Economic and Financial Analysis with Supporting Tables
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Technical Assistance Consultant’s Report Project Number: TA 7917 March 2013 Republic of Uzbekistan: Amu Bukhara Irrigation System Rehabilitation (Feasibility Study) Annex 5: Economic and Financial Analysis with Supporting Tables Prepared by Lahmeyer International in association with Info Capital Group For the Ministry of Agriculture and Water Resources This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. Amu Bukhara Irrigation System Rehabilitation Annex 5 – Economic and Financial Analysis ANNEX 5 ECONOMIC AND FINANCIAL ANALYSIS Lahmeyer International in association with InfoCapital Group InfoCapital Amu Bukhara Irrigation System Rehabilitation Annex 5 – Economic and Financial Analysis ANNEX 5 – ECONOMIC AND FINANCIAL ANALYSIS CONTENTS I. PROJECT AREA .................................................................................................................... 1 II. THE IRRIGATION SYSTEM .................................................................................................. 3 A. Kuyu Mazar ........................................................................................................................ 4 B. Kizil Tepa ........................................................................................................................... 4 III. PUMP STATIONS .................................................................................................................. 6 A. Summary of Main Characteristics ....................................................................................... 6 B. Energy Consumption .......................................................................................................... 7 C. Energy Costs ...................................................................................................................... 9 D. Pumped Volumes ............................................................................................................. 11 E. Recurrent Costs ............................................................................................................... 13 1. Overall ABIS System .................................................................................................... 13 2. Pump Station O&M ....................................................................................................... 13 IV. CURRENT AGRICULTURAL ACTIVITY .............................................................................. 14 A. Cropping ........................................................................................................................... 14 B. Farm Size ......................................................................................................................... 14 C. Crop Yields ....................................................................................................................... 15 D. Unit Costs of Outputs and Inputs ...................................................................................... 17 1. Crop Prices................................................................................................................... 17 2. Mechanisation Costs .................................................................................................... 18 3. Labour Costs ................................................................................................................ 18 4. Fertilizer and Agro-chemical Costs ............................................................................... 18 5. Border Parity Prices...................................................................................................... 19 6. Electricity Costs ............................................................................................................ 19 E. Crop Budgets ................................................................................................................... 21 F. Current and Future Agricultural Benefits .......................................................................... 22 V. PROPOSED PROJECT ....................................................................................................... 24 A. Development Options ....................................................................................................... 24 B. Development Costs .......................................................................................................... 27 C. ‘Without’ and’With-Project’ Recurrent Costs ..................................................................... 28 1. ‘Without-Project’ Scenarios .......................................................................................... 28 2. Non-Energy O&M Costs ............................................................................................... 29 3. Energy consumption ..................................................................................................... 30 VI. ECONOMIC ANALYSIS ....................................................................................................... 31 A. The ‘With’ and ‘Without-Project’ Scenarios ....................................................................... 31 B. Net Incremental Benefits .................................................................................................. 33 Lahmeyer International in association with InfoCapital Group page i InfoCapital Amu Bukhara Irrigation System Rehabilitation Annex 5 – Economic and Financial Analysis C. Development Costs .......................................................................................................... 33 1. Capital Costs ................................................................................................................ 33 2. Recurrent Costs ........................................................................................................... 34 D. Economic Analyses .......................................................................................................... 34 1. Cash Flows................................................................................................................... 34 2. EIRR ............................................................................................................................. 34 VII. FINANCIAL ANALYSIS ........................................................................................................ 37 A. Study Area ....................................................................................................................... 37 1. Cropping Patterns, Intensities and Yields ..................................................................... 37 B. Crop Budgets ................................................................................................................... 37 C. Farm Sizes ....................................................................................................................... 38 D. Without and With-Project Situations ................................................................................. 38 E. Rate of Decline ................................................................................................................. 39 F. Returns per Hectare and per Holding ............................................................................... 39 G. Overall Financial Impact ................................................................................................... 40 Supporting Tables Table A.1 Cotton and Wheat. Border Parity Price Calculations Table A.2 Fertilizers. Border Parity Price Calculations Table A.3 Crop Budgets. Main analysis Table A.4 Crop budgets. Vegetables Table A.5 Crop budgets. Fruit Table A.6 Crop budgets. Fodder Table A.7 Capital costs - Khamza 1 - new(combination) Table A.8 Capital costs - Kuyu Mazar - rehabilitation Table A.9 Capital costs - Khamza 2 - rehabilitation Table A.10 Capital costs - Kizil Tepa - rehabilitation Table A.11 Capital costs - Kizil Tepa Auxiliary - rehabilitation Table A.12 Capital costs - ABMK rehabilitation Table A.13 Capital costs - SCADA Table A.14 Capital Costs - Pilot Farms Table A.15 Capital Costs - Consultancy Table A.16 Capital Costs - PMO Table A.17 Capital Costs - PIU Table A.18 WOP Decline scenario slow Table A.19 Without-project' Irrigated Areas and cropping patterns. Gradual Table A.20 Without-project' Cotton, Forage, Vegetables areas. Gradual Table A.21 Without-Project' Other crops & Wheat areas. Gradual Table A.22 Without-project' Net crop returns. Kuyu Mazar. Gradual Table A.23 Without-project' Net crop returns Kizil Tepa. Gradual Table A.24 Without-project' Net crop returns Karaul Bazar. Gradual Table A.25 Net agric returns. Gradual Without & with project non-energy PS Recurrent Costs - Table A.26 gradual decline Table A.27 Without-Project Power consumption. Gradual decline Table A.28 With -project power consumption. Gradual decline Lahmeyer International in association with InfoCapital Group page ii InfoCapital Amu Bukhara Irrigation System Rehabilitation Annex 5 – Economic and Financial Analysis Table A.29 Decline scenario - failure Table A.30 Irrigated Areas and cropping patterns. Failure Table A.31 Without -project'. Cotton, Forage, Vegetables areas. Failure Table A.32 Without-project'. Other crops & Wheat areas. Failure Table A.33 Without-project'. Net crop returns. Kuyu Mazar. Failure Table A.34