Document of The World Bank FILECop
FOROFFICIAL USE ONLY Public Disclosure Authorized
RlportNo. P-2926-NEP
REPORT AND RECOMENDATION
OF THE
OF THE
Public Disclosure Authorized PRESIDENT
INTERNATIONALDEVELOPMENT ASSOCIATION
TO THE
EXECUTIVEDIRECTORS
ON A
PROPOSED CREDIT
TO THE
Public Disclosure Authorized KINGDOM OF NEPAL
FOR THE
BABAI IRRIGATION ENGINEERINGPROJECT
December 11, 1980 Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of their officialduties. Its eotents may nototberwise bedisctsed without World Bankathoriation. CURRENCY EQUIVALENTS
Currency Unit - Nepalese Rupee (NR)
Since March 20, 1978
US$1.00 = NRs 12.00 NR 1.00 US$0.08 NRs 100 = US$8.33
FINANCIALYEAR
July 16 - July 15
ABBREVIATIONSAND ACRONYMS
ADBN - Agricultural Development Bank of Nepal AIC - AgriculturalInputs Corporation DCA - Development Credit Agreement DIHM - Departmentof Irrigation,Hydrology and Meteorology HHGN - His Majesty's Governmentof Nepal MFA - Ministry of Food and Agriculture SDR - Special Drawing Rights UNDP - United Nations DevelopmentProgramme FOR OFFICIAL USE ONLY
NEPAL
BABAI IRRIGATION ENGINEERING PROJECT
Credit and Project Summary
Borrower: Kingdom of Nepal
Amount: SDR 2.8 million (US$3.5 million equivalent).
Terms: Standard
Project Description: The proposed project would assist the Government in the preparation of final designs, tender documents and evalua- tion of tenders for a proposed Babai Irrigation Project. The engineering credit would finance:
(a) preparation of detailed engineering designs, cost estimates and tender documents for a diversion weir across the Babai River, irri- gation, drainage and road systems within the project area, and a 30 km stretch of the East- West Highway passing through the project area;
(b) aerial photography and topographical mapping;
(c) a semi-detailed soil survey and a socio-economic benchmark survey, geological and hydrological surveys and hydraulic model tests;
(d) procurement of engineering equipment;
(e) camps and quarters required for the field work, local counterpart staff and related operational cost; and
(f) assistance to DIHM in prequalifying interested civil works contractors and evaluation of tenders.
The project faces no special risk.
This document has a restricted distribution and may be used by recipients only in the performance of thcir official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii. -
Estimated Cost: US$ Million Equivalent Local Foreign Total
EngineeringConsultants: Remuneration& Subsistence 0.15 1.05 1.20 Travel & Other Expenses 0.03 0.12 0.15 Sub-contracts 0.15 0.40 0.55 Equipment & Vehicles 0.01 0.49 0.50 Socio-Economic Survey 0.05 - 0.05 Local Support 0.10 - 0.10 Camp & Quarters 0.25 - 0.25 0.74 2.06 2.80
Physical Contingencies 0.10 0.30 0.40 Price Contingencies 0.08 0.22 0.30 Total Cost Net of Taxes and Duties 0.92 2.58 3.50 Taxes and Duties 0.05 - 0.05
Total Project Cost 0.97 2.58 3.55
Financing Plan: US$ Million Equivalent Local Foreign Total
IDA 0.92 2.58 3.50 Government 0.05 - 0.05 0.97 2.58 3.55
Estimated US$ Million Equivalent Disbursements: IDA FY 1981 1982 1983
Annual 0.6 2.3 0.6 Cumulative 0.6 2.9 3.5
Rate of Return: Not applicable.
Maps: IBRD No. 15208 and IBRD No. 15209. INTERNATIONAL DEVELOPMENT ASSOCIATION
REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF NEPAL FOR THE BABAI IRRIGATION ENGINEERING PROJECT
1. I submit the following report and recommendation on a proposed development credit to the Kingdom of Nepal for Special Drawing Rights (SDR) 2.8 million (US$3.5 million equivalent) on standard IDA terms to help finance the Babai Irrigation Engineering Project.
