Irrigation Management Improvement Investment Plan Financed by the Technical Assistance Special Fund

Technical Assistance Consultant’s Report

Project Number: 45207 June 2014

Bangladesh: Irrigation Management Improvement Investment Plan Financed by the Technical Assistance Special Fund

Prepared by Sodev Consult

For Bangladesh Water Development Board

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Technical Assistance Consultants Report

Project Preparatory Technical Assistance 8154-BAN

Irrigation Management Improvement Investment Program (IMIIP)

FINAL REPORT JUNE 2014

Prepared for Bangladesh Water Development Board Government of the People's Republic of Bangladesh Asian Development Bank

Prepared by the IMIIP PPTA Consultants

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) ii Final Report

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) iii Final Report

Executive Summary

Background Two principal constraints to sustainable performance of major water schemes emerged from the Second Command Area Development Project (CAD-II) PPTA in 2007/08.

o Limited capacity and resources of public agencies in effective maintenance of public agencies in managing operations and maintenance(OM) of large scale irrigation schemes o Major system deterioration as a result of inadequate O& M planning and financing mechanisms.

A subsequent capacity development technical assistance TA7260-BAN: Developing Innovative Approaches to Management of Major Irrigation Schemes (DIAMMIS) was undertaken from 2009 to 2011 to investigate the potential for alternative service delivery agreement and management arrangements including independent entities. The DIAMMIS developed innovative approaches for the Muhuri Irrigation Project (MIP) based on the establishment of a third party to operate and maintain the MIP. The proposals were discussed extensively at the field and in Dhaka and were agreed in principle by the key stakeholders including BWDB and the Water User Associations.

During country programming consultations held in April/May 2012 between the Government of Bangladesh (GOB) and ADB it was agreed to develop a $150million multi-tranche financing facility (MFF) Irrigation Management Improvement Investment Program (IMIIP) including a $40million first tranche for the Muhuri Irrigation Project1. To prepare for the MFF it was agreed to undertake a PPTA to develop the design for the MIP as well as the overall design of the MFF.

The IMIIP PPTA has been designed to build and develop the proposal of the DIAMMIS project as well as synthesizing and updating the 2008 CAD-II PPTA focusing on the proposals for the MIP. PPTA work of the IMIIP was defined in the concept paper2 in 2012 and was originally designed to address the due diligences requirements for an MFF program and support investment preparation to be financed through the first tranche of an MFF . During discussions in December 2013 with ADB and MOWR it was decided to change the modality of the funding for the project from a Multi Financing Tranche Financing Facility (MFF) to a series of standalone projects. The title of the first project would be changed from the Irrigation Management Improvement Investment Program (IMIIP) to the Irrigation Management Improvement Project (IMIP). The design of the IMIP is largely the same as the IMIIP with the same objectives to support the road map for irrigation. The IMIP would support the investment to modernize the Muhuri Irrigation Project (MIP) as well as the preparation of feasibility studies for Ganges Kobadak and Teesta Barrage Irrigation Projects which would be financed in the future through additional financing or a new standalone loan(s).

Work The IMIIP PPTA has implemented comprehensive participative planning as well Undertaken by as advance design work for the proposed modernization of the Muhuri Irrigation the PPTA Project to be taken up under the proposed ADB IMIP project. The PPTA studies have included:

o Comprehensive institutional studies to develop and design the

1 To meet the extra costs it was agreed with ADB in April 2013 to allocate an extra $6 million to the first Tranche. The overall ADB fund allocation remains unchanged. 2 Bangladesh Irrigation Management Improvement Project ADB Concept Paper August 2012 TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) iv Final Report

management arrangements for the MIP through the engagement of a private sector irrigation management operator. Preparation of a road map for the modernization of large scale irrigation. o Extensive consultations and engagement with the farmers, water management organizations and BWDB and other agencies to support the design of the MIP management proposal and to ensure stakeholder understanding and support for the plan o Agriculture, hydrology, groundwater, remote sensing, energy, engineering, environmental, social, gender and economic studies to support the feasibility assessment of the MIP. o Assessment of follow on projects including preliminary assessment of the Teesta and the Ganges Kobadak Projects o Supporting the BWDB and the ADB to prepare the Irrigation Management Improvement Project including the necessary financing and technical and safeguards documentation. Support for the preparation of the DPP. o Preparation of advance designs for an estimated $11.6 million of works to rehabilitate and modernize the MIP including excavation of the drainage khals, repairs to coastal embankment, designs for 2000ha of piped irrigation using electrical pumps and prepaid meters. This comprises 38% of the proposed investment.

Project The IMIP project is designed to realize the full production potential of large scale Description irrigation schemes in Bangladesh. It will address the recurrent lack of sustainable management, operation and maintenance (MOM) and increase water productivity by transferring the MOM schemes to private operators and by introducing innovative infrastructure modernization.3 The Project will focus on the modernization of Muhuri Irrigation Project (MIP) in the Chittagong division. It will also finance the feasibility study and detail design of the modernization of the Ganges-Kobadak (GK) and Teesta irrigation projects which are located respectively in the Khulna and Rangpur divisions.

Rationale Enhancing land water and labor productivity is a high priority under the Government of Bangladesh’s (the Government) Sixth Five-Year Plan, FY2011– FY2015.4 Robust and well managed irrigation systems are central to boosting productivity and contributing to food security.

The major weakness of large scale irrigation schemes is the lack of sustainable management operation and maintenance (MOM). Most large irrigation schemes infrastructure is degraded and need rehabilitation due to inadequate financing; lack of beneficiary empowerment and engagement in irrigation system management; and weak service delivery. The low performance of large irrigation schemes may in the future be further aggravated by the impacts of climate change.

Investing in the rehabilitation and modernization of irrigation schemes will have limited benefits and will not be sustainable unless the physical improvements are partnered by significant strengthening of the scheme management including the development of long-term, effective and sustainable strategies for MOM including: (i) adequate funding including improved OM cost recovery; (ii) introduction of new and highly efficient and cost effective maintenance activities; and (iii) establishment of an efficient management organization..

For the large scale irrigation schemes the current approaches of Participatory Irrigation Management (PIM) through Government and Water User's Association

3 ADB. 2012. Technical Assistance to Bangladesh for Preparing the Irrigation Management Improvement Project. Manila (TA 8154-BAN). 4 Government of Bangladesh, Planning Commission, Ministry of Planning. 2011. Sixth Five-Year Plan: FY2011–FY2015. Dhaka. TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) v Final Report

is less effective and options for the long term and sustainable management of large scale irrigation schemes using a private sector management were examined and agreed under the ADB TA DIAMMIS in 2011. The proposals have been further developed under the current PPTA. The proposed approach is for the use of third party private sector management operators to develop efficient and sustainable management to maximize efficiencies and productivity.

Impact and The objective of the project is to realize the full production potential of the Muhuri outcome Irrigation Project through the use of a third party private sector manager supported by rehabilitation and modernization of the schemes' infrastructure to establish highly efficient and sustainable irrigated agriculture. The results will be higher yields, larger irrigated areas and higher cropping intensities including diversification into higher return cropping systems.

The impact of the project will be sustained high growth in irrigated agriculture, with the outcome. The outcome will be increased productivity and sustainability of MIP.

Outputs Performance-based irrigation management and agriculture support services established. This output will include contracting private irrigation management operators under 5 years performance-based management contracts. This “Construction phase” irrigation management operators (C-IMO) will supervise modernization works, establish sustainable MOM and provide agricultural support services in MIP. Efficient management systems will be adopted to maximize water use efficiencies and develop sustainable and reliable irrigation service delivery. Viable and effective operations and maintenance (OM) cost recovery mechanisms will be setup to achieve 100% cost recovery. The objective will be to bring MIP scheme to the level of profitability and sustainability required for enabling the recruitment of a long term (15 years) “Management phase” irrigation management operator (M-IMO) through a PPP modality. The project will also support the preparation of the long-term PPP transaction.

Irrigation system infrastructure rehabilitated and modernized. This output will include physical rehabilitation and modernization of irrigation infrastructure including (i) repair of 450 km of drains/canals and 22.6 km of coastal embankment with ancillary facilities; (ii) development of 17,000 ha of modern and highly efficient piped water distribution system to improve timely water access and reduce water losses; (iii) provision of prepaid card meters to allow water allocations to be based on a volumetric basis and ensure full and transparent payment and accounting, (iv) full electrification of the pumping to reduce the operational costs and increase management flexibilities and; (v) pilot solar pumping for 80ha.

The Project is efficiently managed with effective institutional development. This output will include (a) establishment of competent project management and project implementation unit; (b) timely procurement and disbursement; (c) timely appraisal of GK and Teesta irrigation projects modernization and provision of required feasibility studies and detail designs and strategies to transfer MOM to private sector; and (d) institutional support and capacity and awareness building of BWDB and water management organizations to successfully administer and support PPP contracts.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) vi Final Report

Project Investment Item Amounta Plan A. Base Cost b 1. Performance Based Irrigation Management 7.7 2. Rehabilitated and Modernized Irrigation Schemes 34.2 3. Strengthened Project Management 9.1 Subtotal (A) 51.0 B. Contingenciesc 5.1 C. Financing Charges During Implementationd 1.8 Total (A+B+C) 57.9

Including taxes and duties of $5.3 million to be financed by the government. b in mid-2013 prices. c Physical contingencies are computed at between 0% and 10%. Price contingencies computed on foreign exchange costs at 2.2% in year 1, 1.9% in year 2 and 1.9% thereafter, and on local currency cost at 8.5% in year 1, 7.5% in years 2 and 7.0% thereafter, including provisions for exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest computed at 2.0% per year. Source: Asian Development Bank estimates.

Project Period The project investment is designed to be implemented over 6 years from mid of Utilization 2014 to mid 2020.

Implementation BWDB will be the executing agency. A project management unit (PMU) led by a Arrangements project director with at least the rank of additional chief engineer will be established in BWDB main office in Dhaka. A project implementation unit (PIU) will be established in MIP. A PIU director will be appointed to supervise MIP modernization implementation in the field. For the Teesta and the GK irrigation projects a design support unit (DSU) led by an executive engineer will be set up at each project site. The DSU will support the preparation of the modernization strategy, feasibility and detail designs of the two schemes. A Project Steering Committee chaired by the Secretary of the Ministry of Water Resources and comprising representatives from all relevant departments will review the project progress, resolve critical implementation issues and provide strategic and policy guidance when required. An Implementation Coordination Committee (ICC) will be established in MIP under the leadership of BWDB chief zonal engineer with representatives from relevant department local offices, farmer’s organizations and IMO. The ICC will be tasked with resolving conflicts and implementation issues related to the implementation of the works and the IMO performance based management contract.

Additional financing may be considered if the project performs well. Necessary provisions were made in the loan to achieve readiness for additional financing. These include studies and detail designs for the modernization of GK and Teesta irrigation projects.

For MIP, BWDB will recruit a private consulting company or consortium through competitive selection and enter into a five-year management contract agreement. The C-IMO will be responsible for delivering efficient service and collecting revenue to recover the cost for MOM. In addition, the C-IMO would be responsible for the: (i) construction supervision of civil works in MIP; (ii) participatory design of level 3 system modernization; and (iii) development of pilot agricultural demonstrations and income generation activities. After 5 years, the M-IMO will be recruited through a 15-year lease contract to maintain the MOM levels established during the 5 year first stage. The contract will be awarded through a competitive tender based on (i) a fixed fee for the lease and bidders present a financial offer for the water charge; or (ii) a predetermined water charge and bidders would present a financial offer for the lease. After 15 years, the contract would be re-tendered.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) vii Final Report

A PPP cell will be established within BWDB. It will prepare the bid documents; support the bidding process and the contract administration of the C-IMO and later the M-IMO contract. The PPP cell will become permanent. A Project Monitoring Cell will be established in BWDB’s Monitoring Division. It will provide independent verification of the performance of various stakeholders and to monitor the project progress against outputs and targets set out in the Design and Monitoring Framework

Procurement Procurement of works, goods, and services financed by ADB will be carried out in accordance with ADB’s Procurement Guidelines. The PMDC and C-IMO recruitment will adopt 90:10 quality-cost ratio since high level of expertise is essential to design performance based irrigation management approaches for GK and Teesta irrigation projects and to the establish a strong and sustainable management organization for MIP. In addition incentives linked to performance of C-IMO consultant will be paid against achievement of key milestones. BWDB with support from the PMDC will monitor the performance of the IMO against the milestones. Least Cost selection method will be used for small consulting assignment including external audits, independent safeguards monitoring and simple studies.

Economic and Economic analyses undertaken for MIP indicate that the project is economically Financial viable. The project provides benefits by increasing the irrigated area from 11,300 Analysis ha to 17,000 ha, increasing crop intensities from 132% to 187%, increasing yields by up to 50% for paddy rice, and increasing cash crop production. The economic internal rate of return for MIP is estimated at 19.5%. The sensitivity analysis indicates that the economic internal rate of return remains at 12% under the scenarios of increased project costs by up to 103%, and reduced project benefits by up to 33%. However, incremental benefits to the project are sensitive to construction delays. The benefit distribution analysis confirms that a substantial proportion of the total project benefits will be shared by the small farmers and sharecroppers.

Financial analyses were carried out to assess the conditions for ensuring financial sustainability of the proposed IMO approach under MIP and its affordability for the farmers. Currently, only 60% of the potential irrigable area is irrigated and farmers pay the tariff of around $138/ha to private pump operators. Due to the high inefficiency of the diesel pumps and reduced command area, this tariff is only sufficient to cover the cost of pump OM. It does not cover any other MOM costs and this has led to deterioration of the scheme infrastructure and its productivity. The Project will increase the irrigated area to 17,000 ha through increased WUE.

It will also reduce OM pumping cost by switching from diesel to electricity pumps. Combined, these will raise the overall revenue of the scheme to sufficiently cover its sustainable MOM. The farm budget analyses reveal that the farmers will generate an average income of $460/ha with-project as against $50/ha without- project. In principle, the farmers could afford to pay for the full cost of the capital investment and level 1 MOM, however this would require raising the tariff to $260/ha which is significantly more than they currently pay and hence would not be immediately acceptable5. A tariff of $104/ha may be considered as an interim tariff level which fully finance MOM of level 2 and 3 of the system including a reasonable profit margin for the IMOs. Once farmers income raises to the expected with-project level 1 OM cost may also be transferred to the farmers and water tariff increased by an estimated $ 26/ha6.

5 Level 1, 2 and 3 correspond to primary, secondary and tertiary drainage/irrigation network. 6 Excluding BWDB establishment costs TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) viii Final Report

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) ix Final Report

TABLE OF CONTENTS I. INTRODUCTION ...... 1

A. OVERVIEW ...... 1 B. STUDIES COMPLETED UNDER THE PPTA ...... 2 C. IMIIP FINAL REPORT ...... 2 II. THE IRRIGATION SECTOR ROAD MAP ...... 3

A. OVERVIEW ...... 3 B. REQUIREMENTS ...... 5 C. LINKAGES TO ADB STRATEGIES ...... 5 D. INSTITUTIONAL FRAMEWORK ...... 6 E. GOVERNMENT GOALS AND STRATEGIES...... 7 F. KEY PROBLEMS ...... 7 G. OPPORTUNITIES ...... 8 H. INVESTMENT STRATEGY FOR LARGE SCALE IRRIGATION ...... 8 I. MUHURI IRRIGATION PROJECT ...... 9 J. ROAD MAP ...... 9 III. THE IRRIGATION MANAGEMENT IMPROVEMENT PROJECT (IMIP) ...... 13

A. INTRODUCTION ...... 13 B. IMPACT AND OUTCOME ...... 13 C. OUTPUTS ...... 13 D. DESIGN AND MONITORING FRAMEWORK ...... 14 E. PROGRAM INVESTMENT AND FINANCING PLAN ...... 16 F. IMPLEMENTATION ARRANGEMENTS ...... 16 1. Steering Committee ...... 18 2. Executing Agency ...... 19 1. Implementation Coordination Committee ...... 22 2. Water Management Organizations ...... 22 VIII. PROCUREMENT ...... 23 1. Consultancy and Management Support ...... 24 2. Long Term Management Arrangements ...... 25 3. Project Readiness Activities ...... 26 4. Implementation Schedule ...... 27 IX. FINANCIAL MANAGEMENT ...... 27

A. FINANCIAL MANAGEMENT ASSESSMENT ...... 27 B. DISBURSEMENT PROCEDURES ...... 29 X. STAKEHOLDER COMMUNICATION STRATEGY ...... 30

A. INFORMATION DISCLOSURE ...... 30 B. AWARENESS: ...... 30 C. PHASES OF COMMUNICATION AND ENGAGEMENT STRATEGY AND OUTPUTS ...... 32 XI. PLANNING FOR THE MUHURI IRRIGATION PROJECT ...... 34

A. INTRODUCTION ...... 34 B. CURRENT ISSUES ...... 37 C. INTRODUCTION ...... 37 1. Analysis of Rainfall Data ...... 37 2. Flow Data ...... 38 3. Return Flows ...... 38 Source IMIIP 2013 ...... 40 D. LAND USE ...... 40 E. WATER BALANCE ...... 40 TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) x Final Report

1. Water Balance ...... 40 2. Estimated Efficiencies ...... 40 3. Reservoir Storage ...... 40 F. ESTIMATE CURRENT AND FUTURE CROPPING FOR THE MIP ...... 41 G. WATER DEMAND FOR THE WHOLE SCHEME ...... 41 H. GROUNDWATER ...... 42 I. STRATEGIES FOR LONG TERM SUSTAINABLE WATER RESOURCES MANAGEMENT ...... 43 1. Strategies to Increase Efficiencies...... 43 2. Issues Affecting Long Term Sustainability ...... 44 3. Mitigation Strategies...... 45 J. CLIMATE CHANGE ...... 46 1. Sea Level Rise and Storm Surge ...... 48 2. Changes in Rainfall and Rainfall Patterns ...... 49 3. Temperature ...... 49 4. Summary of Proposed Adaptation Measures ...... 50 XII. INVESTMENT PLAN FOR MUHURI ...... 50

A. SUMMARY ...... 50 B. REPAIRS AND UPGRADING OF THE LEVEL 1 INFRASTRUCTURE ...... 51 1. Repairs and Upgrading of the Coastal Embankment ...... 51 2. Excavation of Khals to Provide Access to Irrigation Water and Improve Drainage...... 51 3. Repairs to Existing Structures ...... 53 4. Provision of new structures ...... 53 C. UPGRADING OF THE ELECTRICAL DISTRIBUTION ...... 54 1. Supporting Studies ...... 54 2. The Adequacy of the Existing Power Networks to Meet Power Demands ...... 55 3. Assessment of Power Generation to Meet Needs of Future Demand ...... 56 4. Assessment of Availability of Power ...... 57 5. Institutional Arrangements ...... 57 6. Electricity Regulations and Tariffs ...... 57 D. ASSESSMENT OF SOLAR POWER ...... 58 1. Solar Pumps ...... 58 2. Hybrid System ...... 58 E. COMPARISON OF ALTERNATIVE PUMPING ARRANGEMENTS ...... 59 F. UPGRADING AND MODERNIZATION OF THE FARMER CANAL SYSTEMS ...... 61 1. Conveyance Options ...... 61 2. Pumping Systems ...... 63 3. Pre-paid Control and Meter Systems ...... 64 4. The Barind Experience and Lessons Learnt for Muhuri ...... 65 5. Benefits of Prepaid Systems ...... 67 6. Development Strategy for Level 3 Farmer Canal Systems ...... 67 7. OM Costs ...... 68 XIII. PROPOSED MANAGEMENT FOR MIP ...... 69

A. RATIONALE ...... 69 B. PROPOSED APPROACH FOR MUHURI PROJECT ...... 69 1. Proposal for the Stage 1 Management Contract ...... 70 2. MIP Stage 2 Management Arrangements ...... 71 3. Role and Obligations of the Irrigation Management Operator ...... 72 4. The Role and Obligations of BWDB ...... 73 5. Role of Water User Organizations ...... 74 6. Role of the PMDC ...... 75 XIV. FINANCIAL ASSESSMENT ...... 76

A. INTRODUCTION ...... 76 B. FUTURE OM COSTS OF LEVEL 3 ...... 77 C. COSTS OF THE IMO ORGANIZATION ...... 77 TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) xi Final Report

D. OM CASH FLOW...... 78 E. SENSITIVITY OF COSTS ...... 80 F. SETTING OF THE WATER TARIFF ...... 80 G. OVERALL FUNDING OF OM FOR MIP ...... 81 XV. ECONOMIC ANALYSIS ...... 82

A. APPROACH AND METHODOLOGY ...... 82 1. Approach ...... 82 2. Methodology ...... 82 B. CROP BUDGET ANALYSIS, CROP AREAS AND CROP PRODUCTION ...... 84 1. Crop Budget Analysis ...... 84 2. Crop Areas ...... 85 3. Farm Income Analysis...... 85 C. ECONOMIC ANALYSIS ...... 86 1. Economic Viability and Sensitivity Analysis ...... 86 2. Employment Generation ...... 86 XVI. DUE DILIGENCE ...... 87

A. TECHNICAL ...... 87 B. ECONOMIC AND FINANCIAL ...... 87 C. GOVERNANCE ...... 88 D. POVERTY AND SOCIAL ...... 88 E. GENDER ...... 92 F. INVOLUNTARY RESETTLEMENT...... 94 G. INDIGENOUS PEOPLES...... 95 H. INITIAL ENVIRONMENTAL ASSESSMENT (IEE) ...... 95 I. RISKS AND MITIGATING MEASURES ...... 96 XVII. FOLLOW ON INVESTMENTS ...... 98

A. SCHEME SELECTION ...... 98 1. Scope of the Studies ...... 98 2. Existing Large Scale Irrigation in Bangladesh ...... 98 B. ASSESSMENTS BY CAD-II ...... 99 C. SELECTION CRITERIA UNDER THE IMIIP PPTA ...... 99 D. EVALUATION OF THE CANDIDATE PROJECTS ...... 100 E. GANGES KOBADAK IRRIGATION PROJECT ...... 100 1. Introduction ...... 100 2. Physical Works ...... 102 3. Surface Water Availability ...... 103 4. Groundwater ...... 103 5. Current Irrigation Water Management ...... 103 6. Strategy for GKIP ...... 104 F. TEESTA BARRAGE PROJECT ...... 106 1. Introduction ...... 106 2. Physical Works ...... 106 3. Water Availability ...... 107 4. Groundwater ...... 108 5. Current Irrigation Management ...... 109 6. Strategy for TBP ...... 109 G. CONCLUSIONS ...... 110 1. Possible Strategies for Improved Efficiencies for GKIP and TBP ...... 111 H. STRATEGY ...... 111 I. CONCLUSIONS ...... 112

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) xii Final Report

FIGURES

FIGURE 1: PROJECT IMPLEMENTATION ARRANGEMENTS ...... 17 FIGURE 2: PROPOSED LONG TERM MANAGEMENT STRUCTURE...... 26 FIGURE 3: PROJECT SCHEDULE ...... 27 FIGURE 4: LOCATION OF THE MUHURI IRRIGATION PROJECT ...... 35 FIGURE 5: MUHURI IRRIGATION PROJECT ...... 36 FIGURE 6: BWDB FLOW MEASURING LOCATIONS ...... 39 FIGURE 7 VARIATIONS IN FLOWS (M3/S) ...... 39 FIGURE 8: PROPOSED INSTITUTIONAL ARRANGEMENTS FOR THE MIP STAGE 1 ...... 71 FIGURE 9: IMPLEMENTATION COORDINATION COMMITTEE ...... 75 FIGURE 10: GKIP PROJECT INTAKE ...... 104 FIGURE 11: GK IRRIGATION PROJECT ...... 105 FIGURE 12: TEESTA BARRAGE PROJECT ...... 107 FIGURE 13: TEESTA BARRAGE AND INTAKE ...... 108

TABLES TABLE 1: STATUS OF STUDIES AND DESIGNS ...... 3 TABLE 2 INVESTMENT PLAN FOR MAJOR IRRIGATION INFRASTRUCTURE ...... 9 TABLE 3: ROAD MAP FOR THE MODERNIZATION OF LARGE SCALE IRRIGATION ...... 11 TABLE 4: DESIGN AND MONITORING FRAMEWORK ...... 14 TABLE 5: PROJECT INVESTMENT PLAN ...... 16 TABLE 6: FINANCING PLAN ...... 16 TABLE 7: IMPLEMENTATION ARRANGEMENTS ...... 19 TABLE 8: PROPOSED PMU STAFFING...... 20 TABLE 9: SUMMARY OF THE PROJECT MANAGEMENT ARRANGEMENTS ...... 22 TABLE 10: LIST OF MAIN WORKS PACKAGES ...... 24 TABLE 11: CONSULTANCY CONTRACTS ...... 24 TABLE 12: READINESS ACTIVITIES ...... 26 TABLE 13: PROPOSED COMMUNICATION AND ENGAGEMENT PROGRAM FOR THE PMDC ...... 33 TABLE 14: COMMUNICATION AND ENGAGEMENT PROGRAM FOR THE C-IMO ...... 34 TABLE 15: 80% DEPENDABLE RAINFALL (MM) ...... 38 TABLE 16 ESTIMATED 80% DEPENDABLE FLOW (M3/SEC) ...... 40 TABLE 17 ESTIMATED LAND USE 2011 ...... 40 TABLE 18: ESTIMATED EFFICIENCIES ...... 40 TABLE 19: RESERVOIR STORAGE ...... 41 TABLE 20: ESTIMATED CURRENT AND FUTURE IRRIGABLE AREAS (DRY YEAR) ...... 41 TABLE 21: CROP WATER DEMANDS ...... 42 TABLE 22: ESTIMATED NUMBER AND AREAS OF IRRIGATION FROM SHALLOW TUBE WELLS ...... 43 TABLE 23: DELINEATED UPSTREAM CATCHMENT AREA ...... 45 TABLE 24: LAND USE IN THE UPSTREAM CATCHMENT ...... 45 TABLE 25: ESTIMATED CLIMATE RISKS ...... 47 TABLE 26: SUMMARY OF THE PROPOSED CIVIL WORKS FOR MIP ...... 52 TABLE 27: SUMMARY OF REQUIREMENTS FOR STRUCTURE REPAIRS...... 53 TABLE 28: SUMMARY OF NEW STRUCTURES ...... 53 TABLE 29: ASSESSMENT OF SUB STATIONS ...... 56 TABLE 30: MONITORING OF POWER AVAILABILITY ...... 57 TABLE 31: SOLAR/ELECTRIC HYBRID SCHEME WATER BALANCE ...... 59 TABLE 32: COMPARISON OF ALTERNATIVE PUMPING ARRANGEMENTS...... 59 TABLE 33: NET PRESENT VALUE ANALYSIS ...... 60 TABLE 34: LOCATIONS OF THE SOLAR PUMPS ...... 61 TABLE 35: COMPARATIVE ASSESSMENT OF PIPE AND CANAL CONVEYANCE OPTIONS ...... 62 TABLE 36: COMPARISON OF ELECTRIC AND DIESEL PUMPING COSTS ...... 64 TABLE 37: BMDA EXPERIENCE AND IMPLICATIONS FOR MIP ...... 66 TABLE 38: ROLE AND OBLIGATIONS OF THE IMO ...... 72 TABLE 39: ROLE AND OBLIGATIONS OF BWDB ...... 74 TABLE 40: ROLE OF THE WATER MANAGEMENT ORGANIZATIONS ...... 75 TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) xiii Final Report

TABLE 41: SUMMARY OF OM RESPONSIBILITIES ...... 76 TABLE 42: ESTIMATES OF OM COSTS LEVELS 1 AND 2 ...... 76 TABLE 43: SUMMARY OF FUTURE LEVEL 3 OM COSTS ...... 77 TABLE 44: ANNUAL COSTS OF THE IMO ...... 78 TABLE 45: FUTURE COSTS OF MOM OF LEVELS 2 AND 3 ...... 78 TABLE 46: ANNUAL CASH FLOW FOR LEVEL 2 AND 3 OM $ AT 2013 PRICES ...... 79 TABLE 47: COMPARISON OF CURRENT AND ESTIMATED FUTURE COSTS ...... 79 TABLE 48: FINANCIAL SENSITIVITY OF TARIFF ...... 80 TABLE 49: OVERALL OPERATION AND MAINTENANCE BUDGETS FOR MIP ($ MILLION) ...... 81 TABLE 50: PHASING OF IRRIGATION DEVELOPMENT ...... 83 TABLE 51 : WITH AND WITHOUT PROJECT AREAS FOR MIP ...... 85 TABLE 52: SENSITIVITY ANALYSIS ...... 86 TABLE 53: SUMMARY POVERTY REDUCTION ND SOCIAL STRATEGY ...... 89 TABLE 54: GENDER ACTION PLAN ...... 93 TABLE 55: MAIN NEGATIVE IMPACTS AND PROPOSED MITIGATION MEASURES ...... 96 TABLE 56: MAIN POSITIVE IMPACTS OF THE PROJECT ...... 96 TABLE 57: SUMMARY OF RISKS AND MITIGATING MEASURES ...... 97 TABLE 58: EXISTING LARGE-SCALE IRRIGATION SCHEMES ...... 98 TABLE 59: SELECTION CRITERIA FOR IMIIP CANDIDATE PROJECTS ...... 100 TABLE 60: MULTI CRITERIA PARAMETERS OF PROJECTS ...... 101 TABLE 61: MAIN FEATURES OF CANDIDATE PROJECTS ...... 102 TABLE 62: ESTIMATED AREA OF GW IN TEESTA COMMAND AREA...... 108 TABLE 63: PROPOSED WORKS AND STRATEGIES FOR GKIP AND TBP ...... 112

Appendices-separate volume

1 Sector Analysis and Road Map 2 Planning and Design for Muhuri Irrigation Project 3 Management of the Muhuri Irrigation Project 4 Cost and Economic Tables 5 Financial Management Assessment of the Executing Agency 6 Initial Environmental Examination 7 Summary of Meetings and Consultations 8 Supporting Surveys and Studies 9 Terms of Reference for Consultancies 10 Design Report for Embankment Repair and Khal Excavation 11 Design Report for Tertiary Systems

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) xiv Final Report

Summary of Abbreviations ADB Asian Development Bank MOM Management Operation and Maintenance AH Affected household MPO Master Plan Organization AP Affected person MRIP Manu River Irrigation Project BWDB Bangladesh Water Development Board NWMP National Water Management Plan CAD Command Area Development NWP National Water Policy CADI First Command Area Development NGO Non-Government Organization Project CADII Second Command Area Development NPRS National Poverty Reduction Strategy Project CEIP Coastal Embankment Improvement OM Operation and Maintenance Project CAPEX Capital Expenditure MOM Management Operation and Maintenance C-IMO Construction Stage (Stage 1) of IMO OPEX Operations Expenditure CPS Country Partnership Strategy PBS Palli Bidyat Samity-Rural Electricity Society DIAMM Developing Innovative Approaches to PCO Project Coordination Office IS Management of Major Irrigation PD Project Director Schemes DPP Development Project Proforma PIM Participatory Irrigation Management EA Executing Agency PFR Periodic Financing Request ECD Estimated Completion Date PM Person Months EIRR Economic Internal Rate of Return PMDC Program Management and Design Consultant FCDI Flood Control Drainage and Irrigation PMF Program Management Facility FE Facilitating Entity PMF Programme Management Facility FFA Framework Financing Agreement PMU Project Management Unit FGD Focus Group Discussion PPP Public Private Partnership FIRR Financial Internal Rate of Return PPTA Project Preparatory Technical Assistance FMA Financial Management Assessment PV Present Value GKIP Ganges-Kobadak Irrigation Project PWD Public Works Datum GOB Government of Bangladesh PWM Participatory Water Management HYV High Yielding Variety REB Rural Electrification Board ICC Implementation Coordination RF Resettlement Framework Committee ICM Integrated Crop Management RP Resettlement Plan IMIIP Integrated Management Improvement SMU Specialised Management Organisation Program IMO Irrigation Management Operator SRI System of Rice Intensification IEE Initial Environment Examination SWAI South West Area Integrated Water WRMP Resources Management Project IOL Inventory of loss TA Technical Assistance IRR Internal Rate or Return TBP Teesta Barrage Irrigation Project ISC Irrigation Service Charge Tk Bangladesh Taka IWRM Integrated Water Resources WARP Water Resources Planning Organisation Management O LLP Low Lift Pump WMA Water Management Association MFF Mutitranche Financing Facility WMF Water Management Federation M-IMO Management Stage (stage 2 of IMO) WMG Water Management Group MIP Muhuri Irrigation Project WMO Water Management Organization MoEF Ministry of Environment and Forests WSP Water Service Providers MOW Ministry of Water Resources XEN Executive Engineer

This consultant's report does not necessarily reflect the views of ADB or the Government concerned and ADB and the Government cannot be held liable for its contents. All the views expressed herein may not be incorporated into the proposed project's design

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 1 Final Report

I. INTRODUCTION

A. Overview 1. Following the completion of the First Command Area Development (CAD-I) Project in 2003, the Government of Bangladesh requested the Asian Development Bank (ADB) to provide a Project Preparatory Technical Assistance (PPTA) to prepare the Second Command Area Development Project (CAD-II) aimed at improving the performance of large-scale flood control drainage and irrigation schemes (FCDI) schemes7. The CAD-II PPTA was implemented between February 2007 and September 2008. Two principal constraints to sustainable performance of major water schemes emerged from the PPTA:

o Limited capacity and resources of public agencies in effective maintenance of public agencies in managing operations and maintenance(OM) of large scale irrigation schemes

o Major system deterioration as a result of inadequate O& M planning and financing mechanisms.

2. A subsequent capacity development TA7260-BAN: Developing Innovative Approaches to Management of Major Irrigation Schemes (DIAMMIS) was undertaken from 2009 to 2011 to investigate the potential for alternative service delivery agreement and management arrangements including independent entities that would better manage and operate the systems. The DIAMMIS developed innovative approaches for the Muhuri Irrigation Project (MIP) which would be based on the establishment of a Special Management Unit to operate and maintain the MIP. The proposals were discussed extensively at the field and in Dhaka and were agreed in principle by the key stakeholders including BWDB and the Water User Associations.

3. During country programming consultations held in April/May 2012 between the Government of Bangladesh (GOB) and ADB it was agreed to develop a $150million multi-tranche financing facility (MFF) Irrigation Management Improvement Investment Program (IMIIP) including a $40million first tranche for the Muhuri Irrigation Project8. To prepare for the MFF it was agreed to undertake a PPTA to develop the design for the MIP as well as the overall design of the MFF.

4. The IMIIP PPTA has been designed to build and develop the proposal of the DIAMMIS project as well as synthesizing and updating the 2008 CAD-II PPTA focusing on the proposals for the MIP.

5. PPTA work of the IMIIP was defined in the concept paper9 in 2012 and was originally designed to address the due diligences requirements for an MFF program and support investment preparation to be financed through the first tranche of an MFF, including: (i) the physical modernization of MIP; and, (ii) the establishment of third party organizations to operate and manage medium and large scale irrigation projects. The first component of the PPTA has focused on addressing the due diligence of the MFF processing requirements including the following outputs: (i) a refined policy framework, (ii) a sector roadmap, (iii) a medium term investment program, (iv) a program financing plan, (v) a program design and monitoring framework, (vi) necessary safeguards frameworks (environment, resettlement and socials) and institutional and governance frameworks, (vii) the facility administration manual. Importantly, the PPTA will provide recommendations to establish the Program Management Unit (PMU), which will assist with the implementation of the investment program, and the activities under the first tranche (covering safeguards, institutional, technical, etc.) as well as the preparation of physical and non-physical investments for inclusion under the subsequent tranches. The PPTA will also prepare the bidding documents for the PMU consultants and equipment procurement to ensure quick start up of the program implementation.

6. During discussions in December 2013 with ADB and MOWR it was decided to change the modality of the funding for the project from a Multi Financing Tranche Financing Facility (MFF) to a series

7 The four identified schemes were the Teesta Barrage Project, The Manu River Irrigation Project, the Muhuri Irrigation Project and the Ganges-Kobadak Project. 8 To meet the extra costs it was agreed with ADB in April 2013 to allocate an extra $6 million to the first Tranche. The overall ADB fund allocation remains unchanged. 9 Bangladesh Irrigation Management Improvement Project ADB Concept Paper August 2012

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 2 Final Report of standalone projects. The title of the first project would be changed from the Irrigation Management Improvement Investment Program (IMIIP) to the Irrigation Management Improvement Project (IMIP). The design of the IMIP is largely the same as the IMIIP with the same objectives to support the road map for irrigation. The IMIP would support the investment to modernise the Muhuri Irrigation Project (MIP) as well as the preparation of feasibility studies for Ganges Kobadak and Teesta Barrage Irrigation Projects which would be financed in the future through additional financing or a new standalone loan(s).

B. Studies Completed Under the PPTA 7. The IMIIP PPTA has implemented comprehensive participative planning as well as advance design work for the proposed modernization of the Muhuri Irrigation Project to be taken up under the proposed ADB IMIP project. The PPTA has included:

o Comprehensive institutional studies to develop and design the management arrangements for the MIP through the engagement of a private sector irrigation management operator. Preparation of a road map for the modernisation of large scale irrigation. o Extensive consultations and engagement with the farmers, water management organisations and BWDB and other agencies to support the design of the MIP management proposal and to ensure stakeholder understanding and support for the plan o Agriculture, hydrology, groundwater, remote sensing, energy, engineering, environmental, social, gender and economic studies to support the feasibility assessment of the MIP. o Assessment of follow on projects including preliminary assessment of the Teesta and the Ganges Kobadak Projects o Supporting the BWDB and the ADB to prepare the Irrigation Management Improvement Project including the necessary financing and technical and safeguards documentation. Support for the preparation of the DPP.

8. Preparation of advance designs for an estimated $11.6 million of works to rehabilitate and modernize the MIP including excavation of the drainage khals, repairs to coastal embankment, designs for 2000ha of piped irrigation using electrical pumps and prepaid meters. This comprises 38% of the proposed investment. The status of the studies and designs is summarized in Table 1 below.

C. IMIIP Final Report 9. This report presents the findings of the studies of the work completed under the PPTA during the 19 month period November 2013 to May 2014. Findings have been discussed and agreed with the ADB, MOWR and BWDB.

10. The scope of the PPTA initially was to develop a MFF. In February 2014 however it was agreed between ADB and MOWR to change the project from a Multi Financing Facility (MFF) to a standalone project. The final report reflects these adjustments and incorporates the changes in the scope of the proposed project. The standalone project is titled the 'Irrigation Management Improvement Project (IMIP). The original title of the PPTA the 'Irrigation Management Improvement Investment Program' has however been retained for the report

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 3 Final Report

Table 1: Status of Studies and Designs

Aspect Current status under Requirements PPTA Requirements for Implemented by and next stage completion date Studies 1 General planning studies, Completed n mapping preparation of GIS, hydrology studies, groundwater studies, inventories of pump operators. Feasibility study of the MIP 2 Hydrology studies monitoring and Feasibility level More detailed BWDB Hydrology Unit assessments-upgrading of studies based on studies-improved working with IMO 2014 hydrology monitoring and BWDB data and measurement of onwards assessment limited spot flows using ADCP10 measurements equipment 3 Groundwater assessment and Preliminary studies Modelling and PMDC 2015 modelling assessment Designs 1 Design and bid documents for the Design sub repair of the Coastal Embankment contracted to IWM. Completed 2 Design and bid documents for the Design sub excavation of the khal contracted to IWM. Completed 4 Participatory Design and bid Design sub documents of the Pipe Distribution contracted to Systems Stage 1 2000ha Rahman Associates. Completed 5 Participatory Design of Pipe Not undertaken by Design of Stage 2 To be completed under Distribution Systems Stage 2 PPTA Q4/2015, IMO contract working in (7000ha) and Stage 3 (8000ha) Design of Stage 3 coordination with REB including extending the electricity Q4/2016 network. 7 Design of hydraulic structures, Not undertaken by Q3/2015 PMDC rehabilitation of buildings PPTA

II. THE IRRIGATION SECTOR ROAD MAP

A. Overview 11. Agricultural development and sustainable natural resource management are critical for poverty reduction, as the majority of the poor in Bangladesh are in rural areas and depend on agriculture for their livelihood. Some 75% of the population and 85% of the poor live in rural areas. Agriculture generates half of employment, contributes 20% of the gross domestic product, and provides a secure supply of food to the whole population. Fostering agricultural development and sustainable natural resource management has taken on increased importance in recent years as policy makers grapple with climate change and with sudden spikes in food prices.

12. The primary sources of water in Bangladesh are local rainfall amounting to about 250 cubic kilometers (km3) annually and the trans-boundary inflows amounting to about 1,000 km3 annually, derived mainly from the Brahmaputra, Ganges, and Meghna Rivers. Bangladesh occupies only 8% of the total drainage area of these rivers but is located at their downstream end. The result is an abundant excess of surface water during the summer monsoon months and water shortfalls in the winter dry months. The impossibility of developing dams’ facilities prevents flow regulation throughout the year. Despite being scarce, water is not well managed. There is minimal attention to water use efficiency and equitable allocation. Many farmers rely on groundwater to supplement the limited and irregular surface water supplies. However, in many parts, the use of groundwater is significantly constrained by arsenic

10 Accoustic Doppler Current Meter Profiler-accoustic current meter suitable for high accuracy flow measurement

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 4 Final Report contamination and aquifer limitations. Consequently, the minimum flows required to meet total dry season demands are less than what is available from surface and groundwater. This is aggravated by the increasing competition for water among sectors including agriculture, domestic and industrial water use, navigation, fisheries, and conservation of natural eco-habitats. Possible changes in temperature and rainfall patterns due to global warming may also modify crop water requirements and water availability, and adversely widen the current gap between supply and demand.

13. Performance of irrigated agriculture and large irrigation schemes. In Bangladesh, 31.5% of the population was living below poverty line in 2010. Although agriculture’s share of gross domestic product has declined, it is the primary economic sector in rural areas and provides 63% of rural employment. Bangladesh has a total area of about 15 million hectares (ha) with a net cultivable area of around 8 million ha. About 5.3 million ha were irrigated in 2011–2012. The total rice production in Bangladesh for 2010–2011 was 33.5 million metric tons with 56% of the total being produced during the dry season.11 (Boro 56%, Aus 6% and Aman 38%) Productivity of irrigated agriculture remains chronically low; paddy yields during the past 10 years average at 3.6 tons per hectare (t/ha).12 The low land productivity is attributable to unreliable irrigation supply, inadequate agriculture extension services and poor access to farm inputs, markets and agricultural credit services. Around 550,000 ha or 11% of the total irrigated area is provided by 15 large irrigation schemes.13 However, only 46% of the commands of large schemes are irrigated during the main irrigation season.

