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World Bank Document Report No. 595-IND FILECOPY Appraisalof IrrigationProject VI Indonesia Public Disclosure Authorized March 6, 1975 East Asia and Pacific Projects Department Not for PublicUse Public Disclosure Authorized Public Disclosure Authorized Document of the International Bank for Reconstruction and Development Public Disclosure Authorized International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCYEQUIVALENTS US$1.00 = Rupiahs (Rp) 415 Rp 100 - US$0.241 Rp 1 million - US$2,409.64 WEIGHTSAND MEASURES - METRIC SYSTEM' 1 millimeter (mm) - 0.039 inches 1 meter (m) = 39.37 inches 1 kilometer (km) = 0.62 miles 2 1 square kilometer (km ) - 0.386 square miles 1 hectare (ha) = 2.47 acres 1 cubic meter (i 3 ) = 35.31 cubic feet 1 liter (1) - 0.264 gallons (USA) 1 liter/second(1/sec) = 0.035 cubic feet per second 1 kilogram (kg) = 2.2 pounds 1 metric ton (ton) - 2,205 pounds ABBREVIATIONS BIMAS - A farm input package and credit program BRI - People's Bank of Indonesia (Bank Rakyat Indonesia) CRIA - The Central Research Institute for Agriculture DGWRD - Directorate General of Water ResourcesDevelopment GOI - The Government of Indonesia HYV - High yielding variety INMAS - A program to encourageuse of agriculturalinputs outside BIMAS IPEDA - Land tax based on potentialproductivity INPRES - A rural works program MOA - The Ministry of Agriculture 0 & M - Operation and Maintenance PROSIDA - The organizationwithin DGWRD responsible for World Bank Group IrrigationRehabilitation Projects SAE - Agro-EconomicSurvey Institute. CONVERSIONFACTORS FOR RICE 1 ton "dry stalk paddy" - 800 kg paddy ("paddy gabah") = 500 kg milled rice 1 ton paddy (gabah) - 630 kg milled rice INDONESIA FISCAL YEAR April 1 - March 31 INDONESIA APPRAISAL OF IRRIGATION PROJECT VI TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............................... i - ii I. INTRODUCTION ................................... II. BACKGROUND ............................................. 1 The Economy ....... ............................... 1 Agriculture ...................................... 2 Project Formulation ..... ......................... 2 III. THE PROJECT AREA ...................................... 4 General ......................... 4 Climate ......................... 4 Soils and Topography ................... 4 Agricultural Production ................. 5 Population, Farm Size and Land Tenure ............ 6 Agricultural Support Programs .............. 6 Storage, Processing and Marketing ............... 7 Transportation ...................... 7 IV. THE PROJECT ........................................... 7 Project Works ...................... 8 Consulting Services ..... ......................... 10 Feasibility Studies ............. .. ............... 10 Water Supply, Demand and Quality ...... .. ......... 10 Implementation Schedule . 11 Cost Estimates ... ................................ 11 Financing .................... ................... 12 Procurement ................... ................... 12 Disbursements .................. .................. 13 Accounts and Audits ............... ............... 13 Environmental Effects ............ .. .............. 14 -2- Page No. V. ORGANIZATION AND MANAGEMENT .......................... 14 Organization ............i ..... .................. 14 Technical Assistance ..... ....................... 15 Training .................... .................... 16 Agricultural Supporting Services ............. **. 16 Cimanuk Soil Conservation Program ............... 17 Groundwater Investigation .......... .. ........... 17 Monitoring Benefits ..... ........................ 17 Operation and Maintenance .......... .. ........... 17 Recovery of Costs . ............ ..... ...... 18 VI. PRODUCTION, MARKET PROSPECTS, PRICES AND FARM INCOME .............................................19 Production ................... ................... 19 Market Prospects and Prices ..................... 19 Farm Income ................... .................. 20 VII. BENEFITS AND JUSTIFICATION ........................... 22 VIII. RECOMMENDATIONS ...................................... 