PART I - THE ECONOMY
2. The most recent economic report entitled "Nepal-Development Perform- ance and Prospects" (Report No. 2692-NEP) was distributed to the Executive Directors on December 14, 1979. The principal findings of the Report and recent developments are described below. Country data are shown in Annex I.
3. Nepal is one of the least developed countries in the world. Per capita income is estimated at $120 (1978), and health and education standards are well below the average of South Asia: life expectancy at birth is about 45 years, infant mortality 150 per thousand, and adult literacy 19%. The population, growing at the rate of 2.6% a year, is estimated to be 13.3 million (1978). Over 90% of the population live in rural areas.
4. The economy of Nepal centers around agriculture. It accounts for more than 60% of GDP and 75% of merchandise exports, and provides a livelihood to over 90% of the population. In addition, most of the industrial sector, which comprises about 9% of GDP, processes agricultural raw materials. About 25% of total rural incomes are estimated to arise from non-agricultural activities. Cottage industries are one of the most important of these, engaging over 1 million people and comprising about 6% of GDP. They provide basic consumer goods in the many small isolated markets where such goods would otherwise not be available.
5. As a small open economy, Nepal is highly susceptible to develop- ments in India. The Terai, which lies along the Indian border, has close and virtually free trading links with India, and accounts for about 60% of the country's GDP, and about 40% of the population. The Kathmandu Valley, the administrative and commercial center, is closely linked with the Terai, but at significant transportation costs. The rest of the country, the Hills and Mountains, is isolated by the nature of the terrain and consists of a large number of fragmented markets.
6. When Nepal adopted economic and social development as major gov- ernment objectives in the early 1950s, there was virtually no economic or administrative infrastructure. Initial development efforts were necessarily concentrated on establishing a foundation for future development. During these early stages, it was inevitable that growth would remain slow and that - 2 -
there would be little if any increase in per capita income. However, the Fifth Development Plan (1975/76-1979/80) was to be a turning point; it was believed that the country was poised for more rapid growth on the order of 4- 5% annually. The level of investment was to increase substantially and its focus to shift towards the more directly productive sectors and the social services.
7. Public investment performance has been excellent; development expenditures have grown at over 15% annually in real terms and the Government has been relatively successful in reorienting investment away from the trans- port sector towards agriculture and the social services. However, few of the other Fifth Plan objectives have been achieved. The GDP growth rate is likely to average only 2.4% per year, mainly because of poor agricultural performance. Little progress has been made in increasing agricultural productivity and agricultural production increased at an annual rate of only 0.7% during the first four years of the Fifth Plan. Growth in other sectors has been mixed, with the poor agricultural performance limiting the growth of agro-related industries. Production in several large industries including jute goods, sugar, leather goods, and cement has increased but most Fifth Plan targets will go unmet. In the services sector, tourism has been dynamic, but it still only contributes about 1% of GDP.
8. Economic developments during 1979/80 were characterized by declining output, accelerating inflation, and a weakening in the trade and payments position. Foodgrain production declined by 13% due to the poor monsoon in 1979, and to deal with this shortfall, the Government appealed for 110,000 tons of foodgrains assistance. Donors have made available about 60,000 tons and together with local procurement from less seriously affected parts of Nepal, this may be sufficient to maintain minimum food requirements. The 1980 monsoon is reported to have been satisfactory. Inflation accelerated to about 12% in 1979/80, because of the deterioration in the domestic food situation, higher import prices and the expansionary effects of the budget deficit. Government activity slowed in 1979/80; real growth in total expen- ditures was only 5% compared with 10% in 1978/79, while revenues declined by 3.5% in current terms. However, the economic prospects for 1980/81 are some- what brighter in view of the improved weather as well as the planned accelera- tion in government expenditures given in the 1980/81 Budget; GDP growth should be positive in contrast to its 1% decline in 1979/80.