14. There is little evidence to suggest that there are currently any significant ongoing initiatives to improve the irrigation performance. Improving performance by increasing the areas irrigated and recovering fees would contribute to agricultural and economic growth through increased agriculture production and reduced subsidies. Also, developing sustainable approaches to management and operation of the existing schemes would provide a sound basis for developing new schemes. The National Water Management Plan (2001) identified an additional 1 million ha that could be irrigated with new publicly financed, surface water schemes in areas where tubewell irrigation is limited; long term sustainable models for the MOM of large scale irrigation should be a prerequisite to considering any expansion.

15. A major weakness that continues to plague the productivity of large irrigation schemes is the lack of efficient and sustainable MOM. In 2012, the average level of MOM cost recovery from the beneficiaries for MIP, GK and Teesta irrigation projects was 24%. The highest recovery was for Muhuri with 63% while Teesta was at 18% and GK at 0.26%. As a consequence, the infrastructure of these schemes is degraded and needs rehabilitation and modernization. Other reasons include inadequate Government financing14; lack of beneficiary empowerment and engagement in MOM; and limited capacity of public agency resulting in weak service delivery. Specific issues are the: (i) inadequacy of budget15 to support system MOM; (ii) lack of distinction between annual, periodic or emergency maintenance of a system; and (iii) poor cost recovery from the water management groups

16. Water management is very limited with minimal attention to how the scarce water resources are allocated and most schemes only meet a small portion of their target production Many farmers turn to the use of groundwater to support limited and irregular water supplies. The mix of irrigation from surface and groundwater makes evaluation difficult and masks deficiencies of the surface water supplies.

17. During the past 20 years, substantial efforts were made to improve irrigation MOM through introduction of participatory irrigation management (PIM). In Bangladesh, PIM proved generally successful on small and medium schemes but it has yielded limited results on large schemes. The variable performance of PIM in improving irrigation MOM is internationally documented and private sector participation through public private partnership (PPP) is seen as an interesting alternative approach.16 It

11 2011. BBS. Yearbook of Agricultural Statistics, Chapter 2 12 Bangladesh Bureau of Statistic, yearbooks of agricultural statistics, 2003-2012. 13 Large irrigation schemes have command areas of 2,000 ha or more. 14 The Government’s budget appropriation for maintenance only met about 50% of requirements for the 3 schemes. 15 For 2009–2010, budget was $126,000 against a demand of $710,000 and irrigation service charge was $12,000 against target of $430,000. 16 Participatory Irrigation Management (PIM) has been used as the primary method of achieving Irrigation Management Transfer (IMT) so the terms IMT and PIM are used interchangeably.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 5 Final Report has demonstrated promising results in few developing countries such as Brazil, Morocco and Ethiopia but is still to be developed in Asia. In 2009, the Asian Development Bank (ADB) provided a technical assistance (TA) to BWDB to examine alternative approaches of service delivery agreements and management arrangements including PPP for sustainable irrigation MOM in large irrigation schemes.17 The TA proposed a conceptual framework for engaging a third party operator to address the shortcomings in MOM of the combined Muhuri Irrigation Project (MIP). It established the basis for the social and economic feasibility of the approach and confirmed the farmer’s willingness to pay

18. The National Water Policy, adopted by Government in 1999, sets out a comprehensive policy framework for the water sector as a whole and for large-scale surface water irrigation. In so doing, the Policy provides a strategic vision for large-scale surface irrigation. Stakeholders in future schemes are to have a high degree of participation in planning, design, construction, and operation. Poor and other vulnerable persons will have equitable access to water and women will have an enhanced role in water management. Scheme management will be decentralized to the lowest appropriate level in accordance with basic IWRM principles and social and environmental issues will be properly managed. Future schemes will be under private management through leasing, concession, or management contracts, or will be jointly managed by the scheme implementation agency along with local government and community organizations. The policy envisages a state of knowledge and capability in the country to design, through broad public participation, water management plans with economic efficiency, gender equity, social justice, and environmental awareness contributing to water management and national objectives. The Water Act that was promulgated in May 2013 further revised and consolidated existing laws that govern the ownership, utilization and financial management of water.

19. The Sixth Five Year Plan, 2011–2015 recognizes the need to raise agricultural productivity, foster crop diversification, and boost public spending on rural infrastructure.18 The Plan also presents a strategic direction for medium and large scale surface water irrigation. At its highest level, the strategy focuses on modernization and improved management of existing irrigation systems and expansion of the irrigation areas. To reduce public costs in sustainably operating these schemes and to improve delivery service, the proposed strategy encourages use of PPP wherever appropriate. As part of an overall investment program for the water sector, the government has approved an investment plan to rehabilitate and modernize all large surface water irrigation schemes at an estimated total cost of $745 million. Where private-public partnerships are not appropriate, reliance should be placed on improving the quality of the services delivered by BWDB and on technologies to measure water applied to farmers’ fields. To improve services it is necessary to (i) field staff with basic skills required for sustainable delivery of irrigation services, (ii) provide training in participatory water management, and (iii) directly involve irrigators in decision-making for system management, operation, and maintenance.

B. Requirements C. Robust and well managed irrigation systems are central to boosting productivity and contributing to food security. Poor levels of delivery of surface water has increased the use of groundwater for agriculture with implications of sustainability of recharge and deteriorating quality (arsenic currently contaminates over 30% of groundwater resources). There is a need to reduce reliance on groundwater by improving the management of surface water and the reliability and efficiency of surface irrigation supplies. The present low performance of large irrigation schemes may be further aggravated in future by climate change: possible changes in temperature and rainfall patterns due to global warming may modify irrigation requirements, river hydrologic regimes, and the supply capacity of irrigation schemes. Such risks need to be assessed and adaptation strategies to be incorporated when modernizing the infrastructure and the system operation.Linkages to ADB Strategies 20. The proposed investment program is consistent with ADB's Strategy 202019 and Country

17 ADB. 2009. Technical Assistance to Bangladesh for Developing Innovative Approaches for Management of Major Irrigation Systems. Manila (TA 7260-BAN). 18 Government of Bangladesh, Planning Commission, Ministry of Planning. 2011. Sixth Five-Year Plan,2011–2015. Dhaka 19 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank 2008–2020. Manila.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 6 Final Report

Partnership Strategy (CPS) for Bangladesh (2011–2015)20 by reinforcing core areas of operations, such as infrastructure and water resources management and investing in irrigation infrastructure modernization. It proposes the recruitment of the private sector to achieve effective and sustainable management, which follows five of the seven key thematic drivers of the CPS namely; (i) good governance and capacity development; (ii) environmental sustainability and climate resilience, (iii) private sector development, (iv) gender equity, and (v) knowledge solution through the promotion of innovative irrigation modernization designs. The proposed investment program is also in accordance with ADB Water Operational Plan 2011–2020 as it has a strong focus in improving water use efficiency and water productivity

D. Institutional Framework 21. The policy, legal, institutional, and planning frameworks for the water sector in Bangladesh are well advanced. These provide the context within which the road map for the Irrigation Management Improvement Investment Program has been prepared. The Water Act was passed and notified in May 2013; the act revises and consolidates existing laws governing the ownership and utilization and financial management of water. To contribute to the national goals of sustained agricultural growth and improved food security through increased yields, the road map aims to assist the Government of Bangladesh in modernizing and rehabilitating infrastructure associated with existing major irrigation schemes, and to introduce and support public-private partnership models. The road map also envisages a more advanced relationship between irrigators and scheme managers based on advance payment for timely and efficient service delivery..

22. While a large number of public sector agencies are involved in the management of water, the Ministry of Water Resources (MoWR) has the most comprehensive mandate for water management. The core functions of MoWR consist of policy formulation, planning, monitoring and evaluation, and legislative matters. Personnel management is controlled by the Ministry of Establishment, fund allocation by the Ministry of Finance, and legal matters cleared by the Ministry of Law, Justice, and Parliamentary Affairs. The Planning Commission serves as a clearing house for projects from conceptualization through implementation. MoWR discharges its duties through the Water Resources Planning Organization (WARPO) and the Bangladesh Water Development Board (BWDB).

23. The Water Resources Planning Organisation: (WARPO) was established in 1992 under the Water Resources Planning Act as an exclusive public agency responsible for macro-level water resources planning. The mandate of WARPO is defined in the National Water Policy. In its role as the Secretariat of the National Water Council, it is well placed to provide an integrated approach across the various water using sectors. WARPO faces a number of operational challenges. To address these issues, Government is in the process of approving: (i) a revised Water Resources Planning Act and (ii) an Organizational Development Plan. A key of the new Water Act is the re-designation of WARPO from an organization to an authority and to strengthen the planning and coordinating role that WARPO carries out in the sector.

24. Bangladesh Water Development Board: BWDB Act 2000 redefined BWDB’s mandate, organizational structure and measures with the aim of improving its efficiency. The BWDB mandate was revised to respond to priorities identified in the National Water Policy (NWP) and the National Water Management Plan (NWMP), including: (i) integrated water resource management; (ii) conservation of the eco-system; (iii) more equitable access to water for different users; (iv) local stakeholder participation; and (v) sustainable OM.

25. In parallel with the promulgation of BWDB Act 2000, Government reduced staff levels and sanctioned 8,935 positions. The staff reductions were primarily focused on support staff. Since the early 90s, BWDB was not permitted to hire staff and so staff levels were reduced from the approximately 24,000 staff that worked in the organization during its peak in the 1970s. As a result of this strategy, staff levels in 2012 were about 6,000 persons.

26. While the strategy of attrition avoided certain obvious problems, it has created operational

20 The Country Partnership Strategy for India (2013-2016) is under approval by ADB. This reference will be updated once the document is approved.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 7 Final Report challenges. A key challenge is the rapidly declining population of junior and mid-level professionals (including Sub-divisional engineers) within BWDB’s staff profile. Generally, these are the individuals responsible for carrying out field activities which are key inputs to the entire spectrum of water management activities. The current staff profile in BWDB has many vacant positions at the field level and recruitment of good quality staff is of concern.

27. A potentially longer-term problem is that when hiring of sanctioned staff positions is restarted, there is likely to be an absence of leadership for the new recruits. The additional staff need adequate support resources to be effective including transport, computers and access to information; maps, data and previous studies. Within this framework severe staff constraints and shortages initiatives are urgently required how to meet the needs of sustainable and effective long term management.

E. Government Goals and Strategies. 28. GOB has set a number of goals that both help to define a vision for and have an impact on the strategies related to major surface water irrigation schemes, these include: (i) ensure sustained agricultural growth, (ii) increase rural incomes, (iii) improve food security, (iv) expand irrigation, (v) efficient and balanced utilization of land and water, and (vi) reduce vulnerability to natural disasters. Key strategies that support these goals are: (i) participation of local stakeholders in managing, operating and maintaining these schemes, (ii) encourage public-private partnerships to provide selected services, (iii) rationalize, rehabilitate, and modernize existing flood control, drainage, and irrigation schemes, and (iv) ensure farmers have access to complementary inputs such as fertilizers and energy (electricity or diesel).

F. Key Problems 29. A review of irrigation management systems of selected schemes throughout Asia which have been handed over to water user organizations (through irrigation management transfer) concluded that there was a need to move beyond the participation paradigm and involve the private sector in a private public partnership21 22. Key lessons of investments in irrigation within Bangladesh include: (i) establish robust mechanisms to ensure delivery of quality infrastructure including field distribution systems, (ii) involve the private sector in management, operation, and maintenance but ensure they are appropriately qualified and that further training is provided, (iii) farmers will pay for irrigation water that they receive where the level of service is improved and quantities and timeliness meet their needs. The experience of the Barind Multipurpose Development Authority was examined and the lessons that emerged include; (i) the operator needs to be self financing, dependency on Government support is difficult and not secure; (iii) the operator needs flexibility in managing the service to adapt to implementation experience and the needs of irrigators (iv) the operator needs to demonstrate high levels of efficiency to reduce wastage and minimize overheads; (v) cost recovery based on a volumetric basis provides significant increases in water use efficiencies; and (vi) there are opportunities for alternative and supplementary models of cost recovery that need to be explored.

30. The low performance of large irrigation schemes may be further aggravated by the potential impact of climate change. Possible changes in temperature and rainfall patterns due to global warming may modify crops irrigation requirements and river hydrologic regime and related supply capacity of the irrigation schemes. Climate change estimates through the use of downscale models are improving but there remain many spatial variations and inconsistencies in the estimates. In modernizing the irrigation systems, these risks need to be better assessed and adaptation measures incorporated into infrastructure design and system operation. Many of the large scale irrigation schemes are on transboundary rivers; with or without water sharing agreements these require effective management to incorporate the uncertainties of climate change and upstream water uses.

31. Despite a comprehensive water policy framework that strongly supports Governments agenda for major surface water irrigation schemes, performance in the subsector has been mediocre. Irrigation infrastructure is affected by insufficient maintenance stemming from inadequate budgets, the absence of need-based OM cost assessments, undefined monitoring procedures, and little if any support for routine

21 Participatory Irrigation Management (PIM) has been used as the primary method of achieving Irrigation Management Transfer (IMT) so the terms IMT and PIM are used interchangeably. 22 IWMI, 2009. Irrigation Reform in Asia. A Review of 108 Cases of Irrigation Management Transfer. p57.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 8 Final Report maintenance from local water management organizations. System management and operation is further affected by capacity within BWDB where staff levels have been reduced, remaining staff are not well versed in participatory methods and have a bias towards managing construction, which in turn distracts them from developing capability in management, operation, and maintenance, Farmers are reluctant to participate in OM for reasons including the lack of a viable management organisation and lack of enforceable measures to collect revenue for OM as a result irrigation service delivery is unreliable, their participation is not encouraged, and they have limited interaction with service providers. Under the National Water Policy there is a clear agenda and direction for the Governments to improve scheme management, operation, and maintenance and that larger schemes will be placed under private management or joint management by the implementing agency along with local government and community organizations. This approach has the potential to address many of the weaknesses affecting the performance of major surface water irrigation schemes though progress has been slow.

32. Investing in the rehabilitation and modernization of irrigation schemes will have limited benefits and will not be sustainable unless the physical improvements are partnered by significant strengthening of the scheme management including the development of long-term, effective and sustainable strategies for OM including: (i) adequate funding supported by viable mechanisms for cost recovery; (ii) introduction of new and highly efficient and cost effective maintenance activities; and (iii) establishment of an efficient management organization; and (iv) improvements in water use efficiencies and measures to reduce water demands.

G. Opportunities 33. For large scale irrigation schemes the current approaches of Participatory Irrigation Management (PIM) through Government with lower level responsibilities assigned to water users is proving ineffective. The logistics of communication and addressing the very large numbers and differing needs of water users through a fully participative approach is not practical. The options for the long term and sustainable management of large scale irrigation schemes were examined in 2011 under the ADB TA DIAMMIS which developed proposals for long term sustainable management and presented the conceptual framework for the use of a third party operator to address the short-comings of the project management of Government, PIM and the small individual pump operators.

34. The use of private sector management for irrigation is not new but less developed as the water supply sector. Through performance based management contracts private sector management operators can be tasked to meet the key requirements of OM of major irrigation schemes with potentials to develop sustainable and efficient irrigation systems and improved cost recovery for OM.

35. It is proposed to achieve effective management through the engagement of third party private sector management operators who will directly bring the necessary expertise to effectively operate and manage the irrigation schemes. The management operators will also address the issues of cost recovery for OM. To support the management initiatives the irrigation projects will be upgraded and modernized to improve efficiencies and to support more dependable supplies, wider access to irrigation with the results of higher yields, larger irrigated areas and increased overall production

H. Investment Strategy for Large Scale Irrigation 36. Within Bangladesh there are 15 existing large-scale (more than 2,000 ha) irrigation schemes with a net total command area of 552,730 ha, in which Government provides distribution systems down to secondary or tertiary levels23. For the 1996 – 98 period, the National Water Management Plan reported that only about 46% of the net command area of these schemes was irrigated from BWDB sources in the main irrigation season. There is little evidence to suggest any improvement during the interim period. Improving performance by increasing the area irrigated within these schemes and recovering fees would contribute to agricultural and economic growth through increased agriculture production and reduced subsidies. Also, developing sustainable approaches to management and operation of the existing schemes would provide a sound basis for developing new schemes. The National Water Management Plan (2001) identified an additional 1 million ha that could be irrigated with new publicly financed, surface

23 2000. National Water Management Plan. Volume No 3: Investment Portfolio. Ref AW001

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 9 Final Report water schemes in areas where tubewell irrigation is limited

37. As part of an overall investment program for the water sector the Government has approved an investment plan to modernize and upgrade major surface water irrigation schemes shown in Table 2 below. It is envisaged that infrastructure in these schemes will be modernized and upgraded and management structures will comprise private or joint management systems to improve the efficiency, sustainability, and service delivery in accordance with the National Water Policy (1999), the National Water Management Plan (2001), and the Sixth Five Year Plan (2010 – 2015).

Table 2 Investment Plan for Major Irrigation Infrastructure

Item Total Amount1/ Net Cultivated Area (‘000 ha) 7,700 Net Irrigated Area (‘000 ha) 2/ 4,850 Command Area of Major Infrastructure (‘000 ha) 552 Area Actually Irrigated by Major Infrastructure (‘000 ha) 254 Potential for New Major irrigation Schemes (‘000 ha) 1,178 Investment for Modernization Estimated Modernization Requirement (million US$) 3/ 745 Source: 1/ National Water Management Plan Estimates 2/ 2011. BBS. Yearbook of Agricultural Statistics 3/ PPTA Consultant estimate based on investment of $1,350 / ha 4/ BWDB – Chief monitoring Unit February 2013 5/ The total IMIIP project investment is $245million with physical investments(civil works) of $128 million at 2013 prices. . I. Muhuri Irrigation Project 38. As a first step to implement the road map the Muhuri Irrigation Project has been selected as an advance project for modernizing of infrastructure and development of long term and sustainable Management Operation and Maintenance (MOM) of the MIP including transfer of the MOM to private sector.

39. The original MIP construction was completed in 1986. The design enabled dry season irrigation as well as supplemental wet season irrigation by constructing the Feni Closure Dam and Regulator to create a reservoir downstream of the confluence of the Feni, Muhuri and Kalidash-Pahalia rivers. The backwaters from the barrage enter the natural channels (khals) and canal network by gravity. From there it was to be lifted to irrigate the fields by about 800 low-lift diesel pumps. The project was to increase the dry season rice area from about 6,000ha to 20,000ha. Initially, farmers experienced major improvement in production and were able to cultivate much larger areas with rice; however siltation of the reservoir and khals due to lack of maintenance and reduction of river runoff in the river has reduced the benefit over the years. The area irrigated in the dry season has shrunk to 11,300 ha. Increase in diesel cost combined with low efficiency of the pumps and decrease in rice price further contribute to discourage farmers from cultivating. Opportunities have been identified to substantially increase water use efficiency and reduce pumping cost through innovative design modernization and improved MOM.

J. Road Map 40. The road map for the Irrigation Management Improvement Investment Program has been prepared in the context of existing well-developed policy, legal, institutional, and planning frameworks for the water sector. It is designed to assist the Government in modernizing and rehabilitating the infrastructure of existing major irrigation schemes, and to introduce public-private partnership models. The full road map has been prepared for the modernization of large irrigation schemes and is presented in Appendix 1. It includes physical and non-physical investments including necessary measures for development and administration of PPP for irrigation.24 The road map also envisages broad adoption of advanced systems to facilitate improved revenue collection for payment of services. An example is the

24 Road Map (accessible from the list of linked documents in Appendix xx)

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 10 Final Report performance based system that was successfully adopted by the Barind Multi-Purpose Development Authority under the Ministry of Agriculture to sustainably manage and operate more than 100,000 ha irrigated from deep tube-wells and low lift surface irrigation pumps.

41. A summary of the road map for the modernization of the large scale irrigation is presented in Table 3 below

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 11 Final Report Table 3: Road Map for the Modernization of Large Scale Irrigation Key Themes Definition and Activities Program Objectives Responsibilities Timing 1/ Performance Re-establish the full functioning of major (i) Infrastructure is well maintained and Establishing performance-based irrigation Interim results from the Based Irrigation irrigation systems including sustainable basis. Water use is governed management for the large-scale irrigation Stage 1 IMIP project Management (i) Develop advanced systems to facilitate by irrigators paying on a (proxy for) schemes is the responsibility of the should be apparent by established for improved revenue collection. volumetric basis. . Bangladesh Water Development Board. In June 2016. Large Irrigation (ii) Develop institutional strategies for (ii) Provide irrigators with long-term the first stage 2014 to 2020 this will be Scheme performance interventions including the sustainable access to irrigation facilities in supported by the ADB financed Irrigation Final results by 2020. long term engagement of private sector a manner appropriate to the individual Management Improvement Project (IMIP) third party irrigation management schemes. working with the support of the Program Stage 2 GK an or operators (IMOs). (iii) Reduce the burden of recurring operation Management and Design Teesta irrigation (iii) Design of IMO roles appropriate for and maintenance costs from Government Consultants(PMDC) and with private sector projects to be taken up different schemes incorporating lessons budgets. Irrigation Management Operator(IMOs) to be starting in 2016 based learned from IMIP. (iv) An established PPP modality in the engaged for; Muhuri irrigation project under on; (i) the early review (iv) Develop appropriate and viable irrigation sector that Government supports IMIP (stage 1) and possibly for , Teesta and of lessons learnt in approaches for cost recovery to ensure (v) Long term sustainability requires the Ganges Kobadak Irrigation Project through Muhuri; (ii) proposals long term sustainability. reduction of dependency on irregular and subsequent projects (stage 2). for management for the (v) To develop agricultural support services inadequate government funding. Teesta and GK projects to assist farmers to take up more efficient (vi) Parallel upgrading of agriculture to (2016) and (iii) review and higher return agriculture systems improve the farm level returns as well as . of all large irrigation including lower water use cropping. reduce water demands To optimize the schemes. (vi) Assess and define roles for BWDB and use of the combined surface and ground Lessons learnt would be applied to the Stage WUAs that support the PPP enterprise. water resources to ensure sustainability 2 of the road map. Stage 3 programs (vii) Develop institutions to support the PPP and to provide the maximum benefit. would be other large concept for irrigation and promote scale schemes awareness of stakeholders in new Conjunctive water use studies including proposed to start after approaches. modeling will be implemented under IMIP 2020. (viii) Develop conjunctive surface and ground 2014-2016 water management 2/ Required activities include: (i) Properly focused investments to ensure a BWDB supported by international and Three Stages: Modernization reasonable likelihood of success for the national consultants. of Infrastructure (i) Review all large-scale irrigation projects PPP modality (i) Stage 1 schemes for Large to identify those most suitable for (ii) Properly functioning infrastructure that under IMIP 2014 – Irrigation modernization using an approach that provides access to sufficient irrigation 2020. Schemes involves PPP and sustainable O&M. water on a timely basis. (ii) Define the approach to physical (iii) Sustainable command areas included in (ii) Stage 2 GK and or modernization of infrastructure. the investment design. Agreed rules and Teesta schemes to (iii) Analyze water availability in the context operational procedures. be identified and of cropping patterns and crop water (iv) Technologies identified that support appraises by 2015 requirements and prepare a water investment goals. under the IMIP balance. (v) Investments are cost effective and project. Review of all (iv) Analyze options for modernization- appropriate irrigation fees established in a large scale irrigation technical social and agricultural. transparent manner reflecting actual costs. would be undertaken (v) Assess capital and OM costs. (vi) Fit-for-purpose infrastructure. PMDC consultants under IMIP to implement a by the PMDC (vi) Design investment program for review of potential schemes in 2016. consultants in 2016. Modernization – start with Muhuri, Review other potential large scale schemes. . Teesta, and GK and then onto next Planning and design to be taken up by end Planning and design for additional schemes stage. 2019. to be taken up in 2019 under separate (iii) Stage 3 funding. schemes to be The IMIP project will rehabilitate large scale implemented by irrigation in Muhuri, and possibly Teesta and Government after GK. Other large scale schemes to be taken 2023. up ~500,000ha. Potential additional 1.2 million ha that could be considered for development.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 12 Final Report Key Themes Definition and Activities Program Objectives Responsibilities Timing 3/ Development A framework to clearly define relationships Ministry of Water Resources and WARPO Irrigation Policy of Strategic between various parties, their rights, roles, with contracted legal support. developed on the basis Frameworks to and responsibilities. WARPO with financial support together with of lessons learned from better define the A. Overall the support under IMIP through the PMDC. IMIP, 2016. roles of the 1. Policy Framework A.1. different parties The 2000 Water Policy adequately defines (i) A guideline required ensure consistency, Led by Ministry of Water Resources and National Water Code the necessary policies for engagement of synergy and legal basis of different includes representatives from BWDB, LGED, drafted by 2016. private sector to manage large scale management approaches for small and WARPO, and Local Government. Enacted by 2018 irrigation. large irrigation is proposed. 2. Plan Framework A.2. Initiate Updating of National Water (i) An updated NWMP with improved data to Ministry of Water Resources, Ministry of Management Plan . refine and better focus future investment Finance, BWDB Complete NWMP Update. priorities. The existing Plan (2004) was to be updated every five years. B. Irrigation Management B.1. 1. Involving Irrigators (i) Updated guidelines will provide for and (i) Update the 2000 Guidelines for define a PPP approach for major irrigation Participatory Water Management and will provide increased specificity on (GPWM) to ensure appropriate how interveners relate to local stakeholder participation in large scale stakeholders. schemes where MOM responsibilities (ii) A revised Irrigation Service Charge have been assigned to IMOs Ordinance will take a more realistic BWDB and Water Management Improvement NWMP update (ii) Revise the 2003 Irrigation Service Charge account of the real costs of the provided Project (WMIP) with the help of the PMDC completed Dec 2015. and develop improved guidelines of services and approaches to address will ensure that all specified entities are approaches for collection and use of the collection issues. established, appropriately staffed and trained Institutional structures funds. and are functional. in place by March 2014 2. Bangladesh Water Development Board B.2. (i) IMIP Management Unit ensures quality Lessons learnt from the IMO in Muhuri, will (i) Establish an IMIP Project Management program delivery. be reviewed by the PMU, PMDC and Unit under the ADG Planning. (ii) PPP Cell ensures fair and operable PPP independent panel of experts. Draft Stakeholders in synch (ii) Establish and Train a PPP Cell. agreements and contracts, good guidelines based on the findings to be with project operations (iii) Establish an IMIIP Monitoring Cell under coordination with PPP cell. prepared and communicated to MOWR. by June 2015 chief Monitoring. (iii) Monitoring Cell to provide independent (iv) Establish a Safeguards Cell under Chief verification of stakeholders and Project Management and Design Consultants Lessons incorporated Engineer Monitoring intervention impacts. working with the Irrigation Management by June 2016 (v) Amend and adopt the draft BWDB (iv) Environmental and social objectives of Operator and the Implementation Operation and Maintenance Policy 2010 the program are being met or adhered to. Coordination Committee. to incorporate new approaches where (v) Ensure MOWWR and BWDB OM Policy MOM responsibilities have been assigned captures MOM reform including transfer to an IMO. of O&M to IMOs

3. Progress in PPP for Irrigation Management B.3. Establish information, communication, and (i) Well informed stakeholder group able to education strategy and plan, and start its participate meaningfully in program implementation. implementation and long-term operation PMU supported by the PMDC consultants. Activities to be initiated Develop PPP management systems for and maintenance. Lessons learnt to incorporated into the IMIP in 2014 and completed subsequent large scale irrigations scheme (ii) Lessons from Tranche 1 investments are training and awareness program, by June 2018 modernization projects (Teesta and or GK) appropriately incorporated into Tranche 2 Activities to be initiated based on the proposals and lessons learnt in 2014 and completed from Muhuri Irrigation Project. by June 2018

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III. THE IRRIGATION MANAGEMENT IMPROVEMENT PROJECT (IMIP)

A. Introduction 42. The Irrigation Management Improvement Project (IMIP)25 is designed to realize the full production potential of large scale irrigation schemes in Bangladesh. It will address the recurrent lack of sustainable management, operation and maintenance (MOM) and increase water productivity by transferring the MOM schemes to private operators and by introducing innovative infrastructure modernization.26 The Project will focus on the modernization of Muhuri Irrigation Project (MIP) in the Chittagong division. It will also finance the feasibility study and detail design of the modernization of the Ganges-Kobadak (GKIP) and the Teesta Barrage (TBP) irrigation projects which are located respectively in the Khulna and Rangpur divisions.

43. The project is designed to support the establishment of performance based irrigated agriculture initially for the MIP including the development of modernized and highly efficient irrigation systems using new approaches to reduce water losses and improve water availabilities; including improved canal systems and water allocation mechanisms. In parallel the project will develop new and efficient irrigation management through a private sector Irrigation Management Operator (IMO) for the MIP. The project provide agricultural support to assist farmers use the opportunities of the improved irrigation to improve production systems. New and fair approaches to cost recovery for OM will be piloted and taken up through the IMO to ensure adequate funds to ensure the long term sustainability of the projects

B. Impact and Outcome 44. The objective of the project is to realize the full production potential of large scale irrigation schemes through the use of private sector managers supported by rehabilitation and modernisation of the schemes' infrastructure to establish highly efficient and sustainable irrigated agriculture. The results will be higher yields, larger irrigated areas and higher cropping intensities including diversification into higher return cropping systems.

45. The project impact will be sustained high growth in agriculture. The outcome will be increased productivity and sustainability of MIP.

C. Outputs 46. The project has 3 outputs comprising:

(i) Performance-based irrigation management and agriculture support services established. This output will include contracting private irrigation management operators under 5 years performance-based management contracts. This “Construction phase” irrigation management operators (C-IMO) will supervise modernization works, establish sustainable MOM and provide agricultural support services in MIP. Efficient management systems will be adopted to maximize water use efficiencies and develop sustainable and reliable irrigation service delivery. Viable and effective operations and maintenance (OM) cost recovery mechanisms will be setup to achieve 100 % cost recovery. The objective will be to bring MIP scheme to the level of profitability and sustainability required for enabling the recruitment of a long term (15 years) “Management phase” irrigation management operator (M-IMO) through a PPP modality. The project will also support the preparation of the long-term PPP transaction.

(ii) Irrigation system infrastructure rehabilitated and modernized. This output will include

25 During discussions in December 2013 with ADB and MOWR it was decided to change the modality of the funding for the project from a Multi Financing Tranche Financing Facility (MFF) to a series of standalone projects. The title of the project would be changed from the Irrigation Management Improvement Investment Program (IMIIP) to the Irrigation Management Improvement Project (IMIP). The design of the IMIP is largely the same as the IMIIP with the same objectives to support the road map. The IMIP would support the investment to modernise the Muhuri Irrigation Project (MIP) as well as the preparation of feasibility studies for Ganges Kobadak and Teesta Barrage Irrigation Projects which would be financed through additional financing or a new standalone loan(s) in the future. 26 ADB. 2012. Technical Assistance to Bangladesh for Preparing the Irrigation Management Improvement Project. Manila (TA 8154-BAN).

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physical rehabilitation and modernization of irrigation infrastructure including (i) repair of 330 km of canals and 22.6 km of coastal embankments with ancillary facilities; (ii) development of 17,000 ha of modern and highly efficient piped water distribution system to improve timely water access and reduce water losses; (iii) provision of prepaid card meters to allow water allocations to be based on a volumetric basis and ensure full and transparent payment and accounting, (iv) full electrification of the pumping to reduce the operational costs and increase management flexibilities and; (v) pilot solar panels and pumps for 60ha.

(iii) The Project is efficiently managed with effective institutional development. This output will include (a) establishment of competent project management and project implementation unit; (b) timely procurement and disbursement; (c) timely appraisal of GK and Teesta irrigation projects modernization and provision of required feasibility studies and detail designs and strategies to transfer MOM to private sector; and (d) institutional support and capacity and awareness building of BWDB and water management organizations to successfully administer and support PPP contracts.

D. Design and Monitoring Framework 47. The design and monitoring framework for the project is presented in Table 4 below.

Table 4: Design and Monitoring Framework Design Summary Performance Targets and Indicators Data Sources and Assumptions and Risks with Baselines Reporting Mechanisms Impact By 2025 Assumptions Sustained high Annual real agricultural growth Bangladesh Government remains growth of remains at 4.5% ( 4.5% is the Bureau of committed to finance agriculture in baseline average 2010–2012) Statistics Reports agriculture and natural Bangladesh resources sector BWDB annual reports Risks Sharp increases in input prices (fertilizer, pesticides, electricity, etc.) Outcome By 2020: Assumption Increased Dry season irrigation area in MIP BWDB project REB/PBS supplies power to productivity and increased by 50% from 11,300 ha in monitoring and the Muhuri Irrigation Project sustainability of 2013 to 17,000 ha evaluation reports as per agreement (MOU Muhuri Irrigation O&M funding (from farmers and Annual statements signed with BWDB) Project. GOB) increases from 84% in 2013 to of cost recovery by 100% PPP operators and Average yield of irrigated winter government paddy (boro) increases from 3 records tons/ha in 2013 to 4 tons/ha BWDB annual reports for Muhuri

Outputs By 2019: Assumptions 1. Performance- Private sector shows interest based irrigation Long term lease contract in place for Signed lease in PPP for irrigation management and MIP large scale irrigation projects. agreement agriculture support services established Efficient irrigation management in Annual statements place with 100% of level 2 and level of cost recovery by 3 MOM cost recovery achieved from PPP operators and 2013 baseline of 63%. government records 300 trained farmers adopt more productive irrigated agriculture PPP operators methods. At least 20% trainees are records women. 2. Irrigation By 2019: For all indicators: system infrastructure rehabilitated and MIP is rehabilitated and modernized BWDB, IMO

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Design Summary Performance Targets and Indicators Data Sources and Assumptions and Risks with Baselines Reporting Mechanisms modernized employing 5% of women and 20% records and MIS poor and socially excluded as data workers during construction including:

22 km coastal embankment repaired 450 km canal drains re- excavated

One barrage rehabilitated 800 lift pumps with prepaid meters installed employing at least 10% woman as pump operators and 30% as mobile water unit vendors 17,000 ha modernized with piped tertiary distribution 3. The project is The Project meets annual contract ADB records efficiently managed award and disbursement schedule Financial records with effective The Project MIS established with sex institutional disaggregated database BWDB project development The PPP cell is successfully progress reports established with adequate capacities. Activities with Milestones Inputs 1. Performance based irrigation management and agriculture support services ADB: $46 million are established Government $7.6 million 1.1 Award PPP management contract for one large scale irrigation schemes by Beneficiaries $4.4 million September 2014 1.2 Establish implementation Coordination Committee (ICC) to support scheme management for the Muhuri sub-project by October 2014 1.3 Assess IMO stage 1 viability (October 2017) and prepare lease bidding documents (January to October 2016) 1.4 Award long-term irrigation management lease contract for Muhuri IMO (September 2019) 2. Irrigation system infrastructure rehabilitated and modernized 2.1 Award contract for 30% of works including: (i) khal excavation and embankment rehabilitation and (ii) 2,000 ha pumps and pipe irrigation (September 2014) 2.2 Undertake detail design for remaining works including: (i) structures, river protection and buildings; (ii) electrification and (iii) remaining pumps and pipe irrigation (from September 2014 to September 2016) 2.3 Award all civil works contracts (October 2017) 2.4 Complete detail designs of GK and Teesta irrigation project modernization (April 2016) 3. The project is efficiently managed with effective institutional development Establish PMU (January 2014) 3.1 Award PMDC contract (July 2014) 3.2 Establish Project MIS (August 2014) 3.3 Establish BWDB PPP cell (December 2014)

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E. Program Investment and Financing Plan The project is estimated to cost $57.9 million as shown in Table 5 below

Table 5: Project Investment Plan

($ million) Item Amounta A. Base Cost b 1. Performance Based Irrigation Management 7.7 2. Rehabilitated and Modernized Irrigation Schemes 34.2 3. Strengthened Project Management 9.1 Subtotal (A) 51.0 B. Contingenciesc 5.1 C. Financing Charges During Implementationd 1.8 Total (A+B+C) 57.9 a Including taxes and duties of $5.3 million to be financed by the government. b in mid-2013 prices. c Physical contingencies are computed at between 0% and 10%. Price contingencies computed on foreign exchange costs at 2.2% in year 1, 1.9% in year 2 and 1.9% thereafter, and on local currency cost at 8.5% in year 1, 7.5% in years 2 and 7.0% thereafter, including provisions for exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest computed at 2.0% per year. Source: Asian Development Bank estimates. . 48. The government has requested a loan in various currencies equivalent to $ 46,000,000 from ADB's Special Funds resources to help finance the project. The loan will have a 25-year term including a grace period of 5 years, an interest rate of 2.0% per annum during the grace period and thereafter, and such other terms and conditions set forth in the draft loan agreement. The MIP beneficiaries will contribute $4.2 million through payment of water service charges and $0.17 million to the development of farm canal systems. The government will finance the balance of $9.3 million as counterpart funding, including costs allocated to BWDB for OM of MIP Level 1 infrastructure. The financing plan is shown in Table 6 below.

Table 6: Financing Plan

Amount Percent of Source ($ million) Total Asian Development Bank 46.0 79.4 Beneficiariesa 4.4 7.6 Governmentb 7.6 13.1 Total 57.9 100.0 a Contribution to irrigation operation and maintenance costs of each project funded by water charges levied on farmers. IMO costs for initial five years paid by ADB. b Includes financing by BWDB of project Level 1 infrastructure and project management. Figures may not sum up to total due to rounding. Source: Asian Development Bank estimates.

F. Implementation Arrangements 49. The implementation arrangements are summarized in Table 7 and described in detail in the project administration manual.27 BWDB will be the executing agency. A project management unit (PMU) led by a project director with at least the rank of additional chief engineer will be established in BWDB main office in Dhaka. A Project implementation unit will be established in MIP. A PIU director will be appointed to supervise MIP modernization field implementation. A Project Steering Committee chaired by the Secretary of the Ministry of Water Resources and comprising representatives from all relevant departments will review the project progress, resolve critical implementation issues and provide strategic and policy guidance when required.

27 Facility Administration Manual (accessible from the list of linked documents in Appendix 4).

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Figure 1: Project Implementation Arrangements

50. An Implementation Coordination Committee (ICC) will be established in MIP under the leadership of BWDB chief zonal engineer with representatives from relevant department local offices, farmer’s organizations and IMO. The ICC will be tasked with resolving conflicts and implementation issues related

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 18 Final Report to the implementation of the works and the IMO performance based management contract.

51. Additional financing may be considered if the project performs well. Necessary provisions were made in the loan to achieve readiness for additional financing. These include studies and detail designs for the modernization of GK and Teesta irrigation Projects.

52. For MIP, BWDB will recruit a private consulting company or consortium through competitive selection and enter into a five-year management contract agreement. The C-IMO will be responsible for delivering efficient service and collecting revenue to recover the cost for MOM. In addition, the C-IMO would be responsible for the: (i) construction supervision of civil works in MIP; (ii) participatory design of level 3 system modernization; and (iii) development of pilot agricultural demonstrations and income generation activities. After 5 years, the M-IMO will be recruited through a 15-year lease contract to maintain the MOM levels established during the 5 year first stage. The contract will be awarded through a competitive tender based on (i) a fixed fee for the lease and bidders present a financial offer for the water charge; or (ii) a predetermined water charge and bidders would present a financial offer for the lease. After 15 years, the contract would be re-tendered.

53. Procurement of works, goods, and services financed by ADB will be carried out in accordance with ADB’s Procurement Guidelines. Consultant selection and engagement will be carried out in accordance with ADB’s Guidelines on the Use of Consultants. In view of the lack of experience of the EA with performance based management contract and the need to ensure expeditious mobilization of the Project Management and Design Consultant (PMDC) the Government requested ADB to undertake the recruitment of the Project Management and Design Consultant (PMDC) and the C-IMO on their behalf. BWDB retains the responsibility for negotiating and signing the contract with the PMDC and C-IMO, issuing the notice to proceed, and supervising their services.28 The PMDC and C-IMO recruitment will adopt 90:10 quality-cost ratio since high level of expertise is essential to design performance based irrigation management approaches for Project 2 and to the establish a strong and sustainable management organization for MIP. In addition incentives linked to performance of C-IMO consultant will be paid against achievement of key performance indicators (KPIs). BWDB with support from the PMDC will monitor the performance of the IMO against the KPIs. Least Cost selection method will be used for small consulting assignment including external audits, independent safeguards monitoring and simple studies.

54. A PPP cell will be established within BWDB. It will prepare the bid documents; support the bidding process and the contract administration of the C-IMO and later the M-IMO contract. The PPP cell will become permanent. A Project Monitoring Cell will be established in BWDB’s Monitoring Division. It will provide independent verification of the performance of various stakeholders and to monitor the project progress against outputs and targets set out in the Design and Monitoring Framework.

1. Steering Committee

55. A Project Steering Committee will be established to provide overall coordination to the Program and to deal with issues requiring inter-ministerial coordination. The Steering Committee will be chaired by the Secretary, Ministry of Water Resources (MOWR). The Project Steering Committee will include representation of all concerned ministries and agencies including: Additional Secretary Ministry of Water Resources, Joint Chief Ministry of Water Resources, Joint Secretary Ministry of Agriculture, Joint Secretary Local Government and Cooperatives, Joint Secretary Ministry of Environment and Forests, Joint Secretary Economic Relations Division (ERD) Director General Agriculture Rural Development and Research Sector IMED, Joint Chief Irrigation Wing Planning Commission, Director General BWDB, Joint Chief General Economic Planning Division, Director General DAE, Deputy Secretary Finance Division Ministry of Finance, Director General Bangladesh Water Development Board, Director General Department of Agricultural Extension, Additional Director General BWDB O&M 1 and 2, and Chief Engineers and Superintending Engineers of the relevant BWDB Zones and a representative of the ADB Bangladesh Resident Mission. The Project Management and Design Consultants as well as the Irrigation Management Operator will also participate in the Project Steering Committee as observers.

