Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. P-2100-BD REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE Public Disclosure Authorized EXECUTIVE DIRECTORS ON PROPOSED CREDITS TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR THE Public Disclosure Authorized MUHURI IRRIGATION PROJECT June 2, 1977 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 The value of the Bangladesh Taka (Tk.) is officially set relative to the Pound Sterling. From May 17, 1975 through April 25, 1976, the official value was 30.0 to the Pound Sterling. Since the latter date the value has been changed on three occasions, the most recent being on November 3, 1976, when it was set at 25.45 to the Pound Sterling. The Pound is floating relative to the U.S. dollar and consequently the Taka-U.S. dollar rate is subject to change. The exchange rate used in preparing the data for this report is Tk. 15 = U.S.$1 (except where stated to the contrary). WEIGHTS AND MEASURES EQUIVALENT 1 acre = 0.405 hectare (ha) 1 mile = 1.609 kilometers 1 sq. mile = 640 acres = 259 ha 1 foot = 30.5 centimeters 1 maund (md) = 82.3 lbs. = 37.3 kg 1 long ton = 1.016 metric tons = 27.2 md 1 cu. ft. per second 0.028 m3 /second PRINCIPAL ABBREVIATIONS USED BADC = Bangladesh Agricultural Development Corporation BWDB = Bangladesh Water Development Board CEC = Central Evaluation Committee HYV = High Yielding Varieties (of rice) IRDP = Integrated Rural Development Program PIC = Project Implementation Committee TCCA = Thana Central Cooperatives Association TTDC = Thana Training and Development Center GLOSSARY Aman - Rice planted before or during monson and harvested in November or December. Aus - Rice planted during March and April and harvested during July and August. Boro - Rice planted in winter and harvested during the period April to June. Thana - Smallest administrative unit of Bangladesh Government of which there are 413. Six or seven thanas form a district, and there are 19 districts in the country. FISCAL YEAR Ends June 30 FOR OFFICIAL USE ONLY BANGLADESH MUHURI IRRIGATION PROJECT Credit and Project Summary Borrower: People's Republic of Bangladesh Amount: (a) IDA Credit of US$21 million (b) IDA Administered Credit of Can$9.0 million, US$8.6 million equivalent Terms: (a) Standard IDA terms (b) Standard IDA terms Project Description: The project includes: (a) construction of about 5 miles of coastal earthfill embankments and a dam of about 1.5 miles across the Feni River Channel; (b) Construction of a reinforced-concrete regulator structure equipped with radial gates, and flap gates; (c) construction of one major and 30 minor drainage structures equipped with flap gates, and the improvement of an existing drainage outlet; (d) improvement of 110 miles of natural channels and the excavation of 6 miles of new channels; (e) improvement of 9 miles of existing roads and the construction of 9 miles of new roads for access to the main project works; (f) installation of about 1,100 low-lift pumps to raise water from the channels to adjacent farmlands; (g) provision of workshops, equipment, and vehicles for maintenance of civil works and pumps; (h) construction of offices and housing for project staff; This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - (i) transportation (field vehicles, motorcycles and bicycles), and agricultural equipment (hand sprayers) grain dryers) to facilitate agricultural extension, supporting services; and (j) consultant services to assist the Government in project planning, design, supervision of con- struction, and evaluation of the impact of the project. Estimated Cost: US$52.0 million equivalent of which US$18.4 million is expected to be in foreign exchange and US$33.6 million in local currency. Local Foreign Total /a (US$ million) Land Acquisition 0.50 - 0.50 Civil Works Regulator and related works 13.13 7.87 21.00 Cross Darn and Embankments 3.71 1.74 5.45 Channels and Control Structures 2.07 0.29 2.36 0 + N Facilities 0.20 0.07 0.27 Sub-Total 19.61 9.97 29.58 Vehicles and Agric. Equipment 0.22 0.18 0.40 Low-Lift Pumps 0.87 1.33 2.20 0 + M Facilities 0.04 0.09 0.13 Sub-total 1.13 1.61 2.73 Consulting Services 2.00 1.67 3.67 Management and Administration 1.56 - 1.56 Base Cost Estimate 24.29 13.25 37.54 Contingencies Physical 2.70 1.53 4.23 Price 6.60 3.63 10.23 Sub-Total 9.30 5.16 14.46 TOTAL 33.60 /b 18.40 52.0 /b /a Discrepancies in currency conversion due to rounding. /b Includes US$9.8 million equivalent taxes and duty. Estimated Disbursements: US$ (million) Annual