9. The disappointing overall performance of the domestic economy during the Fifth Plan period has been accompanied by a widening trade deficit. Imports have grown under the impetus of the Government's development program while the trend in export earnings has been sluggish due to declining rice exports. The deterioration on the trade account has been partly covered by increased tourism receipts and remittances from Gurkhas (soldiers from Nepal serving in the British or Indian armies). Foreign assistance in the form of grants and concessionary financing have generally ensured that the overall balance remained in surplus. However, the shortfall in foodgrain production coming at a time when Nepal's oil bill was rising has resulted in payments deficit of US$8 million for the 12 months ending July 1980 and Nepal drew SDR 10.5 million (US$13.8 million equivalent) from the IMF under the Compen- satory Financing Facility in September 1980. As of May 1980, foreign exchange reserves were equivalent to six months of imports. - 3 -
10. On March 31, 1978, the authorities replaced a complex system of mul- tiple exchange rates and exchange and trade restrictions with a dual exchange system. Transactions with India, which were virtually free from restrictions, were unaffected by these changes. New treaties on trade and transit with India were also concluded in March 1978. Under the dual exchange rate system, Nepal maintains a basic rate of NRs 12.00 per dollar, with a second, premium rate applying for all merchandise trade with third countries except for imports of certain development goods. On February 21, 1980, the premium rate was changed from NRs 16.00 per dollar to NRs 14.00 per dollar, but the exemption was restricted to only imports of petrol and petroleum products, cement and chemical fertilizers. These exchange rate adjustments involved an apprecia- tion of about 14% for exports to third countries and an overall appreciation of about 2% for imports from them. But this was partly offset by (i) with- drawing the 12% duty on exports of raw jute; and (ii) raising import duties on a wide range of imports from third countries. However, with the exception of raw jute exports, earnings in domestic currency from exports to third countries will decline, leading to a possible shift of some exports to India. The overall trade balance is likely to be adversely affected by the recent measures.
11. The poor long-run performance of the economy is chiefly due to the failure of agricultural production to keep pace with population growth. Over the period 1967-77, foodgrain production grew at an average annual rate of only 1.5%. Increases in the area under cultivation account for almost all of this, since average yields rose by only 0.1% annually. Contribution of irri- gation development has so far been limited. Only about 23% of the irrigable area is provided with irrigation, and existing facilities are still poorly utilized. In the past, insufficient attention has been paid to bringing water down to the farm level and this has been compounded by inadequate support services such as extension and research, timely supplies of improved seed and fertilizer and other inputs, credit and farm-to-market roads. However, recent major irrigation projects financed by IDA and the Asian Development Bank are addressing these problems by taking more comprehensive and integrated approaches.
12. In the Hills and Mountains, which contain only one-third of the country's agricultural land and yet have nearly two-thirds of the population, population pressures have pushed cultivation up steep hillsides and onto marginal land; average yields have actually declined. Population density on agricultural land in these areas is higher than in Bangladesh. Malnutrition is acute; food production meets only two-thirds of minimum subsistence needs. Because they have little to trade except their labor, one-third of the inhab- itants of these Hill areas migrate seasonally to the Terai plains and northern India for food and work. Since the early sixties, an estimated 400,000 have migrated permanently, and there are signs that this exodus is accelerating.
13. Economic policy making has been delayed by the political developments of the past two years. These events culminated in the May 1980 referendum which reaffirmed the existing political system, while allowing for suitable reforms. A Constitutional Commission is expected to announce proposed reforms shortly, possibly including direct election of members of parliament. These political activities slowed down preparation of the Sixth Plan (1980/81-1984/85) and the Plan is only now undergoing final review. However, the thrust of the -4-
Plan, outlined in an earlier document, was endorsed by members of the Nepal Aid Group at its January 31, 1980 meeting. It places highest priority on developing agriculture, including revitalization of Hill food production to meet local requirements. At the same time, since land holdings in the Hills are too small to generate much more than subsistence needs, programs will be started to encourage diversification into other activities such as small-scale and cottage industries to supplement Hill incomes. For the Terai, the strat- egy is to continue efforts to realize the Terai's considerable potential for increasing production of foodgrains and cash crops. The irrigation infra- structure is to be more fully utilized and improvements to extension services and associated inputs concentrated on those areas with irrigation facilities. Reafforestation programs are given priority in order to provide fuelwood and fodder as well as to reduce soil erosion.