28 ADB. Project Administration Instructions, Section 2.05, para. 47.

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Table 7: Implementation Arrangements

Aspects Arrangements Implementation period July 2014 to July 2020 Estimated completion July 2020 date Management (i) Oversight body Project Steering Committee: MOWR Secretary (chair) BWDB, MOA, LGC, MOEF, ERD, ARDRS, PC, DAE, BRM MOF GED (members) (ii) Executing/ BWDB implementing agency (iii) Implementation unit Project management unit in Dhaka and at field level (46 staff) Procurement International competitive 8 contracts $30.3 million bidding (works) Shopping 7 contracts $0.3 million Consulting services PMDC QCBS 595 p-m (82 p-m international $7.1million and 498 national) C-IMO QCBS 868 p-m (47 p-m international, $8.4 million 821 pm- national) Panel of experts 14 p-m (4 p-m internationals $0.15 million Individuals and 10 p-m nationals) Safeguard monitoring, Several contracts $0.104 million studies , audits - LCS Disbursement The loan and/or grant proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook and detailed arrangements agreed upon between the government and ADB.

ADB = Asian Development Bank, ARDRS = Agriculture Rural Development and Research Sector, BRM =Bangladesh Resident Mission, BWDB = Bangladesh Water Development Board, DAE = Department of Agriculture Extension, EPD = Economic Planning Division, ERD = Economic Relations Division, FTP = full technical proposal, GED = General Economic Division, IMO = irrigation management operator, LCS= Least Cost Selection, LGC = Local Government and Cooperatives, MOA = Ministry of Agriculture, MOEF = Ministry of Environment and Forests, MOF = Ministry of Finance, MOWR = Ministry of Water Resources, PC = Planning Commission, PIU = project implementation unit, PMDC = project management and design consultant, QCBS = quality- and cost- based selection. Source: Asian Development Bank estimates.

56. As well as dealing with issues that emerge during the implementation the Project Steering Committee will have two permanent agenda items: review safeguard compliance, and review project impacts in terms of metrics that include amongst others: poverty and gender. These agenda items will require a monitoring unit to prepare submissions to the Project steering Committee. The steering committee will meet at least twice per year

2. Executing Agency

57. The Executing Agency for the Project will be the Bangladesh Water Development Board. A Project Director will be appointed with at least the rank of additional chief engineer. The Project Director will be responsible for the overall management of the project and will manage the Project Management Unit and authorize payments. He will report directly to BWDB additional Director General Planning.

58. The Project Director will be supported by the IMIP support services based on seven support units; accounts, administration, procurement, PPP, Planning and Design, Safeguards and Communications and Strategy Building. The core of the project management will be managed by the Dhaka central office however supported by frequent field visits to engage with the field staff as well as stakeholders. All procurement, payments as well as planning and design will be managed by the support units based in Dhaka.

59. A Project implementation unit (PIU) will be established in MIP. A PIU Director with the rank of Superintending Engineer will appointed. He will be in charge of supervising MIP modernization in the field including the activities currently managed by the GoB as well as the investments and OM activities of the project. The PIU Director will be based in the field but will make frequent visits to the PMU in Dhaka. The PIU unit would incorporate the staff of the superintending engineer's office in Muhuri. Eight staff would be

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formally assigned to the PIU (executive engineer, SDE (3nr) Accountant and (data operator (3nr)). For the Teesta Barrage and the GK irrigation projects a small Design Support Unit (DSU) will be set up under the direction of a Executive Engineer Design to be based at the project site. Coordination and support will be provided by the Project Directors of the two projects on a part time basis.

60. The development of capacity in the management of PPP is a key requirement. A PPP unit will be established to support the Project Director, the unit will comprise of one person from Government with appropriate knowledge in tendering, contract management, negotiating, legal, and communication and preferably private public partnerships. The unit will work closely with the procurement unit and will be responsible for tender documents and will be active in the bidding process during the engagement of the Irrigation Management Operators (IMOs). The cell will also be a party to the PPP contract negotiations between the Project 1 management phase IMO (M-IMO) and Project 2 construction phase and management phase IMOs and BWDB and will, in the longer term, be responsible for monitoring and managing the PPP contract. The PPP cell will participate and support the Implementation Coordination Committee in C-IMO and M-IMO performance evaluation and review and will maintain linkages to the PPP cell under the Prime Minister's Office. It is expected that PPP cell in the Prime Minister's office will be able to provide specialist PPP support as and when requested by BWDB. BWDB will consult with the PPP cell in the prime minister's office and prepare a MOU to identify and implement appropriate support actions. Support to establish and develop the PPP cell will be provided by the PMDC.

61. Positions outside the PMU: As the PPP lease contract will continue after the completion of the IMIIP project it will be necessary to create a structural PPP cell outside the PMU funded from the establishment budget. This will be established by year 3, two years prior to the start of the Muhuri lease contract. Similarly a monitoring cell will be established to provide independent verification of the performance of various stakeholders as well as assessing impacts associated with investment objectives. There is an existing monitoring division within BWDB under the Chief Monitoring who reports to BWDB's Director General. The IMIP monitoring cell will be situated under the Chief Monitoring. The monitoring cell will monitor the project progress against the outputs and targets set out in the Design and Monitoring Frameworks (DMF).

62. The proposed PMU staffing is shown in the Table 8. Initial recruitment of the PMU priority positions will be by 31 January 2014 with the PMU to be fully established by 31 July 2014. Staff will be mainly provided through BWDB on deputation or additional charge or through external recruitment if suitable staff cannot be sourced through BWDB.

Table 8: Proposed PMU Staffing

IV. V. VI. VII. FT/PT Recruitment Position Nr Responsibilities/ Location Date 2014 Source A Central PMU Dhaka IMIP Project Director Head Project Head of the PMU responsible for 1 1 FT January Deputation Management Unit. overall project implementation (ACE/SE Gr-2/3) Deputy Director Head of the Central Accounts 2 Accounts and Finance 1 PT July Deputation. unit (Gr-5) 3 Accounts Officer (Gr-9) 1 Central Accounts Unit FT March Deputation Accountants Clerk Additional 4 Assistant Accountant 1 Central Accounts Unit FT July charge (Gr10/11) Executive Engineer Central Planning and Design 5 Planning and Design 2 Unit. Planning and Design of FT January Deputation (EE Gr-5) GKIP, TBP and MIP 6 Economist (Gr-5/6) 1 Central Planning and Design Unit FT March Deputation 7 MIS Expert (Ass 1 Central Planning and Design Unit FT March Deputation Engineer Gr-9) Capacity Building and 8 1 Central Capacity Building Unit FT March Deputation Communication Officer

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IV. V. VI. VII. FT/PT Recruitment Position Nr Responsibilities/ Location Date 2014 Source (Gr-5/6) Procurement Officer 9 1 Central Procurement Unit FT January Deputation. (SDE Gr-6) 10 PPP Officer (Gr-6) 1 Central PPP Unit FT July Deputation Safeguards Officer (Gr- 11 1 Central Safeguards Unit FT March Deputation 6) Deputy Director PDs office/ Central administration Additional 12 1 FT March Administration (Gr-5) unit charge Administration PDs office/Central administration Additional 13 1 FT July Assistant (Gr 14) unit charge Data Entry Operator PDs office/Central administration Additional 14 2 FT July (Gr-16) unit charge PDs office/Central administration 15 Driver (Gr-16) 4 FT March Outsource unit MLSS & cleaner (Gr- PDs office/Central administration 16 5 FT March Outsource 20) unit Sub Total PMU 25

A. Project Implementation Unit (PIU) Feni Head of implementation of the Muhuri Irrigation Project. Muhuri Project Reports to Director Project 1 Implementation Unit 1 FT March Deputation Management Unit (PMU) Liaises Director EE (Gr.-5) with central support units and field operations. Sub Divisional Engineer Implementation to support works, 2 3 FT July Deputation (Gr-6) MOM, design and safeguards. BWDB Feni OM Division. Post to include; (i) design,(ii) works,(iii) Sub Assistant Engineer 3 6 OM, 9, ( iv) extension; (v) FT July Deputation Section Officer (Gr 10) capacity building and (vi) communication Additional 4 Surveyor (Eng) (Gr-11) 2 Field engineering surveys FT July charge Data Entry Operator Additional 5 2 Office support FT July (Gr-16) charge Additional 6 Work Assistant (Gr-18) 3 Support field supervision FT July charge Accountant Assistant Assistant on finance and account 7 1 FT July Deputation Accountant (Gr-10/11) related tasks Additional 8 Accounts Clerk (Gr-16) 1 Maintain accounts PT July charge Additional 9 Driver (Gr16) 4 As directed PT July charge MLSS, Cleaner and Additional 10 7 Office of the PIU Feni PT July Guards (Gr20) charge Sub Total PIU 30

C. Design Support Units (DSU) for TBP and GKIP Feasibility Study/ Head of the Planning and Design 1 Design Support Officer 2 Unit at the Teesta and GK project PT July Deputation (EE Gr-5) sites Design Support Sub Sub Divisional Engineers to 2 Divisional Engineers 10 support planning and design PT July Deputation (SDE Gr 6) work in TBP and GKIP Sub Assistant 3 20 PT July Deputation Engineers (SO Gr10) Sub Total (SDUs) 32

Overall Total 87

Notes; Deputation-BWDB Staff on Deputation from Existing Manpower of BWDB, Additional Charge.

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1. Implementation Coordination Committee

63. To facilitate implementation of the projects under the program, an Implementation Coordination Committee (ICC) will be established for each sub project of the projects. The ICC will be under the leadership of the BWDB Zonal Chief Engineer. Members of the ICC will include representatives from the offices of the Deputy Commissioner, the Water Users Federation, Water User Associations, the Rural Electrification Board, Department of Agriculture Extension, and law enforcement. The IMO for each sub project will also be a member of the ICC and will act as the member secretary. The ICC will deal with field implementation issues that arise related to conflicts, safeguards, security, and more generally concerns about the performance of the implementing parties and will meet four times per year at a location close to each sub project. The PMU with the support of the PMDC will be responsible for the establishment of the ICCs.

2. Water Management Organizations

64. The Water Management Organizations WMOs (WUG, WMA and WMF) would play a supporting and guiding role in close coordination with the ICC. The role of the WMOs will include; (i) to support feedback and monitoring of the operation and management of the projects through the ICC; (ii) liaising with farmers and the ICC;(iii) implementing independent monitoring function of the management activities including construction, operation and physical maintenance work; and (iv) supporting and dealing with the complaints and grievances in coordination with ICC; more serious complaints would be referred to the ICC who would meet every 3 months; additional special meetings can be organized as necessary.

Table 9: Summary of the Project Management Arrangements Project implementation Management Roles and Responsibilities organizations MOWR o Chairs the Program steering committee o Support the implementation of policy, legal and institutional reforms proposed under the program road map. o Ensures adequate counterpart funding is provided to the EA o Approve procurement of works and consultants or submit for approval to the inter-ministerial purchasing committee. The executing Dhaka office staff agency o Establish a PMU BWDB) o Oversee implementation of the MFF and projects o Prepare annual budget for counterpart funds financing and obtain timely approval. o Monitor and ensure compliance of loan covenants and environmental and social safeguards and facilitate the implementation of corrective action o Procure international consultant(s) and contractor(s) o Lead MOM studies and planning and design for preparation of project-2 o Prepare PFR submissions, quarterly reports to ADB, disbursement projections, updated implementation plans, etc. o Financial management: preparation of withdrawal applications and Statement of expenditures, centralized payments to contractors and consultants (including C- IMOs), arranging for financial audits and implement recommended financial management improvements actions o Administer PMDC and C-IMO contract ensuring timely processing of payments and contract variations. o Implement the participation and communication plan o Monitor C-IMO key performance payment indicator achievement Sub-Project office staff o Facilitate and support- IMO work in the field o Ensure maintenance of primary system and timely and adequate water delivery to secondary and tertiary level o Review C-IMO construction supervision report/recommendations for payment to contractors and submit to PMU for payment o Support PMU design, monitoring and safeguards cells Design Support Units o Support participatory planning and design for modernization of TBP and GKIP Project Steering The PSC will be chaired by MOWR and will include members from, Planning Commission Committee (PSC) BWDB, MOA, LGC, MOEF, ERD, ARDRS, DAE, BRMMOF and EPD.

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o Ensure inter-ministerial coordination o Oversee implementation of the project o Monitor progress of the project including safeguards and development objectives o Rectify issues hindering progress of the project o Guide the Executing Agency o Meet at least once each quarter Program o Prepare feasibility and detail designs for T2 subprojects including detailed options for Management and structural and management modernizations Design o Prepare T1 outstanding detail design for MIP hydraulic structures. Consultant o Prepare lease agreement for M-IMOs and support tendering process and first years (PMDC) contract administration o Provide overall project management support on reporting, financial management, M&E, o Prepare tenders for outstanding T1 and the T2 works and support procurement. o Set up a monitoring and evaluation system including PPMS. Irrigation o Ensure all civil works supervisions of the irrigation scheme under their management Management o Prepare detail design of prepaid pumps and piped prepaid systems and upgrading of Operator (C-IMO) electrification in MIP o Prepare O&M annual plan and implement them o Collect water charges and ISF o Provide agriculture support services o Ensure quality water service delivery to the farmers o To engage with farmers and other stakeholders to ensure of understanding of the new systems and promote the effective use of the irrigation facilities to improve crop productivity. o To establish and manage customer relations including complaints mechanisms. Implementation o Provide tripartite conflict resolution at field level coordination o Review performance of the parties involved at field level committee o Review of C and M- IMO annual reports and O&M work plan Water o Provide feedback to the C- IMO on the quality of water service delivery Management o Support participatory planning and design Organizations o Support participatory work construction supervision o Support conflict resolution between farmers and between farmers and C- IMO and later M-IMO o Ensure water users are kept inform about ICC decision, project progress and implementation issues. o Support/guide IMO agricultural support activities ADB o Recruit PMDC and C- IMO consultants for Project 1 o Conduct regular loan review missions o Review and issues no-objection to procurement and disbursement documents o Overall coordination and advisory support

VIII. PROCUREMENT

65. Procurement packages for civil works will be split into eight packages. Three works contracts with an estimated value of $11.6million have been designed under the PPTA will be tendered in February 2014. There are two consultancy packages; (i) the Project Management and Design Consultants who will be the loan support consultants; and (ii) the Irrigation Management Operator (C-IMO) for the Muhuri Irrigation Project. These will be both QCBS bids with a 90:10 weighting for financial and technical respectively. The main works packages are summarized in Table 10 below.

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Table 10: List of Main Works Packages

Contract Advertisement Estimated Design Value Procurement Date Date of Responsibility General Description ($million) Method (quarter/year) Award CW-1; Excavation of 4.8 ICB Q1/2014 Q3/2014 PPTA complete khal-1, rehabilitation of coastal embankment CW-2; Excavation of 4.8 ICB Q1/2014 Q3/2014 PPTA complete khal-2 CW-3; Farmer 2.0 ICB Q1/2014 Q3/2014 PPTA complete distribution, pumps and prepayment meters- stage-1: 2,000ha CW-4: Upgrading of 3.4 ICB Q2/2015 Q4/2015 C-IMO electrical distribution CW-5; Farmer 5.0 ICB Q2/2015 Q4/2015 C-IMO distribution, pumps and prepayment meters- stage 2 :5,000 ha CW-6; Farmer 5.0 ICB Q1/2016 Q3/2016 C-IMO distribution, pumps and prepayment meters- stage 3: 5,000 ha CW-6; Farmer 5.0 ICB Q1/2017 Q3/2017 C-IMO distribution, pumps and prepayment meters- stage 4: 5,000 ha CW-7; New structures, 4.0 ICB Q4/2014 Q2/2015 PMDC rehabilitation of structures, rehabilitation of BWDB buildings

1. Consultancy and Management Support

66. The two proposed consulting services contracts are summarized in Table 11 below. Details for the two consultancy packages are presented in Appendix 9.

Table 11: Consultancy Contracts

Contract Recruitme Advertisement/ Award International or General Value nt Award Date Date National Description ($million) Method1 (quarter/year) Assignment Comments CS-1; Project 6.6 QCBS Q1/2014 Q3/2014 International quality : cost Management and national ratio 90:10 and Design Consultancy for IMIIP CS-2; Muhuri 8.7 QCBS Q4/2013 Q3/2014 International quality : cost Irrigation and national ratio 90:10 Management Operator (C- IMO)

67. Project Management, Planning and Design: A Project Management and Design Consultant (PMDC) will be engaged to support the PMU over the ten year period of the loan. Given the extended duration of the PMDC contract, it is envisaged that two performance-based contracts will be required – one for the first five-year period and another for the second five-year period. During the Project five-year period, the PMDC will support the PMU in a range of tasks including:

o Designing and supporting the procurement of the MIP civil works for new and rehabilitation of

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structures and buildings. o Preparing feasibility studies, designs and the bid documents for GK and TBP irrigation projects modernization. o Support and supervise the Irrigation Management Operator, o Monitoring construction and related activities (construction supervision would be by the C-IMO). o Designing and conducting training related to managing PPP contracts, project management, and other technical areas as required. o Preparing a review of the progress of the Muhuri C- IMO and support the preparation of bidding documents for the 2nd stage lease contract MOM for at Muhuri.

68. A total of 580 pm of consulting services have been provided for the PMDC, of which 82pm would international and 498 national.

69. Muhuri Irrigation Management Operator. A “Construction phase Irrigation Management Operator (C-IMO) will be engaged MIP; this will be the Muhuri Irrigation Management Operator. The IMO will be located and operate within or near their project areas. The role of the IMO will be to develop and implement MOM of the completed works after completion of modernization and rehabilitation. During the development stage the C-IMO will also implement field level design of the piped irrigation systems and upgrading of electricity as well as being responsible for construction supervision of the investment works. It is envisaged that the IMO would seek to engage some BWDB technical staff with interest and appropriate qualifications and skills to continue to work within the respective systems. For the system modernization stage, which is proposed to have five year duration, the C-IMO would be contracted through a management contract by the PMU. During this period, the C- IMO will:

o Develop and implement operation, maintenance, and management systems and procedures that will carry on following completion of physical work, o Establish a better understanding of system operating costs and revenue streams as input to the longer-term lease arrangements that follow-on the system modernization stage. o Liaising with BWDB and the newly established Implementation Coordination Committee (ICC). o Undertake participatory design of farmer distribution systems, o Supervise the contractors engaged for system modernization. o Ensure compliance with environmental and social requirements. o Conducting demonstrations and other agricultural support activities. o Conducting pilots to investigate supplementary cost recovery.

70. For MIP IMO, the provision has been made for 868 pm of high level professional management experts; of which 47pm are international and 821 pm national. It also includes 911 pm of support staff.

2. Long Term Management Arrangements

71. By year 5, following system modernization and establishment of the OM mechanisms including cost recovery, the IMO will enter into second stage long-term management phase M-IMO based on a lease agreement of fifteen years with BWDB. The lease will define the terms under which the M-IMO will manage, operate, and maintain the system. The lease terms would reference the use of the system assets which BWDB owns, payments associated with the use of these assets, terms associated with the return of the assets at the conclusion of the lease period, water delivery rates, procedures for updating these rates, and so on. The lease for the second stage would be signed with the Zonal Chief Engineer and would be prepared with the support of the PPP cell attached to the MFF Director. The organization structure for the long term management phase is shown in Figure 2 below.

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Figure 2: Proposed Long Term Management Structure

3. Project Readiness Activities

72. The readiness of the project to move from the preparatory stage to implementation is a critical requirement. The proposed project readiness parameters is shown in Table 12 below.

Table 12: Readiness Activities

Project Management - Finance 1 Appointment of Project Director BWDB 1 July 2014 2 PMU initial stage formed MOWR/BWDB 1 July 2014 3 Include 1st year implementation budget MOWR/BWDB 15 June 2014 4 Submit DPP to Ministry of Water Resources BWDB with support 1 March 2014 from PPTA. 5 Request for EOIs for PMDC and C-IMO MIP ADB PMDC 30 March IMO 1 June 6 DPP submitted to Planning commission MOWR/BWDB 16 March 2014 7 DPP approved in PEC PEC with BWDB 7 May 2014 support 8 DPP approval ECNEC 10 June 2014 With BWDB 9 30% of works tenders to be floated BWDB February 2014

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10 PMU fully established MOWR/BWDB 31 August 2014 Environment Safeguards 1 Obtain temporary non-objection certificates for BWDB with support 12 May 2014 DPP ECNEC clearance from DOE from PPTA 2 Prepare and submit EIA based on requirements BWDB with support 30 May 2014 of DOE of PPTA 4 Obtain approval of EIA from DOE BWDB with support 30 June 2014 of PPTA

4. Implementation Schedule

73. The project will be implemented over six years from mid 2014. The project schedule is shown in Figure 3.

Figure 3: Project Schedule 1 2 3 4 5 6 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 Program Management and Institutional Development

PMDC Consultants T T Reports Inception (I), Mid Term (MT) and Final (F) I M F Periodic Financing Request for Tranche 2

Institutional Development and Training Plan Implementation of Training Program Prepare financing documents for GKIP and TIP Follow on Loan Fact Finding Follow on Loan Negotiations IMIIP Stage 2 Loan Stage 2 Loan to mid 2023 2 Rehabilitation and Modernization of Large Scale Schemes Feasibility studies for Teesta and GK Projects

Detailed Design of for Teesta and GK Projects

Project Documents for Follow on Loan

MIP Design Pipe System & Electrification by IMO T T MIP Outstandin Rehabilitation w orks T T 4 Year Implementation

3 Performance Based Irrigation Management Establish PPP Cell and ICC committees Irrigation Management Contract for Muhuri T T 5 years

Irrigation Management Review for Muhuri Lease contract for Muhuri T T T T T T

T -Tendering I Inception M Mid Term F Final

IX. FINANCIAL MANAGEMENT

A. Financial Management Assessment 74. A financial management assessment (FMA) of BWDB was undertaken in accordance with ADB guidelines for Financial Management and Analysis of Projects29 and Financial Due Diligence: a

29 ADB. 2005. Financial Management and Analysis of Projects. Manila. Available: http://www.adb.org/Documents/Guidelines/Financial/default.asp

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Methodology Note, and Technical Guidance Notes.30 The FMA considered the capacity of the executing agency and implementing agencies, including funds-flow arrangements, governance, staffing, budgeting, accounting and financial reporting systems, internal control procedures, financial information systems, and internal and external auditing arrangements. The assessment concludes that BWDB has sufficient experience and capacity to manage the project funds as well as adequate fund flow, accounting and budgeting arrangements. However, improvements are required in several areas including (i) the need for a full time accountant at the PMU (ii) training in ADB disbursement and procurement guidelines (iii) requirement to produce internal audit reports for the relevant zones and circles for each project prior to the first disbursement under each project (iv) provision of a Statement of Audit Needs to ensure that audited project financial statements are received on a timely basis and in accordance with accounting standards as well as to encourage the submission of entity level financial statements on a timely basis. Key findings are presented in Appendix 5.

75. BWDB is a statutory organization tasked with numerous responsibilities from building, operating and maintaining physical infrastructures, to providing and improving irrigation, drainage and navigation services. Its on-going reorganization, a tedious and time consuming approval process, information technology constraints, limited operational capacity and staff shortages poses many challenges to its continued efforts to improve and ‘right sized’ its organizational and operational needs.

76. Conclusions and recommendations: one of the main issues to address are highlighted below and it is recommended that this be considered as follows:

(i) BWDB needs to ensure that adequate and competent staff is assigned to the PMU as per the provision set in the PAM.

(ii) A Project Performance and Management System (PPMS) whose task is to monitor and evaluate project impacts to ensure that the project facilities are managed effectively and benefits, particularly to the poor needs to be established at the beginning of the project.

(iii) Internal Audit of zones and circles are often delayed due to staff shortage. BWDB has committed to completing the audit for MIP zones and circles prior to the first disbursement under each project. In addition, the current practice of the internal auditor’s report being sent to the Additional director general - Finance is not in accordance with best industry practice. ADB will develop a governance action plan with BWDB including changes to the Internal Audit reporting procedure, so that the audit report is sent directly to the Governing Council.

(iv) A Statement of Audit Needs shall be provided to BWDB and communicated to FAPAD to ensure that ADBs audit requirements are met, including the timely submission of audited project financial statements and the submission of BWDBs own audited financial statements within one month of their approval by the governing body.

(v) For all of ADB’s projects under the project, it is recommended that the assets be insured during constructions and after completion of the projects, and these assets should remain insured during the life of the loan repayment period. BWDB currently does not insure its asset after the project construction period.

(vi) Improvements to BWDB’s ICT system are currently being undertaken by WB under their WMIP program. The PMDC should review the ICT proposal to develop modern approaches to Project Management System and other system integrations will be necessary to improve administrative controls, data accuracy, efficiency, and ultimately produce an on-line and on-demand MIS to meet the expectation for better management decision making process.

(vii) For the preparation of the Project, BWDB would benefit from training its designated PMU - PD and its staff in ADB’s procedures in Financial Management, Procurement and Disbursement

30 ADB. 2009. Financial Due Diligence: A Methodology Note. Manila. Available: http://www.adb.org/documents/financial-due- diligence-methodology-note

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(especially on the latest ADB User’s Guide to Prequalification of Bidders, Jan 2013 - in view of the advance procurement action to be undertaken), and Project Management Reporting System.

B. Disbursement Procedures 77. The full disbursement procedures are described in the Project Administrative Manual (PAM).

78. Disbursement Arrangements for ADB Funds: The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2012, as amended from time to time),31 and detailed arrangements agreed upon between the Government and ADB.

79. Types of Disbursement Arrangements. There are four major types of disbursement:

(i) Direct payment procedure where ADB, at the borrower's request, pays a designated beneficiary directly (Chapter 7 of the Loan Disbursement Handbook); (ii) Commitment procedure where ADB, at the borrower's request, provides an irrevocable undertaking to reimburse a commercial bank for payments made or to be made to a supplier against a letter of credit financed from the loan account (Chapter 8 of the Loan Disbursement Handbook); (iii) Reimbursement procedure (with or without full supporting documents) where ADB pays from the loan account to the borrower's account for eligible expenditures which have been incurred and paid for by the project out of its budget allocation or its own resources (Chapter 9 of the Loan Disbursement Handbook); and (iv) Imprest fund procedure where ADB makes an advance disbursement from the loan account for deposit to an imprest account to be used exclusively for ADB's share of eligible expenditures (Chapter 10 of the Loan Disbursement Handbook). The government EA who established the imprest account in its name is accountable and responsible for proper use of advances to the imprest account.

80. The government will make funds available to BWDB. A separate imprest account in USD for the Project loan should be established by the Bangladesh Central bank at the request of BWDB and maintained by funding source. The ceiling of the advance to the Imprest Account is 10% of the respective loan amount. The EA through the PMU may request for initial and additional advances to the imprest account based on an Estimate of Expenditure Sheet setting out the estimated expenditures to be financed through the account for the forthcoming six (6) months, and submission of evidence satisfactory to ADB that the imprest account has been duly opened.

81. Government counterpart Funds and contract award /disbursement projections: All disbursements under government financing will be carried out in accordance with regulations of Government of Bangladesh relevant to co-financing of the projects financed by the Multilateral Financing Organizations. BWDB shall open and maintain the separate account for government’s counterpart funds.

82. GOB will provide counterpart fund as well as ADB’s reimbursable fund to the project as per financing and disbursement percentage. The expenditures to be funded by the donor funding is first made by the government and later on it is reimbursed from the donor as per eligible expenditure. GOB will provide counterpart fund as well as ADB’s reimbursable fund to the project as per financing and disbursement percentage. The expenditures to be funded by the donor funding is first made by the government and later on it is reimbursed from the donor as per eligible expenditure. For the disbursement of fund from the GOB, the MOWR will send the fund release proposal received from BWDB to the Finance Division of MOF for their concurrence before fund is ultimately deposited into a Central Account of the BWDB. Fund disbursement from GOB is usually disbursed in 4 quarterly instalments, and this fund will then be further disbursed through to the various Regional Accounting Centers (RACs) and subsequently payments to the respective service providers. However for the Project, the RAC office will be established in the PMU and all payment issued from the PMU RAC office.

31 Available at: http://www.adb.org/documents/loan-disbursement-handbook

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83. PMU will then consolidate and verify the eligible expenditures and prepare/submit withdrawal application to ADB along with supporting documents or the SOEs. The Project director will be the entity authorised to sign on the withdrawal applications. A copy of the bank statement of Imprest account, Imprest account turnover ratio, and Imprest account reconciliation statement will be also submitted along with the withdrawal application for replenishment.

X. STAKEHOLDER COMMUNICATION STRATEGY

84. The project will maximize transparency by communicating relevant project information to stakeholders in various means. The PMU will set up a website within two months of loan effectiveness and disclose all key project-related information, including the scope, cost, and financial and institutional arrangements of the project, project safeguard reports such as IEE, GAP and project progress such as procurement, contract award and disbursement. The PMO will also fully disclose through the website and its information center relevant project-related information, such as subproject cost, cost-sharing arrangement, contractor's name, contract price, progress of construction, financial status of municipalities, through public briefings, bulletin boards, municipal annual reports, etc. The safeguard documents will also be disclosed in ADB website.

85. Participation is an important aspect of the project. Public awareness programs for gender, social, and infrastructure subproject related measures will be implemented by the PMU supported by PMDC during the planning and design of TBP and GKIP and the project C-IMO during the implementation stages. The PMU with the support of the PMDC working with the C-IMO will prepare a consultation awareness and participation plan (CAPP) within six months of loan signing. The CAPP will be used to guide consultation and awareness building activities under the project to be conducted in parallel with physical investment activities. The GAP and CAPP plans will ensure sufficient consultation and participation with beneficiaries, including women, the poor and vulnerable groups.

A. Information Disclosure 86. The Stakeholders Communication Strategy implementation will engage and inform relevant IMIP stakeholders and sectors with timely, accurate, and comprehensive information shared among stakeholders. Such information sharing will help to build consensus and ensure continuous stakeholder support throughout the Project. The stakeholder Engagement and Communication Strategy (SE&C)is to significantly increase stakeholder and community awareness of the Project strategy, proposals activities and outputs in order to improve stakeholder engagement and to develop greater community support for the project proposals and the decision making process. The guidelines for SE&C will include:

o Clarify the objectives and goals of engagement and evaluate the appropriateness of techniques. o Understand related processes and be clear about how the engagement fits in with official decision-making processes. o Manage information in an accessible way without using complex concepts or jargon. o Support the development of capacity in understanding and applying the research concepts. o Ensure transparent identification of stakeholder groups and invitations to be involved. o Build trust with and between participants for the long term. o Allocate sufficient time to develop process, build partnerships and strengthen networks. o Encourage feedback and ensure flexibility to adapt to that feedback.

87. Stakeholder Engagement and Communication Objectives. The main stakeholder engagement and communication objectives include :

B. Awareness: 88. The PPTA has implemented an intensive program of communication and awareness however it is assessed that the majority of farmers and other stakeholders do know about the proposed project do not know the detail of the project components. Stakeholders are somewhat disappointed in the delays in the project start for the Muhuri project but also in TBP and GKIP. The following aspects need to be addressed to attain the awareness among the different stakeholders of the project.

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Awareness o To raise overall awareness of the project, its intent, activities and outputs including opportunity for women employment and women development activities. o To promote the benefits and positive aspects of the project. o To raise awareness of the linkages between the MIP and other related projects. o To ensure stakeholders are aware of the project and how to be involved. Attitude: o To reduce communications risks by encouraging a positive view of the project. o To manage expectations of what the project can and can’t deliver. o Behaviors: o To encourage public demonstrations of support for the project. o To encourage key stakeholders to engage in project activities. o To provide tools for project partners and collaborators to communicate the project intent, activities and outputs.

89. The SE&C will be based on a strategic approach including:

o Building direct, positive relationships wherever possible o Utilizing media and stakeholder networks where direct relationships are not possible o Building strong linkages between MIP and other relevant projects o Facilitating information sharing and information sharing networks o Demonstrating how MIP is contributing to a broad range and societal goals o Using a matrix of communication tools in a sustained program

90. There are three distinct approaches to communication that can be used for successful implementation of the campaign for the implementation of the MIP as well as the planning and design activities for the GKIP and TBP:

o Behaviour change communication: This approach addresses the knowledge, attitudes, behaviour and skills of individuals, families and communities as they relate to specific program goals. Within a participatory communication framework, individuals and communities gain knowledge, appreciation and skills that motivate them to develop positive and healthy behaviour and practices. o Communication for social mobilization: This approach moves beyond the individual behaviour change communication to a more comprehensive model of communication. It provides an opportunity for greater levels of community participation in social change. It involves planned actions to reach, influence, enable, and involve key segments of the community in order to collectively create an environment that will affect positive behaviour and bring about desired social change. Segments include influential groups or individuals as well as formal and informal leaders among those who will directly benefit from the desired social change. o Communication for advocacy: It is an organized attempt to influence the political climate, policy and program decisions, public perceptions of social norms, funding decisions, and strengthen the voices of communities and societies for social and policy change.

91. Planning and research is required to ensure the message reaches the key stakeholders with optimum impact and frequency.

92. Experience has shown that the communication plan and activities must be targeted to the proposed requirements of behavioural and social change; experience has shown that communication activities are more successful when consistent messages are conveyed through a mix of channels and tools, specially combining the community media (interpersonal communication) with mass media programs:

o Community-based communication. A range of communication activities can be carried out using participatory and interpersonal communication tools. The success of this communication requires the active involvement of the participants in the communication development process. Informal discussion meeting and workshop with the particular stake holder is proposed. Interpersonal communication tools and community media like folk media, theatre, folk songs and

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festivals. The success of this communication requires the active involvement of the participants in the communication development process. Activities suggested include farmer group discussions, courtyard meetings and group discussions. o Mass media campaign. The mass media can be a strong source of information for raising awareness, building knowledge and influencing public opinion. The following devices can be used National and local level seminar/workshop, Electronic media -Radio, Television, video, film, internet. Print media -Newspapers, newsletters, fact sheets, handouts, posters, research findings and reports. o Participative Planning and Design: Farm level design will be done in a participative approaches including briefing meetings and walk through with farmers.

C. Phases of Communication and Engagement Strategy and Outputs 93. It is proposed that both the PMDC and the C-IMO implement a focused programme of stakeholder engagement, communication and awareness during the Project. The PMDC will focus on the development of participative planning and design for the GKIP and TBP modernization; while the C-IMO develops a highly focused campaign to engage with farmers, WMO's and other stakeholders to implement the new initiatives for OM as well as the programs of agricultural support.

94. Planning the program

o Planning and design of the approach: this will be done in Month 3 based on an assessment of the communication work implemented under the PPTA together with consultation with Government and Non-Government stakeholders to assess current levels of knowledge and awareness of the project objectives. o Communication and engagement with selected stakeholders to support the preparation of the project design. o Upscaled communication and awareness to the wider stakeholders o Monitoring and response to provide feedback on the response to the proposed project proposals.

95. The proposed communication and engagement program for the PMDC is summarized in Table 13 below. This program is designed to inform the stakeholders of the IMIP and to engage with stakeholder to support the project planning and design for TBP and the GKIP.

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Table 13: Proposed Communication and Engagement Program for the PMDC

Activity Consultation Participants Objective When Implemented method 1 Initial Public PM WUA, WUF, Farmers, ~45 Feedback on Initial mobilisation Meeting persons. About twenty farmer perceptions of the PMDC at the meetings field sites Media Media To publicise the meetings and To widen the 1 month before and improve the awareness of the awareness beyond after the workshops project objectives the workshops 2 Focus Group FGD About 20 FGD to be held with Feedback on Month 3 Discussions WUG, WMA, WMF, Farmers, current issues and and representative stakeholder perceptions of proposed changes. 3 Individual IDI About 25 direct interviews with Feedback on Month 3 meetings with key farmers, REB, BWDB, WMF, current perceptions stakeholders WMA and women of the project design. 4 Rapid Rural RRA Teams of enumerators Statistical Month 4 design of Appraisal mobilised to support more information of project definitive and information agricultural Month 5 practices, implementation responses to change etc. Special information needs can be targeted including gender, environment poverty 4 Preliminary SVS Farmers, WUA, WUF Surveys to meet Month 5 Surveys specific socio economic information 5 Upazila Level PM WUA, WUF, Farmers, other Dissemination of Month 12 onwards Public Meetings stakeholders preliminary once strategies strategies for have prepared .modernization and improvement 6 Focus group FGD/IDI Government, WUA, WUF, , Consultative Month 13 onwards discussions and meetings with key Individual stakeholders to Meetings with key support the Stakeholders preparation of the detailed design. 7 Participative PM/FGD Focused meetings and Engagement and Month 15 onwards Planning and discussions to review specific feedback from Design planning and design activities farmers on planning and design scenarios and options. 8 Final Workshops PM Public meetings to obtain final Month 18 engagement

96. The proposed communication and engagement program for the Muhuri C-IMO is different with the objectives for the stakeholder to better understand the project implementation objectives. The program is described in Table 14 below.

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Table 14: Communication and Engagement Program for the C-IMO

Activity Consultation Participants Objective Timing method Public Meeting PM WUA, WUF, Farmers, ~45 Create awareness of Month 3 persons. One meeting proposed the project for each Upazilla. Brochures objectives would be prepared to widen the information base Focus Group FGD About 20 FGD have been held Create awareness Month 3-6 Discussions with WUG, WMA, WMF, and obtain feedback Farmers, Pump Operators, on current issues Women's groups and perceptions of proposed changes. Individual IDI About 25 direct interviews held Feedback on current Month 6 meetings with key with farmers, REB, BWDB, perceptions of the stakeholders WMF, WMA and women project design. Participative SVS Farmers, pump operators, WUA, To ensure farmers Month 2-3 design activities WUF. previously signed up - stage 1-reengaging with remain committed. farmers for the 2000ha advance systems Participative design Month 3-6 -stage 2 5000ha second stage for the Stage 2 pipe systems Upazila Level PM WUA, WUF, Farmers, Pump To brief on the steps Month 12 Public Meetings Operators to initiate the pumps and prepaid meters. Focus group FGD/IDI Government, WUA, WUF, Pump Consultative Month 5-24 discussions and Operators, within each meetings with key Individual command to be taken up for stakeholders to Meetings with key pipe systems support the Stakeholders preparation of the detailed design. Agricultural IMO Extension, farmer training Activities to be Year 2-5 support programs school, demonstration plots planned and designed by the IMO

XI. PLANNING FOR THE MUHURI IRRIGATION PROJECT

A. Introduction 97. The original feasibility study of the Muhuri Irrigation Project (MIP) was done in 1973 with construction completed in 1986. In addition to irrigation, the MIP provides drainage, flood control and protection against the sea water intrusion. The design enables dry season as well as supplemental wet season irrigation through the construction of the Feni Closure Dam and Regulator which creates a reservoir downstream of the confluence of the Feni, Muhuri and Kalidash-Pahalia rivers. The location of the MIP is shown in Figure 4.

98. The World Bank appraisal for the original project implementation estimated an increase of the boro rice area from about 6,000ha to 20,000ha. Preventing overland seawater intrusion would bring about 1,200ha of additional uncropped land into cultivation. The backwater from the barrage enables water to enter the natural channels (khals) and canal network by gravity. The water would be then lifted to irrigate the fields by about 800 privately operated low-lift pumps each of 5-7 hp serving about 18ha, allowing for at least one irrigated rice crop a year. A reservoir formed by a coastal earth fill embankment and gated regulator structure would provide a source of permanent fresh water. Following completion of the project rice production was forecast to increase by 60% providing increased income for about 45,000 families most of whom are small farmers with land holdings of about 0.65ha. Annual rice production would increase from about 73,000 tons to about 145,000 tons at full development.

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Figure 4: Location of the Muhuri Irrigation Project

99. In 1996 the expansion of the Muhuri project was studied and the Muhuri-Kahua Irrigation Project was developed to the north. The Muhuri-Kahua partly overlaps the Muhuri Irrigation project. However for this study the Muhuri Irrigation Project is considered to include both projects. The Muhuri and the incremental part of the Muhuri-Kahua project areas are shown in Figure 5 below.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 36 Final Report

Figure 5: Muhuri Irrigation Project

100. Initially, farmers experienced major improvement in production and were able to cultivate much larger areas with rice; however siltation of the reservoir and khals has reduced the benefit over the years. The BWDB operates the Feni Regulator the coastal and river embankment and drainage sluices and is

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 37 Final Report also responsible for removing silt from the khals to ensure adequate drainage as well as providing adequate access to water for irrigation. The low lift pumps and the farmer canal systems are currently managed by about 475 private sector pump operators.

101. During country programming consultations held in April/May 2012 between the Government of Bangladesh (GOB) and ADB it was agreed to develop a $40million first tranche for the Muhuri Irrigation Project.

B. Current Issues 102. The main issue for Muhuri is the gradual loss of area under irrigation. The original project design for the MIP excluding MKIP was for 23,000ha of irrigated boro rice. The cultivable area of the combined MIP and MKIP is estimated to be 38,600ha. Analysis by the PPTA from satellite analysis of the 2011 boro rice cropping estimated the boro irrigated area to be about 17,900ha (46%) of which it is estimated 11,300ha (63%) is from surface water and 6,600(37%) is from groundwater. The main causes of the reduction in surface water irrigated area are complex but include:

o There is major siltation of the khals and as a result much of the irrigation area has no or limited access to khal water. The siltation is also reducing the drainage capacity of the khal which affects the aman cropping. o The original reservoir was designed with 31.6Mm3 live storage. The reservoir itself has significantly silted over the 29 years since construction the reservoir itself has considerably silted there remains about 18Mm3 of live storage about 56% of the original mainly in the rivers. o There are large annual climatic variations which is affecting water availability, recent cold winters and changes in agricultural practice are delaying the planting dates of Boro rice. Pump operators are also slow to install the pumps and planting is often delayed till February which puts additional pressure on the scarce water resources during the critical February and March periods. o The fluctuating prices of rice and high prices of inputs including pumping has resulted in many farmers not planting rice when prices are low. o Pump operators find it too expensive to provide water to plots located far from the pumps and most of the irrigated land is a nucleus around each pump. o There is a significant drop in the number of operational pumps and the irrigated areas. Pump inventories in 2013 show there are only about 440 operational pumps from an original provision of about 1,000 pumps. The irrigated area of rice from surface water based on 2013 satellite imagery is estimated to be about 10,000ha in the MIP which is less than half of the original target of 23,000ha. o There is deterioration of the coastal embankment and associates structures which are causing salinity intrusion and impediments to drainage as well as risk from sea water inundation during period’s high sea level.

