating additional resources proportionally to
the level of poverty in each municipality\. For this targeting system to work effectively, FHIS
had to promote subproject proposals actively in the poorest municipalities where spontaneous
demand has been shown to be the lowest, due to its weaker organization and subprojects
preparation capacity compared with less poor communities\. These special promotion efforts,
covering the 80 poorest municipalities, resulted in increases in the share of resources channeled
to the poorest communities, from 25 percent in 1990 to 45 percent in 1993\.
19\. Coordination with Line Ministries\. FHIS was established at a time when social sector
planning and implementation capacity was lacking in line ministries, and there was a large
backlog of schools and health clinics in disrepair throughout the country\. Coordination between
FHIS and the line ministries ensured that appropriate staff (principally teachers and nurses) and
recurrent budgets would be available for the social infrastructure that FHIS would finance\.
FHIS also ensured that the proposed subproject would fit within the overall priorities of the line
ministries\. This level of coordination was appropriate, given FHIS' policy of not engaging in
new construction, but only in the rehabilitation or expansion of existing facilities\. Closer
coordination would be required if FHIS evolves into a longer-term agency responsible for social
investments, including construction of new health and education facilities\. Line ministries would
exercise their normative role in establishing sector policy priorities, and standards for new
infrastructure\. Their construction departments would be redefined as smaller technical units
responsible for management of large scale projects, development of prototype designs, norms
and standards, supervision and support for local maintenance of school buildings and clinics
constructed with FHIS financing\.
20\. Innovative Micro-Credit Pro2ram\. With the intermediation of NGOs, FHIS has been
successful in using a small share of its resources (6\.5 %) to finance innovative short-term credits
that benefitted small scale artisans and microentrepeneurs, without previous access to credit\.
The design of the program takes advantage of FHIS' financing capacity and the NGOs
knowledge of the market, minimizing operating costs\. FHIS lends to a few, highly experienced
NGOs, and these in turn screen potential borrowers and make small loans at market interest
rates, assuming the credit risks\. The participating NGOs were gradually strengthened by clearly
established lending guidelines and technical assistance provided by FHIS\. The loan recovery rate
exceeded 98 percent\. The future development of this program is being analyzed with the goal
vii
of enlisting the support of commercial banks, and establishing the basis for a sustainable
revolving credit program without FHIS' continuous financial support\.
21\. Importance of Technical Assistance\. Technical assistance provided by UNDP and IDA
during project preparation and implementation, have contributed to the development of FHIS
operational procedures and helped sustain a process of continuous improvements in the program
during implementation\.
22\. The Pilot Nutrition Assistance Program\. The pilot nutrition program demonstrated that
distribution of food coupons is a more cost-effective means of providing nutrition assistance than
distribution of food in kind; that specific interventions should integrate into a broader nutritional
assistance policy, which includes periodic monitoring of the health/nutritional status of the
participants, and education and training of the beneficiaries in sound health and nutrition
behaviors and attitudes\. By distributing food coupons through primary health care and education
facilities, the program generated greater demand for quality education and health services, and
more efficient use of health and education service facilities available at the local level, resulting
in broader and longer term health and education benefits to the beneficiaries\.
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HONDURAS
SOCIAL INVESTMENT FUND PROJECT
(CREDIT 2212-HO)
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE
A\. Project Identity
Name: Social Investment Fund Project (FHIS-I)
Number: Credit 2212-HO
RVP Unit: LAC
Borrower: Republic of Honduras
Executing
Agencies: Honduran Social Investment Fund (FHIS),
Family Assistance Program (PRAF) and
National Planning Ministry (SECPLAN)
Sector: Multiple
Amount: SDR 14\.3 million
(US$20 million equivalent)
Approval Date: February 28, 1991
Signing Date: March 14, 1991
Effectiveness
Date: June 25, 1991
Closing Date: Original: December 31, 1993
Revised: March 31, 1994
B\. Project Background
1\. This report provides information on the Honduran Social Investment Fund Project,
Credit 2212-HO (FHIS-I), which was closed on March 31, 1994\. Since the original FHIS
project was significantly expanded as a result of additional financial contributions from various
sources, this report considers the FHIS operations as a whole during the 1990-1993 period,
rather than only the subprojects financed under Credit 2212-HO\.
2\. In March 1990, the Government of Honduras adopted a package of stabilization and
adjustment measures which were expected to produce an uneven impact on various sectors of
the economy, urban and rural and richer and poorer populations\. These measures, including the
liberalization of the exchange rate and agricultural prices, increase in public service rates, and
reduction of public sector employment, were expected to have short-term negative impact on the
real income of the country's poorest families, risking a deterioration of health and nutrition
indicators, especially among poor pregnant and nursing women and among children under age
five\. Recognizing these short term effects of adjustment and the need to reduce the country's
chronic poverty levels, the Government adopted in the early 1990s, a social safety net strategy
consisting of two programs: the FHIS, to finance small scale, labor-intensive economic and
social infrastructure, social services and informal sector subprojects; and the PRAF, to provide
nutritional assistance through food coupons to the country's most vulnerable groups\.
Recognizing the efforts of the Honduran government to undertake a bold program of economic
- 2 -
reforms, the Bank released the second tranche of the Structural Adjustment Loan 1\. In June
1990, a financial package of US$250 million to clear multilateral arrears was negotiated\.
Lending was resumed in September 1990, initially on IBRD terms andi subsequently exclusively
on IDA terms\. A Second Structural Adjustment Loan (SAL-II) of US$20 million was approved
in September 1990, and the first tranche was disbursed in November 1990\. In light of the
impact of higher oil prices and export earnings loss resulting from a strike of banana workers
in July 1990, IDA approved a US$20 million equivalent Structural Adjustment Credit (SAC) to
supplement the financing provided under SAL II\. Sector Adjustment Credits include one for the
energy sector in the amount of US$50\.6 million, approved in October 1991, and one for the
agricultural sector in the amount of US$1 10 million, approved in August 1993\.
C\. Project Objectives and Description
3\. To support the Government's social sector strategy, IDA approved Credit 2212-HO in
February 1991, for the equivalent of US$20 million to finance the Social Investment Fund
Project\. The project's objectives were to mitigate the social costs of adjustment, establish the
foundation for a decentralized program to directly assist poor groups at risk of malnutrition, and
to support the improvement of services provided by social ministries\.
4\. The above objectives were to be achieved through the implementation of four project
components: (a) financing of FHIS subprojects (98\.3 percent of total project cost); (b) support
for a targeted nutritional assistance pilot program, to be implemented by PRAF (0\.6 percent of
total project cost); (c) technical assistance to improve the services provided by the Ministries of
Health and Education (0\.6 percent of total project cost); and (d) the setting up of a monitoring
and evaluation system of the government's social policy interventions through the use of a Living
Standards Measurement Survey, to be implemented by SECPLAN (0\.5 percent of total project
cost)\.
(a) The Honduran Social Investment Fund (FHIS)\. FHIS was established as a
temporary autonomous entity under the Presidency, by Congressional Decree
No\. 12-90 on February 22, 1990\. Its objective was to provide temporary
employment for the poorest group of society most adversely affected by the
economic crisis and adjustment process, and improve the delivery of basic social
services at the community level\. FHIS was designed to rapidly and effectively
finance poverty alleviation-oriented small-scale subprojects designed and carried
out by a variety of entities at local levels\. The menu of eligible subprojects
consisted of small scale economic and social infrastructure works, such as
construction, expansion and rehabilitation of water supply, sewerage, health
posts, schools, drainages and roads; basic needs subprojects, such as provision
of health, nutrition and training services, support to the elderly and street
children, construction of school desks, establishment of family vegetable gardens
and small livestock farms; and small-scale credits to informal sector workers and
microenterprises\. In its expenditure plan, FHIS expected to allocate
approximately 65 percent of its funds to support infrastructure subprojects, 20
percent to social services, 6 percent to informal sector credit, 2 percent for
institutional strengthening, and 7 percent for administrative costs\.
(b) The Nutritional Assistance Pilot Program\. This pilot nutrition assistance
program designed to test a Maternal Child Coupon Program (BMI), aimed at
ensuring a minimum level of nutrition to poor pregnant and nursing mothers and
- 3 -
children under age five who were at risk of malnutrition\. This program would
complement and improve the PRAF Women Head of Household Coupon
Program (BMJF) created in March 1990, to assist pooi primary school children
in the seven departments\. The BMI food coupons would be distributed monthly
to poor mothers and children attending health checkups at health posts and
centers in specified selected poor areas in two departments\. Thus, the program
would be self-targeted and would combine nutrition assistance with maternal and
child health care\.
(c) Social Sector Restructuring Program\. This component would provide technical
assistance financed by a grant from the Government of Japan, to help the
Government prepare a social sector restructuring program\. The program would
improve the allocation and use of resources in the social sectors, strengthen the
implementation capacity of the line ministries, and design a sector project for
eventual IDA and IDB financing\.
(d) Living Standards Measurement Survey\. Technical assistance provided under this
component, would help the Government develop a system to monitor and
evaluate its social policy interventions, through the use of a Living Standards
Measurement Survey (LSMS)\. It would also help to evaluate the operations of
FHIS through a survey of communities and individuals benefitted by FHIS
subprojects, that would serve as a basis for an impact study of the program\.
The component would be implemented by SECPLAN's General Statistical Office
(DGE), in conjunction with its Multiple Purpose Permanent Household Survey
(MHS)\.
D\. Proiect Desi2n and Oreanization
5\. FHIS subprojects were prepared and requested by a variety of agencies, including
municipal governments, line ministries and agencies, NGOs, local associations, and community
groups\. Evaluation of subproject proposals by FHIS was based on sectoral programming
priorities, target population, labor and materials content, counterpart financing, unit costs,
technical viability, estimated social and economic benefits, and assurances of sustainability based
on satisfactory operations and maintenance provisions\. Using these criteria, FHIS's Operations
Committee evaluated and approved subproject proposals, publicized the list of approved
subprojects, and signed tripartite contracts for subproject execution with the contractor and the
sponsoring agency\. Subprojects were executed by private contractors or NGOs supervised by
FHIS or externally contracted supervisors\. FHIS disbursements against contracts were
contingent on satisfactory reports from field inspections of each subproject\.
6\. Procurement regulations approved for FHIS departed both from standard IDA procedures
and Honduran Government procedures, allowing non-competitive contracting for contracts under
US$35,000, on the basis of unit prices controlled by FHIS and approved by IDA\. Contracts of
US$35,000 to US$70,000, were awarded on the basis of comparison of price quotations from
at least three qualified contractors\. Competitive bidding, advertised locally, was used for civil
works contracts of $70,000 to US$500,000, and for goods contracts of $250,000 or less\. Civil
works contracts above US$500,000 and goods contracts in excess of US$250,000 would have
been procured through international competitive bidding (ICB), but there were no such large
contracts\.
- 4 -
7\. FHIS staff gradually increased in response to the program's growth requirements,
starting with 65 people in 1990 and reaching 230 managerial, technical and administrative
personnel in 1993\. Annual staff increases are considered reasonable for the work performed\.
On average, administrative costs represented about 8\.1 percent of FHIS's subprojects's
disbursements, which is also sound, given the volume and diversity of its operations\. All staff
were based in Tegucigalpa, which is sound, given the good quality of roads and ease of access
to most subprojects\. FHIS' internal organization is led by an Executive Director with
Ministerial rank, and consists of five departments: projects, supervision, administration, data
processing, and external financing\. In addition, there are legal and internal audit units\. The
FHIS has a Board which approves general policies and rules of operation, approves the annual
budget, and authorizes FHIS to contract external financing\. The Board meets quarterly, and is
composed of nine members including the President of the Republic (Chairman), the President
of Congress, the Ministers of Planning, Finance and Labor, and representatives of the private
sector cooperatives and NGOs, and FHIS Executive Director\. FHIS subprojects are approved
by its Operations Committee which includes the Directors of Projects, Administration, External
Financing, Supervision Departments, and Legal Counsel\.
8\. The implementation of the LSMS was the responsibility of SECPLAN and the FHIS
worked in close collaboration with that agency to prepare its impact study\. The social sector
restructuring program was executed by the Social Cabinet Executive Secretariat (SCES) with
financing from a Japanese Government grant, and its activities contributed to the preparation of
a Nutrition and Health Project, partly financed by IDA Credit 2452-HO\.
E\. Project Implementation
9\. Variations in Project Implementation\. The implementation of Credit 2212-HO complied
with the Credit Agreement in its fundamental aspects\. The largest variations between actual
implementation and the plan presented in the President's Memorandum comprised: (a) the target
for external funding, (b) total project cost, (c) methods of procurement used, (d) financial
contribution from project beneficiaries, (e) the closing date\. FHIS was able to mobilize
significantly more external funds than anticipated\. At appraisal, the target for external funding
for the FHIS program was set at US$48\.7 million, including IDA financing, a figure considered
ambitious at the time (Table 5\.C\.)\. By December 1993, total external funding approved for the
FHIS program reached US$84\.3 million, an increase of 73\.1 percent over appraisal estimates\.
As a result, the share of project cost financed by Credit 2212-HO declined from 29\.4 percent
to 20\.3 percent\. The principal sources of additional external financing for the FHIS program
included a second IDA credit (Credit 2401-HO) of US$7\.4 million equivalent, a loan from the
IDB of US$24 million and loans and grants from the Government of Germany in the amount of
US$16\.5 million equivalent\. Actual project cost at US$98\.4 million (see Table 5\.A\.), exceeded
appraisal estimates of US$68\.0 million by about 45 percent\. Cost increases are primarily due
to the 73 percent expansion of FHIS subprojects coupled with an 80 percent increase in FHIS
administrative costs, which were incurred as a result of the larger and more complex portfolio
administered by the Fund\. No significant changes were observed in the cost of the other
components compared to appraisal estimates, except that costs incurred for monitoring and
evaluation were not registered by FHIS separately from administrative costs\. The rate of credit
disbursement was faster than expected, especially during the second year of project
implementation (FY92), justifying the preparation of a second IDA operation to support the
expansion of the program (Table 3)\. Higher than expected use of single-source contracting by
FHIS, resulted in a four-fold increase in the planned aggregated amount financed by Credit
2212-HO under this method of procurement (Table 5\.D\.)\. Project supervision reports and
quarterly external audits confirm that funds were used properly by FHIS and that the contracting
process was efficient and competitive\. The financial contribution by project beneficiaries,
expected at appraisal to reach US$6\.6 million, or 9\.8 percent of the cust of the FHIS program,
are estimated at 12 percent of FHIS subproject cost\. However, as the beneficiaries contributed
mostly in kind and their contribution was not monetized, FHIS financial records do not show
the financial participation of beneficiaries\. Finally, the closing date was extended by three
months, from December 31, 1993 to March 31, 1994, to compensate for delays in completing
subproject disbursements which had been interrupted during the period of transition to a new
national administration\.
10\. Other variations between actual implementation and the plan include 7 percent lower
average size of FHIS subprojects (US$18,650) compared to appraisal estimates (US$20,000)\.
This is actually a small difference\. One reason is that few contract revisions were required to
cover additional work or cost overruns: actual contract revisions averaged only about 4 percent
of the amounts originally approved\. Lower average subproject cost also resulted from quicker
subproject processing and execution by FHIS\. By the end of December 1993, the time required
for project approval was reduced to one month and the average execution period was about five
months\.
11\. FHIS administrative costs excluding technical assistance, exceeded appraisal estimates
by approximately 1\.6 percent totalling US$7\.9 million (Table 5\.A\.) or 8\.1 percent of program
disbursements as of December 31, 1993, compared with 6\.5 percent estimated at appraisal for
a smaller size program\. The slight increase was mainly due to the fact that, as the program
grew in scope and complexity, more resources were needed for quality control and subproject
promotion and supervision than had been anticipated\. The operating cost of 8\.1 percent is
comparable with the range of 7-10 percent which is the actual administrative costs of other social
investment funds in Latin America\.
12\. IDA and the UNDP played a decisive role in supporting the start-up of the FHIS by
helping establish methodologies, procedures and management systems for resource allocation,
subproject evaluation, approval and monitoring, and procurement\. These contributed to the
positive results and credibility achieved by FHIS early on in project implementation, and
facilitated the participation of other multilateral and bilateral donors in financing the FHIS
program\.
13\. Parallel financing\. FHIS mobilized external financing from 16 sources, as well as from
the Honduran Government, totalling US$97\.2 million (Table 5\.C\.) during the 1990-1993 period,
well beyond original expectations (para\. 9)\. The main sources of financing were IDA (26\.6
percent), the IDB (24\.7 percent), the Government of Germany (17\.0 percent), and the Honduran
Government (13\.3 percent)\. Approximately 18\.4 percent of the cost of FHIS operations was
financed by other donors\. The contribution from beneficiaries is estimated at about 12 percent
of total subproject costs, but has not been computed since, in many cases, it was made in kind\.
14\. Procurement\. For civil works contracts below US$35,000, FHIS used simplified
contracting procedures agreed on with IDA\. Small contracts were negotiated between FHIS and
a private contractor based on a unit price costing system consisting of a schedule of standard
prices for completion of different tasks in various types of subprojects\. These prices were
periodically adjusted by region\. On the basis of the standard cost determined as a function of
unit prices, plus an additional 15 percent for overhead and profit, FHIS fixed a non-negotiable
price for awarding small contracts\. This system permitted the agency to use procurement
- 6 -
procedures that were simpler than those of the Honduran Government, and ensured transparent
and cost-effective administration of direct contracting procedures\. Contracts over US$35,000
and up to US$500,000 for civil works and $250,000 for goods, were awarded on the basis of
competitive bidding, advertised locally (LCB)\. There were no larger contracts that would have
been awarded by international competitive bidding (ICB)\. The procurement practices approved
for FHIS were simple and efficient and proved to work satisfactorily\.
15\. A total of 5,474 contracts were financed by FHIS during the 1990-1993 period, one for
each subproject\. Civil works and service contracts were awarded to 1,864 private contractors
and 406 other executors, including municipalities and NGOs (para\. 32)\. Only a few non-
infrastructure subprojects were executed directly by government agencies\. The incidence of
problem contracts was minimal, and very few (4 percent of the amount financed) experienced
adjustment to the original amount during execution\. Considering subprojects financed under
Credit 2212-HO, LCB contracts totalled about US$5\.4 million or 27 percent of the total, single-
source contracting accounted for US$13\.5 million or 67\.5 percent of the total, and consultants,
training and auditing contracts accounted for US$1\.1 million or 5\.5 percent of the total\. The
distribution of the proceeds of the credit by method of procurement was estimated at appraisal
to be: 4 percent under ICB, 53\.5 percent under LCB, 28 percent under other forms of
procurement (local shopping and single-source contracting), and 14\.5 percent under consulting
and training contracts (Table 5\.D\.)\. The larger variation from appraisal estimates observed
under single-source contracting is counterbalanced by the fact that FHIS procurement
performance satisfactorily ensured least cost solutions under no-bidding contracts through its
systems of unit cost controls and concurrent quarterly audits\.
16\. As a result of much more frequent use of direct contracting method of procurement than
originally planned, project implementation deviated markedly from the norms established in the
Development Credit Agreement (Schedule 3, Part C, Para\. 2), which provided for a maximum
aggregated amount of US$4 million in direct contracting to be financed from the proceeds of the
credit\. In fact, approximately US$13\.5 million of the credit proceeds was used to finance direct
contracting\.
17\. Subproiects Preparation\. FHIS' operating scheme is clearly established with manuals
for all of its activities\. These manuals are made up of several parts covering the functions of
administration, promotion, appraisal, and supervision in the various sectors financed by the
FHIS\. All manuals were reviewed extensively and found satisfactory to IDA\. These manuals
are used regularly in all operational aspects of the subprojects, and are amended where necessary
to fit changing conditions\. Resource allocation criteria, based on a poverty map using population
and a poverty index, were used to target projects that were evaluated using social, technical, and
economic criteria\. Although more resources went to the poorer communities, the middle class
communities also received a sizeable share of the Fund, because there were poor people in these
areas\. A one percent increase in the poverty index implied a US$0\.14 increase in the allocation
of funds\. It was sometimes difficult to achieve this target, particularly in the early phase of
FHIS, since poorer municipalities had less capacity to prepare subprojects\.
18\. Subproject execution was thoroughly monitored, and subprojects were inspected by FHIS
supervisors before and during execution, as well as at completion\. FHIS was audited quarterly
by external independent auditors who found that exceptions decreased over the life of
subprojects\. These audits combined financial reviews as well as physical inspection of works
in the field\. FHIS's success in fully implementing corrective actions to audit exceptions resulted
in a sharp decline of audit exceptions in 1993 compared to the 1991-1992 period (Table 6\.C\.)\.
Subproject execution was enhanced by a good working relationship between FHIS, line
ministries and other agencies, resulting from its coordinated efforts to follow their technical
norms and standards in its projects, informing the relevant ministry or agency by fax of their
proposal to appraise a project and giving them limited time to comment, then proceeding if no
comment was received in the stated timeframe; and meeting with them periodically to review
their respective pipeline of projects\. The line ministries and agencies were satisfied that FHIS
operated within their overall objectives and plans, achieving a high level of interagency
coordination which did not delay subproject implementation\.
19\. Project Risks\. One of the risks identified at appraisal relates to effectiveness of FHIS
in targeting resources to the poorest localities and eventual loss in subproject quality due to
excessively rapid execution\. Implementation experience demonstrated that FHIS targeting
performance was good and improved over time\. Expenditures in subprojects located in
municipalities classified as being "poor and very poor" increased from 26 percent of the total
in 1990 to 40 percent in 1993\. About 68 percent of the amount financing subprojects located
in the capital district and San Pedro Sula, proved to benefit groups classified as being "poor and
very poor\." Project quality remained satisfactory albeit the rapid pace of implementation, as
indicated by quarterly audit reports, and field inspection of completed projects by FHIS and IDA
supervision mission\. FHIS targeting performance was enhanced by its efficient information
system to monitor that subproject approvals complied with poverty guidelines, prompt response
to recommendations made in the mid-term review and external audits; close supervision of
subproject execution; and FHIS's special efforts to promote subproject preparation in extremely
poor communities\.
20\. The additional risk raised at appraisal was the possible lack of sustainability of FHIS-
financed subprojects\. FHIS succeeded in reducing this risk by establishing adequate
operations and maintenance arrangements, such as local water boards to administer water and
sewerage subprojects, community maintenance committees to care for schools and health
facilities, and training programs to teach families how to use and maintain latrines\. Specialized
NGOs were contracted by FHIS to provide required technical assistance and training to local
groups\. While more efforts need to be made both by FHIS and the Government in this respect,
measures taken by FHIS to ensure sustainability, notably of water and sanitation subprojects,
have served as a good example in the design of other social investment fund projects financed
by the Bank/IDA\. In order to improve subproject sustainability, more attention must be given
to strengthening the financial capacity of the municipalities, to enable their taking-over of
maintenance and operation functions of completed FHIS subprojects\.
21\. The risks of eventual poor design, targeting and implementation performance of the pilot
nutritional assistance program did not materialize\. The pilot program succeeded in reaching the
target population of mothers and children most at risk of malnutrition\. Also, the administrative
costs were substantially lower than those of nutrition assistance programs distributing food in
kind (administrative costs were 7 percent, compared with 25 percent to 40 percent overhead for
food in kind)\. The design of the pilot program provided for the distribution of food coupons
through health centers\. This proved to be efficient as it was a self-targeted program, since only
poor mothers and children attend health centers\. The program had a positive impact on the
income levels of beneficiary families who were able to purchase more food and improve their
nutrition\. The program also produced a significant increase in the use of health services by the
beneficiaries, which contributed to improving their health status\.
F\. Project Results
22\. The allocation of FHIS resources by subproject type differed from the allocations
estimated at appraisal as follows: infrastructure subproject absorbed 76 percent of the funds
compared to 71 percent anticipated at appraisal; basic needs subprojects 18 percent of compared
to 22 percent; and the informal sector credit program 6 percent compared to 7 percent expected
at appraisal\. These differences are small and reflect actual demand trends expressed by
subproject proposals submitted to FHIS\. They also show that good estimates were made at
appraisal\.
23\. Approved Subproiects\. As of December 31, 1993, 5,474 projects had been approved,
totalling the equivalent of US$97\.2 million, including administrative costs, and 4,482 of these
projects (82 percent) are already completed (see Table 4)\. They helped create over 140,000 jobs
in the 3-year period\. The proceeds of Credit 2212-HO (FHIS-1) were used to finance 1,377
subprojects totalling the equivalent of US$18\.6 million, which created 36,415 direct jobs,
representing 25 percent of all subprojects approved, and 25 percent of total jobs created\. All
projects financed under Credit 2210-HO were completed by March 31, 1994, and the last
disbursement is expected to take place by June 20, 1994\. Between 1990-1993, approvals
increased by 66\.1 percent per year, and disbursements by 173\.2 percent\. Half of all
disbursements for this period were made in 1993\. The economic and financial impact of these
subprojects have not been calculated, nevertheless, the largest impact (76 percent) represents
improved community infrastructure\. Overall, approximately one-third of basic community
services have been improved, including expanded access to nutrition, water and sewerage\.
24\. Infrastructure Subproiects\. FHIS disbursed US$67\.6 million equivalent (see Table 5\.E\.)
between 1990-1993 in 4,480 economic and social infrastructure projects which created 120,771
direct jobs\. The allocation of resources from various donors followed the established FHIS
operational guidelines\. However, some donors restricted funding to some types of subprojects\.
For example, KfW financed only infrastructure subprojects\. Credit 2212-HO helped finance 19\.3
percent of infrastructure investment, accounting for 25\.3 percent of the jobs created\. IDA-
financed subprojects included construction, expansion and repair of schools and health centers,
roads and streets, irrigation and drainage works, water supply and sewer systems, community
facilities and maintenance of historic ruins and monuments\. The results obtained on FHIS
infrastructure subprojects are summarized as follows: (a) in education, 2,708 schools and child
care centers (36 percent of the total) were rehabilitated or expanded; (b) in health, 303 health
centers (30 percent of the total) were rehabilitated or expanded; 244 water supply and sewer
systems were built, as were 57,507 latrines and septic tanks (see Table 6\.A\.)\. Sample results
from quarterly audits and Bank supervision mission indicated that most subprojects were in good
operating and maintenance condition, one or two years after completion\. However, FHIS will
undertake a census of completed projects with assistance from RUTA Social, to quantify this
important aspect of its operations\.
25\. Basic Needs Subprojects\. During the review period, 936 basic needs projects were
approved, totalling disbursements of US$16\.4 million (see Table 5\.E\.), and creating 7,777
temporary and permanent jobs\. Credit 2212-HO financed 255 basic needs subprojects,
representing 17 percent of total financing, and 19\.5 percent of the jobs created\. The funds
invested allowed 6,112 family and community gardens and 3,635 small-scale family and
community farms to be implemented, provided 37,021 people with health programs, 14,788
people with health training programs, and financed the production of 360,836 double school
desks, serving the requirements of about 82 percent of Honduras' primary students\. This
program has been well-focused, since the country's 118 poorest municipalities have received 100
percent of planned financing\. Relatively little is known about the impact and sustainability of
these basic needs subprojects, and that will be a matter of special attention in the planned
subproject census (para 24)\.
26\. Informal Sector Subprojects\. Between 1990-1993, FHIS approved 56 projects to support
the informal sector, totalling US$5\.10 million in disbursement, and creating 12,950 jobs\. Credit
2212-HO financed 11 informal credit subprojects representing 23\.8 percent of the amount
disbursed and 33 percent of the jobs created\. The reimbursable credit system, was administered
with the assistance of NGOs\. Its implementation resulted in the establishment of 254 community
banks with 7,219 direct participants and the financing of 3,753 small businesses in the areas of
production, commerce and services, The informal sector support program has had the greatest
relative effect on the creation of permanent jobs and has had numerous, positive socioeconomic
effects on beneficiaries, including increased investments in fixed assets, increased levels of
savings, replacement of part of the credit provided by traditional money lenders at usurious rates,
improved living conditions for families, and strengthening of grassroots organizations\. Also
positive was the institutional strengthening of NGOs achieved through non-reimbursable technical
assistance grants, the training programs that were implemented, and the close supervision of the
NGOs' efficiency\.
27\. The Family Assistance Program (PRAF)\. The distribution of food coupons to poor
mothers and children under age five (BMI), administered by PRAF, was a success\. At the end
of the first year of project operations, the BMI had reached its established goal of 56,000 mothers
and children under age five; 40 percent of beneficiaries lived in rural areas, 6 percent more than
planned; the BMI, which distributed food coupons through the network of health centers, served
an estimated 13 percent of nutritionally disadvantaged poor children under age five and pregnant
and nursing mothers nation-wide by financing an estimated 20 percent of the cost of their
minimum nutritional requirements\. It brought about an increase in preventive care visits to health
centers of over 150 percent in the annual growth rate registered between 1990-1993\. Based on
the success with this pilot nutrition assistance program, IDA financed the expansion of the
program under the Nutrition and Health project with Credit 2452-HO for $25 million equivalent\.
In addition to the BMI pilot program, the PRAF's BMJF program, which distributed food
coupons through primary schools, has also tested an effective method for transferring income to
poor families, and has served 120,899 beneficiaries, 57 percent of whom live in rural areas\.
Enrollments increased by over 25 percent in schools in which these benefits were distributed\.
The BMJF also served 57 percent of nutritionally disadvantaged children between grades one and
three by financing 17 percent of the cost of their minimum nutritional requirements\.
28\. Living Standards Management Survey (LSMS)\. To meet the objectives of this
component, the General Office of Statistics and Census (DGEC) included a living standards
survey, consisting basically of a household consumption module and questions pertaining to
access to basic health and education services, in its ongoing household survey\. By December
1993, this survey had been conducted three times, and was used in a sampling of FHIS
beneficiaries\. Funds from Credit 2212-HO were used for staff training, consultants and purchase
of computer equipment\. FHIS' impact measurement unit has completed a study on the program's
impact, which concludes that Honduras' public sector has been modernized by efficiently
managed social investments, although it is difficult to distinguish FHIS' contributions from other
institutions, since some of the projects occurred simultaneously\. The results of a public opinion
poll showed that FHIS had distinguished itself from the governmental system, and that people
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considered it to be bipartisan, and would like its continued operation regardless of the political
party in power\. Approximately 82\.4 percent of those surveyed said they would like to be
involved in future projects, and 62\.6 percent said they would volunteer\. The study also showed
that FHIS' primary emphasis was to support education and health, with secondary emphasis on
training and microenterprises\. The FHIS had compensated against the adverse effects of
economic adjustment and helped to identify priorities and increase community participation,
thereby increasing the participation of the municipalities who formulated and executed the
projects\. Finally, the study recommended an improvement in the promotion, execution and
supervision of projects, a redesign of the poverty map at the local level to target social investment
which will identify community needs still unmet, and an increase in support to reinforce
institutions at the local level, and to provide training for better management of resources\.
SECPLAN will continue to measure the living conditions of the population by means of
household surveys and through its social indicators unit\.
29\. FHIS has contributed to enhancing public support for government's adjustment programs
at the local level\. The perception of FHIS was gauged by a public opinion survey conducted in
May 1993, which found that 72 percent of the population nationwide had a favorable opinion of
the FHIS, and only 10 percent expressed a negative opinion\. The approval rating of the FHIS
was higher in the poorest departments than the national average, as, for example, 80 percent in
El Parafso and 79 percent in Copan\. The March 1993 national household survey, reported that
40\.7 percent of the households surveyed had directly participated in FHIS subprojects; 22 percent
of households reported had at least one member who received training in connection with a FHIS
subproject; this figure increased to 37 percent among the poorest households\. Among those who
participated as paid workers, the majority worked as laborers (65 percent)\. Overall, 82 percent
of the hotiseholds surveyed indicated that they would be willing to participate in future FHIS
subprojects \.
30\. FHIS' Macroeconomic Impact\. FHIS had a favorable impact on Honduras'
macroeconomic indicators by contributing to Government investment and direct employment\.
The volume of investments channelled by FHIS during the period has been significant\. After the
economic crisis of the late 1980s, when investments in social infrastructure virtually stopped,
FHIS was able to channel investments to small economic and social infrastructure which
represented 4\.6 percent of public sector FIBCF in 1990, and 11\.2 percent in 1992, and accounted
for 4\.9 percent of Central Government capital expenditures in 1990, and 18 percent in 1992\. At
constant prices of 1978, FHIS contributed to raising Honduras's total gross domestic fixed capital
formation (FIBCF) from 1\.2 percent to 5\.2 percent between 1990 and 1992\.
31\. Employment\. Although project design did not establish targets for employment creation
by FHIS, subprojects generated a total of 141,519 jobs of approximately 5-month duration, or
the equivalent of 59,000 job-years between 1990-1993 (paras\. 24, 25 and 26 indicate the number
of jobs created by each type of subproject)\. This may be modest in relation to the size of the
labor force in Honduras, but represents approximately 12 percent of the unemployed and
underemployed workers affected by the economic crisis in the early 1990s\. Over 85% of the
employment created by FHIS was in construction\. Some of these jobs can be considered
permanent in so far as workers trained in one subproject reported continuing to work with the
same contractor on additional subprojects\. Assuming an indirect employment impact equivalent
of 112 times the direct employment, the multiplier effect of FHIS subprojects has been
significant\.
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32\. Institutional Impact\. The institutional impact of the FHIS program between 1990-1993
is evidenced by the growing credibility of the Government, FHIS has also attained increasing
international prestige and credibility, as evidenced by contributions and loans received from other
governments and multilateral agencies and visits from other countries to observe FHIS'
experience and the operating systems it has created\. Also, FHIS contributed to institutional
development and strengthening of local organizations\. This was achieved by mobilizing about
2,270 executors, including 1,864 (82A1 percent) private contractors (890 professional contractors,
370 foremen, 54 local consultants, and 550 private executors of different types, such as local
organizations); 291 (12\.8 percent) municipalities; 90 (4\.0 percent) NGO's; and 25 (1\.1 percent)
government agencies\.
33\. A second significant institutional impact is the achievement of mechanisms for active
coordination and joint planning with line ministries and other government agencies\. These
mechanisms have allowed FHIS to execute a large share of the Government's overall budget for
small investments in various sectors, especially in health and education sectors, where
coordination was timely, ensuring sustainability and maintenance, provision of inputs, and
preparation of criteria for subproject evaluation and monitoring\. Coordination with line
ministries was very timely in the case of the Ministry of Education, where the existence of
teachers was required in the case of school repairs or expansion\. Coordination with the Ministry
of Health was more extensive, especially with respect to the midwife and latrine projects in which
FHIS worked closely with the Ministry of Health\. By providing continuous support and service
to municipal mayors, through approval of municipality sponsored, implemented or supervised
subprojects, FHIS helped strengthen the institutional capacity of municipalities\. For example,
some 80 of a total of 291 municipalities nation-wide now have engineers as permanent staff to
plan and supervise small investment projects\.
34\. In addition, FHIS has developed excellent working and cooperative relationships with
NGOs which implement subprojects using FHIS' clear operational manuals and transparent
procurement system\. The effective strengthening of these organizations was supported through
non-reimbursable contributions for operating expenses, provision of training, technical assistance,
direct contracting for specific research, and monitoring of various FHIS programs\. Private
enterprises in the construction industry and general consulting also benefitted significantly from
FHIS programs, many of them growing from a one-person operation to a small firm, as a result
of their participation in FHIS subprojects\.
35\. Poverty Alleviation\. The project made a significant contribution to poverty alleviation,
as shown in the employment impact, and in the improved access to basic social services in poor
areas\. In addition, as indicated in paragraph 19, FHIS has been improving the focus of its
activities in the poorest areas\. Attention paid to the poorest quintile (index of extreme poverty)
increased each year; relative attention in terms of the number of subprojects approved was highest
in 1993, doubling that of 1990 (Table 5\.G\.)\. Efforts have also been made to meet the needs of
those living in extreme poverty in metropolitan areas\.
36\. The success of the coverage and effects of the nutritional assistance program (PRAF), as
indicated in paragraph 4, are important achievements in the fight against poverty\. Also, the
informal sector small credit program helped reduce the poverty levels, by increasing assets and
earnings capacity among informal sector works\. More studies will be necessary to gauge the
program's long-term impact and to make a comprehensive assessment of its effects\. Similarly,
the living standards study should be repeated; this study should make systematic, annual
measurements of changes in living standards brought about by the Government's social programs\.
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37\. Impact on Women\. FHIS' basic needs program has assigned priority attention to
subprojects for midwife training, small-scale farms and family gardens, maternal-child care,
which basically focussed on women in general and particularly on female heads of households
(37 percent of heads of households living in poverty), to improve their personal welfare as well
as that of their families and the community\. Twenty-nine (29) midwife training subprojects were
financed, benefitting 4,632 midwives, 700 auxiliary nurses and 100 nurses, 7 basic health training
subprojects had 14,788 beneficiaries, primarily women; and 8 community health projects
benefitted 40,489 persons, primarily women\.
38\. Under the Informal Sector Subproject Program (PASI), 53 percent of all small business
credits granted by NGOs were for women, while in the case of community banks, 79 percent of
beneficiaries were women\. Community banks are established and operated by women who are
already self-employed or are interested in starting a new business, in which they have at least one
year of experience\. Under the guidance of a FINCA (NGO) representative, the women elect
officers, learn bookkeeping and banking procedures, and are entirely responsible for their banking
operations\. The capital of a community bank consists of a loan from FINCA at market rates, and
savings from the participating women\. Members of the community bank must repay their loan
and add to their savings, on a weekly basis\. rThe average loan is US$60 and repayment rates
averaged 98 percent\. As a result of the operation of community banks, some 1,480 women (20
percent of all members) experienced a 40 percent increase in sales in less than two years, and a
42 percent increase in earnings, which they used to increase their working capital and improve
their families' living conditions\. These women have generated significant savings that are
expected to allow them access to commercial banking services\. Six of the 21 NGOs participating
in the PASI program had the exclusive objective of assisting women\. Finally, 63 percent of
participants in training programs are women\.
39\. The Family Assistance Program (PRAF)\. To assist with the risk of malnutrition, PRAF
is aimed at assisting women and children under age five, as well as poor school children in
grades I to 3, and has served the population indicated in paragraph 27\.
40\. Environmental Impact\. FHIS ensured that subprojects financed did not cause adverse
environmental impacts or affect indigenous cultures negatively\. Subprojects on restoration of
historic monuments; support to indigenous communities; provision of sanitary landfills, latrines
and septic tanks have had positive environmental impact\. However, additional work to resolve
the final disposal from sanitary sewer construction subprojects should be implemented to
minimize negative environmental impact\. Most of the other subprojects that were financed,
especially those dealing with infrastructure, may be classified as environmentally neutral\.
G\. Project Sustainability
41\. FHIS has made significant efforts to ensure the sustainability of its subprojects\. FHIS
requires confirmation by the line ministries that teaching and nursing positions have been filled
or budgeted, and that the corresponding ministries have created budgets for recurrent
expenditures, before construction of new schools or health centers is approved\. It also requires
the collection of user-fees by water committees or the municipality to ensure maintenance of
water and sewerage systems financed by FHIS\. It has hired specialized NGOs to carry out
monitoring and training in the use and maintenance of latrines\. Support for FHIS-financed
projects needs to be strengthened and monitored because there is evidence of insufficient funds
available for maintenance and supplies for schools and health centers, and improper use and lack
of maintenance of drinking water and latrines in some localities\.
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42\. Project sustainability has also been sought through careful selection of NGOs with
experience in the respective types of subprojects\. This has been an essential element for the
success of the PASI program, because knowledgeable and capable fl\.,ancial intermediaries are
required for proper management of credit to the informal sector and to small businesses\. This
proper selection of NGOs, together with the use of market interest rates, will ensure that the
program will not be decapitalized and may remain in place over the long term\.
H\. IDA Performance
43\. The innovative design of the project required special attention from IDA\. This IDA
credit was appraised and approved in a relatively short time (para\. 2)\. IDA established close
monitoring and supervision mechanisms, requesting quarterly audits by independent auditors, to
include a financial review of subprojects and physical inspection of works in the field, and to
furnish certified copies of reports within two months after the quarter ended\. In addition, IDA
requested that SIF maintain an executive director whose experience and qualifications were
acceptable at all times, and to be consulted before any replacement for this position could be
made\. The previous experience with social investment funds acquired by IDA in Bolivia, proved
an important factor in the successful assistance provided by IDA to the Honduran Government
in the preparation of the FHIS Project\.
I\. Borrower Performance
44\. FHIS earned respect from IDA, co-financiers and within Honduras as a successful and
efficient institution, mostly influenced by a high quality Executive Director, who has provided
strong leadership and managed the program as a modern private enterprise\. His efficient
management is reflected in clearly defined products, large-scale production, quality control,
accountability, the capacity to attract and retain other high-caliber staff, and an implementation
strategy based on decentralization and privatization\.
45\. The Honduran government's commitment to FHIS in getting the program off the ground
to an early start, helped to establish its credibility\. Continuous government support demonstrated
that FHIS' decisions were based on technical and not political considerations\. This was
instrumental in demonstrating the seriousness of the program to potential donors, which helped
mobilize external resources\.
J\. Project Relationship
46\. Throughout the project, the working relationship between the Government of Honduras
and IDA was positive and constructive\. IDA worked very closely with FHIS and commended
FHIS for the close coordination of their activities with the policies, norm setting, planning and
budgeting of the line ministries and other public agencies, which contributed to their effective
operation and the eventual sustainability of many of FHIS' subprojects\. The close coordination
FHIS maintained with IDA, line ministries, and other agencies demonstrated flexibility,
responsiveness and commitment, and were key factors in its successful operations\.
K\. Project Documentation and Data
47\. The Staff Appraisal Report was essential in providing implementation guidelines for this
project\. The Development Credit Agreement was instrumental in defining responsibilities\. It
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was also important that provision for a Special Account directly managed by FHIS was made to
facilitate disbursements\.
48\. FHIS developed a good microcomputer-based management information system (MIS),
which facilitated subproject administration and monitoring by enabling the staff to rapidly access
data on the current status of any subprojects, especially in discussions with sponsors\. The MIS
system also improved subproject supervision and financial analysis, especially in the areas of cash
flow projections, and monitoring disbursement and administrative costs\. Improvements on the
system are planned to provide automatic integration between financial and operational modules
of the MIS\.
L\. Lessons Learned
49\. Integration of Macroeconomic Policies and High-level Political Support\. An important
aspect of FHIS' success in achieving its objectives was that it became an integral part of the
Government's high priority economic policy; i\.e\., a social program to cushion the social costs
of the economic adjustment program\. This policy framework provided FHIS with sustained, high
level political support and the budgetary resources to start the program even before external
financing could be mobilized\. Strong governmental support was combined with restraint from
political intervention in the FHIS daily operations\. Structural adjustment programs have been
shown to be necessary to ensure economic growth, but they are not enough to achieve a better
distribution of wealth and alleviate poverty, because they demand greater effort and attention on
the part of governments in the social arena\. Well aware of the importance of alleviating the
social costs of adjustment and cushioning the hardship of the adjustment programs, especially on
the poor, and of the need to get broad public support for the adjustment program, the
Government established FHIS and gave it its full support\. As proof of its strong commitment,
the Government made a significant initial financial contribution to start the program\. This, in
turn, attracted other donors\. The new administration that took office in 1994 also considers
FHIS' work a priority and is providing it with adequate support\.
50\. Management Autonomy and Operational Efficiency\. Its semi-autonomous institutional
form allowed FHIS to adopt more efficient management and operational procedures than those
used in line ministries\. Combined with a strong manager's leadership, usually coming from the
private sector, streamlined management procedures resulted in rapid disbursements and good
quality subprojects\. Implementation experience has shown that management efficiency could be
further strengthened by enhancing the existing management information system (MIS) and
improving inter-departmental coordination within FHIS\. The key elements to FHIS' significant
achievements during its four-year existence and to its positive image, was the use of a
standardized menu of subprojects and of simplified procedures for budget, procurement,
disbursement and hiring staff, and the use of private sector contractors together with an efficient
administrative management\. Without these efficient procedures and competent staff, FHIS would
have no advantage over line ministries\. The simplified procurement procedures established in
the law that created FHIS have streamlined disbursement of subloans without undermining
qualiti\. This was also achieved by the good quality of FHIS staff, the use of cost information
systems, the efficient evaluation mechanisms that were established, and an effective control and
monitoring system\. To maintain these standards, it will be necessary to review salary levels
which have deteriorated, relative to the private sector which is the most susceptible of attracting
FHIS staff, fully integrate the MIS, and improve the supervision and control systems\. Additional
efforts are needed to improve coordination among FHIS units, and further improve its impact
evaluation capabilities\.
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51\. Exception from Central Government Procurement and Salary Regulations\. The special
Presidential Decree allowed FHIS to use simplified procurement procedures and to pay its staff
at competitive market rates\. These two factors were instrumental in ensuring the efficiency of
FHIS, leading to a high volume of operations and accelerated disbursements without
compromising the quality of subprojects\. These positive features need to be reinforced by
periodic reviews of the salary scale, integration of management information systems, continuous
attention to supervision of subprojects under execution, and improved evaluation of completed
subprojects\.
52\. Simple and Effective Targeting and Promotion\. FHIS allocated its funds transparently,
according to a poverty map and a set menu of subprojects which received ample publicity\. This
system represents a significant improvement over traditional revenue-sharing formulas based
exclusively on population, since it allows for allocating additional resources proportionally to the
level of poverty in each municipality\. For this targeting system to work effectively, FHIS had
to promote subproject proposals actively in the poorest municipalities where spontaneous demand
has been shown to be the lowest, due to its weaker organization and subprojects preparation
capacity compared with less poor communities\. These special promotion efforts, covering the
80 poorest municipalities, resulted in increases in the share of resources channelled to the poorest
communities, from 25 percent in 1990 to 45 percent in 1993\. FHIS' targeting mechanism based
on poverty categories and map has been successful\. Most funds were channelled to the poorest
municipalities and to districts and settlements with extreme levels of poverty\. It was important
for FHIS to make a special effort to help prepare subprojects in poorer communities which
normally have weaker organization and project capabilities, and therefore, are likely to have
fewer subprojects and less benefit from the social investment fund\.
53\. Coordination with Line Ministries\. FHIS was established at a time when social sector
planning and implementation capacity was lacking in line ministries, and there was a large
backlog of schools and health clinics in disrepair throughout the country\. Coordination between
FHIS and the line ministries ensured that appropriate staff (principally teachers and nurses) and
recurrent budgets would be available for the social infrastructure that FHIS would finance\. FHIS
also ensured that the proposed subproject would fit within the overall priorities of the line
ministries\. This level of coordination was appropriate, given FHIS' policy of not engaging in
new construction, but only in the rehabilitation or expansion of existing facilities\. Closer
coordination would be required if FHIS evolves into a longer-term agency responsible for social
investments, including construction of new health and education facilities\. Line ministries would
exercise their normative role in establishing sector policy priorities, and standards for new
infrastructure\. Their construction departments would be redefined as smaller technical units,
responsible for management of large scale projects, development of prototype designs, norms and
standards, supervision and support for local maintenance of school buildings and clinics
constructed with FHIS financing\. The good level of cooperation with social ministries can be
achieved without creating duplications with the functions of the line ministries when proper
coordination mechanisms are adopted and FHIS operates efficiently\. The Fund complemented
the execution of programs of the social ministries, especially those of the Ministries of Health
and Education (para\. 4), and these line ministries delegated their traditional functions to FHIS
for an efficient attainment of their objectives\.
54\. Innovative Micro-Credit Program\. With the intermediation of NGOs, FHIS has been
successful in using a small share of its resources (6\.5%) to finance innovative short-term credits
that benefitted small scale artisans and microentrepeneurs (para\. 26), without previous access to
credit\. The design of the program takes advantage of FHIS' financing capacity and the NGOs
- 16 -
knowledge of the market, minimizing operating costs\. FHIS lends to a few, highly experienced
NGOs, and these in turn screen potential borrowers and make small loans at market interest rates
assuming the credit risks, thereby protecting the fund from possitle decapitalization\. The
participating NGOs were gradually strengthened by clearly established lending guidelines and
technical assistance provided by FHIS\. The loan recovery rate exceeded 98 percent\. The future
development of this program is being analyzed with the goal of enlisting the support of
commercial banks, and establishing the basis for a sustainable revolving credit program without
FHIS' continuous financial support\. Credit to the informal sector has been a success, and if it
is properly designed, the line of credit can be a useful tool for poverty alleviation on a sustainable
basis\.
55\. Importance of Technical Assistance Technical assistance provided by UNDP and IDA
during project preparation and implementation, have contributed to the development of FHIS
operational procedures and helped sustain a process of continuous improvements in the program
during implementation\. UNDP technical assistance, strong supervision by IDA, and independent,
external quarterly audits have been essential in making FHIS' activities efficient and transparent,
thus achieving its objectives and mobilizing more cofinancing resources\.
56\. The Pilot Nutrition Assistance Program\. The pilot nutrition program demonstrated that
distribution of food coupons is a more cost-effective means of providing nutrition assistance than
distribution of food in kind; that specific interventions should integrate into a broader nutritional
assistance policy, which includes periodic monitoring of the health/nutritional status of the
participants, and education and training of the beneficiaries in sound health and nutrition
behaviors and attitudes\. By distributing food coupons through primary health care and education
facilities, the program generated greater demand for quality education and health services, and
more efficient use of health and education service facilities available at the local level, resulting
in broader and longer term health and education benefits to the beneficiaries\. The program (BMI)
under the PRAF also demonstrated that primary health care services need to be strengthened, as
a pre-condition for successful nutrition programs\. The PRAF pilot program fulfilled the objective
of providing efficient secure nutrition assistance for vulnerable groups affected by adjustment
policies\.
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PROJECT COMPLETION REPORT
HONDURAS
SOCIAL INVESTMENT FUND PROJECT
(CREDIT 22120-HO)
PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE
(Translation from the Spanish original)
A\. Comments on Parts I and III
57\. FHIS fully endorses the analysis and data presented in Parts I and III\.
B\. IDA Performance
58\. The World Bank has played an excellent role in terms of its evaluation guidelines and
procedures in support of the emergency program of the Honduran Social Investment Fund
(FHIS)\. At all times, the Bank paid great attention to FHIS' performance, both in terms of
overseeing the approval of subprojects and their impact on the poorest groups of the Honduran
population\.
59\. It should be noted that the Bank has provided training to our administrative staff on
management and disbursement procedures, which has allowed financial transactions to be
performed more efficiently\.
60\. The Bank placed special emphasis on disbursement procedures through attention to
subprojects presented to it for approval\. Its overall performance was very efficient and timely\.
61\. It was noted, however, that when Bank staff are on vacation, our reimbursement requests
are delayed, affecting the above mentioned timely disbursement pattern\.
62\. Through its Mid-Term Reviews (MTRs), the Bank has established an ideal means of
evaluating the management of FHIS, which has tried to follow the recommendations made on
those occasions strictly\.
63\. The incentive for creating the units of Financial Analysis and Impact Assessment was
another of the Bank's successful recommendations which FHIS has implemented and
strengthened with considerable care and attention\.
64\. The Bank has helped promote the FHIS by suggesting that it serve as a model for social
action for similar programs\. The Bank has also acted as effective liaison between FHIS and
other financial agencies and donors\. This has helped international missions from other
institutions to get to know the FHIS\. The Bank and UNDP have also encouraged the FHIS'
executive staff to inform other countries about the project's experiences\.
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C\. Borrower Performance
65\. The Honduran Government has provided very strong support to FHIS during its
formation and development, which has allowed it to improve its administration, strategies and
investment programs in an independent and politically transparent manner\.
66\. FHIS has developed important contacts with donor and financial organizations and with
friendly countries\. The formulation of specific subprojects and the clear relationship between
subprojects and the communities requesting them, contributed significantly to FHIS' success in
mobilizing funds\. FHIS' subproject portfolio has continued to grow, demonstrating its
credibility with the communities and institutions requesting financing, as well as trust on the part
of financial and donor agencies regarding FHIS processes to evaluate, approve and disburse
subproject funds\. To accomplish this, FHIS had to eliminate bureaucratic obstacles with respect
to national and international commitments\.
67\. One of FHIS' basic objectives was to create employment and generate social benefits
through its subprojects\. This involved an ongoing effort by the FHIS to assist the poorest
groups of society by properly focussing its Infrastructure, Basic Needs and Credit programs on
disadvantaged rural and urban areas\.
68\. Because FHIS represented an innovative social action model in Honduras, it evolved
gradually\. It began slowly and tentatively, and later took firm, confident steps toward becoming
a very efficient institution whose staff shared a strong work ethic and service orientation\.
69\. Other positive features of FHIS are its strong capacity and skill in approving subprojects
covering all of the country's 291 municipalities, and its competent management, efficient and
productive staff, its project targeting procedures, its positive public and international image, and
the excellent coordination it has with line ministries:
(a) The use of the poverty map gave FHIS strength and credibility in resource allocation
nationwide and helped focussed its efforts on the poorest groups\. Decisions of a
sectarian and political nature were thereby avoided\.
(b) FHIS' very simple law, which provided for broad administrative flexibility, and the
development of manuals, procedures and regulations for each operational unit, enabled
it to operate with a high degree of efficiency\.
(c) FHIS succeeded in promoting proper coordination among local governments and
communities on matters of common interests\. FHIS informed each municipality about
the availability of resources so that they can be used for tangible works, thereby
converting the aspirations of the poor into concrete projects\.
(d) The Development Credit Agreement with the World Bank specified that FHIS
administrative expenses should not exceed 10 percent\. FHIS results in this area have
been clear: administrative expenses in 1990 were 5 percent of the total and less than 8
percent at the end of 1993\.
70\. FHIS' weak points and limitations resulted, for the most part, from the speed with which
it has conducted its operations\. Other factors include:
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(a) The approval of subprojects countrywide, including remote areas, has severely limited
FHIS's supervision capacity and have significantly slowed down the disbursement
process\.
(b) FHIS emphasized engineering works and physical execution, rather than promotion
activities and human development\. However, physical works may serve as a catalyst for
the promotion of grassroots organization and participation of the population in the
country's development\.
(c) The lack of comprehensive solutions to community problems and the limited scope of
certain projects financed by FHIS were due, in many cases, to financial restrictions\.
(d) The lack of specialization on the part of certain intermediary agencies (such as non-
government organizations (NGOs)), tended to limit the quality of their work especially
when their programs become diversified,
(e) The lack of community participation in project development and financing points to the
need to strengthen FHIS's promotion procedures\.
(f) The lack of dissemination of specialized information on FHIS' efforts was noteworthy\.
Dissemination of FHIS' operations was limited and general in nature\. For example, no
documentation on poverty research or specific issues related to poverty developed by
FHIS has been published\.
(g) There is a need to integrate FHIS's network of computer services linking the main
operational units in order to ensure better transactions and daily updating of
administrative and technical accounting data\.
(h) There is a need to expand preventive and corrective maintenance activities for recently
constructed education and health infrastructure projects financed by FHIS and to ensure
that these projects are generally sustainable\.
D\. DA - Borrower Relationships
71\. The Mid-Term Review (MTR) process carried out by the Bank and the Borrower has
proved an appropriate mechanism for taking preventive and corrective actions to improve FHIS
performance\. Generally, relations between FHIS and the Bank have been very successful, with
no difficulties\.
72\. The technical and administrative issues raised by the Bank in formal and informal
communications and consultations were well received, and many of the FHIS' achievements were
due to the broad, frank and timely cooperation between the Bank and the Borrower for the
benefit of the project\.
- 20 -
PROJECT COMPLETION REPORT
HONDURAS
SOCIAL INVESTMENT FUND PROJECT
(CREDIT 22120-HO)
PART III: STATISTICAL INFORMATION
1\. Related Credits
Credit Year of
Name/Number Purpose Approval Status Comments
Second Social Help the govemment sustain its 1992 Under This project builds
Investment Fund poverty alleviation efforts and implementation upon the
Project maintain social cohesion during the achievements of
(Cr\. 2401-HO) period of economic adjustment FHIS-1 and expands
until line ministries strengthen the program using
their institutional capacities and the basically the
complete policy reform programs\. same project design\.
Nutrition and
Health Project Protect groups vulnerable to the 1993 Under
(Cr\. 2452-HO) economic adjustment process by implementation The concept of this
channeling nutrition assistance to project, particularly
children, pregnant and nursing its nutrition
women among the poorest groups assistance
of the population; support the component, was
establishment of a longer-term tested on a pilot
nutrition assistance strategy; scale under the
reduce maternal, infant and child FHIS-1 project and
mortality and morbidity rates by lessons learned were
improving quality and access to incorporated in
basic health services and water project design\.
supply and sanitation; strengthen
the institutional capacity of the
Ministry of Health, the Family
Assistance Program and the Social
Cabinet Executive Secretariat; and
control the spread of AIDS\.
- 21 -
2\. Project Timetable
PROJECT TIMETABLE
Processing Date Date Date
Steps Planned Revised Actual
1\. Identification (EPS) 05/14/90 05/14/90
2\. Prep\./Preappraisal 06/15/90 07/15/90 07/26/90
3\. Appraisal 08/15/90 10/21/90
4\. Credit Negotiations 11/15/90 12/17/90 01/14/91
5\. Board Approval 12/18/90 01/29/91 02/28/91
6\. Credit Signature 01/15/91 03/14/91
7\. Credit Effectiveness 03/30/91 08/15/91 06/26/91
8\. Credit Closing 12/31/93 03/31/94 03/31/94
9\. Credit Completion 06/15/94 06/30/94
GRAPH I
CR: 2212-HO PROCESSING SCHEDULE
Planned Time
CD 4 - \. , , Revised rime
Actual Time
3
2
1a-90 Jul 90I I Ju-91 -92 JuI92 Jn-9-Ju l J 'I I
Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Ju1-94
- 22 -
3\. Credit Disbursements
CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS
SDR million
IDA FY FY91 FY92 FY93 FY94
Appraisal Estimates 2\.7 8\.6 14\.2 14\.3
Actual Disbursements i 0\.0 12\.5 13\.7 14\.3
!' Undisbursed amount of SDR 17,767 was canceled August 1, 1994\.
GRAPH 2
CR: 2212-HO: Time Line of Planned and Actual Disbursement Schedules
1 6
C')
\.° 1 0 --- - - - - - - - - - -- -- - - - -- - - - -- - - -
0*
FlblD F Y 92 F Y 93 F Y9 4
Bank Fiscal Year
l iAppraisal Estimates * Actual Disbursements |
- 23 -
4\. Project Implementation: Indicators for FHIS Programs
Number of Amount Amount as
Subprojects (US$ M) % of Total
Subprojects Executed by Type of
Program:
Social and Economic 4,480 66\.83 75\.49
Infrastructure 936 16\.40 18\.52
Basic Needs 56 5\.10 5\.76
Informal Sector Credit 2 0\.20 0\.23
Institutional Strengthening ------- ------- ------
Totals 5,474 88\.53 100\.00
Subprojects Executed by Completion
Status:
Completed 4,482 72\.10 81\.44
Under implementation 992 16\.43 18\.56
Totals 5,474 88\.53 100\.00
Total Expenditures by FHIS:
Subprojects 88\.53 91\.08
Administration 7\.87 8\.10
Institutional Strengthening 0\.80 0\.82
Totals 97\.20 100\.00
5\. Project Costs and Financing
5\. A\. Project Costs
Project FHIS (US$ Millions)
ITEM Appraisal Estimate Actual
Local Foreign Total Local Foreign Total
Subprojects 45\.19 16\.18 61\.37 62\.19 26\.34 88\.53
Institutional Strengthening 0\.64 0\.42 1\.06 0\.40 0\.40 0\.80
Administrative Cost 4\.07 0\.31 4\.38 7\.30 0\.57 7\.87
Monitoring, Evaluation 0\.04 0\.01 0\.05 0\.00 0\.00 0\.00
Subtotal FHIS 49\.94 16\.92 66\.86 69\.89 27\.31 97\.20
Pilot Nutritional Assist\. Program 0\.38 0\.04 0\.42 0\.03 0\.29 0\.32
Social Sector Restructuring 0\.20 0\.20 0\.40 0\.01 0\.64 0\.65
Living Standards Study 0\.30 0\.02 0\.32 0\.07 0\.14 0\.21
TOTAL COST 50\.82 17\.18 68\.00 70\.00 28\.38 98\.38
- 24 -
5\. B\. Project Financing
(US$ millions)
Plan Actual
Components Beneficiaries Government Donors Total Beneficiaries* Government Donors Total
FHIS 6\.57 11\.58 48\.71 66\.86 0\.00 12\.94 84\.26 97\.20
Pilot Nutrition 0\.00 0\.22 0\.20 0\.42 0\.00 0\.06 0\.26 0\.32
Assistance Program
Social Sector 0\.00 0\.20 0\.20 0\.40 0\.00 0\.00 0\.65 0\.65
Restructuring
Living Standards 0\.00 0\.00 0\.32 0\.32 0\.00 0\.00 0\.21 0\.21
Survey
Total 6\.57 12\.00 49\.43 68\.00 0\.00 13\.00 85\.38 98\.38
As % of Total: 9\.66 17\.65 72\.69 100\.00 0\.00 13\.21 86\.79 100\.00
* Beneficiaries' contribution in kind or labor was not monetized, but it is estimated to be an additional 12 percent of the total expenditures presented
5\. C\. FHIS Financing
(US$ millions)
Plan Actual
Sources of Financing: US$ M % US$M %
Beneficiaries 6\.57 9\.92 0\.00 0\.00
Govemment 11\.58 17\.32 12\.94 13\.31
Donors 48\.72 72\.86 84\.26 86\.69
TOTAL 66\. 86 100\.00 97\.20 100\.00
5\. D\. Credit 2212-HO by Methods of Procurement
Plan Actual
Methods of Procurement (USSM) % (US$M) %
ICB 0\.80 4\.0 0\.0 0\.0
LCB 10\.70 53\.5 5\.40 27\.0
Other * 5\.60 28\.0 13\.50 67\.5
Not Applicable ** 2\.90 14\.5 1\.10 5\.5
TOTAL 20\.00 100\.0 20\.00 100\.0
* Appraisal estimates combine local shopping and direct contracting under a single category of "Other Procurement Procedures"\.
** Includes consultants, auditing, training, salaries and other recurrent costs\.
- 25 -
5\. E\. Allocation of FHIS Investinents by Type of Subproject (1990-1993)
Plan Actual*
Type of Subproject (USSM) % (US$M) %
Infrastructure 43\.65 71\.1 67\.57 75\.7
Basic Needs 13\.44 21\.9 16\.43 18\.4
Informal Sector Credit 4\.28 7\.0 5\.10 5\.7
Institutional 0\.00 0\.0 0\.20 0\.2
Strengthening
TOTAL 61\.37 100\.0 89\.30 100\.0
* Actual disbursements as of 12/31/93
5\. F\. Allocation of the Proceeds of Credit 2212-HO by Type of FHIS Subproject
Plan Actual
Type of Subproject (US$M) % USM) %
Infrastructure 12\.70 81\.7 13\.05 70\.2
Basic Needs 2\.20 12\.2 4\.23 22\.8
Informal Sector Credit 1\.10 6\.1 1\.22 6\.6
Institutional 0\.00 0\.0 0\.08 0\.4
Strengthening
TOTAL 18\.00 100\.0 18\.58 100\.0
5\. G\. FHIS Investment by Municipal Poverty Index
1990-1993
FHIS Investments in US$ million*
Classification of Municipalities 1990 1991 1992 1993** TOTAL
Poverty Index Level $ % % $ % S % $ %
Less than 20 Acceptable 0\.19 3 2\.30 8 1\.54 5 0\.66 6 4\.69 6
20 to 30 Regular 2\.93 46 9\.75 34 8\.67 25 2\.16 18 23\.51 29
30 to 40 Deficient 1\.53 24 5\.74 20 9\.42 28 3\.17 26 19\.86 24
40 to 50 Poor 1\.02 16 4\.59 16 6\.48 19 2\.61 22 14\.70 18
more than 50 Very Poor 0\.63 10 5\.45 19 7\.03 21 2\.74 23 15\.85 20
N/A Unclassified 0\.06 1 0\.86 3 0\.99 2 0\.63 5 2\.54 3
TOTAL 6\.36 100 28\.69 100 34\.13 100 11\.97 100 81\.15 100
* Exchange rates used: US$1 = L\.5\.35 (1990); L\.5\.40 (1991): L\.5\.54 (1992): L\.6\.50 (1993)
** Data for 1993 up to March 25\.
GRAPH 3
CR: 2212-HO: Distribution of F1IS Investment my Municipal Poverty Index
80 Data to March 1993
70-
60X
50-
o-40- Acceptable & Regular
30Weficient, Poor, Very Poor
1990 1991 1992 1993
Year
- 27 -
6\. Project Results
6\. A\. Direct Benefits
Projects Completed
Number of Amount Direct Emplo,yment Number of
Category Subprojects (US$ M) Beneficiaries Generated* Type of Benefit Units
Social Infrastructure: 2,728 45 53 - - Kindergarten rehab/cons\. 381
School rehab/cons\. 2,327
Education Retaining walls (nil) 3,476
Kitchen/rtorage 3,177
Health 305 4\.57 - - Health center const\./rehab\. 303
Healthcare 340 20\.41 - - Sewer/water systems 244
Latrines/septic tanks 170
Roads 834 9\.94 Bridges/gutter/pavement
Comm\. Facilities 219 2\.24
Ruins/museum 54 \.86
SUBTOTAL 4,480 83\.56 120,771
Basic Needs: School desks 360,836
Education 651 12\.78 Family gardens 6,112
Comm\. Facilities 143 2\.17 Poultry farms (livestock) 3,635
Health 51 1\.40 Midwife 4,632
Heslth Care 91 4\.01 Latrines 57,337
Septic tanks 170
SUBTOTAL 936 20\.36 7,777
Informal Sector
Subprojects:
Credits 56 5\.95
SUBTOTAL 56 5\.95 12,950 Microentrepreneurs 3,753
Community Bank Mbrs\. 7,219
Institutional
Strengthening: Operations and
Training 2 0\.23 maintenance training for
local water boards
SUBTOTAL 2 0\.23 21
TOTAL 5,474 110\.10 141,519
* Average job of 5 month duration\.
6\. B\. Studies
Studies Purpose as Defined at Appraisal Status Impact of Study
1\. Mid-project Review To review progress and assess performance of FHIS management Completed June 10, 1992 Findings used to assess FHIS performance and
and key personnel and all institutions involved in implementing the taken into account for program planning and
project implementation\.
2\. FHIS Impact Study: (Fondo Main report available only in Spanish\. Based on rationale that by Completed February 28, FHIS has been successful in increasing
Hondureiio de Inversion Social, FHIS: transferring resources to poor urban and rural communities, there 1994 investment in basic community services with
Impacto de los Proyectos, FHIS, would be increased employment and incomes, better sanitation, reasonable administrative costs, and has helped
Primer Informe, July 23, 1993) \. health and education facilities, increased productivity, and to modernize public sector\.
enhanced delivery of social services\. A summary report is
available in English\.
3\. The Living Standards Measurement To set up a monitoring and evaluation system for the Three rounds of Improved format used in national household
Study (LSMS) Government's social policy interventions and to be coordinated by household surveys have surveys with introduction of consumption
SECPLAN\. been completed\. module\.
cx
- 29 -
6\. C\. Audit Recommendations
FY91/92 % FY93 % TOTAL %
SGN 176 30 3 5 179 27
SPR 37 6 12 21 49 8
DCS 163 27 34 60 197 30
LBR 15 3 0 0 15 2
RAE 94 16 0 0 94 14
DOA 9 2 5 9 14 2
GRT 36 6 0 0 36 6
OTH 66 11 3 5 69 11
TOTAL 596 100 67 100 653 100
Findines
SGN = Lack of one or more required signature(s)
SPR = Poor quality of material or a technical deficiency
DCS = Deficiencies at Supervision Department
LBR = Labot cost below expected average
RAE = Reconcialiation of Accounts between the contractor and FHIS not carried
DOA = Deficiencies at Accounting Department
GRT = Subproject not fmnished on the time required
OTH = Others (Lack of counterpart funding, problems not foreseen at time of planning)
GRAPH 4
Quarterly Audit Reports
3t50- U Total # Reports with
Recommendation
300-
[ Total i Reports without
250 Rcmedto
200L
150F
100-
50 ------ \.
0*
FY91 /92 FY93
- 30 -
7\. Status of Covenants
Covenant Subject Deadline for Compliance Status
3\.06(a) Review process of implementing Project with SIF and December 31, 1991 In compliance
Association, to determine appropriateness of established
amounts for achieving purposes of the project\.
3\.06(b) Borrower to take appropriate actions to achieve project's January 31, 1992 In compliance
objectives pursuant to review\.
3\.08 Report on subprojects approved by SIF June 30 and December 31 of In compliance
each year
4\.01(a) Maintain records and accounts Annually, by June 30 of each In compliance
year
4\.01(b) Audit reports Quarterly In compliance
Schedule 3, Procurement N\.A\. Not in
Section 1, Part C compliance*
* Contracts procured through local shopping and direct contracting totalled $13\.5 million (See Table 5\.D) exceeding by 40 percent
the aggregate $5\.6 million originally planned\. L
8\. Use of Bank Resources
8\. A\. Staff Inputs
STAGE OF PROJECT STAFFWEEKS
CYCLE HQ FIELD TOTAL
Through appraisal 21\.8 55\.2 77\.0
Appraisal through 11\.4 0\.0 11\.4
Board Approval
Supervision 22\.0 50\.2 72\.2
PCR 2\.4 6\.4 8\.8
TOTAL 57\.6 111\.8 169\.4
8\. B\. Use of lDA Resources: Mis&ions
Mission Month/year No\. of SW in Specialty Performance Types of
Persons Field Rating k' Problems
Identification 05/90 5 4\.8 A,C(2),D,E N/A
Prep\./Pre-appraisal 07/90 6 12\.0 A,B,C(2),D,F N/A
Appraisal 10/90 8 15\.1 A(2),B, N/A
C(3),D,H
Supervision 1 04/91 1 1\.0 C I N/A
Supervision 2 06/91 1 0\.6 A I N/A
Supervision 3 07/91 2 4\.0 A,G I N/A
Supervision 4 11/91 6 12\.0 A,B(2),D,E,G I N/A
Supervision 5 02/92 2 0\.8 A,C I N/A
Supervision 6 11/92 4 2\.0 A,B,E,G 1 N/A
Supervision 7 07/93 d' 1 0\.4 1 1 N/A
Supervision 8 10/93 ' 1 0\.5 B I N/A
Project Completion 02/94 f 2 3\.0 B,E I N/A
Notes:
5 A =Financial Analyst; B =HumanResources Specialist; C =Human Resources Economist; D = Economist; E= Credit Specialist; F=Architect; G =Engineer;
H =Lawyer; I=Procurement Analyst\.
1 =problem free or minor problems; 2=moderate problems; 3/4=major problems\.
J Jointly with Supervision Mission of Loans 2804-HO and 2401-HO\.
v Jointly with Supervision Mission of Loan 2212-HO and Preparation Mission of Basic Education\.
5 Jointly with Supervision Mission of Loan 2452-HO and Preparation Mission of Basic Education\.
- 32 -
BIBLIOGRAPHY
"Organizaciones Privadas de Desarrollo que Atienden a la Microempresa en Honduras:
Su capacidad para Ilevar a cabo proyectos financiados por el FHIS', Mirtha Olivares,
July 24, 1990\.
"Identifying Poverty Groups in Honduras, Ralph Franklin, May 1990\.
"The Participation of Private Development Organizations in the Basic Needs Program of
the Social Investment Fund", Anna Webb, July 16, 1990\.
'Plan Piloto para el Proyecto de Bono Materno Infantil', Mario Ochoa, August 1990\.
Project Preparation Report on the Water and Sewerage Sector, Ana Maria Sant'Ana,
October 24, 1990\.
"Poverty Alleviation and Social Investment Funds, The Latin American Experience",
LA2HR, The World Bank, May 23, 1994\.
Social Investment Fund I - Credit 2212-HO
Development Credit Agreement\. March 14, 1991
Memorandum to the President\. February 6, 1991
Staff Appraisal Report, February 6, 1991
Supervision Reports\. Dates: June 10, 1991; August 15, 1991; February 28, 1992,
February 8, 1993
Honduras: Mid-Term Review, June 10, 1992 | APPROVAL |
P000149 | Docum-eotof
The World Bank
fOR OMCU USE ONuy
ReportNo\. 11164
PROJRCT COW"TEION REPORT
BOTSWANA
FOURTJ EDUCATI[ON pROJtCT
(LOAI 2644-B4)
SEPmTjEg' 18, 1992
MICROFICHE COPY
Report No\.:11164 BT Type: (PCR)
Title: FOURTH EDUCATION PROJECT (LN 2\.
Author: CHAI, H-C
Ext\. :31727 Room:T9011 Dept\.:OEDDI
anceBumA~Resources D1vis8f0r
,~~~~~~~~~
It cotet AfmyoOt Dewareprut
Afri~~~~~~ Regiois6edWihot 0li fsicae\.
HCAL Y1EAR
April I through March 31
5CYmi EQUB%Av
At time of Appraisa (1985) = US$1 = Pula 1\.95
At time of Completion (1992) = US$1 = Pula 1\.95
I LQABX
AfDB African Development Bank
BEPU Boipelego Education Project Implementation Unit
CJSS Community Junior Secondary Schools
FrE Full-Time Equivalent
irc Industrial Trade Testing and Training Center *
MFDP Ministry of Finance and Development Planning
MLGLH Ministry of Local GovernMent, Lands and Housing
MOE Ministry of Education
NDP National Development Plan
OED Operations Evaluation Department
PCR Project Completion Report
SIDA Swedish International Development Agency
VTCs Vocational Training Centers
(* flfC is now known as Madirelo Training and Testing Center (MTITC))
FOR OJMCJUL Use ONLY
THE WORLD BANK
Washington, D\.C\. 20433
U\.S\.A\.
Office of OlrootorGsmral
Op\.veons Evalaton
September 18, 1992
ERANDIDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Botswana Fourth Education
Project (Loan 2644-BT)
Attached, for information, is a copy of a report entitled "Project
Completion Report on Botswana Fourth Education Project (Loan 2644-BT)" prepared
by the Africa Regional Office with Part II of the report contributed by the
Borrower\. No audit of this project has been made by the Operations Evaluation
Department at this time\.
Attachment
Ths documen ha a resticed dtbutdon and may be used by reciiens only In the pefomanes of
#te offHh duis\. s cotes may not therws be diclsed wthou Woud Btank suthoadon\.
FOR OMCIAL USE ONLY
PRO-T COtgJ]NRLEPO
Y
TAML OF£NEt
Prefe \. i
Evaluation Summary \. iii
PROJECT REVIEW FROM BANK'S PERSPECTI \. 1
P r o je c n ity \. 1
Project Background \. 1
Project Content and Descrption \. 2
Project Drign and Organization \. 2
Project Impeeion a\. 3
Major Results of the Project \. 4
Project Sustainabity\. \.
Bank Performance \. 5
Borrower Peformance \. 7
Project Relationship \. 7
Consltdng Sevices \. 7
II\. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE\. 8
m\. STATISTICAL INFORMATION \. \. 10
RelatedBankLoans \. 10
ProjectTimetable \. 11
oan D\.bu\.e\.en\. 11
Project Implementation \. 12
Projec Costs & Fnancing \. \. 13
Project Results \. 14
Compliane with Loan Covenants \. \. 19
Use of Bank Resources \. \. \. 20
This document has a restricted distribution and may be used by recipients only in the perfonnance
of their ofcial duties Its contents may not otherwie be disclosed without World Bank authorization\.
Annex 1- Names ofOfficials Met DuringMission \. \. 22
Amnu2- SummaryofCivilWork ComplebonbyYeaes \. 23
Annex 3 - Expnditures on Education from the Nationl Budget - 19186 thru
1990191 in PULA'00 \.,24
Annex 4- Record of ProsressReports Submitted \. 25
- i \.
BOTSWANA
EURTH EDUCAS[ON FROMMC
ams 2644"B
ITis is the Project Completion Report (PCR) for the Fourth Educafion Project in
Botwana, for which Loan 2644-BT in the amount of US$ 26\.00 million equivalent was
approved on June 30, 1985\. The Loan was closed on June 30, 1991 as originally planmed\.
The last disbsement was on November 7, 1991\. US$ 23\.69 million equivalent of the Loan
was disbursed; the balance, amounting to about US$ 2\.31 million was canceled\.
The PCR was prepared by the Population and Human Resources Operations Division
of the Southern Africa Department (Preface, Evaluation Summary, Parts I and I), and the
Borrower (part UW\.
The PCR is based, j= a\. on the Staff Appraisal Report; the Loan Agreement;
supervision repars; correspondence between the Bank and the Borrower; Progress Reports by
the Borrower; and interviews with Bank staff and Botswana Government officials who were
closely associated with the project\.
- iii -
PROJECT COMPLON
FOURTH ESlCAl1ONPO
am 264-l
£YALUAfION SIaRx
,vc Qedes and Content
1) Tbe project's long-term objectives wee to meet Botswana's priority needs for
eading access to nine years of basic education and to expand employment-oriented
tecmical and vocational education\. Specifically, the project aimed at: a) expanding primary
education through the construction and fumishing of about 500 classrooms and related
faclities in nine districts, b) increaing access to junior secondary schools by establishing or
expanding 32 junior secondary schools, c) expanding technical and vocational education,
inclun apprenticeship training by establishing two new Vocational Tra Centers (VTCs)
and an Industri Trade Taidng and Training Center (FITC), and d) improving educational
quality through the provision of instructional materials\.
emenadon Exerience
U) Overall, project performance was satisfactory\. lbe project was implemented
eentily as planned with no changes in project composition, a small (1\.2%) cost overrun,
and within the origina Closing Date\. Over 91% of the loan was disbursed, the remaining
balance, amounting to about $2\.3 million equivalent, was canceled (Part m, Table 3)\. lhb
canllation occurred in large part becase the Government substitu its own funds for the
Bank loan and did not bother to submit mbursement applications\. The project design was
reladvely simple and uncomplicated\. It was implemented by the Boipelego Education Project
Implementation Unit (BEPU), a unit established under the Ministy of Education for the
implementtion of three previous education projects\. BEPU liaised with the Ministry of Local
GovernmeM, Lands and Housing (MLOLH), which has responsibility for primay education\.
Standard designs developed by BEPU (for the junior secondary schools and the VICs) and
MLOLH (for the primary schools) were used throughout\. On the whole the buildings are
simple, functional and in the case of the primary school classrooms, affordable for
communities to replicate\. With the completion of this project, the Ministry's target of
achieving universal basic education is virtually attained, and the Government is taking
measure to integrate BEPU more closely with the rest of MOE\.
Ruuts
ill) The project reinforced and complemented the Bank's assistance under three
precding education projects\. In stricdy quantiatve terms, the project has achieved (at times,
- iv -
even exceeded) its appraisal targes In regard to the three principal components of the project:
a) primary school classrooms (construction, equipping and furnishing of over 500 classrooms
and related facilities); b) construction, equipping and firnishing of 32 junior secondary
schools; and c) construction of two VTCs and a trade testing and training institute\. hese
facilities have provided direct benefit for about 60,000 additional primary school places, close
to 11,000 student-places in junior secondary schools and over 750 student-places in VTCs\.
Similarly, according to the Ministry of Labor under which the institution operates, the r1C
is operting at full capacity: in 1991 alone over 3,000 apprentices and trainees attended
workshops and courses of various durations at rfTC (Para\. 13)\.
iv) While the project has thus achieved its quantitative targets, it had only a
margina impact on in respect to improving educational quality or strengthening sector
Institutions\. Only less than 5% of project funds were allocated for textbooks or other
instructional materials for enhancing educational quality\. In retrospect the project was rather
deficient in this respect, notwithstanding the Government's response that educational
"software" was deliberately left out of the project design as the authorities felt at the time that
these could be obtained through bilateral sources, often on a grant basis (Para\. 14)\. While
some of the anticipated bilateral assistance did materialize (e\.g\. USAID), most of the others
concentrated on the provision of technical assistance and fellowships and not so much on
school inputs\.
v) The three stdies successfully completed under the project constitute another
Important benefit of the project (Section il, Table 9)\. Those studies covered a broad-ranging
area including the cost-effectiveness of technical and vocational training, Post-secondary
manpower require , and relationships between frmal and "nonformal" education\. The
results and recommendation of those studies, according to government officials were used
widely as in-puts in the development of NDP VII\.
Onabpjq
vi) The project institutions are likely to be sustained for the foreseeable \.: ture as
integral parts of the country's educational system\. Most of the factors identified by OED as
important preconditions for sustainability are present, including: sound project design, a
relatively problem-free project implementation record, adequate funding for recurt costs
and clear policy and institutional commitment from Governmentl/ The Go-'ernment's
commitment is evidenced by the relatively high share of public recurrent and development
budget allocated for the sector in the past and for the coming Plan Period (NDP VII)\.
Finally, the Government has already begun to mo1ce budgetary allocation for of
educational institutions in the country (including those established under this project) (Para\.
15)\.
F7indi= nd Lm=son Learned
vii) On the whole, all project components were fully implemented, with no major
Implementation difficulties\. All project Insttions arc likewise fully operational\. The main
JL/ The Sustinability of Inbstment Projects in Education\. OED, December 28, 1990, p\. vii\.
- v -
deficiency of the project is that it did not address adequstely qualitative and institutional
Issues\. It was unduly skewed toward expansion of physical facilities for the reasons discussed
in Para\. 13, and Para\. iv of the Summary, with virtually no provision for training or staff
development, and only limited provision for instructiez\. materials or other school In-puts\.
viii) Lessons derived from implementation of the project include the following:
(a) There should be an appropriate balance between support for expansion of physical
facllitieL and qualitative improvement of the system\. The project underscores the \.ed for a
holistic approach to project design, where needs for physical expansion, quality improvement
and strengthening strategic institutions in the sector are properly balanced (Para\. 17)\.
(b) The project confirms the need for a careful and systematic consideration during
project generation of the location of project institutions, especially technical and vocational
instittons (ra\. 17)\. Because of Its location in a remote part of the country where the
commercial and industrial infrastructure is still weak, the Maun VTC has found it difficult to
insute an effective program of industrial attachment\. It is now seeking to re-orient its
programs to tourist and fishing-related industries for which Maun apparently has a
comparative advwtage because of its location in the Okavango Delta\. It is too early to
determine to wbat extent its new orientation will succeed\.
(c) ithe project underscores the need to carefully review and assess the resources -
human and material - available to regional, district or local jurisdictions which are expected
to implenient major components of the project (such as construction of primary schools), or to
even collect the necessary documentation for preparing withdrawal applications (Para 17)\.
PRO\.IEC COMIL1EMO ' R
BOTSWANA
FOURTH EDULCATION PROJECr
PART 1: PROJCBE= FROM B'S EWSPE
A\. Idmiit
Name: Fourth Educatiun Project
Loan Number: 2644-BT
RVP Unit: Africa Region
County: Botswana
Sector: Population and Human
Subsector: Education
B\. Pm ed B3aoui
1\. Sector DMment Obiectives: At the time the project was identified, the Government's
Fifth National Development Plan (NDP V) was coming to an end\. The objectives of that Plan had
been to speed up economic diversification, to generate employment and income opportunities,
especily in the ral areas, as well as accelerating manpower development\. The goals of ND\.P V
had bee retarded by a series of setbacks such as foot and mouth dLsease in 1981-8Z, decline in the
price of metals, and more significantly by decline in the price of diamonds, by far Botswana's main
source of revenue\. By the time the project was appraised, the economy had ntilly recovered,
with the budget In sUrplus and current deficits at manageable levels\. The Government had a sizeable
foreign exchange reserve and a good credit standing\.
2\. Poicy CoQt\. In 1985, the Government of Botswana approved its Sixth Development Plan
1985-91 (NDP VI) in which the lack of skilled manpower was identified as a major constraint to
economic and social development\. Given the rate of population growth and the lack of employment
opportunities in the traditional (rural) sector, the number of unemployed and underemployed had
incresed significany\. At the same time, there were critical shortages of high- and middle-level
manpower which was essential for the country's social and economic development\. The educational
objectives of NDP VI sought to achieve a balance between equitable access by aU groups to geal
(basic) education, while expanding employment-orieted technical/vocational training\.
3\. Project Ubjectives\. Consistent with the policy framework discussed above, the project's
specific objectives were as follows:
a\. expanding primary education beyond the 83% participation rate prevalent at the time;
b\. increasing access to lower secondary schools;
o\. expanding techncal/vocational education, including appreticeship training; and
d\. improving the quality of educadon at all levels\.
4\. Project\. Seor NW M Policy Objectives\. The project was largely
successful i linking project, sector and macro policy objectives\. As Indicated above, the country at
the time of appraisal cetd qevere shortages of skilled manpower, whle at the same time, there was
unemrloyment among primary school leavers who were unable to find places In post-primary
nsittions\. The project sought to address these twin problems by (a) expanding vocational education
through the establishment of Vocational Training Centers, awd (b) expanding access to nine years of
basic education, by establishing new Junior secondary schools\.
C\. &jeCt nQ and Description
S\. Project Components\. As appraised the project included the following components:
a\. Ed= Education\. (i) Construction of 500 primary school classrooms and related
facilities, including teachers' houses, sanitary facilities, office/storage and kitchen
facilities; and (ii) production and distribution of the first edition of new textbooks and
teachers' Guides developed for the raised curriculum;
b\. Iqnir Seodar\. (i) Construction and upgrading of 32 junior secondary schools, with
a total capacity of 11,000 student places; (ii) provision of reference books and
resource materials for teachers and students in 69 Junior Secondary Schools;
C\. lghWcal and Vo oatip Training\. (V) Construction, furnishing and equipping of an
1ndustrial Training and Trade Testing Center I'ITC) in Gaborone for coordiating all
industrial and training programs as well as for training, testing and certification of
skil training; and (ii) Construction, furnishing and equipping of two Vocational
Training Centers (VTCs), located in Palapye (310 training places), and Maun (290
training places)\.
d\. Stuies Specialist services and operating cost to conduct four studies to address
issues pertaining to: O) cost-effectiveness of vocational and skill taining in Bot_aaa,
(ii) The relation between fbrmal an non-formal education and training and
employment expectations and opportunities, (iii) investment options in post-secondary
education, focusing on manpower requirements and cost-recovery, and (iv) altradve
construction techniques to enhance low-cost school construction; and
e\. A\. (i) nine (9) man-years of L,piaflst services in accounting for
the Ministry of Local Government and Lands and Housing (MLGLH), (i) sixteen (16)
man-years of services of clerk of works, (Mii) two and half (2\.5) man-years of
specialist services for the studies referred to above, (iv) two (2) staff-years of
specialist services for architectural and engineering services and for pre-investment
studies, and (v) one man-year (1) of services for a project director\.
D\. Pro Aigrn and irgatigon
6\. Nothwitanding the shorcomings discussed in Para\. 14 below, the central thrust of the
project as well as its design and organizaion were appropriate\. In fact, the project's principal
-3\.
obJectives of improving access to primary eduction and expansion of lower secondary sclhools, were a
contion of previous ank ssistance to the secr\. The project thus complemeted and enforced
the Govenumeet's previous efforts to expand secondary educat}on (under the First Education Project,
Ln\. 1274-BI) and to Improve access to primary education (under the Third Education Project (Ll\.
2057-BI)\. Primary education being under the Ministry of Local Govenment, Lands and Housing,
the project was pardy under that Ministry\. The remaining pordons (unior secondary and
technical/vocadonal education) were under the Ministry of Education and the rfTC was under the
Miistry of Labor\. In retrospect, the project design was somewhat deficient in not having devised a
coordinating mechanism between these Ministries which were responsible for the implementation of
the two major components of the project\. Inadequate coordination between BEPU and MLGLH
hampered to some extent processing of withdrawal applications and preparation and submission mf
audit reports\. The rVIC component was also implemented under the overall supervision of MOE's
Boipelego Education Project Unit (BEPU)\.
E\. ProjectIWpementation
Critical Variances in Project Implementationl
7\. The project was implemented essentially as planned with little (1\.2%) cost overrun and within
the original Closing Date\. Over 91% of the Loan was disbursed, the remaining balance, amounting
about US$ 2\.3 million equivalent was canceled\.
8\. The project was prepared and processed quite rapidly\. It took only 13 months between the
time the project first identified and the time it was approved by the Board of Executive Directors\.
And it became effective only a month after Board approval (Section m, Table 2)\. The project was
mplemented by BEPU which also implemened other Bank and ADB projects\. BEPU liaised with the
MLGLH for implementing the prim-ry school components\.
9\. Contracts for the primary schools was awarded on the basis of LCB, as the contract- were not
atractive for international bidders on account of their small size and scatted sites\. Standard designs
developed by the Government was used throughout\. All specifications and instructions were given
directly on the drawing for simplicity\. Supervision of construction was handled by District
Authorities, with overall coordination of the MLGLH\. On the whole the design and constuction of
the building was carried out satisfactorily\. The buildings are simple, cost effective and have already
been widely replicated by communities in some parts of the counay\. In retrospect, closer attention
should have been made on site planning to maximize proper use of the laM\. Some contractors,
especially in remote areas , defaulted mainly because they were unable ;o handle the size of their
contracts\. On the basis of experience learned from implemenation of this project, to avoid awarding
conOtr to those who do not have the resources and technical capability to carry out the terms of the
contract, the MLGLH has now registered contractors according to their capability and resources\.
10\. Contcs for the JSSCs and the VTCs/WC were awarded on the basis of ICB, in accordance
with Bank guidelines and procedures\. A common design was used for all the instiutions, with only
minor variations for the VTCs\. The designs were improved in the course of implementation,
particularly in regard to cooking facilities, toilet areas, and outdoor teaching areas\. On the whole, the
buildings are simple, funtional, and as far as the Completion Mission could determine, affordable
and replicable\.
11\. Contracts for the procurement of primary school classrm fiurniture was included with the
contacts for construction of the classrooms\. While tis had the advantage of synchronizing the
- 4 -
completion of civil works with the supply of furniture, it nonetheless resulted in uneven quaWity both
in respect to the marials used as well as the workmanship of the furniture\. Future projects should
review the advatages and appropriateness of combining the two contracts\. This situation did not
arise in the case of classroom furniture for the CJSSs and VTCs as the contracts for furniture were
awarded separate'v from the civil works contracts\.
F\. 1yior Results of the Project
12\. As discussed in Para 4, the project had three major objectives: (a) In accordance with the
recommendations of the National Commission on Eduction, to expand access to nine years of basic
eduction, (b) to expand access to lowei secondary education (community junior secondary schools)
and (iii) to expand vocational/technical skill taining\.
13\. In respect to its first objective, the project has accomplished fully its quantitative objectives as
follows: (3 \.M=n rySchools: As shown in Secton HI, Table 8, the project met at least in
qunitative terms, its appraisal target of constructing, furnishing and equipping about 500 classrooms
and related facilities in nine districts, essentially as originally planned, thereby increasing primary
school enrollment by almost 60,000\. (ii) Commniq Junior Secondar Scho\. Again, the project
met its quantitative targets of constructing, equipping and furnishing 32 new CJSSs throughout ihe
country, thereby providing the benefit of a nine-year basic education to 10,800 additional students\.
The Goverment has not yet implemented the 6-3-3 structure as originally recommended by the
National Education Commission (the structure of the education system is one of the topics to be
discussed by the receady established Eduction Commission)\. Nonetheless, in terms of total number
of years, the basic education cycle presently under implementation remains 9 years (7-2), as
envisag'\.d when the project was designed\. (iii) Skill Training\. The project has also met fully its
objectivus of establishing two new Vocational Training Centers and an Industrial Training and Trade
Testing Center (rrTC)\. Enrollment at one of the two Project VTCs (Maun) is somewhat below the
appraisal target - 245 compared to a planned target of 290), in large part because the institution was
located in a rather remote part of the country with limited industrial or commercial activities for
indusial atachment\. On the other hand, the enrollment target for the other VTC (Palapye) has
already been exceeded (current enrollment is 486 compared to an appraisal target cf 310)\. Because of
the rather unique nature of the courses it offers and the clientele that it caters to (courses of various
duration ranging from a few days to a few weeks; the course participants vary trom workers intending
to upgrade their skill to those who attend courses in preparation to their being tested to determine
their skill level in a particular trade), it is difficult to estimate the full-time equivalent (FME) number
of students attending the MTFC\. In 1991, about 3,000 apprentices and trainees attended workshops
and courses of various duration\. The Ministry of Labor, under which the institution operates,
indicated to the Completion Mission that the institution is operating at full capacity and expressed its
satisfaction with the services offered by the institution\.
14\. While the project has achieved (or sometimes even exceeded) its quantitative targets, it had
only a limited impact in respect to qualitative improvement and instition building\. While some
library books, and a limited amount of pupils' textbooks were provided, in retrospect the project was
rather deficient in this respect\. In hindsight, more project funds should have been utilized for
providing various quality-enhancing in-puts, such as instructional materials, teacher/staff upgrading
corses (ocal or overseas), training head teachers, school supervisors and other key educational
personnel\. Less than 5% of the Loan was earmarked for this purpose\. In discussions with
Government authorities at MFDP as well as at MOE, the Completion Mission was told that
Government had deliberately given priority for hardware (I\.e\. construction of new insttions), as the
Government believed that it could find other sources, especially grants from bilateral sources) to
-5
flnce raining and even for procurement of instructional materials\. The USAID assistance, which
was on-going at the time of appraisal (and was still on-going at the time the projec compledon
mission was in the field), in currlculum development and preparation of istructional matials was
cited by the authorities to support their position\. An intnsive dialogue with the Borrower should be
undertken to ensure aSholistic approach to project design where the project would give adequate
provision to expansion, quality improvement and strengthening of institutions in the sector\.
\. ,~~G
G\. PoectM Sustnabilin
15\. ITe project istitutions are likely to be sustained for the foreseeable future as integral parts of
Botswana's educational system\. Ihe project contains most of the principal factors identified by OED
as necessary conditions for sustainability for eduction projects\. Ihese include: sound project design
and relatively problem-free implementation; adequate funding for recurrent costs and clear policy
support from the Government\.l/ The Government places major ;mpbasis In manpower
development\. This commitment is demonstated by the consistendy high proportion of the
Government's recurrent budget that is allocated for education In the past (Annex 3)\. This
comnmitment is even stronger for the years ahead, judging from the planned allocations for education
during the coming Plan Period (NDP VII)\. For instance, for the Fiscal Year 1992-93, the
Government has allocated the highest share of its recurrent budget to education\. The same applies for
the Development budget, where the share of education (8%) is the second highest share for all
sectors\. With regard to the VTCs, continued demand for skilled manpower and industrial support for
the apprenticeship programs at the IllC contribute to the sustaibility of those institutions\. Finally,
the Goverment has already began to include budgetary provision, albeit at a modest level, for
maintenance of buildings and facilities in the sector\. The Completion Mission was assured by the
authorities ihat these provisions would increase in the coming years\.
H\. Bank Eubnow
16\. Mair Sng and Wealmness\. As noted in the Government's contribution to this report
(Pa I, Pamr 21), Bank staff contributed to the successful completion of the project through close
ad supportive working relationship and professional advice\. Eight supervision missions were fielded
during the five-year implementation period (1986-1991)\. While the frequency of the missions may be
somewhat less than the average for education projects, the missions proved to be adequate and quite
effective, in large part because of the problem-free nature of the project, and pardy because of the
strong leadership provided by the expatriate project director\. A case may be cited to illustrate the
professional and collaborative relationship that Bank staff maintained with the borrower\. As noted by
the Borrower (Part II, "aras\. 18-20), early during the implementation phase when the Goverment
decided to Implement nlre years of basic education, it became clear that less expensive school desis
and construction materials than those used in previous projects would have to be utilized if the policy
is to be Implemened nation-wide\. Using "savings* from a previous Bank project, the Bank accepted
the Government's proposal and cottaborated actively in financing two "pilot schools" to develop more
cost-effctive construction designs and building materials\. The designs developed in these "pilot
schools" were eventually used both by the Bank and AfDB for the new Junior Secondary Schools
financed under the project and an Af)B project that was financed concurrenidy\. While these are
some of the positive feaures of the Bank's performance, its record is quite weak in respect to helping
the Borrower develop local capability for project implemeion\. After four successive projects thut
date back to 1976 (Part m, Table 1), BEPU is still dependent on the expariate director for vrtuly
11 lbe SusLinabilt of Investment Priects in Education, OED, December 28, 1990, p\. vii\.
^6-
ail aspects of project implementation (eg\. proJect accounts, technical/architcural srvices, etc\.)\.
While inadequate local capacity is a generic issue in Botswana that has to be addressed broadly, and
even at a national level, the situation is particularly acute at BEPU\. It is further exacerbated by the
limited and inadequate provisions in the Project for staff training and capacity building for BEPU and
the sector as a whole (Para\. 31)\.
17\. LagM La For fture projects the following lessons learned from implementation of
this project may be of value:
(a) Ihe project confirms that the Bank's assistance for education and training should contain
an appropriate balance between support for expansion of physical infrastructure and qualitative
improvements of the system\. In this case the project focussed almost entirely on expansion of
physical facilities with very little provisions for qualitative improvement of the system (ess
than 5% of the loan)\. There was no proAsion for training of counterparts to take over from
expatia funded by the project (Para\. 15)\. While the project's strong emphasis on civil
works was rather typical of education projects of the period, and perhaps appropriate in view
of the Government's plan to universalize nine years of basic education, in retrospect a more
balanced support for quality upgrading and institutional strengthening would have been
appropriate as wealmesses in these areas were recognized in project preparation documents\.
For instance, as already noted, in spite of over 15 years association with BEPU, the Unit is
still heavily dependent on expatriate staff\.
(b) The project confirms the need for careful attention to 'ocation of the project insdtutions\.
This is partic-tlarly true of the vocational training centers (VTCs) which is extremely
dependent for its success on its ability to obtain appropriate industrial atachment for the
stdents in the apprendceship phase of the program\. The difficulties experienced by Maun in
fuily utilizing its fAcilities is mainly as a result of lack of suitable opportunities for industrial
atachment in the Maun area (Para\. 13)\. The authorities are attempting to have Maun VTC
concentrate on skldl training related to the tourist and fishing industries for which Maun
appears to have a comparative advantage over the other VTCs on account of its location in the
Okavango Delta\.
(c) The project underscores the need to carefully review and assess the resources available -
human and material - in jurisdictions outside the central Government (eg\. district, regional,
etc\.) where such jurisdictions are expected to be responsible for implementing major project
components\. In this case (as in many others) primary education is a district responsibility,
and as such the District Councils, under the overall umbrella of the Ministry of Loca
Government, Lands and Housing were responsible for implementing the primary school
component\. Shortage of qualified contractors with the requisite resources led to many
contractors to default on their construction contracts and to abandon their sites\. In the end
MLHLH was forced to use some of its headquarters staff (augmented with temporary workers
hired on force accounts) to complete the classrooms, thereby avoiding a potentially disruptive
situation\. In retrospect, the capabilities of the districts to implement such a large construction
program should have been assessed more carefully and systematically\. Also, as indicated in
the Government's portion of this report (Part II, Parm\. 30) on the basis of the experience
gained in the implementation of the primary school component, MLGLH introduced this year
a requirement that all contractors should be registered in one of nine categories on the basis of
their capability and resources\. MLGLH's expectation is that henceforth only qualified
contractors with the requisite resources will be able to tender and win government/districts
contract, and that this will reduce if not elimte contractors from defaulting\. The project
-7 -
also underscores the need to strengthen the capability of local goverments in regard to other
aspects of project implementation (e\.g\. collecting the necessary documentation for withdrawal
applications)\.
I\. }o
18\. All major project covenants were complied with (Part m, Table 10), although delays were
encountered in fulfilling some of them (eg\. submission of audit reports)\. In retrospect, better
coordination and more frequen joint meeings between BEPU and MLGLH could have expedited the
collection and processing of withdrawal applications for reimbursement of expenditures incurred in
the districts, as the preparation of properly documented withdrawal applications, particularly from the
districts, was perhaps the single most frequent weakness encountered in an otherwise very satisfactory
project performance\.
J\. Project Relationship
19\. Bank staff and officials of the Borrower involved in project implementation enjoyed a sound
professional and working relationship\. lbis contributed to the successful completion of the project,
without any major issue or delays\.
K\. Consltn Serices\.
20\. Architctr and engineeing services for the "pilot schools" (Para\. 15) were developed by a
private architectural consulting firm in collaboration with BEPU\. The performance of these
consultants was good, and as already indicated the designs developed during this phase was used with
some modification for all JSSCs in the project\. No other major consultants were used\.
-8-
PART]II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIE
A\. Mbd= of MC3dun (Boipeeig-o Pr-oiet ImpemenW Unit
(For the Junior Secondary School, VTCs and nTC)
21\. Bank's Perfomace and Lessons Learned\. Bank staff on supervision visits were professional
and und ng\. The missions were scheduled regularly and up to very late in the implementation
phase of the project were carried out by persomnel with a vast local experience, locally, a definite
advantage\. The lesson learned is that continuity in personnel is very important for successful
implementation\.
22\. Likewise, the appraisal mission was effective and the documents were well prepared and
useful\. A special subject of concern was furniture for primay schools\. Previous experience wihi the
Third Education Project (Lu\. 2057-BT) made the Bank suggest that these constiuted an itegral part
of the building contracts, a suggestion reluctandy accepted by MLGLH, but which later proven very
successful\. For the vocational Training Cents, the contribution of the Bank was very significant in
relation to design and plaruing\.
23\. Borrower's Evaluation of Own's Perfrmance\. The overall performance of BEPU has been
reasonable\. The task has been very big and without the dedication of the Bank, consultants, other
Government bodies such as the Planning Unit (MOE), the Miistry of Finance and Development
Planning, Electrical Department and the Project Unit's own clerk of works, this would not have been
possible\.
24\. An important lesson learned on the Borrower's side from previous project was the necessity
of a change in concept of Junior secondary School\. It has been found necessay to expla in detail
the changes in the paragraphs below regarding the (1) design and (2) implementation\.
Design of the Community Junior Secondary Schools (CYSS)
25\. The early part of the Second Education Project made use of sturdy durable but unfortuately
complicated and expensive design\. When the Government decied on a nine-year basic education for
all children of the relevant age-group, it was agreed to simplify the design in order to reduce
consucdon costs\. Using fiuds saved from the Second Education project, the Bank agreed to finmace
the construction of two schools on a pilot basis to test the new design\. The new brief was reduced
both in scope and specification as was the number of faciities\.
26\. It was decided to use a rotational system and build lockers In lieu of a 'Home Classroom"\.
The buildings were suited to the changed curriculum and provision of a mlitipurpose hall to cater for
the various practical subjects introduced into the curriculum\. Consderation was also given to the
proposed new educational structure of 6-3-3 instead of the existing stucure of 7-2-3\.
27\. Taking all these proposals into consideration, a new design was developed by Arc
Plaming Studios in collaboration with BEPU\. The pilot projects in Maun and Hukusi were
tendered in June 1985 and following this both the African Development Bank (ADB) and the World
Bank embarked on projects in cooperation with the Governmen The ADB decided on a project
covering 16 new schools and replacements for three existing schools\. The World Bank did the same
thing but on a larger scale with 8 existig schools and 24 new schools\. Both projects made use of the
design used for the Pilot Projects, but inorporating suggested changes made by the users\.
-9 -
28\. IW plp\. The previous projects were implemented one at a time, over a number of
years\. The necesity of spreading Junior Secondary Schools rapidly to the whole country meant an
increased number of schools to be built every year, hence the need for combined contrac\. The
Bank's performance was excellent during this transitional period, with its suggestions for
modiflcations as needed and its willingness to do retoactive flnmcing\.
S\. Ministry of Local Government\. Lands and Housing
(For the Primary School Component)
29\. CM Agdk\. Defaulting contractors posed a serious problem during the implemeion
period\. As a result of the experience gained in the implementation of this project, it was decided that
with effect from Ist January, 1992, all contracoors wishing to work for Local Authorities should be
required to register with the Ministry of Local Government, Lands and Housing\. On the basis of
information provided by contractors on an application form for registration, the contractor's capability
is evaluated by the Ministry and then contrctors are registered in an appropriate category\. There are
nine categories with the vaiaes ranging from Pula 75,000 (lowest) to Pula 3,000,000 (highest)\. lt is
expected that this newly introduced registration of potental contractors will help ensure that only
competent contractors will be able to take up contracts with the Loca Authorities\.
30\. Also as a resut of implementing this project, the Architectural and Building Unit of MLGLH
Is being strengthened with the help of SIDA\. ITe Unit is expected to develop standard school designs
appropriate for the various districts, and also to bring about some uniformity in consution unit costs
among the local authorities\.
31\. Lesn Lamd\. Among the many lessons acquired as a result of implementing this project
(some of which were referred to above), there are at least two that were particularly critical for the
longterm sustainability of the project\.
a\. In reatspect, the project should have addressed more directly the Government's
responsibility for mair of the facilites\. Perhaps some mechaim should have been
put in place as part of the project to ensure that the Local Authorities provide adequate funds
in their recurrent expenditure budget for mainenance; and
b\. Also in retrospect, the project should have included staff =ainWg (eg\. accountants,
architecuWal technicians, etc\.), as well as office equipment and vehicles for the MLGLH\. In
short, the needs of this Minstry which was responsible for implementig a major component
of the project (primary school) was not taken into account adequaty at the time the project
was designed\.
- 10-
PART m\. STA3=AL INI:OR MA
A\. RELATED BANK LOANS
Table 1: IBRD LOANS RELEVANT TO THE PROJECT
LQan Npmber P~~ums of Prjet Sau Comments
Proect Tidte _APZovl___ _
La\. 12744BT 1976 Secondary school Completed Project objectives
expansion, teacher 3/82 achieved satisfac-
training; adult & torily
rural education
LA\. 1828-BT 1980 Community Junior Completed Except for the
secondary schools; 6/87 Brigades which
Brigades/rural were delayed by
vocational centers 2 years pending
status of Govt\.
decision on the
Brigades
program, project
was completed
a ____________ ,__________ satisfactorily
La\. 2057-BT 1982 Primary Education, Completed Project completed
Education m primary teacher 3/87 satisfactorily
trainMg
Ln\. 2644-BT 1985 Vocational training; Completed Successfully
Educadon IV primary schools, 6/91 completed
clSS
- 11 -
B\. Project Timetabe
Table 2; PLANNED, REVISED AND; ACTUAL DATES OF PROJECr TIMETABLE
IThM AZfPLANNED ACTUAL
DATE __E
Reconnaissance 6-7184 6-7J84 6-7/84
Identification 11/84 11/84 11/84
Appraisal 5/85 5/85 5/85
Negotaons 10/85 10/85 10/85
Board Approval 12/85 12/86 12/85
Credit Effectveness 1/86 3/86 3/86
Project Completion 12/90 12/90 12/90
Closing Date 6/91 6/91 12/90
32\. Comm n l-le\. The project was implemented over a five year period\. There was
no extension of the Closing Date\. Final disbursement from the Loan took place on November
7,1991, and the remaining balance of about US$2\.3 million was canceled\.
C\. Loan Disburse nnt\.
able 3: CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS
_(US$ Mulion
Bank FY '86 '87 '88 '89 '90 '91 '92
Appraisal 1\.5 7\.8 15\.3 21\.3 24\.7 26\.0 -
Estimate
Actual - - 6\.80 18\.3 20\.5 22\.4 23\.7
Actual as % of 0 -0 26\.0 70\.3 78\.8 86\.1 91\.1
the Loan
Date of final disbursement: November 7, 1991
33\. Comments on Loan Disbursement\. Disbursement started very slowly\. There was virtally no
disbument during the first two years of project implementation, even though Bank supervision
reported of award of contracts during that period, and contractors were being paid out of Government
funds\. Reimbursement applications were received by the Bank only during the third year of
implementation\. The intervening time was used to gather the neceary documentation supporting the
withdrawal applications\. This was especially the case with the primary school component which was
- 12 -
being implemeted by the various district authorides, on whom MOE and MFDP depended for
colectng the documeon needed, in accordance with the Bankc's guidelines axd procedur\. As
indicated earlier (Para\. 32), about $2\.3 million equivalent of the loan was not disbursed and was
subsequenly canceled\. The cancellation occurred in large part becae the Government substiued its
own fuds for the Bank loan and did not bother to submit reimbuent applications\.
D\. EM=k1Md
Table 4: PLANNED AND ACrUAL COMLEON DATES OF COMPONENTS*
PS,OJECOROET MANNED ArUL MD=IH O
CQNk X CQOMdLETION DELAX
1\. Pdm schools
(500 classrooms &
related faclities) 12/90 12/90 0
2\. Junior Secodoar
(32 Schools and
related facilities) 12/88 12/88 0
3,VocaotW TraiEzning
a\. rT: 4/88 4/88 0
b\. Maun VTC 3186 6/89 1S
c\. Palapye 4/88 5/88 1
F-URNlUF] &k E OIDPME3r
a\. Primary Schools 12/90 12/90 0
b\. Jr\. Secondary 12/88 12/88 0
c\. Vocationa1 Training and
Trade Testin 4/88 4/88 0
etas for thre vwious project componeas are Ahow _
34\. Cmotents on j12 Inqplementaon\. Delays occurred for individl contruss (as in the
case of Man) but overal yearly targets were met from 1987 onwards\. The delivery of furnire to
the Mann WTC was delayed to coincide with the completion of the facilities\. Overall, the project was
implemend as planned, within the original Closing Date, and wifth viuly no cost overrun (only
1\.2%)\. All project components were completed, an undisbursed funds totaling about US$ 2\.31
mfllion was canceled\.
- 13 -
E\. Project Cost aud Financu
Table S PROJECT COSTS
(US$ Million)
I\. aiSiS WQri
a) Primary Schools 5\.4 3\.6 9\.0 8\.1 5\.4 13\.4
b) CJSS 9\.2 5\.6 14\.8 9\.3 4\.6 13\.9
c) Voc/Technical 5\.6 2\.8 8\.4 4\.9 2\.4 7\.3
EI\. Furniture, equipment,
vehicles, textbooks 3\.6 1\.5 5\.1 4\.2 1\.7 5\.9
m\. Consultants& 0\.7 0\.4 1\.1\. 2\.5 0\.9 3\.1
Tech\. Ass\.
IV\. Unallocated 4\.3 0-5 4\.8 0 0 0
Less Taxes ____ - !47 L -
TOTAL NET TAXES 29\.7 13\.7 43\.4 28\.9 15\.0 43\.9
35\. Comments on Prolect Costs\. Total project costs (net of taxes) were about 1\.2% above
appraised esmates\. There was a cost overrun of about 49% on the civil works component of the
primary schools, but this was offset by cost underrun on the civil works component of the JSSCs an
the VTCs/rTIC\.
Table 6: PROJECT FINANCING
(US$ Million) _
ELANNED ACrUAL
IBRD 26\.0 23\.7
GOVERNMENT 18\.0 20\.2
TOTAL 44\.0 43\.9
36\. Coment on Prject Financing\. There were no co-financiers\. The Government was able to
make initial payments to contractors and suppliers and claim the appropriate reimbursement from the
Bank\. However, not all eligible expenditures made by Government, particularly for the primary
sdhool component appear to have been claimed\. As a result the Government's portion of the Loan
was about 12% higher than the appraisal estimate\. About 91% of the Loan was disbursed, the
remaining (amounting to about US$ 2\.3 million) was canceled\.
\. 14-
Table 7: ALLOCATION OF LOAN OF PROCEECDS
(US$ Million)
C4AM=)X 5g3iL ALLQ Anl AML
DISBUNRSEMtENT
ia\. Priary 6,500,000 7,312,945\.83
lb\. CJSS 8,700,000 8,300,479\.17
Ic\. Voc\.irech 3,000,000 3,766,230\.68
U\.Furniur,
eupment, books, and
vehicles 3,500,000 3,425,387\.27
M\.Architect\. Serv\. 400,000 74,435\.41
IV\. Consultant Serv\. 1,200,000 809,331\.79
Unallocated/Canceled 2,700,000 2,311,189\.85
TOTAL 26,000,000 26,000,000\.00
37\. Cgommnts on Allocation of Loan Proceeds\. Disbursement of the loan got off to a slow start\.
There was virtually no disbursement for almost two years after the loan was declared effective\. This
was largely because of Government had sufficient resources cf its own to pay suppliers and
contractors\. It usually took the Implementing minstries a long time to gather the necessary
documentation to support withdrawal applications\. The situation improved markedly toward the latter
part of project implementation\. At the time of project completion about 91% of the loan was
disbursed\. US $2\.31 of the Loan was canceled\.
F\. Pjecit Result
(See Tables 8a, 8b and 8c, pp\. 15-17)
- 15 -
Tabea± DIRECT BENEFITS OF THE PROJECT
A\. Junior Secondarv chools (Enrollment)
APPAISALCURN
__NIOR _ _400 _ _ TAhGET J2LLML
NEW SCHOOLS
1\. Letlhanke 240 240 1480)*
2\. Middlepits 240 240
3\. Kane I 360 360 1480)
4\. Mabutsane 240 240
5\. Gaborne 480 720
6\. Mochodi 360 480
7\. Molepolele 360 360 (720)
8\. Lentsweletau 360 480
9\. Serowe 480 480
10\. Bobonwona 360 380
11\. Selibe Philkve 360 360 (480)
12\. Pafa!ye 480 480
13\. Shakawe 240 240
14\. Masunga 240 240
15S\. Maftngwan 360 360 (720)
16\. Nswazwi 240 240
17\. Tutume 240 240
18\. Francistown 480 480
19\. Nate 240 240
20\. Orepa Govemment 120 120
21\. Maitengwe 240 240
22\. Jwaneng 480 480 (720)
23\. Gabane 360 360 1720)
24\. Sehitwa 360 240 (3601
25\. Makolojane 480 480
26\. Mepong 480 480
27\. Molopo River 480 480
28\. Kuamanyane 240 240
29\. Mauntila 240 240
30\. Thamapa 480 480
31\. Mathiba 360 360
32\. Thamapa 480
TOTAL 11,160 11520
Figures in parenthsis refer to actuai enrollmen including expansion achieved with Governrnt
resources and other donors\.
- 16-
B\. Number of Mrinee Places in YTC9 and ITTC
| ME OF NINITUIN TRAINgE PLACfj: CURRENT NUMBER OF
l ~~~~~~~~APPRAISAL, JAR=f STUDENT PLACE
1\. Industrial Trade
Testing Training 240
Center (ITC),
Gaborone
2\. Palapye VTC 310 486
3\. Maun VTC 290 245
***lTIC runs a number of short and long term training for apprentices and trainees both at the nlTC
facilities In Gaborone as well as various VTCs and Brigade Centers\. Ihe courses run between 3
weeks and 6 weeks for trainees and between 3 days and 6 days for test groups, i\.e\. those attin
some Trefreher* courses before they sit for skill certification tes\. In 1991 about 3,000 apprtices
and trainees attended various workshops and courses\. Because of the nature of the courses, it is
difficult to esdmate the Full-time equivalent of these trainig programs\.
C\. NUBER OF PRWARY SHQOL LLACES us= nEPROJECT
(By District)
NAMr OF DIMT= MAR S!CHOO l
ENROLLMENT Al E1NROLLMENT
1 \. North East 7,076 12,147
2\. Central 55,294 101,623
3\. Kgatleng 9,070 12,642
4\. Kweneng 33,320 45,210
5\. Southern 45,733 25,724
6\. South East 5,088 8,014
7\. Kgaagadi 5,139 7,624
S\. Ghanzi 2,669 4,619
9\. North West 16,722 20,940
TOTAL 180,111 238,543
38\. Comments on the Direct Benefits of th Proect\. In strictly qualitative terms, the project has
achieved ts maJor objectives\. As shown in the Tables above, enrollment targets for pimary schools
have been exceeded in all nine districts\. The same applies for the number of classrooms and related
facilties provided for the primary schools in the nine districts referred to above\. 'Me project has also
- 17-
met ully Its target of etablisWi two new VTCs and a Trade Tsting ad TraIning Center\.
Altough the ollmentarget ha not be reached for one of the two VTCs (Maum), the target has
bee eceeded in the cae of the second one (Palapye)\. Because of the signiflcant expansion under
the project of the Community Junor Secondary Schools, the Government's strategy of providing a
nineWoa cycle of basic education is becoming a virtual cerinty\. ITe project has also benefitted the
sector in respect to the three important studies completed under the project (rable 9)\. Tbe technical
assistne provion, although limited generally to the project unk (architets, engieedng services
and accountants), has also been fMlly utilized\. Perhaps the most significant benefit of the project was
it contribuon in developing standard school designs for both primary and junior secondary schools\.
The desgns used In these project schools (particularly the primary schools) can now be seen
replicated by various communities in many parts of the country\. Even the junior seconday school
designs are being used by the Government and other agencies (eg\. ADB) for new schools\. On the
other hand, the project had only a limited impact on educational quality and instition-building\. The
Government's emphasis on constuction of new facilities, with little consideration for quality-
enhaing inW-put was appardy deliberate (Pars\. 11)\. But, it appears, in retrospect, that the Bank
and the Govern t should have given more conside,tion to addressing qualitative issues, in the
ntrest of enhancing the benefit derived from this p ject\.
- 18-
Table2: PROJECT STUDIES
Purpose as DeAU4 Imua&LOfmdx
at Aogisal
a) Cost- To es8mate cost per Completed The major
effectiveness of graduate for various recommendations of the
VocationDal and Skll levels of vocational study were incorporated in
Traiing in and technical skill the Master Plan for
Botswana training programs Technical/vocational
3ducation and would be
implenmted under the
NDP VII Plan period
l________________ (1991-95)\.
b) The correlation To estimate the Completed Recommendations of the
between Formal and supply and demand study are under
Non-formal of trained technical implementation\.
education and and vocational
training and manpower in
employment various skill
aspirations/opportun categories
ities \.__ _
c) Post-scondary To study and Completed Recommendations on the
Education: recommend policies expansion of technical
manpower and priorities for education at the Polytechnic
requirements and d) high-level and the University have
Construction manpower training been accepted;
Technology and at the University recommendadon on
cost recovery expansion of secondary
education is still under
consideration\.
d) Construction Pilot study for Not Although the study as
Technology developing completed originally conceived was
appropriate not undertaken, some of the
technology and low underlying ideas are being
cost building tested in ongoing school
materual construction programs
39\. Comments on Studies\. Three of the four studies were completed and served as important in-
puts to developing educational plans and targets\. While the fourth study, on "Constuction
Technology" was not formally conducted, many facets of the issues that were intended to be studied
were in fact pursued informally\.
\.19-
G\. Status of Credit Covenans
Tabl§ 1JQ COMPLIANCE WITH LOAN COVENANTS
Have accouns audited, and submit a In full compUlance,
ertified copy of audit for each fiscal year, although audit reports were
4\.01 within 6 months of the end of the Govt's often submitted lawe\.
\.__________ fiscal year\. \._ \. _\._l
Schedule V Submit bi-anmual report on progress of Substtially complied with
Para\. 2 implementation
Submit annual development plan and Substantially complied
budget for the construction of primary with; as local costs were
Schedule V school and an annual report for previous not a problem in Botswana,
Par 3 year's work covenant was not
particularly critical
Schedule V Provide a satisfactory program for training Fully complied with\. Plan
Para\. 3 teacher/librarians and ensure their submitted and training
placement completed\.
Schedule 5 Furnish satisfactory evidence ihat key Complied with fully
Pam\. 8 positions at the VTCs have been
established
Schedule 5 Appoint appropriate agencies to coordinate Stntally met All
Pars 10 and conduct the studies\. studies (except one) have
been completed\.
-20-
H\. UseoftkRMrces
Table 11: STAFF IN-PUIS BY STAGE OF PROJECT CYCLE
(In Staff-Weeks)
Sb= of Proect P1ame RevisedIAa
g o\. Aca HQ__ A, HQ ' _d
Through 21\.1 10 21\.1 10 21\.1 10
Apprisa
Apprsalto 37 8 37 8 37\.0 8
Board ,,
Board approval
to Effectiveness 2\.4 - 2\.4 ' 2\.4
Supervision 35\.2 22\.6 35\.2 22\.6 35\.2 22\.6
40\. Comments on Staff n \. Staff in-put especiafly during the early stages of project
processing was sgnificanty lower than the average for the period: only 21\.1 s/w were utilized for
project preparation (through appraisal)\. This was pardy because the project was a repeaer project
a also becas Govermnent had made a reasonably thorough preparation prior to appraisal by the
Bank\. Similarly staff in-put for appraisal was quite low, only 37 staff-weeks, confirminkg the rapid
pace with which the project was processed - it took only 13 months between the time the project was
identfied and the time it was approved by the Board, as shown in Table 2 (Section III)\.
-21 -
Tae12\.Z MISSION DATA BY STAGES OF PROJECT
MIS MSO NNQ,QF
HE= PERONS I/ WEEKS
Rcoonss\. 6/84 2 (AGE) 2 Pormance Status2/
Ideatf\. 11/84 4(A,E,GE,VE) 1\.5
Appraisal 5/85 4(A,E,GE,VE) 2
TotalNo\. of S/W IntheField: 7\.5 G P M F
Spn\. I 1/86 2(A,GE 1\.5 1 NR 1 1
Spn\. II 11/86 2(A,GE) 2 1 NR 1 1
spn\. m 7/87 1(GE) 2 1 NR 1 1
Spn\. IV 2/88 2(GEA) 2 1 NR 1 1
Spn\. V 10/88 1(A) 1\.2 2 NR 2 1
Spn\. VI 11/89 1(A) 1 NA NA NA NA
SpaVI 5/90 1(A) 1\.5 1 1 1 1
Spn\. vm 11/90 2(A,GE) 1 1 1 1 1
1/ A= Architect; GE= General; E= Economist; VE= Technical/Vocadonal Educator\.
2/ G=General Status; P=Procurement; M=Management; F=Financial; NR=Not Rated;
NA-Not Avalable
- 22 -
A\. Migist of ria \. an 2 mn VOW fMFDPI:
1\. Mr\. Lk Moh Seretay for EScomic Aftd
2\. Mr\. M\. Ngldl Dirctor, Development Poram
3\. Mr\. J\.S\. Data Ptinoipal Fnanso Officer
4\. Mr\. Erio Odoti Senior Eoonomist (Sooil Socors)
S\. Mo\. Beatlioc Mea\. Plannig Officer
6\. Mr\. S\. K\. Siakwmava Sr\. Ptinoipal Acuntat
2\. Mnistrv of Educeation (MOMI):
1\. Mr\. P\. V\. Sephuma Deputy Permanent sewtay
2\. Mr\. Fabick M\. Mawela Chief EducaUon Officer (Secondazy)
3\. Dr\. Wlli Karow Chief Educaton Offica (Tecuhcal)
4 Mr\. P\. S\. Matis Atng Senior Padnng Officer
S\. Mr\. J\. Moepi Senior Educaton Officer (Techical
7\. Mr\. Niol Lindhardt Diector, Boipelego Education
1mpenzntao Uni
3\. AQMisr of Local oermn\.L&and and Housinuz (MLGLH)
1\. Mr\. L L\. Mukokomni Ag\. Permanet Seretauy
2\. Mr\. S\. B\. Nmang SeniorArchitect
3\. Ma\. Ciuderel Minea Fiance Officr
4\. Mrs\. A\. M\. Somolekae Prima Educaton Prouremet
Offiocr
S\. Mrs\. Bonny Molisiwa Senior P g Offcer
6\. Mr\. Per Sovang Planning Officer
4\. MWitr of Labor and Home Affairs
1\. Mr\. Mr\. Thenbo Lebango Commissioner of Labor
2\. Mr\. B\. R\. PaW Deputy Commisioner of Labor
3\. Ms\. G\. Muzila Ag\. Sr\. Pbnning Officer'
4\. Mr\. S\. Kebakdle Panning Offer
S\. Prolec lnatltlon
1\. Mt\. Heinrich King Prncipal, Maun VTC
2\. Mr\. Stee (Steve) H _edmater, Shawe CISS
3\. Mr\. Jurem Muler Principal, Palapy VTC
4\. Mr\. Fsher Muler Ass\. Pincipa, Play VTC
S\. Mr\. Hans Banspach Director, Madirlo Tlhiing and
Testing Centor
6\. Mr\. Mpaph Thbon Deputy Director, Madirelo TIC
7\. Mr\. 0\.G\. Paballwg Hadmaster, CISS, Pncsown
S\. Mr\. J\. Kabapetse Headm,aster Chambona CISS
9\. Mr\. A\. N\. Mudziag Hadmar, Metusha, CJSS
10\. Ms\. M\.K\. Moatawag Dputy Headmaster, Marang CISS
23 -
SUNK=R OF 0ClVq,S COMPLLISON BY YEAR
Total Comtoltion in A acmuated Peroentae bo Year flgefm
'pmnennnnq ________R\.E~JDD\.~A\.&!A91U9JI ______n
19_88 9_87J 1190
---e- -- -- e -
A ~jg~g~ - 25 25 SO 50 75 75 100 100 4SI Cls" rooms oonVlete
S2o10el In Deo 1990\. Planned
About 500 sohodule was followed
lessroome
d relaed
facm_ __ __
a Jiunb 20 8 40 40 s0 100 80 100 ANl 32 schoolsonmpbet in
R \.I Oeo\.1988 (following tarWt
1ohools sot after appraIsl)\.
About 31
schools of
fa_ _es \.
C Vooationai
-VTC Maun a30 40 100 86 100 Complete In June 188\.,
with a 15 months delay
^VTC
Plpy 25 0 70 75 100 100 \. \. \. Complete In May I PaS,
with 1 months de"a
ITTC 26 0 70 76 100 100 \. \. ComphtI in Api 1988, on
m - m m - m - - -~~~~~~~~~~~tm
-24-
Annex 3
plTUREMM N EDCT0IFO TE
NATIONAL NUDGET - 19851816 TRU 1990191
PULA 'Q
\. 1_ 1 \. ----- 1' loan
_ _ _ E 96 _xp_ EXP AV\.-IL ^ 9
1\. Headquarters 1,124 I1\.11 1,816 (1\.1) 1\.97201\.1) 2,484 40\.9) 3,920 (1\.03 3\.667 (0\.6
2\. T*chNo\. Ed 4\.826 (4\.6S 16\.084 (8\.9) 13\.847 (7\.41 it\.693 (\.63 20,368 (6\.0) 28,271 (6\.41
3\. numws 10\.087 49\.61 11,858 17\.01 a418 47\.21 16,S25 (5\.81 17,707 (4\.43 21,523 44\.9)
4\. Non4_ou 2\.237 42\.13 4\.240 12\.6) 2\.965 (1\.61 3\.768 41\.33 4,467 (1\.13 4,698 41\.1)
5\. COE 1\.373 11\.3) 2898 (1\.7) 3\.390 (1\.8 3\.296 11\.21 3,712 40\.93 S\.776 41\.33
6\. UTS 46,725 (43\.01 57\.026 (33\.73 72\.16 (39\.0 906\.433 (34\.3) 117\.665 (29\.21 159\.474 (36\.43
7\. P_$wy Ed 7,187 46\.71 8\.100 (4\.8 10\.860 46\.8) 18\.919 46\.7) 37\.346 49\.3) 26\.202 (60)
a SocondaryEd 19,276 168\.13 46\.037 (26\.7) 4S\.066 (24\.7) 85,031 (30\.6) 133\.535 (33\.21 117,843126\.91
9\. iaoer Ed 4,026 I3\.8) 6\.531 (3\.9) 6\.908 3\.2) 10\.397 (3\.7) 17\.249 (4\.31 14\.019 (3\.2)
10\. Udverdy Ed 10,660 (9\.9) 18\.448 t9\.71 15\.246 421 25\.962 19\.2) 4\.8 t11\.6S 66\.993 413\.0)
Totd EducatIon 106\.402 (100\.03 169\.035 166\.156 201,517 402\.904 48\.66
Total NWLl Budget 624,828 927\.416 1\.160,830 1\.599,196 1\.882440 2,422\.212
1% of hat Budget (17\.0) (18\.2) (16\.61 (17\.6) 421\.4) (18\.13
FOOWTNOTE
1\. U1S - Unfd TeachIn SepAo
2\. CDE * Cunlhdu m evlopm nd Evalwuton
3\. Expenue fgur am acbal\. except 1990/91
4\. V118 en kWdnuadet eaese for d mrwy, Sendat nd Teae EducaIon
6\. Natnl Budget fiuw cude Debt S n Pebnso ad _Orttl _rd _ _celeous whIbh b about 101 of totl Budget
~~~~i~<
Ia I
,i lliifi Eiiii XI
~ i
I~~ @ @i jijiZj ii|
111 I X I 't I I X ' | APPROVAL |
P107558 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB3443
Project Name
Education for All Additional Financing
Region
SOUTH ASIA
Sector
Primary education (70%); Pre-primary education (10%); Adult
literacy/non-formal education (10%); Sub-national government
administration (5%); Other social services (5%)
Project ID
P107558
Borrower(s)
GOVERNMENT OF NEPAL
Implementing Agency
Environment Category
[
]
A
[X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
November 7, 2007
Date of Appraisal
Authorization
October 3 , 2007
Date of Board Approval
December 6, 2007
1\.
Country and Sector Background
1\. The popular movement of April 2006
led by the Seven Party Alliance (SPA) and the
Maoistsbrought an end to the direct rule of the King, and reestablished democracy in
Nepal\. Subsequently, a Peace Agreement was signed between the SPA Government and
the Maoists ending the ten year old insurgency\. In December 2006 an interim
Parliamentincluding representation by the Maoistswas constituted, and in April 2007
an interim government including the Maoists was formed\. The next step would be
holding elections for a Constituent Assembly, which will have the mandate for drafting
the constitution and function as a Parliament
1
\.
The swift and impressive move towards
settlement of the conflict and the restoration of democracy have raised popular
expectations, however challenges still exist towards cementing this process\.
2\. In 2001, Nepal initiated reforms aimed at increasing the accountability of schools and
efficiency of investments following the Seventh Amendment of the Education Act passed
by the Parliament and demonstrating a rare consensus\. Despite the political instability,
these reforms have moved ahead and by now Nepal has already built an impressive track
record that includes: (a) formation of school management committees (SMCs)
accountable to parents - thus ending the political appointment of SMCs; (b) transfer of
1
Following a failure to reach consensus on the electoral system, the government, on October 5, announced a
postponement of the Constituent Assembly elections, planned for November 22\. Coming just over two weeks after
the Communist Party of Nepal-Maoist withdrew from the Council of Ministers, these events illustrate the continuing
fluid nature of the political situation in Nepal\. The ongoing special session of the interim parliament is expected to
resolve the deadlock either through a political compromise or a vote\. Announcement of a new election date --
possibly before April 2008 -- is also anticipated soon thereafter\. Notwithstanding the current setback, all sides
appear keen to emphasize that they continue to honor the Comprehensive Peace Agreement which the UN is
mandated to monitor\.
Page 2
public schools
2
to community management: to date 3,607 schools
or
over 13% of
public schoolshave been transferred; (c) per capita funding for non-salary costs
reducing the political influence in resource allocation; (d) disbursement of salary grants
to schools instead of supplying government teachers allowing schools to recruit teachers;
(e) funding of unaided schools improving equity, and encouraging communities to open
schools; (f) introduction of a grants manual for transparent allocation of resources; (g)
opening textbook printing and distribution to the private sector; (h) introduction of social
audit for strengthening accountability of schools to communities; and (i) shift from
implementation of development activities through dedicated project units to delivery
through the regular government administration\.
3\. Nepal has also made significant progress in terms of donor harmonization\. Building on
the success of the basket funding (pooled donor funding) approach adopted in the Basic
and Primary Education Project II (1999-2004)funded by Denmark, European
Commission (EC), Finland, Norway and the World Banka Sector Wide Approach
(SWAp) was adopted for Education for All (EFA) program through which seven donors
are pooling resources together with the government\.
2\. Objectives
4\. The original project development objective was to improve access to and benefits from
basic and primary education for children, especially from disadvantaged groups, and
from literacy programs to poor adults\. The project objectives and design have remained
un-changed\.
3\.
Rationale for Bank Involvement
5\. Nepal has been pursuing significant reforms in school education\. It is critical to help the
government to meet the financing gap in primary education to enable the government to
continue these reforms\. At this juncture, the World Bank is the only organization that can
mobilize significant resources to meet the funding gap\. In addition, the Bank experience in
supporting education reforms would be valuable for helping the government to further these
reforms\.
4\. Description
6\. The proposed additional grant would help fill the financing gap resulting from a cost
overrun of core project activities and scaling up of reforms for improved quality and
efficiency\.
7\. The original commitment to the Project was US$629 million, of which US$479 was from
the government and US$150 million from donors\. The cost of the program is now estimated
to increase to US$994 million\. To meet the financing gap of US$365 million, the government
2
In Nepal schools are classified into community and institutional schools\. Institutional schools, which are funded
privately, are called private schools\. Community schools are classified into aided and unaided schools\. Schools to
which government has supplied teachers are aided schools\. Unaided schools receive salary grants from the
government instead of teachers\. Aided schools are also referred to as public schools in this project paper\.
Page 3
has committed additional US$247 million, and it has been seeking support from donors to
meet the remaining gap of US$118 million\. The Asian Development Bank and UNICEF have
committed US$30 million and US$1 million respectively\. The proposed additional financing
of US$60 million from IDA will reduce the funding gap to US$27 million\. A significant
portion of this gap is likely to be met from the requested assistance from EC\.
8\. The major expenditures financed by the project are salary grants, non-salary grants,
scholarships, classrooms and other physical facilities, and incentive grants for attracting
schools to participate in reforms\. In spite of the significant increase in the project costs, the
structure of expenditures funded by the project will remain similar to the original structure\.
9\. Major reforms supported by the project are described in the box below\.
1\.
Salary grants
are provided to schools to recruit community teachers\. Empowering communities to hire and fire
their own teachers
as opposed to government supplying them with centrally recruited teachers- increases
teacher accountability, which impacts quality of education\. First introduced in 2003/04 in unaided schools
through the support from the Poverty Reduction Strategy Credit of the Bank, it was mainstreamed into the EFA
SWAp program in FY04/05\. This funding modality was spread to aided schools from FY05/06\. Already very
popular among the communities, this reform has proven to be highly effective and EFA plans to scale up the
impact by providing additional salary grants\.
2\.
Community Managed Schools (CMSs):
Started in 2002, the transfer of aided primary schools
to SMCs has been
a
radical reform\. To date, 3,607 schools have completed the process\. Community ownership empowers the
SMC (consisting of parents, other community members, teachers and a local government representative) with
various staffing and fiscal decisions\. Government of Nepal (GON) has set a target to transfer an additional
2,500 aided schools to community management in FY07/08, and recently announced a plan to bring all 7,000 or
so unaided schools to the fold of community-managed schools (CMSs)\. The transfer of management of aided
schools to the community was first supported through the Bank supported Community School Support Project
(CSSP) and later mainstreamed into EFA SWAp\. EFA additional financing is expected to disburse incentive
grants to about 16,000 schools\.
3\.
Per capita funding (PCF)
of salaries is a student enrolment-based funding (as opposed to teacherbased
funding) that is expected to enhance quality and efficiency through increased school choice (for children),
competition among schools, and efficient teacher deployment\. GON is introducing PCF based salary grants in
both unaided and aided community-managed primary schools from FY07/08\. PCF provides a major shift in
funding formula and mitigates political influence in resource allocation\.
4\.
Improved equity:
One of the major reforms of EFA in terms of improving equity in resource allocation is the
expansion of per capita non-salary cost grants
financing (NPR 300 per student per year on an average
equivalent to about US$4\.6 per student per year) across the country\. The number of recipients of these grants is
expected to increase by over seven million students\. An increase in the number of dalit
3
students and the
expansion of girls scholarships
to cover 50% of girls is expected to increase the number of scholarship
recipients by over five million\. To address the increase in enrollments the additional financing would support
construction of 8,000 additional classrooms\.
5\.
Opening textbook publication to private sector
:
Since the introduction of free textbooks for primary school
children, Janak Education Materials Center, a state owned enterprise, has been printing and distributing
textbooks\. To address the problem of the late delivery of textbooks,
GON has opened up printing and
distribution of textbooks to the private sector from FY06/07 in the eastern development region for grade 5
textbooks\. It will expand to grades 1 to 5 from FY07/08\.
5\. Financing
Source: (US$
million)
3
Lowest caste in the Hindu hierarchy of casts\.
Page 4
RECIPIENT 247
IDA Grant
60
Asian Development Bank
30
UN Children's Fund
1
Gap 27
4
Total 365
6\. Implementation
10\. The project is being implemented by the Department of Education\. The implementation
of the project has been satisfactory\. The
government has been always meeting its
commitment for co-financing EFA, and it has demonstrated reasonable implementation
capacity\. The absorption capacity of EFA has been high - using at least 95% of allocated
resources annually\. Adequate emphasis is being given to improving accountability and
governance, and particularly strengthening financial management\.
11\. The Parliament has enacted the Public Procurement Law that meets international
standardss, and the Government has subsequently approved the related Procurement
Regulations\. Procurements using International Competitive Bidding procedures financed
under the Grant shall be procured in accordance with the procedures in the Banks Guidelines
for Procurement under IBRD Loans and IDA Credits (May 2004, revised October 2006)
using the Banks Standard Bid documents\. All procurement through National Competitive
Bidding will be carried out following procedures prescribed in the above Law and
Regulations with the caveat that no preference of any kind will be given to any bidder\. A
Governance and Accountability Action Plan for the program has been prepared by the
government\.
7\. Sustainability
12\. The results of the revised economic analysis remain largely the same as for the original
project, and as such, the project remains economically justified\. Using the original analytical
framework and accounting for the additional project costs, the net present value is revised to
US$136 million from the original US$235 million\. Similarly, the revised internal rate of
return is estimated at 14\.2% from the original 16\.2%\. The revised fiscal analysis, assuming
that the benefits remain unchanged, indicates that the extra EFA costs are financially
sustainable\.
8\. Lessons Learned from Past Operations in the Country/Sector
13\. Significant reforms are possible even in an unstable political environment if beneficiaries
of the reforms could be rallied behind the reforms\. And social acceptance of reforms can be
enhanced by offering reforms as choices rather than imposing them\.
9\.
Safeguard Policies (including public consultation)
4
Significant portion of this gap is likely to be met by the European Commission\.
Page 5
14\. Safeguard polices triggered by EFA were as indicated in the table below\. No new
safeguard policies will be triggered by this additional financing\.
Safeguard Policies Triggered by the Project
Yes
No
Environmental Assessment
(
OP
/
BP
4\.01) [X]
[
]
Natural Habitats (
OP
/
BP
4\.04)
[
]
[
]
Pest Management (
OP 4\.09
)
[
]
[
]
Physical Cultural Resources (
OP/BP 4\.11
)
[
]
[
]
Involuntary Resettlement (
OP
/
BP
4\.12)
[
]
[
]
Indigenous Peoples (
OP
/
BP
4\.10)
[X] [
]
Forests (
OP
/
BP
4\.36)
[
]
[
]
Safety of Dams (
OP
/
BP
4\.37)
[
]
[
]
Projects in Disputed Areas (
OP
/
BP
7\.60)
*
[
]
[
]
Projects on International Waterways (
OP
/
BP
7\.50)
[
]
[
]
10\. List of Factual Technical Documents
1\. Education for All 2004-2009, Core Document, Ministry of Education and Sports,
November 2003\.
2\. Annual Work Plan and Budget of 2007/08, Department of Education\.
11\. Contact point
Contact: Rajendra Dhoj Joshi
Title: Sr\. Education Spec\.
Tel: 977-1-4226792
Fax: 977-1-4225112
Email: rjoshi@worldbank\.org
Location: Kathmandu, Nepal (IBRD)
12\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Page 6 | APPROVAL |
P057833 | Report No\. PID7359
Project Name Bangladesh-Air Quality Management (@)
Project (AQMP)
Region South Asia
Sector Environment
Project ID BDPE57833
Borrower Government of Bangladesh (GOB)
Implementing Agencies Ministry of Environment and Forestry
Department of Environment
Contact: Mr\. A\.R\. Khan, Director General
E-16 Agargaon, Dhaka, Bangladesh,
Tel: (880-2) 911-2490
Fax: (880-2) 911-8682
Email: doe@fsbd\.net
Date this PID Prepared February 15, 1999
Project Appraisal Date February 15, 1999
Projected Board Date May, 1999
Project Objectives
1\. The objective of this Learning and Innovation Loan (LIL) is to learn
about options and develop components of urban air quality management by means
of pilot activities and institutional support, with the ultimate goal of
reducing human exposure to vehicular air pollution in a cost-effective manner\.
The components are designed to promote generate consistent and reliable data,
develop institutional capacity for air quality management, test technical
options for financial, environmental and social viability, and raise
stakeholder awareness of the issues and options related to vehicular air
pollution\. The activities under this LIL focus primarily on Dhaka, with some
components replicated in other cities\.
Strategic Context and Sector Issues
2\. Rapid vehicular growth in the metropolitan areas of Bangladesh in recent
years has been accompanied by an associated increase in emissions of harmful
pollutants\. Public exposure to air pollution in Dhaka is estimated to cause
15,000 premature deaths and several million cases of sickness every year\. The
poor are particularly vulnerable to air pollution, due to above-average
physical exposure to air pollution\. Reducing urban air pollution and
associated health impacts in Dhaka have been identified as development
objectives\. At present, there is little knowledge about the extent of the
problem and essentially no air quality management system is place in
Bangladesh today to tackle air pollution\.
3\. Air pollution is by its very nature a cross-sectoral issue, arising from
the transport, energy, industry, commercial, and domestic sectors\. A more
traditional air quality
management system, based on better information, would tackle the key sources
simultaneously across all of these sectors\. However, vehicles constitute the
dominant source of air pollution in Dhaka--as there are no power stations,
significant industrial sources of emissions, or nearby deserts to cause dust
pollution (as in cities like Delhi)\.
4\. The key strategic choice made in this project is to proceed with a LIL
focusing on the transport sector in the absence of complete knowledge of air
pollution sources from other sectors\. It is argued that there is little risk
to this sectoral focus, on the basis that: (a) the economic profile of Dhaka
supports this strategic focus, and (b) the source assessment analysis
undertaken under the project will ensure that the full range of important air
pollution sources and control issues are better understood by the end of the
project\. Nevertheless, two hypotheses need to be tested during the course of
this LIL, i\.e\., that: (a) the return on emissions pollution reduction
measures in the transport sector is greater than in other sectors; and (b) the
return on emissions reduction measures focused particularly on two kinds of
vehicles--two-stroke three-wheelers and heavy-duty diesel vehicles--is greater
than for other types of vehicles\. The LIL is structured to fully address these
cross-sectoral issues\.
Project Description
5\. The project consists of two main components:
a\. Vehicle Emissions Reduction: Enforcement, Standards and Control This
component will support the role of DOE to revise vehicle, fuel and lubricant
standards; carry out vehicle spot-checking for emissions compliance; and
promote pilot technologies for emissions reduction in two-stroke engine and
heavy-duty diesel vehicles (e\.g\. lubricant upgrades; improved lubricant
delivery through either petrol station "premix" or "pumpless" lubricant
injection systems; regular maintenance; engine overhaul; and age limitations)\.
A simple in-use vehicle testing program will be established and launched in
cooperation with other departments to identify and control grossly polluting
vehicles\. The road side tests will focus on "smoke" from diesel and two
stroke engines and carbon monoxide from gasoline vehicles\.
b\. Air Quality Monitoring Air quality monitoring is an integral part of
an environmental management strategy\. The data collected are used in
evaluating current trends in air pollution and assessing the benefits of
control options\. The current preliminary level of monitoring needs to be
systematized and strengthened with quality control and assurance so that the
data obtained can be used for developing air pollution control strategies\. The
data obtained will be made available to the public, and all stakeholders will
be strongly encouraged to participate in finding solutions to controlling air
pollution\. This component will be undertaken in a phased manner to help ensure
that the rate of equipment acquisition is the same as that at which the
technical capacity necessary for its operation and maintenance is created\.
Laboratory facilities will be upgraded to support the program, and data
management and quality assurance programs will be adopted\.
Projects Preparation and Implementation
6\. The agency responsible for preparation and implementation of this project
is Ministry of Environment and Forest/Department of Environment (MOEF/DOE)\.
They will establish a Project Implementation Unit (PIU) which will work on
-2 -
improving air pollution monitoring and subsequent data analysis in close
collaboration with the Bangladesh Road Transport Authority (BRTA), the
Bangladesh Petroleum Corporation (BPC), the Bangladesh University of
Engineering and Technology (BUET), the Bangladesh Atomic Energy Commission
(BAEC), the Bangladesh Council for Scientific and Industrial Research (BCSIR),
the Bangladesh Standards and Testing Institute (BSTI), NGOs and others\. In
addition, a Project Implementation Committee (PIC) of key stakeholders will be
formed to facilitate project implementation and offer guidance\. The DOE has
drafted a project concept and implementation plans which will be submitted to
the planning department for approvals\.
Project Financing
7\. The project cost is estimated at about $5 million\. The financing plan is
approximately: IDA $4\.5 million equivalent and Government of Bangladesh US$
0\.5 million equivalent\.
Key Performance Indicators
8\. Success of the LIL will be defined in terms of the extent to which pilot
efforts have yielded results and various components of the air quality
management system have been put in place\. Indicators of success by the end of
the three-year project period are:
collection of consistent data on major air pollutants (in order to identify
future priorities for cost effective actions);
timely availability to the public of data on air quality and vehicular
emissions;
formulation of an air quality management plan;
testing of several control options and analysis of their cost-effectiveness as
well as social acceptability;
establishing enforceable vehicular emission and fuel standards, and lubricant
regulations;
improved enforcement of vehicular emission and fuel standards, and regulations
governing the quantity and quality of lubricants;
increased public awareness and involvement; and
greater institutional capacity to implement the air quality management plan in
Dhaka\.
Environmental Aspects
9\. No major negative environmental impacts are expected as a result of this
project\. This is an environmental project designed to reduce air pollution in
urban areas in Bangladesh\. It involves primarily capacity building and no
major construction activities are anticipated\. Hence, the environmental
category assignment for this project is "C"\.
Contact Point: The InfoShop
The World Bank
- 3-
1818 H Street, N\.W\.
Washington, D\.C\. 20433
Telephone No\. (202)458 5454
Fax No\. (202) 522 1500
Task Manager: Jitendra (Jitu) Shah
Telephone: 202 458 1598
Fax: 202 522 1664
Note: This is information on an evolving project\. Certain activities and/or
components may not be included in the final project\.
Processed by the InfoShop week ending March 5, 1999\.
- 4- | APPROVAL |
P095392 | Documentof
The World Bank
FOROFFICIAL USEONLY
ReportNo: 41115-EG
PROJECT APPRAISAL DOCUMENT
ONA
PROPOSED LOAN
INTHE AMOUNT OFUS$75 MILLION
TO THE
ARAB REPUBLIC OF EGYPT
FOR A
NATURAL GAS CONNECTIONS PROJECT
December 12,2007
SustainableDevelopment Department
Middle East andNorthAfrica Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without World
Bank authorization\.
CURRENCYEQUIVALENTS
(ExchangeRateEffectiveNovember9,2007)
CurrencyUnit = LE - EgyptianPound
LE5\.5 = US$1
US$0\.188 = LE1
FISCALYEAR
July 1 - June30
ABBREVIATIONS AND ACRONYMS
AfDB AfricanDevelopmentBank IFRS InternationalFinancialReporting
CAO CentralAuditingOrganization Standards
CAS CountryAssistanceStrategy IP IntermediatePressure
CFAA CountryFinancialAccountability ISA InternationalStandards onAuditing
Assessment JBIC JapaneseBank for International
CNG CompressedNaturalGas Cooperation
DA DesignatedAccount LDC Local DistributionCompany
EAS EgyptianAccounting Standards LNG LiquefiedNaturalGas
EGAS EgyptianGas HoldingCompany LP Low Pressure
EGPC EgyptianGas PetroleumCompany LPG LiquefiedPetroleumGas
EIB EuropeanInvestmentBank M3 Cubic meter
EIRR EconomicInternalRateofReturn mmbtu Thousand BritishThermal Units
ESIAF Environmentaland SocialImpact MoF Ministry ofFinance
AssessmentFramework MP MediumPressure
ESMAP EnergySector ManagementAssistance NCB National CompetitiveBidding
Program NPV NetPresentValue
ESMMF Environmentaland Social O&M OperationsandMaintenance
Managementand Monitoring PIU ProjectImplementationUnit
Framework PPIAF Public PrivateInfrastructureAdvisory
FY FiscalYear Facility
GASCO Natural Gas TransmissionCompany PPP Public PrivatePartnerships
GDP GrossDomesticProduct PRS PressureReductionStations
GOE GovernmentofEgypt RFPF ResettlementPolicyFramework
IBRD InternationalBank for Reconstruction ROSC-AA Report on Observanceof Standards
andDevelopment and Codes-Accounting& Auditing
ICB InternationalCompetitive Bidding SDB StandardBiddingDocuments
IFC InternationalFinanceCorporation SOE State OwnedEnterprises
WTP Willingness to Pay
Country Director: EmmanuelMbi
Sector Director: Inger Andersen
Sector Manager: Jonathan Walters
FOROFFICIAL USE ONLY
EGYPT, ARAB REPUBLIC OF
EGYPT-NATURAL GAS CONNECTIONS PROJECT
PROJECT APPRAISAL DOCUMENT
MIDDLEEAST AND NORTHAFRICA
MNSSD
Date: December 12,2007 Team Leader: Anna Maria Bjerde
Country Director: EmmanuelMbi Sectors: Oil and gas (100%)
Sector Managermirector: JonathanD\.Walters Themes: Access to urbanservices and housing
(P);Other economic management(P)
Project ID: PO95392 Environmental screening category: Full
Assessment
Lending Instrument: Specific Investment Loan
[XI Loan [ ] Credit [ ] Grant [ ] Guarantee [ 3 Other:
For Loans/Credits/Others:
Total Bank financing (USsm\.): 75\.00
Proposedterms: Fixed Spread Loan: 20 years maturity and 8 years grace period\.
FinancingPlan (US$m)
Source Local Foreign Total
Borrower (consumer participation) 78\.70 0\.00 78\.70
International Bank for Reconstruction and 13\.60 61\.40 75\.00
Development
Total: 92\.30 61\.40 153\.70
Borrower:
MinistryofInternational Cooperation
8 Adly Street
Cairo, Arab Republicof Egypt
Tel: (+20-2) 391-2815
ResponsibleAgency:
Egyptian Gas Holding Company (EGAS)
85 Nasr Road, 1st District
Cairo
Egypt, Arab Republicof
Tel: 202 264 2737 Fax: 202 405 5876
www\.egas\.com\.eg
This document has a restricted distribution and may be used by recipients only in the performance o f
their official duties\. Its contents may not be otherwise disclosed without World Bank authorization\.
Project implementationperiod: Start April 1,2008 End:April 15,2013
Expected effectiveness date: July 15,2008
Expected closing date: October 31,2013
Does the project depart from the CAS incontent or other significant respects?
Ref: PADA\.3 [ ]Yes [J]No
Does the project require any exceptions from Bank policies?
Ref: PAD D\.7 [ ]Yes [J]No
Have these been approved by Bankmanagement? [ ]Yes [J]No
I s approval for any policy exception sought from the Board? [ ]Yes [J]No
Does the project include any critical risks rated "substantial" or "high"?
Ref: PAD C\.5 [ ]Yes [J] No
Does the project meet the Regional criteria for readiness for implementation?
Ref: PAD D\.7 [/]Yes [ ] N o
Project development objective Ref: PAD B\.2, TechnicalAnnex 3
The project development objective is to (i)contribute to GOE's program o f switching
consumption o f liquefied petroleum gas (LPG) for natural gas through investment in new
connections; and (ii) the scale economies intransportation o f natural gas relative to LPG
exploit
invery denselypopulated areas, thereby reducingthe cost ofgas provision\.
Project description [one-sentence summary of each component] Ref: PAD B\.3\.a, Technical
Annex 4
The Project will support the Government's on-going program to expand the access to piped
natural gas in the Greater Cairo area where the feasibility study prepared by Town Gas has
estimated that approximately 2 million households can be connected to the network within a six
year program period\. This number has been determined based on criteria established for the
suitability o f connections taking into account issues related to safety and structural integrity o f
buildings\. Given that the works included in the program are part of the annual investments
planned by the existing local distribution concessionaire (Town Gas), the World Bank support
will focus on contributing towards a share of the investmentstargeted to connect about 300,000
households within Greater Cairo\. The project will include two components:
(a) Gas Transmission aiming at extendingthe existing gas transmission system by adding 37
kmofpipelines and 4 pressure reduction stations (PRSs) inthe Cairo areato provide additional
supplypoints andto improve reliability o f supply for the expansion ofthe distribution network\.
(b) Gas Distribution and Connection aiming at expansion o f the gas distribution system for
the connection of about 300,000 new customers, including the conversion o f the customers'
appliances to natural gas\. The Distribution and Connection component will allow transport o f
gas at the points o f delivery from the transmission network to housing areas, interconnect and
control pressure inIP/MP/LP mains and to deliver gas to each individual house\. The component
will also include the connection of new appliances and the conversion of existing appliances in
the customer household for the safe use o fnatural gas\.
Which safeguard policies are triggered, ifany? Ref: PAD D\.6, TechnicalAnnex 10
- EnvironmentalAssessment(OPBP 4\.01)
- CulturalProperty(OPN 11\.03, beingrevisedas OP 4\.11)
- InvoluntaryResettlement(OPBP 4\.12)
Significant,non-standardconditions, ifany, for:
Re$ PAD C\.7
Loan effectivenessconditions:
- SubsidiaryAgreement signedbetweenthe BorrowerandEGAS\.
Covenantsapplicableto projectimplementation:
- Agreement signedbetweenEGAS andTown Gas ("the Town Gas Agreement")\.
- EstablishmentofProjectImplementationUnit\.
- FormulationofProjectImplementationManual\.
CONTENTS
Page
A\. STRATEGIC CONTEXT AND RATIONALE \. 1
1\. Country and sector issues\. 1
2\. Rationale for Bank involvement\. 5
3\. Higher level objectives to which the project contributes \. 5
B\. PROJECTDESCRIPTION \. 6
1\. Lendinginstrument\. 6
2\. Project development objective andkey indicators \. 6
3\. Project components and cost estimates \. 6
4\. Lessons learned and reflected inthe project design\. 9
5\. Alternatives considered and reasons for rejection\. 9
C\. IMPLEMENTATION \. 1\.11
1\. Partnership arrangements (ifapplicable) \. 11
2\. Institutionaland implementation arrangements \. 11
3\. Monitoring and evaluation o f outcomes/results \. 12
4\. Sustainability \. 12
5\. Critical risks and possible controversial aspects \. 13
6\. Loadcredit conditions and covenants \. 14
D APPRAISAL SUMMARY
\. \. 14
1\. Economic and financial analyses\. 14
2\. Technical \. 17
3\. Fiduciary\. 18
4\. Social\. 20
5\. Environment \. 20
6\. Safeguard policies\. 24
7\. Policy Exceptions and Readiness \. 25
Annex 1:Countryand Sector Background: Structureof EgyptianGas Industry \.26
Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies \.28
Annex 3: Results Frameworkand Monitoring \. 29
Annex 4: DetailedProjectDescription \. 31
Annex 5: ProjectCosts\. 33
Annex 6: ImplementationArrangements \. 34
Annex 8: ProcurementArrangements \. 46
Annex 9: Economic and FinancialAnalysis \. 51
Annex 10: SafeguardPolicyIssues \. 60
Annex 11:ProjectPreparationand Supervision \. 84
Annex 12: Documents inthe ProjectFile \. 85
Annex 13: Statement of Loansand Credits \. 86
Annex 14: Countryat a Glance \. 88
Annex 15: MapsIBRD No 33400
\. \. 90
A\. STRATEGIC CONTEXT AND RATIONALE
1\. Countryand sector issues
Country issues
1\. Egypt adopted a comprehensive reform program in conjunction with significant changes in
the Cabinet in 2004\. The Government of Egypt (GOE) has made economic reform its key
objective, notably in areas such as finance, investment, trade and industry\. It has also stated its
keen interest in expanding public-private partnerships (PPPs) and undertaking public sector
reforms aimed at enhancing the provision o f public goods and services, including physical and
social infrastructure\. The reform program was largely formulated to address Egypt's concern
with the rising fiscal deficit, which rose from 3\.9% in its FYOO to 9\.6% inFY05 as well as to
stimulate growth and reduce poverty through structural reform\.
2\. Several reform measures have since beenimplementedto reduce the deficit over the medium
term\. These include increasing retail utility prices, such as electricity and gas prices, reducing
custom tariffs, reducing price controls and subsidies on basic products, including diesel-fuel\.
The reforms also emphasize greater participation by the private sector in meeting growth
objectives\. To enable this, a PPP Unit has been established in the Ministry o f Finance and the
privatization program has been strengthened and reorganized under the Ministry o f Investment
established inJune 2004\.
3\. The reforms have already shown results as the deficit as percentage o f GDP for FY07
dropped to 7\.5%\. The GOE plans to reduce it further by 1% per year for the next four years\.
Continued emphasis will be put on measures such as redesigning subsidies towards better
targeting, controlling growth inpublic sector employment and cutting unnecessary expenditures\.
Increased efficiency and performance o f utilities are also a major part o f the GOE's current
economic strategy\. Social dimensions remain a top priority on the Government's agenda and the
reforms must therefore be underpinned by a robust public safety net comprising o f various
subsidies, employment programs and cash transfers\.
Sector issues and Governmentstrategy
4\. Over the last decade, Egypt has confirmed significant reserves o f natural gas (1,930 billion
m3 o f proven reserves as o f June 30, 2006)' and over the last few years has become an
increasingly important natural gas exporter through pipeline infrastructure as well as Liquefied
Natural Gas (LNG) facilities on the Mediterranean coast\. By 2006, Egypt had become the 6th
largest LNG exporter in the world\. Natural gas i s also a very important fuel for the domestic
market, since about 80% o f Egypt's electricity production relies on natural gas\. There i s also a
large and growing demand for natural gas by industrial, commercial and household customers\.
Furthermore, Egypt i s now the world's eight largest compressed natural gas (CNG) user, with
103 stations currently operational and 70,000 vehicles converted as o f June 30,2006\.
5\. Increasing the household use o f natural gas i s a key priority for the Government o f Egypt,
given that it would replace consumption o f Liquefied Petroleum Gas (LPG), which is more
IEquivalentto 68\.2 trillion cubic feet\. SourceEGASAnnual Report\.
1
heavily subsidized and more expensive to transport on a very large scale\. The domestic LPG
price i s fixed at US$35/ton compared to an average border price o f US$506/ton in 2006\. Egypt
consumes more than 3 million tons of LPG per year, o f which approximately half has to be
imported\. In 2006, LPG subsidies cost the Government US$l\.7 billion (equivalent to 1\.6% o f
Egypt's GDP or US$4\.6 millionper day)\.
6\. For natural gas, the industrial customers currently pay an average o f US$l\.25/mmbtu\.
Households and commercial customers pay volume-related block tariffs ranging from
US$OSO/mmbtu to US$lS/mmbtu\. InAugust 2007, the GOE announced plans to eliminate gas
and electricity subsidies for energy-intensiveindustries (cement and steel) over the coming three
years to help reduce the budget deficit\. The price increase came into effect September 3, 2007\.
These plans bring the price o f natural gas for industrial consumers from US$1\.25/mmbtu to
US$2\.65/mmbtuY which i s in line with what the Government pays the upstream developers\.
After the initial three years, gas prices will be based on a formula that takes into account costs
and international prices, with a view to gradually phasing out energy subsidiesto other industries
over the next six years\. Electricity prices increased from US$2\.25/kWh to US$3\.62/kWh for
maximum voltage, US$2\.73/kWh to US$4\.41/kWh for high voltage, and US$3\.73/kWh to
US$6\.02/kWh for mediumvoltage customers\.
7\. Inorder to provide gas to the power sector and as a feedstock to industry, an extensive high
pressure transmission network has been developed in the N i l e Delta\.2 A low pressure
distribution network is developing inurban and semi-urban areas inthe Nile Delta concentrated
inandaroundthe cities o fCairo, Suez andAlexandria, which currently serves around 2\.4 million
industrial, commercial and residential customers\. However, the majority of residential
households inthe Nile Delta continue to use LPG to meet their domestic energy needs\. Inorder
to reduce the LPG subsidies, the Government o f Egypthas set an ambitious goal o f having a total
6 millionhouseholds connectedto the gas network by 2012\.
8\. In addition to the cost-sharing of the connection charge with consumers introduced a few
years agoY3these announced energy sector tariff increases will have a positive impact on the
levels of cost recovery inthe sector, and on the long-term financial sustainability o f EGAS, who
as the owner o f gas network assets, effectively finances and sustains the emerging domestic gas
network\. However, more remains to be done, since the tariff for householdusers has remainedat
the same level for the past ten years, mainly due to the fact that tariff increases to the household
segment remains a politically sensitive issue, and the recognized need to adopt robust safety net
mechanisms to ensure affordability of poor and lower income segments o fthe population\.
9\. In the mid 1990s, the sector was restructured to facilitate a more comprehensive roll-out o f
the Government's strategy to switch from LPG to natural gas\. At the same time, concession
areas were defined for the Nile Delta and agreements were reached with 9 Local Distribution
Companies (LDCs)\. There are now 11 LDCs with concessions that hold for 25 years\. Nine o f
the 11 companies are private and 2 are ownedby public shareholders\. The LDCs are essentially
service-providers responsible for extending access and providing operation and maintenance
* Other parts of Egypt outside the Nile Delta, including Upper Egypt, are currently not connected to the natural gas
network; however, some expansionplans exist\.
UntilthenEGAS paid for the connectioncharge ofLE2,500; US$438\. Today EGAS pays LE 1,000 andthe
customer pays the remainder,LE 1,500\.
2
(O&M) services, and they do not finance any investment in infrastructure\. All o f the assets,
including internal installations in buildings, belong to EGAS\. Based on a scheme introduced in
2005 to increase the incentives to roll-out connections, LDCs receive a commission rate, which
i s volume based and paid upon collection o f consumer payment o f invoices\. There i s cap on the
commission earnable per retail consumer (LE 1OO/consumer/year), which provides an incentive
to sell gas (at least untilthe cap i s reached)\.
10\. While the sector restructuringhas facilitated the development o f domestic gas infrastructure,
challenges remain to achieving the planned roll-out o f household gas connections to reach the
targeted six millionhouseholds\. The key challenges are:
0 Funding of the investments needed to meet the roll-out tareet\. To connect the remaining
approximate 4 million consumers, an estimated US$1\.7 billion4 in infrastructure investment
i s required\. This includes all equipment and services related to distribution, installation and
conversion o f appliances, but excludes any additional investment neededintransmission and
trunk infrastructure\. Investments in infrastructure are financed through the connection
charge\. Under the current connection policy, EGAS finances one third o f the connection
charge (LE 1,000) and the consumer the remainder (LE 1,500)\.
The significant investment needs places a large burden on EGAS' ability to approve the
expansion plans o f the LDCs\. To achieve the roll-out plan in a sustainable fashion and
preventingthe buildup o f extensivepublic debt, the Government i s keen on pursuingPPPs in
the sector\. A strategy for engaging with the private sector was developed with the assistance
o f the World Bank, and involves tendering new areas (Greenfield) to the private sector, and
potentially privatizing existing concession areas\. Further connections in existing concession
areas would, for the time being, continue to be supported through public funding
mechanisms, including long-term loans from international financing institutions and local
banks\. Implementing the PPP strategy successfully also requires further work on risk
allocation, subsidy requirements, bidding parameters, legal issues and sequencing o f the
tendering\. World Bank and the International Finance Corporation (IFC) support is being
provided to assist the PPP Unit inthe Ministry o f Finance to establish and develop capacity
(World Bank) to implement PPP transactions (IFC)\. The support includes addressing the
issues listed above for PPP in natural gas, as the Government i s keen to undertake a pilot
transaction for gas distribution\.
0 Continued subsidies on LPG\. Continued heavy subsidies on LPG (the alternative energy to
natural gas for households for cooking) seriously threaten the connection-rate among lower
income households (medium and high income households convert due to the higher
convenience and safety o f a gas connection)\. Low income households find the up-front
connection charge prohibitive\. However, connecting the lower income households i s very
important for achieving the fiscal benefits o f the roll-out program, as the poor tend to
consume larger quantities o f LPG due to their larger family size\. The recent introduction o f
consumer payment for the connection to natural gas has witnessedboth a delay and a decline
in the demand for connections among these consumers\. A Willingness To Pay (WTP)
survey, undertaken as part o f project preparation, showed that while the lowest income
4 million * LE2,500 (US$438)\.
3
groups all expressed a desire to be connected to the network, quoting benefits such as
convenience, safety and reliability, they may not be able to connect, if it results in a
substantial increase in monthly payments compared to the current spending on LPG
(currently rangingfrom LE 8 to LE 24 depending on distributor)\.
To ease the impact o f the connection charge, consumers can pay the connection charge in
installments through loans from local banks\. However, the financing costs are high and add
up to a greater monthly charge than the average monthly cost of the LPG; LE 21 at the
prevailing interest rate o f 11\.5% for the connection and an additional LE 5 to LE 9 when
taxes and natural gas consumptioni s added; i\.e\., a total o fup to LE 3O/month\.
Some low income consumers manage to pay the connection charge through a pooling o f
funds among each other, whereby each household receives funding assistance from its
neighbors to connect to the network\. This was found inthe WTP study to be quite prevalent
inthe targeted areas under the project\. An additional measure that is being considered is a
targeted government subsidy to eligible low income consumers through the removal o f the
interest charge on installments\. This would reduce the monthly payment o f the connection
charge from about LE 21 to about LE 12\.5, and would bring it closer to the current spending
on LPG\.
A comprehensive EnergyPricing Strategy is about to be launched with the assistance o f the
World Bank and the Energy Sector Management Assistance Program (ESMAP)\. The
strategy will recommend a price adjustment implementation path with associated social
protection mechanisms\. LPG is included inthe scope o f the study\. Worldwide experience,
however, shows that LPG i s commonly subsidized given that it i s widely usedby the poor\. It
i s also a difficult fuel to target subsidies for given the nature o f how it i s supplied\. The
Government recognizes the challenge to the roll-out o f the gas connections program under
continued subsidies for LPG\. The plan i s to gradually replace the use by converting
consumers and making it financially attractive, if not neutral, for those consumers who have
affordability and willingness to pay issues\. LPG consumption will not be eliminated
completely in Egypt, nor will the subsidies on this energy product, but reducing its use
through conversion to natural gas will have bothfiscal as well as other welfare benefits\.
Need to develop the gas infrastructure in Upper Egypt\. To date much o f the focus has been
on infrastructure development inthe Nile Delta and natural gas export facilities\. However,
Upper Egypt remains an important part o f Egypt to develop to achieve the penetration of
natural gas usage in the domestic market as planned\. However, the area lacks significant
trunk infrastructure, a prerequisite for development o f the distribution network\. Besides
contributing to meeting the 6 million household connections target, developing the
infrastructure in Upper Egypt will assist in meeting socio-economic development goals o f
this region where the poverty incidence is high and economic growth potential challenging
and un-tapped\. Preliminary development plans exist, but more detail infrastructure
development and roll-out plans are necessary, including assessment o f necessary population
density, along with assessments of investmentneeds, financing, role o f private sector as well
as potential market arrangements (e\.g\., concessions via existing or newLDCs)\. The Ministry
o f Petroleum and EGAS are currently developing these plans and the Bank team i s providing
assistance inthe review o fthe plans\.
4
2\. Rationale for Bank involvement
11\. The Bank is well positioned to assist the Government in reaching its goal o f converting
households from LPG to natural gas given its advisory role in policy issues related to energy
subsidies, pricing and how to engage with the private sector through technical assistance to the
PPP unit in the Ministry o f Finance (MoF)\. More specifically, a review o f subsidies and the
development of appropriate social safety nets was completed in September 20055and follow-up
work i s planned for FY08\. In addition, the Bank has financed, through the Energy Sector
Management Assistance Program (ESMAP), a study to determine the economic cost o f gas
which served as the basis for the recent GOE announcement to increase natural gas and
electricity prices and phase-out energy subsidiesto industries over the nextthree to six years\.
12\.At present the Bank, through ESMAP, i s assisting the Government informulating an energy
pricing strategy covering all energy products and ensuring that the social safety net i s robust and
well targeted to support price adjustments\. The Public Private Infrastructure Advisory Facility
(PPIAF) i s also financing technical assistance to enhance the capacity within the PPP unit inthe
MoF inimplementingthe Government's ambitious PPP agenda\.
13\. The Bank has found that its ability to effectively advise on the management o f resources in
the Egyptian energy sector depends on establishing the Bank as a long-term reliable partner in
the sector\. Lendingprovides a framework and discipline for that partnership\.
14\. Although there i s no specific technical assistance component proposed to accompany the
investmentsof the proposed project, the Bank is well positioned to advise on sector policy and
market development issues that the Government i s confronting in its effort to reach its roll-out
targets throughout Egypt and develop the sector\. Inthis context, lessons learned under the Egypt
Gas InvestmentProject6 (see section By4) have been leveraged in the project design as has the
Bank's global knowledge on gas market development (e\.g\., Turkey, IndonesiaandVietnam)\.
3\. Higher level objectives to which the project contributes
15\. Conversion to piped natural gas will contribute to higher welfare among consumers inEgypt
by reducing the cost and increasing the convenience and reliability o f energy supply, as well as
enhancing safety\. The Government o f Egypt has made substantial progress since it discovered
natural gas, as evidenced by its position on the LNG world market, the commissioning o f the
Arab Gas Pipeline, the fuel switching that has taken place inthe power sector and the trunk gas
network in place in the Nile Delta\. The proposed financial assistance to expand the existing
network and increase the number o f households connected to the natural gas distribution network
will support the Government's strategy to utilize its natural gas resources and reduce its fiscal
deficit through subsidy savings\. The recent gas price increases to industry and future price
reform from the Energy Pricing Strategy will also contribute to improved efficiency o f gas
utilization\.
16\. The project i s therefore expected to contribute to the goals articulated in the Country
Assistance Strategy (CAS) for Egypt, which include enhancing the provision o f public goods
Egypt: Toward a More Effective Social Policy: Subsidies and Social Safety Net, World Bank, September2005
The project closed on June 30, 1999 and the Implementation Completion Report was issued in December 1999
5
through, inter alia, modernized infrastructure services to achieve higher growth and i s in line
with the Bank's InfrastructureAction Plan, approved by the Board in2003, which calls for more
responsiveness to client demands for infrastructure given the central role o f infrastructure inthe
economic growth and poverty reduction process\.
B\. PROJECT DESCRIPTION
1\. Lendinginstrument
17\. Specific Investment Loan\. The Borrower has requesteda Fixed Spread Loan (FSL), with a
20 year maturity, an eight-year grace period and level repayments\. The Loan will be
denominated inUS Dollars\.
2\. Projectdevelopmentobjectiveand keyindicators
18\. The project development objective are to (i) contribute to GOE's program o f switching
consumption o f liquefied petroleum gas (LPG) for natural gas through investment in new
connections; and (ii) the scale economies intransportation o f natural gas relative to LPG
exploit
invery denselypopulatedareas, therebyreducingthe cost o fgasprovision\.
19\. Key proposed indicators include:
0 Annual number o f connections achieved compared to plan;
0 Reductiono f LPG consumptioninthe target area (todyear); and
0 Annual savings from reduced subsidiesfor LPG (LE and US$/year)
3\. Projectcomponents and cost estimates
20\. The Project will support the Government's on-going program to expand the access to piped
natural gas in the Greater Cairo area, where the feasibility study prepared by Town Gas has
estimated that approximately 2 million households can be connected to the network within the
six year program period\. This number has been determined based on criteria established for
suitability o f connections taking into account issues related to safety and structural integrity o f
buildings\. Given that the works included in the program are part o f the annual investments
planned by the existing local distribution concessionaire (Town Gas), the World Bank support
will focus on contributing towards a share of the investments targetedto connect about 300,000
households within Greater Cairo\.
21\. The project will include two components: (a) Gas Transmission aimed at extending the
existing gas transmission system by adding 37 km o f pipelines and 4 pressure reduction stations
(PRSs) inthe Cairo area to provide additional supply points and to improve reliability o f supply
for the expansion o f the distribution network; and (b) Gas Distribution and Connection aimed at
expansion o f the gas distribution system for the connection o f about 300,000 new customers,
including the conversion o fthe customers appliances to natural gas\.
22\. The expansion program (2008 - 2012) \.for connecting 2 million new customers i s estimated
to cost US$921 million\. As requested by the Government, the World Bank will contribute with
6
financing of US$75 million equivalent towards the cost of goods requiredfor the implementation
of a portion o fthe expansionprogramaimedat connecting 300,000 households\. The total cost o f
connecting 300,000 households i s estimated at US$153\.7 million, including the cost o f
implementation o f the Environmental and Social Monitoring and Management Framework
(ESMMF) estimated to beUS$0\.85 million\.
23\. The Gas Transmission component o f the program is estimated to cost US$14\.2 million and
includes:
0 Pipelines: El Haram: 5 km o f eight inch pipe (30 - 70 Bar); El Tebbin: 1 km o f twenty
inchpipe (30 - 70 Bar) and 1 km of six inchpipe (30 Bar); and New Cairo 30 km of
twelve inch pipe (30 - 70 Bar)\.
0 PRSs: ElHaram: 40,000 m3per hour; ElTebbin: 30,000 m3per hour and 10,000 m3per
\. hour; andNew Cairo: 60,000 m3per hour\.
24\. The Gas Distribution and Connection component i s estimated to cost US$138\.65 million and
includes:
0 Implementation o f intermediate pressure (IP) mains (7 bar o f pressure), mediumpressure
(MP) mains (4 bar) and low pressure (LP) mains (100mbar) for a total length o f about
1,284 km\.
0 Installation o fpressure control units\.
0 Installation o f connection kits (including the gas meters)\.
0 Conversion of customers' appliances to the use o f natural gas for about 300,000
households\.
25\. The Distribution and Connection component will allow transport o f gas at the points of
delivery from the transmission network to housing areas, interconnect and control pressure in
IP/MP/LP mains and to deliver gas to each individual house\. The component will also include
the connection o f new appliances and the conversion of existing appliances in the customer
household for the safe use o fnatural gas\.
26\. It i s important to note that gas mains networks are always planned and designed on a
medium- to long-term basis to ensure that an appropriate "backbone" system of larger diameter
pipes optimal for the medium- to longer-term view is developed\. Without such an approach,
duplicate pipes would be installed to provide the capacity requiredfor future development\. As
such, some o f the material included in the proposed project i s an early part o f a larger roll-out
program\. Inother words, the distribution network to be installed could connect more customers
dependingonthe pace o f consumer demand inthe project-targeted areas\.
27\. The distribution and connection charges have been estimated by EGAS and Town Gas and
are recorded in the concession agreement which exists between them\. This provides for fixed
payments to Town Gas for each domestic connection completed by them and includes the costs
7
o f all distribution, installation and conversion costs incurred\. The rates, which are nominal
averages, charged by Town Gas are shown inthe table below\.
-
Item Components Rate Paid (LE
Egyptian Pounds)
Mains (MP & LP)
Services (external)
Distribution 760
City Gate Stations
Governors
Risers & Laterals
Installation Meters 1510
Internal pipework
Appliance connections
Conversion Appliance conversion 230
Flue upgrading
TOTAL 2500
28\. The program also covers the connection o f commercial and industrial consumers within the
areas where the distribution system i s being developed\. However, since the cost of these
connections i s paid 100% by the consumer, they have not been considered in the capital
expenditureestimates\.
29\. According to current practice in the sector, EGAS i s responsible for distribution and
transmission investments and all network assets belong to EGAS\. Throughout Egypt, a fixed
charge o f LE 2,500 i s collected by the local distribution companies for connecting a household
(this sum includes distribution, connection and conversion of appliance), for which EGAS
provides LE 1,000 (or 40%) per connection, and the consumer i s requiredto pay the remaining
LE 1,500\.
30\. Based on current cost estimates, the material cost for the transmission and distribution
network to be built with financing from the World Bank loan (which in turn i s being made
available to Town Gas to procure material) i s equivalent to approximately LE 1,300 per
connection (based on 300,000 connections)\. This is higher than EGAS' normal share o f the
connection charge\. This i s acceptable to EGAS since the network provides greater capacity than
that required for just 300,000 connections, and EGAS will retain a performance guarantee until
Town Gas connects to the network approximately 385,780 consumers in the targeted area, a
number that will ensure EGAS has contributedthe equivalent ofLE 1,000 per connection\. This
practice has beenimplementedinthe past and no problems have arisen from it\.
31\. Town Gas estimates for the cost o f materials are based on actual project quantities, based on
their experience\. This information has beensummarized and is presentedinthe tables attached
inAnnex 5\.
8
4\. Lessons learnedand reflectedinthe project design
32\. The proposed project builds on lessons learned from the Egypt Gas InvestmentP r ~ j e c t \.The ~
project was rated Satisfactory with physical implementation, including number o f connections,
exceeding appraisal expectations, and the studies undertaken as part o f the project providing
important input to revision o f gas tariffs\. The lessons learned from the project include the need
for (i)careful review o f the cost benefit o f gas distribution projects to ensure economic
justification (i\.e\., volume sensitive) and the need therefore o f networks to accommodate larger
consumers o f natural gas; and (ii) paying clase attention to institutional development during
supervision, which tends to take longer and requires consistent dialogue and policy advice\.
Other Bank-financed gas projects also highlight the need for locally-accepted mechanisms to
ensure lower income households connect to the network that i s constructed\.
33\. The proposed project design also relies on the track record on the ground by the connections
achieved to date in Greater Cairo as implemented by Town Gas\. Egypt has adopted UK
Standards for all transmission and distribution activities\. These standards are contained in the
Recommendations o f the Institution o f Gas Engineers and Managers (IGEM) and are supported
by and cross-referenced to the publications o f British Standards Institution (BSI), American
Standards such as API, ASME etc\. and also the international standards bodies such as I S 0 and
DIN\. Evidence from site-visits during preparation indicates that EGAS and Town Gas follow
these standards, and that safety i s taken very seriously; this i s borne out by the results they have
achieved with only one incident reported in the last 5 years\. The Safety Department in EGAS
monitors the performance of the whole Gas Industry from the upstream production facilities to
the domestic utilization\.
5\. Alternatives consideredand reasons for rejection
Technical options
34\. Two alternative fuels could be considered for comparison purposes with the proposed
expansion o f natural gas distribution included in this project: (i) continue with LPG as current
practice, or (ii) convert to electricity\. Eachi s considered inturn below:
(i)LPG
35\. A large share o f LPG consumed in Egypt i s imported and its costs are subsidized by the
Government to ensure that it i s affordable by the lower income groups; however, there i s no
differentiation and everyone, including higher income households, benefits from the subsidy\.
Introduction o f less subsidized piped natural gas to replace LPG will help to lower the overall
level o f energy subsidies and reduce the import o f LPG\. Subsidies can be lower for piped gas
because there are economies o f scale intransportation by networks in highly densely populated
areas as compared to distribution o f bottled gas, and because transportation costs for imported
gas are considerably greater than for domestic gas\.
The project closedonJune 30, 1999 andthe Implementation CompletionReportwas issuedin December 1999
9
36\. In addition, the proposed project i s expected to produce very positive improvements in gas
utilization safety\. In the natural gas industry in Egypt, appliance standards, fitting and
conversions are strictly controlled and only trained and qualified people are allowed to carry out
installation\. In the case of LPG, this does not apply, so the conversion of existing LPG
appliances helps to eliminate existing unsafe installations as well as expansion o f unsafe use o f
LPG\.
37\. Unsafe practices associated with bottled LPG are also eliminated, such as the need to carry
the relatively heavy cylinders to apartments, the storage of those cylinders containing gas under
significant pressure (up to 15 bar) within householdpremises, the needto exchange cylinders on
a regular basis (it was noted that the LPG cylinders in use do not have the modem safety
connections used inEurope, for example, which have been introducedto minimize the escape o f
gas during change-over) and other safety benefits, such as the relative density of the two gases
(natural gas i s lighterthan air and disperses readily to the atmosphere if it leaks, whereas LPG i s
heavier than air andtends to settle inpockets at low points withinbuildings)\.
38\. A further issue observed in the use o f LPG in Egypt is the delay during change-over o f
cylinders, which can be a problem inwinter time when demand i s higher and cylinder shortages
can occur\. This results inother appliances beingused for standby until a replacement cylinder i s
available - e\.g\., a small stove fuelled by kerosene, which i s a significant fire hazard\. Natural gas
offers continuity o f supply thus eliminating these problems\.
39\. An additional environmental benefit i s also gained by the elimination of the needto transport
LPG, both inbulk (by road or rail) from the import terminals to the bottling plants and then the
transportation o f the bottles from there to the points o f use, which i s almost entirely done by road
transport\. Elimination o f all this transportation i s also a positive safety benefit, mainly because
o f the risks o f damage, leakages, fires or explosions, which could result from a transport
accident\.
(ii)Electricity
40\. The second alternative is to convert all homes to use electricity for cooking and water
heating\. While electricity is more efficient at the point o f use, there are considerable
inefficiencies inpower generation from fossil fuels with about 50% efficiency if combined cycle
plants are available\. Additional power stations would be needed to cope with the additional
demand created by utilization o f electricity in homes, and that power would be generated by
natural gas anyway\. Power losses in transmission and distribution are also significantly higher
than their natural gas equivalents, which would add to the overall inefficiency o f its utilization\.
41\. The project team was also advised that, culturally, Egyptians would be reluctant to accept
forced switching to electricity for cooking\. Their preference i s to cook over a flame due to the
effect the fuel has on the taste and consistency o f the food\.
(iii)OtherPossibilities
42\. The only other additional possible alternatives would be kerosene or fuel wood, which are
unacceptable for environmental and safety reasons\.
10
Institutional Options
43\. Interms o f project design - and given the restructuringthat has taken place inEgyptwith the
establishment o f 11 concession areas served by LDCs under 11 concession agreements - the
option o f setting up a financial facility administered by a financial institution to which the LDCs
would compete for funds was considered\. The advantage o f this approach would be fair access
to funds by all LDCs (public and private) based on ability to implement and least-cost
connection cost\.
44\. This option was discussed indetail with key stakeholders and was deemed to be interesting,
but not practical at this point intime, given: (i) level o f requiredtrunk infrastructure is most
the
complete inCairo; (ii) a significant portion o f the targeted 4 million customers are inthese areas;
(iii) areasareprimarilyservedbyTownGasastheconcessionaire; and(iv)TownGashas
these
a long-standing track record, and increasing connections in its concession area i s considered to
be the fastest approach to reach target connections within the stated period; the latter being
important to reach the project development objective o f reducing energy subsidies\. Having said
that, EGAS will continue to approve expansion plans by the other LDCs at a rate its financial
resources enables it to do\. Future schemes under PPP arrangements will also contribute to
meetingthe roll-out targets\.
C\. IMPLEMENTATION
1\. Partnershiparrangements(if applicable)
45\. Preparation funds from the Japanese Poverty Reduction and Human Development
FacilityFund (PHRD) were granted to EGAS to facilitate preparation o f the required
Environmental Impact Assessment and to assess the feasibility by the household customers to
connect from an affordability and willingness to pay perspective\.
46\. The European InvestmentBank (EIB) has financed main transmission pipelines in Egypt in
recent years and other lenders have recently been approached to contribute to the Greater Cairo
project\. The Greater Cairo project comprises the connection of an estimated 2 million
households, and the World Bank financing under this project will finance a slice o f the overall
investmentsrequiredto reach an estimated 300,000 connections\. Other lenders may contribute
with parallel financing\. Additional high capacity network investment will be needed in Upper
Egyptto facilitate fuel switching inthis area\.
2\. Institutionaland implementationarrangements
47\. EGAS i s the beneficiary o f the World Bank loan as it owns all assets inthe natural gas sector
and is mandated to finance material costs related to extending the network\. Town Gas i s one o f
several LDCs which, under concession arrangements, construct, operate and maintain the
networks\. EGAS will therefore bear the loan to undertake the investments, and will generate
revenues from the sale o f gas\. The cost o f expandingthe network will be covered through these
revenues as well as - until domestic prices are more cost-reflective - some cross subsidization
from other revenues\.
11
48\. Town Gas will assist EGAS in the implementation o f the project as the L D C with the
concession in Greater Cairo\. In this capacity, Town Gas, against the connection charge and a
compensation for O&M based on the volume o f gas supplied, will procure, install and service the
gas distribution and connection network\. The connection charge has been deemed to adequately
cover Town Gas's construction costs and EGAS i s insulated from construction risk since it pays
a flat fee per connection\. During operations, EGAS collects revenues from the sale o f natural
gas and Town Gas i s compensated for O&M based on the volume o f gas supplied, and as such,
Town Gas i s bearingsome risk ifthis service fee i s inadequate to cover their operating costs\. To
date, Town Gas has not asked for the service fee to be reviewed and has indicated that the
arrangement i s financially adequate\.
49\. There will be a Loan Agreement between the Government o f Egypt (Ministry o f
International Cooperation) andthe Bank, and a Project Agreement betweenEGAS and the Bank\.
By virtue of a Subsidiary Agreement betweenthe GOE and EGAS, the GOE will on-lend the
Bank loan proceeds to EGAS\. To establish and solidify the role o f Town Gas in project
implementation, an agreement (the "Town Gas Agreement") will be established betweenEGAS
and Town Gas\. This agreement whose terms and conditions will need to be satisfactory to the
Bank, will detail the implementation arrangements for the different activities under the project\.
The project will be implementedbetween2008 and 2013\.
50\. A Project Implementation Unit (PIU) will be established in Town Gas staffed by a technical
engineer, a procurement coordinator and a financial management expert\. Procurement o f the
goods o f the project will be undertaken as part o f Town Gas routine procurement (see Section D\.
3\. Procurement)\. The PIU will be responsible for the implementation o f the proposed project,
including day-to-day implementation, financial recording and reporting, and will ensure that the
bidding process for the materials financed under the project i s carried out inaccordance to World
Bank guidelines\. EGASwill appoint a technical and financial specialist to liaise with the PIU as
necessary and for reporting purposes vis-a-vis the World Bank\. A Project Implementation
Manual to be prepared by Town Gas will aide the implementation of the project in accordance
with WorldBank fiduciary and reportingrequirements\.
3\. Monitoring and evaluation of outcomeshesults
51\. EGAS and Town Gas will monitor the progress against submitted and approved expansion
plans\. The key performance indicator will be number o f connections per year compared to plan
(see Annex 3)\. Data and statistics on actual project output and outcomes will be gathered,
analyzed, and included in the periodic progress reports to be submitted to the Bank\. Based on
the periodic reports and outcomes ofthe supervision missions, measures will be taken to ensure
the project is completed without delay and achieves its plannedoutcomes\.
4\. Sustainability
52\. The Government's commitment to the conversion to pipednatural gas i s strong, as evidenced
by the substantial progress made over the last decade\. Both EGAS and Town Gas have gained
valuable experience in managing connection expansions and have established a good track
record\.
12
53\. Other conditions for sustainability include the ability and willingness o f customers to be
connected to pay for their share (e\.g\., the LE 1,500)\. A willingness to pay (WTP) study to assess
lower income household's ability to pay was carried out during the course of preparation\.
According to the WTP study, the lowest income groups may not be able to connect, if it results
in a substantial increase in monthly payments compared to the current spending on LPG
(currently ranging from LE 8 to LE 24 depending on distributor)\. At the moment, some low
income consumers overcome this by pooling funds among each other, whereby each household
receives funding assistance from its neighbors to connect to the network\. This was found inthe
WTP study to be quiteprevalent inthe targeted areas underthe project
54\. Consumers can also pay the connection charge ininstallments through Bank loans facilitated
by Town Gas during the gas connection application process\. In most cases, lower income
households choose a 10 year repayment plan, which translates into a monthly payment o f about
LE 21 at the prevailing interest rate (11\.5%)\. The total cost, including taxes and natural gas
consumptioni s likely to be around LE 26 to LE 30 per month\.
55\. EGAS has indicated its interest inhaving the LE 1,500 charge uniform to all consumers, as a
way to ensure a consistency in its message to the public that the policy change on connection
charges i s permanent\. Besides the pooling arrangement described above, an additional measure
i s being considered\. This measure comprises a targeted subsidy to eligible low income
consumers through the removal o f the interest charge on installments\. This will reduce the
monthly payment o f the connection charge from about LE 21 to about LE 12\.5, and will bring it
closer to the current spending on LPG\. Eligible consumers will most likely be identifiedbased
on their geographical location and levels o f expenditure on electricity, both o f which are required
as evidence in the application process and deemed the most feasible eligibility criteria by the
WTP study\.
5\. Critical risks and possible controversial aspects
Risk RiskRating I RiskMitigation Measure
Achievement of Project Development Objei ive
Poor uptake by householdsto be connected M At present, there is awaiting list for customersto
to the distribution network\. be connectedindicating significant interest\.
However, with the recent introduction of acharge
for the householdportion, Town Gas has witnessed
a slowing down inthe contractssigned for a
connectionamong the lower income households\.
This will be mitigated through expected continued
pooling ofresourcesas is practicedby the low
income householdstoday and possibly targeted
assistanceto eligible consumersthrough waived
interest payments on connectionspaid in
installments\.
Achievement of ComponentResults
13
The non-householdconsumers are not M The power sector will continueto use gas andthe
connected within the projectedprojectperiod Governmento fEgyptis developingits public
resultinginhighcapital investmentsto privatepartnership, particularlyinthe fertilizer
connect households industry, onthe availabilityo f naturalgas to
investors\.
OverallRiskRating M
6\. Loadcredit conditions and covenants
Effectiveness Conditions
0 Subsidiary Agreement signedbetweenthe Borrower and EGAS\.
Other [classifu according to covenanttypes used in the Legal Agreements\.]
LegalCovenants (to be determinedat Appraisalbut likelyto include):
0 Agreement signedbetweenEGASand Town Gas ("the Town Gas Agreement")\.
0 Establishment o fProject Implementation Unit\.
0 Formulation o f Project ImplementationManual\.
D\. APPRAISAL SUMMARY
1\. Economic and financialanalyses
Economic Analysis
56\. The economic analysis assesses the benefits and costs to Egypt from developing gas
infrastructure capable o f supplying gas at various off-take points, including households in the
Greater Cairo geographical area\. The analysis has been carried out at two levels: (i)at the
GOE's Program Level, where the natural gas distribution network will be built to connect a
about 2 million households, as well as commercial, industrial and transport users, and (ii) at the
project level, where the economic benefits and costs are based on the project cost and the
anticipated households to be connected under this project, as well as a smaller number o f
commercial, industrial and transport users\.
57\. At the GOE's Program Level, economic benefits are derived from savings incurred from
displacing household consumption o f imported LPG, transport sector consumption o f
domestically-refined gasoline, and industrial consumption o f mostly imported diesel\. Economic
costs comprise o f the construction and conversion cost o f connecting all customer groups to the
natural gas network, the additional O&M costs for the transmission and distribution network to
serve the targeted market and the opportunity cost o f natural gas\.
58\. The cost o f natural gas used in the calculations i s US$3\.65 per mmbtu,* which reflects the
opportunity cost o f the natural gas that is consumed domestically based on a recent study
Source:Egypt: Economic Costs of Natural Gas EconomicConsultingAssociatesandParsonsBrinckerhoff,2007\.
-
14
completed on the economic cost o f natural gas in Egypt\. Using a 10% discount rate, the
economic rate o f return (EIRR) o f the program i s about 24\.8%, and the present value o f the net
economic benefits amounts to LE 3,245 million (US$569 million)\. Sensitivity analysis on
selected variables indicates the program level's robustness to a number o f adverse scenarios:
NPV@ 10%
Scenario EIRR(Yo) Opportunity Cost of
Capital(LE million)
Base case 3,245
ConstructionI conversioncost +25% 2,336
Opportunity cost ofnatural gas +25% (from $3\.65/MMBtu) 20% 2,159
LPG import price -25% (from $506 per ton delivered) 15% 1,036
Total average gas consumptionvolume -25% 17% 1,503
59\. At the Project Level, the net economic benefits are derived from the household connections,
and a smaller number o f commercial, industrial and transport users under the project\. The EIRR
amounts to 46\.5% and the net present value i s LE 1\.69 billion (US$296 million)\. The EIRR i s
substantial because o f the lower construction expenditures associated with the household
connections and the front-loaded conversion o f industrial and transport users\. The detailed
economic analysis and its assumptions are presentedinAnnex 9\.
Financial Analysis
60\. EGAS was established in 2001 as a state holding company, responsible for representingthe
Government's interest in the gas network and also for the further development o f natural gas
markets both domestically and for export\. Currently, EGAS holds the Government share in a
numberofjoint venturesincluding gas field development, LNGprocessing and export, and CNG
production and marketing\. EGAS i s currently engaged in projects to expand the national gas
transmission, and distribution network to increase gas penetration into domestic household,
industrial and commercial markets\. Inaddition, EGAS i s also investing in further expanding its
LNGprocessing facilities, and extendingits network to export markets\.
61\. The company's investment activities are largely debt-financed\. Funding for debt service, as
well as for self-financing o fthe investmentprogram, is provided by: (i)revenues from the sale o f
natural gas (including LNG for exports, which started inJanuary 2005); (ii) service fees from the
transmission and distribution network; and (iii) and profit sharing from its holdings injoint
fees
ventureand subsidiary companies\.
62\. In its role as the Government agency responsible for development o f the gas distribution
network, EGAS i s responsible for payment o f the Government share o f connection costs (LE
1,000 per household), and as such, will be responsible for receiving and repaying the World
Bank loan\.
15
63\. EGAS's financial history i s limited, with financial statements available only for the years
ended June 30, 2004 through2007\.9 Highlights of the company's performanceare providedin
the table below\.
(million LE) Actual
Year EndingJune 30 2004 2005 2006 2007
Gross Revenues 185 1,883 4,277 4,291
(282) (1,802) (3,607) (3,395)
(10) - (8) (20)
19 56 139 110
(89) 137 801 987
21 586 (91) (514)
181 78 1,001 1,537
258 604 309 144
Debt Service Coverage Ratio (1\.5) 1\.7 116\.1 (3\.1)
Current Ratio I 1\.4 1\.1 1\.o 1\.1
**includes purchase o f fixed assets and investment insubsidiaries
64\. An analysis o f EGAS's likely future financial performance(for the periodfrom 2008 -2013)
was undertaken\. Highlights of the results in terms of the company's financial position are
summarized in the table below\. Additional details regarding the underlying assumptions are
providedinAnnex 9\.
EgyptianNational Gas Holding Company
(million LE) Projected
Year Ending June 30 2008 2009 2010 2011 2012 2013
Gross Revenues 4,576 5,236 5,801 6,385 7,015 7,620
(3,141) (3,945) (4,170) (4,511) (4,789) (5,102)
(249) (404) (534) (661) (804) (1,002)
147 48 41 106 24 33
1,333 934 1,139 1,319 1,446 1,550
1,607 299 1,070 1,086 1,257 1,314
3,497 1,288 2,246 1,264 2,603 2,739
166 404 458 439 524 637
Debt Service Coverage Ratio 6\.3 1\.5 2\.3 2\.1 2\.2 2\.0
I
Current Ratio 1\.9 2\.1 2\.2 2\.5 2\.7 2\.8
65\. EGAS has a limitedoperatinghistory inproduction, supply and export of natural gas, since
the companyhas beenrelativelyrecently created, andthe sector i s still ina transition phase\. The
above projectionssuggestthat EGAS's future performancewill be strong, andthat it will be able
EGAS also issued financial results for 2003 but these covered only a 6 month period\.
16
to meet its financial obligations related to the project and the repayment o f debts\. Close
monitoring will be requiredduring supervision to ensure that actual performance i s in line with
the projections\. As such, it is proposed that selected indicators o f financial performance be
monitored to ensure the ongoing viability o f the company\. The agreed indicators to be
monitored and their target levels are as follows: (i)debt-service coverage ratio o f not less than
a
1\.2; and (ii) current ratio o f not less than 1\.2\. The target levels are designed to ensure a
a
minimum level o f satisfactory performance and take into account some uncertainty that may
remain around EGAS' future financial performance given its recent establishment\.
2\. Technical
66\. The Greater Cairo Region gas network expansion program was designed by Town Gas as
part o f its planning activities, and a summary o f the results and details o f the material required
for the program are included in the feasibility study submitted by Town Gas\. The feasibility
study is available inthe project files\. For such design, Town Gas has usedthe Advantica Stoner
SynerGEEGas Network Analysis software\. This is Industrystandard software and is the widest
usedset o f software for gas transmission and distribution analysis and designworld wide\.
67\. Town Gas has very good technical capacity and follows construction and maintenance
standards similar to those usedby the UK utility BritishGas and, in some instances, apply them
conservatively\. Town Gas and its contractors follow the training and work experience schemes,
which have also been developed in UK to ensure that only trained personnel are allowed to
install gas pipework for transmission, distribution or internal installations\.
68\. The project i s expected to produce very positive improvements in gas utilization safety in
Egyptbecausethe natural gas is principally displacingLPG as a domestic fuel\. Inthe natural gas
industry in Egypt, appliance standards, fitting and conversions are strictly controlled and only
trained and qualified people are allowed to install\. Inthe case o f LPG, this does not apply so the
conversion of existing LPGappliances helpsto eliminate unsafe installations\.
69\. A technical and project implementation capacity assessment o f Town Gas was carried out
\. during preparation of the project\. The assessment indicated that Town Gas has very good
technical capacity and follows construction and maintenance standards similar to those used by
BritishGas\. Currently, Town Gas implements annual programs o f 100,000 new connections per
year in the Greater Cairo Region\. Town Gas uses Egypt Gas for all distribution main and
service-laying work together with service riser installation\. Meter installation, internal works
and conversions are generally carried out by Town Gas' own staff\.
17
70\. Both Town Gas and Egypt Gas operate Training Centers to provide the skilled workforce
training necessary for their operations, following the format used inthe UK Gas Industry, which
comprises o f classroom training together with "on-the-job" training, where the trainee works as
an assistant to an experienced operative\. Town Gas has indicated that they are developing an
expansion of the training program to account for the scheduled workforce availability and are
also conscious o f the possible need for an expansion o f training facilities to cope with the
numberofpeople who will berequiringthe training\.
3\. Fiduciary
Financial Management
71\. A financial management assessmenthas been conducted to evaluate the risk level associated
with the project planned activities and the envisaged project design\. The focus was mainly on
the inherent and control risks arising from the project nature and the related implementation
arrangements\. The detailed financial management assessment i s presented inAnnex 7\.
72\. Reporting and Auditing: Town Gas will be reporting separately on the project accounts\.
Such reporting will include all sources o f project funding (EGAS financing, World Bank loan
and other external financing) and all expendituresrelated to the project\.
73\. The following will be submitted to the Bank within six months after the end o f the fiscal
year: (i) project financial statements and audit reports, (ii) financial statements and audit
EGAS
reports (as the revenue generating entity to pay back the loan), and (iii)Town Gas annual
financial statements and audit reports (as the entity responsible for carrying out the project
activities)\.
74\. Flow of Funds: To ensure that funds are readily available for project implementation,
EGASwill open, a Designated Account (DA) at a commercial Bank inEgypt\. Depositsinto, and
payments from the DA, will be made in accordance with the provisions stated in the loan
agreement and the disbursement letter\. Disbursement under this loan will be made according to
the transaction-based disbursement procedures that include withdrawal applications for direct
payment, reimbursementand requests for the issuance o f special commitments\.
75\. The main potential risks identified under the proposed project relate to the (i) reliability o f
information on Town Gas materials costs; (ii)verification o f physical progress and new
connections; (iii) applicable controls inwarehouses; and (iv) ability o f the current MIS to timely
generate the required reports\. The above factors collectively contribute to a risk level deemed
substantial\.
76\. A group o f mitigating measures have been agreed to in order to bring the risk level to
moderate\. These measures include: (i) verification o f cost estimates through recent procurement
o f similar material by other LDCs and reviewingestimated project costs by the Bank's technical
team; (ii) the signing of a contract between EGAS and Town Gas to detail each party's
responsibilities with EGAS retaining a performance guarantee until Town Gas connects to the
network a certain number o f consumers inthe targeted area (this will also help mitigate the risk
that material accumulates in the warehouse and i s not used to achieve connections); (iii)
18
identification o f the project targeted areas under the Town Gas' expansion program; (iv) to
enable consistent monitoring o f funds and physical progress, the formats and contents o f
financial and physical progress reporting were discussed and agreed with Town Gas financial
department as well as with the planning and follow up department; and (v) sample inventory
reports generated by Town Gas financial departments were reviewed and found to be acceptable\.
To compensate for the lack o f recent experience with Bank procedures and requirements, the
designated financial management staff in the PIU will be introduced to the El-Tebbin Project
financial management unit to get acquainted with a successfully performing Bank financed
project\. In addition, the project implementation manual, including FM, i s part o f Town Gas
responsibilities under the Town Gas Connection agreement (dated covenant in project
agreement)\.
Procurement
77\. A procurement capacity assessment has beencarried out for Town Gas who will be handling
procurement under the project\. The assessment reviewed the organizational structure for
implementing the project and the interaction between the project's staff responsible for
procurement and other relevant units\. A copy o fthe capacity assessmenti s inthe project files\.
78\. Town Gas' procurement practices follow the national law # 89 o f 1989 and are carried out by
the Purchasing Department staffed with 20 officers, all of whom have \.university degrees\.
Technical support to the Purchasing Department i s provided by the Technical Department and
Project Sector, which are staffed with Engineers\. Town Gas' staff has good experience in
implementingprojects following its own and procurement procedures o f international donors
who have financed several projects it has been involved with, including World Bank financed
loans\." The main procurement risk identified is the lack o f up-to-date knowledge and
experience o f World Bank procurement guidelines and procedures\. This risk has been partially
mitigated during project preparation through capacity and knowledge transfer by the Bank
team's procurement specialist to the procurement staff o f Town Gas\. Training on World Bank
procurement procedures was carried out on November 27-28, 2007\. In addition, an
Implementation Manual for the project will be prepared (dated covenant), which will include the
detailed procurement arrangements, procedures and bidding documents to be used under the
project\.
79\. The project will include procurement o f goods only, and all procurement will be carried out
using agreed standard bidding documents\. The agreed procurement plan for the project includes
13 procurement packages o f which 9 are ICBs (International Competitive Bidding) and 3 are
NCBs (National Competitive Bidding), in addition to Shopping for contracts with a value below
US$lOO,OOO\. The procurement plan is attached inAnnex 8\. The biddingdocuments for the first
two packages are under preparation so that advanced procurement can start\. The procurement
will be carried out using the Bank's SBD for all ICB and National SBD agreed with and
satisfactory to the Bank, complying with the list o f exceptions to the local law detailed in annex
8\. This agreement, along with the training to be carried out, reduces procurement risks under the
project and, correspondingly, the overall risk assessment related to procurement i s rated as
loThe Bank's last operation inthe gas sector inEgyptwas the Gas InvestmentProjectwhich closedinJune 1999\.
19
Average\. Annex 8 presents a detailed description o f the procurement arrangements under the
project as well as highlights o fthe capacity assessment\.
4\. Social
80\. A willingness to pay (WTP) study to assess lower-income household's ability to pay was
carried out during the course o f preparation\. According to the WTP study, the lowest income
groups may not be able to connect to the network ifit results ina substantial increase inmonthly
payments compared to the current spending on LPG (currently ranging from LE 8 to LE 24
dependingon distributor)\.
81\. Given the financing options currently available to consumers, it i s likely that the poorest
sections o f the population will choose a 10 year repayment plan, which translates into a monthly
payment o f about LE 21 at the prevailing interest rate (11\.5%)\. The total cost, including taxes
and natural gas consumption i s likely to be around LE 26 to LE 30 per month\. Alternatively,
lower income households have found a community approach to enabling payment o f the
connection charge comprising o fpooling resources among neighborsto be able to connect\.
82\. EGAS indicated its interest in having the LE 1,500 charge uniform to all consumers in the
interest o f establishing a consistent policy regardingthe connection charge, having found that the
lack o f consistent and clearly communicated connection charge policy i s a barrier to contract
signingfor new connections\. As such, the provision o f a targeted subsidyto eligible low-income
consumers through the removal o fthe interest charge on installments i s beingconsidered to bring
the monthly payments for natural gas connection and consumption closer to the average
spendingon LPG\. This would reduce the monthly payment o f the connection charge from about
LE21to about LE 12\.5\.
83\. The project i s also expected to yield significant social benefits which include job
opportunities and benefits to owners o f cafes and small restaurants duringthe constructionphase
and improved safety, health and convenience from the elimination o f LPG cylinders\. Piped
natural gas i s also expected to contribute to improved safety, convenience and reliability and will
particularly benefit the handicapped, elderly and women who are reported to experience
difficulty inaccessing the LPG cylinders\.
5\. Environment
84\. The proposed project falls under the World Bank environmental Category A classification
due to its diverse geographic location within Greater Cairo and potential environmental impacts,
as such, Operational Policy 4\.01on Environmental Assessment i s triggered\.
85\. Accordingly, an Environmental and Social Impact Assessment Framework (ESIAF) was
prepared\. The ESIAF was undertaken by a leading environmental consulting firm
(EcoConserve), as well as individual consultants with expertise in risk assessment and in
preparing ESIAFs for large complex infrastructure projects according to the Terms o f Reference
approved by the World Bank\. The ESIAF has been prepared for the entire gas connection
program that EGAS/Town Gas envisages to implement in Greater Cairo, and o f which the
proposed project i s a component\.
20
86\. According to the ESIAF, achieving the project objectives will yield many social, economic
and environmental benefits, and will help in meeting the targets o f the GOE's overall energy
strategy to reduce the reliance on imported products for domestically available natural gas\.
87\. The social and environmental benefits are described in detail in Annex 10\. The key
environmental benefits include reduction o f exhaust emissions and dust generated from the LPG
trucks as well as reduced traffic from these trucks\.
88\. The ESIAF has identified a set o f issues and mitigation measures for both the construction
and the operational phase o f the project and an Environmental and Social Management and
Monitoring Framework (ESMMF) has beenformulated to mitigate impacts\. The implementation
o f the ESMMF i s estimated to cost US$850,000, and will be financed by EGAS\. Additional
details on the potential impacts and the proposed mitigation measures are presented inAnnex 10
and summarized below:
During;Construction:
89\. Traffic Flow: The installation o f the natural gas network i s bound to affect the traffic
operations during construction\. The construction will entail narrowing major roads by
longitudinal and/or lateral excavation\. Either method will produce different levels o f impact on
the major road network\. The narrowing o f the road will reduce the number o f traffic lanes
available for traffic movement and will also entail the prohibition o f on-street parking along the
lengthofthe roadworks\. The narrowing may reduce the right-lane either partially or totally\. In
either case, traffic may avoid the construction side and encroach with traffic in the adjacent
lanes\.
90\. The mitigation measures include: (a) focusing the construction during off-peak periods, (b)
signage and markings to allow construction workers to disseminate proper information to
motorists and pedestrians, (c) traffic detouring, as necessary, by the Traffic Department, and (d)
re-structuring the roadright-of-way\.
91\. Air Emissions: Air emissions during construction will arise from: (i) excavationhackfilling
which generates suspended particles; (ii) dispersion from stockpiles o f waste or sand used for
filling trenches; and (iii)exhaust from excavation vehicles (excavators, trenchers, loaders,
trucks) containing SOX, NOx, CO, VOCs, etc\. The effects o f these impacts are expected to be
local and short term; particularly since soil stockpiling i s normally minimal at the site, and i s
normally filled within the same day\. Another indirect source o f air emissions i s the traffic
congestions that may occur\.
92\. The mitigation measures include (a) storing excavated soil stockpiles and sand in sheltered
areas, (b) relying on licensed and experienced contractors for the transportation o f
excavatiodconstruction waste, (c) disposing the excavatiodconstruction waste in licensed
locations by the local authority, and (d) ensuringthat the air emissions o f excavation machinery
i s within the standards o f the executive regulations o f Law 4/1994 and those o f the World Bank\.
93\. Noise: Constructionactivities will increase noise levels caused by excavation\. Construction
noise varies from increase o f noise intensity due to engine operation, and intermittent impacts
which may take place during demolition o f asphalt, either by trencher or jack hammer\. The
21
effects on construction labor are considered more significant, because they are exposed to high
levels o f noise for relatively longer periods\. Residents o f neighboring areas are the second-level
recipients o f elevated noise levels, as the noise intensity will be relatively dissipated at their
locations\. Inaddition, traffic congestions, which could be caused by excavation works, will also
affect noise levels inthe area, which may increase ambient average noise intensity levels\.
94\. The mitigation measures include (a) adjusting working hours, breaks, and exposure duration
to ensure that noise is within the permissible limits, (b) providing construction workers with ear
muffs, and (c) minimizing constructionat nighttime\.
95\. Risk to infrastructure: Most o f underground pipeline infrastructure (such as water, sewerage
and telecommunication) in Greater Cairo has been established a long time ago, without accurate
documentation for its routes and depths\. Therefore, the risk o f breaking infrastructure lines i s
relatively high\. Normally the contractor applies manual excavation to avoid such situations since
the contractor is obliged to pay for the damage\.
96\. The most adverse impact will arise in the case a sewerage pipe breaks and wastewater
accumulates inthe trench and, possibly, floods onto the streets\. The breakage o f a water supply
pipe may result in cutting the supply to a number of residential units, which may, if it is not
repaired for a long period, direct residents to use other sources o f water which may either be
expensive or unsafe\. The effects o f cutting telecommunication cables during excavation are
mainly socioeconomic and may impact business communications\.
97\. The mitigation measures include (a) collecting the most accurate maps for infrastructure
routes from Information Centers inthe Cairo and Giza Governorates, (b) excavating manual trial
pits in each street to locate the pipes before using mechanical excavation, and (c) applying the
standard procedures o f Town Gas incase an infrastructure pipe i s damaged\.
98\. Effects on structures: Weak and old structures are sensitive to differential settlements, which
could be caused by for example dewatering\. However, excavation for natural gas pipelines i s
usually shallow and does not exceed 1\.0 meter depth (only in very few areas in Greater Cairo
mightthe ground water depthbe less thanthat)\.
99\. The mitigation measures include (a) screening o f the districts to identify areadsectors
including buildings with potential structural problems, (b) excluding areas with potential
problems from the project to avoid any structural problems on existing buildings, and (c)
implementingatight excavatioddewatering schedule inareas o fhighgroundwater level\.
100\. Effects on culturally valuable sites: The effects on culturally valuable sites could occur
from (i) structural damage to a monument due to dewatering during excavation; (ii) impact to a
monument's foundations due to excavation works; (iii) damage to the monument due to vibration
from machinery; (iv) reduction inthe aesthetic value o f the site; and (v) improper management
o f discovered antiquities during excavation\.
101\. The mitigation measures include (a) identifying a comprehensive list o f all Greater Cairo
registeredantiquities, falling within the domain o f the project and possibly riskedby construction
activities, (b) providing supervision from the Supreme Council o f Antiquities on implementation
o f construction works at identifiedlocations, and (c) ifdewatering activities are to take place, the
22
process should be undertaken under the supervision o f foundation engineers who would perform
necessary soil investigations\.
102\. Waste disposal: Wastes that are generated during the construction phase include: (i)
excavated soil and excess sand, (ii)concrete and bricks waste; (iii) demolished asphalt, (iv)
containers of chemicals and lubricant oils used for constructionmachinery; (v) possibly damaged
asbestos water pipes during excavation; and (vi) dewatered water from trenches\.
103\. The mitigation measures include (a) allocating certain areas, in each sector, for
stockpiling waste soil and construction waste, in coordination with the local authority, (b) Avoid
fueling, lubricating or adding chemicals for excavation at the construction site, (c) in case o f
damaging o f asbestos pipes during excavation, the Water Authority, which will carry out the
repairs, will be responsible for handling the waste asbestos according to their procedures, and (d)
preplanning drainage o f dewatering water and taking necessary permits from the sewage
authority, or irrigation authority\.
During,Operation:
104\. Improper handling, o f odorants: The odorant containing Tertiobutylmercaptin (80%) and
Methylehylsulphide (20%) is classified as a hazardous substance\. Improper handling of the
odorant could come from (i)storage in unsafe conditions; and (ii) leakage to the environment
causing different types o f hazards related to its high reactivity and possible production o f
pollutants\. This release to the environment could take many forms, including a discharge o f
remaining odorants in containers, in land or sewers; disposal o f used containers with domestic
waste, or by open disposal; and recycling o f usedcontainers for other materials\.
105\. The mitigation measures include (a) following the information provided inthe Materials
Safety Data Sheet (MSDS) o f the odorant regarding storage conditions and procedures to be
followed inemergencies, and (b) continuing the Town Gas practice o f oxidation o f the container
remains\.
106\. Noise o f PRSs\. The pressure reduction stations cause noise generated from the reducers'
pipes\. Noise levels are normally increased by a few decibels in and around their location\. The
generated noise i s constant (not intermittent)and normally dissipates beyond a few meters\.
107\. The mitigation measures include (a) locating the reducers at least 20 meters away from
the PRS fence, (b) placing the reducers in either a well ventilated closed area, or ina protected
open area according to the Institute o f Gas Engineers and Managers (IGEM) standards\. If the
reducers are in an open area there should be wall barriers to dissipate the noise from PRS staff
offices and the neighboring areas\.
108\. Safetv aspects o f PRS operation: The safety risks associated with the operation o f PRSs
have been assessed for the workers and the public at large using Quantitative Risk Assessment
(QRA) modeling and the results have been compared with international risk acceptance criteria
"As Low As Reasonably Practical-ALARP"\.
109\. The risks have been assessed for the industrial workers and general public representing
the two types o f risk: the "Individual Risk" and the "Social Risk" within each PRS\. For the
'23
general public, the simulation assumed that the station is surrounded by busy roads, as well as
public buildings\. The conclusion drawn from the QRA is that the risk is within the acceptable
limits provided safety precautions are considered and strictly followed in the design, operation
and maintenance of suchfacilities\.
110\. The mitigation measures include (a) remote actuation of isolation and slam-shut valves
by Town Gas for different PRSs as well as the transmission pipelines, (b) preparation of
Hazardous Area Classification drawings for all PRSs, (c) instituting preventive maintenance
policy for the new PRSs, (d) locating the control room inlet door inthe upwind direction away
from the station, (e) providing self-contained breathing apparatus (2 units at least) at each PRS
for handling odorant releases, (0jet fire rated passive fire protection system to be applied to all
emergency shut down valves (ESDVs) or Solenoid valves in order to maintain small isolatable
inventories, (g) adding pipelinemarking signs inArabic and inEnglish "Do Not Dig" and "High
Pressure Pipeline Underneath" in order to prevent such extreme hazardous situation, (h)
installing an elevated wind sock in the PRS site, and (i) complying with the code requirements
for steel and PE pipelinesfor gas distribution(IGE TD/3) inthe design\.
6\. Safeguardpolicies
NaturalHabitats (OPBP 4\.04) [I [JI
PestManagement (OP 4\.09) [I [JI
Physical Cultural Resources(OP 4\.11)
(Possible, dependingon chance finds during construction in [JI [I
, only specific areas of cultural significance ingreater Cairo)
Involuntary Resettlement (OPBP 4\.12) [JI [I
Indigenous Peoples (OPBP 4\.10) [I [JI
Forests (OPBP 4\.36) [I [JI
Safety of Dams (OPBP 4\.37) [I [JI
Projects inDisputedAreas (OPBP 7\.60)* [I [JI
Projects on International Waterways (OPBP 7\.50) [I [JI
Involuntarv Resettlement (OPBP4\.12)
111\. Of the four planned pressure reducing stations in Greater Cairo, all will be located on
land owned by the Governorate and/or on property owned by the Ministry of Petroleum\. As
such, 1,andexpropriation i s expectedto be limited, if any\. However, the Operational Policy on
Involuntary Resettlement (OP/BP 4\.12) is triggered\.
112\. As such, a Resettlement Policy Framework (RPF) is the instrument used because the
nature and extent of possible landacquisitionhesettlement ofthe various sub-componentsare not
known at appraisal\. A ResettlementPolicy Framework was prepared for the project to ensure
* By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the
disputed areas
24
that proper compensation i s administered incase access to amenities or sources o f income would
become restricted as a result o fproject activities\.
113\. The key purpose of the RPF i s to establish resettlement objectives and principles as well
as organizational arrangements and funding mechanisms for any resettlement operation that may
be necessaryduringthe implementation o fany of the subprojects\. Whenduringimplementation
the extent o f land acquisition becomes known, Resettlement Plans (RPs), or abbreviated RPs -
dependingon the scale and severity of impacts - are prepared\. The resettlementhand acquisition
should be completed prior to the start of physical works\.
114\. Inthe eventthe RPF needsto be applied; all project-affectedpeople will be compensated
for their losses at replacement cost with a view to improving or at least maintaining pre-project
living standards and income earning capacity\. The funding for the compensation, if any is
needed, will be financed from EGAS' ownresources\.
PhysicalCultural Resources (OP 4\.1 1)
115\. Operational Policy on Physical Cultural Resources (OP 4\.11) i s also triggered, but only
duringconstruction inareas where cultural relics may be found\. The application o f Chance Find
procedures has beenincluded inthe ESMMF\.
7\. Policy Exceptionsand Readiness
116\. There are no policy exceptions\.
25
Annex 1: Country and Sector Background: Structure of EgyptianGas Industry
In2001, the Government established the EgyptianNational Gas Holding Company (EGAS) to
promote investments in natural gas and also to participate, on behalf o f the Government, in the
management and development o f the gas transmission and distribution network, in the
development o f gas-related joint ventures (such as LNGand CNG production and marketing), in
the export of natural gas (both LNGandpipeline), andinthe award o f concessions on a number
o f new gas developments\. The revenues received by EGAS from its participation in these
activities are used to finance ongoing development o f the natural gas networks, as well as to
finance state participation innew gas-related activities\.
EGAS is the asset owner for all transmission and distribution networks and facilities in Egypt\.
However, it does not construct or operate the facilities\. The structure o f the sector includes one
company for construction and operation o f the transmission network (GASCO) operating as a
service provider under a concession contract and eleven concessionaires acting as local
distribution companies (LDCs) providing construction and operation services for each regional
distribution network, under local concession contracts\. GASCO and two o f the eleven LDCs are
affiliated to EGASand the other nine LDCs are privately owned\.
GASCO i s the company which provides all transmission services, Le\., those relating to pipelines
and facilities operating at more than 7 bar\. Transmission expansion i s driven by demand
requirements generated through the LDCs and directly connected major industrial consumers
such as power stations, fertilizer plants, etc\. GASCO has a concession contract with EGAS for
the provision o f these services, which i s negotiated between the parties\. GASCO utilizes
contractors for constructionactivities and their own staff for operational services\.
The distribution network has developed and expanded over the last 25 years and currently
suppliesjust over 2\.4 million consumers\. The eleven LDCs provide the manpower and services
to carry out the connections based on schedules o f rates for the installation o f Intermediate
Pressure (IP), Medium Pressure (MP) and Low Pressure (LP) mains, pressure control units,
services, risers, meters etc\.
Each LDC operates in a discrete geographical area allocated by EGAS\. Town Gas i s the only
LDC operating in the Greater Cairo Region\. The L D C concession contracts are valid for 25
years and include an agreement renewed every 2 years definingthe network expansion program
for each year o f the period\. The unit rates paid by EGAS for new connections under the agreed
expansion program are the same for all LDCs and are negotiated by the parties or established by
EGAS\.
For construction activities, the constfiction capacity o f the LDCs i s supplemented by the
existence o f three qualified and experienced sub-contractors who provide services for the
construction and commissioning o f the distribution assets\. Town Gas uses the services of Egypt
Gas for supplementingits execution capacity for distribution works\.
All expansion planning, design and procurement is carried out by the LDCs using their own
staff\. LDCs also provide the operations services, i\.e\., emergency cover, repairs and maintenance
26
through their own staff, and they are paid by EGAS for this service under the concession
contract\.
LDCs do not buy or sell gas, nor finance investments in gas infrastructure, nor do they do any
marketing of gas although they are expected to promote connections and conversion to natural
gas\. In the Greater Cairo Region, Town Gas is currently connecting about 100,000 additional
consumersper annum\.
27
Annex 2: Major RelatedProjectsFinancedby the Bankandlor other Agencies
Sector Issues Project PDO Rating
Gas Sector Gas Investment Project (World Bank 1992) S
Arab Natural Gas Transmission Pipeline
(KuwaitiandArab Fundsfor Social and
Economic Development)
Private SectorPower Port Saidand Suez East (IFC)
Power Generation , El-Tebbin Power Project (World Bank S
2006)
Kureimat Power Project (World Bank U
1992)
ElKureimat PowerProject (AfDB)
Power Development Walidia Thermal Power Station (JBIC)
I Abou-Zaabal Substation (JBIC) I
SidiKrir Transmissionand Substation
Project (JBIC)
~~ ~~
CleanEnergy Development Solar-ThermalHybridPower Project S
28
Annex 3: ResultsFrameworkand Monitoring
ResultsFramework
PDO ProjectOutcome Indicators Use of ProjectOutcome
Information
Switchhouseholdconsumptionof Annual savingsfromreduced Public expenditureplanningand
LPGfor natural gas, andas such subsidiesfor LPG(US$/year) developmento fappropriatesocial
contributeto the Governmentof safety nets\.
Egypt's objectiveto reduceenergy
sector subsidies\.
IntermediateOutcomes IntermediateOutcome Use o f Intermediate
Indicators Outcome Monitoring
Connecthouseholdsinthe Greater Annual numberof natural gas Annualmonitoringandevaluation
Cairo Areato naturalgas connectionsinstalledcompared report\.
to plan\.
Reductionof LPGconsumption Planningfuture investmentneeds\.
inthe target area(todyear)\.
29
*
0
:-
rVl4
e
e
8
a
e
g
N
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Annex 4: Detailed Project Description
Most households in Egypt, other than those connected to the natural gas network, use LPG as
their principal fuel for cooking and in some cases, water heating\. LPG supplies, about halfof
which has to be imported, are heavily subsidized by the Government\. The Natural Gas
Connections Project will accelerate the current progress o f expansions and contribute towards
reduced use o f subsidized LPG\.
Although, the GOE's current program i s to make 2 million additional connections by about 2012
inthe Greater Cairo area, the proposed project will contribute with financing of about US$75
million equivalent towards the cost o f goods required for the implementation o f a portion o f the
expansion program aimed at connecting 300,000 households\. The total cost of connecting
300,000 households i s estimated at US$153\.7 million, including the cost o f implementation o f
the Environmental and Social Monitoring and Management Framework estimated,to be US$0\.85
million\.
The Gas Transmission component o f the program is estimated to cost US$14\.2 million and
includes:
Pipelines: El Haram: 5 km o f eight inch pipe (30 - 70 Bar); El Tebbin: 1 km o f twenty
inch pipe (30 -70 Bar) and 1 km o f six inch pipe (30 Bar); and New Cairo 30 km o f
twelve inch pipe (30 - 70 Bar)\.
PRSs: ElHaram: 40,000 m3per hour; El Tebbin: 30,000 m3per hour and 10,000 m3per
hour; and New Cairo: 60,000 m3per hour\.
The Gas Distribution and Connection component is estimated to cost US$138\.65 million and
includes:
Implementation o f intermediate pressure (IP) mains (7 bar o f pressure), mediumpressure
(MP) mains (4 bar) and low pressure (LP) mains (100mbar) for a total length o f about
1,284 km\.
Installationo fpressure control units\.
Installationo f connection kits (including the gas meters)\.
Conversion o f customers' appliances to the use o f natural gas for about 300,000
households\.
Special Crossings\.
The Distribution and Connection component will allow transport o f gas at the points of delivery
from the transmission network to housing areas, interconnect and control pressure in IP/MP/LP
mains and to deliver gas to each individual house\. The component will also include the
connection o f new appliances and the conversion o f existing appliances in the customer
household for the safe use o f natural gas\.
31
EGAS and Town Gas prepareda feasibility study for the Cairo ConnectionsProject\. The main
componentsofthe project comprise:
Operating Material/ Purpose
Pressure Standard
Transmission 70 bar max\. Steel Extendthe existingsystemto provide
Pipelines IGE/TD/l additionalsupplypointsto createcapacity
and improvedsecurity of supplyfor the
expansionworks\.
PressureReducing 70 to 7 IGE/TD/I3 To control maximumoperatingpressure
Stations (or 4) bar inthe distribution network\.
IPMains 7 bar max\. PE 100 To transport gas inbulkto housingareas
or new developments, usually alongmain
IGE/TD/3 roadsand not inclose proximityto
occupiedpremises\.
MP & LP Mains 4 bar max\. PE 80 To transportgas withinhousingareasor
new developments\.
IGE/TD/3
PressureControl 7 bar max\. IGE/TD/I3 To interconnectandcontrolpressuresin
Units IP/MP/LP mainssystems
MP & LP services 100mbar PE 80, To deliver gas from the mains systemto
& meter max\. Steel each individualhouseor apartment as far
connections
IGE/TD/4 as the meter\.
NewBuild 21 mbar Steel To connect new Appliancesinsidethe
Internals max\. property\.
Conversion& 21 mbar Steel To connect andconvertexisting LPG
Internals max\. Appliances insidethe property\.
InfillInternals 21 mbar Steel To connect an Apartment, where the riser
max\. exists, by fitting meter and connecting
Appliances insidethe property\.
It is importantto notethat gas mainsnetworks are alwaysplannedand designedon a medium-to
long-termbasisto ensure that an appropriate"backbone" systemof larger diameterpipesoptimal
for the medium to longer term view is developed\. Without such an approach, duplicate pipes
wouldbe installedto providethe capacity requiredfor future development\. As such, some ofthe
material includedinthe proposedproject is an early part of a larger roll-outprogram\. As such,
the distributionnetworkto be installedcould connect more customers dependingon the pace of
consumerdemandinthe project-targetedareas\.
32
Annex 5: Project Costs
Town Gas' estimates for the cost o f materials are based on actual project quantities, on the basis
o f all project costs they have implemented and experience from previous similar work\. The
overall summary o f materials costs i s shown below, expressed inUS Dollars as well as Egyptian
Pounds (LE) and with contingencies calculated and included\.
EGAShaspreliminary estimated atotal cost of LE 876 million for the project consisting of:
Distribution: LE790\.2 million US$138\.65 million
Transmission reinforcement: LE81\.O million US$14\.20 million
Implementation o f the ESMMF: LE4\.8 million US$0\.85 million
Total: LE876 million USs153\.7 million
As mentionedinAnnex 10, the implementation of the ESMMFwill be financed by EGAS\. The
US$75 million loan will be made to EGAS, and Town Gas, on behalf o f EGAS, will procure
material for network expansion usingthe proceeds o f the loan\. The breakdownof the estimated
cost o fmaterials to be financed under the loan is presented inthe table below\.
Greater Cairo Gas ConnectionsProject - CostBreakdown
Cost of Materials US$ LE
Distribution 21,068,753 120,091,890
Meters 14,757,092 84,115,423
Installation 18,504,035 105,472,997
Conversion 9,973,611 56,849,581
Transmission 6,394,737 36,450,000
Miscellaneous 500\.000 2,850,000
TotalBase Cost 71,194227 405,829,891
Contingencies 3,801,773 21,670,109
Total Cost of Materials 75,000,000 427,500,000
The unit costs for materials has beenestimated by Town Gas based on recent bids and adjusted
for some price escalation as well as saving potential through the switch from yellow to black PE
pipes and from reducing the riser steel pipes diameter from one, % and ?4inches to % and ?4
inches\. Given that the World Bank loan is fixed at US$75 million, any unforeseen price
increaseswill be financed by EGAS\.
33
Annex 6: ImplementationArrangements
The proposed project will be implemented between 2008 and 2013\. The project will be
implementedby Town Gas, an affiliate ofEGAS\.
There will be a Loan Agreement betweenthe Government o f Egypt (Ministry o f International
Cooperation) and the Bank, as well as a Project Agreement between EGAS and the Bank\. By
virtue of a Subsidiary Agreement betweenthe GOE and EGAS, the GOE will on-lend the Bank
loanproceeds to EGAS\.
To establish and solidify the role o f Town Gas in project implementation, a Contractual
Agreement will be established betweenEGAS and Town Gas\. This agreement whose terms and
conditions will need to be satisfactory to the Bank, will detail the implementation arrangements
underthe project\.
Since the project will cover a portion o f Town Gas' expansion program through its usual annual
investment program, only expanded, it is recommended that Town Gas assigns 2 staff (one
engineer and one procurement expert) from its unit responsible for the implementation o f their
usual investment program to a PIU to coordinate the project's day-to-day implementation,
financial recording and periodic reporting, as well as ensure that the bidding process for the
materials financed under the project i s carried out in accordance to World Bank guidelines\. The
PIU will be staffed by a technical engineer, a procurement coordinator and a financial
management coordinator\.
In addition, EGAS will appoint a technical and financial specialist to liaise with the PIU and
monitor the implementation o f the project and assist in ensuring that the World Bank
procurement and reporting requirements, particularly financial reporting, are adhered to\.
Town Gas TechnicalAssessment
Town Gas has very good technical capacity and follows construction and maintenance standards
similar to those used by the UK utility British Gas and, in some instances, apply them
conservatively\. Those standards resulted from the original conversion work in the early 1980s
which was carried out by UK Contractor Wm Press Ltd\. and for which British Gas were the
consultants to the Egyptian Gas Industry\. Egypt has adopted UK Standards for all transmission
and distribution activity\. Since the unbundling and privatization o f the UK Gas Industry, these
standards are now contained in the Recommendations o f the Institution o f Gas Engineers and
Managers (IGEM)\. These IGEMRecommendations are supported by and cross referenced to the
publications o f BritishStandards Institution (BSI), American Standards such as API, ASME etc\.
and also the internationalStandardsbodies such as I S 0 and DIN\.
Town Gas uses the Advantica Stoner SynerGEE Gas Network Analysis software for all network
design\. This is Industrystandard software and is probably the widest used set o f software for gas
transmission and distribution analysis and designworld wide\. Town Gas has a practical attitude
to design, which i s geared to reducing pipe diameters by utilizing available pressure to create
capacity, but also keepingoperating pressures as low as possible for safety considerations\.
34
The majority o f materials used by Town Gas are imported\. PE pipe is extruded in Egypt by
subsidiaries o f European pipe manufacturers using imported PE pellets\. All steel pipes are
imported, although there i s manufacturing capacity available inEgypt\. Town Gas, however, has
been unable to procure locally manufactured pipe to a sufficiently consistent quality for it to be
suitable for gas service\.
Safety
The natural gas Industry world wide has a good safety record which is based on the application
o f robust standards allied to stringent testing and controls\. The UK standards inuse by EGAS/
GASCO/Town Gas are based on the experience o f that industry\. From the assessment carried
out by the Bank project team, it appears that the UK standards are followed rigorously and they
are even applied conservatively insome respects\.
Meetings with the staff at Town Gas and EGAS indicate that they take gas safety very seriously
and this i s borne out by the results they have achieved with only one incident reported inthe last
5 years\. The Safety Department in EGAS monitors the performance o f the whole Gas Industry
from the upstreamproduction facilities to the domestic utilization\. EGAS i s registeredto I S 0
14001and 18001\.
Trainingand Manpower Capacity
Both Town Gas and Egypt Gas operate Training Centers to provide the skilled workforce
necessary for their operations\. The training programs follow those which are usedinthe UK Gas
Industry and comprise classroom training together with "on-the-job" training when the trainee
works as an assistant to an experienced operative\. The overall training programs can, therefore,
be quite lengthy, up to 12 months being required for certain skills although not all that time is
non-productive\.
Town Gas i s confident that they can mobilize the necessary levels o f manpower to achieve
project objectives and see no reason why they cannot also employ a further sub-Contractor to
assist if they and Egypt Gas fail to meet the targets\. Although there are only 3 qualified sub-
contractor Companies at present, Town Gas believe that it should be possible to encourage other
sub-Contractors to join the program\.
35
Annex 7: FinancialManagementandDisbursementArrangements
ExecutiveSummary:
A financial management assessmentwas conducted inorder to evaluate the risk level associated
with the project planned activities and the envisaged project design\. The focus was mainly on
the inherent and control risks arising from the project nature and the related implementation
arrangements\. Control measures and reporting requirements (financial, procurement and
physical progress) necessary for monitoring the project activities were discussed and agreed
uponbetweenthe Bank, EGASand Town Gas\.
The project will support the Government's on-going program to expand the access to piped
natural gas in the Greater Cairo area, where the feasibility study prepared by Town Gas has
estimated that approximately 2 million households can be connected to the network within a six
year program period\. The project will finance a portion o f Town Gas' investments for the
expansion o f the transmission and distribution network as well as for internal installations to
connect consumers to the network\. The World Bank will contribute with financing o f US$75
million towards the cost o f goods requiredfor the implementation o f a portion o f the expansion
program aimed at connecting 300,000 households\. The total cost o f connecting 300,000
households i s estimated at US$153\.7 million\.
The proposed project will be implemented between 2008 and 2013\. The project will be
implementedby Town Gas, the LDC with the concession in Greater Cairo\. Town Gas has a
long-standing experience extending and maintaining gas distribution network and connections\.
There will be a Loan Agreementbetweenthe Government of Egypt (representedby the Ministry
of International Cooperation) and the Bank, and a Project Agreement between EGAS and the
Bank\. By virtue o f a Subsidiary Agreement betweenthe GOE and EGAS, the GOE will on-lend
the Bank loan proceeds to EGAS\. To establish and solidify the role o f Town Gas in project
implementation, a contract will be signedbetweenEGAS and Town Gas\. This agreement whose
terms and conditions will need to be satisfactory to the Bank (dated covenant), will detail the
implementationarrangements under the project andthe roles and responsibilities o f each party\.
Town gas has a long experience inrunning this type o f business\. Although the loan financing i s
limited to only 300,000 connections out o f the whole 2 million connections program in Greater
Cairo area, the increase inthe volume o f connections over a short period o f time from 100,000
per year (500,000 over 5 years) to 2,000,000 over the coming 5 years represents an important
change to the business environment and gives rise to substantial related risks\. This would
generate an increase in the risk o f errors, non compliance with procedures and policies,
miscounting, potential delay in book-keeping and reporting, etc\. Town Gas i s considering the
involvement o f more contractors to absorb the additional risk, but this would place additional
requirement on Town gas side to manage third parties technical work and contract obligations\.
Inaddition, EGAS (the borrower that will pay back the loan) needs to maintain proper control
over Town Gas' implementationo fthe program\.
The main potential risks identified under the proposed project relate to the (i)reliability o f
information on Town Gas materials costs; (ii)verification o f physical progress and new
connections; (iii) applicable controls inwarehouses; and (iv) ability o f the current MIS to timely
36
generate the requiredreports\. The above factors collectively contribute to a risk level assessedas
substantial\.
A group o fmitigating measures have beenagreed to inorder to bringthe risk level to moderate\.
These measures include: (i) verification o f cost estimates through recent procurement o f similar
material by other LDCs and reviewing estimated project costs by the Bank's technical team; (ii)
the signing o f a contract betweenEGAS and Town Gas to detail each party's responsibilities
with EGAS,retaining a performance guarantee until Town Gas connects to the network a certain
number of consumers in the targeted area (this will also help mitigate the risk that material
accumulates inthe warehouse and i s not used to achieve connections); (iii) identification o f the
project targeted areas under the Town Gas' expansion program; (iv) to enable consistent
monitoring o f funds and physical progress, the formats and contents o f financial and physical
progress reporting were discussed and agreed with Town Gas financial department as well as
with the planning and follow up department; and (v) sample inventory reports generated by
Town Gas financial departments were reviewedand found to be acceptable\. To compensate for
the lack o f recent experience with Bank procedures and requirements, the designated financial
management staff in the PIU will be introduced to the El-TebbinProject financial management
unit to get acquainted with a successfully performing Bank financed project\.
Country Issues:
The Report on Observance o f Standards and Codes - Accounting & Auditing (ROSC-AA)
(2002) and the draft Country Financial Accountability Assessment (CFAA) report (2003)
identifiedsome weaknesses inthe reporting and auditing environment inEgypt\. The ROSC-AA
included an assessment as to the level o f compliance to International Financial Reporting
Standards (IFRS) by State Owned Enterprises (SOE), which was concluded to be weak\. The
2003 CFAA assessed the fiduciary risk associated with the budgeting arrangements, internal
control system, and accounting and financial reporting arrangements to be significant (this
assessment covered state owned enterprises and public authorities)\. Such risks are applicable to
EGAS as a SOE\. Thus, the condition o f the country overall reporting and auditing environment
will affect the project assessedrisks\.
The ROSC-AA included an assessment as to the level o f compliance with IFRS and with
International Standards on Auditing (ISA)\. The report concluded some gaps between the
standards as designed and as practiced\. The Ministry o f Investment issued inJuly 2006 the new
Egyptian Accounting Standards (EAS) which are aligned with IFRS except for a few disclosed
variations\. The Capital Market Authority i s working on disseminating the 2006-issued EAS,
sponsoring training courses, and enforcing their adoption\.
37
RiskAssessment andMitiPationMeasures(MM):
InherentRisks:
Risk MitigatingMeasures(MM)
Countrylevel:
- A ministerial decree was issued inJuly
2006 requiringall companies, including
SOEs to adopt the new Egyptian
- Lack o f compliance with IFRS Accounting Standards which are
aligned with IFRSwith few exceptions\.
and ISA when preparing and -
auditingthe financial statements As agreed under other projects with
SOEs, the audit o f the continuing
o f state owned enterprises S (revenue generating) entity will be M
(EGAS)\. carried out by the Central Auditing
Organization (CAO)
- The Bank will also communicate its
audit policy and guidelines to the CAO
prior to the first fiscal year o f the
project\.
Entitylevel:
EGAS
EGAS previous years audit - The project will be implemented
reports include auditors' S through Town Gas and ring-fenced M
qualifications\. through a PIU\.
- A contract will be signed between
EGAS (the borrowerthat will EGAS and Town Gas to detail each
pay back the loan) may not have party's responsibilities\.
sufficient control over Town Gas S - EGASwill retain a performance M
implementation o fthe project guarantee untilTown Gas connects to
activities\. the network a certain number o f
consumers inthe targeted area\.
Town Gas
The designated financialmanagement
The lack o frecent experience staff inthe PIUwill introduced to the
with the Bank can result in S El-Tebbin Project financial M
implementation bottlenecks\. management unit in order to get
acquainted with Bank procedures\.
- The current system outputs were
checked by the Bank financial
Existinginformation systemmay
not be able to support the management specialist and were found
to be satisfactory in general\.
required reportingon the project S - Further breakdowns were discussed M
components\. with boththe financialdepartment and
the planningand follow up department
and were agreed upon\.
38
Risk
Risk Before MitigatingMeasures(MM) After MM
Risk
MM
I Project level I I I I
The project financial information The separate reporting on the project
is not readily separated per the related financial informationwas
applicable financial information
Control Risks:
This is mainly assessed at Town Gas Company levelbeingthe actual implementingentity incharge\.
Risk MitigatingMeasures(MM) Risk
After MM
Budget
Budgets cannot be reasonably Part o f the Japanese grant funds
estimated inthe absence o f reliable was directed to assess customer M
demand forecasts\. S willingness and affordability\.
- Budgets are beingprepared at
the activity level per location to
allow subsequent detailed follow
Budgetingprocess capacity to UP\.
- Itfollows a systemic process
manage additional business activities\. S with inputs from the relevant M
technical departments based
upon relevant surveys and
studies\.
Accounting& Internal Control
The large amount o f materials new Sample outputs o f inventory
purchases poses additional risk inthe reports were checked and were M
absence o f a reliable accounting and S found to be acceptable\.
inventory systems\.
- Town Gas preparedproject
budget based upon previous
similar work and recent bids
The cost o f materials should be adjusted for price escalation\. M
verified for estimate accuracy\. S - Estimated costs were also
reviewedby the Bank technical
team\.
Funds Flow
39
Risk Mitigating Measures (MM)
- Willingness and affordability
Potential low demand for connections were assessedunder the PHRD
would slow the project financing and grant activities\.
- Targeted subsidy assistance is M
implementation\. S
beingconsidered for lower
income households\.
FinancialReporting & Auditing
- The sample reports issuedto
EGAS covered the main Bank
Existinginformationsystem may not requirements\.
-
be able to support the required S Some additional breakdowns M
reportingon the project components\. were agreed upon with both o f
the financial department andthe
planning and follow up
department at Town Gas\.
EGAS and Town Gas will be
jointly requiredto recruit an
The project reports will have to be independent private external
audited inaccordance with Bank S auditor to audit the project M
policies\. accounts under terms o f
reference satisfactory to the
Bank\.
ControlRiskBefore MM ControlRiskAfter MM
H:High S: Substantial M:Moderate L:Low
ImplementingEntities:
EgvptianNaturalGas HoldingCompany (EGAS):
EGAS was established in 2001 as an Egyptianjoint stock holding company under the Public
Business Sector law no\. 203 for year 1991\. Like most of the utilities organized through a
holding company structure, it reports to the sectoral Minister (Minister of Petroleum) unlike
other companiesunderthe same lawwhichreportto the Ministerof Investment\.
EGAS' issuedcapitalamountsto EGP542 million\. Itsmainactivitiesinclude:
0 Promotinginvestmentsingas andproposingrelateddevelopmentplans\.
0 Preparingfeasibility studiesfor gas investmentprojects\.
0 Participatinginmanagingandmaintaininggas networks\.
0 Implementingliquefiedgas projects(separatelyorjointly)\.
0 Exploring, extractingandexportingnaturalgas\.
40
0 Expanding and connecting gas to residential and industrial areas directly or through third part
companies\.
EGAS will be the actual counterpart for the Bank with regards to signingthe project agreement
as well as paying back the loan\. By virtue o f a contract to be signed betweenEGAS and Town
Gas, EGAS will cause Town Gas to carry out the project physical implementation, procurement
and financial functions pertainingto the project\.
Town Gas:
The project will be implementedby Town Gas, the LDC with the concession arrangement in
Greater Cairo\. For the purpose o f the project, a contractual agreement will be signed between
EGAS and Town Gas\. This agreement will spell out the responsibilities of each party under the
project\. Town Gas was established under "Investments Incentives and Guarantees law no\. 8 for
year 1997\. Its capital amounts to EGP 100 million\. Its main shareholders are GASCO (60%),
EgyptGas (30%) and the housingfund o f employees o fthe petroleum sector (10%)\.
To support the implementation o fthe project, a PIU will be established within Town Gas to carry
out the planning, implementation, supervision and reporting on the project\. A finance officer
fiom Town Gas financial management department will join the PIU as a financial management
coordinator who will liaise with Town Gas financial management department on all Bank
financial management requirements\.Town Gas financial management department will still be in
charge o f recording, filing and reporting\. The finance officer inthe PIU will ensure compliance
with the Bank reporting requirements,support the disbursement process (withdrawals from the
loan account), and represent the financial management linklinterface with the PIU\. The
assessment o f Town Gas financial management staffing has shown that the financial
management department has sufficient staff with adequate capacity\. Detailed job descriptions
exist, but there were no procedures manual per se\. The preparation o f a detailed manual for the
project i s set as dated covenant inthe project agreement\.
InternalControls:
Materials Cost: The costs o f materials have been estimated based on requiredproject quantities
and on the basis o f project costs related to previous projects implementedby Town Gas as well
as recent experience from other LDCs\. The unit costs for materials have been estimated by
Town Gas based on recent bids and adjusted for price escalation\. Inaddition, price and physical
contingencies have been added\.
Warehouses Controls: Since the project will finance goods requiredfor a sub-set o f the planned
connections under Town Gas's concession agreement, special attention was paid to the
warehouse controls in order to assess their ability to properly safeguard the project's assets and
account reliably for the cost o f purchases, the classification o f cost components, and the
measurement o f inventory costs\. The current system outputs on inventory were found to be
satisfactory\. The sample reports showed detailed coding for inventory items, quantities and
locations\. The visit to the warehouse and the assessment o f the applicable controls indicated that
there are acceptable controls (forms, systems, reconciliations between inventory control
41
department and inventory accounting department, etc\.)\. Since Town Gas will be the owner o f
the materials, materials dispatched to the subcontractors will represent consigned goods that are
subject to Town Gas checks and physical counts, and the subcontractor will be requiredto report
on inaccordance with the contract requirements\.
Phvsical Progress: Linkages between the materials dispatched to operations, inventory at the
company and the sites warehouses, the physical progress in networks and connections, and the
expenditures incurred are vital to validate the proper use o f funds\. These linkages will be based
upon standardaverage material requirementsfor networks and house connections\. The prepared
budgets o f material quantities and costs per quarter will set the basis for subsequent follow up on
physical progress\. These budgets are based upon inputs from the relevant technical departments
(projects, operations and procurement) and are consolidated at the planning and follow up
department\.
Verification ofNew Connections: The Bank needs to ensure that it is financing new connections
actually implementedsubsequent to its Bank's interventiodfinancing\. Thus the Bank has agreed
with Town Gas to finance only new connections in specific areas/locations\. Reporting on the
physical progress and new connections will be verified through the Bank supervision mission as
well as by the project auditor whose terms o f reference would explicitly require field visits to
verify physical progress\.
Accounting and ReDorting:
The accuracy of reporting will play a major role as pointed out above\. In order to produce the
required interim financial statements including the physical progress/output report, a reliable
Management Information System(MIS) has to be inplace\. The current accounting software was
developed internally and i s supported by Town Gas own IT staff/programmers\. The envisaged
project will not involve any new activities\. It will be mainly a continuation o f Town Gas
activities through the WB parallel financing\. As such, the main additional input will be the WB
loan, which would not entail significant adjustments\. System outputs from the existing software
at the financial management department were checked and found to be satisfactory\. Inaddition,
physical progress reports issued by the planning and follow up department were also checked\.
The reports provided information on material consumptionquantities and number o f connections
distributed among governorates\. The Bank requested further breakdowns to indicate the physical
progress within each o fthe agreed locations inthe project defined areas\. Town Gas indicated that
it has these breakdowns available, but the reports prepared for EGAS were more of summary
reports, and it will provide the Bank with these detailed reports\.
The Bank reporting requirementsinclude interimfinancial reports on a quarterly basis as well as
annual financial statements\. These project reports should cover the project as a whole and not be
limitedto the loan portion of the project\. Sample financial reporting formats were agreed with
Town Gas during appraisal\. As the continuing revenue generating entity receiving the loan,
EGAS financial statements will also be submittedto the World Bank within six months after the
closing o f the fiscal year\. In addition, Town Gas as the entity who will be carrying out the
project activities, will be requiredto submit its annual financial statements to the Bank\.
42
Insummary, the following three reports will berequiredbythe Bank:
-
- Project financial statements (annual and quarterly)
EGAS financial statements (annual only)\.
- Town Gas financial statements (annual only)
ExternalAudits:
As a revenue-generating entity that will pay back the loan, EGAS financial statements should
provide an acceptable basis for reliance on their reported information for financial analysis
purposes and for the assessmento f EGAS continued financial viability\. A ministerial decree was
issued in July 2006 requiring all companies, including SOEs to adopt the new Egyptian
Accounting Standards (EAS) which are aligned with IFRS with few exceptions, explicitly
disclosed in the introduction to the EAS\. Due to its ownership structure (100% owned by
Egyptian General Petroleum Authority), EGAS i s requiredby law to be audited by the Central
Auditing Organization (CAO)\. As such, EGAS is required to submit to the Bank the annual
audit report prepared by the CAO within six months following the end o f the fiscal year\. The
Bank will communicate its audit policy and guidelines to the CAO prior to the first fiscal year o f
the project\.
Since Town Gas, the entity who will be carrying out the project activities, i s not owned by
EGAS and its financial statements are not included under EGAS' consolidated financial
statements, the Bank will require a copy o fthe annual audit report of Town Gas\.
For the project purpose, Town Gas will be requiredto recruit an independent private external
auditor under terms o f reference satisfactory to the Bank\. These terms o f reference will cover
inter alia, the adequacy of internal controls in place, eligibility o f expenditures made from the
loan account, fair presentation o f the project financial position, and linkage o f the reported
expenditures to the physicalprogress (substantiated by site/field visits)\.
In summary, the following three audit reports will be requiredby the Bank, 6 months after the
closing o fthe fiscal year:
- Project audit report
- EGASaudit report
- Town Gas audit report
Flow of Funds& DisbursementArrangements:
To ensure that funds are readily available for project implementation, EGAS will open, a
Designated Account (DA) at a commercialBank inEgypt\. Deposits into, and payments from the
DA, will be made in accordance with the provisions stated in the loan agreement and the
disbursement letter\. Disbursementunder this loan will be made according to the transaction-
based disbursement procedures that include withdrawal applications for direct payment,
reimbursement and requests for the issuance o f special commitments\. Withdrawal applications
and replenishments o f the DA will be prepared by Town Gas and will be duly signed by
43
authorized signatories as determined by EGAS\. The names and corresponding specimen of
signature of authorized signatories will be submitted by EGAS to IBRD through MOIC before
the Bank can disbursethe funds\. Althoughthe DA will be openedinthe nameof EGAS andthe
signatories will be determinedby EGAS, it was initially agreedwith EGAS that it will delegate
Town Gas with signing withdrawal applications to speed up processing, but will retain the right
to cosignifneeded\. EGASwill apply to get access to the Bank's "Client Connection" website in
order to follow up on the status of its withdrawal applicationsand to reconcile its records with
the Bankrecords\.
Allocationof loanproceeds:
Amount of
Category LoanAllocated %ofExpendituresto be
(US$ million) Financed
Goods 75\.0 100%
44
\.
Flow of Materials, Documentsand Funds:
Materials Documents Funds
Suppliers deliver Suppliers submit Town Gas FM
materials to Town invoices to Town department reviews
Gas central Gas according to payment packages
warehouses at contracts payment before effecting
Kattameya terms payments
v v I
Receiving Receiving committee
committees at approves receiving
Town Gas inspect certificates Town Gas FM
delivered department/PIU FO
materials prepare applications for
direct payments or
issues checksbank
Storekeepers record transfers from DA and
Central warehouses incoming items in request replenishments
transfer materials to inventory cards
sub-warehouses
\. dependingon each
location's
requirements
Storekeepers send Town Gas notifies
duplicates o f inventory EGAS o f each
dispatching documents withdrawal
to inventory control application (direct or
and inventory accounts DA replenishment
Respective warehouses departments
II
issues materials to
working sites based on
requests from
operations/projects Inventory control Duly signed
departments and inventory WIAs are sent to
accounts conduct the World Bank
I monthly for processing
reconciliations and
spot physical counts 1
Materials are used for
pipelinesand World Bank
connections\. Unused Regular semiannual transfers funds
materials are returned to physical counts are directly to suppliers
issuingwarehouses conducted by or to replenishthe
established designated account
committees
45
Annex 8: ProcurementArrangements
A\. General
1\. Procurement for the proposed project will be carried out in accordance with the World
Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004; and
the provisions stipulatedinthe LegalAgreement\. The various items under different expenditure
categories are described in general below\. For each contract to be financed by the Loan, the
different procurement methods, estimated costs, prior review requirements, and timeframe have
been agreed to between Town Gas and the Bank and are included in the Procurement Plan,
attached to this Annex\. The Procurement Planwill be updatedat least annually or as requiredto
reflect the actual project implementationneeds and improvementsininstitutional capacity\.
2\. Procurementof Works:There are no Works to be financed underthis project\.
3\. Procurement of Goods: Goods procured under this project will include the goods for the
following facilities:
4\. The Gas Transmission component of the program i s estimated to cost\.US$14\.2 million and
includes:
Pipelines: El Haram: 5 km of eight inch pipe (30 - 70 Bar); El Tebbin: 1 km o f twenty
inch pipe (30 - 70 Bar) and 1 km o f six inch pipe (30 Bar); and New8Cairo 30 km o f
twelve inchpipe(30 - 70 Bar)\.
0 PRSs: ElHaram: 40,000 m3per hour; El Tebbin: 30,000 m3per hour and 10,000 m3per
hour; andNewCairo: 60,000 m3perhour\.
The Gas Distributionand Connection component is estimated to cost US$138\.65 million and
includes:
0 Implementation of intermediate pressure (IP) mains (7 bar of pressure), mediumpressure
(MP) mains (4 bar) and low pressure (LP) mains (100mbar) for a total length of about
1,284 km\.
0 Installation o fpressure control units\.
0 Installation o f connection kits (includingthe gas meters)\.
0 Conversion o f customers' appliances to the use o f natural gas for about 300,000
households\.
0 Special crossings\.
The project will finance the required goods including: MI Fittings; Steel Pipes; Jointing
Compound; Brass Ball Valve; Meter Governor; Flexible Connectors; Gas Meter; Fixtures;
Copper Tubes; Conversion Fittings; Electro Fusion Fittings; Mechanical Joints; Distribution
Regulators; Insulation Tapes; Distribution Valves; PVC Sleeves; G\.R\.P\.; Grommet; Paints;
46
Tapes; Meter Bars; Riser Base; PE Pipes; MI & Conversion Fittings; Flues; Steel Pipe
TransmissionLines; Pressure ReductionStations (4)\. The procurement methodsto be used are:
ICB, NCBand Shopping\. The procurementwill be carriedout usingthe Bank's SBD for all ICB
andNational SBD agreedwith and satisfactoryto the Bank, complyingwith the following list of
exceptions to the local law that has been agreed to betweenthe Government of Egypt and the
WorldBank:
1\. Any prospectivebidder from a country eligible under the Guidelines who proposesto
provide goods producedin, or services supplied from, any such country shall be eligible
to bidfor such contracts\.
2\. Tenders shall be advertisedwith no less thanthirty (30) days for bidpreparation\.
3\. Government-owned enterprises shall be eligible provided they are legally and
financially autonomous, operate under commerciallaw, and are not selectedor hired by
the supervising or reporting authority, and shall be subject to the same bid and
performancesecurityrequirementsas other bidders\.
4\. Bidders shall be allowedto deliver their bidby handor by mail\.
5\. Bids shall be opened inpublic; that is, biddersor their representativesshall be allowed
to be present at the place where bids are to be opened and both envelopes, if two are
submitted, shall be opened at the same time\. The time for the bid opening shall be the
same as for the deadline for receipt of bids or promptly thereafter; and shall be
announced, together with the placefor bidopening, inthe invitationto bid\.
6\. Bids shall be evaluated based on price and on other criteria disclosed in the bid
documents and quantifiedinmonetaryterms, and no provisionfor preferentialtreatment
for national companiesshall be applied\.
7\. The contract shall be awarded to the bidder having submitted the lowest evaluated
responsivebid, andno negotiationshall take place\.
8\. Arabic translation o f the Bank's standardbiddingdocumentsmaybeused\.
5\. Selection of Consultants: No consultant contract will be financedunder this project\.
B\. Assessment of the agency's capacity to implementprocurement
6\. Town Gas will assist EGAS in implementingthe project from a procurementpoint o f view\.
As a result, a capacityassessmentof TownGas hasbeenundertaken\.
7\. The assessment of the capacity of Town Gas to implement procurement actions for the
project was carriedout by Annando Araujo (Procurement Consultant) inAugust, 2007 and was
updated during the Appraisal Mission held in November 2007\. The assessment reviewedthe
47
organizational structure for implementingthe project and the interaction betweenthe project's
staff responsible for procurement and other the relevant units\.
8\. Town Gas' current procurement practices follow the national law # 89 o f 1989\. Town Gas
has long standing procurement experience, which i s carried out by its Purchasing Department,
staffed with 20 officers with university degrees\. This department carries out procurement on a
regular basis for the purposes o f extending and maintaining the natural gas network in its
geographical concession area\. The material to be procured under this project i s o f the same
nature as Town Gas' routine procurement for the purposes o f its annual investment program\.
Technical support to the Purchasing Department i s provided by the Technical Department and
the Project Sector staffed with Engineers\. Overall, Town Gas' staff has solid experience in
implementing projects following its own and international donor procurement procedures,
including previous experience with World Bank loans\. The last Bank operation financed in the
sector was the Egypt Gas Investment Project which closed in June 1999, and which was
implementedwith participationofthe staffthat is today employedby Town Gas\.
9\. The Project Implementation Unit will have one staff in charge o f coordinating, following-up
and reporting to the Bank on procurement actions; however, all procurement actions under the
project will be carried out by the Purchasing Department o f Town Gas as part o f their routine
procurement as described above\. The main procurement risk identified i s the lack o f up-to-date
experience and knowledge o f World Bank procedures\. Mitigation o fthis risk commenced during
project preparation through the transfer o f capacity and knowledge by the Bank's procurement
specialist (Armando Araujo)\. To further mitigate the risk, training on Bank procurement was
carried out prior to Board approval (on November 27-28)\. In addition, an Implementation
Manual for the project will be prepared (dated covenant), which will include the detailed
procurement arrangements, procedures and biddingdocuments to be usedunder the project\.
10\. The overall risk assessment related to procurement is rated as Average\.
C\. Procurement Plan
11\.During project preparation, Town Gas developed a procurement plan for project
implementation which provides the basis for the procurement methods\. This plan was finalized
and agreed to betweenEGAUTownGas and the World Bank during the Appraisal Mission, and
i s attached to this Annex\. As illustrated in the plan, the project will include procurement o f
goods only and all procurement will be carried out using the Bank's SBD for\.ICB and the
National SBD for NCB, agreed with and satisfactory to the Bank\. The bidding documents for
the first few packages are under preparation so that advanced procurement can take place\.
12\. The procurement plan will be available in the project's database and in the Bank's external
website\. It will furthermore be updated annually or as required to reflect the actual project
implementationneeds and improvements ininstitutional capacity\.
48
D\. FrequencyofProcurementSupervision
13\. In addition to the prior review supervision to be carried out from Bank offices, the capacity
assessment of the ImplementingAgency has recommended two supervision missions annually to
visit the fieldto carry out post reviewo fprocurement actions\.
49
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Annex 9: Economic and FinancialAnalysis
EconomicAnalysis
The economic analysis assesses the benefits and costs to Egypt from developing gas
infrastructure capable o f supplying gas at various off-take points, including households in the
Greater Cairo geographical area\. The analysis has been carried out at two levels: (i) the at
GOE's Program Level, where the natural gas distribution network will be built to connect a
minimumo f2 millionhouseholds, as well as commercial, industrial and transport users, and (ii)
at the project level, where the economic benefits and costs are based on the project cost and the
anticipated 385,780 connections (300,000 consumers to be connected within the project period
and anadditional 85,780 able to be connected underthe designednetwork)\.
GOE's Program Level -- Economic Benefits
The benefits from the GOE's ProgramLevelinvestmentwill be savings ineconomic resources
from displacing household consumption o f imported LPG, transport sector consumption o f
domestically-refined gasoline and imported diesel, and industrial consumption o f mostly
imported diesel\.
Another potential benefit from the proposed investment will be an increase in the economic
welfare o f gas consumers that arises from greater consumption o f natural gas based on
consumers' willingness to pay\. This benefit varies with the type o f consumer and the evaluation
considers each consumer category separately\. In the case o f households, these services are
cooking and to some extent water heating\. The evaluation assumes that there would be no
increase in consumer welfare under the project since they already use as much o f these services
as they are willing to pay for through consumption o f LPG\. In essence, this means that the
households would not cook more or use more hot water if they switched from using LPG to
natural gas\. Inthe case o f transport users, a similar assumption i s made as for households, since
initially the targeted users are taxis, private cars and trucks that have a stable demand for fuel\.
For industrial users, it i s expected that natural gas consumption will increase on the grounds o f
convenience and safety\. Their willingness to pay depends on increases in the prices o f the
displaced fuels relative to the price o f natural gas\. A sensitivity evaluation i s performed to
capture the potential increase inwelfare for industrial users\.
The base-case evaluation employs Town Gas' natural gas consumption estimate as presented in
the feasibility study and assumesthat households consume an average of 11MMBtuper annum,
which i s derivedfrom the annual estimate o f 600 million m3for 2 millionhouseholds (25 m3per
household monthly) to be connected under the GOE's Program Level investment\. For the
transport users it i s assumed that 9,600 cars will be converted to CNG, replacing approximately
3,000 gallons/car/annum o f gasoline or approximately 360 MMBtu/car/annum with CNG\. For
industrial users it i s assumed that 86 new industrial users will be connected and will consume a
total o f 170 million m3 per annum, replacing approximately 72,000 MMBtu of
diesel/user/annum\.
51
The economic values for displaced fuels exclude the current substantial subsidies in their
domestic prices, since such subsidies constitute internal resource transfers that do not have an
economic value\. For LPG, the base-case economic value i s taken at the international price o f
LPG inclusive o f the cost o f transporting, filling and distributing LPG cylinders o f LE 62\.1 per
mmbtu(US$506 per ton)\. For diesel, its value is taken at the import value o fLE45\.8 per mmbtu
(US$349 per ton)\. And the domestic production cost o f gasoline o f LE 64\.2 per mmbtu(US$500
per ton)\.
The economic values for the safety and convenience factors o f natural gas are quantified based
on the experience o f the previous project financed by the World Bank (the Gas Investment
Project inEgypt)\. The convenience benefits have beenapproximated based on the fact that most
consumers pay to have LPG cylinders deliveredto their homes at LE 6 per household per annum
inthe base-case\. The security of supply benefit has beenapproximated by the holding cost o fa
spare LPG cylinder to guarantee availability o f LPG at LE 7 per household per annum in the
base-case\.
Industrial users also gain the safety and convenience benefits o f natural gas\. However,
experience from previous Bank projects suggests that these benefitsvary widely betweenusers,
consequently the evaluation does not include these benefits and thus the result i s conservative\. ,
GOE's Program Level -- Economic Costs
The incremental economic costs for the proposed investment consist of the capital cost, the
additional O&M costs for the transmission & distribution network to serve the target market and
the opportunity cost o fnatural gas\.
The capital cost includes the front-loaded outlay for the construction and reinforcement o f the
transmission and distribution network, household connection costs, industrial connection costs
and transport fuel conversion costs\. However, for economic evaluation, the average capital cost
per household connection of LE 2,500 (US$438) is used to allocate the capital cost over the
rollout period\. This cost i s inclusive o f material, labor and economic returnto capital employed
for the incremental transmission and distribution network construction under the proposed
project\. For industrial users, the assumed average cost per connection i s LE 100,000
(US$17,500)\. For transport user, the assumed average cost per vehicle for fuel conversion i s LE
7,500 (US$1,300)\. The additional O&M costs are captured through the average transmission and
distribution costs o f the existing system for households o f LE 6\.9 (US$1\.2) per mmbtu and non-
households o f LE 1\.4 (US$0\.2) per mmbtuof natural gas consumption\.
The opportunity cost o f natural gas that will be consumed as a result of the increased
connectiodconversion i s based on projected export values o f natural gas\. This i s because Egypt
has become one o f the world's largest exporters o f natural gas in recent years and the domestic
demand for natural gas continues to increase via the power sector, industry and household
consumers\. A study on the economic cost o f natural gas for Egypt has been completed and,
based on the study findings, the opportunity cost o f natural gas reference value o f US$3\.77 per
Mscfor approximately US$3\.65 per mmbtui s usedinthe base-caseevaluation\.
52
GOE's Program Level -Net Economic Benefit
The expected economic rate of return (EIRR) at the GOE's Program Level is estimated at
24\.8% and the net present value amounts to LE 3,245 million (US$569 million) discounted
at a 10% opportunity cost of capital\. The expected net economic benefit is substantial because
the value of displaced LPG is almost triple that of natural gas while the value of displaced
imported diesel i s about double that o f natural gas, and the value o f displaced locally-refined
gasoline triples that o f natural gas\. The following table contains key assumptions o f the
evaluation\.
GOE's Program Level-Key Assumptions
Additional natural gas consumption Afier programroll-out
Householdusers-2 millionhouseholds Total 600 million cubic meters peryear*
Industrialusers Total 170million cubic meters peryear
Transportusers Total 95 million cubic metersper year
* (25 m3/household/monthor 11mmbtu/ household/ year)
Displacedfuel costs
LPG LE 62\.1 ($ 10\.9)I mmbtu(importprice inclusiveof delivery charges)
Diesel LE45\.8 ($ 8\.0) I mmbtu(importprice)
Gasoline LE 64\.2 ($ 11\.3) / mmbtu(domestic cost ofproduction)
Opportunity costs of natural gas LE20\.8 ($ 3\.65) / mmbtu
Construction expenditures
Networkreinforcement LE 90 million (assumedto be spent in3 equalannual installments)
Rightofway (physical cost) LE215 million (assumedto be spent in3 equalannual installments)
Networkexpansionand connectioncosts:
Householdusers LE2,500 ($440) I household
Industrialusers LE 100,000 ($ 17,540) / user
Transportusers LE 7,500 ($ 1,3 15) / vehicle
Conveniencebenefits-households Basedonthe amount o ftips an averagecustomer paysto service
providersfor the deliveryof LPGcylinders to home at LE 6 / year
Supply security benefits-- households Basedonthe cost ofholding1extraLPGcylinder peryear at LE 7 I
Year
Source: Town Gas; EGAS;Arab Republic Egypt -- Connecting Residential Households to Natural Gas: An
Economic & Financial Analysis\. OBA workingpaper, no\. 7 (April); Arab Republic of Egypt -Egypt: Economic
Costs of Natural Gas\.
53
GOE's Program Level- Summary o fEconomic Benefits and Costs
LE Million 2008 I 2009 2010 2011 2012 2013 2014-28
a) ProgramEconomic Benefits
a-1\. Displaced LPG purchases 172 400 636 870 1,113 1,357 1,357
a-2\. Displaced diesel purchases 16 99 165 201 234 283 283
a-3\. Displaced gasoline purchases 56 111 167 222 222 222 222
a-4\. Safety & convenience benefits 3 8 12 17 21 26 26
Total benefits 248 617 979 1,309 1,590 1,888 1,888
b) ProgramEconomic Costs
b-1\. Program construction costs 755 960 992 882 899 899 0
b-2\. Natural gas costs, transmission and 103 262 417 557 682 815 815
distribution
Total costs
1,409 1,439 1,581 1,714 815
Net Economic Benefits -430 -130 10 174 1,073
PV o fNet Benefits @ 10% (LE Mil\.) 3,245\.5
(US$Mil\.)
EIRR 24\.8%
Project Level -Net Contribution o fUS$75 million IBRDLoan
At the ProjectLevel, economic benefits and costs are calculated based on the contribution ofthe
requested US$75 million IBRD loan\. The loan proceeds are earmarked towards the procurement
o f materials to build that part o f the infrastructure required by the total Connections Program in
geographical areas which has the potential to directly connect an additional o f 385,780
household customers in the Greater Cairo area\. In addition, and smaller number of industrial
customers and automobiles (compared to the GOE's Program Level) will be
connectedconverted to natural gas\. The expected EIRR for all customer groups i s estimated at
46\.5% and the net present value amounts to LE 1,689 million (US$296 million) discounted at
10%\. The economic rate o f return is substantial because o f the lower construction expenditures
associated with the 385,780 household connections and the front-loaded conversion rate o f
industrial and transport users\. The following table contains key assumptions o fthe evaluation\.
54
Proiect Level - K e y Assumptions
Additional natural gas consumption After project roll-out
Household users- 385,780** households Total 90 million cubic metersper year*
[ndustrial users Total 99 million cubic meters per year
rransport users Total 71 million cubic meters per year
*25 m3/household/month or 11mmbtu/ household / year
** This includes households to be connected underthe performance
guarantee by TownGas\.
Displacedfuel costs
LPG LE62\.1 ($ 10\.9) / mmbtu(import price inclusive ofdelivery charges)
Diesel LE45\.8 ($ 8\.0) / mmbtu(import price)
Gasoline LE 64\.2 ($ 11\.3) / MMBtu(domestic cost ofproduction)
Opportunitycosts of natural gas LE20\.8 ($ 3\.65) / mmbtu
Construction expenditures
Network reinforcement LE 81million(assumedto be spent in3 equal annual installments)
Right of way (physical cost) LE45 million (assumedto be spent in3 equal annual installments)
Network expansion and connection costs:
Household users LE2,500 ($440) /household
Industrial users LE 100,000 ($ 17,540) /user
Transport users LE 7,500 ($ 1,315) /vehicle
Conveniencebenefits- households Based on the amount o f tips an average customer pays to service
providers for the delivery o f LPG cylinders to home at LE 6 / year
Supply security benefits -- households Based on the cost o f holding 1 extra LPG cylinder per year at LE 7 /
year
-: Town Gas; EGAS; Arab Republic ( Egypt -- ConnectingResidential Households to Natural Gas: An
'conomic & Financial Analysis\. OBA workingpaper, no\. 7 (April); Arab Republic of Egypt -Egypt: Economic
Costs of Natural Gas\.
Proiect Level - Summary of Economic Benefits and Costs
LEMillion 2008 2009 2010 2011 2012 2013
a) Project EconomicBenefits
a-1\. Displaced LPG purchases 51 262 262
~
a-2\. Displaced diesel purchases 16 165 165
a-3\. Displaced gasoline purchases 56 167 167
a-4\. Safety & convenience benefits 1 5 5
Total benefits 124 598 598 598
55
LE Million 2008 2009 2010 2011 2012 2013 2014-28
b) ProjectEconomic Costs
b-1\. Projectconstructioncosts 248 342 344 100 114 0 0
b-2\. Natural gas costs, transmission and 49 141 225 237 251 251 251
distribution
Total costs
297 483 569 337 365 251 251
Net EconomicBenefits -173 -144 -3 1 229 233 347 347
PV ofNet Benefits @ 10%(LE Mil\.) 1,688\.9
(US$ Mil\.) 296\.3
EIRR 46\.5%
Sensitivity Analysis
Sensitivities on selected variables indicate the GOE Program Level's robustness to a number o f
adverse scenarios\. Scenario m), n) and 0) below incorporate the World Bank's crude oil price
forecast which forecasts a decline from US$55/barrel average in 2007 to US$35/barrel in 2015
and onwards - in determining the value of displaced fuels and o f the opportunity cost o f natural
gas\.
EIRR(Yo) NPV@, 10%
(LE million)
Base Case 24\.8% 3,245\.52
a) Construction / conversion Cost -25% 35% 4,155
b) Construction / conversion Cost +25% 19% 2,336
c) LPG import price -25% (from $506 per ton -delivered) 15% 1,036
d) LPGimport price +25% 36% 5,455
e) Opportunity cost o f gas -25% (from $3\.65 per MMBtu) 30% 4,332
f) Opportunity cost o f gas +25% 20% 2,159
g) Householdaverage gas consumption volume -25% 19% 2,021
h) Household average gas consumptionvolume +25% 31% 4,470
i)Totalaveragegasconsumptionvolume-25% 17% 1,503
j) Total average gas consumptionvolume +25% 33% 4,988
k)Increase industrialgas usage 5% per annum 25% 3,488
1) b + f + i 9% (221)
m) LPG/dieseVgasoline/opportunitycost o fgas linkedto
World Bank's crude oil price foreca~t'~ 16% 1,103
n)b+m 11% 193
o ) b + i + m 6% (1,014)
l3World Bank's Prospects for the Global Economy2007, April 2007
56
From the sensitivity analysis, it can be concluded that there i s a high probability that the GOE
Program Level investmentwill yield an economic rate o f return well above the opportunity cost
o f capital o f 10%\.
Financial Analysisof EGAS:
The beneficiary ofthe World Bank loan is the EgyptianNational Gas HoldingCompany (EGAS)
which i s the State enterprise responsible for the development o f the natural gas sector inEgypt\.
EGAS was established in 2001 as a state holding company, responsible for representing the
Government's interest in the gas network and also for the further development o f natural gas
markets both domestically and for export\. Currently EGAS holds the Government share in a
numbero fjoint ventures including gas field development, LNGprocessing and export, and CNG
production and marketing\. EGAS i s currently engaged in projects to expand the national gas
transmission, and distribution network to increase gas penetration into domestic household,
industrial and commercial markets\. Inaddition, EGAS i s also investingin further expanding its
LNGprocessing facilities, and extendingits network to export markets\.
The company's investmentactivities are largely debt-financed\. Funding for debt service, as well
as for self-financing o f the investment program, i s provided by: (i)revenues from the sale o f
natural gas (including LNG for export, which started inJanuary 2005), (ii) service fees from the
transmission and distribution network, and (iii) and profit sharing from its holdings injoint
fees
venture and subsidiary companies\.
In its role as the Government agency responsible for development of the gas distribution
network, EGAS i s responsible for payment of the government share o f connection costs (LE
1,000 per household), and as such will be responsible for receiving and repaying the World Bank
loan\.
EGAS's financial history is somewhat limitedand financial statements are available only for the
years ended June 30, 2004 - 2007\. Financial results were also presented for 2003, but
representedonly a few months o foperations; and hence do not provide a basis for comparison\.
Highlights of the company's past performance are provided in the table below\. The dramatic
growth inrevenues in2006 represented the first full year duringwhich EGASreceiveda share o f
the export value o f LNG\.
57
(million LE) Actual
Year EndingJune 30 2004 2005 2006 200:
Gross Revenues 185 1,883 4,277 4,291
OperatingExpenses (282) (1,802) (3,607) (3,395
FinancingExpenses (10) - (8) (20
Other Revenues/(Expenses) 19 56 139 110
Net Incomebefore Tax (89) 137 801 987
Net CashFlow 21 586 (91) (514
Investment inLongTermAssets** 181 78 1,001 1,537
Debt Service Obligations 258 604 309 144
Debt Service Coverage Ratio (1\.5) 1\.7 116\.1 (3\.1
Current Ratio 1\.4 1\.1 1\.o 1\.
EGAS has provided a summarized budget o f income, capital investment and cash flow for the
period from 2008 - 2013\. These were used as a basis for preparing pro forma financial
statements for the company for that period\. Key assumptions usedinpreparing the forecasts are
summarized below:
Forecasts for sales revenue, operating expenses and capital investments,as well as capital
expenditure financing plans were taken from the EGASbusiness plan for 2008 -2013\.
Apart from the IBRD loan, which will finance $75 million o f the future capital
expenditure program, other future loans were assumed to be repayable over a 13 year
periodwith a 3 year grace period at an interest rate o f 10%\.
Assumed on-lending terms for the IBRDloan were 20 years repayment including 8 years
grace at an interest rate o f LIBOR + 0\.05%\. The upfront fee o f 0\.25% was assumed to be
financed from the loan\.
EGAS was assumed to retain 80% of its annual profits in various reserves\. The
remaining profits have traditionally been transferred to EGPC in the form o f dividends
declared at the discretion o f the Supervisory Board\. This practice was assumed to
continue inthe future\.
Accounts receivable from subsidiaries and affiliated companies were assumed to be
maintained at the equivalent o f 90 days o f revenues from LNG sales\. Receivables from
government were assumed to be equivalent to 120 days o f revenues from service fees\.
Accounts payable to suppliers were assumed to be 25% o f total material purchases\.
Payables to subsidiaries were assumed to be 25% o fpurchased services\.
Highlights of the impliedresults interms of the company's financial position are summarized in
the table below\. Pro forma financial statements are available inthe project files\.
58
Egyptian NationalGas Holding Company
Highlights of Financial Performance
(million LE)
Year EndingJune 3( 2008 2009 2010 2011 2012 201:
Gross Revenues 4,576 5,236 5,801 6,385 7,015 7,620
OperatingExpenses (3,141) (3,945) (4,170) (4,511) (4,789) (5,102
Financing Expenses (249) (404) (534) (661) (804) (1,002
Other Revenues/(Expenses) 147 48 41 106 24 33
Net Income before Tax 1,333 934 1,139 1,319 1,446 1,550
Net Cash Flow 1,607 299 1,070 1,086 1,257 1,314
Investment inLong Term Assets** 3,497 1,288 2,246 1,264 2,603 2,739
Debt Service Obligations 166 404 458 439 524 637
Debt Service Coverage Ratio 6\.3 1\.5 2\.3 2\.1 2\.2 2\.0
Current Ratio 1\.9 2\.1 2\.2 2\.5 2\.7 2\.:
** includes purchase o ffixed assets and investment in subsidiaries
EGAS has a limitedoperating history inproduction, supply and export of natural gas, since the
company has been relatively recently created and the sector i s still in a transition phase\. The
above projections suggest that EGAS's future performance will be satisfactory, and that it will be
able to meet its financial obligations related to the project and the repayment o f debts\. Close
monitoring will be required during supervision to ensure that actual performance i s in line with
the projections\. As such, it is proposed that selected indicators o f financial performance be
monitored to ensure the ongoing viability o f the company\. The agreed indicators to be
monitored and their target levels are as follows: (i)debt-service coverage ratio o f not less than
a
1\.2; and (ii)a current ratio o f not less than 1\.2\. The target levels are designed to ensure a
minimum level o f satisfactory performance and take into account some uncertainty that may
remain around its future financial performance, given its relatively recent establishment\.
59
Annex 10: SafeguardPolicyIssues
Introduction
The proposed project will support the Government's ongoing program to expand the access to
pipednatural gas inthe Greater Cairo area where the feasibility study prepared by Town Gas has
estimated that approximately 2 million households can be connected to the network over the next
6 years\. This number has been determined based on criteria established for suitability o f
connections, taking into account issues related to safety and structural integrity o f buildings\. The
rationale for the Government's program i s to replace the consumption o f the relatively more
expensive Liquefied Petroleum Gas (LPG), which to a large extent is imported, with the
relatively cheaper piped natural gas, which in addition to reducing the energy sector subsidy
burdenwill also provide consumers with greater safety through the extensive regulation o f this
product as well as enhanced convenience\.
Dueto the nature and extensive geographic coverage o fthe proposed project and the uncertainty
as to the exact roll-out o f the consumer connections and some o f the associated network
infrastructure, an Environmental and Social Impact Assessment Framework (ESIAF) rather than
a detailed Impact Assessment has been prepared\. The aim o f the ESIAF i s to: (a) provide an
overview o f the anticipated environmental and social safeguard issues related to natural gas
distribution and connections to households inthe Greater Cairo Area; (b) develop environmental
guidelines to be followed for the subsequent gradual phased implementation o f the Project, (c)
propose the necessary mitigation and monitoring plans to ensure an environmentally and socially
sustainable project implementation, and (d) identify the necessary human and financial resources
necessary for environmental implementation\. It is important to note that the ESIAF was
prepared for the entire GOE's program o f connecting 2 million households in the Greater Cairo
Area, o fwhich the World Bank project will be financing the connection o f 300,000 households\.
The ESIAF was prepared by a consortium o f independentenvironmental and social consultants
from EcoConServ Environmental Solutions, with guidance from Petroleum Safety and
Environmental Services Co\. (PETROSAFE) with regards to safety aspects pertaining to the
operation o f PressureReduction Stations (PRS)\. The work was carried out according to Terms o f
Reference reviewedand approved by the World Bank\.
The Government'sProgram
The GOE's program will comprise adding reinforcement in about 40 km in the existing
transmission mains (70 and 30 Bar) surrounding Greater Cairo; establishing five new (PRS) with
addition o f odorant infive o f them, establishing distribution network o f different pressures (7-0\.1
bar) and gate regulators, establishing connections to residential units (at no more than 0\.1 bar)
and conversion o f home appliances for preparing them to receive natural gas\.
To enable the connections, significant upfront network investment i s required\. As such, network
development and connections in household premises happen simultaneously across the targeted
project area (Greater Cairo)\. Therefore, although the main features o f the project has been
identified; details o f pipeline routings, exact locations o f Pressure Reducing Stations and city
head regulators have not been confirmed at this stage\. Such details will be completed during the
60
course o f implementation o f the program\. Furthermore, while a roll-out plan exists for the 2
million consumers, in reality the progress will vary depending on the status o f contracts signed
with customers\. Nevertheless, over the proposed timeframe, the 2 million customers will be
connected to the pipedgas network\. The network will be designed according to the standards of
the Institute o f Gas Engineersand Managers (IGEM) o f the UK\.
About 1\.8 million inhabitants of Greater Cairo are already connected to the natural gas network\.
The service has started inmany districts o f the city since early 1990s\. The project will cover 28
districts in Cairo and Giza Governorates\. The program will introduce the service in new areas
which have not been connected before, and will further extend the network in areas which are
partially covered\.
Duringaninitial survey ofthe areas, anattempt hadbeenmade to categorize the properties based
on experience gained inthe previous projects inGreater Cairo\. The categories are:
0 Category "I" condition and easily accessible single storey dwellings and flats:
Good
comprising Villas ranging in consumption from lm3/hrto 40m /hr, depending on the
existence o f swimming pools, boilers, in addition to the conventional types (cooker), etc\.
Eg\.New Cairo\.
0 Category "11" Flats and other dwellings o f a reasonable standard inareas with reasonable
access: Rate o f consumption from 0\.1 to 0\.4 m3h\.Areas: El Maadi, Masr El Gededa,
Down Town, Nasr City, Faisal, ElHaram, ElAbbasia\.
0 Category 111" Poor housing with possible access problems and likelihood o f structural
problems: Rate o f consumption from 0\.1 to 0\.25 m3/hr\.Areas: El Wayly, El Zawya El
Hammra, El Matria, Ein Shams, Dar El Sallam, Basateen, El Sharabia, Omrania, El
Moneeb, Sakyet Meky, Bolak, Embaba, ElWaraak\.
It is worth noting that areas where weak structures exist are classified by Town Gas as 'In0 gas
area" to avoid possible structural problems associated with establishing the network\.
Although the exact location o f four o f the new PRSs are not yet settled, it has been already
confirmed that they will be located in El Haram, New Cairo, El Mokatam and El Shorouk
districts\. Town Gas has submittedrequests to local authorities for allocating locations in each in
these districts; however site allocation has not been finalized as o f the time o f appraisal\. For the
first four PRSs, Ranges o f 1-3 km in desert roads, and the ring road, for each PRS location are
presentedto local authorities to select 50 x 50 m areas for each PRS\. All these ranges are in
unpopulated areas\.
The location o f the fifth PRS, in Tebbin district will be within an existing gas complex, which
already includes an operating PRS operated by GASCO\. The Tebbinlocation i s the only location
in a relatively populated area\. The proposed site has a house located adjacent to its southern
border\. However, mitigation measures are proposed in the ESMMF to reduce the potential
impact on the nearby residents\.
61
Analysis of Alternatives
N o projectAlternative: The Natural Gas Connections Project in Greater Cairo coincides with
the entire Government Energy Strategy to expandnatural gas connections among households, as
well as among other sectors\. This energy strategy is expected to yield many economic and social
benefits in terms o f providing a more stable energy source, achieving savings in LPG
consumption and enhancing safety inutilizing energy\.
The k o project alternative" has been discussed with a sample population from the local
community, in the social survey undertaken among the activities o f the ESIAF\. Many people
thought the 'ho project alternative" will prevent achieving many advantages that are expected as
results o f the project, such as:
0 Providing clean and stable source o f energy;
0 Improvinghouse cleanliness, as LPG cylinders usually contains dirt and insects;
Reduce noise causedby LPG distributors;
0 Reduce price o f LPG cylinders due to reduced demand; and
Reduce inconvenience to handicapped people, in delivering LPG cylinders to their
houses\.
Alternative Energy Sources: Two alternative energy sources could be considered for
comparison purposes with the proposed expansion o f natural gas distribution included in this
project, which are (a) to continue with LPG as current practice, or (b) to convert to electricity\.
Eachi s considered inturn below\.
LPG\. The majority o f LPG consumed in Egypt is imported and its costs are subsidized by the
Government to ensure that it i s affordable by the lower income groups; however there i s no
differentiation and everyone benefits from the subsidy\. Introduction o f piped natural gas to
replace LPGwill helpto remove those subsidiesand reduce the import o fthat fuel\. The proposed
project i s also expected to produce very positive improvements in gas utilization safety\. In the
natural gas industry inEgypt, appliance standards, fittings and conversions are strictly controlled
and only trained and qualified people are allowed to carry out installation\. In the case o f LPG,
this does not apply so the conversion o f existing LPG appliances helps to eliminate existing
unsafe installations as well as expansion o funsafe use o f LPG\.
Electricitv\. The second alternative i s to convert all homes to use electricity for all energy supply
applications\. Whilst electricity i s more efficient at the point o f use, there are considerable
inefficiencies inpower generation from fossil fuels with about 50% efficiency ifcombined cycle
plants are available\. Additional power stations would be needed to cope with the additional
demand created by utilization o f electricity inhomes, which most probably would work also by
natural gas\. Power losses through transmission and distribution are also significantly higher than
their natural gas equivalents which would addto the overall inefficiency o fits utilization\.
Sequence of Progressing Alternatives: Construction of the gas network within the city
comprise two main components, the first being the distribution network in the direction o f
longitudinal roads, and the second being the connection network to the residential units
perpendicular to road direction on both sides\.
62
Progressing from constructing the distribution network to constructing the connection network
could be practiced through two alternatives:
Alternative 1: Complete the construction o f the distribution network and then start the
connection network at a later stage\.
Alternative 2: Complete both networks simultaneously inone stage
Advantages o f Alternative 1over Alternative 2 are:
0 Technical problems during line testing could be avoided, as detecting leaks in the main
pipewill be much easier ifno connections are placed;
0 Phasing o f connections could be done corresponding with signed contracts for new
customers;
0 Lower risksfor re-excavating parts of the line including leaks; and
0 Shorter traffic disturbance time for the first excavation stage because there are no lateral
intersections with the traffic flow\.
Advantages o f Alternative 2 over Alternative 1are:
0 Amount o f excavatiodfilling works slightly less, because intersections between mains
and connection trenches are excavated only once;
0 Makes mobilization o f equipment, areas o f storage occupied only once; and
0 Traffic disturbance occurs only once\.
The environmental benefits and negative impacts for the two alternatives are close\. The amount
o f excavations in the two alternatives are approximately equal, however, the second alternative
has a clear advantage o f causing disturbance only once for the same street, inaddition to less air
emissions and traffic disturbance caused during equipment mobilizations\. Assuming all other
technical or financial factors are equal then Alternative 2 may be slightly more advantageous
from an environmental perspective\. However, because phasing o f connection works will depend
mainly on developing contracts with new customers, it i s envisaged that there would not be
objection ingoing along with Alternative 1\.
RoutingAlternatives: Routing alternatives apply to transmission mains, distribution mains and
connection mains\. For transmission mains alternatives, the selected project alternative i s to
provide reinforcements to the existing mains using the same route\. The main advantage o f this
selection i s to get the benefit from the design o f the existing route which forms a ring around
Greater Cairo\. This helps access to different geographic locations with a minimum length o f
pipelines\. Forming another route for the required new mains will achieve the same technical
objective, but by losing this advantage\. Therefore the reinforcement alternative i s the favored
one\.
Deciding on routing alternatives for the distribution and connection networks i s premature at this
stage\. However, selecting optimum routes for these networks is crucial to avoid as much
environmental and social impacts as possible\. It i s very important to avoid as much as possible
sensitive sites to minimize environmental and social impacts, therefore this has been considered
intheEnvironmentalManagement andMonitoring Frameworkpresentedbelow\.
63
LikelyImpactsandMitigationMeasures
Positive Impacts\. According to the ESIAF, achieving the project objectives will yield many
social, economic and environmental benefits, and will help in meetingthe targets o f the overall
Energy Strategy for the country\. Among the social benefits that could be achieved by the project
duringthe construction phaseare:
Provide job opportunities to semi-skilledand unskilled laborers\. Those are mostly poor
people and their living conditions are harsh\. This project for them i s o f a major
importance, since it would be their main source o f income duringthe constructionphase\.
0 Achieve benefits to owners o f cafks and small restaurants in the project areas from
providing services to the construction workers\.
Moreover, there will be numerous benefits accruing to the society from the project during the
operation phase, some o f which are:
From a safety standpoint, usingnatural gas at residential areas i s much safer than the use
o f LPG cylinders, due to the reduced risk o f fire accidents\.
N o threats o f harmful behavior from gas cylinder distributors who enter homes to change
the cylinders\.
Avoid contamination with insects and dirt which are normally associated with LPG
cylinders\.
NGi s available around the clock, which eliminates inconvenience caused when the LPG
runsout duringuse
Avoid noise associated with LPG cylinder distributors
Reduce LPG cylinders' prices inthe city, which will be to the benefit o f poor people who
are not connected to natural gas
Minimizes difficulties o f getting gas cylinders for handicapped people, women and
elderlypeople\.
The project will also result insome environmental benefits, such as:
0 Reducing exhaust emissions and dust generated from LPGtrucks,
0 Reducingtraffic o f such vehicles,
0 Reducing consumptiono f fossil fuel by such vehicles, and
0 Reducing environmental impacts associated with production and storage facilities o f LPG
cylinders\.
PotentiallyNegativeImpacts\. By analyzing project activities duringthe construction phase, the
ESIAF identified the following most significant negative impacts that may be encountered\.
Mitigation measures to these potentially negative impacts are provided in the Environmental
Management Matrix shown inthe following\.
Reduction of Traffic Flow\. The installation o f the natural gas network i s bound to affect the
traffic operations during construction\. The construction will entail narrowing major roads by
longitudinal and/or lateral excavation\. Either method will produce different levels o f impact on
the major roadnetwork\.
64
The narrowing o f the roadwill reduce the number o f traffic lanes available for traffic movement
and may also entail the prohibition o f on-street parking along the length o f the road works\. The
narrowing may reduce the right-lane either partially or totally\. In either case, motorists would
avoid the construction site and be diverted to adjacent lanes, therefore potentially creating a
crowding effect\.
Air Emissions\. Air emissions during construction will arise from: (a) Excavation / backfilling
operations which generates suspended particles, (b) dispersion from stockpiles o f waste or sand
used for filling trenches, and (c) Exhaust from excavation vehicles (excavators, trenchers,
loaders, trucks) containing SOX, NOx, CO, VOCs, etc\. The effects o f such impacts are expected
to be local, reversible, and short term; especially that soil stockpiling i s normally minimal at the
site, and i s normally filled within the same day\. Another indirect source o f air emissions i s the
traffic congestions that may occur\. Air emissions from vehicles are usually effected by different
modes o ftraffic, including traffic congestions\.
Noise\. Construction activities will increase noise levels caused by excavation machinery\.
Construction noise varies from increase o f noise intensity due to engine operation, and
intermittent impacts which may take place during demolition o f asphalt, either by a trencher or
by a jack hammer\. The effects on construction labor are considered more significant, because
they are exposed to high levels o f noise for relatively longer periods\. Residents o f neighboring
areas are the second level recipients o f elevated noise levels, as the noise intensity will be
relatively dissipated at their locations\. Inaddition, traffic congestions, which could be caused by
excavation works, may also have an effect on noise levels in the area, which may increase
ambient average noise intensity levels\.
Risk to infrastructure\. Most o f underground infrastructure pipeline (such as water, sewerage and
telecommunication) in Greater Cairo has been established a long time ago, without accurate
documentation for its routes and depths\. Therefore, the risk o f breaking infrastructure lines i s
relatively high\. Normally the contractor applies manual excavation to avoid such situations
where he is obligedto pay for the damage\.
The most important environmental impact will arise in the case o f breaking a sewerage pipe,
where wastewater may accumulate in the trench and, possibly, flood onto the streets causing
significant nuisance to the surrounding environment\. The breakage o f a water supply pipe may
result in cutting the supply to a number o f residential units, which may, if it i s not repaired for a
long period, direct residents to use other sources o f water which may either be expensive or
unsafe\. The effects o f cutting telecommunication cables during excavation are mainly
socioeconomic, due to cutting possible business communications\.
Effects on some structures\. Weak and old structures are very sensitive to differential settlements,
which could be caused, mainly, by dewatering\. Excavation for natural gas pipelines i s usually
shallow and does not exceed 1\.0 meter depth\. Invery few areas in Greater Cairo, ground water
depthmay be less than that\.
Effects on cuZturaZZv valuable sites\. The effects on culturally valuable sites could take place
according to the following reasons: (a) causing structural damage to a moniment due to possible
dewatering during excavation; (b) causing effects on a monument's foundations due to
65
excavation works; (c) causing damage to the monument's body by vibration o f machinery; (d)
reducing the aesthetic value o f the site; and (e) improper management o f discovered antiquities
duringexcavation\.
Waste disposal\. Wastes that are generated during the construction phase include: (a) excavated
soil and excess sand, (b) concrete and bricks waste; (c) demolished asphalt, (d) containers o f
chemicals and lubricant oils used for construction machinery, (e) possibly damaged asbestos
water pipes during excavation; (f) dewatered water from trenches\. The improper disposal o f
these wastes could generate environmental impacts on the surrounding residents, in terms o f
nuisance and/or vector accumulation\.
Duringoperation,the following have beenidentifiedas potential negative impacts:
Improper handling of the Odorant\. The odorant containing Tertiobutylmercaptin (80%) and
Methylehylsulphide (20%) is classified as a hazardous substance\. Improper handling o f the
odorant includes: (a) storage inunsafe conditions, interms o f occupational health and safety; and
(b) leakage to the environment causing different types o fhazards related to its highreactivity and
possible production o f pollutants\. This release to the environment could take many forms such
as: (a) discharge o f remaining odorants in containers, after use, inland or sewers; (b) disposal o f
usedcontainers with domestic waste, or by open disposal; and (c) recycling o f used containers
for other materials\.
Noise of PRSs\. The pressure reducers cause noise generated from the reducers' pipes\. These
reducers normally raise noise level by a few decibels besidetheir location\. The generated noise i s
constant (not intermittent) and normally dissipates beyond a few meters\.
Safety asuects of PRSs operation\. The safety risks associated with the operation o f PRSs have
beenassessed for the workers and the public at large using Quantitative Risk Assessment (QRA)
modeling and the results have beencompared with international risk acceptance criteria "As L o w
As Reasonably Practical -ALARP"\.
The risks have been assessed for the industrial workers and general public representingthe two
types o f risk namely the "Individual Risk" and "Social Risk" within the PRS\. For the general
public, the simulation assumedthat the station i s surrounded by busy roads, as well as the public
buildings\. The conclusion drawn from the QRA i s that the risk i s within the acceptable limits, if
safety precautions have been considered and strictly followed in the design, operation and
maintenance o f such facilities\.
66
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EstimatedResourcesand Budgetneededfor the Implementationof ESMMF
It has been concluded from the assessment o f the existing practices o f EGAS and Town Gas
Health, Safety, and Environment (HSE) Departments are following sound environmental
procedures in the operation phase\. However, the involvement o f both departments should be
emphasized duringthe design, tenderingand constructionphases
Town Gas management should take procedures to involve the HSE department in the approval
and clearance steps o f project designs, tenders evaluation, phasing o f implementation and
construction\. The involvement o f Town Gas HSE Department should be reported in their
monthly and annual reports submitted to EGAS, who should make sure that the integration o f
environmental aspects i s adequately addressedduring design, tendering and construction\.
The existing manpower for EGAS i s considered suitable for their role inreviewing monthly and
quarterly reports produced by Town Gas, and performing infrequent inspection visits to PRSs\.
However it i s recommended to increase the manpower capacity o f Town Gas through recruiting
additional personnel\. The estimated manpower to be used exclusively for the environmental
management and monitoring o fthe project is:
About 3,000 person-days per year for an HSE site supervisor o f constructionworks\.
0 About 100person-days for input during design and tender phase, to provide assistance in
incorporating environmental and social measures in the design and in the specific
conditions o f the contracts\.
0 About 100 person-days per year for following up mitigation and monitoring through the
operation phase\.
The following are the recommended training programs for EGAS/Town Gas staff to build their
capacity for managingthe project\.
76
Trainingcourse Particpating Proposed
parties Scheduling
Tailored training on Class room - Environniental Depiirhnent Before detailed LE50,000kourse
Environmental +onjob staff o fEGAS design of the
Managenlent and training - HSE staff of Town Gas project
monitoringfor theproject - Design, Projects ,and
Operations department staff
(responsiblefor the project) o f
Tolm Gas
Treatmento fodorant OnJob - PRS staft' - Oncebefore start Management
containers training - HSEstaff o f TownGas operation ofPRS costs ofTown
-To bepnrt o fthe Gas
oreintation ofnew
PRS staff andHSE
staff of Town Gas
during project
operation
Safety aspectsofPRS Classroom - PRSstaff - Oncebefore start L\.E\.
+ onJob - HSEstaff o f Town Gas operation ofPRS 20:000/cource
training - Tobep\.art ofthe
oreintation ofnew
PRSstaffandHSE
staff of Town Gas
during pro-ject
operation
Enliroixnentaf auditing Classroom - New HSEstaff ofTown Gas - Onceupon L\.E\.
<andinspection +onjob recruited for the project recnutement of 20,000icource
training new HSE staff
The estimated budget for implementing recommended environmental management and
monitoring activities is US$850,000 during the six years o f implementation o f the entire
program\. EGASwill finance the implementation o fthe ESMMF
The breakdownfor this budget is as follows:
0 US$270,000 as salaries/benefits for new Town Gas' Health Safety and Environment
supervisors to be recruited for the project\. It has been assumed that 10 new staff members
will be recruited at a total cost of US$45,000 / year\. Cost o f inputrequiredby existing Town
Gas / EGAS staff members i s not included\.
0 US$25,000 for monitoring vehicles emissions\. It has been assumed that 30 excavation
vehicles will be working each year and will be monitored on a quarterly basis\. This cost i s
expected to be over normal contractor bidprices\.
0 US$300,000 for mitigation and monitoring activities for antiquity sites\. It should be noted
that there was no accurate estimation for number o f antiquity sites that needs supervision\. In
order to reach an estimated budget, it has been assumed that the number o f sites requires
mitigatiodmonitoring i s 50 sites, each shall costing US$6,000\.
0 US$55,000 gas detectors and PPE inPRSs\.
0 US$55,000 for training and capacity buildingfor Town Gas staff\.
0 US$25,000 for awareness for citizens inthe 28 districts\.
77
US$5,000 allowance for possible extra waste disposal requirements, which could be extra to
normal contractor bidprice\.
US$20,000 for disposal o f odorant containers in the hazardous waste facility in
NasserydAlexandria\.
US$l0,000 Allowance for maintenance, rehabilitation and possibility purchase o f new noise
monitoring equipment\.
US$85,000 for contingencies and confrontation o funforeseen circumstances\.
Resettlement Policy Framework (RPF)
Since some o f the project's physical components may result in involuntary resettlement/land
acquisition, OP 4\.12 on Involuntary Resettlement i s triggered, and a Resettlement Policy
Framework (RPF) has been prepared\. An RPF i s the instrument used, because the nature and
extent o f land acquisitiodresettlement o fthe various sub-components are not known at appraisal\.
Inthe context of this project, this applies e\.g\. to the construction of pressure reduction stations
which may entail some degree o f land acquisition and/or resettlement\.
The key purpose o f the RPF is to establish resettlement objectives, principles; organizational
arrangements and finding mechanisms for any resettlement operation that may be necessary
during the implementation of any o f the subprojects\. When during implementation the exact
extent of land acquisition becomes known, Resettlement Action Plans (RAPs) or abbreviated
RAPs - dependingon the scale and severity o f impacts - are prepared\. The resettlement process
should be completed prior to the start o fphysical works\.
Principles and objectives governing resettlement
The RPF discusses legal and institutional aspects o f expropriation, and in some areas Egyptian
law and Bank rules and regulations differ, although actual practice might not differ as much as
indicatedinthe law\.
Minimization of resettlement: The expropriation o f land and resettlement is minimized according
to Egyptian law, and within the framework o f the Constitution, the Civil Code in Article 805
states that "No one may be deprived o f his property except in cases prescribed by law and this
would take place with an equitable compensation"\. Although squatters and tenants are not
covered by the law, these groups are, as elaborated in the RPF, rarely resettled without
compensation\.
Legal process is obligatory: All expropriations and activities related to resettlement must be
carried out according to Egyptian law\.14 Any occupant subjected to resettlement has the right to
complain within 15 days o f receiving the notification to a specialized committee established by
the appropriate authority\. The committee should reach its decision concerning the complaint
within amaximum of one month\.
l4Articles 29 and34 on propertyrightsofthe 1971 Constitution, Civil Code, Articles 802-805 (onprivateproperty)\. To reflect
this constitutionalmandate, Law 10of 1990 concerningtheExpropriationofOwnershipfor PublicInterestwas issued\.In
addition,expropriationo f property is hrther regulatedby Law 59 of 1979 (EstablishmentofNew Urbancommunities andLaw 3
of 1982 concerningUrbanPlanning\.
78
Compensation and eligibilityprinciples: Compensation for lessees and squatters is not explicitly
,
addressed in Egyptian law\. However, although the government, legally speaking could dispose
o f e\.g\. squatter land without compensation, inreality this right i s almost never exercised, and as
indicated inthe RPF, some form o f compensation i s provided\.
Proceduresfor preparing and approving RAPS
1\. Expropriation procedures start with a declaration o f public interest pursuant to a
Presidential Decree accompanied with a memorandum on the required project and a
complete plan for the project\.
2\. Based on the above, Egyptian General Authority for Land Survey (ESA") submits
request to the President or the Prime Minister including proposed compensation level
to be offeredto the concerned property owners\.
3\. If approved, the President would issue the required decree declaring the property in
question appropriated inthe public interest\.
4\. ESA conducts necessary technical and survey operations to obtain information on the
property\.
5\. A committee composed o f a representative o f ESA, a representative o f the local
government unit within which jurisdiction the project i s located and the treasurer o f
the local area in question is established\. The committee shall declare its activities to
the public 15 days prior to the commencement o fits work\.
6\. ESA shall inspect the property o f the project in question and estimate compensation
to be considered by the Compensation Estimation Committee\.
7\. Lists o f all real properties and facilities beingidentifiedshall be prepared, their areas,
location, description, names o f their owners, and holders of property rights therein,
their addresses, and the compensation determined by the Compensation Estimation
Committee\.
8\. ESA shall thereafter officially notify the property owners and other concerned parties\.
Lists with detailed information will be posted for a period o f 1month inthe offices o f
the concerned local government unit and shall also be published in the Official
Gazette and intwo widely read daily newspapers\.
9\. Owners and concerned parties shall be officially notified with an evacuation request
within a periodnot to exceed 5 months from the date oftheir notification\.
Estimatedpopulation displacement and/or land acquisition
Cannot be determinedprior to appraisal\.
Categoriesof project affected people
''EgyptianSurvey Authority
79
Project affectedpeoplewill include owners, tenants and people without formaltenure\. The poor
andvulnerable (e\.g\., widows, handicapped,pensioners)will requirespecific attention\.
Gaps betweenEgyptian laws and WorldBankpolicies
There may be gaps in several areas which may require conciliation including: the definition of
resettlement,methodsto calculatecompensation, legalstatus of squatters, and support duringthe
transitional period, as well as level of attention givento vulnerable groups\. (A table comparing
Egyptianregulationswith WorldBankpolicieshas beenincludedinthe RPF)
Methodsfor evaluating assets
Compensation of Lands and Structures: Determination of the compensation to be given to
expropriated property owners and holders of rights therein is made at two separate levels\. The
first is made by the Expropriating Entity in order to meet the requirement that the estimated
compensationamount is depositedwith ESA prior to proceedingwith the remainingformalities\.
The second level is a review of the estimated compensation by the Compensation Estimation
CommitteewithinESA\.
Compensationis determinedpursuantto prevailingprices at the time the expropriationdecree is
issued and the estimated compensationamount shall be deposited with ESA within one month
from the date of such decree\. It is possible, ifapprovedby the propertyowners or rightholdersto
obtainin-kindcompensationeitherinfull or inpart\.
Valuation and compensation of structures: The value o f structures to be,demolished will be
assessed by professional evaluators, either from the ESA, or from private offices certified by
ESA\.
Valuation of losses of income for businesses: Estimate of net monthly profit o f the business,
based on records if any, on operator's statements, cross-checked by an assessment of visible
stocksandactivity\. Applicationofthis netmonthlyprofitto the periodduringwhichthe business
i s preventedto operate (should be between 2 and 6 weeks in most cases)\. The risk of losing
income for the gas bottle distributors, is howeveran indirect consequenceofthe project, andit i s
therefore not a safeguard issue\. Given the rapid developments of informal settlements around
Cairo job opportunities for gas bottle distributors are, as indicated in the RPF, likely to arise
elsewhere
Grievance redress
As outlined in the RPF, grievance redress mechanisms include both a proactive approach
(widespreaddisclosure ofproject, clarificationof eligibility criteria, etc\.) and a reactiveapproach
(settling disputes amicably at the local level, involving project management, the courts)\. All
concerned partieshave the right to object to the compensationdetermined\. Grievancesresulting
from misunderstandingsof policy or neighbor conflicts are often solvedthroughmediation\.The
first instanceof dispute handlingwill be set up with the aim of settling disputes amicably\. The
concerned owners have the right, within 30 days from the date of posting the lists and
80
information o f the expropriated properties, to object (to the ESA) to the information contained in
such lists\. In case o f disputes between several individuals, each party must present all relevant
evidence within 90 days from submittingthe memorandum o f objectiodgrievance\. The ruling o f
ESA can be appealed to the Court and must be done within 60 days\. Court cases are known to
requirelongperiods o ftime before settlements can be reached\.
Mechanisms for consultation with and participation o f affected persons in planning,
implementation and monitoring displaced persons are provided timely and relevant information,
but are not, according to Egyptian law, consulted on resettlement options and do not participate
inplanning, implementationandmonitoringofthe resettlement process\.
Vulnerablegroups
Inthe context of this project, those described as the poorest in the Willingness to Pay (WTP)
study and who may be affected by the project, should be given specific attention\. According to
the WTP the poorest sections o f the population include among others widows, pensioners,
unemployed handicapped and workers making less than LE 500 per month\. Additional details
on vulnerable groups i s available inthe WTP\.
Budget and sources of funding
OP 4\.12 states that the full costs o f resettlement necessaryto achieve the objectives o f the project
should be included in the total costs o f the project\. However, in this project where the various
interventions will not be known at appraisal, site-specific Resettlement Plans - as these are
developed - should present the details on costs and financing sources\. These should include all
costs related to the resettlement process, including compensation and administrative costs as well
specific sources o f funding\.
Monitoring of implementation
Ineach case when any type o f land acquisition and compensation is involved, all actions should
be documented, including responsible agencies, expected completion date, and if delayed, the
reasons should be specified as well as the new expected completion date\. As part o f the reporting
to the World Bank, the P M U will prepare quarterly monitoring reports which will include
monitoring and reporting o f any resettlement and/or land acquisition activities
PublicConsultationand Disclosure
The first public consultation for this project was held on November 25, 2006 in Ramsis Hilton
Hotel in Downtown Cairo\. There were 113 attendees, including representatives from EGAS,
EEAA, Towngas, Petrosafe, EcoConServ, World Bank office in Cairo, Local Districts (where
the project will be implemented),localNGOs, Academia and the Community (at large)
The meetingbegan with a number o f opening statements made by representatives from EGAS,
EEAA, and Town Gas\. This was followed by a presentation made by the ESIAF consultants,
which addressed the main features o f the project and the identified environmental and social
issues\.
81
An open discussion session followed for around 2 hours duringwhich many issues were raised,
including:
The citizens' ability to pay, especially in low income areas\. Among the recommended
solutions i s that the Government should bear up to 90% o f the installationcosts, and that
different installment options to facilitate payments o f installation costs for citizens be in
place\. It has been recommended that such economic aspects should be addressed in the
study\.
The issue that previous clients connected to natural gas have not paid for their
connections has been raised\. The representative from EGAS mentioned that it has been
the Government's decisionto provide partial finance o fthe project from endusers to meet
its construction costs\.
Monitoring o f radon gas concentrations inresidential units and possible leaks o f methane
insidethese units have been raised as recommended activities inthe ESMMF\. Town Gas
clarified that radon and sulfur i s being filtered in gas fields and do not enter to the
network\. For monitoring methane leaks, this should be maintained through adding the
odorant inPRSs\.
There was a recommendation that the responsibilities o f the implementing agency (Town
Gas) should include employing adequate criteria for the selection o f contractors, who will
beresponsible for applying control measuresover the project activities\.
There was a recommendation that there should be training for the users o f natural gas in
addition to the training o f Town Gas staff and contractors\.
The risks o f gas leaks and capacity o f fire-fighting authorities in facing such risk have
beenalso addressed\. Again the provenhighsafety o fgas utilization was emphasized\.
The social study should include memberso f Local Peoples Assembly for their role inthe
decision making process\. This comment has been addressed by Cairo Governorate
representative\.
There was a recommendation that LPG cylinder distributors could be substituted by
employing them inthe new project\.
There was a recommendation that the study and presentation should be available on the
EGASwebsiteto include a service for receiving comments from memberso fthe public\.
The Second public consultation for this project was heldon December 27,2006 inRamsisHilton
Hotel in Downtown Cairo\. There were 109 attendees, including representatives from EGAS,
EEAA, Town Gas, Enppi, Petrotrade, GASCO, Egypt Gas, Ministry o f Petroleum, Social Fund
for Development, Ministry o f Health, Ministry o f Manpower, Media, Environmental consultancy
firms, Local Districts (where the project will be implemented), Local NGOs, Academia and the
Community (at large)
The meeting began with opening statements made by the representatives from EGAS, EEAA,
and Town Gas, followed\.by a presentation made by the ESIAF consultants, which addressed the
main features o f the project and the identified environmental and social issues\. An open
discussion session followed for around 2 hours during which many issues were raised\. Some o f
these issues are highlighted below\.
82
PRS locations selection was raised\. There were recommendations for identifying buffer
zones so as to preventfuture urbanization from gettingnear PRSs\. It was emphasized that
the QRA prepared for the PRS considered populated surroundings o f PRS, and that the
risks o f leakdfires, ifmitigation measures were followed, are withinthe boundaries o fthe
PRS and within an acceptable range\.
A representative from GASCO mentionedthat the proposed location for ElTebbinPRS,
i s currently having a PRS operated by GASCO\. The PRS i s receiving complaints from an
adjacent house about high noise levels and he suggested to consider an alternative
locationof this PRS\.
The issue o fraisingpeople's awarenessregardingthe utilization o fNGwas brought up\. It
was emphasized that EGAS shouldplay an active role inthis regard\.
It was emphasized that there shouldbe a strong collaboration betweenTown Gas and its
contractors and whatever body responsible for repaving the road, so that the road i s
effectively paved shortly after excavations works\. It was also emphasized that
construction solid waste should be effectively disposed inthe allocated disposal sites\.
The draft ESIAF and RPF were first made publicly available locally prior to the first public
consultation on November 25, 2006\. Subsequently, updatedversions were made available at the
World Bank InfoShopandpostedonEGAS' websiteas ofDecember5,2006\.
83
Annex 11:ProjectPreparationand Supervision
Planned Actual
PCNreview May 11,2006 May 11,2006
InitialPID to PIC May 16,2006 May 16,2006
InitialISDS to PIC May 16,2006 May 18,2006
Appraisal November 5,2007 November 5,2007
Negotiations December3,2007
BoardRVP approval January 24,2008
Planneddate of effectiveness July 15, 2008
Planneddate of mid-termreview October 15,2010
Plannedclosing date October 15,2013
Key institutions responsiblefor preparationofthe project:
1\. EgyptianNatural Gas Holding Company (EGAS)
2\. Town Gas
3\. Ministry of Petroleum
Bank staff and consultantswho worked on the project included:
Name Title Unit
Anna Bjerde TL andLeadEnergy Specialist M N S S D
~~
Armando Ribeiro Araujo Procurement Adviser M N S S D
Franz Gerner Senior Energy Economist COCPO
Hayat Al-Harazi Program Assistant MNSSD
JohnBowers Gas Engineer Consultant M N S S D
KnutOpsal Senior Social Development Specialist M N S S D
Lizmara Kirchner Infrastructure Specialist M N S S D
Maged Hamed Senior Environmental Specialist MNSSD
Mohab Awad Mokhtar Hallouda Energy Specialist MNSSD
MohamedYehia Abd ElKarim Financial Management Specialist MNAFM
Peggy Wilson Financial Analyst Consultant M N S S D
Rome Chavamicha Infrastructure SDecialist M N S S D
Bank finds expendedto date on project preparation:
1\. Bankresources: $458,916
2\. Trust funds: Zero
3\. Total: $458,916
EstimatedApproval and Supervision costs:
1\. Remaining costs to approval: $150,000
2\. Estimatedannual supervision cost: $100,000
84
Annex 12: Documents inthe Project File
a) Feasibility Study preparedby Town Gas, October 2007
b) Environmental and Social Impact Assessment Framework for Greater Cairo Natural Gas
Connections Project, November 2007\.
c) Willingness to Pay Survey, June 2007\.
d) Procurement CapacityAssessment, November 2007\.
e) Connecting Residential Households to Natural Gas: An Economic & Financial Analysis\.
Gerner, Franz, and Scott Sinclair\. 2006\. Arab Republic of Egypt -- OBA working paper, no\.
7 (April)\. Washington, D\.C\.: World Bank Global Partnershipon Output-BasedAid\.
f) Egypt: Economic Costs of Natural Gas\. Economic Consulting Associates and Parsons
Brinckerhoff, 2007\.
g) Resettlement Policy Framework for Greater Cairo Natural Gas Connections Project,
November 2007
85
Annex 13: Statementof Loansand Credits
Difference between
expectedand actual
Original Amount in US$Millions disbursements
ProjectID FY Purpose IBRD IDA SF GEF Cancel\. Undisb\. Orig\. Frm\.Rev'd
PO91945 2006 EG-EL TEBBIN POWER 259\.60 0\.00 0\.00 0\.00 0\.00 259\.60 0\.00 0\.00
PO90073 2006 SecondPollutionAbatement Project 20\.00 0\.00 0\.00 0\.00 0\.00 20\.00 0\.00 0\.00
PO82952 2005 EG-Early ChildhoodEducation 20\.00 \.o\.oo 0\.00 0\.00 0\.00 19\.90 1\.57 0\.00
Enhancement
PO73977 2005 IntegratedIrrig Improv\. & Mgmt\. 120\.00 0\.00 0\.00 0\.00 0\.00 119\.40 3\.57 0\.00
PO82914 2004 EG-AIRPORTSDEVELOPMENT 335\.00 0\.00 0\.00 0\.00 0\.00 269\.40 55\.85 0\.00
PROJECT
PO49702 2004 EG-SKILLS DEVELOPMENT 5\.50 0\.00 0\.00 0\.00 0\.00 5\.02 3\.08 0\.00
PO56236 2002 EG-HIGHER EDUCATION 50\.00 0\.00 0\.00 0\.00 0\.00 27\.96 21\.57 1\.48
ENHANCEMENTPROG
PO45499 2000 Egypt NATIONAL DRAINAGE I1 50\.00 0\.00 0\.00 0\.00 0\.00 20\.12 15\.12 0\.00
PO40858 1999 EG - SOHAGRuralDev 0\.00 25\.00 0\.00 0\.00 0\.00 6\.74 4\.81 2\.38
PO41410 1999 EGPumping StationRehab 111 120\.00 0\.00 0\.00 0\.00 20\.00 33\.35 53\.35 0\.00
PO50484 1999 EGSecondary EducationEnhancement 0\.00 50\.00 0\.00 0\.00 0\.00 28\.47 20\.59 27\.52
Proj
PO49166 1998 EGEastDelta Ag\. Serv\. 0\.00 15\.00 0\.00 0\.00 0\.00 8\.76 7\.65 0\.46
PO45175 1998 EG-HEALTH SECTOR 0\.00 90\.00 0\.00 0\.00 0\.00 31\.15 22\.93 -8\.89
PO05169 1997 EG-ED\.ENHANCEMENT PROG\. 0\.00 75\.00 0\.00 0\.00 0\.00 8\.01 10\.93 4\.64
PO05173 1995 EGIrrigation Improvement 26\.70 53\.30 0\.00 0\.00 0\.00 6\.13 12\.37 2\.52
Total: 1,006\.80 308\.30 0\.00 0\.00 20\.00 864\.01 233\.39 30\.11
STATEMENT OF IFC's
Held and DisbursedPortfolio
InMillions ofUS Dollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic\. Loan Equity Quasi Partic\.
1996 ANSDK 1\.33 0\.00 0\.00 0\.00 0\.56 0\.00 0\.00 0\.00
2004 Alexandria Fiber 8\.00 0\.00 0\.00 0\.00 5\.00 0\.00 0\.00 0\.00
2001 Amreya 4\.74 0\.00 0\.00 0\.00 4\.74 0\.00 0\.00 0\.00
1999 cIL 0\.00 0\.74 0\.00 0\.00 0\.00 0\.74 0\.00 0\.00
2004 cIL 0\.00 0\.15 0\.00 0\.00 0\.00 0\.15 0\.00 0\.00
1992 CarbonBlack-EGT 0\.00 1\.48 0\.00 0\.00 0\.00 1\.48 0\.00 0\.00
1997 CarbonBlack-EGT 0\.00 1\.48 0\.00 0\.00 0\.00 1\.48 0\.00 0\.00
1998 CarbonBlack-EGT 4\.80 0\.00 0\.00 0\.00 4\.80 0\.00 0\.00 0\.00
2000 Carbon Black-EGT 5\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2002 Ceramica AI-Amir 3\.75 0\.00 0\.00 0\.00 3\.75 0\.00 0\.00 0\.00
2001 EFGHermes 1\.55 0\.00 0\.00 0\.00 1\.55 0\.00 0\.00 0\.00
2006 EFGHermes 20\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 EHF 0\.00 1\.70 0\.00 0\.00 0\.00 1\.70 0\.00 0\.00
Committed Disbursed
IFC IFC
2005 Egypt Factors 0\.00 3\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2001 IT Worx 0\.00 2\.00 0\.00 0\.00 0\.00 2\.00 0\.00 0\.00
2004 Lecico Egypt 15\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
1986 MeleihaOil 0\.00 8\.62 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
1988 MeleihaOil 0\.00 9\.20 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
1992 MeleihaOil 0\.00 13\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 MerlonEgypt 25\.00 0\.00 5\.00 0\.00 25\.00 0\.00 5\.00 0\.00
2005 MerlonEgypt 1\.oo 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2002 Metro 12\.00 0\.00 0\.00 0\.00 12\.00 0\.00 0\.00 0\.00
1992 MisrCompressor 9\.70 0\.00 0\.00 0\.00 9\.70 0\.00 0\.00 0\.00
1996 Orix LeasingEGT 0\.00 0\.53 0\.00 0\.00 0\.00 0\.53 0\.00 0\.00
2001 Orix LeasingEGT 1\.36 0\.00 0\.00 0\.00 1\.36 0\.00 0\.00 0\.00
2001 Port Said 41\.81 0\.00 0\.00 136\.28 41\.81 0\.00 0\.00 136\.28
2002 SEKEM 4\.56 0\.00 0\.00 0\.00 4\.56 0\.00 0\.00 0\.00
2004 SPDC 19\.21 0\.00 0\.00 0\.00 19\.21 0\.00 0\.00 0\.00
2001 SUEZ GULF 41\.17 0\.00 0\.00 133\.00 41\.17 0\.00 0\.00 133\.00
1997 UNI 2\.39 0\.00 0\.00 0\.00 2\.04 0\.00 0\.00 0\.00
2001 UNI 2\.25 0\.00 0\.00 0\.00 2\.25 0\.00 0\.00 0\.00
2005 Wadi Group 15\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Total portfolio: 239\.62 41\.90 5\.00 269\.28 179\.50 8\.08 5\.00 269\.28
Approvals PendingCommitment
FY Approval Company Loan Equity Quasi Partic
2004 ACB Acrylic 0\.00 0\.00 0\.00 0\.00
2004 Merlon Egypt 0\.00 0\.00 0\.00 0\.02
2000 ACB ExpansnI11 0\.00 0\.00 0\.00 0\.00
2006 Orix SME Program 0\.02 0\.00 0\.00 0\.00
Total pendingcommittment: 0\.02 0\.00 0\.00 0\.02
87
Annex 14: Country at a Glance
M\.Eart Lower-
POVERTY and SOCIAL 6 North middle-
Ievelopment diamond'
Egypt Africa Income
2004
68 7 294 2,430 Lifeexpectancy
130 2\.000 2580
GNI(Atlas method, US$ billions) 900 589 3\.847
18 18 10
Laborforce (?? 3 0 -13 07 GNI Gross
per primary
M o s t recent estimate (latest year available, 898-04) capita enrollment
Poverty(%of population belownationalpovertyline) 77
Urbanpopulation (%oftotalpopulation) 42 56 49
Lifeexpectancyat birth(flars) 69 68 70
Infantmortality(per iOOOlivebirths) 33 45 33
Childrnalnutntion (%ofchildrenunder5) 9 n Access to improvedwatersource
Access to an impmvedwatersource (%ofpopulation) 98 88 81
Literacy(%of populationage rS+J 69 90
Gmss pnrnaryenmllment (%0f schoo/-agepopulation) 97 no 114 -gypt,ArabRep\.
Male no n4 tts __ Lomr-middle-incomegroup
Female 95 94 m
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1984 1994 2003 2004 /Economic ratios\.
GDP (US$ billions) 306 519 824 75 1
Gross capitalformation/GDP 275 '66 I71 I70
Exportsof goods andserviceslGDP 224 229 Trade
217 25 5
Gross domestic savings/GDP 140 114 252 148
Gross natmalsavings/GDP 8 0 212 20 7
Currentaccount balance/GDP -82 08 23 2 8
Interestpayrnents/GDP 2 7 2 2 08 Domestic Capital
08
Total debtlGDP 1351 627 38 1 415 savings formation
Total debtservice/exports 214 146 128 94
Presentvalueof debt/GDP 341
Presentvalueof debtleports DO1 I Indebtedness
1984-94 1994-04 2003 2004 2004-08
(averageannualgmwth)
GDP 3 9 4 6 3 2 4\.3 53 -Egypt, Arab Rep
GDP percapita 16 2 7 14 2\.5 37 -- - Lomr-middle-incomegroup
Exportsof goods andservices 7 6 2 6 140 5\.9 n3
STRUCTURE o f the ECONOMY
1984 1994 2003 2004
(%of GDP)
Agriculture 20\.1 6\.9 6 1 155
Industry 29\.3 32\.8 340 32 1
Manufacturing 132 P\.2 189 '62
services 50\.7 504 49 8 524
Householdfinal consumptionexpenditure 67\.9 78\.3 72 2 752
Generalgov't finalconsumptionexpenditure 8\.0 0\.3 P 5 no
Imports of goods andservices 35\.8 28\.1 23 6 27 7
1984-94 694-04 2003 2004
(averageannualgrowth) Growth of exports and imports (Oh)
Agriculture 2 7 33 28 20 T
Industry 4 3 4 8 19
Manufactunng 4 9 75
Services 3 8 5 0 4 1
Householdfinal consumptionexpenditure 42 37 04
Generalgov't final consumptionexpenditure -12 3 2 2 9
Gross capitalformation -57 5 5 -17 15
imports of goods andsewices -14 02 02 11
Note:2004data are preliminaryestimates\.
This tabiewas producedfrom theDevelopment Economics LDB database\.
'Thediamonds showfourkey indicators inthecountry(inbold) comparedwithits income-groupaverage\. If data are missing,thediamondwiil
beincomDlete\.
88
Egypt,Arab Rep\.
PRICES and GOVERNMENT FINANCE
1984 1994 2003 2004 Inflation (%)
Domesiic prices I
(%change)
Consumer prices 9 0
implicit GDP deflator 122 7 1 3\.8 6 9
Government finance
(%of GDP,includes currentgrants)
Current revenue 23 4 28\.2 20 3 20\.8
Current budgetbalance -14\.4 29 -2 5 -3\.1
Overallsurpiusideficit -226 -2\.1 -6 2 -6\.7
TRADE
1984 1994 2003 2004
(US$ millions) ,Export and import levels (US$ mill\.)
!
Totaiexports (fob) 3\.337 8,205 8,247 !20\.000 T I
Cotton 1772 3\.85 2,785
Other agriculture 84 8 9 201
Manufactures 1'127 2,952 3,320
Totalimports (cif) Q\.647 14,821 25\.038 10 000
Food 1,982 1521 2647
Fuel andenergy 542 2,373 2,232 5 000
Capital goods 2\.349 3\.v9 2,869 0
Export priceindex(2000=WO) 92 I
98 99 00 01 02
Import price index(ZOW=WO) Q9 BS Exports nImports
Terms of trade (ZOOO=WOj 85 ~ O3 O4
BALANCE of PAYMENTS I-
1984 1994 2003 2004
(US$ millions) Current account balance to GDP (%)
Exports of goods and sewices 6,848 Q,818 18,005 18,402
Imports of goods and services '12,287 411,332 8,568 20,031
Resourcebalance -5,440 -3,514 -1562 -1629
Net income -1,021 422 -938 385
Net current transfers 4,046 4,383 3,924
Current account balance -2,504 4M 1,883 2,129
Financingitems (net) 2,Q6 1,696 -1221 -2,183
Changesinnet reserves 398 -2,M6 -662 54 1\.4 )
Memo:
Reserves includinggold (US$ millions)
Conversion rate (DEC,local/US$) 0\.9 3\.4 5 0 6 2
EXTERNAL DEBT and RESOURCE FLOWS
1984 1994 2003 2004
(US$ millions) icomposition of 2004 debt (US$ mill\.;
Total debt outstanding anddisbursed 32,203 32,523 31,383 31i55
IBRD 720 1411 539 503
IDA 744 961 1\.386 2465
Total debt service 2,422 2,226 2,763 2,182
iBRD 109 306 Q1 99
IDA 6 19 47 50
Compositionof net resourceflows
Official grants 550 1192 552
Official creditors 1,741 560 -770 -868
Privatecreditors 546 -284 -635 -228
Foreigndirect investment (net inflows) 729 1256 237
Portfoiio equity(net infiows) 0 0 37
I E:22,365
Worid Bank program
Commitments 4 '121 B 670 I A IBRD
- E-Bilaetd
Disbursements 307 8 9 62 00 8-IDA D-Othermitilaera F-Private
Pnncipal repayments 44 204 114 16 G - Shori-ter
Net flows 263 -5 -52 -6
Interestpayments 71 121 34 33
Net transfers 192 -a7 -a5 4 9
Note'This tabiewas producedfrom the Development Economics LDB database 8125105
89
IBRD 33400
ARAB REPUBLIC OF EGYPT
SELECTED CITIES AND TOWNS
GOVERNORATE CAPITALS
ARAB REPUBLIC NATIONAL CAPITAL GOVERNORATES IN NILE DELTA:
OF EGYPT RIVERS 1 KAFR EL SHEIKH 7 DAGAHLIYA
2 DAMIETTA 8 MENOUFIYA
MAIN ROADS 3 PORT SAID 9 SHARGIYAH
4 ALEXANDRIA 10 QALIUBIYA
RAILROADS 5 BEHEIRA 11 ISMAILIA
6 GHARBIYA 12 CAIRO
GOVERNORATE BOUNDARIES
INTERNATIONAL BOUNDARIES
25°E 30°E 35°E
WEST BANK
To AND GAZA To
Darnah M e d i t e r r a n e a n S e a Tel Aviv
Salum
Marsa Matruh 2 Damietta
Damietta
1Sheikh
Kafr el
Kafr el
Alexandria Sheikh Port Said El'Arish
L i b y a n P l a t e a u 3 JORDAN
Damanhur
Damanhur El Mansura
El Mansura ISRAEL
4 6 Tanta7
anta 9
Shibin el Kom
Shibin el Kom Zagizig
Zagizig
8 Ismailia
Ismailia
Benha
Benha NORTHERN
NORTHERN
5 1111 SINAI
SINAI
30°N 1010 30°N
QattaraQattara CAIROCAIRO
GizaGiza Suez
Suez
DepressionDepression 1212
QaraQara Taba
Ta
El Fayoum
El Fayoum SOUTHERN
SOUTHERN
SiwaSiwa SUEZ
SUEZ
MARSA MATRUH
MARSA MATRUH EL FAYOUM
EL YOUM SINAI
SINAI
Beni Suef
Beni Suef Gulf
BENI SUEF
BENI SUEF Abu Zenima
Abu Zenima
of Aqaba
G I Z A Suez SAUDI
of
Ras Gharib
Ras Gharib
AL MINY
AL MINYA El T
El ur Gulf
Al Minya
Al Minya E ARABIA
a
s
LIBYA NileNile AL BAHRt
AL BAHR e
ASSIUTASSIUT Assiut
Assiut r Al Ghurdaqah
RiverRiver AL AHMAR
AL AHMAR n
W e s t e r n Bir Seiyala
Sohag
Sohag
L SOHAGSOHAG D
e Red
i Qena
Qena Quseir \.
b D e s e r t s e Sea
y QENA
QENA
LuxorLuxor
a A L WA D I r t
MutMut\. El-Kharga
El-Kharga
25°N n A L J A D I D Marsa 'Alam 25°N
D ASWANASWAN
e Kom Ombo
Kom Ombo
s Aswan Dam Aswan
Aswan
e
To
Jalu r
t LakeLake
Nasser
Nasser
HalaibHalaib
S U D A N
0 50 100 150 200 Kilometers
To To To
Dongola Berber Port Sudan
This map was produced by the Map Design Unit of The World Bank\. 0 50 100 150 Miles
20°N The boundaries, colors, denominations and any other information 20°N
shown on this map do not imply, on the part of The World Bank
Group, any judgment on the legal status of any territory, or any
endorsement or acceptance of such boundaries\.
25°E 30°E 35°E
NOVEMBER 2004 | APPROVAL |
P001691 | \.
--
\.--~~----\.------------------\.,\.p--- \.
FILE copy
DOCUMENT DE BANQUE INTERNATIONALE POUR LA RECONSTRUCI'ION'ET LE DEVELOPPEMENT
ASSOCIATION INTERNATIONALE DE DEVELOPPEMENT
DOCUMENT A USAGE INTERNE
\. Rapport No\. 340a\.-MLI
\.
PROJET DE DEVELOPPEMENT RURAL INTEGRE
MALI
13 mai 1974
rBfTURN TO
~~~~TE}l r:~~\.~\.
RECORDS l'LaW h n~v\.ihl~ 68\.1
f
Bax N i fb 2/\.r
D,
Departement des projets TRADUcnON NON'()FFICIELLE
Agricoles A TITRE IYINFORMAllON
Bureau regional Afrioue de l'Ouest
Ce rapport a ete prepare II I'usage exclusif du personnel du Groupe de la Banque et ades rros
ofrlcielles seulement\. n ne peut ~tre publie\. cite ou evoque sans l'autorisation du Groupe de ]a
Banque, lequel ne prantit en aucune maniere son exactitude ou son caractere exhaustif\.
TAUX DE CHAi~GE
1 dollar EU 500 francs maliens
100 francs maliens
- 0,200 dollar EU
PO IDS ET HESURES
Systeme metrique
SIGLES
AF Alphabetisation Fonctionnelle
BDM Banque de Developpement du Mali
BDPA Bureau pour le Developpement de la Production Agricole
DGP Direction Generale de la Production
DNS Direction Nationale de la Sante
DNTP Direction Nationale des Travaux Publics
FAC Fonds d'Aide et de Cooperation
FED Fonds Europeen de Developpement
GERDAT Groupement d'Etudes et de Recherches pour le Developpement
de l'Agronomie Tropicale
ICRISAT Institut International de Recherche sur les Cultures des
regions tropicales semi-arides (Hyderabad, Inde)
IER Institut d'Economie Rurale
IFAC Institut Frant;ais de Recherches Fruitieres Outremer
lRAT Institut de Recherches Agronomiques Tropicales et des
Cultures Vivrieres
IRCT Institut de Recherches du Coton et des Textiles Exotiques
IRHO Institut de Recherches pour les Huiles et Oleagineux
OA Operation Arachide
OACV Operation Arachide et Cultures Vivrieres
OC Operation Coton
OD Operation de Developpement
OPA\.~ Office des Produits Agricoles du Mali
OSRP Office de Surveillance et de Regulation des Prix
RCFH Regie des Chemins de Fer du Hali
SCAER Societe de Credit Agricole et d'Equipement Rural
SEPOM Societe d'Exploitation des Produits Oleagineux du Hali "
SOMIEX Societe Malienne d'Import Export
STR Service des Travaux Routiers ,
EXERC!CE FINANCIER
ler janvier - 31 decembre
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
TABLE DES MATIERES
Pages
RESUME ET CONCLUSIONS i vi
I\. INTRODUCTION 1
II\. LE CADRE DU PROJET ~ 1
A\. Genera1ites 1
B\. Le secteur agrico1e 3
C\. Options de developpement 4
D\. Institutions 5
E\. La recherche agrico1e
6
III\. LA ZONE DU PROJET 7
A\. Genera1ites 7
B\. L'operation aracnide 10
IV\. LE PROJET 11
A\.
B\.
Description
CaracteriBtiques du projet
11
12
C\. Organisation du credit et fourniture des facteurs
de production
15
V\. ESTIMATION DES COUTS ET FINANCEMENT 18
A\.
8\.
Couts du projet
Dispositions financieres
\. 18
18
C\. Passation des marches et versementB 21
D\. Comptabi1ite et verification des comptes \.
23
VI\. ORGANISATION ET GESTION RECRUTEMENT ET FORMATION DU
PERSONNEL 23
A\.
8\.
Organisation et gestion \. \.
Recrutement et formation du personnel
23
25
TABLE DES MATIERES (suite)
- 2
Pages
VII\. RENDEMENTS ET PRODUCTION\. COMMERCIALISATION\.
AVAHTAGES POUR LES AGRICULTEURS ET RECETTES
DE L'ETAT 27
A\. Rendements et production 27
B\. Prix et commercialisation 28
C\. Benefices pour ies agricu1teurs participants 30
D\. Incidence du projet sur 1es recettes et 1es
depenses de l'Etat 32
VIII\. AVANTAGES ET JUSTIFICATIONS 32
IX\. POINTS D'ACCORD ET RECOMMANDATIONS 34
ANNEXES
1\. L'agricu1ture ma1ienne
Tableau 1 Production et commercialisation des principa1es cul
tures (1967 a 1972)
Tableau 2 Prix officie1s payes aux producteurs ddes principa1es
cultures
Tableau 3 Contribution du secteur agrico1e aux exportations
Tableau 4 Volume des importations de;c'reales (1969 a 1973)
Tableau 5 Production et commercialisation de l'arachide
(1953-1973)
2\. L' operation Arachide
Tableau 1 Superficie, production, rendements, commercialisation
Tableau 2 Facteurs de production
Tableau 3 Financement
3\. Systeme de culture, facteurs de production\. rendements et production
Tableau 1 Calendrier cultural
Tableau 2 Besoins en main-d'oeuvre sur 1a production arachidiere
et cereall\.ere
Tableau 3 Superficie arachidiere encadree par l'OACV, par
secteur et annee dans la zone du projet
Tableau 4 Superficie arachidiere: diffusion des themes techni
ques dans la zone du projet
Tableau 5 Production et rendements estimatifs de l'arachide
dans la zone du projet
TABLE DES MATIERES (suite)
- 3
Tableau 6 Supplement de production arachidiere directement
attribuable au projet
Tableau 7 Superficie cultivee en sorgho et mil sous encadree par
l'OACV par secteur et annee dans la zone du projet
Tableau 8 Superficie cultivee en sorgho et mil: dif fusion des
themes techniques dans la zone du projet
Tableau 9 Production et rendements estimatifs du mil et du
sorgho dans la zone du projet
Tableau 10 Supplement de production de mil et de sorgho directement
attribuable au projet
4\. Amelioration des pistes rurales
Tableau 1 Longueur des routes et pistes des secteurs de l'Ouest
et du Centre
Tableau 2 Routes classees en 1972
Tableau 3 Amelioration des routes de desserte - Programme 1974/77
Tableau 4 Pistes a ameliorer et propositions pour Ie 3eme projet
routier
Tableau 5 Caracteristiques techniques des routes et pistes
Tableau 6 Consistance des travaux d'amelioration (camion de 7 tonnes)
Tableau 7 Analyse des couts de camionnage dans la zone duprojet
5\. Programme d'alphabetisation fonctionnelle
6\. Programmes de recherche
7\. Assistance medicale
8\. Assistance vete\.rinaire
9\. Unite d'evaluation
10\. Production de semences d' a:\.:achide selectionnees
11\. Facteurs de production et credit agricole
Tableau 1 Prix de rev~cnt et prix de vente des facteurs de
production agricoles
\. Tableau 2 Tableau com?aratif de la situation des prets et des
rembourseme:-\.'; s
Tableau 3 SCAER - Bil~ resume
Tableau 4 SCAER - Comptes resumes d'exploitation et de profits
et pertes
Tableau 5 Materiel agricole necessaire, couts et prets a
moyen terme
TABLE DES MATIERES (suite)
- 4
Tableau 6 Facteurs de production saisonniers, couts et prlts
de campagne
Tableau 7 Recapitulation des couts et des moyens de financement
supplementaires pour les facteurs de production
agricoles
12\. Couts du projet
Tableau 1 Couts du Projet
Tableau 2 Batiments et materiel
r
Tableau 3 Vehicules
Tableau 4 Assistance technique
Tableau 5 Personnel lLalien
Tableau 6 Depenses de fonctionnement
<,;:'ableau 7 Amelioration des pistes rurales
Tableau 8 Alphabetisation fonctionnelle
Tableau 9 Recherche agricole
Tableau 10 Assistance medicale
Tableau 11 Assistance veterinaire
Tableau 12 Unite d'evaluation
Tableau 13 Facteurs de production, couts et financement
suppH~mentaires
Tableau 14 Fonds renouvelable
Tableau 15 Imprevus
Tableau 16 Droits et taxes a l'importation
13\. Financement
Tableau 1 Financement par poste
Tableau 2 Sources de financement
Tableau 3 Calendrier des deboursements du credit de l'IDA
14\. Marches et prix des productions du projet
Tableau 1 Bareme arachide
Tableau 2 Prix payes aux producteurs d'arachide
Tableau 3 Cours mondiaux de l'arachide\. de l'huile et des
tourteaux d'arachide
Tableau 4 Arachide: prix economiques depart exploitation 1973/80
Tableau 5 Destination de la production arachidiere commercialisee
Tableau 6 OSRP - Compte de reserve arachide (1969-1972)
,
Tableau 7 Prix et structure de la commercialisation du sorgho
et du mil - Bareme des prix interieurs
Tableau 8 Prix payes aux producteurs de cereales au Mali et
dans les -;>3:/ _ voisins (1972173)
Tableau 9 Hil et 6,,:" b"\." ~ ?::ix economique \.:\.epart exploitation
1973-1918
TABLE DES MATIERES (suite)
- 5
15\. Modeles et budgets d'exploitation
Tableau 1 Exploitation cultivee manuellement ou sont adoptees
les techniques ameliorees
Tableau 2 Exploitation utilisant la culture attelee
Tableau 3 Flux de liquidites pour une exploitation utilisant la
culture attelee
16\. Incidence sur Ie budget de l'Etat
Tableau 1 Incidence du projet sur l'etat consolide des
finances publiques
Tableau 2 Detail du produits des impots et des prelevements
sur les arachides
Tableau 3 Recettes en devises
17\. Calcul du taux de rentabilite
Tableau 1 Couts et benefices economiques du projet
Tableau 2 Calcul de la rentabilite economique - Benefices du projet
Tableau 3 Accroissement des besoins en main-d'oeuvre agricole du
au projet
DlAGRAMME Organisation du projet
CARTES
1\. Zone du projet
2\. Precipitations
3\. Programmes (en cours et prevus) d'amelioration des routes
,
,HALl
PROJET DE DEVELOPPEHRNT RURAL INTEGRE
Resume et conclusions
i\. Le Nali a demande aI' IDA de participer au financement d 'un projet
visant a intensifier l'''Operation arachide" (OA) qu'ont entreprise les pou
voirs publics et a l'elargir a de nouvelles zones\. L'objectif recherche est
" de relever la productivite et les revenus des paysans dont l'arachide est la
principale culture de rapport\. Ce programme intensif mettra l'accent sur l'ap
plication des techniques modernes a la culture du '\.l il et du sorgho, cereales
les plus repandues au Mali, ainsi qu'a celIe de l'arachide\.
ii\. Le projet, dont la realisation serait echelonnee sur cinq ans
(1973/74 a 1977/78), porte sur une superficie de ~'ordre de 125\.000 kro 2 et
compterait environ 1 million de beneficiaires, qui figurent actuellement
parmi les populations les plus ?auvres du globe, leur revenu moyen par habi
tant etant de l'ordre de 30 dollars\.
iii\. Le developpement du pays est entrave par un certain nombre d'obsta
cles, en particulier:
a) la distance qui Ie separe de la mer, les deux ports maritimes les
plus proches, Dakar e~ Abidjan, se trouvant tous deux a quelque
1\.200 kID de Bamako, la capitale;
b) l'absence de ressources minieres ou de ressources naturelles en
general, a quoi s'ajoute, du fait de precipitations faibles et
variables et de sols generalement mediocres, une base agricole
precaire;
c) une grave penurie de main-d'eouvre qualifiee, qu'il s'agisse
de techniciens ou de gestionnaires; et
d) des problemes de communications dus aux dimensions du pays,
ainsi qu'a l'insuffisance de son reseau routier et de son re
seau de telecommunications\.
En revanche, lel~li dispose d'une population dure a la tache, habituee a vi
\. vre dans des conditions climatiques penibles et a se contenter du strict mi
nimum en matiere de services sociaux\.
- ii
iv\. Le pays a connu en 1968, 1970, 1972 et 1973 de graves periodes de
secheresse souvent liees a une repartition inegale plut8t qu'au volume insuf
fisant des precipitations\. Ce phenomene a entratne des penuries qui ont ne
cessite l'envoi au ~mli d'une aide alimentaire bilaterale et internationale
massive\. Seule l'aide exterieure lui ayant permis de faire face aux aleas
climatiques de ces dernieres ar\.nees, il importe tout particulierement que l'ap
pareil product if mal ien soit remis e;J\. etat et renforce\. Tel est d' ail leurs
l'objectif principal du projet decrit dans Ie present rapport\.
v\. L'agriculture, y compris l'elevage et la peche, est Ie pilier de
l'economie malienne: elle entre pour pres de la moitie (43 % en 1972) dans
Ie PIB du pays, auquel elle procure par ailleurs la quasi-totalite de ses
recettes en devises (54 millions de dollars en 1972)\. Environ 85 % de la
population vit de l'agriculture, pratiquee sur des exploitations dont la
grande majorite n'atteint pas 5 ha\. Quelque 85 % des 2 millions d'hectares
de terres cultivees sont consacres aux produits vivriers, essentiellement Ie
~il et Ie sorgho, et, dans les fonds de vallees, Ie riz\. Les principales cul
ures de rapport sont Ie coton et l' arachide qui, au cours d' une campagne nor
male occupent respectivement 90\.000 et 250\.000 ha\.
vi\. A long terme, Ie Mali pourrait se doter d'une base agricole solide,
en exploitant ses importantes ressources en eaux de surface - Ie bassin des
fleuves Senegal et Niger - pour pratiquer l'agriculture irriguee intensive\.
Un tel projet serait toutefois d'un coGt fort eleve, et, meme si Ie Mali par
venait a se procurer les moyens de financement necessaires, ne pourrait etre
realise qu'a un rythme assez lent\. C'est pourquoi dans l'intervalle, les
pouvoirs publics font porter tous leurs efforts sur l'amelioration de l'agri
culture seche, dont la grande majorite de la population malienne tire ses
moyens de subsistance\.
vii\. Le projet, dont Ie nom initial a ete modifie pour celui de "Opera
tion arachide et cultures vivrieres" (OACV), expression qui donne une meil
leurc idee de son elargissement, sera gere par l'equipe en place, qui donne
toute satisfaction, et beneficiera de I'assistance technique du Bureau
pour Ie ucveloppement de la production agricole (BDPA)\. Le BDPA, qui est un
:1urcau de consultants fran~ais, prete son concours a 1 'OA depuis la creation
de cette derniere en 1967\. Cette collaboration a donne des resultats posi
tifs, dont les pouvoirs publics n'ont eu qu'a se feliciter\. Les principales
activites Iiees au projet seraient:
a) l'intensification des activites de l'OA dans les zones comprises
actuellement dans Ie progra~me;
b) l'elargissement des services de l'OA a de nouvelles zones;
- iii
c) la fourniture aux agr1culteurs-participants, au comptant ou a
credit, de facteurs de production et d'equipement agricoles;
d) la fourniture, a credit, de materiel destine a un certain nombre
de forgerons installes dans la zone du projet;
e) l'amelioration d'environ 1\.500 km de pistes dans la zone du
projet;
\. f) l'elargissement du programme d'alphabetisation fonctionnelle
en cours;
g) la realisation d'un programme de recherche agricole destine a
completer le programme national en cours;
h) l'amelioration des services medicaux dans la zone du projet;
i) l'amelioration des services veterinaires dans la zone du pro
jet; et
j) la creation d'une unite d'evaluation du projet\.
viii\. Le credit de 8,0 millions de dollars Ell que l'IDA envisage d'accor
der au Mali couvrira 42 % des couts globaux du projet, estimes a 18,9 mil
lions de dollars, y compris les droits et taxes d'importation (1,3 million
de dollars), et 75 % des depenses payables en devises, estimees a 10,6 millions
de dollars\. Le solde des couts, evalue a 10,9 millions de dollars, sera cou
vert par un don du FAC (2,5 millions de dollars), des allocations provenant
du budget de l' Etat (4,3 millioI~s de dollars) et les contributions demandees
aux participants (4,1 millions de dollars)\. Le credit sera retrocede par l'E
tat a l'OACV sous forme de subvention pour financer les depenses d'assistance
technique et d'exploitation, la construction des batiments, l'achat des semen
ces, l'amelioration des pistes rurales, Ie programme d'alphabetisation fonction
nelle, les travaux de recherches et l'assistance en matiere de soins medicaux
et veterinaires\. Un montant de 4 millions de dollars serait reserve pour parer
aux imprevus\.
ix\. Passation des marches\. Les marches de vehicules et de niveleuses,
dont la valeur s'eleve a 1,5 million de dollars, seront passes dans Ie cadre
d'appel d'offres internationaux conformement aux Directives de l'IDA\.
'1
Les marches de materiel et de mobilier, evalues a 400\.000 dollars
et pour lesquels le marche interieur est suffisamment concurrentiel, seront
attribues par voie d'appel a 1a concurrence nationale\. Les marches relatifs
a la construction des bureaux, des logements, des entrepots et garages, dont
- iv -
Ie cout e3t estime a 1,9 million de dollars seront eux aussi passes dans Ie
cadre d'appels d'offres nationaux, car, en raison de leur modicite et de la
dispersion des chan tiers, ils ne sont pas de nature a susciter des offres en
provenance de l'etranger\. La concurrence entre les entrepreneurs locaux est
jugee suffisamment vive; et une marge de preference de 7,5 % sera accordee
aux entreprises maliennes lors de la comparaison des offres\.
Les marches pour les facteurs de production agricoles (engrais, in
secticides, fongicides) et Ie materiel de culture attelee, soit 3,5 millions
de dollars devant etre finances par les pouvoirs publics et les agriculteurs,
seront passes par la SCAER dans Ie cadre des commandes concernant l'ensemble
du pays\. Les procedures de passation des marches de la SCAER, qui sont a
l'heure actuelle fondees sur l'appel a la concurrence dans des conditions
satisfaisantes, seront maintenues au titre du projet; il est neanmoins entendu
implicitement que l'IDA sera consultee sur la preparation et la publicite des
documents d'appel d'offres et sur l'evaluation des offres re~ues par la SCAER\.
Les semences necessaires au projet, dont Ie coGt est estime a 1,3 million de
dollars, seront produites sur place et reparties sous Ie contrale de l'OACV\.
~es batis de charettes, dont la valeur est estimee a 319\.000 dollars, seront
foumies ou ache tees sur place par les agriculteurs\.
En ce qui concerne l'assistance technique et les services de consul
tants, dont Ie coGt devrait atteindre 2,5 millions de dollars, il est propose:
de passer un contrat avec Ie Bureau pour Ie developpement de la production
agricole (BDPA) qui a contribue avec succes au proj~t en cours et qui sera
charge de fournir les experts requis par l'OACV, dont Ie coGt est estime a
2 millions de dollars; de meme, Ie Groupementd'etudes et de recherches pour
Ie developpement de l'agronomie tropicale (GERDAT) qui, a l'heure actuelle,
prete son concours au Mali dans Ie domaine de la recherche agricole, fournira
les specialistes necessaires moyennant un coGt estime a 150\.000 dollars; des
experts et consultants, dont Ie coGt est estime a environ 390\.000 dollars,
seront recrutes au niveau international selon des procedures jugees accepta
hIes par l'IDA et charges de l'evaluation du programme d'alphabetisation fonc
tionnelle, de l'assistance a l'OACV en matiere de comptabilite, de la direc
tion de l'unite d'evaluation et de'l'execution d'une etude portant sur les
prix a la production et les mecanismes de commercialisation des cereales\.
Un montant total de 3,5 millions de dollars couvrira les coGts du
personnel malien, les depenses d'exploitation, Ie credit pour l'equipement
des forgerons et Ie coGt des motocyclettes et bicyclettes pour les agents de
la vulgarisation\. Le programme c'amelioration et d'entretien des pistes ru
rales sera execute en regie, ce qui semble etre Ie seul moyen d'arriver a
une execution efficace et diligente de ce programme\.
Un montant de 4 millions de dollars restera non affecte\.
- v
x\. Les fonds provenant du credit de l'IDA seront decaisses pendant la
periode de 4 ans allant de 1974/75 a 1977/78 pour couvrir:
a) 100 % des depenses en devises ou 66 % des depenses totales des vehi
cules et niveleuses importes au titre du projet (800\.000 dollars);
b) 18 % du coat supplementaire des semences (200\.000 dollars);
c) 80 % du coat des batiments (1,4 million de dollars;
'0
d) 85 % des traitements du personnel et des consultants recrutes au
niveau international affectes a la gestion du projet (1,7 million
de dollars);
e) 100 % des depenses au titre de l'etude qu'il est propose de faire
sur la commercialisation des cereales et de l'assistance comptable
(100\.000 dollars);
f) 75 % des depenses supplementaires au titre du personnel malien
(800\.000 dollars); et
g) 80 % des depenses de fonctionnement supplementaires du projet
(1,6 million de dollars)\.
Sur Ie montant du credit, 1,4 million de dollars seront reserves pour parer aux
imprevus\. A l'exception des depenses liees a l'emploi du personnel local,
aux frais de fonctionnement et a l'achat des semences, les decaissements se
feront sur presentation du contrat, du connaissement ou d'autres documents
appropries\. Les demandes de remboursement des depe~ses en monnaie nationale
et des depenses connexes devron_ etre accompagnees d'un certificat emis
par Ie directeur du projet\.
xi\. Les principaux benefices directs du projet resident dans l'augmenta
tion de la production de cereal~s et d'arachides\. Lorsque Ie projet aura at
teint sa phase de maturite, c'esc-a-dire huit annees apres son lancement, cette
production s'etablira d'apres les estimations a 65\.000 tonnes d'arachides et
39\.000 tonnes de d~reales par a:;t et entrainera des gains nets ou des econo
mies de devises de 5,5 milliards de francs maliens (11,8 millions de dollars)\.
On evalue Ie taux de rentabilite economique de l'investissement necessite par
Ie projet a 91 % sur une duree au projet de 15 ans\. Ce taux eleve s'explique
'\. a la fois par l'importance des ~nvestissements effectues anterieurement ou ac
tuellement au titre du projet et qui sont irreversibles, et par les connais
sances techniques poussees qu'ont acquis les agriculteurs grace aux efforts
de vulgarisation faits en leur faveur; il convient de mentionner egalement Ie
niveau assez cleve des projections a long terme des cours de l'arachide sur
- vi
le marche mondial\. L'analyse de sensibilite effectuee revele que tout en etant
assez sensible aux variations des cours, ce taux de rentabilite reste accepta
ble meme dans les cas de variations importantes et defavorables des estimations
de base\.
xii\. Lorsque le projet aura atteint son plein rendement, 11 affectera
environ 107\.000 familles d'exploitants, soit 1 million de persounes en tout,
contre 52\.000 familIes (490\.000 personnes) dans le cadre de l'OA en 1972/73\.
A supposer que toute la production supplementaire d'arachide et de cereales
puisse etre vendue, elle rapportera aux familles participant au projet un
complement de revenu monetaire total representant environ 2,5 milliards de
francs maliens (5 millions de dollars) par an\. Les grandes disparites cons
tatees dans le degre de technicite des methodes culturales utilisees, de meme
que dans les conditions materielles et humaines rencontrees dans la zone du
projet\. font qu'il est difficile d'etablir Ie budget d'une exploitation type\.
11 semble neanmoins que le revenu par habitant des familles,d'exploitants
disposees a suivre les recommandations techniques de l'OACV pourrait etre,
grace au projet, multiplie par deux ou trois\.
xiii\. Les points d'accord et les recommandations sont indiques au Chapi
tre IX\. Le projet justifie l'octroi au Mali d'un Credit de l'IDA de 8 mil
lions de dollars\.
:r:\.fALl
PROJET DE DEVELOPPlliiENT RURAL Il1TEGRE
I\. INTRODUCTION
1\.01 Le Mali a demande a l'IDA de participer au financement d'un projet
visant a intensifier l'''Operation arachide" (OA) qu'ont entreprise les pou
voirs publics et a l'elargir a de nouvelles zones\. L'objectif recherche est
de relever la productivite et les revenus des paysans dont l'arachide est la
principale culture de rapport\. Ce programme intensif mettra l'accent sur
l'application des techniques modernes a la culture du mil et du sorgho, outre
celIe de l'arachide et de divers autres produits\. Le projet inclura egalement
l'amelioration ponctuelle des pistes desservant les regions agricoles, un pro
gramme d'alphabetisation fonctionnelle, le renforcement des services medicaux
et veterinaires, un programme de recherche agricole et la creation d'une unite
d'evaluation\.
1\.02 Le projet, dont la realisation sera echelonnee sur cinq ans (1973/
1974 a 1977/1978) comptera environ 1 million de beneficiaires qui figurent
actuellement parmi les populations les plus pauvres du globe, leur revenu
annuel moyen par habitant etant de l'ordre de 14\.700 francs maliens (30 dollars
EU)\. II s'agira de la deuxieme operation de pret du Groupe de la Banque en
faveur de l'agriculture malienne\. En 1972, l'IDA avait en effet deja accorde
un credit au Mali (277 ~~I) pour un programme de developpement de la produc
tion de riz irrigue, qui progresse de fa~on satisfaisante\.
1\.03 Le projet a ete identifie par la mission permanente de la Banque en
Afrique de l'Ouest et prepare par les services officiels maliens, avec l'aide
de consultants fournis par Ie Fonds d'aide et de cooperation (FAC), organisme
fran~ais\. Le present rapport se fonde sur les conclusions d'une mission
d'evaluation qui a sejourne au ~mli pendant les mois de juin et juillet 1973;
cette mission etait composee de MM\. H\. Ruas et F\. Agueh (IDA), H\. J\. Doyen,
(mission permanente), de M\. J\. ~uilmoto (consultantspecialiste du credit) et
de MM\. M\. Casse et C\. Gassion (PAC)\.
II\. L~ CADRE DU PROJET
A\. Generalites
2
~ 2\.01 La Republique du Mali, qui s'etend sur quelque 1,2 million de km ,
compte environ 5,2 millions c'habitants\. C'est un pays enclave dont les prin
cipa1\.lx debouches ferroviaire\.s e\.t roul:iers vers la mer sont les ports de Dakar
au Senegal et d'Abidjan en Cote d'Ivoire\. La moitie nord est pratiquement
deserte\. Dans Ie sud, Ie regi~e pluvial est plus favorable, mais seulement
- 2
2S % de 1a superficie du pays re~oivent plus de 550 rom de precipitations
annue11es, hauteur necessaire a la culture du sorgho et du mil, qui sont les
denrees alimentaires de base de la population\. A l'exception de la vallee du
Niger, propice aux cultures irriguees et aux cultures de decrue, et de la re
gion la plus meridionale, ou la hauteur des precipitations depasse 1\.300 rom,
les 2S % de la superficie du pays suffisamment arrosee ne se pretent le plus
souvent qu'a des cultures a cycle vegetatif court, tolerant bien la secheres
se: 1e mil, Ie sorgho, le coton et l'arachide\. Le I~li, dont le PIB par ha
bitant est de l'ordre de 10 dollars EU, est l'un des pays les plus pauvres
d'Afrique et l'un des 25 pays designes par l'Assemblee generale des Nations
Unies comme etant les mains developpes du monde\.
2\.02 Le developpement du pays est entrave par un certain nombre d'obs
tacles, en particu1ier: i) 1a distance qui le separe de la mer, les deux
ports maritimes 1es plus proches, Dakar et Abidjan, se trouvant tous deux a
quel\.que 1\.200 km de Bamako, la capitale; Ii) l'absence de ressources minieres
ou j,o ressources nature11es en general, conjuguee a une agriculture precaire
tenant ~l 1a faib1esse et a l' irregularite de precipitations et a la mediocrite
,,<!s :>01s; iii) une grave penurie de main-d' oeuvre qualifiee, qu' il s' agisse de
techniciens ou de gestionnairesj et iv) des problemes de communications dus
aux dimensions du pays, ainsi qu'a l'insuffisance de son reseau routier et de
son reseau de telecommunications\.
En revanche, 1e Mali dispose d'une population dure a la tache, habi
tuee a vivre dans des conditions climatiques penibles et a se contenter du
strict minimum en matiere de services sociaux\.
2\.03 La Hali a connu en 1968, 1910, 1912 et 1913 de graves periodes de
secheresse, souvent liees a une repartition inegale plutot qu'au volume in
suffisant des precipitations\. Ce phenomene a entratne des penuries alimen
taires qui dans le nord du pays ont coute la vie a de nombreuses betes et
meme a des hommes\. La majeure partie des survivants sont sous-alimentes et,
par consequent, en mauvaise sante\. Seule I'aide alimentaire massive des or
ganismes bilateraux et internationaux a permis au Mali de faire face aux a1eas
climatiques de ces dernieres annees\. II est done vital que l'appareil produc
tif soit remis en etat et renforce; ~el est d'ai11eurs 1e principal objectif
du projet decrit dans 1e p=esenc rapport\. Le 13 novembre 1913, l'IDA a approu
ve 1a creation d'un fonds de secours aux populations des pays frappes par 1a
secileresse, projet dans 1e cadre duquel Ie riali a regu un credit de 2,5 mil
lions de dollars - ce montant a servi a financer des activites concernant
principa1ement: i) la construction et 1a remise en etat d'installations de
petite hydraulique; ii) l'achac de rr~teriel et de fournitures pour les ser
vices veterinaires; et iii) l'acquisition du materiel necessaire aux equipes
de construction et de reparation des ?uits\.
- 3
B\. Le secteur agricole
2\.04 L'agriculture, y compris l'elevage et la pEkhe, est Ie pilier de
l'economie malienne; elle contribue pour pres de moitie (43 % en 1972) au
PIB du pays, auquel elle procure la quasi-totalite deses recettes en devi
ses (54 millions de dollars EU en 1972)\. Environ 85 % de la population vi
vent de l'agriculture, pratiquee sur des exploitations dont la superficie
varie tres largement, mais se situe dans 60 a 70 % des cas en dessous de
4 ha\. Quelque 85 % des 2 millions d'hectares de terres cultivees sont con
sacres aux cultures vivrieres, essentiellement Ie mil et Ie sorgho, et Ie riz
dans les fonds de valleee\. Les principales cultures de rapport sont Ie coton
et l'arachide qui, au cours d'une campagne normale occupent respectivement
90\.000 et 250\.000 hectares\.
2\.05 Ces dernieres annees, les resultats du secteur agricole ont ete
determines par les fluctuations meteorologiques\. lIs se caracterisent cepen
dant par un desequilibre entre d'une part, on developpement rapide de la pro
duction destinee a l'exportation, et d'autre part, une baisse sensible de la
production vivriere\. De ce fait, en depit des conditions climatiques defavo
rabIes, la production de coton-graine est passee de 39\.000 tonnes en 1967 a
74\.000 tonnes en 1971, et celIe d'arachide en coques de 81\.000 tonnes a
152\.000 tonnes (Annexe 1)\. Ces deux cultures ont beneficie de projets bien
coordonnes realises dans Ie cadre d'Operations de developpement (OD) disposant
de ressources financieres etd'un personnel suffisants, (par\. 2\.11) qui ont
permis aux paysans de recevoir les services de vulgarisation et les facteurs
de production modernes dont ils avaient besoin\. Des circuits de commerciali
sation efficaces ont ete mis en place et des prix a la production ont ete
fixes qui ont eu un effet stimulant sur les cultivateurs\.
2\.06 Par contre, tout indique que la production vivriere diminue; apres
avoir culmine en 1967, la production de mil et de sorgho n'a cesse de diminuer,
la moyenne pour la periode 1968-72 s'etablissant a 600\.000 tonnes par an\. Le
volume des denrees alimentaires ache mine par les circuits de commercialisation
officiels a accuse une baisse encore plus marquee pendant la meme periode,
passant de 60\.000 tonnes en 1967 a une moyenne annue11e de 15\.000 tonnes\. La
production de riz a egalement fluctue, avec toutefois une legere tendance a
la hausse, due probablement aux investissements qui ont ete effectues au subs
tantiel titre de programmes tel que Ie p:-cjet "riz }iopti", finance par l'IDA\.
La production est ainsi passee de 172\.00J tonnes en 1967 a 198\.000 tonnes en
1971\.
4\.07 Le principal obstacle a I'augmentation de la production cerealiere
reside probablement dans les necanismes de cor\.®ercialisation et de fixation
des prix\. Le prix officiel a la production de mil et de sorgho (20 francs
maliens Ie kilo) est bien trop faible par rapport aux prix effectifs des
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cereales sur Ie marche non officiel (par\. 7\.08), aux prix payes aux producteurs
dans les pays voisins et aux prix payes au Mali aux producteurs de cultures
d'exportation\. Autant de facteurs qui, s'ajoutant aux contrSles, inefficaces
malgre leur severite, que les pouvoirs publics exercent sur la commercialisa
tion, ont sans doute fortement entrave l'expansion de la production de cereales
et de cultures vivrieres\. Le tableau ci-apres indique les revenus a l'hectare
pour les principales cultures pratiquees au Mali selon les methodes tradition
nelles\.
Revenu Revenu
brut Semences et net /2
a l'ha outillage a l'ha
Kg/ha FM/k\./-l- PM PM PM
Mil/sorgho 600 35 21\.000 500 20\.500
ltiz 700 25 17\.500 500 17\.000
Aracbide 500 30 15\.000 500 14\.500
Coton 400 50 20\.000 500 19\.500
11 II s'agit des prix fixes par 1es pouvoirs publics, sauf dans Ie cas du
mil et du sorgho, pour lesquels on a retenu un prix refletant les cours
prevalant sur Ie marche non officiel\.
/2 Avant frais de main-d'oeuvre\.
II suffira que les paysans, guides par les agents de vulgarisation, adoptent
des methodes cu1turales plus modernes pour que leurs revenus nets a l'hectare
s'accroissent de 30\.600 francs maliens (ISO %) pour Ie mil et Ie sorgho,
34\.500 francs maliens (200 %) pour Ie riz, 29\.500 francs maliens (200 %) pour
1 t arachide et 44\.500 francs maliens (225 %) pour Ie coton\.
C\. Options de developpement
2\.08 L'insuffisance des cereales et les couteuses importations, qui ont
etc necessaires pour assurer la continuitc de l'approvisionnement ant con
vaincu les pouvoirs publics rie la necessite d'accroitre la production nationale
de denrees alimentaires\. Le gouvernement s'est d'ores et deja fixe comme ob
jectif d'assurer l'autosuffisance en matiere de cereales d'ici a 1978/1979\.
II faudra pour cela augmenter la production de mil, de sorgho et de mals de
200\.000 tonnes et la production de riz paddy de 100\.000 tonnes\. A cette fin,
les pouvoirs publics prevoient de: i) faire porter les efforts sur l'ameliora
tion de la production vivriere, dans Ie cadre des Operations de developpement
- 5
en cours; ii) lancer d'autres Operations de developpement pour la production
de mil et de sorgho, tache d'autant plus delicate qu'il n'existe pas de varie
tes ameliorees a rendement eleve qui conviennent au gout de la population lo
cale\. En fait, Ie gouvernement ne reussira dans cette entreprise que dans la
mesure ou il pourra offrir aux producteurs des stimulants financiers suffisants
et mettre a leur disposition des services de commercialisation efficaces\. Le
projet envisage contribuerait a la realisation de plusieurs de ces objectifs\.
2\.09 Les pouvoirs publics se sont egalement donnes pour taches priori
taires de: i) relancer et developper l'elevage et la peche en eau douce, qui
ant gravement souffert des recentes periodes de secheresse; ii) mettre en va
leur les importantes ressources en eau dont dispose Ie pays, a savoir essen
tiellement les bassins des fleuves Senegal et Niger, qui peuvent servir a la
culture irriguee intensive; ce projet serait toutefois d'un cout fort eleve
et, meme si Ie Mali peut se procurer les capitaux necessaires, ne pourra etre
realise qu'a un rythme assez lent; et iii) accroitre la valeur ajoutee grace
a la transformation des denrees agricoles\. Des etudes et des projets interes
sant ces secteurs sont en cours de prepararation dans Ie cadre du prochain
plan quinquennal, qui devrait etre acheve au debut de 1974\.
D\. Institutions
2\.10 Hinistere de la production\. La plupart des activites agricoles
officielles sont gerees et contr<31ees par Ie Hinistere de la production\. Au
sein de ee Ministere, la Direction generale de la production (DGP) dirige
les "Operations de developpement" (OD) par l'intermediaire de son service de
l'agriculture dont dependent directement les directeurs des ODe L'Institut
d'economie rurale (IER) est charge de planifier et de pre parer les projets
et les programmes de developpement tout en assurant par ailleurs la coordina
tion et Ie contrale de la recherche agric01e, des fermes d'Etat et de l'en
seignement agricole\.
2\.11 Operations de deve1oppement\. Au cours des huit dernieres annees,
un certain nombre de programmes d'amenagement ont etc lances u l'echelon
national ou regional en vue d'accroitre la production agricole\. Les OD, qui
sont des organismes administratifs jouissant d'une grande autonomie sur Ie
plan financier et celui de la gestion, portent essentiellement sur une seule
culture de rapport (arachide, coton, riz, tabac, fruits) a laquelle sont gene
ralement ajoutees par 1a suite d~s cultures vivrieres que pratiquent tradition
\. nellement les paysans\. II existe actuellement 16 OD, toutes organisees sur Ie
meme modele, qui fournissent generalement aux paysans les services connexes
dont ils ont besoin: facteurs dc production, credit, formation du personnel
d' encadrcment et des agricultc'urs, achat et ramassage de la recolte\. Dans
1'ensemble, ces operations ont ete couronnees de succes\.
- 6
2\.12 Societe de credit agricole et d'equipement rural (SCAER)\. La SCAER,
societe d'Etat autonome, est placee sous la tutelle du Ministere des finances
et du commerce\. Elle assure, soit a credit, soit sur paiement comptant, l'ap
provisionnement en materiel et en facteurs de production agricoles\. Les res
sources financieres dont elle dispose sont, outre son capital, entierement
detenues par l'Etat, Ie produit des redevances qu'elle per~oit sur Ie coton
et l'arachide achetes par les ODl/, ses recettes d'exploitation et des dons
consentis par des organismes d'aide\. La SCAER jouit aupres de la Banque cen
trale de facilites de reescompte\. Elle n'octroie de prets qu'aux agriculteurs
qui participent aux OD, les autres devant regler leurs achats au comptant\. On ,
trouvera aux paragraphes 4\.13 a 4\.17 de plus amples details sur la SCAER\.
2\.13 Societe malienne d'import export (SOMIEX)\. La SOMIEX, egalement
placee sous la tutelle du Ministere des finances et du commerce, detient Ie
monopole des achats d'arachide en dehors du perimetre de l'operation arachide
et celu! de l'exportation de l'arachide et du coton et de l'importation d'une
large gamme de produits, notamment sucre et ciment\. La SOMIEX vend les pro
duits importes a des prix uniformes dans l'ensemble du pays; les pertes qu'elle
2nr2~istre au cours de ces operations sont financees grace aux benefices
qu'elle tire de ses exportations et aux subventions de l'Etat\.
2\.14 Office des produits agricoles du Nali (OPAM)\. L'OPAM, Societe
d'Etat, egalement placee sous la tutelle du Ministere des finances et du com
merce, jouit du monopole de la commercialisation locale des cereales, qu'elle
peut excrcer jusqu'a ce que ses reserves atteignent Ie niveau exige pour Ie
stock regulateur\. L'OPAM, qui detient egalement Ie monopole de l'importation
et de l'exportation des cereales et des fruits, n'a generalement pas reussi a
mettre les cereales a la disposition des consommateurs a un cout raisonnable
en raison d'une politique de prix a la production peu realiste, d'une gestion
defaillante et des mesures coercitives auxquelles il doit recourir pour s'as
surer les quantites de cereales requises\. A l'heure actuelle, la tache prin
cipale de l'Office, qui deja eprouve de la difficulte a organiser les approvi
sionne~ents nationaux, consiste a distribuer les cereales re~ues au titre de
l'aide etrangere\.
E\. L~ recherche agricole
2\.15 Les travaux de recherche agricole, menes sous le contrale de la
"Direction de la recherche" (vGl), division de l' IER, sont geni\.halement ef
fectues par divers membres d'un Dr6anisme fran~ais, dit Groupement d'etudes et
de recherche pour le developpement de l'a 6ronomie tropicale (GERDAT)\. 11 s'agit
1/ 4\.000 francs maliens la tonne de coton-graine et 2\.000 francs maliens
la tonne d'arachides en coques\.
- 7
de: l'Institut fran~ais de recherches fruitieres outre-mer (IFAC) qui se con
sacre a 1a culture maratchere et fruitiere; l'Institut de recherches du coton
et des textiles exotiques (IRCT), pour Ie coton et diverses autres fibres;
l'Institut de recherches agronomiques tropicales et des cultures vivrieres
(IRAT) et l' Institl1t de recherches pour les huiles et oH!agineux (IRHO) respec
tivement specialises dans 1es cultures vivrieres et l'arachide\.
2\.16 Les travaux de recherche sur l'arachide, conduits depuis 1962, visent
principalement a l'amelioration des varietes\. La variete a cycle long 28\.206,
" qui a ete retenue et qui est bien adaptee aux conditions regnant sur la majeure
partie du perimetre de l'OA, a des rendements pouvant atteindre 2,9 tonnes a
l'hectare\. La variete a cycle court 47\.10, selectionnee pour les zones les
plus seches du perimetre de l'OA, a donne dans les conditions experimentales
des rendements de 2 tonnes a l'hectare\. D'autres programmes de recherches por
tent sur la selection d'especes resistant a la rosette (maladie virale), la
desinfection des semences et les essais d'engrais et d'herbicides\. Les travaux
de recherches cons acres au mil et au sorgho sont axes principalement sur 1a
selection de varietes a rendement eleve et a cycle vegetatif court, pouvant
par ailleurs satisfaire Ie gout des consommateurs\. On a deja reussi a ameliorer
les rendements, mais pas a obtenir d'especes presentant les qualites recherchees\.
11 faut esperer que l'Institut international de recherches sur 1es cultures des
regions tropicales semi-arides (ICRISAT) imp1ante a Hyderabad en Inde, et qui
beneficie du soutien financier de la Banque, obtiendra des resu1tats susceptibles
de trouver leur application au Mali\.
III\. LA ZONE DU PROJET
A\. Generalites
3\.01 Emplacement\. Situee dans 1a partie ouest du Mali, la zone du pro-
jet s'etend sur 125\.000 km2 , soit 10 % de la superficie tot ale du pays et
20 % des terres habitees\. Elle forme une bande de 50 a 200 km de large, qui
s'etire sur 850 km Ie long d'une ligne est-ouest Tominian-Sadiola entre la
frontiere voltaique et la frontiere senegalaise et englobe une partie des
circonscriptions administratives de Segou, Bamako et Kayes\.
3\.02 Climat\. Le projet est situe dans la zone soudanaise, zone ecolo
gique et climatique qui se caracterise par une saison des pluies unique
allant de mars/avril a septembre/octoore\. Les precipitations annuelles pas
sent de 550 nun dans la partie septentrionale de la zone du projet (Nourdiah)
a 1\.300 nun a Faraba dans Ie sud (voir carte des precipitations); elles sont
tres irregulieres et mal distribuees\. Les temperatures varient entre des
minima de 12 0 C a 20 0 e en decembre/janvier, et des maxima de 38 0 e a 43 0 e en
avril/maio L'humidite est la plus faible (25 a 35 %) en avril et la plus
- 8
forte (60 a\. 82 %) en novembre\. Si l'evapotranspiration est importante, les
ressources en eau restent toutefois suffisantes en annee normale pour per
mettre la culture de toute une gamme de plantes annuelles de mai a\. septembre\.
3\.03 Ressources en eau\. Le Niger et le Senegal ainsi que plusieurs de
leurs affluents arrosent la region du projet (voir carte) dont la partie sep
tentrionale ne possede toutefois aucune source permanente d'eau de surface\.
La nappe phreatique, sous-jacente a toute la zone du projet peut generalement
etre atteinte a moins de 20 metres de profondeur a l'est, davantage au nord
I
et a l'ouest\. Au cours d'une annee de pluviometrie normale, les puits tradi
tionnels suffisent a assurer l'approvisionnement en eau pendant la saison des
pluies, mais peu profonds, ils sont souvent taris pendant la saison seche\.
3\.04 Topographie, sol et vegetation\. Le terrain, generalement plat au
nord et a l'est, ondule vers l'ouest et Ie sud ou il devient vallonne et ou
i l est traverse par des cours d'eau sinueux\. Le Hali n'ayant fait l'objet
d' aUCllne etude pedologique, on ne connait les sols de la region du projet
T1e par des analyses limitees et des extrapolations effectueesa partir des
donnees dont on dispose sur d'autres pays presentant des conditions pedolo
giques analogues\. La zone du projet, cultivable sur a peu pres la moitie de
sa superficie, consiste essentiellement en sols ferrugineux tropicaux lessi
ves, moyennement fertiles, ou peuvent pousser le mil, Ie sorgho et l'ara
chide\.
3\.05 Population\. En 1972, la zone du projet regroupait selon les estima
tions environ 20 % de la population du Hali, soit 1 million d 'habitants, dont
le taux de croissance est de 3 % par an, y compris les migrations d'habitants
venant de regions plus pauvres\. L'agriculture emploie environ 90 % de la po
pulation active\. Les agriculteurs installes dans la region du projet, qui
comptent parmi les meilleurs des pays soudano-saheliens, sont travailleurs et
receptifs nux innovations\. Les conditions sanitaires sont moyennes pour une
zone seehe d'Afrique occidentale, c'est-a\.-dire meilleures que dans les zones
de iorets\. Cependant, Ie paludisme, la rougeole, la bilharziose, la tubercu
lose et diverses maladies intestinales font des ravages\. Quant a\. l'onchocer
case, elle n'est endemique que dans des secteurs faiblement peuples situes Ie
loog du Senegal et de ses affluents, et ne devrait pas compromettre l'execu
tion du projet; la campagne internationale de Iutte contre l'onchocercose o'in
tcresse d'ailleurs aucune partie de la zone du projet\.
3\.06 Regime fancier\. Le regime foncier se fonde sur Ie principe suivant:
toutes les terres vierges appartiennent a\. l'Etat et les par~iculiers creent
un droit d'usufruit en occupant et en cuitivant la terre\. Ce droit est rela
tivement permanent et peut etre transforme en droit de propriete officiel
sur remise d'un titre a cet effet\.
- 9
3\.07 Systeme d'exp10itation agrico1e\. Dans 1a zone du projet, presque
to utes 1es terres sont cu1tivees a l'aide d'une main-d'oeuvre fami1iale et,
parfois, de quelques ouvriersagricoles\. La region compte en tout que1que
200\.000 fermes; 60 a 75 % d'entre e1les assurent la subsistance d'une a dix
personnes, 25 a 35 % celIe de onze a 25 personnes et 5 % environ font vivre
plus de 25 personnes\. Leur superficie, quoique variable, reste inferieure
a 4 ha dans 60 a 70 % des cas\. Lea cultures principa1es sont, par ordre
d'importance, Ie mil, Ie sorgho, l'arachide, Ie mais, 1e riz, Ie coton, Ie
manioc et 1a pat ate douce\. Une fois defrichee, la terre est cu1tivee pendant
1\. cinq a sept ans, se10n un systeme d' assolement assez irregu1ier, puis 1aissee
en jachere pendant 15 a 20 ans\. II n'y a pas de penurie de terre, et seul
un manque occasionnel de main-d'oeuvre pourrait s'opposer a l'agrandissement
des exploitations\. Tous 1es agricu1teurs e1event des chevres, des moutons
et de 1a vo1ai1le, 50 % d'entre eux e1event des bovins, 1a trypanosiomase ne
sevissant pas dans 1a zone du projet\.
3\.08 Communications\. La voie ferree de la Regie des che~ins de fer du
!viali (RCFN) qui re1ie Koulikoro et Bamako a Kayes et au port maritime de
Dakar, au Senegal, traverse 1a region du projet au centre et a l'ouest\. Le
chemin de fer, qui constitue pour Ie tiali 1e principal moyen d'acces a la
mer, accuse depuisquelque temps une baisse de rendement; cette situation
devrait toutefois etre ame1ioree par 1es projets en cours d'execution au
Senegal et au Hali avec l'aide du Groupe de 1a Banque (Credits 384-r1LI et
314-SEN et Pret 835-SEN)\. C'est 1e rail qui acheminerait tous 1es facteurs
de production importes pour 1e projet et tous 1es articles d'exportation
produits dans le cadre du projet\. La region est ega1ement desservie par
environ 2\.200 km de routes clasbees, entretenues par la direction nationale
des travaux publics (DNTP), qui sont actuellement r\.lodernisees grace a un cre
dit de 7,7 millions de dollars consenti par l'IDA (Credit 383) et un don du
FAC de 931 millions de francs maliens\. L'IDA envisage de financer un autre
projet routier qui prolongerait le reseau des routes nationales jusqu'a la
reg10n du projet\. Les routes regionales et les pistes qui re1ient les villa
ges les uns aux autres et aux routes principales desservent assez bien l'est
de cette region mais sont insuffisantes et souvent en mauvais etat dans Ie
centre et une grande partie de l'ouest; de plus, elles ne sont generalement
pas carrossables pendant la saison des pluies\. En outre, faute de materiel
et de capitaux, les autoritcs locales ne sont pas en mesure d'assurer l'entre
tien des routes regionales et des pistes qui rc1event de leur competence\. C'est
pourquoi le present projet prevoit des travaux de refection sur les parties
les plus mauvaises de quelque 1\.500 km de pistes\.
3\.09 Services sanitaires\. La zone du projet, qui englobe Bamako, pos
sede six hopitaux (1\.135 lits), 18 maternites (168 lits), 25 centres de
soins (116 lits) et 125 dispensaires\. Ces installations ne suffisent pas a
- 10
repondre aux besoins de la population et les services sanitaires manquent a
la fois de ressources et de personnel qualifie\. Le projet comprend done un
modeste programme destine a ameliorer les installations medicales des regions
les plus reculees de la zone du projet\.
3\.10 Education\. Le taux d'alphabetisation, deja faible (10 %) dans la
region du projet comme dans l'ensemble du pays, est encore inferieur chez les
ruraux a 1a moyenne nationale et il est exceptionnel de rencontrer un agri
culteur sachant lire et ecrire\. Afin de faciliter l'adoption des nouvelles
techniques agricoles necessaires a la realisation des objectifs du projet,
l'Operation arachide a lance, avec l'aide de l'Etat et de bailleurs de fonds
etrangers, un programme d'a1phabetisation fonctionne1le (voir par\. 4\.07)\.
Cc programme s'est reve1e tres utile et beaucoup y voient l'un des facteurs
qui ont Ie plus contribue a la reussite de l'Operation arachide, bien que
l'eva1uation n'en ait pas encore ete conduite en detail\.
B\. L'Operation Arachide
j\.1\.1 \.'\.pres une recol te except ionnelle de 138\.000 tonnes d' arachides en
1957, la production et les exportations d'arachide n'ont cesse de diminuer
et les pouvoirs publics ont essaye, sans succes, de remettre sur pied l'in
dustrie de l'arachide\. C'est a cette fin qu'a ete lancee en juin 1967,
l'Opcration arachide (OA), qui beneficie d'un financement partiel du Fonds
d'aide et de cooperation (FAC) et de l'assistance technique d'une societe
fran~aise, Ie Bureau pour Ie developpement de 1a production agricole (BDPA)\.
Initialement, l'OA se proposait de reorganiser la commercialisation de l'ara
chide: en effet, c'est essentiellement parce que la vente etait mal organisee
que les agriculteurs ne trouvaient plus avantageux de se consacrer a l'arachide
comme culture de rapport\. En 1969, l'Etat a accorde aux agriculteurs une
hausse de 25 % du prix au producteur de l'arachide et, par la suite, l'OA
s'est efforcee d'ameliorer les methodes cultura1es et d'introduire des fac
teurs de production modernes\. En outre, un programme d'alphabetisation fonc
tior,:\.-211e\. destine aux agriculteurs, a ete mis sur pied\. Au cours de 1a cam
pagne de 1972, 52\.000 agriculteurs appartenant a l'OA ont produit sur 99\.000
ha 776\.500 tonnes d'arachides, soit environ 51 % de la production malienne\.
En 1972/73, l'OA a ramasse 80 % de 1a production commercia1isce d'arachides
riu HalL Au cours de cette meme campagne, 50 % des agricu1teurs de 1 lOA ont
serne a l'epoque prescrite, 30 Z d'entre eux a la densite recommandee et 36 %
ont procede a des epandages d'engrais; 32 % ont desinfecte les semences d'ara
chides et 20 % les graines de mil et de sorgho\. En cinq ans, l'OA a reussi a
multiplier par douze la distribution de semences ameliorees, a faire passer
Ie rendement ii 1'hectare de SOD idlos en 1968 a 814 kilos en 1971 et a doubler
1a superficie p1acee sous son contrale; grace a ses efforts, 1a production
nationa1e est passee de 81\.000 tonnes en 1967 a 153\.000 tonnes en 1972 (voir
Annexe 2)\.
- 11
3\.12 Halgre des conditions atmospheriques defavorables, l'OA a donc
obtenu d'excellents resultats\. Son personnel charge d'apporter une assis
tance aux agriculteurs est efficace et honnete et la plupart des postes d'en
cadrement sont maintenant confies a des ~~liens, entoures de quelques con
seillers etrangers\. Les services administratifs de l'OA laissent toutefois
encore a desirer, notamment en matiere de comptabilite et de contr8le du
credit\.
IV\. LE PROJET
A\. Description
4\.01 Le projet constituera la deuxieme phase (mars 1973 a mars 1978) de
l'Operation arachide (OA) dont les activites serontintensifiees et elargies
a de nouvelles zones\. La realisation du projet est en cours et les versements
au titre du credit propose de l'IDA commenceraient au debut de la deuxieme an
nee du projet (voir par\. 5\.09)\. Les principales activites liees au projet se
ront:
a) l'intensification des activites de l'OA dans les zones comprises
actuellement dans le programme, en ce qui concerne non seulement
l'arachide mais toutes les principales activites agricoles, no
tamment la production des cereales de base et l'elevage; l'ap
pellation "Operation arachide" sera remplacee par "Operation
arachide et cultures vivrieres" (OACV) pour mettre en lumiere
l'importance accordee dans le projet a la production vivriere;
b) l'elargissement des services de l'OACV a de nouvelles zones;
c) la fourniture aux agriculteurs participants, au comptant ou a
credit, de facteurs de production et de materiel agricoles\.
Pour la realisation des objectifs ci-dessus, Ie projet comprendra egalement:
d) un programme d'amelioration des pistes rurales comportant des ope
rations ponctuelles de refection et d'amelioration sur environ
1\.500 km de pistes;
e) un programme d'alpnabetisation fonctionnelle;
f) un programme de recherche agricole destine a completer le programme
national en cours;
- 12
g) l'amelioration des services medicaux dans la zone du projet;
h) l'amelioration des services veterinaires dans la zone du projet;
i) la fourniture d'equipement a credit a certains forgerons; et
j) la creation d'une unite d'evaluation du projet\.
Le projet financera en outre une etude sur les prix a la production et la com
mercialisation du mil et du sorgho\. (voir par\. 7\.08)\. "
B\. Caracteristiques du projet
4\.02 Programme de developpement agricole\. La superficie des cultures
d'arachide, de mil et de sorgho ou, dans Ie cadre du programme de l'OACV, se
ront uti1isees des techniques ameliorees et la superficie supplementaire di
rectement attribuable au projet sont recapitulees ci-apres (pour plus de de
:ai15 voir Annexe 3)\.
Annee Annee
du projet 0 11 2 3 4 5 6 7 8
(superficie ar- 72/73 73/74 74/75 75/76 76/77 77/78 78/79 79/80 80/81
rond ie au mil-
Her d'ha)
Superficies tot ales auxquelles les themes recommandes par l'OACV seront
appliques:
Arachide 100 105 138 157 172 182 187 191 191
>lil/sorgho 114 117 234 245 255 264 267 270 270
Superficies supplement aires attribuables au projet
,\\.rachide 1 3 8 16 23 28 32 32
::il / sorgho 3 7 10 13 17 18
Les estimations ci-dessus tiennent compte de la diffusion des techniques mo
dernes qui aurait eu1ieu en absence du projet\.
4\.03 Amelioration des methodes de culture\. Les agriculteurs participants
anclioreront progressivement leurs methodes de culture\. Le rythme de cette
evolution sera lie aux methodes auxque1les ils sont accoutumes, a leur recep
tivite aux conseils et a leur capacite d'endettement dans la mesure ou ce11e
ci determinera leur acces aux facteurs de production rnodernes\. Tous les
- 13
participants cultiveront Ie mil et Ie sorgho alternativement avec l'arachide
et recevront des conseils techniques sur la fa~on de maximiser leurs rende
ments\. L'OA a deja diffuse, ces cinq dernieres annees, toute une\. gamme de
themes techniques, ce qui permet desormais de recommander l'usage de ceux
qui ont fait totalement leur preuve\. Les themes preconises pour la culture
de l'arachide sont notamment des semis precoces et denses, un sarclage bien
echelonne, la desinfection des semences, l'utilisation d'engrais et de semen
ces ameliorees; on compte qu'au stade du plein developpement, au moins 70 %
des agriculteurs utiliseront ces semences\. En ce qui concerne Ie mil et Ie
sorgho, en l'absence de meilleures varietes, les principes de base recomman
des sont des semis et un sarclage bien echelonnes et Ie traitement des semen
ces\. Quoi qu'il en soit, ces cultures profitent de l'effet residuel des en
grais utilises pour la culture de l'arachide et de la meilleure preparation
du sol rendu possible par la culture attelee\. Les agriculteurs qualifies
pourront se procurer a credit l'equipement necessaire\.
4\.04 Structure administrative\. La zone du projet sera divisee en neuf
secteurs, composes chacun de deux a cinq sous-secteurs, soit au total 26 sous
secteurs\. II y aura 308 agents de vulgarisation agricole pour l'ensemble du
projet, chaque agent s'occupera en moyenne de huit villages groupant chacun en
viron 45 agriculteurs\. Dans Ie cadre du projet, Ie rapport sera d'un agent
de vulgarisation agricole pour 350 agriculteurs\.
4\.05 Programme de construction\. Le programme comprendra la construction
d'un siege a Bamako et de 27 bureaux, 29 hangars et 33 logements a Bamako et
dans les secteurs et sous-secteurs, l'amenagement de quatre ateliers-garages
et l'agrandissement de l'atelier et du garage principal de l'OACV a Bamako\.
Tous ces batiments seront convenablement equipes et meubles\.
4\.06 Programme d'amelioration des pistes rurales\. Ce programme (Annexe 4)>>
qui s'etendra sur trois ans a compter de 1a deuxieme annee du projet, com
prendra l'amelioration des tron~ons les plus defectueux des 1\.500 km de pis
tes desservant les secteurs de l'ouest et du centre de la zone du projet\. Ces
pistes sont vitales pour Ie ramassage des recoltes, les echanges commerciaux
courants et l'efficacite des services de vulgarisation agricole et du person
nel medical et veterinaire\.
4\.07 Programmes d'alphabetisation fonctionnelle\. (Annexe 5) Le principal
objectif des programmes d'alphabetisation fonctionnelle, qui prennent la forme
de cours extra-scolaires dispenses dans les dialectes locaux, est d'aider les
~ individus a ameliorer leur productivite en leur inculquant les rudiments d'ecri
ture, de lecture et d'arithmetique indispensables a une meilleure comprehension
de leur travail ou de leurs aifaires\. Les programmes d'alphabetisation fonc
tionnelle en milieu rural aident les agriculteurs a mieux comprendre et, par
tant, 3 appliquer de fa~on plus efficace les innovations techniques recomman
dees par les agents de la vulgarisation agricole\. Sn consequence, un pro
granme judicieux d'alphabetisation fonctionnelle favorisera la reussite des
- 14
campagnes de vulgarisation agricole\. On estime que vers la fin de 1973, quel
que 30\.000 agriculteurs des zones de l'OACV auront suivi des programmes com
plets d'alphabetisation fonctionnelle\. L'evaluation des programmes d'alphabe
tisation fonctionnelle a l'echelon du pays d'une part et a l'echelon de l'OACV
d'autre part, n'a pas encore ete effectuee\. En consequence, Ie programme qui
sera finance au titre du projet sera limite a: a) l'evaluation des programmes
d'alphabetisation fonctionnelle passes et en cours au titre de l'operation
arachide et b) dans l'attente des conclusions de ladite evaluation, la mise
en place~ de la premiere annee a la troisieme annee du projet, de 500 nouveaux
centres d'alphabetisation fonctionnelle, y compris Ie recrutement du personnel
et la fourniture de l'equipement necessaires\. Si, comme on l'espere, l'evalua
tion confirme l'utilite de l'alphabetisation fonctionnelle, 200 nouveaux centres
seraient ouverts\.
4\.03 Programmes de recherche\. (Annexe 6) Les programmes de recherche
seront divises en i) des recherches appliquees sur la diversification de la
production agricole dans la zone du projet, notamment la pratique des rota
~-i(:n~\.; plus longues avec introduction de cultures telles Ie coton, Ie maIs,
le \.,iebe et les legumineuses fourrageres; ii) la poursuite des travaux sur
I' arachide en vue de l' amelioration des varietes locales et de l' adaptation
ciu materiel vegetal mis au point dans des pays jouissant de conditions com
parables; des essais de produits antiparasitaires et d'engrais; et iii) des
etudes pedologiques\.
4\.09 z\melioration des services medicaux\. (Annexe 7) 11 s'agit d'un mo
deste programme destine a l'amelioration des activites et de la qualite des
services sanitaires existant dans les secteurs les plus recu1es de la zone du
projet\. L'objectif sera de detecter et de combattre des leur apparition les
maladies infectieuses~ lesquelles, de fa~on generale, atteignent les popula
tions de la zone du projet au debut de la campagne agricole qui coIncide avec
la venue des pluies\. Le programme viserait egalement a inculquer des rudi
!:1ents d'hygiene auxfamilles rurales\. Le personnel supplementaire, les dis
pensaires, les vehicules, l'equipement, lea medicaments et les depenses de
fonctionnement necessaire a la realisation de cet objectif seront pris en
charge au titre du projet\.
4\.10 Amelioration des services veterinaires\. (Annexe 8) Les services
vcterinaires existants, lesquels, de fa~on generale, manquent de fonds pour
acquerir Ie materiel et les fournitures medicales necessaires, seront renfor
ces au titre du projet\. Cette mesure s'impose par suite de l'expansion pro
jetee de 1a traction animale dans 1a zone du projet\. L'ame1iorat1on des
solns veterinaires pour les boeufs d~ labour s'accompagnera de l'initiation
des agriculteurs a l'elevage\. Le personnel supplementaire~ les enc10s de
desinfection, les vehicules~ l'equipenent, la dotation initiale en medicaments
et les depenses de fonctionnement seront finances au titre du projet\.
- 15
4\.11 L'unite d'evaluation\. (Annexe 9) Les avantages du present projet
pour les populations vivant dans les zones de l'OACV et pour l'economie du
P~li en general seront evalues par une unite d'evaluation qui serait creee
au titre du projet\. Elle etablierait, entre autres, l'incidence du projet
sur Ie revenu et Ie bien-etre des agriculteurs participants et, de fa~on gene
rale, l'evolution des indicateurs economiques et sociaux\. Cette unite sera
autonome, bien que rattachee a l'Institut d'economie rurale avec lequel elle
collaborera etroitement\.
4\.12 Impact du Projet sur l'environnement ec 'la'sante "Publigue\. Le pro-
jet aura une incidence modeste mais benefique sur Ie milieu et la sante pub li
que\. Le programne medical aura pour effet une certaine amelioration de la
sante publique et, comme dans les zones ou l'OACV est competente ses agents
sont habilites a empecher Ie defrichage des versants exposes a l'erosion, les
risques de degradation des sols s'en trouveront reduits\.
C\. Organisation du credit et fourniture des facteurs de production
4\.13 La vente de facteurs de production aux agriculteurs, soit au comptant
soit a credit, est, a l'echelon national, Ie monopole de la Societe de credit
agricole et d'equipement rural (SCAER)\. Depuis Ie nois d'avril 1971, la SCAER
a agi essentiellement en tant que centrale d'approvisionnement pour des "opera
tions" - tel Ie l'operation arachide - lesquelles, a leur tour, fournissent les
facteurs de production aux agriculteurs, encaissent les versements en especes
et les remboursements et detiennent des stocks de facteurs de production pour
Ie compte de la SCAER (Annexe 11)\.
4\.14 Les operations de credit dans les zones de l'OA se sont heurtees aux
problemes ci-apres: i) la coordination insuffisante entre la SCAER et l'OA en
ce qui concerne la gestion des stocks de facteurs de production, qui a entraine
des penuries dans certaines zones et des exccdents dans d'autres; ii) des im
payes de l'ordre d'environ 20 % de l'ensemble des prets accordes aux cultiva
teurs d'arachi1,s depuis 1968, contre 2 % d'impayes dans les zones de l'''Ope
ration coton";- iii) une controverse permanente entre la SCAER et l'OA a
11 Le coton, a l'inverse de l'arachide, ne peut etre vendu qu'a un seul eta
blissement de transformation, "1' operation coton", et ne peut etre uti
lise que dans une mesure tres limitee par Ie producteur meme\. En conse
quence,"l'operation coton" recouvre plus facilement les prets en deduisant
leurs montants du produit de la vente des agriculteurs\.
- 16
propos du financement des prets pour 1es semences d'arachides; l'OA a retenu,
ma1gre l'opposition de 1a SCAER, des fonds provenant du remboursement d'autres
prets pour ce financement\. Recemment, toutefois, 1es deux parties ont e1abore
et accepte en principe une "convention de services reclproq\1es" qui definit
plus c1airement 1es responsabilites respectives de l'OA et de 1a SCAER\. Un
systeme ame1iore de commande des facteurs de production et de gestion des
stocks est actue11ement mis en oeuvre et 1es autorites ont reconnu 1a necessite
d'app1iquer des moyens de pression juridiques plus fermes a l'encontre des
agricu1teurs defai11ants\. L'une des conditions prea1ab1es a l'entree en vi
gueur du credit sera que l'OACV et la SCAER signent une "convention de servi
ces reciproques" jugee satisfaisante par l'IDA et definissant les responsabi
lites et obligations des deux parties\.
4\.15 Au titre du projet, la SCAER restera chargee de l'achat des facteurs
de production et de l'equipement agricoles, exception faite des semences, et
1 'OAGV 1es vendra aux agriculteurs, a credit ou au comptant\. Ces credits se
raient finances par la SCAER, grace a une cote speciale de reescompte autorisee
par la Banque centrale\. La Banque de developpement du 11a1i (BDM) agit en qua
lite d'intermediaire et applique une commission de 1,5 % s'ajoutant au taux de
n;escompte de 1a Banque centrale qui est actuellement de 3,5 %\. En fait, s' a
gissant pour la Bml d' operations presque sans risques, sa commission devrait
etre rcduite\. II a ete convenu implicitement que les conditions auxque11es la
BDH financera les facteurs de production et Ie materiel achetes par 1a SCAER
doivent etre jugees satisfaisantes par l'IDA\. L'OACV sera directement res
ponsab1e des credits pour les semences, qui seront finances au moyen d'un fonds
renouvelable etabli par 1'OACV a cette fin\. 11 a ete convenu que l'Office de
surveillance et de regulation des prix (OSRP) assumera la responsabilite de
toute la dette non amortie de l'OA a l'egard de la SCAER, au titre des semences
(c'est-a-dire en fait, fera passer par profits et pertes toutes les pertes en
courues au titre des operations de distribution de semences)et que six mois
au plus tard apres la signature du credit propose de l'IDA, la responsabilite
des operations d'approvisionnement et de credit pour les semences sera trans
feree par la SCAER a 1 '\.OACV qui est mieux adaptee a ce genre d' operations\. Le
projet comprencira des dispositions visant a renforcer la structure et le per
sonnel des services de credit de l'OACV, et fournira notamment 1es fonds ne
cessaires pour ameliorer 1a formation du personnel des services de credit\.
Tous les agriculteurs du projet pourront obtenir a credit les facteurs de pro
duction saisonniers\. Aucun credit ne sera octroye pour l'achat d'animaux de
trait, car 1a plupart des agriculteurs en possedent deja; de plus, et comme
c'est deja actuellement le cas, les demandeurs de credit a moyen terme pour
l'achat de materiel agricole devront faire 1a preuve qu'ils possedent une
paire de boeufs et au moins 1,5 ha de terres defrichees\.
- 17
4\.16 Subventions\. Les engrais, pesticides et fongicides ainsi que les
p1eces detachees sont vendus a profit par la SCAER aux agriculteurs\. Seuls
les semences et Ie materiel agricole sont cedes en-dessous de leur prix de
revient grace a des subventions\. En moyenne, l'agriculteur paie environ 60 %
du cout des semences et du materiel agricole et les subventions, qui attei
gnent 500 millions de francs ma1iens par an pour l'ensemble du pays, sont en
partie financees par des redevances prelevees au niveau du bareme arachide
lcf\. par\. 5\.05); dans Ie passe, Ie deficit etait couvert soit par Ie Fonds
d'aide et de cooperation (FAC), so it par Ie Fonds europeen de developpement
(FED), soit, Ie cas echeant, par des contributions de l'Etat\. Or, Ie FAC et
Ie FED ont l'intention a l'avenir de reduire et meme eventuellement d'inter
rompre ce genre de subventions, ce qui implique une contribution plus impor
tante de l'Etat dans ce domaine; ou alors, l'Etat devra reduire Ie taux de
subvention ou majorer les prelevements sur bareme au profit de la SCAER,
comme il vient de Ie faire\. L'ensemble des subventions relatives au projet
est inclus dans la contribution du gouvernement\. Etant donne qu'il est vital
pour les agriculteurs d'employer des semences ameliorees et que 1a diffusion
de la culture attelee doit etre encouragee, l'adoption de mesures qui, a ce
stade, entratneraient l'augmentation du cout de ces articles pour les agri
culteurs serait ma1encontreuse; il a donc ete convenu que l'IDA sera consultee
sur tout changement que Ie gouvernement se proposerait d'apporter aux prix et
aux subventions des facteurs de production agricoles\.
4\.17 Taux d'interet\. Aucun interet n'est officiellement applique aux
prets de campagne et a moyen terme accordes aux agriculteurs de l'''operation
arachide", mais les charges financieres (de l'ordre de 8,5 % du prix de revient
rendu paysans) et autres, dont les frais de gestion, 1es provisions pour per
tes et creances douteuses et une marge appropriee, sont incluses dans les prix
de revient etablis par 1a SCAER\. Une caracteristique de ce dispositif est que
les charges financiares et provisions pour creances douteuses grevent tant les
ventes au comptant que les ventes a credit, ce qui n'incite pas les agricul
teurs qui Ie peuvent~a acheter au comptant\. II a ete convenu qu'a l'avenir,
les ventes au comptant de facteurs de production et de materiel agricole se
ront effectuees avec remise, afin d'encourager les achats au comptant\. Cette
remise devra correspondre a la reduction de couts due aux achats au comptant,
de l'ordre de 7 a 9 % du prix de revient rendu paysan, d'apres une estimation
rap ide\.
- 18
V\. ESTIMATION DES COUTS ET FINANCEMENT
A\. Couts du projet
5\.01 Les estimations de cout du projet sont detai11ees a l'Annexe 12 et
resumees ci-apres\. Les couts sont fondes sur les prix en vigueur a 1a fin du
premier semestre/1973\. Les estimations tiennent compte de l'incidence de la
hausse des prix! sur differents postes du projet\. Une provision de 5 % pour
depassement des quantites a ete appliquee a tous 1es couts du projet\. Les
provisions pour imprevus s'e1event au total a 4 millions de dollars, soit
~7 % des couts avant provision pour imprevus\. Les couts du projet eng10bent
1es droits et taxes a l'importation dont 1e montant est estime a environ
649 millions de francs ma1iens (1,3 million de dollars)\.
5\.02 Comme Ie present projet constitue Ie prolongement et l'elargissement
a'un programme en cours d'execution, les couts du projet correspondent au fi
nancement supplementaire rendu necessaire par l'accroissement du niveau d'ac
tivite\. Toutefois en ce qui concerne l'assistance technique qui n'aurait pas
etc maintenue en l'absence du projet, 1a totalite des depenses a ete prise en
compte\.
B\. Dispositions financieres
5\.03 11 est propose que l'IDA accorde au Mali un credit de 8 millions
de dollars correspondant a 42 i\. des couts totaux du projet\. Le credit repre
sente 75 Xi\. des depenses en devises, lesque11es sont estimees a 5\.324,8 mil
lions de francs maliens (10,6 millions de dollars)\. Le solde des depenses se
ra finance par une contribution du FAC (13 i\.), de l'Etat malien (23 %) et
la participation des agriculteurs (22 X)\. Les moda1ites de financement propo
sees sont recapitulees au tableau ci-apres et exposees en detail a l'Annexe 13\.
l/ On a applique 1es taux d'augmentation des prix ci-apres:
Materiel Genie civil Assistance technique Autres
1973 10 12 7 3
1974 14 18 7 6
1975 11 15 7 6
1976-80 7,5 12 7 6
- 19
ETAT RECAPITULATIF DES COUTS DU PROJET
-----MU1ions de FN------ ---HU1iers de $ EU---- % de
i:-ionnaie }lonnaie devises
nationa1e Devises Total nationa1e Devises Total
1\. SOUS-PROJET PRINCIPAL
Bat1ments 643,6 262,9 906,5; 1\.287 526 1\.813 29
HobUier et materiel 62,1 93,1 155,2 125 186 311 60
Vehicu1es 184,8 277 ,3 462,1 369 555 924 60
Salaires assistance
technique 201,4 818,8 1\.020,2 402 1\.638 2\.040 80
Sa1aires personnel
local!\.! 352,5 352,5 705 705
Depenses d'exp1oi
tation!! 321\.1 362,1 683,2 642 724 1\.366 53
Total 1 1\. 765,5 1\.814,2 3\.579,7 3\.530 3\.629 7\.159 51
2\. SOUS-PROJETS SECONDAlREs!/
Amelioration des
pistes 201,2 209,4 410,6 402 419 821 51
A1phabetisation
fonctionne11e 92,7 92,7 185,4 186 185 371 50
Recherche 107,5 99,2 206,7 216 198 414 48
Assistance medica1e 94,4 77 ,3 171,7 188 155 343 45
Assistance veterinaire 65,1 62,5 127,6 130 125 255 49
Unite d'eva1uation 89,4 67,4 156,8 178 135 313 43
Etudes£l \. 45 1 0 45,0 90 90 100
Total 2 650,3 653,5 1\.303,8 1\.300 1\.307 2\.607 50
Total 1 & 2 2\.415,8 2\.467\.7 4\.883,5 4\.830 4\.936 9\.766 51
1/
3\. \.
FACTEURS DE PRODUCTION AGRICOLES
Materiel 212,8 1\. 206 ,0 1\.418,8 426 2\.412 2\.838 85
Facteurs de produc
tion saisonniers 619,5 512 2 8 1\.132,3 1\.240 1\.025 2\.265 45
Total 3 832,3 1\. 718,8 2\.551,1 1\.666 3\.437 5\.103 67
4\. FONDS RE~mlJVELABLE11 2Oa7 31 2 1 51 2 8 42 62 104 60
Total 1 a 4 3\.268,8 4\.217,6 7\.486,4 6\.538 8\.435 14\.973 56
5\. PROVISIONS POUR IMPREVUS
Uausse des prix 714,3 896,5 1\.610,8 1\.429 1\. 793 3\.222 56
Depassement des
quantites 163,4 210 2 7 374,1 327 421 748 56
Total 5 877,7 1\.107,2 1\.984,9 1\. 756 2\.214 3\.970 56
TOTAL GENERAL 4\.146,5 5\.324 2 8 9\.471 z3 8\.294 10\.649 18\.943 56
11 Couts supplementaires, sauf pour l'unite d'eva1uation\.
21 Etude sur Ie prix paye aux producteurs et les mecanismes de commercialisation
des cerea1es et assistance aux services comptables de l'OACV\.
1\.1 Pour materiel de forge et motocyc1ettes et bicyclettes pour Ie personnel\.
- 20
5\.04 L'effort financier de~1nde aux agriculteurs et a l'Etat malien semble
e1eve si l'on considere que les uns et 1es autres sont dans une situation fi
nanClcre plutot difficile\. Cependant, la contribution des agriculteurs inclut
les remboursements de prets au titre des facteurs de production et du materiel,
qui reviennent a 983 millions de francs maliens;\. Ie solde de leur contribution,
soit 1\.0tn millions de francs maliens, sera constitue par les acomptes, les
adlats de facteurs de production au comptant, Ie cout des batis de charrettes
et 1es provisions pour imprcvus\. La contribution de l'Etat comprendra notam
ment un montant d'environ 444 millions de francs maliens que la SCAER rees
comptera aupres de la Banque centrale pour financer ses operations de credit\.
En outre, une somme d'environ 645 millions de francs maliens sera compensee
par de recettes douanieres et fiscales directement engendrees par Ie projet\.
Par ail1eurs, l'Etat!l'OACV encaisseront 1\.036 millions de francs maliens au
ti~re du bareme arachide, qui serviront a financer les couts des services de
vulgarisation agricole\.
5\.05 Le bareme arachide\. En consultation avec l'operation arachide et
jT()ifice de surveillance et de regulation des prix, les pouvoirs publics eta
blissent chaque annee la liste des depenses estimatives de toutes les opera
tions se succedant depuis l'achat au producteur jusqu'au point de vente c\.a\.f\.
Le bareme arachide pour 1a campagne 1973/74 fait l'objet du Tableau 1 de l'An
nexe 14\. Dans Ie cadre de ce dispositif, l'OACV percevra une redevance de
7\.600 francs maliens par tonne d'arachides en coques commercialisee, ce qui,
de 1973/74 a 1977/78,serait la source de recettes estimees a 1\.036 millions
de francs maliens sur la base de l'accroissement de la production commercia
lisee dO au projet, de l'ecart entre Ie prix c\.a\.f\. reel et ce1ui estime par
1e bareme reste en fait acquis a 1a Societe ma1ienne d'imports exports (SOMIEX)
alors que tout manque a gagner est absorbe par l'Etat\. II a ete convenu que
1e bareme arachide sera chaque annee etabll en consultation avec l'IDA\.
5\.06 II est propose que Ie credit de l'IDA, de 8 millions de dollars,
soit octroye aux conditions habituelles au Gouvernement malien qui Ie retroce
aera a l'OACV\. Le credit de l'IDA sera debourse en quatre ans (1974/75 a
1971 /78)\. le rAC et 1e Gouvernement malien devant financer les coOts de la
premiere annee du projet\. Les depenses de fonctionnement apres l'exercice
1977/78 jusqu'au stade de pleine production en 1980/81 s'elevent au total a
~no millions de francs maliens\. Les ressources du projet devraient permet
tre au gouvernement de financer ces coOts sans difficultc et, partant, i1 ne
serait pas justifie de prolonger les deboursements du credit de l'IDA au-dela
de 1977/78\.
5\.07 Pour assurer une execution efficace et diligente du projet en depit
des difficultes budgetaires, i1 est propose que l'IDA prefinance les activites
du projet\. Immediatement apres l'entree en vigueur du credit, elle effectuera
a cet effet un premier versement equivalent a 200\.000 dollars, au credit d'un
MALI
PROJEl' DE DEVELOPPl'MENT RURAL lNTEGRE
RESUME DU FTiiANCEMENT
IDA FAC U',;,x AGRICUL1'h,URS LO'!'AL
milliers PM milliers $ 1'I'I-i'1 ''lP'''':c:' ~ mill if!rs % ¥M milliers $
'% milliers PM milliers~ :tiniers ji'rr millj sr," ~ '% ~
\.B,a1\.iment\.~
672\.8 1,346 70 90\.2 180 10 194\.6 389 20 957\.6 100
et mobilier 121\.6 2411 59 84\.4 169 41 206\.0 100
397\.4 795 55 73\.0 146 10 258\.8 518 35 729\.2 1,459 100
Assistance technique 860\.6 721 70 361\.1 722 30 1,221\. 7 2,443 100
personnel rnalien 403\.4 70 124\.6 2\.49 21 51\.6 103 9 579\.6 1,159 100
uepenses de ionetiomlem~nt 818\.7 1,637 72 231\.1 462 20 94\.6 189 8 1,144\.4 2,288 100
Batis de charrettes 159\.6 319 100 159\.6 319 100
Facteurs de productL,n agricoles y- 748\.1 1,496 43 1,001\.1 2,002 57 1,749\.2 3,498 100
semences 103\.8 208 16 214\.5 429 33 324\.0 648 51 642\.3 1,285 100
Fonds renouvelable ~ 51\.8 104 100 51\.8 104 100
Etudes Y 45\.0 90 100 45\.0 90 100
Total partiel 3,301\.7 6,604 44 1,001\.6 2,003 13 1,698\.4 3,397 23 1,484\.7 2,969 20 7,486\.4 14,973 100
Imprevus 698\.3 IJ2§ 35 257\._8 ,5l6_13 449\.3 899 23 279\.5 1,159 ~1\.984\.9 3,970 100
TOTAL GEl\IERAL 4,000\.0 8\.000 42 1,259\.4 2,51" 13 2\.147\.7 4,296 23 2\.064\.2\. 4,12& 22 9,471\.3 18,943 12\.£
N
0
r\.A~ p n ll'T"'rp\.ntaoeR indiaues portent sur Itp\.nRfHllhle t1f']$ ('('lttt~ nu prl">jPt\. T,es p""Urcentrges dE'S cc'6:ts du projet au cours de ~,
12\. periode d~ versement du credit de l'IDA (Bnnees 2 i!\. 5) figurent en d,hBil a\. l'Annexe 13\.
Taux de chance 1 dollar ;00 FM\.
y Facteurs de production supplementaires (sans les samences) au prix fort; la contribution de l'Etat englobe les
sUbventions\.
~ Fonds renouvelable destine au materiel de ~or~e et aU){ motocyclAtt~~ et hicyolettes 0es~~~ts d~ 1- vulgaris~tion\.
1I Etude sur les prix payes aux producteurs et les mecanismes de commercialis~tion des cereales et assistance aux
services comptables de l'OACV\.
- 21
compte specialement ouvert par l'Etat qui est autorise a y puiser pour finan
cer les depenses du projet\. L'IDA reapprovisionnera ce compte des reception
des pieces justifiant que les depenses sont admises a etre financees a l'aide
du credit\. Neanmoins, dans l'eventualite oil Ie compte serait debite pour llne
depense ne repondant pas aux criteres indiques, l'IDA refusera Ie deboursement
et l'Etat sera tenu de deposer la somme correspondante au compte special\. Tel
les sont les dispositions convenues\. L'entree en vigueur du credit sera subor
donnee notamment a l'ouverture du compte special\.
c\. Passation des marches et versements
5\.08 Passation des marches\. Les marches de vellicules et de niveleuses,
dont la valeur s'eH!ve a 1,5 million de dollars, seront passes dans Ie cadre
d'appel d'offres internationaux conformement aux Directives de l'IDA\.
Les marches de materiel et de mobilier, evalues a 400\.000 dollars
et pour lesquels lemarche interieur est suffisamnlent concurrentiel, seront
attribues par voie d'appcl a la concurrence nationale\. Les marches relatifs
R la construction des bureaux, des logements, des entrep6ts et garages, dont
Ie cout est estime a 1,9 ~illion de dollars seront eux aussi passes dans Ie
cadre d'appels d'o[fres nationaux, car, en raison de leur modicite et de la
dispersion des chantiers, ils ne sont pas de nature a susciter des offres en
provenance de l'etranger\. La concurrence entre les entrepreneurs locaux est
jugee suffisamment vive; et une marge de preference de 7,5 % sera accordee
aux entreprises maliennes lars de la comparaison des offres\.
Les marches pour les facteurs de production agricoles (engrais,
insecticides, fongicldes) et Ie materiel de culture attelee, soit 3\.5 millions
de dollars devant etre finances par les pouvoirs publics et les agriculteurs,
seront passes par la SCAEU dans Ie cadre des commandes concernant l'ensemble
du pays\. Les procedures de passation des marches de la SCAER, qui sont a l'heure
actuelle fondees sur l'appel a 1a concurrence dans des conditions satisfaisantes,
seront maintenues au titre du projet; il est neanmoins entendu implicitement
que l'IDA sera consultee sur la preparation et la publicite des documents
d'appel d'offres et sur l'evaluation des offres re~ues par la SCAER\. Les se
mences necessaires au projet, dont Ie COllt est estime a 1,3 million de dollars,
seront produites sur place et reparties sous Ie contrale de I'OACV\. Les batis
de charrettes, dont la valeur est estinee a 319\.000 dollars, seront fournis
au achetes sur place par les agriculteurs\.
En ce qui concerne l'assistance technique et les services de consul
tants, dont Ie cout devrait a~teindre 2,5 millions de dollars, il est propose
de passer un con~rat avec Ie ~ureau your Ie developpement de la production
ap\.ricole (llDPA) qui a contribu avec succes au projet en cours et qui sera
char~e de fournir les experts requis par l'OACV, dont Ie coGt est estimi~ a 2
millions de dollars; de meme t Ie ,;roupement d' ctude~ et de recherches pour Ie
developflement de l'agronor\.lie tropic\.ale (GI:rrDA'\.i') qui, a l'heure actuelle, prete
son concours au :-la11 dans Ie domainc de 1a recherche agricole, fournira les
sp~cialistes necessaires moyennant un COllt estime d 150\.000 dollars; des
- 22
experts et consultants dont Ie coGt est estime a environ 390\.000 dollars, se
ront recrute au niveau international, selon des procedures jugees acceptables
par l'IDA et charges de l'evaluation du programme d'alphabetisation fonction
nelle, de l'assistance a l'OAC\' en matiere de comptabilite, de la direction
de l'unite d'evaluation et de l'execution d'une etude portant sur les prix a
la production et les mecanismes de commercialisation des cereales\.
Un montant total de 3,5 millions de dollars couvrira les coGts du
personnel malien, les depenses d'exploitation, Ie credit pour l'equipement des
forgerons et Ie coGt des motocyclettes et bicyclettes pour les agents de la
vulgarisation\. Le programme d'amelioration et d'entretien des pistes rurales
gera execute en regie, ce qui semble etre Ie seul moyen d'arriver a une exe
cution efficace et diligente de ce programme\.
Un montant de 4 millions de dollars restera non affecte\.
5\.J9 Versement\. Les versements au titre du credit de l' lUA commence
ront en 1974/75, c'cst-a-dire la deuxieme annee du projet\. lIs seront effec
tui2s ~;ur quatre annees dans les proportions ci-apres:
a) 100 % des depenses en devises, soit 66 Z des depenses totales au
titre des vehicules et des niveleuses importes pour Ie projet, soit
un montant estine a 795\.000 dollars;
b) 18 ,,, des couts suppH~mentaires des semences (208\.000 dollars);
c) 88 % du coGt des constructions (1\.352\.000 dollars);
d) 85 % des traitements des experts et des consultants recrutes au
niveau international pour la gestion du projet (1\.721\.000 dollars);
c) 100 ~~ des depenses en devises au titre de l' etude portant sur la com
mercialisation des cercales et l'assistance comptable a l'OACV
(90\.000 dollars);
75 :: des d \.~pensc~) sup;)l"::;~':t\.:;~taire~j au titre Liu personnel malien
(C07\.0no dollars);
h) HU Z des depcnses d'exploitation supplement aires tiu projet (1\.637\.400
dollars)
Un nontant non affectc de 1\. 38'\.l\.OOO dollars constitue la provision pour imprevus\.
- 23
5\.10 Les demandes de retraits de fonds au titre des categories a), c), d)
et e) devront etre accompagnees des documents appropries (contrats, connaisse
ments, etc\.)\. Pour ce qui est des depenses au titre des categories b), f) et
g), les demandes devront etre accompagnees d'une attestation du Directeur du
projet certifiant que les depenses en question ont bien ete encourues au titre
du projet\. Les documents justifiant les demandes de retrait de fonds au titre
des categories b), f) et g) ne seraient pas joints aux fins d'examen mais l'IDA
pourrait demander a les voir\. Le calendrier des versements estimatifs par se
mestre fait l'objet de l'Annexe 13\.
D\. Comptabilite et verification des comptes
5\.11 L'OACV a besoin de perfectionner ses methodes comptables et doit
dresser un bilan d'ouverture exact\. II a etc implicitement convenu qu'un bu
reau d'experts comptables ou de consultants independants serait engage a cette
fin\.
5\.12 L'OACV tiendrait les comptes du projet conformement aux regles
comptables en usage\. Un bureau d'experts-comptables independants, juge satis
faisant par l'IDA verifiera les comptes qui seront soumis a l'examen de
l'IDA, en meme temps que Ie rapport des reviseurs comptables, dans un delai
de quatre mois apres la cloture de chaque exercice financier\. Les comptes
de l'Office de surveillance et de regulation des prix (OSRP) sont verifies
par Ie Service de verification comptable de l'Etat\. Pour permettre a l'IDA
d'evaluer chaque annee Ie montant des reserves d'arachides (voir par\. 7\.05),
ces comptes seront soumis a l'IDA en meme temps que Ie rapport des reviseurs
comptables dans un delai de quatre mois apres la cloture de chaque exercice
financier\. Le Gouvernement malien a donne son accord a ce sujet\.
VI\. ORGANISATION ET GESTION - RECRUTEMENT ET FORMATION DU PERSONNEL
A\. Organisation et gestion
6\.01 Organisme charge du projet\. Le projet sera gere par l'Operation
arachide et cultures vivrieres (OACV) (voir par\. 4\.01)\. L'OA ayant obtenu
de bons resultats, il n'y a pas lieu de modifier sensiblement son organisa
tion et son administration\.
6\.02 Conseil d'administration\. L'OA est administree par un Conseil de
20 membres (13 hauts fonctionnaires, trois experts techniques, trois repre
sentants des agriculteurs et un representant du personnel de l'OA) qui se
reunit au moins deux fois par an sous 1a presidence du Ministre de la pro
duction pour examiner les questions de politique generale et arreter les
details du programme et les budgets\. Afin que les elements du projet inte
ressant d'autres organismes soient executes de maniere efficace, Ie Conseil
- 24
cooptera en fonction des besoins des representants des organismes suivants:
i) Direction nationale des travaux publics (DHTP); ii) Direction de l' alpha
octisation fonctionnelle; iii) Institut d'economie rurale (IER); Iv) Direc
tion nationale de la sante (DNS); et v) Service de l'EHevage et de la sante
animale (SESA)\. 11 a etc conveuu que: i) le Conseil coopt era a mesure des
besoins, des representants d'autres services de l'Etat; et Ii) le Directeur
de l'OSRP siegera a titre permanent au Conse!l d'administration\.
6\.03 Administration centrale\. Le Directeur general continuera a rendre
compte au Service de l'agriculture du Hinistere de la production\. 11 sera \.
seconde par un directeur general adjoint, un directeur technique et un chef
comptable\. Le directeur general adjoint sera charge de l'administration
g~nerale, de l'administration du personnel et des operations de credit; le
directeur technique, aide par un expert en culture attelee devra veiller a
tous les aspects techniques du programme et le chef comptable tiendra tous
les comptes du projet ainsi que des comptes de credit aux agriculteurs (voir
organigramme)\.
r
G\. ,)f; _,~tructures regionales et locales\. La surveillance sur le terrain
s'effectuera par l'intermediaire de neuf chefs de secteurs assistes par des
chefs de sous-secteurs; ces derniers determineront et contraleront les acti
vites des agents de vulgarisation\. Pour les taches/8dministratives, la
comptabilite et les operations de credit, les chefs de secteurs et de sous
secteurs seront aides par des agents sociaux economiques, lesquels ont la
charge de 1a tenue des comptes et du suivi des operations de credit et de
commercialisation\.
6\.05 Programme d'amelioration des pistes rurales\. Un bureau special,
le Service des travaux routiers, sera cree au siege de l'OACV et charge de
la planification et du contrale des travaux d'amelioration des pistes\. A
sa tete sera place un inspecteur des travaux routiers, detache par la DNTP,
qui se verra confier de larges responsabilites en matiere d'organisation,
de )lanification et de surveillance des activites et qui devra veiller a
l'utilisation efficace des unites routieres et du materiel routier\. 11 sera
egalenent charge de coordonner le programme annue1 d'amelioration et d'entre
tien des pistes avec les activ~t:cs de 1a m~TP et notamment d' etablir un calen
drier d'uti1isation des deux nive1euses qui seront achetees dans 1e cadre du
projet, ainsi que la location du materiel de la DNTP\. les bulldozers, par exemr
ple\. Chacune des quatre unites routieres cantonniers sera rattachee a un
secteur de l'OACV et plac6e sous 1'autorite du chef de secteur qui lui
allouera fonds, matcriaux et carburant et controlera ses depenses; elle aura
a sa tete un chef d' equipe detachc par la DI~TP\. II a etc convenu que, pendant
1a duree du programme d'ar\.uHioration des pistes, la DNTP affectera au projet
un inspecteur des travaux routiers et quatre chefs d'equipe ayant, de l'avis
de 1 t IOA, des qualifications et: une experience suffisantes\.
- 25
6\.06 Programme d'alphabetisation fonctionnelle\. La Direction de l'al
phabetisation fonctionnelle, de concert avec Ie directeur general adjoint de
l'OACV, etablira des programmes annuels d'alphabetisation fonctionnelle et
les budgets s'y rapportant\. C'est au directeur general adjoint qu'il appar
tiendra d'assurer Ie controle efficace du programme et de proposer les modifi
cations qu'il estime utiles, mais c'cst l'OACV qui autorisera les depenses a
effectuer au titre du programme d'alphabftisation fonctionnelle dans Ie cadre
du budget arrete\.
6\.07 Programme de recherche\. Les programmes annuels de recherche finan
ces dans Ie cadre du projet seront etablis en detail, y compris les budgets
s'y rapportant, par la Direction de la recherche agricole de l'Institut d'eco
nomie rurale, en consultation avec l'OACV\. Le directeur technique de l'OACV
devra s'assurer que ces programmes repondent aux besoins du projet, et parti
cipation au choix de l'emplacement et a l'amenagement des perimetres d'experi
mentation\. C'est la Direction de la recherche agricole qui sera chargee de
controler les depenses relatives a la recherche dans Ie cadre du budget arrete\.
6\.08 Amelioration des services medicaux\. Les programmes et les budgets
annuels relatifs a l'assistance medicale seront etablis par la Direction des
services medicaux et soumis a l'approbation de l'OACV, leur execution sera
controlee conjointement par les deux organismes\. Le controle des depenses
effectuees a ce titre dans Ie cadre du budget arrete sera assure par la Direc
tion des services medicaux\.
6\.09 Amelioration des services veterinaires\. Le Service de l'elevage
et de la sante animale (SESA), en collaboration avec l'OACV, etablira les
programmes et budgets annuels relatifs aux services veterinaires\. L'expert
de l'OACV, specialiste de la culture attelee\. veillera a ce que Ie programme
soit mene a bonne fin\. C'est la SESA qui controlera les depenses effectuees
a ce titre, dans Ie cadre du budget arrete\.
B\. Recrutement et formation du personnel
6\.10 Cadres\. Les postes de Directeur general, Directeur general adjoint
et Chef comptable de l'OACV sont pourvus par des i1aliens possedant l'experience
requise\. Tous les chefs de secteur sont egalernent I1aliens\. Neuf postes de
conseillers sont encore occupes par des experts du BDPA; ce sont: Ie conseiller
auprcs du Directeur general, Ie Directeur technique, le specialiste en culture
attelee, Ie conseiller en gastion et cinq conseillers sur Ie terrain\. Une
gestion efficace constituant l'une des cles de la reussite du projet, il a ete
convenu que, pendant la periode couverte par Ie credit de l'IDA, les postes de
Directeur general, Uirecteur general adjoint, Directeur technique et Chef
comptable a l'OACV, seraient tenus par des personnes ayant des qualifications
et une experience jug(\.es suffisantes par l'IDA et que les termes et conditions
de leur emploi devront etre juges acceptables tant par Ie Gouvernement malien
que par l'IDA\. A cet egard, 1a situation actuelle donne satisfaction a l'IDA\.
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6\.11 Assistance technique\. Le BUPA a fourni une assistance technique a
l'OA pendant les cinq annees 1967/68 a 1972/73 et continue provisoirement a
Ie faire au titre de dispositions interimaires expirant en mars 1974\. Cette
periode de transition correspond a la premiere annee du present projet (AP 1)\.
Les consultants du BDPA ayant donne satisfaction, il est propose que leur
contrat avec Ie BDPA soit prolonge pendant les quatre annees couvertes par Ie
credit de l'IDA (AP 2 as)\. Le nombre d'agents fournis par Ie BDPA au titre
du projet passera de 9 au cours de la premiere annee (six conse~llers et trois
cadres) a 12 pendant la 2eme annee, puis a 10 au cours de la 3eme annee, sept
au cours de la 4eme annee et enfin six a la 5eme annee\. Ces experts ne seront
pas remplaces lorsque leurs contrats viendront a expiration et leurs contrats
ne seront pas prolonges; Ie devis du projet table sur l'hypothese que, au del a
de la pcriode de decaissement du credit de l'IDA, les services des experts ne
Beront pas retenus\. Dans Ie cadre du programme d'assistance technique, Ie
BDPA enverra egalement sur place des sp1§Cialistes de son bureau central qui
exnmineront des problemes particuliers\. II a ete implicitement convenu que:
i) Ie gouvernement de~ndera au BDPA de fournir a l'OACV des services de con
sultants selon des modalites (mandat et calendrier) jugees acceptables par
l'IJA; i1) que les clauses du contrat permettront de reduire Ie nombre des
experts etrangers sur la demande du Gouvernement malien et avec l'accord de
l'IuA; et iii) que Ie gouvernement et l'IDA reverront, chaque annee et de
concert\. Ie nombre d'experts fournis par Ie BDPA et leur affectation\.
6\.12 Evaluation et recherches\. Les consultants qui seront charges d'eva
luer Ie programme d'alphabetisation fonctionnelle et d'effectuer l'etude sur
Ie prix a la production et la commercialisation des cereales ainsi que l'ex
pert en economie agricole qui dirigera l'unite d'evaluation de l'OACV seront
recrutes au niveau international et employes a des conditions devant satisfaire
l'IDA\. L'assistance technique necessaire au programme de recherche agricole
inclus dans Ie projet sera fournie par Ie GERDAT selon des modalites devant
egalement satisfaire l'IDA\. Le Gouvernement malien a donne son accord sur
ces points\.
6\.13 Cadres moyens\. La plupart des cadres moyens de l'OA sont actuellement
suffisamment qualifies et experimentes\. L'execution du projet exigera toute
fois Ie recrutement de 120 agents de vulgarisation, qui sortiront pour la plu
part des Cent res d' apprent issage ar,rico1e (CAA)]:/\. Les huit postes suppH~men
Laires de chefs de sous-secteur qui seront crees dans Ie cadre du projet seront
confies soit a des agents de vulgarisation\. qui y seront promus, soit a des
uiplorncs de l'Institut polytechnique rural (IPR) de Katibougou\. Le recrute
rnent des autres cadres moyens ne devrait pas poser de problemes\.
II II existe au Mali trois CAA dont sortent chaque annee des promotions
d'une trentaine de dip:om~3 ayant suivi un programme d'etudes de trois
ans\.
- 27
6\.14 Formation professionnelle\. Le BDPA a toujours donne une place privi
legiee a la formation en cours d'emploi de personnel malien et a etabli pour
toutes les categories de personnel un programme permanent qui fonctionne bien\.
II suffira donc de poursuivre et developper ce systeme\. Les programmes de
formation s'adressant aux agents sociaux economiques mettront particulierement
l'accent sur Ie controle du credit agricole auquel il faudra egalement accorder
une place plus importante dans les stages de formation destines au personnel
de vulgarisation\.
VII\. RENDEMENTS ET PRODUCTION, CO}ruERCIALISATION, AVANTAGES
POUR LES AGRICULTEURS ET RECETTES DE L'ETAT
A\. Rendements et production
7\.01 Arachide\. Les producteurs d'arachide ont sensiblement ameliore
leur rendement toutes les fois qu'ils ont suivi les recommandations de l'OA\.
En 1972/73\. Ie rendement moyen etait de 767 kg a l'hectare d'arachide en
coquesl/ soit un chiffre legerement inferieur au maximum de 814 kg a l'hec
tare enregistre au cours de la campagne preccdente, a la faveur d'un climat
favorable\. Ces rendements representent une augmentation de 53 % et 63 % res
pectivement par rapport au rendement moyen de 500 kg a l'hectare qu'obtiennent
les exploitations cultivees selon des methodes traditionnelles\. D'ici a la
fin de la periode d'amenagement de la zone du projet, on s'attend a une nou
velle amelioration du renderaent, qui passerait en moyenne a 950 kg a l'hectare
(24 % de plus qu'en 1972/73) sur les quelque 100\.000 ha actuellement cultives
en arachide sous Ie controle de l'OA\. Par ailleurs, dans la zone d'extension
oij 91\.000 ha seront cultives en arachide a la fin de la phase de maturite du
projet, Ie rendement moyen passera de 500 kg/ha a 835 kg/ha (soit une augmen
tation de 67 h)\. Si les objectifs ci-dessus sont atteints, les agriculteurs
de l'OACV obtiendraient un renderaent moyen de 895 kg a l'hectare a la sixieme
annee du projet, ce qui represcnterait une augmentation moyenne de 255 kg Zi\.
l'hectare (40 %) par rapport a 1972/73\. 11 s'agit la d'une estimation pru
dente, etant donne que des renriements de plus de 1\.100 kg a l'hectare ont ete
obtenus dans les pays voisins dans Ie cadre de programmes analogues, et que
des champs d'essais dans la zone du projet donnent regulierement des rende
ments de 1\.500 kg a l'hectare\. On esc\.ime que la production suppH~mentaire
d'arachide attribuable au projet atteindra 65\.000 tonnes par an lorsque Ie
projet sera parvenu a son stade de maturite, a la huitieme annee (Annexe 3,
Tableau 4)\.
II Les arachides sont generalement conservees en coques et sechees apres
la recolte\. Les arachides decortiquees representent selon l'espece,
65 a 75 % du poids des arachides non decortiquees\. Au Hali, ce pour
centage est de l'ordre de 68 a 70 %\. Les arachides decortiquees pro
duisent apres pressage environ 4Q % d'huile et 60 % de tourteaux\.
- 28
7\.02 Mil et sorgho\. On trouvera au Tableau 7 de l'Annexe 3 les estima
tions concernant Ie rendement et la production de mil et de sorgho\. Grace,au
projet, Ie rendement moyen du mil et du sorgho devrait passer d'une moyenne
nationale actuelle de 600 kg a l'hectare!/ a environ 725 kg a l'hectare, soit
une augmentation de 20 % a la fin de la periode d'amenagement\. En 1980/81,
(AP 8), la production additionnelle attribuable au projet devrait atteindre
38\.600 tonnes par an\. Cette amelioration des rendements serait obtenue grace
au traitement des semences, aux effets residuels des engrais utilises pour la
culture de l'arachide et aux avant ages que procureront de meilleures methodes
culturales, notamment l'emploi de materiel a traction bovine\. II a ete prouve
que ces ameliorations augmentaient Ie rendement des cereales, a l'issue d'ex
per1ences realisees par l'IRAT a Bambey au Senegal ainsi que dans la region
du projet et dans d'autres pays d'Afrique de l'Ouest\.
B\. Prix et commercialisation
7\.03 Arachide\. L'OACV sera chargee de la collecte les arachides produi
tes dans la region du projet, ce qui ne devrait pas poser de probleme\. Le
ra~assage et l'evacuation des produits devraient etre facilites par les pro
grammes d'amelioration routiere actuellement realises avec Ie financement de
I'IDA, du FAC et de l'Etat malien ainsi que par Ie programme de refection des
pistes inclus dans Ie projet\. Lorsque les routes de la region auront ete ame
liorees, l'OACV devrait pouvoir reduire progressivement sa participation au
drainage et a l'evacuation de l'arachide, au profit des entreprises de trans
port\. II a ete convenu, tacitement, que l'OACV laissera progressivement les
transporteurs prives assurer Ie transport des arachides par la route lorsque
l'avancement des travaux de refection et l'amelioration des conditions de
transport Ie permettront\.
7\.04 II a ete estime qu'a maturite du projet, les agriculteurs commer
cialiseront pres de 65 % de leur production; les 35 % restants incluent les
semences,l'autoconsommation, les pertes et fuites\. Quelque 111\.000 tonnes
d'arachide en coques seraient alors collectees, contre une moyenne de 60\.000
tonnes au cours des dernieres annees\. Le projet permettra au Mali de voir
sa part du marche mondial d'exportation de l'arachide passer de 2 % a environ
3,5 % en 1980/81\. Un accroissement de cet ordre de grandeur, qui redonnerait
au ~ali la part qui etait la sienne jusqu'en 1961, ne devrait pas desequilibrer
de fa~on sensible Ie commerce mondial de l'arachide\. Les prix utilises dans
les calcuis se fondent sur des :r,rojectioas ctablies par Ie Departement de
I'analyse et des projections economiques de la Banquej l'Annexe 14 contient de
plus amples details sur les projections de prix ainsi qu'une description des
perspectives de I'arachide sur le r\.~rche rnondial des corps gras et oleagineux\.
11 Moyenne ponderee de 500 kg a I'hectare pour Ie mil et de 650 kg a I'hec
tare pour Ie sorgho\.
- 29
7\.05 Le Departement de l'analyse et des projections economiques prevoit
une baisse du cours mondial de l'arachide decortiquee, qui serait ramene de
393 dollars EU c\.a\. f\. Europe la \.tonne a 235 dollars EU en 1980 (en prix reels
de 1973)\. Meme si cette prevision se verifie, les exportations maliennes d'a
rachide viendront neanmoins gonfler sensiblement les recettes de l'Etat (voir
Annexe 16)\. L'Office de surveillance et de regulation des prix (OSRP) a pour
but de proteger l'economie malienne des repercussions que pourraient avoir les
fluctuations des cours mondiaux, mais les reserves qu'il a accumulees jusqu'a
present, qui ne s'elevent qu'a 520 millions de francs maliens, sont bien infe
rieures a la somme de 4,5 milliards de francs maliens (9 millions de dollars)l/
necessaire a son bon fonctionnement\. ~reme dans l'hypothese ou les cours bais
seraient conformement aux previsions de la Banque et ou Ie prix actuel au pro
ducteur serait maintenu, l'OSRP percevrait, pendant la periode du projet (15 ans),
un montant supplementaire de 4,8 milliards de francs maliens\.
7\.06 Actuellement, Ie prix au producteur de l'arachide non decortiquee
a ete fixe par les pouvoirs publics a 30 francs maliens Ie kilo; ce prix en
courage les agriculteurs a etendre la culture de l'arachide; il est en effet
plus avantageux que Ie prix paye pour d' a-\.~tres produits et au moins egal a
celui qui est paye aux producteurs d'arachide des pays voisins (Annexe 1,
Tableau 2 et Annexe 14, Tableau 2)\. L'amenagement de la productivite et des
conditions de la commercialisation accroitrait davantage les benefices des
producteurs d'arachide\. Toutefois, si Ie prix fixe pour d'autres cultures
venait a etre majore, certains agriculteurs pourraient abandonner la culture
de l'arachide en faveur de ces cultures, notamment dans les regions ou il
serait plus aise de pratiquer une autre culture de rapport (actuellement Ie
seul cas qui pourrait se presenter concerne la culture du coton a l'ouest de
la zone du projet) ou dans celles ou Ie marche des denrees vivrieres justifie
un accroissement de la production\.
II a ete convenu que les reserves du fonds de stabilisation de l'arachide
seront constituees en priorite et seront maintenues a un niveau satisfaisant,
et que Ie Gouvernement malien fixera chaque annee, apres consultation de l'IDA,
Ie prix au producteur pour la campagne suivante et presentera a l'approbation
de l'IDA un etat estimatif des paiements effectues ou re~us par l'OSRP au
titre de la production d'arachide\.
7\.07 Mil et sorgho\. En 1978/79, la demande de cereales devrait atteindre
200\.000 a 300\.000 tonnes, Ie mil et Ie sorgho representant environ 75 % du
total; il ne devrait donc pas etre difficile d'ecouler la production induite
1/ Chiffres calcules dans l'hypothese du soutien d'une campagne entiere
sur la base de la production moyenne au cours des trois annees prece
dentes\.
- 30
par Ie projet, qui serait de l'ordre de 39\.000 tonnes par an\. Lors du calcul
des avantages economiques attribuables au projet, la production cerealiere a
ete evaluee au cours mondial estime par Ie Departement de l'analyse et des
projections economiques, majore du cout du transport au Mali\. Sur cette base,
Ie prix economique des cereales, depart exploitation, serait en 1980/81 de
50\.700 francs maliens la tonne (101 dollars Ell) (Annexe 14, Tableau 9)\.
7\.08 Le prix au producteur des cereales, fixe par les pouvoirs publics,
etait en 1972/73 de 20 francs maliens Ie kilo, soit la moitie du prix moyen
paye par les negociants prives sur Ie marche parallele; Ie prix des cereales
a meme parfois atteint 90 francs maliens Ie kilo sur Ie marche non officiel\.
Dans ces conditions, l'Office des produits agricoles du tolali (OPAM) n'est pas
en mesure d'exercer son monopole sur la commercialisation des cereales et doit
SOllvent employer des moyens coercitifs pour effectuer ses achats\. En fait,
cetce intervention de l'OP1~1 nuit au developpement de la production\. Outre
ses carences administratives, les tentatives de l'OPAM visant a imposer des
prix au producteur beaucoup trop bas, entrainent une diminution des volumes
de cereales en vente libre, l'elargissement du marche noir et une hausse ~
artificielle des prix au consommateur\. Pour que l'important element du pro-
jet consacre a la culture des produits vivriers ne soit pas compromis, il a
etc convenu que: i) les prix payes aux producteurs de mil et de sorgho seront
portes de 20 a 25 francs maliens au minimum Ie kilo, a compter de novembre
1974 et que cette augmentation sera annoncee en mai, avant les semis; ii)
une etude sur la structure des prix et les mecanismes de commercialisation
du mil et du sorgho dont l'achevement est prevu pour Ie 30 avril 1975, sera
executee par des consultants et suivant destermes de reference juges accep
tables par l'IDA\. Cette etude servira de base a des decisions ulterieures,
portant sur les prix au producteur et les mecanismes de commercialisation,
qui devront satisfaire l'IDA\.
Les budgets des exploitations indiques a l'Annexe 15, ont retenu un prix
au producteur de mil et sorgho de 35 francs maliens Ie kilo en moyenne, qui
reflete les cours moyens de ces produits sur Ie marche parallele\.
C\. Benefices pour les agriculteurs participants
7\.09 A son stade de plein developpement, Ie projet interessera quelque
107\.000 exploitations agricoles, soit environ 1 million de personnes, contre
52\.000 exploitations (490\.000 personnes) encadrees par l'OA en 1972/73\. La
vente de l'arachide rapportera aux producteurs un supplement de revenus de
l'ordre de 1,6 milliard de francs maliens par an (3,2 millions de dollars)
au prix actuel; Ie mil et Ie Borgho produits grace au projet auront une va
leur approximative de 900 millions de francs maliens (1,8 million de dollars)\.
- 31
Pour difficile qu'il soit de definir une exploita~ion representative, on peut
estimer que les modeles figurant a l'Annexe 15 donnent une idee assez juste
de la situation des agriculteurs qui participeront au projet\. On a compare
a la ferme traditionnelle de la periode anterieure au projet deux types d'ex
ploitation: l'une pratiquant 1a culture manuelle et l'autre equipee pour la
culture attelee\. Dans Ie premier cas, on a suppose que la superficie culti
vee en mil et en sorgho serait maintenue a 2 ha mais que la superficie culti
vee en arachide passerait de 1,2 a 2 ha, les agriculteurs etant motives par
l'espoir de revenus plus eleves\. On a egalement table sur une augmentation
reguliere de la productivite sur une periode de quatre ans\. Dans Ie cas de
l'exploitation utilisant un multiculteur et un semoir, il est suppose que,
grace a la culture attelee, la surface cultivee passera en quatre ans de
4 a 6 ha dont la moitie serait en mil/sorgho et l'autre moitie en arachide\.
Les donnees figurant a l'Annexe 15 sont recapitulees ci-dessous:
Revenu des exploitations agricoles au stade de plein developpement
Sans Ie projet Avec Ie projet
Culture Culture Culture
traditionnelle manuelle attelee
Superficie de l'exploitation 3,2 ha 4 ha 6 ha
Revenu net de l'exploitation II FH 56\.500 117\.000 177 \.400
Revenu monetaire de l'exploita
tion /2 FH 8\.250 65\.700 126\.200
Revenu net-Par personne 11 FM 6\.650 13\.760 20\.870
$ EU 14 28 42
Autre revenu par personne ~ $ EU 8 10 15
Revenu net total par personne $ EU 22 38 57
II Valeur nette de la production d'arachide et de cereales, uniquement
dans Ie cas d'une exploitation utilisant des boeufs pour les travaux
des champs, apres amortissement du materiel\.
~ Revenu total d'une exploitation, deduction faite de la valeur des pro
duits consommes par la famille et des impots payes par deux adultes\.
11 FamilIes cornprenant 8,5 membres en moyenne, et disposant d'une force
de travail equivalant a 3,5 adultes\.
~ Revenus provenant d'autres cultures, et des produits du potager, du
verger et de l'elevage de volaille et de betail\.
- 32
7\.10 Le projet augmentera les besoins en main-d'oeuvre des exploitations,
puisque l'economie de main-d'oeuvre due a l'utilisation accrue de bates de
trait ne suffira pas a compenser Ie supplement de main-d'oeuvre qu'exigeront
l'entretien des terres nouvellement amenagees et les travaux de recolte\. La
main-d 'oeuvre supplementaire sera en majeure part'ie fournie par la famille de
l'agriculteur, qui par ailleurs engagera, Ie cas echeant, des ouvriers agri
coles\. Le revenu journalier des exploitations pratiquant la culture manuelle
selon les methodes traditionnelles passera d'environ 253 francs maliens a
302 francs maliens par homme/jour, et celIe des exploitations qui utiliseront
des boeufs et suivront les recommandations de l'OACV atteindra 409 francs maliens
par homme/jour (voir Annexe 15)\.
D\. Incidence du projet sur les recettes et les depenses de l'Etat
7\.11 L'Annexe 16 expose les estimations relatives aux recettes et aux de
penses consolidees de l' Etat attribuables au projet; il ressort de ces chiffres
que des excedents derecettes se degageront apres service de la dette des la
premier~ annee du projet, oil ils atteindront en moyenne 137 millions de francs
maliens (0,3 million de dollars); puis 11s passeront a 1,1 milliard de francs
mallens (2,3 millions de dollars) a la fin de la periode du projet, en 1987/88,
apres quoi ils seront en moyenne de 1 milliard de francs maliens (2 millions
de dollars)\.
VIII\. AVANTAGES ET JUSTIFICATIONS
8\.01 Les principaux avantages attribuables au projet proviendront de
l'augmentation de la production d'arachide et de cereales (voir Annexe 3)\.
Si lion evalue ces avantages aux prix economiques indiques aux Tableaux 4
et 9 de l'Annexe 14, et si l'on tient compte des economies que l'amelioration
des plstes permettra de realiser sur les couts de commercialisation, Ie taux
de;-entabilite interne de l'investissement s'etablit a 91 % sur une duree de
vie de 15 ans (Annexe 17)\. Cette forte rentabilitc est attribuable d'une
part, a l'ampleur des investissements, representant des mises de fonds ante
rieures ou exterieures au projet, deja realises ou en cours de realisation
et, d'autrc part, aux connaissances techniques acquises par les exploitants
A I'issue des efforts de vulgarisation precedemment deployes\. 11 convient
egalement de prendre en conpte Ie niveau relativement eleve des projections
concernant les cours mondiaux de l' arachide et du sorgho\. Les couts utilises
dans les calculs sont nets dlinpots, mals comprennent toutes les subventions
accordees aux agriculteurs ainsi que les depenses consacrees a l'amelioration
des services medicaux et veterinaires (aucun effort n'C\. ete toutefois fait
pour identifier separement les avantages decoulant de ces depenses) et les
depenses supplementaires liees au developpement des services de l'OA induit
par Ie projet plus deux tiers des depenses courantes de l'OA (niveau 72/73)
- 33
ce dernier montant a ete inclus dans les couts economiques du projet du fait
que, sans Ie projet, l'OA pourrait progressivement reduire ses depenses d'en
viron 60 % sans que la production s'en ressente\. On a evalue a 200 francs
maliens par homme/jour Ie cout supplementaire de la main-d'oeuvre familiale
ou salariee utilisee par Ie projet, ce qui parait raisonnable, compte tenu
de la relative penurie de main-d'oeuvre qui sevit dans la region en periode
d'activite agricole\. Ce chiffre correspond au gain estimatif du "navetane",
(forme de main-d'oeuvre agricole salariee la plus repandue) et represente
environ 60 % du aalaire minimum agricole legal, de 350 francs maliens par
homme/jour\.
8\.02 L'analyse de la sensibilite du taux de rentabilite a des variations
de couts et benefices par rapport aux estimations de base a ete faite; les
resultats sont recapitules ci-dessous:
Benefices (pourcentage)
Arachide 100 100 100 100 90 80 75 90 90 80 75
Mil/sorgho 100 100 100 100 90 80 50 90 90 80 50
Couts (pourcen
tage) 100 110 120 130 100 100 100 110 130 120 110
Taux de renta
bilite 91 69 54 44 67 49 30 52 33 29 21
Les produits petroliers et les engrais representent 7 % des depen
ses du projet a l'exclusion des imprevus\. Si Ie prix de ces deux produits
doublait, Ie cout total du projet augmenterait de 6,4 %\.
8\.03 Le projet procurera au ~~li d'importantes rentrees et economies de
devises provenant d'une part de l'exportation des arachides, d'autre part du
remplacement des cereales importees par Ie mil et Ie sorgho produits locale
mente Les avantages nets en devises attribuables a cette double evolution
s'eleveront a environ 5,2 milliards de francs maliens (10,4 millions de dol
lars) a partir de la sixieme annee du projet\. 11 s'agit la d'un aspect parti
culierement important du projet, car les possibilites d'exportation du ~~li
sont par ailleurs limitees\.
- 34 -
IX\. POINTS D' ACCORD ET RECOMMANDATIONS
9\.01 L'entree en vigueur du credit sera subordonnee a:
a) la signature par les deux parties d'une "convention de services
reciproques" jugee satisfaisante par l'IDA et definissant les
responsabilites et obligations de l'Operation arachide et cultu
res vivrieres (OACV) et de la Societe de credit et d'equipement
rural (SCAER) (par\. 4\.14);
b) l'ouverture d'un compte bancaire special par les pouvoirs publics
(par\. 5\.07)\.
9\.02 Au cours des negociations, les dispositions auivantes ont ete arretees:
a) le gouvernement consultera l'IDA sur tout changement eventuel de
sa politique en matiere de prix et de subventions des facteurs de
production (par\. 4\.16);
b) Ie bareme arachide sera arrete chaque annee en consultation avec
l'IDA (par\. 5\.05);
c) les pouvoirs publics alimenteront Ie compte special pour couvrir les
depenses non admises a etre financees sur les fonds du credit de
l'IDA (par\. 5\.07);
d) pendant la periode de deboursement du credit de l'IDA lea postes de
Directeur general, Directeur general adjoint, Directeur technique
et chef comptable de l'OACV seront pourvus par des personnes dont
l'experience et les qualifications auront ete jugees satisfaisantes
par l'IDA et dont l'affectation et les conditions d'emploi auront
ete juges mutuellement accept abIes par Ie Gouvernement malien et
l'IDA (par\. 6\.10);
e) les consultants devant assister l'OACV, les specialistea affectes
a la recherche agricole, l'economiste agricole qui serait place a
La tete de l'unite d'evaluation de l'OACV, les consultants neces
saires a l'evaluation du programme d'alphabetisation fonctionnelle,
a l'execution de l'etude sur les prix payes aux producteurs et les
mecanismes de commercialisation du mil et du sorgho, ainsi que Ie
bureau d'experts-comptables charge d'aider l'OACV devront etre
juges acceptables par l'IDA et recrutes a des conditions lui don
nant satisfaction (par\. 6\.11 et 6\.12);
- 35
f) Priorite sera accordee i l'accumulation au sein de l'OSRP de reser
ves permettant de centrer l'effet des fluctuations des cours mon
diaux de l'arachide\. Les autorites consulteront chaque annee l'IDA
sur les prix i la production pour la campagne suivante et lui sou
mettront pour approbation un etat estimatif des paiements qui se
ront effectues ou re~U8 par l'OSRP (par\. 7\.06);
g) en septembre 1974, au plus tard\. les pouvoirs publics fixeront Ie
prix au producteur de mil et de sorgho i 25 francs maliens Ie kilo
au minimum et feront effectuer une etude sur les prix i 1a produc
tion et les mecanismes de commercialisation du mil et du sorgho;
ils arreteront Ie 31 mai 1975 au plus tard avec l'IDA les modifi
cations i apporter aux prix a la p~oduction et aux mecanismes de
commercialisation de ces denrees sur la base des recommendations
de cette etude et etabliront Ie calendrier des mesures a prendre
a cet effet (par\. 708)\.
9\.03 11 a ete egalement convenu de fa~on tacite que:
a) La Banque de developpement du Mali (BDM) octroiera i 1a Societe
de credit agricole et d'equipement rural (SCAER) des conditions
et modalites de financement des facteurs de production et du
materiel agricoles necessaires a l'execution du projet, jugees
satisfaisantes par l'IDA et consultera l'IDA i cet effet (par\. 4\.15);
b) les pouvoirs publics passeront avec Ie Bureau pour Ie developpe
ment de la production agricole un contrat de prestations d'assis
tance technique pour l'OACV (par\. 6\.11)\.
9\.04 Le present projet justifie l'octroi au Gouvernement malien d'un cre
dit de l'IDA de 8 millions de dollars aux conditions habituelles\.
ANNEXE 1
Tableau 1
MALI
PROJET DE DEVELOPPEMENT RURAL INTmRE
L'agriculture malienne
Production et commercialisation des principales cultures (1967 a 1972)
(milliers de tonnes)
Y
1967 1968 1969 !212\. 1971 ~2
Mill sorgho
Production 8\.30 556 603 600 750 500
Commercialisation par Cir~ts officie1s 60 8 26 10 30 5
vente sur Ie marche 1ibre !\. 22 ~ 68 80 60 16
Total commercialise li5 54 84 90 90 21
Paddy
Production 172 134 161 148 198 no
COJIDII\.ercialisatio~ par Ci~gJts officiels 28 18 29 40 52 \.30
Vente sur Ie marehe 'libre "2 2\. 38 \.l!! 30 30 17
Total commercialise 80 56 70 70 82 47
coton graine
Production 39 50 51 60 74 70
Commercialisation 33 41 42 53 68 66
Arachides en co~es
Production 81 99 133 156 152 150
Commercialisation \.30 28 56 74 60 50
3)urce: Minist\.ere de 1a Production
\.1:J Chiffres provisoire
2/ Estimation
10 septembre 1973
')
-
MALI
PROJET DE DEVELOPPF\.MENT RURAL I\.NTIOCmE
Lfagticulture malienne
Prix offioie1s P8Y~s aux Eroducteurs des ~ri\.nCi;ales cultures
(valeur:Fk cOtlrants Ie kilo; in oe 1 64=1(0)
1964 1965 \. 1966 1967 1968 1969 1970 !2l!\. 1972
l/sorghoa _ V 11 11 15 16 18 18 18 18 20
I 100 100 136 ,145 163 _163 163 163 182
ddy blanc V 12\.5 12\.5 16 18 25 25 25 25 25
I 100 100 128 144 200 200 200 200 200
3\.chides V 13 13 16 24 30 30 30 30 30
n coques) I 100 100 123 184 230 230 230 230 230
ton V 34 34 34 40 40 45 50 50 50
'l811~ I) I 100 100 100 117 117 117 132 147 147
Source: M:ln1stere de 1a prodnctlon
~~
~ ~
C
I-'
10 septemhre 1973 N
)
\.ANNEXE 1
Tableau 3
MALI
PROJET DE DEVELOPPDmNT RURAL :mrEGRE
L'agriculture malienne
Contribution d:u secteur agricola aux e:xportat1ons
(mill:lards de FM)
1968 1969 1)1'10 1971 ~t5'72
_Doton (fibre at graine) 3\.3 4\.6 5\.2 6\.4 7\.9
Arachide et produits derives 1 \.5 1\.4 3\.0 4\.8 4\.0
Animaux vi\.vanta 2\.0 4\.0 4\.9 4\.8 4\.7
Poisson (seche et fume) 1\.3 1 \.6 1 \.4 1 \.3 0\.9
Divers \.8 1 \.7 3\.7 4\.2 5\.2
Total des e:xportationa declarees 8\.9 13\.3 18\.2 21\.5 22\.7
Arachide et produits derives
en pourcentage des exportations 16\.8 10\.5 16\.5 22\.3 17\.6
Coton en p ourcentage des exportations 37\.0 34\.5 28\.5 29\.7 34\.8
Y Chittre pro'Viaoire
Y Comprend principal_nt: l8S produits a baae de karite, la gomme arabique,
les noix de cola\.
Note: Les exportations non declarees, princ1pal\.ement le betall, le poisson et
les cereales comestibles ont ete est1Jr1ees comme suit:
(m11 11a rds deFM)
9\.7 8\.7 8\.4 7\.5 8\.0
Source: Rapport economiqpe de la Banque\. Banque centrale du Ma11, rapport
dtactivi~ 1972
10 8eptembre 1974
MALI
PROJ1\.'I' DE DEVELOPPDmNT RURAL INTmRE
L'agriculture rnalienne
Volume des importations de cereales (1969 a 197\.3)
(mUliers de tormes-)
1 969 1 970 1 971 1972 1973 l/
Mi1/sorgho 31 15 32 125
Riz (volume) 16 21 45
\.lL
Total 47 1 36 63 170
3\.4 0\.6 1 \.9 3\.8 13
VaIEm:r totale (milliards de FM)
En pourcentage des importations \.
de denrees alimentaires 41;t' 7\.6% 1B% 30% 57
:\.t!ft pourcentage de la produotion
oerealiere nationale 5 3 9 27
!I Estimation
NOTE: Le mil et Ie sorgho sont essentie11ement \.f'oumis au titre
des-_programmes d t assistanoe (¥AC, USAID, PAM, EJ!)'J)
SOURCE: Ministere de 1a produotion, rapports annuals de 1a Banque
centrale\.
17 deoembre 1973
ANNEXE 1
Tableau 5
}1ALI
PROJET DE DEVELOPPEMENT RURA\.t INTmRE
L'agriculture malienne
Production et cGllllllerciallsati~ de l'arach1de (1953-1973
en CQqUes
Produ\.c1iion totale COJIIIlerc1al1sation
Au titre de l'
Campagne Total "QEera tion arach1de"
Quantite Pourcentage
1953 102\.500 68\.900
1954 90\.000 55\.000
1955 11 '( \.500 80\.000
1956 1 20\.000 85\.500
1957 1 24 \.000 83\.l00
1958 138\.000 97\.000
1959 125\.000 85\.800
1960 90\.000 50\.100
1961 125\.000 135\.700
1962 108\.000 66\.900
1963 117 \.500 73\.600
1964 117\.000 72\.100
1965 9C\.OOO 44\.800
1966 75\.000 27\.900
1967 87\.500 3/\.000 15\.0(Xl
1968 81 \.000 30\.000 10\.500
35
1969 98\.500 28\.000 14\.500 52
1970 132\.500 56\.600 38\.100 67
1971 156\.000 74\.000 46\.000
62
1972 152\.000 59\.500 44\.000 74
1973 150\.000 50 000
0 40\.000 80
ANNJ!XE 2
Page 1
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
Operation Arachide
Dispositions du decret No l16-PG-RM du 15 septembre
1972 portant creation de l'Operation Arachide
ARTICLE ler\. 11 est creee une Operation de developpement rural denommee
Operation Arachide ayant pour but de promouvoir la production arachidiere
specialement et la production agricole en general dans sa zone d'interven
tion\.
Elle est placee sous la tutelle du Ministre charge du deve
loppement rural\.
ARTICLE 2\. Elle a pour objet, dans sa zone d'intervention:
de mettre en oeuvre tous les moyens necessaires pour develop
per la producti~n arachidiere et la production agricole en
general;
d'organiser la commercialisation et Ie credit agricole;
de promouvoir et d'animer les collectivites exploitantes en
collaboration avec les services de la cooperation dans Ie
but de former d~s structures professionnelles d'agriculteurs
capables\. a terme\. d'autogerer les moyens collectifs de pro
duction et de commercialisation;
de former les cadres et les paysans de l'Operation par recy
clages\. seminaires, stages divers et l'alphabetisation fonc
tionnelle;
de proposer e~ d'executer, apres approbation par Ie Ministre
de tutelle, toutes actions concernant les differents aspects
du developpement arachidier de la zone\.
ARTICLE 3\. L'Operation Arachide est soumise aux dispositions du decret
No 33-PG-RM du 25 mars 1972 susvise\.
ANNEXE 2
Page 2
ADMINISTRATION
ARTICLE 4\. L'Operation Arachide est dotee d'un Conseil d'administration
compose comme suit:
Le Ministre de tutelle ou son representant
Le ~linistre des finances et du commerce ou son representant
Le Ministre de l'information ou son representant
Le President Directeur general de la Banque de developpement
du Mali au son representant
Le Ministre charge des transports ou son representant
Les Gouverneurs des regions concernees ou leurs representants
Le Directeur de l'agriculture
Le Directeur du genie rural
Le Directeur general de la Societe de credit agricole et de
l'equipement rural (SCAER) ou son representant
Le Directeur general de la Societe d'exploitation des produits
oleagineux du Mali (SEPOM)ou son representant
Le Directeur general de la cooperation
Trois experts nommes par Ie Ministre de tutelle
Trois representants des agriculteurs
Un representant des travailleurs\.
Le Directeur de l'Operationassiste aux reunions du Conseil
avec voix consultative\.
ARTICLE 5\. Le Conseil d'administration:
delibere sur les programmes d'interventions et sur Ie budget
de l'Operation
examine les rapports d'execution technique et financiere
autorise les modifications de programme
prend ou donne a bail sans promesse de vente tous biens meu
bles et immeubles
delibere eventuellement sur toute question financiere ou
technique administrative concernant l'Operation
Le Conseil se reunit sur convocation de son President au moins
deux fois par an\.
Les decisions du Conseil d'administration sont prises a la
majorite simple\. En cas de partage des voix celle du President est prepon
derante\.
ANNEXE 2
Page 3
Les deliberations du Conseil sont constatees par des proces
verbaux inscrits sur registre special et signes par Ie secretaire de seance\.
ARTICLE 6\. Les decisions du Conseil d'administration ne sont applicables
qu'apres approbation par Ie Ministre de tutelle dans un delai maximum de 15
jours s'il n'a pas preside la reunion\.
DIRECTION
ARTICLE 7\. L'Operation Arachide est dirigee par un directeur nomme par
decret pris en Conseil des ministres sur proposition du Ministre charge du
developpement rural\.
Le Directeur releve de l'autorite du Directeur general de
l'agriculture\.
ARTICLE 8\. Le Directeur del'Operation elabore chaque annee, un programme
d'intervention en collaboration avec les services et organismes interesses\.
Ce programme est relatif:
a) aux activites de production et de commercialisation sur les
zones d'intervention de l'Operation;
b) a l'extension de tout ou partie des activites de l'Operation
a de nouvelles zones;
c) a l'extension eventuelle des attributions de l'Operation a
d'autres aspects de la production arachidiere, conformement
a l'objet de l'Operation;
d) a l'elaboration du budget annuel d'intervention\.
ARTICLE 9\. II depose chaque annee en fin de campagne un rapport sur I'exe
cution du programme annuel etabli\. II dresse egalement un bilan financier\.
Ces documents sont transmis au commissaire aux comptes pour examen et soumis
au Conseil d'administration qui en delibere\.
ARTICLE 10\. L'Operation Arachide est creee pour une duree illimitee\. En
cas de dissolution, la devolution des biens sera reglee par decision adminis
trative apres avis du gouvernement\. ~
ARTICLE 11\. Les Ministres charges des finances et du developpement rural
sont charges, chacun en ce qui Ie concerne, de l'execution du present decret
qui sera enregistre, publie e~ communique partout ou besoin sera\.
MALI
PROJE'f DB DIn:LOPPIM!II'l RIJR\.IL Ilft'\.IURB
L'operation Arachide (1967-1972)
Sapert1c1\. - ;eroducUoD\. raxt___\.: arc1aJisatioD
\. ~\. /\. ~\.
SIlperti\.o1e
--
1967
-
1968 1902 \. J2lQ\. 1971 197211
araobid1he (ha) 46,240 48,6$0 71,630 102,600 92,360 99,600
PJIoda\.ou-\. ( \. \. \. \.) 23,600 24,300 54,000 68,500 75,200 76,)70
ReDdlllmt (Jr&Iba) 510 500 754 668 814 767
Prodrult4GJl ~ro1l'_\.
(tcJ\.ImN) 1U,500 14,5w )8,100 46,OUU 44,uuu 4u,uuu
Source: JI:lId\.tM-e de 1a\. prodnction, op6ziaticm araoh1de
!Ii 972 'tant'une a:an6\. emeptiODDell__t \.auWL18e, \.1"oId\.t:tzwe 88 r8pp0rtant 1 cetteo\. eGiDt
_ pa\.rtl\. dee \.~t\.1\.oD8 basees sur les tendances passees\.
26~1973
~~ \.
~
L'operation Arachide (1967-1972)
Diffusion des facteurs de production
1967 1968 1969 1970 1971 1972
lTtUisat\.ion\. de \.fopgiciciell at insecticidee
Slperi'ici\.e arach:id1~re traitee (ha) 6,000 10,000 11,000 19,000 22,000 32,000
En pourcentage de 1a superficie tota1e 14 20 15 18 24 32
- superficie mil/sorgho traitee (ha) 2,000 10,000 13,000 11,000 20,000 23,000
En pourcentage de 1a superficie tota1e 20\.u
utilisation d'engrais
( araeh1de"
Superficie traitee (ha) 2,000 5,000: 6,000 19,000 23,000 36,000
En pourcentage de la superficie tota1e 4 10 8 19 25 36
133 812 1,042 1,540 1,501 1,580
nt\.atribution de mat~el a traction bovine
( nOilibre d';m,:r;Q s )
Motocultellrs '(9 tltl 466 7U9
S8IIloirJ tl1 213 544
Souleveuses 3 19
Charrettes
Source: Ministere de la Production - Operation Arachid\.e
132 157 395 609
~~
I\)
26 septambre 1973
t ) )
MALI
PROJE'l' DE DEVELOPPEMENT RURAL IM'l'EXlRE
L'o~eration Arachide ~1967-1972)
FiDancement
1967 1968 1969 1970 1911 1972 Total
-
FAe
Depens dt'quipement 82\.t! 51\.9 110\.1 15\.7 40\.3 15\.8 31 6\.6
nepens\. de personnel 195\.5 163\.1 223\.0 212\.7 2)0\.5 188\.5 1,213\.3
~penses de tonctionneaent 7~\.3 60\.0 89\.6 7~\.2 7~\.5 --16 8 412\.4
Total partiel 353\.0 27,\.0 423\.3 Jv3\.6 ,346\.3 ~1\.1 1,94~\.J
:nD
~pen d'eqdpement 3\.1 21 \.) tl\.4 1\.3 32\.2 51\.7 118\.0
Npenses de persormel 45,d 45\.2
Total partiel 48\.3 21\.3 8\.4 1\.3 32\.2 51\.7 163\.2
Eta t malien !I 16300 163\.0 163\.0 163\.0 223\.0 216\.0 1,091\.0
Agricul teurs Y 13\.0 37\.0 57\.0 110\.0 160\.0 203\.0 --2 80 0
TarAL 577\.3 496\.3 651,7 571\.9 761\.5 711\.8 3,776\.5
11 Cb1ftre tris appro:x::l\.ma\.tif coaunique par l'Operation arachide\. Aucun doCUJll8Dt comp'table ne pemet de
v~rifier ces cb1ttraa\.
Y Contribution des a¢cul teurs t 11 s' agit de\. fae1iliara de -pndDction ache"' \.i aredi t on au\. cemptant
~~
engrais, fongicides, \.8IIlelices; materiel a traction bovine\.
26 septembre 1973
\oJ
~
ANNEXE 3
Page 1
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
SPECULATIONS\. FACTEURS DE PRODUCTION, RENDEMENTS ET PRODUCTION
A\. Systemes de culture et rotations
1\. L'arachide, Ie mil et Ie sorgho resteront les principales cultures
pratiquees dans la zone du projet\. Les agriculteurs se consacrent deja au
coton et au mals dans la partie sud-ouest de la zone du projet ou les precipi
tations annuelles atteignent plus de 900 mrn; par ailleurs, Ie riz est cultive
le long du fleuve Niger\. Les Tableaux 1 et 2 contiennent des renseignements
sur les temps de travaux et le calendrier cultural\. Les renseignements con
cernant la dimension des exploitations et les systemes de culture sont gene
ralement pauvres; l'Annexe 15 en contient quelques-uns\.
2\. Les systemes de culture et rotations different suivant les zones
ecologiques du perimetre du projet; ils devraient evoluer a mesure que les
paysans franchissent les differents stades techniques\. En regle generale
cependant, les speculations retenues permettraient d'atteindre les objectifs
ci-apres:
i) auto-suffisance en cultures vivrieres pour la famille de l'exploi
tant;
ii) suppression des penuries de main-d'oeuvre au moment de la prepara
tion du sol, du sarclage et de la recolte;
iii) rotation des cultures de cereales avec les arachides afin d'utiliser
l'effet residuel des engrais appliques aux arachides\.
3\. Dne exploitation utilisant des engrais adopterait donc les assole
ments suivants: annee 1: arachides; annee 2: mil/sorgho; annee 3: arachides;
annee 4: mil/sorgho; annees 5 et 6: jachere\. Cette rotation est pratiquement
la seule qui soit utilisee dans la zone du projet\.
ANNEXE 3
Page 2
B\. Recommandations techniques formulees dans Ie cadre du projet
4\. Les themes techniques preconisees dans Ie cadre du projet sont Ie
fruit d'une recherche et d'une experimentation continues, et ont ete large
ment eprouvees en milieu paysan au Mali et dans d'autres pays d'Afrique de
l'Ouest\. Le Tableau 1 indique les dates optimales recommandees pour les ope
rations cruciales et l'incidence des themes diffusees sur les rendements
figure a la Section Cl\. Les principales recommandations sont les suivantes:
Arachides
J\. Les themes techniques preconises permettraient de multiplier les
rendements de base au mains par 2,4\. Les principaux elements sont les sui
vants:
a) semis precoces\. La duree des pluies constitue la contrainte majeure
et des semis precoces sont Ie seul moyen d'inserer Ie cycle vegeta
tif complet de l'arachide dans la saison des pluies\. La periode
optimale des semis s'etale de la fin de rnai a la fin de la premiere
quinzaine de juin; des dates optimales ont ete determinees a l'in
terieur de cette fourchette et diffusees pour chaque secteur de l'OA\.
Lorsque les semis sont effectues a temps, les rendements de base de
500 kg/ha peuvent augmenter au minimum de 20 % soit 100 kg/ha\. A
compter de cette date limite de semis, chaque jour de retard fait
baisser Ie rendement potentiel d'environ 1 %\.
b) Densite des semis\. Les arachides cultivees de fa~on traditionnelle
produisent des rendements mediocres essentiellement en raison de la
faible densite des semis, qui est en general 40\.000 pieds/ha, alors
que 1a densite optlma1e est de 90\.000 a 110\.000 pieds/ha pour les
arachides tres ramifiees type 28-206 et de 150\.000 a 170\.000 pieds/ha
pour les varietes peu ramifies type 47-10\. Ces densites correspon
dent a des quantites de 100 et 150 kg de semences par hectare res
pectivement contre quelque 40 kg en culture traditionnelle\. Des
semis densest qui constituent de surcroit la meilleure methode pour
combattre la rosette, ameliorent les rendements de base de 40 % au
minimum, soit 200 kg/ha\.
c) Semences selectionnees\. Deux varietes a~aptees aux conditions eco
logiques de la zone :rachidiere du Mali ont ete selectionnees et
sont distribuees aux agriculteurs; ce sont:
ANNEXE 3
Page 3
i) pour la region sud, OU les precipitations depassent 700 mm
par an, la variete 28-206, typE Virginia, a cycle long de
120 jours\. Elle convient a la majeure partie de la zone
arachidiere (pres de 70 % de la zone du projet);
ii) pour la region nord, ou les precipitations sont inferieures a
700 rom par an, la variete 47-10 de type Spanish, a cycle court
de 90 jours; cette variete est plus rustique et plus resis
tante a la secheresse que la variete 28-206\.
Les agriculteurs peuvent reproduire leurs propres semences a partir des
semences selectionnees distribuees; mais les semences de la variete
28-206 doivent etre remplacees tous les quatre ans et celles de la
variete 47-10 environ tous les trois ans\. A la fin de la periode de
developpement du projet, environ 70 % des agriculteurs participants
devraient utiliser des semences ameliorees\. L'utilisation de ces se
mences devrait relever Ie rendement de base de 20 % au minimum, soit
100 kg/ha\.
d) Desinfection des semences\. Apres les semis, les semences non traitees
sont soumises a l'attaque de divers predateurs et les paysans sont
souvent condamnes a effectuer un deuxieme semis ou du moins a rempla
cer les plants manquants\. Pour assurer une levee reguliere, on pre
conise l'utilisation de thioral a raison de 100 grammes pour 100 kg
de semences d'arachide coque\. La matiere active du thioral est un
melange a part egale d'insecticide (heptachlore) et de fongicide
(thirame)\. Le thioral est tres remanent et assure une bonne pro
tection meme si une periode de secheresse suit Ie semis et que la
germination est retardee\. II sera egalement recommande aux agri
culteurs d'utiliser de l'hexachlorure de benzene comme insecticide
a raison de 50 gr pour 100 kg de semences en vue de proteger leur
stocks de semences\. L'utilisation de fongicides relevera Ie rende
ment de base de 10 % au minimum, soit 50 kg/ha\.
e) Fumure minerale\. Jusqu'ici\. l'operation arachide a recommande un
engrais complexe et onereux a base de NPK, a la dose de 110 kg/ha\.
Des recherches plus recent:es ont mis en evidence que Ie superphos
phate simple a 21 % de P205 epandu a raison de 65 kg/ha, induit la
meme augmentation de rendement a un cout inferieur de 30 %\.l/ Cet
1/ L'azote, principal element n2c s saire aux cereales, vient des arachides
qui sont particulierement ~ensibles a l'epandage de phosphate\.
ANNEXE 3
Page 4
engrais, actuellement distribue aux agriculteurs, continuerait
d'etre utilise dans le cadre du projet et contribuerait a relever
le rendement de base de 50 % au minimum, soit 250 kg/ha\. Des re
cherches se poursuivront neanmoins en vue de trouverdes formules
d'engrais plus rentables adaptees aux divers sols et types de
rotation en place dans la zone du projet\.
f) Culture attelee\. L'usage de materiel de culture attelee se gene
ralise au Mali et la demande de materiel augmente rapidement\. Leur
distribution a credit, dans le cadre du projet, sera neanmoins
soumise a une surveillance plus etroite que par le passe\. Les
agriculteurs pour recevoir ce materiel, devront satisfaire aux
criteres suivants: i) posseder au moins 1,5 ha de terrain defriche
et desouche; ii) posseder deux jeunes boeufs aptes au travail; iii)
etre en mesure de verser un acompte correspondant au tiers du cout
du materiel\. La chaine de base se composera d'un semoir, qui
assure la bonne densite des semis, un multiculteur sur lequel
s'adapte un soc (pour les cereales), des pics-fouilleurs et des
dents de canadiens\. L'agriculteur pourra grace a ces instruments
preparer le sol en temps voulu et proceder a des semis precoces\.
Neanmoins, l'utilisation de cet outillage n'a pas d'effet (prouve
du moins) sur le rendement des arachides\. Les agriculteurs pourront
se procurer a credit s'ils le veulent une lame souleveuse et un
train de roues a pneus pour une charrette de 1\.000 kg\. L'Aonexe 11
indique les quantites et le coGt estimatif du materiel qui sera
fourni dans le cadre du projet\.
Cereales
6\. L'un des objectifs du projet est d'associer etroitement la production
de l'arachide a celle des cereales\. En l'absence de varietes de cereales a
haut rendement qui soient acceptees par les consommateurs au Mali, la pro
gression retenue table sur les avantages que procurent un meilleur travail
du sol, le traitement des semences et les effets residuels des engrais utili
ses dans la culture de l'arachide:
a) Effet residuel de la fumure mineral~ Le plan de rotation recom
mande fait suivre la culture de l'arachide de celIe de mil et de
sorgho, aftn que ces derniers profitent des effets residuels de la
fumure minerale appliquee a la culture de l'arachide\. L'incidence
sur Ie rendement est estimee a 150 kg/ha, soit un accroissement de
quelque 25 % par rapport au rendement de base\. Dans cet assolement,
les reserves du sol en elements nutritifs sont mieux utilisees grace
a la succession de deux plantes ayant des besoins differents\. En
ANNEXE 3
Page 5
l'absence de varietes acceptables sensibles a l'application d'engrais
(du moins aux prix actuels des cereales), il n'est pas propose de
recommander Il'application d'engrais au mil et au sorgho dans Ie cadre
du projet\. En fait, la seule innovation technique sera Ie traite
ment des semences au thioral\.
b) Traitement des semences\. Les agriculteurs seraient invites a uti
liser du thiorale vert, compose d'insecticide, de fongicide et de
repulsif pour oiseaux (anthaquenone); il assure une germination plus
reguliere, en particulier en periodes seches et un accroissement du
rendement moyen estime a 90 kg/ha\.
c) Labour profond\. Ce travail est possible grace a la culture atte
lee et ses effets positifs sur les rendements du mil et du sorgho
ont ete demontres, en particulier a Bambey au Senegal et confirmes
par les observations relevees par l'OA dans sa zone d'intervention\.
L'accroissement des rendements attribuable a des labours profonds
pourrait atteindre jusqu'a 175 kg/ha\.
d) Recommandations diverses\. Les autres recomrnandations faites a l'in
tention des agriculteurs porteraient sur Ie maintien de la structure
du sol et de sa fertilite et sur la lutte contre l'erosion a mesure
que les paysans defrichent le sol et que des methodes de cultures
plus intensives sont adoptees\. 11 sera donc recomrnande de laisser
chaque sole en jachere pendant deux ans au minimum et le personnel
de l'OACV interdira Ie defrichage et la destruction de la couver
ture vegetale des pentes de plus de 1 %\. II serait recommande de
proceder au labour suivant les courbes de niveau\.
C\. Rendements et production
Rendements
7\. Le tableau ci-apres recapitule les effets que les techniques et les
facteurs de production dont l'emploi est recommande dans Ie cadre du projet
auront sur les rendements de l'arachide, du mil/sorgho\.
ANNEXE 3
Page 6
Estimations de l'incidence des techniques recommandees sur lesrendements
Arachide Mi1/sorgho
% kg/ha ~ kg/ha
Rendement de base 100 500 100 600
Semis precoces 20 100
Densite des semis 40 200
Fongicides 10 50 15 90
Semences ameliorees 20 100
Engrais et effets residuels 50 250 25 150
Labour profond 30 175
Total 240 1\.200 170 1\.015
Production
8\. Les estimations de production dans le cadre du projet se fondent
sur l'evolution de la distribution des agriculteurs par categories de themes
techniques\. Les Tableaux 4 et 8 indiquent cette distribution et les Tableaux
5 et 9 contiennent 1es estimations de production\.
ANNEXE 3
MALI Tableau 1
PRQ,,"ET DE DEVELOPPEMENT RURAL INTEDRE
CALENDRIER CULTURAL
Mai Juin Juil\. AoQt Sep\. Oct\. Nov\.
I
1 2 3 1 2 3 1 2 3 1 2 3 1 2 3 1 2 3 12 3
I
Arachid8: variete 2R-2U6
Preparation du sol
+
Semi~'
Premier sarclage et epandage d'engrais I
Dpuxiemr~ sarclage
1roisieme sarclage (facultatif)
1ecolte
Arachide: '"<lrite 47-10
Pr~paration du sol
Semis
fremier sarclage et epandage d1engrais
Deuxieme sarclage !
Recolte
Sorgho!mil
Preparation du sol
I I
Semis
rremier sarclage
Deuxi,eme sarclage - Demariage et buttage
:l\.ecolte
i i I
MALI
MAIN D'OEUVRE N~CESSAlRE A LA PRODUCTION
ARACHIDIERE ET CEREALIERE
(par hectare)
Temps de travaux
Travaux Culture manuelle Cu1 ture attelt~e
hommes!jours hommes/jours atte1age/jours
Arachide
Preparation du sol 12\.50 13\.00 3\.75
Decorticage des semences 8\.50 8\.50
Desinfection des semences \.25 \.25
Semis 10\.00 2\.00 1\.00
Epandage d' engrais et ler sarclage 3\.00 1\.00
2eme sarclage 25\.00 10\.50 3\.00
3eme sarclage 18\.75 6\.00 3\.00
Recolte/ecossage 1/ y 26\.25 22\.50 2\.50
Transport interieur 12\.00 --2\.:\.Z2\. 2\.00
Total 116\.25 69\.50 15\.25
Sorgho/mil
Preparation du sol 12\.05-8\.50 10\.00-6\.50 4\.00-3\.25
Semis
2\.05 2\.00 1\.00
ler sarclage
12\.00 6\.00 3\.00
Demariage 3\.00 3\.00
Buttage 6\.25 2\.00 1\.00
2eme sarclage 12\.00 6\.00 3\.00
Recolte/battage 19\.00-25\.75 24\.00-27\.25
Transport interieur 10\.00- 9\.00 5\.75 2\.00
Total 77 \.25-79\.00 58\.75-58\.50 13\.25-14\.00
Y A supposer un rendement de 1\.200 kg a l'?a, les travaux et~t effectues\.a ~a ~in o~ a l'aide d'animaux\.
Le materiel de culture attelee comprend un moticulteur\., un semoir, une souleveuse d'arachide et une
charrue\.
~I~
: i;:i
c::
1\.0>
gJ Lorsque deux chiffres sont indiques, Ie premier se rapporte au sorgho, le deuxieme au mil\. La main N
d'oeuvre necessaire a la recolte et au transport est calculee pour un rendement de 900 kg a l'ha pour
le sorgho et de 725 kg a l'ha pour le mil\.
Source: lRAT - Operation arachide
21 septembre 1973
)
MALI
PROJET DE DEVEIDPPEMENT RURAL INTEGRE
SUPERFICIE ARACHIDIERE ENCADREE PAR L'OACV
PAR SECTEUR ET ANNEE DANS LA ZONE DU FROJET
(hectares) \.
Avant Annee 7
Secteurs J'roJet Annee 1 Annee 2 Annee 3 Annee 4 Annee 5 Annee 6 et ensuite
Koulikoro - Banamba 16,900 18,300 20,550 24,300 27,000 28,200 29,000 29,400
Kolokani 19,700 21 ,300 24,150 26,750 28,700 29,700 30,400 30,800
Kita 37,500 38,200 39,000 39,750 40,600 41 ,300 42,200 42,900
Kayes - Kenieba -Bafoulabe 25,500 26,800 28,400 36,000 39,100 40,400 41,200 42,100
San-Segou 26,f000 3°,f000 _37,()()() 42,000 44,150 45,850
Total 99,600 104,600 138,100 156,800 172,400 181 ,600 186,950 191 ,050
On pourrait conclure a la lecture de ce tableau que la superficie arachidiere cultivee par des
methodes plus modernes, grace a l'execution du projet, passerait de 99\.600 a 191\.050 hectares\.
En fait, une certaine diffusion, tres lente, des themes techniques aurait eu lieu en l'\.absence
du projet\. Ce facteur a ete pris en compte pour Ie calcul de rentabilite econemique (annexe 16)
5 octobre 1973
\.,;j»
5 octobre 1973
~O
~
\\.U
\\.U
~
"
MALI
PROJRr DE Dl'VELOPPEMEN'l' RUML INTEGRE
SUPERFICIE ARACHIDIERE: DIFFUSION DES THEMES TECHNIQUES DANS LA ZONE DU PROJET
Avant
Pro;!et ~ Anne" 2 Annee :5 Arm"'e 4 Annee 6 Annee et ensui'te
r---
ha !!\.! \.:L h\. \.:L !!\.! 1\. !!\.! \.:L !!\.! \.:L !!\.! \.:L !!\.! \.:L
Superficie culti vee 99,600 100 104,600 100 138,100 100 156,800 100 172 ,400 100 181,600 100 186,950 100 191,050 100
Semis precoce 49,900 50 57,500 55 62,100 45 78,400 50 94,800 55 108\.900 60 112,100 60 114,600 60
Densite des semis 30,100 30 36,600 35 41,400 30 54,800 35 77 ,sao 45 90,800 50 93,400 50 95,500 50
Application de f'ongicides 32,350 3~ 43,900 42 55,200 40 70,500 45 86,200 50 99,800 55 lO2,800 55 105,000 55
Utilisation de semencesselectionees 49,000 49 60,600 58 75,900 55 94,000 60 120 ,600 70 127,100 70 130,800 70 133,700 70
\.Epandage d' engrais 36,150 36 49,100 47 55,200 40 79,500 45 94,800 55 99,800 55 102,800 55 105,000 55
Culture attelee 2,400 4,350 4 7,450 13,200 20,950 12 30,400 17 35,000 19 46,300 24
!I FHichissement imputable a l'inclusion des 26\.coo heet""es des \.ecteurs de San Segou ou les paysaus n'utilisent pas de techniques amHiorees\.
8 octobre 1973
\.,\\.~
" '2!
rf::::
>-' rr
-:ti X
~ ::r:
1"\.1
c-
);
,>j
~!:!\.
FPOJET DE DEVELOPPEMENT ROHAL IU'l'EGRE
Production et rc:nde:ments estimatii's de l' a\.ra\.chide dans lu\. zone du projet
(superficie ha\.; production en mi11iers de tonnesj rendcmc-nts en kg!ha)
Production totale et rendement moyen
Production sans ameliorations Supplement de production a!::zihu1'ble tec1m iques mode rnes dans Ie cadre du pro \.1e t
;":emis pre-coce Dens ita semis Fongicides __ 2~~nc~!\. ?~~1-_!-_q!,ee5 "ngrais
Ann~es Production Y §j
"~perf'icie Frc\.ductlon :'uperfic~ Superficie Superficie !E2!!!!~ Product~\.'?!l totale Rende\.ment rooyen
Ava:nt
Proj et 99,600 49,800 49,900 4,990 30,100 6,020 32\.350 1,620 49,000 4,900 36,150 9,040 76,370 767
Ann~e 1 104,600 52,300 57)500 5,750 36,600 7,320 43,900 2,195 60,600 6,060 49,100 12,775 85,900 821
AnMe 138,100 69,050 62,100 6,210 41,400 8~280 55,200 7,760 75,900 7,590 55,200 13,800 107,690 780
Ann~e 156,800 78,400 78,400 7,840 54,800 10,960 70,500 3,525 94,000 9,400 70,500 17 ,625 127,750 815
Ann~e 4 172,400 86,200 94 ,800 9,480 77,500 15~500 86,200 4,310 120,600 12,060 94 ~800 23,700 151\.250 877
Ann~e 5 181\.600 90,800 108,900 10,890 90,800 18,160 99,800 4,990 127 t 100 12,710 99,800 24,950 162,500 895
Ann~e 186,950 93,475 112,100 11,2JO 93,400 18,680 102,800 5,140 DO,BOO 13,080 102,800 25,700 167,285 895
Ann~e 7 191,050 95,525 114,600 11,460 95,500 19,100 105,000 5,250 133,700 13,370 105,000 26,250 170,955 895
lJ
?J Rendement
~
5/
[I
Voir note du tableau 3\.
8 octobre 1973
ANNEXE 3
Tableau 6
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
Supplement de production arachidiere directement attribuable au projet
Avant Annee 7
Superficie (ha) Projet A\.nnee 1 Annee 2 Annee 3 Annee 6 et ensuite
- sans Ie projet !I 99,600 103,700 135,200 :£1 148,700 :£1 156,400 159,000 159,000 159,000
- avec Ie projet 104 ,600 138,100 156,800 172,400 181,600 186,950 191,050
supplement 900 2,900 8,100 16,000 22,600 27,950 32,050
Rendement moyen (kg/ha en coques)
(chiffres arrondis)
- sans Ie projet 767 756 697 J/ 691 \.}i 670 667 667 667
- avec Ie projet 821 780 815 877 895 895 895
suppll!ment 65 83 U8 207 228 228 228
Production
(chiffres arrondis)
- sans Ie projet 76,370 78,430 94,170 100,920 104,770 106,070 106,070 106,070
- avec Ie projet 85,900 107,690 127,750 151,250 162,500 167,285 170,955
supplement 7,470 13,520 26,830 46,480 56,430 61,215 64,885
II est suppose que si Ie projet n'etait pas exl!cute, un certain nombre de producteurs d'arachi~e adopteraient quelques-una des themes techniques et certains
de ceux qui s'y sont dl!ja convertis agrandiraient encore leur exploitation et releveraient leur productivite\.
L'augmentation rapide au cours des annl!es 2 et 3 tient a l'inclusion dans la zone du projet de la Region de Segou (26\.000 hal l'annee 2 et de la circonscription
de Kenieba (6\.650 hal l'annee 3\.
21 Les rendements moyens baissent a la suite de I' inclusion dans Is zone du projet de la Rl!gion de Segou et de la circonscription de Kenieba, ou les rendements
de base sontfaib1es\. \. \\.
8 octobre 1973
)
MALI
ffiOJET DE DEVElOPPEMENT RURAL INTEDRE
SUPERFICIE EN SORCHO ET MIL
ENCJmREE PAR L' OACV SECTEuR
ET ANNE& DANS LA ZONE DU mOJET
(hectares)
Avant AImee 8
Secteurs Projet Annee 1 AImee 2 Annee 3 Annee 4 Annee 5 Annee 6 Annee 7 ~t ensuite
Koulikoro - Banamba 19,050 19,650 20,250 21,700 25,250 27,850 28,230 28,670 28,870
Kolokani 26,000 26,700 27,450 29,150 30,900 32,900 33,340 33,780 33,,80
Kita 40,500 41,300 42,800 43,700 45,h50 45,850 46,390 47,050 47,400
Kayes - Kenieba - 28,450 29,100 29,550 33,850 35,450 36,800 36,840 31,400 37,670
Bafoulabe
San Segou 114,250 116,000 l18,150 120,250 121,610 123,000 123,850
Total 114,000 116,750 234,300 244,400 255,200 263,650 266,470 269,900 271,770
On pourrait conclure a la lecture de ce tableau que la superficie cultivee en sorgho at mil
par des methodes plus modernes, grace a llexecution du projet, passerait de 114\.8,)') a 271\.000
h~ctares\. En fait, une certai~e diffusion tres lente des themes techniques aurait eu lieu en
1 'absence du projet\. Ce facteur a ete pris en compte pour Ie ca1cu1 de rentabilite economique
(annexe 16)
1-3 ~ ~
Pol Z ~
11 octobre 1973 fa
-\.J
'-"
AImEXE 3
Tableau 8
MALI
Diffusion des themes technigues
ri\./3,ns Ie\. zone du EroJet
Avant If ,Annee 8
'Pro,jet ~ Annee 3 'Annee 5 Annee 6 et ensuite
~ \.L Total \.L ~ \.L Total \.L Total \.L Total \.L Total \.L ~ \.L ~ \.L
Superficie cultivee 114,000 100 116,7$0 100 234,300 100 244,900 100 2$$,200 100 263,650 100 266,470 100 269,900 100 271,770 100
Application de fongicides 22,9$0 20 36,1$0 31 67,100 29 87,~0 36 109,600 43 130,800 $0 133,200 $0 135,000 $0 135,800 50
Effet residuel des engrais 22,500 20 27,100 23 40,000 17 44,500 18 54,500 21 69,300 26 85,200 32 86,400 35 87,000 32
Labour profond 2,800 2 2,9$0 3 5,200 2 11,900 $ 20,3$0 8 28,000 11 37,0$0 14 41,7$0 15 47,950 18
!I Flechissement imputable a l'inclusion des 1\.114 ha des secteurs de San Segou ou les paysans n'utilisent pas de techniques ameliorees\.
Voir note du tableau 7\.
9 octobre 1913
,
MALI
PROJEr DE DEVElOPPEMENT RURAL INTEGRE
Production et rendements estimatifs du mil et du sorgho dans la zone du projet
(superficie en ha; production en milliers de tonnes; rendements en kg/hal
Production totale et
rendement total
Production sans ameliorations SU221ement de 2roduction attribuable aux technigues modernes dans Ie cadre du projet
Fongicides Effet residuel des engrais Labour profond
Superficie Production Rendement
Annees eulti'!ee productionY Superficie Pr<Dduction Y Superficie Production 21 Superficie Production!±! totale moyen
Avant
Projet 114,000 68,400 22,950 2,065 22,500 3,315 2,800 490 74,330 652
Annee 1 116,750 70,050 36,150 3,255 27,100 4,065 2,950 515 77 ,885 667
Annee 2 234,300 140,580 67,100 6,040 40,000 6,000 5,200 910 153,530 655
Annee 3 244,900 146,940 87,050 7,835 44,500 6,675 11,900 2,085 163,535 668
Annee 4 255,200 153,120 109,600 9,865 54,500 8,175 20,350 3,560 174,720 685
Annee 5 263,650 158,190 130,800 11,770 69,300 10,395 28,000 4,900 185,255 703
Annee 6 266,470 159,880 133,200 11,990 85,200 12,780 37,050 6,485 191,135 717
Annee 269,900 161,940 135,000 12,150 86,400 12,960 41,750 7,305 194,355 720
7
Annee 8
et ensuite 271,770 163,060 135,800 12,220 87,000 13,050 47,450 8,305 196,635 724
y Rendement =yen: 600 kg/ha\.
y\. Rendement supplementaire moyen: 90 kg/ha\.
150 kg/ha\.
~
" "
175 kg/ha\.
Voir note du tableau 7\.
~\~
11 octobre 1973
\. M
:&1
'" w
'"
ANNEXE "
Tableau 10
MALI
PROJEr DE DEVELOPPEMENT RURAL INTEGRE
S~Element de Eroduction de mil et de sQrgho
directement attribuable au projet
\.Avant Annee 8
Superficie (ha) Projet ,fmnee 1 Annee 2 l}nnee Annee 4
3 Annee 6 et ensuite
- Sans Ie projet !I 111 t OOO 116,750 233,930,g/ 242,)20 ~/ 247,950 253,450 253,450 253,450 253,450
- Avec Ie proj et 116,750 234,300 244,900 255,200 263,650 266,470 269,900 271,770
Supplement 370 2,580 7,250 10,200 13,020 16,450 18,320
Rendement (kg!ha de cereales battues)\.
- Sans Ie projet 652 652 626 6241/ 624 623 623 623 624
- Avec Ie projet 667 655 668 685 703 717 720 724
Supplement 15 29 44 61 80 '4 97 100
Production (tonnes de cereales batt~es)
- Sans Ie projet 74,330 75,980 146,510 151,320 154,700 158,000 158,000 158,000 158,000
- Avec Ie projet 77 ,885 153,530 163,535 174,720 185,255 191,135 194,355 196,635
Supplement 1\.905 7\.020 12,215 20,020 27,255 33,135 36,355 38,635
i
II est suppose que si Ie projet n'etait pas execute, un certain nombre de producteurs de mil/sorgho adopteraient quelques-uns des themes techniques
et certains de ceux qui s'y sont deja convertis agrandiraient encore leur exploitation et releveraient leur productivite\.
21 T,taugmentation rapide au cours des annees 2 et 3 tient ~ l'inclusion dans la zone du projet de la Region de Segou (114\.250 hal l'annee 2 et de la
circonscription de Kenieha (13\.700 hal l'annee 3\.
21 Les rendements moyens baissent a la suite de I'inclusion dans la zone du projet de la Region de Segou et de la circonscription de Kenieba, ou les
rendements de base sont faibles\.
9 octobre 1973
)
ANNEXE 4
Page 1
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
I
AMELIORATION DES PISTES RURALES /
A\. Generalites
1\. Jusqu'a present, l'OA a conduit ses activites de vulgarisation et de
commercialisation en utilisant des routes secondaires en mauvais etat et des
pistes naturelles creees par Ie passage de vehicules se depla~ant a travers
la brousse et les savanes\.
2\. Les couts de transport sur les routes et les pistes naturelles sont
tres eleves; l'OA a ete en mesure d'y faire face uniquement parce que son parc
de camions est finance en grande partie a l'aide de subventions etrangeres\.
L'execution du projet dans les meilleures conditions ne saurait etre possible
sans l'amelioration de l'etat des routes dans toute la zone du projet\. Les
pouvoirs publics en sont conscients et ils ont entrepris depuis 1970 un pro
gramme global (finance par Ie Credit 197-MLI de l'IDA) destine a renforcer les
services d'entretien et a ameliorer certaines routes de la terre arachidiere\.
Neanmoins, il leur faut elargir et intensifier ces programmes\.
B\. Infrastructure des transports
3\. La zone du projet couvre environ 125\.000 km dans Ie Mali occidental
Ie long d'une ligne reliant Tominiam a Sadiola\. Elle est divisee en neuf sec
teurs qui constituent les circ)nscriptions de base de l'OA; la situation de
l'infrastructure des transports varie considerablement a l'interieur d'un meme
secteur et d'un secteur a l'autre\.
II Les elements du projet portant sur les transports et les routes ont ete
examines au cours de la mission d'evaluation par une equipe speciale com
posee de M\. Ouatarra\. de la Direction nationale des travaux publics (DNDP)\.
M\. Kante, de l'Operation arachide (OA) et de rl\. Doyen, de la Mission per
manente en Afrique de l'Ouest\. Cette annexe se fonde sur le rapport re
dige par cette equipe et sur une etude recemment entreprise par des con
sultants (BCEO~1) employes par la DNTP pour determiner les ameliorations
qu'il serait necessaire d'apporter aux routes situees dans la zone du
projet outre les travaux entrepris au titre des programmes en cours
d'execution ou prevus finances par l'IDA et Ie FAC; on trouvera des
details sur ces derniers dans l'Annexe 2\.
ANNEXE 4
Page 2
4\. La voie ferree de la Regie des chemins de fer du Mali (RCFM) tra
verse la zone du projet\. Cette voie et les chemins de fer senegalais qui y
sont relies constituent les principaux debouches du Mali vers le port de Dakar,
au Senegal\. La capacite et l'efficacite de ces lignes de chemin de fer de
vraient s'ameliorer peu a peu ces prochaines annees grace a l'execution de
programmes finances en partie par Ie Groupe de la Banque (Credits 384-MLI et
3l4-SEN et Pret 835-SEN)\.
5\. A l'interieur des secteurs de l'Ouest (Kayes, Kita, Bafoulabe et
Kenieba), le reseau de transport est constitue de routes et de pistes desser
vant les stations du chemin de fer\. Les transports routiers dans cette zone
s'amelioreront notablement a mesure que 1a DNTP mene a bien ses programmes de
modernisation des routes, principalement finances par l'aide exterieure\. Les
secteurs du Centre (Koulikoro, Banamba et Kolokani) sont relies a Bamako et
Koulikoro par des routes gravelees; dans Ie cadre de ses programmes de mo
dernisation, la DNTP intensifiera ses travaux et modernisera les routes de
ce secteur\. Les secteurs de l'Est (Segou et San) sont desservis par un re
seau dense; les infrastructures y sont suffisantes pour l'accomplissement des
activites du projet et n'entreront pas dans Ie programme d'amelioration des
pistes rurales inscrit dans le projet\. Les Tableaux 1, 2, 3 et 4 indiquent
1a longueur du reseau de routes et pistes dans les secteurs de l'Ouest et du
Centre\.
6\. Les routes de la zone du projet peuvent etre classees dans deux
grandes categories (Tableau 5):
a) routes de desserte principales - il s'agit des routes ou 1a densite
du transport - en gros plus de 2\.000 tonnes par an - suffit a justi
fier certaines ameliorations permanentes et l'execution de travaux
d'entretien a la machine\. Deux niveaux d'amelioration ont ete fixes:
i) Type A (normal) pour les routes ou la densite du transport de
passe 4\.000 tonnes par an;
ii) Type B (minimal) pour les routes ou la densite du transport se
situe entre 2\.000 et 4\.000 tonnes par an\.
b) Pistes rurales - elles comprennent les routes rurales non classees
et les pistes naturelles, les chemins reliant les villages les uns
aux autres et aux routes principales\. Elles ne justifient pas l'exe
cution d'ameliorations permanentes meme au niveau minimal de type B
bien qu'elles soient vitales pour la commercialisation des recoltes\.
ANNEXE 4
Page 3
Les Tableaux 2 a 4 indiquent la longueur, la classification et le niveau dtame
lioration qutil est propose dtapporter aux routes desservant les secteurs de
ltOuest et du Centre de la zone du projet\. La zone du projet est desservie
par:
i) environ 2\.200 km de routes de desserte principales qui sont (ou se
ront a ltachevement des programmes dtamelioration en cours dtexecu
tion) placees sous la responsabilite de la DNTPj (Tableau 3 - IV); et
ii) environ 1\.500 km de pistes rurales ou des ameliorations ponctuelles
seront apportees dans le cadre du projet (Tableau 4)\.
7\. Les pouvoirs publics ont pour politique i) de passer a la DNTP la
pleine responsabilite des travaux et de ltentretien des routes de desserte
principale; et ii) de confier aux collectivites locales ou aux organismes de
developpement agricole les ameliorations ponctuelles des pistes (reparations
effectuees de temps a autre a la main)\.
8\. Le programme de la DNTP relevant du projet dtentretien routier fi
nance par l'IDA est execute plus lentement, a des couts plus eleves que prevu;
en juin 1974, environ 600 km seulement, sur les 1\.450 km qui devaient etre
modernises dans Ie cadre du projet, devraient etre acheves\. Les autres tron
~ons, ainsi que 800 km supplementaires, seront probablement reportes dans un
troisieme projet routier, dont ltevaluation est provisoirement prevue pour Ie
deuxieme semestre de 1974\.
9\. Si les 1\.200 km restants sont comme prevu inscrits dans un programme
de modernisation devant etre lance en 1975, les principales routes de desserte
de la zone du projet repondront aux normes arretees en 1978 et Ie programme
dtamelioration interessant la partie occidentale de la zone du projet, situee
Ie long de la voie de chemin de fer, ou les difficultes de transport sont ac
tuellement les plus vives, sera mene a bien en 1976\.
C\. Amelioration des pistes rurales
Programme
10\. Le projet prevoit Ie financement des ameliorations ponctuelles de
petite envergure qui seront apportees a 1\.500 km de pistes rurales et executees
directement par l'OA\. De petites equipes de cantonniers disposant de camions
bennes et dtoutils manuels seront chargees dtexecuter les travaux en se limi
tant a de simples operations rnanuelles telles que Ie concassage, Ie chargement
et la mise en place de la laterite et des materiaux de demolition\. Leurs ac
tivites se repartiront entre:
ANNEXE 4
Page 4
i) des travaux d ' ame1ioration inscrits dans 1e programme, sur diverses
pistes, pendant 1a periode a1lant d'avril A octobre;
ii) des travaux d'entretien et de reparation d'urgence, qui seront
executes de novembre A mars en liaison directe avec la campagne
de commercialisation et la distribution aux agriculteurs des fac
teurs de production\.
11\. Les pistes rurales devant etre ameliorees dans Ie cadre du projet
sont classees en deux categories en fonction de la densite de la circulation
(Tableau 5):
i) Type C: ce sont des pistes ou 1a circulation va de 500 A 2\.000
tonnes par an, composees essentiellement des voies reliant les
points de vente aux princiapl~s routes de desserte;
ii) Type D: ce sont des pistes moins importantes, ou la circulation
atteint moins de 500 tonnes, et dont la fonction principale est
relier les villages aux points de vente\.
Les ameliorations (voir details dans Ie Tableau 6) auront pour principaux
objectifs;
i) eour 1es eistes de Type C - de permettre aux camions d'y circuler
sans difficulte pendant la saison seche et d'assurer toute l'annee
Ie passage des vehicules (sauf au plus fort de la saison des pluies);
et
ii) pour les pistes de Tyee D - de permettre aux camions lourds de cir
cu1er sans risques de dommages graves pendant la periode de com
mercialisation des recoltes (c'est-A-dire la saison seche)\.
12\. 11 est prevu dans Ie cadre du projet d'acheter deux niveleuses,
l'une pour la region de Kita, l'autre pour 1a region de Kolokani\. Le service
du materiel de 1a DNTP sera charge par contrat de la reparation et de l'en
tretien des niveleuses\. La DNTP louera A l'OACV Ie materiel necessaire, en
particu1ier les bulldozers\.
13\. Les travaux necessaires pour ame1iorer un tron~on typique de 10 km
de pistes rurales et Ie porter au niveau C OU D sont indiques dans Ie Tableau 6\.
L'importance des equipes et leur repartition sont determinees d'apres l'esti
mation des travauxinscrits dans Ie programme pendant toute la periode d'ame
nagement du projet\. Les unites routieres et les niveleuses permettront d'exe
cuter, dans Ie cadre du projet, les ameliorations prevues sur les pistes de
ANNEXE 4
Page 5
categorie C et D au cours de la periode 1974/77 et d'assurer l'entretien et
la reparation des routes et pistes a mesure des besoins au cours de la sai
son de commercialisation\. Le materiel et Ie personnel affectes dans Ie cadre
du projet aux divers secteurs Bont les suivants:
Kolokani et
Banamba Kita Bafoulabe Keniebe Total
Unites routieres 1 1 1 1 4
Camions ( 7 t) 5 5 4 3 17
Main-d'oeuvre 29 29 22 20 100
Niveleuses (120 cv) 1 1 2
Estimation des couts
14\. Le Tableau 7 de l'Annexe 12 indique l'estimation des depenses d'equi
pement necessaires a l'acquisition du materiel et de l'outillage pour les qua
tre unites routieres\. Les couts directs des travaux d'amelioration inscrits
au programme et des travaux d'entretien et de reparation hors programme sont
estimes en fonction des depenses de fonctionnement annuelles des quatre unites
routieres et du cout de la location des deux niveleuses et des bulldozers; ces
couts sont recapitules ci-apres:
Couts estimatifs supplementaires de l'amelioration des pistes rurales
(Millions de FM)
Devises en
Honnaie pourcentage du
nationale Devises Total total
Vehicules et
materiel 37 J\.1\. 147 184 80
Personnel 39 39
De2enses de
fonctionnement fl:\. 94 94 188 50
Cout 170 241 411 59
/1 Y compris les charges locales de manutention, droits et taxes\.
fl:\. Y compris taxes, salaires, carburant, lubrifiants, entretien et repara
tion des camions, materiaux de construction, outillage, etc\.