14. While these efforts in the directly productive sectors merit urgent attention, Nepal faces similar challenges in developing its human resources. Although curbing population growth requires major actions, selective programs in education and health can greatly assist population planning as well as alleviate human suffering and lay the basis for future increases in productiv- ity. The Government's strategy recognises that the approach must be selective since programs for meeting basic needs generally have only a long-term impact on manpower development but divert resources away from activities more directly and immediately related to production. Increasing foodgrains production will meet the major need of improved nutrition. Better and more readily available supplies of drinking water and fuelwood will meet other needs, while also freeing labor currently spent in their collection. Basic health facilities are to be expanded through integrated community health posts, while in educa- tion, stress is placed on improving the quality of primary and adult vocational education. Family planning programs are to be stepped up. The other basic need to be met in rural areas is improved transport, and the Sixth Plan will include programs to improve trails, tracks, and suspension bridges.
15. For Nepal to establish a basis for more rapid and sustained growth, the structure of its economy will need to change since its present dependence on agriculture limits the economy's overall growth potential to about 4% per year. Tourism offers perhaps the best near-term potential for increased foreign exchange earnings; however, efforts are needed to reduce its capital intensity, strengthen linkages with other local industries and extend its benefits beyond the Kathmandu Valley. Hydropower also offers some possibil- ities, but neither it nor tourism will ever be substantial generators of employment. In the long run, Nepal must diversify and develop its industrial sector. Obviously, efforts in this sector must be on a highly selective basis. The multiplicity and complexity of the constraints to industrial development, including the lack of natural resources and a skilled labor force, as well as Nepal's small domestic market and landlocked position will nullify any general- ized approach. Public enterprises need to operate more efficiently, village and cottage industries should be promoted. Beyond this, joint ventures with India, for example, as in cement production, may be attractive. The precon- ditions for industrialization must be established in the near future or there is a danger that Nepal will always be struggling to move its economy beyond subsistence. These include providing financial incentives, research and extension services on the technical, financial and marketing aspects of - 5 -
enterprise, and the upgrading of manpower skills in the areas where Nepal may have a comparative advantage.
16. Nepal has made significant progress in mobilizing domestic resources to support its development efforts, considering the extreme poverty, low degree of monetization, and fragmented nature of the economy. Revenue grew at 16% a year in current terms between 1969/70 and 1978/79, increasing from 5% of GDP to about 9% during this period. Over the same period, the Government was able to maintain savings on current account in excess of 2% of GDP, a good achieve- ment for a country in Nepal's economic position. However, this excellent record is now in jeopardy. Political developments led to difficulties in * collecting income and land taxes in 1978/79, but this was more than offset by increased collections from other sources. However, custom duties, which generate about one-third of total revenues, were lowered in the 1979/80 budget contributing to the 3.5% decline in overall revenues in that year. To reverse the deterioration, the 1980/81 budget raised various taxes including import duties, sales tax, income tax on private businesses, tourist taxes (hotel and airport taxes, and visa fees), and fees for extraction of forest products. These measures are expected to generate revenues equal to about 13% of total 1979/80 revenues which, together with better implementation of existing taxes, should be sufficient for overall revenues to exceed 9% of GDP in 1980/81.
17. Foreign assistance has been a decisive factor in Nepal's development. During the Fifth Plan, foreign financing equalled about 45% of development expenditures. In view of the limited prospects for increased domestic resource mobilization, foreign financing requirements may be about 60% of planned Sixth Plan development expenditures, which amount to about NRs 10 billion or over $800 million at 1979/80 prices. Aid commitments need to average about $225 million annually during 1980-82 compared with $160 million during 1977-79. However, even this level of foreign assistance would not provide the Government with sufficient resources to meet increasing consumption demands. Additional aid, either through financing a higher proportion of total project costs or in the form of commodity assistance, could provide budgetary support to meet pressing recurrent expenditure requirements, particularly in the social sectors. The Nepal Aid Group was formed in 1976 to assist in the overall coordination of financial and technical assistance efforts. The Group has met three times at plenary meetings under the Chairmanship of the Bank to discuss overall external assistance needs as well as at the local level in Kathmandu to discuss and coordinate strategy. At the latest plenary meeting, which was held in Paris on January 31, 1980, and was attended by representatives from eight countries and six international organizations, Nepal received aid indications exceeding US$200 million equivalent.
