Document of The World Bank Public Disclosure Authorized
Report No: 17129 - CHA
PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ONA
PROPOSED LOAN OF $90 MILLION AND
A PROPOSED CREDIT EQUIVALENT TO SDR 44.6 MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
Public Disclosure Authorized FOR THE
TARIM BASIN II PROJECT
April 23, 1998 Public Disclosure Authorized
Rural Development & Natural Resources Sector Unit East Asia and Pacific Region CURRENCY EQUIVALENTS
(Exchange Rate Effective January 1998)
Currency Unit = Yuan Y 1.00 = US$ 0.12 US$ 1.00 = Y 8.3
FISCAL YEAR
January I to December 31
WEIGHTS AND MEASURES
I meter (m) = 3.28 feet (ft) 1 kilometer 0.62 miles I square kilometer 100 ha I hectare (ha) = 15 mu 2.47 acres I ton (t) = 1,000 kg - 2,205 pounds
PRINCIPAL ABBREVIATIONS AND ACRONYMS USED
CAS - Country Assistance Strategy GOC - Government of China EIA - Environmental Impact Assessment FAO - Food and Agriculture Organization GIS - Geographical Information System IBRD - International Bank for Reconstruction and Development IDA - Intemational Development Association IPM - Integrated Pest Management MIS - Management Information System MOF - Ministry of Finance MWR - Ministry of Water Resources NBET Non-Beneficial Evapotranspiration NGO - Non-governmental Organization PMO - Project Management Office PRC - People's Republic of China RAP Resettlement Action Plan SIDD - Self-financing Irrigation and Drainage District TBWRC - Tarim Basin Water Resources Commission TMB - Tarim Management Bureau WSC - Water Supply Corporation WUA - Water User Association XUAR - Xinjiang Uygur Autonomous Region
Vice President: Jean-Michel Severino, EAP Country Manager/Director: Yukon Huang Sector Manager/Director: Geoffrey B. Fox Task Team Leader/Task Manager: Douglas OlsoIn CHINA Tarim Basin II Project
CONTENTS
A. ProjectDevelopment Objective
1. Project developmentobjective and key performanceindicators
B. StrategicContext
1. Sector-relatedCAS goal supportedby the Project 2. Main sector issues and Governmentstrategy 3. Sector issuesto be addressedby the Project and strategicchoices
C. Project DescriptionSummary
1. Project components 2. Key policy and institutionalreforms supportedby the Project 3. Benefitsand target population 4. Institutionaland implementationarrangements
D. Project Rationale
1. Project alternativesconsidered and reasonsfor rejection 2. Major relatedprojects financedby the Bank and/or other developmentagencies 3. Lessonslearned and reflectedin the Project design 4. Indicationsof Borrowercommitment and ownership 5. Value added of Bank support in this Project
E. SummaryProject Analyses
1. Economicand Financial 2. Technical 3. Institutional 4. Social 5. Environmentalassessment 6. Participatoryapproach
F. Suistainabilityand Risks
1. Sustainability 2. Critical risks 3. Possiblecontroversial aspects G. Main Loan Conditions
1. Effectiveness conditions 2. Other
H. Readiness for Implementation
L Compliance with Bank Policies
Annexes
Annex 1. Project Design Summary Annex 2. Detailed Project Description Annex 3. Estimated Project Costs Annex 4. Financial and Economic Analysis Summary Annex 5. Financial Summary Annex 6. Procurement and Disbursement Arrangements Table 6.1. Project Costs by Procurement Arrangements Table 6.2. Consultant Selection Arrangements Table 6.3 Thresholds for Procurement Methods and Prior Review Table 6.4 Allocation of Loan Proceeds Table 6.5 Estimated Disbursement Schedule Annex 7. Project Processing Budget and Schedule Annex 8. Documents in Project File Annex 9. Statement of Loans and Credits Annex 10. Country at a Glance Annex 11. Summary of Local Beneficiaries Participatory Development Plan Annex 12. Summary of Voluntary Settlement Action Plan for Keping County, Aksu prefecture
Maps
Tarim Basin II Project - IBRD 29489 Hotan Sub-Project - IBRD 29490 Kashgar Sub-Project - IBRD 29491 Kizilsu Sub-Project - IBRD 29492 Aksu Sub-Project - IBRD 29493 Bayingol Sub-Project - IBRD 29494 CHINA Tarim Basin II Project Project Appraisal Document
East Asia and Pacific Region China
Date: April 23, 1998 Task Team Leader/Task Manager: Douglas Olson Country Manager/Director: Yukon Huang SectorManager/Director: Geoffrey B. Fox Project ID: CN-PE-46563 Sector: Agriculture Program Objective Category: EN Lending Instrument: SpecificInvestment Loan Programof TargetedIntervention: [XI Yes [ I No
Project Financing Data [X] Loan [X] Credit [] Guarantee [] Other [Specify]
For Loans/Credits/Others:
Amount (US$m/SDRm):IBRD Loan $90 million/IDA Credit SDR44.6 million equivalent Proposed terms: [ ] Multicurrency [X] Single currency, specify US$ Grace period (years): 5 Loan/10 Credit [ ] Standard Variable [] Fixed [X] LIBOR-based Years to maturity: 20 Loan/35 Credit Commitment fee: 0.75% Loan/0.50% Credit Service charge: 0.75% Credit
Financing plan (US$m): Source Local Foreign Total Government 100.6 100.6 (37%) IBRD 33.8 56.2 90.0 (33%) IDA 22.5 37.5 60.0 (22%) Beneficiaries 22.0 22.0 (8%) Total 178.9 93.7 272.6 (100%)
Borrower: People's Republic of China Responsible agency(ies): Xinjiang Uygur AutonomousRegion
Estimated disbursements (Bank FY/US$M): 1999 2000 2001 2002 2003 2004 Annual 20.1 37.2 41.5 28.7 16.3 6.2 Cumulative 20.1 57.3 98.8 127.5 143.8 150.0
Project implementationperiod: 1999-2003 Expected effectiveness date: 10/98 Expected closing date: 12/31/2004
OSDPAD Form: July 30, 1997 Page 2
A: Project Development Objective 1. Project developmentobjective and key performance indicators (see Annex 1): The proposedProject developmentobjectives for the TarimBasin II Project (Tarim II) in the Xinjiang Uygur AutonomousRegion (XUAR) which will expand on the successfulTarim Irrigation Project (Tarim I) are to: (a) increaseincomes of poor farmers through irrigatedagriculture development (performance indicator- per capita incomesof Project beneficiaries);(b) establish mechanismsfor sustainableuse, developmentand managementof water resourcesand land in the TarimBasin (performanceindicators - consumptiveuse allocations establishedand enforced);and (c) partially restore and preservethe "green corridor" in the lower reaches of the Tarim River (performanceindicator - amount of water delivered below DaxihaiziReservoir).
B: Strategic Context 1. Sector-relatedCountry Assistance Strategy (CAS)goal supportedby the Project (see Annex 1): CAS documentnumber: 16321-CHA Date of latest CAS discussion:March 18, 1997 ProgressReport is scheduledfor discussionin May 1998
Tarim II would support the Bank Group Strategiesto: (a) promote continueddevelopment of sustainable techniquesto upgrade marginal land; (b) incorporatemajor water storage,transfer, irrigation,drainage and flood control into projects;and (c) target absolute poor through a series of investmentprojects. 2. Main sector issues and Governmentstrategy: Increasinggrain productionis a major goal of the ninth 5-year plan. The developmentand improvementof irrigated agriculturehas been identifiedby the governmentas an importantway of increasingfood production.Feeding China's vast and growing populationis a continuingmajor challenge for the Governmentof China (GOC). Present annual consumptionof grains is about 480 million tons and is expectedto grow to about 700 million tons by the year 2020. This is not only due to the increasing populationbut also to the increasedconsumption of grain for animalfeed resulting from increasingmeat consumptionas incomesrise. The Ninth 5-year plan which coversthe period from 1996-2001has the objective of increasinggrain productionfrom about 450 milliontons to 500 million tons and last year productionreached some 480 million tons, necessaryto meet domesticdemand. Large increases in cotton, oils and other productsare also mandated.
Irrigationand drainageinfrastructure upgrading and increasingyields on irrigated lands are priority objectivesof the GOC and the Ministry of Water Resources(MWR). With 22% of the world's population,China has only 7% of the arable land. In addition,encroachment of urban and industrial areas continuallyreduces the land available for agriculturalproduction. These circumstancesrequire increasinglyintensive use of irrigatedagriculture. Much of the irrigationinfrastructure in China was built in the 1960s,in many cases with substandarddesigns and quality. Most of these systemsare in need of rehabilitationand upgrading. In some areas, flood control, drainageand salinity mitigationare also essentialfor raising agriculturalproductivity. Drainageworks are essentialto allow cultivationof low- lying areas subject to waterloggingand salinization. Since the 1960s,government programs in drainage works have helped control waterloggingon 19 million hectaresand have reclaimed4.8 million hectares of saline land.
Improvedwater resourcesmanagement at the river basin level has been identified by the Ministryof Water Resources(MWR) as an importantgoal for sustainabledevelopment and use of water resources in China. There are seven existingriver basin commissionsestablished in the Yangtze, Yellow,Huaihe, Pearl, Haihe, Songliaoand Taihu Basins. These commissionsare responsiblefor comprehensiveriver basin planning and for the implementationof rational and controlledwater resourcesdevelopment and Page 3
management in these river basins. All of these river basins cover several provinces. Up to now, the river basin commissions have been less effective than anticipated, mainly due to lack of clear jurisdictional definition of responsibilities between the commissions and the provinces. MWR is presently working with others to draft legislation directed towards improving this situation.
Irrigation Institutional Reform has been identified by the Ministry of Water Resources as an important goal for sustainable irrigation in China. A major problem faced by almost all irrigation and drainage systems in China is inadequate O&M which is due primarily to insufficient government budget and low water charges. It is also due to lack of direct farmer participation and feeling of ownership in Project design, implementation and management. This has resulted in a vicious cycle of implementation, deterioraLtionand rehabilitation of irrigation and drainage systems. Key issues for the irrigation subsector are how to pay for irrigation investments and make them sustainable, how to increase local participation and "ownership" in irrigation, and how to implement irrigation investments to consistently higher technical and institutional standards as needed for agricultural intensification. In addition to substantial improvement in irrigation facilities and increases in agriculture prodchction,there is a strong need for institutional reform which would address these issues, and the need for reform is strongly supported by the Ministry of Water Resources. The reform includes the need to implement a number of key policies in the irrigation subsector such as: (a) the user pays principle; (b) decentralization of services delivery; (c) market oriented development; (d) treating water as an economic resource; and (e) participation of water users. Institutions responsible for operation and maintenance of irrigation and drainage systems need to be: (a) organized along hydraulic boundaries, (b) organized to have legal personality to be able to enter into contractual relationships with other entities; and (c) designed to be self-financing.
Poverty Reduction is a major objective of the Chinese Government. Rural economic reforms, including the adoption of the production responsibility system, the dismantling of the commune system, agricultural product price increases and market liberalization resulted in tremendous reductions in absolute poverty, from roughly 250 million poor in 1978 to about 58 million in 1997. The Chinese Government has the goal of eliminating absolute poverty altogether by 2000. Continued reduction in absolute poverty becomes more and more difficult especially where pockets of persistent poverty exist in minority and resources poor areas.
Interior Provinces of China are lagging in development when compared to the coastal provinces. The government has emphasized the need to direct more investments including external financing to the internal provinces as a means of accelerating their development. 3. Sector issues to be addressed by the Project and strategic choices: Agricultural production. The Project is designed to increase agricultural production in economically depressed areas in the Tarim Basin of XUAR, with the objective of raising the per capita incomes of poor people and increasing their access to food. This will be accomplished through improvements to existing irrigation and drainage systems; reclamation of non-irrigated lands; low-yield land improvements; improvements in agriculture support services; and technical assistance, training and research programs. In each of these areas, the experience from recently completed Tarim I which covered the Weigan and Yerqiang subbasins has been instrumental in designing these components in Tarim II which covers the Kaidu-Konque, Aksu, Kashgar and Hotan subbasins.
Improved water resources management at the river basin level. The Project is designed to provide for the establishment (legally constituted in December 1997) and strengthening of the Tarim Basin Water Resources Commission (TBWRC) which will be responsible for comprehensive water resources management including all aspects of planning, policy setting and regulation and control of water and related natural resources of the Tarim Basin. TBWRC development will build upon institutions and information that were developed under Tarim I. Page 4
In particular TBWRC development will:
* Develop and implement hydrologic (surface water and groundwater) data monitoring networks, processing and archiving systems, and analytical processes for data evaluation, as well as a group of hydrologic models that provide both a predictive and a management capability.
* Undertake base-line studies to determine the 'health' of the natural resources in the Basin, the pattern of water usage and its efficiencies.
* Develop and administer a water licensing and allocation system, with suitable enforcement and penalty procedures, as well as the collection of water charges.
* Undertake master water planning studies for the whole Basin, ensuring that these studies involve integration across all aspects of natural resources.
* Develop and implement community awareness and participation programs across the Basin to lift the understanding of the natural resources issues of the Basin.
* Promote, and assist with, the development of 'land and water management plans' by various farmer and community groups that provide for both productivity improvements and resource rehabilitation.
* Oversee funding programs to assist with implementation of water and environmental management and development projects.
SIDD Development. The Project is designed to incorporate institutional measures to ensure the sustainability and self-financing of irrigated agriculture, improve irrigation system performance, and enable effective decentralization of irrigation services, cost recovery and farmer participation in line with Chinese and Bank water resources policy. An important component in the new institutional structure for improved water resources management is the implementation of self-financing irrigation and drainage districts (SIDDs). Each SIDD would comprise: (1) a Water Supply Corporation (WSC) that would be formed to operate and maintain the main and branch canals and drains; and (2) Water User Associations (WUAs) that would be formed and managed by farmers to operate and maintain the lower-level irrigation and drainage systems and would purchase water from the WSC. Initially one WSC and one or more WUA will be established as a pilot in each of the prefectures. During Project implementation, the pilots will be evaluated, and if successful additional WSCs and WUAs will be established in accordance with SIDD development plans (Annex 4 of Project Implementation Plan (PIP) in Project Files) that have been prepared for each subproject area. Page 5
C: Project Description Summary 1. Project components(see Annex 2for a detaileddescription and Annex 3for a detailed cost breakdown): Component Category Cost Incl. % of Bank- % of Contingencies Total financing Bank- (US$M) (US$M) financing Water conservancymeasures Physical 120.3 44.1 70.5 58.6 includingirrigation and drainage systemrehabilitation and improvements,and hydropower stations and transmissionlines
Land recllamationfor irrigation Physical 60.7 22.3 27.8 45.8 purposesof presentlynon-productive lands with a total area of 75,350ha, includingKeping voluntary settlement.
Land improvementof presentlylow- Physical 29.1 10.7 11.7 40.0 yield irrigatedlands with a total area of 105,350ha.
Agriculturalsupport services for on- Institution 16.8 6.1 12.6 75.3 farm development,both in terms of building, productionsupport (seed availability, Management, machineryservices, input supplies, Physical technologytransfer to fanners,etc.)
EnvironmentalProtection and Physical 10.8 4.0 7.6 70.4 Monitoringquality and quantityof groundand surfacewater
InstitutionalDevelopment measures Institution 15.2 5.6 7.7 50.6 to strengthenprefecture and county building, PMOs, SI]DDsand line agencies Management
TBWRCsupport including Institution 12.8 4.7 6.8 53.5 institutionaldevelopment support and building, measureson mainstreamof the Tarim Management, River to improvewater management Physical and deliveryof water to the lower reaches of the river
RegionalManagement support for the Institution 6.9 2.5 5.3 75.9 RegionalPMO and trainingfacilities building, Management, Physical Total 272.6 100.0 150.0 55.0 Page 6
2. Key policy and institutional reforms supported by the Project. The Project would support major institutional changes in the planning and use of water resources within the Tarim Basin. These consist of introduction of rational use of water resources on a basin-wide basis and promotion of irrigation and drainage system management with a large degree of autonomy in financing and farmer management. The first of these includes the establishment and strengthening of the TBWRC which will involve the consolidation and strengthening of the existing Tarim River Administrative Committee and the Tarim River Management Bureau which were established under Tarim I. TBWRC will be a competent institution with overall authority for planning and management of water resources within the Basin. The second includes re-shaping the present local water resources bureau structures in each of the subproject areas to become self-financing water supply agencies, incorporating farmer/water user participation and representation and establishing WUAs. The WUAs would both manage irrigation within their irrigation block and also through their representation in the water supply agencies would have the means of influencing the method of operation of the main irrigation and drainage systems. The institutional developments proposed would, therefore, be the strengthening of the TBWRC covering the whole river basin, WSCs covering the irrigation areas served by main irrigation and drainage systems, and WUAs covering areas supplied by lateral and on-farm irrigation and drainage systems. Formation of the WSCs and WUAs would be initially done on a pilot basis, and if successful, would be gradually implemented throughout the Tarim II Project area.
3. Benefits and target population: The Project would generate the following benefits: (a) an increase in per capita incomes for about 200,000 poor households of Project water users who would directly benefit from increased agricultural production on Project lands; (b) an increase in the supply of agricultural products which would be available for direct consumption and sale, including annual increases of 157,000 tons of wheat, 117,000 tons of maize, 18,000 tons of rice, 43,000 tons of cotton lint, and 93,000 tons of sugarbeet; (c) an increase of the animal herd by about 10,000 heads of sheep annually as a result of improved feed production; (d) environmental benefits derived from improved water resources and land management including reductions of high water tables and salinization problems, and restoration/preservation of part of the "green corridor", an area of natural riverine forests along both sides of the river and approximately 200 km long at the lower reaches of the Tarim River; (e) institutional reforms including self-financing basin- wide water resources management and irrigation and drainage system operation; and (f) development and dissemination of improved irrigation, drainage, agricultural and environmental management technologies to improve water use efficiencies and reduce environmentally damaging water wasting.
Minority nationalities are the overwhelming majority of the Project target population (Uygur 84.66%, Hui 1.3%, Mongols 1.09%, Kirghiz 2.37%, Kazak 0.03%, and others 0.7%). Han Chinese in the Project area constitute about 12.4% of the total. Poor farmers/herdsmen will be the direct Project beneficiaries. Among the 576,900 households that will be directly and indirectly affected by the Project, 114,335 are below the poverty line and have an annual net income of less than 530 Yuan (about US$64) per capita. The poorest households whose annual net income is below 300 Yuan (about US$36) per capita number 20,776. Overall, the Project target beneficiary group has a significantly larger proportion of poor than the country's population as a whole.
4. Institutional and implementation arrangements: The Project would have a 5-year implementation period.
At the Regional level, a "Leading Group" has been established under the leadership of the First Vice Chairman and the Vice Chairman responsible for agriculture and water resources. The Leading Group includes the directors of the Planning Commission, and the Finance, Water Resources, Agriculture, Page 7
EnvirornmentalProtection and Land Management bureaus. The Leading Group is responsible for overall Project coordination and for ensuring that Project design and implementation have high priority and adequate support from the different government entities. Leading groups have also been established in each of the 5 prefectures and 22 counties under the leadership of the heads of the respective governments and including the heads of the involved government agencies.
Implementation of the Project will be under the Regional Project Management Office (PMO) located in Urumqi which has a full-time director, three part-time Deputy Directors, and the following five divisions.
* Comprehensive Division (located in the XUAR Finance Bureau), responsible mainly for coordination with MOF, the World Bank and other external entities, coordination of technical assistance programs, and oversight of procurement actions.
* Finance Division (located in the XUAR Finance Bureau), responsible for overall Project financial management including Bank loan/credit management.
* Planning Division (located in the XUAR Planning Commission), responsible for reviewing of the Project plan, Project monitoring and evaluation, oversight of procurement actions, and coordination (mobilization) and allocation of domestic funding.
* Water Resource Division (located in the XUAR Water Resources Bureau), responsible for Project design, implementation, procurement, and SIDD development and extension.
e Agriculture Division (located in the XUAR Agriculture Bureau), responsible for design and implementation of agriculture support services.
Annex 17 of the PIP presents the organization and responsibilities of the PMO.
PMOs with similar organizational structures have been set up in each of the five prefectures and 22 counties involved in the Project. These PMOs are responsible for all aspects of Project design, implementation and operation of the water conservancy, land reclamation, low-yield land improvement, agriculture support services, environmental protection and monitoring and institutional development and support components.
The Management Bureau of the TBWRC (TMB) will be responsible for design, implementation and operation of the Tarim River engineering and TBWRC subcomponents. A separate PMO structure has not been established in TMB, because its principal responsibility during the next 5 years will be implementation of the Project. Annex 1 of the PIP presents the plans for development of the TBWRC.
Design, implementation and operation of the Regional management component will be the direct responsibility of the Regional PMO.
Following the successful experience of Tarim I, a technical advisory group has been established that will review Project design and implementation throughout the five-year Project implementation period. Annually the group will review all aspects of Project design and implementation, as well as monitoring and evaluation procedures and reports. The group will write an annual report in which recommendations for improvements in all of these aspects are made. The annual report will be prepared prior to a World Bank supervision mission and the report will be provided to the mission along with the progress report, monitoring and evaluation report and annual work plan prepared by the PMO.
A detailled program of Project supervision will be carried out by the PMO at all levels. This will include quality control and inspection of all civil works and goods procurement to ensure their Page 8 high quality and compliance with the technical specifications. These activities will be the responsibility of the Water Resources Divisions (acting as engineer) of the PMOs. Annex 10 of the PIP presents the Project supervision plan.
Financial management, account control and auditing will be carried ouatin accordance with the Financial Management System Manual which is presented in Annex 8 of the PIP. These activities will be the responsibility of the Finance Division and are in accordance with Bank requirements.
In order to coordinate and encourage local development in line with the Project process, the PMO prepared a Local Beneficiaries Participatory Development Plan and takes responsibility for putting it into practice (PIP Annex 5). The work is led by a key PMO staff member in cooperation with other staff and external experts, and a team contracted from the Economic Institute, Academy of Social Science of Xinjiang. The Regional and local PMOs will put the plan into effect and supervise it along with progress of Project implementation.
The PIP has been prepared by the Borrower. Among other things, the PIP includes: (a) detailed description of the Project including technical background and rationale; (b) GANNT chart indicating the schedule for implementation of each of the subcomponents of the Project (PIP Annex 18); (c) five-year TBWRC strategic plan and one-year action plan (PIP Annex 1); (d) SIDD development plan for the overall Project and for each subproject area (PIP Annex 4); (e) procurement regulations, arrangements and schedules (PIP Annex 9); (f) financial management system manual including account control procedures and auditing provisions (PIP Annex 8); (g) supervision plan (PIP Annex 10); (h) counterpart funding plan and repayment plan (PIP Annex 14); (i) local beneficiaries participatory development plan (PIP Annex 5); (j) Keping voluntary settlement action plan (PIP Annex 6); (k) resettlement framework guidelines (PIP Annex 7); (1) description of planned MIS system; (m) monitoring and evaluation plan (PIP Annex 15); (n) financial and economic analyses (PIP Annex 13); (o) environmental review (PIP Annex 12); (p) background discussion of engineering (PIP Annex 2) and agriculture aspects (PIP Annex 3); (q) detailed Project cost information (PIP Annex 11); (r) PMO organization and responsibilities (PIP Annex 17); and (s) copies of legal documents: Project Agreement, Development Credit Agreement and Loan Agreement (PIP Annex 19).
The Regional, prefectural and county PMOs will monitor the Project's progress and evaluate the overall impact of the Project and economic and financial benefits for each component. The county PMOs will keep a current account of the physical and financial progress of each of the Project components. Indicators to be taken into account are defined in Annex 1. Financial reports will quantify Project expenditures and claims for disbursement. Information on physical and financial progress will be submitted annually to the prefectural PMOs which will prepare a progress report to be forwarded to the Regional PMO. As part of Project evaluation, annual longitudinal surveys will be undertaken in the Project areas to determine, inter alia, current levels of inputs and production, crop yields, salinity levels, and farm incomes. These surveys will provide data from which to measure the changes resulting from the Project. The ongoing evaluation of the Project will be included in the annual progress reports to be prepared by the Regional PMO for submission to the Bank. The annual progress reports will include a report by the technical advisory group, and will also include: (a) a description of problems and proposed solutions; and (b) a detailed work plan for the next year. The final, broad assessment of the Project's impact will provide the substance for the Implementation Completion Report, to be submitted to the Bank not later than six months following the completion of Loan/Credit disbursements.
In addition to monitoring and evaluation of the physical and financial progress of the various components that would be carried out by the various PMOs and included in the MIS system, monitoring and evaluation of key performance indicators would also be conducted (see Annex 15 of the PIP for the Page 9
Monitoring and Evaluation Plan). Monitoring and evaluation of Project implementation will be carried out from the bottom up, starting with the county PMOs through the prefecture PMOs and ending with the Regional PMO. Baseline surveys of all key indicators will be carried out during 1998.
D: Project Rationale
Alternatives were analyzed with the objective of reducing non-beneficial evapotranspiration at least as much as crop consumptive use would be increased in order to not reduce the downstream flows to the Tarim River. At the same time, the most cost effective alternatives were selected that achieved this primary objective. Many alternatives related to which canals would be lined, what lining techniques would be used, the use of well fields instead of surface reservoirs, the design of wellfields, and drain location and design were considered, and alternatives that best met the water savings and cost effectiveness objectives were selected. 1. Project alternatives considered and reasons for rejection: A project designed solely to improve irrigation and drainage systems, land reclamation and low-yield land improvements in the 5 subproject areas was considered because it would be simpler to implement than the proposed Project which also includes important water management and institutional development objectives. This alternative was rejected because it would perpetuate and exacerbate the existing situation of poor water management that contributes to increased areas of high water tables and salinization, and the further drying up of the Tarim River in its lower reaches. Continuation of existing water management practices would also significantly limit the availability of water for additional agricultural development in the future due to continuing large amounts of wasted water. In addition, the alternative would not build on the progress for improved water management made during Tarim I.
A project that would solely address water management issues, deferring any further irrigation development until water management policies and mechanisms are fully implemented and operational was also considered. This alternative was rejected because it would be impossible to get the prefectures in the subproject areas to agree to the necessary institutional changes without the benefit of the irrigation development. Also the Project benefits would be less and difficult to measure, and the poverty alleviation aspects would be much less.
A project that would be involved in 3 or 4 subbasins rather than 5 was considered because it would somewhat reduce the Project scope and complexity. This alternative was rejected because coverage of the Tarim Basin would be inadequate making basin-wide water management improvements much more difficult to achieve. The Project as now proposed, when combined with the Tarim I, would cover all of the main subbasins in the Basin and therefore increase the prospects for comprehensive, integrated basin- wide water resources management and obtaining the commitments of all concerned prefectures. Page 10
2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned): Sector issue Project Latest Supervision (Form 590) Ratings (Bank-financed projects only) Implementation Development Progress (IP) Objective (DO) Bank-financed Promote agricultural development on 23 state farms in northern Xinjiang Xinjiang Agricultural S S through investment in irrigation, Development Project pastureland development and ($57 million, closed agroprocessing 12/31/94) Rehabilitation and improvement of Yangtze Basin Water S S irrigation and drainage systems, self- Resources Management financing irrigation and drainage Project districts and river basin management ($210 million, started in 1995) Rehabilitation and improvement of Irrigated Agriculture S HS irrigation and drainage systems Intensification Project ($335 million, started in 1992) Rehabilitation and improvement of Tarim Basin Project S S irrigation and drainage systems and (Tarim I) institutional development ($125 million, started in 1 1992) IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
3. Lessons learned and reflected in the Project design. The Bank has assisted in financing 13 water resources and irrigation projects in China over the last 15 years. These projects serve more than 4 million hectares. Generally, these projects have been implemented efficiently, time and cost overruns have not been excessive despite periods of sharp price escalation, and rates of return have equaled or exceeded appraisal estimates. A notable feature of these projects has been the increasing level of local community involvement in planning, design and implementation. The best performing projects have been where water resources bureaus at all administrative levels have had a leading role in project design, planning and implementation.
The Operations Evaluation Department (OED) identifies O&M, water charges, financial autonomy and irrigators' ownership as key issues in irrigation system design and sustainability. The Agriculture Department of the Central Vice Presidency, in their recent irrigation subsector portfolio quality assurance review, has identified inter alia strong government commitment and ownership and beneficiary participation as main reasons for good performance of irrigation projects. Other key lessons from previous water resources projects are that: (a) detailed organizational and staff arrangements should be formulated and agreed before implementation; (b) counterpart funding should be agreed before implementation; (c) project design should support "user pays" principle, and user (farmer) participation should be explicitly built into project planning, implementation and operation; (d) drainage and flood protection investments should include cost recovery from beneficiaries; (e) irrigation and water Page 1 1 conservancy projects should include provision for unified irrigation system management based on the hydraulic (not administrative) units; (f) projects should include institutional development support for the strengthening of provincial and local water resources bureaus; and (g) project management and quality control should be improved.
The 1993 World Bank Policy Paper on Water Resources Management and Chinese Government policy are compatible and emphasize the following principles.
* Water resources should be managed and developed in a comprehensive integrated manner and consider cross-sectoral issues with the goal of ensuring the sustainability of the water environment for multiple uses as an integral part of the country's economic development process.
* Water resources planning and management should be carried out considering the interrelationships between water, land and human resources with the objective of enhancing economic growth and development in an environmentally sustainable manner.
* Water is an economic resource and therefore should be managed in an economically efficient manner.
* The river basin should be the basic unit for planning and managing water resources.
* Water users should participate directly in water resources management and development.
* Water use should be efficient and environmentally sustainable.
The institutional development components of Tarim II have been designed based on these principles.
With regard to raising of counterpart funding, experience from recent projects in China shows that there are often difficulties in raising the needed counterpart funds on time, especially at the county and township level. Care has been taken during preparation to ensure that the Project financing plan is accurate and realistic and that arrangements for counterpart funding are adequate. The XUAR Planning Commission and Finance Bureau have had key responsibility in this regard.