ANNEXE 4
Page 6
D\. Disposition en matiere d'organisation
15\. Un service special, Ie Service des travaux routiers, sera cree au
siege de l'OACV et charge de planifier et surveiller les activites routieres
inscrites au projet\. II sera dirige par un inspecteur des travaux routiers
(ingenicur/adjoint technique) experimente, detache de la DNTP\. L'inspecteur
sera charge d'organiser, planifier et surveiller les travaux d'amelioration
des pistes inscrits dans Ie projet et d'assurer l'utilisation efficace des
unites routieres et du materiel\. II sera responsable de la coordination avec
la DNTP du programme annuel d'amelioration des pistes\. Ce programme sera
tout d'abord soumis a la DNTP qui formulera ses observations puis devra l'ap
puyer afin d'obtenir qu'il soit approuve\. II comprendra notamment Ie calen
drier d'utilisation des deux niveleuses, qui seront achetees dans Ie cadre du
projet, et de la location du materiel de la DNTP, en particulier les bulldozers\.
Chacune des quatre unites routieres sera affectee a un secteur du projet et
relevera de l'autorite administrative du chef de secteur, qui leur fournira
les fonds, les materiaux et Ie carburant et controlera leurs depenses\. Chaque
equipe sera dirigee par un chef d'equipe detachc de la DNTP\.
E\. Couts des transports routiers dans la zone du projet
16\. Les couts des transports sur les routes classees devraient diminuer
de 30 a 40 % entre 1973 et 1978, grace au programme de la DNTP destine a ame
liorer les principales routes de desserte et a renforcer les services d'entre
tien routier\. Les petites ameliorations financees dans Ie cadre du projet
permettront de faciliter l'utilisation des routes non classees et des pistes
rurales\. Le Tableau 7 contient les estimations des couts de camionnage sur
divers types de routes en 1972 et en 1978\. Les taux de fret officiels ont ete
systematiquement fixes a un niveau inferieur aux frais d'exploitation reels
des vehicules\. Ce principe, conjugue a l'etat tres mediocre du reseau routier,
a d~ssuadc les camionneurs prives d'offrir leurs services pour Ie ramassage
de la recolte d'arachide\. L'OA a donc ete obligee de mettre sur pied son pro
pre parc de vehicules qui, actuellement, est exploite au-dessous de sa capacite
et a des couts elevcs\. A l'avenir, toutefois, et a mesure que l'etat des rou
u~s s'ameliore, l'OACV s'efforcera d'assurer de moins en moins de services de
~amionnage\.
17\. Les reglementations en vigueur sur Ie prix des transports routiers
seront etudiees dans Ie cadre au deuxieme projet routier finance par l'IDA
(Credit 383-MLI) qui devrait de:)\.-:;u\.:::;~er sur une revision des prix en vigueur
de fac;on a encourager Ie develc\.J?crr\.e\.n; d june industrie du camionnage suffi
samment dynamique\.
ANNEXE 4
Page 7
F\. Evaluation economique du programme routier inscrit dans Ie projet
18\. Le programme d'amelioration des pistes est essentiellement constitue
de travaux d'amelioration et d'entretien (Ie cout moyen est d'environ 600 dol
lars Ie km)\. II a fait l'objet d'une breve evaluation economique, etant donne
qu'il constitue une composante importante de l'ensemble du projet et appelle
des depenses d'investissement d'environ 400\.000 dollars\.
19\. Les avantages economiques de l'amelioration des routes sont: a)
des economies de depenses de fonctionnement pour les vehicules utilises i)
pour Ie transport des produits agricoles et les facteurs de production et ii)
pour les activites de l'OACV; et b) l'encouragement de la production arachi
diere grace a l'accroissement des superficies cultivees et'a l'utilisation
plus intensive des services de vulgarisation, de soins medicaux et veterinai
res\.
Les economies de depenses de fonctionnement donnent a l'investissement consacre
aux pistes rurales un taux de rentabilite de plus de 15 %, ce qui en rend
l'execution economiquement justifiable\.
ANNEXE 4
Tableau 1
MnI
AMELIORATION DES PISTES Rt1RALES
Longueur des routes et pistes des
secteurs de l'ouest et du centre
(kilom~tres )
Classees A ameliorer A classer A inclure
Secteurs en 1973 11 1914/17 Y en 1978 y dans Ie projet \.!±/
5/
CAlest - 656 997 1\.437 935
§/
Centre 388 412 743 565
TarAt 1\.044 1\.409 2\.180 1\.500
!/ Les routes classees relevent de la competence de la DNTP - voir tableau 2\.
~/ Routes devant ~re ameliorees par la DNTP au titre de programmes en cours d 'execution
ou envisages, principalement finances par l'aic\.e etrang~re\. Certaines routes, deja\.
classees en 1973, seront modernisees: 216 km dan8 les secteurs de l'ouest, 57 km dans
les secteurs du centre (273 km au total)\. Voir tableau 3\.
21 Les routes qui seront classees en 1978 comprennent les routes classees en 1972 et les
routes modernisees en 1974/77 mais non encore classees en 1972\. Voir tableau 3\.
~ Piates de type C et D devant ~re ameliorees par les unites routieres financees
dans Ie cadre du projet de l'IDA\. Voir tableau 4\.
2! S8cteurs de l'ouest: Kayes, Bafoulabe,,_ K'enieba, Kita\.
§/ Secteurs du centre: Ifoulikoro, l:':!anamba, kllokani\.
16 Decembre 1973
ANNEXE 4
Tableau 2
Routes c1a8S~1!I en 1972
Secteur D6signation Kl10mMres
OUEST Bafoulabe - Djibourou - Kenieba (Guin~e) 184
~es - Sadio1a - Djibourou 187
Kati - Sebekoro - Kita 70
Klta - Toukoto - Segeto 160
Ki ta - Sirakoto (GuiMe) ~
Total sect\.ev eM llo\.eat 656
-
CENrRE Bamako - Kati - Ko1okani\. 124
f
Ko1okani - Didieni 65
Koulikoro - Eanamba 90
Be\.namba - Borou - Bamandjoujou 109
Total secteurs du centre 388
TC7rAL GENERAL 1,044
-----
6 CX:tobre 1973
ANNEXE 4
Tableau 3
MALI
Amelioration des pistes rurales
Amelioration des routes de desserte - Programme 1974/77
I Routes comprises dans Ie credit IDA 383 Y
Kllo~tres
SECTEURS TYPE DESIDNATIOO Tonnesl J\.Dngueur Total
annees tronQOn
OUEST'Y A Kita - Didjan - Batimakana 10\.000 (29) 30\.
Kita - ~kofata 7\.000 60
90
B Didjan - Jambiri 2\.700 (19) 21
Batimakana - Namala 2\.500 13
Batimakana - Tafassadaga 3\.000 13
Kita - Sagabari 3\.800 77
Oulanko - Bamafele 2\.800 115
Mahina - Tantidji 2\.100 (1l5)~
360
Tbtal secteurs de l'ouest 45'0
CENTRE ~/ A Kblokani - Sirakorola (B) 8\.500 (68) 54
Massantola - Tioribougou - Niokona
- Niokona (B) 4\.700 (55) 21
ill
B Niokona - Faladie (c) (19) 20
~lokani - Sebekoro 42
Sirairorola - Niarnina 71
Total secteurs du centre
TarAL GENERAL l!1
II Voir rapport PT~52 a, de mal 1970\. Evaluation d'un projet d'entretien routier
- Republique du Mali\.
S! Secteurs de l'ouest: ~es, Bafoulabe, Kenieba, Kita\.
3/ Secteurs du centre: ~ulikoro, Banamba, Kblokani
Iii Type A Secteurs de l'ouest: 90 km
- Secteurs du centre: III kin
201km
Type B Secteurs de 1louest:360 km
Secteurs du centre: 133 kin
- 493 km
Total general 694
) Nombre de kilom~tres revise\.
II Routes comprises dans Ie programme du FAC
Kiloml?ltres
SECTEURS TYPE DESIDNATION Tonnesl J\.Dngueur Total
annaes tronQOn
OUEST B Toukouto - Sefete 2\.500 87
Toukouto - Tambaga 2\.200 60
Toukouto - Tondidji 2\.000 75
Mamberi - ~urouninkoto 2\.500 66
~es - Sadiola - Dialafara2\.100 150
438
:~:~:~~~:~
ANNEXE 4
fableau 3 (suite)
-
III Recap~tulation
1) Type A : IDA 201 Ion
DNT P ~I-\.!§\. Ion
217 Ion
2) Type B IDA
FAe
DNTP
1\.192 Ion
TarAL
I_I 277 Ion au total, dont 273 Ion deja classes en 1913 (4 Ion de plus)
IV Routes classees en 1978
1) Routes classees en 1973 (tableau 2) 1\.044 Ion
2) Routes du credit IDA 383 (I ci-dessus) 694 Ion
3) Routes du programme FAe (II ci-dessus) 438 Ion
4) Routes du programme DNl'P (note II dEt In
c1-cI\.Osus)
4 Ion
----- Ion
2\.180
-
1 Octobre 1973
ANNEX]; 4
Tableau 4
MALI
Am~lioration des pistes rurales
PISTES A AMELIORER
Kilometres
Secteurs Type D6signation Tonnes/ IDngueur Total
ann~es tronQOn
GUEST!:\./ C Sagabarl - Balega 800 60
Namala - Bangassikoro 1\.600 20
Djibouroa - Dialafora 1\.900 34
Sikoto - Toubafinian 600 25
Djimekourou - Herokoto 1\.500 ~
193
D Sebekoro - Madina - l>i:>roMJro 160 90 \.
Safeto - Dialan 200 40
Sagobarl - Karo - Ifakofata 400 50
!bugaribaya - Hbkofata 160 10
Sabagarl - Gale 250 40
Makariako - Segoune 400 10
Hbkofata - Bating Kana 160 60
Samboula - Yatera - Kassama 400 23
Samboula - Tamboula 150 15
Dialokoto - Faraba 160 40
Toubafinian - Hburoukoto 100 43
Makina - Neguetabali -
Hbulangoulan 450 65
Selinte - Walia - Fatafing 400 82
Kamansdo - Bamafe1e 160 38
Malina - Kale 160 25
Heroko - l>i:>ussa1a 150 14
Tantidji - Bamafe1e 400 17
Sadio1a - Kakadian - l>i:>ussala 200 35
Same - Ndagassenon 200 16
742
Total secteurs ouest m
CENTRAL Y C Didieni - Falon 600 82
Bananiba - Kiban 1\.100 10
Bananiba - Toubakoura 600 12
104
D Niokona - Fassa - 8D1okani 100 50
Sagabala - Samantara 200 35
Kiban - Toukouroba 400 40
Kiban - Toubakoro - Sebete 400 63
Doumba - Koul\.a - Tamani 100 33
Massanto1a - Sirakoroba -
Bamaniba 200 35
Bamandjoujou - MJurdiak 400 30
l>i:>urdiak - Falou 100 70
l'Cullkoro - Tougouni -
Katio1a 200
~
Total S8Cteurs centre
TarAL GENERAL :v
!:\./ Secteurs de 110uest: ~es, Bafoulabe, 88nieba, Kita
Y Secteurs du centre: KbuUkoro, Rmamba, Kb10kani
3/ Type C - Secteurs de 110uest - 193 Jan
- Secteurs du centre - 104 Jan
- 297
Type D - Secteurs de 110uest - 742 Jan
Secteurs du centre - 461 Jan
- 1\.203
TarAL GENERAL
-
1\.500
~\.
MALI
Amelioration des pistes ~ales
Garacterist-Lques techniques des routes et pistes
'!lEe de routes A B C D
1\. Tonnes/annee, ~,000 ~ 10,000 2,000 a 4,000 500 a 2,000 moins de 500
2\. Degagement m 7 5 4
3\. Largeur chaussee m 5\.5 4 3\.50 3
4\. Revetement et
travaux Revtement continu de Revetement continu de Ameliorations ponctuelles Ameliorations ponctuelles
laMrite de 15cm laterite de 12cm pour permettre passage et minimales pour permettre
d'epaisseur; fosses, d'epaisseur; fosses et faciliter conduite; nivel- passage; reparations en cas
dalots et buses, digues dalots sur sections lament et reparations de besoin\.
et gues en beton sur classees, petites annuels\.
toute la longueur\. digues et gues de pierres\.
5\. Niveau de service carrossable toute Pendant saison seche\. Pendant saison seche\. Pendant saison s~che\.
pour camions de l'annee, sauf pendant et
7 tonnes immediatement apres les pluies\.
i) capacite de chargement 75 a 90 0/0 70 a 85 0/0 60 a 75 0/0 500/0
ii) vitesse moyenne 35 a 50 lan/h 20 a 40 km/h 15 a 25 km/h 15 a 25 km/h
iii) coli't moyen du transport, 124 124 155 178 204
FM/km
6\. Cmlt moyen des
ameliorations
(million FM/km)
i) charges d'exploitation 1\.5 a 1\.7 0\.55 a 0\.65 0\.15 a 0\.18 0\.075 a 0\.10
ii) coat total (y compris
assistance technique
et materiel) 2\.15 a 2\.35 0\.80 a 0\.90 0\.25 a 0\.28 0\.135 a 0\.16
70 Usage principal pour Transport des Transport des Transport des arachides Transport des arachides
activites OAGY arachides decortiquees arachides du point de des points de vente des villages aux points 8~
des seccos a la gare vente aux sec cos et secondaires aux seccos\. de vente\. ~ ~
de chemin de fer et a des sec cos a la gare
l'huilerie\. de chemin de fer\. ~~
~~
~
7 Octobre 1973
ANNEXE 4
Tableau 6
MALI
Am~lioration des pistes rurales
Travaux a executer
I Pistes de type C
1) Travaux a executer
i) d~gagement sur 5m de large
ii) refiachage, rechargement des tron~ns sablonneux avec graviers de laterite
iii) construction de petites digues et de gues aux emroits les plus bas, a llaide
de materiaux de demolition
i v) ~roch8l'llent
2) Quantites moyennes pour tron~ns de 10 kIn
i) chargements de graviers de laterite: 65 a 120
ii) chargements de materiaux de demolition: 30
iii) couches rocheuses: 50 m
iv) nombre de jours ouvrables: 10 a 13
II Pistes de type D
1) Travaux a ex~cuter
i) defrichage minimal pour permettre passage de camions
ii) refiachage et rechargement des tron~ns sablonneux avec des graviers de laterite
iii) construction de petites digues et de gu~s a llaide de materiaux de demolition
2) QuantiMs moyennes pour tron~ns de 10 kIn
i) chargements de graviers de laterite: 30 a 60
ii) chargements de materiaux de demolition: 30
iii) nombre de jours ouvrables: 6 a 8
III Travaux confi~s aux equipes de cantonniers
i) abattage et evacuation des arbres et arbrisseaux
ii) extraction et preparation de la laterite et des materiaux de demolition
iii) chargement et dechargement des camions
i v) epandage et compactage de la laterite, mise en place des materiaux de demolition\.
7 Octobre 1973
ANNEXE 4
'rab!eau 7
MALI
Am~lioration des pistes rurales
A\. CoUts uni taires moyens pour divers types de routes et de pistes (valeur 1972)
Charges Fburcentage des Capacit~ de Collt du
d l exploitation charges d 1exploi- charge transport
(FM/km) 1/ tation sur routes utilis~e (FM/TK) gj
- rev~ues oLo
Routes revtftues 86\.8 100 jusqu la 1000/0 24\.8
Routes en graviers amelior~es 108\.6 125 85 - 95 32\.6
Routes de desserte type A 124\.2 145 80 - 95 40\.7
n type B 154\.8 170
II II
75 - 85 52\.5
Pistes "
II
type C 178\.3 210 60 - 75 69\.1
II
" II type D 203\.8 240 60 - 70 85\.7
Routes tertiaires non
entretenues 220\.8 260 50 - 70
99\.8
Pistes naturelles 233\.5 275 50 - 60
115\.2
1/ Y compris droits et taxes (soit environ 220/0), amortissement et salaires des
- chauffeurs\.
2/ M&te chose que dans 1a note 1, a\. supposer en outre que les camions sont charg~s
- uniquement au retour (i1s ne Ie sont pas en direction des points de vente ou des
villages)\. Charges d 1 exp10itation redu1tes de 100/0 pour trajets a\. vide sur routes
des cat~gories superieures au type B\.
B\. Estimation des coUts de transport morens dans la zone du projet en 1972 et 1978
Secteurs ouest Secteurs centre Secteurs est
1972 1978 1972 1918 1972 1978
1) Ramassage (FM/TK) 100 72 104 72 78 66
Beart de 1972 a\. 1978 280/0 310/0 150/0
2) Livraison (FM/TK) 68 47 73 47 52 43
ECart de 1972 a 1978 300/0 360/0 180/0
7 Octobre 1973
ANNEXE 5
Page 1
MALI
PROJET DE DEVELOPPEME&7 RURAL INTEGRE
PROGRAMME D'ALPHABETISATION FONCTIONNELLE
A\. Rappel des faits
1\. Les programmes d'alphabetisation fonctionne11e ont ete introduits au
Mali pour la premiere fois en 1968 sous Ie patronnage de l'Unesco, du FAC et
du FED\. 115 ont pour objectif principal d'aider les beneficiaires a accroitre
leur productivite et, a cette fin, de leur inculquer les rudiments de lecture,
d'ecriture et d'arithmetique necessaires a une meilleure comprehension de leur
travail ou de leurs affaires, par l'intermediaire de cours extrascolaires dis
penses dans leur langue d'origine\. Dans les pays dont l'infrastructure d'en
seignement est insuffisante et qui connaissent des difficultes financieres,
comme Ie ~la1i, un programme de ce genre, s'il est bien administre, peut cons
tituer un moyen satisfaisant de diffuser un enseignement elementaire pour un
cont modique\. Dans Ie domaine de l'agriculture, l'objectif de ce programme
est d'aider les exploitants a mieux comprendre et, partant, a appliquer plus
efficacement les innovations t~chniques que les services de vulgarisation
agricole leur recommandent d'adopter et de leur inculquer des notions sur des
sujets tels que les poids et mesures, qui leur evitent d'etre la proie d'indi
vidus peu scrupuleux\.
B\. Organisation
2\. Niveau national\. Au Nali, 1a responsabilite de dispenser l' enseigne
ment est repartie entre Ie :1inistere de I' enseignement fondamental, de 1a jeu
nesse et des sports et Ie ~1inistere de l' enseignenent secondaire et superieur
et de la recherche scientificiue\. Ce c\.ernier exerce son controle sur 1a direc
tion nationa1e de I' alphabetisation fo;,c~ionnc:lle (mlAF) qui se compose de deux
services: i) un service adr;:\.ii\.is!:\.rati£ c;o\.i, a la demande des operations de de
veloppement ou des entreprises industrielles et com~erciales et en ctroite coo
peration avec elles, procede a des enquetes preliminaires, etablit des program
mes et, en general, les execute et en evalue les resultats; et ii) un service
de production d'aide audiovisue:i\.le, cnarge de pre parer et de distribuer les
affiches et les autres materiels didactiques et notamment de diffuser 1es emis
sions de radio necessaires a i'a??~i de ces progrannes\.
AUNEXE 5
Page 2
3\. Regions et zones\. Le Mali est divise en regions d'alphabetisation
fonctionnelle a la tete desquelles un directeur est responsable de l'organisa
tion et du controle de tous les programmes\. Le directeur regional ag\.it en
etroite cooperation avec les directeurs des operations de develo,ppement et des
autres entreprises aI' intention desquelles sont organises les programmes d' al
phabetisation fonctionnelle et ils dirigent et coordonnent les activites des
chefs des zones d'alphabetisation fonctionnelle (ZAF)\. Chacune de ces zones
groupe une ou deux regions d'alphabetisation fonctionnelle comptant chacune
40 centres d'alphabetisation (CAF) en moyenne\.
4\. Centres d'alphabetisation fonctionnelle\. Le centre est l'unite de
base du programme; il est implante dans un village lorsque lea habitants en
font la demande, puis elisent un comite de l'alphabetisation fonctionnelle et
choisissent deux animateurs pour dispenser les cours\. Sous la direction du
comitf, les villageois construisent un hangar destine a abriter Ie centre\.
Les animateurs, apres avoir ete formes par Ie personnel des zones d'alphabeti
sation fonctionnelle, y dispensent les cours a l'aide du materiel didactique
et de l'equipement fournis par la Direction nationale de l'alphabetisation
fonctio~nelle et epaules et surveilles par Ie personnel de l'alphabetisation
fonctionnelle et des operations de developpement ou des autres organismes in
teresses\. Les animateurs ne sont pas remuneres mais beneficient de certaines
prestations alimentaires\.
C\. Operation arachide
5\. C'est en 1969 que l'OA a demande l'organisation d'un programme d'al
phabetisation fonctionnelle axe sur ses besoins\. La premiere annee, Ie pro
gramme a mis l'accent sur les demonstrations pratiques destinees a expliquer
aux agriculteurs les mecanisnes suivant lesquels l'OA commercialise ses recol
tes, distribue des credits et les recouvre; l'element important est, qu'au cours
de cette phase, les agriculteurs ont appris a lire les balances utilisees pour
peser leurs produits et a verifier les paiements qui leur etaient faits en
echange\. A la suite de cette tentative relativement fructueuse, l'alphabetisa
tion fonctionnelle s'est etendue a d'autres villages et ces programmes ont ete
(~largis pour couvrir les methodes ameliorees de cultures que recommandait d' adop
ter le personnel de vulp,arisation de l'operation arachide\. Les chefs des sec
teurs de base de l'OA servent d'animateurs pendant les deux premiers mois du
nouveau programme puis restent aupres des animateurs reguliers en qualite de
conseillers et assistent aux classes\. Les animateurs sont places sous la sur
veillance du chef de la zone d'alphabetisation fonctionnelle, qui assiste regu
lierement aux cours et participe a des stages de formation au bureau regional
de l'alphabetisation fonctionnelle\. Le programme et Ie materiel didactique
utilise a l'appui sont continuellement revus afin ~e tenir compte des besoins
ANNEXE 5
Page 3
de l'OA et des agriculteurs et des reactions de ces derniers\. Un cycle d'alpha
betisation fonctionnelle s'etend sur deux ans et n'est dispense que pendant la
saison seche, lorsque les travaux des champs sont reduits au minimum\. Se10n
1es estimations, a 1a fin de 1973, 30\.000 agricu1teurs auront termine 1es cy
cles etab1is pour l'operation arachide\. L'objectif conjoint de l'operation
et de l'a1phabetisation fonctionne11e est d'eduquer, par 1e truchement du sys
teme d'alphabetisation fonctionnel1e, un membre actif au moins de chaque fa
mille rurale\.
D\. Programme d'alphabetisation fonctionnelle inscrit dans Ie projet
6\. L'impact des programmes d'a1phabetisation au Ha1i en general et pour
l'operation arachide en particu1ier n'a pas encore fait l'objet d'une evalua
tion approfondie\. C'est pourquoi les pouvoirs publics ayant demande que 3\.000
autres centres soient crees au cours de 1a periode quinquenna1e d'amenagement
du projet, i1 n'a pas ete possible d'acceder a leur demande\. Le programme
serait tres onereux - 1,2 milliard de francs ma1iens (2,9 millions de dollars)
- et il ne serait pas judicieux d'engager des depenses de cet ordre sans proce
der a une evaluation approfond~e de l'efficacite des programmes d'a1phabetisa
tion fonctionnel1e\. Par consequent, l'eva1uation de ces programmes termines
et en cours d'execution est inscrite dans 1e projet et dans l'attente des re
sultats de l'eva1uation, un programme restreint sera mis en oeuvre de 1a pre
miere annee a la troisieme annee du projet\. Ce programme est recapitu1e ci
apres:
197 1974 1975 TOTAL
1 2 1 2 1 2 nouveaux centres
Centres existants 249
n
n
" 115 115 115
" 225 225 225 225
Nouveaux centres 265& 265 265 265 265
" II\.
155 155 155 155 155
" " 100 100 100 100
II
" 100 100 100
100 100
Nombre total de
centres ouverts 589 60S 760 745 620 455
Nombre total de
nouveaux centres 720
/1 Engagement deja donne au cours de l'evaluation\.
ANNEXE 5
Page 4
Fin 1974 et apres examen des resultats de lrevaluation, i1 conviendra de prendre
une decision pour determiner si les 200 derniers centres prevus pour 1975 se
ront ouverts ou non\. Dans l'affirmative, il conviendra de trouver des fonds
supp1ementaires pour 1es maintenir en activite apres 1975, mais a cette date,
et sous reserve de conclusions positives a la suite de l'etude, Ie programme
dralphabetisation fonctionnelle du Mali pourra probablement constituer l'objet
drun important projet d'education fonctionnelle\.
7\. CoOt du programme dralphabetisation fonctionnel1e propose\. Les couts
du programme dralphabetisation fonctionnelle inscrit dans Ie projet sont estimes
a 185 millions de francs maliens (441\.000 dollars); ils sont recapitules au
Tableau 8 de lrAnnexe 12\.
ANNEXE 6
Page 1
MALI
PROJET DE DEVELOPPEHENT RURAL INTEGRE
PROGRAMMES DE RECHERCHE
A\. Rappel des faits
1\. C'est a l'Institut d'economie rurale (IER) du Ministere de la pro
duction qu'il appartient d'organiser la recherche agricole par l'intermediaire
de sa Division des recherches agronomiques (DRA)\. Cette Division se compose
de sept sections: i) pepinieres; ii) semences; iii) plantes nouvelles; iv)
essais multilocaux; v) cultures fruitieres et maratcheres; vi) coton et tex
tiles; vii) cultures vivrieres\. Dans Ie cadre du projet, l'OACV etablirait une
liaison ctroite avec la section des semences responsable de la multiplication
des semences de varietes ameliorees; la section des semences administre des
fermes de multiplication semenciere, contrale les stocks et distribue les
semences qu'elle produit\. Elle aide l'OA a surveiller la production des se
mences confiee aux cultivateurs semenciers relevant de l'OA\. L'OA et la sec
tion ont, jusqu'a present, coopere de fa~on satisfaisante et continueront a
Ie faire dans Ie cadre du projet\. Le projet prevoit en outre l'etablissement
de relations permanentes avec la section de recherches sur les cultures vi
vrieres\.
2\. Section des cultures vivrieres\. Cette section est dirigee par un
chercheur expatrie venant de l'Institut de recherches agronomiques tropicales
et des cultures vivrieres (IRAT)\. Elle se compose de quatre cellules; i)
la cellule d'agropedologie, qui possede une station a Sobuta, est dirigee par
un expert de l'IRAT; ii) la sec;ion des plantes oleagineuses, qui possede une
station principale a Katibougou et une station secondaire a Kita, est dirige
par un expert de l'Institut de recherches des huiles et oleagineux (IRHO);
ii) la cellule de recherches sur les mil, sorgho et mais, dirige par un
chercheur malien, possede une station principale a Sobuta et une station
secondaire a Seno, et iv) la cellule des recherches sur du riz, dirige par
un membre de l'IRAT, possede des stations principales situees a Mopti et
Kogari et une station secondaire a Sikasso\. Tous ces cellules ont des cen
tres d'essai bien localises a travers l:out Ie pays\.
ANNEXE 6
Page 2
3\. Programmes de recherche
i) Arachides\. Les recherches ont porte et portent essentiellement sur
l'amelioration des varietes et se poursuivent par la selection de
nouvelles varietes en fonction du rendement potentiel, du cycle ve
getatif et de la resistance a la rosette et a la secheresse\. Les
autres activites portent sur les engrais, la lutte contre les para
sites, les methodes culturelles et 1'utilisation de materiel de cul
ture attelee\. A Katibougou ou aKita, les nouvelles varietes ou
methodes qui donnent des resultats prometteurs font l'objet d'essais
en vue de leur adaptation locale avant d'etre distribuees ou recomman
dees aux exploitants\. Les essais d'adaptation, dits multi-locaux,
sont conduits en deux ou trois emplacements par secteur dans les
conditions analogues a celles qui caracterisent une bonne exploita
tion moyenne de ce secteur\. A ces emplacements sont egalement eta
blies des exploitations de demonstration servant a la formation du
personnel et des agriculteurs du projet\.
ii) Mil et sorgho\. La recherche interessant ces denrees porte sur la
decouverte de nouvelles varietes a haut rendement adaptees a l'ecolo
gie du pays et au gout et autres exigences de la population locale\.
Quelque dix varietes locales de mil offrant des rendements poten
tiels de 2 a 3 tonnes a l'ha dans des conditions experimentales ont
ete choisies pour faire l'objet de recherches plus poussees, mais
n'ont pas fait preuve jusqu'a present de qualites suffisant a en
justifier la distribution aux agriculteurs\.ll Les recherches con
cernant Ie sorgho donnent des resultats plus prometteurs, mais jus
qu'a present, aucune variete a haut rendement acceptable pour Ie gout
de la population locale n'a ete decouverte\. En l'absence de varietes
presentant des possibilites de haut rendement, la recherche s'inte
resse a des essais de fumure, a la rotation des cultures, au maintien
de la fertilite du sol et a l'utilisation de materiel de culture at
telee, etc\., activites interessantes mais d'application pratique res
treinte\.
B\. Elements de recherche inscrits dans Ie projet
4\. Les eH~ments de recherche inscrits dans Ie projet portent sur la
poursuite et l'intensification des programmes de recherches en cours d'execu
tion stir les arachides et sur la rotation des cultures et sont destinees a
!! Le }lall n'est pas Ie seul a se trouver dans cette situation particuliere;
dans d'autres pays, les activites destinees a ameliorer la productivite
ciu mil se sont soldees par des resultats singulierement mediocres\.
ANNEXE 6
Page 3
aider Ie service des sols a conduire des enquetes pedologiques et a preparer
des cartes pedologiques necessaires a ltOACV et autres programmes de mise en
valeur agricole:
a) Arachide\. Le projet apporterait un concours financier aux acti
vites suivantes:
Varietes: poursuite des essais sur Ie materiel presentant des
possibilites de haut rendement;
Produits anti
parasitaires: essais de fongicides, insecticides et herbicides;
Engrais: besoins en elements nutritifs, choix de ltepoque
dtepandage, effets residuels sur les cereales culti
vees en rotation;
Techniques
culturales: epoque, densite\. preparation du sol;
Materiel: essais de decortiqueuses, laveuses pour les
arach1des de confiserie et calibreuses pour les
semences;
Qualite: contrtle de ltaflatoxine; contrale, preparation,
et conditionnement des ar~chides de confiserie;
contrale de la qualite des graines et de lthuile
arachide\.
b) Rotation\. Les fonds consacres aux recherches sur Ie mil, Ie sorgho,
Ie mats et Ie riz, sont suffisamment abondants et 11 ne serait guere
possible dtameliorer ces recherches sensiblement dans Ie cadre du pro
jet; par contre, il conviendrait d'examiner etroitement les possibili
tes d'une diversification de 1a production agric01e: en particu1ier,
l'adoption de rotations de plus longue duree et incluant outre Ie
sorgho et le mil, d'autres cultures vivrieres telles que Ie mats,
Ie niebe, des cultures fourrageres et dtautres cultures de rapport
comme Ie coton\. Les essais viseront a etablir la rotation optimale
permettant de combiner les cultures susmentionnees avec l'arachide»
Ie mil et Ie sorgho et s'efforceront d'ivaluer l'incidence financiire
et economique des alternatives proposees\. Ces types d'essais ont
ete conduits avec succes au Senegal\. Le programme exigerait l'exe
cution de quatre essais ?crtant sur 2 ha environ dans chacun des
principaux secteurs de l'OACV\.
ANNEXE 6
Page 4
c) Cartes pedologiques\. Le service des sols recevrait une assistance
financiereet technique dans Ie cadre du projet pour effectuer des
enquetes pedologiques et etablir les cartes qui font defaut au Mali
pour planifier Ie meilleur usage de ses ressources naturelles\. Cette
assistance aurait pour principaux objectifs: i) de definir les gran
des unites morphopedologiques de la zone etudiee; ii) d'evaluer la
fertilite potentielle des divers sols; iii) de choisir lea sols les
plus propices a l'intensification de l'agriculture; iv) d'etudier les
risques agronomiques decoulant du passage de la culture itinerante
traditionnelle caracterisee par de longues periodes de jachere a la
culture intensive sedentaire\. Cette assistance presenterait de sur
croit l'avantage notable de constituer Ie point de depart de la
carte pedologique du Mali, qui n'a pas encore ete etablie\. La
carte sera etablie a l'echelle de 1:200\.000eme, qui est l'echelle
utilisee pour les cartes topographiques existantes et cODvient aux
besoins du pays\. En utilisant cette echelle, un pedologue peut
prospecter 14\.000 km 2 par an\. Les autorites maliennes indiqueraient
les limites des zones devant etre etudiees, determineraient lea
zones prioritaires et fourniraient les photographies aeriennes
necessaires\. Le projet fournirait les fonds pour une enquete de
deux ans conduite par une equipe de pedologues qui effectueront lea
levees necessaires sur plus de 28\.000 km 2 representant environ 21 %
de la zone du projet\.
ANNEXE 7
Page 1
MALI
PROJET DE DEVELOPP&~ENT RURAL INTEGRE
ASSIST&~CE NEDICALE
1\. Organisation\. Tousles services medicaux et sociaux du Mali rele
vent du Ministere de la sante publique et des affaires sociales\. Le ministre,
entoure de son cabinet, est plus particulierement charge de rediger les lois,
de planifier, de contraler les inspecteurs, les medecins, les medicaments et
les officines, d'etablir des relations avec les organisations sanitaires in
ternationales et les pays etrangers fournissant l'assistance technique, d'or
ganiser l'enseignement et la formation\. Le ministere se compose de deux depar
tements: la Direction nationale de la sante, responsable des services medi
caux et sanitaires, et la Direction des affaires sociales, responsable des ser
vices sociaux; leurs activites sont coordonnees par un bureau d'etudes compose
des directeurs et des chefs de divisions des deux departements\. La Direction
nationale de la sante est chargee de mener a bien les programmes en matiere de
sante, d'hygiene et de medecine prepares par Ie ministere, d'administrer et d'or
ganiser la surveillance technique des hopitaux et des dispensaires et de con
troler et de faire appliquer la reglementation medicale\. Elle est en outre
chargee de proposer et de preparer des programmes et des dispositions regle
mentaires en matiere de sante, de tenir des statistiques medicales et, en
general, de prendre connaissance de toutes les questions dans Ie domaine de
la medecine et de la sante\. Elle est representee dans chacune des six regions
par un directeur regional de la sante qui est Ie conseiller medical du Gouver
neur et qui contrale les hopitaux, les dispensaires et Ie personnel medical
de la region\. Dans chacune des 42 circonscriptions administratives du pays,
les services de sante ont, a leur tete, un chef de circonscription sanitaire,
qui est un medecin ou un assistant medical t selon les disponibilites en per
sonnel\. Dans chaque secteur est implante un dispensaire et dans certains cas
une maternite placee sous la direction d'une sage-femme\. Les services de
sante publique sont repartis en deux branches: i) les soins medicauy\. de pre
miere urgence, les traitements et la chirurgie attribues aux dispensaires,
maternites et hapitaux; ii) 1a prevention medicale, qui concerne les maladies
contagieuses (ce service est charge de les depister), les vaccins et la the
rapeutique\. Le programme est mene a bien par Ie moyen de visites regulieres
annuelles annoncees a l'avance dans Ie but d'examiner tous les habitants du
secteur dont l'equipe de prevention medicale est responsable\. Les vaccina
tions de masse sont entreprises lorsqu'elles sont necessaires contre la V3
riole, la fievre jaune, 1a rougeole, la tuberculose et le cholera, qui sont
ANNEXE 7
Page 2
des maladies dont la prevalence est la plus forte au Mali\. Ces deux branches
sont, en general, insuffisamment dotees de personnel et de materiel en raison
de la penurie de credits qui ne leur permet pas de surcroit de financer leurs
depenses de fonctionnement\. Les services medicaux sont par consequent souvent
inefficaces\.
2\. Programme propose\. 11 existe dans la zone du projet un dispensaire
pour 15\.000 habitants et trois lits d'hopitaux pour 5\.000\. Ces installations
ne beneficient toutefois qu'a une petite minorite des habitants qui en sont
proches\. Le projet fournira les fonds necessaires au financement du person
nel detache de la Direction nationale de la sante et travaillant sous le con
trale administratif de l'OACV, a l'achat de vehicules, de materiel et de me
dicaments, a la construction de dispensaires et au financement des depenses
de fonctionnement\. Cette assistance permettrait a la branche des soins medi
caux d'clargir sa sphere d'activites et d'attendre les habitants des zones
les plus recuH~es\. Le projet aiderait egalement la branche de la prevention
mcdicale en lui permettant d'effectuer un plus grand nombre de visites de
depistage, des campagnes de vaccination plus regulieres et une meilleure dif
fusion Jes principes d'hygiene et de sante parmi les habitants touches par
lea equipes de prevention\. Les programmes et les budgets annuels seraient
etablis conjointement par la Direction nationale de la sante et le Dlrecteur
general adjoint de l'OACV qui, avec l'aide des services de vulgarisation du
projet et du personnel local de la Direction nationale, veillerait a l'execu
tion satisfaisante du programme\. Le controle financier des depenses du pro
gramme medical inscrit au budget arrete serait place sous la responsabll1te
de la Direction nationale\.
AL'iNEXE 8
Page 1
MAl\. I
PROJET DE DEVELOPPEHENT RURAL INTEGRE
ASSISTANCE VETERINAIRE
1\. Organisation\. Le Service de l'elevage et de la sante animale est
l'une des quatre divisions de la Direction generale de la production du Hinis
tere de la production; elle est chargee du developpement de la production ani
male\. Elle est principalement responsable i) de la sante animale; ii) de
l'amelioration de la production animale; et iii) de l'inspection des viandes\.
Elle se compose au niveau national de deux sections: i) protection sanitaire;
et ii) production anima Ie\. Hors siege, elle est representee par un veterinaire
coordonateur dans chaque region, un chef du secteur de l'elevage dans chaque
cercle; et un chef de poste veterinaire dans chaque arrondissement\. Comme
pour tous les autres services agricoles, le personnel et les fonds ne suffi
sent pas a assurer les prestations necessaires\.
2\. Betail\. Le service de l'elevage estimait qu'a la fin de 1972 et
avant que les consequences de la secheresse ne se fassent pleinement sentir,
Ie cheptel national comptait 5,2 millions de tetes dont 30 % de males et 70 %
de femelles, et 55 % de moins d'un an\. Le taux de reproduction est faible
- 66 % - et Ie taux de mortalite, tout en etant raisonnable pour les animaux
de plus de deux ans (3 %), atteint 33 % pour les animaux de moins d'un an\.
Les enquetes menees sur les effets de la secheresse ne sont pas encore terminees
mais le service de l'elevage estime que, dans le nord du pays, les pertes sont
de l'ordre de 40 % et qu'il faudra cinq a dix ans pour que le cheptel de ces
regions retrouve la dimension qu'il avait avant la secheresse\. Dans le Sud et
l'Ouest, les effets de la secheresse ont ete beaucoup moins graves, les per
tes etant de 5 a 10 % du cheptel\. La zone du projet compterait 1,4 million
de tetes qui, pour la plupart, sont considerees comme un "compte d'epargne"
par leurs proprietaires et avant que l'OA ne soit creee, servaient rarement
comme animaux de trait\. Depuis, les agriculteurs se sont reveles particulie
rement aptes a dresser leurs betes sous les directives et l'assistance du
personnel des services de vulgarisation de l'OA charges de la culture atte
lee\.
3\. Programme propose\. Le projet fournira les fonds necessaires au
financement du personnel detach6 du Service de l'elevage et travaillant sous
~ le controle administratif de l'OACV ainsi que des vehicules, de materiel ve
terinaire et a la constitution d'un fonds renouvelable consacre a l'achat de
medicaments veterinaires, a la creation d'enclos de dcsinfection et aux depen
ses de fonctionnement\. Le fonds renouvelable sera alimente par la contribu
tion des agriculteurs aux frais de medicaments veterinaires\. Le personnel
ANNEXE 8
Page 2
aurait pour principaletache de veiller a la sante du cheptel dans la zone du
projet par Ie moye'n de vaccinations preventives mais egalement de traitements
curatifs et de conseiller les agriculteurs en matiere d'elevage\. Le Service
de l'elevage et l'OACV etabliraient conjointement les programmes et les bud
gets annuels\. Le specialiste en culture attelee de l'OACV, par l'interme
diaire du personnel des secteur et sous-secteurs places sous sa direction,
controlcra l'execution du programme de sante animale\.
Al'fNEXE 9
Page 1
MALI
PROJET DF\. DEVELOPPEIiENT RURAL INTEGRE
L'UNITE D'EVALUATION
1\. Le projet de developpement rural integre aura d'importantes conse
quences pour les populations de la zone du projet et pour l'economie malienne\.
Ces effets ne pouvant toutefois etre estimes avec exactitude, il sera cree dans
Ie cadre du projet une unite d'evaluation qui, a compter de l'annee 2, aura
pour fonctions de juger des resultats obtenus et de les comparer aux previsions\.
Aucun organisme n'etant apte a s'evaluer lui-meme de fa~on satisfaisante,
I'unite d'evaluation sera independant"S de 1a Direction eu projet tout en de
ployant ses activites en etroite collaboration avec elle\.
2\. L'unite d'evaluation aura les fonctions suivantes:
a) suivre les differentes phases de l'amenagement du projet;
b) evaluer les resultats obtenus et les comparer aux previsions;
c) mesurer l'efficacite du projet;
d) reevaluer les objectifs du projet et, Ie cas ccheant, proposer les
modifications a apporter aux objectifs et a l'organisation du pro
jet;
e) etudier Ie processus de developpement rural dans une perspective
de planification et de developpement; et
f) aider 1a Direction du projet a arreter les objectifs du projet et
a etablir Ie calendrier des activites\.
3\. L'evaluation portera sur les questions suivantes:
a) agriculteurs participants: l'evolution de leurs revenus bruts et
nets, de leur consommation, de leur participation a l'enseignement,
etc\., et en general, de leur bien-etre social;
b) evolution de 1a production, en volume et en valeur, efficacite du
mecanisme de commercialisation;
A\.'iNEXE 9
Page 2
c) utilisation des ressources fournies par Ie projet;
d) incidence des sous-projets secondaires;
e) modifications de la situation de l'emploi, du nombre d'emplois et
du type d'activite;
f) mouvements des recettes fiscales et des de?enses; et
g) en general, toute modification des indicateurs economiques et sociaux
temoignant de resultats obtenus directement et indirectement par les
activites du projet\.
Certains des renseignements necessaires pourront etre obtenus dans les dossiers
du projet, les autres seront rassembles a l'issue d'enquetes et aupres de sour
ces exterieures au projet; neanmoins, il appartiendra a l'unite d'evaluation
j1arr\.cter les methodes de rassemblement et d'evaluation des donnees\.
!\. A la tete de l'unJte d'evaluation sera place un agronome economiste
connaissant l'Afrique de l'Ouest, les statistiques et l'economie sociale\. 11
sera recrute internationalement pour une periode de quatre ans (annee 2 a an
nee 5) et, a compter de l'annee 6, il sera remplace par l'assistant de recher
ches devant etre engage au cours de l'annee 5\. 11 sera assure par un statisti
cien affecte au siege et, en dehors du siege, par deux surveillants et 20 en
Gueteurs\. Comme les fonds ne suffisent pas a couvrir les activites hors siege
dans l'ensemble de la zone du projett l'agronome economiste choisira\. de con
cert avec la Direction du projet, les secteurs qu'etudieront les enqueteurs
pendant I'execution du projet\. Le chef de l'unite d'evaluation recrutera son
personnel, Ie formera, etablira les documents a conserver dans les dossiers,
mettra au point un systeme de rassemblement des donnees, surveillera son per
sonnel, consultera la Direction du projet, les fonctionnaires et le personnel
de l'IDA\. 11 preparera des rapports et des recommandations qui seront soumis
au conseil de l'OACV et, apres approbation du conseil, les communiquera a
I'IDA et a la Direction du projet\. L'unite d'evaluation sera etroitement
associ& a l'Institut d'economie rurale avec lequel elle etudiera les possibi
lites d'obtenir un appui supplementaire de la part de l'Universite du Mali\.
I\. e chef de l ' unite sera responsable professionnellement devant Ie directeur
de l'Institut de I'economie rurale (voir organigramme du projet)\.
5\. L'Annexe 12, Tablenu 12, contient les estimations de couts detaillees\.
L'O\.\C\tinanccl"\.'l les d[>penses de l'unit(~ d'evaluation dans les limites de son
budget annuel ct apr'::~s approbation du chef de I' unite\.
ANNEXE 10
Page 1
MALI
PROJET DE DEVELOPPErlliNT RUP\.AL INTEGRE
PRODUCTION DE SE~mNCES D'ARACHIDE'
1\. L'un des principaux objectifs de l'OACV est de remplacer totalement
les varietes d'arachides locales ou les melanges de varietes que les agricul
teurs emploient par des varietes selectionnces puis de preserver la purete
varietale\. Cet objectif se justifie non seulement pour des raisons de pro
ductivite mais encore pour faciliter Ie decorticage et obtenir une production
homogene facilement ecoulable sur Ie marche mondial\.
2\. Varietes selectionnees\. Les deux varietes retenues pour l'operation
arachide sont bien adaptees aux conditions maliennes; ce sont les varietes
28-206 et 47-10 qui, en attendant la selection de varietes presentant encore
de meilleures qualites, seront distribuees aux agriculteurs moyennant a cre
dit et a un prix subventionne\.
La variete 28-206, de type "Virginia", a cycle long de 120 jours,
resistant a la rosette, donne des rendements qui ont atteint 3 t/ha
au cours d'experimencations, et est cultivee pour la production
d' huile;
La variete 47-10, de type "Spanish" a cycle court de 90 jours, re
sistant a la rosette, et dont les rendements ont atteint 2 t/ha au
cours d'experimentations, produit l'arachide de confiserie vendue
a un prix superieur a celui de la variete 28-206\. Elle convient aux
zones septentrionales, plus seches, de la zone du projet\.
Les quantites de semences necessaires sont de 100 kg/ha pour la 28-206 et de
150 kg/ha pour la 47-10\. A la fin de la periode de developpement du projet,
la quantite de semences a mettre en place atteindra quelque 21\.000 t/an, dont
l'OA fournira 4\.740 tonnes, Ie solde devant etre produit par les agriculteurs
eux-memes\.
3\. Phases de la multiplication
\. Phase A Pied de cuve
i) 28-206\. Jusqu'en 1972, Ie pied de cuve etait conserve
a I3ambey (Senegal) mais i l peut etre desormais obtenu
au Centre d'apprentissage rural de Sirakola\.
A\.J\.'lNEXE 10
Page 2
, ii) 47-10\. Jusqu'en 1972, Ie pied de cuve etait conserve
a l'exploitation de ~l'Pesoba, il sera conserve a compter
de 1973 au Centre d'apprentissage rural de Didieni\.
Phase B Elite 1
i) 28-206\. La graine Elite est obtenue aux Centres d'appren
tissage rural de Sirakola, Kolokani et Didieni\.
Ii) La semence Elite est desormais produite par certains agri
culteurs, mais, des que possible, elle sera obtenue direc
tement par l'OACV a Mourdiah\.
Phase C Elite 2\. Cette phase de multiplication est confiee a des agri
culteurs choisis parmi les meilleurs et les plus dignes de con
fiance\. lIs cultivent les semences sous contrat sous l'etroite
surveillance du personnel de la vulgarisation et des agents de
l'operation arachide qui tiennent pour chaque exploitation
semenciere des registres sur les dates des semis et les opera
tions sur Ie terrain\. Les agriculteurs participants re~oivent
gratuitement les engrais et aut res facteurs de production mais
leur recolte est achetee au taux normal\. En 1972, l'OA a fait
produire de cette maniere 400 ha de semences Elite 2\.
Ces trois phases permettent de produire de petites quantites de semences se
lectionnees de Ia fa~on la plus rentable\. Les semences obtenues a l'issue
des deux dernieres phases sont regulierement controlees par la division des
semences selectionnees de l'Institut d'economie rurale et par Ie personnel
de l' IPJiO\.
4\. Phase de diffusion\. Les deux phases decrites ci-apres permettent de
reglementer la distribution de semences selectionnees produites a des points
strategiques de fa90n a reduire les couts de transport\.
i) Phase D: premiere multiplication\. Les semences obtenues a
l'issue de la Phase C sont vendues a des agriculteurs selec
tionnes implantes dans les sous-secteurs et Ie produit de
cette premiere multiplication est utilisee pour la phase de
multiplication (E)\.
ii) Phase E: deuxieme multiplication\. Les semences produites a
l'issue de la Phase D sont distribuees aux agriculteurs de cha
que secteur ayant obtenu les meilleurs resultats et les semences
produites au cours de cette phase sont ensuite distribuees sous
Ie controle de I")/" a l'ensemble des agriculteurs d'une zone
precedenunent "nettoyce"\. Le produit de cette deuxieme multi
plication est reutilise une fois, apres quai de nouvelles
semences sont reintroduites\.
ANNEXE 11
Page 1
HALl
PROJET DE DEVELOPPElillNT Rur~ INTEGP-E
FACTEURS DE PRODUCTION ET CREDITS AGRICOLES
A\. Organisation et fonctionnenent du credit agricole
Organisation de 1a Societe de credit agricole et d'equipement rural (SCAER)
1\. La Societe de credit agrico1e et d'equipement rural (SCAER) est de-
venue un organisme independant en avril 197~ a l'issue des recommandations for
mu1ees par 1a Caisse centrale de cooperation economique (eCCE) et consignees
dans une etude portant sur la situation du credit agrico1e au :la1i\.
2\. La SCAEP\. est dotee de l'autonomie juridique et financiere; e11e est
habi1itee a utiliser les facilites de reesco~pte que lui offre la Banque cen
trale; e11e ales principa1es fonctions suivantes:
a) Servir de centrale d'approvisionnement pour 1es biens de production,
tel 1e materiel agrico1e, 1es enKrais, 1es insecticides et 1es fon
gicides, et contro1er certaines inportations au nom de l'Etat;
b) Distribuer ces biens de production, soit directement, par l'interme
diaire de ses 26 magasins de detail, imp1antes dans tout Ie pays,
so it indirectement, par l'inter~cdiaire des operations de deve1oppe
ment qui, au nom de 1a SCAER, conservent des stocks de biens qu'el1es
vendcnt au comptant ou a credit, recouvrent les creances au moment
du ramassage de 1a reco1te; et octroyer de petits prets individuels
aux agricu1teurs, soit a ses propres fonds, soit sur fonds de cre
dits speciaux; mais cette activite a ete suspendue jusqu'a ce que
des garanties soient obtenues en matiere de recouvrenent des crean
ces\.
3\. La distribution des biens de production agricole et l'octroi de
pd~ts E11e
} court terme constituent 1a principa1e activitc de 1a SCAER\.
partage 1a responsabilitc de ces attributions de Ia fa~on suivante avec 1es
op~rations de d~ve1oprernent:
&~i'\.TEXE 11
Page 2
a) En etroite cooperation avec les operations, la SCAER i) passe les
commandes, apres consultation et par voie d'appel a la concurrence
nationale ou internationale, et livre les biens aux Operations; ii)
finance les achats et les stocks; iii) supporte Ie risque financier
associe aux operations de credit;
b) Les Operations i) gerent et surveillent les stocks qu'elles detien
nent; ii) vendent les biens aux agriculteurs a credit ou au comptant,
a leur discretion; et iii) recouvrent les creances lorsque la recolte
est commercialisee\.
La SCAEI~ retribue les services que lui rendent les Operations moyennant une
re~ise de 5 % sur Ie prix cession des marchandises\.
4\. Les prix de cession uniformes des biens de production agricoles sont
fixes par Ie gouvernement (voir Tableau 1)\. Du fait qu'ils sont, en moyenne,
inf~rieurs de 9 % aux prix de revient rendu Bamako, Ie compte d'exploitation
de 1a SCARP est credite de la fat;on ci-apres:
a) les redevances nationales prelevees sur Ie coton (4\.000 francs ma
liens par tonne de graines de coton achetees) et des arachides
(2\.000 francs maliens par tonne d'arachides en coques achetees); et
b) des contributions emanant du FAC et du FED et spikialement destinees
a financer les subventions\. L'accroissement escompte de la produc
tion d'arachide et de coton, conjugue au relevement des prix de ces
sion, devrait compenser la diminution des concours octroyes par Ie
FAC et Ie FED\.
5\. Deux facteurs, tenant aI' isolement geographique du rIali, concour
rent a l'1mportance des couts de 1a SCAER:
a) les transports, qui grevent en moyenne de 27 % Ie prix depart usine;
b) les charges financieres appliquees au fonds de roulement qui portent
Ie cout des emprunts de 5 % a plus de 8 %, au cours des 20 mois qui
s'ecoulent entre Ie moment ou sont placees les commandes et les
premiers remboursements des credits\.
lJp~rat ion arachide - organisation des operations de credit
6\. Au siege des Operations de d6veloppenent, situe a Bamako, les depar
tements indiques ci-apres sont dlarr;es de 103 distribution des biens de produc
tion:
i\\.i\.~NEXE 11
Page 3
a) le Bureau d'ordre, qui coordonne les besoins, passe les commandes
par l'intermediaire de la SCiillR et receptionne et distribue les
marchandises;
b) la Section du credit, qui enregistre en quantite et en valeur tous
les biens de production\.
7\. Chaque secteur de l'Operation constitue localement une circonscrip
tion administrative dans laquelle les chefs de secteur et les comptables
jouent un role majeur en ce qui concerne la distribution des biens de produc
tion et Ie recouvrement des creances aupres des ar,riculteurs:
a) Ie chef de secteur est charge de: i) vendre au comptant les fon
gicides et les pieces de rechange; ii) vendre a credit le materiel,
les engrais et les semences;
b) les comptables ce secteur et de sous-secteurs retracent ces activi
t~s et effectuent p~riodiquement des verifications des stocks\.
8\. Ce systeme devrait permettre a la SCAEE et a 1a Direction de l' ope
ration de controler les donnees\. En effet, un etat mensuel des mouvenents de
stocks dans chaque sous-secteur leur perr:let de verifier en detail les livrai
sons et les ventes\. Heanmoins, deux graves inconvenients subsistent:
a) les impayes touchent envi ron 20 I~ des pd'hs octroyes aux agricu1
teurs, contre quelque 2 % dans le cadre de 1'operation coton;
b) 1a coordination entre la SCAEi~ et l'OA est insuffisante\.
a reduire les impay~s et souhaite rnettre au
L'OA prend des r:1esures de nature
point un systeme de caution mutuelle\. Dans l'intervalle, les agriculteurs
ou les groupements dont les rernboursenents sont irreguliers ne devraient pou~
voir obtenir aucun autre credit et les defaillants devrai(;nt etre sanc\.tionnt~s
p<1r une action en justice\. Le projct pri!voit Ie renforcement\. et 1a forr::ati\.on
du personnel dlarg0 des op~rations de cr0dit en dehors du si0ge\. Le Tableau 2
contient un 0tat des pr6ts et des rc~boursements de la SCAE~ pour La p6riode
allant de 19M3 \.l 1971\.
n\. Situat ion financiere de l? SCAfF:
\.
9\. Le bilan de la SCAE:z en debut d'exercice, approtlve par l'Etat et le
conseil d' administrat ion, rj::velc que les fonds propres ont servi a financer
toutes les immobilisations et 95 7~ des stocks\. Cette situation se trouvait
A\.~NEXE 11
Page 4
encore amclioree par une dotation de l'Etat de 350 millions de francs maliens
qui represente Ie fonds de roulernent (150 millions de francs maliens) et une
subvention d'equipernent (200 millions de francs maliens)\. Les bilans et les
comptes d'exploitation et de pertes et profits pour 1971 et 1972 sont recapi
tul~s dans les Tableaux 3 et 4\.
10\. Les besoins de tresorerie sont finances par la cote de reescompte
ouvcrte par la Banque centrale au nom de la SCAER chez 1a Banque de developpe
rnent du na1i\. Cette cote, qui est revisee tous 1es six mois, a ete reguliere
ment augmentee\. Neanmoins, les facilites de decouvert irnposent des charges
[inancieres lourdes a 1a SCAER, la Banque de developpement ne lui octroyant
pas de taux pref6rentie1s\.
L\. La secheresse qui a sevi en 1972 et 1973 a eu des effets defavorables
sur le r\!::lboursernent des creances et a provoque une forte augmentation des
st\.oc:~s et des besoins de tresorerie\. La SCAER doit donc maintenir de fac;on
im;< r,ltive un contro1e stricte des comrnandes passees annue11ernent etant donne
que l'accumulation des stocks risque de detruire son equi1ibre financier
\. ~insi, les cornptes de 1a SCAER resteraient positifs\. Son compte d' exploitation
devrait rester crediteur sous reserve que le ratio des comrnandes par rapport
aux ventes soit ajuste et que 1es prix de cession soient re1eves moderement\.
C\. ~Iontant des credits necessaires au Erojet de deve10ppement rural integre
12\. Les Tableaux 5, 6 et 7 indiquent 1es dlhal1s du rnaterie1 et d' autres
facteurs de production agrico1es ainsi que 1e montant des credits necessaires
devant &tre fournis par 1a SCAER, et des sernences se1ectionnees pouvant etre
obtenues auprcs de l'OACV\.
D\. Eecornmandations interessant l'organisation et 1es oEerations de credit
13\. La SCAEI~ devra tenir des etats exacts des stocks dans ses magasins
cnmm{' d:ms les secteurs de l'OA, dans le cadre de la cnnventhm de services
r0ciproqlles qu' e11es devraient conc1ure et signer dans 1es meilleurs dEnais\.
lil\. La SCAE1t et l' OA doivent veiller cl ce que les conmandes de biens de
prl)c111ClLlHl qu' elles passent ne d'::passent pas 1es besoins et ce, en vue de re
duire le~ '\.!Hf\.icHltes de trl;~on'rie\. L'OA devrait par ail1eurs arreter des
di~rositions propres ~ r~duire Ie nombre des inpay~s (i environ 5 % des prets)\.
\.
f
MALI
Prix de revient et prix de vente des facteurs de eroduction agrico1es
(FM)
Prix
Unite depart Rendu Bandu Prix de Prix de cession en
exp10i- Bamako Yap1\.ealteurs3/ cession W pourcentage du prix
- tatioBb/ - de revient total
Multiculteurs Pi~ce 38,h30 40,351 49,794 30,000 600/0
Pica fou:iJleurs Pi~ce 3,800 4,230 4,750 4,750 1000/0
Charrettes de 1000 kg Piece 25,537 26,814 33,088 32,800 990/0
Semoir Pi~ce 24,930 26,177 32,302 18,500 570/0
Souleveuses Pi~ce 4,860 5,103 6,297 6,075 960/0
Superphosphate 210/0 Tonne 17,000 31,270 37,469 40,000 1070/0
53,846 ~ 1440/0
Thioral Rouge (arachide) Kg 680 720 900 1,500 ~ 1070/0
Thioral Vert (sorgho) Kg 570 604 759 2,000?J 2630/0
Gammagrain (lindane) Kg 190 200 250 500 21 2000/0
Semences s~lectionn~es
d'arachide Kg 47\.5 34\.50 2/ 730/0
1/ Commandes en 1973
~/ Bors taxes, transport compris\. 1-3~~
"'I/ Bors
taxes, y compris les coltts pour la SCAER (charges financieres et frais de gestion) et une commission 1(9
de livraison de 50/0 pour l'Operation Arachide\. ro ~
4/ Tarif de la SCAER pour 1973 homologue par les pouvoirs publics\. ~ ~
~/ Prix de vente fix~ par l' Op~ration Arachide\. I-'
10 CCtobre 1973
HALI
Tableau comparatif de la situation des pr~ts et
aes remboursements au 30 Novembre 1972
-- -
M 0 n tan t s Annuals Montants cumulatifs Encours des dettes
en pourcentage des prets
Prets Remboursements Encours Pr@ts Remboursements Encours pour 1 r annee cumul
1968 17,849,070 12,352,185 5,496,885 17,849,070 12,352,185 5,496,885 31 31
1969 55,324,325 49,298,070 6,026,255 73,173,395 61,650,255 11,523,140 11 16
1970 114,223,570 99,405,625 14,817,945 187,396,965 161,055,880 26,341,085 13 14
1971 142,473,570 103,637,295 38,836,275 329,870,535 264,693,175 65,177,360 27 20
Detail au 30 Novembre 1972
Prats Remboursements Encours Encours Dettes/Pr@ts
Semences 169,086,305 137,102,135 31,983,970 190/0
Engrais 134,138,305 112,535,125 21,603,180 160/0
Materiel 26,6\.!§,925 15 2 °55,915 11,590,010 43\.50/0
Total 329,870,535 264,693,175 65,177,160
Les arrie~s de remboursement comprennent tout l'encours des dettes contractees pour l l achat de semences et
d1engrais et une fraction seulement de l l encours des dettes afferentes a l l achat de materiel; les arri~res ~~
~~
represehtent" environ '18 % des prets accordes\. \.
N
1
\.
MALI
PR('\JE)' Dl? DEVE'"1'P?l¥R""!' "!T"'! P'T~E
SocieM de Cr~dit Agrico1e et d'Equipement Rural
Bilans resumes
(millions de FM)
Actif Passif ~janv\. 1971 1971 6 juin 1972
1er janv\. 1971 31 dec\. 1971 (\. juin 1972 31 dec\. 1972 31 dtk\.V72
Immobilisatians $0 181 42/ 311 Fonds proprea 1,2>4 1 ,718 T;fid
Valeur nette des /
immobilisations 1 13 18 16 23 Ex1s1ble a Ions terme 10 10 10
Autres act1fs Exigible a court
immob 1115 ees 37 163 411 288 tcrme 1,504 986 1,392 2,485
Stocks Y 1,260 802 1,711 2,521 Resultats 113 24 24
112alisable/
rlbnnn;"hle 1 1 448 1 1 380 1 1 006 l 1 1 05
t
TOTAL 2,758 2,363 3,144 4,237 2,758 2,363 3, Hi4 4,237
Apr~s amortissements
~ Apres provis ions
a) Fonds de roulement net
1,196 1,441
~
1,204 1,325
Stocks + realisable et disponible, exigible a court terme b) Ratio fonds de roule
b) Fonds de roulement net/stocks + disponible et realisable\. ment net/fonds de 44% 55% 48i 37;';
roule_nt brut
o-!I
~
(1)f:1
~::
\,\.1 -l
MALI
PRQTET DE DEVELOPPEMENT RURAL INTEGRE
Societe de credit et d'equipement rural
Co ertes
31 dBc\. 1971
6 juin 1972 31 die\. 1972
31 dBc\. 1971
6 jilin 1972
31 dBc\. 1972
1\. Co!!!pte\., d'exploitation
Stocks en d8but d'exercica 1\.260
802 1\.711 Stocks en fin d 'exercice
802
1\.771
2\.521
Achats 678
1\.996 , \.021 Ventes
1\.224
743
211
Charges d'exploitation 129
107 42 Subventions d1exploitation
158
252
115
Chargasfinanci~res 1
J4 60 Produits accessoires
2
Amortissallllnt 5
2 Produits financiers
14
4
Provisions 24
ReIll1ltats 127
17 Resultat\.,
258
TOTAL 2\.200 2\.965 2\.851 2\.200 2\.965 2\.851
2\. Comptes de profite et pertes
Partes d'axploitation 258 \.Beneficas d'exploitation 127
17
Pertes exceptionnelle\., 14 Profits exceptionnels
67
4
Subvention de eoutien des prix 215
\.Benefice 11] 2~ 21
TOTAL 127 282 21 127 282
21
~~§
~~
~ t?;l
I-'
I-'
»
ANNEXE 11
Tableau 5
MALI
Mat6riel !lrieole n6cessaire\. coltts et cr6dits a mazen teme
- __________________________
Ann~es-------------------
0 1
- 2 3 !i 2
I\. Quantitlls
Multiculteurs 1,300 2,050 2,550 3,100 3,750
Pies fouil1eurs 950 1,700 2,195 2,740 3,385
Souleveuses dtarachide 400 600 745 930 1,125
Semoirs 1,000 1,670 2,100 2,570 3,080
Jeu de roues pour charrettes 650 1,025 1,280 1,550 1,875
II\. Valeur (millions de FK) 11
~~1!E tot:iI renau agricUIteurs)
Mul\.ticulteurs
64\.7 102\.1 127\.0 154\.4 186\.7
Pies foui11eurs
4\.6 8\.2 10\.5 13\.2 16\.2
Arracheuses d 'arachides
2\.5 3\.8 4\.7 5\.9 7\.0
Semoirs
32\.3 54\.0 67\.8 83\.0 99\.5
Boues de charrettes
21\.5 33\.9 42\.4 51\.3 62\.0
Ettis de charrettes
?J 16\.3 25\.6 32\.0 38\.8 46\.9
Total 141\.9 227\.6 284\.4 346\.6 418\.3
III\. Finaneem\.ent
- Ventes au comptant 21 16\.3 25\.6 32\.0 38\.8 46\.9
- Ac omptes !!/ 28\.6 45\.9 57\.5 70\.1 84\.6
- Rem\.boursem\.ents des
agriculteurs 'i/ 28\.7 74\.7 103\.0 127\.5
Besoin net en credit a moyen
teme 57\.3 63\.4 40\.4 36\.8 41\.8
- Subvensions a la SCAER 39\.7 64\.0 79\.8 97\.9 117\.5
Total 141\.9 227\.6 284\.4 346\.6 41\.8\.3
1/ Voir annexe 11, tableau 4, liste des prix des factettrs de production\.
~/ Fabriqulls par des artisans maliens pour environ 25 000 FM Itunite\.
~I Y compris le co1tt des batis de charrettes\.
!il Un tiers de la valeur du mat6riel\.
21Pr@ts remboursab\.les en deux annui tes
AII1iEIE 11
Tilleau 6
Fa\. de production ea1eomd\., \.te at orid:I\.te de \. \. \. \. \. \. \.
QlTANTITES
Annhe 8
(a)~ ~ _3_ \.L et eneuite
\.2\. \.1\.
1\. Engrais (P 2 05' 21%; tormes) Y 2,350 3,195 3,590 4,585 6,165 6,490 6,690 6,825 6,825
2\. Fongicides (kg) V 3,560 4,830 6,070 7,560 9,480 10,980 11,310 11,550 11,550
3\. Lindane (kg) 11 755 2,42e 3,040 3,780 4,740 5,490 5,660 5,780 5,780
4\. Poids total deds~ces (tonnes) Jy' 10,950 21,020
dont: 21
Ssences produites par 1es agrlculteurs 9,370 8,805 11,580 12,795 14,010 14,275 15,760 16,260 16,260
Semences selectionnees fournies 1~~~ §\./ 1,580 2,695 3,610 4,455 4,950 5,705 4,800 4,760 4,760
(b) Sorgbo/mil
1\. Smnence\. (tonnes) Y 1,540 1,575 3,165 3,305 3,445 3,560 3,600 3,645 3,670
2\. Fongicides (kg) !Y 575 905 1,675 2,175 2,740 3,270 3,470 3,555 3,590
II YALE:1R (achate uniqo\.,t, million\. de HI) 'if IF) 'il
1\. Engrais
Au prix de revient \.!QI 88\.1 120\.0 134\.6 172\.0 231\.2 243\.4 250\.9 256\.0 256\.0
Au prix de vente officie1 94\.0 127\.8 143\.6 183\.4 246\.6 259\.6 267\.6 273\.0 273\.0
Benefices 5\.9 7\.8 9\.0 11\.4 15\.4 16\.2 16\.7 17 \.0 17 \.0
2\. Fongicides pour &rachides
Au prix de revient \.lQ1 3\.2 4\.4 5\.5 6\.8 8\.5 9\.9 10\.2 10\.4 10\.4
Au prix de vente officie1 5\.3 7\.2 9\.1 11\.3 14\.2 16\.5 17\.0 17 \.3 17\.3
BSnefices 2\.1 2\.8 3\.6 4\.5 5\.7 6\.6 6\.8 6\.9 6\.9
3\. ~
Au prix de revient \.!\.QI 0\.2 0\.6 0\.8 0\.9 1\.2 1\.4 1\.4 1\.5 1\.5
Au prix de vente officie1 0\.4 1\.2 1\.5 1\.9 2\.4 2\.7 2\.8 2\.9 2\.9
Benefice' 0\.2 0\.6 0\.7 1\.0 1\.2 1\.3 1\.4 1\.4 1\.4
4\. Semences d'arachides homo1oguhs W
Au prix de revient \.!QL
75\.0 128\.0 171\.5 211\.6 235\.2 228\.0 226\.1 226\.1
\.271\.0
Au prix de vente officie1 54\.5 93\.0 124\.5 153\.7 170\.8 196\.8 165\.6 164\.2 164\.2
3Jbvention s(pertes) 20\.5 47\.0
35\.0 57\.9 64\.4 74\.2 62\.5 61\.9 61\.9
5\. Fongicides pour sorpo
Au prix de revient \.!Q/
0\.4 0\.7 1\.7 2\.1 2\.5 2\.6 2\.7 2\.7
iIu prix de' vente officie1 1\.2 1\.8 3\.4 4\.4 5\.5 6\.5 6\.9 7\.1 7\.1
Ben~fice s 0\.8 1\.1 2\.1 2\.7 3\.4 4\.0 4\.3 4\.4 4\.4
III CREDIT NEX:ESSAIRE W
Total 148\.5 \.220\.8 268\.1 337\.1 417\.4 456\.4 433\.2 437\.2 437\.2
Supplement net annue1 148\.5 72\.3 47\.3 69\.0 80\.3 39\.0 (23\.2) 4\.0
65 kg/ha\.
100 g de thioral (rouge) pour lOQ kg de semences\.
Lindane: 50 g pour 100 kg de semences\.
100 kg/ha pour 1a var1~t~ 28-206 et 150 kg/ha pour 1a var1~t~ 47-10, en moyenne llO kg/ha\.
Semences produites par lea agriculteurs, selectionnees et non selectionnees\.
Quantite necessaire pour remplacer lea semences precedemment distribuees et couvrir les beso1ns dus A 1 'extens~n des superf~~~~\.~--"\.
13,5 kg/ha en moyenne; 10 kg/ha pour Ie mil et 15 kg/ha pour Ie sorgho\.
Environ 185 g de thioral (vert) pour 100 kg de semences\.
Voir Tableau 1, liste des prix des facteurs de production\.
Comprend les charges admin1strat1ves et f'inancH~res de la SCAER\. lea f'rais de livraison et une commission de ~ pour lrOp~ration arachide\.
Lrapprovisionnement et Ie f'inancement des semences sont conf'il§s h\. lrOpl§rat1on arach1de, la SCAER ~tant responsable des autres f'acteurs de
production
Seuls les engrais et les semences am~lior~es sont f'ournis h\. credit\. Les prix de vente of'f'iciels ont ~t~ utilises pour calculer Ie
montant des cr~dits necessaires\.
Jo
MALI
ens de financement
coles !/
Annae 1 2 2,\. ~ 2 TarAt
I\. Matirie1: total 2/ 227\.6 284\.4 346\.6 418\.3 1,418\.8
tnon subVentionnl)
141\.9
Contribution des agricu1teurs V 44\.9 100\.2 164\.2 211\.9 259\.0 780\.2
Cradi t a moyen terme y 57\.3 63\.4 40\.4 36\.8 41\.8 239\.7
Subventions 39\.7 64\.0 79\.8 97\.9 117\.5 398\.9
II\. Facteurs de troduction saisonniers: total ~ 146\.8 226\.1 311\.3 361\.3 1,132\.3
~lX)n subventonn's )
Contribution des agriculteurs V 3\.3 79\.4 130\.3 203\.8 287\.7 704\.5
Supp1fment de credit 72\.3 47\.3 '69\.0 80\.3 39\.0 301\.9
Subventions 11\.2 20\.1 26\.8 21\.2 34\.6 119\.9
III\. Total des facteurs de Eroduction (I + II) 228\.1 314\.4 510\.5 651\.9 119\.6 2,551\.1
(non subventionnAs)
Contribution des agriculteurs V 48\.2 119\.6 294\.5 415\.1 51i>\.1 1,484\.1
Supp1mtent de cr6dit fourni par la SCAER 4/
(moyen terme et cNdit de campagne) - 91\.1 19\.2 80\.2 100\.0 54\.8 405\.3
Credit de campagne fourni par 1 10A (semences) 38\.5 31\.5 29\.2 11\.1 26\.0 142\.3
Subventions 21 50\.9 84\.1 106\.6 125\.1 152\.1 518\.1
1/ Sans compter 1es pi~ces d6tach6es" 1es semences de sorgOO et de mil fournies par 1es agriculteurs\.
~~
"'1/
Comprend 1es instruments aratoires et 1es bttis de charrettes
~ Ventes au comptant" acomptes et remboursements\.
I z\.k>ntant net du cradit supp1lrnenta1re necessaire\. ' (DB
2/ Principalement pour 1es semences" compte tenu des benefices realises sur 1es autres facteurs de production\. ~I-'
-\.31-'
\.-,\.
MALI
PROJET DE DEVEIOPPEMENT RURAL INTEGRE
corns DU PROJET
(en millions de francs maliens)
Tableaux de TOTAL Cout en Devises
reference 1 2 4 L (Millions (Milliers ~ (Millions (Milliers
2- -
de FM) de $)
de FM) de $)
I\. SOUS PROJET PRINCIPAL
Batiments 2 103\.3 392\.6 404\.6 6\.0 906\.5 1,813 29 262\.9 526
Materiel et mobilier 2 6\.6 73\.0 71\.7 3\.9 155\.2 311 60 93\.1 186
Vehicules 3 104\.7 160\.9 30\.7 46\.7 119\.1 462\.1 924 60 277 \.3 555
Assistance technique 4 191\.3 263\.0 227\.8 173\.8 164\.3 1,020\.2 2,040 80 818\.8 1,638
Personnel malien !I 5 14\.1 63\.3 85\.6 92\.5 97\.0 352\.5 705
Charges d'exploitation !I 6 90\.8 160\.4 166\.8 141\.4 123\.8 683\.2 1,366 53 362\.1 724
Total I 510\.8 1,113\.2 987\.2 464\.3 504\.2 3,579\.7 7,159 51 1,814\.2 3,629
II\. SOUS PROJEr ANNEXE
Amelioration des pistes rurales !I 7 256\.6 73\.0 73\.0 8\.0 410\.6 821 51 209\.4 419
Alphabetisation fonctionnelle !I 8 55\.8 86\.8 42\.8 185\.4 371 50 92\.7 185
Recherche 9 34\.7 44\.7 56\.3 45\.3 25\.7 206\.7 414 48 99\.2 198
Assistance medicale !I 10 39\.1 39\.2 38\.1 55\.3 171\.7 343 45 77 \.3 155
Assistance veterinaire I} 11 43\.0 26\.0 14\.8 26\.5 17\.3 127\.6 255 49 62\.5 125
Unite d'evaluation 12 25\.4 38\.6 38\.2 54\.6 156\.8 313 43 67\.4 135
Etudes y 45\.0 45\.0 90 100 45\.0 90
Total II 133\.5 523\.6 264\.7 221\.1 160\.9 1,303\.8 2,607 50 653\.5 1,307
Total I + II 644\.3 1,636\.8 1,251\.9 685\.4 665\.1 4,883\.~ 9,766 51 2,467\.7 4,936
III\. FACTEURS DE PRODUCTION AGRICOLES 2I 13 228\.7 374\.4 510\.5 657\.9 779\.6 2,551\.1 5,,103 67 1,718\.8 3,437
IV\. FONDS RENOUVELABLEV 14 24\.2 14\.0 4\.7 8\.9 51\.8 104 60 31\.1 62
Total I a IV 897\.2 2,025\.2 1,767\.1 1,352\.2 1,444\.7 7,486\.4 14,973 56 4,217\.6 8,435
V\. IMPREVUS
Hausse des prix 59\.6 261\.4 304\.9 402\.9 582\.0 1,610\.8 3,222 56 896\.5 1,793
Depassement des quantites 44\.8 101\.1 88\.4 67\.6 72\.2 374\.1 748 56 210\.7 421
Total imprevus 104\.4 362\.5 393\.3 470\.5 654\.2 1,984\.9 3,970 56 1,107\.2 2,214
TOTAL GENERAL MILLIONS DE FM 1,001\.6 2,387\.7 2,160\.4 1,822\.7 2,098\.9 9,471\.3 56 5,324\.8
Milliers de $ 2 1003 4 1 775, 4 1 321 3 1 645 4 1 199 18,943 56 10 1649
VI\. DROITS ET TAXES D'IMPORTATION 16 78\.0 233\.0 169\.5 84\.7 81\.6 646\.8 129\.4
!I Cofits supplementaires\.
g; Etude sur les prix payes aux producteurs et les mecanismes de commercialisation des cereales et mission d'assistance comptab1e a l'OACV\.
~~
3/ Facteurs supplementaires, aux cofits non sUbventionnes\. \>'f:1
~ Pour les motocyclettes et bicyclettes du personnel et le materiel de forge\.
~ '"
r'i;:;
25 avril 1974
ANNEXE l2
Tableau 2
~
PRCJ ,:r DE DEVELOPPEMENT RURAL lllTffiRE
IJQut l\nnee 2 Anmle 4 TOTAL
-unitaire unite coat Unit" Cout Unite CoUt
!\\. BP,TJMENTS
l\. Hangars: ISO ",2 9\.S 1 9\.8 1 9\.8
100 m2 5\.9 2 11\.8 5\.9 3 17\.7 5 35\.4
75 m 2 4\.3 19 81\.7 4\.3 2 8\.6 22 94\.6
Total partiel 103\.3 10\.2 26,3 139\.8
2\. L05e:r\.J\.ents: 165 1112 19\.4 4 77\.6 4 77\.6
140 m2 15\.0 6 90\.0 6 90\.0
130 m2 14\.0 7 98\.0 7 98\.0
80 m2 8\.9 12 106\.8 26\.7 15 133\.5
'l'otal partiel 372\.4 26\.7 399\.1
3 J,'Lweaux: Siege 200\.0 1 200\.0 1 200\.0
5 pieces 8\.4 3 25\.2 3 25\.2
3 5\.4 5 27\.0 5 27\.0
2 3\.8 18 68,4 18 68\.4
':eotal partiel 320,6 320\.6
4\. Gara~es et ateliers
Bamako 4\.0 4\.0
Banamba 6\.0 6\.0
Kita 20\.0 20\.0
Mahina 11\.0 11\.0
Kenieba 6\.0 6\.0
'l'ote~ partiel 10\.0 31\.0 6\.0 47\.0
Total biitiments 103\.3 392\.6 404\.6 6\.0 906\.5
B\. MATERIEL ET MOBlLIER
l\. Hangars: 75 m2 0\.3 19 5\.7 0\.3 2 0\.6 22 6\.6
100 m2 0\.4 1 0\.4 0\.4 3 1\.2 5 2\.0
180 ro 2 0\.5 1 0\.5 1 0\.5
Total partiel 6\.6 0\.7 1\.8 9\.1
2\. Loserr\.ents: 165 m2
2\.8 4 11\.2 4 11\.2
130 m2
2\.4 7 16\.8 7 16\.8
80 m 2 1\.9 12 22\.8 3 5\.7 15 28\.5
To tal parti el 50\.S 5\.7 56\.5
3\. B'JIeaux; Siege 25\.0 1 25\.0 1 25\.0
5 pUce\. 2\.0 3 6\.0 3 6\.0
3 1\.2 5 6\.0 5 6\.0
2 0\.5 18 9\.0 18 9\.0
Tota\.l partiel 46,0 46\.0
4\. Garages et ateliers
Bamako 9\.1 9\.1
Banamba 3\.9 3\.9
Kita 11\. 7 11\.7
Mahina 6\.5 6\.5
Kenieba 3\.9 3\.9
'::otal partiel 13\.0 18\.2 3\.9 35\.1
5\. Materiel pour 1a formation 8\.5 8\.5
Total mobilier et materiel 6\.6 73\.0 71\.7 3\.9 155\.2
':eOTAL :JENERAI 109\.9 465\.6 476\.3 9\.9 1,061\.7
,",
20 septe\.'llbre 1973
~
,
PROJET DE DE'lELOPPEMENT RURAL llITElJRE
A\. PERSONNEL £inoluments
\.L \.J\.
~:on\.seiller dl! :)\.G, 22\.50 22\.50 22\.50
Chef departement 20\.00 20\.00 20\.00
20\.00 20\.00 20\.00
cult\U'e 13\.00 13\.00 13\.00 13\.00
15\.50 15\.50 31\.00
15\.50 )1\.00
15\.50 15\.50 1550
Cor:\.seillers tec:miques 15\.50 4 62\.00 5 77\.50 77\.50 46\.50 46\.50 20 310\.00
C;,'<cseJ~'-"'rs techniques 13\.30 1)\.30 2 26\.60 26\.60 26\.60 1)\.30 106\.40
Total partie: 146\.)0 12 190\.60 10 152\.60 106\.10 92\.80 44 688\.40
MissionS d' appui
- technique 2\.70 2\.70 2\.70 2\.10
13\.50
)\.30 3\.30
)\.)0 3\.)0 16,50
- formation
T:rtHO 3\.10 3\.10 3\.10 3\.10 15\.50
~otal ptrtie: 9\.10 9\.10 9\.10 9\.10 45\.50
155\.40 199\.70 161\. 70 115\.20 101\.90 733\.90
Accroisserr\.en~ \. 10\.90 29\.00 36\.40 35\.90 41\.00 15)\.20
Tc>tal pa !'tiel 166\.)0 228\.70 198\.10 151\.10 142\.5'J 887\.10
25\.00 34\. )0 29\.70 22\.71 21\.40 133\.10
':'otal personnel 191\.30 263\.00 227\.80 173\.80 1,:)20\.20
:3\. VEEICULES Prix uni i,;a\.ire
a"\rec droi ts Droits
la ~ d! importation < d' importation
Ccnseiller D\.G\. Modhle commercial 2\.50 0\.60
Chef iepartement Cwnionnette 2\.20 0\.50 2\.20 4\.40
Chef service C'll\.tUI'e Camionnette 2\.20 0\.50 2\.20 2\.20
Voi ture leghe 1\.60 0\.40
materiel V~hi cule a 4 roues )\.60 1\.30 3\.60 )\.60
l'l1Otrices
2\. ~ors siege
Conseillers tecl>\.niques Ca\.m\.ioMette 0\.50 2\.20 6\.60 2\.20 11\.00
Vehicule a 4 roues 1\.30~__~3~\.60~__- ,__~10~\.~8~0________~____~__~3~\.60~__~___7~\.~2~0__~____~2~5\.~20~__
motrices
Tctal vehicules 8\.00 21\.00 2\.20 8\.00 7\.20 16 46\.40
3\. Droi":\.!; d'i,,~portatiOL\. (p,'!il\.) Camionette 0\.50 1\.CXJ J
1\.50 0\.50 1\.00 8 4\.00
Vehicule a 4 roues 1\.30~__~1~\.3~0~__~4___5~\.~2~0________~____~__~I~\.3~D~__~~2~\.~6~0__~8~__~10~\.~4~0___
motrices
TotaL drQits d' importation 2\.30 6\.70 0\.50 2\.)0 2\.60 16 14\.40
1\. Location et entretien \.:ogements
1\.8() 1\.80 3\.60
1\.8C 1\.80 1\.80 2 3\.60
1\.80 1\.90 1 1\.80 1\.80 1\.80 5 9\.00
1\.56 1\.56 11 1\.56 1\.56 1\.56 5 7\.80
1\.56 1\.56 1\.56 3~ 12
1\.56 1\.56 1\.56 3\.12
Total pe\.rtiel 6\.72 6\.28 4\.92 336 3\.J6 16 26\.64
b) Hers siege
(zone) 0\.60 300 1\.80 20 12\.00
(secte:n'; 0\.)0 0\.60 0\.30 8 2\.40
Tota\.l :pe\.rtie1 2\.70 3\.60 )\.60 2\.10 14\.40
Total location{entretie-n 9\.42 12 11\.86 1-] 8\.52 5\.76 6 54\.6 41\.04
Entretien et fonctionnement v&\.icules Co1t annuel
(lIlilllere »t)
a)~
Conseiller du D_G\. (Mod\. Com\.) 70 1\. 75 1\.15 1\.75 2 )\.50
Chef departement te:::hnique (CaJI'\.ionnette) 70 1\. 75 1\.75 1\. 75 1\. 75 1\.75 1\.75 5 8\.75
Chei' service attel~e (Camionnette) 10 1\. 75 1\. 75 1\. 75 1\. 75 1\. 75 1\. 75 5 8\.75
Admir:istre\.teU!" legere) 50 1\.25 1\.25 1\.25 2 2\.50
Ing~nie-\lI' roues motrices) 90 2\.25 2\.25 2\.25 2 4\.50
'[ota,l partie::' 6\.50 8\.75 5\.75 350 3\.50 16 28\.00
b) !-lars siege
Camicnnette 7J 1\.75 3 5\.25 )\.50 11 19\.25
V&'icule 4 roues motrices 90 9\.00 4 9\.00 6\.75 17 38\.25
Total petie: 10\.75 lL\.25 14\.25 8\.00 57\.50
Total fonctionnement vehicules 17\.25 23\.00 20\.00 11\.50 85\.50
Total charges de fonctior\.ne!!<ent 26\.67 34\.88 19\.51
318\.88 258 \.52 201\.31 168\.46 1,193\.14
6 octob"" 1973
ANNEXE 12
Tableau 5
~
PROJE\."r DE DEVEWPPEMEliT RURAL INTIDRE
SalaiTe
\.1\. Total
A\. Siege ~ l 2\. l \.l!\.
Directeur General\. 1,920 1,920 1,920 1 1,920 1,920 1,920 5 9,600
Directeur
Directeur
General Adj oint
Technique Adjoint
1,500
1,2&1
1,500
1,2&1
1,500
1,260
1
1
1,500
1,260
1
1
1,500
1,2&1
1,500
1,260 ,\.
5 7,500
6,300
Assistant du Directeur Tecr\.nique 1,140 1,140 1,140 1 1,140 1 1,140 1,140 5 5,700
Chef adjoint service culture attelet:! 1,260 1,260 1,260 1 1,260 1 1,260 1,2&1 5 6,)00
Chef r:ersonnel 1,260 1,2&1 1,260 1 1,260 ,1 1,260 1,260 ;; 6,)00
1,2&1 1,260 1,260 1 1,260 1 1,260 1,260 5 6,)00
Chef' comptab1e
1,140 1,140 1 1,140 1 1,140 1,140 4 4,560
comptabJ\.e 5,700
l'lnp1oye 1,140 1 1,140 1,140 1 1,140 1 1,140 1,140 5
1,140 1 1,140 1,140 1 1,140 1 1,140 1,140 5 5,700
Chef
Employes aux ecritures 6)0 8 5,040 5,040 8 5\. ow 8 5\.040 5,040 40
)
25,200
9,000
Secretaires (E) 3,000 2 6,000 1 ),000
Secretaires 420 2 840 4 1,680 6 2,520 6 2,520 6 2,520 24 10,080
Chauffeurs 400 10 4,000 9 ),600 9 ),600 8 ),200 8 3,200 44 17,600
145 4 580 4 580 4 580 4 580 4 580 20 2,900
145 8 1,160 8 1,160 8 1,160 8 1,1&1 8 1,160 40 5,800
Manoeuvres 100 10 1,000 10 1,000 10 1,000 10 1,000 10 1,000 50 5,000
Technicien audio-visuel 1,150 1,150 1 1,150 1,150 1 1,150, 1 1,150 5 5,750
Total personnel siege 54 31,650 55 30,230 56 28,070 :55 27,670 55 27,670 275 145,2';10
B\. Hors sH:Sje
Chefs secteurs 1,2&1 6 7,560 8 10,080 9 11,340 9 11,340 9 11,340 41 51,660
Chefs SOUs-scteurs 745 18 1),410 23 17,135 26 19,)70 26 19,)70 26 19,370 119 88,655
Chefs secteurs de base 240 191 4:5,BW 278 66,720 )08 7),920 308 73,920 308 73,920 1,393 334,320
Employes aux ~cri tures 630 23 14,451) 28 17,640 35 22,050 41 25,830 46 28,980 173 108,990
Agents culture atte1ee 630 8 5,040 10 6,300 11 6,930 11 6,930 11 6,930 51 32,1)0
Secretaires 420 8 3,360 10 4,200 11 4,620 11 4,620 11 4,620 51 21,420
Chauffeurs 400 38 15,200 54 21,600 54 21,600 54 21,600 54 21,600 254 101,600
Gardiens 145 23 3,)35 29 4,205 34 4,'9)0 34 4,9)0 34 4,930 154 22,330
29 4,205 34 4,9)0 34 4,930 34 4,930 154 ~2,JJO
Messagers 145 23 3,335
Manoeuvres 100 28 2,800 34 3,400 40 4,000 47 4,700 53 5,)00 202 20,200
Total personnel hors siege 366 114,)70 503 155,485 562 173,690 :515 178,170 586 181,920 2,592 803,635
c\. Ateliers et s\.ar~es
1) Siege
Inspecteur teclmique 1,260 1,260 1 1,260 1 1,260 1,260 4 5,040
Employes (comptabili te rnatiere) 420 420 2 840 2 840 840 7 2,940
2) Hors siege
Chef garage pri:1\.cipal 6)0 1 6)0 2 1,260 1,260 5 3,150
Chef adjoint garage 480 3 1,440 3 1,440 ) 1,440 ) 1,4LD ) 1,440 15 7,200
Mecu\.niciens 420 5 2,100 ;; 2,100 8 ),)&1 10 4,200 10 4,200 38 15,960
Electriciens 420 1 420 1 420 2 840 2 840 2 840 8 ),360
Aide-m~ce\.niciens 240 7 1,680 8 1,920 9 2,160 10 2,400 10 2,400 44 10,5&1
Magasinier/ employe de bureau 240 2 480 2 480 2 480 2 480 B 1,920
Pompiste 145 435 3 435 4 580 5 725 5 725 20 2,900
Gardiens 145 3 435 4 580 4 580 5 725 16 2,320
Manoeuvres 100 3 300 4 400 4 400 5' 500 16 1,600
Total garages et ateliers 19 6,075 )0 9,210 40 12,570 45 14,425 47 14,670 181 56,9:50
Total salaires personneL 439 152,095 588 194,925 658 214,330 675 220,265 668 224,260 ),048 1,005,875
D\. Charges sociales 1% 22,815 29,240 32,150 33,040 33,640 150,885
TOTAL GENERAL 174,910 224,165 246,480 253,30:5 257,900 1,156,760
!I 160,860 160,860 160,860 160,860 160,860 804,300
Cout projet en cours
coilts supplementaires 14,050 6J,305 85,620 92,445 97 ,040 352,460
!I 139,874,000 FM, :?lus 15% de charges socia\.les
26 juillet 1973
AlINEXE 12
Tableau 6
!'!!ll
PROJE'J' DE DEVELOPPEMENT RURAL INTlillRE
JeEenses de fonctionnement
(Minions de PM)
'roTA!\.
A\. DEPENSES GENERALES 4 5 (1 to 5l
l\. Siege
Papeterle, timbres, telephone 9\.6 12\.6 12\.6 12\.6 12\.6 60\.0
Electricite, gaz, eau 2\.8 3\.0 )\.0 )\.() )\.0 14\.8
Entretien bureaux 1\.0 1\.5 2\.0 2\.0 2\.0 8\.5
logements 1\.0 1\.5 2\.5 2\.5 2\.5 10\.0
Formation pro:fessionnelle 10\.5 22\.5 23\.5 10\.5 10\.5 71\.5
Frai s medt caliX 1\.5 1\.7 2\.0 2\.0 2\.0 9\.2
::;eplacements locaux 1\.4 1\.5 1\.6 1\.6 1\.6 7\.7
Verification comptable 18\.0 16\.0 14\.0 12\.0 60\.0
Total partiel 27;S 62\.3 63\.2 48\.2 46\.2 247\.7
:Iors siege
telephone 1\.5 2\.0 )\.0 3\.0 3\.() 12\.5
eau 0\.6 1\.0 2\.0 30 30 9\.6
bureaux, hangars 1\.0 1\.5 2\.0 2\.5 3\.0 10\.0
Total partiel 3\.1 4\.5 7\.0 8\.5 9\.0 32\.1
Garages
0\.5 1\.0 1\.5 1\.5 1\.5 6\.0
0\.5 1\.0 2\.0 2\., 2\.5 8\.5
1\.0 2\.0 3\.0 3\.5 4\.0 13\.5
Quti llage, carburants, Wbrifiants
2\.0 3\.0 4\.0 5\.0 6\.0 20\.0
Total partiel
L\.o 7\.0 10\.5 12\.5 14\.0 48\.0
Total de:Qenses generales 69\.2
34\.9 73\.8 SO\.7 69\.2 327\.8
B\. ~ (entretien et :fonctionnement)
FM/m Milliers FM/ an
l\. sH:ge U::-5\.000 km/an)
Vehicule commercial 70 1,750 2 3\.5 2 3\.5 2 3\.5 2 )\.5 2 3\.5 10 17\.5
Camionnette 70 1,750 2 3\.5 2 3\.5 2 3\.5 2 3\.5 2 3\.5 10 17\.5
Fourgonnette 4\.5
Vehicule a 4 roues motrices
60 1,500 3 4\.5 3 4\.5 3 4 6\.0 4 6\.0 17 25\.5
90 2,250 1 1 2\.2 1 2\.3 2 4\.5
Total siege, entretien et fonct1onnement des 11\.5 7 11\.5 11\.5 15\.2 39 65\.0
vebicules 9 15\.3
2\. Hors siege et garages (20\.000 1m>\./anl
Camionnette 70 1,750 A '4\.0 16 28\.0 16 26\.0 16 28\.0 16 28\.0 72 126\.0
Vehicule a 4 roues motrices 90 2,250 22 23 51\.7 29 65\.3 )0 67\.S 30 67\.5 :1)4 301\.5
Camions legers
49\.5
110 2,750 4 11\.0 5 1)\.7 5 13\.7 5 13\.8 5 13\.8 24 66\.0
Total partiel
34 74\.5 44 93\.4 50 10i\.O 51 109\.3 51 109\.3 230 493\.S
'Total oar tiel Siege/Hors siege/Garages 86\.0 104\.9 118\.5 124\.5 124\.6 558\.5
Diminution des coUts attribuable a l' ~lioration des routes i 5 10 20
Total partiel net Siege/hors siege/CaTsges 86\.0 104\.9 88 112\.6 112\.1 99\.7 515\.3
90 5\.7 74 6\.7 88 7\.9 99 8\.9 109 9\.8 433 )9\.0
)0 4\.6 171 5\.1 252 7\.6 265 8\.0 260 7\.8 1\.10)
10\.3 11\.8 15\.5 16\.9 17\.6 72\.1
Camions, transports divers
(4\.'XXl 1m>\./anJ 130 520 57 29\.6 61 )1\.7 56 29\.1 49 25\.5 47 24\.1, 270 140\.0
Diminution des couts due a 1 t amelioration des routes i 1\.0 20\.0 30\.0
Total partiel camion/divers 29\.6 31\.7 26\.2 20\.1, 17 \.1 125\.0
Total, entretien et :f'onctionnement vehicules 125\.9 148\.4 154\.3 149\.4 134\.4 712\.4
Total A+B 160\.8 222\.2 235\.0 218\.6 203\.6 1\.040\.2
Depenses a\.u titre du projet en cou:rs d execution
I
96\.7 96\.7 %\.7 g6\.7 96\.7 463\.5
Couts supplementaires 11 64\.1 125\.5 138\.3 121\.9 106\.9 556\.7
c\. roUR PERSONNEL ASSISTANCE TBCHN UR 26\.7 14\.9 28\.5 19\.5 16\.9 126\.5
TOTAL GENERAL COUTS SUPPLEMENTAIRES %\.8 160\.4 166\.8 141\.4 123\.8 683\.2
20 septe\."l1bre 1973
1) Total AB moins depenses au titre du projet en cours
2) Accroissement des couts + depenses fonctionnemt'!nt personnel assistance technique
MALI
PROJEr DE DEVEI£PPEMENT RIJRAL INTffiRE
AMELIORATION DES PlSTES RURALES
(Milliers de FM)
Prix uni taire
Droits
(avec droits d'il!Iporta
Total
2 3 4 5
d' il!Iporta tion) tion
1\. VEiliicules et materiel
Camion-benne 7 T 7,500 1,500 17 127,500 17
stock initial de pieces de rechange 16,000 3,000 16,000
Niveleuses (120 CV) 17,000 3,500 2 34,000 2
Petit outillage et materiel 3,000 500 3,000
Vehicule 4 roues matrices 3,600 1,300 3,600
Total\. partiel 184,100 184,100
2\. Personnel (Sa\.l\.a\.1re annuel)
Inspecteurs des travaux routiers 1,260 1 1,260 1 1,260 3 3,780
Employe de bureau/dactylographe/comptable 2 840 2 840 2 840 6 2,520
Chefs d'equipes 4 1,920 4 1 ,920 4 1,920 4 1,920 16 7,680
Mecaniciens 4 1,680 4 1,680 4 1,680 12 5,040
Chauffeur 1 400 1 400 1 400 3 1,200
Gardiens 8 1,160 8 1 ,16o 8 1,160 24 3,480
Manoeuvres 68 6,800 68 6,800 68 6,800 32 3,200 236 23,600
Temporaires 3\.000 1\.000 1,000 1, 000 6\.000
Total partiel 3,000 15,060 15,060 15,060 5,120 53,300
3\. Depenses de fonctionnement
Camions-bennes (20,000 km/anl FM/km 130 FM 2,600,000/an 7,000 17 44,200 17 44,200 17 44,200 4 10,400 150,000
Niveleuses (200 jours/an) FM/jour 33,500 liM 6,700,000/an 2 13,400 2 13,400 2 13 ,400 1,480 41,680
Bulldozers ( 30 jours/an) liM/jour 77,000 FM 2,300,000/ an 2 4,600 2 4,600 2 4,600 1),800
Vehicule 4 roues motrices (25,000 km/an)FM/km 90 FM 2,250,000/an 1 2,250 1 2,250 1 2,250 6,750
Entretien et renouvellement
petit outillage 500 1,000 1,000 500 3,000
Materiaux de construction 2,000 2,000 2,000 500 6,500
Frais de bureau 500 500 500 1,500
Total\. partiel 7,000 67,450 67,950 67,950 12,800 223,230
Total\. 10,000 266,610 83,010 83,010 18,000 460,630
Depenses au titre du projet en cours d'execution 10,000 10,000 10,000 10,000 10,000 50,000 ~§i
COUTS SUPPLEMENTAIRES 256,610 73,010 73,010 8,000 410,630
tdl1
~ t>J
--'II;;
y 600,000 331,000 931,000
4\. Projet routier du FAC
Y\. La subvention du FAC est destinee a remettre en etat 438 km de pistes de type B desservant les secteurs de l'ouest de la zone du projet\.
Le cout de ce programme n'est pas incIus dans Ie coftt du projet de l'IDA qui ne couvre que les ameliorations ponctuelles des
rurales\. II est neanmoins indique pour memoire,etant donne qu'il a ete special\.ement con~u pour faciliter les activites que
l'OA dans cette reg~on ou lesliaisons routieres font defaut\. D'autres projets analogues de l'IDA, qui seraient egal\.ement a
faciliter l'execution du projet, sont exclus eux aussi des couts du projet de l'IDA\.
30 decembre 1973
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
Alphabetisation fonctionnelle
(milliers de FM)
CoUt unitaire 2 3 4 5 TOTAL
1\. Etude d I evaluation 45,000 45,000
2\. Investissements:
Materiel 36 490 17,640 255 9,180 200 7,200 945 3\.4,020
Vehicules ~~\. \._-_ 6,360
24,000 9,180 7,200 40,380
3\. Formation profess;ionnelle
2 animateurs par centre 9 980 8,820 510 4,590 400 3,600 1,890 17,010
4\. Visites technigues
Personnel expat~ie 10,000 9,000 9,000 28,000
5\. Personnel
Si~ge - zones et regions 28,000 32,000 34,000 94,000
6\. 'Fone tionnement
Si~ge - zones et regions 18\.QO~ 2Q~00 22,000 60,000
88,820 119,770 75,800 284,390
7\. Depe~ses au titre du projet en cours 33,000 33,000 33,000 99\.000
8\. coat sUpplementaire d1execution 55,820 86,770 42,800 185,390
7 juillet 1973
I~3jiZ
-'
[~
c '"
\.l\. \.L l \.L \.L ~
A\. RECHERC: IE SUR LF,s CEREh1ES
1\. Vehieules
2,200
Camiormette 2,200 <,2W
f~ i a~,ions se('or\.daires
2,500 1,000 3,500
Preparation du sol, <:16turage, hangars
500 1,000 1,500
~~\.~rlel\.~
4\. ?er;wrmel
1 1 1,400 1 1 1,140 1 1,140 5
4 860 4 4 860 4 860 ,,0
Chef d 'equip
4
4 4 580 4 4 560 I; 560 20
(;ardien 6 8 Boo 8 B 8w B 800 40
f\.1aCloeuvre 100 4~) 200
40 2,000 40 2,000 40 2,(X)O 40 2,000 2,000
?ersonnel teMpora\.i re ')0
5,}80 5,}80 5,\.180 5,380 5,)80 26,900
Total partiel
fleEer\.ses de fon~tionnement
ann~e proj et 700 700 },500
F'M/km/an 70 ),000
600 600
E:ngrais~ sen;e~ces, etc\.
Total partiel
11 ,880 8,680 6,680 6,680 6,68C 40,600
Total cere-ales
~Rr;HE SUI{ LES AMeRIDES
1\. ~
2,200 2,200 2:,200 L,L00
Calnio:met te
i,700 1,700
<\. ~teriel - Mobil:ier
PersoIl\.'1el
IRHO 8,000 8,000 8,000 8,000 8,000 40,000
Assistance
550!an 6 6 3,000 6 ),000 6 3,000 6 3,000 15,000
Assist\.ants
420/an 1 1 420 420 1 h20 420 2,100
400/ar\. 1 1 400 400 1 400 400 2,000
l45/ar\. 1 1 145 145 1 145 145 725
Gardier\. 700 7 700 700 ),500
lOa/an 7 7 700
Manoeuvre
12,665 12,665 12,665 1<',665 12,665 6J,}25
4\. !Jepenses de fonctionnement
1,400 1,400 1,400
Ca"llior\.nette km!an) m/km 70 1,400/""
500
500 500
;)eplacements 500 500
500
?::ais de burea\.u 2,000 2,000 2,000
Logements, en;"reLien, loyer, electrici te 400 400 400
Peti t materiel 400 400 400
F'ourni tures de labcratoire 200 200 200
Sereences, engrais, etc\. 700 700 7W 700
Analyse chimique et
22,865 18,965 16,965 21,165 18,965 100,925
Total recherche arachides
C, PEllOWCIE
~
1:1 11 rO'Ges matrices ,,600 ),600 ),600
J50 150 500
2\. ~
\. ~
Assistance technique IRAT 1,140 9,000 18,000 9,000 36,000
1,140 1,140 2,280 1,140 4,560
Assistant
C~a:ui'f'eU!' 400 400 800 400 1,600
100 200 500 200 800
Jllluoeuvre
10,'140 21,480 10,740 42,960
4\. Denenses de fonctionne:ment
km/an) m/km 90 2, 250/an 2,250 1,125 4,500
Vehic1ile 4 roues motrices (20\.000
2,400 1,200 4,800
Analyses 4,4UO 8,800
4,400
Rapport et preparation des cartes
17,015 30,680 17 \.465 65\.160
'I'otal pedologie
34,745 44,660 56,325 4S,}1O 25,645 206,685
TOTAL GENERAL
4 septerr:\.bre
\.!:!!!d
PROJET DE DEVELOPPEMENT RURAL llfl'OORE
Assistance mlldicale
(H1lliere de Fk)
Cout
uniteire _1_ \.L \.L \.JL \.£ ~
1, Vehicules
4 roues motrices 3,600 3 10,800 2 7,200 (3) 10,800 8 28,800
2\. Bitiments
Dispensaires 5,000 5,000 10,000 15,000 35,000
3\. Hatllriel
Technique 1,800 600 2,400
De camping 1,000 500~ 1,500
2,800 600 500 3,900
11, Personnel
Agents de l'Etat 10,1132 10,1132 10,432 10,1132 10,1132 52,160
Assistants 1105_ \.__ -__ 6 8~2~ 10
2,1139 _ _ 4,050 10 1I~~ 13\.770
10,1132 12,862 13,672 111,l,j82 14,482 65,930
5\. Fonciionnement
Vehicule 4 rouee motrices (25\.,900 km/an) :FWkm 90 ) 6,750 5 11,250 5 11,250 5 11,250 18 110,500
Motocyclettes FWm 7,500 6 5110 8 720 10 900 10 900 )11 3,060
BicycleUes FWm 2,500 18 540 24 720 )0 900 )0 900 102 3,060
Entretien des bitilllents existents 4,750 11,750 11,750 4,750 4,750 23,750
Nouveaux bit:lments 250 500 1 1 °00 1 1 750 31 200
4,750 12,830 17,940 18,800 19,550 73,870
6\. ~dicaments 10,000 1° 1°00 10 1°00 1°1°°0 11°1°00
Total 15,182 511,292 54,412 53,282 70,332 247,500
7\. Depen:es au titre du projet en cours 15\.JJ~_1" 182 15,182 1,,182 __ __ 1S,l§\.2 75,910
liiliiita
coOTS SUPPLEMENTAIRES 39,110 39,230 38,100 55,150 171,590
~
i
~t:J
b~
7 octobre 1973
MALI
Assistance vlterinaire
(Milliers de FM)
AnneE 1 2 ---\.L 4
Coat
1:nitaire Total
1\. ~: Enclns de desinfection 1,400 9,800 2,800 12,(00
2\. Veh~
Camionnette 2,200 4,400 2,200 2 4,400 2,20CJ ( 1),200
aL roues matrices ),(00 7,200 2 7,200 4 14,400
11,/'>00 2,200 11,600 2,200 27,(00
)\. Materiel
Cong61ateurs 400 7 2,800 2 800 ),600
Petit materiel et glacieres 60 11 660 ) 180 120 180 4 240 2) 1,)80
),460 980 120 180 240 4,980
4\. Personnel l\. Sal\.)
Assistant veterinaire 1/ 405 4 1,620 5 2,025 5 2,025 5 2,025 5 5,025 24 9,720
Extemes y )21 ) 96) 4 1,284 4 1,284 4 1,284 4 1,284 19 6,099
Agents de la vaccination V 101 8 808 10 1,01 0 10 1,010 10 1,010 10 1,01 0 48 4,848
),)91 4,)19 4,)19 4,)19 4,)19 20,667
" Fonctionnement
Vehicules (2~ \.000 km/an) FM/km 90 4 9,000 5 11,250 5 11,250 5 11,250 5 11,250 24 54,000
Motocyclettes FM/mois 7,500 11 990 14 1,260 14 1,260 14 1,260 14 1,260 67 6,0)0
Entretien enclos de des infection 200 )00 400 500 600 2,000
et divers
10,190 12,810 12,910 1),01 a 1),110 62,0)0
6\. Medicaments 7,100 5,500 12,600
Total pa rtie 1 45,541 28,609 17,)49 29,01 ; 19,869 140,477
7\. ne~enses au titre du ~rojet 2,58) 2,58) 2,58) 2,58) 2,58) 12,915
en cours d I ex~cution
Couts supplmentaires 42,958 26,026 14,766 26,526 17,286 127,562
Taxes: Vehicules: camionnette 500 2 1,000 500 1,000 500 6 ),000
vehicule 1,)00 2 2,600 2,600 4 5,200
4 roue 5 matrices
),600 500 ),600 500 8,200
Materiel: congelateurs 100 7 700 2 200 9 <; 900
petit materiel 15 11 1<6 ) 45 )0 45 4 60 2) )45
86 2 ~2 )0 42 60 1 ,242
4,465 145 )0 ),645 560 9,445
Y Agent Fonction Publique
V Contractuels i~
ID'~
~~
7 juillet 1973 ~'"
MALI
PROJET DE DEVELQFPEMENT RURAL INTEGRE
Unite d'evaluation
(Mill1ers de FM)
_ 1_ _
_2 _
_3 TOTAL
I\. PERSONNEL (Salaire annuel)
A\. SIEGE
Economiste 15\.000 112 7,500 1 15,000 1 15,000 1 15,000 3\.5 52,500
Assistant de recherche 1\.140 1 1,140 1 1,140
Statisticien 1\.000 1/2 500 1 1,000 1 1,000 1 1,000 3\.5 3,500
Employil 630 1/2 315 1 630 1 630 1 630 3\.5 2,205
Dactylographe 420 112 210 1 420 1 420 1 420 3\.5 1,470
Total A 8,525 17,050 18,190 18,190 60,815
B\. HORS SIEGE
Surveillants 1 900 2 1,800 2 1,800 3 2,700 8 7,200
Enqu~teurs (dilnoMbrements) 10 5,000 20 10,000 ;::0 10,000 30 15,000 80 40,000
Employil/Dactylographe 1 420 2 840 2 840 3 1,260 8 3,360
Total B 6,320 12,640 12,640 18,960 \. 50,560
Total I 14,845 29,690 29,690 37,150 111,375
(Prix unitaire avec) (Droits d1im-)
II\. VEHICULES/$quipement (droits d 'n0rtation) (portation)
Commerc:tal , 00 600 1 2,500 1 2,500 2 5,000
Ca\.mion lilger 1,600 400 2 3,200 3 6,800 5 8,000
Mat~riel et mobilier de bureau - 500 400 900
Total II 6,200 400 7,300 13,900
III\. DEPENSES DE FOHCTIONNEMENT
Location et entretien logements 780 1,560 1,560 1,560 5,460
Location et entretien bureaux 300 600 600 700 2,200
Papeterie, timbre s, tlllilphone 100 200 200 200 700
Entretien et fonctionnement vilhicules
-Commercial (1,75 million Ff!Van) 875 1,750 1,750 1,750 6,125
-Carnion lilger (1,5 million FM/an) 1,500 3,000 3,000 4,500 12,000
~!
-Bicyclettes (9010000 FM/an) 450 900 900 900 3,150
-Motocyclettes (30\.000 FM/an) 150 300 300 300 1,050
Divers 200 200 200 200 800
Total III 4,355 8,510 8,510 10,110 31,485 1'1\.)
TOTAL GENERAL 25,400 38,600 38,20Q 54,560 156,760
28 deceMbre 1973
:t
ANNEXE 12
Tableau 13
~
PROJET DE DEVEWPPEMENT RURAL INTEGRE
Facteurs de l'mentaires
A\. Couts 1 2 3 4 5 Total
Facteur;-de Eroduction saisonniers
Engrais 31\.9 46\.5 83\.9 143\.1 155\.3 460\.7
Semences 53\.0 96\.5 136\.6 160\.2 196\.0 642\.3
Insecticides, Fongicides 3\.8 5\.6 10\.0 29\.3
--\.k\.L
Total partiel 86\.8 146\.8 226\.1 311\.3 361\.3 1132\.3
Materiel asricole
~
Batis de charettes V 16\.3 25\.6 32\.0 38\.8 46\.9 159\.6
Equipement 125\.6 202\.0 252\.4 307\.8 371\.4 1259\.2
Total partiel 141\.9 227\.6 284\.4 346\.6 418\.3 1418\.8
Total gmeral 228\.7 374\.4 510\.5 657\.9 779\.6 2551\.1
B\. Financement
- Ve-rites/achats comptan\.JI 19\.6 32\.7 42\.7 54\.0 65\.7 214\.7
Cr'dit mOlen terms
Acomptes des agricu1teurs 28\.6 45\.9 57\.5 70\.1 84\.6 286\.7
Remboursements des agriculteurs 28\.7 74\.7 103\.0 127\.5 333\.9
Credit moyen terms/SCAER 5703 63\.4 40\.4 36\.8 41\.8 239\.7
Total partie1 85\.9 138\.0 172\.6 209\.9 253\.9 860\.3
Credit de campa!ne
Remboursements des agricu1teurs 72\.3 119\.6 188\.6 268\.9 649\.4
Credit net/SCAER 33\.8 15\.8 39\.8 63\.2 13~0 165\.6
Credi t net OA 38\.5 31\.5 29\.2 17\.1 26\.0 142\.3
Total partiel 72\.3 119\.6 188\.6 268\.9 307\.9 957\.3
Subventions
Equipement 39\.7 64\.0 79\.8 97\.9 117\.5 398\.9
Facteurs de production saisonniersUI 11\.2 20\.1 26\.8 27\.2 34\.6 119\.9
Total partiel 50\.9 84\.1 106\.6 125\.1 152\.1 518\.8
Total general 228\.7 374\.4 510\.5 657\.9 779\.6 2551\.1
11 Cout total rendu agricu1teurs; sans compter les pieces de rechange pour Poutillage et 1es semences
produites par 1es agricu1teurs\. Voir details a l'Anne:xe 11, tableaux 5 et 6\.
?J Batis de charettes fabriques par 1es artisane du village\.
3/ Valeur des charettes et prix de vente reel des et insecticides\.
_ SubventionsMtis de principa1ement pour samences, compte fongicidesbenefices realises sur d'autres
41 nettes, tenu des
facteurs de production\.
19 novembre 1973
ANNEXE 12
Tableau 14
~
Fonds renouve1ab1e
nnrrrrersne FM)
Cout
unitaire _1_ \.L \.L -1L \.L ~
A\. Vehicules: Motocyclettes 118 57 6,726 34 4,012 76 8,968 47 5,546 86 10,148 300 35,400
Bicyc1ettes 36 93 3,31L8 --'i\.6_~ ),456 180 6,48 0 115 4,140 _lLL_ ~j3(J0_ 659 2),724
Total CoUt 10,074 7,468 15,448 9,686 16,448 59,124
D~boursements il\. 17,542 15,448 9,686 16,448 59,124
Remboursements ~ 5, on 8,771 11,458 12,567 1\.3 ,067 50,900
Besoin Gr~dit 12,5CS 6,677 (1,772) 3,881 (13,067) 8,224
B\. Mat~riel de forge
Phase 1 30 33 990 62 1,860 77 2,310 81 2,430 95 2,850 348 10,440
Phase 2 150 33 4,950 30 4,500 56 8,400 69 10,350 73 10,950 261 39,150
Phase 3 200 7 1,400 6 1,200 11 2,200 14 ~/J()O_ ~)8 1,600
Total Gout 66 5,940 99 7,760 139 11,910 161 14,980 182 16,600 647 57,190
Deboursements il\. 13,700 11,910 14,980 16,600 57,190
ReIDboursements-~ 1,980 4,566_ 8,537 11\.250 14~496 41,129
Besoin Cr~'dit 11,720 7,3114_ _ _6,4kJ~_ ~,050_ (14,4';16) ,6,061
TOTAL GENERAL 24,225 14,021 4,671 8,931 (27,563) 24,285
Fonds renouvelable 24,225 14,021 4,671 8,931 51,848
11 Deboursements efiectues un an Ii\. l' avance (Annees 1 et 2 ensemble au cours de l' ann~e 1)\.
gl Remboursements: Motocyc1ettes allocation mensue11e de 7\.500 FM, remboursement mensue1 de 6\.500 FM en deux moiti~s, l' une l' ann~e de l' acnae;, l' aucre l' \.unee 6uivlu1oe
Bicyc1ettes allocation mensuelle de 2\.500 FM, remboursement mensue1 de 2\.000 FM, en deux rooities, l'une l'annee de l'achat, l'autre l'annee suivante\.
Mat~rie1 de forge reIDboursements par tiers du prix chaque ann~e a compter de l'annee d'achat\.
5 septembre 1973
HALl
PRO,JET DE DEVELOPPEMEN'C RURAL INTt::GFlJi:
F!4)
1 1 1- ~ \.? ~
A\. I~r~vus EOur hausse des Erix !I
I\. Mat~riel: Mobilier et rnat~riel 29\.9 90\.9 80\.1 4\.1 0\.7 205\.7
Mat~riel culture attel~e, engrais
agrocides
159\.4 252\.3 341\.9 458\.9 536\.7 1,749\.2
V~hicules 127\.1 364\.3 37\.9 60\.5 139\.4 729\.2
Total partiel 316\.4 707\.5 459\.9 523\.5 676\.8 2,684\.1
Imprevu8 (%) 10\.0 17\.7 28\.0 44,0 55\.0 p3\.0}
31\.6 125\.2 128\.6 232\.4 373\.6 891\.4
II\. Genie civil: B!ltiments 115\.6 401\.4 409\.6 16\.0 15\.0 957\.6
Impr~vu\.s (%) 12\.0 22\.0 27\.0 61\.0 80\.0 {25\.02
Total 13\.9 88\.3 112\.0 9\.8 12\.0 236\.0
III\. Divers: Personnel malien 41\.6 115\.0 148\.5 137\.1 137\.4 579\.6
de fonctionnement 120\.8 278\.7 298\.0 261\.9 185\.3 1,144\.7
de charrettes 16\.3 25\.6 32\.0 38\.8 46\.9 159\.6
Semences 53\.0 96\.5 136\.6 160\.2 196\.0 642\.3
Fonds renouvelable 24\.2 14\.0 4\.7 8\.9 51\.8
Etudes
255\.9 574\.8 619\.8 606\.9 565\.6 2,623\.0
5\.5 8\.3 10\.3 26\.5 34\.7 {18\.0}
Total 14\.1 47\.9 64\.3 160\.7 196\.4 483\.4
IV\. Assistance technigue 209\.3 341\.5 277\.8 205\.8 187\.3 1,221\.7
\. V\. TOTAL: coats du projet 897\.2 2,025\.2 1,767\.1 1,352\.2 1,444\.7 7,486\.4
Haussedes prix 59\.6 261\.4 304\.9 402\.9 582\.0 1,610\.8
B\.
Total cants du projet 897\.2 2,025\.2 1,767\.1 1,352\.2 1,444\.7 7,486\.4
Impr~vus (%) 5 5 5 5 5 5
Total 44\.8 101\.1 88\.4 67\.6 72\.2 374\.1
c\. TOTAL GENERAL IMPREVUS 104\.4 362\.5 393\.3 470\.5 654\.2 1,984\.9
!I Hausse des prix = 22 % en moyenne sur les coUts totaux, soit 26 %sur lea coUts totaux deduction faite de l'assistance technique\.
?J To~al general imprevus ell moyenne 27% des coUts\.
27 avril 1974
ANNEXE 12
Tableau 16
MALI
PROJET DE DEVELOPPEMEHT RURAL IHTIDRE
Droits et taxes d1importation
(Millions de FM)
Annlle 1 Ann3e 2 Annlle 3 Annee 4 Annie 5
-
TOTAL \.L
Bat1ments 17,4 64,2 65,5 2,6 2,4 \. 1;)2,1 16%
\.KatArie1 et
mob1l1er 8,9 27,3 24,0 1,2 61,4 30%
Vllhicu1es 33,8 94,0 l2,5 16,8 45,5 202,6 28%
Df~penses de
fonctionnem\.ent 17,9 47,5 67,5 64,1 33,7 ' 230,7 20%
TOTAL 78,0 233,0 169,5 84,7 81,6 646,8
PROJJlT DE DEVELOFPEMENT RURAL INTEGRE
Financement, par rste
(Millions de PM
TOTAL
Ann~es 2 Annee\. 1
! 1 2\. !
1\. Batiments IDA 320\.3 327\.7 12\.8 12\.0 80 672\.8
FAC
Mali
Total 115\.6 401\.4 409\.6 16\.0 15\.0 100 842\.0 100 957\.6
IDA
FAC 3\.3 60\.1 54\.9 2\.8 0\.5 67 ll8\.3 59 121\.6
Mali 26\.6 30\.8 25\.4 1\.3 0\.3 33 57\.8 41 84\.4
Total 29\.9 90\.9 80\.3 4\.1 0\.8 100 176\.1 100 206\.0
IDA 240\.5 25\.0 39\.9 92\.0 66 397\.4 397\.4
FAC
Mali
Tota\.l 127\.1 364\.3 37\.9 60\.5 139\.4 100 602\.1 100 729\.2
4\. Ass i stance techniaue 11 290\.4 236\.1 174\.8 159\.3 85 860\.6 70 860\.6
FAe 209\.3 51\.1 41\.7 31\.0 28\.0 15 151\.8 30 361\.1
Total 209\.3 341\.5 277\.8 205\.8 187\.3 100 1,012\.4 100 1,221\. 7
'5\. Personnel mali en I:\.!A
FAC
Mali
Total 41\.7 115\.2 148\.4 136\.9 137\.4 100 537\.9 100 579\.6
Depenses de fonct\.ionnement :DA 222\.7 238\.3 209\.6 148\.1 80 818\.7 72 818\.7
J<'AC 63\.8 43\.7 47\.4 40\.3 35\.9 16 167\.3 20 231\.1
Mali 56\.9 12\.1 12\.2 12\.2 1\.2 4 37\.7 8 94\.6
Total 120\.7 278\.5 297\.9 262\.1 185\.2 100 1,023\.7 100 1,144\.4
Agriculteurs 16\.3 25\.6 32\.0 38\.8 46\.9 100 143\.8 100 159\.6
Materiel culture attell!e
Engrais agrocides Mali 127\.5 136\.8 149\.4 181\.2 153\.2 39 620\.6 43 748\.1
Agriculteurs 31\.9 115\.5 192\.5 277\.7 383\.5 61 969\.2 57 1,001\.1
':'otal 159\.4 252\.3 341\.9 458\.9 536\.7 100 1,589\.8 100 1,749\.2
9\.~ l:JA
Mali 53\.0
Agriculteur s
Total 53\.0 96\.5 136\.6 160\.2 196\.0 100 589\.3 100 642\.3
10\. Fonds renouvelable Mali 24\.2 14\.0 4\.7 8\.9 100 27\.6 100 51\.8
11\. Etudes lIlA 4S\.0 100 "5\.0 100 45\.0
IDA 1,236\.6 967\.7 557\.0 540\.4 50 3,301\.7 44 3,301\.7
FAC 439\.6 180\.8 177 \.9 105\.1 98\.2 8 562\.0 13 1,001\.6
~a1i 409\.4 428\.2 327\.0 274\.4 259\.4 20 1,289\.0 23 1,698,4
Agriculteurs 48\.2 179\.6 294\.5 415\.7 546\.7 22 1\.436\.5 20 1,484\.7
897\.2 2,025\.2 1\.767\.1 1,352\.2 1\.444\.7 100 6,589\.2 100 7,486\.4
12 ImprevuB IDA 114\.2 183\.3 168\.8 232\.0 37 698\.3 35 698\.3
FAC 14\.4 6\. 0 57\.8 55\.9 65\.7 13 243\.4 13 257\.8
Mali 85\.S 119\.7 62\.0 83\.2 98\.6 19 362\.5 23 449\.3
Agriculteurs 4\.2 64\.6 90\.2 162\.6 257\.9 31 575\.3 29 579\.5
Total 104\.4 362\.5 393\.3 470\.5 65"\.2 100 1\.880\.5 100 1,984\.9
TOTAL GENERAL lIlA 1,350\.8 1,151\.0 725\.8 772\.4 47 4,000\.0 42 4,000\.0
FAC 454\.0 244\.8 235\.7 161\.0 163\.9 10 805\.4 13 1,259\.4
Nali 495\.2 547\.9 389\.0 357\.6 358\.0 19 1,652\.5 23 2,147\.7
Agriculteurs 52\.4 244\.2 384\.7 578\.3 804\.6 24 2,011\.8 22 2,064\.2
1,001\.6 2,387\.7 2,160\.4 1,822\.7 2,098\.9 too 8,469\.7 100 9,471\.3
Assistance technique pour Ie projet principal 1,020\.2 millions de FM
Economiste pour evaluation du proj et 52\. millions de FM
Consultant pour evaluation du programme d! alpha
betisation fonctionnelle en com d! execution 73\.0 millions de FM
Specialistes pour progra:rrq:ne de recherches 76\.0 millions de FM
Toi;\.a\.l
Total 1,221\. 7 millio:>\. de FM
Etude S"J\.r les prix payes aux producteurs et\. les rnecanismes de commercialisa\.tion des
cererales e~ assistance aux services comptables de l! OACV,\.
AmiEXE 13
!!!E\. T8bleau 2
PROJET DE DEVELOI'I'l!I!ENT R!TRAL IlIl'liXlRE
3>Urees de finane_t
'roTA!\.
Anneea 2 - S Annees 1 - S
1 1 \.:i i i\. ~ ~
I\. ~
BAti>lemts 320\.3 327\.7 12\.8 12\.0 se 672\.8 70 672\.8
Vehieules 240\.5 25\.0 39\.9 92\.0 66 397\.4 55 397\.4
Assistanee tec:bnique 290\.4 236\.1 174\.8 159\.3 85 860\.6 70 860\.6
Personnel \.uen 86\.2 111\.4 102\.9 103\.0 75 403\.4 70 403\.4
IJep8Dses de tonetionn_t 222\.7 238\.3 209\.6 148\.1 80 818\.7 72 818\.7
Semences 31\.5 29\.2 17\.1 26\.0 18 103\.8 16 103\.8
Etudes !I 45\.0 100 45\.0 100 45\.0
Total partie\.1 1,236\.6 967\.7 557\.0 540\.4 50 3,301\.7 44 3,301\. 7
IlIlprevus 114\.2 183\.3 168\.8 232\.0 37 698\.3 :n 698\.3
Total 1,350\.8 1,151\.0 725\.8 772\.4 47 4,000\.0 42 4,000\.0
II\. E!£
BIl\.tlJnent\. 90\.2 10 90\.2
Mobllier at materiel 3\.3 60\.1 54\.9 2\.8 0\.5 67 118\.3 59 121\.6
Vehicules 73\.0 10 73\.0
Assistance tec:bnique 209\.3 51\.1 41\. 7 31\.0 28\.0 15 151\.8 30 361\.1
Personne\.1 JIIe\.lien 25\.9 33\.9 31\.0 33\.8 23 124\.6 21 124\.6
l\.\!ipenses de tonctionnfllllent 63\.8 43,1 47,4 40\.3 35\.9 16 167\.3 20 231,1
Total partiel 439\.6 180\.8 117\.9 IDS\. 1 98\.2 8 562\.0 1~ 1,001\.6
I:mprevus 14\.4 64\.0 57\.8 55\.9 65\.7 13 243\.4 13 257\.8
Total 454\.0 244\.8 235\.7 161\.0 163\.9 10 805\.4 13 1,259\.4
III\. ETAT MALlEN
BIl\.tlJnents 25\.4 81\.1 81\.9 3\.2 3\.0 20 169\.2 20 194\.6
Mobilier et \.terie\.1 26\.6 30\.8 25\.4 1\.3 0\.3 33 57\.8 41 84\.4
V6hieule\. 54\.1 123\.S 12\.9 20\.6 47\.4 34 204\.7 35 258\.8
Pereonnel \.uen 41\.7 3\.1 3\.1 3\.1 0\.6 2 9\.9 9 51\.6
JJepenS8S de tonctionn_nt 56\.9 12\.1 12\.2 12\.2 1\.2 4 37\.7 8 94\.6
Msteriel eulture stte\.1ee,
engra1\., agroc1des 127\.5 136\.8 149\.4 181\.2 153\.2 39 620\.6 43 748\.1
Semences 53\.0 26\.5 37\.4 43\.9 53\.7 21 161\.5 33 214\.5
Fonds renouvelqle 24\.2 14\.0 4\.1 8\.9 100 27\.6 100 51\.8
Total partie\.1 409\.4 428\.2 327\.0 274\.4 259\.4 26 1,289\.0 2~ 1,698\.4
I:mprews 85\.8 119\.7 62\.0 83\.2 98\.6 19 363,5 23 449\.3
Total 495\.2 547\.9 389\.0 357\.6 358\.0 19 1,652\.5 23 2,147\.7
IV\. AGRICULmrRS
Blltis de cbarrettes 16\.3 25\.6 32\.0 38\.8 46\.9 100 143\.3 100 159\.6
Materiel eulture stteleee,
engra1s et agroeidils 31\.9
Semences
Total partiel 48\.2 179\.6 294\.5 415\.7 546\.7 22 1,436\.5 20 1,484\.7
;rmprevus 4\.2 64,6 90\.2 162,6 257\.9 31 575\.3 29 579,5
Total 52\.4 244\.2 384\.7 578\.3 804\.6 24 2,011\.8 22 2,064\.2
V\. TarAL GDlI!RAL
IDA 1,1150\.8 1,15LO 725\.B 772\.4 47 4,000,0 42 4,000\.0
FAG 454\.0 244\.8 235\.7 161\.0 163\.9 10 B05\.4 13 1\.259\.4
Mali 495\.2 547\.9 ? 0 357\.6 358\.0 19 1,652\.5 23 2,147\.7
\.Agrieul t\.enrs 52\.4 244\.2 3B4\.7 578\.3 804\.6 24 2,011\.B 22 2,064\.2
1,001\.6 2,387\.7 2,160\.4 1,822\.7 2,098\.9 100 8,469\.7 100 9,471\.3
Y Etude sur les prix payes aux producteurs et les mecanismes de comnercialisation des cereaJ\.es et assistance aux services comptables de l'QACV\.
ANNEXE 13
Tableau 3
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
Calendrier des deboursements du credit de l'IDA
(Mllliers de dollars)
Exercice financier Deboursement Cumul en
et semeatre ---B\.elD\.e strie 1 fin de semestre
1975:
leI' 1,000 1,000
2ffm~ 1,300 2,300
1976:
leI' 1,400 3,700
2f!11le 1,200 4,900
1977:
leI' 1,000 5,900
2eme 800 6,700
1978:
leI' 500 7,200
2eme 500 7,700
1979:
ler 300 8,000
2eme
26 avril 1974
ANNEXE 14
Page 1
MALI
PIlOJET DE !)EVELOPPEHENT RURAL INTEGRE
MARCHES ET PRIX DES PRODUITS OBTEiWS D&~S LE CADRE DU PROJET
A\. Huiles et corps gras
tendance passee et perspectives futures de 110ffre et de 1a demande
1\. La consomrnation estimative d'huile et de corps gras nla cesse de
s'accroitre au rythme de 2,9 % entre 1960 et 1970, mais 1a composition de 1a
demande suivant les regions geographiques et Ie produit a evo1ue au cours de
cette meme periode\. Dans les pays industria1ises et 1es pays en voie de de
ve1oppement, 1a consommation a augmente au taux de 3,2 % et dans 1es economies
a p1anification centra1isee, Ie taux de croissance ne s'est etab1i qu'a 1,8 %\.
2\. La composition de l'offre et des utilisations par produit slest ega
lement profondement modifiee au cours de la decennie ecoulee\. La consommation
de corps gras d'origine anima1e et d'huHe de poisson s'est accrue beaucoup
plus lentenent que la consommation d'huiles vegeta1es\. Au seln du groupe des
huiles vegetales, la distribution des usages s'est egalement modifiee en fonc
tion des disponibilites des differentes huiles et d'un certain nombre de fac
teurs de caractcre economique et non economique\.
3\. L'accroissement de la consonmation d'huile vegetale temoigne essen
tiellement de la demande croissante emanant de certains pays qUi les utilisent
en remplacement des corps gras d'origine animale dans la preparation des ali
ments\. La forte consommation de corps gras dlorigine vegetale pour 1a table
(sous forme de margarine, d'huile de cuisine et autres) par comparaison a\. celIe
des corps gras d I origine anima1e semble traduire, du ~1oins dans certains grands
pays consommateurs, Ie souci que manifestent les habitants d'eviter une absorp
tion excessive de cholesterol\. D'autres facteurs ont neannoins joue un role,
telle la consommation croissante d' alinents prepares\. En Araerique du \.'ord,
les preoccupations concernant Ie cholest6\.rol et Ie deve10ppement des aliments
prep8\.res semblent etre des explications raisonnables il I' accroissement rapide
de 1a consommation par habitant des corps gras d'origine vegetale, en particu
lier SOllS forme de margarine et d'hui1e de cuisine, au cours de la decennie
ecoulee a10rs que la consommation de beurre etait en regression\. Dans d'autres
grandes rer,ions consommatrices industrial , la situation est differente\.
Dans la communaute europcenne ~largie, le changenent de preference des consom
mateurs est moins net\. Au ]a?0~, 1a consommation de corps gras d'origine ani
male et d'origine vegctale s'es: accrue rapidement au cours de 1a decennie
~coulee, temoignant essentie~~eJent de 1a croissance du revenu\.
ANNEXE 14
Page 2
4\. L'evolution de la demande en faveur des corps gras vegetaux ouvre
des debouches a pratiquement tout cet ensemble de corps gras etant donne la
facilite avec laquelle ils peuvent etre substitues les uns aux autres\. Pour
chaque corps gras, Ie taux de croissance de l'offre compare a celui des huiles
concurrentes modifie son prix relatif, mais cette incidence diminue a mesure
que l'offre parvient a equilibrer la demande de l'ensemble de ces corps gras
vegetaux\.
5\. II ressort des projections effectuees par la Banque que la demande
mondiale de toutes les huiles et corps gras continuera a croitre au meme
rythne qu'au cours de la decennie de 1960 pour atteindre 56 millions de tonnes
en 1980\. Ces estimations sont superieures de 2,4 millions de tonnes a cel1es
qui ont ete etablies par la FAD, 1a Banque attendant une hausse plus ferme de
la de\.mande dans les pays industrialises\. Dans les projections de la FAD, 1a
part des corps gras vegetaux atteindra 69,5 % de,l'ensemble, ce qui mettrait
la consommation mondia1e a quelque 39 millions de tonnes en 1980\. L'accrois
sement de cette part par comparaison a celIe des autres corps gras et oleagi
:V:!UX est attribuable a plusieurs facteurs qui se feront probablement sentir
davantage dans les pays industrialises que dans les pays en voie de developpe
ment ~~eanmoins, la demande future de corps gras vegetaux dans les pays en
voie de developpement devrait egalement s'accroitre sensiblement plus vite au
cours de la presente decennie, a raison de l'augmentation des revenus et de
l'elasticite relativement elevee des revenus par rapport a la demande dans 1es
couches de la population a faibles revenus\. Le taux de croissance de la demande
globale de corps gras vegetaux est fixe par hypothese a 3,8 % par an entre 1970
et 1980 dans les pays en voie de dfveloppement\.
6\. L'cvolution de la structure de lademande mondiale des differents
corps gras et oleagnieux au cours de la decennie ecoulee a ete associee a des
Modifications de l'offre etrangeres a l'cvolution des prix ou a la demande por
tant sur les differents produits\. La production mondiale d'huiles et corps
gras d'origine animale s'est accrue lentement par rapport a celIe des corps
gras v<~getaux\. Dans l'ensemble, la production de beurre est restee presque
stagnante en depit des accroissements constates dans des regions particulieres
comme la CEE sous l'effet du soutien energique des prix qui a simplement abouti
a l'accumulation des stocks et a la necessite de subventionner la consommation\.
La croissance de 1a production de saindoux a egalement etc tres lente en partie
a cause des methodes de production qui ont amene la diminution du poids en
graisse de chaque animal\. La production d'huile de poisson stest rapidement
accrue ces dernieres annees, encore que ces produits soient essentiellement con
sommes pour l' alimentation du betail\. L' accroissement dela production de ces
produits et de celIe des huiles et corps gras d'origine animale devrait etre
lent au cours de la decennie se terminant en 1980\. La production de beurre,
saindollx ct llUile de poisson combines devrait pro)2;resser au rythme de 1,9 7\.
A:~'NE};:E 14
Page 3
par an\. contre 3,5 ~~ par an pour 1es corps gras vegetaux\. Par extrapolation
des tendances estimatives de la production, l'offre mondiale de ces corps gras
et huiles devrait equi1ibrer grossomodo en 1980 la demande mondiale au niveau
de S6 millions de tonnes d'equivalents en corps gras\. Par consequent 7 l'accrois
Bement attendu de l'offre d'huiles et de corps gras sera absorbe par Ie marche
sans qu'une pression a 1a baisse ne s'exerce sur les prix de ce groupe de produits\.
7\. Au sein du groupe des corps gras vegetaux, 1a production s'est ac
crue relativement lentement, sauf pour 1 'hu He de graineo de tournesole 7 1 'huile
de colza 7 l'huile de graine de soja et l'lmile de pa1me\. La production mon
diale d t arachide a progresse a un rythme decroissant au cours de la dikennie
ecoulee, en particu1ier apres 1967\. Les exportations mondia1es d'huile d'ara
chide sont restees stagnantes depuis 1955, a l'exception de 1a reprise enre
gistree de 1966 a 1968~ La production ne devrait pas reprendre au cours de 1a
decennie a venir aux cadences enregistrees au cours des annees 1950 a moins
que des plans d'expansion dynamiques ne soient lances\. La production mondia1e
de noix de coco est res tee stagnante du milieu des annees 1950 a 1970 et la
reprise accusee en 1971-1972, attribuab1e a des conditions climatiques propices,
devrait etre de courte duree\. La creation et l'utilisation de variet6s d'hybri
des a haut rendement pourrait pousser la production mais l'effet n'en sera pas
sensible avant 1980\. La production d'huile de graine de coton s'est accrue
1entement au cours de la decennie ecoulee, au rythme de moins de 1 % par an\.
Le gonflement de l'offre survenu en 1972 devrait se poursuivre en 1973 grace
;1 des conditions climatiques propices et a l'utilisation des graines de coton
non plus pour l'alimentation directe, mais pour l'extraction d'huile dans plu
sieurs pays\. rH~anmoins, la croissance a long terme, laquelle est liee a l'aug
r\.1eutation de la production de coton, ne devrait pas se situer a plus de Ij7 %
par an\. L'huile de graine de tournesol, produite essentiellement dans les eco
nomics ~ planification centralisee, se caracterise par un taux de croissance
de la production qui a eu tendance a plafonner vers la fin de la decennie ccou
lee\. La tendance recente de la production devrait se poursuivre jusqu'en 1980
etant donne que les rendements se stabi1isent et que la superficie cultivee en
tournesol en URSS ne Sera pas probablement pas sensiblement etendue\. Les Etats
Unis, quant a eux, ne semblent pas prets de produire Ie tournesol a grande
ccllelle\. La tendance est inverse dans 1a production de graine de colza, prin
cipalement originaire du Canada, d'Surope de l'Ouest et de l'Est, d'URSS et dE:s
pays d'Asie et d'Asie du Sud-Est d'econo~ie a planification centralisee\. L'essor
de la production devrait etre a:tendu a l'avenir du Canada, d'Europe de l'Ouest\.
d'u~~S et d'Europe de l'Est, ce qui pourrait constituer une concurrence pour
les autres corps gras vegetaux sur les marches des pays industrialises\. :'lean
moins, mene aux taux de croissance recemment enregistres, l'augmentation de la
production de graine de colza n~ suffira pas a conqucrir une part importante
du march6 en expansion des corps gras\.
Ai:lliEXE 14
Page 4
3\. Par contre, la production d'huile de palme et d'huile de graine de
soja, qui s'est rapidement accrue au cours des annees 1960, devrait continuer
sur sa lancee au cours de la decennie a venir\. Les pays gros producteurs ont
plante en palmiers de vastes superficies au cours des annees 1960 et ont ac
tuellement prepare des plans beneficiant, dans la plupart des cas, des concours
financiers necessaires, en vue d'etendre les superficies cultivees au cours des
prochaines annees\. Ces agrandissements slajoutent a d'autres moyens deployes
pour remettre sur pied 11 industrie de 1 'huile de palme\. La production mondiale
de graine de soja est passee de 26,5 millions de tonnes en 1956-1960 a 43 mil
lions de tonnes en 1966-1970, soit un accroissement de 65 %\. Clest aux Etats
Dnis que la production a Ie plus augmente, puisqu'elle a double, passant de
14,2 Dillions de tonnes en 1956-1960 a 28,7 millions de tonnes en 1966-1970\.
La production bresilienne s'est encore accrue plus rapidement en pourcentage
au cours de la meme periode (plus 521 %) encore que la production de ce pays
~it etc inferieure a 1 million de tonnes en 1966-1970\. La production des
Etats-Unis devrait atteindre environ 48 oillions de tonnes en 1980; la produc
tion 0resilienne devrait egalement continuer a augmenter rapidement pour at
teindre environ 10 millions de tonnes en 1980\. Ces accroissements sont essen
LL\.:lle::lent attribuables a la demande d ' aliaents pour Ie betail emanant a la
fois des pays producteurs et de l'etranger, bien que l'essentiel de la produc
tion serve egalement a transformer en tourteaux les sous-produits tires du
broyage des graines\. En Chine, la production s'est rnaintenue a peu pres au
lneme niveau de 9 a 10 millions de tonnes pendant les deux dernieres decennies
et elle sera probablement a l'avenir harnonisee aux besoins interieurs\. S'il
en est ainsi, la Chine ne sera ni exportateur ni importateur de graine de soja
ou de tourteaux et d'huiles au cours de la decennie a venir\. La production
mondiale, y compris celIe de la Chine, devrait atteindre en gros 70 a 75 mil
lions de tonnes de graine de soja en 1980, soit 11 millions de tonnes d'equi
valent en huile\.
9\. L'offre des principaux autres corps gras vegetaux devant augmenter
lentement, l'accroissement de la demande mondiale sera couvert pour l'essentiel
:lU cours de la dfkennie ii venir par 1 'huile de palme et 1 'hulle de graine de
soja\. Les parts des differents corps gras dans la production 1110ndiale en 1971
et en 1980 sont indiquees dans le tableau suivant:
ANNEXE 14
Page 5
1971 1980
Produit Production "" du tota117
I\. Production % du totalY
Cor2s gras vegetaux
de table 26,00 60,46 36,8 65,71
Graine de soja 7,10 16,51 11,0 19,64
Graine de tourneso1 3,55 8,26 5,0 8,93
Arachide 3,05 7,09 4,1 7,32
Craine de coton 2,50 5,81 4,0 7,14
Colza 2,50 5,81 3,3 5,89
i\loix de coco 2,30 5,35 3,0 \.5,36
Pa1me 2,10 4,88 2,9 5,18
Olive 1,55 3,60 1,9 3,39
Sesame 0,70 1,63 0,9 1,61
Pa1miste (y compris
babasu) 0,65 1,51 0,7 1,25
CorES gras d'origine
anima1e 14,10 32,79 15,8 28,21
Suif I graisses 5,00 11,63 5,9 9,64
Beurre (teneur en
corps gras) 4,90 11,39 5,4 8,04
Saindoux 4,20 9,77 4,5 10,54
Huiles industrie11es 1,70 3,95 2,0 3,57
Craine de lin 1,25 2,91 1,3 2,32
Ricin 0,35 0,81 0,5 0,89
Abrasin 0,10 0,23 0,2 0,36
Huiles de poisson 1,25 2,90 1,4 2,50
Total 43,00 100,00 56,0 100,00
1\./ Hil1ions de tonnes d ' equivalent en corps gras\.
B\. Arachides
Commercialisation
10\. Les arachides ant ete, jusqu'en 1961\. la principa1e culture d'expor
tat ion du iIa1i, mais e11es sont passees ensuite a 1a deuxicme place apres Ie
caton\. Les Annexes 1, 2 et 3 contiennent les statistiques sur 1a production
ANNEXE 14
Page 6
passee et la production estimative future ainsi que sur 1a commercialisation
des arachides\. La production d'arachides en coques vendues officie1lement
au cours de la periode 1968/72 s'etablit en moyenne a 50\.000 tonnes, contre
110\.000 tonnes dans 1a zone du projet, une fois atteint Ie stade du plein
essor\.
11\. Crest ltoperation arachide qui est chargee de vendre les arachides
des zones relevant de sa competence\. Elle doit donc notamment en assurer Ie
ramassage sur les marches et l'evacuation vers les seccos de la Societe ma
lienne d'import/export (SOMIEX) ou la Societe d'exploitation des produits
oleagineux du Mali (SEPOM)\. Ses activites devraient s'intensifier a mesure
que les routes de la zone du projet se modernisent et permettent aux trans
porteurs prives de jouer un role plus actif\. Ailleurs, Ie ramassage est con
fie aux agents licencies de 1a SOMIEX qui font l'objet de peu de controle\.
lIs fournissent moins de 25 % des arachides en coques commercialisees par les
circuits officiels\. Leur role diminuera a mesure que les activites de l'OA
s'elargiront\.
12\. La production commercialisee par les circuits officiels varie d'une
region a l'autre, en fonction essentiellement de la densite et de l'efficacite
du reseau de commercialisation\. La production commercialisee d'archides en
coques dans la zone du projet devrait passer de quelque 60 % en 1972/73 a 65 %
a mesure que la production s'accroit et que Ie mecanisme de commercialisation
se perfectionne\. La difference entre la production recoltee et la production
commercialisee tient a plusieurs facteurs:
Ie prelevement des semences necessaires (environ 100 a 150 kg/ha);
Ie prelevement pour la consommation des menages, estime a 10 a 15 kg
par tete et par an, suivant l'abondance des autres cultures vivrieres;
les prelevements pour vente sur d'autres marches, qui devraient se
se situer entre 10\.000 et 30\.000 tonnes, et sont destines a satis
faire la demande des zones non arachidieres du Mali et des pays
voisins, principalement 1a Mauritanie\.
Traitement
13\. Le decorticage des arachides en coques est pris en charge par la
SOHIEX ou par la SEPOM qui utilisent les coques connne combustible\. La SEPOM
exploite une huilerie situee a Koulikoro, dtune capacite de 30\.000 tonnes
d'arachides en coques et d'environ 10\.000 tonnes d'autres graines (karite,
coton)\. Cette usine tourne actuellement a sa pleine capacite\. Une deuxieme
usine, de la meme capacite, sera construite a Kita en 1976\. Elle sera finan
cee avec l'aide de l'Agence federale allemande pour l'aide au developpement\.
ANNEXE 14
Page 7
Or, meme apres l'achevement de cette deuxieme usine, de grosses quantites
d'arachides devront encore etre exportees, etant donne que la capacite de
broyage n'atteint qu'environ 54 % de la quantite d'arachide commercialisee
officiellement et 35 % de la production estimative de la zone du projet\. La
SEPOM exporte de l'huile et des tourteaux et fournit de l'huile raffinee a
la SOMIEX qui la distribue sur Ie marche interieur\.
Prix actuels et mecanisme des prix
14\. Les prix de l'arachide comme ceux des autres produits sont fixes par
decret gouvernemental\. Le bareme arachide, publie chaque annee, indique les
prix payes aux producteurs, les prix qui seront payes par la SOMIEX et la SEPOM
a l'OA au moment de la livraison (notamment les prelevements pour l'OA et la
SCAER et Ie remboursement des frais de commercialisation) et un prix c\.a\.f\.
theorique valable pour la SOMIEX\. Le Tableau 1 contient Ie bareme pour la
campagne 1973/74\.
15\. Le prix paye aux producteurx pour les arachides en coques a ete fixe
a 30 francs malien Ie kg en 1968/69 et n'a pas ete modifie depuis\. 11 a cons
titue un encouragement suffisamment dynamique pour les agriculteurs, etant pour
eux plus avantageux que les prix remunerant d'autres cultures (Annexe 1,
Tableau 2) et soutenant favorablement la comparaison avec les prix payes aux
producteurs d'arachides dans les pays voisins (Tableau 2)\. La devaluation du
franc malien decidee en 1967 a permis aux pouvoirs publics de relever les prix
payes aux producteurs et d'affecter une partie des recettes tirees de la vente
des arachides a l'OA et a l'Office de surveillance et de regulation des prix
(OSRP)
16\. Cree en 1968, l'OSRP decoule de la fusion des caisses de stabilisa
tion des arachides et du coton et de la caisse de perequation, qui etait char
gee de stabiliser les produits petroliers et certains biens de consommation
de base\. La caisse de stabilisation des arachides est financee par un preleve
ment de 7\.000 francs maliens par tonne sur les arachides decortiquees exportees
et de 1,800 francs ma1iens par tonne dthuile brute exportee\. Le Tableau 6 in
dique l'etat des recettes, des depenses et des reserves de la caisse de stabi
lisation des arachides\. Les reserves nettes se chiffraient, a la fin de l'exer
cice 1972, a 520 millions de francs malieus\. Neanmoins, elles ne suffisent pas
a attenuer les variations des prix a l'exportation prevues pour l'avenir\.
Prix futurs
17\. Le Mali vient bien apres les principaux producteurs arachidiers de
l'Afrique de l'Ouest, comme Ie Nigeria, Ie Senegal, Ie Niger et la Gambie\.
Une fois Ie projet ayant atteint son plein ess~r, la production commercialisee
ANNEXE 14
Page 8
ne representera, selon les estimations, qu'environ 3,5 % des exportations mon
diales contre 2 % actuellement\. La production et les exportations ~diales
futures d'arachides ne devraient pas s'ecarter sensiblement de celles q"i ont
ete enregistrees au cours des six dernieres annees, Ie taux estimatif de crois
sance en volume des exportations mondiales dfarachides et d'huile se situant a
1,5 % par an pour la periode 1969/80\. Ce taux doit etre mis en regard du taux
de croissance annuel de 3,5 % se rapportant aux dix annees de la periode 1960/70
et du taux de croissance prevu de 12 % par an pour l'huile de palme\. L'offre
d'arachides devrait donc etre relativement modeste en 1980, bien que la substi
tution des differentes huiles les unes aux autres contribue a maintenir les
prix des produits arachidiers au niveau de celui des autres corps gras\. L'ac
croissement projete de la production arachidiere au Mali devrait donc avoir
peu d'incidences sur les cours du marche mondial\.
18\. Le Departement de l'analyse et des projections economiques de la
Banque prevoit un flechissement des prix mondiaux de l'arachide qui, de 393
dollars la tonne (c\.a\.f\. Europe), niveau sans precedent atteint en 1973, de
vraient se trouver ramenes a 235 dollars la tonne en 1980 (en termes constants
1973)\. Si cette prediction se verifie, Ie prix economique depart exploitation
(voir Tableau 4) passera pour les arachides en coques de 105\.480 francs maliens
la tonne en 1973 a 53\.250 francs maliens la tonne en 1980, annee ou Ie projet
aura atteint son plein essor\. Ce flechissement des prix mondiaux est pris en
compte dans Ie calcul du taux de rentabilite economique\.
C\. Mil et sorgho
Commercialisation
19\. Le sorgho, Ie mil et, dans une moindre mesure, le riz, sont les prin
cipales denrees alimentaires de base du Mali\. L'Annexe I, Tableau I, donne des
details sur la production et la commercialisation depuis 1967 jusqu'a la fin
de 1972\. Ces dernieres annees, la production estimative de mil et de sorgho a
atteint, en moyenne, 600\.000 tonnes, a10rs que 1es besoins annue1s sont de l'or
dre de 750\.000 a 800\.000 tonnes\. Le recul de la production est essentiellement
attribuable aux conditions climatiques defavorables que Ie Mali a connues ces
cinq dernieres annees\. II est neanmoins difficile d'etablir si ce leger recul
n'a pas encore ete aggrave par les elements du systeme de commercialisation
officiel decourageant les agriculteurs ou en raison de la contrebande avec les
pays voisins\.
20\. Seuls 5 % de la production sont commercialises pour chacune de ces
recoltes\. L'Office des produits agricoles du Mali (OPAM) detient Ie monopole
ANNEXE 14
Page 9
de la commercialisation des cereales et les mouvements des cereales sont as
sujetties a des controles rigoureux, mais l'office n'a pu fonctionner effi
cacement en raison des larges disparites separant les prix officiels de ceux
du marche noir, de l'organisation mediocre et des difficultes financieres\.
L'OPAM est en outre responsable de la distribution des cereales fournies par
les pays donateurs d'aide ou importees par l'Etat\. Le tableau ci-apres in
dique Ie volume de mil et de sorgho re~u par l'OPAM au cours des huit annees
se terminant en 1973:
Mil et soq~ho re~us Ear l'OPAM
Tonnes 1965/66 66/67 67/68 68/69 69/70 70/71 71/72 72/73
Production
interieure 25\.000 56\.000 60\.000 8\.000 26\.000 10\.000 30\.000 5\.000
/1
Importations- 17\.000 25\.000 37\.000 200\.000
L! Chiffres estimatifs; les importations sont essentiellement composees
de dons\.
Prix
21\. Les prix a la production et a la consommation du mil et du sorgho
sont arretes chaque annee par Ie gouvernement, qui fixe de surcrott les taux
de fret pour Ie transport des cereales\. Le Tableau 7 indique Ie bareme des
prix du mil et du sorgho pour la campagne 1972/73\. Les prix officiels des
cereales sont faibles par comparaison a ceux des autres cultures, comme Ie
coton et les arachides, a ceux du marche noir et a ceux qui sont payes dans
les pays voisins (voir Tableau 8)\. Cette situation decourage la production
et la commercialisation des cereales\. Tout en reconnaissant qu'il leur fau
drait relever Ie prix des cereales, les pouvoirs publics sont reticents a
prendre l'initiative en raison de l'incidence qu'elle aurait sur Ie coOt de
la vie (les cereales constituent environ 34 % de l'indice du coOt de la vie)
et sur les salaires\. En un premier temps, Ie prix paye aux producteurs de
mil et de sorgho a ete porte de 18 a 20 francs maliens en 1972/73 et les pou
voirs publics envisagent de Ie porter a 25-26 francs maliens Ie kg en appli
cation des recommandations formulees par les services officiels et les experts
de l'USAID\. Conjuguee a la reorganisation de l'OPfu~ pour instaurer une meil
leure stabilisation des prix, cette majorat ion constituerait certainement un
element dynamique propre a ameliorer la production et la commercialisation
des cereales\.
ANNEXE 14
Page 10
Dispositions arretees dans Ie cadre du projet
22\. Pour assurer la reussite de l'element du projet interessant les ce
reales, les pouvoirs publics ont convenu de i) relever de 20 francs maliens
Ie kg a 25 francs maliens Ie kg au minimum Ie prix paye aux producteurs de sor
gho et de mil, a compter de novembre 1974, et cet accroissement sera annonce
des le mois de mai, avant la periode des semis; ii) de confier a des consultants
une etude portant sur les prix payes aux producteurs et les mecanismes de com
mercialisation du mil et du sorgho, qui devra etre achevee Ie 30 avril 1975\.
Cette etude servira de point de depart aux decisions qui seront prises ulte
rieurement en ce qui concerne les prix payes aux producteurs et les mecanis
mes de commercialisation et devront donner satisfaction a l'IDA\.
23\. La production obtenue dans Ie cadre du projet devrait pouvoir etre
ecoulee sans difficultes, les deficits annuels en 1978/79 etant evaluds a
200\.000 tonnes de;~i1, sorgho et mals (300\.000 tonnes, compte tenu de l'ap
provisionnement ~es stocks regulateurs)\. La production obtenue dans Ie cadre
du projet pourvoi~t a 12 % du deficit estimatif de cereales\.
24\. Le calcul du taux de rentabilite est base sur les prix a l'importa
tion tels que projetes par Ie Departement de l'analyse et des projections
economiques de 1a Banque\. Le Tableau 9 donne les details de ces calculs\.
ADEXE 14
Tableau 1
MALI
PROJET DE DEVELOPPEMENT RURAL INTmRE
Bar6me arachide
camr;gne 1973-1974
liM 1a tonne)
En coquea Decortiquees
30\.000
11 7\.600
3\.556,
390
900
2\.000
44\.446
Cout ensachage
585
Dechets dessication/parte
1\.335
Prix d\. revient rendu seccos Ll 45\.781 67\.325
Co~t du d~cortic8ge Zli 1\.775
Manutention/chargament 1\.250
Transport interieur/assurance 556
Interets bancaires 1\.458
Dechets Afrique 10
Transport route/rail a frontiere 5\.552
Imp6ts publics L2 8\.951
Taxe office des prix 10\.000
Transport par rail frontiere-port 6\.880
Redevances portuaires 3\.526
Prix de revient f\.a\.b\. 107\.293
Co~t de f\.a\.t\. d c\.a\.f\. 15\.280
Prix de revient caf 122\.563
1/ Samme pr61eV$e uniquement sur 1es arachides ecoulees dans Ie cadre de l'operation arachide
- pour couvrir 1es frais des services de vu1garisation de 110A ainsi que Ie traitanent des
samences et 1es charges de manutention\.
2/ Pr41evee dans 1a zone de competence de l'operation arachide et en dehors pour couvrir en
- partie 1es subventions versees au titre des facteurs de production agrico1es\.
3/ Production d'arachides decortiquees par rapport aux arachides non decortiquees: 68 %\.
4/ Decorticage a 1a machine par 18 SOMIEX\.
2! Comprennent: i) 4\.901 FM fiscalite normale; ii) 4\.050 FM de taxe speciale exportation\.
ANNEX! 14
Tableau 2
PROJET DE DEVElDPPEMENT RURAL INTIDRE
Prix payeS aux producteurs d'arachides
Prix paye au Mali et dans les~ais voisins
(FM Ie kilo - Campagne t97 7 973)
Decortiquees Decortiquees
En cogues a la main a la machine
Mali \.30 so
Niger 32 48
S\.mtfgal 4o\.4! Y
Haute-Volta ~O J\.:: 49-54
11 Le prix paye aux producteurs au senegal vient d' etre releve;
i1 sera de 51 FM Ie kilo pour 1a campagne 1973/1974\.
ANNEXE 14
Tableau 3
MALI
PROJET DE DEVELOPP1!MENT RURAL ItlTmRE
Cours internationaux de l'arachide, de l'huile et des tourtaux d1arachid\.
(Dollars la torme metrique)
Haile d'arachide Arachides Tourteaux d'arachide
Moyennes annuelles (1) (2) (3)
1960
327
197
89
1961
330
196
86
1962
214
171
91
1963
268
172
100
1964
315
181
104
1965
325
206
106
1966
291
181
103
1967
283
119
100
1968
210
166
91
1969
332
207
100
1970
378
229
109
1971
446
254
105
1972
433
271
111
1973
546
393
296
Previsions
Prix courants 1980
787
425
Prix constants 1913
430
235
11 Jusqu1en dec_bre 1911, Nigeria, 3-5 %en vrac, terme rapproche c\.a\.f\. Europe\. A campter
de janvier 1912, Nigerianes/gambiennes/toutes origines, c\.s\.f\. Royaume-Uni\.
2/ Nigeriannes, en coques, terme rapproche c\.s\.f\. Europe\.
1/ Arientine, 50 %exportateurs, terme rapproche c\.a\.f\. Ports Europe septentrionnale\.
Source: F\.A\.O\.: Progrannne d' action: OF/ST/ 73/CRS\. 2 et Departemant de l' analyse et des
projections economiques de la Banque (avril 1914)\.
MA\.LI
INTEGRE
STRUCTURE l'lES PR\.IX DE L' All,4CliIDE
Prix ~conomlque depart exploitation
(l"M constant 1'173 et tonne)
1973 1974 1975 1976 1977 \.!\.ill\. 1979 1980 et ensuite
CA\.F\. ports Europe, dollars y 390 340 300 280 265 255 245 235
Equivalent FM 195,000 170,000 150,000 140,000 132,500 127,500 122,500 ll7,500
Tr'ansport maritime/asRurance ~/ 12,925 12,550 12,250 12,100 11,990 ll,910 ll,840 11,760
FAB Dakar 182,075 157,450 137,750 127,900 120,510 115,590 110,660 105,740
Transport fronti'ere!port 11,500 11,500 11,500 ll,500 11,500 11,500 11 ,500 11,500
redevances portuaires
Commission negociant/exportateur 2f ~ ~ ~ ~ ~ ~ ~ ~
Disponible frontiere malienne 166,925 142,300 122,600 112,750 105,360 100,440 95,510 90,590
Frais decorticage!transport seccos ~ ~ ~ ~ ~ ~ ~ ~
\.-J ~
valeur aux sec cos 159,975 135,350 115,650 105,800 98,410 93,490 88,560 83,640
\:t~
equivalent decortiquee ero %) 111,980 94,745 ~~
80,955 74,060 68,890 65,440 61,990 58,550 jl) t3j
cout de commercialisation "
'"",\.
exploit"tion -seCCOB fJ ~ ~ -2\.1\.QQ\. --2\.2QQ ~ -2\.1QQ ~ -2\.1QQ
""
Prix economique depart exploitation 105,480 88,345 74,755 68,160 63,290 60,140 56,690 53,250
y Departement de l'analyse et dzs projections economiques de la Banque, projections etablies le avril 1974\.
?J Taux de change: 1 dollar 500 FM\.
10,000 PM la tonne + 1,5 %de 1" valeur c\.a\.f\. pour l'assurance\.
~ Charges reelles nettes de taxes; comprend transport par route et rail, assurance et manutention\.
Estimation: 2 %de la valeur f\.a\.b\. (chiffre arrondi) pour les frais generaux de la SOMTEX\.
~ Les-~ais detransport calcules a partir des frais de fonctionnement des vehicules sont super1eurs aux taux de transport fixes par l'Etat\.
lls devraient dimunuer grace au programme d'amelioration general des routes et des ameliorations prevues dans le projet\.
Les autres frais de commercialisation, estimes ~ 2,500 FM par tonne, comprennent les frais d'achat et autres charges\.
15 avril 1974 '
\
I )
ARNEXE 14
MALI Tableau 5
PROJET DE DEVELQPPDmNT RURAL INTEGRE
Destination de la production arachidiire commercialisee
(tonnes)
1973 1974 1975 1976 1977 1978 1979 1980
Production totale *
(en coques) 86,000 108,000 128,000 151,000 162,000 167,000 171,000 171,000
Production commercialisee
(en coques) 55,000 65,000 79,000 97,000 106,000 109,000 111,000 111,000
Capacite maximale huileries
maliennes (en coques) 30,000 30,000 30,000 45,ooo!i 60,000 60,000 60,000 60,000
Disponible pour l'exportation
(en coques) 25,000 35,000 49,000 52,000 46,000 49,000 51 ,000 51 ,000
Equivalent arachide decortiquee Sf 17,500 24,500 34,300 36,400 32,200 34,300 35,700 35,700
Production des hui1eries g/
a) Tourteaux
b) lInile brute 12,700 12,700 12,700 19,000 25,300 25,300 25,300 25,300
- pour exportation 8,700 8,700 8,700 13,000 17,300 17,300 17,300 17,300
- pour usage interieur (3,700) (3,600) 0,500) U ,600) (11,700) (11,500) (11,300) (11,100)
(5,000) (5,100) (5,200) (5,400) (~,600) (5,600) (6,000) (6,200)
* Chiftrea arrondis
1/ A supposer que 1lhui1erie pr~vue ~ Kita entre en service en 1976 et atteigne sa p1eine capacite de
- production an 1977\.
2/ Taux de conversion: 1 tonne d' arachides en coques = 700 kg d' arachides decortiquees\.
- 1 tonne d'arachides decortiquees - 410 kg d'huile brute et 600 kg de tourteaux (le poids
supplementaire de 10 kg est celui des coques)\.
19 septambre 1973
A\.lOiEXE 14
'ableau 6
MALI
PROJET DE DEVELOPPDfENT RURAL DmnRE
Office de surveillance et de regulation des prix
CO!Ipte de re sen_ &rachides (1969-1972)
(FlO
I Recettes
Solde crMiteur de la cais'se de stabilisation des
prix de 1 1arachide (au l-~r janvier 1970) 192,728,946
Rentreel!l pour l' a:ercice 1970
144,000,955
" " " 1971
175,231,825
" " 1972
134,351 ,225
Total des recet\.tes fin exercice 1972 646,312,951
II Depenses (1970-1971-1972)
Personnel 3,665,650
Haterie1/fournitures/carburants
2,585,135
Aide 1 1& p1'?ducti\.on
4,390,000
Ristourne a 1a oaisse d1amortissements
41,123,410
Verl!leaents effectifs/arachides
57,055,043
Contributions diverses
16,524,410
Depenses totales 125,343,648
Solde 1 1a \.tin de 1 1exercice 1972 520,969,)0)
Source: Office de surveillance et de regulation des prix\.
Ilote: 11 n1u:iste auoune ventilation des d8PenHS par exercice\. L'Of'tice de
surve11l ance et de regulation des prix possMe, a 1a fin de l'e:xercice
1972, des reserves nettes de 2\.$97 lIilll\.ons de FM, dont \.$62 millions de FM
au titre des comptes du coton\.
\.ANNEXE 14
Tableau 7
PROJET DE DEVELOPPEMENT RURAL I'N'l'1!DRE
Prix et structure de la cOIJllllercialisation du sorgho et du mil
Barbe dee prix interieurs
I\. Barime du sorgho et du mil (1972/1973
(FM/t )
Prix pqe au producteur 20,000
Frais de collecte 3,200
Dechets (5%), sacherie, frais financiers 2,500
Marge de 1'0PAM 5,000
30,700
Arrondi a: 31,000
Marge du detaillant 1,500
Prix a la consammation/zone de production 32,500
Prix a la conaommation a
BmnakD 37,000
Prix a la consommation a
Kq@s 39,000
Prix a la consommation dans la Region vi(GAO) 45,000
II\. Prix de detail dans les cooperatives et sur Ie marche de Bamako 1965-1973
(FM courants Ie kilo)
1965 1966 1967 1968 1969 1970 1971 1972 1973
Coop l rati ves (Jan\.-M~:d)
Sorgho 17\.5 17\.5 22 29 29\.5 31 32 33 37
Riz R)f 40 78 85\.25 85\.25 85\.25
Marche
Sorgho 47 56 46 39 46 41 60 73
102
Riz RM 40 91 111 113 114 87 96 113 123 145
Source: Office de surveillance et de Regttlation des prix (OSRP)
)0 decembre 1973
-
MALI
PROJET DE DEVELOPPl!l4ERT RIJRAL INTmRE
Prix et stru\.c'blre de cCBIIIlercialisation dn ,sorgho et du mil
Prix
Mil!Sorgho Mais Paddy {Qlali te 12
Mali 20 20 25
Niger 24-36 43
Senegal 30-34 32 42
Haute-Volta 28 30 43
ANNEXE 14
Tableau 9
MALI
\. PROJET DE DEVEWPPEMENT RURAL INTEGRE
Prix et structure de commercialisation du sorgho et du mil
Prix economigue deEart e!Eloitation
(EM constants 1973 et tonnes)
12\.1\.1\.2\. 76/78 79 et ensuite
FAB Golfe Etats-Unis: dollars 95 85 70
Transport maritime et assurance (dollars) ~ ~ ~
eM' Dakar, dollars 120 110 95
\. '
Equivalent FM: 60,000 55,000 47,500
Frais d'all~ge/redevances portuaires 2,900 2,900 2,900
Transport Bamako/livraison 10,500 10,500 10,500
Valeur economique Bamako (vrac) 73,400 68,400 60,900
Transport des zones productrices aux
centre de consommation 8,200 8,200 8,200
Marge des intermediaires 2,000 2,000 2,000
Prix economioue depart exploitation 63,200 58,200 50,700
Note:
a) Taux de change: 1 dollar ~ 500 EM\.
b) Les couts entre Dakar et Bamako sont constitues par les charges reelles
nettes d'imp6ts\.
c) Le transport entre les zones productrices et les centres de consomma
tion est calcule d'apr~s les hypoth~ses suivantes: distance de transport:
230 km (Sikasso/Segou-Bamako)\. Ramassage: 30 km de routes de desserte (AB)
et 20 km de pistes\. Les co"i1ts tablent sur des frais moyens indiques dans
l'Annexe 4, tableau 7, ajustes pour tenir compte des prix en 1973\.
28 decembre 1973
ANNEXE 15
Page 1
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
Modeles et budgets d'exploitation
Donnees fondamentales
1\. Les statistiques sur la population, la dimension des exploitations
et leur activite sont soit fragmentaires, soit divergentes\. Les renseigne
ments indiques ci-apres ant ete tires de l'enquete rurale effectuee en
1969/70, de 1'etude de justification du projet de developpement rural integre
menee par des consultants, des dossiers de l'operation arachide et de sources
diverses\.
i) Population\. La population rurale de la zone de l'Operation arachide
etait estimee, en 1972/73 (annee 0) a 486\.000 personnes (environ
85 % de la population totale) et le nombre d'exploitations (unites
familia1es) a 52\.000, la dimension moyenne d'un menage etant de
9,3 personnes\. Une fois atteint le stade du plein developpement,
la population rurale de la zone elargie du projet devrait passer a
pres de 1 million de personnes reparties sur 107\.000 exploitations\.
ii) Superficie cultivee et dimension des exploitations\. La zone du pro
jet mise en culture etait, en 1972/73 (annee 0), de 213\.600 ha,
l'exploitation moyenne faisant 4,1 ha (2,2 ha cultives en mil et
sorgho et 1,9 ha en arachides)\. Une fois atteint le stade du plein
rendement, la superficie cultivee passerait a pres 463\.000 ha (di
mension moyenne d'une exploitation: 4,3 hal\. Si le projet n'etait
pas execute, l'exploitation moyenne couvrirait quelque 3,8 ha, dont
1,4 ha cultive en arachides (y compris la zane d'extension)\.
Hypotheses de base
2\. a) Les modeles et les budgets des exploitations temoignent de l'in
cidence que le projet aura sur:
i) les paysans se livrant a l'agriculture de subsistance, qui
abandonneront les methodes de cultures traditionnelles
pour les techniques et les facteurs de production ameliores
dont l'adoption est recommandee dans le cadre du projet
(budget d'exploitation A); le Tableau 1 contient des de
tails a ce sujet;
ANNEXE 15
Page 2
ii) 1es paysans plus avances uti1isant deja des methodes de
cultures ame1iorees, qui passeront a 1a culture atte1ee
(budget d'exp1oitation B)\. Ce dernier cas serait soit
ce1ui des nouveaux exp10itants au bout de que1que quatre
ans, soit ce1ui des agricu1teurs deja places sous 1a sur
veillance de l'OA (Tableau 2)\. Les projections de treso
rerie pour cette categorie d'exp1oitation figurent dans
1e Tableau 3\.
b) Le tableau ci-apres recapitu1e 1e progres technique des agri
cu1teurs se trouvant dans 1a situation A (subsistance, travaux manue1s) et
l'evo1ution des exp10itants se trouvant dans 1a situation B (plus avances,
passant a 1a culture atte1ee et e1argissant leur superficie cu1tivee):
Budget A
Progres techniques d'un paysan abandonnant 1es methodes de culture tradition
ne11e pour des techniques ame1iorees
Arachides Sorgho/mil
Annee 0 Pratiques cu1tura1estraditionne11es Pratiques cu1tura1es
traditionne11es
Annee 1 Semis precoces et denses Pratiques cu1tura1es
traditionne11es
Annee 2 Utilisation de semences ame1iorees Pratiques cu1tura1es
et de fongicides traditionnelles
Epandage d'engrais Utilisation de fongicides
Annee 4 Plein rendement Asso1ement pour tirer
profit de l'effet residue1
de 1a fumure
Annee 5 Plein rendement Plein rendement
ANNEXE 15
Page 3
Budget B
Evolution de la superficie cultivee grace a la culture attelee
Superficie
totale (ha) Annee 0 Annee 1 Annee 2 Annee 3 Annee 4 Annee 5
Arachides 2 2 2,5 3 3 3
Sorgho/mil 2 2 2 bi 3 3
Total 4 4 4,5 5,5 6 6
Dont culture attelee
Arachides 0 0 1,5 2,5 3 3
Sorgho/mil 0 1,5 1,5 ~ 3 3
Total 0 1,5 3 5 6 6
Les pratiques culturales ameliorees sont adoptees des
l'annee o\.
PRO,JET DE DEVEl\.OPPEMENT RURAL INTIDRE
~t d' explo~~
Exploitation cultive\. manucH"ment ou sont 'pplig" Ie\. themes techniques \.V
__~ __ \.___\. __ \. ______\.;_Anni!elll___; __" __ -_'"; __ ~ __ -------\.;
superfide (ha) 1\.2 1\.2 1\.5
950 1,200 1,100 1,200
reIldement (kfl\.,/'na) 500 BOO
1,425 2,400 2,400 2,400
600 960
\'aleur ~a ?:O F1<l Ie k11o) 42~750 72,000 72,000 72,000
18,000 28,800
superficie 0)8\.) '2
605 605 695 845 845
rendement (kgjha) 605
1,210 1,210 1,390 1,690 1\.690
1,210
va\.leur 55 F~ le L2,150 h2,150 h2, ),0 43 \.650 59,15C 59,150
i\.'tile'\.}r tot\.ale La production 60,1r;C 71,150 8<;,100 120,650 111,1':10 131 ,1<;0
coUts de produr:t:'on
5,692 6,600 6,600 6,600
Arad:ides (?fI) 2,340 5,960
Sorgho/mil (n\.:) oJ\.' q45 04\.'
253 338 338 338
Sorgho/nrll (FH) 100 100 100
5,200 5,200 5,200
N:penses generales '0 \.J!QQ \.J!QQ 1\.000 1,000 1,000
't,'ntal 3,840 5,7 05 7,765 14,18J 14\.18) lb,183
Valeur ne:;te de la production 56,510 65,445 77 ,315 106\.467 110,Qf,\.7 n6,?M
4\. Consom:n\.a\.tion f6\.l!liliale et imp6ts
consommation !'amilie\.le 'if "5, 4/'; "5,h?< 48,450 4R,11S0 "R,450 4R,4S0
Imp3t persotL'1el y 2\.800 2,800 2\.800 2\.800 2\.BOO 2\.800
Total 48,275 48,2"15 51,250 51,250 51,250 51\.250
Revenu moneta:ire net
Annuel 8\.235 17,170 20,085 5<;,217 6C;,717 ,'\.:(,717
Cumule\.tif 8,235 25,"05 51\."90 106,7(fl '72,424 218\.141
6\. Rem1l\.'14re\.ticn d~ la main d;oeuvre
Main d' oeuvre n~cessaif'e ?J
97 120 158 232 232 232
- Arac':lides
- Sorgho et mil ----1l§\. -ill -ill ~ ~ ~
1'otaJ\. 223 256 294 374 388 388
R,,'ICl't! cotal net par hornme-jotlr travaiUe (FM) 253\." 25$\.6 26J\.O 28;'\.7 101\.' 101 \.,
Revenu :mon4!taire net par hO!llll1e-jour travaill ! (EM) 36\.9 67\.1 88\.7 147\.6 169\.;' 169\.4
6,648 7,69> 9,098 12,526 1J,7f}1 13,761
F-evenu ne':\.: par tete (31)
16 18 22 )0 )3 33
Revenu ne"';; par tete (dollars)
11 de vaEe: parcelle de 3 a4 ha, fa\.m111e de 8,5 peraonnes dont 3,5 actives et
gj Semences~ l\.,rachides 65 kgjha kg lea annees auivantel\.l
Mil et sorgho:: 10 0, 13,5 kgjne\. a 35 EM les annees suive\.ntes\.
L'fUUlee 2, e\.chat de semences (1' arsenides a\.:nl\.liorees a 34,5 'EM Ie kilo;
les sentences sont renouvel~ee tQUS lea quatre ans; celles produites par Ies paysans sent valorisees
;!J FM Ie kilo\.
21 Aux prix de cession officie1s act"\.lels\.
':Y Estime",s & 250 FM/ha pour l' outillage\.
J'l\.rat:r,ides: kg ps\.r habitant et par an, a )0 FM Ie kilo~
Sorgho et 11+0 par he\.bi tant e't\. par an, passant k 150 kg par habitant par an
lI\. compter de l' ann~e '" F1'4 Ie kilo\.
fiI 1\.400 PM pa\.r aduite :uta\.le\.
Voir A::m2xe tallieau 10\.
:F i
1
eau
Budget\. d1une explo1t\.eUon B
!l5!!o1t\.eUon uUl1sant 1\. oulwn att\.el" !I
ANlli
1 RendementB,z E!oduct1on et valeur
~
2\.5
superficie (ha)
1,200 1,200 1,200 1,200 1,200 1,200
renrl"""",t (lrg/ha)
2)400 2)400 3 t OOO 3,600 3,600 3\.600
produc tion (kg)
72)000 72,000 90,000 108,000 108,000 108,000
valeur (d 30 FM Ie Wo)
Sor~ho/laU
auperfici\. (ha) 2\.5
rendement (kg/ha) 845 976 976 991 1,020 1,020
production (kg) 1,690 1,952 1,952 2,478 3,060 3\.060
59, '50 68,320 68,320 86,730 107,100 107,'00
valeur (a 30 FM Ie Wo)
131,150 140,320 15b,3 2o 194,730 215" 100 21S,lOG
V"leur t\.otal\. d\. I \. production (FM)
2\. cotits de l:l"Oduct1on
~
Arachid (FII) 6\.600 8\.250 9,900 11,385 '}\./ 9,900
7,590\.Y
Sorgho/mll (Fill 94, 945 945 1,1bO 1,420 , ,420
Fongicid W
Arachide\. (fill 338 338 423 i07 507 507
Sorgho/mll (FM) 100 100 100 125 150 150
!:grai\. J!I 5,200 5,200 6,500 7,800 7,800 7,800
\.\lilnent\. 'if et so in\. du betail 2,350 3)145 4,175 4,690 4,690
Co<lt du materiel §! 11,700 11,700
11,700 11,700 11,700
De;EeJ1\.ses Enerales ]J
\.l\.QQQ \.l\.QQQ -L\.ill\. 1,375 ~ ~
Total 15\.173 28,233 32, l~b 30, '(02 39,152 37,667
3\. Valeur nette de la EroducUon
112,001 12b,13 2 15'7,900 1'I5,t4o IT(,4J\.:!
"'5\.97"1
4\. Consommation familiale et ~to !Y 51,250 51,250 5' ,250 51,250 51,250 51,250
5\. Reve\.nu monetaire net
- Annual 64,727 60,1137 71J,~e2 lOb, 71~ 1214,69t; 120,11)3
CumulatU 125,564 200,W\.b 3<1/,16b LJ31,tJ62 S5e,auS
64,727
6\. Remnners:t1oo de Is\. main d10euvre
Main d 1 oruVl'e neceesaire a 18 cuI\.tura de 1 t arQchide
232 232 236 257 239 239
:Main dtoeuvre neccesai\.re A Is\. culture do mil et
du \.orgho ~ \.--ill \.--ill ~ -----ill\. -----ill\.
388 369 373 459 434 434
Total
Revenu net per h"""",,- jour travailU (fill 298\.9 303\.8 338\.2 %4\.2 1;05\.4 408\.8
il<tvenu monet\.a1re net par hOlllllle-jour travsille (FM) lU\.~ 11>4\.Q 200\.R 2~2\." :?R? \.'1 290\.7
_erru net par habitant (FM)
13,61,4 13,187 lu,839 18,584 20,700 20,874
(dollars) 49~3
32\.5 31\.4 35\.3 44*2 49\.7
~ a
EQrpotheses de baee I parcelle de 4 Ii 6 hal \.!'udlle de 8,5 peraannes, dent ),5 ""Uvea at 2 l\.IJpo\.bl
~
labour profond fait QUjIIIlAmter de 175 kg le rend\.-nt cIn sorgho \.t cIn 1I1l\.
Semenc ameli\.rees renouvelee\. tau\. 1 quatre ansl cedt pour l'exp]\.o1tant 34,5 FI! le kilo\.
Aux pril:: de cees10Il officiels ,actuels\.
6/
1,600 FM per an pour 1 ooina des -= + 2 kg de c6reale\. per jour do travail\.
Y compri\. l'entretien, le renouvell"""",t (5,000 FII) et l'_rU ement\. (6,700 FM)\.
7/ 250 FM \. I l hect\.en pour l'outillAge\.
8/ :rmpCta: 1,!tOO FM per adult\. \.ne \.t per m\.
e dilcembre 1973
"
HA\.LI
FROJET DE DEVEIJ)PFEj{ENT ~URAL lliTnYRE
_(~!\.:2~1£ l i qHid'U:es 1\.1ti:tisa"t 1a C1'1 1,'
r\. Sorties de fonds -- ------ - ---~------ ----------- --- ---- ----- -- -- - ------------- --- Annees
\.9\. \.l \.L \.L \.L \.L \.L \.l \.L \.1L
Facteurs de production 14,228 8,238 9,748 11,407 22,942 11,557 11 ,557 11,557 22,942 11,557 11,557
gj
t-lateriel/ animaux de trait 70,000 53 J 500 5,000 5,000 40\.000 40,000 23,500 5,000 5,000 40,000
ImpSts 2,800 --1\.J!QQ --1\.J!QQ --1\.J!QQ ---L\.!!QQ ~ --1\.J!QQ ~ ---L\.!!QQ -1\.!QQ ~
Totu partiel 87,028 64,538 17 J548 19,207 65,742 54 ,357 37,857 19,357 30,742 54,357 54,357
Acompte verse 21 16,166
!v
5,200 6,500 7,800 7,800
Remboursement des credits de campagne 12,790 19,185
Remboursement des cr~ts a moyen terme 16,167 16,167
Total sorties de fonds 115,984 85,905 40,215 27,007 84,927 62,157 37,857 19,357 30,742 54,357 54,357
II Rentrees de fonds
21 75,935 74,575 90,925 117,660 139,065 129,165 129,165 129,165 139,065 129,165 129,165
Ventes (nettes)
Autre::;: recettes
Y 50,000 50 t OOO 50,000 50,000 50,000
Credi t de campagne 12,963 5,200 6,500 7,800 19,185 7,800
Credi t a moyen terme
32,334
Total des rentrees de fonds 138,898 112,109 97,425 175,460 208,250 186,965 129,165 129,165 139,065 129,165 129,165
III Solde des liguidi t~s
Armuel 22,914 26,204 57,210 98,453 123,323 124,808 91,308 109,808 108,323 74,808 74,808
- Cumul\.atif 22,914 49,118 106,328 204,781 328,104 452,912 528,035 637,843 746,166 820,974 895,782
Y Hypotheses de base: voir !lIlIlexe 3\.
Y
21
Acnat d'une pe\.ire de boeufs l'ann~e 0,
de semences l'annee 1; a\.chat de pieces
Un tiers du coQt total\. du materiel\.
recnange
les annees 4/5 et 9/10, a\.cna\.t d'un mu1ticu1teur et
l'ann~e suivante\.
ljJ Les prix de revient des facteurs de production du materiel comprennent les charges fina\.nC'ieres et les frais de livra\.:ison\.
I
21 Sans compter Is\. consommation fem1liale, l'aliJ:nenta\.tion des animaux et les semences\.
6/ Economies de I' annee prec~dente portees a I' annee 0) produit des ventes de hoeuf's pour les annees ul terie\lres #
31 aout 1913
MALI
PROJET DE DEVELOPPEMENT RURAL INTIDRE
Incidence du \.,roJet sur l' Hat con\.oliM des finances Eubli!lues Y
(MF Million)
Exercic:e: 1 3 5 7 9 10 12 - 21
1973/74 1975/76 1977/78 1979/80 1981/82 1982/83 1984/85
1993/94 2\123/24
REli'l'REES DE FOll'OO
Recettes des tu:es sur lea arach:1des y 553\.7 827\.1 1,147\.7 1,639\.6 1,700\.3 1,649\.8 1,535\.3 1,346\.4 1,346\.4 1,346\.4 1,346\.4 1,346\.4 1,346\.4
llroi ts et taxes snr les depenses
clu projet 78\.0 233\.0 169\.5 84\.7 81\.6 53\.6 53\.6 35\.0 32\.0 28\.9 24\.9 24\.9 24\.9
Ibn du FAC 454\.0 244\.8 235\.7 161\.0 163\.9
CrOOi t de l' IDA 1,350\.8 1,151\.1 725\.8 772\.4
Ibntribution des agr:!\.cul\.teurs aux ccrdts
eupplementa\.iree des faeteurs de ProcluctiozJ! 34\.7 209\.6 343\.8 524\.9 734\.2 482\.2 389\.8 309\.1 309\.1 309\.1 309\.1 309\.1 309\.1
TotaJ\. rentrees ,120\.4 2,865\.3 3,047\.8 3,136\.0 3,452\.4 2,185\.6 1,978\.7 1,690\.5 1,687\.5 1,684\.4 1,680\.4 1,680\.4 1,680\.4
SORTIES DE FOliDS
Ccrdts supplementa\.irss des faetenrs de
production (non subventionnes) !!I 212\.4 348\.8 478\.5 619\.1 732\.7 324\.7 329\.8 329\.8 329\.8 329\.8 329\.8 329\.8 329\.8
Administration du projet Jf 644\.3 1,636\.8 1,251\. 9 685\.4 665\.1 292\.3 292\.3 225\.1 197\.9 170\.4 139\.9 139\.9 139\.9
Fonde reIlOUvelable pour les forges et lee
v6hicules des agente de la wlgarisation 24\.2 14\.0 4\.7 8\.9 (27\.6) (18\.8) (5\.4)
Imprevns 103\.0 353\.5 383\.4 455\.9 631\.0
TotaJ\. sorties de fonds 983\.9 2,353\.1 2,118\.5 1,769\.3 2,001\.2 598\.2 616\.7 554\.9 527\.7 500\.2 469\.7 469\.7 469\.7
Flux net avant serv:iee de la dette 136\.5 512\.2 929\.3 1,366\.7 1,451\.2 1,587\.4 1,362\.0 1,135\.6 1,159\.8 1,184\.2 1,210\.7 1,210\.7 1,210\.7
Serv:iee de la detta (eomdssion d1engagement + 28\.1 28\.1 28\.1 28\.1 28\.1 28\.1 28\.1 28\.1 28\.1 28\.1 65\.6 140\.6
~ursement)
nux net de ll!l!!d1 tea 136\.5 484\.1 901\.2 1,338\.6 1,423\.1 1,559\.3 1,333\.9 1,107\.5 1,131\.7 1,156\.1 1,182\.6 1,145\.1 1,070\.1
Flu CUlIIIllatif de llqn1d1 th 136\.5 620\.6 1,521\.8 2,860\.4 4,283\.5 5,842\.8 7,176\.7 8,284\.2 9,415\.9 10,570\.0 U,754\.6 23,205\. 6 55,lO8\.6
y de l'Etat, caisse de stabilisation, arachide et SCARR\.
'iY sur Ie produit des taxes et sur arachides - voir tableau 2\.
"5J Facteurs de production fournis par la SCAER et l' operation are\.chide seulement: comprennent l' \.chat au comptant, les acomptes et les remboursements\.
!!I Depenses publi~ues pour les facteurs de production agricoles y compris Ie credit et lea SUbventions\.
?\.! Depenses d' equipement et de fonctionnementdu projet\. fl
"
26 avril 19r4 \. \. 1:;:\.
MALI
PROJET DE DEVELOPFEMENT RURAL INTEDRE
Incidence du projet SIlr l'etat conaolide des finances publiques
])3ta\.il du produit des ~ts et des preUvements SIlr 1es arachides
Millions de FM)
1 2\. 1 !± \.2\. §\. I \.!!\. \.2 10 l!\.:\.1\.1
I\. Production cOllllll&rc1aJ\.isee Y
(tonnes non dleortlqu&es ,
- avec projet 55,000 64,600 79,200 96,800 105,630 108,740 111,120 111,120 111,120 111,120 111,120
- sans projet 47,840 50,850 54,SOO 55,530 56,230 56,230 56,230 56,230 56,230 56,230 56,230
Accroissement 7,160 13,750 24,700 41\.270 49,400 52,510 54,890 54,890 54,890 54\.890 54,890
II\. Produits de 1a vente
Valeur SIlr Ie marche Y 768\.5 1,239\.6 1,888\.7 2,877\.7 3,18Z\.3 3,225\.1 3,182\.0 2,993\.1 2,993\.1 2,993\.1 2,993\.1
Paye au producteur 'JI 214\.8 412\.5 741\.0 1,238\.1 1,482\.0 1,575\.3 1,646\.7 1,646\.7 1\.646\.7 1\.646\.7 1\.646\.7
Recettea pour l'Etat 553\.7 827\.1 1,147\.7 1,639\.6 1,700\.3 1,649\.8 1,535~3 1,346\.4 1,346\.4 1,346\.4 1\.346\.4
III\. Repartition des Recettes Etat ~/
Au 'budget de ltEtat
- droits d l exportation 44\.9 86\.1 154\.8 258\.6 309\.5 329\.0 343\.9 343\.9 343\.9 343\.9 343\.9
- tues SIlr les op&rations de
cClllllllerc1a\.11aation 3\.9 7\.6 13\.7 22\.8 29\.3 29\.0 30\.3 30\.3 30\.3 30\.3 30\.3
A l'OA et A 1a &lAER 68\.7 132\.0 232\.1 396,2 474\.2 504\.0 526\.9 526\.9 526\.9 526\.9 526\.9
A 1a caisse de stabilisation 50\.1 96\.3 172\.9 288\.8 345\.8 367\.6 385\.7 385\.7 385\.7 385\.7 385\.7
A la SCHIEl (retention de projets) 386\.1 505\.1 574\.2 673\.2 543\.5 420\.2 248\.5 59\.6 59\.6 59\.6 59\.6
TO'l'AL 553\.7 827\.1 1\.147\.7 1,639\.6 1,700\.3 1,649\.8 1\.535\.3 1,346\.4 1,346\.4 1,346\.4 1,346\.4
1/ La production commercialisee sans Ie projet diminuerait par nypothese de 61% (ratio actuel avant Ie projet) a 53% a mesure que sont prises en
compte des regions plus etendues ou 1es structures de moyens de commercialisation sont plus faibles\. Jnver§ement, la production commercia1isee avec Ie
projet passera a 64$ puis, apres un flechissement au cours des annees 2 et 3 (60 et 62%), se stabilisera a 65%\.
~!
g/ Valeur projetee depart exploitation plus frais de transport de l'exploitation au marche, voir annexe 14\.
21 Les prix payes aux producteurs sont supposes ~tre de 30 FM Ie kilo pour des arachides en coques (prix officie1 en vigueur sur Ie marche)\.
~ D'apree les prelevements en vigueur (Bar@me 1973/1974)\. II est suppose ~ue Ie taux des taxes reste inchange pour Ie budget de l'Etat\.
)
\.
\.
MALI
PROJET DE DEVELOPPEMRNT RURAL INTEGRE
Recettes en devises 11
(Millions de FM)
~ 10 11 - 15
Annee: !\. ? 3 ~ 2 ~ I 1i!\.
Recettes en 3,480\.7 3,480\.7
3,257\.2 3,643\.3 3,691\.9 3,669\.8 3,480\.7 3,480\.7
836\.6 1,369\.6 2,119\.7
1,610\.0 1,985\.2 1,883\.8 2,001\.4 2,001\.4 2,001\.4 2,001\.4
pour mil et sorgho gj 126\.8 441\. 7 771\.6 1,181\.6
5,677\.1 5,553\.6 5,482\.1 5,482\.1 5,482\.1 5,482\.1
Total des recettes 963\.4 1,811\.3 2,891\.3 4,438\.8 5,253\.3
325\.1 290\.2 276\.0 261\.7 245\.9
Couts en devises 21 560:9 1,337\.1 1,209\.8 1,020\.7 1,175\.4 322\.4
5,354\.7 5,228\.5 5,191\.9 5,206\.1 5,220\.4 5,236\.2
Recettes nettes en devises 402\.5 474\.2 1,681\.5 3,418\.1 4,077\.9
11 l' accroissement de la production commercialisee et la valeur rendu frontiere malienne; chiffres tires de
14, tableau 4\.
P;~
g;
"
'~ te;
,\.
gj D' apres l' accroissement de la production commercialisee et la valeur rendu frontiere malienne; chiffres tires de va
l'Annexe 14, tableau 9\.
21 Voir Annexe 12\.
26 avril lo/r4\.
"
ANNEXE 17
Page 1
MALI
PROJET DE DEVELOPPEMru~ RURAL INTEGRE
CALCUL DU TAUX DE RENTABILITE
1\. Le Tableau 1 indique en detail les benefices et les couts utilises
pour calculer Ie taux de rentabilite economique du projet\.
2\. Les calculs se fondent sur les hypotheses ci-apres:
a) Duree de vie du projet\. Elle est, par hypothese, de 15 ans a compter
l'annee 1 du projet (1973/74)\. Elle est fixee pour tenir compte de
la vie utile des principaux investissements effectues dans Ie cadre
du projet\.
b) Benefices du projet\. (Voir Tableau 2)
i) L'Annexe 3 indique 1es rendements et la production retenus
dans les calculs\. Les semences et les cereales qui seront
utilisees dans l'alimentation du betail ont ete deduites du
volume de la production\.
ii) L'Annexe 14, Tableaux 4 et 8, indique les prix economiques
depart exploitation qui sont utilises dans les calculs\. lIs
se fondent sur les previsions des cours internationaux etablis
par Ie Departement de l'analyse et des projections economiques
de la Banque\. Les benefices tires de la culture arachidiere
ont ete calcules en utilisant Ie prix a l'exportation, sans
tenir compte des benefices tires de la transformation en huile\.
Les benefices tires de la production du mil et sorgho sont
calcules en fonction du prix des importations qu'elle remplace\.
iii) Les benefices attribuables a l'amelioration des routes proposee
dans Ie projet sont pris en compte par Ie biais des economies
de cout faites sur les transports directs et Ie fonctionnement
des vehicules\. L'Annexe 4 indique la rentabilite de cet ele
ment du projet\.
ANNEXE 17
Page 2
c) Couts du projet
i) Tous les couts utilises dans les calculs sont pris hors impots
directs, droits d 1 importation et imprevus financiers\.
ii) Le cout non subventionne des facteurs de production et du mate
riel agricoles, y compris les couts de distribution, a ete prie
en compte dans Ie calcul du taux de rentabilite\.
iii) Le Tableau 3 indique Ie nombre et Ie cout supplementaires des
salaries agricoles\. Le taux de salaire de 200 francs maliens
par homme-jour utilise pour Ie prix de la main-d'oeuvre cor
respond au gain moyen estimatif du "Navetane", travailleur
agricole migrant; les Navetanee constituent la principale source
de main-d'oeuvre agricole au Mali\. Ce taux est juge comme une
retribution equitable de la desutilite attribuable aux efforts
supplementaires demandes aux agriculteurs participant au projet\.
II doit etre compare au gain de la main-d'oeuvre pour un agri
culteur n'utilisant presque aucun facteur de production modeme
(voir Annexe 15) et represente 57 % du taux joumalier officiel
de la main-d'oeuvre dans les zones rurales (350 francs maliens)\.
iv) Les couts d'administration du projet incluent les couts des
services d'appui foumis par les sous-projets secondaires\.
Les couts du sous-projet principal ont ete ajustes pour tenir
compte du personnel de vulgarisation et des depenses de fonc
tionnement du projet en cours d'execution qui, en l'absence
de ce nouveau projet, auraient ete affectes a d'autres acti
vites de developpement\. Cette proportion est estimativement
fixee a deux tiers du personnel de vulgarisation et des depen
ses de fonctionnement en 1972/73\.
3\. Les hypotheses qui viennent d'etre enoncees donnent un taux estima
tif de rentabilite de 91,2 % au bout de 15 ans et de 91,3 % au bout de 20 ansa
Plusieurs variantes ont ete utilisees pour effectuer Ie test de sensibilite,
les plus representatives etant enoncees ci-apres\.
ANNEXE 17
Page 3
Beneficies tires de T/R
Couts Arachides Mil/sorgho (%)
110 100 100 69
120 100 100 54
130 100 100 44
100 90 90 67
100 80 80 49
100 75 50 30
110 90 90 53
130 90 90 33
UO 80 80 29
110 75 50 22
MALI
PROJET DE DEVELOFPEMEN'l' RURAL IRTmRE
CotIts et benefices econ~s du ~rojet
(Mfillons PM)
AImee, \.Almee 6 Annte 10 Ann8e 11-lS
\.Almh 1 \.Almae 2 ~ \.Annee\.4 AnnAe 7 \.Almee 8 AImee 9
1973/74 1974/75 1975/76 1976J\.J:1 1979/80
I BenilfioFes du projet !I
Valeur du suppl&nent de product\.1on
Arach1des 758\.1 1,024\.7 1,773\.9 2,873\.9 3,229\.5 3,335\.7 3,326\.9 3,125\.0 3,125\.0 3,125\.0 3,125\.0
KU/llOrgbo 115\.6 402\.5 703\.2 1,068\.6 1,456\.1 1,795\.5 1,680\.0 1,784\.9 1,784\.9 1,784\.9 1,784\.9
Total I 873\.7 1,427\.2 2,477\.1 3\.942\.5 4,685\.6 5,131\.2 5,006\.9 4,909\.9 4,909\.9 4,909\.9 4,909\.9
n Do2 enaee du pzr:;
al FriIs diS:---et\.ration ~ , 21
Depenses suppi~entaires projet - &6&\.5 1\.6Q5\.~ 1,256\.6 694\.3 665\.1 225\.1 197\.9 170\.4 139\.9
Dopensell de 1 10A J/ 193\.3 ~ ~ 193\.2 193\.2 148\.8 130\.8 112\.6 92\.5
Total part\.1e]\. 861\.8 1,799\.0 1,449\.8 887\.5 858\.3 485\.5 485\.5 373\.9 328\.7 283\.0 232\.4
Taxell sur les depenses du projet Y 78\.0 233\.0 169\.5 84\.7 81\.6 53\.6 53\.6 35\.0 32\.0 28\.9 24\.9
Taxes sur lee dilpenses de 11 OA !II 14\.5 14\.5 14\. ? 14\.5 11\.2 ~
Total partiel 92\.5 247\.5 184\.0 99\.2 96\.1 68\.1 68\.1 46\.2 41\.8 37\.3 31\.8
Total gell frais d l adKl\.nist\.rat\.1on 76<J \.! 1,551\.5 1,265\.8 788\.3 762\.2 417\.4 417\.4 327\.7 286\.9 245\.7 200\.6
b) Couts '2our les exeloitants
Snpplement de main dloeuwe agr:l\.cole 21 76\.0 327\.6 517\.4 790\.0 927\.0 1,026\.0 1,037\.8 1,042\.8 1,042\.8 1,042\.8 1,042\.8
Slppllllaent de"faeteurs de production et
de _ ter:l\.el agr:l\.coles §j 211\. 8 348\.3 480\.3 639\.1 766\.4 360\.4 365\.5 365\.5 365\.5 365\.5 421\.5
D6penses divereell 22\.2 38\.9 ~ 25\.7 -2§\.& -2§\.& -2§\.& ~
'!'otal part\.1el 296\.4 698\.1 1,036\.6 1,488\.5 1,777\.6 1,478\.7 1,499\.0 1,505\.1 1,505\.1 1,505\.1 1,561\.1
c) mi!!slIa\.nt dee 5{!ant\.1tes 44\.8 101\.1 88\.4 67\.6 72\.2
Total n 1,110\.5 2,350\.7 2,390\.8 2,344\.4 2,612\.0 1,896\.1 1,916\.4 1,832\.8 1,792\.0 1,750\.8 1,761\. 7
III Avant&gee eoo~ell nets (236\.8) (923\.5) 86\.3 1,598\.1 2,On\.6 3,235\.1 3,090\.5 3,077\.1 3,117\.9 3,159\.1 3,148\.2
Tam: de rt!ltab1lite ecollOlllique: au bout de IS ansI 91,2 % i au bout de 20 ans: 91,) %
~
Voir Tableau 2\.
~
Voir IImHIlIJI 12\.
2/) du pe1'IIIOnnel de 1 10A et dee cotta de fonctionn_t, voir am!8%e 12\.
14
Environ 2)% des frats de !onctionnement\.
Voir Tableau 1)\.
Les e~es lI1ant eta dedu1tell de 1a product\.1\.on, le ch1i'tre ca\.prend saul_ant
les co1lta de production et de distribut\.1\.on de BlIII8I1Cell\. selec tionnees
!kr1er 1974
\.
~dllil"'\.
!
MALI
PROJET DE DEVELOPPEMENT RURAL INTEJJRE
Calcul de la rentabilit~ ~conomioue
Benefises du projet
A\. Quantit~s (tonnes)
3 4 5 6
Arachides
Accroissement de la production 7,470 13,520 26,830 46,480 56,430 61,215 64,885 64,885
Accroissement des quantit~s de semences -1!ll --L\.lli 3,100 4,316 \.2\."ill\. 5,748 \.£a\.ill \.£a\.ill
Accroissement net 7,187 11,599 23,730 42,164 51,271 55,467 58,686 58,686
Mil
Accroissement de la production 1,905 7,020 12,215 20,020 27,255 33,135 36,355 38,63S
Accroissement des quantit6s de semences 10 425 484 566 625 663 710 735
Aliments pour animaux 11 \.-ill ~ 1,092 1,610 ~ ~
Accroissement net 1,829 6,369 11,127 18,362 25,020 30,850 33,137 35,206
B\. Valeur (millions de FM) gj
Arachides 758\.1 1,773\.9 2,873\.9 3,229\.5 3,335\.7 3,326\.9 3,125\.0
Mil/sorgho 1,068\.6 1,456\.1 1,795\.5 1,680\.0
Total 873\.7 1,427\.2 2,477\.1 3,942\.5 4,685\.6 5,131\.2 5,006\.9 4,909\.9
1\. Voir Tableau 3
~i
2\. Les prix ~conomioues d6part exploitation utilis6s dans les calculs, sont ceux de l'Annexe Tableaux 4 et 9\.
28 d6cembre 1973 ~tx:I
J\)!::I
<I
~
f\;>
0 \. PROJET DE DEVEIDPPEMENT RURAL INTETIRE
0
0
c+ ~c~o~s~merrt des beso1ns en main d'oeuvre agricole et en alimentation des animaux de trait
0
0'
"!
(J)
Annee: _1_ _2_ _3_ \.!L _ 5_ -L _7_ _8_
~
\)J
I\. Main d'oeuvre necessaire 11
(Milliers d'hamme-jours)
Arachides 303 841 1,594 2,620 3,054 3,413 3,342 3,342
MU/Sorgho 77 797 -ill 1\.330 1\.581 1\.720 1,847 1,872
Total 380 1,638 2,587 3,950 4,635 5,133 5,189 5,214
Valeur (Millions de FM)
(Utilisant 200 FM par homme-jour) 76 327\.6 517\.4 790\.0 927\.0 1,026\.6 1,037\.8 1,042\.8
II\. Aliments necessaires pour lea boeufa
Accroisaement du nombre de jours de travail (MUliers)
Arachides 30 77 165 283 427 497 670 670
Mil/Sorgho \.2 1&\. -11L ill 378 314 584 ill\.
Total 33 113 31J2 546 805 811 1,254 1,347
Aliments necessaires gf
( tonnes de cereales') 66 226 604 1,092 1,610 1,622 2,508 2,694 ~I'
~
\)J~
11 Accroissement net, compte tenu de l'economie attribuable ~ la culture attelee\.
g; 2 kg de mil/sorgho par paire de boeufs et par jour de travail\.
\.1
MALI
PROJET DE DEVELOPPEMENT RURAL INTEGRE
ORGANISATION DU PROJET
--
MINISTRE DE LA PRODUCTION
_--?'
, generale
Direction (' Institut d'economie
I
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_
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Conseil _ _ _ _ _ _ _ Directeur general du projet _ _ _ _ _~ Unite d'evaluation
d'administration
Directeur general adjoint
"\. \.
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"\.,\.""'"
Chef du personnel
~,\."\.
Directeur technique Chef comptable
I I I
@ ® Chef Adjoint au Credit Comptes
STr Cf®'l~ V
Unites Agents Chef _ _ _ _ _ Agent Socio-economique \. _ _ _
Routieres - - - C\.A\. - - - secteur secteur
I
--
(Secteur)
L_ l\.
\.
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-\.
sous-secteur
_ _ _ _ _ Agent Socio-economique _____
sous-secteur
\1\.-_ _\.,\.---_--11
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Chefs' des secteurs
de base
I ------
AGRICULTEURS
----------------------
SOUS-PROJETS SECON DAI RES
A\. Recherche conjointement avec la Direction de la recherche agricole de L'I\.E\.R\.
B\. Amelioration des pistes rurales conjointement avec la Direction nationale des travaux publics (DNTP)
C\. Alphabetisation fonctionnelle conjointement avec la Direction de I'alphabetisation fonctionnelle
D\. Assistance medicale conjointement avec la Qirection des services medicaux
E\. Assistance veterinaire conjointement avec Ie service de I'elevage et de la sante animale (SESAI
1! STR = Service des travaux routiers
?:\.,! C\.A\. = Culture attelee
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iPROJET DE DEVELOPPEMEf'H RURAL
PROGRAMMES (EN COURS ET PR
D'AMELIORATION: DES ROUTES
- ROuTES BITUMH:\.S [j PLUS Of lARGE
- - ROUTES 8JTUMEES 111 lH
----Rouns TER
- - - - - gUlins EN TEfl
PISTES MIf\.ELlOREES
PISHS NON AIHLlUREfS
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FINANCEMENT FAe, 197:,
- - PREMIER PHOlfT ROlJlIER ICI11S7L Isn Iq7!)
_ PROGRAMME COMPLEMEr~ r;\IRE PRUPOSE POUR pnl),IET
RQJII~S~jlB\.!H §"MJ>~ I ~LA ,p_ O,,,-IXPf 9 AUT E
FINANCEMENT FAC, 1973,1976
« PREMIER PRDJEr HOLITIER ICR_1971\.1971-1975 G U N E E o l T A
\.,\. PRUGRAMME COMPlEMENTAIR[ PROPOSF POUR 3EMF PRDJET
\.++\.++++\. PISTES RURALES A AMELIDRfH DANS LE CADRE ell PHOiET
~ VOlES FERREES
FLUVIALES NAVIGABLES (JUllLEH1ECEMBHE) ! 10"
AEROPORT INTERNATIONAL
AERODROMES SECONOAIRES
FRONTIERES
o 50
'---~
l COT E 0' I VOl R E
"FeLES | APPROVAL |
P006276 | Donent of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 6568
PROJECT PERFORMANCE AUDIT REPORT
9RAZTL SECONDARY AND FEEDER ROADS PROJECT
(LOAN 1207-BR)
December 23, 19P6
Orrat;ons Evaluation Department
This document has a restricted distribution and may be used by recipients only !n the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization
CURRENCY EXCHANGE RATE
Name of Currency (Abbreviation) Cruzeiro (Cr$)
Calender Year Average
1976 US$ 1 = Cr$ 11
1977 14
1978 18
1979 28
1980 53
1981 95
1982 178
1983 577
1984 1,848
TH WORLD SANK OU LY
Washington\. DC 20433
UiSA
Ofte n DsonwS-Cmwual
Opeseens IbIessnM
December 23, 1986
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Performance Audit Report: Brazil Secondary and
Feeder Roads Prolect (Loan 1207-BR)
Attached, for information, is a copy of a report entitled
"Project Performance Audit Report on Brazil Secondary and Feeder
Roads Project (Loan 1207-BR)" prepared by the Operations Evaluation
Department\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance
of their oftiti duties, Its contents may not otherwise be disclosed without World Bank authorization
FOR OFFICIAL USE ONLY
PROJECT PERFORMANCE AUDIT REPORT
BRAZIL SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
TABLE OF CONTENTS
Pate No\.
Preface \. \. \. * \. *
Basic Data Sheet \. \. ii
Evaluation Summary \. \. v
PROJECT PERFORMANCE AUDIT MEMORANDUM
I\. ROAD SECTOR LENDING \. 1
II\. PROJECT OBJECTIVES, DEFINITION AND DESIGN \. 2
III\. PROJECT IMPLEMENTATION \. 5
IV\. PROJECT ECONOMICS AND SUSTAINABILITY \. 9
V\. CONCLUSIONS \. \. \. \. 12
ATTACHMENT 1 - Comments from Banco Nacional de Desenvol-
vimento Econowico e Social (BNDES) \. 16
PROJECT COMPLETION REPORT
I\. Introduction \. \.17
II\. Project Preparation, Appraisal and Negotiations 18
III\. Project Execution \. 19
IV\. Cost Estimates and Disbursements \. 21
V\. Economic Reevaluation \. \.22
VI\. Perfcrmance of BNDE, DNER and the Sub-Borrowers \. 23
VII\. Role of the Bank \. \. \. 25
VIII\. Conalusions \. \. \. \. 26
TABLES
1\. Evolution of the Financing Plan \. 28
2\. Processing Time of the Subloans \. 29
3\. Review of Final Design and Bid Documentation \. 30
4\. Average Costs of Construction \. 31
5\. Performance of the Sub-Borrowers \. 32
6\. Project Cost \. \. 33
7\. Final Financier Participation \. 34
8\. Schedule of Disbursement \. im 37
9\. ERRs for Road Links - ExAnte Estimation \. 38
10\. Vehicle Operating Costs \. 39
11\. Economic Evaluation \. \. \. 40
12\. Final Physical Targets \. 41
This document has a restricted distribution and may be used by recipients only in thc performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
i
PROJECT PERFORMANCE AUDIT REPORT
BRAZIL SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PREFACE
This Project Performance Audit Report (PPAR) represents a performance
audit of the Brazil Secondary and Feeder Roads Project\. Approved on February
10, 1976, the project was supported by Loan 1207-BR for US$ 55 million, of
which about US$ 49\.5 million were disbursed and about US$ 5\.5 million were
cancelled\. Further Bank financing for the project in the amount of US$ 19\.5
million was made available under the Second Feeder Roads Project, Loan 1730-
BR, approved on June 19, 1979\. The last disbursement under Loan 1207-BR was on
September 13, 1984\.
The PPAR consists oft (i) an Evaluation Summary and a Project Performance
Audit Memorandum (PPAM), written by the Operations Evaluation Department
(OED); and a Project Completion Report (PCR), dated June 14, 1985, produced by
staff of the Latin America and the Caribbean Regional Office\. The PCR was
issued in a timely manner, and its quality is good\.
OED has reviewed the PCR against the President's Report, the Staff Ap-
praisal Report (SAR), the legal dociments, other project files and documents
and the transcript of the Executive Directors' meeting which considered the
project\. Further, OED discussed the project with Bank staff and, during a
mission to Brazil in May/June 1986, with officials of state governments and
the executing agencies\.
Following standard procedures\. OED has sent copies of the draft PPAR to
the federal government and executing agencies for comments\. One agency has
sent a reply which is reproduced as Attachment 1 to the audit report\.
ii
PROJECT PERFORMANCE AUDIT BASIC DATA SHEET
BRAZIL SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
KEY PROJECT DATA
Appraisal Actual/
Estimate Forecast
Total Project Cost (US$ million) 237\.0 214\.0/1
Loan Amount (US$ million)
Loan 1207-BR 55\.0 55\.0
Loan Dishursed (US$ Million)
Loan 1207-BR 55\.0 49\.5/2
Loan 1730-BR 0 19\.5
Date Physical Components Completed 12/31/80 06/30/84
Proportion of Physical Components
Completed by Original Schedule (%) 100 12
Time Overrun (%) 0 72
Economic Rate of Return (%) n\.c\./13 n\.a\./4
CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS
(US$ million)
Bank FYs: 76/77 77/78 78/79 79/80 8Q8 81/82 82/83 83/84 85/86
Loan 1207-BR
(i) Appraisal 0\.5 8\.0 24\.0 40\.0 52\.0 55\.0 55\.0 55\.0 55\.0
(ii) Actual 0 0 2\.0 6\.5 7\.4 18\.1 23\.3 45\.5 49\.5
(iii) Actual as %
of Appraisal 0 0 8 16 14 33 42 83 90
/1 Rounded\.
/2 Rounded\.
/3 Not calculated at appraisal\.
/4 No return calculated for 92% of road sections financed under pro-
ject\. The remaining 8% of sections, for which returns are available, are not
representative of overall project\.
iii
OTHER PROJECT DATA
Loan 1207-BR Original Date Actual Date
First Mention in Files 01107174
Government's Application n\.a\.
Negotiations 12/18/75
Board Approval noa\. 02/10/76
Loan Agreement n\.a\.
03/01/76
Loan Effectiveness 06/01/76 07/13/76
Loan Closing 12/31/81 06/30/84
Follow-up Projects Second Feeder Roads Project (Loan 1730-BR)
Third Feeder Roads Project (Loan 2224-BR)
Fiscal Year of Borrower January 1 - December 31
STAFF INPUT
(Staff Weeks)
Bank FYs: 75/L76 76/177 77/78 78/79 79/80 80/81 jIL82 82/83
Identification/
Preparation 28\.8 1\.0
Appraisal 32\.2
Supervis ion 2\.8 6\.8 5\.0 11\.1 32\.7 10\.6 6\.2
Other \.1 0\.3 0\.2 0\.1
Total 28\.8 36\.0 6\.8 5\.0 11\.4 32\.9 10\.7 6\.2
Bank FYs: 83184 84285 85/86 Total
Identification/
Preparation 29\.7
Appraisal 32\.2
Supervision 6\.1 6\.2 6\.9 94\.6
Other \.4 1\.0 2\.1
Total 6\.1 6\.6 7\.9 158\.6
Othr \. 1\.0 2\.1~
iv
PROJECT PEkFORMANCE AUDIT REPORT
BRAZIL SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
EVALUATION SUMMARY
Introduction
The Secondary and Feeder Roads Project, approved in 1976, marked the
start of a new category of Bank transportation projects in the country\. Ear-
lier transportation projects by the Bank, made over a period of more than 20
years, had been focused on the primary roads network\. Secondary and feeder
roads total about 1\.2 million km and account for well over 90% of the classi-
fied roads system (PPAM, paras\. 1-2)\.
ObJectives
The project had the far-reaching objectives to improve the performance of
the agricultural and rural sectors and contribute to institutional development
of public sector agencies in transport\. It provided funding for rural roads
construction, but not other sector activities, and it set up a frameworK for
implementation which involved several agencies\. The Bank loan funds, rade
available to the Government, the borrower, were designated to be channelled
through a financial intermed'\.ary, a development bank, to the end-beneficia-
ries, the states and municipalities (PPAM, paras\. 3-7)\.
Implementation Ep erienc\.e
The p:oJect was unprepared by conventional Bank standards, as all pre-
investment analyses and studies, including sub-project identification, were
scheduled tor the time after Board approval\. It was implied that lack of
preparation was a consequence of the involvement of a financial intermediary,
but this is not necessarily so (PPAM, paras\. 6, 8 and 9)\.
Because of underestimates of the required start-up time, fiscal con-
straints and inflation, the project suffered a time over-run of about three
and one-half years or 70%\. Actual physical output of the project was about
5,000 km of roads, a small fraction (0\.4%) of the existing feeder roads net-
work\. For lack of sub-project identification, no output targets had been set
at appraisal\. To cope with a shortfall in domestic funding, US$ 19\.5 million
from the Second Feeder Roads Project (Loan 1730-BR) were utilized to complete
the first feeder roads project\. However, about US$ 5\.5 million of Loan 1207-BR
remained undisbursed and were cancelled (PPAM, paras\. 10-12 and 14)\.
V
Results
The project made contributions to both its rural development and institu-
tion building objectives\. Supported by comprehensive implementation guide-
lines, it paid considerable attention to economic procedures for sub-project
selection\. How well the road investments actually performed economically, has
not been determined, as only limited post-evaluation efforts were made\. The
project, in particular, failed to produce tangible evidence that the feeder
road investments had the (rural development) effects which had been detailed
at length at appraisal and were meant to be the subject of a study under the
project\. As intended, institutional advancLa were made in investment prepa-
ration and implementation, though ex-post accounting for achievements was nct
very specific either (PPAM, paras\. 18-20)\.
Sustainability
Limited post-evaluation stands in the way of a good assessment of whether
investment benefits will be sustained\. One isQue bearing on future benefits is
road maintenance - a topic of perennial concern\. The project carried the
rcutine covenant about maintenance which, however, is unlikely to ha-e much of
an impact, and different strategies might have to be devised, c the Bank's
side, to assist in the upkeep of infrastructure\. Whatever the project's insti-
tutional results, they have been reinforced in the meantime through the second
and third feeder roads operations, which were patterned after the first pro-
ject (PPAM, paras\. 21-22)\.
Findings and Lessons
The proj,ct concentrated on road construction to the exclusion of other
sector func;Ions, notably road maintenance\. Whether the project's focus,
largely copied in the two follow-up operations, corresponded to sector priori-
ties, is debatable (PPAM, para\. 25)\.
Institution building evolved around the concept of learning through the
task without the benefit of a formal institutional plan with well-defined
goals\. The lack of such plan has made it difficult to reach firm conclusions
about the effectiveness of institution building, in particular at the level of
the states, with whom the Bank interacted the least, though the belief is
widely he\.d that institutional progress has been significant\. More could be
said on this topic in the context of eventual new institutional initiatives by
the Bank (PPAM, paras\. 5 and 26)\.
The concept of engaging a development bank in a key project management
position was successfully tested under the project, laying the foundation for
the two repeater projects\. The experience, however, may not orly be of signi-
ficance to the Brazilian transport sector but to Bank infrastructure opera-
tions in other countries as well (PPAM, para\. 27)\.
vi
Preparation of all pre-investment studies during project implemencation
has limited virtue as it can increase borrowing costs, create cash flow prob-
lems for the development bank and increase the likelihood that unexpected
events will interfere with the project\. A return to conventional standards of
project preparation is appropriate even, if not especially, with the presence
of a development bank (PPAM, para\. 28)\.
1
PROJECT PERFORMANCE AUDIT MEMORANDUM
BRAZIL SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
I\. ROAD SECTOR LENDING
1\. The Secondary and Feeder Roads Project, Loan 1207-BR, approved in
1976, was the Bank's first Brazilian transportation project exclusively for
roads not belonging to the primary or trunk road network\. Two repeater proj-
ects, Loans 1730-BR and 2224-BR, have since been made, and a fourth project is
under consideration\. The Bank's project was preceded by a USAID project which
developed and pioneered a number of features which now characterize the Bank's
feeder roads projects in the country\./1 Prior to Loan 1207-BR, the Bank had
already financed cural development projects with rural roads components\.
2\. With six highway projects (including a small maintenance project)
for primary roads, made since 1953, preceding the first feeder roads project,
it took more than 20 years until a non-primary roads project was included in
the Bank's Brazilian lending program\. Start-up of such a project was long in
the making even though these roads had always accounted "or well over 90% of
Lhe classified system, out of a country-wide road length of around 1\.3 million
km/2, their quality was uneven and the institutions were weak\. Since the mid-
seventies, when the first feeder roads project was appraised, Bank support for
the various categories of roads, provided under various transport and rural
development operations, became more balanced\. Future Bank lending is expected
to continue that trend\./3
/1 The audit is using the terms "feeder roads", "secondary roads" and
"rural roads" interchangeably\. It should be noted, however, that in other Bank
documents, these terms may have somewhat different meanings and there is no
consistency in their use\. Feeder, secondary or rural roads are classified in
Brazil as state or municipal roads\. Primary roads are federal roads\.
/2 Staff Appraisal Report (SAR) for the Secondary and Feeder Roads
P:oject, Loan 1207-BR, dated January 21, 1976, para\. 3\.03; SAR for the Third
Feeder Roads Project, Loan 2224-BR, dated November 29, 1982, Table 1\.1; and
(Bank) Transport Sector Review Strategy Paper, dated June 14, 1985, Table 3\.
/3 Transport Sector Review Strategy Paper, paras\. 5\.07--5\.13\.
2
II\. PROJECT OBJECTIVES, DEFINITION AND DESIGN
3\. The Secondary and Feeder Roads Project had two primary objectives:
(i) improvements in the performance of the agricultural and rural sectors and
(ii) institutional development of public sector agencies in transport\. Con-
ceived in the spirit of increasing Bank focus on agriculture and the welfare
of the rural population, the project ambitiously and explicitly aimed at:
promoting the modernization of the agricultural sector and its scope of com-
mercialization; pr'viding stimuli for agricultural productivity increases; and
reducing the isolation of areas to "improve health, education and social
interaction and promote increased demographic and ter-itorial interrelation-
ships"/4\. However, touching on the issue of accountability for project goals,
the appraisal cautioned that the linkage between project objectives and actual
results might run into monitoring problems\./5
4\. The institutional development objective, an intermediate objective
for successful management of rural transport infrastructure, was formulated to
address pervasive institutional weaknesses in planning, financing, building
and maintaining feeder roads\. Specifically, the project aimed at improvements
in the appraisal, implementation and supervision of road investments,/6 side-
stepping other possible areas of intervention\. Success in meeting the institu-
tional challenge was perceived as being essential for successful inv-stments
under the first feeder roads project as well as for long-term sector nprove-
ments\. The institutions targeted for support under the project we e State
Highway Departments (DERs/7) and municipalities or municipal consortia, which
are responsible for construction and maintenance of feeder roads; the Departa-
mento Nacional de Estradas de Rodagem (DNER), the federal highway agency,
which under the project was to provide engineering expertise; and the Banco
Nacional de Desenvolviuento Economico e Social (BNDES)/8, the financial inter-
mediary through which the federal government channels most of its development
funds and which was to act as a development bank under the project\.
5\. Institutional development in the sector was to be achieved primarily
through the institutions' exposure to the task, with some support to be provi-
ded by the Bank in the context of its normal project management functions\. The
Bank, however, was expected to deal primarily with BNDES and DNER, whose
functions in turn it was to interact wich the DERs and municipalities\. With
experience in feeder road projects lacking, except in connection with the
/4 SAR, Loan 1207-BR, para\. 6\.02\. - The project's rural and agricultu-
ral development objectives were a topic highlighted by Bank staff at Board
presentation\. Transcript of Proceedings, dated February 10, 1976\.
/5 SAR, Loan 1207-BR, Annex 1, paras\. 4-6\.
/6 SAR, Loan 1207-BR, para\. 6\.02 (e)\.
/1 Departamento de Estradas de Rodagem (estaduil)\.
/8 Formerly Banco Nacional de Desenvolvimento Economico (BNDE)\.
3
earlier USAID-supported operation, all sector agencies needed to learn a lot,
with the DERs and the municipalities perhaps the most\.
6\. BNDES was the lead agency for project implementation\. The involve-
ment of a development bank in transport infrastructure was fairly unique for
Bank operations\. BNDES, an agency of national standing, was selected because
of its institutional strength and interest in the project, in recognition
that the project was a novelty, the number of sub-borrowers was potentially
large and the project was virtually unprepared according to conventional Bank
project standards at the time of Board approval/9\. A further consideration was
the federal government's traditionally strong reliance on BNDES as an %venue
for the management and financing of development projects in various sectors\.
DNER, an alternative to BNDES, was viewed as being less qualified as a lead
agency, being preoccupied with primary roads and inexperienced in feeder
roads\. The Federal Ministry of Transport was not a cand'date for project
management as it was not an implementing agency\. Another consideration in the
choice of BNDES was to reduce political interference with road investment
decisions\. While BNDES was also a public sector agei\.cy facing political
demands, it was expected that its lending practices would be based to a sig-
nificant extent on the technical analyses of its profession;l staff\.
7\. The financial scope of the project was set at JS$ 237 million equiv-
alent, an amount governed by a pre-set Bank loan of USS 55 million (23\.2% of
total costs) which roughly corresponded to the project's foreign exchange
component of about 25%/0\. BNDES was expected to make an identical contribu-
tion of US$ 55 millio (23\.2%); D' ER, US$ 32 million (13\.5%); and the ultimate
beneficiaries, the DER3 and municipal consortia, US$ 95 million (40\.1%)\. Thus,
the principal implcmentation ag?ncios were also project cc-financiers\. The
Penk Joan, made to the Federal Goverenc, was structured for on-lending to
ENDE: and ultimately the end-beneficn\.c:is (sub-borrowers)\.
For all intent and purposIs, the project had no quantified physical
targ ts, though the President's Report, in the Loan cnd Project Sunimary/11,
riport:ed the intended cons?truction of about 10,000 km of roads\. But this num-
bcr, given without further explanat:ons, had of course little basis as at
a-praisal none of the individual project roads had yet been identified/12, and
it i,ad no operarional significance\. The ?CR, not referring to It, makes it
/9 PP?AM, paras\. 8,9 and 28\.- The projeci desigr and title created some
confusLon at the Bonrd\. A Board member queried whether the "socalled" project
wAIS a project loan, a sector loan or simply a line of credit\. The question
about the appropriate terminology remained unresolved aftcr it was agreed that
it\. was the projec-L content which real\.y mattered\. Transcript of Proceedings,
February 10, 1976\.
/10 SAR, Loan 1207-BR, para\. 6\.28\.
/11 President's Report (2RI for own 1207-BR, datec January 21, 1976,
Annex III, page 1\.
112 For sctu a 1,,, en s, :efer ??AM, tr? 12
4
l1o clear that it was not meant to be a serious project target\. In the ab-
sence of a quantitative physical scope, the project waa defined in strictly
qualitative terms\./13
9\. The limited project preparation, and the lack of physical targets,
was supposedly a reflection of the country's public sector investment climate
which is said to have made it difficult to embark on pre-investment studies
until the investment funds were fully secured and implementation could be
firmly programmed\./14 Another factor, which supposedly came into play, was the
difficulty of funding project preparation\. Obviously, with all pre-investment
studies yet to come, the project could be expected to exceed the usual Bank
standards, applicable to this type of operations, for implementation schedules
and loan servicing costs/15\. In different country environments, a pool of
well-prepared project candidates would ordinarily be available at loan sign-
ing, permitting start of investment implementation shortly thereafter\.
/13 The President's Report, in para\. 28, noted that "the proposed pro-
ject would encompass BNDE's total program of lending for feeear roads for the
1976-79 period"\. How this was possible, as the project Lad a different time-
frame for implementation and loan disbursement (Loan Agreement, Schedule 2;
and SAR, Loan 1207-BR, Table 8), was not explained\. BNDES' program, being
otherwise identical with the project, was of course also physically undefined\.
- The Loan Agreement, under Schedule 2, Description of the Project, defined
the project as "part of BNDE's program for the financing of \. feeder roads
"\. This definition did not specify 4 time frame for BNDES' program at all,
raising the question what message it was to convey\.
/14 Inaction until funds are available is in Brazil known as the "verba
syndrome" (verba = money)\.
/15 For actual project performance, refer to PPAM, paras\. 14 and 15\.
5
III\. PROJECT IMPLEMENTATION
10\. The project documents provided lengthy details about the roads
eligible for funding and the rules for project identification, preparation and
implementation\. In addition, the "Manual for [Sub-loan] Applicants", a docu-
ment prepared jointly by BNDES and the Bank, provided further guidelines,
particularly on investment economics\. Actual prepa-ation of funding requests
for individual roads, including the required technical and economic documenta-
tion, was the responsibility of the sub-borrowers (the DERs, municipalities or
municipal consortia), who of all implementation agencies had the most to
learn\. As might have been expected, but was not reflected in project implemen-
tation and disbursement scheduies, it took a very long time until the sub-
borrowers became familiar with the stipulated sub-loan processing procedures\.
However, BNDES and DNER, if not the Bank itself, also went through a lengthy
learning process\./16\.
11\. Project implementation took place in a period of severe constraints
on public sector financing, high inflation and currency devaluations\. The DERs
and municipalities, with the weakest financial basis of all project finan-
ciers, were particularly hard pressed to generate the funds which had been
projected at appraisal\./17 To cope with this situation, the project underwent
a series of financial refornulations whose end-result was: an increase in the
Bank's contribution from US$ 55 million (23\.2% of original project costs) to
about US% 69 million (32\.3% of actual project costs); an increase of BNDES'
contribution from US$ 55 million (23\.2%) to about US$ 59 million (27\.5%); a
decrease of DNER's share of US$ 32 million (13\.5%) to about US$ 21 million
(9\.6%); and a reduction of the end-beneficiaries' share of US$ 95 million
(40\.1%) to about US$ 65 million (30\.6%)\./18 In the process of the financial
reformulations, the Bank transferred US$ 19\.5 million from the Second Feeder
Roads Project (Loan 1730-BR)/19 to the project, it increased its participation
in a group of sub-projects under the provisions of a Special Action Program
/16 Refer to SAR, Loan 1207-BR, Annex 1 and PCR, Tables 2, 3 and 8 and
para\. 4\.02\.
/17 However, there was no legal or other commitment on the part of the
end-beneficiaries (DERs and municipalities) to participate in project funding\.
This was in part the result of the fact that the physical dimensions of the
project were undefined at appraisal and that it was unclear which end-benefi-
ciaries would embark on what road construction under the project\. There was no
legal commitment either on the part of BNDES and DNER\.
/18 Loan 1207-BR and Loan 1730-BR (US$ 19\.5 million) provided simultane-
ous funding for identical sub-projects\. For more details, refer to PCR, para\.
3\.01 and Tables 1 and 7\.
/19 According to the PCR, para\. 3\.01 (d), the US$ 19\.5 million were
still uncommitted at the time of transfer\.
6
and, under somewhat surprising circumstances, it finally cancelled US$ 5\.5
million of undisbursed funds under Loan 1207-BR\./20
12\. Loan 1207-BR (US$ 49\.5 million actually disbursed), in combination
with proceeds from Loan 1730-BR (US$ 19\.5 million), helped finance 5,371 km of
roads and 76 bridges (total length of 3,610 m), distributed over 12 states/21\.
Loan 1207-BR alone (US$ 49\.5 million), accordingly, funded an equivalent of
some 3,850 km of roads and 2,600 m of bridges\. PCR data suggest that the
aggregate achievements represent a shortfall of about 25% against the physical
targets established at the time the individual sub-projects were being pre-
pared\./22 The appraisal, as noted, had no such targets\. The shortfall may be
explained by inflation, but also changes in the financing of the sub-projects,
which occurred after the initial targets had been set\.
13\. Total actual costs of the roads funded under Loan 1207-BR were about
US$ 214 million, and the actual average costs were about US$ 40,000 per km\./23
By comparison, the aggregate costs based on estimates in the preparation
studies for the individual roads were about US$ 219 million, while the corre-
sponding average costs were about US$ 31,000 per km\. As the costs are given in
current terms, and as there may have been changes in road standards between
design and construction, little can be said about\. the efficiency with which
construction was undertaken\.
14\. According to original estimates, the p'oject was to be fully imple-
mented by end-1980, within less than four years af:et approval\./24 On account
of various delaying factors, notably the start-up difficulties and the finan-
cial crisis, project implementation lasted some three and one-half years
longer/2r, until mid-1984, for a time overrun of about 70%\. The first two
years of implementation were without any loan disbursements, clearly the
result of the req,ired start-up time inherfnt in project design, but even In
/20 The canceliation date was September, 1984\. Some one and one-half
years earlier, a third feeder toads Loan, 2224-BR (U3S$ 154 million), had been
approved\. Apparently, implemeration of the third fieder roads project hao nt
yet progressed far enough by mid-1984 to identify sub-projects which coul\.d
have been implemented under Loan 1207-BR\.
/21 PCR, para, 4 01 and Table 12\.
/22 PCR, Table 6\. Sub-prolect preparation was, under the terms of the
project, only started after project appraisal\.
/23 PCR, para\. 4,01 and Table 6\.
/24 Loan Agreement, Schedule 2, Description of PToject\.
/25 Based on actual disbursement schedule\. The ?CR does not report on
the date for completion of actual construct"on work;\.
7
the next two to three years, progress was slow\./26 Only a few sub-projects-
reached disbursement profiles typical for Bank transportation projects in
Latin America\./27
15\. The implementation delays adversely affected BNDES's cost of borrow-
ing, its cash flow under the feeder roads program and the degree of uncer-
tainty under which project implementation was to take place\. - Compared to
about US$ 1\.1 million of commitment charges for Loan 1207-BR implicit in the
original disbursement schedule, actual charges amounted to about US$ 2\.5
million/28, a significant S% of the disbursed amount\. - The cash flow problems
surfaced because Bank loan repayments became due well before the loan was
fully disbursed and before the back-flow of funds from the sub-borrowers
started\./29 To avoid any impression that it is agreeable to the "rescheduling"
of its loans, the Bank has a policy of not adjusting loan amortization sched-
ules to actual impleme ntation schedules, even though at negotiations, the two
are linked, and even though in some cases the original schedules may be based
on over-optimistic analyses of Bank staff\. The opinion has been expressed that
in light of this Bank policy, it might be advantageous to the borrowers to
make conservative estimates of implementation schedules and so extend the
grace pe riod of the loan\. - Uncertainties about a project, as perceived at
appraisal, increase in principle with an increase of the implementation
period\. Under this project, the lengthy start-up time placed the project in
the mPicst of adverse fiscal and inflationary developments, which in turn would
lead to difficult revisions of the original financing plan and daipen the sub-
borrcwts' interers\. in the project\.
16\. From the Bank's viewpoint, the project offered an opportunity to
transter some of its usual project functions to an "agent bank" in thp crun-
try/_P\. The Bank, nonetheless, intended to make substantial staff time anti-
able or\. supervision, projected at appraisal at some 275 staff-weeks, moist of
/26 D ;rinig Bo;?td presentacior\., a Board member expressed concern _bout
the lk of project preparation and corrctly concluded that on the baesy; of
oth;,r %nk fitnanced projects, it wou"d take two years or more before el' ,e
tages\. 'e e coimple*ed and the sub-projeots were ready for implementati:n He
wondered how one could stick to the projected disbursement schedule as the
projec ,ould drag on for years much beyond the year 1981\. Bank 3taff, Wlrig-
ly, predicted that such problems would not exist\. Transcript of Proce\.c'Ings,
Febtu,ar, 20, 1976,
/27 ?CR, para\. 4\.03 and Table 8\.
128 Sa-ed on RNDES fnformation and audit calclons\.
!29 yp\.iclJy, BNDES' sub-loans to the suh-borrowers (DERs etc\.) ea:y a
*, a z a cc\. i-od 'f "-'3 years,
/30 T e respPncI P:ities were outlined, inter alia, in the SAR, Loan
1207-P8, paras\. 6\.?, 6\.12 and 6\.15-6\.26 and Annex 1, paras, 2-3\.
8
them related to field work/31\. For reasons which the audit could not clarify,
actual recorded Bank staff input for supervision to the end of 1980, the
originally projected completion date, was only about 60 staff-weeks, a number
which increased to no more than about 95 staff-weeks by 1985, the last year of
implementation\./32 The actual inputs are very modest for "regular" Bank opera-
tions of a comparable nature, and they were seemingly inadequate under the
circumstances\. A stronger Bank engagement, in particular in the project's
initial phase, might have helped accelerate project progress\. In 1981, the
Bank stationed a resident engineer in Brazil to support implementation of the
Second Feeder Road7 Project (Loan 1730-BR), but his reported involvement in
Loan 1207-BR was marginal\./33
17\. Project implementation at the BNDES/DNER level was for some time
also hindered by inadequate staffing of \.he working groups and by shortcomings
in procedures, and it took several years to rectify the situation\./34 In the
process, BNDES' feeder roads staff was brought up to a strength of about
twenty experienced professionals, though there have been turn-overs more
recently\. What actual staff and institutional developments took place at the
level of DNER, the DERs and the municipalities, is less clear/15, though the
institutional development of all implementing agencies was one of the primary
project objectives\. In any case, exposure to the second and third feeder roads
projects has much further advanced the institutional learning process started
under the first project\.
/31 SAR, Loan 1207-BR, Annex 1\. - Responding to a query at Board presen-
tation, Bank management confirmed that more Bank staff time would be made
available for this project than for others\. Transcript of troceedings, Febru-
ary 10, 1976\.
/32 Data in accordance with the Bank's Time Recording System\. Bank staff
believe that the accuracy of time records often leaves a lot to be desired\.
/33 Total involvement of three staff-weeks, according to Bank supervi-
sion records\. The engineer stayed four years in the country, providing also
support to the Third Feeder Roads Project (Loan 2224-BR) and other Bank operations\.
/34 PCR, paras\. 6\.04-6\.07\.
/35 Note, for example, to what extent the PCR, in para\. 6\.02, comments
on actual institutional achievements\.
9
IV\. PROJECT ECONOMICS AND SUSTAINABILITY
18\. Selection of economically viable investments, if not the introduc-
tion of economic criteria into the management of the entire feeder roads
sector, were major considerations under the loan\. In recognition of the previ-
ously unsatisfactory practices in feeder roads planning, project and implemen-
tation documents devoted considerable attention to economic screening proce-
dures which turned out to be reasonably effective in identifying promising
investment \. In the meantime, further improvements to the procedures were
made\. Independently of the source of funding, economic evaluation procedures
are now being followed more widely in the preparation of rural roads
programs\./36
19\. All investments eligible for project funding were required to show
projected economic rates of return (ERRs) of at least 10%\. Some investments
initially proposed, which did not meet the threshold, had to be rejected\. For
most, though not all, road links ultimately built,/37 ex-ante estimates of
economic rates of return (ERRs) ranging from 10% to 40% were actually made\.
However, no comprehensive economic post-evaluation was performed, which in any
case, rather surprisingly, was not required under the loan\./38 Only for 14
sections, all located in Sao Paulo State, were post-analyses undertaken,
showing re-estimated ERRs between 3% and 100%/39, but these oads are all
paved and not representative of the other 168 sections built\./40 The main
obstacle for even crude estimates of their ex-post ERRs is the complete ab-
sence of traffic data/41, which indicates the ground yet to be covered in
/36 A typical example is a feasibility study of the State of Bahia on
the development of virgin territory in its western part (Estrategia de Desen-
volvimento do Oeste\. Documento Sintese; December 1984)\. The plan for estab-
lishing new settlements hinges significantly on the concurrent construction of
new transport routes\.
/37 According to Table 12 of the PCR, 182 road links were built\. Table 9
of the PCR shows the projected ERRs for 154 of them\. The 28 lnks, for which
-o, ERR information is available, are located in the States of Bahia and Mato
Grosso\.
/38 Loan covenants requiring adequate post-evaluation have now become
Bank standard\.
/39 PCR, Table 11\. Twelve of the 14 sections are shown as having re-
estimated ERRs of 10% or more\.
/40 Of the 5,371 km built under the project, according to the PCR, Table
12, 3,748 km were graveled and 1,623 km were paved\. Geometric road standards
also varied widely\.
/41 Traffic data are primarily relevant for roads whose main justifica-
tion lies in transport cost savings\. However, traffic data could also be
useful in assessing the performance of roads where "developmental" benefits
10
sector planning and the importance which is being given to retrospective
analyses\.
20\. To demonstrate to what extent the project actually would shape
agricultural and rural development and provide guidance for follow-up opera-
tions, the borrower made a commitment to fund and undertake a study of the
socio-economic impact of feeder roads\./42 The study, which was to cover a
period of at least five years after road construction, had been heavily promo-
ted by the Bank\. In mid-1979, the SAR for the second feeder roads project
(Loan 1730-BR) revealed that the study, then reported as being in progress,
was being undertaken by GEIPOT, the planning agency of the Ministry of Trans-
port, with assistance by the Bank\. Further, the SAR expressed the hope that
regression and linear models, sophisticated analytical tools, would be deve-
loped which would relate changes in accessibility to improvements in agricul-
tural production and marketing, labor mobility and education and health levels
of project beneficiaries\. Projected study scope was some 50 road sections with
about 2,500 km of total length\. The estimated budget was US$ 3-5 mil2ion,/43
an amount which would have placed this study into the league of mega-studies
which are not uncharacteristic of the country's transport sector\. The actual
fate of the study and the contribution to it by the Bank are undocumented and
obscure\./44 The PCR and supervision reports indicate that it was completed in
1981, which is well before a significant number of project roads was actually
built and could be monitored\. However, in the view of Bank staff, it fell far
sho~t of meeting the expectations raised at the 1976 and 1979 proiect ap-
pr a5 i s\. /45
are ucominant\.
/42 SAR, Loan 1207-BR, para\. 6\.02 and PPAM, para\. 3; and Loan Agreement,
Section 4\.02, and SAR, Loan 1207-BR, para\. 6\.35\.
i43 SAR, Loan 1730-3R, paras\. 1\.17-1,18\.
/44 Neither the study's terms of reference, nor details about the Bank's su-
pervision efforts, an evaluation of the (final) study report, or the report
itself have found their way into the Bank's archives\. Responsibility for
supervising the study did not rest with the Latin America and the Caribbean
Regional Office but with another Bank department\. Deficiencies in keeping
operational records are not unusual and can often be traced to the place where
the records are generated or enter the Bank, rather than to the depositories
themselves\.
/45 The shortfall in actual achievements is not necessarily a reflection
on the performance of the borrower but rather of tho Bank, whose role in the
study might have been questionable\. The Bank's promotion of the study fell
into the context of maore ambitious attempts by the Bank to research rural
roads topics\. There is little evidence to conclude that the study's reported
shortcomirngs were detrimental to the development of the Brazilian ferder roads
11
21\. Information on che sustainability of project benefits is fragmen-
tary, a result of the project scope (more than 5,000 km of roads) in twelve
states with diverse sector environments and the insufficient post-evaluation
efforts\. The audit mission visited a 10% sample of paved and gravel roads, of
which most, fairly recently built, were in good condition\. Because of the
issue of maintenance, the long-term prospects for their physical upkeep,
however, are clouded\. Road maintenance problems, common to all classes of
roads and other sectors as well, have in recent years come more sharply in
focus because of fiscal constraints and the competition of road maintenance
with road development budgets\. The project made the usual stipulation that the
sub-borrowers were responsible for adequate maintenance, and it required
reviews of the sub-borrowers' maintenance capabilities before sub-loans could
be approved/46, but not being combined with the supply of the means for main-
tenance, these p\.oject features had only limited effects\. Efforts are under
way to address the issue of the country's road maintenance, and the Bank is
offering various forms of support\. Over-design of project roads may also give
a temporary cushion of protection\. Because of DNER's earlier unfamiliarity
with lower class roads and possibly concern about future maintenance budgets,
sub-borrowers would often chose higher standards where lower standards might
have been economically appropriate\.
22\. The project had a positive impact on rationalizing the management of
the feeder rcads sector, and indications are that the achievements - 'he
development of institutional capacities for pre-investment analyses and effec-
tive implementation - can be sustained\. Building on earlier USAID-supported
efforts and the Bank's first feeder roads project, the second and the third
feeder roads operations made further advances\. Continued Bank association with
the feeder rcads sector could create the momentum for making further progress\.
/46 SAR, Lr,a n ER!8 pa ras-\. 6 ,3 nd 6, 0i
12
V\. CONCLUSIONS
23\. The Secondary and Feeder Roads Project, the Bank's first such opera-
tion in the country, was made in response to the needs to upgrade the manage-
ment and performance of the feeder roads sectov\. The sector is characterized
by a multitude of institutions which are in various stages of development,
extremely limited financial resources and a vast network of classified roads
totalling some 1\.2 million km\. Until the project was approved, Bank support to
roads had been largely devoted to the primary road system which is managed by
one federal agency (DNER) and comprises some 85,000 km, though it is likely to
carry the bulk of total road traffic/47\. The physical scope of the project,
about 5,000 km of roads actually built, was determined by the availability of
Bank loan and matching local funds, but implementation capacity may also have
been a consideration\. Though spanning over eight years and stretching imple-
mentation capacities to the limit, the project could deal only with a small
fraction of all feeder roads (0\.4%)\. Once the ongoing third feeder roads
project is completed, the Bank will have supported improvement of close to
20,000 km of feeder roads (1\.7% of total system) under its transport and rural
development projects\. This is an indication that the upgrading and rehabilita-
tion of the feeder roads network, which critically depends on external fun-
ding, is a long-term process\.
24\. A main project objective was the construction of roads which would
support rural and agricultural development\. The rules for investment selection
were comprehensive and went a long way towards setting standards for sector-
wide investment planning\. While the project roads were treated as free-stand-
ing investments, procedures were also devised to link their construction with
other rural development activities\. This linkage, which was weak under the
first feeder roads project, has been tightened in follow-up operations\./48
One of the criteria for sub-project selection was projected traffic, which was
not supposed to exceed 150 vehicles per day on average in the\. road opening
year\./49 The limit may have been introduced in the expectation that roads
with lower traffic, as compared to roads with higher traffic, had more rural
development content, though such a thought would be questionable to the audit\.
25\. The project made a deliberate choice for funding road construction
(improvements, rehabilitation or new construction) rather than maintenance or
other sector activities\. Little information was offered on the rationality of
/47 No global traffic estimates are available for the entire road sector\.
/148 PCR, para\. 8\.02\.
/49 PCR, para\. 5\.01\. The SAR for Loan 1207-BR, para\. 6\.06 (d), had speci-
fied a higher ceiling of 200 vehicles per day (vpd)\. Of 14 road sections
actually built and monitored for traffic, eight had actual traffic exceeding
200 vpd\.
13
the choice,/150 raising the question whether the project adequately dealt with
actual sector priorities\./151 Given the enormous length of the feeder roads
network and the clearly perceived inadequacies in institutions, financing and
maintenance, a different project orientation was a distinct possibility\. More
informative project documentation would have been desirable in this regard,
especially since the project marked the start of a new category of Bank pro-
jects in the cc-ntry\. Again funding road construction only, the other feeder
roads projects followed the format of the first\./52 Bank staff point out that
the roads financed under Loan 1207-BR, which by their account included relati-
vely little new construction, were important for rural, agricultural and
regional development\. While road investments can indeed be effective develop-
ment instruments, the audit wishes to emphasize that roads maintenance can
produce equivalent results, possibly in a more effective way\. In the judgement
of the audit, the Bank's attempts to date at dealing with feeder roads mainte-
nance were feeble at best\.
26\. Institution building in the feeder roads sector was one of the two
main project objectives\. In practice, institution building dealt with the
development, according to norms promoted by the project/53, of capacities for
appraisal and supervision of road construction, the activity funded under the
project\. The follow-up feeder roads projects maintained the same scope of
institurion building efforts which evolved around economic investment analy-
ses, choice of appropriate road standards and efficient organization of works
execution\. In the view of Bank staff, the institutional advances were substan-
tiE\.1, particularly with regard to economic analyses and engineering of feeder
roads and the development of BNDES/DNER capacities to manage civil works\. The
accomplishments are also viewed as noteworthy because of the obstacles which
had to be overcome\. However, apart from such qualitative assessments of pro-
gress made, the PCR (or other Bank documents) provide little formal accounting
150 Bank staff note that in the context of the country's political
realities, characterized by a four-year cycle of state elections, there was no
interest in the country in a project other than one covering road construc-
tion\.
/51 Prior to Board approval, an Executive Director's office inquired
about the reasons for not financing maintenance (equipment)\. Bank staff gave
the rather inaccurate answer thet "the matter of maintenance was being ap-
proached under \. normal lending operations", in reference to the Fifth
Highway Project (Loan 1075-BR) and future lending\. The Fifth Highway Project,
actually, dealt primarily with the delegation of maintenance of primary (fe-
deral) roads from DNER to two DERs and had very limited bearing on feeder
roads maintenance\. Bank staff memorandum to files dated February 9, 1976\.
/52 While not funding road maintenance investments, the third feeder
roaes project aimed at the development of policies and programs to upgrade
feeder roads maintenance\.
/53 With a network of 1\.2 million km of feeder roads in existence prior
to the Bank's first feeder roads project, road construction per se was not an
activity unknown in Brazil\.
14
of achievements of the institutional goals, perhaps influenced by the absence
of a formal institutional plan on which the project was based/54, and particu-
larly, it had little information on the DERs and municipalities, whose ulti-
mate responsibility it is to administer the feeder roads network\. This might
be an area where more will be said in the context of new Bank work on the
sector\.
27\. Selection of a development bank as lead agency in project management
was a unique project feature\. Traditionally, the role of such banks in public
infrastructure is limited, and in road construction, it is uncommon/5\. The
reasons for selecting BNDES were project and country specific, but the experi-
ence suggests that similar approaches could be considered in other countries\.
Because of their usual statutory independence and the banking rules under
which they operate, development banks can be effective instruments of control
over segments of public sector spending and policies\. In addition, developmenL
banks have ordinarily tested procedures for managing loan portfolios, an
important consideration for "retailing" external loans and easing the adminis-
trative cost of development funding otherwise borne by the external lender
("wholesaler")\. Considerations of "retailing" costs, and effectiveness of
retailing, may gain increased importance with current attempts to widen the
scope of lending by international development banks,
28\. Identification, preparation and appraisal of sub-projects and the
engineering of project roads were activities to be undertaken after Bank loan
approval\. As such they contributed to the lengthy project implementation and
finally placed the project in a situation where fiscal and inflationary deve-
lopments would undo the original financing plans\. The practice to undertake
the (economic and engineering) pre-invesument studies and reviews only after
Bank loan approval was continued under the second feeder roads project but
somewhat curtailed under the third in an ateImpe, coupled with other measures,
to reduce the total implementation pericd\./>6 Investment preparation, before
investment funding is fully secured, is apparently feasible and would, more so
than under the third loan, be a desirable feature of a new Bank operation\.
Such preraration would include detailed enjg:ieering which could be financed
under provisions C: 41 ongoing loan, retroaccively under the new Bank loan or
under the Bank's proje' preparation facilit:ies, should financing become an
/54 A formal plan could have covered a timetable, budgets and staff
resources, a definition of the agencies to be developed, an analysis of the
start-off situation, aitong other factors\.
/55 A more recent example for the financing of public infrastructure,
including streets, through a financial intermediary is the 1985 Jordan Second
Cities and Villages Development Bank Project, Loan 2694-JO\.
/56 SAR, Loan 2224-BR, paras\. 4\.06-4\.19, 4\.21, 4\.23, 4\.28 and 4\.30\.
Feasibility studies and preliminary (though not final) engineering designs
were available at Bank loan approval for about 10% of the projected investment
volume, less than normal for even a tranched sector loan\.
15
issue\./7 While cautioning about the difficulty of fully overcoming entrenched
Brazilian practices and systems, Bank staff agree with the desirability of
having pre-investment studies completed before loan approval, and they believe
that advanced preparation is possible to some extent\.
/57 Loan 2224-BR provided already for the funding of detailed enginee-
ring\. - Completion of final engineering before sub-loan approval would reduce
the total implementation time of a typical sub-loan by about one-fourth,
according to the SAR for Loan 2224-BR (Annex 1, page 3), with similar savings
to be realized for the entire project\.
16
ATTiCHMENT 1
Comments from Banco Nacional de
Desenvolvimento Economico e
Social (BNDES)
ZCZC DIST2613 JWS0275
OEDD3
REF: TCP1 MET
JWS0275 JG0114 IN 14/14:04 OUT 14/14:06
2135506BNDE BR
TLX\.NR\.0907/86
NOV 14/86-OP/MJS
AFI/DEPIN/BNDES
FROM BNDES/RIO DE JANEIRO/BRAZIL
TO WORLD BANK/WASHINGTON, D\.C\. (USA)
ATTN: MR\. BRIAN SHIELDS
E'\.RGY, INFRASTRUCTURE AND URBAN DEVELOPMENT
OPERATIONS EVALUATION DEPT\.
RE: DRAFT PROJECT PERFORMANCE CREDIT REPORT - LOAN 1207-BR\.
WE HAVE EXAMINED THE A/M DRAFT AND AGREE WITH ITS TERMS\.
REGARDS,
ISAAC ROFFE ZAGURY - HEAD OF INTL\. DEPT, - BNDES\.
=11141407
ALT RTD FROM:OE3M
NNNN
Rec'd\. No-t\. 14, 1986\.
17
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
I\. INTRODUCTION
1\.01 Brazil's rapid economic growth throughout the 1960s and the 1970s
led to an unprecedented increase in transport needs\. The large area of
Brazil, combined with an abundance of agricultural acreage and inland mineral
resources, has made transportation a crucial element in the development of
the economy\. Almost 20% of the total public investments in the mid-1970s
were made in transport infrastructure, of which about half were directed to
federal and state highways\. Since 1975, development of new highways has
almost stopped and more emphasis has been put by the Federal Government upon
rail and water transport and suburban commuter systems\. Meanwhile,
expenditures in the highway subsector have gradually been redu,ed, and the
emphasis has shifted from new construction to the maintenance and
strengthening of the primary network, as well as to the construction and
improvement of secondary and feeder roads\.
1\.02 Brazil has about 1\.4 million km of roads; of these, 6% are federal
highways, 9% are state bighways and 85% are municipal r,\.ds\. The federal
highways, which form the backbone of the interstate network, have a total
length of about 90,000 km, of which 51% are paved\. Complementary to the
federal system, there are about 118,000 km of state arterial highways and
collector roads, of which 27% are paved\. The municipal roads, which total
about 1\.2 million km, are mostly lcw standard seasonal feed2r roads and
tracks\.
1\.03 The Bank has been involved in Brazil's highway subsector since
1964, when an economic mission recommended a comprehensive survey of the
transport sector\. Five loans, totaling US$376 million, were made between
1968 and 1975 to expand the highway system\. After 1975, the Bank made two
loans, totaling US$324 million, for highway rehabilitation and maintenance;
three loans (including the subject of this report), totaling US$319 million,
for feeder road programs; and a loan of US$240 million to finance the highway
and feeder road components of a comprehensive program for the development of
the Northwest Region\. The Bank is also supporting feeder roads improvement
and maintenance through components of 13 ongoing agricultural or rural
development projects\.
18
II\. PROJECT PREPARATION, APPRAISAL AND NEGOTIATIONS
2\.01 The Secondary and Feeder Roads Project differed from previous Bank
lending for highways in that it involved a program administered by a national
financial institution (BNDES)1/ which, assisted in the technical evaluation
by the National Highway DeparEment (DNER), was to help to finance a program
of subloans for the construction, rehabilitation or improvement of rural
roads to be carried out by state highway departments (DERs) and Municipal
Road Consottia\.2/
2\.02 The total amount of the investments planned under the project was
about US$237 million, with a foreign exchange component of about US$55
million\. The immediate objective of the project was to construct, improve or
rehabilitate secondary and feeder roads linking agricultural areas and
communities to federal and state primary highway networks, or penetrating
into areas with good economic prospects\.
2\.03 The longer term objectives of the Bank's loan were to:
(a) facilitate the modernization of the agricultural sector;
(b) facilitate changes that would contribute to greater
commercialization of the agricultural sector;
(c) provide the means and the incentives for higher agricultural
productivity through better use of the land within the bone of
influence of the existing transportation system;
(d) break down the isolation of some areas in order to improve health,
education and social interaction and promote increased demographic
and territorial interrelationships; and
(e) promote the institutional development of the participating agencies
(DERs, Municipal Consortia, DNER, BNDES) in appraising and
supervising secondary and feeder roads projects\.
2\.04 To help secure these objectives through the project, the Bank,BNDES
and DNER agreed to several key means and instruments which were either
incluied in the definition of the project or incorporated into the legal
documents\. These were:
(a) a Manual for Applicants, with detailed provisions for the
preparation of the subprojects;
(b) a subsidiary agreement between DNER and BNDES securing DNER's
financial and technical participation in the project; and
1/ The Banco Nacional de Desenvolvimento Economico (BNDE), became, in 1982,
the Banco Nacional de Desenvolvimento Economico e Social (BNDES)\.
2/ Consortia of municipal agencies within a state, formed for the purpose
of constructing and maintaining municipal roads\.
19
(d) the establishment of 'orking Groups both in DNER and BNDE to
appraise and superiise the subprojects\.
Negotiations were conducted in Washington from December 18 to December 20,
1975, and a loan amounting to US$55 million was approved by the Executive
Directors on February 2, 1976\.
III\. PROJECT EXECUTION
3\.01 Project implementation experienced substantial delays brought about
by difficulties in launching the program and later exacerbated by the high
domestic inflation and subsequent stabilization policies implemented by the
Brazilian Government, which required several revisions to the financial
arrangements (Table 1)\. What follows is a discussion of the main factors
affecting the implementation of the project and the attempts to mitigate its
effects:
(a) Developing a suitable pipeline of subprojects turned out to be
difficult\. Despite BNDES' and DNER's efforts to promote the
program, it took longer than expected for the program to become
known and understood by the potential sub-borrowers\.
(b) The original financial arrangement was not sufficiently attractive
to the potential sub-borrowers; in particular, the counterpart
requirements proved to be too high for certain low income states\.
In 1979, the financial arrangement was reformulated to increase the
Bank's and BNDES' participation in the subprojects and, thus, to
reduce the counterpart funds requirement for the lower income
states\. Also at that time, a differentiation of the counterpart
requirements for the states according to their income (high, medium
and low) was introduced\.
(c) Because of the large devaluation of the cruzeiro in 1979, without a
corresponding adjustment of the ORTN 3/, the cost of the
subprojects expressed in US dollars wils reduced significantly\.
This devaluation, coupled with the time lag between BNDES'
disbursements and the Bank's reimbursements, reduced Bank financial
participation to only 85% of its originally planned share\.
Additional subprojects had to be included in the program in order
to fully commit the loan funds\.
(d) In 1980, the ORTN lost about 40% of its purchasing power, and the
BNDES/DNER/IBRD-financed share of the investment was considerably
reduced, placing many subprojects beyond the financial capacity of
the sub-borrowers\. A refcrmulation of the project was undertaken
in mid-1981 to reduce the scope of some subprojects and to restore
3/ The monetary unit in whicl\. the subloans were uade\.
20
BNDES/DNER/IBRD participation to its initial level\. To that end,
uncommitted funds from the Second Feeder Roads Project (Loan
1730-BR, US$110 million, June 1979) were approved to provide
additional financing to ten subprojects under the subject project\.
This measure resulted in a marked improvement of the rate of
project execution during 1982\.
(e) Early in 1983, however, the pace of implementation started to
decline sharply\. The reduction in the public agencies' budgets,
carried out by the Brazilian Government as part of its
stabilization program, and the accelerated escalation of domestic
road work prices led to a significant gap in the financing plan of
the subprojects\. In addition, because of the accelerated
devaluation of the cruzeiro, the problem of the time lag between
BNDES' and the Bank's disbursements further reduced actual Bank
participation\. In July 1983, a special account was opened in the
Brazilian Central Bank to reduce this time lag and to eliminate the
corresponding foreign exchange loss\. Additionally, a Special
Action Program was approved by the Bank on October 1, 1983\. As
part of the program, Bank participation was increased from 32% to
an average of auout 60% of the cost of the subprojects, the
corresponding amounts of the increased Bank participation being
transferred, on a grant basis, by the Federal Government to the
sub-borrowers\.
3\.02 The preparation of the subprojects suffered from lack of experience
of the sub-borrowers and of BNDES\. Table 2 shows that, as an averige, two
years were required between an application for financing and the signature of
the corresponding subloan\. Field trips were not scheduled to permit
BNDES/DNER teams to conduct orientation missions in order to assist the
sub-borrowers at an early stage of the feasibility studies\. The quality of
the feasibility studies was uneven on both economic and technical grounds,
and very often BNDES had to ask for additional surveys or to re-do the
economic evaluation\.
3\.03 A significant fraction of the selected road links (about 50%) was
not constructed because of changes imposed for political reasons or because
construction costs above the original estimates made them unfeasible;
therefore, additional feasibility and final engineering studies for new links
had to be carried out\. Although BNDES/DNER teams made substantial efforts to
review and to reformulate the scope of the subprojects, these changes have
been important factors contributing to delays in project implementation\.
3\.04 Designs for most of the roads were carried out by consulting
firms, under the supervision of the sub-borrowers, and reviewed by BNDES and
DNER working groups\. DNER played a key role in the review of the final
designs; however, because it did not carry out sufficient field supervision,
DNER did not develop substantial e4perience in feeder roadt, engineering\.
Therefore, the concept of low cost feeder roads was not fully understood by
the consultants and the highway authorities\. The main deficiencies were:
(a) overdesign of the geometrical alignments and of drainage structures for
21
gravel roads and (b) poor geotechnical studies with little attempt to use
locally available materials\. Highway authorities and consultants were
influenced by DNER's strict design norms and specifications for paved roads
and had difficulty transposing their experience to the more modest
requirements of gravel roads\.
3\.05 Supervision of procurement by DNER was adequate, but was carried
out through cumbersome administrative procedures which also delayed project
implementation; on average, there were 220 days between the presentation of
bid documents to BNDES/DNER and the no objection statement of DNER
(Table 3)\. Top level monitoring of the construction works was generally
satisfactory\. However, DNER's involvement in the detailed supervision of the
works was insufficient to permit substantial improvewents in cost-effective
construction techniques\.
3\.06 Construction of the roads was carried out through about 180
contracts, of which 25% were under US$1\.0 million and the rest had values
ranging from US$1\.0 million to US$6\.0 million\. Local medium-and small-size
contractors were expected to be engaged for the road works\. However,
contrary to expectations, the bulk of the works was carried out by rather
highly mechanized contractors\. The average costs of construction, shown in
Table 4, varied widely according to the road class, but were generally
reasonable\. The performance of the various sub-borrowers, in terms of
average annual construction (km/year), is shown in Table 5\. Apparently,
there was no correlation between the scope of the subprojects and the average
annual rate of construction since about the same implementation period was
required to carry out a large or a small subproject\. Therefore, the
reduction of physical targets did not speed up the implementation of the
subprojects\.
IV\. COST ESTIMATES AND DISBURSEMENTS
4\.01 A comparison between appraisal estimates and final costs of the
subprojects is shown in Table 6\. In fact, as already explained in
Chapter III preceding, the subloans suffered many physical and financial
reformulations between these two steps \. Table 7 shows the final shares of
project financing for each of the participants\. The final cost of
construction of 5,371 km of roads (of which 1,623 km were paved) and of 76
bridges was estimated at about US$214 million, of which US$49\.5 million was
financed by Loan 1207-BR and US$19\.5 million by Loan 1730-BR\.
4\.02 Disbursements lagged behind appraisal estimates from the start for
the reasons mentioned previously; the last disbursement was made on June 26,
1984 (see table following)\. Despite the various measures taken to cope with
exchange rate variations, an amount of US$5\.5 million remained undisbursed
and was canceled on September 19, 1984\.
22
ACCUMULATED DISBURSEMENTS (US$ m)
Actual as
Fiscal Year Appraisal Actual % of Appraisal
1976 0\.5 0
1977 8\.0 - 0
1978 24\.0 2\.0 8
1979 40\.0 6\.5 16
1980 52\.0 7\.4 14
1981 55\.0 18\.1 33
1982 - 23\.3 42
1983 45\.5 83
1984 49\.5 90
4\.03 The cumulative BNDES/DNER/IBRD disbursements were analyzed for each
subloan and compared to the typical curve for Bank transportation projects in
Latin America (Table 8)\. In spite of all the efforts made -such as increases
in financing, supplementary financing, special account, and a special
assistance program- the average typical curve of disbursement at mid-term of
a subloan reached 33% only, while it reaches 61% for the typical Bank
transportation project in Latin America\.
V\. ECONOMIC REEVALUATION
5\.01 The appraisal report did not include an economic evaluation of the
project, since subprojects to be financed under the loan had not yet been
defined\. The Manual for Applicants, containing the methodology for the
economic evaluation of the subprojects agreed upon among BNDES, DNER and the
Bank, considered three cases according to the characteristics of the area of
influence of the subprojects:
(a) subprojects in relatively developed areas, with at least an average
daily traffic (ADT) of 150 vehicles\. In these cases, the economic
justification was to be based upon expected vehicle operating cost
savings accruing only from normal traffic;
(b) subprojects in areas where no road existed previously\. In such
cases, the expected net value added of new production would be
used; and
(c) subprojects in relatively undeveloped ar as, where traffic was low
(less than 150 ADT), or in (,ases where one could expect substantial
development from the road\. In these cases, a combination of both
the consumer aud producer surplus methods could be used, exercising
care not to double-count benefits\.
The eligibility criteria for subprojects was that investment7 in each road
link had to have an estimated economic rate of return of at least 10%\. Table
9 shows the distribution of road links included in the project, according to
the ex ante estimated ERR presented in BNDES' appraisal reports\.
23
5\.02 Because of lack of availability of relevant data, an economic
reevaluation was performed only for a sample of 16 roads in the State of Sao
Paulo\. This sample is representative of the subprojects described under (a)
in the preceding paragraph\.
5\.03 The economic reevaluation was carried out using the methodology
described in the Manual for Applicants\. Vehicle operating costs were
estimated with the Highway Design Model (HDM) on the basis of representative
vehicles and types of roads in the area of the sample (,able 10)\. First year
traffic was based upon traffic counts carried out for each road in the sample
by the Sao Paulo DER in March 1985\. Traffic was assumed to increase at an
average annual rate of 4\. throughout the lifetime of the subprojects\.
5\.04 Table 11 pretents a comparison between the results of the economic
evaluation carried out by BNDES and the current estimates of the economic
viability of the sample subprojects\. The table shows that, even in those
cases in which actual investment costs and traffic are very much In line with
the forecast, the economic reevaluation yields ERRs quite below the original
BNDES' estimates\. This is mainly because the vehicle operating costs
calculated in 1984, when the HDM III became operational, are lower than those
used in the original evaluation\. Nevertheless, the reevaluation confirms the
possible economic viability of 88% of the roads in the sample\.
This conclusion, however, cannot be extended to the rest of the subprojects,
since the sample is not sufficiently representative of the entire project\.
An in-depth reevaluation of the economic merits of the project would have
required substantial field inputs from the sub-borrowers, BNDFS and DNLR, to
which they were not contractually obligated\.
V1\. PERYORMANCE OF BNDE, DNER AND THE SUB-BORROWERS
6\.01 Since the project under discussion wa3 the first in a series ot
projects atming at supporting the efforts of the Brazilian National Feeder
Roads Program, the subject of institutional development is best discussed in
terms of the evolution of the agencies involved\. Underlying the development
in BNDES, DNER and the sub-borrowers, there is a process of learning by
doing, in which the Secondary and Feeder Roads Project played an instrumental
role\. It was under this project that the difficulties involved in
harmonizing the priorities of the federal agencies and states at different
levels of development were identified\. The experience gained through the
pr'oject served as the basis for the changes introduced under the subsequent
Second and Third Feeder Road Projects\.
6\.02 A major objective of the Program has been to gradually upgrade the
capacity of the states and municipalities for planning and implementation of
feeder roads investments and to provide increased and reliable funding for
that purpose\. The onlending procedures were aimed at promoting appropriate
techniques for the preparation of feeder roads projects, focusing upon the
seletion of clearly economically justified investments and the design of low
24
standard roads adapted to actual needs\. Detailed guidelines for subproject
preparation, evaluation, implementation and monitoring were laid out in the
Manual for Applicants\. These guidelines were later simplified, on the basis
of the experience gained under the subject project, to make them more suited
to the capabilities of the sub-borrowers and to the requirements for low
standard roads\. Although other than economic factors continue, to a certain
extent, to influence the decision-making process for investments in feeder
roads, the techniques for project preparation and evaluation are now
relatively well understood and applied in many state DERs and in some of the
Municipal Consortia, even for projects outside the Program\.
6\.03 Progress in the adoption of more appropriate techniques for the
design and construction of low-cost rural roads was well below expectations
under the project\. A major factor involved the training and experience of
the Brazilian highway engineers, who had been concerned mainly with the
design and construction of Brazil's network of federal and state primary
highways\. Also, the standards recommended in the Manual proved to be too
high\. However, the experience gained under the subject project allowed
substantial progress in this di:ection under subsequent projects;4/ in
particular, lower standard road categories were inserted into the-Manual for
the Second Project\.
6\.04 The institutional system set up to implement and administer the
Feeder Roads Program associates the development banking experience of BNDES
and the technical experience of DNER\. BNDES' Feeder Roads Working Groups had
serious shortcomings at the early stages of the project, which derived both
from a lack of familiarity with the system and from insufficient staff
assigned to the implementation of the Program\. When it became evident that
the small number of professionals available could not provide meaningful
assistance to prospective sub-borrowers in matters of project preparation,
review of applications and the administration of day-to-day matters, BNDES
increased the staff of the working group to 20 professionals who are now
familiar with the techniques of preparation, appraisal and supervision of
feeder road projects and with the Program's procedures\. The technical
assistance provided by the engineers and economists of DNER's Feeder Roads
Working Group has allowed them to gradually improve the quality of the
appraisal reports\. The follow up of the implementation of subprojects,
however, continues to have serious weaknesses, and BNDES' management did not
fully succeed in maintaining updated data on project execution\.
6\.05 The role of DNER did not fully develop, as initially planned, in
iapitalizing upon experience in feeder road workE and disseminating
appropriate design and construction techniques, nor in assisting BNDES in
monitoring the Program\. A major factor has been the varying degree of
4/ Some DERs (Minas Gerais, Ceara) and Municipal Road Consortia (Bahia, Rio
Grande do Sul) have tested, and later implemented, simplified final
designs, and some others have used more labor-intensive construction
techniques (Piaui) or adopted new construction specifications (Acre,
Rondonia, Parana, Sao Paulo)\.
25
interest on the part of DNER's management, as a result of BNDES' leadership
role in the implementation of the Program\.
6\.06 The administration of the project also suffered from insufficient
work organization and coordination within the working groups\. The lending
operations were the result of a marketing process followed by early
commitments of funds to sub-borrowers' applications without taking into
account the requirements and implementation capacities of the states\. This
shortcoming was addressed under subsequent projects by introducing the
concept of a lending program based upon a review of the states' priorities
and capabilities to prepare and implement subprojects\. The working program
then served as a basis for organizing the work of the two working groups\.
6\.07 The covenants included in the Loan and Project Agreements were
complied with, albeit with substantial delays, particularly regarding those
related to the staffing of the working groups\. In addition to the covenants
directly related to project implementation, Section 4\.02 of the Loan
Agreement obligated the Borrower to carry out a study designed to monitor the
economic and social impact of a sample of rural roads in their area of
influence\. The study was carried out by GEIPOT and completed in 1981\. It
emphasized the need for better integration between feeder roads and
agricultural development planning\. This approach was supported later on by
Lhe Third Feeder Roads Project\.
V1I\. ROLE OF THE BANK
7\.01 The Bank's involvement in the project was quite considerable during
the preparation stage and the various financial reformulations\. The Bank
also became significantly involved in the review of the subproject appraisal
reports carried out by BNDES and DNER and in recommending improvements to the
technical designs and economic evaluations of the subproject\. The Bank
helped BNDES and DNER to identify the major problems hindering the
implementation of the project and pressed for meaningful remedial actions
such as the strengthening of working groups and the reformulation of
subprojects which were beyond the capabilities of the sub-borrowers\.
7\.02 Additionally, the Bank showed the necessary flexibility to adapt
the financing arrangements to changing circumstances\. However, the need for
the supplementary financing provided in 1981, under the Second Loan, proved
to be overestimated since, despite increased cost-sharing under the S,ecial
Action Program, substantial loan funds had to be canceled\.
7\.03 The supervision of the project's (and the program's) implementation
required substant2al Bank input\. The program's supervision requirements,
together with those for the feeder roads components of a number of
agricultural and rural development projects, led the Bank, in October 1981,
to establish a position of Resident Highway Engineer stationed in Rio de
Janeiro\. BNDES provided the necessary office and secretarial support\.
Through the Resident Engineer's continuous interaction with BNDES' and DNER's
26
working 1roups and management, the zapabilities of the working groups to
appraise and supervise subprojects have been substantially strengthened\.
However, achievements in these areas have been hampered, in the litest part
of the project implementation period, by reorganizations of BNDES' services
responsible for the program\.
7\.01 The Resident Engineer's regular visits to a number of state highway
agencies and to the fields made possible the development ot some new
approaches to feeder road improvements, such as the giving of priority to
spot improvements of critical road stretches, the dissemination of low cost
construction techniques for roads and bridges, and the adoption of more
appropriate engineering, contracting and work supervision standards and
practices\.
VIII\. CONCLUSIONS
8\.01 The project represented a new approach to the improvement of feeder
roads in Brazil, which aimed at coordinating local needs and priorities with
the Central Government's policies and concerns\. Although a quantification of
the economic impact of the project is not available, 5,371 km of roads were
built in areas which were already experi\.encing a substantial degree of
agricultural development, or which had the potential for it (Table 12)\.
8\.02 The weaknesses in the design of the project and the difficulties
encountered during its implementation provided the Borrower and the Bank with
valuable experience that was incorporated into the follow-on projects:
(a) The financing arrangements which were developed under the project
required significant contributions from the states, in the form of
counterpart funding and loan servicing, which many times went
beyond the capabilities of the sub-borrowers\. The inclusion, later
on, of differentiated financial conditions, according to the level
of income of each state, served to alleviate this problem\.
Furthermore, the Third Feeder Roads Project incorporated the
concept of a lending program, based upon an assessment by
BNDES/DNER of the needs and capabilities of the potentiai
sub-borrowers, and which serves as a basis for programing the
actions necessary for project implementation; and
(b) The project was designed using a sectoral view, paying little or no
attention to complementary investments necessary or being planned
in other sectors to realize the Brazilian agricultural potential\.
The project mainly supported the construction or improvement of
secondary roads of relatively high standards connected to the
federal highway network\. The subsequent evolution of the program
toward Euch lower standards reflects a greater concern for rural
development by the agencies involved and a better communication
with those in the agricultural sector concerning the needs of the
rural areas\.
27
8\.03 The project provides two main lessons:
(a) A successful shift toward the efficient construction of low
standard feeder roads is a slow and difficult process in a country
with professionals who, for decades, were devoted to the
development of the main highway network\. A great deal of training
is required to disseminate the right techniques for low cost
construction and, inevitably, a great amount of learning by trial
and error\.
(b) The implementation of a large investment program on a decentralized
basis makes the establishment of a sound project monitoring system
of paramount importance\. Such a system should help to follow
project implementation closely as well as those exogenous variables
that may influence project financing\. The need to cancel a
substantial amount of loan funds when the project earlier required
supplementary financing could have been avoided, at least
partially, if such a system had been in place\.
28
TABLE 1
BRAZiL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Evolution of the Financing Plan 1/ (percent)
Sub-Projects 2/
Before approved between Sub-Projects 3/
01/01/79 01/01/79 and 06/30/79 approved after 06/70/79
All States Group A Group B Group A Group B Group C
IBRD 23\.2 32\.5 23\.2 32\.8 32\.2 32\.5
BNDE 23\.2 34\.0 23\.2 37\.0 29\.7 21\.6
DNER 13\.5 13\.5 13\.5 10\.2 8\.1 5\.9
S/BOR 40\.1 20\.0 40\.1 20\.0 30\.0 40\.0
Total 100\.0 100\.0 100\.0 100\.0 100\.0 100\.0
Final Disbursement
Disbursement after 10/1/83 4/ average
Group A Group B Group G 06/30/83
IBRD 60\.7 58\.8 56\.2 32\.3
BNDE 30\.0 21\.7 14\.1 27\.5
DNER 6\.0 4\.4 2\.7 9\.6
S/BOR 3\.3 15\.1 27\.0 30\.6
Total 100\.0 100\.0 100\.0 100\.0
1/ Groups A, B and C refer, respectively, to states with low, medium and high
incomes\.
2/ Approved: May 2, 1979 with retroactivity\.
3/ Approved: June 20, 1979 and adopted for Loan 1730-BR\.
4/ Approved: October 1, 1983 under the Special Assistance Program\.
29
TABLE 2
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 12U7-BR)
PROJECT COMPLETION REPORT
Processing Time of the Subloans I/
Time in Days Between Application and Step
Letter of Inscription Allocation Appraisal Total
S/Project Application to Programs of Priority BNDE Signature (Year)
GO\.l 01/26/76 88 387 538 605 1\.65
MT+MS 03/24/76 30 303 432 554 1\.52
CRIBA\.1 04/06/76 19 419 53b 5b3 1\.54
MG\.1 10/20/76 5 455 574 614 1\.68
SP\.1 11/23/77 13 188 278 562 1\.54
PB\.1 u2/13/78 15 109 304 543 1\.49
SC\.1 01/05/78 41 189 541 b24 1\.71
CINTEA 02/23/78 50 195 638 649 1\.78
SC\.2 01/05/78 41 189 t87 722 1\.98
GO\.2 06/12/78 395 518 554 646 1\.77
8A\.1 01/16/78 134 791 2/ 7u3 2/ 812 2\.22
PRI 06/21/77 33 3JU b24 982 2\.69
AL\.1 u5/u3/76 15 1246 iiii 1489 4\.08
PR\.2 08/21/77 33 330 848 1u95 3\.00
P\. 04/14/78 21 o 198 93u 2\.55
Average duration of the phase 62 36b 225 135 2\.U8
Maximum duration or the phase 395 1231 5h1 3h6 4\.0
Miniium duration of the phase 5 94 36 II 1\.49
1 Subprojects are identified by the initials ot the name of the states to which
they belong, except for CKIBA and CINTEA which are acronyms for municipal consortia\.
2/ DEK-8A presented its final cover after 8NUE's analysis\.
30
TABLE 3
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Review of Final_Design and Bid DocumenLatioL 1/
unit: days
Review of Final Design Review of Bidding Doeumentation
Average 2/ Maximum Minimum Averige 2 maximum Minimum
MT\.1 NA NA NA NA NA NA
SUL 1 104 166 38 351 500 192
GO\.1 42 1501 5 83 308 46
GO\.2 118 424 61 385 915 381
CRIBA\.1 23 798 9 92 194 70
BA\.1 246 525 127 325 398 170
MG\.1 179 363 1 296 914 201
MG\.2 62 92 34 154 197 135
PB\.1 139 164 114 NA NA NA
SC\.1 226 236 212 248 256 245
SC\.2 275 308 203 242 256 216
CINTEA NA NA NA NA NA NA
SP\.1 253 614 39 117 353 51
PR\.1 156 456 22 212 347 129
PR\.2 94 109 22 193 248 168
AL\.1 -4 94 10 339 419 44
PA\.1 175 203 175 167 173 160
Total 142 1501 1 220 915 44
1/ By BNDE/DNER
2/ Arithmetic Average (maximum and minimum being eliminated)\.
31
TABLE 4
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 12U7-8R)
PROJECT COKPLETION kEPURT
Average Costs of Construction
Average 1/
Disbursement Exchange Rate 2/
Class Subproject US$/Km Date OKTNI=USS:
A (Paved) AL\.1 97,100 11/82 9\.32
SUL\.1 86b,400 9/81 10\.72
11G\.1 e,500 12/81 10\.91
PB\.1 b5,900 12/80 13\.23
GO\.z 63,100 3/83 9\.07
PR\.1 54,000 10/82 7\.76
SP\.1 38,000 9/82 9\.95
00\.1 30,U00 3/79 14\.43
B (Paved) MG\." 111,500 12/81 10\.91
00\.2 56,300 3/83 9\.01
A (Gravel) SC\.2 9b,900 12/61 10\.10
SC\.1 89,6UU 6/81 10\.99
PR\.2 42,200 12/81 13\.75
GO\.2 40,000 3/83 9\.07
BA\.1 38,000 12/82 8\.14
MG\.1 35,buu 12/81 10\.91
,;RIBA\.1 33,uu 12/78 13\.67
P8\.1 32,1u0 12/80 13\.23
PK\.1 26,300 1U/8U 7\.76
SUL\.1 25,500 9/81 10\.72
8 (Gravel) PR\.2 133,bU0 12/82 13\.75
PR\.1 42,400 10/82 7\.76
CKIBA\.1 35,UU 12/78 13\.67
C (Gravel) PR\.1 3i,bu0 12/8 7\.7b
PR\.2 17,30J 12/2 13\.75
D (Gravel) PA\.1 37,190 12/82 6\.69
MG\.1 29,300 12/83 7\.40
E (Gravel) MG\.2 23,900 12/83 7\.40
?A\.1 13,100 12/82 6\.69
1/ Center of gravity of disbursement of the subproject and not necessarily of
the execution of the correbponding class of works\.
2/ Average exchange rate according to 6ND's records\.
32
TABLE 5
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Performance of the Sub-Borrowers
Physical Targets Implementation 1/ Average Yield
S/Project (Km) period (year) Km/Year
MG\.2 447 1\.30 347
GO\.1 624 2\.75 227
MG\.1 614 2\.80 219
CRIBA 504 2\.70 187
BA\.1 493 3\.75 131
SP\.1 463 3\.75 123
GO\.2 513 4\.00 115
PR\.1 405 4\.10 96
PR\.2 224 3\.30 68
PA 238 3\.70 64
SC\.2 181 3\.75 48
SC\.1 168 3\.75 45
SUL\.1 248 5\.90 42
MT\.1 129 3\.20 40
PB\.1 84 2\.30 36
AL\.1 36 3\.80 10
1/ Period of time between the signature of the subloan and about 95%
of physical progress\.
33
TABLE 6
BRAZIL
SECONDARY AND FEEDER ROADS\.PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Project Cost
Initial Final
Estimate Cost Physical Targets (km) Average Cost/km (US$)
US$M US$M Initial Final Initial Final
MT+SUL 1 6\.8 13\.4 615 377 27,300 35,000 (1\.30)
GO\.1 18\.5 15\.6 650 624 28,500 25,000 (0\.88)
GO\.2 18\.8 20\.4 639 513 29,400 39,800 (1\.35)
CRIBA 1 18\.5 16\.1 493 504 37,500 31,900 (0\.85)
BA\.11 24\.7 19\.5 661 493 37,400 39,600 (1\.06)
MG\.1 23\.3 28\.1 649 614 35,900 45,800 (1\.28)
MG\.2 11\.3 11\.4 446 447 25,300 25,500 (1\.01)
PB\.1 3\.7 2\.6 84 84 44,000 31,000 (0\.70)
SC\.1 9\.4 15\.8 179 168 52,500 94,000 (1\.79)
SC\.2 8\.7 15\.7 193 181 45,100 66,700 (1\.92)
CINTEA 1 3\.5 5\.7 63 76 55,560 75,000 (1\.35)
(bridge) (bridge)
SP\.1 20\.4 16\.5 736 463 27,700 35,600 (1\.29)
PR\.1 8\.9 14\.4 533 405 16,700 35,910 (2\.15)
PR\.2 9\.2 7\.0 526 224 17,500 31,250 (1\.79)
AL\.1 2\.3 3\.8 78 36 29,500 105,600 (3\.58)
PA\.1 20\.5 7\.9 622 236 32,960 33,500 (1\.02)
Total 218\.5 213\.9 7,104 5,371 30,700 39,800
+63 bridges +76 bridges
TABLE 7
Page 1 of 3
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Final Financier Participation
ORTN('000) USS('000)
S/troject 1207-BR 1730-BR Total 1207-BR 1730-BR Total
MT BK 68 - 68 754 - 754
BNDES 68 - 68 754 - 754
DNER 40 - 40 439 - 439
S/B 65 - 65 709 - 709
Total 241 - 241 2,656 - 2,656
SUL\.1 BK 118 117 235 1,316 997 2,313
BNDfS 118 94 212 1,316 803 2,119
DNER 69 24 93 766 203 969
S/B 446 38 484 4,978 326 5,304
Total 751 273 1,024 8,376 2,329 10,705
GO\.1 BK 292 - 292 3,513 - 3,513
BNDES 292 - 292 3,513 - 3,513
DNER 170 - 170 2,045 - 2,045
S/B 546 - 546 6,557 - 6,557
Total 1,300 - 1,300 15,628 - 15,628
GO\.2 BK 476 514 990 4,711 3,806 8,517
BNDES 537 254 791 5,315 1,855 7,170
DNER 148 51 199 1,465 349 1,814
S/B 290 27 317 2,870 34 2,904
Total 1,451 846 2,297 14,361 6,044 20,405
CRIBA\.1 BK 292 - 292 3,649 - 3,649
BNDES 292 - 292 3,649 - 3,649
DNER 170 - 170 2,124 - 2,124
S/B 535 - 535 6,j83 - 6,683
Total 1,289 - 1,289 16,105 - 16,105
MG\.1 BK 368 440 808 3,525 4,296 7,821
BNDES 368 384 752 3,525 3,749 7,274
DNER 214 104 318 2,051 1,015 3,066
S/B 634 392 1,026 6,091 3,827 9,918
Total 1,584 1,320 2,904 15,192 12,b87 28,079
MG\.2 BK 734 - 734 5,519 - 5,519
BNDES 370 - 370 2,782 - 2,782
DNER 86 - 86 651 - 651
S/B 331 - 331 2,491 - 2,491
Total 1,521 - 1,521 11,443 - 11,443
35 TABLE 7
Page 2 of 3
ORTN('000) US$('OU)
S/Project 1207-BR 1730-BR Total 1207-B 1730-BR Total
PB\.1 BK 83 7 90 794 61 855
BNES 87 7 90 831 64 895
DNER 34 3 37 330 25 355
S/B 51 5 56 488 30 526
Total 255 22 277 2,443 188 2,631
SC\.1 BK\. 266 250 516 3,032 2,253 5,285
MNDES 246 185 431 2,797 1,667 4,464
DNER 67 42 109 763 379 1,142
S/B 248 227 475 2,i24 2,045 4,869
Total 827 704 1,531 9,41b 6,344 15,760
SC\.2 BK 254 253 507 2,565 2,408 4,973
BNDES 234 233 467 2,366 2,221 4,587
DNER 64 64 128 645 bob 1,251
S/8 236 248 484 2,390 2,360 4,750
Total 788 798 1,586 7,966 7,595 15,5t1
CiNTEA\.1 8K 102 99 201 1,004 858 1,b2
BNDES 94 67 161 926 584 1,510
UNER 26 25 51 252 216 468
S/e 93 105 198 935 918 1,853
rotal 315 29b 611 3,117 2,576 5,693
Se\.1 BK 322 140 462 3,171 1,045 4,216
NDES 322 7J 392 3,171 523 3,694
DNER 187 17 2L4 1,845 127 1,972
S/8 556 153 709 5,483 1,141 6,624
Total 1,387 380 1,767 13,670 2,836 16,506
PR\.1 BK 271 451 722 2,442 3,243 5,685
BNDES 250 192 442 2,253 1,381 3,634
UNER 68 42 110 614 302 916
S/b 252 263 515 2,275 1,890 4,165
Total 841 948 1,789 7,584 6,816 14,400
PR\.2 BK 312 - 312 2,702 - 2,702
BNDES 210 - 21U 1,819 - 1,819
DNER 5 - 53 459 - 459
S/â 232 - 232 2,009 - 2,009
Total 807 - 807 6,989 - 6,989
AL\.1 BK 68 71 139 863 518 1,381
iNDEb 77 58 135 973 423 1,396
DNER 21 15 36 268 109 377
S/8 41 17 58 526 125 651
Total 207 161 368 2,630 1,175 3,805
PA\.1 BK 452 - 452 3,i87 - 3,287
NDES 378 - 378 2,749 - 2,749
DNEK 97 - 97 705 - 705
S/8 162 - 162 1,L78 - 1,178
Total 1,089 - 1,089 7,919 - 7,919
36
TABLE 7
Page 3 of 3
ORTN('000) US$('000)
S/Project 1207-BR 1730-BR Total 1207-BR 1730-BR Total
BA\.1 BK 788 - 788 6,660 - 6,660
BNDES 815 - 815 6,888 - 6,888
DNER 220 - 220 1,859 - 1,859
S/B 480 - 480 4,057 - 4,057
Total 2,303 - 2,303 19,464 - 19,464
Total BK 5,266 2,342 7,608 49,507 19,485 68,992
BNDES 4,758 1,544 6,302 45,627 13,270 58,897
DNER 1,734 387 2,121 17,281 3,331 20,612
S/B 5,198 1,475 6,673 52,544 12,704 65,248
Total 16,956 5,748 22,704 164,959 48,790 213,749
of which SAP:
to DNER 66 77 143 497 627 1,124
to S/B 264 306 570 1,990 2,507 4,497
Total 330 383 713 2,487 3,134 5,621
37
TABLE 8
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Schedule of Disbursement
S/Pr,,ect Accumulated Disbursement (%)
25% 50% 75% 100%
(% of time)
MG\.2 0 25 35 100
GO\.1 3 21 58 100
MG\.1 25 42 92 100
CRIBA 16 65 95 100
BA\.1 2 2 72 100
SP\.1 3 3 42 100
GO\.2 3 21 58 100
PR\.1 9 9 57 100
PR\.2 5 10 60 100
PA 20 37 63 100
SC\.2 20 49 60 100
SUL\.1 NA NA NA 100
PB\.1 45 56 91 100
AL\.1 1 20 88 100
Average 13 33 74 100
IBRD 1/ 15 61 90 100
1/ Typical Bank transportation project in Latin America\.
38
TABLE 9
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
ERRs for Road Links-Ex Ante Estimation
Number Number of Links with ERR Between
S/Project Road Links 10 10/15 15/20 20/25 25/30 30/35 35/40 40
GO\.1 14 - 5 3 2 1 3 - -
MT+MS 8 - - 1 6 1 - - -
CRIBA\.1 26 - - 4 1 2 - 5 14
MG\.1 19 - 2 7 2 4 1 2 1
SP\.1 23 - 2 2 4 2 3 6 4
PB\.1 2 - 1 1 - - - - -
SC\.1 5 - 2 1 1 1 - - -
SC\.2 6 - 4 1 1 - - - -
GO\.2 15 - 6 - 3 2 1 1 2
PR\.1 17 - 1 2 - 3 1 1 9
AL\.1 5 - 1 2 - 2 - - -
PR\.2 8 - 2 2 - - 3 - 1
PA 6 - - - 6 - - - -
Total 154 0 26 26 26 18 12 15 31
100% 0 17 17 17 12 8 10 19
Economic Reevaluation
SP\.1 16 3 6 - 1 1 2 - 3
39
TAULE 10
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Vehicle rating Costs
(US$/1000 kn)
Rolling Hi Mountainous
Paved Gravel Earth Paved Gravel Earth Paved Gravel Earth
Cars 80\.2 96\.1 126\.9 80\.2 94\.1 126\.9 80\.2 94\.1 126\.9
Pick-up 119\.4 150\.6 221\.6 120\.2 151\.5 222\.2 123\.5 156\.4 226\.6
Bus 311\.3 352\.1 446\.6 349\.8 398\.9 495\.4 415\.9 467\.5 566\.0
Light Truck 203\.4 289\.4 502\.1 222\.5 314\.5 529\.5 252\.5 353\.0 568\.5
Medium Truck 243\.8 345\.0 598\.0 266\.5 373\.8 626\.1 303\.2 413\.6 666\.0
Heavy Truck 359\.0 563\.1 1063\.4 402\.8 612\.0 1110\.0 467\.3 678\.0 1435\.3
40 mll 11
SO!MY A I! 10S Im I (IAN 1207-i)
PMUM! 032U!1~ R=m
Fx~c Evaluation
First Year Traffic FamrEsta
(AD) (1977 (R )
Apprasal Appraisal
Eatiamte ktual E!timate ktual A aisal Qrrent
Casuih-Fazenda Sao Jorge 183 112 32,485 24,408 22 12
VSP8-N\. Indepenencia-OJaracal 106 151 26,915 27,429 19 11
Foz do Rio Aguadei-Paulimata 250 138 30,712 31,876 49 11
SPM023-Destilaria Alcidia % 324 25,617 17,168 32 59
Planalto do SuL-Teodoro 5npaio 115 917 26,314 27,174 23 100
Rio Santo Anastacio-Bairro Santa Isabel 200 51 30,716 26,956 50 3
VSP595-Socimra 154 480 25,578 31,710 20 32
Santa Fe do Sud-Ruinixa 102 288 25,724 26,735 14 12
VSP300-Fazenda Tirbore 149 159 25,665 25,755 35 10
Entronc to VSP8-Pontal 148 149 25,645 24,839 33 8
Sao Joao P\. DAlho-P\. Nova Marilia 105 544 25,697 13,458 30 58
VSP27C-Rio Santo Anastacio 138 202 25,651 26,5% 40 12
Teokro Sa~paio-Bairro Corrego Seco 123 214 25,662 25,499 39 26
Corregu Evaristo-Entrcxemento VSP033 161 230 25,649 22,815 39 24
41
TABLE 12
BRAZIL
SECONDARY AND FEEDER ROADS PROJECT (LOAN 1207-BR)
PROJECT COMPLETION REPORT
Final Physical Targets
Paved Gravel Total
S/Project Km No Link Km No Link Km No Link
MT - - 129 3 129 3
SUL\.1 76 1 172 4 248 5
GO\.1 624 14 - - 624 14
GO\.2 189 8 324 7 513 15
CRIBA\.1 - - 504 26 504 26
BA\.1 - - 493 13 493 13
MG\.1 125 6 489 13 614 19
MG\.2 - - 447 15 447 15
PB\.1 28 1 56 1 84 2
SC\.1 - - 168 5 168 5
SC\.2 - - 181 6 181 6
CINTEA\.1 - - 3,610 76 bridges 3,610 76 bridges
SP\.1 463 23 - - 463 23
PR\.1 82 4 323 13 405 17
PR\.2 - - 224 8 224 8
AL\.1 36 5 - - 36 5
PA\.1 - - 238 6 238 6
1,623 62 3,748 120 5,371 182
+76 bridges | APPROVAL |
P133811 | IEG
Report Number: ICRR14715
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 04/20/2015
Country: Yemen, Republic of
Project ID: P133811 Appraisal Actual
Project Name: Emergency Crisis Project Costs (US$M): 102\.0 97\.2
Recovery Project
L/C Number: Loan/Credit (US$M): 100\.0 97\.2
Sector Board: Social Protection Cofinancing (US$M):
Cofinanciers: Board Approval Date : 02/14/2013
Closing Date: 06/30/2014 06/30/2014
Sector(s): Other social services (79%); General education sector (10%); Health (10%); Public
administration- Other social services (1%)
Theme(s): Social safety nets (50%); Nutrition and food security (30%); Education for all (10%); Child
health (10%)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Hjalte S\. A\. Sederlof Denise A\. Vaillancourt Lourdes N\. Pagaran IEGPS2
2\. Project Objectives and Components:
a\. Objectives:
The project development objective (PDO) in the Credit Agreement and the Project Paper was to assist the
Recipient in mitigating the impact of the 2011 crisis by providing cash benefits to eligible poor households\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
Component 1 (estimated cost at appraisal US$ 101\.80 million; actual cost US$ 97\.10 million)\. This component
was to provide cash benefits of US$ 10-20 per household per month to about 400,000 eligible poor households
over a fifteen month period\.
Component 2 (estimated cost at appraisal US$ 0\.20 million; actual cost US$ 0\.10 million)\. This component was
to support project monitoring and evaluation, and the external audit\.
The components underwent no changes during implementation\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project costs\. Total project costs at appraisal were estimated at US$ 102\.0 million\. Actual costs at project
closing were US$ 97\.20 million, reflecting a reduction in incremental recurrent costs\.
Project financing\. The Bank disbursed SDR 65\.06 million (99 percent of the Grant amount) with SDR 0\.04 million
not disbursed\.
Borrower contribution\. The Borrower contribution was initially estimated at US$ 2\.0 million in incremental
recurrent costs under the project to reimburse the payment agency (the Post Office) for its services\. This was
redefined as part of another project - the Institutional Support Project to the implementing agency, the Social
Welfare Fund (SWF)\.
Dates\. The project was approved on February 14, 2013, it became effective on May 8, 2013 and closed on time,
on June 30, 2014\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Relevance of objectives is rated high\.
The PDO was directly relevant to the Governmentâs efforts to mitigate the immediate consumption effects on poor
households of a series of climatic, economic and political shocks that had raised the poverty rate from 43 percent
in 2009 to 55 percent in 2012, increasing pressures on Yemenâs cash benefit system\. Fiscal policies were geared
towards containing a rising fiscal deficit, following a 13 month halt to oil production, and the public expenditure
program was already struggling to address numerous domestic (security) and international (food and oil price
rises) risks\. There were few domestic resources available to meet the rising demands for social assistance\. As a
consequence, while the Governmentâs Transition Plan for Stabilization and Development (TPSD) emphasized
short-term humanitarian, recovery and reconstruction support, the fragile fiscal situation forced he Government to
turn to foreign donors, including the Bank, in first addressing immediate needs\. The Bank responded positively:
this was in line with the Bankâs interim country strategy (FY13-FY14) to address the aftermath of the crisis,
including protecting critical social expenditures, especially for the poor\.
b\. Relevance of Design:
Relevance of design is rated substantial\.
The project was to provide relief to eligible poor families through the countryâs Social Welfare Fund (SWF), an
agency that had experience with unconditional cash transfers\. The SWF was already receiving technical
assistance to increase its operational capacity under an Institutional Support Project (P117608)\. This included
the development of a proxy means test (PMT) for better targeting of poor beneficiaries, as well as support for
project monitoring\. The 400,000 households included in the project were selected using the PMT\. In choosing a
cash transfer mechanism, project designers drew on the positive experience with cash benefit schemes
elsewhere as a cost effective, straightforward and rapid means of supporting consumption levels and patterns
among poor and vulnerable households\. The introduction of even modest amounts of predictable cash support
(in this case varying between $10-20 per household per month) has proven to be important, as they introduce
predictability into the household income stream, and strengthen the scope for household budget planning, even
in a crisis\. The results framework included key process indicators on service delivery performance (transfers)\. In
consideration of the short-trm emergency nature of the project, it did not include outcome indicators\. Instead, a
beneficiary assessment was to be undertaken towards the end of the project to provide information on the effect
of the transfer on beneficiary households\. However, the introduction of additional process/performance
indicators into the results framework, such as timeliness of payments and grievances, could have offered a fuller
picture of project implementation\.
4\. Achievement of Objectives (Efficacy):
The PDO was to assist the Recipient in mitigating the impact of the 2011 crisis by providing cash benefits to
eligible poor households\.
Achievement of the PDO is rated substantial\.
In the result framework, achievement of the PDO was measured by service delivery:
ï Grants totaling US$ 97\.10 million were transferred to beneficiary households, compared to a target of US$
99\.8 million
ï 394,000 households (2\.35 million beneficiaries) received cash transfers through the project, compared to a
target of 400,000 households (2\.4 million beneficiaries)
ï 52 percent of beneficiaries were women, compared to a target of 50 percent
While these outputs were largely met, they by themselves are insufficient to determine whether the project
contributed to âmitigating the impact of the 2011 crisisâ\. However, the subsequent beneficiary assessment does
confirm that the cash benefits did mitigate the effects of the crisis on beneficiary households, when compared to
non-beneficiary ones\. That said, the lumpy payment schedule may have reduced some of the efficacy that could
have been achieved with a more predictable payment stream that might have allowed beneficiaries to practice
more effective income smoothing\. Efficacy is therefore rated substantial\.
5\. Efficiency:
Efficiency is rated substantial\.
No rates of return were estimated for the project\. As noted in section 2b, cash benefit schemes are generally
recognized as cost effective mechanisms for responding to short-term shocks; and using an existing agency was
an efficient way to implement the project\. Moreover, the project achieved its PDO on time and without cost
overruns\. At the same time, some of the benefits of unconditional cash transfers may have been weakened by
the slow release of funds by the Ministry of Finance and the unpredictable and irregular receipt of funds by
beneficiaries (ICR p\. 23)\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The relevance of the PDO is rated high, as the PDO responded to urgent short-term concerns of the government to
address sharply increasing poverty, and the Bankâs strategy of improving access to safety nets and protecting critical
social expenditures\. Relevance of design is rated substantial, reflecting a basically strong design, albeit with some
weakness in the results framework\. Achievement of objectives is rated substantial based on the evidence included in
the beneficiary assessment\. Efficiency is rated substantial, noting the appropriate intervention model, its results, and
timely completion without cost overruns\.
a\. Outcome Rating: Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Sustainability of intended project outcomes â positive consumption and asset building effects on targeted poor
beneficiaries - is in the short to medium term dependent on continued donor support and a gradual upswing in the
economy, as well as political stability\. A follow-up operation has been prepared by the Bank, and the Bank has
been active in mobilizing further donor support for the safety net\. However, the political uncertainties that
accompany the recently heightened conflict point to an uncertain future for this activity, at least for some time to
come\. Until the situation clears, the risk to the development outcome is high\.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
a\. Quality at entry:
The project was relevant in that it addressed a priority need for urgent short-term assistance\. The design
reflected the urgency: the Bank team chose an effective tool for quick delivery of assistance, an unconditional
cash transfer, and used an existing agency, the SWF, to deliver the transfer\. The introduction of PMT
sharpened the poverty focus of the tool, and it helped introduce a positive gender element (female headed
households were likely to be among the most vulnerable households and ones most likely to use resources
for vital consumption and investment needs)\. Reflecting the urgency of the situation, the team appropriately
applied OP 8\.00 (Emergency Recovery Assistance Procedures)\. The project became effective in three
months, indicating readiness and Government commitment\. In view of the short-term nature of the
intervention, the results framework focused on outputs; a beneficiary assessment was also included to
determine project impact\. The risk assessment signaled weaknesses in governance, institutional capacity
and fiduciary management in the SWF, and the team looked to the ongoing Institutional Support Project, as
well as donor support, to help address the risks\. That risk mitigation strategy was partially successful,
although process-related problems would arise during implementation, especially relating to monitoring and
evaluation\. The ICR (pp\. 17 and 26) indicates the absence of insistence on an up-front commitment of
Government funds going into the project as a factor that subsequently would delay funds transfers, as well as
adversely affect the monitoring system\.
Quality-at-Entry Rating: Satisfactory
b\. Quality of supervision:
The project disbursed all the moneys on time, met its output targets, and achieved its objective of mitigating
the effects of the crisis\. At the same time, it did encounter implementation challenges that the supervision team
was not able to resolve: timely delivery of payments, and reconciliation of payments, which would persist through
much of the project\. Here, the ICR, in its discussion of the quality of supervision (ICR pp 22, 23), points to the
need for more hands-on support in implementation\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
With cash transfers to the poor a national priority, and external shocks rapidly increasing poverty, the
government was committed to the project objective\. And it participated actively in project preparation through the
Ministry of Finance\. Government support was less strong during implementation, and did contribute to the delays
in payment of cash benefits, and limited monitoring\.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
While the SWF had experience in operating cash benefit programs, it did not have the capacity to do so in light
of the requirements for rigor posed by the Bank\. Even with assistance through the Institutional Support Project
and support from the EU, and a project support team, the SWF resources would turn out to be stretched\. Still, it
was pro-active, finding solutions to process bottlenecks in collaboration with the payment agency, and managed to
deliver an almost fully disbursed project within the project period\.
Implementing Agency Performance Rating : Satisfactory
Overall Borrower Performance Rating : Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Project monitoring and evaluation focused on the delivery of cash benefits to the eligible households\. This was to
include monitoring of process indicators, and field-level spot checks to ensure eligibility of recipient households,
as well as correct receipt of funds and a follow-up mechanism on late payments\. Here, capacity building was to
be provided by the Institutional Support Project\. A beneficiary assessment was to be conducted towards the end
of the project to determine the effects of the project on the well-being of recipient households\.
b\. M&E Implementation:
Implementation of M&E would be limited to monitoring process indicators on the basis of audit reports,
reconciliation between records in SWF and the payment agency, and the beneficiary assessment\. While
reconciliation took place with delays and field-level audits did not take place (ICR, p\.7), M&E allowed the
essential payment process to be monitored\.
c\. M&E Utilization:
Monitoring information was used to follow disbursement of funds and reconciliation, although adequacy and
effectiveness of reconciliation processes remained unclear throughout implementation\.
M&E Quality Rating: Substantial
11\. Other Issues
a\. Safeguards:
No safeguard policies were triggered\.
b\. Fiduciary Compliance:
Financial management\. All financial covenants were complied with; and the IDA credit was fully disbursed by
closing\. All audit reports were submitted on time with unqualified audit opinions\.
Procurement\. Procurement guidelines were followed\. However, procurement relating to the beneficiary
assessment was significantly delayed, from March to September, 2014; consequently, the results were not
available to be incorporated into the ICR\. The Bankâs supervision team was not able to solve this issue in a
timely way\.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Satisfactory Satisfactory
Risk to Development Significant High IEG considers that current political
Outcome: uncertainties make the risk to the
development outcome, and in particular
sustainability of the process, high\.
Bank Performance: Satisfactory Satisfactory
Borrower Performance : Satisfactory Satisfactory
Quality of ICR: Unsatisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The following lessons are formulated by the evaluator, based on the ICR:
In fragile environments , strong institution -building support is essential when scaling up to meet an
emergency\. While the agency of choice may have the capacity that allows it to operate under normal
circumstances, it may not have the resources to cope with a shock to the system\. SWF proved not to have the
resilience to take on an intense cash transfer process without the support provided by the ISP (and the EU),
and even then, capacity was strained\.
Even emergency operations require a rigorous capacity assessment \. The urgency with which an intervention
is needed should not override good design\. Expecting to address and solve issues during implementation may
prove to be much more challenging and time- and resource consuming than during preparation\. The
preparation team did not sufficiently focus on such relatively complex challenges as monitoring and evaluation
during preparation, leaving it up to the ISP to address them\. This did not work well\.
Maintain continuity of staff in emergency projects \. Maintaining continuity of staff is always advisable, but
especially so when implementing under timetables of emergency â there may be much less time to understand
issues and build relationships than under a regular operation\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
While the ICR provides description and some analysis of implementation processes, it suffers from having been
issued prior to the beneficiary assessment\. Some of the key issues that did arise - notably payment delays and
their implications - are not sufficiently clarified, and sometimes there also appears to be a disconnect between the
conclusions that one can draw from the text and the ratings\. The presentation could have been more focused,
important elements are scattered throughout the text\. It also included a few unclear points: (i) it never explained
the change in the Government contribution; (ii) its basic data sheet erroneously indicated that transfers of
benefits totaled US$ 85 million; and (iii) the basic data sheet indicated only one TTL during implementation, while
in fact there were three\. The document is consistent with the guidelines, but with 26 pages, it is on the lengthy
side\.
a\.Quality of ICR Rating : Unsatisfactory | APPROVAL |
P001276 | Documnit of
The World Bank
FOR oMCIAL USE ONLY
Report No\. 10208
PROJECT COMPLETION REPORT
KENYA
EXPORT PROMOTION TECHNICAL ASSISTANCE PROJECT
(CREDIT 1045-KE)
DECEMBER 27, 1991
Eastern Africa Department
Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official daties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EOTTVALENTS (1980)
Currency Unit - Kenya Shilling (KSh)
KSh - US$ 0\.133
US$ 1\.00 K KSh 7\.5
ABBREVIATIONS
DFCK - Development Finance Company of Kenya
EAC - East African Community
EEC - European Economic Commission
HCDA - Horticultural Crops Development Authority
ICDC - Industrial and Commercial Development Corporation
IDB - Industrial Development Bank
KBS - Kenya Bureau of Standards
KIE - Kenya Industrial Estates
KMC - Kenya Meat Commission
KNTC - Kenya National Trading Corporation
FISCAL YEAR
Republic of Kenya: July 1 - June 30
FOR OFFICIAL USE ONLY
THE WORLD BANK
Washington, D\.C\. 20433
U\.SA
Office of Direoator-Goneral
Operations Evaluatlon
December 27, 1991
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Kenya - Export Promotion
Technical Assistance Project (Credit 1045-RE)
Attached, for information, is a copy of a report entitled "Project
Completion Report on Kenya - Export Promotion Technical Assistance Project
(Credit 1045-KE)" prepared by the Africa Regional Office\. No audit of this
project has been made by the Operations Evaluation Department at this time\.
Attachment
This docent lus a rstricted distributlon and may be used by rtciplents only In the performance of their official duties\.
its contents any not otberwise be disclosed withou' World Bank authorition\.
FOR OFFICIAL USE ONLY
PROJECT COMPLETION REPORT
KENY
EXPORT PROMOTION TECHNICAL ASSISTANCE PROJECT
(CREDIT 1045-KE)
TABLE OF CONTENTS
Page No\.
PREFACE i
EVALUATION SUMMARY \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. iii
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE \. \. \. \. \. \. \. \. 1
Project Identity \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 1
I\. Introduction \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 1
II\. The Project and Its Justification \. \. \. \. \. \. \. \. \. \. \. \. 2
III\. Project Implementation \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 4
IV\. Project Results \. \. \. \. * \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 5
V\. Bank and Borrower Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. 6
VI\. Conclusions \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 6
PART III: STATISTICAL INFORMATION \. \. \. \. \. \. \. \. \. \. \. \. 8
Table 3\.1: Related Bank Loans \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 8
Table 3\.2: Project Timetable \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 8
Table 3\.3: Disbursements \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 9
Table 3\.4: Staff Inputs \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.0\. \. \. 9
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
PROJECT COMPLETION REPORT
KENYA
EXPORT PROMOTION TECHNICAL ASSISTANCE PROJECT
(CREDIT 1045-KE)
PREFACE
This Project Completion Report reviews the Kenya Export Promotion
Technical Assistance Project, which was supported by IDA Credit 1045-KE\.
Credit 1045-RE for US$4\.5 million to the Republic of Kenya was approved
on June 12, 1980, and was closed on June 30, 1985, the original closing date\.
Parts I and III were prepared by Bank ataff based on inforoation
available in project files and from discussions with Bank staff members
associated with the Project\. In view of the lengthy period between closing and
preparation of the PCR, and in accordance with SVPOP guidelines for preparing
PCRs dated June 1989, no attempt was made to ask the Kenyan Government to
prepare Part II\.
This PCR was read by the Operations Evaluation Department\. The draft
PCR was sent to the Borrower for comments, but none were received\.
PROJECT COMPLETION REPORT
REA
EXPORT PROMOTION TECHNICAL ASSISTANCE PROJECT
(CREDIT 1045-RE)
EVALUATION SUMMARY
Obiectives and Design
1\. The Export Promotion Technical Assistance Project was prepared in FY80
to provide technical support for Kenya's first structural adjustment program,
which was approved at about the same time\. It was designed to address
adjustment issues relating to industrial production and export marketing
through studies, seminars and training\. Beneficiaries were expected to include
a broad list of relevant Government ministries and agencies as well as private
entrepreneurs\. The project was to be implemented by a staff drawn from four
ministries, and guided by a comittee consisting of the Permanent Secretaries
of those ministries\. Am advisory comittee was also to be established,
consisting of representatives from six Government ministries or agencies
(paras\. 9-12)\.
Implementation Experience
2\. Project implementation was extremely slow -- no activities had started
by the time the first structural adjustment operation was completed\. A second
structural adjustment program followed on, but very few activities in support
of it were actually implemented under Credit 1045-KE\. In 1983, in an attempt
to speed up project implementation, the Government considered employing UNIDO
to take over project implementation\. However, in 1984, it decided against
doing so\. Also, reluctance on the part of some Government officials to use
loan funds, even on IDA terms, for policy studies led to continued slow
implementation\. The project was closed on schedule June 30, 1985, with only
US$760,000 of IDA funds (17% of the IDA credit) actually utilized
(paras\. 13-17)\.
Results
3\. While the record of the uses made of these funds is not clear, there is
no evidence that any of the project activities undertaken made a positive
impact on the first or second structural adjustment operations, or toward
achieving the project's objectives of supporting industrial development and
export expansion in Kenya\. The project must be considered unsuccessful in
terms of meeting its stated objectives (paras\. 18-22)\.
Lessons
4\. The experience with this project highlights the need for better advance
planning of technical assistance activities; assuring that there is serious
beneficiary interest in the project objectives; instituting project implementa-
tion arrangements that provide for clear lines of responsibility and authority;
- iv -
and for programing an adequate level of Bank staff time for supervision\.
These lessons were incorporated in the subsequent generation of technical
assistance projects for the industrial and financial sectors ir\. Kenya
(paras\. 23-25)\.
PROJECT COMPLETION REPORT
EXPORT PROMOTION TECHNICAL ASSISTANCE PROJECT
(CREDIT 1045-KE)
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE
Project Identity
Project Name: Export Promotion Technical Assistance Project
Credit Number: 1045-RE
RVP Unit: Africa Region
Country: Kenya
Sector: Technical Assistance
T\. Introduction
1\. Kenya's first decade after independence in 1963 was one of remarkable
growth and structural transformation\. Total GDP grew at an annual average rate
of 6\.6% during 1964-73\. Both agriculture and manufacturing grew rapidly, at
4\.7% and 8\.4% per annum respectively\. The expansion of agriculture was
stimulated by the conversion of considerable high-potential land from extensive
use to small-holder cultivation, the introduction of high-value production
activities, and the adoption of high-yielding maize varieties\. Growth of
manufacturing was made possible largely by the expansion of domestic demand due
to riping agricultural incomes, while investment for domestic production was
being encouraged by high levels of protection, a liberal attitude towards
foreign investment, and active Government promotion of and participation in
manufacturing ventures\.
2\. Following the first oil crisis of 1973, growth decelerated to 41 p\.a\.,
or virtual stagnation in per capita terms, reflecting not only the oil shock,
but also the emergence or intensification of structural constraints largely
unrelated to the post-1973 terms of trade deterioration\. Agricultural growth
decelerated, due partly to the tapering off of the specific positive factors
that had sustained agricultural growth in the first decade after independence,
Government policies, including trade and exchange rate policies that turned the
internal terms of trade against the agricultural sector, and inefficient,
monopolistic Government involvement in agricultural marketing that discouraged
production and placed undue burdens on the budget\.
3\. Industrial growth also decelerated due to the increasingly high cost of
Kenya's capital-intensive investment and the burden on the balance of payments
of a sector that imported a substantial volume of intermediate goods for
minimal processing and assembly but exported very little\. Export volume grew
by less than 1% annually during the late 1970s, and exports became more
concentrated on coffee, tea, and petroleum products\.
- 2 -
4\. A fundamental problem underlying the sluggish industrial and export
performance was the wall of heavy protection afforded by tariffs, licensing and
quantitative restrictions\. Also, the collapse of the East African Community
(EAC) common market in 1976 reduced the export prospects for Kenyan products
produced r\.nder prrtected conditions\. In a word, the early economic strategy
that was able to exploit the easy import-substitution possibilities of the
Kenyan economy was exhausted, and the high levels of protection required by
that strategy resulted in an anti-export bias by making it more profitable to
produce for the domestic market\.
5\. During 1974-75 the increase in petroleum prices also put a strain on
Kenya's balance of payments\. This was temporarily relieved by the rapid
escalation of coffee prices (one of Kenya's principal exports) in 1976-77, but
prices soon dropped and the balance of payments pressures accelerated again,
exacerbated by an increased level of military spending and a liberal import
policy adopted during the coffee boom\.
6\. In 1979 Kenya sought the assistance of the Bank and the IMF in designing
and implementing a revised set of policies to cope with the deteriorating
balance of payments situation\. The new strategy was outlined in the Kenyan
Fourth Development Plan (1979-83)\. Kenya signed a stand-by agreement with the
IMF in 1979, and provided the Bank with a letter dated January 2, 1980
outlining a specific and time-bound action program that was designed to begin
the transformation of the Kenyan economy\. This program became the basis for
approval by the Bank of an IDA credit (999-KE) of US$55 million, which was
approved on March 25, 1980 (the World Bank's first structural adjustment loan
in Africa)\. The action program, which was also supported by EEC and OPEC Fund
financing, was conceived as the first phase of a more comprehensive structural
adjustment process and, if successful, was expected to be followed by other
adjustment operations in the future\.
7\. This first phase progra had limited\.objectivts focusing on (i) the
promotion of a more efficient and outward looking pattern of industrial growth;
(ii) effective external debt management; and (iii) realistic advance budgeting
of government revenues and expenditures\. The first objective was designed to
include the growth of non-traditional exports, thus easing the foreign exchange
constraint over the medium term\. Specifically, the Government agreed that
industrial protection would be rationalized and gradually reduced, and that
existing incentives for non-traditional exports would be improved\. The program
was expected to have a substantial impact on the economy, including a boost in
exports\. The IDA credit proceeds were used to finance imports of a broad range
of essential raw materials (except fuels), intermediate goods and final
manufactures, including machinery and equipment\.
II\. The Project and its Justificatlon
8\. The Export Promotion Technical Assistance Project was conceived as a
means of making technical assistance and training available in support of the
structural adjustment program Specifically, the project was intended to
"\. rupport industrial development in Kenya in line with the Government
strategy under the current development plan", with special emphasis on
industrial production and export marketing\.
-3-
9\. The project, to be implemented over four years, we divided into two
parts with primary responsibility for Part A to be located in the Ministry of
Industry and Part B in the Ministry of Commerce\. Activities, as spelled out
in the Development Credit Agreement, were to include:
Part A: Studies, Seminars and Training related to Industrial Production
i\. feasibility studies of export-oriented projects;
ii\. studies to identify and evaluate the production and
export potential of specific industries, f\.rms and
sectors or subsectors;
iii\. studies to identify and assess manpower requirements for
industrial rentructuring;
iv\. studies on implementation of industrial restructuring
policies;
v\. studies on the technology to be applied in the use of
local resources and production techniques for exports;
vi\. a training program providing for the training of staff
from the Kenya Bureau of Standards related to the im-
provement of standards and quality control of exports and
goods;
vii\. a short-term training program in Kenya and elsewhere in
activities relating to the identification, preparation
and appraisal of projects for staff from public agencies;
and
viii\. a staffing program to implement above activities\.
Part B: Studies, Seminars, and Training Related to Export Marketing
i\. marketing studies of export-oriented products and
projects;
ii\. studies to identify and evaluate the export potential of
industries, firms, sectors and subsectors;
iii\. studies to identify and assess manpower requirements for
export marketing and promotions;
iv\. studies on implementation of export marketing and promo-
tion policies;
v\. a program providing for the training in Kenya and over-
seas of staff from public agenc\.et\. in export marketing
activities;
vi\. organization of export marketing seminars in Kenya;
-ii\. support services through a special fund to assist produc-
tion, packaging and direct marketing of exports by
handicraft workers and associations as well as to upgrade
skills of relevant artisans through short-term training
locally or elsewhere;
viii\. a staffing program required to implement I-IV above\.
10\. The project was to be implemented by staff in the Ministries of Finance,
Economic Planning and Development, Industry and Commerce\. A professional staff
of five senior Kenyan officials was to be assembled from personnel in the
Ministries of Planning, Commerce and Industry to manage the project\. An inter-
ministerial project advisory committee was to be established consisting of the
-4-
Permanent Secritaris in the Ministries of Industry, Comerce, Planning,
Firance, and t\. ** other representatives from the other project beneficiaries
(Agriculture astock Development, the Industrial Development Bank of Kenya
(IDB), the LL\.aLopment Finance Company of Kenya (DFCK), the Kenya Industrial
Estates (KIE), 'dustrial and Commercial Development Company (ICDC), the
Horticultural Crops Development Authority (HCDA), the Kenya National Trading
Corporation (KNTC), the Kenya Meat Commission (KMC), and the Kenya Bureau of
Standards (KBS) as well as individual private entrepreneurs)\.
11\. The project staff, after taking due account of comments by members of
the advisory committee, were to submit recommendations for final Government
approval to a committee consisting of the Permanent Secretaries in the
Ministries of Economic Planning and Development, Commerce, Industry and Finance
(or their nominees)\. The Permanent Secretary of the Ministry of Economic
Planning and Development (or his nominee) would act as chairman of the approval
committee\. All proposals would be submitted to the Assoeiation for final
approval\. The Bank's Resident Representative in Kenya would be authorized to
approve submissions on behalf of the association\.
12\. Project costs were projected as follows:
USS Million
Consultants for Studies 4\.50
Training/seminars 0\.50
Support services for handcraft workers 0\.15
Export standards/Quality control 0\.15
Incremental local staffing and
support serviaes 0\.50
Price contingencies 0\.60
6\.40
Project Cost Net of Duties and Taxes 6\.00
IDA agreed to finance US$4\.50 million of the project costs, and the
Government was to provide the equivalent in local currency of US$1\.50 million\.
There is no evidence of any detailed planning or terms of reference prepared
in advance for the studies to be done or for the training programs to be
carried out\.
III\. Project Ioplementation
13\. Conditions of effectiveness, including the appointment of the
professional staff to be responsible for the project, were met on schedule\.
However, the professional staff were Government officials with other duties,
and so had limited time for project implementation\.
14\. Program implementation went forward very slowly, in part because
responsibility for implementation was widely diffused and partly because there *
was no full time locus of responsibility\. One element that moved forward
toward the end of the first year was a training seminar on National Technology
Policy designed by World Bank staff\. On March 9, 1983 the field office
reported that as of that date only two activities had been approved, and only
one had incurred any expenditure\. The first, for the aforementioned technolorT
seminar, had drawn down about US$100,000\. The other, for technical assistance
to the Customs Department, was awaiting the identification of a suitable
consultant\. Several proposals (one for Tourism Promotion Services and a study
on incentives and comparative advantage for Kenyan exports), were considered
but rejected by the Government\.
15\. In view of the slow rate of project implementation, in August 1983 the
Government suggested that UNIDO be engaged to take over project implementation,
and a UNIDO team visited Kenya to work up a proposal\. However, in February
1984 the Government rejected the UNIDO proposal\. Also, the Permanent Secretary
of the Ministry of Economic Planning and Development advised Bank staff in
Nairobi that the Government was reluctant to use any loan funds, even IDA
credits, to finance consultancies for policy oriented studies\. This attitude,
which was not apparent to Bank staff at the time the project was under
preparation, may have been reinforced by the availability of UNDP grant
financing for industry feasibility studies during the implementation period,
which led to several unsuccessful qttempts to obtain UNDP grant financing for
policy studies as well\.
16\. As of August 31, 1984 only US$292,090 of the credit had been disbursed,
US$173,174 of which was for the National Technology Policy Program\. Several
individual consultants had been engaged for short periods to undertake specific
work for the Ministry of Finance and Planning (now combined) related to export
promotion\. Subsequently studies were carried out regarding the foreign
exchange earnings from agriculture, evaluation of progress on changes in the
export compensation scheme, and industrial studies of various kinds along with
financing some of the costs of an Indian small scale industry exhibition held
in Kenya\.
17\. The Government did not seek to extend the project, and it was closed on
June 30, 1985 as originally planned\. As of January 14, 1986, the date of the
last disbursement, US$759,678\.70 had been drawn down and the balance of the
credit was canceled\. The final disbursements by category were as follows:
Disbursed
Category (US Dollars)
1\. Consultant Services 540,217\.13
2\. Training Seminars 201,635\.12
3\. Support Services 17,826\.45
4\. Training for staff --
TOTAL 759,678\.70
XV\. Project Results
18\. The Project's impact was obviously limited by the fact that only 17% of
the project funds were drawn down\. In addition, however, the intended role of
providing technical assistance support for the Structural Adjustment Credit
(Cr\. 999-KE) was not achieved since no activities relating to this credit had
-6-
been expended by the time the structural adjustment operation was closed on
December 31, 1980\. The structural adjustment program associated with this
credit was considered only partially successful, and was particularly
disappointing in terms of making the industrial sector more efficient and
outward-looking\.
19\. A Second Structural Adjustment Loan and Credit (Loan 2190-KE and Credit
1276-KE) was approved on July 1, 1982 as a follow-on to the first credit\. The
Kenyan program of adjustment adopted under the first credit was further
developed and expanded (i\.e\. reduction in industrial protection, export
promotion, improved external borrowing arrangements, and forward budgeting) and
action programs were added with the objective of overcoming constraints in
agriculture, energy, family planning, project implementation and domestic
resource mobilization\. While the Export Promotion Technical Assistance Project
was available during the entire period of the second adjustment program, it
appears to have played only a very limited role (if any) in supporting its
implementation\. The Second Structural Adjustment Program was considered
marginally successful in improving Kenyan structural policies and procedures,
but ineffective in actually achieving improved export performance\.
V\. Bank and Borrower Performance
20\. The Export Promotion Project was largely conceived and designed within
the Bank based on the Bank's perception of the Kenyan Government's needs in
carrying out the structural adjustment program\. As such, it failed to take
into account the lack of Kenyan interest in the expected project outputs, and
the reluctance of some Government officials involved in the project to use
borrowed funds to finance studies and technical assistance (this reluctance is
no longer apparent under more recent sector adjustment operations)\.
21\. Also, the project design suffered from excessive complexity and division
of responsibility for implementation\. Although the record is not clear, it is
doubtful that the Advisory Committee ever met\. The Ministers of Industry and
Commerce appear to have played little or no role in project implementation, and
the professional staff responsible for project implementation had other full
time responsibilities within the Government that diverted their attention from
project activities\.
22\. The project was supervised from the Bank's office in Nairobi, although
no analysis was made to determine if the Nairobi office had the time or the
budget to carry out these responsibilities (which generally fell by default to
the Deputy Resident Representative)\. No systematic supervision program was
developed, and supervision reports were not prepared except on an exceptional
(and incomplete) basis\.
VI\. Concluslons
23\. By every measure this project must be considered as unsuccessful\. There
is no evidence of any effective accomplishments at the project level, the
project did not serve as an effective supportive mechanism for the structural
adjustment program, only a small portion of the funds were actually ittilized,
- 7 -
and Kenyan export performance did not show good results during and immediately
after the life of the project\.
24\. In retrospect, there are some obvious lessons regarding project design:
a\. It is essential that there be serious beneficiary participa-
tion in the project design\.
b\. Responsibility for implementation by the beneficiary should
be clear cut and placed with staff who have the capacity and
time to carry out their responsibilities\.
c\. Adequate advance planning of project activities is necessary
in order to avoid implementation delays and to assure that
the recipients have the same expectations as the Bank
regarding the nature of the project\.
d\. The Bank must program adequate supervision time into its work
schedule\.
25\. These lessons have been embodied in subsequent Kenya operations, and in
particular in the preparation and appraisal of the technical assistance
components of the Industrial Sector Adjustment Credit (No\. 1927-KE approved in
FY 1988), the Financial Sector Adjustment Credit (No\. 2049-E approved in FY
1989) and the Financial Parastatal Technical Assistance Credit (No\. 2147-KE
approved in FY 1990)\.
- 8 -
PART III: STATISTICAL INFORMATION
Table 3\.1: Related Bank Loans
Loan Title Purpose Fiscal Loan Status
Year of Amount in
Approval US$
Killion
1\. Credit To support the 1980 55\.0 Completed
999-KE First first phase of 12/31/80\.
Structural Kenyan Performance Audit
Adjustment Structural Report No\. 9934
Credit Adjustment was issued
2/10/84\.
2\. Loan To support 1983 60\.9 Completed 1/6/84\.
2190-KE & additional and Performance
Credit 1276- structural 70\.0 August Report No\.
KE adjustment of 5682 was issued
the Kenyan 5/31/85\.
economy
Table 3\.2: Project Timetable
Date Planned Revised Date Actual Date
Appraisal November 1979 November 1979 November 1979
Negotiations April 1980 April 1980 April 1980
Board Approval June 1980 June 12, 1980 June 12, 1980
Loan Signature July 1980 July 14, 1980 July 14, 1980
Effectiveness August 1980 October 15, October 15,
1980 1980
Loan Closing June 1985 June 30, 1985 June 30, 1985
- 9 -
Table 3\.3: Disbursements
Cumulative Credit Disbursements
(US$ Millions)
1981 1982 1983 1984 1985 1986
i\. Planned 0\.5 1\.5 3\.0 4\.5 4\.5 4\.5
ii\. Actual 0\.0 0\.01 0\.11 0\.21 0\.65 0\.76
iii\. Actual as % of 0\.0 7% 4% 52 14% 17%
Planned
Original Disbursed Canceled Repaid Outstanding
Credit Amount 4\.50 0\.76 3\.74 0 0\.76
Table 3\.4: Staff Inputs
Staff Inputs (Mission and Headquarters)
yy Person Weeks
Pre-appraisal FY80 2\.6
Appraisal FY80 4\.8
Negotiations FY80 5\.7
Supervision FY81-86 1\.2 (not including Field
Office) 1
Project Completion FY92 3\.0 (Estimate)
Field Office Staff time is not available\. | APPROVAL |
P114010 |  Document of
The World Bank
Report No\.: ICR00003829
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(TF-95978)
ON A
GRANT
FROM THE
GLOBAL ENVIRONMENT FACILITY TRUST FUND
IN THE AMOUNT OF US$8\.532 MILLION
TO THE
FEDERATIVE REPUBLIC OF BRAZIL
FOR THE
SUSTAINABLE TRANSPORT AND AIR QUALITY PROJECT
IN SUPPORT OF PHASE 4
OF THE
SUSTAINABLE TRANSPORT AND AIR QUALITY PROGRAM
June 28, 2016
Transport and ICT Global Practice
Brazil Country Management Unit
Latin America and Caribbean Regional Office
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of June 1, 2016)
Currency Unit = Brazilian Real (BRL)
US$1\.00 = BRL 3\.57
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
ANTP Associação Nacional de Transportes Públicos (National Association of Public
Transport)
BNDES Brazilian Development Bank
BRT Bus Rapid Transit
CAI Clean Air Institute for Latin American Cities
CPS Country Partnership Strategy
FGV Getulio Vargas (Business School)
FM Financial Management
GEF Global Environment Facility
GHG Greenhouse Gas
IBRD International Bank for Reconstruction and Development
ICR Implementation Completion and Results Report
LAC Latin America and the Caribbean
LUTP Leaders in Urban Transport Planning
M&E Monitoring and Evaluation
MTR Midterm Review
NGO Nongovernmental Organization
NMT Nonmotorized Transport
PAD Project Appraisal Document
PDO Project Development Objective
STAQ Sustainable Transport and Air Quality
TDM Transport Demand Management
TOD Transit Oriented Development
WRI World Resources Institute
Regional Vice President: Jorge Familiar
Senior Global Practice Director: Pierre Guislain
Country Director: Martin Raiser
Practice Manager: Aurelio Menendez
Project Team Leaders: Georges B\. Darido
Bianca Bianchi Alves
ICR Team Leader: Bianca Bianchi Alves
BRAZIL
SUSTAINABLE TRANSPORT AND AIR QUALITY PROJECT
CONTENTS
Data Sheet
A\. Basic Information\. i
B\. Key Dates \. i
C\. Ratings Summary \. i
D\. Sector and Theme Codes \. ii
E\. Bank Staff \. ii
F\. Results Framework Analysis \. ii
G\. Ratings of Project Performance in ISRs \. v
H\. Restructuring (if any) \. v
1\. Project Context, Global Environment Objectives, and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes \. 5
3\. Assessment of Outcomes \. 12
4\. Assessment of Risk to Development Outcome \. 21
5\. Assessment of Bank and Borrower Performance \. 22
6\. Lessons Learned\. 24
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 26
Annex 1\. Project Costs and Financing \. 27
Annex 2\. Outputs by Component\. 29
Annex 3\. Emissions and Economic Analysis \. 42
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 51
Annex 5\. Beneficiary Survey Results \. 52
Annex 6\. Stakeholder Workshop Report and Results \. 53
Annex 7\. Summary of Borrowerâs ICR and/or Comments on Draft ICR \. 54
Annex 8\. Comments of Cofinanciers and Other Parteners/Stakeholders \. 55
Annex 9\. List of Supporting Documentsâ¦\.â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦57
A\. Basic Information
BR-GEF Sustainable
Country: Brazil Project Name: Transport and Air Quality
(STAQ) Project
Project ID: P114010 L/C/TF Number(s): TF-95978
ICR Date: 6/27/2016 ICR Type: Core ICR
Municipality of São Paulo
- Brazil, Municipality of
Lending Instrument: APL Borrower:
Belo Horizonte,
Municipality of Curitiba
Original Total
US$8\.532 million Disbursed Amount: US$6\.75 million
Commitment:
Revised Amount: US$8\.532 million
Environmental Category: B
Implementing Agencies:
National Association of Public Transport (ANTP)
Cofinanciers and Other External Partners: n\.a\.
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 04/08/2005 Effectiveness: 8/2/2010 07/28/2010
9/13/2013
Appraisal: 07/27/2009 Restructuring(s):
04/07/2015
Approval: 12/28/2009 Midterm Review: 12/5/2011 01/30/2012
Closing: 12/30/2013 12/30/2015
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Moderately Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Moderately Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments (if
Indicators Rating
Performance any)
Potential Problem Project at Quality at Entry
No None
any time (Yes/No): (QEA):
Problem Project at any time Quality of Supervision
Yes None
(Yes/No): (QSA)
PDO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Public Administration - Transportation 100 100
Theme Code (as % of total Bank financing)
Climate Change 50 50
City-wide Infrastructure and Service Delivery 30 30
Environmental policies and institutions 9 9
Infrastructure services for private sector development 7 7
Land administration and management 4 4
E\. Bank Staff
Positions At ICR At Approval
Vice President: Jorge Familiar Pamela Cox
Country Director: Martin Raiser Makhtar Diop
Practice Manager: Aurelio Menendez Aurelio Menendez
Project Team Leader: Georges Darido Paul Procee/Georges Darido
ICR Team Leader: Bianca Bianchi
ICR Primary Authors: Fatima Arroyo Arroyo, Li Qu
F\. Results Framework Analysis
Project Development Objectives (PDO) and Key Indicators(as approved)
The objective of the project is to assist the selected agencies to (a) reduce GHG emissions growth rates by
fostering a long-term increase in the promotion of less energy-intensive transport modes and (b) promote
the implementation of policies and regulatory frameworks that foster the development of sustainable
transport systems\.
ii
Revised Project Development Objectives (as approved by original approving authority)
The development objective and key indicators were not revised\.
(a) PDO Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
An increase in the number of trips made by public transportation within
Indicator 1:
intervened corridors
Value 9\.60 for São Paulo
(quantitative or 0\.00 10\.00 10\.00 3\.50 for Belo
qualitative) Horizonte
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Dec-2015
96% of the results achieved for São Paul and 35% for Belo Horizonte\. The value refers
Comments
to cumulative growth from annual growth reported by Associação Nacional de
(including %
Transportes Públicos (ANTP) from 2009 to 2013\. Growth rates for 2014 and 2015 were
achievement)
assumed the same as for the previous years\.
Indicator 2: An increase in the number of NMT trips within intervened areas
Value
(quantitative or 0\.00 5\.00 5\.00 122\.00 for São Paulo
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Dec-2015
Comments Target surpassed\. Results are more than 20 times the expected results\. Refers to the
(including % number of bike trips in Av\. Eliseu de Almeida in Sao Paulo (2010 to 2015), part of the
achievement) 400 km of cycle lanes implemented in Sao Paulo from 2010 to 2015\.
A decrease in CO2 equivalent emissions by ground transport within the area of
Indicator 3:
influence of the relevant component or subproject
Value 24\.93 for Belo
(quantitative or â 5\.00 5\.00 Horizonte
qualitative) 10\.91 for Curitiba
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Dec-2015
Comments
Target surpassed\. Results are more than 4 times the expected results for Belo Horizonte
(including %
and 2 times for Curitiba\. Please refer to annex 3 for details\.
achievement)
An increase in the number of cities that integrate environment and climate
change into urban transport and land-use master plans, which include the
Indicator 4:
development of regulatory and financial frameworks that foster the development
of sustainable transport systems at local and national levels\.
Value
(quantitative or 0\.00 1\.00 1\.00 3\.00
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Dec-2015
Comments Target surpassed\. Curitiba, Belo Horizonte, and São Paulo are integrating environment
(including % and climate change components into urban transport and land-use master plans and
achievement) studies\.
iii
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised Target
approval Completion or
Values
documents) Target Years
Comprehensive studies analyzing the impacts and providing recommendations on
Indicator 1: improving fuel efficiency and reducing GHG emissions from freight transport within
urban areas\.
Value
(quantitative or 0\.00 1\.00 1\.00 2\.00
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Jun-2015
Comments
Target surpassed\. The two studies financed by the project are the São Paulo urban
(including %
freight origin-destination survey and São Paulo pilot night delivery program\.
achievement)
Number of cities with land-use policies and regulations designed/proposed that create
Indicator 2:
incentives for more efficient and sustainable transport-oriented development
Value
(quantitative or â 1\.00 1\.00 4\.00
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Jun-2015
Target surpassed\. Belo Horizonte, Curitiba, São Paulo, and Rio de Janeiro have
Comments
achieved the target\. The initiatives in Belo Horizonte and Curitiba were financed by the
(including %
project; the initiatives in São Paulo and Rio de Janeiro were financed under other World
achievement)
Bank co-financed activities\.
Number of cities preparing or implementing specific measures to promote
Indicator 3:
interconnectivity between public transport systems and other modes of transport
Value
(quantitative or 0\.00 2\.00 2\.00 3\.00
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Jun-2015
Comments Target surpassed\. Belo Horizonte, São Paulo, and Curitiba are preparing or
(including % implementing specific measures to promote interconnectivity between public transport
achievement) systems and other modes of transport based on studies financed by the project\.
Number of initiatives to improve public transport operations (segregated or non-
Indicator 4: segregated) through modernizing operations framework or complementary
infrastructure
Value
(quantitative or 0\.00 2\.00 2\.00 7\.00
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Jun-2015
Comments Target surpassed\. In São Paulo, the project supported four initiatives, with direct
(including % impacts on bus operations\. In Belo Horizonte, the project directly financed two
achievement) initiatives\. In Curitiba, the project supported one initiative\.
Number of NMT initiatives (km or facilities) including pedestrian, bikeway, and
Indicator 5:
ancillary infrastructure built
Value 0\.00 2\.00 2\.00 3\.00
iv
(quantitative or
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Jun-2015
Comments Target surpassed\. The project has supported three bikeways (two in Belo Horizonte and
(including % one in Curitiba)\. The project has also supported the âMobility on Foot Seminar,â a four-
achievement) day learning event on pedestrian mobility that included 600 participants\.
Indicator 6: Number of traffic management policies or plans developed or in place
Value
(quantitative or 0\.00 2\.00 2\.00 3\.00
qualitative)
Date achieved 01-Jul-2009 02-Jun-2014 30-Dec-2015 01-Jun-2015
Comments Target surpassed\. The project directly supported Belo Horizonte creating traffic
(including % simulation capacity for downtown/BRT corridors\. The project indirectly supported a
achievement) Transport Demand Management pilot implemented in São Paulo\.
G\. Ratings of Project Performance in ISRs
Date ISR Actual Disbursements
No\. PDO IP
Archived (US$, millions)
1 20-Apr-2010 Satisfactory Satisfactory 0\.00
2 18-Feb-2011 Satisfactory Satisfactory 1\.04
3 27-Jul-2011 Satisfactory Moderately Satisfactory 1\.04
4 22-Feb-2012 Satisfactory Moderately Satisfactory 1\.04
5 19-Oct-2012 Satisfactory Moderately Satisfactory 1\.85
6 26-Jun-2013 Moderately Satisfactory Moderately Unsatisfactory 2\.78
7 13-Jan-2014 Moderately Satisfactory Moderately Unsatisfactory 3\.06
8 29-Jun-2014 Moderately Satisfactory Moderately Unsatisfactory 3\.65
9 18-Dec-2014 Satisfactory Moderately Unsatisfactory 3\.94
10 15-Jun-2015 Satisfactory Moderately Satisfactory 4\.59
11 18-Dec-2015 Satisfactory Moderately Satisfactory 5\.99
H\. Restructuring (if any)
ISR Ratings at Amount
Board
Restructuring Restructuring Disbursed at Reason for Restructuring and
Approved
Date(s) Restructuring Key Changes Made
PDO Change PDO IP in US$, millions
(a) 18-month extension of the
closing date from December 30,
2013 to June 30, 2015, to allow all
ongoing activities to be completed;
(b) an increase in the Designated
Account ceiling specified in the
9/13/2013 N MS MU 2\.78
Disbursement Letter to conform to
the current implementation plan;
and
(c) inclusion of goods and non-
consultant services as a
procurement category and an
v
expenditure type in the
Withdrawal Schedule (through an
amendment to the Grant
Agreement)\.
(a) six-month extension of the
closing date from June 30, 2015 to
December 30, 2015, to allow all
ongoing activities to be completed;
(b) inclusion of goods and/or non-
consulting services in the
04/07/2015 N S MU 4\.10 description of categories to align
expenditure categories for the
three participating cities; and
(c) reallocation of grant funds
between categories to support
operational costs of the
implementing agency\.
I\. Disbursement Profile (in US$, millions)
vi
1\. Project Context, Global Environment Objectives, and Design
1\.1 Context at Appraisal
Introduction
1\. At appraisal, the transportation sector was responsible for more than one-third of the
carbon dioxide (CO2) emissions in Latin America, and it was the fastest growing sector\. The
International Energy Agency projected that worldwide CO2 emissions from vehicles would
increase by a factor of 2\.4 (or 140 percent), from about 4\.6 gigaton in 2000 to 11\.2 in 2050\. The
vast majority of this increase would take place in developing regions, especially Latin America
and Asia, as a result of increased motorization and vehicle use\.
2\. Urban transport represented a key sector for long-term greenhouse gas (GHG) mitigation
efforts\. Latin American cities were rapidly growing, and about 80 percent of the people were
living in urban areas concentrating most of the vehicle kilometers of travel\. The increasing use of
motor vehicles not only generates additional GHG emissions (mainly CO2) but also results in
growing air pollution and associated health impacts, increased congestion, more accidents, and
reduced competitiveness of cities\. In Brazil, the majority of transport sector CO2 came from
urban modes, particularly passenger transport\.
3\. Brazilian cities had experienced phenomenal growth and changes in spatial structure
since the 1980s by the time of appraisal\. The countryâs population was 160 million in 1997 and
192 million in 2007 (annual growth rate of 1\.8 percent a year)\. Its urban areas absorbed more
than 80 million people, and the urban share of the national population went from 56 percent in
1970 to over 85 percent in 2007\. Brazilian cities accounted for 90 percent of the countryâs gross
domestic product and included half of its poor\. The larger cities had become diversified, taking
advantage of large markets for inputs and ideas to enjoy high levels of productivity and growth\.
A key challenge for Brazil was to make its cities more livable, more equitable, and more
competitive by maximizing agglomeration economies (efficiency gains derived from market size
and the exchange of goods, services, and information) while minimizing congestion costs (traffic,
pollution, crowding, violence, and decline of social capital)\. Given the spatial impacts of the
trade liberalization and privatization of the 1990s, enabling cities to rapidly improve urban
services is an urgent task\.
4\. There are at least three institutional levels to promote urban and freight transport
initiatives in Brazilâat federal, provincial, or city level\. Federal support for urban transport is
limited by the Brazilian constitution but in the past decade has included major project
investments through the PAC â Programa de Aceleração ao Crescimento (Growth Acceleration
Program) stimulus program administered through the Ministry of Cities, BNDES, and Caixa
Federal\. State support for urban transport is usually limited to metropolitan infrastructure and
services in the large urban areas such as São Paulo, Belo Horizonte, and Curitiba\. The
municipalities are the primary investors in urban transport services and basic infrastructure
including roads, public transport systems, and nonmotorized facilities, as well as related plans
and local policies\. Municipalities often have limited budget, so state and federal support is
important both for legislation setting and for providing budget for larger infrastructure projects\.
This scenario requires a strong effort to maintain institutional alignment\.
1
Rationale for Bank Assistance
5\. The World Bankâs involvement in the urban transport sector arose from the challenges of
rapid growth of Latin American cities and by the need for a coordinated effort to address
transport and environment issues at all institutional levels\. The aim was to reduce transport costs
- not only in a financial sense but also with regard to time and environmental damage - and
increase transport efficiency, enhance urban productivity and competitiveness, and contribute to
the regionâs overall economic growth\. By acting on several fronts, such as public transport
enhancement, freight management, coordination of public sector policies in land-use and
transport planning, promotion of environment-friendly solutions, such as nonmotorized transport
(NMT), and traffic demand management, this project aimed to reconcile mobility with quality of
life and global and local environmental sustainability\. It was also a partial response to some of
the more intractable problems associated with urban poverty, not only with regard to access to
economic opportunity but also the broader dimensions of social inclusion through improved
access to schools, health facilities, and wider social interaction\.
6\. At appraisal, the World Bank Groupâs FY08â11 Country Partnership Strategy (CPS/
Report No\. 42677-BR) for Brazil aimed to support policies and investments that would
encourage economic growth and social development in a context of macroeconomic stability\.
The project was consistent with the FY08â11 CPS and the World Bankâs development priorities
in Brazil by promoting environmentally and socially sustainable development within urban areas\.
The strategy consisted of deepening the World Bankâs participation in several areas, including
sustainable transport, air quality, and climate change, primarily through lending for transport,
land-use planning, renewable energy, and energy efficiency\. The CPS also listed institutional
strengthening for better governance as a priority, and the Global Environment Facility (GEF)
project aimed to strengthen and link the different entities in charge of environmental
management in a regional network for sharing experiences and enhancing the analytical tools
available at institutional levels and make them accessible to all the cities\.
Strategic Approach
7\. The GEF Sustainable Transport and Air Quality (STAQ) Program was divided into a
regional project and three separate country projects, in Argentina (P114008), Brazil (P114010),
and Mexico (P114012)\. This program was specifically designed to link directly with ongoing or
planned World Bank-transport initiatives1 in key cities of the region and for fostering policies,
knowledge sharing, and cooperation to promote more energy-efficient transport systems and
attain global environmental benefits while ensuring the attainment of other developmental goals\.
Some of the GEF activities supported the long-term sustainability of World Bank-financed
projects, improving access to these projects and maintaining sustainability\.
8\. The regional approach aimed to foster the development of a critical mass of cities
simultaneously working on sustainable transport initiatives\. Clean Air Institute for Latin
1
At appraisal, the World Bank had three active urban transport operations and one under preparation in the state of
São Paulo (BR São Paulo Trains and Signalling [P106038, active]; BR São Paulo Metro Line 4 - Additional
Financing [P105959, active]; and São Paulo Metro Line 5 Project [P116170, under preparation])\.
2
American Cities (CAI), as the executing agency of the regional GEF project (P096017, LAC
Regional Sustainable Transport and Air Quality Project), aimed to provide regional coordination
support and technical assistance\. This would have a widespread beneficial effect throughout the
region, because it would facilitate many cities, including those initially not a formal part of the
program, to develop their own sustainable transport initiatives\.
9\. The Brazil GEF project included technical assistance and pilot investments that were part
of comprehensive urban transport and land-use policies and plans\. Those were aimed at
introducing and developing sustainable transport initiatives toward promoting the clean air
agenda in Belo Horizonte and Curitiba (cities) and São Paulo (metropolitan area)\. This city-level
experience aimed to provide valuable lessons to inform and promote similar positive policies and
plans at a national level\. The STAQ Program, prepared as a combination of local-level activities
with national- and regional-level coordination, was designed to best support participating
national- and municipal-level decision makers and professionals toward fully developing
sustainable transport policies and plans\. At a national level, the Brazilian National Association of
Public Transport (Associação Nacional de Transportes Públicos, ANTP), a nongovernmental,
nonprofit organization, would play the role of the national executive agency of the project, and it
would have five participating agencies of the project at city level (Empresa de Transportes e
Trânsito de Belo Horizonte in Belo Horizonte, Instituto de Pesquisa e Planejamnto Urbano de
Curitiba in Curitiba, Companhia de Engenharia de Trafego de São Paulo , and Secretaria do
Verde e do Meio Ambiente in the city of São Paulo, and Empresa Metropolitana de Transportes
Urbanos in the state of São Paulo)\. The participation of these cities and the metropolitan region
was guaranteed through specific implementation agreements between the respective
municipalities and the ANTP (the executing agency of the project)\.
1\.2 Original Project Development Objectives (PDOs) and Key Indicators
10\. The project development objective (PDO) as defined in the Grant Agreement states: âThe
objective of the project is to assist the selected agencies to (a) reduce GHG emissions growth
rates by fostering a long-term increase in the promotion of less energy-intensive transport modes
and (b) promote the implementation of policies and regulatory frameworks that foster the
development of sustainable transport systems\.â?
11\. Progress toward achievement of the PDO was measured through a set of key indicators,
including (a) an increase in the number of trips made by public transportation within intervened
corridors; (b) an increase in the number of NMT trips within intervened areas; (c) a decrease in
CO2 equivalent emissions by ground transport within the area of influence of the relevant
component or subproject; and (d) an increase in the number of cities that integrate environment
and climate change components into urban transport and land-use master plans, which include
the development of regulatory and financial frameworks, that foster the development of
sustainable transport systems at local and national levels\.
1\.3 Revised PDO (as Approved by Original Approving Authority) and Key Indicators, and
Reasons/Justification
12\. The development objective and key indicators were not revised\.
3
1\.4 Main Beneficiaries
13\. The main beneficiaries of the grant are the citizens living in Belo Horizonte and Curitiba
cities and São Paulo metropolitan area\. Belo Horizonte has a population of 1\.4 million people,
Curitiba 1\.7 million, and São Paulo metropolitan region 19 million\. The project was expected to
have positive impacts also on living standards of the population living in other Brazilian cities,
which may use the knowledge and example of the selected cities\. The selected cities were chosen
based on technical quality, local capacity, commitment, and political support to ensure that the
subprojects had the highest direct GHG impact and indirect impact through dissemination of
lessons learned\.
1\.5 Original Components
14\. This project co-funded measures in five thematic âWindowsâ (identified in the regional
program), according to the priorities identified by the cities, World Bank, and GEF for climate
change mitigation in the urban transport sector\. A detailed description of the investments under
each thematic window (component) is provided as follows:
ï Window (Component) 1: Freight transport\. Provision of technical assistance and
training to improve the efficiency of freight transport in urban areas and reduce
conflicts and impacts on other modes of transport, including, among others, the
development of analytical tools for planning and evaluating projects and policies
that improve freight transport in selected metropolitan regions\. Proposed funding
US$1,250,000\.
ï Window (Component) 2: Better coordination and integration of transport and
land-use planning and environmental management\. Provision of technical
assistance and training to foster more integrated transport and land-use planning and
to reduce the use of private motor vehicles, reduce trip lengths, and increase the
accessibility to public transport and NMT\. Proposed funding US$600,000\.
ï Window (Component) 3: Enhancement of public transport\. Provision of
technical assistance and training and carrying out pilot investments to improve
public transport systems, facilitate the effectiveness and interconnectivity of those
systems with other modes of transport, and induce mode switching away from
private vehicles\. Proposed funding US$2\.499 million\.
ï Window (Component) 4: Nonmotorized transport\. Provision of technical
assistance and training and carrying out pilot investments to better integrate walking
and biking into the municipalitiesâ planning processes and transport facilities and to
create incentives for their use as a viable and safe alternative to traditional motorized
transport systems\. Proposed funding US$1\.5 million\.
ï Window (Component) 5: Transport Demand Management (TDM)\. Provision of
technical assistance and training to support the development and evaluation of
transport interventions and policies to rationalize use of private vehicles and create
4
incentives for more widespread use of public transport and nonmotorized modes\.
Proposed funding US$2,492,000\.
ï Window (Component) 6: Project administration\. Provision of technical
assistance and financing for administrative and technical support staff required for
the implementation, supervision, and monitoring of the project in the selected
metropolitan regions\. Proposed funding US$191,000\.
15\. Co-financing\. The counterpart activities financed by the three cities complement those
financed by the GEF\. Proposed funding: US$16,972,000\.
1\.6 Revised Components
16\. Project components were not revised\.
1\.7 Other Significant Changes
17\. Restructuring\. The project underwent two Level II restructurings:
(a) September 2013\. (i) 18-month extension of the closing date from December 30,
2013 to June 30, 2015 to allow all ongoing activities to be completed (see Section
2\.2); (ii) an increase in the designated account ceiling specified in the Disbursement
Letter to conform to the current implementation plan; and (iii) the inclusion of goods
and non-consultant services as a procurement category and an expenditure type in
the Withdrawal Schedule (through an amendment to the Grant Agreement)\.
(b) April 2015\. (i) Six-month extension of the closing date from June 30, 2015 to
December 30, 2015 to allow all ongoing activities to be completed (see Section 2\.2);
(ii) the inclusion of goods and/or non-consulting services in the description of
categories to align expenditure categories for the three participating cities; and (iii)
the reallocation of grant funds between categories to support operational costs of the
implementing agency\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design, and Quality at Entry
18\. The preparation of the project underwent a rigorous review of the proposals from the
cities in Brazil, based on technical quality, local capacity, commitment, and political support\.
The selection criteria intended to ensure that the subprojects in the selected city would have the
highest direct GHG impact and indirect impact through dissemination of lessons learned\. Three
metropolitan areas were identified (Belo Horizonte, Curitiba, and São Paulo) to participate in the
Brazil country project, which also shared the following characteristics: (a) they were economic
and governmental centers at the national or regional level; (b) their municipal governments were
committed to addressing environmental and sustainable transport issues; (c) they complied with
pertinent federal regulations and are entitled to prepare projects for the World Bank; (d) they had
a positive and, in most cases, ongoing track record of experience in successfully executing
5
operations financed by the World Bank; and (e) there was a large potential for major urban
transport investments in the coming years for all the three cities\.
19\. The project preparation relied on World Bankâs experience from long-standing
involvement in the climate change sector and air quality management in general, and its
interrelationship with urban transport in particular in Brazil as well as other Latin American
cities\. This experience provided unique reference to the World Bank during project preparation
with regard to regional expertise, initiative coordination, and best practices\. In the meantime, the
studies and pilots proposed in the project would contribute to building sound foundations for
transport and environmental challenges, as well as benefit major World Bank-financed transport
projects in the selected cities\.
20\. The project incorporated lessons learned from previous experiences in Brazil as well as
Latin American cities, including (a) long-term integrated land-use and transport planning and
research, (b) coordination among agencies involved at all levels of government; (c) fostering of
national and regional-level land-use planning and air quality policies and sharing of the
experience among other Latin American cities; (d) institutional strengthening and legal
framework improvement; and (e) promotion of private and public stakeholders participation\.
These lessons helped guide the redefinition of activitiesâ priorities during implementation and
achieve greater commitment from the stakeholders involved\.
21\. The GEF STAQ Program was designed using an innovative format: a regional umbrella
project, and three country projects in Argentina, Brazil, and Mexico\. The rationale of this design
was to (a) establish a network of local and national government stakeholders, international
organizations, and private sector entities to promote policies and actions leading toward more
energy-efficient and cleaner urban transport systems in Latin American cities; (b) assist cities to
develop sustainable urban transport strategies that integrate climate change and air quality
components; and (c) improve the capacity of cities to quantify the impacts of transport policies
on climate change and air pollution emissions\. The project design was consistent with the CPS,
World Bank, and GEF objectives\. This regional approach created synergies among countries and
helped strengthen and deepen the analysis when similar issues appeared in more than one
country\. On the other hand, it created difficulties because the results framework, mandated by
the regional program, was not necessarily appropriate to all activities in the different countries\.
The project planned to finance six windows (components) in three different cities, with 29
technical activities at appraisal expected to be implemented through 29 separate contracts\.
22\. The components and activities were consistent with the PDO, but the description of
activities was sometimes broad and ambitious, especially considering the amount of resources
provided by the grant; so, some of the results will not be directly attributable to this project\. For
instance, the first part of the PDO, about reducing the growth rate of GHG emissions, in some
cases was too high a level considering some of the actual project activities\. However, the country
projects shared the same development objectives defined by the regional program, which limited
the capability of making changes in each countryâs PDO\. Additionally, the main project
indicators were also defined by the regional program and did not vary substantially among
projects, and the GEF insisted on the inclusion of GHG emission in the PDO and monitoring and
evaluation (M&E)\. The lack of detailed definition of the methodology for calculating those
indicators resulted in multiple interpretations and a difficulty in monitoring during
6
implementation\. The second part of the PDO, to promote the implementation of policies and
regulatory frameworks that foster the development of sustainable transport systems, was more
consistent and attributable to the projectâs activities\.
23\. The institutional arrangements of the project were innovative; the ANTP - a Brazilian
nongovernmental organization (NGO) - was selected as the implementing agency, different from
the GEF projects in Argentina and Mexico\. The ANTP was selected not only for its technical
capacity on sustainable transport issues but also for its reach within Brazilâs major cities and
state government transportation agencies\. The ANTP was responsible for the execution of all
GEF-financed contracts in Brazil and financial management (FM), as well as the supervision and
monitoring for all activities of the Brazil GEF project\. Although the ANTP was acting as the
only executive agency for the project, it relied substantially on the inputs of the projectâs
participating agencies that were the technical coordinators and end users of the activities\. The
ANTP and the participating city agencies demonstrated a slow learning curve on World Bank
procurement policies and FM processes, which slowed down project implementation in the
initial years\. The multilayer structure required multiple internal reviews and coordinators for a
set of activities within each agency\. This complexity generated uneven implementation progress,
poor coordination when there was a change in personnel as normally occurs on a multiyear
project, and delays during the whole implementation (for instance, delays in the procurement
process and the reporting of monitoring indicators)\. Nevertheless, implementation progress
picked up when the ANTP and local agencies strengthened their capacity at the later stage of the
project, especially in FY2014/15, when the project administration budget was increased\.
24\. The overall risk was defined during appraisal as Moderate\. Some critical risks were
adequately anticipated at project appraisal stage, but most did not hinder the project
implementation\. The fragmentation of institutional responsibilities, despite having resulted in
delays, did not limit knowledge sharing and policy development, as expected\. On the contrary,
knowledge sharing, through seminars and training, was one of the strongest points of the project,
as will be further detailed\. It should be noted that some of the issues that surfaced during project
implementation were not anticipated at appraisal: (a) project implementation delays because of
lack of coordination between the ANTP and the participating agencies on the World Bankâs
procurement policies and FM processes, which caused uneven implementation progress in each
city; (b) difficulties in collecting baseline data and reporting indicators; and (c) underestimated
project administration cost allocated to the ANTP\. The delays generated two restructurings, in
2013 and 2015, to extend the closing dates\.
2\.2 Implementation
25\. The commitment of the participating agencies varied throughout the project cycle\.
The commitment of the participating agencies was strong at the early stages of project
implementation\. However, by 2013, the scope of about one-third of the activities were merged or
significantly altered while maintaining their relevance to the projectâs objectives, either because
the agency decided to procure and implement the study or design with its own funds or because
of contract management issues and schedule dependencies\. The priority of some activities also
wavered after municipal elections at the end of 2012\. With the first project restructuring in
September 2013, the participating agencies were asked and reconfirmed their commitment to
7
individual activities, although there continued to be uneven technical implementation among the
participation agencies due to the reasons cited above and the turnover of key staff\.
26\. Delays occurred because of changing priorities, slow learning curve, and
underestimated administration budget, but teams addressed the challenges and processed
the two project restructurings\. Delays accumulated after declaring effectiveness in July 2010
mainly due to changes in the priority of the participating agencies and an initial lack of
coordination and inexperience by the implementing agency and participating agencies with
World Bank procurement policies and FM processes\. The delays in implementation carried over
to delays in disbursement\. Before restructuring in September 2013, more than three years after
declaring effectiveness, the disbursement was US$2\.78 million or 33 percent of the total amount\.
The combination of slow World Bank approvals and the underestimated resources for project
administration also contributed to project delays\. The ANTP, being an NGO with no continuous
sources of funding, did not want to commit to initiating an activity without sufficient reassurance
that the activity will be concluded within the project period and managed within the initial
budget for the ANTPâs operating expenses\. This approach contributed to some gaps when
activities could not be initiated\. Additionally, the ANTP was initially understaffed and did not
have resources beyond the grant for project management\. The World Bank team identified these
challenges during the Midterm Review (MTR) and restructurings and was proactive in looking
for solutions\. The response consisted of (a) focusing for a while on a smaller number of activities
to accelerate implementation; (b) increasing the training offered to the ANTP and participating
agencies on critical topics such as the World Bankâs procurement and FM procedures; (c)
supporting the improvement of institutional coordination between the ANTP and the
participating agencies at the level of decision makers; and (d) increasing the budget for
operational expenses for the ANTP\. The first restructuring in September 2013 extended the
closing date by 18 months and the second restructuring in April 2015 by six months\. Considering
the strong appreciation of the U\.S\. dollar in 2014 and 2015, the World Bank team supported the
significant effort of the client to not only conclude all ongoing activities but also identify
additional and highly relevant activities that could be executed during the grantâs closing date\.
27\. The project restructurings allowed the activities to be adapted and the PDO to be
achieved despite delays, and 27 activities were successfully concluded\. The number of
activities varied between a high of 29 at appraisal, to 15 at MTR, to finally 27 completed by the
closing date\. The full table of planned and executed activities is presented in annex 2\. In
December 2014, the foreseen closing date of June 30, 2015 would have allowed the project to
disburse, at best, 55 percent of the funds, given the devaluation of the Brazilian Real\. With the
second extension, the project team and the ANTP identified ways to expand activities
successfully implemented, by supporting strategic studies and training activities that would have
broad interest and dissemination and requesting a project extension until December 2015\. The
loan disbursed US$6\.75 million or 79 percent of the total amount, from which 32 percent of the
funds were disbursed in the extension period (from June 2015 to December 2015)\. Annex 1
shows the differences between planned versus actual commitments according to each participant
city and window\. Actual expenditures with Window (Component) 2, Better coordination and
integration of transport and land-use planning and environmental management, encompassed 17
percent of the total grant when compared to the initial 7 percent estimate\. Part of this difference
can be explained by the workshops, seminars, and dissemination activities that had a broader
impact on improving technical capacity in the sector, which was identified as the main
8
bottleneck for implementation\. Activities for Window (Component) 5, Transport Demand
Management (TDM), encompassed only 3 percent of the total grant when compared to the initial
29 percent estimate by appraisal\. This was a result of a lack of readiness from the counterparts to
engage in these types of activities, which are often erroneously considered less effective than the
mainstream planning activities\. Finally, Window (Component) 6, Project administration,
encompassed 5 percent of the total grant when compared to the initial 2 percent estimate, which
is a result of the restructuring after the identification of a understaffing from the ANTP for
operations of such a comprehensive project\. With regard to the disbursement from each
participating city, Curitiba performed slightly better than São Paulo and Belo Horizonte when
compared to appraisal\.
28\. The ANTPâs responsibility also included overseeing the implementation of the
project and monitoring progress in coordination with the regional executing agency, CAI\.
The coordination between the ANTP and CAI did materialize at the beginning of the project but
lost momentum with time\. Additionally, the regional project closed in June 2013, 30 months
before the Brazil GEF closing date\. This fact did not allow CAI to support national projects until
their closing date\.
29\. The project supported a national debate around sustainable urban transport\. As it
had done since the 1970s, the ANTP organized national and regional conferences with thousands
of participants from dozens of cities\. During their biannual national conferences (2009 in
Curitiba, 2011 in Rio de Janeiro, 2013 in BrasÃlia, and 2015 in Santos, São Paulo), the ANTP
hosted meetings dedicated to the STAQ Program with an advisory committee of representatives
from the cities Curitiba, Belo Horizonte, the metropolitan region of São Paulo and other invited
national experts\. These meetings were technical discussions on timely topics relevant to the
grantâs objectives and presentations on the status of the grant open to the public\. These
conferences played an important role of a forum for debate and deliberation regarding cross-
sectoral issues of urban transport in the project locations and supported the project
implementation promoting stakeholders convergence and sharing of agendas, which were critical
to improve quality of the project activities\.
30\. Conclusion\. The two restructurings and the effort of the project supervision have
accelerated the implementation and broadened the range of project activities during the last year
of implementation, when in parallel, the disbursements peaked and the contracts were finalized\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization
31\. M&E design\. The M&E framework at appraisal was designed to conduct a project
impact survey at three levels: (a) project activity level; (b) the city level, including related
activities being carried out by the three partner cities; and (c) the policy level for a wider set of
Brazilian cities taking advantage of a national survey carried out by the ANTP\. Each project
window (component) had specific intermediate results indicators, which were consistent with the
activities of that window (component) and would result in the indicators for the project
outcomes\. However, there was no available data to calculate all the indicators for each city,
collecting the full set of data was unfeasible with the project resources, and there was no clarity
on the methodology to calculate them\. Additionally, the key outcome indicators were also
defined by the regional program and did not vary substantially among projects, and the GEF
9
insisted on the inclusion of GHG emission in the PDO and monitoring and evaluation
(M&E)\.While these indicators are adequate to reflect positive environmental impacts of transport
projects, the methodologies to measure were not easily implementable\.
32\. M&E implementation\. The M&E framework proved difficult to complete and stayed
partially incomplete during most of the implementation\. In the first stage, there were delays in
the definition of baseline values, target dates, and intervened areas\. This was partly because of
the fact that although the project monitoring remained formally a responsibility of the ANTP, the
actual responsibility for the construction of baselines and collection of data remained at the city
level, with the ANTP lacking any capacity to enforce this responsibility when the cities did not
comply\. Moreover, technical support to be provided by the CAI did not materialize as expected
under the regional GEF grant\. The ANTP presented evidence about the difficulty in reporting
some indicators during implementation, namely a decrease in emissions in the intervened
corridors\. As some of the indicators were mandated by the regional GEF program, a CAI
workshop on emissions methodologies was held in September 2010 in Washington, DC\. By
MTR (January 2012), the M&E plan was not in place, but it was agreed that the ANTP was to
prepare and present a plan with the technical support of CAI and specialized consultants\. The
original plan aimed at surveying the impact at three levels proved to be too ambitious and
infeasible given the implementation delays that consumed the attention of the ANTP and the
need to set a baseline and start reporting indicators in the short term\. The qualitative indicators
were incorporated in the M&E framework by June 2014 and the quantitative indicators by
December 2015\. The World Bank team followed these issues closely and reported on the
advancement in each Implementation Status and Results Report, recognizing at the beginning of
the implementation that the M&E framework was complex and could be impractical during
implementation\. However, none of the two project restructurings suggested changes to the PDO
and/or M&E framework mainly because of the following reasons: (a) to maintain similar
indicators across countries to allow comparing results of the regional program and (b) to
maintain consistency with the overall Global Environmental Objective statement\.
33\. M&E utilization\. The result indicators were not provided on time by the ANTP or the
project cities during the implementation of the project\. Therefore, the M&E information was not
available to inform decision making and resource allocation\.
2\.4 Safeguard and Fiduciary Compliance
34\. The project complied with all applicable World Bank environmental safeguards
policies\. This operation only triggered the Operational Policy OP/BP 4\.01 - Environmental
Assessment\. By its nature and focus, aimed at improving air quality through different actions and
initiatives in three Brazilian cities (São Paulo, Curitiba, and Belo Horizonte), there were no
reports of significant adverse environmental impacts\. The positive ones will be achieved through
a longer period, given that different actions undertaken have a longer-term reflection on the
overall air quality in their regions\. Only minor shortcomings with no material impact on
compliance with policy requirements or achievement of development objectives occurred\. For
this reason, and considering that the operation did not generate environmentally negative
consequences, compliance with the World Bankâs environmental safeguards policy was
Satisfactory\.
10
35\. Procurement under the project complied with World Bank policies\. Procurement
under the project was handled adequately, despite the initial delays and inexperience of the
ANTP with procurement guidelines, which was addressed during implementation by training and
hiring appropriate staff\. The procurement plan was updated on time and was followed during the
entire implementation\. Procurement prior reviews took place as defined in the procurement plan\.
Procurement post reviews took place annually and did not identify any substantial problem,
which would result in misprocurement or would cause contracts to be declared ineligible\. Only
minor procedural procurement issues were identified throughout the project execution, and
compliance with the World Bankâs procurement policy was Satisfactory\.
36\. The projectâs FM complied with World Bank policies\. The ANTPâs FM was rated
Satisfactory throughout project implementation considering that (a) reporting and auditing
arrangements provided accurate and timely financial information and (b) there was reasonable
evidence that project funds were used for the purposes intended\. Regular supervision missions
monitored FM as well as followed up on the issues raised in the previous missions\. There was
continuing compliance with the conditions set forth in the Grant Agreement, Disbursement
Letter, and Operations Manual\. The only minor shortcoming, which had no adverse impact on
the project, was that the ANTP outsourced its accounting function to an external firm\.
2\.5 Post-completion Operation/Next Phase
37\. In March 2016, after the closing date, the World Bank discussed with the counterparts the
next phase to give continuation to this project\. The ANTP identified a list of priority projects to
improve urban mobility in Brazilian cities, which are being addressed in further engagement with
Brazil\.
38\. Institutional bureaucracy has been delaying the implementation of plans to link land use
and transport, although actual plans did include strong policies taking this into account and are
likely to materialize in the near future\. Impacts of these policy actions can only be assessed in a
longer-term period, but results from the BR São Paulo Trains and Signaling Project
Implementation Completion and Results Report (ICR) (P106038) have demonstrated that low-
income population growth in the buffer areas of the transit network are much higher than for the
remaining populations\. This can be considered a positive result, because the bottom 40 percent of
poorest people rely mostly on NMT and public transport to access services and jobs\.
Furthermore, despite the often-strong opposing public opinion, policies and measures taken by
the participating cities followed the principles of sustainable mobility of reducing car usage and
increasing efficiency in public transport\. Given the often-low costs involved with these
initiatives, the economic crisis is unlikely to affect this agenda\. The external political
environment, with the 2013 demonstrations about the affordability of transport fares, ratified the
need to tackle transport issues with stronger policies toward public transport and NMT\.
39\. The World Bank is supporting the project participant cities of Belo Horizonte and
Curitiba and the metropolitan region of São Paulo in identifying strategies and potential financial
support to ensure the implementation and sustainability of the projects since the grant has closed\.
A new GEF operation is currently being drafted to allow for expanding the agenda on sustainable
mobility, promoting cofunded initiatives in six thematic âwindowsâ\. This draft proposal is being
developed based on the priorities of the Ministry of Cities, Ministry of Transport, and GEF for
11
climate change mitigation in the urban transport sector\. The World Bank is also seeking funds
for expanding the agenda of financing transport and target subsidies in Brazil\.
40\. Additionally, most cities are undertaking various interesting initiatives in the field of
sustainable transport with their own resources, including expanding bikeway networks (400 km
of bikeways in São Paulo), bike-sharing programs (São Paulo and Belo Horizonte), and
construction of exclusive lanes for public transport (Belo Horizonte, Curitiba, and São Paulo),
among others\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design, and Implementation
41\. Relevance of objectives rating: High\. Project objectives were highly consistent with the
Borrowerâs and Bank priorities at appraisal\. PDO 1 supported pillar of improving environmental
sustainability and PDO 2 supported both strengthening the macroeconomic and good governance
foundations of growth and of improving environmental sustainability pillars CPS FY08-11
(Report No\. 42677-BR)\. They were directly linked to the GEF-4 long-term objectives (2007 â
2010), of facilitating market transformation for sustainable mobility in urban areas leading to
reduced GHG emissions and the strategic objectives of promoting sustainable innovative systems
for urban transport reduced GHG emissions and to promote land-use change as a means to
protect carbon stocks and reduce GHG emissions\. They supported local strategies of the
Borrowerâs and were aligned with State and local projects also being financed by the World
Bank\. The project was also consistent with the transport sector World Bankâs priority on climate
change mitigation\.2 Project objectives remained highly relevant to the priorities of Brazil (CPS
2011â2015 - Report No\. 63731-BR) of improving sustainable natural resource management and
climate resilience, and the GEF-5 objectives, of promoting innovative low-carbon technologies,
and promoting energy efficient, low-carbon transport and urban systems\. Before United Nations
Climate Change Conference in Paris in December 2015, Brazil presented its âIntended
Nationally Determined Contributionâ, where it is noted that Brazil intends to commit to reduce
GHG emissions by 37 percent below 2005 levels by 2025\.3 The GEFâs current global priorities
stated in the GEF-6 promote energy-efficient, low-carbon transport and urban systems as a key
objective in the climate change focal area\.
42\. Design rating: Substantial\. The design of the project was innovative and fostered
increased regional coordination among Latin American cities on the sustainable transport
agenda\. The design provided an integrated approach, relevant to achieve GHG emission
reduction, including land-use interventions, promotion of public transport systems and NMT,
vehicle efficiency, and TDM\. Some project activities, such as âdefinition of a regulatory
framework to promote more efficient and cleaner freight transport in the metropolitan area â? or
âElaboration of a master plan for urban mobility that is integrated with the environmental and
2
Karekezi, S\. , L\. Majoro, T\. Johnson, 2003\. Climate Change Mitigation in the Urban Transport Sector: Priorities
for the World Bank\. The World Bank\.
3
http://www4\.unfccc\.int/submissions/INDC/Published%20Documents/Brazil/1/BRAZIL%20iNDC%20english%20
FINAL\.pdf\.
12
social policies; redefinition of legal framework for urban mobilityâ?, were consistent with the
PDO 1, but their description was broad and ambitious\. Considering the amount of resources
provided by the grant, some of the results were not directly attributable to the project, such as the
investments on BRT in Belo Horizonte and the bus corridors or bikeway infrastructure in São
Paulo , although were indirectly influenced by project activities\. The second part of the PDO, to
promote the implementation of policies and regulatory frameworks that foster the development
of sustainable transport systems, was more consistent with and attributable to the projectâs
activities\. For instance, in several cases, the project influenced the implementation of policies,
such as the parking maximums in São Paulo, the integration of environmental, land-use and/or
urban logistics considerations into mobility plans in Belo Horizonte, São Paulo and Curitiba\. The
âumbrellaâ structure, including one regional project, implemented by CAI, and three country
projects moving in parallel, yet interacting and sustaining an implementation dialogue (among
cities and with CAI), was an original and worthwhile design concept, despite some of the
implementation challenges encountered down the line\.
43\. Implementation rating: High\. Project implementation was responsive to changes in
counterpart needs (i\.e\., the project was restructured twice and the component activities were
adjusted based on changed needs of the participating cities)\.
3\.2 Achievement of Project Development Objectives
44\. Objective 1\. Reducing GHG emissions growth rates by fostering a long-term
increase in the promotion of less energy-intensive transport modes (Substantial)\. The
substantial increase in the number of trips made by public transportation, the high increase in
NMT trips within the intervened corridors, and the decrease in CO2 equivalent tons emitted by
ground transport in the intervened corridors explain the substantial achievement of objective 1\.
45\. It is worth noting that changes in travel patterns and reductions in GHG emission levels
are typically long-term effects of implemented policies and investments, which have been
completed and are in use for a significant period of time\. For the purposes of this assessment,
three types of activities or interventions were considered and are detailed in the Data Sheet and
annexes 2 and 3\. First, physical interventions financed by the project, such as the bikeways and
cycle paths in Belo Horizonte and Curitiba, can have direct effects on the use of nonmotorized
modes and the change in GHG emission growth can be estimated\. Second, studies and other
activities financed by the project may support sustainable transport modes and reductions in
GHG growth rates over time, but these effects may not be possible to estimate in the short term\.
Finally, there are related counterpart initiatives, which were indirectly supported by the project
or the World Bankâs engagement with the participating cities, which have an impact on mode
shares and GHG emissions and can be estimated\.
46\. Overall, in Brazil, there has been significant growth of private motorized modes,
relatively stable ridership for public transport, and notable growth of nonmotorized modes since
the grant was appraised\. Each of the three participating cities/metropolitan region presents
particularities, although the general trend is the continued growth of private motorized vehicles
and slight growth in the number of public transport trips in the intervened corridors\. The main
drivers behind this trend are increasing incomes (which is highly correlated with increasing
motorization), demographic growth, subsidized fuel prices, and attractive financing conditions
13
for new vehicles\. It is important to point out that even stable public transport ridership in this
context is a significant achievement\. Moreover, nonmotorized trips have seen a significant
increase in the intervened corridors of the three participating cities, influenced by the investment
in bike facilities and infrastructure and the support of pro-bike policies\. The following
paragraphs summarize the observable results in each participating city\.
47\. In São Paulo, the studies directly financed under Window (Component) 1, - Freight
transport, removed barriers to strategic planning for reductions in GHG growth rates over time\.
The origin-destination (OD) survey was a pioneer effort in Brazil, the first important step toward
a comprehensive framework for freight\. Without this great effort of data collection, the patterns
of goods movement in the city would not be known, a prerequisite for strategic planning\. Only a
few cities in the world are equipped with this comprehensive data\. The night delivery pilot
decreased total travel times by 43 percent, and while the decrease in CO2 equivalent tons emitted
by ground transport was not calculated directly, the actual percentage reduction is likely to be at
the same order\. While the pilot included only one neighborhood in the city, there is strong
potential for replicating this initiative for specific supply chains, and the overall results for the
city can be significant\.
48\. Other activities not directly financed but influenced by the grant activities are worth
noting toward the achievement of the objective 1\. During the implementation period of the grant,
the number of passenger trips on public transport and NMT in the intervened corridors increased
9\.6 percent4 and 122 percent,5 respectively\. This was largely due to an investment and policy
program by the city of São Paulo that began in 2013 to implement and enforce more than 400 km
of new dedicated bus lanes and 400 km of new bike lanes or paths\. Through the GEF
engagement with the city of São Paulo, the World Bank and partners advised on both of these
programs, as well as related sustainable transport initiatives such as parking policies in the
context of the land-use master plan, revision of the bus network and concession models,
expanding the bike-sharing system, piloting night-time freight deliveries, and other innovative
initiatives\. Some of the results of these activities are summarized below:
ï The mode share of bus trips had increased from 26\.86 percent to 28\.97 percent\.6 The
number of private vehicles and motorcycles increased at an average annual rate of
3\.58 percent and 7\.58 percent, respectively, from 2007 to 2012, far below the rate in
other big cities such as Fortaleza, Salvador, and Natal where the annual increase rate
4
Results provided by the ANTP\. With regard to general ridership in the bus system, both Belo Horizonte and São
Paulo have managed to increase bus ridership by 0\.57 percent and 1\.54 percent, respectively, per year from 2009 to
2013\. While the magnitude might seem small, it is worth mentioning that the effects of bus corridors recently
implemented in São Paulo are likely to produce long-term results that will be likely seen in the future 2017 Freight
origin-destination survey\. Moreover, the intervened lines in São Paulo have seen an increase of 9\.13 percent in
overall bus speeds, which generates a reduction in travel time for users and increases attractiveness of the system\.
5
While the results refer to only one corridor, the intervened corridors have shown substantial results in before and
after traffic counts as demonstrated in http://vadebike\.org/2015/05/contagem-ciclistas-ciclovia-eliseu-almeida-
pirajussara/\.
6
The ANTP - Data from operation cities\.
14
for private vehicles and motorcycles was 6â8 percent and 11â17 percent,
respectively\.7
ï The city political investment on bus lanes has contributed to a reduction of
approximately 19,000 hours of travel time per year, and approximately 10,900 tons
per year of CO2\.6 Given the small investment necessary to implement those lanes,
which takes advantage of existing infrastructure, this initiative has presented an
economic rate of return of 15 percent, as shown in annex 3\. Although it might be
early to identify the overall results, it is likely that this type of policy will produce
significant results with regard to mode shift, and ridership seems to have started to
increase for the first time since 2007\.
ï The data on NMT shows an increase in the number of bike users\. São Paulo is on
track to have 400 km of cycle lanes implemented in 2016\. The number of bike trips
according to the 2012 mobility survey is small but not negligible, around 333,000
daily trips (more than double the number of taxi trips), and growing considerably\. A
new bikeway inaugurated in July 2015 in Avenida Paulista attracted 50,000 people
in one day and there is preliminary evidence that bike trips doubled on this specific
major new route\. On the monitored intervened bike paths, it is estimated that bike
trips in São Paulo have increased by more than 50 percent 8 when opened\. One
specific corridor in São Paulo was monitored since 2010 and has seen a 122 percent
increase in traffic flows from 2010 to 2014\.9
49\. In Belo Horizonte, the project financed bicycle infrastructure investments that had a
direct impact on the reduction of GHG emissions\. The interventions helped to mitigate the
projected growth of the CO2 emissions from the transport sector by 24\.93 tons per day\. The
activity Transit-oriented Development promotes densification along the Bus Rapid Transit
(BRT) stations and, when implemented, is likely to reduce distances traveled and increase
participation of public transport, which generates a decrease in emissions\. The potential benefits
of this specific project were not calculated\.
50\. The project activities have also indirectly supported 23 km of high-quality BRT and 70
km of bicycle lanes that were implemented during the project period, 10 a result of a
comprehensive mobility master plan that helped mitigate the tendency of a decline in public
transport usage for the city\. In 2014, the city reached 23\.8 percent of the target in dedicated lanes
for buses\. The number of passenger trips on public transport in the intervened corridors has
increased 3\.5 percent,11 but the mode share of public transport was around 67 percent in 2014, a
7
Estimate based on: IEMA (2014) Avaliação dos efeitos da implantação de faixas exclusivas em SP: tempo de
viagem, consumo de combustÃvel e emissões de poluentes\. São Paulo\.
8
http://vadebike\.org/2014/09/contagem-ciclistas-aumento-bicicletas-inajar-eliseu-vergueiro/\.
9
http://vadebike\.org/2015/05/contagem-ciclistas-ciclovia-eliseu-almeida-pirajussara/\.
10
https://www\.itdp\.org/2015-sustainable-transport-award-finalist-belo-horizonte-brazil/\.
11
Results provided by the ANTP\. With regard to general ridership in the bus system, Belo Horizonte has increased
bus ridership by 0\.57 percent per year from 2009 to 2013\.
15
general decrease of 3 percent from 2008\.12 At the same time, the number of passengers benefiting
from integration grew from 12\.9 percent in 2009 to 16\.2 percent in 2014\.13 During the BRT
implementation, due to construction and line changes, the bus system has seen a decrease in
average speeds, generating a temporary decline in service quality, which is one of the reasons for
overall decrease in mode share\. The speeds are now recuperating and it is estimated that for the
2016-2020, the number of public transit trips will have a steady growth with new investments in
BRT and the metro, which will encourage more travelers to travel by public transport\. Although
the overall demand for public transport has declined, the more operationally efficient trunk
system, which earlier included only the metro, now carries 50 percent more passengers than
before\.
51\. Finally, in Curitiba, the bike projects directly financed with this grant had a direct
impact on the reduction of GHG emissions\. Bicycle Route Plan and Designs for Curitiba project
will have an estimated impact of 25\.41 tons of CO2 reductions per day, when the plan is fully
implemented\. The sections already concluded generated a reduction of 10\.91 tons of CO2 per
day\. Bicycle Route Plan and Designs for Curitiba project, if fully implemented, will represent
approximately 1\.14 percent reduction in the total urban transport emissions\. The modal share of
public transport in Curitiba is estimated to be around 45 percent based on the census data\.14
Since 2009, Curitiba has not invested substantially in transport infrastructure and the plans for a
metro line have not evolved\. Despite the general lack of investment in public transport
infrastructure because of financial constraints, the project financed executive designs for
improving BRT stations to increase comfort and convenience for users, which will be
implemented as part of the future investments program\. Finally, the city has been very innovative
and a pioneer in integrating transport and land use; however, it lacks information for planning,
making it difficult to make projections or assess the impacts of projects\. For this reason, only
direct impacts of the project were estimated\.
52\. Objective 2\. Promoting the implementation of policies and regulatory frameworks
that foster the development of sustainable transport systems (High)\. This grant financed a
large number of relevant activities that either removed important barriers or directly resulted in
the integration of environment and climate change components into urban transport and land-use
master plans and studies, which in turn promoted the implementation and regulatory frameworks
to foster sustainable transport systems\. Two types of activities or initiatives were considered in
this assessment and are supported by the indicator results in the Data Sheet: first, activities
directly financed by the project, such as studies, workshops, and other technical assistance that
influenced policy and regulatory discussions and decisions, and second, related initiatives or
World Bank engagements with the projectâs participating cities (not necessarily financed by the
project, but directly related to its PDO) that also influenced relevant policies and regulations\.
53\. The project financed several studies that were the first of their kind in the participating
cities and have influenced the strategic agenda for the development of more sustainable transport
12
http://www\.bhtrans\.pbh\.gov\.br/portal/page/portal/portalpublico/Temas/ObservatorioMobilidade/Indicadores/Trans
porte%20Coletivo/%C3%8Dndice%20de%20prefer%C3%AAncia%20do%20uso%20do%20transporte%20coletivo\.
13
http://www\.bhtrans\.pbh\.gov\.br/portal/page/portal/portalpublico/Temas/ObservatorioMobilidade/Indicadores/Trans
porte%20Coletivo/%C3%8Dndice%20de%20passageiros%20do%20transporte%20coletivo%20beneficiados%20c\.
14
Censo Demográfico 2010\. Rio de Janeiro: Instituto Brasileiro de Geografia e EstatÃstica, 2011\.
16
policies and systems\. For example, in Curitiba, the project financed the first Climate
Vulnerability and Socioeconomic Assessment, which influenced the update of the cityâs master
plan and future investment in transport infrastructure\. In São Paulo, the project directly
supported pioneering studies such as (a) the first urban freight movement Freight OD survey that
will serve as the basis for city logistics planning and policies; (b) studies to optimize the bus
transport network, which together with planned reforms and concessions could produce a
significant impact on the performance of the bus system; (c) a methodology for inventory,
assessment, and management of the impacts and environmental risks related to the medium-
capacity metropolitan transport system of São Paulo through Empresa Metropolitana de
Transportes Urbanos; and (d) the first emissions inventory for the municipality of São Paulo
through Secretaria do Verde e do Meio Ambiente\. In Belo Horizonte, a TOD Study for the
perimeter road developed conceptual plans for urban redevelopment of the area surrounding the
perimeter road and, after alternatives analysis, for a BRT line that is projected to transport
around 300,000 passengers per day by 2020, corresponding to 15 percent of the total demand in
mass transit in the city\. It is estimated that 27 percent of daily passengers (80,000) will be
induced demand from increased densification surrounding the BRT stations\. While these studies
do not have immediate impacts on energy use and emissions, they are basic tools to support
sustainable transport development going forward\.
54\. Other groundbreaking initiatives related to the PDO have included capacity-building
activities and technical assistance aimed at removing critical barriers for the implementation of
sustainable transport initiatives through the development of institutional, operational, and human
resources capacities\. These activities support objective 2 by promoting the implementation of
policies and regulation that foster the development of sustainable transport systems, although
outcomes are difficult to quantify\. The most notable activities are as follows:
(a) Window (Component) 1 - Freight transport\. The project supported the evaluation a
âpilot night delivery programâ for São Paulo that has been implemented with
significant results in the intervened area\. Although relying on the specific supply
chains analyzed, the results of such a policy have produced increase in speeds of 32
percent and decreases in travel times of 43 percent\. The World Bank and partners
have also developed publications on the state-of-practice and state-of-the-art urban
and green freight logistics and hosted focus group meetings between the government,
industry, and academics in six Brazilian cities\.15
(b) Window (Component) 2 - Better coordination and integration of transport and land-
use planning and environmental management\. Brazilâs National Urban Mobility Law,
adopted in April 2012, mandates that all Brazilian cities with a population over
20,000 (more than 1,600 cities) prepare and present an urban mobility plan to the
Ministry of Cities by 2015\. Low capacity in urban planning has been identified as a
critical bottleneck in the development of these mobility plans and to translate these
into executable projects\. As a result, the project supported the implementation of this
law by financing a national capacity-building program led by the ANTP (based in
part on the World Bankâs LUTP curriculum) through an online course on the
15
This information is available at: http://www\.clubbrasil\.org/observatorio/relatorios\.html\.
17
principles of sustainable transport planning disseminated to 600 participants in 2015\.
The World Bank also facilitated workshops in Belo Horizonte in 2012 with support
from CAI and international TOD experts\.
(c) Window (Component) 3 - Enhancement of public transport\. The World Bank hosted,
together with Embarq/World Resources Institute (WRI), a workshop in São Paulo in
August 2014 on the international experience in designing and managing bus service
contracts with the participation of more than one dozen cities\. In Curitiba, the
project supported a reformulation of the iconic tube stations, which will improve
user comfort during waiting time at stations and the implementation of bike paths
that link to the transport system\.
(d) Window (Component) 4 - Nonmotorized transport (NMT)\. The project brought
higher awareness on the importance of NMT and its role in reducing emissions and
improving efficiency of the transport system by directly financing a âpedestrian-
centricâ four-day conference in São Paulo with 300 participants from all over Brazil\.
Registrations were beyond expectations and indicated the strong interest in
improving the quality of NMT in the cities given the importance of trips by foot
(around 35 percent in large cities and higher numbers in medium and small cities)\.
(e) Window (Component) 5 - Transport Demand Management (TDM)\. The World Bank
and partners have supported a âPilot Corporate Mobility Programâ for a business
district along the Marginal Pinheiros in São Paulo, a highly congested expressway in
São Paulo, which created incentives for switching to NMT and transit systems,
carpooling, and teleworking to reduce car access to offices\.16 The project is now
being expanded by WRI\. 17 The World Bank and partners have also advised São
Paulo and Belo Horizonte, which are considering changing laws to enable future
implementation of demand management policies and pricing\. The World Bank has
advised the city of São Paulo on its initiatives to regulate taxi and shared mobility
services\. The project influenced a new parking policy in São Paulo, adopted through
the ambitious land-use master plan in 2015, which limits the number of parking
spaces for new developments to discourage the use of private vehicles where better
alternatives exist\. São Paulo is now one of the first cities in the developing world to
eliminate parking minimums and replace them with parking maximums citywide\.
3\.3 Efficiency
55\. Efficiency - Modest\. Due to the long-term benefits of the project and the fact that the
grant financed sometimes only the first stage or removed barriers for future implementation, it is
difficult to compare the costs involved in achieving project objectives with the benefits\. Short-
term benefits are measurable and evident in the bikeways financed in Belo Horizonte and
Curitiba\. The project financed the construction of bikeways in Belo Horizonte and Curitiba,
which has a measurable impact on GHG emissions\. Bike infrastructure investments in Belo
16
http://thecityfixbrasil\.com/files/2013/09/Andrea-Leal_Banco-Mundial\.pdf\.
17
http://www\.conexoesriopinheiros\.com\.br/\.
18
Horizonte financed with this project (geometric design, signaling, and route safety for Venda
Nova and Barreiro bicycle route; Bicycle Route Horizontal and Vertical Signage) had a direct
impact on the reduction of GHG emissions by 24\.93 metric tons of CO2 per day, which
represents 0\.83 percent of total emissions of urban transport\. The bike projects in Curitiba
financed with this STAQ Program (Bicycle Route Plan and Designs for Curitiba; Bicycle Route
Horizontal and Vertical Signage - CecÃlia Meirelles link; Bicycle Route Horizontal and Vertical
Signage - Euclides Bandeira link) also had a direct impact on the reduction of GHG emissions\.
Bicycle Route Plan and Designs for Curitiba have a potential impact estimated in the reduction
of 25\.41 tons of CO2 per day if the plan is fully implemented\. Sections of CecÃlia Meirelles and
Euclides Bandeira, already concluded, have a reduction of 10\.91 tons of CO2 per day\. Thus,
projects CecÃlia Meirelles and Euclides Bandeira represent an impact on the order of 0\.32 percent
and 0\.17 percent of CO2 of the total urban transport emissions, respectively\. The Bicycle Route
Plan and Designs for Curitiba Project, if fully implemented, will represent approximately 1\.14
percent reduction in the total urban transport emissions\. The total reduction of emissions
generated by the concluded bikeways is 35\.84 tons of CO2 per day (24\.93 plus 10\.91 tons of
CO2) or 11,826 tons of CO2 per year\.
56\. The estimated social values of carbon in financed projects are US$30 per metric ton of
CO2, resulting in a value of approximately US$354,792 per year (US$30 times 11,826 CO2
equivalent tons) for the first year of this project\. This does not include the long-term benefits,
including the lifecycle of the project and the change in modal share due to new riders using this
infrastructure\. Therefore, it is likely that these interventions will generate a larger benefit in the
years to come\.
57\. The GEF provided financing for three contracts of US$2\.03 million for the construction
of 16\.4 km of bike paths in Belo Horizonte and Curitiba (30 percent of the total disbursed); the
cost per kilometer of bike path is US$123,780\. If only considering the short-term benefits, the
calculation of the construction cost of the civil works divided by the emission reduction shows
that the cost effectiveness of the bike paths was US$172 per ton (US$2\.03 million divided by
11,826\.43 ton CO2 per year)\. Annex 3 provides more details about the emission reduction\.
3\.4 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
58\. In summary, the objectives as well as the design and implementation remain relevant to
the countryâs current development strategy and GEF priorities\. Objective 1 has been achieved to
a substantial extent and PDO objective 2 has been achieved to a high extent, as evidenced by the
increased use of less energy-intensive modes, even while private motor vehicle use continued to
increase, as well as the advancement of important initiatives, policies, and regulations to promote
sustainable transport at the city and national levels\. Overall efficiency is rated modest given the
limited scale and time frame of the project\. The combination of the ratings for project relevance,
achievement of PDOs, and efficiency justify an overall outcome rating of Moderately
Satisfactory\.
59\. Results of the Latin America GEF STAQ Program\. The regional project (P096017)
and the country projects in Argentina (P114008) and Mexico (P114012) had closing dates of
June 30, 2014, December 10, 2014, and November 30, 2015, respectively\. All country projects
19
have been rated as Moderately Satisfactory and shared similar lessons learned such as the
difficulties in implementing the results framework, the importance of strong institutional
arrangements, the complexity when dealing with a multileveled sector, and the ability of the GEF
to provide âcatalystâ financing for innovative activities and to push the agenda of sustainable
development\.
3\.5 Overarching Themes, Other Outcomes, and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
60\. Although Brazil has seen a decrease in poverty since the beginning of the 21st century,
10 million people lived under poverty conditions 18 in 2013\. In Brazil, significant poverty is
concentrated in urban areas\. International evidence shows that numerous challenges threaten the
ability of cities to become viable pillars of sustainable development, for instance, unequal access
to, and inefficient use of, public transportation\.19 The project financed activities that consider
both environmental and social vulnerability aspects, through investments in NMT to feed into
public transport systems and that allow for affordable and less-pollutant traveling, increasing
accessibility to services and jobs\. Moreover, the project directly financed a study in Curitiba that
allowed for cross-referencing in a geographical information system both the environmentally
vulnerable and socially vulnerable populations, allowing for defining government priorities in
investments directed to the more vulnerable groups\.
(b) Institutional Change/Strengthening
61\. The project supported capacity building at a country level through the online training on
sustainable mobility, which was updated to include the contents from the World Bankâs Leaders
in Urban Transport Planning (LUTP) curriculum adapted for Brazil\. More than 600 participants
from 24 different states and 135 cities, coming from private agencies, public sector, and
academia, completed the training as of December 2015\. Around 80 percent of the participants
were from medium- and high-level management\. Finally, the project supported a four-day
learning event on pedestrian mobility that included 600 participants from 12 states in Brazil and
37 cities (80 participants through video streaming) from the three levels of government,
academia, and civil society\. The objective was to increase awareness about the economic
benefits of on-foot mobility, its effects on health and the environment, its role in containing
emissions, the current legislation barriers, and the lack of funding toward infrastructure for
pedestrians\.
62\. The tailored technical assistance supported by the GEF project strengthened institutional
capacity in sustainable transport at a national and local level through various activities\.
Moreover, the drafting of Brazilâs 2012 National Urban Mobility Law was supported by
organizations cooperating on various GEF project activities (including the ANTP, the
participating project agencies, and NGOs such as Embarq)\. In fact, the topics covered by the
national law are very closely aligned to the GEF projectâs five thematic windows (components)
18
Source: World Bank\. The limit of poverty in Brazil (by international standards) is US$1\.9 a day\.
19
Source: Sustainable Development Challenges, UN World Economic and Social Survey 2013\.
20
(nonmotorized, public transport, integrated land-use planning, demand management, and
freight)\.
(c) Other Unintended Outcomes and Impacts (Positive or Negative)
63\. Several Brazilian cities have been active and innovative in addressing the urban transport
challenges, by investing in improvements to their public transport networks and NMT
infrastructure\. Because of these efforts, in 2015, two of the three cities that are part of this project
obtained the Sustainable Transport Award (stdaward\.org)\. The Sustainable Transport Award is
given by a commission representing the Institute for Transportation and Development Policy, the
World Bank (independent from project team members), the WRI Ross Center for Sustainable
Cities, Clean Air Asia, Clean Air Institute, and Cooperation for Urban Mobility in the
Developing World (Conference on the Development and Improvement of Urban Transport)\. The
commission selected São Paulo and Belo Horizonte (together with Rio de Janeiro) for the scale
and substance of achievements in increasing mobility and enhancing quality of life in its major
cities\. With the support from the project, the debate generated in the conferences organized by
the ANTP has been putting the sustainable transport agenda at the core of urban planning
decisions\. The agenda has been further pushed through an increased civil society participation in
the protests initiated in 2013 about affordability of fares and use of public funds\. The higher
general awareness about the issues has been legitimized by some of the difficult decisions such
as integrated fare policies, reallocating existing road space for bus corridors and bike lanes,
reducing speed limits for safety reasons, eliminating parking minimums, and charging per
vehicle-kilometer for services provided by transport network companies as currently proposed in
São Paulo\.20
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
64\. Not applicable\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
65\. The activities funded by the GEF have influenced the implementation of municipal laws
and policies in the three cities, as follows: (a) public transport improvements on BRT corridors in
all three cities; (b) NMT in all three cities through pilot bicycle investments or bike-sharing
policies; (c) land-use planning in São Paulo and Belo Horizonte through the use of integrated
modeling; (d) demand management in São Paulo through a corporate mobility pilot project that
was disseminated to other cities; and (e) urban freight management in São Paulo and Belo
Horizonte through a Freight OD survey and focus groups with industry and academics\. As the
project activities were mostly studies and plans, as well as a few pilot works, a sustained
commitment by the National Government, municipal governments, and related participating
agencies is critical to the sustainability of the projectâs development outcome and is likely to
continue\. Some activities require strong political coordination such as restructuring bus network
configuration and changing concessions contracts, while others are dependent on availability of
20
For more information, please see: http://blogs\.worldbank\.org/transport/sao-paulo-s-innovative-proposal-regulate-
shared-mobility-pricing-vehicle-use\.
21
funds, such as infrastructure improvements in NMT, bikeways, and BRT\. Some of the activities
had the objective of creating awareness and building currently almost inexistent agendas (city
logistics and pedestrian mobility)\. Finally, the studies and plans conducted in the project are
considered to be important examples for many cities as they are required to implement
sustainable transport plans under a national urban mobility law adopted in 2012 by the Brazilian
Federal Government\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
66\. The World Bank ensured quality at entry through an adequate alignment of the project
objectives with the CPS and national and World Bank transport strategies, as well as appropriate
implementation arrangements\. The World Bankâs inputs and processes before Board approval
were appropriate\. The World Bank provided guidance and support to ensure that technical and
environmental specifications were prepared to meet high-quality standards, and within a short
time\.
67\. While the M&E framework was consistent with the PDO, the description of activities
was sometimes broad and ambitious and the methodology to calculate indicators was not detailed
enough\. The project was originated as part of an âumbrella projectâ, originally conceived as one
integrated project, and later divided into a regional program and three country projects, which
dictated the overall results framework\. This structure promoted cross-coordination and
cooperation among the 11 GEF cities, generating dialogue among the cities, joint participation in
conferences, and so on\. The World Bankâs effort in generating this interaction among local
players at a regional scale should be commended, even if implementation presented challenges\.
68\. Project preparation included an analysis of alternatives; the Brazil GEF project is the
result of evaluating the soundness of many individual city proposals, which were assessed on
technical quality, local capacity, commitment, and political support\. The risk assessment was
comprehensive, but some of the issues that surfaced during project implementation were not
anticipated at appraisal, such as the difficulties in implementing the complex results framework
and an underestimation of administrative costs that later delayed project implementation\.
69\. Finally, project preparation was characterized by a strong participatory approach,
requiring strong inputs from participating cities in defining the actual content of projects
financed through the GEF\. Although this guaranteed that the technical assistance being provided
was aligned to concrete city demands, changes in administration generated uneven engagement
along the project implementation\.
(b) Quality of Supervision
Rating: Moderately Satisfactory
70\. The World Bank supervised the project diligently with the required expertise\.
Implementation Status and Results Reports were prepared on a six-monthly basis and the ratings
22
were candid and appropriate\. In parallel with project activities, the World Bank engaged in
policy dialogue with municipalities on sector reforms and cutting-edge analytical work\.
71\. The team implemented two project restructurings and worked closely with the client to
improve the pace of implementation; these actions were instrumental in improving the rate of
disbursement and substantially achieving the PDO\. The World Bank team performed with agility
in utilizing the available framework and flexibility provided by the windows (components) to
modify the activities to better suit the prevailing needs of the agencies\. The World Bank team
intensively supported efforts in improving the disbursement by including training programs and
workshops, which had the twin advantage of quick disbursements and widespread capacity
building and impact\.
72\. However, despite active interaction with the ANTP, the results framework was not
adequately used during implementation and the World Bank did not provide an extension to
improve the disbursements and achieve even greater results\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
73\. Overall World Bank performance is rated Moderately Satisfactory based on the two
dimensions rated above: (a) World Bank performance in ensuring quality at entry and (b) the
quality of supervision\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Moderately Satisfactory
74\. Government ownership varied among cities and along the project cycle\. Changing
priorities and difficulties in complying with the World Bankâs procurement processes led to a
delayed implementation\. The participating agencies have reaffirmed commitment and have based
their activities on strong stakeholder support and on institutional engagement with different
levels to guarantee the success and sustainability of the activities\. The M&E activities were
undertaken by agencies but not at the level necessary to calculate the project indicators; so, some
results were obtained only after the implementing agency identified specific consultancy to
measure project outcomes\.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
75\. The ANTP responded efficiently on project issues, adhered to the project implementation
requirements, engaged with all World Bank missions, and contributed to the completion of the
project\. Although the procurement learning curve of the ANTP advanced slowly in the initial
years of implementation, by MTR, the implementing agency performed more efficiently\. By the
closing date, it showed clear evidence of efficiency in successfully completing 27 activities
during the project life, against the 29 activities estimated in the Project Appraisal Document
(PAD) (annex 2), and managing to increase disbursement from an expected 56 percent to 79
percent\. Although the M&E framework was not used during the project cycle, the ANTP did
23
provide indicators reference values at the end of the project\. The ANTP has satisfactorily
engaged with partners and stakeholders through several events, seminars, and workshops with a
national reach and showed strong commitment to achieve the development objectives\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
76\. The rating of borrower performance is based on the ratings for each of the two
dimensions: (a) government performance as Moderately Satisfactory and (b) implementing
agency as Satisfactory\.
6\. Lessons Learned
77\. Based on the issues discussed in the earlier sections of the present ICR, some of the
lessons learned that could be applied in similar operations are given below\.
78\. Continuous refinement and adaptation of the planned GEF activities to fit emerging
priorities of the participating agencies under established thematic windows (components)
helped maintain relevance and client commitment\. Linking GEF projects to larger World
Bank operations and large projects by the counterparts is common practice to leverage funds and
save supervision and coordination costs\. Combining this strategy with just-in-time support for
emerging initiatives in the form of pilot interventions and strategic studies can provide even
greater value to the client and development outcomes\. Innovative government initiatives or
policies often cannot be planned years in advance because they require a political window of
opportunity or other unforeseen conditions\. There were a few GEF activities, unforeseen at
appraisal, that added value to the clientâs policy and reform agenda\. For example, the night-time
freight delivery pilot in São Paulo emerged from ongoing conversations between city officials,
industry, and academics, and the GEF was the ideal instrument to finance a rapid and
independent evaluation of this pilot project\. The relative flexibility of the World Bankâs
procurement guidelines compared to Brazilian laws also allowed for a more expedited
procurement process and consulting services that would not have been possible otherwise\.
79\. The selection of an NGO as the implementing agency had advantages and
disadvantages with regard to implementation and outcomes\. During the first few years of
implementation, the ANTP demonstrated a risk averse attitude with regard to not engaging in
new activities that could generate costs beyond those budgeted under the administration and
operations of the GEF project\. Any such costs would have been unbearable due to the ANTPâs
uncertainty of continuous funding\. Therefore, during the processing of the two restructurings, the
implementing agency suspended ongoing procurement processes and resumed them only after
World Bank concurrence was formalized, which sometimes took several months to be
completed, thereby delaying overall implementation\. On the other hand, the ANTP showed
relative independence and agility in redirecting planned activities that were not being properly
advanced by participating agencies\. The often bureaucratic processes and the strict but necessary
controls by the Government auditors, who analyze all procurement processes in each state and
municipality, normally prevent government agents from responding quickly to changes in needs
and scope for fear of noncompliance with rigid interpretations of procurement laws\. Because
NGOs are not subject to the same stringent control, the implementing agency was able to follow
24
the World Bankâs procurement guidelines without additional bureaucracy and was efficient in
identifying alternatives that were compatible with the objectives of the project and could be
delivered before the closing date\. As a result, the project managed to deliver a large number of
activities (27 were completed while 29 were planned at appraisal)\. Finally, the good relationship
of the implementing agency with governmental, civil society, and academic groups was key to
reaching audiences in all states and amplifying the results of the activities\.
80\. The multilayer institutional structure contributed to a lack of coordination between
the ANTP and the participating cities/metropolitan region and an uneven implementation
progress\. The complex institutional arrangement was designed to be decentralized\. The ANTP
was acting as the only executive agency for the project but relied substantially on the inputs of
the projectâs participating agencies\. The multilayer institutional structure contributed to a lack of
coordination between the ANTP and the participating agencies on World Bank procurement
policies and FM processes, which slowed down project implementation in the initial years\. In
addition, this structure generated uneven implementation progress and initial delays when there
were changes in project personnel\.
81\. The relatively long learning curve of the implementing agency could have been
mitigated if the initial operating budget for project management and administration had
been higher\. The operating budget for project management and administration was predefined at
2\.5 percent by the umbrella GEF project, being the same for Argentina, Brazil, and Mexico\. This
level of funding for the implementing agency may be appropriate for government entities if part
of their operational costs are borne by the fixed structure of these entities, such as assigning
existing staff temporarily to the project\. However, the actual costs are much higher than the 2\.5
percent, and this had a significant impact on the Brazil GEF Project\. The ANTP initially
operated with a smaller team than was necessary with a legitimate concern of exhausting the
operating budget before the completion of the project and assuming a financial liability\. When
the operational budget was increased in the first restructuring by including some of the
management costs in the thematic windows (components) and, finally, increasing the operational
budget category with the second restructuring, project implementation started to pick up and
ended up with a remarkable 79 percent disbursement, despite the strong appreciation of the U\.S\.
dollar that increased resources in local currency by more than 60 percent since the beginning of
the project\. In the end, the final costs for project management and administration were
approximately 7 percent of the total project disbursement, a number that seems reasonable given
the size and nature of the operation\.
82\. The development and implementation of an M&E framework was a challenge, even
considering relatively capable participating cities and agencies involved\. In some cases, the
M&E activities should be embedded in the activities by assigning sufficient funding from the
beginning of the project\. It is also advisable that indicators, such as potential emissions
reduction, be included in the terms of reference of each activity and required as an output from
every consulting contract\. In other cases, however, it should be noted that an ambitious M&E
program is sometimes more costly than the project as a whole, especially when gathering basic
data from typical sources that are not already part of the government activities or in the
frequency required\. As an example, collecting basic data for planning purposes, known as
Freight OD surveys, might cost around US$6 million for a city like São Paulo\. Moreover, most
25
of the expected results of these projects are likely to have long-term results that are not easily
quantifiable\.
83\. The agenda of sustainable urban transport continues to be critical if overall
emissions in transport and GEF operations are key to move the sustainable agenda
forward\. Although some of the initiatives, such as the bike paths, have limited impacts with
regard to emissions savings in the short term, their strength relies on the demonstrative effects\.
More comprehensive policies such as prioritizing public transport and NMT in the city as a
whole, undertaken by some of the participating cities, although also presenting modest results in
emissions savings in the short term, set an initial trend that will have effects in urban
development in 10 to 30 years, by improving quality of service of less-pollutant transport modes,
thus increasing its attractiveness in relation to private modes of transport\. Given that private
vehicles are increasingly responsible for emissions from transport, 21 there is still a need to
provide support policies that promote disincentives to car use in urban settings, so restrictive
measures should be critically analyzed and employed as much as measures to improve quality of
alternative modes, such as increasing parking costs, congestion charging, fuel taxation, and
others\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/Implementing Agencies
84\. During implementation, the borrower expressed concern about the length of the World
Bank processes for restructuring the project\. Because of the uncertainty in the approval of
extensions, some activities that could have been initiated were put on hold, leaving the borrower
little time for conducting the procurement process and finalizing the activities once restructuring
was approved\. Despite the initial delays, the implementing agency and participating cities
accelerated implementation in the last two years\. They also expressed dissatisfaction over the
second extension, which was requested for 12 months but was granted for only six months\. The
extension of six more months would have been sufficient to expand the activities, disburse closer
to 100 percent, and achieve better results by funding additional activities in the windows
(components) of freight transport and TDM and very prominent issues of public transport
affordability, financing, and concessions in Brazil\. The World Bank acknowledged the
borrowersâ comments but the decision to extend the project further was influenced by the limited
supervision budget\.
(b) Cofinanciers
85\. Not applicable\.
21
The Faculdade Getulio Vargas (FGV) Report (2015) âPanorama e contribuições do Programa STAQ para as
Iniciativas de Transporte Sustentável no Brasilâ estimates that car trips are responsible for around 60 percent and 63
percent of emissions from transport in São Paulo and Belo Horizonte, respectively\.
26
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (Comparison of Cost Estimate by Appraisal and Actuals in
Percentages)
Window/City Original by Appraisal (US$) Percentage by Appraisal Percentage Actuals
Window (Component) 1 - Freight transport
São Paulo (Municipality) 1,250,000\.00 15 9
Subtotal 1,250,000\.00 15 9
Window (Component) 2 - Better coordination and integration of transport and land-use planning and environmental
management
Belo Horizonte 600,000\.00 7 2
Curitiba â â 7
São Paulo â â 8
Subtotal 600,000\.00 7 17
Window (Component) 3 - Enhancement of public transport
Belo Horizonte 300,000\.00 4 8
Curitiba 900,000\.00 11 0
São Paulo 1,299,000\.00 15 8
Subtotal 2,499,000\.00 29 16
Window (Component) 4 - Nonmotorized transport
Belo Horizonte 1,200,000\.00 14 14
Curitiba 300,000\.00 4 14
Subtotal 1,500,000\.00 18 28
Window (Component) 5 - Transport Demand Management (TDM)
Belo Horizonte 680,000\.00 8 0
Curitiba 962,000\.00 11 0
São Paulo (Municipality) 850,000\.00 10 3
Subtotal 2,492,000\.00 29 3
Window (Component) 6 - Project administration
ANTP 191,000\.00 2 5
Subtotal 191,000\.00 2 5
Total 8,532,000\.00 100 79
Note: *Estimates from the ANTP data\.
(b) Financing (in US$, millions equivalent)
Appraisal Actual/
Percentage of
Estimate Lastest
Appraisal
(US$, millions) Estimate
Borrower 16,972,000 22,835,936 135
GEF 8,532,000 6,752,132 79
27
(c) Financing by City (in US$, millions) (GEF Only)
Appraisal Estimate
Cities Actual/Lastest Estimate Percentage of Appraisal
(US$, millions)
Belo Horizonte 2,780,000 1,580,748 57
Curitiba 2,162,000 1,609,255 74
São Paulo 3,399,000 2,235,572 66
ANTP 191,000 429,319 225
Designated account â 897,237 â
Total 8,532,000 6,752,132 79
28
Annex 2\. Outputs by Component
Window (Component) 1\. Freight transport
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
Technical study to (2) Increase in
Development of
analyze freight number of NMT
methodology for
movements in the city trips within The project was The likelihood of
SP the Freight OD SP
and assess the routes and intervened areas directly financed continuation is
survey of the
most adequate mix of compared to area by this grant and is substantial, given
city of SP Promising\. The
vehicles (trucks) baseline the first stage to the strong
actual decrease of
Technical study to (3) Decrease of plan for less participation of
CO2 emissions was
evaluate the CO2 equivalent tons energy-intensive stakeholders
not achieved in the
implementation of freight emitted by ground freight transport\. throughout the
time frame of the
transfer and distribution transport in The Government is process\. Limited
project, but the
centers, as well as intervened corridors now following up budget for the
Data collection first step toward a
possible strategic Comprehensive as derived by on the next steps, agenda, on the
for the Freight comprehensive
locations for a pilot SP studies analyzing the improvements in SP which involve other hand, might
OD survey of framework was
center, allowing for impacts and providing modal split and developing a limit the
the city of SP taken\.
further restrictions of recommendations on (4) Number of model to test Governmentâs
freight movement and improving fuel cities that are comprehensive capacity to follow
entry of certain vehicles efficiency and integrating policies\. up on the agenda\.
in certain parts of the city reducing GHG environment and
or metropolitan regions emissions from climate change
freight transport components into The pilot night Very positive\. The
within urban areas urban transport and delivery program night delivery pilot
land-use master was a multi- decreased total
Market study to evaluate plans and studies, stakeholder effort, travel times by
Pilot night
the potential for which include led by the 43% and is highly The likelihood of
delivery
rationalizing freight development of Government\. The dependent on the continuation is
program -
movements taking into SP regulatory and SP grant financed the supply chain high, given the
analysis and
account the necessities of financial evaluation of the characteristics\. The successful pilot
assessment of
distributors, shop frameworks that program, decrease in CO2 implementation\.
outcomes
location, and consumers foster the developed by the equivalent tons
development of University of São emitted by ground
sustainable Paulo\. The pilot transport in the
transport systems at looked at the intervened
29
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
local and national overall benefits corridors was not
levels and costs of the calculated directly,
project, defining a but is in the same
framework to order of the
expand the policy reduction in travel
and make it times\.
permanent\.
The city
government has
given continuity to
this agenda and is
developing
alternatives for
regulatory
Define a regulatory frameworks, both
framework to promote in relation to night
more efficient and SP -------------------- deliveries and the
cleaner freight transport use of
in the metropolitan area consolidation
centers in business
areas that can
benefit from the
current bike
infrastructure for
the last-mile
delivery\.
Note: SP = São Paulo\.
Window (Component) 2\. Better coordination and integration of transport and land-use planning and environmental
management
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
Elaboration of a master BH Number of cities with (2) Increase in TOD - Anel BH, The TOD Anel is a Promising in the Each city is in a
30
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
plan for urban mobility land-use policies and number of NMT Rodoviário, CUR, comprehensive long term\. TOD, different stage of
that is integrated with the regulations trips within Environmental SP, and urban development when these policies\. SP
environmental and social designed/proposed intervened areas and Rio de plan around a main implemented, has was the pioneer in
policies; redefinition of that create incentives compared to area Socioeconomic Janeiro mass transit system the potential to this approach and
legal framework for urban for more efficient and baseline Vulnerability and includes the increase the has managed to
mobility sustainable transport- (3) Decrease of Study for the basic design and participation of develop a few
oriented development CO2 equivalent tons city of CUR alternatives public transport, initiatives,
emitted by ground analysis therefore although slowly\.
transport in considering social, generating a BH and CUR also
intervened environmental, and decrease in have a historic
corridors as derived financial aspects of emissions when approach
by improvements in each alternative\. compared to urban integrating
modal split The development that transport and land
(4) Number of socioeconomic and benefits private use, and have
cities that are environmental cars\. The potential managed to direct
integrating vulnerability study benefits of these growth based on
environment and for CUR merges specific projects transport\. Both
climate change the databases from were not cities, however,
components into both areas and calculated\. The face higher
urban transport and defines the grant directly inequality between
land-use master vulnerable areas financed initiatives lower- and upper-
plans and studies, for which in BH and CUR\. income deciles,
which include accessibility to The initiatives in indicating a need
development of services is SP and Rio de to improve
regulatory and deficient and Janeiro were planning
financial environmental risk financed under instruments by
frameworks that is high\. With that, other World Bank including pro-poor
foster the it defines priority cofinanced policies\. Rio de
development of areas to improve activities\. All four Janeiro is in its
sustainable transport systems cities have first stage of
transport systems at or promote incorporated land- development, and
local and national densification\. Both use plans, policies, the World Bank is
levels studies were and regulations financing capacity
directly financed that create building and
by the grant\. incentives for more designs to support
efficient and the agenda\.
31
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
sustainable
transport-oriented
development\.
Capacity Brazilâs National
building for a Urban Mobility
graduate Law, adopted in
Course taken by
professional April 2012,
the agenciesâ staff,
course on CUR mandates that all
directly financed
transport and Brazilian cities
by the grant
environment for with a population
mobility over 20,000 (more
planners in CUR than 1,600 cities)
One-week seminar, prepare and
Technical urban with specialists present an urban
planning week from several mobility plan to
of Instituto de institutions, to the Ministry of
Pesquisa e CUR discuss the future Barriers removed\. Cities by 2015\.
Planejamento of mobility in Improved capacity Low capacity in
Urbano de CUR, partially in developing urban planning has
Curitiba financed by the mobility plans that been identified as a
grant include sustainable critical bottleneck
Online course development in the development
updated to include concepts of these mobility
contents of the plans and to
135 LUTP concept\. translate these into
Cities in The grant financed executable
BRAZIL scholarship to projects\. As a
The ANTP
â please more than 600 result, the project
sustainable
refer to students\. More identified the need
mobility online
list at the than 600 to invest in these
course
end of participants from activities to
this 24 different states disseminate the
annex and 135 cities, concepts of
coming from sustainable
private agencies, mobility into the
public sector, and public and private
32
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
academia, sectors and
completed the academia\.
training as of
December 2015\.
Around 80% of the
participants were
from medium- and
high-level
management\.
2000 The grant financed
The ANTP
participa a stand to Dissemination of
Conference
nts from disseminate the the program results
(2015)
BRAZIL program results\.
The study includes
a literature revision
of current Promising\. The
This study benefits
concession models, application of this
other client cities
including analysis into the
Study the potential of when renegotiating
Analysis of international current concession
public-private partnerships or rebidding the
governance and experiences, models allows for
and other financing bus concessions
concession legislation a more efficient
mechanisms to provide BH SP and raises critical
models for adequacy, fiscal and sustainable
resources for public points in
transit systems impacts of transport system,
transport and NMT maintaining quality
in SP different schemes, which affects
infrastructure investments of service and
risks, and impacts quality of service
sustainability of
on competition\. and ultimately
systems\.
This study was usage\.
directly financed
by the grant\.
Study the land value
capture mechanism
Certificates of potential
additional construction BH â
involve the private sector
in infrastructural
investments in transport
33
Note: BH = Belo Horizonte; CUR = Curitiba; SP = São Paulo\.
Window (Component) 3\. Enhancement of public transport
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
(a) Number of
initiatives to improve
public transport
operations
Redesign of the current
(segregated or
urban transport network The grant directly Barriers removed\.
nonsegregated)
based on the master plan (1) Increase in financed the The mobility
through modernizing
for sustainable urban number of trips mobility observatory
operations framework
mobility, rationalizing the made by public observatory, which increases
or complementary
existing network, transportation Mobility comprises the transparency and
BH infrastructure BH â
increasing modal and within intervened observatory integration of competition and
(b) Number of cities
intermodal integration, corridors compared transport and allows for more
preparing or
reducing overlaps, to corridor baseline urban development public
implementing specific
increasing the mobility in (2) Increase in data into an open participation in the
measures to promote
the urban transport system, number of NMT platform decisions\.
interconnectivity
and so on\. trips within
between public
intervened areas
transport systems and
compared to area
other modes of
baseline and
transport
(3) Decrease of
Barriers removed\.
CO2 equivalent
The methodology
tons emitted by Development of a
is a first step to
ground transport in methodology to
incorporate a
intervened measure quality of
Engineering designs and Measuring systemic
corridors as derived mobility and the
implementation of control quality of measurement of
by improvements measurement of
and communication BH mobility in SP quality that â
in modal split five selected
technology for the bus selected includes all users
corridors\. This
corridor - Antônio Carlos\. corridors in SP of the systemâ
study was directly
pedestrians
financed by the
(including special
grant\.
needs), bicycles,
motorcycles, cars,
34
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
and busesâand
allows for the
design of
âcomplete streetsâ\.
Barriers removed\.
Development of a
The analysis of the
management
data will allow for
system for bus
the city to better
operations through
enforce service This methodology
the definitions of
quality, improve takes advantage of
quality of service
system efficiency the large and
indicators\. The
through route growing
indicators are
Improvements of busway replanning and availability of data
automatically
infrastructure and in system from Intelligent
Data analysis calculated with big
operations; restore optimization, and transport system
and monitoring data (GPS and fare
sidewalks; improve BH SP to better integrate equipment from
of the transit card data), and
accessibility to tube the bus system to private operators to
system in SP allow for online
stations, especially people the other mass monitor service
monitoring of the
with special needs transit systems\. quality with little
system, as well as
This has resources, and is an
for obtaining data
implications for invaluable tool for
for system
system fiscal regulatory
rationalization
sustainability and agencies\.
purposes\. This
quality of service,
study was directly
thus attractive
financed by the
from the user
grant\.
perspective\.
35
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
Development of an
optimized bus
Barriers removed\.
network that
The restructuring
promotes a
of the bus
reorganization of
operations into the
Local feeder bus bus routes into
polygon feeder
networks and feeder polygons
system can
structural SP and structural â
improve system
services for SP system, allowing
efficiency, reduce
transit system for a more
wait times, and
sustainable and
improve speeds
efficient transport
and service
system that
quality\.
promotes local
access by NMT\.
Development of
The development
methodology for
of the Barriers removed\.
inventory,
methodology was This study
environmental
the first step to improved the
Preparation of a risk assessment,
SP measure the effects capacity of the
management program to and evaluation
metropo- of transport Government to
monitor the BH for low- and â
litan policies associated measure the
implementation of the BRT medium-
region with the bus environmental
system capacity
systems\. This impacts of the low-
transport
study was directly and medium-
systems in the
financed by the capacity systems\.
SP metropolitan
grant\.
region
Program to promote the
image of the public
transport system, based on
the priorities and BH â
expectations of the users,
and the capacity and
willingness to pay of users
36
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
Research to understand
usersâ preferences and
BH â
valuation of different trip
aspects
The study updates
the externality
costs of
transportation to
support economic
analysis of
transport projects\.
The value of life,
value of travel Barriers removed\.
time savings, cost This study
of GHG emissions, improves the
and cost of capacity of the
pollution Government for
Study
Evaluation of the Update of the (including noise) better strategic
case for
willingness and capacity to negative were updated planning of the
SP,
pay to use the public BH externalities of based on current sector and â
methodol
transport system, based on different values adequate to estimation of
ogy for
the usersâ preferences transport modes the local context\. externalities
all cities
The total cost of including GHG
mobility emissions using
externalities in updated
Brazil was methodology and
estimated to be data\.
6\.27% of the gross
national product,
with road
accidents and
travel time costs
being responsible
for 2\.8% and
2\.7%, respectively\.
37
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
An update of the Study
The study updates
trip generation case for
Adjustments to the road the trip generation
functions and SP,
plan; link to public BH functions that are
parameters of methodol
transport corridor the basic input for
mobility by ogy for
planning purposes\.
mode in Brazil all cities
Development of Promising\. The
basic designs for study, if
Reallocation,
the restructuring implemented, will
rehabilitation, and BH BH
of the road ring improve traffic
adaptation of bus stops
system of BH flows for the BRT
Microsimulation
central area system, decreasing
studies and basic
wait times,
designs for the
improving service
adaptation of the
reliability, and
road ring to
improving
improve BRT â
perceptions of
traffic flows;
quality from the
Microsimulation capacity building
Pavement to integrate train, user perspective\.
BH software and BH of the BH agency
metro, and bus transport The training
training staff on
allowed for the
microsimulation
transport agency to
develop other
microsimulation
studies and
alternatives\.
Development of
Promising\. The
detailed designs
improvement in
for the renewal of
Executive the quality of
CUR tube stations
designs for stations has a
Studies on bike paths to adapt to current
CUR improved CUR CUR direct effect on the â
connections\. environmental
BRT âtube user perception of
conditions, use of
stationsâ quality and thus
renewable
the attractiveness
resources, and
of the system\.
improvement of
38
At Appraisal By Closing Date
Intermediate Project Outcome Output Intermediate
Output as at Appraisal City City Project Outcome Observations
Outcome Indicators Achieved Outcome
quality and
comfort to the
user\. This study
was directly
financed by the
grant\.
Central control system for
high-capacity public
These studies
transportation corridors:
were included
functional definition, SP â â â â
under Window
implementation plan, and
(Component) 4
preparation of bidding
documents
Note: BH = Belo Horizonte; CUR = Curitiba; SP = São Paulo\.
Window (Component) 4\. Nonmotorized transport
At Appraisal By Closing Date
Project Outcome Output Intermediate
Output as at Appraisal City Intermediate Outcome City Project Outcome
Indicators Achieved Outcome
(2) Increase in The grant financed Barriers removed\.
number of NMT a four-day learning Improved
trips within event on awareness of the
intervened areas pedestrian mobility role of pedestrian
compared to area that included 600 infrastructure
600
Technical assistance for baseline participants from needs and of the
(a) Number of NMT initiatives (km or partici -
design of pedestrian (3) Decrease of 12 states in Brazil tools and
facilities) including pedestrian, Mobility on Foot pants
circulation plan; works to BH CO2 equivalent and 37 cities (80 methodologies to
bikeway, and ancillary infrastructure Seminar from 12
implement the pedestrian tons emitted by participants measure impacts of
built different
circulation plan ground transport in through video increased on-foot
states
intervened streaming) from mobility on health,
corridors as the three levels of quality of life, and
derived by government, environmental
improvements in academia, and civil sustainability of
modal split society\. cities\.
39
At Appraisal By Closing Date
Project Outcome Output Intermediate
Output as at Appraisal City Intermediate Outcome City Project Outcome
Indicators Achieved Outcome
Positive results\.
The potential CO2
Studying of a cycling
Bicycle master savings associated
network for the whole (a) Higher awareness of citizens on the
plan and with this activity
city; designs and works to importance of NMT and its role in
CUR executive design CUR are of 25\.41 CO2
implement the cycling reducing emissions and improving
of bicycle equivalent tons per
paths in the northern part efficiency of the transport system
network in CUR day, as a result of
of the city
improvements in
modal split\.
Revitalization and
(a) Number of NMT initiatives (km or Civil works for The grant directly Positive results\.
enlargement of sidewalks -
facilities) including pedestrian, Boqueirão financed three The CO2 savings
João Negrão/XV de CUR CUR
bikeway, and ancillary infrastructure Corridor (CecÃlia facilities (two in associated with
Novembro/Conselheiro
built Meirelles link) BH and one in this activity are of
Laurindo
CUR)\. The World 10\.91 CO2
Civil works for Bank has equivalent tons per
(b) Number of NMT initiatives (km or supported the SP
Preparation of Boqueirão day, as a result of
facilities) including pedestrian, implementation of
communication plan and CUR Corridor CUR improvements in
bikeway, and ancillary infrastructure more than 400 km
promotion of bike use (Euclides modal split\.
built of bike lanes and a
Bandeira link)
bike-sharing
Executive scheme\.
(a) Number of NMT initiatives (km or Positive results\.
Studies for bicycle lane on designs for
facilities) including pedestrian, The CO2 savings
the road section Paripe â CUR bicycle paths - BH
bikeway, and ancillary infrastructure associated with
Periperi (32 km) Venda Nova e
built this activity are of
Barreiro
24\.93 CO2
Design and (a) Number of NMT initiatives (km or Civil works for equivalent tons per
implementation of a pilot facilities) including pedestrian, Venda Nova and day, as a result of
BH BH improvements in
bikeway; pilot bike bikeway, and ancillary infrastructure Barreiro bicycle
parking facilities built paths modal split\.
Note: BH = Belo Horizonte; CUR = Curitiba; SP = São Paulo\.
40
Window (Component) 5\. Transport Demand Management (TDM)
At Appraisal By Closing Date
Output as at Intermediate Project Outcome Output
City City Intermediate Outcome Project Outcome Observations
Appraisal Outcome Indicators Achieved
Development of This pilot program was not
an analysis tool to directly financed by this
evaluate TDM BH grant but was supported by
projects/policies the World Bank team, in
for city center partnership with World
The cost of
Identification and Resources Institute\. The Positive results\.
implementing such
implementation of project consisted of a There was a 6%
projects is low and
TDM pilot project CU corporate mobility program reduction in the
the results are
with focus on ITS directed to companies of one participation of
Corporate surprisingly good\.
applications of the most congested private car mode to
(2) Increase in number of Mobility However,
SP business centers in the city of the office\. The
NMT trips within Program - promoting
SP\. The project worked with main growth
(a) Number of intervened areas compared Berrini behavior change
main companies to offer occurred in the
traffic to area baseline requires
alternatives to car access and specialized private
management (3) Decrease of CO2 continuous
Identification and decrease car trips to the area, bus services, paid
policies or plans equivalent tons emitted by interventions to
implementation of SP by establishing a range of by the employer\.
developed or in ground transport in sustain the results\.
TDM pilot project services such as dedicated
place intervened corridors as
bus services, full subsidy of
derived by improvements in
public transport, telework
modal split
arrangements, bicycle, and
carpool programs\.
Development of an inventory
Development of of emissions for the city of Barriers removed\.
sustainable SP\. The energy sector is Improved
Emissions
inventory of responsible for 95% of the awareness of the
CU inventory SP â
GHGs for emissions; 75% of those are importance of the
for SP
transport sector at related to transport (46% transport sector in
city level freight, 46% passenger, and emissions\.
the remaining aviation)\.
Note: BH = Belo Horizonte; CUR = Curitiba; SP = São Paulo\.
41
List of participating cities in the ANTP sustainable mobility online course:
City State City (cont\.) State (cont\.)
Ã?gua Boa MT Juazeiro BA
Alegrete RS Londrina PR
Anápolis GO Macapá AP
Aquiraz CE Maceió AL
Aracaju SE Mairiporã SP
Araucária PR Manaus AM
Balneário Camboriú SC Maringá PR
Barueri SP Mogi das Cruzes SP
Bauru SP Mogi Guaçu SP
Belém PA Montes Claros MG
Belford Roxo RJ Muriaé MG
Belo Horizonte MG Natal RN
Bento Gonçalves RS Niquelândia GO
Betim MG Niterói RJ
Blumenau SC Nova Friburgo RJ
Boa Vista RR Nova Odessa SP
BrasÃlia DF Olinda PE
Cabo Frio RJ Osasco SP
Caçapava SP Palhoça SC
Cachoeirinha RS Palmas TO
Cachoeiro de Itapemirim ES Pará de Minas MG
Cajamar SP Pelotas RS
Camaçari BA Petrolina PE
Campina Grande PB Pindamonhangaba SP
Campinas SP Piracicaba SP
Campo Grande MS Pomerode SC
Campos dos Goytacazes RJ Ponta Grossa PR
Canoas RS Porto Alegre RS
Caruaru PE Porto Seguro BA
Cascavel PR Pouso Alegre MG
Chapecó sc Praia Grande SP
Contagem MG Presidente Prudente SP
Corumbá MS Recife PE
Criciúma SC Ribeirão Preto SP
Cubatão SP Rio das Ostras RJ
Cuiabá MT Rio de Janeiro RJ
Curitiba PR Rio do Sul SC
Diadema SP Salvador BA
Divinópolis MG Santa Bárbara d'Oeste SP
42
City State City (cont\.) State (cont\.)
Duque de Caxias RJ Santa Rita PB
Embu das Artes SP Santa Rita do Sapucaà MG
Embu-Guaçu SP Santo André SP
Erechim RS Santo Antônio da Patrulha RS
Ferraz de Vasconcelos sp Santos SP
Florianópolis SC São Bernardo do Campo SP
Fortaleza CE São Carlos SP
Foz do Iguaçu PR São Francisco do Sul SC
Franca SP São Gonçalo RJ
Goiânia GO São José do Rio Preto SP
Guabiruba SC São José dos Campos SP
Guarapuava PR São Leopoldo RS
Guarujá SP São LuÃs MA
Hortolândia SP São Paulo SP
Imbituba SC Senador Canedo GO
Indaial SC Sorocaba SP
Itabuba BA Sumaré SP
Itajaà SC Teresina PI
Itajubá MG Timon MA
Itanhaém SP Três Pontas MG
Itapetininga SP Ubatuba SP
Itaquaquecetuba SP Uberlândia MG
Itatiaia RJ Uruaçu GO
Itu SP Viamão RS
Jacareà SP Vila Velha ES
Jaraguá do Sul SC Vitória ES
Jataà GO Vitória da Conquista BA
João Pessoa PB Xanxerê SC
Joinville SC
43
Annex 3\. Economic and Financial Analysis
Introduction
1\. The PAD selected the cost-effectiveness of the indirect impacts of the GEF operation as
the primary indicator for the purpose of preliminary economic analysis of the proposed GEF
operationâs investment\. This indicator was considered appropriate at the stage of appraisal
because the primary emphasis of the proposed GEF operation is to enable further action to be
taken by the cities and state governments\. While some direct investments are occurring under the
program windows (components), for example in nonmotorized facilities or facilities to
coordinate intermodal movements, these were considered primarily demonstrative to show what
kinds of outcomes were feasible\.
2\. The analysis proposed in the PAD, therefore, does not consider the immediate program
outcomesâthat is, the reduction or elimination of barriers that impede adoption of policies that
lead to structural reductions in CO2 emissions from the sectorâbut rather, the indirect outcomes
that will occur if the policies impeded by the barriers addressed by the program do, indeed,
become adopted within a reasonable time frame following the completion of this program\. Such
an analysis assumes that these more substantive measures will indeed be effective\.
Emission Reduction Assessment for the ICR
3\. The project components involved freight transport management, public transport
promotion, integration of land-use planning, NMT development, and TDM\. The interventions
are expected to reduce GHG emissions by more efficient freight transport, shifting travelers from
private vehicles to public transport as well as nonmotorized travel mode\.
4\. Direct impacts of the project were calculated for the bicycle infrastructure\. The
Transportation Emissions Evaluation Model for Projects - TEEMP methodology was used to
calculate benefits from the projects listed below\. This estimate was performed by FGV and
published in the report (2015) Panorama e contribuições do Programa STAQ para as Iniciativas
de Transporte Sustentável no Brasil\.
(a) For Curitiba, the following projects were considered: design for the 37 km
renovation of cycle infrastructure, implementation of 2\.3 km of Corredor Boqueirão
- Ramal CecÃlia Meirelles, and implementation of 2\.1 km of Corredor Boqueirão -
Ramal Euclides Bandeira\.
(b) For Belo Horizonte, implementation of 12 km of cycle lanes in Venda Nova and
Barreiro\.
5\. The summary of the inputs can be found in the Table 3\.1\.
44
Table 3\.1\. TEEMP Inputs for Belo Horizonte and Curitiba Cycle Lanes
Av\. Av\. Av\.
Av\. Av\. Elias Av\. Senador Senador Waldyr Rua Farm\.
Augusto Antônio Av\. João Ministro Levindo Levindo Soeiro Raul
Item Sub-Item B01 B07 B11 dos anjos Issa Samaha Oliveira Coelho 1 Coelho 1 Emrich Machado
Length (km): 37 2\.7 2\.1 1\.41 2\.05 1\.65 1\.5 1\.4 2 1\.2 0\.78
Data
Width (m): 2\.5 2\.5 2\.5 2\.5 2\.6 2\.5 2\.5 2\.5 3 2\.5 2 [6]
What kind of fully separated bike track x [1] x [1] x [1] x x x [1]
Facility is painted bike lane x x x x x [1]
Planned? mixed lane with pedestrians
What is the quality good x x x x x x x
of the bike fair/average x x x x
surface? poor
connects to the heart activity center x x x x x x[5] x x x[5] x[5] x[5]
Network
moderate demand corridor
Connectivity
isolated from high demand corridors
Meterology and % of year when cycling is
51% 51% 51% 30% 30% 30% 30% 30% 30% 30% 30%
Climate uncomfortable due to weather
Friendliness of degree to which cycle ways have
25% 9% 12% 50% 70% 50% 50% 70% 70% 70% 30%
Design (enter %) shade/exposure protection
safe bike parking available x x
Bike parking
few or no safe bike parking available x x x x x x x x x
flat x x x x x x x
Topography rolling x x x
hilly x
Availability of availability along the lanes x x x x x x x x x x x
lighting not available
Active Traffic available x x [2] x [2] x [3] x [3] x [3] x [3] x [3] x [3] x [3] x [3]
Calming Measures not available
45
Priority at available x x x x x x x x x x x
Junctions not available
Integration with integration with Public Transport x[4] x[4] x[4] x[4] x[4] x[4] x[4] x[4]
Public Transport no integration with Public Transport x x x
such as exclusive bike policies,
sympathetic traffic laws, educational
Other Soft x x x x x x x x x x x
campaigns incentivizing bike priority
Measures
in the roads
no additional bike policies
Note: [1]: Predominantly,[2]: Zone 40, elevated lanes, [3]: traffic redcutors and islands for pedestrian crossings, [4]: partial integration in specific times and days
[5]: connects to BRT, [6]: maximum lenght, variable extracted from FGV Report (2015) Panorama e contribuições do Programa STAQ para as Iniciativas de
Transporte Sustentável no Brasil\.
46
6\. The bicycle path implemented in Curitiba has generated a reduction of 10\.91 ton of CO2
per day, while the full renovation plan, if fully implemented, will have an impact of reduction of
25\.41 ton of CO2 per day\. The Curitiba project has generated an impact of reduction of 24\.93 ton
of CO2 per day\. The annualized costs, funding, and cost-effectiveness of the measures is
presented in table 3\.2\.
Table 3\.2\. Cost-effectiveness of Belo Horizonte and Curitiba Projects
Total Funding Annual CO2 Emission Cost Effectiveness
Project
(US$) Reduction (ton) (US$/ton)
Curitiba 1,022,516 3,601 284
Belo Horizonte 1,014,317 8,225 123
7\. It is important to highlight that, according to the FGV study, these projects have a low
participation on the overall estimates of emissions on urban transport (approximately 0\.83
percent in Belo Horizonte, for instance)\. Moreover, there is an overall trend of growth in the
participation of private vehicles in the mode share, with emissions having increased by 19
percent in Curitiba from 2007 to 2012\. In Belo Horizonte, the scenario is even more critical, with
private vehicles having increased their share in emissions by 119 percent from 2002 to 2012\.
Private vehicles represent approximately 60 percent of the share in emissions in these two cities\.
Increasing motorization rates in the three participating cities, a general trend as can be observed
in table 3\.3, reinforces the need for more comprehensive measures to contain car usage growth
and promote modal shift\.
Table 3\.3\. Annual Growth Rate between 2009 and 2013 (the ANTP)
Belo
São Paulo Natal
Curitiba (%) Horizonte Fortaleza (%) Salvador (%)
(%) (%)
(%)
Bus travel â0\.50 0\.57 1\.54 1\.42 2\.85 1\.99
Private
5\.95 7\.59 4\.88 7\.59 6\.78 7\.39
vehicle fleet
Motorcycle 5\.31 8\.19 7\.19 16\.15 12\.99 11\.94
Economic Analysis of the São Paulo Bus Corridors Program
8\. In 2013, the city of São Paulo began to implement and enforce more than 400 km of new
dedicated bus lanes and 400 km of new bike lanes or paths\. This program has resulted in a small
increase in ridership, as seen in Figure 3\.1, and an improvement in speeds of 9\.13 percent\.22
22
Arbex et al (2016) Avaliação das mudanças nas velocidades das linhas de ônibus da cidade de São Paulo após a
implantação de faixas exclusivas através da análise de dados de GPS\. Revista Transportes\. In press\.
47
Figure 3\.1\. Increase in Ridership in the SP Structural System (million pax/year)
9\. An economic analysis was carried out to test the impact of this new policy\. The
methodology consisted of comparing the situation with and without the project and quantifying
the benefits due to time savings for bus users\. Operating and road maintenance costs were
conservatively considered to have remained constant\. The assumption is that a possible decrease
in costs for these items could be compensated by increased enforcement necessary to guarantee
compliance\. Costs included in the analysis refer to a likely reduction in car speeds and an
increase in accidents (negative externality) as a result of higher speeds and pedestrian
unawareness of the bus lanes, which has been mitigated and is likely to return to before
infrastructure levels\. Investments considered include only road signaling\.
10\. Values of travel time savings were assumed to be 33 percent of the average hourly
income updated to 2016 (for home-to-work trips and other purposes)\. A 160 percent factor was
applied in the value of time for business trips\. It was also assumed that car users had a 2\.38
higher value of time than bus users\.23 Results are presented in table 3\.4\.
Table 3\.4\. Value of Time Distribution (US$)
Travel Purpose Bus Car
Home-to-work 1\.89 4\.49
Business 13\.05 31\.06
Other 1\.89 4\.49
11\. The trip distribution by purpose is shown in table 3\.5\.
Table 3\.5\. Travel Purpose Distribution (%)
Travel Purpose Bus Car
Home-to-work 58\.7 47\.4
23
As a reference, see the World Bankâs Quito Metro Line One Project\.
48
Travel Purpose Bus Car
Business 13\.3 19\.0
Other 28\.0 33\.6
12\. Travel time benefits were calculated using the net benefits of travel time savings for bus
users and loss of travel time for car users\. It was estimated that car trips on the selected corridors
were 25 percent lower than before the bus corridors (conservative estimate)\.
13\. Total investment costs were estimated at US$8 million, invested in two years\. Costs
related to accidents were considered to have had a 31 percent increase in the first year of full
operation and a decrease of 31 percent in the next years\.24
14\. The project flows are presented in table 3\.6\. The economic internal rate of return of 15\.03
percent was obtained\.
Table 3\.6\. Economic Evaluation (Base case, in US$, thousands)
Costs and Benefits
Benefits Externalities Benefits
Project Calendar Total Total
Travel Investments Minus
Year Year Accidents Benefits Costs
Time and Costs Costs
(A) (B) (A - B)
1 2012 0 0 0 4,000 4,000 â4,000
2 2013 0 0 0 4,000 4,000 â4,000
3 2014 363 â19 344 â 0 344
4 2015 1,089 â127 962 â 0 962
5 2016 1,452 â77 1,374 â 0 1,374
6 2017 1,481 â78 1,402 â 0 1,402
7 2018 1,510 â79 1,431 â 0 1,431
8 2019 1,540 â80 1,461 â 0 1,461
9 2020 1,571 â80 1,491 â 0 1,491
10 2021 1,603 â81 1,521 â 0 1,521
11 2022 1,635 â82 1,553 â 0 1,553
12 2023 1,667 â83 1,584 â 0 1,584
13 2024 1,701 â84 1,617 â 0 1,617
14 2025 1,735 â85 1,650 â 0 1,650
15 2026 1,769 â85 1,684 â 0 1,684
16 2027 1,787 â86 1,701 â 0 1,701
17 2028 1,805 â87 1,718 â 0 1,718
18 2029 1,823 â88 1,735 â 0 1,735
19 2030 1,841 â89 1,752 â 0 1,752
20 2031 1,860 â90 1,770 â 0 1,770
24
http://www\.fiquemsabendo\.com\.br/2015/07/faixas-exclusivas-registram-28-dos-atropelamentos-por-onibus-em-
sp/\.
49
21 2032 1,878 â91 1,788 â 0 1,788
22 2033 1,897 â92 1,805 â 0 1,805
23 2034 1,916 â93 1,823 â 0 1,823
24 2035 1,935 â93 1,842 â 0 1,842
25 2036 1,954 â94 1,860 â 0 1,860
26 2037 1,974 â95 1,879 â 0 1,879
27 2038 1,994 â96 1,898 â 0 1,898
28 2039 2,014 â97 1,916 â 0 1,916
29 2040 2,034 â98 1,936 â 0 1,936
30 2041 2,054 â99 1,955 â 0 1,955
31 2042 2,075 â100 1,975 â 0 1,975
IRR â 15\.03%
NPV 10% 3,977
PV Benefits 10% 10,919
PV Cost 10% 6,942
B/C â 1\.57
Note: IRR = Internal Rate of Return; NPV = Net Project Value; PV = Project Value; B/C =
50
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Paul Procee Senior Environmental Specialist LCSEN Team Lead
Georges Bianco Darido Senior Urban Transport Specialist LCSTR Team Lead
Frederico Rabello Procurement Specialist LCSPT Team Member
Joao Vicente Financial Management Specialist LCSFM Team Member
Amanda Schneider Program Assistant Team Member
Supervision/ICR
Georges Bianco Darido Lead Urban Transport Specialist GTI02 Team Lead
Bianca Bianchi Alves Urban Transport Specialist GTI04 Team Lead
Procurement
Frederico Rabello T\. Costa Senior Procurement Specialist GGO04
Specialist
Financial
Senior Financial Management
Susana Amaral GGO22 Management
Specialist
Specialist
Bernardo Guatimosim Alvim Senior Transport Specialist/ETC GTI04 Team Member
Diego Canales Salas Consultant GTI05 Team Member
Marcio Cerqueira Batitucci Safeguards Specialist GEN04 Safeguards Specialist
Paul Procee Program Leader LCC5C Team Member
Hanayo Taguchi Program Assistant GTI01 Team Member
Fatima Arroyo Arroyo Consultant GTI01 Team Member
Li Qu Transport Specialist GTI01 Team Member
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle US$, thousands (including Travel
No\. of Staff Weeks
and Consultant Costs)
Lending
FY10
Total: 0\.00 0\.00
Supervision/ICR
FY10 1\.15 7880\.1
FY11 4\.16 18551\.15
FY12 0\.80 6928\.01
FY13 4\.52 15950\.08
FY14 1\.71 6437\.69
FY15 0\.01 0\.09
Total: 12\.35 55747\.12
51
Annex 5\. Beneficiary Survey Results
Not applicable\.
52
Annex 6\. Stakeholder Workshop Report and Results
Not applicable\.
53
Annex 7\. Summary of Borrowerâs ICR and/or Comments on Draft ICR
The Draft ICR was sent to the Borrower before ICR Review meeting on May 4, 2016 and after,
but the Borrower did not provide its own evaluation of the project nor comments on the ICR\.
54
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable\.
55
Annex 9\. List of Supporting Documents
Censo Demográfico 2010\. Rio de Janeiro: IBGE, 2011\.
FGV Report (2015) Panorama e contribuições do Programa STAQ para as Iniciativas de
Transporte Sustentável no Brasil
http://blogs\.worldbank\.org/transport/sao-paulo-s-innovative-proposal-regulate-shared-mobility-
pricing-vehicle-use
http://thecityfixbrasil\.com/files/2013/09/Andrea-Leal_Banco-Mundial\.pdf
http://vadebike\.org/2014/09/contagem-ciclistas-aumento-bicicletas-inajar-eliseu-vergueiro/
http://www\.bhtrans\.pbh\.gov\.br/portal/page/portal/portalpublico/Temas/ObservatorioMobilidade/I
ndicadores/Transporte%20Coletivo/%C3%8Dndice%20de%20passageiros%20do%20transporte
%20coletivo%20beneficiados%20c
http://www\.bhtrans\.pbh\.gov\.br/portal/page/portal/portalpublico/Temas/ObservatorioMobilidade/I
ndicadores/Transporte%20Coletivo/%C3%8Dndice%20de%20prefer%C3%AAncia%20do%20u
so%20do%20transporte%20coletivo
http://www\.clubbrasil\.org/observatorio/relatorios\.html
http://www\.conexoesriopinheiros\.com\.br/
https://www\.itdp\.org/2015-sustainable-transport-award-finalist-belo-horizonte-brazil/
Ibope (2014) http://www\.capital\.sp\.gov\.br/portal/noticia/3728
IEMA (2014) Avaliação dos efeitos da implantação de faixas exclusivas em SP: tempo de
viagem, consumo de combustÃvel e emissões de poluentes\. São Paulo\.
PAD on a proposed grant from the Global Environment Facility Trust Fund in the amount of
US$8\.532 million to the National Association of Public Transport of the Federative Republic of
Brazil for the sustainable transport and air quality project in support of Phase 4 of the Sustainable
Transport & Air Quality Program\. December 4, 2009\.
Sustainable Development Challenges, UN World Economic and Social Survey 2013\.
56 | APPROVAL |
P006422 |  Minas Gerais Forestry Development
Report No: ; Type: Report/Evaluation Memorandum ; Country: Brazil; Region: Latin America And Caribbean; Sector: Forestry; Major Sector: Agriculture;
ProjectID: P006422
The Brazil Minas Gerais Forestry Development project, supported by Loan 2895-BR for US$48\.5
million, was approved in FY88\. In 1995, US$8\.0 million of the loan was canceled when the credit
component of the project was terminated\. The loan closed on December 31, 1996, after an 18-month
extension\. The Implementation Completion Report (ICR) was prepared by FAO/CP and finalized by the
Latin America and the Caribbean Regional Office\. A summary of the borrowerâs completion report is
attached as Annex 5\. The borrowerâs comments on the draft ICR were taken into consideration in the final
version of the ICR\.
The projectâs main objectives were to protect and expand the natural and industrial forests on
which the stateâs major iron and steel industries depend for charcoal, to alleviate rural poverty, and to
improve environmental protection\. The project was to achieve these objectives by reforestation and
improved conservation and management of native forests\. Project components included a credit line for
planting 165,000 hectares of privately owned industrial forests (84 percent of project costs); grants to help
farmers plant 40,000 hectares of small woodlots; forest conservation activities, including training to
improve management of forest harvesting, conservation education, and the development of parks and
reserves; training to increase the management capabilities of the State Forestry Institute (SFI); and
monitoring of project activities\.
Despite some early delays and many difficulties during implementation, the project largely
achieved its objectives\. The project started 18 months late because approval of the project by the state
assembly was delayed by both unrelated political problems and a change of federal policy on loan
approvals, and effectiveness of the loan was delayed by a change in interest rate indexing policy\.
Implementation was then handicapped by the effects of macroeconomic instability, including weak
demand for credit and counterpart funding shortages, a declining demand for charcoal, institutional
constraints and power struggles, political interference, a freeze on recruitment, and a change of
government in 1991\. After two slow years, the Bank considered suspending disbursements\. The borrower
responded by changing the management team, and implementation then improved\. The dominant credit
component fared badly, as planting costs were higher than expected, loans were concentrated among a few
borrowers, and the demand for credit dropped so that no loans were approved after 1993\. The borrower
then agreed with the Bank to terminate the component, and US$8\.0 million (the balance of unused funds)
was canceled\. Yet the componentâs forest planting achievements were not far below target (63,800
hectares of the 87,000 planned)\. The smallholder planting component made a slow start but was then
successful in exceeding its target (51,800 hectares against 41,000 planned)\. The component contributed to
income growth and to conservation and introduced farm forestry to some 25,000 participating
smallholders\. Forest conservation activities were largely successful\. Forest fee collection rose from a low
level of US$0\.2 million to US$5\.6 million under the project, which also eliminated forest fires, increased
protected areas by 71 percent, and held twice the planned number of environmental education courses\.
Two of the intended research activities (on charcoal technology and management of native forests)
included in the component were not undertaken\. They have since been contracted out to a university\.
Through its institutional activities, the project assisted in the successful decentralization of the SFI,
removing bottlenecks and improving links with other agencies, communities and NGOs\. Plans for future
project operations have been prepared\.
The ICR estimates an economic rate of return of 26\.6 percent, higher than the 16\.6 percent
estimated at appraisal, because wood is to be marketed for plywood manufacture as well as for lower-
valued charcoal production\. Financial rates of return have been reestimated at 10\.4 percent for industrial
plantations and 12\.5 percent for smallholders, well below the corresponding 14 and 20 percent estimated
at appraisal, because the costs of establishing the plantations were higher than expected\.
The Operations Evaluation Department (OED) agrees with the ICRâs ratings of project outcome as
satisfactory, institutional development as substantial, and sustainability as uncertain\. Although the forest
investments appear sustainable, most other project activities depend on continued funding for the SFI,
which in turn depends on whether it will be allowed to keep its income from fees\. OED also agrees with
the ICRâs rating of Bank performance as satisfactory overall, despite frequent changes of task managers
and some supervision deficiencies\. The Bank should have taken a decision on the moribund credit
component earlier than it did\.
The ICR includes a well-considered list of lessons which should be useful to others designing
similar projects\. Notable among these are the following: a) small farmers will adopt tree planting when
the market incentives are favorable, and demand for wood should be assessed as a part of forestry project
preparation; b) mid-term reviews are essential if unsuccessful project components are to be identified and
reallocation of funds to more successful components is to be made possible; and c) project performance is
highly dependent on the quality and stability of local management, the quality of technical assistance
provided, and stability of Bank task managership\.
The ICR is satisfactory but inclusion of standard cost tables and the ICR missionâs aide-memoire
would have improved it\.
No audit is planned\. | APPROVAL |
P160523 | PROJECT INFORMATION DOCUMENT (PID)
IDENTIFICATION/CONCEPT STAGE
Report No\.: PIDC71658
Public Disclosure Copy
Project Name
Region SOUTH ASIA
Country Nepal
Lending Instrument IPF
Project ID P160523
Borrower Name Government of Nepal represented by Ministry of Finance
Implementing Agency Ministry of Forestry and Soil Conservation
Environment Category C - Not Required
Date PID Prepared 24-Aug-2016
Estimated Date of Approval 20-Sep-2016
Initiation Note Review The review did authorize the preparation to continue
Decision
I\. Introduction and Context
Country Context
Nepalâ¢â¨ s economy has grown steadily even during the height of the civil war as economic
management remained prudent\. Since the end of the civil war, Nepal has gone through a long and
difficult political transition, culminating with elections of new constituents and the approval of a
new Constitution\. The political process has been challenging but the Government is starting to shift
Public Disclosure Copy
its attention to the economy\.
Despite very challenging circumstances, Nepal managed to halve the percentage of poor people
living on less than $1\.25 a day in a relatively short time\. This puts Nepal ahead of its neighboring
countries, India and Bangladesh in terms of poverty reduction\. Overall, Nepal performed relatively
well on the MDGs, especially those related to health and education\. Enrollments in primary
education have reached 95 percent, gender parity has been achieved and disparities across
disadvantaged ethnic/caste groups have decreased significantly\. In health, the maternal and infant
mortality rates have decreased significantly and full immunization coverage increased significantly
over the last three decades\. However, persistently high childhood malnutrition continues to
undermine the human potential that is needed to achieve sustained and resilient growth\.
The livelihoods of over three-quarters of Nepalâ¢â¨ s population are based on agriculture and forest
resources\. Over the past years, the number of people dependent on natural resources and ecosystem
services from forests, grasslands and wetlands for their livelihoods and security has increased quite
significantly\. The recent fuel crisis and the 2015 earthquake has led to a skyrocketing need for fuel
wood and timber for reconstruction of damaged housing and human settlements\.
Nepal is also heavily vulnerable to the impacts of climate change and natural disasters\. Recent
records show increasing incidents of drought, flood, hailstorms, landslides and crop disease\.
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Climate change is expected to increase these incidents, with glacier outbursts, floods, droughts, and
ecosystem degradation directly affecting the economy, especially the livelihoods of the poor\. Nepal
is located on the edge of a tectonic plate that gave rise to the Himalayas, and so it is also subject to
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high earthquake risks, particularly in the Kathmandu valley, which was once the bed of a glacial
lake and hence, is prone to soil liquefaction\.
The overall development goal of the Government of Nepal is to attain poverty reduction through
sustainable, inclusive and equitable growth\. The current Country Partnership Strategy CPS
(2014-2018) is focusing on fostering sustained and inclusive growth, despite the continuing
political transition\.
Sectoral and Institutional Context
The modest economic growth achieved in recent decades has come at a high environmental cost\.
High population pressures have led to deforestation on steep mountain slopes, causing massive soil
erosion and flooding on the plains\. Forests and forest habitats are threatened by unsustainable
harvesting and clearing for fuel wood collection and subsistence agriculture\. Mountain biodiversity
is suffering from forest degradation and deforestation, poor management of natural resources, and
inappropriate farming practices\. Encroachment into wetland habitats, unsustainable harvesting of
wetland resources, industrial pollution, agricultural run-off, the introduction of exotic and invasive
species into wetland ecosystems, and siltation have severely degraded the quality of the ecosystems
and the services they provide\.
Some protected areas face major threats from year round grazing, poaching, illegal timber
harvesting and unsustainable tourism\. Long term viability of major potential economic growth
engines like ecotourism, hydropower generation, and agriculture all depend on the sustainable
management of natural resources\.
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Nepal has the potential to deliver higher and more inclusive growth by sustainably managing its
natural resource base\. Planning and managing the country's vast water resources in a sustainable
manner - including through investments to protect catchments â¢â¨ will support long-term growth,
especially from irrigated agriculture and hydropower generation\. Conservation and sustainable
management of forests and biodiversity has the potential to underpin considerable growth in the
tourism sector, especially nature-based tourism\. Healthy forests also provide a stable subsistence
base for the rural poor, curb soil erosion and enhance flood resilience, and provide a natural social
safety net to external shocks such as earthquakes or political turmoil\.
Forestry is an integral part of agriculture and rural livelihoods and fuel wood is the principal source
of rural energy in Nepal\. Non-wood forest products (NWFPs) have become a major source of
income for the rural poor, medicine for primary health care and revenue for the government\.
Nature-based tourism has been argued to be a means of achieving both conservation and sustainable
development as it generates jobs for local communities\. At present, the protected areas in Nepal
include nine national parks, three wildlife reserves, one heritage reserve, three conservation areas,
and 11 buffer zones covering a total area of 28,959\.67 km2\. Altogether these areas constitute
19\.67% of the country's land area\. Out of the total tourists visiting Nepal about 45% visit protected
areas\. In 2015, the direct contribution of tourism and travel to Nepalâ¢â¨ s GDP grew by 5\.4%\.
Tourism investments grew by 12% in 2015 compared to 2014 (WTTC, 2015)\.
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Forests play an important role in Nepalâ¢â¨ s national economy\. FAO (2009) has estimated that
Nepalâ¢â¨ s forestry sector contributed 3\.5% to the GDP of the country in 2000 and 4\.4% for the
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period 1990 to 2000\. But it is estimated that the forestry sector alone contributes 15% to the GDP of
the country\. The forest sector contributes 9\.23% of total national employment\. The majority of
forest sector employment (91\.30%) is in the informal sector with the formal sector contributing
only 8\.70%\. The largest employment category is elementary unskilled forest workers accounting for
61\.83% of total forest sector employment (ERI, 2011)\.
Estimates of foregone timber revenues are a partial indicator of the significance of the current
shortfall in the performance of the forest sector\. Using conservative figures for production and
prices, Nepalâ¢â¨ s forestry sector could sustainably generate US$180 million a year from timber
harvests\. In contrast, officially recorded forest revenue decreased from US$9\.5 million in 2004 to
US$4\.18 million in 2006\. This shortfall is characteristic across the other sources of value from
forest resources\. They are compounded, not compensated, by similar shortcomings in contributions
to poverty reduction, biodiversity conservation, hydrology, and tourism\. (PROFOR, 2013)\.
Several studies show that improved forest management can be a significant contributor to achieving
poverty reduction in Nepal \. Further, the MOSTEâ¢â¨ s recent Rapid Environmental Assessment
report following the 2015 earth quake reiterates the important role forests and biodiversity play
in the economic development of the country as sources of food, medicines and other vital NTFPs;
and critical ecosystem services in watershed and river catchment protection, soil protection, and
land stability\.
Nepal has successfully implemented the first grant allocated for the Reduction of Emissions from
Deforestation and Forest Degradation, Sustainable Forest Management and Enhancement of Forest
Carbon Stocks (REDD+)\. Activities under the original Readiness Preparation Grant were
satisfactorily completed but the need for additional capacity development and the development of a
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grievance and redress mechanism was identified as important to sustain the results from the
readiness activities\. Therefore, the Government of Nepal qualified for additional funding to further
improve its capacity to effectively participate in the REDD+ process; to carry out measurement,
reporting and verification of carbon content in Nepalâ¢â¨ s forests and trees\. The Forest Carbon
Partnership Facility Participants Committee recognized Nepalâ¢â¨ s progress on REDD+ readiness,
its strong ownership and commitment to REDD+, and the consultative multi-stakeholder processes
supporting REDD+ activities\. Within the Ministry of Forests and Soil Conservation, the Nepal
â¢â¨ REDD Cellâ¢â¨ , initially created to implement the first FCPF grant, has now officially been
converted into a REDD Implementation Center, that will serve as focal point for both FCPF and
FIP activities\.
The Forest Investment Program (FIP) is one of the four targeted programs of the Climate
Investment Funds (CIF)\. FIP grants and low-interest loans, channeled through partner multilateral
development banks, empower countries to address the drivers of deforestation and forest
degradation both inside and outside of the forest sector and enhance forest carbon stocks to achieve
a triple win of poverty reduction, climate change mitigation, and resilience\. Nepal was selected as a
pilot country by the FIP Sub-Committee in May 2015\. Nepal is expected to receive investment
support of US$24\.1 million for the implementation of its Forest Investment Plan\.
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The purpose of the FIP is to support the efforts of the Government of Nepal to reduce emissions
from deforestation and forest degradation and promote sustainable forest management leading to
enhanced forest environmental services including carbon stocks, biodiversity conservation, water
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supply, protection of the rights of indigenous peoples and local communities, poverty reduction and
rural livelihoods safety nets\. To assist the Government of Nepal in developing its Forest Investment
Plan and enhance the capacity for implementation, the governing body of the FIP approved a
preparation grant of US$ 250,000\.
Relationship to CAS/CPS/CPF
The proposed activity is in line with Pillar 2 on Increasing Inclusive Growth and Opportunities for
Shared Prosperity of the Country Partnership Strategy 2014-2018\. This pillar is focusing on
increasing inclusive growth and providing historically-disadvantaged Nepalis with opportunities to
improve their resilience and increase their prosperity\. The rural economy in general and agriculture
in particular are prime targets for reducing poverty and sharing prosperity in Nepal as the
livelihoods of over three-quarters of Nepalâ¢â¨ s population are based on agriculture and forest
resources\. Forestry is an integral part of agriculture and rural livelihoods and fuel wood is the
principal source of rural energy in Nepal\. Non-wood forest products (NWFPs) have become a major
source of income for the rural poor, medicine for primary health care and revenue for the
government\.
The development and implementation of a Forest investment Plan for Nepal is also in line with the
cross-cutting dimensions of the CPS as Climate change and risks from natural disaster will also
continue to be addressed in a cross-cutting manner\. The implementation of the FIP Investment Plan
will contribute to achieving the CPS objectives of increasing inclusive growth and providing
historically-disadvantaged Nepalis with opportunities to improve their resilience and increase their
prosperity\. This is in line with the World Bankâ¢â¨ s corporate goals of eliminating extreme poverty
and boosting shared prosperity in a sustainable manner\.
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II\. Project Development Objective(s)
Proposed Development Objective(s)
The objective of this project is to support the Government of Nepal with the preparation of Nepal's
Forest Investment Plan and enhance its capacity for implementation\.
Key Results
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The key output of this project is a comprehensive Investment Plan that will provide a vision for
Nepalâ¢â¨ s forest resources by incorporating forests and climate change considerations into Nepal's
sustainable development agenda and identify priority areas of actions to sustainably manage forests
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and trees to improve the livelihoods of forest-dependent people and rural poor\. The process of
developing the Investment Plan will be participatory and include stakeholder groups such as
government agencies, indigenous peoples groups; local community representatives, the private
sector and other development partners\. The planning process will also enhance the awareness and
capacity of all stakeholders to recognize the importance of forests and trees for Nepal's socio-
economic development and the need for a multi-sectoral, programmatic approach that will allow
addressing the drivers of deforestation and forest degradation in a systematic manner\. The
Investment Plan will prioritize areas for technical assistance and investments that respond the
drivers of deforestation and forest degradation and present the value added of the use of FIP
resources and identify potential sources of co-finance\.
The preparatory grant will also be used to undertake necessary studies and assessments to inform the
investment plan; bring together other development partners which plan or implement forest-relevant
activities and discuss potential support to the Investment Plan; and identify areas for
The plan will build on and foster synergies, collaboration and complementarities among the various
ongoing and planned World Banks supported activities relevant to forests in Nepal, including the
REDD+ readiness process, and the planned Emissions Reduction Program\. The plan will also
identify opportunities to engage with national and international partners with a view to support
Nepalâ¢â¨ s forest agenda in a more strategic manner\.
Success indicators:
- FIP Investment Plan for Nepal reflects the results from a participatory development process;
- A series of technical and social studies and assessment that have informed the Investment Plan;
- Increased political will to address Nepal's forest challenge (i\.e\. active inter-ministerial committee);
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- Potential co-financing partners identified and donor coordination arrangements identified;
- Opportunities for cross-GP collaboration identified
III\. Preliminary Description
Concept Description
In March 2015, the Government of Nepal submitted an Expression of Interest (EoI) to participate in
the FIP to the FIP Sub-Committee\. The EoI provided a description of the country and sector
context, forest-related climate change mitigation potential, drivers of deforestation and potential
investments needed to address those, as well as the potential to generate enhanced development co-
benefits, as required by the FIP\. The major barriers for reducing /avoiding deforestation and forest
degradation as outlined in the EOI included:
- Lack of political will to take a transformational change in forest governance;
- Inadequate financial resources for intensive implementation of SFM;
- Lack of research needed for strong policy decisions;
- Weak governance (including institutional capacity, and law enforcement)
- Inadequate technical capacity among forest officials, user groups and local institutions;
The information provided in the EoI remains relevant and current\. Hence the FIP resources will be
used to address the challenges listed above\. The main activities to accomplish the objective of this
project will include:
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- Review and analysis of national strategies and plans relevant for forests and climate change,
including REDD+;
- Identification of the main areas of investment to be co-financed by the FIP;
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- Hiring of consultants to prepare thematic studies which will inform the investment plan in
accordance with FIP criteria;
- Stakeholder meetings and consultations to discuss the investment plan;
- Finalization of the investment plan and presentation to the FIP Sub-Committee for endorsement in
May 2017\.
The Government of Nepal is committed to address Nepalâ¢â¨ s forest challenge and is eager to
expand the contribution of forests and trees to the national economy while improving forest
governance and private sector engagement During the preparation of the investment plan, priority
areas of action to be co-financed by the FIP will be identified through a consultative process\.
The FIP IP is envisaged to position the country to avail of available and potential new financing
such as from the Green Climate Fund and other bilateral and multilateral financing sources\.
IV\. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
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Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
V\. Financing (in USD Million)
Total Project Cost: 0\.25 Total Bank Financing: 0
Financing Gap: 0
Financing Source Amount
Financing Gap 0\.25
VI\. Contact point
World Bank
Contact: Abdelaziz Lagnaoui
Title: Lead Environment Specialist
Tel: 458-2806
Email: alagnaoui@worldbank\.org
Contact: Andrea Kutter
Title: Senior Operations Officer
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Tel: 473-4231
Email: akutter@worldbank\.org
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Borrower/Client/Recipient
Name: Government of Nepal represented by Ministry of Finance
Contact: Baikuntha Aryal
Title: Joint Secretary of Finance
Tel: 97714211371
Email: baryal@mof\.gov\.np
Implementing Agencies
Name: Ministry of Forestry and Soil Conservation
Contact: Dr\. Sindhu Dhungana
Title: Joint Secretary and Chief
Tel: 9860330217
Email: sindhudhungana@gmail\.com
VII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
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Page 7 of 7 | APPROVAL |
P003599 |  ICRR 12219
Report Number : ICRR12219
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 09/27/2005
PROJ ID :P003599 Appraisal Actual
Project Name :Yunnan Environment Project Project Costs 307\.6 234
US$M )
(US$M)
Country :China Loan /Credit (US$M)
Loan/ US$M ) 150 106
Sector (s):Sub-national
): government US$M ) Yunnan Government: Yunnan Government:
Cofinancing (US$M)
administration; General 165\.6; Industrial 125\.6; Industrial
water sanitation and flood firms: 4\.3 firms: 2\.3
protection sector;
Petrochemicals and
fertilizers
L/C Number :C2892; L4055
FY )
Board Approval (FY) 96
Partners involved : Closing Date 12/31/2002 12/31/2004
Evaluator : Panel Reviewer : Group Manager : Group :
Ashwin Digambar Fernando Manibog Alain A\. Barbu OEDSG
Bhouraskar
2\. Project Objectives and Components
a\. Objectives
To provide a sustainable environmental framework for the long term economic and social development of Yunnan
Province, while providing a conducive foundation for industrial growth \. The specific objectives are to : (a) strengthen
policies, regulations and institutional arrangements for pollution control, and municipal water, wastewater, solid waste
and nightsoil management; (b) support the improvement of the lakes environment in Gejiu and Kunming in order to
allow the waters to be used for potable supply or other uses; (c) facilitate complementary sustainable investments in
pollution control and municipally-provided environmental services; and (d) introduce a comprehensive approach to
planning, prioritization, management, and financing of environmental infrastructure investments \.
b\. Components (or Key Conditions in the case of Adjustment Loans ):
The project consisted of 5 components:
i) Lake Dianchi Basin Water Quality Recovery (U$167\.01million at appraisal; US$157\.21actual) to support the
Dianchi Environmental Action Plan (DEAP) for improved control of pollution causing eutrophication in the lake basin,
including through improved wastewater collection and treatment, municipal solid waste and nightsoil management;
and strengthened water basin management \. Investments in water-related infrastructure would increase Kunming's
water supply;
(ii) Industrial Pollution Control (US$30\.08 million at appraisal; US$8\.19 actual) to abate phosphorus loads in lake
from 2 primary polluting enterprises; and provide abatement support to other enterprises through an Environmental
Pollution Control Subloans (EPCSL) Facility;
iii) Provincial Urban Environmental Services (US$39\.43 million at appraisal; US$55\.30 actual) to protect Gejiu Lake
and other water bodies through wastewater and stormwater collection and treatment, and solid waste management;
and water-supply expansion in Qujing;
iv) Environmental and Water Quality Monitoring (US$5\.06 million at appraisal; US$6\.15 actual) to upgrade and
modemize environmental management and water quality information and monitoring systems; and
v) Institutional Development, Training and Construction Supervision (US$15\.66 million at appraisal; US$7\.0 actual)
to strengthen provincial, municipal, project, and financial management; provide utility operations training; update
environmental action plans and feasibility studies; and prepare future projects \.
Revised Components
Due to savings that resulted from lower -than-expected costs and other factors, the project was restructured at
Mid-term Review (1999) to include 3 additional components:
vi) Solid waste management in Shilin Autonomous County to benefit primarily the popular attraction of the Stone
Forest area;
vii) Wastewater collection and treatment in Mengzi; and
viii) Wastewater collection and treatment in Xuanwei \.
5 subcomponents were cancelled due, generally, to high costs or lack of counterpart funding \.
c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost The project cost at appraisal includes physical and price contingencies totaling US$ 50\.34 million\. Total
estimated financing required, including interest during construction, was US$ 319\.88 million\. The actual project cost
was US$234 million, only 76% of the estimated cost\. After restructuring, US$19 million of the loan was cancelled
and, since after closing US$25 million remained undisbursed, this amount was also cancelled \. The ICR states that
the reasons for the savings were overestimation of procurement contract costs and elimination of several
components from the project, but does not provide any information on the cancelled components \.
Financing At appraisal, US$125 million of the loan/credit amount was in the form of a loan, with the remaining US$ 25
million as IDA credit (SDR US$17\.4 million)\. The actual loan/credit amount was less than at appraisal because of the
lower project cost\.
Borrower Contribution For the same reason, the Borrower's contribution of US$ 125 million was less than the est
imated amount of US$165\.
Dates The project closed 2 years later than expected, after 2 extensions\. According to the Region, the assessment
of the borrower agencies' institutional capacity at start -up was over-optimistic, and the lack of capacity led to
implementation delays\.
3\. Relevance of Objectives & Design :
The project was highly relevant to the CAS goals of improving water quality and natural resource management \.
However, rural and small-town (non-point source) pollution could have figured more prominently in the project \.
Regarding the results framework, there is a lack of clarity regarding some of the objectives \. According to the SAR
and the ICR, an important project goal was to have municipal agencies transformed into financially autonomous
utilities, with improved cost recovery \. But whether this goal falls under Objective (a) or (c) is not clear from either of
these documents\.
The targets framework for improved lake quality is sound, with specific annual targets \. Yet, it is deficient for
objective (a), as the monitoring indicators in the SAR are for municipal environmental service coverage, not for
policies, regulations and institutional arrangements \. The project was adequately designed, with physical
infrastructure investments comp lemented by improved cost-recovery, policies, monitoring, and training \. The causal
chain between Bank lending and the intended outcomes was also sound \. However, as the ICR also notes, the
project was too ambitious, consisting of several physical infrastructure subcomponents \. A focus on the key problems
would have most likely led to greater success \.
4\. Achievement of Objectives (Efficacy) :
Overall, while most of the targets for infrastructure were met , according to data in the ICR water quality levels in
Lakes Dianchi and Gejiu were at the same low levels at project-end as they were when the project became effective \.
However, because industrial pollution of the lakes has been largely arrested , water quality has improved to a degree
and may improve further in the future \.
(a) Strengthen policies, regulations and institutional arrangements for pollution control, and municipal water,
wastewater, solid waste and nightsoil management Rating: Modest\. While the ICR discussed the partial
cost-recovery of municipal environmental agencies, it provides little information on what policies, regulations and
arrangements were developed for water basin management and safeguarding long -term water quality\. According to
the SAR, the project was to address the problem of low pollution fee levels and collection rates through enhanced
enforcement and collection, but this was not discussed in the ICR \. It also states that training and equipment would
be provided to municipal environmental protection bureaus for improved monitoring and regulatory effectiveness \.
Stated simply is that training was achieved, and solid waste recycling and waste minimization measures have been
introduced\. The meager information provided does not support a rating of Substantial \.
(b) Support the improvement of the lakes environment in Gejiu and Kunming in order to allow the waters to be used
for potable supply or other uses Rating: Substantial\. The major Kunming wastewater subproject was delayed due
to a need for redesign and slow counterpart funding \. However, wastewater treatment infrastructure (WTI) to handle
about 95% of the city's wastewater was constructed, thus reducing a main source Lake Dianchi's pollution \. The
system's effluents meet national standards \. With the added water treatment infrastructure, Kunming can provide
100% of its residents with potable water (from a baseline of 85%)\. Construction of 2 landfills and stations now
prevent untreated run-off and solid waste dumping into the Lake \.
In Gejiu, WTI was built and effluents meet national standards \. Gejiu's sewer system was completed late due to
flooding\. To address flooding threats, a sewer and flood control system was designed \. In Qujing, a water treatment
plant was built and the city can now provide water to 100% of its residents\. Wastewater treatment and the city's first
solid waste landfill were established, though the treatment process for the former does not meet the State's
secondary standards (as it was not required to at appraisal ) because these standards were raised during
implementation\. Under the small towns wastewater and rural sanitation subcomponents, additional plants were built
and pollutant treatment benefits were demonstrated \.
In-house WTI was built in the 2 main polluting fertilizer plants\. However, to meet the government's 5/1/99
deadline for reducing industrial pollutants, Kunming Chemical dropped out of the project and used its own funds for
the WTI and converting to profit -enhancing technologies because counterpart funding was delayed \. Lacking these
funds, Kunyang Phosphate could not install the profit -enhancing technologies and this activity was cancelled \.
Despite the pollution control, which included WTI removal of 95% of the phosphorus entering Lake Dianchi
(surpassing the target of 60%), according to the "actual/latest estimate" data in Annex 1 of the ICR lakewater quality
at project-end (Class V) did not meet the target (Class III)\. The Kunming sewer system's late construction probably
accounted in part for this, and now that industrial pollution has been largely arrested Lake Dianchi water quality may
begin to improve\. Gejiu Lake water quality remained relatively low at project-end (Class IV), but bird and aquatic life
returned, and recent reports show that commercial fishing is now possible \.
(c) Facilitate complementary sustainable investments in pollution control and municipally -provided environmental
services Rating: Modest\. The ICR states that investments in municipal environmental services exceeded SAR
expectations, but, as mentioned in Sec \. 3, the meaning of and rationale for "complementary investments" is unclear\.
The indicator for this objective is percentage completion of the DEAP, but the ICR does not provide any information
on the achievement of the DEAP, or on the target and actual investment figures \.
Full tariff adjustments for cost-recovery of water, wastewater and solid waste services were not made by
project-end\. The government was to convert 3 municipal agencies in Kunming, Gejiu and Qujing into autonomous
enterprises but the process, including the valuation and transfer of assets, took several years to complete \. Some
utilities (in Qujing and Xuanwei) lacked the autonomy to control their financial performance, as they were not
completely converted from departments to utilities \. These outcomes were due to the government not having met the
covenants for prompt creation of autonomous enterprises and full cost -recovery through tariff increases \.
The Pollution Control Subloans Facility, designed to provide funds for 7 small industrial enterprises in Yunnan,
was uncompetitive relative to other local lending sources, and largely ineffective \.
(d) Introduce a comprehensive approach to planning, prioritization, management, and financing of environmental
infrastructure investments Rating: Substantial\. The ICR states that the project helped develop a long -term plan for
environmental improvement, and equipped provincial agencies with the vision and tools to undertake planning and
propose priority interventions \. Yet even brief information on what constitutes this environmental plan is lacking \. The
ICR does not explain why only about half of the funding was spent to train the executing provincial and city agencies
for their project responsibilities, including planning and future project preparation, and why the training was delayed \.
According to the Region, difficulties existed because beneficiary project units and utilities had insufficient capacity;
high staff turnover rates made the absorption of large amounts of training problematic; and local staff were
insufficiently involved in project preparation to fully appreciate what kind of training was needed \. The delays that
occurred resulted in weak implementing agency and subproject management, and significant implementation delays \.
Once training was conducted, it improved the agencies' abilities to manage subprojects \. The involvement of 16
implementing agencies in the end made project management difficult \.
Additonal components: Rating: Satisfactory\. A solid waste collection system and landfill were created for Shilin, and
WTI was constructed in Mengzi and Xuanwei \. The three components met their capacity targets \.
5\. Efficiency :
As the ICR states, ex-ante and ex-post ERRs were not calculated for the project overall or for most of the subprojects
because, it was believed that future benefits, such as on health, amenity and production, were difficult to quantify \.
For investments to improve Lake Dianchi's water quality, the appraisal compared these with the costs of a "do
nothing" scenario, which would have involved increased treatment of the lake's water (since it is a water source) or
replacing it with distant sources \. This approach was acceptable to economically justify the component \. The ICR,
however, does not provide the estimated cost calculated for the "do nothing" scenario of and compare it to the actual
cost of the investment\. The ICR should have provided in Sec\. 4\.3 on the NPV and ERR the two cost figures so that
the component's cost-effectiveness could be assessed \. Given the delay in WTI and landfill structure completion, and
the minimal improvement in lakewater quality that thus occurred, the cost -effectiveness of the investments achieved
was less than at appraisal\.
For the proposed investments in Gejiu and Qujing, the 3 additional components in Shilin, Mengzi and Xuanwei,
and the solid waste subcomponent in Kunming, alternative design options were analyzed to identify the least -cost
method\. Although the ICR does not make the estimated and actual costs of the 3 additional components available,
making it is difficult to assess their efficiency, it should be noted that the Mengzi and Xuanwei sewerage systems
were completed later than expected \.
For the Kunming water supply subcomponent, the appraisal compared the average economic incremental costs
of the new supply with consumer willingness to pay for the supply \. Since both values were nearly the same, it was
presumed the NPV would be positive \. Precise ex-ante or ex-post NPVs were not calculated because information on
the shape of the demand curve, which would have been needed, was not available \. Given that water tariffs do not
yet cover costs, the actual cost -effectiveness is likely to be less than the level at appraisal \.
ERRs of 24% and 36% were estimated for the fertilizer plants, Kunyang Phosphate and Kunming Chemical,
respectively\. Since the latter dropped out, the pollution reduction and increased profitability benefits it achieved
cannot be attributed to the project \. As Kunyang Phosphate built only the WTI, its ERR was lower than estimated \.
Why an ex-post ERR for this plant was not conducted in unclear \. No ex-ante or ex-post efficiency analysis for the
pollution control subloan facility was done, but, based on its lack of success, the returns to the facility were low \.
Other China environment projects have similarly not provided ERR figures for the project overall, or for some
components due to a lack of data, and have utilized a least -cost approach to assessing different alternatives \.
However, this Yunnan ICR lacks any kind of information to assess the efficiency of the project's components \. The
ICR should have at least provided the component cost figures at appraisal and project close, and the estimated and
actual costs per unit of benefit achieved \. As the ICR Guidelines state, "if an NPV or ERR was not calculated, the ICR
analyses the project using a cost -effectiveness criterion to determine whether the project represented the expected
least-cost solution to attain identified and measurable benefits by either an analysis of cost per unit of input or cost
per unit of output\. Whether benefits are measured in monetary or other terms, flows are adjusted to reflect real use of
resources\."
6\. M&E Design, Implementation, & Utilization:
In the project's design, indicators exist to monitor and evaluate the project's impact on Lake Dianchi's water quality,
along with precise annual targets for phosphorus reduction \. Annual targets for municipal service tariff adjustments
are also present\. However, the indicators to assess progress in strengthening policies and regulations for pollution
control are inappropriate, as they are more for measuring the coverage of municipal environmental service systems \.
Consequently, it appears that no proper monitoring of policy and regulatory development was done \. The indicator for
Objective (c), to assess whether complementary sustainable investments were made, lacks precision and clarity, as
it is "percent achievement of the DEAP "\.
The project included a component for supplying the local agencies with the necessary water quality monitoring
infrastructure and equipment, and management strengthening, so that M&E of the project's impact on Lake Dianchi
could be done\. The SAR cites the lake's water quality, specifically its phosphorus content, as the primary indicator of
the project's environmental impacts, and gives milligrams per liter of phosphorus as a water quality indicator for
monitoring\. The ICR, however, does not discuss the collection of data \. More seriously, the ICR provides no
information on Lake Dianchi's phosporus content at project -end\. Data for several other important indicators, relating
to complementary investments, operational performance, and institutional development, which according to the SAR
were to be used in project M&E, is also absent \.
7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):
The Resettlement Action Plan was implemented satisfactorily \. A local university team assessed the resettlement and
land acquisition activities and concluded that the plan was properly followed \. This Category A project complied fully
with the environmental assessment requirement \. In 1999, the QAG review found that all relevant safeguard policies
had been practiced\. A positive side-effect of the project was the creation of over 280 permanent jobs in the public
utility companies and over 10,000 temporary jobs during infrastructure construction \.
8\. Ratings : ICR IEG Review Reason for Disagreement /Comments
Outcome : Satisfactory Moderately Satisfactory The outcome is rated "Moderately
Satisfactory" (a rating which does not
exist on the ICR's 4-point scale)\.
Efficiency and relevance are rated
Substantial\. However, efficacy is rated
Modest for the following reasons :
cost-recovery and autonomy for municipal
agencies was not achieved; water quality
in Lakes Dianchi and Gejiu was still poor
at project-end (but will likely improve in
the latter in the future after the late
completion of Kunming's WTI); the
industrial pollution control component
(including the subloans facility ) was not
achieved; and comprehensive planning
and management of investments was
modest\. Additionally, information on the
achievement of Objective (a) is lacking\.
OED's 6-point scale requires a rating of
Moderately Unsatisfactory for projects of
this type\.
Institutional Dev \.: Modest Modest
Sustainability : Likely Likely But only marginally so, as tariff
adjustments have not been completed to
allow the utilities to operate on a
cost-recovery basis, and some of the
utilities lack financial autonomy \.
However, the government does appear to
support sound utility management and
increased investments, and is gradually
proceeding with the tariff increases while
it considers their social and economic
impacts\.
Bank Performance : Satisfactory Satisfactory Quality-at-Entry was weak though in
terms of formulation of the objectives,
M&E design, cost-effectiveness analysis,
and assessment of Borrower capacity \.
Supervision suffered, as there were 4
TM's during the project's life and mission
resources were at times inadequate \.
Also, the expectation that the government
would promptly create autonomous
institutions for environmental services and
initiate full cost-recovery was perhaps
unrealistic, even with the use of legal
covenants, given China's political
economy\.
Borrower Perf \.: Satisfactory Satisfactory In addition to aspects of Borrower
Performance under under "Sustainability"
and "Bank Performance", delays in
counterpart funding led to the late
completion or abandonment of
subcomponents\.
Quality of ICR : Unsatisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating,
IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \.
9\. Lessons:
The Bank needs to consider providing technical assistance, limiting the number of components and using
programmatic lending instruments for projects to be implemented by agencies that lack capacity and have little
experience with the Bank\.
Procurement processing in the field can lead to more prompt reviews, and improved communication with and
support for project implementing agencies \.
As long as the Borrower supports full cost recovery for municipal environmental services, the Bank may consider
gradual instead of substantial tariff increases, to done in parallel with the progress being made in constructing
and commissioning the service -providing infrastructure\.
10\. Assessment Recommended? Yes No
Why? To verify the ratings\. An assessment would also (1) determine what policy and regulatory actions
were undertaken for pollution control ; and (2) explain why the move towards cost -recovery and financial autonomy
for municipal environmental service providers was problematic for the Borrower in part by looking at the nature of
China's sustainable development a genda and its priorities\. The findings of the assessment on this issue might guide
future environmental projects in China \.
11\. Comments on Quality of ICR:
The ICR is rated Unsatisfactory for the following reasons :
A lack of information on the activities implemented for long-term basin management and water quality under
Objective (a), and their achievements\.
No information on Lake Dianchi's phosphorus content, which was regarded as the primary indicator of the
project's environmental impact\.
An analysis of whether the project represented the expected least -cost solution was not made available \. Given
that some subcomponents were delayed in completion and tariff adjustments were not fully made, Sec \. 4\.3
should have reassessed the efficiency with which they achieved their benefits \. For the fertilizer plant that
remained in the project, the ERR should have been recalculated \.
Under "Revised Components", the ICR does not mention all of the various sub-components cancelled or added\.
Only the Borrower's Report discusses all the cancellations\. | APPROVAL |
P057910 | Document of
The 'World Bank
Report No: 17965 BR
PROJECT APPRAISAL DOCUMENT
ON A
PROP'OSED LOAN
IN THE AMOUNT OF US$5\.0 MILLION
TO
BRAZIL
FOR A
STATE PENSION SYSTEMS REFORM TECHNICAL ASSISTANCE PROJECT
JU1NE 29, 1998
Brazil Country Management Unit LCC5C
Latin America and the Caribbean Regional Office
Brazil
State Pension Reform Technical Assistance Loan
CONTENTS
A\. Project Development Objective \. 2
1\. Project development objective and key performance indicators \. \. 2
B\. Strategic Context \. 2
1\. Sector-related CAS goal supported by the project \. \. 2
2\. Main sector issues and Government strategy \. \. 2
3\. Sector issues to be addressed by the project and strategic choices \. \. 3
C\. Project Description Summary \. 3
1\. Project components \. 3
2\. Key policy and institutional reforms supported by the project \. 5
3\. Benefits and target population\. 5
4\. Institutional and implementation arrangements\. 5
D\. Project Rationale\. 6
1\. Project alternatives considered and reasons for rejection \. \.6\. 6
2\. Major related projects financed by the Bank and/or other development agencies 7
3\. Lessons learned and reflected in proposed project design \. \. 7
4\. Indications of borrower commitment and ownership \. \. 7
5\. Value added of Bank support in this project \. 8
E\. Summary Project Analyses \. 9
1\. Economic \. 9
2\. Financial \. 9
3\. Technical \.9
4\. Institutional \. 9
5\. Social \. 9
6\. Environmental assessment \. 9
7\. Participatory approach \. 9
F\. Sustainability and Risks \. \. 10
1\. Sustainability \. 10
2\. Critical risks \. 12
3\. Possible controversial aspects \. 14
G\. Main Loan Conditions \. 14
1\. Effectiveness conditions \. 14
2\. Other \. 15
H\. Readiness for Implementation \. 15
I\. Compliance with Bank Policies \. 16
Annexes
Annex 1\. Project Design Summary \.17
Annex 2\. Detailed Project Description \.21
Project Implementation Program \.22
Detailed Project Components and Costs \.24
Annex 3\. Estimated Project Costs \. 28
Annex 4\.* Cost-Benefit Analysis Summary, or [NA]
Cost-Effectiveness Analysis Summary [NA]
Annex 5\.* Financial Summary for Revenue-Earning Project Entities, or [NA]
Financial Summary [NA]
Annex 6\. Procurement and Disbursement Arrangements \. 29
Table A\. Project Costs by Procurement Arrangements \. 31
Table Al\. Consultant Selection Arrangements \. \. 32
Table B\. Thresholds for Procurement Methods and Prior Review \. \. 33
Table C\. Allocation of Loan Proceeds \. \. 34
Annex 7\. Project Processing Budget and Schedule \. 35
Annex 8\. Documents in Project File \. 36
Annex 9\. Statement of Loans and Credits \. \. 37
Annex 10\. Country at a Glance \. 39
* The streamlined LIL approach does not require these annexes hence they are not presented\.
Brazil
State Pension Systems Reform Technical Assistance Project
Project Appraisal Document
Latin America and the Caribbean Regional Office
Country Department
Date: June 24, 1998 Task Team Leader/Task Manager: Chris Parel
Country Director: Gobind T\. Nankani Sector Manager/Director:
Project ID: BR-PE-57910 Sector: Program Objective Category:
Lending Instrument: LIL Technical Assistance Loan Program of Targeted Intervention: [ ] Yes x No
Project Financing Data [x] Loa [ ] Credit [] Guarantee [] Other [Specify]
For Loans/Credits/Others:
Amount (US$m/SDRm): US$5\.0 million
Proposed terms: [] Multicurrency [x] Single currency (US$)
Grace period (years): 5 [ ] Standard Variable [] Fixed [x] LIBOR-based
Years to maturity: 15
Commitment fee: 3/4 % p\.a\.
Service charge: %
Financing plan (US$m):
Source Local Foreign Total
Government 5\.0 0\.0 5\.0
Cofinanciers
IBRD 3\.8 1\.2 5\.0
IDA
Other (specify)
Total 10\.0
Borrower: Federative Republic of Brazil
Guarantor: idem
Responsible agencies: Ministries of Finance and Social Security (MPAS) and State Agencies Responsible for Pensions
Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001
Annual 0\.0 1\.8 2\.3 0\.9
Cumulative 0\.0 1\.8 4\.1 5\.0
Project implementation period: 3 years Expected effectiveness date: 11/98 Expected closing date: 12/01
OSD PAD Form: July 30, 1997
-2 -
A: Project Development Objective
1\. Project development objective and key performance indicators (see Annex 1):
The overall project objective is to prepare the states technically to address pension reform and help them
to move through the initial phases of reform\. It is also to assist the Federal and State Governments to
choosefrom among the best options and encourage them to implement sound reforms\.
State pension reform comprises four phases:
i\. Technical preparedness and diagnostic
ii\. Elaboration of pension reform proposals
iii\. Design of required institutional framework
iv\. Implementation of reform proposals
The project is a Learning and Innovations Loan (LIL) with limited objectives\. It specifically targets
Phases #1 and #2 and exceptionally will support Phase #3 activities for more advanced states\.
B: Sitrategic Context
1\. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1):
CAS document number: R98-116 Date of latest CAS discussion: June 2, 1998
Federal and state fiscal reform is one of the CAS's principal objectives\. The fiscal situation of most
Brazilian states is precarious\. State and local debt in December 1997 was 13% of GDP and 38% of total
government debt\. Pension obligations constitute a large and growing component of states' debt,
consuming 30-50% of revenues in some states\. A further indication of the gravity of the pension crisis is
given by the ratio of pension expenditures to salary bill for current state civil servants\. For instance, in
Minas Gerais, Rio de Janeiro, and Rio Grande do Sul the ratio ranges from 50% to 120%\. Hence,
resolving the pension crises that afflict most states is essential to achieving a stable fiscal situation\.
However, pension reform will not be easy\. Implicit pension debt for some of the larger states could be
billions of dollars\. Hence, the solution to the states pension problem is not immediately clear\.
Nevertheless, it is essential that the problem be confronted immediately and in a technically sound
manner\. The Project is a first, necessary step in that process\. As such, it addresses an important CAS
objective and is specifically cited in Annex 3-B of the CAS document approved by the Board on June 2,
1998\.
2\. Main sector issues and Government strategy:
* State pensions are constitutionally a state attribution and the Federal Government
consequently has no obligations or rights regarding state pension reform\. It is hoped that the
project will lead to the diagnosing and dimensioning of state problems and the first steps in
designing solutions\.
* The magnitude of the costs of state pension reform (implicit pension debt) and how it will be
financed is a major area of concern\. A related area is the 'portability' of individual state
reforms and how they might be incorporated into a national solution involving the INSS and
other Federal pension reforms\. There is yet no defined Governnient strategy for addressing
these issues\. They will be studied in parallel Bank ESW and discussed extensively in Project
workshops\.
* Federal pension reform is a Government priority\. A Constitutional reforn addressing the
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* Federal pension reform is a Government priority\. A Constitutional reform addressing the
INSS system is making its way through Congress with some difficulty\. October-November
elections will delay passage\.
* Both Federal and State Government's consider state pension reform a fiscal and social
priority\. Numerous pension funds (MPAS cites 1,200 such funds) have been set up in states
and municipalities to address pension problems but without adequate financing or attention
to actuarial and other technical requirements\. Pension fund management is also addressed in
the Project\.
3\. Sector issues to be addressed by the projecr and strategic choices:
Diagnosing states' pension problems and designing reform proposals\.
C: Project Description Summary
Objectives to be achieved in each of the phases will be:
Objective Components & Description
Phase #1 (a) States develop a sample data base of active and retired state employees sufficient
Diagnostic to extract actuarial data for pension modeling
(b) States and MARE train 2 state officials in pension reform and pension modeling
making use of the Bank's "P]ROST" software
(c) States and MARE produce a diagnostic of current and future pension obligations
and financial implications using PROST or other simulation models in use
(d) States disseminate and debate results in open forums
(e) States strengthen pension units with appropriate mandate, trained personnel,
budget, hardware and software (also from the Loan) to manage pension reform
(f) MPAS develops a Technical Unit (TU) with a legal mandate and appropriate
resources, including trained staff, to assist the states and the MF in implementing the
project and monitoring through shared data the evolution of state pensions\. The TU
will assist the MF in project implementation
Phase #2 (a) States develop reform proposals using PROST and any other simulation models
Reform vetted by the TU
Proposal
(b) States disseminate and debate results in open forums
Phase #3 (a) A few states, on an exceptional basis, design the legislative and institutional
Institutional framework necessary to implement pension reform; this Phase could become the
-Framework object of a second LIL or otlier Bank operation
(b) States disseminate and debate results in open forums
Government Federal and state pension reform supported though studies targeting 3 crucial areas:
Strengthening (i) complementary legislation to implement the Constitutional reforms; (ii) "best
practice" for pension fund management, and (iii) Federal INSS pension related
financial obligations to the states and state obligations to the INSS\.
It is expected that at least 15 of Brazil's 26 slates (plus the Federal District) will complete Project Phases
#1 and #2\.
The Bank will further support the Project by undertaking a study (see box below) addressing the issues of
how implicit pension debt might be financed, scenarios for a global pension solution involving Federal
-4 -
and state systems and the implications of such a system for the 'portability' of reformed state pension
systems\. If necessary, the Project could reallocate funds for PROST modeling of such a solution\. An
important Project output will be proposals for next steps in state pension reform\.
The Proposed World Bank Study
The World Bank proposes to undertake an independent study of critical pension issues in the first year of
the Project that is designed to support Federal and State reform efforts\. Work is just beginning on
defining the study but the general outline is likely to include the following points:
Objectives\. Study objectives will be to monitor, guide and support state reforms of civil service pension
systems\. The study will identify relevant lessons suggested by the experience of other countries (inter
alia, Argentina, USA and Chile) and Brazil's own experience in the context of state debt and federal-state
fiscal relations\. It will also discuss what must be done for state reforms to be consistent with broader
reforms of the social security system\.
Description\. Specifically, four issues will be addressed:
(i) Suitability and design of funded pension schemes for state civil servants,
(ii) The implications of likely national reform scenarios for state pension reform,
(iii) Costs of and options for funding the transition from existing PAYGO to funded systems,
(iv) Implications of contemplated state reforms for Brazil: fiscal adjustment, labor market efficiency,
capital market development\.
Design and Timing\. The study proposal contemplates three interim briefs followed by a main report,
"Reforming State Pension Systems: Main Challenges and Realistic policy Options"\. The proposed briefs
would be:
(i) Integrating Federal and State Pension Systems--Payoffs, Intemational Experience and Main
Lessons for Brazil\.
(ii) Feasibility and Design of a Second (Funded) Pillar--The Brazilian Case and International
Experience
(iii) Funding the Transition-Magnitudes of State Pension Debt, International Experience, and
Realistic Options for Brazilian States\.
Dissemination\. The study findings would be incorporated into the Project's dissemination efforts\. It is
proposed that briefs would be discussed at Project and CONFAZ (a permanent group of State Secretaries
of Finance) workshops and during training sessions\. Dissemination would also include concerned
Federal, State, Municipal and private groups and individuals\.
-5 -
1\. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown)
Component Category Cost Incl\. % of Total Bank % Bank
Contingencies Financing Financing
(US$) (US$)
Start up Training 102,520 1\.0 33,000 33\.0
Consulting Firms 470,000 5\.0 155,000 33\.0
Administration 17,000 0\.1 5,000 33\.0
Phase # I Consulting-Individual 2,200,000 22\.0 363,000 16\.5
Training 725,000 7\.0 119,000 16\.5
Goods 530,000 5\.0 530,000 100\.0
Miscellaneous 537,400 5\.0 88,000 16\.5
Phase #2 Consulting-Individual 2,200,000 22\.0 2,200,000 100\.0
Miscellaneous 448,000 4\.0 448,000 100\.0
Phase #3 Consulting-Indiviclual 1,050,000 11\.0 483,000 46\.0
Miscellaneous 200,700 2\.0 92,000 46\.0
Government Studies Consulting-Firmns 424,000 4\.0 0 0\.0
Miscellaneous 28,750 0\.2 0 0\.0
Administration 162,000 2\.0 0 0\.0
Contingencies Miscellaneous 904,630 9\.0 484,000 53\.0
Total 10,000,000 I 5,000,000
2\. Key policy and institutional reforms supported by the project:
The Project is designed to diagnose state pension problems and support the development of reform
proposals and in exceptional cases, design of institutional framework proposals\. No specific policy
solutions are being proposed--these must be worked out by the states with technical assistance from the
Project\. However, through training, exposure to "best practice", and consultant and TU support it is
expected that proposals will meet necessary technical standards\.
There are three institutional objectives, (i) constituting/strengthening the state units responsible for
pension management and ensuring that their mandate, resources and staffing are adequate, and (ii)
constituting a technical unit in MPAS that will monitor and provide technical assistance to the states both
during the Project and on a permanent basis thereafter, and (iii) helping Brazil to identify and debate the
best options for reforming the Federal/State pension system\.
3\. Benefits and target population:
Successful pension reform will benefit the nation as a whole:
* The Federal Government benefits from State fiscal reform and strengthening
* The State Governments benefit from addressing the huge fiscal burden imposed by pensions
* State pensioners benefit from having State pensions on a sound financial basis
* State populations benefit from having more financial resources available to States to address
development needs
4\. Institutional and implementation arrangements:
The Project Coordinating Unit (PCU)\. The PCU is under the borrowing institution, the Ministry of
Finance\. It is headed by an experienced advisor to the Executive Secretary\. The advisor is also heading a
-6 -
PCU for a large IDB umbrella state fiscal modernization loan\. Experienced staff inyolved in managing a
IDB loan will also participate in the Project PCU which should ensure smooth implementation\.
Liaison with states will be facilitated through the Ministry of Finance's CONFAZ, a permanent
organization of State Finance Secretaries which meets regularly\. The head of the PCU is also the advisor
to the MF coordinator of CONFAZ\. A similar forum coordinated by MARE for states' Administration
Secretaries will also be used for this end\.
Technical Unit (TU)--MPAS\. A Technical Unit will be constituted at MPAS to assist the PCU in
managing the technical aspects of the Project\. It will vet terms of reference for state contracted
consultants manage studies, organize workshops, and generally manage, provide opinions, and vet all
technical aspects of the Project\. TU staff will be trained in PROST and given courses in pension reform
so that they can assist the states in carrying out diagnostics and elaborating reform programs\. Consultants
and seconded Federal Government and MPAS staff required to carry out this work will sit in the TU as
well\. It is expected that the TU will become a permanent MPAS unit liaising and providing technical
assistance to the states\.
Consultatbive Committee\. The Project Coordinating Unit and the Technical Unit will be supported by this
committee whose membership will include high ranking officials from four ministries--MF, MPAS,
MPO and MARE\. The Committee will serve as a sounding board for issues and proposals that arise
during the implementation of the Project\.
Agreements ("Convenios") and Operational Manual\. State obligations and conditionality will be detailed
in Agreements and an Operational Manual (see Section G)\. Conditions must be met to qualify for Project
participation and in order to pass from one Phase to the next\. The TU will verify that these conditions
have been satisfactorily met\.
Financial Management and Procurement\. The Project Coordinator and his staff are currently managing
an IDB multi-state loan hence they are experienced\. Procurement will be supervised from the Bank's
Brasilia office\. A Financial Management Specialist (FMS) has already diagnosed PCU capability and
made recommendations\. A Brasilia based FMS will now assist the PCU to meet Bank standards by
effectiveness and will help with project implementation thereafter\.
D: Project Rationale
1\. Project alternatives considered and reasons for rejection:
A LIL is justified for the following reasons:
* Streamlined Bank Processing\. The Federal and State Governments want to provide
technical assistance immediately to support reform efforts underway\.
* Small Size\. The $5 million loan ($ 10 million total operation size) is appropriate for the
activities to be undertaken\.
* Rapid Government Processing\. Given budget restrictions, the elections, and the desire to
begin work as soon as possible the Project was seen as being an intervention that would
obtain ample support and be more easily processed\.
* New and Innovative Approaches\. The Project is piloting PROST in Brazil and providing
individual states with resources to generate their own solutions\. This is a new area of
activity in Brazil for the Bank, the Federal Government and the states and it is
'experimental'\.
* Trust/DemandAmong Stakeholders\. The Project is designed to promote dissemination of
results through publications and workshops in the states which could be key in building
support for reform in this sensitive policy area\.
* Maximum Flexibility\. The Project will allow for reallocation of funding and adaptation
among components to obtain the best approach before committing more resources\.
-7-
Alternative approaches that were rejected include:
1\. A Project (LIL) that Included Phase 3\. A LIL is confined to a 3 year term and $5 million\. To
include a component addressing design of institutional frameworks in Brazilian states would exceed the
Project's time and cost limits and complicate the operation unnecessarily\. Rather it was deemed
preferable to deal with institutional framework and implementation phases in a subsequent LIL or other
operations if justified by states' progress\. Regarding the timing of the different LIL components, we note
that the LIL's Phase #1 (generate a clean data base sample, train staff, and generate diagnostics and
public debate) could easily take 18 months or more depending upon the states while Phase #2 (reform
proposals and debate) could take an additional 12 months or more\. Also, October-November elections
and transition will likely delay loan processing and start-up, another reason for not including Phase #3\.
2\. Small Technical Assistance Loan\. This is perhaps an option for subsequent pension interventions
should a larger operation be required\. Processing time and size mitigated against this alternative\.
3\. Adjustable Program Loan (APL) or investment Loan\. Size, processing, and uncertainty regarding
the subsequent steps rendered the larger APL, a less attractive alternative\. The cost of the state pension
diagnostics, reform simulations and institutional framework proposals should not exceed $10-20 million\.
Also, the Bank would not undertake the huge financial obligations associated with implementation of
pension reforms in the States\. A single state loan would also be less attractive as it would cost too little
for Phases #1-3 and too much for implementing pension reform\. And it would have the added drawback
that no lessons would be available for replication in other states for 2-3 years\.
2\. Major relatedprojects financed by the Bank and/or other development agencies (completed, ongoing
and planned):
Sector Issue Project Latest Supervision (Form 590)
Ratings
(Bank-financed projects only)
Implementation Development
Progress (IP) Objective (DO)
Bank-financed
Pension Reform--Argentina Pension Reform S S
idem Pension Reform TA S S
Pension Reform--Bolivia Fin\. Markets and S S
Pension Reform
Pension Reform--Hungary Pension Administration S U
Other development agencies
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
3\. Lessons learned and reflected in the project design:
Bank interventions in the area of pension reform have been limited to a few investment operations
targeting national systems\. This operation is different because
* It is a LIL and only a few have been done to date in the Bank
* It has very limited, generic objectives, namely providing resources for States to pursue
diagnoses and elaboration of reform proposals
* It makes use of new Bank software (PROST) that has been tested in only a few countries
* It targets autonomous states in the federated Brazilian system\.