C. Introduction

103. Hydrology studies have been carried to assess the water availabilities and crop water requirements. Water balance assessments to assess the current and future water balance and the areas of different types of crops that can be supported by the project. Full details of the analysis are given in Appendix 2.

1. Analysis of Rainfall Data

104. Bangladesh Water Development Board (BWDB) is the main source of rainfall data. An analysis of the 80% dependable rainfall was carried out and is shown in Table 15:

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 38 Final Report

Table 15: 80% Dependable Rainfall (mm)

Station J F M A M J J A S O N D Total Chhagalnaya 0 0 0 58 145 321 435 211 136 6 0 0 1,312 Parshuram 0 0 8 81 177 290 410 293 156 88 0 0 1,504 80% for MIP 0 0 4 70 161 306 423 252 146 47 0 0 1,408 80% Effective Rainfall 0 0 3 56 112 214 296 176 102 38 0 0 998

2. Flow Data

105. Flow is measured by BWDB using a current meter at the two location on the Feni and Muhuri Rivers and with monitoring of water levels of the Kalidash Pahalia river. Flow data is available at the locations shown in Figure 6. The flows represent the inflows to the Muhuri Irrigation Project and excludes the Muhuri-Kahua part. The flows are measured twice monthly using a propeller flow meter. The flow velocities are very low and some loss of accuracy is likely due to limitations of propeller flow meters at very low velocities. There are very large variations in the flows as shown in Figure 7 which reflect the very high seasonal variations but these partly may be due to measuring errors. Flows were verified by the Institute of Water Modelling (IWM) using a highly accurate ADCP current profiler in March and April 2013 .This single comparison showed a reasonable correlation between the flows measured by the IWM and BWDB. The very slow velocities at the gauging sites makes accurate flow measurement difficult and the use of propeller measuring instruments are not accurate.

106. There is no flow monitoring for the Kalidash Pahalia. Flow measurement by the IWM show the Kalidash Pahalia as 90% of the Muhuri flow in March but dropping to zero in April. A value of 30% of the Muhuri flow has been assumed for the Kalidash Pahalia which is the ratio of the two catchments. The 80% dependable flow which equivalent to a return a return period of 1.125 years has been estimated using the Gringorten Formula (where probability P= m-0.44/n+0.12 where m is the rank of the event and n=number of years of data.) The estimated dependable flows are shown in Table 16.

3. Return Flows

107. The Muhuri system is a closed system which means that infiltration from irrigation seeping into the groundwater can potentially support recharge into the rivers. The shallow groundwater in Muhuri is about 3-7m below the ground (about level 0 PWD) and infiltration from irrigation will provide some recharge of this shallow aquifer. During the period December to April the reservoir gates are closed and the water is ponded to a level of about +3metres PWD which is higher than the groundwater table. During the winter season it is concluded there is very limited recharge potential from infiltration to the river systems. Rice fields directly adjoining the Khal may potentially contribute some but quite limited infiltration water to the rivers and khals

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 39 Final Report

Figure 6: BWDB Flow Measuring Locations

Figure 7 Variations in Flows (m3/s) 140.0

120.0

100.0

80.0 January 60.0 February

Total Flow Total m3/sec 40.0 March

20.0

- 919293949596979899 0 1 2 3 4 5 6 7 8 9 101112 Year 1991-2012

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 40 Final Report

Table 16 Estimated 80% Dependable Flow (m3/sec)

River Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Feni 11.9 9.2 7.4 10.9 19.6 55.4 63.6 88.9 59.6 46.5 16.2 14.0 Muhuri 1.9 1.3 1.1 1.6 3.3 12.9 11.7 22.1 13.6 12.0 6.6 2.9 Kalidash Pahalia 0.6 0.4 0.3 0.5 1.0 3.9 3.5 6.6 4.1 3.6 2.0 0.9

Total 14.4 10.9 8.8 13.0 23.9 72.2 78.8 117.6 77.3 62.1 24.8 17.8 Source IMIIP 2013

D. Land Use

108. Land use in 2011 was analyzed by CEGIS using satellite imagery and is summarized in Table 17 below which shows an estimated area of 17,900ha of boro rice in the combined project area, 11,800ha of boro rice inside the Muhuri Irrigation Project and 6,100ha in the Muhuri Kahua part.

Table 17 Estimated Land Use 2011

Muhuri Kahua Area ID Class name Muhuri Area ha (outside Muhuri ha) Total ha Irrigated Boro Rice (surface 1 and groundwater) 11,843 6,108 17,951 2 Fallow 9,773 7,136 16,909 3 Other Crops 3,160 539 3,700 4 Settlements 15,265 7,168 22,433 5 Water 2,286 634 2,919 6 Gher 1,385 1,385 7 Hill Forest/grassland 8 92 100 8 Mudflat/mangrove 50 50 9 Rail/road 123 54 177 Total 43,892 21,731 65,623 Source IMIIP/CEGIS Analysis of Satellite Imagery 2013 based on 2011 imagery

E. Water Balance

1. Water Balance

109. A water balance of the MIP has been carried out and is presented in Appendix 2. The water balance has been based on a 1 in 5 dry year with water availability based on the 80% dependable rainfall and flows. The water balance analysis has been carried out based on the Muhuri part (southern part) by linking the water demand to the estimated total flows from the three gauging stations. As there is no flow information for the Muhuri-Kahua part (the northern part) of the scheme the analysis has applied the same increase in efficiencies and extrapolating the water demand from Muhuri part to the whole MIP.

2. Estimated Efficiencies

110. The estimated efficiencies are presented in Table 18 below and these have been applied in the water balance. With the new pipe systems the overall irrigation efficiencies would increase by about 60%.

Table 18: Estimated Efficiencies

Current Earth Channels Payment Future Piped System with prepaid based on area meter. Payment based on volume Distribution Efficiency 59% 80% Application Efficiency Rice 60% 66% Application Efficiency Non Rice 50% 55% Overall efficiency 18% 29% 3. Reservoir Storage

111. The reservoir storage parameters are presented in Table 19. Maximum level is 4.08 which is the

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 41 Final Report crest level of the gates on the Feni Regulator and the minimum water level is 3.0m with a storage of 36.9 Mm3. The total live storage is summarized in Table 19.

Table 19: Reservoir Storage Water Level (m.amsl) 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4 4.08

Storage (Mm3) 36.9 38.4 39.8 41.3 42.8 44.3 46.0 47.7 49.4 51.1 52.8 54.3

F. Estimate Current and Future Cropping for the MIP

112. For the MIP the estimated cultivable area from satellite imagery is 38,600ha. From the water balance it is estimated that in the 1 in 5 dry year it is currently possible to irrigate about 9,800ha of boro rice by surface water irrigation. There is currently no non rice or aman rice irrigation by surface water. For the boro period it is difficult to differentiate the area of crops irrigated by surface or groundwater. The in 1 in 5 dry year is very extreme and a figure of 11,300ha of current boro rice has been used for the economic analysis which is based on farm surveys and is considered better reflects the average situation in the field.

113. For the future with project situation using piped irrigation it is estimate the future cropping that 14,450ha (85% rice) and 3650ha (15%) non rice would supported by surface water during a 1 in 5 dry year. Currently groundwater is irrigating about 8,300 ha and it is estimated that this would remain unchanged. The current and future crop areas are summarized in Table 20 below.

Table 20: Estimated Current and Future Irrigable Areas (dry year)

Current Area Boro ha Future Area of Boro Rice and Non Rice/4

Surface Ground Surface Water Total Cultivabl water water Total Non Ground Surface e Area/1 rice/3 rice/2 rice/1 Total Rice3/ Rice3/ water rice and GW Muhuri 24,800 6,900 4,900 11,800 13,000 10,800 2,200 4,900 17,900 Muhuri- Kahua 13,800 2,900 3,200 6,100 4,000 3,650 350 3,200 7,200 Total 38,600 9,800 8,100 17,900 17,000 14,450 2,550 8,300 25,300 Notes 1/ Data from 2011 Satellite Imagery 2/ Data from Upazila statistics 2011 3/ Based on the water balance for a 1 in 5 dry year and cross referenced with satellite imagery 2011

G. Water Demand for the Whole Scheme

114. The estimated crop water demands are summarized in Table 21 below. Under the current situation with earth canals during a dry year there is no contribution from rainfall during the boro season and about 9,800ha of irrigated boro rice could be cultivated. Water demand is very high at around 17,900m3/ha at the pumps. The planting of the boro rice is generally delayed due to the slow mobilization of the pumps which results in an inefficient use of the water in the early boro period.

115. Under the future with project for the 1 in 5 dry year the maximum irrigable area has been estimated to 14,450ha (85%) of boro rice and 2,550ha (15%) of non rice (mainly vegetables). The increased water efficiencies reduce the water demand to 13,700m3/ha as well as earlier planting of the boro rice allows for more efficient use of the water. During a dry year the aman rice would require supplementary irrigation, the aman requirement is estimated about 17% of the total water demand (40Mm3). This cropping plan has been used for the economic analysis.

116. Under an average rainfall year, the crop water demands drop considerably due to some

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 42 Final Report supplementary rainfall to around 8500m3/ha. During such situations it is likely there would be a preference to grow 100% boro rice. There would be no requirement for supplementary aman irrigation during a dry year. The water requirements for the average year have been used for the financial analysis of the operation of the MIP.

Table 21: Crop Water Demands

Areas of Crop (ha) Water Requirements at the Pumps Boro non Total Boro Aman Total Total per Boro rice rice Aman rice (Mm3) (Mm3) (Mm3) ha (m3) Current without project- 9,800 0 0 175 0 175 17,900 1in 5 dry year Future with project -1 14,450 2550 17,000 190 40 230 13,700 in dry year Future with project 17,000 0 0 144 0 144 8,500 average year.

H. Groundwater 117. There is currently heavy use of groundwater for irrigation which is used to support the shortfall of surface water. Shallow groundwater is available within 2 to 4m below the ground surface in the project area but its quality it is not good and availability is variable. The groundwater is exploited by shallow tubewells for irrigation and deep tubewells with hand pumps for drinking water. There are a few deep tubewells for irrigation which abstract good quality water at a depth of greater than 150m for irrigation; these can potentially provide yields of about 20 l/s.

118. Geological Setting: The multi-layered unconsolidated and semi-consolidated sediments of the area have various depositional origins, and highly heterogeneous in nature. The area has been formed mainly by the three main rivers. The project lies in the south west of Feni district of the south-east Bangladesh. The project area sits between the Meghna floodplain in the west and the Tripura Hills in the east; and is made up of estuarine sediments.

119. The available BWDB lithological logs define two distinct aquifer systems; an upper unconfined to composite and lower leaky-confined to confined aquifer systems. The logs logs indicate that groundwater occurs in four water-bearing layers, a lower semi-confined to confined aquifer and an upper unconfined to leaky aquifer. An upper clay and silty clay layer occurs below the ground surface to depth down to about 30 m which is grey to light-brown in color. This surface aquitard (very low permiability) is underlain by very fine to fine sand and is defined as 1st or composite aquifer. The thickness of this zone ranges from less than 20 m to greater than 50 m with moderate to high water bearing characteristics. The 2nd or main aquifer occurs at depth ranging from 80 to 120 m, consists of light brown, fine to very fine sand overlain by silty clay aquitard of about 55 m thick, in places it is inter-bedded with medium sand. At places, the zone has thin lenses of silty clay. Grains size analysis of aquifer sediments from various depths show that the uniformity coefficient value is less than 1.68, indicating a fairly uniform grading of sands.

120. Underlying the main aquifer, there is a deeper water bearing unit, referred to as the 3rd or deep aquifer. This water bearing zone is separated from the overlying main aquifer by silty clay or clay layers of thicknesses about 40 m. The 3rd aquifer consists of grey, medium to fine sand and occurs at depths ranging from 160 to 180 m.

121. The 4th aquifer consists of grey to light brown medium to fine sand overlain by aquitard of 17 m thick. This water bearing zone occurs at the depths ranging from greater than 200 to less than 260 m.

122. BWDB monitoring of the well data shows that groundwater occurs at depth of 20–260m from the ground surface under a hydraulic gradient of 0.001–0.000087 between water level elevations of around 2.9–7.8 m amsl (average mean sea level). The general groundwater flow is from the north-north-west along a trough in the water level with north-easterly, westerly and north-westerly flow toward the trough from the north and north-western sides, respectively, and in directions away from the Muhuri, the Feni and Choto (Little) Feni Rivers. It moves from the Feni and Muhuri Rivers towards the south and the south-

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 43 Final Report east and from the Little Feni River towards the south and south-west directions. The Muhuri and Feni river are permanently losing streams but have seasonal surface flows.

123. The rate of seepage of water from these rivers depends on the cross-sectional area of the stream, hydraulic conductivity of bottom material and the underlying layers and depth of groundwater level at some distance from the rivers. Flow velocity in the rivers has no direct effect on seepage, but it affects seepage indirectly when fine sediments have a chance to accumulate on the bottom of the channel. The area is recharged by lateral underground flow from the rivers, reservoir and khal or rainfall towards the aquifers. .

124. The MIP area is located near the coast and sea-water intrusion might be a probable phenomenon and upper aquifers in the area are generally contaminated with brackish to saline waters. The spatial distribution of the major ions in the groundwater and the geologic and hydro-geological characteristics of the aquifers anticipated that groundwater abstraction might be suitable from deep aquifers and groundwater of this region is of enormous importance, as it constitutes the only source of potable water. The assessment of some contamination indicators, such as pH, TDS, EC, As, and Fe indicates that the water is suitable for human consumption from deep aquifers and also suitable for irrigation use. There are indications the shallow aquifers have iron concentrations above the permissible and arsenic is within the permissible for potable water but levels are quite high.

125. The estimated areas of current groundwater and the safe annual abstraction level assessed by the Master Plan Organization(MPO) use are shown in Table 22. The current number and area of tubewells inside the project area have been estimated from the Upazila statistics by assessing the proportion of each Upazila inside the Muhuri or Muhuri Kahua project areas. From the table it can be seen the groundwater abstractions are about three times the safe levels assessed by the MPO.

Table 22: Estimated Number and Areas of Irrigation from Shallow Tube Wells Estimated Upazila Muhuri Muhuri Kahua Total Annual Safe Annual Abstraction Abstraction Nr Area ha Nr Area ha Nr Area ha Mm3 Mm3 Feni Sadar 591 2,618 - - 591 2,618 37 0 Chhagalnaiya 22 186 7 56 29 243 3 7 Fulgazi 57 510 149 1,315 206 1,825 26 0 Parshuram - - 315 1,828 315 1,828 26 26 Sonagazi 65 86 - - 65 86 1 0 Miersharai ------3 Total 735 3,400 471 3,200 1,206 6,600 92 36

I. Strategies for Long Term Sustainable Water Resources Management

1. Strategies to Increase Efficiencies.

126. Desilting of the khal will allow many areas to access surface water which are currently are unable to irrigate. The increased demand from expansion of the irrigated area through desilting must however be supported be initiatives to reduce water loss and improved water use efficiencies to ensure the supply and demand remain in equilibrium. With current levels of water use efficiencies and storage availability is estimated that surface water is only sufficient to irrigate about 11,300 ha of boro rice during a dry year. To support the expansion of the irrigated area requires water conservation and increased water use efficiency. An integrated approach to improved access to water through desilting of the khal to increase access to wider area combined with water conservation through; (i) increasing the efficiencies of water distribution to reduce the water losses; (ii) to reduce water use by farmers through more precise irrigation and the volumetric basis of charging; (iii) to reduce the quantity of water lost through the boundary of the project through boundary water retention structures and (iii) to promote the diversification from rice to other lower water use crops. The project will also take up pilots and demonstrations of rice cultivation

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 44 Final Report techniques that are less water intensive.

127. The development of pipe distribution systems is proposed to reduce the water losses through improved application, distribution and operational efficiencies. The change from a fixed rate to a volumetric charging system by using a prepaid meters has shown significant reduction in water use in the Barind project.

128. The proposed prepaid smart card system in conjunction with a buried pipe tertiary distribution system and improved pumping equipment is expected to result in the following:

(i) Water use efficiency gains of around 60 % from reduced conveyance and operational losses and improved field irrigation practices. The change of basis of charging from a fixed rate per unit area to a volumetric basis is significant to the water use efficiencies. (ii) Flexible on-demand irrigation supply to farmers resulting in increased yields as well as support crop diversification. (iii) A 15 % shift from rice grown under puddled conditions into non-rice crops, including vegetables. In addition promoting early planting of vegetables to minimise the water demand during the critical month of March. (iv) Pumping (energy) efficiency gains accruing from newer more efficient pumps and motors, and use of pumping equipment that operates efficiently for the discharge and average pumping heads expected for each system. (v) 100% cost recovery for OM costs from water users (farmers) by use of prepaid meters with charges based on volume used instead of a fixed rate. (vi) Elimination of any exploitation by pump owners and operators or corruption or loss of funds by eliminating cash payments. (vii) To allow presently unirrigated areas to have access to irrigation water. (viii) The introduction of on demand irrigation with pumps permanently available opens opportunities for supplementary irrigation during the whole Rabi and Kharif seasons in addition to irrigation for the boro crop.

129. These in turn will enable: (i) about 70% expansion in cropped area; (ii) reduced pumping volumes and costs; (iii) a variety of crops with different planting dates, crop durations and irrigation water requirements, to suit individual farmers; (iv) improved crop yields arising the individual farmers being able to control timing and amounts of irrigations; and (v) sustainable funding for operation and maintenance.

130. The estimates indicate that with the project the net (rabi) irrigation area could potentially increase from around 9,800 ha to 17,000ha based on: (i) an increase in water use efficiency from 18% to 29%; (ii) a possible crop diversification with 15% of the Rabi cropped area being non-rice; (iii) khal excavation so that all parts of the command have access to water.

131. Over and above the estimated water savings above, the project will also provide agricultural support initiatives to help farmers improve production levels as well as develop water saving initiatives; these would include the use of water saving technologies including SRI and alternate wet and dry irrigation, developing improved cropping patterns and mechanisation. These initiatives will be piloted and demonstrated during years 1 to 4 of the project.

2. Issues Affecting Long Term Sustainability

132. Siltation of the reservoir will continue but as the reservoir is now only contributing 12% of the live storage further loss of storage will be less significant. Storage in the rivers provides 76% of the storage which are considered to be reasonably stable due to flushing as well as some commercial abstraction of sand. The khals which contribute 12% of the live storage will continue to silt but the proposed program of effective maintenance will ensure the storage in maintained.

133. Increased water use in the upper catchments could potentially lead to some loss of supply to the MIP. To assess the possible risks a short study of the upstream catchment has been carried out and shown in Appendix 2. Using DEM and advance GIS analyses, three river catchments have been

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 45 Final Report delineated; Muhuri river catchment, Feni river catchment and Muhuri Kahua (Selonia) river catchment. The detailed information of the catchments is presented in Table 23: .

Table 23: Delineated Upstream Catchment Area Name of Location Country wise catchment area Total catchment area Area (%) Catchment (sq. Km) (sq. Km) Bangladesh 226.42 22.9 Muhuri 987.15 India 760.73 77.1 Bangladesh 1161.88 68.9 Feni 1684.61 India 522.73 31.1 Muhuri Kahua Bangladesh 117.92 37.3 316.09 (Selonia) India 198.17 62.7

134. The land use in the upstream catchment is summarised in Table 24. The main uncertainty is the possible increase in water.

Table 24: Land Use in the Upstream Catchment Sl Muhuri Feni Selonia Class Name Total Area (%) No catchment Catchment Catchment 1 Leveled rice land 200.8 154.9 79.4 435.1 14.6 Other agricultural 2 land(Rubber, 58.8 142.6 31.2 232.6 7.8 coffee, Tea etc) Settlement with 3 homestead 134.7 275.4 53.1 463.3 15.5 vegetation 4 Forest 485.3 877.4 90.6 1453.3 48.6 Others (water body, road, 5 107.5 234.2 61.3 403.0 13.5 Shrub/Grass, fellow land etc.) Total 987.2 1684.6 315.6 2987.4 100.0

135. The possible implications of changed water demand include:.

136. For potable water the estimated current population is 1.7million over the whole catchment. At 100lpd this is equivalent to 5Mm3/month. By 2050 the population could increase to about 2.5million at 150lpd (to allow for improved service) and this could increase to 11Mm3/month. Most of the abstraction would be from groundwater but surface water might be used for the larger communities. 75% of the population in the catchment lives in Bangladesh

137. For irrigation there is about 19,000ha of levelled rice land in the three catchments in India. Increased abstraction of surface water for boro rice would however affect the dry season flows, although some return flows could be anticipated. There is no information on the current area of irrigated boro rice so it is not possible at this stage to make any definitive assessment of the future impacts of increase boro rice production.

138. In conclusion it is considered that there is some risk that future expansion of water demand in the upstream catchment that could affect future long term the flows into MIP.

3. Mitigation Strategies

139. The development plan for MIP is based on a high intensity of boro rice but introducing some diversification from rice to non rice crops including vegetable. In a future scenario if significant reduction in water inflows were to occur then some mitigation measures will need to be taken up and still maintain the viability of the projects. Two scenarios and three possible mitigation measures are assessed.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 46 Final Report

(i) Scenario 1: To assess the impact of possible future changes in flows, a 30% reduction in the 80% dependable flow has been applied. Under this scenario the area of boro rice would be reduced to 50% January to March. The reduction in boro rice can be offset by increasing the area Aus rice which would start in April once early rains contribute to river flows. To allow sufficient time after the Aus to plant aman short period Aus rice crops would be grown. From the water balance a rice intensity of 185% could be achieved.

(ii) Scenario 2: presents a more extreme situation with a 50% reduction in the 80% dependable flow. Under scenario 2 the area of boro rice would reduce to 25% of the command area but this reduction in boro could be offset by planting 25% of the command by an Aus crop. Under this situation increased efforts would be required to diversify from puddled rice including the use of SRI rice and other lower consuming cash crops.

(iii) Increasing the role of groundwater; although over exploited and with some environmental issues the groundwater could potentially provide a supplementary source especially during the 2 critical months of February and March. No development of groundwater is proposed under the project; there are also environmental issues which need to be considered. Further studies are however proposed to assess the viabilities of improved conjunctive management of the surface and the groundwater. Most of the tubewells are privately owned which limits the scope for groundwater management.

J. Climate Change 140. Bangladesh is one of the most vulnerable countries to climate variabilities and change due to its geographic location, low deltaic floodplain, very large inflows from major transboundary rivers and the influence of erratic monsoon rainfall. A review of climate change impacts on the Muhuri Irrigation Project has been carried out to assess how adequate levels of resilience to climate change should be incorporated into the design of the project. Coastal cyclones from the Bay of Bengal and upstream river floods during monsoon season pose significant impact on the project area. In particular, cyclones in coastal zone of Bangladesh accounted for several of the world's worst natural disaster in the twentieth century.

141. Climate change assessments have been prepared based on; (i) Climate Observations and Projections for Bangladesh by the UK Met Office Hadley Centre 2011; and (ii) the Coastal Embankment Improvement Project Phase I implemented by BWDB and World Bank 2012 Various other studies including the ADB TA7417 India Support to the National Action Plan for Climate Change 2011 were used as supporting reference material as the river catchments are in India.

142. The Hadley centre study report for Bangladesh assessed that: (i) the A1B emissions scenario projected temperature increases over Bangladesh are in the region of 3 to 3.5°C by 2100. The agreement between models is high over the entire country; and (ii) precipitation is projected to increase in Bangladesh under the A1B emission scenario with increases of 5-10% in the vicinity of the Muhuri Project Area. Agreement across the CMIP3 ensemble is moderate to high.

143. Studies by the Hadley centre indicate an increase in mean and extreme precipitation over Bangladesh. This confirms conclusions from the IPCC AR4 however large uncertainties remain, particularly with respect to how the large-scale monsoon system might respond to climate change and changes in precipitation associated with tropical cyclones. Studies carried out by the Institute of Water Modeling (IWM)32 which included simulation modelling of rainfall intensities. From this the IWM who are responsible for the detailed design of the drainage improvements have recommended to increase the drainage modulus to a 1:25 year flood. The project will excavate 450km of drains(Khal) these will be designed to meet the projected increased levels of rainfall intensity project under climate change.

144. Studies by the Hadley centre indicate that although there are many uncertainties in predicting water stress but from the few regional assessments available it is suggested that; (i) Bangladesh could be

32 IWM Studies of Drainage in Polders in the South West of Bangladesh

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 47 Final Report exposed to moderate to high water stress with climate change. However, further research is required to quantify the potential magnitude of any change; (ii) simulations by the Hadley centre using the AVOID programme broadly agree with the global- and projecting an increase in water stress for Bangladesh as a whole with climate change. However, the uncertainty in the projected changes is large. Monsoon variations and increased chance of periods of drought even during the monsoon will be reduced by provision of access to irrigation supply throughout the year.

145. The PPTA has implemented a detailed water balance model based on 17 years of historic data. No obvious trend in the flows was seen. Flows are affected by upstream abstractions in India, overexploitation of the groundwater and possibly climate change. Modeling of future flows was not attempted due to the poor quality flow data and the difficulties of assessing current and future abstractions from the upstream catchments in India.

146. A preliminary analysis including some modeling was carried out by the PPTA through the Institute of Water Modeling (IWM) to assess the required crest height and cross section of the coastal embankment to meet resilience of climate change using the same approach as the Bangladesh Coastal Embankment Implementation project Phase 1.. The estimate is that to provide adequate allowance for increased sea level (from sea level rise and storm surge) and wave run up would require the raising of the crest of the coastal embankment by 1m in Polder 60 (which is set back from the sea) and about 5 metres for polder 61. It was concluded that these assessments need to be better verified by detailed modeling including the incorporation of new bathymetry data.

147. The projected changes under an A1b scenario are summarized in Table 25.

Table 25: Estimated Climate Risks

Average Annual Precipitation (mm) Sea Level Rise (masl): Others Temperature (oC)

From: 22.0 From: 3372 Increase by 0.3-0.5m by Storm Surge 10% increase in To: 25.0 To: 3541 2100 (Hadley study) wind speed of every cyclone CEIP assesses 0.5m by (CEIP) 2050 Projected changes under A1b scenario (Scenario assessed by Met Hadley Centre for 2100 from the 1960-1990 baseline averaged over 21 CMIP3 models)33 Sea Level Rise and Storm Surge based on estimates by the CEIP 201334 148. The estimated climate risks are summarized below

(i) The projected increase of 5-10% in the precipitation will be generally beneficial and provide increased river flows for the during the post monsoon irrigation period; The Hadley studies however considered that the quality of the data was not considered good enough to quantify the climatic impacts. Changes in temperature and humidity would affect the evapotranspiration which may affect the crop water requirements.

(ii) Increased runoff will result increase the likelihood of flood flows and the need to improve the drainage. Greater variabilities including increased standard deviation in monsoon rainfall and greater extremes of the rainfall patterns will increase the frequency and extent of drought which will increase the requirements for access to irrigation throughout the year.

(iii) The Hadley centre reviewed various studies on storm surge it is generally suggested that cyclones in the north Indian Ocean could decrease in frequency with global climate change, the uncertainties in the magnitude of this decrease and the sign of the response of cyclone intensities makes it extremely difficult to determine whether cyclone impacts in the coastal zone Bangladesh could decrease or increase. This is particularly true given that the most intense; and hence rare cyclones cause the vast majority of damage35 and could continue to do so in the

33 UK Met Office Hadley Centre Climate: Observations, projections and impacts for Bangladesh 2011. 34 Bangladesh Water Development Board/ World Bank, Coastal Embankment Improvement Project (CEIP) Phase 1 2012. 35 Mendelsohn, R., Emanuel, K. & Chonabayashi, S. 2011. The Impact of Climate Change on Global Tropical Cyclone Damages.

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future.

(iv) The Muhuri project is located at the apex of the Bay of Bengal with a large tidal range and is vulnerable to storm surges. The Institute of Water Modeling Dhaka (IWM) based on the same analysis used for the CEIP in the south west of Bangladesh estimated that sea level rise together with the projected 10% increase in wind speed during cyclones will result in significantly increased sea levels during cyclones from storm surge combined with sea level rise. Preliminary estimates by the IWM indicate these could be of the order of 1-3 meters which would require a significant raising and strengthening of the coastal embankment.

1. Sea Level Rise and Storm Surge

149. The Muhuri project area lies at the apex of the Bay of Bengal and coastal cyclones together with upstream river floods during monsoon season pose significant impact on the project area. The MIP is protected by the coastal embankment of Polders 60 and 61. The embankment needs strengthening including provision of adequate protection from storm surges and wave impacts under the impacts of climate change including sea level rise. The embankment provides for the safety of properties, lives and livelihood of the local communities inside the MIP.

150. The coastal embankment the Coastal Embankment Improvement Project (CEIP)36 has carried out extensive studies of the Polders in the South West of Bangladesh and report provides a basis of estimating climate resilience for the Muhuri Irrigation Project. No specific studies storm surge studies have however been implemented for the eastern Bangladesh. Recommendations in the CEIP report include:

o Design storm surges need to be based on the historic data of 38 cyclone situations including 19 actual events and 19 actual events but assuming the cyclones hit at high tide level. o Embankment designs would be based on the situation in 2050 with climate change and were based on the IPCC predictions for 2050 which require consideration of +0.50m sea level rise and a 10% increase in wind speed in every cyclone. o The norms for coastal flood protection incorporate a 1:20 years flood, where agricultural damage is predominant and a 1:100 year flood where loss of human lives, properties and installations are predominant. The CEIP found that the embankment sections become impractical and uneconomic, when 1 in 100 years frequency storm level is selected for the design of embankment in addition to the requirements for climate change resilience. The CEIP study therefore proposes a surge level of 25 years return period in addition to the rise in storm surge due to the impact of climate change. Subsequently for areas where human lives are predominant it is also recommended to consider some additional approach, when 1 in 25 years frequency is selected to minimize the losses of lives etc. by providing adequate number of cyclone shelters distributed throughout the vulnerable zone and ensuring that the cyclone warning system works efficiently and reliably.

151. The current embankments are designed for historic assessment of sea levels including high tides, historic storm surges and allowance for waver run up with no provision for climate change.The current design crest level is 7.93m PWD.

o The Polder 60 embankment is relatively set back from the sea and preliminary assessments indicate a 1m increase in crest height may be required to meet the needs of long term climate resilience. o The Polder 61 embankment is very exposed to the sea and preliminary estimates indicate a 5m increase in embankment height may be required to meet the long term needs of climate resilience. o The assessments are indicative and need to be supported by sophisticated modelling. For Polder 60 there is also a need to review the alignment. There is now about 3km of reclaimed land on the sea side of the existing embankment. The ongoing river training work downstream of

36 Ministry of Water Resources, Bangladesh Water Development Board Detailed Design Report for Flood Embankments Drainage Canal, Protection Works and Hydraulic Structures May 2012.

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the Feni barrage may increase the extent of this reclaimed land. The future embankment should consider whether the climate resilient embankment should incorporate the reclaimed land which includes a number of settlements. o The required embankment crest levels need to be reconfirmed by full mathematical modelling of flood flows, tidal surge and sea levels with up to date bathymetry. o The costs and land acquisition requirements as well as the engineering design is complex and the cost increases would be very significant. Detailed planning is required to reassess the alignment as the existing alignment excludes quite large areas of land outside the existing embankment. o Parts of the embankment are used as roads-raising the crest would require demolition of the roads or creating a new embankment butting onto the existing embankment. o Climate proofing one portion of the embankment and leaving other parts without climate proof may limit the protection due to flood inflow from the parts without climate resilience. o The climate resilience can in most cases be added to the existing embankment without requirement for demolition. The exception is where there are asphalt or brick roads where the option is demolish the road or build a new embankment butting onto the road.

152. The requirements for climate proofing the coastal embankment for Muhuri should be taken up as part of the overall climate proofing the eastern coastal zone of Bangladesh. Climate change is gradual and the existing embankment has only overtopped once with minor damage in the last 30 years. The embankment in Polder 60 is in poor condition in many parts and it is concluded rehabilitation to the original design is the first step and will provide a reasonable degree of protection. In Polder 61 the embankment has recently been rehabilitated and the land inside the embankment is fish ponds and will provide a good buffer from storm surge. Provision of climate resilience should be taken up as soon as possible preferably within the next 5 years but the immediate requirements can be met by the original design section. The climate proofing requires detailed modelling of storm surge and flood levels, complex engineering design, a review of the alignment and significant land acquisition.

2. Changes in Rainfall and Rainfall Patterns

153. The Muhuri project is totally dependent on the monsoon rainfall and an increase under climate change will be generally beneficial. Monsoon variations however will need to be incorporated into the water management plan to be prepared by the IMO. The proposal for Muhuri is the low lift pumps would be installed and available for supplementary irrigation throughout the year which will provide a significant level of resilience to climate variations ; pumps will meet the full water requirements of Rabi as well as meeting the supplementary requirements for the Kharif and Aus cropping which presently have no access to surface water irrigation. Periodic weak monsoon rainfall can be expected which will impact on the winter flows to Muhuri and affect the boro season cropping especially rice. Monitoring of monsoon rainfall patterns including sourcing data from the Indian catchments can provide a key input to advise farmers on the prospects for boro cropping. Improved water management including mechanisms to adjust planting dates, reduce rice water requirements and crop diversification to lower consuming crops are key adaptation measures which will be promoted under the project.

154. Increased Rainfall Intensity. To meet this potential risk it is proposed to increase the drainage modulus from 1:10years to 1:25 years. The accuracy of climate change impacts relating to extreme rainfall events remains quite poor. The project will implement re-excavation of the drains to meet the needs of irrigation and drainage. Significant over excavation to meet the possible impacts of climate change is not proposed due to the likely increases in sedimentation if there is over-design of the capacity of the drains. The drains will be routinely excavated once every 5-7 years and additional section can be added quite easily when the climate change information becomes more reliable.

3. Temperature

155. . Increased temperatures need adaptation measures to select the optimum rice varieties. Increased evapotranspiration will increase the crop water requirements. In recent years cold winters have resulted in crop damage and there is a trend for farmers to plant later; planting appears to be delayed by about 1 month. The delayed planting does affect crop water balance as the water available during December and January is not used and puts more pressure on the water demand during February and

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March which are the critical periods for the water availability-demand balance. Further studies will be taken up under the Muhuri Management contract to better assess the impacts of delayed planting of boro rice and the options for adaptation. Crop diversification including more use of cold resistant crops is a proposed adaptation response. The project will support agriculture support services which will include piloting and demonstrating new cropping which can provide increased returns, reduced water requirements as well as resilience to climate change

4. Summary of Proposed Adaptation Measures

156. To meet the risks of climate change the project will;

o Increase the drainage design modulus from 1:10 year return period to 1:25year return period as a response the likely increase rainfall intensities. o Increase the irrigation efficiency by 39% by through the use of piped distribution and pre-paid meter systems. Together with a 15% diversification to non rice crops will increase the irrigable area from 11,300ha to 17,000ha. o Provide access to irrigation on demand throughout the year for 17,000ha to help meet current and future climate uncertainties. Currently irrigation only available during period January to April. o The project will provide agricultural support services to promote the diversification from rice, water saving methods, training and extension to support the establishment of sustainable and climate resilient cropping systems. o Repair the coastal embankment to restore it to its original design section as an interim measure prior to the implementation of the 2nd Stage of the Coastal Embankment Improvement Project (CEIP) to be implemented by the Government as a follow on program under the CEIP1 project which is currently working in the western part of Bangladesh. o Investigate the potential for integrated surface and groundwater management as a means to increase the water supply as well as reducing risk of shortages from increased risk of drought or flow uncertainties. o Support capacity development for application of integrated water resources management to improve inter-sector management of water resources and as a front-line adaptation response o Upgrade irrigation infrastructure including the use of piped water distribution and the excavation of the drains. o Contracting of a private sector irrigation management operator to develop improved irrigation management and to develop management strategies to meet impacts of climate change. o Provide capacity building of water users in efficient land and water management practices

XII. INVESTMENT PLAN FOR MUHURI

A. Summary 157. The investment plan was developed based on close consultation with the Feni Circle of the BWDB who prepared the proposals for the rehabilitation works. It has not been possible to address all of the needs; prioritization has been applied to measures to increase the irrigation productivity and sustainability. Cost estimates have been prepared based on an analysis of volumes and applying the 2013 unit rates based on the BWDB schedules. The proposed investment incorporates:

o Repairs to the original design section of the 22.6 km coastal embankment of polder 60 running from the Feni regulator to the new Little Feni regulator. o Rehabilitation of four coastal water control structures and construction of 2 new coastal water control structures. o Rehabilitation of 3 water control structures and 5 new water control structures in the khal. o Excavation of 3.8 million m3 from the 460km of khals to ensure the whole project area has access to water in the Khals during the boro season as well providing improved drainage. o Development of 17,000ha of a modern and highly efficient piped farmer water distribution to system to improve timely access to water and reduce water losses. The water savings from the increased efficiency will allow an increased area of irrigation. o Provision of prepaid card meters to allow water allocations to be based on a volumetric basis

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and ensure full and transparent payment and accounting systems. o Full electrification of the pumps to reduce the operational costs and increase management flexibilities. The electrification includes conversion of diesel pumpsets to electric and replacement of old electric pumps as well as extension of the grid network to allow connection of pumps. o Pilot solar panels and pumps for six schemes to irrigate a total of 83ha o Rehabilitation of office space for use by the BWDB and the proposed Irrigation Management Operator

158. The estimated cost of the investment plan is $30.4 million (Tk243 crore). A summary of the proposed physical works is given in Table 26 below:

B. Repairs and Upgrading of the Level 1 Infrastructure 1. Repairs and Upgrading of the Coastal Embankment

159. The coastal embankment for polder 60 runs from the Feni Regulator to the new little Feni 23 vent regulator. The preliminary cost estimates given in Table 26 are based on an estimated volumes of the 2011 studies carried out by the Institute of Water Modeling (IWM) and using 2013 costs, with and the original design crest level 7.31m above mean sea level. The final volume of fill for the coastal embankment based on the 2014 design by IWM is 161,000m3

2. Excavation of Khals to Provide Access to Irrigation Water and Improve Drainage.

160. Design capacities for the Khal need to incorporate the requirements to meet crop irrigation requirements and drainage during the monsoon; the design will factor in requirements for resilience to climate change. The control level will be the mouth of each Khal both the low level during the dry season as well as flood levels during the monsoon.

The original project in 1985 excavated 3.5million m3 of Khal to a bed level of 2.5m PWD. The design for the khals is ongoing. The proposed volume for re-excavation is for 4.8 million m3 based on the final designs by IWM during in 2014. For the design bed levels and bed widths will be reviewed and new cross sections prepared based on the hydraulic requirements for irrigation and drainage; the design section will incorporate the larger of the two requirements.

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Table 26: Summary of the Proposed Civil Works for MIP

Cost (Tk Sub Total Tk Sub Total $ Ref Item Unit Qty Cost ($ Million) % Million) million million 1 Coastal Flood Protection 1.1 Repairs to the coastal embankment Polder 60 m3 325,000 66.625 0.833 66.6 0.8 2.7 1.2 Coastal Flood Protection Stuctures 1.2.1 Rehabilitation of Coastal Protection/Drainage Structures 1 Polder 60 Sluice 05 Rehabilitation nr 1 0.826 0.010 2 Polder 60 Sluice 06 Rehabilitation nr 1 0.839 0.010 3 Polder 60 Sluice between 6 and 7 Rehabilitation nr 1 1.774 0.022 4 Polder 60 Sluice 08 Rehabilitation nr 1 10.925 0.137 1.2.2 New Coastal Protection/Drainage Structures 1 Polder 60 Sluice 07 New 2 Vent nr 1 23.485 0.294 2 Polder 60 Sluice 09 New 2 Vent nr 1 21.136 0.264 59.0 0.7 2.4 2 Main River System 2.1 Repairs to Water and Flood Control Structures 2.1.1 Feni Regulator Structure-gate and lifting system Ls 1 9.900 0.124 2.1.2 Little Feni River Sluice 10 Rehabilitation nr 1 2.640 0.033 2.1.3 Little Feni River Sluice 11 Rehabilitation nr 1 0.350 0.004 2.2 New Water and Flood Control Structures 2.2.1 North Daulatpur New 2 Vents nr 1 23.340 0.292 2.2.2 South Daulatpur New 4 Vent nr 1 42.639 0.533 2.2.3 Bhalukia New 2 Vent nr 1 28.340 0.354 2.2.4 Madhya Khal New 4 Vent Water Retention Structure nr 1 41.672 0.521 2.2.5 Ichakhali Khal New 7 Vent Water Retention Structure nr 1 62.571 0.782 211.5 2.6 8.7 3 Excavation of khals m3 3,825,000 688.500 8.606 688.5 8.6 28.4 4 Repair of BWDB Offices,stores Ls 1 15.000 0.188 15.0 0.2 0.6 5 Farmer Canal Systems 5.1 New low lift pumps with electric motors ha 17,000 81.600 1.020 5.2 Buried UPVC Pipe and associated structures ha 17,000 952.000 11.900 5.3 Prepaid meters and system ha 17,000 68.000 0.850 5.4 Pilot solar pumps and panels ha 60 14.400 0.180 1,116.0 14.0 46.0 6 Upgrading of electrical distribution system 6.1 Upgrading of electrification ha 17,000 272.000 3.400 272.0 3.4 11.2 Total 2,428.562 30.357 2,428.6 30.4 100.000

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3. Repairs to Existing Structures

161. The repairs proposed to existing structures summarised in Table 27 below.

Table 27: Summary of Requirements for Structure Repairs

Structure Requirements 1 Rehabilitation of Coastal Protection Drainage Structures 1.1 New lifting gates and flap gates repair to aprons Polder 60 Sluice 05 and operating platform 1.2 Polder 60 Sluice 06 New lifting gates with vertical pillars 1.3 Polder 60 Sluice between 6 and 7 New river side flap gates, 1.4 Polder 60 Sluice 08 Replace of flap gates and accessories for lifting. 2 Repairs to Water and Flood Control Structures 2.1 Repairs to the gate lifting mechanism, provision of Feni Regulator Structure-gate and lifting new control room with electrical controls. system Installation of AWLR device 2.2 Little Feni River sluices 10 Replace flap gates repair to apron 2.3 Little Feni River sluice 11 Replace flap gates replace cc blocks

4. Provision of new structures

162. A summary of the proposed new structures is summarised in Table 28 below. The structures sizes and costs have been estimated based on the current size; the required capacities will be assessed at the design stage.