Tarim I has been a highly successful project which has resulted in major benefits to farmers and significant improvements in water and environment management. Tarim II has incorporated some improvements due to lessons learned in Tarim I, including: (a) improvements in canal lining technologies and techniques; (b) modifications to the livestock component including more emphasis on organic fertilizers; (c) more involvement of the Water Resources Bureau in Project decision making and implementation; (d) clearer definition of responsibilities and funding, and strengthening of the existing Tarim Basin institutions; (e) inclusion of more training in the areas of irrigation and water conservancy; (f) more emphasis on commitments for counterpart funding and repayment during preparation. 4. Indications of Borrower commitment and ownership: For Tarim II the Regional, prefecture and county PMOs have already been established and is functioning. Intensive efforts are underway in the Regional Government and in all of the involved prefectures to prepare the Project in an adequate and timely manner. Regulations for the TBWRC were passed by the XUAR People's Congress in December 1997. The Xinjiang Region has demonstrated the capability and commitment to successfully implement Tarim I, a project of somewhat smaller size and scope than the proposed Project, though similar in design. Page 12
5. Value added of Bank support in this Project: Although there is a strong understanding at the Regional level of the need to significantly improve water management in the Tarim Basin, it will be very difficult for the Regional Government to overcome the inertia of existing poor water management practices in the subbasins. The financial and technical support that the Bank would provide will be necessary to achieve the required working relationship between the prefectures and the Regional Government for improved water management. These arrangements would include the acceptance of the overlying principles that: (a) the water belongs to the state; (b) water utilization should be restricted to beneficial use; and (c) the costs for water management would be recovered through water charges.
Although there is considerable enthusiasm in the Region for SIDD development, the Bank's technical and financial involvement will be necessary for the successful establishment of the SIDD institutions and mechanisms. The development of SIDDs for sustainable operation and maintenance of irrigation and drainage systems is a fundamental and much needed reform. The Bank also has substantial experience in irrigation projects in other countries, as well as some experience in China, which indicates that strong farmer participation is critical to the success of SIDDs.
Project preparation and implementation management are areas that present significant room for improvement in water resources development projects in China. This is especially true in the interior provinces such as XUAR. The Banks experience in project preparation and implementation management in China and elsewhere provides large benefits in improved projects.
The Bank is well positioned to assist the Regional and local governments to effectively address these issues while building on the considerable achievements of Tarim I.
E: Summary Project Analysis (Detailed assessments are in the Project file, see Annex 8) 1. Economic and Financial (supported by Annex 4): Project as a whole
Economic Cost-Benefit Analysis: NPV=US$ 49.5 million; ERR = 14.3% Financial Cost-Benefit Analysis: NPV-US$ 119.2 million; FRR= 16.9%
The Project takes a holistic approach, investing in 1.) innovative institutional arrangements for water management at the river basin level as well as at the water user and water supply level of the tributaries, 2.) structural improvement of hydraulic infrastructure and river engineering, 3.) improvement of land currently under cultivation and 4.) reclamation of wasteland to expand irrigation activities.
While the investments can be reasonably well divided into these components, the benefits cannot. For the technical features of the land improvement and wasteland reclamation components to lead to sustainable results the investment in improved institutional arrangements for water management at all levels is essential, i.e. benefits in terms of increased agricultural output accrue not only through the direct investments in this component but also through the investments in the other components.
Given the linkage between the different components, analyses have been carried out at two levels, 1) the overall Project level and 2) for each of the 5 prefectures. For the economic analysis, at the prefecture level costs including investment and O&M costs as well as provision for physical contingencies were compared to economic benefits. The benefits were derived from crop models valued at economic prices Page 13 and assumed cropping patterns. An overall IRR for the Project was estimated based on costs and benefits from each of the subproject areas with overall Project management costs added on. The same analysis was undertaken using financial prices. The main differences result from: (i) labor costs are included in the economic analysis, not in the financial one; (ii) all taxes are excluded from the economic analysis; (iii) economic values of the main output (grain, cotton) are usually lower than the financial ones. These benefits are considered as the quantifiable benefits derived through the new enabling environment related for example to improved institutional arrangements for water and irrigation management, river engineering measures and the environmental component.
Water Savings and Environmental Benefits. In the subproject areas (excluding the Tarim mainstream) there is presently an estimated 3,400 million m3 of non-beneficial evapotranspiration. Project activities including canal lining, drainage improvements and wellfield construction, as well as water management improvements are estimated to result in a reduction of 1,000 million m3 in non-beneficial evapotranspiration. This water would be used as follows: (a) approximately one half of the reduction in non-beneficial evapotranspiration in the subproject areas will be utilized in increased consumptive use of crops in the land reclamation areas and to a lesser extent in the low-yield land improvement areas; these benefits are already quantified in the above-mentioned agricultural benefits of the Project, and; (b) the remaining half of the saved water will be delivered to the Tarim river mainstream mostly from the Aksu drainage which will increase deliveries by about 400 million m3 . Of this water a minimum of about 150 million m3 is estimated to be released downstream into the "green corridor" and the remaining water will be consumptively used by grazing land, forest areas, irrigation and through non-beneficial evapotranspiration. The environmental benefits resulting from the water delivered to the "green corridor" would be the conservation of a sufficient vegetation barrier against progression of the desert. Conservatively, these benefits have not been quantified in this analysis.
Fiscal Impact. Government revenue will increase from four different sources: (i) increased water charges mainly from newly reclaimed land; (ii) agricultural tax on incremental agricultural production; (iii) incremental community development fund, and; (iv) land lease taxes collected on all improved land and reclaimnedareas.
On the other hand, the Government would directly or indirectly subsidize Project farmers by protecting local products against imports. These subsidies are reflected by the difference between economic prices and financial prices, such as for cotton. They have been calculated on the incremental agricultural production due to the Project. Present values for the entire Project life for both fiscal revenues and expenses have been estimated. The impact would be positive: NPV of 320 million Yuan.
2. Technical: The key technical issues for the Project are: (a) comprehensive river basin planning and water resources management for the Tarim Basin and for the tributary subbasins; (b) water balance analyses to evaluate overall river basin management options, and subbasin investment and operation proposals to ensure adequate water availability for downstream purposes; (c) salt balance analyses to evaluate investment and operation proposals for salt reduction and disposal areas; (d) groundwater modeling studies to tie in with water and salt balance studies to ensure that groundwater and surface water interchanges are adequately considered; (e) planning of irrigation and drainage system improvements and extensions to be carried out to ensure that downstream flows from the subbasins are not reduced, that highly saline water does not contaminate usable waters, and that the most cost effective measures are proposed; (f) water supply and demand studies to ensure adequate water supplies to irrigated lands included within the Project; (g) river morphology studies to ensure the suitability and stability of river training, flood control and canal off-take works to be located in the river flood plain; (h) dam safety review of existing and proposed dams impacting on the Project area; (i) improved irrigation and drainage system design; and (j) improved O&M Page 14 programs.All issues have been addressedduring preparation and will continueto be addressedduring implementationthrough technical assistance, research and training programs. 3. Institutional: PMOs have been establishedat the Regional,prefectural and county levels. An MIS will be developedfor Projectmanagement and used at all levels for implementation,monitoring and evaluation. TBWRC, WSCsand WUAs will be establishedand strengthened. With these measuresthe prospectsfor good Projectimplementation and sustainabilityare substantiallyimproved. 4. Social: A Social Assessmentstudy was undertakenduring Project preparation.The results show that the intended Projectbeneficiaries are highly motivatedto participatein the Project and that the target populationof the Projectconsists of 90% poor minoritynationality farmers. A specificaction plan, includedas part of the Local BeneficiariesParticipatory Development Plan (summarizedin Annex 11 and presented in PIP Annex5), has been designedto ensuretheir participation. A special assessmentwas made for the voluntarysettlement program to be implementedin KepingCounty, Aksu Prefecture.A detailed action planis summarized in Annex 12 and presented in PIP Annex 6. The Project was prepared and will be implementedso as to avoid involuntaryresettlement, but if during preparationof annual civil works plans,it is determinedthat such resettlementis unavoidable,the prefectureconcerned will prepare and carry out a ResettlementAction Plan (RAP) on the basis of the ResettlementFramework Guidelines (PIP Annex7).
Socialbenefits of the Project are primarilyrelated to the conservationand expansionof the production base in the Tarim Basin. Irrigatedagriculture is the basis of livelihoodin the area, especially for the poor farners. Maintainingand improvingthe natural resource,institutional and technologicalbasis is essential not only for developmentand povertyalleviation in general,but also for overall quality of life. In addition to reducingpoverty and improvingfood securitythrough increased agricultural production of poor households,the Project would result in: (i) improvedreliability and quality of drinkingwater bringing healthbenefits to the entire villages;(ii) a reductionin labor needed for heavy agriculturalworks (especiallyfor women) due to increasedagricultural mechanization, and; (iii) improvedstandard of living in the townshipsand villages whereelectricity would be providedas a result of the new power stationto be builtin Kizilsu. 5. Environmentalassessment: EnvironmentalCategory [I A [X] B []C A purposeof the Project is ecologicalrestoration and preservationin the Tarim Basin. The Project would not significantlychange the existingwater utilizationpatterns in the Basin. The subproject areas are existingoases where irrigatedagriculture has been underwayfor sometime. Civil works would in most cases be rehabilitationof existingfacilities. New structureswould be in areas alreadysignificantly alteredby human activities. Project environmentaleffects would generallybe positive(i.e. reducing high watertable and salinization areas, and partiallyrestoring and preservingthe "green corridor"),and are Projectobjectives.
Fullenvironmental impact assessmentshave been prepared for all subprojectsin accordancewith Governmentof China EIA requirements.Summaries have been providedto the Bank and are partially incorporatedin Annex 12 of the PIP. Separatehydrological modeling studies for all subprojectareas have alsobeen prepared. 6. Participatoryapproach a. Primary beneficiariesand other affected groups: Theprimary beneficiaries of the Projectare poor minoritynationality farmers. A participatoryapproach has been achievedin two differentways. First,based on the Social Assessmentstudy carried out during Page 15
Project preparation, an action plan was developed with detailed steps on how to involve farmers in Project design, implementation and follow-up operation and maintenance activities. These steps include timely dissemination of information during the various stages of Project design and implementation so that beneficiaries have been and will continue to be able to influence Project components. Feedback mechanisms have been designed to make sure that their opinion will be taken into account by the different levels of Project management and that the Project can be adjusted during implementation.
The second part of the participatory approach relates to the SIDD component which in itself has the aim to render irrigation management more participatory. Through the creation of WUAs, the water users/farmers themselves will be able to take decisions on operation and maintenance, investment needs and water charges. In addition, the creation of WSCs will render the process of water delivery and payment more transparent and will facilitate water users' understanding of costs and management structures b. Other key stakeholders: Other key stakeholders are the government entities at provincial, county and prefecture levels. Each level has its own PMOs and thus has the facility to fully participate in the Project.
F: Sustainability and Risks 1. Sustainability: The Project has been designed to include Project management and institutional arrangements that together will ensure sustainability. Project management arrangements are designed to ensure coordinated, timely and high quality design and implementation of all components. Institutional arrangements are designed to ensure the comprehensive and integrated management of water resources in the Basin. The establishment and strengthening of TBWRC, WSCs and WUAs has the purpose of ensuring sustainable planning and management of water resources within the Basin. The sustainability of the water conservation measures was addressed during preparation through adequate consideration of quality design and implementation mechanisms and will be addressed during implementation by developing adequate operation and maintenance procedures for Project facilities after construction including the introduction of adequate water charges to ensure financial sustainability. 2. CriticalRisks (reflectingassumptions in thefourth columnof Annex 1): Risk Risk Rating Risk Minimization Measure
- Government does not maintain focus on N High-level dialog between Bank improved water resources and land and Chinese government will be management maintained to strengthen current policies and strategies - Water tariffs will not be raised sufficiently to M Water tariffs will be monitored and ensure financial sustainability evaluated during Project implementation. Project Agreement includes a covenant to require that water charges be raised to levels adequate to cover costs of O&M, repair, replacement and a portion of the loan repayment. Page 16
- Project interventions will not primarily benefit N Land allocation procedures and poor households results will be continuously monitored by the PMO. Project Agreement includes a covenant to require that priority will be given to providing reclaimed lands to poor farmers.
- Product prices, especially for cotton, decline M Prices and farmers' incomes will be and are not sufficient to generate net benefits monitored during Project for households, which in turn reduces the implementation. PMO will evaluate poverty alleviation benefits. cropping patterns and recommend changes to more profitable crops to XUAR and farmers
- Project beneficiaries (farmers, prefectures) do M Sufficient preparation of Project not perceive sufficient incentives to change beneficiaries at all levels through institutional arrangements and/or to introduce workshops, study tours, and training technical improvements. The significance of before and during Project preserving the "green corridor" and other implementation. environmental measures is not fully recognized. The importance of adequate operation and maintenance and SIDD development is not perceived.
- Technical and institutional measures, M Institutional and technical measures including TBWRC and SIDD development will will be reviewed and modified as not result in sustainable water use and necessary during Project development. implementation. Project Agreement includes a covenant to require that TBWRC be maintained with TORs acceptable to the Bank. - Increases in agricultural consumptive use will M Monitoring systems will be not be more than offset by decreases in non- included in the Project and beneficial evapotranspiration. River training necessary authority will be vested and water savings measures are not sufficient to with TBWRC for enforcement of generate expected water savings and provide water use allocations. Water sufficient water to the "green corridor". allocation quotas will be established by TBWRC as provided for in legislation. Dikes will be implemented after evaluating the effectiveness of other control structures along the Tarim mainstream. Page 17
- Key inputs are not available M Project performancewill be monitoredon a continuingbasis by the PMO throughthe establishment of a comprehensiveMIS. Annual progressreports will be prepared by the PMO whichprovide detailed informationon the progressof implementationof all Project components. The progressreports will includethe monitoringand evaluationof physical and financial indicators,and the identificationof problemsand solutions.
- Counterpartfunding is not availableon time M The timely availabilityof counterpartfunds will be monitored on a continuingbasis duringProject implementationby the PMOs. Financialmanagement measures establishedby the PMO (PIP Annex 8) includethe internalrequirement that Bank funds would only be utilized when counterpartfunds are also availableas indicated in the the FinancialManagement System Manual (PIP Annex 8). PMO and TBWRCpersonnel is not adequatein M Project performanceis monitored numberand capacity on a continuingbasis. A covenant has been includedin the Project Agreementrequiring adequate numbersof qualifiedexperienced staff in the PMOs and TBWRC.
Overall Risk Rating M Risk Rating - H (High Risk), S (SubstantialRisk), M (ModestRisk), N (Negligibleor Low Risk)
3. Possible Controversial Aspects: An internationalNGO, the LaogaiResearch Foundation, alleged in 1995 and 1996that World Bank projects were benefitingforced labor camps in Xinjiang. The Bank conductedan investigationof the specific allegations,which indicatedthat they were untrue and that Project funds were being used for the purposes intended. The investigationfound that XinjiangProduction and ConstructionCorps (XPCC), which has a broad range of commercialand civilian responsibilities,is responsiblefor administering some prisons and adjacentfarms. To avoid even the appearanceof a link to forced labor,the Bank has stated that it would use XPCC as an implementingagency in future projects only if its commercialand civilian activitiesare clearly separatedfrom it prison managementand other functions. In connection with U.S. Congressionalcommittee hearings on the allegationsin July 1996,the U.S. Treasury Departmentpublicly accepted the findingsof the Bank investigation.It is possiblethat some of these NGO or political groups may raise objectionsabout the Bank continuingto supportagricultural developmentin Xinjiang. Page 18
The preparation team has done its best to ensure that the Project design does not benefit any forced labor camps near Project areas. The Project does not use XPCC as an implementing agency. The Regional Government has confirmed that there are neither state farms nor prisons that will have any benefit from Tarim II and that XPCC will not be involved in any way in Project implementation. State farms in this Region, as an economic entity independent of local administration, are subordinated directly to the Ministry of Agriculture of the central government. Prisons are controlled by the penal system of Ministry of Justice (some are directly controlled by the Ministry, some through the Regional Justice Bureau).
The director of Xinjiang Justice Bureau wrote an official letter to the Bank assuring of no benefit from Tarim II to prisons and state farms, no prison in the Project areas, and not any labor from prisons and state farms to be used for work to be done in the Project.
G: Main Loan Conditions 1. Effectiveness Conditions: Legal agreements including responsibilities for system O&M, and water charge and collection should be signed between the pilot WSCs and the pilot WUAs.
Legal agreements including responsibilities for system O&M, personnel, asset transfer, and water charge and collection should be signed between prefectures and pilot WSCs. 2. Other [classify according to covenant types used in the Legal Agreements.]: The Management Information System software should be fully developed, and installed and operational and in each of the 5 prefecture PMOs by October 15, 1998. The complete MIS should be operational by October 15, 1999.
By December 1 1998, after consultation with each of the prefectures, XUAR, through TBWRC, shall establish annual gross water use quotas for each prefecture.
XUAR shall maintain policies and procedures to monitor compliance with the gross annual water use quotas and furnish annual reports to the Bank by February 28 of each year on the results of such monitoring and take measures to improve rational and efficient water utilization taking into account the Bank's views on the matter.
Reclamation lands will be allocated in priority to poor farmers (about 70% planned to be set aside for the poor). The remaining lands will be retained by the villages and/or contracted.
Land-lease for reclamation lands will be for a minimum of 30 years. Water resource fees and agriculture taxes will be exempted for 5 years. Collective fees will be exempted for 3 years. For poor farmers land lease contract charges will be exempted for 3 years.
By 1999, water charges will be increased to cover the full cost of operation and maintenance, major repair and replacement (over up to 30 years), and a reasonable portion of debt repayment. Thereafter compliance with this requirement will be monitored by the PMO and adjustments in water charge rates will be made as necessary to ensure continued full cost coverage.
A panel of independent experts will review design and implementation of Xinir Dam. Existing dams that supply water to Project areas will be inspected during Project implementation. Required remedial actions as determined by these inspections will be carried out by XUAR using non-Project funds. Large dams (e.g. Wuluwati Dam in Hotan which is under construction) will continue to be monitored by the existing Page 19 independent panel of experts. Copies of inspection reports and independent panel reports will be provided to the Bank.
In order to ensure adequate participation by women in the Project, thirty percent of persons receiving training and undertaking study tours will be women in the aggregate.
The SIDD development plans for each prefecture will be carried out.
By April 1, 2000, an evaluation will be undertaken of SIDD pilots and plans made for SIDD expansion.
WSCs and WUAs will be authorized to collect water charges and will have customary labor taxes transferred to them.
TBWRC will be maintained with terms of reference and composition acceptable to the Bank.
The Project prefectures will furnish O&M plans for all Project irrigation systems to the Bank by December 31, 1999 and thereafter implement them taking into account the Bank's views.
The PMO's and TBWRC will maintain adequate qualified staffing at all levels.
A mid-term review will be undertaken by December 31, 2001.
Project implementation will be carried out in accordance with the Local Beneficiaries Participatory Development Plan (PIP Annex 5).
The settlement in Keping County will be carried out in accordance with the Keping Voluntary Settlement Action Plan (PIP Annex 6).
XUAR will ensure that all Project works are planned and implemented so as to avoid resettlement, but if during preparation of annual civil works plans, XUAR determines such resettlement is unavoidable, XUAR will ensure that the prefecture concerned prepares a RAP on the basis of the Resettlement Framework Guidelines (PIP Annex 7) and carries out such RAP as shall have been approved by XUAR, and if 200 persons or more are involved, by the Bank.
Feasibility studies for fertilizer mixing plants will be prepared prior to their implementation. Such plants will not be constructed unless the Bank is satisfied with their feasibility, based on the studies.
An independent technical advisory group will review the Project annually.
A masterplan for Bosten Lake and the Kaidu catchment will be prepared by December 31, 1999;
A masterplan for the Tarim Basin and tributaries will be prepared by December 31, 2001.
In order to control cotton pests, cotton plantings will be monitored with annual reports being sent to the Bank by February 28 of the following year; if the cotton plantings would exceed 40% of the total farmland in any county, XUAR will take all reasonable measures with the view to limiting the cotton plantings so as to control cotton pests.
IPM training will be implemented for farmers and technicians in Project areas in accordance with a program and schedule acceptable to the Bank. Page 20
The PMO will furnish to the Bank by February 28 each year; (a) annual reports which include progress reports, technical advisory group reports, monitoring and evaluation reports for the previous year; and (b) by October 1 each year action plans for the upcoming year.
H. Readiness for Implementation
[X] The engineering design documents for the first year's activities are complete and ready for the start of Project implementation.
Detailed preliminary designs have been prepared for all Project features. Detailed designs for the retroactive financing period will be completed by June 1998. Detailed designs for the first year of implementation will be completed by August 1998.
[X] The procurement documents for the first year's activities are complete and ready for the start of Project implementation.
Standard bidding documents agreed to by the Chinese government and the Bank will be used. Bidding documents for each civil work will be completed at the same time as the completion of the detailed designs.
[X] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality.
I. Compliance with Bank Policies
[X] This Project complies with all applicable Bank policies.
OP 7.50, Projects on International Waters. Tarim II involves improvements to existing irrigation and drainage systems, land reclamation and low-yield land improvements along the Aksu River which originates in the Kyrgyz Republic and the Kashgar River which originates in the Kyrgyz Republic and in Tajikistan. At the Project Concept Review Meeting (held on February 20, 1997) it was decided to request an exception to the requirement that the two upstream riparian states be notified of the Project and that the exception be sought on the basis of paragraph 7.(a), "Exceptions to Notification Requirement" of OP 7.50, "Projects on International Waters". Para. 7.(a) of OP 7.50 provides that the notification to the other riparian states of a proposed Project is not required if the Project involves minor additions or alterations to an existing scheme that require rehabilitation, construction or other changes that in the judgment of the Bank: (i) will not adversely change the quality or quantity of water flows to the other riparians; and (ii) will not be adversely affected by the other riparians' possible water use. The East Asia and Pacific Regional Vice President approved the exception on August 18, 1997.
The subprojects to be built as a part of the Tarim Basin II Project in the Aksu and Kashgar drainages are rehabilitation and modification of existing schemes, and not new projects. The amount of water diverted from these rivers would not be increased. The civil works would include rehabilitation of main and secondary systems (lining of canals, etc.), and construction of tertiary irrigation and drainage systems to develop some additional dry land and to improve low-yield lands. A specific preparation requirement of the Project is that additional consumptive use of water on agricultural lands be offset by improvements in efficiencies (reduction in losses) of existing irrigation and drainage systems such that the net impact on the rivers is zero.
As this Project is located in China, the downstream riparian state, it will have no impact whatsoever on the quality or quantity of the water flows to the two upstream riparians. Although it is theoretically Page 21 possible that the Project could be affected by any use which the upstream riparians might make of t1he water flows, the likelihood of such an effect is nil at the present time and for the foreseeable future.
OD 4.20.1 A Local Beneficiaries Participatory Development Plan was prepared by the PMO and is included in Annex 5 of the PIP. A summary of the plan is provided in Annex 11. Almost ninety percent of the Project beneficiaries belong to minority nationalities which thus are the primary target group of the Project. For this reason, the plan is primarily but not exclusively geared towards the minority nationalities in the Project area.
The purpose of the plan is to help ensure a culturally compatible development in the Project areas where primarily minority nationalities live, based on the informed participation of the beneficiaries themselves. It intends to establish a participatory mechanism in Project management, with clear regulations and rules for beneficiaries participation in all of the Project's processes. It also aims at building farmers' commitment and capacity to participate in Project decision-making. The plan specifies what institutional arrangements will be addressed and incorporated in the Project for its intended beneficiaries, how they will be carried out and monitored, and how farmers will be able to manage the process of change as the Project is implemented.
In order to coordinate and encourage local development in line with the Project process, the PIVK prepared the Local Beneficiaries Participatory Development Plan and takes responsibility for putting it into practice. It is based on the outcomes of a Social Assessment Study carried out by the Economic Institute, Academy of Science of Xinjiang.
In the Project process, the PMOs at the various levels will fulfill their duties in the following aspects:
(1) disseminate among the rural households about the Project aims, scopes, contents/ components, schedules/timing, and implementation arrangements, so that local beneficiaries caik make their own choices regarding Project activities and make decisions on arrangement of Project components;
(2) pay special attention to social issues identified in relation to Project design and implementation, resettlement (voluntary and involuntary, if applicable), adjustment of water charges, land allocation, etc., so as to adapt the Project components to local circumstances and needs and avoid or minimize any possible negative impact;
(3) coordinate and arrange farmers' labor input, collected funds, and other kinds of private investment in the Project;
(4) supervise allocation of reclaimed and improved land to farmers;
(5) supervise training programs for beneficiaries;
(6) gain feedback information from beneficiaries and incorporate it into Project evaluation and management;
(7) monitor Project benefits.
' For this project, the term "ethnic minorities"as used in OD 4.20 has the same meaning as the term "Minority Nationalities"referred to in the ChineseConstitution. Page 22
OD 430, InvoluntaryResettlement. At the time of appraisalno involuntaryresettlement needs could be identified.The Project contains componentsof water conservancy,land reclamation,low-yield land improvement,construction of wellfieldsand power plants, transmissionlines and buildings,which could but are unlikely to, adversely affect individualsor communalland or housing.Most of the construction will takeplace in uninhabitedwasteland (notably Xinir Reservoir,the wellfields,power plants and most of the canals)around the villages and townships.The designs for the main canals have been completed andit was shown that they will not necessitateany resettlement.Designs of lower-levelcanals and drains, however,can be finalized only duringthe Project and althoughno resettlementdue to these structures is anticipatedat this stage, in case such would occur ResettlementFramework Guidelines have been developedby the XUAR Governmentand approvedby the Bank.The Guidelinesare in full compliance with OD 4.30 and with Chinese laws and regulations.If during implementationit is found that land acquisitionor adverse effects occurto people due to civil works(including canals, drains, wells, power plants, transmissionlines, buildings,etc.) in the Project areas, the governmentof XUARwill develop a resettlementaction plan on the basis of these Guidelinesto ensure equitableand effective treatmentof resettlementissues underthe Project. Annex 7 to the PIP providesthe SettlementFramework Guidelines.
VoluntarySettlement. A voluntary settlementcomponent is includedin the Project in Keping County in Aksu Prefecture.The voluntary settlementwill affect 2,000 householdsor an estimated 10,000 people. Annex6 to the PIP providesthe "KepingVoluntary Settlement Action Plan", and Annex 12 provides a summaryof the plan.
T-heobjective of the voluntarysettlement is to improve poor farmers' living standards.Keping County is designatedas a national povertycounty. The area from which farmerswill move out has very limited land andwater resources which result in poor agriculturalyields and very low farmer incomes. Relocationof part of the farm populationfrom the arid basin to a newly establishedirrigation district is the only way to mitigatepopulation tension and poverty pressure.There are two groups of beneficiaries:(a) those poor farmerswho will relocate and be providedwith a new and better livelihoodin the Project area; and (b) those poor farmers who stay behind in a situationof less populationpressure and resource scarcity. Settlers will be selectedon the basis of demonstratedneed and only those that desire to relocate and apply will be considered.
OP 4.37, Safety of Dams. An independentreview panel will review the designand implementationof XinirReservoir. A suitableconstruction supervision plan for XinirReservoir has been adopted. Existing damsthat serve water to Project facilitieswill be inspectedby an independentreview panel and remedial actionswill be carriedout to ensure their sustainedand safe operation.
OP/BP 10.02 FinancialManagement. During appraisalthe financialmanagement systems to be used during Project implementationwere reviewedand found to be acceptable. Acceptablefinancial management,account control, financial managementreports and auditingprocedures have been adopted for use during the implementationof the Project. Annex 8 to the PIP presentsa FinancialManagement SystemManual (FMSM)with all the necessarydetails for these aspects. The PMOs at each level (Region,prefecture, county) have qualifiedand experiencedstaff to producereliable accountson Project activitiesin a timely manner. The FMSM indicates:(a) clear lines of authority,well-defined responsibilitiesand appropriatesegregation of duties for the PMO Chief,the Finance DivisionChief, the ProjectAccountant, the DisbursementOfficer and the Cashier;(b) clear written standardsand procedures for financial management,account control and auditing;(c) clear policies and proceduresfor managementof the special account;(d) proceduresfor easily availableaccess to supporting documentationon Statementsof Expenditures(SOEs); (e) clear plans and procedureson the sources and managementof counterpartfunds at each level; (f) clear control and managementof assets, including fixed assets,cash, bank accounts, inventories,accounts receivable, intangible assets and deferred assets at Page 23
each level; (g) clear control and managementof expendituresand disbursements. As presented in the FMSM financial statementswill be prepared and providedto the Bank, including:(a) sources and uses of funds;(b) costs by activities showingactual, budgetedand variances;(c) statementof unit variances comparingactual and planned quantitiesand costs; (d) Project expenditureforecasts for six monthsof activities;(e) special accountreconciliation statement; (f) statementof expendituresby disbursement category; (g) balance sheet; (h) current accountbreakdown; (i) procurementreport; (j) Project progress report includingboth physical and financial,monitoring and evaluation,and key performanceindicators.
Task Team Leader/Task Manager: Douglas Olson- 2 7
Sector Manager/Director: Geoffrey B. Fox /
Country Manager/Director: Yukon Huang Annex I Project Design Summary China: Tarim Basin II Project
NarCatiVe Summary Key Performance Monitoring and Evaluation Critical Assumptions Indicators I CAS Ch$eetives: (Goal to Bank Mission)
1. Sustainable 1. Improved institutional 1. Adequate laws in - Stable political develop,mentan d arrangementsfor water existence; Annual review transition and -mianagementof water and resources management of statistics from Ministry maintenance of overall other natural resources. implemented;increased of Agriculture, Ministry of reform program in water availability;more Water Resources, and post-Deng era efficient water use and provincial government management data - Govemment maintains focus on 2. Pove alieviation 2. Reduction in poverty 2. Comparisonof census improvedwater level of participating indicators resources and land (see footnotel) households; management
- No large extemal shocks that would affect terms of trade, current account balance or foreign exchange rates
lFroject Development (Objectiveto Goal)
I. Estabolishmechanisms 1. Water use allocations Project Impact Evaluation 1. Financial and social for sus"'a-nableuse, for the subbasins are through: sustainability of water development and established and met in management managemeI^tof water and order to maintain flows to - Water and salt subprojects land reso-urcesin the the Tarim river monitoring data from |TarirnRasin Project monitoring system in annual progress reports
2. Increase in incomes of 2 a. Changes in household - Activity reports by new 2 a. Adequate ru-ralpoor minority incomes of a longitudinal water management development and farm'ers through irrigated stratified random sample institutions; implementation agriculture development of households who will capacity by new water and access to more land. participate in the Project - prefecture/provincial management as compared to a similar statistics organizations sample of households not participating in the Project
The sector-specificinstruments mentioned in the CAS to achieve these objectivesare: a) Promotionof better utilization of marginal agriculturalland throughsustainable techniques, b) Incorporationof majorwater schemes into future projects that includeinstitutional reform and user participationas integral components,c) Targetingof the absolute poor through a series of investment projects. 2 b. Net economic benefits - Baselinesurveys will be 2 b. Appropriate of increasedagricultural carriedout duringthe first targeting of Project production year of the Project, prior to interventionsto rural new land being brought poor/minority 2 c. Numberof households into productionand then households havingreceived reclaimed followedup every two land. years thereafter.The surveyswill be longitudinal,i.e. the same householdswill be surveyedover the years.