The experience of Bank practitioners and findings documented in "Perspectives on Technical Assistance
Loans" (CODE98-4) provide useful lessons:
-8 -
(i) Need to upgrade data bases in order to have a sound basis for diagnostics and simulations\.
Brazilian state pension data bases are unreliable\. This will be addressed in phase one through the
allocation of consulting funds to states to upgrade a representative sample of sufficient size to allow for
actuarial analysis\.
(ii) Need to provide adequate technical assistance and resources to ensure relatively unsophisticated
practitioners can carry out and take ownership of technically demanding diagnoses and elaborate
reform proposals having tested various scenarios\. This includes both pension reform theory and
practice and PROST/simulation methodologies\. Also, competent state pension staff must be chosen
and due diligence done to avoid a situation where beneficiaries move too quickly into PROST-based
reform simulations before sound assumptions have been formulated and staff adequately trained\.
Quality control is essential, especially as PROST is a Bank product and there is a risk of the Bank's
name being invoked tojustify unsound results\.
MPAS based "trainers" will be instructed intensively in pension reform, PROST, and Visual Basic and
will be available to assist the states in all phases of the Project\. Two state officials will also be trained in
PROST and pension reform\. States will receive funding to contract consultants for this work and a series
of workshops will be held on various aspects of pension management and reform during the three year
period\. Also, an ample supervision budget will be provided to ensure that Bank pension reform experts
can help guide the states, especially in the first diagnostic and reform exercises carried out by the more
advanced states\. Finally, MPAS Technical Unit staff will formally vet participants, TORs and the quality
of diagnostics and simulations as part of Project conditionality\.
(iii) Properly identify the criticalparameters, their impact,and the magnitude of the financial burdens
implicit in proposals\.
The comibination of PROST, pension reform training, MPAS and Bank technical assistance and
workshops should enable states to identify critical parameters, run sound simulations and dimension the
financial burdens involved in pension reform\.
(iv) Ensure that (a) there is ownership in the Federal and state governments and a willingness to engage
the opposition and push through reforms, (b) the 'owner' of the data base/pension management
supports the exercise, (c) the process is participatory and amply disseminated/debated and
stakeholders' interests are identified and addressed, and (d) campaigns are undertaken to build
constituency supportfor the reform effort\.
To participate in the Project and pass from one phase to the next, states must agree to disseminate
findings and hold workshops in order to hear from stakeholders\. Finance is provided in the Project for
publications and workshops in each state for each phase\. Given the sensitive political issues involved,
these components will also be designed to build state-wide constituencies by demonstrating the
consequences of delaying reforms\. It is possible that more resources will need to be budgeted to develop
campaigns in support of reforms in some states\.
4\. Indications of borrower commitment and ownership:
The Finance Minister has endorsed the project, which was given to a key Executive Secretary to task
manage\. MPAS has now a major technical role and is in the process of constituting a permanent
Technical Unit to assist the Ministry of Finance with the technical aspects of the Project, monitor state
data, and provide PROST and technical assistance on a continuing basis\. The Project was presented in
two workshops sponsored by the Ministry of Finance for Secretaries of Finance and Administration and
officials\. Individual conversations and phone interviews with 9 of the leading states and a two hour
-9 -
meeting with 4 of these confirmed widespread interest\. The Federal Government has agreed to put the
Project on a fast track despite the election cycle and budget restrictions\. The Government is pushing hard
to gain approval of the Constitutional Amendment addressing pension reform and States are looking
seriously at setting up pension funds -- a few lhave already done so\. In Bahia, $400 million from
privatization revenues was put into a pension fund and some $300 million will be allocated in Ceara\.
Finally, continuing Bank dialogue with the Government and states involved in State Reform/Privatization
loans as well as frequent newspaper and journal articles affirming the need to address the state fiscal and
pension crises affirm the high level of interest in pension reform\.
5\. Value added of Bank support in this project':
* The Bank, as purveyor of PROST and international best practice in pension reform, is well
placed to address state pension re:Form systematically across states and on the requisite
technical/professional level\.
* The Bank, with Government support, can bring together states in a single operation\.
* The Government has largely kept at arms-length as it has no legal responsibilities or rights
and is concerned that it will be sadldled with the states' fiscal burden\. The Bank can help to
forge an MPAS/state link\.
- Bank prestige and its 'honest broker' reputation can help states to present their proposals and
build reform constituencies\.
It is hoped for the above reasons, that the Project will become the centerpiece of a Federal and State
campaign to address pension reform\.
E: Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1\. Economic (supported by Annex 4):
[NA ] Cost-Benefit Analysis: NPV=US$ million; ERR= % [NA ] Cost Effectiveness Analysis:
[ ] Other (Specify)
2\. Financial (see Annex 5): [NA] NPV=US$ million; FRR= %
Fiscal impact: [NA]
3\. Technical: [NA]
4\. Institutional:
a\. Executing agencies: Ministry of Finance, MPAS, MARE; individual states through their pension agencies
b\. Project management: Ministry of Finance wiith technical assistance from MPAS
5\. Social: [NA]
6\. Environmental assessment: [NA] Environmental Category []A []B [] C
7\. Participatory approach [key stakeholders, how involved, and what they have influenced,; if
participatory approach not used, describe whv not applicable]:
-10-
a\. Primary beneficiaries and other affected groups:
State Governments--Finance and Administration: All of the key states--those with large civil service,
pension obligations, and privatization revenues--have manifested their interest in the Project\. State
officials were advised of the operation and given the opportunity to comment in two Ministry of Finance
sponsored meetings--a third dedicated exclusively to pension reform took place June 17-18\. A meeting
was held with representatives from Parana, Sao Paulo, Bahia, and Para to go over the design of the
operation and verify whether it satisfied beneficiary needs--which proved to be the case\. The primary
findings of these meetings that have been incorporated into the design of the Project are:
* Funding will have to be provided to upgrade a representative data base sample in order to be
able to run simulations\. This will cost $100,000 and take 10-12 months/state\. Even in the
best states data bases are highly suspect\.
* Even in the few states who have advanced on pension reform there is strong interest in
obtaining a "second opinion" and training in PROST\.
* Flexibility will need to be maintained in Phase #2 as some institutional framework work
from Phase #3 will likely need to be done to better define reform simulations
* There is need for a study on Pension Fund Management best practices\. This is now part of
the Project\.
* There is tremendous concern among states for how pension obligations will be financed--a
few states already have projections of the financial burden associated with reform\. The
Bank has said that the amounts involved are much too large to be resolved through Bank
lending and that alternative solutions must be sought\. A parallel Bank study will be
conducted on this topic\.
- There is considerable difference among states regarding the organization, staffing, technical
capability, and budgeting of pension management units\. A survey has been designed and
distributed to obtain basic information and care will need to be taken in dealing with
individual states and their needs\.
b\. Other key stakeholders: State Civil Servants
Recent defeat of a Constitutional Reform component dealing with reform of age/eligibility attests to the
fact that pension is a politically sensitive issue\. The Project is not proposing any specific line of reform or
model but rather providing technical assistance and financial support to states so that they can develop
their own proposals\. In the process, the Project will require as a condition for any state to pass from one
phase to another, that the quality of work is vetted by the MPAS TU and results are disseminated through
publication and public workshops which will be financed by the operation\. Bank supervision of this
component: should help ensure that stakeholders are informed and will be heard\.
F: Sustainability and Risks
1\. Sustainability:
A\. States
The Project will require that states legally establish/strengthen pension units with adequately trained staff
(including those trained through the Project) and appropriate resources\. A small computer hardware and
software package will also be provided by the Project to ensure capacity\. This will be covered in the state
agreements ("convenios") with the MF and constitute a condition for moving to Phase #2\. True
sustainability will come about if and when states perforn the diagnostics, discover the danger to their
pension systems and fiscal situation, and feel compelled to move through phases #2-3 and implement
pension reforms\. If this doesn't happen the Project will have failed\.
- 11 -
B\. Government
(i) MPAS\. An administrative order is expected that will establish a permanent technical unit to monitor
state pensions and provide technical assistance to states as needed\. Such an order and funding for the unit
can, at any time, be withdrawn and there is the risk that once the Project is finished States will no longer
want to liaise and exchange data with MPAS--they have no legal obligation to do so\. Hence
sustainability will most likely come about as, a function of the MPAS unit providing continuing assistance
to the States through PROST and pension reform advice, by coordinating updates of PROST, and through
promoting workshops over the course of the Project\.
(ii) MPAS/FAZENDA\. The three studies to be carried out under the auspices of the operation
(complementary legislation to implement Constitutional reforms, best practice in pension fund
management, and evaluation of outstanding Federal/States pension liabilities) will have a direct impact on
pension reform as they address pending issues and matters of great importance to the states and the
Government\.
-12 -
2\. Critical Risks (reflecting assumptions in the fourth column of Annex 1):
Risk Risk Risk Minimization Measure
Annex 1, cell "from Outputs to Objective"
PROST will prove less user friendly than M 3-4 MPAS based staff will be intensively
originally expected and adaptation will be trained in PROST and Visual Basic and
cumbersome, especially for weaker states\. given travel budget so that they can assist
individual states\. A first adaptation of
PROST for Brazil will be made prior to
training State participants\. Completion of
PROST pilots for the INSS system and
Parana State are contemplated prior to start-
up\. An ample supervision budget has been
provided to ensure that Bank experts can get
involved as needed Phase #1 workshops are
planned\.
Inadequate quality control will result in poorly M Training will emphasize quality\. The MPAS
trained state participants, unsound assumptions TU will vet participants, TORs, and results
and questionable simulations; the Bank's name of diagnostics and reform proposals
will be invoked in support of unsound proposals (successful completion are Project
especially as PROST is a Bank product conditions) as well as provide technical
assistance at each step\. Consultants will be
funded for each state in each phase\. An
adequate supervision budget will be
provided to ensure Bank experts participate
and adequate quality control is being
exercised\.
States will complete Phase #1 diagnostics but M PROST's robustness, demonstrated during
will be reluctant--for stakeholder/political the diagnostic phase, plus the offer of
reasons-- to undertake serious Phase #2 funding for consultant help should be strong
elaboration of reform proposals and subsequent inducements to complete Phase #2\.
institutional steps required to implement Workshops and dissemination will be part of
pension reform\. Ownership will be lacking\. campaigns to build a reform constituency\.
States will delay moving into Phase #3 owing M As part of the Project the Govemment and
to lack of Project support, timing, and Bank are required to come up with a next
uncertainty regarding how to address large step proposal that could be a second LIL for
funding obligations\. Phase #3 or other intervention\. The Bank
ESW proposed for "best practices" in
dealing with transition costs and the Project
studies on "best practices" in pension
management will lead the way\.
-13-
Start-up will be delayed owing to (i) the S Government officials think signing and
political cycle and/or weaker states taking more effectiveness prior to October would be
time to move through Phase #1, and (ii) lackc of unlikely\. Hence, if retroactive finance is
retroactive finance to train "trainers" in MPAS forthcoming, this interim will need to be
technical unit\. used judiciously to train "trainers" at MPAS\.
EDI and retroactive finance should be
available courses for state officials must be
ready for January-February of next year;
smaller components that can be initiated
sooner such as studies, preparation of
bidding documents for computer packages,
studies, and for Phase #1 contracting of
consultants will be done during this period
Government Decrees 2451 and 2384 limiting M These decrees have just been lifted for FY98\.
expenditures for consultants and training will Main expenditures will begin in CY99 and
constrain project implementation care must be taken that similar decrees are
not promulgated in CY99\.
Annex 1, cell "from Components to Outputs" The MPAS technical unit has 3 years to
prove to the States and MPAS that it can be
MPAS permanent technical unit will not M of use for liaising and monitoring state
continue beyond the Project period owing to pensions, providing technical assistance, and
budget constraints, state reticence, lack of legal as a repository of PROST knowledge,
mandate organizer of workshops and forums for
exchanges and disseminator of information
on pensions\. The administrative order
creating the unit has been prepared by
MPAS\.
States' permanent pension units will not M The Project has 3 years to prove the wisdom
continue beyond the Project period in the of having such units\. The diagnostic and
desired, strengthened form\. elaboration of reforms should help to
consolidate understanding of the scope and
importance of professional units\.
Cost under (over) estimate of work to be M The Project does not permit detailed analysis
financed under Phases #1-2 of likely consultant costs on a state-by-state
basis during preparation\. Flexibility will be
maintained to allow for reallocations as
needed\. Given assumptions, cost under runs
are far more likely\.
Overall Risk Rating M This is mitigated by the fact that loan size is
only $5 million\. If the Project is not
working funds can easily be reallocated
between Phases or the Project can be
scrapped and a new effort begun if justified\.
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)
- 14-
3\. Possible Controversial Aspects:
Pension reform is controversial and there are many and vocal stakeholders as witnessed by the Government's recent
defeat in Congress on the Constitutional Amendment component dealing with age/eligibility\. The Bank is NOT
proposing any model or specific action--it is up to the States to diagnose their situation and elaborate proposals\. The
Project's dissemination components will ensure stakeholders become aware of the work in progress and are heard\.
Controversy is inevitable\. But one of the Project objectives is to disseminate findings in order to build a
constituency for reform\.
G: Main Loan Conditions
Note thatf the MPAS Technical Unit will provide a technical opinion to the PCU regarding whether the
conditions described below have been satisfactorily fulfilledI The PCU will render the final judgement
regardingfulfillment of all conditions\.
Effectiveness Conditions\.
1\. MF will formally establish the Project Coordinating Unit
2\. MPAS will create and operationalize a Technical Unit with qualified staff nominated for training and
an adequate budget to carry out its work\. This unit will:
(a) support Project implementation through vetting technical work, providing technical assistance
and organizing work shops, monitoring state pension data, etc\.,
(b) present a work and financial program for carrying out the attributions of the Technical Unit,
(It is expected that MPAS will constitute a permanent unit with these attributions by the end of
the project period\.)
3\. MF will finalize a Bank approved agreement ("convenio") with the MPAS regarding its Project roles
and responsibilities\.
4\. MF will elaborate a Bank approved model agreement ("convenio") that states must enter into in order
to participate in the Project\. This agreement will require states, inter alia, to
(a) Follow the conditions and procedures set out in the Operational Manual
(b) Elaborate and adhere to a work and financial program that will ensure successful participation
in the Project and that has been vetted by the MPAS TU and demonstrate that adequate resources
exist to carry out these programs\.
(c) Faithfully complete the requirements set out in each phase of the Project phases entered into
including contracting of appropriate consultant support, producing and disseminating (including
thlrough workshops) reports on findings, identifying appropriate staff for Project training and
participation in workshops and other Project activities\.
(d) Establish and maintain a project executing agency that could be a part of the state pension
agency and that would require a Coordinator and staff responsible for financial administration
and technical implementation of the Project\.
(e) Indicate two employees who are qualified to receive and use the training that will be provided
and who are state civil servants\.
(f) Incorporate by the end of Phase #1 (and as a condition for moving into Phase #2) Project
trained staff and Project computers and software formally into the state agency responsible for
administering pensions\.
(g) Formally establish, by the conclusion of Phase #2 (and as a condition for moving into Phase
#3) a permanent state pension agency duly constituted with appropriate mandate, staffing
('including Project trained staff), resources (including Project provided hardware and software)
and budget to effectively manage pensions and pension reform\.
(h) Be participating in the "Programa Nacional de Apoio a Administracao Fiscal para os Estados
E3rasileiros" (an IDB loan) with satisfactory implementation performance\.
(i) Retum a completed survey questionnaire\.
(jj) Agree to the sharing of data and infornation with MPAS on the state's pension system\.
-15 -
(k) Be eligible to receive federal on-lent funds in accordance with existing legislation covering
"inadimplencia", INSS and FGTS obligations\.
5\. Financial Management\. The PCU will fully implement all Bank recommendations regarding financial
systems, organization, and management\.
6\. Operations Manual\. The PCU presented a draft of a Bank approved manual at negotiations and it will
be finalized prior to effectiveness\.
Other (Note that conditions will be elaborated in the "convenios " and Operations Manual)
1\. Approval of First Disbursement Undler Phase #1\. In order for states to receive the first
disbursements under Phase #I they shall have concluded "convenios" with the Ministry of Finance and
continue to satisfy all of the relevant requisites set out in the "convenios"; they will also have established
their TUs\.
2\. Approval to Pass from Phase # 1 to P'hase #2\. In order for states to proceed to Phase #2, they
must continue to satisfy the agreements set out in the "convenio" and the conditions required for the First
Disbursement\. In addition, they must have successfully completed all of the requirements for Phase #1
which will include, inter alia, the following unless waived by the PCU
(a) Have produced a 'clean' data sample adequate for extracting demographic data for use in
PROST and/or any other simulation software in use;
(b) Have 2 staff who have completed Project training in pension reform and PROST;
(c) Have received and made operational the Project package of computer hardware and software
and PROST;
(d) Have participated in all of the PFroject sponsored workshops organized by the MF (PCU) and
MPAS (TU);
(e) Have successfully carried out a diagiiostic of the pension system using PROST or whatever
other pension software in use so long as it is vetted by the TU;
(f) Have satisfactorily disseminated a report of the results to stakeholders and conducted a
workshop to transmit and debate the results;
(g) Have incorporated Project trained staff and Project provided hardware/software into the state
pension management unit\.
(h) Continue to share state data with MPAS as needed\.
3\. Approval to Passfrom Phase #2 to Phase #3\. On an exceptional basis, advanced states will be
supported in their Phase #3 efforts to design an institutional framework\. It should also be noted that some
part of this work may need to be included in the Phase #2 activities, in which case they will be funded
under Phase #2\. In order to pass to Phase #3, states will need to have satisfied or continue to satisfy all
previous conditions set out in the "convenios", and the conditions for First Disbursement and for passing
to Phase #2\. In addition, states will have satisfied the following conditions unless waived by the PCU
(a) Have used PROST and/or other accepted methodologies to design a satisfactory reform
proposal that has been vetted by the MPAS TU with regard to simulations of critical parameters
and other technical requirements;
(b) Have satisfactorily disseminated the Phase #2 results and proposal and convened a workshop
so that stakeholders will have ample opportunity to debate the findings
(c) Have a legally established, perrnanent state pension entity with appropriate mandate, staffing
(including Project trained staff), resources (including Project provided hardware/software) and
budget to administer the pension system and reforms\.
Note that funding for Phases #1-2-3 has been budgeted predicated on 25, 22, and 7 states qualifying
respectively\. The Borrower, together with ithe Bank, may reallocate funding between phases and
activities in accordance with what will best meet project objectives as befits a LIL\.
H\. Readiness for Implementation
[NA ] The engineering design documents for the first year's activities are complete and ready for the start
-16 -
of project implementation\. [x ] Not applicable\.
[ok ] The procurement documents for the first year's activities are complete and ready for the start of
project implementation\. Procurement will be relatively simple\. The intention of the Bank and
Government at this point is that the TORs and short lists for the studies be prepared as a condition of
effectiveness\. Also, model procurement documents will be preparedfor the states so that they can
contract the work required to upgrade a sample of the data base\. Finally, the training course will be sole
source owing to its uniqueness\. Arrangements for a January-February training course are underway and
will almost certainly involve EDI and Bank staff\.
[ok I The Project Implementation Plan has been appraised and found to be realistic and of satisfactory
quality\.
[ I The following items are lacking and are discussed under loan conditions (Section G):
I\. Compliance with Bank Policies
I] This project complies with all apple Bank policies\.
[signature] 6kfL44, V(L
Task Team Leader/Task Manager: Chris Parel
[signature]
Acting Country Director: Patricio MilIl;
-17 -
Annex 1
Brazil: State Pension Sysl:ems ReformTechnical Assistance Project
Project Design Summary
Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions
Sector-related CAS Goal: (Goal to Bank Mission)
To improve the fiscal - At least 15 states vill TM and PCU will monitor States will complete
situation of state complete Phase #1 and 10 these basic data Phases #1 and #2 and this
governments through states will complete FPhase will provide the necessary
pension reform #2 impetus to implement
pension reforms;
- Studies of complementary idem
legislation and pension Findings and study
management 'best practice" recommendations will
completed plus Bank ESW influence implementation
on financing reform and
\.'portability" \.
Project Development (Objective to Goal)
Objective:
A\. States
1\. Establish permanent and Decrees formalizing units TM and PCU aided by Trained staff will remain in
adequately resourced where they don't exist; MPAS Technical Unit will the state units and
pension units strengthening of exisiting monitor using initial survey resourcing and mandate will
units through addition of LIL to benchmark continue beyond the period
trained personnel and of the LIL
computer equipment
idem; also that new
2\. Train 2 officials/state in 2 officials/state complete idem employees can be trained to
PROST/simulations and Phase #1 training and the same levels after the LIL
pension reform participate in workshops ends through MPAS
intervention
3\. Diagnose and Diagnostic satisfactorily MPAS Technical Unit will States will have the capacity
disseminate/ debate current completed, report published determine whether to contract and manage the
state pension situation in and disseminated, diagnosis and dissemination effort to upgrading of
Phase #1 and build workshops held in states to is satisfactory sample data basis and carry
constituency for reform disseminate and debate out the diagnosis using LIL
results trained officials, consultants,
and MPAS and Bank
technical assistance; results
aptly disseminated will build
reform constituency despite
vested interests\. Some
states may need more
resources for this work
4\. Elaborate and Technically sound pension
disseminate/ debate reform proposal is idem idem for Phase #2 and #3
pension reform proposal in elaborated and
Phase #2 and on an disseminated and results
exceptional basis Phase #3 debated
institutional framework
proposals
B\. Federal Government Permanence of unit and
Establishment of pernanent TM, PCU, MPAS Technical mandate; Government &
5\. Permanent, adequately unit with appropriate Unit states will agree on
resourced and trained mandate and resources; desirability of such a unit
MPAS unit to monitor and number and training of staff
provide technical assistance
to states
Dissemination of best
6\. Improved sub national Eventual improvement in MPAS Technical Unit practice will result in Federal
pension fund management legislation and management or state
of pension funds legislation/regulatory
changes despite vested
interests, inertia
7\. Satisfactory Complementary legislation MPAS Technical Unit Passage of Constitutional
Complementary Legislation adopting study Amendment and adoption
making use of international recommendations of Project study
best practice\. recommendations
8\. Clarity on Federal Government adopt a
pension obligations to states position vis-a-vis obligations PCU/MPAS Long standing problem will
based upon study findings eventually be solved despite
cost
Outputs: (Outputs to Objective)
States
Phase #1
1\. State pension units Decree, and MPAS TU/PCU Sustainability
formalized/strengthened operationalization
2\. 2 officials/state LIL Officials trained MPAS TU/PCU Turnover can be countered
trained by training new employees
Technically sound diagnosis MPAS Technical Unit States can manage
3\. State pension diagnosis & in states; exercise; good will in
dissemination/debate dissemination/work shops dissemination
Phase #2
4\. State pension reform Technically sound proposal; MPAS Technical Unit idem
proposal & dissemination/ dissemination & workshops
debate
Federal Government
1\. Permanent MPAS Decree; operationalization PCU, MPAS Technical Unit Sustainability
Technical Unit with with adequate resourcing for
adequate resourcing 3-4 staff
Study dissemination can
2\. Pension fund Study completed and MPAS Technical Unit build sufficient constituency
management improvement disseminated; actual change despite vested interests
influenced by study results in legislation, management,
& dissemination regulation;
Passage of adequate
Study cornpleted; MPAS Technical Unit Constitutional Amendment
3\. Complementary Complementary Legislation
legislation incorporates study
incorporates study proposals
proposals
Study completed; Ministries PCU, MPAS Technical IJnit Competent study
4\. Clarity on Federal clear on obligations
pension obligations to
states\.
- 19 -
Project Components/Sub- Inputs: (budget for each (Components to Outputs)
components: component)
Unclear whether a
1\. 3-4 MPAS Technical Unit $550,760 (includes training MPAS TU consultant will need to be
based staff trained in in US) contracted or Technical Unit
PROST and Pension based staff will all be
Reform with resources to MPAS/seconded
assist states reform efforts Government staff which
a\. Training would result in savings;
b\. Travel budgets
Phase #1
2\. Training of 2 $600,000 for 50 trainees MPAS TU vets qualifications Some training might be in
officials/state plus Brazil if feasible and cost
workshops effective
a\. Training
b\. Travel
$375,000 (1 workshop in MPAS TU vets diagnostic, The assumption of 25 states
3\. Workshops each of 25 states + dissemination plan and is likely optimistic
dissemination + 2 MPAS organizes 2 workshops
workshops
The assumption of 20 states
4\. Consultancy for $2,200,000 (22 states @ PCU/MPAS vets terms of is untested and may be
upgrading a sample of $100,000) reference, price optimistic
pension data base for use in
generating actuarial data MPAS TU vets states
$530,000 (25 beneficiaries procurement
5\. Hardware & software @ $20,000)
packages
$76,800 MPAS TU manages
6\. Technical assistance
from MPAS Technical Unit--
travel and per diems
$125,000 PCU
7\. Air fare for State officials
being trained in US
$85,600 PCU/MPAS TU 22 beneficiaries untested
8\. Workshops organized by and may be optimistic if
PCU/MPAS fewer than 22 states
complete this phase costs
Phase #2 will be reduced
$2,200,000 (22 beneficiaries MPAS TU vets TORs, cost
1\. Consultancy for @ $130,000)
elaborating a pension
reform proposal
$370,000 MPAS vets proposal and
dissemination campaign;
2\. Dissemination and organizes own work shops
Workshops--one in each
state and two organized by
MPAS $76,8000 MPAS TU manages
3\. Technical assistance
from MPAS Technical Unit--
travel and per diems
-20 -
Phase #3
1\. Consultancy for $1,050,000 (7 states) PCU/MPAS TU vets TOR, 7 states may be optimistic
elaborating institutional cost, PCU approves
framework
2\. Workshops--one in each $187,400 MPAS TU vets dissemina-
state and 2 in Brasilia tion proposals; does own
workshops
3\. Technical Assistance $13,300 MPAS manages
from MPAS Technical Unit--
travel and per diems
Studies
1\. Complementary $116,000 (includes MPAS TU does
Legislation dissemination @$20, 000) TOR/manages; PCU
approves
2\. Federal/State Pension $200,750 MPAS TU & STN do
Obligations TORs/manage; PCLI
approves
$116,000 (includes MPAS does TOR/manages;
3\. Management of Pension dissemination @ $20,000 PCU approves
Funds
4\. Publication of prior $20,000 MPAS TU/PC
workshop results on models
Supervision
PCU Supervision Costs for $162,000 (one employee @ PCU manages
3 years $4,500/month)
-21 -
Annex 2
Brazil: State Pension Systems Reform Technical Assistance Project
Project Description
Project Component 1 - US$ 0\.6 million (total cost of component)
Phase: Start-Up
* Contract and train MPAS TU based trainers/consultants who will provide technical assistance on PROST and
pension reform to states
* Adapt PROST to Brazilian reality and translate PROST materials\.
Project Component 2 - US$ 7\.8 million (total cost of component)
Phase #1
* Train Federal and state employees in pension management and reform and in PROST
* Upgrade sample state social security data bases in order to extract actuarial data for simulations
* Provide consultant support to assist states complete a PROST/simulation diagnosis of their current pension
system
* Convene workshops for Project participants to exchange experiences, discuss issues, and hear of best practice
* Disseminate results and convene workshops in each state in order that stakeholders can learn about and
debate diagnostic results
* Provide hardware/software packages to ensure adequate and dedicated computer equipment available\.
Phase #2:
* Provide consultant support to assist states complete simulations and develop pension reform proposals
* Convene workshops for Project participants to exchange experiences, discuss issues, and learn of best practice
* Disseminate results and convene workshops in each state in order that stakeholders can learn about and
debate proposals
Phase #3:
- Provide consultant support to assist a few states complete design of an institutional framework to implement
Reform proposals
* Convene a workshop for Project participants to exchange experiences, discuss issues, and learn of best
practices
- Disseminate results and convene workshops in each Phase #3 state in order that stakeholcders can learn about
and debate proposals
Project Component 3 - US$ 0\.7 million (total cost of component)
Government Activities
* Studies & dissemination: (i) complementary legislation for the constitutional amendment, (ii) best case
Pension fund management, (iii) Federal pension obligations
* Dissemination of International Workshop results
* Design of an information system linking MI'AS with states' pension data bases
* Supervision, under the PCU, of Project transactions
Contingency - US$0\.9 million
PROJECT IMPLEMENTATION PROGRAM
The following reflects how the World Bank project team and Brazil PCU will manage critical events on the critical path with focus on start-up and Phase #I which will account for
the first 1-1/2 to two years\.
Critical Path Event Proposed Event Management Responsible
1\. Send the head of MPAS TU to the Harvard/EDI EDI will finance the $8,500 registration; MPAS will finance air fare and MPAS and Bank
pension seminar incidentals
2\. Train intensively 2 TU staff in July/August in EDI will finance; Bank is responsible for arranging Bank Bank will arrange for training
PROST/Visual Basic staff/consultants to train TU staff--work in progress\. MPAS has program
identified staff\.
3\. Train intensively 2 additional TU staff in This may not occur prior to project effectiveness owing to limitations on Bank will arrange training
PROST/Visual Basic retroactive and Bank sourced finance\. MPAS will need to identify and program\.
incorporate these staff into the TU team\.
4\. Develop training course (pension theory/reform EDI is task managing this task\. The program is planned for Jan\.-Feb\., Bank; EDT task management;
and intensive PROST) for an estimated 30-40 state 1999\. This course may be given in conjunction with Wharton\.
pension officials\.
5\. Pre Effectiveness Activities All of these activities will need to be prepared in the period July- Bank, PCU, TU
A\. Finalize and distribute Operational Manual November since Loan Effectiveness is expected around end Nov\. and
to states training of the first states' cohort should be Jan-Feb\. Hence the MPAS
B\. Identification of states' participants in the UT, PCU, and Bank Team will need to develop and distribute materials
training course and urge states to prepare for Effectiveness, at which time they would
C\. Prepare state "convenios" for signature provide the necessary documentation to qualify to participate in the
D\. States develop Work Programs Project\.
E\. States formalize Technical Units
6\. Translation of training materials To be determined\. These materials will be required for the Jan\.-Feb\. Bank and the PCU will need
training program to manage this
7\. State agreements/'convenios' with MF MF will elaborate model 'convenios' and in the period July-November MF will do this\.
establishing conditions for state participation in the will formalize them with states (subject to any electoral cycle or other
loan judicial restrictions)
8\. Hire or transfer MPAS staff required for the (i) MPAS has identified two civil servants and is arranging to have them MPAS
MPAS TU seconded to MPAS for the duration of the project\.
(ii) MPAS will need to identify two consultants: an actuarial/pension
expert and an information technology specialist by Loan effectiveness--
they will need to participate in the January-February training program\.
9\. Complete the MF PCU team and systems
a\. Satisfy the Bank's financial management A qualified Bank staff has already diagnosed the PCU's financial The PCU must finalize
requirements as a condition of effectiveness and management program and required certain things to be done\. Follow-up systems in accordance with
hire a someone to manage loan transactions\. on this will be carried out by the new Brasilia based FM specialist\. Bank requisites\. Bank must
The PCU must identify a consultant to supervise loan transactions during assist the PCU and verify that
the period prior to effectiveness this work is satisfactorily
completed\.
The PCU/MF will hire the
staff\.
b\. Ensure procurement adequately covered The consultant the PCU will contract in (9-a) above will also be trained in The PCU/MF is responsible\.
procurement
c\. Become proficient in Bank disbursement Morag van Praag will work with the PCU in June and the CMU based The Bank will provide
procedures and regulations disbursement specialist will continue to support this effort\. Competence technical assistance\. the PCU
in Bank disbursement procedures must be attained by Effectiveness\. It must operationalize\.
must be functioning properly for the critical training course component to
be completed in Jan-Feb, 1999\._
10\. Initiate procurement operations A\. Studies\. TORs and short lists should be nearly completed or MPAS is responsible for all
completed by effectiveness for the three studies (i) complementary three studies although the
legislation, (ii) best practice in pension regulation and management, and financial aspects of the third
(iii) Government pension obligations to states and municipalities\. study are to be managed by
Depending upon progress of the Constitutional amendment, (i) should be the MF\.
initiated very soon\. __ _
B Hardware/Roftware- Daeniinn on hnw this will be procured arnd MF needs to tAke +\.he lead\.
preparation of bidding documents should be readied by effectiveness\. The Bank will need to assist
with bidding documents and
the specs of required
hardware/software\.
C\. Upgrading Data Bases\. The PCU and MPAS mus resolve whether MF must take the lead\.
this will be centrally procured or decentralized to the States\. A model
contract based upon work done in Parana will need to be updated and
adapted\. How this work will be carried out in the states needs to be
resolved\. The participation of MARE and others needs to be explored to
verify if an upgrading of the data base in every state is feasible\. The data
base upgrade will take at least 6-8 months and must feed into the
diagnostic\.
DETAILED PROJECT COMIPONENT ACTIVITIES AND COSTS
Activity Description Cost Explanation Cost Total Cost
Calulation
I\. Start-up: Training MPAS Retroactive finance may be required
TU StaI\.
1\.1 Air Fares 1 economy class Brasilia-Boston-Brasilia $2,500x3 for fares 3x$2,500 $7,500
2 economy class fares Brasilia-Washington-Brasilia
1\.2 Per Diems 28 days in Washington for 2 TU staff $210/day ($150 for hotel 28x2x$210 $11,760
and $60 for per diem)
1\.3 Training Programn Harvard/EDI course on pension theory/reform from $8,500 $8,500 $8,500
July 6-17 in Boston for head of UT
Intensive training for 2 TU Duration of about 4 weeks in July-August
staff in PROST in
Washington
1\.4 Bank Staff/Consultants A number of Bank staff and Bank consultants will The estimated total cost $10,000 $10,000
likely be involved in training for 4 weeks would be
$10,000
1\.5 Miscellaneous Miscellaneous costs associated with training $1,000 $1,000 $1,000
Administrative Costs
Sub-Total $38,760
II\. Additional
Strengthening of TU &
Training for MPAS TU
Staff
11\.1 Actuarial Consultant Contracting 1 actuarial consultant to assist the states I consultant x 3 years x 1 x 36 x $288,000
and the MPAS for 3 years with state diagnostics and $8,000/month $8,000
simulations
11\.2 Consultant in Contracting of one specialist in MIS and programming I Consultant x 3 years x $162,000 $162,000
Informatica to design, implement and maintain an integrated data $4,500/month
bank of state pension data and to assist in
PROST/Visual Basic programming for states
11\.3 Translation and Translation of roughly 200 pages of English text on Estimated $15,000 $15,000 $15,000
reproduction of materials PROST/pensions to Portuguese
11\.4 Continuation of training EDI is designing a 3 week training course in pension 4 TU staff at an estimated 4 x $12,000 $48,000
reform and intensive PROST that may include Wharton\. $ 12,000/staff
Likely date is Jan-Feb\. 1999
11\.5 Air Fare Air fare for EDI training 4x$2,500 4x$2,500 $10,000
11\.6 Repeat of intensive Similar to training provided in (I) above for up to 3 (Items 11\.7-11
PROST training in weeks; note that these expenses may be reduced or may be
Washington for 2 more TU eliminated through training in Brasilia eliminated or
staff I_I I I reduced)
11\.7 Air Fare Economy class Brasilia-Washington-Brasilia for 2 TU 2x$2,500 2x$2,500 $5,000
staff
II\.8 Per Diem 28 days @ $210/day 2x21x$210 2x21x$210 $11,760
II\.9 Bank Staff/Consultants Bank staff and consultants will provide intensive Estimated at $10,000 $10,000
PROST training of up to 4 weeks $10,000/month
11\.10 Gastos administrativos $1,000 $1,000 $1,000
Sub-Total $550,760
III\. Phase #1 The first, 'diagnostic' phase of the PARSEP program
for state officials
III\.I Training of State Training of 1-2 staff (assume 2; excluindo AC, RR, RO 2 trainees x 25 states x 2x25x$12,00 $600,000
Officials but including DF, MARE) $12,000 estimated cost 0
(Note that course costs
and participants may be
significantly reduced)
111\.2 Air Fare Round trip economy class air fares to Philadelphia or 2 x 25 x $2,500 $125,000 $125,000
Washington including domestic Brazilian fares
111\.3 Data Base Upgrading States will contract actuarial consultants to assist in this 22 x $ 100,000 $2,200,000 $2,200,000
-ork;
assume $100,000/state;
(SP, PR, MARE will not t M
need) Lu
III\.4 Air fares and per Once the data base upgrade is done TU staff will assist 23 states, 2 visits /state, 2x2x8x(600+ $76,800
diems for technical states to perform diagnostics using PROST/simulation each trip including 3 states 12x150)
assistance by MPAS TU models and average air fare of
staff $600 plus 12 per diems of
$150
III\.5 Brasilia Workshops 2 MPAS sponsored workshops for the States to 2 meetings x 2 state 2x2x23x($50 $85,600
exchange experiences on actuarial, diagnostic and participants x 23 states 0+2x$15) +
reform experiences with outside experts (except DF, MARE) x 2x$6,000
(air fare of $500 + 2 per
diem @ $150) +
specialist(s) @ $6,000
III\.6 Dissemination of 1 workshop/state plus publication and dissemination of 25 states x $15,000/state 25 x $15,000 $375,000
Results results to stakeholder to build constituencies
(in some states larger
efforts may be required)
III\.7 Hardware and Equipment to ensure that state pension agencies have package estimated at 26 x $20,000 $530,000
Software adequate resources to implement PARSEP and carry $20,000 for 23 states plus + $10,000
out pension work: 2 computers, a printer, plus software MARE, MPAS, DF +
10,000 for MPAS laptops
for TU staff
Sub-Total $3,922,400
IV\. Phase #2 Simulations and reform proposal =____
IV\. I States contract Consultants will help with simulations and design of 22 states @ $100,000/state 22 x $2,200,000
consultants reform proposals $100,000
IV\.2 Brasilia Workshop One national workshop for states to exchange Half of 111\.6 above as lx2x22 $41,200
information on experiences and get help on technical there will be only one ($800) +
issues firom pension experts; assumes 22 states workshop $6,000
IV\.3 Dissemination One workshop/state plus publication and dissemination 22 states x 22 x $15,000 $330,000
of simulation results and the proposal $15,000/dissemination
campaign; it may be
necessary to increase this
in some states
IV\.4 Air Fares and Per TU staff will assist states in adapting simulation 2 TU staff; 2 visits/state; 2x2x8(600+ $76,800
Diems for MPAS TU models/PROST and simulating reforms each visit includes 3 states 12x150)
Technical Assistance with air fare of $600 and
12 per diems @ $150
Sub-Total $2,648,000\.00
V\. Phase #3 Design of institutional frameworks to support reforms
V\.1 Contracting An estimated 7 states will advance to this phase and Consultants estimated ( 7x $150,000 $1,050,000
Consultants will require consultant support $150,000
V\.2 Brasilia Workshop One MPAS sponsored workshop to explore and discuss Same as IV\.2 lx2x22 $41,200
institutional framework with participation of expert(s) ($800)
+$6,000
V\.3 Dissemination One workshop/state plus publication and dissemination 7 states x 7x$15,000 $105,000
of proposals $15,000/dissemination
campaign; it may be
necessary to increase this
in some states
V\.4 MPAS TU Technical The TU will also assist states during this phase and will 2 TU staff, I trip/state; 2xlx7x $13,300
Assistance require air fares + per diems with air fare @ $500 + 12 ($500 +
per diems @ $150 3x$150)
V\.5 Wrap-Up Workshop A wrap-up workshop will review the experience of idem V\.2 lx2x22($800 $41,200
PARSEP, evaluate results and propose next steps ) + $6,000
Sub-Total $1,250,700
VI\. Government Activities Studies and Implementation Support
VI\. I Study # 1- Contracting a Brazilian specialist(s) to elaborate a study I Consultant x 12 months lxl2x$8,000 $116,000
Complementary Legislation of complementary legislation required to operationalize x R$8,000/month + + $20,000
the Constitutional Pension Reform amendment Dissemination of $20,000
VI\.2 Study #2--Pension Contracting one consultant(s), national or international, I consultant x 12 months lx12x$8,000 $116,000
Fund Management to study best practices in pension fund regulation and x R$8,000/month + $20,000
management
Dissemination of $20,000
VI\.3 Study #3-Federal Contracting two consultants (?) to study financial 2 consultants x 12 months 2x12x$8,000 $192,000
Compensation Obligations compensation obligations between the INSS and the x R$8,000/month
States and Municipalities and ways of financing them; 1
consultant for MF and 1 for MPAS
VI\.4 Travel Air fare and per diems for the consultants who will do 5 trips for each consultant (5x2x$500) + $8,750
the studies @ $500 and 2\.5 per diems (2\.5x5x2x$l
valued at $150m for each 50)
trip
VI\.5 Publication of Prior Publication and dissemination of the results of the $20,000 $20,000 $20,000
Seminar Results International Workshop on "Modelos de Projecoes e
Simulacoes"
VI\.6 Financial Financing of a PCU staff to administer loan transactions lx36 months x $4,500 $162,000 $162,000
Management/Procurement and procurement for 3 years
-PCU
Sub-Total $614,750
Swh-Total Itfmc l_VI Sinh-Tota SlE 9e-37n
___ _ _ \. ~~~~~~~~~~~~~~~~~~~~~~Items I-VI|
Contingency Contingency $904,630
(9%) G
Grand Total Grand Total $10,0000,000
-28 -
Annex 3
Brazil: State Pension System Reform Technical Assistance Project
Estimated Project Costs
Project Component Local Foreign Total
-----------------------US $ million--------------------
Start-Up and Training of MPAS Technical Unit Staff 0\.4 0\.2 0\.6
Phase # --Training, Diagnostic, Workshops, 2\.9 1\.1 4\.0
Dissemination, Computers
Phase #2--]Pension Reform Proposal, Dissemination and 0\.0 2\.6 2\.6
Workshops-
Phase #3--institutional Framework Proposal, 0\.7 0\.6 1\.3
Dissemination and Workshops
Government Studies, MPAS/States link, Supervision 0\.6 0\.0 0\.6
Contingency
Total 4\.6 4\.5 9\.1
Total Baseline Cost
Physical Contingencies
Price Contingencies 0\.4 0\.5 0\.9
Total Project Cost 5\.0 5\.0 10\.0
-29-
Annex 6
Brazil: State Pension System Reform Technical Assistance Project
Procurement, Disbursement, and Accounting/Auditing Arrangements
I\. Procurement
1\.1 The procurement of project components financed by the Bank loan, would be in accordance with the Bank
Guidelines for Procurement of Goods and Works, (January 1995, revised January and August 1996 and September
1997) and the Bank Guidelines for the Use of Consultants (January 1997, revised September1997)\.
1\.2 Procurement of Goods: There would be only one contract, costing only US$350,000 or more, for the
procurement of computer hardware and software\. It would be awarded through Intemational Competitive Bidding
(ICB) procedure\. Although not envisaged, there may be a need to procure during project implementation some items
costing less than US$350,000 per contract but more than US$100,000, under national competitive bidding
procedures (NCB), and some items costing less than US$100,000 that would be procured on the basis of
national/international shopping procedures from at least three eligible suppliers\. There would be no Works to be
procured under this project\.
1\.3 Selection of Consultant Services: consultant services worth more than US$100,000 would be selected in
accordance with Quality-Cost-Based Selection procedures (QCBS)\. Contracts for simple assignments not exceeding
the equivalent of US$100,000 may be awarded following Least Cost Selection procedures (LCS)\. Individual
consultants would be selected based upon their qualifications\.
1\.4 The Bank's Procurement Review\. Prior Review\. The Bank will review ex-ante the ICB bidding documents for
the procurement of goods estimated to cost more than US$350,000 and the first contract under NCB\. The Bank
would also review ex-ante, all documentation for the selection of consultants (short lists, letter of invitation, contract
forms, terms of reference etc) of contracts estimnated at more than US$100,000 for firms and US$50,000 for
individuals\. Prior review of terms of reference would be required for contracts estimated at less than US$100,000 for
firms and less than US$50,000 for individuals\. Popst Review: All procurement documentation, including that related
to contracts not subject to prior review would be kept by the Borrower for ex-post review by the Bank according to
Bank Guidelines\.
1\.5 The Borrower is planning to administer and implement part of the project under the auspices of the United
Nations Development Program (UNDP)\. This agency will help to enhance the local institutional capacityand take
care of some complex procurement\. In addition, the Project Coordination Unit (PCU) would hire a procurement
specialist to expedite project implementation\. The administrative expenses for the PCU, including UNDP fees,
would be financed by the Borrower\. Table A, shows-Project Costs by Procurement Arrangements, Table Al, Project
Costs by Consultant Selection Arrangements and Table B, Thresholds for Procurement Methods and Prior Review\.
H\. Disbursement
2\.1 Allocation of loan proceeds: The proposed Bank loan would be disbursed over a period of three years\. The last
disbursement will be incurred thirty six months after the contract signing date\. The closing date of the project is
expected to be no later than six months after the last disbursement\. The allocation of loan proceeds by project
component is shown in Table C\.
2\.2 Use of Statements of Expenditures: Disbursements would be based on Statements of Expenditures (SOEs) for:
(a) all goods contracts valued below US $350,000 (except the first contract awarded under NCB procedures); and (b)
consultant services valued below US $100,000 for firms and US $50,000 for individuals and (c) training
expenditures\. Documentation supporting SOEs would be retained by the PCU and made available for examination by
Bank staff as requested\. All other disbursement requests would be accompanied by full documentation\.
- 30 -
2\.3 Special Account: A Special Account will be established to cover expenditures paid directly by the Borrower,
with an authorized allocation of US $0\.5 million\. The authorized allocation would be sufficient for approximately
four months of financeable expenditures\. The Special Account would be managed by the PCU which would be
responsible for preparing disbursement requests\. These requests would be submitted monthly or when the Special
Account has been drawn down by a third of the initial deposit, whichever occurs first\.
2\.4 Retroactive Financing: At negotiations, the need for retroactive financing of up to US $ 100,000 was reviewed
and agreed for eligible expenditures incurred between June 1, 1998 and the loan signing date\. Retroactive financing
is recommended to allow for Bank financing of expenditures which have been incurred since the Project was
identified\.
HI\. Accounting and Auditing
3\.1 The Project Coordination Unit (PCU) would maintain the accounts for the project and would be accountable for
funds allocated for the different investment categories for the project execution\. lThese accounts would be maintained
in accordance with sound accounting practices, acceptable to the Bank\.
3\.2 Accounts, including the Special Account and related financial information (including supporting documentation
for the SOEs), would be audited annually by an independent auditor acceptable to the Bank, in accordance with Bank
auditing guidelines\. Certified copies of the audited consolidated project accounts and audited Special Account
(including a separate opinion on the use of SOEs) would be submitted to the Bank no later than six months after the
close of the fiscal year\.
-31 -
Annex 6, Table A: Project Costs By Procurement Arrangements
Expenditure Category Procurement Method Total Cost
(including
ICB NCB Other 1/ N\.B\.F 2/ Contingencies)
1\. Works --
2\. Goods* 530,000 --- -- 530,000
(530,000) -- -- (530,000)
3\. Consulting Services --- 6,344,000 -- 6,344,000
Firms ---*-- 894,000 --- 894,000
(136,000) (136,000)
Individuals -- --- 5,450,000 --- 5,450,000
(3,250,000) (3,250,000)
4\. Training 4/ ---- 824,000 --- 827,520
(824,000) --- (827,520)
5\. Administration - -- --- 179,000 179,000
6\. Miscellaneous 3/ --- --- 2,119,480 --- 2,119,480
(260,000) --- (256,480)
Total 530,000 --- 9,291,000 179,000 10,000,000
(530,000) --- (4,470,000) --- (5,000,000)
Figures in parenthesis are the amounts to be financed by the Bank loan\.
1/ Other: includes training and consultants to be selected according to the guidelines "Selection and Employment of
Consultants by the World Bank, January 1997, revised September 1997"\.
2/ N\.B\.F (Not Bank-Financed)
3/ Miscellaneous: includes US$ 904,630 for resources not allocated\.
4/ The Bank loan cannot pay EDI or EDI contracted consultants for training programs; these can be paid from counterpart
funding
* centralized procurement of goods for dispersal to beneficiaries is foreseen\.
- 32 -
Annex 6, Table Al: Consultant Selection Arrangements ( optional)
(in US$ thousand equivalent)
Selection Method Total Cost
Consultant Services \. (including
Expenditure Category QCBS QBS LCS Other Contingencies)
A\. Firms 874 20 894
(136) (---) (136)
B\. Individuais 5,450 5,450
(3,250) (3,250)
TOTAL 874 20 5,450 6,344
(136) (---) ((3,250) (3,386)
Note: QCBS = Quality and Cost-Based Selection
QBS = Quality-Based Selection
LCS = Least-Cost Selection
Other = Selection of individual consultants (per Section V of Consultants Guidelines),
Commercial Practices, etc\.
Figures in parenthesis are the amounts to be financed by the Bank loan\.
- 33 -
Annex 6, Table B: Thresholds for Procurement Methods and Prior Review
Expenditure Contract Value Procurement Contracts Subject to
Category (Threshold) Method Prior Review/
Estimated Total Value
Subject to prior Review
US$ thousands US$ millions
1\. Works na na Na
2\. Goods > 350 ICB All
< 350>100 NCB 1st One
<100 Shopping None
3\. Consulting Services
Firms > 100 According to guidelines All
< 100 According to guidelines TOR Only
Individuals > 50 According to guidelines All
< 50 According to guidelines TOR Only
- 34\.-
Annex 6, Table C: Allocation of Loan Proceeds
Expenditure Category Amount in Financing Percentage
US$ thousands
1\. Goods 530,000 100% of foreign expenditures,
100% of local expenditures (ex-factory ) and
80% of local expenditures for other
Items procured locally
2\. Consulting Services 3,386,000 100%
3\. Training 824,000 100%
4\. Unallocated 260,000
Total 5,000,000
- 35 -
Annex 7
Brazil: State Pension System ReformTechnical Assistance Project
Project Processing Budget and Schedule
A\. Project Budget (US$000) Planned Actual*
(At final PCD stage) 30,000
$30,000
*estimate through end June
B\. Project Schedule Planned Actual
(At final PCD stage)
Time taken to prepare the project (months) 4 4
First Bank mission (identification) 16/03/1998 16/03/1998
Appraisal mission departure 06/06/1998 06/06/1998
Negotiations 22-23/06/1998 22-23/ 06/1998
Planned Date of Effectiveness 11/1998 11/1998
Prepared by: Ministry of Finance
Preparation assistance: None
Bank staff who worked on the project included:
Name Specialty
Chris Parel Country Officer
Indermit Gill Economist
Antonio Magalhaes Economist
Morag Van Praag Finance/Disbursement
Livio Pino Financial Management
- 36 -
Annex 8
Brazil: State Pension System ReformTechnical Assistance Project
Documents in the Project File*
A\. Project Implementation Plan
Included in the PAD
B\. Bank Staff Assessments
Minutes of PCD and "preliminary PAD" meetings
C\. Other
*Including electronic files\.
Annex 9
Statement of Loans and Credits
Status of Bank Group Operations in Brazil
IBRD Loans and IDA Credits in the Operations Portfolio
Difference
Between expected
Original Amount in USS Millions and actual Last ARPP
Loan or Fiscal disbursements a/ Supervision Rating b/
Project ID Credit Year Borrower Purpose
No\. IBRD IDA Cancellations Undisbursed Orig Frm Rev'd Dev Obj Imp Prog
Number of Closed Loans/credits: 206
Active Loans
BR-PE-6414 IBRD 30430 1989 COMGAS, SAO PAULO NTRL GAS DIST 94\.00 0\.00 0\.00 2\.66 2\.64 0\.00 S S
BR-PE-6370 IBRD 30130 1989 FEDERATIVE REPUBLIC OF BR NE IRRI JAIBA 71\.00 0\.00 0\.00 3\.91 3\.92 0\.00 HS S
BR-PE-6446 IZRD 31730 1990 FEDERATIVE REPUBLIC OF BR NAT ENVIRONMT 117\.00 0\.00 0\.00 23\.53 23\.55 0\.00 S S
BR-PE-6453 IBRD 31700 1990 FEDERATIVE REPUBLIC OF BR NE IRRIG I 210\.00 0\.00 69\.00 28\.67 97\.69 28\.69 S S
BR-PE-6473 IBRD 31600 1990 STATE OF SANTA CATARINA LND MGNT II-S\. CATAR 33\.00 0\.00 0\.00 4\.05 4\.04 -1\.94 S S
BR-PE-6492 IBRD 33760 1991 PETROBRAS BRAZI HYDROCARBN TRNSP/PRO 260\.00 0\.00 0\.00 3\.22 3\.22 0\.00 S S
BR-PE-6364 IBRD 33750 1991 STATE OF SAO PAULO INNOV BASIC ED 245\.00 0\.00 0\.00 26\.63 26\.63 0\.00 S S
BR-PE-6505 IBRD 34920 1992 GOVERNMENT OF BRAZIL MATO GROSSO NAT RES 205\.00 0\.00 0\.00 82\.02 82\.02 0\.00 S S
BR-PE-6454 IBRD 34440 1992 GOB RONDONIA NTRL RES\. M 167\.00 0\.00 0\.00 37\.01 37\.00 0\.00 S S _
BR-PE-6368 IBRD 3442S 1992 GOVERNMENT WATER SECTOR MODERNI 167\.88 0\.00 0\.00 \.46 43\.68 0\.00 S S
BR-PE-6368 IBRD 3442A 1992 GOVERNMENT WATER SECTOR MODERNI 69\.62 0\.00 0\.00 43\.23 43\.68 0\.00 S S
BR-PE-6547 IBRD 36330 1993 FED\.REP\.OF BRAZIL METRO TRANSP\. RIO 81\.02 0\.00 0\.00 \.29 27\.32 0\.00 S S
BR-PE-6427 IBRD 36040 1993 MIN\. OF EDUCATION N NE BASIC EDUC II 212\.00 0\.00 0\.00 53\.91 40\.58 0\.00 S S
BR-PE-6540 IBRD 35540 1993 MINAS GERAIS ST\. WTR Q/PLN(MINAS GERA 145\.00 0\.00 5\.00 20\.28 25\.27 -7\.93 S S
BR-PE-6378 IBRD 35480 1993 STATE GOVERNMENTS STATE HWY MGMT 38\.00 0\.00 18\.00 3\.63 24\.02 -2\.45 U U
BR-PE-6378 IBRD 35470 1993 STATE GOVERNMENTS STATE HWY MGMT 50\.00 0\.00 0\.00 3\.73 24\.02 -2\.45 U U
BR-PE-6541 IBRD 35050 1993 S\.PAULO/PARANA STS\. WTR Q/PLN(SP/PARANA) 117\.00 0\.00 8\.00 29\.99 77\.25 0\.00 S S
BR-PE-6541 IBRD 35040 1993 S\.PAULO/PARANA STS\. WTR Q/PLN(SP/PARANA) 119\.00 0\.00 0\.00 34\.02 77\.25 0\.00 S S
BR-PE-6541 IBRD 35030 1993 S\.PAULO/PARANA STS\. WTR Q/PLN(SP/PARANA) 9\.00 01\.00 0\.00 5\.26 77\.25 0\.00 S S
BR-PE-6522 IBRD 37670 1994 ST\.OF ESPIRITO SANTO ESP\.SANTO WATER 154\.00 0\.00 0\.00 86\.36 62\.22 0\.00 U U
BR-PE-6558 IBRD 37660 1994 REPUBLIC OF BRAZIL PARANA BASIC EDUC 96\.00 0\.00 0\.00 29\.01 1\.83 0\.00 S S
BR-PE-6543 IBRD 37330 1994 GOVERNMENT M\. GERAIS BASIC EDUC 150\.00 0\.00 0\.00 50\.41 17\.74 0\.00 S S
BR-PE-6555 IBRD 37150 1994 STATE GOVTS STE HWY MGT II 79\.00 0\.00 18\.00 7\.52 12\.49 -10\.00 S S
BR-PE-6555 IBRD 37130 1994 STATE GOVTS STE HWY MGT II 54\.00 0\.00 18\.00 16\.30 12\.49 -10\.00 S S
BR-PE-6452 IBRD 36630 1994 MINISTRY OF EDUCATION NE BASIC EDUC III 206\.60 0\.00 0\.00 80\.52 60\.88 0\.00 S S
BR-PE-6546 IBRD 36590 1994 GOVERNMENT AIDS CONTROL 160\.00 0\.00 0\.00 5\.89 -\.03 0\.00 S HS
BR-PE-6524 IBRD 36390 1994 ST\.OF MINAS GERAIS MINAS MNC\.DEVELOPMT 150\.00 0\.00 5\.00 34\.82 33\.13 -2\.53 S S
BR-PE-38885 IBRD 39190 1995 GOVT OF BRAZIL RURAL POV\.-SERGIPE 36\.00 0\.00 0\.00 20\.21 2\.00 0\.00 S S
BR-PE-38884 IBRD 39180 1995 GOVT OF BRAZIL RURAL POV\.- CEARA 70\.00 0\.00 0\.00 46\.81 9\.15 0\.00 S S
BR-PE-35717 IBRD 39170 1995 GOVT OF BRAZIL RURAL POV\. (BAHIA) 105\.00 0\.00 0\.00 61\.37 9\.39 0\.00 S S
BR-PE-6564 IBRD 39160 1995 FED REPUBLIC/BRAZIL BELO H M\.TSP 15\.68 0\.00 0\.00 \.36 44\.36 0\.00 S S
BR-PE-6564 IBRD 3916A 1995 FED REPUBLIC/BRAZIL BELO H M\.TSP 83\.32 0\.00 0\.00 78\.65 44\.36 0\.00 S S
BR-PE-38882 IBRD 3915A 1995 FED REPUBLIC OF BRAZIL RECIFE M\.TSP 98\.72 0\.00 0\.00 98\.72 49\.05 0\.00 S S
BR-PE-6436 IBRD 37890 1995 STATE OF CEARA ZIL CEARA UR\.DV/WATER CO 140\.00 0\.00 0\.00 103\.61 70\.27 -5\.40 S S
BR-PE-37828 IBRD 40600 1996 STATE OF PARANA (PR)R\.POVERTY 175\.00 0\.00 0\.00 158\.64 66\.07 0\.00 S S
BR-PE-6554 IBRD 40470 1996 FED\. REP\. OF BRAZIL HLTH SCTR REFORM 300\.00 0\.00 0\.00 261\.09 88\.58 0\.00 S S
BR-PE-40028 IBRD 4046A 1996 FEDERATIVE REPUBLIC OF BR RAILWAYS RESTRUCTURG 151\.48 0\.00 0\.00 142\.62 25\.95 0\.00 S S
BR-PE-6512 IBRD 39240 1996 CVRD ENV/CONS(CVRD) 50\.00 0\.00 0\.00 30\.13 7\.56 0\.00 U U
BR-PE-6547 IBRD 3633A 1996 FED\.REP\.OF BRAZIL METRO TRANSP\. RIO 47\.48 0\.00 0\.00 27\.02 27\.32 0\.00 S S
BR-PE-46052 IBRD 41900 1997 CEARA WTR PILOT 9\.60 0\.00 0\.00 8\.92 -\.68 0\.00
BR-PE-48870 IBRD 41890 1997 THE STATE OF MATO GROSSO MT STATE PRIV\. 45\.00 0\.00 0\.00 45 \.00 16\.68 0\.00 5 S
BR-PE-6532 IBRD 41880 1997 FEDERAL GOVERNMENT FED HWY DECENTR 300\.00 0\.00 0\.00 285\.00 11\.67 0\.00 S S
Difference
Between expected
Original Amount in US$ Millions and actual Last ARPP
Loan or Fiscal originalAmountinUS$Millioddisbursements a/ Supervision Rating b/
Project ID Credit Year Borrower Purpose
No\. IBRD IDA Cancellations Undisbursed Orig Frm Rev'd Dev Obj Imp Prog
BR-PE-43873 IBRD 41690 1997 FED\.REP\.OF BRAZIL AG TECH DEV\. 60\.00 0\.00 0\.00 55\.51 8\.83 0\.00 S S
BR-PE-34578 IBRD 41650 1997 RIO GRANDE DO SUL RGS HWY MGT 70\.00 0\.00 0\.00 70\.00 7\.34 0\.00 S S
BR-PE-43868 IBRD 41480 1997 STATE OF RGS RGS LAND MGT/POVERTY 100\.00 0\.00 0\.00 97\.00 11\.10 0\.00 S S
BR-PE-6475 IBRD 41470 1997 FED\. REP\. OF BRAZIL LAND RFM PILOT 90\.00 0\.00 0\.00 75\.05 \.89 0\.00 S S
BR-PE-6562 IBRD 41400 1997 STATE OF BAHIA BAHIA MUN\.DV 100\.00 0\.00 0\.00 98\.98 8\.65 0\.00 S S
BR-PE-39196 IBRD 41390 1997 STATE OF RIO GRANDE DO SU RGS ST\.REFORM 125\.00 0\.00 0\.00 50\.02 20\.02 0\.00 S S
BR-PE-42566 IBRD 41220 1997 STATE OF PERNAMBUCO R\.POVERTY(PE) 39\.00 0\.00 0\.00 28\.99 3\.44 0\.00 S S
BR-PE-43871 IBRD 41210 1997 STATE OF PIAUI (PIAUI)R\.POVERTY 30\.00 0\.00 0\.00 24\.98 4\.28 0\.00 S S
BR-PE-38896 IBRD 41200 1997 STATE OF RGN R\.POVERTY(RGN) 24\.00 0\.00 0\.00 21\.24 4\.14 0\.00 S S
BR-PE-40033 IBRD 43180 1998 THE STATE OF MINAS GERAIS MG STATE PRIV\. 170\.00 0\.00 0\.00 170\.00 0\.00 0\.00 S S
BR-PE-6559 IBRD 43120 1998 THE STATE OF SAO PAULO (BF-R)SP\.TSP 45\.00 0\.00 0\.00 45\.00 2\.67 0\.00 S S
BR-PE-50762 IBRD 43110 1998 GOV\. OF BRAZIL FUNDESCOLA1 62\.50 0\.00 0\.00 62\.50 0\.00 0\.00
BR-PE-38895 IBRD 43100 1998 GOVERNMENT OF BRAZIL FED\.WTR MGT 198\.00 0\.00 0\.00 198\.00 0\.00 0\.00
BR-PE-43420 IBRD 42920 1998 FED\. REPUBLIC OF BRAZIL WATER S\.MOD\.2 150\.00 0\.00 0\.00 150\.00 0\.00 0\.00
BR-PE-43421 IBRD 42910 1998 STATE OF RIO DE JANEIRO RJ M\.TRANSIT PRJ\. 186\.00 0\.00 0\.00 186\.00 10\.00 0\.00 S S
BR-PE-38947 IBRD 42660 1998 GOVERNMENT OF BRAZIL SC\. & TECH 3 155\.00 0\.00 0\.00 155\.00 5\.00 0\.00
BR-PE-6549 IBRD 42650 1998 TBG GAS SCTR DEV PROJECT 130\.00 0\.00 0\.00 130\.00 0\.00 0\.00
BR-PE-51701 IBRD 42520 1998 STATE OF MARANHAO MARANHAO R\.POVERTY 80\.00 0\.00 0\.00 80\.00 0\.00 0\.00
BR-PE-42565 IBRD 42510 1998 STATE OF PARAIBA PARAIBA R\.POVERTY 60\.00 0\.00 0\.00 60\.00 0\.00 0\.00
BR-PE-48357 IBRD 42450 1998 REPUBLIC OF BRAZIL CEN\.BANK TAL 20\.00 0\.00 0\.00 20\.00 \.50 0\.00 S S
BR-PE-6474 IBRD 42380 1998 STATE OF SAO PAULO LAND MGT 3(SP) 55\.00 0\.00 0\.00 55\.00 \.67 0\.00 S S
BR-PE-35728 IBRD 42320 1998 STATE OF BAHIA BAHIA WTR RESOURCES 51\.00 0\.00 0\.00 51\.00 0\.00 0\.00
BR-PE-39197 IBRD 42110 1998 STATE OF RIO DE JANEIRO RJ ST\.PRIV\. 250\.00 0\.00 0\.00 125\.00 50\.00 0\.00 S S
Total 7,337\.90 0\.00 141\.00 4,094\.75 1,551\.04 -14\.01
Active Loans Closed Loans Total
Total Disbursed (IBRD and IDA): 3,116\.95 15,767\.01 18,883\.96
of which has been repaid: 291\.92 12,535\.05 12,826\.97
Total now held by IBRD and IDA: 6,945\.87 3,236\.01 10,181\.88
Amount sold : 0\.00 45\.83 45\.83
Of which repaid : 0\.00 45\.83 45\.83
Total Undisbursed : 4,094\.75 4\.05 4,098\.80
a\. Intended disbursements to date minus actual disbursements to date as projected at appraisal\.
b\. Following the FY94 Annual Review of Portfolio performance (ARPP), a letter based system was introduced (HS = highly Satisfactory, S = satisfactory, U = unsatisfactory,
HU = highly unsatisfactory): see proposed Improvements in Project and Portfolio Performance Rating Methodology (SecM94-901), August 23, 1994\.
Note:
Disbursement data is updated at the end of the first week of the month\.
- 39 -
Annex 10
Brazil at a glance 8/28/97
Latin Upper-
POVERTY and SOCIAL America middle- --
Elrazil & Carib\. Income Development diamond'
Population mid-1996 (millions) '161\.2 485 479
GNP per capita 1996 (US$) 4,360 3,710 4,540 Life expectancy
GNP 1996 (billIons US$) 702\.9 1,799 2,173 T
Average annual growth, 1990-96 I
Population (%) 1\.4 1\.7 1\.5 GNP Gross
Labor force (%16) 1\.6 2\.3 1\.8 per primary
Most recent estimate (latest year available since 1989) capita enrollment
Poverty: headoount index (% of population) 17
Urban population (% of total population) 78 74 73
Life expectancy at birth (years) 67 69 69
Infant mortality (per t,OOO rive births) 44 37 35 Access to safe water
Child malnutrition (% of children under 5) 18 s \.t
Access to safe water (% of population) 92 80 86
Illiteracy(%ofpopulationage 15+) 17 13 13
Gross primary enrollment (% of school-age population) 114 110 107 Brazil
Male \. Upper-middle-income group
Female
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1975 1985 1995 1996
Economic ratios*
GDP (billions US$) 121\.8 222\.9 716\.9 748\.7
Gross domestic investment/GDP 26\.8 19\.2 20\.1 19\.5 Openness of economy
Exports of goods and services/GDP 7\.5 12\.2 6\.7 6\.6
Gross domestic savings/GDP 22\.9 24\.4 19\.2 18\.2
Gross national savings/GDP 21\.1 19\.3 17\.6 16\.3
Current account balancelGDP -5\.8 -0\.2 -2\.5 -3\.2
Interest payments/GDP 1\.7 3\.3 1\.2 1\.7 Savings Investment
Total debt/GDP 22\.4 46\.5 22\.2 23\.8
Total debt servicelexports 43\.5 39\.1 43\.1 46\.7
Present value of debtGDP \. \. 22\.1
Present value of debUexports \. \. 270\.7 Indebtedness
1976-86 1986-96 1996 1996 1997-06
(average annual growth) Brazil
GDP 3\.1 1\.2 4\.1 2\.9 4\.8 Upper-middle-income group
GNP per capita 0\.2 -0\.4 2\.8 1\.6 4\.0
Exportsofgoodsandservices 10\.5 6\.5 -1\.4 6\.1 7\.0 _:_ ::::::_:::= :
STRUCTURE of the ECONOMY
(% of GDP) 1975 1985 1996 1996 Growth rates of output and investment(%)
Agriculture 12\.1 11\.5 14\.4 14\.4 15
Industry 40\.2 45\.3 36\.5 36\.4 10
Manufacturing 30\.3 33\.7 23\.8 \. s-
Services 47\.7 43\.1 49\.1 49\.2 93 94 9 9
\.5 - -9-2 93 94 95 9e
Private consumption 66\.5 65\.8 64\.9 65\.7 -10 -
General govemment consumption 10\.6 9\.9 15\.9 16\.1 GDl 0-GDP
Importsofgoods and services 11\.5 7\.1 7\.6 7\.9 -
1976456 1986-96 1995 1996
(average annual growth) Growth rates of exports and imports (%)
Agriculture 4\.3 2\.6 4\.9 3\.1 40
Industry 3\.0 -1\.1 2\.1 2\.3
Manufacturing 2\.6 -1\.5 2\.1 \. 20
Services 2\.9 2\.8 5\.3 3\.3
Private consumption 3\.0 1\.8 11\.0 4\.1 o / 9 S / 9 l
General govemment consumption 1\.2 0\.7 2\.4 0\.8 91 93 94 9 se
Gross domestic investment -2\.9 -0\.6 9\.4 0\.0 -20
Imports of goods and services -4\.0 89 36\.8 5\.9 Exports a Imports
Gross national product 2\.5 1\.1 4\.2 2\.9
Note: 1996 data are preliminary estimates\. Figures in italics are for years other than those specified\.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average\. If data are missing, the diamond will
be incomplete\.
- 40 -
Annex 10
Brazil
PRICES and GOVERNMENT FINANCE
1975 1985 1995 1996
Domestic prices Inflation (%)
(% change) 4000 T
Consumer prices 25\.0 226\.9 67\.0 15\.5 2,000
Implicit GDP deflator 33\.9 231\.7 74\.9 11\.1 2,000
Governmrent finance 1 000
(% of GDP) 00
Current revenue \. \. 31\.5 32\.4 91 92 93 94 95 9S
Primary surplus/deficit \. \. 0\.4 -0\.1 *- GDP def * CPI
Operational surplus/deficit \. \. -4\.8 -3\.9
TRADE
1976 1986 1995 1996
(millions IJS$) Export and import levels (mill\. USS)
Total exports (fob) - \. 25,638 46,508 47,746 60,000
Coffee \. 2,607 1,970 2,059
Other food \. 2,545 3,896 4,665
Manufactures \. 13,356 25,568 26,247 40000
Total imports (cif) \. 13,153 49,663 53,286
Food \. \. 3,535 6,044 20,000 TIT
Fuel and energy \. 6,176 4,649 5,752 fi
Capital goods \. 2,480 19,688 19,804 0° -1 \.
Export pr\.ce index (1987=100) 97 128 126 90 91 92 93 94 95 95
Import price index (1987=100) \. 79 124 125 nExports I Imports
Terms of trade (1987=100) \. 123 103 101
BALANCE of PAYMENTS
1976 1 985 1996 1996
(millions JS$) 1 Current account balance to GDP ratio (%)
Exports of goods and services 9,418 27,713 47,960 49,558 2-
Imports of goods and services 14,323 16,928 54,306 59,355
Resource balance -4,905 10,785 -6,346 -9,797 t
Net inconme -216-123 -1,1 1,0
Net current transfers -10 16 3,973 2,899 9 92 9 94 95
Current account balance, -2
before official capital transfers -7,021 -412 -17,792 -24,300 1
-2
Financingi items (net) 5,956 1,826 30,779 32,935
Changes in net reserves 1,065 -1,414 -12,987 -8,635 -4
Memo:
Reserves induding gold (mill\. US$) 4,166 11,613 51,469 59,663
Conversion rate (iocalYUS$) 3\.OE-12 2\.3E-09 0\.9 1\.0
EXTERNAL DEBT and RESOURCE FLOWS
1975 1985 1995 1996
(millions IJS$)
Total debt outstanding and disbursed 27,329 103,601 159,130 178,131 A c
IBRD 1,045 5,274 6,038 5,876 | 6038 142
IDA 0 0 0 0 ComposiStgj4ftotal debt, 199ti 1\. USS)
Total debt service 4,320 11,470 22,328 \. /
IBRD 98 796 1,868 1,638 / / 1941 1
IDA 0 0 0 0 9/ 4/
Composition of net resource flows
Official grants 9 34 64
Official creditors 1,059 935 -1,378 \. ',
Private? creditors 4,213 149 9,827
Foreign direct investment 1,302 1,348 4,859
Portfolio equity 0 0 4,411 \. F
99678
World Bank program
Commitments 538 1,525 404 858 A - IBRD E - Bilateral
Disbursements 249 765 838 1,500 B - IDA D - Other multilateral F - Private
Principal repayments 26 406 1,377 1,222 C-IMF G - Short-temm
Net flows 224 359 -539 278 __1
Interest payments 72 391 491 416
Net transfers 152 -32 -1,031 -138
Development Economics 8/28/97 | APPROVAL |
P163060 | \.
PROJECT INFORMATION DOCUMENT (PID)
IDENTIFICATION/CONCEPT STAGE
Report No\.: PIDC106390
\.
Project Name Armenia Mineral Sector Policy (P163060)
Region EUROPE AND CENTRAL ASIA
Country Armenia
Lending Instrument IPF
Project ID P163060
Borrower Name Republic of Armenia
Implementing Agency Ministry of Energy and Natural Resources, Government of Armenia -
Prime Ministers Office
Environmental Category C - Not Required
Date PID Prepared 10-Jan-2017
Estimated Date of Approval 15-Mar-2017
Initiation Note Review
Decision
\.
I\. Introduction and Context
Country Context
Since independence, and until 2008, Armenia had been featured as one of the pre-eminent reformers
among the former Soviet Republics\. Indeed, over a number of years, the country displayed a record of
sustained growth, economic stability, low inflation, modest deficits and external debt, rising
remittances from migrant workers abroad, and sharply falling poverty rates\. However, many analysts
pointed out at the time that the continuation of this development path required deepening reforms to
sharpen the competitive framework of the economy, achieving closer integration with international
trade and capital markets, building financial markets, and creating the conditions for the absorption of
knowledge that leads to higher technological sophistication\.
Almost a decade since 2008, Armeniaâs economy finds itself in radically different and challenging
circumstances, with a low growth-low investment environment and stalled poverty reduction\. A
rapidly increasing public debt has left the country with no fiscal space to manoeuver\. The country also
has one of the highest unemployment rates (18\.5 percent) in the Europe and Central Asia region
largely stemming from low job creation, and a mismatch of workersâ skills and jobs\. The country
grapples with falling remittances, deteriorating external conditions, stalling poverty reduction,
unfinished reforms in critical areas and worsening demographics that will soon pose fundamental
constraints\.
Going forward the main challenge is to reinforce macroeconomic stability and uncover new sources of
stable and shared growth, anchored in a well-integrated and competitive economy\. On the
macroeconomic front, imports remain significantly higher than exports, and there is continued reliance
on private and official transfers\. Public debt has increased, limiting options in terms of external
borrowing for financing growth\. The fiscal consolidation in recent years has been marked by large
Page 1 of 4
increases in current spending and falling public investment\. The primary scope for strengthening
public finances is therefore through revenue mobilization\. In terms of strengthening competitiveness,
Armenia has secured better market access to Russia and other large countries (such as Kazakhstan)
through its EEU membership, but the dynamics in those markets have contributed to a decline in
exports\. Critical gaps in the business environment such as low incentives for entrepreneurs and high
logistics costs, are important constraints on productivity and growth, as is the need for more market
contestability\.
Armenia has an abundance of mineral resources such as copper, gold, silver and zinc, as well as
industrial minerals such as diatomite, gypsum, limestone, perlite and rhenium salt\. In 2011, it ranked
7th in the world in molybdenum production\. Armeniaâs economy has undergone major structural
changes since independence, changing from an industry-based economy to increasingly becoming an
economy based on agriculture and trade\. The minerals sector represents one of few industrial sectors
that have developed in an economically positive way, and it is seen by the Government as having an
important role in further development of the country's economy\. In the past 5 years, inflows from
sector exports have been in the region of USD 500 million annually, making it Armeniaâs top sector in
terms of export and inflow of foreign exchange\. Mining companies are significant job providers,
especially as they offer formal jobs in more rural areas\. However, the potential for large-scale, short-
term economic gains through investment in the sector often overshadows its likely impact on the
environment and local communities\.
Sectoral and Institutional Context
Mining, although a potential engine for growth, is also a contested subject in Armenia\. There is strong
suspicion of mining activities by parts of the population, and in particular civil society\. This distrust is
largely fueled by a lack of information and dialog between stakeholders, and the fact that most
metallic mines were developed in the Soviet era under weak environmental and social standards\. To
address this lack of trust and improve the investment climate, the Armenian government, supported by
the World Bank, has been considering the Extractive Industries Transparency Initiative (EITI) process
for several years\. On July 28, 2015, the Government of Armenia made a public announcement that
they intend to seek EITI candidacy, and nominated the Minister-Chief of Staff of the Government,as
the person to lead the implementation of the initiative\. In August 2016 a Multi Stakeholder Group was
formed and worked out the EITI priorities for Armenia as well as the action plan\. Armenia submitted
an EITI candidacy application in December 2017\.
It is clear that the mining sector's future development has to be accompanied by a strong and
transparent dialog on the future of the sector, between the government, the private sector, civil society
and the communities affected by mining activities\. In 2015-16, The World Bank, under the Extractive
Indsutries-Transaction Advisory Facility Multi Donor Trust Fund (EI-TAF MDTF), supported the
undertaking of a Strategic Mineral Sector Sustainability Assessment (
http://documents\.worldbank\.org/curated/en/289051468186845846/Armenia-Strategic-mineral-sector-
sustainability-assessment) \. It showed that whereas mining is important to the Armenian economy,
individual operations are not generally contributing sufficiently to the longer term sustainable
development of the nation\. This is in spite of a range of past and ongoing initiatives taken by the
regulators to reform the sector\. The current situation of low mineral prices is a fortuitous time for
mining policy development, to ensure that when the next wave of development and investments
arrives with an increase in mineral/metal prices, Armenia will be well prepared to manage the various
challenges and opportunities that such times entail\. The Reportâs main recommendation is to urgently
embark on developing a national mining policy, as it has never had one, and couple this with the
efforts that are being made to make Armenia an EITI compliant country\. The main point of having
such a sector policy is that it will help ensuring the sustainable development and regulation of the
Page 2 of 4
sector, and its contribution to the achievement of an overall vision for national development
Relationship to CAS/CPS/CPF
The Project is aligned with the 2013-2017 Country Partnership Strategy, which places private sector
led job creation at the center of its Strategy, focusing on I) supporting competitiveness and job creation
and ii) improving efficiency and targeting of social services, with âImproving governance and anti-
corruption measures in public services as a cross-cutting theme, with a specific focus on the impacts
on gender\.
\.
II\. Project Development Objective(s)
Proposed Development Objective(s)
To support the development of a Mineral Sector Policy for Armenia that focuses on strengthening of
the contribution of the mining sector to sustainable economic growth\.
Key Results
- A Mining Policy is developed through an inclusive multi stakeholder process that is line with good
international practices and standards for sustainable mineral sector governance
- Representatives from communities affected by mining ( both men and women) participate actively in
a dialog on the future of the sector
- A permanent dialog forum for key stakeholders in the mining sector ( communities, civil society,
companies and government agencies) is put in place, and allows better knowledge and access to
information on the key characteristics, impacts, benefits and future strategy for the Armenian mining
sector
\.
III\. Preliminary Description
Concept Description
IV\. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment OP/BP 4\.01 X
Natural Habitats OP/BP 4\.04 X
Forests OP/BP 4\.36 X
Pest Management OP 4\.09 X
Physical Cultural Resources OP/BP 4\.11 X
Indigenous Peoples OP/BP 4\.10 X
Involuntary Resettlement OP/BP 4\.12 X
Safety of Dams OP/BP 4\.37 X
Projects on International Waterways OP/BP 7\.50 X
Projects in Disputed Areas OP/BP 7\.60 X
\.
\.
Page 3 of 4
V\. Financing (in USD Million)
Total Project Cost: 0\.45 Total Bank Financing: 0
Financing Gap: 0
Financing Source Amount
Extractives Global Programmatic Support 0\.45
\.
\.
VI\. Contact point
\.
\.
World Bank
Contact: Kirsten Lori Hund
Title: Sr Mining Spec\.
Tel: 458-0904
Email: khund@worldbank\.org
\.
\.
Borrower/Client/Recipient
PHBORROWERSEC
TION
PHBORROWERSEC
TION
Name: Republic of Armenia
PHBORROWERSEC
Contact: Davit Harutyunyan
TION
PHBORROWERSEC
Title: Minister, Chief of Staff
TION
PHBORROWERSEC
Tel: 37410515703
TION
Email: davit\.harutyunyan@gov\.am
\.
\.
\.
Implementing Agencies
PHAGENTPARTNER
SECTION
Name: Ministry of Energy and Natural Resources
PHAGENTPARTNER
SECTION
Name: Government of Armenia - Prime Ministers Office
PHAGENTPARTNER
SECTION
Contact:
PHAGENTPARTNER
SECTION
Contact:
PHAGENTPARTNER
SECTION
Title:
PHAGENTPARTNER
SECTION
Title:
PHAGENTPARTNER
SECTION
Tel:
PHAGENTPARTNER
SECTION
Tel:
PHAGENTPARTNER
SECTION
Email:
PHAGENTPARTNER
SECTION
\.
Email:
\.
\.
VII\. For more information contact:
\.
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
Page 4 of 4 | APPROVAL |
P145298 | PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Public Disclosure Copy
Report No\.: PIDC1241
Project Name Algeria Energy Efficiency Project (P145298)
Region MIDDLE EAST AND NORTH AFRICA
Country Algeria
Sector(s) Energy efficiency in Heat and Power (80%), General industry and trade
sector (20%)
Theme(s) Climate change (70%), Other Private Sector Development (30%)
Lending Instrument Technical Assistance Loan
Project ID P145298
GEF Focal Area Climate change
Borrower(s) Ministry of Energy
Implementing Agency National Agency for the Promotion of Energy Efficiency (APRUE)
Environmental C-Not Required
Category
Date PID Prepared/ 12-Mar-2014
Updated
Date PID Approved/ 12-Mar-2014
Disclosed
Estimated Date of
26-Nov-2014
Public Disclosure Copy
Appraisal Completion
Estimated Date of 27-Feb-2015
Board Approval
Concept Review Track II - The review did authorize the preparation to continue
Decision
I\. Introduction and Context
Country Context
Regional overview:
The four Maghreb countries â Algeria, Libya, Morocco, and Tunisia â face common challenges
related to the rapid increase in energy demand due to demographic changes and increasing
urbanization\. This is despite their widely varying energy profiles, particularly regarding the type of
energy used, the level of energy consumption, and the availability of hydrocarbon resources\.
The Maghreb has experienced a rapid increase in peak electricity demand in recent years, which
exceeded 8 percent in 2012 (11 percent in Tunisia, 14 percent in Algeria, 8 percent in Morocco, and
8 percent in Libya)\. To address this growing demand more than 3,000 MW of power generation
capacity has been added since 2010\. It is estimated that the Maghreb will need to double installed
Page 1 of 7
power generation capacity by 2020 in order to keep pace with demand\.
As part of the efforts to curb this demand, the four countries have taken steps to promote and scale
Public Disclosure Copy
up energy efficiency measures, which are commonly âno regretâ measures and thus significantly
cheaper than adding power plant to meet increasing demand\. However, even though regulatory and
institutional frameworks have evolved considerably in the past years, implementation on the ground
is still lacking and a more comprehensive approach covering all sectors is required\. Moreover,
common policies and measures at the regional level are missing\.
One of the reasons for higher growth of electricity consumption is arguably the presence of energy
subsidies in the Maghreb\. The Middle East and North Africa (MENA) region has among the highest
energy subsidies in the world, with the average subsidy level close to 10 percent of GDP between
2007 and 2009\. Implementing energy efficiency measures reduces the need for energy subsidies by
governments, and thereby alleviates government budgets\. But energy subsidies present a particular
challenge to efficiency measures as end-user prices do not naturally provide consumers with
sufficient incentives to choose energy efficient equipment\. Any measures therefore have to be
carefully designed to take account of the presence of subsidies in order to be effective\.
Country Context (Algeria):
Among the four countries, Algeria has experienced the highest increase in overall electricity
demand in recent years as it grew on average 7 percent annually between 2006 and 2012\. Given that
the growth rate for electricity significantly outpaces the growth rate of GDP, which has been
between 2\.4 percent and 3\.6 percent since 2008, Algeriaâs energy intensity is also growing\.
Similarly, peak demand has been increasing significantly since 2006, with an average growth rate of
8 percent per year and reaching 13\.6 percent in 2012\. Since 2006, Algeriaâs annual peak demand
has shifted from a winter peak demand for lighting to a summer peak due to the demand for air
conditioning\.
Public Disclosure Copy
As a result of the increasing peak demand, Algeria faces power shortages\. According to Algeriaâs
power utility SONELGAZ (Société Nationale de l'Electricité et du Gaz), the Government agreed to
call for an urgent plan to install additional capacity of 8,400 MW by constructing six gas-fired
power plants by 2017 in order to offset these shortages at an approximate cost of between US$6-7
billion\.
Sectoral and Institutional Context
Regional context:
The energy sector in the Maghreb is heavily dependent on fossil fuels and suffers from low
efficiency in key end-use sectors, such as the industrial, transport and residential sectors\. In 2012,
the building sector (both residential and commercial) accounted for 33 percent of total electricity
use in the four Maghreb countries, only slightly less than the industrial sector at 37 percent\. Energy
consumption in the building sector has grown on average by 6 percent annually in past few years,
mainly due to the exponential increase in the use of household appliances and air conditioners\. This
has led to power outages during the summer months in Tunisia, Libya and Algeria\.
An assessment of energy efficiency potential in the South East Mediterranean countries conducted
by Plan bleu in 2011 indicated that significant energy savings (13-18 percent of final energy
Page 2 of 7
consumption) could be achieved if efficient air conditioners were to be introduced\. Even though the
penetration of air conditioners in the Maghreb is still quite low, ranging from about 5 percent of
households in Morocco to about 14 percent in Tunisia, approximately 2 million air conditioners are
Public Disclosure Copy
added to households throughout the region every year\. To respond to the peak demand they create
approximately 1\.5 to 2 GW of power plant have to be built corresponding to a cost of between US
$1\.2 to 1\.6 billion for the Maghreb countries annually\. If efficient air conditioners were installed
instead, the need of additional peak power plant could be significantly reduced\.
Ensuring that new air conditioners have a high efficiency rating and use refrigerants with lower
global warming potential (GWP) is a low-cost measure â especially when compared to the addition
of power plant â that is often considered a âno-regretsâ option to control the increase of electricity
peak demand\. However, it requires a well-defined regulatory framework be put in place and
complied with, which covers standard setting and verification, financial intermediation, and public
awareness-raising, in order to provide the appropriate incentives to consumers to buy more efficient
air conditioning units\.
But the market for air conditioners is not well regulated in the Maghreb\. Only Algeria and Tunisia
have standards in place, with only the Tunisian standards being applied\. But even in Tunisia the
application of standards is lacking due to the lack of control of labeling standards\. Much of the less-
efficient equipment traded throughout the region originates in the Algerian air conditioner market,
which does most of the local assembly, and then makes its way illegally across porous borders\.
Targeting this market first before developing projects in the other countries should go a long way
towards preventing future problems with leakage\.
Maghreb countries have already established a good working relationship on energy efficiency
through their membership in the Comité Maghrébin de lâElectricité (COMELEC), and the Regional
Center for Renewable Energy and Energy Efficiency (RCREEE), which are independent
organizations that have conducted comprehensive analytical work on energy efficiency in the
Public Disclosure Copy
Maghreb, and published national and regional reports on the matter\. Building on this existing
cooperation, COMELEC along with RCREEE can help bring together key stakeholders to jointly
identify areas of actions that would help accelerate the implementation of harmonized regulations
on energy efficiency\.
The proposed energy efficiency program for the Maghreb countries is designed as part of a âSeries
of Projectsâ (SOP) program with an expected overall envelope of about US$200 million\. The first
project in the series is the âAlgeria Energy Efficiency Projectâ\. The program is based on a scoping
study to identify projects in the Maghreb which could benefit from joint implementation (e\.g\. a
regional testing facility, setting of standards, enforcement, etc\.) and targeted national programs\. It is
then to be executed through projects in all four Maghreb countries over a 4 to 5 year horizon across
countries as a horizontal SOP\.
Country context (Algeria):
Algeriaâs electricity system does not meet current demand\. In recent years, Algeria has experienced
frequent power outages, due to peak demand outstripping the existing installed electric capacity\.
The peak demand has been increasing strongly since 2006, growing by an average of 8 percent per
year and reaching 13\.6 percent in 2012\.
Page 3 of 7
Meeting increasing demand is costly for Algeria\. The country has installed an additional 5\.5GW of
power plant between 2006 and 2012 at an approximate cost of US$4\.4 billion in order to address the
demand increase\. Out of this, 3\.8GW at an approximate cost of US$3 billion were installed to
Public Disclosure Copy
overcome the increase in peak load\. The cost of additional installed capacity could have been
drastically reduced through demand-side measures\.
Increasing residential consumption is a major part of the peak-demand problem\. A study conducted
by Plan bleu and RCREEE (2011) showed that, over the period of 2000 to 2009, energy
consumption in the residential sector rose at a total rate of 69 percent\. This increase is mainly due to
the increased use of household appliances and air conditioners\. In 2007, the Algerian energy
efficiency agency APRUE conducted a survey concluding that about 600,000 air conditioner units
are sold annually, constituting a US$237 million market with a 30 percent average annual growth
rate\. Energy efficiency measures in the residential sector may be effective in countering the trend\.
Based on the level of efficiency of appliances sold in todayâs market, energy efficiency measures
could reduce peak load by 20-30 percent\. This in turn would lead to reductions in (i) required
additions of power plant capacity, (ii) fuel consumption, and (iii) greenhouse gas emissions\.
The legislative framework in Algeria covers some aspects of regulation and implementation of
energy efficiency policies, and in 2011, the Government of Algeria approved a comprehensive
national program for renewable energy and energy efficiency with a 2030 time horizon\. Under the
heading of the Montreal Protocol another GEF-sponsored initiative is underway to help introduce
refrigerants with lower global warming potential (GWP) in air conditioners in Algeria\.
Despite the potential for reducing energy use in the residential sector and the impressive legislative
work undertaken by the Government thus far not much progress has been made on achieving greater
efficiency levels\. The fundamental problem in Algeria is that there is a lack of continuity between
Government policies and implementation\. While laws and regulations are often state-of-the-art, they
are rarely implemented on the ground\. The main reason for this is that stakeholders â especially the
Public Disclosure Copy
private sector actors and consumers â are not consulted to ensure that the regulatory framework
responds to their needs\. Also, while decrees are being issued, the actual mechanics of putting the
decrees into effect are not agreed beforehand\. For example, Algeriaâs feed-in law in place since
2005 has not led to a single renewable energy project\.
More specifically, the challenges to implementing energy efficiency measures are as follows: (i) no
mechanism has been put in place to control, verify and enforce the implementation of energy
efficiency regulation; and (ii) standards are based on proven models from outside of Algeria without
adaptation to the specificities of Algeria, especially the local end-user appliance markets and
technologies\. Indeed, a greater involvement and consultation of the private sector and consumers is
necessary to ensure that the regulatory framework effectively works to achieve the intended goal\.
Relationship to CAS
The proposed Maghreb energy efficiency program is fully in line with the 2011 updated regional
strategy for the Middle East and North Africa Region (MENA), which under its third pillar supports
the mitigation of climate change\. The regional strategy supports sub-regional programs such as the
one proposed\. The Algeria energy efficiency project is fully in line with Algeriaâs 2011 Country
Partnership Strategy (CPS)\. It falls in the area of intervention II âPromoting sustainable
development and reducing spatial disparities,â since it will help to address the rapid growth in
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electricity consumption through energy efficiency improvements while contributing to the
mitigation of greenhouse gas emission\.
Public Disclosure Copy
II\. Proposed Development Objective(s)
Proposed Global Environmental Objective(s) (From PCN)
The project development objective (PDO) of the Maghreb Energy Efficiency program is to
introduce policies and measures to enhance energy efficiency in the Maghreb with the aim of
reducing the growth of electricity demand and curbing greenhouse gas emissions\.
The PDO of the Algeria Energy Efficiency project is to strengthen verification capacity that
promotes the use of energy efficient air conditioning units in Algeria, and to demonstrate the
benefits of using more efficient air conditioner units to Algerian stakeholders\.
The global objective of both the program and the project is to contribute to the reduction of global
greenhouse gas emissions\.
Key Results (From PCN)
Progress made under the proposed project will be monitored according to the following key project
performance indicators:
⢠Quantified energy savings from the use of efficient air conditioners (kWh);
⢠Quantified CO2 reductions (thousand tons); and
⢠Enhanced policy and compliance mechanisms for energy efficiency developed and applied
(e\.g\. application of performance standards and labeling schemes, testing laboratory in place, etc\.)\.
III\. Preliminary Description
Concept Description
The project targets small household-use air conditioners such as window units, which represent the
Public Disclosure Copy
bulk of the air conditioning market in Algeria\. It targets the analysis of barriers to the adoption of
efficient technologies and techniques\. Various mechanisms and tools will be tested with the aim of
helping overcome these barriers such as incentive mechanisms, verification mechanisms for
technical standards, capacity building & awareness raising, and coordination mechanisms for
stakeholders (including the private sector and manufacturers)\. Based on preliminary analysis, the
project could be expected to avoid a cumulative total of greenhouse gases in the order of 5 MtCO2e\.
This project is designed to comply with the Montreal Protocol\. To this end, it will be aligned with
Algeriaâs hydrochlorofluorocarbon (HCFC) Phase Out Management Plan that targets manufacturing
and servicing and was approved by the Multilateral Fund of the Montreal Protocol in April 2012\.
While the proposed project will not directly address refrigerants, in promoting more energy efficient
equipment the project will also promote the use of the lowest GWP refrigerant commercially
available and technically appropriate, including zero-GWP options where feasible\. The market
study will determine the best way of doing this in the Algerian context\. The project is based on three
complementary sub-components:
Component 1: Piloting Energy Efficiency Incentives
Providing incentives to encourage energy efficiency in the air conditioning sector is critical because
behavior needs to be shifted away from production and consumption of low-cost inefficient
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appliances to higher performing appliances and to those with lower greenhouse gas global warming
potential (GWP)\. Under this component a demonstration of one or more financing mechanisms that
could help provide this needed incentive would be undertaken\.
Public Disclosure Copy
A market survey will be conducted to help define the type of measures needed to create appropriate
incentives to encourage a shift away from inefficient air conditioners\. The market survey will take
into consideration the type of refrigerant used\. The design of the instrument will assess mechanisms
to promote an on-going effort to seek out the lowest GWP refrigerant commercially available and
technically appropriate, including zero-GWP options where feasible\. The project would also
consider a range of upstream and downstream incentives: for example, improvements in component
quality or assembly at the level of the manufacturers versus consumer financial incentives\.
Component 2: Setting-up of a Laboratory for Testing and Certifying Air Conditioners
Currently claims of efficiency of air conditioning equipment as well as use of specific refrigerants
are not being verified, thus giving very little protection to the consumer that standards are being
met\. This component aims to provide a laboratory system for the testing of air conditioning
equipment sold in the Algerian market, which will ensure that air conditioners sold on the Algerian
market meet existing (or possibly improved) performance standards\. Tests on establishing precise
GWP levels from refrigerants used in air conditioner equipment will also be introduced\. This
collaborative effort would use space in a laboratory belonging to the Ministry of Commerce, but
testing and certification of air conditioners would be done by APRUE\. To help with cost recovery,
manufacturers would pay a user fee to have their models tested for compliance\.
Component 3: Technical Assistance and Awareness Raising
Behavior of customers, vendors, distributors, and manufacturers needs to be adequately informed in
order for sales to be oriented towards more efficient and climate friendly air conditioning systems\.
Public Disclosure Copy
In order for this to be done, technical assistance and awareness-raising for stakeholders is important
and is envisaged under this component\. The project will include funding for a âlessons learnedâ
wrap-up exercise just prior to project closing\.
IV\. Safeguard Policies that might apply
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
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V\. Financing (in USD Million)
Total Project Cost: 10\.88 Total Bank Financing: 0\.00
Public Disclosure Copy
Financing Gap: 0\.00
Financing Source Amount
Borrower 7\.26
Global Environment Facility (GEF) 3\.62
Total 10\.88
VI\. Contact point
World Bank
Contact: Andrew Michael Losos
Title: Environmental Specialist
Tel: 473-6169
Email: alosos@worldbank\.org
Borrower/Client/Recipient
Name: Ministry of Energy
Contact: Ms\. Nora Zouaoui
Title: Assistant Manager Energy Efficiency
Tel: 21321488156
Email: nora\.zouaoui@mem\.gov\.dz
Implementing Agencies
Name: National Agency for the Promotion of Energy Efficiency (APRUE)
Public Disclosure Copy
Contact: Mohamed Salah BOUZERIBA
Title: Director General
Tel: 21321603137
Email: msbouzeriba@aprue\.org\.dz
VII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Page 7 of 7 | APPROVAL |
P175594 |  The World Bank
Côte d'Ivoire Social Safety Nets System strengthening (P175594)
Program Information Document
(PID)
Concept Stage | Date Prepared/Updated: 21-May-2021 | Report No: PIDC247481
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Côte d'Ivoire Social Safety Nets System strengthening (P175594)
BASIC INFORMATION
A\. Basic Program Data OPS TABLE
Country Project ID Parent Project ID (if any) Program Name
Cote d'Ivoire P175594 Social Safety Nets
System Strengthening
Does this operation
Region Estimated Appraisal Date Estimated Board Date have an IPF
component?
AFRICA WEST 28-Feb-2022 18-Apr-2022 Yes
Financing Instrument Borrower(s) Implementing Agency Practice Area (Lead)
Program-for-Results Republic of Côte d'Ivoire Ministry of Solidarity and Social Protection &
Financing Fight against Poverty Jobs
Proposed Program Development Objective(s)
The Program Development Objective is to support the government to expand coverage and increase the efficiency and
effectiveness of its Social Safety Nets system
COST & FINANCING
FIN_SRC_TABLE1
SUMMARY (USD Millions)
Government program Cost 495\.00
Total Operation Cost 350\.00
Total Program Cost 345\.00
IPF Component 5\.00
Total Financing 350\.00
Financing Gap 0\.00
FINANCING (USD Millions)
Total World Bank Group Financing 150\.00
World Bank Lending 150\.00
Total Government Contribution 200\.00
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Concept Review Decision
B\. Introduction and Context
Country Context
1\. Côte dâIvoire was one of the fastest growing economies in the West African Economic and Monetary Union
(WAEMU) before the COVID-19 pandemic, and the recovery is ongoing\. With Gross Domestic Product (GDP) growth
of 6\.9 percent in 2018 and 6\.2 percent in 2019, Côte dâIvoire continued to be one of the fastest growing economies
in Sub-Saharan Africa (SSA)\. Pre-COVID-19 pandemic growth was dynamic across all sectors, including agriculture\.
With the onset of COVID-19 in March 2020, GDP slowed down to 2\.0 percent against a projected growth of about 7
percent pre-pandemic\. While the agricultural sectorâs performance remained relatively stable, service and
manufacturing sectors have been heavily affected by the pandemic\. Economic growth is expected to gradually
recover to pre-crisis levels to reach 6\.5 percent by 2023\.1
2\. Côte dâIvoireâs economic development did not translate into progress on human capital or gender equality\.
Despite recent efforts, Côte dâIvoireâs human capital index (HCI) score remains low, with large gaps in education and
health outcomes across socio-economic groups\. With a HCI score of 0\.382, Côte dâIvoire ranks 149 out of 157
countries globally, which is lower than the average for SSA and lower middle-income countries\. Furthermore, Côte
dâIvoire has one of the highest gender inequality rates in the world: in 2019, it was ranked 153 out of 189 countries
on the United Nations Gender Inequity Index\.3 Women in Côte dâIvoire continue to face inequalities at school, in
accessing health care and in the labor market\.
3\. Côte dâIvoireâs poverty reduction efforts between 2015 and 2019 have been significant with persistent regional
disparities\. The countryâs poverty rate fell from 44\.4 percent in 2015 to 39\.4 percent in 2019, with urban areas
showing a decrease from 35\.9 percent to 24\.7 percent compared to rural areasâ more limited reduction from 56,8
percent to 54\.7 percent\. In addition, poverty reduction in rural areas is also marked by inter-regional disparities\.
There is a high concentration of poverty in the north and west of the country: Bafing has a poverty rate of 67\.8
percent, Kabadougou of 66\.4 percent, Tonkpi of 66\.1 percent and Cavally of 65\.8 percent\.4 The poorest households
tend to work in the agriculture sector, which operate at lower levels of productivity and earn less\.
4\. The COVID-19 pandemic translated into rising poverty in Côte dâIvoire, at least temporarily \. The global pandemic
has led to significant income losses for households across all sectors and income levels, worsening the living
conditions of already vulnerable households\. 71 percent of Ivorian households saw their income decrease and were
unable to meet their basic living expenses\. To cope with the income loss, many had to adjust their spending, mostly
through the reduction of non-food expenditure\. Women headed households seemed particularly affected with a
higher share having had to reduce daily expenditures\.5 While some households have been able to smooth
1 World Bank\. Côte dâIvoire Economic Update (upcoming)\.
2 A child born in Côte dâIvoire today will be 38 percent as productive when she grows up as she could be if she enjoyed full education and health\.
3 United Nations Development Report\. Human Development Report\. Gender Inequality Index\. 2019\.
4 Enquête harmonisée sur le niveau de vie des ménages (EHCVM), 2018
5 Enquête rapide sur les effets de la Covid-19 â Une perspective Genre, Côte dâIvoire 2020, Women count\.
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consumption with savings and family support, national poverty significantly increased during the pandemic and is
estimated to have reached 41\.5 percent in October 2020\.
5\. Vulnerability to shocks, including climate related shocks, is a challenge for long-term poverty reduction\. More
than 60 percent of Ivorian households report having suffered from a shock\. Idiosyncratic shocks are common, with
illness or/and injury being reported as the most frequent by 23 percent of the households\. Besides idiosyncratic
shocks, covariate shocks have an important impact on households and the countryâs economy\. The increase of food
prices, the decrease of agricultural sales prices and droughts were reported as the most impactful shocks\. 6 In
addition, the country is also particularly susceptible to climate risks\.7 8 Shocks tend to disproportionately affect the
poorest: 52 percent of the households reporting a shock are situated in the two poorest quintiles\. The most
adversely affected are those: (a) working in agriculture; (b) in rural and dry areas; and (c) in areas at risk of flooding\.
In addition, the poor tend to be less able to adapt and, in the absence of a shock-responsive social safety net, may
be forced to employ negative coping strategies such as selling productive assets, reducing food consumption, or
reducing access to health and education services as evidenced above, thus undermining human capital gains\.
Sectoral (or multi-sectoral) and Institutional Context of the Program
6\. The National Social Protection Strategy (Stratégie Nationale de Protection Sociale, SNPS, 2016â2020) enshrines
the governmentâs vision to increase pro-poor spending and coverage of social protection programs\. The SNSP
aimed to transform social protection programs which were historically limited in their poverty alleviation efforts
through social actions targeting vulnerable populations, with a particular emphasis on health, education, access to
drinking water and electricity as well as basic infrastructure\. While the SNPS came to an end in 2020, it is currently
being updated, under the leadership of the Ministry of Employment and Social Protection (Ministère de lâEmploi et
de la Protection Sociale, MEPS)\.
7\. The National Development Plan 2021-2025 (Plan National de Développement, PND) is currently being finalized
and provides a clear vision of the governmentâs objectives and activities to fight poverty and reduce
vulnerabilities\. Pillar 4 of the PND aims to strengthen inclusion, national solidarity and social action\. Once adopted,
the PNDâs strategic vision will need to be operationalized through the formulation of a Social Inclusion program by
the Ministry of Solidarity and Fight against Poverty (Ministère de la Solidarité et de la Lutte contre la Pauvreté, MSLP)\.
Also, the update of the SNPS will be aligned to the strategic directions given in the PND\.
8\. Important progress has been made in Côte dâIvoireâs social protection sector over the last five years, as a result
of strong government commitment to building the foundations of a safety net system and by developing the
countryâs first large scale productive safety net program\. With the IDA-funded Productive Social Safety Net project
(P143332), the government put in place its first productive cash transfer project in 2015\. Since then, the project has
grown into a national program (Productive Safety Net Program, PSNP), financially supported by the Productive Social
Safety Net project and its Additional Financing and important government co-financing\. The PSNP has expanded
significantly over the years, bringing the total number of beneficiaries to a cumulative 227,000 households in 2020,
covering rural and urban areas and all regions of the country\. The PSNP provides quarterly unconditional cash
transfers to beneficiary households as well as economic inclusion measures to support them increase their income
in a sustainable way\.
6 Enquête harmonisée sur le niveau de vie des ménages (EHCVM), 2018\.
7 ND-GAIN Vulnerability Index (https://gain\.nd\.edu/our-work/country-index/rankings/)\.
8 https://thinkhazard\.org/en/report/66-cote-d-ivoire\.
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9\. Beyond the cash transfers and economic inclusion measures, the PSNP has led and supported the development
of foundational elements of a social protection delivery system focusing on the poorest households\. These include
support to the development of a unique social registry (Registre Social Unique, RSU), the development of the
programâs management information system (MIS) and a Grievance and Redress Mechanism (GRM)\. The RSU was
created by decree on September 18, 2019 as a crosscutting instrument of the SNPS with the objective to register all
poor and vulnerable households in the country\. The RSU, currently being operationalized, will be interoperable with
the MIS of the PSNP and the MIS of the medical assistance scheme for the poorest (Régime d'Assistance Médicale -
RAM) of the Universal Health Coverage (Couverture Maladie Universelle - CMU)\.
10\. Despite the programmatic progress realized in recent years, the institutional landscape of Côte dâIvoireâs social
protection system remains highly fragmented\. The MESP oversees the implementation of the SNPS in coordination
with other ministries and agencies implementing social protection programs\. Furthermore, the CMU initially under
the MESP was transferred to the Ministry of Health; the decentralized social centers and social security schemes are
anchored under the MESP; and the school feeding program is anchored under the Ministry of National Education,
Technical Education and Vocational Training\. The fragmentated institutional landscape leads to limited coordination
of policies, financing strategies, and delivery services\. While the setup of the SNPS steering committee in 2015
improved overall coordination, shortcomings remain and call for strengthened institutional arrangements and
common implementation mechanisms to improve dialogue and efficiency\.
11\. In addition, social protection coverage and spending in Côte dâIvoire remains limited\. Social protection and labor
spending is very low and stood at 6\.3 percent of total public expenditure in 2015-2016, of which 94 percent went to
pension schemes for formal workers\. Between 2014 and 2016, âsocial spendingâ? (primarily general administration,
as well as in-kind social assistance programs) and âother poverty-fighting spendingâ? (youth and other programs) was
on average 0\.7 and 0\.2 percent, respectively, of total public expenditure\.9 In 2019, PNSP spending represented only
0\.05 percent of GDP\.
12\. Lastly, the countryâs COVID-19 response has highlighted the limitations of the current shock response mechanisms
and the need to develop a delivery system that can be mobilized more efficiently\. Despite a large scale COVID-19
response targeting vulnerable households and informal workers, the intervention encountered significant
challenges that demonstrated weaknesses in the shock response system\. Weaknesses include the lack of an
operational emergency response protocol; the non-operationalization of the RSU as of 2020; and the lack of a unique
identification number and the low rate of coverage of the national identity card excluding the most vulnerable\.
Relationship to CAS/CPF
13\. The proposed Program-for-Results (PforR) operation supports Focus Area Two of the Country Partnership
Framework (CPF)10 in general, and objective 6 in particular, to expand an affordable social protection system\. The
proposed PforR will support the CPFâs aim to build human capital for economic development and social cohesion
and contribute to objective 6 on expanding social protection systems by: (a) supporting targeted safety nets and
employment opportunities in the short term to help increase the consumption of the poorest 40 percent of the
population and protect their assets from depletion, thereby developing and protecting human capital; and (b)
extending social protection coverage to build household productivity and increase their in the medium to long term\.
9 Policy Note, World Bank, 2018 - Côte dâIvoire: Modernizing Social Protection and Labor policy for inclusive growth â financing and institutional
overview\.
10 Report No\. 96515-CI\. While the CPF initially covered the period FY16 to FY19, it was decided to extend the CPF until FY21 during the PLR in May
2018\. The CFP got approved on August 17, 2015\.
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Côte d'Ivoire Social Safety Nets System strengthening (P175594)
14\. The proposed Program is aligned with the World Bankâs COVID-19 Crisis Response Approach Paper\.11 The
proposed Program fits squarely within the COVID-19 Crisis Response Approach Paperâs ârestructuring stageâ? aimed
at restoring, maintaining and enhancing human capital, as well as the âresilient recovery stageâ? focusing on building
a more sustainable, inclusive and resilient future\. Specifically, the proposed operation will support: (a) Pillar 2 of
âprotecting the poor and vulnerableâ? through targeted income support for vulnerable households while also
improving delivery systems for expanded coverage following adverse events, and greater resilience to future shocks;
and (b) Pillar 4 âStrengthening Policies, Institutions and Investments for Rebuilding Betterâ? by renewing efforts to
build equity and inclusion by offsetting the negative impacts of COVID-19 and move towards shared prosperity\.
15\. The proposed Program furthermore supports the World Bankâs âGreen, Resilient, and Inclusive Development â
GRIDâ? approach\.12 The proposed Program would support building resilience and inclusion across all facets of the
economy and society, in a context of growing fragility and a dramatic increase in inequality of outcome and
opportunities, which have been exacerbated by the COVID-19 crisis\. Specifically, the Program would support GRIDâs
focus on strengthening human capital through improved access and service delivery, while bolstering mechanisms
to ensure equal opportunities, equitable access and voice\.
Rationale for Bank Engagement and Choice of Financing Instrument
16\. The World Bank is well positioned to support the government of Côte dâIvoire expand the coverage and increase
the efficiency and effectiveness of its social safety nets system\. The World Bank has engaged in Côte dâIvoireâs
social protection sector over several years, bringing its international experience in building efficient and integrated
systems for delivering adaptive social protection services and building delivery systems to the country\. It has
supported the government in developing the building blocks of a harmonized, effective and efficient social safety
net system, and in further developing the PSNP\. The World Bank will continue promoting coordination and synergies
with financing and technical partners that are also supporting the government further develop its social inclusion
program (European Union, African Development Bank, etc\.)\.
17\. The PforR Program is therefore well-suited to support the government in strengthening its safety net system given
its strong focus on building country systems, strengthening institutional and governance arrangements while also
emphasizing achievement of results\. The safety net system is comprised of the PSNP, the associated delivery
system, as well as the countryâs shock response targeting households\. As such, the proposed Program will support
select priorities set out in the new PNDâs Pillar 4 âStrengthening social inclusion, national solidarity and social
actionâ?, in particular section 4\.4 âSocial inclusionâ?\. The choice of a PforR instrument relies on the following
considerations: (a) the operation can support the operationalization of elements constituting the safety nets system
as laid out in section 4\.4 of Pillar 4 of the PND; (b) the Program will leverage t he governmentâs existing social
protection instruments and programs and support needed reforms; (c) the PND identifies key outcomes whose
achievement could be incentivized through a results-based approach and financing; (d) there exists strong
government commitment to put in place a national safety net program that is effective and efficient to deliver relief
to beneficiaries; (e) a PforR could mobilize participation and contribution of other development partners and
agencies into a coherent, streamlined government program; and (f) Côte dâIvoire has built capacity in preparing and
11 World Bank Group (2020)\. Saving Lives, Scaling-up Impact and Getting Back on Track: World Bank Group COVID-19 Crisis Response Approach
Paper\.
12 https://www\.devcommittee\.org/sites/dc/files/download/Documents/2021-03/DC2021-0004%20Green%20Resilient%20final\.pdf
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implementing PforR Programs in the past, though the countryâs first PforR in the governance sector (Enhancing
Government Effectiveness for Improved Public Services, Board approval on April 5, 2019)\.
C\. Program Development Objective(s) (PDO) and PDO Level Results Indicators
Program Development Objective(s)
The Program Development Objective is to support the government to expand coverage and increase the efficiency and
effectiveness of its Social Safety Nets system
PDO Level Results Indicators
18\. The following PDO level results indicators are proposed to monitor the achievement of the PDO:
⪠Number of beneficiary households enrolled in the Productive Safety Nets program (PSNP)
⪠Share of women recipients of cash transfers under the PSNP
⪠Share of PSNP beneficiaries who participated in the complete set of economic inclusion measures
⪠Number of households registered in the RSU whose data is up to date
⪠Number of programs using the RSU to target its beneficiaries
⪠Operational framework of social ministries to respond to shocks adopted by the relevant authorities
D\. Program Description
PforR Program Boundary
19\. The MSLP is planning to develop its social inclusion program based on the PND priorities\. In 2020, the government
adopted the Program-Budget reform\. Since the reform adoption, the MSLP manages its own budget for the
implementation of a number of projects that are presented under the Social Inclusion section of the new PDN\.
However, even though the budget is now planned based on a programmatic approach, with clear objectives, results
and indicators, the ministry does not currently possess a detailed social inclusion program\. Developing such a
program has been declared a priority for the ministry after the nomination of the new government in April 2021 and
the adoption of key strategic documents that will guide the Presidentâs third mandate\. The ministryâs five-year social
inclusion program will be based on the newly adopted PND\.
20\. The PforR Program will be anchored in the governmentâs PND\. In particular, the PforR will be anchored under Pillar
4 on Strengthening Inclusion, National Solidarity and Social Action; and more specifically, the Pillarâs section 4\.4 on
Social Inclusion\. The priorities highlighted under the social inclusion section are:
⪠Result 1: Vulnerable households and individuals have accessed to humanitarian, social and community led
assistance as needed\.
⪠Result 2: Socio-community infrastructure are built as part of the community repair operations\.
⪠Result 3: Women and adolescent girls have life skills, and reproductive, maternal, newborn, child and
nutritional skills\.
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⪠Result 4: The communities have enhanced skills for building socio-community infrastructure and managing
local development\.
⪠Result 5: National coverage in terms of productive social safety nets for poor and vulnerable households /
populations is ensured\.
⪠Result 6: Unique National Registry (RSU) of poor and vulnerable households (integrated social information
system) is set up to ensure better targeting of social programs\.
The proposed PforR will support Results 1, 5 and 6 of the social inclusion section 4\.4 of the PND\.
21\. To achieve the PDO, the proposed PforR focuses on three results areas and foresees an IPF component to support
technical assistance\. The PDO of the proposed PforR is to support the government expand the coverage and
increase the efficiency and effectiveness of its Social Safety Nets system\. The efficiency of the Social Safety Nets
system refers to the aim of the proposed operation to (a) strengthen the systemâs delivery systems, including the
RSU, for social programs to support poor and vulnerable households in a more efficient way; and to (b) enhance the
systemâs coordination and adaptability to respond faster and in a more targeted manner in times of shocks\. Results
areas 2 and 3 will contribute to achieving this part of the PDO\. The effectiveness of the Social Safety Nets system
refers to the impact that the PSNP has: (a) through its economic inclusion measures, which provide cash transfer
beneficiaries with a pathway to improved earnings and resilience; and (b) how the PSNP addresses vulnerabilities
and constraints that poor women in particular face\. Results area 1 will contribute to achieving this part of the PDO\.
22\. The following results areas are being proposed:
a) Results Area 1: Strengthen the PSNP to run at scale in a sustainable manner\. The PSNP expanded to a
cumulative 227,000 households in 2020 and is now covering all regions of the country\. The PND aims to expand the
coverage of the PSNP to 300,000 households by 2025 and sustain its stock over time, as well as to offer economic
inclusion measures to all beneficiaries\. The Program will support the ambition of the government to achieve a
constant stock of 300,000 beneficiary household\. Furthermore, the Program will help the government apply a strong
gender focus, by giving preference to women in beneficiary households for cash transfers and economic inclusion
measures\. As such, the PforR will contribute to womenâs economic and social empowerment\. Finally, the Program
will support reforms to institutionalize the implementation of economic inclusion measures: the reforms aim to
strengthen the function of the decentralized social workers, which are housed in the regional centers, for the PSNP
to no longer depend on long term consultants\. This Results Area thus aims to improve the PSNPâs coverage and
impact, with a focus on women\.
b) Results Area 2: Support the Unique Social Registry (RSU) to facilitate the delivery of services to the poor
and vulnerable\. A decree adopted in September 2019 established the RSU, anchoring it in the MSLP\. In parallel, two
social programs (the PSNP and the CMU) collected data on 800,000 poor households in the country that will feed
into the RSU once its Management Information System (MIS) is operational\. The Program will support the
operationalization of the RSU (at the technical and operational levels), the registration of all poor households in the
country and data sharing with different social programs to increase efficiency and coordination in the delivery of
services to poor and vulnerable households\. This Results Area thus aims to support the RSU become a central tool
of social programs that enables the quick, reliable and efficient targeting of poor and vulnerable households across
the country to improve support services by social programs to the poor and vulnerable\.
c) Results Area 3: Lay the grounds for an efficient and adaptative social safety nets system\. So far, the
countryâs efforts focused mostly on developing large scale social programs (PSNP and CMU) and the RSU\. Limited
efforts have been made to bring the different elements together as a coherent system, where the impact of the
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overall system is higher than the sum of its parts\. Furthermore, the country lacks a clear shock responsive strategy\.
Shocks are managed ad hoc, with systems put in place ad hoc\. A recent example is the COVID-19 pandemic, during
which the government set up the FSSH as a cash transfer program in parallel to the PSNP\. The Program will support
the consolidation of an efficient and adaptive social safety nets system, including the following elements: (i)
strengthening of delivery system beyond the RSU\. This includes questions related to joint payment platforms and a
GRM for social programs; (ii) development and piloting of shock-responsive operational tools; and (iii) adoption of
a financing strategy to ensure the availability of sufficient financial resources to implement and sustain an adaptive
safety nets system\. This Results Area thus aims to improve the coordination of a safety nets system that is responsive
to shocks for programs and services to leverage the systemâs building blocks in an efficient manner\.
d) IPF component to provide technical assistance (TA) (US$ 5 million): The proposed PforR includes an IPF
component to provide TA on various aspects during the implementation of the Program\. Related to Results Area 1,
it would provide TA to support: (i) the design and organization of an impact evaluation of the PSNP; (ii) yearly process
evaluations on the PSNP; and (iii) the update of the MIS of the PSNP to reflect operational lessons\. Related to Results
Area 2, it would provide TA to support: (i) the update and upgrade of the RSU-MIS to reflect operational lessons; (ii)
the assessment of the accuracy of the targeting methodology to improve targeting performance; and (iii) periodic
process evaluations\. Related to Results Area 3, it would provide TA to support: (i) training and knowledge exchange
to increase the capacities of the leadership team of the social safety nets system; (ii) the improvement of the GRM
mechanisms to meet WB safeguards standards; and (iii) the assessment and development work required for the use
of a coordinated and efficient payment platform\.
23\. The proposed PforR particularly emphasizes womenâs social and economic empowerment and a more ambitious
shock responsive system than foreseen under the government program\. While the PND highlights the particular
social and economic constraints that women face in Côte dâIvoire, it does not directly link its social inclusion section
with objectives related to womenâs empowerment\. Yet, social safety net systems can be used as a vehicule to
strengthen womenâs economic and social position within the household as well as the broader community\.
Futhermore, the governmentâs envisioned shock response ambition is limited\. The proposed PforR would incentivize
the government to develop a more ambitious operational framework that would allow to respond to shocks
disproportionnally affecting poor and vulnerable households\.
24\. The World Bank will disburse up to US$ 145 million over five years through seven Disbursement-Linked Indicators
(DLIs) that are defined under the PforR\.
E\. Initial Environmental and Social Screening
25\. The risk screening at PCN suggests that the overall social impact of the operation is likely to be positive regarding
the specificity and the content of the Program\. The Program will improve household income and influence positive
behavioral changes in targeted communities\. On the basis of pre-determined criteria, the Program will target the
poorest and most vulnerable communities\. It will provide cash transfers and engage in community awareness
related to human capital and essential family practices for longer-term social benefits, with a specific focus on
women and children\.
26\. The social risks and adverse impacts of the Program are expected to be Moderate\. Risks are mainly related to
potential elite capture, lack of voice for the most vulnerable, functioning of the GRM and SEA/SH risks associated to
payments and income changes within the households\. These social risks will need to be adequately assessed and
mitigation measures will need to be put in place\. As the Program will also undergo an environmental and social
May 18, 2021 Page 9 of 10
The World Bank
Côte d'Ivoire Social Safety Nets System strengthening (P175594)
systems assessment (ESSA), the social risks will be assessed further, and a clear list of exclusion activities and
mitigation measures will be put in place\.
27\. The environmental risk is rated as Low\. The Program is not expected to cause impacts on physical and cultural
resources or natural habitats, as the focus will be on productive safety nets and technical assistance\. The Program
will support minor civil works for small scale installation and the equipment of the RSU Unit\. These interventions
are expected to take place in the property of existing building or facilities; therefore, environmental issues (and
impacts thereof) are expected to be temporary, predictable, and easily mitigated\. Currently, the Program is not
expected to cause any physical or economic displacement; however, should any of the small scale installation cause
any concern, these will need to be assessed and mitigated as per the process outlined in the Environmental and
Social Management System (ESMS) established by the program\.
28\. An ESSA will be prepared by Q2 of FY22 to assist the Program in mitigating environmental, social, health and
safety issues associated with activities\. The ESSA will provide a comprehensive review of relevant government
systems and procedures that address environmental and social issues associated with the program\. The proceeding
IDA-projects â Productive Social Safety Nets project (P143332) and its Additional Financing (P167623) â established
the current PIU, which has developed good capacity to implement the PSNP at some scale\. It has also gained some
experience and institutional capacity to manage expected social and environmental risks and impacts, even though
these were considered low in the last two operations\.
29\. The ESSA will describe the extent to which the applicable government environmental and social policies,
legislations, program procedures and institutional systems are consistent with the World Bankâs standards \. The
ESSA will include recommendations and Program Action Plans (PAPs) to address the gaps and to enhance
performance during Program implementation and capacity of stakeholders\. For the ESSA, the team will review the
environment and social systems that are relevant to the Program\. Potential aspects to be assessed would be energy
efficiency standards, waste management, genders gaps, and access to the Program by vulnerable groups (e\.g\. people
with disabilities, minor ethnic and communities living in enclave areas and/or without mobile phone connection,
etc\.)\. Public consultations with key stakeholders or representatives will be carried out in preparation of ESSA\. A draft
of the ESSA will also be available at the country website for public comments and review\. The final version of the
ESSA will be disclosed by the Bank after it is published on the national governmentâs website\.
\.
Legal Operational Policies Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
Summary of Screening of Environmental and Social Risks and Impacts of the IPF Component
\.
May 18, 2021 Page 10 of 10 | APPROVAL |
P155601 | PROJECT INFORMATION DOCUMENT (PID)
ADDITIONAL FINANCING
Report No\.: PIDA25317
Project Name Addl\. Financing - Scaling Up Sustainable and Responsible
Microfinance (P155601)
Parent Project Name India: Scaling Up Sustainable and Responsible Microfinance
(P119043)
Region SOUTH ASIA
Country India
Sector(s) Microfinance (100%)
Theme(s) Rural non-farm income generation (10%), Other social protection
and risk management (20%), Micro, Small and Medium Enterprise
suppor t (50%), Financial Consumer Protection and Financial
Literacy (6%), Other Financial Sector Development (14%)
Lending Instrument Investment Project Financing
Project ID P155601
Parent Project ID P119043
Borrower(s) SIDBI
Implementing Agency
Environmental Category F-Financial Intermediary Assessment
Date PID Prepared/Updated 02-Jun-2015
Date PID Approved/Disclosed 02-Jun-2015
Estimated Date of Appraisal 02-Jun-2015
Completion
Estimated Date of Board 08-Sep-2015
Approval
Appraisal Review Decision The review did authorize the team to appraise and negotiate
(from Decision Note)
I\. Project Context
Country Context
Financial Inclusion in India, has primarily been largely designed and implemented by the banking
system, as a result of government mandate\. Other diverse stakeholders including technology
service providers, self-help groups (SHGs)/community organizations, government programs have
played a supporting role\. Since the 1990s, microfinance institutions (MFIs) have played an
increasing role in delivery of financial services to the doorstep of hitherto excluded customers\.
Between 2005 and 2010, Indian microfinance was among the fastest growing microfinance sectors
in the world\. Due to a complexity of factors including rapid growth rates fuelled by private equity
investments and substantial debt from banks alongside increasing rivalry between the MFIs and
state run SHG model, the year 2010 saw the biggest crisis in Indian microfinance\. The liquidity
Page 1 of 5
crunch forced several MFIs to revise their business plan and cut down on the growth targets\.
Consequently, the financial performance of the MFIs showed signs of stress across all key
parameters related to growth, portfolio at risk, margins which translated into operational and
financial losses\. It was only the continued support of SIDBI and the public sector commercial banks
(albeit in a much more cautious way than before) that prevented a complete funding withdrawal and
attendant disaster in the sector\.
The parent project â âScaling Up Sustainable and Responsible Microfinance Projectâ (P119043)
supports Indiaâs efforts to enhance access to financial services for the poor\. This has remained a
long-term challenge in India, despite numerous initiatives to improve access to the financially
underserved segments\. A significant portion of Indiaâs population remains unserved by Indiaâs well
developed formal banking sector\. The microfinance sector bridges this âaccess gapâ by providing
thrift, credit, and other customized financial services to the under-served with the aim of improving
living standards and raising incomes\.
A significant achievement of the parent project is the introduction of the responsible finance
initiative\. Responsible Finance spearheaded by SIDBI under the World Bank funded project
linked MFI funding to performance criteria and actions revolving around greater transparency,
responsible expansion, accountability, growth in under-served areas, disclosure, and good
governance in the microfinance sector, thereby contributing to a responsible finance initiative,
Under the parent project 30 MFIs with nearly 16 million clients have been supported (of which 1\.4
million received funding from the Bankâs loan)\. Most of the clients of the MFIs â and, as a result,
most of the recipients of financing under the Bankâs loan â are women\. 82 percent of them are in
underserved areas (defined in the parent project as areas outside the five southern states of
Telangana, Andhra Pradesh, Karnataka, Kerala, and Tamil Nadu which accounted for more than 70
percent of the microfinance sector previously)\.
The parent project has also helped SIDBI provide innovative financing through equity/quasi-equity
investments in MFIs totaling about US$5 million to help the long-term financing needs of MFIs\.
The proposed additional financing (P155601) for this well-performing project will help sustain
SIDBIâs ongoing successful efforts in the microfinance sector and lock-in the gains from the parent
project so that the positive momentum built up thus far is entrenched and further capitalized upon\.
Sectoral and institutional Context
Access to financial services for Indiaâs poor remains a key development challenge, as a significant
part of the population is under-served by the formal banking sector, The microfinance sector, which
bridges the âaccess gapâ by providing thrift, credit, and other customized financial services to the
under-served, with the aim to help raise incomes and improve living standards, has been growing
exponentially in India\. This growth has contributed to reducing the gap between the unmet demand
for and supply of financial services for under-served households and microenterprises\. However,
two overarching challenges remain: (i) a large unmet demand for financial services by Indiaâs
under-served segments, particularly in states where market penetration has been extremely low; and
(ii) rapid expansion, which introduces the dual challenge of maintaining good-quality growth while
promoting responsible finance among MFIs\.
The parent project has consistently performed well and latest project implementation ratings are
Highly Satisfactory for Progress towards Achievement of PDO and Satisfactory for Implementation
Page 2 of 5
Progress\. (The project has been rated Moderately Satisfactory or higher on both PDO and
Implementation Progress throughout its implementation period)\. The parent project has achieved
impressive results and has met or surpassed all targets in its results indicators\. Progress on all four
PDO indicators that relate to the leverage of project funding by other resources, targeting of project
funding to underserved areas, sustainability of operations of funded MFIs and data transparency (all
responsible finance dimensions), exceeds targets\. Performance on most intermediate indicators is
also strong\. There is evidence of significant improvements in responsible lending practices, better
disclosure of interest rates, better structured grievance redress mechanisms, enhanced credit
reporting, etc\. now being in place, clearly demonstrating that the progress on more customer
friendly practices has led to positive actions on the ground\.
II\. Proposed Development Objectives
A\. Current Project Development Objectives â Parent
The objective of the project is to scale up access to sustainable microfinance services to the
financially excluded, particularly in under-served areas of India, through, among other things,
introduction of innovative financial products and fostering transparencyand responsible finance\.
III\. Project Description
Component Name
Component I: Scaling up funding for Microfinance Institutions (MFIs)
Comments (optional)
SIDBI will increase the amount it provides as innovative quasi-equity/equity finance up to 40 per
cent of the overall financing\.
Component Name
Component II: Strengthening responsible finance
Comments (optional)
SIDBI will continue to support key sector development and responsible finance efforts
Component Name
Component III: Capacity Building and monitoring
Comments (optional)
SIDBI will undertake an impact evaluation in 2018 - after the proposed mid-term review of the
additional financing in 2017 â using the baseline data generated under the parent project to assess
the impact of the project along economic, financial, income, welfare,and social performance
dimensions\. Under the support for the communications strategy, SIDBI will hire a communications
expert to help ensure that the benefits and lessons learned from this intervention are shared with the
wider microfinance sector\.
IV\. Financing (in USD Million)
Total Project Cost: 300\.00 Total Bank Financing: 200\.00
Financing Gap: 0\.00
For Loans/Credits/Others Amount
Page 3 of 5
Borrower 100\.00
International Bank for Reconstruction and Development 200\.00
Total 300\.00
V\. Implementation
The implementation arrangements under the proposed additional financing would remain the same
as for the parent project\. SIDBI will continue to be responsible for implementation\. SIDBI is well
placed to implement the project and experience with SIDBIâs implementation of the parent project
has been satisfactory\. The Operations Manual currently in place for the implementation of the parent
project will continue for the additional financing as well\. Funds flow arrangement would be the
same as before, as would the safeguards framework\. Arrangements for continued monitoring and
evaluation of outcomes and results will be discussed and finalized during discussions with SIDBI\.
VI\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
Comments (optional)
VII\. Contact point
World Bank
Contact: Subrahmanya Pulle Srinivas
Title: Lead Financial Economist
Tel: 5785+79196
Email: psrinivas@worldbank\.org
Contact: Varsha Marathe Dayal
Title: Sr Financial Sector Spec\.
Tel: 5785+79436
Email: vmarathe@worldbank\.org
Borrower/Client/Recipient
Name: SIDBI
Contact: Vivek Malhotra
Title: Dy\. General Manager
Tel: +915222288546
Email: vivekm@sidbi\.in
Page 4 of 5
Implementing Agencies
Name:
Contact:
Title:
Tel:
Email:
VIII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Page 5 of 5 | APPROVAL |
P105329 | Page 1
1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: 38887
Project Name
GREATER MEKONG SUBREGION (GMS) POWER
TRADE PROJECT: CAMBODIA
Region
EAST ASIA AND PACIFIC
Sector
Power (100%)
Project ID
P105329
Borrower(s) CAMBODIA
Implementing Agency
Environment Category
[] A [X] B [ ] C [ ] FI [ ]
Safeguard Classification
[] S
1
[
]
S
2
[
]
S
3
[
]
S
F
[
]
Date PID Prepared
February 22, 2007
Estimated Date of
Appraisal Authorization
March 1, 2007
Estimated Date of Board
Approval
May 31, 2007
1\.
Key development issues and rationale for Bank involvement
The GMS region, comprising of Cambodia, Lao PDR, Myanmar, Thailand, Vietnam, and
Yunnan province of China, spread over 2\.3 million square kilometers, houses a population of
about 260 million\. While growing rapidly, the region exhibits acute disparity among the
countries in terms of economic and human development\. Despite large endowment of energy
resources, the regions per capita consumption of electricity is low ranging from about only 63
kWh per annum in Cambodia to about 1,900 kWh per annum in Thailand\. The six GMS member
countries are largely characterized by national electricity demands that do not match with
national electricity producing resources\. The economic rationale for this electricity integration
lies in the striking diversity in - electrification ratios, electricity demand and demand growth,
electricity tariffs, generation mix, the current state of development of power infrastructure and
above all in the endowment of electricity generation resources vis-à-vis electricity demand - in
the six countries\. High electricity demand growth in the region over the next fifteen years would
require capacity addition of almost 100 GW more than twice its present capacity and
matching investments in transmission and distribution systems\. Over the next decade, financing
needs in the electricity sectors of Thailand and Vietnam alone are estimated to be about US$3
billion / annum, and US$2billion / annum respectively\.
Momentum for regional economic integration and, in particular, integration of electricity systems
among the countries in the GMS region has been growing steadily\. The ADB, WB, and other
development partners are actively engaged in fostering a coordinated approach towards
development of the GMS countries resources, and their activities currently touch upon the
following sectors - agriculture, environment, human resource development, investment, energy
(electricity), telecommunications, tourism, trade and transport\. The WBs strategy is now
articulated in the April 2006 Strategy Note on Economic Cooperation across the Mekong Sub-
Region\. The Bank supports the development of frameworks for joint action; their
Page 2
2
implementation through AAA, TA, capacity building, dialogue, and investment; and helps
ensure that what is being proposed and implemented at the regional level complements and
reinforces country level activities and programs\. The Banks GMS regional assistance strategy
focuses on two main areas (i) continued support to the development of power trade, and (ii)
enhancing collaboration on Mekong water resource management\. The Bank is also ready to
provide assistance in other areas, upon discussion with the GMS governments and the ADB\.
Two areas where work has already been identified and is in the initial stages are support to trade
and transport facilitation and analytical work on labor migration in the GMS region\.
Country commitment and ownership of relevant policies and strategies for developing a regional
power trade market is strong\. The member countries first established the GMS Power Forum in
1992\. Support from the ADB and the Bank culminated in the Intergovernmental Agreement on
Regional Power Trade (IGA) signed by all countries in November 2002\. Key objectives of the
IGA are: (i) cost minimization in planning and operation of power provision; (ii) full cost
recovery and equitable sharing of benefits of investments; (iii) provision of reliable and
economic electricity to all parties\. There is also concerted endorsement of private sector
participation in sector development in all six countries\.
Analytical work to demonstrate the benefits of strengthening regional transmission
interconnections, and options for market design were prepared with donor assistance\. A
Regional Power Trade Coordination Committee (RPTCC) was established as the high level body
responsible for actively coordinating and guiding the markets development
\.
Since its
establishment, five RPTCC meetings have been held in China (2004), Thailand, Laos, Myanmar
(2005), and Cambodia (2006)\. RPTCC has so far reviewed the GMS energy cooperation
activities; began implementing the RPTCC Work-plan; and most recently, agreed to conduct a
study on an integrated regional master plan for power development in the GMS\. Technical
working groups have been established recently to assist in implementation\. At present, detailed
design of future market, action plans for implementation, and alignment of regional and national
investment priorities are in the process of being discussed among the participants and analytical
work is in progress\.
The Bank has the unique experience of helping develop power markets in other regions (South
East Europe and sub-Saharan Africa), and is, therefore, well positioned in bringing that
experience to the GMS\. The Bank has been an active participant in all five RPTCC meetings,
and working closely with ADB, has helped shape the RPTCCs agenda and work-plan for
implementing the IGA\. With support from PHRD, the Bank has contributed to analytical work
such as developing a power import-export strategy for Lao PDR, and an Energy Sector Strategy
Study and a power development plan for Cambodia; developing principles for ownership and
benefit-sharing of cross-border investment projects; good practice guidelines for bilateral power
trade; defining the scope of work for an integrated regional power master plan which will
inculcate a regional integrated planning culture in the development of national power plans;
and is going to finance a feasibility study for EHV interconnections between South China and
Vietnam\. The Bank presented a workshop on international experiences in the August 2006
RPTCC meeting, which was greatly appreciated by the participants\.
A
draft strategy note outlining the Banks strategy for its support for the GMS regional
electricity market has been recently prepared\. The following key principles govern Bank
strategy:
Page 3
3
Overcoming obstacles facing the development of an economically, technically,
institutionally, environmentally and socially sustainable regional electricity market;
Fostering a regional integrated planning culture based on consensus, that ensures (i)
optimal development of the regions resources; and (ii) consistency of bilateral national
transactions with ultimate market goals;
Ensuring the application of sound principles in the development of the market
infrastructure, its institutions and its operating rules and regulations; and
Supporting, in the early years, initiatives and investments in bilateral trade through: (i)
large power transfers between countries (such as China-Thailand, China-Vietnam, Laos-
Thailand, Laos-Vietnam, Myanmar-Thailand); and (ii) more modest power transfers
between the contiguous borders (such as Laos-Cambodia, Vietnam-Cambodia) which would
bring in tremendous benefits of economical electricity in the recipient border areas\.
The Banks strategy is comprised of a two-pronged approach, combining institutional/policy
support and investment support to help achieve the above objectives\. Investment support would
assist with the construction of cross border connections and the preparation of investments in
physical infrastructure generation and transmission, while the institutional component would aim
at strengthening the institutional capacity at the regional and individual country levels to
facilitate power transactions reflecting market principles of power trading\.
2\. Proposed objective(s)
The ultimate development objective of the GMS regional power trade program is to lead to the
realization of an integrated GMS Power Grid and a Power Market\. The attainment of this
objective and removal of barriers is expected to take several years\. These barriers are being and
would continue to be addressed through concerted and sustained efforts, over the next several
years, on the part of IDA, ADB and other development partners, and the GMS countries
themselves through the RPTCC\. A regional APL for supporting the regional power trade would
be developed within the next two years on: (i) successful completion and adoption of the
Regional Power Master Plan followed by consensus on its implementation; and (ii) agreement
among the GMS countries on the road map for a phased implementation of the long-term
program\.
Nested within the aforementioned long-term GMS framework, two proposed Projects- GMS
Power Trade (Cambodia) and GMS Power Trade (Lao PDR) being prepared simultaneously-
have the following three immediate development objectives: (i) to bring affordable grid-based
electricity to Cambodias provinces of Kampong Cham and Stung Treng, through import of
power from Lao PDR and Vietnam; (ii) to supply affordable grid based electricity to the
province of Saravan in Lao PDR in the near term while establishing a portion of a transmission
link that would in the medium-term help interconnect Cambodia and Thailand through southern
Lao PDR to increase power trade among them; and (iii) to help establish load dispatching
facilities and capabilities in Lao PDR, that would enable it to optimize its system operation and
facilitate its participation in regional trade\.
In a broader sense, the proposed project would also contribute
towards promoting regional power
trade through demonstrating the establishment of mechanisms for common design, financing,
and construction of cross-border links and commercial agreement underpinning such
transactions\.
Page 4
4
3\. Preliminary
description
GMS-Power Trade (Cambodia) Project
:
This Project has the following key components:
Component C-1: 115 kV Transmission System: Vietnam-Border to Kampong Cham:
This
component is the Cambodia portion of a 115 kV transmission line from Tai Ninh Substation in
Vietnam to Kampong Cham Substation in Cambodia\. It would enable import of power
1
from the
South of Vietnam to the Kampong Cham Province in Cambodia\.
Component C-2: 115 kV Transmission System: Lao-Border to Stung Treng:
This component is
the Cambodia portion of a 115 kV transmission line from Ban Hat Substation in Lao PDR to
Stung Treng Substation in Cambodia\. It would enable import of surplus hydropower from the
south of Lao PDR to the Province of Stung Treng in Cambodia\.
Component C-3: Consulting Services for project design and management for Components C-1
and C-2
(about 35 staff-months) would be provided to assist EDC in design and supervision of
implementation\. An independent Procurement Agent (PA) would be hired by the Ministry of
Economy and Finance for IDA projects, including GMS-PT (Cambodia) project\.
Component C-4 and C-6
would provide incremental operating costs to EDC and MIME\.
Component C-5: Detailed Feasibility Study for a Hydropower
:
This component would advance
the pre-feasibility level studies to detailed feasibility stage studies a hydropower project jointly
selected by IDA and the Ministry of Industries, Mines and Energy (MIME)\. The study would
include an assessment of environmental and social impacts, dam safety issues, review the
application of Banks safeguards policies, and make recommendations on mitigation measures,
according to Terms of Reference satisfactory to the Bank\.
Component C-7
:
Institutional Development of MIME and EDC\. This component would finance
consulting assistance to EDC for strengthening its Internal Audit department; EDC and MIME
for strengthening power sector planning and institutionalizing the processes developed in
preparing the recent power system development plan with the assistance of a Japanese (PHRD)
Grant\.
4\.
Safeguard policies that might apply
Safeguard Policies Triggered
Yes No
Environmental Assessment
(
OP
/
BP
/
GP
4\.01) [X]
[
]
Natural Habitats
(
OP
/
BP
4\.04) [X]
[]
Pest Management
(
OP 4\.09
)
[
]
[X]
Cultural Property
(draft OP 4\.11 -
OPN
11\.03
-)
[X] []
Involuntary Resettlement
(
OP
/
BP
4\.12) [X]
[
]
1
While initially used for power import, the line could, in the medium and long term plans with hydropower
development in Cambodia, help transfer surplus hydropower from Cambodia to Vietnam\.
Page 5
5
Indigenous Peoples
(
OD 4\.20
)
[] [X]
Forests
(
OP
/
BP
4\.36) []
[X]
Safety of Dams
(
OP
/
BP
4\.37) [
]
[X]
Projects in Disputed Areas
(
OP
/
BP
/
GP
7\.60)
*
[
]
[X]
Projects on International Waterways
(
OP
/
BP
/
GP
7\.50)
[X] []
5\. Tentative financing
Source:
Cambodia
BORROWER/RECIPIENT
(US$ million)
1\.50
INTERNATIONAL DEVELOPMENT ASSOCIATION
18\.00
Total
19\.50
6\. Contact points
Contact:
Mohinder Gulati (TTL)
Apurva Sanghi (co-TTL)
Title:
Lead Energy Specialist (EASTE)
Senior Economist (EASOP)
Tel:
(202) 473-3211
(202) 458-8974
Fax:
(202) 522-1648
(202) 522-1787
Email:
Mgulati@worldbank\.org asanghi@worldbank\.org
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Page 6
6 | APPROVAL |
P007300 |  ICRR 10508
Report Number : ICRR10508
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID :
OEDID: C2053
Project ID : P007300
Project Name : Fifth Power Project
Country : Haiti
Sector : Distribution & Transmission
L/C Number : C2053-HA
Partners involved : CIDA, AFC, IDB
Prepared by : George T\. K\. Pitman, OEDST
Reviewed by : Alain A\. Barbu
Group Manager : Gregory K\. Ingram
Date Posted : 08/16/1999
2\. Project Objectives, Financing, Costs and Components :
Project Objecti ve: Initially, the objective was to support Haiti's economic development by providing reliable power
supplies, particularly for the industrial and commercial sectors \. The project aimed to expand the generating facilities
at Port-au-Prince, supplying power to the cities of Hinche and Thormande and improving the efficiency of Electricite
d' Haiti (EdH) by reducing non-technical losses, institutional improvement and training to strengthen EdH's
managerial and technical capacity \. Following an international embargo of Haiti and suspension of disbursement from
the IDA credit 1991-94, the project was restructured in 1996 to allow for the privatization of EdH \. At restructuring,
IDA refocused primarily on implementing the physical components while CIDA, AFD and IDB took over support for
institutional strengthening and development \.
Financing and Costs : Approved in June 1989 and made effective in January 1990, total project costs were US$26\.8
million compared with the appraisal estimate of US$ 27\.6 million\. After restructuring in 1996, the project closed five
years behind schedule in January 1999 at which time US$25\.4 was disbursed from the IDA credit\. An outstanding
balance of SDR 0\.522 million will be canceled\.
Components : The initial seven components were reduced to five following the 1996 restructuring: (1) installation of
additional generating units in Port -au-Prince; (2) preparation and implementation of a program to reduce
non-technical losses from 40% to 15%; (3) a study to determine site and costs for medium speed generating plants
to be constructed by EdH; (4) a study to determine EdH's tariffs; and (5) a smaller institutional development and
training program to facilitate implementation of the loss -reduction program, improve the effectiveness of EdH's high
level staff, and upgrade EdH's information, inventory and accounting systems \.
3\. Achievement of Relevant Objectives :
The project did not achieve its revised objectives to privatize EdH \. While the level of service improved, it is not
sustainable\.
4\. Significant Achievements :
The physical objectives were substantially achieved \. Power generation facilities were expanded by 31 MW at
Port-au-Prince but have yet to be fully commissioned \. Hinche and Thermonde were provided with diesel -powered
generating plants\. Electricity generation increased from 466 GWh in 1995 to 663 GWh in 1998 and service in Port au
Prince increased from four hours /day in 1995 to 18 hours/day in 1998\. The power loss reduction study was
implemented (but only as a small pilot), the tariff study was conducted and the pre -feasibility study for new 60 MW
diesel plant was completed\. Partly as a result of this project, government enacted the Law of Modernization of Public
Enterprises that allowed creation of the Counsel for Modernization of Public Services to promote private participation
in public enterprises and transfer of operations to private companies \.
5\. Significant Shortcomings :
Despite significant advances in the legal and regulatory environment, government support for the privatization of
EdH is beset with indecision and delays and the expected efficiency improvements of EdH did not occur \.
Government is more interested in supplying power at any price over the short -term than taking unpopular measures
for long-term results such as supporting EdH's actions to cut off illegal customers and allow tariff restructuring \. As a
result, EdH is caught in a declining performance spiral \. Since 1989, non-technical electricity losses have risen from
29% in the Port-au-Prince area to 55% by 1998 (compared with the restructured target of 35%), accounts receivable
have increased from 75 days in 1997 to 181 days in 1998\. In consequence, the FRR continuously declined and was
-10% in 1998\. These problems are compounded by the loss of key EdH staff due to lack of incentives, low salaries
and political interference in EdH's management \. Procurement was also fraught with difficulties because of the
uncertain political and economic environment, preparation of the consultant's terms of reference and contract without
participation of EdH who had to work with them, poor specification and muddled contract award procedures : the
Bank had not learned the lessons from the three previous operations with EdH \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Unsatisfactory Unsatisfactory
Institutional Dev \.: Negligible Negligible
Sustainability : Uncertain Unlikely There is a lack of political will to ensure an
enabling environment and make the hard
policy and management decisions
essential for the financial viability of EdH -
and these are disincentives to a private
sector concession or ownership \.
Bank Performance : Deficient Unsatisfactory The ratings are the same\. The ICR rates
Bank as deficient at appraisal but
satisfactory during supervision \.
Borrower Perf \.: Deficient Unsatisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
When the political environment is unstable, the risks should be thoroughly examined at appraisal and
realistically factored into operational and financial projections;
While government ownership is vital at the policy level, it is also important to maintain law and order at
grassroots level to facilitate collection of users' fees - a prerequisite for financial viability;
A comprehensive long-term program attending to all the details is essential for a successful electricity
loss-reduction campaign;
Technical assistance programs cannot be a substitute for ownership, sound planning and management by the
utility; and
Projects that focus on the hardware to the detriment of policy reform, fail to take account of the lessons from
previous operations and off -load institutional development and strengthening to other agencies, stand a high
chance of failing\.
8\. Audit Recommended? Yes No
Why? To establish how the privatization process is proceeding and how the Bank's partnership with
CIDA, AFD and IDB is working out\.
9\. Comments on Quality of ICR :
Generally satisfactory, but overly focused on provision of physical infrastructure \. Also more information could have
been included to explain the interrelationships among the external partners - it appears the Bank has opted out of a
difficult situation without resolving the pressing institutional policy issues and expects IDB to take over \. It is not clear
from the ICR whether CIDA, AFC and IDB are joint or parallel financiers (the Region subsequently clarified that the
CIDA/AFD TA was a separate project)\. | APPROVAL |
P162397 | COMBINED PROJECT INFORMATION DOCUMENTS / INTEGRATED
SAFEGUARDS DATA SHEET (PID/ISDS)
Additional Financing
\.
Report No\.: PIDISDSA21768
Date Prepared/Updated: 26-Jul-2017
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Lesotho Project ID: P162397
Parent Project ID (if P119432
any):
Project Name: Lesotho Smallholder Agriculture Development Project Additional
Financing (P162397)
Parent Project Name: Lesotho Smallholder Agriculture Development Project (P119432)
Region: AFRICA
Estimated Appraisal Date: 12-May-2017 Estimated Board Date: 15-Sep-2017
Practice Area (Lead): Agriculture Financing Instrument: Investment Project
Financing
Borrower(s) Ministry of Agriculture and Food Security
Implementing Agency Ministry of Agriculture and Food Security
Financing (in USD Million)
Financing Source Amount
International Development Association (IDA) 10\.00
Financing Gap 0\.00
Total Project Cost 10\.00
Environmental Category: B-Partial Assessment
Appraisal Review Decision The review did authorize the team to appraise and negotiate
(from Decision Note):
Other Decision:
Is this a Repeater project? No
\.
\.
B\. Introduction and Context
Country Context
The Kingdom of Lesotho is a small mountainous country characterized by extensive land degradation
and erratic climatic conditions\. It has a population of 2\.1 million people of whom around 57% live
below the poverty line and 34 percent fall below the extreme poverty line (CPF, 2016)\. The country is
also beset with high unemployment rates and a high incidence of HIV/AIDS\. This interaction of socio-
economic factors and environmental constraints results in low agricultural productivity with maize
yields averaging only 800 kg/ha leading to food and nutrition insecurity\.
Variations in the Kingdomâs topography and micro-climate shape its ecological zonesâthe lowlands,
the foothills, the highlands, and the Senqu (Orange) River Valley\. Annual precipitation is highly
variable, both temporally and spatially, ranging from 500 mm to 760 mm\. Temperatures are also
highly variable, ranging from â10°C to 30°C\. Agriculture accounts for less than 10 percent of the
countryâs gross domestic product, but it provides employment for as many as 63 percent of the
country's population\. The crop sectorâs contribution to agriculture GDP declined by 17\.2% in 2015,
with the main crops of maize, sorghum, and wheat planted on more than 85 percent of the cultivated
area\. Livestock contributes 30 percent of total agricultural output, including domestic production of
pigs and poultry and extensive production of wool and mohair on rangelands in the hill and highland
areas\.
The IPCC categorizes Lesotho as one of the countries highly vulnerable to the impacts of climate
change\. The country has a temperate climate with subalpine characteristics, having four distinct
seasons, and experiences regular droughts, floods, frosts, snow, hailstorms, and strong winds\.
Frequent droughts result in poor harvests and large livestock losses to rural farmers\. Dry spells also
create food shortages and can lead to an increase in invasive plants and destructive insects\. Strong
winds and floods also pose devastating threats to Lesothoâs agricultural sector; as a result, there are
large swings in output, with maize yields ranging from a high of more than 1\.5 t/ha in 1977 to only
170 kg/ha in 2011\.
The impact of climate change on crop and livestock production systems, and consequently livelihoods,
may be severe if existing cropping and land use systems remain unchanged\. Lesotho is over-reliant on
rain-fed agriculture for food production and has a large rural population engaged in undiversified
subsistence farming\. Climate change and increasing climate variability may be reflected in reduced
crop yields and increased incidence of crop failure\. There is also likely to be a decrease in forage
production and a decline in the carrying capacity of the rangelands, which will have negative impacts
on livestock production resulting from reduced animal vigor and fertility\. As animal condition
deteriorates, the quality of animal products, especially wool may decline\. Furthermore, there may be a
higher incidence of livestock pests and diseases which will have negative implications for animal
production\.
Less than 1 percent of crop production in Lesotho is under irrigation and almost all subsistence and
smallholder farming is rain-fed\. The development of medium to larger irrigation schemes is expensive
and may not be suitable due to the demanding topography and geology, and lack of local scheme
management skills and experience is a serious limitation\. The fragile soils also demand very careful
irrigation management\. Thus, while water is available, it is being allocated for other purposes and
farmers have yet to productively exploit their countryâs water resources\. Small-scale water harvesting
schemes are seriously lacking and yet these remain viable adaption options for smallholders in the face
of expected climate change impacts on water resources\.
The commercial farming sector in Lesotho remains underdeveloped\. Full-time commercial farmers
are still few in number, and specialized agribusiness firms are equally scarce\. Lesotho stands in stark
contrast with neighboring South Africa, where production, processing, and distribution of food is
carried out by commercial producers and agribusiness firms\.
Opportunities continue to exist in Lesotho for developing commercially viable smallholder agriculture\.
Demographic changes, compounded by rising incomes and accelerating urbanization, and improved
access to South African markets, are fueling changes in consumption patterns that are creating new
opportunities for agricultural producers and processors\. Local and regional demand is projected to
continue to strengthen in the coming years for fresh fruits and vegetables; for meat and processed
livestock products (sold through local market stalls, small and medium-scale butcheries, and large-
scale meat wholesalers); for milk and dairy products; and, for processed foods and products (dried
fruits, processed meat and animal feed)\.
Continued support to smallholders and close coordination at the national, district and community
levels is still needed\. Strategies for strengthening smallholder capacity must take into account the
communitiesâ stated needs and aspirations and align them with targeted innovations to create resilience
and sustainability\. However, guidance is needed to help farmers gradually re-orientate their farming
approaches to produce for markets and to be resilient to the imminent impacts of climate change in
fragile and highly vulnerable production systems\.
Two options for scaling-up the SADP were considered: (i) increase counterpart funding; and (ii) seek
additional IDA 17 financing\. Given fiscal restrictions, the Government of Lesotho is unable to
increase counterpart funding for the SADP\. Therefore, additional IDA 17 financing was identified as
the most appropriate mechanism to enable expansion of the SADPâs activities to new districts\. With
the AF, the SADPâs objectives, which include increasing marketed output among project beneficiaries
in Lesothoâs smallholder agriculture sector, can be expanded in more districts in the country,
contributing to government efforts to develop smallholder agriculture\. The proposed scale-up can be
completed by February 28, 2020 â representing a cumulative implementation period of less than ten
years\. The original closing date is March 31, 2018\.
The AF for the Smallholder Agricultural Development Project (SADP II) will continue to support
smallholder farmers in targeted areas of Lesotho â Botha-Bothe, Leribe, Berea, and Mafeteng, rural
Maseru, Mohale's Hoek, and Quthing â with the goal of helping them exploit opportunities to increase
their productivity in a changing climate and diversify into market-oriented agriculture, and to improve
the enabling environment for agribusiness activities\. Project support will continue to be driven by
market opportunities and perceived commercial viability of enterprises and products\. These three
additional border districts with good potential and accessibility to markets, have a rural population of
almost 500,000 people (about 100,000 households); a cropped area of about 80,000 ha; and ready
access to Maseru and South African markets due to their location along the border\. The addition of
these three districts will result in all of the more productive lowlands and foothill areas being included
in the project\. It is expected that at least an additional 18,000 beneficiaries will benefit from the AF in
addition to the 55,000 already reached under SADP\.
The overall zones of intervention for this project have been identified and prioritized to complement
current activities supported under the Smallholder Agriculture Development Project (SADP) and to
consolidate and support the achievements under SADP\. SADP supports smallholder farmers in
targeted areas of Lesotho, with the goal of helping them exploit opportunities to diversify into market-
oriented agriculture\. SADP is driven by market opportunities and perceived commercial viability of
enterprises\. The proposed Additional Financing will focus on continuing to increase the capacity of
farmers in Lesotho, smallholder and commercial, to build more productive climate resilient
commercial agricultural systems\.
The incremental benefits of this AF are expected to be extensive\. For example, by initiating the
process of discussing food quality and safety standards in Lesotho, the GoL and the international
community can begin to finance and provide the focused expertise and funds needed to undertake
actions in setting standards and strengthen capacity to enforce them\.
Sectoral and Institutional Context
Rural and agricultural sector\. Manufacturing and mining contribute the largest shares to GDP in
Lesotho, but agriculture remains important as a major provider of employment and source of food\.
About 70-80 percent of Lesothoâs people live in rural areas, and more than three-quarters of these are
engaged in agriculture â mostly traditional, low input, low output, rain-fed cereal production and
extensive animal grazing\. In the past, remittances from mineworkers were a major source of rural
livelihoods, providing vital cash needed to purchase agricultural inputs and productive assets or to
invest in household assets and housing, but remittances have declined steadily over the past decade as
the number of Basotho employed in the South African mining sector has declined substantially from
more than 100,000 20 years ago to less than 30,000 at present\. Despite the economic growth that has
been achieved in recent years, income-generating opportunities remain limited and are generally
confined to urban areas and wage employment in the industrial sector especially in garment
production\.
Because the urban economy has limited ability to absorb new labor market entrants, the rural economy
in general and agriculture in particular will continue to play a major role in Lesothoâs development
strategy for the foreseeable future\. Agricultural development faces a number of challenges; however,
most significant are difficult agro-climatic conditions and limited availability of irrigable arable land\.
The countryâs limited production potential is not fully exploited due to poor farming practices, limited
use of quality seeds, inappropriate crop selection and lack of diversification\. Agricultural productivity
is further undermined by unsustainable land management practices that in many cases have led to
declining soil fertility and severe soil erosion\. If agriculture were commercially viable, these
constraints could likely be overcome through well-targeted investments, but the development of
market-oriented crop and livestock production enterprises faces a number of constraints such as
limited small-scale irrigation, lack of access to finance, and limited supply of produce of the required
quality\.
Institutional Context:
The successful transformation of Lesothoâs smallholder agricultural sector will continue to depend on
sustained support in the form of technical advisory services, improved technology, and investment
capital, among other factors\. This support has come from three main sources: (i) public service
providers, (ii) producer organizations, trade associations, and other industry groups; (iii) NGOs and
donor-funded programs\. SADP II will continue to benefit from the current institutional arrangement of
having the PMU embedded within the main service provider in this sector - MAFS, which has proven
efficient as an implementation and communication strategy\. The Ministry of Forestry, Range and Soil
Conservation continue to be implementing partners in NRM projects along with the Ministry of Water
Affairs\. Producer groups such as piggery and poultry associations, as well as wool and mohair
growerâs associations are also important partners and can prove instrumental in setting standards,
prices and spreading knowledge towards increasing marketed output; however, much still needs to be
done for this to be realized\. NGOs and donors provide services in support of agricultural
development\. Most technological innovations continue to be introduced by both national and
international NGOs, donor-funded projects and programs, and by private entrepreneurs in some cases\.
\.
C\. Proposed Development Objective(s)
Original Project Development Objective(s) - ParentPHORGPDO
To increase marketed output among project beneficiaries in Lesotho's smallholder agriculture sector\.
Current Project Development Objective(s) - Parent
Increase in marketed output among project beneficiaries in Lesotho's smallholder agriculture sector
and, in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to
said Eligible Crisis\.
Proposed Project Development Objective(s) - Additional Financing
To increase marketed output among project beneficiaries in Lesotho's smallholder agriculture sector\.
Key Results
\.
D\. Project Description
The proposed AF offers a well performing vehicle to scale up smallholder agricultural productivity to
other districts in Lesotho â reinforcing a key component of the CPF pillar on private sector jobs, in
line with Lesothoâs National Strategic Development Plan\. The AF provides combined multi-faceted
support in the form of technical advisory services, improved technology, and investment capital that
are key to meeting the governmentâs goals in the new districts\. The AF will be allocated to expand
project activities to three additional border districts with good potential and accessibility to markets,
namely rural Maseru, Mohale's Hoek and Quthing\. The addition of these three districts will result in
all of the more productive lowlands and foothill areas being included in the project\. It is expected that
at least an additional 18,000 beneficiaries will benefit from the AF in addition to the 55,000 already
reached under SADP\.
PHCOMP
Component Name:
Component 1: Increasing Agricultural Market Opportunities\.
Comments ( optional)
PHCOMP
Component Name:
Component 2: Increasing Market-oriented Smallholder Production- Climate Smart Packages for
Smallholders\.
Comments ( optional)
PHCOMP
Component Name:
Component 3: Project Management\.
Comments ( optional)
PHCOMP
Component Name:
Component 4: Contingent Emergency Response Component (CERC)
Comments ( optional)
E\. Project location and Salient physical characteristics relevant to the safeguard analysis
(if known)
The activities to be financed by the Additional Financing include small-scale gravity irrigation
schemes, small-scale water harvesting structures such as weirs and tanks for households or community
groups, small-scale investments in livestock operations (such as piggery), cultivation of high value
crops, wool and mohair production, production of tree seedlings and horticulture, processing and
storage, rangeland management, climate smart agriculture, gully reclamation and catchment
conservation\. Although a list of potential sub-projects is known, the specific sub-project locations are
not yet known\. The project is designed as demand driven and, therefore, the exact locations will only
be known at the time when the applications are received by the PMU through the Competitive Grants
Programme\. This will take place during the implementation phase of the project\.
The Additional Financing will be scaled up in three (3) additional districts which have been identified
as suitable for agriculture and have good potential for accessing markets, namely (i) rural Maseru, (ii)
Mohale's Hoek, and (iii) Quthing located in the southern lowlands agro-ecological zone\. \.
Topographically, Lesotho is predominantly mountainous, with the mountain zone covering
approximately 65% of the total land area\. The land is mostly characterized by steep slopes with fragile
soil formations which are extensively degraded\. Only 9% of Lesothoâs land is arable and over 80% of
this is found in the lowlands, where it is not only used for agriculture, but rather for other purposes
such as housing\. They typically have rich black soils or sandy loams in the valleys where the major
agricultural activities occur\. The southern lowlands, where the new districts are located, are
characterized by poor soils and low rainfall and cover the western part of the country, occupying about
2,700 km2 which is 9% of the total surface area\. Generally, the lowland soils are the duplex type
which are prone to erosion, and have poor moisture retention capacity\. They are thus liable to rapid
loss of top soil\. The region forms the main livestock grazing area in the country\. Although the soils are
much less susceptible to erosion, inadequate grass cover combined with the steep slopes, and torrential
rains result in massive erosion in this zone\. It will be important to include sub-projects that will control
runoff and control soil erosion such as sustainable landscape management, gully reclamation,
catchment management and small-scale infrastructure such as gabions and check dams\.
\.
F\. Environmental and Social Safeguards Specialists
Kisa Mfalila, Social Safeguards Specialist
Majbritt Fiil-Flynn, Social Safeguards Specialist
II\. IMPLEMENTATION
The AF will benefit from the institutional arrangements established under Parent Project which
established a Project Management Unit (PMU) However, the capacity of the existing Project
Management Unit (PMU) to implement, monitor and report on environmental and social
safeguard issues during the implementation of the Parent Project was inadequate\. With the
guidance of the World Bank, the PMU is currently in the process of recruiting a dedicated
environmental and social specialist who will oversee the screening of sub-projects to determine
the level and degree of risk and impacts, ensure that site-specific ESMPs are prepared and
mitigation measures are implemented, monitored and reported on in the progress reports, and
which will eventually strengthen the capacity of the PMU\. Further safeguard training will be
provided by the World Bank staff throughout the implementation phase to ensure adequate
capacity is retained\.
\.
III\. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment OP/BP Yes The Additional Financing to the Lesotho
4\.01 Smallholder Agriculture Development
Program will maintain the Environmental
Category B classification of the Parent
Project\. Environmental risks and impacts
inherent to the agriculture and agribusiness
industry are largely related to effluent
discharges from use of pesticides/herbicides in
controlling weed infestation, use of fertilizer
to increase crop productivity, pollution of soil
and water resources from runoff, occupational
health and safety of workers, efficient use of
water and energy resources, and solid waste
disposal\. The review of the ESMF of the
Parent Project indicates that the instrument is
adequate for the Additional Financing in terms
of identifying potential environmental impacts
that will likely occur from implementing the
project activities, the proposed measures to
mitigate the impacts and monitor the
implementation, the pest management
approaches to be used to ensure sustainable
use of fertilizers and pesticides, and
community health and safety issues\. The
ESMF also contains adequate and very clear
screening procedures and methodologies to
guide the PIU in the screening, assessment,
review, approval, implementation and
reporting of environmental issues for the sub-
projects\.
Natural Habitats OP/BP 4\.04 No The project will not support sub-projects that
have the potential to adversely alter or impact
natural or critical habitats as defined under OP
4\.04\. Therefore, the policy is not triggered\.
Forests OP/BP 4\.36 No The project will not support sub-projects
located within forested areas or plantations as
defined under OP 4\.36\. Therefore, the policy
is not triggered\.
Pest Management OP 4\.09 Yes The Pest Management Policy is triggered to
allow for the use of agrochemicals, as needed,
using licensed professions and in a manner
described in the Integrated Pest Management
Plan (IPMP)\. The initial screening of the
potential sub-projects to be funded under the
AF, indicates that the risk of pesticides use is
minor to moderate due to the small amounts of
pesticides currently being used in the sub-
projects of the Parent Project\. The ESMF
prepared for the Parent Project, incorporates
an Integrated Pest Management Plan (IPMP)
which provides guidance on the sustainable
application of fertilizers and pesticides taking
into consideration the soil type and slope to
ensure protection of watershed and
groundwater\. The use or purchase of
significant amounts of pesticides will be
excluded in the screening process described in
the ESMF\.
Physical Cultural Resources OP/BP No The AF will not support physical cultural
4\.11 resources but in some of the districts that the
project will be implemented, artifacts from
historical cultural resources have been found\.
The ESMF of the Parent Project have included
Physical Cultural Resources Chance Find
procedures for handling chance finds that
might occur during the implementation of the
sub-projects\.
Indigenous Peoples OP/BP 4\.10 No OP 4\.10 is not triggered as there are no
indigenous people within the project area of
influence\.
Involuntary Resettlement OP/BP 4\.12 Yes It is not anticipated that there will be any land
acquisitions as a direct result of the project\.
However, communities are expected to
continue to pool their land or provide
voluntary land donations of communal land\.
This potentially impact livelihood through
affecting access, for example for grazing and
water\. The existing RPF will be applied to
screen and guide implementation\.
Safety of Dams OP/BP 4\.37 No OP 4\.37 is not triggered as the project will not
finance construction or rehabilitation of dams,
nor will it rely on the performance of an
existing dam or a dam under construction, as
defined in the policy\.
Projects on International Waterways No The project is not expected to affect
OP/BP 7\.50 international waterways and, therefore, OP
7\.50 is not triggered\.
Projects in Disputed Areas OP/BP No The project will not finance any activities
7\.60 located in any known areas under territorial
dispute as defined in OP 7\.60\. Therefore, the
policy is not triggered\.
\.
IV\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify and
describe any potential large scale, significant and/or irreversible impacts:
The activities to be financed by the Additional Financing include small-scale gravity irrigation
schemes, small-scale water harvesting structures such as weirs and tanks for households or
community groups, small-scale investments in livestock operations (such as piggery),
cultivation of high value crops, wool and mohair production, production of tree seedlings and
horticulture, processing and storage, rangeland management, climate smart agriculture, gully
reclamation and catchment conservation\. The sub-projects are similar to those that are already
being financed under the Parent Project, and therefore the AF will maintain the Environmental
Category B classification of the Parent Project\. Environmental risks and impacts inherent to
the agriculture and agribusiness industry are largely related to effluent discharges from use of
pesticides/herbicides in controlling weed infestation, use of fertilizer to increase crop
productivity, pollution of soil and water resources from runoff, occupational health and safety
of workers, efficient use of water and energy resources, and solid waste disposal\. The
anticipated risks and impacts are expected to be small-scale in nature and scope, limited to the
project sites and can be addressed with known mitigation measures\. Overall, there are no large
scale, significant or irreversible impacts that have been identified\.
The PMU will use the ESMF of the Parent Project â which describes the screening,
reviewing, implementing and monitoring procedures â to assess the risks and impacts and
prepare the appropriate mitigation measures during the implementation phase\. Review of the
ESMF of the Parent Project indicates that the instrument is adequate for the Additional
Financing in terms of identifying potential environmental impacts that will likely occur from
implementing the project activities, the proposed measures to mitigate the impacts and
monitor the implementation, the pest management approaches to be used to ensure sustainable
use of fertilizers and pesticides, and community health and safety issues\. The ESMF also
contains adequate and very clear screening procedures and methodologies to guide the PIU in
the screening, assessment, review, approval, implementation and reporting of environmental
issues for the sub-projects\.
Review of the environmental performance of the Parent Project:
The team has been continuously reviewing the environmental performance the Parent Project
through regular missions to the sub-project sites, and the overall environmental performance
of the Parent Project is moderately unsatisfactory\. Some of the issues identified under the
parent project relate to, for example, improper handling of solid and liquid waste, insufficient
monitoring of water access, improper handling of agrochemicals\. A detailed time bound
action plan has been agreed with the Borrower to remedy any environmental issues and avoid
them reoccurring in the future
Climate Vulnerability
There is a need for climate vulnerability to be considered particularly during the siting of
subprojects\. One poultry subproject is located on a mountainside exposed to severe wind and
cold, and consequently many of the chickens died\. Recently, a number of horticulture tunnels
were damaged due to strong winds, hail and rain, and although these conditions were
reportedly a one-off event, tunnels that were located in less sheltered terrain were more
severely damaged than those that were somewhat sheltered\. The siting of subprojects taking
into account climatic factors is therefore important in ensuring sustainability of the
investments\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities in
the project area:
The sub-projects to be supported under the AF will not generate indirect and/or long term
impacts in the sub-project areas\. It is, however, anticipated that some of the sub-projects that
entail landscape restoration and management, will result into long term positive and beneficial
impacts\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts\.
In accordance with the RPF, voluntary land contributions will only be permitted where the
land is communal land\. If private use the communal land contributed under the project exists,
then the private users must either benefit directly from project activities or be provided
suitable alternatives\. Such arrangements must be fully documented and are subject to
informed consent procedures\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an
assessment of borrower capacity to plan and implement the measures described\.
The Environmental and Social Management Framework (ESMF) prepared for the Parent
Project by the Ministry of Agriculture and Food Security will serve as the key environmental
safeguard instrument for the project\. Review of the ESMF by the project team indicate that
the instrument is adequate for the Additional Financing in terms of identifying potential
environmental impacts that will likely occur from implementing the project activities, the
proposed measures to mitigate the impacts and monitor the implementation, the pest
management approaches to be used to ensure sustainable use of fertilizers and pesticides, and
community health and safety issues\. The ESMF also contains adequate and very clear
screening procedures and methodologies to guide the PIU in the screening, assessment,
review, approval, implementation and reporting of environmental issues for the sub-projects
With the guidance of the World Bank, the PMU is currently in the process of recruiting a
dedicated environmental and social specialist who will oversee the screening of sub-projects
to determine the level and degree of risk and impacts, site-specific ESMPs are prepared and
mitigation measures are implemented, monitored and reported on in the progress reports, and
which will eventually strengthen the capacity of the PMU\. Further safeguard training will be
provided by the World Bank staff throughout the implementation phase to ensure adequate
capacity is retained\. The first task to be carried out by the PMU environmental specialist will
be to undertake an environmental audit for all ongoing sub-projects to assess the extent to
which the World Bank Safeguard Polices are complied with and make recommendations on
how environmental risks and impacts will be mitigated\.
All other institutions that will be involved in implementing the AF have previously
implemented World Bank funded projects or are currently involved in implementation of
other World Bank programs\. As such they are familiar with World Bank safeguard policies
and have gained experience in the implementation and oversight of Bank projects\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on
safeguard policies, with an emphasis on potentially affected people\.
The safeguards documents (ESMF and RPF) were subject to discussions with various groups
of stakeholders at district and national level, including relevant government agencies, national
and international NGOs, and farmer associations during appraisal of the original project in
2011\. In addition, beneficiary farmers and communities will receive appropriate training, as
they will participate in screening, verification and mitigation measures (as relevant)\.
\.
B\. Disclosure Requirements
Environmental Assessment/Audit/Management Plan/OtherPHEnvDelete
Date of receipt by the Bank 03-May-2011
Date of submission to InfoShop 11-Jun-2011
For category A projects, date of distributing the Executive Summary of the
EA to the Executive Directors
"In country" Disclosure
Resettlement Action Plan/Framework/Policy ProcessPHResDelete
Date of receipt by the Bank 30-May-2011
Date of submission to InfoShop 11-Jun-2011
"In country" Disclosure
Pest Management PlanPHPestDelete
Was the document disclosed prior to appraisal? Yes
Date of receipt by the Bank 30-May-2011
Date of submission to InfoShop 11-Jun-2011
"In country" Disclosure
If the project triggers the Pest Management and/or Physical Cultural Resources policies, the
respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please explain why::
\.
C\. Compliance Monitoring Indicators at the Corporate Level
PHCompliance
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA
Yes [X] No [] NA []
(including EMP) report?
If yes, then did the Regional Environment Unit
or Practice Manager (PM) review and approve Yes [X] No [] NA []
the EA report?
Are the cost and the accountabilities for the
Yes [X] No [] NA []
EMP incorporated in the credit/loan?
PHCompliance
OP 4\.09 - Pest Management
Does the EA adequately address the pest
Yes [X] No [] NA []
management issues?
Is a separate PMP required? Yes [] No [X] NA []
If yes, has the PMP been reviewed and
approved by a safeguards specialist or PM?
Are PMP requirements included in project Yes [X] No [] NA []
design?If yes, does the project team include a
Pest Management Specialist?
PHCompliance
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy
framework/process framework (as appropriate) Yes [X] No [] NA []
been prepared?
If yes, then did the Regional unit responsible for
safeguards or Practice Manager review the Yes [X] No [] NA []
plan?
Is physical displacement/relocation expected? Yes [] No [X] TBD []
Is economic displacement expected? (loss of
assets or access to assets that leads to loss of Yes [] No [X] TBD []
income sources or other means of livelihoods)
PHCompliance
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents
Yes [X] No [] NA []
been sent to the World Bank's Infoshop?
Have relevant documents been disclosed in-
country in a public place in a form and language
Yes [X] No [] NA []
that are understandable and accessible to
project-affected groups and local NGOs?
PHCompliance
All Safeguard Policies
Have satisfactory calendar, budget and clear
institutional responsibilities been prepared for
Yes [X] No [] NA []
the implementation of measures related to
safeguard policies?
Have costs related to safeguard policy measures
Yes [X] No [] NA []
been included in the project cost?
Does the Monitoring and Evaluation system of
the project include the monitoring of safeguard
Yes [X] No [] NA []
impacts and measures related to safeguard
policies?
Have satisfactory implementation arrangements
been agreed with the borrower and the same
Yes [X] No [] NA []
been adequately reflected in the project legal
documents?
V\. Contact point
World Bank
PHWB
Contact:Ijeoma Emenanjo
\.
Title:Sr Agricultural Spec\.
\.
Borrower/Client/Recipient
PHBorr
Name:Ministry of Agriculture and Food Security
Contact:Hon\. Semano Sekatle
Title:Minister Development Planning
\.
Email:ntebohelengraliapeng@yahoo\.com
\.
\.
Implementing Agencies
PHIMP
Name:Ministry of Agriculture and Food Security
Contact:Jules Cesaire YAGANZA
Title:Directeur du Departement Techniques Industrielles et Exploit
\.
Email:motselebanem@agric\.gov\.ls
\.
\.
VI\. For more information contact:
\.
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
VII\. Approval
Task Team Leader(s): Name:Ijeoma Emenanjo
Approved By:
PHNonTransf
Safeguards Advisor: Name: Nathalie S\. Munzberg (SA) Date: 27-Jul-2017
Practice Manager/Manager: Name: Mark E\. Cackler (PMGR) Date: 30-Jul-2017
Country Director: Name:Janet K\. Entwistle (CD) Date:31-Jul-2017 | APPROVAL |
P095563 | PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB2852
Project Name PE- (APL2) Health Reform Program
Region LATIN AMERICA AND CARIBBEAN
Sector Health (80%);Non-compulsory health finance (20%)
Project ID P095563
Borrower(s) GOVERNMENT OF PERU
Implementing Agency Ministry of Health
Peru
Ministry of Health
Peru
Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared December 8, 2008
Date of Appraisal December 8, 2008
Authorization
Date of Board Approval March 24, 2009
1\. Country and Sector Background
Peru is a heterogeneous country with a population of more than 27 million\. It went from being an
eminently rural country in 1950, when only 33% of the population lived in urban areas, to a
predominantly urban country\. By 2004, 72% of its population lived in cities1\. However, rural population
in absolute terms is currently greater than 8\.3 million\. There are marked differences in poverty levels
among the country's regions\. In 1994, 12\.2% of the urban population compared to 62\.9% of the rural
population was extremely poor\. By 2004 these figures had changed to 9% for urban areas, and to 56% for
rural areas2
The country is facing the global financial crisis with strong macroeconomic indicators and sound
macroeconomic policies in place, although the crisis has changed Peru's medium term growth prospects\.
Economic growth has remained high and broad in the past six years, and has been accompanied by public
sector surpluses, relatively low inflation, high levels of international reserves, and a manageable external
current account\. However, it is expected that the global financial crisis (particularly the ongoing credit
growth moderation, falling commodity prices and the recessionary risks of developed economies) will
affect Peru's growth prospects, slowing down the economic activity for 2009-11, but still with robust
rates of growth\. In order to face these challenges, the government of Peru has decided to secure access to
contingent lines of credit to strengthen its preparedness in the event that the external environment worsens
substantially\.
Peru has experienced aggregate improvements in some health outcome indicators during the last decade\.
The decrease in the national infant mortality rate (IMR) has been one of the most important achievements,
and is currently below the LACR average of 24\.2 deaths per 1,000 live births (as of 2006)3\. Peru is on
track to achieve its Millennium Development Goal (MDG) target for this indicator\. However, IMR
inequalities persist; while the aggregate rate has declined, the improvement has not been uniform among
1ENAHO 2004
2ENAHO 2000, 2004
3HNP data base World Bank, 2006, and WHO basic indicators 2007
socioeconomic groups or Regions\. In 2006, the IMR varied from 5 per 1,000 (in the richest quintile) to
45 per 1,000 (in the poorest quintile)\. Moreover, the relative share of perinatal4 and early neonatal
mortality5 as a cause of infant deaths has increased\. The leading causes of death among children under 1
year old are related to low coverage of birthing care in health facilities, lack of immediate professional
attention for the newborn, and maternal malnutrition (there is a 25\.4% prevalence of anemia among
women between 15 and 49 years of age) 6, 7\.
Malnutrition continues to constitute a major public health problem in Peru\. One-quarter of Peruvian
children younger than five suffer from chronic malnutrition, while 50% of children under five and 69% of
children under two suffer from anemia (ENDES, 2001)\. Moreover, the pace of progress has been uneven,
and, in the case of chronic malnutrition, it has been slowing down\. Malnutrition is almost four times
higher among children living in rural areas (39%) as it is in children living in urban areas (10%)\. In 2004
chronic malnutrition reached 44% among the extreme poor and 28% among the poor against only 5%
among the non-poor (INEI, 2006)\. In addition, breastfeeding practices have decreased in the past five
years\. Exclusive breastfeeding until the 6th month of age (which is considered optimal) has decreased
from 79% to 76% among infants from 0 to 1 month of age, and from 67% to 60% among infants from 2
to 3 months of age8\.
Maternal mortality continues to be a serious problem in Peru\. The maternal mortality rate (MMR) is 164
deaths per 1,000 live births, almost double the regional LAC average\. According to the Ministry of Health
(MINSA), Peru has the fourth highest MMR in LACR, after Bolivia, Paraguay9 and Haiti\. There is also
pronounced disparity in the MMR across the country, suggesting unequal access\. The MMR for Lima
was 52 in 2000, while the MMR for Huancavelica and Puno the same year were 302 and 361,
respectively\.
Birth delivery attended by skilled professionals is unequal among Regions\. Regions with lower economic
growth, high levels of poverty, and high percentages of rural population are especially affected\. For
example, in Huancavelica only 21% of births are professionally attended, and in Puno 27\.8%\. In
addition, the risk of dying due to complications in pregnancy, delivery, or puerperium10 is more than ten
times higher in poor Regions such as Ayacucho and Puno (36 deaths and 36 deaths per 1,000 women in
reproductive years, respectively) than in more affluent Regions such as Lima and Ica (3 deaths per 1,000
women in reproductive years, each)\.
Gaps also persist in access to health services between the poor and the non-poor, and between rural and
urban areas due to economic conditions\. Financial obstacles still represent a significant barrier to access\.
In the poorest quintile, 34% of individuals reported they had no access to health care for lack of money,
while in the richest quintile only six percent did\.11 Moreover, 40% of the poorest population accounted
for only 32% of the number of days of hospitalization in MINSA hospitals, while the richest 40% used
45% of total hospitalization days\.12
A key challenge to address these disparities in access is increasing accountability within a very
4Period between 22 weeks of gestation, 500 grams of weight and the first 7 days after birth\. CIE - 10
5Period between birth and the first 7 days of life, CIE-10
6Endes 2000 2001 Peru
7Sistema de naciones Unidas en el Peru\. Hacia el cumplimiento de los objetivos de desarrollo del Milenio en el
Perú\. Informe 2004\.
8Comparison of the 2000 Demographic and Family Health Survey (DHS-ENDES) with the 2004-06 DHS-ENDES\.
9MMR of Paraguay is 190 per 100\.000 lb (2004)\.
10The period between childbirth and the return of the uterus to its normal size\.
11ENAHO 2006
12ENAHO 2006
fragmented health care system\. The Peruvian health care system is still highly segmented\. It comprises
two subsectors (public and private) and various subsystems that historically have worked independently
and lacked coordination\. As a result, the current system fails to offer health insurance protection to the
whole population (62% of Peruvians lack health insurance)13\. One promising step toward coordination
inside the sector occurred in 2006 with the unified purchase of medicines by MINSA, the Social Security
System (ESSALUD) and the rest of the Military hospitals\.
In the face of these challenges, MINSA has established policies and strategies aimed at obtaining
demonstrable results in maternal and child health morbidity and mortality\. MINSA has defined access to
institutional births with good quality services as a key operational standard for the primary health system,
recognizing that this indicator is a key tracer of the quality of primary and secondary medical care\. In this
context, MINSA has set an aggressive target to improve coverage of institutional births in the poorest
Regions\.
One of the most important innovations designed to address the lack of a harmonized supply of health care
services, and to deal with inequalities in access due to income limitations, was the Seguro Integral de
Salud (SIS)\. SIS was created in 2001 and reimburses MINSA public providers for the variable costs
within specified health plans\. SIS gives priority to the vulnerable population living in poverty or extreme
poverty\. SIS has made important contributions to sector development, such as improvements in the use of
resources, reduction of economic barriers to access, and production of transparent information for sector-
based insurance management\.
Currently, while SIS is the main financing instrument to address supply-side weaknesses, it accounts for
14 percent of the health sector budget and has low coverage, which shinder achievement of targets for
institutional births\. SIS covers over 16% of the population, while ESSALUD covers 18% and private
entities cover 4%14\. Although most of the beneficiaries of SIS come from the two poorest quintiles and
from rural areas, the majority of the population within these quintiles is still not covered by any health
insurance\. Increased effort is needed to extend SIS coverage in key Regions, including poor, dispersed,
and indigenous populations\. In particular, it is intended that SIS will raise coverage of a full insurance
package for women of childbearing age in the poorest Regions of Peru by around 75 percent between
2008 and 2010, as well as setting an operational standard for the supply of medicines in primary and
secondary health posts that provide birth delivery services\. In this way, SIS aims not only to guarantee
funding for health care costs for the poor, but also to promote the notion of a guarantee of the right to
maternal and child health services\.
2\. Objectives
Framed within the long-term objectives of the Health Reform Program, the project objectives are to:
(i) improve family health care practices for women (during pregnancy, delivery and breast-feeding) and
children under three years old in the nine poorest provinces
(ii) strengthen health service network capacities to solve obstetric, neonatal and infant emergencies, and
provide comprehensive health services to women (during pregnancy, delivery and breast-feeding) and
children under age three in the nine poorest provinces
(iii) support MINSA's governance functions of regulation, quality, efficiency and equity for improving
the new health delivery model of maternal and child health care in a decentralized environment\.
13ENAHO 2006
14ENAHO 2006
The nine Regions of focus in the Project are: Amazonas, Huánuco, Huancavelica, Ayacucho, Apurímac,
Cusco, Cajamarca, Ucayali and Puno\.
Success in achieving the above objectives in the targeted 9 Regions will be assessed using the following
key indicators:
(1) Increase the proportion of institutional deliveries15 in rural areas of the nine selected Regions
from 44% (2005) to 78% (2013)\.
(2) Reduce the prevalence of anemia among pregnant women in the nine Regions from 41\.5%
(2005) to 35% (2013)\.
(3) Increase the proportion of pregnant women of the nine Regions with at least 1 prenatal control
during the first trimester of pregnancy from 20% (2005) to 45% (2013)\.
(4) Reduce the hospital mortality rate among neonates in the nine selected Regions from 9\.5%
(2005), to 5% (2013)16\.
(5) Reduce the prevalence of anemia among children under age 3 in the nine Regions from 69\.5%
to 60%\.
(6) Increase from 40% to 50% the share of children in the nine selected Regions who are
exclusively breastfed until 6 months of age\.
3\. Rationale for Bank Involvement
The World Bank has been active in health in Peru in recent years, maintaining a constant dialogue with
authorities and supporting reform efforts through analytical and lending operations\. The proposed project
would complement other past health sector investment projects in Peru financed by the World Bank and
other donors that have supported the Government of Peru's (GoP) efforts to implement institutional
reforms, increase health care coverage, strengthen primary care and vaccination programs, lower rates of
infant and maternal mortality, and improve maternal and child nutritional status\. The Bank's involvement
in the health sector dates back a number of years and has focused mainly on maternal and child health
issues\. From 1994-2000, the Government implemented the Basic Health and Nutrition Project, which
supported MINSA operations to strengthen maternal and child services in three regions of Peru\. In 1998,
the Bank carried out analytical work which showed that maternal and child health issues were still a
priority, and called for institutional reforms to address these issues\.
The proposed project is the second phase of an Adaptable Program Loan (APL) which supports health
reform in Peru\. The overall objectives for the APL Program are to: (a) improve maternal and child
health; and, (b) help reduce morbidity and death among the poor due to communicable diseases and
inadequate environmental conditions\. The first phase project was an investment loan, Health Reform
Support Project I (Programa de Apoyo a la Reforma del Sector Salud I - PARSALUD I), part of a cluster
of Bank-supported activities designed to improve basic health indicators in Peru\.
This cluster included influential AAA (RECURSO), which made recommendations for health policy
reforms needed to obtain better results in health\. These recommendations were implemented through a
series of four policy-based loans (Programmatic Social Reform Loans, or PSRLs) and an investment loan
15As defined by SIS: deliveries attended in a health establishment
16Neonates Lethality rate is the mortality among neonates that arrived alive to the hospital
(PARSALUD I)\. The latter, financed jointly with the Inter-American Development Bank (IADB), had as
its main objective the reduction of perinatal and infant mortality through empowering the poor to
strengthen the demand side while improving the quality of the supply side of health programs and
services\. It had three achievements\. First, it targeted Regions with the highest incidence of IMR, and
MMR, and the lowest access to effective and quality services\.17 Second, it addressed inequalities in
access by expanding health insurance coverage under the SIS\. Third, the GoP began to address
geographic inequalities by proposing the decentralization of the governance structure of the health sector
to the Regions\. The proposed second phase of this project will contribute to sustain these GoP's
achievements under PARSALUD I\. It is relevant to note that because of protracted implementation of
phase one of the APL, phase two is being proposed for the timeframe originally foreseen for the third
phase\. This PAD takes into account the project document evaluation indicators elaborated by MINSA
and submitted to the Investment Evaluation Unit of the same Ministry, as well as to the Ministry of
Economy and Finance in compliance with the National Public Investment System SNIP (Sistema
Nacional de Inversión Pública)\.
More recently, the National government has asked the World Bank to continue to support MINSA and
sub-national governments to improve the efficiency and quality of publicly-financed services, focusing on
coverage of maternal and child health care in a decentralized context\. The World Bank is uniquely
positioned to contribute expertise on issues related to designing regional health care networks, adapting
sector governance to better address maternal and perinatal health care, resource management, and
performance improvements\. These reforms are oriented toward stimulating system rationalization and
accountability, in part through the reconfiguration of service delivery into a new maternal and neonatal
health care delivery model\.
The Bank's contributions in system reform and decentralization are crucial\. Both the national and
subnational governments seek the Bank support for consolidating the reforms and decentralization of the
health system\. The World Bank is uniquely positioned to contribute expertise on issues related to
designing regional health care networks, adapting sector governance to better address maternal and
perinatal health care, resource management, and performance improvements\. While the PARSALUD II
Project would represent a small portion of national (recurrent) financing, there is considerable demand
from the national government for Bank support to the policy reforms as well for its fiduciary
contributions to ensure an expedite and efficient execution of the supply investments supported by this
project\. Moreover, the Project would represent additional funding for regional governments which will be
channeled to investments and interventions that are not covered by current budgetary allocations\. The
ongoing decentralization process has brought a new focus in the sector and requires strong support in
order to ensure continued improvement in key health indicators\.
This proposed second phase of the APL builds on activities being undertaken by other donors\. As was the
case for PARSALUD I, this second phase would also be jointly financed and supervised by IADB\. The
Bank team anticipates coordinating activities with other donors, including the European Community,
UNICEF, and USAID, especially on intercultural issues, monitoring, and capacity building of regional
health authorities\.
4\. Description
This proposed second phase APL would have four components and total project costs of US$162\.4
million\. This project has been jointly prepared with the IADB\. The GoP has requested that the Bank and
IADB finance up to US$15 million each, with the remainder to be covered by other fiscal resources\. The
17Amazonas II (Bagua), Ayacucho, Huancavelica, Apurimac I (Abancay) and Apurimac II (Andahuaylas), Cuzco,
Puno and Huanuco
project will be implemented in the same Regions as under the APL I (Amazonas, Huánuco, Huancavelica,
Ayacucho, Apurímac, Cusco and Puno) plus two additional Regions: Cajamarca and Ucayali\. These
Regions were prioritized because IMR and MMR still remain well above the national average, and thus
need further intervention\. Disbursement for this project will be based on standard mechanisms for
investment projects as requested by the GoP and the categories under which funding will cover
components were prepared by the borrower\.
When PARSALUD's I main focus was to support SIS in the expansion of the MOH's maternal and child
health services and programs in the selected Regions, the main focus of PARSALUD II is to support SIS
to improve the quality of provision of those services and programs, as well as to improve the organization
of a new health delivery model in a decentralized context in the same regions\. In addition, reducing the
gap of results in mothers and children from rural populations requires PARSALUD II support to SIS in
improving health promotion interventions and develop campaigns of changing behaviors in dispersed
populations, as well as improving cultural sensitivity of health services to indigenous population in the
targeted areas, increasing demand and guaranteeing the access of rural population to all levels of the
health care chain\.
Component 1\. Improving health practices at the household level for women and children under age
three in rural areas of the nine targeted Regions (US$6\.0 million)\. This component will finance three
lines of actions:
Subcomponent 1\.1\. The design, implementation, and monitoring of a Behavioral Change
Communication and Education Program (BCCEP)\. The BCCEP aims to promote healthy practices at
the household level, including increase demand for health services, with a focus on mothers during pre-
and post-natal periods and children under three, taking into consideration the cultural context of rural and
indigenous populations\.
The activities to be financed include: (i) studies to identify current practices, beliefs and attitudes,
including the use of health services; (ii) 9 tailored BCCEP strategies (by region); (iii) development,
validation, and production of culturally sensitive printed and audio-visual materials (radio spots, soap
operas, videos, etc\.); (iv) equipment for basic training and dissemination (PCs, data display devices, TVs,
DVD); (v) training of MINSA, DIRESAs staff, as well as staff, networks, micro-networks, and
community agents for the local implementation of the BCCEP; (vi) a training program for local
authorities, community leaders, social and civil society organization; (vii) learning workshops and study
tours; (viii) technical assistance to health staff and community members on the implementation of the
BCCEP; (ix) monitoring and evaluation of the BCCEP; (x) evidence-based studies for health promotion
in maternal and neonatal health care\. In addition, a competitive fund of approximately US$1 million (to
be financed under the IADB loan), would be established to finance local initiatives to improve healthy
communities\.
Subcomponent 1\.2\. Promotion of SIS enrollment rights and identity rights among eligible target
population\. This sub-component aims to support the GoP in enrolling eligible women and their children
for SIS benefits\. The lack of national identification documents is a serious obstacle to accessing social
programs: the problem is especially serious in indigenous rural areas\. In the country, almost 10% of adult
population is undocumented, and women who lack a Documento Nacional de Identidad (DNI) may lose
access to health insurance (SIS), as well as to other social protection and development opportunities\.
Therefore, the Project will promote SIS enrollments, and DNI requests\.
Specifically, the project would finance: (i) the design and implementation of a campaign promoting SIS
rights and identity rights\. This campaign would facilitate the work to be carried out by civil servants in
charge of the delivering of the DNI; (ii) the design, production and dissemination of materials promoting
SIS rights and identity rights for all nine Regions; and (iii) training of health staff and local authorities on
the promotion of SIS rights and identity rights\.
Component 2\. Increasing the capacity to provide better maternal and child health services for the poor
(US $142\.3 million)\. This component would strengthen the health delivery model through improving the
capacity of health service networks to attend obstetric and neonatal emergencies, to improve the
integration between pre-natal and post-natal care, and health care for children under three\. The
component would support:
Subcomponent 2\.1\. Improvement in the quality of services in health facilities\. This would include: (i)
minor constructions, rehabilitation, and equipment investments, including supervision vehicles, for the
networks in the Regions supported by the Project, related to the improvement of the 8 essential obstetric
care functions, and one neonatal service18; (ii) technical assistance and training for health personnel; (iii)
inclusion of an intercultural focus in service provision; and (iv) a fund to support innovative proposals to
finance local initiatives for health services provision (to be financed by the IADB)\.
Subcomponent 2\.2\. Raising the efficiency and effectiveness of networks\. The main purpose of this
subcomponent is to improve the new health delivery model to be implemented under the project\. The
table below explains the differences between the old and new health model for mother and child care\.
This would include: (i) strengthening management systems at network level; (ii) improving the referral
and counter-referral system, (iii) supporting the implementation of health care chains for maternal and
neonatal service referrals, (iv) clinical governance studies, and (v) regulation of the health networks and
maternal health care chains\.
Component 3\. Strengthening government capacities to offer more equitable and efficient health
system in a decentralized environment (US$5\.2 million)\. This component would work towards the
strengthening of MINSA, and the decentralization of the health system through:
Subcomponent 3\.1\. Regulatory framework in support of service quality\. The PARSALUD results-based
model entails innovations that require regulatory reforms in order to ensure that they are incorporated into
the institution and are sustainable\. Technical assistance including training will be provided to support the
integrated health delivery model and the development of support systems\. These include the development
of the regulatory framework and implementation plan for: (i) the accreditation and certification system,
currently proposed by the law but not regulated, (ii) infrastructure maintenance systems, (iii) a reference
laboratory system, (iv) hemotherapy (v) hospital financing, (vi) pharmaceutical purchasing and logistics
system, and (vii) a health communication and promotion system\.
Subcomponent 3\.2\. Strengthening of SIS\. The Project would support SIS to develop the public
insurance system\. This would entail technical assistance for: (i) the development of the regulatory
framework, improvement of the SIS information system, aimed at better monitoring enrollment, coverage
and access in the Regions initially included in the project, (ii) quality assurance mechanisms, and
technical assistance for the implementation of the SISFOH targeting system to ensure adequate targeting
of health insurance financing in urban areas\.
Subcomponent 3\.3\. Systems development to enhance the monitoring capacity of MINSA\. This set of
activities would support the improved implementation of existing systems, namely SIS (see above), and
SIGA, all of which can produce monitoring data and thus introduce greater accountability into the system\.
This is particularly important for the MINSA decentralization process, whereby the sector is moving
18WHO, essential obstetric health care functions, and one neonatal health care, 2003\.
towards a greater regulatory role and the Regions will be taking on greater responsibility for
implementation\.
Subcomponent 3\.4\. Support to decentralization\. The Project would support the continued
implementation of Management Agreements (MA) developed under APLI, as instruments for supervision
and accountability between the central regulatory level and the Regions, which are responsible for service
provision\. To this end, new MAs will be signed, and the Project would provide direct technical assistance
and training to MINSA and regional staff\. In addition, the Project will support the design of an
incentive/penalty system that will ensure that the MAs are effective instruments\. Finally, Subsidiary
Agreements will be signed between MINSA and Parsalud II with the region of Cusco and the region of
Cajamarca, respectively, to detail the terms and conditions in which the above-mentioned regions shall
repay the Borrower the portion of the Loan allocated to them under the Project as set forth in the
Operational manual\.
Component 4\. Project Coordination, and Monitoring & Evaluation (US$ 8\.9 million)\. This component
would finance activities related to the administration of the project, such as: (i) The financing of external
concurrent auditors, (ii) monitoring and evaluation activities, including impact evaluation of specific
detailed project activities, and (iii) project management and procurement team within MINSA\.
The PCU PARSALUD will operate as a PCU under an operations manual agreed with the Bank\.
5\. Implementation
The Project will be managed by a PCU that will report to the Vice Minister of Health\. The PCU will
have the same responsibilities as it did in PARSALUD I, which includes fiduciary issues (i\.e\. financial
management and procurement) and activities planning\. The PCU will plan and implement Project
activities in coordination with relevant Ministry Regions, which have already been identified as
responsible for specific Project components or clusters of activities\.
A Project Steering Committee (PSC) will be created to approve yearly operational plans, annual reports,
and any significant change in the design, as required\. The Steering Committee responsibilities are
described in the Operations Manual\. The composition of this committee has not been established but the
following structure has been proposed (to be confirmed during appraisal): the Steering Committee would
be headed by the Vice Minister (who would be delegated by the Minister)\. The other members would be:
one representative of each of the Ministry's General Directorates and the OPDs, one representative of
each of the 9 Regions, the Coordinator of PARSALUD, one representative of MEF, and one
representative of the health networks\.
The project will be managed in accordance with an Operations Manual that will provide guidelines on all
operational issues including overall functions, financial management arrangements, procurement
arrangements, structure of the PCU, and linkages with MOH, Regions and the Banks\.
6\. Sustainability
The project has been evaluated and approved by the GoP using standard measures of sustainability\. The
major concern is the affordability of recurrent costs, so this project includes three elements to promote its
sustainability: (i) the inclusion in the evaluation of the recurrent cost to be funded either by regional
budgets or through SIS; (ii) the commitment of regional governments to provide enough personnel and
maintain facilities to keep the local health networks working on reducing maternal and child mortality;
and, (iii) the inclusion of regional and national goals into the Management Agreements scheme, which
can be achieved by monitoring the population at the national and local levels\. This evaluation was cleared
by the Peruvian Ministers' Council, which receives requests from the Ministry of Economy and Finance\.
With respect to financial sustainability, there are two means by which funds are committed to the social
sectors\. The first mechanism was an initiative from the World Bank and the Government of Peru based on
the Programmatic Social Reform Loans\. In that context six functional prioritized programs (PSPs) were
defined that were budget-protected in their non-salary component\. Within those programs, the health
sector budget grew in a sustained manner mostly in the activities related to the recuperative interventions\.
In addition to the PSPs, the second mechanism is based on the Financial Equilibrium of the Public Sector
Budget for Fiscal Year 2006 (Law No\. 28653) which pledges to the prioritized programs at least 30
percent of any additional budget coming from taxes collection\.
7\. Lessons Learned from Past Operations in the Country/Sector
World Bank experience in project implementation in Peru provides a number of lessons that have
contributed to the design of this proposed project\. In particular, those learned from the implementation of
the APL I\.
An evidence-based results approach strengthens the project by protecting it from external pressures\. The
APLI had significant difficulties in implementation during the first two years\. These difficulties had a
number of causes, but they were particularly influenced by the lack of a clear implementation strategy
that would ensure results\. Once the project team decided to focus on results and established the necessary
inputs (supported by evidence-based research), the project started to flow and outcomes were achieved\.
The evidence-based results framework has been the main instrument for project design in this proposed
second phase of the project\.
In addition, there is a clear need for political support from the Minister and his/her management team\.
Results-oriented management is not common practice in Peru\. As such, any such practice of this type in
the health sector requires significant support\. This was clear during the implementation of the first phase
of the APL, where ministerial influence made a decisive difference in implementation\. The results-
oriented framework has been promoted throughout the Ministry during the first phase but, as with all
cultural changes, the process has been slow\.
Finally, institutionalization of projects is very difficult in the health sector and needs to be followed-up
closely by the Bank\. The original design for the first phase of the project called for a PCU that would
mainly manage administrative processes while technical aspects would be designed and implemented by
the Ministry's technical areas and by the Regional Directorates\. Although this design has been successful
in other sectors in Peru, this was not the case for the first phase of the APL\. As a result, the Ministry
hired a technical team that led the design and implementation of activities in consultation with the
Ministry\. While this was an improvement from the previous project (which operated in a bubble within
the Ministry), greater involvement of the Ministry and of regional staff are necessary to ensure
sustainability\. It is expected that the new institutional arrangements will lead to greater ownership within
the Ministry\.
Based on the experience during implementation of APL I it was agreed that the Bank could further
support the borrower by (i) providing know-how and technical support to the MINSA regarding
development of policies, plans, and investments related to implementation of the SIS in poorest Peru's
Regions; (ii) developing a robust stewardship framework for a new health delivery model
implementation in the maternal and neonatal health care; (iii) improving jointly with IADB the quality of
program supervision of the total project amount, and not only the portion corresponding to the loan; (iv)
mandating an impact evaluation; and (v) incorporating a health promotion-based approach for indigenous
populations\.
On the other hand, regarding malnutrition, the "RECURSO" AAA studies showed that malnutrition in
Peru is due to lack of mothers' awareness, lack of accountability from providers, and lack of incentives by
everybody\. These recommendations were provided for health policy reforms needed to obtain better
results in health, and as a potential road map to be followed in order to improve key outcomes\. This
proposed second phase APL addresses these issues\.
8\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP 4\.01) [x] [ ]
Natural Habitats (OP/BP 4\.04) [ ] [x]
Pest Management (OP 4\.09) [ ] [x]
Cultural Property (OPN 11\.03, being revised as OP 4\.11) [ ] [x]
Involuntary Resettlement (OP/BP 4\.12) [ ] [x]
Indigenous Peoples (OP/BP 4\.10) [x] [ ]
Forests (OP/BP 4\.36) [ ] [x]
Safety of Dams (OP/BP 4\.37) [ ] [x]
Projects in Disputed Areas (OP/BP 7\.60)* [ ] [x]
Projects on International Waterways (OP/BP 7\.50) [ ] [x]
9\. List of Factual Technical Documents
1\. Ministerio de Economía y Finanzas\. Proyecto de Inversión Pública\. Perfil de la Segunda Fase del
Programa de Apoyo a la Reforma del Sector Salud - PARSALUD II\.
2\. Ministerio de Salud\. Segunda Fase al Programa de Apoyo a la Reforma del Sector Salud
PARSALUD II Estudio de Factibilidad, July 2007
3\. Banco Mundial\. Diagnóstico Socio-Cultural de Pueblos y Comunidades Indígenas del Área de
Intervención del PARSALUD II\. May 2006
4\. Banco Mundial\. Plan para los Pueblos Indígenas\. June 2006
5\. Banco Mundial\. Informe de Evaluación Ambiental
6\. Informe de Evaluación Ambienta\. Perfil de PARSALUD II Fase\. Febrero 2005
7\. Aide Mémoire Final Preparation Mission PERU PARSALUD II March 11-14, 2008
8\. Aide Memoire Special Preparation Mission PERU PARSALUD II November 12-15, 2007
9\. Aide Mémoire Technical Visit PERU PARSALUD II December 11-14, 2007
10\. Aide Memoire Preparation Mission PERU PARSALUD II September 3-6, 2007
11\. Aide Memoire Pre-Evaluation Mission PERU PARSALUD II June 2228, 2006
12\. Aide Memoire Preparation Mission - PERU - Health Sector Reform II (PARSALUD II) - From
March 9th to 15th, 2006\.
13\. Aide Memoire Preparation Mission - PERU - Health Sector Reform II (PARSALUD II) - From
November 14th to 23rd, 2005\.
14\. Aide Memoire Pre Identification (Exploratory) Mission IBRD-IADB - PERU - Health Sector
Reform II (PARSALUD II) September 6-14, 2005
15\. Implementation Completion and Results Report (ICR) PARSALUD I March 2007
*By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
16\. Ugarte Ubilluz, O\. Aseguramiento Universal en Salud en el Peru\. Ministerio de Salud\. Nov 2008
17\. Velásquez, Anibal; Seclén Y, Poquioma E, Cachay C, Espinoza R\. Munayco C\. La Carga de
Enfermedad y Lesiones en el Perú\. Mortalidad, Incidencias, prevalencias, duración de la
enfermedad, discapacidad y años de vida saludables perdidos\. Febrero 2008
18\. MINSA\. Plan Esencial de Aseguramiento en Salud (PEAS)\. Tomo II Costos Totales de los
esquemas de manejo integral de las condiciones asegurables para el I nivel de atención\. Abril 2008\.
19\. MINSA\. Plan Esencial de Aseguramiento en Salud (PEAS)\. Tomo IIIa Costos Totales de los
esquemas de manejo integral de las condiciones asegurables para el II y III nivel de atención\.
Condiciones Obstétricas y Ginecológicas\. Abril 2008\.
20\. MINSA\. Plan Esencial de Aseguramiento en Salud (PEAS)\. Tomo IIIa Costos Totales de los
esquemas de manejo integral de las condiciones asegurables para el II y III nivel de atención\.
Condiciones pediátricas, neoplásicas, transmisibles y no transmisibles\. Abril 2008\.
21\. MINSA\. Plan Esencial de Aseguramiento en Salud PEAS\. Costeo Estándar de Procedimientos
Medicaos contemplados en la elaboración de los esquemas de manejo referenciales aplicable a
condiciones asegurables del PEAS a ser atendidas en el Nivel I, II y III\. Abril 2008
22\. MINSA\. Escenarios PEAS Total y PEAS Acotado
23\. MINSA\. Plan Esencial de Aseguramiento en Salud (PEAS)\. Tomo I Esquemas de manejo integral
de las condiciones asegurables para el I, II y III nivel de atención\. Abril 2008\.
24\. MINSA\. Plan Esencial de Aseguramiento en Salud (PEAS)\. Versión Acotada del Plan (PEAS
Acotado)\. Cobertura ofrecida por Nivel de Atención y Entorno de la Atención Brindada\. 2008
25\. Escobedo, S\. MINSA\. Reporte Técnico\. Metodología para la estimación de costos estándar de los
procedimientos médicos incluidos en el Plan Universal de Beneficios de Salud\. Setiembre, 2007\.
26\. Pan American Health Organization\. Health in the Americas 2007\. Scientific Technical Publication
No\. 622\. Washington, DC 2007\.
27\. Pan American Health Organization\. Health Situation in the Americas Basic Indicators 2007\.
28\. Ministerio de Salud, Programa de Apoyo a la Reforma del Sector Salud\. Estudio de factibilidad:
Segunda fase del Programa de Apoyo a la Reforma del Sector Salud - PARSALUD II\. Lima, 2008
29\. Ministerio de Salud\. Oficina General de Planeamiento y Presupuesto, Consorcio de Investigación
Económica y Social\. Observatorio de la Salud\. Cuentas Nacionales de Salud\. Perú, 1995-2005\.
Lima, 2008\.
30\. Fraser Barbara\. Peru makes progress on maternal health\. World Report\. The Lancet, Vol 371 April,
2008
31\. Unicef\. El estado de la niñez en el Perú\. Peru, 2004
32\. Ministerio de Economía y Finanzas\. Marco Macroeconómico Multianual 2008-2010 -Aprobado En
Sesión De Consejo De Ministros Del 30 De Mayo De 2007\. Peru, 2007\.
33\. PHR and Physicians for Human Rights\. Deadly Delays, Maternal Mortality in Peru: A Rights-
Based Approach to Safe Motherhood\. USA, 2007
34\. WHO\. Maternal mortality in 2005: estimates developed by WHO, UNICEF, UNFPA, and the
World Bank\. Geneva, 2007
35\. Huicho, L et al\. National and sub-national under-five mortality profiles in Peru: a basis for
informed policy decisions\. BMC Public Health 2006, 6:173
36\. Instituto Nacional de Estadística (INE)\. Perú: Panorama Económico Departamental Junio 2008\.
Informe Técnico N° 08 Agosto 2008
37\. IDB\. Sexual and reproductive health and health sector reform in Latin America and the Caribbean:
challenges and opportunities\. Washington, 2001
38\. Grade\. El Seguro Escolar Gratuito y el Seguro Materno Infantil: Análisis de su incidencia e impacto
sobre el acceso a los servicios de salud y sobre la equidad en el acceso\. Documento de Trabajo 46\.
Perú, 2004
39\. OPS\. Proyecciones de Financiamiento de la Atencion de Salud\. Perú, 2002
40\. INEI, UNFPA\. Resultados de la Encuesta Nacional Continua ENCO\. Lima, 2007
41\. INEI\. Encuesta Demográfica y de Salud Familiar\. ENDES Continua 2004-2006\. Peru, 2007
42\. INEI\. Encuesta Demográfica y de Salud Familiar\. ENDES Continua 2004\. Peru, 2005
10\. Contact point
Contact: Fernando Lavadenz
Title: Sr Economist (Health)
Tel: (202) 473-1463
Fax: (202) 614-1311
Email: flavadenz@worldbank\.org
11\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P133338 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: PAD411
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED GRANT FROM THE
GLOBAL PARTNERSHIP FOR EDUCATION FUND
IN THE AMOUNT OF US$53\.3 MILLION
TO THE
REPUBLIC OF CAMEROON
FOR AN
EQUITY AND QUALITY FOR IMPROVED LEARNING PROJECT
February 26, 2014
Education Sector Unit for West and Central Africa (AFTEW)
Country Department AFCC1
Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 18, 2013)
Currency Unit = CFA Franc (FCFA)
FCFA 500 = US$1
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
AFD French Development Agency (Agence Française de Développement)
AfDB African Development Bank
APEE Parent-Teachers Association (Association des Parents dâElèves et des
Enseignants)
BP Bank Procedures
BT Budget Transparency
BTI Budget Transparency Initiative
C2D Debt Relief and Development Contract (Contrat de Désendettement et de
Développement)
CA Coordinating Agencies
CAA Automatic Amortization Unit (Caisse Autonome dâAmortissement)
CAPIEMP Professional Certificate for Maternal and Early Childhood Development
(Certificat dâAptitude Professionnelle dâInstituteurs de lâEnseignement Maternel
et Primaire)
CAMS Commission for Approval on Teaching and Learning Materials (Commission
dâagrément des manuels scolaires)
CAS Country Assistance Strategy
CE1/CE2 Primary Grade 1/Primary Grade 2 (Cours Elémentaire 1/Cours Elémentaire 2)
CELOP Operations Unit (Cellule Opérationnelle)
COPIL Steering Committee (Comité de Pilotage)
CM1/CM2 Middle School Level 1/Middle School Level 2 (Cours Moyen 1/Cours Moyen 2)
CONFEMEN Conference of Governments and Ministers of Education in Francophone
countries (Conférence des ministres de lâéducation des Etats et gouvernement de
la Francophonie)
Comités PPBS Committees for Planning, Programming, Budgeting, and Monitoring (Comités
pour la Planification, Programmation, Budgetisation, et Suivi)
CP Preparatory Course (Cours Préparatoire)
CPS Special Preparatory Course (Cours Préparatoire Spécial)
CSO Civil Society Organization
CSR Country Status Report (Rapport dâEtat sur le Système dâEducation Nationale)
CTP Contract Teacher Program
DEMP Directorate of Maternal and Primary Education (Direction de lâEnseignement
Maternel et Primaire)
DLI Disbursement-linked Indicators
DPPC Directorate for Policy, Planning, and Cooperation (Direction de la Planification,
ii
de la Prospection et de la Coopération)
DRH Human Resources Department (Direction des Ressources Humaines)
DSCE Growth and Employment Strategy (Document de Stratégie pour la Croissance et
lâEmploi)
DSRP Poverty Reduction Strategy Paper (Document de Stratégie de Réduction de la
Pauvreté)
DSSEF Education Sector Strategy 2013-2020 (Document de la stratégie dâéducation et
de la formation)
EFA FTI Education for All Fast Track Initiative
ECD Early Childhood Development
EDICEF Classic French Editions (Editions Classiques dâExpression Française)
EGMA Early Grade Mathematics Assessment
EGRA Early Grade Reading Assessment
EMIS Education Management Information System
ENIEG Teacher Training Institute (Ecoles Normales des Instituteurs de lâEnseignement
Général)
EU European Union
ETSS Education and Training Sector Strategy
FM Financial Management
GDP Gross Domestic Product
GER Gross Enrolment Rate
GPE Global Partnership for Education
GPEF Global Partnership for Education Fund
GPI Gender Parity Index
GQLA Decentralized Management for Education Quality (Gestion Locale de la Qualité
des Apprentissages)
IAEB Local Inspectorate for Basic Education (Inspecteur dâArrondissement de
lâEnseignement de Base)
IDA International Development Association
IEC Information, Education and Communication
IFR Interim Unaudited Financial Reports
IPF Investment Project Financing
IPPF Indigenous Peoples Planning Framework
IPP Indigenous Peoples Plan
JICA Japanese International Cooperation Agency
LEG Local Education Group
MCS Ministry Committee for the Contract Teacher Selection (Comité de suivi pour
lâopération de Contractualisation)
MDG Millennium Development Goal
MINEDUB Ministry of Basic Education (Ministère de 1'Education de Base)
MINESEC Ministry of Secondary Education (Ministère des Enseignements Secondaires)
MINESUP Ministry of Higher Education (Ministère de lâEnseignement Supérieur)
MINEPAT Ministry of Planning, Economy and Regional Integration (Ministère de
lâÃconomie, de la Planification et de lâAménagement du Territoire)
MINFI Ministry of Finance (Ministère des Finances)
MINEFOP Ministry for Vocational Education and Training (Ministère de lâEmploi et de la
Formation Professionnelle)
MINFOPRA Ministry of Civil service and Administrative Reform (Ministère de la Fonction
Publique et de la Réforme Administrative)
iii
MINMAP Ministry for Public Contracts (Ministère des Marchés Publics)
MOD Delegated management arrangement (Maitrise dâOuvrage Délégué)
MOF Ministry of Finance (Ministère des Finances)
NER Net Enrolment Rate
NGO Non-Governmental Organization
OP Operational Procedures
PAD Project Appraisal Document
PASE Education Development Capacity Building Project (Projet dâAppui au Système
Educatif)
PASEC Program for the Analysis of Education systems (Programme dâAnalyse des
Systèmes Educatifs de la CONFEMEN)
PCR Primary Completion Rate
PDO Project Development Objective
PEFA Public Expenditure and Financial Accountability
PEMFAR Public Expenditure Management and Financial Accountability Review
PforR Program for Results
PFMP Public Financial Management Modernization Plan
PTA Parent-Teachers Association
PTR Pupil-Teacher Ratio
RESEN Country Status Report (Rapport dâEtat sur le Système dâEducation Nationale)
RRA Rapid Results Approach
RRI Rapid Results Initiative
RRS Rapid Results Strategy
SE Supervising Entity
SG Secretary General (Sécretaires Général)
SIL Basic Literacy Level (Section dâInitiation au Language)
SMC Schools Monitoring Committees (conseils dâécoles/établissements)
SSE Education Sector Strategy 2006 (Stratégie sectorielle de lâéducation 2006)
ST Technical Secretariat (Secrétariat Technique)
TA Technical Assistance
TF Trust Fund
UPE Universal Primary Education
UNESCO United Nations Educational, Scientific and Cultural Organization
UNESCO UIS UNESCO Institute for Statistics
UNICEF United Nations Childrenâs Fund
WA Withdrawal Application
WFP World Food Programme
ZEP Priority Education Areas (Zones d'Education Prioritaires)
Regional Vice President: Makhtar Diop
Country Director: Gregor Binkert
Sector Director: Tawhid Nawaz
Sector Manager: Peter Nicolas Materu
Task Team Leader: Shobhana Sosale
iv
REPUBLIC OF CAMEROON
EQUITY AND QUALITY FOR IMPROVED LEARNING PROJECT
TABLE OF CONTENTS
Page
I\. STRATEGIC CONTEXT \.1
A\. Country Context \. 1
B\. Sectoral and Institutional Context \. 2
C\. Higher Level Objectives to which the Project Contributes \. 11
II\. PROJECT DEVELOPMENT OBJECTIVE \.14
A\. PDO\. 14
Project Beneficiaries \. 14
PDO Level Results Indicators \. 15
III\. PROJECT DESCRIPTION \.16
A\. Project Financing and Costs\. 24
B\. Lessons Learned and Reflected in the Project Design \. 25
IV\. IMPLEMENTATION \.26
A\. Institutional and Implementation Arrangements \. 26
B\. Results Monitoring and Evaluation \. 29
C\. Sustainability\. 29
V\. KEY RISKS AND MITIGATION MEASURES \.30
A\. Risk Ratings Summary Table \. 30
B\. Overall Risk Rating Explanation \. 30
VI\. APPRAISAL SUMMARY \.31
A\. Economic and Financial Analysis \. 31
B\. Technical \. 33
C\. Financial Management \. 34
D\. Procurement \. 34
E\. Social (including Safeguards) \. 35
F\. Environment (including Safeguards) \. 35
Annex 1: Results Framework and Monitoring\.37
v
Annex 2: Detailed Project Description \.48
Annex 3: Implementation Arrangements \.63
Annex 4: Operational Risk Assessment Framework (ORAF) \.97
Annex 5: Implementation Support Plan\.102
Annex 6: Economic and Financial Analysis \.105
Annex 7: Analysis of Textbooks\.122
Annex 8: Letter of Sector Policy \.133
Annex 9: Lessons Learned \.146
Annex 10: List of Supporting Documents \.149
MAP
vi
PAD DATA SHEET
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
PROJECT APPRAISAL DOCUMENT
\.
AFRICA
AFTEW
Report No\.: PAD411
\.
Basic Information
Project ID EA Category Team Leader
P133338 C - Not Required Shobhana Sosale
Lending Instrument Fragile and/or Capacity Constraints [ ]
Investment Project Financing Financial Intermediaries [ ]
Series of Projects [ ]
Project Implementation Start Date Project Implementation End Date
26-Feb-2014 30-Sep-2018
Expected Effectiveness Date Expected Closing Date
02-Apr-2014 30-Sep-2018
Joint IFC
No
Sector Manager Sector Director Country Director Regional Vice President
Peter Nicolas Materu Tawhid Nawaz Gregor Binkert Makhtar Diop
\.
Borrower: Republic of Cameroon
Responsible Agency: Ministry of Basic Education
Contact: Title:
Telephone No\.: (237) 9998-3371 Email:
\.
Approval Authority
RVP Decision
This is a Global Partnership for Education (GPE) financed project\. It does not require Board approval\.
\.
vii
Project Financing Data(in USD Million)
[ ] Loan [ X ] Grant [ ] Guarantee
[ ] Credit [ ] IDA Grant [ ] Other
Total Project Cost: 55\.80 Total Bank Financing: 0\.00
Financing Gap: 0\.00
\.
Financing Source Amount
Borrower 2\.50
Education for All - Fast Track Initiative 53\.30
Total 55\.80
\.
Expected Disbursements (in USD Million)
Fiscal Year 2014 2015 2016 2017 2018 2019
Annual 3\.20 17\.60 17\.00 13\.20 1\.30 1\.00
Cumulative 3\.20 20\.80 37\.80 51\.00 52\.30 53\.30
\.
Proposed Development Objective(s)
The objective of the project is to improve the equity and quality of primary education service delivery in
the Recipient's territory with an emphasis on disadvantaged areas\.
\.
Components
Component Name Cost (USD Millions)
Component 1: Improving equity and quality in primary 48\.30
education service delivery
Component 2: Building institutional capacity for improved 5\.00
education service delivery
\.
Institutional Data
Sector Board
Education
\.
Sectors / Climate Change
Sector (Maximum 5 and total % must equal 100)
Major Sector Sector % Adaptation Mitigation
Co-benefits % Co-benefits %
Education Primary education 100
Total 100
viii
I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information
applicable to this project\.
\.
Themes
Theme (Maximum 5 and total % must equal 100)
Major theme Theme %
Public sector governance Managing for development results 10
Human development Education for all 90
Total 100
\.
Compliance
Policy
Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ]
respects?
\.
Does the project require any waivers of Bank policies? Yes [ ] No [ X ]
Have these been approved by Bank management? Yes [ ] No [ ]
Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]
Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ]
\.
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 X
Natural Habitats OP/BP 4\.04 X
Forests OP/BP 4\.36 X
Pest Management OP 4\.09 X
Physical Cultural Resources OP/BP 4\.11 X
Indigenous Peoples OP/BP 4\.10 X
Involuntary Resettlement OP/BP 4\.12 X
Safety of Dams OP/BP 4\.37 X
Projects on International Waterways OP/BP 7\.50 X
Projects in Disputed Areas OP/BP 7\.60 X
\.
ix
Legal Covenants
Name Recurrent Due Date Frequency
Financial management system X
Description of Covenant
The Recipient shall, throughout Project implementation, maintain a financial management system in
accordance with the provisions of Section 2\.07 of the Standard Conditions\.
Name Recurrent Due Date Frequency
Interim unaudited financial reports X
Description of Covenant
Without limitation on the provisions of Part A of Section II of the Grant Agreement, the Recipient shall
prepare and furnish to the World Bank, interim unaudited financial reports for the Project covering the
quarter, not later than forty-five (45) days after the end of the period, in form and substance satisfactory
to the World Bank\.
Name Recurrent Due Date Frequency
Audit of Project financial statements X
Description of Covenant
Recipient shall have its Financial Statements for the Project audited in accordance with the provisions of
Section 2\.07 (b) of the Standard Conditions\. Each such audit of the Financial Statements shall cover the
period of one fiscal year of the Recipient\. The audited Financial Statements for each such period shall be
furnished to the Bank not later than six months after the end of such period\.
Name Recurrent Due Date Frequency
Internal auditor 02-May-2014
Description of Covenant
In order to ensure the timely carrying out of the audits referred to in Section II\. B\.2, the Recipient shall,
no later than one (1) month after the Effective Date, recruit an internal auditor in accordance with the
provisions of Section III of Schedule 2 of the Grant Agreement\.
Name Recurrent Due Date Frequency
External auditor 04-Aug-2014
Description of Covenant
In order to ensure the timely carrying out of the audits referred to in Section II\. B\.3 of this Schedule, the
Recipient shall, not later than four (4) months after the Effective Date, recruit an external auditor in
accordance with the provisions of Section III of Schedule 2 of the Grant Agreement\.
Name Recurrent Due Date Frequency
Computerized financial and accounting 02-Jul-2014
system
Description of Covenant
In furtherance of the provisions of this Section II\.B, no later than 3 months after Effective Date, the
Recipient shall update, for purpose of the Project, the computerized financial and accounting system
established pursuant to Article 4\.01(a) of the Development Credit Agreement for the Education
Development Capacity Building Project, dated August 1, 2005, and train relevant staff in its use\.
x
\.
Conditions
Name Type
Authorization by Government for execution and delivery of the Grant Effectiveness
Agreement
Description of Condition
The execution and delivery of the Grant Agreement on behalf of the Recipient have been duly authorized
or ratified by all necessary governmental action\.
Name Type
Project Steering Committee Effectiveness
Description of Condition
The Recipient has established the Project Steering Committee in accordance with the provisions of
Section I\.A\.1(a) of Schedule 2 to the Grant Agreement\.
Name Type
Project Secretariat Effectiveness
Description of Condition
The Recipient has established the Project Secretariat in accordance with the provisions of Section
I\.A\.2(a) of Schedule 2 to the Grant Agreement\.
Name Type
Project Coordinator Effectiveness
Description of Condition
The Recipient has nominated a project coordinator to the Project Secretariat in accordance with the
provisions of Section I\.A\.2(b) of Schedule 2 to the Grant Agreement\.
Name Type
Project Implementation Manual Effectiveness
Description of Condition
The Recipient has adopted the Project Implementation Manual in accordance with the provisions of
Section I\.C\.2 of Schedule 2 to the Grant Agreement\.
Name Type
Comprehensive Record Keeping System in the Project Secretariat Effectiveness
Description of Condition
The Recipient has set up, within the Project Secretariat, a comprehensive record keeping system
satisfactory to the World Bank in accordance with Section III\.E of Schedule 2 to the Grant Agreement\.
Name Type
Inclusion of First Cadre's salary allocation in Government's FY2014 Budget Effectiveness
Description of Condition
The Recipient has included the first four months of the First Cadreâs salary allocation in its FY2014
budget in accordance with Section V\.A\.2(a) of Schedule 2 to the Grant Agreement\.
xi
Team Composition
Bank Staff
Name Title Specialization Unit
Shobhana Sosale Senior Operations Team Lead AFTEW
Officer
Kirsten Majgaard Education Economist Education Economist AFTEW
Ramahatra Andriamamy Senior Education Senior Education AFTEE
Rakotomalala Specialist Specialist
Kouami Hounsinou Messan Senior Procurement Senior Procurement AFTPW
Specialist Specialist
Emeran Serge M\. Menang Senior Environmental Senior Environmental AFTN1
Evouna Specialist Specialist
Enagnon Ernest Eric Adda Financial Management Financial Management AFTMW
Specialist Specialist
Kolie Ousmane Maurice Senior Financial Sr Financial AFTMW
Megnan Management Specialist Management Specialist
Karen Cecilie Sjetnan Senior Country Officer Senior Country Officer AFCC1
Nneoma Veronica Nwogu Counsel Counsel LEGAM
Laura S\. McDonald E T Consultant E T Consultant AFTEW
Natalie Tchoumba Bitnga Program Assistant Program Assistant AFCC1
Laurence Hougue Bouguen Program Assistant Program Assistant AFCC1
Janet Omobolanle Adebo Program Assistant Team Assistant AFTEW
Rose-Claire Pakabomba Program Assistant Program Assistant AFTEW
Thierry Herve Jackson Voice Secondee AFTEW
Ngwa Edielle
Non Bank Staff
Name Title Office Phone City
Victoire Ngounoue Consultant Governance Yaoundé
& Communications
Analyst
Vincent Perrot Consultant Research Yaoundé
Assistant
\.
Locations
Country First Location Planned Actual Comments
Administrative
Division
Cameroon Project in the Recipientâs
territory with a focus on
disadvantaged áreas\.
xii
I\. STRATEGIC CONTEXT
A\. Country Context
1\. Geographic and macro-economic context\. Located on the western coast of Central Africa,
Cameroon is a lower middle income country with a Gross Domestic Product (GDP) per capita of
US$1,165 in 2012\. Economic growth has been modest over the past decade and was further
negatively affected by the global crisis that led to weaker demand for Cameroon's non-oil
exports\. Non-oil exports (e\.g\., wood, timber, rubber) are the main drivers of economic growth
although activity in the oil industry picked up in 2012\. In recent years, the economy has
rebounded with real GDP growth approaching 4\.7 percent in 2012\.
2\. Demography, poverty and regional disparities\. In 2012 Cameroon had an estimated
population of 21 million\. While the annual population growth rate is high (more than 2 percent),
real GDP per capita has grown by only 1 percent annually on average during the last decade\.
Poverty rates declined between 1996 and 2001 by some 13 percentage points, but have since
stagnated at around 40 percent\.1 Further, national average poverty figures mask major regional
disparities\. While 56 percent of the population was residing in urban areas in 2007â87 percent
of the poor were living in rural areas\. Further, there is a growing income gap between regions,
urban and rural areas, and between rich and poor\. Between 2001 and 2007, poverty rates
increased in four regions (Adamaoua, Far North, North, and East) with the two northern regions
seeing the biggest increase and human development indicators (including access to schooling,
primary completion rates (PCR), literacy, access to water and sanitation and life expectancy)
registering slower growth in these regions than in other parts of the country\. The Governmentâs
Document de la stratégie dâéducation et de la formation 2013-2020 (DSSEF 2013-2020) states
that gender disparity (a comparison of girls versus boys) was relatively lower in 2012 than in
prior years\. Spatial/geographic disparities by rural and urban areas and poverty-based gender
disparities have also become more pronounced\. There are pockets of low access to education,
and low retention rates characterized by growing dropout rates during the primary education
cycle\.
3\. In 2012, Cameroon was largely off-track for achieving the Millennium Development Goals
(MDGs) (see Annex 7, Table 1)\. Recent data indicate that the MDG for universal primary
schooling, which was once considered possible to achieve, is not feasible\. Gender parity index
declined from 0\.88 in 2004 to 0\.85 in 2010\. Further, it is possible that the lack of progress in the
MDGs pertaining to water and sanitation, the absence of teaching and learning materials, and
school re-entry support structures for girls is affecting education enrolment and attainment for
out-of-school children (girls, vulnerable groups including ethnic minorities) and life expectancy
in general\. The World Bank Country Assistance Strategy (CAS; 2010) identified Cameroon's
central challenge to be that of stimulating a healthy rate of growth, and ensuring that growth is
equitably shared\. Debt relief in 2006 helped Cameroon become more debt sustainable and
increased fiscal space for Government spending linked to poverty reduction\. Cameroon is one of
the least aid-dependent countries in Sub-Saharan Africa (SSA) and works with a relatively small
number of development partners\.
1
The most recent poverty data are from 2007\. A new ECAM is awaited for 2013 (Enquête Camerounaise auprès des ménages)\.
1
4\. Cameroon officially announced a progressive approach to decentralization in 1996\.
However, the decentralization law was only promulgated in 2004\. The legal framework
envisages progressive decentralization with the concentration of administrative powers being
transferred to the regions by 2017\. Accordingly, the central Government is in the process of
transferring financial and human resources to the regional and sub-regional levels\. The
Governmentâs 2010 Strategy Document for Growth and Employment (Document de Stratégie
pour la Croissance et lâEmploi 2010âDSCE) sets out decentralization as the basis for promoting
improved governance and line ministries have been instructed to take into account decentralized
administration in their respective sector strategies\. This vision document emphasizes a shift away
from poverty reduction to one of growth as the source of prosperity and employment, premised
on income redistribution and poverty reduction\. Governmentâs strategic objective is to ensure a
well-educated human resources base in support of Cameroonâs quest to emerge as a strong
middle-income economy by 2035\. This strategic objective is communicated in various national
strategic documents, including the vision documents Cameroun emergent à lâhorizon 2035 and
the DSCE\.
B\. Sectoral and Institutional Context
Main issues and challenges
5\. Between 2007 and 2011 Cameroon made some progress with respect to access to and
completion of primary education although girlsâ completion rate has grown less
significantly in the Zones dâÃducation Prioritaires (ZEP) (see Annex 7, Table 2)\. Specifically,
there have been notable increases in the Net Enrolment Rate (NER) and the PCR (across
genders) and a reduction in the repetition rate\. There have been improvements in the ZEP
(particularly the Far North, North, Adamaoua, North-West, and East regions, the disadvantaged
pockets of the urban, peri-urban areas, and the frontier parts of the country)\. However, the rate of
progress has been much slower than in the rest of the country\. For example, the PCR increased
from 51 percent in 2007 to 63\.1 percent in 2011, with the figures for girlsâ education being 38
percent in 2007 and only 42\.6 percent in 2010\. The 2016 target set out in the new education
sector strategy 2013-2020 is ambitious at 84\.1 percent for the ZEP by inter-regional
comparisons\.
6\. A new vision and education sector strategy\. In August 2013 the Government of Cameroon
and development partners endorsed a new strategy entitled Document de Stratégie du Secteur de
lâEducation et de la Formation (DSSEF, 2013-2020)\. The DSSEF underpins the overarching
policies for the education sector as stated in the Constitution, the legislation Loi dâOrientation de
lâéducation en 1998, the Loi dâOrientation de lâenseignement supérieur de 2001, the MDGs, the
key pillars of the DSCE, and development partnersâ engagement in and support for the sector\.
The DSSEF embodies a continuum of the policies outlined in the Governmentâs Stratégie
sectorielle de lâéducation (SSE, 2006) and focuses on access and equity, quality and relevance,
sector governance, management, financing mechanisms for education and training, as well as the
institutional aspects, and the modalities for monitoring and evaluation (M&E) of the SSE 2006
implementation\.
2
7\. Decentralization features prominently in the Governmentâs new sector strategy for
education, the DSSEF\. Decentralization is a key feature of the DSSEF\. A decentralized
approach is currently used in the construction/rehabilitation of schools and the administration of
Governmentâs âminimum subsidy to schoolsâ (paquet minimum) for free primary education
(gratuité)\. Decentralization would be further reinforced through the transfer of education
planning to the regional level and by formalizing the relationships between parent-teachers
associations (PTA) and the local education administration\. School-based management is
included in the 1998 Loi dâorientation de lâéducation\. In 2001/2002 the Government instituted
school management committees (SMCs) (conseils dâécoles/établissements)\. The SMCs are in
charge of supervising, counseling, and evaluating the operations of schools\. However, the
DSSEF 2013-2020 acknowledges that the SMCs are not functional\.
8\. Regional disparities are most pronounced in the ZEP (Adamaoua, East, North, Far North and
North-West) regions\. Indicators on school enrolments of 6-11 year olds and on literacy rates of
15 year olds and above reflect the disparities\. Figure 1 shows the spatial disparities\.
Figure 1: Cameroon: Regional Disparities in Education
Source: Government of Cameroon: Draft Poverty Map, 2012\.
Taux de scolarisation (enrolment rate); taux dâalphabétisation (literacy rate)
9\. Cameroon faces specific challenges in the education sector, a summary of which is provided
below (more details are available in Annex 7):
(a) The education system is characterized by a fragmented institutional context with
four ministries in charge, one for each of the education sub-sectors: primary, secondary,
technical & vocational, higher education, and a fifth ministry in charge of youth affairs
and youth policy\. There are two education systems that operate in parallel: one for the
Francophone and one for the Anglophone parts of the country\.
(b) Sectoral Financing shows the country to be significantly below regional average\. The
GDP per capita allocation for education is about 3\.2 percent (2011) in Cameroon\. This
placed the country below the SSA regional average of 4\.4 percent\. Further, sub-sectoral
financing reveals a stark picture, with secondary education receiving a relatively large
allocation in 2011 compared to primary or higher education\. This is in part due to the
3
growing numbers enrolling in secondary education\. Efforts to universalize primary
education appear to be showing some progress\.
(c) Moderate public spending on education falls short of target, resulting in high unit
cost of education\. The unit cost of primary education is relatively high compared to
Early Childhood Development (ECD) and the first cycle of general secondary education\.
Between 2002 and 2011 unit cost increased about 18 percent at primary level\.
Inefficiencies are due in large part to poor management of teachers (low time on task and
high numbers of specialized, non-polyvalent teachers) at the secondary education level\.
(d) Cameroonâs primary education is characterized by high out-of-pocket expenses for
households at 42 percent of total education expenditure compared to 21 percent in
Senegal and 13 percent in Niger\. This is in part due to low efficiency of public spending\.
Schooling is officially âfreeâ (gratuité)\. However, households are required to pay for
textbooks, uniform, exam fees, and transportation\. The high unit cost of primary
education combined with poverty prevents many families from being able to afford
primary schooling resulting in many children not being sent to school or children
dropping out of school\.
(e) There has been a surge in primary school enrolments, but girlsâ school participation
lags behind that of boys\. Over the past 15 years, school-age population has grown by
about 2\.5 percent annually\. Total enrolments across all levels are now over 5\.7 million
students, of which almost 3\.6 million attend primary school\. In 2010-11 girlsâ
participation accounted for only 46\.5 percent of enrolments (primary) \. While girlsâ
participation accounted for 47\.2 percent and 48\.8 percent of enrollments in lower
secondary and upper secondary, respectively\.
(f) Although the PCR has been improving rapidly it is still well below what is needed to
attain universal primary schooling\. In 2011, the PCR was between 71\.5 and 81\.3
percent, depending on the data source\.2 As described above, high costs are a significant
barrier to schooling whereby many familiesâparticularly poor familiesâcite high costs
as one of the main reasons for dropping out of school\.
(g) There are wide disparities in school attendance based on gender and socio-economic
characteristics\. Net attendance for girls in rural areas is only about 65 percent, compared
with 79 percent for boys in rural areas\. The gender gap is narrower in urban areas, where
school attendance is high for all children\. The gender parity index (GPI) for primary
completers increased from 0\.85 in the 1980s to 0\.88 in 2004\. However, since then it has
dropped back to the 1980s level of 0\.85\.
(h) ZEP and rural areas have weaker service delivery and human development
outcomes\. The ESS 2006 identified the Far North, North, Adamaoua, East, certain
âpockets of low levels of school participation in the largest citiesâ, and of the border
regions as ZEPs for Government support to raise schooling access, attainment, and
2
The Primary Completion Rate is 81\.3 percent according to EDS, but only 71\.2 percent according to Government data, as
reported in the forthcoming Cameroon Education Sector County Status Report 2012\.
4
achievement, as they were lagging behind the rest of the country in education outcomes\.
Investments are essential to reach MDG targets\.
(i) Overall the status of education service delivery is weak\. Cameroon has relatively weak
service delivery indicators and significant regional disparities\. In public primary schools,
the pupil:teacher ratio (PTR) improved through the Contract Teacher Program (CTP), but
are still moderately high at an average of around 52:1 in the country as a whole, with
urban-rural divides\. Further, there are inter-regional PTR variations with a low of 32 in
the rural Littoral Region and a high of 82 in the rural areas of the Far North Region\. In
the areas with low population density PTRs of 100:2 are not uncommon\.
(j) There is a shortage of teachers that is affecting the quality of education service
delivery\. The CTP was introduced by the Government in 2006 to address teacher
shortages and very high PTRs due to a freeze in civil servant recruitment in Cameroon\.
With funding support (US$47\.3 million) from the Education for All-Fast Track Initiative
(EFA-FTI)3, between 2007 and 2011, a total of 37,200 qualified contract teachers were
hired providing for many more teachers in schools; 60 percent of the new hires were
female\. The teachers had all acquired professional qualifications\. The level of teacher
attrition is high among CTP teachers\. Attrition has been particularly high (about 18
percent) among female contract teachers from the south who were deployed in the
northern part of the country, particularly when deployed to the ZEP areas\. Attrition has
also resulted from migration of contract teachers to other ministries after being registered
as civil servants in Ministry of Basic Education (Ministère de 1'Education de Base â
MINEDUB)\.
(k) There is a severe shortage of teaching and learning materials\. The current practice is
that parents buy the required textbooks in the marketplace\. Textbook costs in Cameroon
are relatively high relative to other SSA countries\. Furthermore, textbooks are not always
available locally\. On average only an estimated 11 percent of students had access to
textbooks in 2009/10\. Cameroonâs pupil to textbook ratio is the highest (poorest) in SSA
at 12:1\. The ratio in the Central African Republic, for example, is lower, at 8:1, followed
by Togo where the ratio is 3:14\. The national average figures mask significant regional
differences\. A detailed analysis of the political economy of the book industry in
Cameroon is provided in Annex 7\. A national textbook policy is currently under
discussion by the Government and publishers\. Durability and pricing would need to be
addressed\.
3
Cameroon has received support from the Fast Track Initiative (now the Global Partnership for Education) through previous
grant financing for primary education\. The Governmentâs 2006 Education Sector Strategy (ESS) served as the basis for
Cameroonâs grant application\. Cameroon received a total of US$47\.3 million grant for the Contract Teacher Program (CTP), to
be disbursed as two annual grants: (i) âYear Iâ financing in the amount of US$22\.5 million for the payment of salaries for
teachers hired in 2007 and 2008 (disbursed in 2008); and (ii) âYear IIâ financing in the amount of US$24\.8 million for
reimbursing the Government for part of the 2010 salaries for contract teachers recruited between 2007 and 2010, and for the 2011
salaries\. The aim of this program was to reduce the pupil-teacher ratio in primary schools using the less costly contract teachers
(as opposed to civil servant teachers), while seeking to reduce the regional disparities in pupil-teacher ratios\. The CTP program
was co-financed with the Government of Cameroon and Agence Française de Développement (AFD)\. The CTP program led to a
reduction in the average pupil-teacher ratio in public primary schools from 48 to 45, through the recruitment of contract teachers,
and to moderate improvements in the regional disparities in pupil-teacher ratios\. World Bank/IDA support through the Education
Development Capacity Building Program served to provide the fiduciary due diligence support for the EFA-FTI Project\.
4
These are estimates\. There are certainly many countries in Sub-Saharan Africa with pupil:textbook ratios which are worse than 3:1\.
5
(l) Teacher training is highly theoretical and academic in nature without sufficient
professional and practical experience training\. The curriculum of the Teacher Training
Colleges (Ecoles Normales des Instituteurs de lâEnseignement Général--ENIEG) was
reformed in the 1990âs\. Since then the program has become highly theoretical with very
practical training for teachers\. This is reflected in the quality of teaching of ENIEG
graduates\. Therefore, teacher training requires some attention and especially so in the use
of specific teaching and learning materials for ENIEG graduates to grasp the nuances of
building basic literacy and numeracy skills\.
(m) There is no national assessments framework with formative student learning
evaluations\. Student learning achievement is mainly tested at the end of the primary and
secondary education cycles through high-stakes exams\. There is currently no formative
evaluation of learning achievements\. Cameroon has participated in several rounds of the
Program for the Analysis of Education systems (Programme dâAnalyse des Systèmes
Educatifs de la CONFEMENâPASEC) and recently has carried out a national Early
Grade Reading Assessment (EGRA)\. The Government is keen on administering an Early
Grade Mathematics Assessment (EGMA) in the near future\. Cameroonâs results on the
PASEC declined between 1998 and 2005, although they are still higher than in many
other Francophone countries in Africa\.5 The different assessments need to be unified
within a more systematic national assessment framework, including the development of
national technical capacity for assessment, wider sharing of assessment results, and
improving the feedback loop from assessment results to those responsible for curriculum
and teacher training\.
(n) The status of school infrastructure is poor\. Girlsâ education is particularly affected by
the lack of proximity of schools to their homes, poverty, family obligations, early
marriage, and absence of latrines and water points in many schools\.
(o) The quality of education statistics is weak and poor\. The education management
information system (EMIS) in Cameroon is complicated due to five ministries of
education (one for each of primary, secondary, vocational, university, and youth
education), each collecting data for its sub-sector\. There is considerable variability in the
completeness and reliability of data collected by different ministries\. The EMIS for
primary education is perhaps the most complete and longest-running\. The United Nations
Educational, Scientific and Cultural Organization (UNESCO) is supporting Government
efforts to create and link regionally comparable data, and the United Nations Childrenâs
Fund (UNICEF) is undertaking a pilot data collection and school mapping exercise6 in
the ZEP to capture information on various equity indicators from schools\. The production
of education statistics has been strengthened under the recently completed World Bank-
5
On the 5th grade PASEC student assessment, only Gabon achieved a higher mean score than Cameroon in French, and only
Madagascar did better than Cameroon in mathematics\. Between 2006 and 2010, there was an improvement in student flow
indicators through lower dropout and repetition and an overall sense that the quality was improving\. However, the 2009 PASEC
shows that learning outcomes have likely declined further since 2005, and the 2011 early grade reading assessment (EGRA)
found that 49 percent of 3rd graders students had great difficulty with reading, and 27 percent could not read at all\. Source:
World Bank Implementation Completion Report on the âEducation for All-Fast Track Initiative: Support to the Education
Sectorâ\.
6
The effort is coupled with support for a partnership between the MINEDUB and the Harvard Center for Geographic Analysis
for training and development of a web-based dynamic education mapping GIS system for Cameroon\.
6
funded Education Development Capacity Building Project (P075964)\. The Project
supported the on-time production of annual statistical yearbooks for primary, secondary
and higher education\. However, there are still issues with the reliability of the data\. With
the Bankâs technical support and financing, Government has also prepared school report
cards (tableau de bord) across the country\. Due to its added value the school report cards
process needs to be mainstreamed\.
(p) Weak governance and accountability is pervasive in the education sector\. Tackling
this issue is made complicated due to fragmented management of the education sector\. At
a project level, contributing aspects are political interference, procurement delays, price
distortions due to lack of competition, and institutional inertia to undertake timely
decisions\. At sector level accountability is weak, in part because education sector
stakeholders do not have access to reliable and timely data on sector performance to
stimulate greater accountability and performance improvement at all levels\. Public school
resources are not transparently allocated, and there are instances of inefficient resource
management\.
Government policies and strategies to address sector issues
10\. The new vision adopted by the Government in 2010, the DSCE, provided the opportunity
for revising the strategic policy options that were set out in 2013\. A new Country Status Report
(CSR; Rapport dâEtat sur le Système dâEducation NationaleâRESEN) was prepared in 2013,
updating the sector diagnostics from the previous CSR of 2003\. Key among the analytical
findings is that: (a) regional, gender, and poverty disparities persist and become more
pronounced as children progress through the education system; (b) about 8 percent of school-age
children are still out-of-school; and there is (c) a steep decline in the quality of education as
shown by student learning achievements; (d) weak governance and regulations at the central
level; (e) poor relevance of vocational training and education, and higher education; (f) poor
regulation and management of the education system as a whole leading to poor distribution of
entering students and of teachers throughout the system\.
11\. Based on the CSR diagnostics and with support from development partners, the
Government prepared three elements that embody the strategic thinking of the ministries of
education as of May 2013: (i) an education financing simulation model that embodies the
macroeconomic aspects for the period 2013-2020; (ii) the DSSEF 2013-2020 indicating the
policies that the ministries of education intend to put in place to attain education objectives; and
(iii) a three-year budgeted action plan detailing the activities to be undertaken and their costs for
the period 2014-2016\.
12\. The Government is taking steps to reform the system through the development of a new
policy on teaching and learning materials\. The objectives are to ensure that teaching and learning
materials are available and accessible to teachers and students at the basic education (primary
and secondary) and vocational education and training levels\. This is being done by: (i)
addressing the issue of high textbook system and textbook unit costs; (ii) allocating resources
from Government to make textbooks available in all ten regions in a timely manner; (iii)
improving the quality of pedagogy in science, physics, culture, moral, and ethics in textbooks as
a means of addressing equity and to eliminate social stereotypes and all types of discrimination;
7
(iv) promoting public-private partnerships (PPPs) in the sector aimed at encouraging quality
improvements in teaching and learning materials especially among national publishers, and
making them more competitive; (v) ensuring that at the earliest opportunity all publishers and
schools accept that the present practice of writing and designing textbooks which require pupils
to write in the them implies only a one year classroom life and is thus costly and unaffordable
and that all new textbooks must be redesigned to enable extended classroom life and maximum
cost amortization; and (vi) providing textbooks (and reading books) to schools but not
accompanying activity books, which will remain the responsibility of parents to purchase\.
13\. The main objectives of the DSSEF 2013-2020 are: (a) internal resource mobilization for
education; (b) improved sub-sectoral allocation through rationalization of recurrent expenditures
from secondary to primary education; (c) addressing the major disparities in the primary
education system; (d) managing the flow of students through the sub-sectors of education; (e)
focusing on quality improvements and relevance in education; and (f) improving sector
governance\.
14\. With respect to gender disparities, the DSSEF objective (c) emphasizes the importance of
improving access while reducing all forms of disparity in primary education\. The agreed actions
include stimulating demand for enrolment among poor underprivileged girls and that of
vulnerable children, potentially taking to scale a system inspired by the UNICEF pilot schools
project, which provides scholarships and pedagogic kits to the most underprivileged girls and
most vulnerable children, complemented with school nutrition measures (e\.g\., dry rations,
canteens)\. Further, awareness-raising campaigns supported by NGOs and operators in these
localities are used to encourage parents and traditional authorities to enroll their girl children\.
Other activities are also being undertaken including building separate latrines for girls and boys,
providing drinking water points and hand washing basins, and supplying sanitary kits\. These
measures serve as incentives to encourage access and keep girls in school\.
15\. Proposed actions to achieve the aforementioned objective include: (i) increasing the budget
allocation for the education sector and for basic education specifically\. This will require the
Government to increase the budgetary allocation and inter-sectoral arbitrage in favor of the
education sector, and undertake serious intra-sectoral arbitrage in order to increase the budget for
primary education and higher education, and for decreasing the budget for secondary education\.
It is likely that the salary outlay would be greater than envisaged\. But the macro and sectoral
analyses show that the increase would occur at a slower pace than GDP growth\. If inter- and
intra-sectoral arbitrage do not happen, stringent regulations might be required at the higher levels
of education in order to reallocate more financing for primary education to ensure free primary
education for the poorest segments of society; (ii) staying on track with the key priorities of
universal and free primary education; and (iii) reviewing free primary education as a policy,
reconsidering the policy to extend its benefits to the disadvantaged and particularly in rural areas
of the country where poverty is greatest and regional disparities in terms of education indicators
is lowest, and implementing specific measures/support for the poorest, the handicapped, and the
minorities (for example, pygmies, Baka, Bororos, refugees)\.
16\. The Government has specified in its letter of sector policy that ECD would be the
responsibility of the private sector in urban areas and of communities in the rural areas\. For
8
communities in the poorer parts of the country the Government would transfer credits to help
finance the policy\. The Government envisages defining a clear policy on pre-schooling as the
key to laying the foundation\. Other policy measures include the introduction of a new strategy
for basic education (éducation fondamentale) with the objective to educating more students
beyond the primary education cycle\. This would require significant revisions to reorient
curriculum, the content, organization, and delivery of lower secondary education to be included
as a continuum from primary education cycle\. In the medium-term this strategy would
necessitate a close control over the education indicators set out in the DSSEF: an increase in the
PCR from 71\.8 percent in 2011 to 100 percent in 2020/21; transition rate through primary
schooling to decrease from 68 percent in 2011 to 32\.7 percent in 2020/21 (that is, by half in order
to maintain education quality at the upper levels); and the transition to lower secondary
education to increase from 69\.3 percent in 2011 to 85 percent in 2020/21\.
17\. It is expected that the demand for vocational education and training will be three times
greater in 2021 than it was in 2011, with service delivery being taken up in large part by the
private sector and through PPP\. At the level of higher education, the Government anticipates a
moderate slowdown in the increase in students\. This would require new regulations with an
emphasis on diversification in specializations with a greater emphasis on science and technology
(S&T)\. In order to achieve these policy goals, Government is committed to managing the flow of
students through the education system\.
18\. Within the context of its decentralization program, the Government envisages greater
community participation to manage the day-to-day oversight at the school level through SMCs
(conseils dâécoles)\. It is also looking to manage the education system better through: (a) the
greater use of more credible data on the education sector that would require the strengthening of
the education management information system and its architecture through the use of school
report cards (tableau de bord); (b) the adoption of methodologies and appropriate tools for
localized management of education quality (gestion locale de la qualité des apprentissages â
GLQA); and (c) the wider dissemination of the policy content, the objectives, and criteria for
decision-making through improved communication, regular publication of the norms and budget
and resource allocation and their results\.
19\. Within the framework of its new DSSEF, the Government is requesting assistance from the
Global Partnership for Education (GPE) to redress geographical disparities by focusing support
in the disadvantaged areas of the country, and to focus on improving the quality of service
delivery with a view to improving learning outcomes in the first three grades of primary school\.
The choice of focusing on the early grades of primary schooling is based on available resources,
the results of the 2011 EGRA, several rounds of PASEC results for Cameroon, and the findings
and recommendations of the last GPE Project implementation completion and results report
(ICR)\.7 A poor foundation in literacy and numeracy is known to have severe and lifelong
negative effects on human capital development\.
7
The Project design is based on lessons learned from the Education For All-Fast Track Initiative (EFA-FTI) Project (P116437)
that closed in December 2011, the World Bankâs Education Development Capacity Building Project (IDA Cr\.4070 -CM) that
closed in September 2012, the ongoing implementation experience of the CM2D Project of the AFD, and other development
partnersâ specifically UNICEF, UNESCO, JICA, and World Bank Project design and implementation experience\.
9
Donor Programs and Coordination Mechanisms
20\. Donor harmonization\. As noted earlier, Cameroon is one of the least aid-dependent
countries in SSA, and works with a relatively small number of development partners\. Table 1
provides the details of support for the three year period from 2014 to 2016\. The various
development partners have expressed their commitment to strengthening partnerships and
harmonizing donor activity\. There are, however, some critical mitigating factors preventing
donor harmonization in Cameroon: (i) the implementation challenges encountered in previous
operations; (ii) the inability of partners to define upfront the objectives for co-financing; (iii) the
significant transaction costs of coordination among partners, and between partners and the
ministries of education; (iv) significant governance challenges incountry; and (v) the tendency
for development partners to finance relatively small scale, and recurrent investments\. These
reasons are not conducive to pooled funding\.
Table 1: Development Partner Financing for Primary Education, 2014/15-2016/17
Specific area of support as it relates to 2014/2015 2015/2016 2016/2017 Amount
Development Partner 2017/2018 %
the Education Sector Strategy (2014-2016) (US$)
Contract teachers, teaching and learning
Global Partnership for Education (GPE) materials, training, institutional capacity 21,908,110 16,924,562 13,152,619 1,348,100 53,300,000 32\.7
development
Construction of classrooms, latrines, training,
Agence Française de Développement (AFD) 17,438,667 17,438,667 17,438,667 52,316,000 32\.1
teaching materials
Proposed investments in the primary
African Development Bank (AfDB) 8,333,333 8,333,333 8,333,333 25,000,000 15\.4
education sub-sector; details to be confirmed
T raining, curricula, support, M&E (primary
UNICEF 3,284,000 3,284,000 3,284,000 9,852,000 6\.1
and pre-primary)
School meals, community schools, training,
World Food Programme (WFP) 2,662,504 2,662,504 2,662,504 7,987,512 4\.9
schools garden
School meals, community schools, training,
Counterpart international (CSO) home grown school meals/school garden 2,589,629 2,589,629 2,589,629 7,768,887 4\.8
(2014, 2015)
Health education, Statistics, Inclusive
UNESCO 833,333 833,333 833,333 2,500,000 1\.5
Education, Adult basic education
Construction, Rehabilitation, school meals,
IT AKA (CSO) 434,667 434,667 434,667 1,304,000 0\.8
salaries, training
European Union (EU) Construction 60 classrooms 333,333 333,333 333,333 1,000,000 0\.6
Knowledge for Children (CSO) Community textbooks program 325,333 325,333 325,333 976,000 0\.6
UNHCR T extbooks, PT A fees, Latrines, Classrooms 359,173 359,173 0\.2
AGBET SI (CSO) T raining, sensitisation, birth acts 45,667 45,667 45,667 137,000 0\.1
Japanese International Cooperation Agency Not yet programmed, except the financing for
- - - 0\.0
(JICA) UNESCO activities
T extbooks, Classrooms, Girls Education,
PLAN Cameroon 291,499 291,499 0\.2
disdvantaged childrens
Total 58,839,248 53,205,028 49,433,085 1,348,100 162,792,071 100\.0
NOTE:
1\. In 2013, UNICEF implements a Japanese Governmental grant of USD 1,229,624 USD for 30 blocs latrines, 60 water points and 60 classrooms (North and far North)\.
2\. Japanese International Cooperation Agency (JICA): not yet programmed with the exception of activities to be implemented by UNICEF on behalf of JICA\.
21\. The Local Education Group (LEG) serves as a forum/mechanism to coordinate
technical and financial support to the basic education sub-sector\. The LEG was formally
established in 2006, with the signing of the Partnership Principles (Cadre Partenarial)\. This
document embodies the principles for the LEG coordination mechanism\. The LEG is governed
by a Lead Agency (Chef de File) who is nominated and voted into office for a one-year period by
the individual partners who comprise the LEG\. The LEG is composed of representatives from
the MINEPAT, Ministry of Finance (Ministère des finances-MINFI), Governmentâs education
technical team (drawn from the five ministries of education), multilateral and bilateral
development partners, representatives of civil society, private education providers\. The LEG
meets regularly, and is fully associated with the development of the DSSEF\. The Government
10
representative from the education technical team and the Chef de File coordinate the annual joint
sector reviews to monitor the implementation of the ESS and ensures the timely commitment and
disbursement of funds\. The Government representative and the Chef de File of the LEG report
on the progress being made on the DSSEF, including the funding commitments and
disbursements of all partners on an annual basis\.
22\. Within the LEG, UNESCO and UNICEF have extended their co-chef de file
responsibilities to serve as the co-Coordinating Agencies (CAs) and the World Bank is the
Supervising Entity (SE) for the Government application to the Global Partnership for
Education Fund (GPEF)\. The Governmentâs technical team has led the preparation of the new
Sector Strategy with technical assistance from the development partners, especially the SE and
the CAs\. The CAs have served as the primary communication link between the Governmentâs
technical team, the LEG, and the GPE Secretariat\. As SE, the World Bank has prepared the GPE
application in collaboration with the Governmentâs technical team and the other development
partners\. The SE will be responsible for the full fiduciary oversight of the GPEF Grant and will
supervise the implementation by the Government of Cameroon\.
23\. The role of the World Bank as SE\. The World Bank has demonstrated experience and
is well positioned to support large-scale investments and to work with the Government to
continue introducing reforms in the education sector in line with Government commitment to
reform service delivery aspects in the sector\. Building on the Project design and implementation
experiences of previous operations (IDA and the EFA-FTI), the Bankâs convening authority is
well recognized as is its commitment to supporting Government-led reforms\.
C\. Higher Level Objectives to which the Project Contributes
24\. The Project activities are aligned with the Governmentâs strategic objective of
achieving a well-educated human resources base in support of Cameroonâs quest to emerge
as a strong middle-income economy by 2035\. This strategic objective is communicated in
various national strategic documents, including the vision documents Cameroun emergent Ã
lâhorizon 2035 and the DSCE\. The Project also responds directly to the key areas outlined in the
DSSEF 2013-2020 which in turn is linked to the Governmentâs strategic objective of achieving a
well-educated human resource base\.
25\. The project is aligned with the twin goals of the World Bankâs strategy on poverty
reduction and boosting shared prosperity\. Education builds human capital, and this in turn
contributes to improving productivity and earnings of the population, including and especially
for the poorest\. The Project activities would contribute to reducing out-of-pocket expenses for
households in disadvantaged areas of the country\. Further, the emphasis on greater equity in
intra-regional education budget would contribute to promote shared prosperity\. A key element of
shared prosperity is linked to good governance which comprises part of the World Bank strategy\.
26\. Relationship to CAS and the World Bank Africa Region Strategy âAfricaâs Future and
the World Bankâs Support to Itâ (March 2011)\. The Project focus is to improve service
delivery and governance and build public sector capacity\. The Project is closely aligned with the
second strategic theme of the 2010 CAS for Cameroon that focuses on improving service
delivery as a means to reduce poverty\. For the education sector, the CAS emphasizes improving
11
the efficacy and accountability of education services\. More generally, the CAS foresees
supporting local development, by building greater capacity for local governance\. The other
strategic theme of the CAS is improving competitiveness, for which this Project will contribute
through its focus on improving learning outcomes\. The Project is aligned with the World Bank
strategy to improve governance, which is also a transversal CAS theme\. As SE the World Bank
will ensure fiduciary integrity of the GPE operation and help to strengthen the Governmentâs
fiduciary risk management\. The Project includes measures to reduce opportunities for corruption
by emphasizing the importance of results and the Bankâs zero tolerance for corruption through
the application of its anti-corruption guidelines\. The Bank will also draw on the lessons and
conclusions from the GPF-funded governance program which is aimed to strengthen the
demand-side of governance in Cameroon\.
Justification for the proposed Project interventions
27\. Complementarity with development partnersâ support for basic education \. Key
considerations for the choice of project interventions are: (a) the strategic directions set out in the
DSSEF (2013-2020); (b) good practice experience from development partnersâ financing and
project implementation experience in the country; and (c) prior World Bank experience with
implementing projects in-country that has led to the conclusion that large-scale investments are
more manageable and result in positive impacts than small-scale interventions involving small
procurement\. For example, the 2009-2011 EFA-FTI allocation for contract teachersâ salaries was
judged to be a satisfactory approach to address the important service delivery element of
improving pupil-teacher ratios in the country8\. Further, Government has shown commitment to
the contract teacher policy by using its budget to pay the payroll bill for this cadre of staff in
2012-2013\. Government has now requested support for a third phase of financing for the contract
teachersâ salaries, recognizing the need to improve teacher deployment and retain them in the
assigned areas\. This issue is complex and has been taken into account in the DSSEF\.
28\. The United Nations Educational, Scientific and Cultural Organization (UNESCO) is
supporting Governmentâs efforts to strengthen the EMIS, and the United Nations Childrenâs
Fund (UNICEF) is undertaking a relatively small school mapping exercise to capture data on
various indicators from schools\. The production of education statistics has been strengthened
under the recently completed World Bank-funded âEducation Development Capacity Buildingâ
Project (P075964)\. The Project supported the on-time production of annual statistical yearbooks
for primary, secondary and higher education\. There are still issues with the reliability of the data,
however\. During the last few months of implementation, the Project provided funding for
technical assistance (TA) to triangulate and validate data to resolve some of the consistency and
reliability issues\. With the Bankâs technical support and financing, Government has prepared
school report cards (tableau de bord) across the country\. This has proved to be a useful exercise
in informing the EMIS at the primary education level, and deserves regular administration\. The
Project will complement the activities\. The Project design also complements the ongoing work of
8
World Bank\. Implementation Completion and Results Report (TF97256) for the Education for All-Fast Track Initiative:
Support to the Education Sector\. June 28, 2012\.
12
AFD, IDA through the Sanitation Project, Plan Cameroon, UNHCR, and UNICEFâs integrated
package for girls\.9
29\. The Project design is responsive to key weaknesses from implementing the previous EFA-
FTI Project, and critical areas of weaknesses in the primary education sub-sector\. The emphasis
is on improving primary completion rate and greater equity through significant investments to
improve the quality of primary education: (a) reducing the out-of-pocket cost of primary
education for parents; (b) reducing regional and gender inequities by addressing the problem of
inter-regional teacher deployment by recruiting teachers locally/intra-regionally; (c) addressing
regional and gender disparities (with an emphasis on girlsâ education) due to poverty and
constraints to demand-side financing (parentsâ out-of-pocket expenses) to meet primary
education expenditures\. (d) motivating new contract teachers to be more present in the classroom
through teacher development and support with teaching materials; (e) reducing the system costs
of textbook provision to make it more affordable and providing teaching and learning materials
and promoting their proper use in the classroom; (f) improving learning through more time on
task; and (g) reducing student attrition through improved governance/management of the
education system\.
30\. The Project will address sustainability by: (i) ensuring commitment through increased
budget allocation from Government to finance the reforms (final phase of contract teacher
reform and introduction of a sustainable approach to increasing the volume, quality, and
accessibility of teaching and learning materials) progressively throughout the project
implementation period; (ii) introducing high quality, low-cost and durable teaching and learning
materials to ensure that their renewal and replacement takes place once in three-four years; (iii)
promoting efficiency in the use of resources through third party verifications, assessment of
costs-benefits of project interventions; (iv) supporting the Governmentâs decentralization
strategy by strengthening the role of communities in overseeing schools, strengthening
institutional capacity to better manage the system, and carry out important studies to address
issues relating to excluded and/or out-of-school children, and adult literacy; and (v) collaborating
with Government to set up a sustainable approach to managing teachers in the future\.
31\. During the March 2013 identification mission, and subsequently in May 2013 during the
second validation of components meeting with the Government technical team and the CAs it
was decided that Government counterpart financing would be used for: (i) pre- and in-service
training in general for teachers; (ii) strengthening the schools inspectorate cadre in general for
pedagogical supervision; (iii) putting in place the important policy reform of improving âtime on
taskâ for teachers and students; and (iv) improving teacher deployment\.
32\. Alignment with the GPE objectives\. Project activities would contribute to achieving the
MDGs and the GPE objectives and priorities\. There is Government commitment to these
9
UNICEFâs integrated package for girls: providing scholarships, hygiene kits, paquet dâapprentissage essential (PAE), paquet
attractif pour fille (PAF), construction/ rehabilitation of classrooms, and water and sanitation facilities to improve the school
environment and better staff retention (especially female staff), teaching material kits, reinforcing Capacity of the Association of
Mothers of Students for the Education of Girls (AME), Accelerated Re-Entry Program (CARED), disaggregated data collection
for the EMIS, birth certificates to improve access and retention of girls in school who are unable to take their primary school
certificate exams without birth registration\. (this is a critical handicap in the completion of the primary cycle)\. The problem is
more acute among girls, refugees and minority populations in rural areas; and parental education and advocacy\.
13
priorities: (i) free primary education that is mandatory for all children; (ii) promotion of girlsâ
education; (iii) achievement of gender parity; and (iv) promotion of learning achievements,
particularly in literacy and numeracy, through improvements in the quality of education service
delivery\. The interventions in the ZEP and other disadvantaged areas will address some of the
unmet needs of out-of-school children\.
33\. Government ownership\. In March 2013 the Project interventions were determined jointly
by the Governmentâs technical team, the CAs, and the SE\. The proposed interventions were
reviewed and endorsed by the Steering Committee for the education sector\. There is full
ownership of the Project components\. The Project investments were re-validated in May 2013\.
The Project sub-components are set in the Governmentâs Letter of Sector Policy (Annex 8)\. The
prospective salary commitments for the first Project cohort of contract teachers (2014/15
academic year) have already been included in the Government budget by December 2013\.
34\. Cameroon has demonstrated its commitment, ability, and willingness to pursue a results-
based financing approach through the previous EFA-FTI project\.
II\. PROJECT DEVELOPMENT OBJECTIVE
A\. PDO
35\. The objective of the project is to improve the equity and quality of primary education
service delivery in Cameroon with an emphasis on disadvantaged areas\.
Project Beneficiaries
36\. The Project investments will be countrywide\. Beneficiaries include :
ï 478,000 students including 218,000 girls who will benefit from the Contract
Teacher Program
ï 2\.28 million students including 1\.09 million girls who will benefit from the
Teaching and Learning Materials
ï Capacity development for 33,600 (16,500 female) public primary school teachers
and 382 (150 female) inspectors in the use of the teaching and learning materials,
for teaching grades 1, 2, and 3\.
ï 1\.22 million girlsâ in grades 4, 5 and 6 would benefit from increased girlsâ
education awareness campaigns and materials in all the 10 regions of the country\.
ï Students in the ZEP and other disadvantaged areas
Note: Each of the 10 regions in Cameroon has âdisadvantaged areasâ\. For equity and equality purposes, each region will be
required to identify no more than 2-3 most disadvantaged areas\. Contract teachers will be intra-regionally recruited and maîtres
des parents converted to contract teacher cadre within a region\. Teaching and learning materials will be provided to all public
primary schools\.
37\. Other Project beneficiaries are approximately 9,000 teachers (currently 7,253 maîtres des
parents and an additional 1,747 local ENIEG graduates who will be converted to contract teacher
status), school administrators, parents, administrative staff of MINEDUB and Governmentâs
regional departments of education\.
14
38\. The indirect beneficiaries are communities in the targeted areas who would benefit from
increased economic activity due to the production and distribution of teaching and learning
materials\. In addition, communities around the catchment areas of the schools, especially in the
semi-arid parts of the country would benefit from the availability of water due to the
complementary investments being made by other development partners (UNICEF, Japan
Government grant)\. This would help to relieve the burden for women and girls to fetch water
from distant waterholes, and possibly have a positive effect on girls going to school\.
PDO Level Results Indicators
39\. The PDO-level results indicators are provided below\. The complete results framework is
provided in Annex 1, and a description of the monitoring and evaluation arrangements is
included in Annex 3\.
Objective Key Performance Measures
Indicators
% reduction in out-of-pocket expenses for Reduction in the number of maîtres des parents
households
% reduction in out-of-pocket expenses for Increase in the number of learning materials
households in the ZEP and other disadvantaged
areas
Reduction in pupil:textbook ratio Current pupil:textbook ratio at 12:1 reduced to 3:1 for
Project Cohort
(i) Improve equity of primary education Number of new contract teacher as a result of the Existing maîtres des parents converted to contract
service delivery with an emphasis on project teacher status is at least 32% of 9,000 during each of
disadvantaged areas the first three years of the project
of which % females of which % of female is at least 45%
Share of maîtres des parents converted to % of new contract teachers in the ZEP and other
contract teachers status in the ZEP and other disadvantaged areas is at least 80%
disadvantaged areas
of which % females of which % of female is at least 45%
Number of new teaching and learning materials Number of grades 1, 2 and 3 year textbooks and
supplied as a result of the project teaching materials supplied
% of students that meet reading benchmark monitored
Share of students that meet reading benchmark
through EGRA is at least 65% for boys and 65% for
monitored through EGRA
girls
of which % females of which % of female is at least 45%
of which in ZEP and other disadvantaged % of students in ZEP and other disadvantaged areas
areas that meet reading benchmark monitored that meet reading benchmark monitored through
through EGMA EGRA is at least 65% for boys and 65% for girls
(ii) Improve quality of primary % of students that meet mathematics benchmark
Share of students that meet mathematics
education service delivery with an monitored through EGMA is at least 65% for boys
benchmark monitored through EGMA
emphasis on disadvantaged areas and 65% for girls
of which % females of which % of female is at least 45%
of which share in ZEP and other % of students in ZEP and other disadvantaged areas
disadvantaged areas that meet mathematics that meet mathematics benchmark monitored through
benchmark monitored through EGMA EGMA is at least 65% for boys and 65% for girls
of which % females of which % of female is at least 45%
Four studies on topics linked to the Studies to build knowledge and capacity using national
Governmentâs DSCE and international TA
Direct project beneficiaries with disaggregated
spatial and gender data
- Number of direct project beneficiaries
(iii) Combined/overall - of which number of female beneficiaries Composite/All DLIs
System of formative evaluation included in the
National Assessment Framework
15
III\. PROJECT DESCRIPTION
40\. The design of the Project is guided by the following principles: (a) simplicity; (b)
implementation feasibility; (c) measurability; (d) sustainability; and (e) replicability\. The two
project components are summarized in the following section\. A more detailed project description
is provided in Annex 2\.
Component 1\. Improving equity and quality in primary education service delivery (Total
cost including contingencies: US$48\.3 million; 100% GPE financing)
41\. Component 1 supports improvements in primary education service delivery, in particular the
early grades of primary, with a focus on supporting the disadvantaged areas of Cameroon and on
improving girlsâ school attendance\. Through Component 1, the Project also supports setting up a
system of regular monitoring of learning outcomes in the early grades\.
Sub-component 1\.1 Increasing teacher availability in public primary schools in disadvantaged
areas (Total cost including contingencies: US$31\.4 million; 100% GPE financing)
42\. The Project builds on previous efforts especially the EFA-FTI investment by supporting
the third and final phase of support for the Governmentâs Contract Teacher Program (CTP), to
build a single teacher cohort where teachers are held to the same standards\. This would entail the
conversion of: (a) some existing maîtres des parentsâteachers financed by
communities/parentsâto contract teacher status; and (b) in some regions where there are few
maîtres des parents, but high teacher shortages, to hire new ENIEG graduates as contract
teachers\. A proposed 9,000 contract teachers (7,253 maîtres des parents and 1,747 new recruits
from the local ENIEG) will be supported through the Project\. The new hires are expected to have
direct impact on improving pupil-teacher ratios and address an important link in improving the
quality of primary education\. The project investment would emphasize and target the
disadvantaged regions of the country (ZEP, poverty pockets in the urban and peri-urban areas,
and in rural areas)\.
43\. The sub-component will support the progressive conversion of existing, selected maîtres
des parents to contract teacher status\. The financing will be in the form of a one-year salary
subsidy for the new contract teachers\. This will be implemented in a phased manner for
Government to gradually take over the payments over the course of project implementation\.
During Year II, Government will take over the first cohort of maîtres des parents who have been
converted to contract teacher status, and so on\. The target conversion rate is 3,060 in Year I,
2,970 in Year II, and 2,970 in Year III, with the Government taking over the payment for the
total 9,000 during Year IV of the project\. It is anticipated that approximately 90 percent would
be recruited from among the current corps of maîtres des parents\.
44\. Disbursements of salaries to contract teachers will be conditioned on the achievement of
certain quality measures, that are linked to an on-going teacher reform program: (i) an analysis of
the continued relevance, strengths and weaknesses of the CTP; (ii) the identification of
opportunities for strengthening teacher quality, using third party technical verification through
Management Agency(ies) to assess teacher absenteeism, time on task, use of teaching and
learning materials, and raising on-the-job performance; (iii) addressing the internal control issues
16
raised in the Special Audit undertaken for the previous EFA-FTI financing of the CTP; (iv) an
institutional assessment of the management capacity of the CTP; and (v) an assessment of the
CTP attrition and redistribution issues\.
45\. The selection of the maîtres des parents to be converted would be based on objective
criteria applied in each of the 10 regions in the country, with an emphasis on rural areas\.
Objective targeting criteria would be applied starting at the regional level by ranking all schools
by pupil-teacher ratio and by urban and rural zones\. Intra-regional targeting would be based on
identifying all rural schools, ranked by pupil-teacher ratio, by number of classes-teacher ratio,
and by number of pupils-class ratio\.
46\. The eligibility criteria for conversion to contract teacher status would be that: (a) the
maîtres des parents should have a diploma from the ENIEG; (b) the contract for converting their
status should be signed by the President of the APEE or a counterpart from Sub-divisional
Inspectorate; (c) the proof of the maître de parent would require the submission of the last salary
statement from the APEE; (d) the priority would be for female maîtres des parents to be
converted to contract teachers; (e) the teacher to be converted must have a minimum of at least 1
year of experience serving the community since graduating from the local ENIEG; and (f) the
pre-determined minimum age threshold for being converted from maîtres des parents to contract
teacher status is 35 years of age\.
47\. Disbursements would be based on the following indicators:
(a) Letter from MINEDUB confirming the budget commitments for (i) ongoing CTP; and (ii)
Project CTs and (iii) list from MINEDUB/ DRH with the names and unique contract
reference numbers for the teachers who have been newly converted /recruited\. Starting in
2013 budget year, by end-December 2013 the Government budget includes a salary
commitment for new contract teachers during the prospective academic year (September-
December 2014), and salary payment commitments for the eight months in the following
academic year (January-August 2015)\. This would trigger the payment of an advance for
4-monthsâ salary from the proposed Project between April-May 2014\.
(b) Between April-May 2014, third party technical verification and financial audit of the
institutional capacity of MINEDUB/Département de Ressources Humaines (DRH)
(Department of Human Resources) to produce appropriate reporting for disbursements
would be undertaken\. Based on the reports, an assessment would be made to determine if
DLIs are achieved to trigger GPE funds flow\.
(c) In each of the Project implementation years, the disbursement cycle would follow the
Government budget cycle (January-December) to ensure that adequate and timely
financing is available for the payment of salaries during the academic year (September-
August)\.
48\. The achievement of the sub-component objective would be measured by tracking the
number of maîtres des parents who have been converted to contract teacher status and the
number of newly recruited graduates from the ENIEG, and as a result are being paid by the
17
Government rather than by parents\. A covenant is proposed to be introduced in the legal
agreement to prevent the horizontal attrition of teachers to other Ministries for a period of at least
five years after being converted from maîtres des parents to contract teacher cadre, or upon
receiving employment as contract teachers following graduation from the ENIEG\. Performance
of contract teachers would be monitored through Sub-component 2\.1 that would focus on
improving governance and primary education service delivery\.
49\. The sub-component will finance: salaries for maîtres des parents converted to contract
teachers and new ENIEG graduates recruited as contract teachers in those regions with few or no
maîtres des parents\.
Sub-component 1\.2 Provision of teaching and learning materials (Total cost including
contingencies: US$13\.3 million; 100% GPE financing)
50\. The Project would support Government provision of good quality, low-cost and durable
teaching and learning materials for children in the early grades of primary schooling\. The
investment will take place in all public primary schools in the country with an emphasis on the
ZEP and other disadvantaged areas\. The aim is to: (a) set up a demonstration effect for a reliable,
more affordable, and sustainable system of textbook supply; (b) provide a sufficiently large
volume of textbooks and basic collections of reading books to support literacy; (c) achieve
reduced unit costs and textbook provision system costs; (d) ensure good quality books to public
schools for grades 1, 2 and 3 in the project target areas; and (e) carry out program of proper-and-
intended use awareness campaigns for teaching and learning materials\. Teaching and learning
materials would be financed through the project\. Specifically, three textbooks per grade covering
languages French and English, and Mathematics, that conform to the curriculum of primary
grades 1, 2 and 3, reading books, and exercise books would be financed\.
51\. The approach would be to provide teaching and learning materials progressively to one
cohort (the Project cohort)\. Specifically, the starting point would be to hold the 2013 Approved
booklist for grades 1, 2 and 3 to remain constant throughout the four-year implementation period
of the Project, and to ensure that no textbooks require the pupils to write in them, therefore
making them unusable by subsequent cohorts\. Publishers will be informed that they will need to
redesign any such books, and no books requiring pupils to write in them will be purchased for
the project\. In addition, the quality of production will be compatible with a 3 year book life\.
Then grade 1 titles of the French, English and Mathematics books would be supplied for students
enrolling in grade 1 in school year 2014\. The same students who graduate and move up to grade
2 would receive grade 2 titles in school year 2015\. During school year 2015 the new grade 1
titles already supplied in 2014 would be used by the new cohort of grade 1 students\. And during
the third year of project implementation, the students who move up from grade 2 to grade 3 will
receive the appropriate titles in school year 2016\. The new cohort moving up from grade 1 to
grade 2 would use the project financed books during the previous year\. In school year 2017 the
Government would purchase the new titles based on a new 2017 approved booklist\. Sensitization
campaigns and teacher training would be undertaken to ensure that the books are being used for
the intended purposes and not for resale\. Storage boxes or cupboards will be provided to each
public primary school\. Provision will also be made for teachers and school management to be
trained in the effective use of textbooks in the classroom\.
18
52\. In keeping with Government policy to promote the commercial book industry, the sub-
component would be implemented using the existing national practices\. The following would be
the performance-linked indicators:
(i) 40 percent would be disbursed on the basis of Governmentâs written
guarantee/undertaking that the (i) 2013 Approved Booklist for primary grades 1, 2
and 3 will remain constant during each of the Project implementation years; and (ii)
that the same textbooks/titles selected during the first year of the project will remain
constant during the project implementation period\.
Note: Project financing has been determined to be a maximum of US$3\.0 per
textbook title for publishing and distribution for grade 1; US$3\.5 per textbook title for
publishing and distribution for grade 2; US$4\.2 per textbook title for publishing and
distribution for grade 3; and US$2\.25 per reader for publishing and for distribution\.
Should the unit cost exceed the Project specified ceiling price, Government would
finance the difference\. If, however, the unit cost is below the Project specified ceiling
price, Government would ensure that more textbooks are produced and supplied to
public primary schools\.
(ii) 60 percent (the second and final tranche) would be paid on the basis of third party
technical verification that the books have been distributed to the schools, and are of
an acceptable standard\. The third party verification would be undertaken by
contracting a management company\. In addition, a third party financial audit would
also provide the necessary fiduciary oversight before the second and final tranche is
disbursed\.
Penalties would be applicable if books are not distributed to the Project target areas
within stipulated timeframes\. The Ministry approval and price agreement system and
Government customs practices must not prevent publishers being able to print and
distribute in time for the start of the school year\.
Specifically:
(a) In order for the second and final 60 percent full disbursement to be effected,
books would need to reach the schools in time for the beginning of the academic
year (each September);
(b) 5 percent of the final 60 percent payment would be withheld for non-distribution
of books within 30 days;
(c) 10 percent for non-distribution within 60 days; and
(d) No payment if books are not distributed within 90 days of publishing and printing\.
(iii) Third party verification through technical and financial audits would be adopted to
ensure that the GPE funds are being used for the intended purposes, and to assess if
DLIs are achieved to trigger GPE funds flow\. Upstream supportive efforts would be
provided through a Rapid Results Approach (RRA) to ensure that books are
19
distributed in a timely manner prior to the commencement of each of the school
years (2014/15, 2015/16, and 2016/17)\.
53\. Sustainability: During the last year of project implementation 2017/18, MINEDUB would
demonstrate that (a) a line item has been included in the budget to ensure that replacement costs
for books lost or damaged are included; and (b) a second line item has been included in the
budget to ensure that a full set of textbooks are financed through the Government budget\.
54\. Reporting: A computerized inventory management system would be used to track the books
that are produced, printed, and distributed\. Audits of publishersâ books of accounts, technical
audits through third party verification by a management agency and the local communities, and
school report cards would be used to track and triangulate data on inventory\.
55\. Sub-component 1\.2 will finance: teaching and learning materials\.
Sub-component 1\.3 Continued professional development for teachers and inspectors (Total
cost including contingencies: US$1\.1 million; 100% GPE financing)
56\. The objective of this sub-component is to train teachers and school management in the use of
the new teaching and learning materials to be distributed through the Project\. Specifically the
sub-component would include the preparation of a national plan for teacher training in the
ENIEG and in-service capacity development for teachers and inspectors\. The content of the
national plan would be linked to grades 1, 2, and 3 book titles, the use of the new teaching
materials, and the preparation, administration, and grading of studentsâ tests (early grade reading
and early grade mathematics)\. The teacher training would be rolled out progressively over the
project implementation period, and teacher performance would be evaluated through third party
verification mechanisms\.
57\. Sub-component 1\.3 will finance: preparation of teacher training materials, including hands-
on training in the preparation, administration, and grading of studentsâ tests in the areas of early
grade reading and early grade mathematics\. The modules would be introduced at the ENIEG and
the in-service training would be based on a cascade training approach\.
Sub-component 1\.4 Support for girlsâ education (Total cost including contingencies: US$1\.1
million; 100% GPE financing)
58\. The objective of Sub-component 1\.4 is to support improvements for equity in access and
retention of girls in primary education\. There is a heightened awareness among the Government
and development partners about addressing girlsâ education\. The aim is to complement the
ongoing targeted investments being financed by other development partners (see sub-section on
Complementarities of GPEF support) especially the UNICEF integrated program for girlsâ
education, the ongoing IDA Sanitation Project, British High Commission support\. Together, with
the Project investments, the Government and development partnersâ assistance would contribute
to improving the equity in access and retention of girls in primary education\.
20
59\. The project investment would focus on strategic communications\. The sub-component
financing would be for lifeskills advocacy, content and capacity development through gender-
oriented campaigns, the preparation and proactive dissemination of awareness campaigns\.
Specifically, the project will focus on:
(i) Producing lifeskills pamphlets, posters, publicity material, multimedia dissemination
options (radio, television) as teaching and learning materials (financed under Sub-
component 1\.2 in the amount of an estimated US$1 million) and disseminating them
widely;
(ii) Launching gender sensitization communication campaign (awareness raising, violence
against girls and women) using multiple and complementary methods including:
a\. Gender responsive teaching and learning environments to enhance the positive
participation and performance of girls and boys in primary schools, especially in
grades 4, 5 and 6;
b\. Management of the sexual maturation and enhanced sanitation in primary schools,
targeted to grades 4, 5 and 6;
c\. Advocacy for promoting positive attitude among parents and communities about
educating both girls and boys through gender advocacy and sensitization programs\.
(iii) Enhanced monitoring and evaluation of gender equity in education at all levels\. This
would be achieved by supporting data capture to systematically document the
transversal aspects of gender in the project sub-components (hiring of female contract
teachers, GER and NER of girls in primary schools, complementary support from other
bilateral and multilateral partners especially in the area of school latrines and water
points)\.
(iv) Strengthening the institutional framework and building the capacity of Ministry
officials to track progress towards the sub-component objectives\.
60\. Sub-component 1\.4 will finance: (i) contracting the services of experts to develop
information, education, and communication (IEC) materials; (ii) contracting of services of non-
government organizations to mobilize communities and carry out institutional capacity
development; and (iii) contracting services of experts to follow-up on the administration and
evaluation\.
Sub-component 1\.5 National primary education assessment framework (Total cost including
contingencies: US$1\.4 million; 100% GPE financing)
61\. The objective of this sub-component is to assist the Government to prepare a National
Assessment Framework including a formative evaluation system by instituting the EGRA and
EGMA as a tool for measuring learning outcomes for early grade students (grades 1 to 3)\. These
would also be used to monitor the achievement of the two higher level objective indicators on
learning outcomes in disadvantaged areas\. The project will support EGRA and EGMA exercises
at the end of school years 2014, 2015 and 2016 respectively\.
21
62\. Sub-component 1\.5 will finance: test development, test marking/grading, testing materials,
stop watches, and rapid results assessments\. Third party verification through the contracting of a
management agency would be used to determine the efficacy of the tests and whether they are
being administered accurately\. The National Student Evaluation Committee will be responsible
for implementing the sub-component\. The services of experts in the area of student learning
assessments will be responsible for developing tests, for designing the approach to
marking/grading tests, and for preparing the testing materials\. The teachers and inspectors will
be responsible for administering the tests\.
Component 2\. Building institutional capacity for improved education service delivery
(Total cost including contingencies: US$5\.0 million; 100% GPE financing)
63\. The objective is to limit the risks of weak governance (poor management, weak citizen
participation, and lack of transparency and accountability) in the conversion of maîtres des
parents to contract teacher status and in the distribution of Essential teaching and learning
materials, and to better monitor service delivery for improved service delivery, learning
outcomes and equity in basic education\. The Project would use already piloted approaches in
past and current projects in order to limit the risks associated with time lags in developing new
tools\. In order to achieve the objective, two specific tools would be included: (a) school mapping
and linking the existing tableau de bord; and (b) budget transparency initiative (BTI) and school-
based management\. A brief explanation for each tool is provided below\. The third party
verification that is to be undertaken by a management company/firm would use the tools to track
project implementation progress\.
Sub-component 2\.1 Improving information, governance and accountability, and monitoring
and evaluation capacity (Total cost including contingencies: US$3\.3 million; 100% GPE
financing)
64\. Improving information\. The objective for the sub-activity is to support the geo-mapping of
public and private early childhood development centers, and public and private primary and
secondary schools in the country, linking the school report cards (tableau de bord), and
preparing the architecture for the unification of the EMIS for the five ministries of education\.
The sub-activity will complement the ongoing efforts of UNESCO to build capacity towards
setting up a unified platform for EMIS across the five ministries of education\. The sub-activity
will draw on the lessons from UNESCOâs experience\. Baseline and endline data would be
collected in order to analyze the out-of-pocket expenses for households\. Building on the 2007
ECAM (household survey) database, it is anticipated that the ECAM 2012 (results awaited)
would help to construct a credible baseline for measuring the percentage of reduction of out-of-
pocket expenses for households\.
65\. Governance and accountability\. The objective is to apply two project implementation
support strategies to keep the project implementation on-track:
(a) Rapid Results Strategies (RRS)\. The objective is to follow-up on the project
implementation\. The Rapid Results Approach (RRA) is a management tool to help make
22
large scale change happen, incrementally\. By empowering teams to achieve results
quickly, typically in less than 100 days, a virtuous cycle of achievement can be created
whereby short-term successes lead to capacity building and the achievement of longer
term goals\. The RRS can help to overcome procedural barriers which render systems
lengthy and cumbersome\.
(b) The budget transparency strategy support to be used for the project would include:
(i) The adaptation of BT templates to highlight: the number of recruited staff in each
school in the Project target areas; the number of PTA teachers converted to contract
teachers in the school as well as their names; the number of benches manufactured
and supplied; and the number of student/textbook supplied to the school;
(ii) Making it compulsory for schools to fill out the template and have this published on
the notice board throughout the academic year;
(ii) Making it systematic to have the names of teachers recruited as well as PTA
teachers converted to contract teachers, read over the public regional radio; and
(iii)Making it compulsory systematically that schools should present and discuss their
respective BT templates at school management meetings\.
66\. M&E of the Project activities\. The objective is to monitor project implementation progress
against the results framework, track the success of adopting the DLIs, and evaluate the results\.
67\. The Project will finance the contracting of: (a) a firm to carry out the geo-mapping/school
mapping of the primary and secondary schools in Cameroon; (b) an expert in information
technology and education to prepare the key architecture document for the education sector
management information system, including linking the tableau de bord; (c) experts/champions in
the domain in which RRS, adapt the BTI templates and administer them, train and assist
MINEDUB to meet its targets and design actions needed to achieve results; (d) an expert to carry
out an assessment of the teacher salary payment system, the procedures and steps, and the
efficacy of the system; and (e) third party verification firms for sub-components 1\.1 (contract
teachers program) and 1\.2 (provision of teaching and learning materials)\.
Sub-component 2\.2 Building knowledge for improved service delivery and learning (Total cost
including contingencies: US$1\.7 million; 100% GPE financing)
68\. The objective of this sub-component is to support the preparation of key studies that will
help set the stage for moving Cameroon to the next stage of building human capital for growth
and competitiveness\. Key studies proposed to be undertaken at this time include:
(i) Analysis on introducing fundamental education (énseignement fondamentale--pré-
scolaire jusquâau premier cycle secondaireâ12 années) the underpinning challenges,
opportunities, budget implications, strategy, and implementation\. This would include
pre-school education or early childhood development to secondary education (12
years of schooling);
23
(ii) Study on skills for the labor market\. This would inform curricular changes at the
basic education level, including the introduction of competency based education,
especially (i) getting children off to the right start with nutrition, psychological and
cognitive stimulation, basic cognitive and social skills; (ii) ensuring that all students
learn with cognitive skills, socialization, behavioral skills, and offering second chance
education\. More importantly, identifying the necessary competencies to take
advantage of economic and labor market opportunities;
(iii) TA to Government for finalizing its policy on adult literacy (alphabetisation), out-of-
school children (les non-scolarisés), reducing dropout, and inclusive education, as
well as, prospectively, the development of some tools to address the challenges; and
(iv) Study on higher education reform based on extracting the analysis of introducing
énseignement fondamentale which is expected to change the flow of students in the
system to higher levels of education\.
69\. The financing for this sub-component would be for contracting consulting services,
workshops, and small goods\.
70\. Project management\. The objective is to ensure the smooth implementation of the day-to-
day operations of the Project\. The main activities include project coordination, technical
coordination, financial management, procurement, internal audit, reporting, archiving, data
management, and secretarial support\. Project management staff would be financed by the
Government in the amount of US$2\.5 million\. In addition, the Project would finance experts as
necessary for Project implementation\.
71\. Operating costs are estimated to be 4\.5 percent (US$2\.5 million) of the total Project cost,
plus some funding from the Project for hiring fiduciary specialists\.
A\. Project Financing and Costs
72\. Proposed Lending Instrument\. The instrument will be Investment Project Financing (IPF)
with a hybrid of results-based disbursements against DLIs and the use of national systems\. The
DLIs would be for the first two sub-components of the Project that would primarily be
implemented using national systems\. Approximately 72\.4 percent or US$38\.6 million of the total
grant for the Project would be disbursed based on DLIs\. The remaining 27\.6 percent or US$14\.7
million would be disbursed using national procedures for procurement\. The IPF instrument and
implementation arrangements provide efficient financing to a program that forms an integral part
of the Governmentâs DSSEF\. The financing approach serves to take the contract teachers reform
to its logical conclusion, and would help to introduce a system which supports cost reduction in
the system of textbook provision and a decentralized approach to the procurement of teaching
and learning materials\.
73\. Adopting an IPF approach would be the most appropriate instrument at this time\. The
education system is still highly input-driven\. The options for the lending instruments have
received careful consideration based on discussions with Government: (i) a Program for Results
(PforR); or (ii) IPF\. The use of PforR was judged not to be feasible due to the lack of strong and
24
reliable monitoring systems\. The decision was precipitated also by the strong feeling that the
GPE funds might not be disbursed in the traditional three-year implementation period\. Hence the
Project would be implemented over a four-year period (2014/15â2017/18)\. Analysis of
experience from ongoing Bank operations in Cameroon underscores this decision\.
74\. Cameroon has demonstrated its ability and willingness to pursue a results-based financing
approach through the previous EFA-FTI Project, and also as applied in an ongoing health
operation\. There is every reason to build on the reform that is already in place\. The Government
technical team expressed the possibility of a hybrid approach\. IPF with: (a) DLIs for converting
maîtres des parents to contract teacher status and for the provision of teaching and learning
materials based on the relative good experience of implementing the EFA-FTI Project (2009-
2011); and (b) based on the relatively positive experience with implementing a similar sub-
component\.
Table 2: Project Costs
Project cost Share of total
Project Components
(US$ million) Project cost (%)
1\. Improving equity and quality in primary education service delivery 48\.3 86\.5
1\.1 Increasing teacher availability in disadvantaged areas 31\.4 56\.3
1\.2 Provision of teaching and learning materials 13\.3 23\.9
1\.3 Capacity development for teachers and inspectors 1\.1 2\.0
1\.4 Support for girlsâ education 1\.1 2\.0
1\.5 National primary education assessment framework 1\.4 2\.5
2\. Building institutional capacity for improved education service delivery 5\.0 9\.0
2\.1 Improving information, governance and accountability, and monitoring 3\.3 5\.9
and evaluation capacity
2\.2 Building knowledge for improved service delivery and learning 1\.7 3\.0
Total Financing from GPEF 53\.3 95\.5
Government financing for project management 2\.5 4\.5
TOTAL PROJECT COSTS 55\.8 100\.0
Notes: Assumptions--(i) Operating Costs = 5% of base cost; (ii) Unallocated = 2% of base cost; (iii) USD 1 = 500 FCFA\.
*Figures may not add up due to rounding\.
B\. Lessons Learned and Reflected in the Project Design
75\. The Project design is based on lessons learned from the implementation of (a) the EFA FTI-
financed Project (P116437) that closed in December 2011; (b) the World Bank-financed
Education Development Capacity Building Project (IDA Cr\.4070-CM) that closed in September
2012; (c) the ongoing CM2D Project of the Agence Française de Développement (AFD: French
Development Agency); and (d) previous and ongoing support from other development partners,
in particular UNICEF, UNESCO and the Japan International Cooperation Agency (JICA)\.
76\. The EFA FTI-financed Project (P116437) closed in December 2011 after achieving its
development objectives\. The World Bank EFA-FTI Project Completion and Results Report
(World Bank ICR2591; June 28, 2012) includes a detailed analysis of the project implementation
experience\. The project was rated as moderately satisfactory due to its success in attracting and
keeping children in school\. However, the project experienced some difficulties complying with
disbursement conditions\. Key among this was the reporting tool that was to produce the required
data on teacher salaries\. The lessons from this project were that: (i) it is important to understand
25
country systems and enhance them as necessary for appropriate reporting\. Further, that adding an
extra layer of reporting would defeat the purpose of using and strengthening national systems;
and (ii) adopting a composite measure (alea) to calculate the achievement of the project
development objective could result in including exogenous variables that could dilute the results
achieved through a project\. The current GPEF project design and implementation measures are
based on these lessons\.
77\. The World Bank/International Development Association (IDA)-financed Project Education
Development Capacity Building Project (P075964) closed on September 1, 2012 after about
seven years of implementation\. Based on implementation experience some important lessons are
summarized in the ICR (ICR2591; February 26, 2013): (i) the need for a systematic assessment
of the political economy environment in Project development; (ii) particular challenges of
implementing Projects in the context of multiple ministries; (iii) the strength of setting up a
Permanent Technical Unit with a minimum amount of resources and human resources with
periodic rotation to implement Project design with heavy procurement; (iv) the value of a
coherent plan for institutional capacity development directly linked to the Project design; (v)
taking the CDD approach and harnessing the support of the private sector to ensure greater
efficiency and execution of select activities such as decentralized school
construction/rehabilitation; and (vi) IPF with disbursement-linked indicators to pave the way for
the adoption of Program for Results (PforR) approach to design and implement interventions to
support Governmentâs program\. The Government has expressed willingness to use a hybrid
approach to the design and implementation of the new GPE Project\.
IV\. IMPLEMENTATION
A\. Institutional and Implementation Arrangements
78\. The institutional and implementation arrangements for the Project will be a blend of
disbursements against DLIs using national systems and national procurement procedures\. That
is, disbursement-linked indicators to pay for the salaries for teacher pay (US$31\.4 million) with
disbursements being made directly to Government Treasury against the evidence of
Governmentâs inclusion of teacher salaries in the government budget for the prospective
academic year, and a similar approach for the provision of teaching and learning materials
(US$13\.3 million)\. The remaining parts of the project would be implemented using national
procurement procedures\. More details are provided in Annex 3\.
Sector management and administration
79\. The education sector in Cameroon is divided into five sub-sector ministries: MINEDUB
(Ministère de lâEducation de Base; Ministry of Basic Education), MINESEC (Ministère des
Enseignements Secondaires; Ministry of Secondary Education), MINEFOP (Ministère de
lâEmploi et de la Formation Professionnelle; Ministry for Vocational Education), MINESUP
(Ministère de lâEnseignement Supérieur; Ministry for Higher Education), and MINJEUN
(Ministère de la Jeunesse; Ministry for Youth Affairs)\. Sector management is organized as
follows:
26
a) The Steering Committee (Comité de pilotage) (CP) composed of the Ministers for
Education, and headed by the Minister for Economy, Planning, and Regional Integration
(MINEPAT) coordinates the implementation of the Education and Training Sector
Strategy 2013-2020\.
b) The Steering Committee is supported by two technical units: the Cellule Opérationnelle
(CELOP) and a Technical Secretariat (Sécretariat Technique, ST)\. The CELOP is
composed of the 12 Permanent Secretaries (Sécretaires Généraux, SG) of the ministries
of education\. Their role is to arbitrate and address emerging issues of education
administration while taking into account the decisions by Government decision-makers\.
The ST is composed of the Technical Secretary, three adjoint secretaries and various
education sub-sector experts\. The ST is responsible for operational aspects such as
implementing the activities of the sector strategy, coordination of related activities, and
for reporting on the technical and financial aspects relating to the activities\.
c) At the level of the sector ministries, the sector strategy implementation is guided by the
Comités pour la Planification, Programmation, Budgetisation, et Suivi (PPBS)
(Committees for Planning, Programming, Budgeting, and Monitoring)\. Their terms of
reference are to improve the budget preparation process and to orient the process towards
a practical approach to the preparation of the programs-budgets\. The Comités PPBS
ensure a balance in the sector strategy implementation, and the budget preparation
mechanisms\. Individual sub-sector strategies would guide their implementation, as also
the related budget preparation exercise for each sub-sector of education\.
d) The annual Joint Review of the Education Sector (JRES) will provide a forum for
coordination between the ministries and the technical and financial development partners\.
The JRES will be based on the examination of relevant documentation and on a review of
the annual action plans\.
Project management and administration mechanisms
80\. The Project Steering Committee (PSC) would be chaired by the Minister responsible for
Basic Education (MINEDUB) or his or her representative\. The PSC will include Ministers or
their representatives, responsible for secondary education, higher education, finance,
employment and professional training, economy and planning, and public contracts and a
representative of the Recipientâs unit responsible for automatic amortization\. The PSC would
meet at least twice annually and would be responsible for Project oversight, including: (i)
reviewing the proposed Annual Work Plans and Budgets for the Project, reviewing the draft
annual implementation and audit reports, as well as the Procurement Plan prepared by the Project
Secretariat; (ii) overseeing overall implementation and performance of the Project and providing
policy guidance; and (iii) identifying necessary Project adjustments based on monitoring and
evaluation results\.
81\. There will be no independent Project Implementation Entity (PIE) to implement the
Project\. The Project will be implemented by MINEDUB\. A Project-specific MINEDUB
Secretariat staffed with qualified and experienced personnel in adequate numbers, and
comprising a project coordinator, a technical coordinator, a procurement specialist, and a
financial management officer and an accountant\. The Project Secretariat would be responsible
for the day-to-day operations for the Project\. A Secretariat Coordinator and a Technical
27
Coordinator would be jointly responsible for coordinating the Project implementation\. They
would be paid through Government funds\. The Project Secretariat would report to the Minister
for MINEDUB and to the PSC\. The Secretariat specialists (Financial Management, Accountant,
and Procurement) and other staff as necessary would be paid by the Project funds\. The terms of
reference for the additional specialists and other staff and the budget for the staff would be
prepared by the Project Secretariat for the SEâs non-objection\. The SE would provide technical
assistance to the Project Secretariat and participate in working meetings\. Representatives of the
Caisse Autonome dâAmortissement (CAA) of the MINFI and MINEPAT will participate in the
Project Secretariat planning and preparation meetings relating to sub-components 1\.1 and 1\.2\.
Technical implementation aspects
82\. Overall institutional responsibility for managing, monitoring and evaluating Sub-
component 1\.1 (Salaries for maîtres des parents converted to contract teacher status, and
for new ENIEG graduates recruited as contract teachers)\. The current institutional
arrangements would be largely maintained\. MINEDUB/DRH is responsible for the overall
implementation and monitoring of the CTP\. Several Government entities are involved in the
CTP: (i) the Prime Ministerâs office, which gives prior approval to proceed with the contracting
process; (ii) the Ministry of Public Function and Administrative Reform [MINFOPRA; Comité de
suivi pour lâopération de Contractualisation (MCS)], which signs the contract; and (iii) the MINIFI,
which is responsible for budget allocations and payment of salaries\.
83\. Proposed reforms for procedural and institutional arrangements\. MINEDUB/DRH
would be the main entity for implementing, monitoring, and reporting about the CTP\. The main
institutional reforms would relate to: (i) the avoidance of inter-regional and the intra-regional
deployment of teachers based on lessons learned from the EFA-FTI Project, and instead
converting existing maîtres des parents to contract teacher cadre so as to maintain the same
standards for teachers, and recruiting newly graduated teachers from the local ENIEG; (ii)
reporting on the CTP and the maîtres des parents\. This would involve the Prime Ministerâs
office, MINFOPRA, and MINFI; and (iii) disbursements would be against pre-agreed indicators\.
84\. Overall institutional responsibility for managing, monitoring and evaluating Sub-
component 1\.2 (Provision of teaching and learning materials and storage) lies with the
Inspectorate General of Education of MINEDUB\. The evaluation and approval of textbooks is
managed by the National Council for the Approval of Textbooks and Didactic Material\. In
keeping with Government policy to promote the national book industry, the technical
implementation aspects would follow national procedures\.
85\. Third-party Verification for Components 1 and 2\. The decentralized nature of the sub-
components warrants third party verification\. A Management Agency would be hired to follow-
up on the impact of the activities under Component 1 of the Project (subsidy for contract
teachers, provision of teaching and learning materials for grades 1, 2 and 3)\. The third-party
verification agency would be responsible for: (i) developing a dedicated RRS for each of the
major activities under Components 1 and 2\. The description of the RRS for the Project is
outlined under Component 2 Monitoring and Evaluation activities\.
28
B\. Results Monitoring and Evaluation
86\. The Results Framework (Annex 1) and the monitoring and evaluation arrangements
(Annex 3) for the proposed Project are aligned with the three-year action plan\. The Results
Framework is designed to track: (a) the achievement of the PDO-level outcome indicator(s); (b)
the service delivery (education inputs) aspects\. These comprise the intermediate indicators; and
(c) the DLIs are designed to track the process of achieving the key annual targets\. Their
achievement would trigger disbursements\. Further, the third component on building institutional
capacity would include the Rapid Results Approaches designed to suit each of the sub-
components under Component 1\. Therefore, the M&E system for the Project would comprise
linked measures with a mid-term review to be held no later than March 2016\. Each sub-
component would have a sub-system that is intended to verify results, disburse against pre-
agreed indicators, monitor the financing to ensure that it is being used for the intended purposes,
prepare periodic reports, and evaluate the Project specific reforms\.
87\. Reporting\. Mechanisms would include data triangulation for verification, data analysis,
dissemination, and for introducing corrective measures during Project implementation\. Specific
tools would include: (a) RRA to facilitate front-end performance; (b) service delivery indicators
(SDI) such as tracking time on task, use of teaching materials in the classroom by teachers, use
of textbooks by students, and teacher presence in the classrooms, and budget transparency tools\.
These would be to facilitate process measures; and (c) third party verifications reports would
ensure end-point assessments\.
C\. Sustainability
88\. The estimated fiscal impact of the Project is assessed to be sustainable for the
Government, for schools, communities, and households\. The Project would have recurrent
cost implications for the Government over the four-year (2014/15-2017/18) project
implementation period and beyond (see Figure 3 and Table 6)\.
Figure 3\. Government take-up of GPEF contract teachers Table 6\. Fiscal implication of GPEF support
US$ million
70,000 2014 2015 2016 2017 Total
60,000 Ov erall estimated cost of the DSSEF 2013-2020 1,152\.1 1,236\.1 1,360\.5 1,520\.4 5,269\.1
50,000 of which estimated capital ex penditures 80\.7 58\.5 60\.8 96\.0 296\.0
of which estimated recurrent ex penditures 1,071\.4 1,177\.6 1,299\.7 1,424\.4 4,973\.1
40,000
GPEF
30,000
Contract Teachers Program 13\.2 9\.7 6\.5 29\.4
20,000
Teaching and learning materials 1\.2 1\.2
10,000 Sub-total - 13\.2 9\.7 7\.7 30\.6
-
Domestic funding
1,070\.2 1,160\.9 1,258\.7 1,364\.3 4,854\.1
(including tax rev enue and other)
No\. State paid teachers No\. Parents paid teachers GPEF inv estment as % of domestic funding (fiscal
1\.1 0\.8 0\.6 0\.6
implication)
Source: Cameroon Education Financing Simulation model (2013)\. Source : Gov ernment of Cameroun, DSSEF 2013-2020\.
89\. These costs relate to: (a) the conversion of some maîtres des parents to contract teacher
status, and the recruitment of a relatively small number of new contract teachers from the local
ENIEG\. This is estimated to be around US$9\.89 million during the second year and increasing to
29
US$29\.4 million (approx\. FCFA14,668 billion) by the end of the Project implementation period\.
This would represent only 0\.6 percent of the estimated 2017/18 recurrent expenditure for the
education sector; and (b) an estimated US$1\.2 million (about FCFA 618\.5 billion) the purchase
cost of a new set of teaching and learning materials for a new cohort of students, and the
replacement cost for damaged or lost teaching and learning materials\. This would represent only
0\.02 percent of the estimated 2017/18 recurrent expenditure for the education sector\. Equally, the
Project beneficiaries would generate tax revenue due to an increase in their respective income
stream\. Government has committed to sustaining the Project investments through the gradual
absorption of the salary payments for newly contracted teachers, and the demonstration of
commitment to reforming the system for the evaluation, approval, school selection, production
and distribution of teaching and learning materials to introduce re-usable and sustainable books
and incur only the replacement costs for the books\. The commitment is embodied in the
Governmentâs signed letter of sector policy (see Annex 8)\.
V\. KEY RISKS AND MITIGATION MEASURES
A\. Risk Ratings Summary Table
Risk Category Rating
Stakeholder Risk High
Implementing Agency Risk
- Capacity Substantial
- Governance High
Project Risk
- Design Substantial
- Social and Environmental Moderate
- Program and Donor Moderate
- Delivery Monitoring and Sustainability High
Overall Implementation Risk Substantial
B\. Overall Risk Rating Explanation
90\. Annex 4 provides a detailed assessment of the operational risks related to the achievement of
the PDO\. The main risks associated with the Project:
a) Government spending on education could decrease further, with the GPE grant
substituting for Government resources\. Government has indicated its commitment to
gradually increasing the budget for education over the project period, to bring the
percentage allocated for education up to 20 percent by 2016 and 22 percent by 2020 (see
Annex 8)\. Further, one of the key triggers for project disbursement for teacher salaries is
evidence from Government about including the prospective salary payment for new
contract teachers in the budget\.
b) The teaching and learning materials sub-component which would be implemented
countrywide\. There is a risk that MINEDUB and the Commission dâagrément des
manuels scolaires might not reach an agreement\. However, this is a relatively minor risk
since all parties have participated in the project design and agree that it is in their best
30
interest to collaborate\. The effective transportation and distribution of the books to the
schools and their proper storage/safe keeping would be key contributing factors to the
success of the sub-component\. Experience in other Sub-Saharan African countries
suggests that teachers who have not received textbooks for many years are often unable
to use them in class when they are provided\. The provision of training in textbook use to
teachers in the lower grades of public primary schools is intended to redress this
possibility\.
c) The risk of fraud and corruption in the country has been high in general\. Project sub-
component 2\.1 integrates a governance action plan that is designed to include third party
verifications, the budget transparency initiative, rapid results strategies for project
implementation, and close monitoring and evaluation throughout the Project
implementation period\.
d) Implementation capacity is within a fragmented sector environment characterized by
relatively low capacity at decentralized levels, and lack of verifiable data\. However,
central Ministry level capacity is not a significant issue\. The implementing agency staff
has had prior experience with World Bank-financed projects\. Further, through the project
implementation process appropriate technical assistance for monitoring would be
provided\. Despite these measures, capacity challenges do pose a considerable issue for
project implementation\.
e) Associated monitoring and evaluation risks are that a number of stakeholders would be
involved in project implementation\. Their understanding of the project implementation
process would need to be enhanced through a project launch workshop, and continual
implementation support mechanisms\.
91\. Based on the overall risk rating for the project at implementation is Substantial\.
Mitigation measures will be introduced to reduce monitoring & evaluation risks by linking
project M&E to stakeholder and third party monitoring through the use of governance,
accountability, and service delivery tools such as (a) school mapping and linking the existing
tableau de bord that would help to track progress in education indicators and budgets at school
level, and efficiency in the use of resources at school level; and (b) BTI and school-based
management through SMCs\.
VI\. APPRAISAL SUMMARY
A\. Economic and Financial Analysis
92\. Overall macroeconomic impact\. The reforms supported through the Project are expected
to have a positive socio-economic impact\. In the long run, the Project has the potential to
contribute to poverty alleviation in the most disadvantaged areas of the country\. Annex 6
includes the complete economic and financial analysis of the Project\.
93\. Project investments are estimated to be cost-efficient and to contribute to positive
economic benefits due to increased economic activity in the Project target areas \. The design
focuses on quality improvements that will establish the necessary foundation for a more efficient
31
and effective lower primary education system, mainly for grades 1, 2 and 3\. These grades serve
as the foundation for students to continue on to upper primary education\. Further, the project
design would contribute to stimulating the local economies\.
94\. Project interventions are designed to be cost-effective and could potentially introduce
efficiencies in Government expenditures\. Specifically, (a) by converting maîtres des parents to
contract teacher status, their income levels will increase as will their social status\. Newly
recruited contract teachers would also benefit from an income stream; (b) experience elsewhere
in Sub-Saharan Africa suggests that by adopting decentralized selection for teaching and learning
materials school ownership of the selected materials is enhanced and there is a much greater
chance of effective classroom usage as a result; (c) no risk, bulk purchase of textbooks by the
MINEDUB, and supplied to regions which had previously provided only negligible sales to
publishers would benefit from increased production volume and thus reduced unit costs; (d) the
shift to mandatory physical production standards and the introduction of the concept of reusable
books will significantly reduce textbook system provision costs by increasing classroom book
life from 1 to 3-4 years, thus amortizing the costs of textbook provision; (e) the introduction of
competitive distribution bids for the pilot districts through the existing book trade in place of the
current system of publisherâs discounts should reduce current distribution costs for textbooks; (f)
local booksellers would benefit from increased income as a result of increased annual activity
with the distribution of books to schools; and (g) by reducing the out-of-pocket expenditures
through the Project interventions, households would potentially have more disposable income for
other essential expenditures\.
95\. Quality improvements would contribute to reducing student-teacher ratios and social
disparities between regions, increasing access to teaching and learning materials\. Key
improvements that will contribute to the sustainable development for better quality primary
education include the development of high quality pre-service in the ENIEG and inservice
training programs for teachers and inspectors that would promote the introduction of improved
classroom practices that are appropriate for teaching and learning of basic competencies,
especially literacy and numeracy\. The provision of the necessary additional teaching and
learning resources would ensure that schools in the targeted areas have the basic tools to support
the use of new methods of instruction\. Finally, gender disparities would be directly addressed
through the Project interventions\.
96\. The estimated fiscal impact of the Project is assessed to be sustainable for the
Government\. The Project would have recurrent cost implications for the Government over the
four-year (2014/15-2017/18) project implementation period and beyond\. These costs relate to:
(a) the conversion of some maîtres des parents to contract teacher status, and the recruitment of a
relatively small number of new contract teachers from the local ENIEG; and (b) the purchase
cost of a new set of teaching and learning materials for a new cohort of students, and the
replacement cost for damaged or lost teaching and learning materials\. Equally, the Project
beneficiaries would generate tax revenue due to an increase in their respective income stream\.
Government commitment to sustaining the Project investments would be ensured through the
gradual absorption of the salary payments for newly contracted teachers, and the demonstration
of commitment to reforming the system for the production and distribution of teaching and
32
learning materials by introducing re-useable and sustainable books and incurring only the
replacement costs for the books\.
B\. Technical
97\. Central technical and operational features of the Project include service delivery
response to improve equity or reduce regional disparities, and promote learning outcomes\.
The focus is on: (a) taking the contract teacher reform into a final phase with the conversion of
existing maîtres des parents to contract teacher status, and contracting some new graduates from
the regional ENIEG in regions\. This is to improve efficiency in the recruitment of qualified
teachers, and to reduce potential attrition due to redeployment of teachers to areas outside their
respective regions; and (b) piloting the provision of good quality, low cost, durable teaching and
learning materials through decentralized school-based selection of the materials to be used\.
98\. The technical design aims to alleviate the out-of-pocket expenses of households, builds
on prior and tested institutional mechanisms, reinforces good practice, and provides
institutional capacity development by complementing Governmentâs decentralization
efforts, taking into account the implementation capacity in-country\. The Project
interventions will alleviate the direct costs borne by parents to pay for maître des parents and for
learning materials\. The investments would target training for newly contracted teachers on the
use of the new teaching and learning materials\. Students would benefit from qualified and
trained teachers\. The Project will also ameliorate the learning environment in the countryâs most
disadvantaged areas and regions, and enhance girlsâ education\.
99\. The Project interventions complement the assistance of other development partners,
and prior projects\. It addresses a gap specified in the DSSEF 2013-2020, and complements the
demand-side financing through households that is to be provided through the World Bank
Cameroon Social Safety Net Project\. The Project provides the supply-side response to the need
for improving the quality of education service delivery at primary education level\. The technical
design includes activities that build on institutional mechanisms that have been put in place
through prior projects, particularly the EFA-FTI Project, the World Bank/IDA financed
Education Development Capacity Building Project, UNICEFâs pilot textbooks purchase and
distribution experience, AFDâs experience with financing contract teachers and classrooms
construction and rehabilitation, and JICAâs experience with school construction\. The Project
complements JICAâs proposed support for school-based management by building the capacity of
SMCs\.
100\. The Project addresses key areas for development set out in the vision, strategy, and
sector policy documents of Cameroon, in the MDGs, and in the GPE strategy\. Universal and
free primary education remains key priorities of the DSSEF 2013-2020\. Free primary education
requires review and reconsideration in order to extend its benefits to the disadvantaged and
particularly to those in rural areas of the country\. The proposed Project addresses these concerns\.
It draws on the sector diagnostics from the RESEN/CSR 2013, the DSSEF 2013-2020, the
MDGs and the GPE strategy to articulate a combination of interventions that would contribute
to: (a) promoting learning outcomes; (b) introducing greater efficiency in Governmentâs resource
utilization both directly and indirectly by emphasizing the role of SMCs at school level, relieving
the pressure on out-of-pocket expenditure for households, encouraging improved service
33
delivery response; and (c) encouraging increased budget allocation for primary education
gradually to ensure sustainability of project interventions\.
C\. Financial Management
101\. The proposed financial management (FM) and disbursements arrangements comply with
the Financial Management Manual for World Bank-financed Investment Operations dated March
1, 2011\. MINEDUB and the Project Secretariatâs financial management system have been
assessed to determine whether (i) adequate financial management arrangements exist to ensure
that the project funds will be used for its intended purposes, in an efficient and economical
manner; (ii) the financial reports will be prepared in an accurate, reliable, and timely manner;
and (iii) the Project assets will be safeguarded\. The financial management assessment has taken
into account lessons learned from recent implementation experience in Cameroon especially
from the EFA-FTI-financed project and the World Bank/IDA-financed project\. The conclusion is
that subject to the implementation of the mitigation measures outlined below, MINEDUBâs
Project Secretariat financial management system would comply with the World Bankâs
requirements under OP/BP10\.00\.10
102\. The overall FM risk is considered to be Substantial\. The mitigation measures proposed
to enhance the FM system are as follows: (a) the recruitment of a technical auditor (third party
verification agent) to perform the in-depth review of payments made to contract teachers to
ensure the reliability of the list of contract teachers and salary figures provided by MINEDUBâs
Project Secretariat; and the delivery of teaching and learning materials; (b) the recruitment of one
financial management officer and one accountant to support the Project Secretariat; (c) the
recruitment of an internal auditor and an external auditor for the financial audit of the Project; (d)
an upgrade of the World Bank/IDA-financed project (Education Development Capacity Building
Project) information system (Tompro) to manage the Project; and (e) the adoption of a
procedures manual as part of the Project Implementation Manual, with a more detailed
description of roles and responsibilities for the use of in-country systems relating to the system
of teaching and learning materials production, distribution and provision, including the role of
communities\.
103\. The detailed financial management arrangements are included in Annex 3\. The FM
conditions and covenants are set out in the sub-section G on readiness for implementation\.
D\. Procurement
104\. An assessment of the Project implementation arrangements has been carried out, focusing
particularly on the Project Secretariat\. The overall procurement risk for the project is rated as
High\. This is due to, among other factors, the risk of corruption in procurement, especially in the
activities related to the public contracts\. The capacity assessment of the project found that
although the implementing agency has experience with implementing Bank-financed projects; (i)
at present there is no qualified procurement specialist within the Project Secretariat\. The
specialist will be hired within one month after project effectiveness; (ii) at present there is no
10
Projects supported by Investment Project Financing are governed by Operational Procedures (OP) and Bank
Procedures (BP) 10\.00, and related provisions\.
34
implementation manual that includes a section on procurement; (iii) the Project Secretariat and
Ministry for Public Contracts (MINMAP) are still to develop a comprehensive record keeping
system; and (iv) while the motivation for the reform related to the new institutional arrangements
of December, 2011 with the responsibilities of MINMAP is understood, it has been identified
some aspects of the new institutional arrangements raise some concerns\. These relate to technical
and legal responsibility and related regulatory issues as described in Annex 3\. A mitigation
action plan has been agreed (see Annex 3) which, if properly implemented and monitored, will
bring this risk down to Substantial\.
105\. The draft procurement plan for the first 18 months of the project was carefully reviewed
at appraisal\. The final version of this procurement plan was discussed during negotiations\.
During Project implementation, the procurement plan will be updated by agreement between the
project team and the Bank as required, and at least annually to reflect actual project
implementation needs and any necessary increase in institutional capacity\. The plan would be
available on the World Bank Project database, and a summary will be disclosed on the Bankâs
external website once the project is approved by IDAâs Board of Directors\.
106\. The procurement for the Project would be carried out in accordance with the âGuidelines
on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and
IDA Credits and Grantsâ, dated October 15, 2006 and revised in January 2011, the âGuidelines:
Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by
World Bank Borrowersâ dated January 2011, and the "Guidelines: Procurement of Goods,
Works and Non consulting Services under IBRD Loans and IDA Credits and Grants by World
Bank Borrowersâ dated January 2011\.
E\. Social (including Safeguards)
107\. The Project is anticipated to have a positive social impact through improvements in
education service delivery in participating areas\. On the basis of pre-determined objective
criteria, the Project would target all 10 regions of the country for the project investments with an
emphasis on the ZEP (Adamaoua, North, Far North, North-West and East), and other
disadvantaged areas (pockets of poverty, peri-urban areas and rural areas)\. The extent and depth
of capacity development for teachers and/or outreach activities to girls in areas where indigenous
peoples inhabit is not known at present\. During implementation should Government decide to
extend the project outreach to the geographic areas, an Indigenous Peoples Planning Framework
(IPPF) or specific Indigenous Peoples Plans (IPP) will be prepared, consulted upon, and
disclosed\.
F\. Environment (including Safeguards)
108\. The proposed project does not include any civil works and no environmental issues are
expected\.
109\. No Safeguards Policies are triggered and the project is Category C\.
35
Readiness for Implementation
110\. So as to ensure maximum implementation readiness upon declaring Project effectiveness,
the preparation period has included the following key steps: (a) design of a detailed Project
Operating Manual with procedures for each sub-component; (b) design of a financial
management manual to outline the financial management due diligence aspects for each sub-
component; (c) preparation of draft procurement bidding documents for works, goods and
consulting services including appropriate terms of reference; and (d) ensuring that the
Government 2014 budget includes the commitments for Government financing and absorption of
the contract teacher salaries\.
Implementation support plan
111\. The strategy and approach for implementation support commensurate with the Project
design would combine reinforcing and continual support throughout the Project implementation
period\. Specifically, country-based support, bi-annual supervision missions, rolling technical and
financial audits, and strategic technical assistance would comprise the core of the
implementation support\. Approaches would be based on two levels: (a) the sub-component
specific needs; and (b) the timing of the support\. Annex 5 outlines the implementation support
details for the Project\.
36
Annex 1: Results Framework and Monitoring
\.
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
Results Framework
\.
Project Development Objectives
\.
PDO Statement
The objective of the project is to improve the equity and quality of primary education service delivery in Cameroon with an emphasis on disadvantaged areas\.
These results are at Project Level
\.
Project Development Objective Indicators
Responsibility
Cumulative Target Values
Data Source/ for
Unit of Methodology Data Collection
Indicator Name Core Baseline YR1 YR2 YR3 YR4 End Target Frequency
Measure
% reduction in out-of- MINEDUB
Household
pocket expenses for Percentage 0\.00 10\.00 One time Project
Survey
households Secretariat
% reduction in out-of-
pocket expenses for MINEDUB
Household
households in the ZEP Percentage 0\.00 10\.00 One time Project
Survey
and other disadvantaged Secretariat
areas
Third party MINEDUB
Reduction in
Percentage 12\.00 3\.00 Annual technical Project
pupil:textbook ratio
verification Secretariat
Number of new contract
MINEDUB
teachers as a result of MINEDUB,
Number 0\.00 3060\.00 6030\.00 9000\.00 9000\.00 Annual Project
the Project DRH
Secretariat
37
Percentage MINEDUB
MINEDUB/
Percentage female Sub-Type 0\.00 45\.00 45\.00 45\.00 45\.00 Annual Project
DRH
Supplemental Secretariat
Share of maîtres des
parents converted to MINEDUB
MINEDUB/
contract teachers' status Percentage 0\.00 80\.00 80\.00 80\.00 80\.00 Annual Project
DRH
in the ZEP and other Secretariat
disadvantages areas
Percentage MINEDUB
MINEDUB/
Percentage female Sub-Type 0\.00 45\.00 45\.00 45\.00 45\.00 Annual Project
DRH
Breakdown Secretariat
% of Grade 3 students EGRA
MINEDUB
meeting the reading (SOFRECO
Percentage 0\.00 0\.00 One time Project
benchmark monitored Survey Results
Secretariat
through EGRA 2012)
EGRA
Percentage MINEDUB
(SOFRECO
Anglophone schools Sub-Type 33\.10 38\.00 One time Project
Survey Results
Breakdown Secretariat
2012)
EGRA
Percentage MINEDUB
(SOFRECO
Francophone schools Sub-Type 36\.80 45\.00 One time Project
Survey Results
Breakdown Secretariat
2012)
Share of Grade 3
students in ZEP and Exam and
MINEDUB
other disadvantaged assessment
Percentage 0\.00 0\.00 One time Project
areas that meet reading results
Secretariat
benchmark monitored database
through EGRA
Percentage Exam and MINEDUB
Anglophone schools Sub-Type 0\.00 0\.00 One time assessment Project
Breakdown results Secretariat
Percentage Exam and MINEDUB
Francophone schools Sub-Type 0\.00 0\.00 One time assessment Project
Breakdown results Secretariat
% of Grade 3 students Exam and
MINEDUB
that meet mathematics assessment
Percentage 0\.00 0\.00 One time Project
benchmark monitored results
Secretariat
through EGMA database
38
Exam and
Percentage MINEDUB
assessment
Anglophone schools Sub-Type 28\.10 34\.00 Annual Project
results
Breakdown Secretariat
database
Percentage Exam and MINEDUB
Francophone schools Sub-Type 26\.30 34\.00 One time assessment Project
Breakdown results Secretariat
% of Grade 3 students in
ZEP and other
Exam and MINEDUB
disadvantaged areas that
Percentage 0\.00 0\.00 One time assessment Project
meet mathematics
results Secretariat
benchmark monitored
through EGMA
Percentage Exam and MINEDUB
Anglophone schools Sub-Type 0\.00 0\.00 One time assessment Project
Breakdown results Secretariat
Percentage Exam and MINEDUB
Francophone schools Sub-Type 0\.00 0\.00 One time assessment Project
Breakdown results Secretariat
\.
Intermediate Results Indicators
Responsibility
Cumulative Target Values
Data Source/ for
Unit of Methodology Data Collection
Indicator Name Core Baseline YR1 YR2 YR3 YR4 End Target Frequency
Measure
MINEDUB
Direct project
Number 0\.00 0\.00 1,164,633 2,329,225 3,493,988 3,493,988 Annually Project reports Project
beneficiaries
Secretariat
Percentage
Female beneficiaries Sub-Type 0\.00 0\.00 40 44 46 46
Supplemental
Sub-Component 1\.2
Number of Grade 1 MINEDUB
textbooks, teaching Number 0\.00 3,060,403 3,060,403 Annual MINEDUB Project
guides (French, English, Secretariat
Mathematics), readers
39
and stationery
Sub-Component 1\.2
Number of Grade 2
MINEDUB
textbooks, teaching
Number 0\.00 2,697,183 2,697,183 Annual MINEDUB Project
guides (French, English,
Secretariat
Mathematics), readers
and stationery
Sub-Component 1\.2
Number of Grade 3
MINEDUB
textbooks, teaching
Number 0\.00 2,582,896 2,582,896 Annual MINEDUB Project
guides (French, English,
Secretariat
Mathematics), readers
and stationery
Component 1\.3 Number
MINEDUB
of teachers trained in the MINEDUB,
Number 0\.00 10,221 20,442 30,663 30,663 Annual Project
use of the teaching and ENIEGs
Secretariat
learning materials
MINEDUB
Number
Statistical Project
Of which females Sub-Type 0\.00 4,599 9,403 14,105 14,105 Annual
Yearbooks Secretariat/
Breakdown
DPPC/DRH
Component 1\.3 Number
MINEDUB
of inspectors trained in MINEDUB/
Number 0\.00 0\.00 127 255 382 382 Annual Project
the use of teaching and ENIEGs
Secretariat
learning materials
Number MINEDUB
MINEDUB/
Of which females Sub-Type 0\.00 0\.00 48 102 168 176 Annual Project
ENIEGs
Breakdown Secretariat
Sub-Component 1\.3
Number of ENIEG MINEDUB
MINEDUB/
Directors trained in the Number 0\.00 0\.00 19 39 58 58 Annual Project
ENIEG
use of the new teaching Secretariat
and learning materials
Number MINEDUB
MINEDUB/
Of which females Sub-Type 0\.00 0\.00 7 15 26 27 Annual Project
ENIEG
Breakdown Secretariat
MINEDUB
Geo-mapping of public
Yes/No No Yes One time GIS firm Project
and private schools
Secretariat
40
Firm with
Education Management expertise in MINEDUB
Information System Yes/No No Yes One time education Project
(EMIS) Architecture indicators and Secretariat
IT\.
Building Knowledge &
Capacity Development--
Study 1: Analysis on
National and MINEDUB
introducing
Yes/No No Yes One time International Project
énseignement
TA Secretariat
fondamentale including
early childhood
development
Building Knowledge
and Capacity National and MINEDUB
Development--Study 2: Yes/No No Yes One time International Project
Skills for the labor TA Secretariat
market
Building Knowledge &
Capacity Development-- National and MINEDUB
Study 3: Policy Note on Yes/No No Yes One time International Project
adult literacy and out- TA Secretariat
of-school children
Building Knowledge &
Capacity Development-- National and MINEDUB
Study 4: Student Flow Yes/No No Yes One time International Project
and Higher Education TA Secretariat
Reform
National and MINEDUB
Mid-term review Yes/No Yes One time International Project
TA Secretariat
\.
41
Table\. Protocol for Government Actions (Compliance Thresholds) and Disbursement-linked Indicators
Component 1 Improving the equity and quality of primary education service delivery
Sub-Component 1\.1 Increase teacher availability in disadvantaged areas
Objective To conversion of 7,253 maîtres des parents & recruitment of 1,747 new ENIEG graduates to contract teacher status
(total 9,000 contract teachers by end of project; the target conversion rate is 3,060 in Year 1, 2,970 in Year II, and 2,970 in Year III\.)
Protocol for Government Actions Disbursement Linked Disbursement
Compliance Thresholds Indicators amount (US$)
BY DECEMBER 2013
Action\. Government budget includes:
(a) Salary commitment for new contract teachers for the prospective academic year for 4 months
(September-December 2014)
(b) Salary commitment for new contract teachers for the following academic year for the 8 months
(January-August 2015) 1\. Letter from MINEDUB
BETWEEN JANUARY-MARCH 2014 confirming the budget
Government launches Phase III Contract Teacher Program commitments for (i) ongoing
Government list of eligible schools based on pupil teacher ratio CTP; and (ii) Project CTs and
BETWEEN APRIL-JUNE 2014 (iii) list from MINEDUB/
MINFOPRA list A with unique identifying code for each contract (maîtres des parents converted to CT status) DRH with the names and
unique contract reference
MINFOPRA list B with unique identifying code for each contract (new CTs recruited from local ENIEG)
numbers for the teachers who
A designated special account will be opened in the Standard Chartered Bank for the disbursement of 33% advance to Treasury of the GPEF support for the CTP
have been newly converted
Action\. MINEDUB has applied the agreed objective targeting criteria for selecting maîtres des parents to be converted to contract teacher status during
/Recruited
Project Year 1 (national academic year 2014/15)
A\. Existing maîtres des parents converted to contract teacher status is at least 32% of the 9,000 to be converted
B\. of which % of female is at least 45%
C\. % of new contract teachers in the ZEP and other disadvantaged areas is at least 80%
D\. of which % of female is at least 45%
MINEDUB has applied the agreed objective targeting criteria for selecting maîtres des parents to be converted to contract teachers and for recruiting new
ENIEG graduates as contract teachers where necessary\.
TRIGGER DISBURSEMENT 1 between April-May 2014 3,329,280
[IC1 advance through DA A: for 4 months salary payment for academic year 2014/2015 (September-December)]
(33%)
BETWEEN APRIL â MAY 2015
Action\. Third party technical verification to review technical compliance:
(a) Assess relative strengths and weaknesses of the CTP 2\. Finalized technical
(b) Identify opportunities for strengthening teacher quality (teacher absenteeism, time on task, and use of teaching & learning materials) verification report of the
(c) Assess the CTP attrition and redistribution issues Project CTs satisfactory to the
Bank by August and Finalized
Action\. Financial audit of the institutional capacity of MINEDUB/DRH to: financial audit report of the
(a) Produce appropriate reporting for disbursements undertaken Project CTs including
(b) Assess internal control issues raised in the Special Audit for the previous EFA-FTI financing of the CTP SIGIPES & ANTILOPE
reports satisfactory to the
(c) Assess management capacity of the CTP
Bank, by August
TRIGGER DISBURSEMENT 2 between April-May 2015 6,658,560
[IC1 reimbursement directly to Treasury for 8 months salary payments for academic year 2014/2015 (January - August)]
(67%)
42
Protocol for Government Actions Disbursement Disbursement
Compliance Thresholds Linked Indicators amount (US$)
BY DECEMBER 2014
Action\. Government budget includes:
(a) Salary commitment for new contract teachers for the prospective academic year
(September-December 2015)
(b) Salary commitment for the eight months for the following academic year 2015/2016
(January-August 2016) 1\. Letter from MINEDUB
BETWEEN JANUARY-MARCH 2015 confirming the budget
Government launches Phase III Contract Teacher Program commitments for (i) ongoing
Government list of eligible schools based on pupil teacher ratio CTP; and (ii) Project CTs and
BETWEEN APRIL-JUNE 2015 (iii) list from MINEDUB/
DRH with the names and
MINFOPRA list A with unique identifying code for each contract (maîtres des parents converted to CT status)
unique contract reference
MINFOPRA list B with unique identifying code for each contract (new CTs recruited from local ENIEG)
numbers for the teachers who
Action\. MINEDUB has applied the agreed objective targeting criteria for selecting maîtres des parents to be converted to contract teacher status during have been newly converted
Project Year 1 (national academic year 2015/16):
/Recruited
A\. Existing maîtres des parents converted to contract teacher status is at least 32% of the 9,000 to be converted
B\. of which % of female is at least 45%
C\. % of new contract teachers in the ZEP and other disadvantaged areas is at least 80%
D\. of which % of female is at least 45%
MINEDUB has applied the agreed objective targeting criteria for selecting maîtres des parents to be converted to contract teachers and for recruiting new ENIEG
graduates as contract teachers where necessary
TRIGGER DISBURSEMENT 1 between April-May 2015 3,231,360
[IC2 disbursement through DA A: advance for 4 months salary payment for academic year 2015/2016 (September-December)]
(33%)
2\. Finalized technical
BETWEEN APRIL â MAY 2016 verification report of the
Action\. Third party technical verification to review technical compliance: Project CTs satisfactory to the
(a) Assess relative strengths and weaknesses of the CTP Bank by August and Finalized
(b) Identify opportunities for strengthening teacher quality (teacher absenteeism, time on task, and use of teaching & learning materials) financial audit report of the
(c) Assess the CTP attrition and redistribution issues Project CTs including
SIGIPES & ANTILOPE
reports satisfactory to the
Action\. Financial audit of the institutional capacity of MINEDUB/DRH to:
Bank, by August
(a) Produce appropriate reporting for disbursements undertaken
(b) Assess internal control issues raised in the Special Audit for the previous EFA-FTI financing of the CTP
(c) Assess management capacity of the CTP
TRIGGER DISBURSEMENT 2 between April-May 2016 6,462,720
[IC2 reimbursement through Treasury for 8 months salary payments for academic year 2015/2016 (January - August)]
(67%)
BY DECEMBER 2015
Action\. Government budget includes: 1\. Letter from MINEDUB
(a) salary commitment for new contract teachers for the prospective academic year confirming the budget
(September-December 2016) commitments for (i) ongoing
(b) for the eight months for the following academic year CTP; and (ii) Project CTs and
(January-August 2017) (iii) list from MINEDUB/
BETWEEN JANUARY-MARCH 2016 DRH with the names and
Government launches Phase III Contract Teacher Program unique contract reference
Government list of eligible schools based on pupil teacher ratio numbers for the teachers who
BETWEEN APRIL-JUNE 2016 have been newly converted/
recruited\.
MINFOPRA list A with unique identifying code for each contract (maîtres des parents converted to CT status)
MINFOPRA list B with unique identifying code for each contract (new CTs recruited from local ENIEG)
43
Action\. MINEDUB has applied the agreed objective targeting criteria for selecting maîtres des parents to be converted to contract teacher status during
Project Year 1 (national academic year 2016/17):
A\. Existing maîtres des parents converted to contract teacher status is at least 32% of the 9,000 to be converted
B\. of which % of female is at least 45%
C\. % of new contract teachers in the ZEP and other disadvantaged areas is at least 80%
D\. of which % of female is at least 45%
TRIGGER DISBURSEMENT 1 between April-May 2017 3,231,360
[IC3 disbursement through DA A: advance of 4 months salary payment for academic year 2016/2017 (September-December)]
(33%)
BETWEEN APRIL â MAY 2017
Action\. Third party technical verification to review technical compliance: 2\. Finalized technical
(a) Assess relative strengths and weaknesses of the CTP verification report of the
(b) Identify opportunities for strengthening teacher quality (teacher absenteeism, time on task, and use of teaching & learning materials) Project CTs satisfactory to the
(c) Assess the CTP attrition and redistribution issues Bank by August and Finalized
financial audit report of the
Action\. Financial audit of the institutional capacity of MINEDUB/DRH to: Project CTs including
(a) Produce appropriate reporting for disbursements undertaken SIGIPES & ANTILOPE
reports satisfactory to the
(b) Assess internal control issues raised in the Special Audit for the previous EFA-FTI financing of the CTP
Bank, by August
(c) Assess management capacity of the CTP
TRIGGER DISBURSEMENT 2 between April-May 2017 6,462,720
[IC3 reimbursement through Treasury for 8 months salary payments for academic year 2016/2017 (January - August)]
(67%)
TOTAL DISBURSEMENTS (2014/2015 - 2017/2018) 29,376,000
Component 1 Improving the equity and quality of primary education service delivery
Sub-Component 1\.2 Provision of teaching and learning materials
Objective The objective is to provide good quality, low-cost and durable teaching and learning materials for children in the early grades (1, 2 and 3) of
primary schooling\.
Protocol for Government Actions Disbursement Linked Disbursement
Compliance Thresholds Indicators amount (US$)
BY DECEMBER 2013
Action\. Government budget to include :
(a) Year 1 100% financing for primary grade 1 teaching and learning materials 3\. Government provides a
BY APRIL 2014 written guarantee/undertaking
Action\. MINEDUB has applied the agreed objective targeting criteria for the publishing, printing and distribution of teaching and learning materials that the (i) 2013 Approved
(testbooks, teacher guides, readers, lifeskills aspects, stationery) for Project Cohort 1 (national academic year 2014/2015) Booklist for primary grades 1, 2
Note: The Project will finance according to the following criteria: (a) for primary grade 1 textbooks the unit prices will not exceed US$3\.00; (b) for & 3 will remain constant during
primary grade 2 textbooks the unit price will not exceed US$3\.50; (c) for primary grade 3 textbooks the unit price will not exceed US$4\.20; and (d) each of the Project
reading books unit price will not exceed US$2\.25\. Should the unit cost exceed the Project specified ceiling price, Government would finance the implementation years; and (ii)
difference\. If, however, the unit cost is below the Project specified ceiling price, Government would ensure that more textbooks are produced and that the same textbooks/titles
supplied to public primary schools\. selected during the first year of
A\. Baseline for number of new teaching and learning materials to be produced and made available in the the project will remain constant
disadvantaged areas of the country during the project
B\. Baseline number of new teaching and learning materials available in the ZEP and disadvantaged areas of the country implementation period
TRIGGER DISBURSEMENT 3 between April-May 2014 1,143,090
[Disbursement through DA B: advance of 40 percent payment for Grade 1 books for Project Cohort /academic year 2014 /15 (September 2014-August 2015)]
BETWEEN APRIL â MAY 2015
44
Action\. Third party technical verification to review technical compliance 4\. Finalized technical
verification report of publishing,
printing, and distribution of
teaching and learning materials
satisfactory to the Bank
Action\. Financial audit of the institutional capacity of MINEDUB
5\. Finalized financial audit
report of publishing, printing,
and distribution of teaching and
learning materials, statistics,
inventory/data satisfactory to the
Bank
TRIGGER DISBURSEMENT 3 between April-May 2015
[Reimbursement through Treasury: percent payment for Grade 1 books for Project Cohort /academic year 2014 /2015 (September 2014-August 2015)]]
A\. All teaching & learning materials have reached schools in time for the academic year commencement in 1,714,635
September (full 60% payment)
B\. All teaching & learning materials have reached schools 30 days after the start of the academic year in September 1,571,749
(55% payment)
C\. All teaching & learning materials have reached schools 60 days after the start of the academic year in September 1,428,863
(50% payment)
D\. All teaching & learning materials have reached schools 90 days after the start of the academic year in September 0
(No payment)
BY DECEMBER 2014
Action\. Government budget to include :
(a) Year 1 100% financing for primary grade 1 teaching and learning materials
BY APRIL 2015
Action\. MINEDUB has applied the agreed objective targeting criteria for the publishing, printing and distribution of teaching and learning materials 3\. Government provides a
(testbooks, teacher guides, readers, lifeskills aspects, stationery) for Project Cohort 2 (national academic year 2015/2016) written guarantee/undertaking
Note: The Project will finance according to the following criteria: (a) for primary grade 1 textbooks the unit prices will not exceed US$3\.00; (b) for that the (i) 2013 Approved
primary grade 2 textbooks the unit price will not exceed US$3\.50; (c) for primary grade 3 textbooks the unit price will not exceed US$4\.20; and (d) Booklist for primary grades 1, 2
reading books unit price will not exceed US$2\.25\. Should the unit cost exceed the Project specified ceiling price, Government would finance the & 3 will remain constant during
difference\. If, however, the unit cost is below the Project specified ceiling price, Government would ensure that more textbooks are produced and each of the Project
supplied to public primary schools\. implementation years; and (ii)
A\. Baseline for number of new teaching and learning materials to be produced and made available in the disadvantaged areas of the country that the same textbooks/titles
B\. Baseline number of new teaching and learning materials available in the ZEP and disadvantaged areas of the country selected during the first year of
the project will remain constant
during the project
implementation period
TRIGGER DISBURSEMENT 3 between April-May 2015
[Disbursement through DA B: advance of 40 percent payment for Grade 2 books for Project Cohort /academic year 2015 /1016 (September 2015-August 2016)]
1,133,388
45
Protocol for Government Actions Disbursement Disbursement
Compliance Thresholds Linked Indicators amount (US$)
BETWEEN APRIL â MAY 2015
Action\. Third party technical verification to review technical compliance 4\. Finalized technical
verification report of publishing,
printing, and distribution of
Action\. Financial audit of the institutional capacity of MINEDUB teaching and learning materials
satisfactory to the Bank
5\. Finalized financial audit
report of publishing, printing,
and distribution of teaching and
learning materials, statistics,
inventory/data satisfactory to the
Bank
TRIGGER DISBURSEMENT 3 between April-May 2016
[Reimbursement through Treasury: percent payment for Grade 2 books for Project Cohort /academic year 2015 /2016 (September 2015-August 2016)]
A\. All teaching & learning materials have reached schools in time for the academic year commencement in September 1,700,082
(full 60% payment)
B\. All teaching & learning materials have reached schools 30 days after the start of the academic year in September 1,558,409
(55% payment)
C\. All teaching & learning materials have reached schools 60 days after the start of the academic year in September 1,416,735
(50% payment)
D\. All teaching & learning materials have reached schools 90 days after the start of the academic year in September 0
(No payment)
BY DECEMBER 2015
Action\. Government budget to include :
(a) Year 1 100% financing for primary grade 1 teaching and learning materials 3\. Government provides a
written guarantee/undertaking
BY APRIL 2016 that the (i) 2013 Approved
Action\. MINEDUB has applied the agreed objective targeting criteria for the publishing, printing and distribution of teaching and learning materials Booklist for primary grades 1, 2
(testbooks, teacher guides, readers, lifeskills aspects, stationery) for Project Cohort 3 (national academic year 2016/2017) & 3 will remain constant during
Note: The Project will finance according to the following criteria: (a) for primary grade 1 textbooks the unit prices will not exceed US$3\.00; (b) for each of the Project
primary grade 2 textbooks the unit price will not exceed US$3\.50; (c) for primary grade 3 textbooks the unit price will not exceed US$4\.20; and (d) implementation years; and (ii)
reading books unit price will not exceed US$2\.25\. Should the unit cost exceed the Project specified ceiling price, Government would finance the that the same textbooks/titles
difference\. If, however, the unit cost is below the Project specified ceiling price, Government would ensure that more textbooks are produced and selected during the first year of
supplied to public primary schools\. the project will remain constant
A\. Baseline for number of new teaching and learning materials to be produced and made available in the disadvantaged areas of the country during the project
B\. Baseline number of new teaching and learning materials available in the ZEP and disadvantaged areas of the country implementation period
TRIGGER DISBURSEMENT 3 between April-May 2016
[Disbursement through DA B: advance of 40 percent payment for Grade 3 books for Project Cohort /academic year 2016 /2017 (September 2016-August 2017)]
1,111,443
46
BETWEEN APRIL â MAY 2016
Action\. Third party technical verification to review technical compliance
4\. Finalized technical
Action\. Financial audit of the institutional capacity of MINEDUB verification report of publishing,
printing, and distribution of
teaching and learning materials
satisfactory to the Bank
5\. Finalized financial audit
report of publishing, printing,
and distribution of teaching and
learning materials, statistics,
inventory/data satisfactory to the
Bank
TRIGGER DISBURSEMENT 3 between April-May 2017
[Reimbursement through Treasury: percent payment for Grade 3 books for Project Cohort /academic year 2016 /2017 (September 2016-August 2017)]
A\. All teaching & learning materials have reached schools in time for the academic year commencement in September 1,667,165
(full 60% payment)
B\. All teaching & learning materials have reached schools 30 days after the start of the academic year in September 1,528,234
(55% payment)
C\. All teaching & learning materials have reached schools 60 days after the start of the academic year in September 1,389,304
(50% payment)
D\. All teaching & learning materials have reached schools 90 days after the start of the academic year in September 0
(No payment)
TOTAL DISBURSEMENTS IF 100% (2014/2015 - 2017/2018) 8,469,803
TOTAL DISBURSEMENTS IF 95% (2014/2015 - 2017/2018) 8,046,313
TOTAL DISBURSEMENTS IF 90% (2014/2015 - 2017/2018) 7,622,823
TOTAL DISBURSEMENTS IF 40% (2014/2015 - 2017/2018) 3,387,921
47
Annex 2: Detailed Project Description
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
1\. The Project is financed by a grant in the amount of US$53\.3 million from the Global
Partnership for Education Fund\. It is planned for a period of four years and is designed to support
selected activities of the Governmentâs 2014â2016 Action Plan for the implementation of the
new Education and Training Sector Strategy 2013-2020\.
2\. Table 4 summarizes the principles that guided the project design and the selected project
components\.
Table 4: Technical and Operational Principles for Selection of Project Components
Technical principles Transversal operational principles
based on sector based on lessons learned Project components
diagnostics
Simplicity: Avoiding a complex Project Component 1\. Improving the equity and
design with disparate, unconnected activities quality of primary education service delivery:
Ensuring realism in Project design 1\.1 Increasing teacher availability in dis-
advantaged areas
Provide incentives for Implementation feasibility: Using existing 1\.2 Provision of teaching and learning materials
improved quality of mechanisms, and building on national 1\.3 Capacity development of teachers and
education service delivery systems inspectors
Using Rapid Results Strategies (RRS) where 1\.4 Support for girlsâ education
feasible to accelerate effective 1\.5 National primary education assessment
implementation framework
Measurability: Facilitating the monitoring & Component 2\. Building institutional capacity
Create demonstration
effect by making available evaluation of the Project interventions to for improved education service delivery:
assess outcomes and impact 2\.1 Improving information, governance and
low-cost educational
inputs accountability, and monitoring and evaluation
Sustainability: Creating a system of capacity
progressive transfer of financing 2\.2 Building knowledge for improved education
Strengthen institutional responsibility to Government service delivery and learning
capacity to construct Creating appropriate and timely knowledge
credible data and improve transfer to build institutional capacity
education oversight
Replicability: Creating demonstration
effects to enable scaling up of good practices
3\. The Project design is responsive to key weaknesses from implementing the previous
EFA-FTI Project, and critical areas of weaknesses in the primary education sub-sector\. The
emphasis is on improving primary completion rate and greater equity and through significant
investments to improve the quality of primary education:
(a) Reducing the out-of-pocket cost of primary education for parents to make it really âfreeâ
(gratuité de dâÃducation primaire) especially in the most disadvantaged regions of the
country by recruiting teachers and providing teaching and learning materials\. The
MINEDUB has issued a circular on 27 August 2013, decision number
1254/B1/1464/MINEDUB/CAB on the subject of anti-corruption action during the
48
commencement of the school year\. According to this circular schools cannot charge
parents fees for sending their children to primary school\. Moving forward, this
decision/circular needs to be invoked on an annual basis;
(b) Reducing regional and gender inequities by addressing the problem of inter-regional
teacher deployment by recruiting teachers locally/intra-regionally\. However, some
localities and regions especially in the ZEP may not have the required number of
qualified candidates\. In such cases, teachers would need to be recruited from neighboring
regions so as to maintain cultural identity and avoid teacher attrition\. The recruitment and
management of teachers needs to be progressively decentralized to local councils to
assess needs, recruit and manage teachers paid by the State\. This could be a realistic
means of reducing absenteeism and attrition rates especially in the most remote areas;
(c) Addressing regional and gender disparities (with an emphasis on girlsâ education) due to
poverty and constraints to demand-side financing (parentsâ out-of-pocket expenses) to
meet primary education expenditures\. Demand-side financing response is directly being
addressed through the World Bankâs Social Safety Net Project that is being piloted in
four regionsâAdamaoua, East, North, and Far North regions\. The proposed GPE Project
would address the supply-side response;
(d) Motivating new contract teachers to be more present in the classroom through teacher
development and support with teaching materials;
(e) Reducing the system costs of textbook provision to make it more affordable and
providing teaching and learning materials and promoting their proper use in the
classroom;
(f) Improving learning through more time on task; and
(g) Reducing student attrition through improved governance/management of the education
system\.
Component 1\. Improving equity and quality in primary education service delivery (Total
cost including contingencies: US$48\.3 million; 100% GPE financing)
4\. This component complements the interventions of development partners, addresses a gap
specified in the Governmentâs Education and Training Sector Strategy 2013-2020, and
complements the demand-side financing through households that is to be provided through the
World Bank Cameroon Social Safety Net Project\. The component is the supply-side response to
improve the quality and education service delivery at primary education level\. Two activities are
to be financed through the component: (i) a final phase of support for the Governmentâs Contract
Teacher Program (CTP) in the 10 regions of the country; and (ii) the pilot provision of teaching
and learning materials to public primary schools in the Zones dâEducation Prioritaires (ZEP:
Adamaoua, East, North, and Far North regions) and in the North West region; (iii) pockets of
poverty in the peri-urban and rural areas; and (iv) the frontier parts of the country\.
Sub-component 1\.1 Increasing teacher availability in public primary schools in disadvantaged
areas (Total cost including contingencies: US$31\.4 million; 100% GPE financing)
5\. This sub-component will support the conversion of maîtres des parents based on strict
selection criteria to contract teacher status, and the recruitment of some new contract teachers
particularly in disadvantaged zones of the country with an emphasis on rural areas\.
49
6\. Five reasons to justify the subsidy/investment: (a) over time there has been a steady
increase in school enrolments from 3\.2 million in 2007/08 to 3\.6 in 2010/11; (b) the
Governmentâs first and second phases of the CTP that resulted in the recruitment of 37,200
contract teachers had two outcomes: (i) it contributed to increasing enrolments, and therefore
only partially solved the problem of high pupil-teacher ratios (enrolments increased at a higher
rate than the recruitment of CTP); (ii) the deployment of teachers, especially female teachers, to
remote parts of the country resulted in teacher attrition; (c) the number of maîtres des parents has
remained more or less constant despite the CTP from 9,300 in 2006 to 9,913 in 2012 resulting in
passing on the Governmentâs responsibility for recruiting teachers to households; (d) the Sector
Strategy aims to address the high out-of-pocket expenses for parents at primary education level
that is contributing to high dropout rates; and (e) the long-standing problem of Governmentâs
ability to ensure a stable teacher allocation in primary schools in rural and areas with highest
poverty incidence\. Therefore, the Project will finance a final phase of support for the
Governmentâs CTP through: (a) the conversion of an existing 9,000 maîtres des parents11 and a
proportion of locally recruited teachers from the regional ENIEG to contract teacher cadre\. This
approach is to ensure greater equity and reduce regional disparities\.
7\. The selection of the maîtres des parents to be converted and a proportion of new
contract teachers for each of the 10 regions of the country would be based on objective
criteria\. The aim is to address inter- and intra-regional inequities as highlighted in the CSR
2013\. The approach rests on the key principle of recruiting contract teachers locally to prevent
teacher attrition\. The new recruitees would have contract terms and conditions that vary slightly
from the normal contract teacher\. They would need to sign a contract that requires them to
remain in their respective posts for at least one year\. Where the number of maîtres des parents is
dis-proportionately low, inter-regional inequities would be smoothed by recruiting new graduates
from the local ENIEG to contract teacher cadre (table 2\.1)\. This is to ensure that teacher attrition
is kept to a minimum level by recruiting locally\. In other cases, where the maîtres des parents
are dis-proportionately high, intra-regional inequities would be smoothed by converting the
maîtres des parents to contract teacher cadre\.
11
Maîtres des parents by definition are financed by communities/parents to address state-paid and deployed teachers
to schools in their respective catchment areas\.
50
Table 2\.1: Regional distribution of teachers
Ratio New
Teachers Teachers Teachers Ratio Recruited
Students/ recruited Converted % %
Students (All (state (parents Students/ from
State paid or MdP ENIEG MdP
Status) paid) paid) Teachers ENIEG
teachers converted
Adamaoua 188,864 3,106 2,684 604 61 70 1,008 404 604 40% 60%
Centre 415,311 9,216 7,634 1909 45 54 780 - 780 0% 100%
Est 186,718 3,313 2,768 562 56 67 967 405 562 42% 58%
Extrême-Nord 678,246 8,950 6,813 1760 76 100 1,427 - 1,427 0% 100%
Littoral 152,461 4,746 4,212 590 32 36 519 - 519 0% 100%
Nord 399,907 6,045 4,485 804 66 89 1,278 474 804 37% 63%
Nord-Ouest 273,512 5,334 4,179 1840 51 65 938 - 938 0% 100%
Ouest 378,103 7,912 6,173 559 48 61 878 319 559 36% 64%
Sud 130,731 3,489 3,322 1011 37 39 564 - 564 0% 100%
Sud-Ouest 171,129 3,915 3,813 497 44 45 643 146 497 23% 77%
Total 2,974,982 56,026 46,083 10,136 53 65 9,000 1,747 7,253 19% 81%
Source: MINEDUB, Directorate of Human Resources (DRH) and Statistical Yearbook 2012\.
8\. With an emphasis on rural areas, the Project will target the conversion of 3,060 in
year 1 of the Project, 2,970 in Year 2, and 2,970 in Year 3, with the Government
progressively taking over the financing of the converted teachers over the implementation
period of the Project\. The proportion of maîtres des parents to be converted would be 86
percent\. New CTP recruits would be trained [graduates from Ecoles Normales dâInstituteurs
(ENIEG)] teachers as per the existing requirements of the contract teacher program\. The Project
would help to strengthen the CTP administration further, a process that has already been initiated
under the previous GPE Project (then EFA-FTI) which also provided support for the CTP\. This
sub-component builds on the strong foundation set up through the previous Project\.
9\. Cameroon has demonstrated its ability and willingness to pursue a results-based
financing approach through the previous EFA-FTI Project\. There is every reason to build on
the reform that is already in place, and consider a disbursement-linked indicator (DLI) to finance
contract teachersâ salaries\. Continued financing for one more phase is based on: (i) an analysis of
the continued relevance, strengths and weaknesses of the CTP; (ii) identification of opportunities
for strengthening teacher quality, reducing absenteeism, and raising on-the-job performance; (iii)
addressing the internal control issues raised in the Special Audit undertaken for the previous
EFA-FTI financing of the CTP; (iv) an institutional assessment of the management capacity of
the CTP; and (v) an assessment of the CTP attrition and redistribution issues\. A convenant is
proposed to be introduced in the legal agreement to prevent the horizontal attrition of teachers to
other Ministries for a period of at least five years after conversion from maîtres des parents to
contract teacher cadre or after being recruited from the local ENIEG\.
10\. Dual financing sources for converting maîtres des parents to contract teacher status\.
A phased GPE financing approach would be adopted, with Government gradually taking up the
payment for converted maîtres des parents as contract teachers (Table 2\.2 and Figure 2\.1)\. The
sub-component would be financed through the GPE at the beginning of the Project
implementation period\. During Year II, Government will take over the first cohort of maîtres des
parents who have been converted to contract teacher status, and so on\.
51
Table 2\.2\. Decreasing Maîtres des parents and increasing: Figure 2\.1: Sub-component financing
Government paid teachers (2013-2016)
70,000
2013 2014 2015 2016 60,000
Total
50,000
Govt paid teachers 52,521 55,760 59,056 64,311
40,000
Maîtres des parents 4,511 3,007 1,504 - 30,000
Share of Govt paid 20,000
teachers 0\.92 0\.95 0\.98 1
10,000
Source: MINEDUB/DRH, 2013\.
-
Note: Data in table relate to DSSEF 2013-2020 projections to show
increasing number of State/Govt paid contract teachers and civil
servant teachers, and decreasing number of maîtres des parents over
No\. State paid teachers No\. Parents paid teachers
time\. Therefore, the GPE project is consistent with the DSSEF\.
Source: Cameroon Education Financing Simulation model (2013)\.
11\. The following objective criteria for selecting and targeting the maîtres des parents to be
converted to contract teachers would be applied for each of the ten regions of the country:
Table 2\.3: Targeting and Selection criteria
Targeting
Level 1 Regional
ï Ranking all schools by pupil-teacher ratio
ï Ranking all schools by urban and rural zones
Level 2 Intra-regional
ï Identifying all rural schools
ï Ranking by pupil-teacher ratio
ï Ranking by class-teacher ratio
ï Ranking by pupil-class ratio
Eligibility criteria
Maîtres des parents should have a diploma from the local ENIEG
The contract for converting the maître de parent should be signed by
the President of the APEE or a counterpart from IAEB (Departmental
Inspectorate)
The maître de parentâs last salary statement from the APEE
Priority for female maîtres des parents to be converted to contract
teachers
The maître de parent to be converted to have a minimum of 5 years
of experience serving the community since graduating from the local
ENIEG
A pre-determined age threshold for conversion
12\. A Rapid Results Approach (RRA) would be used to closely monitor teacher
absenteeism and attrition, to provide feedback to local communities and Government education
department at the regional level\.
13\. Anticipated benefits of converting maîtres des parents to contract teacher status\. The
lessons from the EFA-FTI Project implementation serve as the basis for the final phase of
contract teacher recruitment through GPE financing\. Specifically,
52
ï From an equity perspective the sub-component would have three levels of benefits: (a)
regional; (b) gender; and (c) household levels\. The Project would help to equalize the
regional disparities in teacher availability through the geographic concentration of
converting existing maîtres des parents to contract teacher status; (b) the approach would
help to reduce attrition (especially of female teachers) in disadvantages areas, and ensure
a better distribution of teachers; and (c) for households, the approach would indirectly (or
directly) support Governmentâs efforts to address the precepts of universal and free
primary education through direct benefits to reduce parents out-of-pocket expenses\.
ï From a quality perspective the sub-component would help to reduce teacher absenteeism,
and support efforts to promote girlsâ education in those regions where cultural norms do
not permit girls to be taught by male teachers\.
14\. The following activities would be financed under the sub-component:
Eligible financing category Items
Salaries for Contract Teachers - Payment of salaries (budget support) against DLis
Consultancy services - Technical audit of the maîtres des parents and CTP
- Financial audit of the program
Goods - Small goods such as office supplies
15\. The stream of costs and the fiscal implications of converting maîtres de parents to
contract teacher status are provided in Annex 6 on Economic and Financial Analysis for the
Project\.
Sub-component 1\.2 Provision of teaching and learning materials (Total cost including
contingencies: US$13\.3 million; 100% GPE financing)
16\. In designing this sub-component, the experience of development partners has been
taken into account\. Specifically, UNICEFâs response to the flood disaster areas in the North and
Far North by supplying schools with textbooks and stationary to 480 schools has been taken into
consideration\. The pilot was in the most remote and difficult to access areas where in many cases
the schools are only a little grass shacks with boulders for the children to sit on\. Many of the
children had never seen a book, let alone used a book, and teachers had no experience of using
books either, and had certainly not been accustomed to teaching children with books\. (i) one set
of books (reading, mathematics, science, IT and Civic Education and teachersâ guides) in
packages of 10 books x class x subject for primary classes in metal boxes (against damp and
insect proof)\. The boxes were carried each day to and from the Headteacher or Chiefâs house in
order to ensure safe keeping\. UNICEF did not aim to supply one book per child; and (ii)
provided some teacher training in using the books\. Regarding distribution, UNICEF has its own
system and personnel for emergency work in the areas\. But they also made arrangements with
local agencies and provided them with a budget\. UNICEF has cautioned about problems with
books getting stuck in the regional capital or District\. Government district offices received
payment from UNICEF to ensure distribution\. UNICEF staff verified the availability of the
books in the schools\. Further, parents were reported to have been committed to ensuring that the
books were safe\. The UNICEF personnel in charge shared the concern that Government needs to
take responsibility for textbooks supply, but that it would never happen unless the prices came
53
down so that the financing of textbooks would be sustainable\. Their approach to buying the
books directly from publishers in France rather than procuring the same books from local
distributors seems to have resulted in higher book prices and further investigation is required to
establish the cause of this\.
17\. The objective is to support the Governmentâs reform in the area of textbook provision by
financing good quality, low cost, durable teaching and learning materials based on the 2013
Approved Booklist in all public primary schools in the country, with a focus on the ZEP and
other disadvantaged areas\. The aim is to set up a demonstration effect for a reliable, affordable
and sustainable system of textbook supply based on widely used cost reduction strategies that
have been effective elsewhere in Sub-Saharan Africa\. This involves the removal of books
designed to be consumable in one year and the introduction of a system of reusable textbooks
with a classroom life of 3-4 years, which will allow for the achievement of cost amortization and
lower system costs\. Government procurement of a large volume of good quality textbooks and
readers at significantly lower prices to public schools for grades 1, 2 and 3 in the project target
areas, which have previously been largely unsupplied\. Teaching and learning materials would be
financed through the project\. Two titles in language and one in Mathematics in both
Francophone and Anglophone schools that conform to the primary grades 1, 2 and 3 curricula
and are on the current approved textbook lists would be financed\.
18\. The approach would be to provide teaching and learning materials progressively to one
cohort (the Project cohort)\. Specifically, the starting point would be to require the 2013
Approved booklist for grades 1, 2 and 3 to remain constant throughout the four-year
implementation period of the Project\. Then grade 1 titles of the French, English and Mathematics
books would be supplied for students enrolling in grade 1 in school year 2014\. The same
students who graduate and move up to grade 2 would receive grade 2 titles in school year 2015\.
During school year 2015 the new grade 1 titles already supplied in 2014 would be used by the
new cohort of grade 1 students\. And during the third year of project implementation, the students
who move up from grade 2 to grade 3 will receive the appropriate titles in school year 2016\. The
new cohort moving up from grade 1 to grade 2 would use the project financed books during the
previous year\. In school year 2017 the Government would purchase the new titles based on a
new 2017 approved booklist\.
19\. In order to ensure appropriate handling of teaching and learning materials, a program of
proper-and-intended use awareness campaigns would be launched during Project
implementation\.
20\. In keeping with Government policy to promote the commercial book industry, the sub-
component would be implemented using the existing national practices\. The following would be
the disbursement-linked indicators:
a) MINEDUB and the Commission dâagrément des manuels scolaires will provide a
written, co-signed guarantee that the 2013 Approved Booklist for primary grades 1, 2
and 3 remains constant during each of the Project implementation years\. The guarantee
would trigger the funds flow for the Project\. Prior to funds flow for each of the project
54
implementation years, the guarantee would be revisited to ensure that the agreement is
still in effect\.
b) Disbursements would be based on the use of indicators\. MINEDUB would be
responsible for implementing the sub-component\. Disbursements from the SE would be
in two tranches:
(a) 40 percent upon evidence from MINEDUB of: (i) signed contracts between
publishers and MINEDUB\. Project financing would be a maximum of US$3\.0 per
textbook title for publishing and distribution for grade 1; US$3\.5 per textbook title
for publishing and distribution for grade 2; US$4\.2 per textbook title for publishing
and distribution for grade 3; US$2\.25 per reader for publishing and distribution; and
(ii) caution money in the form of a commercial bank letter from publishers to
MINEDUB\. These two would serve as the guarantee for the payment of the
advance\. MINEDUB would be responsible for overseeing the publishing, printing,
and distribution processes; and
(b) 60 percent second and final tranche would be paid on the basis of third party
verification that the books have been distributed to the schools\. The third party
verification would be undertaken by contracting a management company\.
ï§ Penalties would be applicable if books are not distributed to the Project areas
within stipulated timeframes\. Specifically,
(i) In order for the 60 percent full disbursement to be effected, books would
need to reach the schools in time for the academic year commencement in
September of each year of the Project\. This would require the approved
lists and order processes to be completed in time for the publishers to print
and deliver the required quantities to the selected distributors\.
(ii) 5 percent of the final 60 percent payment would be withheld for non-
distribution of books to schools within 30 days;
(iii) 10 percent for non-distribution of books to schools within 60 days; and
(iv) No payment if books are not distributed within 90 days of publishing,
printing, and distribution to all public primary schools\.
21\. Third party verification through technical and financial audits would be adopted to ensure
that the GPE funds are being used for the intended purposes, and to assess if disbursement-linked
indicators (DLIs) are achieved to trigger GPE funds flow\. Upstream supportive efforts would be
provided through a Rapid Results Approach (RRA) to ensure that books are distributed in a
timely manner prior to the commencement of each of the project implementation school years
(2014/15, 2015/16, and 2016/17)\. During the last year of project implementation 2017/18,
MINEDUB would demonstrate: (a) that a line item has been included in the budget to ensure that
replacement costs for books lost or damaged are included; and (b) a second line item has been
included in the budget to ensure that a full set of textbooks are financed through Government
budget\.
22\. Reporting: A computerized inventory management system would be developed and used
to track the books that are ordered, produced, printed, and distributed\. Audits of publishersâ
55
books of accounts, technical audits through third party verification by a management agency and
the local communities, and school report cards would be used to track and triangulate data on
inventory\.
23\. A Rapid Results Approach (RRA) would be used to support MINEDUBâs efforts to
reduce the elapsed time to procure and deliver inputs, and to determine if the teaching and
learning materials have been delivered to schools\.
24\. The following activities would be financed under the sub-component:
Eligible financing category Items
Consultancy services - Preparation of a national reading plan
- Preparation of a procedures manual based on the
national policy on teaching and learning materials (yet
to be validated by the Government)
- Design and development of a computerized inventory
management system
- Technical evaluation
- Fiduciary evaluation
- Rapid Results Approach preparation and delivery
Goods - Procurement and delivery of armoires to selected
schools in the targeted regions\.
- Textbooks (French, English, Mathematics)\.
- Reading books collections for grades 1, 2 and 3 to
support literacy\.
Sub-component 1\.3 Continued professional development for teachers and inspectors (Total
cost including contingencies: US$1\.1 million; 100% GPE financing)
25\. The sub-component activities are linked to sub-components 1\.1 and 1\.2 to ensure
internal consistency in the Project design\. The sub-component objective is to improve teacher
quality through a teacher training program, address teacher absenteeism and on-the-job
performance\. The teacher training program is linked to Sub-Component 1\.2 (teaching and
learning materials)\. The activities include the following: (a) the preparation of a national plan for
pre-service in the ENIEG and inservice capacity development for teachers and inspectors\. The
content of the national plan would be linked to the grades 1, 2 and 3 book titles, the use of the
teaching materials, and the preparation, administration, and grading of studentsâ tests; (b) rolling
out the teacher training progressively over the Project implementation period; and (c) evaluating
teacher performance\.
26\. The following activities would be financed under the sub-component:
Eligible financing category Items
Consultancy services - Needs assessment
- Preparation of a national plan for teacher pre-service
(ENIEG) and inservice training
- Programming capacity development
- Rolling out the teacher training
- Preparation of teacher performance guidelines
- Preparation of student evaluation tests, tools to administer
the tests, implement the test, and to grade them
56
Goods - Testing material
- Tools to administer/implement the test
- Grading material
Sub-component 1\.4 Support for girlsâ education (Total cost including contingencies: US$1\.1
million; 100% GPE financing)
27\. The objective is to support equity in access and retention of girls in primary education\.
28\. The sub-component would complement the ongoing efforts of other development
partners\. Specifically, the sub-component activities would complement activities by UNICEF
[(pilot schools, hygiene kits in emergency areas, nutrition (rations sèches, cantines), pedagogical
kits, construction of latrines and water points], British High Commission, PLAN
International/Cameroon (girls scholarships), and potentially World Bank/IDA support through
the Sanitation Project (construction/rehabilitation of latrines and water points)\.
29\. The sub-component financing would be for lifeskills content and capacity development
through gender-oriented campaigns, the preparation and proactive dissemination of awareness
campaigns\. Specifically, the project will focus on:
(i) Producing lifeskills pamphlets and posters as teaching and learning materials (see sub-
component 1\.2) and disseminating them widely;
(ii) Launching gender sensitization communication campaign (awareness raising, violence
against girls and women) using multiple and complementary methods including:
a) Gender responsive teaching and learning environments to enhance girlsâ and boys
positive participation and performance in primary schools, especially in grades 4,
5 and 6;
b) Management of the sexual maturation and enhanced sanitation in primary schools,
targeted to grades 4, 5 and 6;
c) Enhanced monitoring and evaluation of gender equity in education at all levels\. In
this connection, supporting data capture to systematically document the
transversal aspects of gender in the project sub-components (hiring of female
contract teachers, GER and NER of girls in primary schools, complementary
support from other bilateral and multilateral partners especially in the area of
school latrines and water points);
d) Advocacy for promoting positive attitude among parents and communities about
educating both girls and boys through gender advocacy and sensitization
programs;
(iii) Strengthening the institutional framework and building the capacity of Ministry
officials to track progress towards the sub-component objectives\.
57
30\. The following activities would be financed under the sub-component:
Eligible financing category Items
Consultancy services ï Contracting the services of experts to develop
information, education, and communication (IEC)
materials;
ï Contracting of services of experts to carry out
institutional capacity development;
ï Contracting services of experts to follow-up on the
administration and evaluation\.
Goods ï Financing for IEC materials to be published and
reproduced under sub-component 1\.2\.
31\. Monitoring and evaluation of the sub-component\. A cross-section of stakeholders will
be involved in monitoring and evaluating the activities under the sub-component\. MINEDUB
would be responsible for general oversight, NGO(s) with outreach facilities in various parts of
the country would be responsible for undertaking the awareness raising and communication
campaigns, communities will be actively solicited to take part in monitoring gender sensitive
activities in their local schools, and third party technical verification would ensure that the
activities are being implemented as planned and agreed and provide periodic, comprehensive
reports on the impact of the sub-component activities\.
32\. Beneficiaries of the sub-component activities are girls at primary education levels 4, 5
and 6\.
Sub-component 1\.5 National primary education assessment framework (Total cost including
contingencies: US$1\.4 million; 100% GPE financing)
33\. To assess the outcome of the service delivery improvements (increasing the provision of
teachers and teaching and learning materials, teacher and inspectorsâ training), sub-component
1\.5 activities will focus on student learning assessments for reading and mathematics during the
life of the Project\. Specifically, since the greater portion of the Project investments would be
undertaken in the disadvantaged areas of the country where early childhood development is not
developed, and therefore grade 1 newly enrolled students might not have the ability to read, write
and count, the baseline for reading and counting would be zero\. This is assessed to be a good
starting point to subsequently carry out formative Early Grade Reading Assessment (EGRA) and
Early Grade Mathematics Assessment (EGMA) at the end of school years 2014, 2015 and 2016\.
58
34\. The following activities would be financed under the sub-component:
Eligible financing category Items
Consultancy services - Test preparation
- Test administration (pre- and post-test)
- Grading tests
- Compiling results
Goods - Data Bank
- Stop watches for teachers to assess
students
- Testing material
- Scoring sheets
- Grading material
35\. Beneficiaries of Component 1: Beneficiaries of Component 1 constitute a cross-
section of the education system\. The direct beneficiaries would be:
ï 478,000 students including 218,000 girls will benefit from the Contract Teacher
Program in the 10 regions of the country\.
ï 2\.28 million students including 1\.09 million girls will benefit from the Teaching
and Learning Materials in the 10 regions of the country\.
ï Capacity development for 33,600 (16,500 female) public primary school teachers
and 382 (150 female) inspectors in the use of the teaching and learning materials
would be provided in all the 10 regions of the country, for all public primary
school teachers responsible for teaching grades 1, 2, and 3\.
ï 1\.22 million girlsâ in grades 4, 5 and 6 would benefit from increased girlsâ
education awareness campaigns and materials\.
Component 2\. Building institutional capacity for improved education service delivery
(Total cost including contingencies: US$5\.0 million; 100% GPE financing)
36\. The objective is to limit the risks of weak governance (poor management, weak citizen
participation, and lack of transparency and accountability) in the conversion of maîtres des
parents to contract teacher status, in the distribution of Essential teaching and learning materials,
and to better monitor service delivery for improved service delivery, learning outcomes and
equity in basic education\. The Project would use already piloted approaches through various
Projects in order to limit the risks associated with time lags in developing new tools\. Towards
this end, two specific tools would be included: (a) school mapping and linking the existing
tableau de bord; and (b) budget transparency initiative (BTI) and school-based management\. A
brief explanation for each tool is provided below\.
Sub-component 2\.1 Improving information, governance and accountability, and monitoring
and evaluation capacity (Total cost including contingencies: US$3\.3 million; 100% GPE
financing)
37\. The objective is to support the geo-mapping of public and private early childhood
development centers, and public and private primary and secondary schools in the country,
linking the school report cards (tableau de bord), and preparing the architecture for the
59
unification of the EMIS for the five ministries of education, linking school report cards (tableau
de bord), and preparing the architecture for the unification of the EMIS for the five ministries of
education\. The sub-activity will complement the ongoing efforts of UNESCO to build capacity
towards setting up a unified platform for EMIS across the five ministries of education\. The sub-
activity will draw on the lessons from UNESCOâs experience\. Baseline and endline data would
be collected in order to analyze the out-of-pocket expenses for households\. Building on the 2007
ECAM (household survey) database, it is anticipated that the ECAM 2012 (results awaited)
would help to construct a credible baseline for measuring the percentage of reduction of out-of-
pocket expenses for households\.
38\. Budget Transparency refers to âthe extent and ease with which citizens can access
information about and provide feedback on Government revenues, allocations and
expendituresâ (World Bank 2013)\. It is one of several approaches (participatory budgeting,
gender budgets, and budget audits etc\.) with enormous potential to improve accountability,
increase revenues and improve its efficient use, and more importantly, improve relationships
between the state and citizens through increased trust\.
39\. In Cameroon, the BTI was piloted in the education sector in 2012/13 \. It led to a
change in parentsâ willingness to contribute to the financing of schools, increased trust between
members of the school community (administration, parents and students) and is likely to further
increase trust between the state and citizens as it did for mayors and their constituents (World
Bank, 2013)\.
40\. The use of BTI strategy in the Equity and Quality for Improved Learning Project
(a) Adapt BTI templates to highlight: (a) the number of recruited staff in each school in the
Project target areas; (b) the number of PTA teachers converted to contract teachers in the
school as well as their names; and (c) the number of student/textbook supplied to the
school\.
(b) Make it compulsory for schools to fill out the template and have this published on the
notice board throughout the academic year
(c) Make it systematic to have the names of teachers recruited as well as PTA teachers
converted to contract teachers, read over the public regional radio
(d) Systematize and make it compulsory that schools present and discuss their BT templates
at school management meetings\.
41\. If implemented with success, the above presented strategy will greatly improve
transparency and accountability in the management of Project activities, and limit irregularities
such as duplicate contracts (teachers recruited as contract teachers in several schools) or students
complaining of not having received textbooks due to them or school community complaining of
not having received budgeted benches, etc\. In addition making the above information available
will make it possible for improvements in school-based management and for civil society
organizations involved in budget tracking in the sector of education to have the tools to act where
necessary\. Furthermore, publishing this information will enable the community to have a third
party monitoring on the affairs of the school and success of their children\.
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42\. The following activities would be financed under the sub-component:
Eligible financing category Items
Consultancy services - Contracting the services of an expert to train stakeholders
on how to adapt and use the existing BTI template
- Follow-up on the administration and evaluation
Goods - Reproduction of the BTI template on an annual basis
43\. Monitoring and evaluation of the Project interventions\. The objective of this sub-
component is to follow-up on the Project implementation through the use of approaches
such as the Rapid Results Strategy (RRS)\. The RRS is a management tool to help make large
scale change happen, incrementally\. By empowering teams to achieve results quickly, typically
in less than 100 days, a virtuous cycle of achievement can be created whereby short-term
successes lead to capacity building and the achievement of longer term goals\. The RRS can help
to overcome procedural barriers which render systems lengthy and cumbersome\.
44\. Using the RRS in the Project
ï RRS will be used to: (a) effect payments to maîtres des parents who have been converted
to contract teacher cadre, and to newly recruited teachers; and (b) follow the procurement
and delivery of teaching and learning materials\.
o With respect to teacher salaries, since the RRS operates on a cycle of 100 days
equivalent (about 3 months) it would be planned to be operationalized in three phases
covering an entire academic year (9 months), evaluated every term and at the end of
the academic year;
o At the end of the first year, the approach would be evaluated, amended where
necessary and scaled-up to include the management of a greater proportion of
teacherâs salaries in the Ministry of Basic education\.
ï Using the RRS to distribute textbooks:
o Since the Project target areas are five regions for this pilot as a means of setting up a
demonstration effect to introduce reforms in the production and distribution of
teaching and learning materials, the target here would be 30 days (1 month) into the
academic year\.
A key pre-Project implementation activity would to undertake an indepth analysis of the current
process of payment of salaries to teachers in the MINEDUB\.
45\. The following activities would be financed under the sub-component:
Eligible financing category Items
Consultancy services - Expert/champion in the domain in which the RRS is to be
designed to train and help MINEDUB to set its targets
and design reforms needed to achieve results\.
- Expert to carry out a preliminary assessment of the salary
payment system, the procedures and steps
Goods - Materials for individual domain RRA
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Sub-component 2\.2 Building knowledge for improved service delivery and learning (Total cost
including contingencies: US$1\.7 million; 100% GPE financing)
46\. The objective of this sub-component is to support the preparation of key studies that
would help to set the stage for moving Cameroon to the next stage of building human capital for
growth and competitiveness\.
47\. Key studies proposed to be undertaken at this time include: (a) an analysis on introducing
basic education (enseignement fondamental), the underpinning challenges, opportunities, budget
implications, strategy, and implementation; (b) an indepth study on skills for the labor market\.
This would inform curricular changes at the basic education level, including the introduction of
competency based education, especially (i) getting children off to the right start with nutrition,
psychological and cognitive stimulation, basic cognitive and social skills; (ii) ensuring that all
students learn with cognitive skills, socialization, behavioral skills, and offering second chance
education; (c) technical assistance support to Government for finalizing its policy on adult
literacy (alphabetisation), out-of-school children (les non-scolarisés), reducing dropout, and
inclusive education\. And prospectively, the development of some tools to address the challenges;
and (d) an indepth study on higher education reform based on extracting the analysis of
introducing enseignement fondamental which is expected to change the flow of students in the
system to higher levels of education\.
62
Annex 3: Implementation Arrangements
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
Project Institutional, Implementation, and Accountability Arrangements
Sector management and administration
1\. The education sector in Cameroon is divided into five sub-sector ministries: MINEDUB,
MINESEC, MINEFOP, MINESUP, and MINJEUN\. Sector management is organized as
follows:
a\. The Steering Committee (Comité de pilotage) (CP) composed of the Ministers for
Education, and headed by the Minister for Economy, Planning, and Regional
Integration (MINEPAT) coordinates the implementation of the Sector Strategy\.
b\. The Steering Committee is supported by two technical units: the cellule opérationelle
(CELOP) and a Technical Secretariat (secrétariat technique) (ST)\. The CELOP is
composed of the 12 General Secretaries (Sécretaires Généraux) (SG) of the ministries
of education\. Their role is to arbitrate and address emerging issues of education
administration while taking into account the decisions by Government decision-
makers\. The ST is composed of the Technical Secretary, three adjoints secretaries,
and education sub-sector experts\. The ST is responsible for operational aspects such
as implementing the activities of the sector strategy, coordination of related activities,
and for reporting on the technical and financial aspects relating to the activities\.
c\. At the level of the sector ministries, the sector strategy implementation is guided by
the Comités PPBS (planification, programmation, budgétisation, suivi)\. Their terms
of reference are to improve the budget preparation process and to orient the process
towards a practical approach to the preparation of the programs-budgets\. The Comités
PPBS ensure a balance in the sector strategy implementation, and the budget
preparation mechanisms\. Individual sub-sector strategies would guide their
implementation, as also the related budget preparation exercise for each sub-sector of
education\.
d\. The joint review of the education sector (JRES) would provide a forum for
coordination between the ministries and the technical and financial development
partners\. Organized on an annual basis, the JRES would be based on the examination
of reports and on the basis of annual action plans\.
Project management and administration mechanisms
2\. The Project Steering Committee (PSC) would be chaired by the Minister responsible for
Basic Education (MINEDUB) or his or her representative\. The PSC will include Ministers or
their representatives, responsible for secondary education, higher education, finance,
employment and professional training, economy and planning, and public contracts and a
representative of the Recipientâs unit responsible for automatic amortization\. The PSC would
meet at least twice annually and would be responsible for Project oversight, including: (i)
reviewing the proposed Annual Work Plans and Budgets for the Project, reviewing the draft
63
annual implementation and audit reports, as well as the Procurement Plan prepared by the Project
Secretariat; (ii) overseeing overall implementation and performance of the Project and providing
policy guidance; and (iii) identifying necessary Project adjustments based on monitoring and
evaluation results\.
3\. There will be no independent Project Implementation Entity (PIE) to implement the
Project\. The Project will be implemented by MINEDUB\. A Project-specific MINEDUB
Secretariat staffed with qualified and experienced personnel in adequate numbers, and
comprising a project coordinator, a technical coordinator, a procurement specialist, and a
financial management officer and an accountant\. The Project Secretariat would be responsible
for the day-to-day operations for the Project\. A Secretariat Coordinator and a Technical
Coordinator would be jointly responsible for coordinating the Project implementation\. They
would be paid through Government funds\. The Project Secretariat would report to the Minister
for MINEDUB and to the PSC\. The Secretariat specialists (Financial Management, Accountant,
and Procurement) and other staff as necessary would be paid by the Project funds\. The terms of
reference for the additional specialists and other staff and the budget for the staff would be
prepared by the Project Secretariat for the SEâs non-objection\. The SE would provide technical
assistance to the Project Secretariat and participate in working meetings\. Representatives of the
Caisse Autonome dâAmortissement (CAA) of the MINFI and MINEPAT will participate in the
Project Secretariat planning and preparation meetings relating to sub-components 1\.1 and 1\.2\.
4\. National systems would be used for sub-components 1\.1 and 1\.2\. That is, for contract
teacher salaries (maîtres des parents converted to contract teachers and for new ENIEG
graduates recruited as contract teachers), and for the provision of teaching and learning
materials\. While sub-components 1\.3, 1\.4, 1\.5, 2\.1 and 2\.2 would involve a combination of
national systems and project specific institutional arrangements\.
Sub-component 1\.112 Increasing teacher availability in public primary schools in
disadvantaged areas
5\. Overall institutional responsibility for managing, monitoring and evaluating the sub-
component\. The current institutional arrangements would be largely maintained\. MINEDUB
(DRH) is responsible for the overall implementation and monitoring of the Contract Teacher
Program (CTP)\. Several Government entities are involved in the CTP: (i) the Prime Ministerâs
office, which gives prior approval to proceed with the contracting process; (ii) the Ministry of
Public Function and Administrative Reform (MINFOPRA; MCS), which signs the contract; and
(iii) the Ministry of Finance (MINFI), which is responsible for budget allocations and salaries
payment\.
6\. Specific implementation responsibilities\. To ensure efficient coordination between these
actors, the Government has established a Monitoring Committee (MC) within MINEDUB\. The
MC includes representatives from the Prime Ministerâs office, MINFOPRA and MINFI\. It has a
12
References include: Government of Cameroonâs report on contract teachers, EFA-FTI Project audits, AFDâs
report on contract teachers, EFA-FTI Project Implementation Completion and Results Report, World Bank Project
Appraisal Document for the EFA-FTI Project\.
64
Permanent Secretariat headed by the Human Resources Director of MINEDUB, and is assisted
by a Technical Secretariat\. The MC is responsible for (i) ensuring the coordination of the
activities of the Project; (ii) preparing and organizing the overall recruitment process for
contracting teachers; (iii) managing the recruitment and deployment of contracted teachers, and
also for verifying teacher presence in schools; (iv) monitoring the quality of the teaching; and (v)
keeping records and reporting to the development partners on all aspects of the Program\. In
addition, for the GPE financed Project the MC would report to the World Bank as the
Supervising Entity (SE)\. The SE would participate in the MCâs working sessions\. The MINFI
and the MCS shall be jointly responsible for the administrative management and disbursement,
under the Project\. As such, the MC would be responsible for (i) the identification and selection
of the contract teachers to be paid under the Project; and (ii) the signing of the contracts with
maîtres des parents who would be converted to contract teacher status\. MINFI would be
responsible for (i) identification of the payments to be made under through the Project; and (ii)
issuance of wire transfer orders to the relevant central, regional, and prefectural level entities for
the processing of payments\.
7\. Responsibility for follow-up to assess impact\. The monitoring and evaluation (M&E)
system put in place for the Year I EFA-FTI Grant provided detailed and consistent information
on the implementation of activities\. Therefore, the Project would use the same system\. The M&E
system is as follows:
(a) The primary source of information would be MINEDUB\. Bi-annually, MINEDUB would
submit the names of teachers, who are converted from maîtres des parents to contract
teacher status, prepare and make available a report on the basis of spot checks to the
regions, and financial information on the amounts spent on contract teachersâ salaries by
each region\.
(b) The second source of information would be provided through regular independent
technical and procedural audits as well as through the financial audits required under the
Grant\. The technical and procedural audits would assess whether: (a) the rules for
recruitment and payment of salaries are being followed at the regional and sub-regional
levels; (b) teachers are present in the classrooms, and (c) salaries are paid regularly\. The
financial audit examines the financial management of the Project\.
(c) The third source of information would be from the bi-annual supervision missions
conducted by the SE in collaboration with development partners\. One of these bi-annual
missions would occur at the time of the annual joint review of the education sector\.
(d) Achievement of the Project Development Objectives13 would be measured by a reduction
in pupil teacher ratios (PTR)\. PTRs are measured by dividing the number of teachers by
the number of students within regions and for the nation\.
13
The monitoring experience and lessons learned from the EFA-FTI Project has been taken into consideration\.
Composite measures for individual monitoring indicators with uncontrollable factors to measure the achievement of
PDO would not be used\. Thus, the variation of PTR across regions which is calculated by regressing the size of
specific schools against the number of teachers in each specific school (a statistical measure) would not be used for
the Project\.
65
8\. Proposed reforms for procedural and institutional arrangements\. MINEDUB (DRH)
would be the main entity for implementing, monitoring, and reporting about the CTP\. The main
institutional reforms would relate to: (i) the avoidance of inter-regional and the intra-regional
deployment of teachers based on lessons learned from the EFA-FTI Project, and instead
converting existing maîtres des parents to contract teacher cadre; (ii) reporting on the CTP and
the maîtres des parents\. This would involve the Prime Ministerâs office, MINFOPRA, and
MINFI; and (iii) disbursements would be against pre-agreed indicators\.
Sub-component 1\.2 Provision of teaching and learning materials
9\. Overall institutional responsibility for managing, monitoring and evaluation lies with the
Inspectorate General of Education of MINEDUB\. The evaluation and approval of textbooks is
managed by the National Council for the Approval of Textbooks and Didactic Material\.
10\. Cameroon has a functioning commercial industry for textbooks\. A developing publishing
industry, which is considered to be stronger for English speaking textbooks than for French
language textbooks is currently oriented towards supply to private schools where parents can
afford to pay for textbooks\. It operates: (a) under two recognized publishersâ associations; (b)
national authorship for textbooks is the norm and this is in line with the national policy on
textbooks; (c) there are examples of good quality Cameroon-based printers but they are
considered by some publishers to be more expensive than international printers and longer four
color print runs tend to be printed outside Cameroon; (d) there are a number of good booksellers
who maintain stock of approved textbook titles but bookselling is strongly oriented towards
supply to urban areas and to rural areas where there are parents who can afford to buy;
bookselling is not oriented to supplying poor areas where the textbook purchase market is
negligible; and (e) parents who have to purchase the textbooks\. The current debate on the book
industry is healthy\. Publishers have made some sensible suggestions\. For example, to ensure that
schools establish active textbook selection committees, that it should be recognized that authors
do not have to be pedagogic inspectors or teachers, that minimum production standards for high
quality books should be enforced, that the evaluation and approval methodology should be
transparent and the approval complete much earlier in time for books to be made available to
booksellers, and that libraries should be established in schools\. There are also a few extravagant
requirements such as Government support for a national paper industry\. If a good compromise is
reached it could strengthen the textbook industry, providing for a more transparent and more
efficient system of textbook approval and, most importantly, improve the quality of the
textbooks and the speed and equity of supply\.
11\. The National Council for the Approval of Textbooks and Didactic Material tends to
change the Approved List of books (titles) every academic year although the books on the list are
supposed to remain for a period of 3 years\. They are then reviewed and sometimes retained for
longer\. Changes to books required by the Ministry, publishers and changes to curriculum often
mean books have to be altered and reprinted\. This is not a sensible approach\. It would be better
to move to a 4 or 5 year approved list where all titles are approved at the same time according to
a stable system of curriculum review\. This would remove annual submissions and thus the
frequent textbook redundancies as old titles are removed and new titles added\. The list needs to
be announced in good time for publishers to be able to produce books in time for the school year\.
66
At present the list is announced too late\. Schools select the titles, publishers prepare the books,
printers print the books and booksellers stock up on the books they can afford to pay for in
advance and in anticipation of potential purchase, and parents purchase the books\.
12\. The annual change to the Approval Textbook List is a contributor to the high cost of
textbooks and didactic material in Cameroon\. Changing the list every year is expensive because
the books have to be reprinted but they are always reprinted anyway because the books are
designed to be consumable every year in Cameroon\. The high cost is also due to short print runs
due to few purchasers and publishers not daring to print many books because they do not know
how many they can sell\. Also the system is expensive because up to now the Cameroon market
has been a purely private parent purchase market and because books have to be reprinted and
supplied each year\. This is very unusual in many parts of Africa where schools rather than
parents buy the books and books are usually re-used and passed down to the next yearâs students\.
Books are reprinted because the Cameroon market is a dominantly a private school market, not a
state school market and because the books are designed to be written in, making it impossible for
them to be used for more than one year\. They are also often sold with a consumable Activity
Book, also a very expensive practice and not one that can be afforded outside a private market
system\.
13\. Proposed reforms for procedural and institutional arrangements\. For practical purposes,
the Project would work with the existing institutional arrangements\. The key reform areas would
be: (i) that the National Council for the Approval of Textbooks and Didactic Material 2013
Approved List for grades 1, 2 and 3 remains unchanged/constant throughout the Project
implementation period (2013/14-2016/17); (ii) through the Project financing, a pilot would be set
up to demonstrate that through the production of a larger volume at lower prices, students at the
early grades of primary education could benefit from low cost, durable textbooks with a target
classroom life of 3-4 years that could help them to read, write and count\. There is also a need to
reform the current textbook evaluation system to make it more transparent and to ensure that
publisher submissions are clearly in line with government policy\. These reforms should create a
textbook provision system with significantly reduced costs which would enable government to
initiate free textbook supplies in the future\. The main institutional reforms would be introduced
through the adoption of a Rapid Results Strategy (RRS) for the ordering of textbooks, the
publishing, printing, and distribution of the same\.
Sub-component 1\.3 Continued professional development for teachers and inspectors
14\. Overall institutional responsibility for managing, monitoring and evaluation would be
with MINEDUB, MINESEC, ENIEGs, Development partners, teachers and inspectors\. The
Project Secretariat will ensure that appropriate technical expertise is contracted as necessary\. The
technical expert will collaborate with the national counterparts to prepare the needs assessment,
guide the preparation of the national plan for teacher pre-service and inservice training, prepare
the content for teacher training, prepare the implementation plan for rolling out the training
progressively over the project implementation period, prepare teacher performance guidelines,
and to evaluate teacher performance\. The technical expert(s) should be contracted in tandem with
the technical expert(s) for sub-component 1\.5 (student learning evaluation)\. Together the
67
national and international experts would prepare student evaluation materials, the tools to
administer/implement the test, and grade the tests\.
Sub-component 1\.4 Support for girlsâ education
15\. Overall institutional responsibility for managing, monitoring and evaluation of this sub-
component would be with the Project Secretariat, selected non-governmental organizations
(NGOs) and communities\. Development partners such as UNICEF who have specific work
programs in the area of girlsâ education would be consulted in the context of implementing this
sub-component\.
Sub-component 1\.5 National primary education assessment framework
16\. Overall institutional responsibility for managing, monitoring and evaluation of this sub-
component would be with the Project Secretariat, the recruited evaluation and student assessment
specialist\. The two evaluation tests EGRA and EGMA for reading and mathematics would be
prepared by the IGE, DPPC, and DEP Assessment Unit\.
17\. Third-party Verification for Component 1\. The decentralized nature of the sub-
components warrants third party verification\. A Management Agency would be hired to follow-
up on the impact of the activities under Component 1 of the Project (subsidy for contract teachers
and provision of teaching and learning materials for grades 1, 2 and 3)\. The third-party
verification agency would be responsible for developing a dedicated Rapid Results Strategy
(RRS) for each of the major activities under Components 1 and 2\. The description of the RRS for
the Project is outlined under Component 2 Monitoring and Evaluation activities\.
Component 2\. Building institutional capacity for improved education service delivery
Component 2\.1 Improving information, governance and accountability, and monitoring and
evaluation capacity
18\. Overall institutional responsibility for managing, monitoring and evaluation of this sub-
component would be with the Project Secretariat to ensure coordination with MINEDUB,
MINESEC, MINEFOP, MINESUP, INS (EMIS/INS), and MINFI (Budget Transparency
Initiative)\.
Component 2\.2 Building knowledge for improved service delivery and learning
19\. Overall institutional responsibility for managing, monitoring and evaluation of this sub-
component would be with the Project Secretariat to ensure coordination with MINEDUB,
MINESEC, MINEFOP, MINESUP and Development Partners (World Bank, UNESCO,
UNICEF)\.
20\. A schematic representation of the implementation arrangements is provided in Figure 3\.1\.
68
Figure 3\.1\. Project Implementation Arrangements
Monitoring and Evaluation
21\. The Results Framework is aligned with the three-year action plan for implementing the
DSSEF 2013-2020\. The Results Framework is designed to track: (a) the achievement of the PDO
level outcome indicator(s); (b) the service delivery (education inputs) aspects\. These comprise
the intermediate indicators; and (c) the disbursement-linked indicators (DLIs) are designed to
track the process of achieving the key annual targets\. Their achievement would trigger
disbursements\. Further, the second component on building institutional capacity would include
the Rapid Results Approaches designed to suit each of the sub-components under Components 1\.
Therefore, the M&E system for the Project would comprise linked measures\. Each sub-
component would have a sub-system that is intended to verify results, disburse against pre-
agreed indicators, monitor the financing to ensure that it is being used for the intended purposes,
prepare periodic reports, and evaluate the Project specific reforms\.
22\. Timing\. Project monitoring would be undertaken continually on a quarterly, bi-annual,
and annual basis\. A mid-term review would be fielded no later than March 2016\. Project
69
monitoring would be based on the key principles of: (a) ensuring that the annual budget for
primary education increases; (b) pegging disbursements against results indicators; and (c)
ensuring that service delivery inputs are provided to primary schools at the right time to coincide
with the school academic year beginning\.
23\. Achievement of the PDO would be measured by annual formative evaluations of the
Project cohort reading and mathematics levels\. The annual student learning assessments (sub-
component 1\.4) would be undertaken by a third party that would prepare and administer the early
grade reading assessment (EGRA) and the early grade mathematics assessment (EGMA), train
the central and regional education departments through a learning-by-doing process, creating
item banks, upload the expected reading and mathematics standards, elaborate the guidelines for
administering the tests, code the reading and mathematics tests, analyze the data, and prepare the
reports for informing the decentralized levels of the education administration, and for onward
dissemination to the schools\. The tableau de bord for individual schools would capture the data
at school level and this would be linked to the education management information system at the
central level\. There would be wide broadcast of school performance including the resources
provided (contract teachers, teaching and learning materials, and student performance on the
formative evaluations)\. Baseline and endline data would be gathered to establish progress or
regress in learning outcomes\.
a\. Sub-Component 1\.1 Increasing teacher availability in disadvantaged areas\. This is based
on a subsidy for (a) converting a selection of existing maîtres des parents to contract
teacher status in disadvantaged zones of the country with an emphasis on rural areas; and
(b) for hiring new contract teachers from the local ENIEG in areas where there is an
overall dearth of maîtres des parents\. A monitoring and evaluation system had been put
in place for the EFA-FTI Project\. This provided detailed and consistent information on
the project implementation activities\. The proposed Project would use the same system,
albeit strengthened to include a database for maîtres des parents\. Three sources of
information would be used:
ï§ The primary source of information would be MINEDUB\. Bi-annually, MINEDUB
would submit the names of teachers who have been hired, the observations of
government missions to the regions, and financial information on the amounts spent
on Primary Contract Teachers (PCT) salaries by region\.
ï§ The second source of information would be regular independent technical and
procedural audits, as well as financial audits required under the GPE grant financing\.
The technical and procedural audits would assess whether: (i) the rules for
recruitment and payment of salaries are being followed; (ii) teachers are present in the
classrooms; and (iii) salaries are paid regularly\. The financial audit would examine
the overall financial management of the sub-component\.
ï§ The third source would be the bi-annual supervision missions conducted by the
World Bank team as Supervising Entity, and in collaboration with development
partners\. One of these bi-annual missions occurs at the time of the annual DSSEF
review\.
70
b\. Sub-Component 1\.2 Provision of teaching and learning materials\. The monitoring system
for this would follow the commercial production and distribution process\. Disbursements
linked indicators would be used to track results and effect payments against them\.
Payments would be effected twice, once upon contract signature between the publisher
and MINEDUB, and a second payment upon final distribution to beneficiaries and based
on third party verification\. Before effecting the first payment, MINEDUB and the
Publishersâ Association would report on: (a) using unique identifiers (Region,
department, locale, school, book title, distributor/bookseller) the list of book titles
requested by schools for each of the subjects French, English, and Mathematics, the price
per book title, the quantities, and the list of schools; (b) the signed contracts between
individual publishers and MINEDUB; and (c) the evidence of caution money is produced
by MINEDUB\. The final payment would be based on a graduated scale: (a) 5% less for
books if not distributed to public primary schools within 30 days of publishing and
printing; (b) 10% less for books if not distributed within 60 days of publishing, printing,
and distribution to the schools; and (c) No final payment if books are not distributed
within 90 days of publishing and printing and distributed to the schools\. The Rapid
Results Approach would serve as the front-end facilitation for monitoring distribution\.
Third party verification would provide the end-point evaluation\.
c\. Sub-Component 1\.3 Building capacity of teachers and inspectors\. M&E would be based
on ENIEG reports for pre-service training, and cascading training and reporting by
inspectors\. Third party verification reports would assess the impact of the capacity
development program\.
d\. Sub-component 1\.4 Support for girlsâ education\. M&E would be a key function of this
sub-component\. This would involve advocacy, community sensitization, follow-up, and
monitoring of girlsâ education activities at school level\. The M&E would serve as the
feedback loop to assess the efficacy of the project support for girlsâ education\.
e\. Sub-Component 1\.5 National primary education assessment framework\. M&E would be
the student assessment reports, information from tableau de bord, and third party
verification reports\.
24\. Reporting\. Mechanisms would include data triangulation for verification, data analysis,
dissemination, and for introducing corrective measures during Project implementation\. Specific
tools would include: (a) Rapid Results Approaches (RRA) to facilitate front-end performance;
(b) service delivery indicators (SDI) such as tracking time on task, use of teaching materials in
the classroom by teachers, use of textbooks by students, and teacher presence in the classrooms,
and budget transparency tools\. These would be to facilitate process measures; and (c) third party
verifications (TPV) reports would ensure end-point assessments\.
71
Financial Management, Disbursement, and Procurement
Introduction
25\. The financial management, disbursement and procurement arrangements for the
Project are based on: (i) the Financial Management Manual for World Bank-financed
Investment Operations dated March 1, 2011; and (ii) lessons learned from recent implementation
experience in Cameroon especially from the EFA-FTI Project and the World Bank/IDA Project\.
26\. Cameroon has considerable experience working with World Bank procedures, and
in the management of World Bank Projects\. The proposed financial management
procedures are therefore considered to be acceptable to the World Bank \. Considerable
institutional capacity already exists and international knowledge transfer has been made possible
over the years through technical assistance from development partners\. The purpose of the
financial management assessment is to determine whether the financial management system
proposed for the Project is adequate, and whether the institutional parties are capable of
producing timely, relevant, and reliable financial information that would allow the World Bank
as Supervising Entity and Government to plan and implement the Project, monitor compliance
with agreed procedures, and appraise progress towards Project objectives\. The aim is to ensure
that appropriate reforms in consonance with the Project activities are achieved while at the same
time to achieve economy, efficiency, and effectiveness in the use of the GPE grant\. The
assessment is aimed at determining the readiness of the Government to adopt a hybrid approach
to financing Project activities\. That is, for a combination of national systems with disbursement-
linked indicators to transfer funds from the World Bank as Supervising Entity directly into the
Governmentâs Treasury for a significant proportion of the Project, and adopt a traditional World
Bank procurement linked disbursement of the GPE grant\.
Financial Management
Overview of Project and implementing entity
27\. National system (national teachers enrolment system and teaching and learning materials
procurement system) including part of Public Financial Management System (mainly Budget,
Accounting, Cash flow) would be mainly used (US$29\.4 million) and for the provision of
teaching and learning materials (US$13\.3 million)\.
28\. There will be no independent Project Implementation Entity (PIE) to implement the
Project\. The Project will be implemented by MINEDUB\. A Project-specific MINEDUB
Secretariat staffed with MINEDUB and MINESEC personnel, and some recruited staff
(dedicated financial management and procurement specialists, an accountant, data management
specialist, report-writing and archiving assistant), would be responsible for the day-to-day
functions of the Project\. They would be paid through Government funds\. A Secretariat
Coordinator and a Technical Coordinator would be jointly responsible for supporting
MINEDUB to implement the Project\. The Project Secretariat would report to the Ministers of
MINEDUB and MINESEC, and to MINEPAT\. The SE would provide technical assistance to the
Project Secretariat and participate in working meetings\. Representatives of the Caisse Autonome
72
dâAmortissement (CAA) of the MINIFI and MINEPAT will participate in the Project Secretariat
planning and preparation meetings relating to sub-components 1\.1 and 1\.2\.
Figure 3\.2\. Project administration organization
Project Secretariat
Coordinator
MINEDUB Technical MINESEC
Staff Coordinator Staff
Financial
Management
Officer
Accountant
Country PFM situation and Use of Country System
29\. Following the 2006 Public Expenditure Management and Financial Accountability
Review (PEMFAR) and 2007 Public Expenditure and Financial Accountability (PEFA) that
identified several weaknesses in Cameroonâs Public Financial system (budget credibility,
comprehensiveness and transparency, policy-based budgeting, budget execution, accounting and
reporting, auditing and external scrutiny), the country has been embarked on implementing
comprehensive reforms to improve budget transparency and efficiency\. This has resulted in the
elaboration of the Nouveau Régime Financier de lâEtat (2007) and a public financial
management modernization plan (PFMP) covering the 2009-2015 period\. The Government is
also introducing program budgeting in the 2013 budget year as part of the reforms\. The PFMP is
composed of seven strategic pillars (planning, budget execution-revenue, donors financing,
budget execution-expenses, accounting, cash and debt management and internal and external
control)\. The objectives are to be achieved through the implementation of 170 actions under the
leadership of a dedicated high level Committee (Comité de Pilotage des Réformes des Finances
Publiques)\.
30\. An independent midterm review of PFMP showed that 18 percent of the actions have
been implemented, about 37 percent are ongoing, and the remaining 45 percent are yet to be
73
implemented\. The review points to the need for undertaking an assessment on the use of country
systems to determine modalities that could be used for donor financed projects\. Once the
assessment has been completed, the World Bank will review and analyze the potential
opportunities to retrofit on the entire portfolio\. The detailed financial management arrangements
are described below\.
31\. The proposed financial management and disbursements arrangements comply with the
Financial Management Manual for World Bank-financed Investment Operations dated March 1,
2011\. MINEDUB and the Project Secretariat financial management system have been assessed
to determine whether (i) MINEDUB has adequate financial management arrangements to ensure
that the project funds would be used for its intended purposes, and in an efficient and economical
way; (ii) the financial reports would be prepared in an accurate, reliable, and timely manner; and
(iii) the Project assets would be safeguarded\. The conclusion is that subject to the
implementation of the mitigation measures outlined below, MINEDUBâs financial management
system would comply with the World Bankâs requirements under OP/BP10\.0014\.
32\. Risk Assessment and Mitigation measures\. The Project fiduciary management would be
the responsibility of the Project Secretariat\. The overall residual risk rating is Substantial\. The
assessment undertaken during preparation recommends the following mitigations measures: (a)
the recruitment of a technical auditor for the Project to perform indepth reviews of payments
made to Contract teachers to ensure the reliability of listing and figures provided; (b) the
recruitment of one financial management specialist and one accountant; (c) the recruitment of an
internal auditor and an external auditor for the financial audit; (d) the upgrading of the World
Bank/IDA project (Education Development Capacity Building Project) information system
(Tompro) to manage the Project; (e) the adoption of an Financial Management Procedures
Manual as part of the Project Implementation Manual with a more detailed description of roles
and responsibilities for the use of country systems relating to the production and distribution of
teaching and learning materials, and the roles and responsibilities of the publishing industry\. The
risk assessment, risk rating and mitigation measures are outlined in Table 3\.1\.
Table 3\.1 Financial Management Risk Assessment, Risk Rating and Mitigation Measures
Risk Risk Mitigating Measures Incorporated into Residual Risk/ Preparation/
Project Design Risk rating Implementation
Inherent risk High
Country level High
Delay in the implementation of Implement PFM reform agenda with the support
the PFM master plan could of Word bank and others donors (AfDB and
hamper the governance\. EU)\.
Entity level
Substantial
14
Projects supported by Investment Project Financing are governed by Operational Procedures (OP) and Bank Procedures (BP) 10\.00, and its
related provisions\.
74
Based on the lessons learned Implementation
from implementing the EFAâ Recruit a qualified financial management officer
FTI Project, MINEDUBâs and one accountant with a track record in World
record for managing the EFA- Bank financed projects\. Implementation
FTI financed project was rated
as moderately satisfactory due
to weak capacity\. Rely on third party verification to assess the
technical and financial aspects on contract
teachersâ salaries and textbooks distribution
Project level Substantial
Payment to ghost contract Rely on third party verification to assess the Implementation
teachers\. technical and financial aspects on contract
teachersâ salaries and textbooks distribution\.
Unreliable data from the
payroll\. Perform Rapid Results Approach (RRA) to
closely monitor teacher absenteeism and
Teaching and learning materials attrition, and obtain disaggregated data\.
not delivered to the
beneficiaries\. Involve CONSUPE in spot control checks\.
Perform Rapid Results Approach (RRA) to
reduce the elapsed time to procure and deliver
inputs, and to determine if the teaching and
learning materials have been delivered to
schools\.
Deploy the BTI to improve transparency and
accountability in the management of Project
activities, and limit irregularities such as
duplicate contracts (teachers recruited as
contract teachers in several schools) or students
complaining of not having received textbooks
due to them or school management committees
(SMCs) complaining of not having received
budgeted studentsâ desks and benches, etc\.
Control Risk Substantial
Budgeting Moderate
Delay in preparing yearly Follow strictly budget procedures and timeline Implementation
budget and inappropriate as per administrative and financial manual of
monitoring of budget execution procedures\.
resulting in delay in achieving
Project objectives\. Ensure that the annual work program is in line Implementation
with the procurement plan to prevent any delay
due to the procurement process\.
Track budget variances and take proactive
decisions\. Implementation
Accounting Moderate
Lack of capacity (staffing) for Recruit a qualified finance officer and one Implementation
financial management of the accountant with a track record in World Bank
GPE financed project which financed projects\.
would result in delay and
inaccuracies in recording
financial transactions\.
75
Internal Controls and Substantial
Internal audit
Absence of coordination and Adopt an administrative and financial manual of Implementation
description of roles and procedures as part of project implementation
responsibilities of publishers manual\.
and MINEDUB\.
Poor quality of teaching and Recruit an internal auditor Preparation /
learning materials and those not Describe in detail the roles and responsibilities Implementation
delivered to the beneficiaries of the third party for ensuring the verification of
and payment of ghost contract contract teachersâ salaries, and teaching and
teachers\. learning materials\.
Perform RRA and BTI\. Preparation/
Implementation
Funds Flow Substantial
Funds may be diverted or used Open a Designated Account in an acceptable Preparation
for ineligible expenditures for commercial bank into which funds will be
components other than contract deposited\.
teachersâ payment\.
Rely on third party verification for contract Implementation
teachersâ salaries, textbooks\.
Risk of delay in the
disbursement of the funds under Agree on a modus operandi to produce the DLIs\. Negotiations
the component 1 in the absence
of measurable DLIs\.
Financial Reporting and Substantial
Monitoring
Lack of adequate accounting Update the World Bank/IDA project (Education Preparation /
software that could delay the Development Capacity Building Project) Implementation
submission of agreed IFRs and accounting software (Tompro) to handle the
annual project financial projectâs transactions and generate the required
statements financial information\.
Agree on IFR template\.
External Auditing Moderate
Inadequate audit opinion Recruit qualified and independent external Implementation
auditors under Terms of reference (TORs)
satisfactory to the Bank\. The audit would be
performed according to internationally
recognized standards, the scope and the
objectives of the audit tailored to the
particularity of the project\.
Fraud & Corruption Substantial
Risk of fraud & corruption in Ex post controls: financial internal audit and Implementation
the contracts management external audit, and integrated fiduciary review
would be performed\.
Ex ante controls: Third party verification would Implementation
be undertaken for contract teachersâ payments,
and teaching and learning materials distribution
RRA and BTI will complement the third party
verification\.
The overall residual risk rating is Substantial\.
76
33\. Strengths\. The World Bank/IDA projectâs (Education Development Capacity
Development Project) existing Project Implementation Manual outlining procedures would serve
as a basis to draft and adopt a new Financial Management Manual for the proposed Project\.
34\. Key weaknesses and Action Plan to reinforce the control environment\. Table 3\.2
outlines the risks and mitigation measures\.
Table 3\.2 Weaknesses and Action Plan to reinforce the control environment
Significant Weaknesses Actions Responsible Completion
or risks
MINEDUB staff is not familiar with Recruitment of one qualified MINEDUB Within 3 months
World Bankâs financial management Financial Management Officer, an after effectiveness
procedures internal auditor, and one
Accountant for the Project
Secretariat
Weak internal control system Adoption of the Project MINEDUB Prior to
Implementation Manual outlining Effectiveness
procedures
Update of the computerized Within 3 months
information system/ accounting after effectiveness
software (Tompro) to manage the
Project
Recruitment of third party Within 3 months
verification agents after effectiveness
Recruitment of an external auditor Within 4 months
after effectiveness
Funds flow arrangements
35\. Two mechanisms of disbursement are proposed for this project:
36\. Funds will flow from the World Bank to National Treasury (for reimbursement) or a
Designated Account A for a ceiling amount of CFAF 1,600,000,000 and Designated Account B
for a ceiling amount of CFAF 580,000,000 opened in acceptable commercial bank (for advance
payment) on the basis of appropriate evidence or technical and financial reporting\. The WAs will
be supported by a Statement of Expenditure customized to the specifics of contract teachersâ
salaries payment or learning and teaching materials\.
37\. The proposed schedule of tranches of payment is outlined in detail in the disbursement
sub-section below\. The disbursement-linked indicators and the protocol for disbursements
capture the financial and technical verification aspects\.
Funds flow chart
38\. Funds flow would be based on an advance of four monthsâ salary for sub-component 1\.1,
and an advance payment for sub-component 1\.2 to enable Government to pay for contract
teachers (maîtres des parents converted to contract teacher status and new ENIEG graduates
recruited as contract teachers), authors, publishers, and printers\. The GPE funds would be
77
disbursed to the DA A and B for the payment of these advances once acceptable evidence is
provided to IDA\. For expenditures to be reimbursed and that met criteria and conditions set in
the DLIs, funds will flow to Government Treasury account\. The ceiling of DA A and DA B is
respectively XAF 1,6 billion and 580 million\.
39\. Figure 3\.3 shows the funds flow for contract teachers and for teaching and learning
materials\.
40\. For the payments to Publishers, the conditions should be fulfilled:
ï¼ Payment of an advance of 40% into a Designated account B a commercial bank
acceptable to World Bank\.
(i) MINEDUB provides an attestation that the 2013 Approved List of textbooks for primary
grades 1, 2 and 3 remains constant during each of the project implementation years\.
(ii) Publishers provide to MINEDUB a caution from an acceptable and financially sound
commercial bank\.
ï¼ The release on the second Tranche of 60% will be subordinated to an acceptable report
from verification third party that the books have reached the schools\. A Rapid Results
Strategy (RRS) through the proposed third-party verificationâcontracting a management
agency- will be used and penalties as follow will apply: (i) 5% less for books if not
distributed within 30 days of publishing and printing: (ii) 10% less for books if not
distributed within 60 days of publishing and printing; and (iii) no final payment if books
are not within 90 days of publishing and printing\.
41\. The scope of third party verification may be extended to ensure that the books which
reached the schools are maintained in the schools for certain time\. If not, the Government will
refund the full amount of indicators cost unit of missing textbooks\.
78
3\. Funds flow arrangements for other components
42\. A Designated Account C for a ceiling amount of CFAF 1,000,000,000 will be opened in
a commercial Bank acceptable to the Bank and managed by the joint signature of the Caisse
Autonome dâAmortissement or CAAâs General Manager and Deputy Manager\. The DA C will
receive an initial advance of XAF 1 billion and will be replenished regularly through monthly
Withdrawal Applications\. Payments will be made to service providers as needed and as per
disbursement letter\.
Disbursement arrangements
43\. For subcomponent 1\.1 and 1\.2, disbursements will be made in accordance with the
proposed disbursement schedule in Table 3\.3(a) and 3\.3(b), and will be based on customized
statement of expenditures prepared by MINEDUB\. The customized SOEs will identify actual
expenditures incurred in the program for contract teachersâ salaries and teaching and learning
materials\. Specially, disbursements will be conditioned on the compliance with DLI targets as
proposed in Annex 1\. The reimbursement method will be used to reimburse the government for
expenditure pre-financed as expected to be the case for salary payments and learning materials
for the last 8 months of the school calendar year\. Advances will also be made for the first four
months to enable the government to meet the first payment of school calendar year, hence a
designated account will be opened and managed by MINEDUB through the CAA in line with
standing procedures in Cameroon\. For all other components, all four disbursement methods
(reimbursement, advance, direct payment and special commitment) could be used by MINEDUB
to withdraw the grant proceeds\. Standard SOEs or records will be used to support withdrawal
applications\. For these components, a separate DA will be opened in a commercial bank
acceptable to the Association\. The borrower will continue to use electronic delivery of
applications to ensure expeditious processing of withdrawal applications\.
79
44\. Tables 3\.3(a) and 3\.3(b) specify the eligible expenditures categories that are to be
financed by the GPEF, the financial allocations against each category, and the percentage of
expenditures to be financed in each category\.
Table 3\.3(a) Allocation of GPEF Grant Proceeds
Category Amount of the Grant Percentage of Expenditures
Allocated to be Financed
(expressed in USD) ([inclusive] of Taxes)
(1) Salaries under Part 1 (a) of the
Project 29,376,000 100%
(2) Goods for Part 1(b)(i) of the
100%
Project 9,219,804
(3) Goods, non-consulting services,
consultantsâ services, Training
and Operating Costs under Parts,
1(b)(ii), 1(c), 1(d), 1(e), 1(f) and 13,704,196 100%
2 of the Project
(4) Unallocated 1,000,000
TOTAL AMOUNT 53,300,000
80
Table 3\.3 (b) Disbursement-Linked Indicators
Amount of Amount of Amount of
Disbursement Linked Indicators Disbursement Financing Financing Financing
Actions to be completed Category Allocated in Allocated in Allocated in
2014/15 2015/16 2016/17
(in USD) (in USD) (in USD)
1\. Letter from MINEDUB ï Government budget includes
confirming the budget salary commitments for 4
commitments for (i) ongoing months (September-
CTP; and (ii) Project CTs and December) and for 8 months
(iii) list from MINEDUB/ DRH (January-August)
with the names and unique ï MINEDUB creates
contract reference numbers for MINFOPRA list A, and
the teachers who have been MINFOPRA list B (1) Salaries under 3,329,280 3,231,360 3,231,360
newly converted /Recruited ï MINEDUB has applied the Part 1(a) of the Project
agreed objective targeting (33%) (33%) (33%)
criteria for selecting maîtres
des parents to be converted to
contract teachers and for
recruiting new ENIEG
graduates as contract teachers
where necessary
2\. Finalized technical verification ï Third party technical
report of the Project CTs verification for technical
satisfactory to the Bank by compliance
August and Finalized financial ï Financial audit of the Project (1) Salaries under Part 6,658,560 6,462,720 6,462,720
audit report of the Project CTs CT 1(a)
including SIGIPES & of the Project (67%) (67%) (67%)
ANTILOPE reports satisfactory
to the Bank, by August
3\. Government provides a written ï Government budget to include
guarantee/ 100% financing for primary
undertaking that the (i) 2013 grades 1, 2 and 3
Approved Booklist for primary
grades 1, 2 & 3 will remain Note: The Project will finance
constant during each of the according to the following criteria:
Project implementation years; (a) for primary grade 1 textbooks (2) Goods for Part 1,143,090 1,133,388 1,111,443
and (ii) that the same the unit prices will not exceed 1(b)(i) of the Project
textbooks/titles selected during US$3\.00; (b) for primary grade 2 (40%) (40%) (40%)
the first year of the project will textbooks the unit price will not
remain constant during the exceed US$3\.50; (c) for primary
project implementation period grade 3 textbooks the unit price will
not exceed US$4\.20; and (d)
reading books unit price will not
exceed US$2\.25\. Should the unit
cost exceed the Project specified
ceiling price, Government would
finance the difference\. If, however,
the unit cost is below the Project
specified ceiling price, Government
would ensure that more textbooks
are produced and supplied to public
primary schools\.
4\. Finalized technical verification ï Third party technical All teaching and learning materials have reached
report of publishing, printing, verification to review technical public primary schools in time for the academic
and distribution of teaching and compliance year\.
learning materials satisfactory [100% of 60%]
to the Bank (2) Goods for Part
1(b)(i) of the Project 1,714,635 1,700,082 1,667,165
5\. Finalized financial audit report
of publishing, printing, and ï Financial audit of the All teaching and learning materials have reached
distribution of teaching and institutional capacity of public primary schools 30 days after the start of
learning materials, statistics, MINEDUB the academic year\. [95% of 60%]
81
inventory/data satisfactory to (2) Goods for Part
the Bank 1(b)(i) of the Project 1,571,749 1,558,409 1,528,234
All teaching and learning materials have reached
public primary schools 60 days after the start of
the academic year\. [90% of 60%]
(2) Goods for Part
1(b)(i) of the Project 1,428,863 1,416,735 1,389,304
All teaching and learning materials have reached
primary schools 90 days after the start of the
academic year\.
0\.00 0\.00 0\.00
Financial conditions of Effectiveness
45\. The following are the financial conditions of effectiveness:
(a) The Grant Agreement is executed and delivered on behalf of the Recipient, and it is
duly authorized or ratified by all necessary governmental action\.
(b) The Recipient has established the Project Steering Committee in accordance with the
provisions of Section I\.A\.1(a) of Schedule 2 to the Grant Agreement\.
(c) The Recipient has established the Project Secretariat in accordance with the provisions
of Section I\.A\.2(a) of Schedule 2 to the Grant Agreement\.
(d) The Recipient has nominated a project coordinator to the Project Secretariat in
accordance with the provisions of Section I\.A\.2(b) of Schedule 2 to the Grant
Agreement\.
(e) The Recipient has adopted the Project Implementation Manual in accordance with the
provisions of Section I\.C\.2 of Schedule 2 to the Grant Agreement\.
(f) The Recipient has set up, within the Project Secretariat, a comprehensive record
keeping system satisfactory to the World Bank in accordance with Section III\.E of
Schedule 2 to the Grant Agreement\.
(g) The Recipient has included the first four months of the First Cadreâs salary allocation in
its FY2014 budget in accordance with Section V\.A\.2(a) of Schedule 2 to the Grant
Agreement\.
Dated Covenants
46\. There are five dated covenants:
ï§ Recruitment of one qualified Procurement Specialist for the MINEDUB Project
Secretariat within one (1) month after effectiveness\.
82
ï§ Recruitment of one qualified Financial Management Officer and One Accountant
within three (3) months after effectiveness, and one internal auditor for the
MINEDUB Project Secretariat within one (1) months after effectiveness\.
ï§ Update of the computerized information system/accounting software (Tompro) to
manage the Project within 3 months after effectiveness\.
ï§ Recruitment of an external auditor within 4 months after effectiveness\.
ï§ Not later than August 31 in each calendar year (or one month after the Effective Date
for the first year of Project implementation), the Recipient shall prepare and furnish to
the World Bank a draft annual work plan and budget for the Project (including
Training and Operating Costs) for the subsequent calendar year of Project
implementation, of such scope and detail as the World Bank shall have reasonably
requested\.
Technical covenant
47\. There is one technical covenant:
ï§ The recruitment of third party verification agents\.
FM Standard Covenants
48\. There are five FM covenants:
ï§ Annual detailed work program, budget, procurement plan, and disbursement forecasts
would be prepared by June 30 of each Project year\.
ï§ Quarterly unaudited interim financial reports (IFRs) would be generated from the
computerized financial management system in accordance with the format agreed
with the World Bank as Supervising Entity and submitted to the Supervising Entity
within 45 days of the end of each calendar quarter\. The IFRs will include: (i) sources
and uses of funds by the classifications of project expenditures; (ii) a comparison of
budgeted and actual project expenditures (commitment and disbursement) to date and
for the quarter; (iii) a statement of the use of funds by component or activity; (iv)
designated account activity; and (v) a physical progress report on the implementation
of the Project\.
ï§ Periodic internal audit by a qualified internal auditor on the basis of predetermined
terms of reference, and the report would be made available to the SE\.
ï§ Annual financial audit by a reputable and independent auditing firm based on terms
of reference that is satisfactory to the World Bank as Supervising Entity\.
ï§ Third party technical verifications and reports on an annual basis to inform financial
disbursements for the Project\.
83
49\. Staffing\. One qualified financial management officer and one accountant will be
recruited competitively to ensure the financial management of the project\. They will technically
report to the Director of Financial Affairs (DAF) of MINEDUB\. Their role and responsibility
will include: (i) preparation of Withdrawal applications; (ii) preparation of periodic financial
reports and annual financial statements; (iii) bookkeeping; and (iv) project assets safeguard\. Staff
from the DAF of MINEDUB will be involved and will receive training on World Bank financial
management procedures at the project launching and periodically\.
50\. Budgeting\. The overall responsibility for preparing a consolidated annual work plan and
budget will lie with MINEDUB with support from the financial management officer under the
leadership of the MINEDUBâs DAF\. This will be done in line with the program based budget
currently in force in Cameroun\. The different steps of budget management (preparation, revision,
adoption, and execution) will be detailed in the Project Implementation Manual\. The annual
work plan and budget will be prepared, submitted to the Bank for approval no later than the end
of January (or one month after the Effective date for the first year of the project), and then
approved by the Steering Committee\. The annual work program will be in line with the
procurement plan to prevent any delay due to the procurement process\. A budget execution
report will be included in a quarterly interim financial report to enable the projectâs
implementation to be monitored\.
51\. Accounting Arrangements and System\. The financial management officer will have the
overall responsibility for maintaining the accounts of the project activities and ensuring that the
annual financial statements are produced in a timely manner and in accordance with the
accounting standards that are in effect in Cameroon\.15 PASEâs computerized accounting system
will be upgraded to record the projectâs transactions and to produce the required periodic reports\.
52\. Internal Control\. The administrative, financial, and accounting procedures will be
defined in the administrative, accounting, and financial procedures manual as part of projectâs
implementation manual\. The manual will include a clear description of the initiation and
approval processes with respect to segregation of duties\. A clear mechanism for distributing text
books will be described in the manual\. The financial management officer will be responsible for
maintaining all necessary controls to ensure: (i) that the project funds are used only for the
intended purposes in an efficient and economical way; (ii) the preparation of accurate, reliable,
and timely periodic financial reports; and (iii) that the projectâs assets are adequately
safeguarded\. The World Bank LOA and financial management (FM) units will provide adequate
training in disbursement and FM procedures to the project FM team\. All of these measures will
enhance the internal control system\. Ongoing PFM reforms master plan identified some actions
related internal control and the implementation of the latter with donors supports will enhance
the internal control system of projectâs components implemented via country system\.
53\. Internal Audit\. CONSUPE will be involved to perform a periodic control and the report
will be made available to IDA\. An internal auditor would also be hired to perform a risk-based
15
The accounting principles set out by LâOrganisation pour lâHarmonisation en Afrique du Droit des Affairesâ
OHADA\.
84
audit\. The terms of reference for this internal auditor would be submitted to the World Bank for
approval\. The internal auditor would submit periodic reports on findings and recommendations
to strengthen the internal control system\.
54\. Financial Reporting and Monitoring\. As countryâs financial reports are not made
available timely and are not compliant with IPSAS, tailored Quarterly financial reports will be
agreed during negotiation\. The quarterly interim financial reports (IFRs) to be generated from the
computerized financial management system will be presented in accordance with the format
agreed with IDA and submitted to IDA within 45 days of the end of each calendar quarter\. The
IFRs will include: (i) sources and uses of funds by the classifications of project expenditures; (ii)
a comparison of budgeted and actual project expenditures (commitment and disbursement) to
date and for the quarter; (iii) a statement of the use of funds by component or activity; (iv)
designated account activity; and (v) a physical progress report on the implementation of the
project\.
55\. External Auditing\. The annual financial statements and quarterly IFRs prepared by the
Project Secretariat as well as the internal control system will be subject to an annual audit by a
reputable and independent auditing firm based on terms of reference that are satisfactory to IDA\.
The scope of the audit will be tailored to the projectâs specific risks in accordance with World
Bank requirements and will be agreed upon with the government\. In particular, the independent
auditor will audit the use of all funds flowing from the designated account to the ultimate
beneficiaries\. The project will comply with the World Bankâs access to information and
disclosure policies by making of all disclosable audit reports publicly available promptly after
receiving them\. The projectâs external auditor will be hired within six months of effectiven ess\. A
single audit opinion, in compliance with International Standards on Auditing, will be issued and
will cover all project receipts, payments, and accounts\. The audited financial statements, along
with the auditorâs report and management letter (incorporating managementâs comments)
covering any identified internal control and accounting system weaknesses, will be submitted to
IDA within six months of the end of each financial year\. In addition, a separate operational audit
will be conducted for funds disbursed under the cash transfers program\.
56\. Technical audit or third party verification\. An audit firm will be recruited to ensure third
party verification for component related to teaching and learning materials, and salaries
reimbursement for contract teachers\. The terms of reference of these verifications will be
detailed in the project implementation manual\. The tranche of related to salaries payment and the
second tranche of textbooks delivery by publishers will be made after submission to IDA of an
acceptable report by the third party technical auditor\.
Table 3\.1\. Financial Management Action Plan
Responsible
Action to be undertaken Time-frame body Comments
1\. Agree on interim financial report (IFR) format Negotiations MINEDUB Completed
2\. Prepare the appropriate terms of references for Negotiations MINEDUB Completed
the recruitment of an external auditor
3\. Adopt an accounting, financial, and
3\. Effectiveness MINEDUB
4\. administrative manual of procedures
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Responsible
Action to be undertaken Time-frame body Comments
4\. Recruit one FMS, one accountant Within three months MINEDUB
after effectiveness
5\. Recruit one internal auditor Within one month MINEDUB
after effectiveness
6\. Recruit third party verification reputable firm Following project MINEDUB
effectiveness
7\. Update computerized information system Within three months MINEDUB
(Tompro) for the financial management of the after effectiveness
Recruit a activities
8\. projectâs reputable external auditor Within four months MINEDUB
after effectiveness
57\. Conclusions of the FM Assessment: The overall residual FM risk is considered
Substantial\. The proposed financial management arrangements for this project are considered
adequate and met the Bankâs minimum fiduciary requirements under OP/BP10\.00\.
58\. Implementation support Plan: FM implementation support intensity and frequency will
be in line with risk-based approach, and will involve a collaborative approach with the entire
Task Team\. A first implementation support mission will be performed two months after the
project effectiveness\. Afterwards, the missions will be scheduled by using the risk based
approach model and will include the following diligences: (i) monitoring of the financial
management arrangements during the supervision process at intervals determined by the risk
rating assigned to the overall FM Assessment at entry and subsequently during Implementation
(ISR); (ii) integrated fiduciary review on key contracts, (iii) review the IFRs; (iv) review the
audit reports and management letters from the external auditors and follow-up on material
accountability issues by engaging with the task team leader, Client, and/or Auditors; the quality
of the audit (internal and external) is to be monitored closely to ensure that it covers all relevant
aspects and provide enough confidence on the appropriate use of funds by recipients; and, (v)
others assistance to build or maintain appropriate financial management capacity and efficient
internal control system\.
59\. CovenantsâMINEDUB ensures that the 2013 Approved List of textbooks for primary
grades 1, 2 and 3 remains constant during each of the Project implementation years\.
Stipulations: - World Bank payment for publishing, production, and distribution would not
exceed: (i) US$3\.00 per textbook for Grade 1 (SIL/CL1/CPS); (ii) US$3\.50 for
Grade 2 (CP/CL2); and (iii) US$4\.20 for Grade 3 (CE1/CL3); US$2\.25 for
readers at grades Grade 1, 2 and 3; and stationery (a package of exercise books
2, pencils 2, sharpeners 1, ruler 1) for each student\.
- Government guarantees that the 2013 Approved List would be held constant\.
Publishers Union would be a signatory to the guarantee\.
Tranche 1: Payment of advance (40%)
World Bank ï Government Treasury on the basis of
- MINEDUB making advance payments;
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- Satisfactory signed contracts between MINEDUB and publishers to publish,
produce, and distribute teaching and learning materials within the stipulated
ceiling prices for the books; and
- Caution money on the basis of a commercial bank letter from publisher to
MINEDUB\.
Tranche 2: Final payment (60%)
World Bank ï Government Treasury on the basis of verifying that:
- The teaching and learning materials have reached the schools\.
[Use of a Rapid Results Strategy (RRS) through third-party verification i\.e\.,
contracting a management agency]
Proposed Penalties:
5% less for books if not distributed within 30 days of publishing and printing\.
10% less for books if not distributed within 60 days of publishing and
printing\.
No final payment if books are not within 90 days of publishing and printing\.
Reporting: An electronic inventory system would be used to track the books that are produced,
printed, and distributed\. Audits of publishersâ books of accounts, technical audits
through third party verification by a management agency and the local communities,
and school report cards would be used to track and triangulate data on inventory\.
Technical audits and supervision missions
60\. The Bank will exercise quality control\. Control mechanisms, including reporting would
be prepared on bases of the existence and performance of the teachers\. This would be undertaken
during supervision missions and through technical audits\. The selection procedures, job
description and terms of employment would be deemed acceptable by the Bank\. For the contract
teachers hired in 2010 and 2011, compliance of the rules was attested by the 2012 Technical
Audit\. For the PCTs to be hired in 2014, 2015, and 2016, compliance verification would be
carried out between April and June of each year, through the regular bi-annual supervision of the
project, on the basis of the results of the Technical Audits and Specific Audit\.
Procurement
Guidelines
61\. Procurement for the Project will be carried out in accordance with the World Bank
âGuidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans
and IDA Credits & Grants by World Bank Borrowersâ dated January, 2011; and âGuidelines:
Selection and Employment of Consultants under IBRD Loans and IDA Credit & Grants by
World Bank Borrowersâ, dated January, 2011, and the provisions stipulated in the Legal
Agreement\. Procurement (goods and non-consulting services) or Consultant Selection methods,
prequalification, estimated costs, prior review requirements, and time-frame will be agreed in the
Procurement Plan\. The Procurement Plan will be updated at least annually or as required to
87
reflect the actual project implementation\. The Bankâs Standard Bidding Documents (SBD) or
Cameroonâs National Standard Bidding Documents satisfactory to the Association will be used\.
To the extent practicable the Bankâs Standard Bidding Documents for goods and Standard
Requests for Proposals, as well as all standard evaluation forms, will be used throughout project
implementation\.
62\. Advertising\. A comprehensive General Procurement Notice (GPN) will be prepared by
the Borrower and published in the United Nations Development Business online (UNDB online)
following Board Approval, to announce major consulting assignments and any international
competitive bidding (ICB)\. The GPN shall include all ICB for goods and non-consulting services
contracts and all large consulting contracts (i\.e\., those estimated to cost US$300,000 or more)\. In
addition, a specific procurement notice is required for all works and goods to be procured under
ICB in UNDB online\. Requests for Expressions of Interest (EOI) for consulting services
expected to cost more than US$300,000 shall be advertised in UNDB online\. An EOI is required
in the national gazette, a national newspaper, or an electronic portal of free access for all
consulting firm services regardless of the contract amount\. In the case of NCB, a specific
procurement notice will be published in the national gazette, a national newspaper, or an
electronic portal of free access\. Contract awards will also be published in UNDB, in accordance
with the Bankâs Procurement Guidelines (para\. 2\.60) and Consultants Guidelines (para\. 2\.28)\.
63\. Requirements for National Competitive Bidding\. Goods and non-consulting services
contracts will use National Competitive Bidding (NCB) procurement methods in accordance
with national procedures using Standard Bidding Document acceptable to IDA and subject to the
additional requirements:
ï In accordance with paragraph 1\.16 (e) of the Procurement Guidelines, each bidding
document and contract financed out of the proceeds of the financing shall provide that (i) the
bidders, suppliers, contractors and their subcontractors, agents, personnel, consultants, service
providers, or suppliers shall permit the World Bank as Supervising Entity, at its request, to
inspect all accounts, records and other documents relating to the submission of bids and contract
performance, and to have said accounts and records audited by auditors appointed by the World
Bank/Supervising Entity; and (ii) the deliberate and material violation of such provision may
amount to an obstructive practice as defined in paragraph 1\.16 (a)(v) of the Procurement
Guidelines:
ï Invitations to bid shall be advertised in national newspapers with wide circulation\.
ï The bid evaluation, qualification of bidders and contract award criteria shall be clearly
indicated in the bidding documents\.
ï Bidders shall be given adequate response time (at least four weeks) to submit bids from the
date of the invitation to bid or the date of availability of bidding documents, whichever is
later\.
ï Eligible bidders, including foreign bidders, shall be allowed to participate\.
ï No domestic preference shall be given to domestic contractors and to domestically
manufactured goods; and association with national firm shall not be a condition for
participation in a bidding process\.
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ï Bids are awarded to the substantially responsive and the lowest evaluated bidder proven this
bidder is qualified\. No scoring system shall be allowed for the evaluation of bids, and no
âblanketâ limitation to the number of lots which can be awarded to a bidder shall apply\.
ï Qualification criteria shall only concern the bidderâs capability and resources to perform the
contract taking into account objective and measurable factors\.
ï Fees charged for the bidding documents shall be reasonable and reflect only the cost of their
printing and delivery to prospective bidders, and shall not be so high as to discourage
qualified bidders\.
64\. Procurement Environment\. Recent changes in the Cameroon legislation have modified
the institutional architecture of the bodies responsible for public procurement in the country\. The
new organizational structure was introduced through three decrees issued on 8 March, 2012, and
recently on August 5, 2013\. No special exceptions, permits or licenses need to be specified in the
Financing Agreement since the procurement code, approved by the President of the Republic in
September, 2004 allows International Development Association (IDA) procedures to take
precedence over any contrary provisions in local regulations\.
65\. Procurement arrangements for Bank-financed projects in Cameroon have been under
discussion for some time as the national system has been revised to shift responsibility for the
bulk of procurement and contract management from decentralized agencies to a newly created
Ministry of Public Contracts (MINMAP)\. IDA fielded a procurement mission between October
31 and November 10, 2012 to assess the potential effects these changes and notably the possible
effect on Bank-financed projects in Cameroon\. The mission concluded that the new centralized
system could lead to a number of positive outcomes\. However, concerns were raised with respect
to technical and legal responsibilities as well as regulatory issues\. This mission was followed by
another one conducted jointly with other Development Partners based in Cameroon during the
period of January 28 to February 3, 2013, in order to (i) discuss the recommendations of the
initial mission; (ii) facilitate the transition from the old to the new procurement system; and (iii)
ensure the smooth implementation of the Bank financed projects\. MINMAP has confirmed in
writing to the Bank that it accepts the proposed short term measures of the donors concerning
existing projects as identified in the documents of negotiations and the legal agreements, which
consist of the creation of special tender boards with full procurement responsibility and the
MINEDUB Project Secretariat in charge of the publication of tenders, contracts award and
signature of all contracts\. For these existing projects, the national prior review will be now
conducted by MINMAP as the previous body in charge of this review was dissolved\. For the
new projects, as for this current one, the Bank is willing to accept the national systems as
proposed by MINMAP, however, we expect MINMAP to take all the steps needed to ensure the
smooth implementation such as:
ï A dedicated commission in MINMAP to handle procurement under Bank projects with
specialists that are knowledgeable of Bank procurement policy\.
ï Close monitoring by MINMAP of the project implementation and monthly reporting on the
advancement in procurement and contract implementation\.
ï Periodical meetings with the World Bank Country Office in Yaoundé to discuss procurement
related portfolio performance issues\.
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66\. Specific procurement arrangements for this project\. In light of the above missions, it
is recommended that the Government create a special tender board (Commission Spéciale de
Passation des Marchés Publics or CSPM) within the relevant implementing entity\. The order
âarrêtéâ of the creation will be acceptable to IDA and reflect the agreement between the
government and the Bank on the constitution, composition, competencies of the CSPM under
this project\. The âarrêtéâ will be issued by the government prior to effectiveness\.
67\. Procurement of Goods and Non Consulting Services\. Under this project no major
procurement of Goods or Non-Consulting Services through ICB is foreseen\. Procurement of
Goods under this project will include: school desks and chairs for students, tables and chairs for
teachers, storage for teaching and learning materials, materials for undertaking student learning
assessments, materials for budget transparency initiative, and materials for Rapid Results
Strategies\. Taking into account the level of value added, and manufacturing/production capacity
in the country, procurement of goods will be bulked where feasible (of similar nature and need at
same time period) into bid packages of at least US$1 million equivalent, so that they can be
procured through suitable methods to secure competitive prices\. Goods estimated to cost US$1
million equivalent and above per contract will be procured through ICB, which will use the
Bankâs Standard Bidding Documents\. For others goods contracts costing less than US$1 million
equivalent, NCB procurement methods will be used in accordance with national procedures
using Standard Bidding Document acceptable to IDA and subject to the additional requirements
set forth or referred to above in paragraph on Requirements for National Competitive Bidding:
ï Procurement of goods and non-consulting services, including those of readily available off-
the-shelf maintenance of the office electronic equipment and other services such as printing, and
editing, which cannot be grouped into bid packages of US$100,000 or more, may be procured
through prudent shopping in conformity with Clause 3\.5 of the procurement guidelines\.
ï Based on country-specific needs and circumstances, shopping thresholds for the purchase of
vehicles and fuel may be increased up to US$500,000, considering the major cars dealers and oil
providers are consulted\.
ï Teaching and learning materials will involve the DLI approach\. They will be bought and
distributed under the responsibility of the Inspectorate General of Education of MINEDUB at the
decentralized levels\. They will not therefore be subject to the use of World Bank procurement
procedures\. However, due diligence shall be conducted on the unit costs of the output to be
reimbursed by the Bank, as these costs shall be credible and reliable, and not unrealistically high\.
The established thresholds for teaching and learning materials are: (i) a maximum of US$3\.0 per
textbook title for publishing and distribution for grade 1; (ii) US$3\.5 per textbook title for
publishing and distribution for grade 2; (iii) US$4\.2 per textbook title for publishing and
distribution for grade 3; and (iv) US$2\.25 per reader for publishing and distribution\.
68\. Selection of Consultants\. Consulting services will used be for the following activities:
(i) technical audit; (ii) preparation of a national reading plan; (iii) preliminary feasibility study;
(iv) preliminary assessment; and (v) third party verification\. These consulting services will be
procured with the most appropriate method among the following which are allowed by Bank
guidelines and included in the approved procurement plan: Quality-and Cost-Based Selection
90
(QCBS), Quality-Based Selection (QBS), Selection under a Fixed Budget (SFB), Least-Cost
Selection (LCS):
ï Selection based on Consultantsâ Qualifications (CQS) will be used for assignments that shall
not exceed US$300,000\. Single Source selection shall also be used in accordance with the
provisions of paragraphs 3\.9 to 3\.13 of the Consultant Guidelines, with IDAâs prior agreement\.
All terms of reference will be subject to IDA Prior Review\.
ï Assignments of Engineering Designs & Contract Supervision in Excess of US$300,000, and
all other technical Assistance assignments above US$100,000, must be procured on the basis of
international short-lists and in accordance with the provisions of the paragraph 2\.6 of the
consultantsâ guidelines\.
ï Consultants for services meeting the requirements of Section V of the consultant guidelines
will be selected under the provisions for the Selection of Individual Consultants, through
comparison of qualifications among candidates expressing interest in the assignment or
approached directly\.
69\. The contract teacher Program under sub-component 1\.1 will be disbursed against DLIs
that have been met according to agreed verification of eligible expenditure criteria\. No World
Bank Procurement activity is associated with this sub-component 1\.1
70\. Operational Costs financed by the project include, inter alia, utilities and offices supplies,
vehicle operation, maintenance and insurance, building and equipment maintenance costs\. They
will be procured using the projectâs financial and administrative procedures included i n the
operation manual and based on the annual work plan and budget\. For services (car maintenance,
computers maintenance, etc\.) to be financed through operational costs, the project will proceed
by service contracting for a defined period\.
71\. Trainings, Workshops, Seminars, Conferences and Study Tours will be carried out on the
basis of approved annual work plan and budget that will identify the general framework of
training and similar activities for the year, including the nature of training, study tours,
workshops, the number of participants, and cost estimates\.
Institutional arrangements for procurement and capacity assessment including risk
mitigation measures
72\. An assessment of the Project implementation arrangements, in particular the Project
Secretariat, was carried out\. The capacity assessment found that: (i) the MINEDUB and part of
CEQUIL Secretariat has a relatively limited experience in the implementation of Bank-financed
projects through the recently closed education project; (ii) at present there is no qualified
procurement specialist within the project secretariat; (iii) the operational manual including a
section on procurement will need to be prepared and agreed during negotiations; (iv) the project
secretariat does not have a comprehensive record keeping system; and (v) while the motivation
of the reform related to the new institutional arrangements of December, 2011 with the
responsibilities of MINMAP is understood, it has been identified some aspects of the new
institutional arrangements which raise some concerns with respect to technical and legal
responsibility and related regulatory issues\.
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73\. Risks identified and proposed mitigation measures\. The overall procurement risk for
the project is rated as high\. This is due to, among other factors, the country environment risk of
corruption in procurement, especially in the public contract, the relatively limited experience in
the implementation of Bank-financed projects for the Project Secretariat and MINMAP, and the
conflict interest of MINMAP on the management of complaints, whose contracts are being
directly handled by MINMAP\. A mitigation action plan has been agreed which, if properly
implemented and monitored, will bring this risk to Substantial\. The action plan in Table 3\.2
below needs to be implemented and appropriately monitored in order to bring the risk to
substantial\.
Table 3\.2: Procurement Action Plan
Action to be undertaken Timeframe Responsible body
Elaboration and submission a procurement plan to the Draft was submitted at Project Secretariat
World Bank appraisal and the final
version was discussed
during negotiations
Finalize and submit to IDA for agreement, a Draft manual satisfactory to Project Secretariat
satisfactorily version of the operations manual the SE to be adopted upon
comprising a section on procurement for use by the project effectiveness
project
Recruit a Procurement Specialist with qualification and One month after Project Secretariat
expertise satisfactory to the Bank within the Project effectiveness
Secretariat
Recommend the creation of a special tender board Before the beginning of any Project Secretariat /
(CSPM) within the implementing entity and attached procurement activity MINMAP
to the project to supervise project procurement, which
is acceptable to the Bank\.
Mandatory submission to the Bank of the feedbacks of As needed during project Project Secretariat /
the Regulatory Body (ARMP) on the complaints of all life MINMAP
contracts directly handled by MINMAP, and Bank No-
objection on complaint decisions of the said contracts\.
MINMAP shall comply with Procurement Services As needed during project Project Secretariat /
Standard time of the procurement code life MINMAP
Strengthen the capacity of the key staff of the Project Two months after the Project Secretariat through
Secretariat on the procurement and consultant project effectiveness and as a consultant or training
guidelines dated January, 2011 needed during project life center, with the
participation of the World
Bank procurement staff
Development of a comprehensive record keeping Shortly after Project Project Secretariat /
system for the Project Secretariat and MINMAP effectiveness and as needed MINMAP By project effectivenESS and as nee
MINMAP during project life
74\. Institutional responsibility for procurement and implementation arrangements\. The
MINEDUB is the key implementing entity and will be responsible for compliance with relevant
procurement procedures\. The implementing entity is responsible for ensuring that the necessary
national clearances and approvals have been received before the no-objection requests are
transmitted to the Association\. Procurement contracts costing FCFA 5 million (US$10,000
92
equivalent) or more, depending on their thresholds will be conducted in compliance with the
procurement institutional arrangement described in the procurement code, namely either by
MINMAP through their central tender boards or with the technical support of a special tender
board to be set up, as recommended, by an order (âarrêtéâ) of the Minister in charge of public
contracts at the level of the implementing entity\. For contract amounts of less than FCFA 5
million (US$10,000 equivalent) the implementing entity will rely on an internal procurement
committee\. Details of the institutional arrangement and the responsibility of this internal
procurement committee will be provided in the operations manual\.
75\. Procurement Plan\. A first draft Simplified Procurement Plan for project implementation
has been elaborated, providing the basis for the procurement methods, and will be available for
discussions\. This plan, covering the first 18 months of project implementation, has been
reviewed at appraisal\. The final version of this procurement plan has been discussed and agreed
upon by the Recipient and the project team at negotiations on December 19, 2013\. It will be
available in the projectâs database and a summary will be disclosed on the Bankâs external
website once the project is approved by the GPE Board and cleared by Africa Region Vice
President\. The Procurement Plan will be updated in agreement with the Project Team annually or
as required to reflect the actual project implementation needs and improvement in institutional
capacity\.
76\. Publication of Results and Debriefing\. Publication of results of the bidding process is
required for all ICBs, Limited International Biddings (LIBs), and Direct Contracting\. Publication
should take place as soon as the no-objection is received, except for Direct Contracting which
may be done quarterly and in a simplified format\. Publication of results for NCB and Shopping
should follow the requirements of the procurement code of Cameroon\. The disclosure of results
is also required for selection of consultants\. All consultants competing for the assignment should
be informed of the result of the technical evaluation (number of points that each firm received)
before the opening of the financial proposals, and at the end of the selection process the results
should be published\. The publication of results in selection of consultants applies to all methods\.
For CQS and SSS, however, the publication may be done quarterly and in a simplified format\.
The publication of results may be done through Client Connection\. Losing bidders/consultants
shall be debriefed on the reasons why they were not awarded the contract if they request
explanation\.
77\. Fraud and Corruption\. The procuring entity as well as Bidders /Suppliers/Contractors
/Services Providers shall observe the highest standard of ethics during the procurement and
execution of contracts financed under the program in accordance with paragraphs 1\.14 and 1\.15
of the Procurement Guidelines and paragraphs 1\.22 and 1\.23 of the Consultants Guidelines\. The
Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD
Loans and IDA Credits and Grantsâ, dated October 15, 2006, and revised in January, 2011, will
apply to this project\.
78\. Frequency of Procurement Supervision\. The capacity assessment of the implementing
agency has recommended supervision missions to visit the field at least two times a year and a
post review of procurement actions will be conducted on an annual basis\.
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Summarized Procurement Plan
79\. The main goods and non-consulting services to be procured in the project are listed in
Table 2 below\.
Table 2: List of Goods and Non-Consulting Services Contract Packages to be Procured
Ref\. Description Estimated Procurement Domestic Review by IDA Comments/
No\. Cost Method Preference (Prior/Post) Completion date
(US$ million) (yes/no)
Metal containers with
Teaching and locks and keys for all
1\. learning materials 2\.4 million ICB No Prior public primary
Storage containers schools; August 2014,
August 2015, August
2016\.
Desks and chairs for
students; desks and
chairs for school
2\. School desks and 0\.15 million NCB No Post administration and
chairs teachers; August 2014,
August 2015, August
2016\.
Baseline (2014/15)
Materials for student Grade 1 year end
evaluation tests, stop (2014/15);
3\. watches for teachers, 0\.17 million NCB No Post Grade 2 year end
results compilation (2015/16); &
and dissemination Grade 3 year end
(2016/17); &
Final impact (2017/18)
Materials for Budget
Transparency 2014/15
4\. Initiative (BTI) and 0\.2 million NCB No Post 2015/16
Rapid Results 2016/17 &
Strategies (RRS) 2017/18
80\. Prior review thresholds for Goods and Non-consultant services\. Contracts estimated to
cost above US$500,000 for goods per contract, the first NCB contracts for goods, eventually
others as identified in the procurement plan and all Direct Contracting will be subject to prior
review by the World Bank\.
81\. The main consulting assignments of the project are listed in the table 3 below\.
94
Table 3: List of Consulting Assignments with Selection Methods and Time Schedule
Ref\. No\. Description of Assignment Estimated Selection Review by IDA Comments/
Cost Method (Prior / Post) Completion date
(US$ million)
Preparation of national
reading plan; preparation
and review of procedures
Teaching and learning manual; developing
1\. materials provision 0\.2 million QCBS Prior computerized inventory;
implementing the sub-
component
(2014/15; 2015/16;
2016/17; 2017/18)
2\. Building capacity of teachers Needs assessment, national
and inspectors on the use of 0\.94 million QCBS Prior plan for teacher pre-service
the teaching and learning and in-service training,
materials
Preparation of advocacy
(needs assessment,
3\. Girlsâ education advocacy 1\.0 million QCBS Prior awareness raising,
multimedia messaging);
implementation
Test preparation, test
4\. National primary education 1\.34 million QCBS Prior grading, compiling test
assessments results, dissemination
Terms of reference
preparation for school
5\. Education management 0\.88 million QCBS Prior mapping, tableau de bord,
information system gender disaggregated data
collection, cleaning and
compiling,
Terms of reference
6\. Monitoring and evaluation 0\.27 million QCBS Prior preparation for M&E;
implementation
Budget transparency initiative Terms of reference
7\. (BTI) 0\.24 million QCBS Prior preparation for BTI;
implementation
Terms of reference
8\. Rapid results strategy (RRS) 0\.32 million QCBS Prior preparation for RRS;
implementation
Terms of reference
preparation for technical
9\. Special audits of contract 0\.90 million QCBS Prior and financial audits of
teachers program contract teachers program;
Implementation
Terms of reference
preparation for technical
and financial audits of
10\. Special audits of teaching and 0\.53 million QCBS Prior teaching and learning
learning materials materials;
Implementation
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82\. Prior review thresholds for consultant services\. Consultant services estimated to cost
above US$200,000 for firms and US$100,000 for individuals per contract, and Single Source
selection of consultants (firms and individuals) will be subject to prior review by the World
Bank\. Similarly, all audit contracts will be subject to prior review, as will be the first contracts to
be awarded in accordance with each selection method of consulting firms and individual
consultants, regardless of contract amount\. Short Lists of Consultants for Assignments of
Engineering Designs & Contract Supervisions estimated to cost less than US$300,000 and all
other Consultancy Assignments whose estimated cost donât exceed US$100,000 per contract
may be composed entirely of national consultants in accordance with the provisions of paragraph
2\.7 of the Consultant Guidelines\.
83\. Technical audits and supervision mission\. The Bank will exercise quality control on
the use of the recruited teachers and the use of teaching and learning materials in classrooms\.
Specifically, the control mechanisms, including reporting will be done on the existence and
performance of the teachers, and on the availability and use of teaching and learning materials in
the classrooms\. This will be done during supervision missions and through third-party technical
audits\. For the teachersâ recruitments, compliance will be verified during supervision of the
project, based on the results of the technical audit as well as that of the specific audit\.
96
Annex 4: Operational Risk Assessment Framework (ORAF)
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
Stage: Approval
\.
Project Stakeholder Risks
Stakeholder Risk Rating High
Risk Description: Risk Management:
Education administration is still highly centralized in Efforts will be made to ensure that upstream milestones for decisions regarding
Cameroon despite ongoing efforts to decentralize and teacher recruitment and textbooks purchase and distribution will be undertaken\.
deconcentrate decision-making and actions\. Decentralization
During implementation progressive adjustments will need to be made in order to
is relatively a new phenomenon\. It is being undertaken
ensure that the MINEDUB decision-making is on track to ensure the full
progressively\. Government anticipates decentralization implementation of the GPE grant within a four-year time frame\. Governmentâs
actions to be completed by 2017\. Although regional decisions would require consistent and supportive stakeholder feedback about
education administrations do exist, and the MINEDUB has a service delivery\. Measures will include seeking inputs from stakeholders through
good outreach across the 10 regions of the country, the
third party verifications, budget transparency initiative, and assessment of school
culture of information exchange and outreach to elicit
report cards\.
feedback on education service delivery is limited, if not
totally absent\. This has resulted in the absence of consistent Resp: Status: Stage: Recurrent: Due Date: Frequency:
and supportive stakeholder feedback about service delivery\. Both In Progress Both Quarterly
Highly centralized decision-making with regional equity Risk Management:
reasons drive decision-making\. Regional and national level consultations have been undertaken to share the
results of the education sector Country Status Report and the emphases of the
Delays in decisions inside MINEDUB\. For example, for the Education Sector Strategy 2013-2020\. These are now a good basis for future and
purchase and distribution of teaching and learning materials\. continued stakeholder feedback\. A missing element is a regular feedback
mechanism\. Through the project, a service delivery feedback mechanism would
Decentralization is still at a nascent stage\. The local level is be developed\.
characterized by relatively weak capacity to manage
decentralized responsibilities such as procurement, follow-up Resp: Status: Stage: Recurrent: Due Date: Frequency:
of infrastructure\. Election at location level in 2013 could Client Completed Preparation 06-Jun-2013
impact program preparation and implementation at local
level\.
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Implementing Agency (IA) Risks (including Fiduciary Risks)
Capacity Rating Substantial
Risk Description: Risk Management:
Through the project preparation process, efforts will be made to reduce the
Description:
procurement timeframe\. Project preparation will include implementation
preparation, specifically, the preparation of bidding documents\. Project
(i) Generally prolonged procurement timeframe\. implementation will be managed by an external monitoring agency to ensure that
(ii) Low motivation and stakeholder inputs to inform the procurement is successfully completed, and implementation is on track and as
MINEDUB\. planned for 6 months prior to project closing in September 2018\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Risk Management:
Stakeholders' capacity to monitor service delivery will be enhanced through
timely sharing of information, and their involvement in project monitoring and
evaluation\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Governance Rating High
Risk Description: Risk Management:
Risk management measures are incorporated directly into the project design,
(i) Contract Teachers Program: political economy through including third-party verifications, rolling audits, and external monitoring
bottlenecks constrain the rational distribution of teachers\.
agents\.
(ii) Textbooks: political economy of textbooks in Cameroon
is a major factor in the absence of teaching and learning Resp: Status: Stage: Recurrent: Due Date: Frequency:
materials in the classroom\. This is a very sensitive subject in
the country\.
Risk Management:
The risk of political pressure would be best managed by the allocation of GPE
grant resources across all disadvantaged regions of the country based on an
assessment of actual service delivery (the population density, poverty level, and
98
objective criteria)\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Risk Management:
Stakeholder monitoring and evaluation of the presence of contract teachers will be
introduced\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Risk Management:
Textbooks procurement will be monitored by an external verification agency\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Project Risks
Design Rating Substantial
Risk Description: Risk Management:
Statistical data has had to be triangulated and verified to rationalize the
(i) Weak statistical data have impacted the GPE preparation
inconsistent data, and to introduce time series consistency\.
process, and is likely to affect project implementation if not
carefully managed and monitored\. Resp: Status: Stage: Recurrent: Due Date: Frequency:
(ii) Limited collaboration between various agencies
responsible for preparing the project\.
Risk Management:
Difficulties in coordination among the various government agencies (MINEDUB,
MINESEC, MINEFOP, MINESUP, National Statistical Agency), and
development partners has been mitigated through continuous sharing of
information, and the division of labor across the agencies\.
99
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Social and Environmental Rating Moderate
Risk Description: Risk Management:
Regional and national level consultations have driven the project design\. Further,
The risk of negative social impact of the Project is expected the consultations will continue throughout the project implementation process\.
to be moderate\. On the contrary the Project is anticipated to
have positive social and economic impacts\. The Resp: Status: Stage: Recurrent: Due Date: Frequency:
environmental risks associated with the Project are assessed Both Not Yet Due Implementati 31-Mar-2018
to be low\. on
Risk Management:
The project does not include any civil works and no environmental issues are
expected\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Program and Donor Rating Moderate
Risk Description: Risk Management:
GPE Board may not approve and/or reduce available The project will focus on the Zones Education Prioritaires (ZEP) on quality and
allocation for Cameroon\. equity, including gender equity\. These design elements are in line with GPE
priorities\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Delivery Monitoring and Sustainability Rating High
Risk Description: Risk Management:
(i) On time and proactive monitoring of teacher recruitment (i) Appropriate teacher recruitment and deployment guidelines will be prepared
and deployment remains difficult\. based on lessons learned from the EFA-FTI (now GPE) project, and the
(ii) National wide textbook distribution will be challenging\. implementation experiences of the World Bank and AFD\.
100
(ii) The publishing and distribution contract would be combined to encourage
collaboration between the various actors\. Payments will be effected only after
teaching and learning materials have reached the schools\. The publishers' unions
and distributors would be required to co-sign the contract\.
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Both In Progress Both 31-Mar-2018
Other (Optional) Rating
Risk Description: Risk Management:
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Other (Optional) Rating
Risk Description: Risk Management:
Resp: Status: Stage: Recurrent: Due Date: Frequency:
Overall Risk
Overall Implementation Risk: Rating Substantial
Risk Description:
Overall implementation risk continues to be rated as substantial despite the mitigation measures to be taken during implementation\. The
assessment is based on factoring the governance challenges in the country, and taking in to account that the institutions and actors adapt to
mitigation measures\. The underlying risks could still persist\.
101
Annex 5: Implementation Support Plan
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
Strategy and Approach for Implementation Support
1\. The strategy and approach for implementation support is based on the Project design, the
inherent implementation risks and the proposed mitigation measures, the country environment,
and the implementation capacity of the Recipient\. Direct project implementation responsibility
would rest with the Ministry of Basic Education (MINEDUB)\. The implementation strategy
combines reinforcing and continual support throughout the Project implementation period\.
Specifically, country-based support, bi-annual supervision missions, and strategic technical
assistance would comprise the core of the implementation support\. Approaches would be based
on two levels: (a) the sub-component specific needs; and (b) the timing of the support\. The
strategy and approach for implementation support are provided in the Table below\.
Table 5\.1: Implementation Support Plan
Project Sub-Components Sub-component specific needs Timing of the
Implementation support Technical support support
1\. Improving the quality and service delivery
of primary education
1\.1 Subsidy for converting a selection of - Task Team Lead - Financial audit
existing maîtres des parents to contract - Country-based support - Technical audit
teacher status and new CTs from the local - Financial Management Specialist
ENIEG in regions where there are few - Operations Analyst
maîtres des parents, in disadvantaged zones
of the country with an emphasis on rural
areas
1\.2 Provision of teaching and learning materials - Task Team Lead - Teaching & Learning
and storage - Country-based support Materials Specialist
- Procurement Specialist - Computerized inventory
- Financial Management Specialist management system
- Operations Analyst specialist Bi-annual
1\.3 Capacity development for teachers and - Task Team Lead - Teacher Training Specialist (technical support
inspectors - Country-based support missions to assess
- Operations Analyst progress towards
1\.4 Support for girlsâ education - Task Team Lead - IEC Specialist for advocacy DLIs and other
- Country-based support messaging project indicators)
- Operations Analyst
1\.5 National primary education assessment - Task Team Lead - EGRA Specialist Annual reviews
framework - Country-based support - EGMA Specialist (Joint technical
- Procurement Specialist review of the
- Operations Analyst Education Sector)
2\. Building institutional capacity for Mid-term review
improved education service delivery (no later than
March 2016)
2\.1 Improving the education management - Task Team Lead - Governance Specialist
information system (EMIS), the flow of - Country-based support - EMIS
information for improved governance, - Procurement Specialist - BTI
monitoring and evaluation, rapid results - Financial Management Specialist - RRS
strategies, and community-based support for - CB/SB management
school-based management
2\.2 Building knowledge for improved service - Task Team Lead - Various Topic Specialists
delivery and learning (studies) - Country-based support
- Procurement Specialist
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Table 5\.2: Implementation Support Plan
Financial Management Frequency
Desk reviews
Review of FM operations Continually
Financial recordkeeping report
Internal control systems report
Interim financial reports review Bi-annually
Annual FM audit of project investments Annually
Rolling audit reports Quarterly
Spot checks, review of transactions
Monitoring actions based on issues and
recommendations set out in the audit reports, auditorsâ Continually
management letters, internal audits, and third party
verifications
Technical
Third party verification Bi-annually
Rapid Results Approaches, Spot checks
FM Capacity Development
FM training sessions Project launch and as needed
9\. Financial Management\. A country-based Financial Management Specialist would
support the task team, coach the MINEDUB Project Secretariat staff, and other executing
agencies\.
10\. Procurement\. A country-based Procurement Specialist would support the task team,
coach the MINEDUB Project Secretariat staff, and other executing agencies\.
11\. Third Party Verification\. The Project would contract Management Agencies with the
ability to monitor decentralized procurement, carry out technical audits of Project inputs,
perform classroom observations, and prepare third party verification reports to inform the
Supervising Entity regarding the impact of the Project\.
The main focus of Project implementation support:
Time Focus Skills Resource Partner
Needed Estimate Role
Pre-implementation Project Operations Task Team Lead
preparation Manual Financial Management
(December 2013-March Project Financial Specialist $75,000 Annual joint review of
2014) Management Manual Procurement Specialist the education sector
Draft Procurement Operations Analyst
Bidding Documents
First twelve months Tracking FM Task Team Lead
(April 2014-April 2015) reporting mechanisms Financial Management
Technical evaluation Specialist Annual joint review of
reports Auditor $175,000 the education sector
103
Third Party
Verification
Management Agency
Operations Analyst
12-48 months Tracking FM Task Team Lead
(April 2014 â April 2018) reporting mechanisms Financial Management
Technical evaluation Specialist
reports Auditor
Mid-term evaluation Third Party $175,000 Annual joint review of
Safeguards reports Verification (for each of 12 months the education sector
Management Agency for 4 years)
Social Safeguards
Specialist
Operations Analyst
Other
Skills Mix Required:
Skills Needed Number of Staff Number of Comments
Weeks Trips
Task Team Lead 25 staff weeks annually 6
In-country Operations Analyst 44 staff weeks annually Country office based
Financial Management Specialist 6 staff weeks annually Country office based
Procurement Specialist 6 staff weeks annually Country office based
Environmental Specialist 3 staff weeks annually Country office based
Social Specialist 3 staff weeks annually Country office based
Partners for the Annual Joint Technical Review of the Education Sector
12\. The Local Education Group (LEG) serves as a forum/mechanism to coordinate
technical and financial support to the basic education sub-sector\. There exists a formal terms
of reference for the LEG\. The formal LEG was established in 2006, with detailed Terms of
Reference\. It is led by a Lead Agency (Chef de Filat) who is nominated and voted in by the
individual partners who comprise the LEG, and is composed of representatives from the
Governmentâs Ministry of Economy, Planning and Regional Integration (MINEPAT), Ministry
of Finance, Governmentâs education technical team (drawn from the five ministries of
education), multilateral and bilateral development partners, representatives of civil society,
private education providers\. The Chef de File is an annual rotating position\. A document entitled
âPartnership Principlesâ or the âCadre Partenarialâ duly endorsed by each of the individual LEG
partners embodies the principles for the LEG coordination mechanism\. The LEGâs mandate is to
meet regularly, be fully associated with the development of the Education and Training Sector
Strategy, and the Project design\. The Government representative from the education technical
team and the Chef de File coordinate the annual joint sector reviews to monitor the
implementation of the Education Sector Strategy and ensures the timely commitment and
disbursement of funds\. The Government representative and the Chef de File of the LEG report
on the progress being made on the Education Sector Strategy, including the funding
commitments and disbursements of all partners on an annual basis\.
104
Annex 6: Economic and Financial Analysis
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
Introduction
1\. The proposed Project is expected to have both medium- and long-term impacts\. While it
has short-term fiscal implications for Government, the Project interventions would have short,
medium, and long-term socioeconomic impacts\. An analysis of the economic rationale and the
fiscal implications of the Project interventions show that the effects are sustainable, although
Government commitment would be the driving factor for project sustainability\. This annex
provides a brief overview of the economic, fiscal, and social context, the status of the primary
education sub-sector and its financing, the main issues in relation to the GPE strategy (quality,
equity), the internal and external efficiency aspects, the rationale/justification for investment, the
cost-benefit analysis, and the fiscal impact of Government policies and of the Project\.
A\. Economic, fiscal, and social context
2\. Over the period 1995-2012, Cameroonâs GDP growth averaged about 6\.3 percent
annually in nominal value and 3\.6 percent in real terms (FCFA value of 2011)\. Considering high
population growth rate of 2\.3 percent a year, per capita income grew by only 1\.3 percent
annually\. Despite a fairly diversified resource base and a moderate reliance on petroleum
revenues, this growth has been slower, averaging 4\.2 percent since 2000 and dropping to 2\.0
percent during the peak point of the global crisis in 2009\. A deteriorating infrastructure base, a
weak business climate, and poor governance further limits economic growth from reaching the
levels needed for sustainable poverty reduction\. As a result, overall poverty reduction has been
stagnant since 2001\. In 2007, 39\.9 percent of the population lived in poverty and 26\.1 percent
lived in chronic poverty\. As the population has continued to grow, the real number of people
living in poverty increased from 6\.2 million in 2001 to 7\.1 million in 2007, and is expected to
continue to rise\.
3\. Poverty rates have increased in the northern rural areas\. While the incidence of poverty
has dropped in urban areas, rural poverty is high and increasing\. In regions like Adamaoua, the
East, the North, and the Far-North, almost two-thirds of the population is considered to be below
the poverty line\. There were significant increases in poverty levels in these provinces between
2001 and 2007\. The North and Far-North regions had the largest increases of 13\.6 and 9\.6
percent respectively\. Nearly 40 percent of the individuals classified as being in the poorest
income quintile live in the Far-North while 17 percent are in the North\.
4\. In 2000, the high level of external debt had qualified the country to become a Highly
Indebted Poor Country (HIPC) and eligible for corresponding financial provisions\. Since that
time, macroeconomic stabilization and structural adjustment served to improve the fiscal
situation and provided a framework for development with a very slow increase in the overall
budget\. In 2006, the country graduated from the program\. This has had a huge impact on the
105
budget with an increase of 63 percent in 2007 and 27 percent in 2008\. Due to the end of 2008
financial crisis, the government budget has decrease by 2 percent in 2009\.
5\. In 2009, Cameroonâs Government
adopted a new development plan (DSCE) that
focuses on sustainable economic growth
through infrastructure development and
productivity increase\. This has resulted in
public expenditure increase from 7 percent in
2010, 114 percent in 2011 to 104 percent in
2012\. The projected budget increase in 2013 is
around 132 percent\. To fill the budget gap,
since 2010 the Government of Cameroon has
begun borrowing from the public by issuing
treasury bonds in the local market\. This has
increased internal debt\. After 3 consecutive
years of government bond issues in the local
financial market, the space for new borrowing has diminished considerably, making it necessary
to supplement with external resources\.
6\. Tax administration and revenue have improved significantly since 2000 and represent the
main source of financing for about 60 percent of all expenditures for the four last years\. This has
provided more fiscal space for the Government to increase its contribution to the budget through
an increase in taxes from xx percent in 1995 to an estimated 15\.7 percent in 2012\.
7\. Public expenditure structure between 1995
and 1998 was at a critical state with more than 50
percent comprising debt service\. After the HIPC
completion point and fiscal consolidation, debt
service was reduced to 3 percent in 2009\. This
enabled the government to increase capital
expenditure from 23 percent in 2009 to 29 percent in
2012, with a projection of more than 30 percent in
2013\. Per capita operational expenditure has also
seen a substantial increase from 32,961 in 2006 to
83,150 in 2012\.
8\. In terms of resource allocation to education, the Cameroon 2000 Action Plan for
Education called for substantial increase in public funding for education\. Between 2000 and
2011, current expenditures for education increased from CFA137\.4 billion to CFA348\.2 billion,
tripling by 10, at an average rate of 9\.75 percent each year\. Current expenditures represent about
90 percent of education public expenditures\.
9\. By contrast, the share of spending on education in the overall spending represented only
16 percent in 2011\. This was below the expected share, based on the 2000 commitment\.
However, Cameroon is now above the expected average allocation between 2000 and 2007\. The
106
share of education in the overall budget has tended to decrease over time with the fiscal years
registering the lowest values\. This has been mainly due to the increase in public investment in
infrastructure, based on the objectives of the
new development vision/plan, the DSCE\. The
massive investment in infrastructure is slated to
decrease in 2014, allowing for potential
increase in expenditure for the social sectors\.
The share of education expenditure in the GDP
has remained fairly stable between 2000 and
2011, varying between 2 and 3 percent\.
10\. The DSCE emphasizes the central role
of human capital development to develop the
necessary skill for growth and competitiveness,
and to set the country on the path of becoming a middle-income country by 2035\. It is within this
overall vision that the Government has drafted a new Education and Training Sector Strategy
covering the period 2013-2020\. The DSCE goals would be achieved through sustained
implementation of the education sector strategy\. Reforms envisaged in that strategy are
anticipated to culminate in an education and training system having the following characteristics:
(a) Quality basic education covering the primary level and the first cycle of the
secondary level and being accessible to the greatest number of children aged from 6
to 15 years, and helping to raise the level of education to a level that is coherent with
the DSCE vision of an Cameroon characterized as a middle-income country by 2035;
(b) A quality second cycle of secondary education based on a dynamic balance between
general and technical education in preparation for higher studies in priority
professional fields of studies for the development of an economy geared towards
industrialization;
(c) Vocational training based on a modernized and significantly strengthened system for
imparting solid knowledge centered on the mastery of skills required for the job
market, and preparing students who would be leaving the first and second cycle of
general secondary education for job creation (self-employment);
(d) University education with a focus on professional education;
(e) Extended training coupled with a system for developing learning-by-doing; and
(f) Increased student enrolment by defining a system of transparent and credible flows,
strengthening the educational counseling system, and increasing the salary scale for
technical professions\. Based on the sectoral diagnostics set out in the Country Status
Report 2013, considering the current situation of the education system, achieving the
DSCE goals would require an increase in public expenditure for education combined
with massive reforms\.
107
Primary Education Financing
11\. The Education Sector Country Status Report 2013 shows that public financing for
education in 2011 is a third below the regional average\. Moreover, the education expenditures
distribution among subsectors is quite different from the Sub-Saharan African average\. Only 37
percent of public funding for education is allocated to the primary level, far below the 45 percent
of countries in the region, 14 percent for higher education compared to 21 percent in the region\.
However, 46 percent of education sector expenditures are allocated to secondary education,
compared to the 32 percent average of the region\.
12\. Over the period 2008-2011, Government has progressively increased the share of primary
education in the overall education sector budget from 31\.6 percent to 37\.1 percent in the four
years\. If the government maintains similar allocations for the following years, the share for
primary education could reach the regional
average by 2015\. However, the budget increase
directly relates to only recurrent budget for
salaries (85 percent in 2011), leaving only a
modest margin for investments to improve
primary education quality (inputs such as
textbooks, in-service teacher training, school
operating costs, supervision of schools, etc)\.
The result is that parents/households now have
to pay more out-of-pocket for their childrenâs
primary education\. This has had two negative impacts: (a) on school enrolment and attendance
because, despite a formal removal of primary education school fee, schools collect fees to
finance operating costs\. Children from poor families drop out because their parents cannot afford
the contribution to the Parents-Teachers Associations; and (b) on the quality of service delivery:
of teaching and learning because public funds are unable to finance even minimum operating
costs at the school level\.
13\. Unit cost of education\. There is a large difference in the unit cost of primary education
compared to ECD and the first cycle of general secondary education (Table 10\.1)\. This is due in
part to the poor management of personnel, especially teachers (low time on task and high
numbers of specialized teachers who are not polyvalent) at secondary education level\. At
primary education level there has been an increase in the unit cost (about 18% higher between
2002 and 2011), albeit the 2011 level of 7\.8 percent for Cameroon is less dramatic than the unit
cost increase in the Ivory Coast (18\.3 percent), Ghana (17\.8 percent), Burkina Faso (16\.6
percent), and Senegal (16\.4 percent)\. This is due on the one hand to the increase in out-of-pocket
expenses for parents, and on the other hand due to the introduction of better paid contract
teachers to replace the instituteurs vacataires (short-term/temporary/voluntary contract teachers)\.
This reform has more than compensated the decrease in the number of civil service teachers\.
108
Table 6\.1: Unit cost (Fcfa) of ECD, Primary and Secondary (First cycle) Education
in Cameroon (2011)
Recurrent expenditure (million Fcfa) Unit Costs
Enrolments GDP per
Maintenance Services Total Fcfa Coefficient
capita
Early Childhood Development 11,656\.10 2,570\.80 14,226\.90 120,663 117,906 19\.70% 2\.53
Primary Education 95,082\.40 31,723\.30 126,805\.70 2,719,294 46,632 7\.80% 1
First cycle of Gen Sec Ed 50,877\.20 9,680\.30 60,557\.40 696,068 86,999 14\.50% 1\.87
Total 303,278\.40 1,903\.30 65,181\.70
Source: World Bank 2013\. Education Country Status Report\.
14\. High out-of-pocket expenses\. A striking feature of the Cameroonian education system is
the high out-of-pocket expenses at 42 percent of total education expenditure compared to 21
percent in Senegal and 13 percent in Niger\. This is due to low efficiency of public spending, the
need for households to pay for textbooks and for teachers in many instances, and other indirect
costs (uniform, exam, transportation) that are passed on to parents\. These costs are mostly related
to pre-primary, primary and lower secondary education\. Private financing is used in large
proportion to pay for teachers through PTA fee collection, in both primary and secondary
education\. A similar pattern exists in the health sector in Cameroon where out-of-pocket
expenses at 66\.5% exceed the level in Nigeria (59 percent), Senegal (35 percent), Ghana and
Zambia (26\.5 percent) [World Bank 2012 publication: Rapport sur la Santé et le Système de
Santé au Cameroun (RaSSS)]\. Primary education is relatively expensive for families\. About 18
percent of primary school teachers are paid by parents (maître des parents)\. The percentage is
even higher in the rural areas where education coverage is also low\. On average there the public
sector pupil-teacher ratio is approximately 55:1 in public schools, 82:1 in the Far North and 33:1
in the South\. Figure 10\.1 shows regressive out-of-pocket payments by poverty quintile\.
Source: World Bank\. Education Country Status Report 2013\.
15\. Public resource mobilization for the education sector to a large extent depends on
macroeconomic factors, in particular, (i) global economic growth; and (ii) fiscal and other
exogenous pressures from the Government\. However, a portion of additional resources for
109
primary education could also be generated from an inter-sectoral arbitrage in favor of the
education sector\. For this to occur, political will in favor of the education sector is required\. The
Government has agreed to progressively increase the budget for education over the 2014-2016
period until the budget is back to the 20 percent level\. The seriousness of intent has been
articulated in the letter of sector policy\.
16\. The recruitment of new teachers during
the period 2009/10 had a crowding out effect
on investment in physical assets\. This has had a
negative effect on school infrastructure,
slowing down investments in school
rehabilitation and new school buildings\.
Governmentâs investment in school
construction and facilities procurement
decreased from FCFA37\.3 billion to FCFA9\.9
billion in three years\. If this situation continues in the following years, it could exacerbate the
already bad infrastructure situation in the disadvantage areas\.
B\. Current education sector performance
17\. Over the last 10 years Cameroon has witnessed
improvements in access to primary education\. This
improvement was higher for preschool and post primary
education\. Compared to others Sub-Saharan African
countries, Cameroon has registered an increase in gross
enrolment rate (GER)\. Between 2001 and 2011, GER in
preschool increased from 13\.3 percent to 27\.2 percent\.
With respect to primary level, it increased from 102\.8
percent to only 112\.9 percent\. For the first cycle of the
secondary education, it increased from 28\.8 percent to a
significant 53\.4 percent\. If we consider the net
enrolment rate (NER), the improvement is lower\. In 2010, the NER in primary school for
children between 6 and 11 was estimated at 78\.8 percent slightly lower than the 79\.8 percent
estimate in 2005\.
18\. Net enrolment rate (NER) for boys (79\.4 percent) and girls (78 percent) is more or less
equal\. However, spatial disparities in gender have increased over time\. The deviation between
urban and rural area was estimated to be 10\.8 percent in 2010 and 7\.1 percent in 2005\. NER
varies by region: Far North (59\.1 percent), North (59\.4 percent) and Adamaoua (72\.9 percent)
are the most disadvantaged areas, whereas the Littoral region excluding Douala at 94\.9%, the
Western region at 92 percent) and the Center with 91\.1 percent are the most well-resourced\.
19\. Primary Completion Rate (PCR) in 2011 for the relevant age-group was estimated to be
80\.3 percent at the national level (RESEN)\. PCR was higher in urban areas at 90\.7 percent than
in rural areas at 68\.2 percent\. Further, PCR was greater for boys (83\.5 percent) than for girls
110
(77\.4 percent) who completed primary education\. 89 percent of boys go on to secondary school
compared to 81 percent of girls\. With respect to primary completion rates, there are significant
regional disparities\. In 2011 the highest completion rate was in the South-West region at
96\.1percent\. The lowest was in the Northern region at 46 percent\. Three regions are lagging far
behind, with an average of 52\.9 percent\.
20\. Repetition rate in primary education was estimated to be around 7\.4 percent in 2010, and
still high compared to other countries in Sub-Saharan Africa\. The first and the sixth grades had
the highest rates 14\.4 percent and 6\.8 percent respectively\. Girls tended to repeat class more than
boys (8\.4 percent against 5\.5 percent)\. Littoral without Douala and Western regions had the
highest rate at 16\.3 percent compared to Adamaoua at 2\.3 percent, and the Far North at 1\.7
percent\. This could probably be explained by the fact that in the northern regions, multi-grade
learning is the norm\. The dropout rate at primary education level was around 2\.2 percent in 2010
and was much higher for the last grade of the primary cycle (7\.3 percent)\. The problem was more
acute in the Northern and Eastern regions with Adamaoua registering 5\.4 percent in 2010\.
21\. Highest level of education attained\. In 2010, the average number of years of education
attained by the Cameroonian was still low and it was estimated to be 6\.7 years\. This implies that
the average Cameroonian completes only primary education\. The ZEP regions have the lowest
attainment: 4\.2 years in the Far North and 4\.3 years in the North\. The situation has an impact on
student enrolment in the sense that there is a statistical relationship between the level of
education of parents and their willingness to send children to school\.
22\. Learning measured (PASEC 1996 and 2005)\. The basic knowledge rate measures the
proportion of school age population that has acquired the minimum cognitive skills for a given
level\. It combines the school attendance with learning outcomes\. Table 10\.2 below shows that
although Cameroon compares favorably in relation to other Sub-Saharan African countries,
between 1996 and 2005 basic knowledge acquisition rate in French and math for grade 5
declined for Cameroon from 65\.5 to 53\.4 in French, and from 50\.8 to 46\.8 in Mathematics\. The
result is not the same if we consider some North African francophone countries\.
111
Table 6\.2: Evolution of the Basic Knowledge Rate in French and Math: 1996 to 2005 for grade 5 students in
some francophone African countries (PASEC)
Country Year Average Score Average Score Country Year Average Score Average Score
French 5AP Maths 5AP French 5AP Maths 5AP
Cameroun 1996 65\.5 50\.8 Burundi 2009 41\.6 45\.0
Cameroun 2005 53\.4 46\.8 Ivory Coast 2009 37\.3 27\.3
Benin 2005 31\.6 32\.5 Comores 2009 33\.6 36\.5
Madagascar 2005 36\.9 56\.6 Tchad 2010 35\.0 37\.4
Gabon 2006 61\.4 44\.3 Togo 2010 30\.9 46\.4
Burkina Faso 2007 37\.7 38\.5 Congo 2010 42\.3 45\.5
Democratic
Congo Rep\. 2007 36\.9 36\.4 Moyenne (> 2004) 39\.9 41\.2
Senegal 2007 40\.6 42\.1
Source: PASEC 2012\.
23\. The 2010 SOFRECO survey shows French scores for Cameroon to be lower than the
results of the 2005 PASEC assessment\. The result likely points to knowledge degradation due to
lower quality of primary education\.
C\. Analysis of main GPE strategic areas (quality and equity) as it applies to Cameroon
Quality
24\. Even though Cameroon is among the top two best performing countries in francophone
Africa in terms of learning outcomes as measured by the PASEC, its relative performance is low
for a country with the level of economic and social development ambitions and objectives, and as
compared to other middle-income countries\.
25\. The education Country Status Report 2013 analyzes several contributing factors to
learning outcomes and knowledge acquisition in Cameroon:
(a) The pupil-teacher ratio which includes the size of the classes (defined as the number of
children in a class) that a teacher must teach\. On average this is very high in Cameroon\.
Pupil-teacher ratio could serve as a proxy indicator for supply-side constraint that has a
bearing on learning outcomes;
(b) The learning environment that are characterized mainly by dilapidated classrooms, the
dearth of school desks, benches, the lack of latrines, and especially separate ones for girls
and boys, the absence of potable water, and the lack of perimeters for schools to assure a
minimum level of security for school children;
(c) Repetition rates for girls and boys that are having a negative impact on learning
outcomes\. The CSR indicates that students who have repeated some level have lower
learning outcomes, around 5\.5 points below others\.
112
(d) Low access to textbooks that has affected learning outcomes over time\. Between the
group of student that have no textbooks in reading and mathematics at all (26 percent of
SOFRECO sample) and those who have textbooks, the difference in learning outcomes
score is around 3\.3 points\.
(e) The absence of qualified teachers in the disadvantaged areas of the country\. Four main
factors determine the impact of teachers on learning outcomes:
(i) Social characteristics;
(ii) Pre-service trainingâthere is a positive relationship between the number of
academic years that teachers have had and the impact on student learning outcomes\.
It is estimated that on average, if teachers have about 15 years of schooling, they
would have the potential to produce the most optimal impact on student learning
outcomes;
(iii) Professional experience as it relates to the number of years of teaching experience;
(iv) Vocational trainingâCameroon is characterized by three types of trained teachers:
a\. Those without any vocational training;
b\. Those with CAPIEM training--the impact of having a CAPIEM teacher
certification on student learning outcomes is only 2 percentage points\. The
implication is that even if teachers undergo pedagogical training and their
efficiency is estimated to have improved as a result, their in-class performance
plays a greater role in promoting student learning; and
c\. Those with no CAPIEM but with alternative pedagogical training\. Finally, on an
average of about +5 points, teachers with no CAPIEM but who have alternative
pedagogical training appear to be outperforming their CAPIEM trained teachers\.
(v) Employment status\. The system includes four categories of employment cadres: civil
servants, contract teachers (paid by Government), contract teachers (paid by private
parties), and maîtres des parents (teachers paid by parents)\. Civil servants and
Government-paid contract teachers demonstrate about the same level of performance\.
However, maîtres des parents (+3\.8 points) and privately-paid contract teachers (+4\.3
points) have demonstrated better performance\. The potential for becoming contract
teachers is one of the key monetary incentives for maîtres des parents to perform
better on their jobs\.
Equity
26\. Regional disparities in school enrolments and completion\. Five out of the ten regions in
the country face huge disparities\. Pupil-teacher ratio is very high in the three northern regions of
Far North, North, and Adamaoua\. PCR is below 10 percent in the three northern regions\.
According to ECAM 2007, these regions are the poorest in the country, where household income
is very low and education service delivery is of poor quality\. In addition, there are stark cultural
113
differences between the northern and southern regions\. Parents do not have any incentive to send
their children (especially girls) to school in the northern regions\. Cultural differences contribute
significantly to teacher absenteeism particularly among female teachers who are deployed from
the south to the north\. Reducing regional disparities requires both supply- and demand-side
responses\.
Internal efficiency
27\. The low performing regions of the country pull down the overall performance of the
education system\. An efficiency analysis of the education sector shows that based on the existing
level of public financing and resources, Cameroon could afford to increase the average number
of years of schooling\. An internal efficiency analysis undertaken in 2010 showed that the
factoring repetition and dropout at 79\.8 percent far exceeds the estimated 63 percent in the 2003
education sector Country Status Report\.
This implication is that even with an
improvement of over 10 percentage points
during the 2003-2010 period, around 20
percent of education funding is inefficient\.
Reducing repetition and addressing the
problem of dropout from primary schooling
could contribute to achieving efficiencies in
the sub-sector\.
28\. The EESI 2010 provides an analysis
of the factors contributing to high dropout
rates\. Most households (48\.6 percent) stated
Table 6\.3\. Reasons for Dropout and not attending school
that financial constraint was the primary reason that prevented them from sending them children
to school\. This was followed by the need to ensure that household labor supply (12\.4 percent)
was assured due to the arduous nature of the chores that needed to be undertaken, class repetition
was stated as the third reason (6\.7 percent) and distance to school was the least important\.
114
External efficiency
29\. Completing primary schooling is one of the major factors that can significantly
contribute to poverty alleviation in Cameroon\. The EDS 2011 provides an analysis of the
relationship between schooling and poverty\. The five quintiles of the sample show that 50
percent of the poorest quintile has never completed a single year of schooling compared to the
richest quintile in which 50 percent has completed 9 years of schooling\. The conclusion is that
overwhelmingly the rich are the ones who can afford to attend at least 9 years of schooling\. The
fourth quintile reveals mean years of schooling to be only 5 years, whereas the second quintile
only 2 years\.
30\. The EDS 2011 shows that a person who has completed primary education has the highest
probability of getting a job compared to those who do not have a primary education\. Further, the
probability of doing so is higher for men than for women\. However, although primary education
has the potential to improve the chances of being employed, the reward is not remarkable\. The
diagnosis in the education CSR 2013 shows that a supplementary year of schooling increases
household income by about 7\.6 percent\. The higher the initial number of years of schooling, the
greater the household income\. However, earnings depend on the sector of employment\.
D\. Rationale for intervention
31\. Primary education is universally regarded as a public good with significant positive social
externalities, and market failure is often cited as the main reason for the private sectorâs inability
to provide wide and adequate coverage\. However, the poor quality of public education service
delivery in Cameroon propels many parents to opt to send their children to private primary
schools\. However, private sector provision is only 22 percent at primary education level,
compared to about 62 percent at preschool level\. The implication is that over 77 percent of
parents rely on public service delivery\.
32\. Primary education is strongly correlated with economic development and with increased
productivity\. In Cameroon most young adults have primary education as the highest level of
learning\. They mostly work in the agriculture sector where productivity improvements are
expected per the DSCE\. Improving the quality of primary education could be a significant factor
in breaking the cycle of poverty, especially in rural areas of the country\. This could potentially
contribute to increasing agricultural productivity\.
33\. The main economic arguments for a proactive role of the Government and the Bank in
this sector are the follows:
ï Returns\. There are high social and private returns to investing in primary education\. At
the private level, it could increase the probability of finding a job\. At the social level, it
could increase productivity\. Without a high-quality primary education system, the
majority of the labor force will continue to lack basic skills that are crucial to increasing
efficiency and productivity in the labor market\. The GPE project aims to provide a better
quality primary school education contributing to improved learning outcomes\. This has
115
the potential to put primary school leavers on the road towards better employment and
income-earning possibilities\.
ï Equity\. Primary education spending in Cameroon tends to be pro-poor and the
government has an important role to play in continuing to ensure that access to education,
especially education of high quality, is equitable\. GPE project interventions, such as
increasing teacher availability in disadvantaged areas and textbooks distribution are
aimed at achieving this objective\.
ï Information\. Currently, there is no systematic monitoring and evaluation of the overall
education system especially of primary education\. The Government has a crucial role to
play in the collection, analysis and dissemination of information on the quality and
effectiveness of education provided in different institutions, and on analyzing how
efficiently public and private funds flow through the administrative and budgetary system
and ultimately reach teachers and schools; and determining how those resources are
combined with others inputs at the school level to generate education outcomes\. By
preparing the architecture for the unification of the EMIS for the five ministries of
education and supporting some investments such as the geo referencing of schools in the
country, linking school report cards (tableau de bord), the GPE project would aim to
ensure that such information is really available and can feed back into policy\.
E\. Project alternatives considered
34\. Some alternatives that were considered include:
ï IPF versus PforR: In light of the difficulties encountered during the implementation of
the World Bank/IDA Education Development Capacity Building Project (numerous
procurement items, generally poorly performing, weakly managed, very slow disbursing)
a results-based approach is considered to be more appropriate\. Lessons learned from the
World Bank/IDA implementation indicate that a systematic analysis of the political
economy environment for project development and implementation is a sine qua non in a
country where political decisions have led to the creation of multiple Ministries resulting
in weakening government commitment to full engagement in project implementation\.
Concentrating the project intervention only in primary education and pegged to specific
results to be achieved would ensure progressive commitment from Government\.
Cameroon is not ready for a Program for Results (PforR), an instrument that relies solely
on disbursements against results (activities pre-financed by Government)\. The lack of
strong and reliable monitoring systems prevents the use of the PforR instrument for the
Project\. Therefore, the choice is to use IPF with a hybrid approach to disbursements\. That
is, disbursement-linked indicators (DLIs) for some sub- components and a traditional IPF
for other sub-components that are less amenable to DLIs\.
ï Targeted areas vs nationwide\. The GPE project is primarily focused on disadvantaged
areas\. This includes the ZEP (Adamaoua, North, Far North and East and North West
regions), and disadvantaged pockets in other regions (for example, in some major cities
with poor education indicators)\. Factoring in the political economy sensitivities, the
major portion of the Project interventions would be on a national scale\. This is due to
116
identified market failures in the production and distribution of teaching and learning
materials especially in the northern regions of the country, and also the absence of
conducive learning environment for students in these areas\.
ï Final phase of investment in the contract teacher reform versus single investment in
teaching and learning materials\. Two compelling reasons have resulted in the decision
to invest in both areas, with an emphasis on the first: (a) Market failure in the latter and
the political economy sensitivities were taken into account in determining the investment
breakdown for the two areas\. A project focusing on teaching and learning materials
would likely induce significant reforms in the commercial book industry in Cameroon
which is suffering from rigidities, collusive practices, and an interest in maintaining high
book prices\. However, sensitivity analysis has revealed that flooding the market with
monopoly books from external sources would destroy the local industry and would
contravene the Governmentâs policy on competing alternative teaching and learning
materials\. The decision is, therefore, to set up a demonstration effect particularly in the
northern parts of the country where the book industry is virtually absent\. This would be
done through decentralized ordering but centralized procurement of teaching and learning
materials; and (b) improving service delivery through the provision of teaching and
learning materials would be necessary but not sufficient to improve learning outcomes in
the northern regions of the country\. There is a severe shortage of teachers in these parts\.
It, therefore, investment in contract teachers is a sine qua non for the project to achieve
some positive results\.
ï Centralized versus decentralized financing\. The Project design preparation process did
include the consideration of school-based grants in order to decentralize project
financing\. However, this alternative was rejected due to key reasons: (i) decentralization,
devolution and deconcentration of education administration have not yet been instituted
in the country\. This is proposed to take place by 2017; (ii) school management
committees (SMCs; conseils dâécoles) are very much at a nascent stage in Cameroon\.
They require significant capacity development before they can manage school-based
grants\. The timeframe for project implementation is insufficient to allow for a year-long
training program for SMCs\.
F\. Financial cost analysis
35\. The estimated direct cost of the Project comprises the project investment, the public and
private costs of each intervention, and the costs for student and family\. Public costs are estimated
to be equal to Government expenditure generated due to the project\. The Project is estimated to
generate approximately US$33\.2 million\. Private sector costs are those incurred by enterprises
for taxes and other contributions\. This is estimated to be around US$0\.1 million\. The Project
would not result in any direct costs for households\. The overall Project investment is estimated to
be approximately US$89\.02 million\.
117
Table 6\.4: Estimated direct cost of the project
Categories Total cost Cost to Cost to Private Cost to student
sponsor by government sector and family
GPE
Component 1\. Improving the equity and
quality of primary education service
delivery, and improving learning
outcomes
1\.1 Increasing teacher availability in 58\.80 29\.40 29\.40 -
disadvantaged areas
1\.2 Provision of teaching and learning 14\.88 12\.4 2\.48 -
materials
1\.3 Capacity development for teachers and 1\.00 1\.00 -
inspectors
1\.4 Supporting girlsâ education 1\.00 1\.00
1\.5 National primary education assessment 1\.40 1\.40 -
framework
Component 2\. Building institutional
capacity for improved service delivery
2\.1 Improving information, governance 3\.72 3\.10 0\.62 -
and accountability, and monitoring
and evaluation capacity
2\.2 Building knowledge for improved 1\.92 1\.60 0\.32 -
service delivery and learning
Operational cost 4\.25 2\.40 1\.65 0\.2 -
Unallocated 1\.00 1\.00 -
TOTAL 89\.57 53\.30 34\.47 0\.2 -
G\. Cost Benefit analysis
36\. The Project investments are estimated to be cost-efficient and to contribute to positive
economic benefits due to increased economic activity in the Project target areas\. The Project
design focuses on quality improvements that will establish the necessary foundation for a more
efficient and effective lower primary education system, mainly for grades 1, 2 and 3 level\. These
grades serve as the foundation for students to continue on to upper primary education\. Further,
the Project design would contribute to stimulating the local economies\.
37\. The Project interventions are designed to be cost-effective and could potentially
introduce efficiencies in Government expenditures\. Specifically, (a) by converting maîtres des
parents to contract teacher status, their income levels will increase as will their social status\.
Newly recruited contract teachers would also benefit from an income stream; (b) by adopting
decentralized procurement for teaching and learning materials using national systems, the local
publishing industry and the prevalent commercial mechanisms would have an incentive to
118
produce less expensive books\. They would benefit from increased volume of production rather
than by keeping volume down and raising the prices of books\. The local booksellers would
benefit from increased income as a result of increased annual activity with the distribution of
books to schools; and (c) by reducing the out-of-pocket expenditures through the Project
interventions, households would potentially have more disposable income for other Essential
expenditures\.
38\. Quality improvements would contribute to reducing student-teacher ratios and social
disparities between regions, and increasing access to teaching and learning materials\. Key
improvements that will contribute to the sustainable development for better quality primary
education include the development of high quality pre-service and inservice training programs
for teachers and inspectors that would promote the introduction of improved classroom practices
that are appropriate for teaching and learning of basic competencies, especially literacy and
numeracy\. The provision of the necessary additional teaching and learning resources would
ensure that schools in the targeted areas have the basic tools to support the use of new methods
of instruction\. Finally, gender disparities would be directly addressed through the Project
interventions\.
39\. The estimated fiscal impact of the Project is assessed to be sustainable for the
Government\. The Project would have recurrent cost implications for the Government over the
four-year (2014/15-2017/18) project implementation period and beyond\. These costs relate to:
(a) the conversion of some maîtres des parents to contract teacher status, and the recruitment of a
relatively small number of new contract teachers from the local ENIEG; and (b) the purchase
cost of a new set of teaching and learning materials for a new cohort of students, and the
replacement cost for damaged or lost teaching and learning materials\. Equally, the Project
beneficiaries would generate tax revenue due to an increase in their respective income stream\.
Government commitment to sustaining the Project investments would be ensured through the
gradual absorption of the salary payments for newly contracted teachers, and the demonstration
of commitment to reforming the production and distribution of teaching and learning materials to
introduce renewable and sustainable books and incur only the replacement costs for the books\.
The direct benefits of the project are indicated in the table below\.
Table 6\.5: Project benefits of interventions
Interventions Cost Benefits
Comp 1 Conversion of qualified maîtres Increase the number of qualified teachers
des parents and recruitment of in disadvantaged areas to reduce
new graduates from ENIEG based disparities among regions\.
on regional need to contract Reduce out of pocket expenses for
teacher status households
Provision of textbooks, teaching Improve the textbook ratio in targeted
48\.3
materials and readers distribution areas and provide small class sets of
reading books in lower primary grades to
support literacy
Reduce out-of-pocket expenses for
households
Capacity development of teachers Improve quality of teachers
119
and inspectors training
Supporting girlsâ education More girls continue through primary
education grades 4, 5 and 6
National primary education Improve literacy and numeracy at the
assessment framework formative years of schooling
Comp 2 EMIS, School Mapping, tableau Improve education system management
de bord, BTI, RRS, M&E
5\.0
Building knowledge for improved Improve education policies quality
service delivery and learning
Note: Figures may not add up due to rounding\.
H\. Fiscal impact analysis
40\. The fiscal impact assessment has been undertaken by integrating the fiscal implications
of the Project on Government budget\. The additional recurrent costs generated by the Project
relate to the conversion of maîtres des parents to contract teachers\. GPE resources will subsidize
salaries for the proposed newly converted teachers for three cohorts, each for only 12 months\.
Government would gradually take over the payment for newly recruited contract teachers during
the Project implementation period\. They are estimated to be around US$9\.79 million for the
second year of the project and US$29\.37 million at the end of the project and represent only 5
percent of the projected expenditure in 2016\.
41\. The others sub-components of the project relate to Works, Goods and Services\. These
would result in generating tax loss for the government since the funding for the VAT would be
through the use of internal resources\. This fiscal loss is estimated to be around US$3\.79 million
for the overall Project implementation period\.
42\. With the assumption that primary education would receive about 40 percent of the
education budget in 2016, an increase of about 10 percent to the overall education budget
between 2014 and 2016, including donor contributions to education, the Government will have
sufficient resources to finance the overall average cost of the education sector strategy of
FCFA2,634\.5 billion (US$5,269\.1 million) during the period 2014-2017, but will still face an
estimated FCFA65,550 million (US$131\.1 million) gap to fulfill\. The Government would make
efforts to finance the gap through additional domestic financing, new external funding and by
reviewing the three-year sector strategy action plan to scale back on ambitious development
plans\. Table 6\.6 summarizes the cost and financing of the three annual plans\.
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Table 6\.6: Three-year Annual Plan for Education
Actual Values for Three Years Target Values for the Period of the Program
(USD million) (USD million)
Overall Education 2013
2011 2012 2014 2015 2016 2017 TOTAL
Sector: (est\.)
Education Sector Plan
843\.7 946\.3 1,046\.7 1,152\.1 1,236\.1 1,360\.5 1,520\.4 5,269\.1
Cost*
Domestic Funding 836\.7 908\.6 986\.3 1,070\.2 1,160\.9 1,258\.7 1,364\.3 4,854\.1
External Funding
N/A 24\.8 N/A 79\.6 74\.6 70\.8 59\.0 283\.9
(including GPEF)
Funding Gap 7\.0 12\.9 60\.4 2\.3 0\.7 31\.0 97\.1 131\.1
GPE Support as % of
N/A N/A N/A 27\.5 22\.7 18\.6 2\.3% 18\.8%
External Funding
Basic / Primary
2013
Education 2011 2012 2014 2015 2016 2017 TOTAL
(est\.)
sub-Sector:
Education Sector Plan 285\.8
357\.8 429\.8 501\.7 518\.1 591\.1 680\.3 2,291\.2
Cost
Domestic Funding 257\.2 347\.9 419\.9 443\.6 468\.4 527\.3 572\.8 2,012\.1
External Funding
11\.1 11\.1 11\.1 36\.9 36\.3 36\.3 36\.5* 146\.0
(excluding GPE)
Funding Gap 17\.5 -1\.2 -1\.2 21\.2 13\.4 27\.5 71\.0 133\.1
Requested GPE
4\.8 53\.3
Funding 0\.0 0\.0 21\.9 17\.0 13\.1 1\.3
GPE Support as % of
1\.7 N/A N/A 4\.4 3\.2 2\.3 0\.2 2\.5
sub-Sector Funding
*Recurrent and Capital Expenditure\.
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Annex 7: Sector Background and Analysis of Textbooks
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
1\. In 2012, Cameroon was largely off-track for achieving the Millennium Development Goals
(MDGs) (see Table 1)\. Recent data indicate that the MDG for universal primary schooling,
which was once considered possible to achieve, is not feasible\.
Table 1: Cameroon: Progress towards the Millennium Development Goals
Target Initial Most Recent
MDG 1a\. Poverty headcount ratio, national poverty line 25,2% 40\.2% 39\.9%
(% of population) (2001) (2007)
MDG 1b\.Malnutrition prevalence, weight for age 8% 19,3% 14\.6%
(% of children under 5) (2006) (2011)
MDG 2\. Primary completion rate, total 100% 77\.8% 88\.0%
(% of relevant age group) (2004) (2011)
MDG 3\. GPI Ratio of girls to boys in primary and secondary 1 0\.88; 0\.85;
education (%) (Primary; 2004) (Primary; 2010)
0\.79 0\.93
(Secondary\. (Secondary; 2010)
2004)
MDG 4\. Mortality rate, under-5 (per 1,000) 75,6 14 122
(2004) (2011)
MDG 5\. Pregnancy-related mortality rate 344 per 100,00 669 per 100,000 670 per 100,000
(per 100,000 live births) live births live births live births
(2004) (2010)
MDG 7a\. Improved water source 75% 59,8% 59,8%
(% of population without access) (2005) (2011)
MDG 7b\. Improved sanitation facilities 51% 51%
(% of population without access) (2001) (2010)
Source: United Nations Development Programme (UNDP) database for Cameroon, (2012 update)\.
Main issues and challenges
2\. Between 2007 and 2011 Cameroon made some progress with respect to access to and
completion of primary education although girlsâ completion rate has grown less
significantly in the Zones dâÃducation Prioritaires (ZEP) (see Table 2)\. Specifically, there
have been notable increases in the Net Enrolment Rate (NER) and the PCR (across genders) and
a reduction in the repetition rate\. There have been improvements in the ZEP (particularly the Far
North, North, Adamaoua, North-West, and East regions, the disadvantaged pockets of the urban,
peri-urban areas, and the frontier parts of the country)\. However, the rate of progress has been
much slower than in the rest of the country\. For example, the PCR increased from 51 percent in
2007 to 63\.1 percent in 2011, with the figures for girlsâ education being 38 percent in 2007 and
only 42\.6 percent in 2010\. The 2016 target set out in the new education sector strategy 2013-
2020 is ambitious at 84\.1 percent for the ZEP by inter-regional comparisons\.