18. Although foreign aid commitments and disbursements grew by over 25% annually during the Fifth Plan period, only 40% of disbursements included in the Government's budget were from foreign borrowing, the remainder being grants. As of December 31, 1979, official foreign debt outstanding was only $125 million, of which $106 million was due to multilateral agencies. These loans were obtained on a highly concessional basis and the grant element of total aid remains in excess of 90%. As a result, debt service payments were only US$3.1 million during 1978/79, equivalent to less than 2% of exports of goods and services. - 6 -
PART II - BANK GROUP OPERATIONS IN NEPAL
19. Bank Group operations in Nepal began in FY70 with an IDA credit of US$1.7 million equivalent for a telecommunications project. Since then, 22 additional credits have been approved, bringing total IDA assistance to Nepal to US$267.6 million equivalent, net of cancellations. In view of Nepal's many development needs, this assistance has been for projects in a wide variety of sectors. Six of these sectors account for 83% of IDA credits by amount: irrigation ($75.0 million for 5 projects); water supply and sewerage ($46.8 million for 3 projects), power ($40.8 million for 1 project); telecommunica- tions ($21.7 million for 3 projects); highways ($19.2 million for 2 projects); and rural development ($19.0 million for 2 projects). The remaining $45.1 million of IDA assistance has been for one project in each of the areas of settlement, technical education, tourism, technical assistance, forestry, grain storage and industrial development financing. The proposed credit would be the third in FY81, bringing the total amount of IDA assistance to Nepal to US$271.1 million equivalent, net of cancellations. No Bank loans have been made to Nepal. IFC made its first investment in Nepal ($3.1 million) in a hotel project in Kathmandu in FY75. Annex II contains a summary statement of Bank Group operations as of October 31, 1980, and notes on the execution of ongoing IDA projects. It shows certain delays in the implementation of these projects, particularly during the initial periods. These delays have been largely due to Nepal's limited technical and managerial capabilities. In order to assist Nepal in coping with this constraint, considerable technical assistance is being given by Bank Group staff, including our Resident Mission in Kathmandu. As a result, improvement in the rate of disbursements is being realized. During FY80, US$22.6 million equivalent were disbursed compared to US$42.8 million equivalent disbursed during the entire previous nine years.
20. Bank Group lending to Nepal has so far been at a modest level compared to the country's need for external assistance. The international community has shown considerable interest in Nepal's economic development and, to date, shortage of funds has not been a bottleneck. The main constraint on the utilization of increased aid has been Nepal's limited absorptive capacity, affecting the pace of project preparation and implementation. The Bank is assisting the Government in project preparation through the Technical Assis- tance Credit (Credit No. 659-NEP) and by acting as Executing Agency for a number of technical assistance projects financed by UNDP. The Bank Group has also addressed the problem of absorptive capacity through its role in organizing the Aid Group for Nepal (para 17).
21. The Bank Group's current strategy places major emphasis upon the directly-productive sectors (particularly agriculture) and the development of complementary infrastructure, including feeder roads (particularly con- necting the Hills to the Terai), communications and hydroelectric power. Preparation of projects in irrigation, Hill food production, agricultural extension, cottage industry, technical education and power is under way. PART III - THE AGRICULTURAL SECTOR
22. Agriculture is the key sector for Nepal's economic development: farm production and related activities contribute more than 60% of GDP, pro- vide almost 90% of employment and about 75% of merchandise exports, mostly foodgrains2 jute and oilseed. Only about one sixth of Nepal's gross area of 141,000 km is cultivable. Foodgrains account for about 90% of cropped area, rice being the most important (50%), followed by maize, wheat, other cereals and pulses. The rest of the cropped area is under oilseeds, jute, potato, tobacco, sugarcane and horticultural crops. Growth of agricultural production (average 1.1% per year 1970-77), which is largely determined by foodgrain performance, has not kept up with population growth. Growth has primarily come from area expansion since yields have largely stagnated (para 11).