3. Preservationand partial 3. Amount of water - Bi-annualBank missions 3 a. River training and restorationof the "green deliveredbelow Daxihaizi water savings measures corridor"in the lower Reservoir. are sufficientto reaches of the Tarim generateexpected River water savings
3 b. Increasesin agriculturalCU will not be more than offset by decreasesin non- beneficialCU Outputs: (Outputsto Objective)
1. Agricultural production 1. Total and per mu - county and township - Product prices, on lands reclaimed for agricultural production in statistics especially for cotton, irrigation reclaimed areas are sufficient to - Results of household generate net benefits 2. Yields improved on 2. Total and per mu income surveys for households low-yield lands agricultural production in improved areas
3. Restructured water 3. Following is in place: - Activity reports by new - Farmers have management set-up for TBWRC, WSCs and water management sufficient incentives for the Tarim Basin, WUAs completely institutions land improvements, including a) strengthening institutionalized, water loan repayment and to of Tarim Basin Water charges cover all costs - Meetings with take over O&M of Resources Commission, including depreciation; representatives of Project facilities b) strengthening of monitoring and financial TBWRC, WSC & WUA hydrological monitoring systems are in place. during Bank missions - Sub-basin prefectures system, and c) upstream and decentralization of downstream cooperate decision making to in TBWRC appropriate levels, d) adequate financing system Project Inputs: (budget for each (Componentsto Components/Sub- component) Outputs) components:(see Annex 2 for Project description)
1. Water Conservancy la. Irrigationand drainage Project MIS; annual Key inputs are measuresincluding systemsinstalled in progressreports available. irrigationand drainage Bayingolarea. (US$17.5 systemrehabilitation and million) DisbursementRecords PMOpersonnel is improvements adequatein number and lb. Irrigationand drainage Audit Reports capacity systemsinstalled in Aksu area. (US$45.9million) Bank missions The Project is owned by the differentlayers I c. Irrigationand drainage Physical inspection of stakeholders systemsinstalled in (communities/farmers/p Kashgar area. (US$26.2 Group of local experts; refectures/provincial million) annual reviewstogether government) with internationalexperts 1 d. Irrigationand Counterpartfunding is drainagesystems installed Beijing-basedBank staff; availableon time in Kizilsu area. (US$17.4 annual specific million) supervisionof disbursementand 1 e. Irrigationand procurement drainagesystems installed in Hotanarea. (US$13.3 million)
2. Land reclamationfor 2 a. Land reclamation irrigationpurposes of completedin Bayingol presently non-productive area and land transferred lands with a total area of to farmers.(US$8.0 75,350 hectares million)
2 b. Land reclamation completedin Aksu area and land transferredto farmers. (US$21.5 million)
2 c. Land reclamation completedin Kashgararea and land transferredto farmers. (US$18.6 million)
2 d. Land reclamation completedin Kizilsu area and land transferredto farmers.(US$5.7 million) 2 e. Land reclamation completed in Hotan area and land transferred to farmers. (US$6.9 million)
3. Land improvement of 3 a. Low-yield lands presently low-yield improved in Bayingol irrigated lands with a total area. (US$5.0 million) area of 105,350 hectares. 3 b. Low-yield lands improved in Aksu area. (US$8.5 million)
3 c. Low-yield lands improved in Kashgar area. (US$7.0 million)
3 d. Low-yield lands improved in Kizilsu area. (US$3.0 million)
3 e. Low-yield lands improved in Hotan area. (US$5.6 million)
4. Agricultural support 4.1 a Completion of Progress reports from services investments in fixed prefectural PMOs Agricultural Hardware infrastructure
4.1 Seed production, 4.1 b Financial status of Financial statements of processing and enterprises enterprises distribution 4.1 c Availability of Longitudinal household improved seed in Project surveys areas
4.2 Agricultural extension 4.2 a Completion of PMO progress reports infrastructure investments in fixed infrastructure
4.2 b Improved delivery of Longitudinal household services surveys
4.3 Agricultural 4.3.a Procurement of PMO progress reports mechanization equipment
4.3 b Improved Longitudinal surveys availability of mechanical equipment 4.4 Fertilizer mixing 4.4 a Completionof PMO reports stations feasibilitystudies
4.4 b Completionof PMO reports investmentsin fixed infrastructure
4.4 c Financial status of Financial statements of enterprises enterprises
4.4 d Increasedavailability Householdsurveys of compoundfertilizer in Project areas
4.5 Livestock 4.5 a Procurementof stock PMOreports development in accordancewith plans
4.5 b Increasedavailability PMOreports of livestockin Project Householdsurveys areas
Agricultural Software
4.6 InternationalStudy 4.6 Completionof tours in PMOreports Tours accordancewith plans
4.7 Domestic StudyTours 4.7 Completionof tours in PMO reports accordancewith plans
4.8 Domestic Training 4.8 a Completionof PMOreports (IPM) trainingprograms in accordancewith plans
4.8 b Increasedawareness Householdsurveys of IPM approach
4.8 c Changesin agro- townshipand countydata chemicalconsumption householdsurveys patterns
4.8 d Complianceof townshipand county data extensionstores with nationalagro-chemical guidelines
4.9 DomesticTraining 4.9 a Completionof PMOreports (other) trainingprograms in accordancewith plans 4.9 b Dissemination of Household surveys training messages amongst farmers
4.10 Research 4.10 Completion of PMO reports research topics
(Total allocation: US$16.8 million)
5. Environmental 5. a Tarim Basin Master PMO reports Protection and Plan finalized by end of Monitoring year 1. mainly geared toward monitoring of quality and 5. b Tarim Basin Master Physical inspection quantity of ground and Plan implemented: surface water. Environmental monitoring stations and facilities have been set up at appropriate sites. Data are available in a timely manner.
(Total allocation: US$10.8 million)
6. Institutional Development and Support
6.1 Establishment of Self- 6.1 a. By April 2000, at PMO reports financing Irrigation and least one SIDD pilot is Drainage Districts established and Financial statements of (SIDD) including WlAs. functioning in each WSCs and WUAs prefecture. Household surveys 6.1 b. Study tours undertaken by appropriate staff of implementing Workshop report agencies and WUAs according to Project plans.
6.1 c A workshop held in April 2000 to evaluate the pilot and decide on expansion.
Total allocation: US$ 0.72 million 6.2 Applied 6.2 a Researchand PMOreports Research&Development developmentservices and Studiesfor adaptive completedand functioning and appliedresearch in Bayingol,Aksu, designedto improve the Kashgar,Kizilsu, and irrigation,drainage, Hotan prefectures. agriculturaland environmentalconditions 6.2 b Researchresults PMOreports and efficiency. published(when applicable)and disseminated.
Total allocation:US$ 2.79 million
6.3 Trainingand 6.3 a Specifiednumber of PMO reports Technical Assistance to study tours undertaken to strengthen the technical the appropriate and institutional features destinations. of the Project and to ensure its sustainability 6.3 b Specified number of PMO reports farmers, WUA, WSC, TBWRC and PMO staff at all levels trained
6.3 c Adequate number of PMO reports women trained Household and focus group surveys Total allocation: US$ 3.43million
6.4 Management 6.4 a All hardware and PMO reports Information System to software installed. support the development, testing and installation of 6.4 b MIS is functioning Physical inspection a complete MIS for the and reports, planning, prefectures including report generation as well both hardwareand as use of databasestakes software. place on a continuing basis.
Total allocation:US$ 8.28 million 7. Tarim Basin Water 7 a TBWRC is created and PMO reports Resources Commission carries out its duties with Support to create and respect to planning, policy TBWRC reports strengthen TBWRC; setting and overall includes Tarim River management of water and Works related natural resources for river training and of the Tarim Basin flood control measures on (US$ 5.4 million) mainstream of the Tarim River to improve water 7 b All Tarim River works management and delivery components are completed of water to the lower and functioning according reaches. to the design and specifications of the component (US$7.4 million)
Total allocation: US$12.8 million
8. Regional 8. a All hardware and PMO reports Management software installed. component to support the Physical inspection development, testing and 8. b MIS is functioning installation of a complete and reports, planning, MIS for the Project report generation as well including both hardware as use of databases takes and software; to establish place on a continuing Regional training centers; basis. and to provide institutional development 8. c Regional training support to the prefectures, centers in Urumqi are incl. training, TA and established and study tours. functioning.
8. d The existing training center in Kashgar is rehabilitated and functioning.
8. e The respective study tours, training and research are carried out.
(Total allocation: US$6.9 million) Annex 2 Tarim Basin II Project Detailed Project Description
The Project will operate in five prefectures, 22 counties of southern Xinjiang Uygur Autonomous Region (XUAR) in the Tarim River Basin in the subbasins of the Hotan, Kashgar and Aksu rivers (tributaries to the Tarim River) and the Kaidu/Konque river subbasin (a separate river system from the Tarim), and the area of the Tarim River mainstream, which is located in two of the same prefectures.
1. Water Conservancy - US$120.3 million
Works include construction of 3 headworks diversion structures, construction or improvement of about 740 km of trunk and main canals, excavation of around 850 km of main drains, construction of 1 reservoir with capacities of 98 Mm3, establishment or expansion of 14 wellfields with a total of about 700 wells with associated canal systems, and provision of a 2.5 m3 /s pumping station. Electrical power would be increased through provision of two hydropower stations of 6 and 4 MW capacity respectively, and provision of 112 km of transmission lines and transformers.
The features of the water conservation work to be carried out in Tarim II, are presented in the following table. A detailed tabulation of all water conservancy, land reclamation, low-yield land improvement, and river engineering works to be implemented under Tarim II is presented in Annex 2 of the PIP.
Bayingol Aksu Kashgar Kizilsu Hotan Total Headworks (No.) 2 1 3 Trunk/main canals (no./length)* 2/50 10/246 12/253 7/104 6/86 37/739 Main drains (km) 8 239 473 88 40 847 Reservoirs (No.) and live 1/98 - - - - 1/98 storage (Mm3) Wellfields (No.) and well 1/79 3/179 3/150 2/90 5/198 14/696 numbers (No.) Pumping stations (No.) and - 1/2.5 - - - 1/2.5 capacity (m3 /s) Hydropower stations (kW) 4,000 6,000 10,000 Transmission line (km) 38 213 25 276 *Trunk and main canals include an unspecified number of hydraulic structures.
About 700 km of canals will be lined, of which 433 km with the use of 0.5 mm thick welded sheets of geomembrane protected by concrete or local materials. The proposed types of canals for the Project include cast in-situ concrete; geomembrane with precast concrete; cobble with mortar; geomembrane with cast-in-situ concrete; geomembrane with dry cobble; geomembrane with cobble and mortar; geomembrane with earth; and geomembrane with grass turf. The proposed general work for each prefecture is as follows:
Bayingol Prefecture - US$17.5 million
The Bayingol Prefecture water conservation components would include enlargement and top lining of the side slopes of the Korla-Tarim (Korta) Canal - Work will consist of raising the existing lining for 17.8 km to increase the design flow of the Korla-Tarim Main Canal from 30 to 35 m3/s.
Also the West Main Canal with a length of 32.1 km will be rehabilitated. The existing lining installed between 1993 and 1995, consisting of precast concrete panels, has experienced problems from high ground water, frost heave, and problems with algae growing in the bottom of the canal. The precast concrete lining segments will be removed and a geomembrane placed over a sand and gravel layer about 40 cm thick, and the precast concretepanels will be replacedas a protective cover for the geomembrane.
To provide additionalirrigation storageand hydropowerfrom the irrigationwater releases, the Xinir dam and regulating reservoirwill be constructedwith a live storagecapacity of 98 Mm3. The dam will have a maximumheight of 18 m and a length of 12.2km.
Aksu Prefecture - US$45.9 million
The Aksu Prefecturewill improve or reconstructthe wholeor sections of 10 main canals, 246 km in lengthwith capacitiesranging from 6 to 65 m3/s together with the associatedstructures. Two hundredthirty nine kilometersof main drainswill be excavatedwith capacitiesranging from 0.4 to 4 m3/s. A pump stationwill be constructedat Laoqilangwith a capacity of 2.5 m3/s and a 6 km of canal to serve 2650ha of irrigationland. Wellfieldswill be establishedat three locationswith a total of 179 wells, associatedcanals, structuresand powerlines.
Kashgar Prefecture - US$26.2 million
The work in the Kashgar Prefectureincludes work to improveor rehabilitatetwo headworksstructures, the Tashimilike (80 m3 /s) and the Mihuali(75 m3 /s); reconstructtwo trunk canals with capacitiesof 60 and 75 m3/s, with a total lengthof 32.5 kin; and ten main canals, 217 km in length,with capacitiesfrom 15 to 60 m3/s to be lined.Drainage improvement would includeexcavation or improvementof about 473 km of drains with capacitiesof 1.5 to 8 m3 /s. Three wellfields would be establishedwith a total of 150wells, associatedirrigation canals, structuresand power lines.
Kizilsu Prefecture - US$17.4 million
The Kizilsu Prefecturework includesconstruction of the Qiakmakeheadworks to increaseits capacity from 30 to 40 m3 /s. The Mihualiheadworks discussed in KashgarPrefecture is a shared structurebetween the two prefecturesand will providebenefits for Kizilsu as well. The work includeslining of a portionof a main trunk canal, the Kushan Main General Canal, which is a shareduse with KashgarPrefecture and six additionalmain canals.
Hotan Prefecture - US$13.3 million
Work to be accomplishedin the Hotan Prefectureincludes liningsix main canals with capacitiesranging from 5 to 60 m3 /s and a flood channelwith a capacity of 80 m3/s with a total lengthof 87 km, and includingthe constructionof 34 hydraulicstructures. Drainage includesexcavation and rehabilitationof two main drains increasingtheir capacitiesfrom 0.5 to 1 m3/s and 0.46to 2 m3/s respectivelyover a total length of 40 km. Wellfieldswould be establishedat 5 locations with a total of 198 wells and the associatedirrigation canals, structuresand power lines.
2. Land Reclamation - US$60.7 million
Reclamation of presently non-irrigated land would cover 75,334 ha. Land reclamation would involve bringing into irrigated cultivation areas of wasteland within or adjoining existing oases. The following table summarizes the land reclamation investments for all prefectures.
Land Reclamation Bayingol Aksu Kashgar Kizilsu Hotan Total Land reclamation area (ha) 10,000 22,667 26,667 8,000 8,000 75,334 Lateral canal (km) 103.48 373.3 419.8 143 190.5 1,230.08 Lined (km) 103.48 47.4 419.8 143 190.5 904.18 Field canal (km) 522.8 686.8 839.6 396 440 2,885.2 Lined (km) 839.6 48 887.6 Structures(no.) 853 3,280 3,275 1,390 5,960 14,758 Roads (km) 1,002 363.3 384 365.3 2,114.6 Bayingol Prefecture - US$8.0 million
Land reclamation will cover an area of 10,000 ha and will include about: (a) 625 km of canals of which 103 km will be lateral canals and 522 km will be field canals; (b) 303 km of drains of which 44 will be lateral drains and 259 will be field drains; (c) 745 bridges and 334 gates; and (d) 1,768 ha of land leveling.
Aksu Prefecture - US$21.5 million
Land reclamation will cover an area of 22,700 ha and will include about: (a) 1060 km of canals of which 373 km will be lateral canals, and 687 km will be field canals; (b) 841 km of drains of which 265 will be lateral drains and 576 will be field drains; (c) 1120 bridges, 765 culverts and 1305 gates; (d) 42,000,000 m3 of land leveling; and (e) 1002 km of farm roads.
Kashgar Prefecture - US$18.6 million
Land reclamation will cover an area of 26,670 ha and will include about: (a) 1526 km of canals of which 266 km will be branch canals, 420 km will be lateral canals, and 840 km will be field canals; (b) 947 km of drains of which 92 will be branch drains, 244 will be lateral drains and 611 will be field drains; (c) 409 bridges, 1504 culverts and 1206 gates; (d) 20,000,000 m3 of land leveling; and (e) 363 km of farm roads.
Kizilsu Prefecture - US$5.7 million
Land reclamation will cover an area of 8,000 ha and will include about: (a) 661 km of canals of which of which 122 km will be branch canals and 143 km will be lateral canals, and 396 km will be field canals; (b) 375 km of drains of which 58 will be branch drains, 151 will be lateral drains and 168 will be field drains; (c) 732 culverts and 658 gates; (d) 8,000 ha of land leveling; and (e) 595 km of farm roads.
Hotan Prefecture - US$6.9 million
Land reclamation will cover an area of 8,000 ha and will include about: (a) 723 km of canals of which 93 km will be branch canals, 190 km will be lateral canals, and 440 km will be field canals; (b) 108 km of lateral drains; (c) 233 bridges, 213 culverts and 5514 gates; (d) 7,000,000 m3 of land leveling; and (e) 365 km of farm roads.
3. Low-Yield Land Improvement - US$29.1 million
Low-yield land improvement would cover an area of 105,334 ha. Improvement would focus on areas where yields are presently low due to high watertables, salinity and inadequate land leveling. The following table provides a summary of the investments.
Low-yield Land Improvement Bayingol Aksu Kashgar Kizilsu Hotan Total Improvement area (ha) 16,667 32,000 26,667 10,000 20,000 105,334 Lateral canal (km) 136.23 259 54.13 144 475 1,068.36 Lined (km) 136.33 54.13 144 160 494.46 Field canal (km) 375.24 413 138.9 365 867 2,159.14 Lined (km) 138.9 315 453.9 Structures (no.) 1,388 1,456 735 1052 300 4,959 Roads (km) 268 268 Bayingol Prefecture - US$5.0 million
Low-yield land improvement will cover an area of 16,670 ha and will include about: (a) 511 km of canals of which 136 km will be lateral canals and 375 km will be field canals; (b) 842 km of drains of which 145 will be lateral drains and 697 will be field drains; (c) 333 bridges, 811 culverts and 1055 gates; and (d) 1,333 ha of land leveling.
Aksu Prefecture - US$8.5 million
Low-yield land improvement will cover an area of 32,000 ha and will include about: (a) 672 km of canals of which 259 km will be lateral canals, and 413 km will be field canals; (b) 834 km of drains of which 310 will be lateral drains and 524 will be field drains; (c) 283 bridges, 605 culverts and 568 gates; and (d) 21,000,000 m3 of land leveling.
Kashgar Prefecture - US$7.0 million
Low-yield land improvement will cover an area of 26,670 ha and will include about: (a) 192 km of canals of which 54 km will be branch canals 138 km will be lateral canals, and 93 km will be field canals; (b) 929 km of drains of which 507 will be branch drains, 177 will be lateral drains and 245 will be field drains; (c) 6 bridges, 527 culverts and 629 gates; and (d) 11,700,000 m3 of land leveling.
Kizilsu Prefecture - US$3.0 million
Low-yield land improvement will cover an area of 10,000 ha and will include about: (a) 509 km of canals of which 144 km will be lateral canals, and 365 km will be field canals; (b) 598 km of drains of which 36 will be branch drains, 162 will be lateral drains and 401 will be field drains; (c) 427 culverts and 626 gates; and (d) 10,000 ha of land leveling.
Hotan Prefecture - US$5.6 million
Low-yield land improvement will cover an area of 20,000 ha and will include about: (a) 1342 km of canals of which 475 km will be lateral canals and 867 km will be field canals; (b) 240 km of lateral drains; (c) 300 culverts; and (d) 20,000 ha of land leveling.
4. Agriculture Support Services - US$16.8 million
Cropping Patterns. Crop production on wasteland reclaimed under the Project and incremental production on low-yield areas improved under the Project will be virtually the sole source of financial and economic benefits to justify the investments. Cropping patterns will be similar to those presently employed in the areas, with some adjustment to allow for continuing salinity problems in the early years of the Project. The main crops in all areas will be grains (mainly wheat) and cotton which, in general, will account for around 80% of sown area. Other crops include vegetables, fruits and other cash crops such as alfalfa, the patterns of which vary according to region and proximity to markets. To build up soil organic matter, planting of green manure crops is being encouraged by extension agents. Based on current practices, it is expected that around 20% of total sown area will be used for green manure production in any given year. The most popular method of green manure production is through the planting of clover as a second crop to wheat. As mentioned, alfalfa is also planted but it is not as attractive to farmers as an annual manure crop. The projected cropping patterns in the Project counties presently and after completion of the Project are shown in the table: Percentage of Cultivated Land Planted per Crop
Grain Cotton Other (wheat + corn) Bayingol Prefecture Current 52% 20% 20% Future 51% 32% 17% Aksu Prefecture Current 53% 36% 11% Future 51% 38% 11% Kisilzu Prefecture Current 44% 21% 8% Future 58% 28% 14% Kashgar Prefecture Current 50% 30% 20% Future 40% 40% 20% Hotan Prefecture Current Future 40% 40% 20%
To exercise primary control over pest build-up, all counties will monitor cotton plantings so that if they are likely to exceed 40% of planted area within their respective counties, they will take measures to limit plantings to appropriate levels. Most of the grain crop will be wheat which, on average, will account for around 40% of cultivated area. The other main grain crop is maize, either double cropped with wheat or planted after it. Rice would be grown, particularly as a reclamation crop, in all the prefectures, except Hotan, and sugar beet in Bayingol and Aksu during the reclamation of saline soil areas. Forage/green manure would take up about 20 - 25% of crop area but most green manure is clover planted as s second crop to wheat rather than alfalfa (which generally only accounts for around 5% or less of total cropped area). Regarding the distribution of reclaimed waste land; current practice is for 70% of new land to be made available for allocation to individual farm families and the remaining 30% being allocated to township enterprises and collectives and this will be followed for new land created as a result of the Project. New land will be provided preferentially to the poorest families within the vicinity and, to the extent possible, the areas of land allocated will be consistent with the labor and other resources available to the recipients. In support of the agricultural development of reclaimed land and improvement of low-yield land, the Project would finance investments to fill critical gaps in local agricultural support services. The types of investments vary from prefecture to prefecture depending on local conditions but, in general, they include some or all of the following: (a) improvements in seed production, processing and distribution. The scope of investments varies between the prefectures but they are mainly directed at improving breeding and multiplication of hybrid seed for cotton and grains, improved processing and quality assurance and improved storage and distribution. The seed production, processing and distribution investments would strengthen the capacity of existing facilities to meet farmers' requirements for improved seeds. The bulk of seed production will be by local farmers contracted to the seed corporations, the latter being mainly responsible for seed processing, testing, quality control and distribution; (b) improvements in prefectural and county level agricultural extension infrastructure. Investments will include rehabilitation of existing or construction of new county and township level extension stations, provision of office equipment, development of improved soil testing services and provision of vehicles. All prefectures have included funds which will be used for procurement of training equipment and materials required for an augmented Integrated Pest Management training program which will be implemented under the Project; (c) procurement of farm machinery. Some prefectures have insufficient machinery available to handle incremental demands due to the newly reclaimed land. Following existing practices, they propose to procure additional machinery through Township Agricultural Machinery Stations (TAMS) for distribution to suitably technically and financially qualified farmers on a rental (with an option to buy) basis for use on their own farms and under contract on other farms. Rental periods may be up to four years. (d) livestock investments. Livestock developments are included in three prefectures (Bayingol, Aksu and Hotan) where it is considered that there are insufficient numbers to maintain the guideline stocking rate of one sheep per mu which is considered necessary to supply adequate quantities of animal manure to meet soil requirements. (e) fertilizer mixing stations. Three prefectures have proposed development of 30,000 tons/annum fertilizer mixing stations to improve the availability of compound fertilizers in the Project areas. These investments have been agreed to in principal but final approval to disburse funds will be dependent on the successful outcome of feasibility studies, including market assessments, which will be carried out by consultants during the initial stages of the Project. (f) agricultural software (applied research, training, study tours and technical assistance). Each prefecture has fonnulated a software program, the overall cost of which is proportional to the cost of total investments in their prefecture and which was distributed so as to provide an acceptable balance between research, training and study tours with the emphasis on the first two. Local technical assistance will be utilized for design of applied research programs and development and delivery of short term training programs. The cost for this has been incorporated into the costs for each component. The proposals for training and study tours are outlined below. The applied research proposals are outlined in Section 1.5. The total Project cost for agriculture support services for each of the prefectures is: Bayingol Prefecture - US$1.0 million Aksu Prefecture - US$6.4 million Kashgar Prefecture - US$4.5 million Kizilsu Prefecture - US$2.5 million HotanPrefecture - US$2.4 million
The proposals for each prefecture under each of the above categories are summarized in the following sections. Seed Production, Processing and Distribution Prefecture Components Bayingol 1. Development of 235 ha. of seed production base for breeding of foundation seed to produce 1,000 tpa of wheat, cotton and corn seed to be used in multiplication farms; 2. Development of seed testing center and laboratory including procurement of lab equipment for testing seed from multiplication farms
Aksu 1. Development of a new production base for introduction and development of improved varieties including: offices and staff quarters; warehouse; drying floor; vehicle and small farm machinery; and associated infrastructure. 2. Establishment of a prefecture level breeding, experimental and multiplication station with 3 related county level breeding stations (out of five Project counties) to produce grain and cotton seeds. Production rate will be 2,250 t of rice seed, 4,000 t cotton seed, 5900 t wheat seed. 3. Expansion of existing acid delinting plants in 3 Counties plus one additional new processing plant (saw grinding).in a fourth county. Investments include: offices and staff quarters; drying floors; and processing equipment 4. Expansion of a prefectural level seed coating factory including: offices and warehouses; drying floor; and coating equipment. 5. Development of a new, county level cotton gin including: offices; warehouse; drying floor; and seed processing equipment. 6. Upgrade seed supply stations in 11 townships including provision of: offices Seed Production,Processing and Distribution Prefecture Components and warehouses; drying floors; minor infrastructure; and laboratory and farm equipment. Kisilzu 1. establishment of 290 ha. seed production base 2. development of two new county level seed processing factories including: processing workshop and seed storage (1,200 sq.m.); dryers and coating equipment (2 sets); and, drying floors (4,000 sq.m.). 3. Establishment of two new county level seed distribution centers including: laboratory (400 sq.m.); testing equipment; seed distribution center (400 sq.m.); and, seed storage and workshop (1,200 sq.m.). Kashgar 1. County level seed testing centers consisting of (in each county): seed testing laboratory construction (350 sq.m.); and, simple testing equipment (one set). 2. New prefectural seed testing center consisting of: building (2,000 sq.m.); analytical instruments (11 sets); vehicles (2). 3. Seed processing and distribution centers in five Counties including: buildings (1,000 sq.m. ea.); testing equipment (5 sets). Hotan 1. prefecture level breeding farm including: warehouse (590 sq.m.); drying floors (400 sq.m.); machinery and vehicles; and small scale infrastructure 2. upgrade 3 county supply stations including: buildings (1,060 sq.m.); equipment, machinery and vehicles (2) 3. upgrade 6 township supply stations including: buildings (700 sq.m.); drying floors (800 sq.m.); laboratory equipment; tractors (2 x 40 kW); and small infrastructure.
AgriculturalExtension Services Prefecture Component Bayingol 1. New training rooms and soil testing laboratories (100 sq.m.) in six county level extension centers 2. improve existing station in Heshuo County including provision of analytical and office equipment; 3. establishment of comprehensive prefectural experimental center to carry out soil and plant tissue analysis (230 sq.m.) 4. provision of vehicles for six county extensions stations.. Aksu 1. improve prefectural extension station including offices and warehouse (800 sq.m.) 2. Improve one county extension station; 3. establish 2 new township extension stations including sales department and warehouse (2,210 sq.m.) and field trial areas (23 ha.) 4. Improve 17 existing township extension stations including sales department and warehouses (7,394 sq.m.); field trial areas (200 ha.); provision of soil testing equipment; and farm machinery. Kisilzu 1. development of 2 new county technical stations including: offices (2 @ 1,000 sq.m.); laboratories; training rooms; office and analytical equipment. Kashgar 1. new extension stations in 5 counties including: buildings (5,000 sq.m.) and office/ analytical equipment (5 sets); 2. new extension technical stations in 16 townships including: buildings (6,400 sq.m.) and office/analytical equipment 3. new prefectural training center including buildings (2,000 sq.m.) and training and office equipment. Hotan 1. upgrade 3 county agricultural technical stations with office equipment and motorcycles (8 sets) 2. development of new prefectural testing center including: building (700 sq.m.); instruments 3. rehabilitation of 6 township agricultural technical stations including: buildings (960 sq.m.); instruments; and, tractors (5 x 25 kW).
Farm Machinery Prefecture Component Kisilzu Tractors and attachments (15 sets) Kashgar 1. Tractors and attachments (90 sets) 2. Rehabilitation of Yuepuhu agricultural service machinery center including construction of 3,000 sq.m. workshop and provision of service machinery (lathes, etc.) Note: All prefectures have allocated an allowance of 0.5 million Yuan as their contribution to procurement of one unit of small scale laser leveling equipment for demonstration and training purposes
Livestock Prefecture Component Bayingol 1. procurement of 6000 breeding stock Aksu 1. procurement of breeding stock - 180 to begin with for distribution to breeding farmers. There is an additional provision for purchase of an additional 3,600 head at a later date subject to the outcome of the initial pilot program. Kisilzu 1. improved fodder production facilities 2. rehabilitation of breeding station Hotan 1. development of breeding station and stables (1,280 sq.m.), procurement of Al equipment and procurement of breeding stock (6,000 head); 2. development of alfalfa production base (2,000 ha.)
Fertilizers Prefecture Activities Aksu Provision of contingency funds for development of 30,000 ton per annum fertilizer Kashgar mixing stations in each prefecture subject to the outcomes of further technical, Hotan financial and marketing studies.