122
Table 2: Basic Education Indicators, 2007-2011
2016
Year 2007 2008 2009 2010 2011
Target
Student enrolments in primary
3,510
education [â000] 3,100 3,202 (2,470) 3,351 (2,585) 3,577 (2,781) 4,064 (3,201)
(2,712)
(Girls)
Gross Enrolment Rate (%) 101 104 107 110 111 110
Net Enrolment Rate (%) 76 82 87 88 90 91
Access rate to primary education 102 112 115 125 124 117
Repetition rate 21,8 16,8 14 13 13 8,3
Primary Completion Rate 64\.3 71\.5 72\.6 73 80\.3
84\.1
(Girls) (59\.5) (65\.3) (66\.4) (68\.8) (77\.4)
53\.2 57\.7 56
ZEP (girls) 51 (38) 63\.1 84,1
(38\.1) (42\.2) (42\.6)
Pupil-Teacher Ratio
50/1 52/1 53/1 51/1 52/1 53/1
Improvement
Randomness in contract teacher
45 37 35 35 41 anticipated, but
deployment (%)
no target set
Total number of teachers in
public primary education 50,712 (2006) 49,043 52,411 53,452 60,560
Number of public primary
school contract teachers 18,485 23,610 30,100 24,729 30,521 40,711
% of public primary school state 82 85
73 79 90 100
paid teachers (2006) (estimate)
Sources: World Bank: Country Status Report (2013): Education Simulation Model 2013; Republic of Cameroon Document de
Stratégie du Secteur de lâEducation et de la Formation (DSSEF, 2013-2020); Republic of Cameroon\. Statistical
Yearbooks\.
3\. A new vision and education sector strategy\. In August 2013 the Government of Cameroon
and development partners endorsed a new strategy entitled Document de Stratégie du Secteur de
lâEducation et de la Formation (DSSEF, 2013-2020)\. The DSSEF underpins the overarching
policies for the education sector as stated in the Constitution, the legislation Loi dâOrientation de
lâéducation en 1998, the Loi dâOrientation de lâenseignement supérieur de 2001, the MDGs, the
key pillars of the DSCE, and development partnersâ engagement in and support for the sector\.
The DSSEF embodies a continuum of the policies outlined in the Governmentâs Stratégie
sectorielle de lâéducation (SSE, 2006) and focuses on access and equity, quality and relevance,
sector governance, management, financing mechanisms for education and training, as well as the
institutional aspects, and the modalities for monitoring and evaluation (M&E) of the ESS 2006
implementation\.
4\. Decentralization features prominently in the Governmentâs new sector strategy for
education, the DSSEF\. Decentralization is a key feature of the DSSEF\. A decentralized
approach is currently used in the construction/rehabilitation of schools and the administration of
Governmentâs âminimum subsidy to schoolsâ (paquet minimum) for free primary education
(gratuité)\. The DSSEF proposes to further reinforce decentralization by transferring education
planning to the regional level and to formalize the relationships between parent-teachers
123
associations (PTA) and the local education administration\. School-based management is
included in the 1998 Loi dâorientation de lâéducation\. In 2001/2002 the Government instituted
school management committees (SMCs) (conseils dâécoles/établissements)\. The SMCs are in
charge of supervising, counseling, and evaluating the operations of schools\. However, the
DSSEF 2013-2020 acknowledges that the SMCs are not functional\. This is due to limited
capacity, lack of understanding about the rules, regulations, and procedures of the Association
des parents dâélèves et des Enseignants [APEE; Parents-Teachers Association (PTA)], the local
education administration, lack of access to appropriate information, and the lack of support from
deconcentrated education administration\. The DSSEF emphasizes the importance of the SMCs,
and plans to strengthen SMCsâ capacity by providing information on public resources and
education through workshops\.
5\. Regional disparities are most pronounced in the ZEP (Adamaoua, East, North, Far North and
North-West) regions\. Indicators on school enrolments of 6-11 year olds and on literacy rates of
15 year olds and above reflect the disparities\. Figure 1 shows the spatial disparities\.
Figure 1: Cameroon: Regional Disparities in Education
Source: Government of Cameroon: Draft Poverty Map, 2012\.
Taux de scolarisation (enrolment rate); taux dâalphabétisation (literacy rate)
6\. Cameroon faces specific challenges in the education sector:
(a) The education system is characterized by a fragmented institutional context with
five ministries in charge, one for each of the education sub-sectors: primary, secondary,
technical & vocational, higher education, and the fifth, the Ministry of Youth which is in
charge of youth affairs and youth policy\. There are two education systems that operate in
parallel: one for the Francophone and one for the Anglophone parts of the country\. One
of the main differences between the two is in the organization of secondary schooling,
with the duration of general secondary schooling being 4 and 5 years respectively in the
two sub-systems, converging to 3 and 2 years respectively at high school level (DSSEF,
2013-2020, pp\.24-25)\. Private schools account for a relatively large share of enrolments
at all levels of schooling, particularly in urban areas where 22 percent of students are
enrolled in private primary schools and 50 percent in Douala\.
124
(b) Sectoral Financing shows the country to be significantly below regional average\. The
GDP per capita allocation for education is about 3\.2 percent (2011) in Cameroon\. This
placed the country below the Sub-Saharan African regional average of 4\.4 percent\. Total
education spending as a percentage of total national spending showed a steady upward
trend from 13\.9 percent in 1995 to 25\.8 percent in 2003\. Within the framework of the
ESS 2006, the Government had committed to increase education budget to 19\.5 percent
of the national budget, but actual allocations fell short of this target; the budget share for
education decreased from 17 percent between 2007 and 2009 to only 16\.3 percent in
2011\. The share of total education budget allocated to basic education was only 38
percent in 2009\.
(c) Sub-sectoral financing reveals a stark picture, with secondary education receiving a
relatively large allocation in 2011 compared to primary or higher education \. The
explanation is in part due to the growing numbers enrolling in secondary education\. To
this extent it could be inferred that efforts to universalize primary education is showing
progress\. However, a countervailing factor is the practical evidence that primary
education is not really free in Cameroon\. Unit cost of primary schooling is high in
Cameroon, with Government contributing an increasingly lesser share to primary
education resulting in high out-of-pocket expenses for parents\.
(d) Moderate public spending on education falls short of target, resulting in high unit
cost of education\. There is a large difference in the unit cost of primary education
compared to Early Childhood Development (ECD) and the first cycle of general
secondary education\. At primary education level there has been an increase in the unit
cost (about 18% higher between 2002 and 2011), albeit the 2011 level of 7\.8 percent for
Cameroon is less dramatic than the unit cost increase in the Ivory Coast (18\.3 percent),
Ghana (17\.8 percent), Burkina Faso (16\.6 percent), and Senegal (16\.4 percent) during the
same time period\. Efficiency in public spending at secondary education level requires
serious review\. This is due inefficiency in large part to poor management of teachers (low
time on task and high numbers of specialized teachers who are not polyvalent) at the
secondary education level\.
(e) Cameroonâs primary education is characterized by high out-of-pocket expenses for
households at 42 percent of total education expenditure compared to 21 percent in
Senegal and 13 percent in Niger\. Schooling is officially âfreeâ (gratuité)\. However, the
high unit cost of primary education combined with poverty prevents many families from
being able to afford the required high out-of-pocket spending for primary schooling\. This
is one of the main reasons for not sending their children to school or for children
dropping out of school\. This phenomenon is due to low efficiency of public spending, the
need for households to pay for textbooks, uniform, exam fees, and transportation\. Private
financing is also used to pay for teachers through PTA fee collection, in both primary and
secondary education\. About 18 percent of primary school teachers are paid by parents\.
These teachers are called maîtres des parents\. The percentage is even higher in the rural
areas where education coverage as measured by pupil-teacher ratio is low\. On average in
the rural areas the public sector pupil-teacher ratio is approximately 55:1 in public
125
schools, 82:1 in the Far North, and 33:1 in the South\.
(f) There has been a surge in primary school enrolments, but girlsâ school participation
lags behind that of boys\. Over the past 15 years, the education sector has experienced a
strong expansion in school enrolments at all levels of education, with school-age
population growing by about 2\.5 percent annually\. Total enrolments across all levels are
now over 5\.7 million students, of which almost 3\.6 million attend primary school\. In
2010-11, the gross enrolment rate (GER) was 27\.2 percent in pre-primary, 112\.9 percent
in primary, 53\.4 percent in lower secondary, and 30\.2 percent in upper secondary\.16
However, girlsâ participation was only 46\.5 percent of enrolments (primary), 47\.2 percent
(lower secondary), and 48\.8 percent (upper secondary)\.
(g) Although the PCR has been improving rapidly it is still well below what is needed to
attain universal primary schooling\. In 2011, the PCR was in the range of between 71\.5
and 81\.3 percent, depending on the source of data used\.17 Despite the fact that schooling
is officially free, many familiesâparticularly the poorâcite high costs of schooling as
one of the main reasons for dropout\.
(q) There are wide disparities in school attendance based on gender and socio-economic
characteristics\. Net attendance for girls in rural areas is only about 65 percent, compared
with 79 percent for boys in rural areas\. The gender gap is narrower in urban areas, where
school attendance is high for all children\. The gender parity index for primary completers
increased from 0\.85 in the 1980s to 0\.88 in 2004\. However, since then it has dropped
back to the 1980s level of 0\.85\.
(r) ZEP and rural areas have weaker service delivery and human development
outcomes\. The 2006 Education Sector Strategy identified certain geographical areas as
priority for Government support to raise schooling access, attainment, and achievement,
as they were lagging behind the rest of the country in education outcomes\. These Zones
dâEducation Prioritaires (ZEP) are comprised of four provinces (Far North, North,
Adamaoua, East) and certain âpockets of low levels of school participation in the largest
citiesâ, and of the border regions\. The geographical disparities are apparent as can be
observed in Figure 2 that captures the poverty and human development indicators\. The
ZEP areas are characterized by relatively low enrolments, gender disparities, literacy and
high poverty\. Intra-regional differences also show disadvantaged pockets in each of the
ten regions, including the wealthiest\. Targeting investments in these areas would require
Governmentâs continued commitment in order to ensure greater equity and equality of
opportunity to education\.
16
Primary school enrolments were also comparatively high in the 1970s and 1980s, but dropped in the early 1990s because of budget cuts\. A free
primary education policy was introduced around 2000\.
17
The Primary Completion Rate is 81\.3 percent according to EDS, but only 71\.2 percent according to Government data, as reported in the
forthcoming Cameroon Education Sector County Status Report 2012\.
126
Figure 2: Poverty and education outcomes by Region
120 Poverty rate (%)
100
80
60 Enrollement rate
(%)
40
20 Literracy rate (%)
0
Source: Data from the draft poverty maps--Carte de la
pauvreté au Cameroun (INS, 2012), based on ECAM III
(INS 2007) and staff calculations\.
(s) Overall the status of education service delivery is weak\. Cameroon has relatively weak
service delivery indicators and significant regional disparities\. In public primary schools,
pupil-teacher ratios improved through the Contract Teacher Program (CTP), but are still
moderately high at an average of around 52 students per teacher in the country as a
whole, with urban-rural divides\. Further, pupil-teacher ratios (PTRs) vary considerably
from one region to another, between a low of 32 in the rural Littoral Region and a high of
82 in the rural area of the Far North Region\. In the areas with low population density
pupil: teacher ratios of 100:2 are not uncommon\. These teachers tend to teach multiple
classes ranging from basic literacy level [grade 1 or Section dâInitiation au Language
(SIL) to grade 6 or Cours Moyen 2 (CM2)] or more in other cases\. There are three types
of teachers: civil servants, contract teachers, and teachers hired and paid by
communities/parents (maîtres des parents)\. All types of teachers are required to be
graduates of the Ecoles Normales des Instituteurs de lâEnseignement General (ENIEG)\.
The national average number of graduates from the ENIEG is around 10,000 each year\.
Only about a tenth is being hired as civil servants or contract teachers\.
(t) There is a shortage of teachers that is affecting the quality of education service
delivery\. The Contract Teachers Program (CTP) was introduced by the Government in
the 1990s in order to address teacher shortages and very high PTRs in the context of a
freeze in civil servant recruitment in Cameroon\. Initially the program was not well
defined, leading to inequitable deployment, high attrition and uneven performance\. In
2000 the system was revamped\. A more sophisticated Contract Teacher Program (CTP)
was adopted\. The policy outlined salary scales18, benefits and a career path for contract
teachers\. With funding support (US$47\.3 million) from the EFA-FTI19, between 2007
18
The salary of contract teachers was set at approximately three times the average GDP per capita and two-thirds of regular civil servants salary\.
The GoC also established a career development strategy for contract teachers, including several levels of promotion\. The GoC provides an
additional payment to contract teachers in lieu of a guarantee of a pension\. Contract teachers are also given similar benefits as regular civil
servants, such as 18 days of leave during the school year\. Teachers with children are entitled to two additional days of leave per child\. If leave is
not taken during the school year, contract teachers are allowed to cumulate the leave (civil service teachers, however, are not allowed to cumulate
leave)\.
19
Cameroon has received support from the Fast Track Initiative (now Global Partnership for Education) through previous grant financing for
primary education\. The Governmentâs 2006 Education Sector Strategy served as the basis for Cameroonâs grant application\. Came roon received a
total of US$47\.3 million grant for the Contract Teacher Program, to be disbursed as two annual grants: (i) âYear Iâ financing in the amount of
US$22\.5 million for the payment of salaries for teachers hired in 2007 and 2008 (disbursed in 2008); and (ii) âYear IIâ financing in the amount o f
US$24\.8 million for reimbursing the Government for part of the 2010 salaries for contract teachers recruited between 2007 and 2010, and for the
127
and 2011, a total of 37,200 qualified contract teachers were hired providing for many
more teachers in schools; 60 percent of the new hires were female\. The teachers had all
acquired professional qualifications\. The level of teacher attrition is high among CTP
teachers\. Attrition has been particularly high (about 18 percent) among female contract
teachers from the south who were deployed in the northern part of the country,
particularly when deployed to the ZEP areas\. Attrition has also resulted from migration of
contract teachers to other ministries after being registered as civil servants in Ministry of
Basic Education [Ministère de 1'Education de Base (MINEDUB)]\.
(u) There is a severe shortage of teaching and learning materials\. On average only an
estimated 11 percent of students had access to textbooks in 2009/10\. Cameroonâs pupil-
textbooks ratio is the worst in Sub-Saharan Africa, at 12:1\. The ratio in the Central
African Republic, for example, is lower, at 8:1, followed by Togo where the ratio is 3:120\.
Textbook costs in Cameroon are relatively high compared with other Sub-Saharan
African countries\. Furthermore, textbooks are not always available locally\. Cost and
availability are issues constraining access to textbooks for students as well as teachers\.
The national average figures mask significant regional differences\. In disadvantaged
areas, there are very few textbooks in the classrooms\. Teaching materials are also of
limited quantity and of poor quality\. There is no good system of getting textbooks into
the hands of children in Cameroon\. Despite liberalization, Government and the
commercial book industry have not been able to supply the specified textbooks to most of
the public school system for many years due to systemic rigidities, vested interests and a
system that is largely catering to the private education system\. Therefore, the only
children who have books are those who can afford to attend private schools or those in
public schools whose parents can afford to buy them\. The rest of the children in the
country go without, and the vast majority of children, especially in the northern regions
of the country are deprived of any textbooks at all\. The current practice is that parents
need to buy the required textbooks in the marketplace\. A detailed analysis of the political
economy of the book industry in Cameroon is provided in Annex 7\.
The national textbook policy is currently being discussed by the Government and
publishers\. In response to comments and criticisms from publishers, the Government is
developing another draft of the policy\. Durability and pricing would need to be
addressed\. In order to make textbooks more affordable they will have to be reused for at
least three, preferably four years\. This means that (i) the books cannot be designed so that
the student writes in the book; and (ii) that the school must preserve the books so they
can be issued to the next year intake, and reused in a similar manner for three years\.
Therefore, they must be physically durable enough to last three to four years\.
2011 salaries\. The aim of this program was to reduce the pupil-teacher ratio in primary schools using the less costly contract teachers (as opposed
to civil servant teachers), while seeking to reduce the regional disparities in pupil-teacher ratios\. The CTP program was co-financed with the
Government of Cameroon and Agence Française de Développement (AFD)\. The CTP program led to a reduction in the average pupil-teacher
ratio in public primary schools from 48 to 45, through the recruitment of contract teachers, and to moderate improvements in the regional
disparities in pupil-teacher ratios\. World Bank/IDA support through the Education Development Capacity Building Program served to provide
the fiduciary due diligence support for the EFA-FTI Project\.
20
These are estimates\. There are certainly many countries in Sub-Saharan Africa with pupil:textbook ratios which are worse than 3:1\.
128
(v) There is no national assessments framework with formative student learning
evaluations\. Student learning achievement is mainly tested at the end of the primary and
secondary education cycles through high-stakes exams\. There currently exists no
formative evaluation of learning achievements\. Cameroon has participated in several
rounds of PASEC and recently carried out a national EGRA\. The Government is keen on
administering an EGMA in the near future\. Cameroonâs results on the Program for the
Analysis of Education systems (PASEC) test declined between 1998 and 2005, although
still higher than in many other Francophone countries in Africa\. 21 Between 2006 and
2010, there was an improvement in student flow indicators through lower dropout and
repetition and an overall sense that the quality was improving22\. However, the 2009
PASEC shows that learning outcomes have likely declined further since 2005, and the
2011 early grade reading assessment (EGRA) found that 49 percent of 3rd graders
students had great difficulty with reading, and 27 percent could not read at all\. There is a
need for placing these different assessments within a more systematic national
assessment framework, that emphasizes the development of national technical capacity
for assessment, wider sharing of assessment results, and improving the feedback loop
from assessment results to those responsible for curriculum and teacher training\.
(w) The status of school infrastructure is poor\. Girlsâ education is particularly affected by
the lack of proximity of schools to their homes, poverty, family obligations, early
marriage, and absence of latrines and water points in many schools\.
(x) The quality of education statistics is weak and poor\. The education management
information system (EMIS) in Cameroon is complicated by the fact that there are five
ministries of education, each of which collects data for the own sub-sector\. There is
considerable variability in the completeness and reliability of data collected by different
ministries\. The EMIS for primary education is perhaps the most complete and longest-
running\. The United Nations Educational, Scientific and Cultural Organization
(UNESCO) is supporting Government efforts to create and link regionally comparable
data, and the United Nations Childrenâs Fund (UNICEF) is undertaking a pilot data
collection and school mapping exercise23 in the ZEP to capture information on various
equity indicators from schools\. The pilot would result in new data being collected on
refugees, disabled children, and minority populations (Baka, Mbororo, etc\.)\. These will
be added to the MINEDUBâs national database\. The data would include district and
school level information by gender thus allowing deeper analysis on gender disparities at
the micro level, and serve as a tool for improved planning and tracking of the most
vulnerable children (girls, ethnic minorities, refugees)\.
The production of education statistics has been strengthened under the recently
completed World Bank-funded âEducation Development Capacity Buildingâ Project
21
On the 5th grade PASEC student assessment, only Gabon achieved a higher mean score than Cameroon in French, and only Madagascar did
better than Cameroon in mathematics\.
22
World Bank Implementation Completion Report on the âEducation for All-Fast Track Initiative: Support to the Education Sectorâ\.
23
The effort is coupled with support for a partnership between the MINEDUB and the Harvard Center for Geographic Analysis for training and
development of a web-based dynamic education mapping GIS system for Cameroon\.
129
(P075964)\. The Project supported the on-time production of annual statistical yearbooks
for primary, secondary and higher education\. However, there are still issues with the
reliability of the data\. With the Bankâs technical support and financing, Government has
prepared school report cards (tableau de bord) across the country\. This has proved to be a
useful exercise in informing the EMIS at the primary education level, and due to this
added value the school report cards process needs to be mainstreamed\.
(y) Weak governance and accountability is pervasive in the education sector\. Tackling
this issue is made complicated by the fragmentation in the management of the education
sector\. At a project level, aspects such as political interference, procurement delays, price
distortions due to lack of competition, and institutional inertia to undertake timely
decisions contribute to the problem\. For the CTP, the 2008 technical audit and the
financial audit of the Year I grant had revealed deficiencies\. At the time the Year II
Education for All-Fast Track Initiative (EFA-FTI) grant was designed in 2010, there was
consensus that an appropriate system of internal controls had to be put in place\. However,
there has been only partial progress in this area\. This needs to be taken up by the
proposed third and final phase of support for the CTP through the Project\.
At the sector level, accountability is weak, in part because education sector stakeholders
do not have access to reliable and timely data on sector performance to stimulate greater
accountability and performance improvement at all levels\. A study on governance in
education (World Bank, 2012) focused on three regions with different profiles (North
West, Littoral, and Far North)\. The study revealed that public school resources were not
transparently allocated, and there were instances of inefficient resource management
resources\. The study proposes four strategies to improve education outcomes: (i)
establish and implement benchmarks and standards for performance at the school and
regional levels of Government, (ii) improve teacher management and address governance
issues, (iii) ensure an equitable distribution of resources and the effective monitoring of
budgets and expenditure, and (iv) establish a system of public transparency to promote
good governance\.
(z) Teacher training is highly theoretical and academic in nature without sufficient
professional and practical experience training\. The curriculum of the Teacher Training
Colleges was reformed in the 1990âs\. Since then the program has become theoretical
academic outlook with very little time allowed for practical training\. This is reflected in
the quality of teaching of ENIEG graduates\. Teacher training, therefore, requires
attention and especially in the use of specific teaching and learning materials to draw
ENIEG students to the nuances of building basic literacy and numeracy skills\.
Analysis of Textbooks
7\. There is a severe shortage of teaching and learning materials in primary schools\. On
average only 11 percent of students had access to textbooks in 2009/10 (Table 7\.1)\. The national
average figures mask significant regional differences\. In the disadvantaged areas, there are
130
practically no textbooks in the classrooms or one textbook for every 50 or 100 students\. Other
than textbooks, teaching materials are also of limited quantity and of poor quality\.
Table 7\.1: Example of textbook availability by grade, 2009/10
Textbooks SIL CPS/CP CE1 CE2 CM1 CM2 Total
Reading 12% 12% 11% 10% 10% 11% 11%
Mathematics 10% 10% 10% 10% 10% 11% 10%
Science 3% 3% 3% 4% 4% 5% 4%
English/French 9% 10% 9% 9% 9% 10% 9%
Source: Statistical yearbook 2009/2010 of MINEDUB/DPPC\.
Acronyms : SIL Section dâInsertion Linguistique; CPS Cours Préparatoire Spécial; CP Cours Préparatoire;
CE1 Cours élémentaire 1; CE2 Cours élémentaire 2 ; CM1 Cours Moyen 1; CM2 Cours Moyen 2\.
8\. The current practice is that parents need to buy the required textbooks in the marketplace\.
Textbook costs are relatively high compared with other Sub-Saharan African countries\.
Furthermore, textbooks are not always available locally because publishers are not motivated to
supply poor districts where parents cannot afford to buy and booksellers are not established in
areas where there is no significant market for books\. Cost and availability are issues constraining
access to textbooks for students as well as teachers\. Many families do not buy the required
textbooks, since they are not perceived as being mandatory as other out-of pocket costs of
education, such as school admission fees, contributions to parent-teacher associations, and
uniforms\.
9\. The system is characterized by: (i) monopoly and market capture; (ii) unfair advantage;
(iii) conflicts of interest; (iv) undue political influence; (v) an approach to âsharingâ the market
that has resulted in collusive behavior: the current practice of designing textbooks to be written
in by students requires textbooks to be purchased new each year and prevents re-use and thus
extended classroom life, maximum cost amortization and a cheaper textbook provision system,
which would enable government to more easily afford the costs of free provision\. Deliberate
pressure from publishers has been reported forcing MINEDUB to make marginal changes to the
curriculum each year that would require the printing of new editions of books\. Small print runs
that result from the restricted market caused by parental inability to pay the costs of textbooks
also keep textbook prices high and make it difficult for parents to purchase textbooks from
booksellers; and (vi) a textbook distribution system that works well for private school parents
and some richer parents in state schools in urban areas but is not oriented to effective supply to
schools in poor rural areas, although it is probable that there are commercial distributors who
could undertake this kind of distribution on a tendering basis\. Cameroonâs pupil-textbooks ratio
is the highest in Sub-Saharan Africa\.
Figure xx: Pupil-textbooks ratio in Cameroon (2012)
10\. Political economy of textbooks: The potential
market for textbooks is estimated to be around
US$120 million\. Parents are required to purchase
textbooks, more so at the primary level than at
secondary level\. Essential teaching materials are
scarce due to high cost and low availability\. The
131
Source: UNESCO data base (2012) and World Bank staff calculations\.
problem with textbooks supply is not a new issue in Cameroun, and it has always been a
controversial one\. The ministries for basic and secondary education publish the official list of
textbooks for each level of education on the basis of advice from the National Commission for
Textbooks\. The political economy of textbooks is complex and characterized by entrenched
interest groups\. There is competition among publishers, authors, local editors, local printers,
libraries, briefcase booksellers, informal selling, and a second-hand market for textbooks\. The
entrenched interest groups have put in place a market that largely caters to private schools\. This
has led to supply constraints in public sector schools since there is no government supply of
textbooks and a high proportion of parents cannot afford to purchase the textbooks\. There are
few booksellers in poor rural areas and those that do exist can only afford to stock a very few
titles\. A survey in 2012 in the Far North and North-West regions showed that only 3 percent of
students have a mathematics textbook\. A national survey reported 21 percent with a mathematics
book\.
11\. A World Bank report released in January 2000 advocated liberalization of the textbooks
market\. This was formalized in 2002\. A decade later, the situation has not improved\. The
textbooks market is 100 percent oriented to supplying books for the strata of society that can
afford to purchase them\. Wealthy parents sending their children to private schools are the only
ones who can afford to purchase the textbooks\.
12\. Despite liberalization, Government and the commercial book industry have not been able
to supply textbooks to the public school system for many years and therefore, the only children
who have books are those who can afford to attend private schools or those in public schools
whose parents can afford to buy one or two core textbooks\. The rest of the children in the
country go without, and the vast majority of children, especially in the northern regions of the
country are deprived of any textbooks\. Figures for textbooks availability in Cameroon differ
from region to region and from urban to remote areas\. Estimates of the current national
pupil:textbook ratio suggest an average of 11:1 in the core subjects of language and mathematics
with much worse ratios in other curriculum subjects\. In urban areas the pupil-textbook ratio is
better, but there are regions where the ratio is 30:1 and worse\. In the Far North region, UNICEF
and other sources report that there are areas where primary schools where primary schools have
no textbooks at all, and have not had them for so long that none of the children have ever used a
book\. Teachers in these schools have become accustomed to never using textbooks\. Almost no
schools in Cameroon are reported to have reasonable collections of reading books to support the
development of literacy\.
13\. Cameroon was long dominated by textbooks supply from France and the United
Kingdom\. This is changing and Cameroon publishing, though still struggling against commercial
difficulties is emerging as an industry\. Now often in partnership with French and British
publishers, both local and the international publishers are mutually benefitting\. The printing
industry is struggling against world class printing which is cheaper and more reliable\. The
bookselling industry, closely linked with publishing, is capable of distribution throughout the
country, although probably not through a sole supplier\. All three parts of the Cameroon Book
industry are almost entirely dependent on textbook sales for survival, and especially on sales of
132
the core primary textbooks\. It is Governmentâs policy to protect and develop the local Cameroon
book industry\.
14\. In order to address the pressing needs of public school children, in December 2012 the
Government launched a forum for a new textbooks policy\. The timing and the restricted
invitation to the forum is seen as the perpetuation of monopolistic practices by the Publishersâ
Unions\. The Government is taking steps to reform the system through the development of a new
policy on teaching and learning materials\. The objectives are to ensure that teaching and learning
materials are available and accessible to teachers and students at the basic education (primary
and secondary) and vocational education and training levels\. This is being done by (i) addressing
the issue of high textbook system and textbook unit costs and the capacity of parents to pay for
the textbooks on the one hand, and on the other, the allocation of resources from Government to
make textbooks available in all 10 regions in a timely manner; (ii) improving the quality of
pedagogy in science, physics, culture, moral, and ethics in textbooks as a means of addressing
equity and to eliminate social stereotypes and all types of discrimination; and (iii) promoting
public-private partnerships in the sector aimed at encouraging quality improvements in teaching
and learning materials especially among national publishers, and making them more competitive
15\. The national textbook policy is currently under debate between the Government and the
publishers\. In response to comments and criticisms from publishers, the Government is now
developing another draft of the policy\. The debate is healthy\. Publishers have made some good
suggestions (for example, ensuring that schools establish active textbook selection committees,
that it should be recognized that authors do not have to be pedagogical inspectors or teachers,
that minimum production standards for high quality books should be enforced, that the
evaluation and approval methodology should be transparent and the approval completed earlier
so that publishers can make books available earlier in the school year, and that libraries should
be established in schools\. More extravagant requirements have also been suggested by
publishers, including Government support for a national paper industry)\. If a good compromise
is reached, it would strengthen the book industry, provide a more transparent and more efficient
system of textbook evaluation and approval and, most important, improve the affordability of the
textbooks, the speed, and equity of supply\. As previously suggested, durability and pricing
would need to be tackled\.
133
Annex 8: Letter of Sector Policy
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
République du Cameroun
Lettre de politique pour le secteur de lâéducation et de la formation, 2013-2020
134
135
136
137
138
139
140
141
142
143
144
Figure 2\.1\. Institutional Arrangements for the Education and Training Sector Strategy 2013-2020
145
Annex 9: Lessons Learned
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
World Bank24 and How the lessons have been addressed in the
Other development partners25 Project design
A systematic assessment of the political economy The issues and challenges sub-section of the
environment in Project development provides a sound basis Project appraisal document captures in detail the
for designing implementation strategies\. political economy dimensions of the education
sector\.
Financing instrument and modality\. The Government of The Government has expressed willingness to use
Cameroon has demonstrated its commitment, ability, and a hybrid approach (procurement through national
willingness to assume budget responsibility for the system and through World Bank system) to the
Contract Teachers Program\. Further, it is seeking to design and implementation of the Project\. The
introduce key reforms in the teaching and learning materials Project would:
area while continuing to use the existing commercial/private (a) Use Investment Project Financing (IPF), but
sector publishing and printing of textbooks and didactic with disbursement-linked indicators (DLIs),
materials\. for Sub-components 1\.1 and 1\.2 (the two
major quality investments of the Project)\. This
implies using national system for
procurement; and
(b) Use regular Investment Project Financing (IPF)
for Components 2 and 3 of the Project\. This
implies using World Bank system for
procurement\.
The EFA-FTI Project lessons from recruiting and By converting the existing maîtres des parents to
deploying contract teachers across the country precipitated contract teacher status, the Project would ensure
concerns regarding contract teachersâ attrition (specifically that teachers continue to work in the respective
of female teachers), distribution, absenteeism, and resulting environments that are most suited to their cultural
effects on the quality of education\. Cameroon is a culturally background\. This is expected to reduce teacher
diverse country with clear demarcation of Francophone and attrition, improve teacher distribution, and
Anglophone education systems\. Governmentâs efforts are to motivate teachers to perform better on the job
unify the system\. Recruiting and deploying teachers from the through improved pay and benefits, and the
South to the more remote Northern areas, with marked provision of localized teacher training\.
cultural differences has rendered the teacher deployment
approach to be less effective than intended\. Teacher attrition
has been due to the absence of appropriate support groups\.
There are particular challenges of implementing Projects There will be no independent project
in an environment with multiple ministries using a separate implementation entity (PIE) to implement the
PIU\. There is merit in setting up a Permanent Secretariat project\. The project will be implemented by
with a minimum amount of resources and staffed with MINEDUB\. A Project-specific MINEDUB
24
Lessons learned from the Education For All-Fast Track Initiative (EFA-FTI) Project (P116437) that closed in December 2011
and summarized in the World Bank Implementation Completion and Results Report ( ICR2591; June 2012); the World Bankâs
Education Development Capacity Building Project (IDA Cr\.4070-CM) that closed in September 2012, and summarized in the
World Bank Implementation Completion and Results Report (ICR2591; February 26, 2013)\.
25
Agence Française de Développement (AFD) C2D Project; previous and ongoing support from other development partnersâ
specifically UNICEF (learning materials procurement and distribution to flood emergency areas, school mapping), UNESCO
(education management information system), and JICA (school construction)\.
146
appropriate Project implementation specialists (financial Secretariat staffed with MINEDUB and
management specialist, procurement specialist, accountant) MINESEC, and some recruited staff (dedicated
with periodic rotation of technical staff only to implement financial management, accountant, procurement
Projects with heavy procurement\. The Permanent Secretariat specialist, data management specialist, report
would report directly to the Steering Committee of writing, and archiving assistant) would be
MINEPAT\. responsible for the day-to-day functions of the
Project\. They would be paid through Government
funds\.
Results Framework\. Two lessons that are important to take The Project would measure the individual and
into account: (i) the results measures would need to relate quantifiable variables as key outcome indicators\.
appropriately to the length of the implementation timeframe Each of the variables would contribute to the
for a Project; and (ii) it is important to avoid using composite anticipated positive Project impact\.
indicators for measuring individual Project sub-components\.
For example, the EFA-FTI Project used the indicator
ârecruitment and deployment of contract teachersâ as the
outcome indicator\. While this is an important impact that
was sought through the Project, the quantitative outcome
measurement of the Project resulted in demonstrating that
each of the integral parts of the measurement had a
confounding effect\. This resulted in showing that the Project
development outcome was less favorable than it would have
been had a less complex indicator been selected\.
Evidence-based and data driven decision- making provides The Project would combine decision-making
an objective basis for decisions\. (targeting Project regions and sub-regions) based
The on-time production of annual statistical yearbooks for on the use of objective criteria and data, with
primary, secondary and higher education was financed validation by Government\.
through the IDA Education Development Capacity Building
Project\. There are still issues with the reliability of the data, The Project would invest in: (i) supporting the
however\. During the last few months of implementation, the Government to set up the architecture for the
Project provided funding for technical assistance to education sector; (ii) use geo referencing (school
triangulate and validate data to resolve some of the mapping) to identify the public and private sector
consistency and reliability issues\. The main issues are with schools at primary and secondary education levels;
standardization of data collection instruments, absence of and
standard norms for unifying the disparate databases of the (iii) link school report cards (tableau de bord) with
five ministries of education, problems with data reliability, the school mapping data, and (iv) provide periodic
and issues surrounding data mining for coherent analyses; information on schools report cards to the
communities\.
Experience of development partners, and especially of
UNESCOâs regional office in Yaoundé provides some
insights\. (i) UNESCOâs efforts are currently directed
towards ensuring that the decentralized regional education
departments are linked up to the central ministries, and that
Cameroon is linked up with the regional database\.
Government is seeking standardization of data, indicators,
and a unified system at the central level across the ministries
of education; (ii) UNICEFâs experience with piloting school
mapping would be taken into consideration\. Government is
seeking school mapping of all primary and secondary
schools\.
147
A coherent plan for institutional capacity development The Project capacity development elements
directly linked to the Project design has a greater impact (Component 2) would be directly linked to the
than disparate capacity development elements\. other sub-components of the Project\. This would
ensure opportunities for knowledge acquisition-by-
doing, direct problem-solving, and the design of
interim corrective measures as required\.
Improving accountability in the allocation of public Emphasis would be placed on developing and
resources and promoting the efficient use of the resources disseminating appropriate and timely information
requires multiple and mutually reinforcing strategies\. At and communication during the Project
the sector level, accountability is weak, in part because as implementation process in order to: (a) promote
education sector stakeholders do not have access to reliable informed decision-making; (b) reduce unwanted
and timely data on sector performance, that can stimulate interferences; and (c) promote monitoring and
greater accountability and performance improvement at all evaluation on objective bases\.
levels\. A study on governance issues in education that
focused on three regions with different profiles (North West,
Littoral, and Far North) revealed that there was little
accountability in the allocation of public resources in the Far
North, and not surprisingly, instances of inefficient
management of these resources\. The study proposes four
strategies to improve education outcomes: (i) establish and
implement benchmarks and standards for performance at the
school and regional levels of Government, (ii) improve
teacher management and address governance issues, (iii)
ensure an equitable distribution of resources and the
effective monitoring of budgets and expenditure, and (iv)
establish a system of public transparency to promote good
governance\. Finally, access to information at each level of
the sub-sector would increase accountability and
transparency\.
Appropriate governance and anti-corruption measures Third party verification of transactions would be
need to accompany the lending instruments to enable employed as a strategy\. Third party verification
timely and efficient monitoring of fiduciary challenges\. would include three dimensions: (a) financial; (b)
technical; and (c) capacity assessments\.
Adhering to an agreed-upon procurement plan is The procurement plan for the project would be
indispensable for the success of Projects\. prepared and included following the appraisal
mission\.
An implementation timeframe of 3 years for GPE projects The proposed Project would be implemented in 4
is relatively short in order to measure results/impact on the years (2014/15-2017/18)\.
ground\. This is based on implementation experience from
the EFA-FTI project in Cameroon and other projects
financed by the GPE in other Sub-Saharan African countries\.
Most GPE financed projects in Sub-Saharan African
countries have requested extensions\.
148
Annex 10: List of Supporting Documents
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
Agence Française de Développement (AFD), mai 2012\. Cameroun : Rapport dâEtape relatif Ã
lâappui de lâAFD Ã la Contractualisation des Enseignants de lâEducation Primaire\.
Division éducation et formation professionnelle\. Paris, France\.
Cameroun: Mise en Åuvre du programme de contractualisation des instituteurs vacataires et des
maîtres des parents\. Juillet 2008 Audit Test : Rapport Final\.â 2AC (Associes Audit et
Conseil), Paris, France\.
Deloitte\. Janvier 2012\. Audit de la composante contractualisation des instituteurs : Exercices
2010 et 2011\. Rapport final\. Financement par la Banque mondiale\. Yaoundé, Cameroun\.
Education for All-Fast Track Initiative: August 2010, Support to the Education Sector\. Project
Appraisal Document\. Report No\.48373-CM\. Washington, D\.C\., USA\.
GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit)\. Décembre 2012, Rapport de
Capitalisation des expériences et pistes dâaction pour le PADDL III dans le secteur
dâéducation de base\.
Government of Cameroon, 2009\. Cameroun Vision 2035\. Ministry of Economy, Planning and
Regional Development\.
Institut National de la Statistique\. Juin 2008\. ECAM 3\. Enquête Camerounaise auprès des
ménages\. Tendances, profils et déterminants de la pauvreté au Cameroun entre 2001-
2007\. Yaoundé, Cameroun\.
Institut National de la Statistique\. Juin 2011\. ESSI 2\. Jeunes et marché du travail au Cameroun
en 2010\. Yaoundé, Cameroun\.
Institut National de la Statistique, Octobre 2011\. ESSI 2\. Enquête sur lâEmploi et le Secteur
Informel\. Yaoundé, Cameroun\.
MINEDUB, 2013\. Maquette annuaire statistiques 2012\. Document de travail\. Yaoundé,
Cameroun\.
Ministry for Youth, Government of Cameroon (2011)\. Un Cameroun de 20 Millions: Face aux
Défis de la Jeunesse\. Prepared with Support from the Cameroon Center for Census and
Population Studies (BUCREP) and UNFPA\.
République du Cameroun\. 2010\. 3e Rapport de présentation des résultats définitifs (RGPH)\. La
population du Cameroun en 2010\. Yaoundé, Cameroun\.
___________\. Avril 2011\. Rapport sectoriel de mise en Åuvre de la stratégie de lâéducation\.
Secrétariat Technique des Ministères de lâéducation\. Yaoundé, Cameroun\.
____________\. 2005 Structures de la population Indicateurs démographiques\. Données
nationales\. Yaoundé, Cameroun\.
____________\. 2007\. MINEDUB\. Annuaire Statistique 2006/2007
____________\. 2008\. MINEDUB\. Annuaire Statistique 2007/2008
____________\. 2009\. Document de Stratégie pour la Croissance et lâEmploi (DSCE)
____________\. Septembre 2010\. Stratégie Nationale de Lutte contre la Corruption\. 2010-2012\.
____________\. 2011\. MINEDUB\. Annuaire Statistique 2009/2010
149
____________\. Décembre 2011-Janvier 2012\. Rapport mensuel du secrétariat technique du
comité de suivi des opérations de contractualisation\. Yaoundé, Cameroun\.
____________\. 2012\. MINEDUB\. Annuaire Statistique 2010/2011\.
____________\. Ministère de lâéducation de base\. Programme dâAppui au Système Educatif\.
Avril 2012\. Etude portant sur lâimpact du recrutement des instituteurs contractualises
sur la qualité de lâenseignement primaire au Cameroun\. Rapport final provisoire préparé
par PRO INVEST : au service du développement\. Yaoundé, Cameroun\.
____________\. 2013\. MINEPAT\. Draft final de stratégie sectorielle pour lâéducation
____________\. 2013\. MINEDUB\. Direction des Ressources Humaines\. Rapport sur le
programme de contractualisation des instituteurs\. (Draft)
____________\. 2013\. MINEPAT\. Etat des maîtres des parents en activité dans les écoles
primaires publiques du Cameroun\. Direction des Ressources Humaines Revue de la
Stratégie Sectorielle de lâEducation du 18 au 21 avril 2011\. Avril 2011\. Aide-mémoire
conjoint du Secteur de lâEducation\. Yaoundé, Cameroun\.
SOFRECO/MINEDUB\. Juin 2011\. Rapport provisoire sur lâévaluation des acquis scolaires en
CM1/Class 5 au Cameroun\. Yaoundé, Cameroun\.
World Bank\. Country Assistance Strategy for the Republic of Cameroon, for the Period FY10-
13\. 2010\. World Bank\. Washington, D\.C\. USA\.
__________\. CAS Progress Report for Cameroon for the Period FY10-FY13\. 2012\. World Bank\.
Washington, D\.C\. USA\.
__________\. 2012\. Implementation Completion and Results Report on a Catalytic Fund Grant
for an Education For All-Fast Track Initiative: Support to the Education Sector (TF-
97256)\. Africa Region, Washington, D\.C\., USA\.
__________\. 2012\. Policy Note on Governance in the Education Sector\. Africa Region,
Washington, D\.C\., USA\.
__________\. Implementation Completion and Results Report on a Credit to the Government of
Cameroon for an Education Development Capacity Building Project (P075964)\. 2013\.
Africa Region, Washington, D\.C\.
__________\. Le Système dâEducation et de Formation du Cameroun 2013\. Education Sector\.
Country Status Report for Cameroon\. Human Development Department, Africa Region,
Washington, D\.C\., USA\.
150
Map
REPUBLIC OF CAMEROON
Equity and Quality for Improved Learning Project (P133338)
151 | APPROVAL |
P106823 | Page 1
INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: AC5500
Date ISDS Prepared/Updated: 10/20/2010
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Bolivia
Project ID: P106823
Project Name: Feeder Roads Sector Development Project
Task Team Leader: Gylfi Palsson
Estimated Appraisal Date: May 20, 2011
Estimated Board Date: July 19, 2011
Managing Unit: LCSTR
Lending Instrument: Specific Investment
Loan
Sector: Roads and highways (90%);Public administration- Transportation (10%)
Theme: Rural services and infrastructure (100%)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
25\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER/RECIPIENT
4\.50
4\.50
B\. Project Objectives [from section 2 of PCN]
Project Development Objective
The Project Development Objective is to ensure access of targeted rural populations to local
services (economic, social, educational, civic, religious, etc\.) by improving the quality of the
rural road network in selected municipalities and in a sustainable fashion, establishing effective
methods for the maintenance of this network, and developing the institutional capacity necessary
at the local and central levels for rural road management as a whole\.
C\. Project Description [from section 3 of PCN]
The Project comprises 3 components:
Component 1\. Institutional strengthening at the central and local levels
The objective of this component is to provide a comprehensive institutional strengthening
package at the local and central level\. One of the objectives at the central level is to identify the
management tools necessary to allow the VMT to meet its obligations as regulating entity, as
well as the entity responsible for safeguarding the maintenance of rural roads by local
Page 2
governments\. Also at the central level, the national road agency (ABC) will receive
strengthening to execute Component 2, whereby a principal responsibility of ABC will be to
provide municipalities with hands-on assistance on carrying out processes associated with
planning, preparation of bidding documents, awarding and signing of contracts, supervising of
works, and subproject evaluation\. Strengthening at all levels will be largely comprised of
technical assistance and equipment\.
Component 2\. Rehabilitation of feeder roads
This component will finance rehabilitation and improvement of rural roads in the targeted areas,
using maximum referential costs to ensure the application of technologies appropriate to the type
of intervention\. The execution of works will be contracted to firms with the necessary technical
and financial capacity\. See further discussion under section on institutional arrangements\.
Component 3\. Maintenance of feeder roads
The objective of this component is to improve the capacity of local governments to plan,
budget, execute, and supervise, the maintenance of the road network under their responsibility\.
This capacity will be built with hands-on support from the VMT, which will control the quality
of the local governments maintenance management as a whole\.
The entire financing of this component will be supplied by local governments\.
D\. Project location (if known)
Physical investments will be made in selected municipalities in the Prefecturas of La Paz,
Cochabamba and Santa Cruz\.
E\. Borrowers Institutional Capacity for Safeguard Policies [from PCN]
VMT will have responsibility for implementing the project, and will act as the principal
counterpart, helping to coordinate with other responsible entities (ABC and local government)\.
While ABC has some capacities for safeguard policies, VMT and municipalities have very weak
capacity in this regard\.
F\. Environmental and Social Safeguards Specialists
Mr Raul Tolmos (LCSEN)
Mr Jose Vicente Zevallos (LCSSO)
Ms Ruth Llanos (LCSSO)
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered
Yes No TBD
Environmental Assessment (OP/BP 4\.01)
X
Given the unknown scope and siting of subprojects, an Environmental and Social
Management Framework (ESMF) will be prepared\. The ESMF will contain information on how
will it identify impacts, the screening methodology, a description of the types of mitigation
activities that will be required to minimize and manage these impacts and information on
budget and institutional arrangements\. Principles and actions outlined in the ESMF will be
Page 3
Safeguard Policies Triggered
Yes No TBD
translated into site-specific Environmental Management Plans (EMPs) when sub-projects are
identified and before actual works on that sub-project begin\. The ESMF, and subsequent EMPs,
will also include information on #chance find# procedures and occupational health and safety\.
The ESMF will also describe the mechanisms for holding contractors accountable for
environmental and social safeguards actions (e\.g\. through legal covenants in contracts, etc\.)\.
Technical assistance, training of counterparts and rehabilitation and improvement of rural roads
in the targeted areas will be eligible for support under this project\. Activities that might impact
on natural protected areas and critical and pristine habitats and forests as well as purchase and
storage of pesticides will be ineligible for support under this project\.
Natural Habitats (OP/BP 4\.04)
X
Though this policy is not triggered, the ESMF screening procedures will include a way to
filter and document that activities that will impact critical natural habitats will not be supported
by the project\.
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Since this policy is not triggered, the ESMF will outline controls to ensure that any activities
that propose to procure, store, or handle pesticides are not supported\.
Physical Cultural Resources (OP/BP 4\.11)
X
This policy has been triggered because of the unknown siting of sub-projects\. The ESMF will
include steps to either screen out any sub-projects that would impact on known cultural sites as
defined under the policy or include the actions necessary to minimize, mitigate and manage any
potential impacts that were caused by sub-projects supported in these areas\.
Indigenous Peoples (OP/BP 4\.10)
X
Considering that Indigenous Peoples are the overwhelming majority of project beneficiaries,
the elements of an Indigenous People#s Plan (IPP) # including, but not limited to, appropriate
consultations # will be included in the overall project design\. Before appraisal, the team will
ensure that the elements of an IPP have been reflected and that broad community support has
been documented\.
Involuntary Resettlement (OP/BP 4\.12)
X
This policy was triggered in light of the potential for resettlement, as defined under the
policy\. Given the unknown nature and siting of each sub-project, a Resettlement Policy
Framework (RPF) will be prepared prior to appraisal and incorporated into the ESMF\. The RPF
will identify how resettlement impacts will be identified and managed, together with how
Resettlement Action Plans (RAPs) will be developed for each site where resettlement is present\.
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
Environmental Category:
B
-
Partial Assessment
III\. SAFEGUARD PREPARATION PLAN
A\. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS
would be prepared: 10/29/2010
Page 4
B\. For simple projects that will not require a QER, the target date for preparing the PAD-stage
ISDS: N/A
C\. Time frame for launching and completing the safeguard-related studies that may be needed\.
The specific studies and their timing
1
should be specified in the PAD-stage ISDS\.
TBD
Consultations\. The ESMF will specify the process by which project-affected people at the
sub-project sites and other stakeholders will have an opportunity to comment on the actions
proposed in the safeguard instruments that are ultimately developed\. This will be
complemented by a grievance mechanism that outlines a methodology for capturing and
managing grievances at the site level and, if necessary, at the national level\.
IV\. APPROVALS
Signed and submitted by:
Task Team Leader:
Mr Gylfi Palsson
08/04/2010
Approved by:
Regional Safeguards Coordinator:
Mr Glenn S\. Morgan
09/30/2010
Comments:
Sector Manager:
Mr Aurelio Menendez
10/12/2010
Comments:
1
Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected
persons\.
Page 5 | APPROVAL |
P010393 | Document of
The World Bank
Report No\. 26224
PROJECT PERFORMANCE ASSESSMENT REPORT
INDIA
NATIONAL AIDS CONTROL PROJECT
(Credit No\. 2350)
July 2, 2003
Sector and Thematic Evaluation Group
Operations Evaluation Department
Currency Equivalents (annual averages)
Currency Unit =Rupee
(As of January 19, 2000)
Rupee 43\.5 US$1\.00
Rupee 1\.0 US$ 0\.02299
Abbreviations and Acronyms
AIDS Acquired immunodeficiency syndrome
BSS Behavioral Surveillance Survey
CDC United States Centers for Disease Control and Prevention
CSW Commercial sex worker
DfID Department for International Development (United Kingdom)
GOI Government of India
GPA Global Programme on AIDS/WHO
HIV Human immunodeficiency virus
ICR Implementation Completion Report
IDU Intravenous drug user
EEC Information, education, and communication
MOHFW Ministry of Health and Family Welfare, GOI
MSM Men who have sex with men
NACO National AIDS Control Organization
NACP National AIDS Control Programme
NFHS National Family Health Survey
NGO Nongovernmental organization
OED Operations Evaluation Department
PIS Prevention Indicator Survey
PPAR Project Performance Assessment Report
PWA Person living with HIV/AIDS
SACC State AIDS Control Cell
SACS State AIDS Control Society
TNSACS Tamil Nadu SACS
STD Sexually transmitted disease
TRG Technical Resource Group
USAID United States Agency for International Development
WHO World Health Organization
Fiscal Year
Government: April 1-March 31
Director-General, Operations Evaluation Mr\. Gregory K\. Ingram
Acting Director, Operations Evaluation Department Mr\. Nils Fostvedt
Manager, Sector and Thematic Evaluation Group NMr\. Alain Barbu
Task Managers: Mr\. Timothy Johnston and
Ms\. Martha Ainsworth
i
OED Mission: Enhancing development effectiveness through excellence and Independence In evaluation\.
About this Report
The Operations Evaluation Department assesses the programs and activities of the World Bank for two
purposes: first, to ensure the integrity of the Bank's self-evaluation process and to verify that the Bank's work is
producing the expected results, and second, to help develop improved directions, policies, and procedures through
the dissemination of lessons drawn from experience\. As part of this work, OED annually assesses about 25 percent of
the Bank's lending operations\. In selecting operations for assessment, preference is given to those that are
innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which
Executive Directors or Bank management have requested assessments; and those that are likely to generate
important lessons\. The projects, topics, and analytical approaches selected for assessment support larger evaluation
studies\.
A Project Performance Assessment Report (PPAR) is based on a review of the Implementation Completion
Report (a self-evaluation by the responsible Bank department) and fieldwork conducted by OED\. To prepare
PPARs, OED staff examine project fifes and other documents, interview operational staff, and in most cases visit
the borrowing country for onsite discussions with project staff and beneficiaries\. The PPAR thereby seeks to
validate and augment the information provided in the ICR, as well as examine issues of special interest to broader
OED studies\.
Each PPAR is subject to a peer review process and OED management approval\. Once cleared internally, the
PPAR is reviewed by the responsible Bank department and amended as necessary\. The completed PPAR is then
sent to the borrower for review; the borrowers' comments are attached to the document that is sent to the Bank's
Board of Executive Directors\. After an assessment report has been sent to the Board, it is disclosed to the public\.
About the OED Rating System
The time-tested evaluation methods used by OED are suited to the broad range of the World Bank's work\.
The methods offer both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or
sectoral approach\. OED evaluators all apply the same basic method to arrive at their project ratings\. Following is
the definition and rating scale used for each evaluation criterion (more information is available on the OED website:
http://worldbank\.org/oed/eta-mainpage\.html)\.
Relevance of Objectives: The extent to which the project's objectives are consistent with the country's
current development priorities and with current Bank country and sectoral assistance strategies and corporate
goals (expressed in Poverty Reduction Strategy Papers, Country Assistance Strategies, Sector Strategy Papers,
Operational Policies)\. Possible ratings: High, Substantial, Modest, Negligible\.
Efficacy: The extent to which the project's objectives were achieved, or expected to be achieved, taking into
account their relative importance\. Possible ratings: High, Substantial, Modest, Negligible\.
Efficiency: The extent to which the project achieved, or is expected to achieve, a return higher than the
opportunity cost of capital and benefits at least cost compared to alternatives\. Possible ratings: High, Substantial,
Modest, Negligible\. This rating is not generally applied to adjustment operations\.
Sustainability: The resilience to risk of net benefits flows over time\. Possible ratings: Highly Likely, Likely,
Unlikely, Highly Unlikely, Not Evaluable\.
Institutional Development Impact: The extent to which a project improves the ability of a country or region
to make more efficient, equitable and sustainable use of its human, financial, and natural resources through: (a)
better definition, stability, transparency, enforceability, and predictability of institutional arrangements and/or (b)
better alignment of the mission and capacity of an organization with its mandate, which derives from these
institutional arrangements\. Institutional Development Impact includes both intended and unintended effects of a
project\. Possible ratings: High, Substantial, Modest, Negligible\.
Outcome: The extent to which the project's major relevant objectives were achieved, or are expected to be
achieved, efficiently\. Possible ratings: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately
Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\.
Bank Performance: The extent to which services provided by the Bank ensured quality at entry and
supported implementation through appropriate supervision (including ensuring adequate transition arrangements
for regular operation of the project)\. Possible ratings: Highly Satisfactory, Satisfactory, Unsatisfactory, Highly
Unsatisfactory\.
Borrower Performance: The extent to which the borrower assumed ownership and responsibility to ensure
quality of preparation and implementation, and complied with covenants and agreements, towards the
achievement of development objectives and sustainability\. Possible ratings: Highly Satisfactory, Satisfactory,
Unsatisfactory, Highly Unsatisfactory\.
Contents
Principal Ratings \.v
Key Staff Responsible \.v
Preface \. vii
Summary \. ix
Introduction and Background \.1I
Project Design and Objectives \.3
Project Implementation Experience \. 5
Ratings \.8
Relevance \.8
Efficacy \.9
Strengthening the National Response to HIV/AIDS \.9
Improving Blood Safety \. 12
Promoting Public Awareness and Community Support \. 13
Targeted Interventions for High-Risk Groups \. 16
Controlling Sexually Transmitted Diseases \. 19
Improving Clinical Management of AIDS \. 20
Strengthening Surveillance, Monitoring, and Evaluation \. 21
Efficiency \. 22
Institutional Development Impact \. 23
Sustainability \. 24
Outcome \. 24
Bank Performance \. 25
Borrower Performance \. 26
Lessons \. 26
Future Directions \. 28
Recommendations \. 29
References \. 31
Annex A\. Basic Data \. 33
Annex B\. Persons Consulted \. 35
Annex C\. Project Financing by Component \. 41
This report was prepared by Timothy Johnston and Martha Ainsworth, who assessed the project in August
12002\. The report was edited by William Hurlbut, and Pilar Barquero provided administrative support\.
iv
Annex D\. Trends in Knowledge, Awareness, and Behavior, by State \. 43
Boxes
Box 1\. Components of the National AIDS Control Project (1992-1999) \.4
Box 2\. Adaptation and innovation in India's institutional response \. 10
Figures
Figure 1: Reported Annual Expenditure from the First India National AIDS Control
Project, Five States and Delhi, 1992-99 ($US) \.6
Figure 2: Increase in the Percent of Ever-Married Women 15-49 Who Have "Heard of
AIDS", selected states and nationally \. 15
Figure 3: Expenditure on IEC in Selected States-Total and Per Capita \. 15
Figure 4: Percent of Ever-married Women 15-49 Who Spontaneously Reported that
Condoms Prevent HIV Transmission \. 16
Figure 5: Reduction in Risk Behavior Among High-Risk Groups in Tamil Nadu \. 18
Tables
Table 1\. Cumulative Reported AIDS Cases in India, 1992-2002, Selected States and
Nationally \.2
Table 2: Number of NGOs Financed by the Projecta in Selected States and by NACO,
1993-99 \.7
Table 3: Growth in the Number of Sentinel Surveillance Sites, Selected States and Delhi
\. 2 1
Table 4\. Summary OED Ratings of Outcome by Objective \. 25
v
Principal Ratings
ICR* PPAR
Outcome Satisfactory Satisfactory
Sustainability Likely Likely
Institutional Development Impact Substantial Substantial
Bank Performance Satisfactory Satisfactory
Borrower Performance Satisfactory Satisfactory
* The Implementation Completion Report (ICR) is a self-evaluation by the responsible operational division of
the Bank\.
Key Staff Responsible
Task Manager/Leader Division Chief! Country Director
Sector Director
Appraisal Salim Habayeb Richard Skolnik Heinz Vergin
Completion Salim Habayeb Richard Skolnik Edwin Lim
vii
Preface
This is a Project Performance Assessment Report (PPAR) for the first India
National AIDS Control Project (Cr\. 2350)\. The project was approved on March 31, 1992,
and provided financing for the government's National AIDS Control Program (NACP) to
address the HIV/AIDS epidemic\. The project was supported by an IDA Credit of US$84
million\. The credit was closed on March 31, 1999, following an 18-month extension of
the original closing date\. The credit amount was fully disbursed, with the final
disbursements taking place on September 7, 1999\.
This PPAR is based on findings from an evaluation mission in August 2002,
comprising Timothy Johnston (OEDST), Martha Ainsworth (OEDST), and Sheila Dutta
(AFRHV)\. Before departure, team members interviewed previous task managers for the
project, reviewed project files and the project's Implementation Completion Report
(ICR), and undertook an extensive review of the published literature on HIV/AIDS in
India\. In New Delhi, the team interviewed staff of the World Bank country office, current
and former staff of the National AIDS Control Organization (NACO) and the Ministry of
Health and Family Welfare (MOHFW), U\.N\. organizations and donor partners,
nongovernmental organizations (NGOs), persons living with HIV/AIDS, representatives
of professional organizations, researchers, and joumalists\. The mission visited six states
and union territories to interview staff of State AIDS Control Societies (SACS), NGOs,
and other stakeholders: Andhra Pradesh, Delhi, Maharashtra, Tamil Nadu, Uttar Pradesh,
and West Bengal\. Findings from these areas are highlighted in this report\.
To ensure consistency in the information collected during the state visits, the team
developed a common list of persons to be interviewed and a standard set of questions for
each respondent type (e\.g\., donors, NGOs, SACS, and researchers)\. Persons interviewed
included current and former members of the State AIDS Control Societies or Cells,
including the directors, the NGO coordinator, and the sentinel surveillance specialist\.
When possible, a senior official in the state MOHFW was also interviewed\. Several
NGOs that received funding under the project were also interviewed in each state visited\.
A list of persons interviewed is attached in Annex B\. The team also sought to collect
common data during each state visit, including trends in HIV prevalence by site; a
complete list of NGOs funded under this and the follow-on HIV/AIDS projects, the type
of activity funded, and the amounts awarded; and examples of information, education,
and communication (IEC) materials\. The authors wish to express appreciation to all those
who made time for interviews and provided documents and information\.
This is the third of a series of PPARs that will be undertaken on the "first
generation" of completed Bank-financed HIV/AIDS projects, as background for a larger
OED evaluation of the development effectiveness of the World Bank's AIDS assistance\.
Following standard OED procedures, copies of the draft PPAR were sent to
relevant government officials and agencies for their review and comments\. Comments
from the National AIDS Control Organisation have been taken into account in the text\.
Following presentation to the World Bank's Executive Board this PPAR will be
considered a public document\.
ix
Summary
This is the Project Performance Assessment Report prepared by the Operations
Evaluation Department (OED) on the India National AIDS Control Project\. The project was
the first Bank-financed HIV/AIDS project in India, and only the second financed by the Bank
globally\. It was a US$99\.6 million project at appraisal, with an IDA credit of $84 million, a
government contribution of $14\.1 million, and $1\.5 million in cofinancing from the World
Health Organization (WHO)\. The project was approved on March 31, 1992, and closed on
March 31, 1999, following an 1 8-month extension of the original closing date, with the credit
amount fully disbursed\. The project ultimately expended $113\.3 million, with the
government contributing nearly double its original contribution ($27\.5 million) and WHO an
additional $700,000\.
The project's overall objective was to slow the spread of HIV by initiating a major
effort in the prevention of HIV transmission\. It was a start-up investment to launch expanded
preventive activities\. The specific objectives were to: (i) involve states and union territories
in developing HIV/AIDS preventive activities with a special focus on the major epicenters of
the epidemic; (ii) attain a satisfactory level of public awareness on HIV transmission and
prevention; (iii) develop health promotion interventions among risk behavior groups; (iv)
screen the majority of blood units collected for blood transfusions, and decrease the practice
of professional blood donations; (v) develop skills in clinical management, health education
and counseling, and psycho-social support to HIV sero-positive persons, AIDS patients, and
their associates; (vi) strengthen the control of sexually transmitted diseases (STDs); and (vii)
monitor the development of the HIV/AIDS epidemic in the country\.
Due to the lack of monitoring and evaluation in this project, including the lack of
baseline information, OED was not able to estimate the number of HIV infections averted - the
project's broad objective\. However, based on interviews with stakeholders in the field, OED
found that this project likely advanced by several years the government response to HIV/AIDS,
relative to the counterfactual of no project, and largely put in place the institutional mechanisms
at the national and state level on which a broader response could be launched\. In addition, the
project greatly improved the safety of the blood supply and succeeded in establishing nation-
wide epidemiological surveillance of HIV\. The project also enlisted the mass media and
nongovernmental organizations (NGOs) to increase awareness of HIV/AIDS; piloted
prevention interventions targeting groups at high risk of spreading HIV (commercial sex
workers, truck drivers, intravenous drug users); and trained thousands of health providers in
HIV/AIDS/STD care and prevention\. The impact of these latter interventions is difficult to
gauge due to the lack of baseline, output and outcome data during the life of the project\. The
strong institutional base built by the end of the project helped mobilize additional financial and
technical support from other international partners\.
Although there are promising signs of behavior change among those engaged in risky
behavior, increased awareness of AIDS among the general population has not been
sufficiently accompanied by specific knowledge of how HIV is and is not transmitted, and
the project did not address sufficiently public attitudes toward people in high-risk groups and
those living with HIV/AIDS\. The project greatly overestimated the capacity of NGOs to
design and implement HIV/AIDS interventions\. Consequently, in most states a smaller
percentage of risk groups were reached than might have been expected\. There is a continuing
need to build implementation capacity among NGOs and all levels of government if the
quality of the response and its coverage is to be enhanced\. Finally, aside from the successful
x
implementation of nation-wide epidemiological surveillance of HIV in the last year of the
project, monitoring and evaluation was unsatisfactory\. The design and ultimate effectiveness
of public information campaigns and pilot interventions might have been greatly enhanced
had the project invested in collecting the planned baseline data on attitudes, behavior, and
HIV levels in the general population and key groups at the start of the project\. OED believes
that availability of critical information on nationwide patterns of HIV prevalence and risk
behavior earlier in the project's life also would have been helpful in generating stronger
political commitment and earlier action, preventing many more infections\. Nevertheless, as a
start-up investment for the national HIV/AIDS response, project outcome is rated
satisfactory\. Institutional development impact is rated substantial, and sustainability is rated
likely\. Bank and borrower performance are rated satisfactory\. A second HIV/AIDS project,
now under implementation, is building on the experience of the first project\.
The experience of this project suggests a number of lessons that may be relevant in
other countries\.
* Building robust institutions for a national response requires substantial innovation
and flexibility in implementation\.
* Epidemiological and behavioral surveillance provide key information to build support
for the response where denial is high and the epidemic is otherwise "invisible\."
* Projects that seek to enlist NGOs to implement HIV/AIDS interventions need to
carefully assess NGO capacity in light of what is expected, and to ensure continuous
training and technical support\.
* When political commitment is heterogeneous in a decentralized system, channeling
resources to effective programs in areas with higher commitment can serve as a
powerful demonstration of the local feasibility of otherwise controversial programs\.
* Targeted awareness and interventions for high-risk groups can be successful only to
the extent that complementary efforts are launched to improve the environment for
HIV prevention among these groups\.
* Campaigns to increase awareness of HIV/AIDS and promote change in attitudes and
behavior should be informed by local research on behavior and attitudes in their
design and implementation and in such as way as to reduce stigma of people living
with HIV/AIDS\.
* Where most clients seek STD treatment in the private sector, engaging private and
even traditional, non-allopathic practitioners is necessary to ensure coverage and
impact\.
Gregory K\. Ingram
Director-General
Operations Evaluation
Introduction and Background
1\. Since the discovery of the first cases of AIDS in India among female commercial
sex workers in 1986, HIV has spread to all states and union territories in the country\.
Prevalence' of HIV remains highest among commercial sex workers (CSWs) and clients,
men who have sex with men (MSM), intravenous drug users (IDUs), truck drivers, and
sexually transmitted disease (STD) patients, whose behavior puts them at high risk of
contracting HIV\. More than 50 percent of CSWs in state of Goa and the city of Mumbai
[Bombay] in Maharashtra are infected with HIV\. In six states- Andhra Pradesh,
Kamataka, Maharashtra, Manipur, Nagaland, and Tamil Nadu - more than 1 percent of
women attending antenatal clinics (a relatively lower risk population) are infected and
HIV prevalence among STD clinic patients is greater than 5 percent (NACO 2001 a)\.
Nationally, HIV prevalence among adults (ages 15-49) is less than 1 percent, but with a
population of one billion, India has the world's second-largest number of people living
with HIV/AIDS-an estimated 3\.97 million in 2000 (NACO 2000)\.
2\. Nearly 43,000 AIDS cases had been reported to NACO through December 2002,
with significant increases in recent years, reflecting both the progression of the epidemic
and improvements in AIDS case reporting (see Table 1)\. Yet these are certainly under-
estimates: only 5-10 percent of AIDS cases are currently reported\. Among the reported
AIDS cases since 1986, 84 percent can be attributed to sexual transmission2 and 3 percent
each to transmission by intravenous drug use, contaminated blood, and mother-to-child
transmission\. While nationally the extent of HIV transmission via IDU is small, it has
been the leading mode of transmission in several northeastem states (e\.g\., Manipur,
Nagaland)\. The contribution of unsafe injecting practices and other transmission in health
care settings is not known\.
3\. Most Indian officials and the health establishment initially viewed HIV as an
"imported" infection-one that would be confined to persons retuming from abroad, to
port cities and marginalized groups, and which was unlikely to spread more widely into
Indian society\. The Indian Council of Medical Research initiated limited HIV
surveillance in 1985, and in 1987 the government established a National AIDS Control
Program as a small unit within the Ministry of Health and Family Welfare (MOHFW)\.
The program's primary activity was monitoring HIV infection rates among risk
populations in a few major cities, although the subsequent discovery of H1V in the blood
supply led to the inclusion of blood safety in its mandate\. HIV rose rapidly among CSW
in Mumbai, from 1 percent in 1987 to nearly 35 percent in 1991, and in Vellore, from 2
percent in 1986 to nearly 30 percent in 1990 (US Bureau of the Census 2002)\. In a single
year (1989-90), HIV among injecting drug users in the state of Manipur rose from
roughly 8 percent to 60 percent (Stimson 1996)\. These findings were widely reported in
1\. HIV prevalence is defined as the percent of a given population infected with HIV at a point in time\.
Prevalence levels in a specific population group can rise over time because of new infections (or incidence)
in the group, fall because of AIDS mortality in the group, or change in either direction because of the
arrival or departure of infected and uninfected individuals\.
2\. Most sexual transmission is assumed to be heterosexual; sexual transmission between men is under-
reported because of stigma\.
2
the national press, but unfortunately contributed to the impression among many political
leaders and the public that HIV affected only marginalized groups\.
Table 1\. Cumulative Reported AIDS Cases in India, 1992-2002, Selected States and
Nationally
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Pradesh 1 1 1 5 24 39 46 48 533 1,265 2,350
Delhi 31 45 64 89 116 206 219 219 283 641 720
Maharashtra 93 124 280 1,040 1,560 2,490 3,314 3,378 3,726 6,454 9,106
Tamil Nadu 92 153 345 382 581 1,102 1,634 4,364 8,570 15,054 18,276
Uttar Pradesh 1 8 8 8 56 109 125 166 259 461 804
West Bengal 5 17 27 39 50 57 57 57 57 725 930
National 260 512 969 2,016 3,067 5,050 6,652 9,989 17,223 31,362 42,947
Source: NACO
Note: Data are as reported through December 31, 2002\. The first reported cases were in 1986\.
4\. Although some officials recognized the potential seriousness of the situation, the
initial response to HIV was characterized by complacency, denial, and a resort to "law and
order" measures\. The latter included jailing infected sex workers and intravenous drug
users, deporting HIV-positive foreign nationals, and calling for mandatory testing by some
politicians (Dube 2001; Ramasubban 1998)\. The director of the Indian Council on Medical
Research (ICMR), for example, advocated making sex with foreigners illegal (Jayaraman
1988)\. The AIDS Control Program did not make extensive attempts to raise public
awareness\. In 1989, however, the government developed a two-year medium-term plan for
AIDS control with funding and technical assistance from the World Health Organization's
Global Program on AIDS (WHO/GPA) and an annual budget of about US$2 million\. It
sought to take a more proactive approach to HIV prevention and initiated efforts to
improve blood safety together with limited AIDS case management programs (Asthana
1996)\.
5\. In 1991, the World Bank initiated a dialogue with the government regarding
support for a series of disease control programs-including tuberculosis, leprosy, and
HIV/AIDS\. Because of a 1991 financial crisis, the Ministry of Finance was keenly
interested in foreign exchange\. There was skepticism among many within govenunent
regarding the relative importance of HIV/AIDS, however\. As of September 1991, there
were only 96 reported AIDS cases in India-13 of whom were foreigners-and 5,879
persons known to be infected with HIV out of a population of nearly 850 million people\.
Because of the lack of information on HIV prevalence in key populations of India and the
long lag between HIV infection and AIDS, the problem appeared small relative to other
pressing health issues\. Further, the lack of infornation on the distribution of risk behaviors
in the population made it difficult to assess the potential for a large epidemic and allowed
to persist widespread denial that the conditions existed for an indigenous epidemic\. Thus,
the govermment initially requested World Bank support primarily for blood safety, even
3
though the majority of known infections at that time could be attributed to heterosexual
transmission\. Following an intensive dialogue with the Bank and WHO, the government
prepared a comprehensive five-year (1992-97) National Strategic Plan for the Prevention
and Control of HIV/AIDS\. The project design represented a compromise: although blood
safety still constituted more than a third of the planned project expenditures, the scope of
the national program and project was broadened to encompass prevention of the major
modes of HIV transmission, including sexual transmission among high-risk groups and
raising AIDS awareness in the general population\.
PROJECT DESIGN AND OBJECTIVES
6\. The India National AIDS Control Project ($99\.6 million) was approved in 1992 and
was funded by an $84 million IDA credit supplemented by WHO/GPA co-financing of
$1\.5 million and a planned government contribution of $14\.1 million\. It was only the
second stand-alone HIV/AIDS project financed by the Bank\.
7\. The overall objective of the project was to slow the spread of HIV by initiating a
major effort to prevent HIV transmission\. It was characterized as a start-up investment to
expand preventive activities and to put in place the institutions and procedures necessary to
fight the epidemic\. The specific objectives were to: (i) involve states and union territories in
developing HIV/AIDS preventive activities with a special focus on the major epicenters of
the epidemic; (ii) attain a satisfactory level of public awareness on HIV transmission and
prevention; (iii) develop health promotion interventions among risk behavior groups; (iv)
screen the majority of blood units collected for blood transfusions and decrease the practice
of professional blood donations; (v) develop skills in clinical management, health
education and counseling, and psycho-social support to HIV sero-positive persons, AIDS
patients, and their associates; (vi) strengthen the control of sexually transmitted diseases
(STDs); and (vii) monitor the development of the HIV/AIDS epidemic in the country\. To
accomplish these objectives, the project had five components (see Box 1)\. The project
design included a number of intermediate and outcome targets, including involving at least
100 NGOs in prevention programs in at least 12 states\.
8\. The project agreement included several conditions of effectiveness and
"assurances" regarding HIV/AIDS policy and programn implementation\. As a condition of
effectiveness, the government agreed to establish the National AIDS Control
Organization (NACO) as a semi-autonomous body under the MOHFW, with the NACO
Director having the status of an Additional Secretary within the MOEFW\.3 The
government provided several key assurances that were to be implemented soon after
credit effectiveness, among them: each state and union territory was to establish an AIDS
Control Cell in the state MOHFW to direct HIV/AIDS programs; the government agreed
to select NGOs to participate in the project based on criteria and procedures satisfactory
to the World Bank; in response to concems about the poor quality of condoms (including
frequent breakage), the government agreed to amend the national Drugs and Cosmetics
3\. The project agreement actually specified creation of an independent National AIDS Control Authority,
but by mutual agreement NACO was created within MOHFW (see Box 2, below)\. An Additional
Secretary is second in rank only to the Secretary of the MOHFW, who reports to the Minister\.
4
Act so that all condoms manufactured or sold in India conformed to WHO standards; and
the government was to establish by 1992 a Technical Advisory Subcommittee on Social,
Ethical, and Legal Issues, in response to concerns regarding discriminatory practices
against HIV-positive persons\. For both legal and pragmatic reasons, the Bank did not
include any specific conditions related to changing existing or proposed discriminatory
laws related to persons living with HIV/AIDS or the confidentiality of HIV testing\. It
nonetheless engaged the government in private dialogue on these issues, which may have
contributed to the government's subsequent decision to amend or withdraw some
discriminatory legislation at both national and state levels\.4
Box 1\. Components of the National AIDS Control Project (1992-1999)
(1) Strengthening the management capacity for the HIV/AIDS prevention and control program through the
formation and support of organizational structures at the national and state levels ($7\.7 million);
(2) Promoting public awareness and community support for AIDS prevention with a primary focus on
sexual transmission, behavioral change, and condom promotion through television and radio stations,
private advertising agencies, nongovernmental organizations (NGOs), and the health system ($31\.1
million);
(3) Improving blood safety by raising blood screening from 30 percent to 90 percent of the blood supply,
enhancing the rational use of blood, and raising the share of voluntary donations ($34\.1 million);
(4) Building surveillance and clinical management capacity to monitor the spread of the epidemic and to
strengthen the skills of health staff and social workers in managing and counseling persons with HIV/AIDS
($11\.6 million); and
(5) Controlling sexually transmitted diseases by improving clinical services and case management in the
country's public STD clinics and in private practice in metropolitan areas ($14\.5 million)\.
9\. Project design was based on a number of assumptions of implementation: (i) that
states would be willing and able to use the money to design and implement HIV/AIDS
interventions; (ii) that NGOs had the experience and capacity to deliver HIV/AIDS
interventions, particularly to high-risk groups in urban areas; and (iii) that the existing
health structures could be relied upon to reach rural populations\. The assumption of state
involvement was key, because health is constitutionally a state responsibility in India's
federal system\. Yet, neither states nor NGOs were consulted during project design\.5
Further, while the design sought to avoid creating a parallel "vertical" structure for the
HIV/AIDS program at district and local levels, the government's family planning and
other disease control programs also had limited involvement in the design process\.
4\. Legislative changes included the amendment of the 1985 Goa Public Health Act to remove mandatory
testing and other discriminatory measures against HlV-positive persons\. In 1989, the govemment introduced
an AIDS prevention bill in Parliament that called for forced testing and isolation of HIV-positive individuals
and gave government broad powers of enforcement\. The bill was withdrawn in 1992, following criticism by
domestic activists and international organizations (see also Asthana 1996; Jain 2002)\.
5\. The economic reform program launched in 1991 was accompanied by efforts to decentralize
responsibility for many govermnent programs and budgets to states\. The project ultimately benefited from
this government-wide process, but in the early 1990s central control was still very much in place\.
5
PROJECT IMPLEMENTATION EXPERIENCE
10\. Project implementation was slower than planned in the early years\. Given that the
organizational structures for implementing the national and state-level programs had to
be built up nearly from scratch, this was not entirely surprising\. In the first two years,
NACO and 32 State AIDS Control Cells (SACCs) were established and functioning to
varying degrees\. But project implementation faced a number of bottlenecks\. By the Mid-
term Review in late 1995, nearly one-third of the total project budget ($29 million) had
been expended, most of it for blood safety equipment\. This reflected the relatively higher
priority the national and state governments attached to this component as well as its
simplicity (mostly procurement of equipment)\. It also was a less politicized component
because it did not require directly addressing sexual behavior\. Only 29 sentinel
surveillance sites had been set up and were functioning\. IEC materials were slow to be
produced and of mixed quality; progress on the STD component was limited; and fewer
than two dozen NGOs had received funding for awareness-raising activities\.
11\. Several factors contributed to the slow pace of implementation\. NACO staff had
limited experience with Bank rules and procedures, particularly those for procurement and
financial management\. This contributed to delays in procuring equipment and supplies for
the blood safety and STD components\. While project design called for contracting out a
substantial portion of the awareness-raising component either to private advertising firms
or to NGOs, the government had limited experience with such arrangements\. Moreover,
technical capacity for HIV/AIDS program design and implementation were weak-within
NACO, the SACCs, and the NGO community\. Finally, despite the efforts of dedicated
officials at the national and state levels, political commitment was mixed nationally and
weak in many states, particularly those with few reported AIDS cases\.
12\. The effectiveness of State AIDS Control Cells was undermined by limited
technical capacity, staff shortages and turnover, funding bottlenecks, and centralized
control by NACO\. As of 1995, one-third of the SACC posts remained unfilled, and
turnover was high, in part due to a widespread perception of the Cells by career civil
servants as a "punishment posting\." Although the project was almost entirely centrally
funded, SACCs had to requisition funds through their state ministries of finance\. Due to
liquidity problems and competing priorities, the states often delayed release of funds by
months, and even then released less than originally budgeted\. This made it difficult to
plan and execute programs, contributed to frustrations among committed government
staff, and strained relations between state officials and NGOs (Sethi 1999)\.
13\. The project succeeded in launching SACCs in all 25 states and 7 union territories,
but due to significant variations in state commitment and capacity, project resources were
spent disproportionately in a few-Tamil Nadu (24 percent), Maharashtra (10 percent),
and Andhra Pradesh (10 percent)\. These and other "strong performer" states consistently
spent 80-100 percent of their budget allocations, while "weak performer" states (such as
Uttar Pradesh and Bihar) typically spent less than 10 percent of their allocated budgets
6
(see Figure 1)\.6 The high share in Tamil Nadu reflects in part its status as one of the most-
affected states and greater commitment by the state government\. But in 1994, Tamil
Nadu also transformed its State AIDS Control Cell into a semi-autonomous State AIDS
Control Society (SACS) led by a senior officer from the elite Indian Administrative
Service (IAS)\. The autonomy of the SACS significantly helped to facilitate disbursement,
and Tamil Nadu came to be seen as a model for other state programs\.' Adoption of the
SACS model was made a condition for participation in the follow-on Second India
National AIDS Control Project (1999-2004), and many states established SACS in the
final year of the first project (including Andhra Pradesh, which doubled its annual
HIV/AIDS spending following establishment of the SACS in 1998)\.
Figure 1: Reported Annual Expenditure from the First India National AIDS
Control Project, Five States and Delhi, 1992-99 ($US)
5,000
4,500 \. \. \. \. \. \. \.
4\.000 \. \. \.+---Tamil Nadu
4,000 __ _-*- _ __
3,500 - -\._\.--- \.- _ __\.- --- -- __ __\.-Andhra Pradesh
3 3 ,000 -\. \. \. \.--- - \. \. \. \. \.
(A /W_Maharashtra
:0 2,500 \. \. \. \. s \. \. \. \.
2,5000 \.
-0 West Bengal
s 1,500 \.
1,000 - Uttar Pradesh
500 - w ^ Delhi
0 _
1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99
Fiscal year
Note: Rupee values were converted to US dollars using to the average exchange rate for each period\.
14\. The project placed heavy reliance on NGOs for awareness raising and reaching
high-risk groups\. However, the Bank and national government significantly overestimated
the capacity of NGOs to implement HIV/AIDS activities\.8 Although NGOs had been
6\. The Mid-term Review noted that about a third of the states were implementing the program satisfactorily
(at least in terms of disbursements), but expressed concern that another third had mixed performance, and
performance was weak in the final third\. This remained unchanged through the end of the project\.
7\. Under Indian law, societies are quasi-governmental entities that can receive and disburse funds without
going through the government's normal approval processes\. Core staff were seconded from government
ministries, while some additional technical staff could be on contract\.
8\. Other donors also overestimated NGO capacity\. The USAID-funded AIDS Prevention and Control
Project (APAC) in Tamil Nadu first advertised for NGOs in mid-1996\. However, many NGOs that
responded were small, had no experience working with risk groups or in the areas where interventions were
7
involved in health, family planning, and other development issues for decades, few in the
early 1990s had experience in the design and implementation of HIV/AIDS activities or
represented the marginalized groups at highest risk of HIV-commercial sex workers,
intravenous drug users, or men who have sex with men\. Many state governments were
reluctant to devote substantial resources to NGO activities, and all NGO proposals had to
be approved by NACO prior to funding, further contributing to funding delays\.
15\. As a result of both the administrative and budgetary encumbrances of the SACCs
and limits to NGO capacity, components that relied on NGOs for implementation were
among the slowest to disburse\. By the Mid-tern Review, 13 states had undertaken some
training or funding for NGO activities (including workshops to help NGOs develop
proposals), but the vast majority of NGOs were funded in just two states (Maharashtra
and Tamil Nadu) (see Table 2)\. In addition, NACO funded two "nodal agencies" to
provide technical support to small NGOs\. However, except in Maharashtra, these played
a limited role\. NACO prepared guidelines and selection criteria for funding of NGOs,
including a requirement that NGOs must have been in existence at least three years
before receiving funding\. The extent of NGO involvement as well as the modalities for
NGO selection, financing, and technical support varied substantially among the states,
with the process most developed in Tamil Nadu\.
Table 2: Number of NGOs Financed by the Projecta in Selected States and by
NACO, 1993-99
State 1993-94 199495 1995-96 1996-97 1997-98 1998-99
Andhra Pradesh 0 0 0 9 34 0
Delhi 0 0 0 8 4 1
Maharashtra 6 10 20 16 97 32
Tamil Nadu 0 17 22 63 88 106
Uttar Pradesh 0 0 3 8 13 0
West Bengal 0 5 6 10 10 10
NACOb 0 0 6 20 47 8
a\. The number of NGOs awarded contracts in each year (not the number of interventions supported)\.
b\. Contracts directly with NACO-not a national total\.
16\. Following the Mid-term Review, responsibility for selection and funding NGOs
was increasingly devolved to the states, and the number of NGOs financed increased
(Table 2)\. The Bank and NACO agreed to adopt a "performance-based" approach to
improve the pace of implementation\. Additional resources were allocated to the states
that were implementing their programs more effectively\. Although this accentuated
differences in resource allocation across states, it introduced a performance incentive and
provided experience in scaling up the response in a few "well perforning" states\. The
project was extended by 18 months to allow completion of project activities\.
17\. The process for vetting NGO proposals also evolved\. Initially, NGO contracts
were only for one year and there were often delays in receipt of payment, particularly the
needed\. APAC provided additional training before the first NGO interventions could be financed in 1997-
98 (Bowers et al 2000)\.
8
final payment\. NGOs were thus often left with gaps of 4 to 6 months between contracts
with no support for the interventions they had launched\. According to OED interviews
with NGOs that participated in the program in five states and Delhi, some of the larger
NGOs were able to bridge these gaps with their own resources, while others did not have
resources from elsewhere and had to discontinue interventions\. This experience led to an
evolution to longer contracts (3 years), renewable annually, which was formally adopted
as the norm for the second AIDS project\. Thus, the project represented a learning process
that helped refine the modalities for NGO support and contributed to a significant
increase in the number and capacity of NGOs working in HIV/AIDS\. While the number
of NGOs was constrained by capacity and the coverage of interventions was far from
universal, several of the states visited by OED were able to focus the limited existing
capacity on priority areas by directing NGOs to submit proposals for specific types of
interventions in specific locales\. This likely improved the efficiency of the use of NGOs
and guided them to interventions for high-risk groups that are difficult to reach\.9
18\. By project closing in March 1999, the credit had fully disbursed, with nearly 40
percent of project expenditures for blood safety, 21 percent for raising awareness and 16
percent for STD control (Annex C)\. The government spent nearly twice its originally
planned counterpart contribution ($27\.5 million compared to a planned $13\.9 million)\.
The project clearly exceeded its target of engaging 100 NGOs in 12 states\.
Ratings
RELEVANCE
19\. Project relevance is judged to be substantial\. The project design was consistent
with government and Bank strategies and helped improve the relevance of the
government's HIV/AIDS strategy\. It was generally sound technically, seeking to address
the major modes of HIV transmission, and placing priority on regions and groups most
affected by the epidemic\. The project helped design the structures for the national AIDS
response at both the national and state levels, and provided critical financing-at levels that
would not have been forthcoming from national or state budgets\. The project established a
strong partnership with WHO/GPA, and later helped mobilize additional donor resources
(including from DfiD, USAID, and CIDA)\. In addition, the project engaged a wide range
of stakeholders in the HIV/AIDS response, including NGOs\. The main weakness in project
design was that it did not adequately anticipate the constraints to implementing the
program-both from an institutional and political perspective\. Instead, the project helped
to identify and address the complexities during implementation\.
9\. The states also conmiissioned NGOS to undertake awareness-raising activities for groups in the general
population\.
9
EFFICACY
Strengthening the National Response to HIV/AIDS
20\. The national response is farther advanced than it would have been in the absence
of the project-although not where it could have been ifpolitical commitment had been
stronger and more consistent\. The Bank and government deserve credit for launching the
project when there were still relatively few visible signs of HIV/AIDS in most of India
and denial was widespread\. The project provided the majority of financing for the
national program from 1992-98 and a framework that helped mobilize substantial
additional donor financing\. Because of competition for scarce government resources and
uncertain political commitment to HIV/A1IDS prevention during much of the 1990s, it is
doubtful that the national and state governments would have been willing to allocate a
similar level of resources from their own budgets\. HIV/AIDS had a higher profile and
priority than would have prevailed in the absence of Bank support\. '
21\. The project helped establish and refine the institutionalframeworkfor the
national HIV/AIDS response, a model that has endured and been strengthened (Box 2)\.
The organizational framework for NACO established during the early years of the project
is still in place today\." The establishment of State AIDS Control Cells provided the basis
for decentralizing the national response, and the subsequent adoption of the Society
model further facilitated implementation\. The Society model appears to have facilitated
procurement and disbursements, and some informants perceive that leadership by IAS
officers improved management, increased the influence of the SACCs, and facilitated a
"nonmedical" response\. On the other hand, many IAS officers do not perceive the SACS
as a prestigious post, and turnover is very high (averaging once per year in many states)\.
This is one of the major constraints to capacity and institutionalization of the response at
the state level, and is particularly problematic because most IAS officers come into the
position knowing little about HIV/AIDS and even after establishment of SACS, many
had responsibilities in addition to HIV/AIDS\.
22\. Although the IDA credits still constitute the majority ofprojectfunding, the
national government's own expenditures for HIV/AIDS increased during the project
period-from about $2 million annually in 1991 to roughly $20 million in 1999\. Because
of the availability of central funding, however, few states allocate their own fumds for
HIV/AIDS\. 12 Of the states visited by OED, only Maharashtra contributed its own budget
during 1992-99, and only Andhra Pradesh currently makes a substantial commitment of
its own resources, committing an additional 27 percent beyond the NACO budget to
augment the number of sentinel surveillance sites in 2001\.
10\. "International donors have been an important impetus for policy change and\. [brought] in new
scientific knowledge and technical skills, and methodologies in research in both the medical and social and
behavioral services\." (Ramasubban 1998)
11\. "The creation of NACO represented a turning point in Indian AIDS policy\." (Asthana 1996)
12\. However, states do finance STD and blood bank staff and operation of major hospitals treating AIDS
patients, such as the Tamnbaran Hospital in Tamil Nadu\.
10
Box 2\. Adaptation and innovation in India's institutional response
Both the national and state-level institutions that led the response to AIDS underwent changes in the course
of the project to improve project performance and work within political and administrative constraints\.
NACO: The Staff Appraisal Report (SAR) and Project Agreement called for the establishment of an
independent National AIDS Control Authority, which would have functioned as an autonomous parastatal\.
However, when it became clear that Parliament would not approve such an arrangement, the Bank and
government agreed to make NACO a semi-autonomous organization under the MOHFW and headed by a
Director with the status of an Additional Secretary\.
State AIDS Control Societies: The state response was initially located in State AIDS Control Cells within
the state Ministries of Health, but the Cells encountered funding bottlenecks, as all funding requests and
disbursements were funneled through the state Ministries of Finance\. Tamil Nadu innovated by creating a
quasi-government "society" in which to base it's AIDS response, headed by an IAS officer\. Under Indian
law, societies can receive and disburse funds without going through the cumbersome govermnent approval
process\. By the beginning of the second AIDS project, all states were following this model, although not
all SACS are headed by IAS officers\.
23\. The national strategy and project emphasized the importance of encouraging
HIVIAIDS interventions in other sectors, but with afew notable exceptions, the response
of other ministries was limited\. Given NACO's location within the MOHFW,
intersectoral activities depended on the persuasion of NACO leadership, and the
emergence of "champions" in other ministries\. The "Universities Talk AIDS Program,"
launched in 1991, sponsored awareness-raising activities that reached an estimated 3\.5
million students by 1999 (NACO 1999)\. Situated in the Department of Youth affairs in
the Ministry of Education, the program-designed by UNICEF and UNESCO and
expanded with project support-used students to design and carry out awareness-raising
activities\. The National Council for Educational Research and Training, which is
responsible for developing national curriculum standards, developed a school curriculum
in 1995 with support from UNICEF\."3 States are responsible for final decisions on
curriculum\. As of 2002, the HIV/AIDS module is reportedly being offered in 10 percent
of schools nationally and as high as 60 percent and 52 percent in the cities of Mumbai
and Chennai, respectively\."4 Several other sectors initiated HIV/AIDS activities during
the project, including the ministries of Information and Broadcasting, Tourism, Mines,
Labor, Social Justice and Employrnent, and Women's Affairs-but little evidence is
available regarding the outcome of these activities\.
24\. The project made limited progress integrating with other MOHFWprograms\.
Despite NACO's location within MOHFW, in many respects it functioned as a vertical
disease control program\. The project's main contribution to integration was its direct
\.support of training for treatment of AIDS and STDs and the inclusion of HIV/AIDS
issues in pre-service medical training\. But OED found little evidence of follow-up on
short-term training or that HIV/AIDS concerns had been integrated into MOHFW
programming and supervision\. Tuberculosis (TB) is one of the major opportunistic
13\. The development of an AIDS curriculum coincided with the transfer of the first Project Director of
NACO, Mr\. Dasgupta, to Secretary, Ministry of Education\.
14\. NACO data, as of August 2002\. National figures exclude the states of Haryana and Jarnmu and
Kashmir, for which data were incomplete\.
11
infections of AIDS patients, and prophylaxis and treatment of TB in HIV-infected
patients is key in reducing morbidity\. The Bank missed a major opportunity to coordinate
HIV and TB when it launched a tuberculosis project with no links to the AIDS project\.'5
Efforts to coordinate HIV and TB have only emerged in the past several years, although
some states have designated district TB officers as responsible for HIV/AIDS\. The
limited integration between AIDS and these other health programs reduced the "reach" of
the HIV/AIDS program into rural areas, as evidenced in the low levels of HIV awareness
in most rural areas (see below)\.
25\. The policy and legislative frameworkfor HIV/AIDS has improved significantly,
although afew key gaps remain, and policy implementation remains a challenge\. The
project, through its support for NACO, helped refine the policy framework for
HIV/AIDS\. NACO has developed a wide range of specific policies and guidelines-
including testing, blood safety, and treatment and care for AIDS patients (NACO 1996)\.
Legislative changes have generally taken longer than expected-for example, the
government fulfilled the condition for adopting WHO standards for condoms in 1996
rather than in 1992 as originally agreed, and the national AIDS policy was developed in
the final year of the project and not approved until 2001 (NACO 2001b)\. Due in part to
the difficulties in changing legislation through Parliament, a number of the key policy
and legal changes were initiated through India's activist Supreme Court, including
mandating licensing for blood banks and banning professional blood donations\. Although
a progressive policy framework is now in place at the national level, policies have
advanced farther than NACO's ability to enforce them, as evidenced by the significant
gaps between a number of policies (e\.g\., non-discrimination against AIDS patients, or
confidentiality of HIV testing) and practice\.'6 Anti-sodomy laws continue to present
significant problems for reaching MSM, and anti-solicitation laws have also been used as
a pretext by local police for harassment of CSW outreach workers-creating a situation
where activities financed by one branch of government have been subject to law-
enforcement actions by another (Friedman 1996; Human Rights Watch 2002)\.
26\. Statements of support from political leaders have increased, but skepticism
continues regarding the scope of the epidemic\. The HIV/AIDS program initially was
supported by a few key officials, including the Secretary for the MOHFW\. But the
national government and most state governments continued to accord relatively low
priority to HIV/AIDS through the mid-1990s\. In 1994, the national Minister of Health
and Family Welfare forcefully denied that HIV/AIDS was a problem in India (Haniffa
1994)\. By the final two years of the project, however, senior officials and political leaders
at the national level began to speak publicly about the importance of HIV prevention and
behavior change-including a speech by the Prime Minister in 1998 (NACO 1999)\. In
2002, the leader of the opposition Congress Party convened all the Congress Party Chief
Ministers to call on them to take a more active role in HIV/AIDS prevention (Soniya
Gandhi speech, NACO website)\. Support by political leaders at the state level has also
15\. Tuberculosis Control Project (Credit 2936), approved in 1997\.
16\. "\.problems of translating policy into practice in the Indian context may have been
underestimated \. [Moreover], the very progressive approach of national-level policymakers has been
countered by conservative forces at the state and local levels\." (Asthana 1996)
12
improved overall, but varies substantially from state to state\. In the states visited by OED,
most Ministers of Health and, in some cases, Chief Ministers have been willing to make
statements in support of HIV/AIDS programs, but many are still reluctant to speak
explicitly about prevention\. Andhra Pradesh is a notable exception; the state's Chief
Minister became actively engaged in the state prevention program in 2000 after presented
with the alarning finding that 2 percent of pregnant women at the state's sentinel
surveillance sites were infected with HIV\. Nevertheless, national and state political
leaders remain sensitive to international reports regarding the potential scope of the
HIV/AIDS epidemic in India (Eberstadt 2002; Lancet 2001)\.
27\. The project and the Bank contributed to political support through advocacy with
senior officials and strengthening sentinel surveillance\. The project was launched despite
low political commitment to addressing HIV/AIDS\. Bank team members, including
sector and country management, played a useful advocacy role in raising the importance
of AIDS in dialogue with officials in health, finance, and other ministries at the national
and state levels\. Given the sensitivities regarding AIDS in the early years, there is no
evidence that a more public advocacy role by the Bank would have strengthened national
commitment; according to a range of informants, it instead could have strengthened the
perception that the HIV/AIDS program was externally driven\. The eventual expansion of
HIV sentinel surveillance helped reduce denial and eventually contributed to political
support; delays in establishing a national sentinel surveillance system represented a lost
opportunity (see below)\.
Improving Blood Safety
28\. The blood safety component, which represented 40 percent of project cost and
nearly half of the Bank's credit, contributed to a significant improvement in the safety of
the blood supply and is widely viewed as one of the project's major contributions\. In
1992, less than 30 percent of the blood supply was screened for HIV\. The blood banking
system was poorly regulated, with many public and private blood banks operating
without a license, and most with outdated equipment\. Due to a shortage of blood, up to a
third of donations were from low-income "professional" paid blood donors, who were at
higher risk of HIV/AIDS, while only about 30 percent came from voluntary donations\.
Inefficient medical practices, including single-unit transfusions, contributed to wastage of
scarce blood\.
29\. The project upgraded equipment (including refrigerators and centrifuges) in
government blood banking facilities, facilitated technical assistance and advice on blood
safety from CDC and WHO, and financed HIV test kits\. It also sponsored IEC campaigns
at both national and state levels to encourage voluntary blood donations and to increase
awareness of the potential danger of unsafe blood from unlicensed blood banks or
professional donors\. That said, equipment procurement was not based on a facility-
specific needs assessment\. Some of the equipment procured appears to have been over-
dimensioned and is under-utilized, particularly for lower-level facilities\.'7 In addition,
17\. In a tertiary facility visited by OED, a 100 blood unit refrigerator procured during the first project sat
unused next to a 30 unit refrigerator procured under the second project, which was in use and adequate for
13
the project provided no direct support to private blood banks, even though they account
for 20 percent of the blood supply\.
30\. NACO was responsible for ensuring the safety of the blood supply but considered
its ability to enforce a ban on "professional" blood donations and to strengthen licensing
requirements to be inadequate\. However, changes in the regulatory environment were
generated by the Indian Supreme Court in 1996, in response to a lawsuit brought by an
NGO\. This ruling called for the banning of professional blood donations by 1997 and
required that all blood banks be licensed in the next two years or face closure\. The ruling
shifted responsibility for ensuring safety to the national drug control authority\. Many of
the government's blood banks would have faced difficulty meeting certification
requirements\.
31\. There is a wide consensus that the blood supply is substantially safer than it had
been previously\. 1 All facilities report that 100 percent of blood is screened-exceeding
the project's target of 90 percent-but screening may not be comprehensive at the district
level and in some private facilities\. Unfortunately, the current monitoring system is not
sufficiently comprehensive to assess how safe the blood supply has become\. As of 2000,
the share of voluntary blood donations rose to 39 percent, with the remaining 61 percent
"replacement" donations (NACO 2000)\. However, an estimated 5 percent of the
replacement donations may still be from professional donors\. This nevertheless
represents a substantial decline in professional donations since the start of the project\.
Promoting Public Awareness and Community Support
32\. The project supported a wide range of activities to raise awareness of
HIV/AIDS-for both the general public as well as risk groups\. In a departure from
typical government practices, many of the media campaigns were designed by private
advertising agencies\. The media campaigns initially were sponsored by NACO-which
also negotiated free air time for AIDS messages with some media outlets-but
subsequently a number of state Cells/Societies sponsored their own campaigns\.
Expenditures on IEC and public awareness campaigns were slow at first and concentrated
in a few states, but the rate of disbursement accelerated in the later years\.
33\. HIV/AlDS awareness in the general population increased during the project\. The
absence of a comprehensive baseline survey on awareness and behaviors makes it
difficult to assess impact, but a few key HIV/AIDS-related questions were included in the
National Family Health Surveys (NFHS) of 1992/93 and 1998/99\. Knowledge of AIDS
the hospital's needs\. OED received reports that in some district-level government facilities, which typically
use only a few units of blood per month, the refrigerators were too large to be installed\.
18\. The percentage of AIDS cases attributable to infected blood has declined since the beginning of the
project from 8 percent in 1992 to 3 percent in 1998\. While this is often cited as evidence of success for the
blood supply component, most of those developing AIDS in the late 1 990s or early 2000s would have
acquired the virus before the investments and policy changes under this component\. Furthermore, the
change in the share of AIDS cases due to contaminated blood reflects the dramatic expansion of cases due
to heterosexual transmission\. The mission was unable to obtain estimates of the change in number of new
HIV infections due to contaminated blood over the life of the project\.
14
(the response to the question, "Have you ever heard of AIDS?") among women of
reproductive age increased nationally from 17 percent to 40 percent and in all states for
which data are available for both periods (Figure 2 and Appendix D)\. Although this
increased awareness may be partly due to news coverage and other information sources,"9
it seems plausible that the project contributed to the increase\. Among the states visited by
OED, those with the highest IEC expenditures (Tamil Nadu and Andhra Pradesh) also
saw the greatest improvements in awareness (Figures 2 and 3)\.
34\. While average "knowledge of AIDS" appears to have more than doubled among
women of childbearing age, it was still low in absolute terms at the end of the project
(only 40 percent)\. To be fair, the project targeted urban areas and, there, results were
likely better\.20 Further, the increases in awareness among the states that used project
resources most intensely were substantially better than the national average - rising from
23 percent to 87 percent in Tamil Nadu and 19 percent to 61 percent in Maharashtra\. No
nationally representative data on awareness among the general population of men were
collected during the project\.
35\. Of equal or even greater concern is whether those who had heard of AIDS had
specific and correct knowledge regarding how HIV is transmitted and how it can be
prevented\. In 1998/99, for example, only 8 percent of women of reproductive age
spontaneously named condoms as a means of preventing HIV/AIDS, a small increase from
5 percent in 1992/93 (Figure 4)\. A wide range of misconceptions also persist\. In 2001, only
21 percent of the general population understood that HIV cannot be spread through
mosquito bites or through sharing a meal with an infected person and that a healthy-looking
person can have HIV (NACO 2001c)\. Only 30 percent of urban dwellers got all three of
these questions correct, and only 29 percent of CSWs\. There are no national trend data
regarding other key behavioral indicators in the general population, such as the percentage
reporting non-regular sex partners and condom use among non-regular partners\.2'
19\. Differences in the level and rate of change of awareness across states can be explained by many factors,
including education levels (Kerala and Delhi both have above average female literacy, for example) and the
extent of exposure to mass media, particularly television (Balk and Lahiri 1997)\.
20\. Unfortunately, the NFHS did not provide a breakdown of results for urban and rural areas\.
21\. A direct comparison of the 2001 Behavioral Surveillance Survey (BSS) with the four states covered in a
NACO-sponsored 1996/97 Prevention Indicators Survey suggests an increase in reported non-regular
partners\. However, this comparison is incorrect and misleading for the most part because the survey
methodologies and areas covered are not strictly comparable (NACO 2001 c, 1997a)\.
15
Figure 2: Increase in the Percent of Ever-Married Women 15-49 Who Have "Heard
of AIDS", selected states and nationally
100
90 \. \. \. \. \.
8 0 \. \. \. \. \. \. \. \. \.
70
60 \. \. \. \.
cD 4 0 \. \. \. \. _\. \._\. \._ \.
3 0 \. \. \. D \. \. \. \. i\. \. - \. \. \. \. \. \. \. \. - \.
20
*_ ',,10 -', "-
Tamil Nadu Delhi Andhra Maharashtra West Bengal Uttar Pradesh National
Pradesh
51992-93 (NFHS-1) * 1998-99 (NFHS-2)
Note: Data for Andhra Pradesh and Uttar Pradesh were not collected in the NFHS-1
Figure 3: Expenditure on IEC in Selected States-Total and Per Capita
0\.18 10000
0\.16
0\.14 8000
0\.10200
6000 0
\.0\.06
t004 2000 9
0\.02 F
Tamil Nadu Delhi Andhra Maharashtra West Bengal Uttar Natonal
Pradesh Pradesh
|M-23" Per capita IEC expenditure 4-Total IEC expenditure
36\. While the overall spending on awareness raising ($23\.8 million) was modest for a
country of 1 billion people (amounting to only about 2\.4 US cents per capita over the life
of the project), there are reasons to believe that the component could have been more
effective\. First, only 76 percent of the amount allocated for public awareness ($31
million) was spent, even though the resources available to the project exceeded the
original budget\. Second, the content of messages and materials at both the national and
state levels was often inadequate and the targeting of messages to specific groups was
weak\. Many of the messages conveyed no information on how HIV is transmitted or how
16
it can be prevented ("Know AIDS for No AIDS")\. n Other messages emphasized fear or
conveyed a moralistic tone ("A weak mind is the first step towards death")\. Few staff at
the national level, and fewer at state level, had expertise in the design and implementation
of behavior change campaigns\. Moreover, the dearth of research on sexual behavior,
weak surveillance data, and near absence of information regarding the numbers and
location of high-risk groups during the life of the project made it difficult to design and
target awareness or behavior change interventions\. The project sponsored some of the
first qualitative research on sexual practices, including a 1995 study launched in several
dozen cities (NACO 1997b)\. While these were used by some states to improve the design
of EEC campaigns, the results were not widely disseminated (Pelto 1999)\. Private media
firms were able to design sophisticated campaigns, though often with limited guidance on
message design and targeting\. Most fear-based messages were discontinued by the late-
1 990s but may have contributed to the prevailing high levels of stigma against persons
with HIV\.
Figure 4: Percent of Ever-married Women 15-49 Who Spontaneously Reported that
Condoms Prevent HIV Transmission
100
90 - --\.;\. ; \. \. \. \. \. \. \. \. \. _\.
80 - \. \. \. \. \.
80
7 0 \. \. \.- - - \. \. \._ _ _ \. \. \. \. \. \.
6 0 \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \._\. \. \.
a 5 0 \. \. \. \. \. \. \.
4 0 \. \. \. \. \. \. \. \. - \. \. \. \. \. \. \. \. \. \. _\. \. \. _\. \. \. \. \. \. \. \. \.
(L 30 -
20--- - -----*-\._\. \.I\. --\.---------\.-- -\. \. -\.- - - - \. - \.
30 - \. \. \. \. \. \. -- \. \. \. \. \. \.
0 \. \.-\. _ \. \. \. \.
Tamil Nadu Delhi Andhra Maharashtra West Bengal Uttar Pradesh National
Pradesh
0C1992-93 (NFHS-1) * 1998-99 (NFHS-2)
Note: Data for Andhra Pradesh and Uttar Pradesh were not collected in the NFHS-1
Targeted Interventions for High-Risk Groups
37\. The project fulfilled its objective of piloting high-risk group interventions in a
dozen states and mega-cities\. While the majority of NGO interventions financed by the
project for high-risk groups were also for awareness, the project provided direct support
and helped create political "space" for the piloting of interventions, such as condom
distribution and STD treatment, focused on risk groups\. The project's reliance on NGOs for
implementing interventions targeted to high-risk groups catalyzed development of a policy
22\. Other messages included: "You can't stop warring mothers and daughters-in-law, but you can stop
AIDS" and "Be Aware, Take Care" (slogan from the Tamil Nadu SACS)\.
17
framework and guidelines for the financing of NGO activities\. Bilateral projects provided
complimentary additional financing and technical support for targeted NGO interventions
in selected states\.' No information is available regarding the percentage of risk populations
reached during the project, even in the states where these activities were most developed\.
However, the activities launched in these states effectively demonstrated to the national
audience of policymakers that targeted interventions could have an impact on behavior
among risk groups in India\. The experience helped develop and refine approaches that were
appropriate to the Indian context for wider replication (Ramasundaram and others 2002)\.
38\. No nationally representative data on the behavior of high-risk groups were
collected during the project\. However, the USAID-sponsored APAC project in Tamil
Nadu conducted annual behavioral surveillance surveys of risk groups in urban areas
between 1996 and 2001 (APAC 2002)\. Between 1996 and the end of the first National
AIDS Control Project in 1999, the percent of truck drivers reporting non-regular sexual
partners or use of commercial sex dropped in half (see Figure 5)\. Condom use among sex
workers and truck drivers who bought sex rose from already relatively high levels of
roughly 55 percent in 1996 to 80-90 percent by 1999\. Since the APAC-sponsored
targeted interventions were not launched until 1997/98, the declines in risk behavior in
1996-98 are likely attributable in part to Tamil Nadu SACS or NACO awareness-raising
activities-although general media coverage of the AIDS issue may also have
contributed\. And 1996 levels were no doubt higher than in 1992\.
39\. The large share of the condom market attributable to family planning and
uncertainty concerning trends in use of this method make it difficult to discern the
possible impact of AIDS awareness and interventions on condom demand for HIV
prevention\. Nationally, condom sales through social marketing increased by 50 percent
during the 1990s\. But the increases were offset by a decline in condoms distributed for
free through government facilities (NACO 2001 a)\. As a result, the total number of
condoms distributed or sold remained unchanged over the course of the project\. To the
extent that uptake of socially marketed condoms reflects primarily demand for HIV
protection, the shifting share of socially marketed condoms could be indicative of greater
use of condoms for casual and commercial sex\. However, no evidence was presented to
substantiate this conclusion\.
23\. Donor projects supporting targeted interventions during the 1990s included the USAID-sponsored
AIDS Prevention and Care (APAC) project in Tarnil Nadu; the UK-sponsored Sexual Health Projects in
Andhra Pradesh, Gujarat, Kerala, Orissa, and West Bengal, and the DfuD-sponsored Healthy Highways
Project, which targeted truckers\.
18
Figure 5: Reduction in Risk Behavior Among High-Risk Groups in Tamil Nadu
Percent of high-risk groups having sex with a non-regular
partner (NRP) or sex worker (SW) in the past 12 months,
Urban Tamil Nadu (Source: APAC survey)
60 -
40 ---- -- ----- \.---------\. \. ------- \. \.
0_
\. 1996 1997 1998 1999 2000 2001
Tmuck drivers & helpers-NRP - Male factory wvrers-NRP _Truck drivers & helpers-SW -Male factory woreSW
Percent of High-Risk Group Using Condoms with the Last Non-regular
Partner (NRP) or Sex Worker (SW), Urban Tamil Nadu
100
go \.
80
c 60
~50
40
30
20
10
0
1998 1997 1998 1999 2000 2001
j_ Sex worrem -NRP _ Trjck drivers & helper-NRP G Male factory worers-NRP
Trmck drtvers & heipars-SW MSe factory vmrkerSW
Source: APAC (2002)\.
40\. The sentinel surveillance system has monitored HIV prevalence in STD patients,
many of whom are from high-risk groups\.24 In Tamil Nadu, with the strongest evidence of
24\. Trends in HIV prevalence among STD patients are difficult to interpret because the same behaviors that
might reduce HIV incidence (fewer partners, condom use, STD treatment) would also reduce STD
incidence and the number of STD patients\. While it is reassuring to know that the rate of co-infection of
STD patients with HIV stabilized, trends in infection among other high-risk population groups (CSWs,
IDU, truck drivers) are more useful in understanding the dynamics of the epidemic\.
19
behavior change, HIV prevalence was high but had stabilized in four of the five high-risk
group sentinel sites by the late-1990s\. In Maharashtra, however, HIV prevalence among
CSWs continued to climb rapidly through the mid-1990s, exceeding 50 percent in both
Mumbai and Pune\. A study of HIV incidence (the number of new HIV infections per year)
among female STD clinic attendees in Pune in 1993-95 found an annual infection rate of
approximately 26 per hundred person years among CSWs, and 8 per hundred person years
among non-CSWs (Mehendale and others 1995)\. These high rates of incidence and
prevalence may reflect the high prevalence of risk behavior and relatively low coverage of
CSWs in the state, despite the mobilization of NGOs by the State AIDS Control Cell\.
Controlling Sexually Transmitted Diseases
41\. Evidence from India and elsewhere has demonstrated a correlation between the
presence of sexually transmitted diseases (STDs) and HIV infection-both because the
presence of STDs can facilitate HIV transmission and because they are contracted through
the same risk behaviors\. A national STD program was launched in the 1 940s, but suffered
from neglect\. At the time of project appraisal STDs were among the top five causes of
morbidity in India (Raamasubban 1998)\. The project gave renewed attention to STD control,
providing equipment, pharmaceuticals, and training for 504 government STD clinics in
public hospitals, exceeding the original target of 372 clinics\. In addition, five regional
referral centers were upgraded to provide training, research, supervision, and monitoring\.
The project also facilitated the development and dissemination of the syndromic guidelines
for STD treatment, possibly its most important contribution\.25 In interviews with OED,
physicians reported that the guidelines had been adopted in the public sector and to some
extent in the private sector, but there are no data to confirm the extent of adoption or
adherence to syndromic treatment guidelines\. Although the majority of component
expenditures focused on government STD clinics-including training for 19,000 medical
officers-approximately 10,000 private doctors also received training in syndromic
management through the Indian Medical Association (IMA)\.
42\. Unfortunately, there is little evidence on which to judge the impact of this
component\. There are no representative data at the national or state level regarding
compliance with these guidelines\. The project did little to strengthen STD surveillance,
which remains weak (Hawkes and Santhya 2001)\. There are no data on the change in
incidence of STDs or the reported number of STD cases over the lifetime of the project\.
43\. While this modest component did represent an important invigoration of the STD
control program, there are reasons to believe that its overall impact on STD incidence
was also modest\. First, although training was offered to some private practitioners, the
project mostly financed inputs for public sector STD clinics\. Yet, fewer than 10 percent
of STD patients seek treatment in the public sector; most seek care from private or
traditional, non-allopathic practitioners, or self-medicate\. Government clinics supported
by the project may see as few as a dozen STD patients per month\. Second, the project's
approach to both equipment and training was primarily input-oriented, with little
25\. Developed by WHO, the syndromic approach to STD treatment is the process by which clinicians
diagnose and treat STDs using standardized protocols based on symptoms (Dalabetta et al 1998)\.
20
monitoring of the quality and clinical effectiveness of treatment\. Finally, while STD
treatment combined with behavior change interventions has been shown to reduce HIV
incidence among high-risk groups, such as CSWs, the project did not explicitly target
these groups for STD treatment\. Fourth, behavior change counseling and partner tracing
remain weak (Hawkes and Santhya 2001)\.
44\. In the final year of the project, the government began to pilot Family Health
Awareness Campaigns, which seek to increase STD awareness and treatment-seeking in
selected communities though "camps" that involve door-to-door awareness raising and,
in some of the communities, STD screening and referral for treatment (Arora and others
2000)\. The approach has been expanded under the Second AIDS Control Project\.
Improving Clinical Management of AIDS
45\. While the overwhelming priority of the project was to enhance awareness and
expand prevention, the project anticipated the need to enhance capacity for treatment and
launched activities to train health providers - most of whom had never encountered an
AIDS case-to identify and clinically manage AIDS patients\. NACO developed and
distributed training manuals in AIDS clinical case management\. About 45,000 public and
7,500 private physicians received training under the project\. NACO and WHO also
jointly developed a training manual for nurses, but only a few states made substantial
progress in nurse training\."
46\. Although very large numbers of people received training under the project,
training was of short duration, little attention was placed on the interpersonal skills
required for effective counseling, and there appeared to be little follow-up to assess the
quality and effectiveness of training\. NACO had limited capacity to monitor or enforce
adherence to the treatment and counseling protocols or to encourage integration of care
and support into supervision protocols\. Although the availability of voluntary HIV
counseling and testing increased under the project, interviews with people living with
HIV/AIDS (PWAs) diagnosed during this period reveal that little counseling occurred
(even in the event of a positive HIV test) and results were often not kept confidential\.
Many also reported being given incorrect information by health providers when informed
of their HIV status (for example, that they had only weeks to live or should not touch
their children), and being accused of immoral behavior\.
47\. Finally, several proposed studies that would have improved the design and
selection of interventions for treatment and care-such as of the effectiveness of home-
based care, the cost-effectiveness of alternative HIV testing techniques, the natural
history of AIDS in the Indian population, and the effects of homeopathic remedies on
those with HIV-apparently were not undertaken\.
26\. Manipur, one of the hardest-hit states, trained 60 percent of nurses according to the ICR\.
21
Strengthening Surveillance, Monitoring, and Evaluation
48\. Because of the long delay between HIV infection and AIDS, sentinel surveillance
data that show spread of HIV even while the number of AIDS cases is low, provide
extremely important evidence for mobilizing political commitment, as well as for
tracking the epidemic and fine-tuning the response\. The first sentinel surveillance sites
for HIV were established in the late 1980s, covering only major cities in the south\.27 The
project contributed to improving the coverage and quality of the national HIV sentinel
surveillance system through support for equipment, training, and technical assistance\.
The project target was to provide HIV testing capabilities to 100 sites throughout the
country, a subset of which would be used for sentinel surveillance\. During the course of
the project, HIV sero-surveillance capacity was developed in 140 centers and 180
sentinel sites nationwide, surpassing this target (see Table 3)\.
Table 3: Growth in the Number of Sentinel Surveillance Sites, Selected States and
Delhi
1994 1998 2000 2001
Andhra Pradesh 3 7 9 13
Delhi 0 4 7 9
Maharashtra 4 14 19 25
Tamil Nadu 5 9 11 17
Uttar Pradesh 0 10 13 21
West Bengal 0 8 9 15
National 55 180 232 306
Source: NACO for all national totals and state totals for 2000-2001\.
49\. Two factors limited the effectiveness of the sentinel surveillance\. First, the
usefulness of sentinel surveillance to enhance political commitment during the project's
lifetime was greatly reduced because of delayed implementation\. At the Mid-term
Review, only 29 sentinel sites had been established\. The system did not achieve adequate
national coverage until 1998, the last year of the project, after NACO took a more
proactive role in program design and technical support\. The states with the greatest
political resolve and that used funds most readily-like Maharashtra, Manipur, and Tamil
Nadu-were those where the number of AIDS cases had already prompted public
concern and surveillance had already been launched\. Earlier implementation of sentinel
surveillance in other states might have helped dispel denial earlier, generated stronger
political commitment, and accelerated implementation of the rest of the project's
activities\.
50\. Second, HIV surveillance of high-risk populations was and remains inadequate\.
At project appraisal, CSW, MSM, IDU, and truckers were identified as high priority for
sentinel surveillance, in addition to patients at STD clinics and populations "without
identified risk", such as antenatal clinic attendees, voluntary blood donors, and
27\. The SAR did not mention nor was OED able to confirm the number, type, and location of sentinel
surveillance sites at the time that the project was launched\.
22
outpatients\. However, virtually all 'high-risk' sites implemented during the project are
STD clinics: Of the 306 sites covered by the 2001 round of sentinel surveillance, 163
were in antenatal clinics, 121 in STD clinics, 13 among IDU, and only 2 each among
CSW and MSM (NACO website 2002)\. STD patients represent a mix of people with
high-risk and low-risk behavior who, by definition, are not using condoms\. Thus, it is
impossible to track the effects of behavior change on HIV levels among STD patients\.
The use of results for STD patients as a proxy for high-risk groups can lead to misleading
assessments\. For example, HIV prevalence among STD patients in West Bengal in 2001
was less than 1 percent, yet data from researchers have found that over 10 percent of
CSW are infected (USBOC 2002)\. The project financed sites that are most easily set up -
in public clinics-not those that are most relevant to tracking the epidemic\.
51\. The implementation of analytic work and monitoring and evaluation was
unsatisfactory\. At appraisal, the need to launch quickly behavioral and epidemiological
studies was emphasized, to serve as a baseline for measuring impact and to improve the
design and evaluate the effectiveness of pilot interventions\. Thirteen specific studies were
proposed, of which nine were to take place in the first year of the project\. Only a few of the
proposed studies to be undertaken were conducted\. The Prevention Indicator Survey (PIS)
in 1996 assessed the knowledge and behavior of the general population in urban and rural
areas of five states (NACO 1997b), but it wasn't until 2001-after the end of the project-
that a national baseline Behavioral Surveillance Survey (BSS) was conducted (NACO
2001c)\. The methodology was so different between the two surveys that the results for
most variables cannot be compared and there is effectively no benchmark against which to
measure progress during the first project\. A study of high-risk behavior practices was
conducted in May 1995 in 65 cities, but results were eventually written up for only 18\.
There were no evaluations of the cost-effectiveness of the project's interventions; a study
of the cost-effectiveness of CSW interventions in the Sonagachi project in Calcutta was
never completed\. Of the nine studies conducted during the entire project listed in the ICR,
only two could be located during the OED mission\. In the states visited by OED, there was
no system for the evaluation of NGO interventions financed by the first project\.
52\. Further, the sentinel surveillance results and reports generated by the project have
not been sufficiently disseminated or available to the public, reducing their usefulness in
improving the effectiveness of the response and informing the public\. The 1996
Prevention Indicator Survey report has not been posted on the web, nor are the datasets
for the PIS or the 2001 BSS available for analysis by researchers\. Further analyses of the
original 2001 BSS data could yield valuable insights into the determinants of levels of
awareness and behavior, with implications for improving program design\. Sentinel
surveillance results are not posted on the NACO web site except in a summary form for
all sites of a given type by state for the most recent year\. The value of sentinel
surveillance data is in tracking trends in the same population over time; they are not
meant to be representative of any of the populations\. To be meaningful, researchers need
access to trends for multiple rounds by site within each state\.
EFFICIENCY
53\. Efficiency is not evaluable\. In principle, the project financed a number of
interventions that are cost-effective\. However, the lack of a monitoring and evaluation
23
system make it impossible to assess the efficiency or cost-effectiveness of the
interventions as implemented\.
INSTITUTIONAL DEVELOPMENT IMPACT
54\. Institutional development impact is rated substantial\. The project established and
refined the institutional framework at the central and state level for the national response
to HIV/AIDS\. The evolution of State AIDS Control Cell to State AIDS Control Society
significantly improved the timeliness of decentralized disbursement of project resources\.
Dialogue associated with the project led to the modification of a number of key national
policies\. While the extent of NGO involvement was limited in relation to the size of the
country and the task, the project launched important capacity\.building activities to
strengthen the NGO response and made substantial resources available for NGOs\.
Procedures were developed and refined for the vetting, selection, and monitoring of
NGOs\. Capacity was also built among government officials and health providers through
the project's training programs\.
55\. A main shortcoming of the project's design that slowed institutional development
was that it severely underestimated the need to provide technical support and capacity
building at the national, state, and NGO levels\. HIV/AIDS was a new disease that
required a different approach than previous disease control programs -infection is
"invisible", AIDS develops after many years, there is no cure, and issues of private
behavior must be addressed to effectively prevent the infection\. Yet, NACO was
conceived of as a coordinating body with relatively few technical staff\. Thus, for
example, while NACO is responsible within the MOHFW for the national STD control
program, it did not and still does not employ a full-time STD specialist\. Technical
capacity was even more limited at the state level\. The technical specialists funded by
WHO/GPA, together with experts from the CDC, were too few to provide regular
implementation support to the states\. The project helped establish a number of Technical
Resource Groups, but the terms of reference were never clearly defined, funding was
limited, most of the groups met infrequently, and staff in SACCs and NGOs did not know
how to access their expertise\. Finally, although NACO and the Cells/Societies provided
some training for NGOs-particularly to help them develop proposals-the state AIDS
Cells/Societies did not have sufficient capacity to provide ongoing technical support and
capacity building for NGOs (although in some states, bilateral programs-financed by
USAID or DfID-provided both direct financing and extensive technical support to
NGOs)\. These weaknesses still have not been fully remedied in the second project\.
56\. Staff turnover at the national and particularly the state level is detracting from
building and sustaining capacity, however\. While IAS officers are perceived to be
excellent managers, their tenure is often short\. Since 1994, for exanple, the six Project
Directors for the Tamil Nadu AIDS Control Society (TNSACS) had an average tenure of
only 16 months (range from 5 to 27 months)\. IAS officers generally have no technical
background or previous experience in HIV/AIDS activities\. With such short tenure, the
Project Directors leave the program just as they have learned enough to be most effective\.
Turnover is not exclusive to IAS officers: there have been 8 Project Directors for the
Andhra Pradesh SACC/SACS in 10 years, only two of them IAS, with nearly identical
24
tenure as the TNSACS\. High turnover resulted in considerable loss of institutional
memory and reduced the scope for learning from experience\.
SUSTAINABILITY
57\. Project sustainability is rated likely\. The Second India National AIDS Control
Project ($229\.8 million, 2001-2004) has built upon the lessons and accomplishments of
the first project, and further strengthened the institutional framework for the response\.
While the majority of funding for the national HIV/AIDS program continues to come
from the IDA credit, the national govermment has steadily increased its contribution and
spent more than planned\. Additional resources have been forthcoming from DFID,
USAID, and CIDA during the second project period, and more recently from the Gates
Foundation ($100 million) and the Global Fund to Fight AIDS, Tuberculosis, and Malaria
*($26 million for AIDS over the next two years with a five year maximum of $100
million)\. Evidence from expanded epidemiological and behavioral surveillance as well as
the growing number of AIDS cases in the most affected states and major cities has
weakened denial and helped strengthen political support for HIV/AIDS prevention and
control\. To the extent that it exists, uncertainty about sustainability hinges on whether
the huge increase in resources will out-strip the institutional capacity to manage and
implement these finds effectively at the national, state, and local level\. The government
and other donors are effectively relying on the same pool of NGO capacity for
implementation; thus, continued investment in increasing NGO and local capacity is
critical to sustaining the response\.
OUTCOME
58\. Due to the lack of monitoring and evaluation in this project, including the lack of
baseline information, OED was not able to estimate the number of HIV infections averted -
the project's broad objective\. However, based on interviews with stakeholders in the field,
OED found that this project likely advanced by several years the government response to
HIV/AIDS, relative to the counterfactual of no project, and largely put in place the
institutional mechanisms at the national and state level on which a broader response could
be launched\. In addition, the project greatly improved the safety of the blood supply and
succeeded in establishing nation-wide epidemiological surveillance of HIV\. The project
also enlisted the mass media and nongovernmental organizations (NGOs) to increase
awareness of HIV/AIDS; piloted prevention interventions targeting groups at high risk of
spreading HIV (commercial sex workers, truck drivers, intravenous drug users); and trained
thousands of health providers in HIV/AIDS/STD care and prevention\. The impact of these
latter interventions is difficult to gauge due to the lack of baseline, output and outcome data
during the life of the project\. The strong institutional base built by the end of the project
helped mobilize additional financial and technical support from other international partners\.
59\. Although there are promising signs of behavior change among those engaged in
risky behavior, awareness of AIDS among the general population has not been
sufficiently accompanied by specific knowledge of how HIV is and is not transmitted and
the project did not address sufficiently public attitudes toward people in high-risk groups
and those living with HIV/AIDS\. The project greatly overestimated the capacity of
25
NGOs to design and implement HIV/AIDS interventions\. Consequently, in most states a
smaller percentage of risk groups than anticipated were reached\. There is a continuing
need to build implementation capacity among NGOs and all levels of government if the
quality of the response and its coverage is to be enhanced\. Finally, aside from the
successful implementation of nation-wide epidemiological surveillance of HIV in the last
year of the project, monitoring and evaluation was unsatisfactory\. The design and
ultimate effectiveness of public infotnation campaigns and pilot interventions would
have been greatly enhanced had the project invested in collecting the planned baseline
data on attitudes, behavior, and HIV levels in the general population and key groups at
the start of the project\. OED believes that availability of critical information on
nationwide patterns of HIV prevalence and risk behavior earlier in the project's life also
would have been helpful in generating stronger political commitment and earlier action,
preventing many more infections\. Nevertheless, as a start-up investment for the national
HIV/AIDS response, project outcome is rated satisfactory\.
Table 4\. Summary OED Ratings of Outcome by Objective
Major Objective Importance* Outcome
Involve states and union territories in developing HIV/AIDS
preventive activities with a special focus on the major
epicenters of the epidemic High Satisfactory
Attain a "satisfactory level" of public awareness on HIV \. Moderately
transmission and prevention High Satisfactory
Develop health promotion interventions among risk behavior Substantial Moderately
groups in some states Satisfactory
Screen the majority of blood units collected for blood
transfusions, and decrease the practice of professional blood
donations High Satisfactory
Develop skills in clinical management, health education and
counseling, and psycho-social support to HIV sero-positive Moderately
persons, AIDS patients, and their associates Modest Unsatisfactory
Strengthen the control of sexually transmitted diseases Modest Moderately
(STDs) Satisfactory
Monitor the development of the H1V/AIDS epidemic in the Moderately
country Substantial Satisfactory
* Importance is judged by the priority accorded to the objective in project design, based both on the project
description and the amount of funds allocated\.
BANK PERFORMANCE
60\. The Bank's overall performance was satisfactory\. The Bank worked closely with
international partners to convince the government to borrow for HIV/AIDS prevention
while the country was still in the early stage of the epidemic, AIDS was invisible to most
policymakers, denial was high and there was little support for preventive measures beyond
improving the safety of the blood supply\. The Bank established good working relationships
with government and international partners and helped mobilize additional funds through
donors\. During supervision, it provided good technical advice (both through Bank staff and
through the CDC) and maintained continuity in the project team\. Policy dialogue and
26
conditions contributed to several important changes, including improved condom quality,
increased political commitment, and legislation to reduce discrimination\.
61\. A major shortcoming in Bank performance-noted by a range of stakeholders,
particularly outside government-was the failure to ensure monitoring or accountability
for project outcomes, as opposed to project outputs and disbursement\. In addition, more
attention could have been devoted to research on the nature and scope of the epidemic, as
well as to the cost-effectiveness of the interventions that were piloted\. Some promising
initiatives were launched-including a study of the cost-effectiveness of CSW
interventions in Calcutta-but they were not completed\. Finally, in retrospect, the Bank
underestimated the institutional challenges and capacity building involved in
implementing a comprehensive HIV/AIDS program in a challenging context, including
the need for technical assistance\. However, the Bank was not alone in this respect; similar
miscalculations were made by other donors and agencies involved in the response\.
BORROWER PERFORMANCE
62\. Borrower performance is also rated satisfactory overall\. Despite reluctance in
some quarters, the government deserves credit for borrowing to expand HIV/AIDS
prevention when it seemed invisible because few were yet dying from the disease\.
National political commitment was mixed through much of the project, but appears to
have steadily strengthened during the final two years of implementation\. There was
heterogeneity in the performance of states; the states most affected by the virus were
among the stronger responders\. However, HIV/AIDS activities are still not well
integrated into non-health ministries and are even not well integrated into family planning
programs\. Police harassment of outreach workers continues to hinder prevention
interventions among risk groups, and the govermment has been reluctant to change
legislation that has provided justification for such harassment (including anti-sodomy
laws)\. Financial management was a weakness through much of project implementation--
particularly at the state level, contributing to delays\.28
Lessons
63\. The first National HIV/AIDS Control Project was a critical start-up investment to
put in place the mechanisms for the response\. Project experiences suggest many lessons
relevant to the HIV/AIDS response in India and elsewhere, of which OED highlights a
few of the most prominent\.
Building robust institutions requires substantial innovation andflexibility\. The
original design of the project called for establishing a National AIDS Control
Authority that would have functioned as an autonomous parastatal\. However, as it
became evident that Parliament would not approve such an arrangement, a
compromise was struck that led to creation of NACO, a high-level semi-autonomous
body under the MOHFW headed by a Director with the status of an Additional
Secretary\. Likewise, the eventual adoption of the "society" model for State AIDS
28\. Reimbursements were suspended in Tamil Nadu briefly\.
27
control activities greatly reduced the administrative impediments to timely project
implementation\.
* Epidemiological and behavioral surveillance provide key information to build
support for the response in countries where denial is high and the epidemic is
otherwise "invisible\. " Epidemiological evidence to establish the potential scope of
the epidemic in India was thin during most of the life of the project\. The states with
the strongest commitment and response were those where the number of AIDS cases
was mounting (Maharashtra, Manipur, Tamil Nadu)\. The additional information
provided by the first national round of HIV surveillance in the last year of the project
was a catalyst and turning point for political commitment in some states where HIV
had spread, but the number of AIDS deaths was small\. Had these activities occurred
earlier, political commitment might have developed earlier in several key states\. They
also would have provided a baseline for measuring the accomplishments of the
project, demonstrated more clearly the feasibility of effective responses, and have
enabled fine-tuning of project activities\.
* Projects that seek to enlist NGOs to implement HI V/AIDS interventions need to
carefully assess NGO capacity in light of what is expected, and to ensure continuous
training and technical support\. The Bank, the government, and others in the
international community overestimated local implementation capacity\. While NGOs
may in principle have a comparative advantage in spreading AIDS awareness or in
reaching high-risk groups, their capacity for doing so may be weak\. The mere existence
of well-established development NGOs in the social welfare sector did not ensure the
skills or capacity to quickly shift to HIV/AIDS interventions sometimes targeted to
non-traditional groups\. The lack of training and technical support to NGOs during
project start-up delayed the implementation and expansion of project activities\. While
the project made major headway in terms of the selection and vetting of NGOs,
capacity for monitoring and evaluation of NGO activities remains extremely weak\.
* When political commitment is heterogeneous in a decentralized system, channeling
resources to effective programs in areas with the highest commitment can serve as
a powerful demonstration of the localfeasibility of otherwise controversial
programs\. The project management's decision to channel funds to the states most
able and willing to use them facilitated the development of indigenous "models" or
"pilots" of key interventions, with lessons for states that lagged, as well as
institutional models (like the Tamil Nadu "society" model) better suited to rapid
implementation of the project\.
* Targeted awareness and interventions for high-risk groups can be successful only
to the exctent that complementary efforts are launched to improve the environment
for HIVprevention among these groups\. The project focused on implementing
specific IEC and technical interventions for high-risk groups\. But in a number of
cases NGOs reported that harassment by police made it difficult to work effectively
and drove members of the beneficiary groups underground\. Gradually, the states are
coming to realize that law enforcement must be sensitized and informed of the public
health benefits of the interventions for groups that are engaging in otherwise illegal
28
activities, so that they cease counter-productive enforcement actions, the NGOs can
do their jobs, and those at highest risk are enabled to engage in safer behavior\.
* Campaigns to increase awareness of HIV/AIDS and promote behgavior change
must be informed by local research on behavior and attitudes in their design and
implementation and in such as way as to reduce stigma ofpeople living with
HIV/AIDS\.
* Where a majority of clients seek STD treatment in the private sector (as is often the
case with se-xually transmitted diseases), engaging private and even traditional non-
allopathic practitioners is likely to be necessary to ensure coverage and impact\.
Future Directions
64\. While HIV/AIDS has likely spread less than it would have in the absence of the
project, it nevertheless has continued to spread, albeit unevenly, throughout India\. The
results of the 2001 round of sentinel surveillance found six states in which HIV infection
had reached high levels among STD patients and surpassed one percent of women
attending antenatal clinics-Andhra Pradesh, Karnataka, Maharashtra, Manipur,
Nagaland, and Tamil Nadu\. In these states, where the epidemic started somewhat sooner,
infection is mounting and so is the number of people living with HIV/AIDS in need of
health care\. In other states and union territories HIV has spread among high-risk groups,
but not into the general population, while in a large number the epidemic has not yet
taken off even among CSWs and IDUs, where it is likely to appear first\. In 2001, roughly
75 percent of sex workers and their clients reported using condoms during their most
recent sexual contact\. But "consistent" condom use among CSWs and paying clients in
the last month is lower - about 50 percent - and with non-paying partners lower still (21
percent) (NACO 2001c)\.
65\. Certain priorities remain relevant for all states, irrespective of the stage of the
epidemic:
* Expanding correct knowledge in the population concerning specific ways that HIV is
spread and how to prevent it;
* Building and sustaining government and NGO capacity to implement, monitor, and
evaluate programs;
* Refining the procedures for vetting and funding projects and improving the
transparency of the process;
* Improving the reliability of funding flows, reducing uncertainty of funding levels, and
improving the timeliness of release of resources to SACS and NGOs;
* Expanding the coverage of behavior change interventions to high-risk groups, while
improving the quality of services;
29
Investing in baseline surveys and analytic work that will help to design, evaluate, and
improve the effectiveness and efficiency of programs, and disseminating results\.
66\. In the states with the most advanced epidemics and mounting numbers of AIDS
patients, programs need to urgently improve the access of people living with HIV/AIDS
(PWAs) to cost-effective medical care\. Interviews with PWAs and visits to AIDS wards,
together with data and reports from a variety of sources, indicated that many PWAs lack
access to even the most basic health care and continue to be subject to discrimination and
stigma by health care providers as well as family, co-workers, and neighbors (Dube 2000;
Hawkes and Santhya 2002; Jain 2002)\. These states will want to conduct surveys of
public and private provider knowledge, attitudes, and practices toward treatment of AIDS
patients, and of the type and quality of treatment that AIDS patients are receiving, as the
basis for assessing what improvements are necessary\. Thus, both care and reducing
discrimination against people with AIDS are urgently needed\.
67\. The states that have not yet felt the brunt of the epidemic, where infection rates
are still low, cannot be complacent\. Experience globally and in India shows that HIV can
and will spread wherever it can\. These areas have an opportunity to act early, spread
awareness, and enable those at high risk to adopt safer behavior, preventing a widespread
epidemic\. In these areas, expanding coverage of behavior change interventions is critical,
as is continuous sensitization of policymakers to the urgency and priority of the task\.
68\. The Second National HIV/AIDS Control Project ($229\.8 million) was approved
in 1999, financed by an IDA credit of $191 million and a government contribution of
$38\.8 million, covering the period 1999-2004\. The Second Project addresses many of
these issues, by seeking to: expand the coverage of targeted interventions to high-risk
populations; increase access to voluntary counseling and testing (VCT) centers and
quality of IEC for the general population; improve access to low-cost care for people
living with HIV/AIDS; enhance technical and managerial capacity; and promote multi-
sectoral responses\. The project design also calls for strengthening monitoring and
evaluation\. The Mid-term Review is scheduled for June 2003\.
Recommendations
69\. In addition to the general priorities noted above, the OED evaluation recommends
that the second project address a number of specific issues highlighted by this review of
the first project:
* Improve the environment for behavior change among high-risk populations by
sensitizing law enforcement to the need for HIV prevention;
* Establish mechanisms to ensure that national and state-sponsored behavior change
campaigns are based on rigorous research and are subject to regular monitoring and
evaluation;
* Reduce the discrimination faced by HIV-positive persons, starting with the medical
profession, and ensure the involvement of PWAs in the policy dialogue;
30
* Provide incentives to extend the tenure of Project Directors to at least 3 years, to
reduce their turnover and improve effectiveness;
* Improve the dissemination of the results of analytic work and ensure access of
researchers to raw epidemiological and behavioral datasets (like the BSS) for
additional analysis, to improve the effectiveness or targeting of programs; and
* Put in place a results-based monitoring framework that will shift the focus from
achieving output targets to monitoring progress toward agreed outcomes and to the
quality of interventions\.
31 References
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United States Agency for International Development (USAID)\.
Arora, N\.K\. and others\. 2000\. Family Health Awareness Campaign: Process Evaluation (New Delhi:
All India Institute of Medical Sciences)\.
Asthana, Sheena\. 1996\. "AIDS-Related Policies, Legislation and Programme Implementation in India,
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Balk, Deborah and Subrata Lahiri\. 1997\. "Awareness and knowledge of AIDS among Indian women:
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Bowers, Gerard R\., K\.C\. Malhotra, Eliot Putnam, Jr\., and Rajani Ved\. 2000\. Midterm Evaluation:
AIDS Prevention and Control Project (APA C)\. Washington, D\.C\.: The Synergy Project, TvT
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2000\.
Chatterjee, N\. 1999\. "AIDS-Related Information Exposure in the Mass Media and Discussion within
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Management of Sexually Transrnitted infections"\. Sexually Transmitted Infections 74, Suppl
1: SI-S1l\.
Dube, Siddarth\. 2000\. Sex, Lies and AIDS\. (HarperCollins: New Delhi)\.
Eberstadt, Nicholas\. 2002\. "The Future of AIDS\." Foreign Affairs; 81(6): 22-45\.
Friedman, Robert\. 1996\. "India's Shame: Sexual Slavery and Political Corruption Are Leading to an
AIDS Catastrophe," The Nation, April 8, New York\.
Haniffa, Aziz\. 1994\. "Shankaranand Denies Reports of an AIDS Epidemic in India," Economic Times;
July 10: Delhi\.
Hawkes, Sarah, and K\.G\. Santhya\. 2001\. "Diverse Realities: Understanding Sexually Transmitted
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Delhi\.
Human Rights Watch (HRW)\. 2002\. "Epidemic of Abuse: Police Harassment of HIV/AIDS Outreach
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1993: Introductory Report (Bombay)\.
International Institute for Population Sciences (IIPS)\. 2000\. Nationai Family Health Survey (NFHS-2)
1998-99 (Bombay)\.
Jain, Kalpana\. 2002\. Positive Lives: The Story of Ashok and Others with HIV (Penguin Books: New
Delhi)\.
Jayaraman, K\.S\. 1988\. "Drastic measures proposed in India"\. Nature 333: 697\.
Lancet, The (Editorial)\. 2001\. "Time for India to Act on AIDS," The Lancet; 1(3): 137\.
Mehendale, S\.M\., J\.J\. Rodrigues, R\.S\. Brookmeyer and others\. 1995\. "Incidence and Predictors of
Human Immunodeficiency Virus Type 1 Seroconversion in Patients Attending Sexually
Transmitted Disease Clinics in India," Journal of Infectious Diseases; 172 (6): 1486-91\.
National AIDS Control Organization (NACO)\. 2003\. Website: www\.naco\.nic\.in\.
32 References
National AIDS Control Organization (NACO)\. 2002\. National Baseline High Risk and Bridge
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Government of India, New Delhi\.
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Ministry of Health and Family Welfare, Government of India, New Delhi\.
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Ministry of Health and Family Welfare, Government of India, New Delhi\.
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Ministry of Health and Family Welfare, Government of India, New Delhi\.
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Health and Family Welfare, Government of India, New Delhi\.
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India (1996-1997)," Ministry of Health and Family Welfare, Government of India, New
Delhi\.
National AIDS Control Organization (NACO)\. 1997b\. "A Summary of the Findings of the High Risk
Behavior Study From 18 Cities," Ministry of Health and Family Welfare, Government of
India, New Delhi (mimeo)\.
National AIDS Control Organization (NACO)\. 1996\. Guidelines for the Appropriate Use of Blood,
Ministry of Health and Family Welfare, Government of India, New Delhi\.
Pelto, Peri\. 1999\. "Sexuality and Sexual Behavior: The Current Discourse," in Implementing a
Reproductive Health Agenda in India, Saroj Pachauri, ed\. (Population Council: New Delhi)\.
Ramasubban, Radhika\. 1998\. "HIV/AIDS in India: Gulf Between Rhetoric and Reality," Economic
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Ramasundaram, S\., K\. Allaudin, Bimal Charles, and others\. 2002\. "HIV/AIDS Control in India:
Lessons from Tamil Nadu," Paper No: WG-5: 25, WHO's Commission on Macroeconomics
and Health, World Health Organization, Geneva\.
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Sharma V, Dave S, Sharma A, Chauhan P\. 1997\. "Condoms: Mis-Use = Non-Use\. The Condom
Equation in Gujarat, India\." AIDS Care\. December 1997: 707-713\.
Stimson, Gerry V\. 1996\. "Drug injecting and the spread of HIV infection in Southeast Asia"\. In L\.
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33 Annex A
Annex A\. Basic Data
INDIA NATIONAL AIDS CONTROL PROJECT (CREDIT 2350)
Key Project Data (amounts in US$ million)
Appraisal Actual or Actual as % of
estimate current estimate appraisal estimate
Total project costs 99\.6 113\.3 114
Loan amount 84\.0
Cancellation 0%
Cumulative Estimated and Actual Disbursements
FY93 FY94 FY95 FY96 FY97 FY98 FY99
Appraisal estimate (US$M) 12\.2 20\.1 20\.3 16\.3 14\.6 0\.5 0\.0
Formally Revised 9\.14 5\.69 7\.13 9\.39 20\.39 16\.88 15\.51
Actual (US$M) 8\.99 5\.70 7\.67 9\.86 20\.36 16\.03 15\.56
Actual as % of appraisal 74 28 38 60 139 - -
Date of final disbursement: September 7, 1999
Data obtained from the Integrated Controller's System
Due to rounding and the use of different exchange rates, figures my no fully match the disbursements record In GOI's
report\.
Project Dates
Original Actual
Identification (Executive Project Summary) 08/30/91
(IEPS review)
Appraisal 10/17/91 10/16/91
Negotiations 02/19/92
Signing 04/24/92
Effectiveness 09/91* 09/21/92
Mid-term Review 03/31/95 11/03/95
Project completion 03/31/97 09/30/98
Closing date 09/30/97 03/31/99
* Dates obtained from MOP
Staff Inputs (staff weeks)
Stage of Project Cycle Planned Actual
Staff Weeks US$ ('000) Staff Weeks US$ ('000)
Preappraisal to appraisal - 18\.6 59\.1
Appraisal _ _ 44\.7 132\.2
Negotiations through Board approval - - 12\.3 36\.2
Supervision* 134\.8 422\.8
Completion* 18\.0 68\.0 4\.0 18\.2
Total 18\.0 68\.0 214\.4 668\.5
* Infornation available from FACT only for FY96-FY98\.
34 Annex A
Mission Data
Date No\. of staff Specializations Performance raib Types of
days in Perforinanrebrams
(monthlyear) persons fleld represented' problems
Implementation Development
status Objectives
Preparabon through TM, SPHS, P SINGYUAN n/a
appraisal n/a
Appraisal through 10/91 40 n/a n/a
Board approval
Board approval 03/92 n/a n/a
through effectiveness 09/92
Supervision 1 08/92 3 12 TM, SPHS, P, 2 1
PHS
Supervision 2 08/93 9 14 TM, SPHS, P, SS, 1 1
PHS, AC
Supervision 3 08/94 7 14 TM, SPHS, P, SS, S S
PHS, AC
Supervision 4 06/95 1 0 TM
Supervision 5 12/95 7 35 TM, SPHS, P, SS, S S
PHS, HE, LEG,
AC
Supervision 6 05/96 1 0 TM S S
Supervision 7 11/96 1 24 TM/PHS S S
Supervision 8 06/97 1 0 TM S S Cl
Supervision 9 01/98 4 11 TM, PPHS, P, S S
SS, PHS
Supervision 10 05/98 1 0 TM HS S
Supervision 11 08/98 1 17 TM, PPHS, P, HS S
SS, PHS
Supervision 12 and 02/99 5 12 TM, PPHS, P, HS S
Implementation FMS, OA, AA
Completion Report
a\. TM = Task Manager; SS = Social ScienUist; SPHS = Sr\. Public Health Specialist; PPHS = Principal Public Health
Specialist; PHS = Public Health Speclalist; P = Procurement Specialist; AC = AIDS Coordinator; HE = Health Economist;
FMS = Financial Management Specialist; OA = Operations Analyst; AA = Administrative Assistant\.
b\. The earlier performance ratings were based on a numbered system\.
c\. Due to audit delays largely involving Tamil Nadu, Disbursements against SOEs were suspended on June 5, 1997\.
35 Annex B
Annex B\. Persons Consulted
WASHINGTON, D\.C\.
WORLD BANK
Dr\. Salim Habayeb, Lead Health Specialist (former Task Manager, India AIDS I)
Mr\. Prabhat Jha (former Task Manager, India HIV/AIDS II)
Mr\. Mead Over, Lead Economist, Health, DECRG
Mr\. Richard Skolnik (former Sector Manager)
Mr\. Heinz Vergin (forrner India Country Director)
OTHER INTERNATIONAL ORGANIZATIONS (OUTSIDE INDIA)
Ms\. Joanne Csete, Human Rights Watch, New York
Mr\. Siddarth Dube, UNICEF, New York
Dr\. Michael Merson, Dean, Yale School of Public Health (former Director, WHO/Global
Programme on AIDS)
Dr\. John Narkunas, Blood Safety Specialist, US Centers for Disease Control and
Prevention
Dr\. Sam Perry, Chief STD/HIV, US Centers for Disease Control and Prevention
Dr\. Lyle Petersen, Chief, Surveillance, US Centers for Disease Control and Prevention
Dr\. Swarup Sarkar, UNAIDS Intercountry Technical Adviser for South Asia, Bangkok
Ms\. Liz Williams, Doctoral Candidate
NEW DELHI
WORLD BANK
Dr\. Peter Heywood, Lead Health Specialist
Mr\. Chris Hoban, Senior Operations Advisor
Dr\. K\. Sudhakar, Senior Health Specialist, Task Manager, HIV/AIDS II, and former
manager of the USAID-funded AIDS Prevention and Control Project in Tamil Nadu
Ms\. Suneeta Singh, Senior Public Health Specialist
G\.N\.V\. Ramana, Senior Public Health Specialist
NATIONAL AIDS CONTROL ORGANISATION (NACO)
Ms\. Meenakshi Datta Ghosh, Additional Secretary and Project Director
Dr\. P\.L\. Joshi, Additional Project Director
Mr\. Navreet'Singh Kang, Director, Finance
Mr\. Pratik Kumar, Deputy Director (EEC) and NGO Coordinator
Dr\. A\. S\. Rathore, Joint Director (Training)
Dr\. P\. Salil, Joint Director (Blood Safety)
Dr\. V\.N\. Sardana
Dr\. Mohammed Shaukat, Deputy Director (Technical)
36 Annex B
OTHER GOVERNMENT OFFICIALS
Mr\. P\.R\. Dasgupta\. Member, Telecom Disputes Settlement & Appellate Tribunal
(Former Director of NACO, 1991-95)
Mr\. Prasada Rao, Secretary, Family Welfare, Ministry of Health and Family Welfare
(Former NACO director)
Mr\. S\. Ramasundaram, Joint Secretary, Department of Commerce (Former Director of
Tamil Nadu AIDS Control Society)
DELHI STATE AIDS CONTROL SOCIETY
Mr\. N\.C\. Ray, Project Director
Dr\. Bhatia, Deputy Director and Medical Officer
Mr\. R\. Pande, Finance Officer
Mr\. Kaushik, Finance Manager
RESEARCHERS/ INSTITUTES
Mr\. Lester F\. Coutinho, Researcher
Dr\. Heiner Grosskurth, Head, HIV/STI Prevention and Care Research Programme,
Population Council
Dr\. Indrani Gupta, Institute for Economic Research\.
Ms\. Vaishali Sharma Mahendra, Population Council
Dr\. Saroj Pachauri, Regional Director\. Population Council - South & East Asia Regional
Office
Prof\. Mohan Rao, Department of Community Medicine, Jawaharlal Nehru University
Mr\. Ravi Verma, Population Council
NGOs
Dr\. Priyam Vada Chatturvedi, Secretary, Drishtikon
Dr\. Bitra George, Program Manager (Technical), Family Health International
Ms\. Kalpana Jain, Special Correspondent, The Times of India
Dr\. Rajesh Kumar, Executive Director, Society for Promotion of Youth and Masses
Dr\. A\. Rajatashuvra, Senior Research Officer\. Family Health International
Dr\. Asha Rao, Country Programme Director, India HIV/AIDS Alliance
Mr\. Luke Sampson, Director, SHARON
Dr\. Saraswathi Sankaran, Executive Director\. Deepam Educational Society for Health
(DESH)
Ms\. Geeta Savant, The Naz Foundation (India) Trust
Ms\. Carol Squire, Country Director, Population Services International
Rtn\. (Dr\.) Rajiv Tandon, Consultant Pediatrician
DONORS
Mr\. Fran;ois M\. Farah, UNFPA Representative
Dr\. Prakash Gurnani, Programme Officer-Health & Nutrition, UNICEF
37 Annex B
Dr\. Sanjay Kapur, Project Management Specialist, Office of Population, Health &
Nutrition, USAID
Mr\. M\.K\. Padma Kumar, Programme Officer, DFID
Dr\. David Miller, Country Programme Adviser, UNAIDS
Bethanne Moskov, Team Leader, Infectious Disease, Office of Population, Health &
Nutrition, USAID
Mr\. K\. Pradeep, Strategic Planning Officer, UNAIDS
Dr\. Dora Warren, Director, Global AIDS Program, US Centers for Disease Control and
Prevention
Mr\. Desmond Whyms, Health Adviser, DFID
ANDEIRA PRADESH
ANDHRA PRADESH STATE AIDS CONTROL SOCIETY
Ms\. K\. Damayanthi, Project Director
Dr\. C\. Surya Kumari, Deputy Director
Mr\. S\.D\. Madhukar, NGO Advisor
Dr\. M\.V\. Ramana Rao, Joint Director
Mr\. T\. Gopal Singh, Deputy Director, IEC
Mr\. R\. Tyagaraju, Deputy Director, Public Relations
Ms\. M\.L\. Nagamani Amnmal, Retired Project Director, AP AIDS Cell
Dr\. B\. Nandraj Singh, Director of Health and Family Welfare, Retired Project Director,
APAIDS Cell
NGOs
Mr\. G\. Manoj, SMA, Andhra Pradesh\. Hindustan Latex Ltd\.
Dr\. Dinesh Raj Mathur, Prof & Head, Dept\. of Microbiology, Osmania Medical College
Mr\. P\. Srinivas, Coordinator, Counselor, Nrityanjali Academy (Sociocultural
Organisation)
Mr\. P\. Venkateshwar Reddy, Coordinator, Rahul's Medical & Health Services Society
MAHARASHTRA
MAHARASHTRA STATE AIDS CONTROL SOCIETY
Dr\. Subhash Salunke, Project Director and Director General of Health Services
Dr\. Deshpande, Chief Officer for Sentinel Surveillance, STDs, and Training
Ratnakar Khaire, NGO Advisor
MUMBAI DISTRICT AIDS CONTROL SOCIETY
Dr\. Alka Gogate, Project Director
38 Annex B
DONORS
Mr\. K\. Vaidyanathan, Program Director, AVERT Project (USAID)
NGOS
Mr\. Shaskant Bansode, Project Director, John Paul Slum Development Project
Dr\. S\. D\. M\. Bhadkamkar, Director, Sevadham Trust
Dr\. Nitin Bora, Kayakalp
Dr\. Ranjan Darwekhar, AIDS Theatre Group
Mr\. Vivek Divan, Legal Consultant/Coordinator, Lawyers Collective HIV/AIDS Unit
Dr\. R\. R\. Gangakhedkar, Assistant Director, National AIDS Research Institute, Indian
Council of Medical Research
Mr\. Anand Grover, Advocate, Director HIV/AIDS Unit, LC Associates
Dr\. S\. K\. Hira, Director, ARCON
Mr\. Manoj, Network of Maharastra People Living with HIV/AIDS (NMP+)
Mr\. Shivade Mitiu Mohan, Manas Vyasanmukh Kendra Mashik
Mr\. George Swamy, President, John Paul Slum Development Project
Ms\. Aparna Tamharkar, We Need You Society
Ms\. Seema Waghmode, Kayakalp
TAMIL NADU
TAMIL NADU STATE AIDS CONTROL SOCIETY
Mr\. R\. Christodas Gandhi, Project Director
Mr\. K\. Allaudin (Former Project Director Dec 1, 1997-Jan 1, 2000)
Dr\. R\. Murali, Professor, Institute of Community Medicine (former Deputy Director for
Sentinel Surveillance)
Dr\. K\. Palanichamy, Deputy Director for STDs
Mr\. A\. Sebastian Jayaraj, NGO Coordinator
DONORS
Dr\. Bimal Charles, Project Director, AIDS Prevention and Control Project
(APAC)/Voluntary Health Services (funded by USAID)
NGOs
Mr\. A\.J\. Hariharan, Secretary, Indian Community Welfare Organisation (ICWO)
Ms\. Sayamala Nataraj, Secretary, South India AIDS Action Programme (SIAAP)
Mr\. A\. Purushothaman, Secretary, Kalaiselvi Karunalaya Social Welfare Society (KKSS)
Ms\. Semeda, Programme Coordinator, Madras Christian Council of Social Service
(MCCSS)
39 Annex B
UTTAR PRADESH
UTTAR PRADESH STATE AIDS CONTROL SOCIETY
Sh\. Bachittar Singh, Project Director
Prof\. Manoj Ajarwan, Advisor
Mr\. Ashutosh, Director, Training, and NGO Advisor
Dr\. S\.K\. Chakravarty, Joint Director, Blood Safety/DDO
Dr\. R\.P\. Mathur, Assistant Director, Sentinel Surveillance and Procurement
Dr\. R\.P\. Pathak, Deputy\. Director, Voluntary Counseling and Testing
Mr\. Anant Vijay Singh, Monitoring and Evaluation Officer
NGOs
Ajit Banerjee, Project Coordinator, Healthy Highways Project, Sarvajan,
Vinod Kumar Singh, UP Voluntary Health Association
T\.N\. Srivastrana, Senior Project Coordinator, Sarvajan
WEST BENGAL
WEST BENGAL STATE AIDS CONTROL SOCIETY
Mr\. S\. Suresh Kumar, Project Director\.
Ms\. Aparjita Dhar, Deputy NGO Officer
Dr\. Surjit Kumar Ojha, Deputy Director
Mr\. Trilochan Singh, Finance and Accounts, West Bengal State Electricity Board
DONORS
Mr\. Shumon Sengupta, Representative to West Bengal, British Deputy High Commission
NGOs
Dr\. Rakesh Agarwal, Bhoruka Public Welfare Trust
Mr\. Sujit Datta, Association of Voluntary Blood Donors (AVBDWB)
Mr\. K\. Kanar, SAVE
Mr\. Tarun Maiti, Manager, West Bengal Voluntary Health Association
Mr\. S\.K\. Mitra\. SAVE
Mr\. Biswajit Panda, Bhoruka Public Welfare Trust
Mr\. Satyaban Ranjit, Chittaranjan Welfare and Research Centre
Mr\. Debabrata Ray, Association of Voluntary Blood Donors (AVBDWB)
Mr\. Partha Roy, CNI-ASHA
41 Annex C
Annex C\. Project Financing by Component
Appraisal estimate Actual/latest estimate
Components (US$ 000) (US$ 000)
IDA WHO GOI Total IDA WHO GOI Total
Strengthening Program 5,990 565 1,166 7,721 4,415 844 5,246 10,505
Management Capacity 5
Promoting Public Awareness 26,105 282 4,749 31,136 16,955 420 6,411 23,786
and Community Support
Improving Blood Safety and 30,297 113 4,242 34,652 39,141 169 5,707 45,017
Rational Use
Controlling Sexually Transmitted 10,040 283 1,232 11,555 14,338 422 3,882 18,642
Diseases
Building Surveillance and 11,748 226 2545 14519 8801 337 6241 15379
Clinical Management Capacity 2 1 8 3 , 1
TOTAL 84,180 1,469 13,934 99,583 83,650 2,192 27,487 113,329
43 Annex D
Annex D\. Trends in Knowledge, Awareness, and Behavior, by
State
Table El\. Change in Awareness of HIV/AIDS Among Women of Reproductive Age
"Heard of AIDS" (percent)a Aware that condoms prevent HIV
"Heard o AJDS" percenttransmission (percent)b
1992-93 1998-99 2001 1992-93 1998-99
(NFHS-1) (NFHS-2) (BSS) (NFHS-1) (NFHS-2) 2001 (BSS)
NATIONAL 16\.8 40\.3 70\.0 4\.7 8\.0 33\.7
Andhra Pradesh 55\.3 97\.4 8\.9 55\.6
Arunachal Pradesh 16\.2 60\.4 12\.5
Assam 8\.4 33\.7 60\.8 8\.9 23\.9
Bihar 11\.7 26\.9 2\.8 4\.5
Goa 41\.7 76\.3 90\.2c 13\.3 11\.4 60\.4 c
Gujarat 10\.6 29\.8 37\.5d 3\.5 8\.1 8\.0
Haryana 44\.3 69\.8 16\.2 38\.0
Himachal Pradesh 60\.9 89\.6 24\.2 68\.7
Jammu & Kashmir 31\.9 75\.4e 5\.1 38\.6d
Kamataka 58\.1 78\.9 5\.0 32\.6
Kerala 86\.9 98\.7' 10\.4 71\.8
Madhya Pradesh 22\.7 42\.9 6\.0 15\.4
Maharashtra 18\.6 61\.1 77\.3 6\.0 12\.3 34\.9
Manipur 72\.5 92\.9 92\.0 14\.3 60\.1
Meghalaya 26\.7 44\.2 8\.4
Mizoram 84\.8 93\.2 37\.1
Nagaland 40\.9 72\.4 2\.3
Orissa 39\.0 58\.6 5\.7 13\.7
Punjab 54\.6 88\.0 \. 19\.0 65\.6
Rajasthan 20\.8 52\.5 7\.0 21\.3
Sikkim 53\.6 70\.8 12\.6 40\.3
Tamil Nadu 23\.4 87\.3 87\.4h 3\.3 9\.6 40\.4
Tripura 13\.2
Uttar Pradesh 20\.2 34\.9 5\.0 10\.3
West-Bengal 9\.8 26\.4 50\.1' 3\.5 5\.6 10\.4
Union TerritoriesJ
Delhi 35\.8 79\.2 85\.9 14\.4 41\.2 63\.1
NFHS: National Family Health Survey, BSS: Behavbral Surveillance Survey\.
aThe percentage of women who responded in the affirmative to the question, 'Have you heard of AIDS?"
The samples of women for each survey are slightly different\. NFHS-1: Ever married women age 13-49;
NFHS-2: Ever married women age 15-49; BSS 2001: Women age 15-49 (irrespective of marital status)\.
b As a percent of all women (not just those who were aware of AIDS)\. The results for the NFHS and BSS are
not strictly comparable because of differences in the way that the questions were asked\. The NFHS asked
respondents if a person can do anything to avoid becoming infected with HIV; those who
responded in the affirmative were asked what a person could do to avoid AIDS, in an open-ended
question\. The BSS asked all respondents who had ever heard of or seen a condom, "For what purposes
could a condom be used?", for which one possible answer was "HIV/AIDS Control" (NACO 2001c)\.
'The union territories Daman and Diu are included in results for Goa\.
44 Annex D
dThe union territories Dadra and Nagar Haveli are included in results for Gujarat\.
eJammu region only\.
fThe union territory Lakshadweep is included in results for Kerala\.
9The union territory Chandigarh is included in results for Punjab\.
hThe union territory Pondicherry is included in results for Tamil Nadu\.
'The union territories Andaman and Nicobar Islands are included in results for West Bengal\.
3The National Family Health Surveys did not survey union territories, with the exception of Delhi\. The BSS
pooled results for union territories with an adjacent state\. See footnotes c-i\. | APPROVAL |
P008960 | Document of
The World Bank
FOR OMFCIAL USE ONLY
i t X ; G6 AZ -7
: ! Repot No\. P-4214-TU
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
IN AN AMOUNT EQIJIVALENT TO UStIO\.0 MILLION
TO THE TURKISH ELECTRICITY AUTHORITY
WITH THE GUARANTEE OF THE REPUBLIC OF TURKEY
FOR AN
ELBISTAN OPERATION AND MAINTENANCE ASSISTANCE PROJECT
January 8, 1986
tlib ocmumst ha redOid dlsbiEO\. and may by reciien ouin the perfme of
CURRENCY EQUIVALENTS
Currency
Unit Jan\. 1980 /1 Jan\. 1982 Jan\. 1983 Jan\. 1984 Jan\.1985 Oct\. 1985
US Dollar - TL 70\.00 TL L39\.60 TL 191\.15 TL 309\.20 TL 451\.400 TL 540\.80
TL 1 - US$ 0\.014 US$ 0\.007 US$ 0\.005 US$ 0\.003 US$ 0\.002 US$ 0\.002
IL Since January 1981, the rate is being adjusted for the differentiaL
inflation between Turkey and its major trading partners\.
Fiscal Year
January 1 to December 31
WEIGHTS AND MEASURES
kVA = kilovolt ampere
kW = kilowatt
kWh = kilowatt hour
GWh (Gigawatt hour) = 1,000,000 kWh
HV = High Voltage
kV (kilovolt) = 1,000 volts
MW (Megawatt) = 1,000 kW
MVA (Megavolt-ampere) = 1,000 kVA
MVAR (Megavolt-ampere reactive) 1,000 kVAR
One meter (m) = 3\.28 feet
One kilometer (km) = 0\.624 mile
One kilogram (kg) (1,000 grams) 2 '\.2 pounds
One ton (metric ton) (1,000 kg) = 2,205 pounds
One kilocalorie (kcal)(1,000 calories) = 3\.968 BTU
toe = tons of oil equivalent
GLOSSARY AND ABBREVIATIONS
CEAS - Cukurova Elektrik A\.S\. (Cukurova Power Company)
DSI - DevLet Su Isleri (State Hydraulic Authority)
EdF - Electricite de France
EIB - European Investment Bank
Eltem TEK - Electric Tesisleri Mishen Dislik Hizmetteri ve Ticaret
Anonim Sirketi
KEPEZ A\.S\. - Kepez Electric Company
KfW - Kreditanstalt fur Wiederaufbau
LRHC - Long-Run Marginal Cost
MANTRUST - Manufacturers Hanover Trust
MENR - Ministry of Energy and Natural Resources
MTA - Mineral Research Institute
PEE - Public Economic Establishment
PPF - Public Participation Fund
SEE - State Economic Enterprise
SPO - State Planning Organization
STEAG - Steinhohlen Energie A\.G\.
TEK - Turkiye Elektrik Kurumu (Turkish Electricity Authority)
TKI - Turkiye Komur Isletmeleri Kurumu (Turkish Coal
Enterprise)
TPAO - Turkiye Petrolleri Anonim Ortakligi (Turkish Petroleum
Corporation)
FOR OMCUL USE ONLY
TURKEY
ELBISTAN OPERATION AND MAINTENANCE ASSISTANCE PROJECT
Loan and Proiect Summary
Borrower: Turkish Electricity Authority (TEK)
Guarantor: Republic of Turkey
Amount: US$10-0 million equivalent
Terms: Seventeen years including four years of grace, with
interest at the standard variable rate\.
Project The proposed project would provide for the Bank's
Description: continued presence in a key thermal power project in
Turkey\. The main objective of the project would be
to help finance the completion of Units 3 and 4 at the
Elbistan Power Station and to ensure the station's
adequate operating availability and efficient operation\.
Project Benefits The project is part of the least cost program to assist
-~ and Risks: TEK in meeting the growing demand for electricity after
1988\. The only remaining project risk would be the
uncertainty regarding the mine's ability to meet the
lignite needs of the power station beyond 1986\. The
Government has confirmed that it will continue to take all
measures necessary to ensure an adequate supply of lignite
for the efficient operation of the Elbistan power station\.
I This document has a restricted distribution and may be used by recipients only in the performance
or their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Estimated Project Cost: US$ Million Equivalent
Local ForeiRn Total
Power Station
Plant and equipment (incl\. spares) 7\.9 33\.1 41\.0
Civil Works 11\.9 - 11\.9
General Erection Contract 62\.3 32\.7 95\.0
Engineering \.4 13\.7 14\.1
Administration 56\.6 - 56\.6
Base Cost (early 1985 prices) 139\.1 79\.5 218\.6
Physical Contingencies 3\.7 2\.7 6\.4
Price Contingencies 7\.4 5\.4 12\.8
Total Project Cost 150\.2 87\.6 237\.8
rnterest during Construction on
Bank Loan - 1\.0 1\.0
Other Loans - 9\.0 9\.0
Total Financing Required - 150\.2 97\.6 247\.8
Financing Plan
IBRD - 10\.0 10\.0
EIB - 14\.5 14\.5
KfW - 30\.7 30\.7
US EXIM Bank/MANTRUST - 30\.0 30\.0
Government/TEK 150\.2 12\.4 162\.6
Total 150\.2 97\.6 247\.8
Estimated Bank Disbursements: US$ Million Equivalent -
IBRD FY FY86 FY87 FY88
Annual 2\.0 4\.2 3\.8
Cummulative 2\.0 6\.2 10\.0
Economic Rate of Return: 11\.3%
Appraisal Report: No\. 5774-TU dated December 31, 1985
Map: No\. 19045
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AMD RECOMMENDATION OF THE PRESIDENT OF THE IBRD
TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN
TO THE TURKISH ELECTRICITY AUTHORITY
FOR AN
ELBISTAN OPERATION AND MAINTENANCE ASSISTANCE PROJECT
1\. I submit the following report and recommendation on a proposed loan to
the Turkish Electricity Authority (TEK) with the guarantee of the Republic of
Turkey for the equivalent of US$10\.0 million to help finance the foreign
exchange cost of an Elbistan Operation and Maintenance Assistance Project\.
The loan would have a term of 17 years including 4 years of grace, with
interest at the standard variable rate\.
PART I - THE ECONOMY 1/
2\. An economic mission visited Turkey in June 1982, and its report
entitled "Turkey: Country Economic Memorandum, Recent Economic Developments
and Medium-Term Prospects" (No\. 4287-TU) was distributed to the Executive
Directors in June 1983\. The report of a mission to review the financial
sector, entitled: "Turkey: Special Economic Report - Policies for the
Financial Sector" (No\. 4459-TU), was distributed in September 1983\. A Bank
mission reviewed the Government's Fifth Five-Year Development Plan (1985-89)
in September 1984 and its report: "Turkey: The Vth Five Year Plan in the
Context of Structural Adjustment" (No\. 5418-TU) was distributed in July 1985\.
3\. Turkey's area is about 781,000 square kilometers (i\.e\. about equal to
the area of France and West Germany combined) with a population of around
50 million and GNP per capita of $1200 in 1984\. The density of population is
low (78 per square kilometer of agricultural land), and about 47 percent live
in urban centers\. Population growth (2\.2 percent per annum) is below the
median for middle-income countries\. Despite rapid economic growth in the
mid-1970s as well as emigration of workers (to Western Europe and more
recently, to the Middle East), there is still substantial unemployment which,
including disguised unemployment in agriculture, is estimated at about
19 percent of the civilian labor force\. There is, however, little or no
absolute poverty, although income distribution is skewed\. There are
considerable regional differences in income and large rural-urban
disparities\. Recent data indicate a probable increase in income inequality
since the 1970s, especially a relative deterioration of the position of wage
and salary earners and an improvement in the position of the trading and
commercial classes, and, more generally, of capital-owners\. Educational
enrollment has expanded greatly, but the level of adult literacy remains
relatively low compared to the European average for middle income countries\.
1/ Parts I and II are substantially the same as Parts I and II of the
President's Report on the Small and Medium Scale Industry Project
(P-4148-TU) dated December 12, 1985\.
-2-
Background
4\. During the 1970s Turkey did not make the necessary adjustments to the
shocks caused by the steep rise in oil prices, stagflation in the OECD
economies, and the consequent deterioration of its terms of- external trade\.
Until 1977 Turkey maintained high rates of economic growth by increasing
public investment\. The foreign exchange requirements were financed initially
by workers' remittances and then increasingly by borrowing, a large part of it
short-term\. The rapid GNP growth came to an abrupt halt in 1977 as the
massive external debt burden led to a sharp deterioration in creditworthiness,
severe shortages of imports, disruptions in industrial production and a rise
in unemployment\. By the end of 1979, domestic inflation had also become an
issue of critical importance\.
5\. In response to the crisis of the late 1970s, the Turkish authorities
made a major shift in development strategy in 1980, moving towards outward
orientation and giving an increased role to market forces\. To alleviate the
balance of payments constraint and import shortages, policies were adopted to
expand exports, increase workers' remittances, liberalize import\.;, encourage
foreign investment and improve external debt management\. On the domestic
front, the objectives were a reduction in the inflation rate, reform of the
State Economic Enterprises (SEEs), a more efficient financial sector, improved
resource mobilization and better selection of investments, especially in the
public sector\.
6\. The adjustment program, which has been supported by the Bank through
five structural adjustment loans and an agricultural sector adjustment loan,
involves far-reaching changes in attitudes, institutions, and the legal and
policy framework, all of which require time to be put in place\. Major
structural changes have been made in the exchange rate system, the export and
import regimes, the tax system, interest rate and selective credit policies
and the public investment program\. Implementation of the adjustment program
started in January 1980, continued under a military regime during the period
September 1980 - November 1983, and has since been carried out by an elected
government\.
The Structural Adjustment Program - 1980-85
7\. The Turkish economy has shown an impressive response to the
structural adjustment program and actual outcomes met or exceeded the
Government's own targets through 1982\. The overall performance deteriorated
in 1983 due to a combination of factors (slowdown of export growth, slippages
in the monetary program, shortfall in Government revenues), but improved
again, except in the area of inflation and the budget deficit, in 1984\. The
improvement has been maintained in 1985, as evidenced by a slowdown in
inflation and a reduction in the budget deficit\.
8\. After expanding by 4\.1 percent in 1981 and 4\.6 percent in 1982, real
GNP growth slowed down to 3\.2 percent in 1983, due to the effects of a bad
harvest, stagnant exports, and lower workers' remittances\. The growth rate
rebounded in 1984 to 5\.9 percent, mostly on account of favorable performance
in agriculture (3\.7 percent growth) and industry (9\.3 percent growth)\.
-3-
Exports also expanded strongly, by more than 25 percent in dollar terms\. In
1985, the growth rate of the economy is, according to the latest estimates,
expected to be about 4\.9 percent, as against the program target of
5\.5 percent\. The slowdown of growth is apparent across the board, but is most
significant in agriculture (2\.3 percent growth) and manufacturing
(5\.6 percent), due respectively to less favorable climatic conditions and
slackening domestic demand\. On the expenditure side, the average annual real
rate of growth of public fixed investment over the period 1980-85 has been
fairly stable, at less than 3 percent p\.a\., while the growth rate of private
investment has recovered, following a 17\.3 percent decline in 1980, and rose
by 7\.1 percent in 1984 and an estimated 5\.2 percent in 1985\. Private
consumption, after declining by 5 percent in real terms in 1980, grew by
5 percent in 1983 and 1984 before slowing down to an estimated 3 percent in
1985\. Strict budgetary discipline contributed to a steady decline in the real
rate of growth of public consumption from 8\.4 percent in 1980 to 1\.8 percent
in 1983; however, it increased to 3\.8 percent in 1984 and an estimated
4\.4 percent in 1985\.
9\. Through 1982, the Government met with considerable success in
reducing the rate of inflation by a combination of fiscal, monetary and
incomes policies\. After peaking at 107 percent in 1980, the average annual
rate of increase in thte wholesale price index decelerated to 37 percent in
1981 and 27 percent in 1982\. In 1983 the downward trend was reversed and the
inflation rate rose to 30 percent\. Inflation accelerated further in 1984, and
reached 50 percent\. The major factors that brought about the worsening of the
inflationary situation in 1984 were the lagged impact of the expansionary
monetary policy pursued during the second half of 1983, and a significant-
increase in agricultural product prices, especially of fresh fruits and
vegetables, as a consequence of export liberalization and higher export market
prices\. Other contributory factors included substantial "catch up" increases
of SEE prices - since January 1984 most SEEs have effectively been allowed to
set their prices freely - and higher import prices resulting from the nominal
depreciation of the Turkish lira\. In addition, inflationary pressures stemmed
from a larger than anticipated budget deficit in 1984 as a result of a
slowdown in the growth of revenues\.
10\. Inflation is expected to decline to 43-44 percent in 1985\. This
average annual inflation rate would be the net result of a period of high
inflation during the first quarter of the year, followed by a period of
deceleration starting in April 1985\. Deceleration occurred despite
significant increases in prices of goods produced by SEEs; it was rendered
possible by the maintenance of high real rates of interest, a decline in the
prices of a number of agricultural goods (mostly fru_ts and vegetables), and
an overall siackening of domestic demand\. The slowdown of inflation in the
second half of 1985 reinforces the expectations of a further decrease in the
average rate in L986, bringing it close to the Government's target of
25 percent\.
11\. In the fiscal area, the progress achieved between 1980 and 1982
(during which time the budget deficit declined from 5\.3 percent to 2\.1 percent
of GNP) was not sustained in 1983 and 1984\. Due to a steady decline in
-4-
consolidated government revenues ag a percentage of GNP, l/ the budget deficit
increased to 3\.2 percent of GNP in 1983, and reached almost 5 percent of GNP
in 1984\. The somewhat disappointing performance in the raising of revenues
was accompanied, however\. by significant improvements in the control of public
expenditure\. Overall, government expenditures decreased from 22 percent of
GNP in 1983 to an estimated 16 percent in 1985, essentially due to a
curtailment of personnel expenditures and government transfers to SEEs, with
the latter declining from 2\.5 percent of GNP in 1983 to an estimated
0\.8 percent of GNP in 1985\. However, the fact that improvements in the area
of government expenditures were not matched by commensurate gains in the
reduction of the budget deficit highlights the urgency of mobilizing
additional public resources\. As a step in this direction, the Government
introduced a Value Added Tax in January 1985, replacing previous indirect
taxes based on the value of output\. The new tax has resulted in raising the
share of taxes on goods in total government revenues from around 12 percent in
1983-84 to an estimated 20 percent in 1985\. As a result of these measures,
the budget deficit is expected to improve to about 2\.5 percent of GNP in 1985\.
12\. Progress has also been made in rationalizing interest rates and
reforming the banking system\. Commercial bank deposit interest rates, which
were deregulated in July 1980, are positive in real terms\. Time deposits have
been yielding a positive real return since early 1984, with interest rates
presently ranging between 45 to 55 percent depending upon the term of the
deposit\. Positive deposit interest rates have resulted in a steady increase
in deposits: in 1984 private non-commercial deposits grew by 8 percent in
real terms, and in 1985 the growth has continued at a rate of about
10 percent\. Improvements in incentives for savings were accompanied by
administrative reforms of the banking system\. A new banking law was enacted
in June 1983\. It included many of the recommendations made in the Bank's
report on the Financial Sector (No\. 4459-TU), including measures to reduce the
undercapitalization of banks and the interlocking between banks and
corporations\. The legal basis of the banking reform was strengthened with the
enactment of a revised banking law in April 1985, which introduced
standardized accounting for banks and specified improved procedures for
handling of non-performing loans\. The Government also took a major step
towards reducing the cost of bank intermediation by reducing in December 1983
the financial transactions tax from 15 percent to 3 percent\. Other important
developments in the financial sector include measures undertaken to revitalize
the capital markets, for which IFC has provided technical assistance, and the
sale of revenue-sharing certificates linked to the income from selected public
infrastructual facilities (e\.g\. the Bosphorus bridge, and two dams)\.
13\. While positive real interest rates have provided an incentive to
save, they have also meant high borrowing costs\. Effective nominal interest
rates range from 60 to 80 percent on non-preferential credits, in part because
of the high intermediation costs of the commercial banks and the prevailing
practice of requiring compensating balances\. The Government has taken a
number of steps in 1985 to reduce the interest rate differentials between
1/ Although total government revenues (inclusive of extra-budgetary
funds introduced in 1984) have not declined as sharply\.
-5-
preferential and non-perferential credits: in particular, the perferential
interest rate for export credits was discontinued in January 1985, while
interest rates for agricultural short-term loans and for loans to SEEs have
been increased in 1985 to 30 percent (from 28 and 24 percent respectively)\.
The narrowing of the gap between interest rates on preferential and
non-preferential credits, together with the decrease in the amount of
preferential credits, is expected to increase the general availability of
credit and exert a downward pressure on non-preferential interest rates\.
14\. Improvements in the balance of payments were substantial between 1980
and 1982, with the current account deficit decreasing from $3\.3 billion
(5\.7 percent of GNP) in 1980 to $1\.2 billion (1\.6 percent of GNP) in 1982\. In
1983 the current account deficit increased, to $1\.8 billion, as merchandise
exports stagnated and workers' remittances fell by one-third\. These
developments were reversed in 1984 as exports increased by over 25 percent in
dollar terms to reach $7\.4 billion\. Remittances, too, registered a higher
than expected increase, reaching $1\.8 billion (up by 20 percent over 1983)\.
Merchandise imports, fueled by high growth as well as a more liberal import
regime put in place in 1984, grew by more than 16 percent to reach
$10\.8 billion (or almost 22 percent of GNP)\. As a result of these
developments, both the trade and the current account deficits declined as
compared to 1983: the trade deficit by $50 million, and the current account
deficit by $350 million, to reach $1\.4 billion or about 2\.9 percent of GNP\.
Projections for 1985 indicate a further strong improvement of the current
account situation\. Merchandise exports, after a sluggish start in 1985, have
grown by 13 percent (in dollar terms) in the first nine months of 1985, while
merchandise imports have grown at a moderate 5\.3 percent\. Among the
invisibles, tourism revenues and investment income from abroad have increased
significantly compared to 1984 and previous years\. Similarly, workers'
remittances have continued to rise at a rate of about 10 percent per annum\.
It is now estimated that the current account deficit in 1985 would be in the
range of $650-800 million (about 1\.3 - 1\.6 percent of GNP)\.
15\. Merchandise export performance has been impressive throughout the
1980-85 period, during which exports registered an average annual rate of
increase of about 22 percent in dollar terms\. This growth has been led by the
manufacturing sector and has involved a rise in the share of expor_s to the
Middle Eastern countries\. Industrial exports, composed primarily of processed
foods and textiles, have risen from 36 percent of total exports in 1980 to
more than three-quarters in 1985\. These results were achieved by a
combination of indirect (flexible exchange rate policy, import liberalization)
and direct (tax rebates, preferential credits) measures to enhance the
relative profitability of exports and offset the traditional bias towards
production for the domestic market\. Successful penetration of the Middle
Eastern markets has brought their share in total Turkish exports from
17 percent in 1980 to around 40 percent in the 1983-85 period\.
16\. On the import side, the 1982-83 period was marked by a relative
stability in the growth of merchandise imports, as prices of both oil and
non-oil imports declined, and the volume rate of growth remained moderate\. In
1984, however, merchandise imports increased by 16\.1 percent in dollar value\.
The increase was most pronounced in some of the groups (e\.g\. raw materials and
-6-
consumer goods) that have been subjected to major liberalization in terms of
both a lowering of tariff rates and a significant removal of quantitative
restrictions\. In 1985, as domestic demand eased, and the initial effects of
pent-up demand for importables released by import liberalization weakened, the
rate of import growth decreased to one-third of the level recorded in 1984\.
Medium-Term Prospects
17\. The Fifth Five Year Development Plan (1985-89), which was approved by
the Grand National Assembly in June 1984, reaffirms the Government's
determination to pursue an outward-oriented development strategy and to
liberalize the economy by relying increasingly on market forces for allocation
decisions\. The public sector is targeted to play a supportive role by
concentrating its investments in infrastructure rather than manufacturing,
while the private sector is to be encouraged to play a leading role in the
growth of manufacturing and exports\. Some of the key targets are:
(i) an average annual GNP growth rate of 6\.3 percent;
(ii) an average annual real rate of growth of merchandise exports of
10\.6 percent;
(iii) an average annual real rate of growth of 10\.9 percent in private
investment and 6\.8 percent in public investment;
(iv) a declining external debt service ratio, from 26 percent in 1984
to around 18 percent in 1989; and
(v) a decreasing rate of inflation reaching 10 percent p\.a\. in 1989\.
18\. While the overall thrust of the Plan is in accord with the goals of
the structural adjustment program, the Plan targets, if viewed collectively
and in the light of the developments in 1984 and 1985, appear ambitious and
likely to strain domestic resources (especially in the public sector) as well
as to have an adverse impact on the external balance\. Accordingly, the
Government is adjusting the annual programs to ensure that they remain
compatible with the fight against inflation and with a growth strategy
commensurate with the Government's ability to generate resources\.
19\. The Bank's projections indicate that GDP growth of 5\.7 percent p\.a\.
on average for the 1985-90 period may be more realistic\. In the first phase
of this period (1985-87), growth might be relatively slow (5\.3 percent p\.a\.),
gradually accelerating in the outer years with an average rate of 6\.0 percent
p\.a\. in the period 1988-90\. The inflation targets in the Bank's projections
are also more conservative, implying a reduction from about 40 percent in 1985
to around 18 percent in 1990\. Key economic variables in the Bank's
projecticis for the period 1985-90 are presented in Table 1: 1/
1/ The Bank's estimate for 1985 may differ slightly from the Government's
latest estimates for 1985 discussed above\.
Table 1: TURKEY - SELECTED ECONOMIC INDICATORS, 1984-90
Reml Growth Rate Average Reil Growth Rate
1984 1SBS 19990 () CZ)
Units MACc\.) (EIst\.) UProj\.) 1984 1985 1985-90
tWu Ia L985 TL bil 25b72\.5 2092U\.2 354bb\.8 5\.t 4\.9 5\.7
irLcuLture 4"XI\.9 4728\.2 5481\.3 3\.0 2\.3 3\.0
Industry 7138\.1 7b05\.6 l02U\.4 9\.3 b\.b 7\.3
Services 12443\.2 13U4U\.5 1715b\.4 4\.7 4\.8 5\.6
Consomption 21578\.3 22389\.b 29274\.5 6\.9 3\.7 5\.5
-IXed Lv\.stLWe\.kt "\.b82\.3 4921\.b b742\.1 2\.0 5\.1 6\.5
Exports of goods Ifob) Curr S miL 7389\.0 7982\.0 18127\.b 34\.b 12\.1 8\.5
Lmports ot 0ouds i(ub) 1U331\.0 1081U\.9 Z1507\.7 18\.0 5\.3 7\.8
Trade balance -2942\.0 -2828\.9 -3440\.1
-lurkers' remttances 179S\.U z191\.0 2741\.8
Lurrent account balance -142b\.U -75U\.5 -bU9\.0
K3Li08
LnVCstmen\.t/l;DP ZU\.2 L9\.8 2U\.5
Oumestic savings/GDP 1 15\.5 L6\.0 15\.3
xports Ot OuL dad3:UP 14\. 15\.0 17\.1
Current acct\. deficit/lDP lb Z -2\.7 -1\.4 -0\.8
enL ser\.ce ratio /c A 2b\.0 11\.3 21\.2
Puulic fixed ituvestment/
LotaL taxed itveatment 59\.0 58\.D 51\.8
rlemo item:
Uross capital required Gaurr S mil 4b27\.J 3894\.8 45U7\.4
l AL mrket prices\. %\.mponents are expressed at factor cost\.
lb 'ased on cunstaunt TL\.
Tc lotal debt service lexcLudLn4 short-teru)/exports ut guods and NFS plus workers remictances\.
-8-
20\. Achievement of these growth rates will depend primarily on the
performance of agriculture and manufacturing\. This in turn will depend to a
large extent on the Government's determination to constrain the growth of the
public sector in line with resources and to create a more favorable investment
climate for the private sector\. This translates into a projected real growth
in public fixed investment of about 3\.8 percent p\.a\. on average for the
1985-90 period, starting with a more modest increase of around 3\.5 percent
p\.a\. in the early years\. The comparable figure for the growth of private
fixed investment (for the whole period) is 10\.0 percent p\.a\. These figures
are consistent with the need to meet the infrastructural requirements of the
economy through the public investment program, while providing for the
capacity expansion of the private sector necessary to meet the output and
export targets\. The projections allow for a modest increase of per capita
consumption of about 3\.0 percent p\.a\. on average over the period 1985-90\.
21\. Merchandise exports are projected to grow at an average rate of
8\.5 percent per annum in real terms during 1985-90, while merchandise imports
are projected to grow at an average annual rate of 7\.8 percent\. This is
consistent with the import liberalization program of the Government\. On these
assumptions, the current account deficit is projected to decrease through 1988
as stabilization policies act to contain import growth while encouraging
exports\. As higher growth rates set in during the outer years of the period,
the trend would reverse and the current account deficit would rise moderately
through 1990\. For the year 1990, the projections show a deficit of
$810 million as compared to an estimated 1985 figure of $750 million\. The
projected capital account would remain manageable throughout the period, even
in the face of some sharp increases in amortization payments arising from the
debts rescheduled during 1978-80\.
22\. On the external front, the current expectation of lower oil prices in
the next period is likely to have a positive impact on the balance of
payments\. The savings on direct petroleum imports could be as much as
$275 million in 1986 alone\. Lower oil prices will no doubt have some negative
consequences for Turkey's exports to oil-exporting countries as well as on
profit and workers' remittances from construction activities in these
countries\. Nevertheless, the overall effect on the current account is likely
to be positive, due to the stronger effect of the import savings\.
23\. The medium-term scenario presented above is, of course, only one of
many possibilities and is used specifically to illustrate Turkey's potential
in the light of the Government's own development strategy\. Given Turkey's
progress in the structural adjustment program, the favorable response which
this has evoked from the international financial community, and the present
outlook for both lower oil prices and a strong growth of Turkish exports, the
GNP growth projected in the medium-term base case scenario could be exceeded
if slightly higher export growth rates were achieved and there was an
improvement in the mobilization of public resources\.
24\. In view of the sensitivity of the projections to the assumptions
regarding export growth, a i'ownside risk case has also been developed\. With
Turkey's export performance heavily dependent on exogenous factors such as the
world economic conditions and movements in international prices, a slower
-9-
growth of merchandise exports (an average of about 6 percent p-a\. over the
1985-90 period) coupled with lower mobilization of public resources
(3 percent lower revenues than envisaged under the base case scenario) would
lead to a more difficult but still manageable balance of payments situation, a
lower GDP growth (averaging about 4\.7 percent p\.a\.) and a higher debt service
ratio (averaging 26\.7 percent during 1986-90 against 25\.1 percent in the base
case scenario)\. In such a situation the Government would have less chance of
absorbing the unemployed and improving tangibly the average standard of
living\. However, if the Government in such circumstances were to resort to a
high growth strategy, then it could witness a repeat of the situation which
prevailed in the 1970s, and which led to a debt crisis\. It is unlikely that
the Government would risk such a situation\. It is therefore more probable -
even if exogeneous developments are unfavorable - that the Government will
continue with the structural adjustment program as implemented to date, so
that the scenario of high growth fuelled by increased external borrowing seems
at present unlikely\.
External Debt and Creditworthiness
25\. At the end of 1978, Turkey had $7\.2 billion in short-term debt and
$7 0 billion in medium and long-term debt\. Between 1978 and 1980, Turkey
rescheduled some $9\.2 billion of outstanding obligations through a series of
rescheduling arrangements concluded with official and commercial creditors\.
Following the resolution of the debt crisis, inflows were mostly from official
sources - OECD countries, the World Bank and the IMF\. Since 1983 commitments
from commercial banks have outstripped those from official sources and are
likely to reach an estimated level of $2\.5 billion by end-1985\. Of the
estimated total debt outstanding of $22\.3 billion (including IMF) at end-1984,
medium and long-term debt accounted for about 79 percent\. Short-term debt as
a percentage of total debt outstanding fell from 51 percent in 1978 to about
11 percent in 1982, then increased to 14 percent in 1983 and to an estimated
21 percent in 1984\. Much of this growth in the stock of short-term debt is
due to the inflows associated with the Dresdner Bank scheme 1/\. At end-1984,
the outstanding liabilities associated with the Dresdner scheme amounted to
$1\.8 billion, constituting 39 percent of short-term external obligations\.
Based on the growth scenario outlined in paras\. 19 to 22, debt outstanding and
disbursed as a percentage of GDP is projected to fall from an estimated
42 percent in 1984 to 37 percent in 1990\. This translates into a total debt
outstanding forecast for 1990 of $28\.8 billion, with short-term debt
constituting about 25 percent of the total\.
26\. The debt service ratio for medium and long-term credits increased
from about 26 percent in 1984 to an estimated 31 percent in 1985, mostly as a
1/ Under this scheme the Dresdner Bank collects deposits from Turkish
workers in West Germany and automatically places these funds at the
disposition of the Central Bank of Turkey, which guarantees the
deposits and pays an interest rate commensurate with the Euro-market
rate\.
- 10 -
result of large repayments of rescheduled debt falling due\. Debt service
obligations are expected to be on average about $4\.0 billion a year during
1986-90, a quarter of which is attributable to service obligations on
rescheduled debt\. However, the debt service ratio is projected to decrease to
a level of about 25 percent during 1986-1990, due largely-to improvements in
the current account of the balance of payments\. The debt burden should remain
manageable provided current policies are successfully implemented, the export
drive is sustained, and Turkey continues to receive support from international
comnercial and official sources\. Confidence in Turkey's overall economic
performance, its stable record in meeting debt servicing obligations and its
improved debt management, encouraged commercial banks to commit about
$1\.3 billion in 1985\. Several major American, European, Japanese and Middle
Eastern banks were involved in these operations, including a $500 million
syndicated loan in support of the balance of payments signed in April 1985\.
27\. Turkey's economic program has been supported by the IMF through a
series of standby arrangements during 1980-84\. The Government has not asked
for a new standby in 1985\. The Government's decision seems to reflect the
view that the favorable economic developments in 1985 constitute proof of
Turkey having "graduated" from the IMF's program and that the IMF presence
through Article IV consultations should suffice for purposes of maintaining
international confidence\.
PART II - BANK GROUP OPERATIONS IN TURKEY
28\. Through September 30, 1985 the Bank and IDA have lent
$6185\.8 million 11 to Turkey, through 88 projects\. Agriculture accounts for
21 percent of the funds lent, industry and DFCs for 22 percent, power for
16 percent, structural adjustment and program loans for 27 percent, and urban
development, transportation, education, tourism and technical assistance for
the remaining 14 percent\. Disbursements for all sectors combined averaged
63 percent of appraisal estimates at the end of September 1985, which compares
favorably with other countries in the region\. As of September 30, 1985, IFC
commitments to Turkey totalled about $246 million, of which about $64 million
were still held by IFC\. Annex II provides a summary statement of Bank loans,
IDA credits and IFC investments as of September 30, 1985\.
29\. Bank lending is aimed at supporting Turkey's medium-term objectives
of restructuring the Turkish economy by placing more reliance on market forces
and adopting a more outward-oriented strategy\. The main vehicle for the
Bank's operational discussions with the Government has been the structural
adjustment lending (SAL) program, which was completed in June 1984, and more
recently the sectoral adjustment lending program\. Significant progress has
been achieved in the last five years, but the task of restructuring is by no
means over\. The current plan involves the broadening and deepening of the
adjustment process at the sectoral level\. Recent economic developments have
underlined the need for a continuation of the stabilization program without
1/ Net of cancellations\.
- 11 -
giving up the goals of sectoral adjustment\. Hence the emphasis of Bank
lending in the post-SAL period would be on striking an appropriate balance
between sectoral adjustment lending designed in part to be quick disbursing
and supportive of policy reforms in the major sectors, and carefully
formulated project lending focussing on high priority projects principally in
the agriculture, energy, industry and transport sectors\.
30\. A series of sectoral adjustment loans for the major sectors is
planned over the next few years\. A first loan for agriculture was approved in
June 1985\. Further lending of this kind would support measures to address the
structural problems of the financial sector and enhance the utilization of
industrial capacity in the public and private sectors, keeping in view the
scope for the "privatization" of publicly-held assets in the manufacturinF
subsectors\. Other sectors where sectoral adjustment loans are likely to ae
developed include energy and transport, and it is expected that there wo'Ad be
a follow-up loan in agriculture\.
31\. This would be the third loan to Turkey presented to the Executive
Directors this fiscal year\. Other projects being processed include Kayraktepe
Hydropower, a loan for drainage and on-farm development, and a financial
sector adjustment loan\.
32\. The close macroeconomic and sector dialogue established with the
Government in recent years is expected to be pursued\. The economic and sector
work currently being undertaken includes a review of the public investment
program and studies of housing finance, engineering industries, transport
investment, telecommunications and electronics\. Topics expected to be covered
in the future include a study in domestic resource mobilization, a country
economic memorandum focussing on inflation, reviews of the health and
education sectors and a study of private sector adjustment to liberalization
action\.
33\. Turkey's debt burden is projected to remain manageable throughout
1986-89 (paras\. 25 and 26)\. The Bank Group's share of Turkey's total external
debt was 13\.4 percent in 1983, is estimated at 14 percent in 1984, and is
expected to grow to about 17 percent by 1989\. Official debt outstanding is
projected to increase from $11\.0 billion in 1984 to $13\.4 billion in 1989 and
private medium and long-term debt outstanding is projected to increase from
$5\.2 billion in 1984 to $7\.5 billion in 1989\. The Bank group's share of total
debt service payments is projected to increase from about 12 percent in 1983
to an estimated 13 percent in 1984, and to about 18 percent in 1989\.
34\. IFC has invested in synthetic yarns, textiles, pulp and paper, glass,
aluminum, cement, iron and steel products, heavy diesel engines, motor bicycle
engines, piston rings, food processing and tourism\. It has also invested in
the Industrial Development Bank of Turkey (TSKB) and provided guarantees for
overseas contracting firms\. In addition, IFC is currently providing technical
assistance to the Government with respect to the development of the capital
market and a regulatory framework for leasing\.
- 12 -
PART III - THE ENERGY SECTOR AND THE POWER SUBSECTOR
Energy Resources
35\. Turkey has substantial untapped lignite and hydropower resources, as
well as more limited, but still important, oil, gas and coal resources and
geothermal potential\. Hydropower with potential economic viability is
estimated at about 29,500 MW under average hydrological conditions and
corresponds to an annual production of about 100,000 GWh\. Only 15 percent has
been developed so far, but this is projected to rise to about 30 percent by
1990\. Proven recoverable reserves of oil are about 16 million tons; however,
potential reserves that may become economically recoverable, using enhanced
oil recovery techniques currently being tested, could be as high as 30 million
tons\. Oil production has been declining over the last decade, as few
discoveries have been made in recent years; in 1983 production was about
2\.3 million tons, equivalent to 13 percent of total consumption\. Proven
recoverable gas reserves are about 400 billion standard cubic feet\. Domestic
gas will, however, be supplemented, beginning in 1987, by large scale imports
of natural gas from the U\.S\.S\.R\.
36\. Total known reserves of hard coal are estimated at about 1 billion
tons, all located in the north of Turkey\. Coal production has been declining
as operations move to deeper, less accessible seams; in 1983 production was
3\.5 million tons (2\.2 million toe)\. Proven and probable lignite reserves are
about 8 billion tons, but about half of this is of extremely low quality
(950-1,000 kcal/kg)\. Lignite production in 1983 was about 20 million tons,
equivalent to about 4\.6 million tons of oil\. There is potential for
geothermal development, for both space heating and electricity generation, and
a review of promising geothermal sites is under way\.
Energy Consumption and Supply
37\. Total gross energy consumption was about 38 million toe in 1983, of
which commercial energy consumption amounted to 30 million toe\. Petroleum
made up the most significant share of primary commercial energy (58 percent),
with lignite (20 percent), hydropower (9 percent), coal (11 percent),
asphaltite and imported electricity making up the balance\. Overall, about
23 percent of final commercial energy consumption was in the form of
electricity\. Non-commercial energy production (primarily fuelvood, but also
other biomass) was an important energy source, accounting for 37 percent of
total domestic energy production\. The most notable change in the pattern of
energy consumption over the past two decades has been the decrease in the
relative share of hard coal in the total\. This was accompanied by a rapid
growth in consumption of petroleum until the mid-1970s, peaking at over
50 percent in 1977/78; and a rapid rise in the share of lignite (primarily for
thermal power production) and hydroelectric power consumption starting in the
second half of the 1970s\. During this period, hard coal consumption stayed
relatively constant in absolute terms, while traditional biomass energy
sources increased slightly in absolute terms but decreased steadily as a
percentage of total energy consumed\.
- 13 -
38\. Trends observed in the growth and pattern of energy consumption
during the latter part of the 1970s are expected to continue during the 1980s
and 1990s\. The most important factor in the growth of energy demand will be
the growth rate of the economy as a whole and the growth of the relatively
energy-intensive industrial sector\. The demand for lignite is expected to
grow rapidly, both for direct consumption by households and industry and, even
more importantly, for the power sector\. The growth in demand for petroleum
will be moderate due to the much higher price of imported oil and petroleum
products and its substitution by other energy sources\.
Organization of the Energy Sector
39\. The energy sector in Turkey is characterized by the dominance of
Government owned enterprises and agencies\. The Ministry of Energy and Natural
Resources (MENR) is responsible for the development of energy resources in
Turkey\. The Turkish Hard Coal Enterprise (TTK), the Turkish Lignite
Enterprise (TKI), the Turkish Petroleum Company (TPAO), and the Mineral
Research Institute (MTA) have responsibility for the extraction of fossil
fuels and radioactive minerals\. Identification, design and construction of
hydroelectric projects is entrusted to the State Hydraulics Authority (DSI)\.
The Turkish Electricity Authority (TEK) is responsible for the generation,
transmission and, since November 1982, the distribution of almost all the
electricity sold in Turkey\. TEK is also responsible for the implementation of
the Government's program for rural electrification and the construction of all
public sector generating and transmission facilities, with the exception of
public sector hydroelectric plants for which DSI has responsibility\.
40\. Private sector participation in the supply of electricity was, until
1983, confined to two small private utilities (CEAS and KEPEZ) and industrial
companies which generated power for their own use\. However, recent changes in
Government energy policy now give greater encouragement to private sector
participation in the development and production of energy (para\. 42)\. The
Government is actively seeking ways to encourage both local and foreign
private sector participation in geothermal development, lignite mining,
hydroelectric projects and the construction and operation of power plants
fired by imported fuels\.
Energy Sector Policy
41\. To meet its energy requirements, Turkey launched a massive program in
the late 1970s to increase the domestic production of electricity and
lignite\. This program tended to stretch the implementation capabilities of
the State energy agencies, and spread resources too thinly over too many
projects, with resulting long delays in completion schedules\. This has, in
turu, resulted in an energy deficit which is likely to remain a feature of the
Turkish economy at least through the 1980s\. MENR and TEK are in the process
of improving their energy planning capabilities; and MENR has produced
Turkey's first energy policy paper\. Furthermore, the current Five Year
Development Plan (1985-89) contains some broad objectives relevant to the
energy sector including the following:
- 14 -
- Priority is to be given to domestic sources of energy, especially
hydro and lignite, provided that they are economically justified;
- Imported energy including, but not limited to, oil will be
considered;
- Renewable and nonconventional resources such as geothermal, solar
and biogas are to be supported; and
- Private sector financing, both local and foreign, will be sought
for participation in energy development\.
42\. Two features of Government policy appear to represent a departure
from previous energy policy\. The first is that Government policy is now quite
clearly to encourage private sector participation in the energy sector\. There
are now no legal constraints to private sector electricity generation, and
existing private utilities like KEPEZ and CEAS have plans to increase their
capacities\. In addition, the State Planning Organization (SPO) is currently
undertaking, with assistance from consultants, preliminary studies to assess
whether private finance could be sought for the construction and operation of
thermal plants based upon imported fuels (coal, nuclear) and geothermal
sources\. The second shift in policy focus is increased concern that
indigenous resources be developed only when economically justified\. Improving
efficiency in the lignite mining subsector at least to levels at which
marginal production costs are competitive with imported coal, or conversely
abandoning such mining ventures if such economies cannot realistically be met,
has become a major energy policy objective for the Government\.
43\. A less explicit but no less important component of the Government's
energy policy relates to the pricing of energy products\. Regular increases in
the prices of petroleum products to maintain them at economic levels has been
a feature of the Government's pricing policy for the past five years\.
Electricity tariffs have been increased sharply since early 1984\. As of
April 1, 1985 bulk power tariffs had caught up roughly with the level of long
run marginal cost\. Prices of petroleum products are being maintained at
international levels\. Lignite prices, which had shown a threefold increase in
real terms in the seven years up to 1983, declined slightly in real terms in
1984\.
44\. The Government is also in the process of developing a program for the
conservation of energy by encouraging more efficient use in existing and new
industrial enterprises\. Energy efficiency programs and legislation have been
evaluated by both the MENR and SPO, and legislation has been passed which
allows for tax credits for various types of investments in energy efficiency
improvements\. The Bank included financing of energy audits in selected
manufacturing facilities under Loan 1916-TU\. These audits have been
completed, and recommendations are expected to be implemented\. TEK has
engaged consultants to assist in the development of an energy conservation and
load management program\. MENR has requested Bank assistance in the
development and implementation of a comprehensive energy conservation program\.
- 15 -
Electricity Supply and Demand
45\. The present installed power capacity in Turkey is about 7,600 MW of
which 3,500 MW (50 percent) is thermal and the balance hydro\. The share of
hydroelectric power has increased over the past ten years from 33 percent in
1972 to about 50 per cent in 1984\. On the thermal side, lignite has made an
increasing contribution to the production of electricity\. Total gross
generation in 1984 was about 30,000 GWh, of which TEK accounted for almost
90 percent\. Imported electricity from Bulgaria and the U\.S\.S\.R\. accounted for
a further 2,500 GWh\. Total availability was less than the potential effective
demand, estimated at 35,000 GWh\. There is considerable evidence that power
shortages have caused cutbacks in production in industries such as cement,
textiles and paper\. In addition to the capacity constraint, the high level of
total system losses (technical losses plus energy unaccounted for), estimated
at about 20 percent, contributed to the supply shortages\.
46\. Growth in demand for electricity averaged about 9 percent per annum
over the period 1965-1983\. Between 1970 and 1983, the percentage of
population with public electricity supply rose from 51 percent to 78 percent\.
Per capita consumption of electricity is currently about 550 kWh\. TEK's
latest long-term generation plan (1987-2005) is based upon a projected overall
growth in energy demand of about 11 percent per annum, with peak demand
increasing at about 9 percent per annum\. This represents a considerable
sustained annual increase in demand, particularly as the base from which the
demand is extrapolated (1987) appears to be high\.
47\. For more than two decades the Turkish power subsector has been
confronted with major problems\. Electricity supply has been insufficient to
meet demand in every year since 1971, resulting in high costs to the economy
as imports increased and supply interruptions continued\. Many of the issues
facing the subsector can be traced to institutional problems in the public
sector agencies responsible for planning and implementing the subsector's
investment program\. This has resulted in project delays, consequent
substantial cost escalations, power shortages, frequent and protracted plant
breakdowns due to inadequate maintenance, and relatively high system losses,
especially in the urban networks\. The shortage of qualified staff in TEK
resulted in resources, human and financial, being spread too thinly over too
many projects in the investment program\.
48\. The Government agrees that closing the supply gap will require a
sustained coordinated effort by the major agencies in the subsector\. It plans
to emphasize increased supply in parallel with managing demand and improving
efficiency of existing facilities\. To illustrate the magnitude of the task,
it should be noted that Turkey would have to bring on stream three times more
capacity in the 1980s than in the 1970s and that the momentum would have to be
sustained throughout most of the 1990s\. Also, scarce resources will be tied
up in technologies new to the country, such as nuclear, and in projects of an
unprecedented size\. TKI and DSI will have to meet their respective production
targets commensurate with TEK's plans\. Even if a lower growth rate in
electricity demand is assumed, and optimistic assumptions are made about the
sector's implementation capacity, except for 1986 and 1987 some power
shortages are likely to continue throughout the 1980s\.
- 16 -
Bank's Role in the Power Subsector and Experience with Past Lending
49\. The proposed project would be the eighteenth Bank operation in the
power subsector in Turkey\. The Bank has made thirteen loans and a technical
assistance grant (total $921\.7 million), and IDA has granted three credits
(total $55\.7 million) for four hydroelectric projects, two thermal power
stations (oil- and lignite-fired), a lignite mine, and several transmission
and distribution networks\. The technical assistance grant helped reorganize
Turkey's power subsector\. The first five loans/credits were for projects in
the CEAS concession area\. All these projects were completed successfully,
although often with long delays\. The Bank has made six previous loans to TEK,
for the First, Second, Third and Fourth Power Transmission Projects, a Power
System Operations Assistance Project and the power component of the 1974
Elbistan Thermal Power Project (Loan 1023-TU)\.
50\. A Project Performance Audit Report (PPAR) distributed to the Board in
November 1981, 1/ on the Keban Transmission (Loan 568-TU) and the first TEK
Power Transmission (Loan 763-TU) projects, found that these projects had met
their physical objectives despite implementation delays and cost overruns\. A
Project Completion Report on the Istanbul Power Distribution Project (Loan
892-TU), distributed to the Board in December 1982, 2/ also reported physical
completion of the project after considerable delay\. Major constraints to
timely project completion were identified as shortage of local counterpart
finance and, in the case of Loan 892-TU, late preparation of bidding
documents\. A major conclusion of the TEK II (Loan 1194-TU) Project Completion
Report was the need for improvement in the monitoring and coordination of the
project\. The report recommended the establishment of a single unit within TEK
to be accountable for project implementation\. Such units are now regularly
used in Bank financed power projects in Turkey\. Implementation of the Third
TEK Transmission Project (Loan 2322-TU) is satisfactory\. The loan for the
fourth TEK Transmission Project (Loan 2586-rU) was signed on June 27, 1985\.
The Power System Operations Assistance Project (Loan 2602-TU which was signed
on July 8\. 1985) is the first project to focus directly on improving the
efficiency of existing facilities for producing, transmitting and distributing
electricity\.
51\. The Bank has been able to assist the Government in the consolidation
of the power sector and in the creation of TEK\. The Bank has also supported
efforts to bring about other institutional reforms\. Considerable progress has
been made in areas such as TEK's accounting system, system planning, and
procurement procedures\. The Bank has also assisted in attracting funds from
other bilateral and international financing agencies (e\.g\. EIB, German Aid
(KfW), US Eximbank)\.
1/ No\. 3695, dated November 23, 1981\.
2/ No\. 4264, dated December 29, 1982\.
- 17 -
Planned Strategy for Assistance to the Sector
52\. Sector policy discussions, which recently have been held twice a year
with the Government and energy sector agencies, have provided a valuable forum
to discuss the issues and constraints facing the sector\. The Bank is
generally in agreement with the Government's strategy for the energy
subsector\. Detailed agency by agency action programs have been prepared and
will be discussed with the Bank\. Current and future Bank lending would be
based on these action programs\. For the electric power subsector, it has been
agreed that attention be given to a selected number of high priority issues\.
The strategy includes focus on (a) investments which yield quick returns, such
as completion of priority ongoing investments, upgrading of existing
facilities, reduction in losses, and improvements in maintenance procedures
and efficiency; (b) programs to ensure a balanced electric power development
program through appropriate investment in generation, transmission,
distribution and general plant; (c) improved demand management including
identification of energy saving investments and enactment of energy
conservation legislation; (d) technical assistance to strengthen capabilities
in planning, financial management and manpower development; (e) investment in
new generation options such as those based upon imvorted coal and natural gas;
and (f) an increased role for the private sector in the production of
electricity\.
53\. The Government has identified a series of investments which would
address the above medium-term issues\. The Bank agrees with the size and
structure of Turkey's 1986 power sector investment program and generally with
the investment strategy proposed for subsequent years\. The Bank will have
opportunities to express its views on detailed future energy sector investment
programs\.
PART IV - THE PROJECT
54\. The proposed project would help finance the completion of the
Elbistan Power station and would help ensure its adequate operating
availability and efficient operation\. The project was identified in December
1984 and appraised in April/May 1985\. Loan negotiations were held in
Washington in November/December, 1985\. The Turkish delegation was led by Mr\.
Hikmet Ulugbay, Chief Financial and Economic Counselor of the Turkish Embassy
in Washington and included representatives of the Treasury and TEK\. A Staff
Appraisal Report entitled "Elbistan Operation and Maintenance Assistance
Project" (No\. 5774-TU), dated December 31, 1985 is being circulated separately
to the Executive Directors\. The main features of the project are given in the
Loan and Project Summary and in Annex III\.
Background of the 1974 Elbistan Thermal Power Project (Ln\. 1023-TU)
55\. The 1974 integrated Elbistan Thermal Power Project is the first to
exploit the Afsin-Elbistan lignite deposit\. It accounts for a substantial
share of Turkish power investment (36% and 13% in 1975-1980 and 1981-1985
respectively) and is a highly visible operation\. The Project is designed to
supply electric power using low grade lignite from the Kislakoy
- 18 -
mine in Afsin-Elbistan as part of a balanced program of power development
utilizing Turkey's fuel and hydropower resources\. Other project objectives
are to address institutional problems (organization, management, personnel and
finances) that were apparent in TEK and TKI and which proved to be the main
causes of delay in the execution of the project\. The project originally
included the following components:
(a) a thermal power station with four 340-MW lignite-fired units
delivering, after meeting the power station and mine loads, an
estimated 1,048 MW and 7,030 GWh p\.a\. to TEK's interconnected
system;
(b) 380-kV transmission lines, about 540 km long, connecting Elbistan
with Kayseri and Ankara by 1978 and 1979 respectively;
(c) an open-cast lignite mine with a planned capacity of 20\.7 Mt/a,
17\.9 Mt/a for the power station and 2\.8 Mt/a for processing for
sale as domestic fuel; the project included the cost of land and
restoration of the worked-out mining area;
(d) separate permanent housing for power station and mine staff and
roads between these and the works as well as Afsin-Elbistan
towns; and
(e) consultancy services\.
56\. The Bank provided about 24Z of the original foreign financing\. Loan
1023-TU for $148 million, ($123 million for the power station and $25 million
for the lignite mine) was approved in June 1974\. Cofinancing was provided by
German Aid (KfW, Hermes), European Investment Bank (EIB), US Eximbank,
Japanese Eximbank, Italy and France\. Loan effectiveness was delayed nearly
two years largely on account of delays in implementing a tariff increase to
improve TEK's finances\. The loan was finally declared effective on June 1,
1976\. The Closing Date of the loan was June 30, 1983\. This loan was fully
disbursed by September 15, 1983\. Ongoing contracts under the project have
been financed through 1985 by KfW, EIB and the Government\.
57\. Initially a mine output for a 600-MW power plant (4 x 150 MW) was
planied\. In an effort to achieve economies of scale TEK, with support of its
consultants, decided to increase the power plant rating to 1200 MW (4x300 MW)
and the mine's design output to 20 Mt/a, with most of the lignite intended for
power generation\. This decision proved to be critical since it overloaded
TEK's and TKI's manpower and financial resources\.
Implementation Problems
58\. TEK and TKI had difficulty in recruiting and retaining suitably
qualified personnel because of the remoteness and poor living conditions of
the site and the low civil service salary structure\. Project site supervision
ran into difficulties due to the inexperience of TEK and TKI's site managers
and the limited authority delegated to the field staff\. There was also a
problem of coordination between the two entities\. These issues led
- 19 -
delays in the procurement of equipment and in payments to contractors and lack
of supervision and control of civil works\. Delays in the provision of local
funds also af\.fected the implementation of the project\.
Status and Operating Performance
59\. The project is about seven years behind schedule but there has been
no further slippage since 1983\. The present situation can be summarized as
follows:
(a) Power Station: All the main plant and equipment for the four
340-MW units are on site\. The cooling towers, chimneys and the
bulk of the civil works are complete\. Since July 1982, erection
work has been proceeding satisfactorily\. Unit I went into
commercial operation in January 1985\. Unit 2 went into trial
operation in May 1985 and is going into commercial operation in
January 1986\. Units 3 and 4 are to follow at one-year intervals\.
(b) Lignite Mine: The quantities of material moved at the mine over
the past three years have been well below planned levels\.
However, by March 1985, the lignite seam had been uncovered for
the first time, with an inventory of about 4\.3 Mt available for
immediate mining\. Data gained from the seam showed improved
geological conditions compared to those previously assumed from
exploration results, resulting in more lignite available within
power station specifications and a lower overall stripping
ratio\. No mine planning based on the new parameters has been
done as yet and further verification is required\. But the Bank
is satisfied that the existing mine equipment is adequate to
handle the required quantities of material without major
overburden backlogs over the next two to three years provided,
however, that corrective a-tion is taken on the following major
operational constraints: insufficient managerial and skilled
personnel, lack of training, insufficient spare and wear parts,
inadequate maintenance arrangements, and inefficient removal of
hard strata\.
(c) Domestic Fuel Drying Plant: In the light of the problems
encountered in suppLying lignite for the power station, the
lignite drying plant associated with the original project has
been dropped by TKI\. The Bank agreed to this decision\.
(d) Transmission Lines: Of the two 380-kV lines under the original
project, Elbistan-Kayseri has been in operation since 1983\. The
other, Elbistan-Ankara, is under construction and scheduled for
completion this year in time to accommodate the commercial
operation of Unit 3 starting in January 1987\.
60\. The severe delays in the execution of the project led to a more than
doubling of the original cost estimates (as shown in the table below)\. The
following factors also contributed:
- 20 -
(a) Exchange Rate Variation: The bulk of equipment was procured
from countries whose currencies appreciated substantially during
project implementation\.
(b) Increased Cost of Engineering: When the project ran into
difficulties, more engineering supervision was called for;
actual man months of engineering and administration are more
than 2002 of the appraisal estimate\.
(c) Interest During Construction: The length of the execution
period for the project coupled with borrowings to cover the
resulting financing gap substantially increased the amount of
interest during construction\.
Elbistan Project Cost Estimates
($ million)
Appraisal Cost Revised Cost
Estimates (1974) Estimates (1985)
Power Station 767\.8 1744\.6
Transmission Lines 31\.5 67\.1
Lignite Mine 337\.7 594\.2
Total 1137\.0 2405\.9
Rationale for Continued Bank Involvement
61\. The Elbistan Project is almost complete\. Project implementation is
now under control and progressing well\. The mine is fully operational and
construction of the fourth and last unit in the power station is scheduled for
completion by the end of 1986\. Moreover, the government is committed to
introducing adequate measures to ensure the long term availability of lignite
for the power plant\.
62\. Throughout the implementation of the Elbistan project, starting in
1974, the three major cofinanciers, KfW, EIB and! L;le Lank, have acted in close
coordination to help bring about a more favorable turn of events\. In addition
to participating in the proposed project, KfW and EIB are also funding a
parallel project to assist TKI carry out operation and maintenance
improvements at the lignite mine\. An additional remedy is provided for under
the Bank loan agreement in the event that the KfW or EIB financing for this
parallel project is suspended\. One of the reasons why it is considered
desirable to make this modest (in financial terms) loan is that it would
enable the Bank to continue to work with KfW and EIB now that a solution to
Elbistan's long-standing problems is in sight\.
Project Objective
63\. The main objectives of the proposed project would be to complete the
Elbistan Power Station and to ensure the station's adequate operating
availability and efficient operation\.
- 21 -
Project Description
64\. The project would include:
(a) the completion and commissioning of Units 3 and 4 at Elbistan
power station (4x340 MW); and
(b) improvement in the Borrower's project management and operation
and maintenance capabilities at Elbistan\.
Project Implementation
65\. TEK would implement the project\. To ensure adequate technical support
at the power plant TEK has agreed to continue to employ a project management
firm to provide supervision of construction and assistance in operation and
maintenance of the power plant up to December 31, 1987 or the commissioning of
Unit 4, whichever comes later\. The project would be implemented over three
years (1985-1987) and is expected to be completed by December 31, 1987\.
Project Financing Plan and Lending Arrangement
66\. The proposed Bank loan of $10\.0 million would be made to TEK\. It
would finance about 4% of the total financing required ($247\.8 million) and
10% of the foreign exchange portion ($97\.6 million)\. The remaining costs of
$237\.8 million would be covered from loans and credits being provided by EIB,
KfW, US Eximbank, and own resources from TEK and the Government\. Retroactive
financing would not be required\. A suimnary of the project financing plan is
shown below\. Details of the items that would be financed out of the Bank loan
are given in para\. 68\. The foreign exchange risk on the Bank loan would be
born by TEK\.
Project Financing Plan
($ Million)
Local Foreign
Currency Currency Total
Proposed IBRD Loan - 10\.0 10\.0
EIB - 14\.5 Li 14\.5
KfW - 30\.7 S 30\.7
Us EXIMBANK _ 30\.0 3 30\.0
TEK 35\.0 - 35\.0
Government 115\.2 12\.4 127\.6
Total 150 9\.2
11 Released from blocked ECU 45 million loan\.
72 From remaining DM 25 million in Loan No\. 5 and DM 55 million in Loan No\. 6\.
/3 From available MANTRUST facil\.ty\.
- 22 -
Given the recent improvements in TEK's financial performance, no difficulties
are foreseen in TEK meeting its share of the local cost of the project\. TEK
suffered a net operating loss in 1983, hut the situation improved sharply in
1984 and 1985\. As of April 1985 bulk rates had roughly caught up with long
run marginal cost\. The Government is committed to the completion of the
Elbistan complex and has agreed to make available local funds to TEK for the
proposed project in a timely manner\.
Audits
67\. TEK's financial statements are audited by the High Control Board in
the Prime Ministry\. TEK is required by law to submit its balance sheets and
financial accounts to the Prime Ministry for auditing no later than the third
month following the year they pertain to\. TEK is then required to subait its
annual audited accounts to the Bank no later than five months after the close
of the year\. However, there are shortcomings in both the scope and the timing
of the present audit reports\. The auditors rarely comment on the reliability
of the presentation of the accounts, or on significant events which occurred
during the year\. The audit reports concerning 1981 and 1982 and 1983 were
received more than a year after the close of the fiscal year\. The report for
1984 has not yet been received\. Most likely it will not be possible to meet
the five month target for submission of audit reports until the 1987 report\.
TEK's consultants are giving priority to helping TEK improve the timeliness
and accuracy of the financial statements\. Furthermore, an upgrading of TEK's
computer center, presently being studied\. should improve TEK's ability to
prepare and correct the annual financial reports\. It is expected that the
quality and timely submission of audit reports will improve gradually\. The
1985 and 1986 reports are expected within ten and eight months, respectively,
after the end of the given fiscal year, and within five months for 1987 and
afterwards\.
Procurement and Disbursement
68\. Procurement arrangements are summarized below:
Total Procurement
($ millions)
Project Element ICB LCB Other Total Cost
Plant & Equipment - 0\.5 45\.6 46\.1
including spares (0\.5) (2\.5) (3\.0)
Civil Works - 12\.7 12\.7
Installation & - 103\.4 103\.4
Erection - - (5\.0) (5\.0)
Engineering - - 15\.4 15\.4
- - (2\.0) (2\.0)
Administration - - 60\.2 60\.2
Total 0\.5 - 237\.3 237\.8
(0\.5) - (9\.5) (10\.0)
Note: Figures in parentheses are the respective amounts
to be financed from the Bank loan\.
- 23 -
Plant and Equipment up to an amount of $45\.6 million equivalent would be
co-financed by KfW and EIB and procured through extension of existing
contracts with eligible suppliers under KfW and EIB rules\. Spare parts to be
financed by the Bank ($2\.5 million) are proprietary items, obtainable only
from one source and would be procured through direct contracting, in
accordance with procedures satisfactory to the Bank\. Installation and
erection services ($103\.4 million) would be procured through extension of
existing contracts, awarded under ICB in accordance with Bank guidelines\.
Civil works ($12\.7 million), which would not be financed by the Bank would be
procured as an extension of existing local contracts\. Contracts for
miscellaneous items costing the equivalent of $50,000 or less, up to an
agregate of $1,000,000 equivalent may be procured under contracts awarded on
the basis of comparison of pr:ce quotations, solicited from a list of at least
three suppliers, eligible under the Bank's guidelines, in accordance with
procedures acceptable to the Bauk\. Engineering services ($15\.4 million) would
be procured through extension of existing consultancy contracts, awarded under
the Bank's guidelines\. Administration would be done by force account not
financed by the Bank\. All bidding packages for goods over $250,000 to be
financed by the Bank would be subject to the Bank's prior review of
procurement documents, resulting in about 90% coverage of goods contracts\.
The balance of contracts would be subject to selective post review by the Bank
after contract award\.
69\. Disbursement of proceeds of the proposed Bank loan would be made for:
Z of Expenditures
Category to be Financed
(a) Goods 100% of foreign
expenditures and
100% of local ex-
penditures (ex-
factory cost)
(b) Installation & 100% of foreign
Erection Services expenditures
(c) Consulting services 100% of foreign
expenditures
The disbursement schedule takes into consideration the special nature of the
proposed project as a result of which a comparison with power project profiles
in EMENA as a whole is not appropriate\.
Special Account
70\. The establishment of a Special Account in the Central Bank would
permit payment of Bank-financed expenditures with a minimum of administrative
delay\. The initial deposit would be $2 million\.
- 24 -
Environmental Aspects
71\. The Elbistan power station is located in a sparsely inhabited area\.
The power plant provides for ash removal from flue gases by means of
electrostatic precipitators designed for 99Z removal efficiency\. At this
level, fly ash emissions are in compliance with World Bank Guidelines for dust
and electrostatic precipitators\. In addition, the plant will meet Bank
Guidelines for sulfur dioxide and nitrogen oxides\. Under Loan 1023-TU, TEK
agreed to establish pollution monitoring stations and to inform the Bank of
recorded pollution levels and any corrective actions taken, should they be
necessary\. This covenant is being complied with and the Government has agreed
to take measures to ensure continued application of pollution controls\. The
mine site area is treeless and at best sparsely cultivated\. It affords no
shelter to wildlife\. Moreover, TKI is carrying out, under Loan 1023-TU,
necessary reclamation to allow resettlement and reuse\. The lowering of the
water table in the mining area has produced no ill effects and extracted water
is used for irrigation\. Sewage is being treated appropriately\. Noise
pollution does not arise\.
Project Benefits and Risks
72\. The only remaining project risk is the uncertainty of the mine
meeting the lignite needs of the power station beyond 1986\. The Government
has confirmed that it will take all measures necessary to meet minimum
requirements of lignite for the efficient operation of the power station\. The
proposed project would form part of the interconnected power system operated
by TEK\. TEK's system is projected to expand rapidly over the next ten years
in order to meet a fast-growing demand and close the still prevailing
electrical energy deficit\. It is very unlikely that the projected generation
expansion to 1990, which includes Elbistan 3 and 4, will be able to meet the
system's energy requirements, even under average hydrological conditions and
with continued power imports from Bulgaria and the USSR\. Any delay in
commissioning of Elbistan 3 and 4 would therefore increase the projected
supply gap\. The proposed project is justified and necessary to meet projected
incremental demand on TEK's system\.
73\. The remaining question is whether any other type of plant could meet
the projected requirements at less cost than the project\. Of the available
alternatives, only combustion turbines could conceivably be installed in time
to lessen the energy deficits which would prevail in 1988 and later years
without the project\. Other feasible options would be justified, only if they
showed sufficient economic advantage over the proposed project to offset the
costs to the economy in terms of unserved demand which their longer completion
times would involve\. Evaluation of all the alternatives shows that both the
capital and operating costs of the proposed project are lower than those of
any alternative\. Sensitivity testing confirmed that the project would still
be the least-cost option in TEK's projected system growth\.
Rate of Return on the Overall Sector TEK/DSI Expansions Progra'
74\. The overall TEK/DSI expansion program for 1985-1990, which includes
the proposed project was evaluated in conjunction with the appraisal of the
Fourth TEK Transmission and the Power System Operations Assistance projects
- 25 -
(Loans 2586-TU and 2602-TU respectively) and indicated a rate of return of
11\.3Z, marginally below the estimated opportunity cost o\.f capital of 122\.
This reflects that average power tariffs are near long run marginal cost of
supply\. However, it understates the real economic return on the program,
since the measurement of benefits underestimates the willingness to pay for
electricity\.
Recalculation of the Rate of Return on the 1974 Elbistan Project
75\. The rate of return on the Elbistan project has been recalculated\.
The period used for the calculation was 1973-2014, covering the start of
construction of the power station and mine and their estimated economic life
of 30 years from the start of commercial operation in 1985\. The costs are the
capital and operating costs of the mine and power station together with the
associated transmission facilities\. The benefits comprise the revenues from
the incremental bulk sales of electricity attributable to the power station\.
Incremental sales were valued at the average prices projected for bulk
consumers (at 1985 prices), which are as follows:
1985 1986 1987 1988 1989 1990 onwards
TLIkWh 26\.87 28\.21 29\.62 31\.10 33\.10 36\.83
Electricity tariffs were assumed to increase at regular intervals to reach and
maintain LRMC, and to ensure an adequate level of self-financing for the power
subsector, reflecting the Government's commitment to reduce public
expenditures\. Since the tariffs used in the calculation were estimated as a
proxy for consumers' willingness to pay, all taxes 1/ were included\. Given
the large unmet demand, the willingness to pay for electricity is likely to be
higher than the current average tariff, but it cannot be readily quantified\.
76\. A comparison of the Elbistan's costs and benefits results in a rate
of retura of about 6X\. This compares with an estimate of nearly 18% in the
original (1974) appraisal\. The difference is due largely to the delay
experienced in completing Elbistan and the resulEing lengthy period of time
which has elapsed between incurring its heavy investment costs and reaping the
benefits of its output\. The Elbistan project is worth completing because the
rate of return estimated for the proposed project is over 407,given that a
large part of the costs of units 3 and 4 were incurred before 1985-
1/ VAT presents some difficulties, since it is repaid to industries which use
electricity as an intermediate good\. However, repayment may take up to a
year, and the "effective price" to industrial consumers is therefore taken
as including VAT\. Excluding VAT in these cases would slightly reduce the
rate of return\.
- 26 -
PART V - RECOMMENDATION
77\. I am satisfied that the proposed loan would comply with the Articles
of Agreement of the Bank and recoumend that the Executive Directors approve
the proposed loan\.
A\. W\. Clausen
President
Attachments
January 8, 1986
Washington, D\.C\.
-27- ANX I
Page 1 of 6
T A tb E 34
mmvvM - &tTAL uitcmf DATA ^W
TnUR RF011C GROPS (WKLCI AVSAS)
MMe (mur macwr KSutUwl Ab
I7b lbr T7b amr RAM9O INL
AUA umasa SQ\. a)
TMAL 7W\.6 710\.0 780\.
AGRICUTUTIJRAL 3I6\.7 361\.6 360\.8
GP F CUrA C) \. \. 1240\.0 2144\.3 l1062\.9
(ULOClANS OF OIL ou UIVALHT) 170\.0 362\.0 570\.0 11L9\.5 4991\.3
Marua A VRAXL sATsCs
POPULATION\.NIO-IDAR (TISaNDS) 27509\.0 35321\.0 47279\.0
URBAN POPULATtON CZ OF tOTAL) 29\.7 32\.9 45\.1 47\.5 70\.7
POPULATION mPJC
POPUATION IN YUs 20 (ELL) 65\.4
STATIOIAL POPULATION (MILL) 111\.0
POPULATII unn,
PER SQ\. KM\. 35\.2 45\.Z 0\.6 84\.7 1411\.
PER Sq\. %K\. ACR1\. LAND 74\.6 92\.5 120\.3 166\.9 521\.2
POPULATO EC SIRUCUrE (z)
0-14 tRS 41\.2 41\.0 37\.6 31\.2 z1\.3
15-64 ns 55\.2 54\.3 57\.1 61\.5 66\.6
65 AND ABOVE 3\.5 4\.8 4\.3 7\.2 12\.0
POPULATIO CG I RATE CZ)
TOTAL 2\.1 2\.5 Z\.2 1\.6 u\.o
URaN 6\.1 3\.6 4\.S 3\.7 1\.3
CRUDE BIRTH RATE (PER TAWS) 13\.1 37\.9 30\.6 23\.4 13\.5
CRE DEATH RATE (PER TroUS) 1S\.6 12\.2 8\.6 8\.9 8\.9
r;DSS MPROSUCrION RAEn 2\.9 2\.6 = 2\.0 1\.5 o\.Y
EARfl PLNG
AEP7ORS\. AISAL (THOS) 05\.6
USERS CZ OF PARRIEO WNEN) 5\.3 I\. 32\.0 Id e 38\.0 /f \. 11\.1
INDEX OP FOD PR0D\. PER CAPITA
(1969-71-1D0) 96\.0 100\.0 110\.0 109\.1 107\.2
PER CAPITA SUPLTY OP
CALOIES (S OF WEQUIRTHTS) 109\.0 112\.0 125\.0 131\.5 13Z\.v
PROTEINS (CGRAMS PER DAY) 54\.0 80\.0 83\.0 92\.4 101\.0
OF MICH ANDL MULSE 25\.0 23\.0 25\.0 15 34\.5 81\.'
CHILD (ACES 1-4) DEAT RA;TE 62\.5 27\.5 8\.0 4\.7 0\.4
LIFE EPECT\. AT BIRH (tEARS) 50\.5 55\.9 63\.2 67\.2 75\.5
INFArTr YOYT\. MEt (pmo ius) 177\.8 13h\.2 62\.0 53\.3 9\.9
ACCESS MD SAFE WATER (zpoP)
TOTAL \. 52\.0 75\.0 lb 70\.2
URBAN \. 51\.0 95\.0 lh 89\.4
RURL \. 53\.0 62\.0 7ir 57\.0
ACCESS T EXCRETA DISPOSAL
CZ OF POPULAoIN)
TUTrL \. \. \. S9\.b -
URA \. \. 60\.1 /h 65\.9
RURAL \. \. \. 47\.6
POPULATON PEm pSTc 2600\. 2230\.0 1830\.0 /h 1070\.6 553\.2
POP\. PER HRSINp ff3505 16300\.0 IL 1S80\.0 1130\.0 lb 769\.5 166\.8
PoP\. PDI HOSPITAL 8ED
TOTAL 60041 490\.0 490\.0 If 328\.3 12U\.9
URBA 340\.0 IL 270\.0 /1 270\.0 ji 201\.9 L13\.2
URAL 5100\.0/1 6510\.U l 5650\.0 /A 4519\.7 778\.d
AD1SSION1S PER HOSPITAL BED \. 20\.2 22\.3 AL Z2\.0 17\.U
AVERAGE bIZE OF HUSEROID
TOTAL 5\.7 &k 5\.9
URBAN \. \.
RURAL \. \.
AVERAGE N0\. OF PERSONS'ROtaO
'TOTAL 2\.4 /h 2\.2
URBAN 2\.0 7F 1\.9
RURAL 2\.7/k \.
PERCENTACE OF OCELLIS wIT ELECr\.
TOTAL 29\.0 41\.1
URL8 \.- 78\.2
RUL 2\.0 18\.0
-28 - ANEX I
TASLI 3A Page 2 of 6
TUR1T SOCIAL INDICATORS MTA SHRET
TUUCYT REFh881IR E WOUPS (WiECGE AVERGS L
S (mlm Nzr 1s_ u) A
aiCUT MIDDLE\. CCSE rU L
196im( 1ig-rLb jjTji-j/b EUIOPE mA=? sco4SOHsrZ
wusrED EROLUI RATIOS
PRIMARY: TOTAL 75\.0 110\.0 102\.0 101\.9 101\.2
MALE 90\.0 124\.0 10\.0 106\.2 102\.6
VOULF 58\.0 95\.0 95\.0 97\.5 102\.4
SEICOUA: TOMA 14\.0 27\.0 39\.0 57\.5 87\.1
HALE 20\.0 38\.0 50\.0 64\.9 80\.3
FEMAlZ 8\.0 15\.0 27\.0 50\.0 84\.1
VOCATIOVAK\. CZ SOCONDST) 17\.7 13\.7 21\.9 21\.0 18\.4
PUPIL-TEAOCI RATIO
PRIMARY 46\.0 38\.0 28\.0 25\.1 16\.7
SECONDAI 19\.0 28\.0 19\.0 19\.1 11\.6
PASSDIGER CARSAOUSAMD POP 1\.7 3\.9 11\.5 11 54\.2 366\.3
RADIO RECErVERSITSOUSAND POP 49\.1 87\.7 93\.0 170\.7 1093\.2
Ty zzczxvrnsUSAID lPOP 0\.0 1\.8 105\.8 149\.3 492\.3
HISPAPU ("DAIL\. GENEML
IFFERIST) CIROCULAOU
PER THOUSAID POPULATIO 51\.3 40\.6 89\.1 I\. 97\.0 320\.4
CXbA AlU\.L ATTI ICECAPTA, 1\.1 7\.0 1\.4 f 2\.7 3\.3
TOTAL LADOR FORCE (CT S) 13782\.0 15829\.0 20660\.0
FEMALE (PENCIEr) 40\.2 37\.0 36\.3 36\.3 36\.2
AGRICULTUE PECENT) 78\.5 67\.7 53\.5 lh 40\.8 6\.2
IIUSTRT (PeCENmT) 10\.5 12\.1 12\.8 7W 23\.3 37\.7
PARTICIPATION RATE (PERCENT)
TOAL 50\.1 "4\.8 43\.7 43\.1 46\.0
HMLa 5B\.7 55\.7 54\.B 55\.1 59\.5
FEMALE 41\.2 33\.6 32\.2 31\.4 32\.7
ECOIIOWC DEPEIWDICE RATIO 0\.9 1\.0 1\.0 0\.9 0\.7
iNcUa DISTEIBUTEW
PERCElT OF PRIVkTE INCOME
RECEIVED Br
HIGHEST SE OF UDUSEROLDS 33\.0 Ic 32\.8 Id
HICIEST 2Z 0F HOUSEOLDS 61\.0 77 60\.67i \. \. 43\.L
LOWEST 201 OF lCUSlOS 4\.2 Ic 2\.9 Id \. '' 5\.4
LOWEST 401 Or KDUSENOLS P10\.6 7 9\.4 d \. \. 16\.4
ESTIMATED ABSOLUTE POVEl! nINCU
tEEL CaSS PER CWA )
MURAl \. \. 362\.0 If
MRAL \. \. 27\.0 7F T
ESTILATO RELATIVE POVERT DINOM
LEtL CBSS PR CAPITA)
aR \.
RURAL \. \. 220\.0 If
ESTlI!MA POP\. BELOW ABSOLUMT
POVTT INCaM LEVEL (C)
Um \.
RMUAL \.
M\.I AVAILALE
ROT APPLICABLE
\. N~~~~OTES
N O T E S
a TMe group average for each Indicator are population-eighted aritbe tic mans\. Covrage of countries
amng the ludicacorx depends on avallab4licy of data and Is am un±foru\.
lb Unlan otherwise noted\. "Data for 1960"I refer to an year between 1959 and 1961; Data for 1970" between
1969 ad 1971; nd data for "Mt Recant Esetiate betweem 1981 and 1983\.
le 1963; Id 1968; 1\. Ages 15-44; f 1978; Ig 1977; ht 1980; It 1962; / 1972; /k 1965; /I 1976;
7UNE, 1965
-29- ANNE I
r 3gc 3uf 6
DETIMONS OF SOCIAL INDICATO\.tS
Notes Although the data are drawn from sourc generalyjudgd the most authoritative and rehlabb\. it should also be noted thatthey may not beintetionally
compable bemuse of the lack or stndardized dedinitions and concepts tued by different countries in collecting the data\. Te data ae, nonetheles usful to
describe olders of mpgnitude, indicate traens, and chaactize certain major differnces between countries
The referenac groups are (I) th sme country group of the subc countr and (2) a country group with somwht higher average incomc than the country
group of the subject country (exctept for "Higb Income Oil Exportwr group where 'Middle Income North Africa and Middle East' is chosen because of stronger
socio-cultural affinities)\. In tbe referenec group dat the *avrages are population weighted arithmetic meas for each indicator and shown only when majority
or dte countries in a group has data for that indItork Since the covage ofcountrie ang the indcatos depends on the avwitobility of duta and is not unifom\.
ciLution must be exercised in relating averages uone indicator to another The averges are only ueful in comparing the value ofone indicator at a time among
the country and reference groups\.
AREA (thousand sq\.km\.) Cruhe Birh Rate (per tousd)-Nutmber of live births in the year
Total-Total surface area comprising land area and inland waters; per thousand of mid-year population: 1960\. 1970\. and 1983 data\.
1960\. 1970 and 1983 data\. Cruk Death Rare (per thousand)-Number of deaths in the year
Agricwltuirul-Estimate of agricultural area used tempomrily or per thousand of mid-year population; 1960\. 1970\. and 1983 data\.
permanently for crops\. pastures\. market and kitchen gardens or to Gross Reproduction Ra-verage number of daughters a woman
lie fallow\. 1960\. 1970 and 1982 data\. will bear in her normal reproductive period ir she experences
present ag-specific fertility rates; usually five-year averages ending
GNP PER CAPITA (USS)-GNP per capita estimates at current in 1960\. 1970\. and 1983\.
market prices, calculated bv same conversion method as World
BakAtda (!981-83 basis); ;1983 data\. Faly PAadrg-Acceprs, Am (thosans-A ninual num-
Ban* Alias (1981-83 basis); 1983 data\. ber of acceptors of birth-control devices under auspices of national
ENERGY CONSUMPTION PER CAPITA-Annual apparent family planning progam\.
consumption of conumercial primary energy (coal and linite\. Fna Plnng-Uses (pert-r ofm rred wnen)-The percn-
petroleumn, natural gas and hvdro-\. nuclear and geothernal dcec- tage of married women of child-bearing age who are practicing or
tricty) in kilograms of oil equivalent per capita: 1960\. 1970\. and whose husbands are practicing any form of contraception\. Women
1982 data\. ofchild-bearing age are generally women aged 15-49\. although for
some countries contraceptive usage is measured for other age
POPULATION AND VITAL STATISTICS groups\.
TotalPopulation\. Mid- Year (rhmusands)-As of July 1; 1960, 1970\. FO N UlTO
and 1983 data\. FOOD AND NUT ON
laoaI of Food Prodtcs Per Capia (1969-7l = 100)-Index of per
Urbau a aion (percent of wrafi-Ratio of urban to total capita annual production of all food commodities\. Production
population;f d tdefinitions of urban areas may affcat coapar- excludes animal feed and seed for agriculture\. Food commodities
indude primary commodities (e\.g\. sugarcane instead of sugar)
Populatn Projections which are edible and contain nutrients (e\.g\. coffee and tea are
Population in vear 2000-The projection of population for 2000\. excluded): they comprise cereals\. root crops\. pulses\. oil seeds,
made for each economv separately\. Starting with information on vegetables fruits\. nuts\. sugarcane and sugar beets\. livestock, and
total population by age and sex\. fertility rates\. mortality rates, and livestock products\. Aggregate production of eacb countrv is based
international migration in the base year 1980\. these parameters on national average producer price weights; 1961-65\. 1970\. and
wre projected at five-year intervals on the basis of generalized 1982 data\.
assumptions until the population became stationary\. Per Capa Supply ofCalries (prcat ofrequi ns)-Comput-
Stationary population-Is one in which age- and sex-specific mor- ed from calorie equivalent of net food supplies available in country
tality rates have not changed over a long period, while age-specific per capita per day\. Available supplies comprise domestic produc-
fertility rates have simultaneously remained at replacement level tion\. imports less exports\. and changes in stock\. Net supplies
(net reproduction rate = 1)\. In such a population\. the birth rate is exclude animal feed\. seeds for use in agriculture\. quantities used in
constant and equal to the death rate\. the age structure is also food processing, and losses in distribution\. Requirements were
constant\. and the growth rate is zero\. The stationary population estimated by FAO based on physiological needs for normal activity
size vas estimated on the basis of the projected characteristics of and health considering environmental temperature\. body weights\.
the population in the year 2000\. and the rate of decline of fertility age and sex distribution of population\. and allowing 10 percent for
rate to replacement level\. waste at household level; 1961\. 1970 and 1982 data\.
Population Momentwn-Is the tendency for population growth to Per Capita Supply of Protein (grams per day)-Protein content of
continue beyond the time that replacement-level fertility bas been per capita net supply of food per day\. Net supply of food is defined
achieved\. that is\. eveu after the net rcproduction rate has reached as above\. Requirements for all countties established by USDA
unity\. The momentum of a population in the year t is measured as provide for minimum allowances of 60 grams of total protein per
a ratio of the ultimate stationary population to the population in day and 20 grams of animal and pulse protein\. orwhich 10 grams
the year r\. given the assumption that fertility remains at replace- should be animal protein\. These standards\.are lower than thos: of
ment level from year r onward\. 1985 data\. 75 gams of total protein and 23 grams of anumal protein as an
Populaio Density average for the world\. proposed bv FAO in the Third World Food
Per sq\.kn\.-Mid-year population per square kilometer (100 bec- Supply\. 1961\. 1970 and 1982 data\.
tares) of total area; 1960\. 1970\. and 1983 data\. Per Capita Protei Supply From Aninau and Pake-Protean supply
Per sqkcm\. agrircdarraland-Computed as above for agricultural offoodderivedfromanimalsandpulsesingramsperday; 196145\.
land only\. 1960\. 1970\. and 1982 data 1970 and 1977 data\.
Population Age Structure (percent)-Children (0-14 years)\. work- Child (ages 1-4) Death Rate (per tousaad)-N tumber of deaths of
ing age (I5-64 years)\. and retired (65 years and over) as percentage children aged 1-4 years per thousand children in the same age
of mid-year population; 1960\. 1970\. and 1983 data, group in a given year\. For most developing countries data derived
Populiatin Growth Rate (percent)-toral\.-Annual growth mraes of from life tables: 1960\. 1970 and 1983 data\.
total mid-year popilation for 1950-60\. 1960-70\. and 1970-83\. HEALTH
Popultion Growt Rate (percearj-arhenr-Annual growth rates Life Erpectancy at Birth (yarsf-Number of years a newborn
of urban population for 1950-60\. 1960-70\. and 1970483 data\. infant would live if prevailing patterns of mortalitv fror all people
ANNEX I
-30 - Page 4 of 6
at the time of of its birth wer to stay the same throughout its life; Pupl-teacher Ratio \. prbiwy, and secondair-Total students en-
1960, 1970 and 1983 data\. rolled in primary and secondary levels divided by numbers of
infaut Mortait Rate (pr tAousd) -Number of infants who die teachen in the corresponding levels\.
before reaching one year of age per thousand live births in a given
year, 1960, 1970 and 1933 dau\. CONSUMPTION
Access to Soft Wff (pecnt of MpationJ-tota\. ub\. Aid Pswener Cars (pe nomand population)-\.Passenger cars com-
mra-Number of people (toza, urban, and rural) with reasonable pris motor cars seaidng less than eight persons: excludes ambul-
access to safe water supply (includes treated surface waters or ances, hearses and militury vehides\.
untreated but uncontaminated water such as that from protted Radio Reciers (per thosad popuJtion)-AlI types or rectivers
borehols, springs and sanitary wells) as percentages of their respec- for radio broadcasts to general public per thousand of population;
tive populatons\. In an urban area a public fountain or standpost excludes un-licensed reeivers in countries and in years when
located not more than 200 meters from a house may be considered registration of radio sets was in effect data for recent years may
as being within reasonable acc of that house\. In rural area not be comparable since most countries abolished licensing\.
reasnable access would imnply that the housewire or member of the Ved pf tn ppu m TVmivsrobodc
houselhold do not have to spend a disproportionate part of the day TVn (per IOw dUeJ-T receivas forbroadast
in fetching the hmily's water needs\. to general public per thousand population; excludes unlicensed TV
receivers in countries and in years when registrtion of TV sets was
Access to Eccrete Dposl (percent of pop -totl,in effect\.
and rural-Number of people (total, urban, and rural) served by m ,
excreta disposal as percentages of thir respective populations\. Nwpa Cczodasl (per thousandeppuLkon)--Shows the aver-
Excreta disposal may include the collection and disposaL with or age, circuladon of -daily general interest newspaper," defined as a
vwthout traLtment, of human excreta and waste-water by water periodical publication devoted primarily to recording geneal news\.
borne systems or the use of pit privies and similar installations\. It is considered to be 'daily' if it appcea a least four dmes a week\.
Poplaion per Physidani_PIopulation divided by number of prac- CGh Asiwi Attendace per Capita per Year--Based on the
tising physicians qualificd from a medical school at univcrsity leveL number of tickets sold during the year\. induding admissions to
Populan per Nursig Pesen-Pbpulation divided by number of drive-in cinemas and mobile units\.
practicing male and female graduate nurses, assistant nurses, LOR FORC ~
practical nurses and nursing auxiliaries\. LABOR F RCh'
Popalatsou per Hspital Bed-total, urba\. and rurak-Population Tlu Labrm force (toasndu-E c onomically active persons, in-
(total\. urban, and rural) divided by their respective number of cluding armed forces and unemployed but excluding housewives\.
hospital beds available in public and private, general and specialized students, ec\. coering populaton or all ages\. Definitions in
hospitals and rehabilitation centcrs\. Hospitals are establishments vanc Is countries are not comparable; 1960, 1970 and 1983 data\.
permanently staffed by at least one physician\. Establishmrents prov- Female (percenp)-Femak labor force as percentage of total labor
iding principally custodial care are not included\. Rural hospitals, forsc\.
however\. include health and medical centers not permanently staffed Agriculwe (perceur)-Labor force in farming, forestry\. hunting
by a physician (but by a medical assistant, nurse\. midwife\. etc\.) and fishing as percentage of total labor force; 1960\. 1970 and 1980
\.vhich offer in-patient accommodation and provide a limited range data\.
ofs nedical raciliEies\. indstry (,percent)-Labor force in mining, construction\. manu-
Admwnsions per Hospita Bed-Total number of admissions to or facturing and electricity, water and gas as percentage orwtol labor
dischaiges from hospitals divided by the number of beds\. force; 1960\. 1970 and 1980 data\.
PArtiapaon Rae (jperct)-ttalo male, madfemna-Participation
HOUSING or activity rates are computed as total\. male, and fmale labor force
Avrge Sre of Houehold (persons per nsehold)-4ota -rban, as percentages of totaL male and female population of all ages
andraho-A household consists of a group of individuals who share respectively-, 1960, 1970, and 1983 data\. These am based on ILO's
living quarcrs and their main meals\. A boarder or lodgcr may or participation rates reflecting age-sex structure of the population, and
may not be included in the household for statistical purposes\. long time trend\. A few estimates are from national sources\.
Averae Number of Persons per Room-total, urban, and rural- Economic Depedncy Radi--Ratio of population under 15\. and
Average number of persons per room in all urban, and rural 65 and over, to the working age poipulation (those aged 15-64)\.
occupied conventional dwellings\. respectively\. Dwellings exclude
non-pernanent structure and unoccupied parts\. INCOME DISTRIBTI1ON
Percentage of Dwemllngs wi4 Electricity-torta, rban, and ruralL- Peveage of Total Diosabklencne (both u cask and kid)-
Conventional dwelUings with e lectricity in living quarters as percen- Accruing to percentile groups of households ranked by total house-
tage of total, urban\. and rural dwellings respectively, hold income\.
EDUCATION POV1ERTY TARGET GROUPS
Aduted Etnrm Raios The following estimates are very approximate measures of poverty
PriMay school - total\. male and femak-Gross totaL male and levels, and should be interpreted with considerable caution\.
female enrollment of all ages at the primary levd as percentages of Estimed Absole Pe nc Leve (R pUSSper capita)-arban
respective primary school-age populations While many countries and rural-Absolute poverty income levl is that income level
consider primary school age to be 6-11 years\. others do not The below which a minimal nutritionally adequate diet plus essential
differences : countrv practices in the age and duration of school non-food requirements is not affordable\.
are reflecd in the ratios given\. For somc countries with universal Estimted Relate Porm Incnme Leael (USS per captra)-urban
education, gross enrollment may exceed 100 prcent since some and rwral-Rual relative poverty income level is one-third of
pupils are below or above the country's standard primary-school average per capita personal incomc of the country\. Urban evel is
age\. derived from the rural level with adjustment for higher cost of
Secondar wchool - total\. male and female-Computed as above living in urban areas\.
secondary education requires at least four years of approved pri- Esmated Population Below Absolute Poverty income Level (per-
mary instruction; provides general\. vocationaL or teacher training cent)-urban and rura- Pcrcent of population (urban and rural
instructions for pupils usually of 12 to 17 years of ag, correspond- who are absolute poor\.-
ence courses are generally exduded\.
Vocationd EnroHmeni (percent of seconda y-Vocational institu- Comparative Analysis and Data Division
tions include technical, indusuiaL or other programs which operate Economic Analysis and Projeions Department
independendy or as departments of secondary institutions\. June 1935
-31 - AM I
Pap 5 of 6
nLM0 - ar DAM
PftpaLioA 0\.8 uillim t\.W4)
cm er tZpi: U$130 (9*4)
AMMIC huerag AMuSjalocua (2) Sure Of GIP MIdet fice (Z)
(million L (at cma nt l9t) prices) (at curret prices)
n\.icatr at Curt prices)
1964 19W-70 1970-75 197u-6S 19804V4 19%5 1970 1975 19110 158
6voss dmstic pdct If b\.i \.6 7\.5 2\.8 4\.7 100\.0 10D\.0 I1\.0 110\.0 \.00\.0
Agricul e 9,199 3\.1 4\.4 2\.7 2\.5 30\.7 2b\.4 26\.2 \.214 18\.5
zsaatry h 13,952 9\.5 9\.5 2\.8 7\.4 16\.6 17\.2 18\.0 21\.6 2L\.1
Servicas 24,314 8\.2 8\.0 3\.7 4\.6 42\.9 46\.5 46\.0 44\.3 48\.9
-muztioo 41,97u 5\.6 7\.0 1\.7 3\.5 84\.6 82\.8 85\.2 81\.8 84\.5
GS iin\.o\.t 10,100 11\.7 12\.9 -0\.1 2\.9 lb\.7 20\. 23\.3 26\.4 20\.2
KW=E afwdu andWS 8\.615 7\.9 7\.3 4\.4 28\.8 6\.1 5\.8 6\.1 7\.1 17\.4
Iorts at godsd WS 11,05 IL\.2 [3\.8 -3\.1 8\. 7\.4 0\.7 14\.5 15\.2 22\.1
Gross raigmzl seviq 6,630 11\.6 11\.9 9\.8 10\.0 15\.8 18\.8 1L1 18\.3 17\.4
Avrh Aiuaa lcure () ii of Heircamlise Trade (2)
(At caetm 1980 pPries) (at rt pr)
1IY1 1972-75 1975-O l9HO-84 I972 175 1960 19W6
1EIWl1 0(AE yi
Merchandise mqorts 7,134 -6\.1 Z\.8 33\.2 lO\.0 100\.U 1CO0\.0 100\.0
Primm 1,969 -6\.3 4\.0 15\.5 72\.6 64\.1 61\.0 27\.9
lnAmerial mdurts 5\.14, -5\.8 u\.9 45\.3 27\.4 35\.9 36\.0 72\.1
nerheaise iqxots 1U,757 11\.2 1\.2 10\.7 1W\.0 1\. 100\.0 \. lO\.0
\.^ricure meliwatum 41d 27\.9 -2:\.8 87\.1 2\.2 4\.3 0\.7 3\.9
;-imzi qM8yuz 27z 17\.4 6\.8 22\.2 1\.2 L6 1\.8 2\.5
pktIoum \.s,373 5\.4 1LO -1\.2 Y\.Y 17\.1 468 31\.3
'aiz iml e (si 2,252 14\.0 -12\.1 18\.5 45\.0 35\.6 18\.2 20\.1
Utter ;iustriaL products 4,4*3 9\.9 4\.5 15\.1 41\.7 41\.4 30\.5 -42\.2
1978 1979 1960 1981 1982 L983 1984
:!,L'8i iA 19S OF l W
a\.e deflator (196 - ILW) 29\.0 45F\.4 (lu\.O 142\.1 181\.8 233\.3 351\.1
Ea¢iz rtae 24\.3 311 7\.0 111\.2 162\.6 225\.5 366\.7
EVo price jiexi t3\.0 78\.Z 111\.O 95\.8 %\.4 82\.6 83\.6
lopoot\. price ilm 61\.2 71\.9 LO3\.3 lU1\.2 100\.3 93\.4 98\.0
Teim of made ja2x 111\.9 100\.8 1U0\.O 914\.7 A\.1 8L4 88\.9
as Z of GW!
(at car prices)
1965 197I 1975 1980 ISwB
RIK=J tIMNC (Central Govrnen)
C\.rrm ee L5\.U ZZ\.6 b 2\.0 19\.8 15\.5
,ran e ine 11\.0 I\.8 12\.6 LL5 10\.1
Suplus (+W or deficit t-i 2\.0 -2\.3 -U\.4 4\.8 -4\.9
einwstnr , 4\.7 0\.7 4\.2 3\.9 3\.7
Trafer 5\.0 7\.5 5\.5 9\.2 o\.6
Foeip fin-,% Lb L6 u\.3 0\.2 L8
1i5-7u 1973-75 197580 191U64
Qp prmth rate (2) 6\.8 7\.7 2\.6 4\.7
11P per capt grwth rate () 4\.1 5\.0 U\.3 2\.1
LOLA 2\.9 2\.9 5\.7 4\.7
1eqi-e savi\.t rae Vl) 2L\.2 19\.5 3U\.8 27\.5
lapt eLasticity 17 1\.8 U\.5 1\.8
af Ac \.mre wncer cospailents ate ozecsd at factor cma meli11 mat aid to ezc1usn of oet inirct jtwes and subs2dies\.
bIues leS inm:g and Wmyilu\. --fmturuvg, -ia eluctiqty\. Wa, and water\.
c/In a1cordc wuth Tuxki* Gwverxint's specificatims\. \.,cbh ace wt wit th SiV a\.
-32- am I
~~~~~~~~~~~~~o 0
MINIl - AMa 15 aN t ptal
1tpsl_L1 teJA mLIl& 119
cm kr tapirs: 1613 (loh)
Acbl t'5 hut
9M72 IWD 9li1 15 1s5 IH5 1i b xis IY s luff7
tIF W:i-d Lo
ha o aps or ww &4 _tA -6 -I -2ll -7 -ZM 7 -17 -17J -L321 -Ul
E4ams at us I WS IL53 41 m 7744 5M S5 9512 U 1279 150I 17t72
1MBJI \.4t AA* & WS z S716 96L1 1V PM II LID AS 3I 1 3l5A 192 35 1656 19576
w11 tz tans 140 2O173 4 211 M14 1791 231 23 am as ma3
ht ta ste 14 - - - 2278 250 - -
kz ,ac nel ts -M - -ug -022 -us -7S7 -n7 -Qe -a2 -49
tUint paaae nasa s Ub tU 90 W3 96b Iw 140 1no O1D
walic IIX ss) Itc % ID= 227 Zs 215C 262 32 X33 3360 3613 314t
\.muiatia ei HoX IC -tL7 -'db -0 -15 -1513 -152 -Zb -2375 -21 -2eit -0m
1'iaicSAZ m(MO 177i 144 17 150 b62 1V07 0 95 1Oi9 29 83b
\.kar cdpitaL A 292 1D7 62 3D IJ7 -3b 7b3 Si 56 41 t7
tu\.( in nra t- - ine) -266 -f7 -27 -2 -52 i -153 -619 -S -\.63
Inte\.tasnil renst Lin IMO 65b 15 1 M3 2154 3ub7 3509 N 52W 535
_ amaw of Di a 96\. 2 2 2 3 2 3 3 4 4 4
MA--
DU17 1563 196 15 191$ 115'
Was d fS :1 6 2C 66 226L 17d\. 242
WtcL&L 51u8 - - - -s zmLS
wac l 2W 61Z 62 &29 3bi 4(D
bdLasrDI ad 7b;l SW 402 3A0
Us\. - - - - -
sther aLcilltera 17 29 23 27 24 iS
larcxsnLL 5133 1455 12b 1613 Ifi\. MN\.
UfficaiL c crt 1 273 265 262 15 Sl i
le s25 313 45\. 50 4t66 623
'kir auciltra 27 3 15 167 207 12 L56
WLVcU 47 715 3JO 64 466 m
Inct tad1Arsan ad 016T6 1 1527 1851w ibsu 1566' 1571
ufs cissl 1 1TI ;S iL5121 LiiBl UiYJ UI 11111
upffic -L 727 WL55 WMSd LVW7 -IWet iol-
1sU 9Z 1156 566 1!i62 733D 2
I 99 IN 1d 1V7 I4 L
Ucker ;2Z 7W71 1175 737 1031 8034
Prine 177 1S73 AM21 4933 4X3 4756
UInt \.aUZALtS la:Luau attA Ow L7\. 193A WM2 am 1ML
Tctl - serce js 2'\. ILIY I\.S 175J 2U4 323
-"D LbL 4U 574 36 W1059 1178
Loetn bJ et3 7YZ 91 1115 b101
loca dt inies as eL qiDot of 428\.
* \.r'br raxicc ed 11\. 1t\.3 I 9\.6 17\.7 23\.0 21\.4
Ft\. icotc ro )\. 6 \.1\. b\.2 7\.6 11\.1 s\.3 9\.6
ufewi\. l \.5 5\.9 t\.7 10\.0 7\.7 6\.3
Pis 66 17\.5 15\.5 14\.9 9\.4 I\.2
jtF ,erLY Ot \.m\. L\. iYOCJ 22\.1 Lo\.0 15\.3 13\.Z 14\.2 ZJ\.2
Ufficial 26\.0 1Y\.1 Io\.5 15\.6 1\.0 14\.6
Prolue uIR *\.5 5\.6 5\.5 6\.3 Y\.1
mufaur ni ca)
aw LaLitut Lai 3\.7 7\.6 IU\.0 12\.3 I5\.1 ;77\.
II didmwmabtaIwI gs d iOman b\.7 L3\.6 21\.0 2\.3 27\.8 zSY
IS ab ser_icelcol diii saiva: 5\.1 L3\.1 32\.1A L1\.9 12\.5 153
ML2 aWel as 3\.S 1\.2 L2 1\.2 1\.2 LI
DR d_/sakoca l pta dishsMes L I - - - - -
Mt debt msvimcfLot dde sevice fi hA U\.2 u\.2 U\.2 u\.2 u\.2
As i Ot MEc uJ-Cd
at of 11e Ra
VOW (14e6)
UMonE tDuna \.5 din osctaiaqN U)
AIAitzaS ANe \.nSO\.1) yin\. 747\.z
kscnmfas d\. omchin ILI yra bl-5
ricie dn \. Lu Jenz (a)
cnea ordu ut eet eAsouEt;
J\. Al a a c qns L e t msc41 we sin-u ae * tnOn' Dnn rpqut *y- (oily pblc i pri1e nt ad HOZ deat)\.
- 7bW an hake of pawt' clasafacia\. we cih peioa 1-9\.
Ie lakmb psisa\. g\.arfld nt n-paietsed mc
Id mum earm ad madam, as far pmjucta yEM ict 2SCIs 't DV3\. sMdlet 1, ad usidrcified capita lftie_
Lim a-of ac rkld efto dekC noSsliq\. ads mlii\. icetea a eec-n dbit cn *prit wwaebcd SeC\.
33 -ACI'
l!p I of 2
SMUS OF iMM oW (VEATIO 11 MU
A\. SOM TC OF aMA LfS AID TM aM I/
(As of Sqceter 3U\. 195)
1st -iscaL Ast (l iliaon) h
afater Year Borrow f l- ak M Ikdl- burusgg
Fortso loami su farteeu credits fulLy dibaruid 30\.98 19b\.15
15a-n 1978 Repiit:c of bickey Macclem Foinrly t6\.00 39\.A5
15%-7U 1378 a1aLmLic\. of hAwy Liwtock IV 2X\.00 11;8
1606i- 1978 Republic of nWqr Fen Steel Sba IL 0 17\.42
1742-ni 197I public of brkny Gain Stae 79\.0D 74\.59
1754-ni 19w hautnial Dewlap-
meC Back ot
hdt t(z;b) Prite Sbctor Tcties 65\.0 4_15
1755-ni 1S lrxhmtrial aw-at
ad Credit EIr
(srI) Privat Macr Tactiles 13\.00 3\.44
sla-i DtD RepSli t S biqrkey Kqu Hydropower 10W 3\.65
I+7-11 1W Rqpblic of bikey S9an bet Cott\. Tec;lea cO\.W 10\.22
1862-' 19HO Republic of liur Livestock V 5LOG 31\.42
1916-IU 1981 sephlic of lArkey Pettolem Explorarim 25\.00 9\.83
1917-ni1 1981 Republic of Ti¢re Oil RmS y %2\.W0 16\.55
1952-Wl 19151 Rpubic of flrkey Labor £aeiwe kflacty 40\.0D 7\.22
19o7-DJ 1981 Republic of Tudhv Sa \. Frit ad V^eAble 40\.00 24\.50
1985-rn MI fuablic of Tlukey Fertilizer ahty
abbiliratim ll\.O 5*\.47
1998-211 1981 Stt Inwatan State Izxs riteri
ma (Il=) Fiame 7\.W0 37\.26
2W3-niU IIZ MM Export-ri lm n IGLoO 21L75
:-U L982 &xbLic of bTtry Eras\. _aL cvelnpme 4\.00 28\.76
2131-ni 191S Eqxblic of Turke S5a Fextiimer
Miabilitatim 383LW 31\.21
2137-¶l 1961 sepablic of iudey di$aay 7111 27\.10
zw-n,i i stanbu WaCer Suply
sid Serage i;eral
irectorate (ISa) ista Sewerage 0\.10 82\.W
ZJ3W-IW 163 9m Secos AgicuLu (kit 150\.40 107\.20
23-mU 183 DTnish Llstr,\.ciy
dtnity (Mu *h Travaissiom [A\.W 143\.09
2327-nU 1983 Turkish Petrolem
Corpocariou ('Ui) *ace Ge Exploration 55\.20 4d\.Z7
2399-ni 198 iftxblic of Turkey 1r,sria1 rainim 3668) 36\.59
2&JD--i 19W Rq*lic of Tufl Tecl1tcat Assstane for sE 4\.65 4\.54
2405-ni IY84 Hoblic of Turey Asrhg tenssi adn Research 72\.20 67\.4
2\.W33- 198\. i&umLic of hUx LA& Irrigatimn 115\.30 1Ol\.86
2439-ni L\.8 RepLblic of Turky Secad HiW y IdbAO 174\.50
2535-nU 19t5 Rpublic of arT Third Forts 136\.50 - Ic
2536-ni 1 L%b 9Apblic of Tusey lutatrial Mdihols )7\.70 57\.70
2537-1i 1StS epblic of Turkey Ce;nva Veg\. Uxban DeO \. 9\.20 7\.17
2545-ni 1985 Rqeublic of Turk Pu4 and Paper Reab\. 55\.10 55\.10
2585-nU 195 R4eublic of Turkey Agnc\. Sctor Adjestt me \. 3W11\. 250\.41
25tdb-U 1985 tirkidh Llectricity
A&nwmty MK) Faorth aK Trassision 142\.00 - /d
26LI-U 1986 turkin Electriciry
achority tmcs Poer Sstem peatins Asrt\. 1000 - le
Lnl 5989\.63 19a\.15 1605\.74
ot winch has e repaid 733\.42 17\.36
Total *w ascaat 5250\.21 178\.79
AnisE sold 3\.55
at which iss oet repaia 3\.55 -0- V
lotal m held by 1x \.nd LRA If 525b621 17d\.79
rotal mxaLiaurs 1605\.74 - 0-
/a The stact ot tlU projects hated in Part A Ls described in a sqeprt repot
am all 5tIILA fluated projects in executom, wuich is updated tawi yearly
aOd cirCulated to tie Fzruttw Dirctors on april 30 al October 31\.
/b Net oE cancerLltioms\.
jc Lo Agreernst became efiecive 10l4/i5\.
;d Lom Ageee bwae effectiw 10n/85\.
Ie ice\. Agreement b ibectiw 101t8/85\.
/f Prior to eihge adljuosns
34 ANNEK II
Page 2 of 2
SrA1US OF BAII GUP (EERATlNb IN ¶IURI(
B\. SlA ;M (F IFC INYESI]fDS
(As of Septerber 30, 1985)
Fiscal Am *t Millions
Year 0blimr T'ue of Business Loan Equit Total
1964/67/69/ TMiDC 60\.00 4\.77 64\.77
72/73/75/76/
77/80/83
M9b6/b9/ SIFAS I Nylon Yarn 3\.15 1\.42 4\.57
71/72
1970/71/ Vikirg I Pulp and Paper 2\.50 0\.82 3\.32
82/83
1970 ticS Glass 10\.00 1\.58 11\.58
1971/76/ NASAS Aliun 8\.58 1\.46 10\.04
83/84
1973 Akdeniz TQxris 0\.33 0\.27 0\.60
1974/77 Borusan Steel Pipes 3\.60 0\.49 4\.09
1974 AM Textiles 10\.CU - 10\.00
1975 Kartaltepe Textiles 1\.30 - 1\.30
1975 Sasa Nylhx Yan 15\.00 - 15\.00
1975 Aslaa ner 10\.60 - 10\.60
1975/78/83 iXCEKAS Steel 7\.50 1\.53 9\.03
1976/79 Asil Celik Steel 12\.00 4\.00 16\.00
1979 Ege Moxsan Egixnes for !peds 2\.15 - 2\.15
1979/80/82j ISAS Mktor Vehicles & Access\. 8\.85 2\.34 11\.19
84/85
1979/81/ Trakya Can Glass 33\.15 3\.23 36\.38
83/84
1980 ENEi Textiles and Fibers 4\.00 - 4\.00
1981 Kizklareli
Cam Saoyi-i
A\.S\. Glass Tableware 12\.95 - 12\.95
1982 M\.A\.N\.
moltors MtMor Vehicles & Access\. 7\.88 - 7\.88
1984 Pinar Food anxd Food Prcessirg 3\.90 - 3\.90
1985 R"AS Motor Vehicles & Access\. 6\.47 6\.47
Total Gross Canniments 223\.91 21\.91 245\.82
Lss Caxcellations, Teninatims,
Exchange Adjustnents, Repayments
and Sales 172\.2 9\.78 181\.98
Total Commitments now held by T:h 51\.71 12\.13 63\.84
Total UWxisbursed _ _ _
- 35 - Annex III
TURKEY
Elbistan Rehabilitation Project
Supplemental Project Data Sheet
I\. Timetable of Key Events
(a) Time taken by country to prepare June 1984 -
project: April 1985
(b) Project preparation agency: Govt\./TEK
(c) First Bank mission to consider the
project: June 1984
(d) Appraisal mission departure: April 1985
(e) Negotiations completed: December 20, 1985
(f) Planned date of loan effectiveness: May 1986
I1\. Special Bank Implementation Actions
None
III\. Special Conditions
TEK to continue to employ consultants for proper management and
assistance in operation and maintenance until the commercial
operation of Unit 4 or December 31, 1987 whichever comes later
(para\. 65)\.
BULGARIA / h N\. \. \. ~
l~~~~~~~~~~~~~~~~~~~ X ; - J--R
GREECE
C-MARMARA - d\.- --
4--~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\.
E6~~~~~~~~~~~~~~~~~~~~~~I
\. 0'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
1' ~
N ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~N
1'v;-\.<\. -
* 'D d }\.i - inA\.v\. ----
AEGEAMEDtTERRANEAN SEA
---U\. =- <
-U\.--~~~~~~~~~~~~~~~~~~U\.
_3-~~~~ m - \. - -o LBA
- U - \. - dm- - X;
a -\. 30~~~~~
IBRD 194
-- U\. S\. S\. R\.
,~ ,\.,-s\., A- 4:
\~~~~~~w-b ffflb\
j> UG U \. S , R\.
________X~~~01d L
*~~~~n\. Sr - Eras ~
Enfid )~~Od
k
%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
M1 s 'a Doo''"'' wi
-,Fab~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a
T\. \.1\.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IST~~~~~~~~~~~~~~~~~~~~~~~~~-
h~~~~~~~~~\. / IRAQ4y''X V
__ - in\.c~~~~~~~~~~~~~~~ ~~~~ C\.¶~~~~~~~\.P7 /\. \.
-= 5 \/fZ / ~~~~~~~~~~~~~I R A Q
E ~~~S YR I AN A R AB REFP UB L IC POWER PLANTS TPAN SFORMER STATIQNS
M in Ioperation * In opernsio
* _ Urnder construdion and future Under construcion arid Jife
Zg F'~~~~~~~~~~~~~~~~~~~~roject
@WE ~~~~~~~~~~~~~~~~~TRANSSUIISSION LINES
j~~~~~~~~~ < ~~~~~~~~~~~In oper(fion __Internafonol boundaries
) ~~~~~~~~~~~~~~~~Under construcrion and hms e
S EBANON
JULY 1985
7 - , \. | APPROVAL |
P125824 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 61067-TZ
PROJECT PAPER
ON A
PROPOSED ADDITIONAL CREDIT
IN THE AMOUNT OF SDR 17\.2 MILLION
(US$27\.88 MILLION EQUIVALENT)
TO THE
UNITED REPUBLIC OF TANZANIA
FOR AN
ENERGY DEVELOPMENT AND ACCESS EXPANSION PROJECT
May 9, 2011
Energy Group
Sustainable Development Department
Country Department AFCE1
Africa Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without World
Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 30, 2011)
Currency Unit = Tanzanian Shillings
TSh 1,508\.50 = US$ 1
US$ 1\.6209 = SDR 1
FISCAL YEAR
July 1 â June 30 (Government of Tanzania)
January 1 â December 31 (TANESCO)
ABBREVIATIONS AND ACRONYMS
AF Additional Financing
AF 2010 Additional Financing as approved in April 2010 for the TEDAP
AfDB African Development Bank
AMR Adaptive Multi-Rate
CAS Country Assistance Strategy
CMU Country Management Unit
CQS Selection Based on Consultantsâ Qualifications
DA Designated Account
DSM Demand Side Management
EDCF Economic Development Cooperation Fund
EIB European Investment Bank
EIRR Economic Internal Rate of Return
EMP Environmental Management Plan
ENPV Economic Net Present Value
ESMF Environmental and Social Management Framework
EWURA Energy & Water Utilities Regulatory Authority of Tanzania
FIRR Financial Internal Rate or Return
FM Financial Management
FY Fiscal Year
GEF Global Environment Facility
GOT Government of Tanzania
HPP Hydropower Plant Project
HV High Voltage
IBRD International Bank for Reconstruction and Development
ICB International Competitive Bidding
IDA International Development Association
IFC International Finance Corporation
IFR Interim Financial Report
IP Implementation Progress
ISR Implementation Status and Results Report
JICA Japan International Cooperation Agency
kV Kilovolt
kWh Kilowatt hour
LKEMP Low Kihansi Environmental Management Project
ii
LKHP Low Kihansi Hydropower Plant
MCC Millenium Challenge Corporation
MEM Ministry of Energy and Minerals
MKUKUTA Mpango wa Kukuza Uchumi na Kupunguza Umaskini Tanzania
MOF Ministry of Finance
MTR Mid Term Review of December 2010
MW Megawatt
NCB National Competitive Bidding
OPRC Operational Procurement Review Committee
PDO Project Development Objective
PIU Project Implementation Unit
PoA Program of Activities
QCBS Quality- and Cost-Based Selection
RPF Resettlement Policy Framework
SSS Sole Source Selection
TANESCO Tanzania Electric Supply Company Limited
TEDAP Tanzania Energy Development and Access Expansion Project
REA Rural Energy Agency
RMU Ring Main Unit
SDR Special Drawing Right
SHS Solar Home Systems
TANROADS Tanzania National Roads Agency
TF Trust Fund
WBG World Bank Group
Vice President: Obiageli Katryn Ezekwesili
Country Director: John Murray McIntire
Sector Manager: S\. Vijay Iyer
Task Team Leader: Robert Schlotterer
iii
TANZANIA
ADDITIONAL FINANCING - ENERGY DEVELOPMENT AND ACCESS EXPANSION
PROJECT
CONTENTS
ADDITIONAL FINANCING Data SheeT \.v
I\. Introduction \.1
II\. Background and Rationale for Additional Financing in the amount of $27\.88 million \.2
A\. Background \.2
B\. Status of Ongoing Project \.3
C\. Rationale for Additional Financing \.6
D\. Alternatives Considered \.9
III\. Proposed Changes \. 10
A\. Key Indicators and Results Framework \. 10
B\. Financing \. 10
C\. Implementation Arrangements \. 12
D\. Condition of Effectiveness and Legal Covenants \. 12
E\. Readiness of Activities for Additional Financing \. 13
F\. Risks \. 13
IV\. Appraisal Summary \. 13
A\. Economic and Financial\. 13
B\. Procurement \. 15
C\. Financial Management\. 16
D\. Environmental and Social \. 16
Annex 1: Revised Results Framework and Monitoring \. 19
Annex 2: Operational Risk Assessment Framework \. 26
Annex 3: Detailed Description of Project Components\. 32
Annex 4: Revised Procurement Plan \. 36
Annex 5: Revised Project Financing Plan including other sources of funds \. 41
iv
UNITED REPUBLIC OF TANZANIA
ADDITIONAL FINANCING - ENERGY DEVELOPMENT AND ACCESS EXPANSION
PROJECT
ADDITIONAL FINANCING DATA SHEET
Basic Information - Additional Financing (AF)
Country Director: John M\. McIntire Sectors: Power (86%); Renewable energy
Sector Manager/Director: Subramaniam V\. (11%); Central government administration
Iyer (3%)
Team Leader: Robert Schlotterer Themes: Infrastructure services for private
Project ID: P125824 sector development (40%); Other urban
Expected Effectiveness Date: July 1, 2011 development (20%); Rural services and
Lending Instrument: Specific Investment Loan infrastructure (20%); Climate change (20%)
Additional Financing Type: Cost Overrun Environmental category: B Partial Assessment
Expected Closing Date: March 31, 2015
Joint IFC: N/A
Joint Level: N/A
Basic Information - Original Project
Project ID: P101645 Environmental category: B Partial Assessment
Project Name: TZ-Energy Development & Expected Closing Date: March 31, 2015
Access Expansion
Lending Instrument: Specific Investment Loan Joint IFC: N/A
Joint Level: N/A
AF Project Financing Data
[ ] Loan [ X ] Credit [ ] Grant [ ] Guarantee [ ] Other:
Proposed terms: 40 years, with a 10 years grace period
AF Financing Plan (US$m)
Source Total Amount (US$m)
Total Project Cost: 43\.38 43\.38
Cofinancing: 0\.00
Borrower: 15\.50 15\.50
Total Bank Financing: 27\.88
IBRD 0\.00
IDA 27\.88
New 0\.00
Recommitted 27\.88
v
Client Information
Recipient:
Ministry of Finance
P\. O\. Box 9111
Dar es Salaam
Tanzania
Tel: +255 22 2926001/6
Fax: +255 22 2926011
Email: nmagonya@mof\.go\.tz
Responsible Agency:
Tanzania Electric Supply Company Ltd\. (TANESCO)
Umeme Park, Ubungo
Tanzania
Tel: (255-22) 245-1130
Fax: (255-22) 451-158
Email: william\.mhando@tanesco\.co\.tz
AF Estimated Disbursements (Bank FY/US$m)
FY 12 13 14 15
Annual 5\.00 10\.00 5\.00 7\.88
Cumulative 5\.00 15\.00 20\.00 27\.88
Project Development Objective and Description
Original project development objective:
The Project Development Objective is to improve the quality and efficiency of the electricity
service provision in the main three growth centers of Dar es Salaam, Arusha, and Kilimanjaro
and to establish a sustainable basis for energy access expansion and renewable energy
development in Tanzania\.
Revised project development objective
N/A
Project description:
TEDAP consists of three components (indicating original cost estimates): (A) a grid component
of US$85\.8 million focusing on investments in national utilityâs transmission and distribution
network; (B) an off-grid component of US$47\.5 million (including US$6\.5 million from GEF
and a US$ 25million Credit Line) to support an institutional set-up for the newly established
Rural Energy Agency (REA) and to develop and test new off-grid electrification approaches for
future scale up; and (C) a technical assistance component of US$3\.2 million\. The Additional
Financing is only for the on-grid part of the Project, which includes components A and C\.
vi
Safeguard and Exception to Policies
Safeguard policies triggered:
Environmental Assessment (OP/BP 4\.01) [ X ]Yes [ ] No
Natural Habitats (OP/BP 4\.04) [ X ]Yes [ ] No
Forests (OP/BP 4\.36) [ ]Yes [ X ] No
Pest Management (OP 4\.09) [ ]Yes [ X ] No
Physical Cultural Resources (OP/BP 4\.11) [ X ]Yes [ ] No
Indigenous Peoples (OP/BP 4\.10) [ ]Yes [ X ] No
Involuntary Resettlement (OP/BP 4\.12) [ X ]Yes [ ] No
Safety of Dams (OP/BP 4\.37) [ X ]Yes [ ] No
Projects on International Waterways (OP/BP 7\.50) [ X ]Yes [ ] No
Projects in Disputed Areas (OP/BP 7\.60) [ ]Yes [ X ] No
Does the project require any waivers of Bank policies? [ ]Yes [ X ] No
Have these been endorsed or approved by Bank management? [ ]Yes [ ] No
Conditions and Legal Covenants:
Financing Agreement Description of Condition/Covenant Date Due
Reference
Article 5\.01 a) The Subsidiary Agreement has been Effectiveness
executed on behalf of the Recipient
and TANESCO\.
Article 5\.01 b) TANESCO has adopted the Effectiveness
Operational Manual, in accordance
with the provisions of Section D\. of
the Schedule to the Project
Agreement\.
vii
I\. Introduction
1\. This Project Paper seeks the approval of the Executive Directors to provide an additional
credit in an amount of SDR17\.20 million (equivalent of approximately US$27\.88 million) to the
Tanzania Energy Development and Access Expansion Project (P101645; Cr\.-4370 TA 1)\. This
Additional Financing is sought on the basis of OP 13\.20, paragraph 1, by using a cancellation
amount from the Songo Songo Gas Development and Power Generation Project (Songo Songo
Cr\. 3569), which was cancelled in December 2010 on the basis of OP 13\.50\.
2\. The proposed additional credit would help finance completion of the original Project
activities as a result of an unanticipated cost overrun of up to US$43\.38 million in the on-grid
part (Components A and C)\. This proposed Additional Financing will not entail restructuring of
any of the Projectâs components or its implementation arrangements\. The current Project
Development Objective will remain unchanged and the current closing date will not be extended\.
3\. A previous Additional Financing for US$25 million to support a rural/renewable energy
credit line under the Project´s off-grid part (Component B) was approved by the Board on April
2010 and became effective in September 2010 (âAF 2010â)\. The AF 2010 restructured the off-
grid partâs (Component B) sub-components including their implementation arrangements and
extended the Project´s original closing date by three years from March 31 st 2012 to March 31 st,
2015\.
4\. In addition to this former restructuring of the Project, an amendment of the Financing
Agreements and reallocation of Unallocated Funds was approved on April 7, 2011 through a
Level II restructuring\. This latest restructuring was processed in advance of this Additional
Financing to immediately prevent certain credit category cost overruns and to facilitate a
Government Notice to waive all future taxes and duties liabilities on this Project, thereby
reducing the overall financing gap\.
5\. The Government of Tanzania (GOT/Government) and its state owned utility Tanzania
Electric Supply Company (TANESCO) have reiterated the importance of this Project for the
energy sector in Tanzania, which suffers from a chronic shortage of power supply during the dry
season that is aggravated by high transmission and distribution losses\. Because of the
importance of this Project, the GOT not only requested an Additional Financing for this Project
by using project savings from another IDA-financed energy project, but also confirmed
contribution of Government counterpart funds of up to US$11 million through its letter dated
March 8, 2011\. In addition the Government is about to process a tax waiver for contracts
financed by this Project as mentioned in the previous paragraph\. Finally TANESCO in their
Letter dated April 18, 2011 confirmed to the Bank that in addition to the GOT counterpart funds
it will use up to US$4\.5 million from its own budget to complete the overall funding gap
remaining after use of the IDA Additional Financing amount and usage of GOT counterpart
funds\.
1
Please note that while the TEDAP includes also credit Cr\. 4726 -TZ (Credit Line Component B) and GEF Trust
Fund TF091281, this Additional Financing only relates to the Projectâs main Credit Cr\. 4370-TA\. Currently no cost
overruns occur under Cr\. 4726-TZ and GEF TF091281\.
1
II\. Background and Rationale for Additional Financing in the amount of $27\.88 million
A\. Background
6\. The Tanzania Energy Development and Access Expansion Project (TEDAP) for originally
US$105 million (IDA), and US$6\.5 million (GEF) was approved on December 13, 2007 and
became effective in March 2008, in the aftermath of one of the most serious energy crises in the
country\. The crisis exposed the underlying vulnerability of hydro-dominated generation systems
to drought and the need to diversify generation, and it accentuated the urgent need for
investments in transmission and distribution networks to improve reliability of supply\.
7\. Project Development Objective remains unchanged\. The Project Development Objective, as
slightly reformulated by the 2010 Additional Financing to highlight the projectâs enhanced focus
on renewable energy development, is to improve the quality and efficiency of electricity service
provision in the three main growth centers of Dar es Salaam, Arusha, and Kilimanjaro, and to
establish a sustainable basis for energy access expansion and renewable energy development in
Tanzania\. The Projectâs Global Environmental Objective is to abate greenhouse gas emissions
through the use of renewable energy in rural areas to provide electricity\.
8\. The current Project Development Objective will not be affected by this Additional Financing\.
Achieving TEDAPâs development objective remains a key element of TANESCOâs 5-year
investment plan aimed at not only improving service in the key urban areas, but also reducing
losses and improving revenue streams, thereby directly contributing to TANESCOâs financial
recovery\. The current technical and non-technical combined losses stand at 20 percent\. TEDAP
and related transmission and distribution rehabilitation projects being financed by other
Development Partners (AfDB, EIB, MCC, JICA, South Korea EDCF and Finland), anticipated to
be completed between 2012 and 2015, are expected to bring significant reduction of combined
losses in target areas\.
9\. Consistency with CAS and Regional Strategy\. Furthermore, the TEDAP is in line with the
objectives of the outgoing Tanzania Joint Assistance Strategy JAST and the GOTâs own former
poverty reduction strategy, the MKUKUTA (Goal 6: Provision of reliable and affordable energy
to consumers)\. In addition the TEDAP is in line with the GOTâs recently endorsed new poverty
reduction strategy, MKUKUTA 2, as well as with the proposed new World Bank Tanzania CAS
submitted for Board approval in parallel with this Additional Financing\. The Project, including
this Additional Financing, contributes to outcomes and goals of each strategy by allowing for
improved electricity access to the population and, through focusing the majority of investments
on specific, targeted service quality improvements and access expansion in key economic growth
areas\. Furthermore, the project will improve the quality of life for the affected population\. At
the regional level, the project supports several economic and social objectives of the World
Bankâs New Africa Strategy of March 2011, and at the corporate level, the TEDAP is also in line
with the current draft of the proposed WBG Energy Sector Strategy\.
10\. Project Componentsâ scope remains unchanged\. The proposed Additional Financing will not
change the current structure and scope of the Project\. TEDAP consists of three components: (A)
a Component A (on-grid part) with an original cost estimate of US$85\.8 million (including
contingencies) focusing on investments in national utilityâs transmission and distribution
2
network; (B) a Component B (Small Power Project Component under the off-grid part) of
US$47\.5 million (including US$6\.5 million from GEF and a US$25 million Credit Line2); and
(C) a technical assistance related Component C with an original cost estimate of US$3\.2 million\.
11\. The Additional Financing relates mainly to Component A cost overruns\. TEDAP´s
Component A supports investments in TANESCOâs transmission and distribution networks in
Dar es Salaam, Arusha, and Kilimanjaro\. This grid component will improve the capacity of
existing networks, thus improving the service quality for existing customers and allowing new
customers to connect to the grid in the three main growth centers of Tanzania\. Furthermore,
these investments will improve the capacity of existing networks, thus improving power system
performance by reducing system losses, frequent outages due to overloaded transformers and old
equipment, low and fluctuating voltage conditions and poor system power factors\. The
investments will include adding, replacing or upgrading transmission and distribution lines and
substations and medium and low voltage equipment, meters, spare parts, and tools\. Component
A is implemented by TANESCO\.
12\. Additional funds also needed to cover some cost overruns under Component C \. Due to some
higher than anticipated bid prices, certain cost overruns under Component C recently occurred
and parts of the existing Unallocated Funds have been added to cover those costs\. In addition,
procurement advisory services were added to this Component two years ago\. It is proposed to
strengthen TANESCOs environmental capacity through an additional institutional and capacity
development consultancy (See paragraphs 32-34)\. Consequently, Component C will also need
some additional funds under this Additional Financing to cover the costs of all existing and
planned activities\.
B\. Status of Ongoing Project
13\. Current Overall Project Rating\. Since its effectiveness in March 2008, TEDAPâs
development objectives and implementation progress have been consistently rated satisfactory or
moderately satisfactory\. The project ratings, as reported in the past two ISRs are tabulated
below:
Table 1: Project Ratings since June 2010
Rating June 2010 February 2011
Progress towards achievement of PDO MS MS
Progress towards achievement of GEO S S
Overall Implementation Progress (IP) MS MS
Financial Management S S
Project Management MS MS
Counterpart funding S S
Procurement MS MS
Monitoring & Evaluation S S
Public involvement S S
Government commitment S S
Overall Safeguard Compliance S S
2
This Credit Line was introduced by the AF 2010 to support an institutional set -up for the newly established Rural
Energy Agency (REA) and to develop and test new off-grid electrification approaches for future scale up\.
3
14\. The Component A (on-grid part) and Component B (Small Power Project Component) have
recorded different implementation performance up to the Mid Term Review completed in
December 2010\. The implementation of Component B has progressed satisfactorily and some
intermediate outcome indicators are already close to being achieved or even exceeded\.
Implementation of Component C has also been Satisfactory\. Further details on the status of
Components B and C and their current rating explanation can be found in Annex 3\.
15\. Since this Additional Financing only relates to Component A and Component C of the
project and taking into account that the implementation of the Small Power Project Component
(Component B) is progressing satisfactorily the following sections focus only on Component s A
and C\.
16\. Component A is rated Moderately Satisfactory\. After effectiveness, Component Aâs
implementation started on a satisfactory level with timely launch of all major procurement
processes\. However, in late 2008 seven large transmission and distribution rehabilitation
contracts of Sub-Component A\.1 encountered some delays in their procurement processes partly
caused by TANESCOâs lack of continuous focus on those important procurements, but also due
to some set-backs in procurement evaluations, notably causing the rebidding of the distribution
packages under this Sub-Component\. Consequently, TANESCO took measures in 2009 and
throughout 2010 to enhance the performance of the procurement functions (details in Annex 3)\.
17\. While those mitigation measures were proven successful and allowed for an improvement of
implementation speed of the ongoing procurements at that time, Component A faced another
implementation delay that occurred in the three transmission-rehabilitation contracts, which were
successfully awarded in May 2009 (additional details Annex 3)\. Those additional set-backs led
to a downgrade of the transmission and distribution sub-component under Component A to
Moderately Satisfactory, and given the overall weight of Component A under the Project (over
60% of the total credit amount), the Projectâs overall PDO and IP ratings were downgraded to
Moderately Satisfactory in 2010\.
18\. During the Mid-Term Review in December 2010, additional progress was noted on the
implementation of Component A, as most of the Transmission Lineâs implementation issues had
been resolved or were close to being resolved\. At the same time the Mid-Term Review revealed
a significant financing gap, and since the full mobilization of the transmission line contractor
was not yet achieved, the ratings for Component A and for the overall project ratings were kept
at Moderately Satisfactory\.
19\. Action Plan\. Following the Mid-Term review and during the preparation mission for this
Additional Financing, a concrete Action Plan to address the past implementation challenges and
to avoid further delays and cost increases was agreed with the GOT and TANESCO\. The most
relevant measures agreed with the GOT are the following:
ï Dedicated Teams\. TANESCO has to ensure that dedicated Project teams continue being
available and duly monitor and take timely action on the implementation processes, such as
timely release of pending/new change orders, which could have an impact on the project cost\.
With regard to Component A, during preparation of this Additional Financing, it had been
agreed that TANESCO will enhance its TEDAP team with two additional engineers, which
4
will ensure timely and close follow up on all outstanding actions to secure the transmission
rehabilitation sites and ensure that full mobilization of the contractor is reached b efore the
end of the year 2011\. The appointment of those two engineers had been fulfilled by the time
of this Additional Financingâs appraisal in April 2011\. In addition TANESCO will submit an
updated operation/procedures manual for its TEDAP Team\. Submission of a manual
acceptable to IDA is a condition for effectiveness\.
ï Improvements in TANESCO Procurement\. Under TEDAP, TANESCO has recruited and put
in place a qualified procurement specialist with international experience\. Despite important
improvements in the past two years, procurement efforts on the remaining procurements of
Component A have to be further improved, and timely processing of procurements becomes
critical to avoid further delays\. In this regard, it was agreed during preparation of this
Additional Financing that a dedicated Procurement Specialist from TANESCOâs central
procurement department was going to be deployed full-time to the TANESCOâs TEDAP
team\. The Procurement Specialist was subsequently appointed by the time of appraisal in
April 2011\.
ï Treatment of Taxation and Customs Duties\. A general exemption for taxes and duties under
the Projectâs major works, goods and consultancy contracts or arrangement for payment of
those fees outside the Project becomes an important necessity to limit the amounts required
for additional financing\. In this regard, an agreement has now been reached between IDA
and MOF in which MOF will waive any future tax payments and custom duties under
Contracts\.
20\. In addition, TANESCO, through a letter to the Bank dated April 18, 2011, outlined a credible
implementation time line of the projectâs Component A activities showing that the Component
can be fully implemented before the Project closing date\. Taking into account that the maximum
implementation time of the most complex and lengthy contracts is expected not to exceed
twenty-four months from mobilization, and assuming that all major contracts will have been
procured and mobilized by the latest in 2012, full implementation of Component A is achievable
during 2014, which would be three to six months in advance of the current closing date of March
31, 2015\.
21\. Therefore, subject to implementation of the above actions and subject to the approval of the
proposed AF, the Project would be able to achieve the current PDO by Project closing\. It is
further expected that upon implementation of the above Action Plan the Project could reach an
overall Satisfactory rating within the next supervision cycle if no new issues are identified\.
22\. Legal Covenants and Financial Management\. Based on the information available to the
Task Team at appraisal the Project is in compliance with all critical legal covenants\. The
financial reporting and auditing performed to the implementing agencies, REA, MEM and
TANESCO is overall in compliance with World Bank requirements\. The transfer of
implementing responsibilities under the Off-Grid part recently led to some minor delays in
reporting and some recent âpost reviewsâ under the MEMâs contracting responsibilities revealed
that efforts have to be strengthened, especially with regard to documentation and expenditures
reconciliations\.
5
23\. The overall project credits 4370-TA and 4726-TZ (Credit Line under Component B) have
currently disbursed 24% of the allocated funds\. Overall, the FM rating is Satisfactory\.
24\. Audits\. The 2009/2010 external audit reports were received before the deadline of December
31, 2010\. Unqualified (clean) audit reports were issued\. The management letters did not contain
any major issues\.
C\. Rationale for Additional Financing
25\. Total Project Costs likely to increase by US$35\.4 million\. During the MTR of the project, a
comprehensive financial analysis of the projectâs funding situation was carried out, and this
analysis was updated during appraisal of this Additional Financing in April 2011\. The updated
analysis indicates that Total Project Costs would increase by US$35\.4 million, assuming all
Project activities would still be contracted and implemented as originally planned\. The analysis
is based on the SDR amounts allocated at original Board for Credit 4370-TA (December 2007)
and Credit 4726-TZ (Credit Line introduced in April 2010) and compares those amounts to: (i)
the current allocation at appraisal of this Additional Financing, which takes into acc ount the
recent allocation of the originally Unallocated amounts; and (ii) the required allocation if the
Project would continue to include all currently planned activities including their required
additional costs\.
26\. The analysis does not include the US$6\.5 million of the TEDAP-related GEF Trust Fund, as
there are currently no cost overruns anticipated under this Trust Fund\. The Total Project costs by
Component would change as follows when all currently planned activities are implemented:
Table 2: IDA Financing for TEDAP: Original, Current and Proposed
Proposed
Allocation
Original Current 2011
Components/Activities Allocation Allocation (including
2007 2011 Counterpart funds
and excluding
Contingencies)
USD USD USD
A: Component A â Ongrid Investments 76,631,173 81,563,219 116,335,590
B: Component B â Offgrid Investments (excl CL & GEF) 15,993,943 16,411,454 16,411,454
B 4: Sub-Component B\.4 â Credit Line (Board April 2010) 0 24,896,580 24,896,580
C: Component C â Sectoral Technical Assistance 3,183,261 6,714,671 7,378,422
Unallocated 9,316,860 0 0
Total Credit Amount (US$) 105,125,237 129,585,924 165,022,046
27\. The above table confirms that the cost overruns only relate to Components financed by the
main credit 4370-TA\. In addition, current cost overruns where additional funding is needed
mainly relate to Component A and to a smaller extent to Component C\. Those cost overruns are
mostly caused by (i) substantial cost increases of the transmission and distribution rehabilitation
contracts when comparing the contracted and bidding prices with the original cost estimates; (ii)
implementation delays of the transmission rehabilitation contract; and (iii) higher than
anticipated contract costs for various consulting assignments under Component C, including the
addition of one new consultancy\.
6
28\. Transmission and Distribution contract price increases\. The important difference in prices
between the appraisal stage estimates of August 2007 and the bid submission prices
(transmission lots) of June 2008 and bid submission prices of November 2010 (distribution lots)
can be explained by steadily increases in equipment prices from 2007 to date for transmission
and distribution equipment on the world market\. These price increases are driven by an
increasing global demand for such equipment and correlated steady rise in prices of raw
materials like copper and aluminum, which are the main commodities used for the manufacture
of the equipment\. In addition the US dollar exchange rates to major currencies have been subject
to important fluctuations, and in most cases the US dollar overall depreciated against major
currencies from the time of original appraisal in 2007 to the time of bid submissions\.
29\. In addition overall funding requirements under the project were increased due to the current
implementation delays under the transmission rehabilitation contract\. Those additional increases
currently amount to approximately US$6 million, including price increases due to design
changes, contract time extensions as well as applicable import duties and taxes (which until now
were financeable under the credit)\.
30\. Cost increases under Component C: This component supports various technical assistances
to TANESCO and the GOT\. The component supports capacity building implementation
measures for TANESCO and contributes to increasing the GOTâs capacity to develop public and
private generation projects through the provision of legal, technical, financial, environmenta l,
and social advisory services\.
31\. The cost increases under Component C are mainly caused by higher than anticipated
consultancy contract prices for three advisors (legal, financial and technical) to the Ministry of
Energy and Minerals (MEM), to prepare the next major hydropower project in Tanzania with
participation of a private investor\. Since some of those advisory contracts were awarded to firms
that had bid on non-US Dollar prices, the US Dollar depreciation against those currencies in the
last three years added to the contract price increases against former estimates\. In addition the
MEM requested a much larger scope for the technical advisory contract to include consulting
services for the implementation phase, which were originally not foreseen\. However, given the
complexity of a hydropower projectâs implementation, extending this advisory contract for the
implementation phase is warranted, which is why the change of scope was approved in the
procurement phase\. Two of the three advisories have now been procured and contracted, and the
contracting of the technical advisor is expected during May 2011\.
32\. Two additional capacity-strengthening measures included in Sub-Component C\.1\. When the
procurement delays under the transmission and distribution Sub-Component A\.1 occurred in late
2008, TANESCO agreed with the Bank to hire an international procurement advisor to
strengthen TANESCOâs procurement capacities\. This advisory capacity was introduced under
Sub-Component C\.1 in 2009 and is currently financed by the Project over two years with an
allocated budget of US$360,000\. In addition TANESCO recently approached the Bank to
consider including an additional capacity-building measure under Sub-Component C\.1, which
relates to TANESCOâs Environmental unit and foresees strengthening of the utilityâs capacity
for environmental management\.
7
33\. This proposed additional environmental capacity-strengthening activity relates to a follow up
action for which TANESCO is responsible for implementing the Environmental Management
Plan (EMP) after the closure of the IDA financed (Credit 3546 -1-TA) Lower Kihansi
Environmental Management Project (LKEMP, P105220)\. This separate project will close on
June 30, 2011\. As per the objective of the LKEMP an updated Environmental Management Plan
(EMP) was agreed and approved in 2004 in the context of the IDA financed Lower Kihansi
Hydropower Plant (LKHP)\. The EMP outlines actions to mitigate LKHP impacts on the Kihansi
Gorge, which contains the ecosystems in which several unique and previously unknown species,
including the Kihansi Spray Toad (KST) and at least four new plant species have been found\.
The proposed LKEMP activities support the reintroduction of the captive bred KST into its
natural habitat in Kihansi gorge\. According to this EMP, TANESCO is legally responsible to
implement environmental mitigation measures from the operation of the LKHP\. The EMP
prescribes a series of actions to be implemented by TANESCO during the life of the LKHP
facility\.
34\. The proposed activity to be included under the TEDAP will enable TANESCO to fulfill its
monitoring and environmental auditing responsibilities under the LKHP EMP\. This includes
monitoring of key ecological indicators in the Kihansi gorge; sustaining the population of captive
bred KST at the captive breeding facilities at the University of Dar es Salaam and Kihansi; and
the implementation of soft and hard releases of KST back to the gorge as detailed in KST
reintroduction plan\. Through additional support in Component C, TANESCO will strengthen its
capacity for mitigating environmental impacts in the operations of the LKHP and to protect,
minimize and mitigate adverse environmental impacts on future hydropower plants\.
Consequently this capacity building measure is in line with the existing PDO of the TEDAP
âestablish a sustainable basis for [â¦] renewable energy development in Tanzaniaâ\.
35\. Total financing gap of up to US$43\.38 million\. The total financing gap assessment took
account of (i) the current existing contract costs; (ii) anticipated contract price increase; and (iii)
all planned future commitments as per current price estimates under all components\. In addition
and as a precautionary measure, the financial analysis also includes new contingency amounts of
US$7\.94 million for all major contracts under Components A and C, since the creditâs former
Unallocated funds have all been allocated by now\. When adding the required contingencies of
US$7\.94 million to the current cost overrun amount of about US$35\.44 million, the total
additional financing need is US$43\.38 million\.
36\. Finally the financial analysis compared the current financing gap with the available IDA
resources for this Additional Financing of about US$27\.88 million (equivalent of SDR17\.2
million at current exchange rate) sourced from the cancellation amount under the Songo Songo
Credit 3569-TA\. The analysis consequently shows the following funding requirements and
funding sources as documented in the table below:
8
Table 3: TEDAP Cost Overrun and Financing Plan
US$
Additional Financing Requirements
Cost Overrun TEDAP Project Credit -35,436,122
Contingencies on Major Contracts -7,944,390
TOTAL AF Requirement 43,380,512
Financing Sources
Songo Songo Savings (equivalent of SDR 17\.2 million) 27,880,512
GOT/TANESCO Counterpart Funds Required 15,500,000
37\. GOT and TANESCO counterpart funds of US$15\.50 million proposed: As the table above
documents, and since no more IDA resources are currently available under the Tanzania IDA
country envelope, the currently needed counterpart funds from the GOT and TANESCO amount
to about US$15\.50 million\.
38\. Given the importance of this project for TANESCOâs efforts to (i) reduce transmission and
distribution loss levels and (ii) to enhance its overall operational performance, the utility
informed the Task Team through Letter dated April 18, 2011 that it is ready to provide the
necessary counterpart funds from its own budget in addition to the confirmed GOT counterpart
funds\. Those funds are proposed to finance certain outstanding contract procurements as further
explained in the following Section III\.
39\. The proposed additional financing, accompanied by the implementation of measures agreed
under the Action Plan, will allow processing the outstanding contracts and achieving the
Projectâs Development Objective by project closing\.
D\. Alternatives Considered
40\. Dropping Project Sub-Components\. Given the limited amount of IDA funds currently
available, and in the absence of any counterpart funds, the Project would have to be downsized
by dropping certain sub-components and activities\. Since major contracts have already been
awarded (transmission rehabilitation contract and nearly all of the consultancies under
Components A and C) or are close to contract award (distribution packages under sub-
component A\.1), a cancellation of those ongoing procurements would offset the implementation
efforts made in the past two years\. In addition, the cancellation or downsizing of the
transmission and distribution contracts would risk that major outcomes of this project could only
be achieved partially or not at all\. Consequently the current PDO could not entirely be achieved\.
In addition, TANESCOâs current transmission and distribution network needs substantial loss
reduction improvements, and in the current situation of load shedding due to generation
shortfalls, the reduction of those losses becomes even more important to enhance the utilityâs
operational performance\. Finally the economic analysis (see Section IV below) also confirmed
that even with the increased prices the Project is still economically viable at the current scope\.
41\. Provision of additional IDA funds\. The Tanzania IDA country envelope under IDA 15 has
already benefited from additional funding resources allocated in this Fiscal Year\. Considering
that those previous allocations have been fully committed to other projects, the only available
9
funding for this additional financing in this Fiscal Year is the cancellation amount from the
Songo Songo Credit 3569-TA\.
42\. Preparation of this Additional Financing in FY12\. The Task Team also considered the
possibility to propose this Additional Financing in the next Fiscal Year when a new Tanzania
IDA country envelope becomes available\. However, this alternative was rejected since the
amounts from the Songo Songo Credit 3569-TA were cancelled under IDA 15 and cannot be
transferred beyond the IDA 15 cycle as per the World Bankâs guidelines\. The funds would
consequently be unavailable in the next Fiscal Year\.
43\. Provision of counterpart funds from other Development Partners\. Similar activities to those
being implemented under TEDAP´s Component A are also supported by other Development
Partners in Tanzania by existing projects (AFDB, JICA, Korea EDCF, Finland and MCC)\.
However, none of those Development Partners have currently sufficient additional funds
available under their projects to support the cost overruns under the TEDAP Project and
processing additional resources, if available, would take a long time\. Since one of the largest
cost overruns under the project relates to the distribution rehabilitation contracts, which are
expected to be contracted within the next few months, the availability of the required funds is
very time sensitive\.
III\. Proposed Changes
A\. Key Indicators and Results Framework
44\. The incurred delays under the On-Grid part required some necessary changes to the Outcome
and Intermediate Outcome indicators\. However those changes only relate to a rescheduling of
the targets into future years\. All activities could be implemented and targets achieved as per the
original target values by the current Project closing date of March 2015, recently extended
because certain On-Grid targets would not have been achievable in the original time frame of the
Project\. The Results Framework was already updated in this regard during the Mid Term
Review of December 2010 and reviewed by and agreed with the Bank\. The applicability of this
updated Results Framework was reconfirmed during appraisal by the Bank and the Borrower
including validity of all its indicator values and targets\. The updated Results Framework also
includes the Energy Core Indicators relevant for this Project and is outlined in Annex 1\.
B\. Financing
45\. GOT counterpart Funds allocation\. As indicated above, the Additional Financing is sought
to cover cost overruns which mainly arise under Component A and to a smaller extent under
Component C\. As per the financial analysis documented above, this Additional Financing
proposes to add SDR17\.2 million to the financing of Components A and C, using the formerly
cancelled funds under the Songo Songo Credit 3569-TA\. As common practice for Additional
Financings, this additional amount will be provided in form of an additional credit under the
TEDAP, which is closely linked to the Projectâs main credit 4370-TA\. In addition, the GOT and
TANESCO through various official communications have indicated that they will provide
counterpart funds to this Additional Financing in the amount of US$ 15\.5 million\.
10
46\. The proposed counterpart funds are proposed to be used for certain original project activitie s
which are at an advanced stage of preparation, but which are not yet contracted\. TANESCO will
procure those activities by applying World Bank procurement guidelines but without having to
seek clearance from the World Bank on the individual procurement steps\. However, progress of
those activities will be closely monitored by the Task Team\. The proposed activities to be
funded by the GOT/TANESCO funds is as follows:
Table 4: TEDAP Activities to be financed by GOT/TANESCO Counterpart Funds
# Activity Name Activity under Estimated Financed by
Sub- Costs US$
Component (incl\.
Contingencies)
1 HV Distribution Network, Lot 1: Network for A\.2 and A\.3 10,000,000 GOT Budget through
25,000 new customers and new HV Cluster, counterpart funds to
Lot 2: RMU switching units TANESCO
2 Lot 2 : 10,000 Three Phase Whole-Current A\.4 5,000,000 TANESCO's own budget
Split Type Keypad-Operated Smart (AMR) US$4 million (plus US$1
Prepayment kWh Meters million GOT counterpart
funds)
3 Vehicles for Project Supervision A\.5 500,000 TANESCO's own budget
TOTAL 15,500,000
47\. Activities Financed by TANESCO\. The IDA credit currently finances a consultancy related
to the preparation of the Activity 1 in the above table\. According to TANESCO a draft set of
Bidding Documents for this procurement of the HV Distribution Network has been submitted for
TANESCOâs initial comments, and it is expected that the procurement process for those works
can be launched in the coming months\. Since the current implementation time of this activity
including the procurement process is currently expected not to be longer than twenty-four
months, this activity currently can be implemented in the remaining time of the Project\.
TANESCO proposes to use the GOT budget counterpart funds to fund this US$10 million
procurement, including contingencies\.
48\. With regard to Activities 2 and 3 in the above tables, those activities have recently been bid
out, but the bids received were found non-responsive according to TANESCOâs Tender Board\.
Since those procurements will have to be rebid and taking into account the current cost overruns
under the IDA credit, TANESCO proposes to finance those activities through its own budget
with US$4\.5 million and to use US$1 million from the counterpart funds provided through the
GOTâs budget\.
49\. Revised IDA Financing Plan: By financing those proposed three activities, which were
foreseen by the original project, TANESCO and the GOT will contribute about US$15\.5 million
to the financing of the total cost overruns plus including contingencies that will complement the
IDA Additional Financing of SDR17\.2 (about US$27\.88 at applied exchange rate)\. The
Financing Plan by component would then be financed as follows3:
3
A comprehensive overview on the development of the Original Project Financing Plan since 2007 including other
sources of funding can be found in Annex 5\.
11
Table 5: IDA Financing by component in US$ since original Project approval in 2007
Component including Original Changes Reallocation Changes with Revised
Contingencies and financing with Unallocated proposed AF financing
Excluding GEF TF) AF2010 Amounts June 2011 After this
April April 2011 AF
2010
Financed by IDA IDA IDA IDA GOT/
TANESCO
1: Grid Component 77\.00 -- 5\.00 27\.28 15\.50 124\.78
2: Offgrid Component 16\.00 25\.00 -- -- -- 41\.00
3: Technical Assistance 3\.00 -- 4\.00 0\.60 -- 7\.60
Unallocated 9\.00 -- -9\.00 -- -- --
Total 105\.00 25\.00 0\.00 27\.88 15\.50 173\.38
C\. Implementation Arrangements
50\. The implementation arrangements for Component A will not change; however, the
implementation and procurement capacity of TANESCO´s TEDAP team has been strengthened
(see risk section below)\. In addition a revised implementation schedule focusing on
TANESCOâs activities implemented under Component A has been received by the Bank and
was reviewed by the Task Team\. The review showed an acceptable updated timeline and
confirms that all outstanding activities can be completed before the current Project closing date ,
subject to approval of this Additional Financing and provision of GOT/TANESCO counterpart
funds\. Financial management and disbursement arrangements will remain unchanged for this
IDA Credit\.
51\. With regard to the proposed new capacity building measure on TANESCOâs environmental
management capacity, TANESCO will contract this capacity building measure in form of a
consultancy with the University of Dar es Salaam in accordance with the current implementation
and procurement arrangements, which remain unchanged\. The attached Procurement Plan has
been updated accordingly with a proposed Consultancy under Sub-component C\.1, labeled
Consulting Service on Mainstreaming Implementation of the KST Reintroduction Management
Plan\.
D\. Condition of Effectiveness and Legal Covenants
52\. Conditions of effectiveness will consist of (i) the submission of a copy of the duly executed
Subsidiary Agreement between TANESCO and the MOF related to this Additional Financing
Credit; and (ii) Submission of an updated Operational Manual for the TANESCO TEDAP teamâs
operation\. New Legal covenants will include withdrawal restrictions under the new credit for (i)
payments to the proposed three activities, now funded through GOT counterpart funds; and ii)
any withdrawals under the new credit after July 1, 2013, if the proposed GOT counterpart funds
have not been established fully by then\.
12
E\. Readiness of Activities for Additional Financing
53\. Contracts for procurement of transmission equipment have been procured and awarded under
the Project and are already under implementation\. Procurement for distribution equipment are at
the bid evaluation phase, which is when the higher than originally expected cost bids have been
observed thereby prompting the need for this Additional Financing\. As a result, it can be
anticipated that the procurement will be completed and awards made in the next few months
following AF approval\. Consequently the activities supported by this Additional Financing are
ready for implementation\. The additional capacity-building measure under Sub-Component C\.1,
is also ready for implementation\. In addition TANESCO and the Task Team have started to
discuss the outline of the new Operational Manual and it is expected that this Manual will be
completed by early June 2011 so that effectiveness can be achieved shortly after approval of this
AF\.
F\. Risks
54\. Key Project risks and mitigating measures for this Additional Financing are presented in the
ORAF (See Annex 2)\. Overall risk for Additional Financing is rated MI (medium driven by
impact)\. At an earlier stage of this project, weak implementation capacity at TANESCO and
weak procurement capacity had hindered timely implementation of the Project\. Implementation
and procurement capacity have improved since TANESCO took concerted measures starting in
2009 and continuing throughout 2010 in order to enhance the performance of the procurement
functions\. These mitigation measures involved a reorganization of the procurement department
and introduction of service level agreements between the procurement department and
operational departments\. TANESCO also hired an international Procurement advisor (financed
under this Project) who is supporting the strengthening of procurement operations\.
55\. In addition, to continue this progress, TANESCO and the World Bank have recently agreed
on an Action Plan that will continue to strengthen the implementation and procurement capacity
of the PIU\. The Action Plan has been outlined under Section II above and most of the actions
have been taken by appraisal\.
IV\.Appraisal Summary
A\. Economic and Financial
56\. For both the Economic and Financial Appraisal, the assumptions used for the original
assessment were reviewed and updated where necessary\. The project benefits are based on
reductions in unserved energy, reductions in technical network losses and reductions in non -
technical network losses\. For each investment program, whilst costs have increased, it is
expected that reductions in technical network losses, non-technical losses and unserved energy
will be the same as were planned at the time of the original appraisal\. A conservative approach
was originally taken on the size of these expected reductions for each package of investment and
this conservative approach is now maintained\.
57\. For the Economic Appraisal, the value of reducing unserved energy is derived from the cost
of avoided self-generation of industrial and commercial customers as well as cost of avoided
self-generation of domestic customers\. Work carried out by consultants DECON for TANESCO
13
found these values to be USc 50/kWh and USc 40/kWh respectively\. These figures and the rest
of the key assumptions used in the original appraisal are judged to still be appropriate and valid\.
58\. Even with the increased costs, the recalculated overall EIRR of investment projects is
expected to be clearly positive at about 17\.4% with an Economic Net Present Value (ENPV) of
US$43\.0 million (see Table 6 below)\. This reflects the high value to society of making the
system more reliable and efficient\. For the connection of new urban customers, as previously,
the Economic Internal Rate of Return (EIRR) is expected to be even higher than indicated in the
table, due to high current alternative energy costs, high consumer willingness to pay (by both
households and businesses) in urban areas, and the potentially lower than assumed connection
costs\.
Table 6: Summary of revised Economic Analysis for Ongrid Components
Component Economic internal Economic NPV
rate of return (%) @ 10%
(US$ million)
Reinforcement of distribution and 11\.1 3\.7
transmission networks in Dar es Salaam
Reinforcement of distribution networks in 19\.8 10\.1
Arusha
Reinforcement of distribution networks in 35\.4 16\.5
Kilimanjaro
Connection of 25,000 new customers 38\.4 12\.7
Replacement of 60,000 credit meters 10\.0 3\.7
Total for Ongrid Investments 17\.4 43\.0
59\. Table 7 below presents the Financial Internal Rate of Return (FIRR) and financial net present
value for different components\. The increased costs lead to an overall project FIRR that is now
very slightly below the 10% threshold\. Reinforcement work at Arusha and Kilimanjaro remains
strongly above the threshold minimum rate and so the overall relatively low financial return is
driven by financial returns in Dar es Salaam\. The considerable increase in cost of works for
reinforcement of distribution and transmission networks in Dar es Salaam (almost doubling from
c\.US$ 30\.3m to c\.US$ 58\.6m) has made this activity net negative financially\. The sub-
component that will finance the connection of 25,000 new customers also shows a low rate of
financial return and a negative NPV\. For both these instances, customers are almost exclusively
from Tariff Group D1: Domestic low Usage Tariff\. It is often the case that utility activities in
low tariff customer areas are cross- subsidized by customers paying higher tariffs in other supply
areas\. This is expected to be the case here\. We have verified that the financial âlossâ on these
activities is small relative to the overall activity and period over which the benefits will be
derived\. It is also worth remembering that each of these activities has strongly positive
economic returns\. For instance, the component that will finance the connection of 25,000 new
customers has an economic rate of return of 38\.4% (as shown in Table 6 above)\.
14
Table 7: Financial Assessment of Project Investments 4
Component Financial internal Financial NPV
rate of return (%) @ 10%
(US$ million)
Reinforcement of distribution and 6\.7 -10\.6
transmission networks in Dar es Salaam
Reinforcement of distribution networks in 13\.0 3\.0
Arusha
Reinforcement of distribution networks in 20\.0 5\.8
Kilimanjaro
Connection of 25,000 new customers 2\.3 -3\.3
Replacement of 60,000 credit meters 5\.3 -1\.3
Total for Ongrid Investments 8\.8 -6\.3
60\. Overall, it is noted that two out of the three reinforcement clusters (Arusha and Kilimanjaro)
are expected to earn a sufficient return with an FIRR above the minimum hurdle of 10%\. The
overall Financial NPV is negative though remains moderate compared to the investments
proposed of now over US$100 million for Component A\.
B\. Procurement
61\. The Procurement of activities not started as of January 1, 2011 are or will be carried out in
accordance with the World Bankâs "Guidelines: Procurement of Goods, Works and Non
Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers"
dated January 2011; and "Guidelines: Selection and Employment of Consultants under IBRD
Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011; Guidelines on
Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA
Credits and Grants, dated October 15, 2006 and revised in January 2011; and the provisions
stipulated in the Legal Agreement\. For each contract to be financed by the Credit, th e different
procurement methods or consultant selection methods, the need for pre-qualification, estimated
costs, prior review requirements and time frame, are agreed between the Borrower and the Bank
in the Procurement Plan (Annex 4)\. The overall risk assessment for the procurement risk of this
Project is currently rated MI (Medium driven by Impact - further details in Annex 2)\.
62\. The Projectâs current Procurement Plan has been updated to take into account the methods
and thresholds applicable as well as the revised estimated costs and the one new activity to be
included under sub-component C\.1\. The Procurement Plan will continue to be updated at least
annually, or as required, to reflect the actual project implementation needs and improvement s in
institutional capacity\. Additional Financing procurement will maintain existing arrangements for
TANESCO\. Since this Additional Financing only relates to Credit 4370-TA, the other project
related Procurement Plan for the GEF Trust Fund is not included\. The updated Procurement
Plan is attached in Annex 4 and also shows the three procurements that were formerly being
procured under the IDA credit and are now proposed to be funded by GOT/TANESCO
counterpart funds\.
4
Tariff for 2011 is taken from EWURA Electricity (TANESCO) Tariff Adjustment Order, 2010\. No\. 010 -019\.
15
C\. Financial Management
63\. As part of the preparation for this Additional Financing, a financial management assessment
was carried out in accordance with the Financial Management Practices Manual issued by the
Financial Management Sector Board in March 2010\. The objective of the assessment is to
ensure that the implementing agency of this Additional financing, TANESCO, has adequate
financial management arrangements to ensure that (a) TEDAP AF funds will be used for the
purposes intended in an efficient and economic way; (b) TEDAP financial reports w ill continue
to be prepared in an accurate, reliable and timely manner; and (c) external audit reports will be
prepared in line with international accepted audit standards and issued on time\. The Financial
Management Teamâs work included a visit to both MEM and TANESCO\. The conclusion of the
assessment is that projectâs financial management arrangement satisfies the Bankâs minimum
requirement under OP/BP 10\.02 and the existing system is adequate to provide, with reasonable
assurance, accurate and timely information on the status of the project as required by the IDA\.
Based on the findings of this review, the overall FM risk rating remains moderate 5 and ISR FM
rating remains satisfactory\.
64\. As per the current and recently amended Financing Agreements of the original Project credit
4370-TA, the proceeds of the grant will finance 100% of eligible expenditures exclusive of taxes\.
Under the Subsidiary Agreement, to be concluded between MOF and TANESCO, the MOF will
pass on the Additional Financing funds allocated to Categories (1) and (2) on a grant basis as for
the original credit 4370-TA\.
65\. Disbursements will continue to be made on the basis of quarterly unaudited Interim Financial
Reports (IFRs) whereby the Designated Account (DA) ceiling will be equivalent to a forecast for
two quarters as provided in the quarterly IFR\. The existing DA under Component A of the
Original Financing will be used for Component A of the Additional Financing\. However, a new
DA will be opened for the proceeds of Part B (as defined in the Legal Agreements for this
Additional Financing)\. Part B, as defined in the Legal Agreements for this AF corresponds to the
activities of the original Projectâs Component C\.1\. Additional instructions are provided in the
World Bank Disbursement Guidelines for Projects, dated May 1 2006 and the Disbursement
Letter\.
D\. Environmental and Social
66\. Overall Safeguards Compliance is currently rated Satisfactory\. The Additional Financing
does not alter the safeguards policies triggered or the arrangements for safeguards compliance\.
Current Safeguards related Operational Policies (OPs) are mainly triggered for Project
Componentâs A and B\.
67\. Safeguards Policies triggered: Component A, which will be supported by this Additional
Financing triggers OP/BP 4\.01, OP/BP 4\.04, OP/BP 4\.11 and OP/BP 4\.12\. Component B, which
is not subject of this Additional Financing, triggers the same OPs and in addition triggers OP/BP
5
This âmoderateâ risk rating is the FM teamâs own assessment, which is different from the ORAF risk categories\.
The Task Team overall rates this rating with an MI (Medium driven by Impact (MI) corresponds to a risk that would
have high impact if it took place but a low likelihood of it occurring) in the context of the ORAF with regard to
Implementing agency risk\.
16
4\.37 (Safety of Dams) and OP/BP 7\.50 (International Waterways)\. Those additional two policies
had been triggered at the original approval of the Project\. Further details on the status of this
Componentâs safeguards and those policies are given further below in paragraphs 70 and 71\.
68\. The full suite of safeguards documents produced and publicly disclosed for the project to
date are:
ï Environmental Impact Assessment (âEIAâ for Component A);
ï Environmental Audits of 18 Substations (âEAâ for Component A);
ï Resettlement Policy Framework (âRPF Aâ for Component A - Rehabilitation works in
Dar es Salaam);
ï Two Resettlement Action Plans (âRAPâ for Component A â one for Rehabilitation works
in Arusha and Kilimanjaro and one for Rehabilitation works in Dar es Salaam);
ï Environmental and Social Management Framework (âESMFâ for Component B);
ï Resettlement Policy Framework (âRPF Bâ for Component B);
ï Riparian Notification (âRNâ for Component B)\.
69\. Implementation of Safeguards under Component A\. Environmental management has
proceeded satisfactorily to date, with the latest development being approval by the ownerâs
engineer of the transmission line and substation contractorâs Environmental Management Plan
(EMP) that had been submitted in draft at the time of the MTR\. The MTR also confirmed that
the recommendations of the substation environmental audits TANESCO carried out during
project preparation have been included in the design for the one substation in the audited group
that is being addressed in the project\. As mentioned above, an EIA was prepared and disclosed
in 2005 prior to appraisal of the original project in 2007\. The EIA includes a general EMP\.
Based on this general EMP, each contractor procured under the Projectâs Component A is
obligated to submit a detailed EMP for the particular segments he is working on\. Since to date
only one contractor has been contracted under Component A for rehabilitation works, currently
only one EMP has been finalized and since the contractor only recently started mobilization, the
EMP was submitted accordingly\. It is expected that additional EMPs will be prepared once
distribution rehabilitation works, currently under procurement, have been contracted\.
Management of physical cultural property under this Component A is addressed in the EIA and
to date no physical cultural property issues have been identified\.
70\. The Social Safeguards under Component A are based on two Resettlement Action Plans
(RAP) and one preceding Resettlement Policy Framework (RPF)\. The implementation of the
RAP for the distribution line from Moshi to Arusha has been accomplished by now\. The
implementation of the RAP for the transmission and rehabilitation works in Dar es Salaam is
ongoing, though the majority of the affected people have been compensated by now\. According
to this RAP 2,212 properties were affected out of which 955 needed to resettle\. However, in one
transmission line segment in Dar es Salaam, approximately seven houses originally not thought
to be in the right-of-way are actually within its limits\. Transmission tower design is being
modified to avoid or minimize new resettlements\. Once the technical work is finalized (not
17
expected before August 2011), a RAP Addendum will be prepared, consulted upon, and
disclosed\. Civil works will not commence until the RAP Addendum is implemented\.
71\. Implementation of Safeguards under Component B\. Under Component B, not affected by
this proposed Additional Financing, safeguards implementation has been satisfactory to date\.
OP/BP 4\.37 (Safety of Dams) and OP/BP 7\.50 (International Waterways) were originally
triggered under this project\. These policies were triggered since Component B was expected to
involve mini-hydro development\. Consequently riparian notification in accordance with OP 7\.50
was carried out by the Bank in 2007 (at the request of the Government) and no comments were
received opposing the project\. OP 4\.37 was triggered as a precautionary measure, as only small,
run-of-river dams were expected and have been proposed to date\. The ESMF prepared for
Component B explains the application of dam safety to the small dams, and the review of
proposed mini-hydro projects includes ensuring that designs are prepared by engineers qualified
to incorporate standard dam safety measures\.
72\. Following outreach and consultations by the Task Team with local communities and mini -
hydro project developers during the initial years of project implementation, the Task Team
determined at MTR that there would be additional value created by preparing summaries of the
ESMF and RPF (for Component B) so that the documents are more easily accessible and
understood by stakeholders who are both benefitting from and being affected by the mini -hydro
sub-projects\. GOT through the Rural Energy Agency (REA) has engaged a local consultant and
an international advisor to reformat these documents, which will also be disclosed in-country (in
English and Kiswahili) and through the Info Shop, once finalized\.
73\. Transferred Project Status\. The project began as a Category B transferred project\. Due to
the proposed addition of the LKEMP related capacity building activity the project will not
continue as a transferred project for safeguards oversight and clearance purposes\. At the same
time the project will retain its Category B status after this Additional Financing\.
18
Annex 1: Revised Results Framework and Monitoring
TANZANIA: ADDITIONAL FINANCING - ENERGY DEVELOPMENT AND ACCESS
EXPANSION PROJECT
Results Framework
Revisions to the Results Framework Comments/
Rationale for Change
PDO
Current (PAD) Proposed
The Project Development Objective is No changes proposed to PDO in Small change in the PDO adding
to improve the quality and efficiency of this AF\. âand renewable energy
the electricity service provision in the development in Tanzaniaâ
main three growth centers of Dar es incorporated in AF 2010\.
Salaam, Arusha, and Kilimanjaro and to
establish a sustainable basis for energy
access expansion and renewable energy
development in Tanzania\.
PDO indicators
Current (PAD) Proposed change*
Improvement in TANESCOâs operational No change
efficiency as measured by: (i) a 7%
reduction in losses; and (ii) a 25% increase
in collection efficiency in targeted areas\.
Improvement in service quality as measured No change
by: (i) increase in end user voltage to 216
volts; and (ii) improved customer
satisfaction\.
REA fully functional as demonstrated by: (i) No change
capacity to develop, finance, and implement
scale-up of pilot schemes, and (ii) pipeline
of new rural connections\.
Generation capacity (MW) of Renewable No change Renamed indicator in AF 2010;
Energy constructed under the project increased target
Number of direct beneficiaries, of which No change New indicator, incorporated in
female (%) (Component B only) AF2010
19
Intermediate Results indicators
Current (PAD) Proposed change*
Improved customer service with a No change
centralized call center and a high
value customer cell in place\.
Improved IT systems for No change
commercial, technical service and
resources management functional\.
Replacement of 60,000 credit No change
meters with prepaid meters
completed\.
Pilot project for low loss high No change
voltage distribution system
implemented\.
Number of people provided with No change Renamed indicator during MTR
access to electricity under the and revised target values
project by household connections
(Component A)
Number of people provided with No change Renamed indicator in AF 2010;
access to electricity under the revised target
project by household connections
(Component B)
Number of indirect beneficiaries, No change New indicator incorporated in AF
of which number of women 2010
(Component B)
Number of community electricity No change Renamed indicator in AF2010
connections under the project
Standard PPA/Ts methodology for No change
small renewable power projects
adopted and in use (Yes/No)
Delivery of MW of renewable No change Increased target in AF 2010
energy by grid connected SPPs
under Standard PPA/Ts
Number of subproject transactions No change Increased target in AF 2010
concluded by REA\.
Number of PFI loans approved for No change New indicator incorporated in
rural / renewable energy sub- AF2010
projects
Number of banks accessing No change New indicator incorporated in
REAâs capacity building services AF2010
Timely and equitable No change
development of the identified least
cost large power generation
project\.
Institutional capacity development No change
needs identified and a plan to
address these agreed and
implemented\.
* Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of project target value
20
Revised Project Results Framework
Project Development Objective (PDO): The Project Development Objective is to improve the quality and efficiency of the electricity service provision
in the main three growth centers of Dar es Salaam, Arusha, and Kilimanjaro and to establish a sustainable basis for energy access expansion and renewable
energy development in Tanzania
Baseline Cumulative Target Values
Original Progress Responsibility
2012 2013 2014 2015 (at Data Source/
PDO Level Results Indicators UOM Project To Date Frequency for Data Comments
Core Start (2011) closing) Methodology
Collection
(2007)
This indicator
has been
1\. Improvement in TANESCOâs renamed
Report on âTransfer
during MTR
operational efficiency as measured Units â Grid
% 28 28 27 25 23 21 Monthly TANESCO 2010 to
by: Electricity losses per year in the Systemâ, Monthly
follow the
project areas\. Sales Reports
proposed
Energy Core
Indicators
2\. Improvement in TANESCOâs
operational efficiency as measured % 70 70 70 75 85 95 Monthly
TANESCO Monthly
TANESCO
by: Improvement in collection Zonal Reports
efficiency
3\. Improvement in service quality
Marketing Division
as measured by: Increase in end user Volts 190 190 190 >190 >218 >218 Monthly TANESCO
Monthly Reports
voltage
Summary Report of
4\. Improvement in service quality
Customer Feedback
as measured by: Improved customer % - 40 45 60 >75 >75 Bi-annually TANESCO
Survey to be made
satisfaction\. available
21
Baseline
Original Progress To Cumulative Target Values Responsibility
Fre- Data Source/
PDO Level Results Indicators UOM Project Date for Data Comments
Core
2012 2013 2014 2015 (at quency Methodology
Start (2011) Collection
(2007) closing)
Transfer of Improved
Improved Improved REA
Offgrid business, World Bank
technical business identifies
5\. REA fully functional as Component economic Supervision
REA is and and and
demonstrated by: Capacity to implemen- and Mission
unfunc- business economic approves Annual REA
develop, finance, and implement scale- tation to REA, financial Reports,
tional assess- assess- new
up of pilot schemes\. functionnal assess- Ongoing sector
ment ment connec-
REA, key staff ment dialogue
capacity capacity tions
appoint-ted capacity
World Bank
Supervision
6\. REA fully functional as
Mission
demonstrated by: pipeline of new Number - 27,500 30,000 34,000 40,000 50,000 Annual REA
Reports,
rural household connections Ongoing sector
dialogue
7\. Global Environmental Objective:
Generation capacity (MW) of
SPPA
Renewable Energy constructed under MW - 11 15 18 20 25 Annual REA
implementation
the Project\.
Beneficiaries
World Bank
Direct project beneficiaries, Supervision
Only for
Mission
(Component B) Number - 20,000 30,000 50,000 80,000 114,000 Annual
Reports,
REA Component
B
Ongoing sector
dialogue
World Bank
Supervision
Only for
Mission
Of which female Percent - 50% 50% 50% 50% 50% Annual REA Component
Reports,
B
Ongoing sector
dialogue
22
Intermediate Results and Indicators
Baseline Target Values Data Responsi-
Unit of Original Progress
2012 2013 2014 2015 (at Source/ bility for
Intermediate Results Indicators Measur Project To Date Frequency Comments
Core
Project Methodo- Data
ement Start (2011)
closing) logy Collection
(2007)
Intermediate Result 1: Component A (TANESCO related and Ongrid Investments): Increased operational efficiency of TANESCO, increased quality of supply and service levels in
selected clusters, and increased access to electricity in targeted clusters\.
Call Center Call Center
and High and High Monthly
1\. Improved customer service with a Value Value Marketing
centralized call center and a high value - - - - - Annual TANESCO
Customer Customer Division
customer cell in place Cell Imple- Cell Reports
mented Implemented
2\. Improved IT systems for Implementat
commercial, technical service and Monthly IT
ion of CMS,
resources management functional\. - - - - - - Annual Division TANESCO
TSMS &
Reports
RMS
3\. Replacement of 60,000 credit meters Monthly
with prepaid meters completed\. Marketing
Number - - 10,000 35,000 60,000 60,000 Annual TANESCO
Division
Reports
4\. Pilot project for low loss high Monthly
voltage distribution system Partially
Fully Marketing
implemented\. - No No No No Implemente Annual TANESCO
Implemented Division
d
Reports
25,000
5\. Number of people provided with 25,000 25,000
households Monthly
access to electricity under the project household households
or Marketing
by household connections (Component or or Annual
Number - - - 142,500 Division TANESCO
A) 142,500 142,500
persons Reports
persons persons
23
Intermediate Results and Indicators
Baseline Target Values Data Responsi-
Unit of Original Progress
2012 2013 2014 2015 (at Source/ bility for
Intermediate Results Indicators Measur Project To Date Frequency Comments
Core
Project Methodo- Data
ement Start (2011)
closing) logy Collection
(2007)
Intermediate Result 2: Component B (Small Renewables off-grid): Increased electricity access in rural and peri-urban Tanzania to productive enterprises, service delivery facilities
(in health and education), and to households with the capacity to pay for electricity, establishment of a functioning institutional and regulatory framework for commercially oriented,
sustainable service delivery for rural electrification and renewable energy that can be scaled up, removal of barriers to, and reduction of costs of, implementation of renewable energy
technologies to help mitigate greenhouse gas emissions, provision of long-term loans to renewable/rural energy developers on commercial basis, an enhanced bank expertise in
appraising and supervising rural/renewable energy projects
11,000 MEM/REA
6\. Number of persons provided with
House- reports,
access to electricity under the Project 70,000 78,000 85,000 110,000
Number - holds Annual verification MEM/REA
by household connections (Component persons persons persons persons
or 62,700 reports and
B)
persons surveys
50,000 130,000 170,000 200,000 250,000 MEM/REA
7\.Number of indirect beneficiaries, of
persons persons persons persons persons, of reports,
which number of women (Component
Number 0 of which of which of which of which which Annual verification MEM/REA
B)
25,000 65,000 85,000 100,000 125,000 reports and
women women women women women surveys
MEM/REA
8\. Number of community electricity reports,
connections under the project Number - 800 825 870 910 1,200 Annual verification MEM/REA
reports and
surveys
9\. Standard PPA/Ts methodology for
small renewable power projects No SPPA/Ts SPPA/Ts SPPA/Ts SPPA/Ts SPPA/Ts MEM/REA/
adopted and in use (Yes/No) Number SPPAs signed for signed for signed for signed for signed for Annual TANESCO MEM/REA
signed 10 MW 13 MW 15 MW 18 MW 20 MW reports
10\. Delivery of MW of renewable
energy by grid connected SPPs under MEM/REA/
Standard PPA/Ts MW - 10 13 15 18 20 Annual TANESCO MEM/REA
reports
11\. Number of subproject transactions MEM/REA/
concluded by REA\. Number - 3 5 7 9 10 Annual TANESCO MEM/REA
reports
12\. Number of PFI loans approved for
rural / renewable energy sub-projects Number 0 2 4 - - 4 Annual REA reports MEM/REA
24
Intermediate Results and Indicators
Baseline Target Values Data Responsi-
Unit of Original Progress
2012 2013 2014 2015 (at Source/ bility for
Intermediate Results Indicators Measur Project To Date Frequency Comments
Core
Project Methodo- Data
ement Start (2011)
closing) logy Collection
(2007)
13\. Number of banks accessing REAâs REA/TIB
Number 0 2 3 - - 3 Annual REA
capacity building services reports
Intermediate Result 3: Component C (Technical Assistance): Support for legal/technical/financial advisory support for least cost IPP and capacity building for TANESCO and MEM
14\. Timely and equitable development Studies
Studies Consultant
of the identified least cost large power - under - - - Annual TANESCO
completed reports
generation project\. Contract
Monthly
Capacity Capacity Capacity Human
15\. Institutional capacity development Building Building Building Resource
needs identified and a plan to address - - - Annual TANESCO
needs program program Division
these agreed and implemented\. identi-fied initiated completed Reports
25
Annex 2: Operational Risk Assessment Framework
TANZANIA: ADDITIONAL FINANCING - ENERGY DEVELOPMENT AND ACCESS EXPANSION PROJECT
Project Development Objective(s)
The Project Development Objective is to improve the quality and efficiency of the electricity service provision in the main three growth centers
of Dar es Salaam, Arusha, and Kilimanjaro and to establish a sustainable basis for energy access expansion and renewable energy development
in Tanzania
PDO Level Results Indicators: 1\. Improvement in TANESCOâs operational efficiency as measured by: (i) a 7 percentage point reduction in losses; and
(ii) a 25percentage point increase in collection efficiency in targeted areas\.
2\. Improvement in service quality as measured by: (i) increase in end user voltage to 216 volts; and (ii) improved
customer satisfaction\.
3\. REA fully functional as demonstrated by: (i) capacity to develop, finance, and implement scale-up of pilot schemes,
and (ii) pipeline of new rural connections\.
4\. Generation capacity (MW) of Renewable Energy constructed under the project
5\. Number of direct beneficiaries, of which number of women (Component B only)
Rating Category Explanation: Low (L) corresponds to a risk factor with a low impact if it does happen and a low likelihood of it occurring; High
(H) relates to a risk with a high impact on the PDOs and a high likelihood that it will occur; Medium driven by Likelihood (ML) rating indicates a
risk that would have a low impact even if there is a high likelihood that it will happen; and Medium driven by Impact (MI) corresponds to a risk
that would have high impact if it took place but a low likelihood of it occurring\.
Risk Category Risk Risk Description Proposed Mitigation Measures
Rating
Project Stakeholder Risks MI Borrower commitment to the Project objective may TANESCO and the Government of Tanzania have
change reiterated the importance of this Project for the energy
sector in Tanzania, which suffers from a chronic
shortage of supply during the dry season, which is
aggravated by high transmission and distribution
losses\. Because of the importance of this Project, the
Government of Tanzania not only requested an
Additional Financing for this Project, but also
confirmed contribution of Government counterpart
funds of up to US$ 11million\. In addition the
Government is also about to process a tax waiver for
26
contracts financed by this Project, which will reduce
the overall financing gap\. Finally TANESCO in
addition to the GOT counterpart funds confirmed
additional funds from its own budget of up to US$4\.5
million\.
Implementing Agency Risks MI The past experience has shown some weaknesses in The proposed mitigation measures and detailed
Overall TANESCOâs overall implementation capacity assessment for each Implementing agencyâs risk rating
under this project for Components A and C, mainly is shown in the following section on Implementing
relating to slower than expected procurement Agency Risks by Agency\.
processes\. REA, the implementing agency for
Component B is a relatively new organization
which has no previous experience with World Bank
projects\. Consequently implementation efforts
under Component B could risk to slow down in the
future\.
Implementing Agency Risks
By Agency
ï TANESCO MI Weak implementation capacity at TANESCO TANESCO has agreed to strengthen the PIU´s
implementation capacity by hiring two additional
engineers and have a dedicated procurement staff\. All
three staff members have been hired by appraisal and
are now duly established\.
TANESCO will submit to the Bank an updated
operation/procedures manual of the TEDAP PIU
review before appraisal\. In addition, TANESCO has
agreed to have close management follow-up on the
Project´s PIU\.
MI Weak procurement capacity of TANESCO TANESCO has already implemented key measures to
address TANESCO´s weak procurement capacity
including a reorganization of the procurement
department and introduction of service level
agreements between the procurement department and
supporting operational departments and hiring a
procurement advisor\. In addition, TANESCO now
also added to the PIU a dedicated Procurement Staff
to work on the TEPAD Project\.
27
MI Weak financial management at TANESCO TANESCO has demonstrated throughout Project
implementation that it has adequate fiduciary capacity\.
The Bank team will continue close monitoring and
supervision of fiduciary aspects\.
ï Rural Energy Agency MI Component B: REA has not extensive experience Component B: REA is fully staffed and operational\. A
(REA) with IDA projects full procurement, financial management and
safeguards capacity assessment of REA as an
implementing agency was undertaken during the
preparation of TEDAP AF 2010 (Component B) and
ranked the institutional capacity as âsatisfactoryâ\.
TEDAP is supporting REA in building its capacity
and developing scalable models for renewable energy
and access expansion\. REA also benefits of technical
assistance under the SIDA Trust Fund executed by the
Bank and the SIDA capacity building program
implemented by a private consulting firm\.
MI Component B: REA does not have much Component B: A procurement capacity building plan
procurement experience with IDA projects was agreed during the design of the AF 2010 for
Component B and is currently being implemented\.
Component B: REA does not have much financial Component B: A financial management capacity
ML
management experience with IDA projects enhancement plan was agreed during the design of the
Additional Financing for Component B and is being
implemented\. REA staff benefited of financial
management training for IDA projects provided by the
Malawi Institute of Management\.
Project Risks
ï Design L Project design is not adequate The AF will support the implementation of key
investments on T&D under Component A that were
designed to improve the capacity of existing networks
in Dar es Salaam, Arusha, and Kilimanjaro by
reducing technical and nontechnical losses and
improving the overall reliability of the system\. The
additional funds to be provided by this AF will allow
28
the pending contracts under Component A to be
processed and implemented before project closing on
March 31, 2015\.
MI Component B\. Delays in the materialization of the IDA approved in 2010 a credit line for rural/renewable
small power projects pipeline energy development under TEDAP AF that provides
long term financing (10-15 years)to local developers
through local commercial banks, on market terms\.
IDA is working with REA on the establishment of a
financing mechanism including a PoA that will
improve the financial viability of the projects and
address the equity gap\.
ï Social and MI Component A: Implementation of the RAP for this Component A: An EMP has been prepared for the
Environmental component could face some resistance from some transmission line and the substation\. Additional EMPs
of the affected people since it involves urban land will be prepared as and when necessary\. Continued
and property\. TANESCO needs to strengthen its Bank supervision of RAP modification and
social safeguards team and monitoring of the RAP implementation\. A systematic monitoring of the RAP
implementation\. TANESCO needs to update the implementation and continued direct oversight of the
RAP to reflect a change in number of PAPs in one contractor by the ownerâs engineer consultant, and
transmission-line segment\. Contractor has prepared continued supervision by the Bank\.
an acceptable EMP for the transmission line and
substation work and needs to be diligent in its
implementation\.
Component B: REA does not have much experience Component B: An ESMF and RPF have been prepared
on safeguards with IDA projects for this component to guide safeguards
implementation\. REA needs to improve its safeguard
capacity\. To address this, REA has already hired a
social scientist who will be solely working on the
safeguards issues related to the rural electrification\. In
addition, an international consultant has been
contracted to improve REA capacity in this regard\.
ï Program and Donor L Lack of cohesiveness among interventions in the Over and above the continued engagement of IDA,
energy sector projects financed by donors NORAD, SIDA, and AfDB in the sector, the GOT and
TANESCO have been able to draw additional donor
interest from Millennium Challenge Corporation of
USA (MCC), EU, Finland, JICA, and South Korea
29
EDCF\. Furthermore, to harmonize the support
provided to the energy sector, the World Bank has
taken the lead in collaborating with SIDA, NORAD,
South Korea EDCF, MCC, JICA, Netherlands, EU,
AfDB and UNDP to design the overall assistance to
the energy sector\.
The off-grid efforts are supported by several trust
funds managed by the Bank: SIDA TF for support to
electricity access and regulation, AFREA Lighting
Rural Tanzania Grant, etc
ï Delivery Quality MI Weak capacity of PIU at TANESCO will affect the An action plan that will strengthen the PIU´s capacity
capacity to deliver Component A of the Project to deliver the Project has been agreed with
TANESCO\. New staff has already been hired and a
dedicated procurement staff supports now the
procurement processes currently under way\.
ML Component B: The household connections may be Component B: The team is working with the client
delayed due to some challenges (equity gap, limited and other donors (SIDA, NORAD) on several
local capacity etc) faced by local developers instruments aimed at mitigating the equity gap risk
(through Carbon Finance Program of Activities, grants
under the Russian Trust Fund etc)\. Moreover, several
instruments under TEDAP (matching grants) and
SIDA Trust Fund provide capacity building to the
developers, local commercial banks and other
stakeholders
30
Overall Risk Rating at Preparation Overall Risk Rating During
Comments
Implementation
This is an AF to an ongoing operation (TEDAP), which has been rated
as Moderately Satisfactory (DO and IP) for the past year\. The rating
has been selected considering that the implementation and procurement
capacity of the implementing agency (TANESCO) has improved over
the last 15 months and is expected to continue on that path as various
measures described above have already or will be put in place,
ML MI including: (i) additional staff for the PIU including a dedicated
procurement specialist, (ii) a revised operational manual, and (iii)
continuous oversight by TANESCO´s management\.
The implementation of Small Power Projects (SPP) Component B has
been satisfactory\.
31
Annex 3: Detailed Description of Project Components
TANZANIA: ADDITIONAL FINANCING - ENERGY DEVELOPMENT AND ACCESS
EXPANSION PROJECT
I\. On-Grid Component (Components A&C)
A\. Summary of Componentsâ main activities
1\. Component A supports investments in TANESCOâs transmission and distribution networks
in Dar es Salaam, Arusha, and Kilimanjaro\. This grid component, once fully implemented, will
improve the capacity of existing networks, thus improving the service quality for existing
customers and allowing new customers to connect to the grid in the three main growth centers of
Tanzania\. Furthermore, these investments will improve the capacity of existing networks thus
improving power system performance by reducing system losses, frequent outages due to
overloaded transformers and old equipment, low and fluctuating voltage conditions and poor
system power factors\.
2\. Most of these investments are either in an advanced stage of procurement or are already
under implementation\. The investments include adding, replacing or upgrading transmission and
distribution lines and substations and medium and low voltage equipment, meters, spare parts,
and tools\. The main rationale of these investments is to create value in the electricity business
and to demonstrate its viability in a replicable manner\. Component A is implemented by
TANESCO\.
3\. At the same time implementation of this Component faced some severe implementation
issues and currently the Componentâs implementation is about 1-2 years delayed\.
4\. Component C supports technical assistance to TANESCO and the MEM for: (i) building
implementation based on a detailed training plan currently under assessment by TANESCO; and
(ii) providing legal, financial and technical advisors to the MEM to develop the next major
hydropower generation project (Ruhudji HPP) on a public private partnership basis\. Except for
the capacity building training and the proposed environmental capacity building measure to
TANESCO, all of those Technical Assistances have been contracted by now and are under
implementation\.
B\. Current status of Component A main activities
5\. Status of Procurements\. The four Distribution Rehabilitation lots have been rebid in early
2010 after a failed first procurement in mid 2009\. This ICB procurement was reviewed at the
Bankâs OPRC level\. During the bidders conference for this procurement there was some
miscommunication with regard to the pricing methodology applicable\. While those Bids had
been requested on an adjustable price basis close to all bidders submitt ed fixed price bids\.
Consequently the Bidding was cancelled but a new bidding was approved by the Bankâs
authorities\. Under the new bidding bids were submitted by 16 firms on November 29, 2010\.
The analysis of the submitted bids is currently on-going and the submission of the Bid evaluation
report is expected in May 2011\. The procurement for these distribution packages are currently
32
delayed by 2 years due mainly to the failed procurement attempt\. However, with an estimated
implementation time of 21 months and an expected contracting of those four distribution lots in
mid 2011, those contracts are expected to be implemented within the current project lifetime\.
6\. The procurement process for the HV distribution and Network Expansion is under
preparation by a related consultancy\. This procurement is now expected to be financed by
TANESCO as per the earlier indications in the main part of this Project Paper\. Regarding the
Metering Sub-Component, the Bank gave its no objection for award of contract under Lot 3 and
the analysis for the Lot 1 and 2 Evaluation Report is ongoing\. It is expected that Lot 2 will be re-
bid due to non-responsive bids\. This Meter Lot 2 is expected to be financed by TANESCO as
one of the counterpart funding measures to bridge the current financing gap\. All the other
procurements of goods are currently under preparation and all consulting services are under
implementation, with the exception of the Marketing Department Study and Training for
Capacity Building\. It is expected that all components under the Credit will be implemented by
the revised Project closing date of March 2015\.
7\. Status of Transmission Contract\. The three transmission lots under Sub-Component A\.1,
were procured in May 2009 and all three contracts became effective in March 2010\. The delay
for effectiveness was mainly due to the processing of the Letter of Credit by TANESCO\. The
contractor has mobilized on the majority of the substations sites and transmission corridors
although on some sites and corridors there are some remaining issues with regard to land sites
and right of way not used as planned originally in the project, which is expected to b e resolved
within the next few months\. Those delays had already an impact on the contract completion date
of March 2012 and the anticipated cost increases have been taken into account in the additional
financing amount calculation\. Additional delays are also experienced due to slow timely
payment of custom duties and clearance of shipments of invoices as well as slow timely release
of pending/new change order proposals of the Contractor, which to some degree could have an
impact on the project cost\. Those additional costs have been taken into account in this
Additional Financing\. Consequently a Tax exemption of the projectâs activities from local
taxation and custom duties has now been agreed with the Ministry of Finance (MOF)\.
C\. Current Rating explanation and brief summary of Rating history of Component A
8\. Component A is currently rated Moderately Satisfactory\. After effectiveness the Component
A implementation started on a satisfactory level with timely launch of all major procurement
processes\. However in late 2008 the procurement process of the transmission and distribution
rehabilitation contracts of Sub-Component A\.1, encountered some severe delays as explained
above\.
9\. Subsequently the IP rating of the Distribution packages related Sub-Component was
downgraded to Moderately Satisfactory in 2009 and the Task Team and TANESCO took various
measures to enhance the procurement implementation performance under Component A
including: (i) provision of additional World Bank procurement training to TANESCOâs TEDAP
team; (ii) engagement of an International Procurement Advisor by TANESCO (financed by this
project); and (iii) reallocation of the TEDAP Task Team Leader from Washington DC to Dar es
Salaam\.
33
10\. While those mitigation measures were proven successful and allowed for an improvement of
implementation speed of the ongoing procurements at that time, Component A faced another
implementation delay that occurred under the 3 transmission rehabilitation contracts,
successfully awarded in May 2009 as explained above\. Those additional set-backs led to a
downgrade of the transmission related sub-component under Component A to Moderately
Satisfactory and given the overall weight of Component A under the Project (currently over 60%
of the total credit amount) the Projectâs overall PDO and IP rating was downgraded to
Moderately satisfactory in 2010\.
11\. During the Mid Term Review in December 2010 additional progress was noted on the
implementation of Component A as most of the Transmission Line sitesâ and substation sitesâ
issues had been resolved or were closed to being resolved\. At the same time the Mid Term
Review revealed a significant financing gap and since the full mobilization of the transmission
line contractor was neither achieved, the Component Aâs and the overall projectâs rating was
kept at Moderately Satisfactory\. This rating is currently maintained\.
12\. However and as explained in the main text of this Project Paper under Section I, the Project
is expected to reach a Satisfactory level, once this Additional financing is approved and the
proposed Action Plan has been implemented and if no new issues are identified\.
II\. Small Power Project Component (Component B)
13\. The implementation of the off-grid component has been satisfactory\. The component has
established a new framework for off-grid electrification to be financed on a public private
partnership basis and the first pilot projects under this framework are being implemented\. The
component was initially implemented by the Ministry of Energy and Minerals but was
transferred to the Rural Energy Agency (REA) in 2010 when REA became fully operational\.
14\. The Component B under the off-grid part consists of four sub-components: (i) small power
generation and distribution (SPGD); (ii) sustainable solar market development (SSMD); (iii)
technical assistance (TA); and (iv) rural/renewable credit line\.
15\. Under the SPGD sub-component, the project has established a comprehensive framework
consisting of (i) streamlined and simplified regulatory procedures for small power projects,
including standardized power purchase agreement (SPPA) and tariff (SPPT), and (ii) financing
package consisting of a performance grant (US$ 500 per connection) and matching grant (for
pre-investment support)\. In 2010, Additional Financing was processed to add one additional two
activity under SPGD â B\.1 e) low-cost electrification pilot, and one new sub-component B\.4
relating to a rural/renewable energy credit line, channeling long-term commercial funding for
rural and renewable projects through Tanzanian commercial banks\.
16\. The SPGD component is on track to reach its targets\. TANESCO has already signed SPPAs
with 5 projects for total of 24 MW, of which 10\.4MW are already in operation, and a Letter of
Intent was signed with additional four projects for 17\.8 MW\. REA has awarded first two
performance grants for 6,000 connections, and three matching grants for a new pipeline of
projects seeking pre-investment support\. Two commercial banks pre-qualified for the credit line,
and two sub-projects are currently being considered for credit line financing\. A study to design a
new low-cost electrification approach was launched in February 2011\.
34
17\. The SSMD component has developed two new approaches to electrification with solar
photovoltaic (PV) systems\. One of the key issues in the past PV projects in Tanzania was high
prices of PV systems and sustainability\. The component is addressing these issues by piloting
new approaches that would aggregate demand in a defined geographic area (reducing costs of
service provision) and require longer term sustainability measures (maintenance, training, market
development activities)\. The project has financed first three sustainable solar market packages
(SSMP) in Rukwa region, which combine installations of PV systems for public institution with
development of commercial market for households and businesses\. The first three packages for
500 public institutions and 8,000 household/business connections were competitively awarded to
a private sector provider, which has already started the installations\. Additional packages are
now prepared for eight districts in five regions, and are expected to be bid out in earl y 2012\. A
parallel PV cluster pilot project is working with rural cooperatives, such as agricultural
association (tea, coffee and cashew nuts) to provide solar home systems to their members, with
the cooperatives serving as demand aggregators and providing credits for their members to buy
Solar Home Systems (SHS)\. The installations are ongoing in two clusters and a scale up to other
cooperatives/regions is now also being prepared\.
18\. The technical assistance sub-component is also implemented satisfactorily\. Main activities
included design and implementation support of SSMP and PV clusters, transaction advice for
SPGD component, and other capacity building activities for REA, MEM and project developers\.
35
Annex 4: Revised Procurement Plan
TANZANIA: ADDITIONAL FINANCING - ENERGY DEVELOPMENT AND ACCESS EXPANSION PROJECT
Revised Procurement Plan
April 28, 2011
1\. Goods, Works, and Non Consulting Services
List of contract packages to be procured following ICB, NCB and direct contracting and other methods of contracting:
Review Remarks/ Status
Estimated Procure Domesti Expected
Ref\. Part of the P- by Bank Implemen-
Contract Description Cost ment c Pref\. Bid-Opening
No\. Project Q* (Prior / ting Agency
(US $) Method (yes/no) Date
Post)
Works/ Supply and Installation â
1 a)
TANESCO
Completed- bids were Contract under implementation
1\.1 5 132/33 kV Substations in DSM A\.1 (Trans\.) Contracted ICB No No Prior opened on 23rd June\. TANESCO
2008
Completed- bids were Contract under implementation
4 132 kV 36Transmisión Lines in
1\.2 A\.1 (Trans\.) Contracted ICB No No Prior opened on 23rd June\. TANESCO
Dar es Salaam
2008
Completed- bids were Contract under implementation
1\.3 1 132/33 kV substation at KIA A\.1 (Trans\.) Contracted ICB No No Prior opened on 23rd June\. TANESCO
2008
Completed- bids were
6 new 33/11 kV substations in
1\.4 A\.1 (Distrib) 16,000,000 ICB No No Prior opened on November TANESCO Bid Evaluation Stage
DSM
29\. 2010
Completed- bids were
Rehabilitation of 5 33/11 kV
1\.5 A\.1 (Distrib) 9,000,000 ICB No No Prior opened on November TANESCO Bid Evaluation Stage
substations in DSM
29\. 2010
Completed- bids were
8 new 33/11 kV substations in
1\.6 A\.1 (Distrib) 14,000,000 ICB No No Prior opened on November TANESCO Bid Evaluation Stage
Arusha and Kilimanjaro
29\. 2010
33 and 11 kV overhead lines in Completed- bids were
1\.7 Dar es Salaam, Arusha and A\.1 (Distrib) 15,000,000 ICB No No Prior opened on November TANESCO Bid Evaluation Stage
Kilimanjaro 29\. 2010
1 b) Works â REA
Selected
1\.8 Low Cost Electrification Pilot B\.2\.a 4,000,000 NCB No No December, 2011 REA Bid preparation
for Prior
36
Review Remarks/ Status
Estimated Procure Domesti Expected
Ref\. Part of the P- by Bank Implemen-
Contract Description Cost ment c Pref\. Bid-Opening
No\. Project Q* (Prior / ting Agency
(US $) Method (yes/no) Date
Post)
2 Goods â TANESCO
Meters, Lot 1-3: Replacement of
60,000 credit meters by prepaid
meters, supply and installation of Bid Evaluation Stage /Contracting stage for
2\.1 a) A\.3, A\.4 9,200,000 ICB No No Prior Completed TANESCO
25,000 new prepaid meters and Lot 3
up to 10,000 new prepaid meters
for the HV cluster;;
Supply and Installation of 1,800
2\.1 b) A\.4 630,000 ICB No No Prior January, 2012 TANESCO Procurement process in preparation\.
Solid State Remote Meters
Centralized Call Center for Dar
2\.2 A\.4 260,000 NCB No No Post January, 2012 TANESCO Procurement process in preparation\.
es Salaam
2\.3 High Value Customer Cell A\.4 130,000 NCB No No Post January, 2012 TANESCO Procurement process in preparation\.
Corporate IT Systems:
Lot1: Commercial Management
System (CMS);
2\.4 Lot 2: Technical service A\.4 3,315,000 ICB No No Prior September, 2011 TANESCO Procurement process in preparation\.
management System (TSMS);
Lot3: Resource Management
System (RMS)
Goods â MEM/REA
3
3\.1 First 3 SSMP packages B\.2\.a Contracted ICB Yes No Prior Completed\. MEM Contract under implementation
3\.2 Second SSMP packages B\.2\.a 3,800,000 ICB Yes No Prior September, 2011 REA Bid preparation
3\.3 IT equipment B\.3 Contracted NCB No No Post Completed MEM Completed
3\.4 Office equipment B\.3 Contracted Shopping No No Post Completed MEM Completed
3\.5 Vehicles B\.3 Contracted NCB No No Prior Completed MEM Completed
3\.6 Office equipment B\.3 50,000 Shopping No No Post September 2011 REA Under Preparation
* P-Q stands for Pre-Qualification
(a) ICB contracts for works estimated to cost above US$5,000,000 equivalent per contract, for goods estimated to cost above US$500,000 equivalent per contract and all direct contracting will be
subject to prior review by the Bank\. However, a specified number of NCB contracts will be identified in the Procurement Plan to be prior reviewed
37
2\. Consulting Services
(a) List of consulting assignments\.
RefNo\. Description of Assignment Part of Estimated Selection Review Expected Implementing Remarks/ Status
the Cost Method by Bank Proposals Submission Agency
Project (US$) (Prior / Post) Date
1 Consulting Services â
TANESCO
1\.1 Training Needs Assessment C\.1\.a Dropped at TANESCO Request; with Self Completed TANESCO Under Implementation
for TANESCO Financing
1\.2 (a) Implementation of C\.1\.b 620,000 Multiple TBD September 2011 TANESCO Procurement to start upon completion of
Capacity Building for Contracts item 1\.1\.
TANESCO â to be identified â TBD
(b) Procurement Advisory C\.1\.b Contracted IC Prior Completed TANESCO Contract Under implementation
1\.3 Consultancy services for A\.5 Contracted QCBS Prior Completed TANESCO Contract Under implementation
training, supervision of
TEDAP Investments &
Project management -
Component A\.1
(transmission)
1\.4 (a) Consultancy services for A\.5 Contracted SSS Prior Completed TANESCO Contract under implementation
preparation of bid packages
for TEDAP - Component A\.1
(distribution)
(b) Consultancy services for A\.5 1,000,000 QCBS Prior Completed6 TANESCO Contract initialed but not signed\. Will start
training, supervision of only after 1\.4a) has been completed and
TEDAP Investments & after No Objection by World Bank\.
Project management -
Component A\.1 (distribution)
1\.5 Consultancy for project A\.5 1,000,000 QCBS Prior November 2011 TANESCO Procurement process in preparation\.
management (A\.3/ A\.4)
1\.6 Planning, design, bid A\.5 Contracted QCBS Prior Completed TANESCO Contract Under implementation
documents, evaluation for HV
Distribution Cluster
1\.7 Consultancy services for A\.5 Contracted QCBS Prior Completed TANESCO Contract under implementation
Corporate Management
Systems: (i) Incorporation of
CMS to improve operational
procedures and customer
information; (ii)
Incorporation of TSMS to
attend to customers claims;
(iii) Incorporation of RMS
(including definition of new
6
A QCBS process for a Time-Based Contract involving Consultancy services (supervision of implementation works up to commissioning and preparation of the final project report) for the TANESCO
Distribution System Reinforcement Project for Dar es Salaam, Arusha and Kilimanjaro was negotiated by TANESCO in May 2006 and an initialed contract was provided with a conditional No
Objection by the Bank in 2006\.
38
RefNo\. Description of Assignment Part of Estimated Selection Review Expected Implementing Remarks/ Status
the Cost Method by Bank Proposals Submission Agency
Project (US$) (Prior / Post) Date
operational procedures)
1\.8 Design and implementation of A\.5 830,000 QCBS Prior September 2011 TANESCO Rebidding to start
the Marketing Department,
including the Centralized call
Center and High Value
Customer Cell
1\.9 Mainstreaming C\.1 263,000 SSS Prior June 2011 TANESCO Procurement under preparation
Implementation of the KST
Reintroduction Management
Plan Advisory\. (One contract
with subtasks)
2 Advisory Services â MEM
2\.1 (a) Legal Advisors for C\.2 Contracted QCBS Prior Completed MEM Contract under implementation
Ruhudji HPP
(b) Financial Advisor for C\.2 Contracted QCBS Prior Completed MEM Contract under implementation
Ruhudji HPP
(c) Technical Advisor for C\.2 3,500,000 QCBS Prior Completed MEM Contract Negotiations
Ruhudji HPP
3 Advisory Services to REA
3\.1 Various Feasibility Studies B\.3 500,000 QCBS Prior September 2011 REA Procurement under preparation
Note: Single Source Selection (SSS) to be adopted subject to clearance by the Bank
â¦â¦â¦â¦ Those lines refer to procurement items that have been completed or are under implementation\.
39
3\. Goods, Works, now to be financed by TANESCO/GOT counterpart funds
Part of Estimated Procure Domesti Review Expected Remarks/ Status
Ref\. P- Implementing
Contract Description the Cost ment c Pref\. by Bank Bid-Opening
No\. Q* Agency
Project (US $) Method (yes/no) (Prior / Post) Date
Works/ Supply and
1
Installation â TANESCO
HV Distribution Network,
Lot 1: Network for 25,000
A\.2, November, To be procured and financed by
1\.8 new customers and new 10,000,000 ICB No No N/A TANESCO
A\.3 2011 TANESCO/GOT counterpart funds
HV Cluster, Lot 2: RMU
switching units
2 Goods â TANESCO
Meters, Lot 2:
2\.1 Procurement of up to A\.3, Rebidding and financed by TANESCO/GOT
5,000,000 ICB No No N/A October 2011 TANESCO
a) 10,000 new three phase A\.4 counterpart funds
prepaid meters split type;
Re-tendering of Vehicles Rebidding and financed by TANESCO/GOT
2\.5 A\.5 500,000 ICB No No N/A October, 2011 TANESCO
for Project Supervision counterpart funds
40
Annex 5: Revised Project Financing Plan including other sources of funds
TANZANIA: ADDITIONAL FINANCING - ENERGY DEVELOPMENT AND ACCESS EXPANSION PROJECT
The table below shows the Financing Plan of the entire Project, including counterpart funds and other sources of funds and
how those financing contributions evolved since the original IDA Board approval of the TEDAP in December 2007\. IDA
sources are shown in US Dollars and have been computed from the approved SDR amounts at the exchange rate applied at
appraisal of each Additional Financing\. The format of the table follows the format of the original Project Appraisal
Documentâs Data Sheet generated in 2007\.
Source Original With Revised With Proposed
Financing Plan Plan Plan
(November 2007) (April 2010) (June 2011)
(US$m) (US$m) (US$m)
Borrower 6\.80 6\.80 22\.30
International Development Association (IDA) 105\.00 130\.00 157\.88
Global Environment Facility (GEF) 6\.50 6\.50 6\.50
Other Donors and Bilateral Agencies 3\.20 3\.20 3\.20
Local Sources of Borrowing Country (Private Sector, unidentified) 13\.55 13\.55 13\.55
Foreign Private Sector (unidentified) 13\.55 13\.55 13\.55
Total 148\.60 173\.60 216\.98
41 | APPROVAL |
P105229 | Documentof
The World Bank
FOROFFICIAL USEONLY
ReportNo: 39892 CN
-
PROJECTAPPRAISALDOCUMENT
ONA
PROPOSEDGRANT FROMTHE
SPECIALCLIMATE CHANGEFUND
(ADMINISTEREDBY THE GLOBALENVIRONMENTFACILITY)
INTHEAMOUNT OFUS$5\.0MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
FORA
MAINSTREAMINGCLIMATE CHANGEADAPTATION
INIRRIGATEDAGRICULTUREPROJECT
March 18, 2008
RuralDevelopment,NaturalResourcesandEnvironment SectorUnit
SustainableDevelopmentDepartment
EastAsia andPacific Region
This documenthas arestricteddistributionandmaybeusedbyrecipientsonly inthe
performanceoftheir official duties\. Itscontentsmaynot otherwisebe disclosedwithout World
Bank authorization\.
CURRENCYEQUIVALENTS
(Exchange Rate Effective May 30,2007)
Currency Unit = Yuan Y/RMB
Y7\.50 = US$1
US$0\.13 = Y 1
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS AND ACRONYMS
3H Basin Huang-Huai-Hai Basin MWR MinistryofWater Resources
AB Agriculture Bureau NDRC NationalDevelopment and Reform
CAD Comprehensive Agriculture Commission
Development O&M Operation & Maintenance
CAS Chinese Academy of Sciences OBD Output-based Disbursements
CATEC County Agro-technical Extension occ Opportunity Cost of Capital
Center OFD/OFW On-Farm DevelopmentlOn-FarmWorks
CBD Project Implementation Plan
cc Convention on Biological Diversity PIP
Climate Change PMO Project Management Office
COCAD County Office of Comprehensive POCAD Provincial Office of Comprehensive
Agriculture Development Agricultural Development
CPMO Central Project Management Office PPC Provincial Planning Commission
EMP Environmental Management Plan PPG Project Preparation Grant
ERR Economic Rate o f Return PPMO Provincial ProjectManagement Office
ET Evapo-transpiration PPRWRP Pro-Poor Rural Water Reform Project
FA Farmers' Association (financed by the UK Dept\. for
FB Finance Bureau International Development)
FMS Financial Management System SCCF Special Climate Change Fund
FRB Forestry Bureau SEPA State (National) Environmental
GEF Global Environment Facility Protection Agency
GOC Government of China SFA State Forestry Administration
IAIL3 Irrigated Agriculture Intensification SIDD Self-managing Irrigation Drainage
I11Project District
MES Monitoringand Evaluation System SOCAD State Office of Comprehensive
MIS Management Information System Agricultural Development
MOA MinistryofAgriculture UNCDD UnitedNations Conventionon Drought
M O O MunicipalPrefecture Office o f and Desertification
Comprehensive Agriculture UNFCCC UnitedNations FrameworkConvention
Development on Climate Change
MOF MinistryofFinance WP Water Productivity
WRB Water ResourcesBureau
WUA Water Users Association
Vice President: James W\. Adams, EAPVP
Country Director: David Dollar, EACCF
Sector Director: Christian Delvoie, EASSD
Sector Manager: Rahul Raturi, EASRE
Task Team Leader: Qun Li,EASRE
CHINA
MainstreamingClimate Change AdaptationinIrrigatedAgriculture Project
CONTENTS
Page
I STRATEGICCONTEXTANDRATIONALE
\. \. 1
A\. Country and sector issues \. 1
B\. Rationale for Bank involvement\. 2
C \. Higher level objectives to which the project contributes\. 3
I1\. PROJECTDESCRIPTION \. 4
A\. Lendinginstrument \. 4
B\. Project development objective andkeyindicators \. 4
C\. Project components\. 4
D\. Lessons learned and reflected inthe project design\. 8
E\. Alternatives considered and reasons for rejection\. 9
I11\. IMPLEMENTATION \. 9
A\. Partnership arrangements \. 9
B\. Institutionaland implementation arrangements \. 10
C\. Monitoring and evaluation o f outcomeshesults\. 13
D Sustainability andReplicability\.
\. 15
E\. Critical risks andpossible controversial aspects\. 15
F\. Grant conditions and covenants\. 16
I V
\. APPRAISAL SUMMARY \. 18
A\. Economic and financial analyses\. 18
B\. Technical\. 19
C\. Fiduciary\. 21
D\. Social\. 21
E \. Environment\. 22
F\. Safeguard policies \. 22
G\. PolicyExceptions and Readiness\. 23
FOR OFFICIAL USEONLY
This document has a restricted distribution and may be used by recipients only in the performance o f
their official duties\. Its contents may not be otherwise disclosed without World Bank authorization\.
Annex 1: Countryand Sector or ProgramBackground \. 24
Annex 2: Major RelatedProjectsFinancedby the Bank and/or other Agencies \.29
Annex 3: ResultsFrameworkandMonitoring \. 30
Annex 4: DetailedProjectDescription \. 34
Annex 5: ProjectCosts \. 42
Annex 6: ImplementationArrangements \. 47
Annex 7: FinancialManagementandDisbursementArrangements \. 50
Annex 8: ProcurementArrangements \. 58
Annex 9: Economicand FinancialAnalysis \. 62
Annex 10: SafeguardPolicyIssues \. 69
Annex 11:ProjectPreparationand Supervision \. 73
Annex 12: Documentsinthe ProjectFile \. 74
Annex 13: Statementof LoansandCredits \. 75
Annex 14: Countryat a Glance \. 81
Annex 15: AdditionalCost Analysis \. 84
Annex 16: STAP RosterReview \. 97
Maps\. 104
CHINA
MAINSTREAMING CLIMATE CHANGE ADAPTATION
INIRRIGATEDAGRICULTURE PROJECT
PROJECT APPRAISAL DOCUMENT
EAST ASIA AND PACIFIC
EASRE
Date: March 18, 2008 Team Leader: Qun Li
Country Director: David R\.Dollar Sectors: Irrigationand drainage (68%);
Sector Managermirector: RahulRatud Agricultural extension andresearch (12%);
Christian Delvoie Generalpublic administration sector (11YO);
Project ID: PO84742 Forestry (9%)
Lending Instrument: SCCF Grant Themes: Other rural development (P); Rural
services and infrastructure (P); Ruralpolicies
and institutions (S); Environmental policies
and institutions (S)
Environmental screening category: B
Global SupplementalID:P105229 Team Leader: Qun Li
Lending Instrument: Specific Investment Loan Sectors: Irrigation and drainage (64%);
Focal Area: C-Climate change Agricultural extension andresearch(16%);
SupplementFully Blended: Partially Blended Generalpublic administration sector (14%);
Forestry (6%)
Themes: Climate change (P); Environmental
policies and institutions (P); Natural disaster
management(P); Water resource management
(P); Rural services and infrastructure (S)
[XI Loan [ ] Credit [XI Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: IBRD LoanUS$20\.00M/SCCF Grant US$5M
Total Bank financing (US$m): US$25 million (of which IBRD loan US$20 million for IAIL3
and SCCF grant ofUS$5 million)
Global Environment Facility (GEF) 4\.73 0\.27 5\.00
GLOBAL ENVIRONMENT - Associated 20\.00 0\.00 20\.00
IBRDFund(IAIL3)
Total: 55\.23 0\.27 55\.50
XZ\.Guan@Mof\.g0V\.cn
ResponsibleAgency:
State Office for Comprehensive Agricultural Development
MinistryofFinance
Beijing
China
Tel: 86-10-8819-1812
I
GEFEstimateddisbursements(BankFY/US$m)
FY 08 09 10 11 12
Annual 0\.30 2\.07 1\.49 0\.86 0\.28
Cumulative 0\.30 2\.37 3\.86 4\.72 5\.00
Does the project depart from the CAS incontent or other significant respects?
Re$ PADI\. C [ ]Yes [XINO
Does the project require any exceptions from Bank policies?
Re$ PAD I K G [ ]Yes [XINO
Have these been approved by Bankmanagement? [ ]Yes [XINO
I s approval for any policy exception sought from the Board? [ ]Yes [XINO
Does the project include any critical risks rated "substantial" or "high"?
Re$ PAD III\.E [ ]Yes [XINO
Does the project meet the Regional criteria for readiness for implementation?
Re$ PAD I K G [XIYes [ ] N o
Project development objective Re$ PAD II\.B\., Technical Annex 3
The project development objective i s to enhance adaptation to climate change in agriculture and
irrigation water management practices through awareness-raising, institutional and capacity
strengthening, and demonstration activities inthe 3H Basin\. This would help mainstream climate
change adaptation measures, techniques, and activities into the national Comprehensive
Agricultural Development (CAD) Program which is China's largest national investment program
inirrigatedagriculture\.
The mainproject development impact indicators would be: (a) increased climate change
adaptation awareness o f farmers, Water User Association (WUA) and ProfessionalAssociations
(FA)members, technical staff, andofficials (percentage o fpeople); (b) relevant climate change
adaptation measures implementedinselected demonstration areas (number o fhectares) andby
participatory stakeholders (number o fhouseholds); and (c) documents issued by
SOCAD/POCADs/COCADs integratingadaptation policies, measures and activities (through
policy briefs, government reports, implementation and/or replication plans)\.
Global Environment objective
N\.A\.
Project description Re$ PAD II\.C\., TechnicalAnnex 4
Component1\. Identificationandprioritizationof adaptationoptions\.Adaptation involves
making adjustments ineconomic, social or ecological systems inresponse to actual or expected
climatic changes andtheir effects or impacts\. The component will analyze the impacts o f climate
change and thus i s important for measuringvulnerability, andidentifyingwhat specifically
should be done indifferent places over different time periods to facilitate adaptation\.
Component2\. Demonstrationandimplementationof adaptationmeasures\.The purpose o f
this component is to introduce, demonstrate andimplement the specific adaptation measures in
selected demonstration areas, and adjust and integrate appropriate adaptation measures into the
implementation of the IAIL3 project, inorder to reduce vulnerability to climate change inthe 3 H
Basin\.
Component3\. MainstreamingadaptationintonationalCAD programandinstitutional
strengthening\.The component would aim at integratingandmainstreamingclimate change
adaptation into the national C A D program, including a series o f capacity building, technical
assistance, knowledge sharing, public awareness activities, and preparation o f a "National
Climate Change Adaptation Plan" for C A D by SOCAD, with the close cooperation o f CAS, the
NDRC and MOFnational climate change adaptation offices\.
Which safeguard policies are triggered, if any? Re$ PAD I K F, Technical Annex 10
Environmental Assessment (OP/BP/GP 4\.01)
Indigenous Peoples (OD 4\.20, being revised as OP 4\.10)
The proposedproject will bringnew concepts o frisk management, new standards inirrigation
management andinfrastructure, and the use o f natural resilience (land, water, forests) to
moderate the impact o f extreme weather conditions and climate change\. Therefore, the project
has been classified as a category C project (see Annex 10 for details)\.
Significant, non-standard conditions, ifany, for:
Re$ PAD IIL F\.
Board presentation:
None\.
Effectivenessconditions\. Confirmation from the Recipient and eachProject Province,
respectively, which the GEF Grant Agreement and GEF Project Agreement have beenduly
authorized or ratified, and are legally bindingupon the Recipient and each project province in
accordance with their terms\.
Covenantsapplicableto projectimplementation\. The mainlegal covenants are:
(a) The RecipientRroject Provinces shall, throughout the period o f implementation o f the
Project, promptly inform the World Bank o f any identified adverse impact and take
measures, satisfactory to the World Bank, to mitigate the identified adverse impacts,
including measures set out in the relevant environmental and resettlement plans and
policies referred to inthe IAIL3 Loan Agreement;
The Recipientproject Provinces shall, no later than September 1, 2008, develop and
install a results-based monitoring and evaluation system and a management
information system focusing on assessing the effectiveness o f climate change
adaptation measures and link and coordinate said systems with the monitoring and
evaluation system o f the IAIL 3 Project\. The Recipient shall maintain and operate
said systems ina manner satisfactory to the World Bank;
The Recipient shall, no later than June 30, 2011,formulate policy recommendations
and an action plan on climate change adaptation for the CAD Program focusing, inter
alia, on the application o f adaptation policies and measures in the areas o f irrigated
agriculture and water resources management and development, satisfactory to the
World Bank\. The recipient shall initiate implementationplanina manner satisfactory
to the World Bank;
The Recipient shall, no later than June 30, 2009, establish a data, metadata, and
knowledge framework, satisfactory to the World Bank for collecting and developing
modeling information relating to climate change adaptation measures developed
under the project\. The Recipient shall maintain and utilize said framework through
SOCAD, and ensure that the Project Provinces utilize said framework, all ina manner
satisfactory to the World Bank and for the purpose o f ensuring that the lessons
learned from the implementation o f the activities under the Project are widely
disseminated and practiced;
The RecipientProject Provinces shall maintain throughout the period of
implementation o f the project: (i) central, provincial and lower-level (at municipal
the
and county levels) Project Leading Groups, with terms o f reference, composition and
other resources acceptable to the World Bank, to be responsible for providing policy
guidance and inter-agency coordination for the implementation of the Project; and (ii)
the central, provincial and lower-level (at municipal and county levels) Project
Management Office, with terms o f reference, staffing and other resources acceptable
to the World Bank, to be responsible for overall project implementation and
management o f its respective activities, timely allocation o f counterpart fimds for the
project implementation, and Project monitoring, evaluation and reporting at each
level;
The Recipientproject Provinces shall maintain a team o f mobile scientific and
technical experts (MSTE) at the central, provincial and lower level (as a part o f the
IAIL3 MSTE), including experts with adequate qualifications and experience in
climate change adaptationmeasures, with terms o f reference, compositions, and other
resources acceptable to the World Bank, to be responsible for providing advice to
respective PMOSon technical matters relating the Project implementation; and
The Recipient shall prepare and submit to the Bank the following reports: (i)semi-
annual progress reports by February 15 and August 15 each year summarizing, inter
alia, physical and financial progress during the previous half-year and the latest
implementation status from project start-up, and project impacts based on agreed
monitoring indicators; (ii)annual project M&E report, including the social and
environmental safeguards monitoring and evaluation with groundwater and ET
management plan and impacts in Hebei, and development o f WUA, FALFPCO in
each province, summarizing activities, findings, annual evaluation results, technical
and scientific recommendations from the MSTE and actions taken for the previous
year by SOCADPOCAD; (iii) preparing and furnishing to the Bankby June 30,2010
o f a Mid-term Review Report, summarizing, inter alia, problems and issues
encountered during implementation, revised costs estimates, proposed revised
components and covenants, results of project monitoring and evaluation activities,
measures recommended to ensure the project completion before December 31, 2011
and to further its objectives, and implementation o f measures agreed at the Mid-term
Review; and (iv) the Recipient's Implementation Completion Report (ICR) within six
months after project completion\.
Retroactive Financing\. As SOCAD requested, retroactive financing from the grant for
some project activities incurred after September 30, 2007, will be available up to an
aggregated of $310,000\. The retroactive financing will cover all activities in respect o f all
the expenditure categories\.
I\. STRATEGICCONTEXTANDRATIONALE
A\. Country and sector issues
1\. The North China Plain or Huang-Huai-Hai River Basin (3-H Basin) is particularly
vulnerable to the impact o f climate change\. Overall, China i s in the bottom 25 percent o f
countries in terms o f water availability per capita\. Within China, 3 H Basin has only about one-
third o fthe China average andabout halfthe per capitawater availability specifiedbythe United
Nations as the standard for maintaining socio-economic and environmental development\. At the
same time, the 3H Basin i s China's prime agricultural area and breadbasket, producing some 50
percent o f national grain output and accounting for about 35 percent o f national industrial output\.
The basin also has a population o f 425 millionpeople\. Water demand inthe region, already high,
i s growing rapidly\. However, available water resources generally are already fully allocated and
often overexploited\. Moreover, in several locations, increasing water quality degradation
exacerbates water shortage problems\. The projected climate changes could further decrease
water stream flows and groundwater recharge in the Basin, while concurrently increasing
irrigation water demand and withdrawals due to higher temperatures and consequent higher crop
evapo-transpiration (ET)\.
2\. It has been shown recently that the stagnation o f grain production for a number o f
consecutive years in the 3 H Basin area i s linked to climate variability\. China's irrigation-based
agriculture inthis region will be further negatively affected by climate change, and remedial and
adaptation measures need to be taken to ameliorate these effects\. Action i s needed quickly
because it takes time for such measures to have a significant impact\.
3\. Adaptation involves making adjustments in the management o f productive activities,
assets and natural resources (inthis case, agriculture and water) inresponse to actual or expected
climatic changes and their effects or impacts\. The goal is to reduce the vulnerability o f
communities, regions and activities to climate change\. Especially important with regard to
adaptation are: (a) the assessment o f climate change impacts and vulnerabilities; and (b) the
development and evaluation o f climate change response and adaptation options\.
4\. These issues and their relationship to climate change are only recently becoming clear
and their seriousness understood\. In fact, past and current interventions generally have not
addressed climate change and how to adapt to it\. This is the case, for example, with the
country's National Comprehensive Agricultural Development Program (CAD) and the Bank-
supported Irrigated Agriculture Intensification I11Project (IAIL3) which i s part of the C A D
Program\. The objectives and components o f IAIL3 are important but do not consider climate
change factors, their likely impacts and how to prevent or reduce their negative impacts\.
However, climate change adaptation has recently become an important national priority inChina
and IAIL3 needs to be strengthened to include objective assessments o f measures and priorities
for adaptation to climate change and to address gaps inthe original design o f IAIL3\. Indeed, the
main objectives o f IAIL3 are to increase water and agriculture productivity inlow- and medium-
yield farm land areas, raise farmers' incomes and promote sustainable participatory rural water
resources management and agro-ecological environmental management in the 3-H Basin\. The
main components o f IAIL3, especially on water-saving irrigation, drainage, agro-ecological
environmental protection and management are likely focuses o f any future adaptation to climate
change strategy\. However, IAIL3 components were not designed with climate change as an
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impact factor, which means that there may be a number o f vulnerabilities due to increasing
climate variability and change that need to be addressed\.
5\. IAIL3 i s unusually well suited to the purpose o f introducing and demonstrating climate
change adaptation measures\. The project covers the primary food production region in China,
the 3 H Basin\. This basin i s particularly vulnerable to the impacts o f climate change and
according to some recent research has already begun to feel the effects o f climate change\.
IAIL3's largest components are water saving irrigation and water saving agriculture, which are
among the most likely areas to be affected adversely by climate change\. Morevover, as part of
the national C A D program, IAIL3 offers a potential path for mainstreaming adaptation measures
into a major national program\. IAIL3 i s implemented by the State Office for Comprehensive
Agricultural Development (SOCAD) in the Ministry o f Finance (MOF) which, because o f its
position, has significant influence with all provinces and close working arrangements with
central agencies concerned with adaptation to climate change, including the ministries o f Water
Resources and Agriculture and the State Forest Administration\. Finally, M I L 3 i s based on a
flexible "program approach" design which facilitates the incorporation o f measures to
demonstrate climate change adaptation and to fill adaptation gaps duringproject implementation,
since such measures were not included inthe original project\. The proposed GEF/SCCF (Special
Climate Change Fund) financed project has been designed as a gap-filling and programmatic
operation that would focus on the 3 H region with possible expansion to other regions as
appropriate, based on initial experience with the project\.
6\. China ratified the United Nations Framework Convention on Climate Change (UNFCCC)
and the Kyoto Protocol inJanuary 1993 and August 2002, respectively\. Itjoined the Convention
on Biological Diversity and the United Nations Convention on Drought and Desertification\.
Therefore, China i s eligible for SCCF administered by the Global Environment Facility (GEF)\.
More recently, China has also developed a strong policy and strategic framework to support
climate change adaptation, setting out several national environment and sustainable development
policies, strategies and programs, and identifying adaptation to climate change as a national
priority\. These policies and programs relate directly to China's Initial National Communication
on Climate Change, the National Strategy for Climate Change, the New Environmental
Protection Standards, the CAD, and the ongoing IAIL3 Project\.
B\. Rationale for Bank involvement
7\. The proposedproject is consistent with the Bank's assistance to China inthe rural sector,
focused on reducing the inequality between urban and rural areas and on facilitating the shifts
from subsistence to commercial agriculture and from quantity to quality and value o fproduction\.
The proposed project is also consistent with the Bank's recent China Water Resources
Assistance Strategy, which confirmed that better water resources management was central to
sustainable economic growth and poverty reduction\. The project i s highly innovative and can
help establish a model which is very relevant to GoC's priority o fusingthe Bankto help develop
and explore adaptation measures to address agricultural and associated natural resource
management vulnerabilities to climate change\. Adaptation concepts and measures developed
under this project will thus further enhance the relevance, quality and sustainability o f the
investments and work that the Bank i s supporting in rural China\. In addition, the proposed
project will contribute to the successful implementation o f the Bank's "China Country
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Partnership Strategy (2006-20 10)'' which focuses on economic integration, poverty reduction
andsustainable development\.
8\. Agriculture and rural development are central to China's strategy to accelerate economic
growth and poverty reduction\. However, China has little experience dealing with adaptation to
climate change in agriculture and water resource management\. With its global perspective, GEF
(in partnership with the Bank) is the leading body in this new field and is well positioned to
provide knowledge and institutional experience gained from its programs worldwide\.
9\. Implementation o f the proposed project will require close coordination and integration
with IAIL3 and therefore the Bank's direct involvement will be required\. Moreover, as the
executing agency for the proposed project, the Bank has the capacity to mobilize worldwide
expertise on a wide range o f aspects related to project management, agriculture, water resources
management and climate change adaptation to assist in both project preparation and
implementation\. Inaddition, results and lessons from other Bank-executed, related activities can
be utilized under this project\. Finally, the Bank already has supported large investments in
agriculture, irrigation and rural development in China; this provides strong incentives for the
Bank to support effective adaptation measures which can help make China's agriculture and
irrigation more resilient against climate change and variability\.
10\. In addition, the Bank is the Implementing Agency of the ChindGEF Integrated
Management o f Haihe River Basin Water Resource and Water Environment project that focuses
on reforming water administration institutions and related capacity-building\. The project
includes the concept of E T management in order to increase water-use efficiency, mitigate water
resource shortages and improve the ecological environment\. The Haihe project also includes
Hebei Province but project areas o f the two projects do not overlap and the Haihe project does
not include adaptation to climate change\. However, the proposed GEF/SCCF adaptation project
team has coordinated with Haihe project team during the project preparation, and these two
projects would further coordinate and complement each other duringimplementation\.
C\. Higher level objectives to which the project contributes
11\. The higher level objectives to which the proposed GEF/SCCF project contributes are: (a)
to strengthen the resilience o f agricultural development to climate change in North China; and
(b) to help mainstream climate change adaptation in irrigation and rural water resource
management\.
12\. The project is consistent with the goals o f the Bank's assistance to China in the rural
sector, which i s focused on reducing inequality between urban and rural areas and on facilitating
the shift from subsistence to commercial agriculture and from quantity to quality of production\.
The successfil implementation o f this project will contribute to the approved "China Country
Partnership Strategy (2006-20 1O)", which focuses on economic integration, poverty and
sustainable development inChina\.
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11\. PROJECTDESCRIPTION
A\. Lendinginstrument
13\. The proposed project would be partially blended with the ongoing IAIL3 project
(P084742)\. Its cost totals US$55\.5 million to be funded by: (a) a GEF/SCCF grant (from the
Special Climate Change Fund) o f US$5 million; and (b) US$ 50\.5 million financed under the
ongoing IAIL3 including US$30\.5 million from government (SOCAD) and US$20 million from
the IBRD loan\.
B\. Projectdevelopmentobjectiveandkeyindicators
14\. The project development objective i s to enhance adaptation to climate change in
agriculture and irrigation water management practices through awareness-raising, institutional
and capacity strengthening and demonstration activities in the 3 H Basin\. This would assist in
mainstreaming climate change adaptation measures, techniques and activities into the national
Comprehensive Agricultural Development (CAD) Program which i s China's largest national
investmentprogram inimgated agriculture\.
15\. The main project development impact indicators would be: (a) increased climate change
adaptation awareness o f farmers, Water User Association (WUA) and Farmer Professional
Associations (FA) members, technical staff and officials (percentage o f people); (b) relevant
climate change adaptation measures implemented in selected demonstration areas (number o f
hectares) and by participatory stakeholders (number o f households); and (c) documents issuedby
SOCAD/POCADs/COCADs integrating adaptation policies, measures and activities (through
policy briefs, government reports, implementation and/or replication plans)\.
C\. Projectcomponents
16\. The project objectives would be achieved through the implementation o f three
components inthe six project provinces: Hebei, Henan, Shandong, Anhui, Jiangsu, and Ningxia\.
Implementation o f these components would lead to the integration o f climate change adaptation
measures, techniques and activities into the national C A D program\. Based on a preliminary gap
analysis o f IAIL3 from a climate change adaptation perspective, these components can be
described as follows:
17\. Component 1: Identification and Prioritization of Adaptation Options (US$OSO
millon from GEF/SCCF)\. Adaptation involves making adjustments in economic, social or
ecological systems in response to actual or expected climatic changes and their effects or
impacts\. The goal o f adaptation i s to reduce the vulnerability o f individuals, communities,
regions or activities to climatic change and variability\. Understanding adaptation is important for
two reasons: (a) adaptation will reduce the final impacts o f climate change and thus i s important
for mitigating vulnerability; and (b) what specifically should be done in different places over
different time periods to facilitate adaptation needs to be determined\. Preliminary work on this
component was started during project preparation under the Project Preparation Grant (PPG)\.
Under the proposed project, this work would continue in order to: (a) finalize conclusions and
recommendations from the PPG work; and (b) undertake additional work on impact assessment,
4
gap analysis and selection and prioritization o f measures to expand adaptation to C A D
investment areas, The work would integrate climatological, hydrological, and economic analyses
through the related models and studies\. The analyses would capture climate change impact and
adaptations for both irrigated agricultural development (climate change sensitivity at the local
levels) and irrigation water resources management (at the river basin level)\. The study outcomes
would be reviewed and disseminated by SOCAD and the six project provinces in accordance
with their specific circumstances andpolicies\. Specific activities underthis component include:
(a) Impact assessment of climate change in 3-HBasin andproject area, including: (i)
stocktaking o f previous studies; (ii)testing and adapting o f existing hydrology and
agricultural production models to be dynamic and responsive to climate and resulting
changing land cover-land use (including cropping patterns); (iii)assessing of the
sensitivity o f 3-H Basin agriculture to climate andwater availability; and (iv) conducting
farm households analyses inthe project area and elsewhere inthe 3 H Basin to determine
climate sensitivity, water demand, adaptation response and the effectiveness o f
household- and community-level adaptation options in the face o f projected climate
change\. The work would integrate all the relevant climatological, hydrological and
economic aspects; capture climate change impact and adaptations inboth agriculture and
irrigation (climate sensitivity); and in water resources management (at the river basin
level)\. The use o f these state-of-the-art modeling techniques to integrate climate,
hydrology and agricultural economics over key spatial and time scales i s an important
and essential innovation in the approaches that will be adopted under the proposed
project;
(b) Gap analysis and study on adaptation measures\. Adaptation measures for climate
change were not included in the design o f IAIL3 and a gap analysis was conducted for
IAIL3 during preparation o f the GEF/SCCF project\. Preliminary key gaps in the design
o f M I L 3 were identified with regard to climate change and adaptation to climate change
in relation to knowledge and public awareness, design of irrigation and drainage
facilities, agricultural practices, farmer participation and economic cooperative
organizations, water and soil conservation and biogas activities\. During GEF/SCCF
project implementation, the gap analysis would be expanded to cover more IAIL3 and
C A D program areas inthe six project provinces\. This analysis would identifythe needed
adaptation measures and help integrate those measures more broadly into IAIL3 and the
C A D program\. SOCAD and the six POCADs would organize national, provincial and
local scientists and experts to carry out any such additional gap analysis work at the
national, provincial and local levels as needed; and
(c) Prioritization and selection of adaptation measures and demonstration areas\.
Based on preliminary results from project preparation work, activities under this sub-
component would include: (i)identification and selection o f demonstration areas for
adaptation, giving priority to areas with both high vulnerability and high likelihood o f
making significant impacts; (ii)use o f scientific and technical analysis to develop
potential adaptation options in terms o f content, implementation, costs and impacts o f
various climate change scenarios on surface and groundwater and on flood and drought
predictions and risks, in order to identify and select the most cost-effective adaptation
measures for each project province; and (iii) consultations with farmers and discussions
5
with provincial and county experts to help incorporate empirical experiences into
adaptation measures duringproject implementation\.
18\. Component 2: Demonstration and Implementation of Adaptation Measures (US$48\.43
million comprising US$2\.25millionfrom GEF/SCCF and US$46\.18million co-financed from
IAIL3)\. This component aims to introduce, demonstrate, and implement specific climate change
adaptation measures in selected demonstration areas; and to integrate appropriate adaptation
measures into the implementation o f IAIL3 to help reduce vulnerability to climate change inthe
3 H Basin\. The adaptation measures would focus mainly on agricultural production andpractices
and on irrigation water management anduse, taking into account expected temperature increases
due to climate change\. Adaptation measures would be carried out in conjunction with the
ongoing IAIL3 project and would be expanded to cover as much o f the IAIL3 project area as
possible\. The two sub-components would be as follows:
(a) Demonstration of Climate Change Adaptation Measures (US$2\.25 million from
GEFBCCF)\. Based on the gap analysis o f IAIL3 and preliminary conclusions o f
scientific studies under Component 1, initially identified demonstration adaptation
measures for each specific demonstration area would be introduced and demonstrated in
each related sub-region o f the 3-H Basin (focusing on agricultural production and
irrigation water management and utilization)\. The selected specific new activities (in
addition to those included in IAIL3) include the following: (i)water resources
management measures based on each sub-region 's conditions, including the development
o f catchments (natural and artificial ponds) to enhance rainfall storage capacity and
reduce water logging threats, well-based irrigation with reinforced prevention and
resistance to drought and advanced field "real" water-saving irrigation technologies and
works; (ii)adaptation-oriented farming practices, including adjustment o f farming
patterns to reduce water consumption (proportion o f wheat-rice, wheat-rape seed and
other crops would be adjusted based on the climate change tendency), and combining
drainage with irrigation to avoid soil deterioration; (iii)
water-savings-oriented farming
technologies, including development o f drought resistant varieties, "seeded in water"
practices, membrane and biological water conservation to deal with water scarcity, and
land and eco-system rehabilitation and amelioration; and (iv) supporting through SCCF
sub-grant financing, the development and expansion o f Farmers Associations and Water
Users Associations for carrying out water-saving management and agricultural adaptation
measures\. The identified innovative adaptation activities would be implemented and
tested in selected demonstration areas, and then supported, expanded and promoted
where appropriate in all IAIL3 project areas, as described in (b)\. The specific additional
activities andmeasures supported under the project are detailed inAnnex 4\.
(b) Integration of Adaptation Measures into IAIL3 Project Implementation Activities
(US$46\.18 million from IAIL3 comprising US$18\.47 million IBRD loan and US$27\.71
million counterpartfunding)\. The proposed component would focus on IAIL3 activities
that are at risk from climate change\. Based on the gap analysis o f IAIL3, scientific and
modeling analysis under Component 1 and lessons from demonstration sites, this sub-
component would review and refine the original IAIL3 technical design to help "climate
proof' IAIL3 project activities\. M I L 3 activities related to climate change adaptation
would be modified and expanded as appropriate, including in particular: (i) engineering
water-saving measures, including various water-saving irrigation and drainage
6
technologies and facilities; (ii)agronomic water-saving measures, including land
leveling, deep plowing, minimum tillage, balanced fertilizer use, use o f crop residues,
introduction o f adaptive varieties and high quality seeds, adaptive on-farm forestry belts
(to be financed by sub-grants), etc\.; and (iii)
water-saving management measures such as
volumetric water charges and high quality WUAs/FAs (also financed through sub-
grants)\. IAIL3 activities would be enhanced to respond to actual or expected short-term
climate variability and long-term climate change and their effects ineach specific region\.
All identified IAIL3 activities related to adaptation measures would be supported and
expanded where appropriate (see the detailed activities inAnnex 4)\.
19\. Component 3: Mainstreaming Adaptation into National CAD Program and
Institutional Strengthening (US$6\.58 million, including US$2\.25 million from GEF/SCCF
and US$4\.32 million eo-financed from IAZL3)\. The component would aim to integrate and
mainstream climate change adaptation into the ongoing national C A D program\. Key activities
would be a series o f capacity building,technical assistance, knowledge sharing, public awareness
activities and preparation o f a "National Climate Change Adaptation Plan" for C A D by SOCAD,
with the close cooperation o f Chinese Academy o f Sciences (CAS), the NDRC and M O F
national climate change adaptation offices\. Sub-components and activities would include the
following:
(a) Research and development of adaptation policies (US$112,400from GEF/SCCF),
including development o f the national CAD climate change adaptation policy and
replication and implementation plans;
(b) Institutional strengthening and capacity building on climate change adaptation
(US$5\.25 million, US$1,43 million from GEF/SCCF and US$3\.82 million eo-financed
from IAIL3), including training, workshops, technical assistance, study tours and
information dissemination;
(c) Results-based monitoring and evaluation (M&E) (US$221,400from GEF/SCCF),
including establishment o f a data, metadata, knowledge framework and implementation
o f a results-based M&E system and a management information system (MIS) focusing on
adaptation measures\. Adaptation M&E would be linked to and coordinated with (and
may be added on to) the ongoing comprehensive M&E system o f IAIL3 and will be
designed to assess the effectiveness o f adaptation implementation mechanisms and
measures; and
(d) Project management (US$990,000, US$490,000 from GEF/SCCF and
US$500,000 eo-financed from IAIL3 ) including support for project implementation
management and dealing with project and implementation related issues such as
procurement, financial management, the project Management Information System (MIS)
and other incremental costs\. In particular, the development o f mechanisms to promote
and support cooperative work on adaptation between MOF, NDRC and SOCAD would
be supported\.
20\. Overall, the project logical framework that has been followed for the general design o f
the project, and the identification and sequencing o f project components can be summarized in
the diagram below:
7
Analytic work on
Demonstrations
climate change
L J
* CAD Program
design o f IAIL3 mainly "climate proof' A'
dealing with water
conservation
D\. Lessonslearnedandreflectedinthe projectdesign
21\. Although China i s still exploring specific climate change adaptation measures and
methodologies, lessons from experience have shown that there i s a wide range o f possible
adaptations with the potential to reduce adverse climatic change impacts\. Many o f these
adaptations -especially in agriculture and water applications - represent improved resource
management and many have benefits in dealing with current climatic hazards as well as with
future climatic risks\.
22\. Duringproject preparation, Chinese stakeholders, including scientists and farmers under
the leadership o f SOCAD and based on scientific information and empirical experiences, agreed
on two categories o f adaptation measures: (a) modification o f current practices to adapt to
changed climate trends inorder to avoid natural disadvantages or disasters; and (b) opportunistic
search for practices favored by global warming which will also better benefit humans and the
ecological environment\. With this pro-active adaptation approach, adaptation measures would
embrace a much broader scope and thus adaptation could support and accelerate the process of
transition from traditional development into sustainable development\.
23\. Adaptation measures could include: (a) using advanced water-saving irrigation
technologies and management to improve both technical and economic water-use efficiency; (b)
changing cropping patterns and practices including timing o f farm operations and mulching to
conserve soil moisture; (c) developing and using drought and flood-tolerant crop varieties; (d)
broader utilization o f biogas digesters, taking advantage o f rising temperature, faster growth o f
micro-organisms, more rapid fermentation and increased biomass production; and (e) increased
use o f greenhouses to allow farmers to utilize the favorable factors o f climate warming to
advance crop cultivation, save water and improve the capacity o f farmers inproduction o f cash
crops\. The modeling framework and information system established under Component 1would
be utilized to evaluate adaptation tradeoffs throughout the region\.
24\. It is important to highlight that current knowledge o f adaptation and adaptive capacity is
generally insufficient for rigorous evaluation o f planned adaptation options, measures and
8
policies\. A key need i s to enhance the process o f consultation and decision-making on
adaptation, conditions that stimulate or constrain adaptation and the role o f non-climatic factors\.
In addition, existing methods for evaluation adaptation options have limitations\. For example,
economic benefits and costs are important criteria but are not always sufficient to determine the
appropriateness o f adaptation measures\. Social andinstitutional criteria are also very important\.
25\. The proposed project would also coordinate with the GEF-supported Hai Basin
Integrated Water and Environmental Management Project which was designed before the role o f
climate change adaptation was recognized but which includes a number o f activities which are
closely relatedto adaptation\.
E\. Alternativesconsideredandreasonsfor rejection
26\. The proposed GEF/SCCF project has been designed to be blended with IAIL3\. An
independent "stand alone" and smaller operation using the GEF/SCCF grant for adaptation to
climate change only would have been inappropriate because the contemplated adaptation
activities are numerous and their testing clearly calls for a wider area o f implementation and a
longer time period\. Inaddition, IAIL3 has included in its design a certain number o f activities
that can be characterized as good adaptation measures to cope with climate change\. Moreover, a
stand-alone project would present much less opportunity for mainstreaming o f climate change
policy and adaptation measures directly into a Bank-financed project and the national C A D
program\.
27\. The partial blending o f the proposedproject with IAIL3would be based on a gap-filling
analysis utilizing a programmatic approach adopted under IAIL3\. This would lead to
identification o f specific priority climate change issues that need to be addressed under the
project\. The proposed blending as proposed under the project would infact help: (a) identifythe
adaptation gaps inIAIL3 and expand and deepen responses as needed; (b) provide an adaptation
framework for comprehensive and cross-sectoral interventions; (c) support farmer participation,
institutional capacity building and public awareness on climate change and adaptation; (d) create
a favorable environment for more highly integrated agriculture and water management and for
replication o f good practices; and (e) avoid practices which run counter to climate change
adaptation needs\.
111\. IMPLEMENTATION
A\. Partnershiparrangements
28\. The partners for the GEF/SCCF project are the government, the concerned provincial and
local governments, the farmers and the World Bank\. To establish climate change adaptation
priorities, needs and constraints, direct engagement with stakeholders i s essential\. The major
direct intended beneficiaries o f the project are farmers and local communities in the
demonstration sites and the counties where these sites are located\. Farmers, the private sector
andgovernments at other levels could also benefit from the project once it is replicated\.
9
29\. It is fimdamental to gather the most useful stakeholder input and this requires careful
planning and an inclusive stakeholder dialogue process\. This process should: (a) include a wide
range o fnecessary viewpoints; and (b) enable the project to respondto adaptationpriorities\.
30\. The stakeholder participation process will be interactive, with the initial project team
consulting with a small group o f stakeholders, to inform them on the initial development o f
project objectives, and then the full project team engaging a broad group o f stakeholders
throughout the project\. A documentation log will be kept to retain institutional memory o f key
views, recommendations and agreed decisions by the stakeholders\. It is important to note that
participation will apply to each o f the project components during both the design and
implementationstages\.
31\. The major stakeholders o f the project are:
(a) National government departments, including Ministry of Finance (MOF),
National Development and Reform Commission (NDRC), Ministry o f Water Resources
(MWR),Ministry ofAgriculture (MOA), State Environmental ProtectionAdministration
(SEPA) and State Forestry Administration (SFA);
(b) National andregional research institutions and universities;
(c) Local governments and government staff, especially Finance Bureaus, Planning
Commissions, Water Resource Bureaus (WRBs), Irrigation Districts (IDS),Water
Management Stations (WMSs), Agriculture Bureaus (ABS)andForestry Bureaus (FBs);
(d) The private sector including local input suppliers, traderdmerchants and
dragonhead enterprises;
(e) Civil society and organizations, including Water User Associations (WAS),
Farmer Associations (FAs) andFarmer Cooperatives; and
(f) Farmers and local communities\.
B\. Institutionalandimplementationarrangements
32\. The GEF/SCCF project will share project management and institutional arrangements for
implementation with IAIL3\. The project would have a four-year implementation period up to
December 31,201 1\. The project closing date will therefore be June 30,2012\.
33\. Project Management and institutional responsibilities\. Effective institutional
management arrangements for the GEF/SCCF project are crucial to its success, especially in
view o fthe needto ensure an adequate breadth o fparticipationinimplementingthis new type o f
project and the objective o f integrating climate change adaptation into the national C A D
Program\. As the implementing agency for the GEF/SCCF project, SOCAD will be responsible
for management, monitoring and supervision o f project implementation, ensuring that agreed
requirements and conditions are met and liaising with the Bank on behalf o f the six project
provinces\. As under IAIL3, MWR, MOA, SFA, SEPA and other agencies as needed, will
provide technical support to ensure the project i s implementedsmoothly and according to plans\.
It is particularly important that NDRC and its lower-level offices participate in design and
preparation for implementation and provide implementation support; NDRC i s the lead agency
for climate change issues in China and this i s the first project on climate change adaptation\.
10
Local C A D offices and IAIL3 PMOs will be responsible for project implementation at the field
level, under the direction and coordination o f the concerned POCADs and the leadership and
guidance o f SOCAD\. Management arrangements for the GEF/SCCF project would be integrated
with IAIL3, and the following organizational and institutional arrangements for management o f
the GEF/SCCF project inconjunctionwith IAIL3 have been agreed and established\.
(a) Project Leading Groups (PLGs)\. PLGs for the proposedproject, from the central
level down to provincial and county government levels, will be the same as for IAIL3,
but will be strengthened with special experts and scientists concerned with climate
change and adaptation\. The central PLG would be chaired by the MOF vice-minister
responsible for the project and would include, as needed, members from MOF, NDRC,
MWR, MOA, SFB, SEPA and other concerned agencies and experts\. The provincial
PLGs would be chaired by the provincial vice-governor responsible for agriculture with
members from the provincial Finance Bureau, Provincial Planning Commission, WRB,
AB, FRB, EPA and other agencies and institutes as appropriate\. It is important that the
PPCs as representatives o f NDRC participate in the PLGs and provide support to the
project; and that the representatives from the All China Women's Federation also
participate where possible\. The major responsibilities o f the PLGs are to provide
coordination, policy-level support and policy guidance\. City and county PLGs will
follow the same model o f the provincial PLG and have similar organizational format,
composition and responsibilities\.
(b) Central Project Management Office (CPMO)\. The national level or Central
PMO (CPMO) inSOCAD for IAIL3 would be the CPMO for the GEF/SCCF project, but
with responsibilities added which are specific to the GEF/SCCF project, and would be
chaired by the Director o f SOCAD\. Under the leadership o f the PLG, the CPMO would
be responsible for handling day-to-day management o f the project at the national level,
overall project coordination, project financial management, funding mobilization and
allocations, ensuring overall project progress and quality, overall project supervision,
monitoring and evaluation and reporting on project implementation and supervision\.
Particularly, the CPMO will be responsible for the project monitoring and evaluation
system (M&E System), guidelines and procedures, providing oversight and technical and
policy guidance to lower levels, specifying tasks and responsibilities for overall project
implementation, making implementation recommendations and providing guidance to
improve the project and its impact duringimplementation as appropriate\.
(c) Provincial PMOs (PPMOs)\. PPMOs for the IAIL3 project will be responsible
for implementation o f the GEF/SCCF project in the respective province, similar to the
national level, with specific responsibilities and unit(s) added as needed\. Special units
for the GEF/SCCF project have been established within the existing PPMOs in Hebei,
Henan, Shandong, Anhui, Jiangsu and Ningxia with terms o f reference, staffing and other
resources acceptable to the Bank\. PPMOs will be responsible, inter alia, for day-to-day
implementation management, direction, monitoring and supervision o f implementation,
ensuring coordination between different departments involved in implementation,
provision o f adequate and timely flow o f funds to lower levels, coordinating funding
from the various sources, management and disbursement o f the GEF/SCCF grant funds,
provision o f specialized technical assistance support to lower levels, operation o f M&E
systems, various types o f procurement, arranging for project research, information
11
dissemination, workshops and other related activities\. GEF/SCCF units in the PPMOs
would include senior-level, expert staff from WRB, AB, and FRB\.
(d) Local Level Project Management Offices (PMOs)\. Similarly, local level
(municipality and/or county) PMOs at lower levels for IAIL3 will be responsible for
implementation o f the GEF/SCCF project, but will have specific responsibilities and units
added as needed\. Membership o f PMOs will follow the same pattern as for PPMOs\.
These local-level PMOs will be responsible for routine day-to-day operation and
implementation o f the project, including local project planning, field implementation,
field supervision, inspection, field M&E data and statistics collection and preliminary
analysis, local procurement, reimbursements, local project management activities and
coordination among local line bureaus involved inthe project\. Institutional arrangements
for management o f the GEF/SCCF project have been established in the concerned
MunicipaVPrefecture and County C A D Offices (MOCADs and COCADs)\. M O C A D
PMOs would in particular be responsible for overseeing project design, execution and
supervision in the field, as well as overall local coordination and financing\. COCAD
PMOs would be responsible for project implementation in the field and arranging local
fundingand labor contributions\.
(e) Mobile Expert Teams (METs)\. METS have been established under IAIL3 by
SOCAD and the POCADs\. For the GEF/SCCF project, these METs would be
strengthened and expanded with suitable experts to provide guidance on climate change
andadaptation to staff and farmers inthe field duringimplementation\. The METs should
include experienced leading scientist and experts on climate change, meteorology and
environment, as well as the experts on water resources, agriculture and forestry for
IAIL3\. The METs would coordinate internally to ensure that the GEF/SCCF climate
change work i s fully integrated with IAIL3 work and that the messages delivered to the
field are consistent\. National-level experts, in particular, should be utilized where
appropriate\. The functions o f the METs would include provision o f expert advisory
services for implementation o f the project aimed especially at the farmers; provision o f
technical consultation services to the PPMOs and lower-level PMOs for
preparationhpdating o f the PIPS and implementation of the project; contribution o f
suggestions to the PMOs to help facilitate smooth project implementation and
recommendations to correct problems which arise during implementation; and assistance
inproject supervision, monitoring, inspection andmid-term and completionreviews\.
34\. FinancingArrangements and FinancialManagement\. Financing will be provided by
a combination o f GEF/SCCF grant funds and IAIL3 project funding, including both the Bank
loan and counterpart funds\. GEF/SCCF funds will be used mainly to develop adaptation
measures for IAIL3 and introduce them into IAIL3 implementation, as well as for promoting,
expanding and/or enhancing the innovative aspects o f IAIL3 related to climate change adaptation
(such as WUA and FA development, precision land leveling, ET management, and groundwater
management) and for activities to promote mainstreaming o f climate change adaptation in the
C A D program\. The small amount o f GEF/SCCF funding will therefore help guide a large
amount o f IAIL3 funding into climate change adaptation\. Financial management (FM) under the
GEFISCCF project would be based on the IAIL3 FM system and its computerized MIS\. A
separate FM system and MIS would be developed to cover the GEF/SCCF project\. The
GEF/SCCF project M I S would produce separate progress and financial monitoring reports for
12
the GEF/SCCF project, and the use o f funds would be reported separately from IAIL3\. SOCAD
will be responsible for unified FM o f the GEF/SCCF grant funds\. Use o f funds will follow
requirements o f the GEF/SCCF grant, IAIL3 and the C A D program for fimd use and
management\. GEF/SCCF grant funds would be used to reimburse qualified expenditures for the
GEF/SCCF project following standard Bank procedures\. Disbursements from the grant would
be based on withdrawal applications prepared at the level at which the expenditures were
incurred and submitted to the Bank through SOCAD\. As with IAIL3, withdrawal applications
would be prepared through the project MIS, with the same certification requirements including
for W A S and FAs\. Conversion o f the GEF/SCCF grant funds to Chinese Yuan during
disbursements would follow standard Bankprocedures\.
35\. Inorder to facilitate project disbursement, it was agreed that as inIAIL3, a "sub-grant"
category will be established for some small value project activities, including establishment o f
WUA andFA, water wells, biogas, green houses and tree planting\. These activities are expected
to be conducted by the communities themselves\. The sub-grants will be given to the F N W A
and project participant household farmers to finance the cost o f goods, works and services
required for carrying out all such activities\. The local COCADs will provide the Sub-grant from
SCCF grant using financial and management procedures already established under IAIL3\.
However, in order to ease disbursement monitoring and review process, the output-based
disbursement (OBD) procedure will be used for some o f the project activities to be financed
under these sub-grants (including water wells, biogas and green houses)\. The requirements
specified in paragraph 15 in Annex 7, regarding OBD, should be followed and the only
exception i s that the unit cost i s not applicable for activities which are not using the OBD\.
36\. Accounting system\. PMOs at various levels will maintain separateproject accounts set
up for the GEF/SCCF project and will have experienced full-time accountants available to
manage the GEF/SCCF accounts and funds\. Accounting standards, principles, internal financial
controls, financial reporting and auditing methods inconformity with IAIL3 project management
would be established\. Field PMOs will maintain accounts and records o f expenditure for the
project in the project MIS\. These accounts will be submittedto upper levels usingthe M I S and
the CPMO will submit to the Bank an annual settlement o fproject expenditures and funds based
on these accounts andrecords\.
37\. Audits\. The Audit Services Center (ASC) o f CNAO has been identified as auditors for
the project and annual audit reports will be issued by ASC accordingly\. The annual audit reports
and project financial statements will be submitted to the Bank within six months after the end o f
each calendar year\.
C\. Monitoringandevaluationof outcomes/results
38\. Management Information System (MIS)\. The project MIS will be the basis for
physical and financial progress monitoring and reporting and will be coordinated and integrated
with the IAIL3 MIS\. As indicated above, the project MIS would be integrated with the IAIL3
computerized MIS, which would be expanded to cover the GEF/SCCF project\. As with IAIL3,
the project MIS will produce progress and financial monitoring tables, procurement monitoring
tables, disbursement monitoring tables and WithdrawaVdisbursement requests, based mainly on
procurement data entered into the system by the county PMO staff, The MIS data would then
13
be sent to PMOs at higher levels electronically, consolidated at provincial and central levels and
provided to World Bank inthe semi-annual periodic reports for supervision reviews\.
39\. Monitoring and Evaluation System (MES)\. The project would establish a MES
System for monitoring project outputs and evaluating and analyzing project outcomes\. The
system for the GEF/SCCF project would include key indicators specifically identified for the
GEF/SCCF project (see Annex 3 for details on key indicators for the project)\. The MES would
be able to produce separate MES reports for M I L 3 and the GEF/SCCF project, and consolidated
reports for the two projects\. SOCAD, POCADs and COCADs would be responsible at their
various levels for maintaining the project MES, ensuring its accuracy and quality and
undertaking analysis as needed for evaluation o f project outputs and outcomes; POCADS in
particular would be responsible to monitor and supervise the operation o f the MES and ensure
that MES data entered by lower levels i s high quality and accurate\. MES results would be
provided as required inperiodic reports, which would include the agreed key outcome and output
indicators incoordination with financial and physical progress reporting through the MIS\. These
reports would be kept up-to-date and provided as needed for project supervision by the Bank
(progress reports are discussed inAnnex 4)\.
40\. As the GEF/SCCF project is the first o f its kind in China, high quality and timely
monitoring and evaluation o f implementation and outcomes will be important to identify and
resolve problems and to evaluate the outcomes and impacts o f the project\. Evaluation will be
especially important because the project i s based partly on "learning by doing" and one o f the
major project objectives i s to mainstream climate change adaptation\. The tasks are the collection
and analysis o f data (on project implementation progress and quality and its social and
environmental impacts) inassociation with the project M I S andMES\.
41\. Progress Reporting\. Progress reporting to the Bank using the MIS and MES would be
provided by SOCAD and POCADs twice a year, by February 15 and August 15\. SOCAD and
POCADs would carry out internal semi-annual supervision reviews and reviews by experts; and
submit their supervision reports to the Bank (in English) before Bank supervision reviews\.
SOCAD and POCADs would provide input for project management and also Bank supervision
reviews\.
42\. Institutional Responsibilities\. PMOs at the field (and higher levels as appropriate)
would be responsible for the collection and evaluation o f data collected for monitoring and
evaluation indicators\. PMOs would be responsible for entering data in the MIS (mainly for
procurement and certification o f W A Sand FAs) and MES; and producing the required reports\.
The PMOs would designate specific units and/or staff to be responsible for these functions\. MIS
and MES responsibilities o f the CPMO and PPMOs would include: (a) the formulation o f
uniform monitoring and evaluation standards and the key indicator system, and supervision o f
the implementation and operation o f the project MIS and MES; (b) training, guidance,
supervision and inspection o f lower-level MIS and MES institutions and personnel; (c) carrying
out field inspections, consolidation o f data, studies on important issues and report writing; and
(d) provision o fMIS and MES data andreports to CPMO which will submit reports to the Bank\.
14
D\. Sustainability and Replicability
43\. The addition o f the GEF/SCCF project to the ongoing IAIL3, will further enhance IAIL3
sustainability in the face o f climate change\. The GEF/SCCF project i s designed to demonstrate
climate change adaptation implementation and integrate adaptation into the ongoing irrigation
improvement, water management and rural development programs\. The project will provide an \.
interactive and analytical methodology to assess current irrigation practices and cropping
patterns in the light o f expected climate change and will test a comprehensive and integrated
adaptation methodology and approach in demonstration areas\. Project methods and lessons will
be replicated in the existing C A D program and also in China's new rural development models\.
The project will strengthen the ability o f local communities to control their own resources and
other factors that determine their livelihoods, such as through W A Sand FAs\. All o f these
characteristics will promote boththe sustainability andreplicability o fthe project\.
E\. Criticalrisksand possible controversial aspects
44\. The project faces a moderate overall risk\. A project risk assessment has been carried out
to identify the operation-specific risks and mitigation measures o f the project\. The most
important risk for the project is the delay inimplementing the activities, which would reduce the
opportunity for climate change adaptation in IAIL3 and consequently reduce its impacts\.
Provisions for retroactive funding under the project have been included to minimize the impact
o f delay\. As for climate variation and change, activities under the project would reduce the
associated risks\. For example, public adaptations via "disaster loss mitigation" may include non-
structural risk management initiatives (such as improved warning and preparedness systems,
risk-averse land-use planning, crop loss insurance, more resilient water storage, irrigation and
supply systems)\. Hardware or structural risk mitigation measures may include the revision of
irrigation and drainage facility standards and measures to reduce non-beneficial evapo-
transpiration\. With the gap analysis and scientific approaches under the project and wide
participation indecision-making processes, risks would further minimized\. The following table
summarizes the results o f the project risk analysis:
Operation-specificRisks
Project Weak understanding ofnew
Sustainability climate change adaptation government staff and leaders indemonstration areas) on new
concepts, measures and adaptation project concepts\. Linkage to experts and specialized
components institutions for training and support will be establishedand
coordinated (integrated) with the establishedtraining systems under
IAIL3\.
Low adoption rates/ Strengthening, expansion and integration of agricultural extension
Unsuccessful demonstration services and technical support systems\. Adaptation selection based
at selected sites on good scientific practice, and farmers' and local officials'
participation in decision making\. Capacity building for individual
rural households, village basedrural technicians\. County level
extension and service stations, and local governments\. Pilot
activities will be closely monitored and supported\. Clear indicators
for tracking outcomesand outputs with a focus on implementation
milestones and project results and impacts\.
Failure of mainstreaming SOCAD (and MOF) sees climate change adaptation as critical to 2
adaptation into CAD their own CAD program and strongly supports mainstreaming
measures\. Use of appropriate extension and dissemination
15
Program mechanisms,including training, workshops, and demonstrations\.
Use of M&E information to enhanceand disseminatelocal and
nationallaowledge of benefits of the project\. Jointly with SOCAD
andpartnerswork out an adaptationactionplanandrelevantpolicy
for integrationof adaptationinto CAD Program\.
A delay inthe processing The Task Team will pay specialattention to the linkagebetween
timetable and/or MIL3 and the proposedGEFISCCFprojectinterms of linkage
implementation start-up with MIL3 implementationactivitiesand timetable, and the
schedule could adversely identificationof the necessaryalternativesto address the options,
affectprojectimpactand financingand arrangementsneeded ifthe GEF/SCCFproject
the proposedpartial cannotbe completedat approximately the same time as IAIL3\.
blendingwith IAIL3\.
Financial Grantproceeds are not used SOCADhas substantialpreviousexperienceinmanagingWorld
Management for the purposes intended Bank financedprojects, has consistently met FMrequirements,and
(FM) i s currentlymanagingthe IAIL3 Projectfinanced by the Bank\.An
adequate FM system already inplace for MIL3 will be adapted for
the GEF/SCCFproject, and can provide, with reasonable
assurance, accurate and timely information on the status of the
funds as requiredby the Bank\.FMS/MIS will control and monitor
counterpartfunds and expendituresas well as loan funds\.
Procurement All aspects as specified in 1 First 18 monthsprocurementplan will bepreparedand approved
China's OverallPortfolio beforenegotiations\. The sameproceduresas agreed for IAILI11
Risk assessment(incl\. loss Projectwill be used for the GEF/SCCFproject\. The existingMIS
of efficiency, lack of systemunder IAIL3 will control and monitor "real-time" data on
transparency, unfair procurementand contracting progressbasedonprocurement
treatment of bidders, categoriesand methodsinthe loanagreement\.
unethical or corrupt
behavior)\.
Inadequateprocurement 2 Training to be organizedby PPMOfor procurementofficers at new
capacity for new county County PMOSbeforestart up of the Project\.
PMO
Social and In case anypossible Social 2 Annual environmentand safeguards M&E reports will be
environmental and environmental providedhntegratedwith the MIL3 EMPby SOCADK'OCADs,
safeguards safeguardsissues occurred\. which will be followed up withnecessaryactions\. Continuous and
iterativeimplementation applied\.
Overall R i s k 'I overallrisk is moderate\. I Nte: I= 2moderate3=substantial,4=high\.
101
F\. Grantconditionsandcovenants
45\. The proposed GEF/SCCF project i s to be partially blended with the ongoing IAIL3
project\. To be consistent with the latter, the GEF/SCCF project requires many of the same
covenants as IAIL3\. Some additional covenants have also been included to facilitate
mainstreamingo f climate change adaptation into the overall C A D program\. Inaddition, the legal
documents o f IAIL3 will be modified as necessary to ensure that IAIL3 activity i s implemented
in accordance with appropriate climate change adaptation measures developed under the
GEF/SCCF Project\. The technical designs of the activities under IAIL3 will be refined
accordingly\. The main covenants are listed below (the detailed covenants are described in the
GEF/SCCF Grant andProject Agreements):
46\. Effectiveness Conditions\. Recipient's confirmation that the GEF/SCCF Grant
Agreement and GEF/SCCF Project Agreement have been duly authorized or ratified by each
project province, and i s legally bindingupon such project province inaccordance with its terms\.
47\. Covenantsapplicableto projectimplementation\. The mainlegal covenants are:
16
(a) The RecipientProject Provinces shall, throughout the period o f implementationof
the Project, promptly inform the World Bank o f any identified adverse impact and take
measures, satisfactory to the World Bank, to mitigate the identified adverse impacts,
including measures set out in the relevant environmental and resettlement plans and
policies referred to inthe IAIL3 LoanAgreement;
(b) The RecipientProject Provinces shall, no later than September 1, 2008, develop
and install a results-based monitoring and evaluation system and a management
information system focusing on assessing the effectiveness o f climate change adaptation
measures and link and coordinate said systems with the monitoring and evaluation system
o f the IAIL3 Project\. The Recipient shall maintain and operate said systems ina manner
satisfactory to the World Bank;
(c) The Recipient shall, no later than June 30, 2011, formulate policy
recommendations and an action plan on climate change adaptation for the CAD Program
focusing, inter alia, on the application o f adaptation policies and measures inthe areas o f
irrigated agriculture and water resources management and development, satisfactory to
the World Bank\. The recipient shall initiate implementationplanina manner satisfactory
to the World Bank\.
(d) The Recipient shall, no later than June 30, 2009, establish a data, metadata, and
knowledge framework, satisfactory to the World Bank for collecting and developing
modeling information relating to climate change adaptation measures developed under
the project\. The Recipient shall maintain and utilize said framework through SOCAD,
and ensure that the Project Provinces utilize said framework, all in a manner satisfactory
to the World Bank and for the purpose o f ensuring that the lessons learned from the
implementation o f the activities under the Project are widely disseminated andpracticed;
(e) The Recipientproject Provinces shall maintain throughout the period o f
implementation o f the project: (i) the central, provincial and lower-level (at municipal
and county levels) Project Leading Groups, with terms o f reference, composition and
other resources acceptable to the World Bank, to be responsible for providing policy
guidance and inter-agency coordination for the implementation o f the Project; and (ii) the
central, provincial and lower-level (at municipal and county levels) Project Management
Office, with terms o f reference, staffing and other resources acceptable to the World
Bank, to be responsible for overall project implementation and management o f its
respective activities, timely allocation o f counterpart funds for the project
implementation, andProject monitoring, evaluation andreporting at each level;
(0 The Recipientproject Provinces shall maintain a team o f mobile scientific and
technical experts (MSTE) at the central, provincial and lower level (as a part o f the M I L 3
MSTE), including experts with adequate qualifications and experience in climate change
adaptation measures, with terms o f reference, compositions, and other resources
acceptable to the World Bank, to be responsible for providing advice to respective PMOS
on technical matters relating the Project implementation; and
(g) The Recipient shall prepare and submit to the Bank the following reports: (i)
semi-annual progress reports by February 15 and August 15 each year summarizing, inter
alia, physical and financial progress during the previous half-year and the latest
implementation status from project start-up, and project impacts based on agreed
17
monitoring indicators; (ii)annual project M&E report, including the social and
environmental safeguards monitoring and evaluation with groundwater and ET
management plan and impacts in Hebei, and development o f WUA, FA/FPCO in each
province, summarizing activities, findings, annual evaluation results, technical and
scientific recommendations from the MSTE and actions taken for the previous year by
SOCADPOCAD; (iii) preparing and furnishing to the Bank by June 30, 2010 o f a Mid-
term Review Report, summarizing, inter alia, problems and issues encountered during
implementation, revised costs estimates, proposed revised components and covenants,
results o f project monitoring and evaluation activities, measures recommended to ensure
the project completion before December 31, 2011 and to further its objectives, and
implementation o f measures agreed at the Mid-term Review; and (iv) the Recipient's
Implementation Completion Report (ICR) within six months after project completion\.
48\. Retroactive Financing: As SOCAD requested, retroactive financing from the grant for
some project activities incurred after September 30, 2007, will be available up to an aggregated
o f $310,000\. The retroactive financing will cover all activities inrespect o f all the expenditure
categories\.
IV\. APPRAISAL SUMMARY
A\. Economicandfinancialanalyses
49\. Securing food production for a growing population while also maintaining the
sustainability o f natural resources, such as land and water, has long been a great challenge for
China\. With the likely occurrence o f climate change, addressing such a challenge may become
even more difficult\. Climate change i s already reported to affect to some extent the pattern o f
water resource availability, rainfall and temperature in some areas and thus may impact
agricultural production invarious locations o f the country\. This i s especially critical for the 3 H
Basin, which is China's breadbasket\. To address the likely impacts o f climate change, fanners
will need to modify their production practices in response to changes in water availability,
rainfall pattern andtemperature\. The set o f possible modifications that farmers may undertake i s
called adaptation\. The ability o f farmers to adapt is based on many factors, including existing
technologies, input and output process, human capital and knowledge, infrastructure and support
services by the government\.
50\. The agronomic and economic assessment o f the proposed project was based on
comparison o f simulations using two types o f models: bio-physical crop models for wheat and
maize, two o f the major crops in the 3 H Basin; and a Ricardian model that observes present
climate across regions and statistically quantifies impacts o f climate change on net income per
hectare at the farm level\. Although there are certain caveats and limitations with this approach,
the analysis suggests that: (a) without adaptation, the agricultural sector, especially for maize in
the 3 H Basin, will face significant economic losses under the various climate change scenarios
tested; and (b) with adaptation, farmers can compensate for climate change and increase net farm
income, especially under irrigation\.
51\. Overall, the comparison o f the bio-physical crop simulations models show that
substantial yield reductions would occur as a result o f climate change without adaptation
18
(`without project' case), while the Ricardian models indicate that with adaptation net farm
income can generally increase slightly (`with project' case)\. Although it is not possible to
compare the outcomes o f the two model systems quantitatively, these results provide a strong
qualitative justification for the proposed project\. These results assume that the farmers have the
knowledge, guidance and support needed to facilitate adaptation and this is a major purpose o f
the proposed project\. In addition, the Ricardian analysis did not consider water availability,
which i s an implicit assumption that water i s non-limiting\. Given that water supplies are very
limited inthe 3H Basin, this provides a justification for the project's strong focus on improving
"real water saving" as a means for climate adaptation\.
52\. Two key adaptation measures were indicatedby the analysis: (a) changing cropping patterns
by moving from one set o f crops to another which is more adapted to the climate as it
changes; and (b) moving from rainfed to irrigated agriculture based "real" water saving (with
the assumption that sufficient water resources will be available)\. The analysis suggests that
the combination o f irrigation and cropping pattern change would be critical adaptation
measure for the 3 H Basin\. The analysis also suggests that further work on analysis o f water
availability and adaptation to climate change would be needed to help identify further critical
adaptation measures, guide support and policy for adaptation in the future, monitor and
respond to climate change and its impact on agriculture, and address adaptation needs as
climate change progresses\.
B\. Technical
53\. The project technical study completed by the Chinese Academy o f Science (CAS) analyzed
climate change in the 3H basin, historically and over the coming decades\. Two approaches
were used\. The first was to analyze trends in climate over the past decades, and the second
was to assess the best projections from computer modeling o f future climates\. Temperatures
have increased over the past 50 years, particularly in the 199Os, when temperatures rose by
1' to 1\.5'C over the long-term average\. The observed trends are consistent with climate
modeling, which suggests that temperatures inChina will rise by 1\.5' to 3'C by 2030 and by
4' to 6'C by 2100\. Precipitation inthe 3 H region has decreased since the 1950s by 140mm,
at a rate o f 2\.92mdyr\. Climate modeling projects changes in precipitation o f +5 percent or
less by 2050 with 10 to 15 percent increase by the end o f the century\. This small increase
would be counterbalanced by increased evaporation as the result o fhigher temperatures\.
54\. Using state-of-the-art water balance models, the project investigated the net impact o f
increasing temperatures and precipitation by modeling changes in water availability\. These
showed that projected water resource availability, as indicated by estimated run-off, i s likely
to decrease significantly in the future\. Modeling runs using scenarios consistent with the
most likely climate projections showed that run-off might fall by 4 to 6 percent and that
available soil moisture for crops would also decline significantly\.
55\. The impact on crops i s a complex outcome o f many factors, but the most important are: (a)
higher temperatures, allowing a longer and often earlier-starting growing season; and (b)
higher water use due to higher temperatures and increased growth rate and water-use
efficiency as a direct response to the higher concentration o f COz in the atmosphere (the
"COz fertilization effect")\. The net impact on crops depends on the complex balance
between these and other factors, including management actions (e\.g\., changing planting
19
dates, varieties or irrigation methods)\. The 3-H Basin crop production models show that the
impacts on crop yield will usually be negative, unless they are counterbalanced by
management activity\. Marginal increases intemperature have very different effects with and
without the COz enrichment effect; COz enrichment plays a positive role in crop yield, which
either turns the original negative effect to moderate positive effect or mitigates the negative
effect\.
56\. Up to 70 percent o f the irrigation water inthe region comes from ground-water\. Changes in
the recharge rate for ground-water under changing climate conditions are poorly understood
and were not included in the original CAS study\. However, a new effort to improve
modeling capacity in this area was initiated during preparation\. A statistical based model,
RTFN, was used to evaluate the potential change in the depth o f the water table under
different climate scenarios\. A key assumption o f the model is that water consumption i s the
same as in the historical records, and irrigation withdrawals were not included inthe model\.
The model showed that variations o f water table depths are generally consistent with the
variations o f precipitation surplus as temperature increases\. This model would need to be
modified to examine scenarios o f irrigation withdrawals\.
57\. The CAS study has identified a number o f 3 H region wide preliminary adaptation options
based on experience in dealing with climate variability and experience elsewhere\.
Essentially, they focus on greater water capture, more efficient water use through crop
species and variety selection, and improved management practices\. Based on these, specific
adaptation measures are put forward for different sub-regions, as follows:
(a) Piedmont plain (short o f surface water for agriculture): (i)reinforce
replenishment o f ground water by flood management; (ii) develop advanced field real
water-saving irrigation technologies and facilities; (iii)
adjust agriculture farming-patterns
to reduce water consumption; and (iv) explore alternative water resources, such as waste
water\.
(b) Alluvial plain sub-region (relatively less rainfall and poor-quality shallow ground
water): (i) develop technologies and facilities for collecting rainfall by using natural
ponds and artificial ponds to promote recharge; and (ii) reduce proportion o f agriculture
andincreaseproportion o fforestry, livestock and fisheries\.
(c) Huang-Huai plain sub-region (relatively more precipitation, with less
groundwater utilization): (i)develop alternative water resources, such as treated waste
water; (ii) develop technologies and facilities for both drainage and irrigation purposes;
(iii) irrigationbasedonwells, soastoreinforcecapacitiestodealwithdroughtand
plan
flood disasters; and (iv) adjust proportions o f farming areas for wheat-rice, wheat-rape
seed and other crops\.
(d) Yellow River irrigation area sub-region (replenish local water resources): (i)
enhance efficiency o f utilization o f Yellow River and local water; and (ii) same
follow
strategies as Alluvial Plain andHuang-Hai sub-regions\.
(e) Tongxin County inNingxiaProvince (water short conditions): (i) fbrther develop
rainfall-collecting technologies and facilities to collect the short-term but intensive
rainfall inwater cisterns for supplementary irrigation utilization; and (ii) develop water-
20
saving oriented farming technologies, such as drought resistant species, "seeded inwater"
measures, membraneapplication and biological materials for water conservation\.
C\. Fiduciary
58\. The GEF/SCCF project followed procedures similar to IAIL3 and will use the IAIL3
financial management system, which i s operating satisfactorily\. Therefore, a full financial
management assessment o f the project financial management system was not required\.
However, a detailed review o f financial management under IAIL3 covering related financial
documents, audit reports, discussions with SOCAD and a review o f financial management
plans for the proposed project have been undertaken\. The proposed project will have inplace
an adequate project financial management system that can provide, with reasonable
assurance, accurate and timely information on the financial status o f the project inthe agreed
reporting format as required by the Bank and accurate accounting for the grant funds used\.
Similarly, a full procurement assessment was not required\. Procurement capabilities o f
SOCAD and the COCADs have been adequate under IAIL3 and are expected to be adequate
for the proposed project which will use the existing IAIL3procurement system and staff\.
D\. Social
59\. Preparation o f the proposed project has paid close attention to Bank policy, social objectives
and appropriate means to achieve those objectives\. The social development goal in the
project context i s to support the empowerment o f local farmers through their involvement in
design and implementation o f project activities and adaptation measures\. Extensive
consultations were conducted with farmers on the possible components to ascertain their
views and priorities\. A questionnaire survey o f 5,070 farm households under IAIL3 showed
that project area farmers looked forward to the on-farm work and improved irrigation
efficiency and would participate with their labor inputs\. A number o f consultations during
the preparation o f the proposed project also showed that farmers would welcome adaptation
measures that would eventually help them reduce risks o f climate disasters\. To help
strengthen the farmers' own capability to deal flexibly with climate change, support for
expansion o f WUAs and FAs as the farmers' own organizations has been included in the
GEF/SCCF Project (as well as IAIL3)to enable the farmers themselves to participate in and
(where appropriate) control decision-making on local irrigation management and agricultural
production\. Each o f the IAIL3 provinces under the GEF/SCCF project prepared WUA and
FA development plans conducive to agricultural adaptation to climate changes as part o f
project component design\. In doing so, care was also taken to ensure the participation o f
women farmers in W A Sand FAs, particularly as managers o f household land and water
when males migrate for work\. Moreover, the project also paid particular attention to
vulnerable groups inthe official poverty counties (about one-third o f the IAIL3project areas)
to promote inclusive institutions that increase the poor farmers' participation and benefit
from both IAIL3 and the proposed GEF/SCCF project\.
60\. Because the GEF/SCCF program will be conducted not only in the regular five MIL3
provinces but also in Tongxi county in Ningxia Hui Autonomous Region, an EMDP was
prepared for the Hui ethnic minority communities in the project area in Ningxia, in
21
combination with the IAIL3-related WUA pilot program in the same project area\. Based on
consultations with local ethnic minority groups duringthe project information dissemination
campaign and social assessment process, the EMDP analyzed the local Hui people's needs
and aspirations related to the project activities and set forth measures to help ensure equal
opportunities for Hui ethnic groups to participate in project design and implementation\.
Although the GEF/SCCF program in Ningxia covers only 10 villages in one township, 6 o f
the ten villages have Hui populations which account for 47 percent o f the total project
beneficiaries there\. The EMDP i s intended to ensure that these people participate in the
GEF/SCCF program voluntarily and benefit equally from it and also help ensure that project
design inNingxia i s inconformity with the required social safeguards under OP4\.10\.
E\. Environment
61\. Partially blended with IAIL3, which is focused on improvement and upgrading o f existing
farm irrigation facilities with limited new construction and no major civil works, the
proposed project i s an environmental project\. In line with its development objectives, the
proposed project will introduce new concepts o f risk management, new standards for
irrigation management and infrastructure, and the use o f natural resilience (land, water, and
forests) to moderate the impact o f extreme weather conditions and climate change\. Overall,
environmental and social impacts o f project activities are expected to be positive\. In
addition, the proposed project will primarily provide technical assistance, capacity building
andother software support for climate change adaptation\. The project has been classified as
a Category C project\.
F\. Safeguardpolicies
SafeguardPoliciesTriggeredby the Project Yes N o
Environmental Assessment (OPBP 4\.01)
Natural Habitats (OP/BP 4\.04)
PestManagement (OP 4\.09)
Physical Cultural Resources (OP/BP 4\.11)
Involuntary Resettlement (OPBP 4\.12)
Indigenous Peoples (OP/BP 4\.10)
Forests (OP/BP 4\.36)
Safety o f Dams (OPBP 4\.37) [I [I
Projects inDisputedAreas (OP/BP 7\.60)* [I [I
Projects on International Waterways (OPBP 7\.50) [I [I
62\. EnvironmentalAssessment: There are no major adverse environmental impacts expected
as a result o f this project (as described in Section E above)\. The project is designed to be
positive from an environmental point o f view, particularly by protecting vulnerable
ecosystems from the impact o f climate change\. Some expected direct positive impacts
* By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the
disputed areas
22
include: (a) reduced uncertainty o f impacts from climate change and formulation o f adequate
adaptation measures; (b) mitigation of impacts from unsustainable agricultural practices and
development and implementation o f sustainable alternatives; (c) reduced vulnerability o f
agro-systems, and planning and management o f irrigation water supplies; and (d) increased
public awareness buildingon adaptation needs and increased social and institutional capacity
to manage the ecosystems\. An Environmental Assessment will be performed as part o f the
preparation of adaptation measures\.
63\. Involuntary Resettlement: The proposed project will not undertake activities that will
require taking o f land and neither land acquisition nor involuntary relocation is expected
duringproject implementation\. Any potential impacts resulting from the proposed testing of
adaptation measures at demonstration sites would be dealt in accordance with the
Resettlement PolicyFramework prepared for the ongoing IAIL3\.
64\. Indigenous Peoples: The proposed GEF/SCCF project demonstrations sites are all within
the original IAIL3 project areas, except for Tongxin county inNingxia Province, which has
been added to the M I L 3 project area as a Participating Province for WUA development and
in which there are Hui minority communities\. For the five recently added Participating
Provinces/regions under IAIL3, Ethnic Minority Development Plans (EMDPs) have been
prepared for WUA pilot areas for the three provinces -- Ninxia, Yunnan and Inner Mongol --
where ethnic minorities reside\. Seven ethnic minorities including Hui ethnic groups reside in
about 61 WUA pilot sites in those three provinces/regions\. Because Tongxin county under
the GEF/SCCF project is located inthe IAIL3 project area inNinxia, those Hui communities
related to GEF/SCCF program will also be covered by the EMDP prepared for Ninxia\. The
EMDP will help ensure that Hui communities have equitable opportunity to participate in
and benefit from the GEF/SCCF program, and also ensure they have cultural and location-
specific compatibility under boththe IAIL3 and GEF/SCCF projects\.
G\. PolicyExceptionsandReadiness
65\. The project is fully consistent with Bank policies and does not require any exceptions\.
Project staff has been mobilized at all levels and trained inBank procurement, disbursement
procedures and financial management requirements\. They are also experienced in IAIL3
implementationprocedures\. The project meets the readiness criteria\.
23
Annex 1: CountryandSector or ProgramBackground
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
Key agricultureandwater issues inthe NorthChinaPlain
1\. Overall, China ranks at the bottom 25 percent o f countries inwater availability per capita\.
Within China, the North China Plain or Huang-Huai-Hai Basin (3H Basin) has only about one-
third o f the China average and about half the per capita water availability as specified in the
UnitedNations standard for maintaining socio-economic and environmental development\. At the
same time, the 3 H Basin is China's prime agricultural area and breadbasket producing some 50
percent o f national grain output and accounting for about 35 percent o fnational industrial output\.
The basin also has a population o f 425 million people, which, if it were not in China, would be
the third largest country in the world\. Water demand in the region, already high, is growing\.
Available water resources generally are fully allocated and often overexploited, and groundwater
levels are falling over wide areas, sometimes by as much as one meter per year\. Moreover, in
many locations, increasingwater quality degradation exacerbates water shortage problems\.
2\. It has been shown recently that stagnated grain production for a number of consecutive
years in the 3 H Basin area i s linked to climate variability\. Frequent natural disasters, such as
droughts, floods, storms and insects in this region, are a major factor contributing to rural
poverty and constraining rural development\. The projected climate changes could further
decrease water stream flows and groundwater recharges inthe Basin, while they would increase
irrigation water demand and withdrawals due to higher temperatures and consequent higher crop
evapo-transpiration (ET) and soil evaporation\. Given the current global warming trend, China's
irrigation-based agriculture in this basin will be hrther negatively affected by climate change
and remedial measures need to be taken to ameliorate these effects\. Action is needed quickly
because it takes time for such remedial measures to have a significant impact\.
The importanceof addressingclimatechange issues
3\. As the Intergovernmental Panel on Climate Change report (IPCC's Third Assessment
Report, 2001) stated, "Approximately 1\.7 billion people, or one third o f the world's population,
presently live in countries that are water-stressed, including China\. The projectedclimate change
could further decrease the stream flow and groundwater recharge inmany o f these water-stressed
countries\." Climate change "may substantially affect irrigation withdrawals\. \. Higher
temperatures, hence higher crop evapotranspiration demand, mean that the general tendency
would be towards an increase inirrigation water demands\." More recently, estimates o f sea level
rise suggest that coastal regions 1-5 m above sea level are likely to suffer inundation duringhigh
tides and storm events and there is also a danger o f sea water infiltrating and salinizing depleted
groundwater aquifers\.
4\. Adaptation to climate change involves making adjustments in the management o f
productive assets and natural resources (in this case, agriculture and water) in response to actual
or expected climatic changes and their effects or impacts\. The goal o f adaptation is to reduce the
vulnerability o f communities, regions, or activities to climatic change and variability\. Adaptation
i s important in the climate change issue in two ways: (1) regarding assessment o f impacts and
vulnerabilities; and (2) regarding development and evaluation o fresponse options\.
24
5\. Climate change problems are only recently becoming clear and their seriousness
understood\. In fact, past and current interventions generally have not addressed climate change
andhow to adapt to it\. This is the case for example with the country's National Comprehensive
Agricultural Development (CAD) Program and the Bank-supported Irrigated Agriculture
Intensification I11Project (IAIL3)\. The latter was approved inOctober 2005\. Its total cost is $463
million, including a World Bank loan o f $200 million with the remainder financed by the State,
provincial and local governments and farmers\. It supports sustainable development o f modem
irrigated agriculture in 107 counties in five provinces within the 3 H Basin (i\.e\., Anhui, Henan,
Hebei, Jiangsu and Shandong) through four integrated components: (a) Water-saving Irrigation
and Drainage; (b) Agricultural Modernization and Organization Development; (c) Agro-
ecological Environmental Protection and Management; and (d) Institutional Strengthening and
Project Management Support\.
The Importanceof FactoringAdaptationto ClimateChange
6\. Though both the GOC and WB through IAIL3 focused on sustainability, however,
adaptation was little known at the time where the C A D and IAIL3 were prepared\. The proposed
GEFISCCF project would be a partially blended project with IAIL3\. Based on a preliminary gap
analysis, it i s designed to fill critical climate change adaptation gaps in the design o f IAIL3\. In
addition to improving sustainability o f IAIL3 investments, the proposed GEF/SCCF project
would integrate climate change adaptation concepts and measures directly into IAIL3
implementation and subsequently into the national C A D program itself\. The broader objective of
this project would be to help strengthen the resilience o f China's agricultural sector by
integrating adaptation to climate change into the design and implementation o f water
management, agricultural andrural development programs\.
7\. A quick examination could easily identifymal-adaptationpractices which remain largely
unaddressedunder current Chinese and WB interventions inthe 3 Hbasin:
(a) Cropping Patterns and Irripation Modalities\. Currently, in North China Plain,
most o f agriculture productions are from winter wheat, corn, and cotton\. Serious
problems arise from application o f such a cropping pattern and accompanying irrigation
modalities\. The climate in the area i s dominated by monsoon, with rainfall and high
temperatures occurring simultaneously in the warmest months: July and August\. Rainfall
is rare and river runoff very low during April and May while this i s the season where
winter wheat needs water most for its growth\. Though against natural rainfall, this type o f
water-consumed crops is still dominant in the 3 H basin and therefore, winter wheat i s
vulnerable to and often damaged by drought in spring and early summer\. Withdrawing
groundwater to irrigate wheat has increasingly reduced groundwater levels\. Over the past
20 years, government and farmers spent great amounts o f financial and humanresources
to fight against heavy drought during spring to ensure acceptable yields but wheat
production is still declining and they continue to lose enormous human resources,
financial investments, precious water resources, as well as other eco-system related
services\. There is no surprise that in 3 H Basin, the groundwater level was normally 2-5
meters deep 30 years ago and i s 30-50 meters deep now\. It i s not unusual for the
groundwater level to bebelow 80-100 meters insome places\.
25
(b) Unsystematic design and actions to cope with climate change\. In order to deal
with severe water shortage inTianjin Metropolitan, also in3H Basin, water from Yellow
River is transferred to Tianjin through canals\. The problem i s that clear water is
transferred but huge amounts o f sand from Yellow River water i s left inYangu County o f
Shandong Province\. An area o f 6,700 hectares has become man-made bare sandy land
from original rich agricultural land and with sandy thickness o f 1-5 meters, and i s
expanding in a speed o f 100 hectares per year\. Without systematic and urgent follow-up,
besides its severe negative impacts locally, this bare sandy landmay become a long-term
threat to the provinces o f eastern China given the fact that the strong wind o f winter
monsoonmay blow the sand over this most important agricultural area o f the country\.
Government GeneralPoliciesandProgramson Climate Change
8\. China ratified the UnitedNations Framework Convention on Climate Change (UNFCCC)
and the Kyoto Protocol inJanuary 1993 and August 2002, respectively\. Itjoined the Convention
on Biological Diversity (CBD) in January 1993, and the United Nations Convention on Drought
and Desertification (UNCDD) in October 1994\. Therefore, China is eligible for Special Climate
Change Fund(SCCF) administered by the Global Environment Facility\.
9\. Recently, China also developed a strong policy and strategic framework to support
climate change adaptation\. China has set out several national environment and sustainable
development policies, strategies and programs, all o f which now identify adaptation to climate
change as a national priority\. The main thrusts o fthese programs can be summarized as follows:
(a) Initial National Communication on Climate Change\. China's Initial National
Communication on Climate Change submitted to the Secretariat o f the UN Framework
Convention on Climate Change in October 2004 aims to enable China to fulfill its
commitments under the UNFCCC\. Chapter three o f this communication, entitled
"Impacts o f Climate Change and Adaptation" states inparticular that: (i) has been a
there
continuous drought in the North China Plain since the 1980s, while flooding disasters
have happened more frequently in southern China; (ii) these natural disasters have been
more pronounced during and after the 1990s; (iii) climate warming would speed up plant
growth and shorten the crop-growing period, so would affect the accumulation o f dry
biomass and grain yield; and (iv) China has started to take relevant adaptation measures\.
These include promulgating 13 related laws and regulations, constructing water
conservation projects, planning water diversion from the South to the North, adjusting the
agricultural cropping patterns and systems, and cultivating and spreading the new
drought-resistant varieties\.
(b) National Strategy for Climate Change\. China's National Strategy for Climate
Change has just been published with the leadership of the National Development and
Reform Commission (NDRC) and the active participation o f the Ministry o f Finance
(MOF) and will be issued for implementation soon\. The strategy emphasizes the urgent
need for adaptation and indicates preliminary adaptation measures\. The strategy identifies
agriculture andwater as China's national priorities for climate change adaptation\.
(c) New Environmental Protection Standards\. As part o f its 11th Five-Year
Development Plan (2006-201 0) (FYP), China adopted new environmental protection
26
standards, which were approved in February 2006\. According to the FYP, the State will
enact and amend over 1,000 environmental standards\. It also will draft and enact specific
industry discharge standards for different sectors\. The FYP provides a favorable policy
framework to adopt and incorporate climate change adaptation measures inthe national
development agenda, The FYP strongly encourages and supports sustainable agriculture
and rural development, water-saving agriculture, modification o f cropping patterns and
conservation farming\.
(d) Ongoing National CAD Program and the IAIL3 Project\. The National C A D
program i s China's largest agricultural program\. C A D carries out "New Countryside"
rural development tasks in a unified, comprehensive way\. C A D therefore has the
potential to play a key role in implementing the shift in focus for China's rural
development over the next five years\.
10\. China has the necessary policy frameworks to implement adaptation measures\.
Adaptation can also be replicated in China and can even become a driving force for China to
adopt sustainable development models in its rural areas while China's social-economic
development has so far depended, to a large extent, on over-exploitation o f natural resources\.
Climate change can be a wake up call and adaptation may provide opportunities for China to
adopt more sustainable development models through their pilot adaptation implementation inthe
3Harea\.
Lessons learned and activities of other partners
11\. Although China i s still exploring specific climate change adaptation measures and
methodologies, lessons from experience have shown that there are a wide range o f possible
adaptations with the potential to reduce adverse climatic change impacts\. Many o f these
adaptations-especially in agriculture and water applications-represent improved resource
management and many have benefits in dealing with current climatic hazards as well as with
future climatic risks\. For example, adaptation strategies could include (i) advanced water-
using
saving irrigation technologies and management to improve water-use efficiency and protect
against soil erosion; (ii)
changing farming cropping patterns and practices including timing farm
operations andmulching to conserve soil water; (iii) developing and using droughtlflood-tolerant
crop varieties; and (iv) being opportunistic based on climatic trends and find practices which are
favored by global warming and which will also better benefit humans and ecological
environment\. From this pro-active adaptation mindset, adaptation measures could embrace a
much broader scope and thus the adaptation could accelerate the process o f transition from
traditional development into sustainable development\.
12\. However, it i s important to highlight that current knowledge o f adaptation and adaptive
capacity is generally insufficient for rigorous evaluation o f plannedadaptation options, measures
and policies\. Key needs include the processes of adaptation decision-making, conditions that
stimulate or constrain adaptation and the role o f non-climatic factors\. In addition, existing
evaluations o f adaptation options have limitations\. For example, economic benefits and costs are
important criteria but are not always sufficient to adequately determine the appropriateness o f
adaptation measures\. Social andinstitutional criteria are also very important\.
27
The Role of GEF
13\. During the last decade, the GEF support to China covered all its focal areas but
adaptation to climate change\. It would bring tangible global benefits and mitigate the economic
andsocial impact o fclimate change ifChina could adopt andimplement the environmentally and
economically sound approach o f climate change adaptation to its rapid development\. This i s
particularly important in the context o f improving water resource management and irrigation,
which i s an essential aspect o f climate change adaptation as well as China's hture economic
development\.
14\. The proposed GEF/SCCF adaptation project will provide an opportunity for China to
bring new perspectives to and build on results from other existing GEF-supported projects in
China as a number o f them are directly relevant to climate change adaptation, in particular the
ongoing GEF Hai Basin Integrated Water and Environment Management Project\. The Hai Basin
Project is supporting an integrated approach to water resources management and pollution
control at the river basin level inthe Hai Basin, which itself i s part o f the much larger 3 H Basin\.
Meanwhile, at the field level, the IAIL3 project includes provisions for support o f similar vital
water management and irrigation innovations\. The proposed project would aim to help
mainstreamthe Hai Basininnovations inwater resource management, and apply them over much
wider areas inthe context o f a large-scale project (IAIL3)\.
15\. In light of these factors and as indicated above, the proposed GEF/SCCF project is
designed to be partially blended with IAIL3, which includes components that deal directly with
many o f the topics above, such as water-saving and improved crop patterns\. The blendingwill be
done through a gap-filling analysis utilizing the programmatic approach adopted under L4IL3\.
This methodwill be followed with the objective o f identifyingpriority climate change issues that
need to be addressed\. The proposed project would also coordinate with the ongoing GEF-
supported Hai Basin Integrated Water and Environmental Management Project which was
designed before the role of climate change adaptation was recognized\. There is no overlapping
betweenthe two projects\.
28
Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies
CHINA: MainstreamingClimateChangeAdaptationinIrrigatedAgricultureProject
LatestSupervision(Form590)
Ratings(Bank-financedprojects
Sector Project only)
Implementation Development
Progress(IP) Objective
(DO)
EASRE Hai BasinIntegrated Water and Environment S S
ManagementProject (P075035)
EASRE Irrigated Agriculture Intensification Project I11 S S
(P084742)
EASRE Irrigated Agricultural Intensification LoanI1 Closed Closed
Project (P049700) HS HS
EASRE Pro-Poor RuralWater ReformProject S S
(PO88116)
EASRE Guanzhong IrrigationProject (PO5 1888) Closed Closed
S S
EASRE Yangtze BasinWater ResourcesProject S S
(P064730)
EASRE Water Conservation Project (PO56516) HS H S
EASRE SecondTarim Basin Project (P046563) Closed Closed
29
Annex 3: ResultsFrameworkandMonitoring
China: MainstreamingClimateChangeAdaptation inIrrigatedAgriculture Project
ProjectDevelopmentObjectives OutcomeIndicators Use of OutcomeInformation
(GEF/SCCFl
The project development objective i s (i) awareness o f farmers, members Informationwill be used to
to enhance adaptation to climate o f WUAs/FAs, technical staff and disseminate and replicate CC
change inagriculture and irrigation officials on the needto enhance CC adaptation concept and
water management practices through adaptation inagriculture and implementation measures inChina's
awarenessraising, demonstration irrigation(percentage o f people)\. agricultural water management
activities inthe 3HBasinand sectors\.
institutional, capacity andpolicy (ii)Relevant adaptation measures
strengthening on CC adaptation\. implemented inselected Progress on each o f these indicators
This would helpmainstreamclimate demonstration areas (ha) andby will be reviewedand assessedto see
change adaptation measures, participatory stakeholders to whether the project is having the
techniques, and activities into the enhance CC adaptation in intendedimpacts\. Ifnot, adjustment
national Comprehensive agricultural practices and irrigation will be made to project activities so
Agricultural Development (CAD) water management (number o f as to achieve the desiredproject
Program which i s China's largest households)\. objective\.
national investmentprogram in
irrigated agriculture\. (iii)Documents issued by
socADPocAD/cocADsto
support and implement institutional
strengthening, policies, measures
and activities needed for CC
adaptation inagriculture and
irrigationmanagement (through
policy briefs, government reports,
implementation and/or replication
plans)\.
IntermediateResultsby IntermediateResultsIndicators Use of IntermediateResults
Component Monitoring
Component 1\.Identificationand (i) baseline,projectedscenarios
The To improve the design o f the
Prioritizationof Adaptation andpossible long term impacts o f activities incomponent two and the
Options including climate change identifiedfor the effectiveness o f adaptation
project area through analyses o f measures\.
(i) Development o f adaptation relevant hydraulic and agricultural
options, through CC impact production models and o f the results To draw the project baseline
assessment, gap analysis, selection monitoringresults and other M&E
andprioritizationo f adaptation o f economic research and surveys\. activities\.
measuresbased on specific local CC
conditions; and (ii) ofpossibleadaptation
Menu
measures developed based on
(ii)Identification o f demonstration scientific analysis and stakeholder
areas for implementation\. participation\.
(iii) demonstrationareas
Project
identified based on appropriate
selection criteria\.
30
Component 2: Demonstrationand (i) Adaptation measuresdeveloped The outcomes o f demonstration and
implementationof adaptation and implementedinthe implementation will help:
measures demonstration areas (ha under each
different measure)\. (I) whetheradaptation
confirm
This would include: measuresare appropriate for the
(ii) changeadaptation
Climate selected demonstrationareas;
(i) Introduction, demonstration and concepdmeasures integratedwith
implementation o f the specific MIL3design andimplementation (ii) exchange experiences and
adaptation measures inthe selected (covered bypercentage o f the lessons learnt among demonstration
demonstration areas; and project area)\. areas;
(ii) Integrationo f appropriate (iii)Acceptance by farmers o f (iii) andimprovethedesign
adjust
adaptation measures into MIL3 adaptation measures (No\. o f o fthe adaptation technologies and
project implementation inthe project households)\. practices that couldbe developed
area\. elsewhere; and
(iv) promote CC adaptation in
agricultural practices and irrigation
water management inthe 3HBasin\.
Component 3: Mainstreaming (i) SOCAD/POCAD/COCAD Publications, documents and other
adaptation to climatechangeinto webpages, booklets and other informationsources will be usedto
nationalCAD programand publications and mass-media raise awareness o f and motivate
institutionalstrengthening coverage incorporating adaptation change inthinking about CC and
to climate change knowledge and help integrate adaptation into CAD
This would be achievedthrough a measures\. program\.
series o f capacity building, technical
assistance, knowledge sharing, and Consultations and coordination
public awareness activities, the (ii)Consultations, coordination among agencies and actionplanning
formulation o f the Policy meetings and training on adaptation and recommendations will be used
recommendations and the "National to CC among SOCAD, MOF, as intruments to promote policy
Climate Change Adaptation Plan" NDRC, CAS and other concerned change, raise understanding and
by SOCAD, with close cooperation technical line agencies\. integrate CC adaptation into CAD
o f CAS and the NDRC and MOF and irrigated agriculture\.
national climate change adaptation (iii) recommendationsand
Policy
offices\. the action planto integrate CC M&E results willprovide goodbasis
adaptation into CAD program to plan andjustify integration o f
formulated\. adaptation into China's major
comprehensive agricultural
(iv) Climate Change Adaptation development programs, together
Monitoring and Evaluation with institutional and knowledge
mechanism inoperation\. building and experiences and lessons
learned from demonstration sites\.
31
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Annex 4: DetailedProjectDescription
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
I\. IntroductionandSummary
1\. The project development objective is to enhance adaptation to climate change in
agricultural practices and irrigation water management through awareness raising, demonstration
activities in the 3 H Basin, and institutional and policy strengthening\. This would help
mainstream climate change adaptation measures, techniques and activities into the national
Comprehensive Agricultural Development (CAD) Program which i s China's largest national
investment program inirrigated agriculture\.
2\. The main project development impact indicators would be: (a) increased climate change
adaptation awareness o f farmers, Water User Association (WUA) and Farmer Organizations
(FO) members, technical staff and officials on the need to enhance understanding o f climate
change and adaptation in agriculture and irrigation (percentage o f people); (b) relevant climate
change adaptation measures implemented in selected demonstration areas (number o f hectares)
and by participatory stakeholders (number o f households) to enhance climate change adaptation
in agricultural practices and irrigation water management; and (c) documents issued by
SOCAD/POCAD/COCADs integrating climate change adaptation and policies, measures and
activities needed to support climate change adaptation in agriculture and irrigation management
(through policy briefs, government reports, implementation and/or adaptation replication plans)\.
3\. Key components o f IAIL3 are related to and sensitive to climate change\. However,
adaptation measures for climate change were not included in IAIL3 project design because the
need for climate change adaptation has been widely recognized only recently\. The proposed
project would identify gaps in the IAIL3 project design with regard to needed adaptation
measures and would help integrate adaptation measures into IAIL3 components\. The proposed
GEF/SCCF project has been designed to be partially blended with IAIL3 and the $463 million
total cost o f the latter, an estimated $50\.5 million would be partially blended with and used as
co-financing for the proposed project activities\. This represents the portion o f IAIL3 which
would be directly modified for climate change adaptation purposes under the proposed project,
although it i s plannedthat adaptation should expand to as much o f IAIL3 as possible\.
4\. The project objectives would be achieved through the implementation in the six project
provinces (Hebei, Henan, Shandong, Anhui, Jiangsu, and Ningxia) o f the following project
components: (1) Identificatioflrioritization o f Adaptation Options; (2) Demonstration and
Implementation o f Adaptation Measures; and (3) Mainstreaming Adaptation into the national
C A D Program and Institutional Strengthening\. The mainproject activities are detailed as below\.
11\. Projectcomponents
5\. Inline with the above objectives, andbased on apreliminarygap analysis ofIAIL3 from
a climate change adaptation perspective, the proposed GEF/SCCF project would include the
following components:
34
6\. Component 1:Identification and Prioritization of Adaptation Options (US$0\.50million
from GEF/SCCF)\. Understanding adaptation to climate change i s important for two reasons:
(a) adaptation will reduce the impacts o f climate change and thus understanding the need for
adaptation is important for measuring vulnerability; and (b) it is important to understand what
specifically should be done indifferent places over different time periods to facilitate adaptation\.
Preliminary work on this component was started during preparation under the PPG\. Under the
project, that work would continue inorder to: (a)finalize conclusions and recommendations from
the PPG work; (b)undertake additional work on impact assessment, gap analysis and selection
and prioritization o f measures to expand adaptation into IAIL3 and C A D investment areas; and
(c)integrate climatological, hydrological and economic models to analyze the comprehensive
impact o f climate change and adaptation measures for agricultural and irrigation at the local
levels and rural water resources management at the river basin level\. The study outcomes would
be reviewed and disseminated by the six project provinces and ten counties in accordance with
their specific circumstances\. Specific activities include 3 subcomponents:
(a) Impact Assessment of Climate Change in 3H Basin and Project Area\. The
activities under this subcomponent include: (i)stocktaking o f previous studies on
assessment o f vulnerability to climate change and potential adaptation options, including
local knowledge and practice; (ii)adapting state-of-the art simulation models and
observations to assess climate change impacts on local hydrology (including surface and
groundwater) and on agriculture\. Inclusion o f cropping patterns and agricultural yields
will be addressed by coupling the hydrology model(s) to agriculture models; (iii)
conducting a farm household analysis study in the project area and the 3 H Basin to
determine climate sensitivity, water demand and adaptation responses\. This farm
household analysis study will compare farm behavior and outcomes across different
climate zones\. The study would examine changes in yields and water use, quantify
climate sensitivity, estimate the agricultural demand for water and its sensitivity to
climate and determine potential adaptations by Chinese farmers; and (iv) estimate the
sensitivity o f 3 H Basin agriculture to climate and water availability\. The use o f these
state-of-the-art modeling techniques to integrate climate, hydrology and agricultural
economics over key spatial and time scales is an important and essential innovation inthe
approach beingadopted under the proposed project\.
(b) Gap analysis and study on adaptation measures\. Adaptation measures for
climate change were not included in the design o f IAIL3, and a gap analysis was
conducted for IAIL3 during preparation o f the GEF/SCCF project\. Preliminary key gaps
in the design of IAIL3 were identifiedwith regard to knowledge and public awareness
about adaptation to climate change, design o f irrigation and drainage works, agricultural
practices, farmer participation and economic cooperative organizations, water and soil
conservation andbiogas activities\. Under the GEF/SCCF project, the gap analysis would
be expanded to cover more IAIL3 areas and C A D program areas in the six project
provinces\. This analysis would identify the needed adaptation measures and help
integrate those measures into IAIL3 and the C A D program\. SOCAD and the six
POCADs would organize national, provincial and local scientists and experts for the gap
analysis in order to integrate adaptation into M I L 3 and the C A D program, maximize
adaptation benefits, and improve the design o f C A D investment programs at the national
andprovincial levels\.
35
(c) Prioritization and Selection of Adaptation Measures and Demonstration Areas\.
Based on preliminary results during preparation, activities under this sub-component
would include: (i) identification and selection o f expansion areas for adaptation, giving
priority to areas with both high vulnerability and high likelihood o f making significant
impacts; (ii) use o f scientific technical analysis to develop potential adaptation options (in
terms o f content, implementation, costs and impacts), and to estimate the impacts o f
various climate change scenarios (on surface and groundwater and on flood and drought
predictions and risks), in order to identify and select the most cost-effective adaptation
measures for each project province; and (iii) consultations with farmers and discussions
with provincial and county experts to incorporate empirical experiences into adaptation
measures duringproject implementation\.
7\. Component 2: Demonstration and Implementation of Adaptation Measures
(US$48\.43 million comprising US$2\.25million from GEF/SCCF and US$46\.18 million co-
financed from IAIL3)\. The objectives o f this component are to introduce, demonstrate, and
implement specific climate change adaptation measures in selected demonstration areas; and to
integrate appropriate adaptation measures into the implementation o f the IAIL3 project to help
reduce vulnerability to climate change in the 3 H Basin\. The adaptation measures would focus
mainly on agricultural production and practices and on rural water management and would take
into account expected temperature increases and variations in precipitation due to climate
change\. Demonstrationmeasures would be implemented inconjunction with the ongoing IAIL3
project and would be expandedto cover as much o f the IAIL3 project area as possible\. The two
subcomponents would be as follows:
(a) Demonstration of Climate ChangeAdaptation Measures (US$2\.25millionfrom
GEF/SCCF)\. Based on the gap analysis o f IAIL3 under Component 1, the proposed
project would identifyspecific climate change adaptation measures and techniques which
would be demonstrated at selected project sites\. These new adaptation measures would
aim to: (i) explore and develop alternative or additional water resources; (ii)promote
adaptive farming practices, technologies and institutions (including participatory FAs);
(iii)
promote adaptive and water saving irrigation and drainage design, technologies and
management (including participatory management by farmer WAS); and (iv) pilot
small-scale biogas facilities\. The specific new activities and measures include:
(i) Rainfallcollectionworksandwaterharvesting(307demonstrationsites)\.
Construction o f field rainfall collection and water harvesting works to increase
storage andretention o f surface runoff andrainfall and mitigate rainfall deficits or
insufficient irrigation water resources, especially in dry seasons, and to help
compensate for increasingly unbalanced natural rainfall between seasons expected
as a result o f climate change;
(ii) Adaptive agricultural technologies (36 demonstration sites)\. Through
promotion and demonstration o f measures like "dry seeding" technologies,
precision irrigation, minimum tillage practices, precision land leveling, land
shaping, accurate nitrogen fertilizer use and other adaptive agricultural
technologies and practices, the capacity o f farmers inthe project areas to adapt to
climate change would be improved;
36
(iii) Adaptive cropvarieties (438,900 kgofseeds)\. Newcropvarieties with
increased resistance to drought, water logging resistance and extreme
temperatures would be introduced, such as: Ningxia alfalfa; Tongxin dates and
potatoes; heat resistant rice and wheat from Anhui; stripe disease and heat
resistant rice from Jiangsu; and drought resistant wheat, corn and vegetables from
Henan\.
(iv) Biogas digester demonstrations (2,570 digesters and ancillary facilities)
will be financed through SCCF sub-grants\. Technical assistance and pilot small-
scale biogas digesters and facilities will be provided to farmers inthe project area
to produce and use clean-burning biogas\. This would utilize higher temperatures,
faster growth o f microorganisms, longer fermentation time and increased biomass
production under climate change to reduce the need for burning wood and coal
and the by-product biogas slurry would be used to increase the organic matter
content o f soil;
(v) Greenhouse development (237,200 m2 o f greenhouse space)\.
Greenhouses would enable farmers in the project area to fblly use favorable
factors brought by climate warming to advance crop cultivation and the capacity
o f farmers to overcome unfavorable conditions;
(vi) Establishing enhanced, high quality W A S and FAs (17 additional
WAs/FAs)\. W A Sand FAs have proven very effective farmer participatory
organizations under IAIL3\. In addition to increasing the number o f W A Sand
FAs, the proposed project would, through the provision o f SCCF sub-grants,
develop, promote and demonstrate enhancements which would improve their use
for climate change adaptation, demonstration and training and would also
strengthen their sustainability inthe face o f climate change;
(vii) Afforestation (676 hectares)\. Tree species specially adapted to climate
change would be selected and introduced for field windbreaks\. This would help
reduce wind velocity and evaporation, increase moisture in the air, improve the
"micro climate" o f farm fields and help mitigate the impact o f higher
temperatures;
(viii) ET monitoring and management\. Remote sensing data together with
hydrological and meteorological observation data and ground truth observations
would be used to monitor and manage crop ET in the project areas\. Based on
calibrated remote sensing ET estimates, the impacts o f climate change and water
saving measures on agricultural production and crop water use would estimated;
these would provide the basis for managing ET for optimal water use and
irrigation inselected project area sites; and
(ix) Groundwater management\. A number o f areas in the northern 3 H Basin
suffer from severe groundwater overdraft, especially in Hebei\. In conjunction
with ET management (above), the project will also assist development of
comprehensive Groundwater Management Plans for all water-short counties
under the project inHebei (19 o fthe 22 IAIL3 project counties inHebei)\.
37
(b) Integration of Adaptation Measures into IAIL3 Project Implementation
Activities (US$46\.18 million from IAIL3 comprising US$18\.47 million IBRD loan and
US$27\.71 million counterpart funding)\. The proposed project would focus on IAIL3
activities that are at risk from climate change\. Based on the gap analysis o f IAIL3,
scientific analysis and modeling under Component 1, and lessons from demonstration
sites, this sub-component would review and refine the original IAIL3 technical design to
help "climate proof' IAIL3 project activities\. IAIL3 activities related to climate change
adaptation would be modified and expanded as appropriate, including in particular: (i)
engineering water-saving measures, including various water-saving irrigation and
drainage technologies and facilities; (ii)agronomic water-saving measures, including
land leveling, deep plowing, minimum tillage, balanced fertilizer use, use o f crop
residues, introduction o f adaptive varieties and high quality seeds, adaptive on-farm
forestry belts to be financed by SCCF sub-grants,etc\.; and (iii) water-saving management
measures such volumetric water charges and as high quality WUAdFAs also financed
through sub-grants\. IAIL3 activities in the GEF/SCCF project area which would be
enhanced to strengthen climate change adaptation include:
Adaptive irrigation canals and drainage systems (13,001,600 m3);
Small field water storage (691 units);
Impervious canals (1,832,600 m2);
Low pressure pipe (4,507,400 m);
Drip irrigation (123\.3 hectares);
Land leveling (38,998\.4 hectares);
Balanced fertilization (29,133 hectares);
Crop residue shredding (18,783\.2 hectares);
Water Users Associations (strengthening 134 existing and planned WUAs
to disseminate adaptation practices andtraining);
Introduction o f quality seed for adaptive and resilient varieties (1,554,300
kg);
Integrated Pest Management demonstration and extension (1,800
hectares);
Greenhouses (1,000,000 m2);
Farmers Associations (strengthening 31 existing and planned FAs to
disseminate adaptation practices and training);
Adaptive farmland shelter belts (3,958\.3 hectares); and
Bio-energy for rural areas (1,230 biogas digesters and facilities)\.
3: Mainstreaming Adaptation into National CAD Program and
institutionalstrengthening (US$6\.58 million, comprising US$2\.25 million from GEF/SCCF
and US$4\.32 million co-financed from IAIL3)\. The component would aim to integrate and
mainstream climate change adaptation into the ongoing national CAD program\. Key activities
would be a series o f capacity building, technical assistance, knowledge sharing, and public
38
awareness activities, and, preparation o f a "National Climate Change Adaptation Plan" for C A D
by SOCAD, with the close cooperationo f CAS andthe NDRC andMOFnational climate change
adaptation offices\. Sub-components and activities would include the following:
(a) Research and development of adaptationpolicies (US$112,400)\.
(i) Researchandanalysis on: adaptationgapsfor CADProgram; theimpact
o f climate change on water availability and agriculture, farm economics and
income, crop pattern adjustments, rural water resource management and
agricultural green house gas emissions; and specific measures to address the
identifiedgaps;
(ii) Formulationofpolicyrecommendations toaddressclimatechangewith
regard to agricultural water management and rural development, incorporating
scientific, economic and technical input from CAS and provincial and local
scientists and experts, empirical experience from farmers, including women, and
their organizations ( W A Sand FAs), and good practices and lessons learned from
SOCAD, POCADs and COCADs;
(iii) Preparation ofa"National Climate Change AdaptationPlanfor CAD"
under the leadership o f SOCAD, with close cooperation o f the NDRC and MOF
national climate change adaptation offices and CAS; and
(iv) C A D arrangements and actions to implement the above Plan for
adaptation, including mechanisms for consultation and coordination among
government agencies, development and implementation o f policy support
recommendations, andinstitutionalization o f adaptation into CAD\.
(b) Institutional strengthening and capacity building on climate change adaptation
(US$5\.25million)\.
(i) Trainingandworkshops, includingtrainingonscientificunderstandingof
climate change, impact o f climate change on agriculture, adaptation to climate
change and sustainable development, adaptive project design and water resource
management\. Target groups for training would be farmers, including women and
other vulnerable rural population groups; agricultural and water resource technical
and fieldextension staff; andproject management staff\.
(ii) Informationdisseminationonclimatechangeadaptationthroughvarious
means such as print and communications media, public awareness campaigns,
development and distribution o fprinted materials, DVDs, and the internet; and
(iii) Technical assistance from Mobile Expert Teams (METs)\. METs are
established and operating under IAIL3, would be strengthened to include
international and national experts specialized in climate change and adaptation in
water resources, agriculture and meteorology and would follow a structured
program to provide technical advice and guidance on climate change and climate
change adaptation\.
(c) Results-based monitoring and evaluation (M&E) (US$221,400)\.
(i) Establishment of a Data, Metadata, and Knowledge Framework\. The
resulting modeling information would be developed as a "Dynamic (Landscape-
39
Water Resources) Information Framework (DIF)", maintained by SOCAD, and
applied by the decision makers and PMO staff in SOCAD/POCADs/COCADs
during Implementation\. It would play an important role in ensuring that lessons
learned duringthis immediate project are practiced more widely; and
(ii) Establishment ofaclimatechangeM&Esystem, inconjunctionwiththe
management information system (MIS) and the ongoing M&E system under
IAIL3, to focus on implementation progress and the impact o f adaptation
measures and assess effectiveness o f adaptation implementation mechanisms and
measures\. The investment costs o f M&E system are composed by M&E training
workshops (US$120,000), M&E system and related indicators development
(US$26,600), data collection, analysis and reporting (US$57,900), and
establishing sample/pilot sites (US$16,900)\.
(d) Project management OJS$990,000)\. This sub-component would support project
implementation management, including dealing with project and implementation related
issues such as procurement, financial management, and other incrementalcosts\.
Scope of Project Area, Selection Criteria and Selection of Pilot Demonstration Areas
9\. IAIL3, implemented by SOCAD o f MOF, involves the major grain producing area o f
China, the 3H Basin, which at present has rather weak capacity to adapt to climate change\. The
major contents o f IAIL3 involve irrigation and agriculture, which at the field level are prone to
the negative impacts o f climate change\. However, IAIL3 is designed for flexible implementation
under its "program approach" and can be modified during implementation to incorporate
adaptive measures and overcome deficiencies inadaptation\. Meanwhile, considering that the 3 H
Basin i s ecologically vulnerable region and also subject to the negative impacts o f climate
change, climate change adaptation under the GEF/SCCF project i s badly needed and should be
integrated with IAIL3 and implemented in the 3 H Basin (as a demonstration for the national
C A D program)\. The project area for the GEF/SCCF project will comprise the M I L 3 provinces
o f Hebei, Jiangsu, Anhui, Shandong, and Henaninthe 3 H Basin and the Autonomous Region o f
Ningxia inthe aridnorthwest\.
10\. Demonstration sites under the GEF/SCCF project would be identified mainly within the
3 H Basin\. Special demonstration sites under IAIL3 outside the 3 H Basin (e\.g, in Ningxia) may
also be selected to illustrate adaptation under other specific climatic conditions for adaptation\.
The criteria for site selection are that: (i) climate conditions are identical or similar across
local
the region; (ii)agricultural irrigation and cropping patterns are typical o f the region; (iii) the
ecological environment i s rather fragile; (iv) local leaders have strong enthusiasm for the project;
and (v) local areas have reasonably complete and accessible hydrological, meteorological and
agricultural data\.
11\. In accordance with these selection criteria, the six project provinces (Hebei, Henan,
Jiangsu, Anhui, Shangdong, and Ninxia) have selected 10 countries as demonstration sites in
these provinces\. The sites are all included under IAIL3 and represent different types o f climate,
irrigation, and landconditions\. The sites are located and briefly described inthe following table:
40
Table of demonstrationsites
I Hebei ICangzhou 1 Cangxian IGroundwater plus canal I
I I I
I IXuzhou I Xionyi IRiver diversion
Jiangsu Suqian SUYU River diversion
Bengbu Huaiyun Groundwater
Chuzhou Mingguang Surface water
Weifang Groundwater
Shandong
Henan Yellow River Diversion for
Shangqiu Liangyuan supplementing local water
sources
Ningxia Wuzhong Tongxin Yellow River diversion
Total 10 10
41
Annex 5: ProjectCosts
CHINA: MainstreamingClimateChangeAdaptationinIrrigatedAgriculture Project
1\. The total cost o f the project i s estimated at US$55\.5 million equivalent, including
physical and price contingencies o f about US$2\.64 million\. The direct foreign exchange cost i s
estimated at about US$0\.27 million equivalent\. The base cost totals US$52\.86 million, o f which
US$0\.47 million (about 1percent) i s for identification and prioritization o f adaptation options;
US$45\.96 million (about 87 percent) is for demonstration and implementation o f adaptation
measures; US$6\.42 million (about 12 percent) is for mainstreaming adaptation into National
C A D program and institutional strengthening\.
2\. The project baseline cost is expressed in September 2007 prices and includes local taxes
and duties computed at about US$3\.10 million equivalent\. The unit costs and estimated annual
quantities are based on typical designs with a uniform physical and technical standard for each
province\. Cost estimates for civil works are derived from costs o f works recently completed
under MIL3 and similar recent works in each province\. Cost estimated for goods are based on
recent quotations from manufacturers and suppliers or prices o f similar goods that were recently
purchased under MIL3 and similar program\. Consultants' services costs are based on the
experience inthe country with recent consulting contracts for similar tasks\.
3\. Physical contingencies are about 5 percent for all civil works and goods, 3 percent for all
consultants' services in ongoing MIL3 project\. For the GEF/SCCF grant, physical contingencies
are 4 percent for all expenditure categories, including civil works, goods, consultants' services,
studies, training and workshops, sub-grants for WUA establishment and incremental operation
costs\. For price contingencies, the Bank's standard local and foreign inflation rates were applied
over the project's implementationperiod\. For costs expressed inU S dollars, the expected annual
price increases are estimated at 0\.4, 0\.8, 0\.7 and 0\.6 percent for the period 2008-2011\. For costs
expressed inYuan, the annual rates are 1\.9, 3\.0,2\.8 and2\.5 percent for the period 2008-2011\.
42
Table 1: ProjectCosts by Component
ComponentsProject Cost Summary (us$'ooo) (us$'ooo)
Local Foreign Total
A\. IdentificationandPrioritizationof Adaptation Options
(GEF/SCCF)
1\. Impact Assessment of Climate Change in3-HBasin and Project Area 23\.9 13\.0 36\.8
2\. Gap Analysis and Study onAdaptation Measures 381\.5 28\.1 409\.7
3\. Prioritization and Selection ofAdaptation Measures and
Demonstration Areas 16\.5 8\.9 25\.4
Subtotal 421\.9 50\.0 471\.9
B\. DemonstrationandImplementationof AdaptationMeasures
1\. Demonstration of Climate Change Adaptation Measures (GEF/SCCF) 2,139\.9 2,139\.9
2\. Integrationof Adaptation Measures into IAIL3 Project
ImplementationActivities 43,822\.9 43,822\.9
Subtotal 45,962\.8 -- 45,962\.8
C\. MainstreamingAdaptation intoNationalCAD Programand
InstitutionalStrengthening
1\. Research and Development ofAdaptation Policies (GEF/SCCF) 106\.8 106\.8
2\. Institutional Strengthening and Capacity Building on Climate Change
Adaptation (GEF/SCCF/IAIL3) 4,952\.1 210\.0 5,162\.1
3\. Results-based Monitoring and Evaluation (M&E)(GEF/SCCF) 210\.8 210\.8
4\. Project Management (GEF/SCCF) 942\.7 942\.7
Subtotal 6,212\.4 210\.0 6,422\.4
TotalBASELINE COSTS 52,597\.1 260\.0 52,857\.1
Physical Contingencies 2,3 11\.2 4\.4 2,315\.6
Price contingencies 325\.3
\.~\. 2\.0 327\.3
~
Total PROJECTCOSTS 55,233\.6 266\.4 55,500\.0
The total project cost includes identifiable taxes and duties of about US3\.10 million, and the
total project cost, net of taxes is US$52\.40 million\. Therefore, the share o f project cost net of
taxes i s 94\.4%\.
Table2: ProjectCosts by Category
ExpenditureAccounts Project Cost Summary (us%'ooo)
Local Foreign Total
I\.InvestmentCosts
A\. CivilWorks 41,495\.5 - 41,495\.5
B\.Goods 1,445\.5 1,445\.5
C\. Consultants' Services 1,304\.8 21\.9 1,326\.7
D\.Studies, training and workshops 5,217\.3 238\.1 5,455\.4
E\. Sub-grant 2,191\.3 2,191\.3
F\. IncrementalOperationCosts 942\.7 942\.7
TotalBASELINE COSTS 52,597\.1 260\.0 52,857\.1
Physical Contingencies 2,3 11\.2 4\.4 2,315\.6
Price Contingencies 325\.3 2\.0 327\.3
TotalPROJECTCOSTS 55,233\.6 266\.4 55,500\.0
43
Table3: Project Costs by ComponentsandYear (US$ '000)
China
Mainstreaming Climate Change Adaptation inIrrigated
Agriculture Project
Project Componentsby Year -- Totals Including
Contingencies (us$'ooo)
2008 2009 2010 2011 Total
A\. Identificationand Prioritizationof Adaptation
Options(GEFECCF)
1\. Impact Assessment of Climate Change in3-H
Basin andProject Area 11\.5 11\.6 11\.7 3\.9 38\.7
2\. Gap Analysis and Study onAdaptation
Measures 128\.1 128\.8 129\.8 43\.6 430\.3
3\. Prioritization and Selection of Adaptation
Measures and Demonstration Areas 7\.9 8\.0 8\.0 2\.7 26\.6
Subtotal 147\.5 148\.4 149\.5 50\.2 495\.6
B\. DemonstrationandImplementationof
AdaptationMeasures
1\. Demonstration of Climate Change Adaptation
Measures (GEFECCF) 1,550\.1 663\.6 32\.3 2,246\.0
2\. Integrationof Adaptation Measures into IAIL3
Project ImplementationActivities 23,004\.6 18,514\.2 4,663\.2 46,182\.0
Subtotal 24,554\.7 19,177\.8 4,695\.5 -- 48,428\.0
C\. MainstreamingAdaptation intoNational
CAD Programand InstitutionalStrengthening
1\.Research and Development ofAdaptation
Policies (GEF/SCCF) 33\.5 33\.7 33\.9 11\.4 112\.4
2\. Institutional Strengthening and Capacity
Building on Climate Change Adaptation
(GEF/SCCF/IAIL3) 2,328\.9 1,960\.2 818\.3 145\.2 5,252\.6
3\. Results-based Monitoring and Evaluation
(M&E)(GEF/SCCF) 65\.9 66\.3 66\.8 22\.4 221\.4
4\. Project Management (GEF/SCCF) 294\.7 296\.4 298\.7 100\.2 990\.0
Subtotal 2,722\.9 2,356\.6 1,217\.7 279\.2 6,576\.4
TotalPROJECT COSTS 27,425\.2 21,682\.8 6,062\.7 329\.4 55,500\.0
44
Table 4: Project Cost by FundsResources
China
Mainstreaming Climate Change Adaptation inIrrigated
Agriculture Project
ComponentsProjectCost Summary
Counterpart IBRD GEF/SCCF Total
US$ `000 US$ `000 US$ `000 US$ `000
A\. IdentificationandPrioritizationof AdaptationOptions
(GEF/SCCF)
1\. Impact Assessment of Climate Change in3-HBasinand
Project Area 36\.8 36\.8
2\. Gap Analysis and Study onAdaptation Measures 409\.7 409\.7
3\. Prioritizationand Selection of Adaptation Measures and
DemonstrationAreas 25\.4 25\.4
Subtotal 471\.9 471\.9
B\.DemonstrationandImplementationof Adaptation
Measures
1\. Demonstration of Climate Change Adaptation Measures
(GEF/SCCF) 2,139\.9 2,139\.9
2\. Integration of Adaptation Measures into IAIL3 Project
Implementation Activities 26,293\.8 17,529\.2 43,822\.9
Subtotal 26,293\.8 17,529\.2 2,139\.9 45,962\.8
C\. MainstreamingAdaptation intoNationalCAD Program
andInstitutionalStrengthening
1\. Researchand Development ofAdaptation Policies
(GEF/SCCF) 106\.8 106\.8
2\. Institutional Strengthening and Capacity Building on
Climate Change Adaptation (GEF/SCCF/IAIL3) 2,277\.7 1,518\.5 1,365\.9 5,162\.1
3\. Results-based Monitoring and Evaluation
(M&E)(GEF/SCCF) 210\.8 210\.8
4\. Project Management (GEFBCCF) 476\.1 466\.6 942\.7
Subtotal 2,753\.8 1,518\.5 2,150\.1 6,422\.4
TotalBASELINE COSTS 29,047\.6 19,047\.6 4,761\.9 52,857\.1
Physical Contingencies 1,271\.7 835\.2 208\.8 2,315\.6
Price Contingencies 180\.7 117\.2 29\.3 327\.3
TotalPROJECT COSTS 30,500\.0 20,000\.0 5,000\.0 55,500\.0
45
Table 5: ProjectCost By FundsResources(Totals includingcontingencies)
ComponentsProject TotalsIncludingContingencies-Summary
Counterpart IBRD GEF/SCCF Total
US$ `000 US$ `000 US$ `000 US$ `000
A\. IdentificationandPrioritizationof Adaptation Options
(GEFECCF)
1\. ImpactAssessment of ClimateChange in3-H Basinand
ProjectArea 38\.7 38\.7
2\. Gap Analysis andStudy onAdaptationMeasures 430\.3 430\.3
3\. Prioritization and Selection of AdaptationMeasures and
DemonstrationAreas 26\.6 26\.6
Subtotal 495\.6 495\.6
B\. DemonstrationandImplementationof Adaptation
Measures
1\. Demonstrationof ClimateChange AdaptationMeasures
(GEF/SCCF) 2,246\.0 2,246\.0
2\. IntegrationofAdaptationMeasures into IAIL3 Project
ImplementationActivities 27,709\.2 18,472\.8 46,182\.0
Subtotal 27,709\.2 18,472\.8 2,246\.0 48,428\.0
C\. MainstreamingAdaptation intoNationalCAD Program
and InstitutionalStrengthening
1\. ResearchandDevelopment ofAdaptationPolicies
(GEF/SCCF) 112\.4 112\.4
2\. InstitutionalStrengtheningandCapacity Building on
ClimateChange Adaptation(GEF/SCCF/IAIL3) 2,290\.8 1,527\.2 1,434\.6 5,252\.6
3\. Results-basedMonitoring andEvaluation
(M&E)(GEF/SCCF) 221\.4 221\.4
4\. ProjectManagement(GEF/SCCF)
TotalPROJECTCOSTS 30,500\.0 20,000\.0 5,000\.0 55,500\.0
Table6: ProjectCosts by Category(Totalsincludingcontingencies)
ComponentsProject TotalsIncludingContingencies
Summary
Counterpart IBRD GEF/SCCF Total
US$ `000 US$ `000 US$ `000 US$ `000
I\.InvestmentCosts
A\. CivilWorks 26,142\.2 17,428\.1 217\.6 43,787\.8
B\.Goods 670\.1 446\.8 405\.3 1,522\.2
C\. Consultants' Services 205\.2 136\.8 1,046\.8 1,388\.9
D\.Studies, trainingandworkshops 2,290\.8 1,527\.2 1,743\.0 5,561\.0
E\. Sub-grant 691\.7 461\.1 1,097\.3 2,250\.1
F\.IncrementalOperationCosts 500\.0 490\.0 990\.0
TotalPROJECTCOSTS 30,500\.0 20,000\.0 5,000\.0 55,500\.0
46
Annex 6: ImplementationArrangements
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
1\. Institutionalarrangements for project implementation\. As the implementing agency
for the GEF/SCCF project, SOCAD will be responsible for management, monitoring and
supervision o fproject implementation, ensuring that agreed requirements and conditions are met,
and liaising with the World Bank on behalf o f the six Project Provinces\. As under IAIL3, the
Ministry o f Water Resources (MWR), Ministry of Agriculture (MOA), State Forestry
Administration (SFA), State Environmental Protection Administration (SEPA) and their local
lower level offices and other agencies as needed will provide technical support for GEF/SCCF
project implementation to ensure that project is implemented smoothly according to agreed
schedule and plans\. It is also important that the National Development and Reform Commission
(NDRC) and its lower level offices support the project and provide implementation support, as
NDRC i s the lead agency for climate change issues in China and this i s the first infrastructure
investment project on climate change adaptation\. Local offices for Comprehensive Agricultural
Development (CAD) offices and IAIL3 PMOSat various levels will be responsible for project
implementation at the field level, under the direction and coordination o f the concerned
Provincial Offices o f C A D (POCADs), and the leadership and guidance o f SOCAD\.
Management arrangements for the GEF/SCCF project would be integrated with IAIL3, and the
following organizational and institutional arrangements for management o f the GEF/SCCF
project inconjunction with IAIL3 have been agreed and established\.
2\. ProjectLeadingGroups(PLGs)\. PLGs for theproposedproject, from the central level
down to provincial and county government levels, will be the same as for IAIL3, but will be
strengthened with special experts and scientists concerned with climate change and adaptation\.
The central PLG would be chaired by the MOF Vice-Minister responsible for the project and
would include as needed members from MOF, NDRC, MWR, MOA, SFB, SEPA and other
concerned agencies and experts\. The provincial PLGs would be chaired by the provincial Vice-
Governor responsible for agriculture with members from the provincial Finance Bureau,
Provincial Planning Commission, WRB, AB, FRB, EPA and other agencies and institutes as
appropriate\. It i s important that the PPCs as representatives o fNDRC participate inthe PLGs and
provide support to the project, and those representatives from the All China Women's Federation
also participate where possible\. The major responsibilities o f the PLGs are to provide
coordination, policy-level support and policy guidance\. City and county PLGs will follow the
same model of the provincial PLG and having similar organizational format, composition and
responsibilities\.
3\. Central Project Management Office (CPMO)\. The national level or Central PMO
(CPMO) in SOCAD for IAIL3 would be the CPMO for the GEF/SCCF project, but with
responsibilities added which are specific to the GEF/SCCF project, and would be chaired by the
Director o f SOCAD\. Under the leadership o f the PLG, the CPMO would be responsible for
handlingday-to-day management o fthe project at the national level, overall project coordination
between agencies involved, project financial management according to Bank requirements,
annual funding mobilization and allocations, ensuring overall project progress and quality
according to agreed plans, overall project supervision including regular supervisionmissions and
technical support for Bank supervision missions, monitoring and carrying out o f procurement
according to Bank requirements, monitoring and evaluation and the overall operation and
47
performance o f the M I S and MES, revision o f the project PIP as needed, and reporting regularly
to the Bank on project implementation and supervision\. In particular, the CPMO will be
responsible ensuring that the project monitoring and evaluation system (M&E System) will
provide useful analytical results for guiding future climate change adaptation, providing
guidelines and procedures, providing oversight and technical and policy guidance to lower
levels, specifying tasks and responsibilities for overall project implementation, and making
implementation recommendations and providing guidance to improve the project and its impact
duringimplementationas appropriate\.
4\. Provincial PMOS(PPMOs)\. PPMOs for the IAIL3 project will be responsible for
implementation o f the GEF/SCCF project at the provincial level, similar to the national level,
with specific responsibilities and unit(s) added as needed\. Special units for the GEFISCCF
project have been established within the existing PPMOs in Hebei, Henan, Shandong, Anhui,
Jiangsu andNingxia with terms o f reference, staffing and other resources acceptable to the Bank\.
PPMOs will be responsible inter alia for day-to-day implementation management, direction,
monitoring and supervision o f implementation, providing periodic progress reports, ensuring
coordination between different departments involved in implementation, provision o f adequate
andtimely flow o ffunds to lower levels, coordinating fundingfrom the various sources, ensuring
financial management and procurement inaccordance with Bank requirements, management and
disbursement of the GEF/SCCF grant funds and ensuring accurate accounting for their use,
provision o f specialized technical assistance support to lower levels, proper operation o f the
MES and analysis o f MES data, operation o f the METs, carrying out various types o f
procurement, and arranging for project research, information dissemination, workshops and other
related activities\. GEF/SCCF units in the PPMOs would include senior-level, expert staff from
WRB, AB, andFRB\.
5\. Local Level Project Management Offices (PMOs)\. Similarly, local level
(municipality and/or county) PMOs at lower levels for IAIL3 will be responsible for
implementation o f the GEF/SCCF project, but will have specific responsibilities and units added
as needed\. Membership o f PMOS will follow the same pattern as for PPMOs\. These local-level
PMOs will be responsible for routine day-to-day operation and implementation o f the project,
including local project planning, field implementation, field supervision, inspection, field M&E
data and statistics collection and preliminary analysis, local procurement, reimbursements, local
project management activities, and coordination among local line bureaus involved in the
project\. Satisfactory institutional arrangements for management o f the GEF/SCCF project have
been established in the concerned MunicipaWrefecture and County C A D Offices (MOCADs
and COCADs)\. MOCAD PMOs would in particular be responsible for overseeing project
design, execution and supervision in the field, as well as overall local coordination and
financing\. COCAD PMOs would be responsible for project implementation in the field and
arranging local fundingand labor contributions\.
6\. Mobile Expert Teams (METs)\. METS have been established under IAIL3 by SOCAD
and the POCADs\. For the GEF/SCCF project, these METswould be strengthenedand expanded
with suitable experts to provide guidance on climate change and adaptation to staff and farmers
inthe field duringimplementation, and shouldinclude inparticular experienced leading scientist
and experts on climate change, meteorology and environment, as well as the experts on water
resources and agriculture and forestry for IAIL3\. The METs would coordinate internally to
ensure that the GEF/SCCF climate change work is fully integrated with IAIL3 work and that the
48
messages delivered to the field are consistent\. National-level experts, in particular, should be
utilized where appropriate\. The h c t i o n s o f the METs would include provision o f expert
advisory services for implementation o f the project aimed especially at the farmers; provision o f
technical consultation services to the PPMOs and lower-level PMOs for preparat\.ion/updating of
the PIPSand implementation o f the project; contribution o f suggestions to the PMOs to help
facilitate smooth project implementation and recommendations to correct problems which arise
during implementation; and assistance in project supervision, monitoring, inspection and mid-
term and completion reviews\.
7\. Farmer Participation\. To establish adaptation priorities, needs and constraints,
engagement with farmers and other stakeholders i s essential\. Major direct intended beneficiaries
o f the project are farmers and local communities in demonstration areas and technical line
agencies and governments and their staff at different levels\. Because one o f the major goals o f
the project i s to change awareness and thinking on climate change and adaptation, it is essential
to ensure a carefully planned and inclusive stakeholder input\. Stakeholder dialogue should: (a)
include a wide range o f viewpoints; and (b) enable the project to respond effectively to
adaptation priorities\.
8\. Preparation o f the proposed GEF/SCCF project has paid close attention to public
participation and consultation\. Extensive consultations were conducted with farmers on the
possible components to ascertain their views and priorities on issues affecting agricultural
development and climate change adaptation, as well as their own interests and lives\. A
questionnaire survey o f 5,070 farm households under IAIL3 showed that project area farmers
looked forward to having adequate on-farm works and improved irrigation efficiency with great
enthusiasm and wanted to participate with their voluntary labor input\.A number o f consultations
during the preparation o f the GEF/SCCF project also showed that farmers would welcome
adaptation measures which would help them reduce risks o f climate disasters\. To help strengthen
individual farmers' capability to deal flexibly with climate change, support for expansion o f
Water Users' Associations (WAS)and Farmers' Associations (FAs) as the farmers' own
organizations has been included to enable farmers to participate in and, where appropriate,
control decision-making on local irrigation management and agricultural production\. Each o f the
IAIL3 provinces prepared WUA and FA development plans for IAIL3 and those have been
revised to make them conducive to agricultural adaptation to climate changes as part o f the
GEF/SCCF project design\. In doing so, care was also taken to ensure full participation o f
women farmers in W A Sand FAs, particularly as managers o f household land and water when
males migrate out for work\. Moreover, the project has also paid particular attention to
vulnerable groups in the official poverty counties that count for about one-third o f the IAIL3
project areas, in order to promote inclusive institutions to increase poor farmers' participation in
andbenefits from bothIAIL3 andthe GEF/SCCF project\.
9\. Major stakeholders o fthe project include:
(a) National government departments and technical line agencies including MOF,
NDRC, MWR, and MOA;
(b) National andRegional research institutions anduniversities;
(c) Local governments;
(d) Civil societies including W A S ,FAs and village communities; and
(e) Individual farmers\.
49
Annex 7: FinancialManagementandDisbursementArrangements
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
ExecutiveSummary
1\. The Financial Management Specialist (FMS) has conducted an assessment o f the
adequacy o f the project financial management system o f the Mainstreaming Adaptation to
Climate Change into Water Resources Management and Rural Development (MACCWRMRD)
Project\. The assessment, based on guidelines issued by the Financial Management Sector Board
on November 3, 2005, has concluded that the project meets minimum Bank financial
management requirements, as stipulated inBP/OP 10\.02\. Inthe FMS' opinion, the project will
maintain financial management arrangements that are acceptable to the Bank and that, as part o f
the overall arrangements that the borrower has inplace for implementing the operation, provide
reasonable assurance that the proceeds of the trust fund are used for the purposes for which the
trust fund was granted\. The FMrisk ratingproposed for this project during the appraisal stage i s
modest\.
2\. The project is partially blended with the on-going IBRD lending project and the total
project investment i s USD 55\.5 million\. However, the GEF/SCCF grant i s USD 5 million and
the remaining USD 50\.5 million is the counterpart funds committed under the Bank's on-going
IAIL3 lending project\. There is no additional counterpart funds injection for the GEF/SCCF
project\. Inorder to avoid any confusion and duplication, the Bank agreed that only GEF/SCCF
financed transactions would be recorded in the project accounting and financial reports\. The
IAILI11financed activities would be recorded separately through its accounting and reporting
system\. The GEF/SCCF grant will flow from the Bank into project designated accounts (DA) to
be set up at and managed by the State Office for Comprehensive Agricultural Development
(SOCAD) under the MOF\.
3\. N o outstanding audits or audit issues exist with any o f the implementing agencies
involved in the proposed project\. However, the task team will continue to be attentive to
financial management matters duringproject supervisions\.
Audit Arrangement
4\. The Bank requires that project financial statements be audited in accordance with
standards acceptable to the Bank\. Inline with other Bank financed projects in China, the project
will be audited in accordance with International Auditing Standards and the Government
Auditing Standards o f the People's Republic o f China\. The Audit Services Center (ASC) o f
CNAO has been identified as auditors for related project components and annual audit reports
will be issuedbythe ASC accordingly\.
5\. The annual audit reports o f project financial statements will be due to the Bank within 6
months after the end o f each calendar year\. SOCAD i s responsible for submitting Consolidated
Project financial statements on June 30 o f each year o f implementation\.
50
FundsFlow andDisbursementArrangements
6\. Funds flow for GEF/SCCF grant will follow Bank and MOF requirements\. One
designated account (DA) will be established and managed by the SOCAD\. The funds flow is as
follows:
The - DA Provincial - - Municipal County Suppliers
World managedby + Finance Finance Finance -b and
Bank SOCAD Bureau Bureau * Bureau contractors
* ForNingxia, Jiangsu and Anhui province, the finds will be delivered to county level directly rather than go
through the municipal level\.
7\. All GEF/SCCF grant funds will be disbursed against same eligible expenditures using
identical disbursement percentages, as indicated inthe following table\.
Amount of the Grant Percentageof
Disbursement Allocated Expenditures
Category (in thousandUSD) to befinanced
(1) Civil Works 217\.6 100
(2) Goods 405\.3 100
(4) Studies, Training and Workshops 1743\.0 100
(5) Sub-grant 1097\.3 100
(6) Incremental Oueration Costs 490\.0 100
8\. Four disbursement methods will be available for the project: reimbursement, advance,
direct payment and special commitment\. The minimumvalue o f applications for reimbursement,
direct payment, and special commitment will be agreed before signingo fthe grant agreement\.
RetroactiveFinancing
9\. The Project requested retroactive financing for some project activities incurred after
September 30, 2007\. The aggregated amount will not exceed $310,000 o f total grant amount\.
The retroactive financing will finance the activities in respect o f all the categories and will be
finalized duringproject negotiations\.
10\. For expenditures against contract amounts indicated in the table below, Statements o f
Expenditure (SOEs) will be furnished as supporting documentation with the request for
reimbursement and to report eligible expenditures paid from the DA\.
51
ExpenditureCategory ContractsEquivalentor Less than US$ Equivalent
Civil Works All
FirmConsultant 100\.000
Individual Consultant 50,000
Studies, TrainingandWorkshops All
Sub-grant All
Goods 300,000
11\. For contract amounts subject to the Bank prior review indicated in the table below, the
list o f payments against the contracts, and records evidencing eligible expenditures, e\.g\., copies
o f receipts, supplier invoices, will be finished as supporting documentation with the request for
reimbursement andto report eligible expenditures paid from the DA\.
I Consulting firm I 100\.000 I
Individual consultant 50,000
Goods 300,000
County Provincial SOCAD - World
Finance +Municipal
Finance --b Finance Bank
Bureau Bureau * Bureau
* ForNingxia,JiangsuandAnhuiprovince, the withdrawalapplicationwillbe submittedby county levelto
province directlyandwill not be reviewedbymunicipallevel\.
14\. During project implementation, the Bank will closely monitor the efficiency and
effectiveness o f the approval and disbursement procedures\. Ifpossible, the Bank will work with
related implementing agencies and PMOSto find ways for more effective streamlinedprocessing
procedures\.
15\. Inorder to facilitate project disbursement, it was agreed that a "sub-grant" category will
be established for some small value project activities, including establishment o f WUA and FA,
water wells, biogas, green houses and tree planting\. These activities are supposed to be
conducted by the communities themselves\. Meanwhile, in order to ease disbursement
monitoring and review process, the output-based disbursements (OBD) will be used for some o f
project activities to be financed under the Sub-grant category including water wells, biogas and
green houses\. The following requirements regarding output based disbursement should be
followed and the only exception is that the unit cost i s not applicable for activities which are not
usingthe OBD\.
