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World Bank Document Do_imntof TheWorld Bank FOROMCIAL USE ONLY Public Disclosure Authorized Report ro. 6514-AL Public Disclosure Authorized STAFF APPPRAISAL REPORT DEMOCRATICAND POPULARREPUBLIC OF ALGERIA CHELIFF IRRIGATION PROJECT April 1, 1987 Public Disclosure Authorized Public Disclosure Authorized Regional Projects Department Europe, Middle East and North Africa Regional Office Agriculture II Division This documenthas a restricteddistribution and may be usedby recipientsonly in the performance of their officialduties. Its contentsmay not otherwisebe disclosedwithout World Bankauthorization. CURRENCY EQUVALENTS Currency Unit Dinar (DA) US$1.00 DA 4.7 DA 1.00 US$0.213 WEIGHTS AND MEASURES The metric system is used throughout this report. FISCALYEAR January 1 - December 31 GLOSSARYOF ABBREVIATIONS BADR Banque de l'Agriculture et du Developpement Rural (Bank for Agricultural and Rural Development) DAD Delegation Agricole de Daira (Agricultural office of MAP at the DaYra level) DAP Direction de l'Agriculture et de la Peche de la Wilaya (Provincial Directorate for Agriculture and Fisheries) DAS Domaine agricole socialiste (Socialist Sector Farm) DGPI Direction des Grandes Perimetres Irrigues (Department of Irrigation and Drainage of MHEF) LSI Large-scale Irrigation MAP Ministere de l'Agriculture et de la Peche (Ministry of Agriculture and Fisheries) MHEF Ministere de l'Hydraulique, de l'Environnement et des Forets (Ministry of Hydraulics, Environment and Forests) OPI Office des Perimetres d'Irrigation (Regional Irrigation Authority) SDA Secteur de Developpement Agricole (Agricultural Development Service) SMSI Small and Medium-Scale Irrigation FOROFFCIAL US ONLY STAFF APPRAISAL REPORT DEMOCRATICAND POPULAR REPUBLIC OF ALGERIA CHEI1FF IRRIGATIONPROJECT LOAN AND PROJECT SUMMARY Bornower Governmentof Algeria AmAount US$94million equivalent Terms 15 yearsincluding 3 yearsof grace,at the standard variableinterest rate. ProsectDesor4dipti: The proposedProject has the followingobjectives: (a) at the locallevel: (i) to implementthe first priorityinvestment package for the developmentof the Cheliffriver basin; and (ii)to safeguardand improve the incomeof the farmersand theirfamilies living in the subprojectareas and improvesocial welfare by providingsome basic infrastructure;(b) at the sector level: (i) to developand implementnew institutional arrangementsto ensureadequate water management, operationand maintenancein the Cheliffriver basin which,when replicated,would benefit all major irrigationin the country;and (ii)to developand improveinternal financing of O&M by increasinguser chargesto fullycover costs; and (c) at the national level,to developefficiently irrigation potential in the countryby expandingthe large-scaleirrigation areaspresently used for irrigationby about252. The Projectwould consist of (a) rehabilitationof existingirrigation infrastructure over 5,000 ha in Bas Cheliff;(b) constructionof new irrigationsystems over8,000 ha in Haut Cheliff;(c) provisionfor equipmentand vehiclesfor extensionand O&M staff; (d) technicalassistance for the supervisionof works, for studiesof furtherirrigation works in the Cheliff valleyand for O&M; (e) trainingand recruitmentof localstaff; and (f)on-farm investments. The riskof slowproject implementation which was experiencedwith a previousProject has beenminimized by careful designof the procurementpackages to facilitate efficientconstruction operations (large contracts). The riskof a slowerbuildup of benefitsthan the conservativeestimate made has beenminimized by introducinga strictmonitoring system and remedial measuresto be takento improveagricultural performance if necessary. Thk lhas a rstrited distrbutonand maybe ued byrecipients only in the prformac oftheiroffkW dutble ItscentDts mayno othefwisebediscosed wihout World Sankauthoriution. (ii) EstimatedProiect Costs: Local Forsiam Total (US$ million) - Civil works 44.9 45.0 89.9 Equipment and vehicles 5.1 14.7 19.8 Technicalassistance, Training and studies 1.5 5.2 6.7 On-farm Investments 9.8 8.1 17.9 IncrementalRecurrent costs 3.2 2.3 5.5 Total Base Costs 64.5 75.3 139.8 Physicalcontingencies 6.5 7.9 14.4 Price contingencies 20.2 11.2 31.4 Grand total'A 91.2 94.4 185.6 FinancinsPlan: Local Forei Total (US$million) World Bank - 94.0 94.0 Government 32.6 - 32.6 Beneficiaries 7.5 - 7.5 BADR 17.0 - 17.0 Net ProjectCosts 57.1 94.0 151.1 Taxes and Duties 34.5 34.5 Total ProjectCosts 91.6 94.0 185.6 EstimatedDisbursements: 1988 1989 1990 1991 1992 1993 1994 1995 _ ~~(i Tmil-lion)- Annual 2 5 12 16 19 16 15 9 Cumulative 2 7 19 35 54 70 85 94 EconomicRate of Return: The CheliffWater Master Plan: 17X The Project: 15S Staff'AvpraisalReport: No. 6514-AL map No. IBRD 19879A /a IncludingUS$ 34.5 million in taxes and duties. (.ii) SrAFF APPRAISALREPORT DEMOCRATICAND POPULAR REPUBLIC OF ALGERIA CHELIFFIRRIGATION PROJECT Table of Contents PbReNo. I. INTRODUCTION. 