5. Environmental Protection and Monitoring - US$10.8 million
All prefectures have included environmental monitoring, in particular, quality and quantity of ground and surface water, and draft monitoring proposals have been prepared. These proposals and plans will be reviewed as part of the development of the Masterplan for the Tarim Basin and, subject to any changes arising out of the review, implementation will commence during the second Project year. Far more detailed environmental monitoring has been proposed in the vicinity of Bosten Lake, in Bayingol Prefecture and this will be financed under the Project. The total Project cost for environmental protection and monitoring for each of the prefectures is:
Bayingol Prefecture - US$1.2 million Aksu Prefecture - US$2.2 million Kashgar Prefecture - US$4.6 million Kizilsu Prefecture - US$1.7 million Hotan Prefecture - US$1.1 million Water and salt monitoring programs are proposed to be included in the Project to improve data and thereby improve the models. The design of the monitoring Plans for the Tarim II sub-basins has been based on the following factors:
* the experiences obtained from the Tarim I monitoring Program; * the existing climatological, hydrometric and hydrogeological monitoring systems; * the feed-back from the modeling activities undertaken during the water and salt balance studies; * the location of the works proposed to be undertaken during Tarim II; * the areas where the assessment of the impacts of the proposed works are difficult to estimate due to information deficiencies; * the areas where particularly sensitive or topographically problematic features exist; * the ability of the local authorities to manage the network both from a logistical and administrative perspective and from a budgetary viewpoint; * the need to ensure that data in excess of real needs is not gathered.
A major element will be water table measurement and water quality monitoring, particularly with regard to salt movement. A common approach has been adopted for proposing monitoring plans for the Project.
For the monitoring of surface water inflow and drainage outflow from the subproject areas, besides the existing hydrological stations and the water measuring points in the irrigated areas ,necessary new stations have been planned. For the measurement of groundwater level and water quality permanent observation wells and temporary well will be installed. For the saving of funds the groundwater observation wells will be mainly concentrated in key Project areas for detailed study. For the monitoring of soil water and salinity in each subproject area soil water and salt monitoring points in typical farmland (high yield land, low-yield land and reclaimed wasteland) will be installed.
6. Institutional Development and Support - US$15.2 million
Institutional Development and Support includes the sub-components SIDD Development, Applied Research&Development and Studies, Training and Technical Assistance, and Project Management. The following Table provides a summary of these investments by prefecture.
Sub-component Bayingol Aksu Kashgar Kizilsu Hotan Total SIDD Development 0.15 0.14 0.16 0.19 0.08 0.72 Applied R&D and Studies 0.35 1.17 0.53 0.31 0.43 2.79 Training and Technical 0.71 1.02 0.77 0.39 0.54 3.43 Assistance Project Management 0.97 1.27 3.40 1.24 1.40 8.28 Total 2.18 3.60 4.86 2.13 2.45 15.22
6.1 SIDD Development - US$ 0.72 million
The Project will finance the setting up of WSCs and WUAs, including office facilities and equipment, information dissemination activities, technical assistance, study tours and on-going training at water user, WSC and Project management levels1. These institutional investments in SIDD will be linked to investments in physical irrigation infrastructure in the respective Project components relating to land reclamation, improvement, and water conservancy.
All pilot WSCs and WUAs have already been defined and are shown in the following table:
' Thecosts in this sectiondo not includetechnical assistance, study tours, trainingand research.These are includedin sections6.2 and 6.3. WSC WUA General Branch Company Company Project Name No. Name No. Name No. Area ____ Bayingol Kai-KongRiver Basin 1 Ku-TaMain Canal 1 * DaXi 2 Water Supply BranchWSC * Zhondaogan GeneralCorporation I Aksu Aksu River Basin 1 Aksu City Branch 1 * Aksu City Tuanjie 2 Water Supply WSC * Aksu City Seed General Corporation Farm Kizilsu Qakmak-BuguzRiver 2 * Tokay Reservoir 2 Basin Water Supply IrrigationArea GeneralCorporation _ Gaizi-KushanRiver * JaimaterekBranch BasinWater Supply CanalMukelmel GeneralCorporation . Kashgar MusumanMain Canal 1 * Hojila BranchCanal 1 Water Supply GeneralCorporation I Hotan Lop Main Canal 1 * Adil Canal 1 Water Supply I GeneralCorporation _ _ TOTAL 6 2 8
After two years of Project implementation an evaluation workshop will be held. If the SIDD component is deemed successful, it will be expanded to cover the entire Tarim II Project area.
6.2 Applied Research&Development and Studies - US$ 2.79 million
Agriculture Research. All prefectures are proposing to carry out a variety of adaptive research activities to improve yields and make best use of the improved varieties which will be made available through the Project. It is proposed that all research proposals will be subject to review by a Regional committee convened by the Regional Agricultural Bureau whose objective will be to provide quality assurance on research designs and minimize overlapping of research efforts. Prefecture Research Topic Objective Bayingol IPM research Adaptation of IPM techniques to local circumstances High yield farming systems Development of the "1 ton per mu" production system" High yield wheat production on Development of improved wheat saline land agronomy methods for saline land High quality, high yield cotton Adaptation of cotton techniques to production local situation. High yield, high sugar content Development of improved beet production agronomic techniques for sugar beet production High yield, high quality Agronomic techniques for fruit trees. horticulture production Aksu IPM research Development of IPM techniques for local circumstances Cotton high yield methods Fertilizer trials Other To be identified during the course of the Project Kisilzu Comprehensive pest control Development of IPM techniques for local circumstances High yield grain production Fertilizer and varietal trials Other To be identified during the course of the Project Kashgar Cotton disease and pest control Investigation of pest types and optimization of control techniques High yield wheat production Fertilizer and varietal trials Soil improvement by fertilizer Use of soil testing to govern fertilizer application applications Improved cultivation techniques Field trials of alternative land preparation techniques. Hotan Use of plastic film Optimization of techniques for water saving using plastic film Comprehensive pest control Development of IPM techniques for local circumstances High yield, high quality, high Selection and varietal trials resistance winter wheat Low-yield land improvement Alternative crops for low-yield land
Irrigation and Drainage All prefectures are proposing to carry out a variety of adaptive research in the areas of water conservancy. Prefecture Research Topic Objective Bayingol Water and salt model Improvements to accuracy and optimization usability of models Water savings through pipe Development of efficient and cost systems, etc. effective water delivery systems Conjunctive use of surface and Optimization of surface and groundwater groundwater usage Aksu Automatic forecasting and Improve water deliveries and system measurement systems operations Water savings and irrigation Development of efficient and cost system improvements effective water delivery systems Conjunctive use of surface and Optimization of surface and groundwater groundwater usage Kisilzu Water and salt model Improvements to accuracy and optimization usability of models Water savings and irrigation Development of efficient and cost system improvements effective water delivery systems Conjunctive use of surface and Optimization of surface and groundwater groundwater usage Kashgar Water and salt model Improvements to accuracy and optimization usability of models Water savings and irrigation Development of efficient and cost system improvements effective water delivery systems Hotan Water savings and irrigation Development of efficient and cost system improvements effective water delivery systems SIDD
Each prefecture has allocated funds for empirical institutional research in the SIDD pilot areas in order to accompany implementation and improve future design.
6.3 Training and TechnicalAssistance - US$3.43 million
An essential component of the present Project relates to skills development, training and technical assistance in order to strengthen the technical and institutional features of the Project and to ensure the sustainability of the development effort. The training component was started during Project preparation and will be continued during implementation. A Training, Study Tour, Research and Technical Assistance Plan is included in Annex 16 of the PIP.
SIDD
Study tours. A number of international and domestic study tours are planned. The principles for the study tours are the following. Both decision makers, technical personnel, WSC staff and WUA representatives are in need of training concerning SIDD. For this reason a selection was made that will cover these sub-groups. The study tours will take place during the first two years of Project implementation, i.e. during the SIDD pilot and include international trips to the USA, Turkey, Spain, and Mexico as well as domestic tours to visit SIDD projects in Hubei and Hunan. The overall objectives are to assess approaches used in integrated river basin planning and management and self managed water user/irrigation organization or corporations and to assist the TBWRC in evaluating the results and forming approaches for adoption by the TBWRC. This will enable experiences and techniques to be compared and used as a critical analysis and input into the workshops below.
Technical Assistance. In order to ensure a successful implementation of the component, the pilot will be evaluated after a two-year period before consideration on how to proceed further. Since implementation of the SIDD component already is on-going, the workshop should be held in April, 2000. The workshop would include all prefectures, the Regional PMO and international experts for assistance. It is be planned for a time period of two weeks and would be based on prior self- evaluation by the entities involved in the pilot. In addition, national and international technical assistance regarding the setting up and running of WUAs and WSCs will be provided on an on-going bases as need arises.
Agriculture
Technical Assistance, Training and Studies. Foreign technical assistance will be provided to assist in implementation of the Integrated Pest Management program. An IPM expert will be procured to assist in development of capacity within the Regional Plant Protection Department and participating prefectures to train trainers in Integrated Pest Management with particular emphasis on cotton but also on other crops grown in the Tarim Basin. The expert will assist in organization and management of the training program for the Project and review current crop protection investment and training allowances in each prefecture participating in the Project for adequacy to meet comprehensive IPM training needs under the Project. Each prefecture has committed a substantial proportion of available training funds to meet the local currency costs of the IPM program. The allocations for IPM and other training and for studies are as follows:
Prefecture Activity Bayingol: Training topics and budgets: 1. IPM - (Y574,000) 2. Practicalcultivation techniques (Y300,000) 3. Plantprotection (Y37,500) 4. Greenhouseproduction of vegetables(7,500) 5. Horticulturalmethods (Y300,000) 6. Soil testing and fertilizerapplication (Y300,000) 7. Householdeconomic accounting (Y45,000) Note: these allowancesexclude training overheadswhich are separatelyaccounted for) DomesticStudy Tours and budgets: Unallocated(Y140,000) Foreign Study Tours 1. Agriculturaldevelopment in arid areas (Y150,000) 2. Agriculturaldevelopment in cold areas (Y150,000) Aksu Trainingtopics and budgets: 1. IPM training (Y1,230,000) 2. Cotton quality control(Y90,000) 3. New croppingtechniques (Y434,000) 4. Cash crop plantingtechniques (Y434,000) 5. Agriculturaleconomics (Y240,000) 6. Soil testing (Y120,000) 7. Laser leveling(Y40,000)
DomesticStudy Toursand budgets: Unallocated(Y400,000)
Foreign StudyTours 1. High yield agriculturaltechniques (Y200,000) 2. Seed processing(Y200,000)
Kisilzu DomesticTraining and budgets: 1. IPM (Y635,000) 2. New farmingtechniques for townshipmanagers (Y1 80,000) 3. Technicaltraining for farmers (Y200,000) 4. Mechanicalequipment training for farmers(YI00,000) 5. Generalfarmer training (Y200,000)
DomesticStudy Tours: Unallocated(Y220,000)
ForeignStudy Tours 1. Agriculturalmanagement (Y55,000) 2. Integratedpest management(Y55,000)
Kashgar Domestictraining and budgets: 1. IPM (Yl,373,500) 2. High yield cottonand grain production(Y200,000) 3. High yield vegetableproduction (Y200,000) 4. General farmertraining (Y280,000)
DomesticStudy Tours 1. Seed productionand processingmanagement (Y1 20,000) 2. High yield cottonand grainproduction (Y120,000) 3. Horticultureproduction (Y90,000)
ForeignStudy Tours 1. Low-yieldland improvement(Y 110,000) 2. Cotton cultivationtechniques (Y55,000) 3. Seed productionand processing(Y55,000) Hotan Short term training and budgets: 1. IPM (Y738,000) 2. Low-yieldland improvement(Y400,000) 3. High yield cotton production(Y550,000)
Domestic Study Tours Unallocated(Y200,000) Foreign Study Tours 1. Soil improvement(Y80,000) 2. Soil testing for improvedfertilizer use (Y80,000) 3. High yield agriculturalcultivation (Y90,000) 4. IPM (Y80,000)
Irrigation and Drainage
For the irrigation and drainage component, two international study tours are planned. One trip to study canal lining techniques will be undertaken to Pakistan and one study tour will me made to Canada to study advanced techniques of dealing with canal seepage and frost heave.
Technical assistance will be provided for water and salt model studies and monitoring, and for water saving techniques in irrigation and drainage.
Subject Content/Objectives water and salt model studies and monitoring TA will be provided throughout Project implementation to continuously improve water and salt model studies and monitoring networks. The objective of this activity will be to develop fully functioning models that can be used for evaluating alternative water development and system operation programs and procedures water saving techniques in irrigation and TA will be provided to evaluate different water drainage savings techniques and technologies for irrigation and drainage systems with the objective of devising and implementing cost effective water savings programs and procedures.
Training would be provided to technical water resources personnel in the areas of: (a) design of irrigation and drainage systems; (b) construction of irrigation and drainage system; (c) inspection and quality control during construction of irrigation and drainage systems; (d) operation and maintenance of irrigation and drainage systems; (e) groundwater system design and operation; (f) hydrology; and (g) hydrogeology. Environment
Technical assistance will be provided for preparation of a masterplan for Bosten Lake and also for the inclusion of environmental factors in development of the overall Tarim River Basin Plan. The latter is covered in the relevant section. The TA for the Bosten Lake Masterplan is intended to provide assistance to Bayingol Environmental Protection Bureau in researching and developing a masterplan for the lake and its catchment building on the mathematical modeling work that was completed as part of preparation for the Tarim II Project. The plan would be based on assessment of ecological requirements of the lake and its assimilative capacity, detailed review of all current development plans for the area, and could include a wide variety of development guidelines (land use zoning, discharge standards for industrial and municipal developments, development guidelines for tourism and other potential future activities in the catchment) to provide a basis for future development planning in the area. To the extent possible, the plan will provide development options which would allow the prefectural and local governments some latitude in trading costs and benefits in determining development plans.
6.4 Project Management- US$ 8.28 million
A number of activities are planned to enhance and strengthen Project management. First, an international study tour will be undertaken to an appropriate World Bank client country as a project management case study. In addition, a domestic study tour is planned to Sichuan (for MIS/project management), two study tours to Beijing (project monitoring and evaluation as well as project financing, procurement and disbursement) and to Liao Ning for project management.
To provide deeper knowledge of project management issues, also international training at the Learning and Leadership Center of the World Bank is planned. Domestic training relates to project management, MIS, English language skills, etc.
7. Tarim Basin Water Resources Commission Support - US$12.8 million
7.1 The TarimBasin WaterResources Commission- US$5.4million
The TBWRC will be created and strengthened to be responsible for all aspects of planning, policy setting and overall management of water and related natural resources of the Tarim Basin.
In particular it will:
* Develop and implement (or have implemented) hydrologic (surface water and groundwater) data monitoring networks, processing and archiving systems, and analytical processes for data evaluation, as well as a group of hydrologic models that provide both a predictive and a management capability.
* Undertake base-line studies to determine the 'health' of the natural resources in the Basin, the pattern of water usage and its efficiencies.
* Develop and administer a water licensing and allocation system, with suitable enforcement and penalty procedures, as well as the collection of water charges.
* Undertake master water planning studies for the whole Basin, ensuring that these studies involve integration across all aspects of natural resources.
* Develop and implement community awareness and participation programs across the Basin to lift the understanding of the natural resources issues of the Basin.
* Promote, and assist with, the development of 'land and water management plans' by various farmer and community groups that provide for both productivity improvements and resource rehabilitation.
* Oversight funding programs to assist with implementation of water and environmental management and development projects.
Legislative Aspects
In January 1998, the Xinjiang Uygur Autonomous Regional People's Congress passed regulations for the Management of Water Resources of the Tarim Basin which establishes the TBWRC. A copy of the regulations is included in Annex I of the PIP. The regulations are applicable to the development, utilization, protection and management of water resources in the Tarim Basin. The hydrologic boundaries of the Basin are defined as the drainage areas of the Tarim River mainstream and of the Hotan, Yerqiang, Kashgar, Aksu, Weigan and Kaidu-Konque subbasins. The regulations clearly define the authority and responsibilities of the TBWRC which will have the following structure: A Board of Commissioners responsible for: (a) setting policy and making timely and effective decisions on major issues related to the development, utilization, protection and management of water resources in the Basin; (b) reviewing and approving work reports, master plans, programs, projects and budget reports submitted by the Management Bureau; (c) reviewing and approving plans for water conservancy projects in the Basin; (d) reviewing and approving applications for the use of financial resources included in the Tarim Basin Water Resources Protection Fund to be set up by XUAR Government.
A Management Bureau which is the administrative and technical body of the TBWRC and is responsible for: (a) providing technical reports and information to the Board of Commissioners to assist it in decision making; (b) monitoring water quantity and quality; (c) establishing and maintaining data bases; (d) evaluating water use, allocation and development plans; (e) administering a water licensing system for water use along the mainstream; and (f) implementing and managing hydraulic works and environmental protection projects on the mainstream of the Tarim River.
The Project will support the establishment and strengthening of the TBWRC through: (a) the purchase, installation and operation of water quantity and quality monitoring equipment and computer hardware and software; (b) operating costs for three biological monitoring stations in key ecologically critical areas; (c) construction of a research, monitoring and dispatch center; (d) establishing and equipping field offices in each of the prefectures; equipment; (e) technical assistance, training study tours and research in water resources and environmental management, water resources and environmental monitoring; water resources modeling; water savings techniques, river basin planning, water licensing, GIS, MIS, remote sensing, and river morphology. Annex 1 of the PIP provides a background discussion of water resources management in the Tarim Basin, a discussion of the organizational structure of the TBWRC, an Action Plan for the first year of TBWRC implementation, and a five-year development plan for TBWRC.
TBWRC Technical Assistance
Technical assistance will be required in relation to the implementation of three priority activities which are considered essential to the effective development and operation of the TBWRC:
* basin water planning and sharing;
* environmental management;
* developmernt of database and mathematical models to provide a basin for integrated water resources planning in the Basin
* TBWRC institutional development and strengthening
During the first three years of the new TBWRC an annual workshop will be held to develop greater skills on water management, basin agency operation, enforcement, community awareness programs and to help review progress, priority setting, performance assessment etc. This in effect, provides a high level 'reference group' to review progress towards a highly competent TBWRC, and establishes a strong personal and on-going contact with basin management experts.
The first annual water management workshop will be held in Xinjiang about 3 to 6 months after completion of the second study tour. It would develop lessons learnt from the study tours, review and assess for use in the TBWRC modern methods and technologies relating to integrated river basin planning.
The subsequent two annual workshops will be organized to assist the TBWRC in strategic planning, human resource planning, performance assessment, environmental reporting and in its general approach to integrated river basin planning and management. 7.2. Tarim River Works - US$7.4 million
The river engineering component would continue the work program started under Tarim 1. Works in the upper and middle reaches would consist of providing 26 new regulators at the head of outlet channels on the Tarim River to control unregulated spillage during the flood season. Estimations based on average channel dimensions indicate that losses might be around 920 Mm3, or almost a quarter of the annual water resources of the river.
In the middle reach, the Project would finance construction of a new intake for the Kaerquga reservoir. The reservoir serves an irrigated area of about 1,000 ha and has recently been improved by increasing the bund height but cannot be filled from the present intake channel. The new intake would be located 25 km further upstream with the regulator located 2 km from the river.
Towards the end of the middle reach, the Tarim splits into two channels. In order to regulate the flows in both of these, a pair of regulators would be constructed at Aqi with design flow capacities of 60 m3/s and 100 m3 /s respectively.
The Project would include the construction of a total of 150 km of flood control dikes in sections of the middle reach of the Tarim with the aim of further containing spillage during the summer flood season. In view of the present limited hydraulic data, the construction of the dikes will be postponed to the latter part of the Project implementation period when better data on which to plan the dike construction will be available.
The major investment of the component is the construction of the Luohuluke Reservoir in the lower parts of the middle reach of the Tarim River. At present, the Wusiman River, which is an offtake from the Tarim, discharges into a seasonally flooded area, which in heavy floods extends to 200 km2. This flooded area is known as the Luohuluke lake. The reservoir would cover an area of 26 km2, have a bund of 20 km long with a maximum height of 6.5 m and would have a live storage of 88 Mm3. The reservoir would be used to augment supplies to an existing irrigated area of 8,000 ha.
8. Regional Management - US$6.9 million
Management Information System - US$ 0.78
The Regional management component will support the development, testing and installation of a complete MIS for the Project including both hardware and software. The Regional PMO and the prefectural plans are for the software portion of the MIS to be completely developed, installed on a limited number of personal computers and tested by October, 1998. MIS hardware will be purchased and installed, and software will be developed, installed and tested on the complete system during the first year of Project implementation. At the Regional and prefecture levels and at the TBWRC Management Bureau, Local Area Networks and servers would be installed. Each of the 22 counties would have a personal computer that would be tied into the Wide Area Network which would include the LANs.
The MIS will be used for all aspects of Project implementation and operation management. Specifically the MIS will cover the following areas:
Civil Works- including overall planning for civil works implementation and progress, design preparation and approval, bidding and contracting processes, supervision (inspection and quality control), physical implementation and financial progress, reporting.
Material and Equipment Procurement- including overall goods procurement planning and progress, design and technical specification preparation and approval, bidding and contracting processes, goods allocation and use, physical implementation and financial progress, reporting.
Technical Assistance, Training, Study Tours and Research- including overall planning and progress, preparation and approval of TORs, individual program processes, implementation and financial progress, reporting. Water and Salt Monitoring and Modeling- including development and implementation of monitoring and modeling plans, operation of monitoring networks, development of data bases, development of models, all related to groundwater, surface water (irrigation, rivers, lakes and reservoirs) and salt balances, reporting
TBWRC- inclulding five-year strategic plans and annual action plans, water allocation and licensing programs and processes, river basin planning and plan implementation, approval and funding of hydraulic works programs and processes, Tarimi River mainstream programs and management, budgeting and funding, reporting.
SIDD- including SIDD development planning and progress, pilot program implementation and evaluation, extension programs and progress, water resources management, investments, reporting.
Monitoring and Evaluation- including overall planning and progress, definition of indicators, baseline surveys, investment progress, physical progress, benefit monitoring and evaluation, reporting.
Financial MUanagement-including Project financing plan including World Bank and counterpart funding, expenditures, cost control, disbursement of World Bank and counterpart funds, accounting, reporting.
Auditing- including overall plans for auditing, actual auditing programs and processes, reporting (on source and use of funds, funds availability, disbursements).
Document Control- including official and non-official documents, correspondence, Project preparation reports and documents, computer software, others.
Urumqi and Kashgar Training Centers - US$ 2.85 million
Because of the major institutional development aspects of Tarim II, the Project would support the implementation of a training center in Urumqi for high- and medium-level line agency and PMO personnel in the areas of Project management, financial management, water resources management, agriculture, irrigation and drainage and English language. The Project would also support the rehabilitation of an existing training center in Kashgar which would be used for training lower-level line agency and PMO personnel, WSC and WJUApersonnel and farmers in the areas of agriculture, irrigation and drainage and SIDD development.
Other - US$ 3.31 million
The Regional management component also includes SIDD Development, Applied R&D and Studies, Training and Technical Assistance. These items will be carried out by the Region in support of the activities described for the prefectures in t]heprevious sections. Annex 3
CHINA TARIM BASIN II PROJECT Estimated Project Costs
The total Project costs are estimated at $272.6 millionwith a foreign cost of $93.8million or 34 percent of the total. Cost estimatesare based on quantities derived from the preliminarydesigns and from unit prices currentlyprevailing for Tarim I and other similar constructionworks in the Project areas and from price lists of local and overseasmanufacturers of equipment,machinery and vehicles. The base cost estimatesof $242.6million are expressedin December1997 prices and the exchangerate used to convert base cost estimatesis Yuan 8.3 to $ 1. Price contingenciesof $16.6 million for costs incurredin foreignexchange are based on annual internationalprice escalationrates of 2.5 percent for 1998, 3.1 percent for 1999, 2.9 percent for 2000, 2.8 percent for 2001, 2.7 percentfor 2002, and 2.6 percent for 2003. Price contingencies for costs incurredin Yuan are based on annual domesticprice escalationrates of 4.8 percentfor 1998, 5.0 percent for 1999and 5.5 percentfor 2000-2003. No price contingencieshave been appliedto design, Project overhead and operating costs. Physical contingencies,equivalent to $13.4 million,are basedon an averagerate of 6.5 percent for works, 5 percent for equipmentand inputs. Project costs are summarizedin Table 3.1 (Totals may not add due to rounding).
Table 3.1 PROJECTCOST SUMMARY
Project Component Local Foreign Total ------US $ million------A. Water Conservancy 65.0 41.4 106.4
B. Land Reclamation 37.9 15.6 53.5
C. Land Improvement 18.9 6.4 25.4
D. AgricultureSupport Service 8.4 6.6 15.0
E. EnvironmentalProtection & Monitoring 8.0 1.7 9.7
F. InstitutionalDevelopment & Support 10.6 4.1 14.7
G. Tarim River Subproject 7.3 4.2 11.5
H. RegionalManagement 2.9 3.6 6.5
Total Baseline Cost 158.9 83.7 242.6 Physical Contingencies 8.9 4.5 13.4 Price Contingencies 11.1 5.5 16.6
Total Project Cost 178.9 93.7 272.6 Annex 4 Tarim Basin II Financial and Economic Analysis Summary
(million US$, base year 1998)
PresentValue of Flows Fiscal Impact Economic Financial Analysis Analysis Revenues Subsidies Benefits 616.5 1008.5 98.4 23.5
Costs 567.0 889.4
Net Benefits: 49.5 119.2 IRR: 14.3% 16.9%
1 Introduction
The Project has three objectives,namely improvewater management,increase access to land and improve management techniques,and increaseagricultural output for poverty alleviation.These objectivesare intrinsicallylinked. Achievementof the water resourcesmanagement objective is the enablingcondition for the other two objectives.As discussedin other sections, the Tarim Basin is subjectto deterioratingconditions at all levels due to historicallypoor water management.The lower reaches of the Tarim River have been drying up over the past decades, leavingherdsmen and farmers without sustenancefor their livelihoodsand severelydamaging the "green corridor". The Tarim's tributaries have increasinglybeen used for irrigationexpansion but have now reached a level of exploitationwhere further increases in agriculturalproduction are hampereddue to lack of sufficientwater resourceŽs,and water logging and salinizationof soils currentlyunder cultivation.The Project thereforetakes a holistic approach,investing in: (a) innovativetechnical and institutionalarrangements for improvedwater and environmentalmanagement at the river basin level and at the subbasin level; (b) structuralmeasures to improve river course and water managementon the Tarim River mainstream;(c) improvementsto irrigationand drainage systemsin the subbasins,(d) improvementof land currentlyunder cultivation and (e) reclamationof wasteland to expand irrigationactivities.
Whilethe investmentscan be reasonablywell divided into these components,the benefits cannot. For the technical features of land improvementand wastelandreclamation components to lead to sustainableresults and not negatively impactother parts of the Basin,the investmentsin improvedtechnical and institutionalarrangements for water and environmentalmanagement at all levels, the TarimRiver engineeringimprovements and the irrigationand drainage systemimprovements in the subbasinsare essential,i.e. benefits in terms of increasedagricultural output accrue not only throughthe direct investmentsin land improvementsand on-farm irrigationsystems but also throughthe investmentsin the other components. For instance,the new institutionalset-up and analyticalprocedures will ensure that increased agriculturalwater use in the subbasins,due to the Project and to future water developmentactivities, will not further adversely affect the water availabilityalong the Tarim mainstreamand in the "green corridor".Additionally, the subbasin institutionalmechanisms and structuralimprovements within the irrigatedareas will help farmerstake responsibilityfor their irrigationsystems, including operation and maintenance,and will introduceimproved pricing, and improved irrigationand drainage systemphysical and operationalefficiencies which will result in more efficient water use. Increasesin agriculturalconsumptive use of water will be offset by reductionsin non-beneficialevapotranspiration that will result from the institutional,physical and operationalimprovements. Given the linkage between the different components, analyses have been carried out at three levels: (a) the river basin level; (b) the prefecture level; and (c) the farm level. Farm model analyses have been prepared for typical farms, and economic analyses have been prepared for each prefecture and for the Project as a whole. At the prefecture level, only investment costs related to the prefecture and benefits in terms of improved farm incomes were counted. For the Project as a whole, the linkages of the different Project components, i.e. all investment costs were considered. These were compared to the benefits derived in the form of increases in farm income. These benefits are considered as the quantifiable benefits derived through the new enabling environment related for example to improved institutional and technical arrangements for water, irrigation and environmental management, and river engineering measures.
A. Expected Benefits from the Project
In addition to extensive and valuable informnationprepared by the PMOs, data collected during discussions with local staff and field investigations, the preliminary results and lessons from the implementation of Tarim I have been incorporated in this analysis as the activities and areas of both projects are very similar. In particular, the "Social Impact and Benefit Evaluation Report" of Tarim I, dated October 1997 which evaluates project impacts on a sample of 457 households was a valuable source of information.
Expected Benefits Regarding Agriculture and Farmers ' Incomes
The main quantifiable benefits of the Project would be the incremental agricultural production as a result of land improvement of about 105,000 ha and land reclamation of about 75,000 ha. A preliminary assessment of the impact of the Tarim I project on agricultural results show progressive yield increases over a 6-7 year period. These achievements have been used in the projections for this Project.
At the Project level, it is estimated that about 98,000 households would benefit from land reclamation and 128,000 households from land improvement. Assuming an overlap of about 20% of households benefiting from both activities, the total number of direct beneficiaries would be about 200,000 households. The annual incremental production of the main agricultural products is estimated at: 157,000 tons of wheat; 117,000 tons of maize; 18,000 tons of rice; 43,000 tons of cotton lint and 93,000 tons of sugarbeet. As a result of improved feed production, the animal herd would increase by about 10,000 heads of sheep annually.
Farm Size and Number for Existing,Improvement and Reclamation Farms 4 Numinberof iIAkveragei Tota area..E Number Area Total ireclaimed eclaimed reclaimed of of iproved improved Precture farms land perl (ha) improved fam (ha) area
B-aywiTigoli40 8,333;: :10,0001.2 11 , 773 .41 16,667 Aksu 19_076 1.19 22,700 24,806 1.29 32,000 Kashgar 4200 03 346,789 26,666 0.057 i26,670 Kizilsu . 41.1111 !: 0.72 8,000 18,000 0.8 1,000 Hotan 157,391 !0.46 8,000 i36364 0.55 20,000 90.4 75,366 1, 09 105,337
Water Savings and Environmental Benefits In the subproject areas (excluding the Tarim mainstream) there is presently an estimated 3,400 million m3 of non- beneficial evapotranspiration. Project activities including canal lining, drainage improvements and wellfield construction, as well as water management improvements are estimated to result in a reduction of 1,000 million m3 in non-beneficial evapotranspiration (see Annex 1 of the PIP). This water would be used as follows: (a) approximately 500 million m3 or one-half of the reduction in non-beneficial evapotranspiration in the subproject areas will be utilized in increased consumptive use of crops in the land reclamation areas and to a lesser extent in the low-yield land improvement areas; these benefits are already quantified in the above-mentioned agricultural benefits of the Project, and;
(b) approximately 500 million m3 (50%) will be delivered to the Tarim river mainstream mostly from the Aksu drainage which will increase deliveries by about 400 million m3. Of this water a minimum of about 150 million m3 is estimated to be released downstream into the "green corridor" and the remaining water will be consumptively used by grazing land, forest areas, irrigation and also through non-beneficial evapotranspiration. The environmental benefits resulting from the water delivered to the "green corridor" would be the conservation of a sufficient vegetation barrier against progression of the desert. Conservatively, these benefits have not been quantified in this analysis.