Table 28: Summary of New Structures Structure Assessment of Requirements A New Coastal Flood Protection Structures 1 New Pipe Sluice Nr in The existing structure is a 3-vent: 3.0 ft dia pipe structure. The structure is Polder 60 seriously damaged and non-functional. To meet the needs of salinity, flood control and drainage, replacement of this structure is proposed. 2 The regulator is located at Village: East Char Chandia of No.6 Char The existing structure is a 1-vent: 1.5 m x 1.8m box-type reinforced cement New Sluice Nr.7 in concrete (RCC) structure. The structure was damaged beyond repair and Polder No.60 is currently non-functional. For salinity, flood control and drainage, replacement of this structure is proposed The new structure will be a reinforced cement concrete (RCC) box type regulator. 3 The regulator is located on Sukonia Khal at Village: Char Chandia of No.6 Char Chandia Union of Sonagazi Upazila. The existing structure is a 3- New Sluice Nr 9 in vent: 3.0 ft dia pipe structure. The structure is damaged beyond repair and Polder No.60 rendered non-functional. For flood and salinity control and drainage, replacement of this structure is proposed. The proposed structure will be a reinforced cement concrete (RCC) box type regulator. B New Water and Flood Control Structures

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1 New North Doulatpur These structures are located upstream of the confluence of the two rivers drainage sluice ( 2 Vent courses (Muhuri and Kahua). 1.5mX1.8m) A flood embankment has been constructed on the banks of the Kahua New South Daulatpur 4 River in Daulatpur area. No facility has however been provided to drain Vent rainfall runoff into the river during the monsoon period. This leads to inundation of the cropped land and also occasionally in the late Boro season in April and May. To relieve the drainage congestion two new drainage regulators are proposed: (i) at North Daulatpur (2 vent: 1.5m x1.8m) and (ii) at South Daulatpur (4 vent: 1.5m x1.8m). The investment in these two drainage sluices will reduce the level of inundation in the monsoon period and reduce damage to the rabi and kharif season crops. 2 Bhalukia Khal New Bhalukia Khal is connected to Kachua Khal (secondary canal) of the MIP Check Structure (2- which in turn is connected to the Kalidas Pahalia River. In the monsoon, vent: 1.5mX1.8m) water enters into the Kachua Khal through back-flow from the outfall river, and that in turn enters the New Bhalukia Khal and damages crops. Previously there was a structure at its outfall but it was rendered ineffective. A new hydraulic structure on the outfall of New Bhalukia Khal is proposed to save crops in the monsoon. The structure should be fitted with flap gate on the river side with arrangement to allow ingress of water for irrigation except in the monsoon period from June to September. The structure should include provision of a foot bridge the community use. 3 Madhuai Khal New The Khal is connected in the upstream with the Kalidas Pahalia River and Retention Structure ( 4 also links to the Little Feni River. During the irrigation season water Vent 1.5mX1.8m) escapes from the Muhuri system to the adjoining Little Feni river. A temporary earthen cross dam is built across the khal at Char Hoqdi prior to each irrigation season. This temporary arrangement is difficult to implement and more difficult to remove after the irrigation season to permit drainage in the monsoon. To conserve the water stored in the Muhuri reservoir river systems and to facilitate timely irrigation construction of a water retention structure (WRS) is proposed across the khal. The WRS may built at a point downstream the present location as there is constraint of space to build it at the present earthen cross-bund location. The structure should have facility of a foot-bridge to facilitate movement of the community. 4 Ichakhali Khal. New Water stored in the MIP is lost indirectly through the Ichakhali Khal. Check Structure (7- Although the Ichakhali Khal has a regulator at its outfall into the Sandwip vent: water retention Channel water is lost through the Omar Ali Khal which is linked to the structure 1.5mX1.8m) Ichakhali Khal about 6 km upstream from the outfall regulator. Water leaks from the Ichakhali Khal via the Omar Ali Khal towards the Bamansundar Khal.

It is proposed that that a Water Retention Structure (WRS) is constructed across the Ichakhali Khal at a location upstream of the confluence with the Omar Ali Khal. The structure will retain valuable water for irrigation during the Rabi period.

C. Upgrading of the Electrical Distribution 1. Supporting Studies

163. The change from diesel to electric pumps offers many advantages. Studies have been carried out to assess the viabilities, strategies and costs to electrify the all the low lift irrigation pumps within the project area. The power study has been conducted in close liaison with the Feni and Chittagong-3 PBS (Palli Bidyat Samity-Rural Electricity Society) which the operational arm of the Rural Electrification Board (REB).

164. The study has carried out assessments of the existing power network and infrastructure including the capacities of substations, transformers and lines. The current and future requirements for domestic

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 55 Final Report supply and industry inside and in the vicinity of the project area have also been completed. A review of the viabilities and risks of adding additional load to the power network and assess the options and costs how the project could best operate within the limitation of available including developing load management and backup systems and what measures the project could proceed with electrification. A comparison of alternative power sources has been completed including diesel, electric and solar stand alone as well as solar in conjunction with diesel or electric.

165. The Muhuri Irrigation project area consists of 6 Upazila; Feni Sadar, Chagalnaiya, Fulgazi, Parshuram, Sonagazi and Mirersharai. The Mirresharai Upazila is under Miresharai PBS (a part of Chittagong- PBS3) with the other Upazila are under Feni PBS. Based on a 10% sample of the khal (50 km) it was found that there are a total of 228 diesel operated LLP which would require to connected by electric distribution line. This equivalent to 4.6 pumps per km of khal

166. Discussions were held with the pump owners and there appears to be a high level of interest to get electric connections due to the current high costs of pumping using diesel. It is also learnt by the surveys team that many pump owners felt that they will not be able to continue the irrigation by diesel operated pumps as they are not achieving a viable financially sustainable way to provide adequate irrigation water. From the government statistics and which is supported low lift pump survey it is estimated that about 25% of the LLP pumps are currently powered by electricity.

167. The operation season is dictated by the pump owner who removes the pump to his house except during the boro season. This precludes access to irrigation outside the boro season. Planting of boro is also frequently delayed as the pump operator will often not initiate pumping until all the outstanding water charges are met from the previous season.

2. The Adequacy of the Existing Power Networks to Meet Power Demands

168. The adequacy of the existing networks has been assessed including the locations of lines, substations including existing demand and future demands of the pumps and other facilities have been verified on the electrical network layout map. The power requirements of electric pumps are assessed at 0.45kw per ha which for 17,000ha would amount to 7.65 MW. From the pump surveys it is estimated that 25% of pumps are already electrified so the net increase in load would be 5.7 MW. The extension of the network would allow for more communities to be connected an additional 20% extra load has been added to meet this, making a total estimated additional load on the grid of 7.0 MW. Based on a sample study of 50 km canal, it is found that about 0.2 km power line will be needed to connect each LLP. This includes about 10% addition to meet the social obligation to give connection to the nearby villages for domestic power facility. For the estimated 800LLPs this will require a total of 160km of new electrical distribution of which it is estimated 70% would high tension and 30% low tension. In addition provision of voltage regulators capacitors, transformers and line isolators.

169. From discussions with the Rural Electrification Board that the existing sub stations plus the proposed substation at Dagonbhuiya would be completed by 2014 and the network would have adequate capacity to meet the increased load..Date from Feni and Chittagong-3 PBS has been collected by substation together with information on the installed capacity and maximum power demand. Information was verified on a sample basis in the concerned in PBS. Summary Information as compiled from the record data of concerned PBS are described in below.

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Table 29: Assessment of Sub Stations

Name of Sub- Capacity (MVA) Installed Capacity Maximum Demand Power Factor station KVA / MW MW Chittagong-3 (Mirressarai) PBS Mirsharai 21.680 MVA(3X3.33 + 21, 680 / 20.097 10 .00 0.927 1X10) Feni PBS Feni Sadar 10 MVA (3 x 3.333) 9.1 8.2 0.91 Lemua 10 MVA (3 x 3.333) 9.1 6.3 0.91 Chhagolnaiya 10 MVA (3 x 3.333) 9.2 5.7 0.92 Fulgazi 10 MVA (6 x 1.67) 9.1 7.5 0.91 Sonagazi 10 MVA (3 x 3.333) 9.1 4.8 0.91 Dagonbhuyian 10 MVA (3 x 3.333) Data not available Data not available Data not available Debipur 10 MVA (3 x 3.333) -do- -do- -do-

170. For the Mirsharai area, the substation capacity is 20.1MW, whereas maximum power demand is only 10.0MW. So, allowance of additional power of about 10 MW remains and therefore the new power load due to LLP in future for about 10 MW could be safely accommodated. For the Feni PBS , substation installed capacity are higher than maximum demand. So, allowance of additional new power load in future due to LLP of about 9% in Feni Sadar, 30% in Lemua, 37% in Chagolnaiya, 18% in Fulgazi, and 47% in Sonagazi, could be safely accommodated. For Dagonbhuian & Debipur, required data and information are not available.

171. Six number substations at present are feeding Muhuri irrigation area, with a total capacity of the substations of 70 MVA; the maximum demand is 42.5 MW. The REB in rural electrification distribution system use voltage regulators in the substation and also in the 11 KV line where it is necessary They also use capacitor banks in the substation and also in the 11 KV line to improve the power factor of the system. The data collected from the FENI PBS and Miresharai PBS, it is seen that loading levels are about; 89% for Feni substation, 82% for Fulgazi 82%, 77% for Lemua, 52% for Sonagazi, 52% for Chhagolnaiya and 55% for Mirresserai

172. Feni PBS has taken up the construction of two 33/11KV new substation each of capacity of 10 MVA at Debupur and Dhagonbhuya. There is currently no existing 33/1 KV sub-station in Parshuram and a sub-station of 10 MVA capacity has been approved by REB and construction is waiting for funding with a target to construct by 2015.After construction of these three substations the load of the other five substations will be reduced. It is estimated that the substations will be capable to feed the additional load of LLP and also the additional domestic consumers.

3. Assessment of Power Generation to Meet Needs of Future Demand

173. The annual increase in load for the area covered by the Rural Electrification Board is about 8-9% however some reduction in load growth is apparent since 2009. Over recent years growth in demand has exceeded supply. Information gathered from the PBSs show that there was a strategy to restrict the demand and during the last few years new electric connections to new consumers were not allowed. This was due to shortage of power generation all over the country as power demand has fallen behind power generation

174. There are major plans to provide increased power for Bangladesh including the development of 11 new major power plants over the next four years to provide 5,600MW of power. In the Feni area the Independent Power Producer Doreen will increase its capacity from 11MW to 33MW the plant is presently sanctioning for gas supply.

175. There are some limitations of the 33KV supply lines which are in poor condition. REB has taken up projects to improve the 33 KV systems and also up gradation and new construction of 33kv/11 KV substations through a JICA loan. The project is under implementation which will be completed by 2016.

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After implementation of the project the 33KV system in this project area will be improved. PGCB has also taken a project namely “National Power Transmission development project” by JICA loan. In this project PGCB will construct new 132 KV lines, new grid substations and also upgrade the existing Grid Substations. The project is under process of implementation and which may be completed by 2016. After implementation of this project the capacity of the Grid Substations of this project area will be increased and the PBSs will be able to draw more power from Grid Substation.

4. Assessment of Availability of Power

176. Irrigation requires power for pumping over the period December to April together with some access to power for supplementary irrigation outside this period. Ideally power is required for at least 18 hours a day to meet the peak irrigation demands. Monitoring of power of power over 40 days was carried out at three locations. The 24 hour period was split into three periods; day, evening and night with night being the best period for irrigation and evening the worst which coincides with the peak demand. The analysis is shown in Table 30.

Table 30: Monitoring of Power Availability

Day Evening Night Total in 24 7am-5pm 5pm-11pm 11pm-7am hours 10hrs 6hours 8 hours Average number of hours of power in each period 6.0 2.9 7.8 16.7 Standard deviation hrs 0.5 0.5 0.5 0.8 Average percent of available time 60% 48% 98% 69%

177. Pumping in the evening is very erratic and officially not permitted for the low tariff irrigation.From the monitoring it assessed that 12 hours power per 24 hours would be reliably be available (7.0 hours in the night and 5.0 hours in the day. Pumping and distribution systems would need to be designed based on this estimate of availability.

5. Institutional Arrangements

178. The Rural Electrification Board (REB) was established to implement the electrification programs. Each Palli Bidyut Samity (PBS) is based on the principles of a consumers' cooperative ( Rural Electricity Cooperative) in order to ensure maximum possible participation of the beneficiaries ; in order to organize , finance, administer, and monitor the activities of the PBSs a central agency REB was established through a Presidential Ordinance on October 29, 1977. PBS is an arm / organization within Rural Electrification Board (REB). The cornerstone of PBS development has been decentralization and privatization. Results, independent entities which give local member/ owners a voice in the operation of their PBS. Thus, not only are members responsible for timely payment of their electric bills, but they elect a Board of Directors and advisors, chosen from the membership, to lead and develop policies for the PBS. The operation of the PBS working through a democratic process at the grass roots level has been proven successful

6. Electricity Regulations and Tariffs

179. Tariffs are based on the government order; the tariff rate is heavily subsidized by Government for reach the affordable capacity of the village irrigation pump owner. Through enquiry in PBS and REB, it has been confirmed that there are some regulation of timings of the use of irrigation pumps with no power allocation allowed during the period 5pm to 11pm. This is not enforced in the field but drops in voltage and heavy power cuts during this period means that farmers generally avoid pumping during the evening. Current tariffs for irrigation are around Tk2.5 per kw-hr this has however risen by 14% per annum over the last two years. A tariff level of Tk4.5/kw-hr has been used for the cost analyses. In Barind where all the pumps are paid as a single payment by the Authority a 20% discount is provided. The full unsubsidized and economic price of electricity is estimated at Tk10/kw-hr

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D. Assessment of Solar Power 180. Solar power presents an alternative source of energy for the LLP. In the rural off grid area, direct solar power is gaining popularity for its effectiveness and economic use. Solar Power can be used directly for operating LLP during day time availing sun shine. Solar panels develop DC power, which are converted to AC power through an inverter. The most cost effective approach is to avoid the use of batteries which limits solar as a day time power supply to LLP with the option for night time use of mains electricity. For solar power generation, the solar panels requires open land of approximately 6m2 per KW.

1. Solar Pumps

181. Based on the discharge and other values obtained, an appropriate solar PV pumping solution proposed for the MIP would comprise of: (i) a solar array of 8.16kWp at 12V output. Each panel would be 120Wp and the array would require 68 panels; (ii) a variable speed pump of power 5.5kW. The 8kw panel and 5.5kw electric motor would be capable of supplying 800m3/day at 8metres head. The installed cost of the solar panels including frames is solar power is estimated at $9600 and a imported variable speed motor and pump unit $11,000; total $19,600. An electric pumpset of the same capacity costs installed cost around $1000 ($175/kw). The costs of the panels and frame are $1375/kw and for the variable speed pump $2000/kw; total $3,375/kw.

182. To meet the needs of irrigating boro rice, the 800m3/day unit would only be be able to supply 7.2ha (using a piped distribution system). The limitation of the area is due to the very high peak demand of rice.

2. Hybrid System

183. The MIP pumps have been designed such that each scheme will have two AC grid electric pumps, in parallel. Pump 1 is designed to cater to the average water requirement of the scheme and will operate throughout the cropping cycle. Pump 2 is so designed to work jointly with Pump 1, it will cater to the peak demand and will operate only when the demand for water exceeds the capacity of Pump 1 which may occur during periods of extreme power cuts. The small schemes have however been designed with a single pump

184. A similar arrangement is proposed for the solar pumps ,which can significantly reduce the capital costs. This solar electric hybrid system would have 2 pumps; a solar pump and a grid electric pump. The solar unit would meet the base demand of irrigation and a supplementary grid electric pump would provide the needs of the peak demand. A hybrid system with a solar (800m3/day unit) and a parallel grid electric unit would be able to meet the irrigation needs of boro rice for about 14ha

185. For the 14ha scheme a simple water balance is presented in Table 31 below. The water balance shows the water requirements and the possible contribution of an 800m3/day (24,000m3/month) solar system and the necessary contribution from the grid power. The analysis shows the solar unit would pump 80% of the annual water requirements. The solar panels would be capable of generating around 15,840kw-hr per year however the demand for irrigation is only 8,745kw-hrs leaving a 45% surplus of 7095kw-hr, based on a 1in 5 dry year. The surplus in an average rainfall year would increase to about 10,000kw-hr equivalent to about 60% surplus.

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Table 31: Solar/Electric Hybrid Scheme Water Balance Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Total Scheme Water Requirements (14ha scheme dry year) At field boundary ('000m3) 2 26 25 27 31 19 12 - - - 10 10 162 At Pump ('000m3) 32 32 34 39 24 15 - - - 12 12 202 Pumped by: Solar ('000m3) 24 24 24 24 24 15 - - - 12 12 161 Electric ('000m3) 8 8 10 15 0 ------41 ------Solar potential ('000m3) 24 24 24 24 24 24 24 24 24 24 24 24 288 Solar potential (Kw-hrs) 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,320 15,840 Solar power used (kw-hr) - 1,320 1,320 1,320 1,320 1,320 825 - - - 660 660 8,745 Solar power available (kw-hr) 1,320 - - - - - 495 1,320 1,320 1,320 660 660 7,095

E. Comparison of Alternative Pumping Arrangements

186. A short assessment has been carried out compare the use solar power against alternative options. A comparison of the capital costs is given in Table 32: shows six different arrangements based on a 14ha scheme37. As each option has different capital and operating costs a simple Net Present Value(NPV) financial analysis has been carried out to compare different pumping options. The analysis in Table 33 examines 7 options (including electric pumping assessed both at subsidized as well as full tariff).

Table 32: Comparison of Alternative Pumping Arrangements. Solar Variable Electric Diesel panels speed Electric Intercon Total Cost per Annual Options Area ha Pumpset 8kw pump pumpset nection Cost ha OM cost $ $ $ $ $ $ $/ha L$/ha 1500 9600 11000 1000 1400 1.Diesel pump 14 1 1,500 107 130 2. Electric Pump subsidized tariff 14 2 1 3,400 243 54 3. Electric Pump full tariff 14 2 1 3,400 243 110 4. Solar Standalone 7.2 1 1 20,600 2,861 25 5. Solar/electric hybrid 14 1 1 1 1 23,000 1,643 31 6. Solar farm and electric pump 14 1 2 2 14,400 1,029 31 Note: 1/OM costs include pump operator, pump maintenance, pipe maintenance 2/Diesel & Electric Pump Replacement 9 years, solar pump replacement 12 years, solar panel replacement 20years 3/ Electric pumpset requires 2 pumps to meet peak demands and mitigate effects of power cuts 4/Solar standalone-8kw panels, 5kw pump only sufficient to irrigate 7.2ha (boro rice) 5/Solar electri hybrid-solar pump provides base flow with electric booster pump to meet peak demand. Uses variable speed pump with invertor. 6/Central solar farm to supply the grid, Electric interconnection costs increased to allow for the necessary invertors and control systems. Normal electric pumpset used as per option 3.

37 Except the stand alone solar which has capacity only to irrigate 7.2ha

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Table 33: Net Present Value Analysis Discount rate 10.0% Net Present Value ($) NPV for Description 14 ha Option scheme NPV per ha Option 1 Diesel Pump 17,135 1,224 Option 2 Electric subsidised tariff (Tk4.5/unit) 10,474 748 Option 3 Electric pump full tariff (Tk 10/unit) 16,877 1,206 Option 4 Solar standalone 45,742 3,267 Option 5 Solar/electric hybrid 31,527 2,252 Option 6 Solar/electric hybrid with supply to grid 22,755 1,625 Option 7 Solar farm and electric pumps 12,375 884 Notes: 1. Electric pumps require two pumps base load pump and booster pump to meet peak requirements and power cuts 2. Current subsidized tariff is Tk4.5/unit. Full unsubsidized price Tk10/unit 3. Solar hybrid is one solar pump and one electric pump which allows for the irrigation area to be increased. 4. Solar hybrid supply to the grid assumes 50% of the energy produced could be sold to the grid at Tk8Kw-hr $0.1/kw- hr. Night time and peak pumping usng grid power . In average year could generate 10,000kw-hrs surplus power. 4.OM costs include pumping costs, connection fees, pump and pipe maintenance costs.

187. The selection of the most appropriate pumping option is complicated. The technical aspects must be considered in parallel with the Governments policy relating to subsidies of energy for irrigated agriculture and the significant benefits to farmers from lower cost pumping systems. The current limitations of electric power also affect the selection process.The key points relating to the seven options being considered are summarized below.

(i). Option 1: The diesel pump has the lowest capital cost and but has high operational cost as diesel fuel is largely unsubsidized. The net present value/ha including operating costs over 25years is $1,224. Technically diesel is a sound option but does not offer the opportunities of an electricity subsidy as well as add on costs of fuel delivery. (ii). Option 2: The electric pump at the subsidized tariff has operating costs of around 40% of the diesel pump; however the capital investment costs are higher mainly due to the need to extend and upgrade the electricity grid (estimated at $200/ha). The main drawback of the electric pump is power outages and the need to install a second booster pump to mitigate against the lack of power as well as meet the peak water requirements. The NPV/ha of option 2 is $748 which is about 60% of the diesel option. Difficulties of power during the day will require farmers to practice night irrigation. (iii). Option 3: Electric pump at full tariff. This is the same as option 2 but considering the full tariff. Although the operating costs are less than diesel due to the higher efficiencies of electric pumps the NPV/ha is higher due to higher capital costs including the need to extend and upgrade the electricity distribution lines. Option 3 is cost to the Government of implementing option 2. The NPV of option 3 is $1206. (iv). Option 4: Standalone solar panel and solar pump system. The costs are expensive due to the high capital cost of the panels as well as the costs of the variable speed motor system and invertor. The 8Kwp panels and 5.5kw 800m3/day pump, the standalone system would only be able to irrigate 7.2ha of rice. This is due to the very high peak demand of the boro rice. The NPV/ha is $3,267. (v). Option 5: To reduce the capital costs the option of a hybrid solar/electric pump system has been examined. The proposed arrangement for the solar electric hybrid is that the solar pump would provide about 60% of the peak water demand (800m3/day) with 40% supplied by an electric pump (500m3/day) at night. This hybrid solar/electric arrangement uses the same 800m3/day solar pump as option 4 but it enables the unit supply 14ha which reduces the capital costs. Over the year the solar pump would pump 80% (161,000m3) of the water and the electric pump 20%. The NPV/ha of the solar/ electric hybrid system would be $2,252 about 70% of the standalone solar but 85% more than the electric option with full tariff.

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(vi). Option 6: Solar Electric Hybrid with supply to the grid. One drawback of the solar powered schemes for irrigation is relatively low level of utilization of the solar power. The solar unit has capacity to pump 288,000m3/year but utilized is only 161,000m3/year (55% of the potential), during a 1in 5 dry year; there would be more surplus in an average rainfall year38. By feeding the energy not used for pumping into the grid would allow for revenue to be generated. For a dry year it is estimated that there is 7095 kw-hr of surplus energy that could be sold. In an average rainfall year the surplus increases to 10,000kw-hr. At a tariff of $0.1kw-hr (Tk8/kw-hr) this could generate an annual revenue of $1,000. The NPV of option 6 is $1,625 which is about 28% less than Option 5. (vii). Option 7 explores the alternative of creating a central solar farm which would feed power into the grid. There would appear to be some advantages of this, in that security and management of the panels would be easier and also this option would allow the use of normal and significantly cheaper pumps rather than the expensive variable speed pumps. Indicative costing shows the NPV could be about $884 which compares very reasonably with options 1, 2 and 3.

188. Within the context of IMIIP options 6 and 7 within the context of the IMIP are not possible to implement, but they both offer an attractive strategy to be considered for the future. The technologies for option 6 are now commonly used in other countries the facility is however not currently available in Bangladesh. Option 7 which is most the most financially attractive as it removes the requirement for the expensive variable speed motor and pump. The concept of supplying the grid with solar power during the irrigation off season for irrigation is more attractive from a financial perspective than considering only solar power for pumping. This is however a long term strategy and the feasibility and economics need to be assessed. The 6 pilot solar units to be installed in MIP are designed as a first step to demonstrate the viability of solar pumping. For the MIP 6 pilot hybrid solar/electric pumps will be installed to irrigate a total of 83ha (average size of 14ha). The solar pumps will be located at the locations described in Table 34 below.

Table 34: Locations of the Solar Pumps Nr Code Scheme Name Upazila Size ha 1 CHL21 Laxmipur Chagalnya 12 2 FGZ13 East Boshikpur Fulgazi 15 3 FSD11 Ijjatpur-1 Feni Sadar 16 4 MIR02 Jay Purbajowar-1 Mirressarai 16 5 PAR05 Parsuram Porsuram 13 6 SON01 Middle Char Chandia-1 Sonagazi 11 Total 83

189. The design arrangement is that the electric booster pump would pump on only during the night when the solar pump would not operate. A switch should be installed to disconnect the booster pump if the solar pump is in operation. The solar /electric pumpset would be fitted with a prepaid meter with farmers being charged for water the same as the other pump units..

F. Upgrading and Modernization of the Farmer Canal Systems 190. About 40% of the proposed investment in physical works for the MIP is the upgrading and modernisation of the farmer canal system. The proposal is to develop high efficiency irrigation water supply on demand which will increase the water use efficiencies allowing water savings which can be applied to maximise the irrigable area; provide opportunities for increase in cropping intensities and support for crop diversification as well as reduce the operational costs of pumping.

1. Conveyance Options

191. Irrigation water may be conveyed by either; (i) open channel systems; (ii) pipeline systems; or (iii)

38 The hybrid scheme has a lower power surplus than a standalone solar scheme; which has an irrigation demand of 161,000m3 /year against a potential to pump 475,000m3/year effectively a 66% surplus. .

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 62 Final Report a combination of both channels and pipelines. In the past pipeline conveyance has been considered too expensive and often dismissed out of hand unless pressure (sprinkler or drip) water applications are planned. However with increasing water shortages, and hence value of irrigation water, coupled with lower pipeline costs and ease of laying, pipeline conveyance is becoming attractive particularly for small flows. A comparative assessment of pipeline and canal conveyance (locally termed Pucca channel) is given in Table 35 below.

Table 35: Comparative Assessment of Pipe and Canal Conveyance Options

Consideration Brick and cement plastered channel Buried uPVC Pipes Design Aspects Require consistent land slope Can cross broken and undulating terrain and delivery water under pressure. Minimum & maximum flow limits must be followed Construction Slow, quality control may be problematic, Quick / easier quality control. No land take takes up land, impedes on-farm and no obstruction to on-farm vehicle movement movements (tractors, etc) Design Life & 5-20 years . Vulnerable to soil 50 years plus. Low maintenance providing Maintenance movements. Maintenance costs can be care taken over bedding, laying & jointing. large Also may be vulnerable to sedimentation if silt laden water is transported and flow velocities are low. Losses and Operational losses may remain high & Losses (conveyance & operational) are Flexibility flexibility of supply is lower than for pipe eliminated. Delivers water to riser (field) system outlets in any order for required time – ie flexible supply Operation / Control Flow regulation & measurement requires There are many devices available on the Systems careful choice of structures (gated, etc) market facilitating operations (accurate flow measurement & regulation). Many of these were originally developed for potable water supply applications. Smart (pre-paid Smart meters / pre-paid cards topped up by mobile phones or dealers facilitate user card) famer charging and cost recovery. These work particularly well with (buried) pipe delivery charging systems systems. Costs Cheaper than pipes for flows >300l/s. For small flows (<30l/s) pipeline costs comparable or lower than pucca channels Costs for typical 14.7 14.5 20ha system $/m

192. In addition to seepage losses are operational losses which arise whenever water in the canal prism is allowed to run to waste. Operational losses are minimized if field irrigations occur in sequence, usually starting at the head of the canal and proceeding slowly downstream. However this often does not occur due to:

o Farmers cropping higher land wanting to irrigate first as their field dries out, while farmers with low land are forced to delay. o Payment priorities as farmers who pay for water understandably want to receive water first. o Complexity arising from crop types and required irrigation application depths and intervals.

193. Operational losses are typically 5-20% depending on how well irrigation supplies can be managed. Total conveyance losses for the existing unlined canals are therefore estimated in the range 30-45%. Lining the system may eliminate seepage losses but not the operational losses.

194. Buried pipe systems have superior technical performance over open channels with fewer quality control issues and lower maintenance costs providing suitable pipe materials and joints are provided. Operational as well as seepage losses are negligible, which may not be the case for lined channels unless deliveries proceed in sequence – head to tail or visa-versa. Buried pipe systems offer added advantages when provided together with a smart (pre-paid card) user charging system due to ease of

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 63 Final Report flow control and measurement, and the ability to switch irrigation supply to field outlets in any order. The costs of open channel and buried uPVC pipes are compared for a typical 20ha scheme with a design flow of 18 l/s. For larger flows channels would be cheaper than buried pipes, while for smaller flow pipes would be cheaper.

195. Pipe systems require some additional pumping head which does associated operational costs. For the pipe systems in Muhuri pipe systems will require a 2m header tanks which would increase the energy costs for pumping.

196. For up to 350 mm diameter pipe, uPVC is comparable in cost to a concrete alternative. For larger diameters concrete pipes are considerably cheaper. Calculations show that uPVC pipe is cheaper than concrete pipe for small flows up to about 60 l/s, but for larger flows concrete pipes become cheaper. For the MIP the adoption of uPVC rather than concrete pipes is recommended for the following reasons:

o Lengthy (on-site) manufacture of concrete pipes is avoided. o Quality control is easier and problems arising from poorly cast / spun concrete pipes are avoided. o uPVC pipes are light and handling, placement and jointing is both easier and quicker than for concrete pipes. o With uPVC pipes leaking joints are rare. For concrete pipes leaking joints are likely to be problematic and entail expensive maintenance. o For the small flows envisaged (5-40 l/s) concrete pipes are more expensive. o The pipes have the advantage they can go direct whereas channels have to follow field boundaries which adds some addition to the channel costs.

197. Recommended Conveyance Method: The capital cost of tertiary level channels and buried pipe systems are similar, buried pipes are recommended for MIP due to the considerable added advantages of:

o Quality control and quicker construction; o No land take or obstruction to vehicle / farm machinery movements; o Longer design life and lower maintenance; o Greater flexibility of supply and lower water losses, particularly operation losses as when flows are directed to outlets in any order; and o Greater range of flow measurement / control devices for buried pipe systems o Appropriate for intermittent power supply as pipes remain full allowing a quick resumption of irrigation when the power is restored. o Appropriate to access pockets of higher land.

2. Pumping Systems

198. Electric power provides significant benefits over diesel power, primarily in terms of the costs of pumping but also the reduced operation and maintenance requirements .The electricity tariff is low and subsidised and for the long term subsidies may reduce. The full financial cost of power is estimated at Tk10/kw-h but even with the full economic price the electric option is still has lower costs than diesel. The comparison is shown in below. The use of pipe systems require about 2m head which over and above the lift head from the Khal of 2metres.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 64 Final Report

Table 36: Comparison of Electric and Diesel Pumping Costs

Diesel Pumping Electric Pumping Electric Pumping Electric Pumping Earth Channel Earth Channel Pipe System with Pipe System Full prepaid meter Tariff /3 Average Pumping 2.0 2.0 4.0 4.0 Head (m) Energy Costs 6.0 (481) 1.1 (88) 2.5 (197) 5.5 (438) $/1000m3 (Tk/1000m3) Total costs including 8.2 (659) 3.5 (282) 4.6 (365) 7.6 (606) OM $/1000m3 Notes: 1/ OM costs include maintenance, pumpset depreciation, operator costs, distribution maintenance. For the pipe systems includes the prepaid meter costs. 2/ Electric tariff is based on the Tk4.5/unit which is the rate available for irrigated agriculture. 3/ Includes prepaid meter and vendor costs at full financial cost of power generation and distribution estimated at Tk10/unit .

3. Pre-paid Control and Meter Systems

199. A prepaid smart farmer card system is proposed for the MIP and, in conjunction with a buried pipe tertiary distribution system. The prepaid system is based on providing every farmer with a user card with a photo ID and user number. The cards are loaded with credit and are inserted into a slot in the prepaid meter and water pumps automatically with the charge levied against the credit on the card.. The card system is clearly working in Barind and farmers were using the card with confidence. The smart cards are topped up by a vendor who would collect payments from users (farmers) and deposit the collected funds into the bank account of the system operator. The vendor would be paid, typically on a commission basis, according to the amount of water / energy sold. The process uses technology and management similar to cell phones.

200. The benefits of the prepaid system include:

o Water use efficiency gains as farmers use the water more carefully o Flexible on-demand irrigation supply to farmers; o 100% financial cost recovery from users (farmers) according to amount of water each used o Elimination of any “rent seeking” from pump owners and operators or corruption or loss of funds. o The system is completely transparent with checks and balances to counter fraud

201. With buried pipes, paddy “lock-in” is averted and farmers may cultivate a range of crops in efforts to reduce water bills as well as increased incomes. Farmers can irrigate throughout the year including options for supplementary irrigation in the Kharif I and II as well as

202. Two options for a pre-paid smart card control system have been considered

o A smart energy meter is linked to the electric motor through the control panel and enables the motor to operate when a user’s smart card is inserted. The charge is proportional to the energy consumed. This system is adopted by BMDA.

o Comprising a smart card controlled volumetric water meter and valve which would be installed at the head of buried pipe system downstream of the header tank. This system would be new to Bangladesh is suited to locations where there is no / little electric power.

203. The energy meter is cheaper, has a proven track record in Bangladesh (BMDA) and should be adopted for MIP. The smart card with a volumetric water meter can be used if there is a diesel pump.

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4. The Barind Experience and Lessons Learnt for Muhuri

204. The experience and lessons learnt from the Barind Multipurpose Development Authority (BMDA) is very relevant to Muhuri. The BMDA is an autonomous and self-financing organization under the Ministry of Agriculture, set up in 1992 to ensure self financing of improved irrigation services to farmers using pumped water. It covers about 280,000 ha and irrigates mainly from deep tube wells and low-lift pumps (LLPs). One of the key objectives and its major strength is the strategy and success in achieving 100% self financing Key to transparent collection of service fees from farmers was the adoption of a prepaid smart card & meter system so that farmers pay (approximately) for the volume of water received.

o Each farmer is issued with a pre-paid User card which when introduced into a pre-paid Meter enables the pump to start and water delivered until such time as the card is removed or its credit expires. The amount debited to the card is proportional to the pumping duration and therefore volume. o Farmers recharge their cards using a hand held Mobile Vending Unit (MVU) kept by a Dealer who collects farmer payments. The Dealer recharges his MVU credit whenever required from a Vending Station (VS) at the local BMDA office after depositing the recharge amount into the BMDA bank account. o The prepaid meter system which currently extends over 16 districts is managed by BMDA staff. Repairs to the system, for example for the +13,000 Meters, are done under contract with a private company (currently Sanakosh Associates Ltd). The system was supplied and installed by Wasion Group, China who also developed the software and have made improvements from time to time as the system expanded. The prepaid meter system has also been adopted by BADC who manage +1,000 meters. o All the pumps under BMDA are electric pumps. There are issues of reliable electricity but the farmers manage an informal backup system pumping from ponds and khals. Farmers understand the limitations of electricity and some schemes are not fully planted due to the limitations of the number of hours of electricity. o BMDA also involves itself in, Upazila roads and bridges, reforestation, supply of potable water, seed production, groundwater management, water conservation and village pilot projects including micro credit.

205. Water charges levied by the BMDA are typically about Tk100/hr which equates to Tk 2,500 to 3,700/ha (US$ 31 to 46 /ha), or Tk 10 to 15 / decimal). These are about 1/3 of the rates charged in Muhuri despite the greater pumping head. However in Muhuri diesel powered pumps predominate which are much more costly to run. Farmers contribute to the construction cost of the delivery system, (typically at about Tk30/m of pipeline); this equates to a contribution of about 3% of the distribution system cost.

206. Stakeholder Visit to Barind; A total of 40 farmers, representatives from WUA and BWDB officers visited BMDA schemes in January and May 2013. All gave very positive feedback which as summarised below:

o Irrigation service to farmers was very good. o Water is available whenever required by an individual farmer (ie reliable & flexible supply) o Low water charges (about 1/3 of Muhuri) o Financial transactions are transparent and secure with 100% payment for water according to the volume used o High quality and quick construction enable by adoption of buried uPVC pipelines o There was No land take or obstruction to farm vehicle movements o The 50 year design life for uPVC pipeline and low maintenance (design life of pumps and meters is 10-20 years o A variety of crops are cultivated in Rabi o Improved water use efficiency (and energy efficiency) so that the cropped area may increase o Increased productivity with near triple cropping o Sustainable /self financing.

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207. Observations of the Barind project and implications for the MIP are shown in Table 37 below.

Table 37: BMDA Experience and Implications for MIP

Nr BMDA Experience Implications for MIP Financial Cost Recovery 1 The pre-paid smart card system ensures 100% A pre-paid smart card system will greatly facilitate raising of collection from farmers and by being totally funds for O&M and should be adopted for the MIP. However transparent eliminates rent seeking and corruption. unless reliable and sufficient electric power is available for It is also fair with farmers paying according to electric pumps and energy meters linked to the pumps, a volume of water they use. system that works with a diesel pumping option will have to be adopted. 2 The use of electric power for pumping greatly The same subsidy will apply for Muhuri if the system is reduces pumping costs due to the Government’s electrified. However a large investment may be required to subsidy. In most areas covered by the BMDA load provide electric power for the MIP and the frequency / shedding is not a major problem. likelihood of load shedding is difficult to predict. Diesel is a Farmers themselves provide an informal back up of higher financial cost but low risk alternative. water supplies by pumping from ponds and khals. There are options for the diesel back up to be provided by the existing diesel pumps. 3 The BMDA pre-paid smart card system requires Either reliable electric power must be supplied to each electric powered pumps and power supply for the pumping point or a pre-paid smart card system adopted that meters. works in conjunction with diesel powered pumps. It may be appropriate to install electric power for the control meters, or use solar powered batteries. 4 With a buried pipe distribution system the pump The same will apply for Muhuri runs for 10-20 seconds after a farmer’s user card is withdrawn (the amount being charged to the card). Another card needs to be inserted within this time of the pump shuts down. Once a pump stops it cannot be restarted for 3-5 minutes to avoid damage to the motor. 5 BMDA undertakes a number of cost For MIP the model and financial analysis is based purely on recovery/income generation activities which help revenue from water sales. Some pilot cost recovery support the financing of the authority as well as systems will be supported during the stage 1 of the IMO; provide direct and indirect benefit to farmers. depending on the outcome and assessment of viabilities these could be upscaled in stage Water Use Efficiency While the pre-paid card system can work with open Adoption of a buried pipe system reduces operational channels operational losses are significant as the losses and enables greater flexibility of supply canal prism empties / fills when water is rotated to different outlets. A buried pipe system remains full. Pipeline diameters used vary from 6-10 inch (160 – 250 mm). 6 Farmer irrigation service is good with a direct link The same will apply for Muhuri between volume supplied and cost. It is claimed that water use efficiency has greatly improved as farmers minimize their costs. Scheme Size 7 The full pumped flow (typ. 30-40 l/s) is used by one It is desirable that the farmer who pays for water can farmer who may split the flow so that field crop manage the full flow. This places an upper limit on pumped damage is avoided. system size of about 40 ha. Cropping 8 With the prepaid user card and buried pipe system The same will apply for Muhuri farmers irrigate a variety of crops, including tomato, and boro – paddy lock in is avoided. Back up power Despite frequent power cuss the Barind do not The power situation in Barind and Muhuri are not so provide any back up power supply. Farmers different. The role of back up water informally by individuals individually or collectively provide some back up or groups can be considered. supply from ponds and drains

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5. Benefits of Prepaid Systems

208. The proposed prepaid smart card system in conjunction with a buried pipe tertiary distribution system and improved pumping equipment is expected to result in the following:

o Water use efficiency gains of around 30% from reduced conveyance and operational losses and improved field irrigation practices. The change of basis of charging from an fixed rate per unit area to a volumetric basis is significant. o Flexible on-demand irrigation supply to farmers resulting in increased yields as well as support crop diversification. A shift from rice grown under puddled conditions into non-rice crops, including vegetables, would reduce water demands o Pumping (energy) efficiency gains accruing from newer more efficient pumps and motors, and use of pumping equipment that operate efficiency for the discharge and average pumping heads expected for each system; o 100% cost recovery from users (farmers) with charges based on volume used; and o Elimination of any “rent seeking” from pump owners and operators or corruption or loss of funds.

209. These in turn will enable: (i) considerable expansion in cropped area; (ii) reduced pumping volumes and costs; (iii) a variety of crops to be cultivated with different planting dates, crop durations and irrigation water requirements, to suit individual farmers; (iv) improved crop yields arising the individual farmers being able to control timing and amounts of irrigations; and (v) sustainable funding for operation and maintenance.

210. Efficiencies: The diesel pumps with unlined canals require a total of 16,724 m3/ha per season which require a total of 911 Kw-hr/ ha per season. Changing to electric pumps with unlined canals reduces the energy costs to 325 Kw-hr/ ha per season; the pumping head is 2metres in both cases. With electric pumps and pipe system the volume pumped is 11,760 m3/ha at 4.5m head; the energy cost is 558 Kw-hr per season less than diesel but more than current electric due to the higher pumping head with the pipe systems.