23. The Government has had to moderate its earlier approach to regional specialization according to comparative advantage (foodgrains in Terai vs. horticulture, tea and livestock in Hills) in view of the need for a proper foodbase in the Hills. The role of the Terai will continue to be the genera- tion of domestic and exportable foodgrain surpluses as a resource for further development. Since area expansion is limited in the Terai, emphasis will be given to increasing yields, mainly by an expansion and upgrading of existing irrigation infrastructure and inputs. Initial results from the IDA-assisted Birganj Irrigation Project (Narayani Zone) indicate that substantial yield improvements can be expected from improved irrigation water supply combined with increased agricultural inputs and effective extension services.
24. Agricultural Institutions. Apart from the Ministry of Forest, the Government has three major Ministries dealing with agriculture: the Ministry of Food and Agriculture (MFA); the Ministry of Land Reform; and the Ministry of Water Resources. Irrigation projects are the responsibility of the Ministry of Water Resources which includes the Department of Irrigation, Hydrology and Meteorology (DIHM). MFA includes the Department of Agriculture (DA), and the Department of Food and Agriculture Marketing Services. MFA also has overall responsibility for a number of public sector corporations which include the Agricultural Inputs Corporation (AIC), Agricultural Development Bank of Nepal (ADBN) and Nepal Food Corporation. In general, like many other government agencies, agricultural institutions suffer from lack of trained staff.
25. Agricultural Extension, Research and Training. The DA's Division of Agricultural Extension and Training is responsible for operation of agri- cultural extension services through offices located at the regional and district levels. Effectiveness of extension services is hampered by inadequate staff training and lack of communication, transportation, and housing facili- ties at the village level. Research is carried out in a research complex near Kathmandu and in 12 smaller stations dispersed throughout Nepal. However, the linkage between research and extension activities is poor and the products of research are not always directly well disseminated to farmers. Training also suffers from shortage of experienced instructors and training facilities. IDA's financing of intensified and reorganized extension services in seven Terai districts under ongoing irrigation projects (para 32) promises to yield favorable results, as already noticeable in the Parsa district where the Training and Visit system is being implemented. A project for agricultural extension and research for eight more districts in the Terai is being prepared.
26. Agricultural Inputs Supply. AIC is mainly responsible for the marketing of fertilizers, seed, pesticides, and agricultural equipment. AIC distributes these inputs to cooperative societies (Sajhas), village committees, other public organizations, and private traders, fixes retail prices for all inputs, and is responsible for input storage. Provision of inputs is coordinated with District Agricultural Officers, ADBN and cooperatives. The activities of AIC have been rapidly expanding and are fairly satisfactory.
27. Agricultural Credit. ADBN is the main source of institutional credit in agriculture; two commercial banks play only a minor role in this sector. ADBN extends short, medium and long-term loans to individual farmers, groups of farmers, cooperative societies and village committees. Overall lending has increased considerably over recent years, and now covers about 25% of total agricultural credit needs. ADBN's financial position is reasonably sound, although overdues run at about 24% of loans outstanding. Repayment performance of cooperative societies has even been poorer. The Asian Development Bank has been assisting ADBN in improving its procedures. The technical assistance needs of ADBN would be further studied and partly provided under a component in a proposed agricultural extension and research project (para 21).
28. Cooperative Movement. Since 1976, the cooperative movement has been reorganized under the name Sajha. In order to reach more farmers and mobilize local savings, the Government converted existing "guided" societies (under ADBN management) and village committees into village cooperative societies, under the direction of village panchayats. They are to provide credit, inputs, marketing services and some basic consumer goods. They function as collective borrowers towards ADBN and as agents of national trading organizations.