Social Benefits
Although they are not quantifiable, social benefits resulting from the Project would be important as experienced in Tarim 1. In addition to reducing poverty and improving food security through increased agricultural production of poor households, the Project would result in: (i) improved reliability and quality of drinking water bringing health benefits to the villages; (ii) a reduction in labor needed for heavy agricultural works (especially for women) due to increased agricultural mechanization, and; (iii) improved standard of living in the townships and villages where electricity would be provided as a result of the new power station to be built in Kizilsu.
B. Financial Analysis
Financial Prices
Although small variations are noticed between prefectures, financial prices used in the analysis are average 1997 farmgate prices in the Project area. Apart from cotton, all prices are determined by market forces even if part of the agricultural surplus, such as grains, is purchased by the State which applies a price close to market prices. Crop by-products, such as straws, have been valued at their market prices, though most of them are used on the farm.
The cotton sub-sector is still controlled by the State. All cotton is purchased by the district level representatives of the Provincial Cotton and Flax Corporation at prices set by Central Government. Between 1994 and 1995 (when international cotton prices were rising) the central government increased the procurement price paid to farmers for seed cotton by 70%. This reduced black market trading in cotton and domestic production increased from 4.3 million tons in 1994/95 to 4.8 million tons in 1995/96. The government felt that the higher prices could be absorbed by the east coast textile mills without loss of export competitiveness. The State price of 861 Yuan for the third consecutive year is negotiable within a margin of plus or minus 6% according to the supply and demand conditions. Due to the above-mentioned marketing, the price paid for Xinjiang cotton gin is lower at an average of 771 Yuan per 50 kg (861 minus 6% minus transportation and financial costs) and the price paid to farmers fixed at 630 Yuan per 50 kg. The latter price was used in the models.
Most farm inputs are supplied by the Supply and Marketing Co-operatives system. Prices are influenced by the Government through different means such as: negotiated factory prices, and subsidized transportation costs. Farmers' labor has not been valued in the financial analysis: return per labor day has been calculated.
The following three categories of taxes have to be paid by the farmers and have been incorporated in the financial crop budgets:
* the agricultural tax which is 5 kg of wheat per mu of land planted with grain (115 Yuan per hectare at current prices), 11 kg of wheat for cash crops (255 Yuan per hectare) and 10% of the net income for fruit production. Under the Project, farmers receiving reclaimed land would be exempted from paying agricultural tax during the first 5 years;
* a land lease tax was introduced under Tarim I to recover the cost of land improvement and reclamation. The rates are set by prefecture and vary according to location, soil quality, and access to irrigation. On average, 50 Yuan per mu of reclaimed land (750 Yuan per ha) and 30 Yuan per mu of improved land (450 Yuan per ha) has to be paid annually after an initial 3-year period of exemption;
a Community Development Fund fee which is equal to approximately 5% of net returns. This contribution is collected by the rural collectives for administrative expenses and social welfare and range from about 140 Yuan per ha for wheat and maize, to 425 Yuan for cotton, and up to more than 1,000 Yuan per ha of fruit.
Taxes and Water Charges
Current water charges are below actual O&M costs, ranging from 0.02 to 0.04 Yuan ( 2 to 4 Fen) per m3 delivered to the farm. Over the next 2-3 years, they would be raised to 0.057-0.128 Yuan and would cover all O&M and depreciation costs (see calculations below). A weighted average of 0.091 Yuan has been used in the crop budgets.
Crop Budgets
Illustrative activity models have been prepared for the main crops as well as for sheep production which would also be supported by the Project. Although natural conditions and crop performance vary from one prefecture to another, only one "average" model for the entire Project area has been compiled in order to have clear and transparent parameters and facilitate the discussions on key assumptions.
The crop models have been computerized using FARMOD software and are available on file. Yields assumptions and resulting incremental incomes are summarized in the following Table. The yield increases and input use in the with Project projections are the actual results monitored during the implementation of Tarim I from 1991 to 1996 for both land reclamation and improvement: averages of yields and quantities of inputs between the two subproject areas of Tarim 1 (Yerqiang and Weigan) have been directly used in the models. In 1997 yields and outputs on improved land and reclaimed land have been deducted from the general increase of all land in the project areas of Yerqing and Weigan. It is assumed that, without Project, yields and input use would also increase, but to a lesser extent. Local economists estimate that performance monitored under Tarim I result: 60% from physical investment in water conservancy; 20% from the agricultural component of the project; 20% from factors external to the project. Therefore, without-Project performance of low-yield land has been estimated at 20% of that with Project. Regarding land reclamation, the current use of this land is insignificant as without water the existing vegetation is very scarce, dry and of very low value for grazing purposes. This use has been neglected as the value of crop residues after harvesting of most crops and by-products after the land is reclaimed is even higher than this scarce vegetation. Crop Yield IncrementalNet Income
Land Improvement Land Land Improvement Land - Reclamation Reclamation Without1 Wift With Incremental ______Project Project Increase Project Income Increase Net lncome
.__ . (t/ha) ... ..(0)... (t-ha) (Yuan/ha) (%) (Yuan/ha) Wheat 3.0 4.4 +48 4.0 1,455 +123 1,848 Maize 3.7 5.2 +41 4.1 1,374 +58 1,810 Rice 3.5 5.0 +43 4.2 1,620 +82 2,184 Cotton 0.98 1.26 +28 0.95 2,983 +26 7,061 Sugarbeet 24.4 42.0 +72 42.0 2,967 +72 5,211 Vegetables 9.2 16.4 +78 12.9 4,462 +72 3,336 Fruits (pears) 8.8 12.0 +36 12.0 5,838 +42 19,514 Notes: Yields and Incomesare at full developmentof Projectactivities, i.e. from Year 7 onwards Net Income is calculatedafter taxes.
Grain productivity appears to increase by between 40% and 50% on improved land. However, the net income per hectare is only about 2,000 Yuan, much lower than the net income from cotton which averages 7,000 Yuan on reclaimed land although the yield is not very high at less than one ton per hectare after 7 years of progressive increase. Similarly, increased yields of cottQn on improved land are more reduced than for the other crops to an estimated 28% over a seven- year period. The r eturn on fruit production is by far the highest. However, this can be achieved only in limited areas and requires a higher investment cost during a longer establishment period.
Farm Models
Six farm models have been prepared to illustrate the impact of the Project on typical households in terms of farm incomes, food production, labor use, return per labor day and impact of increased water fees on farm incomes. Three farm sizes have been considered. These are "small size" (Hotan); "medium size" (Kizilsu) and "larger size" (Bayingol). For each size of farm, those which benefit mainly from land reclamation have been analyzed separately from those which benefit from land improvement.
The main results are shown in the following Table. The average income per capita would increase by 24% to 80%. The greatest increases are expected for small farmers where income would rise from 445 Yuan without Project to 757-802 Yuan with Project. These small poor farms would represent about 70% of Project beneficiaries. Their current income per capita estimated at 445 Yuan is below the poverty line (500 Yuan). With Project, their financial situation would improve substantially as their income per capita would reach 757 Yuan in the case of land improvement and 802 Yuan in the case of land reclamation. This would be enough to escape from poverty as the poverty line is estimated at 500 Yuan per capita.
Similarly, their food security problems would be addressed as the minimum gross requirement is estimated at 250 kg of wheat per capita. Under the Project, wheat availability per capita would reach from 272 to 353 kg, provided enough land is distributed to these small and medium size households: at least 0.5 ha of land to be improved or 0.4 ha of land to be reclaimed.
Labor use would increase substantially only on farms benefiting from land reclamation as agricultural production on improved land would not require substantial additional labor. Only an annual analysis has been undertaken. On small reclaimed farms, labor use would increase by an estimated 70%. However, if an average labor force of 3 persons is available on the farm (200 working days per labor force per year to account for the long winter), this would not cause major constraints. This might cause problems only if the labor is scarce in the household (single headed households or families with off-farm employment). On larger farms, labor could be a constraint if they are provided with reclaimed land. To achieve the best economic results, it is recommended to distribute reclaimed land to already large farms only if they can demonstrate that they have enough labor force to cultivate the new land with enough labor intensity. The return per labor day would reach between 19 and 31 Yuan, which is 2 to 3 times the average opportunity cost of unskilled labor. If the water fee is increased as previously mentioned, its rate would represent between 6.3% and 9.7% of the gross incomes of the households. This is more than the informally agreed level of 5% mentioned by the administration and problems to recover these water fees could be expected in some cases unless some adjustments are made, such as not incorporating full recovery of investment cost in the calculation of the water fee (see below).
Unit Fari Farm Farm, Farm : Farm Farm : Model:MdIIMddel Model2 3 Model4 ModelS Model6 SizeUad: Small. Smbaffl Medium Medium Large. Large y;ProjecttActivityg:t: i: ______yi F I Impzrovemrentt R:eclamation Improvement Reclamation Improvement Reclamation Size ofHousehold person 666 6 8 8. LabhiorForce -______i ;:f47;7:: 3 0 3 __ 3 : 3 __3_ _ _4_ 4 Farm Size hai BeforeProjectt 0.6 Q.6 10 1.0 2.0 12.0 ImprovediLand 0.5 0.6 :L0 Reclaimed Land 0.4 0.5 0.5 Afterroject : 0.6 10 1.0 iL. 2.0 2.5 Net~hicom eFtper Capita BeforeProject Yuan per i 445: 445 765 765 1267 1267 AfterProject person i i7517 802 1235: 1206 1888 1575 % Increase ______+70% +80% +61% +58% +40% +24%, Grainper, CZapita BeforeProject kgper 1176 16 22 221 265 265 After Poject capita 272 309 322.1 353 ; 354 414 %*. Increase . +54% +7~~ ~ ~~~~~~5%+46%/ +60% ~ . 1+34% 56%
iDa . Noof 169 254 245 335 481 565 ifn% of Available*)i working 280% 42% 411% !56% 60% 70% %*increase das+12% *. 70% +111% +52%6 +11% +31% RefturnPerLabbr Day inYuan withPrjct Yuae 269 19.1 .30.3: 21.6. 314A22.3 0 :increase; labor6day! +51%. : 6+5% 45% J+ %i i +34% -4%o Water Chare (*)as of GrossIncome withProjecth I I9.7%___ _ 7.1: . . 1 .6.6 847%: . 6:3% .3 88%
(*) Estimatedat 200 working days per labor forcein the family. (**) At revisedrates proposed by the Government.
Financial Analysis of Enterprises Financed by the Project
The financial viability of Project investments in the seed companies, fertilizer mixing plants and power plants has been analyzed. The fertilizer and power enterprises are expected to recover their investment and O&M costs and generate reasonable profits: the first one by adding value to the basic fertilizers mixed before they are sold to farmers; the second one by producing electricity.
The proposed activities to strengthen the seed sub-sector are more complex and can be divided into four major activities: (i) increasing the production of good quality foundation seed, usually on prefecture-owned farms, and of seed multiplication usually contracted out to farmers at county and township levels; (ii) seed processing plants (to improve their quality) such as cotton seed delinting; (iii) seed quality control and testing; and (iv) seed distribution in the townships where land reclamation and improvement activities require additional supply of improved seeds. While the purpose of investments in the seed sector is to improve the services to the farmers, both production and processing activities are expected to recover all their costs. The seed testing and distribution would be covered from the general budgets of the counties.
On the basis of financial budgets prepared by the PMOs following Chinese accounting methods and revised with more conservative assumptions, two simplified Tables (available on file) were prepared for each type of enterprise in order to calculate the following financial indicators:
- annual gross margin defined as the gross annual income net of operating expenditures;
- operating profit defined as operating margin net of depreciation, interest payment and taxes; - annual cash flow before financing and calculation of financial rate of return on capital employed (including working capital) and net present values;
- "pay-off' period defined as the number of years necessary for the cumulated cash flow to become positive;
- financing plan (loan, equity, working capital) and repayment schedule assuming that the repayment period is fixed at 20 years including a grace period of 3 to 5 years depending on the needs.
The most critical assumptions relate to the prices of the outputs, i.e. final seeds, compound fertilizers, processing fees and electricity produced. These prices are still at least partilly controlled (set) by the Government, with the main basis for price setting being that the agreed price should allow the enterprise to cover its operating expenses, the repayment of the investment including interest payments and a sufficient profit margin (usually about 6-7% per year).
These models are used to verify whether the existing price structure is acceptable in that it provides sufficient returns to capital or, if necessary, to propose alternative prices which are found more suitable for a long term financial viability of the enterprises.
Main FinancialIndicators of the ProposedEnterprises
Kizilsu Power Hotan Cotton-seed Aksu Seed Hotan Fertilizer Plant Factory processing ProductionBase MixingPlan
Investmentcost (in 74,840 7,193 10,147 9,513 thousandYuan) - -_-_:_-_ -_- Main sourcesof Sale of electricity Sale of processed Sale of improved Saleofe ompound financialrevenues 358 Yuan/ cottonseeds 2.5 seeds at fertilizers2,265 and currently thousandkWh Yuan/kg 140%/ 160/ of Yuanton proposedprices market price of wheat I seed cotton -_-___: Alternativeprices to 430 Yuan! 3.0 Yuan/ kg No change No change ensure a.long term thousandkWh required required sustainabilitya' Grossmargin at full 10,199 3,603 5,088 12,281 development - Averageannual profit 4,126 936 2,840 4,621 Need for working - 11,812 - 33,656
capital______Workingcapital as % 164%0- 354% of investmentcost Financial rate of 9% 12% 35% 200/% return Econoniicrate of 13% 17% 54% 31% return EconomicNet 2.2 million Yuan 4.8 millionYuan 18.6 millionYuan 35.1 million Yuan PresentValue (12%) - - Pay-offperiod 12 years 6 years 7 years- - 4 years a/ These pricesare used thereafterin the financialanalysis.
The following conclusions can be drawn:
- The power plant would constitute a major investrnent (74.8 million Yuan) requiring a long period to amortize: the pay-off period is 12 years despite the relatively limited operating expenses associated with the plant (only 21% of gross incomes).The proposedprice for electricityat 358 Yuan per thousandkWh appearstoo low to ensure long-termnfinancial viability. It was based on an estimated annual productionperiod of 7,100 hours which appears over-optimistic.An annual productionperiod of 6,000 hours would necessitatea higherprice of about 420 Yuan per thousandkWh.
Investmnentcost of the Hotan cotton seed processing factory is relatively low. However, the need for working capital represents 164%of the fixed assets and adequatefinancing sources should be ensured. In addition,the negotiatedprice for processedseeds shouldbe raised from the current 2.5 Yuan per kg to at least 3.0 Yuan per kg to ensure a sufficient margin to provide sufficient profit and therefore guarantee the long-term sustainability of the factory. This is partly due to the high financial costs associated with interest due on working capital loans.
the Aksu seed production bases show good financial results and the proposed price structure appears adequate: wheat seeds sold at 140% of grain price; cotton seeds sold at 160% of market price. However, this is only enough to recover O&M and investment costs of the seed production activity, and not seed testing or the distribution network associated with it. The cost recovery associated with the two activities should be borne by the county budgets. However, if the costs of testing and distribution have to be recovered through the sale of seeds, a sensitivity analysis shows that the seed price structure should be raised to about: 150% of market price for wheat seeds; and 170% of market price for cotton seeds.
the actual capital cost of the fertilizer mixing factory (9.5 million Yuan) is limited compared with the potential annual output (about 113 million Yuan at full development). However, the need for working capital, which has been estimated at 4 months of raw materials, is relatively large at about 34 million Yuan, or 354% of capital cost. This has not been counted as a Project cost and its financing should be ensured before the factory is built under the Project. The price of the output will be established on the basis of a profit margin (after taxes, payment of interest and depreciation) which is now at 4.1% of gross incomes. This appears sufficient to recover all investment and O&M costs in the long run.
C. Economic Analysis
Economic Prices
Major Farm Outputs and Inputs
Economic parity prices were calculated for the major tradable commodities based on international price projections for 2005 by the World Bankl. Farmgate import parity prices have been calculated for wheat, cotton, maize, rice, urea and DAP. Wheat imports by China were approximately 5.6 million tons in 1995. The Regional surpluses of Xinjiang wheat would be sold to Gansu province, competing with imported wheat. Conversion factor is low at 73% reflecting the high transportation costs between Xinjiang and Gansu which makes it difficult for Xinjiang to sell its surplus to other parts of the country. Imports of maize have increased significantly in the last two years and in 1995 net imports for all China equaled 5.2 million tons. However, maize production experiences the same constraints as for wheat (CF of 81%). It is most probable that additional production would be locally converted into animal production.
Mutton is the preferred meat in the Project area, and is traded locally but not outside the province. It has been considered as a non-tradable commodity despite the fact that there is an international market (import parity price would have indicated a CF of 250%). Import parity prices have been calculated for the main fertilizers, i.e. urea and DAP. Other inputs and outputs such as vegetables, fruits, by-products and chemicals have been treated as non-traded commodities for
I WB QuarterlyReview of CommodityMarkets, Nov. 1997. which a Standard Conversion Factor (SCF) of 1.0 has been assumed in the analysis1. All taxes (agricultural tax, land lease tax and community development fund) have been removed in the economic calculation.
The opportunity cost of farm labor has been estimated at 10 Yuan per labor day which represents the average cost of unskilled labor hired in the area2. Farmers' labor for excavation of canals and drains, assistance with land leveling and construction of other Project works has also been valued at the same rate.
The Case of Cotton
Export of cotton products accounts for about 30% of China's foreign exchange earnings. The Ninth Five Year Plan sets ambitious targets to expand the area under cotton. A national priority is to develop extensive cotton production in Xinjiang province as the production is decreasing in many other areas of the country. The cotton processing sector is entirely controlled by State-owned companies and used to be the only domestically produced cotton lint. However, as international lint prices have fallen by 35% since early 1995, cotton mills, which are mainly located in the eastern provinces of China, have started to import and the CIF price of lint imported from the USA or Pakistan (US$ 0.80 per pound) is now about 15% lower than the State fixed price (861 Yuan per 50 kg)3 .
Xinjiang currently faces difficulties in marketing its cotton due to the competition from imports. Stocks were about 50% of the 1997/1998 production in February 1998. The conversion factor with import parity price is 94%, reflecting a slight distortion introduced by the State when preventing imports. It is not lower as the farm gate price already incorporates price reductions for Xinjiang cotton as previously mentioned.
Despite these constraints, Xinjiang is considered to have a comparative advantage for cotton production due to the following: (i) good natural conditions on irrigated land resulting in higher average yields than in other provinces where, in addition, ball worms have developed resistance to pesticides; (ii) good quality as 5% of the production is estimated to fall into grade No 1, 2 and 3; (iii) not many alternatives to cotton as sources of income for the farmers due to high transportation costs burden on low-value products such as grains. For these reasons, the Xinjiang Government is favoring the development of cotton which increased from 780,000 tons in 1995/1996 to a projected 1,280,000 tons in 1998/1999. Currently cotton is expected to account for almost 30% of the total cropped area of the Region. In conclusion cotton is the most important economic justification of the Project. As such, marketing problems related to cotton could be a risk for the Project (see Sensitivity Analysis below).
Economic Cost and Value of Water
Competing uses of water in the Tarim Basin are limited due to reliance of the economy on agriculture and the lack of industry in the Region: it is estimated that more than 90% of the economic use of water is for agriculture. The purpose of releasing water downstream into the so-called "green corridor" is of an environmental nature and the objective is to help control desertification.
Given the lack of alternative uses it is assumed that the real cost of providing irrigation water (investment plus O&M) provides a reasonable approximation of its opportunity cost. The current water fee levels largely under-estimate the actual cost of providing water. With Project, they would increase dramatically by 3 or 4 times to include all O&M costs, major repairs as well as depreciation. The revised price would reflect the actual economic cost of water in the area. The weighted average cost of 0.09 Yuan (US$ 1.1 cent) per m3 has been used in the economic analysis.
As water is the single most important limiting factor for agriculture in the area, the economic value of water can be evaluated by the net agricultural value produced per unit volume of irrigation water, i.e. net income (without considering
I In line with recent reports by WB. 2 This is an averageover the year. This wagerate is lowerin winterand higherduring specificlabor demand peakssuch as the cotton harvestwhen tens of thousandsof workersmigrate from other provincesand are paid up to 20 Yuan per day. 3 The 1996/97net imports of cottonwere estimatedat 250,000tons and in 1997/98are projectedto fall to 150,000tons as importsare currentlyrestricted to encouragetextile millspurchase domestic cotton water fee) divided by the amount of water used. The analysishas been done at the basin level for each of the five subprojectareas to take accountof the varying croppingpatterns. The agriculturalvalue of one m3 of water ranges from: 0.65 Yuan in Kashgar;0.74 Yuan in Hotan; 0.81 Yuan in Aksu; 1.01Yuan in Bayingol,and 1.17Yuan in Kizilsu where the proportionof cotton is greater. On average,the economicvalue of water is estimatedat 0.88 Yuan (US$ 0.11) per m3, or about ten times the economiccost of providingwater.
Results of the Economic Analysis by Prefecture
An economicanalysis has been carried out for each of the 5 subprojectareas. Costs, includinginvestment and O&M costs as well as provision for physical contingencies,have been comparedto economicbenefits. The benefits have been derived from crop models valued at economicprices and assumedcropping patterns. An overallIRR for the Project has also been estimated. This is based on costs and benefitsfrom each of the subprojectareas with overallProject managementcosts added on.
The same analysis has also been undertakenusing financialprices. The main differencesresult from: (i) labor costs are includedin the economicanalysis, not in the financialone; (ii) all taxes are excludedfrom the economic analysis;(iii) economicvalues of the main outputs(grain, cotton) are usually lower than the financialones.
MainFinancial and Economic Results (in millionYuan)
In Financialterms In EconomicTem ProjectArea zFIRR(%) FNpV ElR %)EP Bayingol 18.1 ~~~~~~~~158 15.7; 896 Aksu :14.7 155 12.0 -2 Ilotan 19. 210 17.2 140 Kiis 20.2 197 I&Ii 144 Kashgar(Kashi) ~19.6 405 15.9 179 Total Project ~16.9 98914.3 411
Note:Economic results for the entireProject include all costs, including those related to Regionalinvestments.
The Project therefore appears economically and financially viable as the overall EIRR has been estimated at 14.3% and the FIIRR at 16.9%. Due to the different costs associated with water conservancy,land improvementand reclamation as well as varying cropping pattemns,the EIRR ranges from 12.0% in Aksu to 18.3% in Kizilsu. The results, although acceptable are relatively modest for the following reasons:
* full benefits resulting from the investment take a long time to materialize: from 5 to 7 years for improved land and reclaimed areas respectively;
* investmentcosts are relativelyhigh in these remoteareas;
* actual economicbenefits have been underestimated.The positiveenvirornmental impact of releasingpart of the savedwater downstreamhas not been quantified.Also the agriculturalbenefits do not consider the fact that the increasedproduction of maize would be convertedinto more valuableproduction of animal products;
• due to the remotenessof the area, the economicvalue of grains is relativelylow as it is calculatedon the basis of parity prices with the rest of China. However,the impacton food security although unquantifiable,is very important. Sensitivity Analysis
A sensitivity analysis was carried out on potential increased costs or decreased benefits respectively. The following switching values show that the economic results are robust: costs increased by 25% or benefits reduced by 20% would lead to a 12% EIRR.
A delayed implementation resulting in delayed materialization of Project benefit would also influence economic results. A two year delay would lead to a 12% EIRR. This again indicates a good robustness of the Project.
As previously mentioned, the importance of cotton in the economic justification of the Project can also be a risk if marketing difficulties are faced. According to our calculations, the sale of cotton would account for 52% of the total economic gross output at full development of the Project. An analysis shows that the economic viability of the Project is relatively sensitive to the price of cotton: a decreased cotton price by -17% would switch the EIRR below 12%.
Fiscal Impact
Government revenue will increase from four different sources: (i) increased water charges mainly from newly reclaimed land; (ii) agricultural tax on incremental agricultural production; (iii) incremental community development fund, and; (iv) land lease taxes collected on all improved land and reclaimed areas. Conditions and rates of these sources of fiscal incomes are given in the above part titled Taxes and Water Charges.
On the other hand, the Government would directly or indirectly subsidize Project farmers by protecting local products against imports. These subsidies are reflected in the difference between economic prices and financial prices, such as for cotton. They have been calculated on the incremental agricultural production due to the Project. Present values for the entire Project life for both fiscal revenues and expenses have been estimated (calculation tables available on file) and summarized in the following Table. The impact would be positive: NPV of 320 million Yuan. This means that the land lease tax could be slightly reduced without threatening the fiscal balance of the concerned Government units.
Net PresentValues of Main IncrementalFiscal Revenues and Expenses
In ThousandYuan In thousandUS$ In % of TotalFiscal Incomes FiscalRevenues Water Charges 175,631 21,160 20% AgriculturalTax 53,016 6,387 6% CommunityDevelopment Fund 102,435 12,342 12% Land Lease Tax 550,039 66,270 62%
TotalFiscal Revenues 881,120 106,159 100% Fiscal Expenses(subsidies on - 561,152 -67,609 -64% agriculturalproducts) RevenuesNet of Expenses 319,939 38,550 36%
D. Water Charge Analysis
General Analysis
A vital element for the sustainability of irrigation projects is an adequate water tariff. Ideally, the water tariff would cover all operation and maintenance costs, depreciation (to permit replacement of equipment and structures) and loan repayments. Many times, however, water charges are so low that they do not even cover O&M, leading to deterioration of the irrigation facilities, low efficiency in water use and the need to rapidly take on new loans for further investments. In such a situation, investments are not financially or economically sustainable.
Historically, very low water charges have also been applied in the Tarim Basin. One of the aims of the Tarim Basin II Project is to ensure sustainability of the Project investments by promoting more adequate tariffs. For this purpose water charge analyses were conducted at the prefecture levels where the actual cost of water was calculated. The detailed calculation for Kashgar is available on file. The water fee incorporates: (i) all O&M expenses estimated on the basis of the experience of actual works; (ii) depreciation, major repairs and other costs valued at a percentage (6.0% in the case of Kashgar for these three items) of the estimated fixed assets. The cost of water diverted from the river is estimated at 6.32 Fen per m3, which corresponds to a water fee of 12.63 Fen per m3 of water delivered to the field (assuming an efficiency rate of 50%). This is much higher than the rate charged in 1997 which was about 3.0 Fen per m3 on average. All prefectures have indicated that they would progressively charge full cost during Project implementation, i.e. by 1999 or 2000.
A further impact of the Project would be an increase in cost per m3 of water diverted from the river due to the O&M and depreciation costs associated with the incremental infrastructure financed by the Project: from 6.32 Fen during the Project to 7.68 Fen after the Project in Kashgar. However, this would be largely compensated by an increase in efficiency of the irrigation schemes: although the amount of diverted water would not increase or even decrease, the area of agricultural land benefiting from this water would increase. Consequently, the water fee per m3 of water delivered to farmers' fields would only slightly increase: from 12.63 to 12.80 Fen in Kashgar according to the calculations1 . Preliminary calculations of water fees are shown in the following Table (proposed water fees after Project implementation are indicative).
Water Fees Before,During and AfterProject Implementation (in Fen per m3)
Kashgar Bayingol Kizilsu Hotan Aksu Current WaterFee (1997)ai On divertedwater bl 1.20 1.75 1.6 1.0 1.0 SchemeEfficiency d 40% 40% 40% 43% 36% On water deliveredto farms I 3.00 4.38 4.0 2.33 2.78
Proposed WaterFee to cover all cost duringProject implementation: 6.32 2.50 2.3 3.5 2.83 On divertedwater 50% 40% 40% 43% 36% SchemeEfficiency 12.63 6.25 5.75 8.14 7.86 On water deliveredto farms ProposedWater Fee to cover all cost afterProject implementation: On divertedwater 7.68 n.a. n.a. 5.8 n.a. SchemeEfficiency 60% 53% On water deliveredto farms 12.80 10.9
al The 1997 fees had alreadybeen slightlyincreased as comparedwith previousyears. b/ Price of bulk waterat the point of diversionfrom the river. c, Proportionof waterreaching agriculturalfield compared with the amount divertedfrom the river. The remainingis mainly lost by seepage in the irrigationcanals. dl Retailprice of water which is to be paid by finalwater users.
Although improved water supply and management would lead to increased agricultural production, the farm model analysis has shown that the water charges as a proportion of gross farm incomes would rise steadily to levels ranging from 6.3% and 9.7%. An informal agreement between the Government and water users had mentioned a maximum of 5%. If difficulties are faced by the Government to actually recover such high fees, alternative rates could be considered which
I This assumesthat the impact of projectinvestments on the water chargeswould be spread over all water users in the schemes. would include:all O&M costs; all major repairsexpenses; but only a proportionof the depreciationof the existing scheme on the ground that this fixed asset has been built over a longperiod and is largelyamortized.
E. SIDD Analysis
Table 4-1 provides a summary of the water charge rates in the currently planned WSCs and WUAs in the five prefectures. Each WUA is matched with the WSC from which it will buy water. In the case of Aksu the water-buying chain starts at the general WSC (Aksu River Basin WSC) which sells water to Aksu City WSC, which sells water to the two WUAs. In the calculations, the tariff given at the level of Aksu City WSC includes the WUA tariff since at the time the calculations were made not all figures for the WUA were available yet. In this table, three tariff levels can be compared, namely the current, the planned and the full-costtariff level. The full-costtariff level is here defined as that which would cover all costs includingdepreciation, emergency funds, insuranceand loan repaymentsas planned by the prefectures.(Table 4-2 provides the full financial analysis for Kizilsu as an example. In Annex 4 of the PIP the tables of the financial analyses for all prefectures are provided. They are also available on file).
The table shows that with the exception of Bayingol and in the medium term Aksu, the tariffs planned for the WSCs generally are too low for full cost recovery. However, in all cases at least O&M costs are covered. Regarding the WUA level, Bayingol, Aksu and Kashgar and Kizilsu are planning adequate tariffs for full cost recovery if the WUA pays the lower, planned, WSC tariff. If the WUA had to pay the full cost recovery WSC tariff, the planned tariffs in Kashgar, Kizilsu and partly in Bayingol would not be adequate either.