6. Development Strategy for Level 3 Farmer Canal Systems

211. The proposed development of the farmer canals systems would comprise the following:

o Construction of buried pipe uPVC systems with irrigation flows of 20-50 l/s delivered to one farmer at a time. Schemes should ideally be between 10 and 40ha which offer the most economical arrangement. System areas are determined by assessment of topography, physical barriers such as road embankments and khals, and land fragmentation with housing occupying the higher land areas. Each field will be within 100-150 m of an outlet from the buried pipe. Additional efficiency gains are enabled by low-pressure outlets from the buried pipe system so that flexible hose (provided by farmers) may be used to convey water directly to the farmers’ fields without the need for any field channels.

o Replacement of all existing diesel and electric pumpsets of new electric motors and pumps to replace the older and inefficient existing pumps. Some of the new pumps might be expected to be axial flow type for lower pumping heads (< 3 m) where the axial flow pump is highly efficient. Four categories are envisaged: Small (<15 ha): 3 inch pump, 1-3 HP electric motor Medium-small (15-25 ha); 4 inch pump, 3-4 HP electric motor Medium-large (25-35 ha); 5 inch pump, 4-5 HP electric motor Large (>35 ha); 6-8 inch pump, 6-10 HP electric motor

212. It is proposed to develop a fully electrified pumping system due to the large financial advantages of; lower pumping costs, reduced OM and the potential to incorporate transparent prepaid meters and charging systems.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 68 Final Report

213. The problems of load shedding needs to be addressed. The estimate is that pump and pipe systems require to be designed for 12hours per day availability of power; ideally pipe systems are designed based on 18 hours per day at peak periods. Non peak demands can be accommodated in 12 hours but poses some issues of how meet peak demands which are about 60% above the average demands. Peak demands are for about 30 days or 25% of the 135 day crop period. Designing the pipes to meet the needs of peak demand and 12hours power would require increasing the pipe diameter of the pipes which has significant capital cost implications and is not proposed. Other options include:

o Provision of a second electric pump to boost the flow to meet the peak demands; with a pipe system this can be done by increasing the pumping head and height of the balancing tank. Pumping costs would increase during these critical periods requiring about 6-7m total head costing about $3.8(Tk300)/1000m3 but with the low tariffs of electrical power this does not make very significant increase in the operational costs. The costs of electrical pumps and motors are relatively inexpensive at about $25/ha. The second booster pump option can be easily incorporated into the prepaid energy meter. o Provision of a back up diesel pumpset or alternatively a diesel generator using the existing pump. The additional investment costs are about $30-$40/ha and would provide access to uninterrupted pumping which is especially important during daylight hours. The backup diesel pump could pump into the header tank and pipe system. Pumping costs with diesel at 4.0 m head would be about $15.6 (Tk1250) /1000m3. The diesel back up option would require a special arrangement using a volumetric prepaid meter system; which is untested in Bangladesh or alternative arrangement using a simple hour meter on the diesel engine.. o An informal backup system using the existing diesel pumps could pump into the header tank leading into the pipe system. Due to the high operation costs it is likely that the diesel pumps would only be used to as a backup if the electricity availability was insufficient to meet crop water requirements. Pump operators would provide backup supplies based on estimates of water supplied based on an hourly basis; payment would be direct to the pump operators by farmers; this informal approach is the approach adopted in the Barind where electricity supplies are equally constrained as Muhuri.

214. It is proposed to focus the investment on the provision of electric motor driven pumps. The risk of load shedding in the short-medium term would be require the provision of a backup systems. It is proposed to provide a back up booster pump that can provide extra pumping capacity during periods of power cuts or peak demand. The capital costs of an additional electric pump are about $50/ha which is relatively small compared to the overall investment costs. An electric booster pump is cheap to operate and can be coupled to the prepaid meter. A diesel pump option has some advantages in that it offers water supply independent of power cuts is more expensive to operate and requires logistics of fuel supply and a method for payments needs to be developed. A volumetric pre-payment system based on flow meter which could be used with a diesel pump is a possible approach but for the immediate needs the electric booster pump is the preferred option and has been incorporated into the design for the advance pipe and electric systems for 2000ha.

215. For the buried pipe systems the pipe sizes required would depend on the area of the system and discharge requirement, and also on ground elevation difference between the header tank and the highest / furthest point of the system’s command area. No field shall be more than 100-150 m from an outlet and the outlet command area would be 1-2 ha. Structures associated with each tertiary irrigation system shall include: (i) header tank; (ii) surge towers (air vents); (iii) outlet risers for both surface or flexible hose conveyance; and (iv) wash outs.

7. OM Costs

216. An analysis of the OM costs has been carried and is summarized in Appendix 7. The current electric power subsidy for irrigation and the greater efficiency of electric pumps means that financial pumping costs for diesel are about six times higher than for electric. Pumping costs depend on the pumping head which is affected by the required length of pipeline (ie scheme area and shape), system

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 69 Final Report topography and whether any high land is to be commanded and pipe flow velocities (ie pipe diameters). The pipe system requires about 2metre head at the upstream header tanks.

217. For these small systems with prepaid smart cards full time linesmen to patrol the distribution system, check or manage water distribution and assess maintenance needs are not required. Instead these duties, particularly assessment of maintenance needs, will be managed by the pump operators

218. It is proposed that the existing pump operators are retained. The role of the pump operators would be to operate the new electric pumpset and support the management of the pipeline. Budgets In Barind which would appear appropriate the pump operators would be paid about Tk10/hour Annual average maintenance costs of 0.75% of the capital costs of the pipe distribution has adopted which is equivalent to $5/ha.

XIII. PROPOSED MANAGEMENT FOR MIP

A. Rationale 219. Investing in the rehabilitation and modernization of MIP will only be beneficial if physical improvements are accompanied in parallel with significant strengthening of irrigation management including putting into effect a long-term strategies for OM including: (i) adequate funding; (ii) introduction of new and highly efficient and cost effective operation and maintenance; and (iii) establishment of an efficient and sustainable management organization.

220. For the large scale irrigation schemes the current approaches of Participatory Irrigation Management (PIM) through Government and the water users is proving ineffective, Options for large scale irrigation schemes were examined in 2011 under the ADB TA DIAMMIS which developed proposals for long term sustainable management of the MIP and presented the conceptual framework for the use of third party management operators to address the current short-comings. This section provides a summary of the key management arrangements; more details are given in Appendix 4.

B. Proposed Approach for Muhuri Project 221. Currently the Muhuri water is managed by about 475 individual private pump operators who sell water to farmers without regulation. BWDB operates the main regulator and undertakes maintenance work within the limitation of available funds. WUA provide some coordination and liaison activities.

222. To rationalise and improve the efficiency of the operation and maintenance of the irrigation system. It is proposed that a third party Irrigation Management Operator (IMO) is contracted by the BWDB to manage the Muhuri Irrigation Project (MIP) on behalf of the government and water users. For Muhuri it is proposed that the IMO will initially be contracted to manage, operate and maintain the Level 2 infrastructure (the khals and minor water control structures) and Level 3 infrastructure (the tertiary systems including the low lift pumps and the proposed pipe water distribution system).

o Realizing the full production potential of MIP o Ensuring that farmer's receive water deliveries in the amounts for which they pay o Ensuring that water is available as needed by farmers throughout the year. o Establishing a transparent and equitable system for recovering the real costs associated with delivering water through prepaid meter systems. o Establishing an overall effective and fair cost recovery mechanism to meet OM including water charges, lease of assets or other opportunities for income generation related to agricultural services to meet the needs of OM. o Liaising and agreeing with BWDB and the newly established Implementation Coordination Committee (ICC) to set fair and appropriate charging systems as well as the necessary levels of Government subsidy if needed. o Strengthening the assessment, planning, financing, and implementation of OM including water resources management.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 70 Final Report

o Conducting demonstrations and other agricultural support activities o Conducting pilots to investigate complementary cost recovery opportunties. o Implementing the OM of the levels 2 and 3.

223. The management of the Level 1 infrastructure – the main regulator, closure dam, coastal embankment, main rivers would remain with BWDB with the exception of small regulators in the coastal and river embankments which would be assigned to the IMO. The vulnerability of the coastal embankment to natural disasters and large size of the closure dam and regulator make it less appropriate to assign to the IMO at this stage; but could be considered in the future. The operation of the reservoir would follow agreed operation rules to be developed by the BWDB and the IMO in coordination with the Implementation Coordination Committee (ICC).

224. It is proposed to develop the management of MIP scheme in two stages; (i) a performance based Management Design, Supervision and management contract through an “Construction phase” Irrigation Management Operator C-(IMO) over an initial five year period; and (ii) followed by a lease contract39 also through a “management phase” irrigation management operator (M-IMO) for a period of around 15 years.

1. Proposal for the Stage 1 Management Contract

225. The Irrigation Management Operator (IMO) of the MIP under the first stage from years 1 to 5 would be contracted by BWDB to a private company or consortium through international competitive bidding40. The contract will be for a five year period with the C- IMO responsible for the OM for MIP including the establishment efficient revenue collecting through the prepaid meter systems. In addition the C-IMO would be responsible for the (i) supervision of construction of all the investment contracts; (ii) the design for tertiary level infrastructure (farmer canalization and low lift pumps) and (iii) the development of pilot agricultural demonstrations and cost recovery activities. The proposed institutional arrangements for the management of the MIP are shown in the Figure 8 below.

226. All the assets would be the owned by the Government with the IMO responsible for the operation and maintenance of the pumps with the pump operators contracted by the IMO to operate the pumps based on the volume of water pumped. Farmers would pay for water based on volume pumped using a pre-paid meter and user card which when introduced into a pre-paid meter enables the pump to start and water delivered until such time as the card is removed or its credit expires. The amount debited to the card is proportional to the pumping energy consumed which effectively is the volume. Farmers recharge their cards using a hand held Mobile Vending Unit (MVU) kept by a dealer who collects farmer payments. The dealer recharges his MVU credit whenever required from a Vending Station after depositing the recharge amount into the bank account of the management operator.

227. The C-IMO would be responsible for the operation and maintenance of the pumps, pipe systems as well as the khals and other secondary infrastructure. In addition the C-IMO would be responsible for the collection of the Irrigation Service Fee. These costs would be paid through revenue using the prepaid meters. The staff and operational costs of the IMO during the stage 1 period would be provided through the loan. For Stage 2 the M- IMO costs would be paid from water charges. To meet the requirements of the Stage 2 start up, it is proposed that adequate funds to meet the operational costs of the M-IMO

39 The Lease contract also doesn't require involvement of private operator in investment functions (capital costs). The services would be paid to the private operator by the water users (farmers) with scope of Government support if the viable revenue falls short of the requirements. The lease is a Public Service Delegation (PSD) of responsibilities. The main function of the private operator is normally restricted to OM but can also involve in other functions. Lease fees can be fixed or the fees can vary. With a fixed lease fee the operators would agree to provide water and undertake maintenance for an agreed fee based on the lease tender. 40 A management contract is where a private operator is contracted to provide management services and doesn't require any contribution to the investment (capital cost). The Public Authority would normally pay for the services of the private operator however some or all of the charges can be offset by collection of water charges. The management fees paid to the operator can be paid according to performance indicators. The main function of the private is OM but it can also be involved in functions such as design and construction supervision of the investment works. The ownership of the assets remains with government and the operator acts as a service provider.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 71 Final Report including OM requirements for six months is accumulated in the bank account of C- IMO before the end of Stage 1. This fund would be used to support the first year operational costs of Stage 2.

Figure 8: Proposed Institutional Arrangements for the MIP Stage 1

5 years contract PMU PMDC Program Management Unit Project Management Design consultant Support PMU and Support to PMU build capacity Support supervision of IMO 3 to 4 years Design of structures, electrification for Muhuri works 5 years Planning and design of Tranche 2 and 3 management projects. contract supervision by PMU

Contractors IMO BWDB 1. Khal excavation, Irrigation Management Operator Feni OM Division Field design for all the works except for those designed by the PPTA for advanced procurement; embankment rehabilitation. Operation and Maintenance of Level Supervision of all the works engaged through advance procurement including; the rehabilitation and upgrading of the coastal embankment; 2. Underground pipe and Supervision 2 and 3 infrastructure (khals, pumps, Operation and Maintenance of Level Procurement and supervision of the installation of pipe systems, electric pumps, prepaid meter systems and electrification; pumps water distribution system) including 1 infrastructure (closure dam, main Management and Operation for the complete Muhuri Project including the regulator, rivers, reservoir, coastal embankment, khals, low lift pumps and farmer distribution systems 3. Upgrading of electrification OM cost recovery regulator, main structures and 4. Repairs and upgrading of coastal embankment. structures Supervision of construction of works Participatory design of pipe systems Pilot agricultural support activities Pilot cost recovery activities

228. The C-IMO would establish transparent and open systems of financial management through an escrow41 bank account for the project which would be used for revenue collected and payment of operation and maintenance costs. The estimated revenues and expenditures would be presented and agreed by BWDB in the annual work plan and actual expenditures presented in quarterly reports. The C- IMO would be authorised to make direct payments for OM of the pumps and routine maintenance and other expenditures based on procurement rules which would be specified in the contract agreement with the BWDB.

2. MIP Stage 2 Management Arrangements

229. The proposed approach is that the Stage 2 will be based on recruitment of the M-IMO through a lease contract through an international open tender with the objective of maintaining the levels of management established under Stage 1. The lease would be competitive and would be awarded to the bidder who achieved the required level of managerial and technical expertise together with a financially most reasonable price to operate the system. The details of bid will be defined by the PMDC but could be either; (i) a fixed fee for the lease and bidders present a financial offer for the water charge; or (ii) a predetermined water charge and bidders would present a financial offer for the lease. After 15 years the contract would be renegotiated.

230. The details of the contractual arrangements for the Stage 2 would be prepared in Year 3 after a review of the performance of the Stage 1. It is envisaged that the experience of the first three years will be extremely useful and adjustments will evolve; experience of PPP has shown no one approach fits all. In this regard, the process of decision making and the transition from Stage 1 to Stage 2 is critical. The review would be conducted by an Independent Panel of Experts contracted through the PMU and

41 Escrow refers to money held by a third-party on behalf of transacting parties. The escrow manager has the duty to properly account for the escrow funds and ensure that usage of funds is explicitly for the purposes intended.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 72 Final Report supported by the PMDC. From the outcome of the review most appropriate strategy for the Stage 2 will be defined.

3. Role and Obligations of the Irrigation Management Operator

231. For Stage 1 the C-IMO would be required to fulfil its contractual agreements including; (i) the establishment and implementation of effective operation and maintenance systems of pump and pipe distribution systems, khals and secondary structures; (ii) establish full recovery of revenue from water sales within 4 years based on prepaid meter systems; (iii) supervision of construction to international ISO standards of all the investment works, authorizing of progress and payments to be made by the PMU; (iv) participatory design (through sub consultants) of tertiary pipe design for 15000ha; (v) piloting agricultural support activities; (vi) piloting supplementary cost recovery activities including lease out of BWDB assets and other revenue generation opportunities; and (vi) maintain close coordination and liaison with water users and other stakeholders and implement programs of communication and awareness to ensure stakeholders are well informed and engaged with the project process.

Table 38: Role and Obligations of the IMO Aspect Timing 1 Management, Operation and Maintenance 1.1 To establish and implement of effective operation and maintenance 17000ha by month 48 systems of levels 2 (khals and secondary structures) and level 3 (pumps, tertiary level distributions). 1.2 To liaise and agree with BWDB and the newly established Month 4 Implementation Coordination Committee (ICC) the detailed management arrangements including water tariff, advance contribution by farmers, community engagement plans and other operation arrangements 1.3 Establish full cost recovery for water charges based on prepaid meter In stages as new pump and systems. pipe systems are implemented. Full cost recovery by month 48 1.4 To select and contract pump operators, selection will be based on skills, In stages as new pumps are attitude and experience. The experience of existing pump operators installed would be taken into account. 1.5 To meet all the costs and requirements for OM including engagement of Requirements to be defined in subcontractors to implement the work. Contracting arrangements will be annual work plan. open and transparent and would be through direct recruitment, IMO contract document will commercial contractors or water user groups or other means but in all define sub contracting cases the recruitment must open and transparent and must be procedures competitive to engage the highest quality of service at the most reasonable price. 1.6 To maintain liaison with Rural Electrification Board (REB) and negotiate Regularly during the irrigation the best quality of service is made available for irrigation including period reducing wherever possible power cuts especially during the periods of peak irrigation requirements and the most sensitive periods of crop growth 1.7 Maintain close coordination and liaison with water users and other Prepare a communication plan stakeholders and implement programs of communication and awareness by month 4 supported by to ensure stakeholders are well informed and engaged with the project implementation over the five process. year management contract 2 Administration and Finance 2.1 Establishing transparent and open systems of financial management Prepare detailed finance and management plan and submit to BWDB for review and approval 2.2 Maintain a project escrow bank account which would be used for revenue Bank account to be collected and payment of operation and maintenance costs. established by month 3. 2.3 Commission an independent audit of the annual accounts Annually 2.4 Preparation of an annual report and work plan, preparation of quarterly First annual work plan to be progress reports showing revenues and disbursements. submitted within 4 months of contract signing

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 73 Final Report

Aspect Timing 2.5 Prepare quarterly invoices of services provided. Quarterly invoices During stage 1 IMO organisation costs will be reimbursed from the loan During stage 2 IMO costs will be from water revenues 3 Other Tasks 3.1 To ensure the IMO staff maintain professional approach to their tasks As required and keep the highest possible of cooperation and liaison with water users and other stakeholders. 3.2 To monitor water use and prepare an audit of overall water and energy Submit as part of the annual use for the project including estimates of crop yields and production report 3.3 Prepare an overall water resources management plan for the project area Plan to be prepared by month including surface and ground water. The plans will be developed updated 6 and updated annually as required in liaison with stakeholders ensure strategies for long term sustainable management. 3.4 .To support the BWDB hydrology department with flow measurements Bi monthly flow measurements 4 Additional Tasks during Stage 1 4.1 Supervision of construction to international ISO standards of all the Bi monthly supervision and investment works, authorising of progress and payments to be made by progress reports the PMU. 4.2 Participatory design of tertiary pipe design for 15000ha National consulting companies to be sub contracted 4.3 Piloting agricultural support activities including pilots and demonstrations Periodic monitoring final over 3 year period. evaluation month 36. Periodic monitoring and final evaluation 4.4 Piloting supplementary cost recovery activities including lease out of Monitoring reports BWDB assets and other revenue generation.

4. The Role and Obligations of BWDB

232. During the stage 1 the C-IMO will be contracted and supervised by the PMU through the PPP cell. During the initial stages the PMDC would provide management support for establishment and strengthening of the PPP cell. As the contracting authority the BWDB would have key responsibilities including: (i) monitoring of the C-IMO in liaison with the ICC42; (ii) to make advance and stage payments as defined in the C- IMO contract; (iii) make payments to contractors based on the progress certificates provided by the C- IMO; (iii) in coordination with the ICC agree the water tariff to be applied for a determined period and to review and agree the appropriate level of government subsidy if required for the C-IMO operations.

233. The Feni OM division headed by Executive Engineer would remain responsible for Level 1 infrastructure. The Chief Engineer, BWDB Zonal Office would be the Chairman of the ICC; the executive engineer would be the secretary.

234. To support the establishment and the good transition towards long sustainable management it is proposed to build on the existing skills of the BWDB staff at MIP. The recommendation is that BWDB should allow appropriate skilled personnel to provide services to the C- IMO on 'lien43' with remuneration of the staff to be paid by the C-IMO as per the organizations own salary structure. The period of lien would be guided by the government's existing rules.

42 The BWDB would be responsible for the establishment of the ICC within 4 months of the project start up. 43 Lien is leave of absence from Government with the job and salary level kept open for a pre-agreed period. The remuneration package would be provided by the new/host organization.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 74 Final Report

Table 39: Role and Obligations of BWDB

Aspect Timing 1 Establish the Irrigation Coordination Committees (ICC) for each sub project 4 months after loan signing 2 Monitoring of performance of the IMO through the PPP cell including Quarterly verification of the IMO field reports, progress with key performance indicators. To review the annual reports and annual work plan of the IMO. To approve Plans to be submitted annually the plan by 30 June which corresponds to the end of each irrigation season. 3 Liaise with the Implementation Coordination Committee (ICC) to obtain Quarterly feedback and monitoring information on the IMO performance. 4 Make the advance and stage payments to the IMO as defined in the contract. As required 5 Make payments to contractors based on the progress certificates provided by As required the IMO. 6 To review and agree the water charge and requirements for government Annually in coordination with funding required for the MOM of the Muhuri irrigation project. These would IMO prior to submission of include the requirements for levels 1 2 and 3. Discuss the requirements with annual work plan the various stakeholders including the ICC. To make commitments to ensure that agreed level of funding is provided 7 In coordination with the ICC agree the allocation and use of the Irrigation Annually Service Charge.(ISC)funds collected by the IMO. 8 To support the IMO to develop appropriate cost recovery activities to help Support the preparation of the reduce water charges and/or government subsidies. cost recovery plan by IMO in month 4 9 Make available the BWDB land and water assets that can be leased out by Support the necessary legal the IMO to support cost recovery. arrangements 10 To support the IMO and help liaise any difficulties and misunderstandings As required with farmers, water user associations, water management associations, Water Users Federations, water management federations and other stakeholders. Development transparent and functional mechanisms for customer complaints resolutions. 11 To work with the PMDC and the IMO develop reservoir operation procedures Month 6 and ensure these are complied with to ensure the maximum water availability is made available for irrigation as well as ensuring flushing of sediment. 12 To make available all relevant hydrological and other data is made available Bi monthly measurements on to the IMO to support the effectiveness of the project management. the three main rivers To maintain accurate measurements of inflows to the project Management Operation and Maintenance of Level 1 Infrastructure 13 The Feni OM division headed by Executive Engineer would remain As required responsible for Level 1 infrastructure. The Chief Engineer, BWDB Zonal Office would be the Chairman of the 'Implementation Coordination Committee" (ICC).

5. Role of Water User Organizations

235. The Water Management Organizations (WUG, WMA and WMF) would play a supporting and guiding role for the IMO through the Implementation Coordination Committee (ICC) as shown in Figure 9. The ICC would meet quarterly. The costs including honorarium of the ICC would be paid through the ISC fund. The role of the WUAs are summarized in Table 40 below.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 75 Final Report

Table 40: Role of the Water Management Organizations

Aspect Timing 1 To support feedback and monitoring of the IMO through the Implementation ICC meetings to be Coordination Committee (ICC) held quarterly 2 Liaising with farmers and the IMO through the WUA and the ICC As required 3 Working with the BWDB and the IMO to review and agree operational procedures. Annually 4 Supporting the design process and agreements on the layouts of the pipe distribution As required during including the collection of the farmer contribution towards the pipe distribution years 1 to 3 proposed at a level of not more than Tk1,600/ha (Tk 650/acre) to develop farmer ownership. 5 Implementing independent monitoring function of the IMO activities including As required construction, operation and physical maintenance work. 6 Supporting the preparation annual work plan of the IMO and provide feedback to the 2 months prior to BWDB on any specific requirements. preparation of annual work plan 7 Supporting the IMO and the BWDB for priorities for maintenance work 2 months prior to preparation of annual work plan 8 Providing independent reporting to the BWDB PMU and PPP cell to scheme Minutes of ICC performance and any issues. meetings quarterly

Figure 9: Implementation Coordination Committee

Feed back from stakeholders Channel to reduce disputes BWDB Early advice on issues Consultative forum Stage 1: Contracting Authority PMU

Stage 2: Contracting Authority BWDB Zonal Chief Engineer contractual obligations

ICC IMO Implementation Coordination Committee Independent Management Operator 1/ Management, Operation and Maintenance of Chair: Chief Engineer BWDB Zonal Office Muhuri Irrigation Project

Representatives of Water User Federation Consultation 2/ Cost recovery for OM through water sales, lease Representatives Water User Associations and review Representative Local adminstration 3/ Coordination, Liaison with Farmers, WMOs IMMIP Project Director (Member Secretary) Executive Engineer CEO of IMO Tasks Review and IMO annual work plan Independent Monitoring of IMO Independent Monitoring of investment contracts Independent Monitoring of OM activities Review of the water charges Support the resolution of disputes Consultative body for allocation of OM funds Make recommendations to agreed practices

6. Role of the PMDC

236. The PMDC working closely with the PMU would provide support and oversight of the management and operations at Muhuri including:

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Cost $ Cost TK Requirements Unit Quantity million million

Operation and Maintenance Level 1 by BWDB Coastal Embankment 33.9km m3/y 30,510 0.08 6.25 Coastal Embankment Structures Ls/y 1 0.04 2.84 Main Regulator Ls 1 0.02 1.98 Closure Dam Ls 1 0.06 5.00 River Embankments m3/y 52,000 0.13 10.66 River Structures Ls 1 0.05 3.82 Offices and Other Facilities Ls 1 0.04 2.94 Other structures 10% Ls 1 0.02 1.66 Total Level 1 0.44 35.16 Cost per ha 25.8 2,068

Operation and Maintenance of Level 2 (by IMO) Excavation of Khal m3/y 150,000 0.29 23.10 Khal Structures and other OM Ls/y 1 0.05 3.97 Total Level 2 0.34 27.07 Cost per ha 20.0 1,598 o Support for the establishment and development of the PPP cell in the BWDB. o Support the establishment of the ICC committee. o Support the program and awareness of the transition process and establishment of the IMO. o Support the further development of official policies for the establishment on third party management operators for large scale irrigation schemes. o Support the evaluation review of the management operations in year 3 and develop the strategies and bid documents for the stage. o To support the bidding process for the 2nd stage M- IMO.

XIV. FINANCIAL ASSESSMENT

A. Introduction 237. The financial assessment is directed at assessing the financial viability and sustainability of the management, operation and maintenance of the Muhuri Irrigation Project. The proposed OM responsibilities are summarized in Table 41 below.

Table 41: Summary of OM Responsibilities Category Responsibility Present Proposed responsibilities responsibilities Level 1 Main regulator, closure dam BWDB BWDB coastal embankments, main rivers, river banks and minor structures Level 2 Khals and drains and minor BWDB IMO structures Level 3 Low lift pumps, tertiary distribution Private pump IMO includes management new operators pipe distribution and prepaid meter systems

238. The estimated physical OM costs for levels 1 and 2 have been derived from an analysis of the OM needs and are summarized in Table 42 below.

Table 42: Estimates of OM Costs Levels 1 and 2

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 77 Final Report

239. Level 3 is currently managed by individual private operators who set their own charges which vary considerably. From field surveys of pump operators and farmers the current water charge44 is estimated to be $138/ha (Tk11,000/ha) for diesel pumps and $100/ha (Tk8000/ha) for electric pumps.

B. Future OM Costs of Level 3 240. The future costs of OM of level 3 with the proposed electrified pumps and prepayment meters have been estimated and are shown in Table 43 below. For the operation analysis the average rainfall year has been used with an estimated pumping requirement of 8500m3/ha per year.

Table 43: Summary of Future Level 3 OM Costs

Electric pumps with prepayment system Category $/ha Tk/ha Notes Based on 8500m3/ha for boro rice 4m pumping Pumping Costs 14 1,119 head Tk4.5/kw-hr, pump efficiency 60%, motor efficiency 70%. Minimum connection fee 2 150 Connection fee during periods of no demand Maintenance of Pipe System 5 400 0.75% of capital costs of pipes Pumpset and Prepaid Meter 10% per annum of capital cost of pump and prepaid 4 290 Maintenance meter Pumpset/Prepaid Meter 3 257 Replacement after 7 years Depreciation Pump Operator 8 630 Based on TK10 per hour averag 1260hrs/year Prepaid Card Vendor 2 153 2% of water charge ~Tk79m3 Total 37.5 3,000

C. Costs of the IMO Organization 241. During stage 1 the C-IMO operations many start up tasks including design of the pipe systems, construction supervision and establishment of the MOM of the project.

242. During stage 2 the M-IMO organization would focus only on MOM with significantly lower staffing needs and costs than stage 1. The recruitment of the M-IMO would through a tender so the actual costs would be ascertained through a tender process. Although the price is important technical qualification should be given a high weighting similar to the ADB QCBS 90:10 weighting for financial and technical respectively.

243. The estimated long term annual requirements per year for the M-IMO organisation during Stage 2 are 2p-m international professional and 60p-m for national profession staff. These will be supported by 96p-m of supporting staff. Professional staff would be reimbursed at normal rates for national and international consultancy. Supporting staff and other costs of travel per diems would be reimbursed at cost. The estimated annual costs of the M-IMO are summarized in Table 44 below.

44 The reported charges vary considerably; from the surveys of pump operators water charges are quoted at about TK8900/ha for diesel pumps and about Tk7900/ha for electric pumps. Farmers quote higher figures of about Tk9,900-Tk11,100/ha for diesel pumps and about Tk7900/ha for electric pumps. From an analysis of various sources costs are is estimated to be $138/ha (Tk11,000/ha) for diesel and $100/ha (Tk8000/ha) for electric pumps.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 78 Final Report

Table 44: Annual Costs of the IMO Category Total $/ha Tk/ha International Staff 51,467 3.0 242 National Staff 210,000 12.4 988 International Per Diems 9,207 0.5 43 National Supporting Staff 51,600 3.0 243 Other reimbursable transport etc 48,900 2.9 230 Performance based incentive 25,045 1.5 118 Equipment 2,533 0.1 12 Total 398,752 23.5 1,876 Notes: International national staff at professional consultancy rates National supporting staff per diems reimbursed at cost Performance based incentive -8% of staff costs

244. Margin on operational costs: The IMO would be responsible for the MOM of: (i) level 3 pump systems (ii) level 2 khals and other level 2 infrastructure and (iii) collection of the irrigation service charge. The tasks would include planning, management and supervision including procurement and payment of sub contractors, electricity and other suppliers. The IMO would be reimbursed at cost for these items and a 10% margin on these costs has been estimated. The management fee assumes the IMO would hold adequate funds in the project account and would not have to pre-finance OM costs. If pre-financing is required the 10% management fee would be insufficient.

245. The overall costs of the IMO under stage 2 (year 7 onwards) are summarized in Table 45 below.

Table 45: Future Costs of MOM of Levels 2 and 3

Annual Cost Costs Outgoings $ $/ha Tk/ha % Category million OM Level 3 Pumps Pipe Distribution 0.637 37 3,000 36 OM Level 2 Khals and other costs 0.338 20 1,597 19 Irrigation Service Charge Tk260/ha ($3.25/ha) 0.055 3 260 3 IMO Organisation Costs (stage 2) 0.399 23 1,876 23 IMO margin on operational costs 0.103 6 485 6 VAT at 15% 0.230 14 1,082 13 Total Outgoings 1.763 104 8,300 100

246. For an average rainfall year the estimated volume of water to be pumped is 145 million m3 per year based on 17,000ha or 8,500m3/ha. The requirement is for boro rice; with only minimal requirement of supplementary irrigation of aman crops. To meet the costs of full cost recovery requires at water tariff of $12.2 per 1000m3. During the in 1 in 5 dry years the scheme water requirements would increase to around to around 245Mm3 or 14,400m3/ha if the whole command grew boro rice; this includes requirement to provide supplementary water for aman rice. During wet years the water requirements would reduce

D. OM Cash Flow 247. A summary of the cash flow for level 2 and 3 OM is shown in Table 46 below. The full cost recovery tariff is of $10.6 per 1000m3 is required to meet the needs of full cost recovery for OM in year 7 onwards where income and expenditures need to be balanced; the estimated annual turnover of the IMO would be $1.763 million. The cash flow during year 1 to 5 under the management contract where the IMO costs would be paid under the loan show a positive balance which would be used as seed money for the Stage 2 lease contract

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 79 Final Report

Table 46: Annual Cash Flow for Level 2 and 3 OM $ at 2013 prices Year Cost Categories 7 1 2 3 4 5 6 onwards Stage 1 Management Contract Stage 2 Lease Area of Irrigation under new management 500 2,000 6,000 12,000 15,000 17,000 17,000 Volume Pumped Mm3 4 17 51 102 128 145 145

Income $ million Tariff $/'000m3 12.2 0.05 0.21 0.62 1.24 1.56 1.76 1.76

Outgoings $ million OM Level 3 pumps/pipe distribution 0.019 0.075 0.225 0.450 0.562 0.637 0.637 OM Level 2 Khals & structures - - 0.100 0.100 0.100 0.150 0.338 Irrigation Service Charge 0.002 0.007 0.020 0.039 0.049 0.055 0.055 IMO Organisation Costs - - - - - 0.399 0.399 IMO margin 10% on operational costs 0.084 0.103 VAT 15% 0.003 0.012 0.052 0.088 0.107 0.199 0.230 Total Outgoings 0.023 0.094 0.396 0.677 0.818 1.525 1.763

Net Balance $ million 0.028 0.114 0.226 0.567 0.738 0.238 - Cum Balance $ million per year 0.028 0.142 0.368 0.935 1.673 1.911 1.911 Notes: 1/ IMO Organization Costs are paid by the loan under the OM contract from years 1 to 5 2/ All costs are at 2013 prices 3/ Maintenance costs of level 2 are initially low during the period of rehabilitation but would increase to the full requirements by year 7. 3/ Income is based on tariff of $12.2 per' 000m3 which is the full OM cost recovery tariff when all costs are applied in year 7. 4/ Revenue and costs from year 7 onwards are the same as year 7 4/ IMO organisation costs include staff costs at normal international and national consultancy rates and is assessed at $399,000 per annum. Support costs including transport, office costs, office supporting costs would be charged at cost. 5/ 10% margin would be charged by the IMO to manage the OM of levels 2 and 3 and collection of ISF 5/ Irrigation Service Charge is based on Government standard rate

248. A comparison of current levels of charging and the estimated future costs of OM is shown in Table 47 below. The full MOM cost recovery tariff for level 2 and 3 is equivalent to $104/ha is approximately 75% of the current water charge for diesel pumps (from surveys around at $138/ha) and virtually the same as the electric pumps( from surveys around $100ha).

Table 47: Comparison of Current and Estimated Future Costs

Cost per $/ha Cost Tk/ha Current Diesel Pump earth Level 3 only 138 11,000 canal Current Electric Pump earth Level 3 only 100 8000 canal Future Electric pump, pipes Level 2 and 3 104 8300 including OM costs of including IMO Khal IMO

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E. Sensitivity of Costs 249. The costs of OM with different scenarios are presented in Table 48 below.

Table 48: Financial Sensitivity of Tariff

Category Breakeven Tariff Notes $/1000m3 $/ha 1 Baseline: full OM cost 12.2 104 Based on 17000ha pumping 8500m3/ha includes the recovery for levels 2 and 3 collection of ISC and payment of VAT. 2 No ISC No Vat 10.2 87 These are policy decisions and need to assessed by BWDB. Charging farmers VAT for water is a significant burden. 3 20% increase in water 10.9 111 Pumping volumes are based on pumping in Boro pumped season. There may be opportunities to pump in other seasons 4 40% increase in water 10.1 121 During dry years water requirements would increase pumped during the boro as well needs for supplementary pumping for aman rice 5 60% increase in water 9.6 131 During dry years water requirements would increase pumped during the boro as well needs for supplementary pumping for aman rice 6 20% decrease in water 14.3 122 Low prices and returns from Boro rice can reduce pumped area planted. 7 20% decrease in OM 11.1 95 Level 2 costs are based on estimates of Khal costs level 2 siltation-actual requirements maybe more or less. 8 20% increase in OM costs 13.5 115 Effective planning and implementation of level 2 maintenance can reduce costs 9 20% increase in electricity 12.6 107 Electricity costs have increased significantly over the tariff years. Continued increase in tariff is likely. 10 40% increase in electricity 13.0 111 The heavy subsidies in the electricity tariff for tariff agriculture may not be sustainable 11 Increase in cost of IMO 13.0 111 If insufficient funds held in the project account the operational margin 10% to IMO may have to pre-finance some costs in which 20% case 10% margin may have to be increased.

F. Setting of the Water Tariff 250. The water tariff to ensure full OM cost recovery from an IMO operating and managing the levels 2 and 3 including VAT and ISC requires a tariff of $12.2/1000m3 which is equivalent to $104/ha compared with the current charge of about $138/ha for a diesel pump and $100/ha for an electric pump. The analysis of farm incomes indicates that with improved production that the water charge would be affordable at a level of $104/ha.

251. Setting an appropriate water tariff needs to be reviewed by the BWDB working in close liaison with the Implementation Coordination Committee (ICC) at the time of the project start up. The appropriate water charge is linked to the financial returns of the Boro rice. Although keeping tariffs low may seem desirable, an underfunded organization will not deliver an adequate service. In theory keeping the tariffs below the cost recovery can be compensated by periodic government transfer however in practice as budgetary allocations are very often subverted by government agenda and as a result the operator is not able to meet the operational obligations.

252. Farmers have reported difficulties in meeting the current water charges due to the low rice prices however the new and improved irrigation system will improve opportunities to increase crop returns in the boro and other seasons.

253. During Stage 1 the management costs of the IMO would be paid for by the loan with no linkage to the tariff. This will allow the IMO to operate and establish the MOM systems with no linkage to revenue. It

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 81 Final Report is however proposed that nine months operational revenue is built up during stage 1 to act as a seed fund for the stage 2 including a fund for replacements and deferred maintenance. The annual operational costs from year 7 onwards would be $1.76 million per year so requirement for 9 months would be $1.3 million. To meet this requirement and meet the basic OM costs during year 1-5 an initial 10% reduction in the tariff could be applied during the initial years . This indicative start up tariff could be around $11.0/1000m3 (Tk8400/1000m3). The tariff will be agreed by the BWDB at the time of the project start up in line with inflation especially the cost of electricity. The operation and maintenance requirements and costs will be carefully monitored during the initial years and the adjustments made to tariffs made annually based on actual costs.

254. By year 6, however, the tariff should be at an adequate level to meet the needs of full MOM cost recovery for levels 2 and 3. The IMO will be working in Stage 1 investigating alternative and supplementary opportunities for cost recovery. It should be noted that IMO would be responsible for the maintenance of all the drains which actually is of benefit to all communities and farmers covering 38,600ha of agricultural land inside the MIP whereas the irrigation development area is only 17000ha. The scope and establishment of supplementary revenue collection will be undertaken under stage 1; by year 6 it is estimated that 10-20% of the MOM revenue requirements could be through supplementary sources of revenue.

255. For the stage 2 the tariff can be incorporated into the bid evaluation and clearly for the IMO to develop efficiencies and mechanisms to reduce costs and also establish supplementary cost recovery mechanisms.

G. Overall Funding of OM for MIP 256. For Level 1 infrastructure, current annual maintenance costs are estimated at $0.5 million (Tk40 million), excluding BWDB establishment costs estimated at $0.3 million (Tk24 million) per year. Current government allocations are sufficient to meet these requirements. The estimated overall OM budgets for MIP are shown in Table 49 below. Under the project BWDB will transfer the responsibility for Level 2 O&M to the IMO and BWDB allocations for Level 2 O&M will be transferred to Level 1. With this reallocation of resources and recent increases in O&M funding it is estimated that government funding would be sufficient to meet the requirements of Level 1 OM.

Table 49: Overall Operation and Maintenance Budgets for MIP ($ million)

Current Requirementa Current Allocationb Future Requirementc Level O&M Estab Total O&M Estab Total O&M Estab Total 1 0.5 0.5 0.3 0.8 0.3 1.1 0.5 0.3 0.8 2 0.3 0.3 0.5d 1.8 3 2.1 - 2.1 1.3 1.3 1.0 Total 2.9 0.3 3.2 1.8 0.3 2.1 1.8 0.8 2.6 Estab = establishment costs. O&M = physical O&M costs. Future Levels 2 and 3 O&M costs funded from irrigation revenues. $0.055million costs for ISC incorporated into the Level 3 costs a. Based on 17,000 ha 75% diesel pumps, earth canals, full management by BWDB b. Based current area of boro crop 11,300 ha 75% diesel pumps, full management by BWDB c. Based on 17,000 ha full electric pumping, pipe distribution, Level 1 managed by BWDB, Levels 2 and 3 managed by IMO, includes VAT and ISC. d. Costs of IMO.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 82 Final Report

XV. ECONOMIC ANALYSIS

A. Approach and Methodology 1. Approach

257. The financial and economic analysis (FEA) of the Irrigation Management Improvement Project (IMIP) is based on estimates of incremental benefits that will accrue from investment in infrastructure, improved management, operation and maintenance (MOM) and agriculture support services covering 17,000 ha of the Muhuri Irrigation Project (MIP). There is expected to be both an increase in crop yields as a result of improved irrigation delivery and higher input usage resulting from increased farmer confidence in access to irrigation and, in the longer term, limited diversification of cropping patterns towards more market-oriented, higher value crops, such as vegetables leading to increased farm incomes and economic benefits. Improved drainage implemented under the project will also benefit an area of around 11,000 ha of low-lying land outside the 17,000 ha to be rehabilitated. These potential benefits have not however been included in the economic analysis. There is also expected to be an increase in agribusiness activity to meet the increase in demand for farm inputs and product marketing and processing. On and off-farm employment opportunities, and economic activity generally are expected to increase within MIP and neighbouring areas. Given the uncertainty of and difficulty in accurately assessing such indirect benefits only incremental benefits resulting from crop production have been included in the FEA. The IMIP will also generate a range of non-quantifiable benefits, including (i) an improved irrigation project planning system,; (ii) the establishment of an Irrigation Management Operators (IMO) to undertake sustainable operation and maintenance of secondary (Level 2) and tertiary (Level 3) irrigation facilities and serve as local agriculture development facilitators for input supply, technical support, and collective marketing; (iii) improved irrigation and related service-delivery mechanisms with transparent and accountable governance, and (iv) strengthened farmers’ representation in respect of water users’ rights and responsibilities. There may, in addition, be a reduction in the risks to health of arsenic contamination of water extracted from tubewells as irrigation will replenish the aquifer and reduce the level of arsenic.

2. Methodology

258. The FEA compares incremental costs and benefits resulting from investment in the modernization of MIP.45 Crop and farm budgets have been prepared to estimate with- and without-project crop gross margins per hectare (ha) and with- and without-project net farm incomes. Crop budgets have been estimated from data on physical inputs and outputs, prices, and related variables derived from field investigations. Farm budgets have been prepared by applying crop budgets to cropping patterns and crop areas to two representative farm sizes; 0.2 ha and 1.0 ha.46 The financial crop budgets have been converted to economic values to determine with- and without-project economic crop gross margins per ha, which have been applied to project-wide with- and without-project cropping patterns to derive with- and without-project total gross margins. Project-wide cropping patterns have been based on the cropping patterns of the individual farm budgets, weighted according to the estimated distribution of each representative farm within the project area, which is 90% for the 0.2 ha farm and 10% for the 1.0 ha farm. Net incremental benefits have been derived by subtracting total without project gross margins from total with-project gross margins. Net incremental benefits and incremental investment and operation and maintenance costs of the project in economic terms have been combined to derive a cash flow from which the EIRR is estimated. The cash flow also includes an allocation of IMIP overhead costs, such as consulting services, program management, and capacity building. Much of these costs will be incurred in the preparation of projects to be implemented subsequent to IMIP. A conservative estimate of 20% of

45 Supporting tables for the FEA are in Supplementary Appendix 3. 46 Under the ADB-financed technical assistance Developing Innovative Approaches to the Management of Major Irrigation Schemes (TA 7620-BAN) 340 households were surveyed. Under the preparation of IMIP 100 households were surveyed specifically to obtain crop and farm data. Farms surveyed were divided into those with ineffective irrigation (as a proxy for the without-project situation) and those with effective irrigation (as a proxy for the with-project situation). Fifty farms in each category were included in the survey. The distribution of surveyed farms by farm size in each category was 30 small (0.2 ha) and 20 larger (1.0 ha) farms.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 83 Final Report these costs has been allocated to the cost of MIP rehabilitation.