29. Marketing and Transportation. Domestic marketing services in Nepal are not well developed, due to the lack of roads, telecommunications systems, and warehouses. Since the late 1960s, several public sector organizations have been established for marketing major farm products. These include the Nepal Food Corporation (NFC), Rice Export Companies (RECs), National Trading Ltd., and Jute Development and Trade Corporation. Officially, export of rice was exclusively the responsibility of RECs, which are joint ventures with the private sector traditionally involved in rice trading. In practice, however, since the Indian border is open, extensive free trading occurs, for which no reliable data are available. The Government has recently liberalized export trading for foodgrains, and plans to place control of public sector domestic and export trading in NFC and strengthen it so that it may be better able to promote government foodgrain policies. The Grain Storage Project (Credit No. 1062-NEP) is assisting the Government in this effort. -9-
The Irrigation Sub-Sector
30. Water Resources Utilization. Nepal has abundant water resources, including3 major rivers with annual average discharges totaling about 150 billion m and capable of irrigating 6 to 8 million ha. However, there are only about 1.3 million ha of land suitable for surface irrigation in the country. Exploitable groundwater resources, largely concentrated in the Terai, could provide tubewell irrigation for about 0.4 to 0.6 million ha. Total irrigation potential is, therefore, less than 2 million ha. Utilization of water resources for irrigation is limited by several factors: (i) there are few reliable sources of perennial surface water for year-round irrigation except for the eight major rivers 1/; (ii) these large rivers are costly to develop, particularly for relatively small command areas typical in the Nepalese Terai; (iii) heavy sedimentation in riverbeds creates considerable problems in construction, operation and maintenance of irrigation systems; and (iv) power supplies to energize tubewells are severely restricted in extent and amount. At present, only about 300,000 ha (about 23% of the potential surface irrigable area) are provided with some form of irrigation, of which about 150,000 ha are under public schemes.
31. Irrigation Development. Before the launching of Nepal's first Development Plan in 1957, few substantial irrigation works had been undertaken by the Government. The main reasons were limited financial resources and shortage of trained manpower. Nevertheless, with schemes such as the 11,000 ha Chandra Project (1922), farmers' stream diversions, bucket-lift, and other traditional methods, irrigation had been provided to an area of some 154,000 ha, mainly in the Hills. During the First and Second Development Plans (1957- 62 and 1962-65 respectively), the Government's irrigation programs were con- centrated on building medium sized systems (15-16,000 ha) in the Terai. In the Third Plan (1965-70), however, a program was launched for construction of minor irrigation projects, mostly in the Terai, to encourage greater farmer participation and to expand irrigated areas rapidly. Due to poor investi- gations and construction, many of these projects fell short of expectations, which resuited in discouraging response from farmers. The Government switched back in the Fourth Plan (1970-75) to a policy of constructing medium-sized irrigation projects. In keeping with the priority given to quick yielding investments, the emphasis shifted in the Fifth Plan (1975-80) towards the completion of ongoing schemes and new investment in projects with short gestation periods and high returns, including groundwater development for irrigation by tubewells. The target was to bring 146,000 ha under irrigation in addition to the present 300,000 ha. However, it is estimated that by the end of the Fifth Plan, only about 100,000 ha will have been completed. The main reasons for the shortfall are (i) the shortage of technical personnel for design, construction, supervision and project management; (ii) chronic shortages in cement and steel; (iii) weak local civil works contractors; and
1/ The Mahakali (Sarda), Karnali, Babai, Rapti, Narayani (Gandak), Bagmati, Kosi and Kankai Rivers. - 10 -
(iv) slow procurement due to the country being landlocked and to administra- tive bottlenecks. Bank Group strategy is to assist the Government in resolv- ing these constraints through financial and technical assistance, including substantial training components. Preliminary targets set for the Sixth Plan (1980-85) call for the irrigation of 40% of agricultural land in the Terai and 12% in the Hills by 1990 (presently 12% in the Terai and much less in the Hills). The irrigation infrastructure is to be more fully utilized and extension services and associated inputs to irrigated areas to be enhanced (para 13).
