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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PAD1790 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 89.20 MILLION (US$125.00 MILLION EQUIVALENT) TO THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FOR A AGRICULTURE SECTOR MODERNIZATION PROJECT Public Disclosure Authorized JUNE 6, 2016 Agriculture Global Practice SOUTH ASIA REGION Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective May 31, 2016) Currency Unit = Sri Lankan Rupee (LKR) LKR 145.95 = US$ 1 US$ 1.40288 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ATD Agriculture Technology Demonstration CBSL Central Bank of Sri Lanka CGS Credit Guarantee Scheme CPCC Central Project Coordination Committee CPS Country Partnership Strategy DA Designated Account EA Environmental Assessment EAMF Environmental Assessment and Management Framework EMP Environmental Management Plan ERR Economic Rate of Return FAO Food and Agriculture Organization FM Financial Management GDP Gross Domestic Product GHG Greenhouse Gas IDA International Development Association IPM Integrated Pest Management IUFR Interim Unaudited Financial Report M&E Monitoring and Evaluation MOA Ministry of Agriculture MOF Ministry of Finance MOPI Ministry of Primary Industries NPV Net Present Value OP Operational Policy PCG Partial Credit Guarantee PDO Project Development Objective PFI Participating Financial Institution PMP Pest Management Plan PMU Project Management Unit PPMU Provincial Project Management Unit PPP Purchasing Power Parity R&D Research and Development RAP Resettlement Action Plan RDD Rural Development Department RPF Resettlement Policy Framework SME Small and Medium Enterprises SMF Social Management Framework TFP Total Factor Productivity TRG Technical Review Group Regional Vice President: Annette Dixon Country Director: Françoise Clottes Senior Global Practice Director: Juergen Voegele Practice Manager: Martien van Nieuwkoop Task Team Leaders: Ulrich Schmitt, Seenithamby Manoharan DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA Agriculture Sector Modernization Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context.............................................................................................................1 B. Sectoral and Institutional Context .................................................................................1 C. Higher Level Objectives to which the Project Contributes ...........................................3 II. PROJECT DEVELOPMENT OBJECTIVES ................................................................5 A. PDO ...............................................................................................................................5 Project Beneficiaries............................................................................................................5 PDO Level Results Indicators .............................................................................................5 III. PROJECT DESCRIPTION ..............................................................................................6 A. Project Components.......................................................................................................6 B. Project Financing.........................................................................................................10 Project Cost and Financing................................................................................................10 C. Lessons Learned and Reflected in the Project Design.................................................11 IV. IMPLEMENTATION .....................................................................................................13 A. Institutional and Implementation Arrangements .........................................................13 B. Results Monitoring and Evaluation .............................................................................15 C. Sustainability ...............................................................................................................15 V. KEY RISKS......................................................................................................................17 A. Overall Risk Rating and Explanation of Key Risks ....................................................17 VI. APPRAISAL SUMMARY ..............................................................................................17 A. Economic and Financial (if applicable) Analysis........................................................17 B. Technical......................................................................................................................19 C. Financial Management.................................................................................................20 D. Procurement.................................................................................................................21 E. Social (including Safeguards)......................................................................................21 F. Environment (including Safeguards)...........................................................................23 G. World Bank Grievance Redress...................................................................................26 H. Greenhouse Gas Accounting .......................................................................................26 Annex 1: Results Framework and Monitoring .........................................................................27 Annex 2: Detailed Project Description.......................................................................................33 Annex 3: Implementation Arrangements ..................................................................................42 Annex 4: Description of the Partial Credit Guarantee.............................................................63 Annex 5: Project Economic and Financial Analysis.................................................................68 Annex 6: Greenhouse Gas Accounting Analysis.......................................................................74 Annex 7: Implementation Support Plan....................................................................................76 . PAD DATA SHEET Sri Lanka Sri Lanka Agriculture Sector Modernization Project (P156019) PROJECT APPRAISAL DOCUMENT . SOUTH ASIA GFA06 Report No.: PAD1790 . Basic Information Project ID EA Category Team Leader(s) P156019 B - Partial Assessment Ulrich Schmitt, Seenithamby Manoharan Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 15-Oct-2016 31-Oct-2021 Expected Effectiveness Date Expected Closing Date 30-Sep-2016 31-Dec-2021 Joint IFC No Practice Senior Global Practice Country Director Regional Vice President Manager/Manager Director Martien Van Nieuwkoop Juergen Voegele Francoise Clottes Annette Dixon . Borrower: Ministry of Finance Responsible Agency: Ministry of Agriculture Contact: Badullage Wijayaratne Title: Secretary Telephone No.: 94112868920 Email: [email protected] Responsible Agency: Ministry Primary Industries Contact: Bandula Wickramaarachchi Title: Secretary Telephone No.: 94777792966 Email: [email protected] Responsible Agency: Provincial Councils of Northern, Eastern, North-Central, Central and Uva Provinces i Contact: Provincial Secretaries of Title: Secretaries Agriculture Telephone No.: 94112868920 Email: [email protected] . Project Financing Data(in USD Million) [ ] Loan [ ] IDA Grant [ ] Guarantee [ X ] Credit [ ] Grant [ ] Other Total Project Cost: 169.84 Total Bank Financing: 125.00 Financing Gap: 0.00 . Financing Source Amount BORROWER/RECIPIENT 0.74 International Development Association (IDA) 125.00 Local Communities 0.00 Local Farmer Organizations 44.10 Total 169.84 . Expected Disbursements (in USD Million) Fiscal Year 2016 2017 2018 2019 2020 2021 2022 0000 0000 0000 Annual 0.00 20.00 25.00 40.00 30.00 10.00 0.00 0.00 0.00 0.00 Cumulative 0.00 20.00 45.00 85.00 115.00 125.00 125.00 0.00 0.00 0.00 . Institutional Data Practice Area (Lead) Agriculture Contributing Practice Areas Cross Cutting Topics [ X ] Climate Change [ ] Fragile, Conflict & Violence [ X ] Gender [ X ] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits % Co-benefits % Agriculture, fishing, and forestry Agricultural extension 20 and research ii Agriculture, fishing, and forestry Crops 20 20 20 Industry and trade Agro-industry, 20 marketing, and trade Agriculture, fishing, and forestry Irrigation and drainage 20 20 20 Agriculture, fishing, and forestry General agriculture, 20 fishing and forestry sector Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Rural development Rural markets 20 Environment and natural resources Water resource management 20 management Rural development Rural policies
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