259. MIP cost estimates are based on the expected incremental costs of investment in project modernization and expansion, periodic maintenance, and annual operation and maintenance, including the costs of establishment and operation of the proposed IMO. Operation and maintenance of key Level 1 infrastructure will remain the responsibility of the Bangladesh Water Development Board (BWDB)47. Future expenditure for Level 1 O&M in the economic analysis has been based on estimated needs. Current BWDB expenditure on O&M varies significantly from year to year and has historically been well below the level required for effective O&M, though allocations have increased over recent years. Actual incremental O&M costs may therefore be lower than those assumed in the economic analysis. As a result the EIRR may be considered conservative.

260. The rehabilitation of MIP is expected to result in a phased increase in the area irrigated from the current level of around 11,300 ha to 17,000 ha, and a phased improvement in the effectiveness of irrigation in existing areas through the introduction of electric pumps and a piped irrigation system. The proposed system will provide year-round, on-demand irrigation. This will facilitate an expansion in the area and production of crops across the whole 17,000 ha by providing supplementary irrigation at critical times in the growing period of kharif (monsoon) season crops.48 The proposed phasing out of diesel/electric earth channel irrigation and its replacement by the improved system electric pump and piped system is in Table 50.

Table 50: Phasing of Irrigation Development

Irrigation Source/Year 1 2 3 4 5 6 + Existing diesel pumps (ha) 8,588 7,000 5,000 3,000 1,000 0 Existing electric pumps (ha) 2,712 2,000 1,000 500 0 0 Total existing system 11,300 9,000 6,000 3,500 1,000 0

New Improved system (ha) 0 500 2,000 6,000 12,000 17,000 Source: ADB estimates.

261. The economic analysis assumes that in the without-project situation there will be a continuation of the current situation in which irrigation is provided to 11,300 ha in the rabi (dry) season, while in the kharif season crop cultivation across the 17,000 ha to be rehabilitated is predominantly rainfed. The assumption that the present situation reflects the future, without-project situation underestimates potential incremental benefits in as far as over recent years there has been a decline in the area irrigated. This may be expected to continue but the rate of future decline is difficult to predict. As such, it has been assumed to be constant in the analysis, resulting in a more conservative EIRR. With-project economic benefits will principally derive from more effective irrigation delivery through the piped system over the whole 17,000 ha. Benefits from irrigation will be complemented by protection from potential future flooding by improved drainage and from sea-water intrusion by rehabilitation of the costal embankment. These flood-protection and drainage benefits are implicit in the with-project crop budgets.

262. The specific parameters of the methodology include: (i) the use of the domestic price numeraire (ii) constant mid-2013 prices, and the Bangladeshi taka (Tk) as the unit of account, (iii) a standard conversion factor (SCF) of 0.97,49 and a corresponding shadow exchange rate factor (SERF) of 1.03, (iv) a shadow wage rate factor for unskilled labor of 0.75, reflecting the level of unemployment and underemployment in the project area, (v) the opportunity cost of capital (OCC) against which economic

47 Level 1, 2 and 3 correspond to primary, secondary and tertiary drainage/irrigation network 48 At present, pump operators remove their pumps during the monsoon season. As a result, the key kharif season aman rice crop is subject to water deficits apart from where limited alternative irrigation sources, such as tubewells, are available. The project will enable an expansion in aman cultivation and a shift from traditional to high-yielding varieties throughout the 17,000 ha to be rehabilitated. 49 The SCF has been explicitly estimated from Bangladesh Bank trade data for 2012, the latest year for which the required data area available.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 84 Final Report viability is judged has been assumed to be 12%, and (vi) a 30-year cash flow is assumed in determining the EIRR.

263. Financial investment and operation and maintenance cost estimates have been disaggregated into foreign and domestic costs and tax and duty components. Economic costs have been estimated by eliminating taxes and duties (as transfer payments with no real economic cost) and converting the remaining financial values to economic values by applying the SCF. The economic prices of tradable outputs and inputs (rice and fertilizers) are based on export and import parity prices respectively estimated on the basis of prevailing World Bank commodity price forecasts.50 All other project outputs and inputs are assumed to be nontraded and their economic values derived from prevailing financial market prices converted by the SCF. The economic cost of electricity has been used to assess the impact of moving from diesel-powered to electrically operated pumps, and has been used in with- and without- project crop budgets to determine economic crop gross margins. Electricity prices are subject to significant subsidies that distort their true, economic cost. The economic price of electricity in pump operation is estimated at Tk10.00 per kilowatt-hour (kWh).51 The financial price charged to pump operators is estimated from field investigations at Tk4.50 per kWh. This results in an economic conversion factor of 2.22, which has been used in the analysis.

264. Over the 30-year period used for the analysis, there are likely to be developments in crop cultivation technologies and practices that will affect crop yields. The nature and scale of such developments cannot be readily predicted. However, it is assumed that any such developments would only be adopted by farmers if they were shown to improve productivity and income. As such, economic analysis based upon current technologies and practices is considered conservative. Increased rice cultivation can result in methane gas emissions which have an economic cost. However, the level of emissions is dependent upon numerous factors, including whether the rice is either continuously or intermittently flooded. It is impossible to predict with any certainty what such effects may be within the scope of project preparation. As such, no attempt has been made to include potential climate change impacts in the economic analysis.

B. Crop Budget Analysis, Crop Areas and Crop Production 1. Crop Budget Analysis

265. Crop budgets have been prepared for both with- and without-project scenarios and in both financial and economic prices on a 1.0 ha basis. The existing financial cost of diesel pumping include actual diesel and electricity charges and pump operator overheads. The cost per ha of irrigation under the proposed system is estimated at Tk10,827, including the overhead costs of the IMO. The key results are:

o Based on a yield per ha of 3.0 tons, the gross margin of boro under the current diesel-pumped system is Tk601. By comparison, with pumping by electricity, the gross margin is Tk8,255. Under the proposed system, with an increase in yield to 4.4 tons per ha, the gross margin is expected to rise to Tk14,048. o Supplementary irrigation which is expected to be available under the proposed system for the kharif season aman crop results in an increase in yield from 2.1 to 3.5 tons per ha. The respective gross margins in the without- and with-project scenarios are Tk12,064 and Tk26,710. o Improved access to irrigation and provision of extension services is expected to lead to limited crop diversification in the rabi season, with the introduction of potato cultivation for instance. The with-project gross margin of potato is estimated at Tk59,125 from a yield of 10.0 tons per ha. o The introduction of vegetable cultivation in the kharif season is expected in the with-project scenario. Based on a yield of 12.0 tons per ha the gross margin for vegetables is estimated to be Tk84,045. o The gross margin of pulses (cultivated only on the larger 1.0 ha farm) is expected to rise from Tk11,694 to Tk30,367 based on an increase in yield from 0.4 to 0.9 ton/ha.

50 World Bank. 2013. Commodity Price Forecasts February 2013 (Pink Sheets). Washington, D.C. 51 Energy Efficiency Improvement Project, TA 7642-BAN. Consultant’s Second Quarterly Progress Report. 2012.

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2. Crop Areas

266. The change in crop areas over the whole project area is based upon the cropping pattern and the distribution of farms within the project area. The estimated change in crop areas for the project is in Table 51. Cropping intensity is expected to rise from 107% to 185%. The area under rice is expected to increase but the most significant rises are expected in non-rice crops. The proportion of non-rice crops is expected to rise from less than 1% at present to around 12%.

Table 51 : With and Without Project Areas for MIP

Crop Areas Without With Variation from Current Cropping Pattern and Intensity ha ha ha % Crop Boro 8,306 14,365 6,060 73 Aman 9,860 13,260 3,400 34 Potato 0 1,700 1,700 n/a Vegetables 34 2,006 1,983 5,800 Pulses 11 85 74 652 Total 18,211 31,416 13,205 73 Cultivable command area (ha) 17,000 17,000 Cropping Intensity (%) 107 185 Source: ADB estimates.

267. Changes in cropping patterns and increases in yield will result in significant increases in crop production. The total increase in rice production is expected to reach around 64,000 tons, while that of potato, vegetables and pulses is expected to reach 42,000 tons. The incremental values of rice crop production and non-rice crop production are estimated to be Tk802 million ($10.3 million) and Tk465 ($6.0 million) respectively.

3. Farm Income Analysis

268. On a 0.2 ha farm, which represents 90% of farms in MIP, in the without-project scenario only boro and aman rice crops are cultivated with areas of 0.15 ha and 0.12 ha respectively, representing a cropping intensity of 135%. Based on boro and aman crop gross margins under diesel pumping, the total net return from crop cultivation is estimated to be only around Tk1, 538 per year. In the case of pumping by electricity, the total net return amounts to around Tk2, 686. In the with-project scenario, the more diverse cropping pattern is expected with the introduction of potato and vegetable cultivation. Estimated crop areas are: boro 0.170 ha, aman 0.160 ha, potato 0.020 and vegetables 0.024 ha.. This results in a cropping intensity of 187%. Applying the with-project gross margins to these areas results in a total income from crop cultivation of around Tk9,861. This equates to an increase of Tk8,323 from the without- project situation under diesel pumping and Tk7,175 under electrical pumping. Given that the farm income analysis is based upon with-project crop budgets that include the expected with-project level of water charges of Tk10,827, the resulting net farm incomes indicate that farmers would be able to cover the cost of water charges levied by the IMO from crop cultivation.

269. The transition to more intensive cultivation that is expected once more effective irrigation is available to farmers is projected to result in an increase in family labor. On the 0.2 ha farm family labor is projected to increase from 5 to 11 days. In the without-project scenario the return per day of family labor is estimated at Tk128 under diesel pumping and Tk224 under pumping by electricity. The return per family labor day in the with-project scenario amounts to Tk704. The increase in returns per family day of labor results in with-project returns per day significantly in excess of the prevailing daily agricultural wage, which is estimated at Tk315 in the rabi season and Tk300 in the kharif season. However, the limited number of family days engaged in crop cultivation and total returns therefrom indicate a need for farmers to find alternative sources of income to supplement that from crop cultivation. For the 0.2 ha farm, non- farm income is estimated to be around Tk65, 900 compared with Tk9,861 from crop cultivation. For the

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 86 Final Report

1.0 ha farm the difference is less significant given the larger farm size. Non-farm income is estimated at around Tk83,400 compared with income from crop cultivation of Tk40,752.

C. Economic Analysis 1. Economic Viability and Sensitivity Analysis

270. On the basis of a 30 year cash flow of costs and benefits the EIRR is 20.9%. Sensitivity analysis has been undertaken to assess the impact of potential adverse movements in key variables in the analysis. The analysis is based on the cash flow after the allocation of project overhead costs. The results of the analysis are in Table 52.

271. The EIRR is generally robust with respect to adverse changes in benefits and costs. It is more susceptible however to a reduction in the area irrigated and delays in the attainment of benefits. A reduction in the area to only 13,000 ha would reduce the EIRR to 14.0%. A delay in the introduction of improved irrigation by two years would reduce the EIRR to 18.4%. Neither of these scenarios takes account of the reduction in costs and/or phasing of costs that would occur in the event of a reduction in area or delay in irrigation improvement. As such, the resulting EIRRs underestimate the actual viability of the project in the event of such changes. Overall, the sensitivity analysis indicates that the viability of MIP is generally robust but highlights the need to maintain careful control over both the phasing of implementation and the attainment of the target irrigated area.

Table 52: Sensitivity Analysis

Item Switching Value a EIRR (%) Changes in Benefits and Costs Benefits -28 12.0 Investment costs 79 12.0 Operation and maintenance costs 81 12.0 Reduced Irrigated Area b 15,000 ha 18.0 13,000 ha 14.0 Delay in Introduction of Improved Irrigation c Third year 19.4 Fourth year 19.3 EIRR = economic internal rate of return. a. Switching values indicate the percentage by which the variable can change before the EIRR is reduced to the level of the opportunity cost of capital (12%), and at which the economic net present value equals zero. b. The reduced irrigated area assumes that the irrigable area increases to only 15,000 ha or 13,000 ha rather than the target of 17,000 ha. c. The delay assumes the same phasing as in the base case scenario but with the improved irrigation system commencing in the third or fourth year rather than the second year. It assumes no change in the phasing of investment costs or the expansion of area. Source: ADB estimates.

2. Employment Generation

272. Based on the incremental requirement for labor estimated from with- and without-project crop budgets and the with-project project-wide cropping pattern it is estimated that an additional 1.07 million person-days of agricultural labor will be generated annually. At a daily wage rate of Tk300, this amounts to an additional Tk321 million per year in agricultural workers’ incomes. In addition, there will be a one-off demand for skilled and unskilled labor during the construction phase. It is estimated that approximately 160,000 person-days of skilled labor and 474,000 person-days of unskilled labor will be required. Based on BWDB estimated skilled and unskilled daily rates of Tk350 and Tk300, this equates to Tk56 million and Tk142 million respectively. Annual maintenance costs are estimated to range from 1% to 5% of the investment and would create a further 2,300 person-days of skilled labor and 17,400 person-days of unskilled labor annually. This is equal to Tk1 million and Tk5 million per year for skilled and unskilled labor respectively.

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XVI. DUE DILIGENCE

A. Technical 273. The modernization of MIP irrigation infrastructure will substantially improve water delivery services, revenue collection for MOM, and promote overall water use efficiency (WUE). MIP modernization option relies on latest innovations and is tailor made for the scheme. MIP, which relies on low lift pump at tertiary level, will adopt prepaid smart card meters and control systems combined with a piped tertiary distribution system. Pumping costs will be reduced by using efficient electric motors and axial pumps. Power surveys confirmed that the additional load of 5.8 megawatt can be accommodated under the current and planned sub-stations capacity and power generation. As per regulation, the pumps would not operate during the peak period from 5:00–11:00 p.m. As a precaution, mitigation measures were built in the design to reduce the possible impact of load shedding. Solar powered pilot pumps will also be tested under the project.52 All technologies have already been successfully adopted under the Barind Multi-Purpose Development Authority scheme and there is sufficient local and regional capacity available to ensure quality construction and maintenance. MIP modernization program will bring several benefits including: (i) estimated 39% WUE gains from reduced conveyance losses and adoption of volumetric pricing, (ii) flexible, on-demand irrigation supply to support intensification and diversification, (iii) 100% recovery of MOM costs through prepaid system with a 10% reduction of the pumping charges paid by the farmers to the pump operators; and (iv) a substantial mitigation of corruption risk by eliminating cash payments to pump operators.

274. Water balance studies were carried out for MIP to reassess the maximum potential command areas factoring climate change impacts and trans-boundary issues. The water balance and land use studies of revealed that from a potential cultivable area of 38,600 ha, about 11,300 were currently irrigated from surface water during the dry season. With the efficiency gains through the modernization program and crop diversification, the command area of combined schemes would be expanded to 17,000 ha. This factors climate change which anticipates by 2050 a possible increase in temperature of 2°C with increased monsoon rainfall pattern between 0-20% and increases in peak rainfall intensities of around 15%. Climate adaptation has been incorporated into the design by increasing the drainage capacity from 1:10 year to 1:25 year return period

B. Economic and Financial 275. Economic analyses undertaken for MIP indicate that the project is economically viable. The project provides benefits by increasing the irrigated area from 11,300 ha to 17,000 ha, increasing crop intensities from 132% to 187%, increasing yields by up to 50% for paddy rice, and increasing cash crop production. The economic internal rate of return for MIP is estimated at 19.5%. The sensitivity analysis indicates that the economic internal rate of return remains at 12% under the scenarios of increased project costs by up to 103%, and reduced project benefits by up to 33%. However, incremental benefits to the project are sensitive to construction delays. The benefit distribution analysis confirms that a substantial proportion of the total project benefits will be shared by the small farmers and sharecroppers.

276. Financial analyses were carried out to assess the conditions for ensuring financial sustainability of the proposed IMO approach under MIP and its affordability for the farmers. Currently, only 60% of the potential irrigable area is irrigated and farmers pay the tariff of between $100/ha (electric pumps) and $138/ha (diesel pumps) to private pump operators. Due to the high inefficiency of the diesel pumps and reduced command area, this tariff is only sufficient to cover the cost of pump OM. It does not cover any other MOM costs and this has led to deterioration of the scheme infrastructure and its productivity. The Project will increase the irrigated area to 17,000 ha through increased WUE.

277. It will also reduce OM pumping cost by switching from diesel to electricity pumps. Combined, these will raise the overall revenue of the scheme to sufficiently cover its sustainable MOM. The farm budget analyses reveal that the farmers will generate an average income of $460/ha with-project as

52 The pilots were designed with the support of the Energy for All Initiative.

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 88 Final Report against $50/ha without-project. In principle, the farmers could afford to pay for the full cost of the capital investment and level 1 MOM, however this would require raising the tariff to $260/ha which is significantly more than they currently pay and hence may not be immediately acceptable53. A tariff of $104/ha may be considered as an interim tariff level. It would fully finance MOM of level 2 and 3 of the system including a reasonable profit margin for the IMOs. Once farmers income raises to the expected with-project level 1 OM cost may also be transferred to the farmers and water tariff increased by an estimated $ 26/ha54.

C. Governance 278. Measures have been included in the project to mitigate the risk of corruption including (i) independent construction supervision; (ii) reduced number of contracts; and (iii) provision of procurement experts. Financial management and procurement capacity assessments of BWDB were conducted. The assessment concludes that BWDB has sufficient experience and capacity to manage the project funds as well as adequate fund flow, accounting and budgeting arrangements. However, improvements are required in several areas including (i) the need for a full time accountant at the PMU (ii) training in ADB disbursement and procurement guidelines (iii) requirement to produce internal audit reports for the relevant zones and circles for each project prior to the first disbursement under each project (iv) provision of a Statement of Audit Needs to ensure that audited project financial statements are received on a timely basis.55

279. For the large scale irrigation schemes the current approaches of Participatory Irrigation Management (PIM) through Government and the water user associations is proving ineffective, Previous experience has shown that investing in the rehabilitation and modernization of large scale irrigation schemes will only be beneficial if physical improvements are accompanied in parallel with improvements in scheme management including putting into effect a long-term strategy for OM including: (i) adequate cost recovery of OM costs; (ii) introduction of new and highly efficient and cost effective operation and maintenance activities; and (iii) establishment of an efficient management organization. The proposal for the IMIP is to rationalise and improve the efficiency of the operation and maintenance of the irrigation systems through the engagement of third party Irrigation Management Operators (IMOs) contracted by the BWDB to manage the selected large scale schemes on behalf of the government and water users.

D. Poverty and Social 280. The Project is consistent with the broad development goal of the Sixth Five Year Plan of Bangladesh that includes achieving food security, making available adequate infrastructure, and pursuing environment-friendly development. A poverty and social analysis has been completed for MIP. The irrigation scheme modernization will reduce the poverty incidence in the project area by about 7%.56 The beneficiaries will be marginal, small, medium and large landowners, sharecroppers, landless, destitute women, female headed households, minority groups, as well as the general population in the area of influence, numbering about 1.4 million people, of which more than 60% live below the poverty line. MIP will create direct employment opportunities for the poor during the construction period of water related infrastructure.

281. A separate Stakeholder Consultation Strategy (SCS) has been prepared for the project and is described above to provide methodology and processes for continued consultations with various stakeholders particularly the poor and vulnerable groups during the course of project implementation. Local communities will be involved in consultations for project planning, implementation and for any safeguard issues with special attention given to include the poor and female headed households. Orientation on HIV/AIDs and other safety measures will be provided to the contractors and laborers in package training.

53 Level 1, 2 and 3 correspond to primary, secondary and tertiary drainage/irrigation network. 54 Excluding BWDB establishment costs 55 Project Administration Manual (accessible from the list of linked documents in Appendix 4). 56 About 36% of the population is estimated to have monthly household income of less than Tk9000 ($112) which is categorized as 'extreme poor'. An additional 23% who have monthly income of between $112/month and $150/month and are categorized as poor.

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282. The project supports effective gender mainstreaming. The key gender issues in the MIP area generally include non-involvement of women directly in farming, wage labor, trading, skilled crafts, running businesses and market stalls. They also do not migrate seasonally for work, although they do manage their household economy when husbands are absent. A gender action plan has been prepared with measurable targets and responsibilities. The proposed activities are mainstreamed and no separate resource allocation has been made. Specific gender design features are included in 50% or more of project outputs. The project will contribute to improving women's access to the project’s benefits.

283. New jobs can potentially be created for poor women who could be involved in maintenance work through introduction of embankment and canal maintenance groups. Execution of smart card vending unit, pump owner and pump operator (electrified) in the project area may create some employment opportunities for educated women.

284. The Project will also contribute to poverty reduction through a number of unquantifiable ways including the improved availability of electrical energy at the household level in the project area will facilitate the underemployed farm labor and unemployed population to alternative employment opportunities particularly in poultry, livestock, dairy farm and other value added agro processing business. A poverty and social analysis and strategy has been prepared and is presented in Table 53 below.

Table 53: Summary Poverty Reduction nd Social Strategy

I. POVERTY AND SOCIAL ANALYSIS AND STRATEGY Targeting classification: General Intervention A. Links to the National Poverty Reduction and Inclusive Growth Strategy and Country Partnership Strategy The Project will improve the performance of large-scale flood control, drainage and irrigation (FCDI) schemes. It will address the two major constraints to sustainable performance of major water management schemes in Bangladesh: (i) limited capacity of public agencies to carry out effective operation and maintenance (O&M) of large irrigation schemes; and (ii) chronic system deterioration as a result of inadequate O&M planning and financing mechanisms. The broad development goal of the Sixth Five Year Plan (SFYP) of Bangladesh include achieving food security, making available adequate infrastructure and pursuing environment friendly development, which will be supported directly by this project. The relevant strategies of SFYP are (i) acceleration of economic growth and employment including in agriculture by raising land productivity and diversification; (ii) ensuring food security and productivity improvements prioritizing climate change adaptations; and (iii) enhancing poor groups‟ factor endowment by ensuring better access to irrigated water, energy and rural infrastructure. The common goals of SFYP and the Country Partnership Strategy (2011–2015) include enhanced and greener economic growth, inclusive social development, and environmental sustainability with a significant emphasis on climate change mitigation and adaptation. The National Water Policy addresses issues that relate to planning, implementation, and cost recovery within large irrigation schemes but it importantly specifies that “larger schemes will be placed under private management or joint management by the implementing agency along with local government and community organizations”. In addition, building the capacity of local governments to increase local participation for ensuring effective use and sustainability of rural infrastructure has been identified as a key issue to be addressed. ADB‟s support will be within the objectives of its Strategy 2020 to assist the government to address binding constraints to growth in ways that foster environmental sustainability, reduce disaster risks and respond to challenges posed by climate change. The National Water Management Plan (NWMP) recognizes that an additional area of up to 1 million hectares (ha) can be irrigated by groundwater in the future, thereby contributing an added 5 million metric tons to food production. At current consumption rates this would feed an additional population of between 25 million and 30 million people, the estimated increase in population over a 15 year period. However increasing food production can also be achieved by improving surface irrigation performance. The problems of low irrigation intensities and productivity on the existing major surface water schemes can be addressed through infrastructure modernization and enhanced O&M. This will enhance system performance and contribute to increased agricultural outputs and rural incomes and poverty reduction. Institutional strengthening of the irrigation management function of Bangladesh Water Development Board (BWDB) will further enhance operation and maintenance and reduce chronic system deterioration. B. Results from the Poverty and Social Analysis during PPTA or Due Diligence 1. Key poverty and social issues. Some 70% of the Bangladesh poor live in rural areas with low agricultural productivity and unreliable food supplies. Therefore, promoting agricultural growth is a critical element of the Government’s strategy aimed at food security and poverty alleviation. Efficient and sustainable irrigation systems are central to boosting agricultural productivity and encouraging livelihood diversification. Failure to rehabilitate infrastructure and properly manage and maintain the large-scale surface water schemes has direct negative impacts on farm production, household incomes and poverty through deterioration of infrastructure leading to: (i) reduction in

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 90 Final Report the irrigated area; (ii) increased inundation; and (iii) insufficient supply of irrigation water. These factors result in lower yields, reduced farm production and reduced demand for labor. Successful rehabilitation would bring substantial social benefits as a result of increased farm and rural incomes. Adverse social and environmental impacts would be minimal, especially as no land acquisition would be necessary. Sector link to poverty reduction: The benefits of ensuring efficient O&M are established and indicate the high costs to communities and the country as a whole of failing to implement O&M properly. At present the severe deterioration of many of the major irrigation and water management systems in Bangladesh pose an obstacle to the achievement of more productive and efficient agriculture and poverty reduction. Therefore there is a pressing need to improve existing scheme performance through innovative management approaches and institutional frameworks as a platform for designing and implementing a new generation of more effective large-scale surface water schemes that in the future can appropriately contribute to the national food security and poverty alleviation. 2. Beneficiaries. Tenure in the Project areas includes ownership, share cropping, renting, mortgaging and leasing. Some households cultivate land with a mixture of tenure arrangements, while some own land but do not cultivate it. Of the total sample, 73% cultivated land and are classified as farming households. The proportion of farming household was highest in MIP (96%), proposed to be modernized under IMIP. Sharecropping is high in MIP area, with more than 50% of the households surveyed. About three-quarters of the farming households cultivate less than 2 acres (0.8 ha) of land, with a quarter cultivating more than 2 acres. Only 5% of the total sample prospective project areas are comparatively large cultivators, cultivating more than 5 acres (2.02 ha) of land. Thus, the primary beneficiaries will be irrigation farming households. About three quarters of these cultivate less than 0.8 ha while more than 50% of these are sharecroppers. The key constraints faced by these farmers is unreliable irrigation supplies and inundation of their crops during monsoons since silted up canals that also serve as drains do not function. Approximately half of the extreme poor and more than half of the poor rely on agriculture for wages and subsistence, while a further 25% of the extreme poor depend solely on seasonal agricultural labor for their livelihood. Damaged crops from flooding and unreliable irrigation water supplies diminish the labor opportunities for the poor while reliable and productive agriculture increase the demand for their work and reduces the uncertainty in their livelihood and food security. 3. Impact channels. Improved water pumping and conveyance systems will lead in savings for the small farmers and increase their ability to pay for pumping costs and improve budgets for other necessary inputs, including employing labor. 4. Other social and poverty issues: There is a dearth of employment opportunities particularly in poor households that are women headed or women managed (widows or with husbands who are sick) and no male members that can contribute to household income. Civil society organizations, funded by donor organizations organize women labor gangs and secure contracts for them on government infrastructure projects such as roads. 5. Design features. The project design incorporates technology based elements and mechanisms that institute transparency and equity in pumped water acquisition, distribution and delivery, eliminate elite capture and benefit all farmers, including small farmers, alike. II. PARTICIPATION AND EMPOWERING THE POOR 1. Summarize the participatory approaches and the proposed project activities that strengthen inclusiveness and empowerment of the poor and vulnerable in project implementation. A review of PIM/IMT irrigation management systems of selected schemes throughout Asia concluded that there was a need to move beyond the participation paradigm and involve the private sector in a private public partnership. The project DMF output 1 state that self- sustaining Irrigation Management Operators (IMOs) are established. The approach views individual farmers as consumers of water supplies through prepaid cards that will ensure transparency in the use of water. The project will however support strategic emphasis on beneficiary participation with due attention to the diversity of their interests and possible vulnerability. The strategy includes (i) enforcement of policy measures to equalize opportunities and access and, support equal representation of head, middle, and tail reach farmers and increased participation of vulnerable groups including women and minority groups; (ii) specific actions and programs targeting vulnerable groups including women in order to establish links to the existing poverty reduction programs (such as self-help groups); (iv) compliance with social safeguards measures, (v) enhancement of extension service delivery. The project agreement incorporates clauses that ensure government subsidies for O&M and government endorsement and support for cost recovery by the IMO. The PAM reflects this requirement. 2. If civil society has a specific role in the project, summarize the actions taken to ensure their participation. NA 3. Explain how the project ensures adequate participation of civil society organizations in project implementation. NA 4. What forms of civil society organization participation is envisaged during project implementation? N Information gathering and sharing N Consultation N Collaboration N Partnership 5. Will a project level participation plan be prepared to strengthen participation of civil society as interest holders for affected persons particularly the poor and vulnerable? Yes No. A participation plan was prepared to guide consultations with the stakeholders. III. GENDER AND DEVELOPMENT Gender mainstreaming category: Effective Gender Mainstreaming A. Key issues. Like elsewhere in Bangladesh, the division of labor between men and women is spatial. Except in the poorest households, women’s role is very limited and similar throughout most rural areas. They observe the traditional

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Purdah and stay within the household compound (except when going to fetch water, firewood or other fuel or to visit NGO for loan or attend the health center). They, except in the poorest households are generally not involved in farming, wage labor, trading, skilled crafts, running businesses and market stalls, and neither do they migrate seasonally for work. Women perform household chores, care for elders and children, and help with post-harvest processing such as: threshing, cleaning, boiling and drying of crops, (men also take part in post-harvest processing), also, if the opportunity exists, they make handicrafts for sale or home use, although a lot of skilled home-based craft work such as weaving cloth and pottery, is done by men. Women from the poorest household and communities, including women from low caste Hindu communities take laboring work when it is available, particularly seasonal agricultural labor. Wages paid to women are substantially lower than those paid to men, although for most agricultural labor, there is little difference in the productivity of male and female labor. In this segregated society women do not share the public domain with the men, including interaction for irrigation water. Considering such social constraints due to conservatism and seclusion and the purdah system, some of the gender targets have been set quite low. B. Key actions. The following measures will be taken to enhance the inclusion of women in the project that will contribute to improving women's access to the project’s benefits: (i) creating one staff position within the staffing of the Irrigation Management Operator (IMO) to look after the vulnerable groups and support the deployment of female staff at the field level (ii) developing training programs for project based staff to enhance gender participation; (iii) increasing women's participation in the field implementation teams, (iv) establishing links with the Department of Women and Child Affairs; Extension Services in particular with BRDB, (v) generating 10% of employment from civil works and 20% of employment related to the smart card recharge vending will be reserved for women, and (vi) undertaking gender-disaggregated surveying, monitoring and reporting. Gender action plan Other actions or measures No action or measure IV. ADDRESSING SOCIAL SAFEGUARD ISSUES A. Involuntary Resettlement Safeguard Category: A B C FI 1. Key impacts. No land acquisition is proposed and no resettlement impact. 2. Strategy to address the impacts. Not applicable. A resettlement framework has been prepared for the entire MFF. 3. Plan or other Actions. Resettlement plan Combined resettlement and indigenous peoples plan Resettlement framework Combined resettlement framework and indigenous peoples Environmental and social management planning framework Social impact matrix system arrangement No action B. Indigenous Peoples Safeguard Category: A B C FI 1. Key impacts. No impact. There are no IP as defined in the SPS for operational purposes in the project areas. Is broad community support triggered? Yes No 2. Strategy to address the impacts. N/A. 3. Plan or other actions. Combined resettlement plan and indigenous peoples Indigenous peoples plan plan Indigenous peoples planning framework Combined resettlement framework and indigenous Environmental and social management system peoples planning framework arrangement Indigenous peoples plan elements integrated in Social impact matrix No action project with a summary V. ADDRESSING OTHER SOCIAL RISKS A. Risks in the Labor Market 1. Relevance of the project for the country’s or region’s or sector’s labor market. (H), medium (M), and low or not significant (L). M unemployment M Underemployment L retrenchment M core labor standards 2. Labor market impact. Describe the impact of the project on the local labor market (if relevant) and summarize labor-market-related actions taken in the project to address unemployment risks, underemployment risks, retrenchment risks, and lack of adherence to the core labor standards. B. Affordability There is a possibility that small farmers who now pay at the harvest for their pumping charges may find it difficult to afford prepaid arrangements foreseen for water delivery under the project. An evaluation will be conducted during the first year of operations and propose appropriate measures if small farmers are struggling with the prepaid arrangement. Summarize key issues and key measures in the project to address possible exclusion of people due to price mechanisms. C. Communicable Diseases and Other Social Risks 1. Indicate the respective risks, if any, and rate the impact as high (H), medium (M), low (L), or not applicable (NA): L Communicable diseases L Human trafficking NA Others (please specify) ______

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2. Describe the related risks of the project on people in project area - NA. VI. MONITORING AND EVALUATION 1. Targets and indicators: Increased irrigation area (30%), cropping intensity (20%) including high value crops (20%). Increased crop production 30%. Improved efficiency in water use (area [30%]) and production [50%] per unit of water). Average yield of irrigated winter paddy (boro) increases from 2.4 tons (t)/ha in 2011 to 4.1(t)/ha. 2. Required human resources: A separate safeguards cell will be established in the BWDB with a full time social safeguards officer. The loan consultant will incorporate specialist international and national support for ensuring safeguards for the preparation of GKIP and TBP modernization feasibility and detail design studies. A provisional sum has been allocated for (i) recruitment of an independent national organization to monitor social safeguards (ii) recruitment of an NGO to implement the resettlement activities. 3. Information in PAM: The PAM will set out the key requirements for social and poverty safeguards and requirements for monitoring. 4. Monitoring tools: The Irrigation Management Operators in their contract will be required to monitor the project performance including poverty and social indicators. Independent verification by independent organization.

E. Gender 285. The Project has been categorized as a gender mainstreamed project (effective gender mainstreaming). The project components have been designed to ensure involvement and benefits for women as well as reduction of gender inequality. A Gender Action Plan (GAP) as has been prepared integrating action areas, targets and indicators for gender equality and women’s benefits within the various components of the project. A focal point on gender and development will be established in the PIU. The PIU will ensure establishing the MIS system with sex-disaggregated data collection, gender based analysis, and review and reporting on the implementation of the GAP within all reports.

286. BWDB will ensure implementation of the GAP and CAPP and will be supported by the PMU and the PIU team. The Social Development and Gender Specialist in the PMDC will provide support in monitoring and reporting on gender and social aspects in close coordination with the PMU and the PIUs. Adequate budget is allocated to implement these strategies.

287. The project in its broad based objectives will address gender issues in the following manner:

o Create scope for women's participation in the activities during the project planning, implementation, monitoring and evaluation. o Generate jobs for women by involving them in different construction and maintenance and agricultural support activities. o Facilitate linkages of rural women beneficiaries with different resources for sustainability of their livelihood. o Facilitate social and economic development programs aiming at women as the user groups to increase their access to the infrastructure development activities. o Help promoting and building capacity of Union Parishads in particular with women members so that they are able to plan, coordinate and monitor social and gender related development activities in the project area and can play an effective role assigned to them under the project and through the various government circulars. o Gender friendly working environment with safety and security will be ensured in implementation of all possible activities in the project. o Promote gender equality in the context of Millennium Development Goal (MDGs).

288. The Gender Action Plan (GAP) is described in Table 54: below and has been prepared integrating action areas, targets and indicators for gender equality and women's benefits within the various components of the project. It is noted that considering social constraints due to conservatism and seclusion and the purdah system, some of the gender targets have been set quite low.

289. The Project has been categorized as a gender mainstreamed project (effective gender mainstreaming). The project components have been designed to ensure involvement and benefits for

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 93 Final Report women as well as reduction of gender inequality. A Gender Action Plan (GAP) as has been prepared integrating action areas, targets and indicators for gender equality and women’s benefits within the various components of the project. A focal point on gender and development will be established in the PIU. The PIU will ensure establishing the MIS system with sex-disaggregated data collection, gender based analysis, and review and reporting on the implementation of the GAP within all reports

Table 54: Gender Action Plan

Activities Targets and Indicator Monitoring Time Frame Responsibility mechanism Output 1: Independent Performance Based Irrigation Management for Selected Large Scale FCDI Schemes Self sustaining One staff engaged in IMO to Contract During selection IMO,PMU, independent support social and vulnerable agreement, of Large Scale BWDB, Chief management groups. Annual Report FCDI Schemes Engineer Zonal operators (IMOs) of the IMO During selection Office established for Technically qualified women of IMOs selected large scale prioritized for recruitment in IMO irrigation projects for the general purpose of supervising the work Agriculture support services and Agriculture Year 2-5 IMO, PMU, associated with cost recovery activities (ASCR) support BWDB, Chief rehabilitating and designed in year 1 incorporating services and Engineer Zonal modernizing the activities with potential for long cost recovery Office IMO systems. term sustainable roles for women, project design such as, crop diversification, post- reports. Agricultural support harvest processing, social forestry services and pilot cost and other appropriate activities. Monitoring recovery activities through the IMOs will At least 30% women’s participation be planned and ensured in planning ASPR implemented by the IMO. Women constitute 20% of all extension trainees. Output 2: Rehabilitation and Modernization of Selected Large-Scale FCDI Schemes Implementation of Women (50% of all trainees) Meeting Prior to the PMU, BWDB rehabilitation and trained as pump operators, pre- minutes, rehabilitation modernization and paid card vendors and on other Video footage, and up investment activities livelihood skills Progress gradation reports Women constitute minimum 10% of pump operators Women constitute minimum 30% of mobile smart card unit vendors Women selected for at least 20% of smart card vending. At least 30% of the LCS work allocated for women's groups. Provision for at least 5% women’s employment as unskilled workers incorporated in the contractors’ bidding document and implementation monitored. Output 3: Strengthened Project Management and Institutional Development Planning and design One Gender Consultant included PMDC report. Years 1 to 3 PMU, PMDC of GK and Teesta in the Project Management Design Gender Irrigation Projects Consultants (PMDC) during assessments modernization feasibility studies and detail design minutes of of GK and Teesta Irrigation meetings Projects

At least 10% women’s

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Activities Targets and Indicator Monitoring Time Frame Responsibility mechanism representation ensured in each consultation session and document and address their needs. Establishment of M&E reports includes sex PMU quarterly Year 1 to 5 PMU, PMDC Program MIS with sex disaggregated data when relevant reports disaggregated data Ensure effective At least one woman deployed as ICC records Year 1 PMU/PMDC participation of women member of the ICC to deal with in the activities of the gender issues. Implementation Women identified and employed Coordination as at least 10% of the electrified Committee (ICC) pump operators At least 30% LCS membership ensured for women. Incorporation of WMO training curricula developed WMOs Year 1 PMU, IMO gender aspects into integrating gender aspects (WUG,WMA, the WMO training. WMF) formation sheet, WMOs Contract Training reports

Recruit and deploy Gender Specialist and Sociologist Project Year 1 PMU, BWDB Gender Specialist and deployed at PMU progress Sociologist at PMU report HQ level Women deployed at 10% of Deploy female staff at officers and 15% of staff positions BWDB field level as per Govt. employment offices regulation

Institutional All training modules included Training During years 2-5 PMU, BWDB development, project related gender issues reports/ awareness, and Trainees training of key All relevant project staff oriented attendance stakeholders to on gender aspects of the Project sheet. incorporate training in and their own responsibilities M&E Report, Gender and Project Development issues progress reports Training curriculum. Ensure gender Sex segregated data collected, All Formats Prior to PMU, BWD inclusive surveying, collated, and gender analysis and tool. implementation data collection, based report prepared regularly of survey monitoring, recording and reporting of all project activities Gender budgeting Budget allocation for Development During project PMU, BWD mainstreamed GAP Project preparation implementation ensured. Proforma

F. Involuntary Resettlement. 290. The Project is classified as Category C. The requirement for temporary relocation and resettlement during the scheme rehabilitation was avoided through:

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o For the coastal embankment resettlement will be avoided by adjusting the centre line (houses on one side) and increasing slopes behind houses if houses on both side. It is proposed the 'Rehabilitation of the Coastal Embankment' is re-termed 'Repair of the Coastal Embankment' and the designer is required to design the repairs to provide the maximum levels of protection but to avoid resettlement. o The khals which are natural drains and have to be re-excavated to allow adequate capacity for wet season drainage. During the dry season they act as canals and supply irrigation water and have to have sufficient section to meet the needs of dry season irrigation. The excavation of the khals will require some deepening of the bed with some associated profiling of the banks. There are many obstructions to the flow including bridges with inadequate section. Houses and businesses are on the bank tops or partially on the bank with part of the house on stilts. Flow velocities are quite low and the houses/businesses currently have minimal impact on the flow. An inventory of the houses on the khal banks has been carried out, it is concluded that it will be possible to avoid all the requirements for resettlement through four design measures described below. o Where there are settlements on one bank. The khal centre line can be moved away from the settlement. o Side slopes will be designed for 1V: 1.5H (vertical/horizontal). In areas of encroachment into the khal side slopes can be increased to 1V:1H. o Retain the existing slopes which are stable and steeper than 1V:1H and excavate from the canal bed. o Factor in some allowance for obstructions either narrow bridges or short stretches of khal with reduced design section. Hydraulic design of the khal would apply a high value of friction (mannings 'n') to allow for obstructions from reduced hydraulic section in some reaches of the khal.

291. A resettlement framework (RF) prepared in accordance with the government’s laws and regulations and ADB’s Safeguard Policy Statement (SPS, 2009) as a prudent measure to address any involuntary resettlement-related uncertainty during the project implementation, should any issue arise. BWDB has experience in dealing with safeguards including with ADB projects and will be supported by appropriate consultant specialist.

G. Indigenous Peoples. 292. The project is categorized as C. There are no indigenous peoples as defined for operational purposes by the ADBs Social Policy Statement in MIP.

H. Initial Environmental Assessment (IEE) 293. The project is categorized B for environment and an initial environmental examination was prepared in accordance with SPS. The negative impacts are typical to any construction activities involving earth works and can easily be mitigated through adoption of measures described in the environmental management plan. Consultations were undertaken with affected stakeholders and a suitable grievance redress mechanism has been proposed to resolve any project related grievances. The PMU will be supported by PMDC environmental specialists monitor and supervise implementation of the MIP modernization environmental management plan.

294. The project is classed as category B and an Initial Environmental Assessment (IEE) has been carried out and is provided in Appendix 6.