1 II. TEE AGRICULTURAL SECTOR ............. ........... 2 A. Role of Agriculture in the Economy ....... ................. 2 B. Experiencewith Past Lending in the Sector * ...............5 III. THE IRRIGATION SUBSECTOR ............... ........ e.ee 6 A. General Performance .............. ........................ 6 B. Subsector Issues Relevant to the Project .................. 8 IV. THE PROJECT AREA ...................................... 11 A. The Cheliff Water Master Plan .............................11 B. Location, Climate and Soils ................... 1...........13 C. Land Tenure, Irrigation and Land Use ......................14 D. Water Demand and Resources ................................ 15 E. AgriculturalSupport Servicesand Institutions ............17 V* THE PROJECT ..... ....... * .... .... .. ...... 20 A. Rationalefor Bank Involvementand ProjectObjectives ..... 20 B. Suiary Project Description .... ................... 21 C. Detailed Features ........... .. ............................ 22 D. Status of Project Preparation ........... ..................24 S. Cost Estimates .............. 25 F* Procurement .............. 27 G. Disbursement ............................................. 29 Thisreport is basedon the findingsof an appraisalmission whichvisited Algeria in April-May1986 composed of Mr. Darghouth (missionleader)-and Ms. Effron(Bank), Mr. Dumaset(FAO/CP). and Messrs.Abu Sharrand Feher (consultants). (iv) Table of Contents (Cont'd) Page No. VI. ORGANIZATIONAND MANAGEMENT...................... 31 A. ProjectOrganization ............... ...................... 31 B. Organisationfor Operationand Maintenance ............... 33 C. Performanceof the SocialistFarms ....................... 34 VII. BEN-FITSAND JUSTIFICATION............. 35 A. General ................ .35 B. Land Use, Yieldsand Production ............ 36 C. Marketingand Prices 39 D. Farm Incomeand PovertyAlleviation ......... 41 E. Cost Recovery......... 43 F. EnvironmentImpact ........... 46 G. EconomicAnalysis . .46 H. Risks and SensitivityAnalysis 49 VIII. AGREEMENTSREACHED AND RECOMMENDATIONS.............. 52 SUPPORTINGTABLES Table1. ProjectCost Summaryand Scheduleof Expenditures.. 54 Table 2. EstimatedSchedule of Disbursementof Bank Loan .... 56 Table3. Listof Equipmentto be Procuredunder the Project. 57 Table4. Costand RentRecovery .e...................... 58 Table5. SelectedDocuments and DataAvailable in the Project File and Annexes in ImplementationVolume ........ 59 CHARTS 1. OrganizationChart of MEF .......... .. 60 2. ImplementationSchedule 61 MAP IBRD.19879A STAFFAPPRAISAL REPORT DEMOCRATICAND POPULAR REPUBLIC OF ALGERIA CHELW!IRIGATION PROJECT L INTRODUCTION 1.01 Duringthe '970s,Algeria experienced high economic growth, with GrossDomestic Production (GDP), in constantprices, increasing by 7.2Zp.a. and GNP per capitamore thandoubling to US$1,930in 1980. The evolutionof the economywas characterizedby stronginvestment growth (more than 151 p.a.),a aighsavings rate (about38% of GDP),substantial growth in the hydrocarbon,industry and constructionsectors, high employment creation and sustainedregional development efforts. However, in additionto pressureon externaland domesticfinancial resources, there were seriousimbalances in the distributionof investmentbetween industry and othersectors, especially the agriculturalsector, during this period. As a result,the agricultural sectorwas unableto satisfythe rapidlyincreasing food consumption(6X p.a. from the mid 19609to the late1970s) and importsg ew sharplyto fillthe gap. Thisgrowing dependence on foodimports caused the Government,in the contextof the 1980-84Economic Development Plan, to increasepublic investmentand to introducemajor reforms to improveperformance of the agriculturalsector. 1.02 Thesereforms included the promotionof privatesector activity in agricultureand small-and medium-scaleindustries through selective credit and taxationmeasures, decentralizing and restructuringparastatal enterprises and statefarms, introducing financial incentives to improvelabor productivityand deregulatingsome agricultural m&rketing and prices. The reformsare beingcontinued under the current1985-89 Plan. 1.03 Among the measurestaken to improveagricultural productivity are thoseaimed at the irrigationsubsector which provides 402 of agricultural production.Programs are underwayto expandthe availabilityof irrigation waterand to improvethe efficiencyof its use by extendingand rehabilitating large-scaleirrigation perimeters, expanding small- and medium-scale irrigationdevelopment, establishing institutions capable of ensuringadequate O&M,and improvingcost recovery policy and mechanisms.The proposedproject
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