52
(a) Selection o fHouseholds: Participating households would be selected through a
participatory approach inaccordance with principles agreed with the Bank\. The list o f
project villages i s provided ineachprovincial PIP and would be updated as needed\.
(b) Signing o f ImplementationAgreements with Villages: Based on approved annual
work plans, the County PMOs would sign the detailed village implementation
Agreements with individual villages\. The Agreements should include: (i) scope o f
work; (ii) total cost and agreed grant and household contributions; (iii)
implementation
schedule; (iv) technical and construction standards in accordance with related
regulations; (v) supervision and final acceptance procedures; and (vi) payment
arrangements\.
(c) Implementation: Household(s) would purchase the materials from the local
market and employ certified technicians andor carry out the works by themselves
under the technical guidance from County PMO in accordance with the technical
standards set out in the Implementation Agreement\. But due to unavailability o f some
materials, as per request o f households, County PMOs may help purchase those
materials inlarge package andprovide in-kindto households\.
(d) Inspection and Pavment: After project activities are completed, the County PMO
will organize an inspection panel to inspect the completed works and issue inspection
certificates to accept the works\. Payment would be made based on the agreed amount
o f Bank contribution per package against completed and acceptedcertified physical
works\.
(e) Special Checking, Monitoring and Reporting: Special checkinghpervisionwould
be arranged by the County PMO to verify implementation o f the works and proper use
of fknds on a six-month basis by external consultants hired by County PMOs\. The six-
month checking report would be available for review by Bank supervisionmissions\. In
addition, each project village should disclose completion information to the local
public, including names o f households, use o fthe funds and the completion date\.
(0 UnitCost To BeUsed:
53
FinancialManagementandReportingRequirement
Risk Assessment and Mitigation
16\. The following risks with correspondingmitigating measures have been identified during
assessment:
Risk Risk RiskMitigatingMeasuresIncorporated intoProject Design
Rating
0Country Modest See the followingmitigating measures utilized inthe project\.
level
0Entity Modest Legal and institutional framework i s acceptable and current
Level PFMsystems are functioning reasonably well\. As thisproject
will be implementedby various agencies at different levels,
monitoring o f compliance with PFMand Bankprocedures will
be important\. Various level PMOSand finance bureaus
involvement will mitigate some o f these risks\. Furthermore,
Bank will work with the project agencies to further strengthen
their FMknowledge and capacity\.
0Project Modest Although this project will involve geographically dispersed
Level implementingagencies, all the implementingentities are
executingthe on-going IAIL3 project andproject staff have due
experiences and knowledge about the Bank's requirements\.
The well-prepared FMmanual will help them to better
understand some specific requirements o f the GEF/SCCF
project\. Furthermore, finance bureaus at different levels will
review and manage the project funds to ensure appropriate
usage\.
Control Risk
Budgeting Modest The FMS will work with the SOCAD and PMOSat different
levels to improve budget preparation, execution and budget to
actual variation monitoring and evaluation\.
0Accounting L o w Accounting policies and procedures are already inplace\.
Circular #13 has been issuedby MOF and adopted for all
World Bank financed projects\. The tailored accounting
requirements and case studies will be documented inthe FM
manual\. Necessary training will be provided to the accounting -
staff to improve their knowledge and qualifications\.
Internal Modest Internal control procedures and policies will be documented in
Control the FMmanual and all project implementing agencies are
required to follow them\. Inaddition, project expenditures will
be disbursed based on reimbursement basis and all supporting
documents are subject to detailed review conducted by the
finance bureaus at different level\. Refer to the related section
below for details\.
0Funds Modest Funds flow arrangement will involve multi-layered approval
Flow process and a large number o f spending units\. Any instance o f
delayed disbursement will affect project implementation\.
Related requirements and procedures will be documented inthe
54
FMmanual\.
0 Financial LOW The financial reportingresponsibilities are established\. The
Reporting form, content and periodicity of financial reports are well
definedby MOF and understoodby all the implementing
agencies and PMOs\.
Auditing L o w The external auditor, the ASC of CNAO, has extensive
experience with Bank project audits\. The audit will be
conducted inaccordance with acceptable auditing standards
and the audit reports will be due to the Bank every June 30*\.
17\. Therefore, the overall FMrisk-rating o f this project at the appraisal stage is modest\. The
FMSwill monitor the project FMrisk duringproject implementation\.
Strengths and Weaknesses
18\. Strengths\. SOCAD, provincial PMOs and lower level PMOs have accumulated
extensive experience in Bank project financial management and disbursement procedures and
requirements, including the ongoing MIL3 project\. Inaddition, the provincial PMOs, equipped
with experienced and qualified financial staff, will guide and provide oversight on participating
communities' implementation and enhance overall project financial management capacity\.
19\. Weaknesses and Action Plan\. Besides the weakness that give rise to risks identified
above, the following significant weaknesses and the action plan for addressing each weakness
have been identified:
Significant weaknesses Actions Responsible Completion
PersonAJnit Date
This is the first time for all A detailed FMmanual shouldbe SOCAD The FMmanual
the entities involved to prepared by the SOCAD\. and related
implement GEF/SCCF Furthermore, a well designed FM training hadbeen
grant\. training workshop shouldbe completed before
provided to all the project financial negotiations\.
Budgeting
20\. Inaccordance withproject implementationplanandconstructionprogress, provincialand
county PMOs will prepare annual budgets corresponding to the project activities they are
responsible for\. These budgets will be reviewed and approved by provinciaVcounty finance
bureaus and/or related line authorities, which provide related counterpart funds\. For budget
variances arising during execution, necessary authorization procedures and close monitoring
should be established\. Timely and accurate information on variances should be used as the basis
for mid-term adjustments\.
Accounting
21\. After discussing with MOF and SOCAD, it was agreed that the accounting regulation
stipulated by MOF for trust funds will be used for this GEF/SCCF grant\. But given this
regulation i s too simple and may not meet project financial management requirements, SOCAD
will prepare more tailored accounting requirements, which will be achieved by revising the
55
current regulation and adding some more accounts and statements\. All these requirements will
bereflectedinthe financial management manual\.
22\. The project financial reporting package, including detail format and content o f project
financial statements, was agreed and will be included in FM manual\. The project financial
reporting package set includes the following:
(a) Balance Sheet
(b) Summary o f Sources andUses o fFundsbyProject Component
(c) Statement o f Implementation o f Grant Agreement
(d) Designated Account (DA) Statement
(e) Notes to Financial Statements
23\. County PMOs will be managing, monitoring and maintaining respective project
accounting records\. Provincial PMOs will prepare consolidated project financial reporting
package for their province and submit to the SOCAD\. The SOCAD will consolidate the
financial reporting and submit it to the Bank for review and comments on a regular basis\.
Original supporting documents for project activities will be retainedby implementing agencies at
different level\.
24\. Adequate project accounting staff with educational background and work experience
commensurate with the work they are expected to perform is one o f the factors critical to
successful implementation o f project financial management\. Based on discussions, observation
and review o f educational background and work experience o f the staff identified for financial
and accounting positions in the implementing agencies, the task team noted that all staff i s
qualified and appropriate to the work they are expected to perform\. However, given this i s the
first time for all the entities involved to implement a GEF/SCCF-related project, FM and
disbursement training for all financial staff should be provided before signing o f the grant
agreement\.
25\. To strengthen financial management capacity and achieve consistent quality o f
accounting work, the task team has recommended that a project financial management manual
(the FMM) be prepared\. The FMMwill be part o f the Project Implementation Plan (PIP)\. The
FMMwill provide detailed guidelines on financial management, internal controls, accounting
procedures, fund and asset management and withdrawal application procedures\. The second
draft o f the FMMhas been submitted to the Bank for review\. The FMS reviewed the FMMand
provided comments for their W h e r modification\. The FMMwill be finalized and distributed to
all the relevant financial staffbefore implementation starts\.
Internal Control and Internal Auditing
26\. The project will use the internal control procedures and policies established for the IAIL3
project, including approval and authorization controls, segregation o f duties, clear staff
functions, and safeguarding o f assets\. The funds flow will be arranged and monitored through
FinanceBureau channels and will include their substantive review\.
27\. There will be no formal internal audit function to be set up within project\. However,
project expenditures will be disbursed based on reimbursement basis and all supporting
56
documents are subject to detailed review conducted by the Finance Bureaus at different levels\.
Duringproject implementation, the FMS will review the Finance Bureaus' project examination
reports anddetermine whether the Bank can rely on their work\.
Financial Reporting
28\. The format and content o f the project financial statements represents the standard project
financial reporting package agreed to between the Bank and MOF and have been discussed and
agreed to with all parties concerned\.
29\. County PMOs will prepare financial statements on their implemented components, which
will then be usedby the related Provincial PMOs for preparing consolidated provincial project
financial statements\. The provincial consolidated financial reporting will then be consolidated
by SOCAD and submitted to the Bank for reviewandcomment on a regular basis\.
SupervisionPlan
30\. The supervision strategy for this project is based on its FM risk rating, which will be
evaluated on regular basis by the FMS andinconsultation with relevant Bank Task Team leader\.
57
Annex 8: ProcurementArrangements
China: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
A\. Introduction
1\. Procurement for the proposedproject would be carried out in accordance with the World
Bank's "Guidelines for Procurement under IBRD Loans and IDA Credits" dated May 2004 and
revised inOctober 2006; the "Guidelinesfor Selection and Employment o f Consultants by World
Bank Borrowers" dated May 2004 and revised inOctober 2006; and the provisions stipulated in
the GEF/SCCF Grant Agreement\. The various items under different expenditure categories are
described below\. For each contract to be financed by the Loan, the different procurement
methods or consultant selection methods, the need for pre-qualification, estimated costs, prior
review requirements and time frame are given in the Procurement Plan\. The first procurement
plan will cover initially 18 months period and will be updated at least annually or as required to
reflect the actual project implementationneeds and improvements ininstitutional capacity\.
ProcurementofWorks
2\. The works procured under this project would include low value farm irrigation and
drainage construction and improvements such as lining o f canals, structures, pumping stations,
buildings and tube wells\. The procurement will be done using the Bank's Standard Bidding
Documents (SBDs) for all ICB and Model BiddingDocuments (MBDs) for N C B agreed with the
Bank\.
(a) International CompetitiveBidding (ICB)\. Although not anticipated, any contract
for works estimated to cost US$10 million equivalent or more would be procured under
ICB procedures specified inthe Procurement Guidelines\.
(b) National Competitive Bidding (NCB)\. Contracts for works estimated to cost less
thanUS$10 million equivalent may be awarded under NCB procedures acceptable to the
Bank\. Works contracts with estimated values o f less than US$2 million may be
advertised only inprovincial press\. To the extent practicable, contracts for works shall be
grouped inbidpackages estimated to cost US$lOO,OOO equivalent or more each\.
(c) Small Civil Works Procurement (Shopping)\. Contracts for works estimated to
cost less than US$lOO,OOO equivalent per contract would be awarded through shopping
procedures as specified in para\. 3\.5 o f the Procurement Guidelines\. These works would
be suitable for lump-sum and fixed-price contracts awarded on the basis o f quotations
obtained from at least three qualified domestic contractors in response to a written
invitation\. To promote the transparency and competition, County Offices o f
Comprehensive Agricultural Development (COCADs) shall carry out shopping
procurement in accordance with the agreed Procedures for Procurement o f Small Civil
Works developed for this Project\.
(d) Community Participation in Procurement: Plantation, construction o f
greenhouse, small scale bio-gas and other works which are small and widely scattered,
58
which are not suitable for competitive contracting, would be procured through
communities participation inaccordance with the following procedures:
9\. Siminp o f Implementation Agreement: Based on annual work plan issued
by POCAD, county PMO through its township government will sign detailed
implementation agreement with administrative villages to specify: (i) scope o f
works and quantities; (ii) total financing and source o f financing including
agreed unit cost for each activity; (iii)implementation schedule; (iv) technical
standards; (v) supervision and final acceptance procedures; and (vi) payment\.
10\. Implementation: Administrative villages would mobilize local villagers,
use local equipment and materials to implement the activities as specified in
the signed agreement under technical guidance from county PMOs\.
11\.Pavment and Auditing: Payment would be made on unit cost basis against
completed physical works as verified by county PMOs\. A special review
would be arranged by county PMOs together with POCAD, to verify the use
o f the loans on a six-month basis\. The review report would be provided to the
Bank supervisionmissionwithin one month after completion o freview\.
Procurementof Goods
3\. Goods procured under this project would include equipment and seeds\. The procurement
will be done using Bank's Standard Bidding Document (SBD) for all International
Competitive Bidding (ICB) and Model Bidding Documents (MBDs) for National
Competitive Bidding(NCB) agreed with the Bank\.
(a) International Competitive Bidding (ICB)\. All contracts for goods costing
US$500,000 equivalent or more, would be awarded through ICB procedures\.
(b) National Competitive Bidding (NCB)\. N C B procedures would be used for
procurement o f goods costing less than US$ 500,000 equivalent per contract\. Contracts
may be advertised only inprovincial press\.
(c) Shopping\. Other goods in smaller quantities and available o f the shelf, would be
procured using shopping procedures with contracts under US$ 100,000 equivalent per
contract\.
(d) Direct contracting\. New species o f seeds and equipment with proprietary nature
would be procured through direct contracting with prior agreement to the Bank\.
EstablishmentofWater Users Associations (WUAs) andFarmersAssociations(FAs)
4\. Sub-grants would be provided to establish W A Sand FAs\. Each WUMFA established
which meets agreed project requirements and principles set forth in its WUA/FA Development
Plan and is so certified by the responsible PMO would be eligible for a Sub-grant\. The Sub-
grants as agreed WUMFA Development Plan would be used to cover costs for association
establishment including: association registration; office equipment and facilities; office building;
water measurement facilities and equipment; and training activities required for the
establishment and operational start-up o f each association\. Considering that the amounts
59
involved are very small and are at scattered locations, no centralized procurement i s required\.
For each association, procurement would be conducted by the concerned local project agency
responsible using local shopping practices in accordance with the agreed Project Implementation
Plan\.
Selectionof Consultants
5\. Consultants' services would be required under this project\. The consultants' services
would include development o f MIS, mobile expert team and groundwater management\. Most
services would be provided by individual consultants and some would be provided by consulting
firms\. The consulting contracts for firms which are expected to cost more than US$200,000
equivalent per contract will use the Quality and Cost Based Selection (QCBS) inconformity with
paragraphs 2\.1 through 2\.31 o f the Consultants Guidelines\. Most consulting contracts for firms
are estimated under US$200,000 equivalent per contract under this project\. The Selection Based
on Consultants Qualifications (CQ) would be used for these contracts\. Chinese University,
Design and Research Institute as source o f consultants may be included in the shortlist if they
meet the requirements specified in paragraph 1-11o f the Consultants Guidelines\. In such case,
CQ would be usedinstead o f QCBS\. Shortlists o f consultants for services estimated to cost less
than US$300,000 equivalent per contract may be composed entirely of national consultants in
accordance with the provisions o f paragraph 2\.7 o f the Consultants Guidelines\. Under the
circumstances described inparagraph 3\.10 o f the Consultants Guidelines, the consultants would
be selected and awarded under a sole-source basis, subject to the Bank's prior approval\.
Individual consultants would be selected and contracts awarded in accordance with the
provisions o fparagraphs 5\.2 through 5\.3 o f the Consultants Guidelines\. Under the circumstances
described inparagraph 5\.4 o f the Consultants Guidelines, individual consultants may be selected
and awarded on a sole-source basis, subject to the Bank's prior approval\.
Training and Studies
6\. Training and studies would be required\. Detailed programs will be developed by the
SOCAD during project implementation and included in project annual work plans to be
submitted each year by November 30 for the Bank's review and concurrence\. Loan hnds for
training and studies will be disbursedbased on the actual expenditures\.
B\. Assessment of the Agency's Capacityto ImplementProcurement
7\. Procurement activities would be carried out by project provinces through the established
C A D Offices at various levels\. SOCAD will play a coordinating role in the project
implementation\. Since GEF/SCCF i s supplementary to IAILI11Project, no separateprocurement
assessment was done\. The organizational structure, roles, functions and M&E mechanism are
already in place\. Implementing units are equipped with experienced procurement staff, The
overall project procurement risk is average\.
60
C\. ProcurementPlan
8\. SOCAD has developed a procurement plan for project implementation which indicates
the procurement methods to be used\. The initial 18 months procurement plans has been
reviewed at appraisal and cleared duringGEF/SCCF grant negotiation on February20-25,2008\.
D\. Frequencyof ProcurementSupervision
9\. Inaddition to standard prior reviews, procurement supervision will be carried out from
the Bank offices\. The Project Team has recommended that a supervision mission visit the field
every six months to carry out procurement post reviews during the first two years of project
implementation; ifprocurement i s satisfactory duringthat period, procurement post reviewsmay
be carried out once a year for the remaining three years\. The sampling ratio for the ex-post
procurement reviews would be one out o f five contracts\.
TableA
TotalProject Costsby ExpenditureCategory
(inUS$millionequivalent)
I Goods I 1\.52 I
Consultants' Services 1\.39
Studies, Training and Workshops 5\.56
Sub-grant 2\.25
Others 0\.99
Total 55\.50
Table B
Thresholds for ProcurementMethods andPriorReview
ExpenditureCategory Contract Value Threshold ProcurementMethod
(US% thousands)
1\. Goods 2300 ICB/NCB
All direct contractingcontracts
2\. Consultants 2100 for firms QCBSICQ
250 for individual consultants
All single source selection
contracts regardless o f contract
61
Annex 9: EconomicandFinancialAnalysis
China: MainstreamingClimateChangeAdaptation inIrrigatedAgriculture Project
Introduction
1\. Securing food production for a large and growing population, while also maintaining the
sustainability o f natural resources such as land and water, has long been a great challenge for
China\. With climate change, addressing such a challenge may become even more difficult\.
Climate change i s already suspected o f affecting the pattern o f water resource availability,
rainfall and temperature to some extent in some areas; and thus may impact agricultural
production in various locations o f the country\. Such impacts would be especially critical in the
case o f the 3 H basin, which i s China's breadbasket\. It should be noted that impact o f climate
change on agricultural production may vary substantially by region (some may benefit and some
may lose), depending on the climate that farmers in a specific location face at present and
potential climate changes inthe hture\.
2\. Farmers may modify their production practices in response to changes in water
availability, rainfall pattern and temperature\. The set o f possible modifications that farmers may
undertake i s called adaptation\. The ability of farmers to adapt to climate change i s based on
many factors, including existing technologies, input and output prices, human capital and
knowledge, infrastructure and support services by the government\. Inthe event that farmers do
not adapt to negative impacts of climate change, they may face losses because o f possible
reduction in yields and increase in costs o f production\. If farmers adapt, they may be better off
compared to the no-adaptation case, although they may still face losses\. Inthis case, their losses
would be smaller than inthe no-adaptationcase\.
3\. Measuring the economic benefits from adaptation is, however, not a simple task\. It faces
difficulties that may arise in identification o f the set o f adaptations farmers may undertake, the
costs and benefits associated with each o f them and the selected subset o f adaptation measures
chosen by the farmers\. Because there i s a high degree o f uncertainty associated with a likely
climate facing a given region, the set o f prioritized adaptation measures undertaken by different
groups o f farmers i s also uncertain\. Hence, there i s a wide range o fpossible adaptation strategies
and a wide range o f opportunities and benefits to be realized from adaptation to climate change\.
Moreover, climate change and adaptation to it i s relatively slow and changes are incremental and
mixedwith other changes such as market signals\. This situation makes it difficult to recognize,
observe andmeasure the process o f climate change adaptation\.
Methodologyfor ProjectAssessment
4\. A two-model methodology, used to assess the likely benefits from the proposed
GEF/SCCF-financed project, i s described below\. The methodology i s applied to the 3H basin
and focuses on the project provinces o f Jiangsu, Henan, Hebei, Shandong, Anhui and Ningxia
andthe 10pilot areas (pilot project sites) inthose provinces\. Any methodology for assessmentis
constrained by the assumptions inherent in the models used\. In this case, two complementary
model approaches are used: (a) a set o f bio-physical process based crop models prepared by a
team o f scientists from the Chinese Academy o f Sciences (CAS); and (b) a farm-level,
62
statistically-based economic model to simulate inferred farmer behavior prepared by an
agricultural economics group at CAS\. The latter i s referred to as "Ricardian" model\.
5\. Overall, the CAS crop models are used to simulate the impact o f expected climate change
on the yields o f major crops inpilot locations (the "without project" or without adaptation case),
while the farm-level economic models are used to estimate the impact o f farmer adaptation to
climate change on farm income (the "with project" or with adaptation case)\. Although a
quantitative comparison o f the two models is not feasible, a qualitative comparison could
indicate roughly the value o f adaptation measures taken by farmers in response to climate
change\. Crop models, ifproperly calibrated to local conditions, can provide reasonably accurate
estimates o f forecasted changes intemperature and precipitation on the yields o f specified crops
in particular locations\. Crop models can also simulate the impact o f changes to production
practices or technologies, or o f external conditions (such as fertilization effects from ambient
CO2)\. By themselves, however, unless otherwise specified, such models do not evaluate
adaptation options\. Moreover, it must be emphasized that the CAS crop simulation models are
purelybio-physical and do not consider farm economics\. And by definition, the crop modeling
methodology i s limited to the crops being modeled and therefore does not a priori capture
situations where farmers may switch crops which i s one important adaptation measure\.
Nevertheless, even with such limitations, crop model simulations can provide a base-line case
corresponding to an assumption o f current conditions unchanged except for the climate changes
specified inthe crop simulation models\.
6\. To evaluate possible farmer adaptive responses to climate change in various locations,
the Ricardian economic model methodology was used\. The Ricardian model assumes that each
farmer wishes to maximize income subject to the exogenous conditions o f their farm\.
Specifically, the farmer chooses the crop and inputs for each unit o f land in order to maximize
income per hectare\. Ifthe farmer chooses crops that provide the highest net income and for each
crop also chooses each endogenous inputs in order to maximize net income, the resulting net
income will be a (Ricardian) function o fjust the exogenous variables (prices, climate, soils, and
water availability)\. The Ricardian function i s the locus o f income with respect to each o f these
exogenous variables\. Because the Ricardian net income function does not include unprofitable
alternatives, it does not look like the standard response function for any single crop\. It is a
"comprehensive" function across many crops and technology choices undertaken by farmers\. As
climate changes, farmers move from one set o f crops and or technology to another\. Because o f
the wide set o f crops, technologies and production practices included inthe Ricardian function, it
provides an estimate o f the benefits derived from adaptation (although it is limited to the
observed ones in the particular region)\. It should be noted that the Ricardian function can also
include livestock and thus allow farmers switch between crops and livestock as climate changes\.
However, inthis analysis only cropped agriculture will be considered\.
7\. An important caveat that applies to both the bio-physical crop models and the Ricardian
economic models i s that the impact o f climate change on availability o f water in the various
sample locations was not analyzed\. Water availability, which i s an external variable, can affect
the adaptation decisions which farmers undertake, including water saving technologies to help
farming with less water\. Inorder to add water availability considerations, the water system in
the 3H basin should be modeled to assess various future climate scenarios and their impact on
water availability from the basin down to the field\. Although the crop models do consider on-
farm water availability by adjusting irrigation schedules according to soil moisture status, they
63
assume implicitly that additional basinwater resources are available when needed\. Similarly, the
Ricardian analysis does not consider variations inthe amount o f water available and used at the
farm level; it implicitly assumes that sufficient water i s available at the specified location to
accommodate the specific adaptation measurers undertaken by farmers\. Both o f these models
and their analyses need to be enhanced to include the impact o f changes inwater availability as a
result o f climate change\. This was not done at this stage due to lack o f time and resources, but
should be done in the future to help guide future programs, investments and policy related to
climate change\. Water availability i s an especially important consideration for agriculture inthe
3H Basin because the basin is already critically water-short over wide areas\. Another caveat is
the C02 fertilization effect which i s included inthe crop models analysis cannot be addressed in
the Ricardian model analysis due to the non-spatial distribution o f C02\.
8\. Climate change scenarios (assessed in both the crop models and the Ricardian model)
include combination of: (a) increased temperature o f 0, 2, and 5 degrees; and (b) increased and
decreased precipitation o f 0 percent, +15 percent and -15 percent, +30 percent and -30 percent
&year\. Changes invariations by season were not simulated\.
Without ProjectCase/Results
9\. A first approximation o fpossible outcomes without adaptation was provided by running
one o f two crop models for crops in each sample location, with both rainfed and irrigated
conditions being simulated\. Because the volume o f output for all cropAocation combinations is
high, only the results for two locations are presented to indicate the impact on crop yields\. Two
typical counties and eight demonstration locations in other counties were selected\. For the
typical counties, the results are simulated by the Vegetation Interface Program (VIP) model\. For
the other counties, the results are simulatedbythe Decision Support System for Agro-technology
Transfer (DSSAT) model\. The presentation of the DSSAT results in the CAS report could be
provided, with an incremental effort, in terms o f percent reduction from present yield values
using the same scenarios as inthe case o f VIP\. But at present, only the VIP results for the Botou
and Huaiyuan counties are usedfor comparisonwith the Ricardianresults\.
10\. Tables 1 and 2 below present results for the two counties o f the various climate change
scenarios for two crops (maize and wheat), under two technologies (irrigated and rainfed)\. The
climate change scenarios are shown as percent changes in mm of rainfall (+ and -), and
temperature increases in degrees C (5 degrees and 2 degrees)\. Values are percent reduction in
yields compared to the present climate (rounded values) as a result o f those changes\. Because
the way the irrigated crops were modeled\.' one can view the irrigated simulation as an adaptation
compared with the rainfed simulation\.
'The crop models allow adjusting irrigation schedules according to soil moisture status\. When soil moisture is
below a given threshold, then water i s applied during the simulation\. This i s a case where water is provided o n
demand, which is typical o f an irrigation system\. However, by doing so, the modelers still assume that water i s
available at the source to satisfy the demand\.
64
Table 1: Percent Yield Changes Resulting from Climate Change Scenarios for Boutou
County
Maize Wheat Maize Wheat
+15%mmY+2C -5 20 -3 26
O%mm:+2C -6 20 -6 21
O%mm;+SC -20 32 -22 39
-3O%mm;+5C -21 32 -30 24
model (54618)\.
Scenario/Crop Irrigation Rainfed
Maize Wheat Maize Wheat
+l5%mmY+2C -12 17 -9 23
O%mm;+2C -12 16 -14 18
-1~%IIuII:+~C -14 15 -17 12
+3O%mmy+5C -27 -6 -24 2
O%mm;+SC -28 -8 -31 -6
-30%mm;+5C -29 -10 -38 -18
11\. As can be seen, in all cases for maize, the simulated climate change lead to losses
compared to the present climate in the two sample locations\. And under most climate change
scenarios maize yield always shows a more negative response than wheat, for both irrigation and
rainfed technologies\. Generally, crop yields are higher from irrigated land than rain-fed land in
3 H plain\.2 This i s true not only for the baseline but also for the climatic change situation\. The
relative negative change o f crop yields i s usually smaller for irrigated land than that for rainfed,
especially in the range o f a 2 degree C increase, showing that irrigation helps mitigating the
negative impact of increased evapotranspiration (ET) that results from rising temperatures and
changes inprecipitation, on crop yields\.
With ProjectCase/Results
12\. As explainedabove, an estimate o fpossible outcomes with adaptation was provided from
the Ricardian economic models in each sample location, for both irrigated and rainfed farms\.
2While yield under irrigation is higher than under rainfed technology, these incremental yield changes may not
necessarily be high enough to justify investment in irrigation\. Net economic benefits may actually be negative
under irrigation\. Additional economic assessment would be needed to verify this point\.
65
The Ricardian climate estimates were taken from a recent all-China statistical analysis o f
agricultural sensitivity\. To estimate the economic impact o f adaptation at the local county level,
the present climate for each county was inserted into the Ricardian function inorder to calculate
the present net revenue per ha\. It shouldbenotedthat the net revenue per ha captures a crop mix
that i s being grown all year round, as well as technologies and management practices that
farmers already undertake in response to various signals they perceive, including responses to
present changes inclimate\.
13\. As can be seen from Table 3, the 10 counties vary in their sensitivity to climate\.
Additionally, changes in net revenue per ha resulting from change in climate vary across
counties\. For example, Botou and Gaomi are counties that face already extreme climate and this
is reflected intheir low net revenue per rainfed land\. Therefore, with climate change inthe range
simulated in this study, these two counties may face less favorable situation compared to other
counties\. Unlike the other counties, Nanyang and Mingguang counties exhibit almost no
difference between rainfed and irrigated net revenueper ha\.
Table 3: Annual Net Crop Revenue per ha UnderExistingClimate Conditions($/ha, 2006)
Ming-
Botou Huaiyuan Cangxian Yang-gu Gaomi Nanyang Shangqiu Suqian Xinyi guang
Irrigated
Farms 1450 1119 1361 2182 1227 1239 2545 1730 1979 2328
Rainfed
Farms -399 404 332 215 -94 1185 1286 202 253 2326
14\. Climate change scenarios (following the ones that were used in the crop modeling
simulations) were then incorporated into the Ricardian models to calculate the change in net
revenue resulting from change inclimate for each county\. The change innet revenue per ha are
presented in Table 4\. The results in the table show a large variance in the economic impact o f
climate change on net revenue for both irrigated and rainfed farms\. It is also clear that the
various counties exhibit different sensitivities, interms o fthe size o f gains or losses\.
66
Table 4: ChangeinAnnualNet Crop Revenueper ha(% change + or - from 2006)
15\. Except for two sites and a few anomalies inthe results, Table 4 shows that ingeneral net
farm income per hectare increases somewhat with increased temperatures o f 2 and 5 degrees C\.
These results indicate that, with adaptation, farmers in the 3H Basin can compensate for
increasing temperature due to climate change and maintain or even increase their net farm
income per hectare\. Although results are not completely consistent, Table 4 also indicates that,
interms of percent, change in net returns rainfed farms may in general benefit relatively more
from adaptation under the climate change scenarios tested, compared to irrigated farms\.
Conclusions
16\. Overall, the comparison o f the bio-physical crop simulations models show that reductions
inmaize would occur as a result of climate change without adaptation (`without project's case),
while the Ricardian models indicate that with adaptation net farm income can increase (`with
project's case)\. Although it i s not possible to compare the outcomes o f the two model systems
directly, these results provide a strong qualitative justification for the proposed project\. These
results o f course assume that the farmers have the knowledge, guidance and support needed to
facilitate adaptation and thus, it i s a major purpose o f the proposed project\. In addition, the
Ricardian analysis did not consider water availability, which i s an implicit assumption that water
i s non-limiting\. Given that water supplies are very limited in the 3H Basin, this provides a
justification for the project's strong focus on improving "real water saving" as a means for
climate adaptation\.
67
17\. More specifically, while it i s difficult to compare percent change in per ha yield o f
individual crops with dollar reduction inper ha net revenue, it is possible to make a number o f
observations and comparisons which serve to justify qualitatively the project\.
(a) Modeling the production o f two major crops (wheat and maize) that capture 40-
60% o f the sown area in various counties inthe 3 H basin, suggests that at the crop level,
climate change scenarios will result in maize yield losses and loss and gain in wheat,
ranging between 1-46 percent, depending on the scenario and the crop and technology
(irrigation or rainfed crops)\. Translating yield losses to economic losses could be done
using crop budgets data and would enable a closer comparison\. But even without such
data, it is reasonable to conclude conservatively that without adaptation, the agricultural
sector in the 3 H Basin will face significant economic losses at least in maize under
various climate change scenarios; and that with adaptation those losses can be mitigated
or eliminated\.
(b) Another likely conclusion from the crop model simulations is that use o f irrigation
(considered to be an adaptation measure) may result in lower losses due to climate,
compared to rainfed technology for the same crop\. Holding all other factors constant, if
the incremental change inyield under irrigation pays for the irrigation investment (or part
o f it + the value o fthe water), then irrigation could be an important adaptation measure in
the 3HBasin\.
(c) The results o f the Ricardian method suggest that adaptation matters\. Adaptation
is embedded implicitly and explicitly inthe Ricardian function\. The methodology is able
to observe differences between irrigated and rainfed farms and between cropping patterns
(shares o f various crops used in various farms)\. Although the Ricardian methodology is
not able (inthe case o f the 3 H basin) to observe differences stemming from specific farm
level production methods that have been adapted to climate change, these are implicitly
included in the observed data\. Therefore, if one can obtain monetary values per ha o f
agricultural production from a crop model (CP) and from the Ricardian model (RM), the
difference RM-CP (all other factors being equal) may reflect the "value" o f adaptation\.
While the CP impact values are given inpercent yieldha lost and the RM impact values
are given in $ha, it i s clear that such differences would (after transformation) always be
positive, at least inthe sample locations inthe tables above\.
18\. Several caveats to this qualitative analysis need be addressed\.
(a) Water availability should be part o f the analysis\. This i s important since climate
change may reduce (or increase) the amount o f water that i s available to farmers and this
effect i s not captured so far in the Ricardian analysis\. Therefore, the current "with
adaptation" estimates be upward-biased\. The role o f water-saving technologies as an
adaptation measure i s likely to be especially significant in the 3 H Basin\. Including real
water-saving technologies in the project assessment would be possible if water
availability analysis (including both surface water and groundwater) is connected to the
agricultural production system\.
(b) All models are constrained bythe assumptions and processes represented inthem\.
Giventhe importance o fthis topic, continued effort and fundingis needed to enhance and
expand boththe bio-physical crop models and the Ricardian economic models\.
68
Annex 10: SafeguardPolicyIssues
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
A\. Environmentalsafeguardissues
Introduction Environmental Assessment Category C
-
1\. The proposed GEF/SCCF project would be partially blended with the ongoing IAIL3
project, which itself is focused on rehabilitation o f existing sites with limited construction and no
major civil works\. Inaddition, the proposed GEF/SCCF adaptation project is an environmental
project and aims: (a) to help strengthen the resilience o f agricultural development to climate
change in China through implementation o f selected adaptation measures at demonstration sites;
and (b) to mainstream climate change adaptation into irrigation, water resource management and
thus, in the wider context o f rural development\. It has been designed to have positive
environmental and social impacts effects, avoid negative impacts and improve the sustainability
o f IAIL3\.
2\. The proposed adaptation project will use a "gap-filling plus programmatic approach"\. A
gap analysis will be carried out and a flexible programmatic approach will be adopted with the
objective o f identifying priority issues to address\. Such a gap-filling plus programmatic
approach would help: (i) focus on adaptation gaps from other partners' interventions (e\.g\.,
IAIL3); (ii)provide an adaptation framework for comprehensive and cross-sectoral
interventions; (iii)support institutional capacity building and public awareness; (iv) create a
favorable environment for integrated water management, optimizing opportunities for replicating
good practices, and ensuring sustainability; and (v) avoid practices which are counter to
adaptation\.
3\. Based on a preliminary gap analysis o f IAIL3, the proposed project would, in particular:
(a) identify, prioritize and select adaptation options and measures to be tested during project
implementation; (b) demonstrate and implement selected adaptation measures at demonstration
sites; and (c) help mainstreaming climate change adaptation into the national Comprehensive
Agricultural Development (CAD) Program and provide institutional strengthening support to
help replicate adaptation approaches into the wider context o frural development\.
4\. The particular strength o fthe proposed project is that it will screen relevant IAIL3 project
activities on the basis o f climate change impacts and then suggest specific adaptation measures
(including changing the mind-of decision makers) in view o f making IAIL3 and Chinese
agriculture and irrigation more resilient and sustainable\. The project will raise public awareness
o f adaptation to climate change, strengthen institutional coordination and build capacity to
identify and implement adaptation measures needed\. In selecting appropriate adaptation
measures, the project will rely on scientific knowledge, experiences gained, lessons learned and
"learning by doing" in pilot demonstrations\. This approach will be fhther strengthened by full
participation o f stakeholders at different levels\. For the IAIL3 Project, the EMP was prepared
for each province\. The mitigation measures, monitoring program and other activities described in
the EMP would also be applied to GEF/SCCF-supported activities\.
5\. Insummary, the proposed project aims to further strengthen positive environmental and
social impacts through new concepts o f risk management, new standards in irrigation
infrastructure and management, local and farmer participation and use o f natural resilience (land,
69
water, forests) to moderate extreme weather conditions\. Environmental and social impacts o f
project activities are expected to be positive and the project has therefore been classified as a
Category C project\. Based on review o f proposed activities, other environment safeguards
policies are not triggered (see table below)\.
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP/GP 4\.01) [XI [I
Natural Habitats (OP/BP 4\.04) [I [ I
Pest Management (OP 4\.09) [I [ I
Cultural Property (OPN 11\.03, being revised as OP 4\.1 1) [I [I
Involuntary Resettlement (OP/BP 4\.12) [ I [I
Indigenous Peoples (OD 4\.20, being revised as OP 4\.10) [XI [ I
Forests (OPBP 4\.36) [ I [I
Safety o f Dams (OP/BP 4\.37) [I [ I
Projects inDisputed Areas (OP/BP/GP 7\.60) [I [I
Projects on International Waterways (OP/BP/GP 7\.50) [ I [ I
EnvironmentalAssessment
6\. As described above, there are no major adverse environmental impacts expected as a
result o f this project\. The project i s designed to be entirely positive from an environmental point
o f view, particularly by protecting vulnerable ecosystems from the impact o f global climate
change\. Some expected direct positive impacts include: (i) reduced uncertainty o f impacts o f
global climate change and formulation o f adequate adaptation measures; (ii) mitigation o f the
impacts o f unsustainable agricultural practices and development and implementation o f
sustainable alternatives; (iii)reduced vulnerability o f agro-systems and planning and
management o f irrigation water supply; and (iv) increase public awareness based on adaptation
needs and increased social and institutional capacity to manage the ecosystems\. Adaptation
measures selected under the project would be assessed in terms o f environmental impact (or an
Environmental Assessment will be performed as part o f the preparation o f the adaptation
measures)\.
B\. Social Safeguards Issues
I nvoluntary Resettlement
7\. The proposed project will not undertake activities that will require taking off land, and
neither land acquisition nor involuntary relocation i s expected during project implementation\.
Any potential impacts resulting from the proposed testing o f adaptation measures at
demonstration sites will be dealt in accordance with the Resettlement Policy Framework
prepared for the ongoing IAIL3\.
Indigenous peoples
8\. The Bank's IP policy was not triggered by IAIL3, as there are no ethnic minority groups
inthe project areas inthe five Project Provinces area inthe 3H basin, as confirmed inthe social
70
impact review carried out by SOCAD\. The proposed GEF/SCCF project demonstrations sites are
all within the original IAIL3 project areas, except for Tongxin county inNingxia which has been
newly added to the IAIL3 project area as a Participating Province for WUA development and in
which there are Hui minority communities\. For the five recently added Participating
Provinces/regions under IAIL3, Ethnic Minority Development Plans (EMDPs) have been
prepared for WUA pilot areas for the three provinces where ethnic minorities reside\. Seven
ethnic minorities including Hui ethnic groups reside in about 61 WUA pilot sites in Ninxia,
Yunnan and Inner Mongol\. Because Tongxin county underthe GEF/SCCF program is located in
the same project area inNinxia, those Hui communities related to GEF/SCCF program will also
be coveredby the EMDPprepared for Ninxia\. The EMDPwill help ensure that Huicommunities
have equitable opportunity to participate in and benefit from the GEF/SCCF program and that
they have cultural and location-specific compatibility within the context o f both the IAIL3 and
GEF/SCCF projects\.
9\. Inparticular, the Eh4DP for ethnic minorities inNingxiaHuiAutonomous Regioncovers
all the project areas mainly in three prefecture level cities, namely Yinchuan, Wuzhong and
Nonghen\. Inthese project areas, the ethnic minority group i s only the Huipeople\. The proposed
GEF/SCCF program would be located in a township called Xiamaguan in Tongxin county o f
Wuzhong city\. Ten village communities from the Xiamaguan township would participate in the
GEFISCCF program, and six o f them have Huipopulation, accounting for about 47% o f the total
population o f the ten\. There are four villages which are almost purely Hui\. The table below
shows the basic ethnic-demographic situation o fthe GEF/SCCF project area\.
The BasicEthnicCensusinthe GEF/SCCFProgramArea inNingxia
I 1 Average annual
Area 1 Population
House- Ethnic income per
minority Hui in the capita (Yuan)
(only Hui) whole (%) year 2005
I I I
Nanguan 61 780 3393 3393 100% 1800
Beiguan 21 230 1358 1222 90% 1800
Xigou II55 II536 II2790 II2623 II 94% II1600 II
Total I 405 I 3779 I 19042 I 9035 I 47% I I
10\. According to the ethnic census survey done in social assessment process, most Hui
population and their communities center around the township seat which forms the local Hui
communications center in their daily life\. Because o f both geographical requirements o f the
71
project activities and the need for ethnic minority development, the GEF/SCCF program will be
introduced around this area\. Combined with Hui traditional livestock production, adoption of
WWF grass cultivation with date tree planting to reduce low-yield wheat area in community
fields is readily accepted among local villages, while water cisterns are another priority need
because o f their adaptation to the local arid climate\. Inaddition to extensive consultation among
these communities, the EMDP also requires that a participation mechanism be established
specifically for the Hui communities' regular involvement in the project, not only for project
implementation but also for choices and decision-making on project activities\. This leads to
establishment o f farmer W A Sand farmer professional association (FAs) under both IAIL3 and
the GEF/SCCF project, in parallel with a participatory identification of project beneficiaries\.
Both give assurance that Hui villagers will share voluntarily in the control o f the project
processes\. Inaddition, a special dissemination campaign on the GEF/SCCF project concepts and
intensive training for new adaptation technologies and production patterns are also planned and
included under the EMDP\. As in IAIL3, a participatory approach i s thus especially ensured
through the EMDPinthe Huiethnic minority area under the GEF/SCCF project\.
72
Annex 11:ProjectPreparationandSupervision
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
Planned Actual
PCNreview March, 2007
InitialPID to PIC March, 2007
InitialISDS to PIC March, 2007
Appraisal September, 2007
Negotiations February20-25,2008
Board/RVP approval April 17,2008
Planned date of effectiveness July 31,2008
Planned date ofmid-termreview June 30,2010
Planned closing date June 30,2012
Keyinstitutions responsiblefor preparation ofthe project: State Office for Comprehensive
Agricultural Development
Bank staffandconsultantswho worked onthe project included:
Name Title Unit
Qun Li Task Team Leader EASRE
SalahDarghouth Water Advisor ETWWA
Ariel Dinar Lead Economist DECRG
Richard B\.Reidinger Lead Agricultural Economist Consultant
Song Li Climate Change Specialist Consultant
Jeffrey Richey Hydrology andEcology Specialist/Consultant Washington U\.
Robert Mendelsohn Environmental Economist/Consultant Yale University
SyedI\. Ahmed Lead Counsel LEGES
Junxue Chu Senior Finance Officer LOAGl
Jinan Shi Senior Procurement Specialist EACCF
Yi Dong Senior Financial Management Specialist EACCF
Zhongchen Lin Senior Social Safeguards Specialist EACCF
Chongwu Sun Senior Environmental Specialist EACCF
Patria C\. M\.Morente ProgramAssistant EASRE
Bank hnds expendedto date on project preparation: (as of March7,2008)
1\. Bankresources: US$247,884\.69
2\. Trust funds: US$ 152,046\.77
3\. Total: US$ 399,931\.46
EstimatedApproval and Supervision costs:
1\. Remaining costs to approval: US$22,750
2\. Estimated annual supervision cost: US$ 65,000
73
Annex 12: Documentsinthe ProjectFile
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
A\. Project Implementation Plan
1\. Objective, Scope andProject Site Profile
2\. SafeguardPolicy
3\. Project Contents, Costing and Financing Plan
4\. Project Benefits
5\. Risk Analysis andMitigationMeasures
6\. Institutional Arrangement for Project Implementation
7\. ProcurementPlan
8\. Disbursement o f Grant
9\. FinancialManagement, Accounting andAuditing
10\.M&EPlan
11\.Project MonitoringandInspectionPlan
B\. Bank StaffAssessments
Identificatioflreparation MissionAide Memoire
C\. Assessment Report by the IAP (Institute of Atmospheric Physics) and IGNRR (Institute of
Geographic Sciences and Natural Resources Research) of the Chinese Academy of Science
AssessmentReport of the Climate Change and ComprehensiveAgriculture Development in3
Huang-Huai-Hai Region
Annex A Introduction of Appraisal Expert Panel
Annex B Introduction ofAppraisal Models
AnnexC Features of Water Demands, Consumption and Deficit in Growing Season of
Crops inHuang-Huai-Hai Region
Annex D Climate Change, Agriculture Production, Water Resources and Farmland Water
Balance inHistory inTotou City and Huaiyuan County
Annex E Simulation of Suface HydrologicalSituation inHuang-Huai-Hai Region with VIC
Model
Annex F Changes of Yield o f Main Crops and Water Consumption Under Future Climate
Change Scenarios inTypical Counties inHuang-Huai-Hai Region Simulated with
VIP Model
Annex G Changes on Water Consumption Under Future Climate Change Scenarios in
Typical Counties inHuang-Huai Region Simulated with FWBMModel
AnnexH Changes in Yields o f Main Crops Under Future Climate Change Scenarios in
Demonstrative Counties in Huang-Huai-Hai Region Simulated with DSSAT
Model
Annex I ReferencedPublication
74
Annex 13: Statementof Loansand Credits
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
Differencebetween
expected and actual
Original Amount in US$Millions disbursements
Proiect ID FY Purpose IBRD IDA SF GEF Cancel\. Undisb\. Orig\. Frm\. Rev'd
PO86515 2007 CN-3rdNationalRailway 200\.00 0\.00 0\.00 0\.00 0\.00 200\.00 0\.00 0\.00
PO81776 2007 CN-GUANGDONGlPRD2 96\.00 0\.00 0\.00 0\.00 0\.00 96\.00 0\.00 0\.00
PO77752 2007 CN-SHANDONG ENVMT 2 147\.00 0\.00 0\.00 0\.00 0\.00 147\.00 0\.00 0\.00
PO88964 2007 CN-Guangxi IntegratedForestry Dev 100\.00 0\.00 0\.00 0\.00 0\.00 100\.00 0\.17 0\.00
PO91020 2007 CN-FujianHighway Sector Investment 320\.00 0\.00 0\.00 0\.00 0\.00 320\.00 4\.00 0\.00
PO75613 2007 CN-ShaanxiAnkang Road Development 300\.00 0\.00 0\.00 0\.00 0\.00 300\.00 0\.00 0\.00
PO83322 2007 CN-SICHUAN URBAN DEV 180\.00 0\.00 0\.00 0\.00 0\.00 177\.00 -3\.00 0\.00
PO75732 2006 CN-SHANGHAIURBANAPL2 180\.00 0\.00 0\.00 0\.00 0\.00 149\.79 -3\.55 0\.00
PO84742 2006 CN-MIL 111 200\.00 0\.00 0\.00 0\.00 0\.00 160\.99 26\.74 0\.00
PO81255 2006 CN-ChangjiangPearlRiver Watershed 100\.00 0\.00 0\.00 0\.00 0\.00 97\.75 7\.08 0\.00
Reha
PO82993 2006 CN-GEF-PCB Mgnt & Disposal 0\.00 0\.00 0\.00 18\.34 0\.00 17\.57 6\.09 0\.00
PO85124 2006 CN-Ecnomic ReformImplementation 20\.00 0\.00 0\.00 0\.00 0\.00 18\.44 -0\.23 0\.00
PO70519 2006 CN-FuzhouNantai Island Peri-UrbanDev 100\.00 0\.00 0\.00 0\.00 0\.00 99\.75 12\.58 0\.00
PO85333 2006 CN-5th InlandWaterways 100\.00 0\.00 0\.00 0\.00 0\.00 78\.01 10\.65 0\.00
PO96158 2006 CN-RenewableEnergy I1(CRESP 11) 86\.33 0\.00 0\.00 0\.00 0\.00 74\.64 -11\.69 0\.00
PO94388 2006 CN-HFC-23 EmissionsReduction 0\.00 0\.00 0\.00 0\.00 0\.00 1,052\.40 0\.00 0\.00
PO93906 2006 CN-3rdJiangxi Hwy 200\.00 0\.00 0\.00 0\.00 0\.00 200\.00 0\.00 0\.00
PO99992 2006 CN-LiaoningMedium Cities 218\.00 0\.00 0\.00 0\.00 0\.00 202\.88 -6\.78 0\.00
Infrastructure
PO90336 2006 CN-GEF-NINGBOWATER & ENVMT 0\.00 0\.00 0\.00 5\.00 0\.00 4\.50 0\.43 0\.00
PO82992 2006 CN-GEF-Termite Control Demonstration 0\.00 0\.00 0\.00 14\.36 0\.00 14\.36 0\.10 0\.00
PO86629 2006 CN-HeilongjiangDairy 100\.00 0\.00 0\.00 0\.00 0\.00 96\.75 0\.92 0\.00
PO81348 2006 CN-HENAN TOWNS WATER 150\.00 0\.00 0\.00 0\.00 0\.00 149\.63 3\.79 0\.00
PO69862 2005 CN - AgriculturalTechnology Transfer 100\.00 0\.00 0\.00 0\.00 0\.00 86\.69 22\.73 0\.00
PO68752 2005 CN-InnerMongolia Highway& Trade 100\.00 0\.00 0\.00 0\.00 0\.00 76\.93 8\.59 0\.00
Conid
PO71094 2005 CN - Poor RuralCommunities 100\.00 0\.00 0\.00 0\.00 0\.00 86\.25 36\.95 0\.00
Development
PO72721 2005 CN-GEF-HeatReform& Bldg Egy Eff\. 0\.00 0\.00 0\.00 18\.00 0\.00 15\.09 5\.47 0\.00
PO75730 2005 CN-HUNAN URBAN DEV 172\.00 0\.00 0\.00 0\.00 0\.00 160\.06 35\.40 0\.00
PO81161 2005 CN-CHONGQMG SMALL CITIES 180\.00 0\.00 0\.00 0\.00 0\.00 169\.28 33\.61 0\.00
PO81346 2005 CN-LIUZHOU ENVIRONMENT MGMT 100\.00 0\.00 0\.00 0\.00 0\.00 82\.16 2\.26 0\.00
PO57933 2005 CN-TAI BASIN URBAN ENVMT 61\.00 0\.00 0\.00 0\.00 0\.00 37\.12 12\.97 0\.00
PO86505 2005 CN-NINGBO WATER & ENVMT 130\.00 0\.00 0\.00 0\.00 0\.00 109\.66 -0\.34 0\.00
PO67625 2005 CN-GEF-RenewableEnergy Scale-Up 0\.00 0\.00 0\.00 40\.22 0\.00 37\.67 -0\.35 0\.00
Program
PO67828 2005 CN-RenewableEnergy Scale-up Program 87\.00 0\.00 0\.00 0\.00 0\.00 20\.34 4\.44 0\.00
PO87291 2005 CN-PCFJinchengCoalBedMethane 0\.00 0\.00 0\.00 0\.00 0\.00 18\.13 0\.00 0\.00
Project
PO81749 2004 CN-HubeiShiman Highway 200\.00 0\.00 0\.00 0\.00 1\.00 38\.44 -7\.22 0\.00
75
PO77615 2004 CN-GEF-Gansu& Xinjiang Pastoral 0\.00 0\.00 0\.00 10\.50 0\.00 6\.81 7\.57 0\.00
Develop
PO77137 2004 CN-4th InlandWaterways 91\.00 0\.00 0\.00 0\.00 0\.46 60\.51 14\.64 14\.14
PO75728 2004 CN-GUANGDONGRRD UR ENVMT 128\.00 0\.00 0\.00 0\.00 0\.64 79\.40 -2\.33 0\.00
PO84003 2004 CN-GEF GUANGDONG PRDURB 0\.00 0\.00 0\.00 10\.00 0\.00 9\.82 4\.03 0\.00
ENV
PO75602 2004 CN-2ndNationalRailways(Zhe-Gan 200\.00 0\.00 0\.00 0\.00 1\.oo 5\.73 -46\.60 -47\.60
Line)
PO75035 2004 CN GEF-Hai BasinIntegr\. Wat\.
- 0\.00 0\.00 0\.00 17\.00 0\.00 11\.52 9\.18 0\.00
Env\.Man\.
PO73002 2004 CN-Basic EducationinWestern Areas 100\.00 0\.00 0\.00 0\.00 0\.00 40\.65 35\.88 0\.00
PO65035 2004 CN-Gansu& Xinjiang Pastoral 66\.27 0\.00 0\.00 0\.00 0\.00 28\.57 10\.68 0\.00
Development
PO65463 2004 CN-JiangxiIntegratedAgric\. Modem\. 100\.00 0\.00 0\.00 0\.00 0\.00 67\.63 29\.92 0\.00
PO66955 2004 CN-ZHEJIANG URBAN ENVMT 133\.00 0\.00 0\.00 0\.00 0\.00 90\.34 17\.72 0\.00
PO69852 2004 CN-WuhanUrban Transport 200\.00 0\.00 0\.00 0\.00 1\.oo 104\.50 98\.88 0\.00
PO70441 2003 CN-Hubei Xiaogan Xiangfan Hwy 250\.00 0\.00 0\.00 0\.00 0\.00 35\.55 32\.22 0\.00
PO58847 2003 CN-3rdXinjiang Hwy Project 150\.00 0\.00 0\.00 0\.00 0\.00 20\.88 14\.22 0\.00
PO70191 2003 CN-SHANGHAIURB ENVMT APLl 200\.00 0\.00 0\.00 0\.00 0\.00 111\.53 53\.39 0\.00
PO67337 2003 CN-2nd GEF EnergyConservation 0\.00 0\.00 0\.00 26\.00 0\.00 7\.57 25\.75 0\.00
PO76714 2003 CN-2ndAnhui Hwy 250\.00 0\.00 0\.00 0\.00 0\.00 81\.60 22\.10 0\.00
PO40599 2003 CN-TIANJINURB DEV I1 150\.00 0\.00 0\.00 0\.00 0\.00 132\.04 60\.76 0\.00
PO68058 2003 CN-Yixing PumpedStorage Project 145\.00 0\.00 0\.00 0\.00 0\.00 70\.65 43\.98 0\.00
PO68049 2002 CN-HubeiHydropowerDev in Poor Areas 105\.00 0\.00 0\.00 0\.00 0\.00 20\.53 11\.27 0\.00
PO58846 2002 CN-Natl Railway Project 160\.00 0\.00 0\.00 0\.00 5\.00 2\.73 7\.73 0\.00
PO60029 2002 CN-GEF-Sustain\.Forestry Dev 0\.00 0\.00 0\.00 16\.00 0\.00 6\.88 13\.93 0\.00
PO70459 2002 CN-Inner Mongolia HwyProject 100\.00 0\.00 0\.00 0\.00 0\.00 20\.33 5\.66 0\.00
PO64729 2002 CN-SustainableForestry Development 93\.90 0\.00 0\.00 0\.00 0\.00 22\.44 12\.28 0\.00
PO71147 2002 CN-TuberculosisControl Project 104\.00 0\.00 0\.00 0\.00 0\.00 47\.49 25\.97 0\.00
PO45915 2001 CN-Urumqi UrbanTransport 100\.00 0\.00 0\.00 0\.00 0\.00 32\.47 32\.47 0\.00
PO47345 2001 CN-HUAI RIVER POLLUTION 105\.50 0\.00 0\.00 0\.00 0\.00 23\.11 23\.11 1\.37
CONTROL
PO56596 2001 CN-ShijiazhuangUrbanTransport 100\.00 0\.00 0\.00 0\.00 0\.00 49\.90 49\.90 0\.00
PO56199 2001 CN-3rd InlandWaterways 100\.00 0\.00 0\.00 0\.00 0\.00 11\.67 6\.84 0\.00
PO51859 2001 CN-LIAO RIVER BASIN 100\.00 0\.00 0\.00 0\.00 0\.00 18\.04 16\.45 0\.00
PO42109 2000 CN-BEIJING ENVIRONMENT I1 349\.00 0\.00 0\.00 25\.00 26\.51 184\.28 210\.80 -4\.92
PO45910 2000 CN-HEBEI URBAN ENVIRONMENT 150\.00 0\.00 0\.00 0\.00 0\.00 34\.62 33\.28 0\.00
PO49436 2000 CN-CHONGQINGURBAN ENVMT 200\.00 0\.00 0\.00 0\.00 29\.50 66\.52 96\.02 3\.68
PO64924 2000 CN-GEF-BELTINGENVMT I1 0\.00 0\.00 0\.00 25\.00 0\.00 19\.90 25\.00 6\.48
PO56424 2000 CN-Tongbai PumpedStorage 320\.00 0\.00 0\.00 0\.00 100\.00 30\.75 135\.95 1\.51
P058843 2000 CN-Guangxi Highway 200\.00 0\.00 0\.00 0\.00 19\.70 3\.37 23\.07 3\.37
PO64730 2000 CN-YangtzeDike Strengthening 210\.00 0\.00 0\.00 0\.00 0\.00 71\.10 71\.10 12\.10
PO36953 1999 CN-HealthIX 10\.00 50\.00 0\.00 0\.00 0\.40 15\.89 14\.61 14\.61
PO42299 1999 CN-Tec Coop Credit IV 10\.00 35\.00 0\.00 0\.00 5\.84 13\.52 17\.12 0\.00
PO38121 1999 CN-GEF-RENEWABLEENERGY 0\.00 0\.00 0\.00 35\.00 0\.00 8\.71 34\.77 28\.12
DEVELOPMENT
PO51705 1999 CN-FujianI1Highway 200\.00 0\.00 0\.00 0\.00 0\.00 12\.32 12\.32 10\.05
PO51856 1999 CN-AccountingReform& Development 27\.40 5\.60 0\.00 0\.00 0\.00 7\.18 7\.04 2\.98
PO36414 1998 CN-GUANGXI URBAN ENVMT 72\.00 20\.00 0\.00 0\.00 13\.48 19\.16 32\.05 3\.37
PO03614 1998 CN-GuangzhouCity Transport 200\.00 0\.00 0\.00 0\.00 20\.00 46\.78 66\.78 46\.78
PO03566 1998 CN-BASIC HEALTH (HLTH8) 0\.00 85\.00 0\.00 0\.00 0\.00 1\.58 0\.08 0\.00
76
PO03539 1998 CN-SustainableCoastal ResourcesDev\. 100\.00 0\.00 0\.00 0\.00 2\.06 14\.20 16\.27 14\.20
PO36405 1997 CN-Wanjiazhai Water 400\.00 0\.00 0\.00 0\.00 75\.00 4\.41 79\.41 4\.41
Total: 9,707\.40 195\.60 0\.00 260\.42 301\.59 6,470\.46 1,715\.08 114\.65
77
CHINA
STATEMENT OF IFC's
HeldandDisbursedPortfolio
InMillions ofUSDollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic\. Loan Equity Quasi Partic\.
2002 ASIMCO 0\.00 10\.00 0\.00 0\.00 0\.00 10\.00 0\.00 0\.00
2006 ASIMCO 0\.00 0\.00 4\.12 0\.00 0\.00 0\.00 3\.61 0\.00
2005 BCCB 0\.00 59\.21 0\.00 0\.00 0\.00 59\.03 0\.00 0\.00
2003 BCIB 0\.00 0\.00 12\.04 0\.00 0\.00 0\.00 0\.00 0\.00
2006 BUFH 8\.14 0\.00 0\.00 0\.00 8\.14 0\.00 0\.00 0\.00
2005 Babei 0\.00 5\.00 0\.00 0\.00 0\.00 5\.00 0\.00 0\.00
BabeiNecktie 11\.00 0\.00 0\.00 6\.00 8\.94 0\.00 0\.00 4\.88
1999 Bank of Shanghai 0\.00 21\.76 0\.00 0\.00 0\.00 21\.76 0\.00 0\.00
2000 Bank of Shanghai 0\.00 3\.84 0\.00 0\.00 0\.00 3\.84 0\.00 0\.00
2002 Bank of Shanghai 0\.00 24\.67 0\.00 0\.00 0\.00 24\.61 0\.00 0\.00
2005 BioChina 0\.00 3\.70 0\.00 0\.00 0\.00 3\.13 0\.00 0\.00
2002 CDH ChinaFund 0\.00 2\.02 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2005 CDH China I1 0\.00 17\.99 0\.00 0\.00 0\.00 11\.38 0\.00 0\.00
2006 CDH Venture 0\.00 20\.00 0\.00 0\.00 0\.00 0\.51 0\.00 0\.00
2005 CT Holdings 0\.00 0\.00 40\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 CUNA Mutual 0\.00 10\.53 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2006 CapitalToday 0\.00 25\.00 0\.00 0\.00 0\.00 0\.32 0\.00 0\.00
2005 Changyu Group 0\.00 18\.07 0\.00 0\.00 0\.00 18\.07 0\.00 0\.00
1998 ChengduHuarong 3\.36 3\.20 0\.00 3\.13 3\.36 3\.20 0\.00 3\.13
2004 China Green Ener 20\.00 0\.00 0\.00 0\.00 15\.00 0\.00 0\.00 0\.00
2004 China Re Life 0\.00 0\.27 0\.00 0\.00 0\.00 0\.27 0\.00 0\.00
1994 China Walden Mgt 0\.00 0\.01 0\.00 0\.00 0\.00 0\.01 0\.00 0\.00
2006 Chinasoft 0\.00 0\.00 15\.00 0\.00 0\.00 0\.00 10\.00 0\.00
2004 Colony China 0\.00 15\.31 0\.00 0\.00 0\.00 9\.29 0\.00 0\.00
2004 ColonyChinaGP 0\.00 0\.84 0\.00 0\.00 0\.00 0\.49 0\.00 0\.00
2006 Conch 81\.50 40\.93 0\.00 0\.00 81\.50 0\.00 0\.00 0\.00
2006 DagangNewspring 25\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2002 Darong 10\.00 0\.24 0\.00 8\.00 6\.67 0\.24 0\.00 5\.33
2006 Deqingyuan 0\.00 2\.85 0\.00 0\.00 0\.00 2\.85 0\.00 0\.00
1994 DynamicFund 0\.00 2\.21 0\.00 0\.00 0\.00 2\.01 0\.00 0\.00
2007 Epure 0\.00 10\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 Fenglin 17\.64 0\.00 6\.00 13\.47 13\.64 0\.00 6\.00 12\.53
2006 FenglinHJMDF 0\.23 0\.00 0\.00 3\.27 0\.00 0\.00 0\.00 0\.00
2005 Five Star 0\.00 0\.00 7\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2006 GDIH 50\.85 0\.00 0\.00 0\.00 50\.85 0\.00 0\.00 0\.00
2003 Great Infotech 0\.00 1\.73 0\.00 0\.00 0\.00 1\.03 0\.00 0\.00
2006 HangzhouRCB 0\.00 10\.85 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2005 HiSoft Tech 0\.00 4\.00 0\.00 0\.00 0\.00 3\.00 0\.00 0\.00
2006 HiSoft Tech 0\.00 4\.34 0\.00 0\.00 0\.00 1\.74 0\.00 0\.00
2004 IB 0\.00 52\.18 0\.00 0\.00 0\.00 52\.18 0\.00 0\.00
78
2004 Jiangxi Chenming 40\.00 12\.90 0\.00 18\.76 40\.00 12\.90 0\.00 18\.76
2006 LaunchTech 0\.00 8\.35 0\.00 0\.00 0\.00 8\.33 0\.00 0\.00
2001 MaanshanCarbon 5\.25 2\.00 0\.00 0\.00 5\.25 2\.00 0\.00 0\.00
2005 MaanshanCarbon 11\.00 1\.oo 0\.00 0\.00 5\.00 1\.oo 0\.00 0\.00
2005 Minsheng 15\.75 0\.00 0\.00 0\.00 7\.00 0\.00 0\.00 0\.00
2006 Minsheng& E3 25\.09 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2001 MinshengBank 0\.00 23\.50 0\.00 0\.00 0\.00 23\.50 0\.00 0\.00
2005 MinshengBank 0\.00 2\.80 0\.00 0\.00 0\.00 2\.79 0\.00 0\.00
2001 NCCB 0\.00 8\.94 0\.00 0\.00 0\.00 8\.82 0\.00 0\.00
1996 NanjingKumho 0\.00 3\.81 0\.00 0\.00 0\.00 3\.81 0\.00 0\.00
2004 NanjingKumho 31\.38 2\.23 0\.00 0\.00 31\.38 2\.23 0\.00 0\.00
2006 Neophotonics 0\.00 0\.00 10\.00 0\.00 0\.00 0\.00 10\.00 0\.00
2001 New China Life 0\.00 5\.83 0\.00 0\.00 0\.00 5\.83 0\.00 0\.00
2005 New Hope 0\.00 0\.00 45\.00 0\.00 0\.00 0\.00 0\.00 0\.00
1995 NewbridgeInv\. 0\.00 0\.22 0\.00 0\.00 0\.00 0\.22 0\.00 0\.00
2005 North Andre 8\.00 6\.74 0\.00 0\.00 0\.00 4\.25 0\.00 0\.00
2003 PSAM 0\.00 2\.01 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
RAKChina 13\.00 0\.00 0\.00 0\.00 13\.00 0\.00 0\.00 0\.00
2006 RenaissanceSec 0\.00 0\.00 20\.04 0\.00 0\.00 0\.00 0\.00 0\.00
2006 Rongde 0\.00 35\.00 0\.00 0\.00 0\.00 31\.38 0\.00 0\.00
SAC HK Holding 0\.00 1\.60 0\.00 0\.00 0\.00 1\.oo 0\.00 0\.00
2003 SAIC 12\.00 0\.00 0\.00 0\.00 12\.00 0\.00 0\.00 0\.00
2006 SBCVC 0\.00 20\.00 0\.00 0\.00 0\.00 2\.00 0\.00 0\.00
2000 SEAF SSIF 0\.00 3\.74 0\.00 0\.00 0\.00 3\.37 0\.00 0\.00
SHKeji IT 3\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 SHCT 38\.18 0\.00 0\.00 28\.64 29\.04 0\.00 0\.00 21\.78
2004 SJBFI 0\.14 0\.07 0\.00 0\.00 0\.00 0\.07 0\.00 0\.00
1998 Shanghai Krupp 19\.25 0\.00 0\.00 36\.75 19\.25 0\.00 0\.00 36\.15
2006 Shanshui Group 50\.00 5\.50 2\.20 0\.00 50\.00 5\.50 0\.00 0\.00
1999 Shanxi 12\.61 0\.00 0\.00 0\.00 12\.61 0\.00 0\.00 0\.00
SinoSpring 0\.00 0\.00 20\.00 0\.00 0\.00 0\.00 0\.00 0\.00
StoraEnso 20\.83 0\.00 0\.00 4\.17 11\.00 0\.00 0\.00 0\.00
2005 StoraEnso 29\.17 0\.00 0\.00 20\.83 0\.00 0\.00 0\.00 0\.00
2006 Stora Enso 50\.00 0\.00 0\.00 175\.00 0\.00 0\.00 0\.00 0\.00
2006 TBK 4\.00 0\.00 0\.00 0\.00 2\.00 0\.00 0\.00 0\.00
2006 VeriSilicon 0\.00 1\.oo 0\.00 0\.00 0\.00 1\.oo 0\.00 0\.00
Wanjie High-Tech 9\.89 0\.00 0\.00 0\.00 9\.89 0\.00 0\.00 0\.00
2004 Wumart 0\.00 1\.62 0\.00 0\.00 0\.00 1\.62 0\.00 0\.00
2003 XACB 0\.00 17\.95 0\.00 0\.00 0\.00 0\.64 0\.00 0\.00
2004 Xinao Gas 25\.00 10\.00 0\.00 0\.00 25\.00 10\.00 0\.00 0\.00
2006 ZhejiangGlass 50\.00 24\.96 0\.00 18\.00 0\.00 0\.00 0\.00 0\.00
2003 Zhengye-ADC 10\.43 0\.00 0\.00 4\.87 10\.43 0\.00 0\.00 4\.87
2002 ZhongChen 0\.00 4\.78 0\.00 0\.00 0\.00 4\.78 0\.00 0\.00
2006 Zhongda-Yanjin 21\.89 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Total portfolio: 733\.58 577\.30 181\.40 340\.89 470\.95 371\.06 29\.61 108\.03
79
Approvals PendingCommitment
FY Approval Company Loan Equity Quasi Partic\.
2002 SML 0\.00 0\.00 0\.00 0\.00
2004 NCFL 0\.00 0\.00 0\.02 0\.00
2007 Xinao CTC 0\.04 0\.01 0\.00 0\.14
2004 ChinaGreen 0\.00 0\.00 0\.01 0\.00
2006 Launch Tech 0\.01 0\.00 0\.00 0\.00
2005 MS Shipping 0\.00 0\.01 0\.00 0\.00
2003 Peak Pacific 2 0\.00 0\.01 0\.00 0\.00
Totalpendingcommitment: 0\.05 0\.03 0\.03 0\.14
80
Annex 14: Country at a Glance
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
East Lower-
POVERTY and SOCIAL A8la 8 mlddle-
Chlna Paclflc Income Development dlamond\.
2005
Population, mid-year(millions) 1304\.5 1685 2,475
GNIpercapita(Atlasmethod, US$) 1740 1627 Life expectancy
198
GNI(Atlas method, US$ billions) 2269\.6 3,067 4,747
Average annual growth, 1999-05
Population(%) 0\.7 0\.9 10
Laborforce (%j 10 1\.3 14 GNI Gross
per primary
M 08t recent estlmate (latest year available, 1999-05) capita enrollment
Poverty(% ofpopulation belownetionaipo vertyiinej
Urbanpopulation (%oftotalpopulation) 40 41 50
Lifeexpectancyat birth( w r s ) 71 70 70 i
Infant mortality(per 1OOOiivebirths) 28 29 33
Childmalnutrition (%ofchildren under5) 8 15 t? Access to improvedwtersource
Access to an improvedvatersource (%ofpopulationj 77 79 62
Literacy(%ofpopulafion age $59 91 91 89
Gross primaryenrollment (%of school-age population) 18 115 in -China
Male 18 16 1% -Lowr-middie-incomegmup
Female I7 114 10
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1985 1995 04 2005 Economic ratlos\.
GDP (US$ billions) 304\.9 728\.0 19317 2228\.9
Gross capitalformation1GDP 37\.8 39\.3 38\.7
Exports of goods andserviceslGDP 0\.0 23\.1 34\.0 Trade
Gross domestic savings1GDP 33\.6 415 412
Gross nationalsavings1GDP 34\.0 40\.1 422
Currentaccount balance1GDP -3\.8 0\.8 3\.6 5\.0
Interest paynentslGDP 0\.2 0\.6 0 2
Total debtIGDP 5\.5 s\.2 Q\.9
Total debt serviceleuports 7\.7 8\.6 3\.5
Presentvalueof debt1GDP P\.5 1
Present valueof debtlexports 35\.7
Indebtedness
1985-95 1995-05 2004 2005 2005-09
(average annualgmMhj
GDP 9\.7 6\.8 0\.1 9\.9 8\.0 -China
GDP percapita 8\.2 8\.0 9\.4 9 2 7\.3 Lowr-middle-incomegmup
Exports of goods andservices 9\.4 8\.7 28\.4 23\.6 0\.3
STRUCTURE of the ECONOMY
I
1985 1995 2004 2005
(%of GDPj Growth of capltal and GDP ('4 I
Agriculture 28\.4 8 8 0\.1
Industry 43\.1 47\.2 46\.2
Manufacturing 34\.9
Services 28\.5 33\.1 40\.7
Householdfinal consumption expenditure 53\.2 47\.5 46\.5 00 01 02 03 M 05
Genera gov't final consumption expenditure 0\.2 110 02
Imports of goods andservices 14\.1 20\.9 314 -GCF d G D P
1985\.95 1995\.05 2004 2005
(averageannuaigmMhj
Agriculture 4\.2 3\.3 6\.3 5\.0
Industry 2 6 9\.9 111 0\.6
Manufacturing 0\.0
Services 9\.5 9\.7 9\.6 0\.1
Householdfinal consumption expenditure 0\.2 5\.7 ti
Generalgov't final consumplionexpenditure 9\.4 8\.9 6\.8 W 01 02 03
Gross capitalformation 9\.4 0\.1 0\.0 0\.5 -Exports - 0 - l m p O T t S
Imports of goods andservices 0\.3 u\.4 22\.5 15\.3
Note:2005 data are preliminaryestimates\.
This tableMS producedfromthe Development Economics LDB database\.
'Thediamonds showfourkeyindicators inthecountly(in bo1d)comparedvcithitsincome-groupavemge\. if dataare missing,thediamondMil
be incomplete\.
81
China
PRICES andGOVERNMENT FINANCE I:]
1985 1995 2004 2005
Domestic prices lnflatlon (Oh)
(%change)
Consumer pnces E 9 4 0 18
ImplicitGDP deflator 0\.1 137 6 9 3\.8
Government finance
(??ofGDP\.includescurrentgrants)
Current revenue 26 0 0 8 16\.6 7\.5
Current budget balance 7 3 0 6 17 2\.0
Overallsurplusldefici! 00 -15 -15 -13
TRADE
1985 1995 2004 2005
(US$ mrllronsj Export and import levels (US$ mill\.)
Total exports (fob) 27,350 148,780 593,369 771,511
Food 1,000,000 T
3,803 9,954 18,670
Minera fuels,lubncants\.andrelatedmaterial! 7,132 5,332 ?4,476 800 000
Manufactures '0,522 127,295 552\.818 727,81 600 000
Total imports (cif) 42,252 132,084 561423 674,331
Food 1553 6,132 9\.256 400 000
Fuelandenergy 7 2 5,27 48\.003 200 000
1 I
Capitalgoods 16,239 52,642 252,624 230,369 0
Exportpriceindex(2000=00) 52 118 0 2 0 6 99 00 01 02 03 04 05
Import priceindex(2000=WO) 74 0 7 112 18 exports @Imports
Terms of trade (2000-MO) 70 10 91 88
82
BALANCE of PAYMENTS
1985 1995 2004 2005
(US$ millionsj Current account balance to GDP (Oh)
Ewortsof goods andservices 30\.489 167,974 655,827 843,537
Imports of goods andservics 43,092 151882 606,543 746,150
Resource balance -12,602 16\.092 49284 97,386
Net income 841 -11,774 -3,523 4,668
Net current transfers 243 1,434 22,898 0,000
Currentaccount balance -11\.518 5,752 68,659 112\.055
Financingitems (net) 6,096 16,711 87,705 98,000
Changesinnet reserves 5,422 -22,463 -206,364 -213\.055 1 99 00 01 02 03 04 05
Memo:
Reserves includinggold (US$ millionsj 80,277 622,945 826,303
Conversionrate (DEC,local/US$) 2\.9 8\.4 8\.3 8 2
EXTERNAL DEBT and RESOURCE FLOWS
1985 1995 2004 2005
(US$ millionsj Composition o f 2004 debt (US$ mill\.)
Totaldebt outstandinganddisbursed 16\.696 118,090 248,934
iBRD 498 7,209 11,035 11140 A: 11,035
IDA 431 7\.038 D\.670 9,741 8: 10,670
Totaldebt service 2\.478 15,066 23,657 D:4,783
IBRD 26 8D 1054 189
IDA 4 63 264 296
Compositionof net resourceflows
Official grants 17 330 381
Official creditors tm 7,902 16
Private creditors 2\.867 5,OU 7,970
Foreigndirect investment (net inflows) 1,659 35,849 54,936
Portfolio equity(net inflows) 0 0 13,923
World Bank program
Commitments 1,092 3\.?48 1285 E-Bilatsai
Disbursements 565 2,269 A
1188 1,131 B IDA
-- IBRD D Othermultilateral
- F - Private
Principalrepaynents 0 364 999 1004 \. C - I M F G- Short-tef
Net flows 565 1905 8 0 P7
Interestpaynents 29 509 3 8 430
Net transfers 536 1,396 -80 -303
Note:This tablewas producedfrom the Development Economics LDB database\. 8/12/06
83
Annex 15: AdditionalCost Analysis
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgricultureProject
I\.Overview
1\. The project development objective is to enhance adaptation to climate change in
agriculture and irrigation water management practices through awareness raising, institutional
and capacity strengthening and demonstration activities in the 3 H Basin\. This would help
mainstream climate change adaptation measures, techniques and activities into the national
Comprehensive Agricultural Development (CAD) Program which is China's largest national
investmentprogram inirrigated agriculture\.
2\. Key components o f IAIL3 project are related and sensitive to climate change\. However,
adaptation measures for climate change were not included in IAIL3 project design because the
need for climate change adaptation has been widely recognized only recently\. Therefore, the
proposed project would identify gaps in the IAIL3 project design with regard to needed
adaptation measures and this will help integrate adaptation measures inIAIL3 components\. The
proposed project has been designedto be partially blendedwith IAIL3\.
3\. The proposedproject has therefore been designed to be partially blendedwith IAIL3\. As
such, it will provide additional and gap filling support to existing and planned (baseline)
activities related to sustainable development o f modem irrigated agriculture in Hebei, Henan,
Shandong, Jiangsu and Anhui provinces o f the Huang-Huai-Hai river plain (3H Basin), which i s
China's most important agricultural region\. Activities inthe five Project Provinces are part o f the
ongoing IAIL3 Project, while a sixth -NingxiAutonomous Region-has been recently added to
IAIL3 as a "Participating Province" for Water User Association (WUA) development\. The
proposed project i s also important to C A D ingeneral for "best practice" demonstration purposes,
as about 85 percent o f CAD'S investments target water saving irrigation, on-farm irrigation
infrastructure and agriculture and water management which is closely related to and affected by
climate change\.
4\. China has documented and described various phenomena showing its vulnerability to
climate change in different regions and provinces, especially given its vast geographic area and
widely varying climate conditions\. For example, China's initial national communication states:
"There has been a continuous drought in the North China Plain since the 1980s, while flooding
disasters have happened more frequently in southem China; these natural disasters have been
more pronounced during and after the 1990s; global warming would speed up plant growth and
shorten the crop-growing period, so it would affect the accumulation o f dry biomass and grain
yield\."
5\. For the purposes of the proposed GEF/SCCF project, vulnerabilities to climate change in
the North China Plain canbe summarized as follows:
(a) Water availability, as indicated by projections o f river run-off (according to the
Assessment Report o f Climate Change in 3 H Basin done by the Chinese Academy o f
Science) i s likely to decrease significantly in the future\. Water scarcity threatens both
rural income growth and food security\. China i s in fact among the bottom 25 percent o f
countries globally interms o f water availability per capita and inthe 3 H Basin area water
84
availability per capita i s only about one-third o f the national average and about half the
standard specified by the UnitedNations as necessary for maintaining socioeconomic and
environmental development\. At the same time, the 3 H Basin i s China's prime agricultural
area and breadbasket, producing some 50 percent o f national grain output, and about 35
percent o f national industrial output\. Because o f this, water demand in the region i s
already high and growing rapidly and available water resources generally are fully
allocated and often overexploited, especially groundwater\. Moreover, inmany locations,
increasing water pollution and water quality degradation is exacerbating water shortage
problems and the projected climate changes could further decrease water stream flows
and groundwater recharge inthe Basin\.
(b) It has been shown recently that grain production has been stagnant for a number
o f consecutive years in the 3 H Basin area due in part to climate variability\. Given the
current global warming trend, China's irrigation-based agriculture in this basin is likely
to be further negatively affected by climate change and remedial measures need to be
taken to ameliorate these effects\. Action is needed quickly because it takes time for such
remedialmeasures to have a significant impact\.
(c) Climate change may offset IAIL3 and C A D Program benefits and poverty
reduction efforts\. The above issues and their relationship to climate change are only
recently becoming clear and their seriousness understood\. In fact, past and current
interventions generally have not considered or addressed climate change and how to
adapt to it\. This is the case, for example, with the country's national C A D Program and
the Bank-supported IAIL3 referred to above\. IAIL3 needs to be strengthened to include
measures for adaptation to climate change; if not, the expected benefits from IAIL3 (and
from C A D in general) could be substantially offset by the negative impacts o f climate
change\.
11\. BroadDevelopmentGoals andthe Baseline
Development Goals
6\. China has signed the United Nations Framework Convention on Climate Change
(UNFCCC) and the Kyoto Protocol and joined the Convention on Biological Diversity and the
United Nations Convention on Drought and Desertification\. Recently, China has developed a
strong policy and strategic framework to support climate change adaptation and has set out
several national environment and sustainable development policies, strategies and programs, all
o f which now identify adaptation to climate change as a national priority\. The main thrusts o f
these programs relate primarily to China's Initial National Communication on Climate Change,
National Strategy for Climate Change, New Environmental Protection Standards, National
Comprehensive Agricultural Development Program (CAD) and the World Bank-supported
IAIL3\. More recently (June 11, 2007), China has promulgated a National Climate Change
Program which took two years to prepare and which documents the country's efforts to deal with
climate change issues, analyzes future climate change challenges for China and describes
China's policies and positions on international cooperation to deal with climate change\. The
program both elaborates on China's own initiatives and vows to continue support for
international cooperation dealing with climate change issues\.
85
BaselineScenario
7\. The overall development objectives o f the baseline project (IAIL3) are to: (a) increase
water and agricultural productivity in low and medium yield farm land areas; (b) raise farmers'
income and strengthen their competitive capacity under post-WTO conditions; and (c)
demonstrate and promote sustainable participatory rural water resources and agro-ecological
environmental management inthe 3 H Basin\. The project i s consistent with the Bank's assistance
to China in the rural sector which is focused on reducing current trends o f inequality between
urban and rural areas and on facilitating the shift from subsistence to commercial agriculture and
from quantity to quality o f production\. It i s also consistent with the Bank's recent China Water
Resources Assistance Strategy, which confirmed that better water resources management,
through both broad-based and targeted interventions, was central to sustainable growth and
poverty reduction\. IAIL3 also supports a range o f related national and domestic policies aimed
at sustainable rural development, in particular, increasing fanners' incomes, reducing poverty,
promoting more efficient, sustainable agricultural production and competitiveness and meeting
WTO and international market requirements\.
8\. IAIL3 finances sustainable development o f modem irrigated agriculture in 107 counties
located in 32 prefecturedcities inthe five project provinces in the 3 H Basin (Le\., Anhui, Hebei,
Henan, Jiangsu and Shandong) through five components: (a) Comprehensive Water-saving
Irrigation and Drainage (US$3 16\.14 million); (b) Agricultural Modernization and Organization
Development (US$65\.47 million); (c) Agro-ecological Environmental Protection and
Management (US$24\.46 million); (d) Institutional Development and Support (US$33\.78
million); and (e) Project Survey, Design and Management (US$23\.33 million)\. The investment
cost o f IAIL3 totals $463 million\.
9\. The main project outcomes o f the baseline scenario would be: (a) increased water and
agricultural productivity and resource use efficiency; (b) increased per capita income for farm
households; (c) increased high qualityhalue and non-polluting/green crop production; (d)
adoption o f techniques leading to "real" water savings and mitigation o f adverse environmental
impacts; and (e) establishment o f institutional mechanisms for enhanced farmer involvement and
participation\.
Summary of theIAIL3 "Adaptation GapAnalysis"
10\. As stated above the key components IAIL3 are relevant to climate change, butthe overall
project design o f IAIL3 did not consider climate change or identify and integrate measures for
adaptation to climate change\. A number o f specific weaknesses in IAIL3 with regard to climate
change have been identifiedandare summarized below:
(a) The public's awareness o f issues relating to adaptation to climate change is very
limited, and so is the understanding and capacity o f staff, officials and decision-makers
regarding climate change and adaptation\.
(b) Inthe design ofwater saving works, the concept of collecting and storing natural
precipitation was not integrated with irrigation and drainage works and there are few, if
any, works and facilities in the field to collect and store rainfall runoff to use available
rainfall more effectively;
86
(c) Some agricultural measures for climate change adaptation have not been filly
considered, such as planting nitrogen fixation crops, adjusting sowing times o f double
cropped areas, staggered maturity o f crops to reduce peak water demand and the more
widespread development o f agriculture facilities such as greenhouses;
(d) Farmer associations (FAs) and cooperative organizations are weak and have only
limited ability to popularize new varieties, practices and technologies which are more
adapted to climate change;
(e) Although farmer water user associations (WAS)are included in IAIL3, their
coverage i s limited and they lack focus, activities or support on adaptive water
management;
(f) Development o f water and soil conservation forestry was not considered (hence
soil erosion by wind and water are not effectively controlled) and tree species adapted to
climate change have not been selected; and
(g) Insufficient consideration was given to biogas activities under the project,
although biogas i s an important measure in adapting to climate change, provides a new
rural energy resource (in place o f coal, for example), develops recycling and supports
rural and agricultural sustainability\.
111\.Alternative (GEF/SCCF Project Enhancement o fIAIL3)
11\. The proposed GEF/SCCF climate change adaptation project will support baseline
development goals included in M I L 3 (and the national C A D program)\. In addition, it will
increase the sustainability o f IAIL3 and more broadly the resilience o f Chinese irrigated
agriculture in the face o f climate change and support global environmental objectives\. The
project would, among other things, identify gaps in the M I L 3 project design with regard to
needed adaptation measures and help integrate adaptation measures in the main IAIL3
components\. Specifically, the project will focus on those IAIL3 activities that are identified as
being at risk from climate change\. Scientific analysis and modeling would be applied in the
design o f these components and provide more climate resilient outcomes (sometimes referred to
as "climate proofing")\. The proposed GEF/SCCF project will review and refine the original
IAIL3 technical design for all adaptation-related activities and adjust the IAIL3 Project
Implementation Plan to respond to the effects o f both short term climate variability as well as
long term climate change in each region\. As indicated above, the proposed GEF/SCCF project
has been designed to partially blend with IAIL3\. Of the $463 million total cost o f IAIL3, an
estimated $50\.5 millionwould be used to co-finance the proposedGEF/SCCF project\.
12\. Major expected outcomes o f the proposed project include:
(a) Identification and Prioritization of Adaptation Options\. Adaptation involves
making adjustments in economic, social or ecological systems in response to actual or
expected climatic changes and their effects or impacts\. The goal o f adaptation is to
reduce the vulnerability o f individuals, communities, regions, or activities to climatic
change and its variability and to promote understanding o f climate change and the need
for climate change adaptation\. Understanding adaptation to climate change i s important
for two reasons: (i)adaptation will reduce the impacts o f climate change and thus
understanding the need for adaptation i s important for reducing vulnerability; and (ii)
87
understanding what specifically should be done in different places over different time
periods will facilitate adaptation\. Understanding expected adaptations is also needed for
impact and vulnerability assessment and estimating the costs or risks o f climate change\.
Inaddition, the analysis of potential impacts and adaptation methods will help develop
andevaluate different response options to climate changes that will likelyoccur\.
(b) Demonstration and Implementation of adaptation measures\. This component
aims to: (i) introduce, demonstrate and implement specific climate change adaptation
measures in selected demonstration areas; and (ii)integrate appropriate adaptation
measures into the implementation o f IAIL3 to help reduce vulnerability to climate change
inthe 3HBasin\. The adaptation measureswould focus mainlyon agriculturalproduction
and practices and on rural water management and use, taking into account expected
temperature increases due to climate change\. Both demonstration and implementation
measures would be carried out in conjunction with the ongoing IAIL3 project and would
be expanded to cover as much o f the IAIL3 project area as possible\.
(c) Mainstreaming Adaptation into national CAD Program and institutional
strengthening\. The component would aim at integrating and mainstreaming climate
change adaptation into the national C A D program\. Key activities would be a series o f
capacity building, technical assistance, knowledge sharing, public awareness activities
and preparation o f a "National Climate Change Adaptation Plan" for CAD under the
leadership o f SOCAD, with the close cooperation o f NDRC and MOF national climate
change adaptation offices\.
13\. As a result o f the above project activities, both farmers and the agricultural system in
Northern China would become more adaptive and resilient to short-term climate variability and
long-term climate change; and adaptation to climate change consideration and measures would
be integrated into the national rural development process through the C A D program\.
14\. Overall, the logical framework which has been followed for the general design o f the
project and will continue for sequencing o f project components during implementation i s
summarized inthe diagram below:
Analytic work on New adaptive Demonstrations
Grant impacts of ' actions (e\.g\., crop
climate change selection planting
strategies)
Further assessment and refine the Leading to a more ReplicatiordNational
design and implementation of M I L 3 + "climate proof' :,_-----__
_ _ _ _ _ _ CAD Program
mainly dealing with water conservation design
Scope of the Project
15\. The proposed GEF/SCCF project will mainly cover the IAIL3 project area, inparticular
under its Component 2\. This includes the five Project Provinces o f IAIL3 (Hebei, Henan,
Jiangsu, Anhui, and Shangdong) and the Ningxia Autonomous Region\. The latter was selected
mainly because it represents an arid climate typical o f the provinces o f north-western China\. It
88
has in fact been added to IAIL3 as a "Participating Province" for WUA development\. Within
these provinces, project activities will be concentrated inthe selected 10 demonstration counties,
including the Cangxia county inHebei, Xionyi and Suyu inJiangsu, Huaiyuan and Mingguang in
Anhui, Gaomi and Yanggu in Shandong, Wancheng and Liangyuan in Henan, and Tongxin
county inNingxia\.
16\. As CAD i s a national program, some o f the proposed activities under Component 1 and
more-so under Component 3 are expected to be implemented outside these six provinces\. For
example, development o f adaptation policy and plans within CAD, mainstreaming adaptation
into C A D and the proposed replication o f good practice adaptation measures could be used inthe
C A D program inmany other regions and provinces inChina\.
Additional Costs under the GEF/SCCF Projectfor adaptation to climate change in IAIL3
17\. Total expenditures associated with the GEF/SCCF Climate Change alternative adaptation
scenario are estimated to be US$55\.5 million\. These include 2 parts: (a) US$50\.5 million co-
funded under the ongoing IAIL3 Project to support those activities o f this project that are
potentially most affected by climate change\. These have been identified by SOCAD and the
POCADs and are mostly included in Component 2 below; and (b) US$ 5 million funded by
GEF/SCCF to support the other activities o f the proposedproject\.
18\. Component 1:Identification and Prioritization of Adaptation Options (US$0\.50million
GEF/SCCF)\. Specific activities include: (a) Impact assessment o f climate change in the 3H
Basin and project area; (b) Gap analysis and study on adaptation measures; and (c) Prioritization
and selection o f adaptation measures and demonstration areas\. These would include: (i)
conducting a gap analysis o f IAIL3 to identify adaptation measures and plan their
implementation; (ii) identification and selection o f adaptation demonstration areas, which would
be in accordance with well defined selection criteria\. Priority is given to areas where there is
both high vulnerability and a high likelihood o f making significant impacts in terms o f
strengthening resilience to climate change; and (iii) use of the computer models and scientific
technical analysis to select and refine adaptation options in content, implementation, cost and
impact for each project demonstration area and province\.
19\. Component 2: Demonstration and implementation of adaptation measures (US$48\.43
million including GEF/SCCF, US$2\.25 million and IAIL3 cofinancing, US$46\.18 million)\.
This component aims to introduce, demonstrate and implement specific climate change
adaptation measures in selected demonstration areas; and to integrate appropriate adaptation
measures into the implementation o f IAIL3 to help reduce vulnerability to climate change in the
3 H Basin\. The adaptation measures would focus mainly on agriculturalproduction and practices
and on rural water management and use, taking into account expected temperature increases due
to climate change\. Both demonstration and implementation measures would be carried out in
conjunction with the ongoing IAIL3 project and would be expanded to cover as much of the
IAIL3 project area as possible\. The two sub-components would be as follows:
(a) Demonstration of Climate Change Adaptation Measures (US$2\.25 million
GEF/SCCF)\. Based on the gap analysis o f IAIL3 and preliminary conclusions of the
various models described under component 1, the GEF/SCCF project has identified
demonstration adaptation measures, and in consultation with the concerned stakeholders,
89
specific adaptation techniques and measures would be introduced and demonstrated in
the selected sites\. This would focus on agricultural production, rural water management
and efficient water utilization and take into account the expected temperature increases
due to climate change\. The selected specific new adaptation activities (in addition to
those in IAIL3) would include measures to: (i) explore and develop alternative water
resources based on each sub-region 's conditions, including the development of
catchments (natural and artificial ponds) to enhance rainfall storage capacity and reduce
water logging threats in the alluvial plain, well irrigation for reinforced resistance to
drought, and advanced field water-saving irrigation technologies and works; (ii) promote
adaptation-oriented farming practices, including adjustment o f agricultural farming
pattern to reduce water consumption in agricultural production (proportion o f wheat-rice,
wheat-rape seed and other crop would be suitably adjusted based on climate change
tendencies) combining drainage with irrigation to avoid the soil deterioration; and (iii)
adopt water-savings-oriented farming technologies, including development and spread of
drought resistant varieties, "seeded in water" practices, membrane and biological water
conservation, etc\. to deal with water scarcity, land and eco-system rehabilitation and
amelioration; and (iv) supporting the development and expansion o f Farmers
Associations and Water Users Associations for carrying out water saving management
and agricultural adaptation measures\. The identified innovative adaptation activities
would be implemented and tested in selected demonstration areas, and then supported,
expanded and promoted where appropriate inall IAIL3 project areas\.
(b) Integration of Adaptation Measures into IAIL3 Project Implementation
Activities (US$46\.18 million IAIL3)\. The proposed project would specifically focus on
IAIL3 activities that are at risk from climate change perspectives\. Based on the gap
analysis o f IAIL3, scientific andmodeling analysis under Component 1,and lessons from
demonstration sites, this sub-component would review and refine the original IAIL3
technical design to help "climate proof' IAIL3 project activities\. IAIL3 activities related
to climate change adaptation would be modified and expanded as appropriate, including
in particular: (i)engineering water-saving measures, including various water-saving
irrigation and drainage technologies and facilities; (ii)
agronomic water-saving measures,
including land leveling, deep plowing, minimum tillage, balanced fertilizer use, use o f
crop residues, introduction o f adaptive varieties and highquality seeds, adaptive on-farm
forestry belts, etc\.; and (iii)
water-saving management measures such as volumetric water
charges and high quality WUAs/FAs\. IAIL3 activities in the GEF/SCCF project area
which would be enhanced to strengthen climate change adaptation, and respond to actual
or expected short-tern climate variability and long-term change and their effects in each
specific region\. All identified IAIL3 activities related to adaptation measures would be
supported and expanded where appropriate\.
20\. Component 3: Mainstreaming Adaptation into National CAD Program and
Institutional Strengthening (US$6\.58 million, GEF/SCCF, US$2\.25 million, co-financing,
US$4\.32 million)\. Under this component a series o f research and development, public
awareness, capacity building, technical assistance, knowledge sharing, and M&E activities
would be carried out to increase CAD'Scapacity to address this newly recognizedissue\. Based in
part on the demonstration with adaptation, a "National Climate Change Adaptation Plan" for
C A D would be prepared under the leadership o f SOCAD, with the close cooperation o f NDRC
and MOF national climate change adaptation offices\.
90
21\. The GEF/SCCF alternative scenario incorporates both the baseline costs o f the IAIL3
plan indicated above, as well as the costs o f activities required to adjust IAIL3 for mitigating or
preventing expected climate change impacts\. Additional costs are calculated as the difference
between baseline costs and the GEF/SCCF alternative, implying that all the proposed project
activities and costs are additional to the baseline scenario\. The proposedproject would therefore
cover two types o f additional costs: (1) gap filling costs, including the additional costs for
Component 1 (identification and prioritization o f adaptation options), Component 2 (a) (new
adaptation measures); and Component 3 (mainstreaming adaptation in the national C A D
program and institutional strengthening); and (2) costs to refine and enhance IAIL3 activities,
which mainly relate to Component 2(b)\. The following detailed GEF/SCCF costs which are
additional to IAIL3 are estimated for each component at:
(a) GEF/SCCF US$495,600 for Component 1: Identification and Prioritization o f
Adaptation Options;
(b) GEF/SCCF US$2,246,000 for Component 2: Demonstration and Implementation
o f Adaptation Measures, with specific measures to include:
(i) Demonstrationof ClimateChangeAdaptationMeasures (US$2,246,000,
GEF/SCCF)
a\. Rainfall collection works and water harvesting (307 sites);
b\. Adaptive agricultural technologies (36 technical demonstration sites);
c\. Adaptive crop varieties (438,900 kg o f seeds);
d\. Biogas digester demonstrations (2,570 digesters and ancillary facilities
to use biogas);
e\. Development o f greenhouses (237,200 m2 o f greenhouse space);
f\. Establishing additional Water User Associations (WAS)and Farmer
Associations (FAs) (17 additional W A Sand FAs);
g\. Afforestation (676 hectares);
h\. ETmonitoring; and
i\.Groundwater management\. In conjunction with ET management
(above), the project would assist development o f comprehensive
Groundwater Management Plans for 19 water-short counties inHebei\.
(ii) Integration of Adaptation Measures into IAIL3 Project Implementation
Activities (US$46,182,000, IAIL3)\.
a\. Adaptive irrigation canals anddrainage systems (13,001,600 m3)
b\. Small field water storage (691 units)
c\. Impervious canals (1,832,600 m2)
d\. Low pressure pipe (4,507,400 m)
e\. Drip irrigation (123\.3 hectares)
f\. Landleveling(38,998\.4 hectares)
91
g\. Balancedfertilization (29,133 hectares)
h\. Crop residue shredding (18,783\.2 hectares)
i\. Water Users Associations (strengthening 134 existing WASto
disseminate adaptation practices andtraining)
j\. Introductionofadaptive seed(1,554,300 kg)
k\. IPMdemonstrationand extension (1,800 hectares)
1\. Greenhouse (1,000,000 m2)
m\. Farmers Associations (strengthening 31 existing FAs to disseminate
adaptation practices and training)
n\. Farmlandshelter belts (3,958\.3 hectares)
0\. Alternative biogas energy inrural areas (1,230 digesters)
(c) GEF/SCCF US$2,258,400 for Component 3: Mainstreaming Adaptation into the
National C A D Program\.
Summary
22\. The difference between the cost o f the baseline scenario (US$50\.5 million) and the cost
o f the GEF/SCCF alternative (US$55\.5 million) i s US$5\.0 million\. This represents the
incremental cost o f introducing climate change adaptation andmitigation into IAIL3 andinto the
C A D Program\. For details see the table below:
92
EstimatedAdditionalCosts andProposedGEF/SCCFfinancing
(FiguresinUS$ thousand)
1\. Identificatiodprioritization f adaptatic options Domestic benefits:
I\.1\.Assessmentoftheimpact 38\.7 38\.7
o f climate change Having a better understanding o f climate
change impacts and potential adaptation
options through stocktaking of existing
studies\.
Potential adaptation options (including
content, implementation, costs, and impacts),
1\.2\. Gap analysis and study on 430\.3 430\.3 and climate change scenarios' impacts on
adaptation measures surface and ground water fluxes and
flooddrought predictions and risks will
provide a better basis for decision making\.
The outcomes o f estimates o f the sensitivity
o f 3 H Basin agriculture to variations in
climate and water availability, economic
analysis o f climate change impacts, risks and
1\.3\. Prioritization and 26\.6 26\.6 costs, and benefits o f various adaptation
selection o f adaptation measures will help 3 H area better planthe use
measures and demonstration o f scare water resources and thus help 3 H
areas become more adaptive to climate variability\.
Global benefits\.
Expansion o f the range o f experiences with
adaptation; and refinement of the use o f state-
of-the-art models for estimating climate
change impacts and identifiying adaptation
options\.
Sub-total 495\.63 495\.6
The activities under Component 1were started during preparation and have been partly financed by PPGgrant and
domestic budget duringthe project preparation\.
93
t
Domestic benefits:
2\.1\. Exploredevelop 2,021\.9 2,396\.7 374\.9 Throughdevelopingand testingcomprehensiveand
alternativewater resources integratedadaptationmeasuresandpproaches,the
basedon each sub-region's GEF/SCCFprojectwill strengthenIAIL3 project
conditions4 by: increasingawareness of farmers to climate
2\.2\.Promote adaptation- 10,464\.2 11,472\.7 1,008\.5 variation; strengtheningfarmer participation
orientedfarmingpractices' throughWUAs andFAs; improving effectivenessin
2\.3\. Adopt water saving 32,027\.1 32,027\.1 water managementandsaving; promotinguse of
orientedfarming cleanerenergy(biogas); conservingforests/wood;
technologies6 andstabilizingthe income o fpoor farmers\.
2\.4\. Promote adaptation- 1,152\.8 1,484\.8 332\.0 Global benefits:
orientedirrigation and
drainage designand Providinggoodpracticeand enrichingexperience of
management' adaptationmeasures inagriculture; improved
2\.5\. Pilot small-scalebiogas 5 16\.1 1,046\.7 530\.7 effectiveness/efficiency of scarce water resources
use; reducedGHG emission by use ofbiogas;
increasedGHG sinks from afforestation;and
reducedcutting of trees due to biogas\.
Sub-total 46,182\.0 48,428\.0 2,246\.0
The GEF/SCCFprojectwill improvethe
strengthening effectivenessof the CAD Program; improved
3\.1\. Researchand institutional coordinationandcapacity of relevant
development of adaptation agenciesat national,provincial and local levels;
policies(GEFlSCCF improvedknowledgeandpublic awareness on
3\.2\. Capacity building on I 3818\.0 climatechange and adaptationto climatechange;
climatechange adaptation improvedcapacity ofM&E system\.
GEF/SCCF/IAIL3 Better coordinationamong major agencies(MOF,
results-basedmonitoring NDRC, and SOCAD) to support adaptation\.
andevaluation Valuablepracticeto other countries\.
(GEFISCCF)
3\.4\. Proiectmanagement
(GEFISCCF) - I 500\.0
Sub-total 4318\.0
Total project 50500\.0 55500\.0 5000\.0
2\.1 sub-component includes the activities Works for rain collection under GEF, and Small field water storage
under IAIL3 project\.
2\.2 sub-component includes the activities Demonstration o f adaptation agro-technology, Demonstration of
adaptation crop variety, Greenhouse and Shelter belt under GEF, and Land leveling, Balance fertilization, Crop
residueshreding, Introduction of adaptive seed, IPM demonstration andextension, Greenhouse andFarmlandshelter
belts under IAIL3 project\.
6 2\.3 sub-component includes the activities Adaptive irrigationcanals and drainage, Canal lining, Low-pressure pipe
and Drip irrigationunder IAIL3 project\.
2\.4 sub-component includes the activities WUA and FA, ETmonitoringand groundwater management under GEF,
and Water users association and Farmers' association under IAIL3 project\.
* 2\.5 sub-component includes the activities Shelter beltunder GEF, and Farmland shelter belts under M I L 3 project\.
94
Summary of co-financing
Additional Costs and Domestic/Global benefits
23\. The additional financing o f US$5 million from the GEF-managed SCCF for the China
Mainstreaming Climate Change Adaptation in Irrigated Agriculture Project will serve as a
catalyst to integrate climate change adaptation into China's national sustainable development and
poverty reduction strategy\. This project is expected to have three main outcomes: (a) increased
awareness by farmers, government staff and officials and policy makers; (b) climate change
adaptation measures implemented in selected demonstration areas; and (c) policy and
implementation plans issued by SOCAD/POCAD/COCADs on climate change adaptation
policies, measures and activities\. Awareness and adaptation measures under the project would
improve agricultural productivity and water resource management (compared to a "non-
adaptation" scenario) in cases where agriculture and water i s adversely impacted by climatic
change patterns\. The additional resources from GEF/SCCF would be used, inter alia, to
finance: (a) capacity building at the national level in view diversifying agricultural practices to
deal with adaptation; (b) utilization o f water saving and environmental friendly technologies,
techniques and management; (c) demonstration o f adaptation measures for rural development
based on China's special circumstances; (d) identification and filling o f adaptation gaps in the
ongoing Bank-supported IAIL3 project and the national C A D Program; (e) mainstreaming
adaptation to climate change into CAD; and (f) replicating and scaling- up adaptation measures
which prove successhl\. All these activities have great potential for integration into China's
national strategy for sustainable development and poverty reduction\.
24\. The GEF/SCCF financing will also generate additional domestic development benefits\.
For example, the proposed project i s expected to hrther strengthen environmental and social
impacts by bringing in a new concept o f risk management, new standards in irrigation
infrastructure and management, and a wiser use o f natural resources (land, water, forests) to
moderate extreme weather conditions\. The project activities would also contribute to poverty
reduction by making poor farmers less vulnerable to climate changes by teaching new
technologies and techniques to better use and manage land, water and other natural resources\.
Improved water works and water management would enable them to use scarce water more
efficiently and help them to deal more effectively with both droughts and floods; and drought
and water-stress resistant crops would be better able to withstand both short-term droughts and
changes inclimate patterns\.
95
25\. Besides the above-mentioned national, social, economic and environmental benefits, a
few direct global benefits would be generated from this project, for example, reduced emission
o f greenhouse gasses from substitution o f biogas for certain other fuels; increased greenhouse
gas sinks because o f afforestation; and reduced deforestation and cutting o f trees for firewood by
providing biogas\. The project would also contribute to the expansion o f experiences with
adaptation to improve global understanding o f the challenges brought on by climate change\. The
project would demonstrate how a comprehensive approach to deal with climate change
adaptation and change in thinking can strengthen the resilience o f farmers and agriculture in
dealing with climate change and it would serve as an opportunity to reconsider and change
current unsustainable development patterns infavor o f longterm sustainability\.
96
Annex 16: STAPRosterReview
CHINA: MainstreamingClimateChangeAdaptationinIrrigatedAgricultureProject
Review prepared by Ian Burton 15,June 2007
Independent consultant
Emeritus Professor, Universityo f Toronto
Scientist Emeritus, Environment Canada
26, St\. Anne's Rd\.
Toronto, ON\. M6J 2C1, Canada
Ian\.Burton@ec\.gc\.ca
Tel Nos\. 416 739 4314 or 416 538 2034
OverallAssessment
1\. The adaptation imperative\. As global progress in the reduction o f greenhouse gas
emissions continues at a slow pace it is becoming increasingly clear that all countries face a
considerable challenge in finding and implementing ways o f coping or adapting to the inevitable
changes in climate, including the risks o f climate variability and extremes\. The need for
adaptation is greatest in those countries where development i s already stressed by climatic
variables\. The area o f north China (3H Basin area) covered by this project certainly qualifies as
one o f the world regions where development is at risk especially inthe field o f rural agricultural
development and the availability o f water resources\. This project i s therefore timely, opportune
and well conceived\.
2\. A pilot, experimental approach\. While there is considerable experience in the
management o f water resources and agricultural development under "normal" climatic
conditions in China, including farmers, the agriculture and food industries, and governments at
all levels, many are only now becoming aware o f the serious new threats being generated by
climate change\. While the fact o f climate change i s now accepted there remains considerable
uncertainty about the exact nature and rate o f the changes in temperature and rainfall in specific
regions\. There can therefore be no clear blueprint for action\. It is necessary to "learn by doing"
in an experimental pilot project approach\. The north China adaptation project falls into this
mould\. It i s carefblly planned and at the same time designed to be flexible and responsive to
inputs from the farming community and to new information about the nature o f the climate risks
as this is generated duringthe course o f the project\. China as well as other countries with similar
challenges stands to learn and gain a lot from this project\.
3\. Mainstreaming adaptation into development\. Although climate change is a new threat to
water resource management and rural development it makes no sense to develop new purpose-
built or problem-specific responses and institutional capacity\. Such so called "stand-alone'
adaptation projects can be expected to have little value, and could be quite counter-productive\. It
i s entirely appropriate therefore that this project is an "add-on" to existing World Bank projects
in the region including especially the IAIL3\. These projects did not specifically take climate
change into consideration\. Nevertheless they do involve the sorts o f actions that are needed to
cope with the added risks o f climate change\. This means that if climate change should by some
97
good fortune happen at a slower pace that anticipated there would still be considerable potential
benefit from the adaptation measures that it i s anticipatedwill be put inplace\. This project i s also
therefore a good example o f "no regrets" adaptation\.
4\. The future incorporation or mainstreaming o f adaptation\. While adaptation to climate
change has not been specifically incorporated into existing World Bank projects innorth China,
it is encouraging to note that the designers o f this adaptation project have planned to extend the
lessons learned more broadly into China's national agricultural development, (Comprehensive
Agricultural Development)\. Inthis way this project promises to be a good model that can lead to
the much wider adoption o f the mainstreaming o f climate change risks into development
activities inChina and elsewhere\.
5\. The dynamics and sustainability o f adaptation\. A fundamental and recurrent problem in
development assistance o f all kinds i s the matter o f the continuity and sustainability o f the
changes initiated\. This i s likely to be especially acute indealing with climate change, because the
nature o f the climate problem i s essentially dynamic, fluid and indeterminate\. It is not a matter o f
shifting from adaptation to present climate to adaptation to a future climate as in moving from
one equilibriumstate to another\. Climate i s changing, will change, and will go on changing\. The
task i s not so much therefore to promote the adoption o f a set o f specific selected adaptation
measures although this certainly forms an important part o f the project\. The task includes the
creation o f an adaptable farming and water management community and capacity\. There i s
probably enough o f this kind o f flexible learning and adaptability build into the project\. It i s
important to recognize however that an important legacy o f the project should be the generation
and strengthening o f a sense o f adaptability and adaptive capacity\. Such benefits are not readily
measured inmonetary terms\.
6\. A positive assessment\. The perspective o f this reviewer is that this is an excellent, first
rate, timely and much needed project\. The vision and enthusiasm o f the project developers and
proponents comes through all the technical text\. It i s easy to be captured by the enthusiasm\. It
may be appropriate therefore to express a cautious note\. The project i s very ambitious and
promises a lot\. Some o f the claims made seem a little optimistic\. These are not small plans, and
even if they are not fully achieved in all respects there is every indication that this will be an
extremely valuable project\.
Some Specific Comments
7\. Baselines\. It i s important for project evaluation and for the future application o f this type
o f work elsewhere to know and understand enough about the starting conditions\. One way to
express this i s to ask, "How well adapted to current climate i s agriculture and water management
now?" The project documents provide some evidence that crops yields are already suffering as a
result o f climate stress and water deficiency\.
8\. The mix o f rainfall and irrigation\. The relative role o f rainfall versus irrigation clearly
varies from on part of the project region to another\. In developing adaptation measures it i s
important to tailor or design such measures to present and future changes inthe balance between
rainfall and irrigation water\.
9\. Specific measures versus adaptation and development strategy\. There i s a dominant
flavour in the project documents that seems to lean towards the selection and promotion o f
98
specific adaptation measures\. While this i s valid it should also be recognized that vulnerability to
climate change can be increased or decreased by the overall choice o f development path or
strategy\. How will this be taken into account? For example the focus o f the project i s on rural
development and agriculture, but there are also likely to be competing demands for water from
other uses\. The documents refer at one point to the potential for "reallocation" o f water
resources\. It might be advisable as the project develops therefore to keep inmindwhat i s known
(and not known) about the expected development trajectory o f the region\. This involves not only
the strategy for agricultural development, choice o f crops, anticipated markets and the like, but
also the phenomena o f urban growth, rural-urban migration and so forth\.
10\. Constraints and opportunities\. The project includes stakeholder involvement, interviews
and surveys o f the farming community, farmer's perception o f climate risks, and the choice o f
adaptation measures\. These are important ingredientso f the project\. It should also be recognized
that there are many other factors that enter into farm-level decisions about choice o f crops and
cultivars, modes o f cultivation, and other agricultural practices, including such things mentioned
inthe project documents as tree planning and conservation, biodiversity, off-farm employment,
size o f farm and farm boundaries, and scores of other variables\. All o f these can interact with
climate variables and affect farmer's choices\. The importance o f this i s that adaptation measures
for climate change that may seem to make sense and should be widely adopted face obstacles
and barriers that are not immediately apparent, or may be deliberately disguised or concealed\.
Farmers and farming communities make choices inrelation to a wide range o f considerations and
variables and climate and especially climate change i s not necessarily perceived as being
important among them\.
11\. Opportunities\. It i s good that the project documents also mention the idea o f pro-active
adaptation in terms o f new opportunities\. It i s a common pattern in the adaptation literature to
talk about worst case scenarios and emphasize the negative aspects o f climate change
exclusively\. It i s surprising however how often challenges can lead to new opportunities and this
project does recognizethat\.
12\. Partially blended? The projects make reference to the fact that the proposed adaptation
project will be "partially blended" with the ongoing Intensified Irrigated Agriculture Project
(IAIL3)\. The integration o f adaptation to climate change into ongoing development makes good
sense and i s essential in this case\. Why then only "partially blended"? There may be good
reasons for this but they are not explicit or apparent inthe project documents\.
Summary
13\. From the project documents this has all the hallmarks o f an acceptable project\. It i s
technically sound; the project team is competent, capable and balanced, and the necessary
safeguard polices have been applied\. The project has good country level buy-in\. It promises to
fillsome importantgaps indevelopment inatimely andeffective fashion andits demonstration
value should be considerable both within China and more widely in the international
development community\.
IanBurton\.
15\. June\. 2007\.
99
I M E x A response
Responses to STAP reviewer comments
14\. The project task team would like to express their gratitude to the STAP reviewer for the
encouraging and supportive comments on this proposed GEF/SCCFadaptation project\. The team
also appreciates the highly insightful and professional views o f the STAP reviewer\. The team
reviewed the STAP review's comments carefully and incorporated the points as appropriate to
further strengthen the project documents, including the GEF/SCCF Executive Summary\. In
particular, the team would like to underline the following points:
STAPReview Responsefrom the Task Team
2\. A pilot, experimental approach is needed\. There i s This is a very important point, especially inChina,
considerable uncertainty about the exact nature and where implementation o f "plans" i s a standard
rate o f the changes intemperature and rainfall in procedure\. The GEF/SCCF project will break this
specific regions and there can therefore be no clear, pattern as it requires "learning by doing" and
fixed blueprint for action\. It is necessary to "learn by adjusting project implementation accordingly while
doing" inan experimental pilot project approach\. The the project i s progressing\. IAIL2/3 was also designed
proposed project needs to be carefully planned and at with the flexibility to enable project components to
the same time designed to be flexible and responsive to be adjusted and improved inview o f changed
inputs fromthe farming community andto new conditions even during the implementation\. Ifthis
information about the nature o f the climate risks as this "learning by doing," programmatic approach
information is generated duringthe course o f the succeeds, it will be a major accomplishment and both
project\. help enhance project impacts substantially and
provide useful lessons to onproject design and
implementation for other project inChina and also
for other countries\.
Inadditionto the `learning bydoing` approach
adopted under the project, preparation o f the project
also uses state o f the art models for assessment o f
possible interactions between climate uncertainties
and change, interventions and behavioral responses
based on available data; this will help avoid
irreversible mistakes\. Among several
studiedassessments underway or planned, the role o f
hydrologic and economic modeling i s critical\. This
work has been a main focus o f project preparation so
far\.
3\. Mainstreaming adaptation\. So-called "stand-alone' The Task Team has been working with China to
adaptation projects can be expected to have little value, integrate the GEFBCCF components with I A I L 3 at
and couldbe quite counter-productive\. It i s entirely the operational level\. Advantages o f the
appropriate that tlus project i s an "add-on" to an mainstreaming approach include: the GEF/SCCF $5
existing World Bank-supported project (IAIL3)\. million would influence/leverage the muchlarger
Although IAIW didnot specifically take climate financial and human resources o f IAIL3 and the
change into consideration, it involves the sorts o f CAD programinChina; GEF/SCCF's adaptation
actions that are needed to cope with the added risks o f concepts and approach would be widely
climate change\. This means that ifclimate change disseminatedthrough the IAIL3 implementation
shouldby some good fortune happen at a slower pace demonstration; and more Chinese would have
that anticipated there would still be considerable opportunities to learn about climate change
potential benefits from the IAIW adaptation measures\.
100
This project i s also therefore a good example o f "no adaptation\.
regrets" adaptation\.
4\. The future incorporation or mainstreaming of This i s a highly valid point\. Inaddition, it should be
adaptation\. While adaptation to climate change has not noted that methodology-wise, the approach taken by
been specifically incorporated into existing World this project could be extended relatively easily to
Bank projects inChina, this adaptation project is other countries elsewhere\. This important aspect o f
planned to extend the lessons learned more broadly the project can also be o f value to agencies, such as
into China's national agricultural development (CAD)\. the World Bank and GEF/SCCF inconsidering
This project promises to provide a good model that can future climate-adaptation-development type projects\.
lead to the muchwider adoption and mainstreaming of
adaptation to climate change risks into development
activities inChina and elsewhere\.
5\. The dynamics and sustainability o f adaptation\. A The project has incorporated the concept o f "flexible
fundamental and recurrent problem indevelopment adaptation" which is dynamic and can change over
assistance the continuity and sustainability o f changes time according to climate changes adaptation needs\.
initiated\. This i s likely to be especially acute indealing The mind-set changes based o n knowledge sharing
with climate change, because the nature o fthe climate andpublic awareness under the project is especially
problemis essentially dynamic, fluid and at present important to reduce vulnerability and increase
indeterminate\. Climate i s changing, will change, and adaptive capacity, and also continue the adaptation
will go on changing\. The task is not so muchtherefore processes over the long term\. The Task Team will
to promote the adoption o f a set o f specific selected place more emphasis o n t h s point duringpreparation
adaptation measures (although this certainly forms an and appraisal and will continue to work with Chinese
important part o f the project)\. The task is the creation stakeholders to further strengthenthis dynamic
o f an adaptable (adaptation-oriented) farming and response system which includes awareness building
water management community, capacity and mentality\. o f both public (government officials) andprivate
A key legacy o fthe project shouldbe generation and decision makers at different levels\.
strengthening o f a sense o f adaptability and adaptive
capacity\. Such benefits are not readily measured in
monetary terms\.
6\. A positive assessment o fproject and also a caution\. Although the project appears ambitious, there are
The reviewer considers the project to be excellent, first several reasons to believe that the project i s doable in
rate, timely and much needed, but it also notes that the the Chinese context: (a) China has strong ownership
project is very ambitious and promises a lot\. of this project and recognizes the urgent need for
adaptation to climate change for its agriculture, in
particular inthe vital 3 H area; (b) China has an
excellent implementationperformance record for
innovative Bank-supported projects, including IAIL2
(the predecessor o f IAIL3); (c) China has committed
substantial additional financial and in-kindresources
to the project duringpreparation and will provided
muchmore duringimplementation; (d) although this
i s a completely new project and knowledge on
climate change adaptation i s very limited, it will be
partially blended and closely associated with IAIL3
which already has many climate-change related
activities under successful implementation; and (e)
measures have been taken inthe project to
avoidreduce risks and a number o f appropriate
assessments and studies have already been
undertaken satisfactorily\.
Also, the Task Team working with Chinese
counterparts and stakeholders have already removed
a number of overly-ambitious elements from the
original project design, such as exploration o f
101
agricultural insurance and mainstreaming adaptation
into the N e w Countryside Program\.
Giventhe flexibility inthe project design and strong
ownership o f GoC, the Team will continue to work
on the details o fproject implementation to ensure
realism and pragmatism as needed for a successful
adaptation project o n the ground\.
Specific c rnments
1\.Baselines\. Iti s important to know andunderstand
enough about the starting conditions\. One way to
express this is to ask, "How well adapted to current Baseline issues are very important given the
climate are agriculture and water management now?" demonstration nature o f the project\. Duringthe last
The project documents provide some evidence that mission, M&Ewas an important subject o f
crops yields are already suffering as a result o f climate discussion with SOCAD and the provinces\.
stress and water deficiency, which i s a signthat of Identifying baselines and indicators requires learning
inadequacies inwater management\. and special efforts, especially since the propose
project is the first GEF/SCCF supported project in
any country for adaptation inthe area o f agriculture\.
Inaddition, different adaptationmeasuresrequire
different baselines and indicators\. The work plan on
indicators and baseline data collectionhas been
agreed as a collective effort among scientists,
SOCAD, POCAD, farmers, and the Task Team\. IN
addition, several assessments and studies already
getting underway will contribute directly to baseline
data, for example, the economic analysis studies
could provide a good economic estimate o f
adaptation to present climates across various
samples\. This point will be stressed further during
project preparation and appraisal\.
3\. Specific measures versus adaptation and * The task team considers this a key point for overall
development strategy\. There i s a dominant focus o f the climate change adaptation strategy,\. and one which
project documents i s o n selection and promotion o f will likely impact onthe climate change adaptations
specific adaptation measures which i s valid\. However, under the proposed project\. Due to the limited
vulnerability to climate change can also be increased or resources o f the GEF/SCCF project, however,
decreased by the overall choice o f development path or significant work on climate change adaptation inthe
strategy\. For example, although the focus o f the other areas will not be possible under the project\.
project is on rural development and agriculture, it Nevertheless, possibilities for a preliminary study o n
mightbe advisable as the project develops to keep in how adaptation requirements for major competing
mindwhat is known (and notknown) about the water users may impact agricultural adaptation will
expected future development trajectory and pattern o f be explored\.
the region\. This involves not only the strategy for
agricultural development, choice o f crops, anticipated
markets and the like, but also for urban growth, rural-
urban migration, etc\.
4\. Constraints and opportunities\. The project includes Several measures taken so far inthe project would
stakeholder involvement, interviews and surveys o f the help deal with these issues, including: (a) the full
farming community, farmer's perception o f climate participationo f direct beneficiary farmers (through
risks, andthe choice o fadaptation measures\. These are their own organizations -- the W A Sand FAs) in
important ingredients o f the project\. It should also be project preparatiodimplementationand the relevant
recognized that there are many other factors that enter decision-making process; (b) the modeling exercise
into farm-level decisions about choice o f crops and the project has been undertaking; and (c) the
cultivars, modes o f cultivation, and other agricultural empirical experiences from local stakeholders (local
practices, including such things mentioned inthe governments, local scientists, etc\.) as well as
102
project documents as tree planting and soil expertise o ftop adaptation experts inChina and other
conservation, biodiversity, off-farm employment, size countries\. I t is very difficult for such an operation
o f farm and farm boundaries, and scores o f other analyze such complex issues precisely because o f
variables\. All o f these can interact with climate obstacles andbarriers that are not immediately
variables and affect farmer choices\. This means that apparent or may be deliberately disguised and
adaptation measuresfor climate change that appear to concealed\. This i s why one o f the fundamental
make sense and should be widely adopted may face methodological approaches o f the project is to
unexpected obstacles andbarriers that are not consult with the farmers and other key stakeholders
immediately apparent, or may be deliberately disguised as much as possible during project preparation and
or concealed\. Farmers and farming communities make implementation and ensure their participation inthe
choices inrelation to a wide range o f considerations selection o fthe adaptation measureswhich are most
and variables, and climate change is not necessarily relevant andusefulto them\.
perceived as being important among them\.
6\. Partial blending\. The project documents make The needfor "partial blending" is becauseIAIL3 was
reference to the fact that the proposed adaptation approved by the World Bank Board (inOctober
project will be "partially blended" with the ongoing 2005) before the GEFBCCF project was conceived
IAIL3 project\. The integration o f adaptation to climate and the GEF/SCCF project would be added on now,
change into ongoing development makes good sense instead o fpreparing the two projects together at the
and is essential inthis case\. Why i s the blending only same time\. Fortunately, IAIL3 has a program
"partial "? There may be good reasons for this but they approach design which allows changes during
are not explicit or apparent inthe project documents\. implementation, unlike most projects\. This should
not affect the impacts ofthe GEF/SCCF adaptation
activities but will provide an opportunity to adjust
IAIL3 design and make IAIL3 more resilient to
climate change\.
103
Maps
CHINA: MainstreamingClimateChangeAdaptation inIrrigatedAgriculture Project
104 | APPROVAL |
P147158 |  Documento do
Banco Mundial
EXCLUSIVAMENTE PARA USO OFICIAL
Relatório nº: PAD1299
BANCO INTERNACIONAL PARA A RECONSTRUÃÃO E DESENVOLVIMENTO
DOCUMENTO DE AVALIAÃÃO DE PROJETO
PROPOSTA DE EMPRÃSTIMO
NO VALOR DE US$ 50 MILHÃES
PARA O
ESTADO DA PARAÃ?BA
COM A GARANTIA DA REPÃBLICA FEDERATIVA DO BRASIL
DESTINADO AO
PROJETO DE DESENVOLVIMENTO RURAL SUSTENTÃ?VEL NA PARAÃ?BA
26 de setembro de 2017
Práticas Globais no Setor AgrÃcola
Unidade de Gestão Nacional - Brasil
Região da América Latina e o Caribe
O presente é um documento de distribuição restrita\. Seu uso só é autorizado aqueles que o
receberem no exercÃcio de suas funções oficiais\. Seu conteúdo não pode ser divulgado sem a
autorização do Banco Mundial\.
i
EQUIVALÃNCIA MONETÃ?RIA
(Taxa de câmbio vigente em 1º de junho de 2016)
Unidade monetária = R$
R$ 3,28 = US$ 1
US$ 0,31 = R$ 1
EXERCÃ?CIO FINANCEIRO
1º de janeiro â 31 de dezembro
SIGLAS E ABREVIAÃÃES
AA Abastecimento de água
AAS Abastecimento e saneamento
AC Associação Comunitária
AESA Agência Executiva de Gestão das Ã?guas da ParaÃba
AISA Avaliação de Impactos Socioambientais
CAGEPA Companhia de Ã?gua e Esgoto da ParaÃba
CD Conta Designada
CDD Community-Driven Development (Desenvolvimento induzido pela
comunidade)
CFAA Country Financial Management Assessment (Avaliação da Gestão
Financeira do PaÃs)
CGE-PB Controladoria Geral do Estado da ParaÃba
CINEP Companhia de Desenvolvimento da ParaÃba
COOPERAR Projeto COOPERAR do Estado da ParaÃba
EMATER/PB Empresa de Assistência Técnica e Extensão Rural da ParaÃba
EMBRAPA Empresa Brasileira de Pesquisa Agropecuária
EMEPA Empresa Estadual de Pesquisa Agropecuária da ParaÃba
Ex-ACT Ex-Ante Carbon-balance Tool (Ferramenta de Balanço do Carbono Ex-
Ante)
FM Gestão Financeira
FUNAI Fundação Nacional do �ndio
GEE Gases de Efeito Estufa
IBGE Instituto Brasileiro de Geografia e EstatÃstica
IMVA �ndice Municipal de Vulnerabilidade Agroclimática
INSA Instituto Nacional do Semiárido
IPEA Instituto de Pesquisa Econômica Aplicada
IPHAN Instituto do Patrimônio Histórico e ArtÃstico Nacional
LCM Lares Chefiados por Mulheres
M&A Monitoramento e Avaliação
MCRI Marco Conceitual para Reassentamento Involuntário
MGSA Marco de Gestão Socioambiental
ii
MPPI Marco de Planejamento para os Povos IndÃgenas
O&M Operações e Manutenção
ONG Organização Não Governamental
OP Organização de Produtores
PAA Programa de Aquisição de Alimentos
PMU Unidade de Gerenciamento do Projeto
PNAE Programa Nacional de Alimentação Escolar
PRONAF Programa Nacional de Fortalecimento da Agricultura Familiar
R$ Real
SEAFDS Secretaria da Agricultura Familiar e do Desenvolvimento do Semiárido
SIRA Sistema Estadual de Informações sobre Riscos Agrohidroclimáticos
SEIRHMACT Secretaria de Estado da Infraestrutura, dos Recursos HÃdricos, Meio
Ambiente e Ciência e Tecnologia
SIAFI Sistema Integrado de Administração Financeira
SMI Sistema de Monitoramento e Informação
TdR Termos de Referência
Vice-Presidente para a Região: Jorge Familiar
Diretor nacional: Martin Raiser
Diretor Sênior de Práticas Globais: Juergen Voegele
Gerente de Práticas: Preeti S\. Ahuja
Chefe da Equipe do Projeto: David Tuchschneider e Barbara Farinelli
iii
BRASIL
DESENVOLVIMENTO RURAL SUSTENTÃ?VEL NA PARAÃ?BA
Ã?NDICE
Página
I\. CONTEXTO ESTRATÃGICO \.1
A\. Contexto nacional \. 1
B\. Contexto setorial e institucional\. 1
C\. Objetivos superiores para os quais o Projeto contribui \. 5
II\. OBJETIVOS DE DESENVOLVIMENTO DO PROJETO \.6
A\. ODP\. 6
B\. Beneficiários do Projeto \. 6
C\. Indicadores dos resultados relacionados ao ODP \. 7
III\. DESCRIÃÃO DO PROJETO\.7
A\. Componentes do Projeto \. 7
B\. Financiamento do Projeto \. 9
C\. Lições aprendidas e aplicadas ao Conceito do Projeto \. 10
IV\. IMPLEMENTAÃÃO \.11
A\. Arranjos institucionais e de implementação \. 11
B\. Monitoramento e Avaliação de Resultados \. 12
C\. Sustentabilidade \. 13
V\. PRINCIPAIS RISCOS \.13
A\. Classificação global de risco e explicação dos principais riscos \. 13
VI\. RESUMO DA AVALIAÃÃO\.14
A\. Análise econômico-financeira \. 14
B\. Técnicos \. 16
C\. Gestão financeira \. 17
D\. Aquisições \. 17
E\. Aspectos sociais (inclusive salvaguardas) \. 18
F\. Aspectos ambientais (inclusive salvaguardas) \. 19
G\. Mecanismo de apresentação e reparação de queixas do Banco Mundial \. 19
iv
Anexo 1: Matriz de Monitoramento e Resultados \.20
Anexo 2: Descrição detalhada do Projeto \.27
Anexo 3: Arranjos de Implementação \.40
Anexo 4: Plano de Apoio à Implementação do Projeto \.67
Anexo 5: Contabilização dos Gases Do Efeito Estufa \.69
Anexo 6: Variabilidade climática e projeções de mudanças futuras no Nordeste do Brasil 73
MAPA \. 74
v
PAD DATA SHEET
Brasil
Projeto de Desenvolvimento Rural Sustentável da ParaÃba (P147158)
DOCUMENTO DE AVALIAÃÃO DE PROJETO
AMÃRICA LATINA E CARIBE
0000009241
Relatório nº: PAD1299
Informações básicas
Project ID Categoria de avaliação LÃder(es) da Equipe do Projeto
P147158 B - Avaliação parcial David Tuchschneider, Barbara
Cristina Noronha Farinelli
Instrumento de financiamento: Capacidade frágil e/ou com restrições [ ]
Estruturação Financeira para Intermediação de financiamento [ ]
Investimento
Série de projetos [ ]
InÃcio da implementação do Projeto Término da implementação do Projeto
18-set-2017 15-set-2023
Data prevista para entrada em vigor Data prevista para encerramento
26-jan-2018 15-dez-2023
Em conjunto com a IFC
Não
Gerente de Diretor Sênior de Vice-Presidente para a
Diretor nacional
Práticas/Gerente Práticas Globais Região
Preeti S\. Ahuja Juergen Voegele Martin Raiser Jorge Familiar Calderon
Mutuário: Governo do Estado da ParaÃba
Agência responsável: Projeto COOPERAR (SEAFDS)
Contato: Roberto da Costa Vital Cargo: Gestor
Telefone: 83-3246-7858 E-mail: robertocvital@gmail\.com
Informações sobre o financiamento do Projeto (em milhões de US$)
[X] Empréstimo [ ] Contribuição do IDA [ ] Garantia
[ ] Crédito [ ] SubsÃdio [ ] Outro
Custo total do Projeto: 80,00 Financiamento total pelo 50,00
Banco:
Gap financeiro: 0,00
vi
Fonte de financiamento: Montante
Mutuário 30,00
Banco Internacional para Reconstrução e Desenvolvimento 50,00
Total 80,00
Previsão de liberação de recursos (em milhões de US$)
ExercÃcio 2018 2019 2020 2021 2022 2023 2024
fiscal
Anual 2,00 7,00 9,00 11,00 11,00 8,00 2,00
Acumulado 2,00 9,00 18,00 29,00 40,00 48,00 50,00
Dados institucionais
�rea temática (Lead)
Agricultura
�reas temáticas secundárias
Mudanças climáticas, recursos hÃdricos
Objetivo(s) de Desenvolvimento Propostos
O objetivo do Projeto é melhorar o acesso a água, reduzir a vulnerabilidade agroclimática e ampliar o
acesso da população rural pobre da ParaÃba aos mercados\.
Componentes
Nome do componente Custo (em milhões de US$)
Fortalecimento institucional 4,02
Acesso a água e redução da vulnerabilidade agroclimática 44,36
Alianças produtivas 20,73
Gestão, monitoramento e avaliação de projetos 10,76
Taxa inicial 0,13
Ferramenta de Classificação de Risco de Operações (SORT)
Categoria de risco Classificação
1\. PolÃtico e Governança Moderado
2\. Macroeconômico Considerável
3\. Estratégias e PolÃticas Setoriais Moderado
4\. Concepção Técnica do Projeto ou Programa Considerável
5\. Capacidade Institucional de Implementação e Sustentabilidade Elevado
6\. Fiduciário Considerável
7\. Socioambiental Moderado
8\. Partes Interessadas Baixo
vii
GLOBAL Elevado
Conformidade com as PolÃticas do Banco
PolÃticas
O projeto se afasta da Estratégia de Assistência aos PaÃses (CAS) em conteúdo Sim [ ] Não [X]
ou outros aspectos significativos?
O projeto requer algum tipo de exceção à s polÃticas do Banco Mundial? Sim [ ] Não [X]
Tais exceções foram aprovadas pela Direção do Banco Mundial? Sim [ ] Não [ ]
A Direção busca aprovação para algum tipo de exceção à s polÃticas do Banco? Sim [ ] Não [X]
O projeto atende aos critérios regionais de prontidão para execução? Sim [X] Não [ ]
PolÃticas de salvaguarda acionadas pelo Projeto Sim Não
Avaliação Ambiental OP/BP 4\.01 X
Habitats Naturais (OP/BP 4\.04) X
Florestas (OP/BP 4\.36) X
Controle de Pragas (OP 4\.09) X
Recursos Culturais-Materiais (OP/BP 4\.11) X
Povos IndÃgenas (OP/BP 4\.10) X
Reassentamento Involuntário (OP/BP 4\.12) X
Segurança de Barragens (OP/BP 4\.37) X
Projetos em Hidrovias Internacionais (OP/BP 7\.50) X
Projetos em Ã?reas em Disputa OP/BP 7\.60 X
Condições e Cláusulas Legais
Nome Recorrente Prazo Frequência
Unidade de Coordenação do Projeto X CONT�NUO
(COOPERAR) (Anexo 2, Seção I, A\. 1)
Descrição da Condição/Cláusula
Ao longo da implementação do Projeto, o Mutuário deverá manter uma Unidade de Coordenação dentro
da SEAFDS (COOPERAR), sob a chefia do Coordenador do Projeto, com estrutura, funções e
responsabilidades definidas de forma aceitável para o Banco, entre elas: (i) ser responsável pela gestão
geral, planejamento, coordenação, monitoramento e avaliação do Projeto, inclusive das atividades
fiduciárias e do cumprimento das polÃticas de salvaguarda; e (ii) a oferta de cooperação técnica e apoio
às ACs e OPs durante a realização de suas respectivas atividades no âmbito do Projeto\.
Nome Recorrente Prazo Frequência
Plano Operacional Anual (Anexo 2, X Anual
Seção I, A\. 2)
viii
Descrição da Condição/Cláusula
O Mutuário deverá: (a) uma vez por ano, no mÃnimo, durante a implementação do Projeto, até o dia 7 de
dezembro, começando na primeira ocorrência desse dia após a Data de Entrada em Vigor, elaborar e
apresentar ao Banco um plano (o Plano Operacional Anual), nos moldes que o Banco considere
aceitáveis, para operacionalizar o Projeto ao longo dos doze meses seguintes; e (b) a partir daÃ, executar
e/ou providenciar a execução do Plano Operacional Anual em questão de acordo com condições
consideradas aceitáveis pelo Banco\.
Nome Recorrente Prazo Frequência
Convênios de Cooperação Técnica X CONT�NUO
(Anexo 2, Seção D, 1)
Descrição da Condição/Cláusula
Antes de empreender qualquer atividade do Projeto que requeira a assistência da SEIRHMACT, AESA,
CINEP ou de qualquer outra instituição pública selecionada, o Mutuário, através do COOPERAR,
deverá celebrar convênio de cooperação com cada uma delas (o âConvênio de Cooperação Técnicaâ?),
adotando cláusulas e condições aceitáveis para o Banco, entre as quais devem estar incluÃdas a obrigação
de que a SEIRHMACT, AESA, CINEP e qualquer outra instituição pública selecionada: (a) preste
assistência ao Mutuário na realização da atividade ou atividades do Projeto; e (b) cumpra as obrigações
pertinentes previstas no presente Acordo, conforme se apliquem à atividade correspondente do Projeto\.
Nome Recorrente Prazo Frequência
Convênios referentes aos Subprojetos X CONT�NUO
(Anexo 2, Seção E)
Descrição da Condição/Cláusula
A fim de realizar as Partes 2 (b) e 3 (b) do Projeto, o Mutuário, através do COOPERAR, deverá: (a) uma
vez selecionado qualquer Subprojeto de acordo com as diretrizes e procedimentos estabelecidos no
Manual Operacional, firmar um convênio (o âAcordo de Subprojetoâ?) com a OP ou a AC pertinente,
conforme o caso, conforme as cláusulas e condições aprovadas pelo Banco e incluÃdas no Manual
Operacional, a fim de proceder à outorga da correspondente Contrapartida Financeira para a
implementação do referido Subprojeto; e (b) exercer os direitos e cumprir as obrigações previstos em
cada Acordo de Subprojeto de forma a zelar pelos interesses do Mutuário e do Banco e cumprir os
objetivos do Empréstimo\. Salvo com a concordância do Banco, é vedado ao Mutuário ceder, alterar,
revogar, renunciar, rescindir ou deixar de aplicar qualquer Convênio de Subprojeto ou disposição nele
contida\.
Nome Recorrente Prazo Frequência
Implementação das Salvaguardas X CONT�NUO
(Anexo 2, Seção F, 1)
Descrição da Condição/Cláusula
O Mutuário zelará para que as ACs, OPs, AESA, SEIRHMACT e/ou CINEP implementem o Projeto de
acordo com as disposições do Marco de Gestão Socioambiental (MGSA), do Marco Conceitual para
Reassentamento Involuntário (MCRI) e do Marco de Planejamento para os Povos IndÃgenas e
Quilombolas (MPPI)\. à vedado ao Mutuário ceder, alterar, revogar, renunciar ou permitir a cessão,
alteração, revogação ou renúncia de qualquer Documento de Salvaguarda ou disposição nele contida,
sem a aprovação prévia do Banco\.
Nome Recorrente Prazo Frequência
Planos de ação de Reassentamento X CONT�NUO
(Anexo 2, Seção F, 2)
ix
Descrição da Condição/Cláusula
Se qualquer atividade do Projeto (inclusive de Subprojetos) implicar Reassentamento, o Mutuário
deverá: (a) antes de empreender qualquer atividade do Projeto (inclusive de Subprojetos), preparar um
plano de ação de reassentamento de acordo com o MCRI e divulgar o referido plano conforme os
procedimentos nele estabelecidos e, após isso, (b) implementar, ou providenciar a implementação, de
todas as medidas necessárias previstas nesse plano nos seus termos e de forma aceitável para o Banco\.
Nome Recorrente Prazo Frequência
Planos de desenvolvimento para povos X CONTÃ?NUO
indÃgenas (Anexo 2, Seção F, 3)
Descrição da Condição/Cláusula
Se qualquer atividade do Projeto (inclusive de Subprojetos) envolver a presença de Povos IndÃgenas e/ou
Comunidades Quilombolas, o Mutuário deverá: (a) antes de empreender qualquer atividade do Projeto
(inclusive de Subprojetos), preparar um plano de desenvolvimento para povos indÃgenas de acordo com
o MPPI e divulgar o referido plano conforme os procedimentos estabelecidos no MPPI e, após isso, (b)
implementar, ou providenciar a implementação, de todas as medidas necessárias previstas nesse plano
nos seus termos e de forma aceitável para o Banco\.
Nome Recorrente Prazo Frequência
Atividades não elegÃveis (Anexo 2, X CONTÃ?NUO
Seção F, 4)
Descrição da Condição/Cláusula
As seguintes atividades não serão elegÃveis a financiamento ou execução no âmbito do Projeto: (a)
qualquer atividade que acarrete a conversão ou degradação de habitats naturais crÃticos ou de áreas das
quais esses habitas dependam de algum modo; (a) qualquer atividade que acarrete a conversão ou
degradação de áreas de florestas crÃticas e dos habitats naturais crÃticos ligados a tais áreas, Ã
deflorestação de matas ou ecossistemas florestais; e (c) a construção de Barragens de altura superior a 10
metros, tudo conforme descrito de forma mais detalhada no Manual de Operações\.
Condições
Origem dos recursos Nome Tipo
BIRD O Empréstimo foi devidamente registrado pelo Vigência
Banco Central do Garantidor (IV, 4\.01)
Descrição da condição/cláusula
Os Aspectos Legais Adicionais a serem observados consistem em que o Empréstimo tenha sido
registrado de forma válida pelo Banco Central do Garantidor\.
Origem dos recursos Nome Tipo
BIRD Despesas retroativas (Anexo 2, Seção IV, B\. 1) Desembolsos
Descrição da condição/cláusula
Não obstante as disposições da Parte A desta Seção, não serão aceitos saques para pagamentos anteriores
à data deste Acordo, salvo que possam ser feitos saques pelo valor agregado de até dois milhões de
dólares (US$ 2\.000\.0000) em moeda equivalente para pagamentos efetuados no perÃodo de um ano antes
da assinatura, para Despesas ElegÃveis\.
x
Composição da equipe
Pelo Banco
Nome Atribuição Cargo Especialidade Unidade
David Tuchschneider LÃder da Equipe do Especialista Sênior Agricultura e GFA03
Projeto em Desenvolvimento
(responsável ADM) Desenvolvimento Rural
Rural
Barbara Cristina LÃder da Equipe Economista Agricultura e GFA04
Noronha Farinelli AgrÃcola Desenvolvimento
Rural
Luciano Wuerzius Especialista em Especialista Sênior Aquisições GGO04
Aquisições em Aquisições
(responsável ADM)
Michele Martins Especialista em Assistente de Equipe de LCC5C
Aquisições Programa Aquisições
Miguel-Santiago da Especialista em Especialista Sênior GGO22
Silva Oliveira Gestão Financeira em Gestão
Financeira
Agnes Velloso Especialista em Consultor Especialista em GEN04
Meio Ambiente Salvaguardas
Ana Elisa Bucher Integrante da Especialista Sênior Agricultura e GCCRA
Equipe em Mudanças mudanças
Climáticas climáticas
Antonio Manuel Integrante da Especialista Sênior Abastecimento e GWA03
Rodriguez Serrano Equipe em Abastecimento saneamento
e Saneamento
Catarina Isabel Portelo Advogada Advogada Sênior JurÃdico LEGLE
Diego Arias Carballo Integrante da Economista Riscos do setor GFA07
Equipe AgrÃcola Chefe agrÃcola
Gabriela Grinsteins Advogada Advogada JurÃdico LEGLE
Gustavo de Montalvao Integrante da Assistente de Assistente de GFA04
G\. Abath Equipe Programa projeto
Isabella Micali Drossos Integrante da Advogada Sênior JurÃdico LEGLE
Equipe
Jason Jacques Paiement Especialista em Especialista em Salvaguardas CESI2
Salvaguardas Desenvolvimento sociais
Sociais Social
Juan Jose Miranda Integrante da Economista Avaliação do GENGE
Montero Equipe Ambiental impacto
Maria de Fatima de Integrante da Especialista Sênior Desenvolvimento GFA04
Sousa Amazonas Equipe em Rural
Desenvolvimento
Rural
xi
Tatiana Cristina O\. de Integrante da Finanças Empréstimos e WFALA
Abreu Souza Equipe desembolsos
Waleska Magalhaes Integrante da Analista JurÃdico Assistente JurÃdico LCC5C
Pedrosa Equipe
Wanessa De Matos Integrante da Assistente de Assistente de LCC5C
Firmino Silva Equipe Programa projeto
Yago Aranda Larrey Integrante da Consultor Atração de GTCIC
Equipe investimentos/com
pradores
Demais membros da Equipe
Nome Cargo Telefone do escritório Local
Mario Castejon Economista agr\. / FAO Panamá
Rui Marques Especialista Sênior em Lisboa
Abastecimento e
Saneamento
Stephanie Kuttner Consultora Sênior em BrasÃlia
Gênero
Local
PaÃs Primeira Divisão Local Planejad Atual Comentários
Administrativa o
Brasil ParaÃba ParaÃba X
Consultores (a relação de consultores será dada a conhecer na Sinopse Mensal de Operações)
Necessidade de consultores? Haverá necessidade de Consultores
xii
I\. CONTEXTO ESTRATÃGICO
A\. Contexto nacional
1\. O Brasil viveu uma década de progresso econômico e social entre 2003 e 2013, quando
mais de 26 milhões de pessoas saÃram da pobreza e a desigualdade foi significativamente
reduzida (o Coeficiente de Gini caiu 6%, atingindo 0,54, em 2013)\. A renda dos 40% mais
pobres da população cresceu, em média, 6,1% ao ano (em termos reais) entre 2002 e 2012, em
comparação com o crescimento de 3,5% ao ano da população total\.
2\. Hoje esses ganhos sociais correm o risco de recuarem nos próximos anos\. O crescimento
do PIB diminuiu de uma média de 4,5% ao ano em 2006-10 para 2,4% em 2011-14, seguido de
contrações de 3,8% e 3,6% em 2015 e 2016, respectivamente\. Essa desaceleração foi agravada a
partir de 2015 pelo impacto da investigação Lava Jato, por um ambiente polÃtico conturbado e
um ambiente externo cada vez mais desfavorável, que puxaram o investimento e a confiança
para nÃveis historicamente baixos\. Como resultado, a redução da pobreza e da desigualdade vem
mostrando sinais de estagnação\. Para resolver os macro desequilÃbrios atuais e dar novo impulso
ao crescimento, o governo anunciou um pacote de polÃticas de consolidação monetária,
austeridade fiscal, remoção de preços administrados e maior da tolerância em relação Ã
desvalorização da taxa de câmbio\. Além disso, o acesso dos governos subnacionais a novas
garantias para empréstimos federais também ficou mais difÃcil\.
3\. O Brasil também enfrenta uma grave seca nas regiões Nordeste, Sudeste e Centro-
Oeste\. A disponibilidade de água é crÃtica não só para os usuários diretos dos setores de
abastecimento, energético e agropecuário\. A situação atual está afetando o planejamento da
priorização de usos entre abastecimento, geração de energia e produção de alimentos, assim
como a produtividade e competitividade de vários setores\.
4\. Além disso, o paÃs ainda enfrenta importantes desafios na luta contra a pobreza, a
vulnerabilidade e a exclusão social, situação que se manifesta de forma mais marcante na
região Nordeste em geral, e particularmente no interior\. Em todo o Brasil, a incidência da
pobreza continua estando enraizada mais profundamente nas áreas rurais (53%) do que nas
grandes áreas metropolitanas (20%) e nas cidades de menor porte (26%)\. Em relação Ã
distribuição geográfica, cerca de 52% de todos os pobres do Brasil vivem no Nordeste, e em sua
maioria no interior, em povoados e pequenas cidades, onde a atividade econômica gira
maiormente em torno da agropecuária e de serviços associados\.
B\. Contexto setorial e institucional
5\. O Estado da ParaÃba, localizado na região Nordeste do Brasil, ocupa uma área de
56\.469,47 km², dos quais mais de 70% situados no âpolÃgono da secaâ? (região de semiárido
caracterizada por solos pobres, pluviometria baixa e irregular e secas recorrentes)\. Dentre as
restrições ao aproveitamento dos recursos hÃdricos disponÃveis destacam-se a vulnerabilidade das
bacias hidrográficas a eventos de estiagem (aspectos quantitativos) e as relacionadas à qualidade
da água (dureza e alta salinidade)\.
1
6\. Os Ãndices gerais de pobreza e pobreza extrema da ParaÃba atingiram 28,2% e
8,1%, respectivamente, situando-se 1,1 e 1,8 vezes acima dos Ãndices nacionais\.1 Nas áreas
rurais, as taxas de pobreza são mais de duas vezes maiores que nas urbanas e a probabilidade de
uma mulher ser pobre é mais de duas vezes maior que entre homens (ver Tabela 1)\. Assim como
nas demais regiões do Brasil, a prevalência de desnutrição e a insegurança alimentar diminuÃram
substancialmente nas últimas quatro décadas na ParaÃba\. De acordo com dados do IBGE de
2002-2003 sobre estado nutricional, os Ãndices paraibanos de altura para idade e de peso para
altura no sexo masculino estão abaixo das estimativas nacionais e do Nordeste, já os relativos ao
sexo feminino e a áreas rurais estão acima das médias nacional e regionais\.
Tabela 1\. Ã?ndices de pobreza por sexo e chefe de famÃlia (CF) na ParaÃba, %
Ã?rea Homens Mulheres CF Homem CF Mulher
Urbana 6,80 21,00 2,80 14,30
Pobreza*
Rural 15,50 39,90 12,20 27,40
Urbana 3,00 6,30 0,90 3,80
Extrema pobreza **
Rural 6,60 10,40 4,30 6,50
*Menos de R$ 140/mês\. **Menos de R$ 70/mês\. Fonte: Versão harmonizada da Integrated Public Use Microdata Series
(IPUMS) e do Censo 2010 do Brasil\.
7\. A participação da agricultura primária na produção caiu nas últimas décadas, mas
esse setor continua tendo significativa importância no emprego\. A lavoura e a pecuária
representam 5,7% da economia do estado e se baseiam principalmente na produção de cana-de-
açúcar (cultivada sobretudo em grandes propriedades no litoral), frutas, mandioca, milho, feijão e
pecuária\. Para a maior parte da população rural o setor agropecuário continua a ser um
importante gerador de emprego e renda\. Com efeito, cerca de 0,9 milhão dos 3,7 milhões de
habitantes da ParaÃba vivem na zona rural (IBGE, Censo 2010), dos quais se estima que estejam
envolvidos diretamente no setor agropecuário entre 74% e 92%\. Nesse setor predomina a
produção familiar de pequena escala\. De acordo com o Censo Agropecuário de 2006, havia
167\.272 propriedades rurais na ParaÃba, das quais 92% com menos de 50 hectares\.
8\. A escassez crônica de água restringe o acesso a água tratada e agrava a incidência
de doenças transmitidas pela água\. Em 2013, tão somente 25% das famÃlias rurais paraibanas
tinham acesso a saneamento adequado e apenas 54% a água encanada\. Esses dados contrastam
com a média estadual de 71% de acesso a saneamento adequado e 89% de acesso a água
encanada, refletindo as grandes disparidades entre os meios urbano e rural\.2 Os dados
disponÃveis para o semiárido brasileiro sugerem que as secas têm uma forte correlação com
maiores Ãndices de mortalidade infantil e de menor peso ao nascer e com perÃodos de gestação
mais curtos\.3
9\. A variabilidade agroclimática e a estiagem multiplicam os riscos à atividade
agropecuária\. A precipitação irregular (chuvas fortes seguidas de estiagens prolongadas)
1
Fontes: IPEA (http://www\.ipeadata\.gov\.br/) e estimativas do Banco Mundial baseadas em dados da PNAD\. O PNB
per capita da ParaÃba em 2011 foi de R$ 8\.740, cerca de 30% menor que o nacional\.
2
Dados da PNAD-IBGE padronizados por CEDLAS 2001-2013\.
3
R\. Rocha, and R\.R\. Soares (2015), Water scarcity and birth outcomes in the Brazilian semiarid , Journal of
Development Economics (112): 72â91\.
2
recorre, em média, a cada 5 anos, e as estiagens extremas a cada 10 anos\. Como consequência, a
volatilidade do setor agropecuário é quatro vezes maior que a do PIB\.4 Apenas 6,8% das
propriedades rurais do estado têm acesso a irrigação, o principal insumo agronômico para mitigar
essas condições, e 1,4% dessas propriedades ocupam 48,4% da área irrigada\. A exposição aos
eventos hÃdricos afeta todos os produtores agrÃcolas do estado\. Seu impacto econômico é maior
nas grandes propriedades produtoras de cana-de-açúcar e de frutas do litoral (Mata Paraibana),
mas tem um efeito maior nos meios de subsistência dos pequenos produtores5 e dos produtores
familiares, em geral situados na região do semiárido, mais seca e mais frágil (Sertão e
Borborema),6 em razão da sua alta sensibilidade climática e baixa capacidade de adaptação\.
10\. Estratégias de subsistência variadas requerem abordagens diferenciadas de
desenvolvimento agrÃcola e redução da pobreza\. Considerando a distribuição desigual da
terra, as restrições hÃdricas e os riscos agroclimáticos, aumentar a produção agrÃcola por si só não
é garantia de superação da pobreza para boa parte dos agricultores familiares do Nordeste\. A
produção agrÃcola ainda é a principal fonte de renda para a maioria dos agricultores da ParaÃba;
entretanto, para a metade deles apenas é capaz de suprir o suficiente para subsistir\. Na ParaÃba,
86,3% das propriedades rurais têm área inferior a um módulo fiscal, que é uma estimativa da
área mÃnima considerada necessária para um estabelecimento ser viável economicamente\.7 As
estratégias de subsistência desses agricultores muitas vezes dão origem a ciclos viciosos não
sustentáveis de intensificação ou expansão da produção para áreas marginais, maior degradação
dos recursos e maior susceptibilidade ao estresse climático\.8 A migração também é uma
estratégia de enfrentamento fundamental, que leva à redução da pressão sobre os recursos e Ã
diversificação de renda\.9 Considerando que esses agricultores têm poucas oportunidades
comerciais, a assistência prestada deveria focar idealmente na redução da vulnerabilidade a
choques\.
11\. Assim como ocorre no resto da América Latina, estima-se que 20% dos pequenos
proprietários têm potencial para entrar com sucesso em cadeias de valor comercialmente
exigentes\.10 Na ParaÃba, esses agricultores costumam estar entre as fazendas localizadas fora do
4
Banco Mundial, República Federativa do Brasil\. ParaÃba Agriculture Risk Assessment (Volume I & II), Report No\.
AUS12890, GFADR-LAC, April 30, 2015\.
5
Os termos pequeno proprietário, pequeno produtor e agricultor familiar são empregados indistintamente neste
documento\. Segundo a Lei nº 11\.326 de 2006, o âagricultor familiarâ? deve atender aos seguintes quatro requisitos:
(i) não deter, a qualquer tÃtulo, área maior do que quatro módulos fiscais (ver nota de rodapé 7); (ii) ter renda
familiar predominantemente originada da agricultura; (iii) utilizar predominantemente mão de obra da própria
famÃlia; e (iv) dirigir seu empreendimento com sua famÃlia\. Os pequenos produtores que utilizem mão de obra
diversa da familiar também são elegÃveis a participar do Projeto\.
6
Por exemplo, o coeficiente de variação espacial da produtividade da mandioca varia entre 14-45% (D\. Arias et al\.)\.
7
Modulo fiscal é a medida criada por lei de 1979 que leva em consideração os sistemas produtivos e a renda média
para determinar a área mÃnima necessária para a viabilidade econômica\. O módulo médio na ParaÃba tem 50 ha,
variando de 5 a 110 ha\. Essa medida é estática; a viabilidade pode ser melhorada por meio de subsÃdios e de
tecnologia\.
8
Poucas são as áreas do semiárido nordestino que não seguem essas tendências\. D\. Sietz, Regionalization of global
insights into dryland vulnerability: Better reflect ing smallholdersâ vulnerability in Northeast Brazil\. Global
Environmental Change 25 (2014) 173-185\.
9
A ParaÃba é a quinta principal unidade administrativa do Brasil no quesito emigração, apresentando uma taxa
lÃquida de -0,92 por mil habitantes\.
10
M\.H\. Collion, Rural Productive Partnerships: An Inclusive Agribusiness Model for Overcoming Small-holder
Market Barriers, World Bank, 2012\. Essa constatação se repete em pesquisas conduzidas na �frica e na �sia que
indicam que 50-70% dos agricultores são incapazes de ir além da agricultura de subsistência (S\.Ferris et al\., Linking
3
semiárido ou que têm acesso a irrigação, ou entre os 11\.472 estabelecimentos de todas as regiões
com área entre 1 e 4 módulos fiscais\. Esses agricultores enfrentam outras restrições, como o alto
custo da produção e o baixo acesso a infraestrutura, serviços e crédito\. Consequentemente, têm
dificuldades para fornecer a cadeias dinâmicas de maior valor, administradas geralmente por
atravessadores e empresas de processamento de grande porte\. Idealmente, a assistência prestada
a esses agricultores deve se centrar em ações coletivas tendentes a reduzir custos e facilitar o
acesso aos mercados\.
12\. A ParaÃba carece de uma polÃtica explÃcita ou de uma estrutura de planejamento
eficaz voltada para a gestão de recursos hÃdricos\. Em geral, informações sobre hidrologia,
meteorologia e o impacto da seca no Nordeste são desiguais e muitas vezes inacessÃveis, 11 o que
dificulta a emissão de alertas precoces e as iniciativas de planejamento\. O Plano Estadual de
Recursos HÃdricos não é atualizado desde 2006\. Os investimentos em infraestrutura tinham como
principal objetivo melhorar o abastecimento de água urbano\. Diferentes órgãos estaduais e
programas federais fazem investimentos nas áreas rurais\. A empresa de abastecimento e
saneamento do estado da ParaÃba,12 que oferece serviços de água potável e de esgotamento em
todo o estado, tradicionalmente se concentrou nas áreas urbanas, deixando uma importante
lacuna de apoio no tocante aos governos municipais e às entidades comunitárias que gerenciam
os serviços de água nas áreas rurais\. O governo da ParaÃba pretende superar essa situação por
meio da criação de um sistema de gestão de água e saneamento rural\.
13\. A assistência aos pequenos produtores se dá principalmente através do Garantia-
Safra, um mecanismo federal de compensação que paga benefÃcios aos agricultores inscritos
quando seu municÃpio registra importantes perdas da produção devido a eventos climáticos\.
Entre 2002 e 2012, o número de agricultores paraibanos inscritos no programa quase triplicou e,
em sete anos desse perÃodo mais de 60% receberam benefÃcios\. O serviço de extensão rural da
ParaÃba13 presta serviços de verificação para o Garantia-Safra, que comprometem sua estrutura
para oferecer capacitação e assistência técnica aos pequenos produtores\.
14\. O plano do Governo Federal Brasil Sem Miséria cria importantes oportunidades de
inclusão no mercado para pequenos agricultores através de três programas : (a) o Programa
Nacional de Fortalecimento da Agricultura Familiar (PRONAF), que oferece empréstimos
subsidiados a pequenos agricultores em diversas modalidades; (b) o Programa de Aquisição de
Alimentos (PAA), que financia a aquisição da produção de pequenos agricultores por instituições
governamentais, tendo beneficiado quase 200 mil agricultores em todo o Brasil em 2012; e (c) o
Programa Nacional de Alimentação Escolar (PNAE), que obriga que pelo menos 30% do valor
repassado sejam investidos na compra direta de produtos da agricultura familiar\. Ao garantir o
mercado para a produção, esses programas reduzem os riscos do investimento em inovação e
produção e constituem uma fonte de demanda importante para os pequenos produtores; contudo,
têm um alcance limitado em razão de restrições de orçamento e de capacidade, bem como pelo
alto custo para atender às exigências regulatórias (por exemplo, as certificações fitossanitárias)\.
Além disso, as associações e cooperativas de agricultores não são elegÃveis nem ao PRONAF
Smallholder Farmers to Markets and the Implications for Extension and Advisory Services, MEAS Discussion Paper
4, 2014)\.
11
Banco Mundial, Monitor de Secas do Nordeste, em busca de um novo paradigma para a gestão de secas, Relatório
N\.º 106302, BrasÃlia, 2015\.
12
Companhia de Ã?gua e Esgoto da ParaÃba â CAGEPA\.
13
Empresa de Assistência Técnica e Extensão Rural da ParaÃba - EMATER/PB\.
4
nem a outras linhas de crédito formais, o que restringe o alcance das iniciativas coletivas como
forma de superar as restrições de escala\.14
15\. A vulnerabilidade das famÃlias rurais diminuiu significativamente graças ao Bolsa
FamÃlia, programa de transferência condicionada de renda para as famÃlias em situação de
pobreza que beneficia cerca de 45% da população do estado\. Essas transferências são
direcionadas a uma mulher da famÃlia, e se acredita que sejam em boa medida responsáveis pela
queda nos Ãndices de desnutrição\. O Bolsa FamÃlia também tem como efeitos indiretos não
previstos a redução da sensibilidade aos eventos climáticos e das taxas de migração\.15 Ao
regularizar o consumo das famÃlias ao longo do tempo, as transferências de renda contribuem
para evitar que estas tenham que recorrer ao seu estoque de gado e de sementes durante os
perÃodos de estiagem, permitindo, assim, uma recuperação mais rápida; por outro lado, o
crescimento da população pode acarretar uma maior pressão sobre os recursos\. Assim, o Bolsa
FamÃlia oferece uma janela de oportunidade para melhorar a resiliência por meio de intervenções
direcionadas a reduzir a vulnerabilidade dos sistemas de produção\.
16\. A disponibilidade e a segurança hÃdrica deverão sofrer uma piora com as mudanças
climáticas\. A previsão de aumento nas temperaturas e na frequência das secas poderia significar
maiores riscos para a população, a produção agrÃcola e o acesso aos alimentos (ver Anexo 6)\.
Assim, faz-se necessário tomar medidas de adaptação para reduzir o nÃvel atual de
vulnerabilidade e aumentar a resiliência das famÃlias, comunidades e sistemas de produção
agrÃcola diante dos cenários futuros\.
17\. O Banco tem uma longa parceria com a região Nordeste e com o Estado da ParaÃba,
mantendo um diálogo permanente sobre as estratégias setoriais do Estado e através de
operações especÃficas\. O estado da ParaÃba vem recebendo assistência do Banco no âmbito de
projetos de investimento voltados para a redução da pobreza, obras de infraestrutura hÃdrica e
fortalecimento da governança local, através do Projeto de Redução da Pobreza Rural da ParaÃba
(1997-2006, P042565) e do Segundo Projeto de Redução da Pobreza Rural da ParaÃba -
COOPERAR II (2008-2014, P104752)\. O COOPERAR II consistiu na execução de 326 projetos
básicos de infraestrutura (sobretudo de abastecimento) e 161 subprojetos de produção
(processamento de frutas, piscicultura, caprino e ovinocultura e artesanato, por exemplo), que
beneficiaram cerca de 27 mil famÃlias\. Com base nos resultados e lições gerados por essas
operações, o Projeto proposto marca a mudança de uma abordagem de redução da pobreza rural
induzida pela comunidade para um apoio diferenciado tanto no que se refere ao desenvolvimento
da resiliência da comunidade através de melhor acesso a água e redução da vulnerabilidade
agropecuária, como à incorporação de abordagens de redução da pobreza e prosperidade
compartilhada orientadas ao mercado\.
C\. Objetivos superiores para os quais o Projeto contribui
18\. O projeto proposto está inteiramente alinhado com a Estratégia de Parceria 2018-2023
(CPS) para o Brasil (Relatório nº 113259-BR), discutida pela Diretoria Executiva em 13 de julho
de 2017\. Nos setores agrÃcola e de manejo de recursos naturais, o projeto proposto estará voltado
14
Por exemplo, das cerca de 5\.000 cooperativas que têm conta bancária no Banco do Brasil, apenas 50% obtiveram
acesso a crédito\. Banco do Brasil, Equipe de Gestão do Agronegócio, dados pessoais\.
15
E\.De Nys, N\. Engle and A\. Rocha Magalhães, Drought in Brazil: Proactive Management and Policy, CRC Press,
2016\.
5
para um importante desafio definido na Ã?rea Focal 3 da CPS: Desenvolvimento inclusivo e
sustentável - Promover o desenvolvimento socioeconômico dos pequenos agricultores e de
grupos vulneráveis\. Essa área contempla a realização de investimentos direcionados a: (i)
contribuir para melhorar o uso do solo e a gestão dos recursos naturais por parte de pequenos
agricultores familiares, povos indÃgenas e comunidades tradicionais; e (ii) promover uma
mudança em direção a uma agricultura climaticamente inteligente, com tecnologias de produção
modernas e gestão sustentável da paisagem, de forma a aumentar a resiliência face às mudanças
climáticas\. O projeto se centra em duas áreas: na pobreza extrema, através de atividades de
acesso a água e de redução da vulnerabilidade; e na de prosperidade compartilhada, através do
apoio às alianças produtivas\.
II\. OBJETIVOS DE DESENVOLVIMENTO DO PROJETO
A\. ODP
19\. O objetivo do Projeto é melhorar o acesso a água, reduzir a vulnerabilidade agroclimática
e ampliar o acesso da população rural pobre da ParaÃba aos mercados\.
B\. Beneficiários do Projeto
20\. A população alvo do projeto é formada por cerca de 165\.000 pessoas (44\.600 famÃlias)
que dependem predominantemente da produção agrÃcola de pequena escala, de atividades de
transformação e de serviços relacionados\. Os potenciais beneficiários serão priorizados através
de diferentes instrumentos de acordo com suas caracterÃsticas, conforme resumido na tabela a
seguir:
6
Tabela 2\. Priorização dos beneficiários
Tipo de CaracterÃsticas do
Local* FamÃlias
investimento beneficiário
Abastecimento de Acesso a água (quantidade e �reas rurais e cidades 18\.700
água qualidade) é deficitário\. pequenas de municÃpios
priorizados**
Redução da Pequenos produtores com Ã?reas rurais de municÃpios 17\.400
vulnerabilidade terras e/ou água insuficientes priorizados**
agroclimática
Alianças produtivas Pequenos produtores Todo o estado da ParaÃba 8\.500
competitivos
* As comunidades indÃgenas e quilombolas são elegÃveis a todas as linhas de intervenção, independentemente da sua
localização no estado\.
** Selecionados com base no �ndice Municipal de Vulnerabilidade Agroclimática (mais detalhes no Anexo 2)\.
C\. Indicadores dos resultados relacionados ao ODP
21\. A consecução dos ODP será medida por meio dos seguintes indicadores16:
(a) Habitantes da área rural que passaram a ter acesso a fontes de água tratada no
âmbito do Projeto;
(b) Produtores que adotaram alguma das tecnologias agrÃcolas aperfeiçoadas
promovidas pelo Projeto; 17
(c) Aumento do valor médio bruto das vendas dos produtores pertencentes a Alianças
Produtivas;
(d) Sistema de Informação de Risco Agroclimático em operação\.
III\. DESCRIÃÃO DO PROJETO
A\. Componentes do Projeto
22\. O Projeto tem quatro componentes (ver o Anexo 2 para uma descrição completa), a
saber:
23\. Componente 1\. Fortalecimento institucional (Total US$ 4,02 milhões, dos quais 65%
com aporte do BIRD):
(a) Realização de uma campanha de comunicação com o propósito de: (i) informar os
potenciais interessados sobre o alcance e as regras do Projeto; (ii) publicar e divulgar as
atividades do Projeto; e (iii) atrair investidores e compradores para as cadeias produtivas
do setor rural contempladas pelo Projeto\.
16
Sempre que possÃvel, os indicadores serão desagregados por sexo e etnia\.
17
Este indicador de resultados refere-se apenas às tecnologias que contribuem para reduzir o risco agroclimático
(Componente 2)\.
7
(b) Fortalecimento da capacidade institucional das Associações Comunitárias18 (ACs)
e dos Conselhos Municipais com o propósito de: (i) melhorar a sua governança e
habilidades gerenciais e suas técnicas em relação à operação e manutenção da
infraestrutura da comunidade; (ii) realizar ações de educação sanitária, ambiental e
nutricional junto à s famÃlias beneficiárias das ACs; e (iii) realizar cursos de capacitação
em boas práticas agropecuárias e ambientais, incluindo o uso de informação
meteorológica na tomada de decisões\.
(c) Fortalecimento da capacidade institucional das Organizações de Produtores (OPs)
a fim de:19 (i) observar as regulações aplicáveis a organizações e empresas; e (ii)
melhorar as suas competências de gestão de administrativa, de negócios e de risco\.
(d) (i) oferecer treinamento aos prestadores de serviços técnicos que poderão vir a
prestar assistência técnica às ACs, OPs, COOPERAR20 e a qualquer outra instituição
pública selecionada no âmbito do Projeto; e (ii) criar um banco de dados de prestadores
de serviços técnicos\.
(e) Fortalecimento da capacidade institucional da Secretaria de Estado da
Infraestrutura, dos Recursos HÃdricos, Meio Ambiente e Ciência e Tecnologia
(SEIRHMACT) e de outras instituições selecionadas do setor público para implementar
um modelo de gestão direcionado a melhorar os serviços de água e saneamento do setor
rural, incluindo, entre outros, assistência para: (i) definir e estabelecer arranjos
institucionais para o subsetor; (ii) fortalecer a coordenação entre os atores e programas do
subsetor; (iii) estabelecer um sistema de informação para o cadastramento e o
monitoramento dos sistemas de água e saneamento rural; (iv) implementar em caráter
piloto mecanismos de assistência técnica e modelos de gestão para sistemas rurais de
abastecimento de água; (v) apoiar a criação de federações de ACs; e (vi) capacitar e
prestar assessoramento técnico a ACs para melhorar suas capacidades de gerenciamento,
operação e manutenção de sistemas rurais de abastecimento de água\.
(f) Fortalecimento da capacidade da Companhia de Desenvolvimento da ParaÃba
(CINEP) e de outros parceiros selecionados no sentido de priorizar e chegar até os
investidores e compradores em potencial, facilitando sua decisão de aderir às Alianças
Produtivas\.
24\. Componente 2\. Acesso a água e redução da vulnerabilidade agroclimática (Total
US$ 44,36 milhões, dos quais 58% com aporte do BIRD):
(a) Prestar apoio nas seguintes atividades: (i) identificar investimentos em
abastecimento de água, incluindo, entre outros, a construção e a recuperação de sistemas
de água encanada e não-encanada, de plantas de dessalinização e de sistemas domésticos
para aproveitamento da água da chuva, e subprojetos de redução da vulnerabilidade
agroclimática; (ii) realizar estudos de pré-investimento para os sistemas de água
identificados no inciso (a) (i), e para subprojetos de redução da vulnerabilidade
18
As ACs incluem associações civis formadas por membros de uma comunidade ou de qualquer associação privada
legalmente constituÃda na ParaÃba, incluÃdas as comunidades de povos indÃgenas e quilombolas\.
19
As OPs incluem cooperativas de produtores, associações civis ou qualquer grupo de pequenos agricultores
organizados como associação privada legalmente constituÃda\.
20
COOPERAR é a Unidade de Coordenação do Projeto e se insere na estrutura da Secretaria da Agricultura
Familiar e do Desenvolvimento do Semiárido (SEAFDS)
8
agroclimática; e (iii) implementação dos investimentos em sistemas de abastecimento de
água previstos no inciso (i)\.
(b) Financiamento de contrapartida para as ACs destinado à execução dos subprojetos
de redução da vulnerabilidade agroclimática\.
(c) Prestação de apoio à Agência Executiva de Gestão das Ã?guas da ParaÃba (AESA)
para o estabelecimento de um Sistema de Informação de Risco Agroclimático (SIRA)\.
25\. Componente 3 - Alianças Produtivas (Total US$ 20,73 milhões, dos quais 70% com aporte
do BIRD):
(a) Prestar apoio nas seguintes atividades: (i) identificar e implementar Alianças
Produtivas; e (ii) conduzir estudos de pré-investimento para as Alianças Produtivas,
incluindo a formulação de planos de negócios e subprojetos associados a elas\.
(b) Financiamento de contrapartida para as OPs para a execução dos subprojetos das
Alianças Produtivas\.
26\. Componente 4 - Gestão, monitoramento e avaliação do Projeto (Total US$ 10,76
milhões, dos quais 65% com aporte do BIRD):
Apoiar o Mutuário em: (a) Coordenação e gerenciamento do Projeto; (b) monitoramento
das atividades do Projeto, avaliação de resultados e avaliação de impactos; (c)
Administração fiduciária, controles internos e auditorias; (d) gestão dos procedimentos de
salvaguardas; (e) avaliação técnico-financeira independente dos planos de negócios das
Alianças Produtivas; (f) mecanismo de ouvidoria; e (vii) estudos relacionados ao Projeto\.
B\. Financiamento do Projeto
27\. A operação de estruturação financeira para investimentos ora proposta será parcialmente
financiada por um empréstimo flexÃvel com spread variável, carência de 5,5 anos e vencimento
em 18 anos, no valor de US$ 50,0 milhões\. Os aportes adicionais serão feitos pelo Governo do
Estado da ParaÃba (US$ 22,88 milhão) e pelos beneficiários (US$ 7,12 milhão)\.
Tabela 2\. Custos e Financiamento do Projeto (US$ milhões)
% financia-
Custos do Estado da
Componentes do Projeto Beneficiários BIRD mento do
Projeto ParaÃba
BIRD
1\. Fortalecimento institucional 4,02 1,41 0,00 2,61 65
2\. Redução da vulnerabilidade 44,36 17,04 1,52 25,80 58
3\. Alianças produtivas 20,73 0,62 5,60 14,51 70
4\. Gestão, monitoramento e 10,76 3,81 0,00 6,95 65
avaliação
Custo total
Custo total do Projeto 79,87 22,88 7,12 49,87 63
Taxas iniciais 0,13 0,13
Financiamento total 80,00 22,88 7,12 50,00
necessário
9
C\. Lições aprendidas e aplicadas ao Conceito do Projeto
28\. O projeto proposto baseia-se nas experiências e lições aprendidas nos programas de
desenvolvimento rural anteriores executados na ParaÃba (entre os quais o Segundo Projeto de
Redução da Pobreza Rural da ParaÃba - COOPERAR II, recentemente concluÃdo), em outros
estados brasileiros e em outros paÃses da América Latina\. As principais lições que deram forma
ao projeto proposto são resumidas à continuação:
29\. Qualidade dos investimentos em abastecimento de água\. No âmbito do COOPERAR II, a
formulação dos subprojetos de abastecimento esteve a cargo das associações comunitárias (ACs),
que contaram com a ajuda das instituições que participam dos conselhos municipais\. A
experiência aponta deficiências significativas na análise de viabilidade e nos projetos de
engenharia desses subprojetos, com consequências potencialmente negativas na eficácia dos
investimentos\. No Projeto proposto, os estudos de pré-investimento e os projetos de engenharia
serão executados por consultores especialistas contratados pelo próprio COOPERAR\.
30\. Sustentabilidade dos investimentos em abastecimento de água\. O abastecimento de água
no meio rural necessita um marco institucional para manter no longo prazo a infraestrutura
financiada\. Operar e manter sistemas de abastecimento de água pulverizados no meio rural é
desafiador, particularmente para que as comunidades os gerenciem de forma sustentável
financeiramente\. Via de regra, a estrutura para pagamento pela água e gestão dos sistemas requer
atenção desde o primeiro momento\. O desenvolvimento institucional no âmbito do Projeto â
criação de associações de usuários de água, desenvolvimento de modelos de gestão, definição de
tarifas, orientação O&M â será conduzido concomitantemente à execução das obras\. Desse
modo, o componente de fortalecimento institucional ajudará a fortalecer o marco institucional
estadual que apoia esses serviços na ParaÃba\.
31\. Uso de informações climáticas nos sistemas de apoio à decisão: A disponibilidade de
sistemas de alerta precoce e de monitoramento pode potencializar um planejamento que leve em
consideração o clima e uma gestão sustentável dos recursos por parte dos serviços de extensão,
dos agricultores e das comunidades\. Com base nos esforços já realizados nas esferas estadual e
federal, o Projeto apoiará o desenvolvimento de um sistema estadual de informação
agroclimática que englobe informações sobre clima/meteorologia, solos, culturas e hidrologia\.
Tais sistemas integrados já se provaram úteis no planejamento de ações de resposta em situações
de risco de desastre e no monitoramento de situações com baixo impacto inicial, como é o caso
da seca\.
32\. Linhas diferenciadas de apoio aos produtores agrÃcolas\. A expectativa das intervenções
anteriores de que todos os pequenos produtores que recebem apoio âprodutivoâ? são capazes de
aumentar suas vendas e sua renda se provou desigual, na melhor das hipóteses\. Uma grande
parcela de pequenos produtores tem pouca terra e água insuficiente para se integrar com sucesso
em cadeias produtivas mais exigentes e tende a apresentar alta vulnerabilidade à variabilidade
climática\. No Projeto, os grupos de produtores que preenchem o perfil de empréstimo e de risco
exigido para competir em mercados exigentes terão à disposição uma linha de financiamento
competitivo; enquanto isso, os pequenos produtores nas comunidades terão acesso a
financiamento para aumentar a sua resiliência e reduzir o seu risco\.
10
33\. Alianças produtivas\. As experiências do Nordeste brasileiro e internacionais mostram
que iniciativas que visam melhorar o acesso dos pequenos produtores ao mercado são movidas
pela identificação de oportunidades de mercado e não pela satisfação das ânecessidadesâ? e
âdemandasâ? da comunidade, que muitas vezes têm uma perspectiva comercial pouco clara e, por
conseguinte, uma sustentabilidade financeira questionável\. O financiamento da Aliança leva Ã
melhoria dos sistemas de produção de forma a oferecer o que os mercados demandam, ao
contrário das abordagens que visam apenas expandir a produção ou melhorar a produtividade\. O
Projeto exigirá a orientação do mercado e a participação direta dos compradores potenciais como
um critério chave de elegibilidade aos recursos para subprojetos produtivos\.
34\. Avaliação independente dos aspectos técnico-financeiros das alianças\. A capacidade de
avaliação ex-ante de propostas de negócios não é algo que se encontre com facilidade nas
instituições públicas\. Além disso, a prestação de assistência à produção tende a ser capturada
pela elite ou pelo clientelismo\. Tais riscos podem ser mitigados com a contratação de uma
entidade externa, conforme termos de referência e qualificações aceitáveis para o Banco, com o
propósito de fazer uma avaliação independente de cada proposta de aliança antes da aprovação
do financiamento\.
35\. Capacitação e assistência empresarial aos beneficiários\. Fortalecer a capacidade
gerencial dos beneficiários do Projeto, particularmente daqueles que envolvem mulheres e
jovens, que muitas vezes têm menos experiência e entendimento limitado sobre as instituições e
os mercados, é um elemento chave para a consolidação e o crescimento de uma organização\.
Nesse sentido, o Projeto abordará essa questão em três nÃveis: (i) por meio de capacitação em
geral e da sensibilização dos potenciais beneficiários e prestadores de serviços; (ii) ajudando as
organizações de produtores interessadas a estruturar iniciativas de negócios, a negociar com
parceiros comerciais e a aprender gradualmente com a prática; e (iii) oferecendo assistência e
treinamento contÃnuo e personalizado à s organizações participantes ao longo de toda a
implementação\. Serão levados em consideração na personalização o sexo, a idade e a etnia dos
beneficiários\.
IV\. IMPLEMENTAÃÃO
A\. Arranjos institucionais e de implementação
36\. O Projeto será implementado pelo projeto COOPERAR, que foi a Unidade de
Gerenciamento de Projeto estabelecida para o Segundo Projeto de Redução da Pobreza Rural da
ParaÃba (P104752) e que foi remanejada para a recém-criada Secretaria da Agricultura Familiar e
do Desenvolvimento do Semiárido (SEAFDS)\. A SEAFDS será responsável por prestar
orientações estratégicas no tocante à s polÃticas estaduais pertinentes e pela coordenação
necessária para a implementação do Projeto com outras secretarias estaduais e instituições\.
Caberá à SEAFDS aprovar o orçamento anual do projeto e os relatórios de progresso\.
37\. O COOPERAR estará a cargo e prestará contas da gestão global do projeto, seu
planejamento, coordenação, monitoramento e avaliação, inclusive das atividades fiduciárias e do
cumprimento das polÃticas de salvaguarda\. No nÃvel local, a implementação do projeto será
coordenada por unidades regionais com o apoio e orientação de uma unidade central\.
11
38\. O COOPERAR apoiará as ACs, às quais caberá identificar e operar os investimentos em
abastecimento de água e os subprojetos de redução de vulnerabilidades\. As OPs implementarão
alianças produtivas em colaboração com compradores dos setores público e privado\.
Considerando a grande variação de capacidade entre essas organizações, o projeto deverá lançar
uma campanha direcionada de comunicação diferenciada por gênero, bem como uma variedade
de atividades de treinamento e assistência técnica voltadas para o desenvolvimento de
capacidades e a redução de assimetrias de informação\.
39\. Os Conselhos Municipais de Desenvolvimento Rural Sustentável apoiarão as ACs e OPs
na identificação de investimentos e subprojetos e as ajudarão a estimular localmente sinergias
entre os investimentos dos setores público e privado\. No dia-a-dia, a implementação se
concentrará no empoderamento das organizações participantes e na sua capacidade de
autogestão\. As informações relacionadas ao projeto serão disseminadas através de oficinas,
publicações e sites\.
40\. A SEIRHMACT conduzirá o processo de definição, pilotagem e implementação do
Sistema de Gestão de �gua e Saneamento Rural do Estado (Subcomponente 1e)\.
41\. A AESA será responsável pelo estabelecimento do SIRA em parceria com instituições
de pesquisa e extensão rural e meteorológicas (Subcomponente 2c)\.
42\. A CINEP será responsável pela condução e coordenação dos planos e atividades de
atração e promoção de investimentos/compradores, bem como das atividades desenvolvidas
visando facilitar a criação de alianças produtivas (Subcomponentes 1f e Componente 3)\.
43\. Antes de que qualquer atividade do Projeto seja executada, SEIRHMACT, AESA e
CINEP assinarão Convênios de Cooperação Técnica com o COOPERAR, conforme termos e
condições aceitáveis para o Banco\.
B\. Monitoramento e Avaliação de Resultados
44\. O COOPERAR monitorará e avaliará o progresso do projeto e seus resultados do ponto
de vista técnico, financeiro, social e ambiental\. Tendo como referência a situação de linha de
base, o sistema de M&A acompanhará o desempenho do Projeto rastreando seus insumos,
produtos e progresso em relação aos ODPs e aos indicadores de resultados intermediários\. Uma
avaliação contÃnua permitirá: desenhar e implementar ajustes operacionais ao longo da
implementação; promover a responsabilização pelos recursos usados em relação aos objetivos;
dar e receber feedback dos atores envolvidos; e gerar insumos para disseminação de resultados e
lições aprendidas\.
45\. Avaliação\. O COOPERAR conduzirá uma Revisão Intermediária aproximadamente dois
anos após o Projeto entrar em vigor\. Os resultados dessa revisão subsidiarão os ajustes técnicos
ou de desenho de projeto cabÃveis\. O COOPERAR também conduzirá uma avaliação final\. A
estratégia dessa avaliação leva em consideração diferenças relacionadas ao estado do
conhecimento e à capacidade de geração de dados em três linhas de ação\. No caso do acesso a
água, a avaliação dos resultados se centrará nos resultados e nas mudanças comportamentais (uso
e adoção), uma vez que há provas contundentes que evidenciam os impactos positivos desse tipo
de intervenções\. Já no caso da redução da vulnerabilidade agroclimática, dada a dificuldade em
se estabelecer indicadores de resultados que não dependam da ocorrência de eventos climáticos,
os resultados serão medidos em termos de adoção de tecnologias e práticas, e a avaliação seguirá
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uma abordagem focada na aprendizagem a partir da experiência\. Com isso, o Projeto coletará
informações para gerar os insumos e resultados pertinentes, antes e depois dos investimentos, a
fim de medir sua eficácia e eficiência enquanto outros fatores passÃveis de mudança ao longo do
tempo são controlados\. Em ambos os casos, a análise levará em consideração variáveis
socioeconômicas, entre elas sexo e etnia\.
46\. Avaliação do impacto\. Com o apoio de consultores externos, o COOPERAR conduzirá
uma rigorosa avaliação de impacto do componente Alianças Produtivas, empregando métodos
quase experimentais\. As principais variáveis a serem avaliadas serão a renda lÃquida das famÃlias
de agricultores, o volume total de vendas e o nÃvel de emprego por aliança produtiva\. A
avaliação ajudará a identificar a influência de fatores externos (por exemplo, os preços no
mercado internacional) que não podem ser atribuÃdos ao Projeto em si\. Embora uma
estratificação ex-ante por sexo ou etnia não seja plausÃvel, sempre que for possÃvel a análise fará
essa desagregação dos dados\.
C\. Sustentabilidade
47\. Os sistemas de abastecimento de água ganharão em termos de sustentabilidade com uma
avaliação ex-ante rigorosa das fontes de captação e das alternativas técnicas e com o
fortalecimento institucional das ACs em gestão, operação e manutenção (O&M)\. A
sustentabilidade a longo prazo melhorará com o fortalecimento da estrutura institucional do
Estado voltada para os serviços rurais de água e saneamento, especificamente da SEIRHMACT
para implantar novos arranjos institucionais subsetoriais, possibilitar mecanismos de assistência
técnica e promover modelos de gestão sustentável para os serviços de abastecimento e
saneamento rural\.
48\. As intervenções destinadas a reduzir a vulnerabilidade agroclimática são concebidas de
modo a aumentar a resiliência das unidades de produção à variabilidade climática e à estiagem\.
Espera-se que reduzam o impacto das ocorrências e elevem a capacidade de adaptação dos
produtores\. A sustentabilidade a longo prazo dependerá da disponibilidade de assistência técnica
adequada, particularmente diante de eventos imprevistos\.
49\. A sustentabilidade das alianças produtivas será melhorada através de um desenho
rigoroso e da avaliação independente da viabilidade técnica, financeira e institucional\. As
Alianças Produtivas que consigam conciliar os principais interesses dos produtores (maior renda)
com os dos compradores (volume e qualidade do produto) provavelmente sejam sustentáveis\.
Além disso, a capacidade das OPs de crescer e responder a mudanças nas condições do mercado
melhorará com o fortalecimento da gestão, que contemplará apoio diferenciado para as
lideranças femininas\.
V\. PRINCIPAIS RISCOS
A\. Classificação global de risco e explicação dos principais riscos
50\. O risco global do projeto é considerado Alto em razão do elevado risco relacionado Ã
capacidade institucional de implementação e sustentabilidade\. Ainda, os riscos relacionados ao
desenho técnico e aos aspectos fiduciários e macroeconômicos em geral também são
considerados consideráveis\. Os pontos fortes do COOPERAR residem na sua capacidade de
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envolver as comunidades rurais e as famÃlias nas operações do Banco; no entanto, o Projeto
requer mudanças no sentido de operar linhas de intervenção diferenciadas, uma caracterÃstica
conceitual de projeto que implica mudanças no COOPERAR em termos de cultura, pessoal e
procedimentos\. Para mitigar os riscos institucionais, de elaboração técnica do projeto e
fiduciários, o COOPERAR incorporou pessoal técnico e fiduciário qualificado, trabalhará de
forma significativa a questão do fortalecimento das capacidades institucionais e melhorará os
sistemas de gerenciamento de projetos\.
51\. Os riscos macroeconômicos globais do Projeto estão ligados ao impacto da recessão atual
da economia brasileira na receita da ParaÃba\. Uma maior restrição de recursos pode gerar atrasos
na implementação dos investimentos, uma vez que os recursos orçamentários podem ser
contingenciados e realocados para pagamentos correntes obrigatórios\. Esse risco será mitigado
pelo ajuste fiscal que está sendo aplicado na ParaÃba e pela recuperação gradual prevista para o
Brasil após 2017, embora estado e paÃs continuem vulneráveis a choques externos negativos\. A
dÃvida pública do estado é baixa e considerada de baixo risco pelo Tesouro Nacional, apesar do
alto nÃvel de gastos atual em relação à receita total\. O ritmo de implementação do
subcomponente de alianças produtivas também será afetado pelo nÃvel de demanda agregada,
embora as análises da economia apontem uma grande robustez em relação a uma elevação nos
custos ou a uma queda nas receitas\.
52\. O principal risco decorrente das Estratégias e PolÃticas Setoriais está associado Ã
incerteza quanto aos arranjos de governança da água na ParaÃba\. Classificado como moderado,
esse risco deve ser mitigado, primeiramente, com o fortalecimento da capacidade das ACs de
gerenciar os sistemas de água e, depois, com o apoio para a criação de um sistema estadual de
gestão do abastecimento e saneamento rural\.
VI\. RESUMO DA AVALIAÃÃO
A\. Análise econômico-financeira
53\. Considerando a abordagem orientada pela demanda (componente 2) e a abordagem
competitiva (componente 3) contempladas pelo Projeto, não é possÃvel definir ex-ante a natureza
precisa, a combinação e o escopo dos investimentos a serem financiados\. Esses aspectos serão
identificados ao longo da implementação do projeto, de forma que qualquer tentativa de prever
ex-ante a evolução da demanda de serviços e de predeterminar a viabilidade do Projeto como um
todo seria subjetiva\. Contudo, para estimar a provável viabilidade econômica e financeira dos
investimentos do projeto, os principais tipos de subprojetos possivelmente financiados foram
avaliados da seguinte forma\.
54\. Subprojetos de Alianças Produtivas\. Foram estimadas uma Taxa Interna de Retorno
Financeiro (TIR-F) de 32% e uma Taxa Interna de Retorno Econômico (TIR-E) de 43% para um
conjunto de tipos de alianças que provavelmente sejam financiadas pelo projeto (leite de cabra,
mel, pescado, polpa de frutas e vegetais)\. Em nÃvel individual, todos os cinco tipos de alianças
produtivas provaram-se investimentos sólidos tanto do ponto de vista financeiro como de
empreendimentos comerciais independentes, bem como em relação aos ganhos econômicos que
têm a oferecer à sociedade\. As elevadas magnitudes do TIR-E são uma consequência das
distorções significativas que ocorrem nos mercados de insumos e produtos, bem como de uma
14
tributação restritiva que, obviamente, desaparece quando se faz a análise econômica\. As
simulações baseadas nesses modelos concluÃram que o componente Alianças Produtivas
(incluÃda sua parcela relativa do Componente 4) seria financeiramente e economicamente viável
com um TIR-F de 37% e um TIR-E de 53%, respectivamente\. Uma análise de sensibilidade com
respeito à elevação dos custos e à queda na receita mostrou que a viabilidade econômica e
financeira do componente é significativamente robusta\. Incluir na análise os custos e benefÃcios
acumulados pelos compradores aumentaria ambas as TIR, mas a informação para tanto não é
encontrada com facilidade\. Espera-se uma taxa interna de retorno composta relativamente alta
em razão do âcenário sem projetoâ? extremamente baixo\. O reduzido fluxo de receitas sem o
projeto reflete com precisão o desespero de empreendimentos produtivos que não têm uma
perspectiva de crescimento significativo de receitas, o que decorre por sua vez da baixa adoção
de novas tecnologias e do acesso restrito a mercados remunerados\. Nesse cenário, as receitas
âcom projetoâ? mostram um aumento drástico nas receitas prováveis graças a atividades
integradas que contribuem para remover a maioria das restrições existentes\.
55\. Subprojetos de redução da vulnerabilidade agroclimática\. Quando do encerramento
do Segundo Projeto de Redução da Pobreza Rural da ParaÃba (COOPERAR II) foi feita uma
avaliação de uma amostra aleatória dos investimentos em redução da vulnerabilidade (entre eles
os de irrigação de pequena escala e de melhorias em estradas vicinais)\. A análise custo-benefÃcio
ex-post desses investimentos foi revisitada e serviu de referência para a provável viabilidade
econômica desses tipos de subprojetos\. Separadamente, todos os investimentos em redução da
vulnerabilidade foram considerados viáveis economicamente, apresentando uma TIR-E agregada
de 120%\. A TIR-E relativamente alta e talvez aparentemente otimista se explica pelo efeito
indireto dos benefÃcios para as comunidades localizadas no entorno das que demandaram
originalmente as obras\. Uma análise da relação custo-benefÃcio de um subprojeto de barragem
subterrânea identificado como outro tipo provável de subprojeto de redução da vulnerabilidade
também se mostrou economicamente viável, com uma TIR-E de 11%\.
56\. Investimentos em abastecimento de água (AA)\. Os benefÃcios econômicos trazidos
pelos investimentos em AA foram estudados e documentados cuidadosamente e são bem
compreendidos\. Há extensa literatura na área de economia da saúde respaldando a solidez dos
investimentos em expansão da cobertura desses serviços\. Por exemplo, um estudo da
Organização Mundial da Saúde21 estimou que o retorno dos investimentos em abastecimento de
água e em saneamento de 17 regiões do mundo, incluÃdo o Brasil, variaram entre US$ 5,00 e
US$ 28,00 por cada US$ 1,00 investido, tendo como principal benefÃcio a economia de tempo
associada a um melhor acesso aos serviços de água e saneamento\. Estudos mais recentes
realizados no semiárido nordestino estimaram que o valor estatÃstico no qual os investimentos
em AA atingiriam o ponto de equilÃbrio eram significativamente menores que as estimativas
tÃpicas encontradas na literatura, independentemente das taxas de juros adotadas\. Como
referência adicional, foi estimada uma TIR-E agregada de 30% para os subprojetos de
abastecimento financiados e analisados ex-post no Relatório de Conclusão de Implementação do
COOPERAR II\.
57\. Fundamentação para o financiamento pelo setor público Normalmente, os serviços de
abastecimento de água e de redução de vulnerabilidades nas áreas rurais são fornecidos por
21
World Health Organization, Global costs and benefits of drinking-water supply and sanitation interventions to
reach the MDG target and universal coverage, WHO/HSE/WSH/12\.1, WHO, 2012\.
15
agentes públicos, em razão da sua natureza de serviço básico, das significativas externalidades e,
em geral, da incapacidade de o retorno financeiro gerado cobrir os custos do investimento e de
operação, manutenção e substituição, bem como de oferecer incentivos financeiros suficientes,
na forma de margem de lucro, para atrair o financiamento do setor privado\. Os investimentos em
abastecimento de água tendem a ser significativos em escala e a apresentar uma taxa de
recuperação financeira lenta devido à necessidade de manter as tarifas baixas o suficiente a fim
de maximizar a cobertura\.
58\. A agricultura praticada pelos pequenos agricultores paraibanos se caracteriza por baixos
nÃveis de produtividade do solo e da mão de obra e pela baixa agregação de valor\. Esse é
justamente o caso da região do semiárido em um contexto marcado pela oferta insuficiente de
serviços eficientes de extensão rural e de financiamento e no qual a integração a mercados
dinâmicos é obstaculizada pela baixa capacidade de desenvolvimento organizacional e
empresarial, por assimetrias de informação e pela deseconomia de escala\. Os repasses de verbas
do setor público para cofinanciar empreendimentos privados de pequenos agricultores se
justificam pela necessidade de mitigar as falhas de mercado que impedem que esse segmento da
população se integre efetivamente nos mercados dinâmicos e mais lucrativos\.
59\. Valor agregado pelo Banco Mundial\. O longo histórico de participação do Banco
Mundial em uma série de projetos executados no âmbito do Programa de Redução da Pobreza
Rural do Nordeste (1993-2014), inclusive no estado da ParaÃba, e suas operações em torno de
questões semelhantes no contexto latino-americano e mundial situam o Banco em uma posição
Ãmpar para fornecer orientações sobre melhores práticas nas seguintes áreas, entre outras:
elaboração de projetos para sistemas de abastecimento de água com uma boa relação custo-
eficácia; fortalecimento de capacidade de OPs; e aumento da renda e redução da pobreza através
do desenvolvimento de negócios e integração com o mercado\. São particularmente relevantes
para esta operação as experiências recentes do Banco com a implementação de projetos da
Alianças Produtivas e de desenvolvimento e uso de sistemas de informação agroclimática em
vários paÃses da América Latina e de outras regiões\. Está prevista a transferência de
conhecimentos técnicos e estratégicos pelo Banco ao longo da implementação e na avaliação do
projeto\.
B\. Técnicos
60\. Investimentos em abastecimento de água\. O Projeto promoverá o desenvolvimento de
sistemas de água projetados de acordo com o contexto local e aceitos pelas comunidades\.
Quando possÃvel, o projeto dará preferência aos sistemas de água encanada (rede de
distribuição), uma vez que garantem uma maior redução da vulnerabilidade; entretanto, sistemas
não convencionais (como coleta de água da chuva ou dessalinização) também são elegÃveis a
financiamento\. As ACs receberão assistência na forma de capacitação para estabelecer os
arranjos organizacionais e os mecanismos de recuperação de custos necessários para os aspectos
de O&M\.
61\. Subprojetos de redução da vulnerabilidade agroclimática\. Inicialmente, ao elaborar o
projeto se buscava um conjunto de tecnologias comprovadas cujo emprego pudesse ser ampliado
com o mÃnimo de avaliação ex-ante e por meio de intervenções padronizadas nas propriedades
rurais e na comunidade\. Ou seja, tecnologias (i) que tenham sido adotadas com sucesso por um
número significativo de pequenos agricultores do semiárido brasileiro, sob toda a gama de
16
condições agroecológicas presentes na região; (ii) cuja resposta à seca tenha representado uma
melhoria em relação às práticas existentes; e (iii) que tenham gerado um adequado retorno sobre
o investimento\. Como isso não foi possÃvel, decidiu-se adotar uma abordagem sem
arrependimentos baseada no apoio a um conjunto de tecnologias e práticas que já se
demonstraram eficazes em termos de aumentar a resiliência em condições semiáridas em geral,
entre as quais se encontram o aperfeiçoamento da coleta e uso de água, práticas agroflorestais e
adoção de cultivares resistentes ao calor\.
62\. Alianças produtivas\. As alianças serão escolhidas por meio de processos competitivos\.
A pontuação atribuÃda aos planos de negócios das alianças produtivas contemplará indicadores
financeiros, número de beneficiários, qualidade e nÃvel de comprometimento dos compradores,
adequação das escolhas técnicas e resiliência à variabilidade climática\. Os subprojetos
executados sob as alianças produtivas terão como objetivo garantir que os produtores cumpram
com as especificações de mercado definidas junto com os compradores, e incluirão suporte
organizacional e comercial personalizado\. Os grupos dos quais participem produtores mulheres,
jovens e quilombolas contarão com apoio adicional, se for necessário, para poder competir em
condições de igualdade\. A avaliação técnica dos planos de negócios será feita por uma agência
independente\. As associações de produtores receberão assistência técnica ao longo de todo o
ciclo de vida do subprojeto\.
C\. Gestão financeira
63\. Os sistemas de GF do COOPERAR baseiam-se, em grande medida, nos sistemas criados
para projetos anteriores financiados pelo Banco que tenham apresentado um desempenho
moderadamente satisfatório; todavia, relatórios produzidos pela Controladoria Geral do Estado-
PB destacaram a necessidade de aprimorar os controles internos dentro da agência\. Essa questão
foi tratada por meio de um plano de ação institucional durante a elaboração do Projeto\. A
necessidade de aperfeiçoar os arranjos de GF se estende aos nÃveis de OP e AC\. Os relatórios de
auditoria externa de projetos anteriores destacaram a necessidade de melhorar os mecanismos de
controle e prestação de contas dos subprojetos\. A insuficiência de recursos qualificados e
processos para projetar e implementar adequadamente a GF em nÃvel de subprojeto é um risco
inerente\. Por esse motivo, as atividades de assistência técnica na área de GF estão integradas no
Componente 1 do Projeto, de forma a apoiar o desenvolvimento de processos especÃficos de GF
em nÃvel de subprojeto e mitigar esses riscos\.
64\. A conclusão sobre a avaliação do COOPERAR é que as disposições relativas à administração
financeira para este projeto são Moderadamente Satisfatórias\. O risco relativo ao controle da GF
recebeu avaliação Considerável devido ao desafio de garantir que (i) o COOPERAR disponha de
arranjos de GF adequados, (ii) que existam controles internos e sistemas adequados no paÃs e (iii)
que as OPs e as ACs recebam treinamento em gestão financeira e os recursos repassados sejam
contabilizados adequadamente\. Os Riscos Fiduciários foram identificados e as respectivas ações
de mitigação estão refletidas no desenho do Projeto\.
D\. Aquisições
65\. Uma vez feita a avaliação sobre aquisições, seu risco foi definido como Considerável
porque os principais pilares necessários a uma harmoniosa implementação de compras foram
considerados insuficientes, e é provável que o fortalecimento desses pilares não seja finalizado
17
antes do segundo ano de implementação do projeto\. Esse perÃodo pode acarretar atrasos
desnecessários, mas é necessário pois faz parte da curva de aprendizagem\.
66\. As medidas de mitigação acordadas visam fortalecer a capacidade da agência para
executar processos de aquisição estabelecendo o número de pessoal mÃnimo para gerir as
compras, fornecendo informações detalhadas sobre o processamento de compras e a tomada de
decisões, estabelecendo modelos de documentos de licitação/avaliação/contratuais e definindo
necessidades de registro, oferecendo treinamento sobre as regras do Banco em relação a
aquisições, contratando consultoria externa na área e intensificando o suporte à implementação
nos estágios iniciais da implementação do projeto\. A implementação das medidas de mitigação
deverá fortalecer substancialmente a capacidade da agência e, dessa forma, reduzir os riscos\.
Dessa forma, qualquer risco residual que não tenha sido mitigado só poderá ser identificado se,
por qualquer motivo, a agência não puder implementar as medidas propostas\.
E\. Aspectos sociais (inclusive salvaguardas)
67\. O Estado da ParaÃba elaborou uma análise socioambiental completa de acordo com as
polÃticas de salvaguarda do Banco e as exigências legais federais e estaduais\. Com base nos
resultados dessa análise, o Governo do Estado preparou uma Avaliação de Impactos
Socioambientais (AISA), incluindo um Marco de Gestão Socioambiental (MGSA)\. As
constatações da AISA foram revisadas após uma série de consultas públicas regionais com as
partes interessadas\. O MGSA final foi divulgado no paÃs no site do COOPERAR e no site
externo do Banco em 28 de março de 2016\.22
68\. A AISA incluiu uma análise da experiência e da capacidade das agências de
implementação para tratar as principais questões sociais que deverão influenciar os resultados do
Projeto\. Entre tais questões encontram-se a transparência e um tratamento equitativo na
identificação e seleção de beneficiários e subprojetos, potenciais impactos adversos nos meios de
subsistência, relações com povos indÃgenas e comunidades tradicionais, como os Quilombolas,
igualdade de gênero, desapropriação de terras e reassentamento\.
69\. A classificação dos riscos sociais associados ao projeto varia de baixa a moderada\. Os
principais problemas provavelmente surjam do Componente 2 - Acesso a água e redução da
vulnerabilidade agroclimática, já que muitos dos beneficiários visados nessas ações são muito
pobres e têm competências técnicas e/ou organizacionais limitadas\. As desigualdades sociais e
econômicas, inclusive em relação a papéis e expectativas de gênero, podem vir a complicar as
medidas que objetivam aumentar a produção de alimentos e a segurança nutricional das famÃlias\.
A AISA gerou um Marco de Gestão Socioambiental (MGSA) com instrumentos concebidos
especificamente para reduzir esses riscos\.
70\. Assim como ocorreu no projeto anterior (COOPERAR II), este projeto continuará
prestando apoio a grupos indÃgenas e comunidades étnicas, com o qual a OP/BP 4\.10 relativa a
Povos IndÃgenas foi acionada\. O Marco de Planejamento para os Povos IndÃgenas (MPPI)
orientará as ações correspondentes\. O projeto proposto não deverá envolver a aquisição de terras;
no entanto, uma vez que a localização exata e as especificações de desenho do projeto para os
investimentos propostos serão determinadas somente durante sua implementação, a OP/BP 4\.12
de Reassentamento Involuntário foi acionada preventivamente e a AISA preparou um Marco
Conceitual para Reassentamento Involuntário (MCRI), que será aplicado em caso de
22
Consultar o site do COOPERAR: http://www\.cooperar\.pb\.gov\.br/?pg=documentos_oficiais
18
necessidade\. O MPPI e o MCRI aprovados pelo Banco foram divulgados em 28 de março de
2016 no paÃs e no site externo do Banco e encontram-se disponÃveis no site do COOPERAR\.23
71\. Estratégia de gênero\. Com a assistência do Banco, o projeto COOPERAR realizou uma
avaliação de gênero e formulou a respectiva estratégia\. A estratégia de gênero tem como
principais elementos: (i) uma estratégia de comunicação diferenciada; (ii) oferecer cursos de
treinamento especÃficos para mulheres, grupos de mulheres e prestadores de serviços; (iii)
priorizar as comunidades com maior número de mulheres em relação ao acesso a água e Ã
redução da vulnerabilidade; e (iv) prestar assistência técnica especializada a grupos e lideranças
de mulheres nas alianças produtivas\. (Para mais detalhes, ver o Anexo 2)
F\. Aspectos ambientais (inclusive salvaguardas)
72\. O projeto recebeu a classificação de Categoria B uma vez que os impactos negativos que
poderão advir das atividades agrÃcolas e das pequenas obras de infraestrutura devem ser
pequenos, localizados e reversÃveis através de um monitoramento constante e de ajustes no
cronograma\. Por outro lado, a adoção de práticas rurais sustentáveis deve gerar impactos
positivos\. Isso posto, o projeto deverá acionar as seguintes polÃticas ambientais: OP/BP 4\.01
Avaliação Ambiental; OP/BP 4\.04 Habitats Naturais; OP/BP 4\.09 Controle de Pragas; OP/BP
4\.11 Recursos Culturais FÃsicos\. Ainda, as OP/BP 4\.36 Florestas e OP/BP 4\.37 Segurança de
Barragens também foram acionadas preventivamente, dado que algumas atividades do projeto
relacionadas a irrigação e abastecimento de água talvez dependam das barragens existentes ou
demandem a construção de açudes nas propriedades\.
73\. As ferramentas de salvaguarda incluem uma Avaliação de Impactos Socioambientais
(AISA) e um Marco de Gestão Socioambiental (MGSA), um Manual Ambiental e Social de
Obras, bem como modelos para levantamento e monitoramento ambiental adaptados a cada tipo
de atividade prevista pelo projeto\. A AISA e os documentos e modelos de apoio integram o
Manual Operacional do projeto\. A versão final de todas as ferramentas de salvaguarda foi
aprovada pelo Banco em 23 de março de 2016 e divulgada em 28 de março de 2016\.
G\. Mecanismo de apresentação e reparação de queixas do Banco Mundial
74\. Os projetos que recebem o apoio do Banco Mundial dispõem de mecanismos de
apresentação e reparação de queixas (GRS) para que as comunidades e indivÃduos que
acreditarem estar sendo afetados pelo projeto apresentem suas queixas\. O GRS assegura que as
queixas relacionadas a projetos do Banco sejam prontamente apreciadas e tratadas\. As
comunidades e os indivÃduos afetados podem apresentar suas queixas ao Painel de Inspeção
independente do Banco Mundial, que determinará se houve dano, ou se há a possibilidade de
dano, em decorrência de não conformidades do Projeto com as polÃticas e procedimentos do
Banco\. As queixas podem ser apresentadas a qualquer momento após suas causas terem sido
notificadas diretamente ao Banco Mundial e a Direção do Banco ter tido a oportunidade de
responder\. Para mais informações sobre como apresentar queixas ao GRS, acesse
://www\.worldbank\.org/grs\. Para obter informações sobre como apresentar queixas ao Painel de
Inspeção do Banco Mundial, acesse www\.inspectionpanel\.org\.
23
Veja: http://www\.cooperar\.pb\.gov\.br/?pg=documentos_oficiais
19
Anexo 1: Matriz de Monitoramento e Resultados
PAÃ?S: BRASIL
Nome do Projeto: Projeto de Desenvolvimento Rural Sustentável da ParaÃba (P147158)
Matriz de Resultados
Objetivos de Desenvolvimento do Projeto
Enunciado dos ODP
O objetivo do Projeto é melhorar o acesso a água, reduzir a vulnerabilidade agroclimática e ampliar o acesso da população rural pobre da ParaÃba aos
mercados\.
Estes resultados
NÃvel de Projeto
serão atingidos em
Indicadores dos Objetivos de Desenvolvimento do Projeto
Valores cumulativos almejados
Linha de ANO
Indicador ANO 1 ANO 2 ANO 3 ANO 4 ANO 5 Meta final
base 6
Número de pessoas nas áreas rurais com acesso a fontes de água
potável graças ao projeto (indicador numérico) - (Central) 38\.000 38\.000 44\.216 56\.648 69\.080 79\.440 79\.440 79\.440
Clientes que adotaram alguma das tecnologias agrÃcolas
melhoradas promovidas pelo projeto (indicador numérico) - 0 0 9\.623 28\.868 48\.113 64\.151 64\.151 64\.151
(Central)
Clientes que adotaram alguma das tecnologias agrÃcolas
melhoradas promovidas pelo projeto (indicador numérico, 0 0 2\.887 8\.660 14\.433 19\.245 19\.245 19\.245
desagregado) - (Central)
Aumento do valor médio bruto das vendas dos produtores 0 0 0 20 20 20 20 20
20
pertencentes a Alianças Produtivas (indicador percentual)
Sistema de Informação de Risco Agroclimático em operação
(Sim/Não) Não Não Não Sim Sim Sim Sim Sim
Indicadores de Resultados Intermediários
Valores cumulativos almejados
Linha de
Indicador ANO 1 ANO 2 ANO 3 ANO 4 ANO 5 ANO 6 Meta final
base
Beneficiários diretos do projeto (numérico) - (Central) 160\.388 160\.388 160\.388 193\.002 242\.506 292\.010 325\.401 325\.400
Beneficiárias mulheres (percentual, complementar) - (Central) 30 30 30 30 30 30 30 30
Componente 1\. Fortalecimento institucional
Investimentos e subprojetos que já disponham de arranjos
0 0 20 40 60 70 70 70
institucionais para operações e manutenção (percentual)
Modelo estadual de gestão do saneamento rural projetado, testado e
Não Não Sim Sim Sim Sim Sim Sim
implementado (Sim/Não)
Componente 2\. Acesso a água e redução da vulnerabilidade agroclimática
Investimentos em acesso a água e subprojetos de redução da
0 0 197 590 984 1\.312 1\.312 1\.312
vulnerabilidade implementados, por tipo (numérico)
Quantitativo de famÃlias beneficiadas por investimentos em acesso
0 0 5\.415 16\.244 27\.074 36\.098 36\.098 36\.098
a água e subprojetos de redução da vulnerabilidade (numérico)
Sistema de Informação de Risco Agroclimático projetado
Não Não Sim Sim Sim Sim Sim Sim
(Sim/Não)
Componente 3\. Alianças produtivas
Organizações de produtores que seguem as especificações 0 0 0 70 70 70 70 70
21
estipuladas nos contratos de comercialização ou nos planos de
negócios (percentual)
Compradores que cumprem as obrigações previstas no contrato de
0 0 0 70 70 70 70 70
comercialização ou no plano de negócios (percentual)
Subprojetos de aliança produtiva implementados, por tipo
0 0 68 119 170 170 170 170
(numérico)
Número de produtores beneficiados por subprojetos de aliança
0 0 3\.400 5\.950 8\.500 8\.500 8\.500 8\.500
produtiva (numérico)
Número de produtoras beneficiadas por subprojetos de aliança
0 0 1\.020 1\.785 2\.550 2\.550 2\.550 2\.550
produtiva (numérico, desagregado)
Compradores/investidores em potencial identificados pela agência
0 80 160 250 250 250 250 250
de promoção empresarial (CINEP) (numérico)
Componente 4\. Gerenciamento, monitoramento e avaliação do projeto
Coleta sistemática de dados de linha de base e de acompanhamento
Não Sim Sim Sim Sim Sim Sim Sim
dos investimentos e subprojetos (sim/não)
Queixas tratadas relacionadas com a entrega de benefÃcios do
0 80 80 80 80 80 80 80
projeto (percentual) - (Central)
22
Descrição do Indicador
Indicadores dos Objetivos de Desenvolvimento do Projeto
Fonte dos Responsável
Indicador Descrição (definição do indicador, etc\.) Frequência
dados/Metodologia coleta de dados
Número de pessoas nas Número de pessoas nas áreas rurais efetivamente Anual Relatório final de COOPERAR
áreas rurais com acesso a beneficiadas pelos serviços de água potável construÃdos investimento, SMI
fontes de água potável no no âmbito do projeto\.
âmbito do projeto
Produtores que adotaram Número de produtores que adotaram alguma das Anual Linha de base de cada COOPERAR
alguma das tecnologias tecnologias agrÃcolas melhoradas promovidas pelo proposta de subprojeto\.
agrÃcolas melhoradas subcomponente Redução da vulnerabilidade Dados finais dos
promovidas pelo projeto agroclimática\. consultores de AT\.
Relatórios finais dos
subprojetos\.
Clientes que adotaram Número de produtoras que adotaram alguma das Anual COOPERAR
alguma das tecnologias tecnologias agrÃcolas melhoradas promovidas pelo
agrÃcolas melhoradas subcomponente Redução da vulnerabilidade
promovidas pelo projeto - agroclimática\.
Mulheres
Aumento do valor médio Diferença (situação com e sem projeto) no total bruto Anual Monitoramento dos COOPERAR
bruto das vendas dos das vendas, calculando a média entre os participantes da resultados feito por
produtores pertencentes a organização de produtores e considerando a inflação\. técnicos e pelo
alianças produtivas COOPERAR\.
Relatórios de
conclusão\.
Avaliação do impacto
feita por consultor
externo\.
Sistema de Informação de Informação disponÃvel ao público na internet e através Anual Relatórios de AESA e
23
Risco Agroclimático em de outros canais, utilizada para: (i) emissão de alertas implementação da COOPERAR
operação de seca e de outros eventos meteorológicos extremos; AESA
(ii) previsão de parâmetros climáticas e de equilÃbrio
hÃdrico para produtos agrÃcolas selecionados; (iii)
previsão da sazonalidade climática; e (iv) simulação da
lavoura (calendário para certos produtos agrÃcolas)\.
Indicadores de Resultados Intermediários
Fonte dos Responsável
Indicador Descrição (definição do indicador, etc\.) Frequência
dados/Metodologia coleta de dados
Beneficiários diretos do Número total dos beneficiários diretos do projeto Anual SMI COOPERAR
projeto
Mulheres beneficiárias Porcentagem dos beneficiários que são mulheres\. Anual SMI COOPERAR
Investimentos e Em relação aos fornecedores de investimentos em Anualmente, Monitoramento de COOPERAR
subprojetos que já acesso a água: (i) normas internas formalmente na conclusão campo, relatórios de
disponham de arranjos aprovadas; (ii) fundo rotativo para O&M criado; (iii) da primeira conclusão, avaliações
institucionais para pagamento da tarifa mensal; (iv) corte de usuários metade e no intercalar e final\.
operações e manutenção inadimplentes; (v) sistema contábil; e (vi) mecanismo encerramento
para prestação de contas à sociedade\. Em relação às do projeto
associações comunitárias que participam em
subprojetos de redução da vulnerabilidade (com
investimentos coletivos): (i) sistema contábil; e (ii)
mecanismo de prestação de contas para os membros da
comunidade\. Em relação às organizações de produtores
que participam de alianças produtivas: (i) serviços
efetivamente prestados pela OP; (ii) sistema contábil;
(iii) fundo rotativo, caso seja necessário; e (iv)
mecanismo de prestação de contas para os membros\.
Modelo estadual de gestão Procedimento de medição: (i) formulação e Anual Relatórios de SEIRHMACT e
do saneamento rural estabelecimento do modelo de gestão (Ano 1); (ii) implementação da COOPERAR
projetado, testado e projeto piloto implementado e testado em comunidades SEIRHMACT
selecionadas da região do Sertão Paraibano (Ano 2); e
24
implementado (iii) expansão do modelo às regiões de Borborema e do
Agreste Paraibano (Ano 3)\.
Investimentos em acesso a Investimentos e subprojetos executados tanto do ponto Anual Relatórios finais de COOPERAR
água e subprojetos de de vista de obras como financeiro e encerrados do ponto investimentos e
redução da vulnerabilidade de vista administrativo\. Soma dos investimentos da subprojetos, SMI
implementados, por tipo comunidade no componente 2, desagregados por tipo
em relatório complementar\.
Quantitativo de famÃlias Contagem das famÃlias beneficiadas no componente 2\. Anual Relatórios finais de COOPERAR
beneficiadas por investimentos e
investimentos em acesso a subprojetos, SMI
água e subprojetos de
redução da vulnerabilidade
Sistema de Informação de Sistema de informação projetado, discutido e aprovado Anual Relatórios de AESA e
Risco Agroclimático entre os principais atores da ParaÃba e o Banco\. elaboração de projeto e COOPERAR
projetado correspondência
Organizações de Número de OPs que atingiram as especificações Anual Monitoramento COOPERAR
produtores que seguem as estipuladas nos contratos de comercialização ou planos sistemático, relatórios
especificações estipuladas de negócios / número total de produtores beneficiados finais dos subprojetos,
nos contratos de pelas alianças produtivas x 100\. SMI
comercialização ou nos
planos de negócios
Compradores que Número de compradores que cumprem os termos dos Anual Monitoramento COOPERAR
cumprem as obrigações contratos de comercialização ou planos de negócios / sistemático, relatórios
previstas no contrato de número de compradores envolvidos em todas as finais dos subprojetos,
comercialização ou no alianças produtivas x 100\. SMI
plano de negócios
Subprojetos de aliança Subprojetos aprovados que foram executados tanto do Anual SMI COOPERAR
produtiva implementados, ponto de vista técnico como financeiro e encerrados do
por tipo ponto de vista administrativo
Número de produtores Número de famÃlias de produtores beneficiadas Anual Relatório final do COOPERAR
beneficiados por diretamente pelo projeto\. subprojeto, SMI
subprojetos de aliança
25
produtiva
Número de produtoras Número de produtoras beneficiadas diretamente pelo Anual Relatório final do COOPERAR
beneficiadas por projeto (chefes da famÃlia)\. subprojeto, SMI
subprojetos de aliança
produtiva
Compradores/investidores Número de compradores/investidores que preenchem os Anual Relatório de CINEP e
em potencial identificados requisitos empresariais do Manual Operacional do implementação do COOPERAR
pela agência de promoção Projeto e que foram contatados pela CINEP para CINEP, SMI
empresarial (CINEP) participar de alianças produtivas
Coleta sistemática de Dados de linha de base e finais coletados para cada uma Anual SMI, estudos de pré- COOPERAR
dados de linha de base e de das intervenções nas áreas de acesso a água, redução da investimentos,
acompanhamento dos vulnerabilidade agroclimática e alianças produtivas\. avaliação do impacto,
investimentos e Dados coletados da linha de base e das avaliações relatórios de
subprojetos intercalar e final referentes aos grupos da intervenção e conclusão\.
de controle no componente das Alianças Produtivas\.
Queixas relacionadas com Mede os mecanismos de transparência e de Anual Informações COOPERAR
os benefÃcios do projeto responsabilização criados pelo projeto registradas pelos
que foram solucionadas escritórios regionais,
(%) número telefônico
gratuito e conta de e-
mail\.
26
Anexo 2: Descrição detalhada do Projeto
PAÃ?S: BRASIL
Projeto de Desenvolvimento Rural Sustentável da ParaÃba (P147158)
1\. Beneficiários diretos\. A população alvo do projeto é formada por cerca de 165\.000
habitantes rurais que dependem predominantemente da produção agrÃcola em pequena escala, de
atividades de transformação e de serviços relacionados\. Os possÃveis beneficiários serão
priorizados através de diferentes instrumentos conforme as caracterÃsticas do componente\. Os
investimentos em abastecimento de água e redução de vulnerabilidade agroclimática
(Componente 2) serão direcionados à s famÃlias e instituições comunitárias de 100 municÃpios do
semiárido\. Esses municÃpios registram nÃveis altos ou médios de vulnerabilidade e foram
selecionados com base no �ndice Municipal de Vulnerabilidade Agroclimática (ver abaixo)\.
Estima-se que a taxa de pobreza extrema nesses municÃpios seja quase 50% maior que a média
das áreas rurais do estado\. Os investimentos em alianças produtivas (Componente 3) não terão
um direcionamento espacial, mas sim considerando os pequenos produtores, na sua maioria
agricultores familiares24 organizados em associações de produtores novas ou existentes no
estado\. Entre os beneficiários institucionais incluem-se as instituições cooperantes (AESA,
SEIRHMACT e CINEP) e outras organizações, que podem colaborar na criação do sistema de
gestão de abastecimento rural e do SIRA, bem como nas atividades de atração de
investimentos/compradores\.
2\. O grupo de beneficiários secundários poderá abranger a população de todo o estado
com a implementação do SIRA, uma vez que o sistema traria melhorias no planejamento e na
emissão de alertas precoces, bem como forneceria informações para melhor direcionar as
medidas de prevenção e resposta\. Os prestadores de serviços técnicos receberão treinamento em
técnicas culturalmente apropriadas e com uma perspectiva de gênero para trabalhar com os
beneficiários do Projeto\. Por último, no contexto das alianças os compradores também se
beneficiarão com a redução dos custos das transações e dos riscos, graças ao processo de
identificação da aliança\. O fortalecimento da capacidade dos atores SEIRHMACT, AESA e
CINEP propiciará uma melhor prestação de serviços\.
3\. Estratégia de gênero\. A estratégia geral do Projeto em relação a gênero será
implementada através de atividades especÃficas, conforme descrito a seguir para cada
componente\. A estratégia de gênero tem como principais elementos: (i) uma estratégia de
comunicação diferenciada; (ii) oferecer cursos de treinamento especÃficos para mulheres, grupos
de mulheres e prestadores de serviços; (iii) priorizar as comunidades com maior número de
mulheres em relação ao acesso a água e à redução da vulnerabilidade; e (iv) prestar assistência
técnica especializada a grupos e lideranças mulheres nas alianças produtivas\. Em meados do
projeto, a aplicação da estratégia será revisada e, se necessário, ajustada\.
4\. As comunidades indÃgenas e quilombolas serão elegÃveis a todas as atividades
financiadas pelo Projeto, independentemente da sua localização no estado\. O Projeto terá uma
estratégia em separado para chegar a essas comunidades, a qual incluirá assistência adicional, se
24
Os termos pequeno proprietário, pequeno produtor e agricultor familiar são empregados indistintamente neste
documento\. Segundo a Lei nº 11,326 de 2006, o âagricultor familiarâ? deve atender aos seguintes quatro requisitos:
(i) não deter área maior do que quatro módulos fiscais; (ii) ter renda familiar predominantemente originada da
agricultura; (iii) utilizar predominantemente mão de obra da própria famÃlia; e (iv) dirigir seu empreendimento com
sua famÃlia\. Os pequenos produtores que utilizem mão de obra diversa da familiar também são elegÃveis\.
27
necessário, para facilitar seu acesso às atividades do Projeto\. Tanto o treinamento como a
assistência técnica serão adaptados à s suas caracterÃsticas culturais\. As solicitações de assistência
ao Projeto poderão dispensar a mediação dos Conselhos Municipais de Desenvolvimento Rural
Sustentável\.
5\. O objetivo do projeto será atingido através dos seguintes componentes\.
(a) Componente 1: Fortalecimento institucional
(b) Componente 2: Acesso a água e redução da vulnerabilidade agroclimática
(c) Componente 3: Alianças produtivas
(d) Componente 4: Gestão, monitoramento e avaliação de projetos
Componente 1\. Fortalecimento institucional (Total US$ 4,02 milhões, dos quais 65% com
aporte do BIRD%)
6\. O objetivo deste componente é capacitar os principais atores (Associações Comunitárias,
Conselhos Municipais, Grupos de Produtores, prestadores de serviços, compradores e
instituições estatais) para desempenhar papéis ativos no ciclo do projeto, da identificação até à s
operações\.
7\. O componente financiará serviços de consultoria e outros que não de consultoria, bens,
cursos de treinamento e custos operacionais, e compreenderá as seguintes atividades:
(a) Realização de uma campanha de comunicação e extensão diferenciada25 com o
propósito de: (i) informar os potenciais interessados sobre o alcance e as regras do
Projeto; (ii) publicar e divulgar as atividades do Projeto, incluindo, entre outras,
informações sobre demandas, aprovações, financiamento e resultados; e (iii) atrair
investidores e compradores das cadeias produtivas do setor rural contempladas
pelo Projeto\.
(b) Fortalecimento da capacidade institucional das Associações Comunitárias26 (ACs)
e dos Conselhos Municipais com o propósito de: (i) melhorar sua governança e as
habilidades gerenciais e técnicas em relação à operação e manutenção da
infraestrutura da comunidade; (ii) realizar ações de educação sanitária, ambiental
e nutricional junto à s famÃlias beneficiárias das ACs; e (iii) realizar cursos de
capacitação em boas práticas agropecuárias e ambientais, incluindo o uso de
informação meteorológica na tomada de decisões\.
(c) Fortalecimento da capacidade das Organizações de Produtores27 (OPs) a fim de:
(i) observar as regulações aplicáveis a organizações e empresas; e (ii) melhorar as
suas competências de gestão administrativa, de negócios e de risco\.
(d) (i) oferecer treinamento aos prestadores de serviços técnicos que poderão vir a
prestar assistência técnica às ACs, OPs, COOPERAR e a qualquer outra
25
Para melhor chegar aos diferentes grupos-alvo de beneficiários, como mulheres, jovens, povos indÃgenas e
quilombolas\.
26
As ACs incluem associações civis formadas por membros de uma comunidade ou de qualquer associação privada
legalmente constituÃda na ParaÃba, incluÃdas as comunidades de povos indÃgenas e quilombolas\.
27
As OPs incluem cooperativas de produtores, associações civis ou qualquer grupo de pequenos agricultores
organizados como associação privada legalmente constituÃda\.
28
instituição pública selecionada, no âmbito do Projeto; e (ii) criar um banco de
dados de prestadores de serviços técnicos\.
(e) Fortalecimento da capacidade institucional da Secretaria de Estado da
Infraestrutura, dos Recursos HÃdricos, Meio Ambiente e Ciência e Tecnologia
(SEIRHMACT) e de outras instituições selecionadas do setor público para
implementar um modelo de gestão direcionado a melhorar os serviços de água e
saneamento do setor rural, incluindo, entre outros, assistência para: (i) definir e
estabelecer arranjos institucionais para o subsetor; (ii) fortalecer a coordenação
entre os atores e programas do subsetor; (iii) estabelecer um sistema de
informação para o cadastramento e o monitoramento dos sistemas de água e
saneamento rural; (iv) implementar em caráter piloto mecanismos de assistência
técnica e modelos de gestão para sistemas rurais de abastecimento de água; (v)
apoiar a federação de ACs; e (vi) capacitar e prestar assessoramento técnica a
ACs para melhorar suas capacidades de gerenciamento, operação e manutenção
de sistemas rurais de abastecimento de água\.
(f) Fortalecimento da capacidade da Companhia de Desenvolvimento da ParaÃba
(CINEP) e de outros parceiros selecionados no sentido de priorizar e chegar até os
investidores e compradores em potencial e de subsidiar sua decisão de aderir à s
Alianças Produtivas\.
8\. Os principais resultados deste componente são: (i) inserções na programação do rádio (e em
outros veÃculos de comunicação de massa) desagregados por tipo de intervenção e de
beneficiário; (ii) ACs, OPs, famÃlias e agricultores recebendo capacitação, desagregados por tipo;
(iii) possÃveis investidores/compradores alcançados; (iv) prestadores de serviços cadastrados e
treinados; e (v) sistema de gestão de abastecimento e saneamento rural estabelecido\.
9\. A campanha de comunicação ajudará a mobilizar e informar os beneficiários, parceiros e
provedores no intuito de facilitar sua participação\. As mensagens transmitidas e os meios de
comunicação empregados variarão de acordo com o tipo de intervenção, a fase do ciclo de
investimento e o grupo-alvo\. Mulheres, jovens, grupos indÃgenas e Quilombolas serão objeto de
atenção adicional, a fim de receberem informações adequadas que permitam sua plena
participação\.
10\. As atividades do componente ajudarão a eliminar as diferenças de oportunidades para as
comunidades de mulheres, indÃgenas e Quilombolas, através de treinamento especializado e
capacitação em relação a habilidades técnicas e pessoais\. Também será oferecido treinamento em
gênero aos prestadores de serviços a fim de que sejam capazes de identificar as necessidades dos
homens e mulheres produtores e de dar assistência técnica com essa perspectiva de gênero, por
exemplo, levando em conta ao programar as sessões de treinamento as responsabilidades das
mulheres para com os filhos\.
11\. O fortalecimento institucional e a capacitação das instituições de abastecimento e
saneamento rural enfatizarão os aspectos de O&M e de gestão sustentável dos sistemas de
abastecimento\. Serão contratadas uma ou mais entidades especializadas para apoiar o
desenvolvimento do sistema de gestão estadual de abastecimento e saneamento rural, abrangendo
o desenvolvimento de um sistema de informação, instrumentos de planejamento, mecanismos de
assistência técnica e modelos de gerenciamento, bem como o apoio às ACs para o
29
desenvolvimento dos arranjos organizacionais e a criação da estrutura necessária para a gestão
dos sistemas e a O&M durante e após a fase de investimento\.
12\. As organizações de produtores (OP) e os investidores/compradores em potencial poderão
receber assistência de corretores quando do estabelecimento de alianças\. As OPs também
poderão receber essa assistência, se necessário, para constituir-se como pessoas jurÃdicas ou
cumprir com a legislação especÃfica\.
13\. O COOPERAR oferecerá treinamento em administração de recursos às ACs e OPs que
recebem repasses de contrapartida para executar subprojetos, nas áreas de administração
contábil, gestão financeira e aquisições\.
14\. O COOPERAR também será responsável pela contratação de assistência técnica para apoiar
a SEIRHMACT no desenvolvimento do sistema estadual de gestão do abastecimento e
saneamento rural\.
Componente 2\. Acesso a água e redução da vulnerabilidade agroclimática (Total US$ 44,36
milhões, dos quais 58% com aporte do BIRD%)\.
15\. O objetivo deste componente é reduzir as vulnerabilidades locais, isto é, a suscetibilidade dos
meios de subsistência na área rural da ParaÃba aos impactos das condições hidroclimáticas\. Para
tanto, se propõe aumentar a capacidade de adaptação das populações rurais e reduzir a
sensibilidade local aos choques climáticos (particularmente estiagens) e a restrições no acesso a
água\. As atividades do projeto visam melhorar o acesso a água potável e fortalecer a resiliência,
sobretudo entre os pequenos agricultores, com o aperfeiçoamento da gestão, um melhor uso dos
recursos naturais e a adoção de métodos e tecnologias adequados de produção, armazenamento,
processamento e comercialização de produtos agrÃcolas\.
16\. Serão financiados com recursos do componente serviços de consultoria, cursos de
treinamento e bens e obras para apoiar as seguintes atividades:
(a) Prestar apoio nas seguintes atividades: (i) identificar investimentos em
abastecimento de água, incluindo, entre outros, a construção e a recuperação de
sistemas de água encanada e não-encanada, de plantas de dessalinização e de
sistemas domésticos para aproveitamento da água da chuva, e subprojetos de
redução da vulnerabilidade agroclimática; (ii) realizar estudos de pré-investimento
para os sistemas de água identificados no inciso (i) e para subprojetos de redução
da vulnerabilidade agroclimática; e (iii) implementação dos investimentos em
sistemas de abastecimento de água previstos no inciso (i)\.
(b) Financiamento de contrapartida para as ACs para a execução dos subprojetos de
redução da vulnerabilidade agroclimática, entre os quais: (i) fornecimento de água
para produção agrÃcola; (ii) diversificação agrÃcola e gestão dos recursos naturais;
(iii) segurança alimentar e melhoria nutricional; e (iv) melhorias em estradas
vicinais\.
(c) Prestação de apoio à Agência Executiva de Gestão das Ã?guas da ParaÃba (AESA)
para o estabelecimento de um Sistema de Informação de Risco Agroclimático
(SIRA)\.
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17\. Os principais resultados deste componente são: (i) acesso a investimentos em obras de água e
subprojetos de Redução da Vulnerabilidade Agroclimática identificados e projetados; (ii)
investimentos e subprojetos implementados; e (iii) SIRA financiado\.
18\. Ã?rea do componente\. O COOPERAR concebeu um Ã?ndice Municipal de Vulnerabilidade
Agroclimática (IMVA), o qual foi aplicado aos 222 municÃpios da ParaÃba a fim de determinar
seu grau de vulnerabilidade\. O Ãndice possibilita uma melhor avaliação da situação de
insegurança hÃdrica e da capacidade de resposta à seca do que apenas a avaliação dos dados
pluviométricos\. O IMVA inclui os seguintes indicadores:
Categoria Indicador
�ndice de distribuição das chuvas
Clima
Ã?ndice de aridez
Produtividade média por hectare
Valor da produção agrÃcola por habitante
Produção agrÃcola Percentual da área colhida com culturas de subsistência
Percentual de perda de safra
Nº de agricultores aderidos ao seguro safra por 100 habitantes rurais
Ã?ndice de Desenvolvimento Humano
Social Proporção de famÃlias beneficiadas com o Bolsa FamÃlia
Taxa de cobertura do abastecimento urbano de água
19\. Dessa lista, o COOPERAR selecionou 100 municÃpios cuja classificação de Vulnerabilidade
foi considerada Alta ou Médio-Alta para priorizar as ações do componente\. Essa priorização será
reavaliada na revisão intermediária do Projeto ou em caso de emergência\.
20\. Subcomponente 2\.a: Acesso a água\. Este subcomponente trata da promoção do acesso a
água potável, englobando principalmente os seguintes tipos de investimentos:
(a) Sistemas de abastecimento completos ou de água encanada (rede), que incluem
captação, tratamento, reservatórios e distribuição (rede e conexões domiciliares);
(b) Sistemas de abastecimento singelos ou de água não-encanada (fora da rede), que
incluem captação, tratamento, reservatórios e uma ou mais caixas d'água;
(c) Sistemas domésticos de captação da água da chuva, formados por calhas e
cisternas;
(d) Dessalinizadores, incluindo o fornecimento de equipamentos para melhorar a
qualidade da água potável, permitindo o consumo humano e a reutilização ou o
descarte seguro das águas residuais\.
21\. O projeto privilegiará o desenvolvimento de investimentos em água encanada (rede de
abastecimento), uma vez que proporcionam uma maior redução da vulnerabilidade\. Na verdade,
apenas 13% das famÃlias rurais nos 100 municÃpios priorizados contam com um acesso a água
através de conexão domiciliar à rede de água, 6,4 pontos percentuais abaixo da média do estado\.
Por esse motivo, cerca de 65% dos fundos de investimento do componente se concentrarão em
reduzir esse déficit, com o qual poços e nascentes localizados tanto dentro como fora das
propriedades da propriedade são a opção de abastecimento de cerca de 27,5% das famÃlias\. A
coleta e armazenamento da água da chuva em cisternas é a alternativa para 17,9% das famÃlias
31
nas comunidades rurais onde não há águas subterrâneas ou estas são impróprias para consumo
humano\. Na realidade, as cisternas contribuem para reduzir a vulnerabilidade porque são usadas
na seca frequentemente para armazenar a água trazida por carros-pipa\.
Tabela 3\. Porcentagem de famÃlias com acesso a água, por nÃvel de serviço
Cacimba Cacimba Coleta e
ou ou armazena
Conexão Ã
nascente nascente mento da Carro-
Ã?rea rural de rede de
na fora da água da pipa
Outros
água
proprieda proprieda chuva em
de de cisternas*
Estado da ParaÃba 19,3 16,0 17,3 16,4 9,1 21,8
MunicÃpios priorizados (100) 13,0 13,4 14,1 17,9 15,6 25,9
Diferença -6,4 -2,6 -3,2 1,5 6,5 4,1
* Cisternas são tanques domésticos utilizados para armazenar água\.
22\. O custo máximo por investimento foi fixado em US$ 250\.000 e será estimado considerando
os tetos máximos por tipo de investimento apresentados na Tabela 4\. Todavia, os investimentos
que ultrapassem os tetos fixados podem ser elegÃveis, conforme for acordado com o Banco\.
Tabela 4\. Custos máximos e número mÃnimo de beneficiários, por tipo de sistema
Número mÃnimo de
Teto por famÃlia
Tipo de investimento famÃlias por
(US$)
investimento
Sistema de Abastecimento de Ã?gua
2\.500 30
Completo (ADC)
Sistema de Abastecimento de Ã?gua Singelo
1\.500 10
(ADS)
Sistemas domésticos de coleta da água da
1\.400 20
chuva
Sistemas de dessalinização 2\.500 30
23\. Critérios de elegibilidade\. Serão financiados os investimentos que preencherem os seguintes
critérios: (i) o interessado é uma pessoa jurÃdica; (ii) foram obtidas todas as autorizações e
licenças exigidas por lei; (iii) foi conduzida uma análise de sustentabilidade financeira dos
investimentos, incluindo o compromisso formal por parte da comunidade de arcar com as
despesas de O&M dos sistemas; (iv) foi realizada uma análise da sustentabilidade ambiental, que
demonstrou haver disponibilidade de água para atender à demanda ao longo do ciclo de vida do
investimento; (v) foi realizada uma análise de sustentabilidade para provar a viabilidade e
adequação técnica da solução técnica escolhida pela comunidade; e (vi) foram observadas as
salvaguardas sociais e ambientais\. Os recursos somente serão liberados quando se destinarem a
comunidades rurais ou povoados de até 2\.500 habitantes\.
24\. Critérios de priorização: (i) disponibilidade de água escassa; (ii) abastecimento de água
deficiente, em quantidade e/ou qualidade; (iii) número de pessoas potencialmente beneficiadas;
32
(iv) disponibilidade de recursos hÃdricos e/ou proximidade de fontes alternativas de água
(nascentes, adutoras e canais de água tratada ou bruta); (v) não ter sido beneficiado pelo
COOPERAR II ou outros projetos com o mesmo objetivo, exceto os de ampliação da cobertura;
(vi) comunidades com maior proporção de famÃlias chefiadas por mulheres; (vii) compromisso
explÃcito de operar e manter a infraestrutura; e (viii) custos do investimento situados abaixo dos
tetos máximos acordados por famÃlia e tipo de investimento\.
25\. Ciclo de investimento\. As intervenções têm inÃcio com a identificação e priorização dos
investimentos por parte das ACs e dos conselhos municipais\. Em seguida, os consultores
contratados pelo COOPERAR realizam estudos de pré-investimento, incluindo viabilidade
técnica, salvaguardas e coleta preliminar de dados de referência\. Os resultados desses estudos
serão avaliados e aprovados pelo COOPERAR, que dará prioridade às comunidades que
disponham de fontes alternativas de água (nascentes, adutores e canais de água tratada ou bruta)
em relação às águas subterrâneas\. Quando não houver alternativa à água subterrânea, o
COOPERAR contratará empresas separadas para conduzir a campanha de perfuração e para
medir a vazão e a qualidade da água subterrânea, a fim de definir o tipo de investimento viável
nesses casos\. Na etapa seguinte, o COOPERAR assinará um convênio de investimento com a AC
beneficiária antes de contratar empresas separadas para concluir a linha de base e o desenho dos
projetos finais e para construir os sistemas de água\. O convênio disporá sobre a obrigação das
ACs em relação à condução de uma adequada O&M nos sistemas financiados\. O COOPERAR
também será responsável pela contratação da assistência técnica necessária para apoiar a
SEIRHMACT no desenvolvimento do sistema estadual de gestão do abastecimento e
saneamento rural e as CAs no estabelecimento das regras de gestão, operação e manutenção
necessárias, antes do inÃcio dos investimentos em infraestrutura\. O COOPERAR estará a cargo
de supervisionar, controlar e receber as obras, com a colaboração das ACs\. A operação e
manutenção dos sistemas ficará a cargo das ACs, com a colaboração do COOPERAR no
primeiro ano\.
26\. Subcomponente 2\.b - Redução da vulnerabilidade agroclimática\. O objetivo do
subcomponente é ampliar o alcance do apoio prestado aos agricultores familiares a fim de
reduzir a volatilidade da produção e regularizar o consumo em relação à variabilidade do clima e
das secas\. O projeto promoverá as tecnologias e práticas de manejo agrÃcola e de gestão de
recursos que demonstraram a maior adequação e eficácia nas propriedades rurais do semiárido\.
Nos dois primeiros anos, se concentrará no aprendizado continuado e no monitoramento das
tecnologias implementadas\. As experiências adquiridas no perÃodo serão avaliadas para a
Revisão Intermediária a fim de identificar os ajustes necessários à sua replicação e ampliação de
forma sustentável\. O processo de avaliação será conduzido sob a supervisão do COOPERAR e
de uma firma de consultoria, contando com o apoio das instituições mais importantes
relacionadas à agropecuária no semiárido brasileiro\.28 Este subcomponente contempla os
seguintes tipos de intervenção:
(a) Abastecimento de água para produção agrÃcola e pecuária, incluindo obras de
captação, armazenamento e abastecimento (sistemas simples de irrigação e
infraestrutura para coleta de água superficial e subterrânea);
28
Será criado um Grupo Consultivo Técnico para orientar os processos de monitoramento, validação e avaliação do
subcomponente\.
33
(b) Diversificação da agricultura e manejo de recursos naturais, incluindo culturas e
cultivares adaptadas anuais e perenes, pecuária e práticas agroflorestais; produção
melhorada de alimento para gado e infraestrutura de armazenamento de forragens;
e práticas de manejo e recuperação da vegetação, do solo e da água em nÃvel de
propriedade e de comunidade\.
(c) Segurança alimentar e melhoria nutricional, incluindo a introdução ou melhoria
de práticas de criação animal, de cultivo de hortaliças e produção de frutas para
pequenas propriedades\. Esta atividade foi particularmente concebida para reduzir
a carga de trabalho das mulheres e capacitá-las para que o aumento da
produtividade se traduza efetivamente em maior segurança alimentar e
nutricional, especialmente para as crianças\.
(d) Pequenas obras comunitárias destinadas a melhorar o acesso às estradas vicinais,
incluindo obras de drenagem, passagens molhadas e pequenas pontes, bem como
melhorias da superfÃcie das estradas\.
27\. Os subprojetos de redução da vulnerabilidade poderão incluir as obras, bens e assistência
técnica solicitados pelas ACs para implementar e operar as tecnologias e práticas escolhidas\. As
ACs administrarão os fundos dos subprojetos de acordo com regras de contratação da
comunidade, devendo arcar com pelo menos 10% do custo do subprojeto, seja em espécie, mão-
de-obra e/ou bens\.
28\. Critérios de elegibilidade\. Somente serão financiados os investimentos que preencherem os
seguintes critérios: (i) o interessado é obrigatoriamente uma pessoa jurÃdica; (ii) foram obtidas
todas as autorizações e licenças exigidas por lei; (iii) foi realizada uma análise da
sustentabilidade financeira dos subprojetos e foram determinados os custos recorrentes a cargo
dos produtores e/ou das comunidades; (iv) foi conduzida a análise da sustentabilidade técnica
dos subprojetos a fim de testar a adequação agroambiental da solução técnica; (v) custos abaixo
dos tetos máximos por domicÃlio para cada tipo de projeto; e (vi) foram observadas as
salvaguardas sociais e ambientais\. Os beneficiários devem ser pequenos agricultores com até 4
módulos fiscais\.
29\. Critérios de priorização: (i) número de potenciais beneficiários; (ii) proporção de
beneficiários mulheres, indÃgenas ou Quilombolas; (iii) ACs que não tenham sido beneficiárias
do COOPERAR II ou de projetos similares; e (iv) comunidades com maior proporção de famÃlias
chefiadas por mulheres\.
30\. Ciclo do subprojeto\. As seguintes atividades serão realizadas na implementação do
subcomponente:
(a) Identificação das vulnerabilidades e priorização das demandas por parte de
conselhos municipais\.
(b) Validação de demandas e pré-análise de vulnerabilidades por parte dos escritórios
regionais\.
(c) Formulação do Parecer Técnico, incluindo salvaguardas, e coleta de dados de
base, para aprovação pelo COOPERAR\.
(d) Formulação do subprojeto, incluindo arranjos de linha de base e institucionais,
para validação pela comunidade e aprovação pelo COOPERAR\.
(e) Assinatura do acordo de subprojeto\.
34
(f) Implementação do subprojeto pela AC (obras de grande porte ou complexas
poderão ser executadas diretamente pelo COOPERAR)\.
(g) Avaliação do subprojeto\.
31\. As intervenções têm inÃcio com a identificação e priorização dos subprojetos por parte das
ACs, com a colaboração dos conselhos municipais\. Os estudos de pré-investimento, incluindo a
linha de base, serão feitos por consultores contratados pelo COOPERAR, em estreita
coordenação com a AC\. O COOPERAR avaliará e aprovará os estudos de pré-investimento e,
caso seja exigido, procederá a contratar os projetos finais das obras\. O COOPERAR assinará um
acordo de subprojeto com a AC, a qual será responsável pela sua implementação de acordo com
as Regras de Contratação da Comunidade\. No caso de obras de grande porte ou complexas, a
gestão de contratação poderá ser delegada ao COOPERAR\. O COOPERAR estará a cargo de
supervisionar e receber as obras, com a colaboração das ACs\. A operação e manutenção dos
sistemas ficará a cargo das ACs, com a colaboração do COOPERAR no primeiro ano\.
32\. Subcomponente 2\.c - Sistema de Informação de Risco Agroclimático (SIRA)\. O
financiamento deste componente se destinará ao desenvolvimento de um sistema estadual de
informação que dará acesso a: (i) informação integrada sobre clima, recursos hÃdricos e
agricultura e sistemas de suporte à decisão acessÃveis a diferentes usuários; (ii) amplo leque de
informações sobre aspectos agrÃcolas e socioeconômicos que permitirão à s agências competentes
melhor priorizar os beneficiários e as áreas vulneráveis; (iii) ferramentas de visualização e
análise para identificar possÃveis vulnerabilidades e oportunidades para sistemas de produção
agrÃcola mais produtivos em face da variabilidade climática\. Também servirá de base para
identificar futuramente tecnologias e metodologias que potencializem os resultados dos
investimentos nas propriedades e reduzam a vulnerabilidade aos eventos climáticos extremos;
uso de seguro com cobertura contra riscos climáticos; e identificação de intervenções
climaticamente inteligentes e melhores práticas\. O SIRA ajudará a superar uma grande lacuna do
estado da ParaÃba no que diz respeito a uma gestão proativa dos riscos climáticos\.
33\. O SIRA será desenvolvido em torno do Sistema de Informação Climática da AESA, em
parceria com a EMBRAPA, INSA, EMATER, EMEPA e outras entidades relevantes que podem
contribuir para articular e integrar conjuntos de dados relevantes\. O sistema também facilitará a
integração das atuais iniciativas de monitoramento das bacias hidrográficas do estado, bem como
de iniciativas nacionais como o Sistema Nacional de Monitoramento da Seca, que está sendo
implantado atualmente no Nordeste do Brasil\.
Componente 3\. Alianças Produtivas (Total US$ 20,73 milhões, dos quais 70% com aporte do
BIRD)\.
34\. O objetivo do componente é melhorar o acesso dos pequenos agricultores a mercados
dinâmicos através da criação de alianças com compradores dos setores público e privado\. O
projeto apoiará os produtores e compradores organizados na formulação e implementação
conjunta de planos de negócios\. Os recursos serão repassados exclusivamente à OP com a
finalidade de adequar os produtos às especificações acordadas (qualidade, quantidade e entrega)\.
Os compradores poderão fornecer assistência técnica ou financiamento às OPs, bem como
comprometer-se a fazer investimentos adicionais em logÃstica ou infraestrutura de transformação\.
As alianças deverão gerar maiores benefÃcios lÃquidos para ambas as partes, porém serão
medidas unicamente em função do valor das vendas dos produtores participantes\.
35
35\. Serão financiados com recursos do componente diferentes combinações de serviços de
consultoria e de serviços de outros tipos que não de consultoria, cursos de treinamento e bens e
obras no âmbito dos subprojetos, para apoiar as seguintes atividades:
(a) Assistência técnica direcionada a: (i) identificar e implementar Alianças
Produtivas; e (ii) conduzir estudos de pré-investimento para as Alianças
Produtivas, incluindo a formulação de planos de negócios e subprojetos
associados a elas\.
(b) Repasse de recursos de contrapartida às OPs para execução dos subprojetos das
Alianças Produtivas, entre os quais os seguintes: (i) pequenas obras de
infraestrutura nas propriedades; (ii) adoção de medidas de conservação do solo e
da água; (iii) fornecimento e utilização de insumos, equipamentos e implementos;
(iv) serviços de assistência técnica; e (v) infraestrutura de armazenamento,
processamento e embalagem fora da propriedade\.
36\. Os resultados deste componente são: (i) alianças identificadas; (ii) planos de negócios
formulados e avaliados; (iii) OPs produzindo dentro das especificações descritas nos acordos de
comercialização; e (iv) compradores cumprindo os termos dos planos de negócios\.
37\. O plano de negócios de uma aliança produtivas compreende: (i) um acordo de
comercialização contendo as especificações do bem a ser produzido em relação a qualidade,
quantidade e prazo de entrega, bem como o mecanismo de determinação de preços; (ii) os papéis
e contribuições das partes no acordo, entre as quais o Projeto e possÃveis outras instituições
governamentais; (iii) o subprojeto da aliança produtiva, com as atividades necessárias para que o
produto atinja as especificações e para o fortalecimento gerencial da OP; e (iv) as análises
técnicas, financeiras e de salvaguarda necessárias para determinar sua viabilidade\.
38\. Os subprojetos das alianças produtivas serão formulados com base nas especificações
acordadas com o comprador e incluirão: (i) uma descrição das atividades a serem realizadas pela
OP para cumprir os compromissos assumidos em virtude do acordo da aliança; (ii) as áreas em
que a OP necessita fortalecer-se institucionalmente para estar apta a prestar serviços especÃficos
aos seus membros; (iii) um plano de compras simples que contemple os investimentos na
propriedade rural, no grupo e institucionais; e (iv) a sequência de parcelas do financiamento\. As
OPs gerenciarão os recursos destinados aos subprojetos de acordo com as práticas de contratação
e de negócios da comunidade\. Pelo menos 30% dos custos dos subprojetos serão pagos em
dinheiro pelas OPs, parcelados e depositados com antecedência aos desembolsos feitos pelo
Projeto\.
39\. Critérios de elegibilidade\. Em relação aos produtores, pelo menos 80% dos participantes
devem ser pequenos agricultores (com até quatro módulos fiscais) e administrar seus próprios
estabelecimentos\. Produtores com propriedades maiores podem participar, mas não serão
elegÃveis a investimentos individuais na propriedade\. Em relação à s OPs, os critérios são os
seguintes: (i) acordo de comercialização firmado com o comprador; (ii) estar legalmente
constituÃdas quando da aprovação da aliança; (iii) ter uma participação de pelo menos 25
membros29; (iv) possuir conhecimentos básicos sobre o processo de produção proposto; e (v)
encontrar-se em situação de adimplemento\.
29
Uma aliança pode incluir mais de uma OP\.
36
40\. Critérios de priorização\. As alianças serão escolhidas por meio de processos competitivos\. A
pontuação atribuÃda aos planos de negócios das alianças produtivas contemplará a razão entre
benefÃcios e custos, o número de beneficiários, a qualidade e o nÃvel de comprometimento dos
compradores, a adequação das escolhas técnicas e a resiliência às mudanças do clima\. Serão
atribuÃdos pontos adicionais à s associações de produtores lideradas por mulheres, bem como à s
comunidades indÃgenas e Quilombolas que participem de alianças produtivas viáveis\.
41\. Ciclo de uma Aliança Produtiva\. As seguintes etapas deverão ser seguidas na implementação
das atividades dos componentes:
(a) Atração e promoção de investimentos/compradores\. A CINEP e seus parceiros
(consultores, corretores e outras instituições) executarão planos e atividades de
promoção de investidores e compradores direcionadas aos potenciais membros de
alianças produtivas\. Este processo prosseguirá na fase de lançamento de edital
para apresentação de propostas\.
(b) Edital para apresentação de propostas\. O Projeto lançará pelo menos três editais
para que os potenciais parceiros da aliança apresentem seus perfis\. Esses editais
serão acompanhados de um processo de mobilização que consistirá em uma
campanha de comunicação direcionada aos produtores e compradores e oficinas
de campo informativas e de treinamento que levem em consideração as diferentes
necessidades e capacidades dos diferentes grupos-alvo\. O Projeto poderá dar
assistência através de âcorretoresâ? à s OPs e compradores que o solicitem para
encontrar parceiros\.
(c) Avaliação de oportunidade\. O COOPERAR avaliará os perfis das alianças
apresentados conjuntamente por OPs e compradores de acordo com os seguintes
critérios: (i) atendimento aos critérios de elegibilidade e de salvaguardas;
(ii) adequação do comprador; (iii) adequação dos recursos do produtor; e
(iv) compromisso das OPs de cofinanciar pelo menos 30% do custo do
subprojeto\. Nesta fase, o Projeto coletará dados de linha de base para a avaliação
de impactos\.
(d) Formulação dos planos de negócios\. Os parceiros cujos perfis tenham sido
aprovados contarão com o suporte da assistência técnica para formular seu plano
de negócios\.
(e) Avaliação das propostas\. A avaliação técnica e financeira dos planos de negócios
será realizada por entidade independente contratada pelo COOPERAR de acordo
com TdR aprovado pelo Banco\. A avaliação de salvaguardas e a inclusão de
medidas atenuantes, se necessárias, serão realizadas pelo COOPERAR\.
(f) Implementação\. Os subprojetos serão implementados pelas OPs de acordo com as
regras de contratação e as práticas comerciais da comunidade\. As medidas
acordadas pelos compradores serão implementadas por separado\. O COOPERAR
fornecerá suporte à implementação e monitoramento contÃnuo na fase de
investimento e ao longo do primeiro ano de operação\.
(g) Avaliação\. Cada aliança será avaliada para determinar se alcançou seus próprios
objetivos e medir sua contribuição para os resultados esperados do Projeto\. Será
realizada uma avaliação de impacto de um subconjunto de alianças\.
37
Componente 4\. Gestão, monitoramento e avaliação do Projeto (Total US$ 10,76 milhões, dos
quais 65% com aporte do BIRD)
42\. O Projeto financiará os serviços de consultoria e outros que não de consultoria e os bens e
custos operacionais incrementais do COOPERAR empregados para implementar de forma
eficiente e efetiva:
(a) a coordenação e gestão do Projeto;
(b) monitoramento, avaliação e estudo de impactos;
(c) administração fiduciária, controles internos e auditorias;
(d) gestão de salvaguardas;
(e) avaliação técnico-financeira independente dos planos de negócios das alianças
produtivas;
(f) mecanismo de ouvidoria; e
(g) e estudos relacionados ao projeto\.
Custos e financiamento do projeto
43\. A tabela abaixo traz o orçamento indicativo do Projeto, com o detalhamento dos custos dos
componentes por fonte de financiamento:
Componente e subcomponente Total Banco % PB % Benef\. %
1 â Fortalecimento institucional 4\.019\.150 2\.612\.447 65 1\.406\.702 35 - -
1a - Campanha de comunicação 639\.399 415\.610 65 223\.790 35 - -
1b - Fortalecimento inst\. das ACs 937\.652 609\.474 65 328\.178 35 - -
1c - Fortalecimento inst\. das OPs 1\.374\.336 893\.318 65 481\.018 35 - -
1d - Treinamento de prestadores de
serviços 57\.000 37\.050 65 19\.950 35 - -
1e - Fortalecimento institucional da
SEIRHMACT 780\.842 507\.547 65 273\.295 35 - -
1f - Fortalecimento institucional da
CINEP 229\.920 149\.448 65 80\.472 35 -
2 â Acesso a água e redução da
44\.362\.590 25\.799\.222 17\.041\.958 1\.521\.410
vulnerabilidade agroclimática -
2a - Pré-investimentos e investimentos
19\.692\.507 60 12\.970\.814 40
em abastecimento de água 32\.663\.321 - -
2b - Subprojetos de redução da
vulnerabilidade agroclimática 10\.142\.730 5\.172\.792 51 3\.448\.528 33 1\.521\.410 16
2\.c - Sistema de Informação de Risco
Agroclimático 1\.556\.539 933\.924 60 622\.616 40 - -
3 â Alianças produtivas 20\.729\.225 14\.510\.458 70 621\.150 - 5\.597\.618 30
3a - Estudos pré-investimento e AT 2\.070\.500 1\.449\.350 70 621\.150 30 - -
3b â Subprojetos de Alianças
Produtivas 18\.658\.725 13\.061\.108 70 - - 5\.597\.618 30
4 â Gestão, monitoramento e
avaliação do projeto 10\.764\.035 6\.952\.873 65 3\.811\.162 35 -
4 - Coordenação e gestão do projeto -
38
8\.662\.300 5\.505\.495 65 3\.031\.805 35 -
4b â Monitoramento e avaliação\. 982\.000 638\.300 65 343\.700 35 - -
4c â Administração fiduciária, controles
e auditorias 95\.213 61\.889 65 33\.325 35 - -
4d - Gestão de salvaguardas 74\.937 48\.709 65 26\.228 35 -
4f - Avaliação independente de alianças
produtivas 595\.000 386\.750 65 208\.250 35 - -
4f â Mecanismo de ouvidoria 57\.500 37\.375 65 20\.125 35 - -
4g â Estudos relacionados ao projeto 422\.085 274\.355 65 147\.730 35 - -
Taxa inicial 125\.000 125\.000 100
TOTAL 80\.000\.000 50\.000\.000 22\.880\.973 7\.119\.027
39
Anexo 3: Arranjos de Implementação
PAÃ?S: BRASIL
Projeto de Desenvolvimento Rural Sustentável da ParaÃba (P147158)
Arranjos Institucionais e de Implementação do Projeto
1\. O Projeto será implementado pelo projeto COOPERAR, que foi a Unidade de
Gerenciamento de Projeto estabelecida para o Segundo Projeto de Redução da Pobreza Rural da
ParaÃba (P104752), tendo sido recentemente remanejada para a recém-criada Secretaria da
Agricultura Familiar e do Desenvolvimento do Semiárido (SEAFDS)\. A Secretaria de
Agricultura Familiar será responsável por orientar a coordenação do COOPERAR em relação à s
polÃticas estaduais em geral que são relevantes para o contexto do Projeto, aprovar o Plano
Operacional Anual, o Orçamento do Projeto e os Relatórios de Progresso e articular, quando
necessário, a colaboração com outras Secretarias estaduais\. O COOPERAR será responsável e
prestará contas pela gestão, planejamento, coordenação, monitoramento e avaliação globais de
todas as atividades do projeto, bem como pela gestão financeira, contábil, de contratos e de
desembolsos do projeto\. O COOPERAR se estruturará de acordo com o organograma
organizacional ilustrado na Figura 1\. Segundo o plano de ação institucional, os principais
funcionários gerenciais e técnicos serão formalmente nomeados e estarão em seus postos antes
da aprovação do projeto\.
COOPERAR - Organograma organizacional
40
2\. O COOPERAR assegurará que os recursos para financiamento do projeto estejam
contemplados nos Planos Plurianuais do Estado (PPAs), bem como os respectivos orçamentos
anuais durante o perÃodo de implementação do projeto\. O COOPERAR preparará planos
operacionais anuais e planos de compras anuais que prevejam com suficiente margem as
necessidades do projeto no ano seguinte, a fim de garantir a implementação das atividades do
projeto\.
3\. Mais especificamente, o escritório central do COOPERAR será responsável pelo plano de
implementação como um todo e por sua qualidade; estabelecerá uma estratégia financeira e
técnica para racionalizar a execução com o objetivo de consolidar ações e assegurar a
consecução dos objetivos do projeto; gerenciará os recursos orçamentários do Projeto,
encarregando-se dos repasses de recursos de acordo com cronogramas aprovados; zelará para
que todas as aquisições feitas através do Projeto observem as polÃticas de salvaguardas do Banco;
realizará uma auditoria independente anual da gestão e das atividades do projeto; promoverá a
comunicação e divulgação ao público dos objetivos e atividades do projeto; e elaborará os
Termos de Referência e outras especificações relativas à contratação de consultores técnicos para
avaliar as propostas\.
4\. As unidades regionais do COOPERAR serão responsáveis localmente pelo
gerenciamento, execução e monitoramento do projeto\. Três escritórios regionais serão
estruturados e fortalecidos, cobrindo as macrorregiões do Sertão Paraibano, Borborema e
Agreste Paraibano\. As atividades na macrorregião da Mata Paraibana serão gerenciadas pelo
escritório central\. No dia-a-dia, a implementação do projeto será descentralizada e participativa,
concentrando-se no empoderamento das organizações comunitárias e de produtores participantes
e na sua capacidade de autogestão\.
5\. Os Conselhos Municipais de Desenvolvimento Rural Sustentável apoiarão as ACs e
OPs na identificação de investimentos e subprojetos e as ajudarão a estimular localmente
sinergias entre os investimentos dos setores público e privado\.
6\. As Associações Comunitárias identificarão e operarão os investimentos em
abastecimento de água e os subprojetos de redução de vulnerabilidades\. As ACs são
organizações da sociedade civil com atuação local que se dedicam a atividades sociais ou
produtivas, geralmente gerindo recursos públicos locais\. Nesse sentido, podem incluir
associações comunitárias propriamente ditas, bem como cooperativas, grupos de mães e centros
de integração rural\.
7\. As Organizações de Produtores (OPs) implementarão as Alianças Produtivas em
colaboração com compradores dos setores público e privado\. As OPs apresentam-se com grande
variação em termos de tamanho, alcance espacial e capacidade, e englobam associações de
produtores, cooperativas e grupos informais de produtores\. Para serem elegÃveis aos recursos de
contrapartida, as OPs deverão necessariamente constituir-se como pessoa jurÃdica\. O projeto
poderá prestar assistência no processo de formalização ou de alteração da sua situação legal, se
necessário\.
8\. Considerando a grande variação de capacidade entre ACs e OPs, o projeto lançará uma
campanha direcionada de comunicação diferenciada por gênero, bem como uma variedade de
atividades de treinamento e assistência técnica voltadas para o desenvolvimento de capacidades e
a redução de assimetrias de informação\. No dia-a-dia, a implementação se concentrará no
41
empoderamento das organizações participantes e na sua capacidade de autogestão\. As
informações relacionadas ao projeto serão disseminadas através de oficinas, publicações e sites\.
9\. A Secretaria de Estado da Infraestrutura, dos Recursos HÃdricos, Meio Ambiente e
Ciência e Tecnologia (SEIRHMACT) capitaneará a elaboração do projeto, a condução do
piloto e a implementação de um Sistema Estadual de Gestão do Abastecimento e Saneamento
Rural, nos moldes do Sistema Integrado de Saneamento Rural (SISAR) desenvolvido no vizinho
estado do Ceará, tido como uma boa prática\. Para tanto, a SEIRHMACT criará na sua estrutura a
Gerência Estadual de Saneamento Rural (GESAR) para coordenar, planejar e monitorar a
implementação, assistência técnica, gestão, operação e manutenção dos serviços de água e
saneamento nas comunidades rurais\. A SEIRHMACT também estabelecerá um Conselho
Estadual de Saneamento Rural (CESAR), que será o órgão deliberativo a cargo de promover a
articulação e harmonização do projeto de água e saneamento rural implementado pelas
instituições do estado com os programas federais, municipais e ACs, entre outros atores\. A
CAGEPA, que também faz parte do SEIRHMACT, também apoiará a implementação do
Sistema Estadual de Gestão do Abastecimento e Saneamento Rural, com a finalidade de prestar
assistência técnica em áreas especÃficas da sua competência, como qualidade da água e medição,
quando solicitado\.
10\. A Agência Executiva de Gestão das Ã?guas da ParaÃba (AESA) liderará a elaboração
do projeto, a implementação e as operações do SIRA\. A AESA será responsável pela
coordenação dos parceiros relevantes e pelo estabelecimento de um comitê de trabalho que
contribuirá para a identificação e integração de conjuntos de dados relevantes, bem como com
sua expertise em produção agrÃcola e agrometeorologia no estado\. Por último, também será
responsável pela divulgação do SIRA através de oficinas, publicações e sites\.
11\. A Companhia de Desenvolvimento da ParaÃba (CINEP), entidade pública a cargo da
promoção do desenvolvimento industrial no estado, terá um papel crÃtico na coordenação,
liderança e apoio aos diferentes atores envolvidos no processo de identificação das alianças
produtivas\. A CINEP será responsável pela condução e coordenação dos planos e atividades de
atração e promoção de investimentos/compradores, bem como das atividades desenvolvidas
visando facilitar a criação de alianças produtivas (da identificação inicial de potenciais
compradores até a concretização da assinatura de planos de negócios)\. Isso implicará a realização
de extensas pesquisas e buscas no nÃvel estadual e nacional, articulação com outras instituições e
orientação a corretores, consultores e empresas\. O CINEP poderá oferecer serviços adicionais
aos investidores nas alianças produtivas\.
12\. SEIRHMACT, AESA e CINEP celebrarão Convênios de Cooperação com o
COOPERAR, conforme termos e condições aceitáveis para o Banco, antes de dar inÃcio à s
atividades sob sua responsabilidade\. Tais convênios estabelecem as obrigações das partes e
definem as atividades e produtos sob sua responsabilidade\. Cada convênio anexará a dotação
orçamentária acordada pelas partes\. O financiamento do Convênio pelo projeto será gerenciado
pelo COOPERAR e poderá incluir bens, serviços e custos operacionais incrementais\. Os
parceiros estarão a cargo de: (i) preparar o TdR dos consultores; (ii) desenvolver as
especificações técnicas dos bens; (iii) participar dos respectivos comitês de avaliação; (iv)
informar sobre o desempenho das atividades e compras; (v) prestar contas e atender solicitações
de pagamento; e (vi) elaborar relatórios semestrais de progresso\. O modelo do Convênio de
Cooperação Técnica será incluÃdo no Manual de Operações\. Não haverá repasse de recursos para
as instituições parceiras uma vez que todos os pagamentos serão efetuados pelo COOPERAR\.
42
13\. Os componentes do projeto seguirão quatro etapas no que diz respeito aos
investimentos: (i) Identificação; (ii) Pré-investimento; (iii) Investimento; e (iv) Operações e
Manutenção (O&M)\. A tabela a seguir resume os arranjos de implementação por tipo de
investimento:
Tipo de Identificação Pré-investimento Investimento O&M
investimento
Abastecimento ACs e conselhos Consultores Obras executadas pelas ACs, com a
de água municipais contratados pelo empresas contratadas e assistência da
COOPERAR supervisionadas pelo SEIRHMACT
COOPERAR, com o
apoio das ACs
Redução da ACs e conselhos Consultores Recursos de contrapartida ACs, com
vulnerabilidade municipais contratados pelo para as ACs; participação informações
agroclimática COOPERAR, da comunidade em fornecidas pela
mediante validação licitações (no caso da AESA\.
da comunidade contratação de obras
complexas, possÃvel
delegação ao
COOPERAR)\.
Requisitos da contraparte:
pelo menos 10% em
espécie, trabalho e/ou
outro tipo de aporte não
pecuniário\.
Alianças OPs e compradores, Consultores Recursos de contrapartida OPs e compradores
produtivas alguns com a contratados pelo para as OPs; participação
assistência de COOPERAR, sob a da comunidade e práticas
corretores, sob a orientação dos comerciais\.
coordenação da parceiros da aliança e Requisitos da contraparte:
CINEP a assistência da pelo menos 30% em
CINEP espécie\.
Compradores financiam
suas próprias atividades,
por separado\.
14\. Na fase de identificação, os Conselhos Municipais auxiliarão as ACs na identificação e
priorização das potenciais propostas de investimentos em abastecimento e redução da
vulnerabilidade previstas no Subcomponente 2\.a\. No componente de Alianças Produtivas, o
COOPERAR, sob a orientação da CINEP, contratará consultores especializados (corretores) para
oferecer às OPs e compradores suporte na identificação de propostas comerciais conjuntas\.
15\. Na fase de pré-investimento, o COOPERAR contratará consultores para prestar
assistência técnica às ACs na elaboração de subprojetos de investimento e de planos de negócios,
respectivamente\. No Componente 3, Alianças Produtivas, a CINEP coordenará as atividades de
atração de compradores e formação de alianças, e uma empresa independente, a ser contratada
pelo COOPERAR, avaliará a qualidade e a viabilidade das propostas comerciais em relação à s
práticas técnicas, financeiras, ambientais e sociais\.
16\. Na fase de investimento, o projeto promoverá o empoderamento e a autogestão das
comunidades participantes e das organizações de produtores\. No caso do acesso a água
43
(Subcomponente 2\.a), os investimentos serão executados por empresas contratadas pelo
COOPERAR e supervisionadas por este e pelas ACs\. No caso dos investimentos em redução da
vulnerabilidade (Subcomponente 2\.b), a gestão e execução de compras será realizada pelas ACs,
com a supervisão do COOPERAR\. Para investimentos mais complexos, as ACs podem solicitar
ao COOPERAR que execute o processo de aquisição\. Por último, a operação e manutenção dos
investimentos ficará a cargo das ACs e OPs\.
17\. No Subcomponente 2\.c, o estabelecimento do SIRA será planejado e executado pela
AESA em parceria com outras instituições, tais como: Empresa Brasileira de Pesquisa
Agropecuária (EMBRAPA), Empresa de Assistência Técnica e Extensão Rural da ParaÃba
(EMATER), Empresa Estadual de Pesquisa Agropecuária da ParaÃba (EMEPA) e Instituto
Nacional para o Semiárido (INSA)\. O COOPERAR realizará todas as aquisições e monitorará a
execução e os resultados dessas atividades\. Não haverá repasse de recursos para a AESA\.
18\. O COOPERAR apresentará ao Banco relatórios bianuais das ações planejadas, que
incluirão iniciativas empresariais selecionadas, situação da implementação, resultados,
demonstrativos financeiros, planos de compras, questões socioambientais e ações tomadas para
garantir uma implementação satisfatória\. Tais relatórios serão compartilhados com os decisores
polÃticos a fim de permitir um efetivo gerenciamento do projeto, a reformulação da sua
estratégia, caso seja necessário, e a divulgação de experiências\.
19\. O COOPERAR implementará o projeto de acordo com o Manual Operacional do
Projeto considerado satisfatório pelo Banco Mundial, que deverá incluir: (a) regras, métodos,
diretrizes, documentos padrão e procedimentos para a execução do projeto, entre os quais: (a) os
procedimentos para implementação, monitoramento e avaliação do Projeto (incluÃdos seus
requisitos em relação a aspectos técnicos, compras, desembolsos, gestão financeira e
socioambientais); (b) os critérios de elegibilidade para a seleção de OPs e ACs; (c) os critérios
socais, econômicos, financeiros, técnicos e ambientais detalhados para avaliar e classificar
subprojetos; (d) as funções, responsabilidades, estrutura e composição do pessoal-chave do
COOPERAR; (e) modelos dos Acordos para Subprojetos; (f) indicadores para monitoramento e
avaliação do Projeto; e (g) os Documentos de Salvaguarda\.
Gestão Financeira, Desembolsos e Aquisições
Gestão Financeira
20\. Uma avaliação da Gestão Financeira (GF) do projeto proposto foi realizada entre 12 a 13
de março e 10 a 14 de agosto de 2015, de acordo com a OP/BP 10\.00 e com o Manual de Gestão
Financeira\. Essa avaliação teve como objetivo determinar se a principal agência de
implementação, o projeto COOPERAR, está estruturada de maneira aceitável do ponto de vista
da gestão financeira e dos mecanismos de desembolso para se encarregar adequadamente do
controle, gerenciamento, contabilidade e prestação de contas sobre o uso dos recursos do
projeto\.30 Essa avaliação foi validada em junho de 2017\.
21\. Os sistemas de GF propostos baseiam-se predominantemente em sistemas criados para
projetos anteriores financiados pelo Banco que apresentaram, de maneira geral, um desempenho
30
Em consonância com a OP/BP 10\.00 e com o Manual de Práticas de Gestão Financeira (publicado pela Direção Setorial de Gestão Financeira
em 1 de março de 2010)\.
44
moderadamente satisfatório durante a implementação do projeto\. As disposições de GF
estabelecidas no COOPERAR foram consideradas adequadas\. A UGP contratou uma equipe
adequada e está estabelecendo sistemas para garantir os arranjos de GF e de desembolso
necessários para um adequado controle, gerenciamento, contabilidade e prestação de contas em
relação ao uso dos recursos do projeto\. No entanto, a equipe de GF tem pouca experiência com
implementação de projetos do Banco, pelo que deverá receber o treinamento necessário\. Além
disso, os relatórios de Controladoria Geral do Estado da ParaÃba (CGE-PB) referentes a projetos
anteriores destacaram a necessidade de se aprimorar os sistemas de controles internos do
COOPERAR\.
22\. Os subprojetos de Redução da Vulnerabilidade e de Alianças Produtivas baseiam-se em
abordagens coletivas nas quais os arranjos de GF dão ênfase aos controles de governança
participativos\. Essa abordagem leva em consideração a cultura, as normas e a menor capacidade
institucional local, privilegiando a simplicidade nos procedimentos, um alto grau de
transparência e responsabilização e a delegação da responsabilidade pela tomada de decisão e
gestão às comunidades\. A avaliação identificou como um risco importante a ausência de arranjos
institucionais de gestão financeira adequados nas OPs e ACs\. Os relatórios de auditoria externa
de projetos anteriores também destacaram a necessidade de se intensificar os controles e a
prestação de contas nos subprojetos\. Como consequência, essas organizações terão que receber
treinamento e assistência técnica para melhorar sua capacidade gerencial e fiduciária, e suas
estruturas de controle interno (incluindo as de responsabilização) serão reforçadas\.
23\. Com a finalidade de desenvolver a capacidade das agências de implementação e mitigar
riscos em nÃvel regional, o componente de Assistência Técnica do projeto incluirá ações para: (i)
desenvolver procedimentos de GF especÃficos; (ii) capacitar o pessoal da OP e da AC para
aplicar esses procedimentos; e (iii) ampliar a capacidade do COOPERAR para realizar inspeções
financeiras em nÃvel regional\. O COOPERAR também identificará e contratará pessoal dedicado
para a GF e formará parcerias com iniciativas de acesso ao mercado (p\.ex\. SEBRAE, SENAR,
ONGs) para fortalecer o fluxo de GF dentro das OPs e ACs, centrando-se sobretudo em controles
internos, fluxo de recursos, gerenciamento de caixa e de receitas e aspectos da prestação de
contas\. Essas ações garantirão a adequação de todos os processos de GF\. A observância desses
requisitos pelo COOPERAR será avaliada nos primeiros 12 meses de implementação do Projeto
e será revisada ao longo de todo o seu ciclo de vida\.
24\. A conclusão sobre a avaliação do COOPERAR é que as disposições relativas Ã
administração financeira para este projeto são Moderadamente Satisfatórias\. As medidas de
capacitação relacionadas à GF estão incluÃdas no Componente 4\. O risco relativo ao controle da
GF recebeu avaliação Considerável devido ao desafio de garantir que (i) o COOPERAR
disponha de arranjos de GF adequados, (ii) que existam controles internos e sistemas adequados
no paÃs e (iii) as OPs e as ACs recebam treinamento em gestão financeira e os recursos
repassados sejam contabilizados adequadamente\. Os Riscos Fiduciários foram identificados e as
ações de mitigação estão refletidas no plano de ação\.
Estrutura Global de Gestão Financeira
25\. Agência de implementação (dotação de pessoal e arranjos financeiros): O COOPERAR
assumirá as atribuições fiduciárias primárias do Projeto\. Tais atribuições estarão a cargo do
departamento financeiro do COOPERAR\. As principais atribuições fiduciárias da unidade de
45
coordenação do projeto incluem o seguinte: (i) preparar e obter aprovação para as disposições de
gestão financeira do Projeto; (ii) coordenar e supervisar a implementação do Projeto; (iii)
apresentar solicitações de desembolso e documentação comprobatória de gastos ao Banco; (iv)
preparar e apresentar os relatórios financeiros do Projeto (IFRs) ao Banco; (v) preparar e
fornecer toda a documentação financeira e todos os relatórios de projeto solicitados pelos
auditores independentes e pela equipe do Banco; (vi) preparar e atualizar o Manual Operacional
do Projeto e assegurar-se de que seja seguido por todos os executores do projeto; e (vii)
coordenar com as OPs e ACs o componente de capacitação em GF\.
26\. Pessoal: A equipe de Gestão Financeira é composta por profissionais qualificados, com
uma compreensão básica das polÃticas e procedimentos do Banco\. à necessário que a equipe
receba treinamento em procedimentos do Banco\.
27\. Orçamentação, Contabilidade e Sistemas de Gestão Financeira: O ciclo orçamentário
inclui o planejamento e a execução de todas as atividades governamentais, que devem estar
refletidas no marco orçamentário\.31 Todas as transações orçamentárias e contábeis serão
realizadas no sistema público de contabilidade do Estado (SIAFI)\. O sistema SIAFI é usado por
todas as instituições públicas que recebem/transferem repasses do governo\. Todos os pagamentos
observarão a rotina de empenho, liquidação e pagamento\. Essas funções são realizadas pelo
Departamento de Administração e Finanças de cada entidade\. O COOPERAR usa dois sistemas
diferentes e não totalmente integrados: (i) o SIAFI, a ferramenta orçamental e contábil do Estado
da ParaÃba, é usado para registrar as despesas do projeto e efetuar os pagamentos pertinentes
conforme a lei orçamentária anual (isso porque o projeto é a Unidade Gestora dentro do sistema);
e (ii) o sistema de monitoramento e informação (SMI) próprio do COOPERAR, que é a base
para a preparação dos Sumários e dos Extratos de Despesas (SOE/IFR) e das demonstrações
financeiras do projeto, bem como para o monitoramento de subprojetos e para o gerenciamento
do progresso fÃsico e de contratos\. O sistema de monitoramento e informação do COOPERAR
não se comunica eletronicamente com o SIAFI, de modo que os dados financeiros terão que ser
conciliados periódica e manualmente entre os dois sistemas\. Além disso, a versão atual do SMI
não está preparada para gerenciar processos de subprojetos, porém uma nova ferramenta está
sendo projetada para controlar recursos e fazer avaliações econômicas e de progresso\. A
Secretaria de Fazenda (SEFAZ) é a responsável pela manutenção dos registros contábeis do
estado, inclusive os do projeto\. O COOPERAR é responsável por fazer os respectivos
pagamentos dentro dos limites de competência previstos na lei orçamentária anual\.
28\. O estado da ParaÃba segue as Normas Brasileiras de Contabilidade (NBC), Lei 4\.320/64,
que estabelecem certos nÃveis de princÃpios contábeis, e o Manual de Contabilidade Aplicável ao
Setor Público (MCASP), publicado nos termos da Lei nº 10\.180 e do Decreto 3\.589, ambos de 6
de setembro de 2001\. O projeto deverá seguir o primeiro conjunto de normas nacionais de
contabilidade aplicáveis ao setor público (NBCASP) e a edição revista do Manual de
Contabilidade Aplicável ao Setor Público (MCASP), publicado nos termos da Portaria STN
nº 467, de 6 de agosto de 2009, e atualizado em 2013\. A última Avaliação da Responsabilidade
Financeira Nacional (CFAA) do Brasil concluiu que a Lei nº 4\.320/64 atende aos padrões
internacionais de contabilidade\.
31
PPAâPlano Pluri-Anual, LDO-Lei de Diretrizes Orçamentárias, LOAâLei Orçamentária Anual, na qual são estabelecidas as metas e programas
aprovados pelo Congresso Nacional a cada 5 anos, 18 meses e 12 meses, respectivamente\.
46
29\. Controles internos, inclusive auditoria interna: Embora as modalidades de GF
estabelecidas no COOPERAR tenham sido consideradas adequadas em operações anteriores
financiadas pelo Banco, os relatórios da Controladoria Geral do Estado da ParaÃba (CGE-PB)
sublinharam ser necessário aperfeiçoar seus controles internos\. Todo o processamento de
operações se baseia nos processos e sistemas do COOPERAR, que oferecem um nÃvel razoável
de segregação de funções, supervisão, exame de controle de qualidade e conciliação\. Os fluxos
dos processos parecem ser claros e estar compreendidos pelo pessoal do COOPERAR\. As
atividades de GF do Componente 4 do projeto terão como objetivo garantir que o processo de
controle, inclusive de todos os recursos, se estenda aos subprojetos\. O Manual de Operações do
Projeto (MOP) documentará esses processos para orientar sua implementação\. O MOP
descreverá detalhadamente procedimentos e diretrizes para desembolsos, pagamentos,
aprovações, autorizações e elaboração de relatórios e será apresentado ao Banco para apreciação\.
30\. Relatórios Financeiros: O COOPERAR, com o apoio do coordenador financeiro,
garantirá a preparação de relatórios financeiros internos não auditados (IFRs) semestrais, a serem
apresentados no prazo de até 45 dias após o encerramento de cada perÃodo\. Os IFRs serão
gerados a partir do sistema SMI, consolidando os dados financeiros de todos os componentes do
projeto\. Por conseguinte, o formato e o conteúdo do IFRS, a serem acordados com o Mutuário,
cobrirão os seguintes itens:
a\. IFR 1A - Fontes e Aplicação dos Recursos, por categoria de desembolso, indicando a
participação do Banco no financiamento de gastos, gastos acumulados (do inÃcio do
projeto até o presente, do inÃcio do ano até o presente e para o perÃodo) reais vs\. gastos
orçados, incluindo a análise de variância;
b\. 1B IFR - Utilização de recursos pela Atividade ou Componente do Projeto, gastos
acumulados (do inÃcio do projeto até o presente, do inÃcio do ano até o presente e para o
perÃodo) reais vs\. gastos orçados, incluindo a análise de variância;
c\. IFR 1C - Extratos de despesas das OPs e ACs responsáveis pela implementação do
subprojeto\.
31\. Auditoria Externa: Os relatórios financeiros anuais do projeto serão auditados por auditor
independente, de acordo com as normas aceitáveis de auditoria\. A auditoria externa será
realizada de acordo com Termos de Referência aceitáveis para o Banco\. Disposições especÃficas
sobre revisão da execução/atividades do subprojeto serão detalhadas nos TdR dos auditores\. Os
auditores deverão apresentar parecer um único parecer sobre as demonstrações financeiras do
projeto\. Os auditores também terão de produzir uma carta de gestão identificando as deficiências
de controle interno relevantes, o que contribuirá para o fortalecimento do ambiente de controle\.
O relatório de auditoria será apresentado ao Banco no prazo de até seis meses a partir do
encerramento do ano fiscal do mutuário\.
32\. Plano de Supervisão: A supervisão do projeto consistirá na avaliação da implementação
dos arranjos de GF e do seu desempenho, na identificação de ações corretivas, se necessário, e
no monitoramento de riscos fiduciários\. Será realizada semestralmente e incluirá (a) o exame dos
IRFs semestrais; (b) avaliação dos relatórios dos auditores e acompanhamento de quaisquer
questões levantadas pelos auditores na sua carta de recomendações, conforme o caso; (c)
participação na supervisão do projeto (incluindo visitas aos subprojetos - OPs e ACs) e (d)
atualização da classificação da gestão financeira no Relatório da Situação da Implementação
(ISR)\.
47
Desembolsos
33\. Disposições relativas ao fluxo de recursos e aos desembolsos: O fluxo de recursos e os
mecanismos de desembolso propostos serão simplificados no âmbito do projeto para facilitar sua
execução, evitar arranjos operacionais adicionais desnecessários e usar o máximo possÃvel os
sistemas disponÃveis no paÃs\. Todos os pagamentos serão efetuados pelo COOPERAR, uma vez
que as obrigações de pagamento tenham sido assumidas, verificadas e devidamente
documentadas\. Os pagamentos às OPs e ACs no âmbito dos subprojetos serão feitos mediante
ordem bancária emitida em favor das OPs e ACs, as quais pagarão os prestadores de serviços e
pessoal contratado\. Para emitir pagamentos, o sistema estadual exige que os recursos sejam
empenhados por fonte, o que possibilita o acompanhamento dos desembolsos de empréstimos
para cobrir despesas do projeto\. Um Convênio de Financiamento será firmado com cada OP/AC
participante para possibilitar o recebimento de recursos em uma conta especÃfica aberta para o
subprojeto\. Além disso, os recursos de contrapartida deverão ser depositados nessa mesma conta\.
34\. O desembolso dos recursos do Projeto será processado de acordo com os procedimentos
normais do Banco e conforme o estipulado no Contrato de Empréstimo e na Carta de
Desembolso\. Os recursos serão desembolsados para fazer face a despesas elegÃveis incorridas ou
a serem incorridas no âmbito do Projeto e serão desembolsadas de acordo com as porcentagens
de financiamento acordadas\. O principal método de desembolso será o de Adiantamentos\. O
projeto também utilizará o método de desembolso Pagamento Direto e Reembolso, se for
necessário\. O Projeto prestará contas do uso dos Adiantamento e efetuará saques mediante
Requerimento de Saque respaldado por Declarações de Gastos (SOE), tal como definido na Carta
de Desembolso do Banco\. Os pagamentos diretos serão documentados por meio de Registros\. O
Valor MÃnimo dos Requerimentos de Pagamento Direto e de Reembolso é o equivalente a US$
500\.000\. A Conta Designada (CD) terá um limite fixo de U$ 10\.000\.000\. O COOPERAR
assinará os Requerimentos de Saque e solicitará desembolsos e/ou documentará despesas com
base exclusivamente nas despesas reais, com exceção das despesas do subprojeto, para as quais
será empregado o método de montante fixo, ou seja, tratando os desembolsos parcelados para as
OPs e ACs como despesas reais, já que haverá sistemas adequados para monitorar e relatar a
execução do subprojeto\.
35\. O prazo limite para desembolsos do projeto (último dia em que o Banco aceitará
requerimentos de saque do Mutuário ou documentação comprobatória sobre o uso de recursos já
adiantados) será de quatro meses, contados a partir da data de encerramento do Projeto\. A
concessão desse âperÃodo de carênciaâ? tem o propósito de permitir uma conclusão ordenada do
projeto e o encerramento da Conta do Empréstimo mediante a apresentação dos requerimentos
de reembolso e da documentação comprobatória dos gastos efetuados até a data de encerramento\.
As despesas do projeto serão reportadas após serem aprovadas pela Unidade de Gerenciamento
do Projeto e documentadas integralmente, garantindo, assim, que os recursos do empréstimo
sejam empregados exclusivamente para cobrir despesas elegÃveis\.
Fluxo dos Recursos do Projeto
36\. O COOPERAR abrirá uma Conta Designada (CD) segregada em seu nome, no Banco do
Brasil, para receber os recursos do empréstimo em reais (BRL) e enviará ao Banco os
Requerimentos de Saque e os SOEs comprobatórios de adiantamentos do Banco; o Banco
adiantará os recursos na Conta Designada (CD); da CD aberta exclusivamente para o projeto, o
COOPERAR será responsável por administrar todos os recursos do projeto através do SIAFI\.
48
37\. As OP e as ACs abrirão contas bancárias exclusivas para o projeto, nas quais serão
depositados os recursos após o recebimento de instruções de pagamento do COOPERAR
encaminhadas via SIAFI/SMI, referentes a subprojetos elegÃveis e devidamente aprovados\. Os
desembolsos do Mutuário para as ACs e OPs referentes a subprojetos elegÃveis serão parcelados
e efetuados de acordo com o progresso fÃsico da execução\. Tais pagamentos terão de ser
autorizados pelo COOPERAR\. A contribuição de contrapartida das OPs e ACs para
investimentos dos subprojetos será definida no acordo entre o COOPERAR e as OPs e ACs\. Os
valores desembolsados do Empréstimo para os Subprojetos correspondem a uma transferência
para as OPs e ACs na proporção acordada para aportes de contrapartida em financiamentos do
Banco, definida no Manual Operacional do Projeto e nos Acordos Subsidiários\. Os
representantes designados pelas OPs e ACs preencherão registros simples padronizados,
conforme os modelos contidos no Manual Operacional do Projeto, a fim de subsidiar os
relatórios sobre despesas elegÃveis efetuadas nos Subprojetos\. Esses registros também serão
usados para registrar as contribuições em espécie de todas as fontes, bem como os recursos pagos
diretamente aos fornecedores na aquisição de materiais e de mão de obra, estando sujeitos aos
procedimentos de auditoria do projeto\.
38\. As OPs e ACs efetuarão os pagamentos a provedores ou subcontratados (em observância
às Diretrizes de GF e de Compras do Banco) e enviarão toda a documentação comprobatória ao
COOPERAR, que enviará SOEs personalizadas ao Banco\.
Fluxo de recursos
D
PO and Community Associations
Accounts
C
B
Designated Account BRL
WB PARAÃ?BA SUSTENTÃ?VEL BRL
BRL
Washington, DC PROJECT
João Pessoa, PB
Vendors, Contractors, Suppliers
A (Goods, Works and Services)
WB SEFAZ/COOPERAR PO and Community
(Brasilia) (SIAFI) Associations
E
COOPERAR
IFR/SOEs (MIS)
SOEs
WB + Counterpart
(Semester) F
$ Funds Flow (Currency)
Reporting
Contracts
System/Process
PCU â Project
Coordination Unit
49
39\. A seguinte tabela lista as categorias de despesas admissÃveis que podem ser financiadas
com recursos do Projeto e o percentual das despesas admissÃveis coberto, por categoria:
Tabela 5: Alocação de Recursos dos Empréstimos
Alocação do Percentual de despesas a
Categoria Empréstimo serem financiadas
(dólares dos EUA) (impostos inclusos)
(1) Obras, Bens, Serviços outros que não de
consultoria, Serviços de consultoria,
31\.641\.100 100%
treinamento e custos operacionais do
projeto, excluÃdas as Categorias (2) e (3)
(2) Obras, Bens, Serviços de consultoria e
100%
Serviços outros que não de consultoria
5\.172\.792 dos recursos de
no âmbito dos Subprojetos de Redução
contrapartida
da Vulnerabilidade Agroclimática\.
(3) Obras, Bens, Serviços de consultoria e
100%
Serviços outros que não de consultoria
13\.061\.108 dos recursos de
no âmbito dos Subprojetos de Alianças
contrapartida
Produtivas\.
Valor a ser pago de acordo
com a Cláusula 2\.03 do
Acordo de Empréstimo, em
(4) Taxa inicial 125\.000
conformidade com a Seção
2\.07 (b) das Condições
Gerais
Valor devido nos termos da
(5) �gio referente aos valores máximo e
0 Cláusula 2\.09 (c) do Acordo
mÃnimo da taxa de juros
de Empréstimo
VALOR TOTAL 50\.000\.000
50
Tabela 6: Arranjos de financiamento dos subprojetos
Porcentagem do custo do subprojeto
Tipos de subprojetos32 Recursos de
Contribuição do Contrapartida contrapartida do
Beneficiário do GoPB BIRD33
pelo menos 10% em
1\. Subprojetos de redução da espécie, trabalho e/ou
vulnerabilidade agroclimática outro tipo de aporte não até 33% 57%
pecuniário
Pelo menos 30% em
espécie pelas OPs,
2\. Subprojetos de Alianças parcelados e depositados
Produtivas com antecedência aos 0% 70%
desembolsos feitos pelo
Projeto
40\. Os Custos Operacionais que serão financiados pelo Projeto compreendem custos
recorrentes incrementais razoáveis (que não teriam ocorridos na ausência do Projeto)
relacionados à gestão técnica e administrativa e ao monitoramento e supervisão do Projeto, entre
os quais as despesas com pessoal de apoio administrativo e operacional, equipamentos de
escritório, suprimentos, custos de viagem (inclusive acomodações, custos de transporte e
diárias), serviços de impressão, custos de comunicação, serviços públicos, manutenção de
equipamentos e instalações de escritório, uso e manutenção de veÃculos e serviços de logÃstica\.
Tais gastos serão lançados de acordo com os procedimentos administrativos do órgão em
questão, após serem analisados e considerados aceitáveis pelo Banco\.
41\. O termo âcapacitaçãoâ? refere-se aos cursos de treinamento que serão financiados pelo
Projeto e abrange despesas (exceto com serviços de consultoria) incorridas pelo Mutuário com
cursos de treinamento, seminários e oficinas, inclusive despesas de viagem razoáveis (p\.ex\.,
hospedagem, transporte e diárias) de participantes e instrutores (se aplicável), serviços de
alimentação, aluguel do local e de equipamentos para os cursos de treinamento, taxas de
inscrição, logÃstica e serviços de impressão, bem como materiais de treinamento no âmbito do
projeto\.
Aquisições
A) Disposições gerais
32
Para cada Subprojeto, a quantia exata da contribuição do beneficiário será definida nos Acordos de Subprojeto
entre o COOPERAR e a OP ou AC beneficiária, determinando, assim, o valor do financiamento de contrapartida do
GoPB\.
33
âRecurso de contrapartidaâ? refere-se ao repasse a uma OP ou AC selecionada feito a partir dos recursos do
empréstimo, destinado a financiar parcialmente um subprojeto elegÃvel, sujeito à s cláusulas e condições especÃficas
estabelecidas no Manual Operacional do Projeto e no Acordo de Subprojeto correspondente\.
51
42\. As aquisições realizadas no projeto proposto deverão observar o disposto nos
documentos do Banco intitulados âDiretrizes para Aquisições com Empréstimos do BIRD e
Créditos da AIDâ?, datado de janeiro de 2011 (revisto em janeiro de 2014), e âDiretrizes para a
Seleção e Contratação de Consultores por parte de Mutuários do Banco Mundial â?, datado de
janeiro de 2011 (revisto em julho de 2014), bem como nas disposições do Acordo Legal\. Será
apresentada abaixo uma descrição geral de vários itens enquadrados em diferentes categorias de
despesas\. Para cada contrato a ser financiado com o Empréstimo, diferentes métodos de
aquisição ou de seleção de consultores, a necessidade da pré-qualificação, custos estimados,
requisitos de exame prévio e prazos serão acordados entre o Mutuário e a equipe do projeto do
Banco no Plano de Aquisições\. O Plano de Aquisições será atualizado pelo menos uma vez por
ano, ou sempre que necessário, de maneira a refletir as necessidades reais em termos de
execução do projeto e de avanços na capacidade institucional das partes envolvidas\.
43\. Contratação de Obras: Os Componentes 2 e 3 do Projeto demandarão obras como parte
dos investimentos e subprojetos\. No âmbito do Componente 2 (abastecimento e saneamento e
subprojetos de redução da vulnerabilidade), a contratação dos serviços será realizada pelo
COOPERAR conforme os procedimentos das modalidades Concorrência Pública Nacional
(NCB, de National Competitive Bidding) ou Comparação de Preços (Shopping), utilizando os
documentos padrão para licitações aprovados pelo Banco e incluÃdos no Manual Operacional do
Projeto\. Tais obras incluirão: (i) construção de sistemas de abastecimento de água completos ou
singelos, sistemas de água encanada ou não, instalações de dessalinização, instalações sanitárias
(banheiros) e (ii) construção de sistemas de irrigação, pequenas obras de infraestrutura para
captação de água superficial e subterrânea, drenagem de estradas, passagens molhadas, pequenas
pontes e pequenas obras de melhoria da superfÃcie das estradas\. No âmbito do Componente 3
(subprojetos de alianças produtivas), as obras serão contratadas pelas Organizações de
Produtores (OPs) conforme as Práticas Comerciais preconizadas pelas Diretrizes (parágrafo 3\.13
das Diretrizes, detalhado abaixo), se assim estiver previsto no plano de aquisições simplificado
que integra o plano de negócios da aliança produtiva, ou a Participação Comunitária em
Licitações (parágrafo 3\.19 das Diretrizes), estando contempladas pequenas obras de
infraestrutura dentro e fora da propriedade rural destinadas a armazenamento, processamento e
embalagem\.
44\. Aquisição de Bens: No âmbito do Subcomponente 2, os bens serão adquiridos pelas
Associações Comunitárias (ACs) que estejam implementando subprojetos de acordo com as
orientações para Participação Comunitária em Licitações (parágrafo 3\.19 das Diretrizes), cujos
procedimentos serão descritos no Manual Operacional do Projeto, estando contemplados
equipamentos e insumos para produção agrÃcola e pecuária\. No âmbito do Componente 3, os
bens serão adquiridos pelas OPs conforme as Práticas Comerciais (parágrafo 3\.13 das Diretrizes,
detalhado abaixo), se assim estiver previsto no plano de aquisições simplificado que integra o
plano de negócios da aliança produtiva, ou a Participação Comunitária em Licitações (parágrafo
3\.19 das Diretrizes), estando contemplados insumos para a produção e equipamentos e
instrumentos agrÃcolas e destinados a armazenamento, processamento e embalagem\. No âmbito
dos demais componentes, os bens serão adquiridos pelo COOPERAR de acordo com os
procedimentos das modalidades Concorrência Pública Nacional ou Comparação de Preços
(Shopping), utilizando os documentos padrão para licitações aprovados pelo Banco e incluÃdos
no Manual Operacional do Projeto, estando contemplados veÃculos, equipamento de TIS e
estações agrometeorológicas automáticas\. No âmbito da modalidade NBC, servindo como
alternativa à Comparação de Preços, tais serviços poderão ser contratados de acordo com os
52
procedimentos da modalidade Pregão ou como parte de Convênios, já que estes instrumentos
contratuais terão sido examinados e considerados aceitáveis pelo Banco\. A Contratação Direta
também poderá ser empregada, em circunstâncias excepcionais, quando satisfeitas as disposições
do parágrafo 3\.7 das Diretrizes\.
45\. Contratação de serviços outros que não de consultoria: Sob os Componentes 2 e 3,
serviços outros que não de consultoria englobam, entre outros, mão de obra não qualificada e
serviços de instalação, conserto ou manutenção de equipamentos\. No âmbito do Componente 2,
tais serviços serão contratados pelas ACs que estejam implementando subprojetos, de acordo
com as orientações para Participação Comunitária em Licitações, cujos procedimentos serão
descritos no Manual Operacional do Projeto\. No âmbito do Componente 3, esses serviços serão
contratados pelas OPs de acordo com as Práticas Comerciais (parágrafo 3\.13 das Diretrizes,
detalhado abaixo) ou Participação Comunitária em Licitações (parágrafo 3\.19 das Diretrizes)\. No
âmbito dos Componentes 1 e 4, os serviços outros que não de consultoria, entre os quais as
campanhas de comunicação e de comercialização e as pesquisas de dados, serão contratados pelo
COOPERAR, de acordo com os procedimentos das modalidades Concorrência Pública Nacional
(NCB) ou Comparação de Preços (Shopping), utilizando os documentos padrão para licitações
aprovados pelo Banco e incluÃdos no Manual Operacional do Projeto\. No âmbito da modalidade
NBC, servindo como alternativa à Comparação de Preços, tais serviços poderão ser contratados
de acordo com os procedimentos da modalidade Pregão ou como parte de Convênios, já que
estes instrumentos contratuais terão sido examinados e considerados aceitáveis pelo Banco\. A
Contratação Direta também poderá ser empregada, em circunstâncias excepcionais, quando
satisfeitas as disposições do parágrafo 3\.7 das Diretrizes\.
46\. Seleção de Consultores: No âmbito do Componente 3, os serviços de consultoria
prestados por firmas e indivÃduos serão selecionados pelas OPs para cada subprojeto, conforme
as Práticas Comerciais preconizadas pelas Diretrizes (parágrafo 3\.13 e detalhadas abaixo), e
incluirão o seguinte: (i) capacitação nas áreas de identificação, negociação e criação de alianças
produtivas, aderência às normas organizacionais e empresariais, e aperfeiçoamento das
habilidades gerenciais, empresariais e de gestão de riscos e (ii) assistência técnica em
diversificação agrÃcola, manejo de recursos naturais, segurança alimentar e melhoria nutricional\.
47\. No âmbito do Componente 2\.b, os serviços de consultoria prestados por firmas serão
selecionados pelas ACs que implementam os subprojetos, conforme as modalidades de Seleção
Baseada nas Qualificações do Consultor (parágrafo 3\.7 das Diretrizes) ou Contratação Direta
(parágrafo 3\.8(c) das Diretrizes), podendo os consultores individuais serem selecionados através
de Contratação Direta (parágrafo 5\.6(b) e 5\.6(d) das Diretrizes)\. Tais serviços incluirão
assistência técnica e capacitação para assistência técnica em diversificação agrÃcola, manejo de
recursos naturais, segurança alimentar e melhoria nutricional\.
48\. No âmbito dos demais componentes, os serviços de consultoria prestados por firmas
serão selecionados pelo COOPERAR conforme uma das seguintes modalidades: Seleção
Baseada na Qualidade e Custo, Seleção com Orçamento Fixo, Seleção pelo Menor Custo,
Seleção Baseada nas Qualificações do Consultor ou Contratação Direta; os consultores
individuais serão selecionados de acordo com os procedimentos descritos nos parágrafos 5\.2 e
5\.3 das Diretrizes e também através de contratação direta, de acordo com o parágrafo 5\.6 das
Diretrizes\. Tais serviços incluirão identificação e elaboração de subprojetos e propostas e planos
de negócios; supervisão de subprojetos, capacitação de prestadores de serviços para melhorar a
qualidade de seus serviços, para apoiar a competitividade das OPs; capacitação em administração
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de subprojetos e processos de negócios (administração de infraestrutura e serviços comuns,
contabilidade, auditorias e acesso a empréstimos); supervisão de obras; prestação de treinamento
e assistência técnica às ACs e OPs em administração e gerenciamento de subprojetos; instalação
de um sistema supralocal de abastecimento e saneamento rural e de um sistema estadual de
informação de risco agrÃcola; e concepção, desenvolvimento e implementação da avaliação de
impactos do projeto\.
49\. A lista de consultores pré-selecionados (short-list) para serviços cuja estimativa de custo
seja inferior ao equivalente a US$ 1\.500\.000 por contrato pode ser composta inteiramente de
consultores nacionais, como disposto no parágrafo 2\.7 das Diretrizes para Consultores\.
B) Diretrizes para aplicação das Práticas Comerciais no âmbito do Componente 3
50\. O Componente 3 financiará os subprojetos conforme os planos de negócios propostos,
desenvolvidos e executados pelas OPs participantes com recursos de contrapartida\. O valor
médio dos recursos de contrapartida para uma OP destinados a apoiar um plano de negócios é de
US$ 100 mil\.
51\. As disposições da Seção I das Diretrizes aplicam-se a todos os métodos de aquisição
usados pelo projeto, isto é, todos os princÃpios, regras e procedimentos descritos nas Diretrizes
aplicam-se a todos os contratos financiados, no todo ou em parte, por empréstimos do Banco\.
Para cumprir com o disposto acima, cinco considerações principais devem orientar a adoção de
práticas comerciais pelas OPs:
a) a necessidade de economia e eficiência;
b) a necessidade de serviços de qualidade;
c) a necessidade de disponibilizar a todos os participantes do processo licitatório as
mesmas informações e de garantir oportunidades iguais ao concorrerem pelo
fornecimento de bens, obras e serviços;
d) a importância da transparência\.
e) as Práticas Comerciais deverão ser exigidas pelo plano de negócios\.
52\. Como empresas do setor privado, as organizações de produtores rurais frequentemente
cumprem esses requisitos adotando, nos seus procedimentos de aquisição, práticas comerciais
estabelecidas que não a licitação aberta formal\. Isso porque, ao procurar um fornecedor, as
principais considerações feitas por uma OP dizem respeito a elementos como qualidade,
desempenho, preço, entrega, capacidade e garantia de fornecimento\. Além disso, os produtos ou
serviços serão adquiridos pelas OPs com a finalidade de vendê-los e aumentar sua receita\. As
organizações de produtores são entidades com fins lucrativos e, como tal, podem falir, o que as
obriga a adotar mecanismos eficientes em seus processos de compras\. Um plano de negócios
deve conter critérios especÃficos para a mensuração do desempenho das práticas comerciais
utilizadas\.
C) Diretrizes para aplicação dos procedimentos de Participação Comunitária em Licitações
no âmbito do Componente 2
53\. Os procedimentos para aquisição no âmbito dos subprojetos normalmente preveem a
comparação de pelo menos 3 cotações diferentes\. No entanto, com base na experiência adquirida
em projetos com operações semelhantes em outros estados do Nordeste (Bahia, Ceará,
54
Pernambuco e Rio Grande do Norte), também será permitida a contratação direta quando as
circunstâncias sugiram que este método oferece uma vantagem em relação à comparação de
preços\. Tal vantagem deverá ser avaliada com base nos critérios de economicidade, eficiência e
transparência\.
a) O critério de economicidade poderia ser cumprido pelo COOPERAR no momento da
revisão dos subprojetos e da determinação das estimativas finais de custos\. Para chegar
a esses valores finais, o COOPERAR deve pesquisar o mercado regional, no caso de
bens, obras e serviços, ou consultar bancos de dados de preços oficiais para determinar
os montantes necessários para financiar os contratos no âmbito de subprojetos\.
b) Considerando que as ACs não precisarão comparar cotações de preços para contratos
de obras, por exemplo, ou solicitar orçamentos de fornecedores de fora do estado, o
que suporia uma dificuldade de acesso, os contratos diretos serão menos demorados e
mais eficientes do que o processo de âconcorrênciaâ?\.
c) As associações garantirão, por meio de assembleias, que todas as decisões de
aquisição, compra e/ou contratação sejam transparentes\. Nessas assembleias serão
discutidas publicamente todas as questões e as decisões ficarão devidamente
registradas em ata\. Recomenda-se também lançar mão das ferramentas comuns de
publicidade disponÃveis nas comunidades, como os murais de avisos nas escolas e
edifÃcios públicos, as emissoras de rádio locais, os conselhos municipais, etc\.
D) Avaliação da capacidade da agência de implementar as aquisições
54\. O COOPERAR e as ACs ou OPs executarão as atividades de aquisição\. A unidade de
aquisição do COOPERAR é composta por um encarregado de compras\. O Manual Operacional
do Projeto incluirá, além dos procedimentos de aquisições, os Documentos Padrão para
Licitações a serem utilizados em cada método de aquisição, bem como os modelos de contratos\.
55\. Em março de 2015 foi realizada uma avaliação da capacidade do COOPERAR para
executar as ações de aquisição no âmbito do projeto\. Embora a agência tenha experiência prévia
na implementação de um projeto financiado pelo Banco, o projeto proposto difere em aspectos
importantes, como a estrutura organizacional da agência, a equipe (a ser recrutada) e um novo
desenho de projeto (que desafiará a capacidade da agência)\. A categoria de risco foi classificada
como Considerável porque os principais pilares necessários a uma harmoniosa implementação de
compras foram considerados insuficientes â e é provável que só sejam reforçados após o segundo
ano de implementação do projeto, o que poderia acarretar atrasos desnecessários na
implementação\. Os principais riscos são que o COOPERAR não esteja adequadamente dotado de
pessoal em número e qualificações e não possua a estrutura necessária para supervisionar a
aquisição nos subprojetos\. Essa avaliação foi validada em junho de 2017\.
56\. As medidas de mitigação propostas visam fortalecer a capacidade da agência para
executar processos de aquisição fornecendo informações detalhadas sobre o processamento de
compras e a tomada de decisões, estabelecendo modelos de documentos de
licitação/avaliação/contratuais e definindo necessidades de registro, oferecendo treinamento
sobre as regras do Banco em relação a aquisições, contratando consultoria externa na área e
intensificando o suporte à implementação nos estágios iniciais da implementação do projeto\. A
implementação das medidas de mitigação deverá fortalecer substancialmente a capacidade da
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agência e, dessa forma, reduzir os riscos\. Dessa forma, qualquer risco residual que não tenha sido
mitigado só poderia ser identificado se, por qualquer motivo, a agência não puder implementar as
medidas propostas\. Todas as ações de mitigação foram incluÃdas no Plano de Ação Institucional
acordado com o Mutuário\. O grau de risco global do programa em relação a aquisições é
Considerável\.
E) Plano de Aquisições
57\. O Mutuário desenvolveu um Plano de Aquisições para a implementação do projeto, no
qual estabeleceu as bases dos métodos de aquisição\. O plano foi acordado entre o Mutuário e a
Equipe do Projeto em 20 de maio de 2016 e validado em junho de 2017, e está disponÃvel na
sede do projeto COOPERAR (R\. Antônio Francisco Araújo - Lot\. Morada Nova, Cabedelo - PB,
58310-000), no banco de dados do projeto e no website externo do Banco\. O Plano de
Aquisições será atualizado junto com a Equipe do Projeto com uma periodicidade anual, ou
conforme seja necessário, de maneira a refletir as reais necessidades do projeto em termos de
execução e aperfeiçoamento das capacidades institucionais\.
F) Periodicidade das missões de supervisão de aquisições
58\. Além da supervisão anterior à revisão nos escritórios do Banco, a avaliação da
capacidade do COOPERAR recomendou missões de supervisão de campo semestrais para
avaliar os processos de aquisição realizados\.
G) Detalhes do Arranjo de Aquisições no tocante a Licitações Internacionais\.
G\.1) Bens, obras e serviços outros que não de consultoria\.
(a) Não há previsão de Licitação Internacional ou Contratação Direta neste momento\.
(b) Os contratos para aquisição de bens e obras mediante Licitação Pública Internacional
(ICB, do inglês International Competitive Bidding) e Licitação Pública Nacional (NCB,
do inglês National Competitive Bidding) com custo estimado acima de US$ 1\.000\.000 e
US$ 10\.000\.000 por contrato, respectivamente, bem como as duas primeiras NCBs e
todas as Contratações Diretas, estarão sujeitos à revisão prévia do Banco\.
G\.2) Serviços de consultoria\.
(a) Não há previsão de serviços que exijam uma lista de firmas internacionais de
consultoria pré-selecionadas (short-list)\.
(b) Os serviços de consultoria com custo estimado acima de US$ 300\.000 por contrato e
todos os processos de seleção de consultores por Contratação Direta (firmas de
consultoria) para serviços com custo estimado acima de US$ 100\.000 estarão sujeitos Ã
revisão prévia do Banco\.
(c) Listas de consultores pré-selecionados compostas inteiramente de consultores
nacionais: A lista de consultores pré-selecionados para serviços cuja estimativa de custo
seja inferior ao equivalente a US$ 1\.500\.000 por contrato pode ser composta inteiramente
de consultores nacionais, como disposto no parágrafo 2\.7 das Diretrizes para Consultores\.
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Aspectos ambientais e sociais (inclusive salvaguardas)
Meio ambiente
59\. O projeto recebeu a classificação de Categoria B uma vez que os impactos negativos que
poderão advir das atividades agrÃcolas e das pequenas obras de infraestrutura devem ser
pequenos, localizados e reversÃveis através de um monitoramento constante e de ajustes no
cronograma\. Por outro lado, a adoção de práticas rural sustentáveis deve gerar impactos
positivos\. Isso posto, o projeto acionou as seguintes polÃticas ambientais: OP/BP 4\.01 Avaliação
Ambiental; OP/BP 4\.04 Habitats Naturais; OP/BP 4\.09 Controle de Pragas; e OP/BP 4\.11
Recursos Culturais FÃsicos\. Ainda, as OP/BP 4\.36 Florestas e OP/BP 4\.37 Segurança de
Barragens também foram acionadas preventivamente em razão da ligação entre atividades
agropecuárias e florestas no Brasil e do fato de que algumas atividades do projeto relacionadas a
irrigação e abastecimento de água talvez dependam das barragens existentes ou demandem a
construção de açudes nas propriedades\.
60\. O Estado da ParaÃba elaborou uma análise socioambiental abrangente de acordo com as
polÃticas de salvaguarda do Banco e as exigências legais federais e estaduais, a qual foi revisada
pelo Banco e submetida a consulta, como previsto\. Com base nas constatações dessa análise, o
estado da ParaÃba preparou uma Avaliação de Impactos Socioambientais (AISA), incluindo m
Marco de Gestão Socioambiental (MGSA), um Manual Ambiental e Social de Obras, bem como
modelos para levantamento e monitoramento ambiental adaptados a cada tipo de atividade
prevista pelo projeto (p\.ex\., produção rural, manejo de recursos naturais, infraestrutura para
produção e processamento, sistemas de abastecimento e de irrigação, sistemas de saneamento,
melhorias nas estradas vicinais)\. A AISA e os documentos e modelos de apoio integram o
Manual Operacional do projeto\.
Principais impactos ambientais positivos esperados do projeto
61\. Redução da contaminação do solo e da água\. O componente de redução da
vulnerabilidade (Componente 2) centra-se em 100 municÃpios vulneráveis ou altamente
vulneráveis\. A assistência técnica e demais tipos de suporte fornecidos aos sistemas de produção
rural através do projeto incluirão aspectos de sustentabilidade ambiental envolvendo orientação
para a adoção de práticas agrÃcolas alternativas que reduzem ou abandonam o uso de pesticidas,
o que pode contribuir para reduzir a contaminação do solo e da água\.
62\. Melhor eficiência no uso da água\. Melhorando a eficiência dos sistemas de irrigação e
das soluções de armazenamento de água o projeto estará contribuindo para reduzir desperdÃcios e
a pressão sobre os recursos hÃdricos\. Apoiar os sistemas de reutilização da água também
contribuirá para reduzir a demanda de água e melhorar a resiliência à seca\.
63\. CobenefÃcios das medidas de adaptação\. O componente 2 centra-se em melhorar a
resiliência da população rural da ParaÃba à variabilidade e mudanças climáticas\. Como está
prevista uma piora da situação de estiagem no futuro, o projeto proposto se concentra em
melhorar o acesso a fontes confiáveis de água potável e reduzir a vulnerabilidade dos sistemas
agrÃcolas\. Além disso, a criação do Sistema de Informação de Risco Agroclimático possibilitará
que as previsões meteorológicas e o planejamento das atividades agrÃcolas e pecuárias seja
baseado em evidências, bem como propiciará ganhos em termos de prontidão e resposta a
eventos climáticos extremos\.
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64\. Biodiversidade\. O suporte dado às OPs através de assistência técnica rural promoverá a
manutenção e/ou recuperação de habitats naturais nas propriedades rurais\. Isso não apenas
assegurará que sejam cumpridos os requisitos da legislação ambiental relativos às �reas de
Preservação Permanente e às Reservas Legais (áreas localizadas no interior das propriedades
rurais destinadas à proteção ambiental), mas também contribuirá para a manutenção e
recuperação da biodiversidade nativa, dos recursos hÃdricos, da fertilidade do solo e dos recursos
florestais não madeireiros, entre outros benefÃcios\. A promoção de práticas que reduzem o uso de
pesticidas e que promovem a diversidade e o consórcio de culturas também irá beneficiar a
biodiversidade, particularmente os insetos polinizadores e a biodiversidade do solo\.
65\. Redução dos processos erosivos\. A promoção de práticas agropecuárias adequadas ao
semiárido leva em consideração aspectos de sustentabilidade ambiental e também contribui para
reduzir a perda de solo e a erosão\. A aplicação de boas práticas nas obras pontuais de melhoria
das estradas vicinais, particularmente nas passagens molhadas e na construção de pequenas
pontes, também contribuirá para reduzir a erosão e o assoreamento dos corpos d'água,
particularmente quando acompanhadas pela restauração da vegetação ciliar e de drenagem
adequada\.
PossÃveis impactos negativos previstos na implementação do projeto
66\. Prevê-se que as intervenções contribuam para aumentar a sustentabilidade ambiental das
comunidades e OPs beneficiadas, bem como para melhorar a resiliência à seca da população
local e das práticas de produção\. Todas as intervenções destinam-se a reduzir os impactos
socioeconômicos e ambientais pré-existentes e a evitar problemas que possam ser exacerbados
nos habitats sensÃveis\. Os impactos negativos previstos devem ser principalmente de pequeno
alcance, localizados e reversÃveis, resultado das obras de infraestrutura de pequena escala
financiadas (produção, abastecimento/saneamento, melhoria das estradas vicinais) e dos sistemas
de produção agropecuária beneficiados direta ou indiretamente\.
67\. Não serão financiadas obras de construção de estradas e as obras destinadas a melhorar as
estradas existentes terão de seguir as orientações especÃficas do Marco de Gestão Socioambiental
e do Manual Ambiental e Social de Obras, a fim de minimizar ou prevenir possÃveis impactos,
particularmente em áreas sensÃveis, como nas travessias de cursos d'água\. Seguindo as
orientações das agências ambientais e de água da ParaÃba no sentido de minimizar potenciais
impactos negativos, tais como a erosão, os projetos de engenharia para pequenas pontes deverão
ser adaptados à s caracterÃsticas especÃficas de cada travessia de corpo d'água\. Em todos os casos,
essas travessias não poderão barrar o fluxo natural da água\.
68\. A OP/BP 4\.37 (Segurança das Barragens) foi acionada preventivamente, embora
nenhuma obra de construção de barragem esteja prevista\. No entanto, algumas atividades do
projeto relacionadas a irrigação e abastecimento de água podem vir a demandar a construção de
açudes nas propriedades, ou depender de barragens existentes, que podem vir a demandar
manutenção ou reparos\. Nesse sentido, o MGSA do projeto contém orientação e procedimentos
adequados de acordo com esta polÃtica para construção, aproveitamento e/ou restauração de
barragens existentes\. Outros impactos da infraestrutura hÃdrica deverão ser prevenidos ou
minimizados por meio da avaliação prévia de impactos (p\.ex\., possibilidade de salinização do
solo com irrigação inadequada; ou demanda excessiva de água de uma nascente especÃfica),
incluindo a avaliação de impactos cumulativos quando for relevante (p\.ex\., advindos da
perfuração de múltiplos poços para abastecimento na mesma região)\.
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69\. Os impactos identificados serão mitigados ou evitados através da adoção de um conjunto
de critérios e procedimentos aprovados pelo Banco relacionados à elaboração e execução de
projetos de obras de infraestrutura, bem como de medidas de mitigação definidas para outras
atividades do projeto\.
70\. A equipe principal do COOPERAR, que acumula experiência em gestão de projetos
financiados pelo Banco, estará a cargo da gestão das salvaguardas ambientais\. Todavia, para
corrigir as deficiências identificadas na operação anterior com relação a salvaguardas, o Projeto
buscará que: (i) a equipe do projeto esteja suficientemente capacitada em matéria de
salvaguardas para supervisionar as atividades planejadas, (ii) todos os instrumentos de
salvaguarda necessários (estruturas conceituais e diretrizes, formulários de avaliação e
monitoramento, sistema de monitoramento eletrônico) estejam implantadas antes do inÃcio das
atividades do Projeto e (iii) seja planejado um treinamento adequado e oportuno sobre
implementação de salvaguardas voltado para todos os técnicos (particularmente o pessoal de
campo)\. A supervisão da nova operação por parte do Banco acompanhará de perto a
implementação das salvaguardas\.
71\. A estrutura organizacional concebida para a presente operação inclui as seguintes
disposições que visam garantir a conformidade socioambiental e a sustentabilidade das
atividades do projeto:
⢠O COOPERAR conta atualmente com a seguinte estrutura de pessoal: (i) um Analista
Ambiental a cargo da supervisão geral e coordenação dos aspectos de conformidade ambiental e
social das atividades do projeto; e (ii) um Especialista em �gua responsável por prestar
orientação sobre conformidade das atividades que envolvem infraestrutura de água ou uso
significativo desse recurso\.
⢠Dois técnicos adicionais (um da área social e um da ambiental) serão contratados para
auxiliar o pessoal da área socioambiental das Unidades Regionais com orientação, coordenação,
treinamento e supervisão de campo\.
⢠As Unidades Regionais designarão uma equipe técnica como ponto focal regional de
cumprimento das salvaguardas\. Essa equipe receberá treinamento especÃfico e manterá o
COOPERAR informado regularmente sobre o cumprimento das salvaguardas pelos subprojetos\.
72\. Antes de terem seu financiamento aprovado, todos os investimentos e subprojetos
propostos serão examinados do ponto de vista da sustentabilidade socioambiental e do
cumprimento das salvaguardas do Banco e da legislação ambiental (procedimentos de
licenciamento, inclusive)\. Na implementação do subprojeto, a supervisão realizada pela equipe
do projeto incluirá o monitoramento da conformidade ambiental e eventuais impactos, com a
assistência de modelos de monitoramento ambiental\. As informações geradas pelo
monitoramento serão enviadas ao sistema de monitoramento do projeto, incluÃdas as de
progresso de eventuais medidas de mitigação\. Os relatórios periódicos do projeto apresentados
ao Banco incluirão uma seção de salvaguardas na qual os resultados do monitoramento
socioambiental serão informados, incluindo quaisquer impactos negativos identificados durante a
implementação e a correspondente medida de mitigação aplicada, bem como as lições aprendidas
e os impactos ambientais positivos gerados pelo projeto\.
PolÃticas de salvaguarda ambientais acionadas
73\. Avaliação Ambiental (OP/BP 4\.01)\. O Estado da ParaÃba preparou uma AISA que inclui
uma análise focalizada do contexto socioambiental e dos impactos potenciais (positivos e
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adversos) dos tipos de atividades a serem apoiados pelo projeto, incluindo impactos cumulativos,
quando forem relevantes\. A AISA deu lugar ao desenvolvimento de orientações-gerais para
garantir a sustentabilidade socioambiental e o cumprimento das salvaguardas ambientais nas
atividades de produção rural e nos investimentos em infraestrutura, incluindo procedimentos para
seleção de propostas de subprojetos, monitoramento da implementação e prevenção ou mitigação
de eventuais impactos negativos\.
74\. A AISA identifica e apresenta soluções de gestão para todos os possÃveis riscos e
impactos relacionados ao projeto nos ambientes naturais e sociais e na saúde e segurança de
todos os participantes do projeto\. Entre tais soluções de gestão encontram-se orientações e
procedimentos adequados para o uso de pesticidas e outros produtos quÃmicos, intervenções
envolvendo barragens existentes ou a construção de açudes nas propriedades, descobertas
fortuitas de recursos culturais fÃsicos, restauração de matas nativas e manejo sustentável dos
recursos florestais não madeireiros (veja abaixo)\.
75\. Os resultados da AISA produziram um MGSA com orientações e procedimentos de
sustentabilidade de modo a satisfazer a legislação brasileira e as polÃticas de salvaguarda do
Banco, bem como medidas de prevenção e mitigação consideradas satisfatórias pelo Banco
contra todos os possÃveis impactos identificados\. Considerando a infraestrutura planejada que
receberá apoio e o desenho do projeto com inúmeros subprojetos, foi elaborada uma
documentação complementar detalhada para orientar as obras de infraestrutura (Manual
Ambiental e Social de Obras) e o exame e monitoramento adequados das atividades do projeto
(modelos ambientais de exame e monitoramento adaptados a cada tipo de atividade que o projeto
irá apoiar)\. O MGSA também traz medidas para melhorar a capacidade de monitoramento
ambiental do projeto, baseadas nas lições aprendidas na operação anterior (COOPERAR II)\.
76\. Habitats Naturais (OP/BP 4\.04)\. As atividades planejadas para melhorar a resiliência Ã
seca dos sistemas agrÃcolas e das comunidades rurais terão impactos nos recursos hÃdricos, que
poderão ser positivos (p\.ex\., maior disponibilidade resultante da restauração de matas ciliares e
demanda reduzida resultante de uma maior eficiência dos sistemas de irrigação e armazenamento
de água da chuva) ou negativos (p\.ex\., aumento do consumo de água graças aos novos poços ou
dos sistemas de coleta e distribuição de água)\. Além disso, os critérios para apoiar os subprojetos
de produção rural, bem como a assistência técnica rural fornecida no âmbito do projeto, buscam
promover a observância dos aspectos legais relativos à manutenção e restauração da vegetação
nativa (particularmente �reas de Preservação Permanente e Reservas Legais), o que deverá gerar
impactos positivos nos habitats naturais\. O MGSA traz orientações especÃficas sobre boas
práticas de produção rural que contribuem para a conservação dos recursos naturais
(particularmente água, solos e polinizadores); procedimentos para examinar os investimentos
propostos; e orientação detalhada sobre o cumprimento da legislação ambiental e da OP 4\.04\. A
orientação também trata das melhores práticas para a restauração de matas nativas (ver OP 4\.36)
e para o manejo sustentável de produtos florestais não madeireiros\. Ademais, espera-se que os
investimentos em saneamento nas áreas rurais gerem impactos positivos nos habitats naturais, e
nesse sentido o Manual Ambiental e Social de Obras traz orientações para um adequado desenho
de soluções de saneamento e localização desses serviços em relação às massas de água e habitats
sensÃveis\.
77\. Florestas (OP/BP 4\.36)\. Não há previsão neste projeto de atividades que envolvam
produtos de madeira\. Não obstante, dada a ligação entre a agropecuária e as florestas no Brasil,
esta polÃtica foi acionada preventivamente\. Alguns subprojetos de produção rural podem
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envolver o uso de produtos não madeireiros e/ou a restauração de matas nativas (�reas de
Preservação Permanente e Reservas Legais nas propriedades rurais), que serão abordadas na OP
4\.04 e devem seguir as melhores práticas descritas no MGSA do projeto\. Todos os produtores
rurais apoiados pelo projeto terão a obrigação de seguir a legislação ambiental nacional,
particularmente no tocante à porcentagem de matas nativas nas suas propriedades que deve ser
mantida ou restaurada\.
78\. Controle de Pragas (OP 4\.09)\. O projeto apoiará o fortalecimento institucional das OPs e
promoverá a adoção de práticas agrÃcolas que sejam resistentes à seca\. As atividades
contempladas promoverão uma produção agrÃcola ambientalmente sustentável com a adoção de
práticas como a agrosilvicultura e o manejo integrado de pragas, entre outras, que objetivam
reduzir ou eliminar o uso de pesticidas\. O MGSA do projeto dispõe sobre a promoção dessas
práticas sustentáveis e traz orientações sobre as restrições da OP 4\.09 ao uso de pesticidas\. Além
disso, o MGSA inclui orientações sobre o manuseio e armazenamento seguro dos produtos
quÃmicos agrÃcolas aceitáveis e sobre a correta eliminação de restos de produtos e embalagens
vazias\.
79\. Recursos culturais fÃsicos (OP/BP 4\.11)\. Como a localização exata das atividades
planejadas ainda não é conhecida e há no estado da ParaÃba sÃtios do patrimônio cultural, o
MGSA do projeto inclui orientação sobre a adoção de procedimentos adequados em caso de
descobertas fortuitas, com disposições pertinentes para mitigar quaisquer impactos
potencialmente adversos\. Tais disposições incluem a observância das orientações definidas pelo
Instituto do Patrimônio Histórico e ArtÃstico Nacional (IPHAN) em relação a sÃtios históricos
e/ou descobertas arqueológicas\.
80\. Segurança de Barragens (OP/BP 4\.37)\. Não há previsão de construção de barragens no
projeto\. No entanto, o apoio para melhorar a resiliência à seca nos sistemas agrÃcolas pode
envolver a construção de açudes, assim como algumas atividades do projeto relacionadas a
irrigação e abastecimento de água podem depender de barragens existentes\. Por esse motivo, esta
polÃtica foi acionada preventivamente\. Nesse sentido, o MGSA do projeto contém orientação e
disposições adequadas de acordo com esta polÃtica no que se refere ao uso e/ou restauração de
barragens existentes\.
Aspectos sociais
81\. A AISA incluiu uma análise da experiência e da capacidade das agências de
implementação para tratar as principais questões sociais que deverão influenciar os resultados
dos investimentos propostos\. Entre tais questões encontram-se a transparência e um tratamento
equitativo no processo de identificação e seleção de beneficiários e subprojetos, potenciais
impactos adversos nos meios de subsistência e nas relações com povos indÃgenas e comunidades
tradicionais, como os Quilombolas, igualdade de gênero, desapropriação de terras e
reassentamento\. As constatações da AISA foram discutidas e revisadas com base em uma série
de consultas públicas regionais com as partes interessadas\.
82\. A principal conclusão da AISA com relação ao desenvolvimento social é que o projeto
proposto terá impactos positivos significativos\. Além dos resultados positivos gerados pela
redução da vulnerabilidade doméstica reduzida e do melhor acesso aos mercados, o projeto: (i)
criará oportunidades de emprego diretas e indiretas em áreas de grande vulnerabilidade social e
econômica; (ii) desenvolverá valiosas competências técnicas e organizacionais entre as
populações locais (jovens, mulheres e comunidades étnicas incluÃdos) que serão essenciais para
62
sua participação produtiva nas novas oportunidades sociais e econômicas criadas com a
ampliação do acesso aos mercados; e (iii) reduzirá as desigualdades regionais e promoverá a
integração social e econômica dos beneficiários nas áreas do projeto\.
83\. A classificação dos riscos sociais associados ao projeto varia de baixa a moderada\. Os
principais problemas provavelmente advenham do Componente 2 - Redução da vulnerabilidade,
já que muitos dos beneficiários visados nessas ações são muito pobres e têm habilidades técnicas
e/ou organizacionais limitadas\. As desigualdades sociais e econômicas, em relação a papéis e
expectativas de gênero, inclusive, podem vir a complicar as medidas que têm como objetivo
aumentar a produção de alimentos e a segurança nutricional das famÃlias\. A AISA gerou um
MGSA com instrumentos concebidos especificamente para reduzir esses riscos\. Por exemplo, as
medidas de fortalecimento institucional incluÃdas no Componente 1 apoiarão campanhas de
comunicação direcionadas a aumentar o acesso à informação do projeto, capacitação das ACs,
critérios de elegibilidade que privilegiem as famÃlias chefiadas por mulheres e indicadores
desagregados por gênero\.
84\. De acordo com a Fundação Nacional do Ã?ndio (FUNAI, Censo IndÃgena 2005/2006), a
ParaÃba tem uma população indÃgena de cerca de 12\.600 indivÃduos\. No âmbito do COOPERAR
II, projeto anterior financiado pelo Banco Mundial, as comunidades indÃgenas identificaram e
executaram com sucesso quatro subprojetos, principalmente agrÃcolas, no valor de R$ 291 mil,
que beneficiaram diretamente 65 famÃlias\. O COOPERAR II também beneficiou efetivamente
602 famÃlias Quilombolas (descendentes de escravos africanos) com investimentos em
infraestrutura de abastecimento e transporte avaliados em R$ 1\.029\.021,61\. O projeto proposto
continuará prestando apoio a diversos grupos e etnias, expandindo sua esfera de ação de modo a
cobrir regiões, grupos indÃgenas e comunidades étnicas que não foram beneficiadas pelo
COOPERAR II\. Tais ações serão orientadas pelo Marco de Planejamento para os Povos
IndÃgenas (MPPI)\. O MPPI ajudará o Mutuário a assegurar que as comunidades interessadas
apoiem as atividades propostas, bem como quaisquer medidas adicionais que sejam necessárias
para maximizar os benefÃcios culturalmente apropriados por ele gerados e/ou evitar efeitos
potencialmente adversos\.
85\. O COOPERAR II não registrou casos de aquisição de terras\. O projeto proposto
tampouco deverá envolver a aquisição de terras; no entanto, uma vez que a localização exata e as
especificações de desenho dos investimentos propostos somente serão determinadas durante sua
implementação, a AISA preparou um Marco Conceitual para Reassentamento Involuntário
(MCRI) que estabelece as diretrizes, procedimentos e critérios para evitar, minimizar, mitigar
e/ou compensar qualquer impacto não esperado de reassentamento que possa advir de eventuais
especificações do desenho do projeto\.
Gênero
86\. Nas áreas rurais e urbanas da ParaÃba, as mulheres representam uma porcentagem
significativamente maior da população em situação de pobreza e pobreza extrema do que os
homens\. As famÃlias chefiadas por mulheres (FCM) encontram-se em situação particularmente
desfavorável em comparação com as famÃlias chefiadas por homens (FCH)\. Homens e mulheres
que trabalham no setor agrÃcola são mais propensos a ser pobres ou extremamente pobres do que
os trabalhadores de outros setores\. Enquanto nas áreas urbanas as FCM têm maior acesso a
sistemas adequados de saneamento e água encanada do que as FCH, nas áreas rurais, onde o
acesso em geral é pior, a situação se inverte e as FCM passam a ter menor acesso a esses
63
serviços\. Tanto nas áreas rurais como nas urbanas, as mulheres e as meninas não só
desempenham funções na produção como também carregam uma maior parte das
responsabilidades domésticas (cuidar dos filhos, cozinhar, limpar a casa, etc\.), o que significa
que sua situação de pobreza é maior que a dos homens\.
87\. Nas famÃlias tradicionais do Nordeste, a contribuição das mulheres e das meninas para as
atividades produtivas são muitas vezes subvalorizadas\. Elas costumam ter uma menor
participação nas decisões relacionadas a finanças familiares, tais como acesso a crédito, como
investir, como gastar a renda da famÃlia, etc\. O desequilÃbrio na tomada de decisões da famÃlia
com frequência se reproduz na agricultura,34 onde as mulheres registram taxas mais baixas de
acesso a crédito, terra, assistência técnica, insumos e de participação em projetos produtivos do
que os homens â uma oportunidade perdida para aumentar os nÃveis de produtividade e
segurança alimentar entre as famÃlias pobres da ParaÃba\.
88\. Com a assistência do Banco, o projeto COOPERAR realizou uma avaliação de gênero e
formulou sua respectiva estratégia\. A estratégia de gênero tem como principais elementos: (i)
uma estratégia de comunicação diferenciada; (ii) oferecer cursos de treinamento especÃficos para
mulheres, grupos de mulheres e prestadores de serviços; (iii) priorizar as comunidades com
maior número de mulheres em relação ao acesso a água e à redução da vulnerabilidade; e (iv)
prestar assistência técnica especializada a grupos e lideranças de mulheres nas alianças
produtivas\. As ações especÃficas a gênero são detalhadas para cada componente no Anexo 2\. Em
meados do projeto, a aplicação da estratégia será revisada e, se necessário, ajustada\.
Monitoramento e Avaliação
89\. O COOPERAR monitorará e avaliará o progresso do projeto e seus resultados do ponto
de vista técnico, financeiro, social e ambiental\. O sistema de M&A do projeto acompanhará seu
progresso de acordo com os indicadores e metas descritos Matriz de Resultados e
Monitoramento do Anexo 1\. O sistema de M&A será baseado nos sistemas de informação
existentes e nos bancos de dados administrados pelo COOPERAR no contexto do Segundo
Projeto de Redução da Pobreza Rural da ParaÃba (P104752)\. Tendo como referência a situação
de linha de base, o sistema de M&A acompanhará o desempenho do Projeto rastreando seu
progresso em relação aos indicadores de resultados; justificando ajustes necessários durante a
implementação; promovendo a responsabilização pelos recursos usados em relação aos
objetivos; dando e recebendo feedback dos atores envolvidos; e gerando insumos para
disseminação de resultados e lições aprendidas\.
90\. Monitoramento\. O progresso na implementação das atividades relacionadas aos
Subcomponentes 2\.a e 2\.b (abastecimento de água e redução da vulnerabilidade agroclimática)
será supervisionado e monitorado pelos escritórios regionais do COOPERAR\. Após a assinatura
dos acordos de subprojeto com o COOPERAR, cada AC deverá apresentar a esses escritórios
relatórios de progresso técnicos e financeiros anuais, que serão enviados ao escritório central,
para consolidação\. Em relação ao Subcomponente 2\.c (SIRA), a AESA fornecerá relatórios de
implementação periódicos que serão monitorados pelo COOPERAR\.
34
World Bank, Expanding Womenâs Agency through Womenâs Productive Inclusion in Northeast Brazil: Fieldwork
reports, 2015\.
64
91\. Em relação ao Componente 3 - Alianças Produtivas, os escritórios regionais do
COOPERAR e da CINEP fornecerão informações em tempo real sobre o progresso de cada
iniciativa comercial sendo revisada e/ou apoiada pelo Projeto\. Os escritórios regionais estarão a
cargo de supervisionar as atividades das Alianças Produtivas dos Subprojetos conforme
detalhado no Anexo 2 e acompanharão os dados sobre valor e volume das vendas e sobre
práticas ambientais\. O progresso na capacidade gerencial e contábil das organizações
beneficiárias será avaliado anualmente pelos responsáveis por prestar assistência técnica no
âmbito do projeto\. Essa informação será enviada ao escritório central do COOPERAR, para
consolidação\.
92\. Avaliação\. Na implementação do subprojeto, a supervisão realizada pela equipe do
COOPERAR incluirá o monitoramento da conformidade ambiental e eventuais impactos, com a
assistência de modelos de monitoramento ambiental\. As informações geradas pelo
monitoramento serão enviadas ao sistema de monitoramento do projeto, incluÃdas as de
progresso de eventuais medidas de mitigação\. Os relatórios periódicos do projeto apresentados
ao Banco incluirão uma seção de salvaguardas na qual os resultados do monitoramento
socioambiental serão informados, incluindo quaisquer impactos negativos identificados durante a
implementação e a correspondente medida de mitigação aplicada, bem como as lições aprendidas
e os impactos ambientais positivos gerados pelo projeto\.
93\. O Banco e o COOPERAR conduzirão uma Revisão Intermediária aproximadamente dois
anos após o Projeto entrar em vigor\. Nela serão analisados o progresso em relação aos
indicadores de resultados e a probabilidade de alcançar o ODP\. Os resultados dessa revisão
servirão de subsÃdio para os ajustes técnicos ou de desenho de projeto cabÃveis\. O COOPERAR
realizará uma avaliação final conforme os termos de referência acordados com o Banco\. A
estratégia dessa avaliação leva em consideração diferenças relacionadas ao estado do
conhecimento e à capacidade de geração de dados em três linhas de ação\. No caso do acesso a
água, a avaliação dos resultados se centrará nos resultados e nas mudanças comportamentais (uso
e adoção), uma vez que há provas contundentes que evidenciam os impactos positivos desse tipo
de intervenções\. Já no caso da redução da vulnerabilidade agroclimática, dada a dificuldade em
se estabelecer indicadores de resultados que não dependam da ocorrência de eventos climáticos,
os resultados serão medidos em termos de adoção de tecnologias e práticas e a avaliação seguirá
uma abordagem focada na aprendizagem a partir da experiência\. Com isso, o Projeto coletará
informações para gerar os insumos e resultados pertinentes, antes e depois dos investimentos, a
fim de medir sua eficácia e eficiência enquanto são controlados outros fatores passÃveis de
mudança ao longo do tempo\. Em ambos os casos, a análise levará em consideração variáveis
socioeconômicas, entre elas gênero e etnia\.
94\. Avaliação do impacto\. Uma avaliação de impacto rigorosa do Componente 3 - Alianças
Produtivas será realizada empregando métodos quase-experimentais (métodos de pareamento
com diferenças-em-diferenças)\. Em cada edital, para apresentação de propostas, os consultores
coletarão dados de linha de base e farão uma pesquisa de acompanhamento de uma amostra
representativa de candidatos\. Os levantamentos de linha de base coletarão um amplo conjunto de
informações, incluindo produção, resultados e variáveis de controle\. As pesquisas de
acompanhamento coletarão o mesmo conjunto de informações quando as alianças terminarem
(cerca de três anos depois do ano em que foi feita a manifestação de interesse em participar do
projeto)\. O cronograma relativo a essas pesquisas será definido de acordo com os avanços na
implementação do Projeto\.
65
95\. As principais variáveis a serem avaliadas serão a renda lÃquida das famÃlias de
agricultores, o volume total de vendas e o nÃvel de emprego por aliança produtiva\. A avaliação
ajudará a identificar a influência de fatores externos (por exemplo, os preços no mercado
internacional) que não podem ser atribuÃdos ao Projeto em si\. Embora uma estratificação ex-ante
por sexo ou etnia não seja plausÃvel, a análise fará essa desagregação dos dados sempre que for
possÃvel\.
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Anexo 4: Plano de Apoio à Implementação do Projeto
PAÃ?S: BRASIL
Projeto de Desenvolvimento Rural Sustentável da ParaÃba (P147158)
Plano de Apoio à Implementação do Projeto
1\. Devido à complexidade técnica do Projeto em relação à capacidade existente e à ênfase em
qualidade técnica e adequado monitoramento e avaliação, o Projeto demandará um intenso apoio
ao longo a implementação\.
2\. O apoio técnico se centrará na qualidade\. No acesso à água, terão ênfase os aspectos
institucionais e de engenharia, incluindo vÃnculos com o estado\. Na redução da vulnerabilidade
agroclimática, a equipe do projeto se concentrará na adequação e eficácia das soluções
tecnológicas, tal como foram concebidas e implementadas\. O projeto do Sistema de Informação
de Risco Agroclimático exigirá assessoramento constante ao longo do primeiro ano\. A
implementação das alianças produtivas exigirá um apoio intenso durante os dois primeiros anos\.
3\. O monitoramento e a avaliação exigirão suporte especÃfico a fim de garantir a qualidade das
linhas de base e do desenho e execução da avaliação de impacto\.
4\. A gestão de salvaguardas exigirá atenção especÃfica no primeiro ano ou nos primeiros dois
anos, particularmente em relação ao meio ambiente, recebendo após isso apoio contÃnuo do
escritório no paÃs\.
5\. A gestão dos aspectos fiduciários exigirá um intenso suporte no primeiro ano, seguido de
revisões ex-post anuais e do apoio contÃnuo do escritório no paÃs\.
6\. O escritório do BM em BrasÃlia será a principal fonte de suporte para o projeto, uma vez que
conta com funcionários qualificados em salvaguardas e aspectos fiduciários disponÃveis para
acompanhar a implementação do Projeto\. Anualmente serão conduzidas duas missões de apoio
especÃficas para auxiliar no planejamento anual, na análise do progresso do projeto e na
qualidade da implementação\.
Tabela 7: Foco, competências, recursos e origem do apoio à implementação
Quando Foco Competências necessárias Estimativa de recursos
Ano 1 - Planejamento da - Gerenciamento do Projeto - 2 missões de apoio com
implementação - �gua, redução da a equipe do projeto
- Qualidade técnica vulnerabilidade e alianças completa
- Desenho da linha de produtivas - Assistência intensa do
base e coleta de dados - Gestão Financeira escritório no paÃs
- Processos fiduciários - Monitoramento e Avaliação
- Salvaguardas - Gestão de salvaguardas
Anos - Implementação do - Gerenciamento do Projeto - 2 missões de apoio, uma
2a5 Projeto - �gua, redução da das quais com a equipe do
- Qualidade técnica vulnerabilidade e alianças projeto completa
- Salvaguardas produtivas - Apoio do escritório no
- Monitoramento e - Gestão Financeira paÃs em relação a
Avaliação - Monitoramento e Avaliação salvaguardas e processos
- Gestão de salvaguardas fiduciários
Ano - Monitoramento e - Gerenciamento do Projeto - 2 missões de apoio, uma
67
6 Avaliação - Qualidade técnica das quais com a equipe do
- Elaboração de - Monitoramento e Avaliação projeto completa
relatórios
Tabela 8: Combinação das competências necessárias
Competências Número de funcionários- Número de viagens
necessárias semana
Gerenciamento do - 8 funcionários-semana por ano - 2 por ano
Projeto
Especialista em - 8 funcionários-semana por ano - Dois por ano e apoio contÃnuo
Operações do escritório no paÃs
Especialistas em - 2 x 3 semanas por ano - Um por ano e apoio contÃnuo
Processos Fiduciários do escritório no paÃs
(GF e Aquisições)
Especialista em - 2 x 3 semanas por ano - Um por ano e apoio contÃnuo
Salvaguardas do escritório no paÃs
(ambientais e sociais)
Especialistas - 5 x 3 semanas por ano - 1 a 2 por ano, dependendo das
Técnicos, incluindo - M&A 2 x 4 semanas para necessidades especÃficas
em M&A Revisão Intermediária e avaliação
final
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Anexo 5: Contabilização dos Gases Do Efeito Estufa
PAÃ?S: BRASIL
Projeto de Desenvolvimento Rural Sustentável da ParaÃba (P147158)
Antecedentes e Metodologia
1\. Na sua Estratégia Ambiental lançada em 2012, o Banco Mundial assumiu o mandato
corporativo de contabilizar as emissões de gases do efeito estufa (GEE) nas operações de
empréstimo para investimentos\. Quantificar as emissões de GEE é um passo importante na
gestão e, em última análise, redução das emissões de GEE e está se tornando uma prática comum
em muitas instituições financeiras internacionais\.
2\. Para estimar o impacto dos empréstimos para investimento agrÃcola nas emissões de GEE
e no sequestro de carbono, o Banco Mundial adotou a Ferramenta EX-ACT35 de balanço de
carbono, desenvolvida pela Organização das Nações Unidas para Agricultura e Alimentação
(FAO), em 2010\. A ferramenta EX-ACT consiste em um sistema de avaliação terrestre que
permite avaliar o balanço de carbono lÃquido de um projeto, definido como o saldo lÃquido de
CO2 equivalente dos GEE emitidos ou sequestrados como resultado da implementação do
projeto, em comparação com um cenário sem intervenção\. A ferramenta estima as mudanças no
estoque de carbono (ou seja, emissões ou sumidouros de CO2), bem como as emissões de GEE
por unidade de solo, expressas em toneladas equivalentes de CO2 por hectare por ano\.
Aplicação da ferramenta EX-ACT
3\. �rea do Projeto\. Na contabilização dos GEE são considerados três tipos de projetos\. No
primeiro tipo, os projetos de resiliência/vulnerabilidade (480 projetos em 11\.544 ha) usarão dois
tipos de tecnologias para aumentar a resiliência climática: manejo da água/sistemas de irrigação
(pequenas barragens e cisternas) e manejo de pastagens\. As tecnologias foram selecionadas a
partir de uma consultoria desenvolvida pela unidade do projeto no inÃcio de 2015\. O segundo
tipo (251 projetos) consiste em alianças produtivas que visam melhorar o manejo de caprinos e a
produção de vegetais, mel, polpa de frutas e pescado\. O Projeto também apoiará obras pontuais
de melhoria das estradas rurais\.
4\. Fonte de dados\. No que se refere à Análise Econômica e Financeira, os estudos de
viabilidade realizados pela unidade de implementação do projeto foram utilizados como
principal fonte de dados\. Os estudos fornecem, entre outros, uma avaliação detalhada das
atividades agropecuárias e empregam modelos de propriedades rurais padrão para projetar
mudanças na atividade agrÃcola como consequência da modernização da irrigação e da
diversificação da produção agrÃcola\.
5\. Pressupostos básicos\. A ParaÃba apresenta um clima tropical de seco a úmido\. O estado
tem vários tipos de solo, mas o tipo dominante é o solo LAC, especificamente o Litossolo\. A fase
de implementação do projeto terá duração de 5 anos e a fase de capitalização 20 anos, já que a
maioria das tecnologias implementadas terá uma vida útil máxima de 20 anos\. Isso equivale a um
perÃodo de implementação de 25 anos, que se situa na faixa padrão da ferramenta EX-ACT36\. Na
35
http://www\.fao\.org/tc/exact/ex-act-home/en/
36
O prazo de 25 anos deste projeto especÃfico foi escolhido após consulta ao serviço de assistência de GEE do
Banco Mundial\. O perÃodo conjunto de implementação e capitalização não deve ser inferior a 20 anos em situações
em que ocorrem mudanças relevantes no uso da terra\. A literatura cientÃfica o considera o perÃodo mÃnimo para que
69
análise, espera-se que o cenário âBusiness as usualâ?, ou seja, sem intervenções, não difira do
âcenário de linha de baseâ?\. Esse cenário padrão é considerado razoável uma vez que mudanças
na atividade agropecuária dependem das tecnologias disponÃveis que o projeto irá trazer\. Na
avaliação de GEE também se parte do pressuposto de que a dinâmica de mudança será linear ao
longo do projeto\.
6\. Sistemas de irrigação\. Na situação atual, a área do projeto está equipada com sistemas
mÃnimos de irrigação superficial: apenas 390 ha dedicados à horticultura em potenciais projetos
de Alianças Produtivas\. Para reduzir a vulnerabilidade agroclimática, o projeto deverá introduzir
pequenas barragens e tanques de água/cisternas em 2\.480 ha37 (estimativa baseada em 1240 ha
de sorgo e 1240 ha de milho) e pequenos sistemas de aspersão em 105 ha em Alianças
Produtivas, sendo que ambos exigirão bombeamento e, portanto, consumirão energia elétrica\. A
introdução de sistemas de irrigação mais modernos significará um uso mais eficiente da água e
maior produção agrÃcola\. Com base no exame das informações dos subprojetos e em outros
estudos relacionados da área, assumimos que o projeto não acarretará uma expansão da área
agrÃcola, mas sim à intensificação e mudanças na produção agrÃcola\. Esse aumento deverá vir
principalmente das mudanças no uso do solo e da adoção de tecnologias, conforme descrito a
seguir\.
7\. Lavoura e mudança no uso do solo\. Atualmente, a maior parte das propriedades rurais
que compõem o grupo-alvo cultivam o solo com lavouras anuais\. Com base na informação dos
modelos de subprojetos, a introdução de infraestrutura de irrigação e de assistência técnica
deverá gerar um aumento nas taxas de conversão de culturas anuais para culturas perenes\. Por
exemplo, as terras que são utilizadas atualmente com culturas anuais (especialmente milho e
feijão) deverão ser dedicadas à produção de fruta da palma (perene), com 1876 ha, e outras
culturas anuais, como batata doce, cebola, tomate, entre outras, totalizando 105,3 ha\. Além disso,
deverá haver mudança de uso do solo para cultivo de plantas perenes nas terras moderadamente
degradadas (500 ha)\. Ambos os tipos de mudanças no uso do solo são explicados no módulo
âMudança no uso do soloâ? da EX-ACT\. A área de 500 ha utilizada para o cultivo de culturas
perenes na situação de linha de base deverá permanecer com esse tipo de culturas, mas
empregando práticas melhoradas\. Em geral, assumimos que as atividades do Componente 2
conduzirão a melhores práticas agronômicas e de manejo da água, como figura no módulo
âTerras para cultivoâ? da ferramenta EX-ACT\.
8\. Pecuária\. A introdução de sistemas de água e de sistemas pastoris incentivará os
agricultores a aumentar o número de caprinos por propriedade\. A partir das informações dos
subprojetos de agricultura familiar de pequena e média escala nas áreas do projeto, esperamos
um aumento no número médio de cabeças de 20%, de 1000 a 1200, durante o ciclo do projeto\.
Embora os caprinos sejam a espécie de ruminantes que têm uma das menores emissões de
metano por cabeça por ano (5 Kg de CH4, enquanto os búfalos produzem 55 kg de CH4 por ano),
eles são um fator de degradação do solo no projeto\.
9\. Insumos e investimentos\. Com a exceção dos possÃveis subprojetos contemplados nos
projetos de irrigação das Alianças Produtivas (105,3 ha), a maioria das culturas na área do
ocorram os impactos mais importantes nos estoques de carbono (EX-ACT\. Manual do Usuário\. Estimating and
Targeting Greenhouse Gas Mitigation in Agriculture; FAO, 2014)\. De igual forma, a Nota de Orientação sobre
Contabilização de GEE nº 3 do Banco Mundial que trata de Projetos de Investimento no Setor AgrÃcola considera
um horizonte temporal de 30 anos, semelhante ao da Análise Econômica e Financeira\.
37
Estima-se para sorgo uma área de 1240 ha e para milho 1240 ha\.
70
projeto não utiliza adubação quÃmica\. No entanto, espera-se que a maioria dos subprojetos de
redução de vulnerabilidade faça uso de compostagem/estrume\. A energia elétrica utilizada nos
diferentes subprojetos e o consumo de óleo são descritos na tabela abaixo\. As melhorias em
estradas vicinais não serão contabilizadas no Ex-Act, pois a ferramenta só se aplica a estradas
pavimentadas com concreto e asfalto\.
Tipo de tecnologia Consumo de energia por ano Consumo de óleo por ano m3
em MWh (sem vs com)
Tanques de água e cisternas 0 0,48825
Serviço de refrigeração de 4,4*67 8,3*67 1,2*67
leite de cabra
Produção de mel 0 3*39 6,4*39
Agricultura irrigada 0 3,6*39
Produção de polpa de frutas 12*67 28*67 1,2*67
Total 1098 por ano 2583,5 por 410,4 por ano
ano
Resultados
10\. Balanço lÃquido de carbono\. O balanço lÃquido de carbono indica toneladas de CO2
equivalente (tCO2-eq) de GEE emitidos ou sequestrados como resultado da implementação do
projeto em comparação com um cenário sem intervenção alguma\. Ao longo do seu ciclo de 25
anos, o projeto será um sumidouro de carbono que sequestrará 25\.075 tCO2-eq (ver tabela
abaixo, última coluna, para balanço por ano)\.
11\. Fontes e sumidouros de carbono\. A maior parte do carbono sequestrado se deve a
melhorias nas culturas anuais e à expansão dos sistemas perenes, atrás do uso não-florestal do
solo\. A pecuária e os insumos (óleo e eletricidade) são as principais fontes de carbono do projeto\.
12\. Ressalvas\. O projeto financiará subprojetos induzidos pela demanda, sendo, portanto,
desconhecidos ex-ante\. Assim, na análise de carbono a equipe considerou apenas os sumidouros
71
de carbono dos subprojetos de resiliência/vulnerabilidade\. A ferramenta será atualizada uma vez
que o projeto disponha de dados sobre área (ha ou km) destinadas a (i) subprojetos de alianças
produtivas e (ii) melhoria de estradas vicinais\. Além disso, vale dizer que, como os insumos para
esses tipos de subprojetos já foram levados em conta, o sumidouro de carbono total do projeto
poderá aumentar expressivamente\.
72
Anexo 6: Variabilidade climática e projeções de mudanças futuras no Nordeste do Brasil
PAÃ?S: BRASIL
Projeto de Desenvolvimento Rural Sustentável da ParaÃba (P147158)
Piora do estresse hÃdrico causado pela seca e os meios de subsistência rurais
1\. Uma grande parte do Nordeste está situada dentro do chamado âpolÃgono da seca ou
Semiáridoâ?38, uma área caracterizada pelo clima semiárido e por enfrentar secas recorrentes\. As
áreas semiáridas do Nordeste brasileiro estão sujeitas a estresse hÃdrico e são altamente sensÃveis
à variabilidade interanual do clima\. A maioria das áreas pobres da região são identificadas como
hotspots sócio-climáticos em função das restrições naturais de água, do Ãndice de
desenvolvimento humano
relativamente baixo e da alta
densidade populacional, onde a
água já é causa de conflitos\.
Considerando o cenário de um
mundo 4 °C mais quente, espera-
se que as regiões secas do
Nordeste enfrentem aumentos de
calor extremo incomuns, que
causarão eventos de seca mais
intensos e prolongados e uma
maior aridez (Figura 1)\. As
regiões semiáridas registraram
um progresso significativo ao
longo das últimas décadas,
promovendo a saÃda de um
número considerável de
comunidades da situação de
pobreza extrema; no entanto, a
possibilidade de secas mais
frequentes e precipitações
extremas ameaça arrastar muitas
dessas populações de volta para a pobreza extrema\.
Figura 1: Precipitação média anual, evapotranspiração
média anual e Ãndice de seca (precipitação dividida pela
evapotranspiração) nos perÃodos 1971-2000 e 2041-2070
(projeção) com base no modelo climático MIMR sob o
cenário de emissões B1\. A evolução para cores mais
avermelhadas corresponde ao aumento da seca em função da
redução das chuvas e/ou aumento da evapotranspiração
(Banco Mundial, 2014)
38
A área geográfica do semiárido brasileiro cobre mais de oito estados do Nordeste (Alagoas, Bahia, Ceará, ParaÃba,
Pernambuco, PiauÃ, Rio Grande do Norte e Sergipe), além do Norte de Minas Gerais, com uma área total de
980\.113,079 km² (IBGE, 2010)\.
73
O estado da ParaÃba e as mudanças climáticas
Tendências históricas
Localizado na região Nordeste, o Estado
da ParaÃba ocupa uma área de 56\.469,47
km² e se divide em 223 municÃpios\. O
clima da ParaÃba varia\. à tropical úmido
no litoral, com abundantes chuvas
(aproximadamente 1\.300 mm/ano),
enquanto no interior é semiárido e está
sujeito a secas prolongadas e baixa
precipitação média (entre 600 e 1\.200
mm/ano) (Figura 2)\. No mesmo perÃodo
também foi registrado um aumento
considerável na frequência de noites
quentes da região\.
Figura 2: Média histórica da precipitação total de 1961-1990 no
estado da ParaÃba\. (Fonte: University of Sussex-conjunto de
dados CRU, e Climate Analysis tool, Climate Change
Knowledge Portal)\.
De acordo com a análise histórica dos dados
climáticos globais, houve uma média de 55
âdias secos consecutivosâ? (número máximo de
dias consecutivos com precipitação diária
inferior a 1 mm) no estado entre 1961 e 1990
(Figura 3)\.
Figura 3: Média histórica de dias secos consecutivos entre
1961- e 1990 no estado da ParaÃba
(Fonte: University of Sussex- conjunto de dados CRU, e
Climate Analysis tool, Climate Change
Knowledge Portal, http://climatewizard\.ciat\.cgiar\.org/outputs/ParaÃba/)\.
Futuras Tendências Climáticas
2\. Além de um aumento da temperatura média anual de até 2-3 °C, vários modelos
climáticos de projeção em pequena escala conduzidos pelo IPCC estimam um aumento médio da
duração das secas de 20-30 dias39 em meados do século (Figura 4) devido às mudanças
climáticas nos cenários de alta emissão40\.
39
Dias Secos Consecutivos: Duração máxima de uma seca\. Número máximo de dias consecutivos com precipitação diária <1 mm
40
Fonte do dado: Os resultados do Modelo Climático Global baseados no conjunto de dados multi-modelo (Meehl et al\., 2007) do World Climate
Research Programme (WCRP), terceira fase do Projeto Coupled Model Intercomparison (CMIP3), foram ajustados a uma menor escala, conforme
descrito por Maurer et al\. (2009), usando o método de correção de tendência/redução espacial (Wood et al\., 2004) para uma grade de 0,5 graus, com
74
Figura 4: Média histórica de dias secos consecutivos entre 1961- e 1990 no estado da ParaÃba\. (Fonte: University of Sussex, conjunto de dados
CRU, e Climate Analysis tool, Climate Change Knowledge Portal, http://climatewizard\.ciat\.cgiar\.org/outputs/ParaÃba/)\.
Impacto potencial de um clima em mudança
3\. O aumento dos eventos de seca no estado da ParaÃba pode levar a perdas generalizadas na
produção agrÃcola e pecuária, ameaçando os meios de subsistência dos pequenos agricultores\.
Uma queda na produtividade agrÃcola pode limitar o acesso a alimentos, e se essa queda não for
mitigada possivelmente produzirá impactos a longo prazo no estado nutricional das famÃlias\. O
aumento da área sob irrigação, se não estiver bem integrado com o planejamento e manejo dos
recursos hÃdricos a longo prazo, poderá exacerbar os desafios impostos pela disponibilidade
hÃdrica devido à competição por esse recurso para consumo urbano e humano\. Uma menor
disponibilidade de água potável nas comunidades rurais pode acarretar uma maior dependência
pelos carros pipa, elevando os custos para o setor público e privado e aumentando a incidência
de morbidades\. Além disso, a necessidade de buscar água potável e os problemas de saúde
associados à água de baixa qualidade para consumo humano podem ter um impacto na força de
trabalho e na renda nas áreas rurais, gerando problemas sociais adicionais em razão da migração
para as cidades durante os eventos de seca\. Um maior estresse hÃdrico pode levar à sobre-
exploração de aquÃferos já esgotados\. Isso, por sua vez, levaria à liberação de minerais nas águas
subterrâneas, afetando a qualidade dessas águas, e, nos aquÃferos costeiros, à intrusão de água do
mar\. Em geral, os sistemas hidrelétricos e energéticos sofrerão com o estresse hÃdrico nessas
regiões secas\. Os danos diretos causados pelas secas e também seus impactos secundários no
setor agrÃcola e nos mercados de trabalho relacionados à agropecuária podem acarretar taxas
negativas de crescimento do PIB no setor agrÃcola durante esses eventos\.
base nas observações de 1950-1999 de Adam e Lettenmaier (2003)\. Dados disponÃveis na Ferramenta de Análise do Clima
(http://climatewizard\.ciat\.cgiar\.org/outputs/ParaÃba/)\. Ver também Banco Mundial, 2014\. Turn Down the Heat: Confronting the New Climate Normal\.
75
76 | APPROVAL |
P000252 | Document de
FilE COpy
La Banque Mondiale
A N'UTILISER QU'A DES FINS OFFICIELLES
Rapport No\.1068b-UV
\.
RAPPORT D'EVALUATION DU DEUXIEME PROJET
DE FONDS DE DEVELOPPEMENT RURAL
HAUTE-VOLTA
24 rna! 1976
D~partement des projets agrico1es
Bureau regional Afrique de l'Ouest
TRADUCTION NON-OFFICIELLE A TITRE D'INFORMATION
Le present document faU I'objet d'une diffusion restreinte, et De peut etre utilise par ses
destinataires que dans I'exercice de leurs fonctions officielles\. Sa teneur ne peut etre
autrement divulguee sans I'autorisation de la Banque Mondiale\.
TAUX DE CHANGE
1 dollar EU = CFAF 225
100 CFAF = 0\.44 dollar EU
POIDS ET MESURES
1 tonne metrique 0\.98 tonne longue ( 2,205)
1 kilometre (km) 0\.62 mille
1 hectare (ha) 2\.47 acres
SIGLES
AVV Autorite pour le Developpement des Vallees des Voltas
BADEA Banque Arabe pour le Developpement Economique en Afrique
BND Banque Nationale de Developpement
CCDR Comite de Coordination pour Ie Developpement Rural
CESAO Centre d'Etudes Economiques et Sociales d'Afrique Occidentale
CFDT Compagnie Frangaise pour Ie Developpement des
Fibres Textiles
FAC Fonds d'Aide et de Cooperation (AID Frangaise)
FDR Unite d' Amenagement du Fon~ de Developpement Rural
FED Fonds Europeen de Developpement
HAER Direction Hydraulique et Amenagement de l'Espace Rural
HRAT Division de Genie Rural
IRAT Institut de Recherches Agronomiques Tropicales
et des Cultures Vivrieres
OFNACER Office Nationale des Cereales
ORD Organisation du Developpement Regional
ORSTOM Office pour la Recherche Scientifique et
Technique Outre Mer
FWD Departement des Travaux Publics
RDFI Premier Projet de Fonds de Developpement Rural ( Credit 3l7-UV)
RDF II Deuxieme Projet de Fonds de Developpement Rural
SERS Service d'Entretien des Routes Secondaires
EXERCICE FINANCIER
ler janvier - 31 decembre
ANNEE DU PROJET
ler juillet - 30 juin
FOR OFFICIAL USE ONLY
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Table desmatieres
RESu~ ET CONCLUSIONS i-vi
I\. DrrRODUCTION I
II\. DONNEES GENERALES \. \. \. \. \. 2
\. \. \. \. \. \. \.
\.
Une economie rurale 2
Agriculture 3
Strategie de developpe~nt rural \. 4
III\. FONDS DE DEVELOPPEMENT RURAL I \. \. \. \. \. \. \. \. \. \. \. \. \. 6
IV\. LA ZONE DU PROJET \. \. \. \. \. \. \. \. \. \. \. 10
Choix de 1a zone du projet \. \. \. \. \. \. \. 10
Description de 1a zone du projet \. \. \. \. \. \. \. 10
V\. LE PROJET \. \. 12
Donnees generales \. \. \. \. \. \. \. \. \. \. \. \. \. li
Description sommaire \. \. \. \. \. \. \. \. \. \. \. \. \.
Caracteristiques detai11ees \. \. \. \. \. \. \. \. \. \. \. \. \.
13
14
VI\. COUTS ESTIMATIFS ET DISPOSITIONS FINANCIERES\. \. \. \. \. \. \. \. 22
Couts du projet 22
Moda1ites de financement 22
Passation des marches 23
Deboursements
Comptabi1ite et verification des comptes
"\.
\. 24
25
Le projet a ete prepare par une equipe de 1a mission regionale composee de
~I\. R\. van der Lugt et J\. L\. Ginnsz (IDA), V\. Fudzie (BAD), B\. Victor-Pujehet
et H\. Wissink (Consultants)\.
This document has a I'eSlrlct\.cd distribution and may be used by recipients only in the performance
of their offtcial duties: Its contents may not otherwise be disclosed without World Bank authorization\.
- 2
\. Page
VII\. ORGANISATION ET GESTION \. \. \. \. 27
VIII\. AVANTAGES POUR LES AGRICULTEURS
ET INCIDENCES FINANCIERES POUR L'ETAT \. \. \. \. \. 32
Avantages que les agriculteurs retireraient
des sous-projets de production \. \. \. \. \. 32
Incidences financieres pour l'Etat \. \. \. 34
IX\. AVANTAGES ET JUSTIFICATION 35
X\. POINTS AYANT FAIT L'OBJET D'ACCORDS \. 37
ANNEXE 1 Les Statistiques Agricoles
Tableau 1 Utilisation des Sols en Haute-Volta
Tableau 2 Dons et Importations de Gereales
Tableau 3 Production Agricole
Tableau 4 Indices de la Production Agricole, 1967-68/1973-74
ANNEXE 2 Le Premier Projet de Fonds de Developpement
Tableau 1 Travaux Executes dans le eadre du Premier Projet de Fonds de
Developpement Rural par ORD
Tableau 2 Cash Flow du Premier Projet de Fonds de Developpement Rural
Tableau 3 Recettes et Depenses du Fonds de D~veloppement Rural
Tableau 4 Deboursements au Titre du Credit 3l7-UV
ANNEXE 3 Statistiques du Zone du Projet
Tableau 1 Precipitations dans Diverses Villes de Haute~Volta
Tableau 2 Population Rurale, Superficie et Densite de la Population
Tableau 3 Population et Densite de la Population dans les Cinq ORD
du Plateau Mossi
Tableau 4 Superficies Cultivees par Culture
Tableau 5 Taille des Exploitations sur Ie Plateau Mossi
Tableau 6 Production Agricole 1972-73
ANNEXE 4 Amenagement des Terres et de l'Infrastructure
Tableau 1 Amenagement des Bas-Fonds: Cout Unitaire des Investissements
Tableau 2 Bas-Fonds Ameliores: Cout d'Investissement par Ha
Tableau 3 Petite Irrigation: Cout d'Investissement par Ha
Tableau 4 Travaux de Lutte Contre l'Erosion: Cout Unitaire
d'Investissement
Tableau 5 Cout de la Construction des Puits
Tableau 6 Cout et Liste du Materiel Necessaire a la Construction des
Puits
- 3
Tableau 7 Construction des Puits: Depenses d'Exploitation
Tableau 8 Construction des Puits: Personnel
Tableau 9 Cout de Construction des Forages
Tableau 10 Couts de Const~ction des Forages: Frais de Personnel
Tableau 11 Construction des Forages: Couts des Fournitures et Depenses
d'Exploitation
Tableau 12 Brigade d'Entretien des Forages
Tableau 13 Cout Estimatif des Entrepots Villageois
Tableau 14 Couts Estimatifs des Centres Villageois
Tableau 15 Programme d'Amenagement des Terres et de l'Infrastructure
ANNEXE 5 Credit Agricole
Tableau 1 BND Bilans Recapitulatifs
Tableau 2 BND Operations de Pret de 1961 a 1974
Tableau 3 BND Portefeuille de Prets - 1971/72 - 1973/74
Tableau 4 BND Recapitulation des Comptes de Pertes et Profits
Tableau 5 Credit Agricole Accorde de 1966 a 1974
Tableau 6 Remboursements des Prets a Court et a Moyen Termes par les ORD
ANNEXE 6 Etudes sur le Developpement Economique des Regions Liberees
de l'Onchocercose
Tableau 1 Resume des Couts de l'Etude sur l'Onchocercose
Tableau 2 Cout de l'Etude sur 1 'Utilisation des Sols
Tableau 3 Etudes du Climat et des Ressources en Eaux de Surface et
Souterraines
Tableau 4 Etude de la Vocation des Sols
Tableau 5 Etudes Sociales et Economiques
Tableau 6 Preparation d'un Plan de Developpement
Tableau 7 Preparation de Projets d'Investissement
Graphique 15624 - Calendrier de l'Operation d'Assistance Technique
ANNEXE 7 Couts du Projet
Tableau 1 Recapitulation des Couts du Projet
Tableau 2 Couts du Projet
Tableau 3 Personnel des Services d'Appui
Tableau 4 Equipement des Services d'Appui
\. Tableau 5 Couts de Fonctionnement des Services d'Appui
Tableau 6 Services d'Appui Lies aux Puits et Forages
Tableau 7 Recapitulation des Couts de la Brigade d'Entretien des Forages
Tableau 8 Formation du Personnel d'Appui
Tableau 9 Assistance Technique
Tableau 10 Recapitulation du Cout des Etudes sur le Developpement
Economique des Zones Liberees de l'Onchocercose
Tableau 11 Provisions pour Imprevus
Tableau 12 Solde du Credit 3l7-UV
ANNEXE 8 Plan de Financement
Tableau 1 Recapitulation du Plan de Financement
Tableau 2 Financement Detaille des Couts du Projet
Tableau 3 Estimation des D b oursements
- 4
ANNEXE 9 Organisation et Gestion
Tableau 1 CalcuI des Besoins en Agents de Vulgarisation
Tableau 2 Partage des Responsabilites dans Ie Cycle des Sous-Projets
Tableau 3 Partage des Responsabilites en ce qui Concerne Ie Credit
Agricole
ANNEXE 10 Formation
ANNEXE 11 Budgets d'Exploitation
Tableau 1 Exemple de Budgets d'Exploitation Agricole (4 ha) - Cultures
en Sec avec Ouvrages de Lutte Contre l'Erosion
Tableau 2 Exemple de Budget d'Exploitation Agricole - Culture Paddy
dans les Bas-Fonds et les Bas-Fonds Amenages
Tableau 3 Exemple de Budget d'Exploitation Agricole (0,2 ha) - Culture
de Paddy dans Ie Cadre de Petits Amenagements Hydro-Agricoles
Tableau 4 Exemple de Budget d'Exploitation Agricole (6 ha) Utilisant un
Materiel a ~raction Animale
ANNEXE 12 Avantages Economiques
Tableau 1 Production Differentielle Attribuable au Projet
Tableau 2 Prix Economique des Cereales
Tableau 3 Prix Economique du Riz Paddy
Tableau 4 Prix Economique des Arachides
Tableau 5 Prix Economique du Coton Graine
Tableau 6 Calcul du Taux de Rentabilite Economique
Tableau 7 Etude de Sensibilite
Graphique l6054(R) - Ministere de Developpement Rural
Graphique l5429(R) - Organigramme des ORD
Graphique l5432(R) - Organigramme du Direction Hydraulique et Amenagement de
l'Espace Rural
Carte BIRD 12064 - Deuxieme Projet de Fonds de Developpement Rural
HAUTE-VOLTA
'DEUXIEME PROJETDE FONDS DE DEVELOPPEMENT RURAL
REStJME \.ET CONCLUSIONS
i\. Le Gouvernement voltaIquc a demande a l'IDA de poursuivre son con
\.
cours financier au Fonds de developpement rural\. Le present rapport evalue
Ie Deuxieme projet de Fonds de developpement rural pour lequel l'IDA accorde
rait un credit de 9,4 millions de dollars faisant suite au Credit 317-UV, qui
a finance avec succes de petits sous-projets de developpement agricole et ru
ral\. Le projet a ete prepare par la mission residente en Afrique de l'Ouest
en avril 1975 et evalue par une mission de l'IDA en octobre 1975\.
ii\. La Haute-Volta, dont l'economie est traditionnelle et en grande ma
jorite rurale, est l'un des pays les moins avances du monde\. Des precipita
tions irregulieres et une saison seche prolongee, des sols pauvres et super
ficiels, des systemes d'exploitation 'qui n'ont generalement pas depasse Ie
stade de la divagation de cultures et qui n'utilisent guerc les facteurs de
production monetaires sont autant d'elements qui\. rendent l'agriculture pre
caire\. En consequence, la productivite est tres faible et si l'agriculture
et l'elevage font vivre 96 % de la population, ils representent moins de 45 %
du PIB\. Quelque 2,2 millions d'hectares sont actuellement cultives et les
cereales (les cultures vivrieres principales sont celles du mil, du sorgho et
du mais) contribuent pour 80 % a la production agricole\. L'agriculture varie
fortement d'une region a l'autre\. Au centre et au nord, regions tres peuplees
ou les sols sont pauvres et les precipitations irregulieres, et notamment sur
Ie plateau Mossi, on pratique l'agriculture de subsistance\. En revanche, dans
l'ouest et Ie sud-ouest, la production est marchande et plus diversifiee, car
Ie climat et les sols sont plus favorables at la population est moins dense\.
iii\. Le Premier projet de Fonds de developpement-rural (FOR I) a ete eva
lue en aout 1971, signe en juin 1972, et est entre en vigueur en octobre 1972\.
Le projet a demarre lentement en 1973, du fait que Ie recrutement du personnel
a ete retarde, que Ie gouvernement a pris du temps pour organiser Ie prefinan
cement des depenses du projet et que les achats de materiel ont progresse
lentement\. Toutefois, Ie projet a pris de la vitesse en 1974'et a continue
sur sa lances en 1975\. Les fonds du projet ont ete reduits par la devaluation
du dollar, qui a ramene la contribution de l'IDA a environ 86 % de l'estima
tion initiale, et par l'inflation, qui a ete beaucoup plus forte que prevu a
l'epoque de l'evaluation\.
- ii
iv\. Le Deuxieme projet de Fonds de deve10ppement rural (FOR II) portera,
a quelques exceptions pres, sur 1e plateau Mossi\. pour 1es raisons suivantes:
a) c'est sur 1e plateau Mossi que l'on pourra uti1iser au mieux 1es possibi1i
tes du Fonds de deve10ppement rural de financer toute une gamme de petits pro
jets, car cette region se prete mal a 1a realisation de grands projets de deve
loppement agrico1e; b) de grands projets sont en cours dans d'autres regions;
et c) cette concentration des efforts est conforme a 1a po1itique du gouverne
mant en matiere de deve10ppement rural\.
v\. La projet prevoit principa1ement une 1igne de credit au FDR pour des
investissements consacres a de petits projets ruraux et visant essentie11ement
a accrottre 1a production agrico1e et a ame1iorer l'a1imentation en eau des
villages\. L'execution du projet serait eta1ee sur cinq annees (1975/76 a
1979/80), mais 1a p1upart des activites seraient entreprises au cours des
quatre dernieres annees, l'annee 1975/76 etant consideree comme annee de sou
dure, au cours de 1aque11e une partie des travaux sera financee par 1e Cre
dit 317-UV et une partie dans 1e cadre du present projet\. D'apres l'expe
rience acquise anterieurement et 1es estimations etab1ias par 1e FDR et dtau
tres organisrnes, 1e programme d'activites au titre du FDR II correspondrait
en gros a 1a 1iste ci-dessous, sur 1~que11e se fonde 1e ca1cu1 du coGt du
projet:
a) amenagement de bas-fonds, 2\.700 ha;
b) ouvrages de 1utte contre l'erosion, 9\.200 ha;
c) petite hydrau1ique et mise en valeur des bas-fonds ameliores, 500 ha;
d) 520 puits;
e) 180 puits tubu1aires;
f) 400 entrepots de village et 20 centres communautaires;
g) credit a moyen terme pour l'achat de materiel agricole (500\.000
dollars);
h) provision pour projets non identifies (600\.000 dollars);
i) etudes sur 1e deve10ppement economique des regions 1iberees de
l'onchocercose\.
Dans 1e cadre de ces sous-projets, 1e credit financerait ega1ement les ele
ments suivants:
j) une brigade dtentretien des puits tubulaires;
- iii
k) les depenses de personnel, de materiel et d'exploitation effectuees
par Ie FDR lors de l'execution du projet et une assistance au Ser
vice de l'hydraulique agricole et de l'equipement rural (HAER) ainsi
qu'aux organismes regionaux de developpement (ORD);
1) la formation de personnel voltaique;
m) une assistance technique etrangere pour l'execution du projet\.
Bien que les couts du projet tiennent compte du programme de developpement
ci-dessus, les objectifs materiels ne sont pas fermement arretes et il convien
dra, pendant toute la periode du projet, de garder une certaine souplesse afin
de deplacer les priorites en tant que de besoin\.
vi\. Une campagne d'eradication de l'onchocercose financee a l'echelon
international est entreprise depuis 1974 dans les vallees des Voltas\. Bien
que les pulverisations aient un effet presque immediat, il faut poursuivre les
efforts pendant 20 ans pour assurer une eradication permanente; toutefois,
dans certaines regions les paysans reviennent deja dans les vallees fertiles,
qu'ils esperent voir debarrassees a tout jamais de la maladie\. Ces vallees
representent une des dernieres ressources naturelles de l'Afrique de l'Ouest
et il est essentiel qu'elles soient utilisees au mieux et que la mise en va
leur des terres soit controlee\. C'est pourquoi Ie projet comprend desetud\.es
sur Ie developpement economiquedes regions liberees de l'onchocercose qui
comportent la preparation:
a) d'un inventaire des ressources;
b) d'un plan de developpement permettant d'identifier les priorites
de developpement des regions assainies; et
c) d'un certain nombre de propositions precises d'investissement dans
Ie cadre du plan de developpement\.
La responsab1lite generale de ces etudes serait confiee a i'actuel Comite de
coord\.ination du developpement rural; toutefois, ce seraient des ministeres
qui executeraient les differentes etudes: celui du developpement rural serait
charge de l'inventaire des ressources et des etudes de justification tandis
que Ie Ministere du Plan assumerait la responsabilite du plan de d~veloppe
ment\. Pour des raisons pratiques, les deboursements seraient,achemines par
le FDR\.
VL~\. On estime que pendant la periode d'investissement de cinq ans
(1975/76 a 1979/80) Ie Fonds aura besoin de 16,2 millions de dollars\. Un
credit de l'IDA de 9,4 millions de dollars financerait 62 % des couts du pro
jet, net d'impots\. Le solde serai\.t finance comme suit: Banque arabe pour Ie
- iv
developpement economique en Afrique (BADEA), 4,5 millions de dollars (30 %
du cout du projet, net d'impots); Fonds d'aide et de cooperation (FAC),
600\.000 dollars (4 %); Royaume des Pays-Bas, 150\.000 dollars (1 %); Program
me des Nations Unies pour Ie developpernent (PNUD) 450\.000 dollars (3 %); et
la Republique de Haute-Volta, 1,1 million de dollars (7 % du cout du projet,
l'equivalent des impots prevus)\.
viii\. Le credit de l'IDA serait accorde aux conditions habituelles; Ie
pret de la BADEA aurait une echeance de 25 ans dont 5 ans de differe d'amor
tissement; Ie taux d'interet serait fixe entre 2 % et 4 %\. Le PNUD, Ie FAC
et les Pays-Bas accorderaient des dons\. II s'agirait dans tous les cas d'un
financement parallele\. La contribution de la BADEA servirait aux puits, aux
puits tubulaires, a la brigade d'entretien de ces derniers, et aux services
auxiliaires connexes\. Celles du FAC, des Pays-Bas et du PNt~ seraient consa
crees a l'assistance technique etrangere\. Comme il est probable que les fonds
du Credit 3l7-UV seront epuises avant que ceux du credit FDR II soient disponi
bles, un financement retroactif a concurrence de 350\.000 dollars est envisage\.
Par suite du cofinancement du projet, les procedures de passation des marches
et de deboursement seraient differentes selon les bailleurs de fonds\. Les
marches finances par la BADEA (4,5 millions de dollars) seraient passes con
formement aux directives de la BADEA\. Cette procedure ne devrait pas couter
plus cher a l'Etat que si Ie projet etait finance entierement par l'IDA\. Les
services des cadres etrangers et des volontaires, dont la valeur est estimee
a environ 1,2 million de dollars, et qui seraient finances par Ie PNUD, Ie
FAC et les Pays-Bas seraient obtenus conformement aux procedures de ces dona
teurs\.
ix\. Les marches finances par Ie credit de l'IDA seraient passes de la
maniere suivante: les vehicules, tracteurs, et autres engins et les materiaux
tels que Ie ciment et l'acier, d'une valeur de 2,0 millions de dollars, feraient
l'objet dtappels d'offres internationaux conformement aux directives de l'IDA
pour les marches de plus de 50\.000 dollars et d'appels d'offres locaux pour
les marches de moins de 50\.000 dollars\. Pour ce qui est des lots inferieurs a
10\.000 dollars, on procederait par les circuits commerciaux normaux\. Les biens
fabriques en Haute-Volta beneficieraient d'une preference de 15 % ou du mon
tant des droits a l'importation, stils sont inferieurs a 15 %\. Une ~rande
partie des depenses aerait affectee a la mal\.n-d'oeuvre, aux salaires, aux de
penses de fonctionnement et de formation, evaluees a environ 4,2 millions de
dollars, qui ne se pretent pas a des appels d'offres\. Les services\. des consul
tants et du personnel etranger, estimes a environ 1,4 million\.de dollars, se
raient obtenus selon les procedures jugees acceptables par l'IDA\. Ces servi
ces ont trait principalement aux etudes sur les zones liberees de l'onchocer
cose; Ie cout total par consultant a ete estime a 7\.500 dollars par homrne\.
mois, repartis comme suit: honoraires moyens du consultant et indemnite jour
naliere: 6\.000 dollars; deplacements a l'etranger et en Haute-'lolta: 1\.000 dol
lars, et divers: 500 dollars\. Une somme totale de 1,1 million de dollars serait
affectee au credit agricole et a des projets non identifies\. Un montant de
1,8 million de dollars couvrirait les imnrevus\.
- v
x\. Le credit de l'IDA serait debourse comme suit: Categorie I - tous
les travaux et services auxiliaires prevus au projet relatifs aux puits, aux
puits tubulaires, et a la brigade d'entretien des puits tubulaires, 89 % des
depenses totales, soit 200\.000 dollars; Categorie II - tous les travaux et
services auxiliaires prevus au projet a l'exception de ceux qui sont compris
dans la Categorie I: a) coGt des fournitures importees et des services de
consultants etrangers: 100 % des depenses en devises, soit 1,2 million de dol
lars; b) autres depenses remboursables: 89 % des depenses totales, soit 5 mil
lions de dollars; Categorie III - etudes sur Ie developpement economique des
regions liberees de l'onchocercose: a) personnel recrute sur Ie marche inter
national: 100 % des depenses totales, soit 160\.000 dollars; b) services de
consultants: 100 % des depenses en devises, soit 1\.140\.000 dollars; c) autres
depenses pour ltachat de vehicules, les frais d'exploitation et Ie personnel
local: 80 % des depenses totales, soit 100\.000 dollars; et Categorie IV - non
affecte: 1\.600\.000 dollars\. L'IDA financerait a titre retroactif les depen
ses prevues dans les Categories I et II a concurrence de 350\.000 dollars et
cesserait de financer des depenses au titre de la Categorie I Ie jour ou l'ac
cord avec la BADEA serait signee La BADEA ne fournirait aucun financement re
troactif et sa contribution couvrirait 100 % des depenses totales consacrees
aux puits, aux puits tubulaires, a la brigade d'entretien des puits tubulai
res, et aux services auxiliaires connexes\. Les depenses ainsi financees s'ele
veraient a 3,4 millions dedollars,et une somme de 1,1 million de dollars ne
serait pas affectee\. Le FAC, les Pays-Bas et Ie PNt~ debourseraient leurs
contributions directement conformement a leurs propres procedures\. Les debour
sements de l'IDA se feraient sur presentation de certificats de depenses et de
documents dtimportation\.
xi\. C'est Ie Fonds de developpement rural qui restera, en definitive,
responsable de l'execution du projet\. Son personnel sera renforce et Ie Co
mite technique interministeriel, etabli dans Ie cadre du FDR I, sera modifie;
avec moins de membres, il devrait etre plus efficace\. Les DRD et l'HAER se
ront charges de l'identification et de l'execution des sous-projets et des
operations apres la realisation des investissements\. Le FDR se chargera de
l'evaluation, de l'inspection finale des travaux et de l'evaluation ex-post\.
Cette derniere fonction sera sensiblement renforcee dans Ie cadre du projet\.
xii\. L'element agricole du projet aurait pour effet principal d'accroitre
la production de cereales (mil, sorgho) et de paddy\. Si Ie plan de developpe
mant prevu se realise, la production annuelle augmentera de 1\.200 et 5\.300 ton
nes respectivement en 1980, date a laquelle Ie projet aura atteint son rythme
de croisiere\. II devrait etre facile d'ecouler cettn production\.
xiii\. Les agriculteurs beneficieraient de l'augmentation de la production
agricole, de l'amelioration de l'entreposage des recoltes et des facteurs de
production at d'un meilleur approvisionnement en eau\. Les familIes d'agricul
teurs participant a des sous-projets productifs devraient voir leurs revenus
- vi
augmenter d'environ 13\.000 francs CFA (60 dollars) en moyenne en co qui concerne
la lutte contre l'erosion; 9\.800 francs CFA (45 dollars) pour l'amenagement
des bas-fonds, 14\.700 francs CFA (67 dollars) pour la mise en valeur des bas
fonds ameliores et environ 27\.000 francs CFA (120 dollars) pour la petite
hydraulique\. Les agriculteurs qui acheteraient des betes de trait grace a un
credit a moyen terme fourni dans Ie cadre du projet economiseraient des jours
de travail, ce qui leur permettrait d'etendre la surface qu'ils cultivent\.
Ils pourraient ainsi accroitre leur revenu de 40\.000 francs CFA (175 dollars)
par famille\. On estime qu'environ 15\.000 familIes rurales beneficieraient des
sous-projets productifs, et beaucoup d'autres paysans de la construction de
puits at de batiments communautaires\.
xiv\. La projet presente d'importants avantages sociaux et institution
nels\. Les puits villageois permettent d'assurer l'approvisionnement en eau
de populations qui autrement iraient chercher de l'eau a des ruisseaux souvent
eloignes, parfois asseches pendant trois mois de l'annee et souvent malsains\.
Le renforcement des institutions, entrepris dans Ie cadre du premier projet,
se poursuivrait dans Ie cadre de ce projet relais\. Certains des sous-projets
sont directement productifs alors que d'autres presentent des avantages so
ciaux et sanitaires difficiles a chiffrer\. Le projet finan~ant une ligne de
credit pour des investissements consacres a divers petits sous-projets, Ie
calcul des taux de rentabilite ne peut etre qu'approximatif\. Toutefois, si Ie
programme enonce ci-dessus se realise, les investissements effectues dans Ie
cadre de FDR II auraient une rentabilite de 16 i\. Eu egard aux difficultes
que posent ltenvironnement et la population du plateau, tout taux superieur a
10 % doit etre juge satisfaisant\. En outre, Ie taux de rentabilite manque de
refleter un aspect important, a savoir Ie fait que ce sont les couches les
plus pauvres de la population qui beneficient du projet\.
Le projet justifie l'octroi par l'IDA d'un credit de 9,4 millions
de dollars\.
HAUTE VOLTA
DEUXIEME PROJET DEFINANCEMENT DU FONDS "DE DEVELOPPEMENT RURAL
I\. INTRODUCTION
1\.01 La Gouvernement de la Haute-Volta a demande a l'IDA de lui accorder
un financementsupplementaira pour son Fonds de developpement rural\. Le Fonds
a ete cree en 1972 grace au financement fourni par l'IDA au titre du Credit
3l7-UV\. La present rapport a pour objet d'evaluer un Deuxieme projet en fa
veur du Fonds de developpement rural (FOR II) et de recommander qu'un deuxieme
credit de l'IDA soit maintenant accorde en faveur de ce Fonds\. Les ressources
disponibles au titre du FDR I (on trouvera des precisions a ce sujet au Cha
pitre III) avaient perrois de financer divers petits sous-projets agricoles et
de developpement rural geographiquement disperses\. C'est egalement ce que
vise le FDR II\.
1\.02 Le projet envisage serait le sixieme que l'IDA consacrerait au sec
teur agricole voltatque\. Les projets agricoles anterieurement finances ont
ete: le projet cotonnier en Volta occidentale (1971, Credit 225-UV, 6,2 mil
lions de dollars), le projet en faveur du Fonds de developpement rural (1972,
Credit 3l7-UV, 2,2 millions de dollars), le projet finan~ant le Fonds de se
cours contre la secheresse (1973, Credit 442-UV, 2 millions de dollars), le
projet de developpement agricole de la Bougouriba (1974, Credit 496-UV, 8 mil
lions de dollars) et le projet de developpement de l'elevage (1975, Credit
557-UV, 9,0 millions de dollars)\. Dtautres projets qui revetent egalement une
importance pour le secteur rural sont: le projet education (1973, Credit
430-UV, 2,85 millions de dollars), qui comporte un element important de for
mation rurale, et le projet relatif aux routes rurales qui vient d'etre signe
(1975, Credit 579-UV, 7,5 millions de dollars)\.
1\.03 Un rapport d'identification a ete soumis pa~ ledirecteur du Fonds
de developpement rural au debut de ltannee 1975\. Le projet a ete prepare par
une equipe de la mission regionale en Afrique de l'Ouest, au mois d'avril 1975,
et evalue par une mission de l'IDA composee de MM\. R\. van der Lugt et J\.L\. Ginnsz
(IDA), V\. Fudzie (BAD), B\. Victor-Pujebet, et H\. Wissink (consultants), qui
stest rendue en Haute-Volta au mois d'octobre 1975\. \.
- 2
II\. \. DONNEES GENE~\.ALES
Uneeeonomie rura1e
2
2\.01 La Haute-Volta, qui s'etend sur 274\.000 km et compte 5,6 millions
d'habitants, a ete c1assee par 1es Nations Unies dans 1e groupe des 25 pays
"les moins avances"\. En 1974, 1e PIB moyen par habitant depassait a peine
80 dollars\. La Haute-Volta possede une economie presque tota1ement agrico1e
de type traditionne1: 1es agricu1teurs et 1es bergers aides de leur fami11e
et travai11ant pour leur propre compte constituent 99 % de 1a population ac
tive\. L'agricu1ture est toutefois tres aleatoire en raison d'une p1uviosite
irregu1iere, dtune saison seche pro10ngee, de sols pauvres et peu profonds,
ainsi que de pratiques cu1tura1es qui ntont pas en general depasse 1e stade
de 1a divagation, et font tres peu appe1 a des intrants monetaires\. De ce
fait, 1a productivite agrico1e est tres faib1e et bien que l'agricu1ture et
l'e1evage constituent 1es moyens d'existence de 96 % de 1a population, i1s
representent moins de 45 % du PIB\.
2\.02 Lt agricu1ture fait vivre pres de 90 % de 1a population, et contri
bue au PIB et aux recettes d'exportat!on tota1es a raison de 31 et 45 % envi
ron respectivement\. En revanche, l'e1evage qui n'est pratique que par 6 % de
1a population, represente une partre1ativement importante du PIB (10 a 12 %)
et de 34 % a 50 % a peu pres des recettes d'exportation\. Toutefois, en depit
dtune economie a predominance rura1e, 1es importations de cere ales vivrieres
sont importantes\. E11es representent 20 % environ de 1a valeur totale des
importations au cours d'une annee norma1e et sensib1ement plus 10rsque sevit
1a secheresse\. Les importations moyennes entre 1969 et 1971 s'e1evaient a
que1que 40\.000 tonnes de cereales\. Sur ce chiffre, 1e b1e et 1a farine repre
sentaient environ 26\.000 tonnes~ 1e b1e ne pouvant etre cu1tive en Haute-Volta
que sur des terres irriguees\. Au plus fort de la secheresse sahelienne, la
Haute-Volta a dO importer jusqu'a 100\.000 tonnes de cereales par an\.
2\.03 La vague de secheresse qui a dure de 1971 a 1973, a entraine tout
d'abord une stagnation, puis une regression de 1a croissance economique de 1a
Haute-Volta, faisant suite a six annees de faib1e croissance\. En outre, 1a
secheresse a exacerbe 1es disparites existant entre 1e plateau central forte
ment peup1e (plateau 11ossi) et 1es regions ouest-sud-ouest, ainsi que, dans
une moindre mesure, 1es regions orientales du pays\. Ce11es-ci en raison de
1a cecite des rivieres qui y sevit, sont moins peup1ees mais possedent des
sols plus ferti1es et jouissent d'une p1uviosite genera1ement plus e1evee\.
2\.04 L'Etat vo1taIque dispose de reserves exterieures importantes et 1e
niveau de ses depots aupres des banques nationa1es est e1eve\. Cette situation
est 1e resu1tat d'une po1itique budgetaire d'austerite introduite par 1e gou
vernement en 1968 pour remedier aux deficits de son budget\. Cette po1itique
s'est traduite par un contro1e rigoureux des depenses dont 1es services publics
- 3
charges du developpement economique ont le plus souffert\. Le budget d'exploi
tation des services d'agriculture et d'elevage, pris ensemble, s'elevait a 5 %
seulement des depenses courantes totales en 1973\. Le poste le plus important
des depenses courantes est l'education (25 % environ)\. Les budgets des 11 or
ganismes regionaux de developpement (voir par\. 2\.08) charges du developpement
rural, ont plafonne pendant la periode 1969/73 et diminue en termes reels;
bien qu'ils aient connu un accroissement de 10 % environ en 1974, celui-ci nta
pas suffi a compenser l'augmentation des salaires et des frais d'exploitation\.
De ce fait, la penurie de fonds dtexploitation, en deptt de la position finan
ciere re1ativement forte de l'Etat, a represente un obstacle majeur au deve
10ppement et le gouvernement devrait amenager ses priorites budgetaires s'i1
souhaite donner des bases solides a son effort de developpement rural\. Des
augmentations de salaires al1ant entre 20 et 50 % ont ete accordees a dater
du mois de janvier 1976 par 1e gouvernement, ce qui risque d'entrainer un nou
veau resserrement des budgets d'exploitation des ORO\.
Agriculture
2\.05 Les surfaces cultivees representent 2,2 millions d'hectares environ,
80 % etant consacres a 1a production de cereales\. (Les statistiques agricoles
figurent a l'Annexe 1)\. Les contrastes entre les regions sont la caracteris
tique la plus frappante de cette agriculture: au centre et au nord, 1es cul
tures, principalement cel1es du sorgho, du mil et des arachides, sont prati
queee a un niveau de subsistance en raison de la forte densite de population,
de la pauvrete des sols et de l'irregularite des pluies\. En revanche, dans
les regions de l'ouest et du sud-ouest, a mesure que 1es conditions de cultures
et de sols s'ame1iorent et que diminue 1a densite de population, la production
se diversifie at s'oriente davantage vers 1a vente\.
2\.06 Les cultures vivrieres de base (mil, sorgho et mars) ne sont que peu
commercia1isees\. Par contre, les produits tels que le riz, 1es patates douces,
le coton, les arachides, 1e sesame et 1a noix de karite, sont ecoules en plus
grande quantite pour etre consommes sur place ou exportes\. Le systeme tradi
tionnel de divagation des cultures est utilise partout; toutefois, dans 1es
zones ou s'exerce une forte pression demographique, te11e que ce11e du plateau
Mossi, 1es sols se sont degrades parce qu'i1s ne sont pas laisses assez 10ng
temps en jachere\. Le coton, culture de rapport la plus importante et produit
d'exportation de premier plan, est surtout cultive dans les regions de l'ouest
et du sud-ouest\.
2\.07 Les produits de l'elevage constituent l'une des principales expor
tations dupays\. La production annuelle de lait et de viande atteindrait quel
que 100\.000 tonnes et 54\.000 tonnes respectivemant\. La consommation moyenne
interieure de viande par habitant s'etablit a 8,6 kg, 1a viande de boeuf en
representant la moitie\. Sur le plateau Mossi, 1es agricu1teurs s'interessent
de plus en plus a l'embouche du betai1, qu'i1s a1imentent au moyen des residus
et des sous-produits des cultures\. La p1upart des exploitants pratiquent
l'e1evage du petit betail (caprins, ovins, porcins et volai11es) autour de
leur maison et le nourrissent de detritus\.
- 4
2\.08 La mise en valeur des regions est confiee aux organismes regionaux
de deve10ppement (ORD), organismes d'Etat dont l'administration est devo1ue a
des consei1s ou sont representes 1es pouvoirs locaux et 1es simples citoyens\.
Excepte dans 1es va11ees des Volta, 1es ORD sont charges de 1a p1anification
et de l'execution de toutes 1es activites agrico1es de leur region\. 11s sont
places sous 1a tute11e du Ministere du deve10ppement rural\. L'Autorite pour
l'amenagement des va11ees des Volta (organe autonome - AVV) est responsab1e
de toutes 1es activites de deve10ppement de ces va11ees\. E11e re1eve ega1ement
du Ministere du deve10ppement rural\. La recherche agrico1e est rea1isee par
des instituts fran~ais specialises\. Dans l'ensemb1e, ces travaux de recherche
ont permis de trouver des solutions techniques va1ab1es aux prob1emes du coton,
des arachides, du riz et des legumes et, dans une moindre mesure, du mais\.
Toutefois, un programme efficace doit encore atre mis au point, en ce qui con
cerne 1es cerea1es de base traditionne11es, 1e mil et 1e sorgho\.
2\.09 L'Etat vo1taique participe de plus en plus aux activites de commer
cialisation dont 1es entreprises commercia1es privees avaient jusqu'ici la
quasi-exc1usivite\. Les exportations de coton, de sesame et de noix de karite
sont contra1ees par un organisme d'Etat, 1a Caisse de stabilisation, et l'Etat
fixe un prix minimum a 1a production\. En outre, des prix de reference a l'ex
portation sont pub1ies et s'i1s sont "inferieurs aux prix ree11ement obtenus,
1a difference est versee a 1a Caisse de stabilisation; dans1e cas contraire,
1es exportateurs re90ivent 1a difference de 1a Caisse de stabilisation\. La
Compagnie fran~aise pour 1e deve10ppement des fibres textiles (CFDT) jouit
d'un monopole sur 1es exportations de coton, et est actue11ement 1a source 1a
plus importante des excedents de 1a Caisse de stabilisation\. Les exportations
de legumes s'affectuent par 1e truchement d'une cooperative de producteurs,
qui n'a guere remporte de succes sur 1es marches interieurs, mais qui a mis
sur pied un marche d'exportations des produits de qua1ite superieure qui sont
transportes par avion vers l'Europe at 1a Cate d'lvoire\. Afin d'ame1iorer 1a
commercialisation des cerea1es et de stabi1iser les prix internes, l'OFNACER
(Office national des cerea1es) a ete cree en 1971,mais s'est surtout occupe de
1a distribution des cerea1es vivrieres dans 1e cadre du programme de secours\.
En 1974/75, 1e gouvernement a cree un reseau officiel de co~~rcia1isation des
cerea1es par l'intermediaire des ORD et de l'On~ACER, qui ne slest ma1heureuse
ment pas reve1e tres efficace\.
Strategie"de deve10ppement rural
2\.10 La Banque a recemment etab1i un rapport sur 1a situation economique
de 1a Haute-Vo1ta1l qui examine 1es perspectives de deve10ppement a long terme\.
du pays\. Ce11es-ci peuvent se resumer comme suit: a) 1e plateau Mossi est
1/ Rapport No 564a-UV en date du 7 jui11et 1975, Situation economique et
perspectives de 1a Haute-Volta\.
- 5
fortement peuple; dans les cinq ORD dont releve cette region,~1 61 % de la po
pulation tire sa subsistance de 34 % des terres disponibles et, dans bien des
districts, la densite de population depasse 40 habitants par km2, chiffre trop
eleve pour permettre l'application de systemes de cultures atteignant une pro
ductivite soutenue et mime moderement elevee, compte tenu de l'etat actuel des
techniques\. Les efforts deployes pendant les dernieres 15 annees pour amelio
rer sensiblement les niveaux de vie de la population locale sont restes vains\.
Seule une diminution de la densite demographique pourrait accrottre la super
ficie disponible et permettre un relevement important des revenus; en outre,
la Haute-Volta dispose de vastes regions qui sont encore relativement sous
\.
peuplees, voire meme desertes ou, en raison du potentiel agricole qu'elles
possedent, la population pourrait acceder a un niveau de vie satisfaisant\. La
mise en place de projets de colonisation des terres, de developpement rural
integre, et eventuellement, de programmes d'irrigation devrait permettre d'at
tirer la population vers ces regions\. La plupart de ces zones de peuplement
potentielles, se trouvent toutefois dans les vallees des Volta Noire, Rouge
et Blanche, ou l'onchocercose (cecite des rivieres) sevit au niveau endernique\.
2\.11 L'etablissernent de populations dans les vallees des Volta dependra
de l'eradication de cette maladie\. Une campagne financee a l'echelon inter
national a ete lancee a cet effet en 1974 et prevoit de liberer 1\.600\.000 ha
environ de ce fleau dans un delai de vingt ans; on estirne que 600\.000 ha de
cette superficie pourraient se prater a l'agriculture\.
2\.12 L'tnstallation intensive de population pourrait etre realisee grace
au developpement de l'irrigation, quton pourrait appliquer, semble-t-il, a
130\.000 ha\. Toutefois, compte tenu du coGt eleve des investissements dans
l'irrigation et de la penurie extreme de personnel experirnente, il semble plus
judicieux de se concentrer, au depart en tout cas, sur l'agriculture en sec\.
2\.13 Le plateau Mossi ne semble pas se preter a la realisation de vastes
projets de developpement agricole de nature a ameliorer sensiblement les reve
nus d'un nombre appreciable d'habitants; en revanche~il reste possible et ne
cessaire de mener a bien un ensemble de projets a petite echerle destines soit
a exploiter les surfaces lirnitees presentant un potentiel acceptable, par
exemple, les bas-fonds, soit a repondre aux besoins ressentis par les comrnu
nautes rurales, tels que les puits et les entrepots villageois\. Dans Ie cadre
du premier projet en faveur du Fonds de developpernent rural (FOR I), on a su
tirer parti de ces poss1bi11tes et-c'est dans la meme direction qu'irait Ie
deuxieme projet\.
2\.14 En bref, la mission de la Banque a conclu que l'effort principal du
gouvernement devrait atre axe sur les regions de ltouest et du sud-ouest, qui
peuvent se preter a l'application de systernes de culture raisonnablernent pro
ductifs\. En ce qui concerne la region du plateau Hossi, il conviendrait de
mettre en oeuvre un programme d'arneliorations ponctuelles a petite echelle,
dans les zones ou l'on peut demontrer que les collectivites locales en eprou
vent Ie besoin que ces ameliorations sont rentables\. Cette orientation a ete,
dans l'ensemble, adoptee par Ie gouvernement\.
11 Ouagadougou, Yatenga, Kaya, Doudougou et Koupela\.
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III\. -FONDS DEDEVELOPPE}ffiNT RURAL I
3\.01 Le Premier projet en faveur du Fonds de developpement rural (FDR I)
a ete evalue au mois d'aout 1971\. Le Credit 3l7-UV a ete signe au mois de
juin 1972 et est entre en vigueur en octobre 1972\. L'objectif du Fonds (voir
egalement le par\. 5\.01), etait de financer les activites de developpement ru
ral a petite echelle, destinees a accroitre la production agricole et a ame
liorer la sante et le bien-etre des collectivites rurales qui etaient trop mo
destes et tropdispersees pour faire l'objet d'un projet de developpement agri
cole Banque/IDA de type traditionnel\. Lors de l'evaluation, l'hypothese de
base utilisee pour les calculs a ete que le projet engloberait la construction
de: a) 500 puits fournissant l'cau aux menages; b) 700 entrepots villageois
pour le stockage des facteurs de production agricoles; c) l'amenagement de
1\.500 ha de bas-fonds en vue de la riziculture; d) des travaux de lutte contre
l'erosion sur 1\.000 ha, pour ameliorer les rendements des cultures tradition
nelles telles que mil, sorgho, coton et arachides; e) des programmes de petite
irrigation en aval des barrages existants, sur 200 ha ou l'on cultiverait du
riz et des legumes; f) la construction de 270 km de routes rurales; et h) un
certain nombre de projets non identifies\. Le cOllt total du projct a ete es
time a 3,04 millions de dollars et a'ete finance par l'IDA (2,2 millions de
dollars, 72 % du coGt du projet), l'aide bilaterale fran~aise (380\.000 dollars,
13 %) et l'Etat voltaIque (460\.000 dollars, 15 %)\.
3\.02 Les institutions prtncipales participant a l'execution du projet
etaient et continuent a etre le Fonds de developpement rural (FDR) organe
cree au sein de la Banque nationale de developement (BND) pour gerer le Fonds
et evaluer les sous-projets propres a beneficier d'un finance~£nt; la Direc
tion hydraulique et amenagement de l'espace rural (HAER), du Ministere du de
veloppement rural, chargee de concevoir et d'executer les sous-projets, enfin
les ORO, a qui sont confiees l'identification et l'elaboration de sous-projets
susceptibles d'etre finances ainsi que leur gestion ulterieure\. Un Comite
technique interministeriel a ete etabli pour superviser le FDR et approuver
ses programmes\. D'autres institutions participent au projet telles que le
Hinistere du developpement rural\.!\.! qui exerce un controle sur les ORD et l'AVV,
et le Comite de coordination du developpement rural, recemment etabli pour de
finir la politique nationale de developpement rural, approuver les programmes
et projets qui sly rapportent at assurer l'harmonisation et la coordination
qui s'imposent\.
];/ Lors de l'evaluation, i l existait un vaste Hinistere du Plan, du develop
pement rural, de l'environnement et du tourisme\. Toutefois, le 9 fevrier
1976 on a annonce la formation d'un nouveau cabinet\. Cela a entraine la
scission de ce vaste ministere en trois organes: le Ministere du Plan,
le Ministere du developpement rural et le Ministere de l'environnement
et du tourisme\.
- 7
3\.03Progres'materiels\. Le projet a demarre en octobre 1972, mais sa pro
gression a ete lente pendant toute l'annee 1973, en raison de retards dans Ie
recrutement du personnel dont avaient besoin la Direction des travaux publics
(DTP) et l'HAER, de retards dans les dispositions que l'Etat volta!que devait
prendre pour Ie prefinancement des depenses du projet, enfin de la lenteur des
achats de materiel\. En 197~ cependant, Ie projet a commence a progresser a un
rythme plus rapide, qui s'est encore accelere en 1975\. Les fonds du projet se
ront epuises au mois de mars/avril 1976 et l'on estime que, d'ici au mois de
juin 1976, Ie programme suivant aura ete acheve:
Objectifs Realisations esti Pourcentage
prevus lors de matives a l'acheve des travaux
, - 'l'evaluation \. -mentdu'projet acheves
Puits (nombre) 500 277 45
Entrepots villageois
(nombre) 700 677 97
Mise en valeur des
bas-fonds (ha) 1\.500 1\.141 76
Travaux de lutte
contre l'erosion (ha) 1\.000 845 85
Programmes de petite
irrigation (ha) 200 68 34
Routes (km) 270 353 130
Sous la rubrique des projets non identifies, les elements sul\.vants ont ete
finances: a) huit vastes entrepots pour les ORD; b) une etude de justifica
tion relative a l'irrigation de la plaine de Kamadena; c) Ie financement par
tiel d'un entrepot frigorifique; et d) onze enclos a betail destines aux pe
tits exploitants pour faciliter la production de fumier\.
3\.04\. -Couts\. Les couts du programme FDR se sont reveles superieurs aux
previsions effectuees lors de l'evaluation; cela est du en partie a un taux
d'inflation mondiale auquel on ne s'attendait pas au moment de l'evaluation\.
(A l'epoque, on avait en effet prevu des provisions pour hausse des prix ne
representant que 5 % des couts totaux du projet)\. II y a eu donc un depasse
ment important des couts de construction des puits, mais aussi des ,couts des
entrepots et des travaux routiers\. Toutefois, les depenses de mise en valeur
des bas-fonds ont ete inferieures aux previsions, en raison de modifications
de conception (travaux moins compliques que ceux qui avaient eta envisages a
l'origine)\. Aces depassements de couts, s'est ajoutee la devaluation du dol
lar; au moment de l'evaluation, Ie credit de l'IDA de 2,2 millions de dollars
equivalait a 562,6 millions de francs CFA\. Or en pratique, Ie taux moyen de
change a ete inferieur aux previsions et n'a permis d'obtenir que 485 millions
de francs CPA, soit 13 % de moins que Ie chiffre prevu\.
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3\.05Participationdcspavsans\. Un critere important dans Ie choix des
sous-projets au titre du Fonds de developpement rural I etait qu'ils soient
consideres comme necessaires par les habitants de la region, ces derniers
etant disposes a participer benevolement aux travaux\.
3\.06 Les paysans qui, au debut de l'execution du projet FOR I s'etaient
montres hesitants, restant dans l'expectative, ont manifeste un interet crois
sant pour Ie projet a mesure qu'il avan~ait et qu'il etait mieux connu dans les
campagnes\. La main-d'oeuvre necessaire a la realisation des travaux prevus au
projet a ete fournie benevolement par les collectivites villageoises\. Pour
les travaux routiers, les villageois ont toutefois re~u de petites primes\.
Grace au soutien marque apporte par les populations locales, les activites du
Fonds de developpement peuvent se poursuivre\. Une fois la construction ache
vee, on demande egalement aux cultivateurs de participer aux travaux d'entre
tien\. Toutefois, l'experience acquise jusqu'a ce jour est trop limitee pour
que l'on puisse evaluer dans un sens negatif ou positif la bonne volonte des
cultivateurs dans ce domaine\. Les ouvrages semblent en general bien entrete
nus, a quelques exceptions pres ou les ORO n'ont pas fait l'apport necessaire\.
3\.07 Problemes\. Un certain nombre de problemes, outre ceux de demarrage
decrits au paragraphe 3\.03, ont surg! au cours de l'execution du FOR I~et il
convient dty remedier si l'on veut que FDR II soit pleinement couronne de suc
ces\. La plupart des problemes s~nt, en general, dus a la penurie de personnel
ayant l'experience voulue pour concevoir, et executer les sous-projets, aux
faiblesses de l'organisation qui entrainent une supervision insuffisante des
sous-projets tant au cours de la phase de construction que d'exploitation~et
au fait que les participants aux sous-projets directement productifs tels que
la mise en valeur des bas-fonds, la petite irrigation et la lutte contre l'e
rosion\. n'ont pas toujours re~u l'aide voulue (vulgarisation, credits et fac
teurs de production)\.
3\.08 En matiere de personnel, Ie probleme tient simplement a ce que Ie
Fonds de developpement rural, les ORO et l'HAER disposent d'un trop petit nom
bre dtemployes qualifies\. Cette situation est symptomatique d'un probleme
fondamental en Haute-Volta\. Dans Ie cadre du FOR I, Ya penurie de personnel
a entraine l'echec du programme d'irrigation des terres situees en aval des
barrages existants, qui etait pourtant restreint, l'echec evitable de la mise
en valeur de certains bas-fonds dO a des defauts de conception; enfin, la ne
cessite d'approfondir la moitie des puits qui venatent d'etre construits\. La
solution prevue dans Ie cadre du FOR II et decrite au Chapitre VII consiste a
recruter des specialistes etrangers et a mettre sur pied un programme de for
mation des volta!ques\.
3\.09 Le probleme d'organisation est lie a celui du personnel et apparait
plus complexe\. Faute de personnel, Ie FDR nta pas ete en mesure d'assurer un
niveau de supervision et de controle du programme aussl complet que celui qui
avait ete envisage lors de l'evaluation du FOR I\. De plus, et ce n'est pas
moins important, Ie FOR n'a pas ete a meme de veiller a ce que les sous-projets
qu'il finance sotent con~us et geres de fa~on appropriee ni d'evaluer l'influen
ce que les masures prises dans Ie cadre du projet ont eu sur les partiCipants\.
Le Chapitre VII decrit la fa~on dont Ie FDR sera renforce tant sur Ie plan des
activites d'evaluation des resultats que de supervision\.
- 9
3\.10 Lors de l'execution du FDR I, des responsabilites importantes avaient
ete confiees a l'HAER, qui etait chargee de l'execution de tous les travaux, a
l'exception des routes; apres quoi, la gestion des sous-projets etait transfe
ree aux ORO\. L'HAER a souffert d'une forte rotation de personnel, qui a sou
vent entratne des retards dans l'execution du projet ainsi qu'un manque de co
ordination entre ses services et les ORO\. Dans le cadre du FDR II, la parti
cipation de l'HAER se limitera aux sous-projets de construction des puits et
de petite irrigation dont la conception technique est relativement complexe\.
Les ORO seront charges de la construction de tous les autres sous-projets,
notamment des activites importantes de mise en valeur des bas-fonds et de lutte
contre l'erosion\. Ils seront renforces pour etre en mesure d'assumer ces nou
veaux ral~s\. On peut esperer que la participation des ORO a toutes les phases
du cycle des sous-projets, depuis l'identification jusqu'a l'exploitation,
permettra d'ameliorer les resultats\.
3\.11 Lorsque le FDR I a ete lance en 1974, on s'est trouve devant un pro
bleme grave: les ORO ne fournissaient pas les services d'appui et de vulgari
sation, le credit, les semences ameliorees et autres facteurs de production
qui etaient necessaires pour tirer le maximum d'avantages des investissements
du Fonds dtinvestissement rural\. L'IDA a des lors accepte, a la fin de 1974,
de prendre une mesure temporaire, a savoir de financer les services de 40
agents de vulgarisation travaillant au niveau des exploitations dans le cadre
des sous-projets du FDR\. En ce qui concerne le FDR II, les dispositions con
cernant la fourniture des services d'appui seront officialisees et rendues
obligatoires pour toutes les activites financees par le FDR\.
3\.12 Outre les problemes de personnel et d'organisation, d'autres pro
blemes mineurs existent; les mesures qui seront prises dans le cadre du FDR II
pour les resoudre sont decrites dans les divers chapitres du rapport\. En ge
neral,toutefois, le projet FDR I, en depit de ses defauts, a permis de demon
trer que la conception initiale du projet etait bonne\. En Haute-Volta meme le
projet est considere comma une grande reussite tant par les autorites que les
cultivateurs\. On trouvera a l'Annexe 2 des rensei\.gnements plus detailles ainsi
que des tableaux\.
- 10
IV\. LA ZONE DU PROJET
Choix dela'zone du projet
4\.01 Contrairement a celles du FDR I, qui interessaient des sous-projets
sur l'ensemble du territoire de Haute-Volta, les activites du FDR II se con
centreraient sur Ie plateau Mossi (couvrant les cinq ORD de Ouagadougou,
Koudougou, Koupela, Kaya et yatenga)\. Ce choix est justifie pour les raisons
suivantes: a) les possibilites qu'a Ie FDR de financer une serie de petits
projets sont mieux utilisees dans Ie contexte du plateau Mossi OU Ie potentiel
de realisation de vastes projets de developpement agricole est limite; b) de
grands projets de developpement agricole sont en cours de realisation dans
d'autres regions; et c) cette concentration des efforts dans une region donnee
correspondrait a la strategie de developpement rural officielle (voir par\.
2\.10-2\.14)\. Certaines des vallees des Voltas traversent Ie plateau Mossi\. La
mise en valeur de ces val lees releve de l'AVV et Ie financernent prevu au titre
du FDR II ne s'etendrait pas a ces regions\. II y aurait deux exceptions a
cette regIe: tout d'abord la construction de puits et de forages qui serait
financee par Ie FDR dans Ie cadre d'un programma national, deuxiemement, la
possibilite pour Ie FDR de consacrer une somme ne depassant pas 10 % des fonds
du projet a des projets de priorite elevee situes dans d'autres regions du
pays\. Au cours des negociations, il conviendra d'obtenir des autorites vol
taiques des assurances a cat effete
Description de lazorte du projet
4\.02 Le climat de la zone du projet est de type soudanien\. La pluviosite
annuelle sur Ie plateau Mossi varia de 600 mm au nord a 950 mm au sud\. Elle
se concentre (a raison de 85 %) au cours d'une periode de quatre mois allant
de jUin a septembre, les precipitations prenant une forme souvent torrentielle
entrecoupees de periodes de secheresse\. La pluvtosite annuelle presente des
fluctuations importantes, et la datc du debut dcs pluies, qui est importante
pour la preparation des sols et l'ensernencemcnt, varic tres largcment d'une
annee a l'autre\. Cas deux types de fluctuations ont une influence tres mar
quee sur la production\. Les temperatures mensuelles se situent autour de 200C,
en moyenne, atteignant leur maximum (39 0 C environ) en mars, avril et rnai at
leur minimum (14 0 C environ) au mois de janvier\. On trouvera a l'Annexe 3, les
statistiques relatives a la zone du projet\.
4\.03 Les sols de cette region sont generalement pauvres, 75 % d'entre eux
pouvant etre ranges dans la categoric des sols gravclcux peu profonds, dont Ie
potentiel agricole est reduit\. Le seul avantage (ou presque) qu'ils presentent
est d'etre relativement facilcs a travaillcr\. lIs sont utilises pour la pro
duction de mil, de sorgho et d'arachides\. Lcs autres sols, plus lourds et pro
fonds, sont ceux des bas-fonds, dont certains sont inondes pendant la saison
des pluies\. Ceux-ci sont utilises pour la riziculture et la production des
legumes, et s'apparentent aux bas-fonds mis en valeur dans Ie cadre du FDR I
et qu'il est prevu d'exploiter dans Ie cadre du FDR II\.
- 11
4\.04 Les densites de population sur 1e plateau varient entre 21 et 74 ha
bitants par km2 Compte tenu de cette forte pression demographique, plus de 1a
moitie de toutes les terree cu1tivees font l'objet d'une reco1te annue11e\.
Cette culture intensive a entraine una parte de ferti1ite et une degradation
des sols dans 1a plus grande partie du plateau\. La chute des rendements a
fait du plateau Mossi 1a source principa1e de main-d'oeuvre pour 1es pays co
tiers voisins, notamment 1a Cote dtIvoire, 1es emigrants etant pour 1a p1upart
des jeunes gens\. Bien que 1es possibi1ites d'exp10itation des sols soient 1i
rod\.tees, l'app1ication de certaines methodes devrait permettre d'accroitre 1a
productivite agrico1e\. Citons par exemp1e: a) 1 t intensification des cultures
dans 1es zones de depression grace a un mei1leur drainage et un mei11eur ame
nagement de l'ecoulement; b) la construction de banquettes suivant 1es courbes
de niveaux dans 1es terres cu1tivees et 1a culture se10n 1es courbes de niveau
pour ame1iorer 1a retention d'eau et 1utter contre l'erosion; c) l'irrigation
grace a l'eau des lacs et des etangs ou des trous de puisage creuses tradition
ne11ement par 1es cu1tivateurs dans 1es bas-fonds au cours de 1a saison seche,
afin dtirriguer 1es cultures de rapport tel1es que ce11es du tabac et des le
gumes; et d) l'introduction de l'e1evage dans l'exp10itation agrico1e\.
4\.05 La zone du projet contient que1que 440 km de routes bitumees, 1\.400 km
environ de routes nationa1es gravi110nnees ainsi que pres de 1\.500 km de
routes secondaires\. Les communications routieres entre Ouagoudougou, 1a capi
tale, et 1es sieges des cinq OP~ sont plus que suffisantes et s'i1 est vrai
que dans 1es regions relevant des ORO i1 existe des zones diffici1ement acces
sib1es, p1usieurs programmes importants d'ame1ioration des routes rura1es et
secondaires sont en preparation, ce qui devrait permettre d'ame1iorer 1a si
tuation\. Dans 1e cadre du Projet de routes rura1es de 1a Banque, un service
special (Service d'entretien des routes secondaires (SERS» est en cours de
creation\. 11 sera charge de 1a construction et de l'entretien de toutes 1es
routes de desserte de Haute-Volta\.
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V\. LE PROJET
Donnees generales
5\.01 L'idee d'un Fonds de developpement rural a ete 1ancee a 1a suite de
la premiere mission economique de la Banque en Haute-Volta, en novembre 19691/ ,
et trouve son origine dans les conclusions de 1a mission, a savoir:
a) les col1ectivites locales etaient conscientes de 1a necessite
d'entreprendre des mesures de deve10ppement ponctue11es, et
pensaient que ces mesures jouiraient de l'appui de la popula
tion locale;
b) 1es echecs subis anterieurcment par un certain nombre de projets
ruraux avaient ete causes par l'absence d'appui local;
c) les sources etrangeres d'assistance, qui sont 1a principa1e
source de capitaux pour Ie developpement en Haute-Volta,
n'avaient guere mantfeste d'interet jusqu'alors pour 1e fi
nancement de mesures ponctue11es;
d) grace a 1a decentralisation des pouvoirs amorcee lors de la
creation des Organisrnes regionaux de developpement (ORD), la
Haute-Volta possedait desorrnais des institutions capab1es
d'identifier et d'executer des petits projets du type considere;
e) neanmoins, Ie financement des opn etait en grande partie assure
par les sources d'assistance et etait lie a des programmes
specifiques qui ne prevoyaient pas 1e type de projets en ques
tion; par consequent
f) il convenait de mettre au point un mecanisme de financement de
ce type de projets\.
5\.02 Une mission d'evaluation de l'IDA a poursuivi la question et 1e Cre
dit 317-UV, destine a financer un Fonds de deve10ppement rural (FDR I), a ete
approuve, ce Fonds 1ui-meme constituant une ligne de credit pour 1e finance
ment de mesures de deve10ppement ponctuelles\. Il etait entendu que' le Fonds
evaluerait 1es propositions que lui feraient 1es OP~ a mesure 'que de petits
projets appropries seraient identifies et mis au point\. La methode a fait ses
preuves (voir Chapitre III), mais quelques ameliorations sur Ie plan de l'or
ganisation auraient des effets positifs sur l'execution\. Ces ameliorations
seraient pratiquees dans Ie cadre de FDR II (voir Chapitre VII) et la methode
de 1a 1igne de credit serait conservee\.
11 Voir Rapport AW-19a, Ie Developpement economique de la Haute-Volta, date
du 17 novembre 1974, en quatre volumes\.
- 13 -
Descriptionsommaire
5\.03 Le projet (FDR II) consisterait a executer des activites de develop
pement rural a petite echelle (sous-projets) financees par l'intermediaire du
FDR; les sous-projets auraient pour principal objectif d'accroitre la production
agricole et d'ameliorer l'approvisionnement en eau des villages\. Ce projet
serait echelonne sur une periode de cinq ans (1975/76-1979/80), mais la plu
part des activites seraient executees pendant les quatre dernieres annees;
1975/76 serait consideree comme une annee de transition, financee en partie
au titre du Credit 3l7-UV et en partie au titre de FDR II\.
5\.04 L'experience acquise et les evaluations faites par Ie FDR, les ORO
et d'autres organismes ont permis d'elaborer un programme d'activite dont la
liste correspondrait en gros a l'emuneration ci-apresj Ie calcuI des couts du
projet est base sur un programme comportant:
a) mise en valeur des bas-fonds, 2\.700 ha;
b) travaux de lutte contre l'erosion, 9\.200 ha;
c) amenagement de petites' zones irriguees et amelioration de
l'exploitation des bas-fonds, 500 ha;
d) puits, 520;
e) forages, 180;
f) entrepots villageois, 400 et centres communautaires, 20;
g) credit a moyen terme pour l'achat de materiel agricole, equi
valant a 0,5 million de dollars;
h) reserve pour des projets non identifies, un million de
dollars;
i) etudes relatives au developpement economique des regions
liberees de l'onchocercose\.
Les elements ci-apres seraient egalement finances dans Ie cadre du projet pour
appuyer les sous-projets ci-dessus:
j) brigade d'entretien des forages;
k) depenses de personnel, de materiel et d'exploitation faites par
Ie FDR dans Ie cadre de l'execution du projet, et appui a l'HAER
et aux ORO;
- 14
1) formation de personnel voltaique; et
m) assistance technique etrangere necessaire a l'execution du projet\.
Les coGts du projet sont calcules dtapres Ie programme de developpement ci
dessus, mais les objectifs quantitatifs ne sont pas absolus et il faudrait ob
server pendant toute la periode du projet assez de souplesse pour modifier les
orientations en tant que de besoin\.
5\.05 Les details relatifs aux sous-projets d'equlpement figurent a ltAn
nexe 4\. Ceux-ci sont decrits brievement ci-apres\.
Caracteristioues detaillees
5\.06 Exploitationdesbas~fonds\. Les bas-fonds sont de petites depressions
marecageuses irriguees par de minces cours d'eau saisonniers at qui peuvent
etre mises en valeur et utilisees pour la culture du paddy au moyen d'ouvrages
hydrauliques simples\. Le plan du projet prevoit que 2\.700 ha seront mis en
valeur par les ORO a un coGt estimatif d'environ 41\.700 francs CFA/ha (185 dol
lars)\.
5\.07 Travauxde lutte contrelterosion\. Les travaux de lutte contre l'ero
sion sont simples et consistent a amenager des diguettes suivant les courbes
de niveau a l'aide d'un disque traine par un tracteur\. Ces diguettes, en dimi
nuant Ie ruissellement, amellorent la filtration de l'eau et reduisent l'erosion
causee par les pluies\. Comme les ORD ont prouve qu'ils pouvaient mener a bien
ce type de travaux\. Ie programme prevu cst beaucoup plus important que celui
qui figurait dans FDR I\. II incomberait aux ORD de pre parer et d'executer les
travaux sur environ 9\.200 ha a un coGt estimatif de 14\.740 francs CFA/ha (65
dollars)\.
5\.08 Petite irri~ationetmtseen valeur des bas-fonds ameliores\. II
existe toute une serie de possibilites en matiere d'irrigation a petite echelle\.
On peut notamment pratiquer l'irrigation par gravite en aval des petits barra
ges existants, dont environ 240 ont ete finances par Ie FAC et Ie FED au debut
des annees soixante pour l'approvisionnement en eau\. Ces barrages ont mainte
nant ete remplaces par des puits pour l'eau potable\. Chaque barrage peut per
mettre l'irrigation d'environ 40 ha en moyenne, mais seule une portion minime
de la surface totale a ete mise en valeur\. Les autres possibilites'sont notam
ment Ie pompage de l'eau des etangs et des cours d'eau permanents et l'amenage
ment de petits perimetres irrtgues a l'aide de puits peu profonds\. En outre,
on pourrait ameliorer un grand nombre des bas-fonds deja exploites en construi
sant des ouvrages de protection contre les crues et autres ouvrages qui permet
traient dtintensifier les cultures\. Dans Ie cadre de FDR II, 500 ha seraient
amenages\. Aux fins de l'etablissement des coGts, on a estime que l'amelioration
de 300 ha de bas-fonds reviendrait a 150\.000 francs CFA/ha (666 dollars) et que
200 ha pourraient etre trrigues pour un coGt esttmatif de un million de francs
- 15
CFA/ha (4\.400 dollars)\. Ces estimations de couts sont donnees a titre indica
tif, car les couts effectifs varieraient selon les caracteristiques physiques
et hydrologiques particulieres a chaque site\. Outre l'element irrigation a
petite echelle prevu dans Ie projet, Ie FED etudie un programme analogue por
tant sur 300 ha (principalement irrigation par gravite en aval des petits
barrages exis;ants) echel?nne sur les annees a venir\.
5\.09 L'HAER etablirait les etudes techniques des ouvrages d'irrigation et
en assurerait la construction\. Une assistance technique etrangere viendrait
renforcer son personnel (voir par\. 5\.22) pour veiller a l'execution effective
des travaux prevus\. Etant donne les difficultes inherentes a cet element de
FDR II, Ie FDR evaluerait separement les proposi\.tions d'investissement dans
des travaux d'irrigation a petite echelle et de mise en valeur des bas-fonds
ameliores et etablirait chaque annee un programme de travail qui serait ap
prouve par l'IDA avant que l'HAER entreprenne les travaux\. Des assurances en
ce sens ont ete obtenues pendant les negociations\.
5\.10 \. Puits\. Le programme de forage de puits de FDR I a ete execute par
quatre brigades qui seraient reconduites au titre de FDR II, et construiraient
environ 520 nouveaux puits\. On estime Ie cout du creusement a 58\.800 francs
CFA (261 dollars) par metre de profonoeur, ou, en supposant une profondeur
moyenne de 17,5 metres par puits, a 1\.030\.000 francs CFA (4\.570 dollars) par
puits\.
5\.11 L'HAER serait responsable de la construction des puits\. A l'heure
actuelle, les quatre brigades de puisatiers relevent directement des services
centraux d'entretien et d'administration de l'HAER a Ouagadougou\. Ce systeme
est peu efficace; Ie projet prevoit Ie financement d'une base provisoire avec
magasins et ateliers\. Cette base, constituee par des locaux prefabriques et
des caravanes, se deplacerait periodiquement a la suite des quatre brigades\.
Le personnel de la base comprendrait un mecanicien et un responsable des four
nitures, et un coordinateur serait norome pour assurer la liaison entre Ie
siege de l'HAER et les quatre brigades; a l'heure actuelle, les quatre chefs
de brigade rendent directement compte au Directeur de l'HAER\. On a obtenu,
pendant les negociations, l'assurance qu'un coordinateur charge des taches in
diquees serait norome avant Ie 31 decembre 1976\.
5\.12 \. Forages\. Le materiel de forage a ete finance au titre du Projet de
secours contre la secheresse (Credit 442-UV), qui est administre pa~ Ie FOR\.
Les forages finances au titre de ce Credit se poursuivront jusqu'au 30 juin 1977
environ, date a laquelle 120 puits auront ete fores et les fonds fournis au ti
tre du Credit 442-UV seront epuises\.
5\.13 La materiel de forage achete dans Ie cadre du Credit 442-UV devrait
durer au moins cinq ans et pourrait etre utilise pour les forages effectues
apres 1977 au titre de FDR II\. Dans cette hypothese, on estime que 180 puits
- 16
de 50 m de profondeur et 10 cm de diametre en moyenne seraient fores en
1977/78-1979/80\. Chaque puits serait muni d'une pompe manuelle\. Le cout de
l'operation est estime a 18\.600 francs CFA (83 dollars) par metre de profon
deur ou a environ 930\.000 francs CFA (4\.130 dollars) par forage\. Ces estima
tions ne comprennent pas Ie cout du materiel achete initialement au titre du
Credit 442-UV (soit environ 66 millions de francs CFA, ou 300\.000 dollars)\.
5\.14 L'execution du programme de forage continuerait a reIever de l'HAER\.
Une equipe de foreurs, disposant d'une base bien outillee a Dori\. est en cours
de constitution et re~oit une formation, avec l'assistance technique de consul
tants\. Aucurie modification n'est envisagee pour l'execution des forages pre
vus par FDR II et Ie chef de brigade de Dori continuerait a rendre compte au
siege de l'HAER\.
5\.l5Batim~rttsvillageois\. La construction de petits entrepots\. dans Ie
cadre de FDR I, a ete une reussite\. Le FDR a fourni Ie mortier, une presse a
brique simple et un ma~on, et les villages ont fourni la main-d'oeuvre bene
vole\. Ce programme sera poursuivi et on estime que 400 entrepots plus grands
(8 m x 3 m, contre 4 m x 3 m dans Ie cadre de FDR I) seront construits\. Les
couts sont estimes a 152\.100 francs CFA (676 dollars) l'unite, compte non tenu
du cout de la main-d'oeuvre locale\. 'On envisage en outre de construire a peu
pres 20 centres communautaires suivant les memes principes que les entrepots\.
Ces centres comprendraient une grande salle (pour des programmes educatifs\.
des reunions, des programmes d'alphabetisation, etc\.) et une petite salle des
tinee au stockage de fournitures medi\.cales et mise a la disposition des respon
sables sanitaires\. On estime que chaque centre reviendrait a 258\.000 francs
CFA (1\.150 dollars)\. Cependant, avant d'approuver la construction d'un centre
villageois, Ie FDR verifierait qu'il n'existe pas de batiment equivalent et
qu'il n'est pas deja prevu d'en construire\.
5\.16 " Credit "agricole\. En Haute-Volta il n'existe quasiment pas de cre
dit a moyen terme pour l'achat de materiel agricole; la plus grande partie du
credit agricole (95 %) fourni par la BtID est representee par des prets a court
terme pour l'achat d'intrants saisonniers et pour la commercialisation du co
ton\. L'USAID a recemment verse 63 millions de francs,CFA (280\.000 dollars)\.
qui ont ete entierement decaisses, pour des credi\.ts a moyen terme destines a
l'achat de ~4teriel agricole, et geres par Ie FDR\. Les conditions etaient les
suivantes: taux d'interet, 5,5 % et echeance de cinq ans, y compris un an de
differe\. Le projct financera l'etablissement au sein de la BND un fonds re
nouvelable d'un montant pouvant aller jusqu'a 0,5 million de dollars en vue
de financer Ie credit a moyen terme, dcst:i\.ne a l'achat de materiel agricole\.
Les cultivateurs desireux d'obtenir un pret devraient, s'i1s ne possedent pas
d'animal de trait, ou de materiel de traction, verser un acompte minimum equi
valant a 10 i\. du cout du materiel qu'ils veulent acheter\. Les conditions du
pret seraient identiques a celles du credit agricole finance par l'USAID, si
ce n'est que Ie taux d'interet serait porte a 8 i\. pour tenir compte de la
hausse recante du taux de reescompte applique par la Banque centrale (BCEAO)
- 17
a la BND, et qui est passe de 3,5 a 5,5 %\. Les conditions du credit, et les
clauses diverses seraient incluses dans l'Accord de credit qui serait signe
par l'agriculteur et la BND\.
5\.17 La compte du fonds renouvelable de credit a moyen terme serait gere
par la BND qui nommerait avant Ie 31 decembre 1976 un responsable des credits
charge d'en assurer la gestion a plein temps, et des assurances en ce sens ont
ete obtenues pendant les negociations\. Les demandes de credit a moyen terme
seraient presentees par l'intermediaire des ORD qui les evalueraient avec
l'assistance d'un responsable des prets de la BND\. Le detail de ces proce
dures figure a l'Annexe 5\. Les demandes evaluees par les ORO seraient approu
vees par Ie FDR qui devrait autoriser les decaissements\. En effet, Ie FDR
compte des responsables de l'evaluation et a fixe des procedures d'evaluation,
qui, a l'heure actuelle, Ie mettent mieux a meme que la BND de superviser l'u
tilisation du credit\. Par la suite, l'administration et Ie recouvrement des
prets, et la remise en circulation des fonds du credit a moyen terme revien
draient a la BND ou a une autre institution jugee satisfaisante par l'IDA\.
Une fois l'approbation du FDR obtenue, un accord de credit serait signe entre
Ie cultivateur et la BND\. On a obtenu pendant les negociations l'assurance
qu'un modele d'accord de credit a moyen terme serait redige d'ici au 31 decem
bre 1976 et presente a l'approbation-de l'IDA\.
5\.18 'Projets non identifies\. Une somme de 600\.000 dollars seraitprevue
au titre du credit pour financer d'autres types de sous-projets\. Les propo
sitions de sous-projets seraient soumises, a mesure que ces derniers seraient
identifies et mis au point, l'IDA, qui approuverait Ie financement soit de
projets individuels, soit de categories de projets\.
5\.19 "Brigades d'entretien des forages\. Les puits exigent peu d'entretien,
et les villageois peuvent s'en charger eux-memes\. ~~is pour rester en bon etat,
un forage doit etre entretenu\. Certains ORO ont cree des brigades dtentretien,
mais il n'en existe aucune dans Ie nord, ou les forages prevus dans Ie cadre
du projet doivent etre executes\. Une petite brigade d'entretien serait donc
mise sur pied et releverait du chef de l'equipe de puisatiers\. A la fin de la
periode du projet, la responsabilite de l'entretian des forages du projet se
rait transferee aux ORDlIou sont situes les forages\. Des assurances a catte
fin ont ete obtenues pendant les negociations\.
5\.20 Services d'appui\. FDR II couvrirait les depenses de personnel, de
materiel et les depenses d'exploitation du FDR liees au fonctionnement du
fonds, ainsi que les depenses directes a la charge des autres organisations
participantes\. Dans Ie cas de l'HAER, FDR II financerait Ie coGt du coordi
nateur des activites du FDR, les deux brigades topographiques et les quatre
brigades d'entretien des puits et dans Ie cas des ORD, une brigade topographi
que, les tractcurs et Ie materiel (pour les travaux de lutte contre l'erosion
surtout) et les services des agents de vulgarisation\. On trouvera des details
supplementaires sur l'organisation et la gestion au Chapitre VII\.
11 au a toute autre organisation jugee acceptable par l'IDA\.
- 18
5\.21 Formation\. Le renforcement des institutions du projet par 1e recrute
ment provisoire de personnel etranger d'assistance technique serait complete
par 1a formation de Vo1taiques aux responsabi1ites du projet\. L'e1ement forma
tion comprendrait:
a) jusqu'a 24 bourses d'etudes individue11es, permettant de former
des responsab1es d'evaluation de projets, des ingenieurs et des
techniciens, et destinees essentie11ement a former 1es homo1ogues
vo1taiques du personnel etranger;
b) jusqu'a 80 bourses d'etudes destinees au personnel des ORD ou
aux vi11ageois responsab1es de petits projets de deve10ppement
rural, pour de brefs stages de deve10ppement rural au CESA01/;
et
c) services de consultants pour l'execution d'une etude sur 1a
formation de vu1garisateurs (voir\. par\. 7\.09)\.
5\.22 Assistance technique\. 11 a ete demande a un certain nombre d'orga
nismes mu1ti1ateraux et bi1ateraux de participer a l'execution du projet en
fournissant l'assistance technique etrangere\. A ce jour, 1es arrangements
ci-apres ont ete conc1us:
a) Gouvernement neer1andais: Trois techniciens benevoles qui
superviseraient les equipes topo
graphiques des ORD;
b) FAC: Financement de quatre techniciens
- un ingenieur rural en chef qui
ferait office de consei11er tech
nique du coordinateur du FDR a
l'HAER; un deuxierne ingenieur
rural, dont releveraient 18\. AlI
ments de FDR II executes par l'HAER;
un ingeni"eur topographe, charge
dtevaluer 1es etudes topographiques
et de superviser en general 1es
travaux topographiques des ORD; et
un chef de brigade de puits\.
c) PNUD: Deux expatries charges d'aider 1e
FDR a eva1uer les sous-projets et
a en suivre l'execution\.
11 Centre d'etudes economiques et socia1es d'Afrique occidentale\.
- 19 -
Les trois techniciens neerlandais sont arrives en Haute-Volta en decembre 1975\.
Le chef de brigade des puits finance par Ie FAC se trouve en Haute-Volta au
titre de FDR I et sera reconduit au titre de FDR II; l'ingenieur rural princi
pal finance par Ie FAC ast arrive en Haute-Volta en janvier 1976 et Ie deuxieme
ingenieur rural et lingenieur topographe ont ete recrutes en mars/avril 1976;
un document du projet, necessaire pour obtenir l'assistance du PNUD, a ete re
dige et presente au siege du PNUD, qui a autorise son representant resident en
Haute-Volta a financer Ie cout des deux resoonsables de l'evaluation des re
sultats au moyen de son budget d'assistance'technique\.
5\.23 "Etudes concernant Ie des re ions liberees
"de l'onchocercose Etudes onchocercose)\. L onchocercose, qui apporte la souf
france et la cecite aux populations et ampeche Ie developpement de nombreuses
vallees fertiles, fait des ravages dans Ie bassin de la Volta\. Cette maladie
est communiquee par la piqure de la femelle infectee d'une simulie de l'espece
Simuliumdamnosum, qui est Ie vecteur de la maladie\. Un programme de lutte
c~ntre ce vecteur, qui consiste essentiellement a rep andre des insecticides
sur les lieux de reproduction de l'insecte, a ete entrepris avec l'appui de
la communaute internationale, sous la direction de l'OMS\. Le programme est
entierement operationnel depuis dece~bre 1974\. Les insecticides ont des re
sultats pratiquemant immediats, mais les efforts doivent etre poursuivis pen
dant 20 ans si on vaut eliminer definitivement Ie vacteur\. Deja, dans quelques
regions, la population revient d'elle-meme vers les vallees fertiles dans l'es
poir que la maladie sera eliminee de fa~on permanente\. Les vallees touchees
constituent l'une des dernieres ressources naturelles de l'Afrique occidentale
et il est indispensable de les exploiter d'une fa~on optimale, et en particu
lier de controler les methodes traditionnelles et fondamentalement destructrices
d'utilisation des terres\.
5\.24 Les missions FAO/BIP~ qui se sont rendues en Haute-Volta en 1974
ont mis au point une methodologie de planification de base pour les regions
touchees par l'onchocercose, et cette me thodologie a re~u l'accord de prin
cipe du gouvernement\. On trouvera les details pertinents a l'Annexe 6\. II
s'agit de:
a) dresser l'inventaire des ressources naturelles dans les re
gions touchees (banque des donnees);
b) etablir un plan general de developpement pour les d1x pro
chaines annees, identifiant les mesures prioritaires de de
veloppement a prendre dans les regions totlchees (plan de de
veloppement decennal); et
c) mettre au point des propositions d'investissement specifiques
dans Ie cadre du plan de developpement (preparation de projets)\.
- 20 -
Les principa1es etudes dont on a besoin pour completer la banque de donnees
sont une etude sur lt uti1isation des sols et l'etab1issement de cartes, et des
etudes climato10giques et hydrologiques connexes; des etudes sur la vocation
des sols et etablissement de cartes; et des etudes socio10giques et economiques\.
Les etudes seraient effectuees par des consultants sous l'egide du Ministere
du developpement rural en cooperation avec l'AVV et les ORD\. En ce qui con
cerne le plan de developpement, on propose la creation d'un petit bureau de
planification dirige par un conseil1er principal (conseiller principal de pla
nification des zones touchees) au sein du Ministere du Plan\. Ce bureau s'as
surerait les services de consultants specialises et de specialistes dans 1e
cadre de contrats a court terme\. En ce qui concerne la preparation de projets,
i1 a egalement ete prevu d'avoir recours a des services de consultants pour
etablir deux ou trois etudes de factibilite\. Durant toute l'operation, il se
rait fait appel au maximum aux competences locales\. Le Comite de coordination
du developpement rural serait charge\. Celui-ci prendrait toutes les decisions
relatives a l'execution de cet element (voir par\. 7\.11)\. Le FDR ne serait
utilise que comme intermediaire pour le deboursement des fonds\. On a estime
a l'equivalent de 7\.500 dollars par homme-mois 1e total des depenses par con
sultant employe\. Cette somme se decompose comme suit: honoraires moyens des
consultants, plus indemnite journaliere, 6\.000 dollars, voyages internationaux
et interieurs, 1\.000 dol1ars,et depenscs diverses, 500 dollars\. On estime que
75 hommes-mois pourraient atre necessaires pour mener a bien cet element\.
5\.25 Routes dedesserte\. FDR I comprenait un element routes qui a ete
execute conjointement avec des elements analogues finances au titre du Credit
442-UV, ce dernier finangant le materiel\. A peu pres 350 km de routes ont pu
atre ameliores par des methodes faisant appe1 a une main-d'oeuvre nombreuse
et avec la participation active et enthousiaste de la population locale\. Le
projet propose ne comprend pas d'e1ement routes, etant donne que 1e Credit
579-UV~/ destine a financer un projet de routes rura1es, vient d'etre signee
Dans Ie cadre de co projet, un Service dtentrotien des routes secondalres)(SERS)
a ete cree au sein du Ministere des travaux publics qui sera responsable de la
construction, de l'amc1ioration et de ltentretien des routes secondaires et des
routes de desserte dans la zone du projet et ai1leurs\. LeCredit 579-L~ per
mettra de financer pendant les prochaines annecs les travaux d'ame1ioration qui
ne seraient pas finances au titre de FDR II\. Cependant, tout le materj\.el rou
tier finance au titre des Credits 3l7-UV et 442-UV, et confie maintenant au
FDR, serait transfere au SERS a l'achevement des travaux finances dans Ie ca
dre de ces credits (prevu pour juin 1976) et le Gouvernement voltarque fournira
une lettre a cet effet lors de 1a signature de l'Accord de credit\.
1/ On trouvera des details supplementaires dans 1e Rapport 738a-UV, date du
6 juin 1975, "Evaluation d'un projct de routes rurales en Haute-Volta"\.
- 21
\.
H,\L"'!E-VOtTA
Resume des couts du orojet
Hillters de francs crA }ti11iers de dollars
Nonnaie Honnaie
A\. Travaux'nrevusau
titre du oroiot
nationale Devises 'Total
-
nationale Devises ~
Bas-fonds 59\.358 53\.232 112\.590 263,8 500,4
Trava~~ de lutte contra
l'erosion 74\.500 61\.108 135\.608 331,1 271,6 602,7
EA~ansion des bas-fonds et
irrigation a petito echel1e 149\.158 95\.812 244\.970 662,9 425,8 1\.08B}7
Bati:onts v i 1lageois 36\.338 29\.667 66\.005 161,5 131,9 293)4
Puits 261\.425 274\.450 535\.875 1\.161,9 1\.219,8 2\.381,7
Forages 71\.608 95\.722 167\.330 318,3 425,4 743, I
Credit agricole 78\.750 33\.750 112\.500 350,0 150,0 500,0
Projets non identifies 71\.550 '63\.450 135\.000 318\.0 282,0 600\.0
Total partie1 802\.687 707\.191 1\.509\.878 3\.567,5 3\.143,1 6\.710,6
B\. Services d'annui
Personnel 502,450 502\.450 2\.233,2 2\.233; ::1
:'lateriel 44\.040 102\.760 146\.800 195,8 456,6 652\. !I
Depenses d'exploitation 61\. \.145 78\.398 142\.543 285,1 348,4 633,5
Formation 21\.020 9\.000 30\.020 93,4 40,0 133 t 4
Brigades d'entreticn 11\.462 18\.758 30\.220 50,9 83,4 134,3
Depenses liees aux brigades
d'entretien 34\.275 5\.625 39\.900 152,3 177,3
Total partie1 677 \.392 214\.541 891\.933 3\.010,7 953,4 3\.964,1
c\. Assistancetechnioue 222\.606 222\.606 989,4 \.989,:'
D\.' Etudes onchocercose 31\.973 304\.402 336\.375 14~,1 1\.352,9 1\. '4 9 5 \.0
E\. !r:rorevus
;lateriels 101\.366 97\.425 198\.791 450,5 433,0 883
Pour hausse des pri:t 246\.9&2 243\.739 490\.681 1\.097,5 1\. 083 ,3 1\.:\.11\.2" 3
Total partiel 348\.308 341\.164 689\.472 1\.548,0 1\.516,3 3\.06 4 ,3
CoGt du projet (A~~~C+D+E) 1\.860\.360 1\.739\.904 3\.650\.264 8\.268,3 7\.955,1 16\.2::3,':'
Solde du Credit: 317-uy (6\.337) (6\.088) (12\.425) (28,2) ('27\.1)
TOTAL DES COUTS DU P~OJET
1\.854\.023 1\.783\.816 3\.637\.839 8\.2t\.O,1 7\.928,1 16\.158,2
---~\.O'l"_
- 22
VI\. COUTS ESTI~~TIFS ET DISPOSITIONS FINMJCIERES
'CoGts dU'projet
6\.01 Le montant estimatif des couts du projet, ca1cu1e d'apres 1e program
me d'activite suppose au par\. 5\.04, est resume ci-apres et expose en detail a
1tAnnexe 7\.
6\.02 Les couts estimatifs sont bases sur 1es prix obtenUs pendant l'exe
cution du projet FDR I, mis a jour a 1a fin de 1975\. Toutefois, a 1a suite
des hausses de sa1aires recentes (par\. 2\.04), 1e cout des traitements et sa
1aires a ete majore lors des negociations (avril 1976)\. On estirne que 1es
couts du projet s'e1event a 16,2 millions de dollars ou a 15,1 millions de
dollars nets dtimpots\.
6\.03 Des provisions pour imprevus, equiva1ant a 10 % du coGt des travaux
du projet et a 5 % du cout des services dtappu~ sont comprises dans 1es couts
du projet\. Des provisions pour hausse de prix ont ete ajoutees aux couts de
base et aux provisions pour depassement des quantites, et prevoient des aug
mentations composees suivant 1es pourcentages annue1s ci-apres: pour 1e ma
teriel et 1es fournitures, 10 % en 1976, 8 % en 1977, 1978 et 1979, et 7 % en
1980; et pour tous 1es autres postes de depenses (sa1aires, depenses d'exp1oi
tat ion et main-d'oeuvre essentie11ement), 7 % par an\. Aucune provision pour
hausse des sa1aires nta ete prevue pour 1976 puisque 1es chiffres ont ete re
eva1ues en 1976 (voir par\. 6\.02)\.
Modalites de financemcnt
6\.04 On trouvera 1e detail du plan de financement a 1tAnnexe 8\. En voici
un resume ci-apres:
------------ Plan de financernent -------------
TOtal "des "cot'its Net,d'i!l20ts
Millions Millions
de"! %"du'tota1 de"$ % du"total
IDA 9,40 58 9,40 62
BADEA 4,50 27 4,50 30
FAC 0,60 4 0,60 4
Aide neerlandaise 0,15 1 0,15 1
PNUD 0,45 3 0,45 3
Etat '1,10 7
Total 16,20 100 15,10 100
- 23
6\.05 La credit de l'IDA, soit 9,4 millions de dollars, financerait 62 %
des depenses du projet nettes d'impots et couvrirait Ie montant estimatif de
l'element en devises (7,9 millions de dollars) plus 18 % des couts en monnaie
nationale\. Le solde des couts du projet serait finance par: la Banque arabe
pour Ie developpement economique en Afrique (BADEA), Ie Fonds d'aide et de co
operation (FAC) , Ie Gouvernement neerlandais, Ie Programme des Nations Unies
pour Ie developpement (PNUD) et l'Etat volta!que, dont la contribution cor
respond au montant estimatif des impots\.
6\.06 Le credit de l'IDA serait assorti des conditions usuelles et Ie
pret de la BADEA porterait interet entre 2 et 4 % et serait remboursable en
25 ans, dont cinq ans de differe\. Les contributions du PNUD, du FAC et du
Gouvernement neerlandais se feraient sous forme de dons\. Les modalites de
financement seraient paralleles\. La contribution de la BADEA porterait sur
les sous-elements suivants: puits, forages, brigades d'entretien des forages
et services connexes\. Les contributions du FAC, du Gouvernement neerlandais
et du PNUD seraient destinees a l'assistance technique etrangere\. La signa
ture d'un accord entre Ie gouvernement et la BADEA serait une condition d'en
tree en vigueur du credit\.
6\.07 Tous les fonds destines au projet seraient transmis au FDR sous
forme de don\. Le FDR les reaffecterait, suivant les besoins, aux autres or
ganismes participants, l'HAER et les ORD, egalement sous forme de dons\. Des
accords de retrocession seront inutiles, puisqu'on envisage que les ressour
ces destinees au credit agricole a moyen terms soient deposees dans un fonds
renouvelable gere par la BND; au cours des negociations, on a obtenu l'assu
rance que cefondsserait administre par la BND a des conditions qui seront
determinees d'un commun accord entre la BND et Ie gouvernement avec l'appro
bation de l'IDA\.
6\.08 Comma il probable que les fonds disponibles au titre du Credit
3l7-UV seront epuises avant que les fonds provenant du credit accorde au titre
de FDR II puissent etre utilises, on propose un financement retroactif pouvant
aller jusqu'a 350\.000 dollars pour des depenses faites au titre de sous-projets
repondant aux condition~ entre Ie ler mars 1976 et la Signature du credit,
soit autorise\. La BADEA ne pratiquerait pas de financement retroactif (voir
egalement par\. 6\.11)\.
Passation des marches
6\.09 Les marches concernant les biens, travaux et services finances au
titre du credit de l'IDA seraient passes de la fa~on suivante: les vehicules,
tracteurs et autres materiel et fournitures, notamment Ie ciment et l'acier,
d'une valeur totale de 2 t O millions de dollars, seraient achetes par appel a
C'est-a-dire les sous-projets qui satisfont aux criteres etablis pour
FDR I et tels qu'ils ont eventuellement ete modifies dans Ie cadre des
arrangements proposes dans Ie present rapport pour FDR II\.
- 24
la concurrence internationale, conformement aux directives de l'IDA pour les
marches superieurs a 50\.000 dollars, et par appel d'offres local selon des
procedures jugees acceptables par l'IDA pour les marches de moins de 50\.000
dollars\. Pour les marches inferieurs a 10\.000 dollars, on aurait recours aux
voies commerciales normales avec comparaison des prix\. Les biens manufactures
en Haute-Volta beneficieraient d'une preference de 15 % ou du droit a l'impor
tation pertinent suivant cclui des deux montants qui serait le moins eleve\.
Les depenses de main-d'oeuvre, de salaires et d'exploitation et de formation,
evalueesaenviron 4,2 millions de dollars, et dont aucune ne peut faire l'ob
jet d'un appeldtoffres, constitueraient une grande partie des couts du projet\.
Les services de consultants et de personnel expatrie, evalues a environ 1,4
million de dollars, seraient obtenus conformement a des procedures jugees ac
ceptables par ltIDA\. Un montant total de 1,1 million de dollars serait affecte
au credit agricole et aux projets non identifies\. Une somme de 1,8 million de
dollars serait affectee aux provisions pour imprevus\.
6\.10 On sait que le cofinancement amenera a utiliser des procedures de
passation des marches et de deboursement qui varieront suivant les differents
organismes\. Dans le cas de la contribution de 4,5 millions de dollars de la
BADEA, la passation des marches se fera conformement aux regles de la BADEA\.
Cette diversite de procedures ne devrait pas entratner pour le gouvernement
des depenses plus elevees que si le projet etait finance uniquement par l'IDA\.
Les services de personnel expatrie et de volontaires, evalues a environ 1,2
million de dollars, et finances par le PNUD, le FAC et le Gouvernement neer
landais, seraient obtenus conformement aux procedures etablies par ces orga
nismes\.
DeboursetOOnts
6\.11 Le credit de l'IDA serait debourse comme suit:
Categoric I
Tous les travaux et les services d'appui connexes du proJet pour
les puits, forages et brigade d'entretien des forages
200\.000 dollars 89 % des depenses
totales
Categoric II
Tous les travaux du projet et services dtappui sauf ceux
qui relevent de la Categorie I
a) biens importes directement et
services de consultants etrangers 1\.200\.000 dollars 100 % des de
penses en devises
- 25
b) autres depenses pouvant etre
financees 5\.000\.000 dollars 89 % des depenses
totales
Categorie III
Etudes relatives a la mise en valeur des regions
liberees de l'onchocercose
a) personnel recrute sur Ie plan
international 160\.000 dollars 100 % des depenses
totales
b) services de consultants 1\.140\.000 dollars 100 % des depenses
en devises
c) autres depenses pour les vehi
cules, depenses d'exploitation
et personnel local de contre
partie 100\.000 dollars 50 % des depenses
totales
CategorieIV
Non affecte 1~600~OOOdollars
Total 9\.400\.000 dollars
Un financement retroactif de l'IDA serait autorise pour les Categories I et II
a concurrence de 350\.000 dollars\. Le financement de l'IDA au titre de la Ca
tegorie I prendrait fin Ie jour de la signature de l'accord BADEA et tout re
liquat serait reaffecte\.
6\.12 La contribution de la BADEA couvrirait 100 % du total des depenses
relatives aux puits, aux forages et a la brigade d'entretien des forages\. Cela
representerait un montant de 3,4 millions de dollars et il resterait une somme
non affectee de 1,1 million de dollars \. Le FAC, Ie Gouvernement neerlandais
et Ie PNUD effectueraient leurs decaissements directement, conformement a leurs
propres procedures\. Les deboursements de l'IDA seraient effectues au vu des
etats certifies con formes des depenses et des documents d'imp~rtation\.
Comotabilite etverificationdes comptes
6\.13 Le FDR etablirait des budgets semestriels qui seraient presentes au
Comite technique interministeriel pour approbation et a l'IDA a titre d'informa
tion\. Le gouvernement, se fondant sur les budgets approuves, determinerait les
ouvertures de credits budgetaires et mettrait les fonds necessaires a la dis
position du FDR a l'avance tous les trimestres\. nes assurances a cet effet ont
ete obtenues pendant les negociations\.
- 26
6\.14 En outre, 1e FDR etab1irait et enverrait a l'IDA tous 1es semestres,
en janvier et en ju111et, des rapports sur l'etat des travaux et un resume
aussi detaille que Ie demandera l'IDA des depenses du projet et de l'utilisa
tion des fonds\. Des assurances a cet effet ont ete fournies pendant les ne
gociations\. En outre, un rapport annuel detai11e sera redige et devra etre
presente a l'IDA dans 1es trois mois qui suivront 1a fin de l'annee a laquel1e
i1 a trait\.
6\.15 Le FDR: i) tiendrait des comptes indiquant, conformement aux pra
tiques comptab1es genera1ement acceptees, ses operations et sa position finan
ciere; ii) ferait verifier ses comptes par un bureau d'experts-comptables ac
ceptable par l'IDA; iii) presenterait des copies de ses comptes verifies et du
rapport des reviseurs a l'IDA dans les quatre mois suivant 1a fin de chaque
annee du projet; iv) vei11erait a ce que les rapports des reviseurs soient
aussi complets et detai1les que l'IDA peut raisonnablement 1e demander; et
v) presenterait tous autres renseignements sur ses comptes que l'IDA pourrait
raisonnablement Ie demander\.
6\.16 11 etait demande au titre de FDR I que les comptes du FDR soient
verifies conjointement avec les comptes de 1a BND par 1a Caisse centrale de
cooperation economique et par 1e contro1eur des finances du Ministere des fi
nances\. eels n'a pas ete fait, et comme condition de negoc\.iation du credit,
1e FDR a dG designer une societe de reviseurs-comptab1es chargee de verifier
tous les comptes du FDR\. On pense que cette verification sera faite en mail
juin 1976 et que 1e rapport des reviseurs-comptables sera pret a l'automne de
1976\.
- 27
VII\. ORG&~ISATIONETGESTION
7\.01 Les organismes ci-apres participeraient a l'execution du projet,
exception faite des etudes onchocercose: 1e Fonds de deve10ppement rural (FOR),
1a Direction de l'hydrau1ique et de l'amenagament et l'espace rural (HAER) et
1es Organismes regionaux de deve10ppement (ORD)\. Les responsabi1ites de ces
organismes sont resumes ci-apres\. On trouvera des details sur ce sujet a
l'Annexe 9\.
7\.02 Fortdsdedeve1oppement rural (FOR)\. Le FOR conservera 1a responsa
bi1ite glob ale de l'execution du projet; i1 eva1uera 1es sous-projets, contri
buera si necessaire a l'identification et a 1a preparation de sous-projets, et
sera responsab1e de l'inspection technique effectuee apres reception conjointe
mant avec 1tHAER et de l'eva1uation des resu1tats\. Le personnel du FDR serait
renforce par deux specia1istes de l'eva1uation ex-post, d'un agro-economiste
et d'un ingenieur rural\. Au cours des negociations on a obtenu l'assurance
que 1es qualifications, l'experience et 1es conditions de services des specia
1istes de l'eva1uation ex-post seraient jugees satisfaisantes par l'IDA\. On
a ega1ement obtenu l'assurance que, des leur entree en fonction, i1s eva1ue
raient 1e programme finance a ce jour par 1e FOR conformement a un ca1endrier
a fixer en accord avec l'IDA\. A 1a suite de cette evaluation et se10n \.ses re
su1tats, on mattrait au point un mecanisme de suivi permettant de contro1er
l'execution du programme u1terieur du FDR\.
7\.03 Les 10caux reserves au FDR dans l'immeub1e de 1a B~~ sont insuffi
sants et 1e FOR devra 10uer d'autres bureaux au deuxieme semestre de l'annee
1976\. La BND pre1eve une commission de 1 % sur toutes 1es transactions du FDR
pour couvrir 1e 10yer et 1es autres depenses qu'e11e finance\. Cette commission
serait ajustee apres 1e demenagement du FDR\.
7\.04 Outre 1es sous-projets finances au titre du Credit 317-UV, 1e FDR a
administre 1e Projet de fonds de secours contre 1a secheresse (Credit 442-UV)
et 1e Fonds de credit agrico1e a moyen terme de l'USAID (voir\.par\. 5\.16)\. Ce
pendant, de fa~on que 1e FDR puisse vei11er a 1a bonne execution de FOR II, on
obtiendrait pendant 1es negociations l'assurance que 1e FDR ne se chargerait
d'aucune responsabi1ite supp1ementaire sans l'accord de l'IDA\.
7\.05 Comite technique irttermirtisterie1\. Un comite technique interministe
riel a ete institue dans 1e cadre du Credit 317-UV et un comite technique in
terministerie1 analogue a ete cree pour 1e Credit 442-UV\. Ces comites avaient
pour taches i) de promouvoir 1es objectifs du credit de l'IDA, et ii) d'assurer
1a coordination et 1a supervision necessaires du FDR\. La premiere de ces fonc
tiona a ete reprise dans une large mesure par 1e nOuveau Comite de coordination
pour 1e deve10ppement rural\. La deuxieme n'a pas ete exeeutee de fa~on tota1e
mant satisfaisante, car 1e comite etait trop nombreux et ne se reunissait pas
souvent\. Par consequent, 1es decrets No 72-142 (Comite tQchnique interministe
riel au titre du Credit 317-UV) et No 74-092 (Comite technique interministerie1
- 28
au titre du Credit 442-UV) seraient abolis et des assurances ont ete obtenues
qu'un nouveau comite, dont la composition serait jugee satisfaisante par l'IDA,
serait cree au plus tard le 30 septembre 1976 pour superviser le FDR\. Le co
mite compterait parmi ses membres le Ministre du developpement rural (Presi
dent), le Ministre du Plan, le Directeur du Secretariat permanent des ORn, le
Directeur de l'HAER, le Directeur des services agricoles, le Directeur de la
BND, le Directeur du budget, le Directeur du Tresor et le Directeur du FDR
(Secretaire)\. Les Directeurs de l'elevage et des eaux et forets seraient co
optes le cas echeant, si le FDR s'interessait a des activites d'elevage et de
reboisement\. Le Comite se reunirait au moins deux fois par an, mais si pos
sible quatre fois par an\. Etant donne que le Directeur du Secretariat perma
nent des ORD en ferait partie, il deciderait s1 certaines questions devraient
etre renvoyees devant le Comite de coordination pour le developpement rural\.
7\.06 Directiondel'hydrauliaueagricoleet del'equipementrural (HAER)\.
Au titre de FDR I, l'HAER etait chargee des etudes techniques, de la conception
et de l'execution relatives a tous les sous-projets, mais pour FDR II, seule
la construction des puits, les forages et les travaux presentant des difficul
tes techniques, tels que les petits ouvrages d'irrigation et la mise en valeur
des bas-fonds ameliores releveraient de sa competencel/ Mais l'HAER continue
rait a fournir: a) des principes directeurs et des normes d'etudes techniques
et de conception aux\.ORn; et b) effectuerait l'inspection technique lors de la
reception de tous les projets, de concert avec le FDR\. On obtiendrait pendant
les negociations des assurances sur les modifications a apporter au role de
l'HAER\.
7\.07 Les problemas de personnel ont toujours limite la capacite d'execu
tion de l'HAER\. Un assistant aupres du directeur serait nomme dans le cadre
du projet pour coordonner toutes les activites du FDR confiees a l'HAER\. Cette
nomination serait une condition d'entree en vigueur du credit\. La FAC fournit
a l'HAER les services de quatre experts etrangers (voir par\. 5\.22) qui devraient
suffire a resoudre les problemes de personnel technique de l'HAER\.
7\.08 Organismes regionauxde developpement\. Le role devolu aux ORn dans
le cadre du deuxieme projet sera elargi\. Les ORn devront non seulement iden
tifier les sous-projets, assurer les services de vulgarisation, les services
de credit et de fourniture des facteurs de production aux participants des
sous-projets de production et superviser l'entretien des ouvrages construits
au titre des sous-projets, ils seront en outre charges des etudes techniques,
de la conception et de l'execution de travaux simples, comme l'amenagement des
bas-fonds, les ouvrages de lutte c~ntre l'erosion et les batiments villageois\.
Pour pouvoir s'acquitter de ces fonctions, les ORO seraient renforces et FDR II
comprendrait des fonds destines a financer les services d'equipes supplemen
taires d'etudes topographiques et l'achat de tracteurs et du materiel neces
saires pour la mise en valeur des terres\. Le manque de fonds a entraIne une
11 Si le gouvernement instituait une direction de l'irrigation separee, la
responsabilite de ces derniers travaux pourra lui etre confiee, avec
l'approbation prealable de l'IDA\.
- 29
penurie de main-d'oeuvre dans les ORO et le f1nancement des agents de vulga
risation, qui superviseraient l'entretien et fourniraient ces services aux
agriculteurs participant a des sous-projets de production lances dans le cadre
de FDR II\. Les ORO seraient charges de superviser la gestion et l'entretien
des sous-projets par les agriculteurs une fois les travaux de construction
termines, et comme les ORO fournissent egalement les services necessaires, ils
joueraient un role crucial dans le succes des differents sous-projets\. Pen
dant les negociations on a obtenu l'assurance que le gouvernement fournirait
des fonds suffisants et apporterait l'appui necessaire aux ORO pour leur per
mettre d'assurer les services requis pour que les sous-projets fonctionnent
avec succes et efficacite et soient correctement entretenus\.
7\.09 Formation\. Le projet comprend un petit element formation, constitue
par des bourses d'etudes essentie11ement\. On trouvera des details a l'Annexe
10\. Si 1e nombre des agents de vulgarisation formes actuellement en Haute
Volta est suffisant, on eprouve cependant quelques doutes sur la qua1ite de
leur formation et i1 n'est pas certain que les installations soient suffisantes
vu 1es besoins futurs\. Le gouvernement est au courant de 1a situation et en
visage des solutions possibles\. Cependant, une etude succincte serait neces
saire pour rassembler les elements et les idees et pour proposer des mesures
sous une forme concise\. Une etude sur la formation des agents de vulgarisa
tion serait terminee en janvier 1977 et presentee a l'IDA a titre d'informa
tion\. On a obtenu des assurances en ce sens ainsi que des assurances que le
mandat, 1es conditions d t emp10i et 1es qualificati\.ons des consultants seraient
satisfaisantes pour l'IDA\. Le Ministere du deve10ppement rural serait en
principe responsab1e de Itexecution de cette etude, mais pour des raisons pra
tiques, 1e faib1e decaissement requis serait achemine par l'intermediaire du
FDR\.
7\.10 Cyele dessous-projets\. En dehors du fonds renouve1able pour 1e
credit a moyen terme, dont les modalites ont ete decrites aux paragraphes 5\.16
et 5\.17, trois organismes participent au cycle de sous-projets: 1e FDR, l'HAER
et 1es ORO\. Les criteres de selection des sous-projets seraient identiques a
ceux qui ont ete adoptes pour FDR I mais les responsabi1ites pour 1es diffe
rentes parties du cycle ont ete redistribuees\. On trouvera des details sup
plementaires a l'Annexe 9; pour resumer, ces responsabi1ites sont 1es suivantes:
a) Identification et preparation: les ORO et l'HAER pour 1es puits,
1es forages et 1es petits travaux d'irrigation\.
b) Evaluation FDR\. L'eva1uation complete de chaque sous-element par
ticulier n'est pas necessaire\. Les programmes de construction de
pu1\.ts et de forages seraient approuves tous 1es ans, compte tenu
de la capacite d'execution de l'HAER\. Les ouvrages simples, comma
l'amenagement des bas-fonds, 1es travaux de 1utte contre l'erosion
et les entrepots villageois sont maintenant familiers et ne sont
- 30
plus a justifier\. et il ne serait pas necessaire de faire une eva
luation complete pour chaque site\. Cependant, Ie FDR evaluerait la
capacite technique des ORD et veillerait a ce que les etudes soient
terminees, que l'accord des agriculteurs ait ete obtenu et que les
arrangements app\.ropries concernant l' organisation aient ete pris\.
Les propositions relatives a la mise en valeur des bas-fonds ame
liores et aux petits ouvrages d'irrigation seraient evaluees inte
gralement et feraient ltobjct d'une justification individuelle et
les travaux ne seraient entrepris par l'HAER qu'apres approbation
par l'IDA du programme annuel (voir par\. 5\.09)\. Les propositions
relatives a des sous-projets qui seraient finances dans Ie cadre
des projets non identifies seraient evaluees integralement et de
vraient etre justifiees, et une documentation complete serait ensuite
presentee a l'approbation de l'IDA\. Des assurances en ce sens ont
ete obtenues pendant les negociations\.
c) Execution des travaux de construction: les ORD pour les bas-fonds,
la lutte contre l'erosion et les batiments vtllageois t et l'HAER
pour les putts, les forages et les petits ouvrages d'irrigation\.
d) Inspection technique apres reception: FDR de concert avec l'HAER\.
e) Supervision et fourniture des services d'appui aux participants aux
projets: ORD\.
f) Evaluation des resultats: FDR\. Le manque de personnel a empeche Ie
FDR d'evaluer integralement les resultats de FDR It mais Ie recrute
ment de deux agents d'evaluation expatries devrait remedier a cette
situation\. Pour suivre et evaluer l'execution des projets, Ie FDR
determinera quelles sont les donnees dont 11 a besoin, et celles-ci
seront rassemblees tous les trimestres par les agents de vulgarisa
tion des ORD pour tous les sous-projets finances par Ie FDR\. Les
ORD transmettront ces donnees accompagnees de resumes et d'une note
explicative\. Les ORD conserveront un double de cesdonnees a l'in
tention de leur propre section de planificat~on et d'evaluation des
resultats\. Le FDR verifiera les resultats des evaluations tous les
ans en se fondant sur un echantillon de 10 % de tous les sous-projets\.
7\.11 Etudesortehoeereose\. La responsabi1ite globale des etudes onchocer
cose incomberait au Comite de coordination pour Ie developpement rural deja
constitue et qui\. selon les assurances obtenues lors des negociations, sera
maintenu\. Le Ministere du developpement rural aurait la rcsponsabilite imme
diate de la banque de donnees et des etudes de factib:i\.lite, tandis que Ie ~!i
nistere du Plan serait responsable du plan decennal de developpement\. A cet
effet, Ie Hinistere du Plan sera renforce par la nomination d'un conseiller
principal qui sera recrute sur Ie plan international\. et dont les qualifica
tions et les conditions d'emploi seront jugees satisfaisantes par l'IDA\. On
- 31
a obtenu des assurances en ce sens pendant les negociations\. La plupart des
etudes seront sans doutes effectuees par des consultants et on a obtenu l'as
surance que le mandat, les conditions d'emploi et les qualifications des con
sultants seraient jugees satisfaisantes par l'IDA\.
7\.12 L'AVV est ltorganisme charge du developpement economique de zones
bien determinees situees le long des Volta\. Des consultants, dont les ser
vices etaient finances par le PNUD, la Banque servant d'agent d'execution, ont
fait recemment un rapport sur ltorganisation de l'AVV, sur son role futur et
sur ses besoins en matiere d'organisation et de financement\. Le gouvernement
examine actuellement ce rapport et en discute les incidences avec l'IDA\. Au
cours des negociations, on a obtenu ltassurance que le gouvernement presente
rait a l'IDA avant le 31 mars 1977 ses propositions quant aux taches et res
ponsabilites specifiques de ses organismes qui executeront des projets de de
veloppement dans les zones liberees de l'onchocercose\.
- 32
VIII\. AVANTAGES POUR LES AGRICLTLTEURS ET INCIDENCES
FINANCIERES POURL'ETAT
\. Avantagesque les agriculteurs retireraient dessous-projetsdeproduction
8\.01 Les agriculteurs obtiendraient des avantages directs sous forme de
produits agricoles commercialisables ou consommables grace aux sous-projets
de mise en valeur des bas-fonds, des petites irrigations, de lutte contre l'ero
sion et de credit a moyen terme\. Les principales recoltes seraient Ie riz, Ie
sorgho et Ie millet, et, en moindre quantites l'arachide, Ie coton et les legumes\.
8\.02 Si la combinaison de sous-projets envisagee au Chapitre Vest execu
tee, et si les sous-projets sont conformes aux "modEnes" decrits aux Annexes 4
et 11, on estime que d'ici 1980, FDR II aura permis de recolter 5\.300 tonnes
supplementaires de paddy (equivalant a 3\.400 tonnes de riz), 1\.200 tonnes sup
plementaires de cereales et environ 200 tonnes supplementaires d'autres pro
duits par an, d'une valeur financiere totale pour Ie producteur de 217 millions
de francs CFA (965\.000 dollars) par an\. Ces calculs sont fondes sur les prix
officiels au producteur en vigueur a la fin de 1975: paddy, 35 francs CFA Ie
kilo; sorgho/millet, 22 francs CFA le'kilo; arachides, 25 francs CFA Ie kilo
et coton-graine, 39 francs CFA Ie kilo\. Ces prix ont egalement ete utilises
dans les analyses de budget d'exploitation agricole decrites ci-dessous\. Les
estimations auxquelles on est parvenu sont donc prudentes, puisque les prix
consentis par les negociants prives, qui dominent Ie commerce en Haute-Volta,
sont generalement plus eleves\.
8\.03 On estime que jusqu'a 15\.000 familIes d'agriculteurs (de 120\.000 a
190\.000 personnes) pourraient beneficier de l'un ou de l'autre des sous-projets
de production directe de FDR II, ou de plus d'un sous-projet, si Ie programme
suggare au Chapitre Vest execute\. La mise en valeur des bas-fonds est Ie
type de projet qui toucherait Ie plus grand nombre de familIes, puisqu'en ge
neral on octroie environ 0,2 ha a chaque famille\. Ainsi, 13\.500 familIes pour
raient participer aces sous-projets; 1\.000 familIes pourraient beneficier de
l'amenagement des petites zones irriguees, et 2\.500 environ des programmes de
lutte contre l'erosion\. On estirne qu'environ 1\.700 familIes utiliseront Ie
credit a moyen terme\. Toutes ces familIes seraient parmi les plus pauvres en
Haute-Volta\. En outre, un nombre de personnes beaucoup plus important benefi
ciera des puits, des entrepots, et des centres communautaires construits dans
Ie cadre du projet, qui toucherait, selon les estimations, 600'villages\.
8\.04 On trouvera a l'Annexe 11 des modeles des exploitations types ainsi
qu'une analyse des budgets des exploitations\. En voici un resume ci-dessous\.
- 33
8\.05 Bas-fonds\. En supposant 0,2 ha par famille participante, un rende
ment de 1,5 tonne de paddy a l'hectare, et comma seul factaur de production,
les se~~nces ameliorees, on estime Ie reven~1 d'une famille a 9\.800 francs
eFA (45 dollars) par an et Ie rendement par homme-journee employe a la culture
du riz a environ 445 francs eFA (2 dollars)\. Dans Ie cas de la mise en valeur
des bas-fonds ameliores, les rendements s'eleveraient a 2,2 tonnes; Ie supple
ment par rapport au revenu retire des bas-fonds traditionnels serait de 4\.900
francs eFA par famille (22 dollars);1/ et la rentabilite par homme-jour pas
seratt de 445 francs eFA pour un bas-fond ordinaire a 668 francs eFA (3 dol
lars) apres amelioration\.
8\.06 Petiteitti~ation\. Les avantages retires des petits perimetres
d'irrigation varieraient fortement suivant les cultures adoptees et suivant
qu'il y aurait une ou deux recoltes par an\. La ou on cultivera Ie paddy, on
peut s'attendre a des rendements moyens de 3\.500 kilos a l'hectare par re
colte, avec une intensite de recolte de 150 %\. Sur un terrain de 0,2 ha, una
famille cultivant du riz dans Ie cadre de ce projet obtiendrait, apres l'achat
des facteurs de production, un reven~1 estime a 27\.000 francs (120 dollars)
et une rentabilite par homme-jour de 697 francs CFA (3,10 dollars)\.
8\.07 Travaux de lutte contra l'erosion\. Les travaux de lutte contre
l'erosion amelioreraient la retention et la filtration de l'eau de pluie et
ralentiraient la degradation de la structure du sol\. II est impossible de
determiner l'effet direct de ces ameliorations sur les rendcments, et celui-ci
serait tres falble s1 l'on se base sur la production annuelle\. eependant,
les participants aces sous-projets recevraient en outre un assortiment sim
ple de techniques ameliorees (semences de varietes ameliorees, produits de
traitement des semences, engrais et pesticides a pulveriser sur Ie coton et
conseils sur l'espacement et l'echelonnement des cultures)\. Ces ameliorations
conjugees aux mesures de lutte contre l'erosion devratent permettre d'obtenir
un rendement supplementaire de 150 kilos a l'ha pour Ie sorgho, 135 kilos a
l'ha pour l'arachide en coquet et 200 kilos a l'ha pour Ie coton-graine\. Pour
une ferme !10ssi type de 4 ha, situee dans un perimetre de lutte contre l'ero
sion, Ie supplement net de revenu (apres paiement des facteurs de production)
serait estime a 13\.000 francs eFA (60 dollars)!1 et larentabilite par homme
jour employe au gmenteraitde 30 %, passant de 157 a 204 francs CFA\.
En general, les bas-fonds ne sont pas cultives tant qu'ils n'ont pas ete
ameliores\. Le revenu qu'en retireraient les familIes s'ajouterait donc
au revenu qu'ils obtiennent de leurs champs traditionnels\.
y Le revenu retire par une famille d'un terrain de 0,2 ha passerait de
9\.800 francs CFA pour un bas-fond a 14\.700 francs CFA apres amelioration\.
Le revenu provenant d'un terrain irrigue de 9,2 ha s'ajouterait au revenu
provenant d'un terrain traditionnel\.
La valeur nette de la production passerait de 43\.000 francs CFA (190
dollars) a 56\.000 francs eFA (250 dollars)\.
- 34
8\.08 Credit a moyen terme\. Ce credit permettrait d'acquerir du materiel
agricole a traction animale\. Ce materiel permettrait d'economiser la main
d'oeuvre et donc, premierement, de mieux utiliser les terres existantes (des
goulets d'etranglemcnt se produisent au debut de la saison de plantation) et
deuxiemernent, de cultiver des superficies plus etendues\. Dans Ie modele de
l'Annexe 11, on suppose que la famille cultiverait 2 ha de plus et on estime
qu'elle obtiendrait un revenu supplementaire net d'environ 40\.000 francs CFA
(175 dollars)\.
Incidertces financieres pourl'Etat
8\.09 La contribution de l'Etat aux couts d'investissement du projet se
rait equivalente au montant estimatif des i\.mpots pendant la duree du projet\.
L'Etat prendrait ulterieurement a sa charge Ie cout des services de vulgari
sation et des autres services d'appui agricoles fournis aux participants des
projets directement productifs\. Les couts directement Ues au projet sont es
times a environ 30 a 40 millions de francs CFA (130\.000 a 180\.000 dollars)
par an\. A partir de 1986, Ie gouvernement devrait commencer a rembourser les
credits de l'IDA et de la BADEA, a raison de 240\.000 dollars et de 300\.000
dollars en moyenne par an respectivement\. Les partici\.pants aux projets ne
rembourseraient pas les couts d'investissement des sous-projets, etant donne
que ces investissements sont generalemcnt faibles, que les participants sont
pauvrcs, et que les conditions naturelIes du plateau Hossi sont penibles\.
Cependant, 1es depenses d'entretien (main-d'oeuvre essentiellernent) seraient
a 1a charge des participants\. Le gouvernemr\.nt ne recevrait donc aucune re
cette directe pour compenser ses depenses autre que 1es recettes eventuelles
de la caisse de stabili\.sation sur Ie coton et l'arachide et les impots indi
rects engendres par l'accroissernent du pouvoir d'achat des participants\. In
directement, 1es activi\.tes du projet entraineront des depenses de l'Etat pour
les frais gene raux du secteur rural, dans les ORO, l'HAER et Ie Ministere du
developpernent rural notamment\. Les autorites voltalques ont conscience de la
necessite d'accroitre les depenses consacrees au developpement rural\. Le
montant de ces depenses sera etudie periodiquement pendant la supervision du
projet envi\.sage\.
- 35
IX\. AVANTAGES ET JTJSTIFICATIC'N
9\.01 Le projet ouvre un credit au FDR pour lui permettre d'investir dans
de petits sous-projets disperses, choisis conformement aux procedures enoncees
au Chapitre VII et dont on trouvera les details a l'Annexe 9\. Si les avantages
presentes par la plupart des sous-projets peuvent etre identifies (voir avan
tages pour les agriculteurs possesseurs d'un terrain type au Chapitre VIII),
ccrta:f\.ns d'entre eux auront des avantages sociaux et sanitaires qui sont moins
faciles a chiffrer\.
9\.02 Les principaux avantages economiques chiffrables du projet seront
les suivants: bas-fonds - augmentation de la production de riz a la saison
des pluies; petite irrigation - augmentation de la production de riz et de le
gumes saisonniers; lutte contre l'erosion et credit a moyen terms - augmenta
tion de la production de cereales et d'arachides; entrepots - diminution des
pertes pendant Ie stockage des facteurs de production et des recoltes, plus
accroj_ssement de It utilisation des facteurs de production; puits et forages
amelioration de la productivite de la main-d'oeuvre et accroissement de la
production animale\.
9\.03 Le projet se traduira egalement par des avantages sociaux etinsti
tutionnels importants\. Les puits assurent l'approvisionnement en eau de la
population, qui sans eux depend de petits cours d'eau souvent eloignes qui
sont asseches pendant au moins trois mois par an\. Les consequences sanitaires
ne sont pas non plus negligeables, car ces cours d'eau propagent les maladies
transmises par l'eau\. On a deja assiste a un renforcement des institutions
dans Ie cadre du premier projet, grace a l'amelioration de la capacite du FDR,
de l'HAER et des OP~ en ce qui concerne la promotion et l'execution de plans
de developpement viables\. Le renforcement de ces institutions propose dans Ie
cadre du projet (voir Chapitre VII) apporterait des ameliorations supplemen
taires\.
9\.04 Pour calculer les couts du projet, on a determine un programme d'exe
cution des travaux a effectuer (voir Chapitre V)\. Ni ~e programme, n1 Ie ryth
me annuel de l'execution ne sont connus d'avance, mais sur la base des hypo
theses et des differents avant ages decrits au Chapitrs VIII, on estime Ie taux
de rentabilite economique de l'ensemble des investissements du Fonds de deve
loppement rural a 16 %\. On a ornis des calculs Ie coOt des projets non identi
fies et des etudes pour Ie developpement econornique des regions liberees de
l'onchocercose\. La programme d'elimination de l'onchocercose est economique
mant justifie (voir Annexe 6)\.
9\.05 Les calculs de taux de rentabilite economique sont provisoires, etant
donne que Ie projet fournit essentiellement une ligne de credit au FDR\. Les
taux distincts de rentabiltte pour les differents sQus-elements sont tres ar
bitralres, car il est imposstble d'allouer les frais generaux avec preci\.sion
- 36
et de determiner Ie rythme annuel d'execution des travaux\. Cependant, en se
fondant sur des modeles simples et sur Ie programme de developpernent du Cha
pitre V, et en supposant que les avantages decrits au Chapitre VIII se con
cretiseraient et compte non tenu des frais generaux, on peut estimer a titre
tout 11 fait indicatif que les taux de rentabilite economique des sous-projets
sont: pour des bas-fonds, plus de 50 %, pour la lutte contre l'erosion, 30 %,
pour l'amelioration des bas-fonds, 18 %, pour la petite irrigation, 16 %, et
pour Ie materiel agricole, plus de 50 %\. La taux de rentabilit de puits et
de forages est de 6 % (on trouvera des details supplementaires a l'Annexe 12),
mais ces avantages ne comprennent pas l'amelioration de la sante et la garan
tie d'un approvisionnement en eau\. Si on ne compte pas les puits et les fo
rages, Ie taux de rentabilite economique global s'leverait 11 21 %\.
9\.06 Les taux de rentabilite ci-dessus ne tiennent pas compte de deux
faits import ants i) ce sont les categories les plus pauvres de la population,
vivant dans une zone ou les conditions ecologiques et humaines sont difficiles,
qui tireront principalement avantage du projet, et H) Ie projet aura des re
percussions sur Ie bien-ctre de la population, grace aux sous-projets comma
celui qui vise a ameliorer l'approvisionnement en eau des villages\. Le taux
de rentabilite est inferieur a celui d'autres projets agricoles finances par
l'IDA en Haute-Volta, ce qui s'explique par Ie choix du plateau central comma
region devant beneficier de FDR II\. Compte tanu des conditions ecologiques
et humaines qui regnent dans cette region, tout taux de rentabilite superieur
a 10 % dott etre considere COmrr2 pleinement satisfaisant\.
9\.07 Risques\. Comme pour toutes les operations agricoles en Haute-Volta,
les avantages sont sujets a de brusques fluctuations dues a l'irregularite no
taire des predpitations\. Par ailleurs i l sera peut-ctre difficile a) d'as
surer un niveau suffisant de supervision et d 1 appui de sous-projets disperses
sur una vaste superficie; et b) de veiller 11 ce que les communautes locales
retirent des avantages des sous-projets\. Le projet prevoit de renforcer dif
ferents organismes, ce qui devra:f\.t minimiser les risques\.
- 37
x\. POINTS AYANT FAIT L'OBJET D'ACCORDS
10\.01 Des accords ont ete realises avec l'Emprunteur pendant les negocia
tions sur les points suivants:
a) en dehors des puits et des forages, i) un maximum de 10 % des fonds
du projet serait utilise pour des travaux situes en dehors des cinq
OF~ du plateau Mossi, et ii) les sous-projets situes dans les val
lees des Volta\. seraient exclus (R~/ par\. 4\.01 et AC!/ 3\.06);
b) Ie programme annuel de petite irrigation at de mise en valeur des
bas-fonds ameliores sera evalue par Ie FDR et approuve par l'IDA
avant que l'HAER n'entreprennent de travaux (RE, par\. 5\.09 et AC
3\.07);
c) un coordinateur charge d'assurer la liaison entre les quatre briga
des d'entretien des puits du projet et l'HAER serait nomme avant
Ie 31 decembra 1976 (P~ par\. 5\.11 et AC 3\.05);
d) la BND nommerait avant Ie 31 decembre 1976 un responsable du credit
qui serait charge de gerer Ie credit a moyen terme du projet (AR,
par\. 5\.17 et AC 3\.09);
e) un modele d'accord de credit a moyen terme serait prepare d'ici au
31 decembre 1976 et soumis a l'approbation de l'IDA (RE par\. 5\.17
et AC 3\.09);
f) Ie fonds renouvelable de credit a moyen terme serait administre par
la BND a des conditions qui seront determinees par la BND et Ie gou
vernement, en accord avec l'IDA (RE par 6\.07 et AC Annexe 4);
g) les qualifications et les conditions de travail des agents d'evalua
tion du FDR seraient acceptables pour l'IDA at leur ~remiere tache
consisterait a evaluer Ie programme finance Anterieurement par Ie
FDR conformement a un calendrier qui sera determine en accord avec
l'IDA (P£ par\. 7~02 et AC 3\.02 b) et 3\.04);
h) un nouveau comite technique interministerie1, dont 1a composition
serait jugee satisfalsante par l'lDA, serait institue au plus tard
Ie 30 septembre 1976 (RE par\. 7\.05 et AC 3\.15);
i) tous les documents relatifs a chacun des projets non identifies se
raient presentes a l'approbation de l'IDA apres evaluation par Ie
FDR (RE par\. 7\.10 b) et AC 3\.08);
1/ RE\. Rapport d'evaluation
1/ AC\. Accord de credit
- 38
j) Ie mandat, les conditions de travail et les qualifications des con
sultants necessaires pour a) l'etude relative a la formation en ma
tiere de vulgarisation, b) les etudes onchocercose seraient approu
vee8pa~ l'IDA (RE par\. 7\.09 et 7\.11 et AC 3\.10);
k) un conseiller principal pour la planification des zones onchocercose
serait nomme aupres du }tlnistere du Plan au plus tard Ie 31 decembre
1976 et ses qualifications et conditions de travail devraient etre
jugees satisfaisantes par l'IDA (RE par\. 7\.11 et AC 3\.12);
1) Ie gouvernement presenterait a l'IDA au plus tard Ie 31 mars 1977,
des propositions dans lesquelles figurerait une description detail
lee de la tache et des responsabilites specifiques de ses organis
mes qui executeront les projets de developpement dans les regions
liberees de l'onchocercose (P~ par\. 7\.12, et AC 4\.04)\.
10\.02 L'entree en vigueur du credit serait sou~ises aux conditions sui-
vantes:
a) Signature d'un accord entre la BADEA et la Haute-Volta (RE par\. 6\.06
et AC 6\.01 a»; et
b) Nomination d t un assistant aupres du Directeur de 1 'HAER, charge de
coordonner to utes les activites du FDR au sein de l'HAER (RE par\.
7\.07 et AC 6\.01 b»\.
10\.03 Tout Ie materiel routier finance au titre des Credits 3l7-UV et 442-UV
serait transfere au SERS a llach~vement des travaux finances par ces credits
(prevu pour juin 1976) et Ie gouvernement signera une lettre a cet effet pa
rallelement a la signature du credit (RE par\. 5\.25)\.
10\.04 Pour eviter toute difficulte durant Ie passage de FDR I a FDR II et
pour ne pas interrompre ltarrivee des fonds finan~ant les operations du FDR,
un financement retroactif pouvant aller jusqu'a 350\.000 dollars a compter de
mars 1976 serait prevu (RE 6\.08)\.
10\.05 Sous reserve des assurances et conditions ci-dessus, Ie projet jus
tifie l'octroi d'un credit de l'IDA d'un montant de 9,4 millions de dollars\.
ANNEXE 1
Tableau 1
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Utilisation des Sols en_ Haute-tlo1ta
Millions d 'ha % de 1a Superficie
Culture 2\.2 8
Jachere 8\.8 32
Paturages naturels 13\.6 50
Autres 2\.8 10
27\.4 100
HAUTE-VOLTA
DEUXIE~m PROJET DE FONDS DE DEVELOPPEMENT RURAL
Dons et Importatio~de Cereales
1971 1973
-----
-
Quantite Quantite Quantite
Donateurs PrQcluit_ tonnes Produit tonnes
---- Produit tonnes
AID (E\. U\.) Sorgho 19,059 Sorgho 15,000 Sorgho 21,000
FED (C\.E\.E\.) Mars 9,500 Mars 9,500 Mars 15,000
FAC (France) Mars 4,000 Mais 3,500 Ble et Mars 6,000
PAM (O\.N\.U\.) Farine de I\. Mars et Farine de
Sorgho, de blf 1,491 Farine de 2,900 Mars 4,000
et de Mars Mars
Canada Bie 2,000 B1e 5,000
A11emagne de l'Ouest B1e 3,000 Bie 4,000
URSS Rb 150 Riz 950 Riz 500
Cote d'Ivoire Riz\. 150
Total 34,200 36,850 55,650
Importations Normales 25,813 30,350 30,000
Importations 'rotales 60,013 67,200 85,650
~
~
III
CT'
Source: Office National des Cereales\. I-'
CD
III @
t:
I-'
N
ANNEXE 1
Tableau 3
RAU'I'E \.OLTA
DEUXIE\.'IE PROJ'ET DE FONDS DE DEVELOPPEMENT RI\.:!'J\!\.
Production Agricole
(en mil1iers de tonnes metriques: en FCFA le kg)
(millions de FCFA)
1967/68 ~ 1969/70 1970/71 1971 /72 1972/73 ~
J1!\.!\.
Volume 330 315 362 327 298 259 257
Prix 1 l'exp1oitation 11 12 1Z 1Z 1Z 14 16 20
Valeur de la production 3,962 3,780 4,344 3,924 4,172 4,144 5,140
Sorgho
Volume 546 545 560 506 474 507 493
Prix a l' exploitation 13 13 13 14 15 17 23
Valeur de la production 7,098 7,124 7,Z80 7,084 7,110 8,619 11,339
~
Volume 65 66 69 55 66 59 58
Prix a 1 'exploitation 13 13 13 14 16 19 25
Valeur de la production 845 858 897 770 1,056 1,121 1,450
~
Volume 36 38 39 34 37 34 31
Prix a 1 'exploitation 17 17 18 20 23 28 30
Valeur de la production 612 646 702 680 851 952 960
Arochides
Volume 75 75 78 65 66 60 63
Prix a l'exploitation 17 18 18 18 19 21 22
'laleur de 1a production 1,375 1,350 1,404 1,170 1,254 1,260 1,386
&\.!!!
Volume 3 5 8 4 4 6 5
Prix a l' exploitation 19 20 20 20 21 22 23
Valeur de 1a production 57 100 160 SO 84 132 11\.5
~
'iolume 17 32 36 24 29 32 27
Prix a l'exploitation 29 30 30 30 30 32 35
Valeur de ~a production 493 960 1,080 720 870 1,024 945
],/ Les prix 1 l'exploitation representent dans la mesure du possible les prix ~yens oayes au
producteur icmediaeement apres 1a moisson et different done des prix officiels 1 1a production,
notamment de 1971 1 1973 pour le mil, Ie sorgho et Ie maIs, dont le prix officiel a pris de
plus en plus de retard sur le prix effectif\. On s utilise le prix officiel Dour les produits
qui font l'object d'un cont~le plus rigoureux, comma le coton, 1e riz irrigue (environ 50%
de la production) et 1es araehides vendues aux usines (soit environ 15% de la production)\.
11 ~illiards de FCFA,
Source: Direction du Plan, Haute~olta\.
HAUTE\.-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAI4
Indices de 1a Production Agrico1e\. 1967-68/1973-74 JJ
(1969-70 \. 100)
1967-68 1968-69 1969-70 1970-71 1971-72
1972-73
1973-74
Mil 91 87 100 90 82
72
71
Sorgho 98 97 100 90 85
91
88
l,1ais 96 96 100 80 96
86
84
Riz 92 97 100 87 95
87
80
Arachides 96 96 100 83 85
80
81
Sesame 38 63 100 50 50
75
63
Coton 47 89 100 67 81
89
75
Production Agrico1e
Tota1e 88 94 100 88 85
83
81
~
H
~
11 En prix constants de 1967\. I-'
(I)
1\1
c::
\.p\.
e
I-'
Source: Rapport Ecouomique\.
\.ANNEXE 2
Table 1
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Travaux executes dans 1e cadre du 2remier 2rojet de deve10EEement rural
~-"~----------\. - -"--' - - -- -------\.~-
Ear ORD
Entrepots Irrigation en Lutte contre Routes Perimett"es
Puits villageois Bas-fonds ava1 barrages erosion desertes d'horticulture
OED de u , _ _u _ Hombre \. Nombre ha ha ha km ha
Ouagadougou 77 255 24 570 65
Koudougou 97 250 5 48
Dedougou 26 133 74
Bobo-Dioulasso 93 21 31
Banfora 52 3
Kaya 84 132 75 80 5
Fada-N' Gourma 132 15 55
Yatenga 19 78 176 65
Bougouriba 40 40
Koupe1a 76 65
Total 227 627 1,041 29 645 353 39
Concentration sur
_P1atea~, Mo\.s\.s:l Y __42,% __ ___ ,6~% ____L8% --- 83% 100% 73% 13%
1/ Travaux acheves au 30 juin 1975\.
- --lTPourcentage--de travaux exe:cut~sdans -lesC1n:q:-ORS duo-Plateau Mossi-lORDs, d 'Ouagadougo~,
Koudougou, Kaya, Yatenga et Koupe1a\.
IIAlrr~-:\.YQ-"lA
l'-E!!\.Xlf!~:\.!,ROJI~pE FONIl~ ilK n~:VF\.LOI'I'~:MEtiT (HIRAI,\.
Casl!\.i1ow \.~!Le\.!'lt er ~!'~ l~_~~_!~?~~ de_~~~YPJ:elflen~__Rt\.Jtal
(mIll Jers de FC~'A)
1972/1973 1973/197~ 197~/1975 'OTAJ\. 11 1Q7511970 2/
du~dit,;;td;;- Projet lerjullJ:et-'f;r jilnvler hr l11l11et l-;;r janvIer 1,'-: t'lHvler
ll\.!\.: : ul11et
au )0 julo 1973 ~11 dec\.lOb,e -]0 \.ju1n -31 Mcemhr\. ~10 \.juln -31 dcce \.»r\. -10 juln
A\. !"\.rnfs Gena,\.,,'!\. ,1/
tt\.tteriel rDR 2\.017 2\.711 227 3 670 298 8,945 y
'l'ralte1f~nt et frultl d'exploitatlon 1\.749 ],083 4\.4]() 3\.375 918 18,535
~\.£tyJ<:cs Tcchn\.!\.~\.i/
Mated"la
1),023 10\.884 2\.278 2\.115 211\.360
Traire1fl{:ot et: fnds d"exploftat1on _--1\.:\.ill \.1\.:\.12L 4\.471 6\.102 ~ ~
'I'ot;; I part 1el 19\.010 20\.493 11\. 386 15\.322 11\.29] 11\.504
IL !!\.!~~_ux
Putts et forages 1\. 747 8\.183 48\.483 25\.160 47\.877 131\.450
En'repilLfl
96 5\.884 8\.910 10\.318 10\.284 35\.492
HJIH! ton valeur des baH-fonda 5 600 6\.602 3\.355 1\.084 13\.646
l 1 \.atlte j rrJ gatJon 4\.639 1\.264 761 6\.670
IJutte ('ontre It eros1on 63 1\. 267 63 1\.193
RUlltC8 11\.615 28,515 40\.136 86\.926
1) rojt:tf1 DOll iucntifH,!s -~- 21\. 349 21\.611 _52\.824
Total partiel 1\.848 14\.130 90\.113 91\.288 130\.422 328\.401
C\. ~t(H'~a \.~I 5\.540 6\.16] 15\.651 4\.652 3\.526 35\.532
D\. TliTAL 26\.398 l,l\.386 111\.150 111\. 21)2 145\.241 441\.411
11 Total ll(lUr I \. ('''rlode ollant du debut du projet au 30 jilin 1975\.
21 Lee chlfft"ca ne 60nt paa encore d1s1)onlbles \.
3/ A i'executfon des services d'etrangers founds uallo le ca\.dre de l'!rJde bllatcrale
- frao\aitH'!\.
4/ ttl dtrcct\.fon du FUR hllie en entrcltot: faute de sYHtt>nW' de cOIl!ptab-Jli\.te analytlquf!,11 est
- \.f:mpotalihle d ' affecter fltlX t'rUVi:tux 1a valeur dcti fournltures en stock san9 prod~der 3\. un4?
LIlwlyse dftlttlH:tC\. Ce travtlll sera fait par de~ reviseufs qui vcrifleront lea travaux
"I~
\. cn uout ] 976\.
~~
!l\.! Ces eliJ ffres liCl"Ont dfsp(\.)oib1eH au cours uea nt~~~QclatJ()lIti"
:-8
~
N
N
lIAU'f£ VOLTA
DEUXIF\.HE PROJET Ill, FOlIDS DE IJEVt:I\.OPp~:t1Etrr RURAl\.
RecettBfi ~~~ Depenses du J\.oonds de Develoepcment HuriJ\.l
Montant Rembourae
Avances de Contribution
_-l'\.~tat~ p~pen8es l!!_ I'IUA de l'Etat
--------\. ------------'"---------------CFAF------------__________________________________
Avances de I' £lat
112,~~(),041{l
1\. Montant all one (28 avril 1973)
2\. Montant a110'0<1 (11 \.are 1974) 148,000,04141
3\. Montane allone (26 dec\."bre 197\.) 35,413,000
4\. Montant allouii (23 janvier 1975) 130,087,0041
5\. Montant alloue (20 jutn 1975) ~\.120,1>67
510,(,00,667
nepen~
Oem\.llnde de
\.Ret~ Periofie
4,991,641 3,581,505 1,4fl4,Il6
1\. (ler aolie 1972 -"\{) "",ra 1913) 17 ,566,535 3,SL\.O,003
21,406,5 /\.)
2\. (ler avril 1973 :: '0 jutn 1973) 15,805,632 2,892,959
18,69~,591
3\. (ler jut llet 1971 ~ )0 \.opte,wre 1973) 19,008,773 3,678,632
21,687,405
(ler o<tobr\. 1973 - 31 d~c\.mhr\. 1973) 39,297,377 5,8/,7,029
5\. (ler janvier 1914 - n ""'\. 1974) 45,141, ,406
72,005,708 62,553,841] 9,451,405
6\. ner avril 1914 - 30 lutn 1974) 25,947,077 4,883,1>90
30,830,767
7\. (let jnlllet 1974 30 "epteoobre 1974) 23,097 ,460 4,730,804
8\. (ler octohre 1974 - 8 novembre 1914) 27,828,264
52,6412,942 43,660,444 8,942,498
9\. (11 nove\. 1974 12 decembre 1914) 68,904,028 13,012,866
81,916,894
10\. (let janvier 1915 - 3] \.UU'o 1915 29,347,975 6,Oll,Oll
35,359,006
11\. (leI; avrll 1975 - 31 DIU; 19'(5) 35 ,886 ,2ll 8,625,241
12 (ler juln 1975 - 11 poul 1975) _ 44,514,206
457,985,875 384 ,665\.~16 73,320,299
Total (\.u 11 aout 1915)
ronds Dlsponthles (av~Ulce6 moins depenses)
(au 11 aout 1975) 52,614,792
(441,430,597) (371,122,949) (70,113,648)
Chlff",\. AjU\.t~B (voir notel (69,164,rnO)
(au 30 juln 1975)
---"---"---- ------_ \. ------\.-----
NOle: l\.a sJtuaLion UnancUre du FDR presentee\. ci-tlessua va 1USqU'Hu 11 aout 1975~ Afin de
I)ermettre une comparaison entre lea COllipte\.S re]atifs a divertJes camflaf?n~9 (ler 1uU let
au 30 jufn)\. et de lletermtner Ie montant exact den fonds fiisponlbleA an 30 jutn et de
Ie comparcr all budget 1975/76\. on a demande uu service comptahle du FDR di\.! scfltkr Is\.
demande de retrAft no~12~ Ainai Sur Ie montant de 44\.514,20A FeFA, 27 \. 964\.910 )-,CFA
out ete irnputea a Ia periolle allant du let' au 10 1uin lq75\. soit 62\.8225'\. C',cst ce
pourcent3ge q1l1 a servi i determiner ]8; part de ces depcnst:!s revetamt ~ tltDA et a I tEtat\.