Cumulative Fiscal Year IDA IDA Administered Total IDA IDA Administered Total 1978 1.42 0.58 2.00 1.42 0.58 2.00 1979 3.55 1.45 5.00 4.97 2.03 7.00 1980 4.96 2.04 7.00 9.93 4.07 14.00 1981 5.32 2.18 7.50 15.25 6.25 21.50 1982 4.25 1.75 6.00 19.50 8.00 27.50 1983 1.50 0.60 2.10 21.00 8.60 29.60 Procurement: (a) Vehicles, equipment and materials would be procured after international competitive bidding. A 15% preference margin, or prevailing customs duty if lower, would be extended to local manufacturers in evaluation of bids. Procurement of off-the-shelf items costing less than US$10,000 each whose aggre- gate would not exceed US$200,000, would be through normal Government procurement procedures which are acceptable. (b) Bids for the major civil works contract for construc- tion of the main gated regulator have been obtained after international competitive bidding in accordance with Bank-Group Guidelines. (c) Other civil works, (channel excavation, drainage structures, embankments) which are relatively small, would be awarded on the basis of competitive bidding advertised locally and in accordance with local pro- cedures acceptable to IDA. Consultants: Consultants would be retained to advise and assist with the preparation of work programs, designs, and contract documents, and the supervision of construction. About 600 man-months of consultant services would be provided about 250 of which would be expatriate. Rate of Return: 16 percent Appraisal Report: Report No. 725-a-BD dated May 31, 1977. South Asia Region Map: IBRD Map No. 11532 INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON PROPOSED CREDITS TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR THE MUHURI IRRIGATION PROJECT 1. I submit the following report and recommendation on two proposed credits to the People's Republic of Bangladesh totalling the equivalent of US$29.6 million on standard IDA terms to help finance an irrigation de- velopment project around the confluence of the Muhuri and Feni Rivers in Southeastern Bangladesh. One credit of US$21.0 million would be made from IDA resources; a second credit of Can$9.0 million (US$8.6 million equivalent) would be made from Canadian funds administered by IDA in accordance with the terms of the recently approved Agreement between the Government of Canada and the Association. PART I - THE ECONOMY 2. An Economic Mission was in the field in November 1976 and its report entitled "Bangladesh: Current Economic Performance and Development Policy Issues" (Report No. 1469-BD, dated May 19, 1977) was distributed on May 23, 1977. Introduction 3. The Basic Economic Report described the obstacles to development in Bangladesh and outlined a course of action to maximize the development of the country's resources. The high ratio of population to natural re- sources, the slow development of the productive and infrastructural base and the weaknesses of the administrative and institutional framework led the Report to project a growth rate of GDP of between 2% and 3.5% per year in real terms over the five years 1973-78, the variations within that range depending on the appropriateness of the policy framework and on levels of aid. 4. Encouraging progress was made in the period immediately following Bangladesh's independence as an enthusiastic Government, supported by mas- sive external assistance, strove to overcome the devastation of the cyclone of 1970 and the struggle for independence in 1971. Large amounts of food aid were distributed, refugees were resettled, and vital port, road and rail facilities were brought back into operation. A new constitution was adopted, and the first national elections, held in March 1973, brought Sheik Mujibur Rahman's Awami League party into power with an overwhelming parliamentary majority. - 2 - 5. Overall economic progress since independence, however, has been inadequate. Agricultural output remains insufficient for a population growing at close to 3% a year. Industrial output, heavily dependent on imports, has been affected badly by scarcity of foreign exchange. State enterprises have been hampered by management deficiencies, excessive govern- ment controls, shortages and price regulation. Exports have been stagnant and finance less than half of import needs. Bangladesh also has been severely affected by an adverse shift in its terms of trade since 1973. Trade pro- blems are compounded by dependence on annual food imports of 1-2 million tons, even in years of favorable weather, and by heavy reliance on imported industrial raw materials.