As with the general water charge analysis, the planned tariffs are indicative and will depend, among other things, on political feasibility. Since the SIDD water charges in general are lower than the average water charge for the entire system, it seems possible that they should be adjusted in such a manner that they do permit full cost recovery. On the other hand, the process to achieve a truly self-financed irrigation and drainage district is slow, especially in an area where water has been underpriced for such a long time. Thus, the most important aim should be to at least cover operation and maintenance costs as well as major repair expenses, with only a proportion of depreciation costs, as pointed out above for the general analysis.
It needs to be pointed out that the calculations of water purchases by the WUAs are based on volume, i.e. Yuan per m3 purchased. Volumetric charging is one of the important principles of the new institutional framework and intends to promote incentives for the WSCs to become more efficient in order to be able to increase their revenues by selling more water. At the same time, WUAs have an incentive to either reduce their costs by using water more efficiently and buying less or by being able to irrigate a larger area with the same amount of water.
For this new water charging system to function most effectively, the measurement point of water sale to the WUA should be at the point of delivery, i.e. the WSC would have to try to reduce its water losses during transport to the WUA because it could only charge the net volume delivered. The calculations presented here have taken into account such water loss. In case of the WSCs and the WUAs it is planned that volumetric pricing will be introduced at the pilot stage and expanded subsequently as the pilot is extended. SIDDterms
Table 4-1: Comparisonof SIDDwater chargerates
Year 99 8 9 99 PREFECTUREMISCJNUA 1 1 1 | 2D01 201 20 02 2003
Waterrate (Yuanlm3 Kizilau Gaizi-KushaRiver Basin WSC current 0.010 0.010 0.010 0.010 0.010 0.010 planned 0.018 0.018 0.018 0.018 0.018 0.018 fulcost rate 0.044 0.048 0.045 0.043 0.043 0.045 MukemalVWA Currentrate 0.012 0.012 0.012 0.012 0.012 0.012 Plannedrate 0.023 0.023 0.023 0.023 0.023 0.02 Full cost recovery(WUA) and plannedWSC 0.025 0.027 0.029 0.030 0.032 0.032 Full cost recovery(WUA and WSC) 0.038 0.043 0.045 0.046 0.048 0.051
Oakmak-BuugzRver Basin WSC current 0.012 0.012 0.012 0.012 0.012 0.012 planned 0.017 0.017 0.017 0.017 0.017 0.017 full-costrate 0.030 0.033 0.033 0.033 0.033 0.038 77;anWKUA Currentrate 0.016 0.016 0.016 0.016 0.016 0.016 Plannedrate 0.023 0.023 0.023 0.023 0.023 0.023 Fullcost recovery(WUA) and plannedWSC 0.024 0.025 0.027 0.029 0.031 0.031 Fullcost recovery(VWJA and WSC) 0.060 0.041 0.043 0.045 0.047 0.050
Hotan HotanGeneral WSC current 0.010 0.010 0.010 0.010 0.010 0.010 planned 0.035 0.035 0.035 0.035 0.035 0.035 full-costrate 0.050 0.038 0.040 0.039 0.039 0.048 Adl BranchCanal MWA Currentrate 0.010 0.010 0.010 0.010 0.010 0.010 Plannedrate 0.040 0.040 0.040 0.040 0.040 0.040 Fulloost reovery (WUA)and plannedWSC 0.052 0.053 0.053 0.054 Fullcost recovery(WUA and WSC) 0067 0.056 0.058 0.058 0.0S 0.067
Bayingo KutaCanal WSC current 0.025 0.025 0.025 0.025 0.025 0.025 planned 0.035 0.035 0.035 0.035 0.035 0.085 full-costrate 0.033 0.033 0.033 0.033 0.032 0.091 Daxi 9WVA Currentrate 0.025 0.025 0.025 0.025 0.025 0.025 Plannedrate 0.049 0.049 0.049 0.049 0.049 0.100 Futicost recovery(MIA) and plannedWSC 0.046 0.046 0.046 0.046 0.046 0.096 Fullcost recovery(WUA and WSC) 0.059 0.059 0.058 0.058 0.057 0.116 ZhondaoganWUJA Currentrate 0.025 0.025 0.025 0.025 0.025 0.0995 Plannedrate 0.049 0.049 0.049 0.049 0.049 0.100 Ful cost recovery(MUA) and plannedWSC 0.044 0.044 0.044 0.044 0.044 0.094 Fullcost recovery(WIJA and WSC) 0.043 0.043 0.042 0.042 0.041 0.099
Kashgar MusumanWSC current 0.009 0.009 0.009 0.009 0.009 0.009 planned 0.012 0.012 0.024 0.024 0.024 0.024 full-costrate 0.021 0.020 0.026 0.028 0.030 0.032 HuoaplaBranch Canal iWJA Currentrate 0.010 0.010 0.010 0.010 0.010 0.010 Plannedrate 0.014 0.024 0.034 0.044 0.054 0.064 Fullcost recovery(WUA) and plannedWSC 0.016 0.018 0.039 0.040 0.042 0.043 Fullcost recovery(WUA and WSC) 0.025 0.027 0.042 0.044 0.048 0.051
Akau Aksu RiverBasin MC current 0.0028 0.0028 0.0028 0.0028 0.0028 0.0028 planned 0.0078 0.0078 0.0078 0.0078 0.0078 0.0078 full-costrate 0.0098 0.0089 0.0084 0.0085 0.0086 0.0084 Aksu CityWSC current 0.0125 0.0125 0.0125 0.0125 0.0125 0.0125 planned 0.0305 0.0324 0.0345 0.0411 0.0479 0.0494 full-costrate 0.0355 0.0342 0.0343 0.0395 0.0446 0.0441
'The tarffs chargedby the WSCsrelate to the waterdelivered at the inlet of the WUAs.The tarfs chargedby the WUtAsrelate to the pricethe fannerhas to pay at the field leveland includesthe WtJA'scost for buyingwater from the WSC.
-Aksu CityWSC includes the WtiA level,i.e. the tariffsshown are thoseto be chargedat the farm level. At the timeof catculetions,the numbersfor the WUAscould not be separatedyet. Table4-2 Kizisu SIDD- FinancialAnalysis
Prefecture: Kizilsu Name of WSC: Gaizi-KushanRiver BasinWSC
Year Category Unit is is 2000 2001 2002 200
FIXEDASSETS at 10000 Y 12008.0 136857.1 13138.1 12619.2 12100.2 11881.2
1.WATER CHARGE REVENUE(Agriculture)
1.1 Water productionaal 10000 m3 29657 30t85. 33518 36151. 36677. 36777 1.1.t Volume ofWater Sales (15% os) /b 25208 2825 28491 3072t 311 3t1 1.2 Water charge rate yuantm3 1.2.1Currentrate vuarm3 0.01 0.01 0.01 0.01 0.01 001
1.2.4 O& M coat rexovey rate yuarvm3 0.010 0.011 0.011 0.012 0.01 0.01 1.2.5 O&M+Rep+Emr*Rapl yuantm3 0.026 0.028 0.027 0.027 0.028 0.02 1.3 Collection rate % 100% 100% 100% 100% 100% 100% 1.4 Revenue collected 1000 yuan 1.4.1 Current rate 2521 282 2849 3073 3tt 31 1.4.2 Planned rate 4538 4725 5128 5531 561 5612 1.4.3 Cost rate 1041 1250t 127 13157 13278 14051 1.4.4 O&Mcoat recov. rate 2395 2857 3221 404 404 1.4.5 O&M+Rep/Repl+Emtn r. 8483 7315 7779 838 am 850
11.OPERATING EXPENSES 1000 yutan
2.1 Salary & benefits /c 900.0 900.0 900.0 9S.0 900. 900. 2.2 Travel expenses /d 150.0 150.0 150.0 150.0 150.0 150.
2.3 Office supplies + utilities/e 45.0 45.0 45.0 45.0 45.0 45.
2.4 Fuel (ind. for heavyequipment) If 708.0 1180. 1534. 2006. 2360o 2360.
2.5 Materials(ind. spare parts)Ig 21S.8 218.8 218.6 218.8 218. 218. 2.6 Force account/g 131.3 131.3 131.3 131.3 131. 131. 2.7 Biddingworks /g 196.9 196.9 19.8 196. 196. 196. Total of 2.5, 2.6 and 2.7 547.1 547.1 547.1 547.1 847.1 547.1
Z8 Miscellaneousexpenses (sundry 45.0 45.0 45.0 45.0 45. 45. expensesnot coered by lies dtms) mt
Subtotal II: 2338. 2367.1 3221.1 36J3.1 4047.1 4047.1
III. FEES AND CHARGES(specify) 1000 yuan 3.1 Water ResourcesFee 3.1.1 WaterRes. Adm. Feefi 25.2064 26.2527t 28A.490 30.72885 31.1781 31.1761 3.1.2 Bulk water purchase from Kashgr ri 2041.88 2126.4 2307.74 2489.01 2525.2 2525.2 3.2 Insurance4j 240.2 273.1 262.8 252.4 242. 231. 3.3 InlerestM 0 0 0 0 0 0 Subtotal Ill: 2307.3 2428.9 2519. 2772.1 2738. 2788.1
IV. REPAIRFUND A 1OOO yutn 1681.1 19t1 1i19. 1766. 161. 162 V. REPLACEMENTFUND /m IODOyuen 4563 5189.7 4W52. 4793. 4538.1 4400. VI. EMERGENCYMAINTENANCE FUND In 1000 yuan 100 110.0 120.0 130.0 140. 1150
VII. LOAN REPAYMENT(Worid Bank) Jo 1000 yuan 0 0 0 0 0 1e"
Vill. TOTAL COST (1lI+1IIV.V+VI+VIl) 1OOOyuan 110445. 112504. 112711. 13157. 13277. 14081.
IX. SURPLUSIDEFICIT(I-VII)
Surplus/Deficit with currentwater dcrge 1000 yuan -8526 -9879 -9923 -1004 -101 -1 with plannedwater charge a50 -7779 -4 *7e26 - with at-costwater charge 0 0 0 0 Kizilsu
Fooftnot for Kizilsu GaizsKushan FRverBasin WSC
at In 1998fixed assetsare 12,008tenthousand Y. The figure for 1999 indudes depreclalionand investment. After that only dePredation,3.8% per year.
aa/ 100% of the water is imported from Kashgar.
bl W[ll collect waler charge for net water volume.
ct Salary: in 1998 150 staff with a saby of 6000 (in. benefits).
dl Travel expenses: 1000Y per year per staff in 1998.
eaOffice supplies& uthies: only refers to consumpton items per year, 300 per staff.
ft Fuel, annualestmate: have pump irigabon, based on land redaimedand water.
g/ Matedal,force accountand biddingworks are basedon average total of these three gems in past 3 years. The percentageof the totl is 40%, 24% and 35% respectvely.
IV Miscellaneousexpenses are estimatedas the same amountas offie supplies.
t The water resourcesadministration fee (prefecturelevel) is 1Y per 10000m3 fbr nat water use. WVaterpurchases from Kashgarcost 45% of total WSC revenues at the planned rate. y Insuranceis 0.2% on fixed assets. kt No interest payments.World Bank interestinduded in item -Loan repayments.
It The repair fund is counted as 1.4% of the fixed assetsof the respectiveyear.
rn The replacementfund is counted as 38% of the fixed assetsof the respectve year.
nt For 1998100,000Y is chosenas a base. 10000 Y increase per year for the following years.
o/ Loan repaymentsstart in 2003. Kizilsu
WUA - Financial Analysis
Prefecture: Kizilsu Name of WUA: MukemalWUA
Category Unit_ 1998| 1999 1 2000| 2001 | 2002 2003
FIXED ASSETS al IOODOY 27.6 39.7 51.7 63/7 75.8 75.8
I. WATER CHARGEREVENUE (Agriculture)
1.1 Waterpurchased from WSC 10000 m3 497 496 496 496 496 496 1.1.1 Volumeof Water Sales(0% loss) /b 497 496 496 496 496 496 1.2 Watercharge rate yuan/m3 1.2.1Current rate yuanem3 0.012 0.012 0.012 0.012 0. 0.012
1.2.4 O& Mcost recovery rata yuanm3 0.00' 0.005 0.0C 0.006) 1.2.5 O&M+RepoErer+Repl yuan/m3 0.026 0.024 0.028 0.025 0. 0. 1.3 Coller rate MeEon % 100% 100% 100% 100% 100% 100% 1EG4 Revenue oElected 1000 yua 1.4.1 Currenttrate 60 60 6o 60 59 6. 1.4.22Plannederatb 114 114 114 114 114 114 1.4.3 Full costreuovery (alJA) and plannedWSC 126 134 1.5 149 157 1.5 1.4.4 Fullh ost reqivery (WlJAfandWSC) 190 215 22 230 238 252 1.4.5 O&M cost recov. 1a.2. 1 27 28 29 30 31 1.4.5 OM+RepfRep lEmer r. 112. 119 122 125 128 129
II. OPERATING EXPENSES I1000 yuan
2.1 Salary& benefitsk d 6.0 6.0 6.0 6.0 6.0 6.0 2.2 Travel expenses/d 1.1 1.1 1.1 1.1 1.1 1.1
2.3 Offie supplies+ uFilitiesle 1.| 1.5 1.| 1.5 1.5 1.5
2.4 Fuel (inRe.for heavy equipment)tl
2.5 Maaterals(ind. spare paros)/g 12.3 13.0 14.4 15.0 16.0 17.0 2.6 FomreacJcount /g 2.7 Bidding works /g Ttlofr2.5s2.6 and2.7 12.0 13.0 14.0 15.0 16.0 17.0
2.8 Miscellaneous expenses (sundry 5. | 5.0 5.0 | .0 5.0 5.0 eSaenses not coveres by line atem) 84
Subtotal I1: 23.9 5 .6 27.2 28.6 29.6 30.6
Il. FEESAND CHARGES(lspecify) 1000 yuan 3.1 Water Resources Fee 3. 1.1 Water Res. Adm . Fee /i 3.1.2 WaCtrpurchase W romavSC at WSC s plannedrate1t 84.48 84.457 t4.45 14.45 84.45 14.45 3.1.3WaCtr purchase Caom WSC atWSC's fuVl-costraV 148.7| 165.55 164.45 164.80 165.43 178.53 3.2 Insurance j 3.3 In panestna - - 0 0 0 0 Subtotal fll:at WSC's plannedrate w a4Atr ca 84.d 00. 4.4 84.4 atWSCshfll-costrate 148.| 165.0 164.0 164.8 105.5 170.
IV. RtEPAIR FUND fi 1000 yuan 3.9| 5.6 7.2 | E.9 10.6 10.6 V. REPLACEMENT FUND /m 1 000 yuan 10. 1 1 S.1 19.6 24.2 28.8 28.9 VI. EMERGENCY MAINTENANCE FUND In 1000 yuan 1.4| 2.0 2. | 3.2 3.8 3.8t
Vtl. LOAN REPAYMENT (World Bank) lo 1000 yuan 0 0 0 0 0
'All. a) TOTAL COST (11+111(at WSC's planned ratb)+tV+V+Vt+Vtl) 1000 yuan 125.8| 133.7 141.5| 149.4 157.2 15tt.2 b) TOTAL COST (11+111(atWSC's full-cost rate)+lV+V+Vl+VII) 189.7| 214 tt 221.5| 229.7 23t&3 252Z3
IX. SURPLUSIDEFICIT (I-Vtl)
Surplus/Deficit wfth WUA planned and WSC planned water charge 1 000 yuan -12 _191 -27 ~ -35 ~ -4031 -44 with WIUA full-cvost and WSC planned water charge 0 0 0 0 00 with at cJost water charge (WSC and WUA) t t t Kz hsu
Footnotes for Kizilsu MUKEMALWUA atIn 1998 fixed assets are 27.8 tenthousandY. DOepreiabonof 3.8% per yew. The nws arennumb wsth deproatn and vetment already included. b/ Wll collectwater chargefor gross water volume. c Salary: in 1998 3 staff with a salary of 2000 (ind. benefts). di Travel expenses: 370 Y per year per staff in 1998. e/ Office supplies& utblities:only refers to consumptionitems per yer, 500 par staff. f/ Fuel, annualestmate: havepump irrigaton, basedon land reclaimedand water.
9DMaterial is estimated. ht Miscellaneousexpenses are estmated as the same amountas office suppls.
Y/No water resourcesadministrabon fees for WUAs. Water purchasesfrom the WSC are estmated at the vW s plannedand at fe WSCs fullkoe raft. j/ No insurance. k/ No interest payments.
Y The repair fund is counted as 1.4%of the fixed assets of th respectv yer. m/ The replacementfund is countedas 3.8% of the fixed assetsof the respec yer. n/The emergencyfund is counted as 0.5% of the fixed assets of the respectiveyear.
0/ No loan repayments. Annex 5
CHINA TARIM BASIN II PROJECT Financial Summary ($ million)
Sources 98/99 99/00 00/01 01/02 02/03 Total % of Total
Project Costs Investment Costs 74.3 81.2 59.6 36.1 15.6 266.8 98 Recurrent Costs 1.1 1.3 1.3 1.1 1.0 5.8 2 Total 75.4 82.5 60.9 37.2 16.6 272.6 100
Financing Sources IBRD/IDA 43.7 45.4 32.6 19.5 8.8 150.0 55 Government Regional 15.9 17.4 12.8 7.8 3.5 57.4 21 Prefecture 5.1 5.6 4.2 2.6 1.1 18.6 7 County 6.3 6.9 5.1 3.2 1.4 22.9 8 Beneficiaries 4.4 7.2 6.2 4.1 1.8 23.7 9 Total 75.4 82.5 60.9 37.2 16.6 272.6 100
Main assumptions: /a Financing plan is based on total Project costs by year including contingencies. /b Bank's financing includes $90 million of IBRD and $60 million equivalent of IDA. /c Government financing includes funds from various sources in both cash and kind. /d Beneficiaries' contributions are mainly in the form of labor.
On-Lending Terms The on-lending terms between MOF and XUAR will be the same as the IBRD terms for the US$ 90 million (i.e. 20 years with 5-year grace, US$ LIBOR based SCL, plus commitment fee). For the IDA US$ 60 million equivalent credit the terms will be 17 years with 5 years grace at the same service charge rates and commitment fees charged by IDA. On- lending to the prefectures and counties will be on the same or more favorable terms. Financial Management, Account Control and Auditing Acceptable financial management, account control, financial management reports and auditing procedures have been adopted for use during the implementation of the Project. Annex 8 to the PIP presents a Financial Management System Manual (FMSM) with all the necessary details for these aspects. The PMOs at each level (Region, prefecture, county) have qualified and experienced staff to produce reliable accounts on Project activities in a timely manner. The FMSM indicates: (a) clear lines of authority, well-defined responsibilities and appropriate segregation of duties for the PMO Chief, the Finance Division Chief, the Project Accountant, the Disbursement Officer and the Cashier; (b) clear written standards and procedures for financial management, account control and auditing; (c) clear policies and procedures for management of the special account; (c) procedures for easily available access to supporting documentation on Statements of Expenditures(SOEs); (d) clear plans and procedureson the sourcesand managementof counterpartfunds at each level; (e) clear control and managementof assets, includingfixed assets, cash, bank accounts, inventories,accounts receivable,intangible assets and deferred assets at each level; (f) clear control and managementof expendituresand disbursements.As presented in the FMSM financial statementswill be preparedand providedto the Bank, including:(a) sourcesand uses of funds; (b) costs by activitiesshowing actual, budgetedand variances; (c) statement of unit variances comparingactual and planned quantitiesand costs; (d) Project expenditureforecasts for six months of activities; (e) specialaccount reconciliationstatement; (f) statementof expendituresby disbursementcategory; (g) balance sheet; (h) current accountbreakdown; (i) procurementreport; (j) Project progressreport includingboth physical and financial, monitoringand evaluation, and key performanceindicators. Becausethe financial managementsystem is now in place and has been based on successfulfinancial managementof Tarim I with significantimprovements, an Action Plan is not needed and has not been developed.related to goods, civil works (includingforce account),consulting services, training, and Project operation,at each level. Annex 6 CHINA TARIM BASIN II PROJECT Procurement and Disbursement Arrangements
PROCUREME:NT
The Bank's Guidlelines: Procurement under IBRD Loans and IDA Credits, (January 1995 revised in January and August 1996 and in September 1997) and Employment of Consultants by World Bank Borrowers (January 1997 revised September 1997) will be applied in all respects to all Bank-financed procurement. The Bank-approved Chinese Model Bidding Documents will be adopted for all International Competitive Bidding (ICB) and National Competitive Bidding (NCB) for goods and works and the Standard Bid Evaluation Form will be used. The Bank's Standard Documents will be used where no relevant model document exists. All ICB procurement, NCB procurement for most goods and for works above 8 million Yuan equivalent for each package, consultant services above threshold for the Bank's prior review and overseas training/study tours will be the responsibility of the Regional PMO. Two tendering companies both under China National Machinery Import & Export Corporation have been selected as specialized procurement agencies to provide assistance. Each participating prefecture will manage its own procurement for works, goods, consultant services and training not covered by the Regional PMO. The procurement profile is shown in Table 6.1.
Works
Works worth $217.9 million would be required for the Project to support water conservancy, land reclamation, land improvement, and infrastructure development activities. It would cover the costs for earth works and structures for irrigation and drainage systems, civil works for land preparation, support services and environmental monitoring facilities. Works would be spread over 22 counties in 5 prefectures and carried out over five years and would be too dispersed to be of interest to foreign construction companies. Therefore, no ICB procedure for works is considered under this Project. Contracts costing $200,000 equivalent or more each contract will be awarded under NCB procedures acceptable to the Bank. These works worth about $119.9 million comprise mainly canals, drainage systems, well fields, water regulators, pumping stations, hydro-power station, transmission lines and reservoirs. About $39.2 million worth of minor works costing less than $200,000 equivalent per contract consisting of many small undertakings spread throughout the Project areas. As such, they will be best procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from at least three qualified domestic contractors in response to a written invitation. These contracts will be advertised locally. On similar projects in China, including Tarim Basin I project, typically more than three bidders participate. About $57.3 million worth of works in individual assignments not to exceed $100,000 for land reclamation, land improvement and small afforestation activities spread over numerous local communities would consist of basically small scale and labor-intensive irrigation and drainage canals, land leveling, simple access roads and tree plantations. With the prior agreement of the Bank, these works would be most desirable to be carried out under force account and beneficiary participation arrangements to best utilize the local know-how, available materials and employ labor-intensive technologies. Progress payments for works under force account and beneficiary participation arrangements would be based on unit prices and quantities agreed annually with the Bank. About $1.6 million worth of works would be non- Bank funded.
Goods
Goods worth about $32.7 million would be required for the Project. To the extent practicable, contracts for goods would be grouped into bid packages whenever possible to attract competition and permit bulk purchasing. All contracts for goods costing $250,000 equivalent or more will be awarded under ICB. These contracts would include vehicles ($7.6 million ), pump station, power generation and irrigation equipment ($6.4 million), office and training equipment ($1.8 million), MIS equipment ($1.2 million) and geomembrane ($3.8 million). A margin of preference equal to 15 percent of the CIF price of imported goods or the actual customs duties and taxes, whichever is less, will be allowed to qualified domestic manufacturers bidding under ICB procedures. Other equipment ($3.2 million) in smaller packages by value and specialized vehicle for environment monitoring and some construction vehicle ($1.2 million) would be procured through NCB procedures acceptable to the Bank. These NCB contracts for goods would cost $100,000 equivalent or more for each. The remainder, mostly farm tools, laboratory instruments and minor testing equipment ($2.2 million), motor cycles, farm trucks and small tractors ($0.3 million) with each contract under $100,000 equivalent would be procured using national shopping procedures. All breeding animals and tree seedlings ($4.9 million) would be procured, in small batches from local markets and suppliers, also by national shopping. All national shopping contracts will require at least three price quotations.
Consultant services and Training
Consultant services and training worth $11.7 million would be undertaken for the Project. Employment of consultants ($8.3 million) would be in accordance with the Bank's "Guidelines for Selection and Employment of Consultants by World Bank Borrowers" published by the Bank in January 1997 and revised in September 1997. In general, the "quality- and cost-based selection" procedures would be used. All consulting assignments over $200,000 would be advertised in Development Business. For small contracts, less than $100,000, "selection based on consultants' qualifications" procedures would be used, or with prior approval by the Bank, "single source selection" procedures may be used. Training and study tours ($3.4 million) would be reimbursed based on programs agreed with the Bank.
World Bank Review
All ICB contracts for goods, NCB contracts of $1 million equivalent or more for works, first two NCB contracts for works of each year for each prefecture will be subject to prior review by the Bank. This would cover 64 percent and 35 percent respectively of goods and works by value. All contracts for consultant services in excess of $100,000 for firms and $50,000 for individuals would be subject to prior review by the Bank. All other contracts would be subject to ex-post review by supervision missions. Approximately, 40 percent of all such contracts by value are expected to be actually reviewed.
DISBURSEMENT
To avoid delays in startup of the Project, a retroactive financing of SDR 7.4 million ($10 million) is recommended to cover expenditure incurred between March 1, 1998 and the date of signing of the Loan/Credit Agreement. The following activities are likely to be covered: initial site preparation for land reclamation and land improvement, preparatory earth works for canal, well fields and reservoir construction, small quantity of tree seedlings and breeding stocks, equipment required for MIS and SIDD development and some training/study tours for PMO staff.
Statements of expenditure (SOE) would be required for disbursements to be made against (a) contracts for goods costing less than $250,000, (b) contracts for works costing less than $1,000,000 except those subject to the Bank's prior review, (c) training and study tour expenses, and (d) consultant services costing less than $100,000 for firms and less than $50,000 for individuals. Disbursements for all works carried out under force account and beneficiary participation arrangement would be made against statements of physical progress achieved at each site at unit prices agreed with the Bank at the start of the Project and subject to annual review. The supporting documents for SOEs would be retained by the Regional PMO and prefecture PMOs in accordance with the Regulations for Procurement prepared by the Regional PMO and made available for review by Bank's supervision missions. In the case of contracts for goods, works and services above these thresholds, disbursements would be made against the full documentation of the contracts themselves and other supporting documents.
To facilitate disbursement, a Special Account in US dollars to be operated by the Regional Department of Finance would be established in a bank and on terms and conditions acceptable to the Bank, with an amount of $10 million, equivalent to the Bank's financing of average expenditure for four months of the Project implementation period. Applications for replenishmentwould be submittedmonthly or wheneverthe amounts is drawn downto 50 percentof its initial deposit, whichevercomes first. The Project is expectedto be completedby December31, 2003 and the Loan/Creditis expectedto close on December31, 2004. The allocationof loan proceedsis shown in Table 6.4 and an estimatedschedule of disbursementsis provided in Table 6.5.
Table 6.1 PROJECT COSTS BY PROCUREMENTARRANGEMENTS (S million)
ProcurementMethod Items ICB NCB Other/a NBF /b Total
I. Works - 119.9 96.5 1.6 218.0 - (65.7) (40.0) (0.0) (105.7)
II. Equipment 9.4 3.2 2.2 - 14.8 (9.4) (3.2) (2.2) - (14.8) m. Vehicle 7.6 1.2 0.3 - 9.1 (7.6) (1.2) (0.3) - (9.1)
IV. Inpu 3.8 - 4.9 - 8.7 (3.8) - (4.9) - (8.7)
V. Training and Study Tours - - 3.4 - 3.4 - - (3.4) - (3.4)
VI. Consultant Services - - 8.3 - 8.3 - - (8.3) - (8.3)
VII. Miscellaneous /c - - - 10.3 10.3 - - - (0.0) (0.0)
Total 20.8 124.3 115.6 11.9 272.6 (20.8) (70.1) (59.1) (0.0) (150.0)
/a Other procurement methods include force account and beneficiary participation for works, procurement for small works, shopping for small equipment, minor vehicles and inputs, training and consultant services. /b NBF denotes non-Bank financing. /c Miscellaneous include $4.6 million of design and engineering costs, $5.7 million of overhead and operating costs. Note: Figures in parentheses represent the amounts financed by the Bank including contingencies. Table 6.2 CONSULTANTSELECTION ARRANGEMENTS (in $millionequivalent)
ConsultantServices Expenditure SelectionMethod /a TotalCost Category (including QCBS QBS SFB LCS CQ Other N.B.F. contingencies)
A. Firms 4.0 1.7 1.7 7.4 (4.0) (1.7) (1.7) (7.4)
B. Individuals 0.9 0.9 (0-9) (0-9)
Total 4.0 1.7 2.6 8.3 (4.0) (1.7) (2.6) (8.3)
/a QCBS= Quality-and Cost-BasedSelection, QBS = Quality-BasedSelection, SFB = Selectionunder a Fixed Budget,LCS = Least-CostSelection, CQ = SelectionBased on Consultant'sQualifications, Other = Selectionof individualconsultants, Commercial Practices, etc.