La situation elail done Ia sutvante:
fiemande -1\.! ~_~t;~~J~_~ \.!~~~\.~~~ _1\._
~I~
D~penfl*"s 1'otales 44,514,208 27,96 /,\.Ql0
IDA 15,886,967 n\.546\.341l 21 q-215 102,892,(,0
Etat 8\.fI25\.441 5,411\,590 a
On a \ltUise"]e taux de chaHg~ en viglleur a la fiate fie la derntere dctnande de retraJt
(c1I1 cute a part 1 r de 1it 1 ign(! 13 du tu\.b leau 4)\. At nsi\. le monUtnL total de relUbourseluents
pour lA (J6rifi\.de\. al1aut jusqu'aH 11 aofit eJ'~levaJt R $1\.744\.174\.74, l1mf:) Ie mont ant
arrete A 1ft dale;:iu 30 juln 1975 st:rait rtf\.: $1\.6Al\.21 fl\.2b
~IJ\\.!!TE-VO!~T~
prUXIICHE P_ROJl'T\. DE r-!J!'ll£\.QF",-!~f:VEl!,\.J:rf!:,lmT _",,~nAt
n~I>~~Pcnt_s_~I!_t\.!tl'e til> 2~~:_t--l!1\.:!'~'
('oiltrevalcHT
Demande de RetYlllt cstegorle CatQJZ,orie \.__~n 1'01] J!,~ __
Autorloation de Retrait
--1-- --2 'F~~
fu?\. !late !I
- -- - - - -- -_\._- - - \.CFAF--- _\. ---" - - _ " _ 0 -----us$-----
26 juHlet 1973 7,744,400 9,822,13S 17,566,535 87, DO\.OJ
17 oetohre 1913 l,8SS,OUO 1\.7:l2 ,505 3,587,5U5 17,162\.62
24 janv1er 1914 1,969,700 l3,616,828 Ir,J586~~28 59,fI96\.40
4 21 fevr1er 1974 3 Supp1/\."nt 11 219,104 219,104 896\.57
19 IIUIU 1974 4 l,219,BOO 17 ,768,973 19,008,7ll 78,563\. '3
6 11 "",1 1974 11,367,365 21,910,012 39,297,177 161,355\.03
27 BeJ,tembre 1974 Ii 16,Sn,701 46,031,102 62,S53,803 264,610\.00
8 12 d~eernbr\. 1974 8 23,097,460 23,097,460 [02,876,09
9 19 d~cemhre 1974 2,103,189 23,843,888 25,947,017 116,658\.06
10 revr1\.r 1915 43,660,4/,1, /\.3,660,444 200,838\.09
11 9 j\ltn 1975 [0 5,310,629 63,533,399 68, 90l\. ,028 31
\.5,122\.08
12 24 \.Iutn 1975 11 29, %7,975 29,3 /\.7,975 145,412\.98
Tanx de Change
13 14 octobre 1975 12 \.-L6I!, 100 35,UB\.2f\.l 2 5,888,967 163,783\.08 tnO)'en des ueboUrliCmenti!f
$ I 220,55 FCFA
~~~,576
:f01AI\. !!J 48,953,484 335,1l2,O92
------- =========== !!I
S~r';e~:~--n;m::~~"d-;-8- d;~"r;;trBft =- ncr~rtcmcnt d~ Cool role "financier
------
]/ Date ct ordre ue dflmantlcs rle retrai t prepar~es paT le Dfipartment du ContrtlJe f1 nancier\.
2/ Ordre de dem\.andeR de retralt declare par fOR\.
"1/ I\.a de-mantle no\. 3 du FIlR II eti regH~e en deux trancheR \.
4/ Au 31 decem\.hre 1975\. La dernicre dernande de retralt va jusqu'su 11 Bout 197,) \.
5/ A l'fpt)qlle de It~v81uatl()n, on nvait e5tl~ le taux de chanr\.e a 1 dollar pour 2S5:\.19 FCFA
O:I~
- l1utrefnent dlt~ par Buite de 1& dlffprence entre lea taux de chAnr\.e~ It::s dcbour~errtent~
n'onl en fRft represent'; que 86% de la valeur prevue a l'epoque de l'fivalw'Itioo\.
61 Montant des di?bourscmentB couvrant la totnllte dee depenRctJ jusqu t au 11 oout 1975\.
~~
" \.,
"\.
- te eblffrc 'Iu\.t~ 811 10 ju111 1975 (voIr tAbleall 1) ser81t de $ L683\.21~,26, 0 \. Ie oolde
rcotant au cr\.dit 317-lJV de $ 516\.765\.
HAtrrF_~1,!A\.
!!!,~~((ME !'\.!I!\.!:lF\.T J~!I~IJ~ ~ ~!)1~,~,l)l'r\.!'!lrNT \.-"IIRA!
_ l'rec!1~ttltiol!~2~~~8 dive~!\.~~L-\.Y\.!\.tle8 de !J\.aute-llolt~
(en mm)
Total Annuel
Ville
--
Annee
-- F M '\.
A M
- -
j ,- ~-
J \.
A -
s o
\. \.
N -
D Pr0cipl Hombre d
~
Banfora 1960-70 2,1 7,5 24,4 69,6 110,2 159,0 211,6 346,0 222,6 57,1 13,0 3,6 1\. 226,9 78
1!171
1972
-
- -
B3,8
9,3
11,3
75\.4
91,9
114,4
246,6
96,8
76,9
171,7
162,4
413,1
\34,0
113,1
129,4
19,2
101,2
-
-
-
-
1\. 070,6
1,047!5
68
76
nollo 010u t usso
\. --
1960-70 1,7 4,8 20,7 42,S 97,0 128,8 243,0 344,2 219,4
\.
68,6 6,7 3,S 1\.180,9 93
1971 - 36,2 44,6 75,9 32,9 135,4 229,3 291,8 102,3 15,2 - 963,6 85
-
1972 - --
r~---
0,8 9,7 44,2
- -\.--\.
250,4 150,0 161,1 116,1 101,7 60,2 - - 894,2 8S
"
l)cdtlugotJ 1960\.70 0,1 1,2 7,4 48,S 70,0 119,1 200,8 279,8 162,8 38,8 1,8 0,9 951,2 65
1971
1972
-
-
\.
1,5
18,2
-
5,9
7,5
7,0
156,5
61,7
95,6
281,6
137,0
269,9
172,5
126,3
49,4
11,8
50,4
-
-
6,5
-
788,9
670,4
53
64
-- \.
~--- -
Dorl 1960-70 - 1,7 4,9 29,0 103,2 00,5 199,8 102,4 17 ,4 1,4 1,2 590,6 54
1971 - 3,7 3,5 0,6 2,5 73,7 108,5 157,4 76,7 - - - 426,6 42
1972 -
I
- - - ,
40,3 123,8 129\.5 126,0 33,3 18,8 - - 471,7 46
Fada N' Coorrt18 1960-70 0,2 0,2 10,4 32,2 64\.2 129,0 216,0 260,2 195,5 32,S 1,3 1,7 963,4 77
1971- - 15,1 2,8 69,8 86,0 180,5 201,3 157,6 25,9 - - 739,0 72
1972
--\. - - - --
- - 6,7 90,3 49,2 67,0 226,0 194,4 156,1 50,1 - - 839,8 83
Kaya 1960-70
1971
-
-
0,4
2,7
2,2
83,8
D,2
0,8
45,0
10,9
123,3
64,8
164,0
92,5
223,8
288,1
12/, ,3
124,1
21,3
- -
- -
1,2 718,7
687,7
55
51
1972 -
"--
-
r-~---
- 1\.3 U,9 66,9 108,2 217,3
\.--
130,6 10\.0 -
--
- 582,2 47
Koudougou 1960-70
1971
-
-
2,2 6,8
8,2
37,7
25,9
72,8
9,7
100,6
60,2
171,2
157,6
255,6
234,3
175,4
92,6
34,3
7,3
3,4
-
1,6
3,6
863,6
599,4
72
61
1972 - - - 17 ,3 83,6 70,7 123,7 185,8 146,3 101 ,5 - - 728,9 58
-\.--~
NOllna 1960-70 0,2 4,7 1,6 26,6
--- -----
64,0 133,11 169,8 243,8 145,3 43,8
-"
3,9 1,6 859,1 63
1971
19/2
-
-
-
8,5
11,9
-
16,6
16,0
30,4
53,0
91,S
141,0
117 ,9
1l6,7
223,9
224,8
114,4
411,2
1,2
49,8
-
-
29,5
-
697,3
658,0
66
69
~-- r--~---
-
~-----~
O"asudou~oll (ville) 1960-70 0,7 3,5 20,8 81,8 110,1 183,9 259,2 162,3 15,4 2,7 1,9 862,3 15 I
1971 - - 6,0 56,5 37,4 61,7 264,5 215,9 151,1 - - 3,7 796,8
Ouahlgouya
-
1972
1960-70
-
0,6
-
0,9 1,2
- 33,S
7,8
108,5
27,7
300,2
90,6
156,0
181,1
204,8
227,4
150,8
124,1
53,3
36,0 0,6
- -
0,9
1\.009, I
698,8
'~
68
62
1971 -
-
- 3,0
-
18,1 16,8 61,4 135,5 170,6 73,5 - - 2,7 481,4 55
----_\.----
1972 0,3 12,0 38,2 107,0 103,8 136,0 68,2 36,0 - - 501,5 57
- ---\.--- - I
~~
~\. £j
Sourec; ASE\.CUA Upper Vol ta - Sendee HoteoroiogLque
\. @
'"
\.
At'iNEXE 3
Tableau 2
DEUXIEME PROJET DE PONDS DE DEVELOPPEMENT RURAL
Population rura1e, superficie et densite de 1a population
ORD's POEu1ation Superficie Population SUEerficie Cu1tivee
Mil1iers % du % du Densite d'ha- Mi11iers 7\. du
d'habitants Total km2 Total bitants en kmZ d'ha Total
Ouagadougou 1/ 847\.6 17\.5 24,179 8\.9 35\.1 352\.1 15\.8 \.
Yatenga 531\. 5 10\.9 12,297 4\.5 43\.2 218\.4 9\.8
Kaya 592\.6 12\.2 21\.331 7\.9 27\.8 215\.9 12\.4
Koudougou 1/ 719\.3 14\.8 26,324 9\.7 27\.9 342\.3 15\.4
Koupe1a 272\.6 5\.6 9,039 3\.3 30\.2 124\.5 5\.6
Total partiel 2,963\.6 61\.0 93,170 34\.3 \.1\.L\.§\. 1,313\.2 59\.0
Sahel 259\.6 5\.4 36,895 13\.6 7\.0 133\.0 6\.0
Fada N'Gourma 287\.1 5\.9 47,992 17\.7 6\.0 147\.7 6\.6
Bobo -Dioulasso jJ 326\.4 6\.7 28,297 10\.4 n\.5 157\.7 7\.2
Volta Noire 479\.4 9\.9 29,588 10\.9 16\.2 239\.6 10\.8
Bougouriba 350\.0 7,4 17,448 6\.4 20\.6 143\.2 6\.5
Banfora 180\.D 3\.7 18\.393 6\.7 9\.8 87\.0 3\.9
Tatal partiel 1 1 892\.5 39\.0 178 1 613 65\.7 10\.6 908\.2 41\.0
TOTAL 4,856\.1 100 271,783 100 17\.9 2,221\.4 100
========= ====== \.::,====== ---- ==:==
\. ~======
\.- -\.=~\.~~" \.
1/ Sans compter 1a po~u1ation de 1a vil1e\.
Source: Chiffres tires de rapports des ORD pour 1a campagne 1972/73\.
ANNEXE 3
Tableau 3
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Population et densite de la population dans les cinq OF~ du
Plateau Moad
Districts Population Densite
(mUliers r'I\.' haM tants) (hal- i t an ts /km? ,
Ouagadougou
Bousse 95\.9 50\.1
Kombissiri 90\.8 31\. 2
Manga 103\.6 34\.4
Ouagadougou
, 11
- 126\.5 74\.1
Sapone 70\.4 37\.6
Tiebe1e 53\.0 73\.5
Ziniare 123\.4 44\.5
Zorgho 85\.7 21\.0
Po 22\.8 7\.2
KouEe1a
Tenkodogo 111\.3 18\.6
Garango 68\.4 48\.1
Koupe1a 92\.9 57\.1
Zabre 75\.5 33\.9
~
Barsa1ogho 46\.9 13\.0
Bou1sa 147\.9 19\.6
Kaya 211\.1 44\.8
Kangoussi 142\.8 35\.5
Pissila 43\.9 26\.1
Yatenga
Gourcy 120\.4 60\.1
Ouahigouya
, , , 220\.3 45\.0
Seguenega 115\.3 75\.9
Titao 75\.5 19\.4
Koudougau
Reo 85\.6 48\.7
Tenedo 62\.2 18\.2
Yako 197\.7 60\.2
Koudougou 1I 267\.1 72\.2
Leo 106\.7 7\.8
TOTAL 2,963\.6
II Sans compter 1a population urbaine\.
Source: Chiffres tires de rapports des ORD pour 1a campagne 1972/73
HAUTE -110LTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
~upeIficiescu1tivees par culture ~mi11iers d'~a)
1972/1973
ORO de\.1a Zone du Projet
Culture Haute-Volta Zone du Projet % Ouagadougou Koudougou Kax a Yatenga Koupe1a
1- Cerea1es 1,883\.2 1,163\.5 61\. 7 375\.8 245\.9 245\.7 170\.5 125\.6
Mil 711\.4 4:38\.3 61\.6 158\.1 60\.8 88\.6 70\.0 60\.8
Sorgho 1,050\.7 687\.0 65\.4 209\.3 176\.5 146\.4 100\.5 54\.3
Mars 80\.9 22\.2 27\.4 5\.8 6\.0 8\.8 1\.6
Riz 40\.2 16\.0 37\.8 2\.6 2\.6 1\.9 8\.9
2\. Divers 338\.2 149\.7 44\.2 39\.6 36\.i 26\.6 26\.6 20\.3
Arachide 104\.7 43\.6 41\.6 15\.5 8\.1 10\.7 9\.3
Coton 70\.1 28\.2 40\.2 5\.1 12\.5 10\.6
Autres 163\.4 77\.9 47\.9 19\.0 16\.0 16\.0 15\.9 11\.0
GRAND TOTAL (1 +2) 2,221\.4 1,313\.2 59\.1 415\.4 282\.5 272\.3 197\.1 145\.9
Source: Statistiques Agrico1es - Ministere du Plan - 1972-73
~>
~~
@
(l)
~ VJ
\.J:
ANNEXE 3
Tableau 5
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Taille des exploitations sur Ie Plateau Mossi
Superficie de % de la Super- Superficie Nomhre de personnes
1 'exploitation ficie Totale Moyenne par exploitation ha/person
(Ha) % (Ha) (No\. ) (Ha)
Moins de 2 15 1\.3 4\.5 0\.28
2-3\.9 30 3\.0 8\.6 0\.34
4-5\.9 21 4\.8 9\.8 0\.49
6-7\.9 17 6\.6 11\.2 0\.59
8-9\.9 11 8\.7 13\.8 0\.63
Plus de 10 6 \.2 33\.9 1\. 76
Source: ORSTOM (Office de 1a Recherche Scientifique et Technique Outre Mer)
Sample Survey on the Plateau Mossi1973
HAUTE-VOI~TA
DEUXIEHE PROJET DE FONDS DE DEVELOPPEHENT RURAL
Production Agrico1e 1972/73
Zone du OUD du Proj et
Culture Haute Volta Projet % Ouagadougou Koudougou Kaya Yatenga Koupe1a
HH (tonnes ) 265\.6 158\.3 59\.6 53\.1 25\.1 26\.6 23\.1 31l\.4
Sorgho (tonnes) 512\.3 303\.6 59\.1 86\.5 72\.0 77\.8 40\.2 27\.1
Mais\. (tonnes) 58\.6 8\.7 14\.8 2\.8 3\.5 1\.8 0\.6
Rlz (tonncs) 33\.5 8\.8 26\.2 2\.2 2 1\.9 3\.5
Total Cerea1es (tonnes) 870\.0 479\.4 55\.0 144\.6 101\. 8 108\.1 63\.3 61\.6
Population Rura1e 4,856\.1 2,963\.6 61\.0 847\.6 719\.3 592\.6 531\.5 272\.6
Production de Cerea1es par habi
tant des carnpagnes (kg/personne) 179 162 171 142 182 119 226
Arachldes (tonnes) 660\.4 18\.9 31\. 3 6\.5 4\.7 2\.1 5\.6
Coton (tonnes) 32\.6 5\.8 17\.8 0\.9 3\.3 1\.6
~~
1-'t'1
~ &1
r::
w
0\
Mrn~E4
Page 1
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPIDiENT RURAL
Amenagement des terres et de l'infrastructure
Amenagement des bas-fonds
1\. Les bas-fonds sont de petites depressions a fond plat situees Ie
long de marigots temporaires1/ , dissemines dans toute la zone du projet\. Le
sol des bas-fonds, essentiellement argileux et peu permeable, convient a la
riziculture\. Les bas-fonds non amenages servent actuellement de paturages
ou sont consacres a la riziculture extensive\. La taille moyenne des bas
fonds amenages dans le cadre du premier projet de Fonds de developpement ru
ral (FDR I) etait de quelque 6 ha (dans la region dependant de l'ORD de
Ouagadougou, leur superficie variait de 1 a 20 ha)\.
2\. L'amenagement des bas-fonds dans Ie cadre du deuxieme projet de
Fonds de developpement rural (FDR II) comprendrait essentiellement la cons
truction de petites banquettes longitudinales suivant la ¢ourbe de niveau et
de banquettes transversales afin de limiter la superficie de chaque parcelle
a environ 0,2 ha en moyenne\. Les banquettes, environ 1\.000 metres par ha,
ont, vues en coupe transversale, une forme trapezo!dale; elles mesurent 40 cm
de haut et 30 cm de large au sammet\. En periode d'inondation, l'eau suivrait
la pente du terrain, et recouvrirait successivement chaque bande de terre si
tuee entre les banquettes transversales grace a un systeme de buses\. Le la
bourage initial des terres au tracteur fait egalement partie du programme
d'amenagement; cependant, ce serait l'agriculteur lui-merne qui, par la suite,
se chargerait du labourage\.
3\. L'amenagement des bas-fonds serait confie aux ORD\. Les banquettes
seraient construites au tracteur, mais les agriculteurs participeraient aux
travaux (compactage des remblais, transport des materiaux) a l'aide des ou
tils fournis dans le cadre du projet\. Ces ouvrages permettraient de contro
ler quelque peu et de mieux distribuer l'eau, mais les ressources hydriques
dependraient encore dans une tres large mesure des conditions climatiques et
hydrologiques\. La quantite d'eau recueillie dans un bas-fond pourrait ne pas
11 Les marigots sont des petits cours d'eau\.
Al'H'iEXE 4
Page 2
correspondre aux besoins de la r~z~ere, Ie developpement des plantes risque
rait done d'etre encore perturbe par des penuries d'eau ou des inondations
exceptionnelles\. Les inondations, quoique tout a fait inhabituelles, pour
raient endommager les banquettes\. L'entretien et la reparation des banquet
tes seraient effectues par les agriculteurs sous Ie controle des ORO, a
l'aide des outils fournis en vue de l'execution des travaux\.
4\. On estime que 2\.700 ha pourraient etre ainsi amenages, soit 500 a
800 ha par an\. Les OP~ seraient responsables de l'organisation, de l'execu
tion et de la surveillance des travaux d'amenagement des bas-fonds\. Le cout
de ces travaux est estime a 41\.700 francs CFA par hectare (pour de plus am
pIes details se reporter au Tableau 1)\.
Amelioration et protection des bas-fonds
5\. Dans certains cas, la presence d'eau de surplus indique que des bas-
fonds selectionnes, amenages de la fa~on indiquee ci-dessus, pourraient etre
encore ameliores dans Ie sens d'un mei11eur amenagement de l'ecoulement\. Dans
d'autres cas, i1 se peut qu'i1 faille construire des ouvrages de protection
contre 1es inondations\. Parfois, 1es travaux de protection et d'ame1ioration
peuvent etre combines\. On estime que ces travaux pourraient etre justifies
ou necessaires sur une superficie pouvant atteindre 300 ha\. \.~enager l'ecou
lement consisterait normalement a renforcer 1e drainage nature1 (marigots), a
construire de nouveaux canaux de drainage secondaires, des deversoirs simples
en travers du cours d'eau afin d'en re1ever 1e niveau jusqu'a la rive, et des
canaux d'irrigation supp1ementaires\.
6\. Ces travaux seraient effectues sur 1a base d'etudes et de plans pre
cis prepares par l'HAER et avec l'accord prea1ab1e du FDR\. Ensuite, l'l~R
superviserait l'execution des travaux de concert avec 1es ORD\. Les depenses
d'investissement sont estimees a que1que 150\.000 francs CFA par hectare; on
en trouvera 1e detail au Tableau 2\.
Petite irrigation
7\. Les petits amenagements hydro-agrico1es portent sur des superficies
comprises entre 3 et 50 ha et comprennent i) des systemes d'irrigation par
gravite en aval des petits barrages existants; ii) 1e pompage de l'eau des
petits cours d'eau permanents, lacs ou etangs; et iii) 1e forage de puits
dans 1es depressions ou la nappe aquifere est proche de 1a surface et, done,
ou Ie pompage est relativement peu couteux\.
8\. Les principaux travaux dtirrigation necessaires a l'amenagement
dtune zone situee en ava1 d'un barrage comprendraient:
ANNEXE 4
Page 3
des digues de protection contre les inondations Ie long d'un cote
ou des deux cates du marigot;
un deversoir place en travers du marigot qui permettrait de main
tenir en amont un niveau d'eau compatible avec l'irrigation par
gravite et qui laisserait s'ecouler l'eau en exces\. Pour ce faire,
le deversoir devrait etre equipe d'une prise d'eau et d'un evacua
teur;
un canal d'amenee pourrait s'averer necessaire pour conduire l'eau
jusqu'a la zone irriguee;
un reseau d'irrigation;
un reseau de drainage, Ie cas echeant, et
de petits ouvrages hydrauliques en beton\.
9\. L'irrigation par gravite est preferable a un systeme d'irrigation
par pompage, etant donne qu'elle permet d'eviter que les groupes d'agricul
teurs soient tributaires de l'entretien de la pompe, de l'approvisionnement
en combustibles, etc\. La production serait axee sur le riz pendant la sai
son des pluies, et, pendant la saison seche, 50 % des terres seraient proba
blement consacres a la culture des legumes ou a une deuxieme recolte de riz\.
L'HAER serait chargee de la planification, de la conception et de l'execution
de chaque plan\.
10\. Les depenses d'investissement sont estimees a 1 million de francs
CFA par hectare, d'apres une analyse detaillee de deux projets de petite ir
rigation en cours d'execution (voir Tableau 3 pour les details)\. Les depen
ses d'investissement effectives par hectare varieront considerablement en
fonction des caracteristiques physiques des zones irriguees\. Dans le cas de
l'irrigation par pompage, aux importants investissements a l'hectare viennent
s'ajouter des couts d'exploitation annuels eleves\. En plus de l'entretien
des ouvrages proprement dits, que l'on estime generalement a 3-5 % des depen
ses d'investissement, les couts d'exploitation des pompes pourraient repre
senter quelque 25\.000 francs CFA (110 dollars) par hectare\.
11\. L'HAER preparerait des etudes detaillees pour chaque plan d'irriga
tion, et les etudes techniques et d'evaluation seraient presentees a l'IDA\.
Le programme annuel de petite irrigation et d'amenagement des bas-fonds de
vrait etre accepte par l'IDA avant que l'HAER commence les travaux\.
AL'iNEXE 4
Page 4
Travaux de lutte contre l'erosion
12\. Bien que la region soit en general plutot plate, les signes d'ero
sion de la terre sont de plus en plus nombreux du fait d'une exploitation
agricole intensive et de l'importance du ruissellement durant la saison des
pluies\. Les travaux de lutte contre l'erosion executes dans Ie cadre du pro
jet a) favoriseraient la fixation et l'humidification du sol, en diminuant Ie
ruissellement, et b) auraient un role essentiel dans la mise en valeur des
bonnes terres et l'amenagement du bassin versant\.
13\. Les travaux de lutte contre l'erosion consisteraient a construire
des banquettes selon les courbes de niveau\. Ces banquettes ont, vues en
coupe transversale, une forme trapezoidale; elles mesurent 50 cm de haut et
40 cm de large a leur sommet\. L'intervalle entre deux banquettes serait fonc
tion de la declivite et des caracteristiques du sol\. L'ensemble des travaux
serait effectue par les ORD\. Une etude topographique preliminaire fixerait
l'emplacement des banquettes Ie long des courbes de niveau; une banquette
grossiere serait construite a l'aide d'un tracteur equipe d'une charrue a dis
ques et les travaux de finition seraient executes par les agriculteurs comme
cela avait ete Ie cas dans Ie cadre du FDR I; les besoins de main-d'oeuvre
sont estioes a 19 hommes-jour par hectare\. Au titre du present projet, on
estime que 9\.200 ha pcurraient etre arnenages a un rythrne annuel qui passerait
de 1\.500 ha en 1976/77 a 3\.000 ha en 1979/80\. Le cout de l'hectare est es
time a 14\.740 francs CFA, conroe l'indique Ie Tableau 4\.
Puits
14\. Le problerne du manque d'eau potable se pose frequemment dans les
villages de Haute-Volta\. Non seulement les etangs et les ruisseaux sont si
tues bien a l'ecart des villages mais leur eau, de mauvaise qualite, est for
tement contaminee\. En outre, les sources d'approvisionnement en eau sont par
fois taries a la fin de la saison seche\. Dans Ie cadre du FDR I, environ
227 puits avaient ete construits par quatre brigades dependant de l'}UiliR;
l'assistance technique avait ete fournie par Ie FAC qui avait detache un chef
de brigade\.
15\. La technique actuellement utilisee par l'HAER pour la construction
des puits ("havage") comprend deux etapes: 1) Ie creusage manuel du sol jus
quIa la nappe aquifere au cours de la premiere annee, et 2) l'approfondisse
ment (manuel) du puits au-dela de la nappe aquifere a l'aide d'un materiel de
pompage au cours de la deuxieme annee\. Les brigades beneficieraient de l'aide
benevole des villageois\. La methode actuelle n'est pas forcement la meilleure,
mais devrait avoir de bons resultats si elle est appliquee correctement\. Pour
diverses raisons, mais principalement du fait d'un mauvais contrale des tra
vaux, un grand nombre de puits existants ont une profondeur insuffisante et
ANNEXE 4
Page 5
ne peuvent donc pas fournir un volume d'eau suffisant (25 litres par habitant
par jour) pendant la periode cruciale avril-mai (fin de la saison seche), ou
la nappe phreatique est a son niveau le plus bas\. L'HAER essaie actuellement
une autre methode de construction de puits, le fon~age continu, qui ne com
prend qu'une seule etape\. Dans les deux cas, les puits sont revetus de tuba
ges en beton, les tubages inferieurs comportant des perforations (crepines)\.
En terrain rocheux, la construction ou l'approfondissement des puits exigent
l'utilisation d'explosifs\. Les principales caracteristiques des puits sont
les suivantes: diametre de 1,2 a 1,8 m, profondeur de 15 a 20 m\. Les deux
methodes, si elles sont appliquees correctement, devraient donner de bons re
sultats\. Le fon~age continu presente certains avantages financiers, et per
met une utilisation plus efficace des ressources; cependant, cette methode
a~ige des brigades et des responsables experimentes\. Aucun imperatif techni
que n'imposant l'une ou l'autre methode, le choix dependra donc de considera
tions purement pratiques\.
16\. La construction des puits serait entreprise par les quatre brigades
de construction de l'HAER formees dans le cadre du FDR I\. L'expatrie fourni
par le FAC continuerait a assumer son role de conseiller technique et de chef
de l'une des brigades; les trois autres brigades seraient dirigees par des
Voltaiques\. Normalement chaque brigade serait scindee en cinq groupes\. A
supposer que des travaux soient effectues en cinq emplacements differents,
chaque brigade devrait etre capable de construire au debut 25 puits par an et
jusqu'a 40 puits environ a la fin de la periode du projet (grace a l'expe
rience acquise)\.
17\. Quatre brigades de puisatiers continueraient a executer le programme
de forage\. Cependant, ces quatre brigades sont actuellement trop tributaires
des installations centrales de l'HAER de Ouagadougou pour l'entretien et les
autres services, et beaucoup de temps est consacre a la coordination\. Ce sys
teme est inefficace et fastidieux; Ie projet prevoit la nomination d'un coor
dinateur des activites des quatre brigades qui assurerait egalement la liai
son entre l'HAER et les brigades\. En outre, serait construite une base sim
ple en materiaux prefabriques qui pourrait etre ainsi facilement transportee
ailleurs , le cas echeant\. Cette base comprendrait un magasin et un atelier
de reparation, et son personnel serait forme d'un responsable des fournitures
et d'un mecanicien qui dependraient du coordinateur\.
18\. Une fois construits, les puits en beton n'exigent que tres peu d'en
tretien, mais, en cas de besoin, cette tache incomberait aux beneficiaires du
projet qui devraient egalement veiller a ce que les alentours immediats des
puits soient constarnment propres\. L'HAER effectuerait les reparations specia
les\.
Al~NEXE 4
Page 6
19\. On estime que Ie programme de construction des puits reviendrait au
total a environ 535 millions de francs CFA, ce qui equivaut a un cout moyen
par puits de quelque 1\.030\.000 francs CFA (4\.570 dollars)\. Le detail des
couts figure aux Tableaux 5-8\.
Puits tubulaires
20\. Le Projet de fonds de secours contre la secheresse (Credit 442-UV)
devait etre acheve en juin 1976, date a laquelle 150 puits tubulaires de
vaient etre construits\. En raison de retards dans la livraison du materiel
et de problemes survenus lors de l'utilisation du materiel de forage, on s'at
tend que les operations de forage ne seront pas terminees avant juin 1977\.
Cent vingt puits tubulaires devraient alors etre construits, et tous les fonds
devraient etre epuises une fois Ie programme termine\. Cent quatre-vingts
puits tubulaires supplement aires seraient construits dans Ie cadre du projet,
a l'aide du materiel de forage (d'une duree de vie utile estinee a cinq ans)
fourni au titre du Credit 442-UV\.
21\. Les forages auraient une profondeur de 50 m et un diametre de 12 cm
environ\. Chacun serait muni d'une pompe manuelle\. II est difficile d'esti
mer Ie debit qui, en outre, varierait considerablement\. Des estimations tres
approxL~atives donnent un debit moyen de 2 a 4 m /heure\.
3
22\. L'HAER serait chargee de l'execution des programmes de construction
des puits; les travaux comporteraient diverses phases effectuees par trois
brigades qui seraient respectivement responsables i) des travaux de forage,
ii) des essais de pompage, et iii) de l'installation des pompes\. Des consul
tants aident actuellement a mettre sur pied une equipe de forage efficace a
laquelle 11s donnent la formation necessaire; en outre, une base bien equipee
a ete creee a Dori\. Le FDR II ne prevoit aucun changement dans l'organisation
du forage des puits\. Le responsable des operations de forage assurerait la
liaison avec l'fu\ER\.
23\. II est absolument necessaire d'assurer l'entretien des puits tubu
!aires afin que les pompes fonctionnent correctement et en permanence\. Le
projet prevoit la creation d'une brigade d'entretien, qui aurait pour quar
tier general la base de Dori et qui releverait du responsable des forages\.
Cette brigade comprendrait un mecanicien, un chauffeur et deux manoeuvres\.
Elle disposerait d'un vehicule adapte aux travaux d'entretien et du materiel
necessaire\. II est utile que la brigade d'entretien opere dans Ie cadre du
projet car cela permet de garantir que les puits seront correctement entre
tenus\. Cependant, la responsabilite de l'entretien devrait incomber a un ORD
et etre transferee a la fin de la periode du projet a l'ORD du Sahel\.
Al\.'mEXE 4
Page 7
24\. Les Tableaux 9-11 donnent Ie detail des travaux et des couts de
construction, estimes a 930\.000 francs CFA, soit 4\.130 dollars par puits tubu
laire\. Ces estimations ne comprennent pas Ie materiel achete grace au Fonds
de secours contre la secheresse\. Les couts d'entretien sont presentes au
Tableau 12\.
Entrepots villageois
25\. Les entrepots villageois construits dans Ie cadre du FDR I etaient
trop exigus (12 m2); leur superficie serait doublee dans Ie nouveau projet\.
Les entrepots seraient construits avec des briques fabriquees dans les villa
ges, et seraient recouverts de plaques de tole galvanisee\. Les materiaux
tels que Ie ciment, les plaques de tole galvanisee, Ie bois (pour les mon
tants de portes et les poutres du toit), l'acier de l'armature (destine a
renforcer les colonnes), les clous et une presse a briques (pour faciliter
la fabrication des briques traditionnelles) pourraient etre fournis par Ie
FDR par Ie biais des ORD\. Les villageois en tant que beneficiaires du projet
contribueraient benevolement a la fabrication des briques et a la construc
tion, travaux qui n'exigent pas de qualifications professionnelles\. Le FDR
financerait les services d'un ma~on, qui participerait aux travaux de cons
truction delicats et qui conseillerait les villageois, ainsi que Ie transport
des fournitures\. Les ORD seraient charges de superviser les travaux\. Quatre
cents entrepots villageois seraient construits dans Ie cadre de ce projet\.
Le cout de chaque entrepot est estime a quelque 152\.100 francs CFA\. Pour de
plus amples details se reporter au Tableau 13\.
Centres villageois
26\. A titre d'element pilote, Ie projet prevoit la construction de 20
centres villageois\. Ces locaux couverts serviraient de centres de reunion,
d'enseignement, d'instruction, d'alphabetisation, etc\.; ils comprendraient
egalement une petite piece ou seraient stockees les fournitures medicales et
2
qui serait utilisee par les services de sante\. La salle de reunion (45 m )
serait un local ouvert entoure neanmoins d'un mur de briques de 1 m de haut,
et la petite infirmerie serait totalement muree a l'exception de l'endroit
reserve a la porte\. Les materiaux seraient apportes sur place par Ie FDR par
Ie biais de l'OP~ concerne\. Le transport des materiaux et les services d'un
ma~on font egalement partie des couts finances par Ie projet\. Les villageois
participeraient benevolement comme manoeuvres a la fabrication des briques et
aux travaux de construction\. Le cout de chaque centre est estime a environ
258\.000 francs CFA (voir details au Tableau 14)\. Avant d'approuver la cons
truction d'un centre villageois, Ie FDR devrait s'assurer que Ie village ne
dispose pas deja de locaux equivalents (tels qu'une ecole au un dispensaire)
et que 1a construction d'aucun batiment de ce type n'est prevu dans d'autres
MrnE~ 4
Page 8
projets (tel le projet education de la Banque 11ondiale) ou dans le cadre
d'autres programmes d'aide bilaterale\.
27\. On trouvera au Tableau 15 un resume des objectifs du projet et le
calendrier d'execution du programme d'amenagement des terres et de l'infra
structure\. Les estimations ne doivent pas etre considerees comme definiti
ves, et il est probable que, au cours de l'execution des travaux\. il faille
proceder a une reaffectation des fonds en fonction des besoins et des resul
tats\.
ANNEXE 4
Tableau 1
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Amenagement des Bas-fonds: Couts Unitaire des Investissements
(par hectare en FCFA)
Fournitures: ciment, bois, aqueducs 5,000
Materiel: outils, (pioches, pelles, brouette)
42,500 FCFA pour 5 ha, soit par ha
8,500
Depenses
d'exploitation: ~o heures de tracteur par hectare
a 1,040 FCFA par hectare
20,800
Main d'oeuvre
qualifiee deux jours par hectare pour construire
les gou1ottES et installer les aqueducs
a 600 FCFA pa r jour 1,200
Main d'oeuvre
non qualifiee 62 hommes-jours par ha a 100 FCFA 6,200
TOTAL 41,700 -1\./
1/ La part des couts payab1es en devises est estimee comme suit:
- fournitures 55%\. materiel 65%, depenses d'exploitation 55%, soit
l'equivalent de 1~,715 FCFA ou 47% des couts d'investissement~
Les taxes devaient s' l ever a 4% pour 1e ciment, 25% pour 1e materiel,
(outils), 20% pour les depenses d'exploitation\. Le total des taxes
par hectare est estime a 6,417 FCFA soit 15% de l'ensemble des couts
d'investissement\.
ANNEXE 4
Tableau 2
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Bas-fonds Ameliores: Cout d'investissement par hal/
Foumiturea: ciment, 0,54 tonne par ha a 25000 FCFA la tonne 13,500
fer et acier (pour l'armature) 21,000
pierres: achat et livraison 6,000
bois: 0\.2 m3/ha a 40,000 FCFA/m3 8,000
Materiel: outils supplementaires et transport par carnion 2/ 42,000
Main-d'oeuvre
qualifiee: 16 hommes-jours par ha a 600 FCFA par jour 9,600
Main-d'oeuvre
non qualifiee: (canal de drainage, fosses): 166 hommes-jours
par ha a 300 FCFA par jour 49,800
TOTAL 149,900 1/
-----
-----
1/ Le cout de l'amenagement des bas-fonds ameliores serait superieur au
cout d'amenagement des bas-fonds non ameliores\.
~ 19,000 FCFA seraient affectes a l'achat d'outils supplementaires, Ie
reste serait a financer lea depenses d'exploitation\.
1/ La part des couts payable en devises est estimee comme suit:
fourniture: 55%, materiel: 65%, depenses d~exploitation: 55%, soit
l'equivalent de 51,675 FCFA ou 34% de l'ensemble des couts\. Les
taxes devraient s'elever a 4% pour Ie ciment, 22% pour l'acier de
l'armature, 20% pour Ie bois, 25% pour les outils et 20% pour les
depenses d'exp1oitation, soit 16,110 FCFA ou 11% de l'ensemble des
couts\.
ANNEXE 4
Tableu 3
Page 1
H\.AUTE~VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Petite Irrigation: Cout d'investissement par ha
CFAF
1\. Irrigation de 4 ha par pompage de l'eau d'un lac 1/
- achat de deux pompes diesel d'une capacite de
65 m3/heure (18 l/sec) a 445,000 FCFA la pompe 89 0,000
- construction d'une station de pompage, de canaux
principaux murail1es, d'un petit entrepot (main
d'oeuvre benevole, deux ma~ons professionnels,
ciment\. presses a briques) 1,900\.000
- pose d'une cloture (protection contre les animaux,
cloture en fil de fer barbele) 1\.700\.000
- outils 75\.000
TOTAL (4 ha) 4\.565\.000
Cout par ha 1\.141,250
II\. Irrigation de 33 ha en aval d'un barrage 11
- fournitures et materiaux (ciment\. acier\. pierres) 10\.354,000 (49%)
- materiel (aahete et/ou loue pour 1es travaux
de terrassement) l! 4,734,000 (22%)
- main d'oeuvre qualifiee et manoeuvres 6,254\.000 (29%)
TOTAL 21\.342\.000
Coat par ha 646\.727
III\. Cout par ha retenu pour 1es ca1cu1s i/ 1,000\.000 FCFA/ha i/
- (pour notes voir Page 2)
ANNEXE 4
Tableau 3
Page 2
Notes
11 D' apres tm projet en cours d' execution (Lac Dem); les estimations detailles
des couts sont disponibles aupres de l'HAER\.
Plan d'Ing~nierie
Les superficies irrigable brutes et nettes representent respectivement 8 et
-4 ha (176 parcelles de 240 m2 chactme)\. Les- terres sont irriguees grace a
l'eau pompee dans le lac (debit: 65 m3/heure, charge manometrique totale 12 m)\.
L'eau est conduite jusqu'a un petit reservoir de regulation qui debite en
permanence 18 lis\. Deux canaux principaux murailles de section rectangulaire
transportent l'eau jusqu'a des canaux secondaires en terre\. Chaque parcelle
est irriguee par tm petit fosse et re~oit un volume d'eau determine\. L'eau
en exces est evacuee vers le lac grace a tm systeme de drainage\. Une digue
de protection contre les innondations a ete construite afin d'empecher que
l'ecoulement externe ne cause des degats\. Des chemins d'exploitation de 2 metres
de large ont ete prevus le long des canaux secondaires pour que lIon puisse
acceder a toutes les parcelles\.
Cultures
La zone irriguee sera consacree a la culture de legumes de sais-on seche
(d'octobre a fevrier)\.
II d'apres tm projet en cours d'execution (a Zabre) finance par le FED\. Les es
timations detail lees des couts sont disponiblesaupres de l'HAER\.
11 En admettant que les couts de materiel representeraient environ une moitie de
cette somme et les depenses d'exploitation l'autre moitie\.
!::) Ce cout correspond egalement au cout des derniers projets d'irrigation du FED\.
Le coat total de la petite irrigation ( 1 million de FCFA) a ete ventile en
sous elements en vue d'etablir le cout en devises et d'effecturer d'autres
- i:a\.lculs, compte tenu des pourcentages indiques a la rubclque II\.
11 La part des couts payable en devises est estimee comme suit: fournituresi 55%,
materiel: 65%, depenses d'exploitation: 55%, soit l'equivalent de 401,500 FCFA
ou 40% de l'ensemble des couts d'investissement\. Les taxes devraient s'elever
a 4% pour le ciment, 22% pour l'acier, 20% pour le bois, 5% pour les autres
fournitures, et 20% pour le materiel et les depenses d'exploitation\. Le total
des taxes par hectare est estime a 115,000 FCFA soit 11% de l'ensemble des
couts d'investissement\.
ANNEXE 4
Tableau 4
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Travaux de Lutte Contre l'Erosion:
Cout Unitaire d'Investissement
CFAF/ha
Fournitures: ciment et gravier
4,300
Materiel: outils (pioches, pelles, brouettes)
(28,500 FCFA pour 5 ha)
5,700
Depenses d'ex
ploitation: travaux de terrassement: depenses d'exploi
tation pour tracteur et outils:
1 heure x 1,040 FCFA/heure 1/
1,040
Main-d'oeuvre
qualifiee 3 hommes-jours pour les aqueducs
a 600 FCFA par jour 1,800
Main-d'oeuvre
non qualifiee 19 hommes-jour a 100 FCFA 1,900
14,740 J:\./
1/ 00 metres de digue par ha\.
3
J:\./ Lapart des couts payables est estimee comme suit: fourniture: 55%,
materiel: 65%, depenses d'exploitation: 55%, soit l'equivalent de 6,642 FCFA
ou 45% de l'ensemble des couts d'investissement\. Les taxes devraient s'elever
a 4% pour le ciment, 25% pour les outils, et 20% pour les depenses d'exploita
tion\. Le total des taxes par hectare est egal a 1,773 FCFA soit 12% de
l'ensemble des couts d'investissement\.
ANNEXE 4
Tableau 5
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Cout de 1a Construction des Puits
/1
1975/76- 76/77 77/78 78/79 79/80 Total
- - - - - - - - - - - - - - No - - - - - - - - - - - - - - -
Programme de
Construction 100 120 140 160 520
---------------- CFAF '000 ------
Fourniture/2, ciment/3 "\.
--ei acier de-1'armature/4 29,500 35,400 41,300 47,200 153,400
Materiel 116,830 15,460 21,700 2,485 156,475
Depensea d'exp1oitation 29,500 29,500 29,500 29,500 118,000
Personnel 27,000 27,000 27,000 27,000 108,000
TOTAL 202,830 107,360 119,500 106,185 535,875 l!\.
-- ---- --~ - ~\.- \. ---
11 Aucun puits ne sera construit durant cette periode au cours de 1aque11e on
procedera, se10n lea besoins, a l'approfondissement des puits construits dans
1e cadre du FDR !\.
-~- ------------------_\._----
2/Couts des fournitures par puits: \._\._______ _
- - ciinent:-0,-3S- tonnelm~tre-cou-8\.nr x 17,5 mitres/puits x 25,000 FCFA/tonne ::: 153,125FCFA
- acier :\. 40--kgTriiefre- courantx-f7-;5 metre/puits x 200 FCFA/tonne:oll 140,000 FCFA
293,125 FCFA; chiffre arrondi: 295,000 FCFA/puits
11 Au total quelque 3,185 tonnes seraient neceasaires (0,35 x 17,5 x 520)\.
!/ Au total quelque 364 tonnes seraient necessaires (40 x 17,5 x 520)\.
11 Voir Tableau 6 pour de plus amples details\.
~ Voir Tableau 7 pour de plus amp1es details\.
11 Voir Tai1eau 8 pour de plus amples details\.
~/ La part des couts payable en devises est estimee comme suit: fnurnitures: 55%,
materiel: 80%, depenses d'exp1oitation: 55%, soit l'equivalent de 274,450 FCFA
au 51% de l'ensemble des couts d'investissement\. Les taxes devraient s'elever
a 4% pour 1e ciment, 22% pour l'acier, 5% pour l'ensemb1e du materiel - puisque
aucune taxe ne serait per~ue sur 1e materiel importe directement - et 20% pour
les depenses -d-'exp1aitatfon-:-Le total des taxes represente 50,664 FCFA soit 9%
de l'ensemble des couts d'investissement\.
lli~TE \. : \.v_'1!\.m
~!!\.~":H1LJ~~\.9}\.tl ~t; J_~\.lliP::i_J}K J~~i~!:;'H!P£E\.!t!'f~~~t~
(2~lj:_Llli~u~\.m~t~! _!~~!!~~!\.!~_\.!_ ~\.~_Se!H!!D!Sti l)~L~~~W!\.!
(eli m1111er$ de ,"'C,,'A)
\.~chat\. (ll'lvus au tJ tre du FDR II
CUllt Achet' dlinl 1_
t:Jeml!;l~~ !,~!tCllre Nomltre ~~!ll!\.! -197611i
Cl\lUionett\.ee 1\.500 6 11 9\.000 (1) 1\.500 (1) 1\.500 12(lOO
Camtouli (4~5- tonnca) 3\.0110 512 12\.000 (1) 3,000 15\.000
(10 tonnes) 4\.000 1 li- 4\.000 4\.000
l'reul1s tUf\.cnnlques 1\.000 20 t3 6 (14 ) 14\.000 (2) 2\.000 (2) 2\.000 18\.000
CQlUlJrt!saeure 2\.500 12 14 2 (10) 25\.000 (1) 2\.500 (2) 5\.000 l2 \.500
POtnpes l'I all' 350 12 15 (12) 4\.200 (2) 100 (2) 100 5\.600
Tr4pi cd - BrIgade 400 4 /(; 1\.600 (1 ) 400 2\.000
- ton-tee 600 6 16 3,600 (I) 600 4,200
Conca<1tleUr 100 J2 17 2 1\.000 (2) 200 (2) \. 200 1\.400
MaTteau perforateur ~ aie cmapr1\.ml: 100 12 t1 4 800 (21 200 (2) 200 1\.200
Carottier 150 12 - 1\.650 (2) 300 (2) 300 2\. 2~O
i)ellee avec Genne pre8eeuae 600 3 1\.800 (1) 600 2\.400
Materiel dlver¥ 4\.000 11 800 I J!l 800 IlQ 600 Il!l 6\.400
MOlltee
1,80/2,04 (1 1,00) 150 20 13 15\.000 (5) 3,750 (5) 3,750 22,500
1,40/1,bO (10 \. 1,00) 300 10 Ii 3\.000 (3) 900 (2) 600 4 \.~()O
2,10 (_r~\.I1\.) 120 4 I! 480 (2) 240 120
'fubage
dJtmd'ltre 1,80 150 2 300 (I) 150 (1) 150 bOO
ditl~tre 1,40 125 6 150 (3) 375 (3) 375 1\.500
Hutll\. 350 pur b\. 1gade JOO 1\.100 no ItO 2\.0 110 220 1l!l
Ma\.t\.4riel d' atel1er 13 \.000 13\.000 1\.300 ,II 1\.300 iii 1\.300 III
""aU\.riel de cau1\.{lin14 550 ~ -ill I!? _!~ in: --\.ill-lH _1\.()I,5
116\.830 15\.1t6{) 21\.700 2\.485 156 41!1
Ii "-- "a~;fl;d;8-brigade;-'d;Pul\.atier'-(li-'r-;' 4; wik\.anlclen; f;"--"~;I:iVO~8tlbic des {o;rrnftt~r"~' 'fi"'-"'T;i-~i";6-:----~-- -
~I 4 - 5 Lounes: brigade\.: (I x 4)= 4; \.atelier: 1; 10 tonne8j cawion aecvant It 1 Uvratson de mat~rfel lourd; I\.
11 1 par chantier; t x 5 cbanticra x 4 Iltrlga\.dea :20\.
'il 3 par bdgud\.: 3 x 4; 12; 5\.000 II\.
~I 3 par brlg\.de: J" 4 c 12
2\.1 1 par brlg\.d\.: 1 " 4 =4
I pilr lorry: lxb" 6
11 1 pur C()l\.l!preso(!ur: 12
ill 0,5 pile chButtcr
2/ 10 pour cent du \.ut\.:lt't141 aulvant\.: cOlllIH"t!!UiCUrB\. pompes II atr, td\.ptcdB, concaaseurs, martca\.ulIl perforateura ~ all' CUJlprlme,
i,:,u-attJers et pel1es t,iVCC Scnnes preStieUBe
!Q-'
!!I
LV
l{l~Utplll(:emelit au eou1:$ des aouf\.es Bulvant l'annee d' adUlt
1t(;llIplact;'tncnt au cour8 dts Ilrm~es ~utvaut l~alm'~ dtac:hat
Rcmplacclillint I\.IU ellUl'S des\. anll~t!t) euivallt I' annf;i! d' aef\.at
esltruf: ~ 20 pour cent\.
eatill~ 1110 pour cent\.
eatil'lll -\. 10 pour cent
~Ii
:E:i
" \.
ANNEXE 4
Tableau 7
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Construction des Puits: Depenses d'Exploitation
Element Nombre Utilisation Erevue Caut unitaire Cout total
Nombre Unite (en FCFA) (en millier
de FCFA)
Camionnettes 6 30,000 km 45 8,100
Camions 6 20,000 km 50 6,000
Compresseurs 12 800 heures 1,000 9,600
Treuils mecaniques 20 1,000 heures 200 4,000
Detonateurs 11~OO
Cout total annuel 29 2500
ANNEXE 4
Tableau 8
HAUTE-VOLTA
DEUXIEME PROJET DE FUNDS DE DEVELOPPEMENT RURAL
Construction de Puits: Personnel _1/ __
- des
Total--_\.- \. - -
----~--
Nombre Traitement Traitement - Traitements
_ \. ---- ----~---"
mensuel Annuel 21 annuels
(en FCA) {en" iDlll{er--Ten--1:Ililliers
- -~-'~ae-FC1tA~ae1CFA)'- -"
-----
M\.ecaniciens des brigades 4 37,500 338 1,352
\. -- ----
Operateurs de carott{e-ci 20 J\.:l 37,500 338 6,760
et~cles cQ1!lEres~eur~ \."~-- -----
")fa\.;ons___ ~~ __ 20 J\.:l 32,400 !\.l\. 292 5,840
Aides mac;ons 20 27,000 J\.:§\. 243 4,860
__9'au!;e1:l~s 12 30,000 270 3,240
Magasiniers \.--- --- -
4 14 30,000 270 1,080
Aides magasiniers 4 18,000 162 648
Manoeuvres 48 !2\. 7,500 J\.i 68 3,264
27,044
--- \._----_ \. _-- " -----~ ---------\.-~~-~-------- ----- --_\.--- ~ ~ -
11 Compte non tenu des services d'un expatrie, de trois chefs de brigade voltaique,
d'un responsable des fournitures, et d'un mecanicien d'atelier dont le cout est
donne au Tableu 6 de l'Annexe 7\.
2/ Sur la base d'une annee de neuf mois\.
3/ Un par chantier: 1 x 5 chantiers x 4 brigades #20\.
4/ Un par brigade "
5/ Douze par brigade
6/ 300 FCFA par jour, mois de 25 j ours\.
71 27,000 FCFA par mois plus 20% pour heures supplementaires c 32,400 FCFA\.
8/ 22,500 FCFA par mois plus 20% pour heures supplementaires S 27,000 FCFA\.
ANNEXE 4
Tableau 9
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Cout de Construction des Forages
1975/76 1976/77 1977/78 1978/79 1979/80 TOTAL
----------------------- No\. -------------------------
Programme de Construction
- au titreduProjei-de
secours contre la se
cheresse (442~UVL_\. __ 60 60 11 120
- an titre du FDR II 60 60 60 180
Materiel J:\./ --------------------- CFAF '000 ---------------------
------~ur_es-~ (3) 5,000 5,000
- carnion 3,5 tonnes (2) 6,000 6,000
- materiel divers 3/ 1,560 1,560 1,560 4,680
- pompes - 4/------:-~--- 9,000 9,000 9,000 27,000
- Total partiel : materiel 10,560 21,560 10,560 42,680
~-\.-----
Personnel 7,740 7,740 7,740 23,220
Fournitures 12,870 12,870 12,870 38,610
Depenses d'exploitation 20\.940 20,940 20\.940 62,820
TOTAL 52,110 63,110 52,110 167,330 \.!J\.
1/ En raison de problemes techniques (retard dans la livraison de la foreuse et
remplacement de ladite foreuse en ~976~u_ fait des mauvaises conditions d'utili
sation), la construction des forages prevue dans Ie cadre de ce projet
a ete Ionguement retardee\. De ce fait, les calculs ont ete effectuees en fonc
tion d'une diminution du nombre des puits construits (120 contre 150 au depart)
et d' un retard d' un an\.
J:/ Ne cOIl1":;lrend que \.la partie du materiel achet~ dans Ie cadre du projet 442-L'V
qu' ilconviendrait de remplacer pour:sarantir une utilisation marltlale du materiel
de forage disponible\.
3/ Estime a 20% des premiers a~~ats de materiels effectues dans Ie cadre du projet
442-UV\.
4/ 130,000 FCFA/ forage:\.
1/ La part des couts payables en devises est estime comme suit: materiel: 80%,
fournitures: 70%, depenses d'exploication: 55%, soit l'equivalent de 95,722 FCFA ou
57% de l'ensemble des couts d'i~vestissement\. Les taxes devraient s'elever a 5%
pour Ie materiel et 20% pour les fournitures et les depenses d'exploitation, soit
22,420 FCFA ou 13% de l'ensemble des couts d'investissement\.
ANNEXE 4
Tableau 10
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Couts de Construction rtes FOT'3\.a'es: Fr"tj ~ r"''' Personnel
(en milliers de FC!!)
Traitement Total des traitements
Personnel Nombre mensuel annuels
1\. Equipe de forage
bydrogeologue 1Ll\.
chef d'equipe, (technicien
bydrogeologue) 1 /1
perforateur 1 37,500 37,500
aide perforateur 1 30,000 30,000
chauffeurs - camions 4 33,000 132,000
voitures
2 30,000 60,000
2 30,000 60,000
30udeurs \.
mecanicien
1 37,500 37,500
- manoeuvres
4 9,500 38,000
comptable adjoint
1 45,000 45,000
440,000
2\. Equipe responsable des essais
de pompage
chef d' equipe
1 /1
1 37,500 37,500
mi!canicien
chauffeurs - camions
1 33,000 33,000
voitures 1 30,000 30,000
manoeuvres 3 9,500 28,500
129,000
3\. Installation des pomnes
chef de brigade
1 37,500 37,500
macron
1 27,000 27,000
manoeuvres
3 9,500 28,500
93,000
TOTAL 1 662,000
Reures suppl m entaires et indenmites (30i~) 198,000
TOTAL 2 860,000
Total annt:e\.l (neuf mois) 7, 740,000 CFAF
1/ Fourni par l'HAER\.
ANNEX! 4
Tableau 11
HAUTE VOLTA
Construction des Forages:
Couts des fournitures et depenses d'exp1oitation
~-, , --- \.
Fournitures: Coat par forage'---QuaIit-f~--~--~-COut----
_ _ _ \.____ nikessaire par unitaire Cout Total
~ _ _ \.n_ - - - \. forage -:-~tjCiJjAr---- (~~"A-)
tubages (107,940 mm) 44 1\.m\. 3~500 154~000
------::creptte(107;9S-rr-mm) - - - 6 10m\. 3~ 750 22,500
- pierometre (50,800 mm - 63,500 mm) 50 1\.m\. 200 10,000
- gravier =ch~fIre~gro641~ 8,000 8,000
- ciment (bordure) 0\.8 T 25,000
---\._\.,-
20,000 --~
TOTAL par forage 214\.500
------
\.---~peIlsesd'exp10i tat ion Utilisation CoGt Cout Total
ELEMENTS \. prevue par an unitaire _ _a:m,w\.el_(~n
(en FCrA) mi1lien\. de FeFA) ____
3 40,000 km 45 5,400
- reservoirs 1 30,000 km 50 1,500
- camion, 3,5 t 3 20,000 km 50 3,000
- camdon 8'-10 t 1 30,000 km 60 1,800
- foreuse et materiel
de-:flDrage'--~------~- 1 9' 600,000 5,400
- materiel utilise 1 9 mois 400,000 3,600
- divers par forage 4,000 240
TOTAL 20\.940
"-"~'-- ---~-----
- -
l i A raison de 60 forages par an\.
o
ANNEXE 4
Tableau 12
HAUTE-VOLTA
DEUXIID4E PROJET DE FONDS DE DEVELOPPEMENT RURAL
Brigade d 'Entretien des Fora,g:es ___________ ~____"
1975/76 1976/77 1977/78 1978/79 1979/80 Total
------------------------- No\. -------------------------
?~ogr~e 1e Construction
des forages
Credit 4l2-UV 60 60 120
- FDR II 60 60 60 180
~Tombre totalde forag\.as
a entretenir 1\.1 60 120 180 240 300
en milliers de FCFA-----------
Denenses
d'eouipement
Vehicuies a\. quatre roues
motrices apres modification 2\.000 2\.000
Poulies et Mat\. de drain3\.g~ 120 120
Outillage (pelles, pioc~es) 110 110
Materiel de ca:npings 50 50
Cles a ecrous 170 170
Pieces de rechange gj 400 400
Collie!" et bagues de serrar;e 10 10
Pompes de rechange II l:\.§\.QQ 1\.800 1\.800 9\.000
Total 6\.460 1\.800 1\.800 1\.800 11\.860
Depenses d'e~loitation
Mecanicien (1) 450 450 450 450 1,800
Chauffeur (1) 360 360 360 360 1,440
~1ain d' oeuvres 4/ (2) 180 180 180 180 720
Cout d'exploitation
des Vehicules 21 1\. 350 1\.350 1\. 350 1\. 350 5\.400
Fournitures necessaires
a l'entretien 2\.1 900 1\.800 2\.700 3\.600 9\.000
Total D40 i:liQ\. 5\.040 5\.940 18\.360
Cout total 9\.700 ~ 6\.840 7\.740 30\.220 1\.2
MrnEU 4
Tableau 12
Page 2
1/ A la fin de chaque campagne\.
2/ Sauf pompes de rechange
II A raison de 150\.000 FCFA la pompe; le cout a ete calcule
d'apres le nombre de pompes construit chaque annee sauf pour 1976/77,
les calculs ayant portes dans ce cas sur le nombre total de pompes
construit jusqu'a cette annee\.
4/ 300 FCFA par jour un mois de 25 jours et une annee de 12 mois\.
5/ 30,000 km par an a 45 FCFA le kilometre\.
~ Pour 60 puits les depenses s'eleveraient a: 15\.000 x 60 = 900\.000FCFA\. La
quantite de fournitures necessaire a l'entretien est calculee d'apres
le nombre total des puits construit jusqu'ah fin de la campagne precedente\.
II La part des couts payable en devises est estimee comme suit: materiel: 80%,
fournitures: 70%, depenses d'exploitation: 55%, soit l'equivalent de
18\.758 FCFA ou 62% de l'ensemble des couts; les taxes devraient s'elever
a 5% pour le materiel, 20% pour les fournitures et les depenses d'exploitation,
soit 3\.473 FCFA ou 11% de l'ensemble des couts\.
A\."l'NEXE 4
Tableau 13
HAUTE-VOLTA
DEUXIID4E PROJET DE FONDS DE DEVELOPPEMENT RURAL
Cout estimatif des entrepots villageois 11
FCFA
Fournitures: ciment - 2\.200 kg a 25 FCFA/kg 55\.000
plaques de tole- 12 a 2\.500 FCFA 30\.000
1 a 1\. 400 FCFA 1\.400
Support en bois 13\.000
acier de l'armature 2\.000
Fournitures diverses 2\.600
Total partiel 104\.000
Main d'oeuvre: maqons - 50 h/jours a 600 FCFA/jours gj 30\.000
Transport des
fournitures: 2,4 tonnes sur 200 km a 20 FCFA par t/km 9\.600
Materiel: Une presse a briques pour 14 entrepots
a 119\.000 FCFA 8\.500
TOTAL 152\.100 ]}
-------
-------
11 Dimensions 3 x 8 m (24 m )\.2
Y Le reste de la main-d'oeuvre necessaire est consitue par les villageois
(auto-assistance)\.
l\./ La part des couts payable en devises est estimee comme suit: fournitures 55%, 'Jla
teriel :-65%\. depenses d' exploltation et-fr-aL::; de trans:port-: 55%, soit 1 t ec;\.uivalerit: ~cre
68\.005FCFA ou ~5%de l'ensemble des couts d'investissements\. Les taxes
devraient s'elever a 4% :pour Ie ciment, 20% pour plaques de tale et Ie
bois, 22% :pour l'acier\. 5% :pour les fournitures diverses et 20% :pour les
depenses d'exploitation et Ie materiel, soit 15\.270 FCFA ou 10% de l'ensemble
des couts d'investissements
ANNEXE 4
Tableau 14
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Couts estimatifdes centres -vi11ageo{s
FCFA
Fournitures: Ciment - 4\.300 kg a 25 FCFA/kg 107\.500
Et6le - 24 plaques a 2\.500 FCFA piece 60\.000
1 a 1\.400 FCFA 1\.400
Bois de support 17\.000
Acier de l'armature 3\.000
Fournitures diverses 3\.600
Total partiel 192\.500
Main d'oeuvre: ma~ons - 60 hommes/jours a
600 FCFA/jour 1/ 36\.000
Transport des
fourni tures : 0,75 tonnes sur 200 y~ a 20 FCFA par
tonne/km 19\.000
Materiel: 1 presse a briques pour 10 centres a
119\.000 FCFA 10\.500
TOTAL 258\.000 ?J
-----
------
1/ Les villageois contribueront benevolement aux travaux n'exigeant
pas une main-d'oeuvre qualifie (auto-assistance)\.
g/ Les couts payables en devises et les taxes sont calcules comme
au tableau 1 de la presente annexe\. L'element couts en devises,
par centre villageois s'eleve a 123\.150 FCFA soit h8% de l'ensemble
des couts d'investissement, et les taxes representent pour chaque
centre 26\.720 FCFA soit 10% de l' ensemble des couts d\.' investissements\.
ANNEXE 4
Tableau 15
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Programme d'amenagement des terres et de l'infrastructure
il\.
1975/76 1976/77 1977/78 1978/79 1979/80 Total
------------------------ ha -----------------------
Bas- fonds 100 500 600 700 800 2,700
Travaux de lutte
contre l'erosion 200 1,500 2,000 2,500 3,000 9,200
Petite Irrisation
- bas-fonds ameliores 50 50 100 100 300
proteges
- petite irrigation 25 25 75 75 200
nombr~ _____________________
----------------------
Batiments villageois
- entrepots 50 50 75 100 125 400
- centres 5 5 5 5 20
Puits -lJ:\. 100 120 140 160 520
Forage - /3 - 11\. 60 60 60 180
1/ Le budget de FDR pour 1975/1976 a ete etabli sur la base d'une baisse
des activites, etant donne que les derniers fonds du credit 3lT-UV ne
permettraient pas d'elargir le programme et que le FDR II ne sera pas
operationnel avant la fin de l'exercice 1976\.
?J Aucun puits nouveau; approfondissement des puits construits dans le cadre du FDR I\.
}/ iIlViron-'i20 -forages seront-ccJnstfUlts ,mais- les travaux seront finances sur Ie
-cr~dit-442-:fJv \.
A:JNEXE 5
Page 1
HAUTE-VOLTA
DEUXIEHE PROJET DE FONDS DE DEVELOPPENEl1T RURAL
Credit alSrico1e
Donnees generales
1/
1\. Camme cinq autres pays,- la Haute-Volta est membre de l'Union mo
netaire de l'Afrique de l'Ouest, qui existe sous sa forme actuelle depuis
1962\. Les pays membres de cette union ont en commun une monnaie (Ie franc
CFA - franc de la Communaute financiere africaine) ainsi qu'une banque cen
trale (13 Banque centrale des Etats de l'Afrique de l'Ouest - BCEAO)\. Les
operations bancaires commerciales sont assurces en Haute-Volta par la Banque
internationale pour Ie commerce, l'industrie et l'agriculture de la Haute
Volta, la Banque i~ternationale de Haute-Volta et la Banque internationale
de l'Afrique de l'Ouest\. La Banque nationa1e de developpement (B£ID) est la
source principale de financement et l'organe principal de reglementation du
credit a long et moyen terme ainsi que du credit agricola\.
La Banque nationale de developpement
2\. Creee en 1961, 13 BND a succede a une ser~e d' institutions finan
cieres de developpement appartenant a l'Etat\. Elle comprend, depuis 1965,
un service specialise dans Ie credit agricole\. Les statuts de la BND, qui
sont semblables a ceux d'autres banques de developpement de l'Afrique de
l'Oue~~ francophone, ont etc approuves par decret~1 en 1961 et amendes en
1962\.:Y Conformement a la loi,\.!!\.! les objectifs de la B:m sont de fournir
l'aide technique et financiere necessaire a l'execution de tous les projets
propres a favoriser Ie developpement economique et social de la Haute-Volta\.
1/ Benin, Cote d'Ivoire, Niger, Senegal et Togo\.
l\.! Decret No 82/PRES/ECNA, du 4 mars 1961\.
3/ Decret No l03/PRES/EC~lA, du 6 avril 1962\.
4/ Loi No 6/6l/ru\~, du 23 janvier 1961\.
A\.>fNEXE 5
Page 2
3\. La BnD est dirigee par un Cooseil d' administration, compose de onze
membres dont huit appartiennent a divers ministeres, deux a la CCCE fran~aise
et un a 1a BCEAO\. Ce Consei1, qui se reunit une fois par mois, est charge de
definir et d'executer la politique de 1a Banque et ses programmes en matiere
de credit\. 11 peut de1cguer certains de ses pouvoirs a un comite permanent
restreint ou 1es actionnaires sont representes dans 1es memes proportions\.
Le Directeur general de 1a BND est designe par une majorite des trois quarts
des membres du Conseil et nomne par 1e gouvernehlent\.
4\. Le capital de 1a BUD est souscrit comme suit:
Etat 54,55 %
CCCE 9,09 ,\.
ql
BCEAO 9,09
'\.
0/
DEG 9,09 %
Divers 18 zl8 %
Total 100,00 %
5\. La BND est p1acee sous l'autorite du Hinistre du commerce, de l'in
dustrie et des mines\. Ses comptes sont verifies par 1e Commissaire aux comp
tes du }Iinistere des finances et de temps en temps par les experts de la CCCE\.
Se10n l'accord passe avec l'Union monetaire de l'Afrique de l'Ouest, la BCEAO
re~oit, outre 1e rapport et les comptes annue1s de 1a END, des re1eves rnen
sue1s indiquant 1a position de cette derniere en matiere de finances et de
liquidites\. La verification interne des cornptes est confiee au Contro1eur
financier general\. La verification des conptes et 1e contro1e financier, tant
internes qu'exterieurs, semb1ent satisfaisants\.
6\. L'effectif de 1a BND est au total de 126 personnes, y compris un pe
tit nombre d'expatries\. Le personnel de 1a BND a 1a formation et 1es qualifi
cations lui pernettant de s'acquitter convenab1ement de ses taches\. La Ban
que nationa1e de developpement ne dispose pas d'un personnel specialise pour
eva1uer 1es aspects economiques et techniques des demandes de credit agrico1e\.
Ces taches sont actue1lement confiees au personnel des ORD d'ou emanent 1es
demandes\. Toutefois, i1 n'est pas certain que 1e personnel de ces organismes
ait assez d'experience pour traiter des demandes de prets\.
7\. On trouvera au Tableau 1 un resume des bilans de 1a Banque\. Le ca
pital verse, ega1 a 355 millions de francs CFA, a etc porte en aout 1974 a
1\.100 millions de francs CFA\. La Banque a ega1ement d'autres sources de fonds:
MiliE~ 5
Page 3
les dons et fonds de garantie provenant de la CCCE et de l'Etat
voltaique, les provisions pour reserves et les benefices;
les prets a moyen terme consentis par la CCE, l'Etat et la BCEAO;
les prets a long terme accordes par la eCCE, l'Etat, l'AID des
Etats-linis et la Banque africaine de developpeoent (BAD); et
les prets a court terme, depots et fonds\.
La BND jouit de facilites de reescompte aupres de la BCEAO; les prets a moyen
terme sont reescomptes pour une periode maximum de dix ans, les prets a court
terme pour la commercialisation des produits, pour un an, les taux d'escompte
sont generalement de 3,5 % mais ont ete recemment portes a 5,5 %\.
8\. Les operations de pret de la BND sont passees de 206 millions de
francs CFA environ en 1961, a 4\.615 millions de francs CFA en 1974\. Le Ta
bleau 2 donne une description detaillee du portefeuille de prets de la BND
aux principaux secteurs pour la periode 1970/71-1973/74\. Le Tableau 3 en donne
la ventilation\. Reparties par secteur, les operations de la BND pour l'exer
cice financier 1973/74 se presentaient comme suit:
Montant
Nombre (millions Pourcentase
de prets de FCFA) %
Immobilier 3\.056 1\.624 35
Agriculture 96 1\.101 24
Commerce et industrie 145 1\.593 35
Petit materiel et automobiles 5\.535 246 5
Organismes d'Etat 1 51 1
TOTAL 8\.833 4\.615 100
9\. Au Tableau 4 on trouvera, sous forme resumee, les comptes de pertes
et profits de la BND pour les quatre derniers exercices financiers\. Les re
sultats de la BND se sont ameliores au cours des annees, notamment a la suite
de la revision des conditions de pret et du transfert aux ORO des taches de
recouvrement des creances\.
Credit agricole
10\. Les prets de commercialisation, accordes a la Compagnie fran~aise
pour Ie developpement des fibres textiles (C~TD) pour ses achats de coton,
AllliEXE 5
Page 4
representent l'element Ie plus important du portefeuille agricole de la BND\.
En 1973/74, ils s'elevaient a 837 millions de francs eFA, soit 76 % des prets
de la B(ID\. Le credit accorde pendant la meme periode pour l'achat des fac
teurs de production saisonniers correspondait a 205 millions de francs CFA\.
L'ensemble du credit a court terme equivalait a environ 95 % des prets de la
B~m en faveur de l'agriculture\. Le credit agricole a moyen terme accorde par
la BND est insignifiant, comme Ie prouve Ie Tableau 5 qui en donne la venti
lation par categories pour plusieurs annees\. Pour la periode 1973/74, Ie
credit agricole accorde par la mm se repartissait comme suit:
;:lature du credit agricole 1973/74
Uontant Pourcentage
Nature du credit (Uillions de FCFA) %
Facteurs de production saisonniers 205 19
Commercialisation du caton 837 76
(1\.042) (95)
jJouvelles plantations 8 0,7
Batiments 3 0,3
Hateriel 36 3
Elevage 12
- 1
Credit a moyen terme (59) \.ill
TOTAL 1\.101 100
Les prets a l'agriculture qui ont connu une forte augmentation au cours des
annees ont toutefois diminue en pourcentage du credit accorde (Tableau 5),
passant de 50 % environ a la fin des annees soixante a 23 % en 1973/74\.
11\. La BND accorde generalement ses prets aux onze organismes regionaux
de developpement qui les retrocedent aux agriculteurs\. Les demandes de cre
dit a court terme sont soumises en premier lieu aux comites de village ou
siegent les anciens et Ie chef de terre qui approuve la demande\. Chaque for
mulaire de demande est rempli avec l'aide des vulgarisateurs de l'ORD\. L'ap
probation finale est donnee par l'ORD\. Avant Ie debut de la campagne agri
cole, chaque ORD presente a la BND ce qu'il estiroe etre ses besoins en cre
dits a court terme saisonniers\. Les ecritures concernant les credits a court
terme sont tenues par l'ORD\. Le financement du credit a moyen terme fait
l'objet de decision cas par cas, Ie Comite de direction de l'ORD etant charge
d'etudier les demandes\. Apres avoir ete examinees, les demandes et les recom
mandations du Coroite sont transmises a la BND pour approbation\. Le credit a
AJ\.\TNEXE 5
Page 5
moyen terme est a nouveau exam~ne au siege de la Brill a Ouagadougou ou sont
conservees toutes les archives\. La centralisation du credit a moyen terme a
Ouagadougou a souleve certains problemes, par exenple, retards dans l'achat
du materiel agricole et controle insuffisant des remboursements de ce type
de credit\. 11 semble necessaire de decentraliser la procedure d'approbation
et d'enregistrement des credits a moyen terne et une telle mesure devrait
etre mise al' etude par la BND\.
12\. Pour que sa demande de credit a moyen terme soit approuvee par la
BND, Ie demandeur doit:
a) avoir rembourse toutes dettes anterieures qu'il aurait pu contrac
ter;
b) appartenir a une association de precooperatives ou a un groupe vil
lageois;
c) avoir demontre dans Ie passe sa volonte d'adopter les techniques
agricoles prescrites; et
d) prouver qu'il possede un revenu moyen egal au moins a trois fois
Ie mont ant du service de sa dette\.
13\. Les ORn sont financierenent responsables devant la BND pour tous
credits accordes aux agriculteurs et ils doivent rernbourser les fonds pretes
merne en cas de defaut de paienent de la part des agriculteurs\.~1 Tout sous
secteurl! et secteu~1 dont les arrieres de paiernents depasseraient 10 % et
20 % respectivernent n'a pas droit a de nouveaux credits aussi longtemps qu'il
nta pas rembourse ses dettes\. Une garantie generale de l'Etat voltaique pro
tege la BND contre toute malversation financiere commise par l'ORn\.
14\. Les taux d'interet dont sont assortis les credits a court terme
s'elevent a 5,5 %, sont remboursables en un an ou moins, selon Ie cycle de
culture\. Le credit a moyen terme accorde par la mm pour l' achat du materiel
agricole comporte une echeance de deux ans et une obligation de versement
d' un acornpte d' environ 50 ;,\. Les taux prEateurs de la BUD se fondent sur Ie
tau:t de reescompte de la BC&\O\. Comme celui-ci est rccemment passe de 3,5 %
a 5,5 %, la BND a porte les taux applicables au credit agricole a 8 %; toute
fois, on ne sait pas encore si elle souhaite moduler ses taux en fonction de
l'echeance du credit (IT~yen et court terme)\.
~I Chaque OP~ est divise en cinq ou six secteurs, eux-menes divises en
quatre ou cinq sous-secteurs\.
AlRffiXE 5
Page 6
15\. Dans Ie passe, la BND a eu des difficultes a se fa ire re!:lbourser
les prets agricoles, notarnnent les prets a moyen terme destines a l'achat
d'outillage agricole\. Selon un decret presidentiel remontant a 1963, Ie non
remboursement du credit agricole est maintenant considere comme un crime con
tre la nation, au merne titre que la fraude fiscale\. Depuis cette date, Ie
recouvrement des credits a court terme s'est considerablement ameliore, pas
necessairement du fait du decret mais parce que i) lIon a oblige les agricul
teurs emprunteurs a consacrer une superficie minimum de leurs terres aux cul
tures de rapport, et ii) Ie recouvrement des creances a ete desormais confiee
aux OP~\. Les resultats obtenus par les ORD en matiere de recouvrement des
creances (voir Tableau 6) ont varie selon les programmes et politiques sui
vis dans chaque cas\. Eu egard aux critares d'evaluation des prets et aux
techniques de recouvrement des credits a court terme actue11ement adoptes,
les defauts de paiements devraient a l'avenir etre minimes\. Au 30 juin 1974,
94 % des remboursements dus au titre des prets a court terme avaient ete ef
fectues\. Par contre, 54 % seulement des remboursements au titre des credits
a moyen teme avaient ate obtenus\. Pendant les annees de secheresse, on ac
corde normalement un sursis aux agriculteurs pour Ie remboursement de leurs
dettes\. Toutefois, meme si l'on tient compte de cette possibilite, les rem
boursements des credits a moyen terme ne sont pas totalement satisfaisants\.
11 se peut que 1es procedures relatives aux demandes de pret et 1es condi
tions dont ceux-ci sont assortis ne soient pas assez bien organisees ni adap
tees aux besoins\.
16\. L'AID des Etats-Unis a recemment accorde aux agricu1teurs quelque
63 millions de francs eFA par Ie truchement du Fonds de developpement rural
sous forme de credits a moyen terme destines a financer l ' achat des boeufs de
trait et de l'outillage agrico1e\. Ces credits, assortis d'un taux d'interet
de 5,5 %, etaient re!:lboursables en cinq ans dont un differe d'amortissement
d'un an\. Pour pouvoir pretendre a ce type de credit, l'agriculteur devait
posseder ou fournir 1ui-merne un boeuf\.
Credit fourni au titre du 2rojet
17\. Le projet prevoit de mettre a la disposition de la BND 500\.000 dol
lars environ pour a1imenter un fonds renouvelable et assurer ainsi Ie finan
cement du credit agricole a moyen terme\. Les fonds seraient en un premier
temps remis par l'Etat au Fonds de developpement rural; toutefois, apras l'oc
troi des credits a\. moyen terme, Us seraient administres par la BND el1e-meme\.
Les sommes remboursees seraient de nouveau uti1isees sous forme de credits a
moyen terme et 1e fonds renouve1able serait considere comme un fonds fidu
ciaire gare par 1a Blm conformement aux rag1es fixees d' un commun accord par
l' Etat voltaique et 1a BND et approuvees par l' IDA\.
A\.'lNEXE 5
Page 7
18\. Le credit a moyen terme serait assorti d'un taux d'interet de 8 %
et d'une echeance de cinq ans dont un differe d'amortissement d'un an\. Ce1a
correspondll aux conditions auxque11es l'AID des Etats-Unis a mis a 1a dispo
sition de 1a BND un fonds de credits a moyen terme\. Les ressources de ce
fonds, gere par l'intermediaire du FDR, etaient pretees au taux de 5,5 %, qui
etait ega1ement ce1ui de 1a BlID au moment de l' evaluation\. Toutefois, 1es
taux d'interet ont ete reexamines a la suite d'une modification du taux de
reescompte de la BCEAD (passe de 3,5 % a 5,5 %)\. Le taux d'interet propose
pour le projet est de S % mais i l conviendra de le reexaminer si 1a BND fixe
un taux different pour l'octroi de son credit agrico1e a moyen terme\.
19\. Les agriculteurs appartenant aux cinq DRD du plateau l10ssil\.1 pour
raient pretendre au benefice du credit a moyen terme\. Pour que sa demande
soit examinee, le paysan devrait remplir les conditions suivantes:
a) verser, en especes, 1m acompte mininun de 10 % s'il ne possede pas
un animal de trait ou un materiel de traction agrico1e;
b) avoir la reputation de suivre les consei1s des vu1garisateurs en
matiere de techniques agrico1es;
c) avoir remp1i les obligations de remboursement des prets anterieurs;
d) pouvoir tirer de ses activites agrico1es (cultures de rapport,
vente de bctail ou vente de l'excedent des cultures de subsistance)
un revenu monetaire lui permettant de faire 1argement face a ses
obligations de remboursement\.
Les conditions precitees ainsi que d'autres engagements seraient enoncees
c1airement dans un contrat signe par l' agriculteur et la mID\. Ce contrat
preciserait egalement 1es procedures de remboursement applicables\. Un con
trat pro-forma serait redige en collaboration avec l'IDA qui devrait l'approu
ver\. Bien qu'il ne s'agisse pas a proprement parler d'un critere de selec
tion, 1e FDR, lors de l' approbation des demandes de credit, donnerait la pre
ference a ceux des agricu1teurs qui ont deja entrepris d'autres activites de
developpement; en d'autres termes, le credit permettrait de completer d'au
tres activitcs et l'agriculteur pourrait ainsi disposer d'un ensemble plus
comp1et de services\.
11 Excepte en ce qui concerne le taux d'interet qui est de 5,5 %\.
l\.1 Ouagadougou, Kaya, Yatenga, Koudougou, Koupe1a\.
ANNEXE 5
Page 8
20\. La BND nommerait un charge de credit qui serait plus particuliere
ment responsable de la gestion du fonds renouvelable prevu au titre du pro
jet et destine a alimenter Ie credit a moyen terme\. C'est a lui qu'il incom
berait en outre d'etudier les problemes d'organisation qu'impose en general
l'octroi du credit a moyen terme\.
21\. La fourniture du credit a moyen terme aux agriculteurs s'effectue
rait selon les procedures suivantes:
a) les agriculteurs soumettraient leur demande de credit a moyen terme
aux ORD;
b) les ORD feraient une selection attentive des demandes qui rece
vraient une premiere approbation, en fonction des criteres defi
nis par Ie FDR et la BND;
c) Ie charge de credit a moyen terme de la BND se rendrait dans cha
cun des ORD et les aiderait a selectionner les demandes beneficiant
de l'approbation initiale;
d) les demandes seraient transmises au Fonds de developpement rural;
e) Ie Fonds de developpement rural donnerait son approbation defini
tive aux demandes de credit apres avoir consulte Ie charge des cre
dits a moyen terme de la mm;
f) Ie Fonds de developpement rural notifierait aux OP~ les approba
tions donnees et les accords des credits entre les agriculteurs
et la BND seraient signes;
g) Ie Fonds de developpement rural veillerait a ce que les achats ne
cessaires soient effectues et distribuerait les biens aux agricul
teurs par 1e truchenent des ORD;
h) a la suite du deboursement, Ie Fonds de developpement rural remet
trait a la BND une liste indiquant les montants de credit accordes
par agriculteur; Ie montant total serait debite d'un compte renou
velable de la BUD ouvert specialement pour les credits a moyen
terme du projet; et
i) par la suite, la BND serait chargee de gerer Ie fonds renouvelable
et notamment d'assurer Ie recouvrement des creances\.
AllNEXE 5
Page 9
22\. Les procedures decrites plus haut devant etre synchronisees avec
l'emploi du temps agricole (la preparation des sols commence en rnai), l'ap
probation des dernandes par les or~ se deroulerait tout au long de l'annee
rnais devrait s'achever en decembre\. Les dernandes approuvees seraient trans
mises avant la fin du mois de decembre au Fonds de developpement rural\. Ce
lui-ci les examinerait et les approuverait en janvier et etablirait l'ensem
ble de son programme annuel avant la fin du mois de janvier\. 11 pourrait en
suite organiser l'achat des biens necessaires\. Les livraisons aux agricul
teurs par le truchement des ORD s'effectueraient en mars/avril\.
23\. Les agricu1teurs rembourseraient 1es fonds en quatre versements
egaux au bout d'un differe d'amortissement d'un an, mais i1s auraient 1a fa
cu1te d'acce1erer 1es remboursements\. Le montant de cas versenents egaux et
1es echeances figureraient au contrat signe entre l' agricu1t~ur et la B:m\.
La BlD procederait au recouvrement de ses creances apres la reco1te\. Les
agricu1teurs devraient effectuer leurs versements dans l'un quelconque des
bureaux des opn ou le responsab1e de 1a perception leur remettrait un re~u\.
Les represent ants de 1a B~D recouvreraient 1es fonds dans les bureaux des
ORD\. Ils se rendraient egalenent dans les exploitations des agriculteurs
n'ayant pas encore rembourse\. Les vu1garisateurs des o~n n'auraient pas a
s'occuper du recouvrement des dettes\. Ces dispositions devront etre reexa
nees de te:nps a autre en collaboration avec le charge du credit a moyen terme
de 1a mm au cours de la supervision du FDR II\.
HAUTE-VOL'l'A
DEUXIFME PROJET DE FONDS DE DEVELOPPEMEN'r RURAL
BANQUE NATIONALE DE DEVELOPPEMENT Bilans Recapitu1atifs
30/9/71 30/9/72 30/9/73 30/9/74
millions de millions \.de millions de millions de
FCFA % FCFA % FCFA % FCFA %
Actifs
Batiments et materiel 71,4 2,2 73,1 1,7 73,3 1,3 ll4,4 1,2
Investissements 74,0 2)3 75,1 1\.,8 65,7 1,1 66,1 0,7
Credits et comptes divers 2\.868)5 88,2 4\.004,8 93,9 5\.278,7 91,0 9 \.ll5, 5 95,2
En caisse 238,8 7\.J 3 113,6 2,6 381,2 6,6 280,7 2,9
Report des pertes
Total 3\.252,7 100 4\.266~6 100 5\.798,9 100 9-576~7 100
Passi1'
Capital et reserves
Capital 355,0 355,0 355,0 355 J O
Dons et fonds de garantie 282 1 1 283,0 275,7 276,9
Reserves et provisions 250,9 341,5 431,8 553,2
Report a nouveau 0}9 1,1 1,1 1,1
Total partiel 888,9 27 ,3 980,6 23,0 1\.063,6 18,4 1\.186,2 12 ,4
Emprunts
Long terme 776,8 1\.286,7 2\.144,5 3\.541,6
Noyenterme 278,9 281,6 303,4 1\.636,1
Court terme 487 1 6 790,5 1\.288,0 1\.877,4
'['ota1 partiel 1-543,3 47,5 2\.358,8 55,3 3\.735,9 64~4 7\.055,1 73,7
Depot et eomptes divers 820,5 25 1 2 927 , 2 21,7 999~4 17,2 1\.335,4 13,9 ~3~
~d
~0
~ f\.~
Total 3\.252,7 100 4\.266,6 100 5-798,9 100 9\.576,7 100
~
\.4\.1Illl'EXE 5
Tableau 2
HAUTE-VOLTA
DEtJXIEME PROJET DE FONDS DE DEV3LOPPEMEtfT RURAL
BA\.:\.iQUE ?~ATIONALE DE DEVELOPPEMEXT Onerations de uret de 1961 a\. 1974
Periode nombre de Prets Hontant en FCFA
1961 944 206\.249
1962 1\.877 391\.737
1963 2\.478 387\.312
1964 2\.229 592\.992
1965 (9 mois) 2\.569 487\.966
1965/66 3\.426 h1\.8\.366
1966/67 3\.617 544\.361
1967/68 4\.272 755\.957
1968/69 5\.588 1\.475\.168
1969/70 6\.777 2\.438\.203
1970/71 7-71\.9 2\.104\.941
1971/72 7\.894 5\.034\.
1972/73 7711 3\.880\.750
1973/74 8\.833 L\.615\.0 h7
TOTAL 65\.964 23\.]63\.701
HAUTE-VOLTA
DEUXIE:l\.fE PROJET DE FONDS DE DEVELOPPEMENT RURAL
BANQUJi: NATIONALE DE DEVELOPPEMENT-Portefeuille de prets- 1971/72-1973/71
1
1971/72 1972/73 1973/74 Total 1971-74
Miltion de FCFA
I <:~) (%) (%) I (%)
Secteur I I I
I
Irnmobilier 738\.8 I 14\.7 1,144\.8 129\.5 1,623\.6 35\.2 3,920\.3 I 26\.6
Agriculture 1,222\.8 I 24\.3 l,2h2\.0 I 32\.0 1,101\. 0 23\.9 3,738\.1 I 25\.4
Commerce et Industrie 2,551\.5 I 50\.7 646\.7 16\.7 1,593\.3 34\.5 4,938\.4 I 33\.5
Peti t Materiel
et automobiles 231\.4 It\.6 236\.0 6\.1 246\.4 5\.3 956\.6 I 6\.5
I
Orguni~mes Officiels 290\.0 5\.1 6U\.2 15\.1 50\.1 1\.1 1,183\.9
I
t 8\.0
:;?~
r:::
~a
\Jl
w
HAU'l'E-VOl /I'A
DEUxn:Ml~ PHOJET DE FONDS DE m:VELOPPEMENT RURAL
BANQm~ NATIONALE DE Dl'NF\.I\.OPp[i~t41'mT- Recapjtulation des comptes de pertes et profits
1969/70 1970/71 1971/72 1972/73 197M,l4
F'CF'A F'CF'A FC}I'A FCFA F, A
million % million % million % million % million %
Produits
-- --~~
IntEr~ts Bur les pr~ts etc\. 161\.0 92\.2 160\.6 64\.2 205\.2 92\.7 276\.4 91\.2 445\.3 83\.1
Divers 1\.6 0\.6
'I'ransfert3 des fonds de reserve
et de garantie 70\.2 28\.0 10\.8 1 9 17\.7 5\.9 74\.7 14\.0
Benefices au titre d'opera\.tions
anterieures 13\.5 7\.8 18\.0 7\.2 5\.4 2\.4 8\.8 2\.9 15\.7 2\.9
Pertes
'l'O'l'AL 174\.5 100\.0 250\.4 100\.0 221\.'1 100\.0 302\.9 100\.0 535\.7 100\.0
Churge!l\.
ji'l'ais a\.illrdnistratifs et generaux 97\.4 55\.8 122\.5 48\.9 141\.1 63\.7 192\.3 63\.5 300\.0 56\.0
I
'l'runsferts nux reserves et provision 62\.7 35\.9 122\.8 49\.1 75\.7 3'\. 2 105\.8 34\.9 210\.4 39\.3
1-3 ~
Benefic;:s 14\.4 8\.3 5\.1 2\.0 4\.6 2\.1 4\.8 1\.6 25\.3 4\.7
~ ~
~
I-'
17l\.5 100\.0 ro
'~rO'l'AL 250\.4 100\.0 221\.4 100\.0 302\.9 100\.0 535\.7 100\.0
~ \\.Jl
~
IlAU'!'E-VOL'l'A
DJ<lIXJ1i:ME fRO\.n:'l' DE FONDS DE nEV~:LOPPEMEt/'r RURAL
Credit ~ieole nccorde de 1966 a 197~
(en millions de FC~'A)
Nature =:-::==c::\. _~6!2_
I"actettt'" dt: production saisonnier3 111,671 112,5'10 117,550 135,046 127,3112 15'[ ,1 1
12 136,301 181,827 205) 522
(C'1' )
Nouvelle" plu\.ntutious (M'r) 2 ,69~ 365 380 150 2,J 32 2,081 2,687 \., ,0'79 7,61
17
buti m""ts (MT) 2,0')'[ 621 1,110 ),160 7,170 200 3,0;'0
I!auhj ,,] (liT) 60,281 2'( ,906 11,'(29 12;r89 16,400 8,836 17,675 50,1102 35,8 1 1
11
COliunerciuliuuLion au Cotton (C'r) 16,)uo 1,000
\.11 252,000 633,200 988,000 iJ~3,000 1,053,750 996,520 837 ,662
~:l "vag" (N'r) 'TOO
'l'oLal l'Hr an J 109,008 387,730 '[81,80~
Credit "grico] e en pour
centuce de l' en"elfll,le des
creJitu accorde!:l 42 ~)O
51 53 116 50 211 32 23
-------
Note:; CIII court terme\., l,rp luoyeu tcrme
HAUTE-VOI,TA
m!UXIEMJI~ PROJRT DE FONDS DE DEVELOPPEMENT RURAL
Remboursement des pr~ts ii\. cOllrt\. et a moyen termes par les ORD
(en millions de FCFA)
_ 19-'-'(1==:_ _ __ l<JT~ ______ 19'r\.-=:\.3_ _ __ 191!I
I Honta\.n~::; Bon Lmlts Montants Hontants Mont ants r\.Iontants Hontants Hontants
l'!chus Echus Echus Rembour£les Echus
0111)8 ~ :t:
A\. Court terme
Ouagadougou 4\.1 89 2\.4 86 15\.2 89 14\.8 94
Koudougou 18\.0 93 14\.4 81~ 3\.1 63 5\.3 92
Deduugoll 63\.2 99 33\.1~ 93 38\.5 91 36\.9 89
KaYll 3\.1 88 2\.0 11 2\.4 13 2\.6 55
Yatenga 6\.0 81 1\.2 16 2\.9 85
Banfora 6\.5 100 10\.3 59 6\.6 42
Di(:bougou 4\.9 98 4\.2 96 5\.1 81 5\.1 92
Bob-Diou]asso 61\.1 51\.0 61\.3 100 10\.0 100
a I
'l'O'[,AL OHDs I 168\.1 9t\. 118\.9 91 135\.1 92 134\.1 94
B\. Moyen terme 1
Ouagadougou 5\.1 100 1\.5 10
1 1\.4 1 1\.5 63
Koudol1gou 2\.7 6"\.) 2\.6 4 o\.lt 35 0\.3 30
Dedoul!,()U 8\.1 99 3\.9 48 3\.3 61 2\.9 69
KtlYh 2\.1 6h 2\.7 51 i 2\.0 49 2\.0 26
Yat\.enga o\.l; 11 0\.4 13
Hanfonl 0\.2 98 0\.3 50 0\. 1
1 10
DielJougou 0\.8 8h 0\.8 61 0\.2 13 0\.2 41
Bobo-Dio1UDfJO 4\.0 85 1\.2 91 0\.3 89
a
'l'O'J'AL <)0
8 ie
~ ~
I-' t';:J
(j)
III Fj
~
'fl
0\1
ANNEXE 6
Page 1
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEHENT RURAL
11
Etudes- sur Ie developpement economigue
des regions liberees de l'onchocercose
A\. Introduction
1\. Des missions conjointes FAO/BI~ se sont rendues au Benin, au
Ghana, en Haute-Volta, au }~li et au Togo aux mois de juin/jui11et 1975 pour
definir Ie cadre d' etudes de base des zones liberees de l' onchocercose, pre
voir la coordination et Ie renforcement des processus de planification en vue
de la preparation du Plan decennal de developpement et de projets specifiques
pouvant se preter a des investissements par les Etats, 1es agences d'aide
multilaterales et bilaterales, enfin planifier la formation du personnel
local dans les domaines de la collecte des donnees, de leur interpretation,
de la preparation et de l'execution du plan\.
2\. Bien que les differents pays interesses different par leur niveau
de daveloppement economique (par exemple Ie revenu par habitant va de 240 dol
lars au Ghana a 70 dollars seulement en Haute-Volta), ils presentent de nom
breuses similitudes\. Leur economie est dominee par l'agriculture, dont la
production est en baisse par suite de l'accroissement de la population, de
l'epuisement des terres et de l'erosion, problemes qui ont encore ate aggraves
par la secheresse qui a recemment sevi dans la region\. De toute evidence, il
est indispensable de diversifier la production, de remplacer les importations
et d'ameliorer les pratiques culturales\.
11 La presente Annexe se fonde sur un rapport de la FAO ws/H 3291 d'octobre
1975, Developpement economique des regions liberees de l'onchocercose au
Benin, Ghana, Mali, Togo et Haute-Volta, prepare par la mission mention
nee au paragraphe 1\.
1/ Les missions comprenaient MM\. Burer, Kock, Osei, Otten, Sinodinos et Weed
de la Banque, M\. Groom de la FAO et M\. Soa, consultant\. Elles ont ete
aidees au Togo par M\. el Kashef (FAC) au Mali par M\. Fanfant (FAC) et en
Haute-Volta par M\. Hirsch (FAC)\. M\. R\. Noronha (consultant) a participe
a la redaction du present rapport\.
ANNEXE 6
Page 2
3\. Une des principales causes du surpeuplement et de la culture trop
intensive des terres est que les villageois ont quitte les vallees relative
ment fertiles ou sevissait l'onchocercose\. Dans les cinq pays interesses,
ces zones qui se trouvent entre 80 et 15 0 de latitude nord et 4 0 et 80 de
longitude ouest couvrent environ 571\.000 km2 Une fois elimine Ie vecteur
de l'onchocercose, ces regions pourraient etre repeuplees, ce qui allegerait
les pressions demographiques dans d'autres regions du pays, permettrait d'ac
croitre la production agricole et de diversifier l'agriculture~ et ainsi que
de reduire les desequilibres regionaux qui existent actuellement\. Ceci per
mettrait egalement la mise en valeur de deux grandes ressources naturelles:
la terre et l'eau\. Le programme de lutte contre l'onchocercose a pour prin
cipaux objectifs Ie developpement economique et social de ces regions sans
pour autant negliger les buts humanitaires\.
4\. Le bassin des Voltas couvre pres de 700\. 000 km2 dans sept pays
d'Afrique de l'Ouest (Benin, Cote d'Ivoire, Ghana, Haute-Volta, Mali, Niger
et Togo)\. Dans cette region sevit l'onchocercose qui apporte cecite et mi
sere aux habitants et freine la mise en valeur de nornbreuses vallees fertiles\.
La maladie est transmise par la piqure d'une simulie femelle infectee de
l'espece Simulium damnosum\. Le programme de lutte contre ce vecteur, lance
sous la direction de l'OMS, est pleinement operationnel depuis decembre 1974\.
Ce programme a des effets plus ou moins immediats mais pour que la maladie
soit definitivement eliminee, il faut poursuivre les efforts pendant vingt
ans; toutefois, dans certaines regions, les paysans reviennent deja sponta
nement vers les vallees fertiles dans l'espoir que la maladie en aura ete
eliminee de maniere permanente\. II est donc essentiel de proceder a un inven
taire des ressources naturelles de ces regions et de planifier leur repeuple
ment et leur developpement economique\.
5\. Le programme de lutte contre l'onchocercose se justifie par des rai
sons humanitaires mais, plus encore, par des motifs economiques\. On estime
en effet que des centaines de milliers de personnes pourraient s'etablir dans
les regions assainies, ce qui allegerait les pressions demographiques qui
s'exercent sur les sols degrades des plateaux~et accroitrait la production de
cultures vivrieres et de rapport\. Pour empecher l'exploitation incontrolee et
irreversible de l'une des rares ressources naturelles restant a l'Afrique de
l'Ouest et encore relativement inexploitees, il est essentiel de suivre une
methode systematique\. Sur les sept pays ou Ie programme de lutte contre Ie
vecteur a ete entrepris, Ie Gouvernement de la Cote d'Ivoire prepare lui-meme
un programme de mise en valeur des regions qui seront assainies et~pour l'ins
tant,n'a pas l'intention de demander une nouvelle assistance au PNUD ou a
d'autres organismes internationaux au-dela de celIe qu'il a deja demandee pour
l'etablissement de cartes aeriennes et l'etude de l'incidence de la mouche
tse-tse\. Le Gouvernement nigerien prepare egalement ses propres plans de de
veloppement de la region relativement petite qui sera assainie et il est aide
dans ce domaine par Ie PNlm\. Par contre, une assistance technique sera neces
saire pour les zones onchocerquiennes situees en Republique du Benin (56\.000 krnZ),
Al\.'mEXE 6
Page 3
au Ghana (98\.000 km2), au Mali (125\.000 km2 ), au Togo (18\.000 km2 ) et en Haute
Volta (274\.000 km2)\. 11 etait suggere que le meilleur moyen de fournir cette
asssistance technique serait a l' occasion de projets finances par la Banque
ou l'IDA\.11 Dans la suite de la presente Annexe nous ne traitons que du de
veloppement economique des regions liberees de l'onchocercose en Haute-Volta,
interessees par le programme medical de lutte contre le vecteur\. Cette region
couvre environ 90 % du territoire national\.
6\. La methodologie fondamentale de planification acceptee pour les re
gions assainies se traduira par la preparation de:
a) un inventaire des ressources naturelles (la banque des donnees);
b) un plan decennal de developpement des zones prioritaires des regions
assainies (Ie Plan decennal de developpement); et
c) un certain nombre de projets d'investissement (preparation de
projets)\.
B\. L'operation d'assistance technique envisagee
Gene ralites
7\. L'operation d'assistance technique envisagee consisterait a financer
les programmes necessaires a l'application de la methodologie definie au par\. 6\.
En Haute-Volta, cette operation viendrait completer les programmes en cours
finances par le PNUD et autres organismes\.
8\. L'application de la methodologie aurait a long terme les objectifs
suivants:
a) ameliorer le niveau de vie des paysans qui actuellement subviennent
tout juste a leurs besoins dans les regions densement peuplees ou
inhospitalieres, en leur fournissant la possibilite de s'installer
sur des terres relativement fertiles qui ont ete liberees de l'on
chocercose ou dans d'autres regions moins peupleesj
11 Pour la Haute-Volta\.le\. Deuxieme projet de fonds de developpement rural;
pour le Ghana, le Projet de d~veloppement agricole de la region supe
rieure; et pour le Mal~le Projet de developpement agricole Mali-Sud\.
ANNEXE 6
Page 4
b) realiser ce programme de repeuplement tout en evitant l'exploitation
anarchique et l'absence de conservation des sols qui ont caracterise
la plupart des peuplements en Afrique de l'Ouest; et
c) accroitre la production des cultures vivrieres, de l'elevage et des
cultures industrielles et d'exportation\.
9\. Le programme serait execute en trois ans et consisterait a:
a) mettre au point la banque des donnees;
b) etablir un Plan decennal de developpement; et
c) preparer des projets d'investissement pouvant tre rapidement soumis
a des organismes de financement exterieur et executer les quatre
premieres annees du Plan de developpement\.
10\. La methode envisagee pour la planification du developpement des re
gions assa1n~es ne veut pas dire que les projets d'investissement ainsi mis
au point seront necessairement complexes ou couteux\. Le gouvernement voudra
s'assurer qu'un nombre maximum de personnes beneficiera de la mise en valeur
des regions assainies et s'efforcera d'atteindre cet objectif en fournissant
aux colons eventuels une assistance minimale susceptible d'assurer une migra
tion suffisante de personnes tout en appliquant des mesures de conservation
efficaces\. II est donc particulierement important de disposer de bonnes don
nees de base et d'une planification solide\.
Caracteristiques detaillees
11\. Mise au point de la banque des donnees\. La Haute-Volta a deja pre
pare un programme de developpement qui s'etend a certaines regions onchocer
quiennes situees dans les vallees des Voltas noire, rouge et blanche\. L'Auto
rite des amenagements des vallees des Voltas (AVV) execute mme deja des projets
d'un type ou d'un autre dans les regions qui relevent de sa competence\. Tou
tefois, les autorites ont conscience de la necessite d'ameliorer la planifica
tion glob ale et reconnaissent avoir besoin d'une banque des donnees qui leur
fournirait des renseignements a jour sur les regions assainies, leurs ressour
ces et leur potentiel\. II est egalement admis qu'un Plan de developpement de
ces regions, con~u sur la base de connaissances et d'une analyse solide du
potentiel de la region est necessaire, dans la mesure ou il servirait d'ins
trurnent de planification et faciliterait l'obtention d'assistance financiere
exterieure\. Une banque des donnees destinee a la planification du developpe
ment des zones assainies devrait rassembler les principaux elements suivants:
a) utilisation actuelle des sols; b) classification des sols en fonction de
leur vocation agricole (on determinerait la valeur economique des principaux
types de sol d'apres leurs proprietes physiques et chimiques et d'apres cer
tains facteurs sociaux et economiques); c) climat; d) ressources reelles et
ANNEXE 6
Page 5
potentie11es en eaux de surface et en eaux souterrainesj et e) donnees socio
economiques sur 1a population, 1e regime foncier et l'organisation sociale
ainsi que des renseignements de base sur 1es activites relatives a l'agricu1
ture, a l'e1evage, a la sylviculture et a 1a peche\.
12\. De nombreuses etudes et enquetes ont deja ete rea1isees sur 1es
zones infestees\. Par exemp1e, l'Office de 1a recherche scientifique et tech
nique d'outre-mer (ORSTROM) a etabli des cartes pedo10giques et l'Institut
geographique national a dresse des cartes topographiques\. Des renseignements
c1imato10giques sont disponib1es a Paris et a Londres\. Depuis plus de dix ans,
1a region touchee par l'onchocercose fait egalement l'objet d'enquetes par
satellites ~~DSAT et 1es donnees ainsi accumulees ont ete mises sur ordina
teur\. 11 existe egalement une quantite considerable de donnees sociales et
economiques\. Ces donnees, pour dispersees qu'elles soient en Afrique, en
Europe et ailleurs peuvent etre rassemblees et, en consequence, l'etablisse
ment d'une banque des donnees comprendrait: a) le recouvrement des donnees
existantes, b) leur collationnement, et c) 1a realisation de nouvelles etudes
et enquetes specifiques en vue de combler les lacunes\. Une fois mise en
place, la banque des donnees devrait fournir des renseignements sur tout sujet
important relatif aux zones onchocerquiennes\. E1le ne se contenterait pas de
donner des renseignements d'ordre general mais indiquerait egalement les va
riations locales favorables ou defavorables aux activites de developpement\.
13\. Etablissement d'un plan decennal de developpement\. Ce plan serait
etabli sur la base de renseignements fournis par la banque des donnees\. 11
determinerait quelles sont les zones prioritaires, dont la mise en valeur
pourrait etre entreprise au cours de la prochaine decennie et serait divise
en plusieurs volets comprenant chacun un ou plusieurs projets d'investisse
ment\. Avant que ce plan puisse etre etabli, il faudrait que le gouvernement
fixe les parametres et les criteres a utiliser pour determiner l'ordre de
priorite des zones et la nature des projets qu'il souhaite promouvoir\. Pour
etablir les priorites, il conviendrait notamment de prendre en consideration
les facteurs suivants: i) le potentiel de ressources; ii) la gravite de la
surpopulation dans les zones d'ou l'on encouragerait l'emigration; iii) l'exis
tence de conflits sociaux et culturels entre divers groupes ethniques dans les
zones surpeupleesj et iv) le coGt par habitant du programme d'installation\.
Le plan engloberait les programmes officiels deja etablis pour les zones re
levant de l'AVV et tiendrait egalement compte du plan national de developpement
actuellement en preparation\.
14\. Preparation de projets d'investissement\. La preparation detaillee
de projets d'investissement ne commencerait que lorsque le gouvernement aura
procede a un examen approfondi du plan de developpement et aura demande l'as
sistance d'organismes d'aide exterieure\. Toutefois, l'identification des
projets commencerait en meme temps que l'elaboration du plan de developpement
decennal\.
ANNEXE 6
Page 6
C\. Execution du programme d'assistance technique
15\. Des bureaux d'etudes dument qualifies seraient charges de fournir
l'assistance technique necessaire pour effectuer, dans les delais prevus,
l'operation devant aboutir rapidement a des propositions d'investissement\.
11 existe en Haute-Volta du personnel et des institutions qualifies a divers
degres pour effectuer une partie du travail, et les bureaux d'etudes qui pro
poseront leurs services devront evaluer dans quelle mesure des experts vol
tatques seront disponibles et preciser la fa~on de les recruter et de les
employer\. 11 importe toutefois de souligner qu'une grande partie du travail
consiste a rassembler des donnees qui n'existent qu'en dehors de l'Afrique
de l'Ouest\.
La b anque des donnees
16\. La constitution de la banque des donnees necessitera en particulier
la realisation des trois operations suivantes:
i) une enquete sur l'utilisation des sols, l'etablissement de
cartes y afferentes et etudes climatiques et hydrologiques
connexes;
ii) enquete sur la vocation agricole des sols et etablissement
des cartes y afferentes; et
iii) enquete socio-economique\.
17\. Enquete sur l'utilisation des sols et etablissement de cartes\. Cette
etude utilisera principalement les donnees obtenues grace a la teledetection
par satellite, completee le cas echeant par des photographies existantes et
par des observations terrestres et aeriennes\. En raison de la nature hautement
specialisee de ce travail et de l'homogeneite geographique de la zone infestee,
il est preferable que ce travail fasse l'objet d'un contrat unique\.11 En ou
tre, il faudra rassembler des donnees supplementaires sur le climat et l'hydro
logie\.
11 Un projet de definition des diverses etudes figure dans le rapport de
la FAO t-lS/H 3291 (voir note 1 en bas de la page 1)\.
ANNEXE 6
Page 7
18\. Enquete sur 1a vocation des sols et etab1issement de cartes\. Un
contrat distinct sera passe pour ce travail en Haute-Volta\.
19\. Enquete socio-economique\. Un contrat distinct sera passe pour ce
travail\.
20\. L'etude de 1a vocation des sols et 1es enquetes socio-economiques
feront l'objet de contrats distincts, mais 1es bureaux d'etudes pourront sou
missionner p1usieurs de ces contrats\. Cette procedure garantira entre 1es
divers bureaux d'etudes une concurrence maximale assurant que ces bureaux
confient 1e travail a un personnel de qualite\. Un calendrier des operations,
indiquant 1e programme des diverses enquetes, figure au diagramme 15624 joint
a la presente annexe\. Comme l'indique ce diagramme, les enquetes seraient
achevees au cours d'une periode de six mois, a l'issue de 1aque11e debuteraient
les travaux de planification\.
Le plan decennal de developpement (le Plan)
21\. On envisage de creer un groupe de p1anification du deve10ppement
qui serait charge de 1a planification du deve10ppement economique des regions
assainies\. Sa tache principa1e serait 1a preparation du plan decennal de
developpemen t\.
22\. Le groupe de planification aurait un chef permanent (denomme le
conseiller principal a la planification des zones assainies), vo1taIque si
possible, ou a defaut, recrute sur 1e marche international\. Son mandat et
ses qualifications devraient etre juges satisfaisants par l'IDA\. Lors de
l'estimation des couts de l'operation, on a suppose que ce consei1ler serait
recrute sur 1e marche international pour une periode de trois ans\.
23\. Le groupe de planification comprendrait ega1ement une equipe de spe
cialistes composee d'un planificateur du deve10ppement rural, d'un agronome
agro-economiste et d'un ingenieur civil\. On a egalement prevu l'emploi d'au
tres specialistes dont on pourrait avoir besoin pour de courtes periodes\. Les
services de ces specia1istes seraient obtenus dans le cadre de contrats signes
avec des bureaux de consultants qualifies\. Le groupe de p1anification serait
etabli des que les resultats de l'enquete sur l'uti1isation des sols seraient
disponib1es\. On estime que 1a premiere version du plan pourrait sortir dans
1es six mois suivant 1a creation du groupe de p1anification\. L'equipe de
specia1istes serait employee au cours de cette periode et reviendrait un an
plus tard pour reviser et mettre a jour 1e plan\.
Preparation de projets d'investissement
24\. Une fois le plan prepare, il conviendra d'etablir des priorites de
deve10ppement et de preparer des projets\. L'e1ement d'assistance technique
propose prevoit une provision devant financer deux ou trois contrats de con
sultants qui seraient charges de la preparation d'etudes de justification
susceptibles d'interesser des organismes d'aide internationaux\.
ANNEXE 6
Page 8
Organismes responsables de l'execution du projet
25\. Pour completer la banque des donnees, des cartes\. enquetes et etu
des supplementaires doivent etre preparees par des consultants hautement
specialises ainsi que des experts voltarques dont les services sont deja uti
lises pour les projets de developpement rural et de repeuplement\. Ces deux
types de projets relevant du Ministere du developpement rural, recemment
cree, c'est sous la tutelle de ce ministere que serait placee la banque des
donnees\. Le personnel de l'IDA fournira une contribution substantielle et
aidera Ie gouvernement a etablir Ie mandat des consultants et a choisir un
bureau d'etudes approprie\. Les qualifications et les conditions d'emploi des
consultants devront etre jugees satisfaisantes par l'IDA\.
26\. Pour l'elaboration du Plan decennal de developpement, qui presente
un interet national, les services de planification, au sein du Ministere du
Plan, seraient renforces par la nomination, dans Ie cadre d'un contrat a long
terme, d'un conseiller principal (conseiller principal a la planification des
zones assainies), aide de specialistes recrutes pour de courtes periodes et
recevant l'appui de bureaux de consultants pour certaines etudes\. Le plan
decennal de developpement serait prepare par Ie Ministere du Plan, apres con
sultation avec Ie Ministere du developpement rural\. On a egalement prevu des
services de consultants pour preparer des etudes de justification d'investis
sements specifiques, directement liees a la mise en valeur de zones situees
dans les divers ORO ou relevant de la competence de l'AVV\. C'est au Ministere
du developpement rural qu'il reviendrait au premier chef d'executer ces etudes,
mais celui-ci pourrait deleguer ses responsabilites a l'AVV ou a un ORD\.
27\. L'AVV est responsable de la mise en valeur economique des zones bien
determinees situees Ie long des Voltas\. Les consultants, dont les services
etaient finances par Ie PNUD, la Banque servant d'agent d'execution\. ont re
cemment redige un rapport sur l'organisation de l'AVV\. sur son role futur et
sur ses besoins en matiere d'organisation et de financement\.l/ Le Gouverne
ment voltarque etudie actuellement ce rapport et en discute les incidences
avec l'IDA\. Au cours des negociations, on a obtenu l'assurance que, au plus
tard Ie 31 mars 1977, Ie gouvernement presenterait a l'IDA ses propOSitions
detaillees concernant les fonctions et responsabilites particulieres de ces
organismes qui seront charges de l'execution de projets de developpement dans
les zones liberees de l'onchocercose\.
28\. C'est Ie Comite de coordination pour Ie developpement rural qui
serait responsable de l'execution d'ensemble des etudes sur les zones assai
nies\. A des fins pratiques, on ne creera aucun nouveau mecanisme de finance
ment et les deboursements seront achemines par Ie FDR\.
1\./ Bereschot, !-foret\. Boaboom; voir aussi le rapport R 6082/292 date de
janvier 1976\.
ANNEXE 6
Page 9
29\. Le conseiller principal a la planification des zones assainies re
leverait du Ministere du Plan\. Comme les autres specialistes de l'equipe de
planification, il travaillerait en collaboration etroite avec l'AVV, qui est
la seule organisation locale ayant une experience des programmes de repeu
plement\.
D\. CoGts et financement
30\. On estime a environ 1,8 million de dollars le coGt du projet, y
compris les imprevus\. Les estimations sont recapitulees au Tableau 1 et
presentees en detail aux Tableaux 2 a 7\.
31\. Le credit de l'IDA financerait la totalite du coGt des services du
personnel etranger, 100 % des depenses en devises au titre des services de
consultants et 50 % des autres depenses en monnaie nationale; l'IDA preterait
egalement son concours pour le recrutement du conseiller principal a la pla
nification des zones assainies et participerait a la definition du mandat
des consultants\.
E\. Justification
32\. 11 a deja ete prouve que le programme d'eradication de la simulie
etait economiquement justifie, dans l'hypothese ou\., mame si aucun projet par
ticulier n'etait realise, il y aurait une migration spontanee des paysans des
plateaux surpeuples vers les vallees fertiles liberees de l'onchocercose, ou\.
ils pourraient pratiquer l'agriculture traditionnelle\. Dans ces conditions,
et en supposant toute une gamma d'hypotheses plus ou moins optimistes pour le
coGt de l'infrastructure, la valeur de la production et le rythme des migra
tions, la valeur supplementaire de la production provenant de ces regions
depassait le coGt global de la campagne d'eradication et de l'infrastructure;
selon les calculs, le taux de rentabilite economique se situait entre 8 % et
16 %\. La justification des investissements envisages pour la mise en valeur
economique des regions assainies repose sur la demonstration que l'exercice
de planification aboutira a des investissements nationaux qui produiront des
avantages (principalement sous forme d'un accroissement de la production agri
cole) depassant le coGt a la fois de la planification et des investissements
ulterieurs\. Une demonstration chiffree de cette affirmation selon les cri
teres habituels (taux de rentabilite economique ou ratio coGts/avantages) ne
serait qu'un exercice de pure forme, puisque la modernisation des techniques
de production agricole dans cette region a toujours permis d'ameliorer les
rendements, ce qui s'est traduit par des taux de rentabilite economique de
l'ordre de 15 % a 25 %, voire davantage\. Le principal obstacle a une trans
formation rapide et reussie de l'agriculture traditionnelle a ete l'absence
ANNEXE 6
Page 10
d'informations permettant de predire de man1ere plus exacte l'incidence d'un
programme donne sur Ie sol, la population, les systemes d'exploitation, etc\.
La raison d'tre du programme de planification est precisement d'accroitre
la probabilite que soient mises au point des combinaisons valables d'amelio
rations technologiques\.
33\. Les terres qui seront 1iberees de 1'onchocercose representent 1a
derniere grande region d'Afrique de l'Ouest que 1'homme n'ait pas encore
exploitee\. Pour sauvegarder ces ressources, i1 faut utiliser des methodes
de conservation appropriees, proteger et renouveler les reserves, ce qui
sera impossible sans planification\. Le coat de l'assistance technique envi
sagee ne represente qu'une fraction infime de toute estimation raisonnab1e
qui peut tre faite de la valeur de la terre et ce coat est negligeable par
rapport aux avantages que l'on devrait tirer de projets bien con~us de mise
en valeur des regions assainies\.
~
~~Q\.Jn or ~s O! nEVE'LO'Pnu::~:- ::l';()J\.
Deviae
1918119 Tot31
'l MoueDC:
1976/71 1911178
\. - t:'S$ '000 \. -
:-11,\. tfl: tlil,Ke de 1\.1 ba\."'Igue du daftness
Z69\.0 ,7 233\.0
\.
Enquita !Jur 1 t llt:il1sat1\.on du soh 269\.0 45\.::1
'!"5~o 100
C!\.l:natoloqle ':"5\.0
55\.0
55\.0 100
~ \. u de Jill\.j\.rfaca II!\.I: soutetraines ~5 \.0
I\.t:ud ; re!Ulour'Ce\.!I e1t 191\.0
al 155\.0
\91\.0
Zl1\.quica suf La\. vocacion de\. sota
120\.0 120\.0 as 105\.0
Pdpn&t!QI'I de donne\.,\. $oelo \.EcOMm1QWlS 60 \.1\.L\.l J)
\.l2\.ll \.lliil 608\.0
Loeawt ;:our u'chlve' iaS\.O
105\.0
"rotal ?attta1
B\. Pdtlat'\.t\.ion d' -:m ela~ te d;vdotltler\.Mint
laO 165\.0
~S\.O &0\.0 60\.0
ConaeUlar ~u'I'!"\.ane:'\.t 100 135\.0
45\.0
Croua\. d\. planHicacion
Sl'ec\.ialiu sow\. eo-ncE',!\.!:: court :-en:>t , -l2\.9\. ll\.:\.Q\.
1')0 15\.0
2!:\.2
v;ih!cullu et couts ~'e'lQlottat!\.on
1\.25\.0 72\.0 To \.04,9 12\.~
Toed oatchl
j
C\. rr!!"aution d\. 2t'o1ets 1 !:nvuciuall\at'1c
90\.0
100 90\.0
'90\.0
?hOeo~r"i':::iea aariennu 119\.l leO \.lliL\.2 t2\.7
Etudes ~ 34J\.0
190,O J:'O~O
1"otal oiln1el
\. ~ \. \. \. \. \. \. \. CFAt ! 000 11 \. " \. \.
52 ~4 25 8,100
60,525 S7 52~425
60,52S 10~1:!!i
E':lqu;u !ul: l'utUiliat10t1 d\. ,ols 10\.125 100 10\.125
10\.12\.'s 12~37S
Cli~to1<Hti\. 12~J73 100 11\.l75 8,100
12,315 )4 1 815 )4,375
Et:ud\.s des: U,S50ureell <ttl \.au d\. sutfae\. et souurr\.Uas: ;'2,915 81 J\.liS
1\.2\.,915 l3,6ZS 13",615
Z\.n\.~ufte sur 1a voe\.ati\.Ol't d\.& 50ls 21,000 '8
:7,COO \.5 ,625
?ni!,aratiQ'tl de ciom:6\.s aocic-\.econom:1ou 80 \.l\.Jll
L::C3UX four arc\.':!\.i\.,a!! \. --L\.ill\. \.-i\.!\.U 136,800
158,625 158\.621
'focal ,art1al
8\. ?t'eOal':1C!\.on dt:;\.n plan c\. d1iv4!loptl\.!!'!«lt
100 37 ~ 12,S l7,125
:"0,123 13,500 D,'sCO ';1\.14:5 20,)75
CI'\.lD,,4!ille't ?4lt1!,sn\.nt 30,375 100 30\.315
zo\.:t50 10,IlS 16,a75
elatt!!1cat1cn\.
(11'01,19\. de 16,\.15 100 16,815 16,315
16,875
S~ic!\.l1SteS soue: contrat 1 coun :at'!M
Vehi;::\.rles et couts d t ",x-plo{tat\.1::n \.i\.ill ~
19~ 123
~
1\.6\.200
\.IWU\.
101,:::50
40
\.t:~&i
56,92:3
Toul ,ar't!itl
20\.~50
20 1 230 21)~:SO 100
leo
56\.250
?hoto~raoh1\.!1 eil'ie\.lUul" 56,:30
45,000 ~
=:tude" 65 1 2S0 11,250 ']6,500
toul putt\.l
9Q
~ ~ ~
~
21\.450
~
::;e~a\.ueMtl\.'! 4\." l{'Jant1th 4\.668 1,373
16\.8111
:-L&u\. d\.es -prtx 5i lV?~ Wll\. lZ\.:\.li
I ,3 8\.G02 5\.3,991
!:\.i j, 5::: d\. tou\. Ie" coUts \.
2\.1 a tr\. co~o\.e\. caleuU 'Sur las couu d\. b
t1ettt :omt'ca qu\. da 1a mnth dee :urc\.~~::\.:r:::l~~a::1:"e!!:"~t\. ~\. qo&lititf\.4
\II "
::n
c\.o~oSas $011t: la\. "ui"Janu: :91l)l'11: i:\. :971/73: 15%\. et\. 19,el;~;J:\. lea tau\.s:
ANNEXE 6
Tableau 2
HAUTE-VOLTA
DEUXIEME PRDJET DE FONDS DE DEVELOPPEMENT RURAL
Cout de l'Etude sur l'Utilisation des Sols
(Milliers de $ E\.U~)
Haute-Volta
Cout Unitaire Nombre:s d' Uni te Cout Total
Images en relief 11 200 40 8\.0
Negatifs pour controle du sol 120 12 1\.5
Rehaussement couleur 500 12 6\.0
Temps d'ordinateur 2,500 !\.1\. 40 100\.0
Developpement 10\.0
Rapport 17\.5
Services de Personnel
Coordinateur du projet 7,500 13 4 30\.0
Assistant sur le terrain 7,500 T3 8 60\.0
Services voltaiques ~I 1,500 14 24 36\.0
TOTAL
1£ Pour la saison des pluies et l~ saison seche le nombre total d'images pourrait etre
reduit si les etudes etaient executees simultanement pour tous les pays\.
21 Ce cout unitaire du temps d'ordinateur est considere comme un maximum\.
11 Le cout global de $7\.500 par homme-mois comprend les frais de personnel etranger:
honoraires moyens du consultant, indemnite journaliere, deplacements en Haute-Volta
et a l'etranger et petits frais divers\.
~I Le cout global de $1\.500 par homme-mois comprend le traitement ~yen\. les indemnites
journalieres et frais divers du personnel voltaique\.
51 Deux hommes-mois pour chaque homme-mois de services d'etangers\.
II Puisque ces travaux seront probablement executes par des consultants, toutes les
depenses des frais relatifs aux homologues voltaIques\. l"element en devises est donc
de 233\.0 dollars, soit 87%\.
ANNEXE 6
Tableau 3
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMEUT RURAL
Etudes du climat et des ressources
en eaux de surfa~ et -souterraules
A\. Climatologie
La co11ecte, l'ana1yse et la presentation de donnees climatologiques de
vraient faire partie des taches confiees au consultant qui sera charge des
etudes d'utilisation des sols\. Sur 1a base des donnees fournies par les sa
tellites meteorologiques, ainsi que d'observations terrestres et de donnees
pedologiques, i1 serait possible d'evaluer le potentiel de production fores
tiere, vivriere et vegetale des regions\. Outre 1es cartes climato10giques a
la meme echelle que les cartes d'utilisation des sols, il conviendrait d'eta
blir un rapport c1imatologique decrivant les caracteristiques du climat, les
rapports entre 1es conditions meteorologiques et les rendements potentiels au
cours des dix dernieres annees et etablissant des previsions sur 1es rapports
entre le climat et les rendements pour 1es trois annees a venir\. On estime
a 45\.000 dollars le cout supp1ementaire des cartes climatologiques\.
B\. Etudes sur 1es eaux de surface et souterraines
On estime que 1a periode de six mois pendant 1aquelle la banque des don
nees sera mise en place ne suffira pas a proceder a des forages d'exploration
permettant de mieux connattre 1e potentiel des ressources en eaux de surface
et en eaux souterraines des regions interessees dans 1es divers pays\. On en
visage donc d'utiliser la methode de teledetection pour delimiter l'etendue
des nappes d'eau pendant la saison des p1uies et la saison seche, en tenant
compte des donnees existantes, et d'etablir des cartes devant servir de guide
a l'exploration des ressources en eau, indiquant les zones prioritaires OU
lIon aurait de bonne chance de trouver de l'eau\. Ces travaux seraient execu
tes dans le cadre du programme d'etablissement de cartes sur l'utilisation
des sols par teledetection\. On estime que cette etude couterait 55\.000 dol
lars\. Le rapport final devrait comprendre un examen et une compilation a
jour des donnees existantes et des donnees rassemblees par les consultants,
sinsi que des cartes tracees a l'echelle precisee dans le mandat des consul
tants charges de l'etude de l'utilisation des sols\.
ANNEX! 6
Tableau 4
HAUTE-VOLTA
DEUXIEME PROSET DE FONDS DE DEVELOPPEMENT RUAL
Etude de la Vocation des Sols
(Milliers de Dollars)
Couts Uni taires 11 Nomb re d' Uni tes Montant
Pedologue principal 7,500 !\.l\. 4 30\.0
Pedologue 7,500 !\.l\. 8 60\.0
Homologues voltarques 1,500 L1\. 24 36\.0
Travaux de cartographie 60\.0
Rapport
TOTAL
11 I\.e cout global de $7\.500 par homme-mois comprend les frais de personnel
etranger: honoraires moyens de consultant, indemnites journalieres,\.deplace
ments en Haute-Volta et aI' e\.tranger et petits frais divers\.
~I I\.e cout global $1\.500 par homme-mois comprend Ie traitement moyen\. les
indemnites journalieres,les frais de transport en Haute-Volta et petits
frais divers\.
11 Puis que Ie travail sera probablement execute par des consultants\. seuls les
frais relatifs au personnel voltarque sont en monnaie nationale\. l' l ement
en devises est donc de 155\.000 dollars E\.U\., soit 81%\.
A1"NEXE 6
Tableau 5
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Etudes Sociales et Economigues
(Milliers de Dollars)
Couts Unitaires($)ll Nombre d'Unites ¥\.ontant
Specialistes divers 7,500 1\.1 10 75\.0
Homologues volta!ques 1,500 \.L1\. 10 15\.0!2\.
Dessin 3,000 Ll\. 4 12\.0
Mise en forme des donnees ~!2\.
TOTAL 120\.0 !2\.
11 Le cout global de $7\.500 par homme-mois comprend les frais de personnel
etranger: honoraires moyens du consultant, indemnites journalieres, deplace
ments en Haute Volta et a l'etranger et petits frais divers\.
1/ Le cout global de $3\.000 par homme-mois comprend les honoraires moyens des
consultants pour les services techniques au siege (en particulier dessinateurs)\.
11 Le cout global de $1\.500 par homme-mois comprend Ie traitement moyen, les
indemnites journalieres, les frais de transport en Haute-Volta et les petits
frais divers\.
4/ Ce postecomprend les frais d'impression des cartes et d'etablissement d'un
rapport\.
S/Les depenses relatives au personnel voltaique sont en monnaie nationale, les
- depenses en devises s'elevent a 105\.000 dollars, Boit 88%\.
ANNEXE 6
Tableau 6
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Preparaeion d'un Plan de Developpe~2ne
(:Hilliers de Dollars)
Le Gouvernemne voltaique aura besoin de services de consultants qui
prepareront un plan decennal de developpement en vue de la mise en valeur
des regionsliberes de l'onchocercose\. Ce plan serait etabli par un groupe
de planification du developpement comprenant un conseiller principal et trois
specialistes hautement qualifies\. Ce groupe serait renforce par des specialistes
travaillant sous contrat a court terme pour la preparation du programme de
developpement\. L'etalement des travaux sur les trois annees du Projet et les
couts estimatifs seraient les suivants:
1976/77 1977 /78 1978/79 Total FE% Amount
Conseiller principal 11 45\.0 60\.0 60\.0 165\.0 100 165\.0
Groupe de planification de
developpe~nt gj ( 12) 90\.0 (6) 45\.0 135\.0 100 135\.0
Specialistes SOllS contrat
a court tert:!e dI (10) 75\.0 75\.0 100 75\.0
Vehicules ( 2) 23\.0 23\.0 70 16\.1
Exploitation des vehicules (2) 10\.0 ( 2) 10\.0 (1) 5\.0 25\.0 S5 13\.8
Autres f~ais
\.J&Q\. \.J&Q\. 7\.0 2Z\.:\.Q\.
TOTAL 253\.0 125\.0 72\.0 450\.0 404\.9
1/ Ce conseiller serait employe pour 3 ans environ mais n'arriverait pas en
Haute Volta avant Octobre 1976\.
!/ Le groupe comprendrait trois specialistes qui sejourneraient environ quatre
mois chacun en Haute\.Volta, plus deux mois l'annee suivante\.
1/ On a prevu 10 homme-mois de services supplementaires de specialistes\.
ANNEXE 6
Tableau 7
HAUTE-VOLTA
DEUXIEl-!E PROJET DE FONDS DE DEVELOPPEHENT RURAL
Preparation de projets d'investissement
Cartes orthophotographiques et photographies aeriennes
1\. Lorsque la banque des donnees aura ete mise en place, on aura be
soin de cartes orthophotographiques et de photographies aeriennes des regions
choisies comme emplacements d'eventue1s projets de deve1oppement\. Toutefois,
il existe deja pour la Haute-Volta des photographies aeriennes a echelle
suffisante\.
2\. Le projet prevoit Ie financemant de photographies aeriennes de
certaines regions, au 1/20\.000, en vue d'etudes detai11ees ou semi-detai11ees\.
On photographirait les regions ou des projets de developpement pourraient
eventuellemant etre realises\. Le cout estimatif de la photographie aerienne
panchromatique et infrarouge en couleurs est de 90\.000 dollars\.
Etudes
II faudra effectuer des etudes de justification pour mieux definir
et evaluer les projets d'investissement identifies par Ie Plan\. Sur 1a base
de l'experience acquise en Afrique de l'Ouest, on a inclu dans l'estimation
des couts des etudes concernant deux ou trois projets pendant 1a periode de
l'operation d'assistance technique faisant l'objet de la presente Annexe\. Le
cout estimatif d'une etude de justification complete serait de l'ordre de
100\.000 dollars\.
REPUBLIQUE DE HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
CALENDRIER DE L'OPERATION D'ASSISTANCE TECHNIQUE
1916171 1971118 1978179
A\. Constitution de 10 Banqllc do Donnees
1\. Enqueu: sur Ie mode d'ulitisaliol1
de~ lerres Clionalolo!lJe \.~ Etudes
sur les I:WlIX de surfncl et sou
terraines
2\. EnqLJ~hc sur les nptHuulJs agro~
p~d"logiq \.es
3\. E tudes ~t:onolniques tH sociales
B\. p,~palauon du f\.lla" de devclopp,,,nent
1\. Con\.ailier pernwnefll
2\. Groupe de lJ~an"it,;dltOn du
d~v"loppe'nell !
3\. Speciali>l~s ~ court Ie' m"
--
C\. PrepMalion des projeb d'invesllsscmenl
1\. Cart", par phOIO "rlhochlOlflali'jue
lil pholographie a6riennc
2\. Ewdes
Ban"ue Mondiale~ 15624
wsot i
;-4b184\J 1
~"
~o
N \. O N O O
;;:$~~~~
l '"
It'I;ZI
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DEUX1!!! PROJ£'T Of; l'M'DS DE ()iV!"'\.oPP~ lWAl\.
Couca cg Prol\.t
(CYU'Ooo)
1975/76 lillLll lli1\.Ll! t978/H ~ !sal EUIMnt\. 1!4 DeYiH\.t El6-\.st tlU Dav{s
A\. ~1/
~
Supt;tt'ic1\. ,hal
rouraic::ucal
MAti-rid
Colic\. d'u,<plo1tatto'll
(tOO)
SOO
2\.080 "'"
(SOO)
2\.500
4,250
10\.400
>\.(600)
5,~OO
12~4ao
(700)
3\.500
'\.9S0
14,360
(800)
\.!o\.,OQO
6,800
16,~
(2\.~1QO)
13\.500
22\.950
\.56\.160
"
"
5>
7, \. 2\.5
14,919
30\.888
Mata\.d,'OotUVn
~ ~ 4\.:\.40 \.1\.IJ9\. \.l\.ll!! 19\.'J80
=
4, -
\. 7ou\.l ~ \.rtllt A
C'!J\.vrae da Prot\. "t:1011 Cct'lth t'!:ro\.1oa ~t
~il170 20,3'0 25\.020 29~19Q \.33,360 111 \.590 '3\.23%
Supadicta {hal (200) (1\.500) (2\.000) (2\.500) (3,000) (9,ZOO)
~
fO\Jra1t\olna
\.ter1d 1\.1\.40
\.60 6 \. 50
a\.5\.50
8\.600
11\.4\.00
10\.1\.50
!'\.250
12\.900
11,100
39,560
52\.-!040 \.,
5' 21,1\.53
34,087
t
Coilt\. d '-'Irplo1taUOD\. zos 1\.560 2,0&0 2,600 3\. 1:';0 9 1 \.568 5' 5,263
~u'hood:l\.L! \.n
\.ll9\. ~ 1\.400 Q,250 11\.100 l4\.040 ::\. -
101:\.1 part tal 8
, 2~94B 22,11Q 29 f 480 l6\.d\.50 44 \.120 135,60'8 45 61\.108
C\. Petite Pj1"1eitr\. \. d'trrigauclt lilt 8\.
:CAd\.$ \. \. \.!\.J\.crh
f
,
(m (m
(1} petit ptirtUtU d'irrilation (h\.) ;!l~ (7)) (15) (>00)
?outnituru
~:"r1a1
d'~I1l1ait \. t10Q
Coiita
12\.2$0
2\.750
'\.750
12\.250
l~150
2\.750
36,150
9\.250
a~130
36\.150
8~230
8\.l50
98 t ooo
:!\.2\.000
22,000
\.,
55
55
S3\.901
t4 \.)02
12\.102
'taiD\.i'ollluV'u
'~tLl "'4rtie[ {i)
\.wB \.!\.U2 n\.Z50
15~QOO
Z1\.150 58\.COO
200 9000
::\. -
80,:'!~
2'9000 2'\.000 "\.000 0
Bu\. fancjJ& aMUeN (ha) (l00) (lOO)
I,H)
!l (50' (SO) (100)
Faur\.t1tur 4~a50
}!\.ar;:hid
Couts <t f \.xp101tat1\.c1l
1,42\.5
'50
1\.1$0
2\.423
'50
1\.130
4\.3$0
1,"""
2\.Joo
1,900
',JOO
14,\.5$0
5,100
6~900
"
6$
55
8,:104
3,706
3,\.96
~o\.uYn
~ 1\.W! 1\.W! ~ S\.940 l\.l\.W! :\. -
'!'oul ?utteJ\. (:ttl ;: \.::\.:\.u \.l\.ll1 !~ ~ :\.4\.970 \.le 15,506
rOtal ?aut\.l C 31\.495 34,49\.5 99\.990 89\.990 2~\.910 1\. 95\.812
O\. liHoeltt4 Villas_au
(i) tiu:t\.pOu" 1/ (ISO\.TIt) ("") (50) (75) (100) (125) (400)
F'ournttllr\.1Il '\.ZOO 5\.l00 7\.&09 10,400 Ll\.OOO 41\.600 5' 22,880
~\.at'rt\.!\.
4" 42S 618
no
\.SO
\.60
1,063
1\.2<10
1\.401
" 2\.211
CouU d' \.YplaitatioD\. trm\.PQtt
!" ilt'"lld,)#!u~
\.
480
L\.l2!!
480
L\.l2!! t\.,uo ,j,JOQ
\.J\.ll!l
1\.840
12\.000
= " -
2\.112
7"t\.1 pndd (i~ 7\.605 7,SO\.5 U\.408 U\.210 19,013 60\.1>41 4, 27,203
(!\.!) l;\.lttras eOlSllWlautUrQ !!(Ilotlbn) (» (') (5) (5) (%0)
F'ow\.rnUUt"l;\. 963 "3 963 \.63 1~!t:S: 55 2~1l9
!'f\.ach:1al 53
\.,
53
\.,
53 53 212
:ISO
65 136
zoa
Coat\. d' e:qlloi:::atiOD\. tr\.po:rt
!"'\.a\.1n,-t' O&UYn \.:: --1!!!
'5
-l§! \.uq ~
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-2l2 "
:\. -
1'otal 'Put!\.l eli) - l\.m \.L\.l1l \.L\.l1l 1,:91 S 164 ~
\.)
\.!\.m
Tocal pu'ti&! tI 7\.S0' 8\.89' 11\.'" 1'\.501 lO\.306 "\.005 29\.664
E\. ~ll (tl~") (100) (UO) (140) (160) (520J
FourtU tun\. 2'1\._ 33\.400 41\.300 47\.200 t53\.400 55 84~J10
~th1el
Cout\. Ii 'exp1ottatl\.acl l!\._
116\.830 15\.460
2',500
21\.:'00
\.:,\. \.500
:~4'!i
2!\.3oo
1\.56\.41S
118,000 '"
55
12\.5 \. 11:10
64\.900
hnll:ntntll d'''Yplo1taciOQ:
!otLl j'l\.aRiAl t
\.:: p\.
201,530
27,000
101\.360
::1\.000
119 \.500
21\.000
106\.185
108\._
5:B , an
=
51
-
214+430
F\. F<1rag\. !/ bettb:\.) (60) (~) (60) {tao)
!'aumtu'C'\. \. 12\.810 11,870 li\.870 J8~ 610 ;0 '21,027
4-2~6aO 34,144
Y\.atinal
CouU d' ItJQloitat1ou
to\.560
21),940
;0:1\.560
20,944
10,560
20\.j4{) 62 "a20 '"
55 34 t 551
?tnO'lmal d't'X'Pb1tatiOQ \.:: \.:: 7\.140 7,7'fO 7,:;'40 V , 220 :\. -
'total ~\.n:1el , 52\.110 63\.110 n\.ll0 to1,JlQ
" 95\.:'22
17 1 l'~\. "\. Tabluu 1\.
if
1
VoLt
Veil'
Voir
ditalls
d'td\.l\.t
dita1la
a !\. \.o\Dctaa
a I' Aanea
4, Tabla\. 4
"\. bbl_\. 2
"fl VOit\.'
4'tall\. 1 l'Aan_\. 4\. Tabl\.u ")
g "'-oit'd6t411\.1 i l' ~lDI 4" l'\.abluu 13
61 7o:l\.rdetail\. 1 "'At:ula,:n 4, Tab1\.u 14
J) 'ldr ~itall\. i !\. A\.tInAtu 4\. !uluu \.5
,!I Voir <1ita:!\.!s 1 \.1' Ana\. 4\. '!'ableau 4
\.,,\. ~ \.rl'u::,:!t''''' 1';75/75 1/175/77 197:' '73 lli§\.L\.::1 t979/BO !sl\.!l
' 3!\.:nau\. :!\.r<1ccj,C'n ;:;::It
"' " ,l) '1) ':',000 (1) OtOOO JO,OCO
o;"JOO (1) ';~JOO (l) 0;,,000 5,'::00
fro jet
JiNc:eur
$,;:onO:'li3t\. '" ~pic':'-lll5t~
'"
l'~v\.i:'uat\.(Jn (\.o!5 ':"J,1\;C:'::s
l) '\.'
t, II
, ,lOa
1,6JO 3,600
3~6JO
rngent\.lt' spo'ic!a:'btl! \.:\."'~ :-7su1 ~,H9
It) tl) (1) 'll
et:::an;;<r
\. lIo1\.a\.iqlW-- ),6GO 3,500 7\.2(1)
;:o~tabl\. ?rincipal
COmptAl:I1e :t<ijeH\t
;\.600
2\.)00
300 Il) '00
(D
,01\.)
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BOO
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(1)
1,:iOO
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1,)00
3M
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1~
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3,\.!00
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C~&rg:e dn \.l'P ro\. 19 ionrteeuu;s 300 { 2) 90a ;2) lOO ~\.OSO
d; \.50 ill 900 {Z) ::000
Saeretaira :'50 1~!\.40 ",430
i20 (:\. ~ l \.:\.o\.o ,~) 1,\.:\.40 ;\.:\.; 1 ~4\.:\.o I':")
Chauffeurs JClO (2)
(2) 720 i Z~ no '~J no '2:) no :;380
2\.~PiUY"~ :"u;:e,],u i' 26iJ 1,'jEO
Ca:-ch:r\.1\.1
:;*tt;lv*ur i:'
" ,,0
170 ,1)
'1\.)
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210
Il)
iLl
270
2:"0
(\)
'1)
~'i0
\.::~')
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':'
:;70
::'"'1 :I J8O
t3\. ,;JO :-O~"JOO
:'j,~QO 71,17u
"':"r t 011\. ?anie\.l A\. 7,970 :3\.;'00
,\. ?ersonnlt1\. t~e~,nl\.S::e :-!\.\Z~
3 JtlOO
(1\.) 3,500 ( I) ),6<)0 (1) 3~500 ,I) 3\.600 <1: J~iOO 'd 000
,;,'\.!ra':' E\.:'
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J ~Q{jo) " d\.) 3,600 I ~) 3,6CO
nn':L1 ',-,\. ":',900
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1,:'00
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" '\.1)
,t': )\.~OO n\.) ~>6VO "7 ,ZOO
(l) 1\.,:"00 ,l) :,~oO :\.,900
:\.,"00 21 (I) ;00 ~I ll) 1,:\.00 ~ ,::00
'"j J~600 ':') 1,6,)0
3\./,)00 ;2'; 900 "\.:)3C
\.;\.),) ill ':'50 (2) ~OO i 2) 900 (4) '00
S" \. ct'ct\.ai:-e
::::\." \.r\.:ill! ut"!l 36O (21 720 [:") 1 \.:\.:\.0 It\.l l\.~ ,4) 1\. \.;\.;\.0 ,\.' : ,440 :; \.:\.s0
\. 1~'300 :1) l,'JOO \.-:n 1\.SlOO ' :) :\.~OO ],500
950 (21 t~900 (2)
\. ,so (2) 960 (2) >(," ') 96" iZj
{:\.)
96!)
1\.~~OO
':-)
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9floO :',3(\.0
'1,OOu
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m 7::0 \.'21
:)(;1\) (2) 710 (Z) ~20 72O
'"
1,::00 \.!§J'
1,:'00
1,':',)0 llf ;1) 1\.':'00 3,J~0
1,1\.30 en 3~HO
;!~c\.an!!i\.n 720
::h\.w:q\.e :;\.u J1?pro'\.':UiOM&c:\.eo:\.; :s00
:at&l\. ?ar::1e1\. , 11,040 l5,520 ~;)~no :!6 \.nO ::!~ :ZC 96\.5:;0
"
?9rs»'n~Hl1 :l;cr\.nic"\.\e C!'\.!: ll'
3~200 {\.:\.') 3,200 ;!,'::OO
'0 i;:m\.tJ\.;:\.res :'91 300 W u\.) ::\.,,,00 ll! (,:oJ J\.ZOO (4)
\. 520 ? ,CloO
(~) ""-\.:i20 14'
"o:':,,!auu 2/ 1,130
\.~\.!:),,"etre
Ah:\.e-~~of"\.i::e
9S0
::\.80
(4)
(4) ,\., III
1,,\.00
\.:1\.1
(4)
(4)
z~n
3\.S00
:'~920
3~600
(t\. ~
(l\.)
{S} 3,600
3,1300
1~9'20
i';"'!
(:\.,
IS)
3\.800
1\.~?ZO
1,000
'4)
(:\.)
S)
J 1 30C
l\.:':2O
3,600
!7' ,1":0
~\. 6\.:\.0
:\. 6 ~ :':'0
M;'Si\.HJ\.nt* 450 (S) :,600 ill (4) 1,4\.40 41 : \. \.:\.:\.0 (4) :,'-<" &\.~60
36Q (;!oj ;20 \.U/ (!o, 1\.~
,8, '3) 3,600 l~ ,:iOO
e:\."Uifdl\.t"S
::or\.(),u\.:::evrs '=e ::'\.3\.~;\.'\.lrs
_50 1,300
(\.:\.)
J60} 21 ,oog
;6) 3,600
( 1901'05\. "'00 150'
,\.3,600
390 ':':00) 20 ~co\. ,:\.~ i ~;\JI)
430 ("'l) 15 100
'\,\.1"ad\.'Jat:vlt:::'::
6:,300 59\.5BO 10a \.e30 nS\.76C
l':'r~aO 4\.2\.760
:c(;;l1 ?art~\.i C,
"70'!-'L Gt::!:~
:::':;ut"
Qa panoru:tel ';;'u b'He\.u :!\. direc:t1an cu FOR: ut: ent:1t:u1:"IlI'Ot COl'lDt'U :!an$ :'e omjet\. !\.& ~rojet f!\.natlc\. l:eht1\.t i,\.
:u satv1\.ee\. d\. "uelq'\.t~~ I1n!!pleyes d' autr\. organi\. \. \. \. \. -\.tin t!a !"oIclliter l' execution daa tr\.u:t du i1:lR\.
~! FL"Uce i'llt le t':n:D ('!cir ':'"b:'uu !?!~
oi\.l ::4 f;;;r:nt:icn '!era fi::1(!\.r\.ch Dar ::\. ~;t1D ~V(l1r 1'ab1e\.1,l 9)\.
':\.n s:ul'l"as\.e 1,IJ'1l a!':'l'ltlra au \.:IiiiHlt ci\. 1976; on a <lonc {:oJllOte :'J\. It'01\.tli d\. c"rju <!\. ::\. \. 1!:a:rt?4l(n\. 1\.!l~~/76\.
K- !\.~S bw\.rt:tux ::!a \.!\.l s\.,>;!) :'ta 't'\.Jt:it'OfLt pu et 00\. suppo 1U'\.} ?art\.ir- ca 19761,", tl !ala4n bU1:t' des :,,,,re4u\.x~ ce "\.ui ;ukeuite::-3
:::~ "$-nonr\.l "'u!":?:'~':t\entAirt'
\.g\.1 S~~\.3 ccr:!a1:'1\.,n ~\.e\.;':1iq'~e au?rb \.!U coordiDaeeut\.
nne\.ncee pu' lot r,~C (vt'~e rabl\. \. u '1)\.
), 3ua ~ort!!ii :ian$ le cUre :!'J 5:I\'ojet (voLt' r\.b,Lu\.u 9)\.
Et ::nitu\.r\.::s 'u~nt ;:\.;:;«$ ::'at' ::\. rAe :l\&U weas1t" d\. logel!'Mlnt (75\.000 FC"FA pat' 11:101\.1) et ::!a dl~laoalWftt (500\.0:JQ r-:1A\.
;:Od\.r lUI) \.iarolle ::ej!Uu \.;fans :a cadu du lH"Ojet
\.!2, Sera r\.s~nsabla "\. :\. '\.axi-cutiM c\. Ouvrs~5 d'i'trtgaeiofl et du o\.-fonr\.s aNl1ons#
\.!\.,;\./Sera GILl\.'Cge ,-e sut"Vllll\.ger :\. tranil des Equipes tOl"og'Citphi<tUH (de 1\. 'P\.AE1t at c\.- ORn) (lour \.ur\.t una 1;artaina no't"M
1 u aJ\.it4,
';quip\.u c\. 1~A\.F\.JI: \.,;aront fil\.ldCh d\.os 1a cadre cu pro1et\.
!\.:1diqui dana 1e tilbleau Ij ?at'ce q~ SAO!A ~il14n¢\.t"a cat Hbwulie 1 ilar\.:ir <!\. ::\. eamp4jpl\. 191'/11\.
:-Ltuu"-olu\. Finane\. ?a"t 1\. rAe~
par \.:\. FAC :\.ltis l\.nde~ites c!e lo~_n\.t (1S,JQO FeFA\. par !!IOi!!) et de t!i'P1ac\.1Imlt (51')0\.000 F'CFA j)\.~ an} *_ront
l\.ms :'e cadre ,:U pro~\.t\.
c\.ent'Ce C,' <n:e'tatiQnli qu:/\. servin ~e ~u\. aus quact:e ~rl%a4\.urs or~Cl1s1 au 4liout de !a ~-Sft\. l'J1r;/17,
a ,)'!lD Jur 1\. Plateau ~s\.al\.~ l':)lUJ ea OW&~aCou\.lJOu a \.1l!l u::'1e iquil'e tOt)a~r\.!lnlqu\. t\. ,r-o~\.t f\.inancu'll
"""",,,,", de\. Jlluipas :opc!Ta;>!11q:uas dlltl\. lea cine C!W ;nais :!\.e~ :ra\.tlt :\.e :!,er'l\.)Mel ~e (luatft ::I'\.mr;:re ~l\.li!!S $eule~Qt\.
11/--::11 part\.!,dl)ellt au travail de!!! ,1:qu1l)e1l tcpa~rat)hLques at h sUl'arvi!lent et $u~illel1t lu :rau"X d' UHl-nuel!lllt:nt de\.
at't'es dafts io!lt ORD\.
j,lf1'roi\. voluntaires oIrrivenmt 3 ~ya\. '\.'alellqa ee Xoudou~ou ~iD J~ce!!!Ore; un a'Jtn\. 'fOlal"\tairtt ut de~3 3rtive 1 r\.ouo~:'a
\.~f\./1A!I vo:"cnU:\.res sont ;aye!!! par :aun gouwrn\.ellWnU: t;jute:oh\. lu hdem\.ith de logement (25\.000 FCF'A "a\.t ~i$)et 2e
::Iiplac\.ment \.l\.uont :::1\.nancb par 1e ':l"tojec\.
"";';ll':\.Ii\.l:;ue las '\.'clontains At'rlV\.t"Ot'it ell doieetlbn \.::n5, Iu ':!rtgades :ooc~t'''''ht~ues ;!\.vtOtlt itn ~()rm\.s dant :"a uCC:lcie
::lOttii da la ':;1i"C?agne 197~/~6; ~a !lOit!a (!es GOutS \. :!~nc \.e~f
':;'':::;:''U'fres oou\'\;Js ~'\.1prh :u ca\.!euls e:wli<:;uis 41\.; ,: \.i:/le\.au 1 de
J!I~I£I'I,:::"\.V(~p\.A
~)!'\.lc!~!EH!:\.rH()J~:TQ1c"\.~m!E\.s"l>!'c !J!":'\.ft:I,{l!'!'!":~~o!'TJ'!I"!01'
~!pi\.!lllcn~~~~\.§~!'~~~\.~~~j'"~ll
(Mllliers de CFAt')
foiilS\. ~!!!_tt_u}\.r\.C!! )XiS/'IG !1~'1I ,!E7/{!1 I '/{ll/:tt L'{1~/IlO ~
A\. ~\.2\.~~u f'c (Hrectlon\.*l t'Q!! 11
Vo it un: purt t cuI H~n:8
(J) 1 ,two 1,1l00
llreak
(2) J,om (2) ),IJOO
Vchlcule tous terrains
(1) 2,<>00
M,itCrI e1 de bureau II
:!,fiOO "_ _ "~" 21Xl
'fotal partid A ~;,(\.JO 2,IXYJ 2,000 J,nlO lJ,ooo
8\. PenH,)fl\.nel TechnJ91lt! nAER 1/
1\. Services gcn(~raux
Breaks '!\.I i,S(X) (1) 6,mO (~) 6,(\.OU 12,uUO
2\. ~~~JUaphl'1ue"Jdeu,,) '!\.I
Fnurgonnettes L,2(X) (2) (~) 2,~UO I,
\.'aterlel topognphique 1,~OO (2 )
Materiel de camping SOO (2 )
3\. Brigades de\. pul~ (quatre) /,1
Brea\.k \.
Con~tructlon dfu'" centre
Total ponlel 1\ 12,400 8,400 20,800
C\., Personnel Teclmiqut! O_lYl
Breuks 71 1,500 7,S()O 9/ 7,500 15,000
f'(}UrgorulettCt:i 81 1 200 6,UXI 7'f1 6,000 12,000
Haterlel toptJg;aphlque 1:500 'I,)UO '1/ '1,5(11)
Matih;!el de CdPiping 500 2,500 '11 2,~-;d(1
Traci\.eurs et accesBo:l res 10/ 6,000 (~;) W,O(O (~) )O,(X)O i,O,OOO
tk,t09 pour vulgar1sateurs Til lOO ~ ~3\.!lL\.2\.000 (40) 4,000 (50) '> ,000 (50) 5,UOO In ,OUO
Total partiel C ;' "~~OO 32,000 34,000 18,500 5,OUO IIJ,nOll
'1'0 tal (;CtH~ ftil n,500 49,400 36,000 21,100 t6,600 146,800
!/ le bureau de direction d u t"JjR dispose actllellemcnt de trois voitures (1 t>erllne, 1 break~ 1 vo1ture
tous terrains)
lJ l\.es bureaux actucllernent occupea dan6 It!s locaux dt la HND seront b:lcntot tfOP petits; en 1976/71 11 faudr3
done louer un burenu tlu1 devra et
re etJuipe\.
'1/ Actucllement\. Ct(wt Ie FDH qui f:lnance 1 'exploitatJon tic {"\.tatr~ vnitures de 1 tUAER \.
!I~
~I Voitul'es: pour letJ troht throngers et pour 1e coordinateur des activ:l,tcs du I;OR (remplacemcnt dt!~ quatre vultures
\.settle lIes) ~
51 3\.emp]accment et anri'dJorHt1on du fIIat~rie\.1 Achcte pour i\.:CS deux hrlr,adt\.Hi dana: le cadre du :HIR1\. ~[;1
61 Cout expose au Tahlcuu (; sera ffnanci' par BAUEA\. ","
71 rour les direct~urs de Itall1enagi\.',ucnt des terreti\.
81 Pour lca hrigades topogr8phJquea\.
'11 PujUqu8 les vulo11talrCR arrtveront dans Ie!:! ORO en dfeembn! 11}75\. lea brti)\.ud{~:s tnpographlques devront etre
clablles au count de la 6econde f1~):ltlc de 1\.1 (:tlfllpagnt: J')7)/76\.
\.lQl Un tracteur pour chaque UlW en 1916/77 cL un autn-: en 1977/78; Ie tradeur servinl a I'executlon des travllUX
f inDHCeS ptir Ie FUR\.
11/ Uue motu pour chlHlue vulr,arh\.alcul SUpplC111t'ntaJ rc\.
IIAun:~OL1'A
IJImXJlltm l'IlOJET IlE mNJ)S DE Dt:Vl::['oPI'EHEIl'f RURAL
-~\. -------~
Couts de \."'onctlonnement des Services d' Appui
----~---(Milijers de J'CFA) ,,--'-
COlil~_ Uni ta~_t:~~ l'f61'f6 1';1'7('/7'1 l'JTI/'IB 1~rrA1'f9 19'(9/80 Tot"l
A\. Bureau ~~ direct!"" du FllR
Volt"res
frats de bureau 31
1,12~ 1/ (3) J, :rl~ (lj) /J,500 Oil I"soo Oil It,500 (/J ) h,500 21,)'(5
~001750 - 5Q() 'fSO 'ISO 750 750 3,500
Verl\.f1cation deH-coll1l'tes il 6,7<)0 2,250 2,2;;0 2,2~O ",250 1;;,750
Location de bureau J\.l 3,120 6/ >,120 3 z120 3,120 3,120 12,htJO
TOla! partiel A 10,625 10,(;20 10,620 10,620 10,620 53,10;)
Il\. I'e ",onne I Technl'lue IIAln! !'!\./
1\. Seryfccs geucra!,_)(~
Breaks 1,1;>5\.!/ (2 ) 2,250 (/J ) 11,~w 0,) 1,,500 (Ill /J,SOO (Id '10500 ;>0,250
2\. l'~i\.e!~\.'!\.~poJl\.raphtqu""
FOllrgonnet tea 1,)50 g/ (2) 2;(00 (?) 2;rOO (2) 2;100 (2 ) 2;100 (2 ) 2;(00 1) ,500
3\. Brigades des putts JJ
Breaks
Total partie 1 8 /J,950 7,200 7,200 7,200 7,200 33,750
C\. Personnel Technique ORD
llreaks 1,125 1/ (5 ) 2,B13 IJ/ (5) 5,625 (5) 5,62$ (S) 5,625 (5) 5,6~5 25,313
Four-gonnettes ] , J50 ,!I (5 ) 3,375 ~ (5 ) 6,'60 (5) 6,-150 (5 ) 6,750 (5 ) 6,-750 30,3'15
Tradeurs 2!
Hotos 10/
Total I,srtiel C 6, HlB J2,J'{S 12,H5 12,HS 12,375 55,688
To Lal\. Gene ral 21,'1(\.:1 \.N,\.J95 30,195 30,19> 30,195 142,543
JI 25\.000 km I'ar an II 45 h'C~'A Ie kill\.
21 30,000 km par an 4> F'CFA Ie km\.
1/ 500,000 FCFA ~revus au budget pour 1975/76; aUj\mentlltiofi de 507\. par suite puiBque Ie FOR 10llera d~8 bureaux\.
if Le\. cumptea du bureau du fOR II 'ont enCore jama1a <'til veri fies\. Le !,relnter rapport de veri ficat10n exigera un
hOlilme-lIlO\6 de travail iI $ 100 par jour et deux hOUlmes-mola a $ 200 par jOllr; 1"9 frais de aeplacernent ont ell' ~li
[8
"stimes Ii $ 1\.000 par voyage plu9 une in<1enOltte journaH~re de $50\. [\.es rapport\. sulvants demanderont un
c
hommc""IDh de travail a $ 200 par jour; plus $ 1\.000 de frats de ,leplucemcnL et line Ind~nv:llt" journal1he de $50\. en
5/ I,e" bllreaux de la liND seront bfentot troJI petIs, a partir de 1976/77 Ie bureau de direction du niR <levra louer
- deB bur"au~ dont Ie loyer cHl eBth", a 200\.000 N:FA par mols, plull ISO,OOO t'Ct'A par trImestre pour l'elcctricite\.
61 I,,, bureau dedilectiull du t'IlR ne poie pas de loyer 11 In HIlD mals lilt ver~e une commission de 1% de son chtffre
- d'affaires\.
71 Vol r colllS au tah lello 6\.
81 Lea brigade" tul,ogrophl'luea s"cont tn,'mes a la fin de J97';\. I,a moltie des couts sont donc compte" pour In
- campo!!ne 1975/76\.
9/ l)~PtHtfh:::9 dt! fonetlonnePlcnt fJ01\.U1C:ti d~lns ll! cadre de 1 tamenA~t:mcnt des has-fonds et de la constrtll::tion d'ouvruges
- de luLle contre }'erl)f;fon\.
"!\.QI Couts de fonctiollnemcnt finances por vu111arlsateur erlou ORl)\.
~lJ()I,:r!
DEUX) E~IE I'ltOJET IlE FONIlS ELDIlVELOPPI!:HENT RURAL
Servic",,,,-~~es aux Puits et Forages 1J
(en 0111 lie rs de Fen)
Devises
eOn[s"~~~ 1977/18 1918/19 1919/80 rurAL %---I1-ontan t
ill\.:imi 1976/71
A\. !:ersonn,,1 (quatre brigades de putt,,)~/
Cuordinateu\.' des brigades 5/ 1,200 (\) 1,200 (1) 1,200 (1) 1,200 (I) 1,200 4,600
Chef de; hr 1 gades: -
- etrangers 3/ 1,400 4/ (1) 1,400 (1) 1,400 (1) 1,400 4,200
- vultafquea 1,130 - (3) 3,390 (3) 3,390 (4 ) 4,520 (4 ) 4,520 15,820
l1<icanlden au centre 5/ 720 (1) 120 (1) 720 (I) 720 (I) 120 2,880
Charge des ftppruvls1o;ne\.~ntB 2/ 800 ill\._ BOO !1~ 800 Pl 800 (Il 800 3,200
Total 7,SlO 1,510 8,640 7,240 30,900
8\. EqnlpeulCnt §\./
ilreak\. 1,500 (1) 1,500 (1) 1,500 3,000
Etabl1s~ement du centre 1/ 1,000 \.OJ 1,000 500 1,500
Total 2,500 500 1,500 4,500 70 3,150
c~ C()~~~~~_!ouctjonnemc!!!\. §\.I
Breaks 1,125 (1) 1,125 (I) 1,125 (1) 1,125 0) J\.ill 4,500
rotal 1,125 1,125 1,125 1,125 4,500 55 2,415
Total G6neral 11,135 8,635 10,265 9,865 39,900 14 5,625
par-l,,'I!A-OEA et on'';;;,;-pp\.;;;\.;--que la contribution de la
nADEA cOlJlmencer" a la camp"gne 1976/11\.
2/ Quatre brigade" de constructiolt de puits sont finandis dana Ie cadre
- ,dll pro\.1et, Ie personnel rnentionne tei est permanent, d'autrea employes
\. !:iDOt menti\.onllcB duns\. I' Annexe 4\.
i
1\.1 J>Cja en lIuutc-'Jo1ta, finance par FAC\.
~I Finance pur 1e FAC, \.,,1s lea lndelIflites de logement OS,OOO FCFA par mois)
, ct de dcplacemellt (500\.000 ~'Ct'A par an) Beront finances I'ar Ie projet\.
5/ l\.e centre qui scrvjra de base aux quatre brlgatles sera organise au debut
- de 1976/77\.
fJ\.1 EqulpcJ\lcnt et couts de fonctJonnemcnt des brigHd~s t volA Annex 4; cette
~I~
\.'"
Nv'ture t!t!['vira au co~)rdinatclir de-s br1~nJeG\.
nl
II C~utrc devout ticrvlr de ba!:ic nux brigades; """ra1s d'etablissepltmt estfmea "
i\., 1\.000\.000 FC)o'A\. llllliH rcullllacelllCot au bout de deux ans a 11:1\. looilie den
(rdltl\.
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Recapitulation des Couts de la Brigade d'Entretien des Forages II
(en mUliers de FCFA)
% des Montant
ln61Tf ~217/78 197 8 /79 1979/80 Total Devises des Devises
Fournitures 900 1,800 2,700 3,600 9,000 70 6,300
Materiel 6,460 1,800 1,800 1,800 11,860 80 9,488
Couts d'exploltation 1,350 1,350 1,350 1,350 5,ltOO 55 2,970
Personnel d'exploitation 990 990 990 990 ),960
TOTAL 9,700 \.5,940 6,840 7,740 30,220 62 18,7\.58
11 Voir details a l'Annexe 4, Tableau 12\.
~\~
~ &1
~
\. \.
~lrrE-VOL'I'A
IlEUXIEMIl PROJET IlE FONDS DE IlEVELOPl'EMENT ~
For\.ation dll I'ersonnel d'Al!l2ut
(Mililer\. de FCFA)
7\. de\. Montant de\.
Colltil Unitalres 1975/76 1976/17 1917/78 1978/19 1979/80 ~ ~ Devls\.
Specialistes de l'Evaluation
des Result&te !/
Ingeniellrs du Genie Rural '!\./ 500 (1) 2/ 500 (1) 1,000 (1) 1,500 1,500 Y 4,500
Agents Travl!lux Agrtcoles 1/ 100 (2) 200 (2) 400 (2) 600 1\.200 II 2,400
Teclmiclen Superieur du Genle Rural ~/ 345 (4) 1\.380 (I,) 2\.760 (4) 2\.760 1\.380 8\.280
Vulgarisateurs 2/
Stases de Formation au CESAO 73 (20) 1,460 (20) 1\.460 (20) 1,460 (20)1\.460 5,840
Service\. de Consultanta pour l'Etude
de 1& "o\.nation des Vulgariuteurs ~/ 9,000 9,000 100 9,000
TarAt\. 12,540 5,620 6,320 5,540 30,020 30 9,000
11 Formation finance par Ie PNUD\.
IJ Seront formes aI' Ecole Illter-I!tats d'ingenieuru de l' IlquipemenL rural il Ouagadougou\. Bourses annuelles "9 timees
il 500\.000 FCl'A\. Etudes durent trois ans\.
3/ Serout fond,\. a Matourkou, buurses annllelles estlmees ii 400\.000 FCFA\. Etudes durent quane ans\.
lL lliveau 1l!\.ccalauceaL plu9 deUl( 009 de formation a l'Ee01" Inter-Etate des Techniciens Superleurs de I '"ydraul1'1ue
et de l'EquJp"ment rurd de Callvolnse; bours \. annuelles estirnee\. il 345\.00Cl FCFA\.
'H Matourkou "ut actuelleonent surcharge at certains ORD assurent eux-memes la formation de leurs vulgarisauure\.
Le gouvernement envlaage de reorganiser la rOUllation agdcol" des vuIgari/iateurBtauctlne aide oHidelle n'est fournle
~ ce titre dillls Ie projet, mais des consultantu etudieront la for\.,ation deB vulgariaateur8 en "aut\.Voita\.
6/ Dont 500\.ClOO FCFA pour 1980/81\.
-77 nont 400\.000 FCFA pour 1980/81 et 200\.000 pour 1981/82\.
]/ On a prevu quatre hommes-moio de servl"\. " de consultant" 3 $10\.000 par homme-moh, d'oil un total de $40\.000 OU
neuf mUUon de FCFA\.
'}j Les chi fhes entre parentheses indiquent Ie nombre de personne" qui re~o!vent initialement une bourse, toutefois lee
etudes durenl p] us (t' un an, lea chiffres entre parentheses ne reprl!:sentcnt pas Ie nombre total d 'etud1 ants recevant
'iilt
[8
une [ormation au couTS d'une linnee donnee mais Ie nombre d'etudiants de premiere annce\.
"
",'
!!\.AUTE-VOI,TA
QF:\.UX~!,!O:lE!~ \.!!\.Ii_l::Q!l~~ I)E,!~V!iI,Q!'l~!'!!l'!!L,~
A\._~~I'l!\.'\.':\.~l1
(Mill1Hu <Ie f'CFA)
Couts Uniudrcs !975/76 I 976112 19n /7'iJ\. 1978/79 1979(8!!\. TOTAl\.
A\. !'\.N1Jl) 1/
Kconoroiste speclallste de II Evaluat Ion des resullaUi 10,800 2/ 10,800 lO,800 10,800 32,400
Ingenleur ,I 10,800 2( 10,800 10,800 10,800 32,400
Bourst\."s 169 3/ (6) 1,014 (0) 5,070 (42) 7,098 (18) 3,042 16,224
Voyages d I Etudes 2/,7 ~/ (11 247 (1) \.'6\.4 7 (H \. 49"-\. (1) 494 1,482
Total partie! 22,861 26,917 29,192 3,536 tl2,506 !Q/
II\. FAC
Ingenieur du GenIe Rural 9,bOO 51 4,800 9,600 9,600 9,600 B,600
Tcchnl cleo Superieur du Gcnie Rural 7,200 6( 3,600 7,200 7,200 7,200 25,200
Ingenleur Topograpbe 7,200 6/ 3,600 7,200 7,200 7,200 25,200
Chef de I,\. Brigade dea Puits 7,200 II 7,200 7,200 7,200 7,200 26,800
Total purtiel 19,200 31,200 31,200 31,200 112,800
c\. ~,?l~lemcnt Neerlandais
Volontah:es 2 ,600 ~I (1) 3,900 {"s) 1\.,800 (3) 7,800 (3) 7,800 27,300
'fotal partiel 3,900 7,800 7,800 7,800 27,300
Total General 23,100 61,861 65,917 68,192 3,536 222,606
ITn'allresl"doc'umcntrev-iiiTdUproje'tauPNlm\.
2\.'/
$48\.000 par homme-anne,,; on Guppose quc Ie\. experts atrivcront l,endant la secondc "\.,itie de 1976\.
J/ $ 750 par PlOis, lea chlffres entre parcllthese~ rcpreHcntent Ie nOllline tie mots\.
4/ $1DOOpar voyage\.
5/ Estl\.,e par 1" FAC 800\.000 FCFA par "",is\. L'cxpert arriveralt au debut de 1976 et on n'a done compti' que } \.
- ulOfllii des frals pour 1975/76\.
61 Eutime par 1e FAG a 600\.000 J1C~'A par "",j\. L'expert arriverait au dt'but de 1976 ct 011 n'a done c"mpte que la nlottle
- dey Crala pour 1915/76\.
1/ Estllne a 600\.000 t'CI'A par mois; cet expert est deja en lIaute--'/olta\.
87 EsUmii a 30\.000 flarillY neerlandals par Iio\.llne-annee, c'eal-a-dlre, a raison d'un dollar pour 2,60 florins et polur 225 \.CFA,
- 2\.600\.nOO l'CFA par homme-annee\.
~Ii
9/ Four ~e calcul des couts\. on a suppose que les atranr,ers rcstera1ent trois an8 en UauteJlo)ta ou un peu plus: s'll~ y sont
~ derives avant Juillet 1916 \. Los contrata slgnes fie sont pas necc8sniremcnt des conttats de cette duree\. mnts i1 est
probahle que la J1ron'Latton de ccs conlrats nt" pooeraJt pas de gr08 proble-me\. n1\.
HI/ I\.e chiffre donIle dana Ie document revise du pn)jet du PNUD (llPV 75/015/A/Ol/12) est de $210,600\. Ce ehiffre suppos" un
- sejolur dc 2 UllS au lieu de lane ct demi, ",als une prorot~ation cst possible (voir note 9)\. 51 l'on dedul t Ie cout de
"
'"
cette prol'o(~atlon, on arrive approxtOlatlvc\.ment au chtffre cite par Ie I)NUD\. compte tenu du fuit que les: chtffres convert1s
dt: FCE-'A en dollars souL arrondis\. En outre, Ie PNUO fie prevoit pas de provisions pour hnprevuB 1110ra que cOlOme pOllr leE
autrea cuuts du proJet, on a a\.1oute deB provisIons pour imprevu~ nux services d'asaJstancc techniq11e seion lcs pourcen~ages
donnti\.s Ult l'ahlcau 11 de la present"\! annexe\.
HAUTE VOLTA
\.!!\.J~I~'9!~lE PROJHr DE FONDS HE DEVEl\.OPPEHENT RURAl\.
RticapituJ ntion d \. Cout des Etu_des sur Ie Develo\.ep~h1ent
i':co'!P!\~'l'~ ~~"\.!!_ Zone"s Ub{i rees de 1 'Onchoce rcose 11
(Mil Hers de FCFA) --
Devises
, l'i,(L/,(]_ Tot\.al
----- 2I£!!l!\.!!\.!lL\.
A\. Hise en place de la banqlle des dOM_e\.!O!!\.
Enquete sur l'utilisation des sols 60,525 60,525 87 52,1,25
CI imatologie It),12~1 10,125 100 10,125
Etudes sur lea resources en eaux de
surface et soutert:aines 12,375 '12,375 100 12\.375
Enquete sur la vocation des sols 42,975 42,975 81
Preparat ion de dOlmeea soc:lo-economiques 27,000 27,000 88
l\.ocaux pour Archives\. 5,h;~ 5,h25 60
---\.l\.l12
Total partiel 15tl,625 158,625 136,800
B\. PreEaration d'nn ~lan de developpement
"Consei,ller permanent 10,125 13,500 13,500 37,l~» 100 37,12\.5
Groupe de planification 20,250 10,125 30,375 100 30,375
Specia1istes so us contrat 11 court terotC 16,875 11,
,875 lOO 16,875
Vehicules et frais d'exploitation \.'t\.,67~j ~\.>;,{)() n:',700 16,W() 1,0 "'!!";]E
Totsl partiel >6,925 2!l,12,:> H;,200 101,250 91,102
C\. Preparat
Photograt>h1e aeTienne ~)O~;\I)O 20,250 100 20,2,0
Etudes ll,?50 100 ~250
Total partie} 6~,,2)O 11 t;!\.50 '(6,:>00 «tl, ,00
Total General ~t)t>JO )l,n\.::' \.Yi_~~ 90 '104,402
iT Vo"fr" Annc";Zc-6;"TabieooY:----"--------
;;e;:
;:f;l
~ i:I
~ \.
;:)
ANNEXE 7
HAUTE VOLTA Tableau 11
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Provisions pour Imprevus 1/
(Mllliers de FerA)
Provisions l:!0ur I!!Erevu9
Depauement Hausae
eout de Base des guantites2/ des Prix3/ ~ ~
'l'ravaux prevus au nro jet
Bas-fonds 112,590 11,259 24,546 35,805 148,395
Lutte contre l'erosion 135,608 13,561 30,354 43,915 179,523
Petite irrigation 200,000 20,000 51,512 71,512 271,512
Bas-fonds amiliores 44,970 4,498 10,175 14,673 59,643
Entrepots 60,841 6,085 13,884 19,969 80,810
Centre communautaires 5,164 516 1,190 1,706 6,870
Puits 535,875 53,588 102,113 155,701 691,576
Forages 167,330 16,733 44,125 60,858 228,188
Total partial 1,262,378 126,240 277,899 404,139 1,666,517
Services d'Appui
Personnel 502,450 25,123 79,026 104,149 606,599
Equipement 146,800 7,340 24,454 31,794 178,594
Couts de fonctionnement 142,543 7,128 24,553 31,681 174,224
Formation profeesionnelle 30,020 1,501 2,544 4,045 34,065
Brigade d'entretien 30,220 1,515 6,315 7,830 38,050
Services lies aux puits 39,900 -1\.2\.2\.2\. ~ 2\.ill 47,573
Total partial 891,933 44,602 142,570 187,172 1,079,105
Assistance Technique 222,606 11,131 33,033 44,164 266,770
Etudes Onchocercose 336,375 16,818 37,179 53,997 390,372
Cr and To tal 2,713,292 198,791 490,681 689,472 3,402,764
--
}j Non campris les fonds renouvelables de credit agricole il\. moyen teme\. ($500\.000) oi 1'"H'\.,\.nt projets non-identifies
($600\.000) pour lesquels on n'a pas calcule de provisions pour iaprevus\.
2/ Les prOVisions pour imprevus ont ete eva1ues il\. 10% pour lea travaux et a 5% pour les services d'appui\.
11 Les tn:ovisions pour hallSse des prix ont ihe ajout<!ies aux couts de base et aux tlrovisions tlonr '!/'o"!'1sf!rnent: rles c:uantites\.
Les hausses des prix ont <!ite calculees comme suit: vehicules, materiel et fourniturea: 1976: 9%, 1977/79: 8% et 1980: i%\.
Tous autres couts (traitements, couts de ionctionnement, main-d'oeuvre, assistance technique, etc) 7% par an\.
!outefois, 1es traitements ayant ete revises eu cours des negociations, on n'a pas applique de hausse des prix aux traite
ments pour 1976\.
Les pourcentages annuels ont: ete conve~isen taux composes pour 1a campagne al1ant du leI' juillet au 30 juin, du fait que
les eouts sont calcules d'apres les prix en vigueur a ill\. fin de 1975, et les tra1tement d'apres les prix de 1976 at que
pour 1a preriode concernee, saule la moitie du pourcentage est prise en consideration\. Les pourcentages ci-apres ont done
ete utilises: Vehicules etc 1975/76 - 2%; 1976/77 - 9%; 1977/78 - 18%; 1978/79 - 277\.; 1979/80 - 37%\.
Traitements 1975/76 - --; 1976/77 - 2%; 1977/78 - 7%; 1978/79 - 157\.; 1979/80 - 23%\.
Autras 1975/76 - 2%; 1976/77 - 7%; 1971/78 - 15%; 1978/79 23%; 1979/80 - 31%\.
HAUTE_VOLTA ANNEX! 7
Tableau 12
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Solde dti Credit 3l7-UV 11
(Millers de FCFA) -
CREDIT DEB ! T
Fonds non dibourses restant au Credit 317-UV !I 114,750
Contribution du gouvernement 2,\.1 23,500
Programme d'appro(ondissemant des puits
- materiel d'approfondissement additionnel 6,669
- matiriel d'approfondissement 500
- madriaux (ciment et fer) 5,650
- petits outils (pelles, etc) 400
- transport des madriaux 22,556
- cout de personnel 11,640
- coGt d'exploitation des vihicules 4,220
- non affecd !:\./ 3,615
55,250
Assistance a c6\.utres opirations de creusement de puits 2,\.1 8,500
Intervention des brigades topographiques il 2,050
Paiement restant a effectuer pour projets achevis II
- entrepots 10,025
- amenagement des bas-fonds 12,500
- petite irrigation 3,000
- ouvrages contre l'erosion 4,000
29,525
Projet en cours de developpement
- etude de la plaine de Kamadena 81 2,449
entrepot central dans l'ORD de Fada 91 2,305
entrepot central a Koudougou 101 - 3\.160
projet d'entrepot frigorifique-a Bobo Dioulasso 111 20,000
27,914
Commission END 121 2,586
138,250 125,825
=-=
Solde du Credit 317-UV 12,425
11 Le budget du FDR reserve une proV"l\.sion pour les paiementa qu:l\. restent a effectual' sur des travaux deja
ac\.'1eV's; 11 s' agH principalement de clauses de garantie figurant dans les contrats des fournisseurs ou
entrepreneurs qui prevoient les reglemenl de la somme finale quelque temps apres l'aehevement des travaux
ou 1a livraison du materiel\. Ces postes et quelques aut res ont ete tires du budget du FDR pour 1975/76\.
Le reste de ce budget est couvert dans Ie cadre du pro jet, dont les coGts sont presentes dans les autres
tableaux\.
Y En juin 1975\. U renai t EU$516\.785\. sa:t: ll6 211\. 000 -FCFA au taux de change de 1 dollar pour 225 FCFA\. Pour
tenir compte des variations du taux de change pendant Ie reste de la periode de deboursement, on a compte
EU$510\.000 (114\.750\.000 FCFA)\.
1/ Puisque la contribution de l'IDA represente 83% des couts du projet, l'apport de l'Etat, calculi sur la
base des dEboursements du credit de l'IDA restant a effectual'\. serait de 23\.500,000 FCFA\.
41 Calcule a 7% des aut res couts d'approfondissement des puits\.
1/ Le FDR fournit des materiaux aux brigades des puits de Sanfora et Yatenga\. II ne Ie fer a plus dans Ie ca&re
de FDRII mais fera porter ses efforts sur ses propres brigades\.
iI Brigades topographiques de l'HAER qui aident les ORD a effectuer des etudes sur l'amenagement des terres
dans le cadre de FDRII\. les ORD auront leur propres brigades\.
II Les projets ont ete aeheves pendant la campagne 1974/75\.mais certains paiements n'ont pas ete effectues
parce que les procedures de reception ne sont pas terminiies\.
81 Etude realisee par BDPA-GERSAR dans l'ORD de Degoudou\.
2/ Un entrepot de 300 m2 et 2 entrepots de 250 ml\.
10lUn entrepot de 300 m2 et un entrepot de 200 ml\.
III Creation d'un entrepot frigorifique a Bobo-Dioulasso pour les legumes, etc\. Le coGt total de 74\.000\.000 FCFA
nEcessiterait un credit de 50\.000\.000 FCFA, une contribution de l'ORD de 4\.000\.000 FCFA et un apport du
FDR de 20\.000\.000 FCFA\. La participation du FDR est demendee parce que Ie FDR a egalement finance un
perimetre irrigue de culture de legumes a Bobo-Dioulasso\.
12/La BND per~oit une commission de 1% sur tous les fonds ac\.~emines par Ie FDR\. Cette commission couvre le
cout des locaux, etc calculi a 1% des couts totaux en 1975176\. Par 1a suite, on suppoae que Ie FDR louera
des bureaux, dont Ie cout apprait dans les couts eu projet\.
HAUTE VOLTA
DEllXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
"Recapitulation du Plan de Financement 11
GOUVERNEMENT
Couts Totaux IDA BADEA GOUVERNEMENT PNUD FAC NEER,LANDAIS
----------::=::-----::::::------------FCFA'OOO~-------~---------
Ouvrages du Projet 11 1,497,453 706,880 703,205 87,368
Services d'Appui 891,933 731,414 70,120 90,399
Assistance Technique 222,606 82,506 112,800 27,300
Etude Onchocercose 336,375 315,337 21,038
Non affecte 689,472 368,327 232,062 44,919 18,246 20,785 5,133
TOTAL 3,637,839 2,121,958 1,005\.387 243,724 100,752 133,585 32,433
Total en dollars 16,168 9,431 4,468 1,083 448 594 144
Total arrondi en dollars 16,200 9,400 4,500 1,100 450 600 150
11 Resume du Tableau 2 de 1a presente annexe, qui donne 1es details_
!I Moins solde du Credit 317-UV\.
~!
re &1
~
<:Xl
I-'
ANNEXE 8
T\.btuu 2
ft\.UTl'BVOI,TA
DFtlX n:HE PRO\.lt:\.~r ';15 P'QNltS IlE DEYfI\.Ol'PEMr~T IUltlAl\.
(,'a\. :&orle\. d4la_\.Cre'dltt Tn;\. ArrcndlutHllenr pllllr
~1~1U!!! illllil ''ill1?! Catenar!!, PcrA '00(1 fUlloU \.r, -\.f!!!~\.!!!y~
\.-~~ - \. -~-- - ~ \. ~---" ~ -~~-- -~ \._- \. -~ \. ,,-- CFAf" 000
A\. !\.r\.valll: lit Service\. Fln\.net\. par t TM
Ba\.-fond\. , 4,110 20,,850 2S,020 29,190 lJ\.:JbO U2\.5:90
tutu co)ntr~ l'_r;,0lf<m 2,948 n,UG 29~480 16 t 8'iO \.44,220 lJ5:,608
I ~fond raeltor\. at
petite 1rrlgaUon 12\.4'#5 32,49S 89\.990 69\.990 244,910
tiltiNOU v11 hgeoh 1\.605: 8,\.96 12~6M 16,501 20,)04 66 ,60S
Crlit agrtcoh 28,U5 28,125 28,lU 28,125 112,SOD
Pro Jet\. non ldent i flea 13,150 )),150 1l,7SO )),150 135,000
Par,onne] 49,990 11,'80 91,180 136,800 Ul,960 5G2,450
EqulpelDent 23\.500 ",400 36,000 21,)00 16,600 l46,800
C~t\. de¥plOiUtion 21\.1U JO,I'S 30,195 lO,I95 lO,195 142,543
lonnatlon prohuionaolle 12,540 S\.62\. 6,32\. S,540 30,020
Molna &<ltd\. du (rlJlt )l1~W (ll\.illl --\. --- -- -l!\.!&ll
Total pllrttol 91\.5;5>1 110,3lal 325,164 429,021 ~)1\.'i:f4 l,b16\.0bl
JJlA (89'1\.) 86,810 216,201 28Q\.l'J6 )81\.82\. 404\.046 1\.418\.294 1 + II 1,438\.294 6,192\.4 (\.400
CoU~l"IHu\.ent (111) IG,m 14, lle JS,168 41\.192 4',9)8 111,161
B\. Putt\. ,t
lorasea Itt Servtcel conn net
Finane pn BADF\.A
Paltl
FOTag\. I
202,810 [01\.360
52,UG
11',_
61,110
106\.185
S2 , llG
5)5,815
161,))\.
SarYic& '\.ppui U \. \. au\. brta\.d\. \.
dea puiU n,13S 8,635 to\.265 ',8U 39,900
Brtsade \.' \.ntr\.tten ~ -\.~ ~ _2~ 30\.220
Tot\.l part1el 211\.665 ~~ 199\.1l) 115\.900 ll1JU
11,\_ (1001) 221\.6bS l14,045 199,115 115\.900 113,51$
C, !!!!!\.!:!\.!!£t Techn~ 1\.L\.1!Q 61\.861 ~ 68\.192 2\.J-~1! 222\.606
PNUO 22,861 26,911 29,192 3,536 \.2,506
rAG 1',200 Jl~200 ':U\.1OO 31,200 112,800
Couvern4i!_nt naerl\.ndI1\. 1,900 1,800 1,_ 1,800 21,300
[)\.~~~
("of~ det\.il' !l l~\.nnclio 12)
PCUQAUel ctuO!Cu !Q~ ilJQQ IJ 5:00 l1\.12S
1M (1001) 10,125 13,500 I ) ,SOIl 17\.125 111& <)1,125 165,0 1M
$01'111<;\111 4~_~~ rn~ ft\.m 1!~ ill\.lll
lilA (l00l\.) 170,5)0 15,)H ll,250 257,115 un 257\.115 1, 143\.0 1,140
~t;l'U ~p~ \.J\.4Jil ~ ~ 42,0]5
\. ( lOX) 11,431 2,HO 1,)50 21,011 Hie 21,011 9)\.5 100
n,4)ij 2,250 1\.3SO 21,0)\.
G/JuvenlNDtlnt
It\. l>r\.wtI!llJon~~ ~,L~li ~llli ~ll_~!!a l~!U ~!~ \. -~~~ ~~~
lIlA 1,561 \5,50) 11,411 102,_ Ill\.486 168, )21 IV 3bB,ll1 '\.bn ,0 1,600
IlAD'" ]9,911 44,\.7~ 10,019 71\.93) ~)2 ,062
['NUl) 2,82) S,58S 8\.510 1\.)2a 18\.2\.46
fiAC r I\.la) l,8$) \.,414 9,O~5 20,185
COur,lerm::lRt;lll nt-ertalld\.i\. 211 \.63 1,61' 2,274 5,1)]
wuv\.rucjljotul: 935 6\.5bl 8,611 t:l,SSS 16,25:1 44,919
~~",958 M~O~j J'\.t 400
ANNEXE 8
Tableau 3
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Estimation des Deboursements
Montant cumu1atif
Mi11iers de dollars mi11iers de dollars
Premier semestre exercise 77 1,500 1,500
Second" semes tre exe rcise 77 1,200 2,700
Premier semestre exercise 78 1,000 3,700
Second semestre exercise 78 1,000 4,700
Premier semestre exercise 79 1,000 5,700
Second semestre exercise 79 1,100 6,800
Premier semestre exercise 80 1,100 7,900
Second semestre exercise 80 1,200 9,100
Premier semestre exercise 81 300 9,400
9,400
A\.'fNEXE 9
Page 1
'HAUTE VOLTA
DEUXIEME PROJET' DE 'FONDS DE DEVELOPPEMENT' RURAL
'Organisation et gestion
"Donnees gener~les
Les principales institutions chargees de l'execution du projet sont:
a) Le Fonds de developpement rural (FDR),
b) La direction de l'Hydraulique et de l'amenagement de l'espace rural
(HAER) du }ttnistere du developpement rural, et
c) Les Organismes regionaux de developpement (ORD)\.
II existe en outre un Comite technique interministeriel charge de la coordi
nation et de la supervision des activites du FDR\.
2\. Les etudes relatives au developpement economique des regions libe
rees de l'onchocercose constituent une partie speciale du projet\. L'Annexe 6
indique Ie partage des responsabilites en ce qui concerne l'execution de cette
partie du projet\.
Le Fondsdedeveloppement rural (FDR)
3\. L'execution du projet continue a incomber en dernier ressort au FDR\.
La projet prevoit de renforcer en particulier les services d'evaluation ex
post et de comptabilite du fonds pour que celui-ci puisse gerer de fa90n ef
ficace Ie deuxieme FDR, dont la portee est nettement accrue\.
4\. Le personnel du FDR serait charge notamment des taches suivantes:
a) aider les ORD et l'HAER, Ie cas echeant, a identifier et a preparer
des sous-projets (preevaluation);
b) evaluer les propositions de sous-projets, notamment les normes tech
niques applicables aux travaux proposes, Ie degre de participation
des agriculteurs, les modalites d'organisation et Ie calendrier
d'execution, la production supplementaire escomptee, les avantages
economiques et les dispositions prises pour assurer un entretien
adequat;
°ANNEXE 9
Page 2
c) assurer la reception des travaux en collaboration avec l'HAER;
d) evaluer les projets apres leur achevement, et notamment l'inf1uence
qu'i1s ont sur la production agrico1e, 1a qualite de l'entretien,
1es services d'appui fournis par 1es ORD;
e) acheter 1e materiel et 1es materiaux necessaires a l'execution du
projet;
f) administrer tous 1es comptes du FOR notamment le controle des
comptes relatifs aux sous-projets du FOR tenus par les ORD, et sou
mettre a l'IDA des comptes annue1s verifies;
g) preparer des programmes de d~veloppement annuels accompagnes de
budgets et 1es soumettre a l'approbation du Comite interministerie1
technique;
h) preparer des rapports annuels et des rapports d'activites semestriels
en vue de leur soumission au Comite interministerie1 technique, au
Comite de coordination du developpement rural, au Directeur general
de la BND et a l'IDA; et
i) preparer des demandes de remboursement en vue de leur soumission a
l'IDA et a d'autres sources exterieures de financement\.
5\. Le personnel actuel du FOR se compose d'un directeur, d'un aide
comptable, d'un secretaire et de deux chauffeurs\. L'effectif sera considera
blement renforce grace a la nomination de deux responsables de l'evaluation
d'un comptab1e, d'un responsable des approvisionnements, de deux chauffeurs et
d'une secretaire supplementaires\.
6\. Le batiment de la BND abrite actuellement le FOR\. Ces locaux sont
fournis gratuitement au FOR, mais la BND preleve une commission de service de
1 % sur toutes les transactions du Fonds de developpement rural\. Ltexpansion
du FDR necessitant des locaux plus spacieux, il faudra, a partir du 2e semes
tre 1976, louer des bureaux dans un autre batiment de Ouagadougou et recruter
un personnel de bureau supplementaire (coursiers, nettoyeurs, gardes)\. Les
coGts du projet comprennent la couverture appropriee de ces depenses, la com
mission de service de 1 % etant supprimee des que le FOR aura laue son propre
bureau\.
7\. Les comptes du FOR n'ont pas encore ete verifies\. Toutefois, des
reviseurs-comptab1es seraient nommes avant les negociations\. La verification
des comptes est prevue pour jui11et/aoGt 1976 et le rapport des reviseurs cottP
tables devra1t etre pret avant 1a fin du mois de decembre 1976\. Les reviseurs
comptables consei11eront egalement 1e FDR sur son systems de comptabilite, qui
ANNEXE 9
Page 3
a besoin d'etre ameliore pour permettre un meilleur inventaire des stocks et
une analyse plus detaillee des couts\. Le comptable et Ie responsable des ap
provisionnements qui seront nommes aupres du FDR veilleront a la bonne execu
tion de ces ameli\.orations\.
8\. Deux expatries seraient nommes pour aider Ie FDR a effectuer l'eva
luation initiale et ex-post\. Les donnees recueillies a l'occasion du FDR I
etant insuffisantes, et Ie contrale permanent et l'evaluation ex-post appel
lent des ameliorations considerables\. L'evaluation serait confiee a:
a) un economiste agricole, ayant une experience approfondie de tous
les aspects de l'agriculture, de l'evaluation socio-economique des
techniques d'evaluation initiale, de la planification et de la pro
grammation; il serait utile qu'il possede une certaine experience
de l'elevage et de la transformation des produits agricoles;
b) un ingenieur du genie rural, possedant certaines connaissances
d'economie, ayant une longue experience des operations de mise en
valeur des sols et des res sources en eau, telles que ceux qui fi
gurent au present projet ainsi que de la construction des puits et
puits tubulaires\. Cet expert devrait avoir en agriculture et en
economie une formation lui permettant de participer pleinement a
l'evaluation ex-post\.
Ces deux responsables seraient places sous l'autorite du directeur du FDR\. lIs
seraient charges de l' evaluation ini\.tiale et ex-post des sous-projets et aide
raient Ie cas echeant les ORD a effectuer l'identification des projets\. Ils
participeraient a la planification et a la programmation des activites du FDR,
bien que ces taches incombent principalement au directeur\. lIs organiseraient
egalernent, en collaboration avec les ORD, un systeme de contrale permanent et
d'evaluation ex-post des resultats des sous-projets\. L'ingenieur du genie
rural serait particulierement charge de la reception des travaux en collabora
tion avec l'HAER\. La premiere tache incombant aux responsables de l'evaluation
ex-post serait de preparer un rapport d'evaluation du FDR I\.
9\. Les rapports et budgets seraient prepares par Ie FDR de la fa~on sui
vante:
a) Les budgets seraient elabores chaque semestre et pourraient ainsi
etre utilises a la fois pour l'evaluation de l'exercice financier
(janvier a decembre) et de l'annee du projet (juillet a juin)\. lIs
seraient soumis au comite interministeriel technique pour approba
tion avant d'etre transmis a l'IDA pour contrale\.
ANNEXE 9
Page 4
b) Les releves indiquant les depenses au titre du projet et l'utilisa
tion des fonds seraient prepares deux fois par an (a la fin de de
cembre et a la fin de juin): ils seraient transmis a l'IDA avec
les rapports d'activites\.
c) Les rapports d'activites seraient elabores deux fois par an sous
une forme jugee satisfaisante par l'IDA\. lIs seraient soumis a
l'Association ainsi qu'au Comite interministeriel technique en
janvier et juillet ,de chaque annee\.
d) Un rapport annuel detaille serait elabore\. comme c'est Ie cas ac
tuellement; il porterait sur Ie deroulement du projet pendant l'an
nee entiere et devrait stre prst trois mois apres la fin de l'annee\.
II aurait une large diffusion et serait adresse notamment a l'IDA\.
aux autres donateurs, au Comite interministeriel technique et au
Comite de coordination du developpement rural\.
e) les comptes verifies et Ie rapport des reviseurs-comptables presen
tes sous une forme jugee satisfaisante par l'IDA seraient transmis
a celle-ci dans les quatre mois suivant la fin de l'annee du projet\.
Le premier rapport des reviseurs-comptables sera probablement pret
avant la fin de 1976 (voir par\. 7) et portera sur la periode s'eten
dant de 1972 au 30 juin 1976\.
10\. Le FOR a demontre_qu'il peut canaliser de fa~on efficace Ie finance
ment d'investissements agricoles disperses\. D'autres donateurs ont reconnu
qu'il pouvait jouer ce role; ainsi que l'AID des Etats-Unis, qui a demande au
FOR de gerer son fonds de credit a moyen terme\. C'est la une utilisation ef
ficace de ressources de gestion limitees\. Toutefois, les procedures diff~rent
selon les donateurs (notamment en ce qui concerne la passation des marches et
les deboursements), ce qui risque de compliquer la gestion conjointe de fonds
relatifs a des projets separes\. pour laquelle il sera probablement necessaire
de recruter un personnel supplementaire\. En consequence\. bien qu'en principe
il convienne d'encourager l'utilisation du FOR pour centraliser les investis
sements provenant d'autres donateurs, les incidences d'une telle decision
qui ne peut stre prise sans l'accord de l'IDA - devraient stre soigneusement
etudiees\.
'Comiteteehnigue intermirtisteriel
11\. Une des conditions d'entree en vigueur du Credit 3l7-UV etait la 1/
creation d'un comite iqterministeriel technique\. Ce comite a bien ete cree- ;
il compte de nombreu~1 membres, a savoir: Ie Ministre du developpement rural
11 Decret No 72-142/PM/AGRI/EL du 21 juillet 1972\.
II Depuis la creation du Comite en 1972, Ie gouvernement a ete plusieurs
fois remanie\. La liste des membres figurant dans ce paragraphe ne s'ins
pire pas du decret mais de l'organisation actuelle des services officiels\.
AN'NEXE 9
Page 5
(President), un representant du Cabinet du Premier Ministre, Ie Directeur
general de l'education, Ie Directeur de la sante publique, Ie Directeur des
services agricoles, Ie Directeur de l'HAER, Ie Directeur des services de
l'elevage, Ie Directeur des eaux et forats, et Ie Directeur des travaux pu
blics, Ie Directeur de la BND, Ie Directeur du tresor, Ie Directeur du budget,
un representant du Ministere du Plan, Ie Directeur des affaires sociales, et
Ie Directeur du FDR\. En raison du trop grand nombre de ses membres, ce Comite
ne s'est reuni qu'occasionnellernent dans Ie passe mais a tout de marne consti
tue une enceinte utile permettant de promouvoir de FDR\. Ce role n'est guere
necessaire maintenant et peut atre mieux assure par Ie comite de coordination
du developpement rural recemment cree\.
12\. Un Comite technique interministeriel a egalement ete cree en 197~/
pour l'execution du projet de fonds de secours contre la secheresse (Credit
442-UV)\. Sa composition est presque identique a celIe du comite technique
interministeriel etabli pour Ie FDR a l'exception du Ministre du commerce, du
developpement industriel et des mines qui est vice-president du Comite de se
cours contre la secheresse et du representant du cabinet de Premier Ministre
qui n'est pas membre de ce comite de secours\.
13\. Les deux comites techniques interministeriels seraient dissous~la
supervision du FDR etant confiee un comite technique interministeriel unique,
nouvellement cree a cet effat dont la composition serait la suivante:
President: Ministre du developpement rural
Membres: Ministre du Plan, ou un haut fonctionnaire de
ce ministere
Directeur du Secretariat permanent pour les ORD
Directeur de 1a BND
Directeur de I'HAER
Directeur des services agricoles
Directeur du budget
Directeur du tresor
Secretaire: Directeur du FDR
Deux autres membres, par exemple Ie Directeur des services de l'elevage et Ie
Directeur des eaux et forats seraient cooptes si Ie FDR entreprenait des ac
tivites dans ces domaines\. Le comite se reunirait au moins deux fots par an
mais de preference tous les trimestres\. Puisque Ie Directeur du Secretariat
permanent pour les ORO est membra du comite, il lui appartiendra de decider
s'il existe des questions de politique general qu'il convient de renvoyer au
comtte de coordination du developpement rural\.
1/ Decret No 74/902/PRES/PL DR E du 28 mars 1974\.
ANNEXE 9
Page 6
14\. Outre ce comite officie1, 1e directeur du FDR reunirait, au joinS
une fois par trimestre, 1es directeurs des cinq ORO du plateau Mossi~ ces
reunions n'ayant qu'un caractere officieux\.
Direetiond'hydrau1ique etd'amenagement de1'espace rural
15\. Lors de l'execution du FDR I, l'HAER etait chargee de toutes 1es
questions d'ingenierie et de conception technique et par 1a suite de l'execu
tion des sous-projets\. 11 lui etait diffici1e de s'acquitter de ses taches
car sa capacite d'execution etait 1imitee\. Le projet actue1 prevoit de con
fier aux ORO 1a responsabi1ite principa1e de l'amenagement des bas-fonds, des
travaux de 1utte contre l'erosion et des batiments vi11ageois~et de charger
l'HAER des travaux plus complexes te1s que 1es ouvrages de petite hydrau1ique
et 1a mise en valeur des bas-fonds amenages, 1a construction des puits et 1e
forage des puits tubulaires\. Toutefois, etant 1e service technique du Minis
tere du deve10ppement rural, l'HAER doit vei11er au respect des normas tech
niques dans l'ensemb1e du pays\. C'est pourquoi l'HAER serait chargee:
a) des directives at des normas qui doivent etre app1iquees par
d'autres organism8s en matiere d'ingenierie et de conception
technique; et
b) de 1a reception des travaux en collaboration avec 1e FDR\.
16\. Bien qu'a un certain stade d'execution du FDR I, l'HAER ait pu
se doter d'un effectif comp1et, e11e disposait en general d'un personnel trop
peu nombreux et insuffisamment qualifie, ce qui a entrave serieusement ses
capacites d'execution\. Le projet prevott que 1e FAC fournira a l'HAER 1es
techniciens expatries suivants:
a) l'ingenieur rural en chef qui donnerait des consei1s techniques au
responsab1e charge, au sein de l'HAER, de 1a coordination avec 1e
FDR;
b) un ingenieur rural adjoint qui serait charge de 1a petite hydrau
1ique et de 1a mise en valeur des bas-fonds amenages;
c) un ingenieur topographe charge d'eva1uer 1es etudes topographiques
et de fournir des directives d'ensemb1e aux ORD en ce qui concerne
1es etudes et 1es re1eves topographiques; et
d) un chef de 1a brigade de puisatiers\.
11 Ouagadougou, Koupe1a, Kaya, Yatenga, Koudougou\.
~mEXE 9
Page 7
17\. Un adjoint au directeur de l'HAER sera egalement nomme pour coordon
ner au sein de cet organisme toute les activites ayant trait au FDR\. 11 sera
charge de fournir et d'organiser l'appui logistique et administratif neces
saire a l'execution du projet par l'HAER\. 11 assurera 1a liaison entre l'HAER
et 1e FDR et sera ega1ement charge des comptes rendus de l'HAER concernant le
Fonds de deve10ppement rural\.
18\. Le forage des puits tubulaires est actuel1ement execute et dirige
par un expatrie en poste a Dori; toutefois, un homologue voltaique est actuel
1ement forme a cette tache\. Le directeur assure la coordination necessaire
avec l'HAER\. 11 n'existe pas d'organisme analogue pour la construction des
puits\. Pour eviter d'ob1iger chaque chef de brigade des puisatiers a commu
niquer separement avec l'HAER et afin d'accelerer 1a fourniture de l'aide ad
ministrative, un coordinateur serait nomme pour 1es quatre brigades qui serait
charge du programme de construction des puits finance par le FDR et de 1a liai
son avec l'HAER\. Une petite base qui pourrait etre facilement deplacee, serait
mise sur pied pour le stockage et l'entretien de fa~on que l'on n'ait pas a
faire appel aux installations lointaines de l'HAER a Ouagadougou, ce qui en
traIne des retards\. Le personnel de la base se composerait d'un responsab1e
de l'approvisionnement et d'un mecanicien\.
19\. La projet prevoit de financer le personnel de l'HAER enumere plus
haut ainsi que le materiel et 1es frais d'exp1oitation qui s'y rapportent
(dont 1a description detaillee figure a l'Annexe 7, Tableaux 3, 4 et 5)\. En
outre, deux brigades de topographes de l'HAER chargees d'effactuer des leves
seront financees au titre du projet\.
Organismes'regionauxde developpement
20\. Les ORD ont ete reorganises i1 y a peu de temps\. On peut eonsiderer
qu'ils s'acquittent assez bien de leur tache eu egard aux penuries de person
nel, faiblesses d'organisation et imperfections du systeme comptable qui con
tinuent a entraver leur action\. Bien qu'ils aient certainement besoin d'une
aide supplementaire, c'est a l'Etat de la leur fournir dans 1e cadre du Se
cretariat permanent pour les ORD\. Le financement prevu au projet ne peut por
ter que sur 1es investissements qui y sont inclus\.
21\. Le FDR II prevait l'expansion du role des ORD en matiere d'execution
du projet\. Outre les taches existantes d'identification et de supervision
des sous-projets, et l'octroi de services d'appui aux beneficiaires du pro
jet, les ORO se chargeraient egalement des etudes techniques, de la conception
et de l'execution des travaux simples (amenagement des bas-fonds et 1utte
contre l'erosion) et de 1a construction des batiments villageois\. En conse
quence 1es services d 1 amenagement des terres des ORO seront renforces dans 1e
cadre du projet par:
'ANNEX! 9
Page 8
a) les services de supervision du travail de releves topographiques
et d'amenagement des sols, qui seront prates benevolement par des
expatries du niveau d'ingenieur adjoint topographes;
b) la fourniture de brigades de topographie pour effectuer les travaux'
de releves sur le terrain; et
c) la fourniture de tracteurs pour les travaux de mise en valeur des
sols\.
Au mois d'octobre 1975 les travaux etaient a cet egard organises comme suit:
Ouagadougou et a Koupela les volontaires des ORD participaient deja aux tra
vaux de topographie\. L'ORD de Ouagadougou avait deja constitue une brigade de
topographes qui ne disposait cependant pas de l'equipement voulu\. Pour reme
dier a cette situation, trois volontaires supplementaires ont ete demandes au
Gouvernement neerlandais, qui sont arrives en Haute-Volta vers la fin du mois
de decembre 1975\. Le projet permettra de financer les services de quatre
brigades topographiques et prevoira la fourniture du materiel topographique
et des tracteurs aux cinq ORD du plateau Mossi\.
22\. Comma on l'indique a l'Annexe 2, l'inefficacite de la vulgarisation
et l'insuffisance de l'entretien constatees lors de l'execution des projets
de mise en valeur des sols et des ressources en eau tiennent avant tout a la
penurle de personnel\. Aussl avait-il ete decide dans le cadre du FDR I de
flnancer et de recruter des vulgarisateurs directement\. Cette pratique se
poursuivra avec Ie FDR II\. D'apres les estimations (dont on trouvera Ie de
tail au Tableau 1) fondees sur le rapport entre le nombre de vulgarisateurs
et Ie programme de developpement du projet, l'effectif des agents de vulgari
sation qu'il conviendra de financer se decompose comme suit:
1975/76 40
1976/77 60
1977 /78 100
1978/79 150
1979/80 200
23\. Les investissements prevus au titre du projet font partie de l'en
semble du programme d'investissement des ORD et a ce titre devraient y etre
inc1us\. 11 appartiendra done aux ORD eux-memes de vei11er a ce qu'ils Ie
soient\. Cette tlche n'1ncombe pas au FDR, bien qu' en sa qua1ite de "banquier"
1e Fonds ait interet a ce que les ORD obtiennent Qe bons resultats et voudra
done examiner de temps en temps le rapport entre ses propres investissements
et Ie programme general de developpement des ORD\. Cela est d'autant plus vrai
pour les projets de mise en valeur des ressources foncieres et hydriques qui
doivent cadrer avec l'amenagement de l'ensemble de la region\. I1 serait vain
ANNEXE 9
Page 9
de mettre en valeur une zone restreinte sans envisager l'amenagement de l'en
semble du territoire regional\. notamment dans Ie cas de la lutte contre l'ero
sion due a l'eau\. Les services de mise en valeur des terres des ORD devront
tenir compte de ce fait lorsqu'ils elaboreront des propositions detaillees
de sous-projets\. La collecte des donnees prevue dans Ie cadre d'etudes pour
Ie developpement economique des zones liberees de l'onchocercose portera sur
une grande partie du territoire de la Haute-Volta et les services de ~ise en
valeur des sols devront utiljser les donnees disponibles (les photographies
aeriennes pourraient a cette fin se reveler particulierement utiles) pour pla
nifier l'amenagement du territoire\.
24\. Les ORD fourniront aux agriculteurs participant aux sous-projets les
services de vulgarisation\. de credit et d'approvisionnement en facteurs de
production et assureront egalement la supervision de l'entretien des sous
projets deja acheves\. En consequence, c'est aux ORD qu'il incomberait en
dernier ressort d'assurer la reussite des divers sous-projets\. II est impor
tant que les ORD et les autorites voltaiques soient conscients de ce fait et
qu'une aide et des fonds suffisants soient fournis aux ORD pour leur permet
tre d'assurer avec succes et efficacite la gestion des sous-projets et les
travaux d'entretien qui s'y rapportent\.
La repartition des taches dans la cycle des sous-proj~ts
25\. Le Tableau 2 joint en annexe\. qui indique la repartition des taches
dans Ie cycle des sous-projets s'explique de lui-meme\. Le Tableau 3\. qui
donne les memes renseignements en ce qui concerne Ie credit agricola prevu
au p~ojet; n'appelle pas non plus d'explications supplementaires; il est pre
sente sous une forme plus detaillee a l'Annexe 5\. La partage des responsabi
lites pour ce qui est de l'execution de l'element de formation figure en de
tail a l'Annexe 10\.
26\. Lors de l'identification initiale des sous-projets, deux criteres
de base seraient appliques\. Le sous-projet devrait etre:
a) de nature a susciter parmi les agriculteurs des demandes ou un
soutien actif pour assurer la participation benevole d'une main
d'oeuvre non qualifiee aux travaux de construction qui pourraient
se reveler necessaires; et
b) de petite envergure et n'exigeant qutune organisation simple et
un materiel et des materiaux de construction minimaux\.
Parmi les sous-projets repondant aces criteres, la priorite serait accordee
a ceux qui constitueraient un developpement et une amelioration des investis
sements existants dont l'objet est de faire progresser la production agricole
et d'accrottre les revenus des populations rurales\.
ANNEXE 9
Page 10
27\. Les sous-projets ayant subi avec succes l'epreuve decrite plus haut
seraient encore perfectionnes et evalues par Ie FDR\. Dans Ie cas des bas-fonds
non encore amenages, des ouvrages de lutte contre l'erosion et de la construc
tion des batiments villageois, une evaluation en profondeur de chacun des sous
projets ne serait pas necessaire\. Pour les bas-fonds et la lutte contre l'e
rosion, Ie FDR devrait s'assurer que les renseignements reunis sont complets
(accord des agriculteurs, conception appropriee, estimation des coGts, nombre
et dimension des parcelles, calendrier des travaux, dispositions satisfaisan
tes en matiere d'organisation et de vulgarisation) et que les ouvrages sont du
type "standard" dont on a deja l'experience\. En ce qui concerne les entrepots
villageois, Ie FDR exigerait en outre qu'ils ne soient construits qu'a condi
tion qu'un nomhre suffisant d'agriculteurs utilisent deja les engrais, les se
mences ou les insecticides ou qu'une demande pour ce genre de produits ait de
bonnes chances d'apparattre a l'occasion de l'execution d'autres sous-projets
(bas-fonds, irrigation, lutte contre l'erosion) ou bien encore qu'il existe des
besoins importants d'entreposage des recoltes\. En ce qui concerne les centres
communautaires, Ie FDR devra aussi veiller a ce que d'autres projets ou pro
grammes n'incluent pas ou ne prevoient pas d'inclure la construction de bati
ments de ce genre\. Le FDR soumettra les projets d'amelioration des bas-fonds
amenag6s et d'irrigation a une evaluation complete, et Ie programme annuel
d'investissement les concernant devraient etre approuves par l'IDA\. En ce qui
concerne les nouveaux types de projets appartenant a la categorie "non identi
fies" 1es propositions devraient etre evaluees et accompagnees d'une documenta
tion complete et soumises a l'IDA pour approbation avant d'etre finances par
1e FDR\. La construction de puits ne ferait l'objet d'aucune analyse financiere
et economique; 1es villages en beneficiant seraient choisis selon 1es memes
criteres que ceux qui ont ete appliques dans Ie cadre du FDR I (combien de
vil1ageois seraient-ils desservis par Ie puit propose, y-a-t-i1 d'autres sour
ces d'eau accessibles, que1le zone desservent-elles ou sont-elles utilisables
en toute saison?) II faudrait toutefois tenir compte d'un autre facteur: la
mesure dans laquelle Ie betail appartenant aux vi1lageois utilise les points
d'eau existants dans 1e village ou dans ses a1entours pendant toute l'annee\.
On trouvera a l'Annexe 5 la 1iste des criteres auxque1s 1es agricu1teurs de
vront satisfaire pour pouvoir pretendre au credit a moyen terme; les demandes
de credit seraient rassemblees au niveau des ORD et soumises ensuite au FDR\.
28\. Toutes les propositions de sous-projets seraient incluses dans un
programme de deve10ppement soumis chaque annee par le FDR au Comite interminis
teriel technique pour approbation\.
29\. Il est important de controler de fa~on permanente et d'evaluer les
resultats obtenus grace aux investissements dans les sous-projets si l'on veut
determiner les avantages et l'efficacite du "Fonds"\. Dans le cadre du FDR I,
cette analyse n'a pas ete effectuee de fa~on approfondie, faute d'un personnel
suffisant\. Toutefois, dans le cadre du deuxieme projet un systeme de contro1e
ANNEXE 9
Page 11
permanent et d'evaluation ex-post sera etabli au sein du FDR et sera applique
par deux responsables de l'evaluation ex-post nommes au titre d'un programme
d'aide PNUD\. Ce processus portera sur tous 1es investissements effectues dans
1e cadre du FDR I at sera e1argi d'une annee a l'autre pour eng10ber 1es in
vestissements effectues dans 1e cadre du FDR II\. La responsabi1ite de l'eva
1uation incombera en dernier ressort au FDR; toutefois 1es ORO beneficiant
d'investissements effectues par Ie FDR devront stengager a reunir toutes 1es
donnees necessaires a cette fin\.
30\. Le systeme de contro1e permanent et d'evaluation ex-post serait mis
en application au niveau de l'ORD et/ou de l'HAER et reproduit au siege du FDR\.
Un dossier serait prepare au moment de l'achevement de chacun des sous-projets\.
qui fournirait ses caracteristiques physiques et financieres principales\. A
l'achevement du sous-projet, de nouvelles donneesseraient rassemb1ees par les
vu1garisateurs de l'ORD qui effectueraient des mesures des differents avantages
du sous-projet\. Des tableaux recapitulatifs seraient e1abores tous 1es tri
mestres par 1es ORD et transmis au FDR accompagnes de renseignements detail1es\.
Le FDR examinerait ensuite ces donnees et entreprendrait leur verification en
se fondant sur un echanti110n de 10 % de tous 1es sous-projets finances par 1e
FDR depuis sa fondation\. Le rapport annue1 du FDR comprendrait un volume se
pare ou figureraient en detail les resultats de l'eva1uation ex-post\. En
outre, 1e FDR entreprendrait des etudes d'eva1uation ex-post axees sur des
sous-projets precis\.
31\. C'est au FDR qu'i1 appartiendrait de decider des donnees a rassemb1er\.
Toutefois, i1 est evident que 1a co11ecte des donnees differerait selon qu'i1
s' agit d' investissements productifs "ou non productifs"\. S' i1 est toujours pos
sible de comparer 1es resu1tats dtinvestissements productifs avec ceux qu'au
raient obtenu un echanti110n d'agriculteurs ne beneficiant pas d'investisse
ments, une telle comparaison n'aurait pas de Sens dans le cas d'investissements
non productifs\. Pour pouvoir obtenir des avantages mesurab1es dans 1e cas d'in
vestissements non productifs, i1 convient donc de rassemb1er 1es donnees con
cernant 1es beneficiaires eventuels avant l'investissement et de 1es recouper
avec 1es donnees obtenues apres l'investissement\.
32\. Le FDR devra preciser 1es donnees dont i1 a besoin, dont on donne
quelques exemp1es ci-apres:
Donnees d'eva1uation ex-post concernant 1es investissements productifs:
a) donnees a l'achevement (couts, caracteristiques physiques);
b) mesure des facteurs de production et services d'appui agrico1e
fournis par 1es ORn;
c) mesure de 1a production (rendements at revenu);
ANNEXE 9
Page 12
d) mesure des resultats obtenus en matiere d'entretien;
e) mesure de l'accueil reserve par les agriculteurs a la fourniture
d'autres services agricoles de soutien (par exemple Ie credit)
qui ne seraient pas directement lies au sous-projet;
f) collecte d'echantillons de donnees relatives aux agriculteurs ne
beneficiant pas des investissements prevus au projet\.
Donnees d'evaluation ex-post concernant les investissements "non produc
tifs":
a) donnees recueillies avant l'investissement (par exemple pour les
puits: sources d'alimentation en eau existantes en toute saison,
effecttf du cheptel, donnees se rapportant a l'approvisionnement
en eau telles que sante publique et utilisation de l'eau);
b) donnees recueillies apres l'investissement (identiques);
c) analyse de celIe des sources existant avant l'investissement qui
sont encore utilisees et a quelle fin;
d) mesure des resultats obtenus en matiere d'entretien;
e) mesure des avantages per~us par les beneficiaires eux-memes\.
La liste precitee n'est certes pas exhaustive et devra etre raffinee et deve
loppee grace a des entretiens continus entre les ORO et Ie FDR d'une part,
entre Ie FDR et l'IDA d'autre part\.
A\.'iliEXE 9
TABLEAU 1
HAUTE - VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEHENT RURAL
CaLcul des besoins en agents de vuLgarisation
Leore 2e 3e 4e Se 6e 7e Be ge 10e
Annl!!e Annl!!e A\.'lnl!!e Annile Annl!!e Annile Annl!!e Annl!!e Annl!!e Annl!!e
2/
6,~- 2,0 1,5 ::\.,5 1 :::
1,5
~"
2,800 2C,0 13\.3 10,0
2,600 26,0 13,:; :'3,0 13,0
: ,2CC 61\.,0 32,0 21,3 16,0
3,eOo 76,0 38,0 19,Q
13\.,900 136\5 63,8 59,5 59,5
1;\.,/
1975
1976 75 15\.0 5,0 3,75 3,75 3,75
2\.977 75 15,0 5,0 3,75 3,75 3,75
35\.0 11,7 8,75
1979 l75 17,;
500 22,5
o~
- j 153 199 121 85
Arrondi 60 100 150 200 12G 90 3S as
J/ Shiffre global comprenant A la fo1s l'~nagement des bas_fonds et les
ouvrages de lutte contre 1 'erosion\.
'1:/ CalculI!! sur la base d'un 'lUlgarisateur pour 50 ha au cours de la premi~re annl!!e:
1 vulgarisateur pour 100 ha pour la deuxieme annl!!e; 1 vulgarisateur pour 150 ha pour
la troisi~me annl!!ei 1 vulgarisateur pour 200 ha A partir de la quatri~e annl!e\.
3/ Chiffre comprenant A la fois l'irrigation et les bas-fonds amenages\.
~/ CalculI!! sur la base d'un '~lgarisateur pour 5 ha au cours de la ~re annl!!e\.l vulgarisateur
pour 10 ha au cours de la 2e annl!!e, 1 \.~lgarisateur pour 15 ha pour la 3e'annl!!e';et 1
vulgarisateur pour 20 ha A partir de 1a 4e\.me annl!!e\.
40 vulgarisatel,rs dl!jA financl!!s au titre du FDR I (crl!!dit 3l7-UV)\.
A\.'lNEXE 9
Tableau 2
P\.AL'TE-VOLTA\.
DEUXIEME PIlO,fET DE FONDS DE D£VELOPPEMENT RURAL
Partage des responsabilit,s dans le cycle des sous-projets
I
Ba \.II fancI
I
ContrOle Pe tit \. Batiments Const1:1lctionl
de I Non-iclentif16
de
!Non am4!nag'\. i A\.m4!nagh
I It erosion I
\
Hydraulique Villageois Puits y I
I
Identification I 0iiU
I 0RD I i'\.A\.cii Ci4;D ORD/F\.AE\." CEO F\.AER t,ous
les Services
I I
I I ~/
Pr'-I!valuation ?OR F~P\. FOR FDR :-JR F\.AER/FDR FOR
i
!
I
I I
,
Ingl!nUrie Y Par le service
! b/ d i
Conception
:~ ?\.J\.L't\ !JRD
i F\.A\.ER ::\.:C 1'\.AER , charglll\. cle l'iden-
fication
! i I I
Evaluation F:R ?DR ?DR
I FDR
I
I Fl:P\. FIlR
Y
DE
I
I
1
,
I
! I
Ex'cutian
I I Par le service
chars' de l'iden
\. I
I
~R~ HAL" :OR':) HAE:R CR: :::A£R
I
i I
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fication
Rl!ception des I I
1
I I f\.AER/FDP\.
Trava"" I
P\.A\.E?/F:;P l!AEP\./FIlR EA\.E\.~/F)R EAER/FCR :~?'/FtR I !'\.AER/Fi)R
I
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t f I I
i
Evaluation "::,,/ORD :r:R/cPD FIlil/CRO
1
CDR!
Suiv1\. Par le service
charK' de l'iden
fication
11 t'l'~R pr4cis\.ra les dir\.ctives Klln'rales 1 suivre\.
21 Approuvl! chaque annlle lors de I'adoption du programme\.
31 Les ORO\. l'HAER au tout autre service officiel\.
~I Le ~me repartition d'appliquera au forage des puits ~ubulaire
ANNEXE 9
Tableau 3
HAUTE - VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Partage des responsabilites en ce Qui concerne Ie credit agricole
1\. Identification des emprunteurs eventuels
ORD
(se deroule toute l'annee)
2\. Premiere approbation
ORD/BND
des emprunteurs (decembre)
3\. Approbation finale des
FDR
emprunteurs (janvier)
4\. Signature de l'accord de pret
Agriculteur/BND
(janvier)
5\. Deboursements (mars/avril) FDR
6\. Suivi et remboursements
BND
p
(pendant toute la eriode de remboursement)
7\. evaluation (pendant toute la p:riode de
remboursement) FDR/ORD
Le responsable du credit a la BND se rendrait aupres de chaque
ORD pour l'aider a s~lectioner les emprunteurs beneficiant de la
premiere approbation\.
AnNEXE 10
Page 1
HAUTE-VOLTA
DEU'''{IEHE PROJET DE FONDS DE DEVELOPP~IENT RURAL
Formation
1\. Donnees generales\. La penurie de personnel forme et experimente
demeure l'un des obstacles majeurs a l'execution efficace des projets en
Haute-Volta\. II est donc necessaire de faire appel au concours d'experts
non voltaiques competents dans les domaines de l'evaluation ex-post, de l'in
genierie, et des releves topographiques\.
2\. Formation prevue au projet\. L'element de formation du FDR IIll a
ete elabore sur la base:
a) des besoL~s precis en personnel du FDR II; et
b) des activites de formation en cours\.
cet element comprendrait:
a) la formation et les bourses destinees aux homologues voltaiques,
des charges de projets expatries (responsables de l'evaluation
ex-post, ingenieurs, techniciens);
b) des services de consultants pour definir les besoins de formation
future des vulgarisateurs et elaborer un plan directeur de cette
formation; et
c) l'octroi de bourses pour de courts stages de developpement rural
destines au personnel de l'ORD ou aux villageois responsables de
petits projets de developpement rural\.
3\. Les homologues voltaiques beneficieraient grace au projet des
bourses suivantes:
trois bourses pour les ingenieurs ruraux qui etudieraient pendant
trois ans a l'Ecole inter-etats d'ingenieurs de l'equipement rural
de Ouagadougou;
11 Le FDR I ne comprenait aucun element de formation\.
A:f;:iE:::E 1 i)
Page 2
douze bourses destinees aux techniciens agricoles qui suivraiellt
pendant deux ans les cours de l'Ecole inter-etats des techniciens
superieurs de l'hydraulique et de l'equipement rural pres de
Ouagadougou; et
six bourses destinees am: agents des travaux agricoles qui 5ui
vraient des cours au College de Hatourkou pres de Bobo-Dioulasso\.
En outre, les responsables voltaiques de l'evaluation ex-post saraient formes
au titre de l' assistance technique du p:mD qui comprend 96 hommes-mois de
bourses pour stages de formation\. Toutefois, bien que la formation financee
par ces bourses doive evidemment porter sur l'evaluation ex-post dans les
domaines agro-economiques et techniqUeS, aucune ecole ou institut dispensant
de type de formation n'a encore etc choisi\.
4\. Ecole inter-etats d'insenieurs de l'equipenent rural\. Cette ecole
est situee a Ouagadougou et a ete fondee en 1968 par treize pays africains
afin de dispenser une formation aux futurs hauts fonctionnaires responsables
du genie rural\. Les candidats doivent avoir accompli deux annees d'etudes
universitaires notamment dans le domaine de l'irrigation ou passer un con
cours d'entree\. Les cours durent trois ans et les matieres enseignees com
prennent: l'economie, les techniques de planification, l'infrastructure, la
sante publique, l'energie et la gestion des ressources en eau\.
5\. Ecole inter-etats des techniciens superieurs de l'hvdraulique at
de l'eollipement rural de Kamboinse\. Creee en 1965, cette ecole vise a incul
quer aux etudiants des connaissances pratiques en matiere de developpement
agricole\. Les candidats doivent etre titulaires du baccalaureat ou passer
un concours d'entree\. Les cours durent deux ans et les matieres enseignees
comprennent pami d'autres l'hydraulique, la topographie et les travaux agri
coles\. Le Conseil d'administration de l'ecole est le meme que celui de
l'Ecole inter-etats d'ingcnieurs de l'equipement rural\. Cette ecole doit
s'agrandir et pouvoir accueillir 80 etudiants (contre 30 actuellement)\.
6\. iiatourkou\. Le Colle\.ge de tlatourkou dispense:
a) une formation destinee aux vulgarisateurs (un an); et
b) une formation destinee aux agents des travaux agricoles (quatre
ans)\.
7\. La College de ~~tourkou forme les agents des travaux agricoles\. Les
cours durent quatre ans et un brevet d'enseignement agricole est decerne a la
fin des trois premieres annees d'etudes\. Les quatre premiers mois de la qua
trieme annee sont consacres a la formation en cours d'emploi et le reste de
A\.~NEXE 10
Page 3
la quatrieme annee, a des cours gene raux tels que administration, gestion et
developpement communautaire\. Le Brevet d'agent technique est decerne lors
aue l'etudiant a subi avec succes les examens finals\. Pour etre admis, les
~andidats doivent etre titulaires d'un Brevet d'enseignement du premier cy
cle\. La specialisation des etudiants n'a lieu qu'au bout de deux ans et les
etudiants peuvent alors choisir entre les options agriculture, elevage, syl
viculture ou hydrologie\.
8\. CESAO\. Ce centre a depuis sa creation en 1960, re~u l'aide de di
vers organismes\. A l'origine, son objectif etait de dispenser un enseigne
ment de deux ans en economie et sociologie\. Depuis 1970, toutefois, l'ensei
gnement s'est oriente vers des stages plus courts destines a donner une meil
leure comprehension du developpement notamment aux villageois et aux respon
sables du projet de niveau inferieur\. Le CESAO organise deux types de stage:
a) des "cycles ll , de trois mois au centre groupant 15 a 20 participants venus
de differents pays d' Afrique de l' Ouest (la moitie environ de la Haute-Volta
meme); et b) "des sessions", d'une a deux senaines environ donnees au centre
ou sur Ie terrain\.
9\. Execution de l'element formation\. Le Directeur du FDR serait en
principe charge de l'execution de l'element formation\.
Les beneficiaires des bourses d'etudes a l'Ecole inter-etat d'in
genieurs de l'equipenent rural et iii l'-Scole inter-etat des techni
ciens superieurs de l'hydraulique et de l'equipement rural seraient
choisis par Ie Dirccteur du FDR et Ie Directeur de l'~\Err\.
Les bG\.neficiaires de bourses d' etudes au Coll~ge de ilatourkou se
raient choisis par Ie Directeur du FDR de concert avec Ie Direc
teur de l' lIACR et les Directeurs des mm\.
Les stagiaires e\.'1 ~valuation ex-post seraient choisis par Ie Direc
teur du FDR en consultation avec Ie PW-iD\.
Les participants au stage du CESAO seraient choisis par Ie Direc
teur du }~R qui consulterait les Directeurs des OPill ainsi que Ie
Directeur du Projet education de la Banque\.~/ L'objectif de cette
derniere consultation est d'assurer que lorsque l'enseignement
donne au CESAO et la formation prevue par Ie Projet education pour
~I Le Directeur du Projet education est assiste dans sa tache par un Bureau
de pedagogie qui comprend quelque 14 specialistes de la formation\.
ARHEXE 10
Page 4
les vulgarisateurs et les Directeurs de petits projets sont pres
que identiques, la plupart des stagiaires soient choisis au sein
des OR!) du plateau l<lossi qui ne fait pas partie de la zone cou
verte par Ie Projet education; si par contre, les deux enseigne
ments different, les resultats obtenus par Ie Centre seront compa
res avec ceux que l'on a atteints grace au Projet education\.
Apres l'application des procedures de selections appropriees, Ie Directeur
du FDR prendrait les mesures ulterieures qui s'imposent\.
10\. Etude de vulgarisation\. Le College de Xatourkou assure la forma
tion d'une centaine de vulgarisateurs par an, mais ne dispose que d'un per
sonnel limite\. Quelques OR!) (ceux de Ouagadougou, de Kaya et de Yatenga
d'apres les rapports) ont n~intenant organise leur programme de formation des
vulgarisateurs\. Toutefois, meme si aux seules fins du projet Ie nombre de
vulgarisateurs formes parait suffire, on peut se demander si cette formation
a la qualite voulue et si les installations du college sont suffisantes
compte tenu des besoins globaux et futurs de personnel\. Les autorites vol
taiques, conscientes de cette situation, envisagent diverses solutions pos
sibles telle que la decentralisation regionale du College qui serait divise
en trois ou quatre instituts\. Cependant, ce dont on a besoin, c'est une
breve etude regroupant les diverses suggestions et elements et incluant une
proposition concise sur les mesures a prendre pour l'avenir\. Une telle etude
pourrait ensuite etre utilisee lorsque les decisions devraient etre prises et
Ie cas echeant servir de base aux der\.~ndes de financement soumises aux orga
nismes d'aide\. Le projet prevoit de fournir des consultants qui aideraient
a I' elaboration de 1 t etude de formation des vulgarisateurs\. Ceux-ci seraient
choisis par Ie Uinistere du developpement rural, mais l'IDA devrait approuver
leur qualification, leur mandat et leurs conditions d'emploi\. L'objectif
vise serait que cette etude soit achevee en 1977\. Les deboursements limites
necessaires a cette etude seraient fournis par l'intermediaire du FDR\.
~~
J~~~I~~\.:!~: ,'iH),lt:!' I~I:: j\.::jtl!l:;~~~1\.!!\.!\.!!!\.!L
\. "'/
!:~!~:\.l\.!\.!\.!;\.~_!:~t J \.:,lIpiviL\.tlnH 'fl'l, tJ~, \. \.0' h,~) _ l'ulhll'tL;~t:ll ;\.>;Ie \.") f,lI1Jr"cc:; tid Jilt I\.e 1:,)r;II\."\.' l'~~-
+--1--- AV4nt a~'!r~!'i~~; ~r!Jt\. \.!~~!EmJ£!!-
tb!!!! (;~i~rd ~I __ _
lli!\.)~\.!\. Anu;:I~du ~
!'tlperth:Jt; h\. 3," \.,' 3,8
",' 1,6 0#1 \.,1 l \. II\. 1 0\. 2 3,8 ",1 J,O
\. \.5\. ,\.,
0,2 H#b
\.
R\.::uJt:litt"I't *-a/h\. 400 3>\. 4£0 400 ;00 '100
4'0 'UO 600 >~O 81U I:'IOtl 100
j'r~dlte(1"11 1*)10 /\. 1\.146 IlII LiSliO \.0 1\.140 III 1/10 '1,180 110 1,6JU
'\.
1M] )blJ
j'\. 1;" \. rtJc d*clIploJtlt'iou FC"Al*-, n ,\.
\I"ltelU IUlIte d<o ",r"Joetton }'CfA )3f~~O
"
1\.7)0
"
)tt\.4~
"
1\.Otlo
"
)9\.(lU(I ::\.2511
" :,1:,0
"
51\.480
"
2\.9J'i ),1)00 $O,UiO
22
~\.7~n
" 21
'H\.:':'>O
" H
4\.t~jh :1\.&:'1\.
\I",l\.-ur tutal\. d\. 1\. prod,\.eUon 1'Cl'\. 3)\.190 40:\.4)6 44\.1% Stl\.)O~ 52,IJIO tll)2~\.O
(:O"t", Jf! pn\.luctJoo Itilrl~:ul\.
Fe}'A
!>1\\.'1lIt!IICl:1t 609 11 450 11 069 II 450 ]/ 6)4 !I 4)01\.1 1/ 6'14 1,1 450 3/ 4/
t\.oIJ !I 4'1011 5-16 ~/ 4~W 11
r\.llt rah fCFA
)50 !! )25 II
5, 250 2\.1 700!!1 4~ioo
fl\\.'al te 1Jela
'Tota]
FeFA
FeFA 669 \.,\. 4~O
\.'" "\.
116 ':;/
116 6)4 \.00
4tltt
\."
§!
4'\. 5\.178 J \.1'lO
J ElJ~
5\.832
Val \.ur UC'l(:e de: l'[(j,ht'::f ion }'C}'A 12'\.'71 L300 'H\.787 I\. 5"10 18\.966 I,I:HIU :t\.211\.4 :>0 846 2\.12~ 2\.'161 1\.1),491 2\. JOO '}l\.642 2\.b51l 16\.OIHi
\l4ft-lIr pelte lUlale 34,071 l~\.jH 41\.910 5~\.!t);: :>1\.79) HI,)uO
\I;llt!t,u' lIt!lte _up\llrnwnrlt1r\., de l,ru-'
JIII\.t1;\.)n Jl<ill 1t'l'iI'I<,>itur hm }'CfA \.5\.260 (? J)",St) 12\.968 (+jO\.2~) "'Ui\. 709 (I j(I, 1'1)
UV'htuC'1J1 JOIlJ lHica ,I< 214 174 21~' 101 297
lklll<lbiJJltl par hUllu\.ne/jouriult: FeFA
1:14 12;1 IS> 19(,
'''' 2Jl
an H"lA/kg\.
A 2) FCFA/k \.
~hI1\ \. IHI\\.'U d",t'lt",ree~ a
22 )I(;}'A/'" puur h\. cl!nitllelliJ I!L \.i 1) R;~A/ka pour I\.e&\. _rachides\.
f \. A ugriHdro\.'ulM rco;oJ¥ent ICii a\.;a<l:nCtra de l"As/joeJati\.ou O,V,/C \. 'LT\.
don pile 114 4t' \.2 l1ttu a
)40 I'CU le 1 h reo
~Hi
:OS
Ju '1'!,1' \. )S }'CI'A h:' *-15;\.
\.1''''(lltlllitl tiP \.4 j'J tCU I4:l La,
~e
de 6 J ILrro/ha l'n It\(H a HO n::fA le Hue\.
il n f~"A le kS\.
:
"/"
;:
til\.: T5t' l ]) Fe}'" i\., kg\.
Hi' 1 :>0 kg/lla Ii'luil\\. a J:> }'tYA l' hM\.
ilutrGtI c \. lculu dt; rdPll(\.fl ilIl\. utilihe 1\.: l>ud \. ~r C~II(rilJ\.
\.4NNEXE 11
Tableau 2
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPP~~NT RURAL
EXemple de Budget d'Exploitation fl~ricole- Culture paddy dans les bas-fonds et les bas-fonds
amenages
Apres la mise en valeur 1/
Unite Bas-fonds Bas-fonds amena~es
Superficie ha 0,2 0,2
Rendement kg/ha 1\.500 2\.200
Production kg 300 440
Prix sortie d'exploitation FCFA/kg 35 35
Valeur de la Production FCFA 10\.500 15\.400
Couts de Eroduction a5ricole
Semence y FCFA 700 700
Engrais P\.M\. P\.M\.
Pesticides P\.M\. P\.M\.
Total des couts agricoles ]J FCFA 700 700
Valeur nette de la production FCFA 9\.800 14\.700
Valeur nette du supplement
de production FCFA 9\.800 4\.900
Hommes/jours Jours 22 22
Revenu net par homme/Jour FCFA 445 668
La plupart des bas-fonds ne sont pas cultives avant d'etre
mis en valeur\.
2/ 14 kg a 50 FCFA\.
11 Recouvrement des couts non compris puisque les agriculteurs eux-memes
seront charges de l'entretien des travaux (diguettes dans Ie cas de la
mise en valeur traditionnel1e et diguettes et ouvrages de petite hydraulique
pour les bas-fonds ameliores\. Pour l'entretien, les besoins en main-d'oeuvre
ont ete estimes comme suit = 20 hommes/jours pour les bas-fonds non ameliores,
30 homme/jours pour les bas fonds amenages\.
ANNEXE 11
Ff\.AUTE-VOLTA Tableau 3
DEUXIEME PROJET DE FONDS DE DEVELOPPMENT RURAL
Exemp1e de budget d'exp1oitation agrico1e (0,2 ha)1/Culture de paddy dans 1e cadre de petits
amenagements hydro-agrico1es gj
Unite 1 ha 0,3 ha 0,3 ha
Production kgs 3\.500 1\.050 1\.050
Prix sortie exploitation FCFA/kg 35 35 35
Valeur brute de 1a production FCFA 122\.500 36\.750 36\.750
Couts de Eroduction a~rico1e
Semences 3/ FCFA 2\.000 600 600
Engrais !if FCFA 10\.500 3\.150 3\.150
Pesticides FCFA 6\.000 1\.800 1\.800
Recouvrement des couts 21 FCFA 15\.400 400 4\.420 §j
Couts totaux de production FCFA 33\.900 5\.950 9\.970
Valeur nette de production FCFA 88\.600 30\.800 26\.780
Nombre d'hommes/jours Jours 128 38,4 38,4
Rendement par homme/jour FCFA 692 802 697
La superficie de l'exp1oitation serait de 0,2 ha et l'intensite de culture de
150 pour cent (c'est-a-dire double reco1te sur 0,1 hal; cette intensite est
fonction des caracteristiques moyennes des reservoirs (capacite, evaporation)
et des conditions de realimentation pendant 1a saison des p1uies\.
2/ Plan de petits hydrau1iquesen aval des petits barrages\.
3/ 40 l'ha a 50 FCFA 1e kg\.
~ 100 de phosphate d'ammoniaque a 35 FCFA 1e kg;
150 kg d'uree a 35 FCFA 1e kg\.
50 kg de chlorure de potassium a 35 FCFA 1e kg\.
1e calcul de recouvrement des couts se fonde sur 1e decret No\. 9 du 5 septembre 1973
(article 7) et s'app1ique aUX perimetres irrigues; i1 s'effectuerait de 1a fa~on
suivante: chaque exp10itant devrait verser 1) 13\.400 FCFA par ha par an pour
lI amortissement" a partir de 1a quatrieme annee et 2) 2\.000 FCFA par ha par an
a partir de 1a premiere annee pour l'entretien, 1a mise en application du decret
n'etant pas tres stricte, deux budgets ont ete e1abores: l'un fonde sur 1e recou
vrement de l'integralite l'autre sur 1e recouvrement d'une partie seulement des
couts\. En tout etat de cause 1a loi ne prevoit pas 1e recouvrement tota1~ant
1a quatrieme annee\.
Recouvrement au titre de l'amortissement: : 13\.400 x 0,3 = 4,020
Recouvrement au titre de l'entretien: 2\.000 x 0,2 =~
Total 4,420 FCFA
ANNEXE 11
Tableau 4
HAUTE-VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Exemple de budget d'exploitation agricole (6 ha) utilisant un materiel a traction animale
Cereales Cot on
Superficie 3,0 3,0
Re;dement (kg/ha) 870 700
Production (kg) 2\.610 2\.100
Prix sortie d'exploitation (FCFA/kg) 22 39
Valeur brute de production (FCFA) 57\.420 81\.9°0 139\.320
Couts de )roduction agricole
(FCFA
Semences 528
Engrais 5\.250 15\.750
PestiCides 6\.120
Total 21\.870 27\.648
Remboursements de credits (FCFA) 21\.194 gj
Revenu net (FCFA) 90\.478
Homme/jours (nombre) 135 261 396
Rentabilite par homme/jour (FCFA) 228
;; Dans l'hypothese d'une exploitation de 6 ha, comprenant 4
travailleurs agricole et un materiel a traction animale\.
~/ Calcule sur la base de couts d'equipement de 65\.000 FCFA, d'un credit a
echeance de 5 ans y compris un differe d\.'areortissement d'un an portant
l'interet a e%\.
NOTE:
L'agriculteur tirer ~~ benefice de l' acquisition de boeufs\. Ceux-ci en
effet 3 ans au moment de l'achat ~t 6 ans l~rs de la vente\. La
entre Ie prix d'achat et de vente suffirait largement a couvrir les couts
d'alimentation du betail (par ex: ~~ boeuf de 3 ans achete pour 25\.000 FCFA~
est revendu a 6 ans pour 45\.000 FCFA- alors que Ie cout de son
alimentation n'est que de 2\.500 FCFA par an)\.
ANNEXE 12
Page 1
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPP&~ENT RURAL
Avantages economiques
1\. Le projet propose prevoit essentiellement l'ouverture d'une ligne
de credit en faveur du FDR en vue du financement d'investissements dans Ie
cadre de petits projets mis en oeuvre en divers points du territoire, projets
qui doivent etre choisis par Ie FDR selon les modalites dont les details fi
gurent a l'Annexe 9\. Bien qu'il soit possible de determiner les avantages
des sous-projets, comme cela a ete fait pour les exploitations typiques dans
les budgets des exploitations agricoles (Annexe 11), les calculs economiques
ne peuvent etre que provisoires, puisque la plupart des decisions en matiere
d'investissement desquelles dependra en fin de compte Ie taux de rentabilite,
n'ont pas encore ete prises\. Aux fins de calcul du cout du Fonds de develop
pement rural, un programme de developpement (voir Annexe 4) a ete elabore en
vue des travaux a executer au cours de la periode du projet\. Des calculs ont
ete faits afin d'evaluer les consequences economiques de la ligne de credit
accordee au FDR, dans l'hypothese d'une mise en oeuvre des divers sous-projets
prevus dans Ie programme de developpement\.
2\. Le taux de rentabilite economique a ete calcule a partir des hypo
theses suivantes:
a) Duree de vie utile du projet
La duree de vie utile devrait etre de vingt ans et aucune valeur
residuelle n'est prevue apres cette periode\.
b) Couts du projet
Les couts correspondent essentiellement a ceux qui sont indiques
a l'Annexe 7; cependant, les modifications ci-apres ont ete apportees:
i) il n'a pas ete tenu compte des previsions pour hausse des prix;
ii) les impots determinables ont ete exclus;
iii) l'element du projet concernant les sous-projets non identifies a
ete omis;
iv) Ie cout des etudes portant sur Ie developpement economique des zo
nes liberees de l'onchocercose a ete exclu (voir Annexe 6 pour la
justification de ces couts);
Al-liiEXE 12
Page 2
v) Ie coGt des services de vulgarisation n'a pas ete calcule unique
ment pour la periode du projet, mais egalement pour la duree de
vie utile du projet en fonction du nombre de vulgarisateurs pre
vus\. Les couts d'equipement et d'exploitation ont egalement ete
determines compte tenu de la duree de vie utile du projet (a 5 %
par an) de sorte qu'apparaissent dans ces couts d'autres frais
gene raux - qui sont principalement ceux des ORD - decoulant de
la fourniture de services aux beneficiaires du projet;
vi) pour tenir compte des besoins d'entretien des puits tubulaires, on
a prolonge Ie cout de la brigade d'entretien des puits sur toute
la duree de vie utile du projet; et
vii) la main-d'oeuvre qualifiee remuneree employee pour l'execution du
projet est evaluee d'apres les differents tarifs en vigueur pour
chaque categorie de travailleurs necessaires, mais aucun coGt nta
ete attribue a la main-d'oeuvre villageoise et agricole benevol~
qui nta pas d'autres possibilites d'emploi pendant la saison
seche\.
c) Couts differentiels et couts d'entretien
Lea couts differentiels au niveau de l'exploitation ont ete calcules
d'apres les besoins de\.facteurs \.de production supplementaires, in
diques dans Ie budget des exploitations agricoles, pour ce qui est
des sous-projets de mise en valeur des terres et des ressources en
eau a l'Annexe 11\. En ce qui concerne l'amenagement des bas-fonds
et les projets d'irrigation, les besoins differentiels et globaux
sont identiques\. Les besoins differentiels de main-d'oeuvre agri
cole ont ete evalues a 100 francs CFA par jour, la main-d'oeuvre
etant employee pendant la saison agricole\. De la main-d'oeuvre est
egalement necessaire pour l'entretien des terres et des points
d'eau amenages, main-d'oeuvre qui serait fournie par les exploit ants
agricoles; mais, l'entretien devant etre execute pendant la saison
seche, lorsque les possibilites d'emploi sont inexistantes, Ie cout
de la main-d'oeuvre chargee de l'entretien a etc evalue a zero\.
Pour tenir compte de la participation des services techniques a
l'entretien d'ouvrages plus complexes, on a prevu une commission de
1/ La main-d'oeuvre agricole et villageoise a ete evaluee a 100 francs CFA
par jour - qui est Ie tarif en vigueur pendant la saison agricole, ou la
plupart de la maL\.-d'oeuvre rurale est employee a plein temps\. Pendant
la saison seche, il n'y a aucune possibilite d'emploi (a l'exception de
quelques projets dlauto-assistance) et aucune valeur n'a ete attribuee a
la main-d'oeuvre rurale pour cette periode de l'annee\. Deux tarifs dif
ferents selon les saisons ant ete appliques au lieu dlun salaire moyen
pour toute l'annee, qui aurait ete calcule compte tenu des possibilites
d'emploi au cours des differentes saisons\.
AL'lliEXE 12
Page 3
service de 2\.000 francs CFA/ha pour la mise en valeur des bas
fonds ame1iores et les petits travaux d'irrigation\.
d) Avant ages
i) Les chiffres de 1a production qui devrait etre obtenue dans Ie
cadre des projets de mise en valeur des terres et des ressources
en eau figurent au Tableau 1\. Ces chiffres partent de l'annee
qui suit lea investissements, lea ca1culs portant sur les exerci
ces (ler juillet - 30 juin) et non sur des annees civiles\.
ii) Les prix economiques pour la production obtenue dans Ie cadre du
projet sont calcules aux Tableaux 2 a 5 et sont les suivants:
Cereales 39 FCFA/kg
Riz paddy 50 FCFA/kg
Arachides 43 FCFA/kg
Coton 85 FCFA/kg
Le prix economique des cereales et du riz paddy sont bases sur des
valeurs de remplacement des importations, ceux des arachides et du
coton sur des prix paritaires a l'exportation\.
iii) La production des petits perimetres d'irrigation se fonde sur la
production de riz paddy\. Des legumes pourraient egalement etre
cultives, ce qui serait sans doute plus rentable; toutefois, on
n'a pas tenu compte de cette possibilite parce qu'il s'en serait
suivi une differenciation tres arbitraire entre production de riz
paddy et production de legumes\.
iv) Les avant ages procures par Ie credit agricole sont de deux ordres:
economie d'hommes-jour et augmentation de la superficie\. Quelque
1\.700 exploitants en beneficieront sur 1a base d'un cout d'equipe
ment moyen de 65\.000 francs CFA\. Les economies de main-d'oeuvre
sont estimees a 80 hommes-jour par exploitation\. Elles ont ete
evaluees a 100 francs CFA, puisqu'e1les seront rea1isees pendant
la saison agricole\. Au cours de cette saison, une famil1e a suffi
samment d'autres activites agricoles a offrir pour employer la
main-d'oeuvre ainsi economisee\. Les avantagea resultant de l'exten
sian de la superficie (que l'on estime a 2 ha - 1 ha cultive en
caton et 1 ha en arachides) sont calcules d'apres les avantages
economiques nets pour un cout de main-d'oeuvre de 100 francs CFA\.
Ah~EXE 12
Page 4
v) Les avant ages provenant des puits et des puits tubu1aires ont ete
evalues selon la methode utilisee pour le FDR 1,1/ apres mise a
jour compte tenu de l'evolution des prix\.
3\. Sur 1a base des hypotheses mentionnees ci-dessus, le taux de renta
bilite de l'ensemble des investissements du FDR serait de 16 %\. Les couts et
avantages reels figurent au Tableau 6 et les resultats d'une analyse de sen
sibilite au Tableau 7\. Ces derniers ne sont pas particulierement pertinents
en raison de la souplesse du Fonds de deve10ppement rural, mais devraient
fournir des indications sur 1es variations du taux de rentabilite\.
4\. S'il n'etait pas tenu compte dans le flux des avantages du projet
des avantages attribuables aux puits et puits tubulaires tels qu'ils ont ete
evalues ci-dessus et si, reciproquement, les investissements lies aces puits
etaient deduits des couts du projet (voir Tableau 6 ou sont indiques les dif
ferents elements), le reste des investissements aurait un taux de rentabilite
de 21 % (voir egalement Tableau 7)\.
S\. 11 convient de se rappe1er que les taux de rentabilite economique
mentionnes ci-dessus ne refletent pas deux aspects importants de la realite:
i) c'est la tranche la plus pauvre de la population voltalque qui profite des
principaux avantages et cela essentie1lement dans une region aux conditions
ecologiques et humaines difficiles; et ii) les investissements qui permettent
d'ameliorer l'adduction d'eau dans les villages ont un effet direct sur le
bien-etre de la population\. 11 convient egaleoent de ne pas perdre de vue
que, si les divers sous-elements ne comportent pas de risques particuliers
dans 1a mesure ou ils sont executes et entretenus correctement, les avantages
peuvent varier considerablement comme c'est bien souvent le cas dans le do
maine agricole en Haute-Volta, en raison de l'irregularite notoire des pluies\.
Voir Rapport PA-127a, "Evaluation d'un projet de Fonds de developpement
rural, Haute-Volta", en date du 16 mai 1972\. Ces avantages ont ete cal
cules compte tenu des elements suivants: augmentation des journees de
travail disponib1es en raison de l'ame1ioration de la sante (S hornmes
du village pourront travai1ler pendant 300 jours supplementaires a
100 francs CFA); economie de calories du fait de la reduction de la dis
tance parcourue a pied jusqu'aux 1ieux d'approvisionnement en eau (60
familles a raison de 16 km par jour pendant 8 mois - 230\.000 km a raison
de 23 calories/km; comrne 1 tonne de cerea1es donne 3,3 millions de calo
ries, on economise 1,6 tonne de cereales); et augmentation de la produc
tion de lait de chevre (2\.400 litres a 12 francs CFA)\.
ANHEXE 12
Page 5
6\. Le projet prevoit une ligne de credit devant servir a des investis
sements dans divers sous-projets, dont certains seront productifs et procure
ront des avantages facilement chiffrables alors que d'autres procureront des
avantages sociaux et sanitaires pour lesquels une evaluation est ou bien dif
ficile ou bien impossible et moins utile\. Les principaux avant ages economi
ques des divers sous-projets seraient les suivants: bas-fonds - augmentation
de la production de riz pendant la saison des pluies; petite irrigation - ac
croissement de la production de riz et de legumes de saison; protection des
sols contre l'erosion et credit a moyen terme - augmentation de la production
de cereales et d'arachides; entrepots - reduction des pertes de stockage sur
les facteurs de production et les produits agricoles, et encouragement a une
utilisation plus importante de facteurs de production; et puits et puits
tubulaires - augmentation de la productivite de la main-d'oeuvre et de la
production de betail\. Le projet procurera egalement d'importants avantages
sociaux et institutionnels\. Les puits permettraient de garantir un approvi
sionnement d'eau constant a une population qui jusqu'a present devait aller
chercher l'eau a de petits ruisseaux qui sont souvent eloignes des villages,
et a sec pendant au moins trois mois de l'annee; les puits auraient egalement
un effet particulierement salutaire car ces ruisseaux sont des foyers de ma
ladies d'origine hydrique\. Le premier projet a deja abouti a une consolidation
des institutions puisqu'il a ameliore l'aptitude du FDR, de l'HAER et des ORD
a promouvoir et a mettre en oeuvre des projets de developpement valables\. La
consolidation de ces institutions telle qu'elle est proposee dans Ie present
projet ameliorerait encore leurs possibilites dans ce domaine\.
7\. Comme cela a ete explique plus haut, les calculs economiques sont
provisoires parce que Ie projet prevoit essentiellement l'ouverture d'une li
gne de credit en faveur du FDR\. Par consequent, les taux de rentabilite de
chacun des sous-elements sont encore plus provisoires et moins utiles (sauf,
dans une certaine mesure, pour ce qui est de leur classement) etant donne en
particulier qu'il serait tout a fait arbitraire de repartir les frais gene
raux entre les divers sous-elements et de faire des hypotheses definitives en
ce qui concerne Ie rythme annuel de developpement et d'execution des travaux
prevus dans Ie cadre des divers sous-elements\. Cependant, pour donner une
idee de l'ordre de rentabilite des elements, en partant de modeles simples
utilisant Ie programme de developpement donne a l'Annexe 4, et en admettant
que les avantages decrits dans Ie budget des exploitations agricoles (Annexe 11)
se concretiseront sans repartir les frais gene raux entre les divers sous
elements, on peut dire que les taux de rentabilite economique des divers ele
ments productifs du projet s'etabliraient ainsi: bas-fonds, plus de 50 %;
protection des sols contre l'erosion, 30 %; bas-fonds amenages, 18 %; petite
irrigation, 16 %; materiel agricole, plus de 50 %\. Si lIon utilise les memes
hypotheses et avantages que ceux qui sont exposes a la note de la page 4,
l'element puits et puits tubulaires aurait un taux de rentabilite de 6 %\.
At'mEXE 12
Page 6
Ce dernier taux demontre que Ie choix des sous-projets qui doivent etre finan
ces par Ie FDR est dicte par d'autres considerations que des considerations
economiques chiffrables (sante, attitude des cultivateurs, disponibilite des
res sources a developper, etc\.)\.
8\. Au total, il a ete demontre qu'un programme d'investissement comme
celui qui est propose dans Ie cadre du present projet procurerait des avanta
ges economiques pour la Haute-Volta\. De meme, il est clair que les divers
sous-elements qui ont ete identifies sont justifies soit sur Ie plan economi
que ou social soit sur les deux\. Pour les projets qui n'ont pas encore ete
identifies, Ie FDR devra, lors de l'evaluation, en donner la justification
economique, ce qui devra egalement etre fait dans les etudes portant sur la
petite irrigation et l'amenagement des bas-fonds (voir aussi Annexe 9)\. En
outre, les etudes d'evaluation ex-post devront de temps en temps confirmer la
justification economique des divers sous-projets\.
ANNEXE 12
Tableau 1
l'\.AlJ'l'E-VOLTA
ProQuction Differentielle Attribuable au Pro~ot
(Tonnes metriqu,,)
197~/77 1977/78 1978/i9 1979/80 19801Rl 1981/19R? et
\.\\. fra'Jaux de Erotection des
iols contre l'erosion l!
Cereales }}
2\.175/-;6 2:':,':' 27 27 27 27 27 27
~?-::'/;"1 :',::;0 203 203 ~:: ~:3 2'33
:'977 !~e :2 f:'Ct~, 27:] \. '1,~
<, ~ , 27:,
:';'79/"7; 2,)':'0 333 33c
:\.;\.-:;\./80 3, ]~:; "'J) :"05
~3
~
"T'o~l 2?~ 81 ~
Arachides 1/
~,75rE 2C'~ 1
1971;/7\.
:;:77/-;5
:'9-:-~, ,;:
1\.,5SC
2,:':,)
2,\.;:::"
\.;\.
14 \.-
11 "
14
21
- , :~C
''::;'"
-:,~", :
:1\.1 2£\.
Total - ~
Coton ~/
:\.'tT5/\. c 200 2 2 2 2
\.: 2
-;-:, :5 15 15 ::\.;
\.
:'?'7Ej~;\.
I_~
2\.,5eC
2,O;}'j 20 2(;
25
2~
25
2':
2:;
2\.5':C
:?\. :;i ,:_ 3 ,\.i\. \. \.
"'r'- \.L 3:
,\.,\. > 6\.2 ~2 j~
Total ~ \.:\.L
d\. Bas-fones 1/(riz paddy)
117;;76 :00 l50 150 :5'~ l;IJ :;\.:r
::::"'7~, 7" 75C 7,0 75C 75':; -=r
iCO 900
:',:50
9,:0
:\. ,~'50 , ?c:
-, \.~;:;--
:j~~'::C: ~,C:J 1,,20C ,:\.,~\.:~
7-tal ?~C :J'::O :\.,:\.;;: -1"':
Sas-fonds -
a~\.e!\al!e
,
1975/ 7 6
:';"'E/7~ 3; 35 0; 3; 35
2\.?7'1j-3 35 ~; 55 35
:;'975/"'9 ~~
71,'; "
:979(3':\. "
7':;
T\.J:tal 35 78 "-"0 2lJ
D\. Petite irri~ation ]j(riz paddy)
1975/76
:;76/77 25 131 131 :31
1:177/78 25 :31 131 !3!
19""3/79 ~5 394 39~
197 9/88 \.,\.<
~?:\.
Total 131 262 656 1\. t,)5C~
Toeal pour 1e riz paddy 2\.;:: ~,J6 2,1\.32 3~6I\.6
11 Sur 1a base du budget des exploitations agricoles ~e :e region centrale\.
Ii AmoHioration du rende \.nt: 150 kg/ha (de 500 ii 650 kg/he); hypothese: 3,5 ha sur 4 he consecres a
1a culture des cereales; production differentie11e par he: 135 kg\.
2/ Amelioration du ~ende~nt; 135 k~/ha (de 450 a 385 kg/hal; hypothese: 0,2 ha sur 4 ha consacres a
la culture des arachides~ production d1:ferentielle par ha: 7 kg\.
~/ ~~e1ioration du rendement: :00 kg/he (de 300 a 500 kg/hal; hypothese: 0\.: ~a sur 4 he tonsacr~s
: \. culture au coton; production differentielle par he: 10 kg\.
5/ Rendetoett estic,,: 1500 kg/ha
6/ AmEilioration eu rendement ""'timee a 700 kg/he (de 1500 a 2\.200 kg/hal\.
II Rendemene estime: 3500 kg/ha; en admetzant que :a ~itie de :a suyerficie eult!v'e ~onne une double
recoles, production: 5,250 kg/ha\.
ANNEn: 12
Tableau 2
DEti"XI~"\.:E PROJET T')E T7Q~ms !)E DEVELOPPEMENT RURAL
Prix Economique des Cerea1es 11
1975 1980
Prix fob du sorgho, Golfe, - ---- - uS$ - - - -
en dollars courants (113 ) (135)
en dollars constants de 1973 (84) (69)
en dollars constants de 1975 1/ 113 93
Fret et assurance maritimes 30 30
Prix CAF Abidjan (EU$/tonne) 143 123
CFAF
Prix eM Abidj an (FCFA/ionne,)
---~-\.:: \.--;:~'--~\.:\.~~-\.-\. -\.~-~ ~
32,175 27,675
-~--\.-\.-
Frais ~__manutention e~ dr~itsp~rtuaires 1,700 1,700
2 2 900 2,900
Valeur debarque 36,775 32,275
Transport par chemin de fer jusqu'a Oua~adougou l5~700 15\.700
Prix a Ouagadougou 52,475 47,975
Transport local (moins) 2,000 2,000
Marges de commercialisation (moins) 3 2 °00 3:000
47,475 42,975
Pertes i/(moins) 4,315 3,905
Prix economique des cereales a 1a production 11 43:160 39,070
11 D'apres la valeur de remplacement des importations\.
21 Previsions pour le sorgho a grains (US No 2 Mi~o Yellow, prix fob ports du Golfe)\.
11 Obtenu en app1iquant l'indice d'inf1ation international au prix prevu des produits
de base exprime en dollars constants de 1973 (1973:: 100 et 1975\.: 134,9)\.
41 Estimees a 107\. du poids des reco1tes\.
""iJ Le prix officie1 des cereals est de 22 FCFA 1e kg\. Ce-prix a ate lltj1isa_d~_ __
l'analyse du budget des exploitations agrico1es\. Pour les ca1cu1s economiques\.
1e prix retenu a ete 39 FCFA le kg\.
ANNEXE 12
Tableau 3
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Prix Economique du Riz Paddy l/
1975 1980
- - - - US$ -
Prix du riz
5% de brisures, fob Bangkok,2/
en dollars c;urants \. (370) (471)
en dollars constants de 1973 (274) ~-(~q)
en dollars constants de 1975 3/ 370 323
Deduction de 20% pour riz de qualite inferieure
(25% de brisures) 74 65
296 258
Fret et assurance maritimes
- bO----- - ----bO - - - -
Prix caf Abidjan (EU$/tonne) 356 318
CFAF -
Prix caf Abidjan (FCFA/tonne)~/ 80,100 71,550
Frais de manutention et droits portuaires 1,700 1,700
Transport par chemin de fer Abidjan-Ouagadougou 15,700 15,700
Marge des importateurs 2,500 2,500
Prix de gros a Ouagadougou 100,000 91,450
Transport local usine-marche 2,000 2,000
Valeur du riz sortie usine 98,000 89,450
Valeur equivalente du riz paddy (65% de dechets) 63,700 58,150
Cout d 'usinage (moins) 6,500 6,500
Cout de ramassage du riz paddy (moins) 2,000 2,000
Prix economique du riz paddy a la production i/ 55 2 200 49,650
------- ---- - --- _\._---- -~-\.--- --
1L D'apres la valeur de remplacement des importations\.
2/ Previsions pour Ie riz usine Thailandais (5% de bristiresr,-fob Bab\.gkok-~--
3/ Obtenu en appliquant l'indice d'inflation international au prix prevu des produits
de base exprime en dollars constants de 1973 (1~73 _ 100 et 1975 = 134,9)\.
4/ 1 $EU :s\. 225 FCFA\.
11 Le prix officiel du riz paddy etait de 35 FCFA Ie kr- en 1975\. Cependant les expIoi
tants vendent Ie riz paddy a des negociants prives a des prix allant de 45 a 65 FCFA
Ie kg\. Un prix economique de 50 FCFA Ie ~g a ~t utilise dans les calculs economiques
a partir de l'annee 1980; Ie prix de 35 FCFA Ie kg (estimation prudente) a ete retenue
pour Ie calcul du budget des exploitations agricole~\.
ANNEXE 12
Tableau 4
HAUTE VOLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
P~x Economique des Arachides 1/
~,
1975 1980
Prix caf des arachides, Europe ~ - - - - -US$ - - - -
en dollars courants (490) (475)
en dollars de 1973 (363) (242)
en dollars de 1975 1/ 490 326
Fret et assurance maritimes 20 20
Fob Nigeria (EU$/tonne) 1\.70 306
-, - - - CFA:F - - - -
Fob Abidjan i/ (FCFA/tonne) 105,750 68,850
Frais de manutention et droits portuaires 1,700 1,700
Transport par chemin de fer jusqu'a Ouagadougou 17:000 17,000
Prix a Ouagadougou 87,050 50,150
Transport local 2,000 2,000
Marges de commercialisation 3 2°00 3,000
82,050 45,150
Pertes 11 3 2 910 2,150
Prix economique des arachides a Ia production i/ 78,140 43,000
l/D'apres 1a valeur paritaire a itexportation~-
-2/ Previsions pour 1es arachides du Nigeria,p-rix caf Europe\.
3/ Obtenu en app1iquant l'indice de l'inflation international au prix prevu des
- produits de base exprimes en dollars constants de 1973 (1973 = 100 et 1975\. 134 ,9)\.
4/ Garanti ega1 au prix fob Nigeria\.
5/ Estimees a 5% du poids des recoltes\.
§j Le prix officiel des arachides est de 25 FCFA le kg\. Ce prix a ete utilise lors
du calcul du budget des exploitations agricoles\. Pour 1es ca1culs economiques
le prix retenu a ete 43 FCFA/kg\.
HAUTE-VOLTA
DEUXIEME PF\.OJET DE FONDS DE DEVELOPPEMENT RURAL
Prix Economique du coton graine
1975 1980
--------------ct E\.U/livre---------------------
gj , en prix courants 84
Prix CAF du coton, Europe 56
en prix constants de 1973 42 43
en prix constants de 1975 11 56 58
---------------$E\.U\.----------------------------
En prix constants de 1975 par tonne metrique 1\.235 1\.279
Fret et assurance maritimes 20 20
FOB Abidjan ($EU/tonne metrique) 1\.215 1\.259
------------------FCFA-----------------------------
FOB Abidjan (FCFA/ tonne) 4/ 273\.400 283\.300
Frais de manutention et drofts portuaires 1\.700 1\.700
Transport par chemin de fer jusqu'a Bobo 15\.000 15\.000
Egrenage/ manutention 20\.000 20\.000
Couts a Bobo 236\.700 246\.600
Par tonnes de coton graine 5/ 89\.900 93\.700
Transport local, marges de commercialisation 7\.800 7 800
Valeur Economique du coton graine ~ 82\.100 '85\.900
~~
i/ D'apres la valeur paritaire a l'exportation\. :;;'I:!
2/ pre\d\.Sions pour Ie coton, Mexicain 8M 1 - 1/6 "prix CAF Europe du Nord\. ~ @
3/ Obtenu en appliquant l'indice d'inflation international au prix prevu des produits de base exprime en dollars I-"
LnIN
- constants de 1973 ( 1973 = 100 et 1975 = 134,9)\.
4/ 1 $EU = FCFA\.
5/ 38% pour la fibre de coton\.
6/ Valeur de graine non comprise\. Le prix officiel ( utilise dans Ie budget des exploitations agricoles) est 35 FCFA/kg\.
- Pour les c!:l\.lculs economiques Ie prix retenu a ete 85 FCFA/kg\.
RAtrrE\. ':nL~A ~a:\.:'!
'table\. u {"
J:l'£t"XlE}Z PJlOJ[1' DE ro!'!:::; !\.;( D£rnOi!'!':HEl7 :l\.tII\.AL
C\.alcu:l du twx d\. Retltah1!\.! ttl !\.:ancr:l\.c~
(n\. m1lle\.n ~e\. r:7\.'o)
19MJa9
\. C02S- du P'ro In \.v
!~n/76 !!1iill\. ~~ l<l78fH l~79lao 1~61}!81 \.!\.lliL§l\. 1982\.(8) ~ I'''I~~ ll;"l'94\.f~S
TraY\.as
! \. fona\. 4\.170 20\.850 25\.020 29~HO 33+360
fi"\.vawc d\. pr\.:nectiOR da\. u b
t:o'ntre l' erotion 2\. 2t 1l~ 21) 4111'\ 36 Q\('1 44\.120
txtenai<m d bu"f~nds/plltiee lrrig\.cion 3\.2,\." 32,49S 89,990: 89\.990
Bat:imII"l1u de "ill~lII« 1,605: 8 \. 896 It\.699 16\.501 20\.304
\. ?:tits III 202\.830\. 107 \.160 119\.506 1~\.135
- Fora\. \. \. 52"\.110 63\.110
52 \. 110
Credit: 3Irit:01\. %8\.12\.5 lS\.125 19\.12\.5 73 \. 12'
5\."t"'Vi5e\. d\. SOl=!tt\.an
?uannel Li\.~O 1\.51\.~ 40,!iOO 3e-\.2~J)""
:-\.teriel "
llt
Couts d'exp1oitatiotl ll!
23\.500
21\.763
11\.980
49,400
30\.19S
91\.780
36\.000
)0\.19S
U6\.800
21\.300
30,19'
16\.~600
30"\.195
54\.000
"0
1\.510
830
1\.510
38\.2\.50
d)O
1,510
38, lSO
83\.
1,510
",a
1\.510
19',125
8"30
L\.Sl?
ror:n\.ation 12\.S40 5,620 6\.320 S\.540
"' Pour putts et !cra~ea It,llS 8,'35 10,265 4\.86S
\. Pirigad« d' entret ien 11 9,700 \.5,940 6\.840 \., ,140 'l,740 7 ~l:'O 7\.if\.O 7\.'" j~74(} 1 \.740
AU~qsance
"totd p&t'tie!
tesh::i::;ue ~
133,07(,
J\.L!!U
5U,1l7
~
531\.3i6
~
663\.178
~
S99\.610
---
64,080
---
50,seo
---
t\.8\."110
---
43\.JJO'
---
48~nO'
---
2~'105-
?lua pr~i\.$ ionl ;1Ol,l,r d\.pa\. \. \. \. \.nt de\.
ql,l,atttirtis dUili 1e cadTe d'\.J p"t'ojet l!:/ 7\.319 41\.06-1 J8\.113 49\.5n 45\.887 \.,
!-Ioics iMpots uti\.!batUs H'\.fH! ~5 ,256 4$,851 52\.673 52\.111 -L!22 1\.400 1,":'00 -L!22 -L!22 1 ;;ori
Tot&l du !\.nv\.stisa\.ements oOJ\.I:' 1\. projat 129\.584 551,922 523,642 660\.016- 592\.846 62,"0 49\.180 \.i\.6\.<H0 46,930 4b\.~:lo\. 2, \.dU:5
'0 £Q:C:!; ='i\.£'!£eM~i~! (Jst'a\.li"';:;
t:~l;:!t~al!~Onll \.& \.t\.£ic~!\.u
d~s
Faeceurs de IU":\.ld'\.Jct1on f;/ 43\. '3,64% 7\.405 1J\.443 2:0,030 10\.020
~;\.Jin \.d "e'\.J:I'u i/ ~ \. 08"0 \.l:\.ll2\. ~ ~ ~
Tot\.a 1 ,arti\.l \.l\.1l2\. 10,722 \.l!\.aL ~ \.ll\.ll\.Q\. Sj, ~:'"O \.5),5"70 ~3\.370 31,570 "51,570 53, 5 ~:1
\. ~5uss 1'ent\.~eti\.n f!/
--- -- ~ ~ --\.lli\. -h\.Q22 -h\.Q22 -h\.Q22 I\.OOO ~\. ~\.
J\. ! ::H:a:L tes cou tl; 131~11" 568\.54Jo\. 545,757 !t~1\.0!i9 647,066- 117\.250 l03\.750 101\. sao U)L~O(J lCl\.Soo 32\.J15',
,\. ?rdccuon dif"f:l'snHelle ~s~l-ma&i\.:\.~
cecc-;:'lD -:\.-S ?Pitt<l~U je :'Ii,Hi \.n
fi
\. h-\.:l' '1('lI tc:lrres ~:\. d<l\.\l :'!s<llut\.:illj; o!n iau j\.l
::\.::>,ll,l,ic~n ::e:tq,l\.s 1,0\.53- 8\.nO 19,500 JZ~6i2 48\.477 4\.8\.477
riz ;loaddy 7 \.~OO 53\.300 106\.600 182\.300 '2C,5~500 165 ,500
nilc~it:!\.i!"!1 7 51C, 1\.118 1\.349- 2\.7\.52 2\.'52
Y,,:,t1 ~3~ti,"!
;::>::-:m
--- -l?L
8,16\.
1\.445
64,231
:! \.145
130\.363
~
222? 101
7\.!20
324,340
~
324 :549 124\.549- 324\.54<; )24\.54 1)\. n4,~:j
f\. ~du\.a\.
"1 1\.400 6,800 10\.200 ll,6oo 1l~6OQ\. ll\._ 13,600 l)\.600 l!,SOO 1l~600 Ij\.~{}
l:~ ~,t:"l(}t'i 1"::;1' 1:2/ 24*22\.5 48,450 7Z*C,1\.S 1iI6\.900 %,900 94;\.~OO 96\.900- ';;6\.900 %,900 ~e,~OC
?'I~::\.i
T~tal
(r ~ora~t:'!
pJrtk"!\.
-- 3 400
1
---
31\.025
12\.120
iO\.710
)J
120,211
\.916- 5a,lH
1\.66,616-
SJo\.,840
19'\.340-
:;4\.840
1\.9'\. )40
%\.a\.:oO
19\.5\.340
SL\.S"O
1\.9;: :40
&4\.3/00
195\.340
fS\. , i:t4i'
l'l5\.:'~u
c\. T\.::It-lol dea bi~"ii\.c:!~ j \.400- Vji\.791 13S\.001 2~o,514 390\.771 5t9,98~ SH\.8M 5l~\.Bal) 5l9,Sail- H'\.Sa9 =11,56'1
!:'t!"u:- l\.s d,cu!\.::,s\. yoir ann_\. 7, :\.b~i~llu 1\. ton d\l c\.l1CIll Q1,I UtI!!: d\. t'llfttab1Uti 9 11\. n'\. pu _te tanu eOJaPt\. de\. pr'o1ets
;lOg idunfie& (6CG\.OOO !!:r) "1 d\.a ~t\.udel!l sut \.:\. diftlop'Ptfl"mtt ~conQf)it;ue 4\. \. ~OQ libhh\. d\. 1 CI1c::noc\.rcou 11\.H5~ COl)\.
Lu su'vic@"$ dee a\.pDt$ de vul~aris\.t\.iCln soa1: 'p\.la\.-nt Die\. AirM te\. foia ten:t1ab 1\. P'r'ioliM du\. pro jilt\. ChiUr\.
ea1cu\.lb 3 part::\."! ~u pToift'am\. t\. i'atme\. ~~ tabl\l 1\. A'PHe :!1x &I'll- 00\. nt\.a \. c\.owp1:! 1\1Mt 1\. noiti-'l\.
eo-=- i\.I\. ~n\. \.a\. lti ten!,! c\.Q"!!j:Ite\. 1\. travawr d'aatratiea d £o":\.&@" '\.r\.:ntlt
etta ptlunu\.f\.,\.i\., bien\. qU'll ce \.ta~1\. \. \.
p\. c'un ell!MGt- dll ?t'01at~
Faeuun ti\. PT¢CIJcetoa &JI;rlcole\. dlf!'!'t'fIDti\.el\.J en '?U de :\. ~s\. 811 valaur :\.! tend et d l'_Ou!c eft \.au\. lea bel!loilU
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----- - ~-- --------~-----
ANNEXE 12
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HAUTE -¥OLTA
DEUXIEME PROJET DE FONDS DE DEVELOPPEMENT RURAL
Etude de Sensibilite
Couts Benefices Taux de Rentabilite 11 Taux de Rentabilite Y
---~~-~-,-- ~\.---\. -------_\.
100 100 15\.85 21\.05
100 90 13\.35 17\.95
100 SO 10\.75 14\.85
110 100 13\.55 lS\.25
110 90 11\.25 15\.35
110 so S\.75 12\.45
120 100 11\. 65 15\.85
120 90 9\.35 13\.15
uo SO 7\.05 10\.35
100 Ret\.ard d' '1m an 12\.65 16\.35
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- et benefices figurant au tableau 6 lie 1a !lr~-sente-anne;e\. ~--------------~---
Y Sensibilite et taux de rentabilite d'apres 1es couts et benefices figurant
au tableau 6 1l¥Jins les couts et les benefices des puits et des
forages (voir tableau 6, note 15)\.
REPUBUOUE DE HAUTE VOLTA
DEUXIEME PROJET FONDS DE DEVELOPPEMENT RURAL
ORGANIGRAMME MINISTERE DU DEVELOPPEMENT RURAL
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\. \.J | APPROVAL |
P040613 |  ICRR 13614
Report Number : ICRR13614
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 04/12/2012
PROJ ID : P040613 Appraisal Actual
Project Name : Nepal Health Sector US$M ):
Project Costs (US$M): 498\.28 823\.00
Program Project
Country : Nepal Loan/ US$M ):
Loan /Credit (US$M): 50\.00 100\.00
Sector Board : Cofinancing (US$M ):
US$M): 162\.67 237\.39
Sector (s): Health (86%)
Central government
administration (12%)
Compulsory health
finance (1%)
Sub-national
government
administration (1%)
Theme (s): Health system
performance (33% - P)
Population and
reproductive health
(17% - S)
Other communicable
diseases (17% - S)
Child health (17% - S)
Administrative and civil
service reform (16% -
S)
L/C Number : C3980; CH125;
CH368
Board Approval Date : 09/09/2004
Partners involved : DFID, AusAID Closing Date : 01/15/2010 07/15/2010
Evaluator : Panel Reviewer : Group Manager : Group :
Susan A\. Stout George T\. K\. Pitman IEG ICR Review 1 IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
Designed using the Sector Wide Approach (SWAp), the project supported the Nepal Health Sector Program
(NHSP)\. The NHSP sought to improve the health status of the Nepalese population by ensuring equal opportunity to
quality health care through an effective health system \. The main reform actions identified under the program were (a)
prioritized allocation of resources and efforts to ensure access to Essential Health Care Services (ECHS) especially
for the underserved;( b) decentralization of the management of health service delivery to local bodies, and c )
promoting private public partnerships (PPP) to increase service access and quality \. The project was designed to
support the program as a whole\.
According to the Project Appraisal Document (PAD, para 2, page 3), the project development objective was :
âto expand access to, and increase the use of, essential health service, especially to under -served populations\.â?
The Development Credit Agreement (page 15) has identical wording\. This review is based on the PAD's PDOs \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
The project drew from the structure of the NHSP, consolidating eight NHSP "output areas" into two major
components:
Strengthened Service Delivery (estimated total NHSP costs at appraisal US$ 434 million, actual US$ 659
million)\.
million This component sought to expand and /or strengthen 11 priority cost-effective essential health care
service by: (i) developing and implementing technical standards to improve service quality, (ii) providing
in-service training; (iii) ensuring drug availability, (iv) using behavior change communication to strengthen
demand for essential health care, promote health behaviors and promote client focused, gender -sensitive
attitudes among providers; (v) improving outreach services, and (vi) conducting Service Delivery Surveys \. The
component also sought to support advances in the decentralization of health posts and subhealth posts to local
authority management, increasing the autonomy of district /zonal hospitals, and promotion of Private Public
Partnerships (PPP) in delivering essential health services in selected districts \.
Institutional Capacity and Management Development (estimated total NHSP costs at appraisal US$ 63\. 63 \.9
million This component sought to strengthen (i) Sector Management including the
million, actual US$ 164 million)\.
distribution of labor among key actors in the sector, strengthening key management tasks of planning,
programming, budgeting and monitoring; sustainable financing that sought to provide greater transparency on
resource allocation in the sector through Public Expenditure Reviews (PER) and Medium Term Expenditure
Frameworks (MTEF); improve equity of health financing through need -based budget resource allocation formula,
review experiences and update policies on user fees, community insurance and community drug programs; (ii)
Drugs, supplies and equipment management through strengthened decentralized procurement of drugs and
medical supplies, strengthened Logistics Management Division of Department of Health, and strengthened
Health Care Waste Management Plan; (iii) Human Resource Development through review of staffing norms and
practices, skills gaps, deployment and training of staff to decentralized facilities and offices; and (iv) Monitoring
& Evaluation (M&E) through improvements in the collection, reporting, analysis of data and utilization of
information\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost :
The total project costs presented in the PAD and ICR refer to the total expenditure program in the NHSP \. The
Bankâs specific contribution by component is not available \. NHSP program costs almost doubled during the
implementation period\. According to the Borrowerâs contribution to the ICR (Borrower ICR, p 51) financing of
the NHSP was reviewed annually and adjusted as development partners bought into the program and scaling -up
occurred\. Factors contributing to increased costs included Government's decision to reduce financial barriers to
use of ECHS by the disadvantaged by making these free at sub -Health Post, Health Post and Primary Health
Care Centre levels, and the introduction of cash subsidies to mothers and health professionals for skilled birth
attendance and facility based deliveries \. These policies also led to adjustments in other relevant NHSP program
areas, including emphasis on human resources for maternal health, arranging for public finance of maternity
care provided by non-state actors and increased expenditures on arrangements for M&E \.
Financing :
The project pooled IDA, DFID and later AusAID funds with the Government budget financing of the NHSP, while
other External Development Partners (EDP) supported the national sector program under separate, parallel
efforts\. By January 2008, the IDA grant had disbursed US$ 33\.8 million and an additional US$10\.6 million had
been authorized for disbursement \. Noting solid improvement on four key performance indicators for the NHSP,
IDA approved additional financing US$ 50 million in April, 2008, with no change in the project development
objectives\. Additional financing focused on the same eight âoutput areas' in the NHSP as did the original design \.
Parallel co-financing totaling $188 million was provided by non-pooled foreign financiers including USAID,
Gloval Fund, KFW, GTZ, the UN Agencies, Global Alliance for Vaccines and Immunization and JICA \. These
resources focused primarily on technical support to the delivery of the ECHS package \.
Borrower Contribution :
Against the planned US$285\.61 million the Borrower contributed US$485\.61 million\.
Dates :
The project closing date was extended by six months at the time of Additional Financing was approved \.
3\. Relevance of Objectives & Design:
Objectives : Substantial \. The project's focus on support to the NHSP and the entire expenditure program for the
health sector was clearly directed at addressing Nepal's halting progress toward achieving the MDGs, which stems in
part from evident inequity in access and use of essential health services \. Its focus on improving access and
utilization among the disadvantaged was epidemiologically appropriate \. It was also relevant to the current CAS
period (2004-2007) which aims at improving access to basic services, including health, especially for the poor \.
Design : Substantial \. The design reflected and built on a comprehensive set of analytic and sector work as well as
lessons learned in two earlier investment projects in the sector \. It appropriately focused on an explicit package of
essential health services which were appropriate to health status conditions in Nepal, although, as noted in the ICR,
the package did not put sufficient emphasis on redressing the high level of malnutrition \. The project design was
relevant to the achievement of the overall project objectives through structuring support into two major components \.
The first, Strengthened Service Delivery, supported the delivery of the Government's Essential Health Care Services
(ECHS) package (including family planning, the extended program of immunization, community -based Integrated
Management of Childhood Illness (CB-IMCI), supplementation of vitamin A, the introduction of zinc supplementation
and oral rehydration supplements (ORS), improvement in the availability of iodized salt and antenatal and delivery
care)\. The second component, Institutional Capacity and Management Development, sought to strengthen sectoral
management through improvements in planning, programming, budgeting and monitoring \. Project activities were
aligned with the national health sector program \. Although no explicit results chain is expressed in the
documentation, the underlying results logic, improving the delivery of an appropriate mix of services through
improvements in sectoral management was sound \.
4\. Achievement of Objectives (Efficacy):
Expand access to, and increase the use of, essential health service, especially to under -served populations \.
Rating : Substantial
Outcome \. As noted in the ICR (para 1\.1) the 'project' refers to the bundle of IDA grants and credits that supported
the Nepal Health Sector Program,,,thus the close alignment of project development objectives and activities with the
NHSP makes it impossible to clearly distinguish the contributions of the project from those of the overall NHSP
program\. Nevertheless, it is evident that the program largely achieved its objectives as described by its key
performance indicators\. Specifically, key measures of increased service utilization (which can only increase if access
improves) showed substantial improvement and are likely to contribute to improving higher level MDG outcomes \.
However, as noted by the ICR (see p, 7-8), the PDO emphasized improved access and utilization by underserved
population groups, but initial monitoring arrangements did not disaggregate performance across income or ethnic
population strata, thus baselines are not available by quintile groups \.
Contraceptive prevalence (all methods) increased from 35% at the baseline (2001) to 51\.7% (40\.6 % for the
lowest quintile) at project closing, above the target of 47%\.
Skilled attendance at birth increased from 8% (2% for the lowest quintile) to 35% (8\.5% for the lowest quintile)
The percentage of children immunized against measles /DPT3 increased from about 68 -75% (for the lowest
quintile (as of 2006) to 85 (83% for the lowest quintile) at closing\.
The proportion of men/women correctly identifying method of preventing HIV infection improved from 51% to
88% in 2009\.
Between 2001 and 2009 the maternal mortality ratio declined from 415 to 220 deaths per 100,000 live
births\.Under-five mortality fell from 91 to 50 per 1000 births while the infant mortality rate fell from 64 to 41 per
1000 live births and the total fertility rate fell from 4\.1 to 2\.9\.
(Outcome data were sourced from 2001, 2006 Demographic and Health Survey; 2008 Family Planning Project
Midterm Review Survey; and the 2010 Family Planning, Maternal, Newborn and Child Health Situation in Rural Nepal
Survey, USAID See ICR Table 1, p\. 14)
Outputs The following outputs of the NHSP are organized according to the two main components for the project \.
I\. Strengthened Service Delivery aimed at improving access and use of health services \.
( NHSP output area 1)\. The program supported key components for the Essential
Essential Health Care Services \. (NHSP
Health Care Service package (EHCS) including family planning, extended program of immunization,
community-based integrated management of childhood illness (CB-IMCI), vitamin A supplementation, the
introduction of zinc supplementation and oral rehydration and improvement in the availability of iodized salt (now
used by 90% of households) and antenatal and delivery care \. As mentioned above, changes in key performance
indicators provide evidence that access and utilization of services did increase through the NHSP period \.
Decentralization \. (NHSP output area 2)\. The expected outputs were decentralization of management of sub -health
posts to Community Health Facility Committees and increases in hospital autonomy \. The expected target for
decentralization of sub-health posts was 3, 129 by the end of the program, in the end, 1, 433 were transferred (an
increase of about 300 from baseline), an indicator of improved access \. Key constraints to decentralization included
the absence of local authority, a rapidly changing political context, and resistance from professional health staff \. In
view of limited progress, this output was dropped from the NHSP at the Mid -Term Review (MTR)\. A total of 29
hospitals were granted autonomy compared to the original target of 10\. By the end of the project, the districts' share
of Government health budget increased from 13% to 34%\.
Private Public Partnerships (NHSP Output 3)\. The NHSP recognizes the important role of private and NGO sectors
in service delivery, and sought to improve partnerships between these actors in specific areas \. Specifically, the
NHSP monitoring contracting out public hospital management to the private sector for five hospitals \. Steps were
taken to make abortion services legally available in both public and licensed private facilities (the latter now provide
85% of these services), contracting with the private sector to provide logistical services for drug distribution, the
provision of family planning services and collaborate with private medical schools for free training of
Government-appointed staff\.
III\.
III \. Institutional Capacity and Management Development
Sector Management (NHSP Output 4)\. The original design envisioned moving towards unified sector -wide planning,
programming, budgeting financing and performance management to support service delivery supported by external
development partners (EDPs), NGOs and the private sector\. The plan also envisioned restructuring the MOH as
necessary to be supportive of this vision \. Progress was made in the establishment of a Decentralization Forum to
guide policy making and decentralization activities, but less progress was made in streamlining and restructuring the
MOH\. Except for good progress in decentralizing budgets, progress in actual institutional strengthening of
management of health services was limited \. The organization of external support to the sector into programmatic
form through the development of this program significantly improved donor coordination and alignment, particularly
around review of Joint Annual Reviews, a major step forward in improving sector management \.
Health Financing and Resource Allocation (NHSP Output 5)\. Significant policy decisions were reached during
project implementation, including the abolishment of user fees for the essential health care package \. Health
expenditure as a proportion of Government budget increased from 5\.9% to 6\.2% between 2004/5 and 2009/10 and
government expenditure increased from 0\.8 to 1\.7% of GDP\. Absorptive capacity, as indicated by the improvements
in the pace of execution of the health budget, increased from 69% in 2004/5 to 85% in 2008/9, and financial
management reviews led to significant simplification of budget categories and improved flexibility \. The program also
achieved increases in capital spending in health (actual 26% from a baseline of 13% against the target of 30% and
maintaining non-salary operation expenditure at or higher than 39% of total)\. Only limited progress was made toward
more equitable resource allocation which is still facility based and favors Kathmandu valley, and with central region
residents receiving more than double those in the far west,
Physical assets,logistics and procurement management (Output 6)\. Under joint financing arrangements, public
procurement for the health sector was conducted according to the Government's Procurement Law (version of 2007)
except for procurement above the ICB threshold when World Bank rules applied \. Some problems with procurement
were observed during implementation, in particular related to decentralized procurement of drugs and supplies, as
well as national level procurement of equipment and civil works \. While it took time to address the underlying
constraints causing these problems (late budget approvals, low capacity in implementation agencies and delayed
submissions of cost estimates and technical specifications ), there were improvements in the quality and efficiency of
procurement efforts, particularly for goods, during implementation \. Procurement of works, which was conducted by
the Ministry of Planning and Construction continued to experience problems \. Logistics for supplying drugs to service
providers remained a challenge during implementation, although initiatives to overcome constraints were also
undertake\. The output indicator of 100% of 'public health care facilities not experiencing stockouts' was not met,
currently about 75% of facilities are still experiencing some form of stockout (data on the baseline percent of
stockouts is not presented ), likely because of the surge in demand caused by he introduction of free health care
which made 40 essential drugs free at the point of service delivery \.
Human Resource Policy and Management (Output 7)\. The program sought to address imbalances in the size,
distribution and expected workload of the health workforce through supporting upgrades in human resource
management, personnel administration and workforce management information systems \. During program
implementation Government sought took several steps forward including the compulsory 2 year service for new
medical and dental graduates, provision of an 18 month training course for about 1,000 additional maternal and child
health workers, and rules were adjusted to enable local authorities to contract additional staff to fill vacancies \.
Nevertheless, the ICR concludes that further work is required to build on the positive experiences with local level
contracting and to address continuing gaps in the health workforce management information system \.
Integrated Management Information Systems (Output 8)\. The Nepal Health Management Information System
(HMIS), which is facility-based, provides reasonably accurate information on the EHS package and the reliability of
reporting has been validated using DHS survey data \. HMIS data were supplemented by a range of household and
facility surveys conducted by EDPs in the context of the overall NHSP \. During implementation, government started 3
district pilot projects that disaggregate health service data by age, gender, caste, ethnicity and religious minorities \.
However, budget constraints prevented scaling -up these efforts to additional districts \.
5\. Efficiency (not applicable to DPLs):
The ICR presents evidence, drawn from analytic work done of the co -financiers, which suggests that public
spending in health in Nepal saves one Disability Adjusted Life Year (DALY) at a cost of US$144, significantly
lower than the WHO benchmark for cost effective interventions (cost per DALY of less than per capita income --
currently about US$400 in Nepal)\.
The NHSP contributed to improved efficiency and cost effectiveness in the sector through i ) increasing
allocations of government budget to the health sector from 5\.6% to 7%, ii) improving allocative efficiency by
increasing at the allocation of expenditures to essential health care services (ECHS) from 56% to 74%, and iii)
improving elements of administrative capacity which reduced underspending of annual health sector budget
from 20% to 15%\.
However, there was limited progress in improving cost -sharing in the health sector once Government announced
its commitment to the provision of free health care and the abolished user fees for essential health services \. As
noted in the ICR, there is scope for further sector efficiency improvements in public procurement as well as for
further improvement in the equity of resource distribution \.
The Borrower's ICR draws particular attention to the value of improved donor harmonization and alignment (ICR
para 54)\. However, neither the ICR or the Borrowers comments on the draft ICR quantify changes in transaction
cost, although it notes that a report from the district health level reported that the SWAp arrangement promoted
management of development partner transactions at the central level thus enabling a focus on service delivery
at the local level (ICR para 15)\.
Efficiency is rated as substantial \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re -estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Relevance of objectives and relevance of design was substantial \. Efficacy is rated substantial \. The project
achieved its objectives to expand access to, and increase the use of, essential health service s but the absence of
disaggregated data outcomes by income or ethnic group provide only partial evidence of efficacy in reaching
underserved populations\. Efficiency, the result of the SWAp approach, is rated substantial \.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The major risk to the project's development outcomes concerns financial sustainability, which is threatened by the
shift to free health care\. This risk is manageable in the short and medium -term due to commitments for a follow up
IDA operation and commitments from other EDPs through 2015\. Mitigating longer-term financial sustainability risk
will require further reform of health financing, improvements in the quality, deployment and retention of the health
workforce in remote areas as well as addressing problems in public procurement and drug distribution and logistics \.
Further, as noted in the ICR, there is a continuing need for strengthening fiduciary systems, including the weak
control environment, weak fiduciary control beyond the district level, inadequate follow -up to audit observations and
recommendations and weak asset management \. Although there are plans for continuing support to these systems in
the context of NHSP2, these issues remain a risk to the long run sustainability of the improvements in access and
use accomplished through this project \. Decentralization was expected to increase the role of local communities in
oversight of health services, but the decentralization process stalled due to the lack of locally elected authorities \.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
at -Entry :\. The design's institutional arrangements, which focused on the use of existing MOH
Quality -at-
structures to manage the program and project resources was consistent with the CAS's focus on building
institutional capacity to plan, implement and monitor the results of health expenditures and programs \. The design
facilitated improvement in coordination and alignment of resources in the sector, providing a platform (Health
Sector Development Partner Forum) and mechanism (Joint Annual Reviews) to promote coordinated sector
planning and review by government and the multiple donors working in Nepal's health sector \. The use of a
SWAp arrangement for the project provided flexibility to adjust to institutional and policy reforms and for helping
to maintain commitment and ensure resources for essential health services \. It also provided a platform for IDA to
focus its supervision effort on strengthening government's management and fiduciary oversight mechanisms
within the health sector\.
Significant economic and sector work on fiduciary as well as technical issues contributed to the overall design of
the project\. QERs were conducted for both the original design and additional financing plans for the project \.
Effective dialogue with government and EDPs is reflected in the development of effective systems for Joint
Annual Reviews (JARs), of sectoral performance by EDPs and government \. Fiduciary assessment and
arrangements for project implementation were clearly established in advance of implementation \. However, as
noted by the ICR (p17), preparation could have benefited from a more robust analysis of political economy risks,
particularly prospects for decentralization to the district level \. In addition, as discussed further below, the design
of monitoring and evaluation arrangements for the project gave inadequate attention to the need for
disaggregated data to assess progress toward achieving the equity objectives of the project, and some of the
indicators proposed for use in assessing project performance did not have adequate baseline data \.
Supervision : Supervision quality benefited from team continuity (two TTLs over the life of the project with a
six-month handover period in between )\. Placement of the TTL in the field, which occurred during implementation,
enhanced participation of the Bank in Joint Annual Reviews (JARs) and continuous dialogue with EDPs \.
Following a focus on input issues in the first years of implementation, JARs focused increasingly on outcomes
and results in the second half of implementation \. Task teams made effective use of the flexibility in the SWAp
approach to make adjustments in design and implementation arrangements, such as improvements to promote
the use of monitoring information through the implementation process \. Fiduciary challenges were met in a timely
way and financial management performance of the project improved through time, supported by Bank oversight
and the development and implementation of a Financial Management Improvement Action Plan (FMIAP)
Progress toward goals set out in the FMIAP were monitored by IDA as well as in the context of JARs \. Technical
supervision of ECHS was shared among EDPs, and facilitated by the presence, financed by DFID, of a technical
assistance group located within the Ministry of Health which produced some 48 studies and analyses of program
implementation\. IDA supervision teams also supervised procurement arrangements for the NHSP, working with
the Logistics management division of the Department of Health and with local district health offices and district
development committees\. Lessons learned from the supervision of both financial and procurement management
are being incorporated into the design of a second sector support operation \. However, as noted by the ICR,
safeguard compliance was consistently rated moderately satisfactory in supervision reporting, despite inadequate
progress in implementation Health Care Waste Management (HCWM) Action Plan that grew out of an
Environmental Impact Assessment prepared for the project \.
at -Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
Government : The Government provided the enabling environment for the project and supported the
development of a sector-wide-approach to managing the flow of external assistance to the health sector \. It
successfully met the commitments it made in the context of this approach, including increasing the share of
health in the the national budget to 6\.4%, just short of the original target of 7%, shifting the proportion of health
expenditure allocated to essential health care services (from 5\.87 % to 6\.24%), improved budget execution as
evidence by reduced underspending and increasing the proportion of health spending allocated to non -salary
operational budget\. On the other hand, the Government made less progress in moving toward decentralized
management of the sector, beyond the development of decentralized budgets, at least in part due to political
volatility at that level\.
Implementing Agency : The Ministry of Health experienced some challenge in managing fiduciary aspects of the
project, and there was significant turnover among staff overseeing the project as well as understaffing in the unit
within the MOH managing the project\. Implementation Progress Reports (IPRs) and Financial Monitoring Reports
were delayed in the first years of the project, and audit reports during the first half of implementation included
qualified opinions\. Implementation of this effort to strengthen financial management did not begin until after the
midterm review and several systemic issues remain to be addressed \.
a\. Government Performance :Satisfactory
b\. Implementing Agency Performance :Moderately Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
Design \. The original monitoring and evaluation framework was complex and relied too heavily on DHS
(Demographic and Health Survey) data which meant that some baseline indicators were based on 2001 data,
and some national level indicators were not available at the time of ICR preparation \. The key indicators to
measure improved access comprised : (i) contraceptive prevalence rate; (ii) proportion of normal deliveries
conducted with skilled attendance; (iii) proportion of children immunized against measles, diphtheria pertussis
and tetanus (DPT3); (iv) proportion of women and men who can correctly identify one method of preventing HIV
infection\. Aligning the intermediate results indicators with the eight outputs structuring the overall NHSP
facilitated joint review of progress by Government and EDPs \. However, the results framework and monitoring
arrangements did not help clarify the 'boundaries' of the Bank's specific contributions to the overall reform
program (through, for instance, setting out specific measures of progress toward improving sectoral governance
and fiduciary management)\. Although data available at preparation indicated that Nepal âs Health Management
Information System (HMIS) was remarkably robust (estimates of coverage from HMIS were corroborated by the
DHS), the original M&E design did not specify an approach to assessing progress in reaching underserved
populations through disaggregation of results indicators \. This problem was addressed at the MTR, at which time
a number of special studies were put in place to analyze and track progress in improving health outcomes for
marginalized groups, and additional targets for tracking results by income quintile were put in place \.
Implementation \. The project relied on two main data sources for tracking progress -- the HMIS and special
purpose studies and surveys, which were supported through DFID sponsored TA located within the Ministry of
Health\. In addition, a Health Facility Survey and the Nepal Family Health Program MTR survey financed by
USAID (one of the core EDPs) also contributed to the implementation of monitoring \.
Utililization \. Reports from the monitoring and evaluation system were used extensively in the preparation and
review of JARs, but as reported in the Borrower's ICR (see p 46) there is substantial scope for further
improvement in the availability and use of monitoring at the local level, and issues concerning how to improve
linkage between disaggregated data and the shift toward decentralized decision -making remain to be
addressed\.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Safeguards \. The project was assessed as cateogry B Under OD 4\.01 Environmental Assessment\. Social
inclusion concerns featured prominently in the national health sector strategy \. In this context, the MOHP
prepared and 'vulnerable community development plan' which drew on the recommendation of a Social
Assessment and Stakeholder Participation Framework prepared in advance of implementation \.
An Environmental Impact Assessment was conducted during preparation which led to the preparation of a
Strategy Framework and Action Plan for improved Health Care Waste Management \. Some progress was made
toward achievement of specific activities in the plan, but systemic progress on the implementation of the overall
plan was limited, due in part to the lack of an institutional home and gaps in adequate staffing for this issue in the
MOHP\. However, supervision reports consistently rated Safeguards Compliance as moderately satisfactory,
which the ICR opines is more a reflection of insufficient attention to compliance by the Bank team than an
indicator of actual progress (see p 13)\.
Fiduciary The fiduciary environment for the project was recognized as high risk at appraisal, and both IDA and
DFID conducted further detailed health sector fiduciary assessments (covering both procurement and financial
management) during implementation to monitor progress in closing gaps \. Key issues include absence of an
adequate internal control system within MOHP, perception of a high level of corruption risk and lack of
enforcement of the broadly adequate regulatory framework \. Although IDA and DFID, the core co -financiers,
coordinated the development of a financial improvement action plan to guide improvements in the underlying
systems, progress in implementing the action plan was slow and the ICR identifies a need for further
strengthening in future operations \. Gradual improvements in the quality of centralized goods and
pharmaceuticals procured was observed, but as in the case for financial management, substantial further
improvements are still required\. IDA has taken necessary steps in sending follow -up letters asking for the MOHP
plan for improvements\. A sector-specific Governance and Accountability Action Plan was developed in the last
year of the project, and will receive high priority during implementation of NHSP 2\. At the time the ICR was
prepared the finalization of FY2008/09 NHSP audit remained an issue\. Although the audit report was submitted,
it was not acceptable as a large proportion of the health sector expenditures had not yet been audited \. Further,
there are a number of system and control issues raised by the Auditors \.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Satisfactory Moderately Substantial delays in implementation of
Satisfactory improvements in financial management
and procurement systems ,
Quality of ICR : Satisfactory
NOTES
NOTES:
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
The ICR provides several useful lessons, as follows :
Ambitious expectations for policy and institutional reforms in uncertain political and security environments
need to be realistic; in this case, the original ambitions for decentralized management of the health sector
were not realistic given political and social turbulence at the local level in Nepal \.
Projects, and by implication, sector reform programs with a focus on improving access for the poor and
underserved must anticipate the need for disaggregated data to enable specific tracking of progress \. Basic
routine administrative reporting systems are not likely to be adequate for this task, suggesting that
arrangements for mainstreaming survey or other mechanisms to enable local level measurement should be
considered as an element of sector reform \.
Improving access to essential health care requires comprehensive and consistent work to address systemic
constraints\. These include overall sector finance, more robust human resource management systems and
strengthening underlying procurement, logistics and distribution systems \.
The EHSP implemented through NHSP did not adequately address malnutrition \. Nepal had one of the highest
rates of stunting among children under five at the time of project appraisal, but the issue was not effectively
addressed in defining development objectives for the NHSP and the project \.
The placement of the TTL in the field for sector wide operations can facilitate project implementation by
facilitating collaboration and coordination with government as well as EDPs \.
Improving key elements of sectoral governance, including procurement and financial management, requires a
continuous long term approach, likely better integrated with review and advice on broader budget
management and execution issues \. The introducing of the Governance and Accountability Action Plan as
part of the additional financing was helpful in recognizing links between sectoral specific problems and the
need to strengthen country systems \.
14\. Assessment Recommended? Yes No
Why? The project appears to have been a successful application of the SWAp approach in a conflict setting and
may be of interest to the IEG's upcoming evaluation of health systems performance \.
15\. Comments on Quality of ICR:
The ICR provides a clear and complete assessment of progress toward accomplishment of the NHSP and the
project, although it would have been useful to have a more detailed analysis of the contributions of the 'project' itself
to the overall program\. The ICR would have also benefited from a more robust discussion of the challenges of
meeting the decentralization goals originally set out in the sector plan \. The ICR will, nevertheless, be of interest to
other teams working with SWAp like arrangements to promote health sector reform, particularly in fragile or conflict
settings\.
a\.Quality of ICR Rating : Satisfactory | APPROVAL |
P006782 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 14663
PROJECT COMPLETION REPORT
COLOMBIA
RIO GRANDE MULTIPURPOSE PROJECT
(LOAN 2449-CO)
JUNE 26, 1995
Infrastructure Operations Division
Country Department III
Latin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Unit Colombian Peso (Col$)
US$1\.00 Col$ 101\.3 (1984 average)
US$1\.00 Col$ 502\.2 (1990 average)
US$1\.00 Col$ 863\.7 (1993 average)
WEIGHTS AND MEASURES
meter (m) 3\.28 feet
kilometer (km) 0\.62 miles
square kilometer (sqkm) 0\.39 square miles
cubic meter (cum) 35\.3 cubic feet
cubic meter per second (cumecs) = 35\.3 cubic feet per second
kilovolt (kV) 1,000 volts (V)
kilowatt (kWh) = 1,000 watts (W)
Megawatt (MW) 1,000 kilowatts
kilowatt-hour 1,000 watt-hours (Wh)
Gigawatt-hour (GWh) 1,000,000 kilowatt-hour
Megavolt-ampere (MVA) 1,000 volt-ampere (VA)
GLOSSARY OF ABBREVIATIONS AND ACRONYMS
EPM = Empresas Públicas de MedellÃn
ISA = Interconexión Eléctrica S\.A\.
EEEB = Empresa de EnergÃa Eléctrica de Bogotá
CORELCA = Corporación Eléctrica de la Costa Atlántica
CONPES = Consejo Nacional de PolÃtica Económica y Social
CRE Comisión de Regulación Energética
DNP Departamento Nacional de Planeación
IADB = Inter-American Development Bank
CVC = Corporación Autónoma Regional del Valle del RÃo
Cauca
ICEL = Instituto Colombiano de EnergÃa Eléctrica
MME = Ministry of Mines and Energy
MOF = Ministry of Finances
JNT = Junta Nacional de Tarifas
INCOMEX Instituto de Comercio Exterior
FONADE Fondo Nacional de Proyectos de Desarrollo
FEN = Financiera Energética Nacional
FISCAL YEAR
January 1 to December 31
FOR OFFICIAL USE ONLY
THE WORLD BANK
Washington, D\.C\. 20433
U\.S\.A\.
Office of Director-General
Operations Evaluation
June 26, 1995
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on the Colombia
Rio Grande Multipurpose Project (Loan 2449-CO)
Attached is the Project Completion Report (PCR) on the Colombia: Rio Grande
Multipurpose project (Loan 2449-CO, approved in FY84) prepared by the Latin America
and the Caribbean Regional Office, with Part II provided by the Borrower\.
Empresas Piblicas de Medellin (EPM), the municipally-owned autonomous utility
providing electricity, telephone, water supply, and sewerage services to the Medellin
Metropolitan area, was the Borrower\. The project aimed at increasing EPM's power and
water supply capability by implementing combined facilities, adding 325 MW to the
electrical system and 4\.5 m' per second to the available raw water flow for water supply\.
Despite adverse political and economic circumstances, EPM's performance was
satisfactory as it completed the project under budget\. The four-year delay with respect to
the appraisal timetable was essentially due to a dispute with Government over the import
licenses for the powerhouse equipment\. The tariffs conceded to EPM led to returns which
(especially in the water supply department) repeatedly fell short of covenanted levels\.
However, in most recent years the situation improved\.
Project outcome is rated as satisfactory and the sustainability of project benefits as
likely\. The operation addressed institutional development only marginally, objectives were
achieved but the impact was modest\. The PCR is satisfactory\.
No audit is planned\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.

FOR OFFICIAL USE ONLY
COLOMBIA
RIO GRANDE MULTIPURPOSE PROJECT
(LOAN 2449-CO)
PROJECT COMPLETION REPORT
TABLE OF CONTENTS
Page No\.
PREFACE \. i
EVALUATION SUMMARY \. \. n
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE \.1
A \. P ro je c t Id e n tity \. 1
B \. B a c k g ro u n d \. 1
C \. Identification, Preparation and Appraisal\. 8
D \. P roject Im plem entation \. \. \. 13
E \. P ro je c t R e su lts \. 16
F \. P roject Su stainability \. \. 16
G \. B ank 's P erfo rm ance \. \. 16
H \. B orrow er's P erform ance\. 17
I\. P erform ance of C onsultants\. 18
J\. Perform ance of Contractor and Suppliers \. 19
K \. P roject R elationship \. \. \. 19
L \. Project D ocum entation and D ata \. 19
M \. Conclusions and Lessons Learned\. 19
PART H: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE\.21
A\. Project Objectives \. 21
B\. Project Implementation \. 21
C\. Implementation Program \. 22
D\. Financial Analysis\. 22
E\. Financial Performance \. 23
F\. Empresa de Energia (energy service) tariff adjustments \. 24
G\. Analysis of the Internal Financial Rate of Return for the Rio Grande
Multipurpose Project II\. 26
H\. Project Impact and Sustainability\. \. 27
I\. Bank Performance \. \. 27
J\. EPM'S Performance \. \. 28
K\. Institutional Aspects\. 28
L \. L esso n s L earn ed \. \. 2 9
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
PART III: RELATED STATISTICAL INFORMATION \.31
1\. Related Bank Loans\.3\. \.31
2 \. P roje ct T im etable \. \. 3 1
3\. Loan Disbursements \. \. 32
4\. Allocation of Loan Proceeds (in US$) \. 33
5\. P roject Im p lem entatio n \. 34
6\. P roject C osts and F inancing \. \.35
7 \. P roje ct R e su lts \. \. \. 3 5
8\. U se of B ank R esources\. \. 36
9\. Status of Legal Covenants \. \. 37
COLOMBIA
RIO GRANDE MULTIPURPOSE PROJECT
(LOAN 2449-CO)
PROJECT COMPLETION REPORT
PREFACE
This is the Project Completion Report (PCR) for the Rio Grande Multipurpose - Water
Supply and Hydroelectricity - Project in Colombia\. The water supply component and its associated 21
MW Niquia Power Station were commissioned in 1993\. The main 303 MW Tasajera Hydropower
Plant was commissioned in May 1994\. Since its commissioning the Project has operated normally\.
The Project was partially financed with Loan 2449-CO for US$ 164\.5 million
(approved June 21, 1984)\. The Borrower is the Empresas Publicas de Medellin (EPM) a municipal
corporation of the city of Medellin\. The closing date of the loan is June 30, 1994, about two and a half
years later than originally foreseen US$ 7,70 million of the loan proceeds were canceled as a result of
project cost savings\. The balance of the loan proceeds have been disbursed\. The last disbursement
was on June 30, 1994\.
The draft of this report was discussed with the Borrower and its comments are set
forth in Part 1I of the PCR\.
The Infrastructure Operations Division, Country Department III, prepared Parts I and
III of the PCR based, among other sources, on the Issues/Decisions Paper, the Staff Appraisal Report,
the Loan and Guarantee Agreements, records of the World Bank and the Borrower, and interviews
with Borrower's staff in Medellin and at the project site\.

- 11 -
COLOMBIA
RIO GRANDE MULTIPURPOSE PROJECT
(LOAN 2449-CO)
PROJECT COMPLETION REPORT
EVALUATION SUMMARY
Objectives
i\. The loan for the Rio Grande Multipurpose Project was the seventh loan to EPM, the
thirteenth loan since 1970 to Colombia's Power Sector and the ninth to its Water and Sewerage Sector\.
It helped finance a project consisting of (i) a 4\.5 cubic meters per second raw water supply scheme for
the City of Medellin; and (ii) a 324 MW hydroelectric power development scheme, on the Rio Grande
a tributary of the Porce River in Colombia's Antioquia Province\.
Implementation Experience
ii\. The Project was estimated at appraisal to cost the equivalent of US$418\.1 million,
including financial charges during construction\. Final cost of the Project -- US$394\.9 million -- was
about 6 percent below project cost estimated in the SAR\. World Bank financing for the Project
amounted to US$164\.5 million, the proceeds of which were fully disbursed, except for US$7\.7 million
of savings which were canceled\. EPM contribution from its own resources was US$157\.7 million or
40 percent of the capital outlay in the Project\. The balance was financed through suppliers' credits,
EXIMBANK of Japan, and FEN\.
iii\. Albeit with almost four years delay, caused mainly by difficulties in obtaining import
licenses for the main powerhouse equipment and the lengthy and cumbersome contract processing
procedure to which EPM is subjected by Colombia's and Antioquia's contract legislation, the Rio
Grande Project was successfully commissioned in October 1993 for the water supply scheme and in
May 1994 for it power component\. The delay in issuing the import licenses resulted in not having Rio
Grande electric energy production available during the stiff electric power rationing that affected
Colombia in 1992 and 1993\. During that power curtailment period, Rio Grande could have supplied
about 23 percent of the electric energy shortage\. This caused a negative impact to the National
Economy of Colombia estimated at not less than US$700 million\.
Project Results
iv\. In spite of the import licenses dispute, the Project successfully achieved the objectives
established at project appraisal\. The recomputed rate of return -- 9 % -- although lower than the 18%
- Ill -
calculated at project appraisal, is still close to the opportunity cost of capital in Colombia, estimated at
10-12% per annum\.
v\. EPM's performance during project implementation has been satisfactory, both
financially and operationally\. In fact EPM stands probably as the best managed electric power utility in
Colombia's Power Sector\. As in some of the other previous EPM's project financed by the Bank, the
Rio Grande Project has had a good project management and institutional impact, reinforcing the
organization and financial soundness of the water and power services provided by EPM, and enhancing
the technical, administrative and managerial skills of its personnel\.
Sustainability
vi\. The main results of the Project -- that is the physical facilities implemented and the
institutional strengthening of EPM -- have provided, and will continue to provide, tangible direct
benefits to EPM and its customers, and also to Colombia at large\. However, it should be pointed out
that the sustainability of these benefits depends greatly on maintaining an adequate level of tariffs in
order to avoid inefficient use of water and electricity\. Another factor of uncertainty is the structural
and financial crisis affecting the Colombian Power Sector, although the Government is moving in the
right direction by proposing new legislation for a comprehensive reform of the Sector, it should be
recognized that approval of the required legislation and implementation of the proposed changes will
take time\.
Lessons Learned
vii\. The following lessons stem from implementation of the Rio Grande Project:
(a) Before agreeing in funding a project as complex as Rio Grande, the Bank
should satisfy itself that the project has been adequately prepared\. Particularly,
it should insist that the project design should be reviewed by a panel of
independent specialists in the main technical disciplines involved as was done
for Rio Grande\.
(b) The Bank should insist as a condition of loan negotiations on a specific
guarantee that import licenses would not be required for all imports required by
the project under consideration, or that, as a condition of loan effectiveness, a
blanket import license be issued covering all such imports\.
(c) The Bank should always require that a Project Management Unit (PMU),
properly staffed, be set up to manage a project like Rio Grande, so as to ensure
its success\. A case in point is the action taken by EPM to organize
opportunely the Rio Grande's PMU, to which is owed largely the success of
this Project\.
- iv -
(d) Last but not least, it is important to emphasize that a complex project will in
general face considerable problems during implementation; even in cases where
the implementing agency is a very efficient institution\.

COLOMBIA
RIO GRANDE MULTIPURPOSE PROJECT
(LOAN 2449-CO)
PROJECT COMPLETION REPORT
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE
A\. Project Identity
Project Name Rio Grande Multipurpose Project
Loan Number 2449-CO
RVP Unit Latin America and the Caribbean Region, Country
Department III
Country Colombia
Sectors Electric Power & Water Supply
Loan Amount US$164\.5 million
Amount Disbursed US$156\.8 million
Amount Canceled US$7\.7 million
Year of Approval Fiscal Year 1984
Borrower Empresas Piblicas de Medellin
B\. Background
1\. Bank Lending to the Sector Since 1970, the Bank has supported the development of
Colombia's power sector with 13 loans for over US$1\.9 billion', and that of the water supply
and sewerage sector with 9 loans for over US$500 million\. The thirteenth Bank loan to the
power sector since 1970 (and ninth to the water supply and sewerage sector), Loan 2449-CO
1 The Inter-American Development Bank (IADB), the other multilateral source of foreign financing for the
power sector, contributed another similar amount in 22 loans\.
-2-
(June 21, 1984; US$164\.5 million) to Empresas Piblicas de Medellin (EPM), helped finance
the Rio Grande Multipurpose Project - electric power and water supply -, which is the subject
of this Project Completion Report \.
2\. Electric Power Sector Organization and Recent Developments Formulation of the
national policy for power generation, transmission and distribution has been the responsibility
of the Ministry of Mines and Energy (MME)\. Regarding investment priorities, it has shared
responsibilities with the National Planning Department (Departamento Nacional de Planeaci6n
- DNP), the Ministry of Finance (MOF) and Interconexi6n E16ctrica S\.A\. (ISA), a generating
and transmission utility, which owns and operates the National Interconnected Transmission
System, and of which the shareholders are the main Government-owned electric power
utilities3 and the two largest municipal utilities\.4 ISA is in charge of defining the generation and
bulk transmission program; although lately this has taken the form of an indicative program
rather than a committed program\. After approval by the National Economic and Social Policy
Council (CONPES), this indicative program becomes the tentative National Power Expansion
Program\. Formerly ISA's task was skewed by the tendency of its shareholders to introduce
their project's preferences at an early stage in the planning process\. This caused some
difficulties in the proper assessment of the cost to the economy of the shareholders' preferences
and in the transparent choice of the most advantageous solution\. However, currently ISA has
largely been freed from these influences and the planning process appears to be generally
adequately balanced\.
3\. Late in 1990 the oceanic phenomena known as "El Niflo" appeared in the Pacific
Ocean\. The appearance of this phenomena generally gives way to major climatic disturbances
along the West Coast of South America and heralds periods of drought in Colombia\. The
unusual intensity of this phenomenon, coupled with the non-optimal use of the water stored in
the hydro power plants' reservoirs' and thermal plants availability problems caused by
inadequate maintenance, became critical towards the end of 1991\. Early in 1992, when the
2 Up to 1984 the Bank had made 6 loans, totaling US$345 million, to EPM for electric power generation (250-
CO in 1959, 282-CO in 1961, 369-CO in 1964, 874-CO in 1973, 1868-CO in 1980 and 1953-CO in 1981)\. In
1984 the Bank made another loan to EPM for US$164\.5 million for the Rio Grande Multipurpose Project\. In
addition, in 1980, it made a loan (Loan 1825-CO; US$ 44 million) to EPM for its telecommunication expansion
and improvement program\.
Instituto Colombiano de Energia El6ctrica (ICEL), Corporaci6n Aut6noma Regional del Valle del Cauca
(CVC), and Corporaci6n Elctrica de la Costa AtlAntica (CORELCA)\.
Empresa de Energia Eldctrica de BogotA (EEEB) and Empresas Nblicas de Medellin (EPM)\.
The cost of power rationing used in running the interconnected system's power operation dispatch program
was taken at only Col$28 per kWh (about US$0\.05/kWh) of unserved energy\. Later on, when it became
apparent that the power system was on its way to very serious problems, it was raised to Col$300 per kWh
(US$0\.50/kWh), a tenfold increase\.
-3-
water stored at the power plants' reservoir hit a low of 17% of their composite capacity, it
became apparent the power rationing was required\. Faced with a potential total
failure of the power system the Government imposed in early March 1992 drastic power
rationing of up to eight hours per day\. The power rationing was to last 13 months until May
1993\. Contributory to the power system failings was some optimistic overestimation of the
Colombian power system actual generating capability\.6
4\. By 1992 the Colombian power sector had reached a critical stage with serious
operational, financial and managerial problems\. The extensive power rationing early in the year
provided the juncture the Government needed to push forward measures aiming at
restructuring the power sector\. Besides introducing to Congress a law7 setting forth this
restructuring, meanwhile, (failing Congressional approval by June 30, 1994, the Government is
empowered under the Constitution to issue the law by decree) the Government proceeded to
enact measurese that in fact started the restructuring process, including private sector
participation in electricity generation, transmission and distribution\. Paradoxically, the dismal
financial situation of most of the power sector enterprises gave the Government the
opportunity to acquire full control of these organizations by swapping shares for debt\. This
opened the way for the privatization of facilities nowadays fully controlled by the Government\.
5\. In essence, the restructuring policy would separate in the power sector the functions of
generation, transmission and distribution\. Concerning generation, the aim is to de-concentrate
ownership and operation of power plants in order to introduce an element of competition\. This
implies mainly private ownership of generating facilities\. Steps are being taken in this direction
by the sale of the 510 MW Betania Hydroelectric Power Plant and the Cartagena Thermal
Power Station, as well as the introduction of BOOM (Build, Own, Operate and Maintain)
schemes at Barranquilla (150 MW Gas-fired Combined Cycle Power Station) at Paipa (150
MW Coal-fired Fourth Steam Power Unit) and at Cali (150 MW Gas-fired Combined Cycle
Power Station)\. In addition, project preparation is underway for two BOOM schemes; a 300
MW coal-fired steam power station in northern Colombia and a 150 MW gas-fired combined
cycle power station in central Colombia\.
6\. Concerning transmission, it is foreseen that ISA would own and operate the 230 kV
and 500 kV trunk transmission lines and main substations and, that it would shed itself of its
generating facilities, which would be privatized\. All generating enterprises would have access
to the transmission network by paying a wheeling charge\. Load dispatch would be undertaken
6 It is interesting to note that this position of the Colombian authorities -- of surplus capability in Colombia's
power system -- was shared by the Bank See on this subject the Report No\. 8893 from the Operation Evaluation
Department "Colombia -- The Power Sector and The World Bank - 1970-1987", dated June 28, 1990\.
Proyecto de Ley No\. 1271/92 "\.por el cual se establece el r6gimen para la generaci6n, interconexi6n,
transmisi6n y distribuci6n de electricidad en el territorio nacional", Agosto 27, 1992\.
Decree 2119 (December 29, 1992)\. "Por el cual se reestructura el Ministerio de Minas y Energia\."
-4-
by a separate organization that would absorb ISA's current load dispatch department\.
Distribution would be re-organized around existing electric utilities, which would be privatized
gradually\.
7\. The Tariff Commission (Junta Nacional de Tarifas - JNT) was dissolved in 1992, and
replaced by separate regulatory commissions for electric energy and gas, water supply and
sewerage, and telecommunications\. The electric energy and gas regulatory commission
(Comisi6n de Regulaci6n Energetica - CRE) is in charge of setting up the tariffs for distribution
and for power wheeling\.
8\. By 1992 the installed capacity in the power sector's generating facilities reached 9660
MW of which 7700 MW in hydroelectric power plants (80%) and 1960 MW in thermal power
stations (20%)\. As indicated in paragraph 203, the actually available capacity was much less,
due to the drought and to unavailability of a large part of the thermal units\. In 1992, of 32,184
GWh generated by the power sector only 80% ended up as sales to consumers due to
transmission and distribution losses\. This high level of losses is well above what is experienced
in most Latin American countries\.9
9\. Residential electricity sales represent close to 50% of total power sales\. This relatively
high percentage is due basically to high use of electricity for cooking, encouraged by low
residential tariffs, particularly for low income customers\.o The Government is partially
tackling this problem by promoting the use of natural gas for cooking through extension of gas
lines into low income neighborhoods\. In the future there is the intention of limiting or ending
cross-subsidies\.
10\. Between 1970 and 1980 electric energy for the whole of the power sector grew rapidly
at an average of 10 percent per year\. In the following ten-year period it grew at a much slower
rate of 5\.7 percent per year on average\. It is likely that this sharp slowdown in the growth of
electricity demand has been caused by the electric power rational that took place in the years
1980 and 1981, the 1980s' general slowdown in economic growth, and tariff increases
exceeding inflation, which might have forced a more rationed use of electric power in the
productive activities\. The current growth in power demand is around 5 percent, which is
expected to extend till the end of the century\. In 1980 electric supply reached 45 percent of the
Country's population, while by 1993 it attains 72% of the potential customers\.
Considering 29 countries from Latin America and the Caribbean, only four (Haiti, Dominican Republic,
Honduras and Panama) exhibit higher level of power losses than Colombia\. In Brazil and M6xico power losses
are around 13 percent, while in developed countries, they represent only something like 8 percent of total
generation\.
10 Currently in Colombia, electricity tariffs for residential customers depend on six categories of relative
income level, defined by neighborhoods, in such a way that high-income areas cross-subsidize low-income
residential customers\.
-5-
11\. By 1990 the financial situation of the power sector had reached a critical stage\. As a
whole the sector obtained a net income from operations of just 4\.9 percent over net fixed assets
in operation, and sustained a net loss of 4\.3 percent over net worth\." In the same year, against
a debt service of US$1,870 million, internal cash generation attained just US$ 700 million
leaving a cash deficit of US$1,170 million\. Since 1991, there has been a determined effort by
the Government to improve the financial situation of the sector's enterprises with the objective
of making them worthy subjects for privatization\.
12\. Development of Water and Sewerage Sector12 The Bank Review of Water and
Sewerage Institutions, carried out in close collaboration with the Government (Yellow Cover
Review Meeting of February 1, 1993), concludes that the major issues affecting the generally
poor performance of water supply utilities in the Country has been institutional, because of
politicization and lack of accountability\. This poor performance has been reflected in low
indicators of efficiency, quality of service and financial soundness of the utilities, and an
increase in unserved population despite relatively large investments over the last two decades\.
Institutional flux at the national level has been accompanied by a general inability to implement
policies for effective sector development, although in a few cases (Medellin and Bucaramanga,
notably) services have improve markedly, and the problems have not been felt in as acute a
form, because of more arm's length relationship between local politicians and utility
management, conducive to greater autonomy and stability of the latter, professionalism, and
higher efficiency\. Conscious of these short comings, the Government has developed a reform
program\. A new approach to the Sector was evolved and is being supported under the
ongoing Water Supply and Sewerage Sector Project financed by the Bank (Loan 296 1-CO, to
the municipal development intermediary, FINDETER), and is being given further impetus by
the establishment of a regulatory framework conducive to efficiency improvements, expanded
sector participation in the delivery of public services, greater accountability, and a more arms
length relationship between the utilities and local politicians\. These reforms are embodied in
the Public Utilities law, which awaits Congressional approval (failing Congressional approval
by June 30, 1994, the Government is empowered under the Constitution to issue the law by
decree), and will be given more operational shape by the newly established regulatory
commission for water supply and sewerage (Comisi6n Reguladora de Agua Potable y
Saneamiento), which reports to the Presidency of the Republic, and a new Vice Ministry of
Development responsible for formulating sector policies and coordinating their implementation
by sub-national agencies under a decentralized framework\. A new Superintendency of Public
Services (Superintendencia de Servicios Pblicos), also reporting to the Presidency, is charged
under the 1991 Constitution Chart with intervening in poorly managed utilities, and with
applying sanctions, in order to ensure provision of basic public services on an efficient and
equitable basis\. These agencies are still at an early stage of evolution and their future
11 Exposici6n de Motivos, Proyecto de Ley Eldctrica, Ministerio de Minas y Energia, August 1992\.
12 Ts paragraph is taken largely from the Executive Project Summary for the proposed Santafd (BogotA)
Water Supply and Sewerage Rehabilitation and Private Sector Development Project\.
-6-
effectiveness will reflect consolidation of implementation capacity and the Government political
will to support their actions\.
13\. In contrast with environment surrounding previous attempts at sector reform, there is
nowadays greater emphasis on the part of the authorities on accountability (relying on
expanded private sector involvement and strengthening of consumer voice through consumer
representation on local commissions)\. Major environmental problems in river basin
degradation and need for waste-water treatment can only be addressed if the institutional
reforms take hold\. Although it is recognized that it could take quite some years for the reforms
to take hold, and given the difficulties of designing a comprehensive and detailed action-plan
which could take fully into account the considerable regional and local variety in institutional
capacity and culture for change, specific solutions need to be developed on a case-by-case basis
within the global framework\.
14\. The unsatisfactory achievement of the sector in recent years can be seen by the
following figures, which show the slow improvement in service coverage rates and their
current low level, despite relatively high investments in the sector, which proved insufficient to
offset the high rate of growth of population with the resulting increase in total population
lacking the basic services of water and sewerage, while the sector's performance leaves much
to be desired\.
Service Coverage Rates (%)
Urban Rural Total
Year Water Sewerage Water Sewerage Water Sewerage
1970 77 64 18 8 51 39
1985 82 71 12 2 58 47
1992 87 72 24 8 66 51
Unserved Population
(Million Inhabitants)
1970 1978 1985 1990
Total Country 21 26 30 34
Population without 10 10 11 12
water connection
Population without 13 15 16 17
connection to
sewerage
-7-
15\. Role of the Bank in the Power Sector In broad terms the role of the Bank in
supporting Colombia's power sector went through three phases during the past two decades\.
In the 1970s, the emphasis was on interconnection and on ISA's role, for which it was
envisaged a virtual monopoly of building and operating all major generating capacity additions
to the interconnected system\. In the 1980s, the Bank's emphasis shifted to distribution and
village electrification and to issues associated with individual utilities, with sector issues being
dealt with in a somewhat indirect manner\. Only lately, towards the end of the 1980, the critical
condition of the power sector was recognized and the stage was set with a Power Sector
Adjustment Loan (Loan 2889-CO; approved 12/87) for a new phase in the Bank's role,
focusing on broad sectoral issues (a thorough analysis of the Bank's role in the Colombian
power sector can be found in the OED's report No\. 8893 entitle "Colombia - The Power
Sector and the World Bank, 1970-1987", June 28, 1990)\.
16\. Role of the Bank in the Water Supply and Sewerage Sectorl3 Given the immense
investment requirements of the water supply and sewerage sector and the Government's
increased emphasis on improving service coverage in its quest for alleviating poverty, the Bank
planned in the context of the Water and Sewerage Sector Project (Loan 2961-CO; approved in
1988), to continue its role as primary external supplier of finance for sector investments\.
However, continued lending for the sector was made contingent on the Government's
commitment to sectoral institutional and policy reforms which would allow more efficient and
sustainable sector growth within the context and constraints of overall macro-economic
development and public sector investment\. Thus, a Sector Reform Program (SRP), designed
with the assistance of the Bank is geared to bring about the reforms required to address the
sector's many problems and constraints and is supported by the Bank through the provision of
financing for sector investment and continued advice\. The sector investment loan, covering
external resources needs of all sector segments, was thought to be the most appropriate tool
for assisting the Government in improving and expanding service and in implementing the
reforms being introduced under the SRP\. The sector approach was to be continued in the
future as a mean of Bank support to sustain and deepen the adjustment process then being
undertaken by the Government\. To complement the sector loan approach, the Bank was also
to continue the provision of finance for major investment projects for the Country's largest
municipal utilities (Bogota, Cali, Medellin) through separate operations\.
17\. EPM's Service Area, Facilities and Market EPM's service area comprises
essentially the metropolitan area of Medellin (population: 2\.5 million)\. The Medellin area is the
second largest nucleus of industrial and commercial activity in Colombia\. Most of the electric
power supply to the provinces of Antioquia and Choc6 is provided by EPM through block
sales to distribution utilities (Empresa Antioquefia de Energia and Electrificadora del Choc6)\.
EPM also supplies electric power to the interconnected system by way of ISA\. EPM is an
autonomous corporation of the Municipality of Medellin, organized in 1955\. It presently
13 This paragraph in taken largely from the White Cover Review of Water and Sewerage Sector Institutions -
Colombia - June 1992\.
-8-
provides electricity, telephone and water and sewerage services\. These three wings of EPM
are operated as financially independent departments with separate accounts\. EPM's installed
electric power generating capacity at the time of the Rio Grande Project initiation was 979
MW\. Additionally by investing in ISA plants (Chivor, San Carlos, Jaguas) EPM had obtained
rights to a portion of their generating capabilities and capacities (1983: 480 GWh and 80 MW)\.
Peak demand in 1983 in EPMs system was 972 MW; in 1988 it reached 1,226 MW, while in
the SAR peak demand was forecast to reach in that year 1,342 MW (by 1993 it has reached
1357 MW)\. Energy demand was forecast at appraisal to grow at an average 7\.3 percent per
year\. In fact it grew up more slowly at an average of only 5\.8 percent per year reaching 6,698
GWh in 1988\. By 1993 energy demand had only reached 7,167 GWh, at an annual average
rate of growth in the past five years ofjust over 4\.0 percent per year\. With the addition of
Playas (200 MW) and Rio Grande (324 MW), EPM's power system reached a generating
capacity of 1,500 MW by May 1994\.
18\. The metropolitan area of Medellin takes its water from a variety of sources, a number
of which are small rivers and streams or within the urbanized area\. By 1993 the water supply
sources had 9\.5 cumecs capacity\. However, certain local sources have been taken out of
service because of high levels of contamination and encroaching\. Moreover, the reliable
combined capacity of the remaining sources for a 97\.5 percent reliability is considered to be 7\.5
cumecs; to which should be added the initial capacity of the Rio Grande source, of 5 cumecs,
giving a total 12\.5 cumecs raw water capability\. Between 1976 and 1983 water demand
increased at the rate of 2\.4 percent per year reaching 226 million cubic meter (including
unaccounted-for) or 7\.2 cumecs\. At the time the Rio Grande Project was under consideration
it was forecast that water demand would grow at the rate of 6 percent reaching 360 million
cubic meter by 1991 (Production required: 11\.4 cumecs); in fact water demand grew much
more slowly reaching only 283 million cubic meters, with a rate of growth of 2\.8 percent per
year\.
C\. Identification, Preparation and Appraisal
19\. Background The Rio Grande is a river that traverses the high plateau of Northern
Antioquia and empties itself into the Porce River after a precipitous descend of some thousand
meters\. Development for hydropower of the hydraulic head available between the upper
reaches of the river and its confluence with the Porce, had been studied since 1940 and various
schemes were proposed\. However, in 1971 a study recommended tapping the Rio Grande for
augmenting the water supply of the City of Medellin\.14 Subsequently, EPM employed the
Colombian engineering firm INTEGRAL to study the feasibility of a multipurpose (water
supply and power) development of the river\. A report on this subject was submitted to EPM in
April 1982 and communicated to the Bank in September 1982 which confirmed the technical
and economic viability of such multipurpose development\. Nevertheless, the Bank hired in
14 "Aprovechaniento Midtiple del Rio Grande" EPM 1979\.
-9-
December 1982 a geologist who after a visit to the project site and analysis of available
documentation concluded that, geologically, the proposed project would not present undue
problems\.
20\. Issues and Decisions Appraisal of the Rio Grande Project was carried out in October-
November 1983\. Prior to appraisal two major issues were raised concerning justification of the
Project's power component and of Bank's participation in the Project\. These issues were
resolved in the following manner: Additional raw water supply was expected to be needed by
1988 to meet Medellin's potable water requirements\. The use of the Rio Grande waters was
determined to be the only feasible solution, and that it would be economically justified to
complete the water component of the Project by 1988, irrespective of whether or not the
power component was required\. However, the national least-cost power expansion program
indicated that the power component of Rio Grande would not be needed until 1991, by which
time the Project should be fully completed\. On this basis the cost of the power facilities was
about US$600 per installed kW (March 1982 prices), i\.e\. by far the lowest cost power plant in
the future system\. It was considered that the power component of the Project would assist
EPM in meeting incremental power requirements in the Department of Antioquia\. In addition,
it was to make available to the National Interconnected System any excess energy, which was
particularly needed in the light of already expected delays in completing larger plants elsewhere
in the system as well as the provision of hydro-based energy to the North Atlantic Coast to
decrease costly thermal generation\. It was thought moreover, that this project component
would also further the Bank-supported objectives at the time in the power sector by sustaining
the excellent working relationship with EPM, one of the two largest, and the most efficient and
well-managed regional power utility (with commensurate influence in the Sector)\. This was
particularly relevant in view of the unusual complexity of the power sector and its entrenched
history of responsiveness to regional political concerns\. These interests had regularly
threatened to undermine the incipient alliance of the regional power utilities to create an
integrated national power network, and an integrated set of sector entities and national policies
which would permit rational and soundly-financed growth\. The Government has had to rely
upon the Bank as the only existing non-political force that could insist upon objective measures
in the national interest\. Bank strategy, therefore, was to fulfill this function while fostering the
development of Colombia's capacity to take it over gradually\. Indeed, Bank lending for the
Project was proposed by Government and EPM, in recognition of the Bank's ongoing
contribution to the strengthening of EPM s power division\. Furthermore, EPM had been
particularly interested in having the Bank involved in its water division to provide support for
needed tariff increases, an area that had probably been neglected to some extent in the past\.
21\. Finally, it was considered that the Latin American debt crisis at that time would make
probably not possible for EPM to obtain the necessary external financing without assistance
from the Bank\. Indeed it was thought that unless the Bank had a significant financial presence
in the Sector and obtain tariffs and institutional commitments similar to those that had been
worked out in the more recent operations, it would be unrealistic to expect the Sector as a
whole to obtain external funding from private sources on the required scale even if the
- 10 -
international capital market prospects was to recover its previous, favorable levels\.15 Through
a proposed cofinancing scheme, the Bank would seek to build upon efforts initiated under a
proposed Power Development Finance Project to draw commercial lenders back to the Power
Sector, and to the more viable water supply utilities\.
22\. Project Objectives The Project originated as a water supply project, to which at very
low cost a power component could be added\. For this reason, the primary objective of the
Project was to provide the additional raw water supply required by 1988 as a necessary input
for the production of potable water\. The main objective (but secondary in the framework of
the whole project) of the power component, although small in comparison to the power
capacities being installed at the time in the Country, was to assist alleviating the consequences
of the delays (due to financial, technical and organization causes) in large hydroplants
completion elsewhere in the National Interconnected System\.
23\. Project Description The Project (Phase I of the Rio Grande Schemes) consists of
(i) The Tasajera Hydroplant facilities comprising an earthen catchment
dam 65 meters high, impounding a reservoir with a useful volume of
110 million cubic meters, an intake tower with a 7\.2 km long power
tunnel, a surge shaft, a 334 meters deep pressure shaft and a 600
meters penstock in an inclined gallery leading into a two-cavern
powerhouse with three 101 MW turbine-generator units, that would
produce an average of 1600 GWh per year, and two-km long tailrace
tunnel;
(ii) The Niquia water and power facilities, which includes an intake shared
with the power intake, a 15\.9 km long tunnel, a surge shaft, a 160
meters deep pressure shaft and a steel lined 300 meters long gallery
leading into an above ground powerhouse with a 22 MW turbine-
generator unit, that would produce initially about 105 GWh per year at
raw water throughput of 4\.5 cubic meters per second and some 165
GWh per year at a maximum water use of 6\.4 cubic meters per second,
a 5\.5 km long steel conduit (inverted siphon) conducts the raw water
from the powerhouse to a treatment plant constructed separately from
the Project, and;
(iii) Transmission facilities consisting of a surface substation at Tasajera
with 230 kV transmission line to Barbosa Substation, and a surface
substation at Niquia and a transmission line to Bello\.
24\. Project Components The following project components were foreseen in the SAR
and established in the Loan Agreement:
15 "Estudio de Factibilidad del Aprovechamiento Mfiltiple del Rio Grande" INTEGRAL, April, 1982\.
- 11 -
(i) Tasajera Hydroelectric Station Construction and equipping of the
Tasajera hydroelectric facilities, including roads and bridges; river
diversion works; dam and spillway; intake tower; underground works
for power including pressure tunnel, surge tank, penstock tunnel and
penstock, ancillary tunnels, caverns, tailrace tunnel and tailrace canal; a
substation, ancillary works and general accessory services\.
(ii) Raw Water Supply Facilities Construction and equipping of the
Niquia raw water supply facilities, including roads and bridges; intake
tower; underground works including pressure tunnel and penstock
tunnel; pressure reducing facilities; raw water tank; conduit to
treatment plant; a substation; ancillary works and general accessory
services\.
(iii) Niquia Hydroelectric Station Construction and equipping of the
Niquia hydroelectric station, comprising the power station building and
related structures and works; a substation; ancillary works and general
accessory services\.
(iv) Transmission Facilities Construction and equipping of the 220-ky
transmission line between the Tasajera and the existing Barbosa
substation and of the 44-ky transmission line between the Niquia
substation and the existing Bello substation, including the necessary
changes in and additions to the existing substations, ancillary works and
general accessory services\.
(v) Training A program for the training of the Borrower's staff\.
(vi) Data Processing Network Acquisition, erection and utilization of
equipment for the second phase of a computerized data processing
network among the Borrower's various offices\.
25\. Status of Project Design At appraisal the project studies had progressed to the stage
of bid designs\. Final designs for construction were foreseen to be completed by end of 1984\.
Field investigations had been completed at the time of appraisal and these were comprehensive
and permitted the location of all underground works in sound and competent rock\.
26\. Project Cost Estimate, Funding and Implementation Schedule
The Project's cost was estimated at appraisal at the equivalent of US$321\.1 million in mid- 1984
prices including physical contingencies of US$37\.2 million (13% over base-line cost of
US$783\.9 million)\. Adding price escalation estimated at US$40\.9 million (13%), and interest
during construction amounting to US$56\.1 million the project funding requirements reached
- 12 -
US$418\.1 million\. The total foreign cost was estimated at US$252\.9 million (62%) while local
cost was figured up at the equivalent of US$165\.2 million (38%)\.
27\. Financing of the project cost, including interest during construction, was foreseen as
follows:
Sources of Funds US$ million %
IBRD Loan 164\.5 39\.2
Cofinancing B-Loan 65\.5 15\.7
Suppliers (turbines, generators) 22\.9 5\.5
FONADE and Government 13\.6 3\.3
EPM 151\.6 36\.3
Total Project Funding 418\.1 100\.0
28\. The Bank loan was geared to cover foreign cost of contracts for civil works and some
of the electrical equipment\. Suppliers credit were to be sought for the turbines and generators\.
29\. With respect to possible procurement and other problems posed by the provisions of
the State Contracting Act (Decree No\. 222 of February 1983) the Legal Department of the
Bank advised that Bank loans in Colombia are not subject to said legislation, and that this was
confirmed by a legal opinion, dated December 6, 1983, furnished to the Bank on behalf of the
Republic of Colombia as guarantor for Loan No\. 2303-CO (Agricultural Research and
Extension Project), signed September 19, 1983\. All this is an interesting commentary on the
vagueries of legal opinions, since as will be seen further along in this report, the project was
seriously affected by procurement problems stemming from different interpretations of the
above legal opinion\.
30\. It was foreseen at appraisal time that project implementation would require 82 months
(six years and ten months) from the time of issuance of the bid documents for the intake and
main tunnel (August 1983)\. The project was therefore expected to be completed in mid-1990\.
Overall the implementation schedule was rather optimistic\. It is interesting to note that in
judging the risk of not meeting the targets for project commissioning of the Niquia hydropower
station and raw water supply (end-1988) and of the Tasajera hydropower plant (mid-1990), the
SAR did not expected any problems with the underground works since these would be located
in the well known Antioquian Batholith (similar to Guatape, San Carlos, Jaguas, Guadalupe IV
and Playas hydropower project)\. In view of the difficulties experienced in Playas, this optimism
seems rather farfetched\. Curiously, the SAR stated that the procurement schedule was
reasonable and that no unusual delays were expected, while procurement problems were to be
the main source of delays in completing the Project\.
- 13 -
31\. Environmental and Resettlement Issues Environmental impact was deemed to
originate principally from the reservoir, the tailrace facilities, the surface Niquia power station
and raw water tank, the conduit to the water treatment plant and the substations and
transmission lines\. The area thus affected was estimated at 5,700 ha, of which 1,100 ha
pertained to the reservoir\. The area was marginally suitable for agriculture and had been
largely owned by absentee landlords\. At appraisal time EPM had already acquired 90% of this
land\. About 100 persons affected by the project's works had already been moved\.
32\. EPM had a comprehensive program for creating recreation areas within a new forested
area that would cover most of the affected land\. The reforestation work was to be initiated in
1985 under an annual budgetary allocation, arising from the legal requirement that 2% of the
revenue (computed at the block tariff rates) originating in hydropower facilities had to be
allocated to measures to protect the river banks devastating the environment by flushing earth
for finding gold\. This was the largest source of silt in the river\. It was therefore thought that
construction of the Rio Grande Project would balance in favor of the environment due to: (a)
the large area to be reforested; (b) the long-term effects on the river basin of EPM's planning
for improvement; and (c) the fact that an average of 40 cubic meters per second was to be
diverted towards the heavily polluted Medellin River, to double its flow and dilute the sewage
pollution\. Downstream uses of water supply for humans and animals were taken from streams
flowing into the Rio Grande and therefore were not to be affected by the Project\.
33\. Project Loan Documents In May 1984, representatives of the Bank, the
Government, and EPM completed negotiations for the Rio Grande Project\. On June 21, 1984
the Executive Directors approved Loan 2449-CO for US$164\.5 million to help finance the
Project\. The Rio Grande Project Loan Agreement and the Guarantee Agreement were signed
3 months later on September 21, 1984\. The agreements reached during negotiations, which
were incorporated in the Loan Agreement, superseded in large measure those incorporated in
the Playas Hydropower Project Loan Agreement (Loan 1953-CO, US$85 million)\. In Part III
of this report are listed the pertinent covenants with their status of compliance\. The Rio
Grande Loan was to be repaid in 17 years, including 4 years of grace, with interest at the
Bank's standard variable rate
D\. Project Implementation
34\. Effectiveness and Closing Date Loan signing was only delayed 3 months\. Date of
Loan effectiveness was December 20, 1984\. By itself, this delayed effectiveness did not
adversely affect commencement of the procurement process for the Project, since bid
documents for the major civil works contracts were already available\. The Loan's original
closing date was December 31, 1991\. This date was extended three times during project
implementation\. The final closing date was June 30, 1994\.
35\. Procurement Although the procurement process for contracts involving funding by
the Bank went up generally with few problems, procurement for the major equipment items
was fraught with setbacks caused by difficulties with the import licenses issuance by the Import
- 14 -
Licensing Authority (INCOMEX)\. The delays in issuing the import licenses were such that
they were the main cause for not having available the Project's electric energy production
during the stiff power rationing in Colombia in 1992 and 1993\. Between March 1992 and
April 1993 it was estimated that the power shortage nationally was 6,200 GWh and that Rio
Grande could have produced, if available, 1,422 GWh or 23% of the total power shortage\. In
terms of average bulk energy pricing the lack of Rio Grande energy production represented
foregone revenues of the equivalent of US$70 million (at US$0\.05 per kWh) for EPM\. The
non-availability of Rio Grande caused a negative impact to the National Economy of Colombia
that can be estimated at US$700 million (at US$0\.50 per non-delivered kWh)\.
36\. Arrangements for Construction and Procurement Construction of the Project was
organized into five main civil works contracts for:
(a) intake, river diversion tunnel and power tunnel to Tasajera;
(b) dam and spillway;
(c) Tasajera and Niquia powerhouse;
(d) steel linings;
(e) Niquia-Manantiales siphon; and
(f) control building and Tasajera substation\. Main supply contracts covered:
powerhouse equipment, step up transformers, 230 kV cables, and substation\.
In addition a number of smaller contracts were awarded for various civil works
and equipment supplies and erection of transmission lines\.
37\. Project Management and Engineering The Project's implementation was managed
by a Project Management Unit (PMU), which carried out efficiently all aspects of project
management, including the difficult task of dealing with the Government's bureaucracy in the
matter of import licenses for the main powerhouse equipment\.
38\. All construction design work was performed by INTEGRAL, which had been in
charge of preparing the bid-level designs for the Project\. During construction of the
multipurpose scheme these consultants also produced the designs for the modifications that the
project required\. Construction supervision was also entrusted to INTEGRAL\. Additionally,
INTEGRAL at completion of the Project prepared the as-built drawings and a detailed report
on the Project's implementation\.
- 15 -
39\. Throughout the Project's construction the PMU was assisted by a Board of
Consultants (BOC) made up of internationally-known experts" in the main technical disciplines
required by the Project\. This assistance was conducted by means of 8 visits to the Project site
between 1987 and 1992\. The BOC prepared in each case an analytical report covering each
portion of the works examined and their recommendations on the more important design and
construction aspects of the Project\.
40\. Project Implementation Timetable, Cost and Funding Overall implementation of
the Rio Grande Project took 10 years and nine months (129 months) from August 1983 to
May 1994, compared to six years and ten months (82 months) expected in the SAR to be
required\. Therefore, carrying out the Project took about 4 years more than anticipated at
appraisal\. The basic reason for the considerable time overrun was the lengthy dispute with
INCOMEX on the import license for the main powerhouse equipment\. In addition, there was
the lengthy and cumbersome contract processing procedures to which EPM is subjected by
Colombia's and Antioquia's contracting legislation\. Whichever were the problems that arose
during project implementation, it is quite clear that the implementation timetable estimated at
appraisal was somewhat optimistic\. The project objectives were accomplished and
exceeded compared to the estimates contained in the SAR\. In terms of the physical scope
of the project, particularly where the energy subproject was concerned, the transmission
and substation subcomponents were augmented significantly by the inclusion of the
western substation and the control equipment not included in the original scope of the
project\. Due to the delays in project implementation, the closing date of the project was
extended three times, for a total of three years\.
41\. The final cost of the Project was the equivalent of US$394\.9 million, including
US$56\.10 million in financial charges, compared to US$418\.1 million estimated at appraisal, or
an underrun of US$23\.2 million\. In Part III of this report is shown a summary comparison of
the original project cost estimate as per the SAR with the actual project expenditures in the Rio
Grande Project\.
42\. Due to the savings achieved in project cost funding for the Project changed
significantly during project implementation with the net result that EPM canceled US$7\.70
million from the Bank loan\. In Part III of this report appears a tabulation of sources of funds
for the Project, as foreseen in the SAR and as actually made available\.
16 Mr\. Chun Y\. Li (USA), expert in design and construction of earth dams, who has advised EPM on several of
its projects; Mr\. Alfred J\. Hendron Jr\. (USA) expert in rock mechanics and underground works; Mr\. Gabriel G\.
Fern6ndez (USA) expert in soil mechanics and earth dams; and Mr\. Cistian Kilian De Fries (Netherlands)
expert in instrumentation for dams\.
- 16 -
E\. Project Results
43\. The Project achieved its main objective, which was to increase the raw water supply to
meet the demand for potable water in the metropolitan area of Medellin\. It also achieved,
although belatedly, its secondary objective, which was to meet incremental electric energy
demand in the Medellin area and in the provinces of Antioquia and Choc6\. It is unfortunate
that the delays in completing the Project did not permitted to count with its power output when
the Country was in the grip of the worst power shortage ever experienced\.
44\. The recomputed internal economic rate of return using the SAR's methodology is nine
percent, compared to 18 percent in the SAR\. The IERR was computed, as done in the SAR,
for the entire EPM's water supply and power expansion programs up to 1994, which includes
the Rio Grande Project\. Revenues from water and power sales were taken as proxy for
benefits\. The calculation of operating expenses and revenues was extended for 40 years,
reflecting thus, the probable useful life of the investments\. Because of unquantified consumers'
surplus and economic and social benefits, use of revenues as proxy for benefits substantially
understates the benefits\.
F\. Project Sustainability
45\. The major benefit realized from the Rio Grande Project is the badly needed additional
raw water supply to meet potable water demand in the Medellin metropolitan area\. The
secondary benefit was of augmenting the power supply to EPMs power market and to
Colombia's National Interconnected System\. The added power supply came unfortunately too
late to have helped in assuaging the power rationing during 1992-1993\. Nevertheless, both the
added water and power supply at least are helping to maintain the standard of living of the
urban population in the second largest metropolitan area in Colombia and in Antioquia's rural
areas, as well as the industrial base of Medellin\. These benefits will endure for all the useful life
of the Project\.
46\. The revenues accrued to EPM from sale of potable water and electricity originated in
Rio Grande are another benefit to be credited to the Project\. These benefits, of course, depend
on maintaining adequate level and structure of tariffs during the life of the Project\. Given
EPM's excellent track record in this area it is likely that the benefits will be maintained without
undue difficulties\.
G\. Bank's Performance
47\. Bank participation in the Project was in general satisfactory\. It is worth mentioning
that the excellent track record of EPM in dealing with projects financed by the Bank
contributed to the decision to support the Project\. The Staff Appraisal Report provided
suitable information for project supervision\.
- 17 -
48\. During the period of project implementation security problems arose in Colombia in
general and in Medellin in particular\. These problems affected the level of project supervision\.
Nevertheless Bank role in the Project was facilitated by EPM's management and technical
personnel\. The Project Management Unit (PMU) was always supportive and gave full
cooperation to the Bank's teams during project preparation and supervision\. The Bank played
a constructive role in assisting EPM to carry out the Project to its completion\.
H\. Borrower's Performance
49\. At project's appraisal EPM had fully prepared the Project which facilitated the task of
the Bank\. Learning from the experience with the Playas Project, EPM organized opportunely
the PMU for the Rio Grande Project\. It is a credit to PM Us personnel to have shepherded the
Project through all the complex construction activities, without running into cost overruns and
to have handled the dispute with INCOMEX in a judicious manner\.
50\. During project implementation and up to 1993 the financial performance of EPM's
power department has been generally satisfactory\. This is reflected in the following financial
indices:
Year 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
Return of Net 8\.8 11\.3 11\.1 13\.8 9\.3 7\.2 7\.9 10\.0 13\.0 9\.0
Fixed Assets
Self-Financing 25\.0 30\.0 22\.0 40\.0 47\.0 N\. A\. N\.A\. 37\.0 79\.0 84\.0
Ratio I
Debt Service 1\.2 1\.3 1\.2 1\.5 1\.1 0\.9 1\.0 1\.3 2\.0 2\.0
Coverage I_I_I
Debt/Debt & 35\.0 48\.0 55\.0 56\.0 47\.0 52\.0 44\.0 39\.0 30\.0 24\.0
Equity Ratio
Operating 59\.0 52\.0 56\.0 50\.0 56\.0 62\.0 68\.0 64\.0 66\.0 69\.0
Ratio I I I
Current Ratio 1\.7 2\.1 1\.4 2\.2 1\.6 1\.1 0\.2 0\.5 0\.7 0\.9
Account 80\.0 37\.0 33\.0 32\.0 25\.0 21\.0 21\.0 24\.0 22\.0 23\.0
Receivable
(days)
The evident progress in reducing the accounts receivable is noticeable\.
51\. Concerning operation performance, EPM's power department has also been
satisfactory, except for energy losses which are still relatively high given the compact nature of
EPM's power market\. The following indices reflect EPMs operational performance:
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Year 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
Energy Losses 22 23 21 15 19 19 N\.A\. 19 17 21
Customers per 158 155 162 165 176 175 169 174 179 194
Employee
GWh sold per 1\.90 1\.82 1\.91 2\.00 2\.10 2\.07 2\.01 1\.86 1\.66 1\.87
Employee I I I 1 1
52\. The financial performance of EPM's water department in the last few years has also
been generally satisfactory, although not as good as that of the Power Department, as shown in
the following indices:
Year 1989 1990 1991 1992 1993
Return of Net Fixed Assets 2\.1 2\.7 3\.9 5\.3 4\.5
Self-Financing Ratio 10\.0 8\.0 39\.0 70\.0 56\.0
Debt Service Coverage 1\.2 2\.2 2\.8 4\.0 3\.3
Debt/Debt & Equity Ratio 52\.0 60\.0 54\.0 47\.0 43\.0
Operating Ratio 82\.0 89\.0 80\.0 69\.0 72\.0
Current Ratio 0\.4 1\.3 1\.4 2\.1 1\.6
Account Receivable 37\.0 36\.0 35\.0 34\.0 31\.0
53\. EPM's water department also shows a satisfactory operating performance as reflected
in the following indices:
Year 1989 1990 1991 1992 1993
Water Losses (%) 42 38 37 38 35
Customers per Employee 272 283 278 263 282
Water Sales per Employee 129 124 114 108 109
(1000 cum) I
I\. Performance of Consultants
54\. The performance of INTEGRAL the design consultants for the Rio Grande Project
was wholly satisfactory\. Likewise, INTEGRAL performed creditably as construction
supervision consultant during project implementation\.
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J\. Performance of Contractor and Suppliers
55\. The main civil works contractors performed their tasks in a satisfactory manner\. As to
the suppliers, all the firms performed satisfactorily, except for the supplier of the steel pipe for
the Niquia siphon, ROMENERGO (Rumania), which contract had to be canceled for non-
fulfillment of delivery according to time-table\. This forced EPM to re-bid the contract, which
was awarded and performed by the Argentinean firm IMPSA\.
K\. Project Relationship
56\. From the Borrower the Bank received very close cooperation during appraisal\. This
cooperative attitude established early in the project cycle and all through EPM's relations with
the Bank, made possible to resolve successfully the many issues that normally occur during
implementation of a project as complex as Rio Grande\.
L\. Project Documentation and Data
57\. The SAR was generally a comprehensive document, that provided a useful framework
for the Bank and for EPM during project implementation and for the preparation of this PCR
Supervision reports gave generally reasonably good indications of the project status at any time
and of any major incident during project implementation\. These reports together with the
review of the project files at Bank headquarters and at EPM's offices in Medellin provided the
basic information for judging the project's results\.
M\. Conclusions and Lessons Learned
58\. Conclusion The Rio Grande Project was a well prepared project that ran into
difficulties created by the import licensing authorities\. Although it was finally complete below
cost estimate, the dispute concerning import licenses for the main powerhouse equipment was
the main cause of the almost four year delay in completing the Project\. In retrospect, the Bank
failed to require adequate guarantees that all imports for the Project would not be subject to
prior import licenses\. The delay in completing the power component of the Project was
particularly vexing since its power output was not available during the prolonged power
rationing that hit Colombia in 1992-1993\. The loss to the economy from unserved energy that
could have been provided by Rio Grande can be gauged at not less than US$700 million\.
59\. The Project was successful in achieving its main goal of adding raw water supply
capacity to EPM's water supply systems, more or less at the time it was needed\. It also was
successful in adding generating capacity to EPM's power system, albeit with a long delay\.
60\. Lessons Learned The principal lessons learned from implementation of the Rio
Grande Project can be summarized as follows:
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(a) Project Preparation Before undertaking appraisal of a project as complex as
Rio Grande, the Bank should satisfy itself that the project has been adequately
prepared\. The project design should be reviewed by a panel of experts made
up of independent specialists in the main technical disciplines involved, before
bid documents are issued\.
(b) Import Licenses The Bank should careffully examine the existing limitations
and constraints in country legislations, regulations or bureaucratic procedures
which could jeopardize project implementation\. One case in point for this
project was the requirement of import licenses which contributed to a great
extent to the delay in project completion\.
(c) An important lesson is that the success of a project depends more than any
other factor on the ability and the experience of the people and the institution
involved in its implementation\. A case in point is EPM was, and still is perhaps
the best managed water and power utility in Colombia, despite the rather poor
performance of these sectors in general\.
(d) Last but not least, it is important to emphasize that a complex project will in
general face considerable problems during implementation; even in cases where
the implementing agency is a very efficient institution\.
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COLOMBIA
RIO GRANDE MULTIPURPOSE PROJECT
(LOAN 2449-CO)
PROJECT COMPLETION REPORT
PART H: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE
A\. Project Objectives
1\. The Rio Grande Project II had two basic objectives: to supply the Aburri Valley
with potable water through the year 2020 and to generate a reliable annual supply of
electric energy of 1,578 GWh (1,578 million kilowatts per hour), equivalent to 21\.2% of
EPM'S energy demand and to 4\.1% of national demand\.
2\. The project objectives were accomplished and exceeded compared to the estimates
contained in the SAR\. In terms of the physical scope of the project, particularly where the
energy subproject was concerned, the transmission and substation subcomponents were
augmented significantly by the inclusion of the western substation and the control
equipment not included in the original scope of the project\.
B\. Project Implementation
3\. Signature and Effectiveness of the Loan
4\. In terms of steps taken prior to signing loan agreement with the Bank, EPM began
negotiating with the Colombian Government in October 1982 and obtained authorizations
from CONPES and the National Department of Planning in August 1983\. Approval of
effectiveness of the loan was obtained from the Ministry of Finance and Public Credit in
August 1984\.
5\. While negotiations and formalities were under way for the loan, EPM obtained
partial financing from IDB for the second phase of the water supply and sewerage service
subproject (Manantiales water treatment plant and water distribution lines and sewers)\.
External loans were also planned to finance the turbines and generators for the Niquia and
Tasajera power plants, along with partial financing from FEN, FONADE, FEN-
EXIMBANK and the National Government for the local counterpart funds\.
- 22 -
C\. Implementation Program
6\. The original implementation schedule contained in the loan application submitted
to the Bank established, in general terms, that the project-related activities would start in
January 1984 and would end in December 1991\. The works included in the potable water
subproject came into operation in November 1991 instead of December 1989, as originally
scheduled, and it is estimated that the works included in the energy subproject will come
into operation in May 1994, in the case of the third generating unit, instead of December
1991, as originally scheduled\. These slippages are explained below in conjunction with
the main problems encountered in the implementation of some contracts\.
7\. In the case of the potable water subproject, the contract originally awarded to the
Rumanian firm of Romenergo for the design, manufacture and supply of the conveyance
pipe between the Niquia hydropower station and the Manantiales water treatment plant
was voided in February 1988 for non-performance of delivery according to timetable\.
This resulted in a delay of approximately 1\.5 years in the original implementation schedule,
because of the need to start a new international bidding process\.
8\. In the case of the energy subproject, EPM experienced difficulties with
INCOMEX in obtaining approval of the import licenses for the procurement of the
turbines and generators and this caused a delay in project start-up of approximately 2\.5
years and also resulted in the company losing an extension of the financing offered by the
lending agencies, which led to delays in the contracting process and to cost increases\.
9\. Moreover, the contract for the procurement of transformers for the western
substation and the contract for control, protection and communications equipment
originally awarded to Rade Koncar, were voided and canceled, respectively, for non-
performance of delivery according to timetable, in the case of the first, and for inability to
deliver, in the case of the second\.
D\. Financial Analysis
10\. Costs The actual cost of the Rio Grande Multipurpose Project II was
US$394\.9 million, with actual investments, as at December 31, 1993 and based on 1994
estimates, resulting in a total reduction in US dollar cost of 6% compared to the SAR
(US$418\.1 million)\.
11\. Although total project cost is lower than the original budget, there were some
marked differences in certain project components, such as the potable water subproject, in
particular, with a direct cost of US$74\.5 million compared to an original estimated cost of
US$94 million, this being attributable to the lower contract prices for the infrastructure
works and lower contingency costs than originally estimated\.
- 23 -
12\. In the case of the electric energy subproject, the direct cost was US$264 million
whereas the original estimate was US$268 million, but, while the cost of the dam and the
spillway proved lower than estimated, the cost of the equipment, consultants' services and
training categories was actually higher than estimated\. It is important to point out, in this
connection, that the cost overrun of the electromechanical equipment is attributable,
among other things, to: (i) the inclusion of the western substation, which was not
originally considered in the scope of the project; (ii) the inclusion of control equipment;
and (iii) the higher than expected cost of the turbines and generators\.
E\. Financial Performance
13\. EPM's financial performance during project implementation was satisfactory\.
14\. Lower demand, higher tariffs and increased costs all impacted the financial results
achieved and were managed with criteria of austerity and rationalization\.
15\. Empresa de Acueducto y Alcantarillado (water and sewer services) tariff
adjustments:
16\. The application of Resolution 080/90 issued by the National Tariff Board resulted
in the approval of:
* the elimination of tariff brackets for residential users;
* one-time real increases and 5% annual average increases in residential user
tariffs;
* the application of the economic cost to water supply tariffs for industrial and
commercial users;
* an increase in the sewer tariff of between 30% and 50% of the water bill\.
17\. The SAR considered some annual real tariff increases of 5\.82% for the period
1984-91, while the above-mentioned tariff adjustments meant an average real annual
increase of 7\.69% during the same period, which resulted in a decline in average user
consumption\.
18\. In accordance with the mandate of the National Constitution of 1991, the State is
obliged to guarantee the efficient provision of public services to all citizens\. Pursuant to
this goal, the Government established the Comisi6n Reguladora de Agua Potable y
Saneamiento Basico (Potable Water and Basic Sanitation Regulatory Commission)and the
Deputy Ministry of Housing, Urban Development and Potable Water within the Ministry
of Development and it will soon be setting up the Superintendencia de Servicios Pziblicos
Domiciliarios (Superintendency of Household Public Services)\. The Potable Water and
Basic Sanitation Regulatory Commission was established by Decree No\. 2152 of 1992\.
- 24 -
This Commission established the system of regulated freedom for municipalities providing
water and sewer services\.
F\. Empresa de Energia (energy service) tariff adjustments
19\. The efforts begun in the course of the past decade in the area of tariffs contributed
significantly to EPM's solid financial position\. Decree No\. 2545 of 1984, which created
the standardized tariff structure, and Resolution 86 of 1986, which developed it, were
issued at a time when electricity tariffs were in a state of complete chaos\. These
provisions represented a major breakthrough in laying the foundation for tariff
management, although the adjustment program set out in Resolution 86 proved
insufficient, given the sector's financial requirements\.
20\. The adjustment program envisioned in Resolution 090 of 1990 issued by the
National Tariff Board made it possible to raise the tariffs of industrial and commercial
users to reflect the cost of the service (average long-term incremental cost)\.
21\. The difficulties currently being experienced have to do with eliminating the
subsidies\. This problem cannot be resolved by tariff adjustments alone, since this would
mean drastically restricting these users' access to electricity\. The present adjustment
program introduced by Resolution 70 of 1993 would make it possible to raise residential
user tariffs to levels that are consistent with the average long-term incremental cost\.
22\. The restructuring of the electricity sector is a process that has been going on since
1991, the aim being to tailor the structure of electricity services to the ongoing
modernization of the economy\. The issue of Decree No\. 2119 of 1992 on the
modernization of the State resulted in the establishment of the Comisi6n de Regulaci6n
Energtica - CRE (Electric Energy and Gas Regulatory Commission), attached to the
Ministry of Mines and Energy\. The role of this Commission is to formulate new
regulations for the electricity sector that will focus on aspects relating to the quality and
reliability of the services provided, promoting competition, wherever possible, in the
activities of the electricity sector, regulating existing monopolies and preventing practices
that are incompatible with competition\. It will also take over the job of defining the tariff
structure previously handled by the National Tariff Board, which will be done away with
once the new decrees for modernizing the State are issued\.
23\. Application of the Resolutions during the period under review made enabled the
tariff to increase in real terms by 5\.40% per annum whereas the SAR had envisioned
2\.34% per annum\.
24\. Starting on December 17, 1993, with the issuing of Resolution No\. 010 by CRE,
the new electricity sector conditions brought about by the restructuring programs began to
materialize, in keeping with the framework regulations established by the draft Electricity
- 25 -
Law and the draft Law on Household Public Services\. These conditions include, among
others:
* promotion of competition in generation and marketing;
* separation of the end-user market into regulated and non-regulated\.
25\. There is also a possibility that energy supply contracts will be signed between
distributors and major customers, the latter being classed as industrial and commercial
users connected to over I kV, with an average maximum demand exceeding 2 MW over
the last six months\. Starting in 1995, users with a maximum average demand of more than
1 MW will be included in this market\.
26\. These changes are shaping a new electricity sector that has greater flexibility and
that offers new conditions on which energy supply terms can be negotiated\.
27\. Costs With respect to cost management policies, some important programs were
begun during the decade to cut water and energy losses and keep them under control, in
addition to the implementation of programs to promote the efficient use and conservation
of energy and potable water resources\.
28\. In 1992, Empresa de Acueducto y Alcantarillado (Water Supply and Sewer
Service) returned to being an autogenerator of energy when it purchased the Ayuri and
Piedras Blancas power plants\. This is having a positive effect on operating costs, and the
Company plans in the medium term to construct micro power plants at the entrance of the
treatment plants, and also some distribution tanks, with a view to becoming self-sufficient
in terms of energy supply\.
29\. The Company has stepped up its contracting of third parties in its various
operating and administrative processes, placing emphasis on the participation of
precooperative groups and community action groups\.
30\. Administrative costs increased because EPM's Board of Directors approved, by a
resolution dated December 11, 1986, the grant of a lifetime retirement pension to all EPM
staff, in accordance with national legislation, this decision having affected the amount of
the company's actuarial obligations since 1986\.
31\. With respect to debt servicing during the period under review, the magnitude of
amortizations which began during the period under review, in relation not only to the Rio
Grande Project II but also to the Guadalupe IV and Playas projects, also under
construction, is striking\. Also taken into account was the effect of the sharp depreciation
of the Colombian peso (and also of the US dollar in certain years, in relation to other
currencies owed by EPM) on foreign currency debt service payments\.
- 26 -
G\. Analysis of the Internal Financial Rate of Return for the Rio Grande
Multipurpose Project H
32\. In accordance with the methodology used in the Staff Appraisal Report of June 1,
1984, a figure of 5\.2% was obtained for Empresa de Acueductoy Alcantarillado and 11%
for the Empresa de Energia, which thus gave a consolidated figure of 9\.1% compared to
targets of 14% for water supply, 19% for energy and a consolidated figure of 18%
estimated by the SAR\. This result can be accounted for by the following:
33\. Lower growth in demand compared to the SAR\. In the case of Empresa de
Acueducto y Alcantarillado performance went from 93% in 1984 to 79% in 1991, while in
the case of Empresa de Energia it went from 98% in 1984 to 96% in 1991\.
34\. Actual project expenditures were higher than the SAR figures, which reflected
domestic inflation, which was also higher than estimated during the period\.
35\. Investments showed a higher growth rate than in the SAR\. In the case of Empresa
de Acueducto, the second phase of the Rio Grande Project II included additional physical
targets, such as main and intercepting sewers in the development of the Medellin River
Sanitation plan and an expansion in the scope of the water supply control center\.
Similarly, in the case of Empresa de Energia, there was the inclusion of the western
substation and control equipment\. Investments were also affected by major
macroeconomic factors\.
36\. Net ISA energy sales/purchases were affected by the larger volume of energy and
power sold in accordance with Decree 3298 of November 12, 1984, which established that
electricity sector companies were required to purchase 75% of their energy and power
rights from ISA, regardless of their actual needs\.
37\. The Company has been making short and long-term changes in energy and power
as part of the new marketing scheme, which is based on the dismantling of obligatory
purchasing and the elimination of ISA as the sole commercial agent and the replacement of
this by purchase-sale with the various companies in the electricity sector\.
38\. The methodology used to calculate the internal rate of return for the project is
shown in the annex\.
H\. Project Impact and Sustainability
39\. The Rio Grande Multipurpose Project II is viewed as one of the most important
ever undertaken by EPM, considering its great benefit to the community in terms of both
potable water service and energy supply to the Aburri Valley and also in terms of the
variety of investments entailed, such as those relating to the intake and conveyance of
- 27 -
water to the treatment plant, in the case of the Empresa de Acueducto, and those for the
expansion of infrastructure for all the processes involved in electricity generation,
transmission, substations and distribution, in the case of the Energy Company\.
40\. The foregoing plus the experience gained and the training acquired by the staff are
elements that will continue to be extended to both the Company and to the community\.
I\. Bank Performance
41\. EPM wishes to highlight, in this report, the assistance it received from the Bank,
especially during the project preparation phase and in all aspects of the operational
management of the loan\. The Bank provided the resources needed to enable EPM to
make the best possible use of the proceeds of the loan and although it was strict on
aspects relating to the bidding conditions, it was flexible on all those relating to the
administration of this loan: procedures, disbursements, extension, resource allocation, etc\.
42\. The Bank's assistance was pivotal in improving many procedures and especially
those relating to the handling and processing of financial data, with which it always
provided excellent guidance\. The supervision missions were sufficient in number and
generally provided important input toward achieving good technical and financial
performance\.
43\. The Bank's relationship with the project was satisfactory, in that the Bank paid
attention to the suggestions put forward during supervision missions and our requests for
extensions of the disbursement schedule were favorably received by it\.
44\. Although the Bank still offers its borrowers certain favorable conditions compared
to other international financial organizations, in terms of longer repayment periods, it must
be borne in mind that interest rates and currency fluctuations now make the Bank's
financing very similar to what is offered by the competition, i\.e\. commercial banks\.
45\. The improvements introduced by the Bank in 1993 to the information and debt
management system have been satisfactory, since they allow greater agility and equity in
payments and a more practical overview of the elements involved in the monitoring of
loans\.
J\. EPM'S Performance
46\. Generally speaking, EPM's administrative and technical staff was successful in
meeting the requirements of the project and the Bank, at all phases of the project, i\.e\. from
preparation through to project completion\.
47\. The experience gained at all levels of the organizational structure has had a
multiplier effect with respect to the projects that have recently been started in all
- 28 -
departments, including the formation of the Porce II Division, which will be in charge of
the construction of the Porce II hydroelectric project within the Energy Company, the
Technical Division and the San Fernando Group, which is responsible for coordinating the
design and construction of the future wastewater treatment plant within the Water Supply
and Sewerage Company, and the Special Projects Division in the telecommunications
sector, which is coordinating the telephone plan for East Antioquia\.
48\. Particular attention is drawn to the work done by the Rio Grande II Division, as
the project implementation unit, responsible for carrying out all the phases and works of
the project, coordinating all relations with the Bank on technical aspects, which facilitated
the integrated management of the project from its design through to its entry into
operation\. The Rio Grande II Division was also assisted by other areas of the company in
accomplishing the objectives proposed, which made it possible to handle the project in
accordance with project management criteria\. This enable the Company to execute more
works at a cost that was lower than estimated at appraisal\.
49\. The training financed by the loan enabled the institution's professional and
technical staff to achieve a high standard of preparation and experience, due to the size of
the projects undertaken by EPM, the competence and efficiency it displays in contracting
out its services and the reliability it shows in operating these services\. Besides energy the
project also covered finance and administration, which were areas that had not be taken
into account in previous externally financed programs\.
K\. Institutional Aspects
50\. The project for the large-scale supply of natural gas to the city of Medellin and its
Metropolitan Area is of immense importance for bringing down the cost of the energy
basket in the residential and industrial market\. Empresas PiTblicas de Medellin began this
project in earnest in the course of 1991, with the creation of the Unidad del Gas (Gas
Unit) to assume responsibility for coordinating and implementing the household natural
gas distribution project\. This program is consistent with the guidelines established by the
National Government in its large-scale distribution policy undertaken with the support of
the Ministry of Mines and Energy and ECOPETROL\.
51\. In 1991 the Directorate of Computer Technology was formed with the aim of
systematizing the community-wide services provided by EPM\. Its projects include, among
others, a Data Processing Master Plan designed to formulate strategy at the management
level for applying computer technology with the Companies, seeking to procure advanced
and appropriate technology systems that will be integrated and will allow the exchange of
information with existing systems\.
52\. Among the major objectives of the Master Plan is the SIGMA Project, whose aim
is to bring about comprehensive and systematized management of all the service networks,
- 29 -
to develop the software needed to be able to optimize the information systems, and to
provide information resources for office computerization and for expansion and
optimization of the centralized computer services\.
53\. Development of the SIGMA project and the procurement of equipment and
software for the organization received great technical and financial support from the Bank
as part of the Rio Grande II program\.
54\. During 1992 the Loss Division responsible for loss recovery was assigned an
additional task in the form of an energy conservation plan, which adapted the
administrative structure to the current energy problem, seeking to create ongoing action
on energy demand\.
55\. For this reason its name was changed from Loss Division to Conservation and
Energy Control Division and the Department of Energy Savings was created, whose
primary role has been to design, implement and execute the rational energy use program
which, combined with the loss plan, should eventually make the system work more
efficiently for the Companies\.
56\. A highlight of 1992 was the incorporation of the Directorate of Internal Audit into
the administrative structure of the Empresas Publicas, in accordance with the regulations
contained in the new National Constitution and with the aim of providing the entity with a
system that warns and informs the organization of any deviations in its operations,
promotes more expeditious methods for correcting such deviations and constantly seeks to
improve the Entity, the system itself and job satisfaction\.
L\. Lessons Learned
57\. During project implementation EPM had direct and personal relations with the
Bank, which made it easy to make any changes that were needed in the loan\.
58\. Toward the end of the decade these relations were affected by the tightening up of
the Bank's policies toward Colombia's electricity sector, which was reflected in the
sectoral manner in which problems were handled\. EPM needs to maintain and develop its
presence vis-d-vis the Bank and insist on receiving the differential treatment its particular
administrative and financial features warrant\.
59\. EPM has taken decisive actions with a view to improving project preparation and
avoiding the mistakes identified in the preparation of previous projects\. It has a complete
project management unit to take charge of the preparation and administration of the Porce
II Hydroelectric Project\.
60\. In order to improve its financial performance, EMP must work with the Bank to
find mechanisms to shorten the long periods of time that elapse between negotiation,
- 30 -
effectiveness and the first and last disbursement, in order to minimize commitment fee
costs and extend the grace periods so that the amortization schedule does not begin so
long before the projects actually enter into operation\. This will unquestionably improve
the flow of funds, making the Company's financial situation less risky\.
61\. In conclusion, we feel that the SAR should not be the main parameter used in
making the final project evaluation because it results in greater emphasis being placed on
the bad side, i\.e\. the delays and differences, than on the good side, i\.e\. the successes
achieved\.
-31 -
COLOMBIA
RIO GRANDE MULTIPURPOSE PROJECT
(LOAN 2449-CO)
PROJECT COMPLETION REPORT
PART HI: RELATED STATISTICAL INFORMATION
1\. Related Bank Loans
Loan Title Purpose Amount US$ Approval Status
Million
1868-CO Guadalupe IV Hydro 124\.55 1980 Completed
1953-CO Playas Hydro 85\.00 1981 Completed
2889-CO Power Sector Adjustment 225\.00 1987 Ongoing
3278-CO Public Sector Reform 304\.00 1990 Ongoing
3336-CO Municipal Development 60\.00 1991 Ongoing
2\. Project Timetable
Task Date Planned Date Actual
Appraisal 11/83 11/83
Loan Negotiations 5/84 5/84
Board Approval 6/84 6/84
Loan Signing 7/84 9/84
Loan Effectiveness 12/84 12/84
Loan Closing 12/91 6/94
Project Completion 6/90 5/94
- 32 -
3\. Loan Disbursements
Estimated Actual
Fiscal Year and Cumulative Cumulative Actual as % of
Semester US$ Million US$ Million Estimated
1985 Dec\. 1985 413\.00 0\.41 3
Jun\. 1985 21\.00 8\.47 40
1986 Dec\. 1985 25\.80 14\.85 58
Jun\. 1986 32\.70 18\.94 58
1987 Dec\. 1986 48\.10 22\.27 46
Jun\. 1987 67\.30 30\.94 46
1988 Dec\. 1987 85\.30 35\.97 42
Jun\. 1988 102\.70 35\.97 35
1989 Dec\. 1988 119\.00 38\.91 33
Jun\. 1989 133\.10 52\.22 39
1990 Dec\. 1989 144\.30 58\.19 40
Jun\. 1990 153\.70 65\.15 42
1991 Dec\. 1990 160\.20 83\.98 52
Jun\. 1991 164\.50 104\.95 64
1992 Dec\. 1991 120\.14 73
Jun\. 1992 125\.12 76
1993 Dec\. 1992 127\.40 77
Jun\. 1993 137\.79 84
1994 Dec\. 1993 142\.46 87
__ I_Jun\. 1994 156\.80 95
Date of Final Disbursement: June 30, 1994
Cancellations: US$7\.70 million
- 33 -
4\. Allocation of Loan Proceeds (in US$)
Category Original Actual
Allocation Disbursement
1\. Civil Works for Parts A, B, C, and D of Project 81,000,000 65,515,000
2\. Equipment and materials (excluding turbines and 43,000,000 75,894,000
generators) and ancillary services for Parts A, B,
C, and D of Project
3\. Equipment and materials and ancillary services 800,000 2,338,000
for Part F of Project
4\. Consultants' services for Parts A, B, C, and D of 8,000,000 19,287,000
Project
5\. Training and equipment for Part E of Project 800,000 1,356,000
6\. Initial Deposit 8,000,000
7\. Fee 410,224 410,000
8\. Unallocated 22,489,776
Total US$164500 0001 156,800000
A total of US$7,70 million was canceled from the Loan at the request of the Borrower\.
- 34 -
5\. Project Implementation
Component SAR Estimate Actual
Civil Works
Intake and main tunnel 6/88 4/89
Dam and spillway 9/88 9/88
Tasajera cavern 10/89 7/93
Niquia cavern and conduit 12/88 12/98
Substations 7/88 5/93
Transmission Lines 5/88 3/93
Equipment
Turbines-First Unit Tasajera 10/89 10/93
Generators and busbars First Unit 10/89 10/93
Powerhouse Crane 6/86 6/91
Tunnel Linings 11/87 9/92
Gates 11/87 9/93
Auxiliaries Tasajera 11/87 9/93
Auxiliaries Niquia 1/87 9/93
Substation equipment 12/87 9/93
Transmission line materials 6/87 3/93
Completion of Project 6/90 5/94
- 35 -
6\. Project Costs and Financing
Project Funding
(in US$ Million)
SAR Actual
IBRD Loan (2449-CO) 164\.5 156\.8
Cofinancing B-Loan 65\.5
Suppliers (Turbine/Generators) 22\.9 26\.9
FONADE-FEN and Government 13\.6 17\.5
EXIMBANK Jap6n - FEN 36\.0
EPM 151\.6 157\.7
Totals 418\.1 394\.9
7\. Project Results
The SAR evaluated the return on investment as the discount rate equalizing the
present values of the stream of benefits and costs associated with EPM's 1984-1990 water
supply and power development program of which the Rio Grande Project is a part and cannot
be reasonably segregated\. In calculating the revised internal rate of return a similar
methodology has been used\. The cost streams comprise the capital cost of this program
(including Phase II of the Rio Grande Scheme - water treatment, and distribution and
sewerage) and incremental operational and maintenance cost related to the incremental sales of
electricity and water associated with the program\. These costs where deflated to March 1984
(original price level in the SAR)\. Foreign costs were then converted to Colombian Pesos at the
March 1984 exchange rate\. As proxy for benefits, revenues from sales of power and water
were used, derived from incremental sales associated with the program and average annual
exchange rates, deflated for adjustment to March 1984\. This exercise was extended for 40
years after commissioning of the Project in mid-1994, which is considered the useful life of the
Project\. On these basis the recomputed rate of return is 9% compared to 18% in the SAR\.
This recomputed rate of return, compares nevertheless favorably with the opportunity cost of
capital in Colombia, estimated to be about 10-12%\.
- 36 -
8\. Use of Bank Resources
Staff Inputs Staff inputs in carrying out the various task through the project
cycle from appraisal in FY84 to preparation of the Project Completion Report in FY94, were
as follows:
Task Input (Staff Weeks)
Appraisal 83
Negotiations 15
Supervision 76
Total 174
Mission Data
Type of Mission Fiscal No\. of No\. of Staff Performance Type of
Year Weeks Persons Weeks Rating' Problems2
Field
Appraisal 84 3 4 9
Supervision I 85 1 3 3 1
Supervision II 86 1 3 3 1
Supervision III 87 2 2 4 1
Supervision IV 88 1 3 3 1
Supervision V 89 1 5 5 2 0
Supervision VI 90 1 3 3 2 0
Supervision VII 91 1 2 2 2 0
Supervision VIII 92 1 4 4 2 0
Supervision IX 93 1 1 1 1
PCR 94 1 1 1
I = Problem-free or minor problems
2 = Moderate problems
2 F = Financial; M = Managerial; and 0 = Other
- 37 -
9\. Status of Legal Covenants
EPM has complied with the covenants in the Loan Agreement, as shown
below:
Status of
Section Brief Description Compliance
A\. PROJECT COVENANTS
3\.01 (a) Carry out the Project with efficiency Complied
3\.01 (b) (i) Carry out a training program Complied
(ii) Implement a Data Processing Network
3\.02 (a) Employment of Consultants to assist EPM in Project Complied
Implementation
3\.02 (b) Employment of three Consultants for its board of experts Complied
for the overall supervision of the Project\.
3\.03 (a) Insure the imported goods Complied
3\.04 (a) Furnish to the Bank plans, contracts and schedules for the Complied
Project
3\.04 (b) Keep records to monitor the Project progress, its cost and Complied
benefits
3\.05 Acquire lands and rights required for the construction of the Complied
Project
3\.06 Implement the Project with due regard to ecological and Complied
environmental factors
3\.07 Take actions necessary for the completion of the water Complied
treatment plant and related distribution networks
3\.08 Sign agreements with the Municipalities of Envigado, Complied
Sabaneta and La Estrella on water supply and sewerage
services
4\.01 Carry on its operations and plan its expansion in accordance Complied
with sound practices, with qualified management and
experienced staff
4\.02 (a) Maintain its facilities adequately Complied
4\.02 (b) Cause all of its dams and other large structures to be Complied
periodically inspected
4\.03 Maintain insurance against risks Complied
5\.01 (a) Maintain separate records for each Department Complied
5\.01 (b) Keep records of expenditures withdrawn through S\.O\.E\. Complied
5\.02 (a) (i) Auditing of accounts and financial statements Complied
(ii) Auditing of Special Accounts
- 38 -
Status of
Section Brief Description Compliance
5\.02 (b) Submit to the Bank within five months after the end of each Complied
year copies of:
(i) Financial Statements and Special Account;
(ii) Audit Reports
5\.02 (c) Monthly certified statements of the Special Account Complied
5\.03 Annual report on actual and forecasted financial Complied
performance
5\.06 No new debts if net revenues are less than 1\.5 times the Complied
debt service in any year
5\.07 (a) (i) Rate of return (R\.O\.R\.) in power operations not less Complied
than 10% in 1987 and thereafter
(ii) R\.O\.R\. in water supply and sewerage operations not less
than 5\.2% in 1989 and thereafter
5\.07 (b) (i) Quarterly calculation of R\.O\.R\. Complied
(ii) Submit to the Bank quarterly calculation of R\.O\.R\.
(iii) Actions to obtain required R\.O\.R\.
5\.08 Monthly tariff increases Complied
5\.10 (a) Expenditures for capacity expansion larger than 100 MW Complied
only if it is part of ISA's program and approved by the Bank
5\.10 (b) Bank's approval for expenditures larger than 1% of fixed Complied
assets
5\.11 Transfers among Departments only if they are in excess and Complied
treated as a loan
5\.12 Obtain financial resources for about Col$1,200,000,000 for Complied
the Water Supply and Sewerage Department

ä¸ãIAGå¥ããã
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TyF,-ï¼ãCR | APPROVAL |
P118560 | Page 1
INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: 52976
Date ISDS Prepared/Updated: 02/01/2010
I\. BASIC INFORMATION
A\. Basic Project Data
Country: West Bank and Gaza
Project ID: P118560
Project Name: Capacity-Building for Palestinian Economic and Regulatory Institutions
Task Team Leader: Douglas Pearce
Estimated Appraisal Date: February 25,
2010
Estimated Board Date: April 27, 2010
Managing Unit: MNSED
Lending Instrument: Technical Assistance
Loan
Sector: General public administration sector (40%);General finance sector
(35%);Telecommunications (25%)
Theme: Legal institutions for a market economy (60%);Other public sector governance
(15%);Regulation and competition policy (15%);Standards and financial reporting (10%)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
0\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
Borrower
0\.00
Special
Financing
5\.20
5\.20
B\. Project Objectives [from section 2 of PCN]
The project development objective is to build the capacity of leading economic and regulatory
institutions, in order to support the implementation of the Palestinian Reform and Development
Plan\. Capacity building support to the proposed implementing partners would contribute to
achieving this goal as follows:
i\.
Strengthening the capability of PCBS to provide accurate and timely economic data is
critical to sound policy making by the PA\. The work conducted on National Accounts by PCBS
underpins the budgetary process, allows the PA and its supporters to measure the effectiveness of
their efforts, and strengthens the accuracy of National Accounts estimates\. The planned
Agricultural Census would provide much needed data for the Ministry of Agriculture's strategy,
and for efforts to promote the agricultural economy\. Project Development Objective (PDO)
related indicators being considered are the completion of the Agricultural Census, and the
preparation of revised National Accounts\.
Page 2
ii\.
The establishment of a strong independent telecoms regulatory agency could lower
telecoms costs to the customer, improve international and domestic connectivity for the
Palestinian economy, and increase the budget revenues provided by the telecoms sector, thus
contributing to both the intended outcomes and the financing of the PRDP\. Indicators evidencing
contribution to the PDO may include the establishment of a telecoms regulatory agency with
capacity to function independently of MTIT, increased fiscal revenues from the
telecommunications sector by up to 10 percent by end of the project, and a reduction in telecoms
user costs by up to 15 percent within 24 months\.
iii\.
A capable and effective banking sector regulator is essential to ensure that the risks and
challenges facing the Palestinian financial sector are managed and that further progress is made\.
The financial sector, dominated by banks, is closely linked to economic growth, and to the
feasibility of the PRDP's private sector-led economic growth strategy\. The PMA's role in
ensuring that donors can provide funding to the PA and to Gaza, without risk of funds being
diverted to unintended uses, helps ensure substantial donor funding in support of the PRDP\.
PDO-related indicators may include the establishment of a draft regulatory and legal framework
for a Deposit Insurance Scheme, a forecasting and policy analysis system, and a regulatory
framework for consolidated supervision\.
iv\.
The 2008-2011 Palestinian Reform and Development Plan (PRDP) reiterated the PA's
commitment to strengthen its fiscal position\. The proposed technical assistance would enable the
PPA to more effectively manage all civil service pension schemes in West Bank and Gaza, in a
more transparent and sustainable manner\. It would strengthen the PPA's capacity to support the
PA in implementing the necessary parametric and systemic reforms of the various on-going
pensions systems, that otherwise could threaten the fiscal viability of a future Palestinian
government\.
PDO-related indicators may include: constitution of a pensions steering
committee that would meet monthly and begin the process of analyzing pension reform options;
that the Actuary Dept of the PPA is certified in latest version of PROST and can carry out
simulations; that the PPA has consolidated records of active and passive members of all
schemes; and that the PPA has a secure IT system in place with updated pension records for a
civil servants\.
C\. Project Description [from section 3 of PCN]
The Bank has undertaken a series of Development Policy Grants to support the PA's efforts to
implement the PRDP\. This proposed technical assistance grant compliments these DPGs by
helping to build institutional capacity in areas that are critical to the implementation of the
PRDP\. Strengthening these selected institutions will increase the PA's ability to manage the
economy and create opportunities for growth, which will allow the PA to be less reliant on
external assistance\. In addition, helping reform the pensions system will directly impact the PA's
fiscal position\.
D\. Project location (if known)
The project will be coordinated by the PA's Ministry of Finance in Ramallah\. All proposed
implementing agencies are based in West Bank with the exception of the Palestinian Pensions
Authority, based in Gaza\. While the project will make all efforts to include Gaza, it is likely that
the impact of some of the assistance will be limited in Gaza, unless the political context changes\.
E\. Borrowers Institutional Capacity for Safeguard Policies [from PCN]
Page 3
This Category C project will not involve any physical investments and none of the Bank's
safeguard policies will be triggered\. The project's activities will not result in any environmental
impacts\.
F\. Environmental and Social Safeguards Specialists
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered
Yes No TBD
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Physical Cultural Resources (OP/BP 4\.11)
X
Indigenous Peoples (OP/BP 4\.10)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
Environmental Category:
C
-
Not Required
III\. SAFEGUARD PREPARATION PLAN
A\. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS
would be prepared: N/A
B\. For simple projects that will not require a QER, the target date for preparing the PAD-stage
ISDS: 02/25/2010
C\. Time frame for launching and completing the safeguard-related studies that may be needed\.
The specific studies and their timing
1
should be specified in the PAD-stage ISDS\.
N/A
1
Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected
persons\.
Page 4
IV\. APPROVALS
Signed and submitted by:
Task Team Leader:
Mr Douglas Pearce
01/26/2010
Approved by:
Regional Safeguards Coordinator:
Mr Hocine Chalal
01/27/2010
Comments:
Sector Manager:
Mr Simon C\. Bell
01/26/2010
Comments: | APPROVAL |
P101211 |  Document of
The World Bank
Report No: ICR00001740
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-76190)
ON A
LOAN
IN THE AMOUNT OF US$636\.5 MILLION
TO THE
REPUBLIC OF COLOMBIA
FOR
SUPPORT FOR THE SECOND PHASE OF THE EXPANSION OF THE PROGRAM
OF CONDITIONAL TRANSFERS-FAMILIAS EN ACCION PROJECT
June 29, 2012
Human Development Department
Mexico and Colombia Country Management Unit
Latin America and Caribbean Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 15, 2012)
Currency Unit = Colombia Peso
COP 1,791\.8 = US$1
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
AAA Advisory Services
CCT Conditional Cash Transfer
CONPES National Commission on Economic and Social Policy (Consejo Nacional de
PolÃtica Económica y Social)
CPS Country Partnership Strategy
DAPR Administrative Department of the Presidential Office in charge of the Acción
Social Investment Fund for Peace (Departamento Administrativo de la
FIP Presidencia de la República-Agencia Presidencial para Acción Social y
Cooperación Internacional-Fondo de Inversión para la Paz-FIP)
DNP National Planning Department
FM Financial Management
IADB Inter â American Development Bank
ICR Implementation Completion and result Report
IPP Indigenous Peoples Plan
ISRs Information Systems Renewal
MDGs Millennium Development Goals
MIS Management Information System
MSP Ministry of Social Protection
NDP National Development Plan
OPRC Operational Procurement Review Committee
PAD Project Appraisal Document
PDO Project Development Objectives
SIPOD Information System of Displaces Population+
SISBEN System for the Selection of Programsâ Beneficiaries (Sistema de Identificación de
Potenciales Beneficiarios de Programas Sociales)
TORs Terms of References
WB World Bank
Vice President: Hasan A\. Tuluy
Country Director: Gloria M\. Grandolini
Sector Manager: Mansoora Rashid
Project Team Leader: Theresa Jones
ICR Team Leader: Theresa Jones
COLOMBIA
SUPPORT FOR THE SECOND PHASE OF THE EXPANSION OF THE
PROGRAM OF CONDITIONAL TRANSFERS-FAMILIAS EN ACCION
PROJECT
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development Objectives and Design \. 1
2\. Key Factors Affecting Implementation and Outcomes \. 4
3\. Assessment of Outcomes \. 9
4\. Assessment of Risk to Development Outcome\. 17
5\. Assessment of Bank and Borrower Performance \. 18
6\. Lessons Learned \. 20
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 21
Annex 1\. Project Costs and Financing \. 22
Annex 2\. Outputs by Component \. 23
Annex 3\. Economic and Financial Analysis \. 33
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 36
Annex 5\. Beneficiary Survey Results \. 38
Annex 6\. Stakeholder Workshop Report and Results\. 38
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 39
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 62
Annex 9\. List of Supporting Documents \. 63
Â
A\. Basic Information
Support for the Second
Phase of the Expansion
of the Program of
Country: Colombia Project Name:
Conditional Transfers-
Familias en Acción
Project
Project ID: P101211 L/C/TF Number(s): IBRD-76190
ICR Date: 06/29/2012 ICR Type: Core ICR
REPUBLIC OF
Lending Instrument: SIL Borrower:
COLOMBIA
Original Total
USD 636\.50M Disbursed Amount: USD 636\.50M
Commitment:
Revised Amount: USD 636\.50M
Environmental Category: C
Implementing Agencies:
DAPR-Accion Social-FIP, Presidency
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 07/01/2008 Effectiveness: 02/04/2009 02/04/2009
Appraisal: 09/29/2008 Restructuring(s):
Approval: 12/18/2008 Mid-term Review:
Closing: 12/31/2010 12/31/2011
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Low or Negligible
Bank Performance: Moderately Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Satisfactory
Implementing
Quality of Supervision: Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Health 33 33
Other social services 50 50
Primary education 9 9
Secondary education 8 8
Theme Code (as % of total Bank financing)
Education for all 33 33
Nutrition and food security 17 17
Social safety nets 50 50
E\. Bank Staff
Positions At ICR At Approval
Vice President: Hasan A\. Tuluy Pamela Cox
Country Director: Gloria M\. Grandolini Axel van Trotsenburg
Sector Manager: Mansoora Rashid Helena G\. Ribe
Project Team Leader: Theresa Jones Theresa Jones
ICR Team Leader: Theresa Jones
ICR Primary Author: Theresa Jones
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The proposed project would finance Colombia's conditional cash transfer (CCT)
program, Familias, which was expanded during 2007 to cover about 1\.7 million poor
families (including about 250,000 displaced families)\. The principal project development
objectives are:
ii
- Complement the income of poor families with minors under 18 (SISBEN level 1 and
the displaced)
- Promote human capital formation of poor children by increasing regular check-ups,
including growth monitoring, and vaccinations and by increasing enrollment and school
attendance (basic and/or secondary education)
- Strengthen program quality
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Net change in household (1) total consumption; (2) food consumption; (3)protein
consumption (milk, poultry and meat); and high quality food (fruits and
Indicator 1 :
vegetables)\. (3) and (4) measured by share who consume and number of days
consumed, respectively
(1)US$20/mo***
(2)US$6\.75/mo*
(3)12-16
percentage points
depending on
Value
product
quantitative or No targets set\.
(4)\.27-\.49 days
Qualitative)
depending on
product
Achieved given
positive net impact
of program
Date achieved 12/30/2008 12/30/2011
For ITT/TOT definitions see footnote 9\.
(1) US$42/month ***TOT
Comments (2) US$24/month*TOT
(incl\. % (3) 15\.4-21\.3 TOT depending on product
achievement) (4) \.24-\.49 days TOT depending on product
For (3) and (4) significance varies depending on product
Achieved
Indicator 2 : Net change in chronic malnutrition amongst children under 5
Value
\.215* on height for
quantitative or No target set\.
age z score
Qualitative)
Date achieved 12/30/2008 12/30/2011
Comments Achieved given positive net impact of program\.
(incl\. % The z-score measures the degree to which a child's measurement deviate from
achievement) what is expected for that child based on a reference population
iii
Indicator 3 : Net change in secondary school attendance
(1) 2-13\.5 pp
Value
depending on
quantitative or No target set\.
gender, scheme and
Qualitative)
location**
Date achieved 12/30/2008 12/30/2011
Comments
Results are reported from impact evaluation SISBEN census methodology\.
(incl\. %
Achieved given positive net impact of program\.
achievement)
Indicator 4 : Net change in drop-out in secondary school
Value Sample size not
quantitative or No target set\. sufficient to
Qualitative) measure\.
Date achieved 12/30/2008 12/30/2011
Comments
(incl\. % Sample size insufficient to judge whether program has positive net impact or not\.
achievement)
Indicator 5 : Net change in use of preventive services according to the national protocols
Value
quantitative or No target set\. 11\.8*** pp
Qualitative)
Date achieved 12/30/2008 12/30/2011
Comments
13\.2 *** percentage points for TOT\.
(incl\. %
Achieved given positive net impact of program\.
achievement)
Indicator 6 : Net change in percentage of children aged 0-6 with complete DPT vaccination\.
Value
quantitative or No target set\. 4\.2*pp
Qualitative)
Date achieved 12/30/2008 12/30/2011
Comments
4\.0*percentage points for TOT measure\.
(incl\. %
Achieved given positive net impact of program\.
achievement)
Number of registered families as a percentage of number of families eligible
(1)Overall
Indicator 7 : (2)Small municipalities (<100,000 inhabitants)
(3)Large municipalities (>100,000 inhabitants)
(4)Indigenous
(1)62\.1% (1)61\.6%
Value
(2)68\.0% (2)63\.6%/
quantitative or No target set\.
(3)53\.2% (3)55\.6%
Qualitative)
(4)90% (4)66\.9%
Date achieved 06/30/2008 12/30/2008 12/30/2011
Comments
(incl\. %
achievement) Partially achieved\.
iv
Control of responsibilities in health: number of families who comply in health, as
Indicator 8 : percentage of total number of beneficiary families in health for (1) Total, (2)
small municipalities, (3) large municipalities, and (4) urban centers
(1) 70\.8%
Value
(2) 79\.3%
quantitative or (1) 91\.7% No target set\.
(3) 66\.3%
Qualitative)
(4) 56\.5%
Date achieved 06/30/2008 12/30/2008 12/30/2011
Comments
Data from 5th payment cycle in 2011
(incl\. %
Given significant decline, not achieved\.
achievement)
Control of responsibilities in education: number of children who comply in
Indicator 9 : education, as percentage of total number of beneficiary children for (1) Total (2)
Small municipalities (3) Large municipalities (Urban centers)
(1)68\.0%
Value
(2) 68\.0%
quantitative or (1) 71\.9% (6/08) No target set\.
(3)64\.6%
Qualitative)
(4)58\.2%
Date achieved 06/30/2008 12/30/2008 10/31/2011
Comments Measured as share of all children participating in the program, so considers both
(incl\. % children who are not enrolled in school and those who although enrolled are not
achievement) meeting the attendance requirement\.
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Withdrawal: Number of families removed from the program (in previous year),
Indicator 1 :
by reason\.
153,092
⢠45% non-
payment for 3
Value cycles
(quantitative 23,959 No target set\. ⢠36% non-
or Qualitative) compliance with
conditions
⢠19% children
exceeded age li
Date achieved 06/30/2008 12/30/2008 12/30/2011
Comments
Given demonstrated improvements in controls over beneficiary registry as shown
(incl\. %
by this indicator, judged to be achieved\.
achievement)
Indicator 2 : Training: Percentage of beneficiaries having received training from the program\.
Value
(quantitative 47\.5 No target set\. 38\.5%
or Qualitative)
Date achieved 06/30/2008 12/30/2008 12/30/2011
v
Comments
Organization of training events suspended before elections (outside of control of
(incl\. %
Program, so in spite of decline judged to be partially achieved\.
achievement)
Difficulties in process of control: Percentage of beneficiaries reporting
Indicator 3 :
difficulties, by type(1) health and (2) education
Value
(1)1\.7% (1)0\.4%
(quantitative No target set\.
(2) 1\.1% (2) 4\.1%
or Qualitative)
Date achieved 06/30/2008 12/30/2008 12/30/2010
Data comes from reports on periodic monitoring of how program procedures are
Comments
implemented at the local level, not from the MIS, so annual data is not available\.
(incl\. %
Given its availability and the use of indicator for monitoring, judged to be
achievement)
achieved\.
Alerts in process of control: number of municipalities in yellow or red alert in
Indicator 4 :
health and education
Value
(quantitative 121 municipalities No target set\. 120 municipalities
or Qualitative)
Date achieved 06/30/2008 12/30/2008 12/30/2011
Comments
Given its availability and the use of indicator for monitoring, judged to be
(incl\. %
achieved\.
achievement)
Payment: Number of families paid, as a share of number of families complying
Indicator 5 : with their responsibilities for (1)Total, (2)small municipalities, (3)large
municipalities, and (4)urban centers\.
98\.0%
Value
95\.03%
(quantitative 94\.58%(overall) No target set\.
98\.1%
or Qualitative)
97\.6%
Date achieved 06/30/2008 12/30/2008 12/30/2011
Comments
(incl\. % Given improvement registered, judged to be achieved\.
achievement)
Indicator 6 : Alerts in process of payment: number of municipalities in yellow or red alert
Value
(quantitative
or Qualitative)
Date achieved
Comments For each bimonthly payment cycle the program identified municipalities which
(incl\. % showed unusual changes in the number or share of beneficiaries paid, although
achievement) the system of red and yellow alerts was not used\.
Complaints:
Indicator 7 : (1)Number of complaints by type
(2) Percentage of complaints addressed in less than 15 working days
Value
(1)73\.432
(quantitative
(2)92\.6%
or Qualitative)
Date achieved 12/30/2011
vi
Comments
Given its availability and the use of indicator for monitoring, judged to be
(incl\. %
achieved\.
achievement)
Indicator 8 : % of municipalities and families verifying conditions by type of mechanism
Precise data not
available, but
Program using to a
greater extent other
methods of
Main mechanism in use is
Value verification,
presentation by mothers
(quantitative including
of evidence of
or Qualitative) comparisons of data
compliance
bases by municipal
representative of
Program and entry
of information on
compliance\.
Date achieved 06/30/2008 12/30/2011
Comments
(incl\. % Partially achieved\.
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 02/27/2009 Satisfactory Satisfactory 0\.00
2 11/11/2009 Satisfactory Satisfactory 222\.50
3 06/28/2010 Satisfactory Satisfactory 523\.70
4 12/18/2010 Satisfactory Satisfactory 636\.50
H\. Restructuring (if any)
Not Applicable
vii
I\. Disbursement Profile
viii
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
A\. Country and sector issues
At the time of appraisal in 2008, Colombia had benefited from sustained economic
growth and a reduction in poverty for 5 years\. By 2006, the poverty rate had fallen to 45
percent, compared to 55 percent in 2002 and the extreme poverty rate had dropped from
20 to 12 percent\. Despite these improvements, regional, ethnic and gender disparities
remained, particularly in rural areas and among female-headed households, indigenous
people, Afro-Colombians, and displaced individuals\. Nearly 30 percent of the indigenous
population and 25 percent of Afro-Colombians were considered extremely poor\.
Moreover, it seemed likely that the rapid growth of 2007 would subside\.
A national priority was assisting needy families to invest in the human capital of their
children, particularly in education and health\. School attendance had increased across all
age groups, but Colombia still lagged behind Latin American averages\. In rural areas,
only 87 percent of children aged 7-11 attended school while rates dropped to 63 percent
for 12-17 year olds\. Sizeable gaps also existed between poorer and richer departments\.
According to the 2005 National Demographic and Health Survey, 10 percent of children
under 5 in rural areas and 6 percent of those in urban areas suffered from global
malnutrition (weight for age)\. There were also significant differences in rates between
children in households in the lowest-ranked income group (11\.6 percent) and those in the
highest income group (3\.2 percent)\.
Familias en Acción (hereafter referred as Familias) is a Conditional Cash Transfer (CCT)
program which disburses cash transfers (grants) to families, conditional on compliance
with certain requirements primarily related to ensuring that children are enrolled and
attend school and also receive health check-ups\. Since its start in 2001, the objectives
and coverage of Familias have evolved\. In 2005, positive findings from an impact
evaluation1 led to the first expansion of the program as well as a change in focus from
preservation to the promotion of human capital\. In the National Development Plan 2006-
2010, Familias was a key element within the social promotion component of the social
protection system and in the strategy to reduce extreme poverty â the Social Protection
Network to Overcome Extreme Poverty (Juntos, now called Unidos)\. The role of
Familias as both entry point and cornerstone for Juntos had important implications\. A
major expansion in coverage was needed to give all municipalities access to Familias and
the authorities had to consider possible adjustments in its design so as to ensure its
continued efficiency and effectiveness in a larger operational context\.
1
Primer Seguimiento de la evaluación de impacto del programa Familias en Acción, carried out
by the National Department of Planning through a contract with the Institute for Fiscal Studies,
Econometria S\.A, and Sistemas Especializados de Información-SEI\.
1
B\. Rationale for Bank assistance
The project was the fourth World Bank loan supporting Familias en Acción\. Since its
inception in 2001, the Bank had provided technical assistance and financial resources to
help strengthen the program, as well as supported Colombiaâs broader social protection
system through a series of programmatic structural adjustment and development policy
loans and a technical assistance project\.2 In addition to financing, it was intended that the
project be a vehicle for continued technical cooperation and support for the program\. The
project would be complemented by a World Bank program of knowledge and convening
services, Strengthening Social Protection in Colombia\.
C\. Higher level objectives to which the project contributed
The World Bank Groupâs Country Partnership Strategy (CPS) for FY08-11 was based on
Colombiaâs National Development Plan (NDP)\. It included five areas of concentration
and collaboration, including sustained equitable growth, environment and natural
resources management, good governance, poverty alleviation and equity of opportunity
and peace\. In the latter two areas, Familias and complementary non-lending technical
assistance were key contributions to the eradication of extreme poverty, the reduction in
regional inequality, strengthening the social safety net, and removing access barriers to
education and health services in high conflict zones\. The CPS stressed the importance of
continuity with successful operations through second and third-generation projects\. The
project also contributed to Colombiaâs efforts to meet several Millennium Development
Goals (MDGs) and its strategy to reduce extreme poverty (Juntos)\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators
The project development objectives were: (a) complement the income of poor families
with children; (b) promote human capital formation of poor children by increasing
regular check-ups, for growth monitoring and other services, and by increasing
enrollment and school attendance (basic and/or secondary education); and (c) strengthen
program quality\. Key performance indicators were the following:
ï Net improvements in household total, food (including fruits and vegetables) and
protein consumption\.
ï Net change in chronic malnutrition among children under 5\.
ï Net change in enrollment, attendance and drop-out in secondary schools\.
ï Net change in use of preventive health services according to national protocols\.
ï Net change in percentage of children age 0-6 with complete immunization
package\.
2
See ICR, No\. 522, December 21, 2007, ICR No\. 1332, December 18, 2009, and ICR No\. 1829,
June 29, 2011\.
2
ï Percentage of families who comply with the requirements for health check-ups for
children by age, population and geographic groups\.
ï Percentage of families who comply with the school enrollment and attendance
requirements, by age, population and geographic groups\.
ï Percentage of municipalities and families verifying the health and schooling
requirements by type of mechanism\.
ï Percentage of families inscribed in the program who are paid, by geographic and
population groups\.
1\.3 Revised PDO and Key Indicators
There were no revisions to the PDOs or key indicators\.
1\.4 Main Beneficiaries
The main beneficiaries were poor families with children below 18 years of age,
particularly the children in those households\. At the time of appraisal, the project was
expected to finance transfers for roughly 1\.5 million families, out of the 1\.7 million
families reached by the program after its second phase of expansion\.
1\.5 Original Components
The project had one component - Consolidation and Expansion of the Familias
Program\. The project was to finance cash transfers (grants) to the participant families
who complied with the conditions\. These included: (a) assuring that children 0-6 (and in
some cities 7-11) regularly visit health centers according to national protocols; and (b)
assuring that children 7-17 years of age enroll in school and attend classes no less than 80
percent of the time\. It was also intended that the project finance the bank commissions
associated with delivering those payments and consultancy services and analytical studies\.
As of 2007, the program began to operate in large cities (a pilot in Medellin, Soacha and
Cali had been carried out earlier)\. Since the different socio-demographic and economic
characteristics of large cities could affect the potential results of Familias, the NDP and
the program reviewed the structure of conditions\. In addition, the results of the impact
evaluation which had been carried out for rural areas and small municipalities showed no
program impact on primary school attendance in department capitals\. Because the higher
attendance rate for primary school in urban areas (93 percent in 2005) left little space to
achieve a significant impact a decision was made to tailor the conditions to improve
impact by focusing on the secondary level\.
During the project, the program tested three different structures of transfers and
conditions in urban areas\. The changes were intended to reflect better the opportunity
cost of secondary education in urban areas by raising the subsidy amount, particularly at
levels where drop-out is a problem, in order to provide incentives for students to
complete important grade levels\. The main difference was that in two schemes
(incremental) the value of the subsidy increased for higher grades, while in the other
3
scheme (savings), families received a âbonusâ? for completing certain grades (ninth and
eleventh)\. Only the structure differs; the overall amount received by the family is the
same\.
1\.6 Revised Components
The project component was not revised during implementation\.
1\.7 Other significant changes
In late 2008, the Government decided to further expand the coverage of Familias\. The
Program started to register new families in December 2008 prioritizing the departments
and municipalities which had been most affected by the emergency caused by large scale
fraudulent ponzi schemes in which numerous people had lost resources\. In November
2008, the Government issued an Emergency Decree recognizing that special actions were
needed to compensate the families affected, particularly low-income households\. As a
result of this expansion, the coverage of the program increased from 1\.7 million families
at the time of project appraisal to 2\.7 million families by the end of 2009\. The
Government financed the expansion with national resources\. A second significant
change was that loan resources originally envisaged to finance bank commissions were
reallocated to cash transfers\. Details of these changes are described in Section 2\.4\. Bank
management approved the reallocation on January 4, 2010\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
Project preparation and design reflected sound analytical and operational analysis derived
from the Bankâs prior involvement in the area of social protection in Colombia\. Bank
staff drew on the analytical work done for previous phases as well as lessons learned
from the program after eight years of operations\. The project was a logical extension
designed to support adaptations of the program to urban areas and to areas with the
largest social disparities such as indigenous communities, as well as improvements in
quality\. The program would also continue incorporating the eligible displaced population\.
Project design was informed by the results of a series of previous impact evaluations in
rural areas (baseline and 2 follow-ups), as well as impact evaluations of similar
interventions which were piloted in two large cities âBogota and Medellin\. These impact
evaluations were managed by the Government through consultancy contracts, with
technical and financial support from the World Bank and the Inter-American
Development Bank (IADB)\. It made sense to test different structures of benefits in urban
areas and to evaluate their results\.
The Project Development Objectives focused on outcomes for which the operation could
be held accountable\. They were clear, realistic and important in the context of both the
CPS and the NDP and responsive to Borrower priorities\. The implementing agency,
Acción Social, had sufficient capacity\. IADB was a key partner of the Bank, continuing
the history of joint support to Familias\. The commitment of the Government to Familias
4
was clear\. According to the National Development Plan 2006-2010, Familias was a key
element in the social protection system\. The Consejo Nacional de PolÃtica Económica y
Social (CONPES) had approved the request of the Government to contract loans for up to
US$1\.5 billion from the IADB and the Bank to finance the operation of Familias during
2007-2010\.
The assessment of risks and the discussion of mitigation measures were comprehensive
and focused primarily on potential weaknesses in the design and operational procedures
of Familias\. Most risk mitigation measures were incorporated into project supervision
arrangements and the analytical support to be provided to the program during
implementation\. Risk mitigation measures worked effectively, and were particularly
important given the expansion during late 2008-2009\. In particular, the systems audit
helped to identify the improvements which were needed in the management information
system (MIS) of the Familias Program\. It was carried out during 2008 by
PriceWaterhouseCoopers in order to determine whether risk management, control, and
governance processes over the MIS provided reasonable assurances that the security and
confidentiality of data and information is appropriate and that the quality and integrity of
the data processed ensures accurate and complete management reporting, among other
topics\.
Project design was not overly complex as it had only one component and responded to
the Government´s specific requests in terms of the financing package\. The design of
Familias was not overambitious and the program was able to carry out most of the
innovations stated in the Project Appraisal Document (PAD)\. Project design and quality
at entry is considered to be satisfactory\.
2\.2 Implementation
Project implementation was generally satisfactory, particularly considering the significant
expansion of the program which was not foreseen at the time of appraisal\. The need of
the Program to focus on the challenge of the expansion probably did delay to some extent
the progress made on some quality improvements\. In addition, the expansion
necessitated a reformulation of the design and schedule for the impact evaluation,
contributing to its delay and the need to extend the project by one year to December 31,
2011\. An evaluation of operational aspects of the Program 3 showed that there were
weaknesses in the communication to families of the different schemes of transfers and/or
difficulties in understanding the somewhat complex structures of transfers\. Even though
knowledge increased between the baseline (2007) and the follow-up survey (2011), in the
case of locations where the incremental scheme was implemented, only about one-third
of the mothers knew that the transfer level increased according to grade level, while two-
thirds of mothers responded that they did not know\. A similar situation was found in
localities where the âsavingsâ? scheme was implemented\. Only four percent of mothers
3
Evaluación del Programa Familias en Acción en Grandes Centros Urbanos, Informe Final,
Centro Nacional de Consultoria, December 2011\.
5
knew that a bonus was received for passing 9th grade and enrolling in 10th grade, while
nearly one-quarter of mothers knew that a bonus was received for graduating from
secondary school\. Again about two-thirds of mothers responded that they did not know\.
In spite of the lack of knowledge, administrative data show that between 70 percent and
86 percent of eligible students on average among all localities received the bonus,
varying according to the type of bonus and the year\. On the other hand, steady progress
was made in reaching the goal for registration of eligible families in indigenous
communities and the fact that the results of the systems audit were available early on
permitted substantial progress to be made during project implementation\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Design is assessed as satisfactory\. Monitoring indicators were selected based on the
existing MIS of the program\. A moderate shortcoming is that the proposed detailed
breakdown of some indicators by type of population (SISBEN 1, displaced, indigenous,
and small vs\. large municipalities) was probably overly ambitious and proved difficult to
implement in practice\. An external impact evaluation was built into the project in order
to evaluate the results for the different structures of benefits being tested in urban areas\.
The evaluation used a quasi-experimental design combine and included also a process
evaluation and a qualitative assessment of knowledge and perceptions from different
stakeholders\. When the unanticipated expansion of the program made the initial design
unfeasible, the Government responded, in consultation with the IADB and the Bank, by
modifying the contracting process to request alternate designs\. The program also
contracted a third follow-up and analysis of the original evaluation which covered
localities below 100,000 inhabitants, financed under the IADB project\.
Implementation was satisfactory\. The Strategy and Monitoring unit produced regular
reports on compliance with conditions, status of families, complaints, payments, and the
process of opening bank accounts for beneficiaries, which covered most of the indicators
included in the results framework\. The quality and completeness of the information
improved and was an important input for decision-making by the program staff\. As
described in the PAD, an impact evaluation designed to measure the results of the
different structures of education transfers being piloted in large cities was contracted to a
local consultancy firm (Centro Nacional de Consultoria)\. The baseline survey was
carried out in late 2007 (early 2008 in the case of Bogota) and the follow-up in
February/March 2011\. As explained above, implementation of the impact evaluation was
affected by the decision to expand the program, and as a result suffered a delay of about a
year and the methodology had to be revised\. The final report was delivered at the end of
2011\. While the results of this impact evaluation arrived too late to affect the
implementation of the project, they are influencing decisions that are currently being
taken by the Government of Colombia on the redesign of the program\.
M&E utilization was also satisfactory\. Data on monitoring indicators were used to
organize remedial actions and local supervision visits as necessary\. The results of the
impact evaluation are being taken into account in the Governmentâs redesign of the
Familias Program which is currently underway\.
6
2\.4 Safeguard and Fiduciary Compliance
Safeguards\. The project triggered the safeguard policy OP\. 4\.10 on Indigenous Peoples
and an Indigenous Peoples Plan (IPP) was prepared and was the basis for consultations
during project preparation\. During implementation of the previous Social Safety Net
Project (Lns\. 7337 and 7433), the program carried out a pilot in indigenous communities,
including consultations on the proposed strategy\. Agreement was reached with the
indigenous population and municipal authorities in 4 pilot communities on program
implementation\. The IPP described the main results of the pilot, discussed the
modifications in the program to adapt to indigenous communities, and included measures
designed to ensure that indigenous peoples received culturally appropriate social and
economic benefits\. As a result of the IPP, an Operational Manual for the indigenous
population was prepared as an annex to the Operational Manual of the program\. At the
time of project appraisal, Familias had started to consult with indigenous communities in
about 20 departments and had initiated preparatory work in 14 localities, and expected to
register 70,000 indigenous families with 152,000 eligible children during the life of the
project\.
The program has made significant progress registering indigenous families who live in
communities which were not registered for the targeting instrument (SISBEN) 4 and
working with indigenous liaisons (enlaces indÃgenas), who are selected from among the
participants in the program, to ensure that operational processes run as planned\. The
program has registered 78,161 indigenous families (as of the end of 2011), of which
71,997 families received benefits during 2011\.5 Between August 2009 and April 2010,
the program conducted a process evaluation of its operations in indigenous communities\.6
The evaluation found that the program has effectively expanded among indigenous
peoples taking into account their beliefs, cultural identity, and traditional values\. The
indigenous assemblies (Asambleas IndÃgenas), a gathering where participants openly
discuss topics important to the community, were key to the process of registration of new
beneficiaries\. The evaluation found that the assemblies were the most important and
efficient feature of the operational process of the program and differentiated the way it
operated in these localities\. Eligible families were selected in the assemblies using a
process of self-targeting based on the criteria of the Program\. In addition, it was
common to resolve complaints and appeals in collective gatherings such as the
assemblies or other internal discussions\. The assemblies were also an effective
4
Indigenous families eligible for the program are registered in SISBEN enter the program under
the usual procedures\.
5
This represents roughly 25 percent of the estimated 1,392,000 indigenous in Colombia, without
considering the indigenous population who had registered in SISBEN and entered the program
under the usual procedures\.
6
Evaluación de Operaciones de los Proyectos Piloto del Programa Familias en Acción en
Comunidades IndÃgenas (Centro Nacional de Consultoria, 30 abril 2010)\.
7
mechanism to oversee the implementation of the program in these communities\. The
evaluation found that Familias has empowered female heads of households by providing
them with extra income and by encouraging them to participate regularly in local
assemblies\. In addition, the program increased communication between mothers and
linked them to local health and education services\.
The evaluation found no evidence that the operation of the program had caused negative
consequences on the traditional production systems or socio-cultural practices\. On the
contrary, the program had contributed to the strengthening of indigenous institutions,
especially the indigenous councils and the institutions providing health services\. On the
other hand, neither the cultural pertinence nor the consistency with the objectives or other
components of the Familas program were clear for some complementary activities
undertaken such as activities related to food self-sufficiency\. No analysis is available yet
on the results and impact of the Program on human capital formation in indigenous
communities\.
Fiduciary Issues\. The implementing agency (DAPR-Acción Social-FIP) complied with
the Bankâs fiduciary requirements in the area of financial management\. Throughout
implementation, FM performance was rated âmoderately satisfactory\.â? IFRs and annual
financial audits were acceptable to the Bank and delivered in a timely manner\. In the
case of the latter, opinions were unqualified\. Early during project implementation, at the
request of both the Bank and the IADB, a systems audit was carried out, which provided
useful advice to the implementing agency on how to improve the robustness and
reliability of the MIS\.
In the area of procurement, there were difficulties with the procurement process for
banking services to handle the payment of the cash grants and open bank accounts for
program participants\. Although substantial interest was demonstrated at various
information sessions, only one bidder presented a proposal, and the cost associated with
this proposal was substantially higher than expected\. Prior to responding to the request
for no objection to the evaluation report and draft contract (sent by the Borrower
December 1, 2008), the Regional Procurement Advisor instructed the project team to
contact the banks which did not present bids to find out the reasons for their decision not
to participate and to contract a market study to evaluate the âreasonablenessâ? of the offer
in the context of market conditions in Colombia\. Given the size of the contract, the case
was reviewed by the OPRC (April 29, 2009)\. In July 2009, the decision of the OPRC
committee not to provide the Bankâs no objection to the proposed award was
communicated to project staff\. In the meantime, the Borrower had proceeded to sign the
contract\. The Bank task team leader communicated to the Government the decision not
to provide the no objection because the bidding lots had been grouped in a manner that
had not generated the necessary competition to comply with the Bankâs Procurement
Guidelines\. The fact that the Borrower had both negotiated with the bidder and signed
the contract before having received the Bankâs no objection were also contrary to Bank
guidelines and closed off any other alternative for dealing with the bidding process\. An
audit of the process of the contracting of the process of paying the transfers and opening
up bank accounts for the program participants, carried out by the program, showed that in
8
other respects the guidelines of the Bank had been followed\. Subsequently, the Bank and
the Government agreed that the resources which had been allocated to bank commissions
would be reassigned to the category of cash grants\. In response to an official request for
this reallocation, the Bank management effected the change and informed the
Government in January 2010\.
2\.5 Post-completion Operation/Next Phase
Familias is broadly recognized as having contributed to improving the welfare of poor
families in Colombia\. After almost ten years of operations and with a new government
recently elected, the authorities are in the process of re-assessing many of its key features\.
The new administration has decided to maintain the program at least at its current size,
with a small expansion possible\. A key step to institutionalize the program took place
June 7, 2012, when a law was passed by the Congress and signed by the President which
regulated the main aspects and functions of the program\. In addition, the Government
has made a decision to enroll any family in the Red Unidos who is eligible, but not a
current participant of the program into Familias\.
Two important changes will affect the next phase of implementation of Familias\. The
first is that on November 3, 2011, Decree 4155 transformed the implementing agency,
Acción Social, into the Administrative Department for Social Prosperity, an important
institutional change in the context of the Governmentâs poverty reduction strategy\.
Acción Social was intended to be primarily an executing agency\. The new Department
has broader responsibilities as a rector over various components of the social protection
system, including formulating and designing policies and programs\. Unlike Acción
Social, the new Department has the rank of a Ministry\.
Second, for the first time since its inception, the operation of Familias will be funded
almost entirely with national resources starting in 2012, once a small balance from the
IADB loan is fully disbursed, mainly for studies\. There are no plans for a follow-on
World Bank loan to finance Familias\. Already in 2011, the share of external financing
had dropped from nearly sixty percent in 2010 to only seven percent\. In the past some
observers had expressed concern with the high share of external financing of the program,
however, it does not seem to have prevented the Colombian authorities from financing it
now entirely with national resources\. In spite of the termination of external financing to
cover the cash transfers, the program has requested to continue with the agenda of
technical assistance that the Bank and IADB have jointly provided in recent years\. The
Bank has already held meetings with key officials in the new administration to discuss
possible areas of support which would be included within ongoing programmatic
knowledge and convening services\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
The Projectâs objectives, design and implementation were highly relevant and remain
consistent with Colombiaâs development priorities and with current Bank country and
9
sector assistance strategies\. This is clearly demonstrated by the Governmentâs decision to
expand the program to reach 2\.7 million Colombian families (roughly 17 percent of the
countryâs population) and to secure sufficient national financial resources for its
operations in the upcoming years\. The World Bank provided guidance and support
throughout the expansion and consolidation of the program, especially in the
strengthening of key operational processes\. The project was complemented during
implementation by a strong World Bank program of knowledge and convening services
called Strengthening Social Protection in Colombia, which focused on providing
technical assistance to the Government of Colombia in building a more effective, and
inclusive social protection system through the Red Juntos and an expanded social
insurance system\.
3\.2 Achievement of Project Development Objectives
Before moving to a discussion of the outcomes, it is worth noting that the resources
provided through the World Bank loan were part of a larger program of assistance to the
Familias en Acción program which included substantial resources from the IADB\. For
administrative simplicity, the Colombian government preferred to access financing
consecutively from each institution, as opposed to parallel financing\. Nevertheless, at
their request the staff of both institutions worked together without distinguishing which
loan was disbursing at the time or the stage of preparation of new financing\. For that
reason, the dates mentioned below (for example, related to the impact evaluation) should
be seen in the context of the overall program, rather than this specific World Bank project
(P101211)\. 7
Achievement is discussed for each of the three project development objectives, focusing
primarily on the results on the outcome indicators in the context of a program whose
coverage exceeded expectations because of its expansion from 1\.7 to 2\.7 million families\.
There are two main sources for the data on outcome indicators\. The first is the impact
evaluation of the program in large cities which was carried out under a several contracts
and was partially financed by the loan\.8 The baseline survey was done in late 2007 (early
2008 in the case of Bogotá) before the expansion of the program into large cities to test
the different structures of benefits\. The follow-up survey was done in early 2011\.
Following conventional practice, the estimates reported are intention-to-treat (ITT)\. The
data sheet includes results for treatment on treated (TOT) in the comments section\.9
7
Disbursements from Ln\. 76190 began in early 2009 and were substantially completed by the end
of 2010\. The loan stayed open until end 2011 primarily in order to complete the urban impact
evaluation\. In 2011, the main source of external financing for the program was the IADB\.
8
Evaluación del Programa Familias en Acción en Grandes Centros Urbanos, Central Naconal
de Consultoria, December 2011\.
9
The ITT estimate measures the impact of the treatment on the entire sub-sample eligible for
treatment, relative to the entire sub-sample of eligible controls, this is on the entire sub-sample of
10
The evaluation was intended to cover both overall program impact and to compare the
impacts of the alternative transfer schemes in large cities\. Two important considerations
need to be kept in mind to interpret the results of the impact evaluation\. First, the control
group is comprised of families who were not eligible to participate in the program
because their scores on the targeting instrument were just above the cut-off, while the
treatment group is comprised of those participants whose scores are just below the cut-off
point\. Thus, the effects which are reported in the impact evaluation are localized effects
around the cut-off\. Since international evidence suggests that the impacts of conditional
cash transfer programs tend to be larger for poorer participants, these results should be
treated as lower-bound estimates\. Second, for several indicators, particularly in the case
of education, where results were expected only for secondary students, for transition
points (9th and 11th grade graduation), and for relatively rare occurrences (school drop-
out), the sample was not sufficiently large for the relevant groups to be able to pick up
changes of the likely magnitude\.
In order to compensate for this problem, an alternate methodology was used, comparing
education indicators contained within the administrative data for the targeting instrument
(SISBEN) at two points in time (2006 and 2009)\. Instead of depending on the sample of
households covered in the baseline and follow-up surveys, these registers are a census of
the participants of the program\. The treatment group is made up of the universe of all
households eligible to participate in Familias en Acción who are just below the cut-off for
eligibility, while the control group is comprised of households in Level 2 of SISBEN
right about the cut-off for eligibility\. The same comment made above about localized
effects applies\.
The second source of data which covers operational aspects comes from the programâs
MIS\. Detailed figures are included in the Data Sheet\. Because the project was extended
until December 2011, figures are provided as of that date\. Annex 2 contains data for
2009 and 2010 for most of these indicators\. The sections below summarize the main
results\.
(1) Complement the income of poor families with children
The measures related to this objective were net improvements in household total, food
and protein consumption amongst beneficiaries (particularly high quality food such as
fruits and vegetables) in large cities, with data drawn from the comparisons between the
control and treatment groups\. No specific targets were set for these indicators nor those
households that the program intended to assist; the TOT estimate measures impact of the
treatment on the sum-sample of eligibles who were âactuallyâ? treated\. The TOT impacts thus
adjust for both treatment and participation and might present biased estimates of the impact the
program would have on all eligible if the participation decision is driven by unobservable
household characteristics correlated with the outcome of interest\.
11
related to human capital formation of poor children (discussed in the section below)
although comparisons can be made with the results for similar indicators in the impact
evaluation for rural areas and for similar programs in other countries where such data
exist\. The impact evaluation shows positive impacts of the program on total and food
spending\. There were spending declines for both the control and treatment groups
probably reflecting the decline in private consumption experienced in Colombia due to
the effects of the 2008/09 global crisis, but the drop was significantly less for the
treatment group\. In the case of food consumption, the impact evaluation examines
program impact using two measures - the percentage of children who consume specific
food products and the frequency (number of days per week) of consumption\. There is
evidence of the positive impact of the program in increasing consumption of proteins and
fruits and vegetables according to both measures, although for a broader set of products
in the case of the former\. In view of the positive impact of the program on the four
indicators related to consumption, the assessment is that this objective was achieved\.
(2) Promote human capital formation of poor children by increasing regular
check-ups, for growth monitoring, and other services, and by increasing
enrollment and school attendance (basic and/or secondary education)\.
There were four indicators related to this objective again with data drawn from the
comparisons between the control and treatment groups from the impact evaluation
covering both health and education\. In the case of health, the program showed a positive
impact on the treatment group for two measures\. There was an increase of 0\.215
standard deviations (Z score) in height for age for children under 5 as well as an increase
of 8\.4 percentage points in the share of children in the ânormalâ? range in the height for
age measure\. The program also showed a positive impact on the use of preventive health
services by children of 11\.2 percentage points\. The program also showed a positive
effect of 4\.2 percentage points on the share of children with the complete DPT
vaccination\. For both attendance at health services and the DPT vaccination there is a
puzzling decline for both control and treatment groups\.10
The other set of indicators relates to education\. Given the issues related to the small
sample size for the household survey based impact evaluation, the results reported in the
data sheet are from the SISBEN census methodology\. Positive results of the program are
found for school attendance (an outcome indicator for the project) as well as for several
other indicators\. For attendance, increases are seen for program participants compared to
the control group for all schemes and localities, ranging from 2 percentage points for
boys in the savings scheme in Bogotá to 13\.5 percentage points for boys in the
incremental scheme\. With the exception of Bogotá, results are higher for boys\. Program
participation also increases years of schooling attained by an average of a high of 0\.5
10
The decline may be due to the fact that the age group analyzed includes older children (up to
age 14 years), while the condition related to health check-ups applies only to children below 7\.
Also the protocols for health visits require much fewer visits for older children and most
vaccinations take place at younger ages\.
12
years in the case of the incremental scheme to 0\.18 years in the case of Bogotá, with
higher results for the 11-12 year old group\. The share of students (11-16 at the baseline)
with timely school progression increases from a range of 6 percentage points in the case
of Bogotá to 10\.3 percentage points for the incremental scheme\. The program has a
positive impact on 9th grade graduation rates ranging from about 6 percentage points in
the case of the savings scheme in both Bogotá and other cities, to 9\.2 percentage points in
the incremental scheme\. No results can be reported for secondary school drop-outs as
this information is not included in the SISBEN\.
The results (ITT) from the impact evaluation comparing the baseline and follow-up
sample of treatment and control households show a positive impact only for graduation
rates for 9th grade of 0\.9 percentage points\. A breakdown of these results by the type of
transfer scheme shows a positive impact (1\.3 percentage points) only for the incremental
scheme\. TOT estimates are somewhat stronger, showing positive impacts of program
participation on years of schooling attained, 9th grade graduation rates, and one estimate
of enrollment\. Based on the positive results for four indicators in the case of health
and for indicators on attendance, school progression and 9th grade graduation rates
in the case of education, the assessment is that the objective of promoting human
capital formation of children was achieved\. It is important to stress that for
education, this judgment is based almost entirely on the SISBEN census
methodology results\. The survey results are much weaker, at least in part because
of insufficient sample size\. In addition, no impacts could be estimated for high
school dropout or 11th grade graduation rates, although positive results had been
expected\.
(3)- Strengthen program quality
Three indicators are used to measure progress on strengthening program quality\. The
first indicator is the take-up rate or the share of eligible families participating in the
program\. At the time of project appraisal, there was concern that the take-up rate had
dropped as the program had expanded more into urban areas\. While some decline was to
be expected in larger urban areas and was observed in other CCT programs in Latin
America, it was expected that improvements in the registration process, as well as a move
towards a more continuous registration process (instead of periodic âone shotâ? events)
would help to raise participation rates, although no specific target was set\. As it turned
out, the overall take up rate remained virtually unchanged at 61\.6 percent compared to the
baseline figure of 62\.1 percent and a move to a more continuous registration process was
postponed\. The speed of the expansion may have been one factor that worked against
efforts to improve the participation rate of the program, although it could also be argued
that maintaining the previous take-up rate in the face of an expansion of nearly 60 percent
in the program can be considered reasonable performance\. Compared to the baseline,
there was a slight increase in the take-up rate for large municipalities, while the rate of
participation dropped for small municipalities\.
Analysis done in the context of the knowledge and convening services of the Bank
showed that some gaps in the participation of the extreme poor could be addressed
13
through the outreach efforts of the Red Unidos and that higher pro-activity and
commitment to the program by municipal authorities could raise take-up\. Lack of
information, the short time frame for gathering the necessary documentation, the high
opportunity cost for the employed, and the cost of transportation were factors that
affected take-up in large cities\.11 Some of these factors were echoed in the qualitative
companion piece to the urban impact evaluation where work was carried out in Bogota\.
There was evidence of faulty information, lack of credibility, and the negative effects of
long lines to register and travel distances\. Encouraging, those interviewed thought that
the 2009 registration process was better than earlier ones\. These findings show the
importance of incorporating more out-reach activities in the program, improving
coordination mechanisms with the Red Unidos, and modifying the registration process,
particularly moving towards a more continuous one\. See Annex 2 for more discussion\.
The other indicators measure the share of families complying with the health and
education conditions\. Although no specific targets were set, the implicit assumption is
that compliance rates would improve to some extent given the planned efforts of the
program to streamline verification processes\. Of course, the major expansion of the
Program changed the context for these indicators significantly\. In the case of health,
during 2009-2008 there was a slight decline (7 percent) in the share of families meeting
the conditions in health (Annex 2 contains annual figures), but performance worsened
substantially in 2011, falling from 91\.7 percent at the baseline to only 70\.8 percent\. The
reason for the sharp deterioration in 2011 is not clear\. Performance in larger
municipalities and particularly large cities was worse, implying that more efforts are
needed to promote compliance in these areas\. In the case of education, trends on
compliance with the school attendance condition show a drop from the baseline figure of
71\.9 percent of all school-aged children participating in the program to 66\.8 percent in
2009 and to 64\.2 percent in 2010\. Efforts of the program in the area of school enrollment,
improved the rate to 68 percent by 2011, although still below the baseline\.
The intermediate outcome indicators were intended to monitor key operational
procedures of the program relating to five specific areas (management of the beneficiary
registry, training for program participants, quality of the verification process, efficiency
of the payment process, and the effectiveness of control and accountability measures)\.
Specific targets were not set for these indicators because it is difficult to consider all of
the factors which may affect performance (positively and negatively)\. The purpose is
rather to monitor the attention and management follow-up on important aspects of the
program such as the beneficiary registry, key business processes, and the supporting MIS\.
Results are presented in the data sheet with annual figures for selected indicators
available in Table 2\.3 in Annex 2\. The PAD also discusses several areas for which the
project would support quality improvements in the program and challenges being faced
by the program\. Table 2\.2 in Annex 2 summarizes the advances achieved\. More broadly,
11
Studies in the US suggest that take up is enhanced by automatic or default enrollment and
lowered by administrative barriers\. Transaction costs are important\. The take-up rate for the
Temporary Assistance to Needy Families, comparable in some respects to Familias en Acción, is
between 60-90 percent depending on the state\.
14
the program was trying to develop an effective design for operating in both large cities
and in low capacity localities and to develop a role within the Red Unidos\.
Considering all of the evidence presented, performance on improving program quality
was mixed, perhaps reflecting the challenges of operating an even larger program than
was envisaged at the time of appraisal and the challenges of an expansion in urban areas\.
The assessment is that the objective of improving program quality was partially
achieved\. Substantial advances were made to improve the MIS, which also enabled
progress to be made in several other areas\. Better controls applied to the beneficiary
registry are likely to have eliminated inclusion errors\. But there was no progress in
addressing exclusion errors, identified as the more critical issue in the PAD and
institutional arrangements between the Red Unidos and Familias were problematic\. In
retrospect, a better alignment with the Red Unidos and its strategy of outreach to the
extreme poor, might have enabled the program to make progress in this area, and indeed
is now planned by the government\.
The program was successful in streamlining verification procedures, but surprisingly this
is not reflected in the trends on the share of families complying with the health and
education conditions\. Social accountability mechanisms are now stronger, standards
have been raised, and monitoring improved\. In order to address problems in low capacity
areas, the program is increasing its involvement with the local health and education
authorities\. The program has increased its collaboration with health and education
authorities at the national levels, a positive development\. Challenges remain to develop
an effective design for operating in large cities as compliance rates in these localities still
lag substantially the average\. It is still not clear to what extent the key strengths of the
rural operational design â for example, the role of the madre lideres and the municipality
â work equally well in large cities\.
3\.3 Efficiency
A new economic analysis to estimate the impact of the program on human capital
accumulation and poverty reduction was not carried out during appraisal\. Instead the
PAD reviewed the results of the existing impact evaluation of Familas (and similar
interventions), including a cost-benefit analysis\. The expectation of positive results was
based on earlier evidence from impact evaluations of the Familias program in rural areas
and small municipalities, preliminary results in urban areas, and the decision of the
program to modify the transfer structure to focus on improvements in secondary, not
primary education\. The updating of the monetization of the results in large cities as well
as costs is well beyond the scope of this ICR (and was not envisaged in the PAD), but the
results of the impact evaluation in large cities can be compared with the basis for the
previous calculation of the benefits of the program\.
In general, the evidence of performance on the indicators from the impact evaluation of
the program in urban areas confirms those initial assumptions\. The program had a
substantial impact in education, concentrated as expected at the secondary school level\.
In addition, positive impacts are seen in reducing malnutrition and the prevalence of
acute respiratory disease among the young children of beneficiary families and in
15
increasing the utilization of health services as well as vaccination coverage\. Based on
that evidence it seems likely that the conclusion that the program has a positive benefit
cost ratio would generally hold for large cities even in the absence of precise calculations\.
The main aspects of program design and implementation that would have tended to
reduce efficiency would be the 60 percent take-up rate, the lack of progress in reducing
exclusion errors, the lack of knowledge of the majority of participants on the details of
the âsavingsâ? modality of education transfers, as well as the declines (and the relatively
low performance in large cities) in family compliance with health and education
conditions\.
3\.4 Justification of Overall Outcome Rating
Rating: Satisfactory
The evidence from the impact evaluation shows that Familias improved
consumption and human capital formation of children in large cities, achieving
these two objectives\. Outcomes on the third objective of improving program quality
were partially achieved\. Performance on the outcome indicators related to compliance
of participant families with the health and education conditions fell in spite of the
programâs efforts to streamline the verification process\. It is important to note that in the
case of large cities, lower compliance does not appear to have been sufficient to eliminate
the positive results on the final outcomes related to consumption and human capital
formation\. There was mixed performance in the areas identified for quality
improvements in the PAD\. Based on the achievements of the first two objectives and
taking into account the major expansion not anticipated at the time the project was
prepared, the overall outcome rating is judged satisfactory\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
According to the results of the impact evaluation in large cities, Familias lowered
extreme poverty rates as measured by income by 7\.5 percentage points (significant at the
1 percent level)\. Similar to the trends previously discussed on consumption, the rates of
extreme poverty rose for both the control and treatment groups, but less for the latter\.12
(b) Institutional Change/Strengthening
The project contributed to improvements in the capacity of the National Coordination of
the program within Acción Social, the agency responsible for the implementation of
12
Estimates for TOT effects are 9 pp (significant at the 1 percent level), with the treatment group
showing a small decline in rates of extreme poverty in contrast to increases for the control group\.
16
Familias\. The technical assistance and support provided by the World Bank helped
strengthen several areas and processes\. Familias has developed a comprehensive
operational structure supported by more robust mechanisms to run program processes\.
First, the program has improved the quality of information and tackled inconsistencies in
the databases used for the registration of beneficiaries, SISBEN and SIPOD\. Second, the
MIS and the controls and accountability systems continued to be consolidated while
incorporating new modules\. For example, operational audits, spot checks, and a systems
audit of the MIS were carried out and the information generated was used for program
improvements\. Third, during project implementation Familias managed the efforts to
open personal bank accounts for nearly 86 percent of beneficiaries as a means to increase
the financial inclusion of poor families\. This is helping to reduce delays in the payment
process as well as to increase transparency and lower transaction costs\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
During the over ten years of implementation of Familias, the government has
strengthened processes and carried out a series of impact and other types of evaluation\.
Because of this experience, Colombia, in particular the National Coordination of the
Program, has been an active participant and host of numerous south-south exchanges on
CCT programs, some of which have been facilitated by the World Bank\. These
interchanges are likely to continue in the future\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
Not Applicable
4\. Assessment of Risk to Development Outcome
Rating: Negligible to Low
Familias already has a proven record of contributing to poverty reduction and human
capital formation\. The program continues to play a central role in improving the safety
net in Colombia and is generally well regarded by the population and local authorities\.
The risk to development outcome in the Project is negligible to low primarily because the
impact evaluation for urban areas has confirmed the programâs positive impact on the key
outcome indicators\. Government ownership and commitment are demonstrated by the
fact that financing of Familias has been assured primarily through national resources
since 2011\. The new Government has indicated its intention to maintain the program,
even considering a small expansion\. At the same time, the program is going through a
necessary re-design, including more effective integration of the program with the
centerpiece of the current Government social promotion strategy â the Red Juntos/Unidos\.
The Bank provided technical assistance in this area and has been asked by the
Government to continue providing advice\.
17
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
The Bankâs performance in ensuring quality at entry is considered moderately
satisfactory for the following reasons\. The Bank had long been involved in supporting the
strengthening of the social protection system and other related areas in Colombia through
a variety of instruments, including technical assistance, investment and development
policy lending, and analytical work\. Lessons from previous projects were considered and
incorporated in the project design\. During preparation, the Bank team was broad based,
incorporating expertise from staff and consultants with experience in conditional cash
transfers in the Latin America region\. The projectâs design responded to the priorities of
the Borrower in tackling poverty and inequality through an expanded Familias Program
and strengthening its operational processes\. The Bank advocated key objectives,
including the improvement of the MIS and operational indicators\. Project preparation
and design satisfactorily addressed social development aspects, carrying out a social
assessment and supporting the preparation of an IPP which would provide the basis for
the expansion of the program into indigenous communities\. Monitoring and evaluation
arrangements built on the MIS in place and responded to the new challenge of operating
in urban areas\.
However, there was one moderate shortcoming, an oversight in the procurement analysis
related to the contract for banking commissions\. Although the Bank (and the IADB)
provided the no objection to the bidding document, the estimated size of the contract
(US$44 million) was not taken into account, in part because the quotes were to be
presented as unit costs per transfer\. Given the estimated size of the contract, higher
levels of authorization (Regional Procurement Advisor and OPRC) should have been
involved earlier in the bidding process, according to Bank guidelines\. In addition, the
Bank underestimated the complications involved in this bidding process, particularly the
implications of the regional grouping into different lots and the addition of the
requirement to open bank accounts for all program participants\. In retrospect, the Bank
team should have enlisted specialist advice earlier in the process\. Instead, specialist
advice was only brought in after the bidding process had been concluded and it was
necessary to do a market study\.
(b) Quality of Supervision
Rating: Satisfactory
The Bankâs performance during supervision is rated satisfactory for the following
reasons\. The Bank team carried out six supervision missions, all in coordination with the
IADB\. Regular financial management supervision was also carried out\. ISRs were
prepared regularly and were candid in bringing to the attention of management critical
issues such as the decision of the Government to expand the program, difficulties with
18
the bidding process for banking services, the design and timing of the impact evaluation,
and the need for improved coordination arrangements between Juntos and Familias\.
Since the performance of most of the outcome indicators were derived from the impact
evaluation, ISR monitoring focused on the indicators (both outcome and intermediate)
related to the operation of the program\. Themes covered in the supervision missions
included the process of program expansion, particularly in indigenous communities,
improvements in the systems for verification and handling complaints, the results and
follow-up of the system audit, the figures on compliance with education responsibilities,
the process of bancarización, coordination with the health and education sectors, and the
revised targeting instrument\. At the request of the Borrower, the Bank devoted
considerable resources to providing advice and recommendations on how to better
integrate Juntos and Familias to help bring about a more sustainable and effective social
promotion strategy\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
Taking into account the two moderate shortcomings identified in the Bankâs performance
in ensuring quality at entry, overall Bank performance is rated moderately satisfactory\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
The Borrowerâs performance is considered satisfactory, from preparation through
completion\. Government ownership and commitment to achieving the development
objectives was demonstrated by the decision to expand further the program in 2009\.
Project objectives were closely aligned to the goals of the NDP (2006-2010)\.
Discussions on the testing of different transfer schemes, the impact evaluation in urban
areas, implication for the program of revisions in the targeting instrument and changes in
the operational manual were closely coordinated between the Department of National
Planning and Acción Social\. Results from impact evaluations and other analyses were
used for decision making\. Although there were delays in the impact evaluation and the
methodology had to be revised, in the end, an acceptable evaluation was carried out and
delivered\. One shortcoming was that in the context of the new administration which
took office in 2011, decisions on how to integrate Familias better with Juntos (re-called
Unidos) â the centerpiece of the social promotion strategy in the updated NDP (2010-
2014) - lagged, as did measures to resolve the different approaches being proposed by
different institutions and actors\.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
19
Acción Social through the National Coordination Unit of Familias was responsible for
project implementation\. The agency was highly committed to the objectives of Familias
and key staff members were capable and stable in their positions\. Consultations with
stakeholders, primarily with mayors and indigenous communities, were on the whole
satisfactory\. The project was ready for implementation because it was already in
operation\. Disbursement performance was close to target\. The closing date was
extended by one year to December 31, 2011, primarily in order to carry out the follow-up
survey and analysis for the impact evaluation\. Fiduciary management is judged
moderately satisfactory because the agency signed the contract for banking services
before receiving the no objection of the Bank\. Semi-annual reports on the program were
received by the Bank as required and on a timely basis\. During the project, the National
Coordination Unit took several specific steps to improve the quality of the program such
as making improvements in the MIS, following up on the recommendations of the
systems audit, and better integrating the various modules\. The National Coordination
Unit also deepened its relationship with sectors such as education and health, particularly
in municipalities with lagging performance\. Agency handling of reimbursement requests
was satisfactory\. Monitoring information was used pro-actively to improve the program
and follow-up with remedial measures in lagging areas\. The agency maintained close
working relations with both the IADB and the Bank\.
(c) Justification of Rating for Overall Borrower Performance
Rating:
Overall Borrower Performance is considered satisfactory in view of the Government and
the Implementing Agenciesâ performance\.
6\. Lessons Learned
ï A systems audit is useful for identifying areas that need to be improved in the
MIS\. The results of the systems audit were available during the first year of
project implementation\. Its results were important in confirming the overall
acceptable functioning of the MIS, and also in identifying several areas where
improvement was needed\. The results of this systems audit laid out the work plan
for strengthening the MIS during project implementation\. In addition, the
program asked the same firm which had undertaken the systems audit to provide
advice on the best way to integrate the different systems\. In programs where the
MIS is critical to operational procedures, carrying out a systems audit should be
incorporated into fiduciary management\.
ï Contracting for banking services needs to be informed by knowledge of the
market\. Some of the problems that were encountered in procurement of banking
services might have been avoided if more discussions had been held with the
banking sector prior to preparing the bidding documents and launching the
process\. It turned out that the way the lots were organized reduced the possibility
of competition, which was the goal of the process\.
20
ï Good public communication of program rules is important\. The testing of the
effectiveness of different transfer schemes was weakened by the fact that even
after two years of implementation, most beneficiaries did not understand the
structures and in particular did not understand that enrollment in 10th grade or
graduation would result in the receipt of bonuses\. This reduced the impact of the
incentives\. Public Information strategies should have been stronger and the
Program should have taken actions to ensure that a larger share of beneficiaries
understood the structure that applied to them\.
ï Use of administrative data bases for impact evaluation are cost effective\. In
addition to a methodology based on household survey of control and treatment
groups, the impact evaluation also made creative use of the administrative data on
the targeting instrument to measure impact on education outcomes\. Having a
larger data base enabled the analysis to identify effects which were not possible to
measure using the smaller sample available in the household surveys\. Another
advantage is the low cost\. The experience of this project is that administrative
data bases should be considered for the purposes of monitoring and evaluation\.
ï Design of sample for impact evaluation needs to be informed by expected
effects\. The impact evaluation carried out under the project was limited by the
fact that the size of the sample was not sufficient to measure several of the
outcomes which were of particular interest in education\. In retrospect, the sample
could have been more purposively chosen to ensure that it included children of
the ages of interest (in secondary school or who would enter secondary school
soon)\. This problem was addressed partially by the use of administrative data for
the targeting instrument (SISBEN)\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
In addition to preparing a completion report (See Annex 7), the Borrower made
comments on the document drafted by Bank staff\. These comments have been reflected
in the document\. In regards to the comment in Section 3\.2 on exclusion errors, the
Borrower responded that the Program continued to work to improve the accuracy of
beneficiary identification and to minimize both inclusion and exclusion errors\. These
efforts include improvements in the targeting instrument (SISBEN) and the identification
of the cut-off points in collaboration with DNP staff\. It also has been decided to
incorporate into the Program families who are in the Red Unidos, and are eligible, but not
participating in Familias\.
21
Annex 1\. Project Costs and Financing
(a) Estimated and Actual Project Cost by Component (in USD million equivalent)
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
Consolidation and Expansion of
2009-2010 2009-2011
the Familias Program\.
(a) Subsidies 731\.2 2,153\.3 295%
(b) Bank Commissions 44\.2 337\.8 764%
(c) Administrative costs N/A 56\.6 100%
(d) Impact ev\., audit, studies 0\.8 \.9 113%
Total Baseline Cost 776\.2 2,548\.6 400%
Physical Contingencies
None None N/A
Price Contingencies
None None N/A
Total Project Costs 776\.2 2,548\.6 328%
Total Financing Required 776\.2 2,548\.6 328%
(b) Estimated and Actual Financing (USD millions)
Appraisal Actual/Latest
Source of Funds Estimate Estimate
2009-2010 2009-2011
Borrower 1,660\.6
139\.7
Colombian Institute for Family Welfare (ICBF) 209\.3
Other 1,451\.3
International Bank for Reconstruction and
636\.5 636\.5
Development
Inter American Development Bank N/A 251\.5
Total 776\.2 2548\.6
Note: At the request of the Borrower, the estimated financing from the Inter-American
Development Bank was not included in the PAD because the figures had not been
negotiated\. The much higher than expected actual expenses in the area of subsidies
reflect the expansion of the program during 2009 as well as the one year extension of the
project\. The higher than expected costs for bank commissions reflect the higher than
expected amount received from the sole bidder and the extension of the project\.
22
Annex 2\. Outputs by Component
The project had one component â Consolidation and Expansion of the Familias en
Acción program\. This annex contains additional detailed information on outputs in
several areas: the expansion of the program, evidence on targeting performance, and
details on progress on the improvements in program quality which were to be addressed
by the project\. This is followed by sections on the registration process (which relates to
the proposed quality improvement of reducing exclusion errors) and the process of
opening bank accounts for beneficiaries\. This improvement was not described in the
PAD, but was an important initiative of the program during project implementation\. The
annex concludes with a table which presents the results on the intermediate indicators for
the project which focused on the functioning of several of the programâs operating
procedures, including the identification of beneficiaries who no longer were eligible for
the program, the resolution of complaints, and the monitoring of performance of localities
in managing the program\.
Expansion of Familias\. During appraisal, the program covered roughly 1\.7 million
families\. In late 2008, the Government decided to quickly expand the program by
registering new SISBEN 1 families with the objective of reaching 3 million families\. By
early 2010 2\.7 million households (including the displaced) were receiving benefits\. This
expansion of the program was much larger than what the Government and the Bank
envisioned during project preparation\. Registration was discontinued in 2010 and since
then only displaced families can join the program at anytime\. Presently 394,000 displaced
families are part of the program (14 percent of the total)\. Figures 2\.1 and 2\.2 provide
details on the trends in the growth of the program during the project, as well as the
composition between different groups\.
23
Figure 2\.1: Recent Expansion of Familias en Acción
Source: Familias program data\. Includes SISBEN1, displaced, and indigenous families\.
Figure 2\.2: Registration in Familias en Acción, by Groups
Source: Familias program data, 2008-2010
Targeting Performance\. The revised SISBEN targeting tool remained the main
instrument used to identify new beneficiaries\. Household data from 2008 confirmed that
Familias is fairly effective in reaching poor households\. Nearly 82 percent of
beneficiaries are in the two lowest income quintiles and the percentage of families in the
program falls increasingly for the highest quintiles\. Nonetheless, the number of eligible
families who are not receiving benefits is very high, that being the case for 58 percent of
families with children aged 0-17 in the poorest income decile\.
24
Table 2\.1: Distribution of Beneficiaries by Consumption Group
  % of families receiving FAÂ
    Families with children 0â?17Â
Quintile All National Urban RuralÂ
1Â 35 39Â 37Â 44Â
2Â 19 24Â 21Â 34Â
3Â 9 12Â 11Â 24Â
4Â 3 5Â 5Â 15Â
5Â 1 2Â 2Â 11Â
Source: Araujo and Beazley\. âCaracterización de los beneficiarios
de Familias en Acciónâ?, based on ECV 2008\.
Household surveys also reveal that coverage between regions varies greatly\. While in the
Orinoquia-Amazonia region 67 percent of families in the lowest quintile are in the
program, in San Andres only 14 percent in the same income group receive benefits\. One
of the reasons that might explain the low coverage is that the relatively short registration
process and the cost of participating, among other design features, operate as entry
barriers for the poorest families\.
Strengthening program quality: The PAD discusses several areas for which the project
would support quality improvements in the program\. The PAD also mentions several
challenges being faced by the program during the time period covered by the project\.
The following table describes the advances achieved in these areas during project
implementation and provides information to substantiate the rating on the third PDO to
strengthen program quality\.
Table 2\.2: Progress on Implementing Improvements in Program Quality and
Addressing Challenges
Area Status as of December 31, 2011
Improve Management Information The findings of the systems audit were available
System during the first half of 2009\. The report confirmed
many strengths of the MIS, but also areas for
improvement\. Examples of the latter which were
remedied by the Program included: strengthening
the procedures and controls over data changes,
including suing standard menu options;
incorporating consistency and validation checks on
information provided by participants such as ID
numbers; improving the controls and monitoring
of the response time for complaints; exploring
ways to link the different data bases; automatizing
the payment systems and linking with the
complaints module for back payments; and
25
Area Status as of December 31, 2011
managing strictly the codes and passwords for
entry to the system\. Based on additional systems
audit work requested by the Program, the different
systems with the MIS have been linked, including
the system for verification which previously had
been outsourced\.
Reduce both inclusion and The program adapted the registration process to
exclusion errors urban areas to increase take-up rates\. A new web
system was developed to replace the old manual
registration process\. This has helped reduce the
average registration time\. (See also section below
on program participation)
Streamline verification of After the large expansion into urban areas, the
compliance with conditionalities program developed new mechanisms for the
verification of conditionalities\. This includes mass
verification, certification cards, vouchers, and
smart cards\.
Familias is also working on a new application that
will register not only the assistance to health
controls but also the type of services that
beneficiaries receive at the health centers\.
Improve channels for complaints A new module was added to make automatic the
and appeals adjustments to payments (credit or debit) based on
the resolution of the complaint\. The system
improved related document management\.
Monitoring of the response time started\. Efforts
were also made to simplify the formats to make
them easier to understand\. In 2010 the program
organized spot checks to determine problems and
challenges in the operation of the complaints and
appeals mechanisms\.
Develop an Effective Design for The MIS shows that the program was fairly
Program Operation in Large Urban successful in ensuring that eligible beneficiaries
Areas received their bonus with at least 70 percent
coverage during 2008-2010\. This has been a
problem in other CCT programs\. However, the
communication strategy, particularly relating to the
somewhat complicated structures, needs to be
reinforced if the incentives are to work as
designed\. The registration process also needs to be
re-thought to incorporate more out-reach and to
make it easier for poor families to join the
programs (see section below on program
participation for more details)\.
26
Area Status as of December 31, 2011
Meet Demands of Operating The program prioritized departments that showed a
Program in Low Capacity low level of compliance on various indicators
Localities during more than one period and organized
meetings with the local authorities as well as
representatives from the sectors involved in the
operation of Familias\. These âmesas temáticasâ?
discussed, inter allia, the level of coverage of the
program in the department, the local capacity of
health and education services to respond to an
increase in demand, and the operational rules\.
Develop Role of Familias within Little progress was made to align the two
the Red Juntos (now Unidos) programs or to take advantage of potential
synergies as had been envisaged at the time of
project appraisal\. In fact, in order to improve its
coverage of the extreme poor, the Red Unidos
moved from a strategy of using Familias as its
entry point, to one of trying to reach extremely
poor families who for some reason were not
registered in Familias\. However, these families
did not receive the cash transfer associated with
Familias\. The Government has recently taken a
decision that any eligible family in Unidos who is
not a participant will be enrolled in Familias\.
Program Participation (take-up)\. Registration by SISBEN 1 families has been low in
municipalities with a population over 100,000, particularly in large cities, despite the
efforts made to increase their participation\. In 2009 take-up rates slightly increased in
large urban areas, although it is still below participation in rural areas, which suggests
that the program needs to address exclusion or type 1 errors\.13 In Bogotá, the take-up rate
was only 28 percent\. The following table presents the composition of beneficiaries in the
program by size of municipality, showing that in spite of the expansion to larger
municipalities, the program remains focused on smaller municipalities\.
13
Type 1 errors occur if a truly eligible individual does not apply for benefits or if truly eligible individuals
apply for benefits and are rejected\.
27
Figure 2\.3: Beneficiaries, by Type of Municipality
Source: Familias program data, 2008-2010
In 2009, Familias with the support of the World Bank, carried out a study on the
registration rates in five urban areas\. These five cities used a combination of different
communication tools to reach families during the registration periods\. Registration to the
program ranged from 76\.6 percent in Barranquilla to 30\.0 percent in Manizales, a smaller
urban area\. One of the explanations for the high take-up in Barranquilla is that the
municipality sent letters signed by the governor to each SISBEN 1 household informing
of dates and times of registration\. Among the reasons given by eligible families for not
joining the program were the lack of information, the short time frame for gathering all
the required documentation, the high opportunity cost for those employed, and the cost of
transportation\. The study offered several recommendations for increasing registration
rates, namely:(i) developing guidelines for municipalities according to their size to
improve logistics before and during registration periods; (ii) having longer registration
periods and extending them to weekends; and (iii) having a follow-up registration period
for those families that did not register during the first call\.
Bancarization\. In early 2009 the program started opening savings accounts to
beneficiaries in order to improve the payments process and to increase poor familiesâ
access to financial services\. As of the end of 2010, 2\.3 million families were receiving
their payments through a bank account, which accounts for over 90 percent of the
households in the program\. Over the next six months, Familias is looking to extend the
opening of accounts to all beneficiaries, especially those living in 229 remote
municipalities where the bancarization process has not arrived yet\. The program is also
offering training to mothers to improve their financial literacy and incentive savings\. The
benefits Familias expects to achieve through bancarization include: (a) substantially
28
reduce the time beneficiaries spend waiting to get paid in banks; (b) eliminate the refund
of non-collected transfers to the treasury; (c) reduce risks in the financial process; and (d)
improve security of the payment process; among others\.
Figure 2\.4: Evolution of Payments to Bank Accounts
Source: Familias en Acción (2011)
Performance on Intermediate Outcome Indicators
Table 2\.3 provides information on the intermediate outcome indicators, which were
intended to measure the programâs operational performance in several areas including the
management of the beneficiary registry: (1), the organization of training for participants
(2), the quality of the process of verifying compliance on the health and education
conditions (3 and 4), the efficiency of the payments process (5 and 6), and the
effectiveness of control and accountability mechanisms (7)\. A summary of the main
trends and contributing factors appears follows for each topic\.
Management of Beneficiary Registry\. Improvements in the MIS discussed earlier
supported a tighter control over the beneficiary registry, reflected in the higher number of
families dropped from the program in 2011\. Beginning in 2010, the program started
undertaking a standard set of cross-checks with other data bases as well as internal
consistency checks before making payments\. In addition, consistent with national policy,
the program insisted on the registration of ID numbers for children\. \.
Training for Program Participants\. As part of the program model, workshops are
organized for the participants on different topics, including healthy practices, education,
and early childhood development\. Outcomes were significantly influenced by the timing
of elections (municipal in 2010 and national in 2011) because in the run-up to the
elections, no large gatherings are organized by the program\. As result although was a
29
large increase in the share of participants receiving training relative to the baseline, there
was a drop-off in the last two years of project implementation\.
Quality of the Verification Process\. Beneficiaries reporting problems with the
verification process are low\. At the level of municipalities, the program monitored
performance in every payment cycle, identifying sets of municipalities which deviated
from the norm in order to carry out remedial actions as necessary\.
Efficiency of the Payment Process\. The share of eligible families who actually received
their payment dropped from the baseline levels in all localities initially, probably as a
result of the rapid expansion of the program\. However, thereafter performance increased
and by the end of the project, rates of payment receipt were nearly 4 percent above the
baseline figure\. Several factors are likely to have contributed to the improvement,
including the gradual move towards paying participants through bank accounts (see
Figure 2\.4) as well as the improvements in the MIS which included making the payment
system a more automatic business process\. An intermediate indicator of municipalities in
red or yellow alert on the payment process was also included, but in practice, this was not
part of the MIS\. Instead for each payment cycle, the program identified localities with
higher or lower than average changes in the value of payments and sought explications
for the trend\.
Effectiveness of Control and Accountability Mechanisms\. Improvements were also
made in the processes related to the handling of complaints\. The control over documents
was improved and more procedures more automatic\. The program also tried to make
these procedures more understand to the participants and simplified formats\. There is
also careful monitoring of the time period to provide an answer and the standard for
response has been reduced from 30 to 15 days\.
Table 2\.3: Annual Trends in Selected Indicators
Indicator 2009 2010 2011
Number of families who comply in
health, as a percentage of the total (1)85\.5 (1)85\.5% (1)70\.8%
number of families beneficiaries of (2) 77\.0% (2)90\.9% (2)79\.3%
the health transfer: (Total), (2) (3)79\.5% (3)85\.8% (3)66\.3%
small municipalities, (3) large (4) 85\.5% (4)73\.9 (4)56\.5%
municipalities, and (4) large cities\.
(1)Withdrawal: Number of families 143,669* 153,092
removed from the program and ï 75% ï 45% non-
reason children payment for
exceed age 3 cycles
limit ï 30% non-
ï 10% for compliance
double with
inscription conditions
ï 8% ï 19%
30
Indicator 2009 2010 2011
inscribed in children
2 families exceed age
limit
(2)Training: % of beneficiaries 102% 43\.0% 38\.5%
having received training from the (54,596) (35,741) (31,420)
Program (No\. of Workshops)
(3)Difficulties in process of control
(verification): % of beneficiaries
reporting difficulties, by type14
ï Health 0\.4%
ï Education 4\.1%
(4)Alerts in process of control: 120 120 120
number of municipalities in yellow municipalities municipalities municipalities
or red alert
(5)Payment: Number of families (1)90\.9% 93\.9% 98\.0%
paid, as a share of families (2)92\.3% 94\.3% 98\.1%
complying with their (3)90\.2% 93\.6% 97\.6%
responsibilities for (1) Total, (2) (4)86\.5% 92\.7% 97\.9%
small municipalities, (3) large
municipalities; and (4) large urban
centers\.
(6)Alerts in process of payment: N/A N/A N/A
Number of municipalities in yellow
or red alert
(7)Complaints
ï Number 22,871 73,432 35,094
ï % addressed in less than 15 92\.6%
working days
*Consolidated figures for 2007-2010\. Between 2007-2010, program did not drop
families for reasons of non-payment for 3 cycles nor for non-compliance with conditions
because they did not believe operational procedures nor MIS sufficiently robust\.
14
Information comes from reports of periodic monitoring of how the procedures of the program are
working at the local level, not from the MIS, so not available on an annual basis\.
31
Table 2\.4 Trends in Compliance with Education Conditions
% of Children % of Enrolled Adjusted % of
Enrolled Meeting Condition Children
Complying
2009 2010 2011 2009 2010 2011 2009 2010 2011
Small munis 77\.3 70\.9 72\.1 92\.9 95\.3 94\.3 71\.8 67\.6 68\.0
Large munis 72\.8 67\.2 69\.2 91\.3 94\.8 93\.4 66\.5 63\.7 64\.6
Large cities 79\.5 71\.1 62\.8 87\.3 93\.9 92\.6 69\.4 66\.8 58\.2
Total 72\.8 67\.6 72\.4 91\.8 95\.0 93\.9 66\.8 64\.2 68\.0
32
Annex 3\. Economic and Financial Analysis
The economic analysis draws on the results of the impact evaluation of Familias in large
cities which was undertaken to assess the effects of the program in those localities on the
main outcome indicators\. The impact evaluation also included measurements for other
results related to the main objectives of the program as well as other areas\.
The main objectives of the program are to improve the living conditions and human
capital investment of poor households\. At the time of project appraisal, the expected
beneficiaries of the program were nearly 4 million children living in 1\.7 million poor
households throughout Colombia\. In fact nearly 5 million children benefited from the
program given the expansion which took place mainly during 2009\. The economic
analysis is organized as follows\. The first section compares the results of the impact
evaluation for large cities with the impacts achieved by the program in rural areas and
small municipalities\. The analysis in the PAD discussed the factors that needed to be
taken into account in order to extrapolate these results for the project\. First, the results of
the program in rural areas and small municipalities were achieved between 2002 and
2005\. Since the time which had passed before the start of the project was relatively short,
it was considered unlikely that major changes would have occurred that would change
dramatically the direction of these effects\. Second, international evidence suggests that
CCTs have greater impacts (both on consumption and human capital development) for
the poorest households\. In this regard, Familias had maintained use of the targeting
instrument SISBEN, and, in addition to highly urbanized areas (which are generally
speaking not as poor as rural areas), it has incorporated municipalities in disadvantaged
regions (the Pacific Coast, for example) and the Afro-Colombian and indigenous
population, suggesting that these positive impacts should be sustained\. The impact
evaluation carried out during project implementation, however, covers only large cities\.
Third, in the case of education, impacts tend to be higher when the baseline enrollments
are lower\. Colombia took this into account for large urban areas by dropping the
condition for primary education, and reallocating the resources to promote secondary
education\. Thus, it was expected to see results mainly for secondary education in large
cities\.
The PAD referred to evidence of likely results for urban areas from three sources: the
preliminary results of a pilot carried out in Medellin; results from a program implemented
in the city of Bogota, which included conditions relating to secondary education only;
and the results of ex-ante simulations carried out by the IADB\. All of these sources
suggested that the operation of the program in large cities should have positive results,
primarily on indicators related to secondary education\.
Finally, the PAD also referred to the results of a detailed benefit-cost analysis which had
been undertaken jointly in conjunction with a previous impact evaluation by the Institute
of Fiscal Studies, Econometria, and Sistemas Especializados de Informacion (IFS et al,
2006)\. The analysis values benefits of the program through the increased future earnings
that results from: (a) lowered incidence of underweight infants, (b) lowered incidence of
malnutrition and child morbidity among children zero to six year old, and (c) increased
33
years of secondary schooling\. The effects of Familias on these outcomes were derived
from the impact evaluations in rural areas and were monetized using evidence from a
variety of sources, discounted, and compared to costs\.
The updating of the monetization of the results in large cities as well as costs is well
beyond the scope of this ICR (and was not envisaged in the PAD), but the results of the
impact evaluation in large cities can be compared with the basis for the previous
calculation of the benefits of the program\. In general, the evidence of performance on the
indicators from the impact evaluation of the program in urban areas confirms those initial
assumptions\. The program had a substantial impact in education, concentrated as
expected at the secondary school level\. In addition, positive impacts are seen in reducing
malnutrition and the prevalence of acute respiratory disease among the young children of
beneficiary families and in increasing the utilization of health services as well as
vaccination coverage\. Based on that evidence it seems likely that the conclusion that the
program has a positive benefit cost ratio would generally hold for large cities even in the
absence of precise calculations\.
Table 3\.2: Comparison of Familias Impacts in Rural Areas and Large Cities
Objective/Indicator Colombia Colombia
(rural<100,000) (large cities)
Consumption levels for
poor households
ï Impact on per capita 10%**
consumption for the
median household
ï Impact on total and US$20/mo
food spending US$6\.7/mo5
Human capital investment
in children
ï School enrollment
and attendance
(%pts)
o Age 8-13 2\.1**
o Age 14-17 5\.6***
o Ages 6-11 at 2-13\.5**
baseline
ï Child taken to
growth and
development
monitoring (%pts\.)
o <24 months 22\.8***
o 24-48 33\.2***
months
o >48 months 1\.5*
o 0-14 yrs 11\.8***
34
Objective/Indicator Colombia Colombia
(rural<100,000) (large cities)
ï Compliance with
DPT vaccination
(%pts)
o <24 months 8\.9*
o 24-48 3\.5
months
o >48 months 3\.2
o 0-14 yrs 4\.2*
ï Height for age z
score \.161*
o <24 months \.011
o 24-48
months \.012
o >48 months
o <60 months \.215*
*significant at 10% level
**significant at 5% level
***significant at 1% level
35
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Juan Carlos Alvarez Sr Counsel LEGES
Jairo A\. Arboleda Consultant LCSSO
LCSHS-
Jorge C\. Barrientos Consultant
DPT
LCSHS-
Diana Isabel Cardenas Social Protection Economist
DPT
LCSHS-
Aline Coudouel Senior Economist
DPT
Numa F\. De Magalhaes Senior Information Officer MIGCO
Jeannette Estupinan Sr Financial Management Specialist LCSFM
Jose M\. Martinez Senior Procurement Specialist LCSPT
LCSHS-
Maria Claudia Vasquez Alvarez Consultant
DPT
Supervision/ICR
LCSHS-
Francisco Ochoa Consultant
DPT
LCSHS-
Patricia M\. Bernedo Senior Program Assistant
DPT
LCSHS-
Diana Isabel Cardenas Social Protection Economist
DPT
LCSHS-
Aline Coudouel Senior Economist
DPT
Jeannette Estupinan Sr Financial Management Specia LCSFM
Jose M\. Martinez Senior Procurement Specialist LCSPT
b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
USD Thousands
Stage of Project Cycle
No\. of staff weeks (including travel and
consultant costs)
Lending
FY07 10\.82 90\.77
FY08 7\.43 77\.21
FY09 12\.00 104\.4
Total: 30\.25 272\.38
Supervision/ICR
FY09 5\.07 57\.6
FY10 18\.12 128\.7
36
FY11 21\.78 145\.3
FY12 25\.36 103\.2
Total: 70\.33 434\.8
37
Annex 5\. Beneficiary Survey Results
Annex 6\. Stakeholder Workshop Report and Results
N/A
38
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
1\. The main points made in the introduction of the Governmentâs contribution to
the ICR are:
ï Document 3472 (National Council of Economic and Social Policy) approving
loans from the international financial institutions facilitated long-term
collaboration with Familias and a mechanism of continuous assessment which
provided important inputs for its transformation\.
ï When Ln\. 7619 was signed the Program had new challenges: operations in large
cities; coverage of all municipalities, including those with low capacity; and work
with indigenous populations\.
ï The political context during implementation (2009-2011) was marked by the end
of the Uribe administration and the first year of the Santos administration\. The
Uribe government gave an important impetus to the Program, deciding to expand
it and to assist new groups (displaced and indigenous), and facilitating attention in
emergencies during the 2010 winter crisis\.
ï For the Santos government Familias is an important strategy to reduce poverty\.
The goals of the National Development Plan (NDP) are to improve the targeting
of social spending and to consolidate the Social Protection System so that it can
contribute to strengthening and protecting the human capital and income of the
poor\. The government intends to strengthen the Program and has started to
redesign Familias in order to reflect changes in poverty over the last decade,
institutional changes, international experience with conditional cash transfer
programs, and the need to harmonize with other proposals in the NDP\.
ï There was political support to make Familias a permanent program\. In 2011
Congress considered a proposal âto regulate and embed in law the Familias en
Accion Program, in order to avoid its disappearance, the elimination of the
transfers, leaving the extremely poor without protection\.â? President Santos signed
Law 1532 on June 7, 2012\. The law defines Familias as a program of conditional
cash transfers which complements the income of the poorest and most vulnerable
families and places it under the Department for Social Prosperity\. The Law
contains guidelines for targeting, geographic coverage, types of subsidy,
financing, verification and evaluation, responsibilities of local governments and
allows a period of 6 months after its approval to define exit conditions\.
2\. The main points made on program design and implementation of the loan are:
ï Because of the good results (education, nutrition, and health) of the Program in
municipalities of less than 100,000 inhabitants, expansion to large cities was
considered\. It was recognized that the attention to families in rural areas and in
poor neighborhoods in large cities needed to be different\. Also the impacts of the
transfer might be less in urban areas because of the higher coverage of education
and health services\.
ï In spite of the recommendations to enter large cities gradually, the program
expanded nationally using a scheme of different transfer amounts for SISBEN I
families in 16 cities\. The transfer for primary school was dropped, substituting it
39
with a nutrition subsidy for those 7-11 years (for non-recipient families of the
nutrition subsidy for young children), and the transfer for secondary school was
increased in order to reduce drop-outs in higher grades\. There were two
variations implemented: incremental and saving\.
ï The impact evaluation for large cities (2011) carried out by the National
Consultancy Center found positive impacts on the number of years of schooling,
enrollment rate, health insurance affiliation, and the share of children receiving
the DPT vaccination as well as a reduction in acute respiratory infections\. There
was evidence of higher labor force participation among Program families\. As was
the case in the earlier evaluation in rural areas and for the displaced, there were
positive results on household spending\. Thanks to the Program, participant
families increased their requests for credit from financial institutions as well as
the approvals\.
ï Other findings and recommendations from the impact evaluation of large cities
included:
o Families do not understand the transfer structure, so the Program should
work to increase knowledge on this and other aspects\.
o The Program should work to increase the attendance of mothers at training
workshops and to provide nutritional education in order to improve child
growth and development\.
o The conditions of mothers in large cities needs to be taken into account
more\. Many work making attendance at the workshops difficult\. Also the
organization of workshops may not to be adjusted more in the context of
large cities\.
o Training to use automatic banking terminals should be increased, as well
as on financial literacy
o The verification process needs to be streamlined and improved, including
by unifying mechanisms in order to reduce the time and cost for mothers\.
Consideration should be given to giving more responsibility to older
children to documenting verification\.
o The incremental transfer scheme is judged to be better than the savings
scheme because of the constant competition that youth have with work
opportunities\.
o There is a gap in pre-school attendance between the poor and the rest of
the population\.
o Recommended additions to the Program are reproductive health
workshops for adolescents as well as conditions related to education
achievement\. The Program should provide additional support to
secondary school leavers to enable them to access further education\.
3\. The main points made on sustainability and program redesign are the following:
ï In spite of the progress made to reduce poverty, it is not sufficient\. Poverty rates
are still high and Colombia is making slower progress than other countries in the
region\.
ï Although economic growth will help the poor, it cannot be the only mechanism to
reduce poverty and income inequality\. There is an important role for programs
40
targeted to the poor, one of which is conditional cash transfers, which provide
incentives for human capital accumulation in order to promote social mobility,
decrease income inequality and sustain poverty reduction\. This scheme of
redistribution plays a double role of reducing current poverty so that families can
maintain a minimum consumption level as well as contributing to improving the
conditions for future labor market insertion and incomes\. Healthier and better
educated youth should get better jobs in the formal sector, improve their earnings,
have access to permanent social protection and escape poverty\.
ï The goal is to create a system of conditional cash transfers to accompany the life
cycle of poor and vulnerable individuals, focusing on the stages of highest capital
accumulation that generate capacities for higher productivity and better future
connections to the formal labor market\. The intention is to maintain the Program,
as is reflected in the approval of Law 1532, converting it into public policy in
order to sustain its impacts over the long term\.
ï During the first half of 2012 the Directorate of Social Income of the
Administrative Department of Social Prosperity worked to redesign the Program,
taking into account the direction that conditional cash transfer programs are
taking in the region and the priorities set out in the NDP\. The proposed redesign
includes the following, among others:
o Targeting (geographical and population)\. The aim is to define more
precisely the beneficiaries, starting from the objectives of the Program and
trying to maximize the impact of the Program and the efficiency of social
spending, and to minimize errors of inclusion and exclusion\. The target
population is families below the cut-off score using the revised SISBEN
instrument, as well as the displaced, indigenous, and participants of the
Red Unidos \. Inclusion of the last group was recommended by the World
Bank and the Inter-American Development Bank\. Cut-off points were
determined in collaboration with the National Planning Department\.
o Human Capital Formation\. In the next phase, there will be transfers
associated with health and nutrition and education with higher levels for
secondary\. In addition, the transition to primary school and first grade
will be promoted\. There will be a focus on early childhood development
and nutrition in other ways\. 4 pilots will test the impact of the Program in
other areas, including children working in mines, handicapped,
discouragement of adolescent pregnancy and improvements in nutrition
quality\. These initiatives take into account the recommendations of
previous evaluations\.
o Training\. Through links with another program, efforts will be made to
promote training and the creation of competencies for employment for the
youth in Familias who graduate from 11th grade and want to continue their
studies\. This initiative follows from recommendations in previous
evaluations\.
o Regional Focus: There will be different subsidy levels depending on
location, determined using the multidimensional poverty index with the
goal of increasing the Programâs geographic progressivity\.
41
ï Since the Program can count on high political and legal backing for its future
operation, the decision has been taken that from now on national budge resources
will finance the Program\. The National Government would approve annually the
resources to attend all of the families and its operation, in accordance with the
medium term fiscal framework (Article 8-Law 1532)\.
4\. The main points made by the Government on factors which affected the
operation of the Program during loan implementation are :
ï The expansion of coverage was not gradual as recommended in previous
evaluations\. This affected the possibility to carry out an impact evaluation to
measure the results of the intervention on new populations and in some cases led
to the contamination of samples in sites previously selected as control groups\.
ï Only one proposal was received for the bidding process to contract the payment
of the transfer to families and the opening of banking accounts for them\. The
reasons other banks did not present proposals included that they were not
interested in having poor families as clients and because the cost to cover isolated
municipalities was high\. Although the multilateral banks provided the no
objection and authorization for negotiations and it was possible to renegotiate the
bid without affecting the scope of work, the result did affect what had been
planned and demonstrated a lack of knowledge on the supply of banking services\.
ï Although the differences between urban and rural areas, including the
employment of mothers, costs of transportation, different forms of community
organization among others, had been taken into account, they still affected the
promotion strategies\. For example, mothers could not dedicate time to attend
workshops\.
ï Efforts were made to improve the verification system, making it more flexible to
take into account different local situations\. The expansion of new, more
streamlined mechanisms for verification was an important challenge, given the
distances, number of beneficiaries and dispersion of health centers and schools\.
Nevertheless, there continues to be evidence of difficulties, such as the lack of
commitment on the part of health and education services, which means that the
responsibility still falls on the Program and the participant\. There have also been
some issues with the verification of the authenticity of some documents\. In the
case of Bogota, the processes and operation of the Program need to be defined
with the new administration\.
5\. The main points made on the performance of the implementing agency are:
ï The Program was carried out in the context of the implementation of an Integrated
Management System, with a focus on quality, including client satisfaction and
improvements in procedures and processes\. Accion Social received quality
certifications in several areas\.
ï Accion Social had satisfactory performance on the use and supervision of
resources, in addition to the development of a process of monitoring, supervision
and evaluation\. The Agency generated information on a continuous basis that
enabled problems and inconsistencies to be detected\. This included monitoring of
42
a statistically representative sample in the field (called spot checks), as well as
administrative data which covered all municipalities in the Program\.
ï Over the last 3 years, the Program has financed an evaluation program covering
new types of intervention in large cities (2011), effects on the displaced
population (2008), and a process evaluation of operations in indigenous
communities (2009)\. In the first half of 2012, the third round of monitoring for
the impact evaluation in rural areas was completed\.
ï Over the last 3 years, the instruments of data collection, monitoring and
supervision have been improved and evaluation results have been taken into
account to improve the Program\. Given The results of the impact evaluations as
well as external financial audits, the Program has high credibility\. Substantial
efforts have been made to improve client services, including the contracting of a
call center, help desk, and back office support\.
ï There are still areas to improve, such as the verification process, promotion efforts
in large cities, the establishment of intersectoral commitments to improve the
supply of services, and the continuation of the process of unifying the Program
MIS (SIFA) and the verification information (SIRC) in order to improve security,
administration, and response times\.
6\. The main points made on the evaluation of the World Bank are:
ï Support of the multilateral banks was crucial\. It meant that the necessary
financial resources were always available when needed\. Also the policies of the
multilateral banks provided stronger backing for efficient and transparent resource
use\.
ï The World Bank had a well-staffed team which provided technical assistance
throughout project execution\. The interaction of Bank and Program staff through
continuous consultations and field visits helped decision making\. Discussions
with Bank staff offered new perspectives and contributed to the recognition and
position which Familias has today\.
ï Bank policies influenced the selection of specific indicators and reporting
requirements which contributed to and strengthened the monitoring system, as
well as promoted rigorous standards\. The contributions to the evaluation program
were important for decision âmaking for converting it into a permanent technical
instrument\.
7\. The main points made in the section on lessons learned are:
ï Flexible processes are needed to take into account local conditions and
differences in institutional behavior, especially during the process of expansion in
coverage\. The Program is not static and has to improve continuously to meet the
needs of participants and be effective\.
ï Although direct payment was an effective mechanism, it created some problems
for the families â long lines, travel costs, etc\. This motivated the goal to open
bank accounts for the participants\. The Program proved it was possible to
promote savings among poor families and that in spite of the high costs to reach
isolated municipalities; it was possible to negotiate a lower rate without affecting
the scope of work\. For the bank which was awarded the contract, it was an
43
opportunity for growth and portfolio diversification\. The current challenge is to
increase the access to other financial services\.
ï The Program needs to improve information and communication channels with the
families as well as strengthen training for municipalities\.
ï Because the Program is always competing with the incentives youth have to work,
the incremental transfer scheme for secondary school is more effective to keep
them in school\. In addition, the Program should help them make links to higher
education\.
ï Articulation needs to be strengthened between the Program and other government
efforts such as the early childhood development strategy (Cero a Siempre), the
strategy to eliminate the worst forms of child labor, and the Red Unidos, in order
to consolidate the Social Protection System and to enable families exiting the
Program to access a system which can help to consolidate human capital and
formal and sustainable income generation\.
44
Completion Report of the Government in Spanish
Informe de cierre del Proyecto (IBRD-7619)
PRESTATARIO GOBIERNO NACIONAL
El documento CONPES 3472 de 2007 emitió concepto favorable a la nación para
contratar empréstitos con la banca multilateral destinados a la financiación de la
expansión de Familias en Acción\. Esto permitió un acompañamiento de largo plazo por
parte de la Banca Multilateral al programa, en el cual hizo aportes tanto en el diseño
como en la ejecución y ayudo a consolidar un mecanismo de evaluación permanente que
ha generado importantes insumos para su transformación\.
La contratación del crédito BIRF -7619 se dio en el marco de nuevos retos que empezaba
a asumir Familias en Acción, entre ellos el diseño e inicio de operación en grandes
centros urbanos, la entrada masiva a todos los municipios del paÃs, incluso a aquellos que
contaban con una débil capacidad institucional, asà como el inicio de atención con
enfoque diferencial a población indÃgena\.
Durante el perÃodo de ejecución del crédito (2009 â 2011) el contexto polÃtico estuvo
enmarcado por la finalización del gobierno Uribe y el primer año de gobierno del
presidente Santos\. Durante el gobierno Uribe se dio un impulso importante al Programa,
tomando la decisión de su expansión y la atención a nuevos tipos de población (población
desplazada e indÃgena)\. El gobierno Uribe ofreció un respaldo importante al programa,
tomando en cuenta los resultados que éste habÃa tenido en municipios con menos de
100\.000 habitantes y gracias a su flexibilidad que le permitÃa atender población con otro
tipo de necesidades, como lo constituye la población en situación de desplazamiento; asÃ
como la contribución que podrÃa brindar en la atención en situaciones de emergencia
como lo constituyó la ola invernal del año 2010\.
El gobierno Santos a su vez, consideró al programa Familias en Acción como uno de las
estrategias principales en la lucha contra la pobreza y el logro de la Prosperidad para
Todos\. El Plan Nacional de Desarrollo, en el eje de Igualdad de Oportunidades, establece
como desafÃos el mejoramiento de la focalización del gasto social, la consolidación del
Sistema de Protección Social que contribuya a fortalecer y proteger el capital humano y
los ingresos de los hogares más pobres y vulnerables\. Para el logro de este objetivo, la
administración Santos se propuso el fortalecimiento del programa, para lo cual se dio
inicio al rediseño de Familias en Acción, en aras de ajustarlo al cambio en el diagnóstico
de pobreza que se viene dando en el paÃs en la última década, a la evolución de las
instituciones para la reducción de la pobreza, a las tendencias internacionales que se están
45
dando en materia de aplicación de transferencias condicionadas y armonizarlo con los
demás objetivos propuestos en el Plan Nacional de Desarrollo\.
Paralelo a esto, el contexto polÃtico ha sido cada vez más favorable a que Familias en
Acción se convierta en un programa permanente, asà durante el año 2011 hizo trámite en
el Congreso de la República un proyecto de ley cuyo objetivo era: âreglamentar y elevar
a rango legal el Programa Familias en Acción, para con ello evitar que desaparezca del
contexto nacional, ante cualquier contingencia lo que dejarÃa sin subsidios y sin este
mecanismo de protección directa a la población más pobreâ?\.
La ley 1532, que fue sancionada por el señor Presidente de la República el pasado 7 de
junio de 2012, y define a Familias en Acción como un programa de transferencias
monetarias condicionadas que complementa el ingreso de las familias más pobres y
vulnerables y establece que queda bajo la dirección del Departamento para la Prosperidad
Social\. La Ley da los lineamientos para la focalización, la cobertura geográfica, los tipos
de subsidio, la financiación, la verificación y evaluación, las competencias de las
entidades territoriales y da un plazo de 6 meses a partir de su aprobación para la
definición de condiciones de salida\.
A continuación, se presentan los aspectos más relevantes de la operación del programa en
el perÃodo de ejecución del crédito, asà como aprendizajes y consideraciones tenidos en
cuenta en el rediseño del Programa e inicio de implementación de la Tercera Fase\.
1\. Aspectos de diseño y operación del programa implementados durante el
perÃodo de ejecución del crédito e impactos encontrados\.
Los buenos resultados del Programa en municipios con menos de 100\.000 habitantes
contribuyó a plantear la posibilidad de ampliar la cobertura en grandes ciudades, las
evaluaciones demostraban los buenos resultados en educación, nutrición y salud, no
obstante advertÃan tomar con precaución estos resultados para una posible expansión,
dado que el tratamiento a las familias SISBEN 1 en zonas rurales debÃa ser diferenciado a
una familia residente de un barrio marginado de una ciudad15\.
Se tomó en consideración la capacidad del subsidio para aumentar la tasa de asistencia
escolar en área urbana, al conocer que la cobertura de servicios educativos era mayor en
estas áreas; igualmente se consideró que la cobertura de los servicios de salud era
superior, lo que hacÃa suponer que el programa podrÃa no tener el efecto esperado\.
A pesar de las recomendaciones de entrar de manera gradual a grandes ciudades, se dio
inicio a la expansión bajo un esquema diferenciado de montos para el pago de subsidios\.
El programa diseñó diferentes modalidades de pago para las familias nivel 1 del SISBEN
15
Ver: Acción Social; DNP\. (2010)\. El Camino Recorrido\. Diez Años Familias en Acción\. Bogotá\. p\. 337
46
en 16 ciudades\. De tal forma se decidió eliminar el subsidio de primaria y sustituir este
subsidio por una versión revisada del subsidio de nutrición para niños entre 7 a 11 años,
el cual serÃa excluyente al subsidio de nutrición de 0 a 7 años\. Asà mismo, se modificaron
los montos del subsidio en secundaria con el objetivo de reducir la deserción escolar en
los últimos grados de secundaria\. Se implementaron dos esquemas denominados
incremental y de ahorro, el primero consistÃa en aplicar un monto diferenciado
incremental en el subsidio de educación de acuerdo con el grado escolar en secundaria
buscando cubrir el costo de oportunidad en que incurren los estudiantes al seguir
estudiando y no salir a trabajar\. El esquema de ahorro consistÃa en la entrega de un
incentivo en el momento en que el estudiante aprobara noveno grado y se matriculara en
décimo y para cada estudiante que se graduara de grado once con el objetivo de
incentivar la permanencia hasta la culminación del ciclo escolar de básica y media\.
Los municipios se clasificaron teniendo en cuenta diferencias socioeconómicas y
demográficas, los cuales fueron organizados en los siguientes grupos: esquema
tradicional, los que hicieron parte de la prueba piloto de centros urbanos, ciudades bajo el
esquema incremental y ciudades bajo el esquema de ahorro\.
En la evaluación de Grandes Centros Urbanos (2011), desarrollada por el Centro
Nacional de ConsultorÃa, se encontraron impactos positivos en el aumento de número de
años de educación aprobados, aumento en la tasa de matrÃcula escolar, la afiliación al
Sistema General de Seguridad Social en Salud SGSSS y en el aumento del porcentaje de
niños que recibe vacunación contra DPT (difteria, tosferina y tétanos)\. También se
encuentra que el programa Familias en Acción Urbano (FeA-U) genera un impacto
positivo en la disminución de la incidencia de Infección Respiratoria Aguda (IRA)\. Se
ratifica la necesidad de la educación nutricional como enfoque integral articulado a la
oferta del Programa Familias en Acción\.
En la evaluación se evidencia que existe una mayor tasa de ocupación en los hogares
beneficiarios del programa, siendo menores las tasas de desempleo e inactividad\. En
concordancia con lo encontrado en la evaluación de otras modalidades del programa,
como Familias en Acción Tradicional y Familias en Acción para Población Desplazada,
se encuentra que FeA-U tiene impactos positivos sobre el gasto total del hogar, al generar
un incremento de $74\.606 del gasto total\.
Los hallazgos en bancarización son muy positivos, gracias a FeA-U dentro de la
población beneficiaria aumentó tanto la solicitud de crédito a entidades financieras como
su Ãndice de aprobación\. La mejora en el acceso a crédito podrÃa deberse a que gracias al
componente de bancarización del programa, los hogares tienen una cuenta de ahorros con
la cual presentarse ante un banco\. Esto les da cierto respaldo para solicitar crédito en
entidades financieras\. Asimismo, el hecho de contar con el subsidio se puede constituir
en un respaldo para que las entidades financieras aprueben créditos a los beneficiarios\.
47
Otros hallazgos y recomendaciones de la evaluación16:
ï No hay conocimiento por parte de las familias cómo funciona el subsidio en
grandes centros\. En relación con lo hallado en la evaluación cualitativa, se
recomienda que el programa mejore el conocimiento sobre los siguientes
aspectos: a cuánto asciende el subsidio, cuándo se recibe, cómo interponer quejas
y reclamos y cómo utilizar los servicios bancarios\.
ï Familias en Acción debe hacer mucho énfasis en mejorar la asistencia de las
madres a los encuentros de cuidado\. Esto con el fin de reforzar todos los temas de
salud y nutrición que son fundamentales en el crecimiento y desarrollo de los
niños\.
ï Se debe tener en cuenta el perfil de las madres de zona urbana al momento de
considerar el componente de promoción, un porcentaje importante de éstas
trabaja, lo que puede dificultar su asistencia a los encuentros\. Asimismo, en
ciudades grandes e intermedias la oferta social maneja otro tipo de espacios con
objetivos similares a los de los EC; éstos pueden convertirse en sustitutos de
dichos encuentros\.
ï Es recomendable incrementar la capacitación sobre el uso de cajero electrónico de
modo que las madres beneficiarias puedan aprovecharlas de manera efectiva\.
ï SerÃa muy importante agilizar y mejorar el proceso de certificación de
compromisos, se recomienda unificar los procedimientos de verificación de
compromisos, de tal manera que las madres titulares no tengan que invertir tanto
tiempo y dinero en el proceso\.
ï Sobre las madres también cae el peso de los compromisos de verificación y no
sobre los adolescentes\. El programa Familias en Acción debe comenzar a
concebir formas en que los jóvenes sean corresponsables de estos compromisos\.
ï La modalidad incremental supera en varios factores a la de ahorro, la principal
razón para que esto suceda es que el programa siempre estará compitiendo contra
los incentivos que tienen los jóvenes para salir a trabajar, ganar independencia,
ayudar en el hogar, etc\.; y en la medida que el subsidio sea más alto esta lucha se
zanjará a favor de la educación\. Es claro que el programa Familias en Acción
urbano debe transitar hacia la modalidad incremental, cubrir niños desde los 11
años, edad donde comienza a ser crÃtica la deserción y se da la transición
primaria-secundaria\. También es fundamental que el valor del subsidio se
16
Ver: Centro Nacional de ConsultorÃa\. (2011)\. Evaluación del Programa de Familias en Acción en
Grandes Centros Urbanos\. Bogotá\.
48
aumente en todos los tramos escolares con el objeto de reducir el costo de
oportunidad del trabajo âde ahà que la modalidad incremental sea la de mayores
impactos\.
ï A partir de los tres años de edad se abre una brecha educativa cuando los niños de
los estratos más pobres no asisten a educación preescolar\. Según la encuesta de
calidad de vida de 2008, la cobertura escolar para niños entre 3 y 4 años del
quintil 5 llega al 72% mientras que para el quintil 1 es de 48%\.
ï Se recomienda mejorar la educación financiera que el programa ofrece, de modo
que las madres beneficiarias se sientan seguras a la hora de realizar transacciones
a través del cajero automático\.
ï Es necesario reforzar la educación nutricional como parte integral del Programa
Familias en Acción, debido a que aunque los resultados muestran incremento en
la compra de alimentos, no siempre se optimiza ni la variedad ni la frecuencia de
consumo para tener impactos mayores en el estado nutricional\.
ï Para controlar el riesgo latente de embarazo adolescente en la población
beneficiaria del programa, se sugiere exigir como condicionalidad, la asistencia de
jóvenes mayores de 12 años a actividades educativas relacionadas con la
educación sexual\. En este sentido, al menos una vez al año se deberÃan
implementar talleres en los que se les instruya sobre una concepción integral de la
sexualidad, dándoles a conocer temas relacionados con los derechos sexuales y
reproductivos y se les explique el uso de métodos anticonceptivos y las
consecuencias de un embarazo temprano\. Los incentivos en el diseño de los
programas de transferencias condicionadas pueden jugar un papel importante en
los impactos que estos programas tengan sobre el embarazo adolescente\. En tal
sentido, se recomienda pensar en establecer alguna condicionalidad relacionada
con el logro escolar para entregar el subsidio\. Esta condicionalidad puede ser
similar a la establecida en el Subsidio Educativo Condicionado a la Asistencia
Escolar de la SecretarÃa de Educación de Bogotá\. En este esquema una parte del
subsidio se entrega cada dos meses, y la otra sólo se entrega si el beneficiario
aprueba el año lectivo\. Esto tendrÃa efectos positivos sobre el logro escolar y
ayudarÃa a controlar el riesgo latente sobre embarazo adolescente\.
ï Si bien el programa cumple adecuadamente la mayor parte de sus objetivos el
futuro de estas familias sigue siendo incierto, débil, delicado -por decir lo
mÃnimo- y las oportunidades laborales escasas, restringidas y de muy baja calidad\.
Por consiguiente, la movilidad social es restringida y la eficiencia de la polÃtica
redistributiva casi nula\. Por lo tanto, se propone: i) que el programa acompañe a
aquellos jóvenes que completen sus estudios de secundaria para que puedan
acceder a la educación postsecundaria; ii) que puedan acceder a créditos del
ICETEX a tasas subsidiadas y iii) se les dé un subsidio condicionado para
sostenimiento\.
49
Estos resultados, asà como los preliminares de la evaluación correspondiente al Tercer
Seguimiento en municipios con menos de 100\.000 habitantes (se anexa un breve resumen
de las conclusiones del Tercer Seguimiento en municipios con menos de 100\.000
habitantes, la cual fue finalizada en mayo de 2012), constituyeron un insumo importante
durante el proceso de rediseño del programa\.
2\. Perspectiva de sostenibilidad y algunas consideraciones del rediseño:
Debe tenerse en cuenta que aunque Colombia ha registrado avances en materia de
reducción de la pobreza, dichos resultados aún no son suficientes, considerando el alto
porcentaje de la población que todavÃa se encuentra en situación de pobreza y pobreza
extrema, y que el ritmo de caÃda de estos indicadores es lento comparado con los paÃses
de la región\.
Aunque el crecimiento económico (canal indirecto de reducción de pobreza) que ha
venido presentando el paÃs podrá tener un impacto sobre dicha reducción, éste no puede
ser el único mecanismo para generar efectos certeros en la disminución de la desigualdad
del ingreso y reducción sostenida de la pobreza\. Otra de las medidas en búsqueda de
dicho objetivo es el direccionamiento de recursos hacia las familias más pobres y
vulnerables\. Una de las estrategias que se han implementado en varias regiones del
mundo y en Colombia en vÃa de la redistribución del gasto público ha sido la entrega de
transferencias condicionadas, por medio de las cuales se generan incentivos adecuados
para estimular la acumulación de capital humano, que en el futuro permitan la movilidad
social, la disminución en la desigualdad del ingreso y reducción sostenida de la pobreza\.
Este esquema de redistribución juega un doble papel, de un lado constituye una
transferencia directa en el presente, que complementa el ingreso de las familias para que
mantengan un nivel de consumo y sigan en el proceso de formación de capital, y de otro
lado, contribuye a mejorar las condiciones de inserción en el mercado laboral y a
aumentar el ingreso en el futuro\. Jóvenes más sanos y con mayor nivel de educación
obtendrán mejores empleos en el sector formal, mejorarán su ingreso, tendrán protección
permanente y saldrán de la pobreza\.
La apuesta es crear un sistema de transferencias condicionadas el cual acompañe el ciclo
de vida de las personas pobres y vulnerables, en este momento apuntando
primordialmente a las etapas del ciclo de vida en donde se realiza la mayor acumulación
de capital humano y se generan capacidades para mayor productividad y vinculación
laboral en el sector formal en el futuro\. La intención de darle sostenibilidad al programa
se ve reflejada en la reciente aprobación de la Ley 1532 de 2012, que como ya se
mencionó busca âblindarâ? a Familias en Acción para convertirlo en una polÃtica de
Estado que permita mantener sus impactos en el largo plazo\.
En dicha vÃa, la Dirección de Ingreso Social del Departamento Administrativo para la
Prosperidad Social enfocó gran parte de sus esfuerzos durante el primer semestre de 2012
en el rediseño del Programa\. Este rediseño se sustenta en tendencias internacionales hacia
donde se están dirigiendo las transferencias monetarias condicionadas en los paÃses
50
latinoamericanos y en respuesta a las directrices impartidas por el Plan Nacional de
Desarrollo 2010- 2014 âProsperidad para Todosâ?\.
La propuesta de rediseño del Programa tiene en cuenta, entre otros, los siguientes
aspectos:
Focalización, territorial y poblacional: se busca garantizar mayor precisión para
identificar a los beneficiarios\. Esta identificación debe partir de los objetivos del
programa buscando maximizar el impacto sobre la población seleccionada, una mayor
eficiencia del gasto social y minimizar los errores de inclusión y de exclusión\.
La población objetivo del programa corresponde a familias con puntaje SISBEN III
inferior al punto de corte definido por el programa, en situación de desplazamiento,
indÃgenas, y pertenecientes a la Red UNIDOS\. El programa en coordinación con el DNP,
realizó los análisis para determinar los puntos de corte en el SISBEN III, con los cuales
se identificará y seleccionará a la población potencialmente beneficiaria\.
Tuvo en cuenta la recomendación de vincular dentro de la focalización a la poblaciónÂ
UNIDOS que fuese elegible y que no estuviese vinculada a Familias en Acción, en aras deÂ
disminuir los errores de exclusión\.Â
Formación de Capital Humano: entrega de transferencias monetarias para salud y
nutrición y educación de manera incremental en secundaria\. A partir de la tercera fase se
incluirá transición y primero de primaria\. Se hará énfasis en el desarrollo infantil
temprano y en la nutrición\. También se pondrán en marcha 4 pilotos para analizar el
impacto que puede tener el programa para atender otro tipo de necesidades de la
población beneficiaria:
ï Desincentivo al trabajo infantil en minas: Entrega de subsidio monetario a la
familia condicionado a que el menor no trabaje y realice otras actividades\.
ï Atención a familias con personas con discapacidad: Entrega de subsidio
monetario al cuidador o a la persona con discapacidad\.
ï Desestimulo al embarazo adolescente: aumento del subsidio monetario en
educación a las niñas, condicionado a que reciban educación sexual y apoyo en el
desarrollo de un proyecto de vida\.
ï Mejorar la calidad de la nutrición: subsidio monetario condicionado a la
asistencia a capacitaciones en nutrición y en resultados en talla y peso de los niños
Tuvo en cuenta las recomendaciones de las evaluaciones frente a que el programa deberÃaÂ
transitar hacia la ampliación del esquema incremental en educación secundaria, una mayorÂ
atención en la etapa de primera infancia a través del pago de subsidio en transición, la necesidadÂ
de hacer énfasis en mejoramiento de la calidad de la nutrición y el pilotaje sobre cómo elÂ
Programa podrÃa contribuir en la disminución del embarazo adolescente\. Â
51
Formación para el trabajo: por medio del Programa Ingreso para la Prosperidad Social
se buscará promover la formación de capacidades y habilidades para el trabajo de los
jóvenes del programa Familias en Acción que se gradúan de 11 grado, y deseen continuar
su formación titulada\.
Tuvo en cuenta las recomendaciones de las evaluaciones frente a la necesidad de âtender unÂ
puenteâ? con la educación superior de los jóvenes que terminan el ciclo de formaciónÂ
secundaria\. Asàlos jóvenes graduados recibirán un apoyo para que continúen con la formaciónÂ
titulada\.
Enfoque regional: diferenciación de los subsidios entre centros urbanos y municipios
pobres, definidos a partir del Ã?ndice de Pobreza Multidimensional con el fin de
incrementar la progresividad geográfica del programa\.
En el presente contexto, donde el programa cuenta con un alto respaldo polÃtico y legal
para su operación en el futuro, se ha tomado la decisión que la financiación en adelante
sea asumida con recursos del presupuesto nacional, para lo cual el Gobierno Nacional
propenderá por proveer anualmente los recursos para atender los pagos de la totalidad de
las familias y la operación, de acuerdo al marco fiscal de mediano plazo (Art 8 â Ley
1532 de 2012)\.
3\. Factores que afectaron la operación del programa durante el perÃodo de
ejecución del crédito
ï El proceso de ampliación de cobertura no se llevó a cabo de manera gradual, tal y
como lo recomendaron las evaluaciones, lo cual afectó la posibilidad de hacer
una evaluación minuciosa sobre los efectos que estas intervenciones podrÃan
tener sobre las nuevas poblaciones beneficiarias\. La falta de gradualidad en la
entrada tuvo implicaciones en la evaluación de impacto, lo cual derivó en
contaminación de la muestra en municipios piloto como Bogotá y Soacha;
adicionalmente a que algunos de los resultados de la evaluación de los piloto,
como fue el caso de MedellÃn, fueron obtenidos con posterioridad a la
expansión\.
ï En el proceso licitatorio para la contratación de la firma encargada de ofrecer el
servicio de pago de los subsidios enmarcado en la apertura de cuentas de ahorro,
se recibió solamente una propuesta, correspondiente a la Unión Temporal
Bancoagrario de Colombia y Assenda SA\. La razón por la cual otros bancos no
presentaron ofertas fue que âlas familias pobres no son su objeto de negocioâ? y
porque los costos para llegar a municipios muy apartados era muy alto\. Si bien
la banca multilateral emitió concepto de no objeción y la correspondiente
autorización para llevar a cabo las negociaciones, y se logró ajustar la oferta sin
afectar los objetivos y el alcance de la contratación, esto afectó lo planeado
52
inicialmente y evidenció el desconocimiento que se tenÃa de la oferta de
servicios del sector bancario\.
ï Si bien en el marco del diseño del programa en zonas urbanas se tuvo en cuenta
la diferenciación de las dinámicas entre áreas rurales y urbanas en temas como
las distancias, la ocupación de las madres, costos de transporte, otras formas de
organización comunitaria, entre otras; en la implementación del programa dichas
diferencias tuvieron un impacto importante en el desarrollo de las estrategias de
promoción, como por ejemplo en el tiempo en que las madres pueden dedicar a
la asistencia a los encuentros de cuidado\.
ï Se ha buscado el perfeccionamiento del proceso de verificación de compromisos,
buscando su flexibilización y ajuste teniendo en cuenta las diversas realidades
locales, para lo cual se diseñó una estrategia con diferentes modalidades para la
verificación\. La expansión fue un reto importante en el marco de la verificación,
por la gran magnitud de beneficiarios, las grandes distancias, el número y
dispersión de instituciones de salud y educación y tiempos de desplazamiento\.
No obstante, continúan evidenciándose dificultades importantes como por
ejemplo, todavÃa el compromiso por parte de algunas instituciones de educación y
salud es insuficiente, de tal manera que la responsabilidad sigue recayendo sobre
el Programa, y se han presentado dificultades en algunos casos en la verificación
de autenticidad de documentos; y en el caso particular de Bogotá, hace falta
definir más claramente los lineamientos y revisar la operatividad del programa
con la nueva administración distrital\.
4\. Evaluación de desempeño ACCIÃN SOCIAL â Departamento para la
Prosperidad Social
La ejecución del proyecto (2008 a 2011) estuvo a cargo de la Agencia Presidencial para
la Acción Social y la Cooperación Internacional, ACCIÃN SOCIAL, bajo parámetros de
eficiencia en la utilización de los recursos, el máximo cumplimiento de las metas
propuestas, la satisfacción de los beneficiarios de los subsidios y la armonización y
coordinación con otras polÃticas de gobierno\.
El programa ha enmarcado sus actividades en la implementación del Sistema de Gestión
Integral, de acuerdo con el eje de calidad, se ha enfocado en aumentar la satisfacción al
cliente y en mejorar el desempeño de los procesos, en el eje de seguridad y salud
ocupacional, se ha preocupado por brindar adecuadas condiciones de trabajo y en
gestionar los riesgos tanto para los colaboradores, como para los beneficiarios que asisten
a las diversas actividades, como también se viene trabajando en el eje ambiental y en el
eje de seguridad de la información\. Por el cumplimiento de estos estándares, la entidad
recibió las certificaciones correspondientes\.