22 ANNEXES 1. Agricultural Production 2. Agricultural Supporting Services 3. The Project Works 4. Consulting Services and Technical Assistance 5. Water Supply and Requirements 6. Cost Estimates 7. Schedule of Expenditures and Disbursements 8. Training 9. Crop and Farm Budgets 10. Economic Analysis CHARTS Opportunity Cost Curve for Farm Labor Chart 9303 'Water Resources Organization - Chart 8963 PROSIDA Management Organization - Chart 8965 PROSIDA Sub-project Organization - Chart 8964 Design and Construction Schedule - Cirebon - Chart 8960 Design and Construction Schedule - Rentang - Chart 8961 -3- Design and Construction Schedule - Sampean Baru - Chart 8962 Cropping Pattern and Water Requirements- Sampean Baru - Chart 8966 MAPS No. Location Map 3627R1 Irrigation Project VI 10867 Sampean Baru Irrigation System 11197 INDONESIA APPRAISAL OF IRRIGATION PROJECT VI SUMMARY AND CONCLUSIONS i. The proposed project would continue the Bank's program of assistance to irrigated agriculture in Indonesia. The project's main objectivesare to increase paddy productionby rehabilitatingexisting irrigationsystems, to bring a rainfed area under irrigation,to increase rural incomes and improve institutionsby providing technical assistanceand training. The project is on the priority list of the Government'sSecond Five Year Plan and at least 80% of the project beneficiaries are in the lowest 40% income group. ii. There are three main components in the proposed project: the re- habilitation of the existing irrigationsystems in Cirebon area (89,000 ha); a new barrage and improved drainage facilities (33,000ha) in Rentang Irri- gation System (92,000 ha), which was rehabilitated under Credit 127-IND; and completion of the irrigation system in Sampean Baru project area (9,800 ha). Rentang and Cirebon are located in West Java, while Sampean Baru is in East Java. In addition to these works the project would include feasibility studies for future irrigation projects in Madiun and Cirebon areas; a soil erosion control program; training and technical assistancein agriculture and engineering; agro-economic monitoring studies for irrigation areas; and financing of final costs of groundwater investigations,started under Credit 289-IND. Camps, offices, an Agricultural Development Center, Rural Extension Centers and operators houses are included, together with vehicles, equipment, communications and consulting services. iii. The estimated cost of the proposed project is US$165 million. The Bank proposes to finance the foreign exchange component,which is estimated to be US$65 million or about 40% of total cost. iv. Rentang Barrage (US$13 million) and equipment and vehicles (US$3.5 million) would be awarded after internationalcompetitive bidding in accord- ance with Bank guidelines. Contracts for the other civil works (US$54 mil- lion) which are widely scattered in space and time would be awarded after local advertising. Consultingservices, mapping, technicalassistance and training would cost US$9.5 million. Contingenciesamount to US$69 million, of which US$51 million are for anticipated price increases. Construction is scheduled to take six years for all elements of the project. PROSIDA, a special unit within the DirectorateGeneral of Water Resources Development, which is successfully executing three IDA irrigation projects, would be responsible for project implementation and the Ministry of Agriculture would he responsible for administrating the agricultural support program un(dera special directorate. - ii - v. The economic rate of return was evaluated for each component and is 38% for the Cirebon irrigation rehabilitation; 44% for the Rentang Barrage and drainage facilities; and 18% for the Sampean Baru irrigation system. Some 365,000 farm families, made up of about 60% owners and 40% tenants would benefit from the project. Following completion of the project, farm incomes for average farmers on 0.5 ha would increase from US$65-125 to US$150-290, depending on whether they are owners or sharecroppers. For Sampean Baru the farm income of average owner farmers on 0.5 ha would increase from US$30 to US$300. vi. The five on-going irrigation projects, being financed under IDA Credits are progressing relativelywell, but have been affected by inflation, causing delays in civil works and hence in project completion. A recent detailed review, however, indicated that satisfactoryrates of return would be obtained taking into account delays, higher costs and benefits. vii. The proposed project is suitable for a Bank loan of US$65 million for a term of 30 years, including six year grace. The borrower would be the Republic of Indonesia. I. INTRODUCTION 1.01 The Government of Indonesia (GOI) has requested a Bank Loan to assist in financing the rehabilitationof the Cirebon Irrigation Systems; constructionof additional facilities for the Rentang Irrigation System, which would complement works in the area financed under Credit 127-IND; and constructionof the Sampean Baru Irrigation System in East Java. This would be the sixth Bank Group operation for promoting irrigation development in Indonesia; four of the preceding projects being for rehabilitationof existing systems and the fifth for the Jatiluhur Irrigation Extension Project
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