295. The project, aims at improving the agricultural production in the IMIIP area by means of rehabilitation of the irrigation infrastructure and related facilities. In summary, the project can be described as an irrigation and flood protection rehabilitation project aiming at improving agricultural production in the Muhuri Irrigation Project. The main negative impacts of the project and the identified mitigation measures are summarized in Table 55 below.

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Table 55: Main Negative Impacts and Proposed Mitigation Measures

Negative impacts Proposed mitigating measures o Hazards and environmental impacts o Adherence to laws and regulations related to construction activities including: o Watering of unpaved access roads o Worker accidents o Covering of trucks to prevent dust emission o Air, water and soil pollution o Minimize activities during prayer time/rest hours o Conflicts with local population o Provide sanitary facilities to workers o Risk of road accidents o Design a waste collection system for construction o Loss of valuable flora along khals wastes/ wastes from worker camps o Recruit workers locally o Strict enforcement traffic rules o Minimize destruction of bank vegetation o Schedule works not to disrupt irrigation water supplies Some loss of natural vegetation in the waterways o Impacts would be temporary during the excavation activities may affect fish o Management of the fisheries stocks. Land acquisition and resettlement o Careful monitoring o Adherence to the resettlement plan Water quality of surface waters and groundwater o Agriculture extension to support timely and correct due to increased agro-chemical use including pesticide application fertilizers and pesticides o Introduction of integrated pest management

296. The main positive impacts of the project are summarized in Table 56below. The rice production in the area will increase considerably. However, overall agricultural production will increase and this may lead to a regional socio-economic uplift.

Table 56: Main Positive Impacts of the Project Project activity Related positive impacts Improved supply of irrigation water to agricultural lands Increased paddy production Improvement of socio- economic conditions of farmers Socio-economic uplift of the region Increase in number of permanent jobs in agriculture Construction activities Creation of temporary job opportunities

297. In general terms the positive impacts are expected to outweigh the negative impacts, on the condition that the project rehabilitation activities are carefully planned and that due attention is given to the social aspects and risks of project implementation. If carefully implemented and when due attention is paid to the proposed mitigating measures, the project will not have unacceptable impacts and a complete EIA is not thought to be necessary.

I. Risks and Mitigating Measures 298. The project involves risks but most are manageable and where ever possible have been incorporated into the project design and programming. Previously the major risk for irrigation rehabilitation projects has been poor performance and the lack of sustainability. The engagement of third party private sector operators to manage the schemes is a key measure to reduce the risk of not achieving the production targets and lack of OM resulting in scheme degradation and losses of production. A summary of main risks and mitigation measures is summarized in Table 57 below.

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Table 57: Summary of Risks and Mitigating Measures

Risks Mitigating Measures Changes in government affects ADB maintains close dialogue with the government and other stakeholders to commitment to developing PPP ensure commitment remains and the project communication campaign keeps for irrigation farmers and local politicians engaged. BWDB personnel resist transfer BWDB field staff are provided opportunities to join private operators initially on to private operators lien ( a form of secondment). Private sector is reluctant to The project follows a two-stage approach. First stage, financed by the project will engage in PPP for irrigation establish the sustainability of the scheme. Private sector interest was tested for stage 1 and 6 expressions of interest were received. PMDC will be provided with PPP transaction advisor to structure the PPP for stage 2 including risk analysis and allocation to the parties that can best control them. Appropriate PPP policies and legal framework are in place for government to consider financing viability gap if this is required for stage 2.

Low quality of civil works due to The mitigation measure includes (i) Increased transparency through the project corruption communication strategy, (ii) independent construction supervision, (iii). Procurement centralized in Dhaka PMU with support from PMDSC procurement experts.

Political disruptions Strikes (hartals) and other political disruptions may affect the project implementation. Effective programming of activities can reduce disruption. More effective of electronic communication emails, skype, conference calls can help maintain communication during restricted periods.

Farm Production and Incomes Improved water availability will not however, per se realize the full potential for increased crop production and diversification, and related farm, agribusiness and broader economic activity. Constraints currently faced by farmers include availability of farm inputs, effective farm advisory and training services, access to credit, and produce marketing will also have to be addressed. The failure to address these constraints may undermine the realization of the benefits of rehabilitation and improved scheme operation and maintenance. A program of agricultural support has been programmed to pilot and demonstrate approaches to increase farm returns as well as reduce the water use to help bridge this gap. Funding of OM Improved MOM depends heavily upon effective collection of water charges, which to-date has not been fully effective.. The farm budget analysis indicates that farm incomes are more than sufficient to cover water charges but collection will depend upon the willingness of farmers to pay and the ease of use of the proposed prepaid card payment system for MIP.

The willingness of farmers to pay water charges will depend to a large extent upon effective water delivery and the successful establishment and operation of the IMO. A program of awareness building amongst farmers, Government officers and local politicians to disseminate the benefits of increased fees is essential and will mitigate this risk.

BWDB will continue to play an important role to meet the funding gaps where cost recovery is not sufficient to meet the full requirement of OM. Experience shows that the allocation and release of government funds for scheme operation and maintenance has been poor (though improving). The risk of non-provision of government funds is to an extent mitigated by the fact that such costs will be lower (and more affordable) than the full costs of maintenance that BWDB has been required to fund in the past. ADB = Asian Development Bank, BWDB = Bangladesh Water Development Board, IMO = irrigation management IMO= Irrigation Management Operator, MOM = management operation and maintenance, PMU = project management unit, PPP = public private partnership. Source: Asian Development Bank .

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XVII. FOLLOW ON INVESTMENTS

A. Scheme Selection 1. Scope of the Studies

299. This section presents the preliminary studies carried out under the PPTA to support the selection of the possible follow on investment projects. The evaluation is based on discussions and field visits carried out by the PPTA in 2013 as well as earlier assessments carried out under the CAD- II (2008) and DIAMMIS projects (2011). The IMIIP originally designed as a MFF program; the project was redesigned redesigned as a standalone first project IMIP which would invest in the MIP. The MIP loan will include planning and design for the GKIP and TBP with possible financing from around 2016.

2. Existing Large Scale Irrigation in Bangladesh

300. Within Bangladesh there are 15 existing large-scale (more than 2,000 ha) irrigation schemes with a net total command area of 552,730 ha, in which Government provides distribution systems down to secondary or tertiary levels57. For the 1996-98 period, the National Water Management Plan reported that only about 46% of the net command area of these schemes was irrigated from BWDB sources in the main irrigation season. There is little evidence to suggest any improvement since then. Improving performance by increasing the area irrigated within these schemes and recovering fees would contribute to agricultural and economic growth through increased production and reduced subsidies. The existing large-scale irrigation schemes are listed in Table 58 below.

Table 58: Existing Large-Scale Irrigation Schemes Net Status Scheme Name Command Key Points Area (ha) 1. Gravity supply schemes in areas without significant shallow tubewell potential Not one of the 9 projects Bhola Irrigation Project 77,616 Requires secondary pumping proposed to the CAD II by BWDB Secondary pumping, flood Selected for Tranche 1 under Muhuri Irrigation Project 23,076 protection, and saline water IMIIP exclusion. Studied to feasibility level in 2008 by CAD-II and proposed Gravity. Includes pumped for implementation Manu River Project 12,146 drainage of Kawadighi Haor. Rejected by DIAMMIS in 2011 due to high level of absentee landlords. Rejected by CADII prefeasibility Karnaphuli Irrigation Project 14,830 Requires secondary pumping studies 2. Schemes supplied through Primary Pumping by BWDB in areas without significant shallow tubewell potential Conceptual and design Not proposed to the original Barisal Irrigation Project 72,064 shortcomings CAD II PPTA by BWDB Rejected by CAD-II based on Chandpur irrigation Project 16,813 Comparatively successful multi criteria analysis. Comparatively successful. Upgraded with ADB assistance Meghna-Dhonaghoda 6,700 Rehabilitated with ADB under CAD I Project assistance 2009. 3. Gravity or Pumped Supply Schemes in areas with shallow tubewell potential Primary pumping. Rehabilitated Studied to feasibility level by Ganges Kobadak Irrigation with ADB assistance CAD-II and proposed for 95,616 Project (GKIP) between1983-93. Costly to implementation. operate. Studied to feasibility level by Teesta Barrage Project 91,100 Gravity. Phase I completed. CAD-II and proposed for (TBP) implementation.

57 2000. National Water Management Plan. Volume No 3: Investment Portfolio. Ref AW001

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Upgraded with ADB assistance Pabna Irrigation Project 13,281 Primary pumping, flood control. under CAD I Gravity. Significant flood Rejected by CAD-II due to lack Kurigram North Project management component. of BWDB operated systems Gravity. Significant flood Kurigram South Project management component. Dhaka-Naryanganj-Demra Primary pumping. First phase Second phase rehabilitated with No irrigation Project lost to urbanization. JICA assistance about 1999-00 Significant flood management Not proposed to the CAD II North Rupganj Project 2,270 component. Irrigation PPTA by BWDB. component not well developed Gravity. Regulator constructed Can be considered part of the Buri Teesta Project 1,720 on a distributory of Teesta Teesta project River. Source: 2001. National Water Management Plan: Investment Portfolio. AW001

B. Assessments by CAD-II 301. In 2008 BWDB submitted a list of nine existing large-scale schemes for consideration under the CAD-II project.58. The CAD-II project developed a ranking system; of the nine schemes BWDB proposed for consideration three were recommended to be excluded, these were the Sirajganj Project, and the Kurigram North and South Projects; the reasons were the absence of BWDB operated systems within the project areas. From the outcome of the basis of the prefeasibility studies including a multi-criteria analyses two more projects; the Karnafuli and Chandpur Irrigation Projects were excluded. Feasibility studies confirmed the viability of the remaining four projects; (i) Teesta Barrage Project ; (ii) Manu River Irrigation Project,(iii) Muhuri Irrigation Project, and (iv) Ganges Kobadak Irrigation Project. Due to the need to develop alternative management arrangements for effective O&M it was agreed that the two smaller Manu and Muhuri projects would be implemented first.

302. From additional analysis under DIAMMIS59 in 2011, it was concluded that the Manu project was not appropriate for future ADB support. The principal reasons include: (i) the large number of absentee landlords whose land is farmed by sharecroppers or tenants who have little interest in investing for future development or diversification , (ii) the reluctance of farmers to pay irrigation service fees, (iii) the weakness of existing water user groups, (iv) no history of third-party service providers, (v) basic flaws in the system design, and (vi) the risk of drainage congestion in the boro season. The DIAMMIS TA proposed that the Teesta Barrage Project (TBP) and the Ganges Kobabdak Irrigation Project (GKIP) should be taken up as follow on projects.

C. Selection Criteria under the IMIIP PPTA 303. The proposed IMIP is designed to improve the efficiency and sustainability of medium and large irrigation command areas through the involvement of third party operators to improve system management and cost recovery for sustainable OM. The program will combine support for irrigation system rehabilitation with institutional reforms and capacity building to foster public private partnerships working closely with the BWDB and Water Users Associations.

304. The proposals for MIP under the IMIP loan are directed at improving the infrastructure, service delivery and control systems, with pre-paid meters to ensure 100% recovery of irrigation fees and provide (near) on-demand availability of water. The proposed institutional measures are directed towards an enabling institutional environment with private sector management, operation and maintenance.

305. Although the follow on projects will not fit exactly the Muhuri management model, it is proposed to take the key themes and outputs of Muhuri forward into the following stages; these include the development of performance based management through irrigation management operators, efficient irrigation systems, and sustainable high levels of OM cost recovery. The Muhuri project moves away from farmer group management approaches to individual choice and prepayment for water used. Selection criteria for IMIIP projects are shown in Table 59 below.

58 The predecessor PPTA was entitled Second Command Area Development Project and was completed in September 2008. 59 ADB Project No. TA 7260-BAN. Developing Innovative Approaches to Management of Major Irrigation Systems.

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Table 59: Selection Criteria for IMIIP Candidate Projects Nr Criteria Logic 1 Projects must primarily be irrigation The focus is on performance based irrigation management projects with flood control, drainage as to improve productivities and efficiencies. The IMIP is secondary components only designed to build on and improve the performance of already established irrigation projects through focused investment combined with improved management. 2 Project must be able to support a Supplementary wet season irrigation can provide good significant level of dry season irrigation and benefits but the scope for improved management and provide high yields. investment to improve productivity is highest for dry season irrigation.. 3 There must be a significant Government Individual private LLPs or STWs cannot be brought under stake-holding in the project components. project management. Communal LLPs such as Muhuri or communal DTWs, however, do offer scope for improved and sustainable management 4 Projects should be large scale, preferably The introduction of third party management is of most greater than 10,000 ha dry season value for large projects where PIM and WUA approaches irrigation area. are logistically very difficult. Private sector interest will be more in large-scale irrigation. 5 Projects should not require excessively This is consistent with the approach promoted by large or complex investments and should Government through the National Water Management be directed primarily to attaining irrigation Plan. Priority should be on improved irrigation efficiencies efficiency and water conservation. and delivery-based cost recovery to ensure sustainability. 6 The project should demonstrate The IMIP model is a shift from previous PIM approaches. It reasonable scope for stakeholder support is aimed at focused interventions to improve efficiencies and for engagement and acceptance of through modern irrigated agriculture. Stakeholder new institutional models. engagement is essential including agreements to improve levels of cost recovery. The IMIP approach will work with WUAs and WUGs, but a strong WUA is not a prerequisite for success. Absentee landlords, self-interest and strong resistance from power groups can be major obstacles. Irrigation provides direct financial benefits which farmers can value. Willingness to pay has been shown to be related to reliable supply of water. 7 Should demonstrate reasonable scope for Communal LLP or DTW with about 20-50 ha offer good cost recovery scope for cost recovery through pre-paid meters. Other large scale schemes (gravity or central pumping) do not have such scope for pre-paid meters and need other cost recovery options. 8 Minimum risk, maximum opportunity Projects must offer minimum risk and maximum opportunities to move towards modern and intensive irrigated agriculture.

D. Evaluation of the Candidate Projects 306. The IMIIP PPTA reviewed the suitability of two candidate schemes (GKIP and TBP) for possible inclusion for follow on investments. A summary of the candidate follow on projects is shown in Table 60, the Muhuri (MIP) project is shown for reference. A summary of the main features of the two candidate projects and MIP is given Table 61 below.

E. Ganges Kobadak Irrigation Project 1. Introduction

307. The Ganges-Kobadak Irrigation Project (GKIP) is located in western Bangladesh in the Districts of Kushtia, Magura, Jhenaidah and Chuadanga. Water is pumped from the Ganges River into an extensive gravity distribution system. Water is supplied to the 2 pump stations through an approach channel which is prone to sedimentation. It was originally envisaged that the Project would provide supplementary irrigation water to approximately 700,000 ha of land. Of the seven phases originally envisaged, two were completed by the late 1970s. Phase 1 irrigation, started in the 1960s, currently has an irrigable area of about 116,000 ha, ADB supported rehabilitation of the Project between 1983 to 1993.

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Table 60: Multi Criteria Parameters of Projects

Aspect MIP (selected for the IMIP) GKIP TBP Projects must be primarily The primary purpose of the 95,500 ha dry season 60,000 ha dry season, irrigation projects MIP is irrigation, but a 142,000 ha wet season 286,000 ha wet season component of coastal supplementary irrigation. protection is associated with the Project. Project must be able to 17,000 ha 95,000 ha 60,000 ha support significant dry season irrigation. There must be significant Yes, communal LLPs will Yes, major investment in Yes, major investment in government stake- holding be brought under the third primary and secondary primary and secondary in the irrigation party operator. Heavy canals canals reliance on maintaining the khal to ensure sustainability. Projects must be large Yes, 17,000 ha Yes 70% of total Yes 20% of total scale with preferably irrigated area is dry Irrigated area is dry greater than 10,000 ha dry season irrigation season irrigation season irrigation Scope to increase dry Very significant scope to season area through increase dry season water use efficiencies area through water use and conjunctive surface efficiencies and and groundwater use conjunctive surface and groundwater use Projects should not require About 85% of the proposed Investments would be Investments would be costly investments. investment is towards directed to irrigation directed to irrigation Investment should be irrigation efficiency and efficiencies in parallel efficiencies in parallel directed to water efficiency. water conservation with conjunctive surface with conjunctive surface and ground water and ground water management management Projects should Project is already used to PIM approaches were Medium level of WUA demonstrate reasonable private sector management tried initially but have participation which can scope for stakeholder and is currently paying declined. support the new agreements including cost water charges initiative of private recovery There is a operator clear need for new management approaches.

Should present reasonable Good potential using Irrigation Service Recovery of Irrigation scope for cost recovery prepaid meters Charge(ISC) recovery Service Charge through is understood but is one WUA of the lowest in is about 40% of target. Bangladesh.

Requires strong Different approaches to awareness campaigns collecting ISC have and new approaches been tried. Minimum risk and Farmer willingness to pay Very high potential Very high potential - opportunity already established. strong management can -strong management potentially achieve Investments in water can potentially achieve significant benefits management initiatives significant benefits through private operators could potentially increase dry season irrigation by about 40%

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Table 61: Main Features of Candidate Projects

Aspect MIP GKIP TBP Main Features Barrage stores and backs Central pump station Barrage abstracting up water with LLP from takes water from from Teesta, all gravity 460 km of Khal Ganges then by gravity supply. through major canal system. Very large canals designed for supplementary irrigation during wet season. Water Management Develop pipe distribution Improved measurement Improved measurement Strategy-surface water systems, electrification of and allocation of water and allocation of water LLP to improve water use initially at the main initially at the main efficiencies regulators. regulators. Prepaid meters to collect irrigation charges Current role of Water User Low Very low-previously set Medium reasonably Groups up but now largely not active functional Current role of private High Limited-some use of Limited-some use of sector Individual private sector private sector to collect private sector to collect operate low lift pumps and ISC has been tried with ISC has been tried with maintain tertiary canals only limited success some success. Current level of irrigation $130/ha $26/ha $17/ha charges per annum Current payment Farmer currently pay about ISC collection less than ISC collection about $130/ha for pumped water 1% of target. 40% of target through private sector pump operators Strategy-groundwater About 30 % of irrigation is Fair aquifer, fairly high Good aquifer, surface from STWs. Limited groundwater use where irrigation water recharge and current surface water is not contributes to abstractions exceed available. recharge. sustainable No recent groundwater Currently 117 000 ha Limited scope for assessment from groundwater expansion of GW. Opportunities for conjunctive surface - Opportunities for groundwater conjunctive surface - management to be groundwater assessed management to be assessed. Reliability of dry season Some uncertainties of Intake requires intensive Some uncertainties water supply trans-boundary rivers. dredging. Since the Trans-boundary treaty is 1996 water sharing pending. agreement the dry Dry season area of season supply is more about 60,000 ha secure. appears reasonably secure Incidence of Poverty % 42 30 48 Land ownership % landless 37 40 60 Average Size of Arable 0.65 0.72 0.82 Land Holding ha Female Headed 0.3 0.7 1.9 Households %

2. Physical Works

308. The physical works proposed under the CAD-II in 2008 included re-excavation of irrigation and drainage canals, re-sectioning of canal embankments, rehabilitation of existing structures, and

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 103 Final Report rehabilitation of pump electro-mechanical works. The total cost as estimated in 2008 was $37 million60, excluding consultancy, land acquisition, resettlement, and environmental monitoring. The Government has taken up direct funding for project rehabilitation, incorporating some of the proposals by CAD-II amounting to $20.6million (Tk1,647million) is ongoing and will run to 2016. Actual fund allocations to the rehabilitation program have however been quite minimal. The proposed works include re-excavation/re-sectioning of the main, secondary canals, re-excavation of drainage canals, re-sectioning of the embankment, construction of boundary wall for intake channel, construction of a rubber dam, construction, reconstruction of siphons and pipe outlets, rehabilitation of existing structures, repair of gates and hoists, strengthening of WMOs and procurement of chain bulldozers.

3. Surface Water Availability

309. The GKIP started in 1961 with a target to irrigate 488,000 ha of land in five south-western districts but it could not cover the targeted area due to insufficiency of water: it totally failed to supply water during 1992-1996 due to low flows in the Padma River. The project became operational again after signing of the water-sharing treaty with India in 1996.

310. According to the 1996 treaty, the Ganges water would be distributed from Farakka to the two countries between January 1 and May 31 each year on the basis of an agreed formula, and India would make every effort to maintain the flow at Farakka at the average level of previous 40 years. At any critical period Bangladesh would get a guaranteed flow of 980 m3/sec. The two countries also agreed to the need for mutual cooperation to augment the flow of the lower Ganges on a long-term basis. The treaty entitles Bangladesh to receive a fairly good flow of water at Kushtia and also flow into the Gorai river that drains the southwestern districts. Actual allocations from Farakka have varied and recently have been short of the entitlement; however the overall situation is much improved since 1996.

311. In the GKIP, water is pumped from the river Padma (the Ganges river) and distributed to the field by gravity. The project has two pump houses with 15 pumps providing a total capacity of 160m3/s when water levels are high. Of the 15 pumps, three are new large pumps a discharge of about 115m3/sec the remainder are 12 smaller pumps (currently not operational) with a capacity of 42m3/s. However the actual capacity when the river level is low can drop by as much as 50%. It is estimated that the project could potentially supply irrigation water for about 116,000 ha. The GKIP intake is shown in Figure 10.

312. Keeping the intake canal silt-free is a major maintenance task that requires an average annual removal of 190,000 m3 of silt from the channel. The dry season river channel route changes and can case issues when the channel migrates to the opposite side of the Padma river.

4. Groundwater

313. Groundwater use has gradually expanded. Current levels of abstraction need to be compared with potential and actual recharge and with how the aquifer responds during the wet season. Studies in 199561 indicated potential to increase groundwater coverage over the current 116,000 ha in the project area. The studies estimated that recharge is lost when the aquifers become full during the early monsoon and indicating recharge could be increased if the groundwater table were to be lowered. Conjunctive use of surface and groundwater needs to be further assessed.

5. Current Irrigation Water Management

314. Despite considerable effort over time to organise farmers into functioning WMOs, results are very limited. Farmer involvement in tertiary maintenance is minimal and collection of ISC, amounting to about $8,000 out of a potential of $900,000, and is one of the lowest in Bangladesh. OM costs estimated by BWDB are $3.1/year million but the project currently receives only about $0.6 million allocation from Government. BWDB staffing is only 13% of estimated requirements. The project urgently needs a strong management based on new approaches. Water management is inefficient

60 2008 September 1, Second Command Area Development Project : Final Report 61 Technical Assistance to Ganges Kobadak Irrigation Rehabilitation Project January 1995

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 104 Final Report and does not match water availabilities with demands. Pumping rates needs to be tailored to water demands and adjusted to account for available rainfall.

Figure 10: GKIP Project Intake

315. The project was originally designed as an automatic downstream control system, in which the flow regulators would function automatically according to water levels downstream. Later it was converted to a manual system due to problems encountered with the original system. There are regulators in the main and secondary canals with offtake gates to the tertiary canals. Most of the structures have staff gauges but they are not calibrated or used.. Water allocations are scheduled by the project authority fixing a seasonal irrigation target based on a predetermined rotational schedule. The schedule is not properly implemented and some outlets receive almost continuous supply, others receive water on more than the scheduled number of days, and others, especially towards the tail end, receive significantly less than scheduled

316. High conveyance and operational losses in the long canal systems significantly reduce the proportion of pumped surface water reaching the fields. The demand for water is scattered and field losses are high due to the light textured soils. Water losses from the canal systems does however support groundwater recharge. Farmers' organizational problems create inequities in access to reliable water supplies. There is scope for reuse of drainage water especially in tail-end areas.

6. Strategy for GKIP

317. The project appears to be a good candidate for investment in modernization. Dry season water requirements greatly exceed availability and water efficiency through investment and effective OM can potentially increase the irrigable area. Work currently being implemented under Government funding will make the project more functional. Any follow investments should be selective and carefully targeted to improve the operational efficiencies. It is considered that sustainable management can best be provided by an IMO that would focus on performance-based management and effective models for cost recovery. Government finance for OM will need to be guaranteed but should gradually be reduced as alternative cost recovery options are implemented. The GK project canal layout is shown in Figure 11 below.

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Figure 11: GK Irrigation Project

318. The development of efficient irrigation using the proposed new technologies and management procedures will take many years and needs to be introduced in stages, supported by careful investment decisions and a highly effective management organisation.

319. It is proposed that the first stage should focus on macro management of abstractions from the river and irrigation allocations from the 16 main cross regulators. Water measurement technique requires to be upgraded and based on automatic flow measurement using accoustic doppler or other reliable methods, since the low velocities and heads preclude the use of traditional measurement structures. Measurement using gates is possible but is not very accurate and should only be considered as a interim measure. Water requirements need to be monitored and managed based on cropping patterns. Water availabilities need to be managed incorporating both surface water and

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 106 Final Report groundwater. Satellite imagery needs to be used to assess actual cropping and link water availabilities and requirements to cropping. Cropping calendars need to be adjusted to suit water availabilities and crop water requirements.

320. Infiltration from the canal does support groundwater recharge and there is potential to harvest the surface water losses by tubewells. An integrated and managed approach to groundwater needs to be established. For the GKIP the water is pumped so any water lost comes at a cost, unlike the Teesta where gravity surface water is freely available during the monsoon.

321. The project requires targeted rehabilitation focusing on increasing water use efficiency including: re-sectioning of earth canals to correct design profiles, provision of flow measurement and water controls to ensure effective water management and allocations. Effective approaches to OM at all levels are required to increase the reliability of water allocations. Improvement of cost recovery for OM is critical and different options and strategies need to be explored; the MIP model of prepaid meters does not appear to be directly applicable for GKIP except for tubewells.

F. Teesta Barrage Project 1. Introduction

322. The Teesta Barrage Project (TBP) was completed in 1990 to provide irrigation water from the river through canal networks to the TBP catchment area. It is a concrete structure 615 m long with 44 radial gates having a total discharge capacity of 12,750 m3/s. Water is diverted by the Barrage through a canal head regulator 110 m long with a discharge capacity of 280 m3/s. A 4,500 km long network of canals supplies water to the fields. In order to exclude silt from the canals, a silt trap covering 45 hectares was constructed just below the head regulator; an estimated 250,000 m3 of silt is deposited annually. Improvement of the internal drainage system (total length about 5,000 km) has eliminated drainage congestions from the project area. Besides, the flood-affected area along the Teesta River is protected by an earthen flood embankment 80 km long with nearly 10 km of bank protection, which protects the major portion of the project from flooding.

323. The project was originally planned to be completed in three phases with a final target to irrigate 540,000 ha. Phase I, completed in 1998, has a command area of 154 250 ha with a net irrigable area of 111 000 ha. It comprises the Barrage, flood embankment, flood bypass, silt trap, main canal, and part of the canal system with improvement of drainage. The remaining area will be developed under Phase II, which has a total area of 449 000. Phase II; part 1 currently under construction and will for an additional irrigated area of 96 000 ha. Phase II parts 2 and 3 will each add about 176 000 ha but there is some doubt whether these will be taken up. The TBP is shown in Figure 12, the barrage and intake are shown in Figure 13

2. Physical Works

324. The proposed subproject physical works under CAD-II include re-sectioning of irrigation canals and embankments, drainage channels, rehabilitation of existing structures, re-construction of regulators, link canal with outfall structure, canal lining, river training works, excavation of a reservoir and construction of a new irrigation canal, and overhaul of mechanical equipment. The total base cost of for this work, estimated in 2008, was $24 million62. The project has prepared an estimate for rehabilitation requirements in 2013 amounting to $100 million. The increase is partially due to inflation by requirements identified in 2013 are significantly more extensive than CAD-II. A systematic analysis of rehabilitation requirements and benefits and prioritization is required.

62 2008 September 1, Second Command Area Development Project : Final Report

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Figure 12: Teesta Barrage Project

3. Water Availability

325. The TBP project has been designed primarily for supplementary irrigation during the Kharif monsoon period. The canals have been designed for 280 m3/sec which been designed to meet the wet season supplementary irrigation requirements for the full project area. The monsoon river water availability of around 900 m3/sec is more than adequate.

326.

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Figure 13: Teesta Barrage and Intake

327. The Teesta River barrage at Gozaldoba in India controls the amount of water flow downstream to Bangladesh, which results in the Teesta Barrage at Dhalia in Bangladesh being very dependent on releases from India, especially during low-flow periods.

328. Under the Joint Rivers Commission63, Bangladesh proposes water sharing on a 50- 50 basis at Gazoldoba, but decision is awaiting agreement by the West Bengal Government. The Teesta Project in India, which started in 1975-76, is one of the largest irrigation projects in the entire eastern region. The project is scheduled to be completed in 2017, providing irrigation from the Gajaldoba and Mahananda barrages for 900,000ha and also 67MW of hydropower.

329. Currently, February/March flows of about 45 to 56 m3/sec are able to irrigate about 60,000 ha of boro rice. The TBP project management aims to increase the rice area to 80,000 ha or more, through improved water management including staggered planting, expansion of wet and dry rice production systems and improved crop rotations.

330. Sudden release of excess water through the Gazoldoba Barrage during the rainy season causes floods and bank erosion and damages large amounts of crops downstream. Steps therefore, need to be been taken to investigate flows at both Gozaldoba and Dalia in order to manage both high and low season discharges and reduce economic losses.

4. Groundwater

331. A growing interest in cultivating boro rice and a shortage of surface water has led to a major increase of groundwater abstraction in the TBP area. The number of tubewells and groundwater use based on Upazila statistics is shown in Table 62 below.

Table 62: Estimated Area of GW in Teesta Command Area Agency Deep TW Shallow TW Total Nr Area ha Nr Area ha Nr Area ha BMDA 321 6,439 - - 321 6,439 BADC 80 1,490 - - 80 1,490 Others 102 2,625 62,163 107,077 62,265 109,702 Total 503 10,554 62,163 107,077 62,666 117,631

332. The groundwater aquifer in TBP is reported to be very good but its sustainability under such heavy exploitation by STWs needs to be assessed The groundwater potential being variable, different management approaches are needed for different parts of the area. Conjunctive use of surface and ground water needs to investigated as a means to sustainable management. The infrastructure of both

63 The Joint River Commission was a bilateral working group established by India and Bangladesh in the Indo-Bangladeshi Treaty of Friendship, Cooperation and Peace signed and came into being in 1972. As per the treaty, the two nations established the commission to work for the common interests and sharing of water resources, irrigation, floods and cyclones control. The studies and reports of the commission contributed directly to the efforts of both nations to resolve the dispute over the Sharing of Ganges Waters, facilitating bilateral agreements in 1975, 1978 and finally in 1996

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 109 Final Report the surface and groundwater systems needs to planned and designed towards long term sustainable and integrated management.

333. Surface water from TBP is the preferred source if sufficient water is available. The extensive canal system of Phase I provides a significant contribution to groundwater recharge, which will increase further with Phase II. On the other hand, declining dry season flows in the Teesta River are reducing groundwater recharge.

5. Current Irrigation Management

334. Irrigation is currently managed by the Teesta OM Divisions. The water is measured at the intake and the measurements are carried out by the hydrology division. However, the data is not available at the site and there is no measurement of the water allocated to the canal systems. Water management is based on rotating supplies to the main canals with duration proportional to irrigable area, and allocations to secondary and tertiary canals are made by the water user groups. The canal cross sections are designed for full development of 540,000 ha, but the dry season irrigable area is only about 60,000 ha with discharges at about 20% of full supply capacity.

335. Required OM expenditures are estimated by BWDB to be $1.9 million but currently only about 40% of requirements is provided. Collection of ISC is only about $0.35 million against a target of $0.82 million.

336. The project is designed for supplementary wet season (Kharif) irrigation, but the need for this varies annually. It is understood that in 2012 there was no demand.

6. Strategy for TBP

337. Although the TBP was originally designed for supplementary wet season irrigation, interest in Boro season irrigation has increased significantly over recent years. The water availability is reported to be sufficient for 60,000 ha, about 54% of the Phase 1 irrigable area. Phase 2 would increase the irrigable area from 110,000ha to 286,000 ha, but the dry season irrigation would remain restricted within the Phase 1 due to the limited availability of dry season water.

338. Selective rehabilitation is necessary to return the project to full operation, but this needs to be supported by improved recovery of OM costs. The current collection rate, 45% of target, should be increased to 100%, which would provide about 44% of OM needs. The large water channels could maybe be leased out for managed fisheries with stocking and some controls.

339. Enhanced water management, including improved flow measurement and measured water allocations, could increase water use efficiencies. Simple flow measurements can be done initially using gate formulas, but real-time canal measurements using ultrasonic or similar devices should be introduced. The major division structures would be initially taken up for accurate measurement and water allocations based on effective balancing of supply and demand. Planning and staging of crop planting could also help to stagger peak demands and remote sensing should be used to monitor and evaluate cropping.

340. Conjunctive use of groundwater with surface water could offer significant opportunities to sustainably and cost effectively expand the dry season irrigation area. Surface water can be used meet the wet season and dry season base demands of the rice crop supplemented by tubewells to meet the shortfalls of supply and meet peak demands. The more than adequate wet season flows and very large canal systems currently support groundwater recharge with potentials to increase recharge through water management. The surface and groundwater infrastructure and the associated management strategies need to be planned and designed for conjunctive use. There is currently large numbers of deep tubewells using pipes and prepaid meters under management of the Barind project many of which currently already use surface water in conjunction with groundwater. The tubewells could be upscaled and operated more efficiently if a managed surface and groundwater management approach was adopted.

341. The long-term availability of dry season Teesta River flows from India is in question. Improved water management for sustainable water use must be developed for Teesta with or without a trans-

TA8154 BAN Irrigation Management Improvement Investment Program (IMIIP) 110 Final Report boundary river agreement. If the current dry season availability of around 50 m3/sec can be maintained, there is scope to increase the irrigated area by improved water management and conjunctive use of surface and groundwater. Even if dry season supplies deteriorate, the same improvements remain applicable.

G. Conclusions 342. Both of the TBP and GKIP irrigation projects have the major similarities based on irrigation gravity through a extensive network of canals. The GKIP requires pumping around 160m3/s from the Padma river; the pump flow drops to about 80m3/s due to increased pumping head during periods of low water level in the Padma river.

343. During the dry season the Teesta barrage diverts about 50m3/sec river water in the main canal with a reported irrigated area of 60,000ha. Both projects have large areas of groundwater irrigation and it is difficult to define the exact contribution of surface water.

344. Both projects have potential to expand the irrigable area through improved management; They have are constraints and uncertainties of dry season flow that have to be factored into the management strategy. The GK has problems with the intake and some limitations on pump capacities, pumping costs are also an issue; the water allocations from India although now under a water sharing agreement are not always fully satisfied. The Teesta has no water sharing agreement and the continued expansion of the huge 900,000ha Indian Gajaldoba-Mahanda barrage projects to be completed by 2017 is of concern. The water sharing discussions are proceeding but agreement remains elusive.

345. The required strategy for both projects is to move towards efficient water use to maximise irrigable area and improve crop returns within the constraints of available water. Both projects have dry season water constraints; (i) for GKIP there is scope to improve surface water supplies through increased dredging and adjustments to the pumping arrangements; (ii) the Teesta dry supplies are fully dependent on releases from India with no scope to increase the supplies. Rehabilitation, modernization improved maintenance and water management will benefit the potential output of both projects during the Kharif but especially during the Rabi seasons. Investments need to be focused toward the area of secure water supply with objectives of spreading scarce water over a larger area. For both projects but especially the Teesta there is potential for conjunctive water use using surface water and deep tubewells in tandem, to optimise and balance surface and groundwater use.

346. Improved management needs water users gradually change their attitude to pay the ISC (Irrigation Service Charge) to help support the OM costs. The existing rates of ISC in both projects are very low and significantly lower than the costs of groundwater. The TBP project is achieving higher levels of cost recovery than GKIP.

347. Conjunctive use of Surface and ground water Both TBP and GKIP areas have potential for groundwater irrigation. The Teesta project area has one of the best groundwater resources in the country with very high specific capacities of wells; most of the area is suitable for deep tube well installation but increasingly less appropriate for shallow tube well development due to lowering of groundwater below the reach of surface mounted centrifugal pumps.. Recharge in the Teesta is very good based on rainfall and increased water levels and the very extensive network of large irrigation canals and abundant wet season flows.

348. Groundwater potential in the GK project area is good but there are constraints one is risk of over abstraction of groundwater in the dry months and the impacts on salinity intrusion in the areas to the south.

349. Conjunctive surface and groundwater management optimises the use of ground and surface water through; (i) only using groundwater when surface water becomes insufficient; (ii) directing surface water toward areas where there are constraints of groundwater or vica versa; (iii) optimising the management of surface water to reduce losses and maximise the irrigated areas; (iv) managing surplus wet season supplies to support groundwater recharge and incorporating groundwater recharge into the dry season management strategies (v) developing a common charging system for ground and surface water.

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350. There are more than 300 deep tube well in Teesta project area of BMDA, being operated by prepaid meter system. Many farmers have land supplied by both tubewells and surface water and have some understanding the need to pay for water. Tubewells are either individual private shallow tubewells or deep tubewells, many under the BMDA with pipe systems and prepaid meters

351. Social and Political Culture. The GKIP irrigation project’s first phase started in 1960. The long practiced culture of non-payment of ISC in the GKIP area is made worse by the politicians during any election campaigns who have promoted free water. It will be initially difficult to introduce the payment culture of ISC in GK project area; these negative forces are less visible in Teesta project area. The lack of collection of ISC is a key issue and requires a radical change of approach including an element of incentive to meet targets, improved engagement with stakeholders and politicians. The engagement of third party to manage and operate the schemes offers opportunities to develop new initiatives for cost recovery and water resources management. If the two irrigation projects could be brought under controlled irrigation through a financially and viable sustainable model this could offer a major boost to sustainable management of irrigation projects in Bangladesh.

1. Possible Strategies for Improved Efficiencies for GKIP and TBP

352. A summary of the proposed works and strategies to develop efficient OM for the GKIP and the TBP are summarized in Table 63: below. The current review has looked briefly at the requirements and made some indicative suggestions for improved management. Both the requirements for rehabilitation, modernization and management need to be studied in more depth.

H. Strategy 353. Achieving improved efficiencies and productivities in either the TBP or the GKIP is not an easy task and will require a detailed analysis of the issues and requirements including identification of the technical options for improving efficiencies which need to be carefully analysed and workable approaches developed to evaluate and plan how these can be realized. Improved cost recovery is essential The large scale of the projects and the number of stakeholders many of whom are benefitting from the current operations make for a challenging task.

354. Planning and Design for the GKIP and TBP will be implemented under the IMIP by the PMDC over 24 months including the following:

o Prefeasibility including water resources management review 4 months o Detailed planning studies to feasibility studies including groundwater modelling 4 months o Detailed design for modernization 4 months o Engagement of the management operator and contractors 6 months

355. Management: similar to Muhuri it is proposed that a third party private sector operator (IMO) would be engaged to establish efficient management of the schemes including cost recovery as well as supervision of the investment works. The introduction of an experienced and professional management organization opens opportunities for modernization and introduction of new technologies which require high level technical and managerial skills as well as sustainable and adequate levels of funding for OM. It is proposed that selected key staff positions are filled by personnel from BWDB on secondment.

356. The IMO would be initially engaged under a performance based management contract which would incorporate achievement of key performance milestones as one part of the management contract against which payment will be made. Improving the management is not possible by the IMO alone and requires close engagement with Government and the Water Management Organizations. The IMO tasks would include to establish and implement efficient MOM including cost recovering mechanism. Targets for increasing the irrigation area, cropping intensities and increasing levels of cost recovery would be established during the planning and design stage. The IMO would also implement agricultural support services including demonstration plots, trials for mechanization to increase the margins of irrigated cropping as well as reducing water use efficiencies.

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Table 63: Proposed Works and Strategies for GKIP and TBP

Details GKIP TBP 1 Rehabilitation of Canal Systems Re-sectioning of canals CII/BWDB-I CII/BWDB Rehabilitation of structures including gates CII/BWDB-I CII/BWDB Excavating Drains CII/BWDB-I CII/BWDB Repair pump house CII Repair gates CII/BWDB-I CII/BWDB Repair inspection road CII Repair offices and colony BWDB-I BWDB Dredging of silt trap CDII/BWDB Repair Gate lifting and control systems BWDB Culvert BWDB Offtake structures turnouts BWBD Canal lining CII Tree planting BWDB 2 New Structures New regulators BWDB New Inspection roads CII BWDB River Protection BWDB Bridges BWDB Culverts BWDB Offtake structures (turnouts) BWDB 3 River Protection Works CII/BWDB BWDB 4 Equipment New Dredger and Sand Pump BWDB Jeep motorcycle BWDB 5 Upgrading and Modernization including new technologies Flow measurement facilities at main regulators PPTA PPTA Motor hoisting for regulator gates CDII/BWDB Pilot prepaid metering and controls for offtake gates PPTA PPTA Rubber Dam CII/BWDBI Communication system CII BWDB 6 Tubewells Development new tubewells with prepaid meters to support PPTA PPTA conjunctive management Adaptation of existing tubewells with prepaid meters to support PPTA PPTA conjunctive management 7 Improved Water Management Conjunctive surface and groundwater management PPTA PPTA Water management of surface canals to support recharge PPTA PPTA Improved water allocations based on land area/cropped area PPTA PPTA Improved rotation systems PPTA PPTA Reuse of water in drains PPTA PPTA Pilot prepaid offtake gates PPTA PPTA 8 Cost Recovery Cost recovery pilots to investigate options and test approaches PPTA PPTA 9 Agricultural Support Agricultural support demonstrations including mechanisation, PPTA PPTA improved varieties, reduced water use, crop diversification Development of experimental farm BWDB Notes: CII-CAD-II studies in 2008, BWDB-proposed by BWDB BWDB-I currently being implemented by BWDB PPTA-additional possible activities proposed by IMIIP PPTA I. Conclusions 357. Both GKIP and TBP are considered suitable candidate projects for a follow on investment. The physical investment cost for rehabilitation and modernzation of the MIP is about $1750/ha and include the additional costs of introduction of pipe irrigation and electrification. No detailed studies on the requirements for investment for the GKIP or TBP has been carried; however based on estimates for rehabilitation prepared by BWDB with some addition for new initiatives for modernization and water use efficiency the physical investment costs for the GKIP and TBP would likely be of the order of $1250/ha. Based on an irrigation area of about 200.000ha for the two projects the indicative investment in rehabilitation and modernization would be of the order of $250million.