Consideramos que la entidad tuvo una adecuada gestión en el uso y seguimiento a los
recursos, además del desarrollo de un proceso de monitoreo, seguimiento y evaluación; a
partir del cual se generó información de manera permanente y permitió la detección de
53
alarmas y posibles inconsistencias\. Asà se emprendieron acciones para el seguimiento
interno y externo muestral, mediante el seguimiento interno se generó información
permanente sobre la totalidad de los municipios y el cubrimiento a las familias, mediante
el seguimiento externo muestral se verificó la transparencia en la entrega de los subsidios,
para lo cual una firma externa verificaba en campo la exactitud de la información
reportada, esto se hacÃa a través de una muestra estadÃsticamente representativa, esta
metodologÃa es denominada spot checks\.
Adicionalmente, en los últimos tres años, el Programa afianzó el esquema de evaluación,
se llevó a cabo un proceso de análisis de sus nuevos tipos de intervención, en 2008
finalizó la evaluación de Familias en Acción desplazados, se desarrolló el piloto de
grandes centros, en 2009 se puso en marcha la evaluación de operaciones del esquema de
atención a población indÃgena, durante 2011 se desarrolló y finalizó la evaluación de
operaciones y de impacto de grandes centros y durante el primer semestre de 2012, se
finalizó el tercer seguimiento en municipios con menos de 100\.000 habitantes\.
Estos últimos años se ha trabajado en afinar los instrumentos de recolección, monitoreo y
seguimiento, los resultados de las evaluaciones han sido altamente consideradas para el
fortalecimiento y mejoramiento del programa; los resultados de las evaluaciones como de
las auditorÃas externas implementadas han generado alta credibilidad frente a las acciones
desarrolladas para el buen funcionamiento del Programa, adicionalmente, se han
intensificado los esfuerzos por prestar una mejor atención a los beneficiarios, a través de
la Gerencia de Servicios y Soluciones â GERESS, se contrató un outsourcing para
atención telefónica, mesa de ayuda y back office que brinda al Programa este soporte
para agilizar la atención, sin costo alguno para el beneficiario\.
Lo anterior no representa la inexistencia de aspectos claves donde deben realizarse
ajustes o se debe profundizar, como el citado proceso de verificación y algunos
planteamientos de la promoción en grandes centros, el establecimiento de compromisos
intersectoriales para alcanzar la suficiencia de la oferta social, continuar con el proceso de
unificación SIFA â SIRC para mejorar la seguridad, administración, comunicación y
tiempos de respuesta, entre otros\.
5\. Evaluación de desempeño del Banco Mundial
El apoyo de la banca multilateral para el desarrollo del Programa ha sido crucial de una
parte, permitió contar con los recursos necesarios para cumplir con todas las metas
trazadas y no incumplirle a las familias, recursos que estuvieron disponibles con
oportunidad\. Gracias a las polÃticas de la Banca se obtuvo un mayor respaldo frente a la
ejecución eficiente y transparente de los recursos\.
El Banco Mundial dispuso de un completo equipo que proporcionó asistencia técnica a lo
largo de toda la ejecución del crédito\. La interacción entre los funcionarios de la
representación del Banco y los asesores del Programa, a través de consultas permanentes
y visitas a campo, ayudó a la toma de decisiones\. Las discusiones enriquecedoras con
54
este equipo ofrecieron nuevas perspectivas y contribuyeron al reconocimiento y
posicionamiento con el que cuenta hoy Familias en Acción\.
Las polÃticas del Banco implicaban la determinación de ciertos indicadores, tipos de
reporte e informes, que alimentaron y fortalecieron el sistema de seguimiento del
programa y le ofreció alta rigurosidad, asà como el esquema de evaluación fue uno de los
más importantes aportes para la toma de decisiones, convirtiéndose en una herramienta
técnica institucionalizada\.
6\. Lecciones aprendidas
ï La necesidad de flexibilización de los procesos teniendo en cuenta las realidades
locales, las dinámicas propias de las regiones, las diferencias en los
comportamientos institucionales, especialmente ante procesos de expansión de
cobertura tanto geográfica como poblacional\. Debe tenerse en cuenta que el
Programa no es estático y debe mejorarse continuamente para cubrir las
necesidades de los beneficiarios y ser más efectivo\.
ï Aunque el pago de subsidios mediante giros bancarios fue un mecanismo
efectivo, persistÃan algunos problemas para las familias, como las largas filas y la
congestión; esto llevó a repensar el mecanismo de pago y dar inicio a uno de los
procesos más ambiciosos en materia de bancarización\. De tal manera, el programa
abrió una nueva puerta y comprobó que era posible fomentar el ahorro al interior
de las familias más pobres y vulnerables y que a pesar de las dificultades en
términos de los costos que implicaba llegar a lugares apartados, fue posible
acordar una tarifa sin afectar los objetivos\. Para la banca fue una oportunidad de
crecimiento y diversificación de su portafolio\. El reto del Gobierno Nacional se
encuentra en aumentar el acceso a otros servicios financieros\.
ï El programa requiere profundizar los canales de información y comunicación que
tiene con las familias beneficiarias, debe explorar nuevos mecanismos para que
las familias obtengan mayor información sobre cómo operan los subsidios, asÃ
como profundizar la capacitación de los enlaces municipales\.
ï El programa siempre estará compitiendo con los incentivos que tienen los jóvenes
para salir a trabajar y generar mayores ingresos en el hogar, por tanto el esquema
incremental en secundaria resulta más efectivo para la permanencia de los
menores en el sistema escolar\. Adicionalmente, el Programa debe tender puentes
hacia la educación superior, para continuar con el esfuerzo y la inversión que se
realiza al lograr que los jóvenes completen el ciclo escolar\.
ï El Programa debe buscar mayor articulación con otros esfuerzos de gobierno,
tales como la estrategia de Cero a Siempre, la Estrategia Nacional para Prevenir y
Erradicar las peores formas de Trabajo Infantil, la Red UNIDOS, entre otros\. Esto
bajo el entendido de la necesidad de consolidar el Sistema de Protección Social y
para que en el momento de la salida del Programa, las familias estén inmersas en
55
este sistema que ayude en la consolidación del capital humano y en la generación
de ingresos de manera formal y sostenible\.
56
ANEXO N° 1 â Conclusiones Evaluación Impactos de largo plazo del Programa
Familias en Acción en municipios de menos de 100 mil habitantes en los aspectos
claves del desarrollo del capital humano
Unión Temporal EconometrÃa S\.A\. â SEI\. S\.A\.
Y la asesorÃa del
Los impactos en la evaluación se examinan en dos niveles distintos\. Por un lado, los más
directamente relacionados con el Programa (nutrición, salud y educación) que en
conjunto apuntan a al tema del capital humano; por otro lado, aquellos en los cuales se
proyecta el capital humano y dependen no solo de lo que haga el Programa sino de las
condiciones del entorno (mercado laboral, bienestar), asà como aquellos que se traducen
en efectos no esperados del Programa (dependencia del subsidio, fecundidad y
bancarización)\.
El Programa tiene efectos importantes sobre la acumulación de capital humano en el
largo plazo (antropometrÃa y educación), los cuales a su vez se reflejan en diferencias en
el proceso de aprendizaje (desarrollo cognitivo), generando impactos en variables donde
esos desarrollos de capacidades son fundamentales (graduación de bachillerato) y llega a
reflejarse en algunas variables asociadas al mercado laboral\. También se encontraron
efectos en variables sobre las cuales el Programa no tenÃa el propósito de impactar
(acceso a la bancarización)\. En conjunto, se tienen impactos positivos y recomendaciones
de ajuste en la dirección de reorientar los subsidios hacia donde se generen mayores
aportes para romper barreras de acceso y al mayor desarrollo del capital humano\.
En primer lugar se tienen los impactos en variables directamente relacionadas con la
acumulación de capital humano, en municipios con exposición temprana al Programa\. Se
registra una disminución en la probabilidad de tener baja talla para la edad o ser
desnutrido crónico para los niños de 9 a 15 años en zona rural; para los niños entre 13 y
17 años se encuentra una disminución en la edad de ingreso a la escuela en zona urbana,
y se advierten mejoras en la progresión escolar (grado por la edad, probabilidad de
graduación) para adolescentes entre 18 y 26 años en zona rural\.
AsÃ, en variables que reflejan el aprovechamiento del desarrollo de esas mayores
capacidades, hay un incremento de las habilidades cognitivas de los niños entre 12 y 17
años, reflejada en el puntaje del test de matemáticas\.
La acumulación de capital humano se proyecta en un aumento en la probabilidad de tener
un empleo formal para las mujeres entre 18 y 26 años en zona rural\. Sin embargo, es
57
posible que todavÃa no se alcance a evidenciar las mejoras en productividad y el
bienestar, pues muchos de los beneficiarios aún son menores y no han salido al mercado
laboral a generar ingresos\.
A la par de lo anteriormente mencionado, diez años después de haber comenzado la
implementación del Programa, se presentan las siguientes situaciones de alerta: i) La tasa
de asistencia escolar en secundaria continúa siendo baja para niños entre 15 y 17 años
(entre el 80-60%); ii) Es posible que el Programa esté generando un incentivo perverso a
repetir años en la escuela, probablemente en los años finales, para mantener el subsidio
por un periodo adicional; iii) Los adolescentes que salen del Programa encuentran
grandes dificultades para vincularse al mercado laboral\. Esto es particularmente crÃtico
para las mujeres, quienes presentan tasas de desempleo superiores al 60%; iv) Se registra
un aumento en la probabilidad de que los menores entre 9 y 12 años tengan exceso de
peso (sobrepeso u obesidad) en zona rural\.
En cuanto a los efectos de mediano o corto plazo, los resultados son menos contundentes\.
Están limitados a una población más pequeña ubicada en el lÃmite entre el nivel de Sisben
1 y 2, donde no se incluyen los más pobres, población para la cual los impactos tienden a
ser mayores\. A pesar de estas limitaciones, se encuentra que el Programa contribuye a
una disminución del riesgo de estar en condición de inseguridad alimentaria y está
asociado con incrementos en el uso de servicios odontológicos y la adquisición de
conocimientos sobre el manejo de la EDA (a través de los Encuentros de Cuidado)\. Entre
los efectos no esperados se halla que el recibir el Programa Familias en Acción permite a
los hogares en zona rural acceder más fácilmente a crédito formal\.
Por último, no se encuentran resultados significativos en las mediciones de dependencia
del subsidio y tasas de natalidad, temas que han sido debatidos extensiva y
controversialmente, y que se relacionan con las transferencias de dinero condicionadas,
especÃficamente con FA\.
Recomendaciones
Con base en los resultados arrojados, se presentan planteamientos y recomendaciones en
torno a las condiciones futuras del Programa, teniendo en cuenta el momento estratégico
por el que atraviesa el mismo, en el que está previsto su rediseño, en el marco de la nueva
estructura del Departamento para la Prosperidad Social (DPS)\.
Cambiar la estructura de los subsidios para educación
⢠Modificar la estructura del subsidio de educación, reduciendo el subsidio en
educación primaria (donde se tienen coberturas que llegan casi al universo) y
aumentándolo para secundaria, con el propósito de generar mayores incentivos de
permanencia de los jóvenes en educación media\. Este tipo de estrategia puede ser
particularmente apropiada en áreas urbanas donde las oportunidades en el mercado
laboral puedan ser especialmente tentadoras para los jóvenes\. Existen estudios (Todd,
58
P\.; Wolpin, K\. (2008) y Attanasio, O\.; Meghir, C\.; Santiago, A\. (2012)) que han
simulado cambios de este tipo al programa PROGRESA en México; en ellos se
muestra que la misma cantidad de dinero utilizado de manera diferente puede generar
mayores efectos en la asistencia a educación secundaria\. En Colombia, estrategias
alternativas de incentivos a la matriculación en educación secundaria se han
experimentado en grandes ciudades\. Desde luego hay que tener precauciones\. En
particular, se deben considerar los siguientes puntos:
a\. Es posible que el subsidio para educación primaria tenga efectos adicionales,
muy distintos a la estimulación de la asistencia\. Por ejemplo, puede ser que el
subsidio permita a los hogares lograr mejores resultados nutricionales o
simplemente juegue una función importante de redistribución\.
b\. El riesgo de eliminar totalmente el subsidio de educación primaria es que el
Programa puede perder contacto con algunos hogares por algún tiempo\.
c\. Pueden existir áreas (en especial pequeñas áreas aisladas rurales) en donde el
subsidio a educación primaria aún pueda jugar un papel importante, en cuyo
caso se deberÃa continuar utilizándolo\.
d\. El subsidio en educación primaria sin lugar a dudas tuvo un efecto positivo en
la matriculación temprana, que a su vez se relaciona con progreso escolar,
especialmente en las áreas rurales; este efecto es importante y en esa medida es
conveniente buscar un incentivo que lo mantenga\.
Diferenciar subsidios en áreas
En la medida que se encontraron efectos diferenciales por zonas (rural y cabeceras
municipales), hacer que ciertos apoyos especÃficos tambien lo sean\. La evidencia muestra
la efectividad limitada del Programa en zona urbana, por lo que valdrÃa la pena rediseñar
el Programa en las áreas urbanas\. Se conoce, por trabajos previos, que FA experimentó
con estructuras de subsidios alternas en ciudades grandes, que pueden ser útiles al
respecto\. Los mejores resultados estuvieron relacionados con un esquema de pagos
incrementales con el grado, que evitaba el abandono en puntos crÃticos de la carrera
escolar (el cambio de primaria a secundaria básica, y de básica a secundaria media)
(Centro Nacional de ConsultorÃa, 2011)\.
Mejorar la calidad de los servicios
⢠No está claro si los beneficiarios obtienen servicios de calidad adecuada\. Vale la
pena realizar un diagnostico de la calidad de los colegios y centros de salud utilizados
por los beneficiarios de FA y, de acuerdo con los resultados, considerar una
intervención para mejorar la calidad\.
Articular FA con otros programas sociales
⢠Existen aún retos importantes que el Programa, dado su diseño y objetivos, no puede
pretender abarcar (calidad de servicios sociales, retención escolar para adolecentes,
desempleo juvenil, etc\.) y debe buscar articularse con otros programas del Gobierno,
para poder enfrentarlos\. FA puede desempeñar un papel importante (por ejemplo,
59
como punto de entrada al sistema de protección social) pero debe articularse de
manera más cercana con otras intervenciones\. El programa Red Unidos, que tiene
como uno de sus objetivos la coordinación y focalización de la oferta de servicios a
los pobres, puede ser la columna vertebral para este proceso de articulación de
polÃticas\.
Innovaciones dentro de FA
⢠Primera Infancia: Los apoyos en nutrición en los primeros años marcan diferencias
que se mantienen en el tiempo\. Por tanto estos son apoyos que deben conservarse\.
Incluso podrÃan complementarse con programas como los de estimulación temprana,
según se deriva de evaluaciones paralelas que se han desarrollado17\. Se puede utilizar
el capital social en las madres lÃderes de FA para implementar, a través de ellas, otros
programas de primera infancia\.
⢠Créditos para educación terciaria: Hay una demanda de productos financieros que
puedan ser focalizados para acceder a la educación terciaria\. En este nivel las
limitaciones económicas pueden ser muy relevantes para los colombianos más
pobres\. En el análisis cualitativo se evidencian posibles cambios en las familias en
relación con las expectativas que ellas tienen sobre los hijos\. Es necesario por tanto
construir un horizonte más amplio de futuro, donde los jóvenes tengan cabida con sus
proyectos luego de haber terminado el ciclo escolar\. ValdrÃa la pena explorar
estrategias ya sea para incluir un componente adicional a FA o disminuir el subsidio
en estudios en de primaria para usarlos en educación terciaria (con las precauciones
ya anotadas)\. Sin embargo, para suplir la demanda, es necesario que se incremente la
oferta de educación terciaria en el paÃs, en especial en zonas rurales
⢠Bancarización: La inclusión financiera de los pobres contribuye a ganarle a la
pobreza\. El Programa ya ha experimentado en tratar de aumentar la participación de
sus beneficiarios en el sector financiero formal\. Hay evidencia de que en este aspecto
el Programa ha tenido impacto\. Se debe utilizar la infraestructura del Programa para
traer mayor inclusión financiera\. Por un lado se puede reemplazar las cuentas de
ahorro requeridas para el pago de los subsidios por cuentas de capitalización y con
esto fomentar un mayor ahorro\. De otra parte, y con el ánimo de reducir la deserción
en los últimos años de secundaria, se puede abrir cuentas de ahorro a los jóvenes
donde se ahorre una parte del subsidio de secundaria para estudios superiores o
inversiones en proyectos productivos a futuro\. En Bogotá se tiene alguna experiencia
relevante con el Subsidio Condicionado a la Asistencia Escolar\.
Hacer obligatorios los Encuentros de Cuidado
17
El impacto de un piloto de estimulación basado en el trabajo seminal de Sally Grantham-McGregor, en
el cual, en visitas a los hogares a niños pequeños y a sus madres (o cuidador principal), se trabaja un
currÃculo bien estructurado que incluye una cantidad de actividades de juego y la utilización de diferentes
materiales de aprendizaje, con la participación de las madres lideres de FA para realizar las visitas,
evidencia la importancia de la estimulación (presentado en Bogotá el 26 de Marzo del 2012)Â
60
⢠No solo el subsidio de nutrición es importante para mejorar la adquisición de
alimentos en el hogar\. Se deben fomentar mejores hábitos alimentarios para que la
cantidad se reemplace con calidad de alimentos\. En este sentido, se deberÃa pensar en
la obligatoriedad de la asistencia a los Encuentros de Cuidado y hacer partÃcipes a
algunos de los integrantes de la familia (adolescentes, por ejemplo), al igual que
reforzar las temáticas incluidas en estos, no solo relacionadas con la parte logÃstica
del Programa sino con los diferentes aspectos de salud, nutrición, actividad fÃsica,
educación sexual, etc\. que permitan tomar mejores decisiones y por ende, mejorar la
calidad de salud y nutrición en general\. Al respecto, en las capacitaciones es
importante separar lo que significa âno tener hambreâ? de lo que significa âalimentarse
bienâ?\. Una cosa es tener hambre y saciarla con alimentos baratos inadecuados, y otra
cosa es no tener plata y creer que los alimentos saludables no se pueden comprar
porque son los más caros\.
Â
 Â
61
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
N/A
62
Annex 9\. List of Supporting Documents
1\. Evaluación de Operaciones de los Proyectos Piloto del Programa Familias en
Acción en Comunidades IndÃgenas (Centro Nacional de Consultoria, 30 abril
2010)\.
2\. Evaluacion del Programa Familias en Accion en Grandes Centros Urbanos,
Centro Nacional de Consultoria (Bogota, December 2011)
3\. Subsidios Diferenciados - Esquemas Ahorro e Incremental Estado y Avance
(Unidad de Direccionamiento Estrategico y Monitoreo, Familias en Accion,
Noviembre de 2011)
4\. Guia Para la Verificacion de Compromisos Generalidades (Familias en Accion,
2011)
5\. Informes de Estado y Avance (Cada Semestre 2009-2011)
6\. Ley 1532, 7 de junio, 2012
7\. Familias en Accion 10 anos despues: que impactos, que cambios, que futuro, by
Orazio Attanasio, Arturo Grcia, Luca Pelleramo y Olga Lucia Romero, Abril
2012\.
63 | APPROVAL |
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ABBREVIATIONS AND ACRONYMS
C&AG Comptroller and Auditor General
CASE Clean Air and Sustainable Environment
CE Citizen Engagement
CPF Country Partnership Framework
DA Designated Account
DCNUP Dhaka City Neighborhood Upgrading Project
DMA Dhaka Metropolitan Area
DMP Dhaka Metropolitan Police
DNCC Dhaka North City Corporation
DPP Development Project Proposal
DSCC Dhaka South City Corporation
DSM Design, supervision and contract management
DTC Departmental Technical Committee
EA Environment Assessment
EIRR Economic Internal Rate of Return
EMF Environmental Management Framework
EMP Environmental Management Plan
ESMF Environmental & Social Management Framework
ESMP Environmental and Social Management Plan
ERD Economic Relations Division
FAPAD Foreign-Aided Projects Audit Directorate
FM Financial Management
GDP Gross Domestic Product
GIS Geographical Information System
GoB Government of Bangladesh
GRM Grievance Redress Mechanism
Ha Hectare
ICT Information and Communication Technology
IDA International Development Association
IMED Implementation Monitoring and Evaluation Division
IPF Investment Project Financing
IUFR Interim Unaudited Financial Report
LGD Local Government Division
M&E Monitoring and Evaluation
MDGs Millennium Development Goals
MGSP Municipal Governance and Services Project
MLGRD&C Ministry of Local Government, Rural Development and Co-Operatives
NMT Non-motorized transport
O&M Operations & Maintenance
PC Planning Commission
PCR Physical Cultural Resources
PD Project Director
PDO Project Development Objective
PIM Project Implementation Manual
PIC Project Implementation Committee
PIU Project Implementation Unit
PPSD Project Procurement Strategy for Development
PSC Project Steering Committee
RAP Resettlement Action Plan
RP Resettlement Plan
RPF Resettlement Policy Framework
RMS Results Measurement System
SCD Systematic Country Diagnostic
SDGs Sustainable Development Goals
SIA Social Impact Assessment
SORT Systematic Operations Risk-Rating Tool
STEP Systematic Tracking of Exchanges in Procurement
TORs Terms of References
WB World Bank
The World Bank
Dhaka City Neighborhood Upgrading Project (P165477)
BASIC INFORMATION
BASIC_INFO_TABLE
Country(ies) Project Name
Bangladesh Dhaka City Neighborhood Upgrading Project
Project ID Financing Instrument Environmental Assessment Category
Investment Project
P165477 B-Partial Assessment
Financing
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC)
[ ] Series of Projects (SOP) [ ] Fragile State(s)
[ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s)
[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict
[ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster
[ ] Alternate Procurement Arrangements (APA)
Expected Approval Date Expected Closing Date
28-Mar-2019 30-Jun-2024
Bank/IFC Collaboration
No
Proposed Development Objective(s)
To enhance public spaces and improve urban services in selected neighborhoods in Dhaka\.
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Dhaka City Neighborhood Upgrading Project (P165477)
Components
Component Name Cost (US$, millions)
Public space enhancements 97\.30
Place management, urban planning and project implementation support 8\.70
Organizations
Borrower: Peopleâs Republic of Bangladesh
Implementing Agency: Dhaka South City Corporation
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 106\.00
Total Financing 106\.00
of which IBRD/IDA 100\.50
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 100\.50
IDA Credit 100\.50
Non-World Bank Group Financing
Counterpart Funding 5\.50
Borrower/Recipient 5\.50
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Dhaka City Neighborhood Upgrading Project (P165477)
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount
National PBA 100\.50 0\.00 0\.00 100\.50
Total 100\.50 0\.00 0\.00 100\.50
Expected Disbursements (in US$, Millions)
WB Fiscal Year 2019 2020 2021 2022 2023 2024
Annual 0\.50 4\.25 10\.00 19\.00 29\.00 37\.75
Cumulative 0\.50 4\.75 14\.75 33\.75 62\.75 100\.50
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas
Social, Urban, Rural and Resilience Global Practice Transport, Water
Climate Change and Disaster Screening
This operation has been screened for short and long-term climate change and disaster risks
Gender Tag
Does the project plan to undertake any of the following?
a\. Analysis to identify Project-relevant gaps between males and females, especially in light of
Yes
country gaps identified through SCD and CPF
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Dhaka City Neighborhood Upgrading Project (P165477)
b\. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or
Yes
men's empowerment
c\. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1\. Political and Governance ï¬ High
2\. Macroeconomic ï¬ Moderate
3\. Sector Strategies and Policies ï¬ Moderate
4\. Technical Design of Project or Program ï¬ Moderate
5\. Institutional Capacity for Implementation and Sustainability ï¬ Substantial
6\. Fiduciary ï¬ High
7\. Environment and Social ï¬ Substantial
8\. Stakeholders ï¬ Substantial
9\. Other
10\. Overall ï¬ Substantial
COMPLIANCE
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Dhaka City Neighborhood Upgrading Project (P165477)
Policy
Does the project depart from the CPF in content or in other significant respects?
[ ] Yes [â] No
Does the project require any waivers of Bank policies?
[ ] Yes [â] No
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 â
Performance Standards for Private Sector Activities OP/BP 4\.03 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
Legal Covenants
Sections and Description
Financing Agreement - Section I\.A\.1 of Schedule 2 - Implementation Arrangements (Project Steering Committee): By
no later than three (3) months after the Effective Date, the Recipient, through the LGD, shall establish and
thereafter maintain, throughout the period of implementation of the Project, a Project steering committee with a
mandate, functions, composition and resources satisfactory to the Association\.
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Dhaka City Neighborhood Upgrading Project (P165477)
Sections and Description
Financing Agreement - Section I\.A\.1 of Schedule 2 - Implementation Arrangements (Project Implementation Unit):
The Recipient through DSCC shall establish and thereafter maintain, throughout the period of implementation of
the Project, a Project implementation unit, with functions and resources satisfactory to the Association\. The unit
shall be headed by a full-time Project director, who shall be assisted by a deputy Project director; both such officials
to be appointed by no later than one (1) month after the Effective Date\. The said Project implementation unit shall
be assisted by staff in adequate numbers and with qualifications, experience and terms of reference satisfactory to
the Association, to be appointed/engaged by no later than (3) months after the Effective Date\.
Sections and Description
Financing Agreement - Section I\.B of Schedule 2 - Implementation Arrangements (Project Implementation Manual):
By no later than four (4) months after the Effective Date, the Recipient shall adopt and thereafter maintain,
throughout the period of implementation of the Project, the Project Implementation Manual, in a manner
satisfactory to the Association\. The Recipient shall carry out the Project (including the Subprojects) in accordance
with the provisions of the Project Implementation Manual in a manner satisfactory to the Association\.
Sections and Description
Financing Agreement - Section I\.C of Schedule 2 - Implementation Arrangements (Subprojects):
The Recipient through DSCC shall ensure that only those Subprojects selected, prepared and implemented in
accordance with the requirements set out in the Project Implementation Manual, EMF and RPF, shall be financed
out of the proceeds of the Financing\.
Sections and Description
Financing Agreement - Section I\.E\.1 of Schedule 2 - Implementation Arrangements (Safeguards): The Recipient shall
ensure that the Project (including the Subprojects) is carried out in accordance with the provisions of the EMF, the
RPF and all Safeguard Assessments and Plans and the requirements of the Grievance Redress Mechanism\.
Sections and Description
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Dhaka City Neighborhood Upgrading Project (P165477)
Financing Agreement - Section I\.E\.2 of Schedule 2 - Implementation Arrangements (Safeguards):
The Recipient shall: (a) prior to the commencement of any proposed Project activity (including any Subprojects),
proceed to have Safeguard Assessment and Plans prepared, adopted and disclosed in a manner acceptable to the
Association; (b) thereafter take such measures as shall be necessary or appropriate to ensure compliance with the
requirements of such Safeguard Assessment and Plan; and (c) in the case of any resettlement activity under the
Project involving Affected Persons, ensure that no displacement shall occur before necessary resettlement
measures consistent with the RP applicable to such activity have been executed\.
Sections and Description
Financing Agreement - Section I\.E\.6 of Schedule 2 - Implementation Arrangements (Safeguards): Prior to the
hiring/engagement of any consulting services for the provision of technical assistance in relation to the activities
under Part 2\.2 of the Project, the Recipient shall ensure that the terms of reference for any such consulting services
incorporate the applicable international performance, technical, environmental and social standards set forth in the
Associationâs Safeguards Policies then in force, that might be relevant to the technical support provided, or advice
conveyed, through such consulting services\.
Sections and Description
Financing Agreement - Section I\.F of Schedule 2 - Implementation Arrangements (Land Expenditures):
The Recipient shall: (a) ensure that the following expenditures are financed exclusively out of its own resources and
not out of the proceeds of the Financing; and (b) provide, promptly as needed, the resources needed for this
purpose: (i) all costs associated with land and land use rights required for the purposes of the Project if any; (ii) all
resettlement and rehabilitation compensation and other assistance to the Affected Persons, in each case in
accordance with the RPF and the relevant RP\.
Conditions
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Dhaka City Neighborhood Upgrading Project (P165477)
BANGLADESH
Dhaka Urban Upgrading Project
TABLE OF CONTENTS
I\. STRATEGIC CONTEXT \.9
A\. Country Context \. 9
B\. Sectoral and Institutional Context \. 9
C\. Relevance to Higher Level Objectives \. 11
II\. PROJECT DESCRIPTION\.11
A\. Project Development Objective (PDO) Statement \. 11
B\. Project Components \. 12
C\. Project Cost and Financing\. 18
D\. Project Beneficiaries \. 19
E\. Lessons Learned and Reflected in the Project Design \. 19
III\. IMPLEMENTATION ARRANGEMENTS\.19
A\. Institutional and Implementation Arrangements \. 20
B\. Results Monitoring and Evaluation \. 21
C\. Sustainability \. 21
IV\. PROJECT APPRAISAL SUMMARY\.22
A\. Technical, Economic and Financial Analysis\. 22
B\. Fiduciary \. 23
C\. Safeguards\. 24
V\. KEY RISKS \.25
A\. Overall Risk Rating and Explanation of Key Risks\. 25
VI\. RESULTS FRAMEWORK AND MONITORING \.28
ANNEX 1: IMPLEMENTATION ARRANGEMENTS AND SUPPORT PLAN\.40
Institutional and Implementation Arrangements\. 40
Financial Management \. 40
Disbursements and Funds Flow \. 41
Implementation Support Plan \. 43
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Dhaka City Neighborhood Upgrading Project (P165477)
I\. STRATEGIC CONTEXT
A\. Country Context
1\. Bangladesh is one of the worldâs most populous country with an estimated 165 million people
people in a geographical area of about 144,415 sq\.km and per capita income of US$1,670 in 2018 1, well
above the lower middle income country category threshold which it crossed in FY14\. During recent years,
economic conditions improved in the country\. However, headline inflation increased to 5\.8 percent in
FY18, from 5\.4 percent in FY17, reflecting increases in food prices due to supply shocks\. Fiscal deficit was
contained at around 4\.5 percent of Gross Domestic Product (GDP) in FY18\. The FY18 budget targets 5
percent deficit with 26\.2 percent growth in expenditures\. The current account deficit increased to 3\.5
percent of GDP in FY18\. The GDP grew well above the average for developing countries in recent years,
averaging 6\.5 percent since 2010, with an officially estimated growth of 7\.86 percent in FY18, driven by
manufacturing and construction\. Progress on reducing extreme poverty and boosting shared prosperity
through human development and employment generation has continued with the poverty incedence
based on the international $1\.90 per capita per day poverty line (measured on the basis of the Purchasing
Power Parity exchange rate) declining from 44\.2 percent in 1991 to a 14\.8 percent in 2016 (latest available
poverty data)\. In the World Bankâs Human Capital Index 2018, Bangladesh performed better than the
South Asian average as well as the Lower Middle-Income average in all criteria except for Stunting\. With
current education and health conditions, a child born today in Bangladesh will be 48 percent as productive
as she could have been\. Bangladeshâs performance against the Millennium Development Goals (MDG)
goals was impressive relative to the South Asia Region average for most of the indicators\. Such progress
notwithstanding, the pace of poverty reduction and the rate of job creation has slowed since
2010\. Bangladesh needs stronger effort in making growth more inclusive and sustainable to meet its
target of eliminating poverty by 2030 and attaining the Upper Middle Income status by 2031\. For
accelerating private sector-led growth with improved investment climate, the key challenges are the need
for increased infrastructure and power, with much improved quality in spending public resources, better
regulations and enhanced skills of its vast and rapidly increasing labor force\.
2\. Bangladesh is the country most vulnerable to climate change, as per the Global Climate Risk Index\.
By 2050 more than 5 million poor will be vulnerable to the effects of climate change\. The country is likely
to be negatively affected by sea level rise and saltwater intrusion, average temperature increases, rainfall
variability and increased frequency and intensity of extreme weather events\. Dhaka, in particular, faces a
high risk of urban flooding due to four major rivers surrounding it, the presence of a number of lakes,
ponds and canals in the city, and poorly managed and clogged drainage systems\.
B\. Sectoral and Institutional Context
3\. The Dhaka Metropolitan Area (DMA) is the economic and political center of Bangladesh, and has
been its engine of economic growth and job creation\. Its role as an economic hub has led to rapid
population growth, with the population increasing ten times in 40 years to about 18 million in 2015\. This
1 Based on WB Atlas method\.
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has contributed to Bangladesh having one of the fastest rates of urbanization in South Asia\. More than
one-third of the countryâs urban population lives here, and it is one of the worldâs most densely populated
cities with 440 persons per hectare, denser than Mumbai, India (310), Hong Kong, Special Administrative
Region, China and Karachi, Pakistan (both 270)\. 2
4\. Dhaka is also one of the least livable cities in the world\. It is ranked 137 out of 140 cities, the
lowest for any South Asian city surveyed\. 3 Livings standards in the many slums of Dhaka are worse than
in rural areas, despite proximity to jobs\. Only two-thirds of the city is covered with piped water, less than
1 percent of domestic sewage generated is treated, 60 percent of municipal solid waste is collected and
little is disposed in a sanitary manner\. Severe traffic congestion is endemic, a consequence of inadequate
infrastructure and public transport relative to the high population and economic density\. It is the worldâs
fourth most polluted city, with air pollution levels 8 times higher than WHO guidelines\. 4 Finally, public and
open spaces â already limited due to the cityâs density â are declining as a share of land use\. The low
livability in Dhaka disproportionately affects vulnerable and excluded groups such as the poor, women
and elderly\.
5\. The Dhaka City Neighborhood Upgrading Project (DCNUP) is a strategic entry point for the World
Bankâs (WB) long-term engagement with Government of Bangladesh (GoB) to transform Dhaka into a
more livable and competitive city\. The project will focus on Dhaka South City Corporation (DSCC) and will
emphasize interventions that are designed through a collaborative process with beneficiaries, can be
implemented quickly, and will deliver visible improvements to civic life by improving the livability, vibrancy
and regeneration of neighborhoods\. It will finance improvements in public spaces 5 such as streets,
sidewalks, parks, open spaces and community centers\. GoB and the WB have identified certain priority
areas for ârapid resultsâ through consultations with civil society, thinktanks and urban professionals\.
These include: improving pedestrian safety and mobility, enhancing open and green spaces, particularly
in low-income neighborhoods, and revitalization of waterfront areas\. Stakeholders stressed the
importance of designing safe and inclusive spaces for women, providing public toilets, managing solid
waste, and improving drainage\.
6\. Improving walkability, accessibility, pedestrian and personal safety, and traffic management in
Dhakaâs public spaces can yield substantial benefits\. The vast majority of trips in Dhaka, 65 percent, are
made by non-motorized transport (NMT), such as walking (39 percent of modal share), bicycles, and
rickshaws\. 6 However, severe traffic congestion is partly caused by a high mode mix (non-motorized and
motorized traffic sharing the same road space), poor road manners and driver discipline, ineffective traffic
2 Source: United Nations, World Urbanization Prospects: The 2014 Revision\.
3 Ranking by Economist Intelligence Unit (2017)\.
4 Source: Environment Sector Briefs authored by World Bank Environment & Natural Resources Global Practice (2017)\.
5 According to international practice, public spaces are classified into three main categories: (i) roads, streets and sidewalks; (ii)
public open spaces like parks, waterfronts, playgrounds, plazas, squares, green areas etc\.; and (iii) public buildings such as
markets, bus and ferry terminals, community centers, libraries etc\. A more detailed list can be found in UN-HABITAT Global
Public Space Toolkit\.
6 Source: Transport Sector Briefs, World Bank Transport & ICT Global Practice (2017) based on âThe Project on the Revision and
Updating of the Strategic Transport Plan for Dhakaâ by JICA and Dhaka Transport Coordination Authority (2016)\.
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Dhaka City Neighborhood Upgrading Project (P165477)
control, and encroachment on road spaces by parked vehicles and vendors\. 7 More efficient use of the
existing road space can reduce congestion in most parts of Dhaka and provide visible improvements to
the urban landscape\. In Dhaka women use non-motorized or small-scale transport modes (such as walking
and non-motorized or auto rickshaws) as their main means of transport relatively more than men\.
7\. Access to and use of public spaces is a bigger challenge for women in Dhaka compared to men,
which reduces their ability to participate in civic and economic life\. Mobility, walkability and access for
women is limited due to a mixture of poorly-planned infrastructure and services (such as lack of adequate
pavements, sidewalks, streetlights/lighting, public toilets and dedicated open spaces), and prevailing
socio-cultural norms\. Perceptions of, and actual threats to, public safety limit womenâs use and
convenience of public spaces and facilities\. 93 percent of Dhaka women do not use public toilets while 42
percent perceive the cityâs parks to be unsafe\. 8 Women in some project-selected areas of the city reported
discomfort in sending their girl children to parks and streets, with open spaces crowded with men after
dark and lack of streetlighting impacting safety and walkability\.
C\. Relevance to Higher Level Objectives
8\. The project is consistent with the WBâs Country Partnership Framework (CPF) FY16-20 discussed
by the Board on April 5, 2016 (No\.103723-BD)\. It will contribute to Objective 1\.3: âimprove delivery of
basic services in urban areasâ\. To a lesser extent, it will also contribute to Objective 1\.2: âimprove
transport connectivityâ; and Objective 3\.1: âincrease resilience of population to natural disasters in urban
and coastal areasâ\.
9\. The project supports WBâs twin goals of reducing extreme poverty and increasing shared
prosperity\. It will contribute to local economic and social development by improving access, utilization of
urban spaces by businesses and citizens, and access to administrative services, with special attention to
poorer neighborhoods\. It will also directly contribute to Sustainable Development Goal (SDG) 11, âMaking
cities inclusive, safe, resilient and sustainableâ especially Target 7 of Goal 11 which is âto provide universal
access to safe, inclusive, and accessible green and public spaces, particularly for women and children,
older persons, and persons with disabilitiesâ\.
10\. It will benefit lower income groups, women and children who are expected to be the primary
users of improved public spaces\. The lack of public, open and green spaces for leisure and civic activity
disproportionately affect the poor\. Neighborhoods of Dhaka selected for inclusion in the project are
primarily low, lower-middle and middle income\.
II\. PROJECT DESCRIPTION
A\. Project Development Objective (PDO) Statement
11\. To enhance public spaces and improve urban services in selected neighborhoods in Dhaka\.
7 JICA study\.
8 Action Aid (2015), âWomen and the City IIIâ\.
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PDO Level Indicators
12\. The PDO-level outcome indicators are the following:
a\. Percentage increase in the number of people accessing enhanced public spaces
(disaggregated by gender);
b\. Total number of people provided with improved urban living conditions (disaggregated
by gender)\. 9
B\. Project Components
13\. The project is comprised of two components: (i) public space upgrading; and (ii) urban
management, capacity building and implementation support\.
Component 1: Public Space Enhancements
(Total cost US$97\.3 million; IDA share US$92\.5 million)
Subcomponent 1\.1: Neighborhood-Level Public Space Upgrading
(Indicative share of Component 1: 95 percent)
14\. This subcomponent will finance improvements in public spaces clustered within selected
neighborhoods of DSCC, to enhance their accessibility, usability, safety, attractiveness and disaster and
climate resilience; improve mobility and pedestrian access to key destinations; and improve traffic safety
through the carrying out of subprojects including: (i) the development of detailed engineering and
architectural designs of subprojects based on concept designs; (ii) the provision of engineering supervision
and contract management for the subprojects; and (iii) the preparation of safeguards assessments and
plans for the subprojects\.
15\. Public spaces are open areas or structures which are publicly owned or accessible and available
to the general public for use\. These can be broadly grouped into: (i) open and green spaces, such as parks,
playgrounds, plazas, squares and waterfronts; (ii) streets and pedestrian connections, such as streets,
sidewalks, footpaths and bike paths; and (iii) public buildings and amenities, such as community centers,
markets, libraries and public toilets\. This subcomponent will include a focus on the needs of vulnerable
users of public spaces such as women, youths, elderly and disabled\.
Neighborhood Selection
16\. Investments to be financed under this component will be located in four neighborhoods of Dhaka,
namely: (i) Kamrangir Char; (ii) Lalbagh; (iii) Sutrapur-Nayabazar-Gulistan; and (iv) Khilgaon-Mugdha-
Bashabo\. These neighborhoods, falling within the jurisdiction of DSCC, were selected through a series of
9This is a Corporate Results Indicator for urban sector projects and measures the number of people living in urban areas
provided with access to any of the following improved urban living conditions: services, housing, tenure, neighborhoods, public
spaces, parks, resilience, and/or urban environmental conditions\. The underlined will qualify as improvements under this
project\. The number of people will be counted as those living within 500 to 1000 meters of the improved area (as applicable)\.
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structured consultations with stakeholders 10\. These neighborhoods showed a high potential to
demonstrate the impact of improved public spaces and livability, and for community engagement\.
Subproject Screening and Appraisal
17\. Within the four selected neighborhoods, specific subprojects will be selected, screened, designed
and appraised as part of a framework approach\. The implementing agency will select, screen and design
each subproject considered for financing, and submit to the WB for formal appraisal on a rolling basis,
until all project funds allocated to the components have been committed\. Subprojects will be
implemented upon successful appraisal of each package by the WB as per the agreed criteria\. Subprojects
will be appraised by the WB using all of the following criteria:
Contribution to project objectives\. Subprojects must contribute to the development
objective of the project;
Citizen/community engagement\. Subprojects will undertake a participatory approach 11
during design to solicit and incorporate fedback via systematic citizen/community
consultations\. They will also consider further involvement of organized residents groups
in oversight and maintenance of improved public spaces;
Technical feasibility\. Subprojects must be technically feasible, including appropriateness,
quality of detailed designs and readiness for implementation;
Economic viability\. Subprojects must achieve an acceptable economic internal rate of
return (EIRR) 12; or where determination of EIRR is not feasible due to the nature of the
subproject or data constraints, subprojects must meet cost-effectiveness, supported by
an analysis comparing the proposed investment to similar subprojects;
Environmental and social safeguards\. The subproject will have no major or irreversible
environmental and social impacts, and no land acquisition;
Clearances and approvals\. All necessary clearances and approvals for implementing the
subproject, including the detailed urban design, traffic management plan, necessary
environment and construction permits, and approvals / âNo Objectionsâ from other land-
owning/land-managing agencies or other relevant agencies have been obtained, and
maintenance responsibilities are clearly articulated; and
Subproject operations & maintenance, programming and place-making\. Evidence that
Operations & Maintenance (O&M) costs of subproject is sustainable and can reasonably
10 Consultations were conducted as part of a structured citizen engagement framework, including public consultations to
validate the need for public space improvement in Dhaka, followed by a workshop with counterparts to identify potential
neighborhoods\. This was followed by an internal screening by DSCC and WB to ensure feasibility, and then citizen-level
consultations were held in each shortlisted neighborhood to validate user needs and refine potential subprojects\.
11 A citizen engagement framework has been proposed to ensure that citizens are consulted for the neighborhood concept
urban designs as well as subproject design\.
12 The threshold economic IRR can be determined using the methodology and guidance provided in WBâs guidance note
âDiscounting Costs and Benefits in Economic Analysis of World Bank Projectsâ (2016)\.
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be borne by DSCC 13\. Evidence will also be provided to show that arrangements have been
put in place for managing, programming and place-making of new public space assets
where appropriate\.
18\. The typology and indicative types of subprojects to be financed are listed in Table 1\.
Pilots and Behavior Change Activities
19\. Where feasible, selected subprojects will pilot the following innovation:
Mixed-use integrated community centers with green building features, and designated
facilities for women\. DSCC owns and maintains numerous community centers that are
dilapidated, unused or under-used (e\.g\. âsingle useâ buildings that do not utilize space
efficiently)\. There is an opportunity to: (i) co-locate multiple uses within the same building
to provide a broader range of services for the surrounding community such as: public
toilets (including separate toilets for women); multi-purpose halls; health centers; police
posts for safety, security and prevention of harrassment, Information and Communication
Technology (ICT)-based citizen facilitation centers, co-working spaces and integration
with adjacent parks and open spaces; (ii) integrate green building features such as:
rainwater harvesting, solar panels, passive heating and cooling features and consolidated
waste collection points; and (iii) provide designated spaces and programmed activities for
women in these community centers such as: day-care for working mothersâ children;
help-seeking points for women; and clubs and community spaces / activities for
recreation for women; if found feasible during sub-project appraisal\.
Traffic management pilots at selected locations\. Within the selected neighborhoods,
opportunities will be explored as part of subprojects to better organize vehicular and
pedestrian flows to provide safer, more accessible and usable public spaces\.
Behavior change, awareness and place management\. To maintain improved public
space assets, the project will implement a three-pronged approach: (i) improving place
management and maintenance of facilities such as parks and community centers; (ii)
creating public awareness through communications campaigns, including: (a) information
to citizens on the use, maintenance and sustainability of the newly-created and improved
spaces and facilities; and (b) information on existing redress mechanisms for gender-
based violence and harassment in public spaces; and (iii) piloting behavior change in
selected subprojects such as improving âeyes on the street 14â, avoiding âbroken windowâ
syndrome 15 and promoting the normalization of use of these spaces and improved streets
by marginalized groups, especially women\. These activities will be financed under
13 Can be reasonably borne by DSCC without having a substantial impact on its budget, or that reasonable alternative
arrangements are being proposed for O&M, such as outsourcing to private or non-profit entities, management contracts, or
other similar arrangements\.
14 Urban development theory and practice indicates that urban neighborhoods are safer when there are "eyes on the street",
referring to residents/shopkeepers who are naturally drawn to street life, and in the course of their activities, monitor the
street\. Where there are no "eyes on the street" urban spaces are deserted, more likely to be unsafe, and poorly maintained\.
15 The âbroken windowsâ theory is a criminological theory that visible signs of crime, anti-social behavior and civil disorder
create urban environments which encourages further crime and disorder, including serious crimes\.
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subcomponents 1\.1, 1\.2 and 2\.1, and will be directly linked to public spaces upgraded
under Component 1 as an integrated set of activities\.
20\. A draft Project Implementation Manual (PIM) has been prepared which describes in detail all
operational and implementation aspects of the project, including neighborhood selection criteria;
procedures for site analysis of specific subprojects within each selected neighborhood; subproject
development and appraisal methodology; concept designs for potential interventions based on overall
typology of interventions; summary of consultations with local communities; and Terms of References
(TORs) for consultancies needed for the project\. The PIM will be a âlivingâ working document which will
be regularly updated during the project implementation\.
Subcomponent 1\.2: City-wide Pilot Traffic Management Improvements
(indicative share of Component 1: 5 percent)
21\. This subcomponent will finance the improvement of selected traffic intersections within DSCC on
a pilot basis through the carrying out of subprojects, including: (i) the development of broad intersection
management strategies to be developed jointly by DSCC and Dhaka Metropolitan Police (DMP), including
a traffic management plan, an operations plan, a traffic signals improvement plan, and a physical layout
plan of existing intersections; and (ii) the carrying out of civil works for implementing said broad
intersection management strategies and associated plans, to be jointly dveloped by DSCC and DMP,
including improved intersection geometry, allocation and demarcation of space for various users, access
and walkability for pedestrians\.
22\. This subcomponent will also finance the provision of technical assistance for carrying out a
behavior change / awareness program for all types of road users on traffic awareness, regulations and
behaviors and for providing techincal assitance and training to DSCC and DMP to identify critical traffic
bottlenecks in local aras and improving street designs for traffic safety\.
23\. The behavoir change / awareness program, targetted at all street and road users (such as drivers,
vehicle owners, pedestrians and other users) will emphasize the rights of pedestrians and marginalized
users, especially women, elderly, youths and disabled, to make roads and streets safer and more
convenient for them 16\. The program will use various channels of communication such as social media,
mass media (TV, radio, newspapers), and public interaction to complement enhanced enforcement by
DMP\. It will also finance technical assistance, training and capacity building to DSCC and DMP to identify
critical traffic bottlenecks in local areas, and to improve street designs for traffic safety\. All activities under
this component will be implemented and executed by DSCC, and will be done in close collaboration with
DMP, as per the jointly developed plans\.
16This could include, in selected places, public awareness campaigns on good street manners and behaviors (e\.g\. giving way and
seating to pregnant women and disable persons; as well as permanent signage in public spaces on good behavior and how to
seek help if harassed\. Other placemaking measures will be determined during project preparation\.
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Table 1: Indicative types of public space subprojects to be financed under Component 1
Streets & pedestrian Public buildings & amenities
Open and green spaces (~25%)
connections (~32%) (~43%)
⢠Paved streets and ⢠Recreational facilities, such as parks and ⢠Multipurpose community
expanded sidewalks to playground with landscaping, sidewalk centers with green building
improve walkability and furniture and tree plantation; some of features such as rainwater
access, especially for these spaces will have designated spaces harvesting, solar panels and
women, disabled and the for women where appropriate energy efficient design
elderly ⢠Resilient and âgreenâ infrastructure for principles and materials
⢠Street furniture and improved storm water management and ⢠Community centers with
landscaping including tree erosion control on/around river, pond and designated spaces and
plantation lake embankments programmed activities for
⢠Covering of exposed street ⢠Upgrading existing solid waste collection communities and women
level drainage and sewage sites and developing public groups, where appropriate
channels education/outreach to improve collection ⢠Integrated public toilets,
⢠Energy-efficient and sorting including separate toilets for
streetlighting to improve ⢠Public toilets, including separate toilets for women; and childcare facilities
personal safety and women ⢠Amenities such as police posts
access, especially for ⢠Reorganization of mobile vendors with for safety and security, and
women and youths improved facilities health clinics to serve
⢠Improved bridges for ⢠Wayfinding signs and signs to provide communities
better NMT connectivity information on existing helplines or ⢠Plans for efficient O&M of
⢠Improved traffic services to report cases of harassment, or upgraded public facilities and
management, pedestrian perception of danger spaces
crossings and signalized ⢠Placemaking and place management
intersections investments/activities
Note: The indicative financing for each category of subprojects is shown as a percentage share of the total
for Component 1\.
Component 2: Place Management, Urban Planning and Project Implementation Support
(total cost US$8\.7 million; IDA share US$8\.0 million)
24\. This component will finance: (i) activities related to asset management, O&M and place
management of newly-improved public space assets of DSCC; (ii) feasibility studies, conceptual and
detailed designs and other preparation activities for followâon investment projects; and (iii) costs
associated with project implementation, including incremental operating costs, training, technical
advisory, goodsâ and servicesârelated procurement for the Project Implementation Unit (PIU), and
monitoring and evaluation of project results\.
Subcomponent 2\.1: Asset Management, Operations and Maintenance, and Place Management
25\. This subcomponent will finance the provision of technical assistance to enhance DSCCâs capacity
for managing assets and operating and maintaining public spaces developed under the project, including:
(i) the development and operationalization of detailed operations and maintenance plans for newly-
developed public spaces; (ii) the develpoment and implementation of a place management strategy for
implementing a coordinated, area-based, multi-stakeholder approach to improve the use of said public
spaces and vibrancy and inclusion in the selected neighborhoods; and (iii) the development of modalities
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Dhaka City Neighborhood Upgrading Project (P165477)
for outsourcing the management and operations of said public spaces to the private sector or non-profit
entities\.
Subcomponent 2\.2: Urban Planning and Feasibility Study for Upgrading Unplanned Areas
26\. This subcomponent will finance the provision of technical assistance for carrying out a
comprehensive urban planning strategy, identifying critical investment projects and carrying out
feasibility studies, to improve municipal services in selected neighborhoods\. These can include unplanned
areas that have been recently added to DSCC jurisdiction, such as Kamrangir Char\. Investments identified
under these studies may be financed by a follow-on project\.
Subcomponent 2\.3: Support to Project Management and Implementation
27\. This subcomponent will support for carrying out project management and implementation
activities, including: (a) the carrying out of monitoring and evaluation activities and associated training;
and (b) the provision of techical assistance for strengthening DSCCâs financial capacity\. This will include
incremental operating costs; procurements of goods and services for DSCC; consultancy services for
results monitoring and evaluation (M&E); and relevant training\. It will also strengthen the financial
management capacity of DSCC by financing turnkey consultancy services for implementing a digital
accounting system at DSCC, including accounting software, to assist in automated financial reporting and
improved internal audit\.
Climate Change Co-benefits
28\. Public space improvements are expected to result in large climate co-benefits for Dhaka\.
Subprojects under Component 1 fall into the following three categories with relevance to climate change
adaptation and mitigation (see Table 1, with subcomponents 1\.1 and 1\.2 accounting for an indicative 95
percent and 5 percent of total Component 1 financing, respectively):
Streets and pedestrian connections\. Paving of selected streets and widening of sidewalks,
covering of exposed street-level grey water drainage channels, installation of energy
efficient streetlighting and the construction of pedestrian bridges\. Street improvements
and covered drainpipes will reduce the accumulation of water in streets and intersections\.
New footbridges and upgrading the surface and width of sidewalks and narrow streets
will improve pedestrian accessibility, mobility and safety\. Improvements in traffic
management will also reduce congestion and vehicle idling in key intersections\.
Open and green spaces\. Including landscaping for parks, river bank restoration and
planting\. These features will contribute to flooding mitigation by capturing precipitation
and runoff, stabilizing soils and slowing water-based erosion using bioswales, new trees
and other features\. Existing solid waste transfer facilities adjacent to parks and public
buildings will be upgraded to improve transfer service and strengthen public awareness
about solid waste management to reduce the accumulation of garbage on streets and
drains around these sites\.
Public buildings and amenities\. Rehabilitation of existing or construction of new
multipurpose community center buildings incorporating green building features such as
solar panels, rainwater harvesting, energy efficient design and materials and passive
heating/cooling features\. These design features should reduce the overall energy
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footprint of the facilities significantly in terms of the draw from power and water
networks, given that current building codes do not consider energy and water efficiency
as a requirement\.
Citizen Engagement and Gender
29\. Each subproject will be designed through an inclusive process of community participation and
participatory planning\. Feedback will be solicited from beneficiaries and a broad set of stakeholders at the
design stage, to ensure that subprojects are responsive to needs and preferences of end-users\.
Consultations will include vulnerable and excluded groups such as women, elderly and youth, either
through dedicated focus groups (especially for women) or other appropriate means\. These consultations
will also help build and community support of subprojects and activities\. In addition to consultations and
participatory planning, further citizen engagement (CE) measures included in the project are the
following: citizen feedback (also embedded in the results framework of the project); community oversight
and management where selected subprojects will consider involvement of organized community groups
for oversight and maintenance; and grievance redress mechanisms (GRM)\.
30\. A round of community consultations has already taken place in the selected neighborhoods on
the project concept and typology of subprojects, including separate consultations with women in some
neighborhoods\. Community representatives in all neighborhoods endorsed the project concept and
nature of subprojects and activities, and provided specific recommendations\. Specific consultations with
women in the selected neighborhoods have informed the menu and typology of public space
improvements to be financed by the project, and include measures to reduce identified gender gaps to
the extent possible\. Public space enhancements will benefit women by improving their access, mobility
and security\.
C\. Project Cost and Financing
Project cost IDA Financing Counterpart Funding
Project Components
(US$ million) (US$ million) (US$ million)
Component 1: Public space enhancements 97\.3 92\.5 4\.8
Component 2: Place management, urban
planning and project implementation 8\.7 8\.0 0\.7
support
Total Cost 106\.0 100\.5 5\.5
Total Financing Required 100\.5 5\.5
31\. Counterpart financing will flow to the project as parallel financing which will include, but will not
be limited to, costs associated with any project-related resettlement and implementation of resettlement
plans (RP), including compensation to project-affected people and procurement of services to oversee RP
implementation\. IDA will finance taxes no more than 15 percent of the total credit proceeds and anything
over and above 15 percent on account of taxes will be borne by the Government\. Salaries of government
staff, sitting allowances, honorarium and fuel costs will flow to the project as parallel financing from the
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counterpart\. Retroactive financing will be available under the project for an amount up to US$5 million
for eligible expenditures incurred, subject to terms and conditions outlined in relevant sections of this
document\.
D\. Project Beneficiaries
32\. The project will benefit an estimated 1 million peopleâresidents, businesses, visitors and
commuters who frequent the selected neighborhoods â of whom approximately half will be women\. 17
The estimated beneficiaries are disaggregated by neighborhood as follows: (i) 120,000 people in
Kamrangir Char neighborhood; (ii) 210,000 people in Lalbagh neighborhood; (iii) 380,000 people in
SutrapurâNayabazar-Gulistan neighborhood; and (iv) 290,000 people in Khilgaon-Mugdha-Bashabo
neighborhood\. DSCC will be the main beneficiary institution of the projectâs institutional development
activities\.
E\. Lessons Learned and Reflected in the Project Design
33\. The project builds on work undertaken through the ongoing Municipal Governance and Services
Project (MGSP) and recent analytical work of Dhaka Metropolitan Transformation Platform\. It also
incorporates lessons learned from similar WB projects in Sri Lanka and Pakistan 18\. These projects have
been able to show ârapid resultsâ to build initial confidence and a way to build relationship for future and
more challenging projects\. The work also aligns with other ongoing and under-preparation WB projects in
Dhaka\.
34\. A strong focus on functional public spaces, pedestrian-friendly neighborhood upgrading and
livability improvements can be catalysts for urban transformation, as shown by international experience\.
In Medellin (Colombia), the city transformed urban livability and mobility in poor neighborhoods by
creating inclusive public spaces, public libraries and the innovative use of cable cars and escalators\. In
Singapore, careful planning and integration of green spaces in neighborhoods improved livability and
vibrancy in a high-density urban setting\. WB-financed urban upgrading projects in Nigeria and Vietnam
demonstrated the value of strong and sustained community involvement\. These experiences have also
shown that engaging a variety of stakeholders including community groups, private sector and non-
profits, throughout the design process assist in building shared ownership for long-term success\. The
project has targeted local areas investments and aims to leverage engagement of these neighborhood
communities\.
III\. IMPLEMENTATION ARRANGEMENTS
17 Based on the assumption that women comprise 50 percent of the population of the beneficiary area comprises\.
18 Sri Lanka: Strategic Cities Development Project, and Pakistan: Karachi Neighborhood Improvement Project\.
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A\. Institutional and Implementation Arrangements
35\. The project will be implemented by DSCC\. It administratively reports to the Local Government
Division (LGD) of Ministry of Local Government, Rural Development and Co-Operatives (MLGRD&C)\. LGD
will be the nodal GoB ministry for the project\. DSCC is currently implementing two WB-financed projects\.
36\. Project Implmentation Unit (PIU)\. A PIU established in DSCC will have overall responsibility for
implementing the project, including all technical, operational, environmental and social safeguards,
procurement, financial management and communication/ public awareness activities\. The PIU will be
headed by a Project Director (PD) who shall be assisted by a Deputy Project Director\. The PIU shall
comprise of specialists (including individual consultants) in the following areas: technical (urban planning
and design, civil engineering, traffic management and heritage conservation), fiduciary, environmental
and social safeguards, stakeholder communication, monitoring and evaluation and administration\. These
will be recruited externally or deputed from the parent department as required\. The PIU will also be
supported by a number of relevant consultancy firms as needed\. The PIU will be responsible for: (i)
coordinating the day-to-day implementation of all project activities; (ii) handling the procurement,
financial management, and environmental and social safeguards management of the project; (iii) carrying
out the overall monitoring and evaluation of project activities; and (iv) reporting periodically on
implementation progress to LGD and the WB\.
37\. Project Steering Committee (PSC)\. A PSC will provide overall project oversight\. The PSC will be
chaired by Secretary, MLGRD&C with senior officials not below the rank of Joint Secretary / Joint Chief
from LGD, Finance Division, Planning Commission (PC), ERD, Implementation Monitoring and Evaluation
Division (IMED), DSCC, DMP and other relevant agencies as members\. The committee will meet once every
three months, or more often if required, and may co-opt additional members if necessary, for the review
of project implementation\. The PD will act as member-secretary of the committee\. The responsibilities of
the PSC will be as follows: (i) providing oversight and policy guidance during project implementation and
ensuring sustainability of project interventions; (ii) reviewing and endorsing the projectâs annual work
plans and budgets; (iii) facilitating inter-agency coordination to ensure adherence to project objectives;
(iv) resolving disputes or conflicts related to the project if any; (v) approving any policy, regulatory and
institutional recommendations for the project; (vi) to approving changes in project implementation
arrangements/parameters; and (vii) undertaking policy decisions, if needed, for ensuring smooth
implementation of the project\. PSC will also facilitate timely availability of GoB share of project financing
and timely approvals for project-related matters pertaining to agencies included in the committee, where
relevant\.
38\. Project Implmentation Committee (PIC)\. A PIC established within DSCC will provide technical
assistance for the implementation of the project\. It will be charied by the Chief Executive Officer of DSCC,
and representatives from LGD, PC, ERD, IMED and DSCC as members\. The committee will assist the PIU to
ensure smooth implementation, and to monitor and review the physical progress of the project\. The
Deputy Project Director will be member secretary of the PIC\. The committee will meet at least once every
three months, and may co-opt additional members, if necessary\.
39\. The PIU at DSCC will receive IDA funds based on transaction-based (SoE-based) disbursement\. It
will document eligible expenses monthly using the WBâs system, and will request for an initial advance to
meet expenses based on the ceiling stated in the disbursement letter\. Thereafter withdrawal applications
can be submitted based on SoE\. IDA funds will be disbursed through a single Designated Account (DA),
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which will be maintained by DSCC in a commercial bank in accordance with approved GoB procedures
governing the establishment of DAs\. According to existing practices of DSCC, authorized signatories will
operate the DA\. All payments will be managed centrally and the PD, or any other appropriate authority
allowed under the Delegation of Financial Powers regulations of the government, will be the approving
authority for all project expenses\. Interim Unaudited Financial Reports (IUFRs) , prepared and submitted
quarterly by DSCC, will capture all expenses made from the DA\. DSCC will maintain separate books of
accounts and records for counterpart financing (to be reflected in the quarterly IUFRs), and will open and
operate a separate bank account for the same\.
40\. Role of DMP during implementation\. All activities involving collaboration with DMP will be
implemented and executed by DSCC with technical and, where needed, written input from DMP\. Provision
of any training or capacity building of DMP will also follow the overall project implementation
arrangements, and DMP will have no direct fund management role\.
B\. Results Monitoring and Evaluation
41\. The PIU will be responsible for project M&E and progress reporting\. It will have a full-time M&E
staff (individual consultant) to monitor overall project performance, outputs and outcomes, including
performance on citizen engagement and gender, and report on the achievement of the results framework\.
It will also hire a consultancy firm to assist in project M&E and to report on the above-mentioned activities,
including data collection for results reporting and achievement of PDO as per detailed methodology on
outlined in the PIM\. A design, supervision and contract management (DSM) firm hired by the PIU for the
project will prepare, monitor and oversee satisfactory implementation of safeguard instruments such as
Environmental Management Plans (EMPs) and RPs for subprojects\.
42\. Semester and annual progress reports, in a format agreed with the WB, will be submitted to the
WB no later than 45 days after the end of each calendar semester, covering the calendar year\. The annual
progress reports will also provide information on indicators measuring achievement of the PDO\. A midâ
term review of the project will be undertaken and a report shall be be submitted to WB, no later than 39
months from the Effective date\.
C\. Sustainability
43\. The project has strong institutional buy-in from DSCC and relevant GoB stakeholders\.
Consultations carried out during preparation validated the project scope by emphasizing the need for
more open and green public spaces, a cleaner environment, and investments in pedestrian safety,
mobility and improved traffic management in Dhaka\. These were also endorsed by civil society and urban
planning professionals\. A CE framework has been established to ensure that consultations are carried out
by the PIU in an inclusive manner during the design of each subproject\.
44\. The improvement of physical assets will result in the need for better asset management,
operations and maintenance\. The project will support DSCC to prepare multi-year O&M and placemaking
plans for the improved public spaces\. It will also prioritize low-maintenance solutions where feasible,
such as solarâpowered streetlights, durable material for hardscaping, and indigenous plant species with
low water requirements\. DSCC is envisaged to have full management control of the newly-created and
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Dhaka City Neighborhood Upgrading Project (P165477)
improved assets and will do regular O&M either from its operating budgets or via outsourcing,
management contracts or partnership arrangements with private and non-profit operators\. The impact
of post-completion O&M costs on the operating budget of DSCC is not expected to be substantial\. Further,
expected increase in property values around the improved spaces can translate into higher property tax
collections (known as âholding taxâ) for DSCC\.
IV\. PROJECT APPRAISAL SUMMARY
A\. Technical, Economic and Financial Analysis
45\. The selection of the four neighborhoods was conducted objectively through a series of
consultations with government stakeholders and professional groups, neighborhood visits and DSCC
validation to ensure that these are generally feasible and avoid duplicating ongoing or planned city
investments activities\. The WB also provided assistance by utilizing rapid Geographical Information
System (GIS) land use cover analysis of very-high resolution satellite imagery to identify neighborhoods
that were deprived of public space amenities and areas with potential for strong demonstration effect\.
The neighborhoods selected include a balance of these characteristics\.
46\. The technical design of the project is considered to be sound\. Conceptual designs have been
developed for the four selected neighborhoods, which identify thematic zones and focus on accessibility
(walkability), safety, and connectivity of public spaces\. These also include ideas for integrated/multi-use
community centers and other public spaces\. These concept designs have been developed by
internationally renowned urban design firms and contextualized to local requirements with strong input
from local experts and counterparts\. These designs were also discussed with the local community in the
selected neighborhoods\. Detailed engineering designs for civil works will be prepared following additional
comprehensive consultation to incorporate stakeholder feedback\. Subprojects will be financed only after
they have been successfully appraised by the WB according to a robust screening criteria as outlined in
the PIM\.
47\. Economic benefits from improved public spaces are difficult to monetize and attribute; however,
international experience shows that they improve quality of life and social cohesion in the city\.
Rehabilitating roads and streets is expected to reduce travel times and improve access to jobs and other
activities for citizens, especially for those using non-motorized and public transport\. Improved drainage
and waste management will lead to health benefits, such as lower health costs, reduced sick days and
higher labor productivity in the area\. Higher foot traffic and longer stays near improved areas will
contribute to local economic development, by generating more business for local shop owners and mobile
vendors\. Civic life will improve due to the increased provision of recreational and open public spaces in
the highly congested city\. Streetlights will improve the security environment in the project area and
increase the confidence of the community to participate in commercial and social activities after dark\.
48\. Economic analysis for each subproject will be conducted during their design and appraisal, based
on standard methodology described in the PIM, and will be the basis for confirming that subprojects are
economically viable\. Data from recent WB-financed projects on urban public spaces improvement and
integrated urban development show high EIRR in the range of 8-28 percent (China), 12-23 percent
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(Karachi, Pakistan)19 to 33 percent (Georgia), excluding positive externalities often attributed to public
space improvements\. Investments in urban roads and streets have yielded EIRRs ranging from 20 percent
(Ethiopia) to 57 percent (Niger)\. Public space enhancements through solar-powered streetlights along
roads and public places in a conflict-affected urban center in Pakistan yielded an EIRR of 32 percent\.
Subprojects in Dhaka are expected to have similar high economic returns\.
B\. Fiduciary
Financial Management (FM)
49\. An FM capacity and risk assessment for the implementing agency has been conducted\. FM will
use country systems and procedures\. FM performance of DSCC in the context of the ongoing WB projects
is moderately satisfactory\. The implementing agency understands the WBâs policies and procedures but
there is room for improvement\. There are no pending financial reports or audit reports from the agency\.
The assessment has also considered the overall FM design of the project to mitigate possible risks\. Specific
procedures and agreed measures are mentioned in Annex 1\. The project will also strengthen the FM
capacity of DSCC by financing turnkey consultancy services for implementing a digital accounting system
at DSCC â including accounting software â to assist in automated financial reporting and improved internal
audit\.
Procurement
50\. DSCC will conduct all procurement for the project\. Total procurement expenditure of the project
financed by IDA is about US$98\.6 million, with civil works (~87 percent) â urban public spaces and
associated infrastructure, followed by consulting services (~12\.5 percent) â including design and
supervision of civil works, urban master planning, intersection improvement, communications and
behavior change campaigns, M&E and individual consultants); goods (<1 percent) â including office
equipment for implementation support; and non-consulting services (<1 percent) â for implementation
support\. All IDA-financed procurement shall be done in accordance with the requirements set forth or
referred to in the WBâs âProcurement Regulations for Borrowers under Investment Project Financing (IPF)â,
dated July 1, 2016 (and as subsequently revised)\. An assessment of procurement capacity and risks has
identified the main risks to be the procurement process and contract management\.
51\. A Project Procurement Strategy for Development (PPSD) has been developed by DSCC in
agreement with the WB\. As an output of the PPSD, a procurement plan for the project has been prepared
covering the period of the project\. The PPSD is based on the nature of procurement activities, capacity of
the procuring organization, prevailing market conditions, activity level risks etc\. It describes the
procurement arrangements for the project (e\.g\., procurement packaging strategy, method, bid evaluation
methodology of the major procurement packages, timeline for procurement activities, contracting
arrangement etc\.) and includes risk mitigation measures\. It is a live document and is to be updated at least
annually\. The Procurement Plan contains the procurement activities, diverse selection methods, market
approach, contracting arrangements, estimated costs, WBâs prior review requirements, timeline of
activities, and other relevant conditions\. Preliminary TORs have been developed by DSCC for all
consultancy services listed in the procurement plan\.
19Reported EIRRs from Karachi (Pakistan) are estimates at subproject Appraisal Stage\. All other reported EIRRs are estimates at
Project Completion stage\.
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C\. Safeguards
Environmental Safeguards
52\. The project is classified as Category B and safeguard polices OP/BP 4\.01 (Environmental
Assessment) and OP/BP 4\.11 (Physical Cultural Resources) are triggered\. Since the nature, degree of
impact, exact location and specific design of subprojects are not known at appraisal stage, a framework
approach to environmental safeguards implementation has been adopted\. An Environmental
Management Framework (EMF) has been prepared to meet the requirements of Bangladeshâs
Environment Conservation Rules 1997, and WB policies and guidelines\. It is anticipated from the scope of
the project that significant irreversible environmental impacts will not be generated\. Expected impacts
are mostly construction related and include: disturbance of the aquatic habitat, contamination of land
and water, loss of trees, noise from operation of construction machinery, air quality deterioration,
workerâs health and safety, etc\. These impacts can be mitigated through proper design and
implementation of relevant EMPs for each subproject\. The framework includes all necessary guidelines
for addressing environmental issues along with issues pertaining to physical cultural resources (PCR), and
also contain the TOR for carrying out subproject-specific Environmental Assessment (EA) and EMPs\. The
PIU will hire with an environment specialist and a DSM consultant firm having environment expertise\. All
subproject EMPs will be reviewed and cleared by the WB before the subprojects are implemented\. DSCC
will also be responsible for getting necessary environmental clearance\. The subproject-specific
Environmental Codes of Practice and EMPs with cost and special environmental clauses will be
incorporated in the procurement of civil works\. Environmental issues will be integrated into the project
GRM\.
53\. During implementation, if any subproject identifies PCR issues these will be taken into account by
the EA and EMP\. As an integral part of the EA process, the implementing agency will develop a âphysical
cultural resources management planâ consistent with the WB policy and national legislation that includes
measures for avoiding or mitigating any adverse impacts on physical cultural resources, provisions for
managing chance finds, any necessary measures for strengthening institutional capacity, and a monitoring
system to track the progress of these activities\.
54\. The EMF and Resettlement Policy Framework (RPF), including the Bangla version of their
executive summaries have been disclosed on DSCC website, and the full document (English) on the WBâs
website\. Hard copies of the document will be available at site offices related to subproject
implementation\.
Social Safeguards
55\. Project interventions will be designed based on an inclusive process of public consultation and
participation and are intended to have positive effects on the target communities by improving livability\.
Project activities will be limited within existing available lands and avoid acquisition of private lands\.
Attempts will be made to avoid neighborhood sites with high density of formal or informal
settlers/squatters\. But displacement of squatters and encroachers may not be completely avoidable in
situations of critical design requirements\. WBâs policy on Involuntary Resettlement (OP/BP 4\.12) has
therefore been triggered for the project\. DSCC has developed a standalone RPF to deal with any likely
involuntary resettlement associated with the project\.
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56\. Resettlement Policy Framework (RPF)\. The RPF provides guidance for social screening and, where
necessary, to carry out detailed, site-specific social impact assessments (SIA) and subsequently prepare
Resettlement Plans (RP) for project activities, once specific site locations are identified and designs are
finalized\. Given DSCCâs limited capacity in managing social issues, the project will invest in strengthening
social safeguard capacity at DSCC\. The PIU will be responsible for managing social issues associated with
the project including the use of existing land and associated involuntary resettlement issues\. It will appoint
a social safeguards specialist in addition to safeguard resources with the DSM Consultant\. All costs related
to resettlement, and to implement subproject RPs, will be borne by counterpart (GoB) share of project
financing, and GoB will ensure timely availability of funds for this purpose\. The RPF and the Bangla version
of its executive summary have been publicly disclosed on DSCC website, and the full document (English)
on the WBâs website\.
57\. Project-specific Grievance Redress Mechanism (GRM)\. The project will establish a GRM to
respond to queries, receive suggestions and address complaints and grievances about any disconnects
and irregularities in application of the guidelines adopted in the EMF and RPF for inclusive project design,
and assessment and mitigation of social and environmental impacts\. The GRM will be an instrument
where the communities will exercise their basic rights of participation in the project cycle through
suggestions and complaints\. Based on consensus, the procedure will help to resolve issues, saving the
aggrieved persons from having to resort to expensive, time-consuming legal action, but will not pre-empt
a personâs right to take legal action\. The GRM will be inclusive of key stakeholders including the project
proponent as well as the beneficiaries and affected persons, and will be accessible to all stakeholders\.
Other Safeguards
58\. No other safeguards policies apply to the project\.
Grievance Redress Mechanisms
59\. World Bank Grievance Redress\. Communities and individuals who believe that they are adversely
affected by a World Bank (WB) supported project may submit complaints to existing project-level
grievance redress mechanisms or the WBâs Grievance Redress Service (GRS)\. The GRS ensures that
complaints received are promptly reviewed to address project-related concerns\. Project affected
communities and individuals may submit their complaint to the WBâs independent Inspection Panel which
determines whether harm occurred, or could occur, because of WB non-compliance with its policies and
procedures\. Complaints may be submitted at any time after concerns have been brought directly to the
World Bank's attention, and Bank Management has been given an opportunity to respond\. For
information on how to submit complaints to the World Bankâs corporate GRS, please visit
http://www\.worldbank\.org/GRS\. For information on how to submit complaints to the World Bank
Inspection Panel, please visit http://www\.inspectionpanel\.org\.
V\. KEY RISKS
A\. Overall Risk Rating and Explanation of Key Risks
60\. The overall risk of the project is rated as Substantial\.
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61\. Political and governance risk is High\. Political competition between DSCC and other GoB agencies
may hinder implementation\. National elections are scheduled during the first year of implementation and
may result in a changed political operating environment for DSCC\. The next round of Mayoral elections
may also take place during the life of the project\. The project will support dialogue between DSCC and the
community to build support for interventions to ensure strong community ownership to reduce the risk
of political transition\. Regular high-level engagement with DSCC and relevant agencies will aim to ensure
continued support for the project\.
62\. Institutional capacity risk for implementation and sustainability is Substantial\. Sustained
availability of sufficient skilled staff at DSCC will be critical\. The WB is working closely with DSCC to identify
required skills for project implementation, ensure personnel deputed or hired meet these skills, and
provide hands-on training and support to them\. The WB will provide substantial implementation support
to PIU staff to ensure efficient and timely implementation\.
63\. Fiduciary risk (procurement and financial management) is High\.
Procurement (High): The main drivers of the risk are the number of works
contracts/subprojects to be implemented in parallel in the densely populated areas of
Dhaka, which will require close contract supervision by DSCC with existing limited
resources\. DSCC has capacity constraints in performing contract management, managing
cost and time overruns and quality in contract implementation\. With DSCC being a major
local government, non-technical considerations such as patronage in the procurement
process and implementation may be a risk\. Further, the screening process of subprojects
through various criteria may delay the commencement of works\. Key risk mitigation
measures to be put in place are: (i) engaging DSCC dedicated staff, in addition to
consulting firm for contract management process adhering to quality, cost and time
control following an agreed time-bound action plan; (ii) using Systematic Tracking of
Exchanges in Procurement (STEP) system of the WB and faster screening process of
subprojects to monitor procurement activities against the agreed timeline; (iii) training
relevant project officials on innovative approaches of WBâs procurement framework,
contract management and fiduciary due-diligence; (iv) Adopting e-government
procurement (e-GP) for all national market-approached procurement; and (v) forming, in
concurrence with the WB, bid/proposal evaluation committees (BEC/PEC) for the
projectâs procurement activities irrespective of national or international procurement\.
Financial Management (FM) (Substantial): The FM capacity assessment assessed current
systems and practices of DSCC in donor-funded projects to evaluate risks and possible
mitigation measures\. The FM risk rating Substantial derives from the large number of
contract packages and diverse types of subprojects which has inherent risk in managing
quality of expenditure\. The principal FM risks and corresponding risk mitigation measures
are mentioned in in Annex 1\.
64\. Environmental and social risk is Substantial\. Environmental risk is rated as Moderate, while Social
risk is rated as Substantial, thus the combined risk is rated as Substantial\. Compliance with the approved
EMF and RPF, the preparation of subproject EAs, EMPs, SIAs and RPs (where required), and their
satisfactory implementation will be key to addressing environmental and social risks\.
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Social (Substantial): Informal settlements and squatters are widespread in Dhaka\. These
are residential and commercial squatters and encroachers of different scale on existing
unused public spaces\. They are subject to frequent or occasional eviction by government
agencies including DSCC\. Current practice of the Dhaka city corporations in eviction of
squatters and encroachers on public lands does not meet the requirements of the WBâs
policy\. Therefore, activities involving significant involuntary resettlement of squatters will
be excluded from the project if they cannot be managed by DSCC in a manner consistent
with WB policies\. Challenges and risks include limited institutional capacity of DSCC in
managing social issues as per WB requirements; ownership issues of existing public
spaces; and the likelihood of formal and informal private users of existing land\.
Environment (Moderate): Project activities are not expected to cause any long term or
irreversible environmental impact\. The key project environmental management issue will
be traffic congestion, dust pollution and health-safety during construction\. These issues
can be managed with appropriately designed EMP at the implementation level\.
65\. Stakeholder risk is Substantial\. The project is anticipated to include many citizen stakeholders,
and consensus on designs responding to user needs will be critical for smooth project implementation\.
This risk will be mitigated in the following ways: (i) PIU will implement a communications strategy to reach
out to and engage citizen stakeholders (including local-level elected political leaders) on the projectâs
interventions; (ii) a bottom-up support and community ownership of project interventions will be built
through a systematic stakeholder engagement embedded in the design stage for each subproject; and (iii)
local urban design experts and civil society organizations will also be engaged to provide feedback on
subproject design and its suitability for the local context\.
\.
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Dhaka City Neighborhood Upgrading Project (P165477)
VI\. RESULTS FRAMEWORK AND MONITORING
Results Framework
COUNTRY: Bangladesh
Dhaka City Neighborhood Upgrading Project
Project Development Objective(s)
To enhance public spaces and improve urban services in selected neighborhoods in Dhaka\.
Project Development Objective Indicators
RESULT_FRAME_T BL_ PD O
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5
Enhanced public spaces in selected neighborhoods in Dhaka
Percentage increase in the
number of people accessing
0\.00 0\.00 0\.00 0\.00 20\.00 20\.00 20\.00
enhanced public spaces
(Percentage)
Percentage increase in
the number of women 0\.00 0\.00 0\.00 0\.00 20\.00 20\.00 20\.00
accessing enhanced
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Dhaka City Neighborhood Upgrading Project (P165477)
RESULT_FRAME_T BL_ PD O
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5
public spaces
(Percentage)
Improved urban services in selected neighborhoods in Dhaka
People provided with
improved urban living 0\.00 0\.00 0\.00 0\.00 500,000\.00 1,000,000\.00 1,000,000\.00
conditions (CRI, Number)
People provided with
improved urban living
conditions - Female 0\.00 0\.00 0\.00 0\.00 250,000\.00 500,000\.00 500,000\.00
(RMS requirement) (CRI,
Number)
PDO Table SPACE
Intermediate Results Indicators by Components
RESULT_FRAME_T BL_ IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5
Public space enhancements
Total area of public spaces
0\.00 0\.00 0\.00 10\.00 20\.00 30\.00 30\.00
improved (Hectare(Ha))
Number of people
consulted under 0\.00 0\.00 400\.00 800\.00 1,200\.00 1,200\.00 1,200\.00
participatory sessions for
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RESULT_FRAME_T BL_ IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5
subproject design and
implementation (Number)
Percentage of citizens in
selected neighborhoods
who consider that their
0\.00 0\.00 60\.00 60\.00 60\.00 60\.00 60\.00
views have been taken into
account in the subproject
designs (Percentage)
Percentage of women in
selected neighborhoods
who consider that their
views have been taken 0\.00 0\.00 60\.00 60\.00 60\.00 60\.00 60\.00
into account in the
subproject designs
(Percentage)
Percentage of women who
report feeling safe in public
spaces in the selected 0\.00 0\.00 0\.00 20\.00 40\.00 60\.00 60\.00
neighborhood locations
(Percentage)
Roads rehablitated (CRI,
0\.00 0\.00 0\.00 0\.00 15\.00 30\.00 30\.00
Kilometers)
Number of intersection
management strategies 0\.00 0\.00 0\.00 1\.00 3\.00 5\.00 5\.00
developed (Number)
Place management, urban planning and project implementation support
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Dhaka City Neighborhood Upgrading Project (P165477)
RESULT_FRAME_T BL_ IO
Indicator Name DLI Baseline Intermediate Targets End Target
1 2 3 4 5
Share of improved public
spaces with approved plans
for operation,
management, programming 0\.00 0\.00 0\.00 100\.00 100\.00 100\.00 100\.00
and community outreach
(Percentage)
IO Table SPACE
UL Table SPACE
Monitoring & Evaluation Plan: PDO Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
(i) At Data from This indicator measures
baseline; surveys or the changes in the
(ii) annually sign-in sheets number of visitors or
or other or person users of public space
PIU, with the support of
Percentage increase in the number of suitable count for amenities improved by
M&E consultant\.
people accessing enhanced public spaces interval; activities and the project (such as
(iii) at services at parks, playgrounds and
project selected multi-use community
close\. public spaces\. centers that incorporate
uses such as wedding
halls, health centers,
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Dhaka City Neighborhood Upgrading Project (P165477)
public toilets and other
citizen services)\. An a-
priori baseline survey
(with varied sampling
times and days) will be
conducted at each of the
selected sites\. A post-
hoc survey using the
same sampling plan will
be conducted annually
or at other intervals, as
suitable, at each site
following sub-project
completion until the end
of the project\. Results
from each site may be
consolidated across all
the sites using an agreed
formula to reach a final
percentage increase
number for all sites
combined\. Methodology
will be further
elaborated in PIM\.
Percentage increase in the number of Same as Same as Same as parent Same as parent
women accessing enhanced public parent parent indicator\. indicator\.
spaces indicator\. indicator\.
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Dhaka City Neighborhood Upgrading Project (P165477)
"Gridded This indicator measures
Population of the number of people
the World" living or working in or
dataset around the areas of
version 4 Dhaka improved by the
(GPWv4), a project, specifically via
publicly the following facilities:
available improved
raster data neighborhoods, public
(i) At collection of spaces, parks, resilience,
baseline; integrated and/or urban
(ii) annually population environmental
or other across the conditions\.The number
PIU, supported by M&E
People provided with improved urban suitable globe based of people will be
consultant\.
living conditions interval; on population counted as those living
(iii) at data from within 500-1000 meters
project national of the improved area (as
close\. Census and applicable)\. This
United estimation will be done
Nations after completion of each
estimates, subproject, using
showing existing data sources
population such as census data, and
density by 1 UN population
sq\.km\. grids\. estimates\. People living
Developed by or working in area
Center for improved via multiple
International subprojects of different
Earth Science types will only be
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Dhaka City Neighborhood Upgrading Project (P165477)
Information counted once\.
Network Methodology will be
(CIESIN), further elaborated in
Columbia PIM\. Target values may
University and be recalibrated after
NASA baseline measurement
Socioeconomi has been conducted\.
c Data and
Applications
Center
(SEDAC)\.
Detailed data
source
description
available in
PIM\.
Same as parent
indicator\. It is assumed
that women comprise
50% of the area
Same as Same as
People provided with improved urban population\. Thus, area Same as parent
parent parent
living conditions - Female (RMS beneficiary population indicator\.
indicator\. indicator\.
requirement) calculated for parent
indicator will be divided
by 2 to determine
number of women
beneficiaries for this
sub-indicator\. Target
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Dhaka City Neighborhood Upgrading Project (P165477)
values may be
recalibrated after
baseline measurement
has been conducted\.
ME PDO Table SPACE
Monitoring & Evaluation Plan: Intermediate Results Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
(i) At
baseline;
(ii) annually
or a To be assessed through
suitable sub-project progress
interval reports and GIS data\.
PIU, supported by M&E
(such as PIU\. Target values may be
Total area of public spaces improved consultant\.
after each recalibrated after
subproject baseline measurement
completion has been conducted\.
); (iii) at
project
close\.
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Dhaka City Neighborhood Upgrading Project (P165477)
(i) At
baseline;
(ii) annually
or a
Counting total number
suitable PIU\. Data
of people consulted\.
interval from sign-in
Number of people consulted under Target values may be PIU, supported by M&E
(such as sheets at
participatory sessions for subproject recalibrated after consultant\.
after each consultation
design and implementation baseline measurement
subproject sessions\.
has been conducted\.
completion
); (iii) at
project
close\.
(i) At PIU\. Data to % of total respondents
baseline; be gathered responding positively to
(ii) annually from short the relevant question
or a surveys, polls combined across all
suitable or use of surveys (i\.e\. their views
Percentage of citizens in selected interval smart phone were taken into account PIU, supported by M&E
neighborhoods who consider that their (such as apps to collect in the designs of consultant\.
views have been taken into account in the after each responses subprojects)\. Target
subproject designs subproject from citizens values may be
completion who recalibrated after
); (iii) at participated in baseline measurement
project consultations has been conducted\.
close\. for subproject
designs\.
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Dhaka City Neighborhood Upgrading Project (P165477)
Percentage of women in selected Same as Same as
Same as parent Same as parent
neighborhoods who consider that parent parent
indicator\. indicator\.
their views have been taken into indicator\. indicator\.
account in the subproject designs
PIU\. Data to
be gather
(i) At from short
baseline; surveys, polls
(ii) annually or use of
or a smart phone
Percentage of women who report feeling PIU, supported by M&E
suitable apps to collect
safe in public spaces in the selected consultant\.
interval; responses
neighborhood locations (iii) at from women
project at selected
close\. upgraded
subproject
locations\.
(i) At
Physical count of length
baseline;
of roads and streets
(ii) annually
improved by project\. PIU, supported by M&E
or a PIU\.
Roads rehablitated Consolidated for all consultant\.
suitable
subprojects to reach
interval
total end-target\.
(such as
after each
subproject
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Dhaka City Neighborhood Upgrading Project (P165477)
completion
); (iii) at
project
close\.
To be developed by PIU PIU, supported by M&E
Number of intersection management Annually\. PIU\.
and M&E consultant\. consultant\.
strategies developed
Numerator: Number of
improved public spaces
(i)
(parks, community
Annually;
centers) which have
(ii) at a
approved plans to
suitable
operate and maintain
interval
Share of improved public spaces with these public spaces, as
(such as PIU, supported by M&E
approved plans for operation, PIU\. well as programmed
after each consultant\.
management, programming and activities to improve the
subproject
community outreach use of public space\.
completion
Denominator: Total
); (iii) at
number of public spaces
project
(parks, community
close\.
centers) improved under
project\.
ME IO Table SPACE
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Dhaka City Neighborhood Upgrading Project (P165477)
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Dhaka City Neighborhood Upgrading Project (P165477)
ANNEX 1: IMPLEMENTATION ARRANGEMENTS AND SUPPORT PLAN
Institutional and Implementation Arrangements
1\. In addition to the description provided in Section III of the main document, the following
information is relevant for the project\.
2\. Departmental Technical Committee at DSCC: A Departmental Technical Committee will be
formed at the technical advisory level at DSCC, headed by the PD and comprising five external technical
members with at least two external members\. It will perform the following functions: (i) provide technical
reviews and oversight of consultantsâ work; (ii) provide timely advice on key technical issues during design
and implementation; and (iii) act as an impartial reviewer of consultant outputs before finalization of
designs for implementation\. Committee members will be selected from DSCC and other public, private or
civil society organizations\. The committee will also have relevant representatives from DMP and other
agencies (as needed) to facilitate inter-agency coordination at working level and resolve operational
matters for project activities pertaining to these agency\. It will meet as frequently as needed\.
3\. Communication and public information: Given the nature and scope of the project, an effective
public information campaign will be implemented to: (i) promote support for project activities;
(ii) facilitate management and mitigation of project risks; and (iii) strengthen DSCCâs capacity to handle
such communications\. The PIU will engage a consultancy specializing in communications to assist in
reaching out to citizens and other stakeholders\.
Financial Management
4\. Following the WBâs operational policies and guidance, an FM capacity assessment of DSCC has
been conducted\. It assessed current FM systems and practices followed by DSCC in donor-funded projects
to evaluate risks and identify possible mitigation measures\. The overall FM risk of the project is assessed
as Substantial, mainly because the project will finance a number of civil works contract packages and a
number of diverse subprojects, which bears inherent FM risks in managing the quality of expenditure\. The
FM performance rating of Clean Air and Sustainable Environment (CASE) project currently being
implemented by DSCC has been Moderately Satisfactory, though the agency could not operationalize an
automated accounting system to generate timely and accurate financial reports\. There is no designated
internal audit unit in DSCC to check the control system of expenditures regularly manner, which hampered
the conduct of internal audit for CASE project\. The internal audit was carried by an outside audit firm for
that project\. As of now, there is no pending audit or financial reports from DSCC for that project\.
5\. Based on the FM assessment, the following FM arrangements were discussed and agreed with
the implementing agency:
6\. Planning and budgeting\. As with other projects in Bangladesh, a budget will be prepared and
maintained for the entire term of the project and detailed budgets for each subsequent fiscal year will
also be produced no later than June 30th of each fiscal year to provide a framework for FM\. The annual
budget will be prepared based on the approved Procurement Plan and any other relevant annual work
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Dhaka City Neighborhood Upgrading Project (P165477)
plans\. These budgets will be monitored periodically to ensure that actual expenditures are in line with
budgets and to provide input for necessary revisions\.
7\. Financial reporting\. IUFRs will be prepared quarterly and submitted to the WB by the project
within 45 days from the end of each quarter\. These shall be prepared in an agreed format and supported
by appropriate sets of documents and evidences\.
8\. Internal control\. The project will be required to maintain a satisfactory FM system, including
keeping all mandatory books of accounts and preparing quarterly and yearly financial statements for audit
purposes\. It was agreed that the internal audit for the project will be carried out by a private audit firm
twice in the lifetime of the project\. The first will be 6 months before the Midterm Review of the project
and the second must be completed 1 year before the legal closing date of the project\. The internal audit
contract will be a prior review package from FM and procurement perspective\. A copy of the internal audit
reports shall be submitted to the WB within 30 days from the final submission to the implementing agency
by the auditors\.
9\. Governance and oversight arrangements\. Development projects executed by DSCC are being
audited by the Foreign-Aided Projects Audit Directorate (FAPAD) under the Comptroller and Auditor
General (C&AG) of Bangladesh annually to meet legal requirements\. Accordingly, the projectâs financial
statements shall also be audited by the same authority each year and the reports will be submitted to the
WB within six months from the end of each financial year\. The audited financial statements will be made
available for public disclosure, as per the WBâs policy on Access to Information\. The PIU will take the
necessary steps to resolve audit observations by June 30 of the year following the audited year\.
10\. Staffing\. DSCC will hire, as individual consultants, an FM specialist and a project accounts officer
having professional accountancy qualifications\. While the FM specialist will be responsible for the overall
FM of the project, the accounts officer will handle subproject FM issues\. An accounts officer to be deputed
from DSCC, or any other GoB agency as applicable, will also support day-to-day financial activities of the
project\. DSCC will obtain concurrence from the WB on the terms of reference of the consultants to be
hired\.
11\. Enhancing FM capacity of DSCC\. The project will also strengthen the FM capacity of DSCC by
financing turnkey consultancy services for implementing a digital accounting system at DSCC, including
accounting software, to assist in automated financial reporting and improved internal audit\.
Disbursements and Funds Flow
12\. It is agreed that IDA funds for the project will follow transaction-based disbursement method
(SoE-based disbursement)\. The PIU at DSCC will request for an initial advance to meet expenses based on
the ceiling stated in the disbursement letter\. Thereafter withdrawal applications can be submitted based
on SoE\. PIU will document eligible expenditure on a monthly basis using the WBâs system\. IDA funds will
be disbursed through a single DA, which will be maintained by DSCC in a commercial bank in accordance
with approved GoB procedures governing the establishment of DAs\. According to existing practices of
DSCC, authorized signatories will operate the DA\. All payments will be managed centrally and the PD, or
any other appropriate authority allowed under the Delegation of Financial Powers regulations of the
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government, will be the approving authority for all project expenses\. The IUFRs will capture all expenses
made from the DA for the project\.
13\. Counterpart financing\. Counterpart (GoB) financing will flow to the project as parallel financing
and for which DSCC will maintain separate books of accounts and records\. All payments for contracts
procured under parallel financing will be made from counterpart funds\. To ensure efficient management
of counterpart financing, DSCC will open and operate a separate bank account in the name of the project
in a commercial bank as per GoB procedures\. Expenditures made under parallel financing will be reflected
in IUFRs to be submitted to the WB on a quarterly basis\.
14\. Retroactive financing\. Retroactive financing will be available under the project for an amount up
to US$5 million for eligible expenditures incurred by DSCC within twelve months preceding the expected
date of signing of the Financing Agreement\. Eligible expenditures include incremental operating costs;
consultancy fees; purchases of goods, equipment and non-consultancy services; fees (including
mobilization advances) for the first set of civil works contracts\. All expenditures for which retroactive
financing is sought will be submitted to the WB in order to verify their eligibility as per project objectives
and relevant policies and procedures, including applicable WB procurement rules\.
15\. Incremental operating costs\. These are defined as reasonable incremental costs required for the
day-to-day coordination, administration and supervision of Project activities; leasing, repair and/or
maintenance of equipment, facilities and office premises; vehicle rent; office supplies and utilities;
consumables; communication expenses; translation, printing, photocopying and postal expenses; bank
charges; advertising expenses; insurance costs associated to clearance, forwarding, inspection and
transportation of goods; and Project-related meeting expenses and/or Project-related travel expenses
provided that said expenses are paid to the eligible recipient through banking system (except for petty
cash expenses following the Recipientâs applicable existing policy on petty cash expenses); but excluding
fuel, salaries of civil servants, per diem, sitting allowances, honorarium and/or allowances of any nature\.
Table 2: Time-bound FM Action Plan
S/N Action Responsibility Deadline
Opening a Designated Account in the form of Immediately upon Signing of
1 DSCC
CONTASA (Convertible Taka Special Account) project legal agreements
Immediately upon declaration of
Provide security token and update signatory to
2 WB project effectiveness and opening
use âClient Connectionâ
of Designated Account
Immediately upon declaration of
Submission of withdrawal application for initial
3 DSCC project effectiveness and opening
advance
of Designated Account
Completion of hiring process of the FM
4 DSCC March 31, 2019
consultant
Completion of hiring process of consulting firm
5 DSCC May 30, 2019
to install accounting system
6 Training of FM staffs of the project DSCC/WB April 30, 2019
Prepare chart of accounts and operationalize
7 DSCC June 30, 2019
the accounting system
8 Submission of annual forecast DSCC May 31 annually
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Dhaka City Neighborhood Upgrading Project (P165477)
S/N Action Responsibility Deadline
9 Submission of IUFRs DSCC Quarterly
Completion of hiring process of internal auditors
10 DSCC June 30, 2020
(firm)
11 Submission of external audit reports DSCC 31 December annually
Within 30 days from submission of
12 Submission of internal audit reports DSCC
report to PIU by auditor
Implementation Support Plan
16\. The implementation support plan for the project has been developed to reflect the specific nature
of project components, planned implementation schedule, lessons learned from similar projects, and
specific needs identified by the various assessments and will be regularly reviewed as required\. It aims to
enhance the quality of the clientâs delivery of the project interventions and address critical issues and risks
that may affect project implementation\. It will specifically focus on: (i) strengthening technical and
fiduciary capacity of DSCC at the beginning of the project; and (ii) regular provision of implementation
support through WB missions and on-demand/concurrent support, covering technical, institutional,
safeguards, M&E, fiduciary and communications aspects\. The capacity needs of the PIU will be periodically
reviewed during implementation to identify the need for strengthening procurement, supervision,
contract management and technical assistance\.
17\. Implementation support will consist of: (i) formal implementation support missions; (ii) regular
technical meetings (including virtual meetings) and field visits by the WB between missions; and (iii)
regular reporting and monitoring of FM, procurement and environmental and social safeguards\. Formal
missions will be carried out three times during the first year, and every six months in subsequent years\.
Several WB task team members are based in Dhaka and will be able to provide ongoing and continued on-
demand implementation support\. The volume of support is expected to be particularly high in the first
two years of project implementation\.
18\. Estimates of staff time required in the first year and subsequent years are provided in Table 3 and
Table 4\.
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Dhaka City Neighborhood Upgrading Project (P165477)
Table 3: Estimate of staff time required, by time period
Time Skills Staff Partner
Focus
Needed weeks Role
Implementation support to PIU for: start-up; preparing
First safeguards instruments; fiduciary staff training; setting up PIU;
See table
twelve conducting community-level consultations; initiating and 80 N/A
below\.
months developing technical designs; launch of work in first year of
project\.
Implementation support to PIU for: implementation of project
12-48 activities; innovative activities to increase access to and use of See table
120 N/A
months public spaces; behavioral change; operations and maintenance; below\.
communications and research and knowledge sharing\.
Total 200 N/A
Table 4: Estimate of staff time required, by skills mix
Number of Number of
Skills Needed
Staff Weeks Trips
Team leadership 50 14
Urban Development Specialist 18 10
Social Safeguards Specialist 30 10
Environmental Safeguards Specialist 18 8
Procurement Specialist 24 12
FM Specialist 12 8
Citizen Engagement and Gender Specialist 18 6
Technical Specialists 30 12
Total 200
Page 44 of 44 | APPROVAL |
P076809 | 25633
July 1, 2003
Integrated Safeguards Data Sheet (Initial) -
Section I - Basic Information
Date ISDS Prepared/Updated\. 01/07/2003
A\. Basic Project Data (from PDS)
I\.A\. I\. Project Statistics
Country: MOZAMBIQUE Project ID P071465
Global Supplemental ID: P076809
Project: Transfrontier Conservation Areas and Tourism Task Team Leader Robert A Clement-Jones
Development Project
Authonzed to Appraise Date: July 15, 2003 IBRD Amount ($m):
Bank Approval: April 17, 2004 IDA Amount ($m) 20\.00
Global Supplemental Amount (Sm): 10\.00
Managing Unit: AFTES Sector Forestry (50%); General agnculture, fishing
Lending Instrument: Specific Investment Loan (SIL) and forestry sector (40%); General mdustry and
Status: Lending trade sector (10%)
Theme\. Biodiversity (P); Other environment and
natural resources management (S), Environmental
policies and institutions (S); Other financial and
Ipnvate sector development (S)
I\.A\.2\. Project Objectives (From PDS)
The Mozambique Transfrontier Conservation Areas and Tounsm Development Project (TFCATDP)
builds on the expenence of the first GEF-funded TFCA Pilot and Institutional Strengthening Project
aimed at assisting Mozambique to take advantage of unique opportunities in biodiversity conservation,
tounsm and rural development\.
TFCATDP development objective is: to obtain sustainable livelihood and economic development
benefitsfrom the well-managed exploitation of the Mozambique's natural resources\.
Mozambique's ecosystems and biodiversity are globally significant in terms of both the scale of the
resource (surface area) and the nchness of the system and species diversity\. Mozambican ecosystems are
high in endemism and have relatively high quality habitat Given the regional nature of many of these
ecosystems, a major challenge for the project will be to further promote effective regional cooperation
among Mozambique and her neighbors aimed at integrated ecosystem management\.
The global objective is to ensure the sustainable management andprotection of Mozambique's global
biodiversity assets and critically important transboundary ecosystems through integrated ecosystem
management\.
I A\.3\. Project Descripton (From PDS):
The project builds on lessons learned from the first phase of the TFCA program (see Section D3)\.
Dealing with the multiple challenges requires making an intensive and long term commitment\. In
conservation tems, timescales should be calibrated m decades rather than years Building on the
accomplishments of the pilot project (TFCAI), the next five years will:
\. Consolidate the gains made so far in terms of intemational agreements, leading to the formal
adoption of intemational treaties for Limpopo, Lubombo, and Chimanimani, and the development of new
2
ones for Niassa and ZIMOZA\. Formal agreement or signature is really the first step in the process;
* Shift the focus towards Provincial level planning and implementation through new institutional
structures such as the Elephant Coast Development Agency, strengthened Provincial TFCA/tounsm
units, and the application of new planning instruments such as Strategic Environmental Assessments;
* Tum the TFCA planning exercises already completed or underway in Limpopo, Lubombo and
Chimanimani into implementable investment and management programs, involving infrastructure, field
level conservation, community demarcation programs, zoning and other activities;
* Implement the policy changes for the private sector and communities through a scaled up
program of land demarcation and titling for communities in the TFCAs and through an open tendering
process for tounsm concessions, and development of community/private sector joint ventures;
* Extend the TFCA concept and planning exercises to the Niassa and ZINOZA areas,
* Develop and implement a sustainable Tourism Development Framework
* Establish a long term monitoring and evaluation framework
To accomplish the above, the project will consist of six complementary components as follows:
1\. Institutional and Policy Development
This component will build on the expenence of the pilot project, namely to ensure that the policy and
institutional environment evolves as the TFCA process is implemented\. Focus will be on capacity
building at all levels through\.
* Strengthenig of TFCA Unit;
* Establishment of regional TFCA ecosystem planning agencies/authonties;
* Preparation of integrated strategies for conservation and tounsm (national , provincial, distnct,
sub-regional);
* Capacity strengthening of Ministry of Tourism at National and Provincial levels (Provmcial
Tounsm Facilitation Commissions established),
* Policy and legal review of wildhfe, forestry and land management and other relevant policies
* Promotion and implementation of private sector tendering, concessions for tounsm development
and a framework for community-private sector joint ventures;
* Implementation of strategic environmental assessments and strengthening capacity for
environmental assessments;
2\. Ecosystem Planning and Management
This component will provide resources to initiate or strengthen conservation area management in the
TFCAs based on land-use and development plans, integrating biodiversity conservation and ecosystem
management\. Activities will be tailored according to the state of preparedness and the level of planning
that has already been accomplished (see Annex 2 for more detailed treatment of TFCAs) The project
will carry forward activities in the three original TFCAs of Lubombo, Greater Limpopo and
Chimanimani, and will start work on the new ones of ZIMOZA and Niassa/Cabo Delgado\. The project
will provide logistical and other support for eco-system management, includung direct management of
core protected areas, based on a process which will (i) determine and map all existing land uses, the
distribution of communities, analysis of trends and livelihoods in the TFCAs, mapping of private sector
and GoM interventions, and the issues that threaten sustainable biodiversity conservation, and propose
remedial measures; (n) create a collaborative framework with comprehensive stakeholder identification,
review of existing collaborating mechanisms relating to TFCA development, identification of shortfalls
and recommendations for addressing these (iii) identify, map, and priontise key biota using various
cntena including, national, regional, and international importance, contiguity, fragmentation, and degree
3
ISDS
of current and future threats; (iv) identify/zone and map blodiversity hotspots, and zone areas of potential
tourism development, including recommended levels of mfra- and supra-structures development, and
indicate national and regional lmkages that would promote sustainable marketing of the identified
tounsm attractions; (v) develop a GIS decision-making framework with which to monitor management
and sustainable use of tefrestnal resources and aquatic resources of the numerous nvers in the area
3\. Community Empowerment and Private Sector Partnershio
This component will focus on providing communities the tools and assets to participate as full partners in
the TFCA process It will include:
* Community mobilization, capacity building and awareness raising,
* Development of Community Action Plans;
* Demarcation and titling of community areas;
* Assistance to commumities to negotiate tounsm and other Joint ventures with the pnvate sector,
* Communmty investment fund to provide resources for communities to participate in joint
ventures\.
4\. Infrastructure
This component will consist of basic infrastructure (e\.g\. roads, park facilities) for the core pnonty
terrestrial and manne protected areas in the TFCAs, and basic infrastructure requirements linlong
community and pnvate sector initiatives to TFCA cross-border infrastructure mvestments\. Designing
mfrastructure requirements will be done in the context of multi-sectoral planning such that public
investment prionties are aligned with those of TFCAs where possible to ensure complementanty and
prevent duplication or conflict (e g\. m road alignment or design) This component will provide ongoing
technical support for tounsm infrastructure planning in the TFCAs
5\. Sustainable Tourism Framework (STF)
This component will consist of the design and implementation of a Sustainable Tounsm Framework
which will focus on reinforcing and facilitating the role of communities as investors in sustainable
tounsm development\. The process will involve institutional and stakeholder analysis including local
communities, NGOs, private sector and govemment at different levels The STF will focus on the
creation of local level tourism planning processes, on which provincial, national and regional plans will
be based\. Local communities and authorities will play a leading role in defining the tounsm and
conservation assets of the TFCAs, and how these assets will be conserved or sustainably managed\. This
component reflects the emphasis that the Govemment is placing on sustainable tounsm through the
creation of the National Directorate for Conservation Areas (DNAC) in the Mmistry of Tounsm and the
approach adopted by the newly-created Tourism Facilitation Commission and Ministry's efforts to
decentralize decision-making to the Provincial authonties\.
6\. Research\. Monitoring and Evaluation
4
ISDS
Monitoring and Evaluation will be a fully integrated process, done on a regular basis, involving
ecological, social and policy monitonng A dedicated monitonng plan with venfiable indicators will be
established during the preparation phase as part of this component Consultants will be contracted to
support the monitoring process and evaluate and consolidate monitoring data into semi-annual
monitonng reports\. These reports will then form the basis of the semi-annual review meetings\. In
addition, the consultants will conduct independent mid-term and end-term beneficiary assessments within
the TFCAs\. These will serve as the basis for mid-term and completion reviews
I A\.4 Project Location\. (Geographic location, information about the key environmental and social
characteristics of the area and population likely to be affected, and proximity to any protected areas, or sites
or cntical natural habitats, or any other culturally or socially sensitive areas\.)
Context
Mozambique's natural resources are of global interest and significance Natural resource based activities
- agnculture, fisheries, mming and tourism - contnbute about 45 percent of GDP and 70 percent of total
exports\. Forestry and forestry related activities, such as the production of charcoal and timber contnbute
far less, but play a significant role in the local economy, and m the degradation of the natural resource
base\. Traditional energy (largely woodfuels) still contnbutes more than 90 percent of Mozambique's
total energy consumption\. The resource base is seriously threatened by population growth, extreme
poverty, poor management and utilization and lack of financial resources\. Desertification affects more
than half of the ten provinces, and 20-30 percent of Mozambique's population lives on fragile land\.
Coastal erosion is a major problem and has nearly destroyed some townships and threatens others In
particular, the uncontrolled exploitation of the natural resource base, in the absence of an adequate
planning and implementation of the regulatory framework represents a serious threat to the sustained
economic growth that the government is seeking\. At the same time, it is becomung increasingly
recognized that there a lack of focus on the part of the govemment and the international community on
addressing these environmental issues, as the emphasis increases on creating rapid economic growth as
the main weapon against poverty\. The link between environmental degradation and poverty has not been
clarified or absorbed into the political decision-making process\. Although weak environmental
management is an issue threatening sound pnvate sector investment, this perception is unlikely to prevail
under the present circumstances\. Furthermore, the essentially exploitative nature of many of the larger
scale pnvate sector investments (e\.g, gas, mining, coastal tounrsm, energy), requires even greater
vigilance in temis of ensurung both social and environmental sustainability\.
The best approach to dealing with this situation may be to focus less on the negative consequences of
present rates of environmental degradation and poor management, and more on a proactive approach in
mainstreaming environment into the development process Demonstrating that sound environmental
management can play a significant role in facilitating private sector investment and stimulating growth
will require that environmental concerns are addressed in a sound development-planning framework
designed to attract high-quality private sector investment\. At the same time, conservation pnonties need
to be recognized, and the intrinsic value of the maintenance of the country's high biodiversity should not
be lost\. Not all high value conservation areas will be able to be justified for management and protection
on economic grounds\.
Blodlversity
Mozambique is part of the Zambezian Biogeographic Region, a region known for its high degree of
blodiversity\. The country's extensive coastline and large land area makes it unique within the
5
Biogeographic Region as it includes such a wide variety of ecosystems, including 22 vegetation/habitat
types\. Within this region are areas of particularly outstanding biodiversity from a global perspective,
such as the Gorongosa Mountain Rift Valley Complex, Chenngoma Plateau, Zambezi Delta grasslands
and swamps, Great Inselberg Archipelago, Chimanimam Massif, Maputaland Centre of Endemism,
Coastal Barrier Lakes, Pebane Evergreen Coastal Forests of Zambezia, and Lake Malawi/Niassa/Nyasa
Forest cover of nearly 20 million hectares has been identified as having high and medium potential for
forestry production\. As a consequence of the long period of armed conflict, together with the vast size of
the country, lack of trained personnel and operational support, large areas of Mozambique are poorly
documented from a biological perspective\. The current conservation status of Mozambique's flora is still
poorly understood: of the 5500 plant species recorded for Mozambique, some 247 plant species in 67
families may be of conservation concem\. Areas with large numbers of endemic plants include
Afromontane areas (Chimanimani TFCA and Gorongosa mountain) and southem Mozambique
(Lubombo TFCA) Mozambique's rich plant biodiversity is also a critical resource for traditional
medicines, the pnmary first (and often only) medical treatment for the vast bulk of the population\.
The fauna of Mozambique aside from mammals and birds is also poorly documented\. Moz is
charactenzed by a nch diversity of mammal fauna with 211 terrestrial mammal species\. Large mammals
have been sharply reduced\. Gazetted Wildlife Areas cover 87,000 sq km, or about 11% of the country\.
With the exception of Niassa Reserve (which has three endemic species), these areas suffered drastic
declines in wildlife, although signs of regeneration are now seen in several of these areas, notably
Gorongosa, Maputo Elephant Reserve, and the National Parks of Banhine and Zinave\. Mozambique has
the third largest coastline in Afnca, with a diversity of ecosystems including estuanes, wetlands and
coastal lakes\. The Coastal Zone is considered unique in the East African Manne Region in terms of the
quality, diversity and species nchness of its habitats These ecosystems support 18 species of manne
mammals, mainly dolphins and whales, and Mozambique is thought to have the largest population of
dugongs along the East African coast (these are, however, extremely threatened) It is the only country in
the region where all five species of threatened and endangered sea turtles occur and breed\.
Local populations are exceptionally dependent on the country's biodiversity to fulfil their daily survival
needs\. Wildlife provides a major source of protein to about 70% of the population Woodlands and
mangroves are an essential source of construction matenal for housing and fishing boats, and fodder for
domestic animals ( particularly in times of drought)\.
Project Location
To a large extent the location of intervention has been determined in the first phase of the Project
(TFCAI)\. TFCA processes are well underway in the Greater Limpopo and Chimanimani TFCAs,
whereas in the Lubombo TFCA international protocols have been signed, but the degree of complex and
multifanous interventions in this area have delayed focused and concerted action\. All these three TFCAs
will continue to be supported under the Project\. Two new areas have been selected for intervention\. the
ZIMOZA Transboundary Natural Resource Management Area, which has been facilitated to date by
IUCN-ROSA, and the Lake-to-Coast Biodversity and Tourism Comdor (LCBTC) in the north\. Both
these areas have been chosen for different reasons The process of preparing ZIMOZA has been
undertaken at both the community and central levels, focusing on the participation as the Distnct
Administrative level of districts in the countnes of Zimbabwe, Mozambique and Zambia\. As a result of
thds process, there has been strong community buy-in, and the foundations for a successful TFCA have
been laid\. The LCBTC covers a vast area, but which is already subject to the intervention of the SDI
process, in this case falling under the Mtwara and Nacala Development Corrdors Planning for
ecosystem management, biodiversity conservation and tounsm development in the LCBTC will add
6
ISDS
value to the SDI process, and ensure that environmental needs are well balanced with development At
the same time the investments foreseen in infrastructure in the SDIs (roads, airports, harbors) will greatly
enhance the viability and sustainability of the LCBTC\. The MITUR has defined a regional tourism
development strategy in the north as one of its major prionties\.
Local populations living within the broadly defined Transfrontier Conservation Areas along
Mozambique's intemational boundanes will be the main target population\. These populations occur in
the provinces of Maputo, Gaza, Manica, Tete, Niassa and Cabo Delgado\. Less directly, Inhambane,
Nampula, Zambezia and Sofala provinces are also expected to benefit through the development of
tourism comdors associated with TFCA development\. Local populations around protected areas falling
within the TFCAs will benefit through the establishment of more clearly defined access nghts, land
titling and the development of sustainable economic activities\. These protected areas are Maputo Special
Reserve, Limpopo NP, Banhine NP, Zinave NP and Niassa Reserve More protected areas are expected
to be developed under TFCA2\. Additionally, the Project will target local private sector and develop a set
of incentives for joint venture arrangements between international private sector, local entrepreneurs and
local communities\.
B\. Check Environmental Classification: B (Partial Assessment)
Comments' The project is given a Category B rating since the project will be designed to provide a
framework for environmentally sound planning processes Extensive public consultation processes
considered essential to underpin participatory planning for ecosystem management will be triggered\. Project
preparation will design the SEA processes to be carried out as part of project implementation\. These
processes will be set out in a disclosable Environmental Management Framework, pnor to project appraisal
All investments financed by the project will be subject to individual environmental assessments according to
the EMF\. The project will also strengthen capacity and processes in Mozambique for environmental
assessment\.
Major land use changes are not foreseen\. However, even without the project, the coming years will see
infrastructure and private sector development in certain areas which could lead to the expansion of
tounsm nodes, population increase, and in-migration These trends are already being observed in certain
coastal areas The challenge will be to ensure that the project induces positive change, and encourages
sustainable pro-poor tourism\.
C Safeguard Policies Triggered (from PDS)
(click on X for a detailed desciption or click on the policy number for a brief description)
Policy Triggered
Environmental Assessment (OP 4\.01, BP 4\.01, GP 4\.01) 0 Yes 0 No 0 TBD
Natural Habitats (OP 4\.04, BP 4\.04, GP 4\.04) * Yes 0 No 0 TBD
Forestry (OP 436, GP 436) * Yes 0 No 0 TBD
Pest Management (OP 4\.09) 0 Yes * No 0 TBD
Cultural Property (OPN 11\.03) 0 Yes * No 0 TBD
Indigenous Peoples (OD 4\.20) 0 Yes * No 0 TBD
Involuntary Resettlement (OP/BP 4\.12) 0 Yes 0 No 0 TBD
Safety of Dams (OP 4\.37, BP 437) 0 Yes * No 0 TBD
Projects in International Waters (OP 7\.50, BP 7\.50, GP 7\.50) 0 Yes 0 No 0 TBD
Projects in Disputed Areas (OP 7\.60, BP 7\.60, GP 7\.60)* 0 Yes * No 0 TBD
ISDS
Section 11 - Key Safeguard Issues and Their Management
D\. Summary of Key Safeguard Issues Pleasefill in all relevant questions If information is not available,
describe steps to be taken to obtain necessary data
II\.D\. I a\. Descnbe any safeguard issues and lmpacts associated with the proposed project\. Identify and
describe any potential large scale, significant and/or irreversible impacts
The TFCA and Sustainable Tounsm Development Project is a major conservation project which is
focused on sustainable use of Mozambique's immense natural habitat estate\. Its primary objective is that
of institutionalizing ecosystem management, and mainstreaming it mto development planning processes\.
As such it is expected to have significant environmental benefits relative to a no-project situation The
project also has the objective of promotung environmentally sustainable tounsm and other sustainable
land uses such as game farmung\. The project will aim to foster the development of environmental
management and spatial development plans that will underpin the development of the TFCAs
The project will operate in the context of a highly dynamic socio-economic and political landscape The
Government of Mozambique is keen to promote pnvate sector investment and is also responsible for a
sizable public sector investment program, so the project will require adaptable expenential leaming
processes rather than blueprints\.
There are two levels at which the TFCA process will operate by
* influencing current and proposed investment plans - both public and private - towards more
environmentally and socially sustainable pattems\. This could mean realignment or repositioning of
infrastructure investments undertaken by the Govemment or the pnvate sector;
* actively promoting investments which maximize opportunities for sustainable development in the
TFCAs\. This could mean supporting the development of infrastructure whuch is essential for ecological
management or for sustainable tounsm development\. These investments will not be fully defined dunng
the course of project preparation, except in those areas where planning is sufficiently advanced (for
example under TFCAI)
Large-scale impacts such as major land use change will not be induced by the project\. The development
of Mozambique's coastline and intenor is expected whether or not the project is implemented\. The
project is intended to provide a framework for promoting sustainable development, through an ecosystem
management approach\. The project is also not expected to finance or induce major uireversible impacts
Dealing with these challenges will require a two-pronged approach:
* Strategic Environmental Assessments (SEA) would be camed out for the proposed TFCAs as
part of the spatial planning process\. SEAs are considered more appropnate for the large areas where
boundanes remain undefined and where a number of different development activities will be taking
place The SEAs will support a zoning process and help identify prionty sites for private sector
investment\. The SEA processes will identify mitigation activities most likely in respect of the
development of tourism nodes, unregulated access to natural resources, zoning and other factors\.
* Within the broadly designed zones and pnonties set by the SEAs, specific public and private
investments will emerge requring project specific environmental assessments
8
ISDS
Major involuntary resetlement of populations in Mozambique is neither desirable nor necessary, and
current Govemment policy is that involuntary resettlement should not take place\. The Govemment and
other stakeholders are in the process of determning how best to guarantee nghts for communities
currently living within protected areas These rights may apply to land or to other forms of exploitation
such as forest and non-timber products, hunting rights etc\. Project preparation will therefuie include the
elaboration of a Resettlement Process Framework designed to ensure that any project intervention takes
full account of the rights of communities living within or around protected areas\. A Resettlement Policy
Framework will also be prepared to cover the as-yet-undetermmed eventuality that resettlement may be
necessary in certain areas\.
nI D\. I b Describe any potential cumulative impacts due to application of more than one safeguard policy or
due to multiple project component
TBD
11 D Ic Descnbe any potential long term impacts due to anticipated future activities in the project area\.
As mentioned above, the areas in question are very large and are subject to an enormous range of
activities, including mining, forestry, electncity, roads, coastal development, even gas pipelines\.
However, these are not project activities Rather the project is designed to improve the way in which
ecosystem management is carried out, with emphasis on the whole spectrum of planning and
development processes taking place m the areas concemed\.
Il\.D\.2 In light of I, describe the proposed treatment of altematives (if required)
Explicit analysis of altematves has not yet been undertaken\. However, from an environmental perspective
it is anticipated that the with project scenano would be more beneficial than the without project scenario\.
Il\.D\.3\. Describe arrangement for the borrower to address safeguard issues
Preparation of a disclosable Environmental Management Framework, a Resettlement Process Framework
and a Resettlement Policy Framework before appraisal
II\.D 4\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on
safeguard policies, with an emphasis on potentially affected people\.
The key stakeholders for the project are communities, the pnvate sector, govemment at all levels
(district, provincial and national), neighboring countnes (for mternational agreements, shared
unfrastructure, joint tourism planning), NGOs and other donors Project preparation will involve a
participatory process designed to ensure that the key stakeholders are integrated in both preparation and
implementation of the program Precise details on how this process will evolve are not yet available\.
E\. Safeguards Classification (select in SAP)\. Category is determuned by the highest impact in any policy
Or on basis of cumulative impacts from multiple safeguards Whenever an individual safeguard policy is
triggered the provisions of that policy apply\.
SI\. - Significant, cumulative and/or irreversible impacts, or significant technical and institutional risks
in management of one or more safeguard areas
[X] S2\. - One or more safeguard policies are triggered, but effects are limited m their impact and are
techrucally and institutionally manageable
[} S3\. - No safeguard issues
[ ]SF\. - Financial intermediary projects, social development funds, conimunity driven development or
simular projects which require a safeguard framework or programmatic approach to address
ISDS
safeguard issues\.
F\. Disclosure Requirements
Environmental Assessment/Analysis/Management Plan: Expected Actual
Date of receipt by the Bank 9/15/2003
Date of "in-country" disclosure 10/15/2003
Date of submission to InfoShop 11/3/2003
Date of distributing the Exec\. Summary of the EA to the Executive Not Applicable Not Applicable
Directors (For category A projects)
Resettlement Action Plan/Framework Expected Actual
Date of receipt by the Bank 9/15/2003
Date of "in-country" disclosure 10/15/2003
Date of submission to InfoShop 11/3/2003
Indigenous Peoples Development Plan/Framework\. Exoected Actual
Date of receipt by the Bank Not Applicable Not Applicable
Date of "in-country" disclosure Not Applicable Not Applicable
Date of submission to InfoShop Not Applicable Not Applicable
Pest Management Plan: Expected Actual
Date of receipt by the Bank Not Applicable Not Applicable
Date of "in-country" disclosure Not Applicable Not Applicable
Date of submission to InfoShop Not Applicable Not Applicable
Dam Safety Management Plan Expected Actual
Date of receipt by the Bank Not Applicable Not Applicable
Date of "in-country" disclosure Not Applicable Not Applicable
Date of submission to InfoShop Not Applicable Not Applicable
If in-country disclosure of any of the above documents is not expected, please explain why\.
Slened and submitted by Name Rf% Date
Task Team Leader: Robert A\. Clement-Jones t 6 ), Zo
Project Safeguards Specialists I Robert A\. Robelus/Person/World Bank
Project Safeguards Specialists 2\. KristjpM arsdottXr/Personftrld Bank
Project Safeguards Specialists 3: QLAY- 2|' 2ooW
ADproved by: Name Date
Regional Safeguards Coordinator\. Charlotte S Bingham
Comments , 3
Sector Manager/Director Richard G\. Scobey
Comments | APPROVAL |
P082388 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: AB1267
Project Name
ID-Western Java APL2
Region
EAST ASIA AND PACIFIC
Sector
Solid waste management (40%); General water, sanitation and
flood protection sector (40%); Flood protection (20%)
Project ID
P082388
Borrower(s)
REPUBLIC OF INDONESIA
Implementing Agency
Environment Category
[X ] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined)
Safeguard Classification
[
]
S
1
[
X] S
2
[
]
S
3
[
]
S
F
[
]
TBD (to be determined)
Date PID Prepared
December 5, 2004
Estimated Date of
Appraisal Authorization
November 14, 2005
Estimated Date of Board
Approval
April 15, 2006
1\. Key development issues and rationale for Bank involvement
1\.
Context
\.
The Adaptable Program Lending (APL) for the Western Java Environmental
Management Project is a nine-
year program to improve living conditions and Indonesias
international competitiveness by addressing local governments highest priority environmental
problems\. The first phase (APL1) was designed to lay out the strategic framework for
sustainable environmental waste management among the participating provincial and local
governments, and prepare detailed designs for investments to be implemented during the
subsequent two phases\.
2\.
Borrowers objectives
\.
The new Government has only recently issued a proposal for its
first 100 days and is in the process of elaborating medium-term objectives and actions\.
However, there is clear intent to pursue improved governance, consolidate decentralization and
address environmental challenges\. In fact, one of the priority problems to be resolved on the
100-day agenda is a conflicted landfill site in Bogor, West Java (not part of WJEMP)\. Thus, the
proposed project, with its emphasis on management, participation, local governance, and priority
environmental problems is broadly supportive of the new Governments objectives
3\.
Results from the first phase
\.
Given the breadth and scope of the problem, APL1 has
funded a wide range of studies and pilot experiences\. The 35 technical assistance packages can
be summarized as follows:
¨
Waste management
eight packages aimed at improving metropolitan and local solid
waste management as well as a special focus on industrial and medical waste
¨
Flood control for Greater Jakarta
four packages to assess flood control options in
Jakarta and the surrounding drainage basin
Page 2
¨
Provincial and local environmental strategies
11
packages (two provincial and nine
local) to develop management strategies and identify priority investments
¨
Public and community initiatives
three packages for environmental awareness,
education and community environmental management
¨
Sanitation
three packages addressing domestic wastewater management
¨
Composting
one
package to design the GEF compost grant mechanism
¨
Various
five packages covering project management, identification of APL2 and
specialized studies such as the Cilegon-Serang emergency preparedness program
Besides studies, APL1 is also financing pilot work to support a model landfill site, three landfill-
based composting facilities and initial community environmental facility grants\.
4\.
Experience from implementing the first project has yielded the following lessons:
¨
The projects implementation structure requires simplification (it involves five
ministries, two provinces and nine local governments)
¨
The projects scope should be more selective, focusing on fewer activities (there are
35 technical assistance packages in seven substantive areas involving over 50
consulting firms)
¨
New institutional arrangements, e\.g\. metropolitan waste management corporations
and procedures for environmental strategizing, require time to build political support
and capacity
¨
To ensure continuity and achievement of objectives, must have components include
support for JWMC, GBWMC and composting
¨
Local government participation will depend upon clarification of funding
arrangements (KMK35, KMK538 and UU33/2004)
One consequence of these lessons is that there have been significant delays in contracting and
achievement of triggers\.
5\.
Rationale for Bank involvement
\.
Design of the second phase in order to address priority
environmental problems in Indonesias most urbanized and polluted region is consistent with a
range of Bank strategies and policies\.
Regionally, the EAP environment strategy (2004) stresses
themes that are central to WJEMP: improving urban and peri-urban environmental conditions,
reducing vulnerability to natural disasters and climate change, improving policy and regulatory
frameworks, strengthening institutional capacity, and engaging the private sector and civil
society in improving environmental management\. The project is part of the regional/provincial
development business line of the Banks Indonesia urban strategy\. Key elements of the APL are
fully supportive of the current Country Assistance Strategy, especially the local services and
community-driven development platforms and the pillar for making service delivery responsive
to the needs of the poor\. Also, the WJEMP can be a mechanism for following up on the policy
advice that has been given to the newly-elected Government, especially regarding helping local
governments to tackle the solid waste management challenge and reforming the system of
environmental governance\. Finally, no other donor is engaged in a comprehensive to work with
and across the local governments and provinces of Western Java\.
Page 3
2\. Proposed objective(s)
6\.
The second phase (APL2) will build on the accomplishments, processes and lessons of
APL1 by seeking to improve local environmental quality and governance through: a)
consolidating reforms for solid waste management; b) financing locally-prioritized
environmental investments in the areas of solid waste and water resource management; c)
reducing waste-related greenhouse gas emissions; and d) strengthening the framework for local
environmental planning and management, including public information and participation\. Much
of this can be done based on work being completed in APL1\.
7\.
If the project is successful, the principal outcomes for the target group (the residents of
Western Java, especially poorer communities) would include:
¨
Reduced environmental impact from improper solid waste disposal and poor water
resource management
¨
Fewer socio-environmental conflicts arising from waste disposal
¨
Lower health and economic impacts from priority local environmental problems such
as flooding
¨
Reduced impact of consumption patterns on global warming (fewer tons of CO2-
equivalent emissions per capita)
¨
More effective environmental management at the local level through planning and
greater public involvement
3\. Preliminary description
8\.
The CPSU identified three design options that would build on the results of APL1 and
help achieve the specified objectives:
BASIC OPTION
this consists of support for the organization and operations of the
Jabodetabek Waste Management Corporation, the Greater Bandung Waste Management
Corporation and greenhouse gas reduction efforts (both composting credits program and
opportunities for landfill gas control); institutionalization of the provincial and local
environmental strategies and state-of-the-environment reporting; and expansion of the
Community Environment Facility, both in terms of geographical coverage and number of
sub-projects\.
OPTION TWO
the Basic Option plus financing of eight local government sub-projects
that have emerged from the provincial and local environmental strategies (examples
include a new landfill in Serang, watershed management in West Java province and lake
management in Depok) plus financing of drainage works in the Bopunjur basin that were
identified in APL1\.
OPTION THREE
Option Two plus financing of follow-up investments for medical
waste management and emergency preparedness
Page 4
9\.
Following discussions between the EASUR
sector manager and the projects technical
team, there is growing consensus for a version of the second option\. Preliminarily, the project
would consist of two thematic components:
solid waste management
and
flood
control/drainage
\.
The SWM component would encompass: institutionalization of the
metropolitan waste management corporations, expansion of composting credits, promotion of
landfill gas recovery, medical waste management, and financing of waste-related investments at
the local level\. The water component would include: drainage and flood control investments in
the Bopunjur basin as well as in DKI Jakarta, and water management projects at the local and
provincial level\. A capacity-building and institutional development component would support
community environmental management initiatives, institutionalization of the provincial and local
environmental strategies and state-of-the-environment reporting, and project management as
well as monitoring\.
10\.
The PAD anticipates a loan/credit of $49\.3 million for APL2, up to $7\.5 million of GEF
resources and a counterpart of $16\.2 million\. However, the client may pursue a larger loan
depending on the financing needs identified during preparation\. The blend of IDA and IBRD
resources will need to be determined at the time of negotiations, reflecting Indonesias eligibility
for IDA at the time\. A PHRD grant of $755,670 has been secured to assist the borrower with
project preparation\.
4\. Safeguard policies that might apply
11\.
Depending on the final choice of components, the project may trigger the following
safeguards:
¨
Environmental assessment while the project is environmental in nature, it could
raise environmental issues such as siting and development of new sanitary
landfills, the need to control leachates from new and rehabilitated landfill sites,
proper handling and disposal of medical wastes, safety at drainage works, etc\.
For these reasons, the project is preliminarily being listed as a Category A,
requiring a full environmental impact assessment with mitigation measures\.
¨
Involuntary resettlement the siting of new landfills, done in cooperation with
local communities, may require some mutually acceptable resettlement\.
Similarly, priority drainage works may require resettling at-risk dwellers to
remove them from flood-prone areas\. A resettlement action plan will be prepared
to guarantee that any necessary resettlement takes place according to World Bank
guidelines\.
¨
Forests there is a more remote chance that a local or provincial water
management project could involve improved watershed management\.
Problematic watersheds are usually areas with degraded forests so the project
might finance forest rehabilitation\. While this is not normally a problem, any
such activities will be designed to be in compliance with the World Banks forest
policy\.
Page 5
5\. Tentative financing
Source: ($m\.)
BORROWER/RECIPIENT 4
INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT
50
INTERNATIONAL DEVELOPMENT ASSOCIATION
15
Total
69
6\. Contact point
Contact: Josef Lloyd Leitmann
Title: Lead Environmental Specialist
Tel: 62-21-5299-3052
Fax: 62-21-5299-3111
Email: Jleitmann@worldbank\.org
Location: Jakarta, Indonesia (IBRD) | APPROVAL |
P077572 | Report No\. PID11091
Project Name INDIA-Chhattisgarh Community Forest (@)
Management Project
Region South Asia Regional Office
Sector Forestry (60%); Institutional Development (20%);
Micro- and SME finance (10%); Renewable energy (10%)
Project ID P077572
Borrower(s) GOVERNMENT OF CHHATTISGARH
Implementing Agency
Address STATE FOREST DEPT\., VILLAGE
FORESTRY INSTITUTIONS, PRI
Contact Person: Mr\. Ramprakash,
Principal Secretary, Forests
Tel: (0771) 221157
Fax: (0771) 331120
Email: drrscharma@yahoo\.com
Environment Category B
Date PID Prepared March 25, 2003
Auth Appr/Negs Date February 18, 2004
Bank Approval Date July 15, 2003
1\. Country and Sector Background
PLEASE NOTE THAT THE PREPARATION OF THIS PROJECT WAS SUSPENDED PENDING THE
OUTCOME OF A REVIEW BY BANK MANAGEMENT AND A SUBSEQUENT DIALOGUE WITH THE
GOVERNMENT OF INDIA\. THE CONTENT OF THIS PID WILL BE UPDATED PROMPTLY
FOLLOWING THE COMPLETION OF THIS DIALOGUE AND ALL DELIVERY DATES WILL
ADJUSTED ACCORDINGLY\.
This project concept document presents a proposal for a second phase of
the Madhya Pradesh Forestry Project (MPFP; Cr\. 2700-IN) which closed on
December 31, 1999\. The first phase project was implemented in the
undivided state of Madhya Pradesh (now comprising Madhya Pradesh and
Chhattisgarh)\. The project described in this PID will be implemented in
the new state of Chhattisgarh, created on November 1, 2000\. The project
will focus on the most pressing problems of poor communities living in
forest fringe villages\.
This project is building on the experience gained after more than 20 years
of assisting the forestry sector in India\. Through several generations of
projects, the Bank has increasingly supported Government of India efforts
in strengthening participation, empowerment and devolution of forest
management to local communities\. Through this long process of engagement
in the forestry sector, it has become evident that the establishment of a
sound policy and legal framework, clear benefit sharing arrangements, and
appropriate incentive structures are essential for the sustainability of a
forest management program based on community participation\.
Government Strategy
The Government of Chhattisgarh (GOCG) recognizes that although forests
cannot eliminate poverty, they can be major contributors to alleviate this
situation\. To contribute to this goal, the government has been
implementing a broad Joint Forest Management (JFM) program\. This has been,
up to now, their main strategy to address the rural poor\. Although this
strategy has proven effective in improving access to forest resources for
communities living in forest fringe areas, the concept of JFM falls
short of delivering the full measure of control and access required to
maximize the poverty alleviation benefits to forest dependent
communities\. To address this, GOCG would like to introduce now, through
this project, the new strategy of Community Forest Management (CFM), which
represents a major step forward in conferring additional rights and
responsibilities to local groups and supports the acquisition of the
required skills by these groups, their leaders and the responsible local
governments (called in India panchayat raj institutions or PRIs)\.
The national legal framework has the appropriate scope for implementing
this new strategy\. The National Forestry Action Program of 1999 (NFAP)
released by Government of India (GOI) seeks to achieve the objectives of
sustainable forest management through five strategic means (a) protecting
existing forest resources, (b) improving forest productivity, (c) reducing
demand, (d) strengthening policy and institutional framework, and (e)
expanding forest area\. The NFAP is a consolidation of State Forestry
Action Plans setting out new strategies for the implementation of the
National Forest Policy and the development of the sector\. GOI and State
Governments are pursuing these policy goals through five year and annual
development plans using a combination of domestic and international
resources\.
GOCG has adopted a proactive stance vis-a-vis the creation of an enabling
environment for community forest management\. GOCG has already introduced
several policies and procedures that contribute to strengthening the
development of CFM\. These included:
n A new forest policy based on Sustainable Livelihood Approaches with
emphasis on bio-diversity conservation and the creation of people's
protected areas
fn Ownership of Minor Forest Products conferred to village level
institutions
n A new resolution providing for the sharing of forest products with
communities that are engaged in forest protection
n An expedited process for settling pending issues of customary rights of
individuals and communities
During the first phase, the state government demonstrated an ability to
learn from implementation experience and to modify policies and practices
to reflect this learning\. There is an expectation that this process of
iterative policy refinement will continue during the implementation of the
next project phase\. GoCG has adopted a proactive stance vis-a-vis the
creation of an enabling environment for community involvement in forest
management\. GoCG recently introduced several new policies and procedures
that contributed to strengthening the framework for community forest
management in the state\. However, informed legal opinion suggests that
state law and legally binding contracts with individual communities should
eventually replace the use of departmental resolutions and memoranda of
- 2-
understanding as the basis for CFM\. Therefore the culmination of this
process of learning and policy refinement will be the amendment of the
state forest act to reflect the new role of communities in forest
management and to strengthen the legal basis for their continued
involvement\.
In order to ensure that the transition to CFM from JFM does not happen in
an ad hoc manner, it would be critical to ensure the development of
transparent and agreed criteria for "graduation" of community forestry
institutions linked to transfer of specific levels of autonomous decision
making\.
2\. Objectives
The project development objective is to strengthen participatory systems
of natural resource management and marketing to improve and sustain the
livelihoods of forest dependent people\. Specific outcomes of the project
include: establishing an enabling policy and institutional environment to
encourage and facilitate the transition from Joint Forest Management (JFM)
to Community Forest Management (CFM); strengthening community
institutions, developing and implementing mechanisms to ensure that
vulnerable groups (e\.g\. women, scheduled tribes and castes, and landless)
benefit from and are not harmed by management changes, and improving
productivity and financial returns to communities from sustainable forest
use while expanding the natural resource base\. The poverty focus of the
project will be ensured by targeting selected districts and forest blocks
with high concentrations of poor households, including many tribal and
scheduled caste members\.
3\. Rationale for Bank's Involvement
Future development of the forestry sector in Chhattisgarh in accordance
with the National Forestry
Policy will require long-term commitments\. The Bank is one of the few
institutions that could provide the necessary continuity of support\. In
addition, the Bank's involvement in similar state forestry projects
provides a mechanism for transferring up-to-date practical experience with
project implementation\. This experience enables the Bank to engage in a
constructive dialogue on sector management issues with both state and
central governments\. The Bank is also in a position to ensure that
improved technology will be made available to the respective forest
departments in a timely manner, through its support for linkages with
international forestry research organizations\.
Bank support for forestry in Chhattisgarh will allow for coordination with
and expansion of the benefits accruing from a proposed IDA funded District
Poverty Initiative Project\. Functional linkages to this proposed operation
will be developed during preparation\. In addition, Chhattisgarh state
officials have expressed an interest in pursuing a possible co-financing
arrangement for this project\. A co-financier has yet to be identified\.
4\. Description
The proposed project would concentrate on poverty reduction and would be
people centered rather than FD centered\. The department's role would be
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primarily as a facilitator, regulator and provider of technical support\.
The project would support a shift from Joint Forest Management (JFM) to
Community Forest Management (CFM) with project components providing the
necessary ingredients for successful CFM\. These ingredients include
establishing an enabling environment for CFM; strengthening community
institutions, developing and putting in place mechanisms to ensure that
vulnerable groups (e\.g\. women, scheduled tribes and castes, and landless)
benefit from CFM, expanding the natural resource base under CFM, and
improving returns to communities from this resource base\. The
sub-components and interventions to be financed under each component are
only indicative at this stage\. The detailed design of the project will be
developed during preparation\.
The adoption of CFM represents an advance over earlier JFM in that
communities will be empowered to take autonomous decisions regarding the
management of forest resources\. Just how quickly and completely
communities will be able to take over management authority and
responsibility from forest departments will depend on several critical
factors including; 1) skill acquisition and institutional development at
the community level; 2) a deeper and more comprehensive institutional
change within the forest department (toward greater transparency,
accountability, and decentralization relying heavily on developing
effective partnerships with communities, non-government groups and local
governments); and 3) a strong and supportive legal framework\. The forest
department will continue to play a supportive technical and regulatory
role and facilitate inter-sectoral coordination fostering explicit links
to ongoing rural development initiatives\.
The success of CFM will also depend on identifying and exploiting
opportunities to achieve early economic returns through rational use of
Non- Timber Forest Products (NTFPs) and value addition\. Removal of market
distortions will play a key role in ensuring the financial viability of
CFM in the medium and long-term\. To ensure balanced and sustainable
development, forest fringe communities must have access to economic
opportunities outside those provided by forests and forest departments\.
Such opportunities (employment and micro-finance) will be facilitated by
inter-sectoral coordination, an expanded role for local governments, and
functional links to District Poverty Initiative projects (funded by IDA)
and Rural Livelihoods initiatives (funded by DFID) as appropriate\.
The project is firmly based on the experience from successful
implementation of recent forestry projects in MP and in other parts of
India; Bank's sectoral assessments and reports, studies conducted by the
Ministry of Environment and Forests of Government of India; and reports
and case studies prepared by the Madhya Pradesh Forest Department (MPFD)\.
Since it is a follow-on project, the lessons learnt from the previous
project have also been taken into account\.
5\. Financing
Total ( US$m)
BORROWER $15\.00
IBRD
IDA $50\.00
Total Project Cost $65\.00
-4-
6\. Implementation
Implementation arrangements will take place at four different levels:
fi Village-level institutions Their composition and operation should
target and protect the most vulnerable groups, ensuring appropriate
representation of women, scheduled tribes and castes, and landless\.
Program activities and investments will be guided by micro-plans prepared
in collaboration with the forest department staff and facilitation teams\.
A substantial portion of project resources will be channeled through these
village institutions for operations and institutional capacity building\.
n Facilitation teams will play a critical role in the establishment and
support of community forest management at the village level\. These teams
will be primarily constituted of re-oriented and trained field level
forest department staff in collaboration with local non-governmental
organizations and individuals\. Their primary function will be to assist
with the micro-planning process (preparation, implementation, and
monitoring), They will also have a crucial role in refining and assessing
how local winners and losers are identified and the measures adopted to
mitigate any adverse livelihood impacts\.
n At the district level, the District Forest Officers will be responsible
for development of the program, working in collaboration with the local
governments and with other line agencies and non government organizations
acting in the district\.
n At the State level, project activities should be mainstreamed into the
normal operations of the respective departments to ensure institutional
sustainability\. The creation of any new institutions or new and additional
posts should be avoided\. A project unit will be responsible for
coordination, monitoring and evaluation and other project management
activities\.
In addition, a detailed institutional framework for project implementation
will be developed during project preparation\. It will be based on the
following principles:
n promoting a community driven and participatory approach to forest
management, through maximum empowerment of village institutions and local
governments for decision making on the choice of operations to be
undertaken and the support services to be provided to them by public
agencies and NGOs;
n ensuring effective integration and coordination of fund flows for local
development at the village level, and their assimilation to the normal
operations of the respective government agencies;
n providing the different stakeholders with effective monitoring and
evaluation mechanisms;
n dissemination of information on project interventions to all interested
stakeholders to ensure transparency and effective monitoring by civil
society;
n emphasizing community self-monitoring, linked to outputs and outcomes;
n financing in project areas should be commensurate with state sponsored
support in non-project areas to ensure appropriate and sustainable levels
of investment;
-5-
n promoting fund flows directly to communities with maximum decision
making authority in the hands of local communities and their leaders; and
n establishing an agreed strategy with each community to "graduate" once
institutional development benchmarks are reached (specific skills are
acquired and income criteria are met)\.
Monitoring and Evaluation
The project will adopt a comprehensive and participatory monitoring and
evaluation system\. The objective of the system is to enhance operational
learning and thereby improve project management at all levels (village,
district, and state) continuously over the course of implementation\. A
three part monitoring and evaluation system will be followed, including:
(a) input and output monitoring; (b) independent (third-party),
participatory monitoring to assess participation, institutional
development, and other less tangible/quantifiable processes critical to
project success; and (c) impact evaluation\. The first two parts would be
conducted throughout the project duration and the third at defined project
milestones (baseline, Mid-term review, and at project closure)\. Evaluation
mechanisms will be designed to achieve objectives of adaptive learning,
participation and empowerment\.
7\. Sustainability
Sustainability will consider the following aspects:
n Institutional and social Commitment and understanding of government
leadership, and performance of the project's enabling environment
component (especially actions affecting the incentive framework) will play
important roles\. Issues related to fairness, social inclusion, and
conflict resolution both within and among local communities must be
addressed for long-term sustainability, since the actions of a few
individuals can undermine both efforts to improve forest management and
social cohesion\. Devolution of financial and technical decision making
increases the likelihood of reliable maintenance\. Transparency and
implementation of a proactive communication strategy will help build
confidence and ensure continued support\.
fn Environmental\. Reversing trends in environmental degradation requires
long-term monitoring extending beyond the project period and the project
area\. Enhancing the enabling environment (policy plus institutional
elements) and technical improvements (e\.g\., harvesting and processing
techniques for non timber forest products) should make a significant
contribution to environmental sustainability\.
Financial\. Arrangements facilitating self-financing both within the state
government, and within local communities will be important\. Establishing
norms for the Bank's support in project areas that are commensurate with
levels of state support in non-project areas will increase the likelihood
of continuity beyond the project period\.
8\. Lessons learned from past operations in the country/sector
Several valuable lessons have emerged from recent experiences in the
Indian forestry sector and the first phase project in MP\. The completion
report of the MP forestry project and its subsequent internal review
reflected the following lessons\. These are being taken into account in
- 6 -
designing the present project:
n Experiential-learning created the attitudes, competence and confidence
needed for site and user specific adaptation, while decentralization of
decision making to middle management and the front-line staff created
opportunities to use these new capabilities\. Conflict management is a
critical aspect of community based forest management and efforts to
strengthen the skills of village leaders and local staff in coping with
conflict and mediation should be planned from the outset\.
n Conflict between groups can be reduced through careful assessment at the
outset of root causes of conflict and especially by careful identification
of users of particular areas of forest their traditional use patterns and
locally recognized boundaries\.
n Poverty alleviation impacts of community managed forests are
considerable, forest benefit streams provide strong incentives to forest
users, and benefit sharing policy provides an effective self-funding
mechanism for regular forest maintenance\.
n Increased forest productivity and value-addition are effectively
contributing to poverty alleviation, but continued support and mediation
by the CGFD (Chhattisgarh Forest Department or other government agents) is
required to ensure that benefits are shared fairly in the future\.
Strategic communication and effective engagement with a broad range of
stakeholders including development and advocacy non-governmental
organizations, academics, private sector entities, politicians, and the
press would increase awareness and understanding of the transformation,
policy positions, development programs, and ensuing benefits\.
9\. Environment Aspects (including any public consultation)
Issues : Environmental Impacts\. The project would have
beneficial environmental impacts including improved conservation and
sustainable use of biodiversity in selected ecosystems, reafforestation of
degraded lands, watershed management (impacting mainly water quantity,
quality, and availability), and soil conservation\. No significant adverse
environmental impacts are foreseen\. Environmental considerations would be
mainstreamed in almost every component, and integrated in planning,
design, implementation, and monitoring at both the local and regional
scales\.
Key Stakeholders\. Key stakeholders include the village communities
participating in CFM, local government institutions, the state forest
department and non-governmental organizations in the project area, other
civil society organizations (e\.g\. research and education institutes), and
Government of India\. Other important stakeholders include forest product
based industries, NTFP collector cooperatives, print and electronic media\.
Efforts will be made to communicate with and incorporate the views of all
these groups at an early stage of project design\.
10\. Contact Point:
Task Manager
Peter Jipp
The World Bank
1818 H Street, NW
Washington D\.C\. 20433
Telephone: 202-458-7288
-7-
Fax: 202-522-2420
11\. For information on other project related documents contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http:// www\.worldbank\.org/infoshop
Note: This is information on an evolving project\. Certain components may
not be necessarily included in the final project\.
This PID was processed by the InfoShop during the week ending March 28, 2002\.
- 8- | APPROVAL |
P173932 |  The World Bank
Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
Program Information Document
(PID)
Concept Stage | Date Prepared/Updated: 07-Jul-2020 | Report No: PIDC226883
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Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
BASIC INFORMATION
A\. Basic Program Data OPS TABLE
Country Project ID Parent Project ID (if any) Program Name
Madagascar P173932 Madagascar -
Infrastructure
Governance and
Lifeline Connectivity
Program for Results
Does this operation
Region Estimated Appraisal Date Estimated Board Date have an IPF
component?
AFRICA EAST 11-Jan-2021 31-Mar-2021 No
Financing Instrument Borrower(s) Implementing Agency Practice Area (Lead)
Program-for-Results Ministry of Finance Ministry of Energy and Energy & Extractives
Financing Hydrocarbons (MEH),
Ministère des Transports, du
Tourisme et de la
Météorologie, JIRAMA,
Ministère de lâAménagement
du Territoire, de l'Habitat et
des Travaux Publics
Proposed Program Development Objective(s)
Provide more inclusive access to infrastructure services; enhance the financial and fiscal sustainability of infrastructure
service delivery; and improve the environmental sustainability, health and safety in the electricity and transport sectors
in Madagascar
COST & FINANCING
FIN_SRC_TABLE1
SUMMARY (USD Millions)
Government program Cost 400\.00
Total Operation Cost 400\.00
Total Program Cost 400\.00
Total Financing 400\.00
Financing Gap 0\.00
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Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
FINANCING (USD Millions)
Total World Bank Group Financing 400\.00
World Bank Lending 400\.00
Concept Review Decision
The review did authorize the preparation to continue
B\. Introduction and Context
Country Context
A\. Country Context
1\. Development in Madagascar, a low-income country of 26 million people with a gross domestic product (GDP)
of about US$14 billion (2019), was marked by a succession of deep crises and modest recoveries\. Following a prolonged
period of political instability and economic stagnation over the period 2009-13, growth accelerated over the last five years
to reach an estimated 4\.8 percent in 2019, its fastest pace in over a decade\. The return to constitutional order was
instrumental to this economic revival, as it contributed to restore investor confidence, reopen access to key export
markets, reinstate flows of concessional financing, and encourage structural reforms\. Between 2012 â 2019, the
percentage of the population living below the international poverty line of US$1\.90 (2011 purchasing power parity) per
day is estimated to have fallen only slowly, from 77\.6 percent to 74\.5 percent, and remains significantly higher than the
regional average of 41 percent\. According to the Human Capital Index1, a child born in Madagascar today will be 37 percent
as productive when she grows up as she could be if she had enjoyed complete education and full health\. Madagascar is
also highly vulnerable to natural disasters, including cyclones, droughts, and flooding\.
2\. The adverse economic, social, and fiscal impact of the COVID-19 crisis in Madagascar will be very substantial in
2020, calling for renewed attention to poverty reduction and more inclusive growth towards resilient recovery\. Global
trade and travel disruptions associated with the COVID-19 pandemic as well as domestic containment measures are
expected to result in the first recession in Madagascar since the 2009 crisis, with GDP predicted to contract by 1\.2 percent
in 2020\. Assuming successful containment measures, growth would recover to an estimated 4\.0 percent in 2021, leaving
a cumulative effect of the coronavirus outbreak after 2 years of -7\.8ppt of GDP\. Formal employment will be significantly
impacted by contracting activity in tourism and manufacturing sectors, notably textile and apparels, while revenues from
informal jobs in large urban areas affected by lockdowns will be significantly reduced\. In this context, extreme poverty is
predicted to increase in 2020 to 76\.8 percent (US$1\.9/day), undoing three years of consecutive declines\. Vulnerable
populations in urban areas are particularly exposed to economic hardship and poverty traps reflecting strict confinement
measures\.
3\. The countryâs development vision laid out in the National Development Plan (NDP) 2015â2019, is aligned with
the multidimensional approach to development set out in the United Nations (UN) Sustainable Development Goals
1
Madagascar ranks 140 out of 157 economies\.
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Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
(SDGs)\. National reconciliation, reinforcement of democratic institutions, and better management of the economy are the
NDPâs high-level objectives\. The NDP is the Governmentâs medium-term planning tool to progress on the overarching
ambition of the General Policy of the State (Politique Générale de lâEtat) to transform Madagascar into a modern and
prosperous nation, characterized by sound governance, strong and stable growth, and wide access to high-quality public
services\.
4\. Madagascar has limited fiscal space for public investment to meet its development objectives, in part because
its fiscal balance is compromised by subsidies to state-owned enterprises\. Tax revenue, as a share of GDP, has historically
been among the lowest in the world, reaching 10\.5 percent in 2019, still well below the regional average of 18 percent of
GDP\. Strategies for increasing tax revenue have been elaborated and efforts are under way, but progress has been slow
and the COVID-19 crisis will set the domestic resource mobilization agenda several years back\. Furthermore, the
Government still allocates a large share of discretionary spending to: (I) unaffordable and poorly targeted subsidies and
transfers to finance the losses of state-owned Madagascarâs Electricity and Water Utility (Jiro sy Rano Malagasy, JIRAMA)
estimated at 1\.5 percent of GDP in 2019 and (ii) inefficient and short-lived transport network rehabilitation investments
that are not properly followed by maintenance policies\.
5\. The scaling-up of public investment to reinforce connectivity infrastructure is at the core of the governmentâs
development strategy for post-COVID recovery\. Over the past decade, annual public investment averaged 4\.4 percent of
GDP and the quality of overall infrastructure as measured by the Global Competitiveness index is low hovered at 3 (on a
scale of 1 to 7)\. To fill key infrastructure gaps, the authorities aim to increase public investment to 10 percent GDP in 2023,
and infrastructure is at the core of the Governmentâs Plan Emergence Madagascar (PEM; see below for details) as well as
its post-COVID recovery strategy\.
Sectoral (or multi-sectoral) and Institutional Context of the Program
6\. Madagascar urgently needs better infrastructure connectivity in energy and transport to improve peopleâs
access to markets and basic public services\. Madagascarâs challenging topography, mostly characterized by thin coastlines
separated by a rugged high plateau cut by deep gorges and waterfalls, complicates the establishment of regional transport
infrastructure and interconnected power grids\. Only 12 percent of the Malagasy population is connected to the electricity
grid\. Even in the larger economic centers, electricity service quality is poor, severely impairing key export-oriented
industries such as garment manufacturing and seafood processing\. Frequent power outages and oscillating voltage cause
an average Madagascar company losses equivalent to 13\.6 percent of sales per year outside the capital city of
Antananarivo, by far the highest among benchmark countries\.2 Generators offer an alternative to firms that can afford it,
but fuel logistics are costly and prone to shortages\. More generally, limited transport connectivity leads to high costs and
time for trade logistics and only 58 percent of the countryâs population is estimated to live in areas where agricultural
goods can be delivered at affordable transport prices (<US$10 per ton)\.3 The lack of a well-integrated and functional
transport network impedes the efficient movement of people and goods, which depresses domestic demand in secondary
cities, raises prices of essential goods, and limits opportunities to transport perishable agricultural produce and access to
socio economic opportunities\. Poor port access by both road and rail particularly prevents Madagascar from effectively
2Figure from World Bank, âEnterprise Surveys: Madagascar,â? 2013\.
3
The rest of the population is subject to transport costs as high as US$34 per ton, which severely curtails the domestic commerce of goods\. World
Economic Forum 2019\. Global Competitiveness Report 2019\.
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Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
participating in the global markets, while unreliable and expensive international and domestic air flights undermine the
countryâs great potential of tourism\.
7\. The infrastructure connectivity situation is even more dire in rural areas and among poor and vulnerable
population\. Wealth is concentrated in the few urban areas that possess transport links to ports and other cities\. As
distance from the urban areas increases, industries lack the energy they need to operate and the reliable and affordable
transport they need to get products to market\. Rural areas have remained inaccessible and their residents impoverished\.
Private firms, particularly in the mining and tourism sectors, have invested in their own transport and energy systems\.
Today, only 5 percent of the rural population has access to grid-based electricity\. The situation is even worse for the
poorest Malagasies\. Of the households in the bottom income quintile, more than 80% of which live in rural areas, only
one percent has access to electricity\. The lack of electricity is compounded by only 11 percent of the rural population
having access to the road network which leaves an estimated 17 million Malagasies disconnected from both transport and
electricity services\.
8\. Limited connectivity not only reduces peopleâs economic opportunities but also impedes human capital
development particularly in rural areas\. In Madagascar, about 1000 out of 3,200 basic health centers (CSB) have no access
to electricity services and about 900 are disconnected from the road network\. It is already difficult for rural people to visit
local CSB, but the limited availability of medicines and other medical supplies due to the poor road connectivity also
undermines peopleâs healthcare benefits further\. The timely distribution of medical supplies and equipment is often
hindered in rural Madagascar, especially during the rainy season\.4 In the education sector, there are more than 26,000
public schools in Madagascar, out of which less than 3 per cent have access to electricity and about 60 percent are
disconnected from the transport network\. Along with availability of teachers and school materials, rural connectivity is
one constraint to reduce the repetition rate in primary education\.
9\. Poor sector governance and unsustainable sector finances are at the root of the poor state of infrastructure in
Madagascar\. The electricity sector is meant to have an independent, tariff-setting regulator and a commercially operating
utility company, but reality falls far short\. With tariffs far below cost recovery and utility decisions often driven by non-
commercial considerations, JIRAMA has no resources or authority to invest in commercially optimal, long-term
infrastructure\. Ad-hoc, expensive emergency supply contracts with private suppliers have become the ânew normalâ\.5
Government transfers, while significant, fall short of closing the cash flow gap\. Barely able to maintain its existing service
level, investment in access expansion has been deprioritized, leading to a decline in the grid access rate as population
growth outpaced new connections\. System losses are so high that one-third of power produced never reaches the
customer, and due to rampant theft and non-payment, cash is eventually collected for less than half of produced power\.
In the transport sector, the lack of connectivity is due to insufficient public resources for investment and financially
unsustainable arrangements for maintenance, increasing the networkâs vulnerability to extreme climate events and
endangering peopleâs lives\. For instance, about US$250 million would be needed to maintain roads that are currently in
good condition yet the Road Fund (FR) is currently collecting only US$30 million because of a low fuel levy rate and arrears
from oil companies\.
10\. In terms of the fiscal governance of infrastructure, Madagascarâs suffers from poor selection, management, and
implementation of public investments\. The efficiency of public investment management is assessed to be low in
Madagascar6 Main weaknesses include the absence of objective and transparent selection criteria for project, and the lack
4
Iimi and Rajoela\. (2018)\. Transport connectivity, Medical supplies, and people's health care access: evidence from Madagascar\.
Policy Research Working Paper 8488\. World Bank\.
5
Such emergency contracts now provide more than half of JIRAMAâs electricity\.
6
According to the Public Investment Management Assessment conducted in 2019\.
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Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
of information for project assessment, including estimated recurrent cost for operation and maintenance and risk analysis
associated with the execution of each project\. As a result, only 3 out of 10 US dollars committed to public infrastructure
investments are actually spent, and often on poorly selected and executed projects\. Strengthening public investment
management at each step of the process is vital to fill large infrastructure gaps, including the selection of investment
projects based on objective socio-economic criteria, realistic costing estimates and assessment of the governmentâs
present and medium-term financial capacity\. To compensate for the lack of public resources and capacity to deliver public
infrastructure investments, the Government plans to attract private financing through PPP and has started to update the
PPP framework\. Further, the governmentâs capacity to assess, monitor, and manage PPPs and the associated contingent
liabilities is also weak\. To make visible progress with the PPP framework, existing bottlenecks needs to be addressed and
transparency and management of the PPP pipeline improved\.
Figure 1: âInfrastructure Connectivity Challengeâ? - Electricity (left) and Transport Network in Madagascar
Relationship to CAS/CPF
11\. The proposed operation would directly contribute to Focus Area II âPromote Inclusive Growthâ of the World
Bankâs CPF, discussed by the Board of Executive Directors in June 2017\.7 The CPF aims to build on the current relative
7
The CPF was approved by the Board on June 26th, 2017\.
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Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
political stability to help address structural fragilities that hamper sustainable human and economic development in
Madagascar\. The program will support two focus areas of the CPF: (a) increase resilience and reduce fragility and (b)
promote inclusive growth\. Specifically, the operation is directly contributing to two key CPF objectives as follows:
(a) Reducing fiscal transfers on JIRAMA, strengthening Madarailâs governance structure and cost recovery and improving
financial sustainability of the road sector will contribute to objective 5 on increasing fiscal capacity to finance priority
social and infrastructure spending;
(b) Strengthening JIRAMAâs financial position and sector expansion planning will help improve access to energy, as stated
in objective 8, improved access to energy and transport, and is supportive of the Maximizing Financing for
Development approach\.
(c) Establishing a safe, sustainable and resilient intermodal transport system will improve peopleâs transport connectivity
and mobility, which is also consistent with objective 8, improved access to energy and transport\.
Rationale for Bank Engagement and Choice of Financing Instrument
12\. Program-for-Results financing (PforR) was identified as the most relevant instrument to achieve the objectives\.
The choice of the PforR instrument is justified as it will support: (i) the PEMâs investments and reforms to enhance
connectivity as well as financial and environmental sustainability of energy and transport sectors by using and further
strengthening institutional capacity including financial and fiscal management as well as fiduciary and safeguards systems
to enhance program results and sustainability; (ii) achievement of verifiable outcomes and outputs, improved efficiency
and strengthened governance; and (iii) channeling of funds though a rule-based and transparent mechanism\. Other
lending instruments were considered not a good fit for the proposed operation\. Specifically, an Investment Project
Financing (IPF) would not be suitable given the nature of the operation and the expenditure it proposes to support\. For
example, while isolated project-style approaches have, thus far resulted in limited short-term improvements of energy
and transport infrastructure, these typically have limited potential for sustainable connectivity enhancements over the
medium to long run\. A development policy financing would not be appropriate since it would not allow earmarking of
funds, which will be particularly important throughout all stages of PEM implementation to enforce payment discipline
and ensure that no new financial deficits are accumulated in both power and transport sectors\. Thus far, development
policy operations in the energy sector have been useful to alleviate specific crisis situations but have not been able to
lastingly reduce the fiscal burden of the GoM and improve transparency of transfers to JIRAMA, which will be critical for
long term sustainability\.
13\. The proposed PforR builds on a comprehensive dialogue on policy and regulatory reforms enshrined in recent
DPFs and a suite of investment projects\.
For the energy sector, the Fiscal Sustainability and Energy DPO (P166752) supported important reforms to the energy
sector investment framework, including how projects under the PDMC will be developed\. The Energy Sector
Operations and Governance Improvement project (ESOGIP) (P151785), approved in 2016, seeks to improve the
utilityâs commercial, technical, and organizational performance, including through reforms to implement
management information systems and revenue protection programs\. Furthermore, over the past year, the WB has
been in the process of steadily broadening its portfolio in the energy sector to include renewable energy
development: Scaling Solar Madagascar (P166925); and Support to Hydropower IPP Development, (P153220) and
Electricity Access (LEAD, P163870)\. As the success of these new activities will hinge on the improvement of JIRAMAâs
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liquidity and solvency, the proposed operation is considered a cornerstone underpinning the sustainability of the
Bankâs portfolio in the Malagasy power sector\.
For the transport sector, the Government has already set out the series of key policies and plans to enhance
sustainability of transport connectivity, such as Priority Road Investment Plan 2020-23, Road Sector Institutional
Reform Strategy, and Northern Rail Network (Madarail) Revival Plan 2020-24\. Rather than financing specific outputs,
the proposed program will be focused on achieving its outcomes - improved access to sustainability and safe
transport services\.
C\. Program Development Objective(s) (PDO) and PDO Level Results Indicators
Program Development Objective(s)
Provide more inclusive access to infrastructure services; enhance the financial and fiscal sustainability of infrastructure
service delivery; and improve the environmental sustainability, health and safety in the electricity and transport
sectors in Madagascar
PDO Level Results Indicators
14\. The program focuses on three results areas:
(a) Providing more inclusive access to electricity and transport infrastructure;
(b) Enhancing the financial and fiscal sustainability of public delivery of electricity and transport services; and
(c) Improving the environmental sustainability and safety in the electricity and transport sectors\.
15\. The PDO-level indicators will be determined during preparation but could include:
(a) Households, enterprises and public institutions provided with new or improved access to electricity (No);
(b) Cost recovery of electricity service delivery by JIRAMA (%);
(c) MW of newly added renewable energy generation capacity (MW);
(d) Increased Rural Access Index (%)
(e) Rail traffic on Antananarivo and Toamasina (tons)
(f) Increase in road-sector revenue collected by FR (Ar);
(g) Violation of axle load control (% of total traffic on selected corridors);
(h) Number of road traffic fatalities reported in project areas (No);
(i) Resilient roads improved (km);
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(j) Infrastructure projects selected for public financing based on cost-benefit analysis (number);
(k) Extent of contingent liabilities reported in national registry (from none to including PPPs, guarantees and on-
lending to SOEs, financial positions of SOEs)\.
D\. Program Description
PforR Program Boundary
16\. The PforR involves a comprehensive package of interventions for the next five years to improve infrastructure
sector performance and bring it to a sustainable state\. The PforR includes the following components:
17\. Results Area 1: Providing more inclusive access to electricity and transport infrastructure\.
(a) In the electricity sector, the program aims to expand access to electricity for households, enterprises and
public institutions, with a focus on rural and underserved areas\.
(b) In the transport sector, the program aims to provide better road and other transport connectivity for rural
and underserved areas of Madagascar\.
18\. Results Area 2: Enhancing the financial and fiscal sustainability of public delivery of electricity and transport
services\.
(a) In the electricity sector, the program will support the implementation of JIRAMAâs Financial Recovery Plan,
which was prepared with the World Bank support and presented to the GoM in September 2019\. The plan
includes a fiscal roadmap for the GoM and an operational roadmap for JIRAMA with a broad range of
measures to gradually improve the financial health of JIRAMA to become a financially self-sustainable and
creditworthy off-taker\.
(b) In the transport sector, the program will support the improvement of sector governance and enhance
financial sustainability in the sector, specifically by implementing a robust road asset management, including
systematic prioritization of investment, timely maintenance and strengthening axle road control regulations,
and increasing and diversifying road-sector revenues (fuel levy and road user charges)\. Strengthening axle
road regulations will contribute to not only preserving the road assets but also financial sustainability of
Madarai, thereby improving financial sustainability in the transport sector as a whole\.
(c) Cross-cutting, support implementation of improved fiscal planning and budgeting for infrastructure,
enhancement and implementation of the PPP framework including procurement and management of
contingent liabilities\.
19\. Results Area 3: Improving the environmental sustainability and safety in the electricity and transport sectors\.
(a) In the electricity sector, the program will support reforms to facilitate and accelerate the implementation
of PPP reforms for procurement of renewable energy power plants; the implementation of new framework
and tools for generation expansion planning; and the expansion of deployment of solar PV for minigrids\.
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(b) In the transport sector, the program will support the Governmentâs efforts to improve road safety through
assisting the institutional reforms to establish a road safety authority and implement the road safety
strategy\. The program will also support the efforts to building more climate resilience in transport
infrastructure, including design of climate resilient roads, and improving rail operations, which could also
contribute to environmental sustainability and safety in the transport sector, through shifting heavy bulky
freight traffic from roads to rail transport\.
20\. Disbursement Linked Indicators (DLIs)\.
(a) Type of indicators\. The DLIs selected for the Program will involve a mixture of output and outcome level
indicators\. The outputs would involve implementation of financial, governance and policy measures that are
key for ensuring sustainable operation of the electricity and transport sectors\. The outcome indicators would
involve indicators that will measure improved connectivity, financial and fiscal sustainability, and
environmental sustainability and safety\.
(b) Scope of indicators\. Table below summarizes the tentative scope of the DLIs in the three sectors and across
the three results areas\.
21\. Prior results\. Several of outputs designed as DLIs, which are essential for the programâs credibility and
implementation outcomes are expected to be achieved by the appraisal of the Program\. The disbursement linked
results achieved before signing of the Loan Agreement will be eligible for disbursement up to a ceiling of US$ [tbc]
million\.
Table 1: Preliminary scope of DLIs and the PforR Program in the Three Results Areas
# Results Area Global DLIs Electricity Transport Fiscal Governance of
Infrastructure
1 Providing more ⢠n\.a\. New connections as a Better connectivity as a result Progress towards the
inclusive access to result of: of: energy and transport
electricity and ⢠Electrification program ⢠Improved rural accessibility DLIs as a result of:
transport progress (%); ⢠Implementation of
infrastructure ⢠Adoption of new ⢠Increased road the law on public
framework and tools maintenance (km)\. procurement
for electrification
planning;
⢠More affordable
connection charges
through connection
policy and pricing
reforms
2 Enhancing the ⢠Transparency as Improved cost recovery as Improved financial viability of Progress towards the
financial and fiscal a result of a result of: the transport sector as a result energy and transport
sustainability of improved fiscal ⢠Electricity tariff of: DLIs as a result of:
public delivery of budgeting for reforms; ⢠Full operationalization of ⢠Implementation of
electricity and electricity and ⢠Implementation of FR and AR the governmentâs
transport services transport sectors non-tariff measures in ⢠Adoption of increasing fuel PIM strategy for
JIRAMAâs financial levy strategy; 2020-24
recovery plan; and ⢠Strengthening of axle load
⢠Corporate governance control (increasing penalty
reforms at JIRAMA\. rate and increasing
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operational weigh stations)
;
⢠Pilot toll road;
⢠Restructuring of Madarail
ownership;
⢠Legislation of new logistic
park\.
3 Improving the ⢠n\.a\. Development of renewable Safer and more sustainable Progress towards the
environmental energy as a result of: transport service delivery as a energy and transport
sustainability and ⢠Implementation of PPP result of: DLIs as a result of:
safety in the reforms for ⢠Adoption of road safety ⢠Updates to PPP
electricity and procurement of strategy; legal framework
transport sectors renewable energy ⢠Establishment of road and creation of PPP
power plants; safety agency; institutions
⢠Implementation of new ⢠Development of road
framework and tools safety database\.
for renewable ⢠Adoption of climate
generation expansion resilience strategy in
planning; and transport sector;
⢠Expansion of solar PV ⢠Resilient road investment
for minigrids\. (km)\.
Expenditure framework:
(a) In the electricity sector, the expenditure framework will primarily include (i) investments in last-mile
electricity access; (ii) power purchases from private sector suppliers to keep the lights on until tariffs can
cover the full cost of service; (iii) investments in efficiency improvements\. The expenditures under (i) and (iii)
are relatively minor scale constructions/upgrades and therefore will not involve large scale safeguards
impacts or large contracts\. Under (ii), the program will only finance expenditures under contracts that were
procured in line with the public procurement legislation in Madagascar\.
(b) In the transport sector, the expenditure framework will primarily include (i) maintenance and investment
expenditure in the road and rail transport infrastructure; (ii) supporting axle road control operations and
infrastructure; and (iii) investments in climate resilient transport infrastructure and road safety\.
(c) For the fiscal governance of infrastructure, the expenditure framework will include (i) investment in PIM
evaluation tools and training for line ministries; and (ii) Roll-out of a more effective and comprehensive
system to track and evaluate contingent liabilities and associated fiscal risks of the GoM, including for PPPs
and SOEs\.
(d) Expenditures will further include TA for implementation support and capacity building of the key agencies
with significant implementation responsibility under the PforR\. These expenditures may be structured as IPF
component\. This will be determined during preparation\.
22\. Institutional and Implementation Arrangements\. The implementation of the program will be coordinated by a
Program Coordination Unit in the Presidency\. Implementation will be managed by a total of four implementing agencies
including the Ministry of Energy and Hydrocarbons (MEH) and JIRAMA for the electricity sector; the Ministry of Land
Planning and Public Works and the Ministry of Transport, Tourism and Meteorology for the transport sector; and the
Ministry of Finance for the PIM and other cross-cutting areas\.
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23\. Results Monitoring and Evaluation: Different agencies will have a lead role in implementations of the
disbursement linked indicators of the proposed Program\. The implementation oversight unit at the Presidentâs Office (see
below) will have the overall responsibility for monitoring the implementation of program, based on the results framework
that will be agreed as the preparation of the operation progresses\. The implementation oversight unit will collect the
monitoring and evaluation (M&E) information from the lead agencies and provide it to the Word Bank\.
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E\. Initial Environmental and Social Screening
Scope of activities and type of expected associated impacts\. The proposed expenditure framework is focused on
financing the rehabilitation and extension of existing infrastructures to improve access and efficiency in electricity and
transport sectors\. In the electricity sector, the expenditure framework will also cover power purchases from Independent
Power Producers (IPPs)\. Long-term adverse environmental and social impacts in these activities are thus not expected\.
While overall, environmental and social impacts are considered substantial, only the Programâs limited road rehabilitation
activities may entail some minor economic and physical displacements along the ROWs of selected roads, as well as labor
influx, health and safety issues related to civil works including GBV and child labor issues\. The potential environmental
and social risks and impacts will however be site-specific and temporary as limited to the period necessary for the
completion of rehabilitation works\. The PforR instrument is considered suitable to support the governmentâs PEM as,
based on the screening of preliminary expected activities and the preliminary expenditure framework, it does not include
any activities that are typically category A (i\.e\. activities that could have adverse environmental and social impacts that
are large-scale, irreversible, sensitive, diverse, cumulative or precedent setting and may affect an area broader than the
sites or facilities financed by the project)\.
24\. Assessments to be conducted during preparation:
(a) Environmental and social systems assessment\. As part of project preparation, the Bank team will carry out an
Environmental and Social System Assessment (ESSA) for the proposed Program to examine existing
environmental and social management systems within the power and road sector\. The ESSA will be undertaken
to confirm consistency with six core principles outlined in paragraph 9 of the âWorld Bank Policy for Program-
for-Results Financingâ? in order to effectively manage Program risks and promote sustainable development\.
The Assessment will review existing regulations and policies, their legal and practical applicability at the
program level, institutional capacity, and the effectiveness of implementation in practice\. In addition, the ESSA
will assess management capacity with regard to (a) distributional equity, affordability and gender constraints;
(b) consultation processes; (c) risk of creating or exacerbating conflicts\. The findings of the ESSA will be factored
into the overall integrated risk assessment, which will be revised at the appraisal stage\.
(b) Follow-up on ESSA conclusions\. If the ESSA process concludes that present capacity is sufficient to deliver
environmental and social benefits, that there are no significant impacts or risks, or that management capacity
is sufficient to handle impacts or risks that may be involved, there would be no need to devise and agree upon
measures to further strengthen environmental or social management capacity (though the World Bank and
borrower may nonetheless agree to do so as a Program objective)\. If the ESSA process concludes that capacity-
building measures are necessary to strengthen environmental and social performance, or concludes that new
or strengthened measures are necessary to mitigate specific environmental or social impacts associated with
the Program, specific actions would be devised with the borrower and would be provided as an input into the
Program Action Plan, which would be agreed on with the borrower\.
(c) Poverty and social impact assessment\. For the electricity sector, the World Bank team will conduct a Poverty
and Social Impact Assessment (PSIA) in addition to the ESSA, once the tariff trajectory is determined to assess
the impact of planned tariff adjustments on the affected households, particularly the poor and vulnerable
households\. This analysis will inform the discussion of mitigation mechanisms (e\.g\. through social assistance or
tariff), as necessary\.
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25\. Follow-up on PSIA conclusions\. The findings from the PSIA will feed into the appraisal of the supported GoM
Program and will be used to advice the GoM on the design of a tariff trajectory that is consistent with the World Bankâs
twin goals of ending extreme poverty and boosting shared prosperity\.
\.
CONTACT POINT
World Bank
Name : Jan Friedrich Kappen
Designation : Senior Energy Specialist Role : Team Leader(ADM Responsible)
Telephone No : 5339+6042 / Email : jkappen@worldbank\.org
Name : Atsushi Iimi
Designation : Senior Economist Role : Team Leader
Telephone No : 473-4698 Email : aiimi@worldbank\.org
Name : Marc Stocker
Designation : Senior Economist Role : Team Leader
Telephone No : 5339+6008 / Email : mstocker1@worldbank\.org
Borrower/Client/Recipient
Borrower : Ministry of Finance
Contact : Richard J\. RANDIAMANDRATO Title : Minister of Finance
Telephone No : 000261202264680 Email : ministre@mef\.gov\.mg
Implementing Agencies
Implementing Ministry of Energy and Hydrocarbons
Agency : (MEH)
Contact : Christian Ramarolahy Title : Minister of Energy
Telephone No : 00261326666557 Email : cramarolahy@gmail\.com
Implementing Ministère des Transports, du
Agency : Tourisme et de la Météorologie
Contact : Rakotovahiny Jean Luc Title : Secrétaire Général
Telephone No : 0340550509 Email : rakotojl@gmail\.com
Implementing
JIRAMA
Agency :
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Madagascar - Infrastructure Governance and Lifeline Connectivity Program for Results (P173932)
Contact : Vonjy Andriamanga Title : Director General
vonjy\.andriamanga@jirama-
Telephone No : 00261347557255 Email :
mg\.com
Ministère de lâAménagement du
Implementing
Territoire, de l'Habitat et des Travaux
Agency :
Publics
Directeur Général de
Contact : Harimanana Rabe Title :
lâAménagement du Territoire
Telephone No : 0340552234 Email : rabeharim@yahoo\.fr
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
Jul 06, 2020 Page 15 of 15 | APPROVAL |
P112359 | Documentof
The WorldBank
FOROFFICIAL USEONLY
ReportNo: 48132-CN
PROJECTAPPRAISAL DOCUMENT
ON A
PROPOSEDLOAN
INTHEAMOUNT OFUS$300MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR A
NANGUANGRAILWAY PROJECT
May 29,2009
China and Mongolia SustainableDevelopment Unit
SustainableDevelopmentDepartment
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without World
Bankauthorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective 1 February 2009)
Currency Unit = RMB (Chinese Yuan Renminbi)
RMB 1-00 = US$0\.146
US$l\.OO = RMB 6\.85
FISCAL YEAR
January 1 - December31
ABBREVIATIONS AND ACRONYMS
ATP Automatic Train Protection
CQS Consultants' Qualifications
CR China Railways
CTC Centralized Train Control
DA Designated Account
EIA EnvironmentalImpact Assessment
EIRR Economic Internal Rate of Return
EMDP Ethnic Minority Development Plan
EMP EnvironmentalManagement Plan
EMU Electric Multiple Unit
DPs Displaced Persons
FBS Fixed Budget Selection
FCTIC ForeignCapital and Technical Import Center (of MOR)
FIRR Financial Internal Rate o f Return
FM Financial Management
FMS Financial Management Specialist
GDP Gross Domestic Product
GHG GreenhouseGas
HSR High-speedRail
IBRD The International Bank for Reconstruction and Development
ICB International Competitive Bidding
ICR Implementation Completion and ResultsReport
IDA International Development Association
MOR MinistryofRailways
NCB National Competitive Bidding
NDRC National Development and Reform Commission
NPV Net PresentValue
QBS Quality-Based Selection
QCBS Quality- and Cost-based Selection
PCN Project Concept Note
PIC Public InformationCenter
PID Project InformationDocument
RA Regional [Railway] Administration
FOROFFICIAL USE ONLY
RAP ResettlementAction Plan
SEPA State Environmental Protection Agency
SOE Statements o f Expenditure
SOEs State-owned Enterprises
sss Single Source Selection
Note: This document refers to Guangxi Zhuang Autonomous Region as GuangxiProvince
Vice President: Mr\.James W\. Adams, EAPVP
Country Director: Mr\.DavidR\.Dollar, EACCF
Sector Director Mr\.JohnRoome, EASSD
Sector Manager: Mr\.EdeJorge Ijjasz-Vasquez, EASCS
Task Team Leader: Mr\.JohnScales, EASCS
This document has a restricted distribution and may be used by recipients only in the performance o f
their official duties\. Its contents may not be otherwise disclosed without World Bank authorization\.
CHINA
NanGuangRailway Project
CONTENTS
Page
I STRATEGICCONTEXTANDRATIONALE
\. \. 1
A\. Country and sector issues\. 1
B\. Rationale for Bank involvement\. 3
C\. Higherlevel objectives to which the project contributes \. 4
I1 PROJECT DESCRIPTION
\. \. 5
A \. Lendinginstrument\. 5
B\. Project development objective andkey indicators \. 5
C\. Project component \. 5
D\. Lessons learned and reflected inthe project design \. 6
E\. Alternatives considered and reasons for rejection\. 7
I11\. IMPLEMENTATION \. 8
A\. Institutional and implementation arrangements \. 8
B\. Monitoring and evaluation o f outcomeshesults \. 9
C \. Sustainability \. 9
D\. Critical risks andpossible controversial aspects \. 10
\. \.
E \.Loanconditions and covenants \. 15
I V
\. APPRAISAL SUMMARY \. 16
A\. Economic and financial analyses\. 16
B\. Technical \. 18
C \.Fiduciary\. 19
D \. Social \. 19
E\. Environment \. 22
F\. Safeguard policies\. 23
\. \.
G\. Policy Exceptions and Readiness\. 23
Annex 1: Country and Sector or ProgramBackground \. 24
Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies \.32
Annex 3: Results Frameworkand Monitoring \. 33
Annex 4: DetailedProjectDescription \. 35
Annex 5: ProjectCosts\. 40
Annex 6: ImplementationArrangements \. 41
Annex 7: FinancialManagementand DisbursementArrangements \. 43
Annex 8: ProcurementArrangements \. 52
Annex 9: Economic and FinancialAnalysis \. 64
Annex 10: SafeguardPolicy Issues \. 77
Annex 11:ProjectPreparationand Supervision \. 96
Annex 12: Documents in the ProjectFile \. 98
Annex 13: Statementof Loans and Credits \. 99
Annex 14: Country at a Glance \. 103
Annex 15: Map (IBRD No 36827)
\. \. 107
CHINA
NANGUANG RAILWAY PROJECT
PROJECTAPPRAISAL DOCUMENT
EAST ASIA AND PACIFIC
EASCS
Date: May 29,2009 Team Leader: John Carter Scales
Country Director: David R\.Dollar Sectors: Railways (100%)
Sector ManagedDirector: Ede Jorge Ijjasz- Themes: Public expenditure, financial
VasquedJohnRoome management and procurement(P)
Project ID: P112359 Environmental screeningcategory: Full
Assessment
Lending Instrument: Specific Investment Loan
[XI Loan [ 3 Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Total Bank financing (US$m\.): 300\.00
Proposedterms: VSL; the loanwould be payable in25 years including 5 years of grace and
annuity principal repayment at six-month LIBOR for U S Dollar plusvariable spread for
Variable-Rate Single Currencv Loans\.
-
FinancingPlan (US$m)
Source Local Foreign Total
Borrower I 5,685\.00 I 0\.00 I 5,685\.00
International Bank for Reco:nstruction andI 0\.00 I 300\.00 I 300\.00
Development
Total: 5,685\.00 300\.00 5,985\.00
Borrower:
People's Republic of China, representedby Ministry of Finance
China
Responsible Agency:
Ministry of Railways, Foreign Capital & Technical Import Center
10 Fuxing Road
Beijing
China
Tel: 86-10-51841895 Fax: 86-10-51841845
Estimateddisbursements(Bank FY/US$m)
'Y I 09 I 10 I 11 I 12 I 13 I 14 I 15 I I
4nnual I 0\.00 I 15\.00 I, 215\.00 50\.00 70\.00 70\.00 60\.00
hmulative[ 0\.00 I 15\.00 I 50\.00 100\.00 170\.00 240\.00 300\.00
Expected effectiveness date: September 23, 2009
Expected closing date: December 31,2014
Does the project depart from the CAS incontent or other significant respects?
Re$ PAD I\.C\. [ ]Yes [XINO
Does the project require any exceptions from Bankpolicies?
Re$ PAD I K G\. [ ]Yes [XINO
Have these been approved by Bank management? [ ]Yes [XINO
I s approval for any policy exception sought from the Board? [ ]Yes [XINO
Does the project include any critical risks rated "substantial" or "high"?
Re$ PAD III\.E\. []Yes [XINO
Does the project meet the Regional criteria for readinessfor implementation?
Ref: PAD IKG\. [XIYes [ ]No
--- \.- \.-_ - \.-\.
Project development objective Re$ PAD II\.C\., TechnicalAnnex 3
The objective ofthe project is to provide additional transport capacity and reduce transport time
betweenthe less developed western regionof southwest China andthe relatively more
developed Pearl River Delta region\. The project addresses the growing demand for rail
passengerand freight services by providing a much shorter and quicker transport link between
these regions\. The assessmento f the achievement o fthe Project development objective will be
carried out through the measurement o f outcome indicators comprised o f the number of trains
runandrespective travel time\.
Project description [one-sentence summary of each component] Re$ PAD II\.D\., Technical
Annex 4
The project (about 462 km)consists of anelectrifiedmixeduse (passenger and freight) railway
from Litang West Station to New Zhaoqing Station (about 400 km) andNewZhaoqing Station
to Sanyanqiao Station (about 62 km)\. The Bank loanwill finance the procurement o f goods
associatedwith the project including communications, signaling and electrification equipment
andmaintenance vehicles\. Inaddition to the goods financed by the Bank loan, there is related
technical assistance\.
Which safeguardpolicies are triggered, if any? Re$ PAD I K F \. , TechnicalAnnex 10
Environmental Assessment (OP/BP 4\.0l), Habitats (OP/BP 4\.04), Physical Cultural
Natural
Resources(OP/BP 4\.1l), Involuntary Resettlement (OP/BP 4\.11)
Significant, non-standard conditions, if any, for:
Re$ PAD III\.F\.
Boardpresentation: None
Loadcredit effectiveness: None
Covenants applicable to project implementation:
MOR shall monitor, on at least a six month basis, through an independentconsultant compliance
with the implementation o f the RAPs, the RAP Arrangements, and the EMPs\. Inaddition, MOR
shall supplement the RAPs inorder to update the implementationmeasures including for
villages severally affected by the project\.
I\. STRATEGICCONTEXTANDRATIONALE
A\. Countryand sector issues
1\. The railway sector is vital to China, especially to its continued economic growth and
development and its international trade\. Railways also enhance China's ability to extend the
benefits o f its development more widely through society and to people living inremote regions\.
China i s a vast country where people and freight move over long distances\. Aside from specific
inlandwaterway routes, railways provide the most economic means o f transport for a wide range
o f freight and passenger markets\. Incomparison to highways o f similar capacity, railways are
also more energy efficient, environmentally-friendly and consume less land; an increasingly
important consideration\.
2\. For the last 10 to 15 years, the Chinese Government has beenpursuing two key
objectives inthe railway sector\. One i s to reform the industryto become more responsive to the
market economy\. The other i s to achieve an innovative and step change inthe capacity and
quality o f infrastructure and services ina railway network that i s already the busiest, by a wide
margin, ofany inthe world\. Seekingto attain these two goals simultaneously is the most
challenging railway industryagenda currently facing any government\.
3\. Between2000 and2008 traffic onthe China Railways network grew very rapidly\.
Passengertraffic (measured inpassenger-km) grew by 70% and freight (intonne-km) grew by
82%\. Eventhe economic downturn has had comparatively little impact, with passengertraffic in
the first two months o f 2009 up by 10 percent compared to the previous year and freight traffic
down by only 6 percent\. The network has been expanded by 11percent since 2000 but has been
unable to keep pace with traffic demand\. Today, China Railways carries a quarter o fthe world's
rail traffic on 6% o fthe world's track length\. Rail infrastructure utilization (measuredby traffic
unitsper route-km) is aroundthree timesas highas onthe UnitedStates systemand over ten
times that o f the European Union\.
4\. As aresult, muchofthe system, already intensivelyuseda decade ago, now operates
close to or at capacity\. Some traffic on these routes is diverting to transport modes with higher
economic and social costs\. Moreover, with such high levels o futilization there i s little scope for
introducing more specialist, demand-responsive services sought inthe marketeconomy, such as
express freight and container services\. To avoid railway congestion slowing sustainable
economic growth inChina, its railway network and services needto be both increased and
improved\.
5\. In2004, the State Council approvedthe MinistryofRailways' (MOR) `Mid- and Long-
Term Railway Development Plan' (MLTRDP) which set out the investmentrequiredat the rate
o f about US$ 12-15 billionper year through 2020 to keeppace with demand\. This plan was
subsequently revisedand increased (Table l),with an approximate doubling inthe lengtho f new
construction\.
Table 1: MLTRDP and Five-Year Plan Targets (km)
I Double track I 27,000 I 41,400 I 50,000 I 60,000 I
I Electrified I 25,500 I 41,400 I 50,000 I 72,000 I
I Passengerdedicatedlines I 405 I 5,000 I 10,000 I 12,000 I
6\. The massive investmentrequiredimpliesthat structural changes inthe rail industrywill
be neededto ensure the most efficient use of resources\. Inresponseto the strategic goals set by
the national leadership, theNational Development andReform Commission (NDRC) has
determinedthe framework for reform ofthe rail industry,among other industries,and has
detailed the underlying policy principles in"State Development and Reform Commission:
China's Key Reforms in Seven Fields in2004"\. This document sets out three principles that
underpinthe railway reformprocess inChina:
0 separation o f government administration o fthe railways from enterprise management;
0 introductiono f competitionwhere beneficial; and
0 effective industry regulation\.
7\. MOR i s committedto changesthat will enable it to meet the challenge o f functioning ina
marketeconomy, includingcompeting successfully with other modes, and will specify the
actions and timing that are necessaryto implementthe principles established by NDRC\.
8\. External funding i s also neededto complement public sources\. This i s currently being
mobilized through the proceeds o f railway bonds and by usingthe Chinese Social Security Fund
through a trust fund\. In2006 these two sources supplied31% o f the funds used, compared to an
average o f 4% during the preceding five years\. As the reform process makes MOR increasingly
investor-friendly, it is anticipated that more capital from the private sector will be attracted\.
9\. MOR has undertakenmany reforms over the past decade-and-a-half to facilitate
structural and organizational reforms, including the separation o f non-core units,the separation
o fthe accounting o f the passengertransport business, granting concessions to some 100 branch
lines, the establishment o f regulations to permit foreign investment, and the establishment o f
special-purpose subsidiaries\. It has also eliminated an entire layer o f management, the sub-
regional administration, thereby reducing overhead costs and leading to more flexible and
'Xinhua Net Beijing, April 14,2004; report on "Opinion on Implementingthe Guidelinesofthe Decisionofthe
Third PlenarySession ofthe 16" Party CentralCommittee inPushingthe 2004 Economic Reform"\.
2
efficient programming o f locomotives and crews\. All o fthese implementedmeasures, described
inAnnex 1,are important for MOR'Ssector reformandservice enhancementobjectives\.
10\. InNovember 2008, inresponseto agrowing global financial crisis, the Government
announced an economic stimulusplanthat included a huge increase ininfrastructure spending
with anemphasis on railway development\. This emphasishas been deliberately designedto
focus on those sectors inwhich projects will generate significant and continuing long-term
benefits as well as being capable o f rapid implementation\. This will acceleratethe development
plans,increasing the annual investment inrailwaysto US$90billionper year over the two years
o f the stimulusplan\. This project i s one o fthe first projects to be implementedunder this plan\.
B\. Rationalefor Bankinvolvement
11\. The three reformprinciples cited above-separation of policy functions of government
from the management o f enterprises, the introduction o f competition, andthe enhancemento f the
regulatory system-require MOR to continue policy reform inthe upcoming years\. An
implementation program has not yet beenestablished andNDRC has requestedthe Bank's
advice regarding international experience on these issues\. However, NDRC, MOR and the Bank
all recognize that progress inimplementingthe reforms, thoughpartly spurredby the needto
generate new sources o f financing, will be driven by political imperatives largely independento f
the capital investmentprogram\.
12\. The three parties, NDRC, MOR, and the Bank, therefore agreed in2005, to pursue a
railway policy dialogue on a parallel but separate path from the implementationo f individual
investments, including this project\. The Bank's ongoing financial involvement with MOR
sustains a working relationship o f trust with the relevant government agencies, ensuringit a
continuingvital role inthe evolving policy discussions\. Throughout its 15-year history o f
support, the Bankhas been influential inthe physical andpolicy development o f China
Railways\. The Bank's relationship with the Ministry o f Railways remains strong\. This has
allowed the Bankto offer MOR independentpolicy advice based on international experience,
while supporting railway management with specific technical assistanceproducts that have
improved business performance\. As such, the Bank has worked closely with MOR andNDRC
throughjoint workshops andpolicy work to address issues o f nationaltransport strategy,
alternative financing for capital investment, and managing the progressionto greater diversity o f
ownership and operation inthe sector\.
13\. Following State Council approval o f the 11th Five-Year Plan(2006-2010), the annual rate
o f investmentinrailways has increased significantly above the level originally envisaged inthe
MLTDP and in2008 reached a level o f approximately US$45 billion\. Although the Bank
financing for this project contributes to achieving the overall investmenttarget, an equally
important reason for China seeking Bank participationcontinues to be to access technical advice,
especially on the applicationo f appropriate safeguard policies, as well as international practice in
project preparation, procurement and implementation\.
3
14\. The project will support the innovative efforts of ChinaRailwaysto attract newsources
o f financing into rail investmentas proposed by the Bank throughout its policy dialogue\. The
key development inthis project is the use of a project company into which MOR will contribute
equity rather than direct project funding(the company hasnot yet beenincorporated)\. The
company, inconjunctionwith equity from other sources, is then able to obtain debt financing\.
This approach is likely to becomethe predominant model for financingmuch ofthe planned
investmentover the next fifteen years\. The Bank's involvementinthis project maintains the
ability of the Bank to inform and advise China Railways on international experience gained
while pursuing similar policy steps\.
15\. This loanprovides aplatform ofcontinued high-level engagementbetweenthe Bank,
MOR andNDRC, while simultaneously supporting operational development o f the Chinese
railway network through China Railways\. This dual-track approach allows the Bank to speak
with contextual authority, to be received with respect, andto deliver results along bothtracks
that inevitably involve different institutions, different personalities, different skills and a
different pace o f activity\. Giventhe sheer size and the breadth o f the Ministry o f Railways, the
Bank has beenable to leverage its efforts to help improve the way transport i s deliveredto every
province and to the hundredso fmillions o f individuals who rely on the Chinese railway system
for their personal and commercial transport needs\.
C\. Higher levelobjectives to which the project contributes
16\. The Bank's Country Partnership Strategy (2006-2010) contains five "pillars" (priorities)
for the Bank's support o f China's development\. This project directly contributes to three of these
priorities:
0 Pillar 1\. Integrating China into the world economy: This project will substantially
improve the transportation services betweensouthwest China (Guangxi and Yunnan
Province) and the Pearl River Deltaregion and its ports, by reducing the rail distance
betweenNanning and Guangzhou by 250 kmandthroughthe provisionoffast container
services, thereby facilitating export and import o f goods from and to this region\.
Pillar 2\. Reducing poverty, inequality and social exclusion: This project will provide high
quality and relatively lower cost rail transportation services and connectivity to the
inhabitants o fthe relatively poor' provinces o f Guangxi and Yunnanwith the prosperous
Pearl River Delta region\. This would act as a catalyst for faster economic development o f
these provinces and thus helpreduce poverty\.
0 Pillar 3\. Managing resource scarcity and environmental challenges: The project will
enable railways to retain and also attract traffic that would otherwise be carried mainly by
roadtransport, which would consume substantially more landand energyper traffic unit
thanrail\. Moreover, C02 emissions from equivalent roadfreighttransport would be
* Intermso f Gross RegionalProductper capita, Guangxiand Yunnanrank 27 and 29, respectively, out of 31
regionsand provincesinChina\.
4
approximately 400% higher than if it were carried by rail, while emissions from
passengertransport would be nearly double per passengerby motor car and about 300%
more damaging by air transport\.
17\. The project also indirectly contributes to:
0 Pillar 4: Improving public and market institutions: This i s the third Bankproject inthe
railway sector that supports a decentralized and pluralist ownership, with a management
structure that includes significant provincial government participation inthejoint venture
that i s being established to deliver the project\.
11\. PROJECTDESCRIPTION
A\. Lendinginstrument
18\. The proposed lending instrumenti s a Specific InvestmentLoan (SIL)\. The project
involves the construction o f large-scale infrastructure; the loanfunds will be disbursedprimarily
against goods procured mostly through international competitive bidding\. For this purpose a
Specific InvestmentLoan i s the most appropriate lendinginstrument\. The Borrower has selected
a variable-spread US dollar loanwith a five-year grace period and a twenty-fiveyear repayment
term (including the grace period)\.
B\. Projectdevelopment objective and key indicators
19\. The objective o fthe project is to provide additional transport capacity and reduce
transport time between the less developed western regiono f southwest China and the relatively
more developed Pearl River Delta region\.
20\. The assessmento fthe achievement ofthe project development objective will becarried
out through the measurement o f outcome indicators consisting o f the numbero f trains runand
respective travel time\.
C\. Projectcomponent
21\. The project achieves its development objective by connecting the existing railway
network inthe westernregion o f southwest China and the existing railway network inthe Pearl
RiverDelta region\. It will also connect to numerous network improvements underway or
planned which will directly contribute to optimizing the benefits to rail transport provided by this
project\. The construction beingundertaken directly by the project consists o f about 400 kmo f
double track electrifiedmixed use (passenger and freight) railway from LitangWest Station to
New Zhaoqing Station; inaddition, the project will finance halfthe cost ofthe 62 kmfour-track
railway being constructed betweenNew Zhaoqing Station and Sanyanqiao Station by the
GuiGuangRailway project (following construction and once the companies are incorporated, it
i s understood that, the two tracks financed by the NanGuang project will be formally transferred
5
to the NanGuang company but will be maintained and controlledby the GuiGuangcompany for
a yet to be determinedfee)\. At the western endthe project connects to the existing rail network
o f southwest China near the city o f Guigang and again further west near the city o f Litang
(roughly 95 kmnortheast o fNanning), and then connects with the plannedLiuNan Dedicated
PassengerRailway project (Liuzhou to Nanning) at the Litang West station (just west o f the city
o f Litang)\. At the eastern end the project connectsto the existing railway network o f the Pearl
River delta at Sanyanqiao Station\.
22\. The Bank loanwill finance the procurement o f goods including communications,
signaling and electrification equipmentand maintenance vehicles\. Inaddition to the goods
financed by the Bank loan, there i s related technical assistance\. The scope o fthe technical
assistance(consultant services', training, and study tours) (ifany) will be identifiedduring
implementation\.
23\. The proposed project alignment is relatively direct connecting urbancenters such as
Litang, Guigang, Wuzhou and Zhaoqing\. The project passes through generally lightly-populated
country and traverses a variety o fterrains including flat alluvial terraces and eroded basins and
hilly river valley basins\.
24\. Although the track will be laid to technical standards that permit speeds o f up to 250
km/h,passengertrains will operate at a maximum speed of200 kmhand freight trains at a
maximum speed o f 120kmih\. Inorder to accommodate the design speed, it will have a
relatively straight alignment\. The project includes many bridges (approximately 33% o fthe
length) and tunnels (approximately 20% o fthe length)\.
25\. Sixteen intermediate railway stations and four overtaking stations are planned to be built
or reconstructed as part o f the project\. The new track o f the project will runparallel to the
existing track between Litang and Guigang (about 59 km)\.BetweenLitang and Guigang, freight
trains will operate on the existingtrack while the passengertrains will use the new project track\.
Power will be provided from the nearby city gridto the "traction substation" (i\.e\. transformer
house) inthe railway station under an electricity purchase contract and by the local power
company\. There will be connection lines betweenthe traction substation and the city grid\. These
lines are parts o f the city grid and not separate dedicated electric transmission lines for the
project\.
26\. The plannedconstruction period i s about 4 years\. Construction commenced inApril
2009 and the project i s proposed to be commissioned by 2014\. At the time o f appraisal, mid-
April 2009, landacquisitionhadbegun, though resettlement and construction hadnot\.
Nonetheless, construction, once begun, i s expected to proceed rapidly\.
D\. Lessons learned and reflected inthe project design
27\. Valuable lessons drawn by the client and the Bank from preparing and implementingpast
railway projects have beentaken into account inthe preparation o fthis project\. First, a project
should not include components to which the client i s not fully committed\. This can leadto the
6
restructuring o fthe project, as was the case with Railways VII\. Since Railways VII, and
includingthe NanGuangRailway, projects have had strong client ownership and support\. As a
result those projects since completed have exhibited successful implementationand achievement
o f the development objective\.
28\. Second, includingtoo many components ina project (as was the case inRailways VI and
VII) negatively affects implementation, becauseboththe client andthe Bankhave limited
resourcesfor effective supervision and implementation\. This i s particularly true when the size
and urgency o f one component greatly overshadows other components\. As such this project was
designed as a single component consisting ofthe construction ofthe NanGuang Railway\.
29\. Third, when designingandimplementingproject components, the project management
office, MOR staff inBeijing, railway staff inthe regional administrations, and the relevant
provincial and regional authorities needto work with each other closely to implementthe project
efficiently\. Inorder to ensure such cooperation, relevant stakeholders were includedinthe
discussions duringproject preparation\. Further, all stakeholders will be requiredto participate in
the project launch workshop\.
30\. Fourth, client commitment to the Bank's safeguard guidelines and procedures i s essential\.
Problems arose with regard to resettlement and environmental issues inRailways VI, VII, the
SecondNational Railways, and the ThirdNational Railways projects\. However, the Chinese
Government has since become more sensitive to environmental and resettlement issues and
domestic safeguards are now converging to the standards requiredby the international financial
institutions\. Beginning with the ShiZhengRailway project, followed by the GuiGuang Railway
Project and continuing with this project, the Ministryo f Railways plansto form project
companies with provinces to helpfinance and implement railway projects\. Inanticipation o fthe
formation o fthe project company, MOR established a group, the Preparatory Group o fthe
NanGuang Railway Company which will participate inthe project implementation\. This has
increased the provincial accountability (provinces finance, inpart or fully, resettlement and land
acquisition) for the appropriate application of social and resettlement practices\.
3 1\. Fifth,the progress of ChinaRailwaystowards improving businessprocessesandpolicy
reform has been steady and nearlyalways ina direction that the Bank supports\. (See Annex 1 for
details)\. The Bank's support inimproving the management o f China Railways and its business
processeshas beeneffective and is being continued\. However, it i s being done ina manner that
separatespolicy and strategy support from project delivery, thereby avoiding national policy
conditions embedded inproject design as was the case with the National Railways project\.
E\. Alternativesconsidered and reasonsfor rejection
32\. The total lengtho frailway constructed under this project is approximately 400 km
(Litang West to New Zhaoqing)\. The proposed alignment is relatively direct betweenLitang
West (located at the intersection with the proposed LiuNanPassenger Dedicated Railway) and
New Zhaoqing (located at the intersection with the proposed GuiGuang Railway project) and
touches major urbancenters such as Litang, Guigang, Wuzhou and Zhaoqing\. Several
7
alternatives were considered, with the final choice basedon multiplecriteriathat included
connections with existing rail network, minimizing cost and land acquisitionhesettlement and
environmental degradation, as well as connecting potential areas o f economic development\.
Furtherefforts were madeto avoid forest reserves, places with cultural relics, scenic andhistoric
spots, and areas o f poor geology\. The design institutes consulted urbanplanningdevelopment
officials o fthe various cities inselecting sites for proposed railway stations and railway
facilities\.
111\. IMPLEMENTATION
A\. Institutionaland implementationarrangements
33\. This project, andthe previous two Bank-financed projects, the ShiZhengRailway project
andthe GuiGuang Railway project, differ from previous Bank-financed railway projects in
China inthat a project company will be formed and MOR will transfer the assets created by the
project to the project company\. Much o f the nature o f the eventual project company i s yet to be
decided, including how the assets will be transferred, who will own the rolling stock and how it
will be operated andthe interfaces managed\. Itis expected that the controlling share (70%) of
the company, the NanGuangRailway Company Limited,will beheld, through aninvestment
arm, by the two R A s through whose territory the project passes\. The second largest shareholder
(24%), through a provincial investmentarm, i s Guangxi Province with Guangdong Province
holding 6%\. Prior to the transfer, which i s expected to occur after the loan closes, the Bank will
complete a financial and legal due diligence on the transfer o fthe Bank-financed assets\. The
Bankwill seek appropriate agreementswiththe Borrower, MOR andtheNanGuangRailway
Company, as the case may be, before consenting to the transfer\.
34\. Inanticipation of the formation ofthe project company, MOR established a group, the
Preparatory Group of the NanGuang Railway Company\. The group consists o f staff appointed
from within MOR (and who it is expected will transfer to the company when it i s created) and i s
tasked with general responsibility for the implementationo fthe project, including coordinating
withthe local government entities responsible for resettlement andlandacquisition\. As with
past Bank-financed railway projects in China, the central Ministry o f Railways, through their
ForeignCapital and Technical Import Center (FCTIC), will be responsible for the financial
management o fthe loan and Bank-financed procurement\. FCTIC will also continue as the
Bank's direct counterpart inthe administration andmanagement o fthe loan\.
35\. MOR has long and extensive experience o f supervising complex and largerailway
projects\. Examples are the successful upgrading o f the Wuhan-Guangzhou and Hangzhou-
Zhuzhou lines, both o f which were o f similar length as the NanGuangrailway, but which had the
additional complexity o f beingupgraded under traffic\. FCTIC would furnishimplementation
progress reports every halfyear along with action plans to remedy issues that arise inproject
implementation\. The Bank will also supervise this project closely through halfyearly supervision
missions\.
8
36\. The eight civilworks contracts comprising the LitangWest to Zhaoqing portion ofthe
project andthe four related construction supervision contracts were signed on February 13,2009\.
At the time ofthe appraisal ofthe project, landacquisition hadbegunand resettlement and
Construction were expected to commence shortly thereafter\. As this project i s part o f the
Government's economic stimulusplan, construction i s expected to proceed rapidly\. Though the
procurement o fthe Bank-financed goods and equipmentwill not commence for at least a year
(the Bankdoes not finance civil works), the Bank'stask team has begun, and will continue, early
supervision activities together with FCTIC to ensure that implementationproceeds inaccordance
with agreementsreachedduringproject preparation\.
B\. Monitoring and evaluation of outcomes/results
37\. The project, inorder to achieve the development objective, will seek to provide the
requirednumber oftrain paths to meet growing freightandpassenger market demand inthe
proposed railway corridor betweenthe western region o f southwest China and the Pearl River
Delta region, while substantially improving the level o f service offered to customers\. These
outcomes and results are only measureable after the completion and commissioning o f the
project\. The following performance indicators will be monitored\.
0 average number o fpairs o f express passengertrains o f a maximum speed o f 200 km/h
operated per day betweenSanyanqiao and Litang West;
0 average number o fpairs o f freight trains operated per day between Sanyanqiao and
Guigang; and
0 average travel time o f express passengertrains having a maximum speed o f 200 km/h
betweenSanyanqiao and Litang West\.
38\. MORcollects sufficient datato allow satisfactory reportingandmonitoring o fthe
outcomes and results o f the project (see Annex 3)\. The eventual project company will also be
askedto collect relevantdata that will enable monitoring o f the above indicators\.
C\. Sustainability
39\. Sustainability intransport systems has financial, economic, operational, environmental
and social dimensions\.
40\. Infinancial terms, the project will be sustainableifthetransport services it facilitates are
able to earn a positive contribution above long-run marginal costs; ifso, they will make a
positive financial contribution to the railway's financial performance andnot be an increasing
financial drain that could threaten its survival\. The financial analysis indicates that the project
has a financial rate o f returno f 3 per cent\. While this is a relatively low rate, the project i s cash-
positive from the start o f operations, with revenues three times greater than the cost o f operating
the trains and maintainingthe infrastructure, andthere is therefore little riskthat, after services
have beenimplemented, China will not be able to afford to maintain them\.
9
41\. The project has a positive Economic InternalRate o f Return(EIRR) (13 %) and its
economic sustainability will be strengthenedover time becausethe unit values o fthe main non-
financial benefits o f the project: passenger time savings, value o f accident-cost savings andthe
value o f reduced greenhouse gas emissions, are all expected to increase inthe future\. Thus the
surplus ofeconomic benefitover purefinancial benefitwill tendto widen, increasing economic
sustainability\.
42\. There are no obvious threats to operational sustainability\. The technical requirementsfor
maintaining medium-speed train services are well known and the project will be using
established technologies\. Similar train systems have been operated and maintained at very high
levels o f reliability and safety inJapan, Germany, Italy, UK and France for many years and,
since April 2007, over some 8,000 kminChina itself\. Inall these countries there has beenno
degradation o f service over time and there is no reasonto expect that China will not be able to
sustain the services\.
43\. This railway project will contribute to greater environmental sustainability o f China's
transportation systems as a whole because it will be (a) more energy efficient and (b) generate
lower greenhouse gas emissions thanthe current routing or the alternatives o froad or air
transport that would be usedifthe additional capacity were not provided\.
44\. The social sustainability ofthe project will dependmainly onthe affordability o fthe
services it offers\. To gauge this, the Ministry o f Railways has carried out detailed passenger
attitude surveys\. These have established a strong willingness to pay a surcharge o f 50% on high-
speed services compared to conventional rail\. Inaddition, even with higher fares on the new
services, the cost to most passengerswill be less becauseo f the substantial distance savings and
the overall impact ofthe project will beto encouragemore rather thanless passengersto rail\.
Inter-city railway services inChina are usedby a very wide range o f the population: more so
than either private cars or airlines, which tendto serve higher income groups\. To this extent the
impact o f railway improvements tends to be more equitable, and so more socially sustainable\.
D\. Critical risks and possible controversial aspects
45\. The Bank's experience inthe transport sector in China ingeneral i s satisfactory and in
the Railway sub-sector hasbeenvery satisfactory\. The Bank team benefits from the
participationo f international advisors inrailways engineering and management, and economic
and financial evaluation\. As a result, the Bank's ability to satisfactorily deliver this project is
strong\. Basedupon the lessons learned from the prior Bank-financed railway projects, the macro-
economic, financial, policy-relatedand political risks o fthis project not meeting its development
objectives are low to moderate\. The expected project risks andproposed mitigation measures are
discussedinthe following table\.
10
Risk Descriptionof risk Ratinga Mitigation measures FatingaOJ
factors of risk residual
risk
Tech- Estimated traflc demand will S The forecast 2020 traffic under L
nical I not be met -The success o f conservative assumptions is 12
design the project, as with most million passengers and 16 million
transport projects, is tones generally confirming the
dependent in large part on the conclusions reached by the design
achievement o f estimated institutes\. The current economic
traffic demand necessary to downturn is not expected to have an
provide sufficient benefits adverse affect on these 2020
that offset the costs\. Risks projections\.
exist in meeting these
demands on all projects and
particularly on green-field
projects such as this where
existingtraffic does not exist\.
Imple- Implementing capacity of the M This will bethe Bank's thirteenth L
men- Ministry of Railways (MOR) loan to the Ministryo f Railways and
tation and its implementing agency, one o f five concurrent projects and
capa- Foreign Capital Technology most o fthe Bank team has been
city and Import Center (FCTIC)- working with FCTIC for years\. The
sustaina MOR is organized along capacity o f FCTIC is well known and
bility strong functional lines respected\. Inaddition, two recent
including finance, operations (Sept\. 2008) IEGICR reviews for the
and planning\. FCTIC exists last two completed China Railways
outside these hnctional projects ratedthe Borrower's
departments as an office that performance as highly satisfactory\.
reports directly to the Vice
Minister\. While the linkto
the Vice Minister is
beneficial, beingoutside o f
the departmental
organizational structure
means it is at times difficult
to access information
important for project
appraisal or to deliver
meaningful technical
assistance\.
Specialpurpose company - S No loan repayment responsibilities M
The ultimate function o fthe will be held bythe NanGuang
NanGuang Company and Railway Company, once
when it will be incorporated incorporated, or the NanGuang
is unclear\. Railway Company preparation group\.
The Bank will seek appropriate
agreements with the Borrower, MOR
11
Risk Description of risk Ratinga Mitigation measures fatingaOJ
factors of risk residual
risk
andthe NanGuangRailway
Company, as the case may be, before
consentingto the transfer of project
assets\.
Sustainability of the Project Thetask team's initial estimate ofthe Project
investment -There i s a risk S EIRR is 13% (includingregional L
that the relativelyhighcost Network economic benefits)with a payback Network
of the projectwill not be L periodof 10years andan FIRRof L
economically andfinancially around4%\. We consider these to be
sustainable\. At the same conservativeestimates\. The Bank's
time the project will havea task team continually evaluatesChina
large development impact as Railways network andpolicy
the line will connect roughly development andtherefore wouldbe
90 million people living in aware of any changes inthe ability of
GuangxiandYunnan MORto ensure sustainabilityof the
provinces to the richcoastal investment\.
regionby greatly reducing
the costs andtime of moving
goods andpeople\. There is
little or norisk to the
sustainability of China
Railways basedon the
importanceto the National
Government for rail inthe
social andeconomic
development ofthe country\.
Financi Financial Management to be M To mitigatethese risks, the Bank loan L
a1 carried out by a new proceedswill be exclusivelymanaged
manage company -There is a chance by FCTIC\.Additionally, FCTICwill
ment that the projectwill be closely monitorthe project
locally implementedby a implementationandprovide
newly incorporatedcompany\. guidance\. Additionally, FMmanual
When and ifthis occurs, most andtrainingworkshop will equip the
o f the staffwill be assigned projectfinancial staffwith necessary
from local railwaybureausor financialmanagementand
hiredfrom the local market\. disbursementknowledge\. Inaddition,
They may not haveprior as stated above, the Bank will seek
WorldBank project appropriate agreements with the
experience\. Borrower, MOR and the NanGuang
RailwayCompany, as the case may
be, before consentingto the transfer
of project assets\.
Procure The project company may M Procurementwill be mostly carried M
ment lack requiredexpertise in out by (FCTIC) of MORwith
procurementmanagement\. assistance by a tenderingcompany
Privateshareholders andthe andthe design institutes\. This
12
Descriptionof risk Ratinga Mitigation measures ratinga9
of risk residual
risk
size o f the project could process has been employed on all
produce potential conflicts o f Bank financed railway projects in
interest and substantial risks China and measureswould be taken
inprocuringthe civil works to identify and eliminate potential
and goods\. conflict o f interest\. The Bank will
finance only goods similar to several
other on-going Bank-financed railway
projects inChina\. Inaddition, an
assessmento fthe capacity o f FCTIC
to implement procurement actions has
been carried out includingreviewing
the organizational arrangements and
plans\.
Social and Environmental S M
Risk
Environmental protection is central to
Environmental risk - In the Ministry o f Railways' strategy for
general, the NanGuangLine the planning, design, and construction
i s a moderate risk project in o f this project\. As such,
terms o f potential unprecedented funds and resources
environmental impacts\. The will be made available to reduce the
project runs along a well environmental (and land acquisition,
developed corridor, parallel resettlement, and indigenous peoples)
to a major river\. Urban areas impacts and mitigate associated risks\.
and agricultural areas are A conservative estimate is that
prevalent throughout the US$500 million incosts can be
entire corridor\. As such, the associated with environmental (and
area o f the project presents land acquisition) mitigation mainly
moderate sensitivity from an through more expensive alignment
ecological perspective\. A selection and the extensive use o f
number o f environmental tunnels and bridges\. Three primary
sensitive areas (Nature measures, which are proved best
Reserve, Forest Part, practices in previous Bank-financed
Tourism Area, Cultural railway projects in China, have been
Relics, etc\.) have been undertaken by MOR to mitigate the
identified\. Most sensitive environmental risk\.
areas were either avoided (1) Avoidance: Diligent use o f
through proper alignment alternative analysis is the most
selection or will be crossed important mitigation measures to be
by tunnel or tunnel-bridge- employed on this project leading to
tunnel systems which will the avoidance o fpotentially
minimize negative impacts environmentally sensitive areas
caused by the project\. A greatly minimizing potential adverse
limited karstic erosion plain environmental impact\.
will be crossed towards the (2) Sound Engineering: The project
west end o fthe line, with has been designed with state-of-the
little or no significant
\. \. \. \. \. art engineering digital mapping and
\.,\.
13
Risk Descriptionof risk Ratinga Mitigation measures fatingaOJ
factors of risk residual
risk
ecological value and absence designprograms\. Usingtunnel-
o f caves\. The corridor has a bridge-tunnel schemes will avoid or
good road network which greatly limit the impact to most o f the
will help reducethe need for sensitive environmental locations\.
new accessroads to extent Close to 52% o f the line comprise
feasible\. The large tunnels and bridges\.
percentage o f tunnels on the (3) Comprehensive Mitigation plans:
line, and the reduced need for detailed environmental design plans
embankments, will create (green corridors and landscaping) and
large amounts o f excess environmental management plans
excavation materials\. The have been prepared in order to
management o f disposal sites minimize unavoidable impacts from
will need careful the project\. The environmental
considerations\. There seems management plans adequately address
to be no sites o f historical construction impacts such as spoil
and cultural importance sites, borrow sites, soil erosion,
along the alignment\. access roads, dust, and noise and
However, chance finding operation impacts such as vibration
procedures will be necessary\. and waste management\.
\.
Resettlement and Land As with environmental mitigation
Acquisition - This is a green (see above), the planned
field project and the Project establishment o f project companies,
will require acquisition o f joint ventures betweenthe Ministryo f
land and structures\. The Railways and the project provinces,
implementation o f land has a shared incentive to reduce
acquisition and resettlement resettlement and land acquisition
on past Bank-financed impact through avoidance, sound
railway projects has been engineering, and comprehensive
satisfactory though at times mitigation measures\. Besides, the
difficult to monitor due to the current political and macro
detached institutional environment in China focusing on
arrangement where MOR is rural development and farmers'
responsible for construction livelihoods will gear up better
where local governments are attention and improve the RAP
responsible for resettlement implementation environment\.
and land acquisition\. The
Bank though has inthe past,
with the support o f MOR,
been able to reconcile these
differences through dialogue\.
[Asocial screening has
:oncluded that there are no
minority groups present in
:he project areas\.)
14
Risk Descriptionof risk Ratinga Mitigation measures Ratingaof
factors of risk residual
risk
IV\. Overall Risk (includingReputational Risks) M
3\. Other governance and corruption indicators
a Ratingof risks on a four-point scale-H=High, S=Substantial, M=Moderate, L=Low -accordingto the
Ilikelihood of occurrence and magnitudeof potentialadverse impact\.
E\. Loanconditions and covenants
Conditions:
46\. None\.
Covenants:
47\. The Borrower shall cause MOR and through itthe project provinces to implementtheir
respective obligations under the RAPs, the RAP Arrangements, and the EMP ina manner
satisfactory to the Bank and monitor and report on at least a six month basis the implementation
o f the RAPs, the RAP Arrangements, and the EMPs through an independentconsultant\. In
addition, MOR shall supplement the RAPs inorder to update the implementationmeasures
including for villages severally affected by the project\.
48\. The Borrower shall cause MORto engage andretainanindependentprocurement agent,
construct the NanGuangRailway project through the Preparation Group inaccordance with
appropriate technical standards, ensure that the NanGuangRailway project i s commissioned for
operation no later than June 30,2014 and thereafter take all necessary measuresto ensure that it
i s operated and maintained in a financially and administratively viable manner, and maintain the
NanGuang Railway Preparation Group and FCTIC\. The Borrower shall also cause MOR and the
project provinces to maintain records and take all necessary actions to facilitate project
implementation\.
49\. MOR shall:
0 provide Project Reports covering the period o f one calendar semester, and shall be
furnished to the Bank not later than forty-five (45) days after the end o f the period,
including interimun-audited financial reports for the Project covering the semester;
prepare a report on the execution ofthe Project not later thanJune 30,2015; and
have its project consolidated financial statements audited coveringthe period o f one (1)
fiscal year o f the Borrower and shall furnish to the Bank the audit not later than six (6)
months after the end o f such period\.
15
IV\. APPRAISAL SUMMARY
A\. Economic and financial analyses
Economic Evaluation
Economic (Cost Benefit) Evaluation
ERR= 13%
NPV (30-year period discounted to 2014, 12% discount rate) = RMB 8 billion (US$1\.2 billion)
50\. The NanGuangRailway project is anew connectionproviding substantial savings in
distance and time for traffic betweencentral Guangxiand Yunnan, and the Pearl River Delta\. It
also provides east-west rail links for the first time betweenmajor centers along the Pearl River
and Guangzhou\. The existingroute is a congested substandardnon-electrifiedsingle-track line
which, evenwith the additional capacity plannedinthe east-west corridor, will remainbusy with
growth forecast to continue at around 3-4% p\.a\. for the nexttwenty years\.
5 1\. In2007 around 6 milliontons offreight and 3 millionpassengerstraveled between
Guangzhou and south-west China on routes that would be diverted to the new corridor\.
Assuming additional capacity could be made available on the existinglines, these volumes are
forecast to increaseby 2015 to 10 million tonnes of freight and 5 millionpassengersand, by
2030, 15 milliontonnes o f freight and 9 millionpassengers\.These volumes will place a severe
strain on the existing andplannedroutes within the corridor\.
52\. As elsewhere inChina, rail is also experiencing growing competition from both air and
roadtransport within the corridor\. The government requires that passenger services improve
their quality\. This will allow long-term transport strategy to enhance the role ofrail\. This will not
only benefitthe railway as a business, but also the country, by encouraging the use o f the more
economically and environmentally efficient rail\. Inthis project, approximately 40% o f the
forecast rail patronage on the newrailway i s expected to either transfer from other modes or to \.
be generated\.
53\. The project aims to deliver three strategic benefits:
0 significantly improving the capacity and the level o f service for bothpassenger and
freight traffic, inparticular through offering major travel time savings;
0 freeing up capacity on the existing network to allow it to handle the projected increase in
freighttraffic, which would otherwise travel by road, or not at all; and
0 improving (inconjunction with the adjacent Nanning-Kunming improvement project) the
accessibility o ftwo o f the poorest provinces inChina to the economically developed
Pearl River Delta, thus creating wider economic benefits (these are technically known as
`agglomeration' benefits and are discussed indetail inAnnex 9)\.
54\. Following construction o fthe project and related projects, the capacity o fthe corridor
will be sufficient for at least the next 30 years\.
16
55\. The estimatedNPV, calculated over a 30-year period from project completionwith a
12% discount rate, is about RMB 8 billion in2007 prices (discounted to 2014) and the project
has an EIRR o f 13%\. This EIRR i s slightly higher than the Ministryo f Railways' estimate o f
11%\. This i s partly becauseo f differences inmethodology and some parameters, includingthe
inclusion o f the external and environmental benefits (such as road congestion and reduction in
greenhouse gases)\. However, the evaluation also includes agglomeration benefits, which reflect
the benefitsto the Guangxieconomy (principally to the centers along the Pearl Riverwhich
currently have relatively poor access to Guangzhou) from the improved accessibility\. Excluding
these benefits from the evaluation still gives an EIRRo f 9%\.
56\. The project is robust against a wide range of sensitivitytests, with most tests, such as
excluding the benefits attributed to additional traffic, reducing traffic growth rates by one-half,
and increasing investmentcost by 50% still giving an EIRRo f 10% or better\. Counting only rail
operating cost savings and passenger time savings on the base traffic (i\.e\. excluding any benefits
attributable to additional traffic as well as external, environmental and agglomeration benefits)
provides an EIRRo f 6%\.
Financial evaluation
FIRR=3%
57\. Fares will be increased to reflect the higher level o f service once the project is completed\.
This will enable parto fthe users' surplus to be captured bythe railway enterprise\. The current
tariffs for passengertraffic on the existingnetwork range from RMB 0\.12-0\.16 per passenger-
kmfor seats and about double for sleeping berths\.Roadtariffs inthis regionare typically RMB
0\.30-0\.35/ per passenger-km and air tariffs are RMB 0\.88/per passenger-km\. The financial
evaluation assumesthat average yields increase over time from their current level to RMB 0\.30/
per passenger-km by 2020 and thenremainconstant\. Although this is a significant increaseon
current tariffs, it i s still considerably cheaper thanbus or air fares and cheaper for most
passengersthan the aggregate cost by the existingroute, whilst providing a much superior level
o f service and frequency\. By the time the service i s introduced, incomes will be about 40%
greater than today and willingness-to-pay surveys have shown that, eventoday, a majority o f
passengersare prepared to pay the higher price for the improved service\.
58\. Freighttariffs currently average RMB 0\.09Ynet ton-km\. However, much of the traffic on
this railway will behigher value containerized freight, for which the tariff is significantly higher
at RMB 0\.14-0\.2O/net ton-km, compared to RMB 0\.40-0\.60/net ton-km by road\.
59\. Based on these tariffs, the FIRRi s 3%, significantly lower thanthe EIRR\. However, the
project is cash-positive from the start o f operations, with revenuebeing 60 percent greater than
the long-term working expense(i\.e\. excludinginfrastructure depreciation and debt service) and
the difference betweenthe FIRRandEIRRunderscores the strong long-term development
emphasis o f the project\.
17
B\. Technical
60\. The proposed alignment traverses avariety o fterrain includingflat alluvial terraces and
eroded basins and hilly river valley basins\. Inorder to accommodate the designspeed, it will
have a relatively straight alignment with large radius curves o f 3,500m or more\. According to
the project feasibility report (August 2008), around 33% of the project will be on bridges and
viaducts and 20% intunnel\. The track will be laid to technical standards that permit speed up to
250 km/h\. The structure gauge will meet the requirementso f transportation o f double-stack
container trains\.
61\. Seismicity inareas along the proposed alignment i s generally low\. Anti-earthquake
engineeringmeasures as per the Code for the Seismic Designof Railway Engineering will be
adopted for construction o f sub-grade, bridges, culverts and buildingsinareasthat have dynamic
peak acceleration of over 0\.1g\.
62\. The project will provide electric traction (25 kV single phaseAC)\. Expresstrains with a
maximum speed o f 200 km/h will be operated with Electrical MultipleUnits (EMU)while
slower passengerand freight trains will be hauled by electric locomotives\.
63\. Ballasted track laid on Type I11concrete sleeper will be usedexcept intunnels over six
kminlengthwhere ballastless track would be employed\. Tractiontransformer sub-stations will
be installed and shall have capacity ranging from 40 to 75 MVA\. Traction substations will
supply traction power at 27\.5kV\. Single phase transformers and 100% standby will be adopted\.
64\. Automatic signaling will be used\. An intelligent centralized train control systemto
provide automatic operating command will be provided together with a Centralized Train
Control (CTC) dispatching system\. A four-aspect automatic block system with cab signaling and
a train over-speed protectionsystem will be provided as well as trackside signals\. A new
communication system will be installedfor this project with optical fiber cables laid on either
side o f the track\. A GSM-Rdigital mobile communication system will be adopted for radio
communication\.
65\. The alignment will be fenced to keeppeople offthe track while bridgesto carry roads
over or under the track will be providedto avoid level crossings\. A number o f underpasseswill
beprovidedto allow movement o fpeople and animals across the railway right-of-way\. Infrared
hot box detectors will be installed to maximize safety and automatic train identification
equipmentinstalled at selectedstations\. Several measures will be adopted for energy
conservation\.
18
C\. Fiduciary
FinancialManagement
66\. Based on guidelines issuedby the Financial Management Sector Board on November 3,
2005, the financial management assessmenthas concluded that the project meets minimumBank
financial management requirements,as stipulated inOP/BP 10\.02\. Inthe FMS' opinion, the
Foreign Capital and Technology Import Center (FCTIC) o fthe Ministryo f Railways (MOR) and
related local railway administrations will maintainfinancial management arrangementsthat are
acceptable to the Bank and that, as part o f the overall arrangementsthat the borrower has inplace
for implementingthe operation, provide reasonableassurance that the proceeds o fthe loan are
usedfor the purposes for which the loanwas granted\. Financialmanagement risk is definedas
the riskthat the World Bankloanproceedswill not beusedfor the purposes intendedandis a
combination o f country, sector and project specific risk factors\. Taking into account the risk
mitigation measuresproposed under the project, a "low" FMrisk rating was assignedto the
project at the appraisal stage\.
67\. Funding sources for the project include Bank loan and counterpart funds\. The Bank loan
proceeds will flow from the Bank into a project designated account (DA) to be set up at and
managed by ForeignCapital and Technology Import Center (FCTIC) of the Ministry of Railway
(MOR), thento the contractors\. The Bankloan agreementwill be signed betweenthe Bank and
the People's Republic of Chinathrough its Ministryof Finance (MOF) andthe subsidiary loan
agreementwill be signedbetweenMOF and MOR\. Counterpart funds consist o f contributions
from MOR and provincial (Guangdong and Guangxi) governments, government railway bonds
and domestic loans\.
Procurement
68\. Procurement for this Project will be carried out inaccordance with the World Bank's
Guidelines: Procurement under IBRD and IDA Credits, May 2004, as revised October 2006 (the
Procurement Guidelines) and Guidelines: the Selection and Employment of Consultants by the
WorldBank Borrowers, May 2004, as revisedOctober 2006 (the Consultant Guidelines) and the
provisions stipulated inthe Legal Agreements\. Procurement activities will be carried out by the
ForeignCapital and Technical Import Center (FCTIC), Ministry o f Railways\. An assessmento f
the capacity ofFCTIC to implementprocurement actions for the project has been carried out by
the Bank's procurement specialist\. FCTIC have successfully implemented several Bank-
financed projects inthe past\. At the time o f appraisal, FCTIC are implementing another two
Bank-financed projects with similar procurement arrangements\.The overall project risk for
procurement i s moderate\.
D\. Social
69\. Resettlementplanning\. Resettlement planningexercises include an inventory survey of
physical impacts and a census o fthe affected population within the impact area as determined
under the preliminarytechnical design\. A socioeconomic survey and a social assessmentwere
19
carried out to facilitate public consultation and participation inthe resettlement planningprocess\.
The consultation feedback was takeninto consideration inthe resettlement planning\. A
Resettlement Planhas been completed on the basis o fthese planning efforts\.
70\. Resettlement Impacts\. The project is expected to affect 170villages of 15 counties in
Guangxi Region and Guangdong Province\. About 27,777 muo f land will be acquired, including
13,231 muo f cultivated land\. About 19,059 people in5,444 households will be affected through
landacquisition\. About 6,931 people in2,029 households, including210 households with 650
persons from urban areas, are to be relocated\. 195 enterprises and 7 schools and 23 shops will be
affected as well\. The total affected population i s expectedto be 25,784 people, includingpeople
losing land, house, employees inaffected factories and shops as well as students inaffected
schools\. Annex 10 provides the categorized details\.
71\. Livelihooddevelopment\. Onthe basisofrelevant local laws, regulations and World
Bank OP 4\.12, the RAPs have developeda compensation andlivelihoodrehabilitationprogram
that includes a package o f livelihood options that include cashdistribution, landreadjustment
and social security programs for affected farmers\. Vocational training programs will be
implementedto facilitate the livelihoodprograms for the villagers\. Social security programs will
also be available as an elective option\. These will be further discussed and detailed into
household-specific measuresfor implementation\. The RAPs will be supplemented inorder to
update implementationmeasures for severely affected villages\.
72\. Household relocation\. The 1,8 19ruralhouseholds who will lose their residential houses
affected will be paid at replacement cost andprovidedwith new residential plots within existing
villages\. It i s expected that those households to be resettled will be directly responsible for the
reconstruction o f their new houses\. The 210 urbanhouseholds will be providedwith
replacement housing or compensation money to purchase their own new replacement houses in
the market ifthey request\.
73\. Restorationof enterprises, shops and schools\. All are expected to receive
compensation payments for assets, relocation costs and income losses during transition\. The
relocating enterprises are plannedto move to nearby industrialparks and shops to shift to nearby
locations to resume business\. The employees are expected to maintaintheir present employment
withthe enterprises or shops\. The affected schools will be demolished after new schools are
built without interruptiono f schooling\.
74\. Infrastructureimpacts and their restoration\. A largenumberofpublic infrastructure
facilities will be affected during project construction and requirerestoration, including power
andtelecommunication facilities, roads, irrigation and drainage canals\. The contractors will be
responsible for their reconstruction and restoration\. The restoration cost has been estimated and
included inthe project budget\.
75\. Resettlement budget and financing\. The total resettlement budget is estimated at RMB
0\.257 billion (US$37\.5 million)\. It includes compensation for all affected assets, various
allowances, infrastructure restoration cost, livelihoodrestoration assistance, vocational training,
20
management and monitoring costs as well as contingencies\. MOR, the Guangxiand Guangdong
Governments will be responsible for its financing\.
76\. ResettlementImplementationArrangements\. The resettlement'program began
implementationinlate March 2009\. At the time o f appraisal, inmid-April, the Bank mission
found that the RAP implementation to date was proceeding satisfactorily and hadconsisted o f
signing village agreements and completing the land acquisition approval procedure for about
14,000 muo f landinaccordance with the China LandAdministration Law, and physical land
taking and relocationhadnot as ofyet taken place\. Resettlement implementation is expected to
continue untilmid-2011, lasting about two years\. The detailed schedule can be found inChapter
7 o fthe RAP\.
77\. InstitutionalArrangement\. A multi-levelmanagement structure hasbeenestablished
for RAP implementation\. A joint resettlement office has beenestablished to implementthe
resettlement program on behalf o f MOR, Guangxi Province and Guangdong Province\.
Resettlement offices have been established at provincial, county and township level\. Relevant
government departments at various levels, such as land administration, agriculture, social
welfare, poverty reduction and construction, play an active role to support the RAP
implementation\. Internaland external monitoring mechanisms are beingestablished for RAP
implementation\. An external monitoring agency i s to be engagedto monitor and evaluate
resettlement implementation progress at least every six months and more frequently at the
beginningofthe project\. Its monitoringtarget, scope, methodology and organization are detailed
inthe RAP\. The MORis inthe processofhiring the external monitoringagency\.
78\. Consultationand informationdisclosure\. Public consultations have been
mainstreamed inthe project planningprocess\. Active public consultations took place since early
2008 by the three engineeringdesign institutes over the selection o f railway alignment and
location o f railway stations\. The feedback o f these consultations helpedoptimize project design
and reduce the project impacts\. The affected villages participated inthe impact inventory and
census surveys undertakenby the designinstitutes\. The socioeconomic survey, conducted late
2008 on a sample o f 30% o f the affected households continued the public consultation process
through focus group discussions, interviewsand questionnaire survey\. It focused on
compensation rates, relocation arrangements and livelihood restoration approach and measures\.
These contributed to the formulation and finalization o f the approach and package for livelihood
restoration\. Project information was shared with the affected villages and entities through the
consultation process\. The RAP has beendisclosed to the public on government public websites\.
Their availability is also announced inlocal newspapers\. A resettlement informationbooklet is
being prepared for distribution among the affected population\. Public consultations are planned
to continue through the resettlement planimplementation\.
Ethnicminoritiesand social assessment
79\. The National Ethnic Minority Universitycarried out a social assessmentinthe project
areas as entrusted by MOR\. An impact screening exercise conducted inSeptember 2008
indicates that the only ethnic minority group present inthe impact zones inGuangxii s the
21
Zhuangethnic minority and that 22 villages have groups of Zhuang villagers within the impact
zone\.
80\. The Social Assessment was conducted inthese 22 villages inJanuary 2009\. Itemployed
sociological and anthropological methodologies, includingparticipatory rural appraisal methods,
interviews,focus groups discussions and questionnaire surveys\. The social assessmentreviewed
the following aspects relatingto Zhuang ethnic minorities-government policies and definition
o f ethnic minorities, landtenure and land resourcesutilization, livelihoodpatterns, social and
cultural characteristics, informal institutions, poverty status, project impacts and mitigation
measures\. The social assessment concluded that i)the Zhuangethnic population identifiedinthe
22 villages do not meet the definition o f the indigenous people under the World Bank OP 4\.10,
ii)thereisnoneedtoprepareaseparateethnicminoritypeoples' developmentplanandiii)the
mitigation measuresdeveloped inthe resettlement plan are appropriate and sufficient to address
the land loss impacts affecting the Zhuang ethnic minority villagers\. The team has reviewedthe
Social Assessment and agrees with its recommendations\. The task team social scientist also
confirms on the basis o f the social assessmentthat ethnic minority communities meeting OP 4\.10
definition o f indigenous people are not present inthe project impact zone\.
E\. Environment
81\. The project is considered Category A for environmental purposes due to the scale of
potential environmental and social impact and the sensitivity o fthe project areas\. MOR retained
the ChinaRailway Second Survey andDesignInstitute(SSDI) for EnvironmentalAssessment
(EA)preparation\. SSDIhas Class A environmental impact assessmentaccreditation from the
MinistryofEnvironmentalProtection (MEP), andwas the EAconsultant for severalprevious
World Bank financed railway projects (including National Railways 11,National Railways I11
and most recently the GuiGuangRailway Project\. The draft EnvironmentalImpact Assessment
(EIA)report was preparedinaccordancewith relevant provisions specified inChinese EA
laws/regulations and technical guidelines, as well as consideration o f World Bank safeguard
policies and submittedto the World Bank inOctober 2008\. The final EA documents were
submittedto the Bank inFebruary 2009 and updatedinApril 2009, and included: (i) Report; EIA
(ii)Environmental Management Plan; and (iii) Executive Summary\.
EA
82\. The major environmental concerns include selection ofthis route from alternative
alignments, waste and spoils disposal, opening o f access roads, water pollution and soil erosion,
camp and construction site management, social disturbance during construction, and noise,
vibration, and safety during operation\. These environmental concerns have been adequately
addressedduringEA preparation\. Great effort has been made to avoid environmentally sensitive
sites through the analysis o f various alignment alternatives\. The tunnel-bridge-tunnelscheme
(whereby nearly 53% o f the alignment will be carried by either tunnel or bridge), will also
minimize loss o f surface vegetation and related ecological impacts\. Adequate spoil disposal sites
were screenedand identifiedfor proper disposal ofwaste materials from tunnel construction\.
Existing rural roadnetworks will be usedas much as possible as access roads\. A strict
review/approval procedure was developed inthe EMP for opening new access roads or spoil
disposal sites by contractors duringthe construction stage\. Other potential impacts were also
adequately addressedand necessarymitigation measures developed inthe EMP\. The EMP
22
details the environmental management setup and responsibilities, mitigation measures, capacity
training plan, monitoring plan, and budget estimatesfor EMP implementation\. The Ministry of
Railways is committed to ensure that the contractors implementthe relevant obligations within
the EMP\. See Annex 10for details\.
83\. Two rounds o f public consultation have beencarried out inaccordance with Chinese EIA
regulations and the Bank's OP 4\.01 requirementby individual interview,public meetings and
questionnaire surveys, andpublic feedback and these have beenincorporated inEIA/EMP
reports and project design\. The summary draft EIA report was disclosed inAugust 2008 through
the internet, with announcement of suchdisclosure inthe ChinaEnvironmentDaily\. The
EnvironmentalImpact Assessment Report was reviewedand approved by the Ministryo f
EnvironmentalProtection (MEP) inOctober o f 2008\. M O R announced the disclosure o f the
final EA inthe middleMarch, 2009 on the Guangxi Daily Newspaper and the Southern Daily
Newspaper and disclosed the full document on the websites o f China Railway Eryuan
EngineeringGroup Co\., Ltd\., Guangdong and Guangxi Development and Reform Commission,
and the Environment Protection Bureaus withinthe relevant cities and provinces, and as such,
the documents are easily accessibleto the general public\.
F\. Safeguard policies
Safeguard Policies Triggered by the Project Yes N o
EnvironmentalAssessment (OP/BP 4\.01) [XI [I
Natural Habitats (OP/BP 4\.04)
Pest Management (OP 4\.09)
Physical Cultural Resources(OP/BP 4\.11)
Involuntary Resettlement (OP/BP 4\.12)
Indigenous Peoples (OP/BP 4\.10)
Forests (OP/BP 4\.36)
Safety o f Dams (OP/BP 4\.37)
Projects inDisputedAreas (OP/BP 7\.60)
Projects on International Waterways (OPiBP 7\.50)
G\. Policy Exceptions and Readiness
84\. The Project meets the readinesscriteria for project implementation, closely follows all
the applicable Bankpolicies, anddoesnot require any exceptions\.
23
Annex 1: Country and Sector or ProgramBackground
CHINA: NanGuangRailwayProject
The Role of the Bankinthe Reformand Developmentof China Railways
1\. For the last 10-15 years, the Chinese railway industryhas beenpursuingtwo key
objectives\. One is to reform the industryto become more responsive to the market economy\.
The other is to achieve an order ofmagnitude change inthe capacity and quality of infrastructure
and services ina network that is already the busiest, by a wide margin, of any inthe world and
which i s still facing rapidly growing demand\. Seekingto attain these two goals simultaneously
i s perhaps the most daunting rail industry challenge currently facing any government\.
2\. The case for the reform ofthe China Railway system from its historical structure as a
vertically and horizontally integrated, and wholly state-owned monopoly, has beenwidely
accepted for a number o f years\. The Government has adopted a step-by-stepapproach to
industryreforms, concentrating onreforms within(or grafted on to) the existingframework
rather thanbreakingup China Railways itself\. These reforms have included:
0 Non-core businesses: Separation o f non-core activities such as enterprises (construction,
manufacture, telecom, design, education and social activities) and reducing the number of
working staff from 4\.0 million in 1995 to 2\.1 million in2006; a period duringwhich
traffic increased by 75%\. Many o fthese enterprises now provide services to China
Railways on a competitively tendered basis\.
0 New industryparticipants: Betweenthe mid-1990sand2004, the Ministry of Railways
supported the establishment o f 29 newjoint-venture railways that are owned by national
andprovincial governments andprivate investors\. (About two-thirds ofthese railways are
understood to be independentlyprofitable\.) Since then, the Government has expanded
this approachto finance newhigh-speeddedicated passengerlines that would free up
freight capacity on existing lines and it is intendedthat all new investmentwill be made
usingthis model\.
0 Commercialization: Implementation in 1999 of the Asset Operation Liability System has
made managers o f regional railways administrations accountable for returns on capital,
output, profitability and safety\. It also provides incentives ifagreed performance levels
are exceeded\. China Railway's operating labor productivity (excluding non-core
business) has doubled since 1995 and it has earned profits since 1998, despite controlled
tariffs, and is a major net contributor o f taxes to the budget (US$1\.4 billion in2006)\.
0 Management restructuring; In2004 MOR removeda whole layer of management by
eliminating the 44 sub-regional administrations\. Management was consolidated at the
level o f the 18 regional administrations and some 60,000 staff positions were removed\.
This change brought together management responsibilityand accountability at the
regional level\. It also facilitated and encouraged higher utilization o f locomotives and
24
crews, which had normally beenchanged at sub-regional boundaries\. There has also been
some separation o f management of low-density lines with emphasis on reducing losses\.
0 Passenger services; Since 1992, MOR has made passengerfares more flexible,
introducinghigher fares for fast and premiumservices and a surcharge for peak season\.
Also, passengerbusinesshas beenseparated on an accounting basis\.
0 Freight services: In2003 specialist companies were formed to operate container
services, mail and parcels, and special freight\. In2007 MOR agreed with international
freight and logistics companies to establish a new container terminals joint venture
company to develop and operate 18 newregional container hubs\.
Information technology: Inthe mid-1990s MOR introduced a new world-class Traffic
Management Information System with World Bank finance and the Bank has also
financed a specification o fthe next generation upgrade o fthe system\.
0 Train operations; China Railways has begun upgrading specific routes to make them
capable o f camying double-stack containers\. It i s buildingto higher axle loads on a trial
basis for heavy haul freight\. China Railways managershope to obtain the substantial
benefits that have been demonstrated by these approaches inNorthAmerica\.
3\. All ofthese steps are consistent with advice or recommendations made by the World
Bank, buttheir adoption and detailed implementation hasbeento the credit ofthe Ministryof
Railways and China Railmanagers\.
4\. The Bankhas also advocated anapproach that would separatethe policy andregulatory
functions o fthe Ministry from the commercial functions o f China Railways\. The Government
has not yet taken this step\. This reluctance i s due to:
0 concern about a possible diminution o f the role o fpublic interest inrailway management
decisions at a time whenrailway capacity and coverage are being seen as an increasing
constraint on development;
concern that rail service might be disruptedduring institutional change at a time when its
capacity i s already stretched; and
0 higher priority givento systemexpansion and upgrading; since 1990 the network has
been expanded by 20,000 kmand a further 40,000 kmare planned by 2020\.
5\. The issue of separation is currently still the subject o fdialogue between MOR, NDRC
andthe Bank\. Alternative models were highlighted by the Bankinapaper on the subject in
2005 (see below)\. Ultimate responsibility for such institutional restructuring (as opposed to
internal reforms) lies with NDRC rather than MOR, but this measurei s unlikely to proceed until
a wider consensusi s reached\.
25
6\. The Bank's first railway project with China was completed in 1990\. Since then, its
involvement has helpedshape the debate o f China's railway policy makers regarding reform\.
The Implementation Completionand ResultsReport (ICR) for the Sixth Railway Project
reported substantial progress inrailway reform\. The ICR for the SeventhRailway Project
recorded that MOR had, as before, executed major civil works quickly and effectively\. But a
sense o f ownership had been lacking for some other components recommended by the Bank,
including some technical assistancetopics\. The project was restructured after three years to
adapt it more closely to MOR'Spriorities\. The next two projects (First and SecondNational
Railways) continued to engage MOR ina dialogue andprovide support by way o f international
experience andtechnical assistancerelated to reform, policy, and operational enhancements\.
7\. Through its history o f support the Bank has beeninfluential inestablishing the direction
o f the transformation\. Today, the Bank's relationship with the Ministryof Railways i s as strong
as it ever has been\. This has allowed the Bank to offer MOR independentadvice based on
international experience on railway policy options and issues and to support management with
specific itemso ftechnical assistancethat have improved business performance\. At the same
time it has made amodest but effective contributionto project financing for ChinaRailway's
infrastructure development program\.
8\. In2004, while preparing the SecondNational Railway Project, the Bank, MOR, and
NDRC launched a dual-track approach that reflected the differing responsibilities o fNDRC and
MOR and the different modes o f engagementnecessary\. Support for sector-wide reform was
separated from project development and lending\.
9\. NDRC i s responsible for recommending the major structural steps such as the separation
o f ministerial policy and regulatory functions from railway commercial enterprises, and major
tariff reform\. MOR is taking the lead inseekingnew sources offinance for the proposed major
investmentprogram to 2020\. The two issues are related\. Accordingly, the Banknow maintains
a policy and reform dialogue at the higher level o f MOR andNDRC, while the project lending
work continues at project implementinglevel\.
10\. MOR can only raise the financing requiredinthe long-term ifthree key policy issues -
the greater separation ofpolicy functions ofthe Ministryfrom the commercial functions o fthe
enterprises, a framework for encouraging a more pluralist and contestable industry, and an
improvedregulatory systemwith regard to entry and pricing -are addressed\.Although these
are difficult areas while the network remains congested (requiring centralized control to
prioritize traffic and maximize the use o fthe available infrastructure), they are increasingly being
recognized as crucial to accessingrisk capital from the private sector (rather thanjust from large
users)\. They represent the key areas o fpolicy dialogue betweenthe Bank and MOR inrecent
years; some significant milestones have been:
InJune 2005, the Bankpreparedareport andpresentation to MOR titled "China Railway
Investmentand FinancingReform Forum" arguing that MORwould needto seek
substantial non-traditionalfunding inthe next ten years to fully meet the investment
requirementsfor the medium-and long-termplanapproved bythe State Council\. It also
26
demonstrated why some o fthe potential sources o f finance were less likely to be secured
without structural reforms, particularly separation o fpolicy and regulationfrom
commercial service delivery institutions\.
0 InJuly 2006 the Bank providedto MORareport onhow railways inthe developedworld
cope with multiple operators ina single railway system\. It focused on the arrangements
usedfor allocating responsibilities and settling payments among the operators to cover
three situations encountered insuch systems: (a) passengersbuy tickets for trips that run
over the networks of more thanone company; (b) an operating company runs its trains
over the track o f another company; and (c) a company makes use o f the wagons o f
another company that have entered its network\. The note was timely, given the
Government's decision to rely on project companies to finance and operate the proposed
network o f high-speed dedicated passenger lines\.
0 In2007-08 the Bank financed, inter alia, studies ofinternational experience informing
and implementingtheir national investmentpolicy on railway construction and
development (including the measurement and application o f Social Costs)\. The Report o f
that Studyprovided evidence o f how most countries have granted considerable pricing
freedom to their national railway companies\. The report recommended that adoption in
China's rail sector o f more market oriented tariffpolicies could help meet the challenge
o f financing its mid-to long-term development program\.
0 In2008-09 the Bankis also advising MORindeveloping apilot project that would be
suitable for international private sector fundingthrough a concession mechanism,
although the Government's response to the global credit crisis with increased funding as
partofthe stimuluspackagehas reducedits short-term attraction\.
11\. In2009-10, this dialogue is continuing with aproject that explores the degreeto which
the Government could reasonably cede commercial autonomy over railway tariff setting to the
Railways and the business processby which tariffs mightbe more commercially established and
altered\. The dialogue will be concurrent with preparation and delivery o f the lendingprogram\.
12\. This loanprovides aplatform of continued high-levelengagement betweenthe Bank,
MOR and NDRC, while simultaneously supporting operational development o fthe Chinese
railway network through China Railways\. This dual-track approach allows the Bank to speak
with contextual authority, to be receivedwith respect, andto deliver results along bothtracks
that inevitably involve differentinstitutions, differentpersonalities, different skills and a
different pace of activity\. Giventhe sheer size andthe breadth o f the Ministry o fRailways, the
Bankhasbeenable to leverage its efforts to helpimprove the way transport is deliveredto every
province andto the hundredso f millions o f individuals who rely on the Chinese railway system
for their personal and commercial transport needs\.
27
A BriefOverview of the Mid- and Long-TermRailwayDevelopmentPlan
13\. InJanuary 2004 the State Council approved inprinciplethe Mid-andLong-Term
Railway Development Plan, setting out the construction priorities o f the Chinese railways and
providing the framework for developing future railway five-year plans\.
14\. Rail transport i s a key element o f the national economy but, inspite o fthe major reforms
inrecent years which haveimprovedefficiency, demandis continuingto outstrip capacity\. As a
result, bothpassengerand freight demand has beenconstrained on many corridors for several
years\. This plan, the first o f its kindapproved by the state, addressedthis problem inthe context
o f both the expected national development and the development o f the other transport modes\. Its
key characteristics are the expansion o frail transport capacity and improvement o f service
quality, with an emphasis on ensuringmaximum value for the proposed investment,while
supporting both rural and urbandevelopment ina sustainable manner\. It encouragesboth
domestic and foreign private capital investment,with the Government's regulatory role and
responsibilities being defined within a market framework\.
15\. The key principles underpinningthe plan are:
0 Coordinating its development with that o f other transport modes, as well as the energy
sector and other related sectors at boththe macro and corridor level;
0 Separation o fpassengerand freight transport on constrained busytrunk lines to increase
capacity and improve service levels, with the development o f inter-city fast passenger
networks indenselypopulated and developed areas;
0 Strengthening the links between major economic areas and optimizing line and terminal
capacity to ensure the smooth operation o f major corridors;
0 Expanding the coverage o f the rail network to support and encourage sustainable
economic development, territory development and national defense;
0 Raisingthe local content o f railway equipmentand promoting local equipment
manufacture\.
16\. By 2020, the original plan expected the total operational lengthof Chinese Railwaysto
reach over 100,000 km,with separate high-speedpassenger and freight routes on the main
corridors and 50% o f the network either double-tracked or electrified or both\. The high-speed
passengernetwork i s basedon four north-south and four east-west corridors, with three regional
inter-city systems\. The target speed inthese corridors is over 200 km/h\.Because o fthe dominant
role that coal plays, and will continue to play, inChina's energy structure, it also includes high-
capacity coal transport corridors, together with the duplicationand electrification o f other trunk
corridors where required, and the development o f container transport\. Inaddition, it also sets
detailed schemes for strengtheningthe network inthe western region\.
17\. Since the initial publication o f the plan, the timing has been accelerated and it is now
expected that the network will reach 120,000 kmby 2020, roughly doubling the increase
28
originally included inthe MLTDP\. Table 1\.1 summarizesthe original and revisedtargets for the
categorieso fwork\.
Table 1\.1:MLTDPand Five-Year PlanTargets (km)
I End2007 I 2010 I 2020 MLTDP I
Actual 11th FYP
Original Revised
Total length oftrack 78,000 92,000 100,000 120,000
Double track 27,000 41,400 50,000 60,000
Electrified I 25,400 I 41,400 I 50,000 I 72,000 I
Passenger dedicated lines I 405 I 5,000 I 10,000 I 12,000 I
The following sections discuss the key elements inmore detail\.
Passenger-dedicatednetwork
18\. The long-distancepassenger-dedicatednetwork is basedon four north-south corridors
and four east-west corridors:
North-southcorridors between:
Beijing-Shanghai via Tianjin;
Beijing-Shenzhen via Wuhan and Guangzhou;
0 Beijing-Harbin and Dalianvia Shenyang;
0 Hangzhou-Shenzhen via Fuzhou, providing a direct link for the first time betweenthe
Yangtze and PearlRiver Deltathrough the coastal southeast area\.
East-westcorridors between:
0 Xuzhou-Lanzhou via Zhengzhou, linkingthe northwestarea and north China;
Hangzhou-Changsha via Nanchang,joining central andeast China;
0 Qingdao-Taiyuan via Shijiazhuang, linkingnorth and northeastChina;
0 Nanjing-Chengdu via Wuhan and Chongqing, linking southwest and east China\.
19\. Three inter-city passenger networks are plannedfor the Bohai Sea ring (Tianjin, Beijing,
Qinhuangdao), the Yangtze River Delta (Shanghai, Nanjing, Hangzhou) and the PearlRiver
Delta (Hong Kong, Guangzhou, Shenzhen), covering the major cities andtowns ineach area\.
29
Upgrading the existingrailway network
20\. The existingrailway network andterminals will be upgradedto increasethe capacity o f
the existing corridors\. About 30,000 route-km will be double-tracked and some 47,000 km o f
existing lines will be electrified\.
21\. Inparallelwiththe constructionofdedicatedpassengerlines, high-capacity coal corridors
will be created basedonthe ten major coalfield^\.^ Immediatepriorities are expanding the
capacity of the Datong-Qinhuangdao RailwayY4upgrading the BeitongpuRailway, construction
o f the Huanghua-Dajiawa Railway, and expanding the capacity o f the Shijiazhuang-Taiyuan
line by constructing a separate passenger line\.
22\. The double-tracking and electrification of seven major corridors will be completed\.
These will include Beijing-Harbin, Beijing-Shanghai, Beijing-Kowloon, Beijing-Guangzhou,
Lianyugang-Alashankou (the border with Kazakhstan), Shanghai-Wuhan-Chengdu and
Shanghai-Kunming\. Inaddition, terminal, marshalling and depot facilities will be modernized\.
23\. Container terminals will be constructed to upgrade railway lines with intensive container
transport and to operate double-stack container trains\. 18 central container terminals are to be
built inthe mainports and inland center^,^ with a further 40 terminals inmajor provincialcenters
and inlandborder crossings\.
Westerndevelopmentalnetwork
24\. Regional economic development will be supported through major expansion o f the
western railway network and improvements inthe central and easternareas\. Intotal, about
16,000 kilometers o f new lines are planned\. These include:
New links to international borders inthe north-west and south-west:
0 Kashi-Tuergate (China-Uzbekistan-Kyrgyz Railway)
0 Reconstruction o f the Kunming-Hekou line to Vietnam
0 Kunming-Jinghong-Mohan (China-Lao Corridor)
0 Dali-Ruili (China-Myanmar)
0 Taipan-Zhongwei (Yinchuan) and Linhe-Hami to form a new corridor from the
northwest to north China
0 Lanzhou (or Xining) -Chongqing (or Chengdu) to form a new corridor from the
northwest to the southwest
Datong(including western InnerMongolia), Shenfu, Taipan (includingsouthernShanxi), southeasternShanxi,
Shaanxi, Henan,Yanzhou,HuainanandHuaibei, GuizhouandeasternHeilongjiang
This was floatedonthe Shanghaistockexchange inAugust 2006 as a public company\.
5 Shanghai,Kunming, Harbin, Guangzhou,Lanzhou,Urumqi, Tianjin, Qingdao,Beijing,Shenyang, Chengdu,
Chongqing,Xi'an, Zhengzhou, Wuhan, Dalian,Ningbo, and Shenzhen\.
30
0 Kuerle-Ge'emu and Longgang-Dunhuang-Ge' e m uto providea directcorridor from
Xinjiangto Qinghai and Tibet
0 an extensiveregionalwestern railway networkservingXinjiang andTibet
0 sevennewrailwaysinthe centraland easternrailwaynetwork
Phasing
25\. The first dedicatedpassenger lines under constructionare those betweenBeijing-
Shanghai, Wuhan-Guangzhou, Xi'an-Zhengzhou, Shijiazhuang-Taiyuan, andNingbo-Xiamen\.
The Bank-financedShiZhengRailwayproject(Shijiazhuangto Zhengzhou) is part ofthe second
phase which isjust commencing\. The initial intercitylines will be Beijing-Tianjin inthe north
(completedin2008), Nanjing-Shanghai-Hangzhou inthe Yangtze Delta, and Guangzhou-
Shenzhen, Guangzhou-Zhuhai and Guangzhou-Foshan inthe PearlRiver Delta\.
26\. Newconstructionwill beginon a number of sections; includingthe Bank funded
GuiGuangRailwayprojectbetweenGuiyangand Guangzhouas well as this project\.Existing
lines are also beingupgraded includingthe Kunming-Liupanshui line (theBank-financedThird
NationalRailwayProject)\.
31
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
CHINA: NanGuangRailway Project
Sector Issue Projects LatestSI iervision
Ral 1gs6
Implement Develop-
World Bank-financed (Completed unless shown
otherwise) -ation ment
Progress Objective
I\.Addressrailwaycapacity Railways I,11, 111, IV, V -
Jottlenecksthrough construction, all incl\. items 1, 2
louble-tracking,electrification, Inner MongoliaRailwayProject-
indthe introductionofmodern incl\. items 1, 2
echnology RailwaysVI-incl\. items 1,2, 3 S S
?, Technical assistance/training, RailwaysVI1-incl\. items 1,2,3 S S
ransfer of newtechnology NationalRailways-incl\. items 1,3 S S
:onceptsto improve efficiencyof SecondNationalRailway-incl\. S S
\.ailwayoperations andrailways' items 1, 2 and 3\.
inancialcondition ThirdNationalRailway- incl\. S S
I\.Institutionalstrengtheningand items 1,2 (ongoing)
ShiZhengRailway-incl\. items 1,2
raininginrailwayreformissues S S
mdintroductionoftools needed and 3 (ongoing)
GuiGuangRailway- incl\. items 1,2
or makingdecisionsin a socialist
narket economy (under preparationat the time of
amraisal)
Other developmentagencies Project Status
Asian DevelopmentBank Guang-Mei-ShanRailway Completed
Hefei-JiujiangRailway Completed
(since 1992) Jing-JiuRailwayTechnical Enhancement Completed
Dazhou-Wanzhou Railway Completed
Shenmu-YananRailway Completed
Guizhou-ShuibaiRailway On-going
Hefei-Xi'an Railway On-going
Ganzhou-LongyanRailway On-going
Yichang-WanzhouRailway On-going
Dali-LijiangRailway On-going
hiyang-Xi'an Railway Launched
Japan Bank for International Baoji-ZhongweiRailway Completed
Cooperation Hengshui-ShangqiuRailway Completed
(since 1991) Yanning-Kunming Railway Completed
Zhang-QuanRailway(FujianProvince) Completed
3houxian-HuanghuagangRailway Completed
Yi'an-AnkangRailway Completed
Myang-LoudiRailway(double-tracking) On-going
Agence Franpaisede ,uoyang-Zhangj iajie Railwayelectrification On-going
Ddveloppement
Earlyprojects,encompassingRailwaysIthroughV and InnerMongoliaRailwayProject,were not rated
32
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Annex 4: DetailedProjectDescription
CHINA: NanGuangRailway Project
1\. A key element ofMOR's network expansionplanis to connect the railnetwork ofthe
Pearl River delta region with that o f the southwest China\. This project will provide a short and
direct connection betweenthe two regions through a new electrifiedrailway, about 462 km,
betweenLitang West station inGuangxi Province and Sanyanqiao station inGuangdong
Province\. Upon completion o f this project the rail distance betweenthese two points will be
reduced from 678 kmto 462 km(30%) andthe travel time for passengertrains reduced from the
current 10hours to less than 3 hours\. As such, this railway line will provide an efficient and
lower cost rail transport access for passengersand freight\.
2\. The Bankloanwill finance the procurement of goods includingcommunications,
signaling and electrificationequipmentand maintenance vehicles\. Inadditionto the goods
financed by the Bank loan, there i s related technical assistancewhose scope (consultant services,
training, and study tours (ifany)) will be identified during implementation\.
3\. The project connectsthe existingrailway network inthe westernregion of southwest
China and the existingrailway network inthe Pearl River Delta region\. It will also connect to
numerous network improvements underway or planned which will directly contribute to
optimizing the benefits to rail transport provided by this project\. Within the Pearl River delta
region around Guangzhou these includethe GuangZhuLine (Guangzhou to Zhuhai), the
Northeast Guangzhou Connecting Line,the WesternCoastal line, the GuangZhu Intercity Line,
the GuangShen(Guangzhou to ShenZhen)PassengerDedicated Line(PDL), and the GuiGuang
Line(Guiyang to Guangzhou, partially financed by the Bank)\. The latter three connect at
Sanyanqiao Station\. Within the southwest region the plannedprojects include the NanQin Line
(Nanning to Qinzhu) and the LiuNanLine(Liuzhou to Nanning)PDL\.
4\. The construction beingundertaken directly by the project consists o f about 400 kmof
double track electrifiedmixed use (passenger and freight) railway from Litang West Station to
NewZhaoqing Station; inaddition, the project will finance halfthe cost o fthe 62 km four-track
railway being constructed betweenNew Zhaoqing Station and Sanyanqiao Station by the
GuiGuang project (following construction and once the companies are incorporated, it i s
understood, the two tracks financed by the NanGuang project will be formally transferred to the
NanGuang company but will be maintained and controlledby the GuiGuang company for a yet
to be determinedfee)\. At the western endthe project connects to the existingrail network o f
southwest China near the city o f Guigangand again further west near the city o f Litang(roughly
95 kmnortheast o f Nanning), and then connects with the planned LiuNan Dedicated Passenger
Railway project (Liuzhou to Nanning) at the Litang West station Cjust west o fthe city o f Litang)\.
The LiuNanPDLproject will construct two newtracks betweenNanningand LitangWest\. At
the easternendthe project connects to the existingrailway network ofthe Pearl River delta at
NewZhaoqing Station and Sanyanqiao Station along with the three lines plannedor underway as
discussedabove\. The NanGuang Railway project shares Litang West Station with the LiuNan
Railway project and New Zhaoxing and Sanyanqiao Stations with the GuiGuang Railway
project\.
35
5\. The proposed project alignment is relatively direct connecting urbancenters such as
Litang, Guigang, Wuzhou and Zhaoqing\. Aside from the end near Zhaoqing, the project passes
through generally lightly-populatedcountry and a variety o fterrains including flat alluvial
terraces and eroded basins and hillyhiver valley basins\.
6\. The project feasibility report (August 2008) shows the project will have 33% of its length
on bridgesand viaducts and 20% intunnel\. The track will be laid to technical standardsthat
permit speed up to 250 km/hthough passengertrains will operate at amaximum speedof 200
km/hand freight trains at amaximumspeedof 120km/h\.Ballastless track will be installed in
tunnels over six km inlength\.The structure gauge will allow the operation o f double stack
container trains\. Inorder to accommodate the designspeed, it will have a relatively straight
alignment with large radius curves o f 3,500m or more\.
7\. The final choice of alignment was basedon multiplecriteriathat includedconnections
with the existingrail network, minimizing cost, landacquisition/ resettlement and environmental
degradation, connecting potential areas o f economic development and avoiding forest reserves
and areas of poor geology\. The designinstitutes consulted urbanplanning development officials
o f the various cities inselecting sites for proposed railway stations\.
8\. The proposed alignment passes through the towns and cities ofLitang, Guigang, Guiping,
Pingnan, Teng Xian and Wuzhou\. Continuingeast the alignment passes through Yunnan,
Nanjangkou, Yunfu, New Zhaoqing, New Sanshui andNew Foshan inGuangdong Province and
ends at Sanyanqiao Station within Guangzhou\. Sixteen intermediate railway stations and four
overtaking stations are planned to be built or reconstructed\. The project will runparallel to the
existing track betweenLitang and Guigang (about 59 km)\. BetweenLitangand Guigang, freight
trains will operate on the existingtrack while the passengertrains will use the new project track\.
The project tracks betweenGuigangandNew Zhaoqing shall beusedfor passengeras well as
freighttrains\.
9\. The project includes the civil works elements listed inthe following table\. Typical to all
civil works, the location o f some o fthe civil works are identified by the contractor inorder to
allow the contractor to optimize operations\.
Civil Vorks
Located by design Located by Contractor
Track Temporary offices and housingfor
Bridges construction bureau and construction
Tunnels supervision staff
Culverts Work camps*
Stations, station yards and buildings Access roads*
Traction sub-stations Spoils sites*
Traction power dispatch center Borrow pits*
Overhead electric system for electric Concrete mixingplants
traction
Locomotive and rollinn stock service
36
Civil Jorks
Located by design Located by Contractor
depots
Water supply stations
Signals along the track
Signal rooms
Telephone exchanges
Electric sub-stationsfor nontraction power
supply
Service buildings
Soundbarriers
Longrail storage base
Bridge beammaking yard
Ballast storage area
Material storage sites
Work camps*
Access roads*
Spoils sites*
Borrow pits*
contractors\.
Technical Parameter
10\. Seismicity inareas along the proposedalignment is generally low (peak acceleration
below 0\.05g)\. Anti-earthquake engineeringmeasures as given inthe Code for the Seismic
Design of Railway Engineeringwill be adoptedfor the construction of sub-grade, bridges,
culverts and buildingsinarea that have dynamic peak accelerationof over 0\.lg\.
11\. Expresstrains with a maximum speed of 200 km/hwill be operatedwith Electrical
MultipleUnit (EMU)having 8 or 16cars while passenger(160 km/hmaximum speed) and
freight (120 km/hmaximum speed) trains will be hauledby electric locomotives\. The maximum
weight of freight trains will be 4,000 tonnes ,container trains: 3,000 tonnes, and passenger
trains:1,000- 1,100tonnes\. The travel time oftrains betweenSanyanqiao and Litang West will be
ExpressEMU:2\.8 hrs, loco-hauledpassenger: 4 hrs, and freight trains: 6 hrs\.
12\. Salient technical parametersof the project are:
a Distancebetweencenter lines oftwo tracks: 4\.6m\.
a Minimumtrack radius: Guigang-Litang 3,500 myGuigang-New Sanshui4,50Om, New
Sanshui-Guangzhou1,600m
0 Ruling grade (per thousand): Litang-Guigang 12, Guigang- New Sanshui 6, New
Sanshui-Sanyanqiao 13\.
a Effective lengthof departuretrack: 850m for freight and 650m for passenger trains\.
a Traction: Electric 25kV 50 Hz
37
0 Traction type: Electric MultipleUnitsfor 200 km/htrains and electric locomotives for
slower passengertrains and freight trains
0 Train operation control: Automatic
0 Traffic management control: Centralized Traffic Control
0 Minimumheadway betweentrains: 6 minutes
0 Axle load: 25 tons
Rail: New 60 kg/mrails o f 1OOm length, continuous welded (CWR)
0 Structure gauge: will permit operation o f double-stack container train
13\. New 60 kg/m, U75V rails will be laid on a 350mm track bed, increased to 500mm where
the soil is non-permeable\. Ballastedtrack laid on Type I11concrete sleeper (1667 sleepers/km)
will be usedexcept intunnels over six kminlengthwhere ballastless track will be employed\.
14\. The project will have electric traction (25 kV single phaseAC)\.Ten tractiontransformer
sub-stations will be installed with capacities ranging from 40 to 75 MVA\. Traction substations
will supply tractionpower at 27\.5kV\. Singlephasetransformers and 100percent standby will be
adopted\. The energy consumption on the project line inyears 2020 and 2030 is estimated at
1,154 and 1,598 million kWhrespectively\.
15\. For overhead contact wire high-strength copper tin alloy auto-tensioned conductor will be
used\. For the messenger wire, copper alloy stranded conductor will be used\.
16\. The technical parameters o f HXD3 and SS9 locomotives that will be deployed are given
below:
17\. Automatic signaling will be usedwith six minuteheadway between trains\. An intelligent
centralized train control systemto provide automatic operating command will be provided\. CTC
dispatching system will be adopted, usingtwo existingdispatching centers at Guangzhou and
Naming\. A four-aspect automatic block systemwith cab signaling and a train over-speed
protectionsystem will be provided\. Trackside signals will also be provided and the train
movement control system will comply with CTCS-2 level\.
18\. A new communication system will be installed for this project with optical fiber cables
laid on either side o f the track\. The communicationnetwork includes a transmitting system,
telephone switching system, data communication network, dispatch communication system,
38
video conference system and integrated video monitoring system\. The main communication
equipmentwill bebasedonmulti-service transfer platformtechnology\. GSM-Rdigital mobile
communication system will be adopted for radio communication\.
19\. Three applications o f the Information System (Freight traffic management -FTMS,
Passenger Service Information-FSIS, and Office Information System) will be implemented\.
20\. The alignment will be fenced to keeppeople off the track, bridgesto carry roads over or
under the track shall be provided to avoid level crossings\. A number o f underpasseswill be
providedto facilitate movement o fpeople and animals across the railway right o f way\. Infrared
hot box detectors will be installed to maximize safety\. Automatic train identification equipment
will also be installed at Guigang and Wuzhou stations\. Inthe interest of safety, systems for
monitoring wind, rainfall and detection o f foreign matter on track will be adopted\.
21\. Protection against electromagnetic interference to communication, broadcasting and other
systems will be provided\.
22\. Several measureswill be adopted for energy conservation\. High efficiency electrical
equipmentsuch as transformers and motors will be selectedandpower sub-stations located close
to load centers\. The design o f lighting, ventilation and air conditioning will be optimized for
energy consumption\. Long locomotive runs will be adopted to reduce idling o f locomotives\. The
traction feed system will use current-carrying carrier and returncables to decreasethe impedance
per unit andtherebyreduce power consumption\. Tractiontransformers with highefficiency will
be adopted andparallel capacitor compensation devices usedto improve the primary-side power
factor\. The EMUtrain sets will have AC traction motors and adopt technology such as
regenerative brakingto maximize energy efficiency\.
23\. The project is proposedto be funded 50:50 by equity capital from the proposed
NanGuang Railway Co\. and borrowings\. The borrowed capital will include the proposed loan o f
US$300 million from the Bank (about 5 percent o f the project cost)\.
24\. The plannedconstruction periodis about 4 years\. Construction commenced inApril
2009 and the project i s proposed to be commissioned by 2014\. At the time o f appraisal, mid-
April 2009, landacquisition hadbegun, though resettlement and construction hadnot\.
Nonetheless, construction, once begun, i s expected to proceed rapidly\.
39
Annex 5: Project Costs
CHINA: NanGuangRailway Project
Project Cost By Activity (US$million) Non-Bank Bank Total
financed financed
NanGuang Railway
- civil works7 3,255\.44 0\.00
-- landacquisition 3,25 5-44
goods 565\.32 298\.95 864\.27
andresettlement 455\.48 0\.00 455\.48
- other 278\.80 0\.00 278\.80
- consulting services (technical assistance) 0\.00 0\.30 0\.30
Total Baseline Cost 4,555\.04 299\.25 4,854\.29
Contingencies 484\.58 0\.00 484\.58
Total Project Costs 5,039\.62 299\.25 5,338\.87
Interest during constructiona 353\.20 0\.00 353\.20
Rolling stock 291\.97 0\.00 291\.97
Front-end Fee 0\.00 0\.75 0\.75
TotalFinancing Required 5,6g4\.79 300\.00 5,984\.79
Project Cost By Activity (RMB million) Non-Bank Bank
financed financed Total
NanGuangRailway
- civil works8 22,299\.75 0\.00 22,299\.75
- goods 3,872\.41 2,047\.8 1 5,920\.22
- landacquisition andresettlement 3,120\.02 0\.00 3,120\.02
- other 1,909\.77 0\.00 1,909\.77
- consulting services (technical assistance) 0\.00 2\.06 2\.06
Total Baseline Cost 3 1,201\.95 2,049\.87 33,25 1\.82
Contingencies 3,319\.37 0\.00 3,3 19\.37
Total Project Costs 34,521\.32 2,049\.87 36,571\.19
Interest during constructiona 2,4 19\.42 0\.00 2,4 19\.42
Rolling stock 2,000\.00 0\.00 2,000\.00
Front-end Fee 0\.00 5\.14 5\.14
Total Financing Required 38,940\.74 2,05 5\.O 1 40,995\.75
Exchange rate: 1US$=RMB 6\.85 aInterestand commitment fee
Civil works cost include the cost o f stations to be constructed as part of this project
Ibid\.
40
Annex 6: ImplementationArrangements
CHINA: NanGuangRailway Project
1\. This project, and the previous two Bank-financed projects, the GuiGuang and the
ShiZhengRailway projects, differ from previous Bank-financed railway projects inChina inthat
it is anticipated that aproject company will be formed and MOR will transfer the assets created
by the projectto the project company to own\.
2\. The proposedNanGuang Railwayproject crossesparts oftwo provinces, Guangdong,
and Guangxi\.The project line is plannedto be eventually owned by theNanGuang Railway
Company Limited\. The controlling share o fthe company will be held, through an investment
arm, by the Ministryof Railways (70%)\. The other major shareholders, through their provincial
investmentbodies, will be the two provinces; Guangdong (6%) and Guangxi (24%)\. (The
percentageso f shares held, as shown here, are approximate and will vary depending upon actual
equity contributions\.)
3\. Much o fthe nature o fthe eventual project company i s yet to be decided, including when
and how the assets will betransferred, who will own and how rolling stock will be operated and
how the interfaces will be managed\. MOR, through the Guangzhou and Nanning RAs, will carry
a sufficiently large part o fthe responsibility for implementationand, probably, the operation,
similar to a conventional railway project\. Inaddition, this is a high-profile project with strong
political support at both the national and provincial levels\. Consequently, there i s little risk to
successful implementationifconstruction starts before these operational issues are settled\. When
the project company is formed and agreement is reachedonthe eventual transfer of assets, the
Bankwill assess the capacity oftheproject company and amendthe Loan agreementas needed\.
4\. Inanticipation ofthe formation ofthe project company, MOR established agroup, the
Preparatory Group o fthe NanGuang Railway Company, in2008\. The group consists of
approximately 30 staff appointed from within MOR and i s tasked with general responsibility for
the implementation ofthe project includingcoordinating with the local government entities
responsible for resettlement and land acquisition\. As with past Bank-financed railway projects in
China, the central Ministry o f Railways, through their Foreign Capital and Import Center, will be
responsible for the financial management o fthe loan and Bank-financed procurement\. FCTIC
will also continue as the Bank's direct counterpart inthe administration and management ofthe
loan\.
5\. FCTIC will be responsible for procurement o f all Bank-financed goods and services
through an independentprocurement agent (tendering company)\. The Preparatory Group o fthe
NanGuang Railway Company will manageprocurement o fthose contracts (works and goods)
wholly financed by MOR\. The railway administrations, underthe direction o f the Preparatory
Group o f the NanGuang Railway Company, will be responsible for supervisingthe construction
and installation\.
6\. The organizational set-upfor implementingthe loan is explained further inAnnex 7
(Financial Management) and procurement arrangements are set out inAnnex 8 (Procurement
41
Arrangements)\. Arrangements for implementing the environmentalmanagementplanand the
resettlement action plan are set out inAnnex 10 (Safeguard Policy Issues)\.
7\. Reporting\. MOR will monitor and evaluatethe progressofthe project on a six-monthly
basis\. MOR, through FCTIC, will prepare, by February 15 and August 15 ineachyear,
commencing February 15,2010, and untilcompletionof the Project, a comprehensiveProject
ProgressReport integrating the results of the monitoring and evaluation activities including
reporting on performancemonitoring indicators, and onthe progressachieved incarrying out the
project\. Shortly after receipt of eachproject progress report the Bank will review, together with
MOR, the progressofthe project\.
8\. Since this is a largeproject, the Bank will also supervise this project closely through at
least half yearly supervisionmissions\. Particular attention would be paid, during the Bank
supervision missions, to the effective implementation ofthe Environmental ManagementPlan
and the RAPS,as there are critical to mitigate the environmental and social risksposedby this
project\.
9\. Anti-Corruption\. The Project shall becarried out inaccordance withthe provisions of
the World Bank Guidelineson Preventingand Combating Fraudand Corruption inProjects
Financedby IBRDLoans and IDA Credits and Grants, dated October 15,2006\.
42
Annex 7: FinancialManagementand DisbursementArrangements
CHINA: NanGuangRailwayProject
1\. The FinancialManagement Specialist (FMS) has conducted an assessmento fthe
adequacy o f the project financial management systemo fNanGuangRailway Project\. The
assessment, basedon guidelines issuedby the Financial Management Sector Boardon
November 3,2005, has concluded that the project meets minimumBank financial management
requirements, as stipulated inOP/BP10\.02\. Inthe FMS' opinion, the Foreign Capital and
Technology Import Center (FCTIC) o fthe Ministry o f Railways (MOR) and related local
railway administrations will maintain financial management arrangements that are acceptable to
the Bank and that, as part ofthe overall arrangementsthat the borrowerhas inplace for
implementingthe operation, provide reasonableassurancethat the proceeds o f the loan are used
for the purposes for which the loanwas granted\. Financial management risk i s definedas the
riskthat World Bankloanproceedswill not beusedfor thepurposes intended andis a
combination o f country, sector and project specific risk factors\. Risk rating is "moderate" before
and "low" after mitigation measuresat the appraisal stage\.
2\. Funding sources for the project include Bank loan and counterpart funds\. The Bank loan
proceeds will flow from the Bank into a project designated account (DA) to be set up at and
managed by FCTIC, then to the contractors\. The Bank loan agreement will be signedbetween
the Bank andthe People's Republic o f China through its Ministry o f Finance (MOF)\. MOF will
on lendthe funds to MOR for carrying out the project\. Counterpart funds consist o f
contributions from MOR, provincial (Guangdong and Guangxi) governments and domestic
loans\.
3\. No outstanding audits or audit issues exist with any o fthe implementingagencies
involved inthe proposed project\. However, the task team will continue to be attentive to
financial management matters duringproject supervisions\.
Country Issues
4\. To date, no Country Accounting and FinancialAssessment (CFAA) has beencarried out
by the Bank for China, thoughdialogue with the Government of China inrespect ofthe CFAA
exercise has been initiated\. However, basedon the studies and material produced by others,
observations o f developments inthe areas o fpublic expenditures, accounting and auditing, and
Bank experience with China projects for the past several years, it may be notedthat there has
been substantial achievement inthe aforementioned areas andthat further improvement is
expected inthe next few years\. This is a work inprogress and as economic reform programs
further unfold, the Government of China has come to realize the importance of establishing and
maintaining an efficient and effective market mechanism to ensure transparency and
accountability, and minimize potential for fraud or corruption\.
5\. Dueto auniquearrangement by the Government of China, funding (particularly Bank
loans/grants) o f Bankprojects i s controlled and monitored by MOF and its extension at sub-
national level, (i\.e\. finance bureaus at provincial, municipal/prefecture and county level)\.
43
However, project activities are usually carried out by implementingentities o f a specific industry
or sector due to the level and complexity o f expertise involved\. This segregation o f duties
provides added fiduciary assurance\. However, this arrangement does not apply to this project
since all the Bank loanwill be controlled and monitoredby FCTIC\. This specific situation has
been considered by the Bank and FCTIC when designing the project's internalcontrol system\.
Sector Issues
6\. The Ministry o f Railways i s responsible for managing the railway industry at the national
level while at the sub-national level this i s delegatedto the various local administrations which
are then responsible for construction and operation o f the railway industryunder their
jurisdiction (although MOR still has oversight and supervision responsibility)\. Interms o f World
Bank financed projects, construction oflocalrailwaysis implementedbyrelated local railways
administrations or project companies which are incorporated by MOR and local governments\.
The Bankloanproceeds are normally centrally managedby FCTIC ofMOR\. As FCTIC has
managed several Bank projects and i s familiar with the Bank's FM and disbursement
requirementsandprocedures, such arrangement will simplifydisbursementwork andmitigate
the fiduciary risks\. As for the counterpart funds, basedon previous experiences, timely
appropriations from the provincial governments may be at risk\. The task team will closely
monitor the budgetingand counterpart fund matters to avoid any delays inproject
implementation\.
Summary of ProjectDescription
7\. The estimated basecost ofthe proposed project is RMB41 billion(approximately US$6
billion)\. The proposed Bank loan is US$300 million\. See Annex 4 for detailed project
description\.
Audit Arrangement
8\. The Bankrequires that project financial statementsbe audited inaccordance with
standards acceptableto the Bank\. Inline with other Bank financed projects inChina, the project
will be audited inaccordancewith International Auditing Standardsandthe Government
Auditing Standards ofthe People'sRepublic ofChina\. Audit Service Center ofChinaNational
Audit Office for Foreign Loanand Assistance Projects (ASC) andrespective ChinaNational
Audit Office's resident offices have beenidentifiedas auditors for relatedproject activities in
GuangxiAR and Guangdong Province\. One consolidated annual audit report, encompassing all
the project related activities, will be issuedinthe name ofASC\.
9\. The annual audit report o fproject consolidated financial statementswill be due to the
Bankwithin 6 months after the end ofeachcalendar year\. This requirementis stipulated inthe
loan agreements\. The responsible agency and timing are summarized as follows:
44
RiskAssessment and Mitigation
10\. The following riskswith correspondingmitigating measureshavebeen identifiedduring
assessment:
Risk Risk RiskMitigatingMeasuresIncorporatedinto Risk
Rating Project Design Rating
Before After
Mitigating Mitigating
Measures Measures
Inherent Risk
Country Moderate Continuous dialogue with relatedgovernment entities Moderate
level andtechnical assistance fromthe Bankwill help the
government to improve its public sector financial
management\. Inthe short-term, annual audit
requirementswill reducethe riskthat projectfunds
are not usedfor their intendedpurposes\. For those
areas where a government systemcannot be used,the
Bank'sspecific requirementswill be embeddedinto
project financial managementsystem\. Project
supervision mission, usinga risk-basedapproach, will
review the implementation in regardsto all aspects of
project financial managementto minimizeprojectFM
risk\.
D Entity Level Substantial Detailedprojectimplementationwill be conductedby Moderate
local railwayadministrations in Guangxi and
Guangdong\. Monitoringof compliancewith PFM
and Bank procedureswill be important\.FCTIC's
overallmanagementof Bank funds will mitigate
some ofthese risks\.Furthermore,the Bank will work
withthem to further strengthentheir FMcapacity\.
D Project Moderate Most ofthe projectfinancial staff inlocal railway Low
Level administrationshaveextensiveexperience and
knowledgein this industry\. Though they are not
anticipatedto havepriorWorld Bank project
experience, the Bank loanproceedswill be
exclusively managedby FCTIC,whichhasmanaged
five previousBank-financedrailwayprojectsand is
very familiar with the Bank's financial management
anddisbursement requirements\.Additionally, FCTIC
will closely monitorthe projectimplementationand
provide guidanceto local projectfinancial staff\.
Furthermore, FMmanual andtrainingworkshop will
:quip the projectfinancial staffwith necessary
financial managementanddisbursement knowledge\.
45
Risk Risk RiskMitigatingMeasuresIncorporated into Risk
Rating Project Design Rating
Before After
Mitigating Mitigating
Measures Measures
ControlRisk
0 Budgeting Moderate Counterpart funds dominate the project's overall Moderate
budget and any delays in counterpart contributions
will affect project implementation\. The FMS will
work with FCTIC and related local railway
administrations to improve their budget preparation
so that counterpart funds could be included intheir
approved sectoral budget\. Moreover, budgetto actual
variation monitoring and evaluation will improve
their budget execution\.
Accounting Moderate Accounting policies and procedures are already in Low
place\. Circular #13 has been issued by MOF and
adopted for all World Bank financed projects\.
Necessary training will be provided to the accounting
staffto improve their knowledge and qualifications\.
Internal Moderate Internal control procedures and policies are already in Moderate
Control place and will be documented inthe financial
management manual for all parties to follow\. In
addition, internal audit activities will be conducted by
MOR on a regular basis focusing on compliance and
transaction examinations\.
D FundsFlow Low Funds flow arrangements are simple\. FCTIC has Low
demonstrated its experience inmanaging Bank loan
proceeds through previous and ongoing projects\.
D Financial Moderate The project financial report covers all the project Low
Reporting funds includingboth Bank loan proceeds and
:ounterpart funds\. The financial reporting
responsibilities have beenestablished\. The form,
:ontent and periodicity o f financial reports are well
definedby MOF and understood by FCTIC and
related local railway administrations\. Additionally,
FCTIC has demonstrated its experience and capability
inthis areathrough management ofother Bank
x o jects\.
D Auditing Low The external auditors have extensive experience with Low
Bank project audits\. The audit will be conducted in
iccordance with acceptable auditing standards and the
iudit report will be due to the Bank before every June
3Oh\.
3verall Moderate Low
11\. This project's FMis primarilyhandledby the Foreign Capitaland Technology Import
Center (FCTIC) o f MOR, which has managed several bank loan-financed projects, and their
capacity and experience have beendeemed appropriate and satisfactory\. Though the financial
management staff at the local level has no prior experience inimplementingBank-financed
46
projects, this will not impact the risk o f misusingBank loanproceeds as the Bank will only
finance goods procurement and consulting contracts, which will be managed exclusively by
FCTIC o f MOR\. The local financial staff will only manage counterpart funds and prepare project
financial statementsinaccordancewith the format requiredby the Bank\.These financial staff are
from the local railway administrations and have extensive railway industry experience and thus
will only requirethe Bankto educate them on Bank-related FMrequirements/procedures\.
Additionally, FCTIC at the central level will supervise their work andprepare the project
consolidated report\. The "low" riskrating is assignedby taking into account the above mitigating
measures\. The FMS will monitor the effectiveness o f the measures andproject FMrisk during
project implementation\.
FundsFlow and DisbursementArrangements
12\. Fundsflow for the Bank loanwill follow Bank and MOF requirements\. One USD
designated account (DA), will be established and managed by FCTIC\. The authorized allocation
for the DA i s proposed not to exceed US$lO million\. The Bank loanproceeds will be directly
managed by FCTIC and will not flow to the local railway administrations\. The detailed funds
- -
flow i s as follows:
The DA Managed Suppliersand
World Bank by FCTIC contractors
13\. All the Bank loanproceeds will be disbursed against eligible expenditures as indicated in
the following table\.
Amount of the Loan Percentageof
Category Allocated Expenditures
(inUSDmillion) to be financed I
(1) Goods 298\.95 100%
(2) Consulting service 0\.30
n 3n 100%
(3) Front-end fee 0\.75
Total 300\.00
14\. Four disbursementmethods: reimbursement,advance, direct payment and special
commitment are all available for the project\. The minimumvalue o f applications for
reimbursement,' direct payment, and special commitment will be agreedduringnegotiations\.
15\. For expenditures against contract amounts indicated inthe table below, Statements o f
Expenditure (SOE) will be furnishedas supporting documentation to request for reimbursement
and reporting eligible expenditures paid from the DA\.
ExpenditureCategory ContractsLess than US$ Equivalent
Goods 500,000
Consultant 300,000
47
16\. For contract amounts subject to the Bank prior review indicated inthe table below, the
list o fpayments against the contracts, and records evidencing eligible expenditures, e\.g\., copies
o f receipts, supplier invoices, will be furnishedas supporting documentation to request for
reimbursementandreportingeligible expenditures paid from the DA\.
ExpenditureCategory Contracts Equivalentor More than US$ Equivalent
Goods 500,000
Consultant 300,000
FCTIC will be directly responsible for the management, monitoring, maintenance and
reconciliation o f DA activities o fthe project\. The flow o f withdrawal application i s proposed as
follows:
Contractors1 4 FCTIC + The
Suppliers - World Bank
I I I I
17\. Counterpart funds consist o f shareholders' investmentand domestic loans\. Shareholders'
investmentincludes MOR'Scontributionincash and provincial (Guangdong and Guangxi)
government's contribution incashand land\. The shareholders' contributions will be injected
into the project following commercial procedures\. Domestic loans will be mobilized by local
government following domestic procedures\.
Managementand ReportingRequirement
Strengths and Weaknesses
18\. Strengths\. The Bank loanproceedswill only finance the goods procurement and
consultant activities o fthis project\. Therefore, all the disbursementwork will be centrally
managed by FCTIC o f MOR\. As FCTIC has managed several Bankprojects and i s familiar with
the Bank's FMand disbursement requirementsand procedures, such arrangement will simplify
disbursementwork and mitigatethe fiduciary risks\. Fromthe perspective ofproject
management, FCTIC will closely monitor the project implementation and provide guidance to
the localproject financial staff\.
19\. Weaknesses Besides the FMrisks identifiedin#10 above, no other significant
\.
weaknesses are identified\.
ImplementingEntities
20\. Similarto the ongoing Bank financed ShiZhengRailway Project, MOR'SFCTIC will
manage procurement and disbursement matters on a national level\. The Preparatory Group o f
the NanGuang Railway Company, jointly established inNaming by localrailway
administrations and the provinces o f Guangxi and Guangdong, will be the local implementing
48
agency managing all the day-to-day construction work\. MOR will contribute approximately
70% o fthe capital with the remainder providedby the two provinces\. Most o fthe project
financial staff inthese local railway administrations has extensive experience andknowledge o f
this industry\. The Bankloanproceedswill not flow to localrailway administrations which will
only manage counterpart funds\.
Budgeting
21\. Inaccordancewiththe projectimplementation planandconstruction progress, the local
railway administrations will prepare an annual investmentbudget\. Such budget will be reviewed
and approved by FCTIC and the Finance Departmentof MOR\. Based on the approved budget,
the localrailway administrations will receive government appropriations and mobilize domestic
loans\.
22\. For budgetvariances arising during execution, necessary authorization and close
monitoring should be established\. Timely and accurate information on variances should be used
as the basis for mid-termadjustments\.
Accounting
23\. The administration, accounting andreportingofthe project will be set up inaccordance
with the Circular #13: "Accounting Regulations for World Bank Financed Projects" issued in
January 2000 by MOF\. The circular provides in-depthinstructions o f accounting treatment o f
project activities and covers the following:
0 Chart o f account
0 Detailedaccounting instructions for eachproject account
0 Standard set o fproject financial statements
Instructions on the preparation of project financial statements
24\. The project financial reporting package, including detail format and content o f project
financial statements was agreed to betweenthe Bank and MOF\. This set o f project financial
reportingpackage includes the following:
0 Balance Sheet
0 Summary o f Sources and Uses o f Fundsby Project Component
0 Statement o f Implementationo f Loan Agreement
Designated Account (DA) Statement
0 Notes to Financial Statements
25\. BothFCTIC and related local railway administrations will be ma aging, monitoring and
maintaining respective project accounting records and retaining original supporting documents\.
49
26\. Adequate project accounting staff with educational background and work experience
commensurate with the work they are expected to performi s one o fthe factors critical to
successful implementationo fproject financial management\. Based on discussions, observation
and review of educational background and work experience ofthe staff identified for financial
and accounting positions for this project, the task team noted that they are qualified and
appropriate to the work they are expected to assume\.
27\. To strengthenfinancial management capacity and achieve consistent quality of
accounting work, MOR Finance Departmenthas prepareda project financial management
manual (the Manual)\. The Manual provides detailed guidelines on financial management,
internal controls, accounting procedures, fund and asset management and withdrawal application
procedures, etc\. It will be distributedto all the relevant financial staff before implementation
start\.
28\. The computerized financial managementinformation system, "Railway Information
Management System (version 4\.0)", developed by MOR will be utilized for this project\. This
system has beenused indomestic reportingfor several years and is also usedfor the current
Bankfinanced railway projects\. Through further development and upgrade, the project
transactions could also be integrated into this system\. The task team will closely monitor the
processing o f its accounting work especially inthe initial stage to ensure that complete and
accurate financial information is provided ina timely manner\.
Internal Controland Internal Auditing
29\. As withprevious Bank financed railway projects, this project will establish internal
control procedures andpolicies, including approval and authorization controls, segregation o f
duties, bank statementreconciliation, and safeguarding assets\. The funds flow will be arranged
and monitoredthrough FCTIC and will include their substantive review\.
30\. MOR has its own internal inspection division, who will function as the internal auditors
for this project, by conducting compliance andtransaction oriented examinations on a regular
basis\. During project implementation, the FMS will review their project examination reports to
see if any material issues are identified\.
FinancialReporting
31\. The format and content o fthe project financial statementsrepresent the standardproject
financial reporting package agreed to betweenthe Bankand MOF, and have been discussed and
agreed to with all parties concerned\.
32\. Related local railway administrations will preparethe project financial statementson
their implementedproject activities, which will thenbe usedby FCTIC for preparing
consolidated project financial statements(format inaccordance with the aforementioned Circular
#13 agreed with MOF) as part o fthe Progress Report and these will be submittedto the Bank for
review and comment on a regular basis\. The unaudited semi-annual consolidated project
50
financial statementswill be prepared and furnishedto the Bank by FCTIC no later than 45 days
following each semester (the due dates will be August 15thand February 15th), inform and
substance satisfactory to the Bank\.
Conditionality
33\. No additional financial covenants are proposedby the FMS other thanthe standard
financial covenants, (e\.g\. maintainingproject accounts inaccordancewith sound accounting
practices and audit requirement),as described inthe legal document\.
SupervisionPlan
34\. The supervision strategy for this project i s basedon its FMrisk rating, which will be
evaluated on a regular basis by the FMS and inconsultation with the relevant task team leader\.
51
Annex 8: ProcurementArrangements
CHINA: NanGuangRailwayProject
A\. General
1\. Procurement for the proposed project would be carried out inaccordancewith the World
Bank's "Guidelines:Procurement under IBRDLoans and IDA Credits" dated May 2004 and
revisedinOctober 2006; and "Guidelines:Selection and Employment o f Consultants by World
BankBorrowers'' dated May 2004 and revisedinOctober 2006, andthe provisions stipulated in
the Legal Agreements\. The various itemsunder different expenditure categories are described in
general below\. For each contract to be financed by the Loan, the different procurement methods
or consultant selection methods, the need for pre-qualification, estimated costs, prior review
requirements,and time frame are agreedbetweenthe Borrower andthe Bank inthe Procurement
Plan\. The Procurement Planwill be updated at least annually or as requiredto reflect the actual
project implementation needs and improvements ininstitutional capacity\.
2\. Procurementof Works:Nil\.
3\. Procurementof Goods: Goods procured under this project will include:
telecommunication equipment, signaling equipment,electrificationequipment, mechanical
equipment,andrails for the proposedNanGuang Railway Project\. The procurement will be
undertaken usingthe Bank's SBD for all ICB andthe Chinese Model BiddingDocuments,
agreed with or satisfactory to the Bank, for all NCB\.
4\. Procurementof non-consultingservices: Nil\.
5\. Selection of Consultants: Consultant servicesprovidedby firms and individuals for the
project will be identified during implementation\. An amount o f US$300,000 will be allocated to
consultant services and an overseastraining study tour\. Short lists of consultants for services
estimatedto cost less than US$300,000 or equivalent per contract may be composed entirely o f
national consultants inaccordancewith the provisions o f paragraph 2\.7 o f the Consultant
Guidelines\.There may be some consultant services engaging universities and government
research institutions\.
6\. OperatingCosts: Nil\.
7\. Others: Nil\.
8\. The procurement procedures and SBDs to be usedfor eachprocurement method, as well
as model contracts for works and goods procured, are presented inthe project implementation
manual inFCTIC's office\.
52
B\. Assessment of the agency's capacity to implementprocurement
9\. Procurement activities will be carried out by the ForeignCapital and Technical Import
Center (FCTIC) o f the Ministry o f Railways\.
10\. An assessmentofthe capacity ofFCTIC to implementprocurement actions for the
project has beencarried out by the Bank's procurement specialist\. The assessmentreviewedthe
organizational structure for implementingthe project and the interactionbetweenthe project staff
responsible for procurement and the Ministry's relevant central unit for administration and
finance\.
11\. The overall project risk for procurement is assessedas beingmoderate\.
C\. ProcurementPlan
12\. The Borrower, by appraisal, had developed aprocurement planfor project
implementation which provides the basis for the procurement methods\. This plan has been
agreedbetweenthe Borrower and the Project Team at appraisal and i s available at FCTIC's
office inthe Ministry o f Railways and can be found at the end o f this Annex\. It will also be
available inthe project's database and on the Bank's external website\. The Procurement Plan
will be updated inagreementwiththe Project Team annually or as requiredto reflectthe actual
project implementation needs and improvements ininstitutional capacity\.
D\. Frequencyof ProcurementSupervision
13\. Inadditionto the prior reviewsupervision to becarried out from the Bank's offices, the
capacity assessmento f FCTIC has recommended supervision missions to take place once a year
to visit the field to carry out post review o f procurement actions\.
E\. Detailsof the ProcurementArrangementsInvolvingInternationalCompetition
14\. Goods andNon Consulting Services
(a) List o f contract packagesto be procured following ICB (see Procurement Plan)\.
(b) ICB contracts estimated to cost above US$500,000 or equivalent for goods per contract or
the aggregatevalue ofthe contracts inapackage and all direct contracting will be subject to prior
reviewby the Bank\. The first NCB contract irrespective of contract sumwill also be subject to
the Bank's review\.
53
15\. Consultant Services
(a) Consultant services provided by firms and individuals for the project will be identified
duringimplementation\. An amount ofUS$300,000 will be allocated for consultant servicesand
an overseastraining tour\.
(b) Consultancy services for firms estimated to cost above US$300,000per contract will be
subject to prior review by the Bank\.All single source selection o f consultants irrespective of cost
estimate will be subject to prior review by the Bank\.All individual consultant selection
estimated to cost above US$300,000 will be subject to prior review o fthe Bank\.
(c) Short lists composed entirely o f national consultants: Short lists o f consultants for services
estimated to cost less thanUS$300,000 equivalent per contract, may be composed entirely o f
national consultants inaccordancewith the provisions o f paragraph 2\.7 o f the Consultant
Guidelines\.
Thresholds for ProcurementMethods
Description Thresholds
- \.ooo ICB
I I ~
I NCB
Consultant <=us$200,000 CQS
Services
Thresholds for Prior Review
Description Thresholds
Goods >=US$500,000 Prior Review
The first NCB contractirrespectiveof contract sum Prior Review
Consultant Consultantfirm selection>=US$300,000 Prior Review
Services All SSS contracts Prior Review
All individual consultant selection >=US$300\.000 Prior Review
54
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Annex 9: Economicand FinancialAnalysis
CHINA: NanGuangRailway Project
ANNEX9A: ECONOMIC ANALYSIS
A\. Introduction
1\. This annex presentsthe results ofthe economic evaluation o fthe construction ofthe new
medium-speedpassenger line between Litang West inGuangxi Province and Sanyanqiao in
Guangdong Province (theNanGuang Railway project)\. This i s expected to yield a netpresent
value during 30 years o f operation o f RMB 8 billion(2007 prices discounted at 12% to the first
full year of operation in2014) andto achieve an economic rate ofreturnof 13%\.
B\. Traffic andNetworkCapacity
2\. The NanGuang Railway project is a newroute linkingthe existingrailway network of
western region o f southwest China and existingrailway network o f the Pearl River Deltaregion
which saves some 220 kmcompared to the current routes\. The project provides a much more
direct link between the Pearl River Delta and two of China's poorer provinces compared to the
current circuitous and congested single-track route via Maoming\. It will provide a strong impetus
to assist these provinces inclosing the gap ineconomic development betweenthemselves and the
wealthier coastal delta region\.
3\. The route starts from Sanyanqiao and runs via New Zhaoqing (where it diverges from the
GuiGuang Railway project currently under construction), Wuzhou and Guigangto Litang West
and provides a direct route for on-traffic to Nanning, Kunmingand Yunnan\. Currently this
traffic travels on the non-electrified single-track Sanmao local railway to Maoming and on via
Hechun\.
4\. Although most trains will operate betweenGuangzhou andNanning, as the Nanning-
LitangandNewZhaoqing sections are being (or will be) constructed inother projects, the
evaluation considers the costs and benefits o fthe New Zhaoqing-Litang section only\.
64
Table 9\.1: Traffic flows within NanGuang catchment2007
Guangdongl
Fujian Nanning Guigang Liuzhou Yunnan Total
Passengers(000)
GuangdongRujian 377 274 187 666 1504
Guangxi
Nanning 472 132 604
Guigang 266 110 110 44 530
Liuzhou 229 134 363
Yunnan 821 43 864
Total 1788 487 583 297 710 3865
Freight(000 tonnes)
GuangdongEujian 130 37 644 807 1617
Guangxi
Nanning 337 275 612
Guigang 106 76 93 188 463
Liuzhou 315 477 792
Yunnan 3183 4541 7924
Total 3941 206 5330 737 995 11209
5\. In2007, the traffic betweenNaming-YunnanandGuangdong-Fujian was 4\.5 million
tonnes o f freight and 2\.3 millionpassengers, with a further 1\.1 million tonnes o f freight and 0\.9
millionpassengers between Guigang-Liouzhou and Guangdong (Table 9\.1)\. The route thus
provides substantial benefits to Nanning although traffic to and from Yunnan represents nearly
65% o f the passengermarket and over 70% o f the freight market\.
6\. Once the current economic downturn has been surmounted, economic growth inthe
western provinces i s expected to be above average for at least the medium-tern; freight traffic i s
assumed to decline by 10% inthe short-term but passengertraffic i s unlikely to be as affected
and has been assumedto grow at 4% p\.a\. to 2011 (compared to 8% p\.a\. inrecent years)\. After
2011, passenger and freight traffic along the corridor i s then expected to increase at around 7%
p\.a\. and 6% p\.a\. respectively to 2015, reducing to between3 and 4% p\.a\. thereafter, assuming
capacity is available and excluding any impacts due to the improvements to infrastructure\. This
forecast growth over the NanGuang Railway project i s consistent with recent national trends; the
growth rates for passenger and freight traffic on the network as a whole between2000 and 2008
have been7\.2% p\.a\. and 7\.9% p\.a\. respectively\.
7\. Inparticular, after more thantwo decades ofintermittentgainanddecline, the volume of
inter-city passengertraffic beinghandled by CR grew substantially in2007and 2008 as
additional services were provided\. Over the last year, since the initial introduction o f high-speed
services (which now carry between5- 10% o f all passengers), rail passengertraffic has grown
twice as fast as both road and air\. This reversal o fpast trends i s expected to continue with the on-
going reductions intravel time on the planned high-speednetwork as well as the substantial
increases inroad costs; even since November 2008, passengertraffic has grown at about 7% p\.a\.
65
8\. Two newrailways will be built inthe medium-termbetweenHepuand Hechun and
betweenMaoming andXiaolan (the latter predominantly for passengers) to complete a newroute
along the Guangxi and Guangdong coasts\. When complete, this new route will be shorter than
the existing Sanmao route but will still be 154kilometers longer thanNanGuang\.
9\. The traffic forecasts for the NanGuang Railway project assumethat most ofthe
passengertraffic betweenYunnan-Naming-Guigang and the Pearl River Delta will transfer to it\.
Inthe short-term, passengersto andfrom Liuzhouare likely to also usethe NanGuang Railway
project, as the section betweenLitangand Liuzhou will be upgraded as part o f the Liuzhou-
Naming (LiuNan) PassengerDedicated Line\.However, inthe longer-term, as Liuzhou-Guilin is
also upgraded, the GuiGuangRailway project will offer a route to Guangdong which i s the same
distance andthis traffic can be expected to go on both routes\. All freight traffic between
Yunnan-Naming-Guigang and Guangdong-Fujian is assumedto use the new railway, saving
180 kilometers compared to the existingroute via the Sanmao railway\.
10\. The overall objective is that by 2015 anew medium-speed(200 km/h)corridor will be
constructed for this traffic, with freight trains operating at a maximum o f 120 km/h\. The travel
time betweenNamingand Guangzhou for passengersshould be reduced from the current 11
hours to around 3 hours, providing a quantumimprovement inthe accessibility betweenthe
under-developed provinces o f Guangxi and Yunnan and the industry and commerce of the Pearl
River Delta\.
11\. The key factors underpinningthe forecasts are the volume oftraffic transferred from road
and air andthe volume oftraffic generatedby the much shorter travel time and improved service
frequency, taking into account changes inother service characteristics such as the higher rail
fares as well as the reducedhighway travel times when the Nanning-Guangzhou expressway i s
completed\. Two independent sets o f forecasts for passengershave beenprepared,one by the
DesignInstituteresponsible for the Feasibility Study and a second set by the Bank team\. Both
are basedon a logit choice model; the DesignInstitute calibrated a model based on absolute
modal shares while the Bank team used a pivot point model consistent with a price elasticity o f
0\.9\. The DesignInstituteforecasts for the opening year predicted a low proportion o f existing
rail traffic (30% compared to the Bank's estimate o f 56%); as there appears to be an
inconsistency inthe DesignInstitute's forecast, with traffic diverted from the existing route
beingsignificantly lower thanthe current rail flow, the Bank's forecast has been adopted for the
evaluation\. Both forecasts included an allowance for generatedtraffic\. The DesignInstitute
forecast o f generatedtraffic varies by origin and destination, with an average o f 31% overall\.
The Bankforecasts are more conservative, forecasting 14% ofthe total to be generated\. This is
comparable to the typical generatedtraffic on other high-speedrailways o f 20%, although the
travel time savings on such lines are generally smaller thani s the case with NanGuangRailway
project \.
12\. The freight forecasts preparedby the Institutewere more straightforward, with the
through freight betweenNaming-Yunnan and Guangzhou assumedto transfer inits entirety
Local freight from GuiGuang and Wuzhou i s forecast to be relatively small andthe Bank's
66
forecasts assumed halfo f this freight currently travels by road and halfwill be generated\.No
other diversion o f freight traffic from other routes or modes has beenassumed other than this
local freight traffic\.
13\. Table 9\.2 compares the two sets o f forecasts for key years\.
Table 9\.2: Forecast traffic 2015 & 2030
I Total 13\.3 19\.7
14\. The forecast traffic on the project line in2020 under these assumptions is 12 million
passengersand 16 milliontonnes o f freight and 16 millionpassengersand 20 million tonnes o f
freight in2030\. While the principal route that would otherwise carry this traffic (Guigang-
Hechun-Maoming-Guangzhou) is currently relatively busy, duplication ofthe existing single-
track sections would provide adequate capacity\. For the purposes o fthis evaluation, it has been
assumedthat duplication which would otherwise be requiredin2020 can be deferred
indefinitely\.
C\. Project Investment
15\. The estimated cost ofthe project infrastructure is RMB 36\.6 billion(US$5\.3 billion) at
2008 4 2 prices\. For the purposes o f economic analysis, all input costs are assumed to be adjusted
to marketprices and no shadow price factors have beenused\.
16\. The initial cost o f the train-sets (taken as 10 8-car sets) and other rolling stock i s an
additional RMB 2 billion (US$290 million)\. This has been excluded from the project capital
costs and instead the net change inrolling stock capital has been converted into an equivalent
annual cost and included inthe operating costs for the "with project" case\. Similarly, no specific
cost has been included for any additional investmentrequiredby the power authority to provide
additional tractionpower supplies, as this i s includedwithin the price paid by MOR for traction
electricity\.
67
D\. Benefits
17\. The benefits o f the new construction o f the NanGuangRailway project fall into three
main categories:
0 a major reductionintravel time and distance for the traffic diverted to the new project
line, thereby generating significant operating cost savings to the railway and time savings
for passengers and freight\. Service frequency will also be greatly improved, with services
every hour as opposed to the existing services which leave effectively twice each day\.
0 freeing up capacity on the existing lines will allow them to handle the projected increase
infreight traffic, which would otherwise travelby roador not at all\.
0 wider economic, social and environmental benefits\. Some o f these benefits are included
as part o f the cost-benefit analysis (CBA)\. However, a significant amount i s not covered
by the CBA\. For example, the NanGuangRailway project would provide a quantum
improvement inaccessibility between the southwest provinces and the Pearl River Delta
and thus increase the competitiveness of the regional economy and stimulate its economic
growth\. These benefits fall outside the conventional benefits directly linked to transport
operations and are discussed further in Section E\.
18\. Time and Distance Savings\. The project will save the average rail passenger more than
six hours compared to the existing timetable\. This has beenvalued usingthe weighted average
income per head o f the expected passengers usingthe train o f RMB 2400/month or RMB
15/hour (2008 values at 2007 prices), based on the results o f on-board surveys o f rail services in
the region\. Business and non-business travelers are valued at 100% and 35% o f this average
income (based on estimates derived for countries at a similar stage o f development) and the
businesshon-business mix was taken at 35:65, again based on the on-board surveys\.' This gives
an average value o f time savings in2008 o f RMB 8\.73 per hour (US$1-27), which i s increased
inline withthe expected growthinaverage income per head\. Frequency benefitshave been
considered when deriving the demand forecasts but have not been explicitly includedinthe
evaluation\.
19\. Distance savings have been calculated based on the estimated resources (loco-km,
wagon-km etc) saved, combined with 2007 unit costs\. Savings for passengers transferring from
air and road (estimated as 7% and 22% respectively o f the opening volume) are based on the
estimated operating costs o f buses and air\.
20\. The project i s part o f a general improvement o f the link between Yunnanand Guangzhou
andtherefore contributes to benefits for trips made over much longer distances (e\.g\. Pearl River
Delta to Kunming)\. For such trips, the project has been credited with a share o f the benefits in
proportion to its distance relative to that o f the total trip\.
21\. Freeinn-up capacity\. Transferring passenger and freight operations to the new project
line from the existing network will provide additional capacity for freight which would otherwise
On-boardsurveys in2002 gave a mix of4456; this has beenassumedto reduceby 2015 to 35:65
68
have slower transit times or, ifa route i s saturated, be forced to travel by road or not travel at all\.
The most heavily-used alternative route is from Guigang to Zhaoqing via HechunandMaoming\.
Inthe long-term, this route will bepartlyrelievedbythe Guangdong coastal railway between
Maoming and Jiangmen but this will primarily be for passengers\. The potential reduction in
congestion on the Maoming line has beenallowed for inthe economic analysis by including a
benefit, on a per train basis, that is credited to the project\.
22\. Transferredand generatedbenefits\. The improved level of service will attract passengers
from other modes, especially from Wuzhou which currently does not have a practicable rail
service to Guangzhou as well as generating additional trips by providing greater opportunities for
potential passengersto travel (e\.g\. it will be easily possible to make a day returntrip between
Guangzhou and Naming, something which i s currently impossible to achieve)\. This trip transfer
will create user benefits as well as, inmost cases, reducing bothoperating costs and externalities\.
23\. Divertedand generatedtraffic, calculated as parto fthe demandforecasting, has been
allowed benefits calculated at 50% o fthe increase inuser surplus to base traffic, as provided by
the 'mle-of-a-half\. The associatedoperating cost savings for traffic divertedfrom other modes
has been calculated usingaverage operating costs derivedfrom user surveys and highway cost
studies (for road) and from the assumed operating cost component of air fares o f 85%\.
24\. External and environmental benefits\. The external benefits included inthe benefit
include the reduction inroadaccidents and congestion, vehicle emissions (net o f the change in
rail emissions) and changes ingreenhousegases (GHG)\. These have all beenvalued using
standardunit costs adjusted to Chinese conditions\.
E\. Wider EconomicBenefits
25\. Recently there has beenincreasing focus on the impacts o f major transport projects which
are outside conventional financial and cost benefit analysis (this i s based on economic studies
that have since become known as the New Economic Geography)\." These major transport
projects arise through the stimulation, over time, o f regional economic development associated
with:
0 the productivity and agglomeration o f firms
0 the working o fproduct and service markets, and
0 the working o fthe labor market
26\. Inthe UK,where there have beenrecent analysesofsuchwider benefits, the impacts
have been shown to be particularly significant for rail projects\. Similar studies have also been
undertaken inGermany, the Netherlands, and Sweden\.
lo
This has beenpioneeredby anumber of economistswho have worked on location andtrade theories, such as
Fujita (1988),Krugman(1991) and Venables (1996)\.
69
27\. The theories o fNew Economic Geography have beenapplied withinthe Chinese context
to assess the extent o f such benefits for the NanGuangproject\.
28\. Transport projects are a special type o f investment as lower transport costs and transit
times can potentially influence:
where companies invest and grow their business
0 how they source their inputsfrom different locations
0 how they develop and expand the catchment o ftheir goods and services
how they imitate and learn from one another amid competition, and (insome cases)
develop their own niche markets
All ofthe above can lead to increasedproductivity\.
29\. A transport project that makes a step change intravel costs and times betweenregional
economic centers (such as the NanGuang Railway) is expected to yield significant impacts
through bringing companies closer together intravel time and distance\. Broadly speaking, the
impacts can be classified as:
Direct impacts on companies as they make their individual decisions basedon
considerations o fprofits and costs\. These are already largely accounted for inthe cost
benefit analysis o fpassengerand freight traffic (e\.g\. via travel time savings)
Externalities -the reductions indistances and travel times enable the companies to share
inputand output marketsandto enjoy knowledge spillovers; this produces positive
externalities inthe form o f agglomeration\. However, infrastructure buildingand traffic
produces negative environmental effects\. The cost benefitanalysis usually includes the
environmental effects, but excludes agglomeration effects\.
30\. Agglomeration effects are excluded from conventional cost benefitanalysis as most
companies decide where to locate/expand on the basis o ftheir own profits and costs rather than
the impact o ftheir locationuponprofitshosts of others\. However, inareas with improved
transport, an increasing number o f companies become more closely connected and this is known
to generate agglomeration economies\. Such agglomeration brings benefits to all companies in
the cluster\.
31\. Therefore, ifa transport project makes a company locate or expand ina given area, the
cost benefitanalysis will capture the benefits to the company through direct cost and time
savings but will not include potential efficiency gains which arise from that decision but which
accrue to other companies inthe cluster\. Examples o f such gains are i)wideningthe range o f
products for production inputs, ii)sharing a wider and more flexible pool o f labor, capital, and
raw materials, iii)transfer o f technology and innovation amidst increased competition inthe
cluster\.
32\. Such agglomeration economies have long beenunderstood to exist\. Theories on
agglomeration can be traced back to Marshall (1890) while recent UK researchhas developed a
methodology'based on New Economic Geography to quantify such impacts\. This methodology
has beenapplied to a number o ftransport studies inthe UK; amongst them rail projects that
70
connect the main urbancentre and its hinterland (such as CrossRail inLondon) have shown very
significant agglomeration benefits\.
33\. InChina, agglomeration effects have beenrecognizedat atheoretical level, although to
date there are only a few quantitative studies on the topic\. One, conducted by the Bank in2006,
found that firms inmore populated cities and city regions tendto be more productive, and this
was tentatively attributed to greater competition and agglomeration benefits\.
34\. Several interviewswith planners and businesses inNanning showed that local businesses
are already well aware o f the possibility o f the construction o f the NanGuang Railway\.
Businesses inNanning and along the NanGuang corridor have formulated their commercial plans
to exploit the complementarity o f local industrial activities to those inthe Pearl River Delta\.
Guangdong businesses have already made significant investmentinNanningbusinesses,
bringing expertise as well as financial support for expandingand new business activities\.
Obviously, when a railway line links a developed area (such as Guangdong) with an under-
developed area (such as Guangxi), there i s a complex pattern o fpotential gains and losses
betweenthe regions, although the total effects are expected to be beneficial, particularly ifthe
commercial activities inGuangxi are developed ina complementary manner to those in
Guangdong\. The gains and losses o f each regionto a significant extent depend on local
circumstances, such as industry clustering, local resources, labor supply, entrepreneurship,and
governance, butthe field work indicates that there can be significant benefits arisingfrom the
agglomeration effects\.
35\. The UK analysis basedonNew Economic Geography also considers two other groups o f
long-term effects, besides agglomeration, that have not beenaccounted for by the cost benefit
analysis\. '' They are:
gains by firms inproduct and service marketsthat are not fully competitive, and
additional gains inthe labor marketthrough improvedlabor supply\.
36\. There could also be significant short term benefits along the railway corridor that are
associatedwith the investment and construction activities, with the local input-output multiplier
effects o fthe railway investment and also with the training o f and technology transfer to the local
work force inunder-developed areas\. A post-opening survey along the original NanGuang to
Kunmingsingle track line undertakeninthe early 2000s suggestedthat the railway construction
ledto a step change inthe economic andtechnical outlook ofthe local populationand gave them
momentumfor exploitingthe new rail services\.
Possiblequantificationof agglomeration benefits
37\. The various additional benefits discussedabove are intrinsically difficult to quantify\.
However, UK Dff (2006) developed an approach basedon a relatively simple partial
equilibriumframework that has beenusedinpractice to quantify the agglomeration benefits ina
" Summarizedin"Transport,WiderEconomicBenefits,andImpactsonGDP" London:UKDepartmentfor
Transport(2006)\. See h t t p : / / w w w \. d ~ \. g o v \. u k / p g r / e c o n o m i c s / r d g / w 3 137
71
numbero froad andrail projects inthe UK\. This approach is basedon a comparison ofthe
economic mass with and without a transport project\. The economic mass for a given location is
definedas
where
i Locationo f a firm
j Other locations inthe regionwhere other firms are located
g; The generalized cost o ftravel fromj to i, where B denotes 'Base Case'\. All
the zone pairs ij can be considered inthe calculation ifappropriate\.
E," A measure of economic activity\. Inthe UK approach, the numbero fworkers
i s used as this measure but as the units cancel out, regional GDP has beenused
inthis project\.
38\. The economic mass o fthis location i increases if:
0 there i s an increase inthe level o f economic activity ini,or the surrounding areas
0 there are decreasesinthe generalized costs o f travel betweeniandj (especially where the
economic activity level i s high)\.
Increasesincongestion, or increased dispersion o fjobs, will therefore reduce the economic mass\.
39\. The generalized cost oftravel has beenderivedfrom the estimated costs andtimes
assumed inthe demand forecasts\. These costs and times determine the level o ftransfer and
generatedtraffic and can also be combined into a composite cost averaged over all modes which
also takes into account various other non-quantitative factors which also influence mode share\.
This generalized cost was calculated for boththe 'with-project' and 'without-project' cases; the
latter allowed not only for the current transport network but also for any other improvements
(e\.g\. to expressways or other railways) which would be made inthe absence o f the project\.
40\. The agglomerationbenefitsare calculated basedon changes ineconomic mass for an
Alternative Case (A) versus a Base Case (B), as
where
w A I B Agglomeration benefits for the Alternative Case (A) vs\. the Base Case (B)
I The locationfor which agglomeration benefits are beingcalculated
K Industrysector
d,A,d,B Economic masses o f location i infor A and B respectively
d,B" Economic mass for the Base Year (Le\. 2006)
72
Y Productivity parameter with respectto economic mass (empirically estimated)
4 GDP per worker inZ
E:' Employment (inthe Alternative Case A)
41\. The above equations have beenapplied to the NanGuangproject to demonstrate the
potentialmagnitudes o fthe effects\. The estimation o f specific Chinese parameters would
involve extensive analytical work and the analysis inthis annex instead uses a wide range of
parameter values imported from the UK studies\.
42\. These benefits have beenestimated using the calculation outlined above, for the years
2015 -2045\. Table 9\.3 summarizes the results for a rangeo f assumptions for ,the empirical
parameter inthe model\. Recommendedvalues o f 7' inthe UKare between0\.08 and 0\.20 for the
range of industries\." These values have been applied to a range o f rail projects inthe UK\.A
value o f 0\.075 has been adopted for the current project\. However, the sensitivity tests show that
even a low y value such as 0\.05, well outside the UK recommended range, still generates
substantial agglomeration benefits, equivalent to over 45% o fthe project cost when discounted at
12%\. This i s consistent with similar results obtained inUK,where agglomeration benefits are o f
the same order o f magnitude as the puretransport benefits for major projects\.
Table 9\.3: Agglomerationbenefits(RMB billion 2008)
Gamma(y ) Annual benefits 2020 Discounted benefits (@
12% to 2014)
0\.050 1\.4 18\.1
0\.075 2\.1 28\.1
0\.010 2\.9 38\.8
43\. This estimate of agglomeration effects includes three geographic areas within Guizhou
Province (Nanning, Guigang and Wuzhou) as well as inYunnan\. Although they are the furthest,
and thus benefitfrom larger reductions intravel time, Naming and Kunming only represent
about 25% o f the agglomeration benefits; this is becausethey both have existing air services and
thusthereductionincomposite cost across all modes is not as great as itwould otherwise be\.
Guigang and Wuzhou both currently have poor rail services to Guangzhou andNaming, no air
service and only partially-completed expressways\. This project thus generates a quantum
improvement intheir accessibility which flows through to the agglomeration benefits\. In
practice, similar benefits may also accrue inother parts o f Guangxi Province (e\.g\. Liuzhou) but
these have been excluded as they are likely to be relatively small given that this city also has the
option o f usingthe GuiGuang line\.
F\. EconomicRateofReturn and SensitivityAnalyses
44\. The benefits are calculated for the 30-year periodfollowing project completion, from
2014to 2044 and the estimated EIRRderivedandNPV calculated (using a discount rate of
l2The derivationofthe y parameter is throughan estimationofthe trans-log production functions ofthe different
industries\. This has beendone inthe UK usingfm-level accounts data\.
73
12%)\. The estimatedNPV, discountedto 2014, is about RMB 8\.2 billion in2007 priceswith an
EIRR of 13%\.
45\. The distribution of direct transport-relatedbenefits is as shown inTable 9\.4\.
Table 9\.4: Analysis of ProjectBenefits(RMB billion2007, discountedat 12% to 2014)
46\. The sensitivity ofthese resultswas tested against changes in six base case assumptions:
an increaseininvestment costs of 50%;
excluding agglomerationbenefits
halving traffic growth rates from 2015 onwards
excluding the benefits attributedto additional traffic
including only rail operating benefitsandpassenger time savings
47\. The results of these tests are given inTable 9\.5\.
Test IRFtfY0) RMB (bill) 1
1 Base 13 8\.2
2 Construction costs + 50% 10 -15\.8
3 Exclude agglomerationbenefits 9 -19\.4
4 Traffic growth rates halved from 2015 12 -1\.0
5 Divertedhppressed benefits excluded 12 -2\.6
6 Rail operatingand time savings only 7 -27\.3
48\. The project is reasonably robust against all sensitivity tests\. Even ifthe analysis i s
restrictedto benefits to the rail operating cost savings andpassenger time savings and
discounting all benefits associated with traffic which would otherwise be suppressed or have to
travel by roador air, the EIRR is still 7%\.
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ANNEX9B: FINANCIALANALYSIS
A\. Background
1\. The project will eventually be ownedby anewly-formed project company, although
M O R will be formally responsible for implementingthe project and will mobilize all the
financing and repay all borrowed funds\. This financial analysis focuses on the financial
soundness o fthe project from the viewpoint o fthe project company\.
2\. The project will be financed using 50% of equity obtained from the project company
partners, loans obtained from domestic banks (China Development Bank) and from the World
Bank, andbonds raised inChina, amounting to RMB41 billion($US 6\.0 billion) intotal (2008
prices)\. O f this, $US 300 million (approximately 5%) will be funded by the proposed Bank loan\.
3\. The project company will be ultimately responsible for the maintenance and operation of
the project line, although inpractice the actual functions will be subcontracted; the regional
administrations (RA) will probably operate the trains while maintenance will be contracted to
them or to thirdparties\. Basedon current practice on similarprojects, the U s will ownthe train-
sets\. Details o f revenue will be forwarded to M O R by the U s , as agents o f the project company,
and a revenuesettlement made betweenthe interestedparties\.
B\. Cash Inflows
4\. The largest share of cash inflows on the high-speedrail (HSR) will be earned from the
allocated passenger revenue\. Unitrevenues are assumedto be RMB 0\.30 per passenger-km in
2020, compared to the current average level o f RMB 0\.1413(1\.7 US cents) per passenger-km\.
Revenue from other sources(parcels etc) is estimated at 10% oftraffic revenues\.
5\. Whilst these yields are already achievable today from some market segments, the bulk of
the travelingpublic still earns relatively low incomes\. Surveys indicate a general desire for
higher-quality services, and a willingnessto pay more, and per capita incomes are likely to
double by 2015\. Inaddition, because o f the shorter distance, the point-to-point fare will increase
by far less thanthe unit rate\. Nevertheless, it is unlikelythe planned yields will be reached for
the marketas awhole for severalyears anduntilthenthere will needto be fares policies which
provide a range o f availability and service levels to manage yields as effectively as possible\. This
has been built into the financial evaluation, which assumesthe yield growing from 0\.25
RMB/pkmin2015 to RMB0\.30/pkm in2020, remainingconstant thereafter\.
C\. Cash Outflows
6\. The initial category of cash outflows is the project investmentoutlays at RMB37 billion,
with a credit ofRMB 24 billionfor the residual value ofthe investmentat the end o fthe
evaluation period\. Operating costs have beenlargely based on unit costs developed by the
l3Althoughtariffscanbe doublethis ratefor the higher-standardaccommodation\.
75
project team, basedon industry ex erience, with local costs (train crew, station costs etc) as
developed by the DesignInstitute\.P4
D\. FinancialRate of Returnand SensitivityAnalyses
7\. Net cash flows are calculated for 2011-2045 to derive the financial IRR, excluding debt
service considerations, o f 3%\. This reflects the very substantial initial costs, with revenues not
beingearneduntilafter five years ofthe start o f construction\. However, the project is always
cash-positive once operation begins, with recurrent expenditure typically beingabout 50% o f
revenue and the significant amount o f equity being injected by the local governments reflects the
substantial economic benefits arising from the project\.
l4These have been benchmarked against typical HSR operating costs as part of IBRDdue diligence
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Annex 10: Safeguard Policy Issues
CHINA: NanGuangRailwayProject
1\. Safeguard Policies Triggered\. The project triggered the following World Bankpolicies:
EnvironmentalAssessment; Natural Habitats; Involuntary Resettlement; and Physical Cultural
Resources\. Compliance with these policies i s summarized below\.
Table 10\.1: Compliance with World BankSafeguards Policies
SafeguardPolicies Actions
EnvironmentalAssessment - Category Aproject\.Full EL4 and EMP have beenprepared\.
(OP/BP 4\.01)
Natural Habitats - Alignment alternativesto avoid natural habitats
(OP/BP 4\.04) - Adequate assessment of impactedprotected areas and mitigation
measuresincorporatedin EMP
Physical Cultural Resources - Archeological survey conducted alongalignment
(OP/BP 4\.11) - Alignment alternatives to avoid cultural relics sites
- Chance find procedures developed in EMP
Involuntary Resettlement - Resettlement Action Planhas been prepared
(OP/BP 4\.12)
2\. As designed, the project (i)will not adversely affect or convert critical natural habitats;
(ii)willnotadverselyaffectresourcesofhighculturalvalue;(iii)willhaveminimizedtheneed
for resettlement and will provide adequate andjust compensation and income restoration for
affected peoples; and (iv) includes a framework for addressing environmental and social issues
duringconstruction and operation o fthe project\.
3\. Safeguard Approach\. The NanGuangRailway will havethe potentialto cause direct,
indirect, or cumulative impacts to the social and natural environment\. The NanGuang Railway i s
anticipated to have beneficial impacts related to increasedmobility and the promotion o f
economic development inimpoverished regions o f southern China\. Manageable adverse impacts
are primarily related to (i)crossing sensitive sites such as nature reserves and forest parks, areas
o f cultural value, and scenic areas; (ii)
community impacts such as resettlement inurban and
rural areas, community severance, impacts on ethnic minorities, and noise and vibration;
(iii)induced and scenic impacts; and (iv) impacts during construction\. The project has
implemented a three-fold approachto minimize environmental and social impacts\. These are:
0 Avoidance\. Alternative analysis has been regarded as one o f the most important
mitigationmeasures to minimize potential adverse environmental and social impacts\.
Sound Engineering\. The project has been designed with state-of-the art engineering\.
Tunnel-bridge-tunnel schemes are adopted for more than 50% o f the whole alignment
which will avoid most sensitive issues and minimize ecological footprint\. (See Table
10\.2)
0 Comprehensive Mitigation Plans\. Detailed environmental design plans (green corridors
and landscaping), environmental management plans, and resettlement actionplans have
beenprepared inorder to minimize and/or compensate unavoidable impacts from the
project\.
77
Table 10\.2: EngineeringDesigns
4\. Timing\. UnderChinese EIA law, an EIA is basedonthe feasibility study and, after
beingapproved, should not be changedunless there are fundamental changes inthe project
scope\. Becauseo fthe rapid designprogress, the RAP o fNanGuangRailway has beenprepared
based on the preliminary design, which i s more detailed than the feasibility study\. Compared to
the feasibility study,the NanGuangpreliminary engineeringreducedthe total landacquisition by
4\.59% and demolition by 12\.10%\. Inthe preliminaryengineering, there are 20 stations, two more
than inthe feasibility study\. Minor adjustments to route alignment have also reducedthe total
length from 466 kminthe feasibility study to the latest estimate o f 462 km\. The task team
assessedthe potential impact and concluded that this will cause little changeto the overall
impact o fthe project assuming mitigation measuresare implementedeffectively during
construction\.
5\. GuiGuangRailwayProject\. The GuiGuang Railway project safeguardsdocuments will
govern the construction o f the shared 62 kmfour-track railway beingconstructed betweenNew
Zhaoqing Station and Sanyanqiao Station\.
EnvironmentalAssessment (OPBP 4\.01)
6\. EnvironmentalCategory\. The project is considered Category A for environmental
purposes due to the scale o fpotential environmental and social impact and the sensitivityo f the
project areas\. MOR retained the China Railway Second Survey and Design Institute (SSDI) for
EA preparation\. SSDI has ClassA environmental impact assessmentaccreditation from the
MinistryofEnvironmentalProtection (MEP), and was the EA consultant for severalprevious
World Bank financed railway projects (including National Railways 11, National Railways I11
and most recently the GuiGuangRailway Project\. The draft EIA reports were prepared in
accordancewith relevant provisions specified inChinese EA lawshegulations and technical
guidelines, as well as consideration o f World Bank safeguardpolicies and submittedto the
World Bank inOctober 2008\. The final EA documents were submittedto the Bank inFebruary
2009 and updated inApril 2009, including: (i) EIA Report; (ii) Environmental Management Plan;
and (iii) Executive Summary\.
EA
7\. The EIA report includes comprehensive impact assessmentand developed necessary
mitigation measuresto avoid, minimize, and compensate any adverse impact identified\.It
concluded that the adverse environmental and social impact will be minimized to an acceptable
level provided that the mitigation measures are adequately implemented\.The main issues
addressedinthe EIA are summarized below\. Natural Habitat issues, as well as Physical Cultural
resourcesissues were addressedas part o fthe EIA\.
78
8\. Environmental Setting\. The NanGuangRailway will traverse a well developed
corridor, parallel to a major river\. The areahas a dense roadnetwork and i s crossedby many
electrical transmission corridors\. Urbanareas and agricultural areas are prevalent throughout the
entire corridor\. As such, the areao f the project presents moderate to low sensitivity from an
ecological perspective\. A number o fkey environmental settings include:
0 Sensitive Areas\. There are more than 30 environmental sensitive areas (Le\. nature
reserves, scenic areas, forest parks, water source protected areas) along the project
corridor\. The project alignment has beencarefully selectedto avoid most o f them\. The
final alignment will passthrough the edge o ftwo nature reserves (all through tunnels),
the edgesoftwo forest parks(all through tunnels), andpassthe outskirt boundary of one
nature reserve and one scenic area (by tunnels)\. Inaddition it also avoids the core
protectionsections o f all water source protectionareas\.
Contrasting Socio-economic Setting\. The project will be constructed inthe economically
underdeveloped regions of Guangxi, where traffic by waterways, highways and airlines i s
comparatively lagging\. The project alignment will pass through the main cities/counties
o fNaming, Guigang, Wuzhou in Guangxi, and the cities o f Yunfu, Zhaoqing, Foshan
and Guangzhou in Guangdong Province\. The economic development i s fairly unbalanced,
with Guangdong Province inthe east beingone ofthe most developed areas inChina
with a GDP per capita of RMB 69,286 (in2005)\.This contrasts with a GDP per capita of
RMB5,998 inGuigang at the western end o fthe project\. Although the alignment passes
primarily through rural areas, it will also cross major urban areas such as Guigangin
Guangxi, andZhaoqing, Foshan and Guangzhou inGuangdong (the alignment from
Zhaoqing to Guangzhou shares the same right-of-way with the GuiGuang railway)\.
9\. Analysis of Alternatives\. Alignment selection at the regional level was followed by site-
specific analysis o f alternatives\.
0 Regional Corridors\. Duringthe project proposal and feasibility study, three corridors at
the regional level were studied, namelyNorthern, Central and Southernline schemes\.
Comparative analyses o f these three corridors were carried out considering the current
situation and development planning o f the regionalrailways\. At this stage, the main
factors considered were regional economic and social development as well as financial
andtechnical aspects, as specific environmental concerns could not bemeaningfully
examined at this macro-scale analysis\. Insummary, the Central line scheme i s the most
efficient express passage connecting the southwest and northwest part o f China and
regiono f the Pearl River Delta area\. It can effectively expand regional railway networks,
and will bringpotential benefits to the region, alleviate poverty and improve socio-
economic development\. These developments are consistent with the Ministryo f Railways
policies and long-termplanningand therefore, it i s recommended for further feasibility
studies\.
0 Alternative Alignmentbv Sections\. The process o f alignment selection has been an
important environmental tool for this project\. Alternative alignments for various sections
have beenextensively studiedto choose the optimal scheme interms o f environmental
and social impact, technical feasibility and financial and economic benefits\. Consultation
with local governments andrelevant authorities incharge ofenvironmental sensitive
79
areas were conducted and fully incorporated into the alternative selection process\.
Considerable effort has been made to avoid ecological sensitive areas, geological
unstable zones, floodplains and wetlands, relocation o f houses, cultivated lands, and
cultural resourcesinorder to ensure the environmental feasibility o f the alignment\. The
final alignment thus minimizes environmental and social impacts, avoids natural hazards,
and connects the economic hubs inthe region\. Section specific alignment alternatives
included:
o Litang Section at western end\. Four alternative Litang station locations and
alignments were considered\. The option o f LitangWest Station was chosen due to
its consistency with urban planning, less land acquisition and resettlement,
convenient traffic management, avoidance o f drinkingwater protection area, and
official agreement from local government\.
o Guigang City Section\. Two alternative alignments were considered (using existing
Guigang station along the existing railway line and, and new by-pass alignment and
a new Guigangstation)\. The option using existing GuigangStation was selecteddue
to its consistency with urbandevelopment planning, convenient mobility
connections, efficient utilization o f existinginfrastructure such as station and freight
facilities, and agreement o f local government\.
o Pingnan-Zhaoqing Section\. This section features topography o f corrosive plain and
low-hilly areas, where the alignment i s generally parallel with Xijiang River, a
major tributary of the Pearl River\.Two alternatives were considered: north and
south options\. The south option was selected due to avoidance o f core drinking
water protectionareas, Fengkai National Geological Park, Hezhou Scenic Area and
Wuzhou ancient tomb areas, less interference with urban development planning, and
agreementfrom local government\. The selectedalignment will pass through the
edges o f one nature reserve and two forest parks, all by tunnels to minimize
ecological impact\.
o Cangwu County Section\. Three alternatives were considered: north, middle, south
options basedon three station locations\. The north option was selected becauseo f its
close distance to urbanareas and convenient mobility connection, compatibility with
urbanplanning and existing infrastructure, andagreement from local government\.
o Yun'an Section (CK400+900 - CK437-l-000)\. Two alignment options were
considered: north option (close to the city) and south option (far from the city)\. The
north option was selected due to its reduced disturbance o f urbanplanning,
avoidance o f geological hazards, and agreement from local government\.
o Zhaoqing Section\. Two alignment options were considered for Zhaoqing section, i\.e,
through-city option and city by-pass option\. The city by-pass option was selected
because o f avoidance o f a significant amount o f urbanresettlement, minimized
impact on environmental sensitive areas (through tunnels), and minimized
disturbance o f urban planning\.
10\. CrossingSensitiveAreas\. The most sensitive element of the proposed project will be
the construction and operation ofthe project line through environmentally and socially sensitive
areas\. There are more than 30 environmentally sensitive sites identifiedalong the project
corridor\. Various alternatives were studiedand the final proposed alignment successfully
80
avoided most o fthese areas\. However, due to the distribution o f economic hubs and special
natural conditions along the project, there remainabout 7 environmentally sensitive areas upon
which the alignment may have potential impact\. The final alignment will pass through the edge
o f two nature reserves(all through tunnels), the edgeso ftwo forest parks (all through tunnels),
andthe outskirt boundary of one nature reserve and one scenic area (by tunnels), and the edge of
an ancient tombs area\. Inaddition it also avoids the core protectionsections of all water source
protectionareas\. These include: (i)Tongledashan Nature Reserve, (ii) Jilongding Nature Reserve,
(iii)DalishanForestPark,(iv)YapojiForestPark,(v)DinghushanNatureReserve,(vi)Xinghu
Scenic Area, and (vii) Guigang Ancient Tombs Group Area\.
11\. NaturalHabitats (OP4\.04)\. By avoiding most ecologically sensitive areas, the project
has minimized impacts on natural habitats\. However, construction activity ina localized
ecologically sensitive area could indirectly affect the ecological environment\. Any impact will be
temporary during the construction stage\. The tunnel-bridge-tunnelscheme o f the project (more
than 50% ofthe whole alignment) will minimizethe loss ofsurface vegetation as well as
fragmentation o f wildlife habitats\. It also avoids the main habitats where richwildlife
biodiversity is present\.The ecological survey through data collection, consultation with local
authorityhesearch institutesand utilization o f GIS/GPS/Remote Sensingtechnology, confirmed
that surface vegetation along the alignment (outside the protected areas) i s mostly
secondary/planted trees o f common species\. Giventhe intensive development and human
activities along the project corridor, the project areas are not valuable habitats interms o f
biodiversity\. Hence, the project will not lead to significant loss o fnatural habitats, nor adversely
affect any critical natural habitat\.
12\. Through screening against World Bank safeguards policies, it i s noted that the OP4\.04
Natural Habitats applied for this project\. The application o f this policy i s due to the fact that part
of the alignment fall into the boundary of several natural reserves which have legal protection
status and compatible with the definition o f "natural habitats" in OP4\.04\. However, the
alignment sections through these reserves are all tunnels, without ecological footprint within the
boundary o f these reserves\. Site specific analysis has been conducted for each sensitive site\. The
construction arrangement i s made to avoid any physical activities within the reserve boundary\.
Close consultations with relevantauthorities have been conducted as per law requirement, and
legal approvals have been grantedby these authorities\. Therefore, though OP4\.04 is triggered
due to legal concept reason, the analysis confirmedthat there is very little potential impact
envisioned\. Since there will be no degradation or conversion o f natural habitats, there is no need
for offsets; however, mitigation measures have beenincluded inthe EMP such as: (i) for rules
contractors; (ii)no disposal sites or new access roads inside sensitive areas; (iii) ecological
monitoring (specifically requested by MEP); and (iv) greeningprograms\.
13\. Though some woodland will be taken during construction, the project will not lead to loss
o fprotected, or old or valuable plants under Chinese laws\. The loss o f vegetation will be
common plant species and farmland crops, which do not represent highvalue interms o f
biodiversity\. Intensive soil erosion control and a re-vegetation program have been designed as
per Chinese laws/regulations upon completionof the project, which will further mitigate and
compensatethe loss o f surface vegetation\. Therefore, the project's impact on surface vegetation
will not be significant, and can be minimized to an acceptable level\. As aresult, OP 4\.36 Forest
81
i s not triggered\. It i s also noted that there will be no use o f herbicides along the right-of-way to
clear vegetation\. Therefore, OP 4\.09 Pest Management i s not triggered\.
14\. PhysicalCulturalResources\.(OP 4\.11)\. A culturalresourcessurvey was conducted for
all project sites, lead by local archeological institutes, incombination with consultation with
local cultural property management authorities and the general public\. This survey was
complemented by field surveys duringEA preparation\. One cultural property site - Guigang
Ancient Tombs Group Area (ca\. 3\.08 km2)was identified\. The alignment will passthrough one
edge o fthe area\. Though officially this areawas namedas Ancient Tombs Group Area in 1963
for protection, it was observed during the field visit that the areahas become highly urbanized\.
There i s little evidence o f visible tombs\. The alignment i s being fine-tunedto reduce the
possibility o fpotential impact on the tombs\. The proposed project will include upgrading o f an
existing railway station and expansion o f existing railway lines by two new tracks\. Another
round o f field surveys i s being conducted by licensed cultural relic institutes\. The licensed
institutehas beenhiredby the NanGuang Project Office to conduct the detailed investigation and
excavation following process and technical procedures as per Chinese Cultural Property Law and
relevant regulations\. Chance-find procedures inline with domestic cultural property
lawshegulations are included inthe EMP\.
15\. There i s one church inrural area inNanhai, Guangdong province\. This i s a small
community church, and classified as a public institution\. Dueto its common status o fthe
buildingand public service purpose, it is not listedas any level o f Cultural Property Protection
unit\.The church will berelocatedprior to construction\. Special consultation was heldwiththe
church and the local community, from which the relocationprogramhas beendiscussedand
agreed by the church and the community\. This relocationprogram i s included inthe RAP, and
will be implementedby local governments inline with RAP requirement\.Givenits non-
protectionstatus, no special legal permission is requiredfor the relocation o f the building\.
16\. There are five surname-basedfamily temples to be resettled inSanshui andNanhai
region o f Guangdong\. These buildingstructures are for gatherings o f certain big families\. Dueto
their common existence andbuilding status, they are not listedas any level of Cultural Property
Protection unit\.Consultation has been conducted with these local communities, and their
compensation and relocationhave been discussed and agreed with those families, and included in
the RAP\.
17\. There are also about 1,320 graves to be relocated along the alignment\. All these graves
are normal tombs for local communities and individually scattered along the alignment, with this
cumulative number\.The project i s not affecting large cemeteries\. The approach i s compensation
for self-relocation, which i s a standardpractice for all projects inChina\. The compensation and
implementation procedures are well covered inRAP\.
18\. ConstructionImpacts\. Construction ofthe NanGuangRailway will causetemporary
impact to the surrounding environment\. Typical short-term construction impacts could include
noise, vibration, air quality, and water quality\. Ifproperly planned, the impact o f construction on
neighborhoods, businesses, andthe natural environment can be minimized\. Several aspects o f
82
construction have received special attention such as access roads, disposal o f excess materials
from tunnel construction, and management o f camps\.
0 Spoil disposal and Borrow Pits\. Giventhe fairly large portion o ftunnels throughout the
project, proper handling of spoil material i s a major environmental issue\. 38 soil borrow
sites and 106 spoil disposal sites, intotal occupying an area o f 692\.3 ha, have so far been
identified following a series ofenvironmental and social criteria\. Restoration and
reclamation plans have beendeveloped for these sites, including farmland reclamation o f
440 ha, grass re-vegetation o f 45 ha, and the plantingo f 658,593 trees and bushes\.
Screening criteria and approval procedures were developed and included inthe EMP for
additional such sites chosen by contractors duringthe construction period\.
Access Roads\. The roadnetwork i s fairly developed inthe project corridor, hencethe
demand for newaccess roads will be limited\.However, the access roads, ifnot well
managed, will create substantial environmental impact\. Access roads inkey sensitive
areas (nature reserve, forest park and scenic areas) were particularly assessed\. Ruralroad
networks will be utilized as access roads with appropriate strengthening\.As most o f the
access roads will be identifiedby contractors duringconstruction, a screening and
approval procedure was developed and included inthe EMP to ensure that Environmental
Supervision Engineers reviewand approve the proposal from contractors\. Uponproject
completion o f the project, these access roads will be handedover to local communities if
appropriate; otherwise they will be ecologically restored\.
0 TunnelConstruction\. There are over 100tunnels inthe project alignment, resulting ina
large amount o f spoil waste which will needproper management\. All major tunnels have
been specifically assessed interms o f geological condition, surrounding environment, and
potential impact and key mitigation measures\. Geological survey data indicated non-
existence o f water-rich rock formation for these tunnels; hence there will be minimal
potential impact on groundwater\. Spoil material will be reused for the project and local
construction demandto the extent possible, and the waste spoil will be properly disposed
o f inpre-identifieddisposal sites according to the Soil Erosion Control Plan\. Safety and
health issues related to tunnelconstruction will follow the standardpractice andtechnical
norms inthe sector\.
Water Pollution\. The construction o f bridgefoundations and wastewater from
construction sites will have a potential impact on surface water\. Such impact can be well
mitigated by good construction management practice, including cofferdam method for
bridge foundation construction and sedimentation tanks for slurry and for wastewater\.
Wastewater i s not allowed to be discharged directly into the surface water body\.
Construction wastewater will not be allowed to be discharged directly into irrigation
system for farmlandwithout proper treatment\.
0 Soil Erosion\. Temporary retainingwalls will be constructed to prevent earthhone falling
into the water body\. Wastewater collectiodinterception ditches will be dug inthe
material processing area\. Spoil disposal sites will have proper drainage, retaining
structure and timely leveling and reclamation\. A dedicated Soil Erosion Control Planhas
been developed, as per the requirementof Chinese laws, as part of the EA document
package\. This plan includes design and mitigation measuresfor soil erosion control o f all
disturbedsites, including subgrade, slope protection, borrow and disposal sites, access
roads, construction and camp site, etc\.
83
0 Social Disturbance\. Construction activities will have an impact on local road traffic and
disturbpeople's daily lives\. Social impact will bemitigatedbyproper selection of access
roads, avoidance o f residential areas, well planned traffic management measures
(dedicated staff, installationo f clear signage at sensitive sites, speed limit for material
hauling vehicles), provision o f temporary access roads for local communities, integration
o f community development into access roadplanning, timely restoration o f irrigation
facilities, among others\. Cultural education and sensitivity training o f workers will be
provided with special attention to earth excavation, tomb relocation, local holidays or
festivals and local spiritual facilities\. Health education will also be provided to workers
(including locally hiredworkers) on local epidemics, and HIV/AIDS\.
0 DustandNoise\. Construction activities will cause temporary impact ofairborne dust\.
The mitigation measures to be adopted include frequentwater spraying on construction
sites and access roads to suppress dust; covering o f trucks transporting bulk materials and
timely site cleanup after construction; dust control facility for material processing and
mixing tower; personal protectionfacility (e\.g\. masks) will be provided to workers as
needed\. Construction activities will also exert temporary noise impact on local
communities\. Such impact will be properly mitigatedby measures including use o f low
noise equipmentandproper maintenance; careful scheduling o f construction activities
near sensitive sites; speed limits and signsprohibiting the use o f vehicle warning devices
will be installed for accessroad sections near sensitive sites; night-timematerial hauling
i s to be restricted for roads near residential areas; provisiono f personal protectionfacility
to relevant workers etc\.
19\. ImpactsDuringOperation\. The main issues during operation ofthe NanGuang
Railway include noise and vibration, community safety and severance, and pollution aspects in
terminals\.
0 Noise and Vibration\. Noise modeling results indicated that the noise level at most o fthe
279 sensitive receptors (residential houses, schools and hospitals) will exceed applicable
standards\. Accordingly, proper mitigation measureshave been developed inthe EMP to
mitigate noise impact, including noise barriers(139 places with a total length o f 54\.8 km),
insulationwindows (126 places with a total area o f 35,430 m2),relocationo f 106
households, and use o f track with damping system\. The modeling also concluded that the
vibration level will exceed applicable standards at 11 sensitive receptors\. At these
locations special elastic track and vibration-absorption cushion will be adopted to
mitigate vibration impact to an acceptable level\. Intensive green belt has been designed
along both sides o f alignment to helpreduce noise impact\.
0 Communitv Severance and Safetv\. The alignment will be fenced to keeppeople off the
track\. Bridgesand underpassesto carry roads over or under the track have beendesigned
basedon consultation with local governments and the general public\. There are a total o f
292 passages(over-passes and under-passes) designed to facilitate safe movement o f
people and animals across the railway right-of-way\. More than 1,157 culverts are
designed, with consideration given to the needs of pedestrianand agriculturalvehicles\.
Waste Management\. Wastewater treatment facilities will be installedinthe train stations
to ensure compliance o f discharge\. Solid waste will be properly collected and disposed o f
inlocalmunicipal landfills\.
84
0 Electro-magnetic Frequency Impacts\. Modeling and analog analysis concluded that
operation o f electric trains may have a potential impact on nearbyhouseholds who use
antenna for television signal reception\. This potential impact will be monitoredduring the
operation stage, and a total budget o f RMB 2\.59 million has been reserved for provision
o f cable TV access for those villages that may be affected\. The EMF impact traction from
power lines i s knownto be negligible, and the impact o fpower transformer substations
and GSM-R stations is withinthe applicable standards\.
20\. EnvironmentalManagementPlan\. A stand-alone EnvironmentalManagement Plan
(EMP) has been developed basedon the findings o f the EIA report\. The EMP detailed the
environmental management and supervision organizations and responsibilities, mitigation
measures, capacity training plan, monitoring plan, and budget estimates o f the EMP
implementation\. The Ministry o f Railways is committed to ensure that the contractors
implementthe relevant obligations withinthe EMP\. Bank supervision will monitor
environmental activities carried out under the project inorder to ensure compliance\.
21, EMP implementation will be managedby MOR (FCTIC) through the NanGuang Railway
Project Office\. Dedicated environmental staff will be appointed to the Construction Management
Division inthe Project Office\. Qualifiedenvironmental staff will be requiredto be assignedin
the Contractor team and EnvironmentalSupervision Engineerteams to ensure effective
implementationo fthe EMP\. A separate EnvironmentalConsultant will be engaged by MOR to
monitor the EMP performance o fthe Contractors and Supervision Engineers\.
22\. A two-tier monitoringprogramhasbeendeveloped for this project: daily and regular
monitoring i s to be carried out by the Contractors and Environmental Supervision Engineers
from the supervision companies, andperiodical compliance monitoring by professional
monitoring institutes\. MOR, through the Project Office, will be responsible for submitting
progress reports on the EMP implementation to the Bank\.
PublicConsultationand InformationDisclosure
23\. A combinationof opinion surveys andpublic meetingsinthe townships, village
committee and affected villagers' homes have beenimplementedduringpreparation o f the EA
and Resettlement Action Plan\. Each mitigation measurewas determined by suggestions from
both experts andthe public\. Most o fthe concerns have beenincorporated either inproject design
or inthe environmental management planor resettlement plan\.
24\. A brief edition ofthe EA for this project was made accessible on the website of SSDI
(http://www\.crssdi\.com), to collect opinions, suggestions and concerns from communities along
the line andthepublic ingeneral\. Suggestionswere providedviatelephone, fax and e-mail\. After
the first draft ofthe EnvironmentalImpactReport was completed, a summarywas publishedon
the website o f SSDI (http://www\.crssdi\.com) on August 15,2008\.
25\. The EnvironmentalImpact Assessment Report was reviewed and approved by the
Ministry o f EnvironmentalProtection (MEP) inOctober o f 2008\. M O R announced the
85
disclosure o fthe final EA inthe middleMarch, 2009 on the Guangxi Daily Newspaper andthe
Southern Daily Newspaper and disclosed the full document on the websites o f China Railway
EryuanEngineeringGroup Co\., Ltd\., Guangdong and Guangxi Development andReform
Commission, and the Environment Protection Bureaus within the relevant cities and provinces,
and as such, the documents are easily accessibleto the general public\.
26\. The EA and EMP, as well as the Resettlement Action have also beensent formally to the
World Bank's Infoshop inWashington, D\.C\. inMarch 2009, and the Public Information Center
inthe Bank's BeijingOffice\.
Summary of ResettlementPlan & SocialAssessment
Summary of ResettlementPlan
A\. Introduction
27\. The project will requirelandacquisition and relocationo fresidential houses, enterprises,
shops and infrastructure\. The resettlement planning began inMarch 2008 and was carried out by
three national railway design institutes with assistancefrom the Southwestern Communication
University\.
28\. Resettlement planning exercises include an inventory survey o f physical impacts and a
census o f the affected populationwithin the impact area as determinedunder the preliminary
technical design, a socio-economic survey on a sample basis, and a social assessment carried out
by the National Ethnic Minority University\. Community andpublic consultation was
mainstreamed inthese planningefforts\. A draft Resettlement Planwas completed inSeptember
2008, and reviewedwith World Bank comments and finalized inMarch 2009\.
86
B\. MitigationMeasuresfor Resettlement
29\. Reducing landacquisition and resettlement was a primary consideration inthe project
engineering design, particularly its consideration o f alignment alternatives\. Minimizing efforts
include usingalternative locations for stations, section realignment o f the project line, increase in
the lengthoftunnels andbridges, anduse ofwasteland insteadoffarmland etc\. These efforts
have ledto reductiono f project impacts\. Through these optimizing measures, land acquisition
amount was reducedby 5% from 29,112 muat the preliminarytechnical design to 27,777 muat
the feasibility study design; house demolition is downby 12%, from 1,389,679 m2to 1,221,504
m2\.
C\.ResettlementImpacts
30\. The inventory and census surveys were carried out inthe project impact zones as
determinedon the basis ofthe preliminary technical design\. These impact datawill be further
verified andupdatedwhenthe detailed technical designis completed and the impact zones
demarcated on the ground\. Local communities and governments participated inthe surveys\. A
socio-economic survey was conducted through questionnaires, interviewsand focus group
discussions\. The sample surveys covered 521households to be relocated and 1,692 households
to lose land\. The sample size i s about 30% o fthe total affected households\. This survey
facilitated consultation at community level and collected a large amount o f local feedback that
was incorporated inthe development o f the RAP\.
31\. The project is expected to affect 170villages of 15 counties inGuangxi and Guangdong
Provinces\. About 27,777 muo f landwill be acquired, including 13,23 1muo f cultivatedland
while another 12,780 muo f landi s expected to be leased duringthe construction period\. About
19,059 people in5,444 households will be affected through landacquisition\. About 6,93 1
people in2,029 households, including 210 households with 650 persons from urbanarea, are to
be relocated\. 195 enterprises and 7 schools and 23 shops will be affected as well\. The total
affected population i s expected to be 25,784 people\. The above impacts are basedon
preliminary technical design\. These will change and will be updated with the detailed
engineeringdesignwhich will finalize the precise impact boundary and be reflected inthe
monitoring andprogress reports and by informing the Bank ina timely manner o f any significant
change\.
87
Table 10\.3: Summary of ProjectAffectedPopulation
P stands for affectedpopulation\. HHstands for affectedhouseholds\.Note that the numbers for enterprises,
schools and shops refer to number of effectedpopulation\.
D\.ResettlementPolicies/Strategiesand Compensation Rates
32\. The RAP has beendeveloped following relevant local laws and regulations as well as
World Bank Operation Policy 4\.12 on Involuntary Resettlement\.
33\. Domestic Policies\. China has its own policy framework regarding landacquisition,
house demolition and involuntary resettlement\. "The LandAdministration Law (LandLaw)",
promulgated in 1986 and revisedthree times since then, is the overarching national policy
governing land acquisition\. Everyprovince has also issued their provincial implementation
regulations o f the Land Law\. In2004, the State Council issued the latest decree (Decree No\. 28),
raising compensation standards and also strengtheningmanagement o f land acquisition\. In
recent years, the Central Government has issued policies to extend the social welfare system into
rural areas, \.particularly for farmers affected through landacquisition\. Local governments are
requiredto issue implementationrules and regulations inline with the national policy\.
88
34\. World BankPolicy\. The World Bank policies on involuntary resettlement are described
clearly inOP 4\.12\. The overall objectives o f the Bank's policy on involuntary resettlement are
the following:
Involuntary resettlement will be avoided where feasible, or minimized, and all viable
alternative project designs will be explored\.
Where it i s not feasible to avoid resettlement, resettlement activities will be conceived
and executed as sustainable development programs, providing sufficient investment
resourcesto enable the persons displaced by the project to share inthe project benefits\.
0 Displaced persons will be assisted intheir efforts to improve their livelihood and standard
o f living or at least to restore them, inreal terms, to pre-displacement levels or to the
levels that were prevailing prior to the beginning o fproject implementation, whichever i s
higher\.
Lack o ftitle will not bar the resettlers from benefitingfrom the resettlement program
35\. Compensationrates\. Landcompensationrate has beencalculated inaccordancewith
the LandLaw andnew requirementsfrom project provincial level governments according to the
State Council Order No\. 28,2004\. Compensation rates for structures are determinedfor various
categories at replacement cost with reference to market prices for comparable structures\.
Compensation for other fixed assets and transitional support to meet relocation costs also are
definedindetail inthe RAP\. Urbanhousesand enterpriseshhops will bepaid according to
commercial appraisal price for replacement cost\. Compensation for temporary land use during
construction i s also estimated according to annual output value o fthe targetedland as well as use
period\.
E\.ResettlementRestorationMeasures
36\. Livelihooddevelopment: The project will affect 19,059 farmers from 170villages
through land acquisition\. Giventhe linear nature o fthe project, the landacquisition impacts are
generally small ineach affected village\. The RAP impact analysis indicates that no village i s
losing all their farmlands, and o f the 170 villages affected, only 9 villages are losingmore than
10% o f their land, 43 less than 1%and 97 between 1%-5%\. The 9 villages are considered
severely affected villages\. From an income perspective, it i s further revealed that, though 94%
o f the survey households are engaged inthe plantingindustry, on-farm agriculture provides 14%
o ftheir total household income\. This indicates that household income loss i s generally limited\.
37\. Following relevant practices under collective land ownership inChina and initial rounds
o f consultations inthe villages, the RAP has developed a package o f options for livelihood
restoration and rehabilitationfor those farmer households losing land\. The package includes i)
cashcompensation, ii)landredistribution, iii)participation inthe social security program where
it is and will be implementedand iv) non-farm employment\. Extensive vocational training
programs will be implementedto facilitate the livelihoodprograms for the villagers\. Underthe
collective land ownership, village councils representingall village members will discuss the
package o f livelihood options for the project-affected households through revisitingthe sharing
o f all the village resources, including land and cash\. The livelihood options will be detailed into
89
household-specific measuresand finalized for implementation\. Despite the package uniformity,
the options andmeasuresat eachvillage are expectedto vary greatly\. The team believes that this
approach andpackage for livelihood development complies with the World Bank policy on
involuntary resettlement\.
38\. Landcompensation funds will be disbursedto the affected villages prior to any land
redistribution\. The village councils, elected by and representing all village households, will hold
village meetings to discuss and determine i)how the land compensation money will be
distributedwithinthe villages, ii)measuresandprocedures for redistributiono f either remaining
land or landto be developed to all village members, including the project affected households,
iii)whowillparticipateinthesocialsecurityprogram,thespecificprovisionsandconditionsfor
their participation, and iv) who will move into urban statusfor urbansocial security program,
vocational training and employment assistance\. For villages severely affected by land
acquisition, the affected people will have priority to rent railway service facilities, and be given
preference for employment opportunities at the railway stations\. Resettlement agencies and local
governments will actively guide and assist the villages over the social security program and non-
farm employment\. Those who temporarily lose landwill receive annual compensation as set
forth inthe RAP duringthe landoccupation\. The RAPSwill be supplementedinorder to update
the implementation measuresfor villages severely affected bythe Project\. The RAP provides
sample village livelihood development plans\.
39\. China has beenextending its social security policy and programs into rural areas\. This i s
a gradually evolvingprocess\. The progress and specific policy provisions and details vary at
different government levels and indifferentareas\. Inregions where social security policies have
beenissued it i s an additional resettlement measure for the affected farmers and can be carried
out after common resettlement compensation\. The main measuresinclude the following,
although each city has varying policies and standards o f insurance\.
a Regulations ineach city indicate a clear mechanism on how to carry out the policy;
a A standard will be established to identify those eligible for social insurance;
a Individuals eligible for social insurance can be identified only through village meetings
with approval from local government;
a Individual can decide whether or not to accept social insurance;
a There will be two social insurance accounts to collect money: county government
accounts andpersonal accounts\. County governments will input landrelated income into
social insurance accounts while personal accounts will receive funds from land
compensation;
a Money inthe personal accounts can be inherited;
a Those who are identifiedas eligible for social insurance will receive different benefits
according to their age\.
a The standard for social insurance is to be regularly increasedinaccordance with local
economic development\.
40\. The procedures to conduct social insurance withinvillages are as follows:
a Village meetings will identifypeople who are eligible to participate in social insurance;
90
0 A list ofnames ofthesepeople will be disclosed within the village;
0 The confirmedname list will be submittedto the county authority;
0 Processing will be inaccordance with the regulations to provide social insurance for the
people\.
41\. Employment innearly all the affected enterprises and shops i s o f a temporary nature\.
Workers affected inenterpriseshhops are expectedto maintaintheir present employment with
the enterprises or shops\. Enterprises that will close downwill informthe workers six months in
advance so that they have sufficient notice to seek alternative jobs\. They will be assistedwith
information and counseled over employment opportunities\.
42\. Household relocation: 1,8 19 rural households will need to relocate under the project\.
Most o f them are scattered throughout existing villages\. They will be paid at replacement cost
for their houses and be provided with newresidential plots for their new houses within existing
villages\. It i s expected that those persons to be resettled will be directly involved inthe
reconstruction o f their houses\. Inthe severely affected villages, the number o f relocating
households i s relatively highandthey are expectedto be provided with newplots inthe same
village, but at a concentrated site\. The RAP has set aside budget for the necessary infrastructure
at these sites\. 210 affected urbanhouseholds are inone city\. They will be provided with the
option o f replacement housing inthe city or the purchase o ftheir own newhouse inthe market at
their preference withtheir housecompensationmoney\. Bothwill also receive movement
allowance and transition subsidies\.Vulnerable households are entitled to obtain additional
assistancefrom local governments for housing\. The RAP has provided a sample village planfor
house restoration\.
43\. Restoration of enterprises, shops and schools: They will receive compensation for
assets and relocation costs, as well as a transitional subsidy covering any lost wages or profits
during relocation\. These enterprises are expected to relocate innearby industrial parks and the
shops can reopen nearby with full compensation\. Structures, equipment, movement allowance
andtransition subsidiesare paid according to commercial evaluation\. Any schools must be
demolished after new schools have been built to prevent interruption o f schooling\. The RAP
included a sample plan for each o fthe enterprises, shops and schools\.
44\. Infrastructure impacts and their restoration: A large number o fpublic infrastructure
facilities will be damaged during project construction and requirerestoration\. This includes
large facilities such as power and telecommunication facilities and simple facilities such as paths,
small canals and drains\. The contractors will be responsible for their reconstruction and
restoration\. The investment for the restoration has beenestimated and integrated into the project
budgets and will be under the management o f the resettlement supervision and monitoring\.
45\. Land leasing for construction activities\. 12,780 o f land are expected to be leasedfor
various construction activities during the construction period\. This i s estimated for cost estimate
purpose by the designengineers based on designstandards andpast experiences\. Their actual
planningwill beconducted under the Resettlement Policy Framework which is part o fthe RAP\.
One fundamental planningprinciple i s to minimize landimpacts\. Measures will include using as
91
much as possible non-productive lands or wastelands, and the areas to be permanentlyacquired
for railway stations for the construction temporary use\.
F\.ResettlementBudget andFinancialSources
46\. The RAP contains an itemized resettlement budgetbasedon resettlement impacts and
their compensation andrestoration standards agreedwith localgovernments anddocumented in
the RAP\. The total resettlement budgetis estimated at RMB2\.57 billion, which is included inthe
project total cost\. MOR and the Guangxi and Guangdong Governments will be responsible for
the project financing, while resettlement cost will befinanced by Guangxiand Guangdong
Provinces\. M O R confirmed that all resettlement activities under the project will be financed by
project provincial governments who will provide the Bank with commitment letters on
resettlement investmentprior to project negotiations\.
G\. ResettlementImplementationArrangements
47\. The resettlement programbeganinlate March2009\. Implementation activities mainly
include updating o fthe resettlement impacts based on detailed technical design, village level
consultation and meetingsfor livelihood planning, signing village agreements, and completing
land acquisition approval procedure as under the China LandAdministration Law\. The process
i s related to about 14,000 mu o f land\. A recent Bank mission indicates that physical taking o f
landhas not taken place yet and relocation activities have not started yet\. Resettlement
implementation i s expected to continue untilmid-2011,lasting about two years\. This schedule
corresponds with the engineering construction schedule\. Detailed schedule i s inChapter 7 o f the
RAP\.
H\.InstitutionalArrangement
48\. OrganizationalManagement: Ajoint resettlement office will be established to
implementthe resettlement program on behalfof MOR, andGuangxiand Guangdong Provinces\.
Itwill lead and coordinate the resettlement implementationofthe project\. Meanwhileboth
Guangxi and Guangdong will establish their respective resettlement offices as agreed with MOR
to take charge o f the implementation o f the resettlement program within their province\. The
provincial resettlement office will organize and coordinate various levels o f government
agencies for the implementationo fthe resettlement program, including planningand finance,
land administration, agriculture, rural development, social welfare, and urbanconstruction\. At
the same time, resettlement offices will also be established at county andtownship level to lead
the implementation ofthe resettlement program within their ownjurisdiction\. The villages will
play a key role inthe development and implementation o fthe detailed village implementation
measures\.
49\. Resettlementmonitoring: The project office has designed internal and external
monitoringmechanisms for RAP implementation\. Internal monitoring, to be conducted by the
management office within the project companies, focuses primarily on physicalprogress and i s
reported on a six monthbasis\. An external monitoring agency i s to be engagedto report on
92
resettlement implementation progress at least every six months\. Apart from physicalprogress,
external monitoring reports will assess on at least a six monthbases household relocation and
livelihood restoration andtransitional measuresfor affected enterprises and shops\. The RAP
describes monitoring purposes, responsibilities, indicators, methodology, procedures and
reportingrequirements\. At the time o f appraisal, the process o f hiring the external monitor was
underway and the appointment was expected to commence within a couple o f months\.
I\.ConsultationandInformationDisclosure
50\. Public consultations have beenmainstreamed inthe project planning process\. Active
public consultations took place since early 2008 by the three engineering designinstitutes over
the selection ofrailway alignment and location ofrailway stations\. The feedback ofthese
consultations helpedoptimize project design and reduce the project impacts\. Local governments,
community and village leaders, the affected households, and affected enterprises and shops
participated inthe planning surveys o f census and asset inventory\. The socioeconomic survey,
conducted late 2008 on a sample o f 30% o f the affected households continued the public
consultation processthrough focus group discussions, interviewsand questionnaire survey\. It
focused on compensation rates, relocationarrangements and livelihood restoration approach and
measures\. These contributed to the formulation and finalization o fthe approach and package for
livelihood restoration\. Project informationwas sharedwith the affected villages and entities
through newspapers, TV, broadcasting and public bulletinboards and public meetings\. The RAP
has been disclosed to the public on government public websites inMarch 2009\. Their
availability i s also announced inlocal newspapers\. These have also beendisclosed at the Bank
Public Information Center at the World Bank'sBeijingOffice on March 17, 2009 and the Bank
Infoshop inMarch 2009, Washington DC\. A resettlement informationbooklet is beingprepared
as a summary o f the final approved RAP\. It will be distributedto the affected households inall
affected villages and entities\. Public consultations are plannedto continue through the
resettlement planimplementation\. These are detailed inthe RAP and are available on project
files\.
Summary of SocialAssessment
5 1\. The National Ethnic Minority Universitycarried out a social assessment inthe project
areas as entrusted by MOR\. Ithas three specific tasks:
Carry out a screening to identify ethnic minority groups inthe areas along the proposed
NanGuangRailway project and assess the project impacts\.
Carry out detailed investigations over their social, economic, cultural and development
characteristics, and assess whether these ethnic minority groups meet the definition o f
indigenous people under the World Bank OP 4\.10 and whether an ethnic minority
people's development planneeds to be developed under the project\.
Assess the adequacy o f the measures inthe Resettlement Plan for the ethnic minority
populationidentified\.
93
52\. The screening exercise was conducted in September 2008 on the basis o f a desk review
o f existing statistics, discussion with local governments, and a field check within a corridor o f 10
kmoneachside o fthe proposed alignment\. The screening came upwith the following findings:
Ethnic minority populations are present along the alignment but only inGuangxi, and not
inGuangdongProvince\.
Although there are several ethnic minority groups present inthe cities and counties
through which the proposed alignment passes, only Zhuang ethnic minority groups are
present inthe 20-km corridor zone;
0 22 villages are identifiedto have groups of Zhuang villagers\. Nearly all of these villages
are mixedvillages with Hanand Zhuang\. The Zhuang households range between4% -
100%\. Some Hanvillages are found to have individual Zhuang households, andthey are
not considered to form a Zhuang community group\.
53\. The Social Assessment (SA) was conducted inthe 22 villages inJanuary 2009\. In
addition to statistical analysis, interviewsandmeetingswith local government officials, the SA
employed sociological and anthropological methodologies, including participatory rural
appraisal methods, interviews, focus groups discussions and questionnaire surveys\. The social
assessmentreviewedthe following aspects o f the Zhuang ethnic minority groups, relevant to its
TOR objectives:
0 Policy analysis\. The analysis reviewedthe Chinese policy framework regarding ethnic
minority groups, including "the Chinese Constitution" and "Self-administrative Law of
Ethnic Minority Autonomous Regions"\. The analysis reviewedthe government process
o f "ethnic minority group identification", its policy and technical criteria for this
identification incomparison with the definition o f indigenous people under the World
BankOP 4\.10\. The analysis concludes that there are major differences infocus and
definition betweenthe two\. While the Chinese identification focused more on ethnic,
social and cultural characteristics as supported through historical traditions, documents
and legends, the World Bank policy focuses more on its vulnerability (social, political
and economic ), and its geographical attachments\. Therefore some ethnic minority groups
recognized under the Chinese policies may not meet the World Bank definition o f
indigenous people\.
Land tenure\. The social assessmentreviewedthe Chinese land system, including its
policies, its ownership and mechanism for utilization\. It concluded that landtenure and
resourcesutilization by the identified Zhuang ethnic minority groups fall within the same
system\. Their access to and use o fthe resources fall within the same pattern as Han
people\. There are no differences inthis regard from an ethnic perspective\. Village lands
and forests belong to the village collectively\. Farmlandand forests are allocated or
contracted to village members for cultivation and management under the household
responsibility contract system\.
0 Livelihoodpatterns\. The social assessmentalso reviewedtheir economic pattern and
activities, including on-farm activities, cropping patterns, sideline activities, non-farm
employment, migrant laborers working outside the province etc\. The Zhuang households
are mainly agriculturalists, with sideline activities and non-farm income\. Their
livelihood patterns and employment structures are the same as their Hanneighbors\. An
94
analysis was done o f their household income and expenditure levels\. There i s no ethnic
difference inthis regard\.
0 Social and culturalcharacteristics\. Zhuang people have a long history and have been
one o fthe main ethnic groups inthe southwestern part o f China\. They were officially
named "Zhuang" in 1950\. Zhuang have their own language and their written language
was developed inthe 1950s\. Zhuang has a colorful culture and their March singing
festivals are well known\. They are more mixed with Haninthe plains areas, butmore
with other ethnic groups inmountainous areas, such as Yao andMiao\. Inthe 22 villages,
the current co-habitation with Hanvillagers has continued for over ahundredyears\.
Relations are close betweenHanand Zhuang and inter-marriages are quite common\.
0 Institutions\. There are no internal, formal or informal institutions withinthe Zhuang
ethnic groups\. They are organized into farmer groups under the administrative villages\.
The villager households are represented inthe village councils to manage village affairs\.
Poverty status\. Guangxi is a lagging region inChina, butthe areawhere the proposed
railway line traverses i s among the more developed\. The assessmentindicates that any
lack o f development i s due to a set o f common factors, such as geographical conditions,
lack o f infrastructure and resources etc\., but not ethnic distinction\.
Projectimpactsand mitigationmeasures\. The assessmentconcludes that there are no
differential impacts affectingthe Zhuang ethnic minority groups under the project\. The
resettlement measures adopted are also appropriate with the Zhuang ethnic minority
groups and sufficient to addresstheir losses\.
54\. Inconclusion, the social assessmentstates that the Zhuang ethnic populationidentifiedin
the 22 villages do not meetthe definitionofindigenous people under the World Bank OP 4\.10
andthere is no requirementto prepare a separateethnic minority peoples' development plan, and
that the mitigation measures developed inthe resettlement planare appropriate and sufficient to
address the landloss impacts o f the Zhuang ethnic minority villagers\. The team social scientist
confirms that IP communities meetingthe characteristics definedunder OP 4\.10 are absent inthe
project area\.
55\. Bank supervision\. The Task Team will carry out its regular supervision during
implementation, with particular attention to the RAP implementation\. The Task Team will
organize a project launch workshop on safeguards for the contractors andthe agencies
responsible for implementingthe EMP and the RAP\. The Task Team will hold periodic follow-
upmeetings/workshops withthe client andkey stakeholders to discussthe findings regular
project progress reports and the independentmonitoring reports on RAP implementation\.
Appropriate Bank supervision budget will be made available to support early intensive
supervision\.
95
Annex 11:ProjectPreparationand Supervision
CHINA: NanGuangRailwayProject
Planned Actual
PCN review 01/22/09 01/22/09
Initial PID to PIC 03117/09 03118/09
Initial ISDS to PIC 03117/09 03119/09
Appraisal 03130109 04115/09
Negotiations 05111/09 05118/09
BoardRVP approval 06125IO9
Planned date o f effectiveness 09/23/09
Planneddate o f mid-termreview not applicable*
Planned closing date 12/31/2014
* Continuousmonitoring is superior to mid-termreview for projectswhich are linear innature(where infrastructure
i s constructedprogressivelyover distance) so that problemsbecome evident either early or at specific interfacesand
which have a singleBank-financedcomponentthat limits the opportunity for mid-term project restructuring\.
Key institutionsresponsible for preparation o f the project:
1\. Ministry o f Railways, ForeignCapital and Technical Import Center
2\. Second Survey and DesignInstitute
Bank staff and consultants who worked on the project included:
Name Title Unit
Mr\.John Scales Lead Transport Specialist (TTL) EASCS
Ms\.Lei Wu Program Assistant (Beijing) EACCF
Ms\.Malou Juico Program Assistant (Washington) EASTE
Mr\.EmmanuelPy Young Professional EASTE
Mr\.JuanQuintero Senior EnvironmentalSpecialist EASE
Mr\.NingYang Environmental Specialist EASCS
Mr\.PeishenWang EnvironmentalSpecialist Consultant
Mr\.Chaohua Zhang Senior Social Sector Specialist SASDI
Mr\.Songling Yao Social Sector Specialist EASCS
Mr\.Jianjun Guo Procurement Specialist EAPCO
Ms\.Yi Geng FinancialManagement Specialist EAPCO
Ms\.QiZhu FinancialManagement Specialist Consultant
Mr\.Jit Sondhi Railways Engineeringand Management Advisor Consultant
Mr\.RichardBullock Railway Economic & FinancialEvaluationAdvisor Consultant
Mr\.Paul Amos Transport Policy AdvisodRailway Specialist Consultant
Mr\.SyedAhmed Legal Counsel LEGES
Mr\.Jin Ying Regional Economic Advisor Consultant
Mr\.GeorgeTharakan Peer Reviewer- Lead Transport Specialist SASDT
Ms\.MarthaLawrence Peer Reviewer- Senior Transport Specialist ECSSD
96
Bank funds expendedto dateonprojectpreparation:
1\. Bankresources: US$233,187 (as of May 14,2009)
2\. Trust funds: none
3\. Total: US$233,187
EstimatedApproval and Supervision costs:
1\. Remainingcosts to approval: US$50,000
2\. Estimatedannual supervision cost: US$200,000 during first year
US$90,000 thereafter
97
Annex 12: Documents in the ProjectFile
CHINA: NanGuangRailwayProject
"" Author Date Chin\./ Hard/
Eng\. Digital
Project Proposalfrom MOR MOR Apr\. 26, Chinese Hard
to NDRC 2007
2 Request to NDRC by MOR NDRC Feb\. 5, Chinese/ Hard
on inclusion ofNanGuang 2008 English
intothe World Bank's transl\. by
lending program the Bank
3 Responseto MOR byNDRC NDRC March Chinese/ Hard
on Project Proposal 20,2008 English
transl\. by
I the Bank
SSDI / CRECG June English/ Hard
2008 Chinese
SSDI Sept\. 12, EnglishI Hard
(English) -August, 2008 2008 Chinese
6 DemandForecastmatrices SSDI 2008 Chinese Hard
Ministry of October Chinese Hard
Environment 2008
SSDI October English/ Both
2008 Chinese
SouthwestJiaotong October Chinese Both
University 2008
Capital Ethnic October Chinese Both
Minority University 2008
11 RevisedEIA SSDI Jan\. 21, Chinese Both
2009
Capital Ethnic Feb\. 12, Chinese Both
Minority University 2009
SouthwestJiaotong Feb\. 16, Chinese Both
University 2009
98
Annex 13: Statement of Loansand Credits
CHINA: NanGuangRailwayProject
Differencebetween
expectedand actual
Original Amount in US$Millions disbursements
Project ID FY Purpose IBRD IDA SF GEF Cancel\. Undisb\. Orig\. Frm\. Rev'd
P114107 2009 CN-WenchuanEarthquake Recovery 710\.00 0\.00 0\.00 0\.00 0\.00 710\.00 0\.00 0\.00
Project
PO96556 2009 CN-Eco-Fanning 120\.00 0\.00 0\.00 0\.00 0\.00 120\.00 0\.00 0\.00
P101258 2009 CN-Hubei Yiba Highway 150\.00 0\.00 0\.00 0\.00 0\.00 150\.00 0\.00 0\.00
P101988 2009 CN-Jiangxi ShihutangNavi & 100\.00 0\.00 0\.00 0\.00 0\.00 99\.75 0\.00 0\.00
Hydropower
PO96925 2008 CN- BengbuIntegratedEnvironment 100\.00 0\.00 0\.00 0\.00 0\.00 97\.75 -2\.00 0\.00
Improv
PO93963 2008 CN-GuiyangTransport 100\.00 0\.00 0\.00 0\.00 0\.00 87\.64 22\.96 0\.00
PO93882 2008 CN-ShandongFlue Gas Desulfurization 50\.00 0\.00 0\.00 0\.00 0\.00 44\.88 5\.50 0\.00
PO92631 2008 CN-Xi'an SustainableUrbanTransport 150\.00 0\.00 0\.00 0\.00 0\.00 150\.00 0\.00 0\.00
PO91949 2008 CN-GansuCultural &Natural Heritage 38\.40 0\.00 0\.00 0\.00 0\.00 38\.40 2\.88 0\.00
PO87224 2008 CN-HanRiver UrbanEnvironment 84\.00 0\.00 0\.00 0\.00 0\.00 83\.55 -0\.24 0\.00
PO84437 2008 CN-Rural Health 50\.00 0\.00 0\.00 0\.00 0\.00 49\.88 0\.00 0\.00
PO84874 2008 CN- EnergyEfficiency Financing 200\.00 0\.00 0\.00 0\.00 0\.00 164\.76 -28\.33 0\.00
PO85376 2008 CN-Migrant Skills Dev\. and Employment 50\.00 0\.00 0\.00 0\.00 0\.00 49\.88 0\.00 0\.00
PO99224 2008 CN-Liaoning Med\. Cities (LMC) I11 191\.00 0\.00 0\.00 0\.00 0\.00 190\.52 22\.50 0\.00
PO99112 2008 CN-Anhui Highway Rehab& 200\.00 0\.00 0\.00 0\.00 0\.00 199\.50 5\.00 0\.00
Improvement
PO99062 2008 CN-ShiZhengRailway 300\.00 0\.00 0\.00 0\.00 0\.00 299\.25 0\.00 0\.00
PO88964 2007 CN-GuangxiIntegratedForestryDev 100\.00 0\.00 0\.00 0\.00 0\.00 38\.32 -47\.18 0\.00
PO81776 2007 CN-GUANGDONGPRDZ 96\.00 0\.00 0\.00 0\.00 0\.00 95\.61 15\.61 0\.00
PO83322 2007 CN-SICHUANURBAN DEV 180\.00 0\.00 0\.00 0\.00 0\.00 143\.15 68\.15 0\.00
PO86515 2007 CN3rd NationalRailway 200\.00 0\.00 0\.00 0\.00 0\.00 67\.44 -62\.63 0\.00
PO77752 2007 CN-SHANDONG ENVMT 2 147\.00 0\.00 0\.00 0\.00 0\.00 81\.72 -40\.28 0\.00
PO96285 2007 CN-MSEFinance 100\.00 0\.00 0\.00 0\.00 0\.00 5\.00 5\.00 0\.00
PO95315 2007 CN-W\.RegionRural Water & Sanitation 25\.00 0\.00 0\.00 0\.00 0\.00 21\.94 -0\.50 0\.00
PO91020 2007 CN-Fujian Highway Sector Investment 320\.00 0\.00 0\.00 0\.00 0\.00 75\.66 \.,124\.29 0\.00
PO92618 2007 CN-LIAONNG MED CITIES INFRAS 2 173\.00 0\.00 0\.00 0\.00 0\.00 162\.57 9\.00 0\.00
PO75613 2007 CN-ShaanxiAnkangRoad Development 300\.00 0\.00 0\.00 0\.00 0\.00 231\.34 16\.55 0\.00
PO96158 2006 CN-RenewableEnergy I1(CRESP 11) 86\.33 0\.00 0\.00 0\.00 1\.65 67\.79 48\.61 0\.00
PO86629 2006 CN-HeilongjiangDairy 100\.00 0\.00 0\.00 0\.00 0\.00 83\.98 50\.48 41\.48
PO93906 2006 CN-3rdJiangxiHwy 200\.00 0\.00 0\.00 0\.00 0\.00 10\.33 -72\.17 0\.00
PO99992 2006 CN-Liaoning Medium Cities Infrastructure 218\.00 0\.00 0\.00 0\.00 0\.00 154\.73 9\.23 0\.00
PO75732 2006 CN-SHANGHAI URBAN APL2 180\.00 0\.00 0\.00 0\.00 0\.00 122\.73 50\.23 0\.00
PO81255 2006 CN-ChangjiangTearlRiver Watershed 100\.00 0\.00 0\.00 0\.00 0\.00 89\.13 34\.13 0\.00
Reha
PO81348 2006 CN-HENAN TOWNS WATER 150\.00 0\.00 0\.00 0\.00 0\.00 125\.71 35\.71 0\.00
PO70519 2006 CN-Fuzhou Nantai IslandPeri-UrbanDev 100\.00 0\.00 0\.00 0\.00 0\.00 90\.99 35\.99 0\.00
PO84742 2006 CN-IAIL I11 200\.00 0\.00 0\.00 0\.00 0\.00 29\.33 -20\.74 0\.00
PO85124 2006 'CN-EcnomicReformImplementation 20\.00 0\.00 0\.00 0\.00 0\.00 17\.11 11\.61 0\.00
PO85333 2006 CN-5th InlandWaterways 100\.00 0\.00 0\.00 0\.00 0\.00 22\.61 12\.61 0\.00
99
PO69862 2005 CN Agricultural Technology Transfer
- 100\.00 0\.00 0\.00 0\.00 0\.00 55\.94 39\.44 0\.00
PO68752 2005 CN-Inner MongoliaHighway& Trade 100\.00 0\.00 0\.00 0\.00 0\.00 7\.73 -13\.52 0\.00
Corrid
PO71094 2005 CN - Poor RuralCommunities 100\.00 0\.00 0\.00 0\.00 0\.00 44\.67 38\.47 0\.00
Development
PO57933 2005 CN-TAI BASINURBANENVMT 61\.00 0\.00 0\.00 0\.00 0\.00 14\.84 13\.99 0\.00
PO75730 2005 CN-HUNAN URBANDEV 172\.00 0\.00 0\.00 0\.00 0\.00 136\.20 76\.70 0\.00
PO86505 2005 CN-NINGBO WATER & ENVMT 130\.00 0\.00 0\.00 0\.00 0\.00 40\.32 -9\.93 0\.00
PO81161 2005 CN-CHONGQINGSMALL CITIES 180\.00 0\.00 0\.00 0\.00 0\.00 79\.72 34\.27 0\.00
PO81346 2005 CN-LIUZHOU ENVIRONMENT MGMT 100\.00 0\.00 0\.00 0\.00 0\.00 31\.02 2\.42 0\.00
PO65035 2004 CN-Gansu & Xinjiang Pastoral 66\.27 0\.00 0\.00 0\.00 0\.00 3\.65 1\.47 0\.00
Development
PO65463 2004 CN-JiangxiIntegrated Agric\. Modem 100\.00 0\.00 0\.00 0\.00 0\.00 21\.48 15\.25 0\.00
PO66955 2004 CN-ZHEJIANG URBANENVMT 133\.00 0\.00 0\.00 0\.00 0\.00 65\.91 53\.98 0\.00
PO69852 2004 CN-WuhanUrbanTransport 200\.00 0\.00 0\.00 0\.00 1\.00 10\.15 11\.15 2\.43
PO81749 2004 CN-HubeiShiman Highway 200\.00 0\.00 0\.00 0\.00 1\.00 0\.73 1\.73 0\.00
PO77137 2004 CN-4thInlandWaterways 91\.00 0\.00 0\.00 0\.00 0\.46 16\.13 13\.33 12\.83
PO75728 2004 CN-GUANGDONGPRD UR ENVMT 128\.00 0\.00 0\.00 0\.00 0\.64 67\.96 57\.80 0\.00
PO73002 2004 CN-Basic Education in Westem Areas 100\.00 0\.00 0\.00 0\.00 0\.00 10\.18 10\.18 0\.00
PO68058 2003 CN-Yixing PumpedStorage Project 145\.00 0\.00 0\.00 0\.00 0\.00 34\.46 34\.46 0\.00
PO70191 2003 CN-SHANGHAI URB ENVMT APLl 200\.00 0\.00 0\.00 0\.00 0\.00 41\.72 37\.27 0\.00
PO76714 2003 CN-2ndAnhui Hwy 250\.00 0\.00 0\.00 0\.00 0\.00 11\.16 11\.16 0\.00
PO40599 2003 CN-TIANJIN URB DEV I1 150\.00 0\.00 0\.00 0\.00 0\.00 108\.03 94\.67 16\.77
PO58847 2003 CNJrd Xinjiang Hwy Project 150\.00 0\.00 0\.00 0\.00 0\.00 3\.08 3\.08 0\.00
PO71147 2002 CN-TuberculosisControlProject 104\.00 0\.00 0\.00 0\.00 0\.00 30\.17 28\.51 0\.00
PO64729 2002 CN-Sustainable ForestryDevelopment 93\.90 0\.00 0\.00 0\.00 0\.00 3\.80 3\.80 0\.00
PO51856 1999 CN-AccountingReform & Development 27\.40 5\.61 0\.00 0\.00 0\.00 3\.84 3\.69 3\.74
PO42299 1999 CN-Tec Coop Credit IV 10\.00 35\.00 0\.00 0\.00 5\.84 7\.37 10\.96 1\.15
Total: 8,780\.30 40\.61 0\.00 0\.00 10\.59 5,123\.21 637\.12 78\.40
CHINA
STATEMENTOF IFC's
Held andDisbursedPortfolio
InMillions ofUSDollars
Cornrnitted Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic\. Loan Equity Quasi Partic\.
2002 ASIMCO 0\.00 10\.00 0\.00 0\.00 0\.00 10\.00 0\.00 0\.00
2006 ASIMCO 0\.00 0\.00 4\.12 0\.00 0\.00 0\.00 3\.61 0\.00
2005 BCCB 0\.00 59\.21 0\.00 0\.00 0\.00 59\.03 0\.00 0\.00
2003 BCIB 0\.00 0\.00 12\.04 0\.00 0\.00 0\.00 0\.00 0\.00
2006 BUFH 8\.14 0\.00 0\.00 0\.00 8\.14 0\.00 0\.00 0\.00
2005 Babei 0\.00 5\.00 0\.00 0\.00 0\.00 5\.00 0\.00 0\.00
BabeiNecktie 11\.00 0\.00 0\.00 6\.00 8\.94 0\.00 0\.00 4\.88
1999 Bank of Shanghai 0\.00 21\.76 0\.00 0\.00 0\.00 21\.76 0\.00 0\.00
2000 Bank of Shanghai 0\.00 3\.84 0\.00 0\.00 0\.00 3\.84 0\.00 0\.00
100
2002 Bank of Shanghai 0\.00 24\.67 0\.00 0\.00 0\.00 24\.67 0\.00 0\.00
2005 BioChina 0\.00 3\.70 0\.00 0\.00 0\.00 3\.13 0\.00 0\.00
2002 CDH ChinaFund 0\.00 2\.02 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2005 CDH China I1 0\.00 17\.99 0\.00 0\.00 0\.00 11\.38 0\.00 0\.00
2006 CDH Venture 0\.00 20\.00 0\.00 0\.00 0\.00 0\.5 1 0\.00 0\.00
2005 CT Holdings 0\.00 0\.00 40\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 CUNA Mutual 0\.00 10\.53 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2006 Capital Today 0\.00 25\.00 0\.00 0\.00 0\.00 0\.32 0\.00 0\.00
2005 ChangyuGroup 0\.00 18\.07 0\.00 0\.00 0\.00 18\.07 0\.00 0\.00
1998 Chengdu Huarong 3\.36 3\.20 0\.00 3\.13 3\.36 3\.20 0\.00 3\.13
2004 China Green Ener 20\.00 0\.00 0\.00 0\.00 15\.00 0\.00 0\.00 0\.00
2004 ChinaRe Life 0\.00 0\.27 0\.00 0\.00 0\.00 0\.27 0\.00 0\.00
1994 ChinaWalden Mgt 0\.00 0\.01 0\.00 0\.00 0\.00 0\.01 0\.00 0\.00
2006 Chinasoft 0\.00 0\.00 15\.00 0\.00 0\.00 0\.00 10\.00 0\.00
2004 Colony China 0\.00 15\.31 0\.00 0\.00 0\.00 9\.29 0\.00 0\.00
2004 Colony China GP 0\.00 0\.84 0\.00 0\.00 0\.00 0\.49 0\.00 0\.00
2006 Conch 81\.50 40\.93 0\.00 0\.00 81\.50 0\.00 0\.00 0\.00
2006 DagangNewSpring 25\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2002 Darong 10\.00 0\.24 0\.00 8\.00 6\.67 0\.24 0\.00 5\.33
2006 Deqingyuan 0\.00 2\.85 0\.00 0\.00 0\.00 2\.85 0\.00 0\.00
1994 DynamicFund 0\.00 2\.21 0\.00 0\.00 0\.00 2\.01 0\.00 0\.00
2007 Epure 0\.00 10\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 Fenglin 17\.64 0\.00 6\.00 13\.47 13\.64 0\.00 6\.00 12\.53
2006 FenglinHJMDF 0\.23 0\.00 0\.00 3\.27 0\.00 0\.00 0\.00 0\.00
2005 Five Star 0\.00 0\.00 7\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2006 GDIH 50\.85 0\.00 0\.00 0\.00 50\.85 0\.00 0\.00 0\.00
2003 Great Infotech 0\.00 1\.73 0\.00 0\.00 0\.00 1\.03 0\.00 0\.00
2006 HangzhouRCB 0\.00 10\.85 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2005 HiSoftTech 0\.00 4\.00 0\.00 0\.00 0\.00 3\.00 0\.00 0\.00
2006 HiSoftTech 0\.00 4\.34 0\.00 0\.00 0\.00 1\.74 0\.00 0\.00
2004 IB 0\.00 52\.18 0\.00 0\.00 0\.00 52\.18 0\.00 0\.00
2004 JiangxiChenming 40\.00 12\.90 0\.00 18\.76 40\.00 12\.90 0\.00 18\.76
2006 Launch Tech 0\.00 8\.35 0\.00 0\.00 0\.00 8\.33 0\.00 0\.00
2001 MaanshanCarbon 5\.25 2\.00 0\.00 0\.00 5\.25 2\.00 0\.00 0\.00
2005 MaanshanCarbon 11\.00 1\.00 0\.00 0\.00 5\.00 1\.00 0\.00 0\.00
2005 Minsheng 15\.75 0\.00 0\.00 0\.00 7\.00 0\.00 0\.00 0\.00
2006 Minsheng& lB 25\.09 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2001 MinshengBank 0\.00 23\.50 0\.00 0\.00 0\.00 23\.50 0\.00 0\.00
2005 MinshengBank 0\.00 2\.80 0\.00 0\.00 0\.00 2\.79 0\.00 0\.00
2001 NCCB 0\.00 8\.94 0\.00 0\.00 0\.00 8\.82 0\.00 0\.00
1996 Nanjing Kumho 0\.00 3\.81 0\.00 0\.00 0\.00 3\.81 0\.00 0\.00
2004 Nanjing Kumho 31\.38 2\.23 0\.00 0\.00 31\.38 2\.23 0\.00 0\.00
2006 Neophotonics 0\.00 0\.00 10\.00 0\.00 0\.00 0\.00 10\.00 0\.00
2001 New ChinaLife 0\.00 5\.83 0\.00 0\.00 0\.00 5\.83 0\.00 0\.00
2005 New Hope 0\.00 0\.00 45\.00 0\.00 0\.00 0\.00 0\.00 0\.00
1995 Newbridge Inv\. 0\.00 0\.22 0\.00 0\.00 0\.00 0\.22 0\.00 0\.00
2005 North Andre 8\.00 6\.74 0\.00 0\.00 0\.00 4\.25 0\.00 0\.00
2003 PSAM 0\.00 2\.01 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
FUK China 13\.00 0\.00 0\.00 0\.00 13\.00 0\.00 0\.00 0\.00
101
2006 RenaissanceSec 0\.00 0\.00 20\.04 0\.00 0\.00 0\.00 0\.00 0\.00
2006 Rongde 0\.00 35\.00 0\.00 0\.00 0\.00 31\.38 0\.00 0\.00
SAC HK Holding 0\.00 1\.60 0\.00 0\.00 0\.00 1\.oo 0\.00 0\.00
2003 SAIC 12\.00 0\.00 0\.00 0\.00 12\.00 0\.00 0\.00 0\.00
2006 SBCVC 0\.00 20\.00 0\.00 0\.00 0\.00 2\.00 0\.00 0\.00
2000 S E N SSIF 0\.00 3\.74 0\.00 0\.00 0\.00 3\.37 0\.00 0\.00
SHKeji IT 3\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 SHCT 38\.18 0\.00 0\.00 28\.64 29\.04 0\.00 0\.00 21\.78
2004 SIBFl 0\.14 0\.07 0\.00 0\.00 0\.00 0\.07 0\.00 0\.00
1998 ShanghaiKrupp 19\.25 0\.00 0\.00 36\.75 19\.25 0\.00 0\.00 36\.75
2006 ShanshuiGroup 50\.00 5\.50 2\.20 0\.00 50\.00 5\.50 0\.00 0\.00
1999 Shanxi 12\.61 0\.00 0\.00 0\.00 12\.61 0\.00 0\.00 0\.00
SinoSpring 0\.00 0\.00 20\.00 0\.00 0\.00 0\.00 0\.00 0\.00
StoraEnso 20\.83 0\.00 0\.00 4\.17 11\.00 0\.00 0\.00 0\.00
2005 StoraEnso 29\.17 0\.00 0\.00 20\.83 0\.00 0\.00 0\.00 0\.00
2006 StoraEnso 50\.00 0\.00 0\.00 175\.00 0\.00 0\.00 0\.00 0\.00
2006 TBK 4\.00 0\.00 0\.00 0\.00 2\.00 0\.00 0\.00 0\.00
2006 VeriSilicon 0\.00 1\.00 0\.00 0\.00 0\.00 1\.00 0\.00 0\.00
Wanjie High-Tech 9\.89 0\.00 0\.00 0\.00 9\.89 0\.00 0\.00 0\.00
2004 Wumarl 0\.00 1\.62 0\.00 0\.00 0\.00 1\.62 0\.00 0\.00
2003 XACB 0\.00 17\.95 0\.00 0\.00 0\.00 0\.64 0\.00 0\.00
2004 Xinao Gas 25\.00 10\.00 0\.00 0\.00 25\.00 10\.00 0\.00 0\.00
2006 ZhejiangGlass 50\.00 24\.96 0\.00 18\.00 0\.00 0\.00 0\.00 0\.00
2003 Zhengye-ADC 10\.43 0\.00 0\.00 4\.87 10\.43 0\.00 0\.00 4\.87
2002 ZhongChen 0\.00 4\.78 0\.00 0\.00 0\.00 4\.78 0\.00 0\.00
2006 Zhongda-Yanjin 21\.89 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Total portfolio: 733\.58 577\.30 181\.40 340\.89 470\.95 371\.06 29\.61 108\.03
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic\.
2002 SML 0\.00 0\.00 0\.00 0\.00
2004 NCFL 0\.00 0\.00 0\.02 0\.00
2007 Xinao CTC 0\.04 0\.01 0\.00 0\.14
2004 ChinaGreen 0\.00 0\.00 0\.01 0\.00
2006 LaunchTech 0\.01 0\.00 0\.00 0\.00
2005 MSShipping 0\.00 0\.01 0\.00 0\.00
2003 PeakPacific2 0\.00 0\.01 0\.00 0\.00
Total pendingcommitment: 0\.05 0\.03 0\.03 0\.14
102
Annex 14: Country at a Glance
CHINA: NanGuangRailwayProject
Page 1 of 4
China
Recent Economic and Financial Indicators
2008 2007 2008 OSOB 0408 0109 JMQS FtbQ9 Mar09
27 2 25 8 1 1 3 23 I 4 4 -197 - I 7 5 -251 -171
19 7 203 186 25 9 $ 8 -309 -43 1 -24 1 -25 1
15 0 32 4
253 3 311 8 440 0 440 0
9 6 I 1 0 1 0 2 111
56 9 121 4
4 9 7 9
-51 6 18 1
1058 5 15303 1949 3 1907 7 1?49 3 19166
16 2 19 2 20 6 17 6 24 3 37 3
8 0 7 6 6 9 6 8 6 8
7 8 1 3 6 8 6 8 6 8
$44 09 I 1015 IO8 5 1134
Totalexternal debt omanding ana d15b~md(us$QIIIIO~ 3 2 3 7
Long+em debt 1 4 1 5
Of which Nonn\.(BSldeddepDSltl
ShM-t-tsmdeb1 1 8 2 2
Shoit-ten deM(%oIGDF) o t 0 1
Memo GDP (CwrentUS$ billion) 2626 3382 4321 4121 4327 4441
- - -
FinancialSector
Monetay wwoy
Money Supply (M2)1% Chmge yly 15 7 16 7 17 8 I 5 3 1 7 8 254 166 2 0 4 254
M2 MYltiplier (BroaaMoneymeserve Money
\. 4 4 4 0 3 7 3 9 3 1
M2 idlo to brax r e s e ~ e 5 0 0 0 0 0 0 0 0 0 0 0 0
Ne4DomesticCredit 1% mangey/y) 163 11 6 11 1 12 2 11 7
TO pnvde sedor 14 3 19 3 14 0 14 1 14 0
Net DOmeSbCCredit(%GDP) 1319 132 0 1262 1239 126 2
TOpnvate sedoi 114 4 1110 108 3 1093 1083
NOmlnll tnbnDi nbi1%:
BankRsle (eop) 3 3 3 3 2 8 4 1
htwbawOflered Rate MonthlyAverage 0 1 0 8 0 1 2 8
m e Landlng Rata ieop 6 t 1 5 5 3 7 2
Swings DepositRate 2 1 2 4 2 5 0 7
1 5 \.1 4 -2 9 -1 1 0 3
4 3 2 s \.o 5 1 8 2 1 6 0 4 4 1 1 6 5
0 4 \.2 3 -3 2 4 3 -1 9 1 0 - 0 5 2 1 1 5
Bmklng SLctor 1%:
BmUnonperfomingloans10 totd grossloan$ 7 5 8 1
Bank cwdal to aisets ratio 5 1 5 5
Banhng System indicator(B5i: E D D
Net Loans Icustcmer B S i Funding
Cwltll mllCiti
mocumshet mder 1% change ww prwrouspenod; 16 9 163 9 a 4 o -194 -17 5 40 1 178
Stock mahet mpMnation (US$ billion 916 3504 1425 1776 1425 1863 1557 1632 1863
Dwdopment Economics DevelopmentDateGmup(DECDG) 04117120C4
103
Page 2 014
2OW 2m7 low 9508 MOB PlQB JMQO FtbQS M i r Q 9
Fiscal Sector (Centra Government)
(%chm(le YCI
Total revenues 225 324 105 \.1 5 17 1
Tax revenue 209 31 1 107 d 7 -16 7
NM tax revenue 8 2
Total expendbre 1 9 1 226 22 1
Current expenditure
Capitalexpenditure end net lendinc
(IS IXofGDP)
Total revenues I 8 5 1 9 9 1 9 9 1 3 8
Tax revenue 1 6 6 17 7 178 1 2 0
Non-taxrevenue 01 2 1
Total expendbre 1 9 3 1 9 3 I9 1
Currentexpenditure
01 wnch interestpayments
Capiial expenditwe and net lendin(
Overall fiscal bahnce - 0 8 0 7 0 8
Pnmary balance
DeflUlFlnaKlnQ 0 8 4 7 -08
Dmesbc finanung
Foreign knanung
Total cenbal governmentdebt
Dmestic debt
External debt
M m o GDP at cumnt prices ( X u Billion) 20941 25731 30067 29289 30067 3W92
(1405 Qzo7 c408 mo5 01\.01 am 018 0347 0109
-1ddINerw +Tddqedrbnr -Pnmprlbd8no --O--DlmllW$lao UUwrsidY P o d D d d
G w hmGDP Gmnh m COP lndmdirdwdpdwm
104
Page 3 of 4
2006 2 W 7 2008 Pa08 0408 P 1 4 9 Jan49 Fob49 Mar48
Global Linkages
Grorr private mansid now, to davaloplng counmn(US$ blllon, sum of lilt 12 montha
Ewity issumnc~ 112 201 48 118 48 42
01 whloh China 53 63 12 38 12 11
Banas 102 133 65 a4 65 66
ofwhlch China 2 1 0 0 0 0
Syndicated bank loan mmmitments 266 360 239 295 299 291
01 whioh China 15 27 18 22 18 11
5-y~my1vereQn credit default swep spread 11 8 287 1684 900 1884 1563 2232 2475 1563
EMBl global bond spreBd 50 8 1197 2278 1914 2278 2096 1677 1684 2098
Foreign dmct invaatmant to devaloplng cwntllai 368 460
01 whtch China 57 121
Nomlnallnhnlt rata8 (%par annum
$LIBOR (6momn) 5 4 4 6 1 8 4 0 1 8 1 7 1 7 1 8 1 7
Eurot1eOR (6 mono) 3 9 4 7 3 0 5 4 3 0 1 7 2 2 1 9 1 7
CHnaTerma oftndelndex p W c 1 0 0 92 85 87
Exportpnce index (2WO=1001 110 110 130
Impodpnce index 12000=100 120 130 150
Plicer Of prlmlry axport commodltiea Ac ChMge ytf
Ironand Steel(20W=100 -2 8 0 2 5 9 0 8 8 1 6 1 6 1 9 6 380 214 2 1
Pluminm [Vrnt) 35 4 2 7 - 2 5 9 5 -255 -504 -422 4 2 1 5 5 6
RubbericentshgJ 39 7 8 9 1 4 3 410 -345 4 6 6 -433 -478 -488
Plices of pllmaw Impoflcornmodllles I% change ytf
Energy (2000r100J 17 3 1 0 8 3 9 7 617 ,287 4 9 8 455 -516 -518
Copper(ShntJ 82 7 5 9 - 2 3 - 0 4 45 7 -560 -544 -580 -556
Wood (cenllcm) 13 6 7 6 1 0 3 9 7 7 2 -51 0 7 \.67 -98
Baltk dry Index (MP) 4362 9143 774 3217 774 1646 1070 1986 1648
2006 2 m 7 20W 2ooD 2010
Estimate Proiec!sns Proledions
GDP I% YM)ChMga G m h m GOP
world 3 9 3\.8 1\.9 4 7
Devsloplng countries 7\.7 8\.2 6\.8 2\.1
Hlgh4ncome countdes 2 9 2\.6 0\.8 l \. 8
United States 2 8 2 0 I 1 -24
HongKong 6 9 6 3 2 6 -35
Japan 2 1 2 4 -07 -53
Korea 5 1 5 0 2 6 - 4 0
Germany 3 2 2 6 t o - 3 3
Netheflands 3 4 3 5 2 0 - 2 2
United Kingdom 2 8 3 0 0 7 - 3 0
Exports (GNFS) volume 1% chinpa ytV
M i l a 9 9 7 5 4 0 - 6 1
Hlghinmme wuntnes 8 6 6 4 2 9 - 8 0
bveloprqccuntnes 13 4 10 7 7 1 - 1 6
Imports (GNFS)voluma (%Changey&
Hiohinmme mtmmes 7 8 5 0 1 1 - 7 0
Developing countnes 13 7 1 3 0 1 0 4 - 0 9
Commodlty prlcsi F c h m g e In nominal US$,yv @,raw
Mmufacfurmg[MUV) 1 6 5 5 7 5 1 9 01 NethDllinOl
Energy 17 3 1 0 8 3 9 7 4 8 0 UndcdKln(idorn
Food 10 0 2 5 7 3 3 9 -257 1 3
Metals and minerals 56 9 12 0 3 7 -428
World pnln supply anddamand (milllor metrlc tons
Picduction M 1 8 2 W 1 2117 2224 Gransjxbm Chne andlheWorm
EndlnQSIOCkS 389 342 361 434 bs%sbrec#mrumpm)
% share 01 use 19 17 17 20
Carnesticconsumplion 2018 2044 2091 2147
%change yiy 1 4 1 3 2 3 2 7
Memo China's gmln stock5 as % Share of consumption 28 6 284 3 0 7 354
Wwld 011 demand and ruppb (mllllon barnla p e r d q
World demand 85 86 86 83
Non-OPEC oil supply 50 51 51 50
Call on OPEC incl stock dlanges ma
30 31 31 28
Call M) OPEC lncl slob( manges 1% change yly: 1 3 1 7 - 1 0 - 7 9 -Chw
Development Economm Development Data Gmw IDECDGJ M I 1112009
10\.5
Page4014
Sources and Notes
Lternal Sector
CunmtAccount
Source Haver
Note Merchandise exports and imporis for montMy and quarterly data are based on customs data other dala are based on BOP dawficdion Trade openness is defineda!
BXWIIS plus imwrts01goods and 58WiC8S divided by GDP
Clpbil Account
Source Haver
FinancialSector
Mon8tuySuny
Souma Haver
hbNdRttS
Source Haver
Note Real interest rates are denfed using mnsumerpnce innahon
Banklnpibctor
Source World Bank WcMDevelopment hdcetorc
Banhng Syatem Indicator[BSI) The BS1is a nrmmary measure of intmsic bankng system quahty or strength derived horn Fitds bni\. standing and current lndividud
Ratings for bank The BSI measuressystem quality crsbength on a scale ranginglmm A (veryhigh) through E (high) C (adequate) and D (low) to E iverylaw) Source
Fit& Rdmgs BankSystemicRisk Report
Clplhl matbts
Source Haver
Fiscal Secfw (Centra Government)
Source Haver
Note Quanew dBbt to GDP ratios are CBlculatedusingthe sum ofGDP lwme trailing bur waders
Real Sector and Prlces
Savces Haver
Wages and Employment
Source It0 tabor Suwey
Global Linkages
Gross privab flnurslllflow8 lo dbvbloplnp counmbr and foreign dlnct lnvtrtmtn
Source Dealogic
5YR CDS spreads show the 5 YR CDS mid rate spread behveenthe entity and the relevant benchma* c w e Higher valws representhlpher risk of default Source Datasbeam
EMEbGlobal Shw the sovereign govemmenls bond spreads benchmaWd agamstthe yield ofU S Treasuw notes expressed in b m 5 pants Higher the value more expensNe
termsof borrwin~Source Datasbeam
NominaIntbnsi n b s Wpbr m u m
SDurce DataStream
Prlcu of primary rxport and import commodlttbr, ipgnpatb lntbmdlonslcommodltlrs prlcbr; tbmr oftnda
Source World Bark DECPG
Nde Histoncal data and projectionsare ProvidW by DECPG
Blltlc dry indbx
Source Bloomberg
Note The BalbcDry lnder (BDl)pmvides an assessmentofthe pme 01 moving the major raw matenais by sea Shplt term movements oltne index nnedme demand Iw bulk
cargo ShiPpinQ Issueddaily by the London based BdticErdanpe
RbiI GDP, w o r t volumb ind Import volume projecllonsfor pirtnbrcountrlbi
Source WorldEark DECPG
Note Histoncal data and prqections are provided by DECPG
Fininclal now
Source World Bank DECPG
World rpliniupply a d dimand
Source USDA
Nde Food grain sto& and domesticwnsumpbon excludefeed mmumption
World oil :upply and demand
Source international Energy Assouation
Note Call on OPEC ndudro stock manges is me diffirmce between non-OPEC swply OPEC natura gas hquids (NGts)and global demand OPEC inoludesAngola and
Ecuadw
106
CHINA
NANGUANG RAILWAY HARBIN
PROJECT M O N G O L I A
CHINA
NANGUANG RAILWAY LINE
EXISTING RAIL NETWORK, 2008 Jilin
CHANGCHUN
MAIN CITIES
J I L I N
PROVINCE CAPITALS
NATIONAL CAPITAL
N E I M O N G O L
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES L I A O N I N G
SHENYANG Fushun
DEM\.
Anshan
PEOPLE'
REP\. OF
HOHHOT BEIJING KOREA
Huang
Datong BEIJINGBEIJING Tangshan
TIANJIN Dalian
Bo Hai
H E B E I TIANJIN
SHIJIAZHUANG
YINCHUAN
TAIYUAN
NINGXIANINGXIA JINAN
XINING
S H A N X I S H A N D O N G Yellow
Huang LANZHOU Huang Sea
Q I N G H A I
Luoyang
G A N S U ZHENGZHOU Xuzhou JIANGSU
JIANGSU
Baoji
XI'AN
H E N A N
S H A A N X I
NANJING
HEFEI Wuxi
SHANGHAI
A N H U I SHANGHAISHANGHAI
H U B E I
G
NAZIXIZANGX HANGZHOU
S I C H U A N ChangJiang WUHAN
Jinsha CHENGDU
Z H E J I A N G
CHONGQING
Nu
CHONGQING NANCHANG
H U N A N CHANGSHA East
Zhouzhou China
Lancang
G U I Z H O U J I A N G X I Sea
FUZHOU
F U J I A N
GUIYANG
Jinsha Duyun
Guilin
KUNMING
Hezhou TAIWAN
TAIWAN
G U A N G D O N G
Nu
Y U N N A N G U A N G X I New New Sanyanqiao
Wuzhou Zhaoqing
GUANGZHOU
Litang West Xun
Lancang Guiping Hekou Shenzhen
Kowloon
NANNING
NANGUANG HONG KONG
HONG KONG
RAILWAY PROJECT MACAOMACAO
RAMNAANMARYMY V I E T N A M
M 0 100 200 300 Kilometers
LAO PEOPLE'S
LAO PEOPLE'S HAIKOU 0 100 200 300 Miles
DEM\. REP\.
DEM\. REP This map was produced by the Map Design Unit of The World Bank\.
The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of The World Bank IBRD
JUNE HAINANHAINAN Group, any judgment on the legal status of any territory, or any
THAILAND
THAILAND endorsement or acceptance of such boundaries\. 36827
2009 108° 112° 116° 120° | APPROVAL |
P008434 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 7305
PROJECT COMPLETION REPORT
GREECE
INTEGRATED FORESTRY
DEVELOPMENT PROJECT
(LN\. 1718-GR)
June 23, 1988
Agriculture Operations
Country Department IV
Europe, Middle East and North Africa Region
This document has a restricted distribution and may be used by recipients only In the performance of
their official duties\. Its tents may not otberwise be disclosed without World Bank authorization\.
ABBREVIATIONS AND ACRONYMS
CIF - Cost, Insurance and Freiglst
DGF - Directorate General of Forests
EEC - European Economic Community
ERR - Economic Rate of Return
GDP - Gross Domestic Product
OECD - Organization for Economic Cooperation & Development
PCR - Project Completion Report
PPMO - Project Planning and Management Office
RPDS - Regional Policy and Development Service
SAR - Staff Appraisal Report
UNDP - United Nations Development Program
]FOR OMfCIAL USE ONLY
TM WORLD SANK
Washington\. D\.C\. Z0433
U\.S\.A\.
0*e d Oft,toCefwal
opwatoN evAutmt
June 23, 1988
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Greece Integrated
Forestry Development Proiect (Loan 1718-GR)
Attached, for information, is a copy of a report entitled
"Project Completion Report on Greece Integrated Forestry Development
Project (Loan 1718-GR)' prepared by the Borrower together with an Overview
prepared by the Europe, Middle East and North Africa Regional Office\.
Further evaluation of this project by the Operations Evaluation Department
has not been made\.
Attachment
Yves Rovani
by Ram K\. Chopra
This document has a restricted distribution and may be used by recipients only in the perforance
of their official duties\. Its contents may not othefwise be disclosed without Wotid Btank authorintion\.
FOR OMCUIL USE ONLY
PROJECT COMPLETION REPORT
GREECE
NEGRATED FORESTRY DEVELOPMENT PROJECT
(LOAN 1718-GR)
TABLE OF CONTENTS
Page No\.
Preface \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.i
Basic Data Sheet\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.ii
Evaluation Summary \. \. \. \. \. \. \. \. \. \. \. \. \. \. iii
PROJECT COMPLETION OVERVIEW MEMORANDUM\. \. \. \. \. \. \. \. \. \. \. \.
I\. Introduction \. \. \. \. \. \. \. \. \. \. \. 1
II\. Project Processing \. \. \. \. \. \. \. \. \. \. \. \. 4
III\. Project Implementation\. \. \. \. \. \. \. \. \. \. \. \. 7
IV\. Project Impact\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 13
V\. Institutional Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. 18
VI\. Conclusions and Lessons Learned \. \. \. \. \. \. \. \. \. \. 21
ANNEX 1 - Tables to Overview Memorandum
PROJECT COMPLETION REPORT (Borrower) \. \. \. \. \. \. \. \.
Part I - Overall Project
I\. Introduction\. \. \. \. \. \. \. \. 33
II\. Project Identification, Preparation and Appraisal \. \. 35
III\. Project Implementation \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 44
IV\. Operating Performance \. \. \. \. \. \. \. \. \. \. \. \. \. 74
V\. Costs, Benefits and Economic Post Evaluation\. \. \. \. \. 76
VI\. Institutional Perforimance and Development \. \. \. \. \. \. 93
VII\. Conclusions \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 95
Part II - Village Infrastructure Development
I\. Project Identification, Preparation and Appraisal \. \. 119
II\. Project Implementation \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 122
III\. Survey Analysis \. \. \. \. \. - \.---\. 130
IV\. Conclusions \. \. \. \. \. \. \. \. *\. - 140
ANNEXES A-B
This document has a restricted distribution and mnay be used by recipients only in the perfowmance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Page No\.
Part III - Credit for Logging Equipment
I\. Introduction \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 157
II\. What the Project Comprises \. \. \. \. \. \. \. \. \. \. \. \. \. 157
III\. Funds for logging equipment procurement\. \. \. \. \. \. \. 159
IV\. Terms of Subloans\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 159
V\. Procurement of machinery \. \. \. \. \. \. \. \. \. \. \. \. \. \. 160
VI\. Implementation of the Project - Part B \. \. \. \. \. \. \. 160
VII\. Procurement of equipment \. \. \. \. \. \. \. \. \. \. \. \. \. \. 162
VIII\. Procurement cost of logging equipment\. \. \. \. \. \. \. \. 163
IX\. Financing\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 164
X\. A\. B\. G\. performance and development \. \. \. \. \. \. \. \. 165
XI\. Approval and disbursed subloans\. \. \. \. \. \. \. \. \. \. \. 165
XII Benefit and economic post evaluation \. \. \. \. \. \. \. \. 166
TABLES I-II
MIAP
IBRD 1403lRl
PROJECT COMPLETION REPORT
GREECE
INTEGRATED FORESTRY DEVELOPMENT PROJECT
(LN\. 1718-GR)
PREFACE
This is the Project Completion Report (PCR) of the Integrated
Forestry Development Project in Greece, for which Loan 1718-GR in the amount
of US$25\.0 million was approved on June 5, 1979\. The Loan was fully
disbursed, and the date of final disbursem-nt was February 28, 1986\. The Loan
was closed nine months behind schedule on March 31, 1986\.
The PCR was prepared by the Borrower's Ministry of Agriculture,
Ministry of National Economy and the Agricultural Bank of Greece\. A Project
Performance Overview Memorandum was prepared by the Europe, Middle East and
North Africa Regional Office to discuss various matters not fully covered in
the Borrower PCR\. The Overview Memorandum alsc compares actual developments
with appraisal estimates and highlights the principal achievements, issues and
lessons learned\. The PCR and Overview Memorandum are based in part on a
review of the Staff Appraisal Report, the President's Report, the Loan
Agreement of July 9, 1979, correspondence with the Borrower, internal Bank
memoranda on project issues as contained in relevant Bank files, as well as
interviews %ith officials both in the Bank and in Greece who have been
associated with the project\.
The draft overview was sent to the Borrower for comments on
April 12, 1988\. Replies received from the Ministry of Agriculture and the
Agricultural Bank of Greece acknowledged that they had no comments to make\.
This project has not been subjected to an audit by OED\.
- Li -
PROJECT COMPLETION REPORT
GREECE
INTEGRATED FORESTRY DEVELOPMENT PROJECT
LOAN 1718-GR
KEY PROJECT DATA ~~~BASIC DATA SHEET
APPRAISAL Actul or Acta% o
ITEM ESTiMATE Estimated Actual ApD\.Est\.
Total Projet Cost (USS Milion) 144\.6 120\.8 84%
Loan Amount (USS MiNion) 25\.0 25\.0 100%
Amount CanceUed (USS Million) 0 0
O ot Board Apprval 6/5/79 615/79
OD of Loan Agrement 7/9/79
t of Etfsciveness 1/7/80 First Extension \.7/111/80
Second Extension\. 12/31/80
Third Extenslon \. \. \. 3/31/81
Fourth Extension \. \. \. \. 6/30/81
Final \. \.7/31/81
Date Physc Components Compet 12/31/84 12/31/85
Proportion then Completed 100% 100% 100%
Clokg Date 6/30/85 3/31/86
Ecnontl Rate of Retum 21\.2% 19\.0% 89\.6%
Institutional Performance Satisfactory
Technica Perfornance Gow
Number of Direct Beneficiaries 50\.000 Prblv\. 450\.0O0 <100%
CUMULATIVE DISBURSEMENTS _____F _____ ____ Y__
I FY 80 FY 81 FY 82 FY 83 FY 84 FY85 FY86
Appraisal Estimate (USS Million) 1\.2 6\.9 12\.7 17\.5 21\.3 25\.0
Actual (USS Million) 0\.0 0\.0 1\.8 6\.9 13\.8 17\.2 25\.0
Acul as Percent of Estimate 0\.0%* 0\.0% 14\.2% 39\.4% 64\.8 68\.8%j 100\.0%
MISSION DATA__ _ _ __ _ ___ _ __ _ _ _
DATE No\. of Mandays Spcatne\. Perform\. Types Of
_MO\./YR\. Persons in Fleld Rorntd\. /a Ratina lb Trend Ic Prbims\. /d
Identification-- by Bank 11/77 1 9 A
1/78 1 5 e
Preparation-GOG + Consutants 8/78
Preappralsal 9/78 6 21 A\.B\.D\.G
Appras 12/78 5 19 A,B,C,O,E
Supervision I 11/79 1 8 A 1 2
SupeNision II 3/80 1 10 a 2 2 O,F
Superviion III 10/80 2 17 A,B 2 2 P\.F,M
Supevislon IV 5/81 1 10 A 2 2 P\.F,M
Superviion V 9/81 1 12 B 2 1 F\.M
Supervison VI 6/82 2 5 A\.B 2 2 F,M
Supervilsion Vll 10/82 1 5 B 2 1 F\.M
Supervison Vill 2/83 2 9 B\.F 2 2 F\.M
Supevn IX 8/83 1 3 F 2 2 F,M
Supervision X 10/83 2 14 S,F 2 1 F,M
Supervision Xl 2/84 1 7 B 2 1 M
SupeNision Xli 10/84 2 11 B,F 2 1 M
Supervision Xil 3/85 2 j 10 B\.F 2 2 M
I_; tl/85 2 7 B\.F 2 2 MP
OTHER PROJECT DATA _
Borrower The Helhnic State
Execuw Agences MWsres of Agricultusre\. and National Economy and Agrictural Bank of Geece
Fiscl Year of Borower January 1 to December 31
Name of Currency (abbredation) Drachma (Or)
Currency Exchnge Ree:
Appr Year USS 1\.00 \. nr 36\.7
Intvenig Years-Average USS 1\.00 a Dr 87\.7
ComdoAion Year u 1\.00 - Dr 150\.0
/a A - Economist; B - Forester; C - Rural Deveopmem Specialst;
D - CMl Enghe r: E - Pasture Mangement Specast
F a A uturalist; and G - Forest Induaties Spealist
/b I \. Prblem Free or Minor Prblem; 2- Moderate Problm; and
3 M ajor Problems
/c 1 m Improvn; 2 - Statinary; and 3 \. Deterirang
Id T \. Tehnical F - Finanidal: M \. Maoeriak and O \. Other
- iii -
PROJECT COMPLETION REPORT
GREECE
DITEGRATED FORESTRY DEVELOPMENT PROJECT
(LN\. 1718-GR)
Evaluation Summary
Introduction
1\. The Integrated Forestry Development Project was the fourteenth loan
to Greece by the Bank and the fifth in the agriculture sector-three of the
other four were for irrigation, and one was for regional development\. Greece
graduated from Bank lending in 1979\.
Objectives
2\. The Integrated Forestry Development Project, located in continental
western and north-western Greece and the Peloponnesus was designed to:
firstly, increase wood productioi\. from underutilized forests of western and
north-western Greece; secondly, to assist Government in developing a sound
long-term strategy for forest resource development; thirdly to provide for
more permanent employment and improved qluality of life to retain workers in
forest villages; and fourthly, to build up local capabilities to prepare
projects suitable for external financing\. Project components included:
infrastructural development of forest areas including roads and fire control
measures; establishment of industrial plantations; pilot mechanization
plantation research--for which UNDP financed the technical assistance and
training components; range management research; provision of machinery loans
and training for forest operators; a village infrastructure development
program; and a Forestry Sector Strategy Study and a Regional Development Study\.
Implementation Experience
3\. The project, at an estimated cost of US$144\.6 million was appraised
in December 1978, and the Bank loan for US$25\.0 million was signed on July 9,
1979\. Cofinancing was provided by the Tokai Bank for US$25\.0 million\. The
project finally became effective, after four extensions, on July 31, 1981\.
Delays occurred in Government obtaining parliamentary ratification and,
thereafter, in establishing the froject office and appointing the Project
Manager and Accountant\. This was exacerbated by a change in Government which
occurred in 1980\. Despite these early delays, and the effect of inflation and
fall in the value of the drachma (Dr) relative to the US dollar, the project
has achieved most of its objectives\. The project closing date was extended
once to March 31, 1986 and the funds available under the loan have been fully
utilized\. Internal inflation substantially exceeded appraisal expectations
and as a result total project costs were Drs 11,599 million as against Drs
5,307 million estimated at appraisal--an increase of 119%\. However, on
- iv -
account of the drachma falling against the dollar over the life of the
project, total costs in dollar terms were US$120\.82 million against an
estimated 144\.6--a decrease of 17X\. The economic rate of return, excluding
the non-directly proluctive village development program, was 19S as against
21\.2% estimated at appraisal\. This lower than expected ERR was principally
due to the poor quality of sawlops produced anA the diminishing demand for
pulpwood by the Greek particle board industry because of national economic
difficulties\. However, these negative factors have been largely offset by
increases in commercial fuelwood production\. This overview considers the
PCR's ERR to have been overestimated for reasons stated in paras 4\.11 - 4\.12,
and it is likely that the more correct figure would be about l\., excluding
the nonquantified benefits\.
Results
4\. The project may be regarded as a successful venture in support of
increasing the productivity of Greece's forest lands thus helping the national
economy--both from the short- and long-term points of view\. The project was
soundly conceived by both Government and the Bank\. Initially, the project
experienced difficulties--particularly in regard to matters affected by
bureaucratic procedures sL-\. as: parliamentary ratification of the Loan which
was a condition of effectiveness; procurement procedures; budgeting; and
overall decision making\. In due course, however, the Government provided
stronger commitment and support to the project\. The project has
satisfactorily completed both short- and long-term objectives\. The former
(which, nevertheless have important long-term implications) included: a
reafforestation program; support for nursery production; training of forest
workers and operators; loans to forest operators for forest exploitation
equipment, including heavy machinery; and infrastructural works including
roads and fire control measures\. In addition, a village development program
has provided an enhanced living environment for those engaged in the forestry
sector\. Long-term project components, satisfactorily completed, include: the
sector strategy study (but note reservations in para\. 3\.03 and 6\.03); pilot
range management program; and pilot plantation research\. The Bank/Government
relationship has been constructive and effective throughout implementation
though there were differences of approach in regard to the co\.duct of the
Sector Strategy Study\. The Bank responded positively to Government's request
for amendment to the loan agreement to allow for: expansion of the project
area since reafforestation proposals were constricted by grazier rights in the
originally defined area; adjustment of the allocation of loan proceeds and the
percentage to be disbursed on account of the drachma/dollar exchange rate
changes; and the extension of the project closing date to allow fuller
utilization of the loan proceeds\.
- v -
Sustinabity
5\. The project has provided the potential for long-term improved
productivity from Greece's forest lands whilst, at the same time, onslring
protection for the environmental and amenity use aspects of these natural
resources; it is understood that proposals on those subjects are to be
included in the next five-year development plan, commencing 1989\. The Fector
Strategy Study provides the base to future planning and management of these
resources though it is not certain that Government will use the base that\. has
been developed\. The rangeland and plantation research programs, carried out
under the project, provide valuable bases of knowledge which may now be
developed into practical applicatiou\. Furthermore, Government has declarea
its intention to maintain these important research programs in the future\.
The positive impact of the infrastructural features carried out under the
project 'tas provided Government with the justification for their maintenance
and expansion\. The successful village development Drogram has demonstrated
the importance of linking the development of human capital to sectorl1
productivity targets\. The concept, which is closely linked to the 'regional
development' philosophy has already been accepted by Government, following the
successful implementation of the Evros Development Project (Ln\. 1457-GR)\.
Findngd and Lessons
6\. The principal points are:
- More consideration should have been shown to Greek sensitivities
wnen designing the approach to be followed for the Sector
Strategy Study\.
- A more detailed and more clearly defined component for ensuring
effective socio-economic evaluation should have been built in to
the project\.
- More realistic assumptions should have been made in regard to
speed in procurement of goods and services in view of the
experiences of past, Bank-; nded projects in the agriculture
sector\.
_ The advantages of developing human capital in parallel with
efforts to increase produrtion from the forestry sector has been
clearly demonstrated through the village development program\.
This has helped to improve the standard of living of rural
comrminities, dependent for their livelihood on forest lands and,
thereby, stabilize the forestry labor resource which otherwise
would have continued to emigrate from rural areas to the
detriment of the industry\.
PROJECT COMPLETION REPORT
GREECE
INTEGRATED FORESTRY DEVELOPMENT PROJECT
PROJECT COMPLETION OVERVIEW MEMORANDUM
I INTRODUCTION
1\.01 Forestry in the Economy\. Forests cover about 2\.5 million ha or 20%
of Greece's total land area\. About 1\.8 million ha of these are exploitable
forests, with a growing stock estimated at 134 million m3 and net annual
increment around 4 million m3\. Coniferous forests make up about 60% of the
total growing stock but only 25% of current annual wood removals; the
remainder is accounted for by broadleaved trees\. Nearly two thirds of the
total forest area is owned by the State, and the balance is owned by
communities, monasteries, various organizations and private groups or
individuals, or jointly by the State and other owners\. Although industrial
roundwood production contributes only about 2% of agricultural GDP, forest
products form an important element of indigenous consumption\. Fuelwood
accounts for a high percentage of rural energy consumption, supplying
villagers' basic needs for heating and cooking\. Forests also play a vital
role in protecting Greece's watersheds, thereby preventing soil erosion and
ensuring a sustained flow of irrigation and drinking water for farmers and
urban dwellers situated downstream\. The forest areas constitute a very
significant dry weather grazing reserve for villagers' livestock\. They also
provide the bulk of the country's hunting and inland recreational areas, sites
for national parks and wildlife reserves and habitat, for example, for a
significant portion of Greece's 739 species of endemic plants\.
1\.02 Forest areas include some of the least developed parts of Greece and
contain most of the poorest people, who directly benefit from forestry
development\. Out qf a population of 9\.2 million in Greece, about 2\.5 million
live in rural areas, of whom nearly half a million people live in mountain
villages located in or close to the forest areas and depending partly on
forestry employment for their livelihood\. Forestry provides nearly 3 million
mandays of direct employment to more than 40,000 persons annually (an average
of 75 mandays per person) About 90% of these workers are empl-iyed
seasonally, mostly in logging operations, for an average of 50 days in the
year\. In mountain regions, forestry typically provides work for over 20% of
the village work force\. For those who work in both agriculture and forestry,
the latter usually accounts for about half the family income\. The per capita
incomes and access to social facilities of these people are substantially
lower than the national average; a large majority fall in the rela\.tive poverty
target group with incomes less than US$1120 per capita\.
- 2 -
1\.03 The forestry policy of Greece aims, inter alia, at reducing the trade
deficit in forest products through intensification of production from natural
forests, expansion of forest industries' capacity, and the establishment of
new forest plantations, particularly of fast-growing species\.
1\.04 In 1979, the trade deticit in forest products was in the order of
US$230 million, of which some 50% represented pulp and paper\. In 1979, a
deficit of some US$450 million was forecast for 1985, with a caution that the
amount would be considerably greater by the end of the century unless wood
supplies to industry were substantially increased\. The trends in imports,
exports, consumption and local production, 1950-1983, are set out in Annex 1,
Table 3\. These reveal a continuing deficit in the order of 1\.0 to 2\.0 m3
roundwood equivalent between the consumption and production of wood products
other than fuelwood, the consumption of which continues to decline\. In dollar
terms, imports of wood products in 1983 were valued at US$346 million, against
exports of US$52 million\. The adverse situation is further emphasized by the
predicted consumption of wood products for the years 1983-2007, during which
time progressively higher consumption is expected for all products except
fuelwood\.
1\.05 Bank involvement in the AgricL\.tural Sector\. The Integrated Forestry
Development Project was \.he first Bank loan for forestry to Greece\. However,
the Bank has made four loans to Greece in the agricultural sector all of which
have now been closed\. In June 1971 the first loan, of US$25 million, was made
for a Groundwater Development Project (Ln\. 75s\.-GR);'' in June 1974, the Bank
lent US$30 million for the Nestos and Yannitsa Irrigation Project (Ln\.
99l-GR);2' in October 1975, the Bank lent US$40 million for the East Vermion
Irrigation Project (Ln\. 1165-GR);3' and in June 1977, the Bank lent US$35
million for the Evros Development Project (Ln\. 1457-GR)\. This fourth project
was closed in December 1982 and a Project Completion Report was issued on
March 31, 1987\.
1\.06 The Evros Development Project, in the far north eastern part of the
country, had inter-relating components to the Integrated Forestry Project
under review, since the fotmer had a forestry component involving provision of
forestry ii\. rastructure and reforestation and, subsequently, incorporating
significant environmental aspects\. The Evros Project also had provision for
infrastructural support for rural communities to improve their standard of
living, thereby making rural life more attractive and thus reducing emigration
which otherwise threatened agricultural productivity in this underdeveloped
part of Greece\. The Evros Project Completion Report concludes that the
project was broadly successful, with the forestry component showing, for the
roads and reforestation sub-components, rates of return of 17% and 33%
respectively\. Although the rural development benefits could not be
quantified, the PCR indicated that the quality of rural life improved
I' PPAR No\. 5093 of May 24, 1984\.
2/ PCR No\. 5542 of March 18, 1985\.
3/ PCR No\. 6266 of June 19, 1986\.
- 3 -
considerably as a result of the infrastructural developments under the
project; emigration was, at least stemmed; and, as a result of the improved
living conditions, external entrepreneurs in the city were attracted to invest
la these rural areas in, for instance, high standard housing\.
-4-
I\. PROJECT PROCESSING
2\.01 Project Identification\. The Integrated Forestry Development Project
was identified by two Bank missions that visited Greece in November 1977 and
January 1978\. GOG originally wanted a small, localized project and agreed to
the wider concept of forestry development within the wider context of the
national economic framework, as envisaged by the Bank, only after considerable
discussion\. Preparation was carried out by the Government of Greece with the
assistance of a Finnish consultancy firm, funded by OECD\. The report, issued
on July 7, 1978, was well prepared\. The Bank assisted throughout the
preparation process, especially in regard to the preparation of terms of
reference for the consultants\. The project was appraised in December 1978,
following a preappraisal in September of that year\.
2\.02 Prolect Obiectives and Description\. The principal objectives of the
project were to: (i) save foreign exchange by increasing wood production from
underutilized forests of western and northwestern Greece; (ii) introduce
mechanized logging and more intensive forest management systems, and assist
the Directorate General of Forests (DGF) in the Ministry of Agriculture in
formulating a sound long-term strategy for forest resource development
(including forest industries); (iii) provide more permanent employment and
improved quality of life and thereby to retain workers in forest villages; and
(iv) build up local capabilities for preparation of projects for external
financing\. Selection of the project area was influenced by Government's
objectives of creating rural employment in the poorer mountainous areas of the
country and introducing intensive extraction and reforestation operations into
as large an area of forests as possible during the next decade\.
2\.03 Project Components\. The main components of the project were:
- construction of about 3,500 km and improvement of about 2,000 km
of forest roads, and provision of maintenance equipment;
- credit for provision of logging equipment and communal housing
and transport facilities for about 3,000 workers and forestry
staff;
- intensitied forestry management, including modernization and
expansion of three nurseries, establishment of about 16,000 ha
of industrial plantations, and provision of fire protection
equipment and works;
- infrastructure investments in 37 selected forest villages; and
- training and research programs and studies, including:
i) training and demonstration in mechanized logging methods;
- 5 -
ii) pilot industrial plantation research;
iii) a sectoral development strategy study; and
iv) a regional development study\.
2\.04 Project Area, Topographv, Climate, Population and Land Use\. The
project area comprises continental western and northwestern Greece and the
Peloponnesus, covering a land area of about five million ha, or about 40% of
the country\. Commercial forests cover about 680,000 ha of this area, with
some 580,000 ha classified as suitable for commercial log extraction\. About
two thirds of the commercial forests are in the continental part of the
project area, and one third in the Peloponnesus\. Topography in the
continental part of the project area is characterized by the Pindus Mountain
range, which runs in a northwest-southeast direction from the Albanian border
to the Gulf of Korinth\. Most forests are located at higher elevations (above
1,000 m) of this mountain range, where topography is rugged and slopes are
steep, which makes extraction of timber difficult\. In the Peloponnesus, the
topography is somewhat gentler than in the north, though very rugged mountains
are found in some areas\. Soils from metamorphic and sedimentary rocks are the
most important forest soils\. Climate in the area is temperate, but
considerable variations occur at different elevations\. In the main forest
areas the annual rainfall ranges from 800 to 1,600 mm, mostly in late fall and
winter\. Because the highest temperatures and driest periods coincide, moisture
deficiency in the soils is severe towards the fall (September)\. Rains are
often torrential, which, together with rough topography, high soil erodibility
and abusive land use pattern, are conducive to severe erosion\. Mean annual
temperatures in the main forest areas are around 10° C, with an increase of
some 20 - 30 C from north to south and highest values around 190 -
230 C\. Sub-zero temperatures are common during winter in all forest areas,
and snow occurs frequently, even in the Peloponnesus\. Total population of the
project area is estimated at about 1\.9 million (about half of which is in the
Peloponnesus), living in nearly 5,000 towns and villages\. Steady emigration
due to lack of employment opportunities and poor living conditions has caused
a serious dearth of experienced and willing labor in all major forest regions
of the project area\. Land Use: where topography, soils and rainfall permit,
land in the project area is used for permanent agriculture\. However, the
traditional and most extensive land use is grazing (mainly sheep and goats)\.
A long history of grazing and fires associated with it to improve forage
production, have caused a drastic reduction of high forest area, severe
deterioration of the low vegetation cover and large-scale erosion\.
2\.05 Project Costs and Financing\. The total estimated cost of the project
was US$14t,\.6 million, with a foreign exchange component of about US$49\.0
million\. The financing plan was as follows:
AMOUNT I
D Dr million USS millionl %
IBRD 917\.5 25\.0 17\.3
Tokal Bank Ltd 917\.5 25\.0 17\.3
Govemment 3\.148\.8 85\.8 59\.3
Agricubtural Bank of Greece 77\.1 2\.1 1\.5
Seneflca 245\.9 6\.7 4\.6
TOTAL 5,306\.8 144\.6 100\.0
- 6 -
2\.06 Loan Nesotiations\. No major issues were raised during loan
negotiations, which were held in Washington in April 1979\.
2\.07 The loan was approved on June 5, 1979, signed on July 9, 197' and
became effective on June 30,1981\. The deadline for project effectiveness date
had to be extended four times from the original date of January 7, 1980, due
in part to a change in Government but, principally, to delays in Government
obtaining parliamentary ratification and, thereafter, in establishing the
project office and appointing the Project Manager and Accountant\.
Consequently, implementation was delayed, and project costs also rose beyond
expectations, primarily as a result of inflation\.
-7-
m\. PROJECT IMPLEMENTATION
3\.01 Administration\. A small Project Planning and Management Office
(PPMO) was established, in October, 1979, within the Directorate General of
Forests which is part of the Ministry of Agriculture; PPMO has worked
effectively throughout the project life in coordinating the forestry
components of the project\. Within the Ministry of National Economy, the
exieting Regional Policy and Development Service effectively coordinated the
rural development subcomponents of the project\. The credit component was well
supervised by a Credit Officer responsible for forestry in the Agricultural
Bank of Greece\. A Project Steering Committee, chaired by a senior official of
the Ministry of National Economy, provided cohesiveness in resolving project
problems and in providing overall direction\.
3\.02 Pilot Plantation Research\. UNDP provided cofinancing (US$1\.2
million) for the technical assistance element of this component which was
termed "Mechanized Reforestation" by UNDP\. Technical assistance was provided
by FAO for project management, mechanization and economic evaluation\. Whilst,
ultimately, this assistance was effectively utilized, serious delays in
procurement of heavy machinery (funded by the Bank) delayed the start of
operations by two and, in some cases, three seasons\. As a result, the overall
program was not fully completed and, despite UNDP's extension of project
financing by one year, impact evaluation was restricted by the delay in pilot
plantation establishment\. Difficulties were also experienced in obtaining
counterpart staff, particularly at sub-professional level\. A terminal review,
conducted in September 1986 by UNDP/FAO/IBRD, considered the program to have
been successful and its future expansion justified\. Mechanized reforestation
was found to provide the means to reclaim mismanaged land, and to raise and
sustain this productivity in perpetuity\. Of the nine immediate program
objectives six were satisfactorily completed, two partially completed and
one--road construction, harvesting and fire control--was not undertaken by the
project since Government carried out the work from its own resources but as
part of the project\. Research work on combining wood production from
plantations with pasture improvement--an issue of particular importance in the
management of Greek forest lands, has not kept pace with other objectives and
work on this subject should receive high priority in the future\. Government
has confirmed its decision to retain the overall program initiated by the
project\.
3\.03 Forest and Forest Industries Sectoral "evelopment Strategy Stud\.
This component was central to project concept since it was envisaged at
appraisal that policy decisions made by Government as a result of the Strategy
Study's recommendations would determine the future development and utilization
of Greek forest lands over ensuing decades\. The Bank had proposed and it was
agreed by Government during negotiations to use internationally recruited
consultants (totalling about 5 man years) to assist Government in conducting
- 8 -
the study in order to introduce the most up-to-date thinking on forest land
development and to provide an independent viewpoint on resource use which was
not moulded by past custom\. However, subsequently, following a change in
Government, resistance to the use of internationally recruited consultants
increased, and protrac~ed discussions and correspondence ensued between the
Bank and Government\. The study was finally conducted by a core group of Greek
specialists drawn from the local universities, research organizations and
forest industries, with contributions from a wide range of officials and
persons experienced in the utilization of forestland resources\. Despite the
fact that the Bank did not provide funds for the study, it did contribute
actively through guidance on such matters as terms of reference, scheduling
and periodic review\. The report, encompassing the ten management options
examined, has been conscientiously prepared by Greek officials\. However, the
Bank maintained a stance throughout that greater objectivity would have been
obtained had, at least, some internationally recruited consultants been
utilized\. In addition, the Government failed to allot adequate resources to
the study (most members contributed to the study on a part-time basis), its
results were long delayed (they were not made available until the project had
ended) and it did not review inventory data, forest yield studies and
management plans against field examination of forest areas, nor did it review
pricing systems or structure of taxes and subsidies\. Probably the Greek
team's most notable omission in the sub-sector review was its failure to
consider adequately the scope for increasing national wood yields by
intensification of forest management as proposed in the SAR, despite attention
being called to this shortcoming during several Bank missions\.
3\.04 Forest Roads\. The forest road construction program has been
completed generally as envisaged at appraisal though greater emphasis has been
given to "C" class, new unstabilized roads, as against "B" class stabilized
roads\. The reason for this is that increased wood production and quality did
not materialize as expected and the lower standard but greater length of roads
for the same cost was considered to be more appropriate\. Construction
performance is summarized in the following table:
ROAD CONSTRUCTION AND MAINTENANCE PERFORMANCE
INCLUDING NON-STATE FORESTS
______________ _ T ITOTAL FOR PERIOD 1981-1985 (km)
Actual Estimated Act as % of Est
Gravel Surfacing 755 835 90\.42
Road Improvement 778 1,135 68\.55
New Ctss" Roads \. 731 775 94\.32
Now Cis C" Roads 1,500 1,450 103\.45
New Tractor Roads 2,082 1,260 165\.24
Road Maitenance 19,394 16\.417 118\.13
3\.05 Fire Losses and Protection\. During project implementation, the
incidents of serious fire damage increased considerably throughout Greece and
preventive measures envisaged under the project were accordingly given greater
emphasis, resulting in a much larger expenditure on fire protection measures
and purchase of equipment than estimated at appraisal--in drachma terms 576%
-9-
but 92% in dollar terms (applying the prevailing annual exchange rates to
annual expenditures)\. However, this expenditure can be justified by the
results of a national survey of fire damage over the period 1980-1985 which
indicated that in the project area the burnt area had decreased 62% during the
period 1983-85 when compared to 1980-82; whereas in the rest of Greece the
burnt area had increased by 29% for the same periods compared\.
3\.06 Forestry Management\. By December 1985, accelerated establishment of
industrial plantations had exceeded appraisal expectations by 4%--16,527 ha
planted as against 15,900 ha estimated at appraisal\. In February,1984 the
Bank responded to Government's request by amending the Loan Agreement to
provide for the 16,000 ha of industrial plantations to be undertaken
"throughout Greece" as against the "project area" as originally envisaged\.
This expansion of geographic scope was necessary since the areas available for
planting within the project area were severely restricted by grazier rights
which precluded the original program from being carried out as planned\. Of
the 16,527 ha planted, 6,139 ha occurred outside the original project area\.
The extent of the "grazier problem" had not been foreseen at the time of
appraisal, either by Government or the Bank, though recognition of the
importance of tackling forestry/grazier interaction was reflected in the
provision of the pilot range management subcomponent\. It was also proposed at
appraisal that three forest nurseries would be expanded and modernized\.
Expansion did not, in fact, prove necessary; expenditures were, however,
incurred on provision of containers and peat for the paper pot nursery system
which was adopted in several regions with intensive planting programs\.
Nursery production was adequate to meet demand\.
3\.07 Pilot Range Management\. Delays occurred ir\. implementing this
component which resulted in some objectives not being fully achieved--notably,
the land classification (rangeland survey) of northern Greece, primarily,
eastern Macedonia\. The principal constraint to early and full implementation
of this component was the delay in providing adequate numbers of qualified
staff\. In the end, however, the component can be considered very successful\.
Effective use was made of international consultancy and external training to
develop a cadre of skilled rangeland improvement staff\. Improved practices of
pasture establishment (incorporating fertilization, seeding and control of
undesirable plants) were developed and enthusiasticallv adopted by farmers;
roads were constructed to test the impact on increased production of opening
up summer rangelands to communication and service--the result proved to be
positive; and a construction program of stock watering facilities, and stock
and shepherd housing was completed with enthusiastic grazier response\.
Nevertheless, adverse community reaction to fencing and grazing controls
caused these aspects not to be pursued\. Grazier communities, for the most
part, did not contribute to the costs of the pilot program but there are
indications that the benefits have been appreciated by these communities and
that, in the future, community commitment and direct financial involvement can
be expected\. The officer in charge of the component considered that a
substantial portion of the range improvement costs were recovered by
Government through taxes on meat production which has increased under the
project\. It would be safe to conclude that graziers, benefitting through
improved rangeland management tinder the program, became much less dependent
- 10 -
upon forest area grazing, ceased to use tree branches for building
construction, and positively reassessed the financial and social
attractiveness of operating livestock enterprises\.
3\.08 Logging Training and Demonstration\. This component can also be
regarded as successful in that it fully met its objectives of training
significant numbers of forestry workers (79) and operatives (37) in improved
practices and techniques\. Effective use was made of technical assistance
(three Norwegians) in developing an appropriate up-to-date training program;
good quality, cost effective housing and training facilities were constructed
and the calibre of training staff was of a high order\.
3\.09 Logging\. Provisions for loans to forest operatives through the
Agricultural Bank of Greece were not taken up as expected at the time of
appraisal\. Principally, this was on account of the excessive number of
individuals and cooperatives involved in forestry extraction and processing
compared with the quantity of raw material available\. This situation made it
difficult for operators to justify the financial viability of purchasing and
operating expensive forestry equipment\. Whilst, therefore, demand for credit
for the purchase of smaller equipment, (for example, 192 power chain saws over
the project life), has been quite strong, loans issued for large-scale
equipment- have been few (for example, 44 agricultural tractors with logging
trolleys, 5 agricultural rubber-tired skidders and 11 loading cranes)\.
Nevertheless, the provision of credit has met a felt need and the component
can be considered successful within the constraints of government policy in
its impact on the numbers of operators permitted to work in the forests (see
above)\. It should be added that Government is endeavoring to tackle the
problem by reorganizing the cooperatives, and restricting logging to
cooperative members who are potentially full-time employees in forest
exploitation\.
3\.10 Village Infrastructure Development\. Conceptually, this component was
correctly identified and incorporated in the project to improve the living
conditions of those engaged in the forest industry, without which there had
been and would continue to be an increasing exodus of forest workers,
particularly the young, from the rural to urban areas\. This component can be
counted as successful in all respects in that physical development targets
were generally attained or exceeded; cost was not excessive, considering the
inflationary trends; and significant benefits of an improved standard of
living were brought to communities who otherwise lacked much of the basic
amenities of life, especially in regard to communication with sources of
service, supply and recreation\. Furthermore, there is strong indication that
these improvements resulted in direct benefits to the forest industry--not
only in providing encouragement for young forest workers to remain in the
industry but also in attracting new investment into the forestry sector\. In
February 1984 the Bank responded to Government request by amending the Loan
Agreement to provide for the number of villages benefitting under the project
to be increased from 37 to 45\. This extended village development program was
completed before the project was closed\. Within the program, it was realized
by, the Regional Policy and Development Service of the Ministry of National
Economy, which implemented this component, that special impact on improving
- 11
standards of living was being attained by the construction of connecting roads
and rural access roads\. Consequently, with Bank support, expenditures on this
subcomponent relative to other subcomponents were increased considerably above
appraisal estimates\. Nevertheless, other village development components were
by no means neglected on account of this special focus on rural roads as shown
in the following table:
PHYSICAL PERFORMANCE AGAINST APPRAISAL ESTIMATES
OF VILLAGE INFRASTRUCTURE DEVELOPMENT PROGRAM
ITEM UNIT ACTUAL ESTIMATED ACT AS% of ES
Connectng Roads km 416\.0 124\.5 334\.1%
Village Streets km 92\.0 70\.1 131\.2%
Rural Access Roads km 69\.0 47\.0 146\.8%
Water Supply Villages 40 28 142\.9%
Drainage/Sanitation Covered 22 21 104\.8%
Electricity Villages 7 22 31\.8%
Other Community Facilities Covered 39 36 108\.3%
3\.11 Regional Development Study\. Funds were provided under the project
for a study, to be conducted by the RPDS on regional development in western
Greece\. This study would have aimed primarily at the preparation of a
regional development project along the lines of the Evros Development Project
(Ln\. 1457-GR) for which, at that time, Government had signed a Loan Agreement
with the Bank\. The concept of regional development appeared promising, as
embodied in the Evros Project--some of the elements in regard to rural
development also being embodied in the village development component of the
project under review\. The Evros Project has been considered successful (PCR
dated March 31, 1987) such that the Government has stated its intention of
expanding the development approach used in Evros to other regions of Greece\.
In the event, however, the Regional Development Study was not carried out
under the Forestry Project--funds having been provided in the meanwhile for a
much wider ranging study by the EEC through its Integrated Mediterranean
Programs\.
3\.12 Fellowship Program\. When measured against financial provisions made
under the project for this subcomponent, achievements were disappointing-only
one international study tour and two attendances at symposia materialized
prior to 1985; thereafter, however, 4 trainees attended short-courses, 12
attended FAO/ECE seminars, and 20 trainees went on study tours\. Difficulties
in achieving adequate language competence have been cited as a major problem\.
However, the inherent lack of commitment to the use of the fellowship program
(i\.e\. apprehension by Government as to the benefits relative to cost) appears
to have been the most significant fa:tor in the less-than-expected utilization
of fellowship funds\.
3\.13 Project Evaluation\. The appointment of persons responsible and
establishment of evaluation mechanisms for the forestry and village
development components did not receive attention until late in project life\.
As a result, the surveys conducted lacked sufficient depth, though they were
useful in providing some indicators of project benefits\. At appraisal,
- 12 -
evaluation was given only limited attention--the function being contained
within the general duties of the PPMO\. Had more specific attention been given
together with detailed proposals of staffing and funding, greater and earlier
attention would likely have been given to this important function\.
- 13 -
IV\. PROJECT IMPACT
Forest hnp t
4\.01 The positive impact of the project on the development of forest lands
in Greece has been considerable\. Physically, the project has been responsible
for the valuable addition to the sector of some 16,527 ha of reafforestation\.
Infrastructure (particularly roads and fire prevention and control measures)
provided under the project already has, and will continue to have, important
long-term implications for cost effectiveness and the increase in productivity
from the sector\. The training of forest workers and operators is also
yielding benefits by introducing modern techniques to personnel involved in
the industry, thereby realizing greater personal gain, and, in turn,
stabilizing the workforce\.
4\.02 The most significant potential impact of the project lies in the use
that Government may make of the Sector Strategy Study\. Whilst the Bank still
has reservations as to whether, in fact, the most beneficial choice may have
been selected for future sector strategy, the study nevertheless points to the
better utilization of forest lands in all its wide-ranging aspects and
implications\. Since the study was completed much later than anticipated, no
direct impact can be recorded during the life of the project\. However, in the
long-term, impact would be considerable\.
4\.03 Hitherto, a major deterrent to increased forestry development has
been the incursion into forest lands of graziers, managing their flocks and
grazing lands with little thought given to environmental conservation or to
increased productivity that would benefit them personally\. Through the
project's pilot pasture improvement program, improved practices have been
introduced, inventories of grazing areas prepared and the foundation laid for
a national campaign leading towards safeguarding and optimizing the use of
both forest and rangelands, in addition to pointing the way to increased
profits for graziers, and releasing large areas of land without harm to the
forestry sector\. Whilst, therefore, the project has only pointed the way
through this pilot program, the long-term impact for developing a better
grazier/forestry synergy is considerable\.
4\.04 The project has also conducted successfully, with UNDP assistance, a
most important exercise to determine improved practices of mechanized
reafforestation\. This research will be a continuing one to determine the
optimum methodologies for reafforestation in the various ecological areas of
Greece, encompassing, not only good forest lands, but also degenerated or
topographically difficult areas\. The impact of the research already conducted
should be considerable and all foresters are currently beirg encouraged by the
Forest Service to take note of what has been achieved P-\.a to determine its
immediate applicability in different localities\. The long-term impact in
increasing the forest area and its productivity is also expected to be
considerable as forestry sector strategies develop\.
- 14 -
4\.05 The Village Development Program has undoubtedly achieved a
significant and long lasting impact on a number of mountain communities whose
primary source of income comes from forest lands\. Not only has the project
brought to these communities a better standard of living through the provision
of infrastructure leading to improved amenities, but also increased economic
wealth has followed this greater accessibility\. The project has clearly
demonstrated the advantages of developing human capital in parallel with
sectoral production development, rather than simply seeking to attain
increased production targets\.
4\.06 Production\. The following table shows production trends between
1980-1985, the targets being based on existing management plans--not on
enhanced felling regimes expected to be introduced as a result of the Sector
Strategy Study:
PRODUCTION OF FOREST PRODUCTS ('000 cu\.m\.)
1980-1985
PRODUCT Actual Estimated %
Sawlogs 1,617 2,979 54\.3%
Pulpwood 301 1,113 27\.0%
Fuelwood 1\.804 727 248\.1%
Free Collected 3,671 Not Estimated Not Calculated
TOTAL 7,393 4,819 1 53\.4%
The principal reason for the shortfalls in industrial wood production are the
poor quality of sawlogs and the diminishing demand for pulpwood (chipwood) by
the Greek particle board industry\. The latter (comprising ten particle board
mills and one fibreboard factory) have operated at only 50-60% capacity
because of national economic difficulties and have been increasing their use
of sawmill waste and privately produced poplar wood at the expense of
coniferous chipwood\. Industrial wood shortfalls under the project have, in
fact, been compensated to a degree by increases in commercial fuelwood
production\.
Economic Impact
4\.07 Project Beneficiaries\. The population directly benefitting from the
project have not been quantified\. However, it is most likely that, at the
least, numbers of beneficiaries anticipated at appraisal have been attained or
exceeded\. Thus, benefits are likely to have accrued to about 20,000 non-State
forest owners, including communities, organizations and private individuals\.
At appraisal, it was estimated that about 30,000 forest villagers, logging
cooperative members and equipment operators in the project area (including
some of the poorest regions of Greece) would gain fromi improved infrastructure
facilities, better access to markets and jobs, training in mechanized methods,
and higher incomes (for example through pasture development)\. This number has
almost certainly been considerably exceeded since the number of villages
directly targetted at appraisal for infrastructural development was 37
whereas, in fact, 45 villages have received these benefits (an increase of
18%)\.
- 15 -
4\.08 Benefits\. The main quantifiable project benefits are the increases
in wood production\. At appraisal, it was estimated that wood production would
increase from about 700,000 m3 iti 1980 to about 1\.9 million m3 by 1995--an
increase of about 1\.2 million m3\. Incremental production was estimated to
come mainly from sawlogs and pulpwood (about 90%) while the balance 10% was
expected to come from firewoods\. The PCR, pr-?ired by the Government,
estimates that production in 1980 was already about 1\.1 million i3 the main
difference between the PCR estimate and the SAR estimate being the free
collected firewood (about 500,000 m3) included in the PCR but not estimated
at appraisal\. Based on actual production up to 1985, the PCR projects that by
1995 total production will reach only about 1\.7 million m3--an increase of
about 600,000 m3 compared with an incremental 1\.2 million m3 estimated at
appraisal\. The incremental production is expected to come mainly from
firewood (about 80b)--the balance of 20X coming from sawlogs and pulpwood\. It
can be concluded that project induced incremental production is expected to
remain substantially below appraisal estimates not only in terms of quantity
of wood produced but also in terms of its quality\.-I Comparison of SAR and
PCR estimates of project induced wood production are presented in Annex 1,
Table 5\.
4\.09 Prices: Prices used in the PCR's economic analysis for 1980-1985
were derived from the actual annual CIF values of similar types of wood
imported into Greece during the same period\. Firewood prices were assumed to
be equal to the finanicial prices prevailing in the respective years\. Economic
prices in the PCR have been expressed in constant 1979 currency values (using
the agricultural price index) to compare them with the SAR economic price
estimates (see Annex 1, Table 6)\. Constant prices of all types of wood
products used in the PCR were higher than SAR estimates\. It is worth noting,
however, that prices of firewood are only about 202 of the prices of pulpwood
and sawlogs\.
4\.10 Economic Evaluation: The Economic Rate of Return (ERR) estimated in
the PCR has been based on physical incremental output and economic prices for
1980-85 as indicated in paras\. 4\.08 and 4\.09\. Prices beyond 1985 are assumed
to remain constant (at 1985 price levels) while incremental production is
expected to increase as shown in Annex 1, Table 5\. The calculation of ERR in
the PCR did not include operation and maintenance, equipment replacement and
village infrastructure development costs\. On this basis, the ERR was
estimated at 19b compared with the 21% estimated at appraisal; the latter,
however, included O&M and equipment replacement costs\. If all investments but
equipment replacement costs were included, the ERR brought ou in the PCR
would be 14b against 18% estimated at appraisal\.
It should be noted, however, that the development option selected in the
Sector Strategy Study requires early increases in forest production of
5% for fuelwood and 25% for industrial wood\.
- 16 -
4\.11 The PCR does not provide the basic information used for ERR
calculation and consequently no attempt was made to revise it for this
overview\. However, the following observations are worth noting:
1\. Project induced incremental production is only about 50Z of SAR
estimates\.
2\. Actual incremental production cowis mainly from firewood, a low
quality wood, instead of from sawlogs as expected at appraisal\.
3\. Although actual unit prices are higher than the prices estimated
at appraisal, actual firewood price is only about 50% of the
expected SAR sawlog price\. Therefore, higher actual prices
compensate, only partially, for the loss of benefits due to a
lower than expected quantity and quality of incremental wood
production\.
4\. PCR economic calculation did not include operation and
maintenance costs nor did it include equipment replacement
costs\. SAR annual operation and maintenance costs were
estimated at about 102 of annual investment costs\.
4\.12 Based on the above observations, it could be concluded that the ERR
in the PCR appears to have been overestimated, taking into account that at
appraisal the ERR was estimated at 211, and sensitivity tests indicated that a
30% decrease in project benefits would drop it to 12%\. Because, at present,
it is estimated that project benefits are about 252 lower than estimated at
appraisal, it is quite likely for the actual ERR to be about 12%\.L' The
project has, however, brought about substantial long-term unquantified
benefits that would more than offset the low rate of return\.
4\.13 Some of these unquantified benefits are listed below:
1\. The Sector Strategy Study is expected to have a substantial
long-term impact on improved utilization of forest lands\.
However, because the study was not completed until the end of
the project, its direct impact has not been quantified (see
para\. 4\.06)\.
2\. The extensive road network, of various classes, constructed
under the project's forestry and village development program has
had considerable nonquantifiable benefits such as:
- promotion of industrial development, e\.g\., timber
processing plants;
Since this is our last operation in Greece and we are no longer sending
operational missions, a separate mission to recalculate the PCR's ERR was
not considered worthwhile\.
- 17 -
- improved access to the leisure and amenity resources of
forest lands; and
- improved access to schools and markets for isolated
communities situated in and around forest areas\.
3\. The village development program has improved the standard of
living of rural conmunities dependent, principally, for their
livelihood on forest lands, and has thereby helped to stem the
outflow of forest labor fro\.a these communities\. Similar
benefits have been made available under the project to logging
workers through the provision of perwanent, semi-permanent and
mobile accommodation\.
4\. The project has already had considerable beneficial impact on
environmental protection and has laid down the basis for a
national campaign to protect, but yet optimize the use of, both
forests and rangelands through:
- introduction of appropriate, mechanized reforestation
techniques on degraded and steep, erodable lands;
- development of improved grazing management practices,
thereby improving the income of graziers and reducing
damage to forest lands from fires and inappropriate grazing
practices\.
5\. The project has developed the basic research to determine the
optimum methodologies for reforestation in the various
ecological areas of Greece\.
4\.14 It can be justifiably concluded that the project has substantially
and satisfactorily met its overall objectives\.
- 18 -
V\. INSTITUTIONAL PERFORMANCE
5\.01 The head of the Project Planning and Monitoring Office (PPMO) was
appointed prior to Loan negotiations\. The timing of his appointment plus his
knowledge and involvement in the preparation and appraisal of the project gave
strength to the subsequent functioning of the unit and to the coordination of
the project as a whole\. PPMO, though modestly staffed, operated competently
throughout project life to good effect\. There was also good continuity of
officials concerned with project implementation in the Regional Planning and
Development Service of the Ministry of National Economy\. The post of Credit
Officer responsible for administering the project component in the
Agricultural Bank of Greece was held by the same official throughout the
project life\. The position of Chairmanship of the Project Steering Committee
was, however, occupied by a number of officials occupying the post over
project life\. Overall, the project has received good direction and
administrative support\. The continuity and commitment of key executive staff
has been an important contributory factor in the general attainment of project
goals and objectives\. The project has successfully strengthened and supported
existing institutions, no new bodies being created\. This would have an
important contributory effect to long-term sustainability\.
5\.02 The establishment of PPMO, specific to project requirements, has
also, as envisaged at appraisal, provided the Directorate of the Forest
Service with a a planning office able to undertake work in arranging other
external loans for the forestry sector--notably from the EEC\. PPMO's
experience in handling the Bank Loan has assisted this process\. Similarly,
the Regional Planning and Development Service of the Ministry of National
Economy has been able to draw upon its experiences with the Forestry Project
Loan when negotiating other loans--notably, from the EEC--for regional
development programs\.
5\.03 PPMO's performance in the submission of progress and annual reports
has been satisfactory\. Compliance with conditions requiring submission of
audit reports has also been satisfactory\.
5\.04 The principal problems which have detracted from project performance
have nearly all been due to issues of bureaucratic procedure, as under:
- Declaration of effectiveness was delayed four times from
January 7, 1980 to July 31, 1981--a period of 18 months\. This
was due, in part, to a change in Government but, principally, to
the delay in obtaining parliamentary approval for the project\.
- Whilst correct procurement procedures were followed, in line
with the Bank's guidelines, the bureaucratic process, whereby
evaluation and award decisions passed through a series of
committees resulting in long delays, seriously retarding project
- 19 -
progress--most notably in the procurement of heavy machinery for
the pilot plantation research program\.
In the early life of the project, local funding provision
through the annual budget proved a deterrent to project
progress\. Allocations were not made until well into each season
and, initially, sums provided were not adequate to meet
requirements\.
This delay in provision of local funding particularly affected
civil works constructions\. The effective construction season in
most parts of the project area is limited to about 7 months and
with delay in receiving funds from the annual budget leading to
delay in awarding local contracts, it became difficult for
contractors to meet annual construction programs in the time
available\.
In the case of the Village Development Program, the works were
carried out by the various Nomarchies (Regional authorities) and
accounts were maintained at this level\. Considerible
difficulties were experienced by RPDS under this system firstly
in obtaining the necessary supporting documentation to validate
withdrawal applications to the Bank, and secondly, in monitoring
actual physical and financial performance against appraisal
expectations\.
- The delays that occurred in conducting and finalizing the
Forestry Sector Strategy Study were due: in the first instance,
to Government's apparent reluctance to proceed with the study;
secondly, to protracted discussions and correspondence between
Government and the Bank as to how and by whom the study was to
be undertaken; thirdly, to lengthy procedures for review of the
core group's recommendations and decision making; and fourthly,
to the Government ignoring advice offered by Bank missions
regarding examination of increased offtake alternatives\.
- The delay and inadequate utilization of the consultant and
fellowship program was due to Government's view that benefits
would not be commensurate with cost\.
5\.05 Operation and Kaintenance and Continuity\. In general, operation and
maintenance has been satisfactorily carried out during project life, whether
this relates to maintenance of vehicles, machinery, and equipment, or to
construction of civil works, such as roads and infrastructural facilities\.
Government has stated its commitment to continuing with the research program
relating to mechanized industrial plantation establishment\. It has also
acknowledged the value of regional development programs as demonstrated by,
for instance, the Evros Development Project, which incorporates, inter alia,
infrastructural development for rural communities, similar to that carried out
in the project under review (para\. 3\.10)\. It is most likely, therefore, that
Government will maintain and expand on infrastructure development initiated
- 20 -
under the Village Development Program of the Forestry Project\. Proposals under
the Forestry Sector Strategy Study are to be incorporated in Government's next
five-year development plan, commencing in 1989\.
Performance of the Bank
5\.06 There were 13 project supervision missions between November, 1979 and
November 1985 (i\.e\., an average interval of 6 months); missions have included
staff of the following specializations: economist (also combining with
financial analyst), forester, and agriculturalist\. Continuity of supervision
personnel has been good and the specialists involved more than adequate to
review the implementation of the various project components\.
5\.07 The project, as appraised by the Bank, was well conceived in its
approach to the development of the forestry sector in Greece\. Appropriate
emphasis and support was given to increased wood production, research,
infrastructural development, training, the integrated needs of grazing and
forestry, and improving the standard of living of rural communities dependent
upon the forestry economy for their livelihood\. Special emphasis was placed
on the long-term needs of the forestry sector through the conduct of the
Sector Strategy Study\. The Bank responded positively and effectively to
mid-term circumstances that had arisen, by amending the loan agreement at
Government request, to provide: increased disbursement percentages and
reallocation of the proceeds of the loan which had been affected by large
changes in the drachma/dollar exchange rate; expansion of the area in which
reafforestation was to take place, in view of the difficulties due to grazier
rights in reafforesting the area originally designated; and cancelling the
Regional Development Study which was undertaken under EEC funding\.
5\.08 Bank/Government relations were good throughout the project though
reconciliatiou of viewpoint on the approach to the conduct of the Sector
Strategy Study was never achieved even though a spirit of cooperation
prevailed until project completion on the basis of a mutual agreement to
disagree\. The Bank cooperated closely with UNDP and FAO in regard to the
implementation of the Pilot Plantation Research component\. The Bank
participated in tripartite reviews at mid-term and at the completion of the
component\.
5\.09 Environmental Issues\. The project, by its nature, was sensitive to
environmental issues and various components directly addressed problems
leading to environment improvement\. The successfully conducted Pilot
Plantation Research program developed techniques for reforestation of
degenerated and eroded land\. The Pilot Range Management Program successfully
indicated techniques that could be utilized in improving rangeland use,
reducing erosion, and increasing productivity for graziers whilst at the same
time reducing the detrimental effect of uncontrolled grazing in forest lands\.
The Fire Control Program successfully reduced the losses of forestry resources
in the project area due to fire damage\. The Village Development Program
greatly improved the living conditions of rural people dependent upon forestry
for their livelihood and at the same time addressed such environment issues as
torrent control through appropriate civil works construction\. Above all, the
Forestry Sector Strategy Study has provided Government with the tool for
directing its future development of forest lands to the benefit not only of
the economy but of the environment\.
- 21 -
VI\. CONCLUSIONS AND LESSONS LEARNED
6\.01 The project was approved in June, 1979 and was expected to be
completed by December, 1984\. In practice, however, completion was delayed by
one year to December, 1985 which reflects the 18 month delay in declaring Loan
effectiveness due to a change of Government and the c,nsequent delay in
obtaining parliamentary ratification of the Loan Agreement\. The project can
be regarded as generally successful in supporting and strengthening the
existing forestry sector and in laying the foundations for its long-term
development; however, there have been some problems in implementation as
indicated in the following paragraphs\.
6\.02 The bureaucratic procedures (particularly in regard to such issues as
procurement, local staff recruitment and local funding) which resulted in
delayed implementation of a number of project components might have been more
fully recognized at appraisal, especially since similar procedural problems
had delayed implementation in other Bank projects in the agriculture sector in
Greece\. Whilst it is doubtful whether an improved situation could have been
created through covenanted requirements,'' allowance could have been made
for the likelihood of cumbersome bureaucratic procedures by extending project
life over six rather than five years\. This would also have resulted in more
realistic estimates of project costs\.
6\.03 The most contentious issue that arose during project implementation
was in regard to the employment of an internationally recruited firm to
conduct, in conjunction with Greek officials of the Forestry Service, the
Forestry Sector Strategy Study\. The Bank's initial insistence that the study
necessitated the recruitment of a firm of international consultants may have
been an excessively demanding stance which did not give adequate consideration
to Greek views that suitable expertise was available in the country, or to the
relatively higher cost of employing international consultants\. Furthermore,
the Bank focused on the prime reason for the study as being wood production
and its industrialization to the exclusion of all other forestry problems\.
The quality of the study that was produced, entirely from Greek contributions
was detailed in its review of the state of existing forestry and in its
in-depth examination of those alternatives selected for the development and
protection of forest sector resources\. Nevertheless, in spite of an agreed
outline of study content that included all original plus additional items of
In an effort to speed procurement, it was agreed at negotiations, that
the Forest Service and RPDS would be exempt from regulations requiring
procurement through the Ministry of Trade\. In the event, because of
PPMO's inexperience in this field, procurement through the Ministry of
Trade was continued\.
- 22 -
significance to the forestry sector, the final report excluded several
important subjects, identified at appraisal, that should have been addressed
(para\. 3\.03)\. This overview concludes that, by excluding international
consultancy, the study lacked in detached objectivity and lost an opportunity
to take adequate consideration of international experiences gained in recent
years in the field of forestry development and to draw on special expertise in
forest management practices\. Had the Bank adopted a more flexible stance on
consultancy in the first instance it is conceivable that, at least, a modest
use might have been made of this technical assistance facility\.
6\.04 Evaluation\. This aspect was inadequately considered at appraisal
and, as a result, little was achieved beyond some sampling late in project
life in both the forestry and village development components\. No on-going,
in-depth evaluations or special studies were conducted to ascertain the impact
of project investments\. Consequently, in this overview reliance had to be
placed on subjective judgements in assessing project impact to a greater
extent than is desirable\. Since the project has important implications for
long-term development of the forestry sector this weakness is unfortunate\.
- 23 -
ikTEGRAtED FORESIRI f84iLL-4tMEht PROJECT ALUNI&A I
ACTUL PROJECt COSTS COWAREOTO APPRAISAL ESIMATES Table I
1 \.L |;CiGN I 7-TALI LOXAL I FORON TOTAL Fn fn To Ct
JEC lETC Z t f f l s\.T I \.j\.2L\. J \. \. 'UtIlollo ISSI \. Percatt P-mtI
1Cviii Wotk*
-Wnf Roads StiRe P4a& 4ACt I r\.003 313 2 ? ' 0 1 '° 5 1i5s 40 123'\.
4797 Is23 1 120 185 1t 8 303 3894%\. 21 C
mn-Sti roaas ACIt 20 1 1 616 0\.8 0\.5 1 13 35 \. %
__________________________ ~~E I 121 I 88 215\. 3 S 2 4 S\.9 40 '41%
SU0aWLcammAcROM AOl I8180 1S2\.0 2\.988\.0 I1\.8 8\.0 19\.8 40 4% 13 7"\.
' 1 \. S20 i\.327 8 1\.42 25\. E_ _ 39\.2 0%
ESt 18\.2 136 31\.8 0 5 0\.4 0\.9 44 4% 0\.6%
Nursiel Act
ESt 607 0\.3 81\.0 1\.6 00 1\. 0\.0% I 1,
Sd\. PrpwUl oa FarngrV ACt
Est 89 6 7o 160\.0 2\.4 1 9 \. 44 2% 30%'\.
Pt" AVt
Est I59\.0 0\.0 t59\.0 4\.3 0\.0 4\.3 0\.0% 3 0%
PnFq a WediN Act
_st 94 1 0\.0 94\.0 2 6 0\.0 2\.8 00% 1 8%
$5 -lotew PFwtaant estmotJ --- Act 3,134\.0 428\.0 3\.82\.0 23\.1 4\.7 278 16\.9% 19\.2%
EST 4215 84\.3 5058 1 1t4 2\.3 137 I6\.8% 9 S%
Prto Prctscton Watts ACt 5ig90 183\.0 702\.0 3\.7 1\.0 4\.7 2t 3% 3\.3%6
Est 53 4 17\.1 70 5 I s 0\.4 1\.9 21 1% 1 3\.
Suuhngs: LoOgglO Workers a watous Act
(houaa alt) esa a9 f 26\.7 t6 \.3 2\.4 0\.7 3\.1 22\.6% 2\.1%
FoPrsty Wowtrt a Staff Act
_ E 13\.11 1\.4 14\.5 0\.3 0\.1 0\.4 25\.0% 0 3%
\.Suh\.to-aw ANW\. 140 01 400 180\.0 0\.9 0\.3 1\.2 250% 0\.8%
_________________________ Est 02\.7 28 130? 8 27 08 3\.' 22 9% 2 4%
Vdtg9 iMrSutur\.: RAds am St\.mw Acd
0DW FM Es 375 7 1 92\.1 567\.6 103 5\.2 1t5\. 33\.S% '0 7%
Waet Sippy\. OWnap\. a Swa\. Act
Est 66 1 28\.3 94\.4 1\.8 0\.8 2\.6 30\.8% I 8%
Otme Cotmtnr Petd ACt
est 825 353 Ita 2;, 2 to 3: 2 13% 22S
SUD-rtom m4ago Intrafca\.rf Oeolapmnt Act 2\.997 9 0\.0 2\.S97 9 19\.3 0\.0 9\.3 0% 13 3%
____________________________ OEst 524 3 255 7 '80(l0 14 31 70 211\.31 32\.% 47
Piot Ratnito niGit ACt 57 2 24 0 1 t 2 0\.8 0\.2 1\.0 20\.0% 0\.7%
_ Est 70 A 32 83\. 20 04 24 867% I
sub-towa Clvil Wafts Act 8,704\.1 i,827\.0 10,531\.1 $9\.6 14\.2 73\. 19\.2% 81\.0%
Est 1\.979\.1 919,3 ;\.898\. \.J,L S 5\.1 r9\.0 t 1\.8\. 54\.6%
Uhhinery A Equipuwat
ROSCIMA tu1\.i Act 28\.0 244 0 270\.0 02 0\.9 1\.1 81\.8% 0\.8%
Est 16\.6 90\.3 106\.9 0\.4 2\.5 29 86 2% 2\.0%
Maclmo M80mance Act 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0% 0 0%
Est 2\.S 10\.1 12\.6 0\.0 0\.3 0\.3 100\.0% 0 2%
Ptnta,: LOwgin Act 1070 0\.0 107\.0 0\.0 0\.0 0\.0 0\.0% 0\.0%
est 35\.9 7 3 1072 1\.0 1 S 2\.9 65\.5% 2\.0%
mwamwya Tools Act 34\.S 120\.4 155\.0 0\.3 0\.7 1 \.0 70\.0% 0\.7%
eat 2\.7 10 7 13\.4 0\.1 0\.2 0\.3 68\.7% 0\.2%
Nusrfy EqL a Imtim M\. ACt 8\.0 16\.0 24\.0 0\.0 0\.2 0\.2 100\.0% 0\.1%
Est I 0 1\.7 2\.7 0\.0 0\.1 0\.1 100\.0% 0\.1%
Plkee Pla,imtunResewd PA 17\.8 90\.2 108\. 0\.1 0\.6 0\. 85\.7% 0\.5%
\.,E , S\. 34,O 39 34\.t 7 0S\. 0\.9 1\.1 81\.8% 0\.8S
Subt-m Ptumla ACt 187\.4 228\.8 394\.0 0\.41 1 \. 1\.9 78\.9% 1\.3%
\._______ Est 5\.453 j,1 r 1 163\. \.3 J1 4 4 to\.5$ 3\.0%
Fir PreiaO on Ad 47\.6 6 14\. 0\. 5 \.4 1\.9 73\.7% 1\.3%
Ebt 19\.0 47\.6 6\.8 0\. 1\.3 1\.8 72\.2% 1 2%
Ttu'_t Vtnis: Ln Penrsda API 9\.0 41\.0 50\.0 0\. 0\.2 0\. 68\.7 0\.2%
Est 10\.4 36\.1 48\. 0\.3 1\.0 1\.3 40\.0% 0\.9%
fotm Pesou Act 0\.6 7\.2 7\. 0\. 0\.1 0\.1 100\.0% 0\.1%
Est * 16\.8 22\.8 0 \.4 0\.1 88\.rs 0\.4%
Sub\.aI rTeatw? vstuce A P 9\.6 48 2 87\.8 0\.1 0\.3 0\. 75\.0% 0\.3%
\.______________________________ Pit 18\.4 52 1 89\. 0\.5 , \. 4 1 7 1 3%4
Itggs' Teemqng Aet 0\.0 46 0 46\. 0\.1 0\.2 0\.3 66\.7% 0 2%
ENt 2\.4 '0 9 13\.3 0\.1 0\.3 0\.4 75\.0% 0\.3%
PiotRatgeMosau Act 0\.4 0\.6 1| \. 0\.0 0\.1 0\.1 100\.0% 0 1%
Est 0\.5 44 4\. 0\.0 0\.1 01 100 0% 0 1%
Pmoisct Admtrntan Ae 0\.0 0\.0 0\. 0\.0 0\.0 0\.0 0\.0% 0\.0%
S">tett tbehitt4tZ * XzpletrwntEA e 0tl° 5;- S\. 0\.0 0\. GI 500\. 0\.1S
sub-tolet UaCkuty A Eqtuipment A 8631\.2 632\.2 683\.4 1\.3 4\.4 5\.7 77\.2% 3\.9%
Eg \. \.3 _ 339\.4 44\.7, 2\. 9\.2 \. 2\.t 7Z\.7S 8\.3%
Lwam TrM a Oemaitton Aet 2\.9 7\.0 9\.9 0\.1 0\.0 0\.1 0\.0% 0\.1%
Eat 28\.5 12\.3 40\.8 0\.6 0\.3 1\.1 27\.3% 0\.8%
PCOt P_ajtn RtSth Att S\.0 65\.0 73\.0 0\.1 0\.4 0\.5 60\.0S 0\.3%
Est 1\.3 13\.6 14\.9 0\.0 0\.4 0\.4 100\.0% 0\.3%
P8oIReng\.I1Uig t Act 13\.4 3\.4 18\.8 0\.9 0\.2 1A 18\.2% 0\.8%
Est 14\.2 8\.5 22\.7 0\. 0\.2 0\.6 33\.3% 0\.4%
D_eftnmrvt Sesg Sltw Act 2\.0 3\.0 5\.0 0\.4 0\.6 1\.0 80\.0% 0\.7%
ENt 8\.7 13\.9 22\.6 0\.2 0\.4 0\.6 66\.7% 0\.4%
Regional Ovelapnt Stud AO 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0% 0\.0%
Est 82\.6 45\.01 97\. 1\. 1\.2 2\.7 44\.4% t 9%
PMaect AdinIttItyUtltt Pd 80\.0 0\. 60\.0 0\.5 0\.0 0\.5 0\.0% 0\.3%
Est 83\.5 0\.0 23\. 2\.: 0\.q 2\.: 0\.0% S
Svb\.tafal 6Wves Act t10\.3 76\.4 184\.1 2\.0 1\.2 3\.2 37\.8% 2\.2%
Est is&\.& \.,,\.3\. 282\.1 ____,,J-2 L\._ 3 J5 JL
TOWt Os"\. CAst 9,091\.6 2,537\.6 11,599\.3 62\.9 19\.8 2\. 23\.9% 57\.2%
__________________________ *'t ~_\. 27Z \. 2t 1\.2152\.1 ,aj n3 a \. \.J\. , ,,,,,j6\. \., \. IL I L a2 l 8 Li\.2
Co en a Plt ENt 264\.9 139\.2 404\.1 7\.2 3i 11\.0 34\.5% 7\.6%
Pulas E,t 972\.0 307\.4 1\.279\.4 26\.5 6\.4 34\.j 24\.t% 24\.1%
Sb \.on\.Jf I 42 4\.6 1,883\.5 3*I, 121; 4,\. 2\.8S 31\.7%
OltAlZtTOTAL A4 9,06t86 52537\.6 11\.599\.2 62\.9 1\.0 682\.7 2\.9$ 87\.2$
LE2 k' Ja3L\. ,* t \.7 ,,,,,49 144\.6 3lJ e %
PROJECT COMPLETION REPORT
GREECE
INTEGRATED FORESTRY DEVELOPMENT PROJECT
(LOAN 1718-GRI
Appraisal Revised Estimates and Actual Cumulative Disbursements
Cumulative Disbursement at End of Ouarter
IB0 Fiscal Year ------ Revised Estimates or Actual Disbursements --------------- Actual Disbursed Compared
and Ouarter Appraisal Oct\. 1983 Feb\. 1984 Sept\. 1984 Mar, 1985 QC= I Mar, 1986 to Aporaisal Estimate
------------------------------------ (-US5 illion) ----- ----- ------------(
September 30\. 1979 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
December 31\. 1979 0\.1 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
March 31, 1980 0\.6 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
June 30, 1980 1\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
September 30\. 1980 1\.8 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
December 31\. 1980 2\.8 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
March 31, 1981 5\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
June 30, 1981 6\.9 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
September 30, 1981 7\.5 0\.2 0\.2 J\.2 0\.2 0\.2 0\.2 2\.7
December 31\. 1981 8\.6 1\.i 1\.0 1\.0 1\.0 1\.0 1\.0 11\.6
Harch 31, 1982 10\.8 1\.3 1\.3 1\.3 1\.3 1\.3 1\.3 12\.0
June 30, 1982 12\.7 1\.8 1\.8 1\.8 1\.8 1\.8 1\.8 14\.2
198
September 30\. 1982 13\.3 4\.2 4\.2 4\.2 2 4\.2 4\.2 31\.6
December 31\. 1982 14\.2 4\.8 4\.a 4\.8 4\.8 4\.8 4\.8 33\.8
March 31\. 1983 16\.0 S\.6 5\.6 5\.6 5\.6 5\.6 5\.6 35\.0
June 30, 1983 17\.5 6\.9 6\.9 6 9 6\.9 6\.9 6\.9 39\.4
1im
September 30, 1983 18\.0 8\.2 8\.2 8\.2 8\.2 8\.2 8\.2 45\.6
December 31, 1983 18\.6 11\.2 9\.0 9\.0 9\.0 9\.0 9\.0 48\.4
March 31, 1984 20\.1 13\.0 10\.2 10\.2 10\.2 10\.2 10\.2 49\.3
June 30, 1984 21\.3 16\.0 13\.8 13\.8 13\.8 13\.8 13\.8 54\.9
1I98
September 30\. 1984 21\.7 18\.0 15\.7 13\.7 13\.7 13\.7 13\.7 63\.1
December 31, 1984 22\.2 22\.0 10\.5 15\.0 14\.6 14\.6 14\.6 65\.8
March 31, 1985 23\.7 23\.0 20\.7 16\.5 15\.1 15\.1 15\.1 63\.7
June 30, 1985 25\.0 25\.0 22\.0 18\.5 17\.1 17\.2 17\.2 68\.8 I T
1i9 K
September 30, 198S 21\.5 20\.1 20\.0 20\.0 80\.0
December 31, 1985 23\.5 23\.5 25\.0 25\.0 100\.0
March 31, 1986 25\.0 100\.0
" Extension c7 Closing Date from June 30, 1985 to March 31\. 1986\.
- 25 -
PROJECT COMPLETION REPORT ANNEX I
GREECE Table 3
INTEGRATED FORESTRY DEVELOPMENT PROJECT
(LN\. 1718-GR)
TRADE, CONSUPPTICN AND PRMUCIION OF
WOD PRMXCTS, GREEC 1950-1983
A) UATITIES IN ROUMX0OOD EQ VALEHT (1 000 mfr)Y|
__ _ CoNStLPTION I PRDCTION
YEAR MIP TS EXPORTS OTHER OTHER
FUELIdOOD WOW TMTAL FUELWOOD WOWD TOTAL\.
PRMICTS PRODJCTS
s190 894 6\.3 3827 1 095 4 922 3827 207 4 034
190 8r,4 3\.9 3 757 1 201 4 958 3 757 331 4 ON
1970 1 831 28\.2 2 156 2 359 4517 2 52 561 2 713
1975 1 825 99\.2 1 792 2 453 4245 1 78 728 2 U1
1980 2 018 252\.3 1 929 2 547 4476 1 92 785 n713
1981 1 698 228\.6 1 955 2 607 4562 1 953 1 137 3 090
1982 2 043 232\.4 2 01 2 572 4582 2 009 762 2 771
1983 2 38 158\.9 1 8 2 992 847 1 878 842 2 718
mr cubic mstm rourdwimd equivalent
_8) VALUES IN DRACH3AS (MILLION)
WEAR CURRENT PRICES COMTANT 980 PRICES EXPORTs
I'PORTS EXPORTS - PPOTS EXPRS M
(1) (2) (3) (4) (5) (7)
1950 142\.5 13\.5 1 177\.4 111\.6 9\.47
1950 1 058\.7 237\.5 4 937\.8 1 110\.6 22\.48
197 2 855\.1 253\.8 10 859\.8 965\.2 8\.89
1975 7 728\.0 702\.0 16 442\.8 1 493\.6 9\.08
190 16 738\.7 3 658\.2 16 738\.7 3 56B\.2 21\.85
199 18 398\.8 4 444\.3 14 789\.8 3 572\.6 24\.16
1982 24 341\.4 4 877\.1 16 173\.7 3 240\.8 20\.04
1983 30 428\.8 4 567\.7 16 774\.4 2 516\.0 15\.01
(Veau of' 1983 Inxnzt a US$ 346 millian 0 USS1 drs 87\.89)
Source: UNDP Forestry Development and Reforestation Project Findings and
Recommendations, Rome 1986\.
PROJECT COMPLETION REPORT
GREECE
INTEGRATED FORESTRY DEVELOPMENT PROJECT
(LN\. 1718-GR)
FIVE-YEARLY PREDICTIONS OF CONSUMPTION OF WOOD PRODUCTS FOR THE PERIOD 1983-2007
\ PRODUCT FIREWOOD INDUSTRIAL SAWN PLYWOOD PARTICLEBOARD PAPER WOODPULP
WOOD WOOD AND AND AND
PERIOD \' r141 N'r M'r VENEERS FIBREBOARD PAPERBOARD Thousand
____________ ____________ ____________ M 'r \. M'r Tons tons
1983-1987 9 542 036 6 714 414 7 522 918 878 227 2 399 881 2 604 735 593\.0
1988-1992 9 104 72i 7 774 892 8 090 338 952 674 2 814 190 3 004 135 654\.0
1993-1997 8 801 955 8 875 631 8 689 183 1 002 196 3 217 390 3 403 555 715\.0
1998-2002 8 592 341 9 984 374 9 351 215 1 028\.395 3 611 785 3 802 935 776\.0
2003-2007 8 447 218 11 159 891 10 036 437 1 038 833 4 013 571 4 202 335 837\.0
/ M'r - roundvood equivalent
Source: Strategic Study for Development of Greek Forestry and Wood Industry\. Paper MS 84 12 'International and
Greek Markets for Forest Products'\. Ministry of Agriculture, Forest Service, Athens\. March 1985\.
Source: UNDP Forestry Development and Reforestation Project Findings and Recommendations, Rome 1986\.
GREECE
PROJECT rCMPLETION REPDRT
INTEGRATED FORESTRY DEVELOPMENT PROJECT
Estimated Proiect Area Production
(000 m3)
Appraisal Estimates 11 PCR Estimates 11
1980 1985 1995 IXIremntal l99JI 198 l(80 1985 l99S 1i IncrMnt l U3i9S198
ooom I ~~~~~~~~~~00005
\.'wlogs 442 561 1035 593 134 295 250 400 106 35
Pulpwood 141 230 653 512 363 43 40 70 27 62
firewood 115 128 220 105 191 235 240 S00 265 113
free collection In_ _u i n1
TOTAL IO 919 JIM 12U m JA3 JAIL 12 121 12
LI From SAR 2425GE Table 4\.1
2 Ditvision of Planning and Studies\. Section of Forest Statistics\. tinistry of Agriculture, 1980 and 1985 are actual production figures whilp 1995 is
estimated production based on actual reforestation and yields\.
aC
- 28 - Annex 1
Table 6
6REECE
INTEGRATED FORESTRY DEVELOPMENT PROJECT
APPRAISAL VERSUS PCR OUTPUT PRICES USED IN ECONOMIC ANALYSIS-Y
1980 1981 1982 1953 1994 1985
PCR CURRENT PRICES-/
Sawlogs
Coniferous 6,140 9,247 7,581 8,545 10,014 16,230
Oroadleave 10,042 11,384 12,529 15,026 16,414 25,041
Pulpwood 7,439 9,086 8,462 9,623 13,993 15,215
Fuelwoods 1,568 1,611 1,736 2,136 2,543 3,790
AGR\. PROD\. PRICE INDEX 1\.201 1\.525 1\.801 2\.227 2\.689 3\.215
PCR CONSTANT PRICES 3/
Sawlogs
Coniferous 5,112 6,064 4,209 3,937 3,725 5,048
Droadleave 9,361 7,465 6,957 6,747 6,850 7,789
Pulpwood 6,193 5,959 4,710 4,321 5,169 4,733
Fuelwoods 1,306 1,056 964 960 946 1,179
SAR CONSTANT PRICES
Sawlogs
Coniferous 2,232 2,296 2,364 2,431 2,501 2,570
Broadleave 1,893 1,947 2,004 2,060 2,119 2,180
Pulpwood
Coniferous 743 747 750 753 757 760
Droadleave 783 786 790 793 796 900
Fuelwoods 933 935 938 940 943 945
PCRISAR PRICES
Sawlogs
Coniferous 229% 2641 1781 1591 1491 1961
Oroadleave 4421 3832 3472 3282 3231 3571
PtL-puood 8341 791 6201 5741 6932 6232
fuelvoods 1401 1131 1031 1021 1002 1252
11 In 1979 currency values
21 Prices were derived from actu\.! CIF import values\. Transport costs to project area ere deducted from CIF prices\.
31 Current prices deflated using the Agricultural Price Induad
-29-
- * INTEGrATED LFORE1TRY' DEVELOPMkENT PROJECT
(LOAN 1718 GR)
PROJECT COMPLETION REPORT
i6\.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\.
ilthens, March 1987\.
- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~
I ~~~~~Athens, M'arch 1 987,
-\.5\.,\.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
-31-
HE\.LEWIC- R&PUBLIC
MINISTRY OF AGRICULTURE
\.'' DIVISION OF PLANNING AND STUDIES
__ PROJECT PLANNING AND MANAGEMENT OFFICE
p\.
'G R E E C E
INTEGRATED FORESTRY DEVELOPMENT PROJECT
'PROJECT COMPLETION REPORT
p"RT 7\.
IJ
Athens, June 1986
- 33--
REPORT 24 THE UFO\.YC^ 'OC\.MPLETION
I\. - INTRODUCrION
1\.1 The project comprises an integrated development program
in the forestry sub-sector and is intended to assist in
exploiting the underutilized forest resources of continental,
western and northwestern Greece and reducing dependence on
imported wood products\. It is included in the frames of
5-years program for National Forestry Development\.
1\.2\. First responsibility for the execution of the forestry
development program was entrusted to the ex-General Directo-
rate of Forests, which\.disposed well qualified expereienced
staff in all-project area and was capable to perform sati-
sfactorily this role\. The staff working outside the Athens
headquarters was more than sufficient in comparison with
\. the other countries, Each forest district is a separate
administrative unit responsible for its own forest management
-, \. ~plan, *the mar~keting of forest p-oducts and the operation of
the infrastructure works in its area of jurisdiction\.
Nevertheless, the final financial control and policy guidance
are centralized to the Forest Headquarters in Athens\.- -
In order to facilitate overall control and monitor project
progress a Project Planning and Management Office (P\.P\.M\.O\.)
was set up in the Directorate of Planning and Forest Develop-\.
mnene Studies which was responsible for coordinating the
execution of project work by the Forest Service\.
'In addition to the Project \.Planning and Management Office
(P\.P\.M\.O\.) was set one Project Steering Committee which
provided overall policy directions and coordinated the
activities among the various project components and
implementing gagenciiese ~ - \.
1\.3 The project consisted the following complementary components :
(i) construction of about 3,500 km and improvement of about
2,000 km of forest roads and provisions of maintenance
- 34 -
-qu\.pment ; (i4 )porovit3ior\. of loggina equiOent and cc\.r\.a
houzinq and transport facillties fOr about r,|C0 workers a-\.d
--forestry staff ; (iii) intensified forest-managencnt, --
in ding mc e_rrza Lion and expansion of three nurseries,
establishment of about 6,000 ha of industrial plantations,
and fire protection equipment supply and works ; (iv) infra-
structure investments in about 37 selected forest villages ;
and (v) training and research programs and studies, including :
(a) training and demonstration of mechanized logging methods,
(b) pilot industrial plantation research, (c) a pilot range
management program (d) a sectoral development strategy
study and the project represents the start of an accelerated
program of long-term forest and forest industries development\.
It is expected to bring the forests into full production by
1995 and lead in future to complementary investntents in
additional sawmill, woodboard panel and pulp manufacturing
capacity both within and outside the project area, The
implement'ation period of five and a half year is the mini\.mum
necessary to begin to realize benefits of the new logging,
planting and other forest managg' \.emnt practices being
introduced unider the project\.
1\.4 Tite financing sourdes for the projecc was the World Bank
with, an amount of 25,000,000 drs\.
The Japanese Bank Tokai with an amount of US $ 25,000,000 ;
the Agricultural Bank of Greece witt an amount of US $ 2\.1
million and the beneficiaries with an amount of US $ 6\.7 million\.
1\.5 The information source which were used for the elaboration
of the present report were the following:
- The project staff appraisal report\.
- The annual accounts of works of thle Cerntral Forest Service\.
- The annual worl; progrcss repprts of the P\.P\.M\.O to World
Bank\.
- The World anik' s coituncnts on4 the above rcports\.
- 35 -
II\. PROJi-CT IDACNTIICATION, PFEPa\.aTtrNO A1D AP?9RAIS\.AL
--2\.; Origin
2\.1\.1 The Ministry of Coordination in its effort to
find financir\.g sources proposed to the Forest
Service, which has an important investment plan
to examine a loan agreement with the World Bank
in order to contribute to the improvement of the
foreign exchange disposals for the country\.
2\.1\.2 The Forest Service agreed at first and the
Ministry of Coordination proposed to the World
Bank to examine the possibilities-for granting
- a Loan to finance the Greek forestry at the
beginning of 1978\.
- , v The elaboration of the report on Loan granting
was entrusted through the\.Technical -Assistance\.
of O\.E\.C\.D\. (which undertook part of the cost)\.
to the finish Firm'Jaako Poyry and was executed
\.in collaborating with the ex General Forestry
* Division's and World Bank's-staff\.
'2\.1\.3 As far as the feasibility report is one complete
-\. ~ , study, which reccrded the forest resources and
'included excellent proposals for their ekploitatibo\.'-
2\.2 Preparation and Ap'praisal Report
2\.2\.1 The Project was prepared by the finish Firm
Jaako Poyry Ltd\., was financed by O\.E\.C\.D\. and
was worked on the base of technical specifications
prepared by foresters of the World Bank in January
1978\.
The Consultants started the field works in May
- 1978\. 'n c6ntiniuice tdr&esfitatfkes 6of the-
Government and of the above firm were met in Athens
on May 18th, 1978, to detcrmine the teclnical
specifications and to figure out the exact type
of the report to be used-as the base for the
appraisal report\. On 14th and 15th September 1978
- 36 -
representatives of the Norld Bank cam-e to Athens
and collaborated with responsibtes of the ex
\. aGeneral Division of Forests as far as the greek
X - works for the comnletion of the studv\. By the
foreign experts a recommendation was done,
because of the time period limits, to elaborate
one study which would cor\.3ist the Final Study of
the Project and the Appraisal Report\.
The study was proposed to be elaborated at the
siege of the World Bank Jn collaboration with the
representative\.of Jako Poyry and foresters of-the
ex General Division of Forests\.
On April 16, 1979, the negociations were realized
in Washington for the loan agreement\. On June 5,
1979, the Bank notified to the Greek Government
the approval of the loan and the agreement of the
loan granting was signed in Washington on July 9,
1979\.
2\.2\.2\. For the ammendments to the study of Jako Poyry
realized possibly by the Bank may be justified
by it\.
: 2\.2\.3 ThM coimients, if there are, they should be
presented by the World Bank\.
2\.3 Objectives
The project alms to : (i) save foreign exchange by
increasing wood production from underutilized forests
of western and northliestern Greece ; (ii) introduce
mechanized logging and more intensive forest management
systems, and assist ex DGF in develoring a sound long-
term strattegy for forest rc&source development\.(including
forest ind1ustries) ; (iij\.) provide more permanent
employment and improved quality of life to retain workers
in forest villages ; and (iv) build up local capabilities
for preparation of projects for external financing\.
Selection of tho project area was influenced by Government's
- 37 -
o\.,ectives of creating rural emplovment in the poorer
mountainous areas of the country and introducirng
\. _intensive extrac-:ion and reforestation qperations -into _
as large an area of Greek forests as possible-during the
* next decade\. The project has high prioritv in Government's
development plans and is in line with Bank forestry sector
policy\.
2\.4 Description of the Project
The project complementarv components are : (i) constru-
ction of about 3,500 km and improvement of about 2,000 km
*of forest roads, and provision of maintenance equipment ;
(ii) provision of logging equipment, and-communal housing
and transport facilities for about 3,000 workers and
forestry staff ; (iii) intensified forest management,
including modernization and exDansion of threee nurseries,
establislment of-about 16,000 h4 of industrial plantation,
and fore protection eauipment supply and works ; (iv)
infrastructure investments in abou'- 37 selected forest
villages ; and (v) training and research piograms and
studies, includina ; (a) training and -demonstration in
mechanized logging methods, (b) pilot industrial
plantation research, (c) a pilot range managemen\. program,-
- (d) a sectoral dcvelopment strategy study, and (e) a
reqional development study\.
42\.4\.1 Forest Roads
The project provided construction of a total of
about 2,225 km of new forest truck roads and
1,260 km of tractor roads, as well as improvement
to all-weather standards of about 1,135 km and
gravelling of another 835 km of road surface\.
The emphasis was on upgrading at least 60% of
roads in State forests and 40% of roads in non-
State forests to all--weather "B class" standards
(with drainaae ditches, culverts and rock surfacing),
making all-year extraction operations and an
increased rate of wood production possible\.
- 38 -
A total of about 775 km roads was provided to be
constructed ard 1,970 km to be improved (for
x example,1 by_ qravel surfacing) to these standards\.
As a result, the average length of logging season
was expected to increase from 70-100 working days
at present to 150-200 days per year L 1934\. An
additional 1,450 km of lower standard "C class"
truck roads was constructed with little or no
drainage structure or rock surfacing, and serve
essentially as dry weather access roads\. The pro-
*ect itself-WoUiid'not finance road building equip-
ment directly under this component ; it would
reimburse the indirect foreign exchange costs of
equipment hired from private contractors\.
However, to assist in strengthening road maintenance
by DGF, the project would finance some maintenance
equipment (includinig bulldozers,-graders and dwuip
trucks), two mobile repair slhops and construction
or modernization of six mechanical workshops\.
22\.4\.2 Logging
In line with its objective the projert provided
to increase the use of mechanical methods of
moving logs (skidding) from stunp to roadside,
the project was provided to finance logging equip-
ment to be purchased by cooperatives and private
operators\. This was expected to include about 12
skidders, 87 tractors, 53 logging trolleys, 34
short cable systems and 2 long cable systems\.
At \.the implementation start- mcchanical skidding
was only practice on a verv limited scale and,
' in most cases, la)ck of knowledge of efficient use
of-equipment often made it- seem- -uneconomic-\. This
pointed to the need to build up a contractor force '
with mechanized skidding equipment througlh appro-
priate credit facilities and training and demon-
stration\.
- 39 -
Tne project would Lntroduce the agricultural
tractor-togging trollev combination, which is
much cheaper-and-nore cost-effective than-tradi--------
t\.n-t'- -'a -4c1Jated skidders, can be used for other
purpose such as log transnortation, and is relati-
vely easy to service and repair at existing workshop
facilities\. It was expected that, as a result of
the credit and training programs under the project
the share of manual-mule methods in all logging
operations would fall from 90% at the start to
about 50% by 1984\. The share of mechanical
methods was expected to increase correspondingly\.
The private sector would be induced to avail of
credit facilities for ecuipment purchase by
improving the present investment climate through
such changes as (a) planning extraction
operations to allow skidding contracts covering
at least 3-5 years, with cuts of sufficient volume
to keep equipment operating for at least 150 days
annually ; and (b) organizing work contracts to
allotw both cutting and skidding operations to be
carried out simultaneouslv, thus preventing loss
of time\. The lengthening of logging season with
increased use of mechanized methods (and more
all-weather roads) would be reinforced by improved
housing and transport for workers and forestry
staff; The project included provision for transport
facilities, including about 84 buses, trucks and
field vehicles, as well as some 20 permanent, 137
semi-permanent and 50 mobile housing facilities
for a total of about 3,000 workers and staff in
forestry and logging activities\.
2\.4,3: Forests Manaqement
The project provided to introduce intensified
managaient systems in several kinds of forestry
activities\. Regeneration in natural forests
would be supplemented by accelerated establishment
- 40 -
of industrial wood available for domestic
processing and ac\.ieve long-term self-sufficiency
in forest products\. The Droiect-would significant-
Iny 4inr -e-e the present planting rate of about
1,000 ha annually in the project area to 4,600 ha
annually by 1984, establishing a tota'\. of 15,900 ha
of fast-growing industrial plantations and expanding
and modernizing three nurseries to increase their
annual capacity by about 12 million seedlings\.
Greater mechanization in clearing and soil prepa-
ration would be introduced, particularly with devel-
opment of more efficient techniaues under the pilot
research program\. Final species selection would
depend on soil and climlatic conditions as well as
the end use of the plantaion wood\. Emphasis on
conifers was expected, including Pinus nigra,
Pinus radiata, Pinus rinaster and Pseudotsuqa
_ nenziesii (Douglas\.fir)\. In addition, some\. fast-
growing eucalypts for pulpwood might be plantfed\.
Both the pilot reseaich program and thLe sectoral
Cevelopment strategy study was expected to influence
the locetion of industrial plantations under the
project, particularly after 1981\. ;The project _
would also introduce an intensified system of
forest fire protection by financing eauipment,
including' 27 fire and tanker trucks,'10 buses and
121 radio units and stations, and works, including
,5 firewatching towers, 500 km of fire breaks, 200 km
of fire tracks (built to 'C' class road standards)
* and 30 water reservoirs\. The aim would be to
reduce the number of fires and minimise damages
from fires which do occur, through improvements in
- 7 -- - -prcvention-,-pre--suppres-sion, -detection--and-- -
suppression activities\.
- 41 -
2\.4\.4 Training, Research and Studies
'7- _7- - 2\.4\.4\.1 Loaaing -Training\.q and emonstration\. As
a complement to the credit component for logging
equipment, the project would assist ex DGF in
intensifying logging training for both forestry
workers and operators as well as technical and
professional forestry staff, with emphasis on the
efficient use of mechanical skidding equipment and
introduction of cableways with clear felling\.
Forest District offices would be responsible for
_ selecting logging contractors (both existing and
potential) and ex DGF staff for train-\.ng\. Stress
would be placed on practical and efficient
"on-the-job" operation and repair of mechanized
-skidding equipment, with an appropriate mix of
3-6 months courses for staff and young operators,
and 1-2 weeks orientation courses for existina
\. logging contractors\. A total of about 100 operators
and staff were expected to receive training under
this program each year\. The program made use of
existing ex DGF buildings and other facilities
at Kalambaka as the base of operations\. Trainees
would form several logging production units,
operating in the same three Forest Districts as
those being used as pilot areas for revision of
management plans, road locations and logging layouts
under the sectoral development strategy study\.