Figures in parenthesisare the amountsto be financedby the Bank. Table 6.3 THRESHOLDSFOR PROCUREMENTMETHODS ANDPRIOR REVIEW
Expenditure Procurement Value /b Value TotalValue Subject Category Method/a Each Contract All Contracts to Prior Review/c ($ '000) ($ million) ($ million)
I. Works NCB = or >200 119.9 76.0 SW <200 /d 39.2 0.0 FA <100 per 57.3 0.0 assignment NBF NA 1.6 0.0 Sub.- 217.9 76.0 total
II. Goods ICB = or >250 20.8 20.8 NCB =or>100 4.4 0.0 SP <100 /e 7.4 0.0 Sub- 32.7 20.8 total
III. Trainingand TA 8.3 4.2 ConsultantServices Training 3.4 0.0 Sub- 11.7 4.2 total
IV. Miscellaneous NBF 10.3 0.0
Total 272.6 101.0
/a ICB=InternatioanlCompetitive Bidding, NCB=National Competitive Bidding, SP=Shopping,SW= Small Works, FA= Force Accountand BeneficiaryParticipation, TA denotesprocurement method specifiedin Bank Group's Guidelinesfor the use of consultantsand NBF denotes non-Bankfinancing. /b Thresholdsfor procurementmethods. /c Thresholdsfor Bank's prior review are: all ICB contractsfor goods,NCB contractsof $1 million or more for works, first two NCB contractsfor works of each year for each prefectureand all contractsfor consultantservices in excess of $100,000for firms and $50,000for individualsand all single-source selection of consultants. /d Competitionwould be assuredthrough local advertising;at least three bidderswould be required;on similar projects in China typically more than three biddersparticipate. Table 6.4 ALLOCATION OF LOAN/CREDIT PROCEEDS
Category Amount Percent Disbursement ($ million)
I. Works Part A /a 64.6 50% of expenditure Part B /b 34.8 40% of expenditure
II. Goods 32.7 100%of foreign expenditures;100% of local expenditures(ex-factory or ex-farmgatecost); and 75% for other goods procured locally
III. Trainingand 11.7 100%of expenditures ConsultantServices
IV. Unallocated 6.2
Total 150.0
/a Works other than those under footnote/b below. /b Works for land reclamnation,land improvementand tree plantation. Table 6.5 ESTIMATEDDISBURSEMENT SCHEDULE
IBRD Disbursement DisbursementProfile /a Fiscal Year/ Semestral Cumulative Cumulative Year/ Cumulative Semester ($ Million) (%) Semester (%)
1999 Year 1 First (July-Dec. 1998)/b 10.0 10.0 7 First 0 Second(Jan-June, 1999) 10.1 20.1 13 Second 30
2000 Year 2 First (July-Dec. 1999) 16.8 36.9 25 First 38 Second(Jan-June, 2000) 20.4 57.3 38 Second 46
2001 Year 3 First (July-Dec. 2000) 22.7 80.0 53 First 54 Second(Jan-June, 2001) 18.8 98.8 66 Second 66
2002 Year 4 First (July-Dec.2001) 16.3 115.1 77 First 74 Second(Jan-June, 2002) 12.4 127.5 85 Second 82
2003 Year 5 First (July-Dec.2002) 9.8 137.3 92 First 90 Second(Jan-June, 2003) 6.5 143.8 96 Second 94
2004 Year 6 First (July-Dec.2003) 4.4 148.2 99 First 98 Second(Jan-June, 2004) 1.8 150.0 100 Second 100
/a Disbursementprofile for agriculturalsector in China compiledby OPRPG,June 30, 1995.
/b Includingretroactive financing of US$ 10million to cover expenditureincurred between March 1, 1998 and the date of the signingof the Loan/CreditAgreements.
Completiondate: December31, 2003 ClosingDate: December31, 2004 Annex 7 Tarim Basin II Project Project Processing Budget and Schedule
A. Project Budget (US$000) Planned Actual (At final PCD stage) $360 $490
B. Project Schedule Planned Actual (At final PCD stage)
Time taken to prepare the Project (months) First Bank mission (identification) September, 1996 September 1996 Appraisal mission departure June 1998 February 1998 Negotiations August 1998 April 1998 Planned Date of Effectiveness January 1999 October 1998
Prepared by: Project Management Office in the Xinjiang Uygur Autonomous Regional Government
Preparation assistance: FAO/CP and PHRD Grant
Bank staff who worked on the Project included: Name Specialty Douglas Olson Water Resources Engineering Richard Reidinger Irrigation Economist Robert Crooks Agronomist and Environmentalist Karin Kemper Economist Nicolette DeWitt Lawyer Annex 8 Tarim Basin II Project Documents in the Project File*
A. Project Implementation Plan, including:
Main Document
Annex 1 Tarim River Basin Water Resources Management Appendix 1-1 Regulations for the Management of Water Resources in the Tarim Basin Appendix 1-2 Tarim Basin Water Resources Commission Development
Annex 2 Supporting Information for Irrigation and Drainage System Development, Groundwater Development, River Engineering and Land Development Appendix 2-1 Tabulation of Water Conservancy, Land Reclamation, Low-Yield Land Improvement and River Engineering Works
Annex 3 Agriculture Appendix 3-1 IPM Training and Research Plan
Annex 4 Self-Financing Irrigation and Drainage Districts - Overall Project Development Plan Appendix 4-1 Self-Financing Irrigation and Drainage Districts - Development Plan for Bayingol Appendix 4-2 Self-Financing Irrigation and Drainage Districts - Development Plan for Aksu Appendix 4-3 Self-Financing Irrigation and Drainage Districts - Development Plan for Kashgar Appendix 4-4 Self-Financing Irrigation and Drainage Districts - Development Plan for Kizilsu Appendix 4-5 Self-Financing Irrigation and Drainage Districts - Development Plan for Hotan
Annex 5 Local Beneficiaries Participatory Development Plan Appendix 5-1 Local Beneficiaries Participation Action Plan
Annex 6 Keping Voluntary Settlement Action Plan Annex 7 Resettlement Framework Guidelines Annex 8 Financial Management Systems Manual Annex 9 Procurement Appendix 9-1 Procurement Regulations Appendix 9-2 Procurement Schedule Appendix 9-3 Procurement Arrangements Appendix 9-4 Procedures for Hiring Project Beneficiaries Appendix 9-5 Model Procurement Documents for Small Works
Annex 10 Supervision Plan Annex 11 Costs Annex 12 Environmental Review Annex 13 Financial and Economic Analysis Annex 14 Financing and Repayment Appendix 14-1 Counterpart Funding Plan Appendix 14-2 Repayment Plan
Annex 15 Monitoring and Evaluation Plan Annex 16 Training, Research, Study Tour and Technical Assistance Plan Annex 1L7 PMO Organization and Responsibilities Annex 1L8 Project Implementation Schedule Annex 1L9 Legal Documents Appendix 19-1 Project Agreement Appendix 19-2 Development Credit Agreement Appendix 19-3 Loan Agreement Maps
Tarim Basin II Project - IBRD 29489 Hotan Sub-Project - IBRD 29490 Kashgar Sub-Project - IBRD 29491 Kizilsu Sub-Project - IBRD 29492 Aksu Sub-Project - IBRD 29493 Bayingol Sub-Project - IBRD 29494
B. Other
Financialand EconomicAnalysis detailed back-uptables, includingFARMOD and Excel files on diskette
*Includingelectronic files. Annex 9 A Genented: 03/27/98
Status of Bank Group Operations in China IBRD Loans and IDA Credits in the Operations Portfolio
Original A=out in US$ Millions Laor Fi-ca Project ID Credit N.. Yea oro- Purp... IBRD IDA Cac... ati.. Ondisbursed
Number of Close.d Loan/cre.dits: 207
Active L.... CN-PE-3472 IBRD 2968S 1988 PR RAILWAY IV 171.30 0.00 0.00 2.04 CN-PE-3582 IBRD 3337T 19 91 PR IRRIG. AGRIC. INTENS 45.05 0.00 0.00 2.37 CN-PE-3560 IDA 22420 19 91 PR HENAN AGRIC. DEVT. 0.00 110.00 0.00 3.23 CN-PE-3478 IDA 22100 19 91 PRC KEY STUDIES DEVELOFX 0.00 131.20 0.00 .83 CN-PE-3534 IBRD 3471A 1992 PRC ZHEJIANG PROV TRANSP 70.13 0.00 0.00 26.59 CN-PE-3503 IBRD 3462A 1992 ZOOIAN THERA POW7E 26.78 0.00 0.00 14.02 CN-PE-3564 IBRD 3415A 1992 BEIJING MUNICIPALITY BEIJING ENVIRONMENT 32.90 0.00 0.00 28.5E CN-PE-3492 IBRD 3412S 1992 GOC DAGUANGBA-HAINAN 28.88 0.00 0.00 2.83 CN-PE-3486 IBRD 3406A 1992 RAILWAYS V 33.73 0.00 0.00 .29.05 CN-PE-356E IDA 23870 1992 R.O.C. TIANJIN URB DEV i EN 0.00 100.00 0.00 32.40 CN- PE-3544 IDA 23390 1992 PEOPLE'S REPUBLIC OF CHINA EDUC DEV IN POOR PRO 0.00 130.00 0.00 4.07 CN-_PE-3587 IDA 23360 1992 PR RURA WAT SUPP & SAN 0.00 110.00 0.00 1.80 CN_PE-3624 IDA 23170 1992 MIN. OF PUBL.HEALTH INFECTIOUS DISEASES o.oo 129.60 0.00 54.82 CN-_PE-3564 IDA 23120 1992 BEIJ:ING MUNICIPALITY BEIJING ENVIRONMENT 0.00 80.00 0.00 3.70
CN-PE-3492 IDA 23050 19392 GORC DAGUANGBA-HAINAN 0.0 37.6200 0.00 . 472° CN_PE-3565 IDA 22960 1992 SHANGHAI METRO TRANS 0.00 60.00 0.00 3.75 CN_PE-3627 IBRD 3624A 1993 PRC GRAIN DISTRIBUTION P 325.00 0.00 0.00 325.00 _N_PE-3616 IBRD 3606A 1993 PR TIANHUANGPING HYDRO 196.60 0.00 0.00 100.86 CN-PE-3580 IBRD 35820 1993 PRC PROTECTUENIRN 250.00 0.00 0.00 29.05
CN-PE-3570 IBRD 35810 1993 PRC RAILWAY VI 420.00 0.00 0.00 136.54 CN_PE-3533 IBRD 3572A 1993 TIANJIN IND. II 82.68 0.00 0.00 56.09 CN_PE-3597 IBRD 3560A 1993 PRC TAIHU BASIN FLOOD 88.65 0.00 0.00 64.71 CONTRO CN-PE-3512 IBR 3552S 1993 GOV OF PEOPLES REP. OF C SHANGHAI PORT REST. 124.26 0.00 O.00 S.11 CN-PE-3581 IBRD 35310 1993 PRC HENAN PROV. TRANSPORT 120.00 0.00 0.00 16.15 CN-PE-3518 IBRD 3530S 1993 PRC GUANGDONGPROV. 240.00 0.00 0.00 21.43 TRAN PORT CN-PE-3526 IBRD 3515A 1993 GOC SHUIROU II 43.86 0.00 0.00 18.40 CN-PE-3632 IDA 25220 1993 ROC ENVIRONMENT TECH ASS 0.00 50.00 0.00 15.21 CN-PE-3627 IDA 24510 1993 PRC GRAIN DISTRIBUTION P 0.00 165.00 0.00 59714
CN-PE-3567 IDA 24710 1993 PRC EFFECTIVE TEACHING 0.00 100.00 0.00 48.35 SERVICES CN-PE-3597 IDA 24630 1993 PRC TAIHU BASIN FLOOD 0.00 100.00 0.00 4.93 CONTROL CN-PE-3559 IDA 24620 1993 PRIC AGRIC. SUPPORT SERVI 0.00 115.00 0.00 10.45 CN-PE-3509 IDA 24570 1993 PRC CNAGHUN r7AT SUPP i 0.00 120.00 27.55 24.21 CN-PE-3592 IDA 2447 0 1993 PRC REF. INST'L.6 0.00 50.00 0.00 21.62 PREINVEST (CRISP) CN-PE-3623 IDA 24230 1993 PRC FINANIAL SECTOR T.A 0.00 60.00 0.00 35.52 CN-PE-3561 IDA 24110 1993 PRC SICHDA ADP 0.00 147.00 0.00 22.65 CN-PE-3504 IBRD 37480 1994 PRC HEBEI/HENAN NATIONAL 380.00 0.00 0.00 115.10 H'WAYS CN-PE-3562 IBRD 37270 1994 PRC XIAOLANGDI M4ULTIPURPOSE 460.00 0.00 0.00 23.36 CN-PE-3641 IBRD 3718A 1994 PR YANZHOU THERMAL POWER 248.16 0.00 0.00 93.20 CN-PE-3609 1IBRD 3716A 1994 GOC SICHUAN GAS DEV 6 175.45 0.00 0.00 151.79 CONSERVATIO CN-PE-3586 IBRD 3711S 1994 PRC SHANGHAI ENVIRONMENT 160.00 0.00 0.00 79.76 CN-PE-3633 IBRD 3687A 1994 GOVERN4MENTOF PRC TELECOMMUNICATIONS 132.76 0.00 0.00 89.23 CN-PE-3622 IBRD 3652S 1994 SHANGA MUNICIPAL GOVT SH7ANGA MPROHIIHA 13000 0.00 ° °° 10° 393 CN-PE-3557 IDA 26230 1994 PRC FOREST RESOURCE DEV 0.00 200.00 0.00 95.10 CN-PE-3540 IDA 26160 1994 PRC LOESS PLATEAU 0.00 150.00 0.00 42.00 CN -PE-3644 IDA 26050 1994 PRC XIAOLANGDI RESETTI,EMENT 0.00 110.00 0.00 37.74
CN -PE-3595 IDA 25630 1994 PRC RED SOILS II DEVELOP ° °° 150.00 0.00 436869 CN-PE-3502 IDA 25390 1994 MOH RUR HEALTH MANPOWER 0.00 110.00 0.00 40.40 CN-PE-37156r IBRD 3914A 1995 PRC IODINE DEE. DISORDER 7.00 0.00 0.00 7.00 CN -PE-3493 IBRD 39106 1995 PRC INLAND WATERWAYS 210.00 0.00 0.00 150.45 CN- PE-36371 IBRD 39696 1995 PRC SOUTHWEST POV. REDUC 47.50 0.00 0.00 352800 CN -PE -3596 IBRD 3874A 1995 PRC YANGTZE BASIN WATER 97.26 0.00 0.00 67.18 CN-PE-3604 1 IBRD 38736 1995 MOF FISCAL & TAX REF. & 25.00 0.00 0.00 25.00 CN_PE-36947 IaRD 3848A 1995 GO SICHUAN TRANSMISSION 270.00 0.00 0.00 204.26 CN-PE-3600 IB RD 3847A 1995 PRC TECHNOLOGY DEVELOPME 194.99 0.00 0.00 179.78 CN- PE-3642 IBRD 3846B 1995 ZHEJIANG POWER DEVT 215.67 0.00 0.00 183.49 CN-PZ-3642 IB RD 3846A 1995 ZHEJIANG POWER DEVT 154.15 0.00 0.00 102.65 CN-PE -3585 IBRD 37880 1995 GOC ZHENYANG IND. REFQORM 175.00 0.00 0.00 122.24 CN-PE-3612 laBRD 37Z70 1995 PRC XINJIANG HIGHWAY I 150.00 0.00 0.00 95.75 CN-PE-3598 IBRD 37810 1995 LIAONING ENVIRONMENT 110.00 0.00 0.00 79.53 CN_PE-3603 IBRID 3773A 1995 PRC EoN HOUDE INGSOCRDER 2605 000 ° °°°° 240.11
CN- PE-3639 IDA 27440 1l995 PRC SOUTHWEST POV. REDUC 0.00 200.00 0.00 100.53 CN_PE-3596 IDA 27100 1l99S PR YANGTZE BASIN WATER 0.00 110.00 0.00 9.47 CN_PE-36041I IDA 27090 1l995 MOF FISCAL & TA REF. & 0.00 25.00 0.00 17.78 CN_PE-3634 IDA 26550 1l995 PR MATERNAL CHILD HEALT 0.00 90.00 0.00 33.51 CN_PE-3647 IDA 26540 1l995 FR ECONOMIC LWREFORM 0.00 10.00 0.00 6.03 CN- PE-3636 IDA 26510 1l995 PR BAS IC EDUC IN POOR 6 0.00 100.00 0.00 17.69 CN_PE-3603 IDA 26420 1995 PR ENT. HOUS ING SOC. SE 0.00 75.00 0.00 6.21 CN_PE-3599 IBRD 40550 1996 YUNNA PROV. GOV. YUNNAN ENVIRONMENT 125.00 0.00 0.00 125.00 CN_FPE-3646 IBRD 40450 1996 PRIC CHONGQING IND POL CT 170.00 0.00 0.00 170.00 CN_PE-3638 IBRD 40440 1996 PRC SEEDS SECTOR COMKER. 80.00 0.00 0.00 80.00 CN_P E-3594 IBRD 402B0 1996 PRC GANSU HEXI CRRIDOR 600 000 0.00 60.00 CN_P E-40513 IBRD 40270 1996 PRC 2ND HENAN PROV W 210.00 0.00 0.00 198.00 CN-P E-3563 IBRD 4001C) 1996 PRLC ANIMAL FEED 150.00 0.00 0.00 150.00 CN-PE-3648 IBRD 39870 1996 SHANGHAI MUN. GOVT SECOND SHRANGHAI SEWE 250.00 0.00 0.00 219.29 CN_P E-3652 IBRD 3a860 1996 PRC 2ND SHAANXI PROV Hi7Y 210.00 0.00 0.00 178.56 CN- PE-34618a IBRD 3967A 1996 PRC LABOR MARKET DEV. 10.00 0.00 0.00 10.00 CN_P E-3602 IBRD 39660 1996 PRC HUBEI URBAN ENV. PRO 125.00 0.00 0.00 125.00 CN_PE-3507 IBRD 3933B 1996 GOC ERTAN HYDR II 88.84 0.00 0.00 4.08 CN-_PE-3507 IBRD 3933A 1996 GOC ERTA HYDR II 177.68 0.00 0.00 51.64 CN_P E-3569 1IBRD 39290 1996 P.R.C. SHANGHAI-ZHEJIANG HI 260 00 0 00 7.75 149.58 CN- PE-36393 IDA 239201 1996 YUNNP RV.GV SEEDS SECTOR COMMER. 0.00 20.00 0.00 10.087 CN-_PE-3594 IDA 28700 1996 PRC GANSU HEXI CORLRIDOR 0.00 90.00 0.00 70.67 Generated by the Operations Information System (OIS) Annex 9 A Generated:03/27/98
Original Anount in US$ Millions
Project ID Credit No. Year Borrower Purpose IBRD IDA Cancellationo Undisbursed CN-PE-3649 IDA 28340 1996 CHINA SHANXI POVERTY ALLEV 0.00 100.00 0.00 49.32 CN-PE-36950 IDA 28310 1996 PRC BASIC ED. POOR III 0.00 100.00 0.00 40.01 CN-PE-34618 IDA 28000 1996 PRC LABOR MARKET DEV. 0.00 20.00 0.00 15.64 CN-PE-3602 IDA 27990 1996 PRC YUBEI URBAN ENV. PRO 0.00 25.00 0.00 15.36 CN-PE-3589 IDA 27940 1996 PRC DISEASE PREVENTION 0.00 100.00 0.00 80.94 CN-PE-34081 IBRD 42001 1997 PRC XIAOLANGDI MULLI. II 200.00 0.00 0.00 192.17 CN-PE-34081 IBRD 42000 1997 PRC XIAOLANGDI MULTI. II 230.00 0.00 0.00 230.00 CN-PE-44485 IBRD 41970 1997 SHANGHAI WAIGAOQIAO 400.00 0.00 0.00 400.00 CN-PE-3590 IBRD 41070 1997 PRC QINBA MTS. POVTY RED 30.00 0.00 0.00 30.00 CN-PE-36405 IBRD 41790 1997 PRC WANJIAZHAI WATER TRA 400.00 0.00 0.00 367.51 CN-PE-3650 IBRD 41720 1997 GOC TUORETUO POWER/INNER 400.00 0.00 0.00 400.00 CN-PE-38988 IBRD 41610 1997 PRC HEILONGJIANG ADP 120.00 0.00 0.00 117.00 CN-PE-3654 IBRD 41240 1997 PRC HU7NAN/GUANGHWY2-NH2 400.00 0.00 0.00 400.00 CN-PE-3643 IBRD 40990 1997 PRC XINJIANG HIGHWAYS IS 300.00 0.00 0.00 268.81 CN-PE-3635 IBRD 4063A 1997 PRC VOC. ED. REFORM PROJ 10.00 0.00 0.00 10.00 CN-PE-36952 IDA 29540 1997 PRC BASIC ED. IV 0.00 85.00 0.00 77.14 CN-PE-3635 IDA 28980 1997 PRC VOC. ED. REFORM PROJ 0.00 20.00 0.00 16.65 CN-PE-3590 IDA N0280 1997 PRC QINBA MtS. POVTY RED 0.00 150.00 0.00 141.56 CN-PE-3637 IDA N0270 1997 PRC NATL ROURWATER III 0.00 70.00 0.00 69.42 CN-PE-40185 IBRD 42370 1998 PRC SHANDONG ENVIRONMENT 95.00 0.00 0.00 95.00
Total 10,907.1c2 4,426.80 35.30 8,952.75
Active Loans Closed Loans Total Total Disbursed (IBRD and IDA): 6,315.76 12,595.82 18,911.58 of which has been repaid: 15.71 2,105.44 2,121.15 Total now held by IBRD and IDA: 15,282.90 10,133.96 25,416.86 Amount sold : 0.00 0.00 0.00 Of which repaid 0.00 0.00 0.00 Total UDdisbur-ed : 8,952.75 0.59 8,954.34
a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. b. Folloving the FY94 Anual Review of Portfolio performance (ARPP), a letter based system was introduced (HS highly Satisfactory, S = satisfactory, U = unsatisfactory, H0 - highly un-atisfactory): see proposed Improvements in Project and Portfolio Perfornance Rating Methodology tSecM94-901). August 23, 1994.
Note: Disbursement data is updated at the end of the first week of the month.
Generated by the Operations Information System (OIS) Annex 9 B
China STATEMENTOF IFC's Committed and Disbursed Portfolio As of 31-Jan-98 (In US Dollar Millions)
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1987/92/94 China Bicycles 8.50 3.39 0.00 0.00 8.50 3.39 0.00 0.00 1993 Shenzhen PCCP 3.76 .99 0.00 0.00 3.76 .99 0.00 0.00 1993 Yantai Cement 15.60 1.95 0.00 8.33 15.60 1.95 0.00 8.33 1994 China Walden JV 0.00 6.00 0.00 0.00 0.00 3.53 0.00 0.00 1994 China Walden Mgt 0.00 .01 0.00 0.00 0.00 .01 0.00 0.00 1994 Dalian Glass 20.50 2.40 0.00 40.50 20.50 2.40 0.00 40.50 1994 Dynamic Fund 0.00 12.35 0.00 0.00 0.00 9.46 0.00 0.00 1994 Plant. Timber 10.00 1.00 0.00 20.00 10.00 1.00 0.00 20.00 1995 Dupont Suzhou 24.92 4.15 0.00 52.00 19.34 4.15 0.00 30.66 1995 Newbridge Inv. 0.00 10.00 0.00 0.00 0.00 6.70 0.00 0.00 1995 Suzhou PVC 22.00 2.48 0.00 22.20 0.00 2.48 0.00 0.00 1996 Beijing Hormel 5.00 .50 0.00 5.50 4.64 .50 0.00 5.11 1996 Fairyoung Ports 0.00 4.98 0.00 0.00 0.00 4.98 0.00 0.00 1996 Jingyang 40.00 0.00 0.00 100.00 34.29 0.00 0.00 85.71 1996 Nanjing Kumho 16.00 3.81 0.00 45.50 13.63 3.81 0.00 38.75 1996 Tianjin Kumho 11.17 0.00 0.00 33.00 0.00 0.00 0.00 0.00 1996 Weihai Weidongri 4.29 0.00 0.00 0.00 4.29 0.00 0.00 0.00 1997 Orient Finance 10.00 0.00 0.00 20.00 3.33 0.00 0.00 6.67 1997 PTP Leshan 4.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 Rabobank PTPC 2.40 0.00 0.00 2.40 0.00 0.00 0.00 0.00 1998 Rabobank SHFC 2.75 0.00 0.00 2.75 0.00 0.00 0.00 0.00
Total Portfolio: 201.09 54.01 0.00 352.18 137.88 45.35 0.00 235.73
Approvals Pending Commitment
Loan Equity Quasi Partic 1996 CALTEX OCEAN 31.33 0.00 0.00 66.00 1998 CHENGXIN-IBCA 0.00 .36 0.00 0.00 1997 CHINEFARGE 12.80 0.00 0.00 20.00 1998 EURECA 0.00 3.00 0.00 0.00 1997 LIAOCHENG JIAMIN 18.00 0.00 0.00 18.00 1996 NANJING HUINING 4.00 0.00 0.00 0.00 1997 NINGBO 0.00 2.00 0.00 0.00 1997 NISSAN/DONGFENG 20.20 0.00 0.00 27.00 1997 PTP HOLDINGS 0.00 1.50 0.00 0.00 1997 PTP HUBEI 13.00 0.00 0.00 25.00 1998 PTP HUBEI BLINC 0.00 0.00 0.00 1.50 1998 SCANA LESHAN 6.10 1.35 0.00 0.00 1996 SHANDONG SAND 17.00 0.00 0.00 25.00 1998 SHANGHAI COLINE 13.00 0.00 0.00 0.00 1997 SMC 14.00 0.00 0.00 14.00 1997 SUZHOU PVC ADD. 7.90 0.00 0.00 6.40 1996 TIANJIN 9.10 0.00 0.00 9.10 1996 XIAMEN XIAN 10.00 0.00 0.00 0.00
Total Pending Commitment: 176.43 8.21 0.00 212.00
Generated by the OperationsInformation System (OIS)on 03/27198 Annex 10 - China at a glance 3/4/98
POVERTYand SOCIAL East Low- I China Asia Income Developmentdlamond* Populationmid-1996 (millions) 1215 1,726 3,229 GNPper capita1996 (US$) 750 890 500 Life expectancy GNP 1996(billions US$) 906.1 1,542 1,601 Averageannual growth, 1990-96 Population(6) 1.1 1.3 1.7 GNP Gross Laborforce (%) 1.1 1.3 1.7 p primary Most recent estimate (latestyear availablesince 1989) capita enrollment Poverty:headcount index (% of population) 9 Urban populabon (% of totalpopulation) 31 31 29 a Life expectancyat birth (years) 70 68 63 Infantmortality (per 1,000five births) 33 40 69 I Accessto safewater Childmalnutribon (56 of children under 5) 16 .. .. Access to safe water (% of population) 90 49 53 Illiteracy (% of population age 15+) 19 17 34 I China Gross primary enrollment (% of school-age population) 118 117 105 L Male 119 120 112 Low-income group Female 117 116 98 |
KEYECONOMIC RATIOS and LONG-TERMTRENDS 1975 1985 1995 1996 Economicratios GDP(billions US$) 160.3 378.1 755.9 916.4 Grossdomestic investmentVGDP 30.3 37.8 40.8 39.2 Exportsof goodsand services/GDP 5.2 9.9 21.0 19.3 Opennessofeconomy Grossdomestic savings/GDP 30.6 33.7 42.5 41.3 Grossnational savings/GDP 30.6 34.0 41.0 40.0 Currentaccount balance/GDP -0.2 -3.9 0.1 0.4 InterestpaymentslGDP .. 0.2 0.7 0.6 1 Savings Investment TotaldebVGDP .. 5.5 16.9 15.6 j' Totaldebt service/exports .. 8.4 9.9 .9.8 Present value of debtVGDP .. ,. .. 14.1 Present value of debtVexports ...... 72.3 Indebtedness
1975-85 1986-96 1995 1996 1997-05 (average annual growth) China GDP 8.3 9.9 10.5 9.6 8.5 GNPper capita 7.5 8.3 7.9 8.6 77 Low-incomegroup Exportsof goodsand services 17.2 13.6 13.2 8.3 8.9
STRUCTUREof the ECONOMY 1975 1985 1995 1996 G (% of GDP) Growthrtes of outputand investment (%) Agriculture 32.0 28.4 20.5 20.2 30T Industry 42.8 43.1 48.8 49.0 20 l Manufacturing 31.6 35.4 38.1 38.1 Services 25.2 28.5 30.7 30.8 1 10
Privateconsumption 61.9 53.1 46.0 47.6 91 92 93 94 95 96 Generalgovemment consumption 7.6 13.2 11.4 11.1 GDI - DP Importsof goodsand services 5.0 14.0 19.3 17.1
1975-85 1986-96 1995 1996 (averageannual growth) Growthrates of exportsand Imports (%) Agriculture 5.4 4.3 5.0 5.1 40 Industry 10.4 13.5 13.9 12.1 T Manufacturing 13.0 13.0 13.3 11.7 20 Services 9.8 9.0 8.3 7.90 Privateconsumption 8.2 8.8 9.7 11.9 0 -_/_____i Generalgovemment consumption 9.0 9.2 -6.3 8.3 91 92 93 94 95 96 Grossdomestic investment 9.8 10.8 16.2 7.6 -20 Importsofgoodsandservices 22.1 11.7 10.8 8.8 - Expors Imports Gross national product 9.0 9.8 9.0 9.7
Note:1996 data are preliminaryestimates. The diamondsshow four keyindicators in the country(in bold) comparedwith its income-groupaverage. If dataare missing,the diamondwill be incomplete. China
PRICESand GOVERNMENTFINANCE 1975 1985 1995 1996 -- Domestic prices Inflation(%) (% change) 30- Consumerprices .. 9.2 17.1 8.3 20 - ImplicitGDP deflator -0.9 10.1 13.2 7.0 2o Governmentfinance (% of GDP) _ Currentrevenue .. 25.5 11.2 11.3 91 92 93 94 95 96 Currentbudget balance .. 6.7 0.5 0.6 GDPdef. -Q-CPI Overallsurplus/deficit .. -0.5 -1.7 -1.5
TRADE 1975 1985 1995 1996 (millionsUS$) Exportand Importlevels (mill. USS) Total exports(fob) .. 27,350 148,770 151,073 200,000 Food .. 3,803 9,954 10,232 Fuel .. 7,132 5,335 5,929 150,000fo Manufactures .. 13,522 127,283 129,141 Total imports(cif .. 42,252 132,078 138,828 100,000-_ Food .. 1,881 9,126 7,866- Fuel andenergy .. 172 5,127 6,877 50.000 Capitalgoods er 18,694 57,481 63,901 | Exportprice index (1987=100) . 92 133 132 g0 91 92 93 94 95 96 Importprice index (1987=100) 78 132 131 Exports aImports Termsof trade(1987=100) 118 101 100
BALANCEof PAYMENTS 1975 1985 1995 1996 (millionslJSS) Currentaccount balance to GDPrado (%) Exportsof goodsand services 7,828 28,163 147,240 153,740 4 Importsof goodsand services 8,097 41,149 135,284 141,340 T Resourcebalance -269 -12,986 11,956 12,400 Net income 0 932 -11,774 -10,370 l i Net currenttransfers 0 171 810 1,580 O K| i I , Currentaccount balance, 90 91 92 93 94 95 96 beforeofficial capital transfers -269 -11,883 992 3,610 -2
Financingitems (net) .. 9,443 21,477 28,030 j Changesin net reserves .. 2,440 -22,469 -31,640 -4 - Memo:. Reservesincluding gold (mill. USS) .. 16,853 80,312 111,690 Conversionrate (local/US$) 1.9 2.9 8.4 8.3
EXTERNALDEBT and RESOURCEFLOWS 1975 1985 1995 1996 ,B (millionsUS$) Compositionof total debt 1996(mill. US$) Total debt outstandingand disbursed .. 16,696 118,090 128,817 A IBRD 498 7,209 7,616 G 7616 B IDA 431 7,038 7,579 2407579
Total debt service .. 2,478 15,066 15,756 - IBRD .. 26 810 840 ,51311 IDA 4 63 73 E Compositionof net resourceflows 21737 Officialgrants .. 117 328 248 Officialcreditors .. 1,117 7,902 4,359 Privatecreditors .. 2,867 5,013 6,454 Foreigndirect investment .. 1,659 35,849 40,180 Portfolioequity .. 0 2,807 3,466 F 63977 World Bankprogram Commitments .. 1,092 2,850 1,900 A - IBRD E - Bilateral Disbursements . 565 2,269 2,097 B - IDA D - Othermuatilateral F - Private Principalrepayments .. 0 364 364 C - IMF G- Short-termr| Netflows .. 565 1,905 1,734 i I Interestpayments .. 29 509 549 Net transfers .. 536 1,396 1,185
DevelopmentEconomics 3/4/98 Note:The dollarestimates for China'sGNP per capita,GNP and GDPare preliminaryfigures based on an on-goingWorld Bankstudy of China'sGDP. They were calculated to facilitateinter-country comparisons. Official statistics are used as thebasis for all othereconomic analysiscontained in this document. Annex 1 1 Tarim Basin II Project
SUMMARY OF LOCAL BENEFICIARIES PARTICIPATORY DEVELOPMENT PLAN
1 Introduction
This Annex summarizesthe Local BeneficiariesParticipatory Development Plan for the Tarim Basin II Project. Almost ninety percent of the Project beneficiariesbelong to minoritynationalities which thus are the primary target group of the Project. However,the plan is not only a plan for this part of the beneficiarypopulation, but it coversall Project beneficiaries.The detailedLocal BeneficiariesParticipatory Development Plan, which also includesthe results of the Social Assessment(SA) that was conductedfor TarimII, is providedas Annex 5 of the PIP and in the Project Files.