The project would finance equipment and three
manyears of consultants (a logging planning adviser
and skidding/cable operating specialists with
experiefce that was not locally available), to
assist in organizing this program and demonstrating
the efficient use of new equipment\. Four manyears
of postgraduate fellowships and two manyears of
overseas study tours wyould also be financed for
training abroad of ex bGF personnel in modern
logging ind forest management nethods\.
42-
I\.~ ~ ~~*\.
2\.4\.A\.2 Pilot Plantation 'esearch\. The project
- included financing for all the ecui4rment and part
''-- ~-of the techn'ical assistance an'd -rainif\.g -r'
of a five-year pilot industrial plantation research
program, to be executed by FAO\. UNDP proposed to
finance the first three years' technical assistance
and training costs of this program ; funds have
already been allocated and final UNDP approval
was expected shortly\.
- 2\.4\.4\.-3 Pilot Range Management\. The project
included a pilot program to demonstrate the
- economics and practioability of various modern
methods of range management, eventually aimed at
protecting the forests from uncontrolled and
destructive grazing\. The pilot program would cover
about 20#000 ha around eight villages in the
northern districts of Ariclea, Florina and Kastoria,
with a total population of about 6,000 people and
43,000 livestock head (mostly sheep and goats)\.
;Th program would investigate the feasibility of
integrating forestry with livestock through
pasture improvement, rotational grazing and
forage'crop pioduction schemes, and protection of
young\. forested areas\. Specific works would include
improvement of 7,400 ha bf'rangelands through
various surface and seeding treatmen-s, establish-
ment of 600 ha of fodder crops for conservation
as hay-and 200 ha of sown pasture on arable land,
and improvement of 13,000 additional ha through
new watering points, fencing, roads and shelters\.
The extent to which the project's findings could-
be extended to other parts of Greece would be
determined by a comprehensive survey of grazing
resources in northern Greece which would also be
part of the pilot program\.
- 43 -
2\.A\.A\.-4 Forest and Fcrest Industries Sectoral
Develornment Stratecr Study\. The project included
-----\.----\.--a-st-udy-designed-to-car-v -out- an-indepth review-----
of current stocking and growth rates and-to
investigate the implications of introducting
significant changes in current forest management
practices and harvesting methods, with the object
to increasing woo\.d production and eliminating
forest product imports as Quickly as possible and
to justify installation of new industrial capacity\.
-The study would look into various options for long-
term development to the-year 2000,\.and study the
preliminary economic viability of such major new
* industries as a chemical pulp mill\. It would also
*- -\. include an analysis of the present pricing system
and structure of taxes and subsidies in the
forestry sector, with\.recommendations for appro-
priate adjustmehts- to bring about the most-efficient
* \.resource allocation while maintaining adequate
\. \.incentives\. It would inv-stigate the bedgetary,
training, legal and other policy implications for
Government of accelerated forestry sector devel-
, opment\. The study would also include revision of
sample management plans for three Forest Districts
(representative of the main forest types), incorporat-
ing the proposed modifications to road planning,
forest management and industrial plantation
establishment\.
- 44 -
III\. PROJECT IMPLEMENTATION
-- 341 Start l1o
3\.1\.1 Discuss problems and performance during project
start up
The main problem at the project start up was the delay
to the activation of the loan,
So,\. the loan agreement was signed on July 7, 1979, and
the loan was activated two years later on July 31,
1981,
At the beginning the credits provided by the project
were not disposed\. Aiso there was no considerable
number of staff in the Central as well as in the
<Regional Services\.
3\.2 Ammendments
3\.2\.1 No serious changes of th\.e project have been realised
\. during its performance\. Some relatively small
changes are mentioned herebelow :
a/ Because the Drachma-Dollar equivalence has been
changed\.and in An other way was not possible the
_ ; ~bsorption of the loan, the particJpation perce-
ntage of the Bank for Forestry works has been
increased from 20% to 40% since the beginning of
1974\.
* b/ Because the biggest part of the afforestation works
of the country were performed in East Greece the
project areas for reafforestation was extented
to all Greece so that the planned physical targets
can be financed and implemented\.
c/ The Strategy study for the development of forestry
and the forest industries was not entrusted to a
foreign Consultant as was provided by the appraisal
report, but to a greek team of consultants with the
participation of foreign consultants in various
special subjects\.
- 45 -
3\.3 Time Schedule for the Execution of the Project
3\.3\.1 The works of the project were provided to be executed
within 5 1/2 year starting middle of 1979\. Against
what was provided the followina works have been
realised\.
3\.3\.1\.1 Forest Roads
In the state forests gravel surfacing has been\.
realised for 735 km of forest roads, i\.e\. a percentage
of 91%\. improvements for 732 km forest roads i\.e\. a
percentage of 70%, construction of B' class roads
621 km i\.e\. percentage of 86%, construction of C' class
roads 1,092 km i\.e\. percentage of 128%, new tractor
roads 917 km i\.e\. a percentage of 78% and maintenance
of 19,394 km of forest roads i\.e\. a percentage of 118%\.
Analysing the above data it results that the goals
have been successfully covered as far as the constru-
ction of C' class roads and maintenances of the\.
-road network, while slightly delayed the road surfa-
cings (not required due to rocky soils) and the
constructions of B' class which have beei covered by
roads of C' class which equally c:overed the needs
for the forest products transportation\.
In the non-state forest gravel surfacing for 20 km
has been realised\. i\.e\. a percentage of 80%, improvement
for 46 km i\.e\. a percentage of 49%, construction for
110 km of B' class forest roads i\.e\. a percentage of
200%, C' class forest road construction 408 km i\.e,
68% and new tractor roads for 124 km i\.e\. 155%,
Analysing ths above data results that th\.e goals have
been statisfactorily covered for the construction of
-B' class forest roads and tractor roads while the
other activities- have-beenh -lightly delaycd -(road
e s i~urfacing, improvements, etc\.)\.
:?urther the above\.mentioned physical targets which
have been executed, the below mentioned road machinery
equipment have been purchased : Two crawler tractors
- 46 -
against 14 ones provided, 15 graders against 7 ones,
4 dumpt trucks against 12 ones\.
-----ighteen compressors,provided\.have r\.ot been purchased\.
Also the permanent and mobile repair shops have not
been purchased\.
The reasons for the above deviations of the equipment
supply was that the Service found more beneficial to
rent crawler tractors, compressors and lorries, The
same governs the repair shops\.|
Generally, it can been mentioned that in the sector
of forest road constructions the goals have been
achieved to a satisfactory degree set at the beginning\.
for the project completion\.
3\.3\.31\.2 Logging WTorks
The project financed the purchase of logging works
\. \.* machinery from members of cooperatives and private*\.
logging workers\. Five(5) articulated agricultural
tractors against 12 planned ones, 44 agricultural
\.tractors with logging trolleys against 87 ones,
-2 logging tractors against 53 ones, 192 power sans
against 450 ones, 11 loading cranes against 30 ones,
\. 2 vehicles (all purposes) against 40 ones, 3hort
- cable system\. long cable systim ahd\.debarking machines
were -not -purchased\.
* ^ ; The purchase of-all the machinery-was not realized
for the following reasons :
a/ Skidding contracts of 3"-5 years duration with
* \. sufficient cut were not secured for the logging
workers to cover at least 150 days work annually
for the machines in order to be possible for them
to amortizise the investments\.
b/ There was-not in-the project-area-trained young
staff to-operate the logging works machinery\.
c/ Lack of roads for the circulation with all the
weather conditions\.and tractor roads, fact which
obstacted the extension of the logging works and
their mechanisation,
- 47 -
The Service of course got built forest buildings for
the logging workers to make easy their staying and
_ work ini the-fo6est - 58hses (16forest workers)
against 52 planned ones, 34 permanent store houses
against 20 planned ones, 7 semipermanent wooden against
85 planned ones and 65 mobile houses on wheels against
60 ones\. \.
At the same time 38 busses have been purchasedf for
16 people against 20 and 42 field vehicles against
36 ones for the transportation of forest wc\.kers and
the forest staff\.
In the fie'ld of logging works the goals were not
fully achieved, but anyhow a serious effort was given
and is hoped that in the future the mechanisation of\.
\. - th-e logging works will be accelerated\.
3\.3\.1\.3 Forests Management
-Since we believe that the Greek forests have mostly
a protection importance non intensive exploitation of
forests has been realised but the usual one\.
Ten thousands three hundred eighty eight (10,388) ha
have been reafforestated against \.15,9C0 provided ones\.
- No extension of the three nurseries has been realised
but the needs of the service have been served by the
existing nurseries\.
In the field of refforestation better mechanisation
* methods-have been introduced for the clearing and
preparation of the soil, particularly increasing more\.
a beneficial technic with the pilot research project
for economical refforestations (more detailed here
below)\.
*3\.3\.1\.4 Forest Fire Protection
* The following forest fire protection works were
implemented in the project area Gtate forests\.
6 outlooks vis-a-vis 5 planned, 19 reservois for-
forest-trucks pupplv vis-a-vis 30 planned,-561 forest
road kilometres were constructed vis-a-vis 200 planned
- 48 -
and, also 1,000 fire-breaks vis-a-vis 500 planned\.
In parallel, eiaht(8) fire trucks of 10 tons were
procured vis-a-vis 5 planned\. 27-fire trucks of 1,7 tons-
vis-a-vis 10 Slanned, 257\.portable receivers vis-a-vis
60 planned, 195 vehicle receivers vis-a-vis 50 planned,
25 base radio units vis-a-vis 11 planned, 70 motor-
cycles vis-a-vis 35 planned, 40 personnel vehicles
(jeeps) vis-a-vis 0 planned, 200 lound speakers and
1,000 hatchets\.
\.The following items were not bought : 12 fire trucks
of 5 tons'(they judged not necessary), 10 busses of
25 passengers (the Service has available other of
16 passengers), 40 chain saws (not needed), 320 back
fire-extinguishers (stocks there were existing) and
100 pair of binoculars\.
With the above works and the procured equipment,
the prevent±ve\. and repressive forest fightirng measures
were'improved and tle number of fires and damages
-;caused were decreased\.
From the following three tables it is worth to be
remarked that the burnt area in the project area, in
1985 (178,345 str\.) were eaual to\.the averagc one of
the 'previous 5\.-years (table 1)\.
On the other hand, the burnt area in the rest of
Greecc (439,839 str\.), at'the same time,were twice
as much as the average of the previous 5-years\.
From this fact, it is concluded that the credit
- -increament, in the forest fighting sector, had had
a positive effect in the project area\.
a \. \. *, ; *o-/%
COMPARISON\.DATA *
jy:er \.f \.-: \.*\. OR FOIMEST 1R1S**
Number-of Fires Burnt IArea (stremmas) , Damages (,000 drs\.) #\.
ear: ---------,7----------- ^------------*~~~~~~*~~~~~~~ i~
:Project Area:Other Greece:Project Area:Other Greece:Project Area:Other Gr'3ece:
\. J\. \. \. \.
':180: 392\.: 815 - ' \.11\.218 ' 219\.435 ' 4\.358\.390 * 9\.054\.00 '
* , \. \. * \. \. \. \. \. \. \. \. \.
:19C81: 408 751 : 525\.0-57 \. 289\.116 : 40\.282\.864 16\.883\.546
\.!\. \. \. \. \. \. \. \. \. \.
:1:82 - 41 3 \. 612- \.', 127\.562 ,\. 146\.160 ' 8\.125\.570 , 11\.401\.607
, \. : \. 1\.74 1\.16\.
19 833, :3 ;, 49\.294\. - 146\.838 - 3\.871\.744 10\.162\.738
:19\.84 : \. 459 825\. *: , -60\.837 257\.7\.18 \.3\.594\.455 15\.985,347
: \. \., *- *^ , \. : \. \. \.
'1985; \. 446 607 : 178\.343 :,\. 439\.849 ' 10\.507\.685 , 33\.381\.326
:-:a \. '' -* - : '- *
* 2\.513 4,203 ' 1\.051\.313 '\. 1\.499\.116 ' 70\.740\.708 ' 96\.868\.5574
---- - - - - - -- - - - --- - - -- - - - - --- - - -*1 -h
\.I \. \. ' * \. -
* t * %\. ,\. \.
\.~~~~~~~~~~~~~~~~~~~~~~~ \. \. \. \. \.1\.
\. *- * - , \. , , ,\. ,\.,\.~~~~~~~~~ \. \. \. , ,
r *t Pric\. \.' \.19, 8I
i \. 4 *, ' + l ' * ' *' * * § ' " @ ; * -! ' > > * *t *
*- % *t 6 0bt 1 * AN *l S **r I _________ *; \.,\., *;
zosze
COZ-IPARISON DATA
FOR FOREST FIRES-
---------- ------- ----- -----
liumber\. of\. 1,3urn:t Area Darnalesk
(9tremmas) '(#000 drs)
1978 226 45\.728 1\.918\.540
1979 -315 \.31\.222 2\.094\.280
'392' -110\.218 -4\.35-B\.390
1981 4 08 \.:'525\.057 40\.282\.864
7124225 48\.654
TOTAL 1\.342 -\.074
:'1982 3 127\.562 8\.125\.570
\.1983 375 3\.871\.744
49\.294 LA
1984 60\.837 '3\.594\.455
1985 178\.345 \.:\.I 0\.507\.685
:TOTAL 1\.713 416A38 ?6\.099\.454\.-:
A- - - - - - - - - - - -
-Prices 1984\. Y\.:
r
\. \. \. \. \. \. \. \. \. \. \. \. \. \. \.5I P\. \. \. \. \.
fl \.
- I
I r4I *4 I
-- ~ ~ '0-_ -o co01
~~ti~~~i (at co I 0 4 * 4 VS
I1 I
ni I
A~- A\. * 10 ' g
5\.4: o~~~ I 'a ,\.-4 N
'd \. \. \. \. \. \. \. \. \. \. \. \.
I I \.~~~L to\. I' \.3
OD I tn 0\.- CY\. 0 D-
0 :f WI Q-4 I Htn,\. N4 I
* Iz~~~~ \.C') ~~~~c - N* ,\.
4* \.l Iin \. \. *5
I I in - ' ''_ I \. f 7:
O~~'J I HI I-\.~~c iN in' in H Il
m I ~~co) 0 C 0 01
IN M\. af 'a\.
f\. - o' \. H\. \.')
-\. \.-\. I \.~~~~1J :\.4~~ O 'a tn \.
I co I 0to 0o I 0
(h t~~ n an0 fi
I O~~~ 1 0 0\. N ~~~~N N\.
\. IG) 1 9 0 HW0
IN I -q r N \.0\.4 Cy 0 a ti
I 4 0 M o C 0 N - I\.
I H I VI~ NI yl4 J J W D g 44 1
C)I \.-
\.I \., I \. -
- 52 -
3\.3\.1\.5 Training, Research, Studi?s
- iRoging Traininc
As a supplemnht of th criedits granted to the loging
equipment procurement, the project helped the ex-
Directorate General of Forests to intensify the
logging training of the forest workers and operators
as well as the technical and professional forestry
staff with emphasis on the efficient use of mechanical
skidding equipments and introduction of cable ways
with clear felling\.
The full program involved logging and harvesting
works mechanization subjects and lasted one year,
since August 1980 to end of August 1981\.
The partial training programs were attended by various
categories Forest Service staff as well as individuals
employed in similar works\.
As educational staff, in the whole program , three
foreign consultants (Norvegians), invited especially
\.for this purpose, were employed\.
The theoritical and practical work was performed in
Germar\. and English, while the simultaneous translation
in Greek for the trainee was made by the forester
Mr\.N\.Git-sis\. who, in comc cases, were helped by otiher
colleagues\.
The partial programs were 10 and were attented by
116 people of the following categories :
A\. Forest Service Staff
a/ Foresters 44
b/ Forest Technologists 19
c/ Operators 16
79
B, Individuals, Members of Forest Cooperatives
a/ Foresters 11
-b/ Operators 12
c/ Cutters 14
37
- 53 -
Generally, the whole program was successfully imple-
mented and training was judged as especially sati-
sfactory\. The trainees knew modern-methods-inJlogging
-*- -- an%d hsavas"\.ag works planning and technical impleme-
ntation\.
They were being informed about every modern means
existing in this sector\.
They, also, had the opportunity to study the cases
of application of various methods and the uses of
various installations and means, in the Greek forest
sector\. The entire education of trainees was consi-
dered as complete course and they acquired the ability
to organize a modern logging and harvesting work in
the forests\.
Post graduate fellowships in logging and forest mana-
gement modern methods were not granted\.
;- Pilot Plantation Research
The project financed all the machinery (Annex I) and
part of requirements in techpical assistance and
education\. In the proje6t frame 12 educational trips
of Greek foresters (totallv 190 man-weeks) were
realized\. '
- -- The research program included the foilowing activities :
* Three areas in Nigrita, 3revena and'Nafpactos
* were selected and respectively 330 ha, 220 ha and
10 ha were planted, by the end of 1985 (table 1)\.
\.' \. \. A series of experimental areas in Nigrita (5)
' and in Grevena were established for acqiring\.
experience in plantation establishment technics\.
\. In cooperation with the Athens Forest Research
Institute, the critiria for fast growing site
selection, were defined\.
' \.A series of experiment areas in Nigrita (7), in
Grevena (4) and in Nafpaktos (1) were established
to test local and exotic species\.
The existing data, as far as the P\.nigra is
concerned, were used for creation of information
- 54 l
about the growth and Droduction of some species
important for plantations\. As far as the
-\.p'naster is concerned permanent trial areas
were established in Nigrita\.
Two texperimental areas were established in
Nigrita for collection of technical data and
economy aspects of combination between wood and
grazing\.
In cooperation with the Forest Research Institute,
'information and evaluations about road constru-
ction and wood harvesting were collected\.
A project information collection svstem were
established and a provisional cost-benefit analysis
were made for plantation works economic evaluation\.
In the end of the year, directions will be given
about Industria' 9l-aLLUIi piui\.alCily dllU Uillwiiunt,
based on work results\.
Finally, help was given to land mapping project
and to range vegetation improvement project\.
C ~~ - \. \. \. *--
C~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ \.
- 55 -
Table 1
OneratiOrL-F w4hich took place in the three lRefor-estation Akreas \.-
_ -~ - of the P_rjcct "7o_es\. Development-Reforestation"
(area irn Ha)
A\. NIGRITA
1\. Land Clearing 330
2\. Ripping/Subsoiling 86
3, Disc-Harrowing 164,
4\. Tine-Ridging (Planting Lines) 102
5\. Weeding 225
6, Planting 330
B\. GREVENA
1, Land Clearing 200
2\. Ripping/Subsoiling \. 193
3\. Disc-Harrowing- 150
4, Tine-Ridging 200
\.5 Slope M4odification 24
6\. Plantatina \. 200
S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
C, NA\.FPAK1VOS \. \. \.
- 1, Land Clearing 3
2, Slope Modification 6
3, Time Ridging\. 2
4\. Planting 8
- 56 -
- \.Range Manacement Pilot Project
A 5-year pilot program for integrated development of
rangelands in 10 village comuunittes of-Central-Western
Macedonia, Greece, was carried out to the benefit of
livestock industry, forestrv and of the mountain economy
in general\. The villages were : Theodoraki, Notia,
Thiriopetra, Loutralki and Apsalos of the Forest Office
of Aridea ; Lakka of the Forest Office of Edessa ;
Krystallopigi, Varyko and Ag\.Yermanos of the Direction
of Forests of Florina ; and Graniros of the Direction
of Forests of Kastoria, There were 8,000 people in
the villages and 28,60Q ha of rangelands where about
60,000 sheeo, 17,000-goats and 5,500 cattle were grazing\.
The program was part of the "Integrated Forestry Develop-
ment Project" which was partially financed by the
World Bank\.; it was started in 1980 and terminated
after an l-year extension in 1985\.
Based on guidelines written by a W\.orld Bank expert,
* they were improved : 23\.5 ha with seeding, 452 ha
with weed control and 1\.074 ha with mineral fertilizers ;
also,\. they were developed'23,3 ha of rotational
pastures and\.84\.2 ha of bay fields,- Moreover, they
- wcre constaucted 45 water points, 10 wat3r basins,-
90 km roads, 30 stalls and 41 houses, In addition,
\. they were made 134 demonsttations to farmers, 6 seminars
to foresters, and scientific visits abroad while foreign
and Greek experts offered their technical assistance
- to the program, Finally, a special program of surveying
and classifving 407,000 ha of rangelands was carried
'out,
The funds spent in total were 82,388,OOQ drachmas
(based on 1980 prices) and they were distributed as
following 6\.4% for rangeland improvem\.ent and arable
cropping, 75\.6% for engineering works, 14\.6% for edu-
cation, technical assistance and operations, and 3\.4t
for rangeland survev\. Compared to proposals, the
program had a high degree of completion\.
-57-
The vegetational improvements which raised the herbage
production bv 2-3 times along with, the engineering
- -works-contributed to a 3-S5-increase-in,'nimtlaiumbeisi -
and to an 1-8% in milk production in all animal species,
as well as to an 8-37% increase in cattle and goat
production on the average for the 10 villages I also,
they affected favorably the shepherdsp forestry and
the general village economy, Moreover, the program
belped in developing skilled range management staff,
In the successful application of new technology, in
the collection of information regarding the cost of
improvements, in the aqquisition of rangeland improvement
experience, in the more active participation of the
shepherds and the Community Councils to rangeland
development and in the realization of the importance
of the farming lands to the livsetock production in
each Community\.
It is concluded that the proper improvement of range-
lands constitutes a decisive-factor in the development
of livestock economy and in the integrated use of
mountain forest lands\.
Project implementation was not cons-isting of equal
perts\. - lthough\. the ranqeland improvement component
was nearly implemented completely that is'as it had
planned, some parts had a smaller degree of implementa-
tion\. Thus, the rangeland survey of the Northern
Greece remained unfinished, the special research
programs did not start at all, and the implementation
of regular management on Communities' rangelands was
unable to make some progress beyond the first steps
because 6f not complete organization of the special
units by permanent staff of exclusive occupation in
the rangeland forest units\. On the other hand, some
basical targets of the program and especially the
reduplication of rangeland production, compared with
pre-project situation, was proved verv optimistic, at
least within a 5-year period of time\.
- 58 -
In spite of th4s, and because the improvements 'range-
land in the Cormnunities were the main part of the
Project, it\.must be concluded that the prcgram was
com'pletalu imniemented and it achieved its targets\.
The results extracted are so interesting and the
experience acquired so important, that it can lawfully
be said that this project was one of the most sucess-
fyl projects of the Ministry of Agriculture and a
pilot program for the develonment and improvement of
the rangelands all-over the Country\.
Especially for the various project sectors the main
points-conclusions were the following :
Vegetation Improvement
Application of fertilizers, control of
undasirable species arid introduction of desirable
ones by seeding presented imuortant possibilities
for the rangeland production increment (2-3 times)\.
But it was found out that the above measures
ought to have been applied in almost fertile lands,
while the animals grazing ought to have been
controlled after the construction of the main
infrastructure works (e\.g\. roads and waterpoints)\.
\.-\.-\.a - \.mong, the three methods applied,- the appli-
cation of fertilizers was the least -expensive,
the easiest and most impressive\. On the other hand,
seeding was the most expeilsive, the most difficult,
\. but the most effective as well\. However, the
control of undesirable species had had the interim
characteristicts of the above mentioned two methods\.
The required grazing control, after the
completion of the works, to which the stock-breeders
strongly reacted,-was the nmain obstacle in the
implementation of vcgetation Improvement methods\.
This reaction was due to the status of common use
of the public and co\.mmunal rangelands, which, if
not amended, an imp?ortant program for improvemexit
l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
- 59 -
of these areas is not possible to qo ahead\.
In any case, it was found out that if properly
- planned, the application of fertilizer& can be -
done, without grazing prohibition\. On-the other
hand, seeding needs fencing for protection and
success\.
Vegetation improvement and, especially,
undesirable species control together with the
seeding of desirable ones, in some Communities,
led the so-called "landless" farmers to claim the
improved rangelands as farms\. The acceptance of
this claim, destrictive for the rangelands develop-
ment, was avoided owing to the strong reaction of
the stock-breeders, of the Community and of the
Public Services\. \.
\. Farmn Improvement - - ' -- : -
The program of creation of arid grazing
pasture in private-owned farms, through free
\.granting seeds by the State, had after a proper
propaganda, significant effect among the stock-
breeders\. However, this policy stroke against the
fact that, in the Communities of the prograin, the
stock-breeders had no big agTijultural ict so as
to dispose a part of this for pasture\. Consequently,
this program could have a significant success in
Comnunities and among stock-breeders with a fairly
big agricultural lot\.
On the contrary, it was found out that the
creation of harvesting pastures for foader production
was more desirable to the Communities stock-breeders, t
apparently because of the small agricultural lots
- and of-the ne6d f6r-'th deii'elopmnt of fodder \.
production for the winter months\. |
Infrastructure ¶lorks
The access roads were the most needed infra-
structure works in every Community and they absorbed
- 60 -
the most of the program credits\. ?rom structural
o- int of view, it was the easiest work for the
Services ,-compared -with-the--other --infrastructure
works\.
Ho-ever, it was found out that the C' class
roads construction - as they are usually constructed
- is not effective in ground with loose underground
(not lime-stone), where the construction of suppor-
ting works and the road maintenance is enforced
by the facts\.
The animal watering works were especially
needed to Communities with rangelands without
survace waters (lime-stone rocks)\. However, their
cost varied in accordance with t\.he kind of work,
the rainwater-basins being the most expensive,
It was found out that significant savings in the
rangeland improvement credits can be assured, if
the right selection of watering works (that fits to
each case) is done and simple and chcap constructions
are preferred\.
The stock-breeders strongly reached to fencing
es'tablishment in the 'commuidtv of 7ariko, not
taking into account the fenc,ing importance for\.
regular management application\. Nevertheless, in
other Communities and especially'in those with
summer-rangelands and transhumant stock-breeding
thit proposal for rangelands fencing was favorably
discussed\. It means that fencing is not impossibl,e
in Greece, if st\.ock breeders are properly and
under certain circumstances informed,
Shelters and staff houses were proved very
--popular, e_specially\.in -Co=munitiesi witW'summer
rangelands and transhuman stocl--breeders, who move
their families together with their animals\. In
these Communities, the replacement of improvised
and primitive huts bv modernized houses significally
affected the psychology of stock-breeders\.
-61-
The entire construction of infrastructure
works on force account was proved safe and econo-
-\. mical but relatively slow procedure\. On the _
contrary,- the total entrustment-of-the -works -to
the contractors was faster but more expensive and
less safe for the quality of works compared with
the force account procedure\. Furthermore, it was
found out that it was impossible for the contractors
to be found for works which would be done in remote
and inaccessible areas\. Based on this experience
the result that was extracted is that works must
be done on force account, but some phases or part
of works maybe given to contractors\. This mixed
system will assure more speed than the un-mixed
one of force account and better control of the
contractor quality works\.
\. Trcrinig
The emp )yment of foresters, forest technolo-
gists, firemen, etc\., within the program in a
permanent base increased in an important degree
not only the knowledge, but'also their ability to
s'olve the current administrativp and technical
problen\.s related to the rangelands management\.
On the contrary, where the employment, especially
* of foresters was not-permanent and parallel to
other subjects, their efficiency was reduced\.
\. This finding shows how needed is tho exlusive staff
employment in this subject and how necessary is
the creation of office or section of'rangeland
management in every Forest District,
Survey of Rangelands
The rangeland survey of Northern Greece was
proved of significant importance because of the
big and valuable collected data which will drasti-
cally help in the lay out of the future policy of
improvement and management of these areas,
-62-
Impacts or\. Stock-Breeders
The impact of the program on -:\.e Community
stock-breeders was decesive\. 'Seiver" ]f ck-breeders\.
* * who were planning to sell their animals because
of not developing the natural rangelands changed
their minds, after the comencement of the program\.
Some increased the number of\.animals and others
* g bought agricultural cars in order to improve their
lives, after the road construction\.
The main cause for the decesive impact of
- the program to the Conmunities stock-breeding
activities was the fact that all the improvements
was implemented in the relatively small time of
a 5-years period, which, psychological effects
as wzell\. This finding' is very important and shllows
that, if the same works were implemented in lQ or
15 years,\.At would not'have the same impact\.
For this reason, it is preferable the existing
credits in every Fores't D\.istrict to be concentrated
only in same Communities every year, where a syste-
matic rangeland, improvement will be implemented
instead of the distribution to more Communities
for I'social\.policy" reasons\. -\. - ,
The stock-breeder's requirements in rangeland
improvement works were jproved endless\. After the
fullfilment of one requiremen't, another was instantly
projected\. On the other hand, their claims the
state to care even for works, which they themselves
could do, for example the cleaning of the water-
* point's bends were usually exaggerated\. Yet, in\.
some Communities, people did not offer to help in
work construction even payed\. -'This atttittide of
stock-breeders to wait everiything from the State
is due bv one part, to historical reasons\. However,
* the main reason is the status of rangeland use,
in accordance which the stock-breeders of every
- 63 -
Community have the right of use, but m oblication
'or protection or improvement of rangelands\.
The--improvement of-rangelands-and-there
productivity led some stock-breeders to the
number of animals increament, which was a displeasant
development in Communities with already big number
of animals\. This development shows that the Service
that makes the rangeland improvements, should have
as well the possibility to control the number of
animals ; otherwise a wicked cycle is created\.
In spite of th*\. program's provisions the
grazing\.rights to be increased because of the
improvements, it did not became possible to be
achieved due to the lack of proper mechanism and
mainly because of the stock-breeder's certain
reaction\.
, Impact on Forestry
The program imipact on forests were also
significant\. After the rangelands production
improvement and the water-points and shelter constru-
ction, animals,were going less and less to the
neighbouring forests, whereas the construction of
staff houses stopped \.he-tree-brancches and ti,tiber
demand from the forests for hut construction\.
Several roads helped, also, in remoted forest
access, which helped in their namagement starting\.
Full adjustment of the relations between forest
and stock-breeding will be achieved after the
application of management plans in every Community,
1 mpact on' Animal' Production
-Although the project investm,ent per unit'
of rangeland surface were relatively small (211 drs
per stremma in 5-years period in constant prices
1980) its impact On animal\. prodqcts production
was in eithler case significant\. Thus, milk and
cattle beaf production increased by 8% and the goat
- 64 -
meat production by 34% approximately in the 10
Communities\. On the contrary, the increament of
goat milk \.and sheep meat woere positive\.but not _
notable, whereas the sheep milk production was
negative\. However, the differences among the
Communities were important, whereas the relatively
higher investnient made in some Communities has not,
necesarily,been transformed in positive increament
of animal products\.
These evolutions show that the animal
production in Communities is affected not onlv by
the rangelands and their improvement\. but also
by other facts e\.g\. animal product prices, animal
foods prices, stock-breeders demographic situation,
animal health treatment, tribe productivity
etc,
I1pLpact on Mountainous Economy
Apart from the animal product increament,
the project had significant impacts on the General
Economv of every Community and the wider area\.
* These impacts, which are referring to the unemp)oy-
ment, to stock-breeders, life improvement ctuality,
C, - - ; to other resources development \.(e\.g, Games, Tourism,
\.etc\.) will consist subject of special'worls\.
lIntegrated Land Use
The project was a real pilot project of
a integrated land use, The improvenent works were
implemented in the most productive parts of the
rangelands, where the stock-breeding was concentrated\.
The reduction of grazing pressure to less\.
productive parts\.and naturally to forests, came as
a result of the above works\. Thus, the land use
was more reasonable with favorable impact to
erosion and to maintenance of the natural ecosystems\.
In parallel, the agricultural lands with the arid
grazing \.rangelands and the fodder production farms
- 65 -
were included in the stock-breeding development,
, resultinc in covering animal nutricious needs
- - - during the-winter-critica-lp6rpd\.1=
This fact shows that the agricultural areas
should be necessarily incorporated in the stock-
breeding development projects of every mountainous
and semi-mountainous Communities of the Country\.
3\.3\.1,6 Strategy Study for the Development of
Forestry and Forest Industries it Greece
'KHistorical Background
A comprehensive planning approach for the development
of the greek forest resources in close connection with
the manufacturing facilities was visualised by the
forest service during the late '70s\. The conceptual
novelty was the endorsement of the-principal-that-only -
a concurrent development of the primarv and secondary
- gsectors cculd sensibly provide a concrete solution
not found so far despite the 'numerous attempts taken\.
Since both activities are closely interdependant only
\. , parallel progress might ju3tify investments\.
The coming accession of the country to EEC with its
foreseen ecoi,omic reDercussion-and the fina4ncial' -
support of forestry by international sources then
under negotiations was also stressed as reason for
\.evaluating the 'performances and formulating the
necessary measures for making the sectors more
productive\.
One of the projects under negotiation, as mentioned
above, was the "International Forestry Development
Project" to-be financed by the World Bank and the
, opportunify to-have-a-study setting the-proper expansion
ori\.entation and policy measures included in the project
was not missed\.
\.The study as an indispensable componbnt of the project
was designed to investigate ways for increasing the
- 66 -
the forest production, introducing undated silvicultu-
ral methods, evaluating alternative longterm develcp--
-ment-strategies and- improving the employiment and--\.--
living condition of the population\.
- Study Team Selection
The first draft of the terms of reference for the
study p:epared by the World Bank's personnel was
reviewed, modified and completed by specialized
scientists of the Forest Service, the Forest Research
Institutes and the Forestry School of the Aristotelian
University\., The final text enjoyed the consensus of
the Government and the World Bank\.;-----,
It was decided that the study should be carried out
by a consulting firm with international experience
which in rea; terms had to perform research, analysis
and presentations of the follo-4i\.ng comorr-nts- - -
a/ Forest resources and management: methods\.
b/ Forest harvesting systems\.
c/ \.Existing, planned forests industries and
market assessment for forest products\.
d/ Alternative proposals for industrial development\.
e/ Policy proposals for accelerated develbpmcnt
of forsstry and fcrest Industries\.- - - --
Those thoughts and intentions were announced to the
international cmmunity by special press advertisement,
"Development Forum" publication and letters to the
Embassies of the World Bank member countries\.
The response to the announcement was reasonably high,
more than 30 companies submitted their qualifications\.
However only one firm met t legal and technical
requirement\. This fact led the administration to
reco-nsider thle cas, '' '_\. ' ''\.= \.
After deep examination and exhaustive consultations
it was decided to-form a basic team of scientists for
ca:rrying out the studv\. The involvement of consulting
firms or individual cxperts was by no mean excluded\.
- 67 -
The basic team initiallv composed of a forest economist,
an expert in forestry works and a wood technologist
-al-lmembers of -
Research Institute of Thessaloniki\. The team was
soon enriched with the professors of forests economics
and forest industries as well as a forester private
industrial consultant\.
The investigation of all aspects of forestry and under
a wider perspective than what it was initially thought
led after the formation of the framework to the employ-
ment of about 50 more specialists and experienced
scientists who undertook the responsibility for
composing the particular chapters of the study\.
A number of working paper was prepared initially\.
- Main Contents of the Stud
* '\. Existing Situation
Describes *the current status of forestry
and forest industries including natural and
economic conditions, Special emphasis is given
to the'indirect benefits of forestry as well as
research, investments, market conditions and
\.'the social dimensions of\. both activities,- - -
\. Trends and Prospects
Provides an analysis of the nresent and
future market trends along with the factors affecting
them on a worldwide level\. The prospects for
* technological improvements in the field of harvest-
ing and stadardization of forest products and the
future demand of indirect benefits and services
from the forests are also taken into consideration,
\.-\. \. 0 \. \. \. \. \. \. Objectives -\. Alternatives _ _ _ _ \. \.
The'long objectives'of forestry based on the
given forest policv were accepted to be *
Increased production of goods-(wood, resin,
fodder, water\. etc\.)\.
- 68 -
\. Extension of forest area in order to
provide social and environmental services\.
_ Improvement of living conditions for the
j - -mountainous population and- regional\. develop-
ment\.
| Protection of forest and natural environment\.
* ' Especially for the forest industry the fore-
seen targets assumed to be :
I Covering the market reauirements,
F -ull utilization of the pr,imary forest
production\.
, Increasing of the added value\.
Socio-econdmic regional development\.
Based upon'the objectives the team developed
four alternative pr9grams :
1st : Condinuation of the existing situation\.
2nd : Reestablishment of the standing volume
and general improvement of forest
lands,
3rd ; Productive z6ne formation and piroducti-
vity increase,
\.4th : Present capabilities of forestry
: ' development\.
, ongterm Developmenrt Program
Exhaustive'analysis showed that the sectoral
development should be based on the 3rd alternative
and given special emphasis to the multiple forest
use without negative effects on wood production\.
This could be achieved with the creation of
production zones of different utilization and
intensification,
Two acceleration levels were also taken into
consideration the "intensive" or what is needed to
cover to objectives set whith a total cost of 760
billion drs (25 years) and the "minimal" according
to the financial abilities and costing 560 billion drs
- 69 -
- Suggestions for the Government
The materialization of the program should be chiefly
_ _\. _ assignedi -g o tlhe- Ministry-o\.f£Agriculture; and- placed-\.-----
under the jurisdiction of a Vice-Minister exclusively
employed for forestry\. However a number of other
agencies (like the Ministries of National Economy,
Defence,' Interior, etc\.)'should actively participate\.
The major financial and legal measures might be listed
as follows :
At least 2%'of the total public capital invest-
-ent must be'allocated to forestry\.
' , The forest'protection need new_legal framework
' - and to be placed under the sole responsibility
-of the Ministry of Agricul'ture
i A national land cadaster is urgently needed\.
i Special investment insentives for regional
\. ' ' forest industries\.-
\. = E~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~3
Land-classification and regulation of use
changes\.
* forest Service-cooperation in any public work
- design\.
: Redesign of education currictla and estahlishment
- '~ '; -\. of specializations,\. -
\. Special emphasis con research\.
\. Every activity related to forestry 'and forest
industries should take into account the proposal
\.of the present study\.
The project had made provisions for procurement of l
large quantities of ecquipment, by the ex-Directorate
General of Forests, during the first 3 1/2 years\.
Annex I shows the-'natural units of implemented works
and procured equipment and in Annex III the'granting
* *\. :--funds--for t'e-above7atiivties;vi vavis;-iirS-tfihe"' nned
ones\.
-70-
3\.3\.2 The delays in the oroject implementation were due
to the following reasons :
_~~- \. -\. = _ \. \. ~ - \. - - - - - - - - - - - \. - - - - - - -
- \.i\.2\.i AS tar as the procurementSare concerned
to the bureaucrati\.c procedures of the
Ministry of Commerce\.
3\.3\.2\.2 As far as the public works are concerned
to the inadequate financing in the first
years of\.the project implementation\.
3\.3\.2\.3 As far as the Forest Strategy Study is
concerned, to the change of the way of
the study elaboration\.
3\.3\.3 During the project implementation a lot of big fires
took place in the projact-area, especially in 1981
\.and 1985, so that large forest areas were burnt and
it was necessary the budget of expenses to be modified\.
- Thus, procurement of bigger auantities in forest
P*rotection equipment took place as well as construction
of more fire-protective works,
3\.3,4 The project did not had negative effect to the eco-
\. \. \. system of foiests,\. Although intensifdcaticn to timber
extraction happened, forestry operations contticted
according to sound silvicultural and cutting practices,
The fire protection, pilot range management and
\. \. industrial plantation components had a significant
* favorable impact on conserving forest resourccs and
on erosion and +oreqit control\. No adverse effect on
the water regime occured from changing one forest
crop (natural forest) to another (fast-growing planta-
tions) in areas where industrial plantations were
*\. concentrated,
_ 71 -
3\.4 Repcrtirng
The Project Planning and Management Office (P\.P\.M\.O\.) satisfa-
- - ctorily correspornded -to submitting of \.worx progress -repar-t-a-
and reports of Ministry of FJnance for realized expenses of
the project\. The reports submitted, by time order, their
content and the time covered are shown in the Table that
follows\.
3\.5 Procurements
3\.5\.1 The machinery and vehicles procured, by the Forest
Service, for transports, road maintenance, training,
forest protection and other purposes-'(with some
exeption marked below) were procured following interna-
tional competitive\.bidding procedures and in accordance\.
with t1i6 Bank's guidelines,
For local manufacturers of egquipmentraad 'mCteria-
allowed a 15% margin of preference or the applicable
- customs duty, whichever was less\.
Equipment bulked to the extent possible, and bidding
documents for contracts exceeding US $ 100,000 cleared
with Bank before tendering\.
Equipment which could not be'suitably bulked ahd other
\.-small items costing less than US-$ 50,000 \.eachup to
a total limit of US $ 1\.5 million procured by ex-
Directorate General of Forests, through local competi-
tive procedures, with solicitation\.of bids from at
least three suppliers in each case\. Foreign firms
were well represented in Greece and were allowed to
participate in local competitive bidding\.-
The main problem found out during the project imple-
mentation was the fact that procurements had been
included in-the-procuremenit uniform stateprogram of
t-the Ministry of Commerce and it was not possible for
th' Ministry of Agriculture to Implement the procurements
without the interference pf the Ministry of Conimerce\.
This fact had a unfavorable impact on equipment
TABLE OF REPORTS SUBMITTED
:p:Date o
:Submission *Time Period Covered: Report Content
Submissio \. \. \.
1: 18\. 9\.80 :lst Semester i98 :,Work Progress Report
2: 29\.12\.8\.0 :Sep\.-Oct\. 1980 n It
3: 18\. 2\.8; :1281 ,T~aining Works and Rangelands Program
4: 2\. 5\.81 :1980 and 1981 :Accounts 1980 and Program 1981
5: 12\. 5\.81 :Jan\.-Mar\. 1981 Work Progress Report
6: 25\. 8\.81 :2nd Quarter 1981 " ""
7 18\.17L\.81 :3rd 1931 n
8: 30\.L0\.81 :1980 :Auditing Certificates of Ministrv of Finance,
9- 3\.12\.81 :1982 :Work and Procurement Program 1982
:10: 1\. 2\.82 :1982 :Pilot Range Management Program
:11: 3\. 6\.82 :1981 \. Work Progress Report
12 16\. 7\.82 :1981-1982 :'ork Progress for 1981 and Rangeland Program\.
for 1982 I
:13: 16\. 9\.82 :1st Semester 3982 :w1ork Pr6gress Report -J
14: 11\.11\.82 :1981 :Auditing Certificates of Ministry of Finance'
:15: 25\. 4\.83 :1982 :Work Progress Report :
:16: 25\. 4\.83 :1983 :Work and Procurement Program 1983 |
:17: 11\.11\.83 :1982 ; Auditing Certificates of Ministry of Finance:
:18: 6\. 2\.84 :1983 Work Progress Report
:19:\.30\. 4\.84 :1983 :Range Management Works Report
:20:\. 3\. 9\.84 1983 :Auditing Certificates of Ministrv of Finance'
:21: 25\.10\.84 :1st, 2nd and 3rd :'Work Progress ReportC'
Quarter 1984\. i
:22: 29\. 3\.85 :1984-1985 :Annual Work Progress for 1984 and Program
for 1985
:23: 23\. 4\.85 1984 ' :Range Management Work Progress Report
:24: 25\. 9\.85 :1984 a:Auditing Certificates of Ministry of Finance
:25: 30\. 9\.85 :1985 :Work Progress Report
26: 25\.'6\.86\. :1985 :Auditing Certificates of Ministry of Finance
i - A- -- - - -- - - -- - - -- - - --- - - -- - - -- - - -- - - - -- - - -- - - - , S
1\.:
i \. i~~~~~~~~~~~~~~~~~~~~i
- 73 -
procurement, which had a significant delay (the\.time
between the competition notification and the eauipment
_ \._ ~____\.dellvry was 1 to 2_vears)\. _
_ - _\. The pilot plantaton' pr - am could h6t''StAi n'
because of this delay in the procurement of the special
equipment\.
In Annex I are shown the equipment which had planned
to be bought, the procured ones and the allocated
sums of money\.
3\.6 Cost
3\.6\.1 The total expenses for\. the project,--including natural
contigencies and the prospective price rise, had
been calculated to drs 5,307 million (US $ 144\.6 or
\. : o34%)\. The expenses budgets were based in June, 1979,
prices\. , \. _ _ _
The na:tural units\. contigencies had been calculated
i in 10%\. and for services and equipment 5%\. The prospe-
ctive price rise were 12% for 1979, 11% for 1980,
and 10% each year for the last years\.
As far as the expenses in foreign exchange are
\. concerned a 7% increament' had been foreseen for public
,;work\.e andca 6% for equipment and services\. _
The realized expenses bv activity vis-a-vis the fore-
seen are summarized in the Table below and'explained
in details in Annex II\.
*3\.6\.2 The deviations occured are due firstly to high infla-
* \. tion rates, during the project implementation time,
which camoup to the following sums :
18%\.in 1979, 24% in 1980, 24% in 1981, 21% in 1982,
21%,in 1983, 18% in 1984 and 19% in 1985 and secondly
\. ,to changeL Q dracheae-d\.Qll\.ar-equival,en\.e,\. \. '
- - - §She as in 1979 the drachmae--dollar equivalence was
1 US$ = 37 Drs\., in 1980 became 1 US $ = 40 Drs\.,
\.in t81 1 US $ 5 S5 Drs\.i in 1982 1 US $ =-63\. Drs\.,
in 1983 1 US $ a 95 Drs\., in 1984 1 US $ 123 Drs\.
and in 1985 1 US $ = 150 Drs,
- 74 -
3\.7 Financing\.
\.3\.7\.1 The loan amount of US $ 25 million-was-tatally=absorbed
- f'in accordance with the project provisions\. Also, the
loan from the Japaneese Bank TOKAI consisting of
US $ 25 million was granted on October 13, 1981\.
' TJ Xhe Greek State corresponded to its obligations,
* disposing the sum of drs\. ll\.763\.6 million for the
project\.
* The beneficiaries from the-non-state forestry works
works had a portional contribution\.
* beviations from \.the project p;0visions did not occur\.
3\.7\.2 The ex-Directorate General 'of Forests with a slow
rate in the first years but accelerated in the last
ones submitted the loan diabursement applications \.sor
the total\.sum of loan and the Wrorld-Bank with -fast-
rate fulfilledXthe total of applications\.
, I in Annex VI are shown the planned and realized loan
i ~ withdrawal applications in US $ by time order\.
3\.8 Per-formance of Consulatants, tontrattors and Suppliers
The consultant employed in the project offered positive
-\. _\.services ard-saatisfactcrily helped-in the projeut implemsnta-
tion '
The contragtor's and supplier's performance was, also, the'
same satisfactory\.
IV\. OPERATING PERFORMANCE
4\.1 Overall Assessment *
-- - tor caMe\.
Generally, the loan absorbance in the forestry sector came
up to a high level\. (It overpassed by \.6 million the
budget)\.
7
_ _F_ __r~~~~~~~~~~~~~~~~~~~~~~~~~~~~- - --s--_-__---
s,XU ro u Y N 0 A 0 APJ zAtaAK L s LAOS
Lsoc\.l S Foreig Total T__ i o___°__"1_,,,,_t
Z i o 1 X \. I 0 2~~~~~ ~~
's S E ,2T0M M SP 1A A P A Y L S E :Z S A i O YY PXA A O A\. H\.n\.A \.S
S _\. _ _ _ _ _ _ ; _ _<Sa; >#L~~~~~~~~~~~~~~~_L_ _ ________ '~~~~~~~UZ (s^ illion) _ l*r! i qn
S~~~~~ E A A ' L t 8 'L r iiJ !J
\.ANo Ap\.tot 840 \.,d 1\.816,0 52t,o 1\.152,00 1\.327\.8 2\.968\.0 22,0 t2,0 14,2 ?,a 56,2 19, 9 #
\.e4reat Rads\.
\. C'ltC;CCX; \. 452~~~,2 3\.202,4 144,3 7t9,0 r\.6,5 3\.9 22, 11,7l' 19,7 309 6,4 15,6 426,1 t b
\.tsnx:lot,ee \. 72,4 roo , 64,9 90,6 137, 3 981,0 2,0 3,4 1,8 3,1 5,a 6,5 47
\. ,etv'r, \.bFl XwPt \. \. 524,3 2-99w,9 255,7 780,0 2\.9971,9 14,3 i'%\.O 110 L"\. 21,5 '1 )3
:-t\.~t Ovw-3tS rU"4orw\. 19\.1 2 6 100\.4 P 119,5 2 7 0 tli4 0,1 2,S 0,9 3\.2 t\.1 8
MAr\.ter\.-ace liqUSP=eW:
nse -ct Vot44t4V r pyatO 3559 107 7t\.3 - 107\.2 207 1,0 O'1 -1,9 - 2\.9 0\.1 ~
*toops "A& COtYglye erono4v \. \. 119,1 149,6 8t0O 8slf2 ,?O0* 237s8 5s2 1,0 2,1 0'6 595 1,6 40 3A 1v
*ior-er Traspcort eif Houslag\.
-Ar, ,;ib,tl\.!'l iht f)thtgC\. t77*3 t1509 108,2 84,0 dOoli 119199 0 09 2, 06 79 5
\.r:ar-i gAnd zuS uds M oS29 0, 6ee '0
*-t>-|%-S-XTC ta<\.tsvrs ___84a1 ~~80 \.~>2__3a_ 80,0 _?,L_ 0,4 _ Z_QS2 0\.1 _Z 2_ 0\.5 ,,,-6_ 2
r\.':pja inlatssto o 2\.271,2 t\.552,1 3\.62s3 61,9 56*8 9867 ?
U-oe Coat5
;\.- 3et\.-\.As1 vco4w povks&bw\. (11\.2t) 264,9 13912 4"\4I ?,2 5s8 11'0 34
*b;-ical Contingencies 011,2%)
xzz # S oraigenci9s (31A4) I
la\.;_s;^!\.Un~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' *2\. -s__ -a A_ ns- _ i _ _ |__4__ ~t
v~~~~9 I\.,Jp&ust OYO O&WvopO& Av0tSaa40rv ( 1,5 r%01\. *\. UnA)
;LcludaDS pilot platation N Ofn (U;S 1,5 dillLon)
laclv^5A lostIng tr4inim (TU8 1\.5 minion), pilot rang-e manasem*nt (WW 3\.1 m;ton)\. aM the 1to studies (MS 3\.3 lAo1a)\.
Z-;ou vnAnywu6 -tau *^atouc vou3vva ltothtov 25 *ea \. &A,\.nv rm Iaotor xQ; *e6Pouc*
:\.:ee:::;ten Vclowuo eb\.ut V\.%- o3 milLon of t\.xe\.l WA dlutez\.
N-::2 ote _;*'-Ot'#Cat- >+ted A\. \.4MfnOLOVT M\. A-C,tU\. ,,5oyl
-76-
CHAPTER V\. PROJECT ACHIEVEMENTS, COSTS, BENEFITS AND RATE OF RETURN
5\.1\. Achievement of targets
The project as a whole has achieved its targets and espe-
cially in increasing wood production, industrializing of
logging works and adopting intensive systems of forest
administration, developing a long term forest exploitation
strategy, improving the life quality in forest villages as
well as staff training for the preparation of projects
financed by external sources\.
Concerning the following components, it has been estimated
at the time of appraisal :
i\. Forest roads
The construction of 3\.500 km forest roads and the im-
provement 2\.000 km as well as the provision of main-
tenance equipment and it has been constructed :
Forest roads (Km) Est\. Act\. achieved %
New forest truck roads 2\.225 2\.231 100,2
tractor\.roads \. 1\.260 1\.041 \.83
improvement to all
weather standards 1\.135 778 68,5
gravelling of road
surface 835 755 90
road maintenance 16\.417 19\.394 118
Analysing the above table result that the goals have
been satisfactory covered for the construction of the
forest roads and tractor roads, while the other activi-
ties have been slightly delayed (road surfacing, improve-
ments etc)\.
- 77 -
road maintenance equipment Est\. Act\. achieved %
crawler tractrs -t4 -2- t
graders 15 7 47
dumpt trucks 4 12 300
compressors 18
repair shops 2
mechanical workshops 6
The above deviations occured, because the ministry of
Agriculture found more economic to rent crawler tractors,
lorries and compressors than to buy new ones\. Generally
it can be mentioned that in the sector of forest road
constructions the goals have been achieved to a satisfa-
ctory degree\.
!iji\. Logging works
The project financed the purchase of logging works
machinery by members of cooperatives and private logging
workers\.
item Est\. Act\. achieved %
skidders 12 5 42
agricultur\.tractors 87 44 50,5
logging tractors 53 2 4
power saws 450 192 43
loading cranes 30 11 37
skidding winches 60 - -
allpurpose vehicles 40 2 5
debarking machines 10 -
short cable systems 34 -
long cabie systems 2
The purchase of the machinery initially estimated was not
realised due to :
a\. Skidding contracts covering at least 3-5 years with
cuts of sufficient volume to keep equipment operating
for at-least 150 days annually were not secured\.
*~~~~~~~~~~~~~ , * *\. *
- 8 -
b\. Lack of trained young staff, to operate the logging
works machinery\. -_
c\. Lack of roads for the circulation with all weather
conditions\.
In order to make comfortable the transportation staying
and work in the forest for the logging workers, it was
provided :
Items Est\. Act\. achieved %
houses 52 58 ill
permanent store
houses 20 34 170
semi permanent 85 7 8
mobile houses 60 65 108
busses 20 38 190
field vehicles 36 42 117
In the field of logging works the goals were not fully
achieved but a serious effort was made and as it was
estimated at the appraisal report the share of mechanical
methods is expected to increase correspondingly in the
future\.
; iii\. Forestry_Managemntt
10\.388 Ha have been reafforestated against 15\.900 initially
forseen (65% achieved)\. No extension of the three nurseries
has been realised but the needs have been served by the
' existing nurseries\.
Concerning the Forest Fire Protection component the
following forest fire protection works were implemented
-in-the prcject are-state -forests\.-
Items Est\. Act\. achieved %
outlooks 5 6 120
reservoir for forest
trucks 30 19 63
forest roads 200 561 280
fire breaks S00 1\.000 200
\. \. \./\. \.
- 79 -
iv\. Village infrastructure Development Project financed
consttruction of basic infra2tructure\.faciit±as--uch
'as connecting roads, vill'age sheets, water supply,
drainage/sanitary schemes and community facilities
in 45 mountainous forest villages in North Western
Greece\.
Project Output Est\. Act\. achieved %
Connecting roads (Km) 124,5 416 334
Village streets 70,1 92 131
rural access roads 47 69 147
water supply works 28 40 143
drainage and sanitation 21 22 105
electricity 22 7 32
other community facilities 36 39 108
As a conclusion it should be emphasized that most of the
physical development targets have been achieved while the
Project sur passed the Appraisal estimates as far as road
developments are concerned\.
TRAINENG, RESEARCH AND STUDIES
NOPilot Range Management - -
The project includes a pilot program to demonstrate the
economics and practicability of various modern methods
of range management, eventually aimed at protecting the
forests from uncontrolled and destructive grazing\.
Project output Est\. Act\. achieved %
Pilot range management
Grazing Land Improvement
Pasture seeding 1\.600 23 1,5
Sprout Control 1\.200 452 38
Fertilizer/Initial 4\.500 478 11
Fertilizer/Repeat 3\.000 596 20
- 80 -
Arabie-crUPAin1
Rotational Pastures 200 24 1Z-
Hay Production 600 84 14
EncineeriLnB works
Water points 44 45 102
Water basins 47 10 21
Fencing 20 -- --
Roads 100 89 89
Stalls 25 30 120
Housing 10 41 410
Demonstrations 40 134 335
Rangeland survey - 407\.000 ha
Although the most part of the rangeland improvements was
nearly implemented-completely as it had planned, some
parts had a smaller degree of implementation\. Thus, the
rangeland survey of the Northern Greece remained unfini-
shed\. The special research programs did not start at all,
and the implementation of regular management on Communi-
ties rangelands was unable to make some progress beyond
the first Steps,- due to lack of sufficient organization
of the special units employing permanent staff of exclusive
occupation in the rangeland forest\. It has also to be added
that some basical targets of the program and especially the
redoublication of rangeland production, compared with
pre-project situation was proved very optimistic at least
within a 5 year period of time\. In spite of this and because
of the improvements of rangeland in the Communities which
were the main part of the project, it must be concluded
that the program have achieved its targets\.
\.~~ ~ ~~~~~~~~~ * \.
- 81 -
vi\. The Regional Development Study was not realised due to
the e labora t Qon _f - the\. iateg=ated- Xediterranean -Programs- -
which receive financpal assistance fromthe EEC\. The
latter cover both the scope and the geographical area
of the Regional Development Study and therefore its
implementation would lead to an undesirable doublication
of efforts\.
vii\. Pilot Plantation research
The project includes financing of all the equipment and
oart of the-technical assistance and training requirements
of a five-year pilot industrial plantation research program
to be executed by FAO\.
Items Est\. Act\. \. Achieved %
technical assistance 10 man years
fellow'ships 11 man years 3,65manyears 33
overseas trips study I nman year
Operations which took place in the three reforestation
areas of the project "Forest Development - Reforestation"
*(Area in Ha)
Nigrita Grevena Nafpaktos
Land clearing 330 220 8
Ripping/subsoiling 86 193 -
Disc-Harrowing 164 150 -
Tine-Ridging(Planting
Lines) 102 200 2
Weeding 225 - -
Planting 330 200 8
Slope Modification 24 6
S \. \.,/ \.
- 82 -
5\.2\. Proiect cost
------Project- cost,-anc costoverrunbycomponfit appr-aised-and acftual arei
given in taLle I\. Actual cost is higher than appraisal cost
by 121 percent\. Total cost reached 11\.763 billion drs in-
stead of S\.306 at app:aisal\. Cost vy corponent and year
are also given in table II\. II
Concluting we can say that the significant cost over-run
i\. local currency is mainly due to the higher inflation
rates than originally estimated at appraisal\.
The total cost of the village infrastructure Development
Project was drs 2\.998 million and represents a cost overrun
of 135% comnared with appraisal estimates, which were about
drs 1\.272 million\. The cost over-run is mainly due to the
considerable broadening of the project scope, following
the Amendement\. The most impartant cost over-run is that
of fire protection works which had an actual cost of 702
million drs instead of 103,7 million drs as in the appraisal\.
The reason is that during the project implementation a lot
of big fires took place in the project area, especially in
1931 and 1985, so that large forest areas were burnt and
the budget \.of expenses was necessary to be modified\. The
procurement of additional quantities in forest protection
\. equipment took elace as well as construction of more fire
protective works, roads etc\. We can also remark that the
higher inflation rates than estimated, the revaluation of
* the U\.S\. dollar as well as the rocky soil increased the
cost of the unit for work construction and also the prices
of logging and nursery equipment and implements due to the
fact that all this equipment is imported\.
\. \. \./\. \.
rJ
- 83 -
TABLE I Total nroject cost
(Drs million)
ITEM Appraisal Actual Cost over- Actual Sharc
run \.V in total i\._
CiviL works -
Logging roads
State 1\.608,7 2\.771 72 23,5
Nonstate 311,4 197 -36 1,6
Plantation Establishment
Roads
Nurseries
Site preparation and fencing 814,9 3\.562 337 30
Planting
pruning and weeding
fire protection works 103,7 702 576 6
Building_
Logging workers and waterhouses ) 188,1 180 - 4 1,5
Forestry workers and staff
Village infrastructure Develop-
ment 1\.271,9 2\.997,9 135 \.25,4
pilot range management 121,5 121,2 - 0,2 1
Machinery and Egui_me t,
Road Maintenance 122 270 121,3 2,2
Machine Maintenance 14L2 - -
logging 150,1 \. 107 -28 0,9
plantations 17,6 155 780 1,3
Nursery equipnent and implements 3,3 24 627 0,2
pilot plantation research 46,2 108 133 0,9
Fire protection 82,8 279 421 2,3
Logging personnel transport
vehicles 54,2 - 50 - 7,7 0,4
Forestry personnel transrort vehicl\. 27,5 7,8 -71*6 0,06
Logging training 14,9 46 208 0,4
Pilot range Management 5,7 1 -85 -
Project administration 6,6 - - -
Services
Logging training and demonstration 55,8 9,9 -82 0,08
Pilot plantation research 20,3 73 259 0,6
pilot range management 22,7 16,8 -25,9 0,14
Development strategy study 26,3 5 -30 0,04
Regional Development Study 123,3 -
Project Administration 123 80 -34 0,6
5\.336,7 11\.763,6 120,4 100
Data given by the Ministry of Agriculture\.
- 84 -
TABL E II Project cost by cop_Monent and year
(Million drs)
ITEM
Civil Works 1980-1981 1982 1983 1984 1985
__dQgg\.i g roads\.
State 729 428 419 520 675
non state 36 25 22 51 63
Plantation Establishment
Roads
Nurseries
Site preparation (and f ncing) 184 112 835 1\.100 1\.331
i Planting
Pruning and weeding
Fire protection works 72 43 92 134 361
Buildings housing etc
Logging workers 22 24 42 60 32
Forestry workers and staff
village infrastructure Develop\. 190,7 223,1 350,4 760,3 1\.473,1
Pilot Range Management 19 -- 19---- -- 2-7 33 18,2
Pachinerv and equirrent
Road Maintenance 101 32,4 51,9 37,7 47,8
Logging 21,4 21,4 21,4 21,4\. 21,4
Plantations 1 22 36,1 15,6 80,2
Nursery equipment and
\.implements - 12 __ 12 - -
Pilot plantation research 6,6 8,7 25,5 59,7 7,5
E-ire protection Transport
vehicles 0,5 186,8 53,5 40,1
Logging personnel - 25,5 14,5 17,5
Forestry personnel 7,6 - -
Logging Training - 1 45
Pilot Range Management - - 0,5 0,5 -
Project Administration - - - -
Services
Logging Training and Demonstra-
tion \.7 2 1 - -
Pilot Plantation Research - - - 36,5 36,5
Pilot Range management 2,4 2,4 2,8 2,6 3,2
Development strategy study -
Project Administration 16 16 16 16 16
GRAND TOTAL 1\.408,1 991,5 2\.175,5 2\.921,3 4\.268,5
1\. Data given from the Ministry of Agriculture\.
2\. The total account 'logging' from the Machinery and equipment
has bcen equally divised in every year\.
- 85 -
5\.3\. Project Benefits
* \. - -Project benefits by component are given ri-xtU -
1\. Forest Roads
The objectives in Forest Roads construction have been
satisfactorily achAeved by the construction of B\. class
forest roads and tractor roads while the other activi-
ties have been slightly delayed (road surfacing,
improvements)\.
Concerning the equipment supply some deviation from the
initial targets can be noted\. The reason for this was
that the implementing service found more beneficial to
rent crawler tractors,compressors and lorries than
purchase them\. We can conclude that the goals have been
achieved resulting in a substantial increase in the
forest output in wood production, income and productivity
of forest workers\. Generally, we had a better exploita-\.
tion of the forest and an easier collection of the fore-
stry' s products\.
2\. LoUIn_ works
This component of the project has not fully achieved
his targets but it has succeed a serious effort in the
mechanisation of logging works, which results the cost
reduction or the forestry's products collection, as
well as the access to the difficult to reach areas\.
3\. Forestry managementLi
a\. In the field of refforestation better mechanisation
methods have been introduced for the clearing and pre-
paration of the soil, particularly increasing the use
of a more beneficial technique with the pilot research
project for economic refforestations\.
*~~~~~~~ / I \.
- 86
b\. In the field of Forest Fire Protection with the
_- _ \. works achievAd and-th procure& equipmmnts the _
preventive and \.epressive forest fithting measures
were improved and the number of fires and damages
caused were decreased\. The burnt area in the project
area in 1985 (178\.345 str\.) was equal to the average
one of the previons 5 years\. On the other hand, the
burnt area in the rest of Greece (439\.839 Str\.) was
at the same time twice as much as the average of
the previous 5 years\. From this fact, it is concluded
that the incremental credit in the forest fighting
sectors had had positive effects in the project area\.
4\. Village infrastructure Develovment
Regarding the effectiveness of this component of the
project it can-be emphasized that the Project has been
successful in accomplishing its main objectives, namely :
to upgrade the social and technical infrastructure and
improve accessibility for the forest workers living in
relatively remote mountainous villages, thereby helping
to slow down the rate of emigration and retain younger
_- peopleip\. the Project area\. \.It should be also noted that
valuable experience has been gained by the Regional Policy
and Development service of the Ministry of National Economy
for the design, appraisal, monitoring and evaluation of any
future development projects financed by international
Organizations\.
5\. TraininaL research and studies
Pilot Range Management
This pilot program for integrated development of range
lands in 10 village communities of central-western
Macedonia Greece, was carried out to the benefit of
livestock industry, forestry and to the mountainous
economy in general\.
- 87 -
The results extracted by the achievement of the project
are so interesting and the experience acquired so
important, that it can be said that this project was
one of the most successful projects ot the Ministry
of Agriculture and a pilot program for the development
and improvement of the rangelands all-over the Country\.
It is concluded that the proper improvement of rangelands
constitutes a decisive factor in the development of
livestock economy and in the integrated use of mountain
forest lands\.
Compared to proposals, the program had a high degree of
completion\.
The vegetational improvements which raised the herbage
production by 2-3 times along with the engineering works
contributed to a 3-5% increase in animal numbers and
to an 1-8% in milk production in all animal species
and a 8-37% increase in cattle and goat production on
the average for the 10 villages\. They also affected
favorably the forestry and village economy in general\.
Moreover the program helped in dev;loping skilled range
management staff in the successful application of-new
technology, in the collection of information regarding
the cost of improvements, in the acquisition of range
land improvement experience, its the more active parti-
cipation of the shepherds and the Community Councils
to rangeland development and in the realization of the
importance of the farming lands to the livestock pro-
duction in each Communities\.
Pilot Plantation research
With the achievement of this target a serieSof experimental
areas in Nigrita and in Grevena were established for
acquiring experience in plantation establishment techniques\.
In cooperation with the Athens Forest research Institute,
the crite\.ia for fast growing site selection were defined\.
Series of experiemental areas in Nigrita, in Grevena and
*~~~~~~~~~~~~~~~~~~~~ \.* I\. -/ -
- 88 -
in-Nafpaktos were established to test local and
exotic 8peiles-\.-The--xis-t-inT tM-at7to--Was--Uged -
for creation of a databank about the growth and pro-
duction of some species important for plantations\.
In cooperation with the Forest Research Institute,
information and evaluation about road construction
implementation and wood harvesting were collected\.
A project information collection system was establi-
shed and a provisional cost benefit analysis was made
for plantation works economic evaluation\.
Forest and Forest Industries Sectoral Development
Stratega Study
The study as an indispensable component of the project
succeeded in its targets to investigate ways for in-
creasing the forest production introducing updated
iilvicultural methods, evaluating alternative longterm
development strategies and improving the employment
and living condition of the population\. Moreover it
should be added that for the realisation of this study
a consulting firm with international experience has not
been used, but the team has been composed by scientists of
the Forest Service, the Forest Research Institutes and
the Forestry School of the Aristotelion University\.
-89-
Benefits of the project accrued to a large number of
---people- in- z\.,iuc,La rcourstain areas who are well below the country
average in living standards\. Survey data collected by the Forest
Authorities gave the following information for the project area :
A\. Total project area population : about 2\.000\.000 people\.
B\. Number of people (contractors) not members of Forest
Cooperatives, employed in project area forest works the
years:
1978 : -546 1985 : 690
C\. Number of emnloyed in forest works the years :
1978 : 13,218 1985 : 15,122
D\. Total payments of the above employed in million drachmrae
during the years :
1978 : 338 1985 : 1,545
E\. Free collected fuelwodd (in M3 ) during the years :
1978 : 210,680 M3 1985 : 213,500 M3
F\. Number of livestock in the project area :
1978 1985
Number of goats;1,041,106 1,465,477
Number of sheep:2,434,653 2,679,957
Number of cattle: 134,880 263,000
G\. Animal products (plus fresh-water fishes) in tons during
the years :
1978 1985
1,095,897 1,048,575
, \. \./ \. \.-
-90-
H\. Sawmill units and staff empolyed during the year :
--1978 1985
units 577 567
staff 1,802 1,858
I\. Hotels or Hostels units in the project area during the
year :
1978 1980 1985
908 1,011 1,209
J\. Number of registered pupils during the years :
1973 1985
Elementary 156,695 159,606
Gymnasium 62,705 77,620
High School (Lykeon) 35,512 46,572
K\. Health Stations operated in the project area, during
the years :
1978 1980 1985
404 398 400
L\. Theatrical shows performed in the project area during \.
the years :
1978 1985
167 335
M\. Number of modern houses built in the project area during
the years :
1978 1985
15,551 13,660
and totally for the period 1978-1985 : 71,078
N\. Number of houses to which maintenance or improvement
works made, during the years :
1978 1985
6,062 11,999
and totally for the period 1978-1985 : 39,951
-91-
The years 1978 and 1985 were selected as representative
of the before and after- the- projeet- sit-uation-respect-ively\.
One may easily admit t\.hat not all changes are attr4butable
to the project\. However, the above information supports the
view that the project has a positive impact on the incomes
and employment of a large part of the population of the
country\.
5\.4\. Economic Rate of Return
The calculation o' the rate of return utilizes projected
wood production levels given in Annex V\. Table T-1\. Projected
wood production Is expected to increase compared to realized
production during the period 1980-19851) Output prices and
logging costs are also given in Annex VI(Tables T-3 to T-51
The calculation of incremental output (sawlogs; pulpwood,
fuelwood and free collected wood) assumed that the production
level beyond 1985 without the project would remain constant\.
Production levels with and without the project are quite
different tnan those assumed at the appraisal (see above)\.
In the basic run no operation and management was charged
(see Annex 2, Table T-9 of SAR 2425-GR, p\. 57)\. Similarly in
the basic run it was assumed that there would be no investment
beyond 1985, despite the fact that such investment was
included in the appraisal\. On the basis of these assumptions
and the data presented in Annex Is Table T-8 the financial
rate of return is 10% without including the investment in
village infrastructure and 6,6% when investment in village
infrastructure is included\.
(1) Wood production figures in Table T-2 (Annex V) are in-
consistent with information given in the appraisal (e\.g\.
Table 5\.1 page 35 of Report No 2425 - GR)\. The reasons
of this divergence have been reported to the Bank in
earlier communications\.
-92-
When operation and management cost is charged (see above)
-the -finaneial -rate of return drops to -8% -and -S%--respectively\.- -
When benefits from investment in village infrastructure are
included the financial rate of return increases to 7%\.
Economic prices used to calculate the econoomic rate of return
were derived from border prices of imports that are given in
Annex I, Table T-5\. A divergence of economic from
financial prices is observed while the opposite was expected
in the appraisal\.
Using economic prices the rate of return in the basic run
increases to 19% and 15% excluding and including respectively
investment in village infrastructure development\. When opera-
tion and management costs are charged, the rate of return is
reduced slightly to 17% and 14% respectively\. When village
benefits are included the rate of return -increases to 15%\.
,\.*/ * \.1\.
-93-
-'\.: T-''> - : f\.r\.*e_ * T;'Mr~ ;vr \.*w-"'
The ServiCes iznvclved ;n the project implementation worked
eff-ecti-re-,- m\.d es-,cially\.''
- The ex-Cirectcrate'Ceneral of Forests with its staff
satisfactorily implemented\. the road construction works,
the logging works, the pilot plantation establishment
- and the other activities that is staff training and '
the Forest and Forest Industries Sectoral Development
Strategy Study\.
- *\.The Project Planning and Management Office (P\.P \.O\.)
was responsible for the project implementation coordi-
nation by the ex-Directorate General of Forests\.
It satisfactorily corresponded to its duties, although
it was not manned with-the staff provided by the
contract\.
- v The Project Steering Committee coordinated the works
of the various Services and solved the different
prdblems appeared during the project implementation\.
- The Forest and Forest Industries Sectoral\.Developnent\. _
Strategy Studv Tream consisting of scientists, worked
on terms of reference prepared by the World Bank's
personnel, reviewed, modified and completed by specia-
lized scientists of the Forest Service, the Forest
- Research Institutes and the Forestry School of the
Aristotelian University\.
The team implemented the work and the\.study was
! hAnded to the For2st Service\.
-The Range ?sanagement Pilot Program was implemented
I by the ex-Directorate deneral of Forests, in 7 bse
cooperation with the Directorate of Agricultural and
: * Livestock Productioi of: the HilisVtry of Agriculture\.
The head of the range program was the Section Chief
of the Range Management Section of the Forest Research
Institute who had the general coordination responsi-
bility for the program whi ch was satisfactorily
implemented\.
- 94 -
~-\. The Pilot ?lantation Research was implemented by the
Forest Districts of ?Iigrita, Crevena and NafDaktos
-and thliend cooordination\. of a-\.special-- cervice-_ u-
_established in Athens for this purpose under the name
"Forest Development-Reforestations"\.
6\.2 Management and Organization|
6\.2\.1 The total of Services involved worked effectively
and had an important contribution to the project
* \. completion\.
6\.2\.2 The Project Steerins Comnittee helped the Services
involved to correspond to the project requirements
* - and solved the various questions arisen\.
$ 6\.2\.3\. Cost Recovery v
* \. Cost recovery from livestock owners benefiting from the
range management program has not been established\. The
Forest authorities are convinced that it would be extremely
difficult to ask shepherds to pay fees for benefits that\.
were getting for free before project implementation\. Strum-
* \. : page revenues-and fees from project area forests, on the:
* \. other band, contribute significantly to the Central Fund
_ ,,\._ - \. for-\.Agriculturo-- Livestock\. and Foreatry Development\. Their
\.- \. \. collection follows rules established before 1ihe project was
, \. i\.implemented\.
-95-
VII\. Coxnclusions
---The project had -a suiccessful implermentation and modest cost
over-run due mostly to high inflation'rates\. Some cnanges
in the financing of tLe project were also necessary caused
mainly by changes in the exchange rate\. Other than the above
two points, the implementation of the project went smoothly\.
This is attributable to the experience and quality of the
staff that was involved in project implementation\.
The return of the project, however, is lower than expected
at appraisal\. The calculated rates of return in the present
pcst-evaluation differ from those at appraisal, especially
the financial one\. While the economic rate is higher (appro-
aching, under the assumptions of this calculation, the rate
expected at appraisal), it is mainly due to high economic
prices rather than a project ihduced increase in output\.
The increase in the economic prices, caused by changes in
the exchainge rate, led to a further divergence between finan-
cial and economic prices, despite'appraisal expectations for
the contrary\. This trend in prices seems to be in accordance
with views that stress the "protective" rather than the
"productive" character of Greek forests\. Upon acceptance of I
--such views, the investment in the project was a right one,
giving an acceptable rate of return\.
[!~~~~~~~~~~~~~~i ii e $[ii|ri|5¢RgliE>5 5s li g552ii 1
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0e C,5 00 CAS usj Ws sal- DsV asso-sau\. o soast c\.
- 97 -
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| ~ ~ ~ ~ ~ 4 \. rc,u\. \.4 - c s a
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4)~~~~~~~~~~~~
\. \. *\. \. \. \. F\. 4I
w ~ b l
(al DI *e o4 9\. oJ - I
~~~~~~~\. \.
4~~~- CU
*, W 8S-tdx t )
(D 0- ( ,54\.- \.t4 0 a o 4 -
(f'rtOVa0 a-t 00 o s t 2
\. ~ ~ ~ ~ ~ ( 0 th-X X 74-
t ~~ S 4\. t\. _ |
ct :z a u\.t o e) o x *J s t-z *-t vt u @ w: e~~~~~~~~u-
4Z C)tstt\.o Ct e O tt | t 0
t -yeareav2 r ea 3 3 YVar 4 Fer T -T t
ItOU aN\. 1980/81 1981/82 1982/83 * 93/' 198'/85
Dre ~ 250 - 130* - 130 -250 62 o I
Di's - 3\.012 - - - - - - - - - 3,\.012
Agr'icul tural Tractar's &
I 00
Oire - 1,987 Nil- - -- 111 y427 J
logrngpq Trolleys NSO\. Nil\. 2i \. -- - - -- - 361I/2
Govie Span\. (26iOfl o) cable- - - - - -- -
crane,s epd winches N4o\. 311 1 - - I
Dr\. 782 - -- - - - - - - - 782-
Sho-rt Span (Ijo0 m) cable
cranes5 and winche No\. Nil 1I - - -* -I- i l
Di's 413 - - -- - - q3
Mqobile Cable Cus-ne NO\. Nil 1 - - - - - - - -\. - -\.
Ore - 2,625S \. - - - - - ,2
St's - 16 passenger No\. - 2 - - * 2 - - * - - - 2 2 i-\.aI
~~SeI4 Yeldvtes Dr\. - 3,175S - 958 - - - 50 3,175 30
(Light 1\.1111)\. No\. Nil2112
Drz; \.2 - - -- - - - 1,325 -
Slobile O~~~~r* 2,625S - 2,625
Mobile Oebarkclng
Machine (60 cm) No\. - - - - - - - - - - -
Eltup torill No\.~~~~~il
HM1'ili De-bnrktnp\.
Ki6hine (30 em) NO\. - - - - - - - - - - -
Ti*e-r oad tig\. Crafe Nto\. - - 5-
SM\.Lcald Iorprt tractors !,O\. - - - - - - 3 - * 3-
Di's - - - - r - - - -- - 18,60D 18l,EWo
Pohbile bawlng N\.,\.'hlne Nio\. - -- - - - - - --- - - '31
tilutsr Cli\.Iper5a Now\. - - - ----
pro - - - - r\. - - - - - - -
T\.)t\.1i t 661 - - - - 1,0986 45\.030 - 4- 'I la 1+\. 1
--r\.1-
i / *I5'ms'I n~U~iubloIans
i Year I Mear 2 t Yea-r 3 : Yt\.ar I _____'___
Zteq, :M~to\.: 1980/81 1981/82 a 1982/C3 : ~ 1983/84 1984/85
sDrs: A I E at A E t a A a C fa A a £ t A a a A a L
Road P\.aintaa\.ance rgul*oent
Vul\.idozr~r, (14\.0 MP
2-R1ad^/R5ppQr) NO\. - 7 - - - 9
Drs - 27,737 -- - - - - -- r210 7 J7
BuIldoz-\.rs (2(I'p MP
b1aidc\./R1PI or) Mo\. - 7 - 2 - - - 2 7 29
Ors -3',812 - 7,251 - - - - - - - - 7\.250 39,SA2 18
Graer (25-35MP Io\. - 7 - - - - 7 - 4 -iS 21'
Graderaa (125-135 ) e - 21,831 - - - - 27,683 - -23,897 - -47,80WO 1,3 It\.
Gravel Loadersa (70 HP)No\. - S - 4 5 - - 5 £80
Drs - 12,437 - - - - 12,568 13,77 - - - 28,3\.7 12,4\.37 L24
Dump Trtscks
1750 NP& 42c) Mo\. - - 2 2 - 4 - - -\. - - - 2 33
Ore - - 24,930 - 11,608 - - - - - -i1EOd 2%\.!iAC 47
CoffVrf;rsors
(Trailer Morunted) No\. - - - 12 - - ' \.
Drs - ,70 - - - - - - 6,7 -
(Tractor P1iNanted) No\. - - - - 6 - - - - - - - - - 6
Drs 6,615 6,61j
"isjcellanpot,a on\. - - - - - - - - - - - - - --- -
Dvs - - - 25,142 - - - - - - - - - 25,\.412
T4\.-tal Drs 101,817 - 32,3gb 38,115 -s'l95 - 37\.675 - -47,800- l'J**k 1j4J\. , '\.P *
P\.arhi,so Mai,ntenance Equipment
Nab1l'& Repair Workshop No\. - 2 - - - - - - - - - - - ---
bra - 5,250 - - - - - - - - 250 -
Perwmanont Workshop No\. - 3 - - - - - - - - - - - - - ,
bra 7,875 - - - - - - - - - - - - - - 785
Tools for rxufstimg
Workiihops No\. - Various - - - - - \. - ,- -Vazio~aa\.
Ore - 2,625 - - - --- - - \. 2,625 -
Total 2' bra - 15,750 - - - - - - - -is ,7 -
2/ Major and smci' maIntenance common]:y undortaken by private enterpr1sas\. ccusquontly \. there Is nao requiremuent for permanet workaahcpl\.
0
* ~~~~~~~~~~~~~~~~~~~~~~~~4
Y ear I Year 2: Year __ 3 Year, 14 __ __ _ t- I
I tem t No\.; t 1980/81 : 2\.981/12 ;t 19283183/814 1 hA9S14TS_F I
&Drs: A :~~ E : A E s% A : E :% : A E % A E :5 : :1
Tanker Trucks\.
5 Ton/44WD); I/ so\. - 2 - - S - ' S - - 12
* Ba 2,112 - - 882 7,318 - 415,812 -
(lo Ton/1WDi) NO\. I 2 - I 21400 - -- 6I0\.
or* 2,237 S ,370 63, 5 *\.157 1029, 63037~~ 1376 1460
rire Trucks \.
(17006J14WO)\. lie -\. 2 -\. - I 27 14675 -\. -- - - 21 10 270
o re 6,087 - -14,810 - 110\.580 16,732 661 - \. - -110,,59(i\. 37,4'2, 2IS
Buses (25 pesajeger) No\. - 2 - - 4 - 4 - - - - - - 10\. -
* ra 3,950 9,3\.00 10,870 - - -214\.30C -
IIAwi Radio Units "a\. 12 - - 12 -~ 70 12 583 - 12 - 183 12 1666 1 6(i\.l'
D"s 22S 270 - 2,170 309 702 -, \.3142 - 11,WO- 376 2659 1)\.6*'/( 1,622 632
Mobile Radio Vnlts No\. - 10 - - 10 - 70 10 700 2S5 iD 250 t00 10 1000 )\.J!\. SG 3w1
D"e 375 - - 460 - 1,1905 516\. 369 1,000 570 \.175 7\.65' 627 21116 10 fib- 2,538 *: 1
Base Radio 5thtions No\. - 2 - \. - 2 - - 3\. - 25 2 21250 - 2 - 7\. 1 27
Ore - 165 - - 196 - - 3140 - 14,1Z9 151 2980 - 276 - 14,136 I1,131) 36b,
aotor Cycles Moo\. - 7 - -, 7 - 70 \.7;1000 -\. 7 - - - * 7', 36 200
* re - 262 - - 15 - 3,962 361 1069 - 398 - - 1439 - J,862 1 ,71t\. 21-1
cd,alnnsaw NO\. - S - 88 -S
D ra - 200 - - 2140 - 2715 - 3084 - 334 - i- ,6 -0
Back-pack Pumps M\. - 614 - - 614 - - 614 - 614 - - 614 , - 32L, *
Drs - 2140 - 297 - 3141 - * 377 - - 1415 - I 2\.671 -
Lirnoculars * No\. - 20 - - 20 - - 20 - 20 500 - '20 -\. 10 -
Ore 8 - 102 - - 117 - 129 232 - 1142 - 571 -
Other £quipmek N\. Various - - - - - - 2,3 10\.
Dre 1,587 ~~~ 485 - 3,186 - 48,364 - 2 - - I '-8 3,278
Ilar-ienger Vcid loe
Up to1000C No\. - - - - - - - - - - - \.10 - - A -
Ore - - - - - - - - - 16,920 - 2600
loud Speakers NO\. 200 - - - - - -- - 2(bJ-
ore - - - - - - - - - - - 2,264 - 2\.264' -
Firemen Axebs I No\. - - - - - - -- -
Total 2/ D r& 11,532 - 485 37,670 -186,806 143,308 - 3,SOO: 23,719 - 43, 1?1 26,091 - a7s\.1a& k8\.0 is/
\.1/ Large tan*er prefrred to emali;mare tankews ed truckp required\. 20 buses procured outside project\.
'5/ Due to serilous fworst fires In recent year", Goverrment has inteaisifiled fire control services\.- Ij\.
G REECE
\.NTEGRATED rTORETikYDEVEl1'H\.ENT PRJECT \.
I £Eumment for -Nrseries, Plantatioa n, ?ransvort and Administration
j I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
\. year 1 2 Year 2 Year 3 : Year 3: Year 4 ' Tota1
I tam :No\.: 18el19 TI82 1982783 1983/84 a 1984/85
:Drs: A t E :*: A : £ :% : A : E :1: A A : ': A : E : A : : :
tiurser-y Hachinve And Implements
Tractors lwheeled
60-70oI r/440) No\. - 2 - _ 1 - 4 1 - - - - _ _ 4 41lu
Drs - 1,325 - - 755 - 4,000 \. 912 - 4,000 3,012 132
Rotovators 1/ No\. - 2 - - 1 - - 1 - - - - - - - - 4
Drs -\. 162 - - 97 - - 112 - - - - - - - - 371 -
See4 Cleaning
Machine\. 1/ No\. 2 - - 1 - - 1 - 4 - - - - _ 4
Drs - 62 - - 37 - - 3 - _ - - - - _ \.2 _
Trallors i/ No\. - 2 -, - i - - 1 - - - - - - ;; -
Drs - 157 - - 94 - - lO0 - - - - ' - - - - 35 -
tlzne\.cqujp\. a z4ixe\. No\. - Various - Various - - Various - - - - - - - - - Various
Drs - various - 11,991 - - 7,903 - , 9 - - * - - 1'\.)\.80; VarioUs
Totat , Ors - 1,707 - 11,991 1,024 - 11,903 1,174 \.341 - - - - - - ,jt\.i 3,055 T
Fl4ntation CLstpment
Ci~\.tiag Makes No\. - - \. 2 - - 5 - 5 - - - - ;I 10 20
iDrs - - - 809 - - - 2,623 - - 2,897 - - - - 809 1,040 7 -
I\.oavy Duhty
Tine PoW , No\. - - - - - - 5 5 - 5 - - - 5 Jo \. 1
Dra - - - - - - 540 3,913 - - '4,322 - - - - 5"c 8,23M n
LowLbower 2/, No\. - - - - - - ' 1 - - - - - - - - 1
ors - - - - - - - 8,501 - - - - - - - - i -
Crauwler Tractor\. i
(10-901W) \.' No\. - - - - - - 2 - - - - - - - - 2 - -
Pro - - - - - - 2,479 - - - - - - - - ?,u7u '
Ilanting Machine No, - - - - - - 1 - - * - - - - - 1
: Drs - - - - 35 s - - - \. - - 35 i-
1/ Not required; equipment obtained from merging of existing nurseries; reallocatton proposed to paper po,t nurseries and seed testing unit\.
N ot required\. d \. u
ol~
* a~~~~~ ~ ~~ I Ye*ar I1: Yewr 2: Isa I Year 4as Year S jA\.
Item silo\.: 1980~~iss/SV : 1981/82 It 1982/83 1983i'6'\. 1984/85
sOrst A E :%IL: A s E : A t E sa A1 E : : A E £ % A: £ r
PLanitatleoT Equlg=et (Contin~ued)
CrawLlerj Tractor
(90-120 Hfi) No\.- - -5
No - - - - 39,6305 - 3!l,63
Ntsacellanelous Tools No\. Varlous Various V- V\.o:rn - Variou Various various Various V\.arloujs
Drs 1,030 2,500 -21,243 3 a- v\.usW 12\.651 - b\.019- I,i, 2,56C0 -
Total 1/ Dr, 1\.030 2\.500 -22,052 - -36,113 13,037 -1S,832 a\.goo eo, s99 - - 218,,6 61:1
Pile\.t Planttation fleseoarch
2iiWiTH Crawler Nto\. - 2 I
Ors' - 12,300 - - 7,380 - 10,850 - 9,880\. - 9 -2tSr 616
120-150 HP4xi go\. - 1 - 1 - 1 - 1 2
Ores 1,887 - - 2,265 - 1,500 - ,8660\. 5,600 - - 12,,6 :A 3,(-AC ,,iu
100-IOHP-Crawler No\. - 1 - 1 - - -3 - - -1 d
Or's - 187 - - 2,265 - - - -1S,66i - - I I ft ,12 3??'
70-80 HP'ac No\. - 2 - - 1 - 3 1 - I - -\. \. IPC,
* re - 1,325 - - 795* 3,000\. 912 - 3,191 - - t,i\. ,-t 3,itjj' ;,4\.0
*50-O0 Hp \.4a# go\. - 1I - - I - 2 - - I I-Ai
D rs - 4\.56 - - £457 - - 5,760\. - - \.2 2§0 - - \.0i I
Tine Plows Lartle No\. - 2 - - I - 4 - - 1 - I
* Dis - 1,137 - \.- 682 - 760 - - 620- - - 600 - - , a 1,:Y jkL
Ti"e Plows Hod tumn
(land reclamaition) No\. - 2 - - 2 - - -- - - - --
Drs - 587 - - 705 - - - - - - - - 1,;n2
Clearing Rakes NO\. - 2 - - 3 \. - 1 - - -- - ~ C
Ora - 762 - - '457 - \. 304 ZJ\. k
I ,
: Year 1 s Year 2 s Year 3\.: Year 4: YeaW s:_
Item :No\.: 1980/81 a 1981/82 : 1982/83 1983/84 : 1984/85
_Drs:\. A : E : : A A :tE : A C : A : E :A:
Pilot Pl\.antation Research (Continued)
bisc llarrows
Trailed - leavy No\. - 1 - - 1 - - - B - - 2 - - 2AJ 2 *&J
Drs - 281 - - 337 - - - - 2,80 - - 400 - - 3\.?EA 616 "id
: mu\.,steJ - Orfret No\. - 2 - _ 2 - _ 2 - - - - - _ _ ! e -
Drip - 237 - - 285 - 327 - - - - - - - - 849 -
Disc Plow
%-Tine,\.Hgontel No\. - 1 - - I - 2 - - - - - - - - 2 2 100
; Drs - 162 - - 195 - 280 - - - - - - - - 280 1357 78
Scrub Chopping
Machine (eleaning) No\. - 1 - - 1 - - - - 1 - - - - - 2 Su
Dri 662 I 79S - _ _ - 1$0O - - - - - 1400 1;,5' 1\.
Scrub Chop Kech\.' * 1
atntenance 2 - -70 - - 1 - - - - - - - - -
Dr+ 570 - - 95#4 - - - - - - - - 924 -
Brush Slasher
Rotary wIol - 1 - - 1 - - - - *4 - - 1 - - 2
Drg - 94 - - 112 - - - - 1,050 - - 300 - - 1,3-0 206 LSt
Planting Nachinq Nos - 1 - - 1 - - 1, - 1\. - - - - 1 3 33
Drg - 381 - - 457 - - 524 \. - 1,279 - - - - - 1,279 1302 \. O
Herbicide Sprayer NoL - 1 - - 1 - 1 - - - - - - - - 3 -
\.' Drt - 56 - - 67 - -* 524 -4- - - - - - - ;1 -
Fertilizer Distrib\. NoL - 2 - _ 1 - \.- _ _ 2 - - - _ _ 2 3 *7
' Dro - 62 - - 37 - - - - 460' - - - - - 960 i9j
Halt Track Asscib\.Aes No'\. - 1 - - I - - - - - - - 2 * ¶? 2 lr
DDr - 237 _ -\. 285 - - -3 -0 - - 3\.460 _ - 3,-1U ! 4:?2 b °
Pickup Truck 1/2 ton No\. - 2 - - ' _ _ _ - 2 -; - _ _ 2 3 67
Drp _ 912 - - 547 _ _ _ -,1,594 - ' _ _ \. - - q4 1,4b9 iOq
_ _ , , ;~~~~~~~~~~~~~~~~~~
Y ear I1: Year 2: YAea-r 3:i Year if I Year' S\. Total
Item :110\.2 1980/SI 1981/82 : 1982/83 : 1983/84 : 1984/85
:Drs: A\. : : A :6 :\. A E: : A' i :tS A :\. :5 A1 £ :
Pilot Plantatieui Research (Continued)
* Low-LoAdlng Trailr
(4 ton) NO0\. -* 2 - * - -2 -6 6 (iJ
Drs 187 - - 112 M 9 520 - js 299 ':?t\.
rield Vehip1es 4x4 NO\. - 2 - - 2 V - 2 - 6 - - - 3 zil
Oras - 1,235 - -1,590 :- - 1,823 - 4,9156 - 4,10j 'a*L48 8
Exotic Seeds, Toole\.
"inc\.Tools,\. etc\. No\. - Various \.- - \.- - - Vawioas Various - , -Various -
Ds - 2,125 - - -\.- - 2,0S1 - - 91 1$_ ',rt 2\. oI60
'Total ~Di's - 27,862 21,4142 -16,380 5,409 -57,479 34t l54,213
* omestry V\.hiclea
Buast-% (1t\.paoscnger') No0\. - 4 - 2 I- 10 4 - - C 10 IG0
Di's - 6\.350' - - 3,810 - 6,172 8,737 - - - - - -\.6,172 13,89-7 33
Trucks (3-~ton) No\. - 4 - - 2 ~ - - 3 \. - - -
* ~~~~Dr's - 3,175 - - i,eo0 ; - 3;276 - - ,bBm -
Irield Vehicle 1
* (lictit is D) No\. - 1 - -\. - - 2, - \. - - - - 2 'Ai 67
Dr$s - 662 - - -- 1,400 912 - - - - - l,tfo 1,06C 89
Pickup Triock (4VD) No\. - '4 - - 2\. - 3 - - - - - -
Di's 1,825 - - 1,095 - 1,883 - 4\. - - *-- -0-u,o) -
Total Di's 12,012 - - 6,810 - 7,572 14,809 - - - - - £ 7J152 3u,630 -'
Lojine, Persorml' Vehicles
aw,es (lb PssenerYNo\. - S - - S - 28 - - - - - 28 10J 140
* ~~~~Dr's - 7,937 - 9,525 -13,428 13,12 17,462) 77
Buses (25 piissengez4) No\. - S - - - ---\. ---*-
* ~~~~Dr's - 9,875 - -1130 - --- -- --2\.75 -
FIslid Veoic1es 9
(Light,4 ND) No\. - 17 - - 1-7 - 10 - 20 - - 10 - -4 II,) 3\.i
I ~~~~Dr\.s - 11,262 - - \.13,515 - 4,541 -14\.44k 17, SW - - 5\.'1o 24*\.7 V1 147
Total Di's - 41,087 -* - 41,700 -25,541 -144,442 - -17,\. \. 95ilm,W~h
I/ Fipguures co*bLne4 withi Loggdng Personnesl Vehicles\. \.
2/ rigusacoerbinad with Forestry Vehiclea\.
I z Year I: Year 2: Year 3 : Year 4& : Year S
Item 110\.: 1980/81 : 1981/82 : 1982/83 : 1983/84~ : 1984/a5
________ :~Drs A : : A E A : C A I £ :% A : C :% Al C
St!tAmlrrto - DGF I/
No\. 1 - -- - - -1 -
D~~'s - 750 - - - - -- ?
*Tyg'ewrltera NO\. - 2 - - - - - - 2
Drs 37 - - - - - - -- - H 37 -
Cacislaltors No\. - 2 - - - - - - - -- -
DMe 13 - - - - -- - - - -13 -
Pilcot larigeo Igt\. NO\. - Various - - - - - - -Varicus\.
Dye - 6,125 - - - - - - - - - - -
Tolat *Dra - 6,925 - - - - - - - 6,'J25
*PrfJe\.ct Mministretion- RPDS 2/
(liglat 4 ND) NO\. - Ali - - - - - 4
Disn - 2,6S0 - - - - - - - 4 2*E50
* ~~~Typewrniter$a No\. - 5 - - - - - 2 - - -- -45 -
Org - 94 - - - - - - - - - -
CAICOO~torG NO\. - 5 - - - - - - 2 - - -
Hci\.ellaneoot;a' 1 -- \. - -3
(Reg\. Dev\. study) No\. -Various - Vax -ous -n
Dins 3,750 - - - - - - - - - - - - -3,75L'
Total ~~~Di's - ,S25 - - - - - - - - - - - 6,S2E -
I/ Net required;I vehicles and equipment available to P2110 from GYS\.
2Z/ mot requkrqA; vehicles and equipment available to P2110 and regional office from ItPDS\.
- 106-
E, A A I ae^v
Oelog?d 'roVect C;o)Sf \.'mc7 tis Ond aCA1,2,erfor-,aw7ce
sayt rD-\._ !m is?*a 1\.5 ,8 2, ,,; _\. 4i \.
Jo/ 2 j"eetf At* I Os 0, dt i \. o
ibftt e,,, \.a \. Oto \. , ,, \.,
(016247 qe* 7er\.e }} f\. | 14 gooD t1 *tg 41 4 e }JO \.4 Its 44\.
0 -A l e 2hf\.xr @5 "f 2
7^&~~~~~~~~~~~itisw_0-4 610 45 J,' f;4: i\.0 * t 4 21\.5 2 1 5\. ,i'
¢%S>of~~~89 24V f& im 'fW O 4 _\. It }jt2 a l j4 s04
=t; i5N's~~~~1/A 2 J t8t5 0,3 |a3, 7 l 4 f, , 14, 2
96 p J li °°J'\.4f2 4 | 94 I-'s e a3; J20 go 2 <40
x>@@> ,s z - I/swn szoll a5 700 I4\. s-2 24S$i 5§\.3
Xtl~~~~~~04 Tz*I! IY I11 Si 6s3 igt; 2|0 08 dtA - Z- $\.0! $4 13
>;yvv¢oe2\.+Ksor~~ &M 1 919,iI\. 2,9S te 54 915\. 01 MS 7 2SO 11\. S\.7 ,g*
i c > t 4~~~~~~~~~~0- I e62 e e|\.* |0 0eg vcol 0,4 | ,2 |,J to§9 |\. 4\.j *J6t4\. 61,S|
-RttrflffttFfOt -_M -le 251 fIlS§ |g ,6| - |-|- o\.0 | - | \.s - | 0\.6^
; 1e i-^^=tl~is\. 0i \. a\.o *-0v 40 - fq 5wll aq {° 7 \.1 *\.S ° 6\.01JOd
l<t 0e6wcs*1,7 1*7BI~M ol k s2$9, 7 icsg \.2 0,J1 0,91 0\.6 1 ,J 0,7j 0,6,6 8s\. o
r "s ,eetsa\.e 1 9\.0 71141 4t81 or,4 66's MO O7S,o O'S §| , i' t,4 i' *,149 |71,6 73, 6
Oltrv= or 4l 94 \.o; 36,,1 4A\.O11,6 510,0 0\.31 O\.J | *ol 421 J3 |O\.s 7t61 66\.6
1 ub;=-r;~~~6 ji,~ 6 °\.S| 68 2Xe| 7w8 q2|- O | 0,6 Q 017 ^|o 3,7 tO°,°|
{^^j:,if S~~~2\. 1, - t4 |-|l\.S0 J551 46,0 Aj °,1 | J|42 | °4 |°J 20| a6oS |6
{a95 ex7¢a Sr-/?44A 451 0\.4 4,41 0\. 4,9 |L*ol-|-a | , o,1 O| o\. | to4ole
tS\.*9S,z,loo}0\. O \.3l- 5 tg -} -} - o 0,2 6\. - |90,0t -
|~~~~~~~~o\. )2F2Wz4,6 "4 5w,0X F|f014|S 4j 42\.7 iW°\.1tI 1,0 1\. 97 1 FF1 JXQ° 6,076, St
AJXWYAeAO {- J(dCC I I I I
r\.J\.4m YSrs gF'Poopw2f,5| 3z| 0t\.1 T\.* 440| St9 0 0\.1 0,3|o¢|- | {f O\. $0| \.1|
0,j<t 1\.!00C 1 J\.i C3 S\.0 | 161 6s,0l 14\.9 7,0 l- A| o\.|04 q4 4;41 °\. 5 1\. 93 ig 0
6;^e,Gef°it;g: t4ubrX2|J,4| 0\. 5| t4|22, tbqse \.41 49 |021 412 0\.6 | ,l| 5Z4 1040
-A-;v ,t to J3,9 : I sol i22 e O q ,2 010J| 44 - \. 0 |a 6 | \.5 -
i~~~~~~~~6\.6 -; 9t 26| - | |\.9 7 1\.612|05 - | 2 1|t7 | f*|-|
YVy0O"A1- Sa&io | f, 106\.51 9f\. 31 84 |2g02l9? 52 10\. |q CT |b °\. 7, 7 |2tX2 319 J t4t
l-tr¢-6"^2^11~ ~ -Z 1Oq-l l-1'1-1 - 14S1 -ga'6sl
};w>A\.DWoT;4r^\.4982;etsW1\.s,\. "s \.s gX1g 14\.1"a1i30
^?nf~~~~~~~ew\.,2W \.,! M
EAAA1- GREECE \.All03
tppOAOKAJ4I\.0t4E1 ANjAnlY0tOL AAEOnON2IAZ - IN7EGRATMt FCW9ES7Tt1Y DEVELOPMENT PflOEC'r 10942229 I
XPNWrAM £NW600 rFtoyno*wtecza K(AI rAMLAT01`011210EIZE E~STIMATED SCN-EDUJLE OF EXPENDITUR?ES ANDO ACTUAL\.
1960 136 2062 193 Su4940 ___ 1090IVNA0 374 \.2239
___________________________ ~~~~~~~~~~~~cI A C A I A cIA A IA C I A tI A c A EI A EC A C A EC I A E A C A EC A C A C\.I1
ftAm uct\.~099 1675 491 \.12032\.0 290\.31 72\.0 34\.0 369\.0100\. 93\.Q 273\.4 29\.O 203\.4i 42\.C 83 I237 371 7 423,0 222\.0 322, 124\.4 198\. 37\.1 0\. 245,24360 333\.21 2270 3034 675A "2\. 0 189\.00,05 1 I601\.0 30,7115, a72
0989990 ~~~~~~~ ~~333 224 20\. 14, 522 10,( 98\.16\.0S 22\.4 10\.4 57\.4 250\. JO82 13\.1 24\.0 9\. 62\.0 220 61\.1 31\. 0 \.9 20\.0 67,3 61,0 13\. 90, 07,31 23,0 70\.2 a\.C 27\. 22n0\.9 220\.2 71\.0 322\.4 927 Io'
4 3\. 1\. 4\.3 3~~ ~ ~~~~~\.0 7\. 5\.8 \. \. \. 0 52 \. \. 7 27\.2 \. 5
- 60A~~~~~ 20*3420 391 6~~~~~~~~0 0\.1 II3 i, 1\. 148 $I 4A a 0\.' 26\. 31, - 922 980 a4\.0\.
I41Mpwd8gr49 " dgs" OM 98993 90lO\.O 0 2 ?74 (26 20 *16\.S3 I6\.92\. 251 69 2040' 3 32\.7 22\.51*\.l 952 )V 42\. \.20,3 \.72\. * 301 , Sa \.0 97 \.2 3 W\. 7 903
-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~3 '\. -+ - - 924
AM0 70 09921I'0 \. 7\. 4 052 237 o2\. ooo5 200W4\. \.oo 64,
160A4~~~~ 0986009091920960 29~~~~~A7~ , 920 2 \. 0 , 0\. 272 10\. 04 4\. 2\. \.15 *'90,
row-\.* oil A S I~~~~~~~~~~0\. 3 4 0\.5 543 \.I 00
3067 0"S\. 9\. d 74 0 1900734 6 - 100\.8 110\.7, 241 3231 44\.4, - 7206 223 13 306A 6 85 23\. 2504\. 236 1 60\.3 '00 A I 07\.6 7603% 236\.19173\.1 99\.S5 - 334 473\.2 0g\. 0 2997 W\.0\. - a"27 \.9 "Ofm3as
'Wu" ftqpq onoww Pt omp 105 1706 'to '2-00 L9'70 62 \. 6 25\. V X'2 A 4\.8 30l 35\. 270 13\.0 33\. 3~ 5\.0 16\.4 00\. 19\.3 V\. 421 42 0\.4 202203\.4 3 1 3\.9 24,90237,5 us 2333- 2
anlmha\.bm M2 * 629ISO0799 3 6231 2332\.824 24\.9 2400 790\.3 0749 665\. 1254A 268\. g 530 0'S lO7bI 736 19613 220\. 100\.0 104 3603 107? 30321 31 ' 2121173,3332)94 0704\.2 09k1 A2627\.0,439\.9 3M\.2 IM0
699130364 32~~~~~~ ~ ~ 829919319000 66 75~~~St 62 3 0 \.9 61 3\.4 016 A2\.0 91 22\.4- 5\.' 66 S, 51 V\.? 9 6,2 4 1, 8, 20\.4 26\.09 to 36449 1 22\.0 '210\.0 Do
2 3216 21\.4 46\.8 26A I \. 0\. 22 021,4 18396 n\.- 31 124\.4 6\.7219 20\. 4 \.21it 25\.1 22\.4 81,1 - 82314 0040 207 0 32\.2 '00\.2 o? 10\.-as
______________________ 63~~~~~~~~~~~~~o 0\.7 02 0\.3 0 1\.0 O\.,41\.0 3\.1Aa03\.0 2 0 I S0\.1 43 A 6 l\. 26\.1 1\.3 { 13\.0 A '0\.8 0\.v 5\.2 3,2 M9 '\.0 M~ 42 4\.8 13\.6 120\.4 27\.6 239,107310
omm- NV3690720\.9869 00\. 269 06 - 06 \. I 04 3\.01 2\.5 30 0O\.9 1\.9, 0\.4 5,D 05 73 0\.0 122 \.- 23 8\.0 2,0 29,30 3\.6 24\.01687
ro - - fa- _ M988 169 3433 20 46 23 86\. ~2, 2,\.7 '0\.2173ID17\. \.711,2 5 3 I620 4 A4825 5 7 5 5'3\. 00, 6,0 7 17\.8 72 30\.0 10\.2 48\.2 1110\.92I3
ft949061 wdq VW p01O1tactm "own9134 6 4 10 4 -\. 14 4 0 21\.1 3D3 0\. 10\. 40B 205 183 391 1069 3\.4 1\.0 '\.I17, 2\.1 63\. 0\.4 S'T 1\.8 3 2,2 90\. 25,4 71\.4 074 207\.2 87\. 2I I43
82 201\. 24 \. 0 21\.2 20 S - 205\. 25 2\.0 22,5~~~~~~~- 1 V\. 4, 2\. S55 27, 22,0 0\.0 62\.4 41,0 03,2 90\.6\.~7\.
30~~~\.F0003 9919@2 ~~~~~~~24 '9V '0\.8 1 3, \.5 0 7 731 * \.7\.6 0 \.6 30\.0 7\.2 27\.5 77,
C\.116C946608\.01\.2 1220- 14\.8\.0\.j45\., 2\.0 32a\.0 480 24\.9 4 M6
("n-1 6-*00-4- P"2ne momt 0 1 a0 2\. - 0 \. 21 \. 0 0\.2 0il 0\.3 0\.2 05 31 0 2 01 03, 0\.; 0\.5\.0\.s 06 S\.1 08 3S\.7
- _______________ ,~0L 36 374 '70 4\.4 20\. 1300 2 \.1,60 02 660 0120\. 00 0 24 AS$ I-57\.4 3129 61\.6 17\.0 637 22\.2 1502 I\.2 2025 2043 016 2, 216\.1 69\. 259 142,0 276 0 63\.7 773,0 343\.3207 22
&Pmft 09910919840 52 2 5 0\.4 7\.30 7\. \.'626,4 2\.0 8\. Di 1,4 0 710\. o9\. - \. - O3\.6- 10\.6\. \. \. \.6 \. \. 3\.9 34\. 3\.0 00\. 0
roNq am* mAck 9 99 99999\.0223a0 09 S 20 0 2\.5 2\.4 3\.8 \.2\. I\. 0\.5 6\. 26A 50 2\.2 808 ~5 j 2 A 6 A 2\.0 19 \. 92 2 \. \. \. , 6 1, 2\. \. \. 2 40
1~~3~~31934396 ~~0909w99440gW-NW d 9 10 =, M7\., - 2\.9 - 5\.6\. 9\.2 \. 08 2 1\. 89 906
"M" VW* k-r-Atow ",ay6\. 1 7 22V 27\.3 21\.2 40\.5 30 22 52 \.23 - 5\. 2,
4194" 3 t0o 0300047 290\.142 s058 6\.26 099 97 47 32,3079205 15 0\.20630,41,07720188\.346 8117\.220440 30, I3 79\. 6M\.I I8\. 73, 2
Mae\.2 4* A 066 517
AIkE Iv
PROJECT COMPLETION REPORT
! ~~~GREECE,
INTEGRATED FORESTRY DEVELOPMENT PROJECT
(LOAN 1718-GR'
Aa\.ra4ca1 Rov4ced £5timat\. and Actual Ctmuulative Oisbursoments
Cumulative Disbur4ement at End of Ouarter
IBRD Fiscal Year ---------- Revised Estimates or Actual Disbursements --------------- Actual DSisbuTsed Cospared
and Ouarter , Angraisal Oct\. 12 Feb\. 1984 SeDnyLt\.984 Mar, 198S QOct, 198 Mar\. 1986 to A nuajsjlka\.
i(USS Mllion) ------------------------ ____-
September 30\. 1979 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
December 31, 1979 0\.1 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
March 31, 1980 0\.6 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
June 30, 1980\. 1\.2 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
September 30,,1980 1\.8 0\.0 0\.0 0\.0 '0\.0 0\.0 0\.0 0\.0
December 31\. 1980 2\.8 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
March 31, 1981 S\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
June 30, 1981; 6\.9 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
September 30, 1981 7\.5 0\.2 0\.2 0\.2 0\.2 0\.2 0\.2 2\.7
December 31\. t981 8\.6 1\.0 1\.0 1\.0 1\.0 1\.0 1\.0 11\.6
MarOh 31, 1982 10\.8 1\.3 1\.3 1\.3 1\.3 1\.3 1\.3 12\.0
June 30, 1982 12\.7 1\.8 1\.8 1\.8 1\.8 1\.8 1\.8 14\.2
September 30\. 1982 13\.3 4\.i 4\.2 4\.2 4\.2 4\.2 4\.2 3!\.6
December 31, 1982 14\.2 4\.8 4\.8 4\.8 4\.8 4\.8 4\.8 33\.8
March 31, 1983 16\.0 S\.6 5\.6 5\.6 5\.6 5\.6 5\.6 \. 3S\.0
June 30\. 1983 17\.5 6\.9 6\.9 6\.9 6\.9 6\.9 6\.9 39\.4
September 30, 1983 18\.0 8\.2 8\.2 8\.2 8\.i \.8\.2 8\.2 45\.6
December 31\. 1983 18\.6 11\.2 9\.0 9\.0 9\.0 9\.0 9\.0 40\.4
March 31, 1984 20\.1 13\.0 10\.2 10\.2 10\.2 10\.2 10\.2 49\.3
June 30, 1984, 21\.3 16\.0 13\.8 13\.8 13\.8 13\.8 13\.8 \.54\.9
September 30, 1984 21\.7 18\.0 1S\.7 13\.7 13\.! 13\.7 13\.7 63\.1
December 31\. 1984 22\.2 22\.0 10\.S 15\.0 14\.6 14\.6 14\.6 65\.8
March 31, 1985 23\.7 23\.0 20\.7 16\.5 15\.1 15\.1 15\.1 6)\.7
June 30, 1985 25\.0 25\.0 22\.0 18\.5 17\.1 \.17\.2 17\.2 66\.8
inn~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
September 30, 1985 21\.5 20\.1 20\.0 20\.0 80\.0
December 31, 1985 23\.5 23\.5 25\.0 25\.0 100\.0
March 31, 1Q86 25\.0 100\.0
E Extension of Closing Date from June 30, 1985 to March 31\. 1986\.
Annex V -Table T-1
Projected Production of Forest Products
('000 m3)
Year
Product 1986 1987 1988 1989 1996 1991 1992 1993 1994 1995 1996' 1957 199U 19'
Sawlogs 270- 290 310 350 360 380 380 380 390 400 420 430 450 45
Pulpwood 45 47 50 \.50 55 60 60 65 70 70 73 76 82 -
Fuelwood 300 350 370 390 390 420 430 450 480 500 550 560 600 b;
Free iollected 635 663 750 690 695 680 680 715 760 750 707 684 668 6
T o t a 1 1250 1350 1480 1480 1500 1540 1550 1610 1700 1720 1750 1750 18G0 18(
Source : Division of Planning and Studies, Section of Forest Statistics, Ministry of Agriculture\.
-110-
Annex V - Table T-2
Production of Forest Products_
('000 m )
Year
Product 1980 1981 1982 1983 1984 1985
Sawlogs 295 306 260 241 265 250
Pulpwood 43 44 99 39 36 40
Fuelwood 235 440 292 280 317 240
Free collected 523 650 635 570 -742 551
T o t a 1 1096 1440 1286 1130 1360 1081
Source : Division of Planning and Studies, Section of Forest
Statistics, Ministry of Agriculture\.
Annex V - Table T-3
Logging Costs of Forest\. Products --- --
(drs/m3
Year
Product 1980 1981 1982 1983 1984 1985
Sawlogs
Conifers 645 816 1060 1160 1210 1455
Broadleaves 685 792 1030 1125 1260 1545
Pulpwood
Conifers 672 890 1028 1133 1316 1592
Broodleaves 620 820 958 1058 1250 1522
Puelwood 642 840 958 1058 1250 1508
!Source : Division of Planning and Studies, Section of Forest
Statistics, Ministry of Agriculture\.
-112-
Annex V - Table T-4
Domestic Prices of Forest Products at\.Roadside
(drs/m 3
Year
Product 1980 1981 1982 1983 1984 1985
Sawlogs
Conifers 3947 4177 4423 4750 5016 5894
Broadleaves 4492 4908 '5499 6290 5433 6302
Pulpwood
Conifers * 1285 1326 1396 1535 1671 2175
, Broadleaves 1418 1460 1401 1516 2028 2283
Fuelwood 1568 1611 1736 2138 2543 3790
SQur\.ce :\.Division of Planning and Studies, S\.ection\. of Forest \.
Statistics, Ministry of Agriculture\.
- 113 -
Annex V - Table T-5
Prices of Imported Forest Products
(CIF prices in drs/m )
Year
Product 1980 1981 1982 1983 1984 1985
Sawlogs
Conifers 5375 8283 6442 7146 8310 14188
Broadleaves 9277 10420 11390 13627 16709 22999
Pulpwood 6673 8122 7\.43 8224 12189 13173
Note : Prices have been derived from value\.of imports (CIF value)
divided by volume of product in m
Source : Division of Planning and Studies, Section of Forest Statistics,
Ministry of Agriculture\.
- 114 -
\. * \.~~~~~~~~~~~~~~~~~~~~~ ** \.
Annex V - Table T-i
Financial Prices Used in Rate of Return Analysis
(drs/m3)
Output Unit Prices
Year 1980 1981 1982 1983 1984 1985 1986-2000
Sawlogs 4165 4469 4853 5366 \.5182 6057 6057
Pulpwood 1351 1393 1398 1530 1849 2229 2229
Fuelwood 1568 1611 1736 2138 !2543 3790 3790
FreeCollected 1568 1611 1736 2138 !2543 3790 3790
Logging Cost
Sawlocs 660 890 1050 1150 \.1250 1522 1522
Pulpwood 620 890 958 1058 \.1250 1522 1522
Fuelwood 620 890 958 1058 1250 1522 1522
FreeCollected 620 890 958 1058 1250 1522 1522
-115-
Annex V - Table T-7:
Economic Prices Used in Rate of RettrxV Anatysis
, \. \. \.I3
(drs/m )
1980 1981 1982 1983 1984 1985 1986-2000\.
Sawlogs 6561 8387 7777 8987 10803 16551 16551
Pulpwood 5908 7158 6204 6825 11103 11131 11131
Fuelwood 1568 1611 1736 2138 2543 3790 3790
\. \. \. '\. I ,,
* ~~~~~~~~~~~~I
Note : Economic prJces were calculated assuming the following !
transportation cost (including loading and unloading) ;
per m3 from the project area to the market in Athens\.
1980 765
1991 964\.
1982 1139
1983\. 1399 \. *
\.; 1984 1704
*\._\. \.1\.9\.85 \.20\.42 \.
Economic prices for fuelwood were assumed equal to financial
prices because import classified as fuelwood are not used as
dsuch\. Economic prices for free collected wood were assumed
equal to those of fuelwood\.
117 -
InTEGRAED FORESTRY DEVEOPME =-PROJBEr
(LOAN 1718GR)
VILtAE ,F1 WTRUCI= D A
PrCJEC? CiO':M,ICN R~EPORT
- 119 -
I\. Projc'ct TC'\.nt\.5ifiatioe}L PJY'\.LYOra't\.1f)f _t' \.1 'l;
1\.1\. Jarojcct Oriin \.
of
Defore thc cormmenccemnt tlhe Integi-ated Forestry Develolacnt Project,
a "Fas; li\.t-y St\.uy of Forcslry Deve] jnctt in North b ostern and Western
areas of the Grec;k mainland" was carried out by Jaabkko Potiry\. One of thc
principal facts emnrrging from tlis study was that although forest develop-
ment mr\.asures would increase employment in horthern mountainous rural areas,
thcse n!asures wcere not adequate to retaiA population and tjils secure the
requirod labour to be employod in forest activities\. In other words, it was
realized that thc cause of nigration was not unenployment alone, but also
the lack of infrastructural and social facilities comparable to those in more
urbanized regions\. Therefore, in order to ensure that investments into forest
activities %would be profitable, it was thought appropriate to invest a part
*of the Loan funds into technical and social infrastructure and thus increase
the peoples' metives to stay in the Project area\.
To better ccmprehend the rationale behind the conceptualization of the
Village Tnfrastructure Dcvolopment Project, it seems pertinent to refer to the
principal regional problem of Greece, namnely the depopulation of the rural
areas\.
At the- roots of this process lies migration, directecl either to foreign
\.oountries or to the urban centres within the country\.
Migration to foreign countries reached its peak in the 60's and carly
70's\. The regions of, Macedoniia, Thessaly and Epirus, which camprise the
Project area accounted for more than half of migrants going to foreign
countries\. Some of the causal determinants of emcigration were the perception
of more satisfactory econamic opportunities abrxoad, low living conditions in
the areas of origin in terms of health, education, entertainment etc\.
External uit\.gration was considered as the precurso\.r of internal m\.igratioh
Vanifested in th,:! movement of population fran rural comnunities and sunll
provincial towns to big urban centres, maihly Athens anl Thessaloniki\.
Although migration to foreign countries has ceased rural-urban mi\.gration
oonitinues at an increasing pace\. The motives of internal migration werc
initia]ly econoadc\. lky\.hever, in more recent years, econcidc conditions, por
se ceased to be at the origin of migration withing Greece\. It israt\.r ' h'th
*\.
- 120 -
wideningq of the ogap betAwtcn the city\.and thc vil] ages in terms of the ovcra]l
*level of living, iuploynmet, healtlh, education, housing, cultural fac\. I ities
whlich accoun"L for rural-r1xbiu migzcttion\.
A sign-ificmnt factor behind the low service provision and in genci-al, th\.!
low liiving standard in rurral'areas has been, on the olel hand, the frAqTtrnted
and isolated mountainous axcas, which inhlibit the develolxent of a satisfactoLr,
comnunica4-ions network, and on the other, the existencc of a large number of
small di\.sperseLd settlements (a]most eleven thousand settlknonts with a popula-
\.tion of less than 500 and average population-size of 141)\. The latter is a
liability in ternms of the provision of the necessary basic infrastructure as
well as of urban type social and cultural services\. In other words, these
settlcments don-t possess the necessary population threshold for the establish-
ment of economic activities and servicesand, in addition, the limited public
funds have to be spread over a large number of small settlements\.
T\.he area covered by the Integrated Forestry DevelojXent Project exemplifi cd
the above mentioned problems\. In particular, stezady emigration due to lack of
employment opportunities and poor\. living conditions has caused a seriousdeficit
of experienced and willing labourin all major forest regions of the area, cha-
racterized by considerable forest potential\.
Follwcwtng fran the above, the Village Infrastructure DevlorAWent Project
was designed, involving the provision of basic infrastructure facilities,
thereby helping to slow down the rate of emigration and retain youngex people
in these areas\.
1\.2\. Pro ectOective
ffThe Villace Ihnfrastructure DeveJoopnent Project aim-d first to enihance
the quality of life in the forest villageJcs and secondly to improve accessibili\.ty
to markets, jobs and urban type facilities of forest workers living 'in relati-
vely remote mountainous villages, thereby helping to slow aown the rate of
emigration and retain younger people in these areas\. Evidently, the Village
Infrastructure Devwlorment Project contributed to the acheiveantnt of thle chj\.-
ctives of the forestry component of the 1ntegrated porestry J) velopaunt Proje;t
by securing the labour required for forest d\.e\23loJent\. In addition, the
Project fell into line with the country-s regional develoljsent policy iegardl-
ing nral areas\. Specifically one of the priorities of tle latter has ))Cen
\.~~~~~~~~~~~~1
l~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
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the creaticn of ruwal cnaployment and the t\.Apgrading of the standard of living
in poorer initainous areas of the cotutry in order to halt rural depopulation\.
1\.3\. Pro1joct _2eseri pto2*
At the time of appraisal Project act:ivitiCs v:ere planned to be carried
out in a total of 37 villages (with a penranent population of about 19,400),
selected o\.i the bais\.is of critcAa agreed with the flank, such as population
trends, enplc,mir_nt in forestry, and proxinlity to good potential forests\.
Following the aimendment to the Project, referred to in the next section, the
\.number of forest villages increased to 45 (with a permanent population of
about 24\.500 )\. Anticipated Project activities consisted of:
i) The construcLion anC improvement of about\.242 km of connection roads,
village streets and rural access roads including bridges and other
* technical works\.
ii) Improvements and extensions to water\.supplies, including collection of
additional spring wrater, construction of small storage tanks, as well
as renewal and extension of distribution pipes\.
iii) Surface water drainage and torrent control, including construction of
open stonm water drainage channels and small box culverts to prevent
* erosion
iv) Small sanitation schemes, including construction of septic tanks and
soakways\.
\. v) Construction, inprovement and additions to miscellaneous caminiity
* facilities\. These included camiunity centers inoorporating offices
and rest house accomnodation (for visiting d1octors, community admini-
strators and health visitors), cultural centers incorporating library
facilities, day care centres, children's playgrounds, improvements to
vi lUge squares, street lightincg etc\.
* In addition to the Village InfrastrL\.cture Development, the RPDS of the
Ministry of National rconcomy wQuld be responsible for carrying out a regional
developmEnt study in western Grecce, including tle e\.ntire Epirus region, the
islands of Corfu and Lefkada, and the Aitolia-Akaxnania prefecture in central
Grecce\.
The overall objectives of the study were one, to accelerate thte ecolomic
and social developxant of the project care4 (which is one of the poorest in
Gree-ce and yet has substantial forest resourccs and devcioputvnt potential),
and two, to enhance Uti capability 'of thc lUPS -of the Ministry of National\.
\./\.
- 122 -
Eooncnmy to propare intcqt aLcd rc onc\.i dcvcloplyrnt projccts, for fin\.ucing by
externzxl aejencics\. Specific aims of tle studly were: thc developinriL of an
integrated rctfLonal developwmnt fraini\.vwrk providing for inLtcli-ar;es hutween
th e various secLors and (h!veloj1vct projects, the ident:ifcaLion of op),rortu-
nities for irvestnment, constraiiits and irvestmemt priorities inx both L;e public
and private sector of the economy and the preparation of projects to take
advantage of t:hese opportiumicies, and filially the promotion of public ypcrti-
cipation "ivol ing local councils amd organizations in thle design and imDple-
enutation process\. \.
II\. Proect Imnlemntation2
2\.1\. Impl ent\.ation Schedule
At appraisal, it was estimated that Project\. works would be implemented
\.over five and a half years, frm 'mid 1979 to end 1984: The estimated
schedule of physical targets appears in table (Al)\. Hlowever,\.
in
construction started 1980 and was comrpleted in December 1985, one year later
than originally foreseen\. Delays in the start-up of the Project were mainly dur\.
on the one hand to the lengthy approval process of the loen by the Parliament
and on the other to the excessive organizational and staffing arrangements set'
by the Bank\.
2\.2\. ReviSions
* In Februay 1984, three years after the Project became effective, the Bank
and the Greek Government agteed to an Amendment of the Loan Agreement
(letter dated 7/2/84)\. ,
* *Spqcifically, the following changes regarding the Village Infrastructure\.
Development Project have been agreed:
- Increase of the amount of the Loan allocated to civil works for the
Village Infrastructure Developumnt conponent of the Iroject from US
* dollars equivalent 5,8 million to US dollars equivalent 6,5 million,
-\. the\.enlargement of the Villacje Infrastructtire Develolixrnt complorent
through an increase of the number of Projcct villages fran 37 to 45
and an inclusion of additionral operations, prinarily conmecting roads,
- the increase of the disburscntlnt percentage for civil works fronm 20%
to 40% to reflc_t the iatest foreign exchange trends,
- the cxtcjn\.ion of the Los-n closing Date from June 30, 1984 tb Jwne 30,
1985\.
\./\.
- 123 -
The abovo m2ntionccl amnxktmets were cons\.idered nocesscry because of
a) the ccrisiderable devaluation of tie C draChnu against the unxrican dollar,
resulting in Ute decreasc of the rkauik's cv)untcibution to the Y'rojoct's financing,
the deviation from the Project-s implemOntation ScheAule and the lheavy ccantit-
ment of tht\. Greck Public in relation to the expected benefits of the Project,
and b) the decision not to inmplctEnt the jecqional DoveRopoe-nt Stud:y and the
consequent re-allocation of t1he loan Fund assigned to this\. Study ($ 1,2 million)
to the otlher categories of items to be financed out of the proceeds of the
Loan\.
The main reason behind the decision not to implement the Regional Develop-
ment Study has been the elaboration of the,Integrated Mediterranean Programs
which receive financial assistance from the EEC\.
IThe latter cover both the scope and the geographical area of the Regional
Development Study and therefore its inplementation woumld lead to undesired
overlaps and duplication of efforts\. Specifically, the IMPs have been designed
to assist Mediterranean regions in Greece, Italy and France to adjust to
competition fran Spain and Portugal\. Similarly to the Regional Development
Study, the IMPs promise to be a blueprint for an integrated approach on a
broad scale, being designed to provide an encompassing response to the
specific problems of the regions\.
The IMPs contain mltiannual development operations, similar to those
proposed under the Regional Development Study\. Specifically, to satisfy
their integrated nature, the included operations are mutually cceMlementary
and tailored to the regions concerned so as to facilitate their development-
having regard to their needs as well as to their economic and social develop-
went potential\. Also, provision is made for naximum local involvement
FRthermore, the enlargement of the Village Infrastructure Development
Project through the inclusion of additional villages and activities was
considered a\. a requisite for the geographical extension and integration of
thle Project area\. The additional eight ville\.]ies have been identified in the
forest districts of the Project area by the Regional Project Officers in
co-operation with the prefectural councils and the competent, local Authorities\.
Among the criteria used for the selection wpre the proximity to forests,
population size, income level, develolment nceds and potential\. Besides,
the new road developments, withinl the greater area of the Project villages,
have been proposed by the prefectural councils as among the most inportant
since they provide access to main regional arteries and thus improve the
level 6f conmunications\.
\. 124
2,3\. Plwsical Jim-melnt\.ationu*\.
lIbe Developmnt activities inclue'dx in thc Village Infrastructtvre rkcvelop-
ment Project- were decided by thic compcLtcLt prefcctural Councils in co-operation
with the Reqional Project Officers\. They were uiiinly identi\.fi\.ed out of thle
five-year V1ilage InfrastiLictirc Devel-opjnet Programm (1980-84), as ap,ars in
the appraisal rcport, drLtftol by the Regional Policy and Devel1oment !Senrvice
of the Ministry of National Econcmy in co-opcration with the World Bank\.
Also, account has bcen taken of, first, the before mentioned amendlL-nt
to the Ioan and, secondly, th\.e changing, priorities of the Project in tenns of
both the development needs of the forest villages and the aclhievement of the
Fbrestry Camponent objectives\.
More analytically, during the period 1980-85, about 3 mil\.drs have been
disbursed for the implemn-tation of '428 woRrks of technical and social infrastru-
\.cture in the identified forest villages in the prefectures of Kastoria, Grevena,
Pella, Florina, IYikala, Karditsa, Evritania, Phthiotida and loannina\. Specifi-
cally:
a\. 2\.071 million drs for the construction and inprovement of 416 km of connectir
roads\. The performed works concern the provision of an erosion free bitu-
minous surface, earth-worlks, construction of bridges, retiining walls etc\.;
b\. 397 mill;ion drs for the construction and impr-ovement of 69 'mn of village
streets\. f lhe performed works concern concrete paving, sidc drains -of concret:
provision of an erosion and dust free surface;
c\. 37 million drs for the construction of 69 kma of rural access roads\. 'Che
executed works concern gravel surfacing, provision of pennanent culverts
etc\., intended to inoprove access for tractors to communal land, water
points etc\.;
d\. 174 million drs for the implementation of water supply works in 40 villages\.
The Project provided improvements to existing supply such as collection of
water fran additional springs, replacement of old, damagod or rusty delivery
pipes, provision of storage tanks etc,; ,
e\. 111 million drs for drainage and sanitation worls in 22 villages\. qhe inclu\.1
works concern the construction of surface water drains, and sanitation faci--
* lities such as soakaways\. or septic tanks\.
\. \.~~~~~~~~~~~
I
\. / \. _ \.~~K
-125-
f\.- 207 mill ion drs for cc,mmi ty facilities in 35 vil\.acles, encoamp\.rsing
multi-pujrlos\. build\.ings, and fDwnilities or, where thcsc were nona\.xistent
the contnructioc of ncrvo buildingjs\. J¶M2 allocation of the disbursed funds
per catrgory of Project item-\. is shca&n in table ( A2 )\.
As appe<ars from tablc ( A2 ), the oannecting roads clenent has absorbod
tho Ibulk of thy disbursed funds\. 91'is is justified considering that connecting
roads don't sixply provide improved accessi}4ility to villages and thereby
improve the gencral standards of living but in addition have great econodmic
3ignificance, similar to the class B roads, being constructed under the Forestry
component of the Project\.
It should be pointed out that certain categories of works proposed for
inclusion in the Project at the time of Appraisal were not finally executed
as not corresponding to local priorities\. Specifically:
a) Project works concerning the provision and installation of hydrcmeters
were substituted by others including the improvement of the water
collection system and the enriclmnat of tlhe Water Supply network\. As was
Confirniwd by the local authorities and regional project officers, the
latter would offer a more lasting solution to the problem of water
shortage\. Furthermore, the enrichment of the water suply would secure
the water adequacy during the summer months and therefore, there w<ould
be no heed for the installation of hydromters to control the consumption\.
of water by the private households;
b) Project works concerning the construction of septic tanks on an individual
basis were \.substituted bY extensions and inprovements to commmnity-wide
sanitation facilities\. In the latter case, the beneficiaries would
comprise all the members of the community instead of a limited number
of private households;
c) The installation of television transmitters were dropped from the project
because they have been undertaken by the liellenic Organization of Radio
and Television\.
Table ( A3 ) gives a picture of the actual physical development achieve-
ments undex the Proj \.ct as against the developlwnt targets set at appraisal\.
As hias been already stressed the Project over cxceeded thic Appralisal\. estirates
as far as road developmcnts are concernod\.
\.~~~~~\.
\.~~~~~~~~~~~1
126 -
Itfgarding thc annual progress of the implenr'ntation of Project act\.ivities,
ccaparinq tables (A\. 1\. ) and ( A\. 4\. ) it, can ec alleKled that apart from thc
de1\.ys invtlvC'x at the con;r^nccmc!nt of tho rroject-, Project tict\.vities pi\.ocecded
according to schedule\. Nevertheless, mnItion slhouild be nade of certain factors
\.which slowed dcun project iinplcrentation such as: shortfalls on allocxtion of
funds to the Project, bad weatler cornditions limintig the construction scason
to 5-6 man !s each year, insuffficient contra5tor's interest to warrant tendcrs
because of thee\.dispersion of projoct activities, the relative mTall size of
each individual contract, the remoteness of Project villages imipeding the easy
tranfer of equipwbnt and materials etc\.
Finally, regarding the maintenance anl operationual costs of Project works
Orepresentatives of
\.after the Project s campletion, as it was ensured by\te Local Authorities in
the context of the sample survey,-charges will be levied on the supply of
drinking water and on sanitation services by the facilities constructed under
the Village Infrastructure Development Project\. Also, with regards to Project
road develo$nerts, maintenance and repair costs will be assigned priority through
the annual Public Investment Program\.
2\.4\. ProjectbCost
The total cost of the Project at completion was estimated,at Dr\. 2,998
million\. This represents a cost overr"r of drs 2,218 inllion ccmpared with
appraisal esthiates\. Particularly, at the time of appraisal, the cost of the
*Village Infrastructure Developmint Project was estimated at about drs 780\.
nmillion\. The cost estimate ,Ass based on 1979 prices and included physical
contingencies (to allow -for possible design variations, has bcen assessed at
20% of the cost oft\.he civil wDrks), and expected price increases (assumed
-increases in local currency costs of 12% in 1979, 11% in 1980 and 10% per
arum theafter)\.
The significant cost over-run in local currency is mainly due to the
considerable bro-adeninbg of the Project soope, following the Amenanent, and
higher\. inflation rates than originally estimated at appraisal\.
The project expenditure over time broken down by works category appear
in table ( A\.6\. )\.
* E
S\.,\.-
-127-\.
2\.5\. Prclivct FinancinS
'The foreiqn exchange cost of t)ia Project war\. £inanced by Uhe World
Bank and U)e Tbkai Bank Ltd\. _
Pngarding the World Bank loan, allocation to the Villagc InfrastrucLure
Develokpm-2nt Project was initially fixed at US $ 5,8 million, and followingc
the aan'er\. n2nt to the Loan, was increased to US $ 6,5 nmllion\. Also, the
Loan disbursoment percentage increased frcn 20% at thc time of appraisal to
40% in April 1984\.
A total of 64 withdrawal applicati,ns, for an approximate amount of
Dr 947 million 6r US $ 6,9 million were submitted to the Bank before the
Loan Closing Date\. Hiowever, the Bank payed only 58 applications for about
Dr 179 million or US $ 5,6 million\. Therefore, finally, the total loan
disbursement on Village Infrastructure Development amounted to LS $ 5,6
million instead of the agreed amount of 6,5 million\.
2\.6\. Institutional_and M erating Performance
2\.6\.1\. Institutional Performance
The Regional Policy and Developwent Service (RPDS) of the Ministry of
National Economy was responsible for inpleneriting the Villago Infrastructure\.
Development couponent\. fhe RPDS already had some experience as the executing
agency for the Evros Development Project (Loan 1457-CR) which included invest-
ments simiMLr to those of the Village\. Infrastructure Developmenat Project\.
In June 1981, a Project's Coordination Office (PCO) was established
at the RPDS, responsible for overall supervision of Project implarentation\.
Specifically, the P0) was reponsible for putting together the annual programs
of works for each of the prefectures (nomDs) covered by the Project, and
submitting them for Bank approval, monitoring and evaluating Project progress,
iprepaxing annuaiprogress reports for review by tle Bank as well as applica-
Itions for withdravrl fra the loan Account\.
Actual planning, design and supervision of Project works was the
nesposibility of the nomos where they waere locatxd\. The Prefectural Councils
i(nczms coXuicils) in each of the namos had tha responpibility of reviewing
and-then deciding the annual pLrogam of project works prepared by tle rcprc-
sentatives of the Local Authorities in co-operation with the representatives
£rmm the naos lechnical Scrvice Deparbimnts\.
to
/~~~~~~~~~~~~~~~~e
- 128 -
The projcct was exccuLod by tho\.rcijicnal a(jencies of the M\.nWistry of Public
Works alonqg with the Tecmnical Scrvicxs- of tho Ncnmarchy\.
At tho rejLonal lelveo, a icgionwl\. Pro:joct Office (RrW) was set %)n wLthin
the existing regional agencies of the BUDS, for each of tlc four regionv to be
covered by the Village Devoloprjnct componnit (ic\. Ccntral Weistcrn Macedyonia,
hEpirus, lhessaly and Central Greece)\.
'nhc \.gional Project Offices ware staffed hy a Re ional Project Offic'er
asaisted by at least one engineer and one technician\.
Each RPO was assigned the responsibility for overall co-ordination and
control of Project implenentation by the norps technical departments for the
villages within its region\. 1-brecvter, the RPDs were responsible for a) putting
together an annual program of works proposed for Village Infrastructure Develop-
nent in the prefectures of their regions, including detailed cost estimates
nd\. background data, to be submitted to the RPDs, and b) collecting annual\.
information requir-ed for Project nonitoring, preparation of progress reports
as well as withdrawal application\.
2\.6\.2\. Operatinc Performance
The overall performance of the Project was considered satisfactory\.
However mention should be made of certain limitations which impodld the imple-
mentation process and which must be considered in any future Development
Project\.
First, some delay was evidenced in the preparation of tle annual FatJram
of Project wwrks due to the retarded preparation of the ovcrall national Public
\.Investments Program\. Cbnsequently, the annual program of Project works was
\.submitted to the Bank for approv\.al between March and July,of the samw year
instead of the anticipated at Appraisal date of 1 Decenber of the preceeding
year\.
Secondly, considerable delay was involved in the discpatch of withdrawal
applications to the World Bank because of the following:
a)) as a result\. of the bureaucratic strmicture of the Public Services, a long
time lapsed betwpeen the execution of the Project works and the paymcnt of the
contractors and b) the collection process of tlhc variou-' supportive doc1mznts
concerping the expcnditure incurred\. was rather lengthy mainly due to thc
unfavoirable wcather conditions :mpeding the visits of the RPO staff to the
Project villages aid the absenice of a well organized schdale for the dispatch
- \.129 _
of the relova\.nt docunintation from the Iuxal Authoritier\. to the \.RVs\.
Thi dly, some d^lay was involvod 1-i the suhmission\. of annual nrogress
rC]3Drtf, v JIilch c\nvered thc phyri:ical aspect of projects progr\.ess and asc'i\.-itod
financial cxcmitnrwnts, because of on tle one hznd the lerigthy processing
of the neccssay docimntati6n for civil WOLIks by thlo prefectural siervices aid
on the other the dlifficulties c\.xperiencod by the Regioi)al Project Offie-rs
in collec';ng the necessary docime\.ntation ficm the villages where the Project
works were implencntcd and their dispatclhing to the RUDS in Athens\.
2\.6\.3\. Monitorinq of the Prgicct Trogress
* Project progress was monitored by tI Project Officers at the regional
agencies of the RPPDs, the technical ser-vices of the prefectures and the Project
Officers at the RPDS of the Ministry of National Economy\. Generally, the moni-
toring systen operated efficiently, measuring perf-irnance against agreed targets,
providing an early waz-ning of project implementation problems, and acting as a
basis for suggesting remendies enabling thus the Project to be adapted to changing
circumstances as necessary\.
2\.6\.4\. Bank Performance
A good rapport has existed between the Bank and the Regional Policy and
Development Service of the Ministry of National Econcmy, which as has been
previously\. stated, was the implenentation agency responsible for the Village
Infrastructure Development Project\. The\.Bank actively assisted Project Prepa-\.
ration and imnplenentation\. Particularly, during the missions carried out'in
the five-year period of the Project, the B3ank's representatives provided tlhe
\.necessary expertise and useful guidance in discussing project related issues
and also\.in reviewxng progress on the preparation of the Project's carpletion
* report\. In addition, the Bank wzas flexible and considerate in agroeing to
mndify the Project both in terms of its content and duration (Increase in the
number of Project activities to account fo,- the cancellation of the Rogional
Development Study, extension of the Loan closing date, increase of the disbursc-
ment percentage for civil works from 20% to 40%,\.to bring it in line with u5-
dated assessment of forcing exchznqe requrireient)\. Also,\. there was no much
delay in the Bank-s paying the suLmittcd withdrawal applications\.
Nevertheless, despite thc fact that thc Baik \.aareed to kee the Account
open for withdrawal applications up to March 31, 1986, six applications for am
amount of Dr T68 nillion or American $ 1,3 million submitted by the RPI)6 %]-\.l
before tlh Loan closing Date were nOt fioal]y paid by tle Bank\.
-At
- 130 -
II\. ,y~av4 S\.
3\.1\.Hethod OF Invec\.t-igation \.
* A sample survey was caLriCed out in tle frawmwork of thle evaluation exercise
* with thq\. pupose of assessing the socio-oconomic impact of the Village In£ra-
structure \.lvelopewnt Project\. The basic questions attegpted to be answered
through the survey were:
i) whether the socio-oconomic conditions (incomes, levels of living) of the
target groups have changed in significant ways as a result of project
actfvities;
\.ii) if so, to what extent; and
iii) if possible what alternative activities should be\. undertaken\.
The assessment was based on "before" and "after" project interventions\.
This method of analysis involves establishing the baseline before project
implenentarion - at the appraisal stage and assessing changes induced by
the project on ccxpletion\. Thus the variables used were ccmpared for the
years 1979 and 1984\.
$_ s\.:'cifically, the follaoing were encompassed:
- Survey in a random sample of 10 project villages 1 aimed at obtaining
detailed knowledge about the physical achievements of the Project and assessing
the socio-economic effccts of the Project activities as measured by variables
representing various demographic, income, employment and infrastructural attri-
butes\.
Data was obtained on the basis of questiomnaires addressed to the local
officials\. Material was also collected through personal visits to various
prefectural etirectorates, such as the directorate of Agriculture, the directo-
rate of Forestry etc\.
(1) Communities cf: Krania, Promachi, Mala1assi, Tsopelovo, Milca (Obtsovon),
Vovoussa, Kipi, Raptopoulo, Krikello, Fourna
\. \.
- 131 -
In priiul,ar, the nviin tn-ics 'covcred by the questiomnaire were:
i) lXomllcoCt-arrnIlic ecfLts mc-astirod in terno\. of: Ipoilation change and not
migraLior\. in the periodl 1979-84;
ii) Economuc effects, measured in terms of: forestry employmrnt, GDP in
agriiculture, livestock and forestry, estrblishment of economic units
(i\.e\. wood processing industries), in \.thle years 1979 and 1984;
iii) Sociaal effects, mieasured1 in\. terms of: state of education, health and
- other social facilities, frequency of nmdIcal-visits, frequency of
mobile services, in the years 1979 and 1984
\.iv) F\.ffects on accessibiliy, neasured in terms of: state of roads, road
access to neighbouring towns, numnber of services in tlhe years 1979
\.and 1984
\.v)State of technlical infrcastructureL measured in terms of: State of water
supply, \.drainaae and sanitary facilities, adequacy of water supply,
sanitary problems caused by inadequate sewerage and drainage systems\.
2
_ Household questionnaire survey carried out in five project villages
Interviews, on the basis of a questionnaire, were held with a random sample
of five households in each sample villacge\. This survey aimed at obtaining
the local opinion on the socio-economic impact of the Villagei Infrastructure
Development Project\.
* Tha main topics covered by the Survey were: migration, the inconver4ences
of living in the village, the local attitude towards the effectiveness of
the Project in improving the social and; techical infrastructure and therefore
retainidng the younger peop!e in the Project area\.
- * Naeedless to say, much valuable infoniation was cbtained through direct
observation of the Regional Development S'-rvice staff who conducted the sample
survev\. A quick tour c\.f the area visited wasr made in crd\.ir to obtain a gc-ne-
ral picture of the prevailing situation\. Record was held of what was observed
along the itinerary of the tou-, and also of the information obtained turbugh
discussion with persons encountered casually\.
(2) Coiwmnities of: Krania,, Pranachi, Malakassi, Tsepelovo, Milea (M4tsovon)-\.
- 132 -
3\.2\. maEj_'!'z-Fnlq
Dcfore ciobarking upon an analysis of -I ie survey fi Udings it is Tilhiprtan L
to note that ,t\. is rather early to fully asseoss-the infixact of the Villagc Infra-
structuro Development Project since infrast\.muctural developImnts take some tillx
before their inp,act boclins to show\. Also an overall rcuark that ought to be
made regarding the course of the survey i\.s that infonmation collectcd has not
been always reliable mainly due to the lack of official statistical records
held by the iocal offici\.als such as health statistics, data on agricultura'
production etc\. Besides although the villapers were prcmpt to co-operate their
tendency to say w,hat the enquirers want to hcar in the hope of receiving some
kind of favour has not been alw-iys controlled\.
Bearing in mind the above limitations a brief review of the survey findings
will be attempted\.
On the first topic of the Projectl demographic effe&ts, table B\. 1 shows that
almost all the sample conmiunities experienced a decline of both their total
and active population, over the period 1979-1984\. However it is rather prema-
ture to assess the Project's deiuographic inpacts\. Mbreover, the population
decline attributed to migration was not considerable\.
On the basis of the data provided in table B\.2emigration has slowed down
and there is a tentative trend towards return migration mainly in the ccmmuities
characterized by rich forest resources\.
As was ascertained by the respondents, the greatest emigration from the
*villages took place in the fifties, sixties and early seventies\. The majority\.
of emigrants were 'youtig, belonging to the age group 15-45 and left home purely
for financial reasons such as the ab6ence of adequate employment opportunities
in the villages and concomitantly very low annual incomes\. However, following
from the survey findings, the motives for tCe repatriation of past emigrants
have no relation with those behind their migration\. 'iVat is to say, retun-ling
emigrants place importance in the prevailing living standard\. In fact, as was
reported the: improved service provision constitutes a "puslh" factor in their
decision to settle dawm in t;\.eir areas of origin\. Thus the Village Infrastru-
cture DevelopTent Project, involving the uj-xjradinj of the technicatl acd social
infrastructure greatly contributed towards this direction\. It is interestincg
to note that younig people interviewed stated that they intended to st\.ay in
tleir vil]ac3s provided that they could find empJlopioint\. Their dLcision flOt
toIui(jrate was greatly influenced by the improvement of the livingJ stZ4brd
\.1\.
- 133 -
in the forest villagjes as a rosult 6f tlh Project activities\. Specifically,
the younlg re\.rpnn(Ients highly appreciatod' the Iq3tovecment of lhc roid co)nJectio
a5 contriblLing to Iiiqher aucoesibility 'to the nearest urban centre or :iirc \.
populous ccwnuniti s endowal with superior services\.
A factor in support of the prospects for population increase in the
Project villagcs is the reported increase of construction activity\. As wqs
pointed out by the\.local respondents but also as was perceived by the RIMDS
staff who conducted th-le survey in most of the villages visited there has been
an expanding construction activity\. Spxcifically, the number of residential
houses increased fran 465 in 1979 to 573 ii 1984 while the number of summrer
houses increased from 92 in 1979 to 109 in 1984\.
As was commentod by the local\. population, the main factors which stimwla-\.
ted the construction activity were: i) the improvement of road connections
which enabled the txanfer of construction materials and more importantly eli-
minated the problem of inaccessibility and ii) the improvement of the basic
infrastructure - water supply, sanitary schemes\.
Although the domographic favourable impacts of the Project have not been
yet proved, there is no doubt about the overall rehabilitation of these villages\.
Farestry employment has been considerably increased (table B\.3\.) a number of
small manufacturing and handicraft units, mainly wood processting ones have been
established, new markets 'for agricultural and forestry products have been
created and there has been an apparent increase of holiday makers, particularly
in the summer\.
A brief review of each category of project activities based on the data
thrkough
provided the intraviews held with the local population will be attempted
in the following paragraphs\.
i)' Connectinc roads: As has been already nentioned, the bulk of project
investments was allocated to road development\. Tnhc main reasoning behil d
this allocation was that road investments in the northern meunLainous areas
of Greece are amng the most important\. To put it in other words, isolation,
\.produced by limited accessibility to thle nearest urban contre or to more po-
pulous communities endowed with superior services has been reportod as the
principal obstacle to village life in the mountainous rural areas of Grcce\.
\. \.1\.
A\.
- 134 -
In the coutrse of the survey, all, the people intcrvicvw-,d placed conisiclo-
rablc uilhasis on the favourablc inpacts of tle conlu&ctins: roads, implenentcip
tunder the Pr\.oject\. As was repeatedly st-ALed, thi construct ion and impro\rnoennt
of connect-int roads ensurd thiat each village has access to an all SCasOJI
highvway\. Snow and ice conditions, whi\.ch t-enorarily obstructed conmlunications
can be quickly dealt with and thus ecoaomic and social disruption is reduced
to a mininmua\. In particular, some of tlhe alleged benefits of road develop-
ments are tlhe opening of ne-wi markets for the agricultural and forestry products
of the project villages, the improvement of the transfer of products, raw
materials and machinery, the coamuting of labour to nearby towns, the
increase of mobile services and in genxeral the better apcess to superior
*services\.
to illustrate the significance of road investment soue examples of
road developments implemented under the Village Infrastructucture Development
Project will be presented below:
1) Bituminous surfacing of the road Aridea-Praachi: The implementation
of this Project activity ensured that the ccmmunity of Pramachi (with
a permanert population of about 1754) has all season access to the
nearest regLonal center of Aridea\. Some of the reported benefits are:
the prompt and safe transport of forest produce (appreximate annual
forest production amounting to 30 m3) to the forest industries in
the town of Aridea and other industrial centres such as Thessaloniki
and EWessa, the increase of daily bus services linking Promachi w'ith
Aridea fran 4 in 1979 to 7 in 1984, the improved accessibility to
superior service provision, etc\. In addition, the improvement of
this main access road constituted a determining factor in the expansion
of the agricultural processing factory established close to the village
of Praachi, absorbing the agricultural produce (fru\.ts and vegetable)
of the surrounding areas\.
2) m TheJ rovemnt of the connectingr rad: Metsovo-Milea ensured an all
weather-access to the national highw\.ay\. The implenen\.tation of this
Project activity entails great econanic significance considering that
Milea is a village where wood productR\.o is considerable and also
many wood-curving urorkshop\.a are established\. Following the canlwntCs
\. \.~~~~~~~~~~~~~~~~~~~~~~~~~~1
of tho wnrkshop owners, the iinprovement of the connecfing road M4ctsovo-Milea
has greatly influencod the docision to e(2pand their opeArations since the
*transfcr of their proclucts has becn facilitated and access to nw nvmarkets
has been secured\.
3) 'Dhe construction of the connctcng roacl from the 1,-uhini- -Kalyeyn ui i
leading to Krikello and DIaniista\. The constructioni of tlhis road assumas
its full significance if we consider that\. the canl!uunities of Krikello aud
Dommista are typical examples of less favoured, mountainous,-isolated forest
villages\. Specifically, these villages are charactcrized by law level of
service provision and limited range of employment opportunities given the
low potential for agricultural developn\.ent due to the barren soil\. Inaccessi-
bility to superior facilities resulting from deficient transport prior to tie
construction of the concerned road aggravated their inferior standard of
living and led to the emigration of the young\. The provision of an all weather
access to the national highway was highly apprecia Led by the local respondents
as both promoting the economic life of the villages <m-a improving the overall
level of living\. That is to say, some of the accruing benefits of this
particular project activity are the creation of new outlets for the wood
products of the villages and the provision of an all weather access of thie
local population to superior services\. These factors woult contribute
to retaining the young labour required for the exploitation of the rich
forest resources\.
ii) V_aqge_streets included ir the Project have been paved with concrete and
provided with side drains\. Also, in a few villages, designated as "Tradi-
tional", village streets have been paved with hand-pitched block stone
instead of concrete in order to confonm with the traditional Greek style\.
j Following the statements of the local respondents, the imrovcarents of
village streets carried out under the Prcject contribuLed to preventing
erosion and dust- nuisance Which may be detrimental to\.health, and in \.
general to improve the amcnities of the villages and pr6vide a more hygicnic
environment\. Particular mention was made \.of the bertter transport of products
to the houLses and uarkshops\.
iii) Rural access roads included in the Project llave been gravcl surfaced anld
provided with pecr"anent culverts\.' As ras stated by the local respondents\.,
\. s~~~~~~~~~~~
* ~ ~ ~ / \.-v4-
- 136 -
mninly in tlhe agricultural arcas ofr nortlern Greece, the inTwrovcjmr'nt of
tle rural xrods facilitated the access of trzictors to the communal land
and therefore conduced to thc increase of acgiAcultural production\.
iv) LaterKSuj 12: As was indicated at tl'c appraisal stage of the Project
but also verified by the local pxopulation durinj the stuvey, all the
Project villages had a water supply systcmr prior to the implementation
of the Project\. Also, although health statistics are not availab\.e there
was no incidence of prevalent diseases linked to poor water sUpply or
sanitary conditions\. The main problem besetting the Project villages,
regarding water supply, was the water irradoquacy, particularly in the
summrn months\. The water supply works, execut-ed under the Project
concerned the increase of the collecting capacity at sources, the extension
of the reticulation network to all parts of the village, the replacement
of old and damaged delivery pipes etc\. In the course of the survey, all
the local respondents in villages whcre water supply works have been
implemented alleged that an adequate supply of good quality watcr was
secured to cater for both human and animal consuxpiion, mainly during
the summer months when the human population is usually double that of
the winter\. Specifically in most of the Project villages, the water
supply systems provide a maximum daily quantity of 75 litres of acceptable
quality water per person\. Besides the reticulation network has been
extended to all parts of the villages so that all the houses have been
mcnnected %rith the water supply system\.
*v) Surface water drainage and torrent control included construction of open
storm water drainage channels and small box culverts\. This category,
of Project works was considered particularly important by the local popu-
lation as in all the Project villages, steep sidelong gradients on the
mountainous and on the village streets cause erosion problems\. Surface
water drainage and torrent control contributed to preventing lanc\. slides,
the undermining of roads and building foundations and loss of valuable
topsoil, and therefore conduced to the improvement of the social and
health envirnmment of the project villages;
vi) Sanitation: Sanitation schemes i:nplemen(ed under the Project included
construction of septic tanks, soakage pits and sewers for the disposal
of effluents and brude sewage when waterborne sanitation and ilnloor
I\.
*/
- 137-
9\.
bathin(J facilities were used\. Aslto\.icgh no instances of infect:uos
-diseases were reported beforc the iwlploientati\.on of the Project, un-
satisfactory sanitation caused hygienc problems\. As tlhe local re_non-
dents stated the sanitation' schancs pra,iZIed by the Project havc greatly
contributed to tbo inproxvcimnt of the social and hcialth environrnent and
therefore accoluntd to a great extent'for the growth of construction
a\.ctivity\.
vii) T_tnuiPacilities: This category of project works included constru-
ction, improvenent cand additions to miscellaneous comnunity facilities
*such as: Ccmnmity centers incorporating offices and rest house accax-
dation for the cocx nty adminictration and official visitors, rural
dispensaries, primary schools, childrenfs playgrounds, cultural centers,
iriprovenents to the village square etc\. Community facilities can be
described as essential for village life and th=refore have been assigned
prime Imp3rtance by the local population\.
Particularly, in the course of the survey, the local respondents repeatedly
stressed the fact that cmployment alone is not a sufficient stimulus for the
attraction of the young people if not acccmpanied by the improvement of overall
living conditions-health, education, recreation\.
To illustrate the significance of community facilities some examples of
project works pertaining to this category and observed during the survey will
be briefly descrJbed in the following paragraphs\.
1) The construction of a 12 rocm__uest house in the community of MaLakassi\.
This Project activity has beer hiqhly appreciated by the local resporidents
as \.contributing not only to the development of tourism, but also to the
increase of the local financial resources, given that the guest house
will be run by the oommunity authoritWes\. Malakassi, a village endowed
with rich forest resources and beautiful scenery, is situated on the
m nain access road connecting the districts of Crevena and ioannina\.
\.Therefore, it is evident that the lack of accommodation before the\.
construction of the guest house constituted the main impedtdmct to the
davelopment of tourism\.
2) ThergEgir of the pr gyschool and the kindergarten in the community
of Mi]ea\. Milca is a groWing community owing to the rich forest
resources and tlhc existence of wood curving worksh1o6s\. Contrary to
other otwuntainous villages in Grcce, it\. is characterized by a caside-
\. \. ~~~~~~~\.1\.
-138-
rable'%us=er of chilclxci at schoolago, and therefor\.e saeisfactory school
facilities constitute 6noc of tic mai n denands voicecl by the local popJl-ula-
tion\. As was stated by thie local respond:nts blut\. also observed at the
Project Ap-praisal stage, the primary school was in a particularly b-ad
'state beafore the implementation of the Project\. 1Jiowevnr, the RPIDX staff
who visited the school in the course ofg the survey worc\. >ally imiprossed
by the improvements incurred to thie school under the Project\.
3) \. The construction of a rural dis2ensa,y in the commuiity of Mil;a:
This project activity has been considered as mostly significant by the
local respondents since deficient medical services constitute the principal
cause of emigration\. Before the construction of the rural dispensary,
the\.local population relied\.on the services of a visiting doctor who\. was
acccmmodated in the community office\. Needless to say there was no enough
space for the provision of satisfactory nmdical services, and, in addition,
during the winter, the frequency of medical visits was very low, while
if weather conditions were particularly bad the villagers were depri-ved
of any medical services for a month or even more\.
4) The onstruction of a the conmn of Tseelovo, where
* spe4ches, reetings, theatrical performances and other festivities could be
organized\. To illustrate the inportance of cultural facilities in the
* Greek periphery it should be noted that in all the sample villages young
but also older people interviewed stressed the lack of opportunities for
an effective use of leisure time as\.an important problem associated with
\.their life in the village\. As has been reported, all social end cultural
facilities are concentrated in the districts- capitals while all other
comiunities are deprived of any cinema, cultural centers sports clubs
etc\. The only means of recreation during winter time is the television
set, which introduces urban living patterns and therefore reinforce \.the
desaxe of villagers to escape from rural life\.
-139--
In concljxi\.on, as was percceivd in tUhe course of the survey, the local
attitude towards thle overall effectiven-sEL of the Village Infrast-ucture
pevelopn-iLt Project in inmroving villa,e life and concanitantly restraining
the emigration of the young fran the forest villagcs was particularly
favourible\. Tne majority of the local respondents alleged that thc Project
activities contributed to meetirng the real nneds of tlicir villages in terms
; of infrastructure\. In their view, the up4jading\.of tle tecihnical and social
infrastructure would result not only in retaining the necessary labour to be
employed in forest activities but also would boost prodtuctive investments
which further stimulate local employment\.
* BIowever, all the local respondents placed emphasis on two principal'
* \.considerations\. Firstly, the conrinuation of tlhe activities not completed -
* \. before the end of the Project, and secondly, the implementation of catple-
mentary infrastructural developments which although not--of a priority nature
would further enhance the favourable impacts accrued from the Village Infra-
structure Development Project\.
-140-* , t
IV\. Conclusion3-
The Vt Wlage Infrastructure Developimnt Pro\.jct financcd provision of
basic infras\.tructiue facil-ities suchli as cornecting roads, villacle streets,
water supp\.v, drainage/sanitary schemes and ccznmunity facilities in a xt-tal
of 45 nxuntainous forest villap,es in North Western Grccce;\. The rationalc
* behind the decisi6n to implement the Villagp Infrastructure Project was
the realization that the labour required for the forest activities included
in the Integrated Forestry Development Project would not be secured without
the improvement of\. the social and technical-\.infrastructure in the Project
area\. D,
The Village Infrastructure Development Project started in 1980 and was
*copleted in Decmeiber 1985\. Apart from the delays involved at the coimnnce-
enxt of the Project, its overall implementation progress was considered satisfa-
ctory\. During the period 1980-85, about Dr 3 Billion have been disbursed
for the iuplementation of 428 works of technical and social infrastructure\.
Most of the physical developjnent targets have been achieved while the Project
surpassed the Appraisal estimates as far as road developments are concerned\.
Regarding the effectiveness of the Village Infrastructure Development
Project, following the survey findings, it can be alleged that the Project
has been successful in accomplishing its main objectives, namely: to upgrade
the social and technical infrastructure and improve accessibility of the
forest workers living in relatively remote mountainous villages, thereby,
helping to slow down the rate of emigration and retain younger people in
the\.Project area\.:
In conclusion, it should be\.emphasized that valuable experience has been
* gained by the Recjional Policy and Development Service of the Ministry of Natio-
nal Economy for the design, appraisal, monitoring and evaluation of any future
- development projects financed by InternationiAl Organizations\.
- 141 -
\.~ ~~ \. *
, \.~~~~~~~~~~~~~~~~~~~~~~~~~~~~
:~~~~~~~~~~~ * *
la\.>e ; Ij
Integrated Forestry evelcpmtent Project
Village Ifrastrucxre Developyt
Phasing of Project Physical Dcvlopnt Taigets (apraisal) ,
ITSl Unlbit I 1979-80 1981 1982 1 1983 r 1984 Total
1\. Co\.nectinc roads )an 16,0 * 24,0 28,0 28 1 28,5 124,5
2\. Village streets \. km \. 5,6 11,0 15,0 18,5 20,0 \.70,1
3\. Azal Acoessroads M \. 14,0 14,0 14,0 5,0 47,0
4\. ' at*er sueply Villages '2 7 7 5 28
5\. D-raiage/sanitati n\. * 2 3 6 4 21
6\. Ulectr izity n 4\. 7 j 7 4 22
7\. Othexctc2mnity 4 5 9 11 7 [, 36
\.Fac__ilities \. _ \. i \. \. \._\.____ -,
So,rce: Atoraisal Report
Source: APoraisa3\. Rort ' t
Table (A\.2)1
Disbursed roman Fnds l'Nr C-tteckor2\.2of ItC'mns
* S/N \. Item \. Disbursed Fuunds
1\. Cbnnecting roads 2\.071 69
2\. Village streets \. , 397\. 13
\. 3\. Rural access roads 37 1
4\. Water supply * 174 6
5\. Diainage/Sanitation \. 11 4
; \. \. 6\. ommnity facilities 207 \.7
-\. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~~~~~~~~~~~~~~\. \.- - n\. \.~ -* \.-\.s_- \. A \.
-145-
Tale3 (A\. 3)
Physi-cal rive1\.qynernt Achievimunts as v'6;iwcLt P'bsicaJ Divolorent Targets
S/N Il:em Unit Estimatecd at Actual
SIN - h s1dl I Actual Est\.i\.ttd
* 1\. Conmecting roads kmn 124,5\. 416 3,3
\. 2\. Village streets km \.70,1 92,0 \.1,3
3\. Rural access roads kmn 47,0\. 69,0 1,4
4\. Water supply Village 28 40 1,4
w ~~~covered,
5\. \. Drainage/sanitation " 21 22 1,04
5\. 21 22
6\. E;lectricity " 22 7 \. 0,3
7\. Other Cammity " 36 \. \.39 1,08
fAcilities
Table (A\.4)
Integrated Forestry Developent Project
Village Infrastructure Developmant \.
Phasing of Project Physical Developmant Achievements
ITEM Unlt 1979-80 7981 * 3 1984 otal
_ ,, I _ _~~~~I I \.I 32\.
1\. Co=nect!ng\. roads !5 16 29 32 100 1 24
2 2\. Village streets km 5 15 21 16 15 23 j 92
3\. R-al Access Roads - = \._ 31 7 13 6 12 \. 69
4\. \.-_ter supply Village 6 9 14 9 17 25 40
5\. lZRainage/smitation " ' 4 \.3 1 7 9 12 17 22
*6\. `:sctricity 3 \. 1 |\. \., 7
7\. Other coazunity 3 4 12 15 28 \. 2 39
facilities 4j 1 ,''
i~~~~~~~~~~~
V==~~A
__________ % f \. A\.LsI ____________: !nFil11\.Ar,4~IAr
4 6 7 13 i4 iskfl ~2~ ~16 1 I \. t 2 22
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\.O
* XIz,LZ r, \. srntxt ri&-,wr r, \.
P\.BSING OF PROM= PHYSICAL - TA S Z D Z !_:'\. \._\.-\.* :\. :\.
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T=41 I T~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~~cc:~ ~c~ns I L~Gfl1 (Ic\.:)1I \. ga 19\.1932 1004 234
;CT:C\.N ?CIADS 29 32~~~~~~~~~~~~~~~~~~~~1 \.
I os 16* j I 2I II 4
j CSsrT(S) 21,500- \. 59,708 88,3412 ! 186,783 \.'566,873 1,147,871
5 _ EC ( i 5, 1 15\. 1 21 16 s 20!
CC (S?s) | 12,228 j54,66 | 81 632 57,305 60,674 13,937 77
----- T-----------\. \. + \.~~~~~* --- I_ '-
Iz ¢ 31 7: (t;4) * _ ' \.13 6 12
§ C__''(DPS) ! ~ \.- i 9,095 ! 4,112 4,700 3,921 is 15 08 ! 7*\.
-------_ _ _ T-------Z-\. -4
9 '\.9\.
c 4 \.;y \. *a\.co *MT-ES 6 '14 t \. 17 t2, L
CC-T(CSP) 2,720 18,029 26,172 40,038j 31,012 r-5,65,7 -17 -,c
~~~~~~-~-r----________ \._-- \.
2\.72/ 1J | ao\.O' VThL\.oSj 4 3 7 \. 9 12 17 3
c33T(!S) 1 1,430\. !\. -2-,702 9, 159 19,373 24,749 | 5397 ilG,-
\. c o t c:a\.r\. v *Jz, | J , 3 2 1 2 \.31397* 1 r
4 IO':': \.1 1 ~ i I \. a
s c_'i> (r S5) i I 4 rt3,934 8\.19\. * 851 1,994 7 -
,Y r^-'N_ ,;O , \.O:? 3 4s *4 12\. * 15 \. 2 28
:X;~~ ~ ~ ~~~~~~~~~~ a; \.1v7s a tl r* * i-
2 -' - 71,032 6-,377 2 L-,'
_________J - j -\. ~~~ I - ,__ _
1,389 3,4 350410 1
* 39,267 151,521 *50,460 760t305 11473,157 2,997, Z
* 151,52 \. \. 22,3
- 151'-
\. - \. !
S \. \. \.
\.-~~~~~~~ *' \.'"
PNE \. B (Statistical Material fromn the Sarrp1e
- ~ Sunrvey )
Table B\.1\.
1979 1984 1984-1979 a\.ange
CcFrmmitiei I Tb Ation Total Active Total Active
*IPopulaticn ! Population iPopulation I Population Populati30 * 1
_ _ I _ - t - j - ~~ ~~~~~~~~~I I' - - _ _
1\. Kra-\. a 550 400 \.250 j 210 54% -48%
2\. Promachi 1\.853 1\.250 | 1\.754 1\.300 1+ 4
3 Va'kassi1 360 r 180 Q 400 220\. +11% ! 25%
4\. Tspecovo *500 1 450 | 350 330 - 3% -26%
5\. Milea (\.'ztsovO\.U) 1\.600 1\.834 1\.245 1\.355 - 22% -| 24%
6\. 'Vvcousa i 131 | 67\. 146 80 + 11,4% + 111, l4%
7\. Kipi j :200 1\.200 172 1\.000 - 14% -16%
8\. Raptopoulo 1j 25 j 850 997 750 -20% -\.11%
9\. Yzf\.llo | 300 210 280 1 200 6% 4I t
10\. Foura 915 560 930 580 + 1,6% 3%
\.Total I 7\.659 I 5\.921 6\.524 5\.125
:x\.n ' 765,9 ! 592,1 9 652,4 I 512,5 _ 15 -13%\.
Source: -ppraisal R_crt
Statistical Records of Local Authorities
t \.
\.~~~~~~~~~~14 ,-_
Tab] o B\. 2\.
MIGRATION
j et Migration in the Net Migration in the
CROM( NITrEs period 1977-79 period 1979-84
1\.Krania - 300 -250
2\. Prcmachi_ -259 _
- 3\. Malakassi 0\. + 34
* S 4\. Tsepelovo - 20 - 30
, - 5\. Milea (Mtsovciu) - 222 - -\.11
* 6\. Vovousa\. - 3 \.
7 Kipi -
8\. Raptopoulo -50 0
9\. Krikello - 30 19
10\. Fourna - 25 + 13
\.~~~~~~~~~~~ , \. \. ' \.
Source: Appraisal Report
Interviews held with the representatives of the Local Auth-orities
inte ors f hSpe uv \.y
* ~~in the cour\.sc of the Sn'ple Survey'
- 155 -
Tablc D\. 3\.
P1oqz1qmrt in Fo\. estry
I ~~1979 *1984
\.,* TIE | Enllyment inl ForestrY l }loy1prrt i8n Eorestxy
1\. Krania
2\. Pranachi \. 14,2% \. 37%
3\. lalakassi \. \.60 % - 64%
4\. Tselepovo 10,5 % 16 %
\. 5\. Milea (Matsovoxa) 100 % 100 %
6\. Vovousa 63 % \. 64%
7\. Kipi \. 14 % 14%
i \. 8\. Paptopoulo 17,6 % - 20 %
\.9\. }rikello 33 96 31%
10\. Fourna 23 % 30%
M4ean 33,5% L 376%
Source: Appraisal Report
- Statistical Records at, the Forestry Department of the Nomarchies
- 157 -
* - fi\.&zWt4 h *' h
AGRICULTURAL BANK OF GREECE
ANIMAL PPOOUCION DIVISION tVo C ,ECT10 41b
6\.8-10 HARILAOU IRIKOUPI SIR\.
GR \. 106 79 ATHENS - GREECE
INTEGRATED FORESTRY DEVELOPMENT PROJECT\.
Credit for loqqino esuipment
Project completi-on report
Introduction
The ABG has undertaken the responsibility of\.the project
Part B' implementation which is referred to the logging equipment
procurement\.
As it is known the project area comprises continental westeri%
and northwestern Greece and the Peloponnesus\.
The project, acccxding to the SAR, aims to
1) Save foreign exchange by increasing wood pr2duction\.
2) Introduce mechanized logging and intensive forest
management systems
3) Provide more permanent employment and improved quality
of life to retain workers in forest villages\.
i 4) Built up local capabilities for preparation of projects
for exter\.al financing\.
What the Project ( Part B' ):comprises
The SAR determines that the project would finance logging
equipment to be purchased by cooperatives and private operators
ot the pro3ect area\.
Tne logging machinery procurement could increase the use of
mechanical methods of skidding from stump to roadside\.
The'table below shows the machinery included in the project
* Part B' )\.
\. \./\. \.~~~~~~~
- 157 -
ANNEX 6\.1
Page 2 of 6
1\.2 Imports of Household Aluminum Utensils
Exporting 1983 1984
Country Wt\. in ton Mkt Share Wt\. in tons Mkt Share
France 24\.7 23Z
Soviet Union 32\.7 30Z 89\.6 52Z
Ghana 31\.2 29Z 35\.8 212
China 10\.7 lOZ 11\.4 7Z
S\. Korea - 8\.1 5X
Others - 82 - 15Z
TOTALS 109\.3 100Z 171\.5 100Z
Source: Import Statistics (1983-4) Chamber of Commerce Abidjan, Cote d"Ivoire\.
1\.3 Customs Tariffs
Items - Fiscal Customs TVA Cumulative
i) semi-processed
aluminum
products 20Z 5Z 262 51Z
ii) aluminum
household
utensils 35Z 5Z 26% 66Z
Source: Customs Tariffs in Cote d'Ivoire Chamber of Commerce, Abidjan\.
1\.4 Bank charges include insurance commission (12 of C&F value per
annum), telex fees (1502 of P&T fees), documents filing fee (3000-5000 CFA)
and government tax (252 of the above), while insurance fees are based on the
value declared at the customs point of entry either in f\.o\.b\. or c\. & f\.
values\. Fees on household aluminum products range from 1% to 1\.75% of C&F
value depending whether the goods are containerized or not\.
0
ANNE%6\.1
- 159 -
AGRICULTURAL BANK OF GREECE
ANIMA& PPOOtitI\.,ON DIVISION
6\.5-iD HARILAOU ThIKOUPI SIR\.
GR - 105 79 ATHENS - GREECE
Funds for logginQ equipment procurement
It is known that a Subsidiary Agreement was signed between
the Hellenic State and the ADO on May 18, 1981\.
Accoiding to this ,the Greek Government under the terms of
the Loan Agreement, has relent to ABC, out of the proceeds of the
World Bank Loan, an amount of one million two hundred thousand
dollars ($3\.200\.000) equiva lent for the financing in part of the
Sub-loans under Part B of the Project on terms and conditions
satisfactory to the World Bank the amount so relent and made
avalaible to ABG beneficiaries of Sub-loans should be mainly
co-operatives and private loggers operating in the Project area\.
Preference should be given to those who had received training in
mcchanized logging methods\.
It was also deternined by the Agreement the appointment by
ABG of a qualified and experienced Credit Officer on a full-
time basis who should be responsible for the co-ordination and
review ef the implementation of Part B of the Project\.
Terms of Sub-loans\. Appraisaland Approval of Sub-loans
The applications of beneficiaries were submitted to the
ABG branches in the Project area and were appraised by the
for esters and approved by the ABG officers-according to the
valued rules\.
Mainly the appraisal included :
a) creditworthiness and managerial competence of the
beneficiary\.
b) technical feasibility, financial viability and economic
justification for the investment proposed\.
c) detailed cash-flow projections evidencing generation of
sufficient cash-flow to cover debt service and other expenses and
d) compliance with-all criteria referred to the proper Part
of the Loan Agreement\.
\.1\.
- 16C -
*|t"F Z ;'::* :t_\. , a \.: s¢'"
~~~~~~~~~~~~~~~~~~~~\.5 St4itt ** 1'
AGRICULTURAL BANK OF GREECE
AWIMAL PRODUCTION DlVISI10
6-8-10 HARILAOU lIRKOUPI SIR\.
GR - 106 79 ATHENS - GREECE
The Sub-loans were made available for a term of not more
than eight year including one-year of grace\.
The beneficiaries contributed fror their own resources up
to 20% of the estimated cost of the procured equipment depending
on the beneficiaries'income\.
The carried interest of Sub-loans on the principal amount
outstanding frodm time to time was the some with the other
Agricultural purpose loans\.
The Sub-loans were secured by mortgages on the fixed assets
of the beneficiaries\.
Tho State subsidy, when approved for predetermined nu\.'er of
project's machinery, was used for repayment of a part of Sub-
loans\.
Procurement of machinery
Logging equipment was procured by beneficiaries through
regular commercial channels under supervision of ABG\.
The equipment satisfied the specifications prepared by
DG F and approved by the Bank\.
-implementation of the Project-Part B'
The imlementation of the Project-Part B commenced, really,
in the second half of 1980, that is one year approximately after
the date of loan Agreement\.
From the begining of the implementation some weaknesses
were apparent, towards achievement the project's targets\.
The ABC foresters first reports, stated that the necessities
for logging equipment in the project area were much less than those
included in the project machinery list\.
There was no demand for cable systems procurement, because thc-
price of these machinery was considered quite high particularly for private opera-
tws,while the coops,which could afford the price factor,did not express any in-
terest
- 161 -
AVuaAFpN' - 'HEINS
AGRICULTURAL BANK OF GREECE
ANIMAL PRQOUCTION DIVISION
B-8-10 HARILAOU TRIKOUPI STR\.
GR - 106 79 ATHENS - GREECE
A limited interest for the procurement of skidders was shown by private operators
due to their high purchasing price and for the reason that the applied State system in
granting the relevant licences,did not make any distinction in favor of the buycrs of
these machinery through the project, a fact which resulted to an excessive number of
workers in contrast to a small volume of available cuts\.
The agricultural tftdtofi'-with logging trolleys were more convenient to the ope-
rators for skidding\. It is noteworthy that almost all active forestry cooperatives in
the area,had not submitted any application to AB branches for the procurement of log-
ging equipment,because the relative needs were covered by their own machinery and the
mules of their members\.
It is also remarkable that the most private operators who purchased agric\.tractors
with logging trolleys are also farmers and they use the tractors both for the culti-
vation of their own land as well as for forest works in order to justify better the
e\.conomic viability of their tractors\.
It must be er\.:phasized that the government's subsidization of the logging machine-
ry contributed, a great deal, towards encouraging the operators for their purchase\.Un-'
fortunately,the subsidization did not cover all the categories of machinery financed
by the project\. So, during the wlhole period of the project implementation the subsi-
dization covered the following machinery: Skidders,several cable transport systems,
special loading cranes"and power saws while the agric\.tractors with logging trolleys
were- subsidized up to 1982\. Nevertheless, the possibility of subsidization depenAed
always on the available amount of the relevant State credit\. '@ '
Taking into consideration the reasons which caused a delay of the project imple-
mentation,we suggested the completion of the logging equipment list with new logging
machinery\. The supplementary machinery were selected by the ABG foresters in the area
and were approved both by the DGF and the Bank\. The below table comprises the machi-
nery apportioned in the years left i\.e\. 1982-83-84\.
Item Year 1982 1983 1984 Total
Power saws 15Q 150 150 450
Loaing cranes 10 10 10 30
Skidding winches 20 20 20 60
All purpose vehicles - 20 20 40
Debarking machines - 5 5 10
\. \. ________________________________________________________________________---
- 162 -
IILMPIOMI s6 c( Of\.1LC*'I\.A ij
AGRAAiOANK ATHtN'
AGRICULTURAL BANK OF GREECE
ANIMAL PRODUCTION DIVISION
6-8-10 HARILAOU TRIKOUPI STR\.
GR - 106 79 ATHENS - GREECE
The introduction of the supplemerntary machinery in the list did not contribute
to the project implementation progress at the expected level\.The reasons for the delay
have already been mentioned in our quarterly reports to the Bank\.
In summary, the main of these reasons were:
a) The logging operators have never been assured that they can have skidding con-
tracts with large enough volume over a long per;od of time (at least 3-5 years)so as
to amortize their investments\.
b) The absence,from the project area , of properly trained young people to handle
the logging equipment\.
c) The inadequacy of all weather access roads and tractor roads which delayed the
extension of logging operations and mechanization of skidding particularly at the be-
ginning of the prcject implementation,but the situation was gradually improved with
the progress of the roads construction\.
Reports for the impLlementation progress of_the Proiect ( Part B)
The quarterly reports and the relative tables were been submitted regularly\. But,
in order to ease and simplify the processing of the relevant data ty ABG regional
branches, it would be preferable that the tables were submitted to the Bank every
semester instead of every three months\.
Procurement of euLprnent
The beneficiaries of the sub-loans had had the opportunity to purchase the equip-
ment from the market providing that it satisfied the specifications approved by the
Bank\.
In some cases , the logging trolleys were made in local workshops\.
The sort and the number of the purchased logging equipment till December 31,1985
are shown in the following table:
- 163 -
AGflARI9ANb AHtHCN
' AGRICULTURAL BANK OF GREECE
ANIMAL PRODUCTION UIVISSON
G-8-tO 1iARILAOU TRIKOlJI'I STR\.
GR - 106 79 ATHENS - GREECE
___________________ _____________________________--_________________-___\.-\.
Ite E Q UITP ME NT (000L Drs\.
I t e m \.__\.___T_P_M_E_________ \._____ _________
Unitosed UP tr oc u r_e d ABG- loans Total value
________________ Up-its Units rorm_ ____ ______
-- ---- p~~~~~~roflram'
Agric\. rubber 12 5 41\.7 20\.166 25\.207
tire skidders _
Agric\. tractors 87 44 050\.5 47\.414 59\.267
witb log\.trolleys
___________________- ------------- _______-__________-_________-__________
Logging trolleys 53 2 3\.7 320 400
Short cable system 34 _ \._ _
Long cable svstem 2 _ _ _
Power saws 450 192 42\.6 7\.921 9\.901
Loadina cranes 30 11 36\.6 8\.375 10\.468
Skiddina winches 60 _ _ _
All purpose vehicl 40 2 5\.0 1\.980 2\.475
Debarking machines 10 _ _ _
-------- -\.------------------------
T o t a 1 778 256 32\.9 86\.176 107\.720
Procurement cost of loQaina egui ment
The procurement cost of each machine category varied according
to its tvpe, the manufacturer and its HP\. Moreover,fron time to time
the cost was influenced bv the inflation given the 5 year period re-
quired for the completion of the project\.
The number of the various machinery procured every year during
the project implementation neriod, is shown in the following table:
\.1/\. 0
- 164 _
ACRAPIA10\. *£ThtNF
AGRICULTURAL BANIK OF GREECE
&NIMAL PRODUCi ON DIVISION
6-8-10 tiARILAOU TRIKOUPI STR\.
GR - 10G 79 ATHENS - GREECE
---------------------------------------------------- ------------------
Type of ma- 1981 1982 1983 1984 1985 TOTi
chinerv bought
Agric\.rubber 1 3 1 5
tire skidders
--------------------------------------- F--------------------------------
Agric\.tractors 9 15 4 - 4 12 44
with loa\.trol leys
Logging trolleys I - I - - 2
- -----------------------------------------------------------------------
Power saws - 32 32 70 58 192
Loading cranes - 3 2 5 1 11
All nurpose vehicles - - - 2 D - 2
* T o t a 1 10 50 40 84 72 \. 256
Financinca
The expenditures for the purchase of the machinery were covered
mainly bv the ABG sub-loans and secondly by the beneficiaries contri-
bution\.which fluctuated around 20%\.
The sub-loan funds were covered by the ABG and the BANK's resour-
ces\.The BANK's contribution was 37% from the beainning of the project
implementation till June 30,1984 and 66 from July 1,1984 till Decem-
ber 31,1985\.
There was no problem with the withdrawals of the proceeds of the
World Bank loan to meet the expenses in connection with the project
(Part B' )\.
- 165 _
AGh\.AA11ANK A'ININb
AGRICULTURAL BANK OF GREECE
ANIMAL PRODUCTION DIVISION
6-8-10 HARILAOU TRIKOUPI STR\.
GR - 106 79 ATHENS - GREECE
A\.B\.G\. performance and development
The A\.B\.G\. regional services and foresters we're very well informed of the necessities
in logging equipment of the Project area and they made every possible effort towards
the implementation of the project\.
The beneficiaries' applications submitted to the ABG were carefully examined and
given every attention\.
Preference in Sub-loans was given to the logging operators who had received traininp,
in mechanized methods\.
As far as the guarantees demanded by the ABG are concerned(i\.e\.mortgage to the fixed
asset of the applicant)for the Sub-loans approval,they were restricted to the minimum
and in some casus the personal guarantee was enough\.
No problem existed on the sid, of A,B\.,\. for Sub-loans approval\.
Approved and Disbursed Sub-loans
'In some cases Sub-loans approved by A\.B\.G\. were finally cancelled on private-operators
request for various reasons among, which the most considerable ones were:
a) the state had not had the economic possibility to subsidize their machinery\.
b) the operators had not been able to ensure sufficient logging works for the economic
operation of the machinery to-be purchased\.
The relevant data are shown in the fbllowing table:
-7
Approved Sub-loans Disbursed Sub-loanTs
_ I t e m lUnit | (000's drs) Unit (000's drs)
1\. Agricultural Rubber tired Skidders 6 23\.166 5 20\.166
2\. Agric\. tractors with logging trolleys 53 59\.252 44 47\.414
3\. logging trolleys 2 320 2 320
4\. Short cable Systems - - - -
5\. Long cable Systems - - - -
6\. Power Saws 201 8\.688 192 7\.921
7\. Loading cranes 17 14\.75f tl 8\.375
8\. Skidding winches - _
9\. All purpose vehicles 4 3\.880 2 1\.980
10\. Debarking Machines - - _ _
*,r * ;; ~ \._\.- ;-\. :_: \. 166 - l
A&\.-4AANW A NHv h
AGRICULTURAL BANIC OF GREECE
ANIMAL PRODUCTION DIVISION
6-8-10 HARILAOU TRIKOUPI STR\.
GR - 106 79 ATHENS - GREECE
Bonefit and economic post evaluation
the
The logging equipment purchasedthrough/project funds, operated almost
satisfactorily and the financial results were positive,althougb not
always on the expected level\.
The economic situation of the Ieneficiari4-s was considerably improved an;
that justified completely the procurement and utilization of the machiner
The internal rate of return for every representative type of machinery
selected is shown in the attached tables\.Nevertheless the I\.R\.R\. for eac'\.
particular type of machinery fluctuated in a wider range from 20% up to
40%, as a result of the fluctuations in labour remuneration,the quantity
of available cuts and other circumstances prevailing in every region\.
Based on these representative calculations of I\.R\.R\. for each particular
type of machinery, the I\.R\.R\. for the whole project was finally estimatec
at 33,1%\.
THE HEFT E CTION
A\.KARANTZENIS
OVERALL PROJECT
* ~~~~~~~~~~~~~~~~T\.a 1\. 1 a - ;'
IT (000) Drs
* " ar 1 2 3 4 5 6 7 8 9\. 10
4\. licremehtal
i nVeStment
3,\.Ecjipment 9\.386 21\.909 13\.859 31\.442 31\.123 - - - -
D\.Less taxes \. X
and duties - -
Total 9\.386 21\.909 13\.859 31\.442 31\.123 - - - -
d\. \.nl:rcementa1
*Otx-r\.COStS
3\.Operat\.cost 1\.786 5\.341 10\.003 18\.392 26\.839 30\.415 29\.257 27\.501 22\.951 19\.181
3\.abour cost 2\.760 17\.109 43\.948 63\.585 92\.567 101\.354 91\.667 80\.531 55\.331 34\.451
1'otal 4\.546 22\.450 43\.951 81\.977 119\.406 131\.769 120\.924 108\.032 78\.282 53\.632
r \.tal Outflow 13\.932 44\.359 67\.810 113\.419 150\.529 131\.769 120\.924 108\.032 78\.282 53\.632
~\.
OVERALL PROJECT
T a b 1\. l IT\.
In (000) Drs
Year 1 2 3 5 6 7 8 9
; Incr\.Benefits
P"rnefits 6\.700 29\.290 55\.580 102\.139 151\.215 168\.769 15-7\.924 145\.032 115\.282 87\.155
\. Ress\.vaiue - - - - - - - - 37\.617
i\.i\.-il inflows 6\.700 29\.290' 55\.580 102\.139 151\.215 168\.769 157\.924 145\.032 115\.282 124\.772
*\. Itoss(table I)
\.tinl Outflow 13\.932 44\.359 67\.810 113\.419 150\.529 131\.769 120\.924 108\.032 78\.282 53\.632
ticr(emental
:iirplus (7\.232) (15\.069) (12\.230) (11\.280) 686 37\.000 37\.000 37\.OO 37\.000 71\.1'i)
I\.R\.R\. = 33,1 %
\.~~~~~~~~~~~~~~~~~~~~I
F%
Agr\. rubber tired skidder
T d 1 \. \.
In Drs
1 2 \.3 4 5 6 7 8 9 id
t, \. vi ne*n ta 1
inv stment
a Eqi -ment 4\.500\.000 _ _ _ _ _ _ _
O\. L'1 taxes - -
ar:d duties
TOtal 4\.500\.000 -
I\. lit ii ,ment\.al
mp1\.r costs
1\.0po at\.cost 348\.000 567,000 896\.000 896\.000 896\.000 896\.000 896\.000 896\.000 896\.000 896\.000
o\.D\.mbitr cost 591\.000 845\.000 1\.280\.000 1\.280\.000 1\.280\.000 1\.280\.000 1\.280\.000 1\.280\.000 1\.280\.000 i\.280\.00o
Tfota I 939\.000 1\.412\.000 2\.176\.000 2\.176\.00C 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000
r"tta OuitfIOW 5\.439\.000 1\.412\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000
rtal Owltflo 5\.439\.000 1412\.000 2\.16\.000 2\.176\.00 2\.176\.00 2\.176\.000 2176\.000 2\.16\.000 2\.176\.00 2\.176\.00
6gric\.rubber tired skidder
T a b 1 e II\.
In Drs
Yr 1 3 4 5 6 7 8 9 10
A\. Incr\.Benefits
a\. Benefits 1\.647\.000 2\.760\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.00
I\.J Res\.value - - - - - - - 450\.OC
T\.tal inflows 1\.647\.000 2\.760\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 3\.600\.000 4\.050\.Cf
I\.mt\.ai Outflow 5\.439\.000 1\.412\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.000 2\.176\.0C
surplus (3\.792\.000) 1\.348\.000 1\.424\.000 1\.424\.000 1\.424\.000 1\.424\.000 1\.424\.000 1\.424\.000 1\.424\.000 1\.874\.OC
I\.R\.R\.m 34,8 %
td
A,jic\.t&-rtor with log\.trolley a
T a b l e I\.
In Drs
it urn Year 1 Z3 4 5 6 7 8 10
A\.Incremental
II!vestment
\.1\. l\.;uipment 1\.365\.000 -
is\.I\.,e::s taxes *
mAtx- duties - -
*\.'Gta 1 1\.365\.000 - - - - -
(qpfr\.CostS
I\. \. gu I:tItd
\.Opxrat\.cost 107\.000 134\.000 176\.000 203\.000 203\.000 203\.000 \.203\.000 203\.000 203\.000 203\.0
1,\.Labour cost 240\.000 361\.000 448\.000 480\.000 480\.000 480\.000 480\.000 480\.000 480\.000 480\.0
Total 347\.000 495\.000 624\.000 683\.000 683\.000 683\.000 683\.000 683\.000 683\.000 683\.0
';oli\.l Outflow 1\.712\.000 495\.000 624\.000 683\.000 683\.000 683\.000 683\.000 683\.000 683\.000 683\.0
:\.'\.
Agric\.tractor with logging trolleys
T a b 1 e II\.
,,,, ,, , ~~~~~~~~~~~~~~~~~In Drs
t\.,Yea~r
A\. Dnrr\.Benefits
\. U< nefits 600\.000 800\.000 1\.000\.000 1\.200\.000 1\.200\.000 1\.200\.000 1\.200\.000 1\.200\.000 1\.200\.000 1\.200\.0(0
I\. Res\.value - - - - - - - - 136\.000
TotalI inflows 600\.000 800\.000 1\.000\.000 1;200\.000 1\.200\.000 1\.200\.000 1\.200\.000 1\.200\.000 1\.200\.000 1\.336\.OOC
ri, Less(table I)
Total Outflow (1\.712\.000) 495\.000 624\.000 683\.000 683\.000 683\.000 683\.000 683\.000 683\.000 683\.0OC
Incremental
surplus (1\.112\.000) 305\.000 376\.000 517\.000 517\.000 517\.000 517\.000 517\.000 517\.000 653\.000
I\.R\.R\. = 36,5 %
lJ
Logging trolleys T a to I I\.
In Drs
Year
Item I 2 3 4 5 6 7 8 9 10 v
Incremtental-
itive,ntment
Equtlipment 200\.oob
Less taxes
atid duties
Total 200\.000 _ _ _ _ _ _
Incremental
O;perat\.cost 893\.000 840\.000 ,980\.000 1\.470\.000 1\.'760\.000 1\.760\.000 1%760\.0QK 1:760\.000 1\.760\.000 1;760\.000
Lcibour cost 600\.000 790\.000 870\.000 980\.000 1\.100\.000 1\.100\.000 1\.100\.000 1\.100\.000 1\.100\.000 1\.100\.000
Total 1\.423\.000 1\.730\.00t 1\.850\.000 2\.450\.000 2\.860\.000 2\.860\.000 2\.860\.000 2\.860\.000 2\.860\.000 2\.860\.00C
tal Outfloy 1\.623\.000 1\.730\.000 1\.850\.000 2\.450\.000 2\.860\.000 2\.860\.000 2\.860,\.000 2\.860\.000 2\.860\.000 2\.860\.0000
, \. \. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-
l4
Logging trolleys
T a b l e II\.
In Drs
lea~ 1 2 3 4 5 6 7 8 9 10
\. Incr\.Benefits I
\. Benefits 1\.300\.000 1\.670\.000 1\.943\.000 2\.590\.000 3\.080\.000 3\.080\.000 3\.080\.000 3\.080\.000 3\.080\.000 3\.e80\.300
\. Res\.value - - - 2n \.n n - -
3tal inflows 1:300\.000 1\.670,000 1\.943\.000 2\.590\.000 3\.080\.000 3\.080\.000 3\.080\.000 3\.080\.000 3\.080\.000 3\.10^\.nnC
\. Less(table I)
,tal Outflow 1\.623,000 1,730,000 1,850\.000 2\.450\.000 2\.860\.000 2\.860\.000 2\.860\.000 2\.860\.000 2\.860\.000 2\.860nons
icremental
surpLus ( 323\.000) (60\.000) 93\.000 140\.000 220\.000 220\.000 220\.000 220\.000 220\.000 240\.10r
I\.R\.R\. 31,3 %
\.
Poerd'~ (F)
T a b\. l e I\.
In Dri\.
Year
Item\. 1 2 3 4 5
A\.Incremental
investment
\.I\.Equipment 50\.000 - - -
b\.Less taxes \. --
ano duties
Total 50\.000 - - - -
)i\.Incremental
I!L\.Oprat\.cost8
a\.Operat\.cost 45\.000 65\.000 65\.000 65\.000 65\.000
b\.Labour cost 280\.000 360\.000 360\.000 360\.000 360\.000
Total 325\.000 425\.000 425\.000 425\.000 425\.000
VoLaI Outflow 325\.000 425\.000 425\.000 425\.000 425\.000
T'oLal Outflow 375\.000 425\.000 425\.OOD 425\.000 425\.000
(F) The calculations for the IRR of this particular type of machinery have been based on a 5 years period because
the operational life of the power saws does not exceed this time limit\.
Power saw
T a b 1 e II\.
in Drs
( 1 2 3 4 5
A\. lncr\.Benefits
i a\. Bviiefits 310,000 460\.000 460\.000 460\.000 460\.000
b\. Res\.value _ _\., _ - '\.VIA
1TA\.al inflows
Ia\.ss(tabe '310\.OOQ 460\.000 460\.000 460\.000 465\.000
D \. L\.ess(table I)r
Tot\.al Outflow 375\.000 425\.000 425\.000 425\.000 425\.000
Incremental
surplus (65\.000) 35\.000 35\.000 35\.000 40\.000
- I\.R\.R\. = 41,0 %
* -'
Loading crane
T a b e I \.
In Dra
Year
Item 1 i 2 \.3 4 5 6 7 8 9 10
i\. Incremental
investment
a\.Fquipment 1\.000\.000 - - -
b\.T,ss taxes\.
r\.nd duties
Total 1\.000\.000 - - - - - - - _
r- hIncremental
o4mer\.costs
*!\.Operat\.cost 50\.000 70\.000 90\.000 90\.000 '90\. 000 90\.000 90\.000 90\.000 90\.000 90\.000
I\.Labour cost 170\.000 \.220\.000 321\.000 321\.000 321\.000 321\.000 321\.000 321\.000 321\.000 321\.000
Total 220\.000 290\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000
Tital Outf low 1\.220\.000 290\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000
Loading\. crane
T a b 1 e II\.
In Drs
J~e Year 1 2 3 4 5 6 7 8 9 10
tf ti: r\. \.enefits
,\. Iet,ef its 500\.000 550\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000- 600\.000
\. Res\.value - - -- - - - 100\.0()
'otal inflows 500\.000 550\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000 700\.000
i\. Less(table I)
'aytal Outflow 1\.220,000 290\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000 411\.000
:ncre"iecntal1
-;ijrljl ~ ~ ~ u_ 72\.00 189\.
(cr t 720,000) 260-000 189\.003 189\.000 189\.000 189;000 189\.000 189\.000 189\.000 289\.000
* I\.R\.R\. - 25,2%
!'I
11 purpose vehicle
T e' b I e \.
\.In Drs
ltemYe 1 2 3 4 5 6 7 8 ' 10
\.incremental
nvestment
\.rEquipment 1\.595\.000 - - - - -
\.Less taxes _ - - -
and duties
Total 1\.595\.000 - - - - - - - - -
Ancremental
oper\.costs , b
\.nperat\.cost 485\.000 794\.000 794\.000 794\.000 794\.000 794\.000 794\.000 794\.000 794\.000 794\.000 \.
Labour cost 430\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000 600\.000'
Total 915\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000
Vnn1 Outflow 2\.510\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000
* ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\.
T a b 1 e II\.
In Drs
1 2 3 4 5 6 7 8 9 10
Incr \.Denefit's
BInefits 1\.519\.000 1\.797\.600 1\.797\.600 1\.797\.600 1\.797\.600 1\.797\.600 1\.797\.6000 1\.797\.600 1\.797\.600 1\.7S7\.60r
Res\.value - - - - - - * - - 159\.5f)C
\.oI infIovws 1\.519\.000 1\.797\.600 1\.796\.600 1\.797\.600 1\.797\.600 1\.797\.600 1\.797\.600 1\.797\.600 1\.797\.600 1\.957\.1OC
Le\.ss(table I)
I\.ciL tutflow 2\.510\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.000 1\.394\.IYX
crtemental ac
rurjoWs ( 9\.491\.000) 403\.600 403\.600 403\.600 403\.600 403\.600 403\.600 403\.600 403\.600 5¶3\.1(Y\. c
I\.R\.R\. 39,1 %
S~~~~~~~~~~~~~~~~~~~
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,\. '8BULGARIA S
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m3n i ferous e3-siel9\S- >
Kilki\.~~~~~~~~~~~~enl
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Podurss (chopoGrtl reqion) \< , ~~~~a \. -BIEEB IEr nA2CI 3rnle 9 yml
--*- rnesntioo Distrcboundaries =° kzoto25 ymo
| ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~, L'\.~ REGION I7 REGIO V REGIONS
5 13\. Kcrpech ~i no-l 31\. Prbkoano _6 ondo
6_-itr_ e IM ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Flaino l2\. Aort\. 3\. Vti
0 -36 100rsr _i\. Utozlc 28 ro-h
KIOETR p,9\.A\.I
VV~~~~~~~~~~~~~~~~~~EGO 0 avrt
e*vkoen~veof,oao\.IeVO~~es\.n,Avc 13 krpnici 1\.XyII19r
teeaooPf\.ra LEFKADASk--uoai, i,Fun 2 oita
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0 a4R4eerwvandet\.,n~n\.atooouoRrE onE C cna\.E o 3\. noid4 | APPROVAL |
P169150 | FOR OFFICIAL USE ONLY
Report No: PAD3662
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF EUR 25\.1 MILLION
(US$27\.4 MILLION EQUIVALENT)
TO THE
REPUBLIC OF KOSOVO
FOR A
FOSTERING AND LEVERAGING OPPORTUNITIES FOR WATER SECURITY PROGRAM
(Project 1)
May 12, 2020
Water Global Practice
Europe and Central Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 1, 2020)
Currency Unit = Euro (EUR)
EUR 0\.91 = US$1
US$1\.09 = EUR 1
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
AFS Annual Project Finance Statement
AIC Average Incremental Cost
B/C Benefit-Cost Ratio
BFD Budget and Finance Department
CEF Citizen Engagement Facilitator
CEO Chief Executive Officer
CPF Country Partnership Framework
DANIDA Danish International Development Agency
DOISP Dam Operation Improvement and Safety Project
E&S Environmental and Social
EBRD European Bank of Reconstruction and Development
EIB European Investment Bank
EIRR Economic Internal Rate of Return
ESIA Environmental and Social Impact Assessment
ESMF Environmental and Social Management Framework
ESMP Environmental and Social Management Plan
ESRS Environmental and Social Review Summary
ESS Environmental and Social Standard
EU European Union
FAO Food and Agriculture Organization of the United Nations
FCV Fragility, Conflict, and Violence
FLOWS Fostering and Leveraging Opportunities for Water Security
FM Financial Management
FMS Financial Management Specialist
GBV Gender-based Violence
GDP Gross Domestic Product
GFDRR Global Facility for Disaster Reduction and Recovery
GHG Greenhouse Gas
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German Agency for
International Cooperation)
GoK Government of Kosovo
GRS Grievance Redress Service
IFR Interim Unaudited Financial Report
IMF International Monetary Fund
IMWC Inter-Ministerial Water Council
IPF Investment Project Financing
IPPP Investment Pipeline for Priority Projects
IPSAS International Public Sector Accounting Standards
IWRM Integrated Water Resources Management
KARP Kosovo Agriculture Development Project
KCA Kosovo Cadastral Agency
KFMIS Kosovo Financial Management Information System
KfW Kreditanstalt für Wiederaufbau
M&E Monitoring and Evaluation
MAFRD Ministry of Agriculture, Forestry, and Rural Development
MEPTINIS Ministry of Economy, Employment, Trade, Industry, Entrepreneurship and Strategic
Investment
MEI Ministry of European Integration
MIE Ministry of Infrastructure and Environment
MoF Ministry of Finance and Transfers
MoU Memorandum of Understanding
MTEF Medium-Term Expenditures Framework
NGO Nongovernmental Organization
NPV Net Present Value
NRW Nonrevenue Water
PCC Program Coordination Committee
PDO Project Development Objective
PFM Public Finance Management
PIU Project Implementation Unit
PMT Project Management Team
POM Project Operations Manual
PPDO Project Procurement Development Objective
PPSD Project Procurement Strategy for Development
PTC Program Technical Committee
RAP Resettlement Action Plan
RBDA River Basin Districts Authority
RBMP River Basin Management Plan
RDGP Rural Development Grant Program
RfQ Request for Quotation
RWC Regional Water Company
SDC Swiss Development Cooperation
SESA Strategic Environmental and Social Assessment
SGM Small Grants Manual
Sida Swedish International Development Cooperation Agency
STA Single Treasury Account
STEP Systematic Tracking of Exchanges in Program
ToR Terms of Reference
TWG Technical Working Group
UNDP United Nations Development Programme
WBIF Western Balkans Investment Framework
WFD Water Framework Directive
WRIPS Water Resources Investment Preparation Study
Regional Vice President: Anna Bjerde
Country Director: Linda Van Gelder
Regional Director: Steven N\. Schonberger
Practice Manager: David Michaud
Task Team Leader(s): Pieter Waalewijn, Trandelina Baraku, Regassa Namara
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
TABLE OF CONTENTS
DATASHEET \. 1
I\. STRATEGIC CONTEXT \. 8
A\. Country Context\. 8
B\. Sectoral and Institutional Context \. 9
C\. Relevance to Higher Level Objectives\. 15
II\. PROJECT DESCRIPTION\. 16
A\. Project Development Objective \. 16
B\. Project Components \. 17
C\. Project Beneficiaries \. 21
D\. Results Chain \. 21
E\. Rationale for Bank Involvement and Role of Partners \. 22
F\. Lessons Learned and Reflected in the Project Design \. 24
III\. IMPLEMENTATION ARRANGEMENTS \. 26
A\. Institutional and Implementation Arrangements \. 26
B\. Results Monitoring and Evaluation Arrangements\. 29
C\. Sustainability\. 30
IV\. PROJECT APPRAISAL SUMMARY \. 31
A\. Technical, Economic and Financial Analysis \. 31
B\. Fiduciary\. 34
C\. Legal Operational Policies \. 37
D\. Environmental and Social \. 37
V\. GRIEVANCE REDRESS SERVICES \. 43
VI\. KEY RISKS \. 44
VII\. RESULTS FRAMEWORK AND MONITORING \. 46
Annex 1: Implementation Arrangements and Support Plan \. 55
Annex 2: Economic and Financial Analysis \. 72
Annex 3: Detailed Project Description \. 79
Annex 4: Maps \. 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
DATASHEET
BASIC INFORMATION
BASIC_INFO_TABLE
Country(ies) Project Name
Kosovo Fostering and Leveraging Opportunities for Water Security Program (Project 1)
Project ID Financing Instrument Environmental and Social Risk Classification
Investment Project
P169150 Substantial
Financing
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC)
[â] Series of Projects (SOP) [â] Fragile State(s)
[ ] Performance-Based Conditions (PBCs) [ ] Small State(s)
[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict
[ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster
[ ] Alternate Procurement Arrangements (APA)
Expected Approval Date Expected Closing Date
09-Jun-2020 30-Nov-2025
Bank/IFC Collaboration
No
Proposed Development Objective(s)
The proposed project development objective is to: (i) strengthen national capacity for managing water security, and
(ii) improve water security in Morava e Binces basin\.
Page 1 of 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
Components
Component Name Cost (US$, millions)
Foundational measures for water security 5\.80
Addressing water crisis with catalytic investments 20\.60
Project management 2\.10
Organizations
Borrower: Republic of Kosovo
Implementing Agency: Ministry of Infrastructure and Environment
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 28\.49
Total Financing 28\.49
of which IBRD/IDA 27\.40
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 27\.40
IDA Credit 27\.40
Non-World Bank Group Financing
Other Sources 1\.09
EC: European Commission 1\.09
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount
Page 2 of 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
Kosovo 27\.40 0\.00 0\.00 27\.40
National PBA 27\.40 0\.00 0\.00 27\.40
Total 27\.40 0\.00 0\.00 27\.40
Expected Disbursements (in US$, Millions)
WB Fiscal Year 2020 2021 2022 2023 2024 2025 2026
Annual 0\.00 1\.80 2\.68 6\.26 8\.32 7\.40 0\.94
Cumulative 0\.00 1\.80 4\.48 10\.74 19\.06 26\.46 27\.40
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas
Agriculture and Food, Environment, Natural Resources & the
Water
Blue Economy, Governance
Climate Change and Disaster Screening
This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1\. Political and Governance â« Substantial
2\. Macroeconomic â« Moderate
3\. Sector Strategies and Policies â« Substantial
4\. Technical Design of Project or Program â« Moderate
5\. Institutional Capacity for Implementation and Sustainability â« Substantial
6\. Fiduciary â« Substantial
7\. Environment and Social â« Substantial
8\. Stakeholders â« Moderate
9\. Other
Page 3 of 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
10\. Overall â« Substantial
COMPLIANCE
Policy
Does the project depart from the CPF in content or in other significant respects?
[ ] Yes [â] No
Does the project require any waivers of Bank policies?
[ ] Yes [â] No
Environmental and Social Standards Relevance Given its Context at the Time of Appraisal
E & S Standards Relevance
Assessment and Management of Environmental and Social Risks and Impacts Relevant
Stakeholder Engagement and Information Disclosure Relevant
Labor and Working Conditions Relevant
Resource Efficiency and Pollution Prevention and Management Relevant
Community Health and Safety Relevant
Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant
Biodiversity Conservation and Sustainable Management of Living Natural Relevant
Resources
Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant
Local Communities
Cultural Heritage Not Currently Relevant
Financial Intermediaries Not Currently Relevant
NOTE: For further information regarding the World Bankâs due diligence assessment of the Projectâs potential
environmental and social risks and impacts, please refer to the Projectâs Appraisal Environmental and Social Review
Summary (ESRS)\.
Page 4 of 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
Legal Covenants
Sections and Description
FA, Schedule 2, Section I\.A\.2 (a) and (b)\. The Recipient shall maintain a Project Management Team (âPMTâ) with
necessary staffing and resources for the purpose of, inter alia: (i) overseeing the management and broad
implementation of the Project; (ii) ensuring adherence to all Association fiduciary and safeguard requirements by
Project beneficiaries, and carrying out Project monitoring and evaluation;
Sections and Description
FA, Schedule 2, Section I\.A\.2 (c)\. The Recipient shall, by no later than sixty (60) days after the Effective Date,
establish and maintain a Program Coordination Committee, with terms of reference acceptable to the Association,
and comprised of the Secretaries General of the ministries involved in the Program implementation,
representatives of mayors of municipalities in the Morava e Binces basin in which Program investments are made,
the chief executive officer of the Project Implementing Entity, and the secretariat to the Inter-ministerial Water
Council, to support cross-sector coordination for the program and serve to steer the Project, approve annual work
plans and budgets, review semi-annual work plans and budgets, review semi-annual implementation progress
reports and audits, and bring broad sector coordination issues to the attention of the Inter-ministerial Water
Council;
Sections and Description
FA, Schedule 2, Section I\.A\.2 (d)\. The Recipient shall ensure that the Inter-ministerial Water Council, a standing
sector-coordination body, inter alia, to review for the Program, and the Project specifically, the systematic issues
concerning water, and to advise on the harmonization of different needs and interests, with relevance to broad
sector coordination, particularly in respect to national water resources investment studies and planning under the
Program\.
Sections and Description
FA, Schedule 2, Section I\.A\.2 (e)\. The Recipient shall by no later than sixty (60) days after Effective Date, establish
and maintain a Program Technical Committee, with terms of reference and composition acceptable to the
Association, to, inter alia, provide technical oversight of Project implementation, coordinate among the
implementing agencies, review and recommend Project work plans and budgets to the Program Coordination
Committee, and supervise a technical working group\.
Sections and Description
FA, SCHEDULE 2, Section I\.A\.3\. By no later than sixty (60) days after the Effective date, the Recipient shall hire or
assign: (a) a qualified financial management specialist, as part of the PMT; and (b) an international procurement
specialist experienced with Associationâs procurement policies and procedures to assist the PMT and to provide on-
the-job training to the PMT staff for the first 24 months of the Project\.
Sections and Description
FA, Schedule 2, Section I\.B\.1\. To facilitate the carrying out of the Project Implementing Entityâs Respective Part of
the Project, the Recipient shall make part of the proceeds of the Credit allocated from time to time to Category 3 of
the table set forth in Section III\.A of this Schedule available to the Project Implementing Entity under a subsidiary
agreement between the Recipient and the Project Implementing Entity, under terms and conditions approved by
the Association\.
Page 5 of 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
Sections and Description
FA, Schedule 2, Section I\.A\.6\. For the carrying out of Part 2\.B of the Project, the Recipient shall cause the Project
Implementing Entity to perform all obligations of the Project Implementing Entity set forth in the Project
Agreement and the Subsidiary Agreement; such obligations shall include carrying out the technical aspects, and the
Project monitoring, evaluation and reporting for Part 2\.B of the Project\.
Sections and Description
FA, Schedule 2, Section I\.A\.8\. By no later than ninety (90) days after the Effective Date, the Recipient shall execute
and deliver the WBIF Grant Agreement, and shall fulfill all conditions precedent to the effectiveness of, or to the
right of the Recipient to make withdrawals under, said WBIF Grant Agreement\.
Sections and Description
FA, Schedule 2, Sections I\.C\.1\. and I\.C\.2 For the purpose of Part 2\.C (ii) of the Project, the Recipient shall make
Small Grants to beneficiaries in accordance with Subproject eligibility criteria and selection procedures, and on
terms and conditions, all acceptable to the Association, as set forth in the Small Grants Manual, and make each
Small Grant available to a respective beneficiary under a Small Grant Agreement\.
Sections and Description
FA, Schedule 2, Section I\.D\.1(a)\. The Recipient shall by no later than thirty (30) days after the Effective Date, adopt
and thereafter maintain during the period of Project implementation a Project Operations Manual (âPOMâ), in form
and substance satisfactory to the Association,
Sections and Description
FA, Schedule 2, Section I\.E\.2\. The Recipient shall, and shall cause the Project Implementing Entity to, ensure that
the Project is implemented in accordance with the Environmental and Social Commitment Plan (âESCPâ), in a
manner acceptable to the Association\.
Sections and Description
FA, Schedule 2, Section I\.F\.1 (a)\. The Recipient shall: (a) prepare and furnish to the Association not later than
October 31st of each year during the implementation of the Project, a proposed Annual Work Plan and Budget; (b)
afford the Association a reasonable opportunity to exchange views on each such proposed Annual Work Plan and
Budget, and shall thereafter ensure that the Project is implemented with due diligence during said following year,
in accordance with such Annual Work Plan and Budget; and (c) not make or allow to be made any change to the
approved Annual Work Plan and Budget without the Associationâs prior written approval\.
Sections and Description
FA, Schedule 2, Section II\. The Recipient shall furnish to the Association each Project Report not later than forty-five
(45) days after the end of each calendar semester, covering the calendar semester\.
Sections and Description
FA, Schedule 2, Section I\.E\.6\. The Recipient shall, and shall cause the Project Implementing Entity to, ensure that all
bidding documents and contracts for civil works under the Project include the obligation of contractors,
subcontractors, and supervising entities to: (a) comply with the relevant aspects of ESCP and the environmental
Page 6 of 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
and social instruments referred to therein; and (b) adopt and enforce codes of conduct that should be provided to
and signed by all workers, detailing measures to address environmental, social, health and safety risks, and the risks
of sexual exploitation and abuse, sexual harassment and violence against children, all as applicable to such civil
works commissioned or carried out pursuant to said contracts\.
Conditions
Type Description
Effectiveness FA, Section 4\.01\. The Recipient has established and properly staffed a Project Management
Team, with positions, terms of reference, and staff qualifications acceptable to the
Association\.
Type Description
Disbursement FA, Schedule 2, Section III\.B\.1(b)\. No withdrawal shall be made under Category (3) until the
Recipient and the Project Implementing Entity have executed a Subsidiary Agreement
acceptable by the Association, in accordance with Section I\.B of this Schedule\.
Type Description
Disbursement FA, Schedule 2, Section III\.B\.1(c)\. No withdrawal shall be made under Category (4) until the
Recipient has adopted a Small Grants Manual, acceptable to the Association\.
Page 7 of 92
The World Bank
Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
I\. STRATEGIC CONTEXT
A\. Country Context
1\. Kosovo faces a unique set of challenges and opportunities as one of Europeâs poorest countries
in terms of its gross domestic product (GDP) per capita and as the youngest country in the continent\.
Since its independence in 2008, the country has made considerable socioeconomic progress, benefiting
from the support of the international community and its own diaspora\. With policies anchored in its
overarching political objective of joining the European Union (EU), Kosovo has made progress in
promoting growth, reducing poverty, and improving the business climate\. Between 2010 and 2018, GDP
per capita grew at an average of 3 percent in real terms and nominal GDP per capita reached EUR 3,746
at the end of 2018, making Kosovo the fastest-growing country in the Western Balkans\. However, it has
one of the lowest living standards in Europe, with per capita GDP (purchasing power parity terms) of
US$10,069 in 2018\. The country scores particularly low on labor dimensions of gender equality, including
from a regional perspective\. According to the 2018 Labor Force Survey of Kosovo Statistics Agency,
female labor force participation is low at 18\.4 percent (63\.3 percent among men)\. Female employment
rate is also low at 12\.3 percent (45\.3 percent among men) and unemployment rate is high at 33\.4 percent
(28\.5 percent among men)\. Over 62 percent of the countryâs population lives in rural areas and depends,
directly or indirectly, on agriculture for its livelihood\. Poverty rate is high with 18 percent of the population
living in moderate poverty in 2017\. Poverty in rural area is especially high and over 40 percent of the rural
population is unemployed\. At the same time, with its new statehood and majority of its population under
the age of 30,1 Kosovo is the youngest country in Europe\.
2\. Kosovo is at an important point in its development, and water security is at the heart of all
socioeconomic activity\. As a small country with many intertwined socioeconomic activities, Kosovoâs
economy has been sustained by limited water resources, including hydropower; cooling water for
electricity generation in the two existing thermal power plants (accounting for 96 percent of power
generation capacity of the country); municipal uses (98 percent coverage, most of it through regional
water companies [RWCs]); industrial uses for light and heavy industryâmining and metallurgyâand
irrigation\. Irrigation infrastructure, enabling summer agriculture production, suffered a steep post-war
decline from 29,000 ha to about 12,000 ha and is now slowly bouncing back to around 18,000 ha (both
formal and informal)\. Social impacts of water pollution are severe, with direct and indirect health impacts
as well as major impacts on productive landscapes and ecosystems\. The broadening gap between growing
water demand and available water supply quantities leads to water shortages and interruptions in water
supply services, particularly in the drier southeastern part of the country, which are expected to become
more frequent and severe due to climate change\. Given the economic and social importance of
sustainable land and water management and development, it is critical to address the root causes of water
insecurity to support growth in Kosovo\. In terms of service provision, this includes institutional
strengthening and improving access to water services and participation in management decisions, broadly
for all citizens, and particularly for women\. Currently, Kosovo is facing an acute water crisis with several
below-average rainfall years leading to restricted water supply in major towns in the east of the country
1 Kosovo Agency of Statistics, http://ask\.rks-gov\.net/media/5082/vjetari-2019_ang-final\.pdf\.
Page 8 of 92
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Fostering and Leveraging Opportunities for Water Security Program (Project 1, P169150)
and constraints on other uses\. A more fundamental challenge is rooted in the lack of infrastructure,
institutions, and information that would have built resilience to these shocks\.
3\. In this light, it is critical that Kosovo moves from fragmented, single sector-specific actions to
joint decisions and concrete investments and measures that will set it on a more robust water secure
trajectory\. The World Bankâs Water Security Outlook for Kosovo2 studied the role of water as it permeates
the economy, society, and environment in many aspects and highlighted immediate objectives, also
emphasized in Kosovoâs national strategies\. This requires a two-pronged approach with both foundational
measures and concrete multifaceted investments to address the current crisis and catalyze a broader
transformation\. As foundational measures, Kosovo needs to improve the institutional capacity for
modern, climate-smart, shared-vision planning and management of its water resources in the economy\.
It also needs to improve the information base and data use for planning and decision support\. Finally, it
needs to improve the operation and safety of its existing large-scale water infrastructure assets, through
dam safety programs\. As catalytic investments start to address the water crisis, the nation needs to
prepare and implement a well-prioritized pipeline of water-related investments, in terms of water
storage, irrigation for commercialization and competitiveness, drinking water supply, and water
protection in the face of climate change-induced risks such as drought and flooding\. These investments
should prioritize Kosovoâs most water-stressed regions and sectors and thus increase economic
opportunities for rural populations for development of agriculture, industry, tourism, services, and other
water-dependent sectors\. And it should make water security an issue that permeates society, through
adoption of sustainable land and water management practices, agro-environmental protection, demand
management, and increased awareness of the importance of sustaining precious water resources\. These
inclusive developments should encourage collaboration among diverse communities\. Pursuing these
opportunities should also enhance Kosovoâs implementation capacity of EU acquis and its readiness for
transboundary water dialogue\.
B\. Sectoral and Institutional Context
4\. Kosovoâs water resources are constrained, largely due to its geography\. Kosovo is a small
landlocked country with limited water resources and very little inflow from other countries, with only one
river (Iber) flowing into the country\. All rivers and smaller watercourses belong to the four main river
basins: the White Drin (Drini i Bardhë), the Iber, the Morava e Binces, and the Lepenc (see Figure 1)\.
Kosovoâs water availability is largely shaped by its topography and geographic location\. Its landscape is
dominated by relatively high mountains (the highest peak is 2,656 m) surrounding two plains (Kosovo
Plain from 510 to 570 masl and Dukagjini Plain from 350 to 450 masl)\. The climate is mid-continental, but
the Dukagjini Plain has a more Mediterranean climate due to its lower elevation and the valley of the Drini
i Bardhë river\. The climate features cold and snowy winters and hot and dry summers\. The annual average
rainfall is highest in the west at around 800 mm per year and lowest in the east at around 600 mm per
year, with an overall declining trend, including longer dry spells and shorter and more intense
precipitation periods leading to flash floods\. Temperatures can range from â27 °C in winter to +39 °C in
summer and precipitation generally falls in winter\. Therefore, agriculture relies on irrigation, and all
sectors require larger water storage capacity to meet summerâs demands, which are augmented with
population and economic growth\.
2 World Bank\. 2018\. Water Security Outlook for Kosovo\. World Bank\.
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Figure 1\. Map of the Four River Basins of Kosovo
5\. By regional comparison Kosovo is water stressed, and it has among the lowest levels of water
resources development and storage\. It is estimated that Kosovo has 1,600 m3 total renewable water
resources per person per year, which is about 16 percent of the regional average\. Also, storage volume
per capita is only 300 m3, about 41 percent of the regional average (see Error! Reference source not f
ound\.)\. This combination makes Kosovo vulnerable to current and future climate change-related natural
hazards, especially floods and droughts\. In particular, Iber basin is water stressed and Morava e Binces
basin is driest in terms of decreasing annual precipitation and lower storage capacity, which are
exacerbated by climate change\. It is expected that all Kosovoâs basins will be water stressed in the next
20 years\. 3 While the projected increase in water demand is attributed to population and economic
growth, combined with the revitalization of the irrigation and mining sector and additional demands from
the energy sector, the projected decrease in total water supply and its increasing variability are attributed
to climate change\. Several large water users are currently showing suppressed demand, and their
revitalization is a key government priority\. The anticipated increase in shocks and deterioration of water
qualityâassociated with climate changeâwill require a more harmonized approach to and additional
improvement in management of storage (snowcaps, groundwater, and artificial) and water pollution at
its multiple sources, to satisfy increasing needs\.
3 Based on projections of higher temperatures, reduced precipitation, and population growth, Kosovoâs water basins may
become water stressed or water scarce by 2040 (Source: World Bank Water Security Outlook Report 2018, citing IPCC 5th
assessment report; WRI Aqueduct 2014; FAO Aquastat; NASA GLDAS; Shhiklomanov and Rodda 2004; Florke et al\. 2012;
Matsutomi 2019 and Republic of Kosovo Climate Change Strategy 2019â2028 https://konsultimet\.rks-
gov\.net/Storage/Consultations/14-13-59-04102018/Climate%20Change%20Strategy%20and%20Action%20Plan_sep_2018\.pdf
)\.
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Figure 2\. Per Capita Water Availability and Storage by Country
Data sources: FAO Aquastat and author calculation
6\. In addition to physical water stress exacerbated by climate change, poor management of
available resources makes Kosovo water insecure\. Inadequate investments in infrastructure; heavy
water pollution; data-poor decision-making based on limited, unreliable data; and lack of integrated
planning and enforcement of regulations add pressure on an already constrained resource base\. While
the drinking water sector has made strides in increasing access, the problem of high nonrevenue water
(NRW) persists, sewage and wastewater treatment is lagging, and access to services is still uneven across
the country\. The actual irrigated area is below half of the equipped area, let alone the potential in the
country\. At the same time, many problems have arisen from unprecedented urbanization and the
construction boom of the past decade, which has caused at times development in flood-risk zones,
impeded storm drainage capacities, and interrupted service systems\. Water resources are often heavily
polluted (from domestic, mining, industrial, and nonpoint agricultural sources) and cannot be used for
drinking or irrigation, and services are poorly managed with outdated infrastructure, high losses, and poor
service delivery\. Hydrometeorological observations, analysis, and data services show shortcomings with
limited stations and information in the public domain\. Currently, there are no river basin management
plans (RBMPs) or actionable plans or forums to convene, debate, allocate, and manage in an integrated
way to optimize water use, sustain the countryâs water resources, and/or build resilience against shocks\.
7\. There is no systematic surveillance of dam safety in the country\. Monitoring and maintenance
of the dams were partially suspended in recent years\. The few existing large dams in Kosovo all pose major
hazards if safety is not guaranteed, especially with projected trends of shorter and more intense periods
of rainfall due to climate change\. The absence of systematic dam safety surveillance and planning is of
concern for downstream communities, their economic life span, and their broader operations and
management, and it will block the much-needed expansion of water storage capacity\. Careful integration
of dam safety and operational improvements cognizant of basin changes can significantly enhance overall
basin water efficiency for multiple sectors\.
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8\. Climate change is expected to exacerbate existing problems and introduce new shocks\. Climate
change models predict that the region will get drier and warmer faster than the world average, particularly
summer dry spells may increase, coupled with shorter but more intense rain periods\. This climate trend
is already observed, evidenced by the fact that communities are increasingly affected by water shortages
and floods, ecosystem degradation, pollution and water-related diseasesâparticularly in the east of the
country\. Flood damages are already significant and on the rise\. It is estimated that a 100-year flood may
lead to damage equivalent to 3 percent of the countryâs GDP (US$200 million)\. The annual average
population affected by flooding in Kosovo is about 10,000 and annual average affected GDP is about
US$50 million\.4 With climate change-induced increase in the frequency and intensity of flood events in
the future, coupled with projected economic growth, these figures are modeled to increase dramatically
if no resilience is built up\.
9\. The adverse economic, social, and environmental impacts of these challenges are acute
nationwide\. Kosovo has been struck by droughts several times in the last two decades (1993, 2000, 2007,
2008, 2014, and 2019)\. Between 2004 and 2008, 80 percent of Kosovo municipalities suffered from water
shortages due to hydrological drought\. The drought of 2007 was particularly severe and in 2014, following
depletion of reservoirs from low snow and rain levels, water rationing was instituted in the capital,
Prishtina\. Due to climate change, the likelihood of severe drought is expected to increase significantly\.
Summer precipitation is expected to decrease further while evapotranspiration will increase, more
intense rainfall events are expected, along with reduced system storage and baseflows due to reduced
snowcaps and catchment degradation; the water availability in the dry season is even more sensitive\. It is
estimated that Kosovo will face a decline of 50 days of snow cover per year by 20505, which will have a
large impact on water storage in snowpack with major impacts on system hydrology and increase in winter
flooding risks\.
10\. The ongoing water crisis caused by severe drought particularly in the eastern part of the country
raises the urgency for action\. Within the Morava e Binces basin, the area already with lowest rainfall and
among the highest water stress and least storage of Kosovoâs basins, the 2019 drought has had major
consequences\. Reservoir levels are at record lows due to absence of seasonal rains after a drier-than-
usual 2018 raining season\. Water quality has further deteriorated, making it unusable for any economic
activity including irrigation\. Importantly, major towns and villages have had to introduce strict rationing
with parts of the service area de facto running out of drinking water\. The southeast municipalities of Gjilan
and Viti have been particularly hard hit with more than six months of water restriction among residents
and businesses which has become a repeated episode in this region of Kosovo\. Existing drought
management plans do not address the root cause of the adaptation problem, that is, lack of systematic
water resources planning and demand management\.
11\. Todayâs challenges need to be addressed and new approaches need to be tested\. The
Government has laid out its long-term vision in the National Water Strategy (2017â2036), which includes
both foundational measures and recognizes the need for immediate investments particularly in the most
water-stressed parts of the country, where services are interrupted\. This provides an opportunity to
address the water crisis while also learning valuable implementation lessons in applying a broader water
4Kosovo Country Risk Profile for Floods and Earthquakes, GFDRR, World Bank\. 2016\.
5Kosovo Climate Change Framework Strategy, Kosovo Ministry of Environment and Spatial Planning\. 2014 and Action Plan for
the Climate Change Strategy\. UNDP and Austrian Development Cooperation\. 2016\.
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security lens\. Development of new multipurpose water storage will be the backbone of this approach, and
this will include the âKike-Kremenataâ system, which has remained an unrealized priority project since the
1980s\. The most recent comprehensive water resources investment strategy is the 1983 Water
Masterplan\. The socioeconomic trajectory of the country, the water and climate change situation, the
regulatory framework stemming from Kosovoâs national and EU legislation, and available technology and
management insights have profoundly changed since then\. Improving environmental services and nature-
based solutions will be equally critical in a comprehensive approach of sustaining the countryâs water
resources\. Watershed protection is important for ensuring environmental functions as well as for
satisfactory quality and quantity of water throughout the year for productive livelihoods\. More than 55
percent of Kosovoâs land surface is prone to mild or severe erosion and through forest loss and thinning
(largely due to illegal logging for meeting heating needs), catchments get degraded, threatening their
hydrological functions and noticeably reducing summer baseflows as well as shortening the economic life
span of reservoirs\. At the same time, demand management and improved efficiency of service delivery
(the Hidromorava RWC system for instance has over 62 percent NRW) go a long way in addressing the
current crises, postponing the need for expensive additional storage\. Thus, a water security approach
builds resilience through a combined approach of increasing storage capacity, sustaining water resources,
improving service delivery, and protecting citizens from major water risks\.
12\. Given its water scarcity, Kosovo aims to reduce high inefficiencies in the water services sectors\.
Despite steady improvements in recent years, efficiency gains can still be made\. For instance, NRW levels
in 2017 reached 58 percent, negatively affecting service costs and service level6 This high level of NRW is
due to a combination of factors including outdated infrastructure, outdated metering devices, data-
handling errors, and water misuse\. Staff productivity in 2013 was 6\.6 employees per 1,000 connections7\.
The billing collection rate was 71 percent, revealing internal utility inefficiencies and unresolved
affordability issues with customers 8 \. However, at the same time improving the environmental and
financial sustainability of RWCs remains a priority in the drinking water sector, especially through the
reduction of NRW\. At the national level, a drought management strategy and NRW reduction strategy
have been elaborated, mirrored by medium-term plans for each RWC\. Several utilities have started to
implement pilot projects, although results are not yet visible in shifting efficiency and performance
indicators at the sector level\. At the same time, some utilities, including Hidromorava RWC, have not yet
reached all their rural customers in the service area, and Hidromoravaâs NRW is above average at over 62
percent\. Given its much reduced area, overall irrigation abstractions (~140 million m3 per year) are
currently below water supply and sanitation abstraction (~178 million m3 per year), but if irrigation is to
be revitalized, these figures will rise exponentially if efficiencies are not improved\. The Government is
currently developing a comprehensive irrigation investment framework that will help prioritize and
prepare irrigation and drainage investments in the country that support a thriving agricultural sector and
are based on sustainable water balances and water use efficiency\. This study will be ready in July 2020
and will inform future investments in this sector\.
6 The Kosovo Water Services Regulatory Authority report, 2017
7 Annual Performance Report of Water Service Providers in Kosovo, in 2013\. Pristina: Water and Wastewater Regulatory Office
of the Republic of Kosovo\. 2013\.
8 Annual Performance Report of Water Service Providers in Kosovo, in 2013\. Pristina: Water and Wastewater Regulatory Office
of the Republic of Kosovo\. 2013\.
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13\. Currently, Kosovo is underprepared to tackle these water management challenges\. Efforts to
address them are hampered by a multitude of factors\. A major challenge is weak and fragmented
institutional arrangements and capacity for water management at both national and local levels and a
severe lack of funding for these activities\. The current institutional framework for water management in
Kosovo involves many government institutions and other stakeholders\. Overall, water management is the
mandate of the Ministry of Infrastructure and Environment (MIE), with key functions in subsectors
managed by other line ministries (notably Ministry of Agriculture, Forestry and Rural Development
[MAFRD]; Ministry of Economy, Employment, Trade, Industry, Entrepreneurship and Strategic Investment
[MEPTINIS]; and Ministry of Health)\. State-owned enterprises for irrigation and/or water supply under
MEPTINIS manage most of the service delivery\. Most of the forest and agricultural land is owned and
managed by farming families and interventions on their land require a partnership approach\. The River
Basin Districts Authority (RBDA), currently a department under the MIE, has an executive role for water
resources management for all four basins, and there are many other institutes in the areas of
environment, service regulation, public health, spatial data, and emergencies that fulfill specific functions
in the water sector\. Intergovernmental sector coordination has taken the shape of an inter-ministerial
water council (IMWC), headed by the Prime Minister\. The last decade saw an impressive development of
the legal framework, strategies, action plans, and policies as well as notable successes in subsectors\. Yet,
institutional capacity to deliver on mandates and integrated water resources planning remains weak
across line ministries and enforcement of plans and rules remains haphazard\.
14\. Realizing the challenges, the Government and its partners have begun to address the multiple
challenges\. Under the guidance of the IMWC and following the National Water Strategy (2017â2036),
efforts have begun to rehabilitate and improve management of critical water resources assets in the
country\. These efforts include restoring of Gazivoda-Iber Lepenc, rehabilitation and modernization of the
Radoniqi Dam and Radoniqi-Dukagjini irrigation scheme, and a range of investments and reforms in the
water supply and sanitation sector covering both larger towns and smaller conglomerations\. The
Government has support from several bilateral donors, notably the Swiss Development Cooperation (SDC)
on institutional support and sector coordination, Sweden on river basin planning in the Drini i Bardhë
basin, several financiers on wastewater treatment, and the Deutsche Gesellschaft für Internationale
Zusammenarbeit (German Agency for International Cooperation, GIZ) on preliminary flood risk
management\. Kosovo also developed its Climate Change Framework Strategy with financial support from
Austrian Development Cooperation and United Nations Development Programme (UNDP)\. The country,
therefore, has a good number of building blocks, but as highlighted in the World Bankâs 2018 Kosovo
Water Security Outlook Report, the focus needs to shift to a more holistic and less piecemeal approach
on achieving water security and from strategies to on-the-ground implementation, building the
foundations for real impacts and tangible outcomes that help Kosovo address these multiple challenges
for the coming decades\. The Government of Kosovo (GoK) has requested the World Bankâs assistance to
prepare a comprehensive water security project in close coordination with other partners, particularly the
SDC given its overarching institutional support\. While development of new storage capacity presents a
key objective in the Governmentâs vision, it is important to complement this with a holistic approach
toward planning and investment preparation that could be the major outcome of the project and pave
the way for further development of a transformational program in the broader water sector\. The
âFostering and Leveraging Opportunities for Water Securityâ (FLOWS) program aims to support this vision
through a sequence of two interlinked phased projects, of which this Project Appraisal Document
describes the first phase project\.
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C\. Relevance to Higher Level Objectives
15\. The proposed project aligns well with the World Bankâs Country Partnership Framework (CPF)9
for Kosovo\. The project focuses on safeguarding and enhancing the water security situation in the country
to ensure improved and sustainable livelihoods, food security, water supply, and electrical energy
generation, which are essential elements to support sustainable economic growth and poverty alleviation
efforts\. With a view to improving the countryâs water security, the project intends to reduce the climate
change-exacerbated risks of droughts and floods risks\. In doing so, the project contributes to pillar 3 of
the CPF (2017â2021), âPromoting Reliable Energy and Stewardship of the Environmentâ, which aims to
improve management of natural resources and address environmental contamination\. The CPF plans to
respond to government demand on supporting the modernization, expansion, and sustainability of
Kosovoâs irrigation network\. In addition, the CPF recognizes the need to support structural and
nonstructural measures for Kosovoâs water sector to achieve Kosovoâs socioeconomic development
objectives, in particular its contribution in addressing bottlenecks to shared prosperity and poverty
reduction, as covered under pillar 1 âEnhancing Conditions for Growth and Employmentâ\.
16\. Since the project is closely aligned with the national aspiration on EU accession and is designed
to help build capacity in the water sector to further align with the Water Framework Directive (WFD)
and other EU partnerships, it supports the broader national and regional priorities\. The project directly
responds to GoKâs priorities as laid out in the National Water Strategy (2017â2036) and Water Policy and
the National Climate Change Strategy 2019â2028\. It provides long-term planning, vision, mission,
measures for water policy development in Kosovo in the fields of water resources conservation and
protection, economic valorization of water resources, adaptation to climate change-related shocks, and
response to emergency situations as well as strategic planning for multiple water uses and users\. The
project directly advances the achievement of its five strategic objectives and endorses its principles\.
17\. The project is also expected to contribute to human capital outcomes in Kosovo, from health
benefits through access to improved water supplies and water quality to socioeconomic benefits
associated with water for irrigation, sustainable watersheds, and improved resilience through better
management of water resources, dam safety, and better management of impacts from weather shocks
such as flash floods and enduring droughts\. For example, water supply infrastructure investments are
expected to benefit more than 190,000 residents in the Morava e Binces river basin who are suffering
from the ongoing drought\. Dam safety and hydrometeorological services benefit the entire population in
multiple ways, and improved water resources investment planning enhances aid effectiveness through
better targeting of capital expenditures\. Increases in household income, strengthened empowerment and
determination of water pathways, improvements in water supply and hygiene, and increased resilience
to the climate change-exacerbated drought and flood risks contribute to improved human development
outcomes, as also contained in Sustainable Development Goal 6, which is ensuring availability and
sustainable management of water and sanitation for all\. The projectâs economic and financial analysis
further explains and quantifies these multiple benefits in annex 2\. The project also contributes to the
World Bank Groupâs twin goals of ending extreme poverty and promoting shared prosperity\. The project
area targets climate change resilience building in the driest and most at-risk region of Kosovo, where rural
poverty rates and emigration rates are high\.
9 Kosovo Country Partnership Framework FY17-FY21, Report Number\. 112337-XK\. World Bank\. 2017\.
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18\. While the project addresses a deeper underlying crisis, the issues it addresses have become more
relevant in the context of the COVID-19 pandemic during which the project is appraised\. Water security,
including basic water supply and sanitation services underpin public health, as handwashing, health care
facilities, and sanitation are all critical in the immediate response and depend on uninterrupted water
supply\.
II\. PROJECT DESCRIPTION
A\. Project Development Objective
PDO Statement
19\. The proposed Project Development Objective (PDO) is to: (i) strengthen national capacity for
managing water security, and (ii) improve water security in Morava e Binces basin\.
20\. In this context, water security is defined as the capacity to safeguard sustainable access to
adequate quantity and quality of water for socioeconomic development, improve a range of water
services, preserve the environment, and build resilience against shocks which includes floods and
droughts\. It will be achieved by improving the information base for managing water resources, ensuring
safety and effective management of water assets, improving water services for selected areas, and
improving the planning and preparation of water management actions by the Government, communities,
and individuals in a phased way\.
PDO-Level Indicators
21\. The project proposed the following indicators for each of the two PDO aspects:
(i) Strengthen national capacity for managing Kosovoâs water security (PDO part 1)
⢠National Water Resources Investment Preparation Study developed including climate
change analysis,10 and presented for endorsement to the government
⢠Number of new and refurbished stations with data for near real-time hydro-met,
climate, and spatial planning made publicly available
⢠Number of people downstream of high hazard dams with access to relevant early
warning systems\.
(ii) Improve water security in Morava e Binces basin (PDO part 2)
⢠Percentage of Hidromorava RWC consumers with at least 18 hours of water supply\.
10
The National Water Resources Investment Preparation Study (WRIPS) will conduct assessments of climate change impacts on
water demand and water resources supply as part of the water balance modeling\.
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B\. Project Components
Project Description
22\. This project is the first of two phases of the FLOWS program in a âseries of projectsâ approach,
with the overall objective of improving Kosovoâs long-term water security and resilience to expected
climate change-induced water shocks\. The projects will run partially in parallel and together will directly
address the needs as identified in the Kosovo strategy and the Water Security Outlook\. The programmatic
approach is built around two pillars of (a) foundational measures for long-term transformation and (b)
catalytic investments that address the immediate investment needs, deliver implementation lessons, and
catalyze additional integrated interventions in water security\. The âseries of projectsâ approach was
selected as it will allow staging of investments when they are ready; prioritize emergency measures,
strengthen capacity (in terms of data, analysis, and institutions) through providing learning opportunities
and foundational investments; build in the possibility of adapting to changing circumstances including
increased drought and flood episodes and unforeseen implementation bottlenecks; and consolidate
success from the first phase into the second phase\. A key foreseen activity in the second phase project is
a storage reservoir in the âKike-Kremenataâ hydro-system, not currently ready to be appraised, and the
first phase project will finance the technical, social, and environmental studies to allow a more detailed
appraisal for the second phase project\. See annex 3 for more details\. Figure 3 presents the two-pronged
nature of the project and the envisaged evolution to a more programmatic approach\.
Figure 3\. FLOWS Programmatic Overview - Two-pronged Approach
Component 1: Foundational measures for water security (IDA EUR 5\.3 million)
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23\. This component will build the foundations for water security in the country, thereby increasing
targeted communitiesâ resilience to the climate change-induced threat of droughts, and build readiness
for major investments that duly consider current and foreseen climate change impacts\. It will support
(a) national-level water resources investment preparation, (b) enhancement of water information system
for decision-making\. and (c) dam operations improvement and safety regulations and measures\. These
activities will also enable improved implementation of Kosovoâs Climate Change Framework Strategy\.
24\. Subcomponent 1\.1 - Strengthening National Water Resources Investment Planning\. This
subcomponent aims to update the hydrological, technical, and economic analysis underlying water
resources investment planning in Kosovo in the context of increasing drought and flood risks and
prepare a prioritized bankable investment pipeline for concrete water sector investments and
interventions to support the socioeconomic and sustainable development needs of Kosovo\. An updated
and detailed National Water Resources Investment Preparation Study (WRIPS) will be prepared, including
a national-level Strategic Environmental and Social Assessment (SESA) and assessment of scenarios for
investment opportunities considering projected drought and flood impacts\. This will update the analysis
of the 1983 Masterplan while introducing more flexible rolling plans based on appropriate decision
support tools and a broader range of investments, including nature-based solutions and operational
strategies\. The WRIPS will inform the development of the RBMPs in presenting well-researched
management and development alternatives that address the socioeconomic needs in the country, thus
ensuring the RBMPs will respond to the countryâs broad water security challenges\. The activities will be
based on a structured dialogue and consultation process involving relevant institutions, stakeholders, and
other development partners\. An Investment Pipeline for Priority Projects (IPPP) will be prepared, with
prioritization criteria including climate change considerations\. This will include the identification of a list
of prioritized investments or interventions, analysis of financing options, and documentation for the
integration into the RBMPs that conform with the EU WFD\. These RBMPs are developed in parallel and in
close coordination\. In addition, this subcomponent will finance the preparation of EU Instrument for Pre-
Accession Assistance financed irrigation measures prioritizing efficiency gains in the water supply sector
to avoid exacerbating water stress\. Irrigation investments will be prioritized in the Irrigation Masterplan
and Investment Framework, currently under preparation by MAFRD and expected by July 2020\.
25\. Subcomponent 1\.2 - Enhancing information services for water management\. This subcomponent
aims to overcome the immediate information gap for sustainable water resources management\.
Specifically, it will support the following activities: (a) technical assistance to improve spatial information
systems from data production, analysis, and dissemination for the Kosovo Cadastral Agency (KCA) and (b)
goods (equipment), civil works, and software to upgrade hydrometeorological facilities; systems to
integrate various meteorological and hydrological information; and decision support systems for risk
forecasting and early warning for floods and droughts\.
26\. Subcomponent 1\.3 â Enhancing regulation of dam operation and safety\. This subcomponent aims
to restore rigorous dam safety surveillance and improve the operations of reservoirs in Kosovo in
compliance with the Environmental and Social Standards (ESS) 4\. It will finance the assessments,
equipment, and training for institutionalizing dam safety surveillance measures which will reduce the risk
of dam failures (and the associated flooding) and protect/expand essential water storage capacity for the
country\. These activities will include (a) assessments and training for dam safety surveillance programs,
(b) investments in dam safety surveillance equipment to improve dam operation, and (c) a dam safety
panel to ensure sustainability of dam operations improvement and safety management practices\.
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Selection and prioritization of activities will be informed by a dam operations improvement and safety
management program conducted during project preparation, which includes climate change-related
criteria\. More details can be found in annex 3\.
Component 2: Addressing water crisis with catalytic investments (IDA EUR 17\.9 million and WBIF11 grant
EUR 1 million)
27\. This component aims to catalyze water security investments in the Morava e Binces basin that
address the immediate challenges of water shortage and other risks exacerbated by climate change
(erosion, rising temperatures, evapotranspiration rates, and so on), poor service delivery, and a single-
sector approach to cross-cutting water security issues while embarking on an integrated water security
agenda\. It will finance immediate measures in integrated basin development and management: (a)
preparation of the âKike-Kremenataâ hydro-system; (b) improvements to enhance the quantity and quality
of drinking water supply in response to the regionâs ongoing drought crisis; and (c) piloting of bottom-up,
integrated upstream water stewardship measures that can strengthen water security and resilience,
protect source water, reduce erosion, improve ecological services with an integrated approach, and
improve rural livelihoods\.
28\. Subcomponent 2\.1 - Preparation of FLOWS2 investments\. This subcomponent will prepare one
reservoir planned under the âKike-Kremenataâ hydro-system and other FLOWS2 critical water
infrastructures based on the results of the WRIPS\. This subcomponent is co-financed with a WBIF grant
of EUR 1 million\. The âKike-Kremenataâ hydro-system was envisioned in the 1983 Masterplan and includes
a system of three water reservoirs located at Kremenata, Hogosht, and Desivojca\. This system is the
highest priority water resources investment in the countryâs investment pipeline and would, once
constructed, relieve water shortage pressures and worsening conditions due to climate change-induced
drought in the northern Morava e Binces basin\. As this would entail construction of a high dam,12 and part
of the design studies are more than 30 years old and incomplete, it is imperative to update the analysis in
many aspects, including from a technical, social, and environmental perspective in accordance with
current baseline, demands, and objectives\. The project will support these studies, including through a
WBIF technical assistance grant, and the development of an updated detailed design, procurement, and
financial packaging as well as relevant social and environmental impact assessments and management
plans\. Phase 1 project analysis would set the stage for investments in storage and water supply network
investments as well as irrigation investments to be considered for the Phase 2 project (FLOWS2), both of
which would alleviate increasing water stress\. The timing of the Phase 2 project is primarily determined
by the timing of outputs under this subcomponent\. In addition to the âKike-Kremenataâ hydro-system, this
subcomponent will finance additional preparation studies for activities under FLOWS2, including the
development of feasibility studies and designs for prioritized investments or interventions\.
11 Western Balkans Investment Framework (WBIF) is a joint facility of the EU, financial institutions, bilateral donors, and the
governments of the Western Balkans\. It supports socioeconomic development and EU accession across the Western Balkans
through the provision of finance and technical assistance for strategic investments in the energy, environment, social,
transport, and digital infrastructure sectors\. The World Bank became a full member of the WBIF in June 2019\. A recipient-
executed trust fund will be established\.
12 The 1980s design document estimated that the Desivojca reservoir and Kremenata reservoir could be more than 50 m tall
with potential storage volume of 13 million m3 and 8\.75 million m3, respectively\.
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29\. Subcomponent 2\.2 - Investments in water infrastructure and services addressing the water crisis\.
This subcomponent will finance critical water supply infrastructure, equipment, and activities focused
on alleviating the current water supply crisis in the Morava e Binces basin (the Hidromorava RWC service
area) primarily through improved water demand management and creating conditions for long-term,
reliable water supply for the basin population and industry in a drought-prone area\. This subcomponent
will include (a) investments to rehabilitate and modernize critical municipal water supply system
infrastructure; (b) development and implementation of demand management activities, such as
communication, establishment of progressive tariffs, regulation of the efficiency of water-using
appliances (in new buildings), water leak detection and elimination, and establishment and management
of pressure management zones; (c) purchase, replacement, and installation of equipment and
development of measures needed to improve energy efficiency, reduce commercial water losses, and
establish efficiently control and management of water supply systems; and (d) preparation of NRW survey
for selected water supply systems, project documentation for works, implementation support, project
supervision, utility performance improvement plans, and staff training in Hidromorava RWC\. All of these
activities will directly or indirectly increase the reliable water supply, thereby making the targeted
communities more resilient to the climate change-exacerbated drought risk\. In addition, these four
categories are expected to result in energy efficiency gains\. This subcomponent will also finance the
project-related operating cost and training for Hidromorava RWC\.
30\. Subcomponent 2\.3 - People-centered water stewardship investments\. This subcomponent
supports in piloting bottom-up activities that engage communities and individuals in water stewardship
so that watersheds are able to sustain socioeconomic activity\. This subcomponent will (a) prepare
subwatershed action plans by community groups and (b) pilot a small grants program\. The small grants
will be provided to community groups, civil society organizations, or individuals in selected sub-basins,
prioritized based on vulnerability to climate change, among other criteria, to (a) promote, test, and
demonstrate innovative practices to increase water security, leading to improved resilience to drought
and flood; (b) enhance sustainable natural resources management that will increase carbon sequestration
potential in the project area; and (b) raise awareness about water security and environmental protection\.
Component 3 - Project management (IDA EUR 1\.9 million)
31\. This component will provide funding to contract professional and support staff to strengthen
the Project Management Team (PMT) to be established in the MIE, facilitate its operations, and ensure
that certain specialized tasks are professionally executed by people with the required background and
knowledge, including professional staff, short-term experts, and support staff\.
32\. The project will finance operating cost for participating agencies in the execution of project
activities through the Technical Working Group (TWG), with exception of Hidromorava RWC\. This
project is therefore following GoK guidance on project management and is building local capacity for aid
effectiveness\. General services will be shared between FLOWS and a parallel proposed project in the MIE
on greening wastelands, that is, the Greening Land Project\. More details are described in section III\. In
addition to the above, this component has provisions for workshops, short training courses, and a limited
number of external internships for young professionals (linked specifically to project activities and
multisectoral collaboration)\. Internships will follow similar arrangements as under other donor-funded
programs with the aim to build capacity in the Government and help absorb young talent in the
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implementing agencies\. While there is no shortage of well-educated graduates, their opportunities for
gaining practical experience are limited\.
C\. Project Beneficiaries
33\. All citizens benefit from the improved information services, infrastructure planning, and
institutional strengthening in general terms\. At the national level, beneficiaries of this project include
government agencies in charge of water resources management and development such as river basin
management authority, hydrometeorological services, cadaster agency, and their hosting ministries\.
Residents and farmers will also benefit from enhanced hydrometeorological services, catchment
protection, agro-environmental measures, and the resulting economic opportunities\. All communities
downstream of Kosovoâs high-hazard dams will also benefit from reduced flood risks and better
emergency preparedness\. Drought risks would be reduced by enabling idle water storage capacity to be
utilized\.
34\. The project will directly benefit approximately 190,000 people residing in the Morava e Binces
basin\. They will first and foremost get access to improved water services and be eligible for grants and
awareness/opportunities to engage in participatory basin management\. Within the Morava e Binces river
basin, beneficiaries of this project include residents and businesses in the flood- and drought-prone areas\.
In addition, aggregated effects from regional and national level interventions could benefit the broader
river basin and region in terms of improved awareness and resilience, reduced flood and drought risk
vulnerability, new employment and business opportunities, and more cross-sector coordination for
integrated water and land resources management and development\.
D\. Results Chain
35\. Proposed activities under this project respond to several root causes underpinning key water
sector challenges in Kosovo\. At the national level, water sector investment decision-making is fragmented
across several independent ministries and agencies\. While Kosovo has developed water security strategic
documents, there is a lack of readiness of bankable investment projects to effectively address the water
infrastructure gap, which is widening due to increasing demand for urban and rural water supply and
reduced availability due to longer dry spell and shorter rainfall periods\. Data and information needed to
support decision-making are limited in availability and accessibility\. In addition, poor monitoring and
maintenance of dam safety for existing water storage capacity could threaten downstream community
safety and leads to ineffective water resources management and utilization\. As the most arid river basin
in Kosovo, the Morava e Binces river basin also has unique water resources management obstacles\. Low
per capita water storage capacity makes the basin more vulnerable to drought and flood risk
management\. The repeated drought events in the past five years revealed the acute water shortage
challenge in the basin\. The basinâs infrastructure base is insufficient for resilient service delivery and high
NRW affects both service provision and utilitiesâ financial performance\. In addition, limited participation
of citizens in natural resources management and conservation leaves space for improvement in
government accountability and customer satisfaction\.
36\. Considering the abovementioned challenges, this projectâs results chain will f ollow two pillars:
(a) foundational measures for water security at the national level and (b) catalytic investments in the
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Morava e Binces river basin in response to existing drought emergency while systematically enhancing
integrated water and land resources management within the basin\.
Figure 4\. FLOWS Results Chain
37\. Achievements of proposed objectives should result in improved capacity to plan, manage, and
develop water resources at the national and basin level; improved availability, analysis, and utilization of
information for decision-making; increased water storage capacity; improved irrigation service delivery
and irrigation coverage; improved flood resilience; and increased water supply to meet residential (urban
and rural) and industrial water demand; and overall stronger and more inclusive institutions that
articulate development priorities into action\.
E\. Rationale for Bank Involvement and Role of Partners
38\. The World Bank has a long history of engagement with Kosovo and brings significant value
added to the project\. The World Bank supported a number of investments in water security during the
Yugoslavia era and since the countryâs independence\. The World Bank continues to support this agenda
through the ongoing Water Security and Canal Protection13 and the Agriculture and Rural Development
Projects 14 as well as through advisory services and analytics studies in the agriculture, energy,
13 Water Security and Canal Protection Project, P133829, 2016â2022\. Its objective is to contribute to restoring the Iber canal to
its original capacity to improve water resource management for various canal water users in Central Kosovo\.
(https://projects\.worldbank\.org/en/projects-operations/project-detail/P133829?lang=ar)
14 Agriculture and Rural Development Project, P112526, 2011â2021\. Its objective is to assist the recipient to promote
competitiveness and growth in the livestock and horticulture subsectors over the next decade through implementation of
selected measures of its agricultural strategy and institutional development (https://projects\.worldbank\.org/en/projects-
operations/project-detail/P112526?lang=es)\.
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environment, irrigation, land management, and water supply and disaster management sectors\. In 2018,
the World Bank published a Water Security Outlook Report for Kosovo, which recommendations were
among the triggers for the development of this project\. Building on these investments, the opportunity
to support the GoK to adopt a comprehensive and integrated planning and development approach for the
country and to show tangible results in the Morava e Binces basin will not only enhance the impact of
these earlier investments but also ensure the long-term sustainability of the GoKâs ambitious economic
development plans\.
39\. The World Bank is also supporting the GoK with the preparation of a parallel Greening Land
Project (P172992) and there are direct synergies between the projects\. The Greening Land Project is also
proposed to be implemented by the MIE and has the objective of demonstrating a sustainable risk-based
approach to remediation and redevelopment at selected contaminated sites\. Many of these sites have
water quality impacts by polluting surface water and groundwater in their vicinity and beyond\. While
projects sites will be determined, the indicative short list of potential sites includes several sites that have
a direct impact on water resources, among which is the Artana mine tailings site in the Morava e Binces
basin\. Polluted water from this site ends up in the Kriva Reka river which is used for drinking water and
other economic use downstream\. This is in the same general area where the FLOWS program is promoting
integrated approaches to water resources management\. At the operational level, there is collaboration in
terms of general services (see the Implementation Arrangements section)\.
40\. The World Bank has served as a trusted partner in the country, working closely with other
development partners (see box 1 for details), including the SDC, Swedish International Development
Cooperation Agency (Sida), GIZ, EU, UNDP, and IMWC as the primary advisory group that provides
guidance to Kosovoâs water sector development\. The IMWC leads a bimonthly donor coordination
meeting of the water sector with participation from representatives of the Ministry of Finance and
Transfers (MoF), the MIE, and MEPTINIS\. While other donors such as the SDC, Sida, and GIZ have
traditionally focused on technical assistance and water supply and sanitation sector, FLOWS represents
an attempt to move the development support for Kosovoâs water sector to the next level, that is, taking
an integrated approach that enables coordinated management and development of water and land
resources to maximize resultant economic, environment, and social benefits\. This approach will not
overlap with but rather build on the ongoing initiatives provided by other development partners\. It
provides an opportunity to achieve more ambitious water sector development objectives with a more
systematic and coherent long-term vision\. There are many synergies between FLOWS and the SDC-
supported Integrated Water Resources Management - Kosovo project and the programs are closely
coordinated in terms of training of young professionals, assessments and investments in hydromet,
investment planning and river basin management planning, and joint policy dialogue on institutional
strengthening and services\. This synergistic approach has allowed FLOWS to embed investments in a
broader support program that maximizes the effectiveness of grant and loan financing\.
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Box 1\. List of Partners Active in Kosovoâs Water Sector and Their Primary Target Activities
SDC\. The SDC is in the start-up phase of a long-term institutional strengthening program (IWRM-K), which will
run parallel to FLOWS\. Relevant activities under this program that are closely coordinated with FLOWS are a
comprehensive institutional training program, including training of young professionals, support to the hydromet
institute with capacity building and an investment needs assessment, development of RBMPs in the three
remaining river basins, including the Morava e Binces basin\. The SDC is currently in the exit phase of the Rural
Water Supply and Sanitation Support Program\. Together with the Kreditanstalt für Wiederaufbau (KfW) and the
GoK, the SDC is supporting the construction of wastewater treatment plants in Prishtina, Peja, Prizren, and
Gjakova\. The SDC is the lead donor in the water sector and coordinating development partners in the sector\.
Sweden\. Sweden is supporting the MIE with the development of RBMP for the Drini i Bardhë river basin, national-
level groundwater investigation, and support to the IMWC\.
GIZ\. Through the program âClimate Change through Transboundary Flood Risk Management in the Western
Balkansâ, the GIZ is supporting the preliminary Flood Risk Assessment for Drini i Bardhë river basin\.
European Bank for Reconstruction and Development (EBRD)\. The EBRD has supported the prefeasibility study
on the Lepenc part of Iber-Lepenc canal\. The EBRD also supported additional WBIF grant application to continue
the detailed feasibility study for the preferred option\. In addition, the EBRD is supporting Gjilani and Mitrovica
Wastewater sector with contribution from the European Investment Bank (EIB)\.
EIB\. Serving as the lead international financial institution, the EIB is conducting a preliminary flood risk
assessment for Drini i Bardhe, Lepenc, and Sitnica river basins\. Upon completion of this assessment, a loan is
being considered\. In addition, the EIB is supporting Kosovoâs water supply, wastewater treatment, and flo od
protection through a loan that covers Kosovo, Belarus, and the Netherlands\.
European Union is completing investments in wastewater treatment plants in Junik and Lipjani\.
French Government has provided loan to implement wastewater treatment plant in Prishtina\.
Government of Austria is providing a loan for wastewater treatment plant in Podujevo, Shtime, Gracanica, Istog,
and Ferizaj\.
F\. Lessons Learned and Reflected in the Project Design
41\. FLOWSâ design has incorporated lessons from past World Bank water engagements in the
Western Balkans region as well as the World Bankâs global experience on integrated water and land
resources management and development\.
42\. Integrated water and land resources management and development can effectively achieve
multiple development objectives in a sustainable manner\. Issues relating to sustainable development in
the water sector are wide ranging, which involve every sector of the economy and relate to sustaining
water resources and improving multiple services for a range of social and economic activities to build
resilience against shocks\. Therefore, water sector interventions are never only about water but also about
need to refer to the triple bottom lines of economic, social, and environmental relevance and
sustainability\. The key challenges, however, lie in implementation\. Hydropower, irrigation, and municipal
water supply development need to be weighed for their cumulative impact on the basin and their
development potential\. The project articulates the links of broad impacts of socioeconomic development
with resource planning through the WRIPS\. Lessons from advisory work in Bulgaria and Romania have
been incorporated in terms of harmonizing socioeconomic planning with EU WFD-mandated RBMPs and
thereby integrating environmental monitoring and basin planning with economic development planning\.
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43\. For multisectoral projects and projects with a significant institutional development focus,
project design needs to be based on a realistic assessment of the borrowerâs existing and anticipated
institutional capacity\. While the project design should reflect the complexity at hand, the implementation
arrangements should aim to simplify where possible\. Kosovo FLOWS incorporates this in several ways: (a)
the project design is built around several pillars that can all move independently as stand-alone activities,
thereby not holding the entire project hostage to bottlenecks in one area; (b) the project contains both
quick disbursing and longer-term activitiesâlonger-term activities are all based on larger contracts that
will be committed early in the project; (c) implementation capacity is outsourced where needed and a
hybrid implementation form through the working group allows meaningful participation by civil servants
in executing project activities; (d) the implementation arrangements build on existing successful
coordination mechanismsâinstead of establishing a new coordination mechanism, the program builds on
the successful model of the IMWC for broad sector coordination; and (e) selectivity and partnership with
other programs\. The project is closely intertwined with the support by the SDC and therefore benefits
from technical assistance provided under that program as this relates directly to program implementation\.
44\. A multisector water security program should be more than multiple sectors implementing
parallel activities\. There should be clear articulation of how these activities are intertwined conceptually
so that they create a spark of interdisciplinary creativity in finding new ways of addressing problems\. It is,
therefore, beneficial to integrate innovation into the project (modern information tools, spatial analysis,
decision support systems, and new implementation and financing mechanisms) in planning and
monitoring and evaluation (M&E) of the program, which will improve knowledge and decision-making,
reduce transaction costs, and allow joint learning\. The project design includes joint learning, integration
of the KCA in support of sector departments, and a project memorandum of understanding (MoU)
describing the possible interaction beyond the mere execution of project activities\.
45\. Any intervention with novel approaches requires local ownership to ensure sustainability\.
World Bank experiences indicated the importance of local ownership of new ideas and practices which
depart from traditional approach\. With limited water resources planning and management capacity, it is
important to ensure that international expertise complements rather than replaces local capacities\. Visits
to Kosovoâs water management agencies indicate that the most pressing need for enhancing Kosovoâs
water resources planning and management capacity is people rather than equipment and tools\.
Embedding training elements is critical for developing the next generation water sector analysts and
decision-makers\. The Stakeholder Platform and the water security small grants are critical for harnessing
the broader creativity in society\. These programs will complement national-level strategic investment
planning and prioritization activities in supporting the development of critical skills to advance the water
security agenda and build human capital for current project management and future challenges\. The
project will leverage findings from previous World Bank-funded efforts such as âMunicipalities for Youth
in Kosovo Project (P165485)â to better engage youth in the project\. Capacity enhancement programs will
explicitly take gender balance into consideration\.
46\. Projects must be ready for implementation at effectiveness to maximize outcomes and avoid
delays\. This is based on recent lessons from the Kosovo portfolio\. Up-front focused investments are
critical to show demonstrable impact and build momentum while other activities are being prepared\.
Timely preparation of project documentation and issuance of required permits is the main cause for delay
in project management of water infrastructure\. Considering the seriousness of the current water supply
crisis and the importance of quick resolution of the existing water supply problem, Hidromorava RWC has
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already initiated preparation activities of required project documentation for priority investments\.
Another major reason for delay is lack of clarity of roles and responsibilities between implementing
agencies\. During preparation, a lot of emphasis has been placed on building a collaborative working group
and clarifying mutual expectations in the Project Operations Manual (POM) for all project activities and
agencies\.
III\. IMPLEMENTATION ARRANGEMENTS
A\. Institutional and Implementation Arrangements
Figure 5\. FLOWS Implementation Arrangements
Program Coordination Committee IMWC
Secretaries-General of relevant ministries, mayors, CEO Standing water sector policy
of Hidromorava RWC, Secretariat to the IMWC coordination framework
FLOWS Program Technical Committee
Director-level representatives of concerned
departments, municipalities, and invitees
FLOWS Project Management Team FLOWS Working Group
Led by project manager based in MIE Technical staff of all
implementing agencies
Component 1 Component 2 Component 3
Foundational measures Catalytic investments Project management
Lead agency: MIE Lead agency: MIE Lead agency:
Supporting agencies: Supporting agencies: MIE (PMT)
⢠MIE (RBDA, hydromet, KCA) ⢠MIE (RBDA, hydromet) Supporting agencies:
⢠MAFRD (irrigation, forestry ⢠Hidromorava (MEPTINIS, ⢠PMT
agency) Budget) ⢠Sector agencies
⢠MEPTINIS (RWCs) ⢠MAFRD (Managing ⢠Municipalities
⢠Municipal agencies authority, forestry agency)
Basin/municipality-level
activities
Oversight: Citizen engagement
Facilitator, Hidromorava RWC,
PMT, municipality divisions
Note: CEO = Chief Executive Officer; PTC = Program Technical Committee\.
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47\. Policy-level sector coordination will be organized through the IMWC while cross-sector
implementation coordination will be organized through the newly established Program Coordination
Committee (PCC)\. To ensure broad government ownership and long-term leadership of the approach, and
to support cross-sector coordination, the project will seek high-level coordination through the
establishment and maintenance of a PCC, comprising the Secretaries-General of the ministries involved
in the program implementation, representatives of mayors of municipalities in the Morava e Binces basin
in which program investments are made, the CEO of the Hidromorava J\.S\.C\., and the secretariat to the
IMWC\. The IMWC, which is a standing sector-coordination body established by the Water Law, is chaired
by the Prime Minister and comprises the IMWC member ministriesâOffice of the Prime Minister, MIE,
MEPTINIS, Ministry of European Integration (MEI), MoF âwith representatives of the donor community
as observers\. It has the mandate to coordinate and support the decision-making process of water
management across sectors\. For FLOWS, the IMWC will include project steering as an agenda point at
least twice annually and invite sector ministries that are not permanent members of the IMWC (notably
MAFRD) and mayors of municipalities where investments take place\. In principle, the IMWC will be
responsible for reviewing the systematic issues of water and advises on the harmonization of the different
needs and interests with relevance to broad sector coordination, particularly national water resources
investment studies and planning under the project\. The FLOWS project manager will work with the PCC
in preparing documentation for program coordination meetings\.
48\. A FLOWS PTC will be established and will be responsible for providing technical oversight of
project implementation as well as reviewing and recommending project work plans and budgets to the
PCC\. The PTC will meet on a quarterly basis or more frequently as need arises and provide technical and
practical work planning coordination among the implementing agencies\. This committee will comprise
IMWC Secretariat, Directors of the principal departments and agencies, Hidromorava RWC management,
municipalities involved in project implementation, and external experts and will operate in an advisory
role to the IMWC on project matters\. The PTC will supervise the TWG and members of the PTC serve as
representatives of their departments when engaging on cross-agency tasks\.
49\. Technical Working Group\. The TWG that has been established throughout project preparation
will continue to strengthen the PMT during implementation\. While there is clear responsibility for
implementation with the hired professional staff that form the PMT (project manager and component
coordinators), they will not work in isolation\. Civil servantsâ staff of each of the implementing agencies
will continue throughout project implementation to serve as focal points for the various activities for
coordination\. The cooperation between the implementing agencies will be set out in the MoU defining
the roles and responsibilities of each institution as well as specific terms of reference (ToR) for the
different bodies\. Details of these arrangements will be provided in the POM\.
50\. Project Management Team\. Given the complexity and multisectoral nature of the proposed
operation, it is proposed that a multisector PMT be housed in the MIE, with participation of the other
implementing agencies\. The PMT will oversee day-to-day implementation and administration of the
project within parameters of the POM and annual workplan and budget\. It will be a fully integrated unit,
comprising externally hired experts, and links with the relevant departments in the agencies through the
TWG\.
51\. Hidromorava RWC will be responsible for day-to-day implementation of activities under
Subcomponent 2\.2, including preparation of technical requirements or ToR for respective activities,
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evaluation of bids, contract signing, financial management (FM), M&E, and safeguards compliances of
mentioned subproject activities\. PMT staff (including procurement specialist and international
procurement expert) will provide procurement support (that is, preparation of bidding
documents/request for proposals and assistance on the bid evaluation) to Hidromorava for all activities
foreseen under Subcomponent 2\.2\. The PMT financial management specialist (FMS) will provide technical
advice to Hidromorava RWC finance department on project FM issues\. Details on responsibilities of
respective institutions (MIE/PMT, Hidromorava, and so on) will be described in detail in the POM\.
52\. The PMT will be led by a project manager, who will be supported by several component
coordinators, who will focus on the implementation of activities under their respective components and
support the project manager with the management of interlinked components\. The project manager
reports to the Permanent Secretary for the MIE\. Tentatively, the component coordinators are the
following:
(a) Coordinator Component 1 - Water resources management specialist
(b) Coordinator Component 2 (infrastructure, Subcomponents 2\.1 and 2\.2) - Water engineer\.
53\. The project will provide funding to contract professional and support staff to form the PMT,
facilitate its operations, and ensure that certain specialized task are professionally executed by people
with the required background and knowledge, including professional safeguards staff (environmental and
social [E&S] safeguards specialists), fiduciary staff (a procurement specialist and an FMS), and support
staff (communications, admin support, translator/data entry clerk, M&E specialist)\. The
communications/M&E specialist will take responsibility for the citizen engagement and grant activities
under Subcomponent 2\.3\. Also, short-term expertise to the PMT is foreseen on specific topics that are
required for quality of implementation but that do not require full-time presence, such as engineering,
legal expertise, hydromet/irrigation/dam design expertise, and IT services\.
54\. Following resource efficiency and aid effectiveness principles, the PMT will share common
services with the parallel Greening Land Project (P172992), also under the MIE\. The common services
will include the fiduciary, safeguards, and communications/M&E specialist functions, as illustrated in
figure 6\. These fiduciary, safeguards, and communications specialists will form an integral part of both
Project Implementation Units (PIUs) and will be hired on a full-time basis within the PMT\. Although they
serve both projects, they do not form a separate unit\.
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Figure 6\. FLOWS PMT Internal Implementation Arrangements
55\. Partnership arrangements have been established with active partners in the water sector: among
others, the SDC, Sida, EU, UNDP\. Particularly the SDC is currently preparing a long-term capacity-building
program in the water sector that will closely dovetail with FLOWS and technical assistance activities will
need to continue to be harmonized\. Overall, SDC program objectives help in strengthening the national-
level institutional framework, through the IMWC and the RBDA\. These are important for the
implementation of FLOWS and the project will support the SDC program while not duplicating its technical
assistance in this area\. Coordination will take place through the existing donor and implementers (of water
projects) coordination mechanisms and through continued close collaboration between the SDC and
World Bank teams\.
B\. Results Monitoring and Evaluation Arrangements
56\. While the PMT will be primarily responsible for M&E, the municipalities and RWCs will serve as
liaison with the PMT at the local level\. The PMT will monitor activities and report project progress by
reporting on project indicators, as presented in the Results Framework in section VII\. The M&E reports
will be presented as part of the regular progress reports\. The PMT will collect and present data and reports
for semiannual reviews by the Project Steering Committee and respective local and national agencies
responsible for project implementation, in conjunction with World Bank missions\. A midterm review will
be conducted to evaluate implementation progress and identify potential issues in need of attention and
resolution\.
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C\. Sustainability
57\. Technical sustainability\. The technical sustainability of FLOWS1 activities is being addressed by
ensuring that the physical infrastructure supported (for example, the works for hydromet, Hidromorava
RWC investments) are built to good technical design, construction, and operational standards, with
adequate dam safety, instrumentation, and operational decision support considerations\. For the Kike-
Kremenata, technical studies have already been started by qualified consulting firms\. The WRIPS is
designed to set up a long-term knowledge base for the country and Subcomponent 1\.2 activities will
improve systematic hydro-climatological monitoring and inflow/flood forecasting\. Catchment
management investments are based on technologies and approaches that have already proved successful
and sustainable in Kosovo, and innovative approaches will be vetted\. The preparation of new water
investments will also be done in a way that ensures technical sustainability of these investments to the
extent possible\.
58\. Environmental sustainability\. The project is designed to reduce natural resources and
environmental sustainability threats to the country, including climate change-exacerbated floods and
droughts\. This is expected to be accomplished through sustainable land and water management
investments that reflect both stakeholder participation and priorities and scientific inputs\. Given that it is
difficult to effectively manage what is not measured, the project seeks to invest in integrated and
sustainable water resources management and water quality and groundwater monitoring to build a solid
knowledge base for water security interventions and management\. Investments will follow the
Environmental and Social Management Framework (ESMF) provisions, developed during project
preparation; the preparation of the WRIPS will include support for environmental assessments; and the
support to âKike-Kremenataâ storage infrastructure will include a detailed Environmental and Social Impact
Assessment (ESIA)\.
59\. Social sustainability\. The project is also being conceived at a time when Kosovo has a major focus
on jobs, especially for the rural poor\. It is expected that project activities, especially those related to
catchment management and storage will provide opportunities for the rural poor to benefit from short-
term jobs as well as longer-term livelihood improvements and improved resilience to recurrent natural
disasters\. Womenâs livelihoods would likely be improved by the project through enhancing incomes and
income opportunities (for example, suitable livelihood investment grants) and increasing empowerment
(acquiring skills through capacity development, accessing services, participating in decision-making
bodies, and assuming leadership roles in community-based institutions and common interest groups)\.
60\. Financial and economic sustainability\. The economic sustainability of the project investments is
demonstrated to some extent by the economic analysis carried out\. Financial sustainability is also
demonstrated by the financial analysis carried out for the project\. There is a need for sustained
commitment to project-related sectorsâboth for operations and maintenance of investments and also
for scaling up investments in water and other natural resources information, institutions, and
infrastructure\. To address the issue of long-term financial sustainability of Hidromorava RWC and
hydromet investments, the project continues to collaborate closely with technical assistance programs
focusing on the institutional and financial aspects of infrastructure management\.
61\. Institutional sustainability\. The projectâs hybrid approach, using existing coordination
mechanisms and explicitly engaging departmental staff in the PMT, supports a move away from traditional
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PIUs\. This, in combination with emphasis on multisectoral collaboration, presents an opportunity to focus
on improving the long-term institutional capacity of key land and water-related institutions to perform
their core mandate\. For example, the integration of different actors on setting the water resources agenda
for the future through the WRIPS overcomes the frequent gridlock caused by parallel planning processes\.
In addition, the Government will be better equipped to make decision that incorporates climate change
impacts with improved hydromet data collection and analysis capacity\. These new capacities and activity
paradigms should help the institutional sustainability of investments under this project\.
IV\. PROJECT APPRAISAL SUMMARY
A\. Technical, Economic and Financial Analysis
Technical Analysis
62\. As the first phase project in a series of projects, the project design represents a technically
sensible approach to improve Kosovoâs water security\. This project goes beyond supporting water
infrastructure development\. It is about developing an integrated way of approaching water resources
planning and management, fostering an enabling environment and institutional capacity, improving
services, and leveraging opportunities to address short- and long-term water security challenges in a
synchronized and inclusive manner\. Project preparation included several technical assessments to help
shape project design, as described in the following paragraphs\.
63\. The basis for Component 1 is laid in the World Bankâs 2018 Kosovo Water Security Outlook
Report, which itself was built on a long list of diligent work done by the Government, its partners, and
others\. This provided a lens for water security that was comprehensive in regional and historical spread,
key trends in water-dependent and water-influencing sectors, climate change trends, gaps, overlaps, and
critical issues in the water sector as it affects the triple bottom line of environment, society, and economy\.
The urgent need for an integrated approach for planning and managing of water-related investments is
clear\. The approach proposed for the national WRIPSâincluding diagnostic tools, decision support tools,
and measuresâis solid and pragmatic and in line with international good practice\. Its steps are clearly
articulated in its relationship with WFD requirements and the ToR is ready in draft form\. Investments for
hydromet facilities under Subcomponent 1\.2 are based on assessments conducted through site visits and
interview with technical staff\. In addition, investments in monitoring network expansion will be informed
by an ongoing needs assessment financed by the SDC and will be ready in the first year of the project\. The
World Bank has regular coordination with the SDC consultants to ensure activities financed under this
project are based on state-of-the-art understanding of information services\. Dam safety activities are
informed by risks identified through the Kosovo Water Security Outlook Report and the Dam Operation
Improvement and Safety Project (DOISP) workshop with dam operators\. Proposed dam safety measures
are based on review of technical characteristics, current conditions, and dam safety management
practices of existing dams in Kosovo\. The remaining steps of the DOISP program will continue during
project preparation with additional funding provided from the Global Facility for Disaster Reduction and
Recovery (GFDRR) Japan-World Bank Program for Mainstreaming Disaster Risk Management in
Developing Countries Trust Fund (JP-WB PMDRM TF)\. Findings from the remaining steps of the DOISP
program will fine-tune the design and implementation of dam safety improvement activities envisioned
under this project\.
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64\. Selection of Component 2 activities was based on identifying basin-specific priority actions and
their links\. This included developing a spatial knowledge base with the best available local, regional, and
global data sets\. This was used to make maps and atlases of areas of interest as well as spatial analysis to
prioritize catchment interventions\. This work continues into implementation\. Subcomponent 2\.1 will
support key infrastructure with the core investment preparation being the âKike-Kremenataâ hydro-
system and its auxiliary infrastructures, along with investments for drinking water and irrigation services\.
MIE has engaged a consulting firm to review the 1983 detailed design of Kremenata reservoir and update
hydrological and social economic inputs needed to inform the redesign of a new reservoir\. The World
Bank team has reviewed the findings and advised on next design steps as well as the detailed social and
environmental assessments\. Experienced consulting firms will conduct feasibility studies and develop
detailed designs, and technical inputs from the independent Dam Safety Panel will be integrated in all
design steps\. For the investments in Hidromorava RWC under Subcomponent 2\.2, the World Bank team
has conducted field visits and considered a range of possible interventions as highlighted in the RWCâs
drought management plan to address the immediate water shortage challenges\. Preliminary list of
specific investments is defined based on expected impact and readiness for implementation (existence of
at least conceptual/preliminary design)\. Proposed potential infrastructure investments in municipalities
of Gjilan, Viti, Kamenica, and Ranillug will primarily focus on demand management and system
optimization, replacement of critical sections with high-water losses and frequent breaks, elimination of
bottlenecks in water flow between different parts of the system, and increasing volume of existing water
reservoir to balance daily demand variations, which will altogether improve reliability and continuity of
water supply\. Experienced consultants will support Hidromorava RWC to prepare tender documentation
and implementation of civil works\. The World Bank will continue to review the hydrology, technical
specifications, designs, E&S aspects, and procurement aspects of the proposed works\. Design and
implementation of people-centered water stewardship activities under Subcomponent 2\.3 design and
pilot implementation of small citizen engagement grants in water security will be supported by a
dedicated service provider\. Citizen engagement will pilot platforms for ideation and mobilization which
are innovative and supported globally with the World Bank initiatives\.
65\. Several alternatives were considered and rejected during project preparation\. The main
alternatives include (a) using a different lending instrument, (b) focusing more on training and national-
level institutional capacity building, (c) focusing broadly on flood risk management and river basin
planning, (d) focusing on a single sector/single ministry, and (e) choosing other spatial areas of program
focus\. The reasons for the current approaches are summarized as follows\. The staging in a series of project
approach best balances early action where possible with maturity of interventions where needed\. Several
activities are considered essential in an integrated approach: river basin planning, training, and national-
level institutional strengthening\. Rather than duplicating grant-funded programs, FLOWS is designed
synergistically with these efforts so that in a closely coordinated effort these activities also benefit FLOWS
and vice versa\. Joint supervision and frequent coordination meetings are practiced and this is also
envisaged during implementation\. A single sector approach would have greatly simplified implementation
arrangements but would have significantly hampered a view of water security that is more encompassing
than a single sector issue\. Instead, project preparation emphasized models for intersectoral collaboration
as a deliberate project objective and worked on tools (teamwork, MoU, and joint working group) to realize
this\. Finally, the Morava e Binces river basin was chosen both from a technical priority perspective with
its major water shortages, pollution problems, and readiness for catalytic investments in storage as well
as from a coordination perspective, where other basins have already received support\.
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Economic and Financial Analysis
66\. Cost-benefit analysis was conducted separately for water security and citizen grant components
of the FLOWS project\. In addition, a consolidated analysis was done to determine the projectâs overall
economic viability, which is an aggregation of the economic returns to the proposed water security and
grant scheme and is summarized in table 1\. In addition, financial analysis was done on investments in
water security component, analyzing financial statements and projection of Hidromorava RWC\. The
analyses suggest that the project is economically viable and financially sound\. Significant economic and
social benefits are expected to result from the projectâs investments in both hard and soft investments\.
Table 1\. Summary of Project - level Economic Cost-Benefit Analysis
Components Economic NPV (EUR) EIRR (%) B/C
Investments in Hidromorava water systems 20,184,129 29\.83 2\.8
Investments in grant scheme 218,838 14\.28 1\.4
Overall project without considering shadow carbon prices 20,402,967 29\.17 2\.8
Overall project (high carbon price assumption) 32,010,745 60\.23 3\.8
Overall project (low carbon price assumption) 26,551,393 44\.7 3\.3
Source: Teamâs calculation
Note: B/C = Benefit-cost ratio; EIRR = Economic internal rate of return; NPV = Net present value\.
67\. The cost-benefit analysis indicates that investing in the proposed water security and grant
scheme components of FLOWS project is economically viable, with an estimated EIRR of 29 percent,
well above the benchmark 6 percent economic cost of capital\. B/C is 2\.8, which is higher for the water
security component\. The sizable benefits from time savings for water supply account for the robust NPV
and EIRR obtained\. The benefits of greenhouse gas (GHG) emission reductions using shadow carbon prices
significantly enhance the economic viability of the project\.
68\. Residents of the Morava e Binces basin, as the most water-stressed region with significant lack of
drinking water and underdeveloped water supply system, will benefit from sustainable water supply\.
Hidromorava RWC will increase its water supply capacities, reduce technical and commercial losses, and
increase efficiency and financial soundness by modernizing its network\.
69\. This project is the first step in paving the way to developing significant investments in storage,
irrigation, and water supply infrastructure in the Morava region and across Kosovo\. It will provide
necessary analysis and preparations for new water sources\. That will result in saving time, increase
implementation efficiency, and reduce costs for the investments in water sector in the subsequent
projects\.
70\. The financial analysis of Hidromorava RWC shows positive results, with the cash flow to loan
repayment ratio of 1\.7 to 1\.8 over the repayment period, even under conservative improvements in billing
and collection\. Financial analysis also shows continuous improvements in sales, billing, and collection in
the last few years, with the potential to improve further given the efficiency improvements expected from
this investment\.
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71\. The lessons learned and data obtained from the ex post evaluation of the Kosovo Rural
Development Grant Program (RDGP) was applied to assess the economic viability of Citizen Grant to
Foster Water Security component of the FLOWS project\. The total funds allocated to citizen grants under
the FLOWS project is EUR 500,000, which is expected to support about 21 grants\. This fund is expected to
generate NPV of EUR 218,838 with EIRR of 14\.3 percent\.
72\. Activities under the foundational measures for water security such as strengthening national
water resources investment planning, enhancing information services for water management, and
enhancing regulation of dam operation and safety would have profound benefits\. The primary benefits
included (a) reduced risks of dam failure; (b) prolonged life of dams and reservoirs, restored performance
of dams, and strengthened institutional capacity for asset management; and (c) mitigated watershed
erosion and sedimentation\. The improvementsâboth of institutional/operational and physical natureâ
that reduce the risk of dam failure will consequently prevent or minimize damages to downstream
property and environment, loss of life, loss of bulk water supply, and eventual (expensive) replacement
of a dam for construction cost of alternative water supply\.
73\. GHG accounting and the shadow price of carbon\. A GHG analysis was carried out for the NRW
reduction activities under Subcomponent 2\.2 and the sustainable natural resources management
activities under Subcomponent 2\.3\. The overall net emissions for the project are estimated at â253,203
tCO2-eq over the economic lifetime of the project, with gross emissions of -179,321 tCO2-eq\. The NRW
reduction activities are expected to result in net emissions of â7,536 tCO2-eq due to energy efficiency
gains\. Under highly conservative assumptions, it is estimated that the sustainable natural resources
management activities will yield net emissions of â245,667 tCO2-eq due to improved carbon sequestration
potential associated with reforestation activities\. The present value of this GHG emission reduction
benefits over the life of the project is estimated to be EUR 10\.7 million, when computed using the high
carbon price scenario and EUR 5\.4 million, when using low carbon price scenario, as specified in the 2017
World Bank methodology\.
B\. Fiduciary
Financial Management
74\. An FM assessment for the proposed project was conducted in accordance with World Bank
procedure\.15 While the MIE, through its PMT, will be responsible for the implementation of the project,
Hidromorava RWC will be responsible for implementation of the investments in water supply
(Subcomponent 2\.2)\.
75\. The MIE PMT will be responsible for the coordination of projectâs FM arrangements, relying on
the MIE Budget and Finance Department (BFD)\. The MIE BFD has a good track record with the
implementation of previous projects financed by the World Bank; no FM, budget, or audit issues were
reported in the past\. It is recommended that, similar to previous projects, the existing FM capacity is
strengthened with an externally hired FM expert (part of the PMT) to meet the additional workload
brought by the project\. Finally, there are concerns about the retention of such capacity as a result of the
merger of administrative functions of former MIE and Ministry of Infrastructure and Transport\. Given the
15 Financial Management Manual for World Bank Investment Project Financing Operations (2010, revised 2017)\.
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characteristics of the prefinancing mechanism and weak technical capacities and gaps in implementation,
the risk pertaining to FM and insufficient or untimely budgetary allocations is Substantial\. To manage such
risk, it is required that the project implements an effective and documented project planning and contract
monitoring process\. Project budget appropriations should meticulously reflect the nature of expected
expenditures and implementation plan\. As a prerequisite, it is required that the MIE takes the necessary
actions to inform the Medium-Term Expenditures Framework (MTEF) (2021â2023), followed by annual
budget formulation 2021 with the project implementation plan\. The enhanced internal controls
mechanism and FM requirements with the MIE will be detailed in the POM\.
76\. The Hidromorava RWC BFD will be responsible for the FM of Subcomponent 2\.2\. The financial
resources are transferred to Hidromorava RWC from MEPTINIS on a grant basis\. The internal control
environment and existing capacity in the finance department is adequate\. As the financing proceeds will
be channeled to Hidromorava RWC as a government grant, it is proposed that the related budgetary
allocation of the projectâs Subcomponent 2\.2 to be implemented by Hidromorava RWC follows the
existing mechanism for the subsidies and transfers from the GoK to publicly owned enterprises, through
MEPTINIS\. The Hidromorava RWC FM responsibilities include planning and budgeting, management of
project accounts, processing and authorization of payments to vendors/contractors, disbursements,
record keeping, accounting, and financial reporting\. Hidromorava RWC will submit quarterly financial
information (plan and actuals) to the MIE PMT and MEPTINIS\. It is critical that the entity implements an
effective and documented project planning and contract monitoring process and efficient communication
with MEPTINIS, so that the project needs are adequately and timely reflected in the MEPTINIS budget\.
The enhanced internal controls mechanism and FM requirements with Hidromorava RWC will be detailed
in the POM\. The PMT FMS will provide technical advice to the Hidromorava RWC finance department on
project issues\.
77\. In summary, the FM arrangements will be strengthened in the following ways:
(a) Establish FM procedures, with enhanced internal controls, covering all project parts, and
documentation as part of the POM, acceptable to the World Bank\. The POM will define
implementation arrangements, including authority line, division of roles and responsibilities
between agencies/entities involved, and relevant communications with respect to project
management and fiduciary functions\.
(b) Establish rules and procedures for the administering of small grant scheme, and document
in the small grants manual (SGM and Small Grants guidelines), acceptable to the World Bank,
which describes the flow of funds, internal control mechanism, and respective templates
(disbursement condition for Subcomponent 2\.3)\.
(c) Recruit a qualified FMS, as part of the PMT, to support the MIE BFD for the implementation
of the project (dated action not later than 60 days from project effectiveness)\.
(d) Provide periodic and on-the-job training of the FM staff (MIE, Hidromorava staff, and FMS)
during implementation in project FM and disbursement procedures\.
78\. For the project parts to be implemented by the MIE, the IDA financing proceeds will be disbursed
based on the regular Investment Project Financing (IPF) disbursement mechanism, including advances,
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reimbursements, direct payments, and special commitments\. The GoK preferred method of disbursement
is reimbursements of funds prefinanced from the budget to finance project\. The advance method and the
Designated Account will be used only if required by Kosovo Treasury\. In that case, a segregated Designated
Account denominated in euro will be opened in the Central Bank of Kosovo, as a subaccount linked to the
Single Treasury Account (STA)\. The advanced funds will be earmarked for the proposed operation only\.
Similar disbursement arrangements will be adopted for the WBIF grantâthe WBIF grant will be used for
a specific study\. The MIE will be accountable for withdrawing IDA financing and grant proceeds through
its authorized signatures\.
79\. For the project part (Subcomponent 2\.2) implemented by Hidromorava RWC, the company may
avail of advances using a Designated Account to be opened in its partner commercial bank\. Direct payment
and special commitment will be used for the sizable remunerations for contractors and suppliers,
especially large works contracts\. Reimbursement will be also allowed\. For Subcomponent 2\.2,
Hidromorava RWC will be accountable for withdrawing IDA financing proceeds through its authorized
signatures\.
80\. The consolidated interim unaudited financial reports (IFRs) will be submitted on a quarterly basis
to the World Bank within 45 days after the end of each quarter\. Consolidated annual project financial
statements (AFS) would be prepared for the project and will be based on International Public Sector
Accounting Standards (IPSAS) cash basis\. The project financial reports will consolidate all sources of
financing (IDA, grant, and government) and all the project operations implemented by the MIE and
Hidromorava RWC\. The MIE PMT will be responsible for consolidation, based on financial information
received by Hidromorava RWC, and final submission of IFRs to the World Bank\. The projectâs financial
statements, as described earlier, would be audited annually by Kosovoâs National Audit Office, under ToR
acceptable to the World Bank\. The ToR of the annual financial audit will be extended to review the flow
of funds, control over subgrants, and inclusion of site visits\.
81\. Hidromorava RWC will maintain its own accounting for project activities and its operations
pursuant to the entity accounting policies based on International Financial Reporting Standards\. Annual
audited financial statements for the entity are required by the legislation\. The audited financial
statements of Hidromorava RWC will be required for submission to the World Bank\. The audit will be
conducted by independent auditors acceptable to the World Bank based on ToR acceptable to the World
Bank\.
82\. Retroactive financing for a maximum amount of EUR 500,000 would be available for payments
made in the period from April 21, 2020, to the date of signing the Financing Agreement, for project eligible
expenditures that have been procured using the World Bank's policies and procedures and adhering to
the World Bank's safeguards policy\. The payments for such expenditure would need to be done from own
resources of the recipient, to be reimbursed from the Credit proceeds upon declaration of its
effectiveness\.
Procurement
83\. Procurement will be carried out in accordance with the requirements in the Procurement
Regulations for IPF Borrowers: Goods, Works, Non-Consulting Services and Consulting Services dated July
1, 2016, revised November 2017 and August 2018; Guidelines on Preventing and Combating Fraud and
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Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants, revised as of July 1, 2016; and
provisions stipulated in the Financing Agreement\. The proposed project will use the Systematic Tracking
of Exchanges in Procurement (STEP) system\.
84\. A Project Procurement Strategy for Development (PPSD) was prepared to outline the selection
methods to be followed by the borrower during project implementation in the procurement of goods,
works, and non-consulting and consulting services financed by the World Bank\. The underlying
Procurement Plan will be updated at least annually or as required to reflect the actual project
implementation needs and improvements in institutional capacity\.
85\. Based on procurement capacity assessment conducted for the MIE as an implementing agency, it
was determined that the procurement risk is Substantial\. The identified risks and the mitigation measures
are detailed in the PPSD, which is summarized in annex 1 of this report\.
\. C\. Legal Operational Policies
\.
Triggered?
Projects on International Waterways OP 7\.50 Yes
Projects in Disputed Areas OP 7\.60 No
\.
D\. Environmental and Social
Environment
86\. The project includes investments for design and construction water supply and erosion control,
on-farm modernization including micro-irrigation, watershed management, gauging stations, and non-
infrastructure interventions such as upstream watershed protection through afforestation, forestry and
biodiversity monitoring, sustainable local tourism development, and technical studies for forest and
agricultural land improvement\. These investments are likely to generate positive impacts on human
population and environment in the project area\. The project will contribute to improved water availability
and increased water supply to meet domestic (urban and rural) water demand\. Safe drinking water supply
will positively impact human health of the project beneficiaries\.
87\. Aside from the studies for the new dam for which the project is financing preparatory technical,
social, and environmental studies, the proposed investments under Component 2 are either small-scale
construction such as check dams or are rehabilitation/reconstruction or expansion of the existing
irrigation and water supply network\. Based on both the MIEâs capacity assessment for the implementation
of E&S due diligence and the nature and scale of project investments, the environmental risk classification
is Substantial\.
88\. Exact information on the siting and design of proposed investments is not available and
feasibility/detailed design studies have been commissioned during project preparation\. The MIE has
therefore prepared an ESMF\. For Component 2, which includes preparation of technical studies for Kike-
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Kremenata hydro-system, E&S due diligence aspects and ToRs for the preparation of ESIA study are
included in the proposed technical studies\.
89\. The project investments will be implemented largely in urban settings\. The ESMF report concludes
that project activities will not affect any protected areas or physical/cultural heritage/monuments\. The
potential adverse environmental impacts could be medium to large scale and predictable and reversible\.
Some of the project activities can be classified green field, for example, create new/improve existing
irrigation and water supply infrastructures and flood management and erosion control infrastructure\. The
scale of construction may result in temporary adverse impacts on human health resulting from work-
related accidents or inadequate waste management\. Typical construction-related environmental impacts
noted for the project are excessive noise and dust levels, localized air and water contamination, impacts
on human health due to hazardous waste (asbestos pipes from the old irrigation and water supply
systems) and inadequate occupational health and safety aspects, increased use of chemical fertilizers and
pesticides, and impacts on community safety\. Management of construction waste, adequate
management of labor camps, maintenance of machinery and yards, and appropriate closure and
restoration of work sites are some other key and potential E&S issues during construction\.
90\. The ESMF provides guidance on the preparation of environmental assessments or site-specific
Environmental and Social Management Plans (ESMPs) and proposes broader E&S impacts mitigation
and monitoring program\. The document also identified key project implementing agencies and the need
for setting up E&S management unit within the PMT for day-to-day project implementation\. Each financed
subproject will prepare an environmental assessment/site-specific ESMP based on the criteria given in the
ESMF\. All environmental assessments will fulfill Kosovo national environmental regulatory requirements
and will be cleared by the World Bank as well\.
91\. The ESMF was consulted with communities, civil society organizations, and other stakeholders
on January 31, 2020, and feedback received from the consultation was reflected in the draft final
document\. The ESMF was disclosed locally (both in English and Albanian [summary only]) on the MIE
website (with the web link https://mmph\.rks-gov\.net/en/publikimet/68/njoftime) on February 10, 2020,
and on the World Bank website on April 9, 2020\.
92\. The MIE has prepared an Environmental and Social Commitment Plan (ESCP), which provides a
list of actions to be carried out by the implementing agencies during project implementation\. Actions
include the ministryâs commitments to prepare relevant E&S instruments (ESIA for Kike-Kremenata dam,
ESMPs for water supply schemes, for example), report arrangements on E&S due diligence, and maintain
agreed E&S staffing at PMT during the project implementation\. Actions in the ESCP also include the
ministryâs commitments to ensure favorable and good working conditions for the project workers,
protecting communities from potential negative impacts arising from projectâs construction activities and
protecting and conserving biodiversity in the project area\.
Projects on International Waters
93\. The Morava e Binces basin, where major project activities will take place, is a transboundary
basin shared by Kosovo, Serbia, North Macedonia, and Bulgaria\. âMorava e Bincesâ is a river that
originates in the mountains of âCrna Goraâ in North Macedonia north of Skopje (close to the border
between North Macedonia and Kosovo) and south of the Municipality of Viti\. It flows in a northeasterly
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direction through the southeast of Kosovo to join the Western Morava river in Serbia\. The Western
Morava river flows into the Danube, which in turn flows into the Black Sea\. The length of the river in
Kosovo is approximately 50 km\. Since the project also considers support to irrigation following masterplan
priorities and locations are not yet known, the riparians of the other river basins (Iber, Drini I Bardhë, and
Lepenc) were also alerted\. Under OP 7\.50 requirements, the World Bank, on behalf of the GoK, notified
riparian countries of the proposed project through letters sent to them on December 5, 2019, with January
15 as the deadline to receive their comments\. Only Serbia and North Macedonia have responded in
support of the project and its objectives, with questions for clarification that were subsequently provided
through a memo dated March 20, 2020\. Regional Vice Presidency approval to proceed with further
processing of the project was provided on March 20, 2020\.
Social
94\. The impacts of the project will be positive in the long term\. The project will improve reliability,
security, and quality of water supply in rather dry region with increased risk of drought and flash flooding
and rural areas that have extensive agriculture activities\. Some activities will directly support the
livelihoods from farming\. As per the Environmental and Social Framework, most probable social risks
associated with the project are those related to workers conditions, that is, ESS2 Labor and Working
Conditions; possible impacts of the works in the community level, that is, ESS4 Community Health and
Safety; and the impacts that result in loss of land, that is, ESS5 Land Acquisition, Restrictions on Land Use
and Involuntary Resettlement\.
95\. The overall social risk is assessed as Moderate\. Most frequent risks are related to ESS2 Labor and
Working Conditions\. These risks are associated with the fact that (a) workers hired by the contractors
might work without a contract, (b) workers are paid partly in cash which is more than the contract wage
as employers underreport the wage in the contract to reduce their contribution to pension insurance, and
(c) the wage paid is without pension and social insurance\. These potential risks will be addressed and
managed through Labor Management Procedures document that will be part of the contractual
obligation\.
96\. Risks associated with the ESS4, such as labor influx, are not likely to occur due to the types of
investments such as rehabilitation/reconstruction or extension of already existing water infrastructure\.
For other subcomponents, communities could face project-induced traffic, but this would be in much
smaller scale\.
97\. On ESS5, risks related to land acquisition are not very significant since the project in this phase
will not finance dam construction and infrastructure will involve water supply, erosion control, on-farm
modernization, watershed management, and non-infrastructure interventions such as upstream
watershed protection through afforestation, forestry and biodiversity monitoring, sustainable local
tourism development, and technical studies for forest and agricultural land improvement\. The MIE,
through its Department for Resettlement, has experience in the World Bankâs involuntary resettlement
policy for much more complex resettlement\. Other risks are those related to poor, vulnerable, and
minority communities\. These communities might be excluded from project benefits\. The implementing
agency has prepared a stakeholder engagement framework with separate strategies to engage the
vulnerable groups\. The framework was disclosed on the government website (https://mmph\.rks-
gov\.net/en/publikimet/68/njoftime) on February 10, 2020, and consulted with the ESMF and
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Resettlement Policy Framework on January 31, 2020\. There is also risk that the MIE is unable to properly
manage the coordination of multiple stakeholders during the people-centered water stewardship
processes and thus the project will support this activity by hiring a facilitator which will build capacity in
the MIE in addition to helping engage citizens and stakeholders in the process\. The project will assist the
capacity development of the MIE in broad social and environmental risk management\.
Citizen Engagement
98\. Citizen engagement is considered essential in achieving the objectives of water management as
water resources planning, catchment management, and service provision should be integrated and
people centered to make meaningful contributions to livelihoods in the basin and to be resilient in the
long term\. The key goals of citizen engagement are driving behavioral change toward more sustainable
and environmentally friendly livelihood models, improving the relationship between the citizens and their
natural environment toward a higher degree of âownershipâ and perception of direct responsibility for
oneâs environmental footprint, and achieving practical local-scale gains with respect to the qualitative and
quantitative status of the water resources and environmental protection\. To this end, during project
prepration a stakeholder mapping and participatory identification of key issues was carried out, alongside
workshops on citizen engagement\. The MIE has already established an outreach office\. Specific activities
are included in the various components under the project\. The project will support various citizen
engagement initiatives, including awareness building campaigns, a mutistakeholder forum, a citizen
engagement platform for communication, community ideation lab(s), a feedback mechanism, a
partnership fund, and a range of impact evaluation and feedback surveys by
(a) Building broad stakeholder alliances around planning and development priorities in the
basin and localities;
(b) Capturing and sharing local knowledge/experience to feed these into local and RBMP
planning processes;
(c) Harnessing the potential and creativity of engaged citizens by introducing an enabling
environment for bottom-up initiatives; and
(d) Closing the feedback loop to ensure that project activities are responsive to beneficiariesâ
needs\.
99\. A stakeholder assessment, with a focus on the Morava e Binces basin, has helped inform the
proposed citizen and stakeholder engagement vehicles, tools, and activities\. Project design and
implementation will be guided through various mechanisms, including consultations, development of new
and strengthening of existing citizen-centered platforms (more concrete examples are discussed in the
following paragraph), communication and outreach using diverse channels and inclusive approaches,
ensuring women and ethnic groups are effectively reached\. Ranillug is a Serbian majority municipality (95
percent Serbian), Kamenica and Gjilan have 95 to 97 percent Kosovar-Albanian population, the remainder
being of Serb, Roma, or other ethnic origin\. At the local government level in policy, planning,
implementation, and monitoring of public service, the engagement of citizens is not optimal\.
Municipalities have limited interactions with their citizens, either directly or through elected village local
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councils, 16 which in turn have poor capacities and are not inclusive as they lack women and ethnic
representation\. At the level of the RWC, a Consumer Consultative Committee has been established that
includes representatives of all municipalities in the service area, following national policy\. They are tasked
to advise on business plans and tariffs, support public awareness initiatives, and resolve grievances of
customers that cannot be solved at first hand with the company\. At the level of the basin, there are no
formal consultation and citizen engagement mechanisms yet in place and no legal structure such as basin
committees\.
100\. Citizen engagement across all Morava e Binces-related components, including the small grants
program, will be supported by a service provider which will be tasked to (a) help communities develop
watershed action plans, (b) support beneficiaries to apply for small grants ensuring female and minorities
participation, and (c) design and supervise small works (events or public nature investments)\. The service
provider will also execute or support the other citizen engagement initiatives mentioned previously\. The
key focus of the service provider will be to network directly with the communities in the selected sub-
basins and municipalities and provide support at all stages of the citizenâs involvement\. The PMT will hire
a grants manager that would support and oversee the service providerâs activities as well as the
implementation of the small grants program\.
101\. Structured consultation for the WRIPS of the Component 1 will be primarily channeled through
the respective basin-level stakeholder groups and the IMWC to ensure close link with river basin
management planning activities\.
102\. Under Component 2, specific citizen engagement measures are proposed:
(a) A popular and easily accessible âFriends of the Basinâ platform\. This social engagement
platform will be executed over a wide array of communication channels and engage a broad
range of citizens and local formal and informal groups with the objective of mobilizing local
momentum, spurring bottom-up activities to contribute to the protection and development
of the basin and that support peopleâs knowledge, appreciation of their natural
environment, and the importance of the basinâs sustainable management and
development\.17 The platform will work with civil society organizations; nongovernmental
organizations (NGOs); local formal and informal groups (entrepreneurs, women, and youth);
companies; and social institutions (schools, and so on) and will include a competitive
matching grant program where local private, public, and not-for-profit entities can propose
activities that contribute to the above objectives\.
(b) Financing of a firm/entity âthe Citizen Engagement Facilitatorâ (CEF) that will design the
platformâincluding both social media/online presence and in-person forumsâand that will
support the facilitation of the activities\. The facilitator and the outreach office of the MIE
will be based in one or several of the municipalities in the basin, probably as a continuation
of the current outreach office in Kamenica municipality\. Training will be provided to the
facilitators, including conflict resolution, given the potential for ethnic tensions\. The
16 Ranillug has not yet established any local councils, Gjilan has done so for most of the villages, and Kamenica has completed
this for all villages; however, for Kamenica no women are either leader or member of the local councils as members or chairs
and ethnic representation is absent\.
17 RBMPs are often highly technical in nature and not accessible to non-expert audiences\.
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platform will also have a broad communication function of human-interest stories linked to
all components of the project (micro-catchment planning, small grants, water service
improvements, and so on) and can also support the grievance redress mechanism to ensure
complaints are routed to respective agencies (PMT, municipalities, RWC, and so on)\.
(c) Strengthening of outreach and feedback mechanism in existing institutions\. The project
will support outreach and customer feedback mechanisms, such as for Hidromorava RWC\.
(d) Involvement of local communities in the micro-watershed planning\. With support of a
facilitation firm, participatory plans for micro-watershed improvements will be developed\.
103\. The effectiveness of the citizen engagement activities will be measured through annual rapid
surveys, taking a pulse on peopleâs satisfaction with the quality of their engagement in the various
activities under the project (access to information, opportunity for dialogue, and responsiveness of
concerned implementing agency) and making results public and feeding back into implementation\.
Specific attention will be given to empowerment of women to meaningfully participate in, contribute to,
and benefit from these activities (see below); similarly, the project will aim to overcome any obstacles in
communicating with Serbian communities, primarily residents in Ranillug municipality\.
Gender
104\. Kosovoâs CPF states that access to economic opportunities, including jobs and assets, is the most
important gender gaps\. Only 12\.5 percent of women are employed, compared to 41\.3 percent of men,
driven by both low female labor participation and high female unemployment (highest in the region and
compared to other middle-income countries)\. Gender inequalities are reinforced by extremely high youth
unemployment (58 percent)18 and ethnic Serbian, Roma, and Askali groups are specifically disadvantaged\.
105\. While national-level data are not available, a recent assessment of RWC Prishtina illustrated that
women filled less than 20 percent of management positions and at the operational level just 12 percent
of the employees were women, mostly in traditional administration roles\. Women were more pessimistic
than men in assessing their opportunities to be hired, promoted, and paid fairly\. Hidromorava RWC had
165 staff in 2018, less than 15 percent female and only a few in senior professional, engineering, or
management roles\.
106\. Women are estimated to own 10 percent of all businesses, most of them microenterprises and
just 16 percent of Kosovar women own land\.19 A recent assessment showed that female farmers play a
vital role in the transformation to high-value agriculture and that good practices to support women in
production and agro-processing already exist, such as under the Kosovo Agriculture Development Project
(KARP)\. However, significant barriers remain to advancing womenâs economic opportunities in
agriculture, such as access to information, business development services and finance, and social norms
and a high burden of unpaid work and childcare\.
18World Bank\. 2017\. Country Partnership Framework for the Republic of Kosovo FY17âFY21\. Washington, DC\.
19 World Bank and FAO (Food and Agriculture Organization of the United Nations)\. âLand and Gender: Improving Data
Availability and Use in the Western Balkans\.â
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107\. To increase the share of women at technical and managerial levels, as part of the technical
assistance under Subcomponent 2\.2 to improve performance of Hidromorava RWC, a gender and diversity
assessment will be carried out\. This will include the development of an action plan, approved by the Board
of Directors\.20
108\. Gender gaps in agriculture are addressed by ensuring that the proposed matching grant scheme
under Subcomponent 2\.3 will follow good practices already carried out under KARP and provide culturally
appropriate technical and extension support and training to maximize inclusion of women as project
beneficiaries\. This training will include support to identify selection of viable activities, prepare their
business plans required for successful application, and so on\. The outcomes will be monitored in the
Results Framework, aiming for at least 25 percent of grants to be used by female farmers\. This incremental
target is higher than the current baseline of female beneficiaries under other grant programs (18 percent)
which is in itself up from earlier years, and this will support women in improving their access to key assets
and resources\.
109\. As part of the micro-catchment planning and restoration, and the citizen partnership platform
(Subcomponents 2\.3) for âFriends of the Morava Binces basinâ, consultants and municipal staff who will
be involved in the facilitation and outreach will be trained\. Watershed planning groups will be required to
include 35 percent of women and the partnership platform will proactively engage formal and informal
women groups\. Women will benefit not only through access to information and decision-making on
priority actions in natural resources management but also through improved access to information on
access to project support in terms of grants\.
110\. The risks related to gender-based violence (GBV) are low based on the GBV assessment matrix
undertaken\. Factors that classify the project as low risk related to GBV are the following: (a) nature of the
infrastructure is mostly rehabilitation, reconstruction, and extension of already existing water supply
systemsâgiven the extent of the work and the construction services, market labor influx situation is not
expected; (b) during the consultations carried parallel with the preparation, GBV issues did not arise; and
(c) the project area is peri-urban and easy to supervise\. This is in addition to country context assessment
and country-level violence background\. Total risk assessment rating for the project is 8\.75\. The lower risk
range is between 1 and 12 points\.
V\. GRIEVANCE REDRESS SERVICES
111\. Communities and individuals who believe that they are adversely affected by a World Bank (WB)
supported project may submit complaints to existing project-level grievance redress mechanisms or the
WBâs Grievance Redress Service (GRS)\. The GRS ensures that complaints received are promptly reviewed
in order to address project-related concerns\. Project affected communities and individuals may submit
their complaint to the WBâs independent Inspection Panel which determines whether harm occurred, or
could occur, as a result of WB non-compliance with its policies and procedures\. Complaints may be
submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank
Management has been given an opportunity to respond\. For information on how to submit complaints to
the World Bankâs corporate Grievance Redress Service (GRS), please visit
20 RWC Hidromoravaâs Board of Directors has six members of which two are female\.
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http://www\.worldbank\.org/en/projects-operations/products-and-services/grievance-redress-service\.
For information on how to submit complaints to the World Bank Inspection Panel, please visit
www\.inspectionpanel\.org\.
VI\. KEY RISKS
112\. Overall risk for this project is Substantial\. There are several specific risks related to this proposed
project\.
113\. Political and Governance: Substantial\. Kosovo has a dynamic political field which also branches
into the civil service\. The challenges of political stability triggered by political cycles and historical
sensitivities among different ethnic groups could lead to substantial political and governance risks\. The
water sector has not borne the brunt from most of the political changes and successive governments have
generally supported the water agenda\. There is a common consensus that water security is a key agenda
issue for the coming years\. As part of the Country Management Unit-led fragile, conflict, and violence
(FCV) pilot, the team has been working with the Governance Global Practice to conduct light functional
mapping of various water-related agencies scattered across multiple ministries to identify potential
overlap, gap, and disconnection among their functionalities\. Also, the team conducted an assessment on
ways to meaningfully and practically engage Serbian minorities\. The collaboration between municipalities
in the basin has been good, irrespective of the ethnic differences, and the local leadership is proud of
setting a good national example\. The project aims to support this dynamic\.
114\. Sector Strategies and Policies: Substantial\. Currently, there is a lack of incentives to foster and
sustain multisectoral coordination at the national basin level\. While key strategic documents have been
developed for the water sector, the lack of cross-sector coordination hinders the translation of policy into
concrete actions\. Components 1 and 2 are designed to mitigate this risk by supporting existing efforts to
establish and strengthen a RBDA to manage multisectoral development interventions in the basin\. The
overall project is closely aligned with EU directives and is based on the Government priorities identified
in the National Water Strategy\. The World Bank is seeking early endorsement of the core principles of
engagement from the PCC and the IMWC to ensure full alignment and harmonization\. Through the FCV
pilot, the World Bank is supporting cross-agency collaboration and setting short and long-term goals for
collaboration and overcoming obstacles in political economy\. Stakeholder engagement is starting early in
the project under the same initiative that is closely linked to the project\.
115\. Institutional Capacity for Implementation and Sustainability: Substantial\. The Ministry of
Infrastructure and Environment, the MAFRD, and MEPTINIS all have experience in executing the World
Bank projects, albeit with implementation challenges\. Even in the presence of strong high-level political
commitment to the water agenda, the multiplicity of agencies and their uneven, and often weak,
institutional capacity could delay or stall implementation\. There are pervasive institutional capacity gaps
at some of the departments, agencies, and at the municipality level to implement and monitor
development projects\. Component 1 is designed to emphasize provision of technical assistance and
institutional capacity building to help mitigate risks associated with weak institutional capacity\. Technical
assistance will be used to build rather than substitute for capacity\. The tiered approach proposed for the
project implementation arrangement will help further mitigate this risk\.
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116\. Fiduciary: Substantial\. According to Kosovoâs CPF for FY17 to FY21, weaknesses are identified in
the overall fiduciary environment in Kosovo, including (a) multiyear perspective in fiscal planning and
policy formulation; (b) internal audit; and (c) internal control system, including commitment controls\.
Such risk is systemwide, with potential impact on investment lending operations\. There is ongoing support
to improve the fiduciary environment in Kosovo from the donor community including EU, International
Monetary Fund (IMF), and the World Bank\. At the same time, the MoF has approved comprehensive
public FM strategy intended to strengthen fiduciary capacity\. Regular implementation support will be
provided to improve procurement capacity\. The procurement capacity assessment conducted for
implementing agency (MIE) revealed a High risk on procurement side, which after the mitigations
measures, described in annex 1, are applied becomes Substantial\. Regular implementation support will
be provided to improve procurement capacity\.
117\. Environmental and Social: Substantial\. Overall, the project is designed for sustainable resource
use and supports environmental services\. It also holds investments that have potentially significant
impacts on the environment and communities that must be carefully studied and addressed\. These are
covered in the Environmental and Social Review Summary (ESRS) in more detail\. E&S measures will be
integrated as much as possible within the development objectives of the project\.
\.
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VII\. RESULTS FRAMEWORK AND MONITORING
Results Framework
COUNTRY: Kosovo
Fostering and Leveraging Opportunities for Water Security Program (Project 1)
Project Development Objectives(s)
The proposed project development objective is to: (i) strengthen national capacity for managing water security, and (ii) improve water security in Morava e
Binces basin\.
Project Development Objective Indicators
RESULT_FRAME_TBL_ PD O
Indicator Name PBC Baseline End Target
Strengthening national capacity for managing Kosovo's water security (PDO part 1)
National Water Resources Investment Preparation Study
developed including climate change analysis, and presented for No Yes
endorsement to the government\. (Yes/No)
Number of new and refurbished stations with data for near real-
time hydro-met, climate, and spatial planning made publicly 0\.00 20\.00
available (Number)
Number of people downstream of high hazard dams with access
0\.00 25,000\.00
to relevant early warning systems (Number)
Improve water security in Morava e Binces basin (PDO part 2)
Percentage of Hidromorava RWC customers with at least 18
75\.00 95\.00
hours of water supply (Percentage)
PDO Table SPACE
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Intermediate Results Indicators by Components
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline End Target
Strengthening National Water Resources Investment Planning
Structured stakeholder engagement for investment planning
introduced and formal meetings held (Number) (Number) 0\.00 10\.00
For specific women focus groups on investment priorities
0\.00 3\.00
(Number)
Water Resources Investment Preparation Study prepared and
No Yes
discussed with stakeholders (Yes/No)
Information services for management
Number of new and refurbished stations operational (Number) 0\.00 20\.00
Annual hydrology reports reporting on water quality trends,
groundwater, surface water and storage use for Morava e Binces 0\.00 4\.00
basin (Text)
Dam Operations and Safety
Number of annual monitoring resports after putting dam safety
0\.00 3\.00
procedures in place (Number)
Multipurpose Water Storage
Number of detailed design for FLOWS2 investments completed
0\.00 2\.00
(Number)
Investments in water supply infrastructure and services
Km of water supply pipeline replaced/constructed under the
0\.00 18\.00
project (Kilometers)
Non Revenue Water (%) (Percentage) 62\.00 45\.00
Gender action plan developed and approved by the board of
directors (Number) 0\.00 1\.00
Citizen grants to foster water security
Civil society initiatives financed with small grants for water
security and implemented (Number) 0\.00 20\.00
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RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline End Target
Of which provided to (predominantly) female beneficiaries, at
0\.00 25\.00
least (Percentage)
Increased awareness among basin inhabitants on water security
0\.00 10\.00
and conservation (Percentage)
Percentage beneficiaries who report that citizen engagement
processes are effective (Percentage) 0\.00 15\.00
Number of citizens participated in the Morava e Binces river
0\.00 500\.00
basin management platform (Number)
Of which female (Percentage) 15\.00 30\.00
Project Management
Number of young professionals trained (Number) 0\.00 35\.00
Of which female (Percentage) 0\.00 55\.00
IO Table SPACE
UL Table SPACE
Monitoring & Evaluation Plan: PDO Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
National Water Resources Investment
Progress on subtasks of the Project
Preparation Study developed including Annual Submitted by borrower National PMT
WRIPS with interim Reports
climate change analysis, and presented
milestones
for endorsement to the government\.
Number of new and refurbished stations Hydro and meteorological Project
Hydromet Institute Hydromet Institute,
with data for near real-time hydro-met, stations to collect water and Annual Reports,
data portal reports PMT
climate, and spatial planning made climate data that send data administrativ
publicly available that is available on a public e data
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platform in near-real time\.
Number of beneficiaries
downstream of the large
dams, all of them
considered as high hazard, Project
in Kosovo for which DOISP Reports,
Number of people downstream of high plans have been made and actual Dam Submitted by borrower
Annual National PMT, RBDA
hazard dams with access to relevant early an early warning plan is in EPPs,
warning systems place\. Number of potentially household
impacted people and their surveys
risk level is to be
determined under the
project\. Current target is
tentative\.
Defined as percentage of
Project
Hidromorava regional water
Percentage of Hidromorava RWC Reports, National PMT,
company consumers with Annual Submitted by borrower
customers with at least 18 hours of water administrativ Hidromorava RWC
availability of water supply
supply e data
between 18 to 24 hours\.
ME PDO Table SPACE
Monitoring & Evaluation Plan: Intermediate Results Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
Number targeted
Structured stakeholder engagement for stakeholder meetings on Project
Annual Submitted by borrower National PMT
investment planning introduced and (elements of) the WRIPS, Reports
formal meetings held (Number) including specific focus
group discussion with
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women\.
For specific women focus groups on
investment priorities
This indicator measures the
progress towards
Water Resources Investment Preparation Administrativ Reported by the
developing the national Annual National PMT
Study prepared and discussed with e Record borrower
Water Resources
stakeholders
Investment Preparation
Study\.
Project
Including both existing (to Reports, Hydromet Institute
Number of new and refurbished stations Annual
be refurbished/modernized) administrativ data portal reports Hydromet Institute, PMT
operational
and new stations e data
Project
Annual hydrology reports reporting on Collaborative reports from
Reports, Hydromet Institute Hydromet Institute, PMT,
water quality trends, groundwater, several agencies on state of Annual
administrativ data portal reports KCA
surface water and storage use for Morava the basin based on available
e data
e Binces basin information\.
This indicator measures
Number of annual monitoring resports progress of development Project
Annual Submitted by borrower National PMT, RBDA, MIE
after putting dam safety procedures in and implementation of dam Reports
place safety measures including
early warning system\.
This includes the design for
Kike-Kremenata as well as Project
Number of detailed design for FLOWS2 Annual Submitted by borrower National PMT
another detailed designs for Reports
investments completed
priorities emerging from the
WRIPS
Km of water supply pipeline Target to be established Annual Project Submitted by Borrower
National PMT,
replaced/constructed under the project with technical audit of the Reports,
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masterplan and deatiled Hidromorava Hidromorava RWC
planning in Year 1\. administrativ
e records
Project
Reports,
Difference between water Hidromorava
National PMT,
supplied and water sold, Annual administrativ Submitted by borrower
Non Revenue Water (%) Hidromorava RWC
expressed as a percentage e records,
of net water supplied technical
audits
This indicator monitors the
progress towards the
development of an action Administrativ
Gender action plan developed and Annual Reported by borrower National PMT
plan to increase the share of e report
approved by the board of directors
women at technical and
managerial level within the
utility\.
Civil society initiatives financed with small Project
Annual Submitted by Borrower National PMT
grants for water security and Small grants program Reports
implemented
Project
Of which provided to (predominantly) Annual Submitted by borrower National PMT
reports
female beneficiaries, at least
Methodology to be Household
developed with baseline,HH Baseline, surveys,
Increased awareness among basin survey based on compound mid-term baseline,
Submitted by borrower National PMT
inhabitants on water security and index measuring awareness and end of mid-term
conservation and behavior on core water project and endline
security areas by mid-term surveys
review\. Measures impact of
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citizen engagement,
outreach and planning\.
Results to be disagregated
by gender and age groups\.
The indicator measures the
INCREASE in awareness
This indicator measures the
progress in designing
project activities in a
participatory manner that
actively engages
stakeholders not only in the
formulation but in providing
feedback on the system, and
that will therefore provide
Percentage beneficiaries who report that Administrativ
timely, accurate and user- Annual Submitted by borrower National PMT
citizen engagement processes are e records
friendly watershed
effective
management activities\. The
level and quality of
participation will be
measured through
beneficiary assessments to
be undertaken during
project implementation at
mid-term and again prior to
project closure\.
This indicator measures
participation in the "Friends
Number of citizens participated in the Administrativ Reported by the
of the Basin" platform in Annual National PMT
Morava e Binces river basin management e records borrower
Morava e Binces river basin\.
platform
The platform will work with
Civil Society Organizations,
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NGOs, local formal and
informal groups
(entrepreneurs, women,
youth), companies, social
institutions (schools, etc\.)
and will include a
competitive matching-grant
program where local
private, public and not-for-
profit entities can propose
activities that contribute to
the above objectives\.
Information collected from
this platform will also
inform the national Water
Resources Investment
Planning process\.
Measures female Administrativ Reported by the
Annual National PMT
Of which female participation in river basin e record borrower
management platform
These YPs are trained linked
to project activities,
Project
following harmonized Annual Submitted by borrower National PMT
Number of young professionals trained Reports
appraoch with other
training programs in the
implementing agencies\.
Of which female
ME IO Table SPACE
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Annex 1: Implementation Arrangements and Support Plan
Project Management Arrangements
Figure 1\.1\. FLOWS Implementation Arrangements
Program Coordination Committee
Secretaries General of relevant ministries, mayors, CEO IMWC
of Hidromorava RWC, Secretariat to the IMWC Standing water sector policy
coordination framework
FLOWS Program Technical Committee
Director-level representatives of concerned
departments, municipalities, and invitees
FLOWS Project Management Team FLOWS Working Group
Led by project manager based in MIE Technical staff of all
implementing agencies
Component 1 Component 2 Component 3
Foundational Measures Catalytic Investments Project Management
Lead Agency: MIE Lead Agency: MIE Lead Agency:
Supporting Agencies: Supporting Agencies: MIE (PMT)
⢠MIE (RBDA, hydromet, KCA) ⢠MIE (RBDA, hydromet) Supporting Agencies:
⢠MAFRD (irrigation, forestry ⢠Hidromorava (MEPTINIS, ⢠PMT
agency) Budget) ⢠Sector agencies
⢠MEPTINIS (RWCs) ⢠MAFRD (Managing ⢠Municipalities
⢠Municipal agencies authority, forestry agency)
Basin-/Municipality-level
activities
Oversight: Citizen Engagement
Facilitator, Hidromorava RWC,
PMT, Municipality divisions
1\. Policy-level sector coordination will be organized through the IMWC while cross-sector
implementation coordination will be organized through the newly established PCC\. To ensure broad
government ownership and long-term leadership of the approach, and support cross-sector coordination,
the project will seek high-level coordination through the establishment and maintenance of a PCC,
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comprising the Secretaries General of the ministries involved in project implementation, representatives
of mayors of municipalities in the Morava e Binces basin in which project investments are made, the CEO
of the Hidromorava J\.S\.C\., and the Secretariat to the IMWC\. The IMWC, which is a standing sector
coordination body established by the Water Law, is chaired by the Prime Minister and comprises the
IMWC member ministriesâOPM, MIE, MEPTINIS, MEI, and MoFâwith representatives of the donor
community as observers\. It has the mandate to coordinate and support the decision-making process of
water management across sectors\. For FLOWS, the IMWC will include project steering as an agenda point
at least twice annually and will invite sector ministries that are not permanent members of the IMWC
(notably MAFRD) and mayors of municipalities where investments take place\. In principle, the IMWC will
be responsible for reviewing the systematic issues of water and advising on the harmonization of the
different needs and interests with relevance to broad sector coordination, particularly national water
resources investment studies and planning under the project\. The FLOWS project manager will work with
the PCC in preparing documentation for project coordination meetings\.
2\. A FLOWS PTC will be established and will be responsible for providing technical oversight of
project implementation as well as reviewing and recommending project work plans and budgets to the
IMWC\. The PTC will meet on a quarterly basis or more frequently as need arises and provide technical and
practical work planning coordination between the implementing agencies\. The PTC will also advise on the
quality of project implementation reports and policy documents, guidelines, and M&E reports; review
coordination needs and implementation obstacles; and suggest solutions\. This committee will comprise
the IMWC Secretariat, Directors of the principal departments and agencies, Hidromorava RWC
management, and municipalities involved in project implementation and external experts and will operate
in an advisory role to the IMWC on project matters\. The FLOWS project manager will serve as the secretary
for the PTC meetings\. There may be ad hoc subcommittees for the different subcomponents\. The
relationship between the PTC and the TWG is that the PTC will have a supervisory role and members
represent their departments when engaging on cross-agency tasks\. The PTC provides the enabling
environment and instructions to the TWG members to contribute at the technical level\.
3\. Project Management Team\. Given the complexity and multisectoral nature of the proposed
operation, it is proposed that a multisector PMT be housed in the MIE, with participation of the other
implementing agencies\. The PMT will oversee day-to-day implementation and administration of the
project\. It will be a fully integrated unit, comprising externally hired experts, and links with the relevant
departments in the agencies through the TWG\. The PMTâs main tasks will cover (a) day-to-day project
management in all its aspects including fiduciary functions; (b) coordination and cooperation among
various implementing agencies; (c) coordination with project stakeholders and the World Bank; (d)
preparation of annual work plan and budget; (e) preparation and update as necessary of the Procurement
Plan; (f) preparation of quarterly unaudited financial reports and annual audited financial statements; (g)
M&E of project activities, including monitoring and reporting of safeguards compliance and gender action
plan and communication outreach; (h) preparation of semiannual and annual progress reports; (i) briefing
of the PCC, PTC, and IMWC on the status of project implementation; and (j) systematic filing of all project-
related documents (including procurement and FM)\.
4\. The PMT will be led by a project manager, who will be supported by several component
coordinators, who will focus on the implementation of activities under their respective components and
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support the project manager with the management of interlinked components\. The project manager
reports to the Permanent Secretary of the MIE\. Tentatively, the component coordinators are
(a) Coordinator Component 1 - Water resources management specialist and
(b) Coordinator Component 2 (infrastructure, Subcomponents 2\.1 and 2\.2) - Water engineer\.
5\. The project will provide funding to contract professionals and support staff to form the PMT,
facilitate its operations, and ensure that certain specialized tasks are professionally executed by people
with the required background and knowledge\. They include professional safeguards staff (E&S safeguards
specialists); fiduciary staff (a procurement specialist and an FMS); and support staff (communications,
administration support, translator/data entry clerk, and an M&E specialist)\. The communications/M&E
specialist will take responsibility for the citizen engagement and grant activities under Subcomponent 2\.3\.
Also, short-term expertise for the PMT is foreseen on specific topics that are required for quality of
implementation but that do not require full-time presence, such as engineering, legal expertise,
hydromet/irrigation/dam design expertise, and IT services\.
6\. Following resource efficiency and aid effectiveness principles, the PMT will share common
services with the parallel Greening Land Project (P172992), also under the MIE\. The common services
will include the fiduciary, safeguards, and communications/M&E specialist functions, as illustrated in
figure 1\.2\. These fiduciary, safeguards, and communications specialists will be an integral part of both the
PIUs and will be hired on full-time basis within the PMT\. Although they serve both projects, they do not
form a separate unit\.
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Figure 1\.2\. FLOWS Implementation Arrangements
7\. Technical Working Group\. The TWG that has been established throughout project preparation
will continue to strengthen the PMT during implementation\. While there is clear responsibility for
implementation with the hired professional staff who form the PMT (project manager and component
coordinators), they will not work in isolation\. Civil servantsâ staff of each of the implementing agencies
will continue to serve throughout project implementation as focal points for the various activities for
coordination\. The TWG will be an integral part of the PMT and will have the following functions:
(a) Data and information sharing and communication\. This includes organizing data and
information for the PMT so that data are readily and timely available to all participating
agencies and consultancies, ensuring that relevant data and information from consultancies
are readily available to relevant agencies, developing cross-sectoral knowledge products,
and ensuring that interdependent activities progress in such a way as to timely generate any
data and information as required by another activity\.
(b) Planning and coordination\. This includes suggesting and designing activities within the
overall FLOWS framework and department priorities, particularly for multisectoral activities;
supporting the development of working documents, Procurement Plans, and technical
specifications/ToRs for studies; and participating in stakeholder meetings and workshops\.
(c) Overall monitoring of progress\. This includes monitoring and reporting on agency activity
status and comparing it with planned schedules and notifying departments/consultants of
any deviations from the planned program; providing quality assurance of the activities,
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reports, and information being generated; conducting supervisory visits to study areas;
identifying any constraints/issues or problem areas and advising on appropriate action; and
supporting the PMT consultants in the fulfillment of their assignments\.
8\. Because the TWG comprises civil servants, it is expected that they spend approximately 20
percent of their time on these collaboration functions, in addition to their other tasks within and outside
the FLOWSâ program scope\. Component 3 makes financial provision for operational costs incurred by the
TWG and other technical staff for carrying out these functions, including for travel, communication, and
limited office costs\.
9\. The cooperation between the implementing agencies will be set out in the MoU defining the roles
and responsibilities of each institution, as well as specific ToRs for the different bodies\. Details of these
arrangements will also be provided in the POM\.
10\. Partnership arrangements have been established with active partners in the water sector: among
others the SDC, Sida, EU, and UNDP\. Particularly, the SDC is currently preparing a long-term capacity-
building program in the water sector that will closely dovetail with FLOWS, and technical assistance
activities will need to continue to be harmonized\. Overall, the SDC program objectives are to strengthen
the national-level institutional framework, through the IMWC and RBDA\. These are very important for the
implementation of FLOWS and the project will support the SDC program while not duplicating its technical
assistance in this area\. Coordination will take place through the existing donor and implementersâ (of
water projects) coordination mechanisms and through continued close collaboration between the SDC
and World Bank teams\.
11\. Component-specific implementation arrangements\. FLOWS consist of several interlinked
subcomponents, which are different in nature\. Specific implementation arrangements are discussed by
subcomponent, as well as their links to the overall FLOWS implementation mechanisms, in the following
paragraphs\.
12\. For Component 1, the PMT will coordinate and contract the studies, technical assistance, and
works, with the relevant departments (RBDA, Water Policy Division, hydromet, and the KCA) through
activity management teams for each subtask\. The PMT will ensure that quality assurance and structured
consultations take place\. Specific arrangements are in place for dam safety and irrigation investments
with the concerned authorities\.
13\. Subcomponent 1\.1 consists of one large activity, the WRIPS, and the follow-on technical studies\.
This activity will be managed and supervised by the PMT with participation of relevant institutions and
departments\. The PMT will coordinate and contract the WRIPS study, the design studies, and necessary
technical assistance and will ensure quality assurance and structured consultations with institutions and
sectors\. This will be supported by the IMWC and the PTC\. Particularly, coordination requirements need to
be actively promoted and ensured with the SDC and the respective consultants contracted for the
development of the RBMPs\. This is to ensure complementarity and gaining synergies during the different
steps conducted under Subcomponent 1\.1 and for the development of the RBMPs\. The results of the
WRIPS and investment pipeline preparatory studies need to be coordinated with and reflected in the
RBMPs\. The funds earmarked for irrigation designs (to advance priority investments to be identified under
the Irrigation Masterplan and Investment Framework) will follow the same arrangements, with technical
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oversight by the irrigation department from MAFRD\. Consultations will be conducted with a broad range
of water-dependent sectors in the public and private sector as well as civil society\. This may be
harmonized with the RBMP consultations or organized separately on a national scale\.
14\. Subcomponent 1\.2 consists of a range of interlinked activities in modernizing hydromet services
and data services from the KCA\. For hydromet, the investments in equipment, facilities, and software will
follow a strategic technical assessment and design study by the SDC-supported program\. The PMT will
also oversee the (interim) outputs of this program and ensure that investments under Subcomponent 1\.2
are technically sound and are well-integrated with the broader capacity strengthening activities supported
by the SDC\. The subcomponent will be adaptively managed to ensure that operation and maintenance
capacity is adequate to maintain the planned investments\. Support to the KCA will be in the form of
technical assistance (on geographic information systems and environmental and water mapping services)
to ensure that (a) available spatial data are effectively used for program activities and national water
resources planning; (b) data generated under the program are adequately stored and accessible to the
implementing agencies and the general public through the KCA; and (c) the KCA can better support the
broader mapping demands from implementing agencies, municipalities, and civil society to support the
planning and management of natural resources\. A longer-term (individual) technical assistant will be
recruited under the project to work with the KCA technical staff\.
15\. Subcomponent 1\.3 will be implemented with the participation of all dam managers in the country
(mostly RWC), the RBDA, and the water division, as well as municipalities\. While the PMT manages the
overall component, the DOISP will include specific assessments to be done by consultants and tasks to be
completed by dam managers\. The activity will include training, workshops to raise the profile of dam
safety within the institutions, and financing for studies and implementation of remedial measures to
enhance dam safety\. Any works under the program, outputs of emergency preparedness plans, and dam
instrumentation plans as well as other dam safety-related documentation produced under the DOISP will
be reviewed by an independent panel of experts\.
16\. Component 2 will focus on the Morava e Binces basin and the municipalities therein\. Initially,
investments will be focused on the municipalities of Kamenica, Ranillug, Gjilan, and Viti, to be gradually
expanded to all municipalities in the basin\. There will be an outreach office in the basin (currently
operational in Kamenica) to support citizen engagement and local-level coordination\.
17\. For Subcomponent 2\.1, the project will continue the technical studies that commenced during
project preparation and will continue with specific assessments and detailed designs\. The PMT will
manage the contracts or studies and will present to the PCC and IMWC key outcomes for decision-making
on final site selection, sizing, and timelines\. The independent dam safety panel will be retained throughout
the project for oversight on all dam safety aspects related to the âKike-Kremenataâ designs\. The oversight
of the ESIA and Resettlement Action Plan (RAP) will also be channeled through the PMT, which will work
with the relevant authorities (Kosovo Environmental Protection Agency, municipality, and so on) for
review and obtaining necessary clearances\.
18\. Subcomponent 2\.2 investments in the Hidromorava RWC system will be supervised with strong
engagement of Hidromorava RWC under a contract management arrangement (managed by an MoU)
while overall supervision remains with the PMT\. Hidromorava RWC will appoint a PIU within the company
and will appoint the PIU manager from within its ranks\. This PIU will oversee the day-to-day tasks assigned
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under the project to Hidromorava RWC, such as engineering services, works contractors, and
consultancies on system optimization and demand management\. All works design and supervision will be
outsourced to private consulting engineers\. The RWC PIU manager will be in frequent liaison with the
Subcomponents 2\.1 and 2\.2 coordinator in the PMT\. The project will finance technical assistance to the
RWC PIU, when required, for strengthening technical and contract management performance\.
Hidromorava RWC reports formally to MEPTINIS and for the purposes of the FLOWSâ program activities,
it will also report on technical, financial, and other project aspects through the PMT to the PCC, PTC, and
IMWC\.
19\. For Subcomponent 2\.3, the PMT will work with a CEF who will be hired under the project and
whose responsibilities under this subcomponent will include supporting the preparation of the grants
program, the inception, and communication to potential beneficiaries; supporting applicants in the
ideation process; facilitating the application process for small grants; collecting data on progress; liaising
between stakeholders; and documenting lessons\. The CEF has a broader role and supports the
development of watershed management action plans, which define priorities to be addressed by the small
grants, and as such provides a road map and vision for basin-level activities\. This activity will be
coordinated with the more formal RBMP development process as supported by the SDC program\. The CEF
will specifically reach out to women and youth to ensure equal access to program information and grant
funding and encourage specifically targeted measures under the small grants program\.
Financial Management
20\. FM\. An FM assessment was carried out to determine the FM and help establish adequate FM
arrangements for the proposed project\.
21\. Country issues\. The project will rely extensively on elements of Kosovoâs public FM systems,
including (a) planning and budgeting, (b) internal control, (c) flow of funds and payments, and (d)
accounting and reporting\. The various Public Finance Management (PFM) reviews 21 have plotted the
significant progress Kosovo has made in improving PFM\. The key strengths of the system are the sound
legal framework, the integrated central treasury system, and an increasingly effective external audit
office\. The strengths are offset by limited professional capacities and gaps in implementation\. There is
considerable scope for improving budget planning and preparation, internal financial control, audits, debt
management, and capital investment management\. The authorities are aware of these limitations, and
there is progress with support from donor community\. Lagging areas include (a) limited coordination of
budgets, MTEF, sector plans, and budget ceilings; (b) budget preparation that is not fully linked with
treasury systems; and (c) FM control and audits that are not fully effective\.
22\. The Public Financial Management and Accountability Law provides the FM and accountability
framework for public administration in Kosovo\. MTEF and the Annual Budget Law are the two main
documents presented for assembly review and approval\. PFM in Kosovo is highly centralized in relation
to budget policy and institutional control\. As a budgetary organization, the MIE and MEPTINIS do not
21 Kosovo has participated in a number of detailed reviews of its PFM, several central governments and municipal Public
Expenditure and Financial Accountability assessments, a country fiduciary review (2012), annual EU- Support for Improvement
in Governance and Management reviews, and other analyses by the World Bank and IMF\.
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maintain separate budget, treasury, and accounting systems\. The process for planning and budgeting is
enabled through the BDMS22 and PIP\.23
23\. Budget execution is controlled by setting allocation limits, which are based on forecasts of
available resources and the individual needs of the spending institution, with due regard to seasonality of
revenues and expenditures\. The Treasury manages allocations through the year and controls budget
execution and cash management based on the cash plan submitted by the budget organizations
themselves\. The Kosovo Financial Management Information System (KFMIS) is an important tool in
executing the budget\. In general, internal control procedures are well-understood\. The Treasury is
serviced through the Single Treasury Account with the Central Bank of Kosovo through which all
government revenues and expenditures are recorded\. The budget organizations enter financial
information into the KFMIS, which produces reports\. Records and information are produced, maintained,
and disseminated to fulfill decision-making control, management, and reporting purposes, as needed\.
Budget execution reports are organized by structure of the budget and present fund balance
commitments on a monthly and quarterly basis for each category\. Detailed books and records are
maintained by each budget organization\.
24\. The publicly owned enterprises are established as joint stock companies\. Their financial reporting
requirements abide by the commercial companies accounting and financial reporting accounting\.
Pursuant to the Public Enterprise Law, MEPTINIS is charged with the policy and monitoring of public
enterprises\. In this regard, the public enterprises have their annual investment plans approved by
MEPTINIS and report on quarterly basis to MEPTINIS\. The government grants for capital investments in
public enterprises are extended through the MEPTINIS budget\. These grants are disbursed into the
companyâs bank accounts that manage their respective investments and report periodically to MEPTINIS\.
25\. Implementing agencies and the FM staff\. While the MIE, through its PMT, will be responsible for
the implementation of the project, Hidromorava RWC (HRWC) will be responsible for implementation of
the investments in water supply (Subcomponent 2\.2)\. The MIE has experience with implementation of
World Bank-financed investment projects\. To some extent, Its finance departments are familiar with the
project requirements; however, FM expert support has been provided throughout the implementation of
previous projects\. A similar arrangement will be adopted for the proposed project\. The FMS will be part
of the PMT and will work closely with the Budget and Finance Division head and other finance staff in
preparing commitments and ex ante controls in payment of project expenditures, planning and budgeting
of the project, and preparing quarterly IFRs and withdrawal applications\. The PMT FMS will have access
to the KFMIS to view and generate project reports\. Even though finance staff have attended trainings and
workshops on World Bank fiduciary and disbursement in the past, continuous trainings and workshops
will be delivered in the future\.
26\. Hidromorava RWC is a joint stock company established and registered in the Kosovo Business
Register in May 2007\. Its sole shareholder is the Kosovo Government\. The internal control environment
and existing capacity in the finance department are adequate for implementation of the project\. The
Hidromorava RWC FM responsibilities include planning and budgeting, management of project accounts,
processing and authorization of payments to vendors/contractors, disbursements, record keeping,
22 Budget Development Management System\.
23 Project Implementation Pipeline\.
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accounting, and financial reporting\. The PMT FMS will guide/train the FM staff at the company to prepare
withdrawal applications, budget plans, and financial reports\.
27\. Close coordination between Hidromorava RWC, MEPTINIS, and MoF is envisioned for the
proposed operation\. The relationship between them will be regulated in an MoU, whereby budgeting,
allocation, and reporting requirements for the operations will be described\. The annual disbursement
forecast for Hidromorava RWC should be reflected in the MEPTINISâs medium-term budget framework
and annual budget\.
28\. The MIE PMT will be responsible for the preparation of the POM, including the SGM\. The section
related to Subcomponent 2\.2 will be prepared in coordination with Hidromorava RWC\. The POM and SGM
will include FM sections\. The FM section of the POM will include (a) the financial and accounting policies
and procedures for the project; (b) the organization of the FM unit, functions, staffing, and relevant job
descriptions (with special emphasis on the segregation of duties) at the central and local levels; (c) the
necessary templates for recording, monitoring, and reporting various transactions; (d) project internal
controls; (e) disbursement procedures; (f) project budgeting, planning procedures, and financial
forecasting; and (g) project reporting\. The SGM (Subcomponent 2\.3) will include (a) roles and
responsibilities of the MIE PMT and CEF, (b) internal control mechanisms for the disbursement of grants,
(b) description of the monitoring role of the MIE, and (d) reporting requirements\.
29\. Budgeting\. In general, the mechanisms for budgeting and opening the budget (release of funds)
in the line ministries are considered adequate for the needs of the proposed project\. The MoF budget
instructions guide the budget and planning preparation process\. Project budgets and forecasts would
reflect inputs from the technical departments and will be based on the approved procurement and
implementation plan\. These budgets would form the basis for allocating funds to project activities and,
after expenditures are paid, for requesting funds from the World Bank\. To facilitate reporting and planning
activities, a unique project code would be assigned, and all project activities would be captured by this
code\. Annual budgetary ceilings monitored by the MoF limit the inclusion of the project activities in the
line ministries, especially for those items that are not regulated by the investment clause\. To mitigate the
risk pertaining to insufficient or untimely budgetary appropriation and allocations, the MIE should
cautiously steer the budgetary planning process and ensure that a realistic project budget and forecast,
prepared as mentioned earlier, is included in the MTEF and the Annual Budget Law, beginning in the year
the project is expected to become effective\. It is required that the project implements an effective and
documented project planning and contract monitoring process in all the implementing entities\.
30\. MEPTINIS is responsible for the oversight of central government public enterprises and
monitoring of their compliance with relevant legislation\. In this capacity, the ministry reviews the entityâs
annual business plan and investment requirements and periodically monitors the entityâs financial
performance and position\. After review of budget needs, the MoF allocates, on yearly basis, a lump-sum
budget to MEPTINIS under subsidies and transfers to finance capital investments as requested by
companies\. It is proposed that the budgetary allocation of the project Subcomponent 2\.2, to be
implemented by Hidromorava RWC, follows the same mechanism\. A protocol should be established
between Hidromorava and the MIE with the purpose of providing timely and quality information to
MEPTINIS, and further to the MoF, for the preparation of annual budget\. The annual budget preparation
process will be monitored by the PMT and the World Bank team\.
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31\. Internal controls\. For the proposed project, the MIE and Hidromorava RWC are committed to
maintaining an effective internal control system to ensure that project expenditures are properly verified
and authorized; supporting documents are maintained; accounts are reconciled periodically; and project
assets, including cash, are safeguarded\. General regulations for processing transactions and approving
contracts exist in both entities\. Recent external audit reports demonstrate that the MIE and Hidromorava
RWC are generally in compliance with PFM regulations and financial reporting requirements\. The MIE and
Hidromorava RWC will minimize the risk of misuse or fraud with respect to FM by strengthening internal
controls with additional control activities that will be described in the FM section of the POM\. These
written standards are to clarify segregation of duties and responsibilities, including level of authority; clear
control over funds and assets, and ensure timely and accurate financial reporting\. The POM will clarify the
role in the implementation of various entities involved in the project and define the communication and
necessary evidence to support good FM\. The additional control activities will include, but not be limited
to, the following:
⢠The MIE PMT/Hidromorava RWC, for their respective parts, will process the payments to
contractors upon receipt of the payment request letter by the spending unit, supported
by the invoices and other payment documents containing all required technical approvals\.
It will also make sure that the payment requests are in line with the contracts\.
⢠The MIE PMT will release payments to project beneficiaries for small grants supported by
duly approved payment requests, payment lists, and other supporting documents\. These
lists and documents must contain all the required technical and financial approvals\.
⢠Hidromorava RWC will be responsible for making regular reconciliations between
accounting records, bank accounts, and IDA Designated Account and disbursements\. The
reconciliation files will be supervised by the CEO and signed by the chief financial officer
on a monthly basis\.
⢠The MIE PMT will conduct regular/on-the-spot controls for grant activities\.
⢠The assets and equipment purchased for use by the MIE/Hidromorava RWC from the
project funds, if any, will be followed in a separate asset register\. Annual asset counts will
be performed and documented by a committee whose members are appointed by the
head of the PMT/Hidromorava RWC Chief Financial Officer\.
32\. The small citizen engagement grants program in water security will be implemented by the MIE
PMT\. Because the program is not regulated by current legislation, additional measures will be put in place\.
The SGM will also describe the FM arrangements for the administration of the program\. Key internal
controls and procedures that need to be in place with respect to grants mechanism should include, among
others,
(a) Clear description of eligibility criteria for beneficiaries;
(b) Clear description of eligibility criteria for activities;
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(c) Procedures relating to evaluation and selection of grants, including determining and
describing responsibilities for this process;
(d) Procedures relating to the budget mechanisms and timely transfers of funds to beneficiaries;
(e) Procedures and processes of monitoring of grants implementation, including reporting on
the use of funds and technical progress and maintaining appropriate accounting records and
supporting documentation; and
(f) Procurement process for the grants\.
33\. The grant operations manual and SGM will be disbursement conditions\.
34\. Accounting system\. The MIE will maintain project financial records (budget appropriations,
allocations, commitments, and actual expenditures) in the KFMIS (free balance system) on a cash basis\.
The project chart of accounts would be based on the KFMIS\. Project funds and expenditures will be
accounted separately and identified by the unique project code\. Budget allocation/transfer for
Hidromorava RWC will be accounted in the MEPTINIS financial statements\. The KFMIS can generate
project reports by the nature of expenditure, institution, source of fund, and program\. However, the
existing chart of accounts does not enable recording of project expenditure by activity\. The FMS will be
required to maintain parallel contract monitoring financial data\. The data will be cross-checked
periodically against the KFMIS-generated statements\.
35\. Hidromorava RWC is using Alpha Business for billing, accounting, and financial reporting purposes\.
Alpha is adequate for keeping accounting records of project financial transactions, resources, and uses\.
The project transactions, bank accounts, assets, and liabilities may be separately identified and tagged,
through the chart of accounts and dimensions\. The entity will maintain its own accounting for project
activities and its operations pursuant to the entityâs accounting policies based on International Financial
Reporting Standards\. Annual audited financial statements for the entity are required by the legislation\.
On a quarterly basis, Hidromorava RWC will prepare and submit to the PMT a predefined financial report
on the sources and uses of funds and contract monitoring, which will be used for consolidation of the
project reports\.
36\. Financial reporting\. The consolidated IFRs will be submitted on a quarterly basis to the World
Bank within 45 days after the end of each quarter\. The financial reports will consolidate all sources of
financing (IDA, grant, and government, if any) and all the project operations implemented by various
entities\. The PMT will be responsible for the preparation of the consolidated financial reports based on
the financial information provided by the implementing entities BFD (MIE and Hidromorava RWC)\. The
IFRs will contain at least the following: (a) statement of sources and uses of funds (with expenditure
classified by disbursement category), (b) statements of sources and uses of funds (with expenditure
classified by component), (c) contract monitoring, (d) grant financial monitoring report, and (e) the KFMIS
budget execution reports\. AFS will be prepared for the project and will be based on IPSAS cash basis\. The
financial statements will cover the Governmentâs fiscal year, which coincides with the calendar year\. The
functional and reporting currency is euro\. The PMT FMS will provide support in preparation of IFRs and
AFS\.
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37\. Audit\. The projectâs financial statements, as described earlier, will be audited annually by
Kosovoâs National Audit Office, under ToR acceptable to the World Bank\. The ToR of the annual financial
audit will be extended to review the flow of funds, control over subgrants, and include site visits\. The
audits of the project financial statements will be conducted by private auditors acceptable to the World
Bank and the audit fees will be financed from project resources, in case the audits by the National Audit
Office are not satisfactory to the World Bank\.
38\. Hidromorava RWC audited annual financial statements prepared in accordance with International
Financial Reporting Standards will be required\. The financial statements will contain adequate disclosures
on the project operations, its financial position, and financial performance and cash flow statement\. Notes
on the financial statements will cover financial and nonfinancial disclosures related to the project
transactions, including a summary of expenditures paid, disbursements, assets, and liabilities\. The audit
will be conducted annually by independent auditors, acceptable to the World Bank, based on ToRs
acceptable to the World Bank\. The review of the previous yearsâ financial statements reveals financial
reporting deficiencies, such as revaluation and impairment of personal protection equipment and
financial assets\.
39\. The audited financial statements for the project and Hidromorava RWC shall be presented to the
World Bank no later than six months after the end of the fiscal year and will be made publicly available on
time and in a manner acceptable to the World Bank\. There are no overdue audits from the implementing
entities on the current projects\.
Disbursements
40\. The project will be financed by an IDA credit and a WBIF grant\. The credit and grant proceeds will
be disbursed on the basis of the regular IPF disbursement mechanism using traditional disbursement
methods: advance, reimbursement, direct payments, and special commitments\.
41\. For project parts implemented by the MIE, the GoKâs preferred method of disbursement is the
reimbursements of funds prefinanced from the budget to finance project expenditures\. The advance and
Designated Accounts may be used for the proposed operation, at the Treasuryâs discretion\. In that case,
a Designated Account denominated in euro will be opened in the Central Bank of Kosovo, as a subaccount
linked to the Single Treasury Account\. The disbursed funds will be earmarked for the proposed operation
only\. In addition, direct payments to third parties (consultants, suppliers, and contractors) and special
commitments can be used\. The payments for eligible project expenditure to contractors, consultants,
vendors, and so on will be executed by the MIE, either though the central treasury system by the MIE
budget or through direct payments\. The PMT FMS will prepare all relevant documents in support of
applications for withdrawal\. The MIE and MoF authorized officials would act as authorized signatures for
both the IDA financing and the WBIF grant\. Upon receipt of each application for reimbursement, IDA will,
on behalf of the recipient, withdraw from the IDA financing account and deposit into the Single Treasury
Account an amount equal to the amount requested\.
42\. For the project parts implemented by Hidromorava RWC, the company may avail of advances
using a Designated Account to be opened in its partner commercial bank\. Direct payment and special
commitment will be used for the sizable remunerations for contractors and suppliers, especially large
works contracts\. Reimbursements will also be allowed\. The payments for eligible project expenditures to
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contractors, consultants, vendors, and so on will be executed by Hidromorava RWC either through direct
payments for large contracts or through a Designated Account for smaller expenses\. For Subcomponent
2\.2, Hidromorava RWC will be accountable for withdrawing IDA financing proceeds through its authorized
signatures\.
43\. Documentation of funds disbursed using the advance or reimbursement method will be
supported by Statement of Expenditures\. For direct payments, the World Bank would require copies of
the original documents evidencing eligible expenditures\. The documentation requirements and form and
substance will be specified in the Disbursement Letter\. Records include documents such as invoices and
receipts\. The implementing entities are required to maintain original documents evidencing eligible
expenditures, making them available for audit or inspection\. These documents should be maintained for
at least two years after receipt by IDA of the audit report and for a period required by local legislation\.
Procurement
44\. Procurement will be conducted according to the World Bankâs âProcurement Regulations for IPF
Borrowersâ (the Regulations), issued in July 2016, revised November 2017 and August 2018, for the supply
of goods, works, and non-consulting and consulting services and the Guidelines on Preventing and
Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants, dated
October 15, 2006, and revised in January 2011 and as of July 1, 2016\. Under the Regulations, the PPSD is
used to analyze and determine the optimum procurement approach to deliver the right procurement
result\. The PPSD carried out for the project entailed a strategic assessment of the operating context and
beneficiariesâ capabilities, as well as the market, the different stakeholders, and the risks affecting
procurement processes, and it informed the Procurement Plan\.
45\. Most of the works and goods/equipment contracts would involve open and international
competition (under the Request for Bid method), but during the project life a few packages may also
involve the use of and Request for Quotation (RfQ)\. The project will use the online tool STEP\.
46\. Project Procurement Strategy Development\. According to the requirement of the Regulations, a
PPSD has been developed and finalized after review by the World Bank\. Market analysis has been carried
out for different contracts/assignments such as for works, goods/equipment, and consulting services to
ensure adequate participation of bidders and firms/individuals\. Based on the PPSD, the Procurement Plan
has been prepared to set out the selection methods to be followed by the borrower during project
implementation in the procurement of works, goods, and consulting services financed by the World Bank\.
47\. Project Procurement Development Objectives (PPDO)\. The PPDOs are the following:
(a) To ensure procurement efficiency and value for money that contributes to strengthening
capacity for planning and development of countryâs water resources
(b) To ensure appropriate market participation in large- and medium-value activities/contracts
and services that are critical for realizing the project development objectives
(c) To ensure effective contract management that facilitates improving water services and
integrated water resource practices in selected areas\.
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48\. Project procurement result indicators\. The achievement of the PPDO will be measured by the
following indicator: Timely completion of major contracts by 75 percent\.
49\. Key procurement under the project\. The following procurement methods are anticipated under
the project:
(a) Procurement of goods, works, and non-consulting services\. Goods and works required
under the project will include goods contracts such as dam safety surveillance equipment,
as well as equipment for drought management plan, and works contracts for upgrading
hydromet facilities, as well as for contract for extending drinking water network\.
(b) Selection of consultants\. Consulting services will be procured for preparation of the water
resources investment plan, water investment design, SESA and ESIA for WRIPS and feasibility
study, baseline survey, assessment and training for institutionalizing of dam safety
surveillance program, engineering design of Kremenata dam, geophysical investigations and
water investment feasibility studies, citizen engagement facilitator, catchment management
planning, ideation, awareness raising, technical assistance for NRW measures, dam safety
panel of experts, ESMP/RAP implementation support, preparation of design and technical
requirements for upgrade of embarkment, and short-term consultants needed under the
project\. Short lists of consultants for services estimated to cost less than US$300,000
equivalent per contract may be composed entirely of national consultants in accordance
with the provisions of the Europe and Central Asia Regional Procurement Thresholds\.
Individuals will be selected in accordance with the regulations for IPF Borrowers\. All ToRs
are subject to the World Bankâs prior review irrespective of prior/post review status\.
(c) The project also includes training for the young professional program and grants under
Subcomponent 2\.3\. These activities will be conducted according to the procedures
acceptable to the World Bank, which will further be described in detail in the POM\.
50\. Advertisements\. A General Procurement Notice will be published through STEP in the United
Nations Development Business online and on the World Bankâs external website\. Specific Procurement
Notices will be published as the corresponding bid documents become available\. All these advertisements
shall be made through the STEP system\.
51\. Debarments\. The borrower will respect debarment decisions by the World Bank and will exclude
debarred firms and individuals from the participation in the competition for World Bank-financed
contracts\. The current listing of such firms and individuals can be found at the following website address:
http://www\.worldbank\.org/debarr\.
52\. Assessment of the agencyâs capacity to implement procurement\. The World Bank team has
carried out an assessment of the procurement capacity of the MIE, as the main implementing agency
under the project\. The procurement assessment concluded the following:
(a) While the MIE was involved in an earlier World Bank project (Clean-Up and Land
Reclamation Project, P172992), given the staff turnover, the MIE currently does not have
any staff who were involved in this project\. On the other hand, while the procurement
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department of the MIE is experienced in public procurement, the procurement staff lack
experience in procurement with donor-funded projects and with the World Bankâs project
financing\.
(b) Hiring of new PMT staff (including procurement staff) with experience in World Bank
procedures would be a challenge given the (i) MoF Decision issued on June 2016 with regard
to the salaries of the civil servants, as it may reduce the interest of qualified staff to
participate in competition, and (ii) modest number of qualified procurement specialists with
knowledge in World Bank procurement, in the country\.
(c) Kosovoâs environment has been identified with high risk on corruption\. The pressure of high-
level officials to influence the results of the selection/tendering process is an issue identified
in the World Bankâs project portfolio\.
53\. After considering the mitigation measures, the procurement risk is assessed as Substantial\. To
mitigate the identified risks, the following measures are proposed:
(a) Hiring an international procurement specialist experienced with the World Bankâs
procurement policies and procedures, who will assist the PMT and provide on-the-job
training to the PMT procurement staff for the first 24 months of the project\. This expert shall
be hired before/at project effectiveness to accelerate the selection process for the main
contracts (such as design)\.
(b) Hiring a procurement specialist experienced in public procurement and/or with the World
Bankâs procurement\. S/he will work together with the international procurement expert and
be trained by him/her through on-the-job training, so that s/he will take over and carry out
the procurement activities after the departure of the international procurement expert\.
(c) Hiring additional technical staff to support the PMT on technical matters\.
(d) The PMT, including the procurement specialist and FMS, shall report to the PMT coordinator\.
(e) The implementing agencies for each component (MIE, MAFRD, and so on) should set up the
evaluation committee for evaluation of bids/proposals on time\. Moreover, the PMT and
respective agency will ensure that the committee members have solid knowledge in the field
of the assignment\.
54\. After the mitigation measures, the procurement risk is expected to be Substantial\. In addition,
the PMT staff should attend the procurement trainings/workshops organized by the World Bank in the
region\.
55\. Frequency of procurement supervision\. In addition to the prior review supervision to be carried
out by the World Bankâs team, the capacity assessment of the implementing agency recommends
supervision missions every six months during the first year of implementation and once every subsequent
year\. Post reviews will be carried out regularly with a minimum sampling of two out of ten\.
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56\. Procurement methods and prior review thresholds\. The Procurement Plan shall set forth those
contracts which shall be subject to the World Bankâs mandatory prior review\. It is proposed to follow the
procurement thresholds applicable effective July 2016, as part of the Regulations\. All other contracts shall
be subject to post review by the World Bank\. The prior review thresholds will be periodically reviewed
and revised, as needed, during the project implementation period based on implementation of risk
mitigation measures, reports from procurement post reviews, and improved capacity of the implementing
agencies\.
A\. Procurement Methods Thresholds
Table 1\.1\. Thresholds for Procurement Approaches and Methods (US$, thousands) (as of June 15, 2016)
Works Goods, IT, and Non-Consulting Short List of National
Services Consultants
Engineering
Open Open Open Open Consulting
RfQ RfQ and
Country Region International National International National Services
⦠⦠Construction
⧠< ⧠< <
Supervision
Europe
and
Kosovo 5,000 5,000 200 1,000 1,000 100 300 n\.a\.
Central
Asia
B\. Thresholds and Prior Review of Procurement Decisions by the World Bank
57\. Except as the World Bank shall otherwise determine by notice to the PMT, the contracts, as shown
in table 1\.2, shall be subject to prior review by the World Bank\.
Table 1\.2\. Contracts Subject to Prior Review by the World Bank
Procurement Method Prior Review Threshold
Procurement Method
Threshold (US$) (US$)
Goods, Works, and Non-Consulting Services
Request for Bids (international) goods >1,000,000 Works above US$10 million per contract
Request for Bids (international) works >5,000,000 Goods above US$2 million per contract
Request for Bids (national) goods <1,000,000
All national approach tenders are
Request for Bids (national) works <5,000,000 subject to post review
Request for quotations (goods) <100,000 â
Request for quotations (works) <200,000 â
Selection Method Prior Review Threshold
Consulting Services
Quality- and Cost-Based Selection >300,000
Firms consultant services above US$1
Least-Cost Selection >300,000
million per contract
Single-Source Selection (firms and
â
individuals)
Consultant Qualifications <300,000
Individual Consultant
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Procurement Method Prior Review Threshold
Procurement Method
Threshold (US$) (US$)
Individuals above US$0\.3 million per
contract
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Annex 2: Economic and Financial Analysis
Background
1\. It is estimated that Kosovo has about 1,600 m3 total renewable water resources per person per
year, which is about 16 percent of the regional average\. Morava e Binces is driest in terms of annual
precipitation\. It also has among the lowest levels of water resources development and storage\. It is
expected that all Kosovo basins will be water stressed in the next 20 years\. Several water users are
currently showing suppressed demand\.
2\. The existing infrastructure for water supply in Kosovo is insufficient to meet the needs for drinking
water and water for household maintenance\. Furthermore, the state of the infrastructure is bad and
affects the efficiency of water supply\. Water pipes are obsolete, leading to water leakage and hence to
lower efficiency and a higher risk of contamination\. Some of the pipes are replaced, as a result of donor
investments\. Currently, 81\.2 percent of Kosovoâs population is supplied with drinking water from
functional water supply systems\. While the urban population has 100 percent coverage with public water
supply systems, the rural population coverage is at 69\.7 percent\.
3\. Important investments have been made in the water sector by the GoK and foreign donors\.
Investments by the GoK focused on regulation of rivers and improvement of water infrastructure,
especially for water and wastewater services\. Donor investments also focused mainly in improving water
sector services and feasibility studies for water treatment infrastructure\. The main foreign donors in the
water sector in Kosovo include Swiss Cooperation Office, EU, GIZ, KfW, Japan International Cooperation
Agency, Danish International Development Agency (DANIDA), International Organization for Migration,
USAID, the Government of Luxembourg, and others\. Based on available data, total investments in the
water sector since 1999 amount to EUR 255\.77 million, out of which EUR 189\.9 million were donations\.24
It is estimated that an investment of at least EUR 60 million per year is required in the next 10 years for
Kosovo to reach the EU standards in terms of water services\.25
4\. Life became difficult due to lack of water in the municipalities of Morava e Binces basin (Gjilan,
Kamenica, Viti, Novobrdo, and Ranillug)\. The region lacks enough water storage capacities\. Only 50
percent of population is covered with the old water supply network, operated by Hidromorava RWC,
which is inefficient and experiences 52 percent water loss\. In 2019, water reductions were imposed due
to an emergency, both in the rural area and in Gjilan town\. In Gjilan, town water service was reduced to
15 hours per day\. Consequently, significant time and energy is wasted by households to gain access to
adequate and quality drinking water on a daily basis\. While the sector has made strides in increasing
access, the problem of high NRW persists, and access is uneven\.
5\. The World Bank investment in water sector is highly important not only for the potentially large
financing with concessional terms, as Kosovo has limited public financial resources, but also in bringing its
knowledge and long-term world-wide experience\.
24 Report on State on Water Kosovo 2015, Ministry of Environment and Spatial Planning, available at http://www\.ammk-
rks\.net/repository/docs/Raporti_i_ujrave_i_2015__Anglisht\.pdf , page 96\.
25 Severno Kosovo u 2020 - BuduÄe istorije u nastajanju, page 58\.
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Methodology, Data Sources, and Key Assumptions
6\. Financial analysis was done for investments in Hidromorava RWC, by looking at important ratios
of past financial performance, future cash flows, cost effectiveness analysis by computing Average
Incremental Costs (AICs), water demand analysis, and so on\.
7\. This economic analysis adopted the forward-looking framework for quantifying costs and
benefits of investments for water security component and the grant component of the FLOWS project\.
Incremental benefits were determined based on âwithâ and âwithoutâ project scenarios\. In addition, the
GHG emission reduction benefits were computed using high carbon price (US$80 pertCO2-eq) and low
carbon price (US$40 per tCO2-eq) assumptions\. These prices were projected to increase by 2\.6 percent
per year over 30 years of the project period\.
Costs
8\. The costs that are directly relevant or specific to FLOWS project are included in the analysis (table
2\.1)\. About 49\.4 percent of total project costs are hard investments analyzed using economic models, as
presented in Subcomponents 2\.2 (Investments in water infrastructure and services addressing the water
crisis) and 2\.3 (People-centered water stewardship investments)\.
Table 2\.1\. FLOWS Project Investment Costs (EUR)
Components Sum of Total Cost %
1\. Foundational measures for water security 5,325,000 20\.4
2\. Addressing water crisis with catalytic investments 18,850,000 72\.2
3\. Project management 1,925,000 7\.4
Grand total 26,100,000 100\.0
Source: World Bank calculations\.
9\. The distribution of the investment costs over the implementation period of the project are
assumed to follow the disbursement schedule shown in table 2\.2, which is informed by the project
implementation experiences in the region and Kosovo\. Given the nature of the investments, annual
maintenance costs of 5 percent of the investment capital over the 30-year life of the project is used\.
Table 2\.2\. Relevant Costs and Disbursement Schedule (EUR)
2021 2022 2023 2024 2025 2026 Total
6\.4% 9\.7% 25\.0% 25\.0% 29\.8% 4\.1% 100%
825,600 1,251,300 3,225,000 3,225,000 3,844,200 528,900 12,900,000
Source: World Bank calculations\.
Financial and Economic Analysis for Hidromorava RWC
10\. A cash flow for a 30-year investment period was developed to assess cash flow coverage of the
loan installments\. The key indicators of financial analysis such as days sales outstanding, days payments
outstanding (DPO), days inventory outstanding, return on equity, return on employed capital, and other
analysis for the past performance are done to measure financial soundness and recent trends of the
company\. Cost-effectiveness analysis by computing AIC and water demand analysis were done\.
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11\. The number of people supplied by Hidromorava is estimated at 90,000, of which 20 percent are
diaspora who live no longer than two months a year in Kosovo, although that period corresponds to the
summer water crisis period\. A population decline by 0\.5 percent annually because of migration (either to
Prishtina or Western Europe) is assumed, but new connections and the number of people served will
increase\.
12\. EUR 12\.4 million will be invested by this project in Hidromorava RWC, to improve efficiency by
reducing technical and commercial losses and expand coverage\. Efficiency increase will result in operation
and maintenance costs savings\. Water losses are estimated at 52 percent currently, assumed to be equally
divided between technical and commercial\. Income from sales is expected to increase proportionally due
to reduction of technical and commercial losses and increase of coverage\. Replacement of old pipes will
reduce water losses\.
Table 2\.3\.Water Losses of Hidromorava
Current (%) Plan (%)
Total 52 15
of which technical 26 7
of which commercial 26 8
Source: World Bank estimations based on interview with Hidromorava RWC technical team
13\. The average water and sewage price currently used is about EUR 0\.57, including EUR0\.08 for
sewage services\. The prices are kept constant for the period analyzed\.
14\. In the economic cost-benefit analysis, different adjustments were applied for people living in
towns who have larger opportunity costs than those in villages, because of larger unemployment in
villages\. The team used a monthly average wage of EUR 400, an income adjustment factor of 70 percent
for people in towns versus 50 percent in villages, and four months of water shortages per year and found
that 70 percent of connections in Gjilan town face water shortage versus 90 percent in other towns and
villages\. People in towns waste 30 minutes in fetching water every day versus 40 minutes in villages due
to longer distances\.
15\. Benefits from the water security component (investment in Hidromorava RWC) are classified as
direct and indirect\. Direct benefits are time savings (opportunity costs) with project compared to time
spent to fetch water without project\. Other direct benefit are maintenance cost savings and reduction of
water losses due to replacement of old networks with new ones\. The indirect benefits from the water
supply project are on improvement of health outcomes due to reduction of contact with potentially
contaminated water, which are not measured here due to lack of data\.
16\. Data used for financial analysis of Hidromorava are from the financial statements published on
the MEPTINIS website and data received directly from the company officials\.
Results from Financial Analysis for Hidromorava
17\. The cash flow to loan repayment coverage ratio is 1\.7:1\.8, which indicates that the investment is
financially viable\. Results from the cost-effectiveness analysis, which calculates the AICs, suggest that
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current tariff charged to customersâ needs to increase if the company is desired to be financially
autonomous\. The calculated AIC is EUR 1\.0571 per m3 of water sold, which is significantly higher than the
current tariff\.
18\. Analysis of past financial performance of Hidromorava RWC suggests that the company had
positive trends and moved from losses few years ago to profit last year\. Sales have continuously improved
in the last five years, due to improvement in billing and collection\. Expenditures grew at a slower pace
than sales, leading to improvement in financial ratios\. The replacement of old pipes will reduce technical
losses and disconnect illegal connections, thus boosting billing\.
Table 2\.4\. Financial Past Performance of Hidromorava RWC
2015 2016 2017 2018
Days sales outstanding 736\.4 545\.3 548\.7 544\.5
Days payment 325\.1 194\.9 161\.9 108\.7
outstanding
Days inventory 1\.2 69\.2 87\.7 69\.5
outstanding
Working capital turnover 693\.0 576\.1 596\.2 587\.9
Return on equity â0\.0145 â0\.0105 â0\.0028 0\.0237
Return on Capital â0\.0081 â0\.0061 â0\.0016 0\.0136
Employed
Source: Financial statements of Hidromorava RWC, World Bank staff calculations\.
19\. Using official standards to calculate water demand26 as a benchmark for calculations of water
demand from Hidromorava RWC, the results show that the company cannot meet the water demand
according to those standards, therefore new sources of water supply should be developed (see table 2\.5)\.
Table 2\.5\. Water Demand from Hidromorava RWC
2020 2025 2030 2035 2040 2045
Population served 80,098 78,115 84,221 82,137 80,104 78121
Water demand m3 16,110,934 16,419,521 17,939,434 17,626,737 17,306,915 16,899,980
Water production m3 7,526,043 8,775,137 8,775,137 8,775,137 8,775,137 8,775,137
Additional water needs m3 8,584,892 7,644,384 9,164,297 8,851,600 8,531,778 8,124,844
Water shortage in % (46\.7) (53\.4) (48\.9) (49\.8) (50\.7) (51\.9)
Source: Hidromorava RWC data and World Bank staff calculations\.
Estimation of Economic Benefits for Investment in Hidromorava
20\. Having an improved water source closer to oneâs home is an economic benefit, and there are
several approaches to measuring the magnitude of this benefit with varying levels of robustness and
26240 liters per person per household in towns, 190 m3 per industry consumption in town, 155 liters per person per household,
and 130 m3 for production in villages\.
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reliability\. 27 The economic analysis results for investment to Hidromorava RWC, based on applied
methodology and assumptions mentioned earlier, suggest that the investment is economically viable even
in a conservative scenario, that is, without including the potential positive economic impacts in improving
health outcomes by eliminating sources of disease because of contaminated water\. The results are as
shown in table 2\.6\.
Table 2\.6\. Economic Analysis Results for Hidromorava RWC
Item NPV (EUR) EIRR B/C
Investments in Hidromorava water systems 20,184,129 29\.83% 2\.8
Source: World Bank staff calculations\.
Note: Discount rate used is 6 percent\.
Cost-Benefit Analysis of Citizen Grants to Foster Water Security
21\. This grants component would finance activities such as agri-environmental measures including
afforestation, land stabilization or erosion control measures, pasture management, plantation of
orchards, organic farming, water conservation, soil conservation, conservation of farm biodiversity, and
resource rehabilitation\. These measures would have profound on-site and off-site benefits including
reducing soil erosion and avoiding land marginalization; improving water balance in the supported
afforested and neighboring areas; increasing forest cover to contribute to climate change mitigation and
support natural biodiversity; improving agriculture productivity and products quality; and promoting
efficient use of water addressing climate change\.
22\. The outputs of citizen grants are expected to have significant on-site production and productivity
enhancing and off-site effects\. It also has effects on human capital, natural resources (including forest,
soils, water, wetlands, and ecosystems)\. These effects are transmitted to the overall economy of the
country through multifarious pathways\. Capturing the overall benefits and costs of these activities in a
few indicators is an oversimplification\. Some of the benefits and costs, even though real, are difficult to
quantify and value\. For those aspects of the grant activities for which the costs and benefits are readily
quantifiable, a standard economic cost-benefit analysis is performed in the next paragraph\.
23\. Since the specific nature and content of these grant proposals is yet to be determined, the data
from the ex post evaluation of the ongoing DANIDA/World Bank-funded Kosovo RDGP are used to
determine the economic viability of potential grant-financed activities under the FLOWS project\.28 The
RDGP supported 278 projects in 2013 and 2014 with a funding of EUR6,842,580\.31, which was, on
average, EUR 23,471 per farmer\. The RDGP resulted in substantial improvements in productivity, income,
employment (particularly for women), and export growth\. The average farm income for supported
farmers increased on average by 56 percent or in absolute terms by EUR 10,981 per farm (EUR 3,660 per
year)\.
24\. The total funds allocated to citizen grants under the FLOWS project is EUR 500,000, which is
expected to support about 21 grants\.
27 For the detailed discussions of these approaches, see Laszlo Lovei (1992) and Whittington and Cook (2018)\.
28 For detailed information see Ex-post Evaluation of the Agriculture and Rural Development Program 2007â2013 of Kosovo\.
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Table 2\.7\. Results of the Cost-Benefit Analysis of FLOWS Grant Scheme
NPV EIRR B/C
Investments in grant scheme EUR 218,838 14\.28% 1\.39
Expected Benefits of Foundational Measures
25\. Activities under the foundational measures for water security, such as strengthening national
water resources investment planning, enhancing information services for water management, and
enhancing regulation of dam operation and safety, would have profound benefits\. The primary benefits
included (a) reduced risks of dam failure; (b) prolonged life of dams and reservoirs, restored performance
of dams, and strengthened institutional capacity for asset management; and (c) mitigated watershed
erosion and sedimentation\. The improvementsâboth of institutional/operational and physical natureâ
that reduce the risk of dam failure will consequently prevent or minimize damages to downstream
property and environment, loss of life, loss of bulk water supply, and eventual (expensive) replacement
of a dam or for construction cost of alternative water supply\.
26\. The overall project cost-benefit analysis was performed considering the benefits of GHG emission
reduction (see table 2\.8)\. The overall project cost-benefit analysis shows that the project is economically
viable even without considering the shadow price of carbon\. The EIRR is 29\.2 percent and B/C is 2\.8\.
Table 2\.8\. Cumulative Results of Economic Analysis for Water Security and Irrigation Components
Components Economic NPV (EUR) EIRR (%) B/C
Investments in Hidromorava water systems 20,184,129 29\.83 2\.8
Investments in grant scheme 218,838 14\.28 1\.4
Overall project without considering shadow carbon prices 20,402,967 29\.17 2\.8
Overall project (high carbon price assumption) 32,010,745 60\.23 3\.8
Overall project (low carbon price assumption) 26,551,393 44\.7 3\.3
Source: Consultants calculation\.
27\. Considering the benefits of GHG emission reduction (see table 2\.9), using shadow carbon prices
significantly enhances the economic viability of the project\.
Table 2\.9\. Results of GHG Emission Analysis
Project Gross Emissions Net Emissions
Subcomponent Over Life of the Annual (tCO2-eq) Over Life of the Annual (tCO2-eq)
Project (tCO2-eq) Project (tCO2-eq)
Subcomponent 2\.2 66,346 2,211 â7,536 â251
Subcomponent 2\.3 â245,667 â8,189 â245,667 â8,189
Overall project â179,321 â5,978 â253,203 â8,440
Source: Consultantâs calculation\.
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Table 2\.10\. Cash Flows for Hidromorava RWC
Cash flow statement and projections
2018 2019 2020 2025 2030 2035 2040 2045
Total volumem of water produced m3 8,464,519 7,272,048 7,526,043 8,775,137 8,775,137 8,775,137 8,775,137 8,775,137
Total volume of water sales (including sewega charge) 3,969,284 3,621,480 3,778,073 5,629,458 6,676,431 7,092,084 7,271,168 7,454,774
Volume of water soled to households (incl sewage) 3,437,235 3,106,100 3,261,405 5,106,299 6,146,699 6,556,502 6,722,062 6,891,802
Volume of water sold to busineses and institutions (sew\. incl) 532,049 515,380 516,668 523,159 529,731 535,582 549,106 562,971
Percent coverage of billing over water supply 47\.80 49\.80 50\.20 0\.64 0\.76 0\.81 0\.83 0\.85
Percent coverage of collection over billing 83\.40 84\.50 86\.50 96\.50 98\.50 98\.50 98\.50 98\.50
Income from Total sales of water 2,213,989 2,056,217 2,137,415 3,069,295 3,597,639 3,808,911 3,905,091 4,003,699
Income form sales of water to households 1,711,056 1,605,280 1,636,247 2,561,830 3,083,799 3,289,397 3,372,458 3,457,617
Income from sales of water to businesses and institutions 502,933 450,937 501,168 507,464 513,840 519,514 532,633 546,082
Income from connection tariffs 154,704 169,112 176,316 183,295 44,607 5,576 5,576 3,658
Total income 2,368,693 2,225,329 2,313,731 3,252,590 3,642,245 3,814,487 3,910,667 4,007,358
Operative expenditure 2,264,971 1,812,813 1,830,941 2,011,598 2,167,062 2,277,604 2,393,785 2,515,892
Operative Cash Flow 103,722 412,516 482,790 1,240,992 1,475,183 1,536,883 1,516,882 1,491,466
Loan repayment - - - 25,000 812,982 812,982 812,982
Interest 25,000 19,649 11,347 2,957
Principal 793,333 801,635 810,025
Other financial costs - - - - - - -
Total financial costs - - - 25,000 812,982 812,982 812,982 -
Cash flow 103,722 412,516 482,790 1,215,992 662,201 723,901 703,900 1,491,466
Investments 570,566 121,232 150,000 100,000 100,000 100,000 100,000 100,000
Investment loan from WB 600,000
Cash flow including investments (466,844) 291,284 332,790 1,115,992 562,201 623,901 603,900 1,391,466
Cash flow coverage of the loan repayment 45\.6 1\.7 1\.8 1\.7
Table 2\.11\. Financial Analysis for Hidromorava RWC (historical financial trends in EUR)
2014 2015 2016 2017 2018
Working capital 3,210,181 3,452,327 3059,736 3,431,902 3,566,007
Current assets 3,398,428 3,674,328 3,263,728 3,663,247 3,724,586
Current liabilities 3,364,055 3,668,442 2,896,269 3,158,396 3,302,895
CE 12,956,691 12,849,303 12,077,276 11,949,717 12,127,480
FA 9,746,510 9,396,976 9,017,540 8,517,815 8,561,473
AR 3,364,055 3,668,442 2,896,269 3,158,396 3,302,895
AP 188,247 222,001 203,992 231,345 158,579
Sales 1,750,932 1,818,261 1,938,587 2,100,956 2,213,970
Purchases 264,587 249,240 382,007 521,692 532,694
Stock 34,373 5,886 367,459 504,851 421,691
Source: Financial statements of Hidromorava RWC published on the website of MEPTINIS of Kosovo\.
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Annex 3: Detailed Project Description
FLOWS Program Description
1\. The FLOWS1 project is the first of two projects of the FLOWS program in a âseries of projectsâ
approach, with the overall objective to improve Kosovoâs long-term water security and resilience\. Given
the scale of the issues and the need to build strong institutions and financing mechanisms, a long-term
partnership between the World Bank and GoK will be required\. The GoKâs vision is to leverage World Bank
support in building a robust investment pipeline structured around the Water Strategy Priorities\. The
program will consist of a series of projects that run partially in parallel and together achieve the overall
goals of improving Kosovoâs water security\. The program will directly address the needs as identified in
the Kosovo strategy and the Water Security Outlook and is built around two pillars of (a) foundational
measures for long-term transformation and (b) catalytic investments that address the immediate
investment needs, deliver implementation lessons, and catalyze additional integrated interventions in
water security\. The Series of Projects approach was selected as it will allow staging of investments when
they are ready; prioritize emergency measures; strengthen capacity (in terms of data, analysis, and
institutions) through providing learning opportunities and foundational investments; build in the
possibility to adapt to changing circumstances and unforeseen implementation bottlenecks; and
consolidate success from the first phase in to the second phase\. Error! Reference source not found\.Figure p
resents the two-pronged nature of the project and the envisaged evolution to a more programmatic
approach\.
Figure 3\.1\. FLOWS Programmatic Overview - Two-pronged Approach
2\. Phase 1 project (FLOW1) will commence both the national-level foundational measures and the
basin-specific catalytic investments\. It supports several activities and implements investments that have
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an immediate impact on addressing the water crisis, are of low or no regret, show readiness, and provide
learning opportunities for scaling, among other things, by focusing on integrated water resources
management, infrastructure development, and efficient, reliable water supply services\. In doing so, the
project seeks to make Kosovoâs population less vulnerable to climate change-exacerbated floods and
droughts\.
3\. The second phase project (FLOWS2) will continue, consolidate, and scale activities from Phase
1\. The second phase project will continue strengthening the foundations while implementing strategic
water infrastructure investments identified and prepared in the early stages of Phase 1\. It would include
a core investment under the program, a storage reservoir in the âKike-Kremenataâ hydro-system, not
currently ready to be appraised, and the first phase project will finance the technical, social, and
environmental studies to allow a more detailed appraisal for the second phase\. There are other important
activities that are not ready yet, such as the irrigation investments (awaiting the development of the
irrigation investment framework and subsequent design studies) which will be tentatively included in
FLOWS2\. Several activities will start and will be adapted during project implementation (grants program,
dam safety program, and hydromet investments) and Phase 2 can include further measures as required\.
Moreover, the project will be flexibly designed to adapt to priorities emerging from the national and basin
planning process and improve national water securityâby adapting to climate change and preparing for
future programmatic and larger-scale investments\.
FLOWS1 Project Detailed Project Description
Component 1: Foundational measures for water security (IDA EUR 5\.3 million)
4\. This component will build the foundations for water security in the country and build readiness
for major investments\. It will support engineering studies, national-level knowledge base development,
and institutional capacity building for river basin management institutions\. This component will focus on
establishing the foundation for science-based water resources management planning and people-
centered management capacities in Kosovo, including support on data collection, management and
analysis, and human capacity development\. These activities will also enable improved implementation of
Kosovoâs Climate Change Framework Strategy\.
5\. This component aims to build the foundations for water security in the country and enhance
readiness for major investments\. It would do so by tackling the fundamental and interlinked challenges
underlying much of water security: strategic investment planning, modernization of water information
systems, and improvement of dam safety surveillance and management\. Once the foundations for
integrated water resources management have been laid, water sector decision-making will be gradually
enhanced and water use will become more sustainable, thus making the beneficiaries more resilient to
climate-induced floods and droughts\. These activities will also enable improved implementation of
Kosovoâs Climate Change Framework Strategy\.
Subcomponent 1\.1: Strengthening national water resources investment planning
6\. Objective\. The objective of this subcomponent is to prepare a priority bankable investment
pipeline for concrete water sector investments and interventions to support the socioeconomic and
sustainable development needs of Kosovo\. The translation of the results of Subcomponent 1\.1 will allow
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to achieve concrete development outcomes by bridging the gap between water sector strategies and
plans toward targeted and concrete investment opportunities based on an updated water resources and
socioeconomic needs assessment\.
7\. Rationale\. The existing Kosovo National Water Strategy is one of the key documents of water
resources planning and management for the country\. It is a document of long-term planning, which
contains the vision, mission, objectives, purpose, actions, activities, and measures for water policy
development in the Republic of Kosovo\. The document is based on a multisector approach that addresses
the most important water-related issues to be addressed in the time frame from 2017 to 2036, taking into
account the Water Masterplan of 1983\.
8\. The strategy outlines actions and activities required for the development of the water sector of
Kosovo and requires further detailed assessments and the preparation of more concrete projects and
activities, which are considered as a priority for the country\. It also requires the development of RBMPs
that conform with the EU WFD\. The activities conducted under Subcomponent 1\.1\. will provide these
detailed assessments and prepare the investment pipeline in line with the Strategy and in close harmony
with the RBMPs\.
9\. To conduct the next steps in support of the actual implementation of the Kosovo National Water
Strategy, latest developments need to be considered in updating the analytical work of the 1983 Water
Resources Masterplan, including, among others, the following:
(a) Socioeconomic development patterns, including latest and expected upcoming changes in
demography and economic development needs for water services, industry, agriculture,
energy, and water-related risks
(b) Temporal and geographic changes in water availability due to climate change already
observed and projected future developments
(c) Changes in the regulatory framework for the sustainable management and protection of
water resources, including the requirements stemming from Kosovoâs national and EU
legislation
(d) Latest developments in terms of best available technology and modern approaches for the
sustainable development and utilization of water resources (for example, multipurpose
development, combination of gray and green infrastructure, circular economy)
(e) Safety considerations and the need for maintenance and upgrade of existing infrastructure\.
10\. Within the framework of the Kosovo National Water Strategy, the objective of the activity is to
prepare an updated assessment of priority actions and investment needs required for the development
of the water sector of Kosovo while introducing more flexible rolling plans based on appropriate decision
support tools and a broader range of investments, including nature-based solutions and operational
strategies\. The activity will allow translating the strategy into a cohesive set of well-justified concrete
projects, which are considered as a priority for the country to ensure a water secure future for the people,
economy, and the environment\.
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11\. The activities under Subcomponent 1\.1 will thus be directly coordinated with and inform the
development of the RBMPs according to the EU WFD, to be prepared with donor support in the upcoming
years\. While achieving âgood statusâ and avoiding deterioration of water bodies are the key objectives of
the WFD, thus requiring ecological restoration measures and actions to reduce pollution, the
socioeconomic development needs of the country need to be recognized and appropriately addressed in
the RBMPs, the respective programs of measures and coordinated with environmental protection
considerations\. The activities will therefore help ensure that Kosovoâs socioeconomic development needs
are appropriately addressed that the prioritization of the required water resources investments based on
an updated and detailed assessment of the countryâs water resources, including hydro-economic
modeling\. Therefore, the activities to be conducted under Subcomponent 1\.1 and RBMP development will
be complementary, inform, and build upon each other, thus helping ensure that the RBMPs will be up-
to-date and most useful also in practical terms by having the nature of âWater Security Management Plansâ
desperately needed by the country\.
12\. Activities\. The following activities will be conducted within the framework of the Kosovo National
Water Strategy and in close coordination with the development of the RBMPs for the country\.
a\. Preparation of a National WRIPS
⢠Preparation of an updated and expanded water resources assessment for Kosovo
⢠Updated needs assessment based on latest and upcoming socioeconomic development
trends/targets
⢠Updated detailed assessment and prioritization of water resources investments\.
b\. Preparation of an IPPP\.
13\. Based on the results of the WRIPS, an IPPP will be developed based on the optimized scenario
selection and for the development of concrete and bankable projects and packages\. This will include the
following steps:
⢠Identification of a targeted number of prioritized investments/interventions to industry
standards for bankability
⢠SESA for priority investments
⢠Analysis of investment implementation\.
14\. The activities conducted under Subcomponent 1\.1 for the development of WRIPS and an IPPP will
be based on a structured dialogue and consultation process involving relevant institutions, stakeholders,
and other development partners\.
15\. The subcomponent will also specifically support the development of feasibility and design studies
for priority irrigation investments as are currently being identified in the Irrigation Masterplan and
Investment Framework, developed by MAFRD, to prepare them for investment in future financing\. Also,
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as part of the WRIPS, an actionable investment plan prioritization will be conducted for the water supply
situation in the Morava e Binces basin, looking comprehensively at all the potential investments in Kike-
Kremenata, additional storage and the Lepenc transfer, among others, as it is such comprehensive
challenges that the WRIPS should aim to address\.
Subcomponent 1\.2: Enhancing information services for water management
16\. Objectives\. This subcomponent aims to overcome the immediate information gap for sustainable
water resources management that will help inform designing measures and investments for a range of
planning products and services to Kosovar citizens\. This subcomponent will complement Subcomponent
1\.1 in supporting the investments and technical assistance to improve water information systems from
data production, analysis, and dissemination\.
17\. Rationale\. In addition to policy planning challenges, Kosovoâs water sector is facing other
fundamental challenges that prevents science-based and more sustainable water resources management\.
Also, operational decision-making is hampered by limited real-time data and limited analysis and services
based on these stations\. Good information is required now and over time to observe trends, manage
allocations, design infrastructure, and conduct full flow warning systems\. While the hydromet institute
has a good laboratory, its office facilities are poor and it suffers from understaffing\. Historical records are
broken, and several stations are not currently reporting, and this has been the case for decades in some
stations\. At the same time, the hydromet institute is able to place some real-time data on its website and
maintain a network of surface water and groundwater, and quantity and quality measurements, and on
that basis incremental investments are proposed\.
18\. Activities\. This subcomponent will finance investments and technical assistance to improve water
information systems including (a) investments and technical assistance to improve water information
systems from data production, analysis, and dissemination for the KCA and (b) investments in civil works
and equipment to upgrade hydromet facilities, software systems to integrate various meteorological and
hydrological information, and decision support systems for risk forecasting and early warning for both
floods and droughts\.
19\. Investments in monitoring network will be informed by the SDC-financed monitoring network
expansion needs assessment, supported by the IWRM-K\. Tentatively, these include upgrading of
hydromet facilities (works on meteorological stations and gauging stations); equipment for upgrading
hydromet facilities (automatic weather stations, particularly mountain stations); additional gauging
stations; upgrading of the existing stations and groundwater monitoring stations; support for upgrading
of the software system to visualize and analyze various types of hydromet data; and installation of a
control room for visualization and decision support\. It will also support technical assitance to the KCA in
mapping and data services for improved water security and cross-sectoral collaboration\. It was agreed
with the SDC and MIE that the assessment on hydromet will be prioritized and that both program teams
will review their ToRs to ensure rapid implementation and good coordination\.
Subcomponent 1\.3: Enhancing regulation of dam operation and safety
20\. Objectives\. This subcomponentâs objective is to address Kosovoâs dam safety management
challenges and reinstitute a rigorous dam safety surveillance program as a sound basis for future
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investments in water infrastructure\. This subcomponent will complement Subcomponents 1\.1 and 1\.2 by
addressing Kosovoâs dam safety management challenges\.
21\. Rationale\. This subcomponent will address two main challenges in Kosovoâs dam safety
management:
(a) Improve dam safety surveillance and maintenance of existing dams in Kosovo\. The
monitoring and the maintenance of the dams were partially suspended in recent years\. Five
large dams exist in Kosovo\. They are the backbone of the water supply in Kosovo\. All of these
have potential high hazards, and their dam safety surveillance needs to be improved while
the country aims to improve its storage capacity\. The total storage capacity in Kosovo is
about 539 million m3, or 300 m3 per person\. This is much lower than the regional average of
799 m3 per person\. The only two countries with lower storage per capita are Serbia and
Croatia and both these countries have the highest natural endowment per capita\. Most
reservoirs are in the Iber basin\. The Gazivoda feeds the Iber-Lepenc canal\. Iber-Lepenc canal
is part of the never completed Iber-Lepenc Hydro-system, which would have had an
additional dam in Lepenc and be an interconnected system for irrigation and supply water
for multiple sources and environmental services\. Only the Iber part of the plan was
developed, including its irrigation system\. The Lepenc Dam is being assessed again for its
current potential\. The Liap and Graçanica sub-basins feature the Batllava and Badovc
reservoirs, respectively, and currently both supply the Prishtina RWC with water for the
population of Prishtina and smaller communities in the capitalâs neighborhood\. This
situation is unlikely to change in the future as the maximum supply capacity of these
catchments has been reached and the reservoirs are likely to rather experience capacity
reduction in the future due to expanding, unregulated land use and increasing pollution
pressure\. Radoniqi is in the Drini i Bardhë region and supplies drinking water to the city of
Gjakova and neighboring areas and irrigation in the region\. Perlepnica, Livoc, Ruboc, and
Tropoje are small drinking water reservoirs for smaller towns, mainly in Morava e Binces\.
The smaller drinking water reservoirs, as well as Batllava and Badovc, have been heavily
affected by droughts with reductions in inflows\.
Table 3\.1\. Main Water Storage Reservoirs
Reservoir Water Flow (River) Catchment (km2) Dam Type and Height (m) Total Volume
Gazivoda Iber 1,060\.0 Rockfill 101 m 390\.0
Batllava Batllava 226\.0 Rockfill 45 m 30\.0
Badovc Graçanica 103\.0 Rock fill 45 m 26\.4
Radoniqi Lumëbardhi i Deçanit 130\.0 Earth fill 61 m 113\.0
Perlepnica Morava e Binces 62\.0 Rockfill 40 m 4\.2
563\.6
Source: National Water Strategy 2017â2036, Dam Safety Review Kosovo 2012\.
Visual inspections of the existing dams and brief review of drawings and the existence of
documentation (drawings and documents on material properties and analysis) undertaken
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during the Kosovo Water Task Force review29 and World Bank project preparations show
that the dams are currently in stable condition, but much knowledge and updated
calculations are missing\. The Kosovo Government is currently employing dam safety panels
of experts and is commissioning hydrological, seismic, and hydraulic studies as well as
instrumentation for two World Bank-funded projects KARP and Water Security and Canal
Protection Project (WSCP), which are supporting the rehabilitation of Gazivoda and
Pridvorica dams\. These are the largest dams and reservoirs in the country, and these will
bring dam safety analysis up to current requirements\. It would be advisable to build on this
momentum to strengthen a more permanent panel of experts and dam safety operations\.
(b) Improve emergency preparedness and response measures in face of flood risks and
potential dam failures\. Emergency preparedness capacities of the RWCs and emergency
management agency in Kosovo are weak and there is limited understanding of risks faced
by downstream communities in face of dam failure\. Preliminary assessment is needed to
understand the exposure of dam failure risks and how to prepare communities downstream
of dams\.
22\. Activities\. This subcomponent will finance the following activities: (a) assessments and training
for dam safety surveillance programs, (b) investments in dam safety surveillance equipment to improve
dam operation, and (c) a dam safety panel to ensure sustainability of dam operations improvement and
safety management practices\. The DOISP (see Figure 3\.23\.2 for a flow diagram of the program) is
envisaged as the first stage of a long-term engagement with the Kosovo Government to enhance its dam
safety management capacity of Kosovoâs five existing dams and ensure adequate dam safety management
capacity for new reservoir construction and management\. This project will also provide training on dam
operation and develop/improve emergency action plans for the Government and RWCs informed by a
road map that is currently being developed through a Bank-executed GFDRR grant into early
implementation\. The road map is expected to summarize the current status of the emergency action plan
implemented by the RWCs (dam owners), identify gaps considering outputs from the partial DOISP
assessment, and develop a time-bound action plan (road map) for the Government and the RWCs to
address these gaps\.
29Kosovo Dam Safety Review\. 2012\. Accessed on 10/30/2019 at http://knmu\.kryeministri-
ks\.net/repository/docs/Kosova_Dam_Safety_Review_Oct_2012\.pdf\.
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Figure 3\.2\. DOISP Flow Diagram
Component 2: Addressing water crisis with catalytic investments (IDA EUR 17\.9 million and WBIF grant
EUR 1 million)
23\. This component aims to catalyze water security investments in the Morava e Binces basin that
address the immediate challenges of water shortage, poor service delivery, and a single-sector approach
to cross-cutting water security issues\. By taking a focused approach in one of the countryâs basins, it aims
to build an integrated approach of three interlinked sets of activities in water security, including (a)
increasing storage: preparation of the âKike-Kremenataâ hydro-system; (b) improving services: enhance
the quantity of drinking water supply and manage demand in response to the regionâs ongoing drought
crisis; and (c) inclusive water security measures: bottom-up, integrated upstream water stewardship
measures that can strengthen water security and resilience, protect source water, reduce erosion, and
improve ecological services in an integrated approach and improve rural livelihoods\. Sound management
of the pertinent river basin and watershed and creating buffers through storage and improving service
networks will reduce the possible impacts of extreme weather events, particularly flash floods and
droughts, thus increasing residentsâ resilience to the latter risks
Subcomponent 2\.1: Preparation of FLOWS2 Investments
24\. Objectives\. This subcomponent will prepare for investment in multipurpose storage
infrastructure and expand access to and performance of other water services for irrigation, residential,
and industrial use\.
25\. Rationale\. With one of the lowest per capita storage capacities in the region, Kosovo is very
vulnerable to current and future natural hazards\. This combination of low overall availability and low
storage, exacerbated by poor planning and service delivery, makes Kosovo extremely vulnerable to
climate variability, especially summer droughts\. As the driest river basin in Kosovo, the Morava e Binces
river basin needs additional water storage capacity to provide water in the dry season\. At the same time,
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Fostering and Leveraging Opportunities for Water Security Program (Project 1,P169150)
the existing water supply system near the dam site has an NRW level of 57 percent due to leakage and
commercial losses\. Water supply coverage of municipalities near the dam site is the lowest among all the
RWCs\. There is also an ongoing drought at one of the largest municipalities within the river basin\.
26\. Activities\. This subcomponent will advance the preparatory work for the âKike-Kremenataâ hydro-
system, a system that was proposed in the 1983 Masterplan including three reservoirs sites at Kremenata,
Hogosht, and Desivojca\. The WBIF technical assistance grant will support detailed design studies, and in
addition the subcomponent will finance geotechnical investigations, further design elements,
procurement packaging, and preparation of financing and social and environmental impact assessments
and management plans\. During preparation, an updated feasibility study was undertaken that included a
review of the 1984 design, the current hydrology, and the demand assessment\. This also looked at basic
topography, hydrology, geology, and E&S impacts to optimize potential dam siting and sizing\. This work
shall continue into implementation under a comprehensive design consultancy that will deliver this until
tender under FLOWS1\. It is envisaged that FLOWS2 will be appraised once the technical, social, and
environmental documentation are in place\.
Subcomponent 2\.2: Investments in water infrastructure and services addressing the water crisis
27\. Objectives\. This subcomponentâs objective is to improve continuity, reliability, efficiency, and
performance of drinking water provision affected by climate changes, through investment in critical water
supply infrastructure, equipment, and activities\.
28\. Rationale\. Meeting this increasing demand from the existing water resources is always a major
challenge, particularly in water-stressed or water scarce regions, that is further aggravated by the already
existing impact of climate changes\. There are typically two potential responses: âsupply sideâ, meeting
demand with development of the new water resources if there are such resources, or âdemand sideâ,
managing consumptive demand itself to postpone, reduce, or eliminate the need to develop new water
resources\. As a result of unfavorable hydrological conditions, underdeveloped water resources, and
increasing service demand, Kosovo already faces quantitative water shortages\. With 1,600 m 3 per capita
per year, Kosovo has limited renewable internal freshwater resources\. About 60 percent of the drinking
water in Kosovo comes from surface water, 30 with groundwater resources being limited and located
mainly in western Kosovo\. To partly address hydrologic constraints, in the 1980s, Kosovo has already, as
part of a larger long-term water supply scheme, developed five large surface water reservoirs (Badovc,
Batllava, Gazivoda, Perlepnica, and Radoniqi), which are used for water supply, irrigation, industry, and
hydropower generation\. The quality of raw water from surface water in Kosovo is generally moderate,
because the water is abstracted from artificial reservoirs\. Some water sources are reportedly polluted or
potentially endangered by organic contamination due to lack of wastewater treatment, neglected
maintenance of the sewerage system, intensive deforestation, or agriculture\. Climate change projections
indicate that climate variability will increase, with warmer temperatures and increasingly irregular
precipitation, giving rise to an increase in water demand, droughts, floods, and forest fires\. The recent
precipitation deficit, with less than 50 percent of the baseline inflow, has already caused a dramatic drop
in accumulations in the Batllava, Badovc, and Perlepnica reservoirs, seriously endangering the water
supply for the central and eastern parts of Kosovo\. This combination of low overall availability of
freshwater resources and insufficient storage space, exacerbated by poor planning and service delivery,
30 International Commission for the Protection of the Danube River\. ICPDR\. 2015\. http:// www\.icpdr\.org\.
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makes Kosovoâs water supply extremely vulnerable to climate variability, especially summer droughts\. As
the driest river basin in south-eastern Kosovo, the Morava e Binces river basin needs additional water
supply capacity to provide water in the dry season\. Currently, most of the larger population centers and
industries in the area are suffering from serious water supply restriction, as increasingly extended drought
periods are resulting in reduced available water quantities that cannot satisfy normal consumption needs\.
At the same time, the existing water supply system in the basin has an NRW level of 57 percent because
of leakage and commercial losses and suffers from suboptimal management\. Planned investments and
activities under this subcomponent are focused on building resilience and ensuring reliability of water
supply considering climate change and current poor service delivery\.
29\. Activities\. This subcomponent will finance the following:
(a) Investments to rehabilitate and modernize critical municipal water supply system
infrastructure, including replacement of sections with large water losses; upgrade and
capacity increase of the existing groundwater sources, pumping stations, and treatment
facilities; develop additional drinking water reservoirs capacity; and eliminate flow
bottlenecks in the existing water supply system\.
(b) Development and implementation of the full set of demand management activities,
including communication, development of progressive tariffs (in coordination with the GoK),
regulation of the efficiency of water using appliances (in new buildings), water leak detection
and elimination, replacement of water meters, improved network management, and
establishment and management of pressure management zones\.
(c) Purchase, replacement, and installation of equipment and development of measures
needed to improve energy efficiency, reduce commercial water losses, and efficiently
control and manage the operation of water supply systems\. This will include purchase of
flow and pressure meters and preparation and development of documentation and software
needed for system optimization and efficiency improvement\.
(d) Preparation of the NRW survey and action plan for selected water supply systems;
preparation of project documentation; implementation support; project supervision; utility
performance improvement plans; and staff training in Hidromorava RWC (including training
in NRW reduction, energy and performance improvement, and advanced system
management)\. In addition, this subcomponent will finance the operating costs and training
for Hidromorava RWC\.
Subcomponent 2\.3: People-centered water stewardship investments
30\. Objectives\. The main objective of this subcomponent is to contribute in pilot scale to sustainable
natural resource management, increase citizensâ environmental awareness, and encourage
environmental actions that address environmental challenges at a village or municipality level\. It will pilot
and start implementing activities to achieve tangible multifaceted investments in water security,
conservation, agroenvironmental measures, and demand management that all support to sustain
resources, improve service delivery, and build resilience in the system\. This will be done through
awareness raising and investment grants\. If scaled up in FLOWS2, these grants will have on-site benefits
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Fostering and Leveraging Opportunities for Water Security Program (Project 1,P169150)
to the grant beneficiary and tangible downstream benefits in terms of improved hydrology, baseflows,
reduced sedimentation, improved environmental services in terms of tourism and other economic
activity, improved water quality, and generally awareness to avoid shocks and pollution\.
31\. Rationale\. Given that both agroenvironmental and forestry measures have not yet been piloted,
this activity will provide capacity building to the beneficiaries, advisory, and administration tasked for the
implementation\. It will also support technical training and awareness activities to help generate quality
demand for the grant support, including supporting beneficiaries to select the proper activities, prepare
adequate applications to the program, and enhance the capacity of the institutions involved\. The small
grants program will provide grants to community groups, civil society organizations, or individuals in
selected sub-basins to (a) promote, test, and demonstrate innovative practices to increase water security;
(b) enhance sustainable natural resources management; and (c) raise awareness about water security and
environmental protection\.
32\. Activities\. This subcomponent will support awareness raising campaigns, citizen engagement for
water security, watershed action planning, and implementation of a small grants program\.
33\. This subcomponent will support the preparation of sub-watershed action plans by community
groups\.
34\. The grants will contribute to sustainable natural resource management, increase of citizensâ
environmental awareness, and encourage environmental actions that address environmental challenges
in a village or municipality level\. The categories include (but are not limited to) the following:
(a) Water security\. This includes rainwater harvesting, reuse/recycling of gray water, water
conservation activities in schools, piloting of drip irrigation in small gardens or school yards,
application of water saving techniques in schools and municipal buildings, development of
micro-retention, and water quality enhancement\.
(b) Awareness and educational activities\. This includes energy and water efficiency campaigns,
clean-up activities, educational programs for schools, tree planting, and awareness raising
on sustainable land management practices\.
35\. A locally based or national NGO or consultantâthe CEFâwith a track record in similar activities
will be contracted to facilitate the community mobilization and awareness raising on small grants program
and assist beneficiaries in the preparation of project proposals\. This facilitator will also help build the
technical and organizational capacities of the beneficiaries to implement project proposals\. The
contracted facilitator will coordinate with the municipalities and other partners that support similar
services\. Relevant data collection and analysis, and information exchange for wider adoption of
sustainable land management, will also be supported\. The facilitator would also support communities to
develop community action plans that would spur community discussions on their priorities that are
related to the project development objective and clearly fall under the small grants program categories\.
The facilitator will assist beneficiaries to identify and design appropriate project ideas that are eligible for
funding\. The activities and beneficiaries eligible for support under the two categories, the selection
criteria, screening and approval procedures, and fiduciary and safeguards requirements will be described
in the SGM\. Selection of subprojects will follow the following criteria: (a) aligned with the project
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objective, as set forth in schedule 1 of the Financing Agreement; (b) demand and needs driven; (c)
technically feasible; (d) economically and financially viable; (e) substantial readiness demonstrated; (f)
environmentally and socially sustainable; (g) compliance with, and can be designed and implemented in
a manner in compliance with the World Bankâs fiduciary and E&S safeguard requirements; and (h) any
other exclusions set force in the SGM\. The program will be managed by the PMT and a grant manager will
be hired as part of the PMT\. The facilitator will be tasked to provide citizen engagement support in all
relevant areas of the project\.
Figure 3\.3\. Small Grant Process Flow with CEF
Component 3: Program Management (IDA EUR 1\.9 million)
36\. This component will provide funding to contract professional and support staff to strengthen the
PMT to be established in the MIE, facilitate its operations, and ensure that certain specialized tasks are
professionally executed by people with the required background and knowledge, including the following:
⢠Professional staff\. They include procurement, FM, E&S safeguards specialists, coordinators
for the components, and liaison/communication specialist, as well as a diverse range of
short-term expertise and annual external audits\.
⢠Short-term expertise in the fields of, for instance, planning and M&E, architecture,
irrigation, water supply, hydropower, catchment management, civil engineering, facilitators,
water quality, legal expertise, IT services, and so on\.
⢠Support staff\. They include executive assistants and liaison officers\.
37\. The program will finance operating costs for the participating agencies in the execution of project
activities through the TWG\. This project is therefore following the GoKâs guidance on project management
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and is building local capacity for aid effectiveness\. General services will be shared between FLOWS and a
parallel proposed project in the MIE on greening wastelands, that is, the Greening Land Project; more
details are described in the chapter on implementation arrangements\. In addition, this component has
provisions for workshops, short training courses, and a limited number of external internships for young
professionals (linked specifically to program activities and multisectoral collaboration)\. Internships will
follow similar arrangements as under other donor-funded programs with the aim to build capacity in the
Government and help absorb young talent in the implementing agencies\. While there is no shortage of
well-educated graduates, their opportunities for gaining practical experience are limited\.
38\. Specific provisions for M&E include baseline, midterm, and end-of-project surveys\. A midterm
review will be conducted to review project implementation arrangements and assess project performance
in addressing outcomes and objectives\. The information system will record the M&E inputs and track
activities related to the various proposed activities, under the different components and subcomponents\.
A baseline survey will be conducted shortly after project effectiveness\.
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Annex 4: Maps
Page 92 of 92 | APPROVAL |
P004890 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Reort No\.
PROJECT COIPLETION REPORT
ALGERIA
ME INDUSTRY (ONAB) PROJECT
Loan 1739-ALG
February 17, 1984
Europe, Middle East and
North Africa Regional Office
This document has a destrcted distribution and may be used by recipients only in the performance of
their officil dWties\. Its contents may not otherwise be disclosed without World Bank autherization\.
CURRENCY EXCHPNGE RATES
Currency Unit : Algerian Dinar (DA)
Appraisal Year Average US$l = DA 3\.97
Cancellation Year Average : US1 = DA 4\.73
WEIGHTS AND MEASURES
Metric System
ABBREVIATIONS
BNEDER - Rural Development Studies Agency
(Bureau National pour le Developpement Rural)
MARA - Ministry of Agriculture and Agrarian Revolution
CMinist4re d'Agriculture et de la Revolution Agraire)
ONAB - National Agency for Animal Feed
(Office National des Aliments du Betail)
FISCAL YEAR OF BORROWER
Calendar Year
\.
FOR OMCIAL USE ONLY
PROJECT COMPLETION REPORT
ALGERIA
NEAT INDUSTRY (ONAB) PROJECT (Loan 1739-ALG)
Table of Contents
Page No\.
PREFACE (i)
BASIC DATA SHEET (ii)
HIGHLIGHTS (iii)
I\. INTRODUCTION 1
II\. PROJECT FORMULATION, PREPARATION AND APPRAISAL 1
III\. THE PROJECT 2
IV\. THE BORROWER AND THE IMPLEMENTING AGENCY 2
V\. PROJECT IMPLEMENTATION 4
VI\. BANK PERFORMANCE 4
VII\. CONCLUSIONS 5
ANNEX: Borrower's, Comments (Translation) 6
Map 14304 PCR
I This document has a resticted distribution and may be used by recipients only in the performance ofi
their ofricial duties Its contents may not otherwse be disclosed without Wo;ld Bank authorization\.
- (i) -
PROJECT COMPLETION REPORT
ALGERIA
NMEAT INDUSTRY (ONAB) PROJECT (Loan 1739-ALG)
Preface
This is a Completion Report of the Algeria Meat Industry (ONAB)
Project for which Loan 1739-ALG was approved June 21, 1979, in the sum of
US$42\.0 million equivalent\. The Loan and Guarantee Agreements were signed
October 3, 1979\. The Loan became effective February 12, 1982 and with the
exception of US$0\.2 disbursed, was cancelled at the request of ONAB on May 15,
1983\.
The PCR was prepared by EMENA Agriculture Division 2 on the basis of
the Staff Appraisal Report (2480a-ALG,, the Loan and Guarantee Agreements
dated October 3, 1979, supervision reports, progress reports, correspondence
with the Borrower and internal Bank memoranda on project issues as contained
in relevant Bank files\.
This report has not been subjected to an audit by the Operations
Evaluation Departitent\.
A copy of the draft report was sent to the Borrower on November 28,
1983 for comments\. Borrower's comments are attached as Annex to this report\.
\.
- (ii) -
PROEE a11= RUMa
WAT fJSI1 (ca) PRWEr (Loi 1739-ALG)
Basic Data Sheet
VCey Projert Data Appraisal Estimate Actual Actual as Z of EstirAte
Projert Cost (US$ Million) 105\.2 n\.a\. n\.a\.
lo ahwv\.t (USe Million) 42\.0 0\.2 0
Date Board Appiwal 06/00/79 06/21/79 -
Date Effectiveness 01/31/80 02112/82
Closirg Date 04/30/84 05/15/83 -
Cumulative Disbursets FM80 FY81 FY82 FY83 FY!4
Appraisal Estimte (US$ Million) 4\.5 17\.6 31\.8 39\.8 42\.0
Actual (USc Million) - - - 0\.1 0\.2
Actual as Z of Estimate 0 0 0 0 0
Date of Finl Disbursemet: 08/01/83
Mision Data
No\. of Him-days Specialization /a Performmice Problen
Date Persons in Field P Treni Type
Identification 01/78 5 20 - - -
Prepartion Corsltants -
Appraisal 12/78 5 70 E\.F\.S\.L\.E\. - - -
Sitotal 90
Supervision I 10n9 2 8 E\. S\. 2 2\. M
Supervision 2 03/80 3 15 EL F\. S\. 2 2 M
Supervision 3 12/80 2 10 M\. S\. 3 2 M
Supervisimi 4 04/81 1 3 F\. 3 1 M
Supervision 5 07/81 1 4 F\. 3 2 M
Supervision 6 05/82 1 6 M\. 3 2 M
dprvision 7 06/82 1 6 F\. 2 1 M
* Supervision 8 10/82 1 4 F\. 2 2 M
Subotal 56
Total 146
Other Prject Data
B : ~~~~~~M
E*ecutirg Agesry: cmA
Fiscal Year: Janckay 1 - Daeceber 31
Nae of Currercy (abbreviation): Algeriaa Dinar (D)
Cirxery Exdiage Rate
Appraisal Year Average: Iistl = DA 3\.97
Cancellation Year Average: UStL = DA 4\.73
/a E = EcomIst, F = Finaial Analyst, L = Livestock Specialist, M= Divisi Chief or Assistan
Division aiief, S = Meat Processing Specialist
- t iii) -
PROJECT COMPLETION REPORT
ALGERIA
MEAT INDUSTRY (ONAB) PROJECT (Loan 1739-ALG)
Highlights
The main project objectives were to increase the supply of beef and
mutton in Algeria and to establish a modern and hygienic meat industry\. The
project intended to create a sheep purchasing and fattening system based on
buying centers on the northern fringes of the arid steppe and newly created
medicago pastures and sheep handling yards in the up-lands, and to create
three integrated meat complexes in Algiers, Oran and Annaba\. An economic rate
of return of 22X for the sheep buying and fattening operation and of over 50%
for the meat complexes was calculated at appraisal; the financial rate of
returns were 15% and 11% respectively\. The Borrower and Project Executing
Agency was ONAB, the national agency for animal feed production, egg and
poultry production and red meat marketing, control and distribution\.
More than two years were required to meet the two effectiveness
conditions, namely acquisition of sites and employment of consultants\. The
Project appeared to be off to a good start after the loan became effective and
BNEDER, with the help of consultants, started preparation of designs and
bidding documents\. Nonetheless, the Borrower requested the Bank to cancel the
loan of which only a small fraction has been disbursed\. No reasons for this
request were given\. Consequently, lessons to be learned by the Bank from this
project must perforce remain conjectural\. Some points of interest are:
- The Project was presented to the Board before the sites for the meat
complexes were acquired by ONAB and before the consulting engineers
needed for preparing bidding documents were recruited\. While a usual
practice in the mid-1970s, currently projects of this nature are only
presented to the Board when sites are acquired (PCR para\. 5\.01)\.
- There were fundamental changes in Borrower's structure which occurred
before Loan effectiveness\. However, during the period before the
Loan became effective there were continuing reiterations of the
Government's commitment with respect to the main Project component
and to the Project as a whole (PCR para\. 5\.04)\.
PROJECT COMPLETION REPORT
ALGERIA
MEAT INDUSTRY (ONAB) PROJECT (Loan 1739-ALG)
I\. INTRODUCTION
1\.01 Loan 1739-ALG for US042 million which was signed on October 3, 1979,
was cancelled at the request of Office National des Aliments du Betail (ONAB)
on April 1, 1983\. Only a fraction of the Loan (US0\.1 million) covering an
advance payment to and two invoices of consultants were disbursed\. The
Ministry of Agriculture and Agrarian Revolution (MARA) appeared to be fully
comnitted to the Project as recently as October 1982 and the reasons for
requesting cancellation are not fully understood\.
II\. PROJECT FORMULATION, PREPARATION AND APPRAISAL
2\.01 MARA and ONAB requested the October 1977 Bank identification/sector
preparation mission to consider a meat production, processing and marketing
project for Bank financing\. The justification of the proposed project was
that the existing red meat production was increasingly lagging behind demand
with, as a result, continuous meat price increases in real terms, that the
existing slaughtering capacity of about 40,000 tons/year was in many cases
outdated, unhygienic and insufficient for the total needed production of some
60,000 tons/year; that meat processing facilities to valorize abattoir
by-products were almost nonexistent; and that the available meat cold storage
facilities were insufficient to handle present and projected needs,
particularly for imports\.
2\.02 The Project was prepared by consultants financed by UNDP (Project
ALG/77/030) with the Bank as Executing Agency\. The consultants started work
in August 1978\. Preparation went slower than expected and at appraisal only a
first draft of the Project feasibility study was ready\. Nevertheless,
Government insisted on early appraisal and on Board Presentation in FY79\.
2\.03 The appraisal mission visited Algeria from November 27 through
December 15, 1978\. The consultants' draft feasibility report was found not to
be satisfactory by the mission and substantial modifications to the Project
concept and components were proposed by the mission and accepted by the
Government\. No issues requiring management decision were raised by the
mission at its return to headquarters\. Negotiations were held from May 12 to
22, 1979\.-! The Board presentation was on June 21, 1979 and the Loan
Agreement and Guarantee Agreement were signed October 3, 1979\.
1/ The Algerian negotiating team did not include any ONAB representative\.
-2-
III\. THE PROJECT
3\.01 The Project's main objectives were:
(a) increase in the supply of mutton by instituting a system of buying
centers for sheep from the arid steppe, transfering them to the zone
of the high plateau for fattening on workers' self-managed 1/ farms
and, subsequently transfering them to ONAB abattoirs for slaughter
and distribution;
(b) reduction of seasonal price fluctuation by the controlled release by
ONAB onto the market of imported or locally acquired meat stored in
appropriate cold storage facilities; and
(c) establishment of modern, hygienic meat industry under ONAB\.
3\.02 The components of the Project were;
(a) construction of sheep buying centers equipped with trucks for sheep
transport;
(b) establishment of about 60,000 ha of medicago pasture with sheep
handling yards;
(c) construction of three multispecies abattoirs (in Algiers, Annaba and
Oran) comprising each a meat cutting plant, a meat product plant,
cold storage, a by-product plant, and means of transport (aggregate
capacity of slaughter 13,000 tons), and
(d) technical assistance for the establishment of medicago pastures and
for preparation of bidding document and supervision of the
construction of meat complexes, and training of ONA3 staff\.
The total Project cost was estimated at US$105\.2 million, of which foreign
exchange was US$42\.3 million\. The Project was to be implemented over four
years commencing January 1979\. The estimated FRR and ERR was 15Z and 22%
respectively for the sheep purchase-transit-fattening component, and 11% and
over 50% respectively for the meat complexes\.
IV\. THE BORROWER AND THE IMPLEMENTING AGENCY
4,01 The Borrower and the Project Implementing Agency was to be ONAB\.
ONAB was-2/ a financially independent government agency with three distinct
functions: animal feed production, poultry and egg production, and livestock
purchase, slaughter and wholesale\. ONAB's organization evolved haphazardly as -
the Office developed in many directions since its creation\. At the time of
appraisal, a wide ranging reorganization to streamline its operation was
taking place\. The total labor force was about 2,450 persons, including 120
professionals\. ONAB's total assets amounted (December 31, 1977) to DA 679
million (US$17O million at appraisal exchange rate) and profit before tax
I/ Domaines autoger6s\.
2/ Past tense is used as ONAB was subsequently completely restructured (see
para\. 5\.04)\.
-3-
(1977) was DA 17 million (US$4\.3 million)\. The Project was to be managed by
ONAB's newly created Department of Marketing which became responsible for all
red meat operations\.
V\. PROJECT IMPLEMENTATION
5\.01 The Loan Agreement called for two special conditions of
effectiveness: acquisition by ONAB of acceptable sites for the meat complexes
and appointment of consulting engineers to assist ONAB in the preparation of
bidding documents, in the evaluation of bids and in the supervision of
construction of the complexes\. Meeting these conditions was more difficult
and time consuming than expected and the original Loan Effectiveness date of
January 31, 1980 had to be postponed six times\. The loan became effective
finally on February 12, 1982, over two years after appraisal\.
Reasons for delay in Effectiveness
5\.02 Choice and Attribution of Sites\. There were two reasons which
delayed meeting this effectiveness condition: (a) indecision by MARA and ONAB
as to the location of the Oran and Annaba abattoirs\. The original project
called for the abattoirs to be located near the above two consumption
centers\. MARA/ONAB questioned this choice and for several months searched for
sites in the interior close to the livestock production areas\. The Bank
agreed in principle to this solution, but, subsequently, MARA/ONAB reverted to
the original plan in respect of the Oran site\. In the case of the eastern
(Annaba) location, a site near Skikda was chosen\. The localization of the
sites for Algiers was delayed by the decision of MURA to construct not one
large abattoir, but rather two small ones; and (b) the acquisition of the
sites was delayed by the lengthy formalities required for the transfer (or
purchase) of each site\.
5\.03 Recruitment of Consultants\. Early in 1980, MARA informed the Bank
that all studies and technical assistance to the agencies of MARA, or
government enterprises under its supervision, must be performed by BNEDER
(Bureau National d'Etudes pour le Developpement Rural), a Government
consulting company attached to the Ministry of Agriculture\. As BNEDER had not
the necessary expertise to act in this matter as consultant to ONAB, the Bank
required that BNEDER (instead of ONAB) should employ the consultants needed\.
Invitations for proposals were sent by BNEDER to short-listed consultants only
in mid-April 1981 and a contract was signed in October 1981\.
5\.04 Changes in ONAB Management and Structure\. The delays in meeting the
above condition of effectiveness were also attributable, to a certain extent,
to changes in ONAB's management and, at a later stage, to a fundamental change
r in the whole structure of ONAB\. Shortly after signature of the loan the
General Director of ONAB was changed and virtually all the staff who were
familiar with the project left ONAB and were not immediately replaced\. The
new ONAB management did not seem to be fully committed to the Project\.
Moreover, in August 1981 ONAB was split into seven autonomous agencies, three
of which were to be responsible for promotion and development of red meat
production (central, western, and eastern Algeria)\. Internal transfers of
staff and redistribution of responsibilities made project-related discussions
with ONAB and with the new regional offices virtually impossible\. However,
-4-
throughout this two-year period MARA c)aimed to be deeply committed to the
meat complex component of the Project-1 and on many instances it reiterated
that the Project had high national priority\. Also, since early 1981 BNEDER
proceeded to review the proposals in the Staff Appraisal Report and the
justifications for the meat complexes component and generally seemed to agree
with them\.
5\.05 After effectiveness and particularly after consultants started work
in Algiers in March 1982, progress appeared to be satisfactory\. In June 1982
the consultants submitted a preliminary report giving the basic technical
parameters of the meat complexes and in Septesber they submitted a detailed
report with lists of equipment, layouts and cost estimates\. This report,
after approval by BNEDER and ONAB, was to constitute the basic document for
the preparation of detailed engineering specifications and bidding documents\.
The final version of this document was ready in November 1982 and by the end
of February 1983 work on bidding documents and specifications was nearing
completion\. The consultants and BNEDER also prepared reports concerning the
training under the Project, required staffing, organization of each complex
and the first stage of the general red meat marketing and supply study\. The
next step, tentatively scheduled for March 1983, was to invite bids for a
turn-key contract for the complexes\. A supervision mission was scheduled for
March 1983 to review progress but the mission was called off as the Bank
learned unofficially that Government intended to cancel the loan\. The
official request for cancellation was received on May 15, 1983\. No specific
reasons for this request have been given\.
VI\. BANRK PERFORMANCE
6\.01 The Bank's project appraisal appears to have been carried out
thoroughly, in spite of an unsatisfactory project preparation, although more
attention should have been given to the relatively small sheep purchasing and
fattening component which was later dropped because of the subsequently
evaluated risks of creating medicago-based pastures on the high plateau\.
However, the Loan was negotiated with the Government in the absence of a
representative from the Borrower, although there were representatives of MARA
and the Ministry of Finance\. It would appear that the Bank should have
insisted on representation from ONAB at negotiations\.
6\.02 The frequency of Bank supervision missions was adequate: five
missions visited Algeria before the Project became effective to assist the
Borrower to meet the effectiveness conditions, to inspect the meat complexes
sites and to advise on Bank procedures\. Supervision was intensified in 1982
after the Loan became effective to speed up implementation and to help
resolving current issues\. The composition of missions reflected more than
usual degree of staff continuity\.
1/ The sheep fattening component representing about 8X of project costs was
to be reviewed, as MARA had voiced reservations concerning the use of
medicago pasture at high elevations\.
-5-
VII\. CONCLUSIONS
7\.01 The Project appears have been approved too early in the Project
cycle\. It is now clear that the two effectiveness conditions, namely
acquisition of sites for the meat complexes and employment of consultants,
should have been rather conditions of negotiations and Board presentation
respectively, as would be the case under present practice\. At the time of
appraisal, however, the Algerian authorities appeared to be strongly committed
L' to rapid project implementation and no undue delays were expected\. The Bank
has had little experience in lending for agriculture in Algeria and no
experience concerning the lengthy administrative procedures inherent to the
Algerian agricultural sector\. The changes which took place first in the
management and subsequently in the structure of the Borrower could not have
been foreseen\. Present practice for Bank projects in preparation in Algeria
is to require completion of critical steps for Project implementation (e\.g\.,
signature of major contracts, and recruitment of consultants) before Board
Presentation, so as to avoid subsequent implementation delays\.
7\.02 A study prepared by BNEDER in April 1981 confirmed the need for the
project and agreed generally with SAR's recommendations concerning the
capacities of the slaughterhouses, and cold storage\. Also the evolution of
demand and supply of red meat and of imports of red meat from the time of
project appraisal until 1981 was in line with the projections made during
appraisal\. The Government's decision not to proceed with the Project may
reflect a change in policy concerning red meat supply and marketing, rather
than a change of view concerning the original project design and
justifications\.
7\.03 A final consideration is whether or not the Bank was right in
agreeing to extend the date of effectiveness six times, for an aggregate
period of 28 months from the date of signature until effectiveness\. The
justification for doing so was that the project continued to be economically
attractive and MARA's (if not ONAB's) commitment to it appeared still to be
strong\. The eventual satisfactory start of implementation in 1982 appeared to
justify the extensions\. However, while the unexpected, abrupt decision of the
Government to cancel the loan in 1983 could not have been foreseen, the
repeated extension of the effectiveness date could have been interpreted by
the Bank as a warning of probable major difficulties during the Project
implementation period\.
-6-
ANNEX
PROJECT COMPLETION REPORT
ALGERIA
MEAT INDUSTRY (ONAB) PROJECT (Loan 1739-ALG)
Borrower's Comments (Translation)
Cable
WORLD BANK, WASHINGTON
ATTENTION MR\. SHIV S\. KAPUR
DIRECTOR, OPERATIONS EVALUATIONI DEPARTMENT
RE YOUR PROJECT COMPLETION REPORT, ALGERIA, NEAT INDUSTRY (ONAB) PROJECT, LOAN
ALG-1739, WE HAVE THE HONOR TO FURNISH THE FOLLOWING ADDITIONAL INFORMATIONS
CONCERNING THE REVIEW OF THE JUSTIFICATIONS OF THE PROJECT\.
1\. THE STUDIES WERE NOT COMPLETED BECAUSE OF THE ASSUMPTION (BY ONAB) OF
OTHER RESPONSIBILITIES AND PRIORITIES\.
2\. ONAB WAS RESTRUCTURED INTO SEVEN AGENCIES, OF WHICH THREE WERE RESPONSIBLE
FOR MEAT PRODUCTION AND MARKETING\.
3\. PARALLEL WITH THE IBRD PROJECT, ANOTHER PROJECT WAS INITIATED WHICH WAS TO
CONSIST OF THE CONSTRUCTION OF 27 COLD STORES WITH A TOTAL CAPACITY OF
53,000 M3 (CONTRACT OF JUNE 23, 1982)\.
4\. INFRASTRUCTURES C (PARTICULARLY SLAUGHTERHOUSES) ARE AVAILABLE THROUGHOUT
THE COUNTRY AND ONLY REQUIRE REMODELLING OR EXPANDING\.
5\. IN ADDITION, THE STATISTICS PREPARED INDICATE THAT THESE INFRASTRUCTURES
ARE UNDERUTILIZED IN THE THREE REGIONS\.
6\. THE COSTS OF THE MEAT COMPLEXES ARE CONSIDERED TOO HIGH AND THEIR
PROFITABILITY UNCERTAIN (RISK OF UNDERUTILIZATION)\.
-7-
ANNEX
Page 2
7\. IN LIGHT OF A NEW STUDY OF THE NATIONAL MARKET THE REGIONAL AGENCIES HAVE
EXPRESSED THEIR WISH TO SEE CONSTRUCTION OF THREE REGIONAL MEAT PROCESSING
PLANTS WHICH WOULD BE ADDED TO THE EXISTING INFRASTRUCTURE\.
8\. CONTINUATION OF SECTOR RESTRUCTURING AND THE DECIDED UPON TRANSFER OF
MARKETING ACTIVITY TO AGENCIES ANSWERABLE TO OTHER MINISTRIES\. STOP AND END\.
YOURS TRULY /S/S\. KECHOUT, DIRECTOR GENERAL
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, , 1!1 t1 | APPROVAL |
P173804 |  The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
Project Information Document (PID)
Concept Stage | Date Prepared/Updated: 30-Apr-2020 | Report No: PIDC29428
Apr 30, 2020 Page 1 of 8
The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Tajikistan P173804 Nurek Hydropower
Rehabilitation Project
Phase 2 (P173804)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
EUROPE AND CENTRAL ASIA May 18, 2020 Jun 29, 2020 Energy & Extractives
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Ministry of Finance,Ministry Barqi Tojik
of Energy and Water
Resources
Proposed Development Objective(s)
The project development objectives are to rehabilitate and increase the generating capacity of six power generating
units of Nurek hydropower plant and improve their efficiency\.
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 191\.90
Total Financing 50\.00
of which IBRD/IDA 50\.00
Financing Gap 141\.90
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 50\.00
IDA Grant 50\.00
Environmental and Social Risk Classification Concept Review Decision
Substantial Track I-The review did authorize the preparation to
Apr 30, 2020 Page 2 of 8
The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
continue
B\. Introduction and Context
Country Context
1\. Tajikistan is a landlocked country located in southeast Central Asia\. It has a population of 8\.5 million and a Gross
National Income per capita of US$1,010 (2018)\.1 In 2016-2019, Tajikistanâs real Gross Domestic Product (GDP) exhibited
healthy growth rates\. According to official statistics, GDP growth was 6\.9 percent in 2016 and accelerated to 7\.5 percent
in 2019, supported by robust year-on-year growth in industry (14 percent), agriculture (7 percent), and retail trade (9
percent)\. On the demand side, consumption and net exports drove growth, while investment fell by 7 percent\. Growth
was largely supported by heightened public investment in infrastructure projects\.
2\. The current account deficit narrowed in 2019 due to larger growth in exports and slow increase of imports\. A jump
in exports and a recovery in remittances helped narrow the current account deficit to an estimated 4\.3 percent of GDP in
2019\. Merchandise imports increased by 6\.3 percent in U\.S\. dollar terms\. Export earnings rose by 9\.4 percent in 2019,
supported by higher shipments abroad of precious metals and electricity\.
3\. The fiscal stance remained cautious in 2019\. The fiscal deficit of 2\.7 percent of GDP was little unchanged from 2018\.
Cuts in non-energy capital spending accompanied with lower-than-projected revenue collection helped to contain the
deficit\. Meanwhile, delays in rolling out the Targeted Social Assistance (TSA) program to an additional 28 regions and slow
progress in deciding to increase the TSAâs budget by 10 percent put this important anti-poverty measure on hold\. Spending
on the Rogun Hydropower Plant (HPP) comprised the largest share of public investment in 2019, facilitating the launch of
the second of the six turbines in 2019\.
4\. Poverty rate reduced\. The poverty rate - using Tajikistanâs official poverty line - fell to 27\.4 percent in 2018, reflecting
acceleration of economic growth and recovery in inflows of remittance\. The rural poverty rate declined markedly from
36\.1 percent in 2014 to 30\.2 in 2018, reflecting rising household consumption\. The rate of extreme poverty also fell steadily
from 18 percent in 2013 to 12 percent in 2018\.
5\. COVID-19 poses significant economic and social challenges for 2020-2022\. The outbreak of the COVID-19 disease
has resulted in a substantially worse macro-fiscal framework\. GDP growth is expected to fall to 1\.7 percent in 2020 or
lower, reflecting the implications of the COVID-19 outbreak and the slowdown in Russia and China\. These implications
include the sharp decline of trade and lower commodity prices, a likely large drop in remittances, and worsened prospects
for transport and tourism industries\. Growth will likely remain weak at about 3\.5 percent in 2021-2022 supported by public
investments\.
6\. The fiscal situation is expected to deteriorate\. The fiscal deficit is expected to widen to more than 5 percent of GDP
in 2020 as a result of lower revenues and increased spending on health, social transfers\. The revenue shortfall will mirror
the high share of value added tax (VAT) and trade taxes in total tax revenue and Tajikistanâs greater reliance on imports
originating from China\. The expected increase in public spending in 2020 is likely to reflect social support to mitigate the
loss of household incomes\. After a one-off surge in the fiscal deficit in 2021, the deficit needs to be reduced in the
subsequent years to ensure debt sustainability\.
1In current US$, Atlas Method, World Development Indicators, The World Bank\. Source:
https://data\.worldbank\.org/indicator/NY\.GNP\.PCAP\.CD?locations=TJ
Apr 30, 2020 Page 3 of 8
The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
7\. The current account deficit will most likely widen in 2020-2022\. The current account deficit is forecast to widen to
above 5 percent of 2020 of GDP due to the contraction in remittances and the larger trade deficit as a result of declining
export of metallic minerals, the largest export commodity of Tajikistan\. Inflow of foreign direct investment (FDI) is likely
to decline\. The current account deficit is expected to remain elevated in 2021-22 as global trade conditions are projected
to remain depressed throughout the medium-term\.
8\. The deterioration of macroeconomic fundamentals may impact the banking sector\. The banking sector is expected
to experience a deterioration of the loan portfolio in 2020 and an increase in the NPL ratio\. The latter is expected to be
affected by the balance-sheet mismatches as a result of Somoni depreciation\. The NBT will need to enhance itâs regulatory
role to restore the banking sectorâs stability\.
9\. The Government has undertaken a number of steps to address the structural issues in the economy and mitigate
the social impacts from COVID-19\. Specifically, the Government initiated: (a) implementation of the Program for Financial
Recovery of BT for 2019-2025 aimed at improving financial viability of BT and increasing reliability of electricity supply; (b)
further roll-out of the Targeted Social Assistance (TSA) Program to cover the entire country; and (c) activities aimed at
exploring options for raising private financing for Rogun HPP considering that entirely public financing to complete the
project may not be feasible especially considering the impacts from COVID-19
Sectoral and Institutional Context
10\. The power sector is comprised of the vertically integrated energy company, BT, three independent power
producers (IPPs), and a concession in Gorno-Badakhshan Autonomous Oblast (GBAO) combining power generation and
distribution\. BT is a state-owned company\. It owns and operates most of the electricity generating plants and is also
responsible for electricity transmission, dispatch, and distribution services to around 9 million people in all regions of the
country except for GBAO\. Two of the IPPs â Sangtuda-1 and Sangtuda-2 hydropower plants (HPPs) â were constructed
with investments from Russian and Iranian state-owned companies and supply electricity to BT under 20-year Power
Purchase Agreements (PPAs)\. The third IPP â Rogun HPP â is under construction and supplies electricity to BT under a
PPA\. Pamir Energy Company (PEC) generates and supplies electricity to around 245,000 people in GBAO under a 25-year
concession agreement\.
11\. Electricity supply mix is dominated by hydropower\. The total installed generation capacity of Tajikistan is 6,856 MW
and HPPs account for 90 percent\. The 3,000 MW Nurek HPP, with a seasonal reservoir, is the largest generating plant\. It
generates 50 percent of the total annual energy requirements and is also the balancing plant in the system\. It should be
noted that available operational capacity is lower considering that several HPPs and some of the CHPs, such as Dushanbe-
1 and Yavan, have technical issues\.
Main Challenges in the Power Sector
12\. The power system is currently facing the key challenges below, which need to be addressed to ensure adequate and
reliable electricity supply, and financially sustainable power sector\.
13\. Challenge #1: Financial distress of BT\. BT has been in financial distress due to: (a) below cost-recovery tariffs; (b)
unsustainable and increasing debt levels; (c) low collection rates for billed electricity; (d) operational inefficiencies; (e) lack
of opportunities for realization of full export potential; and (g) depreciation of TJS vs US$\. This has led to significant
deterioration of financial standing of BT\. Specifically, BT has a sizeable cash deficit because tariffs are below cost recovery
levels and there are operational inefficiencies\. The significant increase in cash costs, which were not fully passed through
to end-user tariffs, coupled with operational inefficiencies, resulted in a significant cash deficit2, which is estimated at
2Difference between cash sales and accrual-based costs related to core business activities: cost of electricity from IPPs; O&M; liabilities related to
repayment of outstanding principal amounts of debt; interest costs; accumulated payables to IPPs, and taxes\.
Apr 30, 2020 Page 4 of 8
The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
TJS11\.7 billion (US$1\.2 billion) as of 2018\. This cash deficit can only be eliminated in case the Government implements
gradual tariff increases coupled with financial measures and operational efficiency improvements by BT\.
14\. Challenge #2: Reduction of electricity supply reliability due to dilapidation of electricity generation, transmission
and distribution (T&D) assets\. The financial distress of BT impacted the reliability of electricity supply, which deteriorated
due to obsolescence and under-maintenance of main power generating plants and T&D networks\. Specifically, only 77
percent of the generation capacity of Nurek HPP is operational because generating units require refurbishment given the
age and technical condition\. The need for rehabilitation was established based on the technical assessment of the
condition of the generating units and other infrastructural components of the power plant\. The poor technical condition
of the plant is due to obsolescence of equipment and lack of major capital repairs since its commissioning\. The same
major issues are relevant for the 600 MW Baipaza HPP, which requires rehabilitation\.
15\. Challenge #3\. 43,126 people (0\.5 percent of population) in GBAO and Khatlon regions do not have access to
electricity service\. In parts of Khatlon, bordering Afghanistan, there are 74 settlements with total population of 31,460
without access to electricity\. Those settlements could not be connected to the grid due to severe financial difficulties of
BT\. In GBAO, 61 settlements with total population of 11,666 are not connected to electricity service\. Those settlements
are in remote mountainous areas in the region, which is also the service area of PEC, where access has historically been a
challenge\. Most of the settlements are scattered over a vast territory in the eastern part of GBAO, while a few of the
settlements are in the western part, close to existing PEC grid\. Before Tajikistanâs independence, those areas were
primarily supplied with diesel-based portable generator sets\. This approach became prohibitively expensive given the
increase in unit costs of diesel-based electricity generation once the generous fuel subsidies provided under the Soviet
Union disappeared\.
Relationship to CPF
16\. The proposed project is fully aligned with Tajikistan FY2019-23 Country Partnership Framework (CPF)\. Specifically,
the project will contribute directly to the achievement of Objective 4 (Improved Financial Viability of Public Electricity and
Water Utilities) under the CPF Focus Area II (Public Institutions and Sustainability)\. It will not possible to ensure financial
viability of power sector without maintaining supply of low-cost electricity from Nurek HPP\. Additionally, without Nurek
HPP, which currently accounts for 50% of total electricity supply in the country, there can be no sustainable institutional
and economic development\. Indirectly, the project will also contribute to the two other CPF Focus Areas:
⢠Focus Area I (Human Capital and Resilience)\. Reliable electricity supply is an essential prerequisite for enhanced
educational, social and health services\. It is not possible to ensure quality delivery of educational, social and
healthcare service if there are frequent electricity outages and supply interruptions\. This creates not only significant
additional costs for public and social facilities, but also significantly impacts the quality of the services\.
⢠Focus Area III (Enabling Private-Sector Growth and Creating Markets)\. Reliable electricity supply is an important
precondition for improved economic opportunities and, thus, private sector led economic growth\. The project would
also contribute to the expansion of electricity export opportunities\.
C\. Proposed Development Objectives
17\. The project development objectives are to rehabilitate and increase the generating capacity of six power
generating units of Nurek hydropower plant and improve their efficiency\.
Key Results (From PCN)
⢠Indicator One (CRI): Generation capacity of energy constructed or rehabilitated under the project (MW)\. This
indicator measures the capacity of hydropower constructed or rehabilitated under the project\.
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The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
⢠Indicator Two (Custom): Estimated annual electricity generation of six units included in the scope of the project
(GWh)\. This indicator measures the amount of electricity supplied by the six units of Nurek HPP, which were
rehabilitated under the project, to the power transmission network\.
⢠Indicator Three (Custom): Estimated increase of total electricity generation of rehabilitated units due to efficiency
improvements (GWh)\. This indicator measures the increase in total generation of rehabilitated units due to
average efficiency increase of 2 percent\.
⢠Indicator Four (CRI): People provided with improved electricity service (Number)\. The indicator measures the
number of people that have received improved electricity service due to the project\.
D\. Concept Description
18\. Component 1: Rehabilitation of six generating units and other key infrastructure, and purchase of machinery
required for maintenance of the power plant\. This component will consist of two sub-components\.
19\. Sub-component 1\.1: Replacement and refurbishment of six generating units\. This sub-component will finance: (a)
rehabilitation of six power generating units (generators, turbines, main inlet valves, and transformers), auxiliary systems
and key balance of plant; and (b) providing spare parts, and operations and maintenance equipment\.
20\. Sub-component 1\.2: Rehabilitation of Nurek bridge, powerhouse, and other buildings/structures at Nurek HPP site
and purchase of machinery\. This sub-component will finance: (a) rehabilitation of Nurek bridge; (b) rehabilitation of the
powerhouse and some other buildings/structures at Nurek HPP that may require rehabilitation; and (c) purchase of
machinery, including excavators, forklift trucks, truck cranes, required for cleaning and maintenance of the roads to access
the dam\. The list of machinery requirement will be finalized by appraisal\.
21\. The rehabilitation of Nurek bridge, the powerhouse and other buildings/structures at Nurek HPP would also
contribute to mitigation of COVID-19 impacts on the local economy by boosting capital spending and creating local jobs\.
The share of local components in such civil works is quite high because most of the construction materials are locally
produced and local labor force would be employed\. The preliminary estimates suggest that only rehabilitation of Nurek
bridge can generate about 1,000 person-month of construction related jobs\.
22\. Component 2: Technical assistance\. This component will support implementation of the project and strengthen the
institutional capacity of BT by supporting the following\.
Legal Operational Policies Triggered?
Projects on International Waterways OP 7\.50 Yes
Projects in Disputed Areas OP 7\.60 No
Summary of Screening of Environmental and Social Risks and Impacts
\.
An ESIA was prepared for the Phase 1 of the project and cleared by the Bank\. For the proposed Phase 2 of the project, BT
is updating the ESIA under the Bank's ESF and preparing other E&S instruments that are required, including ESMP for the
Nurek bridge, an activity that has been included in the project only as part of the proposed Phase 2\.
Apr 30, 2020 Page 6 of 8
The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
\.
CONTACT POINT
World Bank
Artur Kochnakyan
Senior Energy Specialist
Borrower/Client/Recipient
Ministry of Finance
Faiziddin Qahhorzoda
Minister
minister@minfin\.tj
Ministry of Energy and Water Resources
Usmonali Usmonzoda
Minister
uusmonov@gmail\.com
Implementing Agencies
Barqi Tojik
Mirzo Ismoilzoda
Chairman
barki_tojik@tajnеt\.Ñ?оm
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Artur Kochnakyan
Apr 30, 2020 Page 7 of 8
The World Bank
Nurek Hydropower Rehabilitation Project Phase II (P173804)
Approved By
APPROVALTBL
Practice Manager/Manager: Sameer Shukla 30-Apr-2020
Country Director: Lilia Burunciuc 12-May-2020
Apr 30, 2020 Page 8 of 8 | APPROVAL |
P004590 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 20581
PERFORMANCE AUDIT REPORT
PHILIPPINES
RURAL ELECTRIFICATION REVITALIZATION PROJECT
(LOAN 3439-PH)
June 15,2000
Sector and Thematic Evaluations Group
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Currency Equivalents (annual averages)
Currency Unit = Philippine Peso (P)
1993 US$1\.00 P27\.12
1994 US$1\.00 P26\.42
1995 US$1\.00 P25\.71
1996 US$1\.00 P26\.22
1997 US$1\.00 P29\.47
1998 US$1\.00 P40\.89
1999 US$1\.00 P39\.06
Weights and Measures
kWh Kilowatt-hour (1,000 watt-hours)
MW Megawatt (1,000 kilowatts)
GWh Gigawatt-hours (million kilowatt-hours)
Fiscal Year
Government: January 1-December 31
Abbreviations and Acronyms
ADB Asian Development Bank
DOE Department of Energy
ERB Energy Regulatory Board
GOP Government of the Philippines
IBRD International Bank for Reconstruction and Development
IPP Independent power producer
NEA National Electrification Administration
NPC National Power Corporation
OECF Overseas Economic Cooperation Fund
OED Operations Evaluation Department
PAR Performance Audit Report
PIP Performance Improvement Program
REC Rural electricity cooperative
RERP Rural Electrification Revitalization Project
SAR Staff Appraisal Report
SOP Statement of Operating Policy
USAID United States Agency for International Development
Director-General, Operations Evaluation Mr\. Robert Picciotto
Director, Operations Evaluation Department : Mr\. Gregory Ingram
Acting Manager, Sector and Thematic Evaluations : Mr\. Ridley Nelson
Task Manager : Mr\. Fernando Manibog
FOR OFFICIAL USE ONLY
The World Bank
Washington, D\.C\. 20433
U\.S\.A\.
Office of the Director-General
Operations Evaluation
June 15, 2000
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Performance Audit Report on Philippines Rural Electrification Revitalization
Project (Loan 3439-PH)
Attached is the Performance Audit Report (PAR) prepared by the Operations Evaluation
Department (OED) on the above project, which was supported by a loan of US$91\.3 million to
the National Electrification Administration (NEA)\. The loan was approved in fiscal 1992 and
closed in April 1998, 16 months behind schedule\. A total of US$36\.7 million was canceled\.
The objectives of the project were to (a) enhance NEA's capability to function as an effective
core agency for rural electrification, (b) improve the performance of the rural electrification
cooperatives, and (c) increase the availability and reliability of electricity supply in rural areas by
financing part of NEA's 1992-95 investment program\.
Project outcome is rated unsatisfactory because the physical and institutional benefits directly
attributable to the project were both substantially less than projected at appraisal and seriously
delayed\. The institutional development impact of the project is rated as modest in light of
improved rural electricity cooperative performance and better NEA monitoring practices\.
Sustainability of the project benefits is rated uncertain due to NEA's financial problems, which
remain unresolved\. These ratings do not differ from those in the ICR\. Bank and borrower
performance are both rated unsatisfactory\.
The main lessons from this project are:
* Critical policy reforms requiring legislative action should be passed before a Bank loan is
approved by the Board
* Midterm reviews of projects provide a useful opportunity to rectify problems not anticipated
at appraisal and should be undertaken systematically\.
* Bank reluctance to use remedies at its disposal when borrower performance is unsatisfactory
can be counterproductive to achieving project goals\.
* Lending directly to rural electrification umbrella agencies on IBRD terms for rural
electrification projects is hard to justify except in the case of financially very strong entities\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.

Contents
Principal R atings\. iii
K ey Staff R esponsible \. iii
P reface \. v
1\. B ackground \. 1
2\. Project Objectives, Design, and Quality at Entry\.2
Assessment of Implementation Capacity \. \. 3
Assessment of Project Risks\. \. 3
3\. Project Im plem entation \. 4
4\. K ey Issues\. 6
NEA's Financial Difficulties\. 6
REC Performance\. \. 6
Future Prospects for RECs\. 7
Extending Access to Electricity \. \. 8
5\. Bank and Borrower Performance \. 9
Bank Performance \. 9
Borrower Performance\.0\.
Overall Project Assessment and Ratings\. 11
6\. Lessons Learned \. 11
Annex A : Basic Data Sheet \. 13
Annex B: Comments from the Government \. 17
This report was prepared by Fernando Manibog (Task Manager) and Sunil Mathrani (Consultant), who
audited the project in October and November, 1999\. William B\. Hurlbut edited the report\. Marie Daramy
provided administrative support\.
u
111
Principal Ratings
Audit ICR
Outcome Unsatisfactory Unsatisfactory
Sustainability Uncertain Uncertain
Institutional Development Modest Partial
Bank Performance Unsatisfactory Highly Unsatisfactory
Borrower Performance Unsatisfactory Unsatisfactory
Key Staff Responsible
Task Manager Division Chief Country Director
Appraisal J\. Sopher I\. Sud G\. Kaji
Midterm J\. Sopher J\. Shivakumar C\. Madavo
Completion H\. Pape Y\. Sumi V\. Bhargava

V
Preface
This is a Performance Audit Report (PAR) on the Philippines Rural Electrification Revitalization
Project for which the Bank approved a loan (3439-PH) of US$91\.3 million on February 25, 1992\. The
original closing date of December 31, 1996, was extended until April 30, 1998\. A total undisbursed
balance of US$36\.7 million was canceled\.
This report was prepared by the Operations Evaluation Department (OED) based on the
Implementation Completion Report (ICR) prepared by the East Asia and Pacific Region, issued on
January 15, 1999, the Staff Appraisal Report, loan documents, project files, and discussions with Bank
staff\. An OED mission visited the Philippines in October 1999 to discuss the effectiveness of the Bank's
assistance with the government and the National Electrification Administration (NEA), the project
implementing agency\. The collaboration and assistance of government officials, NEA, and the
management and staff of the electricity cooperatives are gratefully acknowledged\.
Following standard OED procedures, the draft of this PAR was sent to the borrower for comments
before finalization\. Comments received from the Borrower are included as Annex B\.

1\. Background
1\.1 The democratic government that came to power in the Philippines in 1986 inherited deep-seated
economic and political crises that left a lasting impact on the country\. To this day, the country is saddled
with a high burden of public debt, a third of households live below the poverty line, and income
distribution is heavily skewed\. The excesses associated with the Marcos regime (1967-86) produced a
consensus within the country that the path to economic recovery should remain genuinely democratic and
participatory\. The devolution of fiscal resources and responsibilities to local government units since 1991
has been enthusiastically embraced at the local level as a means of further decentralization of economic
and political power\.'
1\.2 Electricity distribution in the Philippines has been decentralized since the early 1970s\. Today, the
119 rural electrification cooperatives (RECs), with over 4\.7 million customers, account for over half of all
electricity consumers in the Philippines but only about 20% of electricity consumption\. Within the
geographical areas covered by the RECs, nearly 40% of households still do not have access to electricity\.,
The RECs are misleadingly named because in reality they serve many large urban areas (outside the four
main cities) and provincial towns in addition to rural areas\. The RECs are a very diverse group: the largest
has more than 100,000 residential consumers and the smallest not even a thousand\.
1\.3 In 1988, as part of its efforts to support the new government's economic recovery program, the
Bank conducted a major review of the energy sector\., That review provided the initial framework for nine
Bank energy projects between 1988 and 1996, more than in any other sector at that time\. The power
sector, in particular, was the focus of both lending and sector work\. Substantial staff resources were
devoted to comprehensive analyses of structural and financial issues, that needed to be addressed as a
prelude to greater private sector involvement\. Unfortunately, despite their relevance and valuable
contribution to the general understanding of the complex issues in the power sector, the Bank's sector
work did not prevent its own portfolio of power projects from running into serious implementation
difficulties during the mid-1990s\.
1\.4 The Bank ceased to lend for rural electrification, after an initial project with the National
Electrification Administration (NEA), which was completed in 1983\. A small rural electrification
component of the wide-ranging 1989 Energy Sector Project, was implemented by NEA, but prior to a
more substantial involvement in rural electrification by the Bank, detailed sector work had to be
undertaken\. Rural electrification sectoral issues were therefore examined in detail in a separate Bank
study in 19896 (para 7)\. This laid the foundation for the Rural Electrification Revitalization project,
(RERP), the subject of this audit\.
1\.5 Until the early 1980s, the rural electrification program in the Philippines was well funded by
foreign aid and concentrated on rapidly increasing the number of household connections without due
1\. From paragraphs 2-3, Philippines CAS, 02/96, Report No\. 15362-PH\.
2\. At the national level, 75% of all households are electrified because of the near-100% access rate within the Manila
metropolitan area\.
3\. Philippines Energy Sector Study, Report No\. 7269-PH, September 1988\.
4\. Structural Framework for the Power Sector, Report No\. 13313-PH, November 1994\.
5\. Loans 3163, 3164 & 3165-PH for which PARNo\. 17651 was issued in April 1998\.
6\. Rural Electrification Sector Study: An Integrated Program to Revitalize the Sector, Report No\. 8016-PH, November 1989\.
2
concern for cost or economic viability\. The highest annual increase in new connections took place in 1980
when more than 320,000 new consumers were added\. However, from 1983 onward, foreign funding dried
up and the rural electrification program shrank dramatically\. In 1988, the number of new connections had
fallen below 100,000, its lowest level for 15 years\. The rural electrification sector faced a serious financial
crisis because it was unable to cover its operating expenses from consumer revenues\. When external
donor funding ceased the problems became apparent: the consequences of NEA lending to RECs at below
market rates; its failed investments in alternative generation schemes; the neglect of maintenance by the
RECs and their small, high-cost, low-demand networks; low tariffs; poor revenue collections; and their
difficulties in meeting debt service to NEA\. GOP's rural electrification program had serious financial and
institutional weaknesses that jeopardized its long-term viability, but which had been masked by the inflow
of funds for new capital projects\. By 1989, only 22 of 120 RECs were financially viable and NEA's
collection efficiency was only 36%\. Total energy distribution losses averaged 25%\. Household access to
electricity in areas served by the RECs had still only reached 50% by 1990\.
2\. Project Objectives, Design, and Quality at Entry
2\.1 According to the Staff Appraisal Report (SAR), the Rural Electrification Revitalization Project
sought to:
* Enhance NEA's capability to function as an effective core agency for rural electrification
* Improve the performance of the rural electrification cooperatives through operational and financial
reforms
* Increase the availability and reliability of electricity supply in rural areas by financing part of NEA's
1992-95 investment program\.
2\.2 The project's objectives were highly relevant\. They were formulated from the analysis carried out
under the Rural Electrification Study, which was a thorough piece of sector work and which had been
discussed with the interested parties in the Philippines during 1989/90, in order to build a consensus on
the sectoral reform approach to be followed\. However, it is noteworthy that the project contained no
quantified objective for expanding access to electricity in rural areas, despite GOP's declared intent to
electrify 90% of barangays by 1995\.
2\.3 The Rural Electrification Study had concluded that the pervasive nature of the problems in the
rural electrification sector necessitated an integrated program of reforms that would improve the
operational efficiency of the RECs, introduce sound pricing principles, a viable investment strategy, and
restructure NEA and the RECs\. It correctly emphasized the importance of rehabilitating the existing REC
networks in order to improve service to existing consumers and to permit adding new, 'in-fill'
connections to the network\. Extending supply to unserved areas was judged to be of low priority,
particularly as many RECs suffered from the consequences of earlier socio-political decisions to electrify
unviable areas\.
2\.4 The project had a long gestation period of two years from completion of the Rural Electrification
Sector Study to loan negotiations and was thoroughly prepared in most respects\. The integrated program
of reforms for sector revitalization that emerged from the Rural Electrification Study provided the policy
underpinnings for the project\. These reforms had the support of the key players in the sector and, prior to
7\. The same target was to have been achieved by 1987\. It is now the target for 2004\.
3
Board approval of the Loan, NEA had already adopted a new Statement of Operating Policy governing its
lending to RECs and a new electricity pricing formula to encourage self-financing of investments by the
RECs\. GOP had also agreed to a financial restructuring plan to ease NEA's debt burden\. All of these were
propitious signs for the successful implementation of the project\. However, the design of the project had a
crucial shortcoming that later proved to be a major contributor to the project's implementation problems
and eventual failure\.
Assessment of Implementation Capacity
2\.5 As pointed out by the ICR, the appraisal team over-estimated NEA's project implementation
capabilities and did not institute any project-specific implementation arrangements within NEA\. This is
surprising, given that NEA's investment program in the mid-i 980s was small and the previous Bank
project had ended in 1983, with the result that NEA would not have undertaken major international
procurement in the period immediately preceding the project\. The RERP was relatively large, involving
about 50 RECs, yet the Bank's appraisal team felt it could be implemented in under five years without a
Project Implementation Unit (PIU)\. This proved not to be the case\. An effective PIU could have avoided
or mitigated the many procurement problems encountered during the project (which have been amply
treated in the ICR and are not re-examined in this audit)\. A PIU might also have helped to insulate the
project from the debilitating effect of the replacement of NEA's entire top management in early 1993\.
Assessment of Project Risks
2\.6 The assessment of risks in the SAR was weak in several areas\. It acknowledges that the project
might encounter implementation delays due to its ambitious nature, while claiming that 'at appraisal the
Bank tried vigilantly to ensure that the proposed project would not exceed the absorption capacities of
NEA and the participating RECs\." This proved to be far too optimistic an assessment and the appraisal did
not correctly perceive the limits to NEA's capabilities or incorporate a PIU to overcome the absorptive
capacity constraint\.
2\.7 Second, the risk to NEA's financial restructuring from a failure by congress to pass the necessary
enabling legislation is not even mentioned in the SAR\. Yet the financial restructuring was crucial to
putting NEA's finances on a sound footing\. It was also a prerequisite for justifying the direct IBRD loan
to NEA, with the latter bearing the foreign exchange risk\. At the project preparation stage, Bank staff had
indicated that governmental action on the bailout of NEA would be required even before appraisal, but at
each important processing milestone the up-front action expected of GOP was waived by the Bank\. The
risk of further inaction was clearly high and since the timing of congressional approval was not within
GOP's control, this risk should have been highlighted in the SAR\. In the end, the financial restructuring
never took place due to congressional inaction, with the undesirable result that the IBRD loan has
aggravated NEA's already weak financial situation\. Experience in both the Philippines and elsewhere has
repeatedly shown that it is unwise to link the implementation of a project to the passage of a law\.
2\.8 Thirdly, the RERP did not tackle the issue of NEA's reporting relationship to GOP and its
politicization\. At the time of appraisal NEA reported to the Department of Environment and Natural
Resources, while the other sector entities were attached to the Office of Energy Affairs in the Presidency\.
Prior to 1986 NEA had been under the former Ministry of Human Settlements\. The RE Study correctly
identified the drawbacks of having NEA report to socio-political rather than technical branches of GOP\.
It had led to a lack of clarity as regards its role in the energy sector, and a tendency to use it for broader
rural development objectives unrelated to the provision of electricity\. This issue was not addressed in
4
RERP's design\. Fortunately, in the energy sector reorganization of 1992 which led to the creation of the
Department of Energy, GOP acted upon the matter and consolidated all energy entities under DOE\.
3\. Project Implementation
3\.1 During the six years of implementation (1992-98), the project made only modest progress on
attaining its objectives\. The physical investments it was to finance were seriously delayed and executed
only partially\. Non-procurement of poles and conductors meant that RERP made a minimal contribution
to providing electricity to new consumers, while the SAR had expected 300,000 new consumers to be
hooked up as a result of the project\. The project's impact in strengthening NEA has been minor\. There has
been significant progress in overall REC performance, but it is hard to assess to what extent the project
directly contributed to this objective because of the interplay of a multiplicity of factors that all had an
impact on RECs\. The ICR states that the materials funded by the project assisted the RECs in reducing
their energy losses and in improving the quality of supply, but was unable to quantify this benefit\.
3\.2 The project had a promising start\. Some of the reforms recommended by the sector study were
implemented before Board approval of the loan, partly as a result of Bank conditionality\. NEA had raised
its lending rates to the RECs, improved its collections and its oversight of the RECs\. The adoption by
NEA's Board of a new Statement of Operating Policy (SOP), before loan negotiations was an indication
of GOP commitment to pursue the new approach in the sector\. The SOP shed NEA's peripheral activities
to promote broader rural development and formalized NEA's role as an 'interested' lender\. As such, NEA
staff had taken over the management of many of the weakest co-ops and virtually all the RECs had
substantially raised their tariffs\. System losses had fallen to 21% by the time the loan was approved by the
Board\. Onlending by NEA was subject to the agreement by the borrowing REC on a performance
improvement plan (PIP)\. NEA's investment guidelines required it to lend only for projects with a rate of
return of 15% or more\.
3\.3 Unfortunately, within six months of loan effectiveness, the top management team at NEA was
replaced\. These individuals had worked very closely with the Bank's project staff over the previous three
years in designing and preparing the sector reforms and the NEA recovery program\. This change was a
severe blow to the project because the skills, experience, and commitment of these managers would have
greatly aided project implementation\. A long period of indecision then prevailed in NEA while the new
management settled in, with the result that the RERP was stalled\. Bank staff, meanwhile, turned their
attention to other pressing problems in the electricity sector, and reduced their intensive supervision
efforts\. They also do not appear to have succeeded in establishing a close collaborative working
relationship with the new NEA management, who also did not share with their predecessors the same
level of commitment to project success\. The audit was unable to ascertain the reasons for these attitudinal
problems and difficulties in inter-personal relationships, even though it is clear that they had a profoundly
adverse impact on the project\.
3\.4 By late 1993, 18 months after Board approval, it was apparent to the Bank that the RERP was in
serious difficulty, but the internal Bank supervision ratings were not downgraded to reflect this\. The Bank
apparently considered undertaking a reappraisal in early 1994, but this did not occur, probably because of
the preoccupation of the Philippines energy team with National Power Commission (NPC) problems\.
Meanwhile, USAID, which had been providing parallel financing to the project, decided to phase out its
8\. Such as NPC's financial problems, its unbundling and structural reform of the power sector as a whole\.
5
involvement in the sector, which added to the implementation problems because USAID had been
providing useful technical assistance to NEA, some of which related to strengthening procurement
capacity\. A midterm review of the project that was intended for mid- 1994 also did not take place,
probably due to staff constraints following the sudden death of one of the key members of the Bank's
team responsible for the Philippines energy sector\. Such a review would have provided the Bank with a
more thorough picture of the implementation problems within NEA and could have led to the setting up of
a strong PIU\. Alternatively, it would have given the Bank's management an opportunity to consider more
fundamental changes or remedies such as loan suspension or even cancellation in the face of
unsatisfactory performance\.'
3\.5 By mid-1995, more than three years after Board approval of the project, procurement issues were
proving intractable and under US$2 million had been disbursed out of the US$91 million Bank loan\. The
NEA capitalization bill had failed for the second time to receive senate approval before the end of the
congressional session\. In the words of the supervision mission aide-memoire,o "the project faces too
many problems" for the aide-memoire to even prescribe measures that the borrower needs to undertake\.
Despite this, and its classification as a "problem project" Bank management did not issue any loan
suspension warning to NEA\. Nor were supervision efforts intensified because the Philippines energy team
continued to prioritize new lending to NPC\."
3\.6 A year later, and just 6 months before the original closing date, some of the procurement issues
had been resolved and a substantial portion of the loan amount had been firmly committed\. As a result, the
project was reclassified as satisfactory" and the closing date extended by a year\. Although it was clear that
this would not suffice to complete the project, the Bank's task manager was unwilling to endorse the NEA
request for a two-year extension\.
3\.7 As the extended closing date approached, the project was plunged into controversy and received
unfavorable media coverage arising from a congressional investigation into alleged procurement
irregularities\. A new Bank task manager took over at this stage\. Procurement had slipped from the
schedule that was the basis for the original loan extension and, astonishingly at such a late stage in the
project, deliveries of poles and conductors crucial for line extensions had not even begun\. At this point, it
became apparent that most subprojects for which the Bank-funded materials were intended had
meanwhile been implemented by the RECs using other resources\." Consequently, other subprojects have
had to be found for the materials procured for RERP\.
3\.8 In order to keep up pressure on NEA, and conscious of the likely management changes following
the presidential elections in May 1998 that would inevitably lead to more delays, the Bank decided to
extend the loan by only four months, with the offer of a further short extension if NEA provided a plan for
the reallocation of the Bank-funded materials to new subprojects\. This revised allocation schedule was not
satisfactory and the loan was closed, even though this meant that NEA would be left without financing
amounting to about US$12 million for ongoing contracts that had already been partially funded by the
Bank Loan\. Bank staff appear to have lost all patience with NEA by this stage and management was also
9\. The project was given an unsatisfactory rating for the first time in mid-1994\.
10\. Dated 13 June 1995, paragraph 11\.
11\. The Transmission Grid Reinforcement Project (Ln 3996-PH) was appraised in June 1995\.
12\. This upgrading was based on undue optimism rather than substantive progress, as later events revealed\.
13\. The stronger RECs finance a growing share of their investments from a mix of internal cash generation, GOP/Congressional
funds and local (non-NEA) borrowing\.
6
keen to rid itself of this problem project\. The option of extending the loan to cover disbursements only for
ongoing contracts does not appear to have been considered\.
3\.9 A new administrator was appointed to run NEA in mid-1998 and was faced with the unenviable
tasks of arranging alternative financing from GOP to cover NEA's obligations to suppliers under the
outstanding Bank contracts and also with persuading reluctant RECs to draw upon Bank-funded materials
in NEA's stores which they no longer wished to use in the short-term\.14 NEA's financial problems are
compounded by the fact that it has to service the debt to IBRD incurred to acquire these materials, but
which will bring it no income until it signs onlending agreements with RECs for their use\. Despite an
appeal from the new administrator, the Bank declined to reconsider its decision not to extend the loan,
40% of which remained undisbursed at closure\.
4\. Key Issues
NEA's Financial Difficulties
4\.10 Despite repeated attempts during nearly a decade, the Philippines congress failed to pass the
necessary enabling legislation required to recapitalize NEA, write off its unrecoverable loans, and
restructure its balance sheet\. This reflects poorly on all concerned parties: GOP for not ensuring that the
NEA bill received adequate support and congressional time, NEA and the RECs for lobbying
insufficiently to support legislative passage, congress itself for its lack of concern for an agency whose
work is supposedly a national priority, and finally the Bank for continuing to increase its exposure" to an
uncreditworthy borrower\. The SAR for the project pointed out that NEA was insolvent\. This remains true
today\. Despite receiving a subsidy from GOP of PHP 500 million in the form of payment of interest on its
debts, NEA made a net loss of PHP 202 million in 1998\. Even after this GOP subsidy, NEA's internal
cash generation was insufficient to cover its debt service\. Furthermore, its balance sheet, if adjusted to
comply with international accounting standards, would show negative net worth and negative working
capital\. It has been a burden on public finances for the past 15 years, even if the scale of its financial
problems are dwarfed by those of other state enterprises such as NPC\. The bill to increase NEA's
capitalization was filed with the new Congress in 1998\. The House Energy Committee approved this bill
on March 22, 2000 and it is now on the way to floor deliberations\.
REC Performance
4\.11 Despite the poor performance of NEA as the REC's procurement agent for distribution materials
under RERP, most RECs recorded progress in their operational efficiency during the 1990s\. The ICR does
not present an adequate picture of improved sectoral performance achieved despite the shortcomings of
RERP\. In recent years, REC managers have become more cost-conscious and commercially minded as a
result of external pressure\. Monitoring of REC performance by NEA's Accounts Management
Department was a contributory factor\. The department was set up in 1993 as part of the RERP measures
to strengthen NEA and to monitor the PIPs, which were also instituted as part of the project\. But as the
14\. However, GOP's emphasis on expanding access to electricity in rural areas should result in these materials being used in the
coming years\.
15\. The Bank is NEA's largest lender, accounting for about 20% of its foreign debt\.
7
ICR rightly points out, NEA does little to enforce compliance, despite its considerable statutory powers to
replace managers, dissolve Boards, and withdraw the franchise license of poorly performing RECs\.
4\.12 NEA also administers a performance rating system for the RECs based on a range of quantitative
criteria that shows a steady rise in the number of RECs classified as A or A+ performers\. In 1988, only
18% of RECs received the top rating\. Ten years later this had risen to 60%\. These RECs do not need to
have their operating budgets approved by NEA and most would be creditworthy to borrow from local
banks\. Several of the strongest have little need of NEA and chafe at what they see as its excessive powers
to interfere\.
4\.13 Progress by RECs in energy loss reduction has been significant: the average systems loss fell
from 24% in 1988 to 17% ten years later\. Nearly 40% of RECs achieved even better results with losses
below 14%\. However performance is very diverse and nearly a third of RECs had losses exceeding 18%,
Transformers and substations built as part of RERP contributed to reducing technical losses\. Progress in
loss reduction has also been assisted by the 1994 Anti-Pilferage Act, which imposed a declining cap on
system losses allowable in tariff setting\. The cap has been set at 14% for 2000, which is likely to prove a
tough target to meet\.
4\.14 The RECs have had less success in improving revenue collection, which now stands at 91%,
slightly below the peak of 93% achieved in 1992-94\. Nevertheless, over 70% of RECs now have a
collection efficiency above 90%\. Their repayment performance to NEA has shown dramatic improvement
from about 50% ten years ago to 93% in 1998\. On the other hand, 28% of RECs continue to have overdue
accounts for their power purchases from NPC and almost 40% of RECs registered net financial losses in
1998, despite very substantial tariff increases during the 1990s\.
Future Prospects for RECs
4\.15 The electricity distribution sector has improved its performance during the 1990s, but still has
many problems to overcome, few of which have easy solutions\. Consumer awareness, regulatory
pressure, and competition will help to gradually impose better technical and financial management, but
efficiency will continue to be constrained by size, geography, and institutional factors\.
4\.16 For many years the Bank has argued that electricity distribution in the Philippines is excessively
fragmented and that consolidating RECs would optimize supply and increase efficiency\. In practice, only
one merger has occurred among RECs over the past decade and only one is currently under active
consideration\. Local opposition is understandable because of the ensuing loss of privileges for managers
and board members as well as the fear of job losses among employees\. Consumers' interest in better,
cheaper service is subordinated to these vested interests\. However, pressure from ERB on tariffs and the
looming threat of competition in supply to large consumers mean that more mergers may be considered\.
But given the cooperative status of RECs, it would be extremely difficult politically for GOP or NEA to
impose consolidation among RECs\. Civil society would need to be extensively consulted and implicated
in such steps\. Even without mergers, greater financial transparency and better governance at the municipal
and REC level would automatically lead to a better deal for electricity consumers as they would make
collusive practices more difficult\.
8
Extending Access to Electricity
4\.17 During the early 1990s, due to other sectoral preoccupations, expanding access to electricity was
not a high priority for GOP, despite a long-standing political commitment to it\. However, in the second
half of the 1990s, the annual increase in the number of new connections once again rose to well above
200,000, levels not achieved since the heyday of the early 1980s\. At first sight this is surprising in the face
of the delays and difficulties in implementing RERP and the parallel, Japanese-funded project\. 16 Since the
annual average flow of investment funds" from NEA to the RECs between 1996 and 1998 was less than
P800 million (US$20 million), clearly the RECs had access to substantial non-NEA resources, such as
local bank borrowing, internal cash generation, GOP monies channeled to local government units for rural
infrastructure and the use of congressional budgetary funds\. Since 1992 when the tariff setting formula
was revised to include a provision for reinvestment amounting to 5% of gross revenues, many RECs have
been able to make a significant internal contribution to their investment programs\. In 1998, available data
indicates that the 120 RECs together invested about P2\.8 billion (US$69 million), of which only about
P380 million, or about 13%, was provided by NEA in the form of loans or grants\.
4\.18 GOP's medium-term development plan 1999-04 has set an ambitious target for the RECs of
82%" household electrification by the end of the period, up from about 63% today\. This would require an
average of 0\.3 million new connections annually for the six-year period, which has been achieved in the
past, but not for a sustained 6-year period\.
4\.19 The plan estimates the cost of achieving these targets would be nearly US$600 million in constant
prices, which appears to be low\. Furthermore, the bulk of the funds would have to come from public
sources\. GOP has never invested such large sums in the rural electrification program in the past\. Nor is it
apparent that public resources would be available on this scale in the future to fund the program\.
4\.20 It is also questionable whether raising electricity access levels to such a high percentage is a
critical priority in alleviating rural poverty, an important theme of both GOP and the Bank's assistance
strategy\. In the absence of other crucial rural infrastructure, providing grid-supplied electricity at costs
well in excess of US$0\.25 per kilowatt-hour will do little to raise productivity and living standards\. The
cost of increasing access to grid electricity rises as more and more remote or sparsely populated areas
have to be served\. The 1989 Rural Electrification Study estimated that it would be economic to serve
about 70% of the rural population, but that even in the long-term, covering more than 75% of the
population would be hard to justify economically\. Furthermore, the growing pressure on the RECs to
improve their operational efficiency makes extension of supply to new areas even more unattractive from
a financial point of view\. Alternatives to grid extension need to be given more emphasis as a part of a
package of essential rural infrastructural needs in the provinces where the incidence of poverty is highest\.
16\. OECF made an untied loan of l10 billion loan to NEA in 1994\. This project is still under implementation\.
17\. Loans and subsidies together\. The latter accounted for about a third of total disbursements\.
18\. This would be comparable to the level of rural electrification achieved by Thailand in the mid-1990s\.
9
5\. Bank and Borrower Performance
Bank Performance
5\.1 The lapses, weaknesses and inconsistencies in the Bank's performance before and after the loan
became effective are striking\. On the one hand, the prior sector work was of a very high quality,
significant staff resources were used to bring the project to the Board, and the Bank initially had a strong
team with a good skills mix\. The findings of the sector work, however, are not adequately incorporated
into the final project design, particularly the enormous weaknesses of the rural electricity subsector that
should have served as a warning for the Bank not to underestimate the project's risks and difficulties
ahead\. One of the critical shortcomings that this audit found was the lack of a PIU in the initial project
design and the decision to proceed with the loan even in the absence of congressional approval for NEA's
financial restructuring\. Another one is the absence of good monitoring indicators on project performance\.
Many important milestones consisting of upfront actions were waived or postponed by the Bank, which
indicates a pressure to lend despite the likelihood of implementation problems\." The overall environment
for project implementation was highly political, yet the project was presented to the Board just before the
elections, which laid the ground for staff intability in NEA\. Once implementation began, the Bank's
performance slumped even more badly, as explained below\. Consequently, this audit assesses overall
Bank performance to have been highly unsatisfactory\.
5\.2 Supervision of RERP was inadequate from mid-1993 onwards as staff were diverted to
processing of other large projects with NPC and dealing with its financial problems\. The Bank's
Philippines energy team was also depleted due to transfers and a death and there were long lags before
replacements took over\. In mid-1994 when there were seven energy projects under implementation, and
when the RERP was in great need of restructuring and/or a thorough midterm review, Bank staff seem to
have been overwhelmed by the volume, range and complexity of the issues they had to deal with in the
portfolio\. In spite of the serious procurement problems and NEA staff instability, little time was spent on
supervising RERP, albeit additional efforts were made by the operations officer in Manila responsible for
energy and transport operations\. The critical four-year period of 1993-1997 had only five supervision
missions in the field, of which four had only one Bank staff member, i\.e\., a financial analyst in three of
these four visits\. At times, as little as only 2 days were spent on supervision\. Yet at the same time,
substantial staff resources were deployed on producing a major study of institutional reform of the power
sector\.0
5\.3 In this context, RERP was apparently bottom on the list of the Bank's priorities in the sector\. The
Bank failed to undertake a midterm review of RERP in 1994 and thus lost a suitable occasion to either
take corrective action or cancel the loan before major financial commitments were made against it by
NEA\. Despite the increased emphasis of the Bank's senior management on the quality of the project
portfolio and the increased importance attached to supervision, the Region did little in the course of the
next two years to improve the quantity2l or quality of its supervision at the NEA level or engage GOP in a
dialog on the stalemate regarding the NEA financial restructuring\. The mid-1996 restoration of the
19\. The Bank staff and management took a calculated risk by proceeding with the project in good faith even before full passage
of the bill\. Unfortunately, the bill was blocked by two senators and could not be enacted into law\.
20\. Philippines Power Sector Study, Structural Framework for the Power sector, November 1994, Report No\. 13313-PH\.
21\. According to the ICR Table 13, there were only 3 supervision missions (8/94, 6/95 and 5/96) and they consisted of one person
for one week only\.
10
satisfactory performance ratings and the recommended extension of the loan's closing date by the
Philippines energy team also gave Regional Management a wrong signal of progress in implementing
RERP\.
5\.4 Finally, in an attempt to mitigate its belated recognition of the intractable nature of the problems
facing RERP, the Bank took a set of ill-considered decisions in late 1997 that were not in the best interests
of the borrower\. The Bank had been lax in enforcing compliance with loan covenants during most of the
project's life and had ample time to cancel all or part of the loan at a point where the consequences would
have been less disruptive\. It then abruptly became insensitive to NEA's point of view at a critical juncture
in the project, granted an inappropriately short loan extension (four months) which did not permit the
implementing agency to even complete payments under ongoing contracts\. Bank management should
have known from experience that arbitrarily short extensions in situations where implementation lags are
much longer prevents project restructuring or reprogramming that a single, longer loan extension would
allow\. Nor did the Bank provide a sufficiently early warning to NEA that it would only grant such a short
final extension\. Hardly surprisingly, the Bank's relations with NEA have soured as a result of the decision
to close the project in this hasty manner\.
5\.5 This audit considers that the Bank abdicated responsibility for the project's problems and left
NEA and GOP with a foreign currency loan that financed virtually no productive investments capable of
generating the revenues necessary to service this debt\.
Borrower Performance
5\.6 Just as for the Bank, NEA's performance was satisfactory up to the time of physical
implementation of RERP\. Preparation was carried out well and NEA appeared to have embraced the
reform approach advocated in the Rural Electrification Study\. Up-front action to implement its
recommendations prior to loan approval demonstrated an adequate degree of ownership by the borrower\.
Unfortunately, subsequent borrower performance throughout its implementation was highly
unsatisfactory, as indicated by the ICR\. For this reason, overall borrower performance is rated as
unsatisfactory\.
5\.7 The NEA management team who took over responsibility for the project for the five years before
its closure never demonstrated adequate commitment to its success or a readiness to seek solutions to
expedite it\. NEA's poor management of procurement was a serious disservice to its clients, the RECs,
many of whom had commitments to their own members for projects they were unable to implement
because of the lack of materials that NEA was to procure on their behalf\. Understandably they made other
arrangements to obtain their supplies elsewhere and today they are reluctant to draw on the very delayed
Bank-funded materials\. The abrupt termination of the project and the unfinished business that still remains
to be dealt with (paragraphs 3\.8 and 3\.9) has hurt NEA's image in both the eyes of its borrowers as well
as its lenders\.
5\.8 NEA and GOP were both remiss in not actively seeking congressional approval for the NEA
financial restructuring that was the basis for the direct IBRD loan to NEA, which was and is still
uncreditworthy for such loans\. NEA appears to have been content to continue with its old practice of
leaving GOP to meet its foreign debt service obligations\.
11
Overall Project Assessment and Ratings
5\.9 The overall project outcome is rated as unsatisfactory because the physical and institutional
benefits directly attributable to the project were both substantially less than projected at appraisal and
seriously delayed\. The overall institutional development impact of the project is rated as modest in light of
improved REC performance and better NEA monitoring practices\. Sustainability of the project benefits is
rated as uncertain due to NEA's financial problems, which remain unresolved\. These ratings do not differ
from those in the ICR\.
6\. Lessons Learned
6\.1 The following lessons can be drawn from this project:
* Critical policy reforms requiring legislative action should be passed before a Bank loan is approved
by the Board\.
* High quality sector work preceding a project is no guarantee of a successful outcome if supervision
during implementation is neglected\.
* Midterm reviews of projects provide a useful opportunity to rectify problems not anticipated at
appraisal and should be undertaken systematically\.
* The Bank's reluctance to use remedies at its disposal in the event of unsatisfactory borrower
performance can be counterproductive to achieving project goals\. Unfortunately, this project has
shown that precipitate and ill-timed use of remedies produces even worse results\.
* Lending directly to rural electrification umbrella agencies on IBRD terms for rural electrification
projects is hard to justify except in the case of financially very strong entities\.

13
Basic Data Sheet Annex A
PHILIPPINES RURAL ELECTRIFICATION REVITALIZATION PROJECT
(LOAN 3439-PH)
Key Project Data (amounts in US$ million)
Appraisal Actual or Actual as % of
estimate current estimate appraisal estimate
Total project costs 111\.9 60\.9 54\.4
Loan amount 91\.3 54\.6 59\.8
Cofinancing 16\.7 7\.7 46\.1
Cancellation 36\.7
Date physical components completed nla
Economic rate of return nla
Cumulative Estimated and Actual Disbursements
FY92 FY93 FY94 FY95
Appraisal estimate (US$M) 2\.0 8\.0 23\.0 58\.0
Revised Estimates (US$M) 2\.0 8\.0 18\.0
Actual (US$M) 2\.0
Actual as % of appraisal 3\.4
Actual as % of revised estimate 11\.1
Date of final disbursement: April 30, 1998
FY96 FY97 FY98 FY99
Appraisal estimate (US$M) 86\.0 91\.3 91\.3 91\.3
Revised Estimates (US$M) 24\.5 48\.0 84\.0 91\.3
Actual (US$M) 17\.3 45\.0 55\.3 54\.6
Actual as % of appraisal 20\.1 49\.3 60\.6 59\.8
Actual as % of revised estimate 70\.6 93\.8 65\.8 59\.8
Date of final disbursement: April 30, 1998
14
Project Dates
Original Actual
Identification November, 1989
Preparation April, 1990
Appraisal March, 1991
Negotiations December 9-12, 1991
Board presentation September, 1991 February 25, 1992
Signing June 3, 1992
Effectiveness October 22, 1992
Project Completion June 30, 1996 Ongoing
Loan closing date December 31, 1996 April 30, 1998
Staff Inputs (staff weeks)
Planned Actual
Weeks US$ (000) Weeks US$ ('000)
Through Appraisal 85\.4 257\.4
Appraisal-Effectiveness 43\.9 144\.1
Supervision 87\.0 256\.3
Completion 10\.5 17\.5
Total 226\.8 684\.3
15
Mission Data
Date No\. of Staff Special izationsa Performance rating Types of
(monthlyear) persons days represented Implemen- Develop- problems
In field tation ment
Status Objectives
Through appraisal 2/90 4 5 FA, EC, PE, C
7/90 4 5 FA, PE, EC, C
11/90 2 4 FA, EC
3/91 4 12 FA, EE, PE, FA Appraisal
Mission
Appraisal through 9/91 3 3 FA, PE, EE Post
Board approval Appraisal
Board approval 9/92 2 2 FA, ED S S Inconsis-
through encies
effectiveness etween
NEA's
valuation
reports and
subprojects
designed by
its
engineering
I epartment\.
Supervision 5/93 4 2 FA, PE, EE, C U S o progress
ith
procurement
since
September,
1992\.
9/93 2 3 FA, PE U S Delays
estimated at
up to 18
months\.
6/94 1 2 PE S S Timely
completion of
staging areas
and
eimburse-
ment of
consignee
RECs urged\.
8/94 1 7 FA U S Serious
slippage
noted\.
6/95 1 7 FA U U Extremely
disappointing
progress\.
5196 1 7 FA S S Substantial
progress with
procurement\.
11/97 3 10 ES, PS, OP U S Procurement
much behind
schedule\.
Excess
material
problem
identified\.
11/98 2 7 ES, OP U S Excess
material
problem not
yet solved\.
a\. FA=Financial Analyst; PE=Power Engineer; EE=Energy Economist; EC=Economist; ES=Energy Specialist;
PS=Procurement Specialist; C=Consultant; OP=Operations Officer\.

17 Annex B
FROM NEA-FAPO Off 1ce PHONE NO\. : 9292069 Jun\. 15 2000 10:44AM P1
Republio of the PhlHppine
NATIONAL ELECTUIFICATION ADMINISTRATION
June 8, 2000
MR\. RIDLEY NELSON
Acting Manager
Sector and ThemOtit Evaluations Group
Operations Evalua6tn Department
The World Bank
SUBJECT : DRAFT PERFORMANCE AUDIT REPORT
RURAL ELECTRIFICATION REVITALIZATION PRO3ECT
IBRD LOAN NO\. 3439-PH
Dear Mr\. Nelson:
We have gone over the draft Performance Audit Report and we concur with your
findings and recommendations\. Though we were saddened that NEA's performance
was rated, unsatisfactory, the report was very straightforward and fairly presented
the facts for both the Bank and NEA\.
We believe that the Bank's staff and NEA had exerted their best effort for the
SuCCosSful Implementation of the project\. Unfortunately, some unforeseen events
took place and the implementors of the project at the time were caught offhanded\.
This audit\. report will provide us with a good reference document and an Insight to
improve our performance In future undertakings\.
Thank you and warm regards\.
Very truly yours,
CONRAD *RLLA III
Administrator
)050 CIC hildin"Qon Avonuo\. Qiezon City, Metro Manila\. Pilippincs V 374-25-27 1374-25-58*/374\.-2iSD | APPROVAL |
P096285 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB2372
Project Name
China: Commercially Sustainable Micro and Small Business
Finance
Region
EAST ASIA AND PACIFIC
Sector
Micro- and SME finance (90%); Banking (10%)
Project ID
P096285
Borrower(s)
MINISTRY OF FINANCE OF CHINA
Implementing Agency
The Ministry of Finance
Sanlihe, Xicheng District
Beijing100820
Tel: 86-10-6855 1124 Fax: 86-10-68551125
Email: jk\.wu@mof\.gov\.cn
China Development Bank
No\.29 Fuchengmenwaidajie
Xicheng District
Beijing 100037
Tel: 86-10-6830 7209 Fax: 86-10-68307214
Email: tanbo@cdb\.com\.cn
Environment Category
[
]
A
[
]
B
[] C [X] FI [ ] TBD
Date PID Prepared
June 21, 2005
Estimated Date of
Appraisal Authorization
November 3, 2006
Estimated Date of Board
Approval
February 12, 2007
1\. Key development issues and rationale for Bank involvement
Despite spectacular achievements, China is confronted with many challenges in maintaining
sustainable economic growth, protecting the natural resources and environment; and addressing
the rising economic, social and regional inequalities\. To meet these challenges, China needs to
diversify the sources of economic growth and raise the efficiency of resource allocation,
preferably to those that contribute to employment without exerting undue pressure on the already
strained environment and heavy demands on natural resources\. One potential source for growth
is
micro, small and medium enterprises
(MSMEs), which have contributed importantly to GDP
growth, job creation and export earnings\.
Within the MSME sector,
micro and small enterprises
(MSEs) will play an indispensable role in
meeting these challenges\. Promoting MSEs, the majority of which are privately owned, is a
government priority in the drive to build a well-off and harmonious society\.
While MSMEs as a whole remain credit constrained, it is the MSEs that have over time become
the forgotten segment\. Banks have tended to consider enterprises in the upper end of the SMEs
Page 2
2
as more bankable, and microfinance (especially in the rural area) has at least received attention
from NGOs and donors\.
The reasons behind the lack of access to finance by MSEs are numerous and complex\. One is
that Government officials and banks in China share an entrenched perception that lending to
MSEs is inherently risky, in part because past attempts at reaching out to MSEs resulted in
unacceptably high losses by banks\. Another is a long-standing credit culture biased towards
collateral and guarantees\. Lacking the ability to process the soft information that is characteristic
of MSEs, banks rely heavily on collateral and credit guarantees\. Regulatory policies also
perpetuated the collateral worship as non-secured lending was discouraged\. As most MSEs do
not possess the kind of collateral required by banks and have difficulty arranging for guarantees,
MSE lending became either an impossible or extremely costly proposition\.
Evidence from a number of countries indicates that a diversified portfolio of MSE loans can
often be less risky than a concentration of large loans\.
1
The persistence of the misperceptions in
China risks both undermining appropriate policy decisions and skewing the design of
government interventions to promote access by MSEs to the capital necessary to grow, create
new jobs and improve incomes\.
2
China faces a related challenge to commercialize the banking system\. Commercializing the
banking system will also require that banks differentiate themselves strategically\. Most banks
pursue lending to large and state-affiliated firms and the intense competition has led to under-
pricing of credit risk in general\. In the past in response to political calls to serve the SMEs,
banks tended to apply the same corporate lending techniques to micro and small lending, only to
find their non-performing loans on the rise, which served to further entrench the notion that MSE
lending was risky\. The overemphasis on collateral constrains the availability of credit to MSEs
which cannot meet banks and supervisors collateral requirements, regardless of whether their
cash-flow is adequate to service bank loans at commercial rates of interest\. Increased
competition resulting from financial liberalization is expected to push many banks towards the
lower end of the market\. Thus, MSE lending could serve as a key component of new business
strategies for many banks in China\. But to be successful, they need to adopt lending
technologies more suited to MSEs\.
In recent years, financial sector reform has progressed considerably, and banks have become
more commercially oriented\. Bank supervision and financial policies have also improved\.
Lending interest rates have been largely liberalized, and banks are now encouraged by the
authorities to lend to MSEs\.
In line with the priority the Government attaches to MSE development, it is important to launch
an MSE lending and bank capacity building project aimed at improving access to finance by the
1
As an example, the EBRD small business program, as well as the Procredit Banks in Europe and Central Asia,
have built an impressive track record of lending to small businesses with low delinquency, default and loss rates\.
2
Additional areas that require attention include overhauling and expanding the existing credit information registry
system, various loan guarantee schemes and institutions, and various subsidized lending programs\.
Page 3
3
MSEs in China, adopting tried and tested techniques\.
3
It is also important to imbed these
practices and approach in an institutional framework that can enable eventual nationwide rollout
and scaling up\. The proposed project will provide this vehicle and attempt to address the above
constraints to MSE finance\. At the same time, it will contribute to reinfor
cing the Governments
policy objective of encouraging flows of funds to emerging private entrepreneurs and small
enterprises\. The Government therefore attaches a high priority to the project and has included
the proposed loan in its three-year borrowing plan from the Bank\.
The proposed project has developed from the Banks financial sector work program, designed to
assist China in reform and development of the financial sector\. Banks advocacy for
commercially sustainable microfinance has been an integral part of this program\. Furthermore,
through deep engagement and continued dialogue with the authorities, the Bank has established
substantial credibility and is ideally placed to play a lead role in supporting a specific operation
to promote bank lending to MSEs\. The Banks involvement in the proposed project will further
advance work in this area\. Through the project the Bank will help develop an appropriate
mechanism for channeling funds; ensure access to high quality technical expertise; continue to
engage relevant stakeholders in the policy dialogue necessary to create an increasingly
facilitative regulatory environment; and work with partners to ensure adequate monitoring,
evaluation and propagation of the learning and experiences inherent in the project\.
2\. Proposed objective(s)
The proposed project will support the Governments priority program to catalyze the expansion
of commercial lending to the emerging segment of MSEs that are strongly competitive and
privately owned, but in need of funds for working and investment capital\. The project also aims
to strengthen the capacity of banks to provide lending to MSEs on a mass-market and profitable
basis\. The ultimate objective is to promote expansion of private sector MSEs across China, and
the potential resulting increases in job creation, income growth, and poverty reduction\.
These objectives are fully consistent with the Country Partnership Strategy for 2006-2010,
Report No\. 35435, discussed by the Board on May 23, 2006\. The proposed project will
contribute to Pillar 4 of this strategy:
financing sustained and efficient growth
\.
Specifically it
will contribute to deepening financial intermediation by expanding access to financial services,
through the establishment of a sustainable mechanism of financing for MSEs\. By improving
access to financial services for this fast growing segment of the economy, the project will play a
role in helping the MSEs build assets and increase incomes, thus contributing to employment
generation and hence poverty reduction\.
3\. Preliminary description
The project envisages a two-tier structure consisting of
wholesale
and
retail
operations\. CDB
was chosen to be the wholesaler for this project and will engage in lending to, and arranging
3
Over the last decade a large number of multilateral donors, NGOs and quasi-official institutions have been
operating pilots to promote access to credit, mostly by poor households but also MSEs\. These programs have
experienced a range of outcomes in terms of repayment rates\. Few, if any, have proven commercially sustainable
and none is scaleable\.
Page 4
4
technical support for, PFIs that are engaged in MSE lending operations at the retail level\. PFIs as
retailers will initially be selected from a pool of city commercial banks (CCBs)\. This pool could
subsequently be expanded to include nationwide banks, credit cooperatives, and rural
commercial banks\. To this end, the project consists of two closely linked components: (i) a
Credit Facility ($90 million) for on-lending to eligible PFIs; and (ii) a Technical Assistance
Facility ($10 million) to support capacity building and MSE subloan administration in the CDB
and PFIs\.
CDB will use Credit Facility to provide long-term funds to eligible PFIs for on-lending to MSEs,
in accordance with the terms and conditions of Subsidiary Loan Agreements to be entered into
between the CDB and the individual PFIs\. It is envisioned that the PFI branches involved in the
project initially will be located in urban and peri-urban areas, with roll-out during the project to
increasingly rural areas\. CDB will assume the full credit risk on the PFIs and the currency risk
on the Bank loan\. Provisions will also be made with the PFIs to the effect that subloan
repayments by MSE borrowers will flow directly to CDB in the event of failure of PFIs\. The
PFIs will take the credit risk on the borrowing MSEs\.
A
key goal of the project is to build the institutional and human resource capacity of PFIs to
effectively service the MSE client market\. To this end, under the Technical Assistance Facility,
CDB has engaged an international consulting firm to serve as
PIC
to provide TA to help build
the necessary capacity in the PFIs\. The PIC will work with the PFIs in developing and executing
a
plan for absorbing and applying international best practices and credit technologies\. New MSE
finance departments that will be set up by PFIs as a condition of their participation in the project
will be the main focus of this TA\. The TA will involve, among other activities, recruiting and
training new loan officers, strengthening lending policies and procedures, putting in place the
prerequisites for the accounting, risk management and management information systems,
supporting subloan application preparation, screening and decision-making, and supporting
subloan monitoring and collections\.
The project has an expected duration of five years at which time the technical assistance funds
will have been fully utilized and the on-lending component fully disbursed\. There will be no
sectoral targeting under the project\. Loans will be for working capital and investment\.
Specific outcome and results indicators for the project are expected to include: (i) the number of
PFIs that adopt and implement the project-related credit technologies; (ii) the increase in the
number of loans to MSEs as compared with a control group; (iii) the portfolio quality
(percentage of overdue repayments on loans); (iv) the capacity of CDB to appraise and monitor
commercial banks eligibility to engage in MSE lending as PFIs; (v) the increase in the number of
MSE borrowers; (vi) the average size of MSE loans; (vii) the number of CDB in-house experts
able to provide advisory services to PFIs on MSE lending; (viii) the number of new loan officers
trained in the use of the new credit technologies, and (ix) the increase in the average number of
subloans managed per credit officer
In addition, the business practices and lending technologies propagated under the program are
intended to serve as a foundation for new business opportunities and financial sustainability
Page 5
5
without the need for government subsidy for a steadily increasing number of banks throughout
urban and rural China, including by adopting international standard credit risk management and
other practices\.
4\. Safeguard policies that apply
OP 4\.01
Environmental Assessment (EA)
Yes
Based on the project Concept Note, the EAP Safeguards Secretariat tentatively classified the
project under Category C\. The project was subsequently reclassified as a financial intermediary
loan (FIL)\. The proposed arrangements to ensure that the project is consistent with the Banks
Safeguards policies were reviewed by the EAP Safeguards Secretariat on September 12, 2006
and cleared by the Sector Manager on September 22, 2006\.
5\. Tentative financing
US$m
BORROWER 0\.00
INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT
100\.00
GERMANY: KREDITANSTALT FUR WIEDERAUFBAU (KFW)
53\.78
BORROWING COUNTRY'S FIN\. INTERMEDIARY/IES
569\.97
Total:
723\.75
6\. Contact point
Contact: Jun Wang
Title: Sr Financial Sector Spec\.
Tel: 5788+7657
Fax: 5861 7800
Email: jwang3@worldbank\.org
Location: Beijing, China (IBRD) | APPROVAL |
P105164 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB3485
Project Name
SCALING -UP STUDENT LOANS TO PROMOTE
EQUITABLE ACCESS PROJECT
Region
LATIN AMERICA AND CARIBBEAN
Sector
Tertiary education (95%);Secondary education (5%)
Project ID
P105164
Borrower(s)
ICETEX- THE GOVERNMENT OF COLOMBIA
Implementing Agency
ICETEX
Colombia
Environment Category
[
]
A
[
]
B
[X] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
November 26, 2007
Date of Appraisal
Authorization
December 10-14, 2007 (estimated)
Date of Board Approval
April 1, 2008 (estimated)
1\.
Country and Sector Background
Colombia has an export-led economy that has benefited from high commodities prices and
strong global trade in recent years\. The economy is expected to grow 6\.6 percent in 2007 and 4\.8
percent in 2008, keeping pace with global and regional averages\. But despite strong growth,
Colombia is marked by deep inequalities and high levels of poverty\. In 2006, an estimated 45
percent of Colombians still lived below the poverty line,
and 12 percent lived in extreme
poverty\. The countrys Gini coefficient was 0\.54, relatively high even by regional standards\.
The Government must take advantage of the current expansion to ensure future growth and
progress against poverty\.
Colombia needs to diversify its economy and develop its human capital base to ensure future
growth\. Increasing access, equity, quality and relevance in tertiary education is a key part of the
Government strategy, but tertiary enrollment remains low\. A growing number of secondary-level
graduates is creating a bottleneck at the point of entry to tertiary education, and more high-
quality tertiary supply is needed, but public spending constraints prevent the Government from
building that supply on its own\. Private institutions have sprung up to meet the rising demand for
higher education, but there is a serious constraint: the market is failing to provide education
financing for all talented students\. A true private student credit market has not yet developed in
Colombia and the lack of access to credit prevents many secondary education graduates from
accessing higher education\. Empirical evidence has shown that access to student credit supports
access to higher education\.
Colombia also faces several key sector issues in its tertiary system\. In summary these issues are:
(a) inequalities in access that prevent lower-income students and students from rural areas from
enrolling, (b) a lack of systemic efficiency as some students start programs but drop out before
finishing, (c) the uneven and sometimes low quality of education programs, and (d) low external
relevance as too few programs provide students with skills that are useful in the workforce\.
Page 2
The Government is advancing several critical public policies to improve the tertiary system, and
it considers direct involvement in a targeted public student loan program critical for supporting
education demand\. However, it also believes access to private capital is needed to scale up
student lending in the medium term\. Therefore, it has asked the Bank to support the proposed
loan, a $500 million APL to be extended in two separate phases to national student loan agency
ICETEX\. The proposed project is designed to help ICETEX expand its targeted lending program
and prepare itself to tap private capital markets to further scale up lending in the future\.
2\. Objectives
The development objectives of the proposed program are to: (a) improve coverage by increasing
the enrollment and graduation rates of students in tertiary education; (b) improve equity by
increasing enrollment and graduation rates of tertiary education students from economically
disadvantaged backgrounds; and (c) increase and diversify the sources of alternative funding
available to ICETEX in order to increase
ICETEXs sustainability\.
3\.
Rationale for Bank Involvement
The Bank has broad experience in structuring tertiary education reforms globally in Bangladesh,
Pakistan, Afghanistan, Sri Lanka, Vietnam, Indonesia, Jordan, Ethiopia, Tunisia, Tanzania and
Uganda, among other countries, and specifically in Latin America and the Caribbean, including
middle-income neighbors like Argentina and Chile\. It has specific experience structuring public
student loan programs in Mexico, Venezuela and Jamaica\. The client will also benefit from the
Banks direct experience in Colombias Higher Education Improvement Project which
contained the first ACCES loan program\. This background allows the Bank to incorporate
lessons learned into the new Program design and to increase the efficiency and effectiveness of
ICETEX student lending while working with the Government to achieve broader sector goals\.
The combination of expertise offered by World Bank Group members working together helped
the team develop an innovative solution to address Colombias needs\. The team enlisted the
expertise of the Bank Treasury and the IFC to ensure the financial structure of the loan would
meet Colombias needs and requirements in terms of loan maturity, repayment terms and
currency of borrowing\. The collaboration also supported Colombias interest in attracting private
investment from the capital markets in the future\. The IFC has direct experience working on
student loan projects with a private sector component in Indonesia, India, Chile and Mexico\. It
also has broad expertise working with commercial banks to analyze historical repayment
information and portfolio quality, which can be used to improve portfolio segmentation\.
Segmentation will help ICETEX develop more efficient and cost-effective strategies for portfolio
management and loan collection\.
The Bank was also able to help the client build support for its higher education agenda and the
student loan project with relevant stakeholders, particularly higher education institutions, which
may have to improve the quality and relevance of their programs to attract loan recipients\. The
Bank has helped Colombia build support for the idea that improving the quality and equity of
higher education must be a joint, cooperative effort\.
Page 3
4\. Description
The Program is a 6-year APL divided into two 3-year projects\. The Project Phase I (2008-2010)
will be financed with a $300 million equivalent loan from the Bank and approximately $87
million in co-financing from ICETEX\. The Project Phase II (2011-2013) will be financed with a
$200 million equivalent loan from the Bank and approximately $245 million in co-financing
from ICETEX\.
The Program consists of two components: (a) providing student loans to talented but needy
students; and (b) improving management practices to allow ICETEX to operate more efficiently
and increase sustainability\. The latter includes preparations to attract private capital in order to
scale up access to student finance and contribute to attaining sector-wide policy objectives\.
Through Component 1, ICETEX will contribute to expanding equity and access in tertiary
education by: a) financing and disbursing student loans, and b) forming alliances with higher
education institutions to support students pursuing a tertiary education\. Through Component 2, it
will improve its management practices by: a) strengthening loan administration, portfolio
management and collection procedures and upgrading data technology hardware & software; b)
preparing to expand its funding base to ensure long-term sustainability; and c) overseeing all
project monitoring and impact evaluation\.
5\. Financing
Source: ($m\.)
Borrower 87
International Bank for Reconstruction and Development
300
Total 387
6\. Implementation
Student loan agency ICETEX is the principal executing authority for the proposed Project (Phase
I), which will be implemented over a 3-year period across all departments in Colombia\. The
main responsibilities of ICETEX are: (a) to extend all student loans financed by the project
according to predefined eligibility criteria and loan terms and conditions, to administer loans and
ensure timely repayment, with continuous oversight of loan portfolio quality; (b) to collaborate
with the Education Ministry to improve the reporting of data on outcomes and project monitoring
and impact evaluation activities; (c) to collaborate with HEIs to reinforce the culture of
repayment and loan collection; and (d) to promote sector-wide quality improvements in
Colombian higher education by giving educational institutions an incentive to register in a new
national listing, a prerequisite for hosting ICETEX beneficiaries\.
Within ICETEX, a project implementation unit has already begun to transfer responsibilities to
units within ICETEX, a process that will be finalized by December 2008 according to a plan
agreed with the Bank\. A small, dedicated team from the PIU will stay on to ensure continuity
and to complete monitoring and evaluation functions\.
Page 4
Colombias Education Ministry is responsible for managing the National Education Information
System, the National Accreditation System and the National Evaluation System\. The Vice-
Ministry of Higher Education oversees ICETEXs activities and presides over its Board of
Directors in the absence of the Education Minister\. Colombias National Planning Department
and Finance Ministry are responsible for making the required budget allocations to ensure the
availability of funds to subsidize ICETEX student loans\.
7\. Sustainability
Student loan programs can be sustainable investments provided the administering institution
develops an operating model in which the cost of funds, administration and loan losses are
covered by the interest rates paid by students\. Around the world, government-sponsored student
loan programs targeting the poor receive public subsidies, reflecting the recognition that higher
education produces positive externalities by increasing human development and contributing to
economic growth\. Efforts to lower administrative costs and delinquency and default rates are
also core to ensuring institutional sustainability and maintaining targeting of needy students\.
ICETEX has demonstrated its ability to operate in a sustainable manner with government
subsidies and has set for itself the goal of drastically reducing operating costs and portfolio-at-
risk\. The need to focus management attention on sustainability will become even more important
when ICETEX begins to tap private capital markets for additional financial resources in the
medium to long term\. This will require successful completion of the organizations improvement
plan, particularly in the areas of portfolio quality and loan collection\. The organization has
accelerated the pace of reform in the last 12 months and is starting to see measurable
improvements in key operational indicators\.
8\. Lessons Learned from Past Operations in the Country/Sector
The Bank has extensive experience in tertiary education reform and in structuring student loan
programs\. This project takes a broad, systemic approach to improving the equity and quality of
tertiary education, focusing on the institutions, regulations, procedures and mechanisms needed
to optimize the functioning of the entire sector instead of focusing on specific inputs\. Several
lessons apply specifically to this project\. The main lessons are listed here:
a) Effective targeting is required to reach the neediest students\.
b) Low-income, rural and ethnically diverse students may require ad hoc support from HEIs\.
c) Some amount of government subsidy is necessary to reach poor and lower-middle income
students\.
d) Loan terms and conditions should factor in the special needs of lower-income students\.
e) Strong leadership in the implementing agency is crucial\.
f) The loan agency must collaborate with HEIs to increase the information available to secondary
school graduates on options for financing tertiary education and the potential returns on an
investment in higher education\.
g) Credible and efficient processes to assess creditworthiness prior to loan approval, focused on
co-signors, are necessary to lower delinquency and default rates\.
Page 5
h) Terms, conditions and core processes must include features that increase the likelihood of
repayment\.
i) Education campaigns highlighting the benefits of a culture of loan repayment can help to
mitigate public opinion reactions against enforcing collection\.
j) Sound financial management is essential to the sustainability of student loan programs
k) Risk-sharing with the private sector is desirable, but it is typically more effective when public
institutions have reached a stage of maturity\.
l) Financial institutions with dual missions, such as microfinance institutions, have shown that
creating support groups or effectively using peer pressure can support collection\.
9\.
Safeguard Policies (including public consultation)
No civil works will be financed under the project, and it has therefore received a
category C
rating under the Environmental Assessment Operating Policy (OP/BP 4\.01)\. Category C projects
are expected to cause zero or minimal environmental impact and therefore do not require stand-
alone environmental assessments\.
The project triggers the Banks Indigenous Peoples Policy (OD 4\.20, being revised as OP 4\.10)
because it targets low-income students in Colombia\. Nearly 1\.4 million Colombians self-identify
as Indigenous peoples, representing approximately 3\.4 percent of the population\. Well over half
of these Indigenous people live on resguardos, typically rural Indigenous areas, and they are
disproportionately represented among the poor\.
Colombian law provides for higher education for vulnerable groups, including Indigenous
peoples and also Afro-Colombians, who comprise approximately 10\.6 percent of the population\.
ICETEX and the World Bank have reached an agreement to better target ACCES loans to
specific minority groups\. Starting in 2008, ICETEX will include questions on ethnicity in its
application forms and information updating processes to establish a base of information for
policy decisions on targeting Afro-Colombian and Indigenous students\. It is expected that, once
analytical information becomes available, the proposed Project will specifically address the
needs of these groups to overcome lack of access to financing, one of the critical barriers to
enrolling in tertiary education\. At present, no ICETEX credit line asks about an applicants
ethnicity and therefore it is not possible to know how many Indigenous and Afro-Colombian
students may have already benefited from previous ACCES loans\.
10\. List of Factual Technical Documents
See Annex 13 of PAD: Projects in the Document File
11\. Contact point
Contact: Alberto Rodriguez
Title: Lead Education Specialist
Tel: (202) 458-8234
Fax: (202) 614-0594
Email: arodriguez@worldbank\.org
Page 6
12\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop | APPROVAL |