2 Significanceand Purpose of the Local BeneficiariesParticipatory Development Plan
The purpose of the plan is to help ensure a culturallycompatible development in the Project areas where primarily minoritynationalities live, based on the informedparticipation of the local beneficiariesthemselves. It intendsto establisha participatorymechanism in Project management,with clear regulationsand rules for farmers' participationin all of the Project'sprocesses. It also aims at buildingfarmers' commitmentand capacity to participatein Project decision-making.The plan specifieswhat social measuresand institutionalarrangements will be addressedand incorporatedin the Project for its intendedbeneficiaries, how they will be carried out and monitored,and how farmerswill be able to managethe process of change as the Project is implemented.
3 ProjectManagement Organization
In order to coordinateand encouragelocal development,the PMOprepared the Local Beneficiaries DevelopmentPlan and has taken responsibilityfor its realization.This work took place in cooperationwith outside experts, a team contractedfrom the EconomicInstitute, Academy of Social Scienceof Xinjiangto carry out the SA study.
In the Project process,the PMOs at various levels will fulfill their duties in the followingaspects:
(1) disseminateamong the rural householdsabout the Project aims, scopes, contents/components, schedules/timing,and implementationarrangements, so that local farmers can make their own choices regarding Project activities and make decisionson arrangementof Project components;
(2) pay special attentionto social issues identifiedin relationto Project design and implementation,resettlement (voluntaryand involuntary,if applicable),adjustment of water charges,land allocation,etc., so as to adapt the Project componentsto local circumstancesand needs and avoid or minimizeany possiblenegative impact;
(3) coordinateand arrange farrners'labor input, collectedfunds, and other kinds of private investmentin the Project;
(4) superviseallocation of reclaimedand improvedland to farmers;
(5) supervisetraining programsfor local farmers;
(6) gain feedbackinformation from farmersand incorporateit into Project evaluationand management;
(7) monitorProject economicand social benefits. 4 ProjectBeneficiary Identification
Minority nationalities are the overwhelming majority of the Project population, of which the Uygur constitute about 84.66%, Hui 1.3%, Mongol 1.09%, Kirghiz 2.37%, Kasak 0.03%, and others 0.7%. Han people in the Project area are the minority population and constitute merely about 12.4% of the total. Poor farmers/herdsmen will be the direct Project beneficiaries. Among the 576,900 households that will be directly and/or indirectly affected by the Project, 114,335 are below the poverty line and have an annual net income of less than 530 Yuan per capita (1995). The poorest households are 20,776 whose annual net income is even below 300 Yuan per capita (1995).
5 Local Socio-Economic Conditions
5.1 Social Structure and Organization
Social Structure. The local social structure in the Project areas is characterized by a hierarchy of government administration from township through county to prefecture and the Regional government. Below the township government, the village is the major social organization that is the farmers' own self-governed community. In the community there are smaller groups called villager groups (previously the production groups) formed on the basis of hamlets or neighborhoods. The last social unit is the household which is at once the farmers' living unit and the productive unit. Normally, on the levels of prefecture, county, and township, there are the government authorities, Communist Party organization, People's Congress, discipline supervision commission, women's association, Communist young league, birth planning commission, and civil affairs and religion management organizations.
Local Family Structure. All the nationalities obey the monogamous marriage. 80% of the farm households in the Project areas belong to the nuclear family, and about 15% are extended families. Other family types are rarely seen. When children grow up and get married, they usually leave their parents' home but still keep close kinship relations with each other. Like most other places in China, old-aged parents are normally sustained by their children, no matter whether they are residentially separated or not. Because the southern part of Xinjiang is the area where the minority nationalities live, birth control policies are relatively relaxed towards the minority families. Unlike the one-child policy for the Han families, a minority woman has the chance to give birth to two children. If the first two children are girls, the mother will be allowed to have a third. Therefore, the local families usually have more than four family members.
5.2 Productive System
In the rural areas covered by the sub-Projects, land is owned by village communities and contracted to farm households for cultivation through the productive responsibility system. Farmers arrange grain, cotton, and other crop planting in different proportion, in accordance with the contracts for the annual order of different crops. They have to prepare production funds either by themselves or by loans from the rural credit cooperatives, for the production costs such as seeds, fertilizer, pesticides, farm film, farm tools, water charges, and machinery fees. Farmers then do on-farm work in their own fields based on their household unit. After harvest, farmers hand in the agricultural tax (usually in kind) which is 3% of the yields. Deducting food, seeds, and breeds, they sell the state grain and all cotton to the state. Then they can sell the rest products in the farm markets. All the incomes from the sale belong to farmers themselves. In recent years, some economic crops like cotton and water melon have had good market prices. Many farmers would rather decrease the grain planting area for extending cash crop cultivation. The farm households hereafter increase their incomes while purchasing grain from market for food and the state grain. 5.3 Social and Legal Statusof MinorityPeoples
5.3.1 Legal Status ofMinority Peoples
According to the Chinese Constitution, the Law of Regional Nationalities' Autonomy and the relevant rules and regulations of Xinjiang Uygur Autonomous Region, minority people and Han alike enjoy equal social and legal status and rights, including cultural activities, religious beliefs, traditional customs, and economic development. The Chinese Constitution states that all the nationalities have the rights and freedom to retain or reform their own customs.
5.3.2. Ability of Minority Peoples to Obtain Access to and Effectively Use the Legal System to Defend their Rights
Rural villages in the area have received primary legal education through the legal knowledge dissemination movement. Villagers are informed about citizens' rights and obligations, and have knowledge of laws and by- laws. The courts at prefecture, county, and township levels, the attorney offices, and the villager coordination committees provide farmers with consultation and coordination with regard to their legal problems. Villages and villager study/production groups are usually the first instances in which farmers acquire legal knowledge, production techniques, and educational training; and through which farmers convey their opinions and considerations. Usually farmers are able to use their social and legal channels to communicate with local authorities and to solve problems among themselves.
5.3.3 Minority Peoples'Representatives in Local Congress and Administrative Authorities
According to the Chinese Constitution, the Law of Regional Nationalities' Autonomy, and the relevant rules and regulations of XUAR, minority peoples as well as women must have a certain proportion of representatives in both the congresses and the government authorities, based on congress election rules and the government official appointment regulation. In the minority nationality areas minority representatives must be appointed as the major leaders of the People's Congress and the government. These representatives and officials hence fulfill the minority nationalities' autonomous rights, in accordance with the law on behalf of local minority peoples.
6 Minority Peoples' Religious Beliefs, Folk Customs, and Cultural Traditions
The Uygur, Hui, and Kasaks are of the Islamic faith. The Mongols believe in Lamaism. Some few Han hold Buddhism, Taoism, or Christianity. Uygur farmers mostly retain their traditional Muslim culture and folk customs, as expressed in their mosques and daily worship as the religious rituals, as well as in their clothing and eating habits, housing and decoration, and marriage and funeral customs. A number of features of modern lifestyle have also entered their lives, such as ties, electric and electronic equipment, motorcycles, and motorvehicles.
7 Government Preferential Policies
According to national and Regional policies, the government authorities in the Project areas set up special subsidies for local minority peoples in five aspects: poverty reduction funds, development construction funds, subsidies for the minority area, infrastructure construction subsidies, and education subsidies. As for appointments of officials in the governments and other work units, selection of technological specialists in the scientific institutions, as well as choice of students and workers in the universities and enterprises, in all these matters the governments have required close attention to the minority applicants, and set special quotas for the minority candidates, so as to ensure the chances for the minority people. 8 Strategyfor Local BeneficiariesParticipation in the Project
Local farmers know best about their own situationin the circumstancesto be changed under the Project, and only their consultationand participationwill lead to real sustainabledevelopment, consistent with the farmers' wills, dignity,and cultural uniqueness.To encouragethe local farmers' participationand build their participatory capacity as the overall Project social objectives,the plan thereforesets forward a participatoryapproach to Project designand implementation,so as to ensurethat the localbeneficiaries benefit to the maximumwhile the Project fits best in the social developmentof the local minorities.
8.1 Main Features of ParticipationPlan Activities
The Regional PMO has the overall responsibility for the implementation of the Local Beneficiaries Participation Action Plan. The Planning Division of the PMO has the direct responsibility for its implementation.
The PMO takes responsibility for assurance of the project's acceptability to the local people, based on intensive social assessment and communication. From the county level down, the PMOs contact and consult with local people in cooperation with local administrative authorities and village councils, mobilizing and organizing people to participate in the Project process. To ensure adequate interaction with the Project beneficiaries and improved internal PMO training and information exchange, the PMOs at all levels will include at least one sociologist in addition to other technical staff. These sociologists will be trained in social assessment and communication techniques. In addition, international and domestic consultants will support the implementation of the participation activities.
The Social Assessment showed that there are two typical channels of information dissemination in the Project areas, namely (1) radio and TV broadcasting for initial information, (2) villagers' meetings which regularly take place in each village and where important issues concerning the community are discussed. Both these channels will be used for interaction with the beneficiaries.
The villagers' meetings are the local communication vehicle which will play an important role for the interaction between the PMOs and the farmers. At all stages in the Project PMO personnel will call and/or participate in villagers' meetings to talk with the beneficiaries. The villagers' meetings permit two-way interaction because any discussions and decisions taken in these meetings can be fed back to the PMOs. This relates to siting of structures, to determination of construction dates, timing for labor contribution so as not to interfere with agricultural activities, decisions about land allocations, etc.
A third important channel of interaction with farmers, namely direct door-to-door discussions will also play an important role, e.g. concerning siting of canals or bridges close to farmland. In the design phase during Project preparation this channel has already been extensively used.
As spelled out in the Monitoring and Evaluation Plan (PIP Annex 15), annual surveys are to be carried out with a stratified sample of Project beneficiaries which will permit to adjust implementation of the Project along the way. The general household surveys will be complemented by special studies concerning e.g. IPM and SIDD. They will also be complemented by focus group discussions.
Care will also be taken to involve women. Since women are organized through the local women's associations (for every ten households there is one representative) they are represented in the villagers' meetings. The women's federation will also be adequately included to make sure that women's specific necessities are taken into account. Given women's increasing involvement and responsibility concerning farming and stock breeding, it has especially to be made sure that they benefit from the planned training activities, including study tours. In the aggregate, at least 30% of the training activities and study tours will be reserved for women.
The administrative management set-up provides a direct and close link between local people and the different levels of the PMOs and government departments (the Autonomous Region, prefectures, counties and cities). Members of these organizations pass Project information to communities, villages and local residents. The system also allows to feed back villagers' views, suggestions, and recommendations to the management entities and to return suggestions and solutions to villagers because of the direct interaction with Project personnel.
Design and implementation of the Project depend on a negotiation process between technical personnel and the intended beneficiaries. Since farmers' labor contribution is an important input in implementation activities the Project will not proceed if they are not satisfied with decisions taken or components suggested since they can decide not to participate in the construction.
9 Monitoringof DevelopmentActivities
The monitoringof the local beneficiariesparticipatory development is designedto be associatedwith the Project monitoringsystem as a wholeto be undertakenby the RegionalPMO. The monitoringindicators for the Project are contained in the Monitoringand EvaluationPlan (see PIP, Annex 15). Annex 12 Tarim Basin II Project
KEPING VOLUNTARY SETTLEMENT ACTION PLAN
The Project contains a voluntary settlementcomponent. The settlementwill take place in Keping County,Aksu Prefecture and affect 2,000 householdsor an estimated 10,000people. ThisAnnex providesa summary of the component.The detailed "KepingVoluntary SettlementAction Plan" is availableas Annex 6 of the PIP and in Project Files.
1 Objectiveand Scope of the VoluntarySettlement under the Sub-Project
The objective of the Laoqilangvoluntary settlement is to improvepoor farmers' livingstandards through voluntary relocation.Keping county is a small and nationalpoverty county.In the Kepingbasin where farmerswill move out, very limitedland resourcesand even more limitedwater resourcesare the major reasons for the poor agriculturalyields and incomesof farm households.Relocation of part of the farm populationfrom the arid basin to a newly established irrigationdistrict is the only way to mitigatepopulation tension and povertypressure. There are two groups of beneficiaries.Those poor farmers who will relocate and be providedwith a new and better livelihoodand those poor farmerswho stay behind in a situationof less populationpressure and resourcescarcity. The Laoqilangvoluntary settlementwill be combinedwith the Laoqilangirrigation project to be financedby the Aksu Sub-Project.The settlementcomponent itself will be financedby Kepingcounty. 2,000 farm households(10,000 people) in KepingCounty will voluntarilymove fromthe arid mountainarea to a new irrigationdistrict to be implementedunder the subproject.All the settlers will be Uygur poor farmers and absolutelyvolunteers.
2 Relevant Social Policy and ResettlementAgency
In order to encouragethe poverty-reduction-through-voluntary-resettlement,the relevant preferencepolicies are set forth by the Keping governmentauthorities as follows:
1) the farm householdsto relocate arrangetheir own properties(houses, orchards, attachments to land, etc.) at their will for as long as they want; any of the propertiesnot to be moved for the momentare kept for the owners by the villages in the old sites;
2) resettlerskeep their contracted orchardsand forests in the old sites, as long as they want to keep the terms as contracted;
3) resettlersare allocated3.75 mu of individualfarmland per capita and 0.25 mu of collective farmlandper capita in the new site so as to ensure their agriculturalincomes with adequatecultivated land;
4) resettlersreceive landleasecontracts for 30 years for their farmlandin the Laoqilangirrigation district;
5) the farmlandto be reclaimed in the Laoqilangirrigation district is exemptfrom agriculturaltax, the water resourcesfee and any other taxes for 5 years;
6) the farmlandto be reclaimedin the Laoqilangirrigation district is free from land lease charges and from the collective reservationcharge or collectiveland-use charge for the first 3 years;
7) the farmlandin the old sites originallyallocated to the householdsto relocate are reservedfor them for 3 years while being in compliancewith the plantingand managementplan of the home villages;
8) if any unforeseendelays in constructionin Laoqilangshould occur, then the time limit to return the originalfarmland to the old village will be extendedso as not to deprive the family of their livelihood; 9) the county government subsidizes resettlers with 2,000 Yuan per household for their housing and with another 500 Yuan per household for moving (200 Yuan) and purchase of productive materials (300 Yuan);
10) Farmers are free to unconditionally return to their old villages at any time. They will be compensated for any investments they have made in the new site (including land leveling and improvements in housing);
11) resettlers will be informed about all of their rights and obligations with regard to the resettlement as outlined in the plan before they decide to resettle.
In order to undertake the voluntary settlement, labor mobility/resettlement management agencies are set up at each level of village, township, and county. Keping county government set up The Voluntary Settlement Management and Coordination Committee, which is chaired by the governor of the county and comprised of leaders in the county's line departments and the related townships. The townships and villages concerned also form similar relocation management organizations in charge of mobilizing and organizing farmers, selection and registration of resettlers, physical relocation, land reclamation and allocation, infrastructure construction, production development, and so on.
3 Description of the Settlement Sub-Component
One of the components of the Aksu subproject is the pumping irrigation scheme for land development in the Laoqilang district, Keping county. It is planned to reclaim 40,000 mu of desert/wasteland with establishment of the Laoqilang pumping station and its canal system, so as to develop local agriculture and alleviate poverty. The Laoqilang irrigation project consists of the outside and the inside part. The outside part includes the pumping station, the main, branch, and lateral canals, and power conversion and flood protection. The inside part includes land development (such as land leveling and desalinization, on-farm work, and tractor roads) and other additions to the infrastructure of the district (such as the 10 kv power lines, communication lines, and water supply and drainage). In the first year, 1,000 farm laborers are projected to relocate and 10,000 mu of land will be reclaimed in the new site. In the second year, another 1,000 laborers will move in to reclaim another 20,000 mu of land. In the third year, a further 500 laborers will move in and another 10,000 mu of land will be reclaimed. Thus, in the first three years, a total of 2,500 farm laborers will relocate and about 40,000 mu of land will be developed. In the later two or three years the laborers' families will be organized to gradually settle down in the new site. Eventually there will be 10,000 people in 2,000 families relocated in the Laoqilang irrigation district. Thus the planned voluntary settlement will lead to relocation in parallel with land reclamation, and the resettled farm households will have a stable livelihood immediately after their relocation.
4 General Conditions and Natural Resources of Keping County
Keping county is located in mid-south Xinjiang, with a total area of 12,047 s.km. of which 72.4% are mountains and 27.6% are plain. There are about 1.2 million mu of cultivable land, and 1 million mu are suitable for grassland and forests. There are only two small springs (the water runoff is about 2.9 c3ms) in the entire county which causes serious water scarcity. At present, the generally cultivated land is only about 45,000 mu, and about 1.3 mu per capita (actually less than 0.8 mu/capita in some villages and production groups). Although there exists quite a lot of grassland, it mostly is the arid- desert-like grassland which does not really serve husbandry well. Shortage of cultivated land and lack of water resources cause low productivity and poverty to the local population. Since 1985 Keping county has been listed as a national poverty county. In 1996, net income of the rural population was on average 612 Yuan per capita. Keping county covers three townships and one town, including 24 administrative villages, 147 villager groups (hamlets or production groups), 8,235 households and 38,900 people. Its agricultural population is 30,603 people. The residents are Uygur, Han, Kirghiz, and Hui, and the Uygur account for 99% of the total. Among the rural residents, poverty population amounts to 10,160 people in 2,260 farm households, i.e. about 30% of the rural population. 5 The Basic Conditions of the Keping Basin as the Old Site in Voluntary Relocation
There are two townships and one town (including 17 villages) in Keping basin where the poverty farm households are planned to move out. The total population is 24,545 people who all are Uygur. The factors that determine the scale of the settlement movement are mainly reflected in three aspects: the tension in environmental carrying capacity of the old settlement, the size of land development in the new sites, and the farmers' willingness to move. In the relocation census and consultation, farmers expressed great interest in the Project. In a primary registration in preparation for the relocation, for example, 2,518 households (about 12,896 people) applied for moving to Laoqilang, and among them 1,258 households (6,539 people) voluntarily asked to relocate in the first year of Project implementation.
The Laoqilang Project area is planned to occupy 57,300 mu of land. After Project completion, the Laoqilang irrigation district will cover 48,000 mu of land, and increase 42,000 mu of farmland to Keping county as a whole. By then, the county's average farmland per capita will double to be 2.6 mu. For both mitigation of the population pressure in the old settlement and the prospect of production increase in the new site, relocation of 10,000 farmers to the Laoqilang area is viewed to be appropriate, given the fact that 4 mu of farmland per capita is adequate for livelihood development of farm households in the new irrigation district.
6 Selection and Consultation of Voluntary Settlers
Selection of villages. The resettlers must be poor Uygur farmers in Keping county who request to relocate. Consequently, the selection of the villages from where farmers move out must be in line with the principle of poverty reduction as well -- i.e., poverty and poor environment carrying capacity are the first priority in village selection. In general, except for very few villages whose living environment is extremely bad and simply cannot offer people an adequate livelihood any longer, in most moving-out villages the relocatees' number should not exceed half of the population in each of the villages. As a result, there will be comparatively more moving-out villages and less relocatees in each of them, so as to share the opportunity of voluntary relocation among as many villages as needed, and to leave fair room for production management and environmental control in both the old and new sites.
Selection of voluntary settlers. The criteria for voluntary settlers are also based on poverty and living conditions. The first level of the voluntary settlers' selection criteria are designed as follows:
1) annual net incomes less than 300 Yuan/capita; 2) annual grain less than 250 kg/capita; 3) ages of household heads in the range of 18-50; 4) household heads are preliminary literate; 5) household heads are healthy and no family members are seriously ill or disabled; and 6) family laborers account for 60% or more of the total of family members, or at least two laborers in a family.
While the above criteria are basic and indispensable for relocatee selection, it may be needed to set forth further conditions in line with the basic principle, given the fact that the applicants are many more than the planned number of voluntary relocatees. In order to select the most appropriate relocatees among all the applicants who meet the first level of criteria, the second level of the selection criteria are designed further as follows:
1) applicants with strong willingness of voluntary relocation (15 points); 2) annual net incomes less than 250 Yuan/capita (30 points); 3) annual grain less than 150 kg/capita (20 points); 4) farmland less than 0.8 mu/capita (20 points); and 5) farmers educated in middle school or higher, or skilled in agricultural production, or as specialists in teaching or medicine (15 points).
In addition, in order to speed up the establishment of the new settlement and new production base, it is viewed as possible to select some capable people, who are in the middle or upper level of living standards among the villages (net incomes of 300-500 Yuan/capita as middle and 500 Yuan or more as high level in the poverty area), as voluntary relocatees. This kind of people should have some special skills and intend to be the pioneers in the new site creation and development, and their number should be limited to 10% of the total relocatees. The conditions set forward for their selection are as follows:
1) annual net incomes at middle or high level of Keping county; 2) education level over middle school, with enterprising spirits, management ability, and organizing capability; 3) with skills and ability to promote social/productive connection with the outside world of the villages; 4) with the intention and ability to lead fellow villagers to a better standard of living;
The Procedure of voluntary settler selection is that farmers submit their application for relocation which is to be verified by the township authority and approved by the county government. The voluntary relocation and re-establishment of the new settlement will be implemented mainly based on farmer self-reliance, with proper subsidies from the government. The voluntary relocatees can return to their home villages at any time they want. Before selection of the out-moving villages and the voluntary relocatees, the relocation management agencies and local governments must make full propaganda of the Laoqilang Project and the significance of the voluntary settlement movement through various media like radio broadcast, television, wall-posters, and village meetings. The agencies also must mobilize and organize farmers through household interviews and group meetings, consult with farmers and inform them of the purpose, objective conditions, and selection criteria of the voluntary relocation, and to have their voices/views feed back to the selection preparation in particular and the Project planning in general. The selection of voluntary relocatees begins with submission of applications by farmers. All the farmers in the villages selected have rights to apply for relocation and rights to refuse relocation. There is no discrimination and compelled obedience. All the households (including the household adult members) who want to relocate must submit their written applications to the village councils and fill out application forms. The township Voluntary Settlement Management and Coordination Committee will review and sift the applications according to the selection criteria and make a short list for the county Coordination Committee which will finally verify and approve the selection. The outcomes of the selection will be made public and reviewed among the villagers. In any case farmers have rights to raise concerns about the selection and to receive answers from the Committee.
7 Selection of the New Settlement: Natural Resources and Development Potentials
The Laoqilang Project area is located in the southern part of the flood-alluviated plain in the front of the Achia mountain. The national highway 314 is to its north; Aksu city is 70 km to the east, and the Keping county seat is 80 km away. The township closest to the Laoqilang area is located between Laoqilang and Keping at a distance of 50 km. The area is thus desert land and currently free from residents and economic use so that no conflicts will arise due to the arrival of the relocatees. The Laoqilang area is 11 km long and 9 km wide, totaling about 140,000 mu of which 57,300 mu are planned to be the new settlement deployed with adjacent villages. The Laoqilang engineering Project is to build a main canal from the Aksu River to a pumping station to be built up in this area, for irrigating the tens of thousands of mu of land to be reclaimed. In the Laoqilang area one township including 9 villages is planned to be set up. The resident area will be about 2,689.5 mu, in which the township public buildings and facilities will occupy about 727.5 mu of land, such as the township office, schools, hospital, markets, technical services, enterprises and commercial services, etc. This set-up including road access to be built will ensure farmers have all necessities for their daily lives and health as well as facilities for marketing of their produce. Village facilities (offices and social services) and farmers' housing will occupy 1,962 mu of land (Farmers' housing area is designed on the basis of 30-50 sm./household, plus a yard).
The infrastructure of the new settlement, such as land leveling, roads, power and water supply, and some public services, will be constructed in parallel with construction of the Laoqilang engineering Project, namely, the main canal and the pumping station. Because the Laoqilang area is originally part of the desert, the connection with outside resources (roads, power, and water) will be financed by the engineering Project; while the inside power and water supply will be budgeted to the voluntary settlement program. All the infrastructure construction should be completed within the initial two or three years, so that when farmers' households start to move, the new site will be ready for them to live in. 8 Establishment of the Production Base
As the agricultural production base, there are 44,500 mu of land planned to be reclaimed in the new settlement. This land, for the sake of unified machinery cultivation, will be demarcated into 286 strip fields 256 of which, about 42,000 mu, will be used for cotton and wheat. Cotton will be the major crop, occupying about 54% of the land; and winter wheat will be sown for the 46% where corn is also planted in turn. All the others will be 225.7 mu of orchards, 2,962 mu of economic forests, 560 mu of demarcation trees, and 2,919 mu of protection forests for farmland, roads, and canals. Relocated farmers will be individually allocated 3.75 mu of farmland free from agricultural taxes and water charges for five years. The land is also free from the land lease charge and the collective reservation charge or land-use charge for a period of three years. In addition, after 3 years of relocation, farmers can contract for more land from either the village authorities (some extra land will be saved after initial land allocation for further development) or some households who transfer to non-agricultural business. It will also be possible for some capable farmers to cultivate relatively larger-sized farns, about 100-150 mu of land, when local economic development requires farmers to readjust themselves to a new management style of their livelihoods. Local authorities also plan to establish some sideline processing industry in the new settlement. A cotton processing enterprise will be built up and financed by the Aksu PMO. Keping county further plans to build two plants for food processing and seed processing. After the voluntary relocation, a relatively complete agricultural development system will be achieved.
The settlement Project also includes training and education programs for voluntary settlers, namely
* school education for young settlers: according to the relocation schedules, in the first year of family moving the children schooling rate will be 95% for the primary school and 90% for the middle school. In the second year and later, it will reach 98% or more for both.
literacy classes for adults: in the new settlement, each village will set up a literacy class in Uygur for the illiterate adults. The aim is to eliminate illiteracy among the villagers within three years.
* technical training in irrigation, agriculture, and animal husbandry: Farmer technical training is specifically emphasized as resettlers need to adapt to the intensive irrigated-agriculture in the new settlement. Training will be conducted for agriculture, water resources, forestry, animal husbandry, and engineering techniques to train farmers with necessary special knowledge and practical skills (a preferable condition for the technicians is to be able to speak Uygur). Training will be held in classes and workshops in either the township or village sites and through on-the-spot demonstrations. In each village there will be some key farmers to be trained first, and they will spread their knowledge among fellow villagers.
9 Cultural Affirmation and Social Support
Farmers will relocate to Laoqilang in their original village forms and live with their old neighborhoods if they so wish. They will keep their traditional community organization to perform the folk customs and religious beliefs in their daily lives. For instance, they will have their mosques and imams in the new settlement to pursue their religion. 80 km away from their hometown, the only difference in the new site in the future is the improved production base on which their lives are able to be better-off under their own efforts. In addition, new productive facilities and new social services will be established with governmental and social support to facilitate farmers' social adjustment.
10 Improvement of Living Conditions in the Old Site
After the voluntary relocation from the Keping basin, population pressure will be mitigated in the old site. The balance of the local environmental carrying capacity will be improved and the farmland per capita will almost double. In order to improve local ecological environment and reduce poverty among the remaining population, further steps must be taken in two aspects. One is to strengthen water resources control and management. The county and township authorities plan to mobilize and organize farmers to improve the existing canals and on-farm work, in order to save more water for crops in need as well as protect the fields from soil erosion. The other is to properly readjust local cropping and agricultural patterns, in order to improve land quality and develop diversified economic production by combining crop planting, animal husbandry, forestry, and sideline activities in a virtuous circle.
As was mentioned above, care will be taken in the selection of relocatees to make sure that the population distribution in the villages from which people relocate is not adversely affected. Not more than 50% percent of the population in each village can emigrate.
An important benefit to the remaining populations will be the redistribution of the farmland vacated by the relocatees. It is planned that the farmland will be redistributed to all remaining households in the village. Reallocation will be linked to the available labor in each family to make sure that the increased farmland can be adequately farmed by the household.
11 Monitoring System of Voluntary Settlement
There will be two monitoring systems. One is the internal system conducted by the relocation agencies/PMOs. The other is the external to be contracted to an outside monitoring unit (tentatively the Economic Institute, Academy of Social Science of Xinjiang).
Monitoring Procedures. Baseline Data Collection: As part of Project implementation, the Social Assessment team from the Economic Institute has conducted a sample survey in the Keping basin, based on which the follow-up survey of relocation implementation may be carried out (10%).
Reporting system: Besides the quarterly report by the internal monitoring of the relocation agency, there will be a annual report by the external monitoring unit. Both help steer the voluntary settlement implementation.
Fixed Household Tracking: Assisted by the Rural Investigation Team from the Bureau of Statistics 1% of the relocated household will be selected for regular monitoring by the relocation agency. MAP SECTION IBRD29489
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