32. Bank Group's Participation in Irrigation Development. The Bank Group is presently involved in five ongoing irrigation projects and two rural development projects with irrigation components. The Bank has also acted as Executing Agency for UNDP in the preparation of feasibility studies under the Major Irrigation (Far West Region) Project. The Birganj Irrigation Project (Narayani Zone) (Cr. 373-NEP, US$6.0 M, 1973), under construction since 1974, was originally designed to improve and upgrade 28,700 ha of its command area. In November 1977, the Government and the Association agreed to reduce the scope of the project and limit the works to 16,000 ha of the command area so as to accommodate a 50% cost overrun during 1974-77. After a slow start due to procurement and staffing difficulties, project implementation has steadily improved. All civil works and equipment contracts have been awarded, and construction is about 95% complete. The executing agency, the Narayani Zone Irrigation Development Board, is operating effectively. Crop yields achieved under irrigated conditions are promising. Water charges are being levied in areas reached by irrigation, and farmers' acceptance is satisfactory. The project is expected to be completed by mid-1981. The Narayani Zone Irrigation Development (Stage II) Project (Cr. 856-NEP, US$14.0 M, 1978) is also proceed- ing satisfactorily. Construction works are ongoing in five of the six irri- gation blocks. The Bhairawa-Lumbini Groundwater Project (Cr. 654-NEP, US$9.0 M, 1976), the first full scale tubewell project in Nepal provides for construc- tion of 63 deep wells, detailed development of the 7,500 ha command area and agricultural supporting services. Actual work on the project started in July 1977. More than 40 tubewells have been constructed, and drilling is to be completed by March 1981. All 63 wells are to be provided with pumps and motors by March 1982. Progress in irrigation works has been slow due to shortage and poor performance of local contractors. However, all civil works contracts have been awarded and the project is scheduled for completion by June 1982. The Sunsari-Morang Irrigation and Development Project (Cr. 812-NEP, US$30.0 M, 1978) is designed to restore and improve the existing canal system throughout 66,000 ha, involving, inter alia, river training and sediment control works. Minor distribution canals to 10 ha groups of farms would be planned for 18,000 ha and implemented for 6,400 ha. A contract for the first 850 ha of command area development has been awarded and rehabilitation work on the main canal is on-going. An EEC Special Action Credit of about US$4.0 million equivalent was approved in June 1979 to help finance part of the Government's share of the local cost. Investigations for the design of river training works to improve the water supply to the main canal intake have reached a crucial stage. Unfortunately, no technical solution is also economically viable. The only available option is regular maintenance to keep the supply channel open. This would not affect the overall viability of the project. The Mahakali Irrigation Project (Stage 1) (Cr. 1055-NEP, US$16.0 M, 1980) - 11 -
provides for the rehabilitation and upgrading of the existing irrigation system (3,400 ha) on the left bank of the Mahakali River in the Far Western Region and extending it to 6,600 ha net. The project is also designed to improve drainage conditions, provide a complete public access road network, all weather service roads, intensify agricultural extension and research, and train students in engineering and agriculture through fellowships abroad. A component in the First Rural Development Project (Cr. 617-NEP, US$8.0 M, 1976) provides for improvement of small scale Hill irrigation schemes and development of a high lift scheme on the Batar plateau in Nuwakot District for a total of approximately 1,900 ha. Construction of the major works for the Batar plateau (approximately 200 ha) has been completed, and satisfactory progress has been achieved for the development of the small scale schemes. The Second Rural Development Project (Cr. 939-NEP, US$11.0 M, 1979) also includes a component for the improvement of small scale Hill irrigation schemes in the Mahakali Zone. Implementation of this project is in an early stage.
The Need for Technical Assistance
33. Shortage of technical manpower is a severe constraint on Nepal's development. This constrains the Government's ability to prepare, implement and operate projects, and substantial technical assistance is required to resolve this constraint. In view of the high priority given to irrigation and the large number of projects being prepared and being implemented the absorptive capacity constraint is increasingly felt in this sector. Available staff is very thinly spread over the various regions, divisions, and projects, and is hardly sufficient to meet present needs. The shortage of engineers will be a major constraint in implementing the irrigation projects under the Sixth Five Year Plan. For the Sunsari-Morang Irrigation and Drainage Develop- ment Project, DIHM was unable to provide the necessary design staff and local consulting firms were recruited to work together with project staff and project consultants in order to meet manpower requirements. The use of local consultants has been successful and is expected to strengthen the development of local consulting firms. In addition, any completed project would require about as much staff for operation and maintenance as is now available for construction. Hence, the number of irrigation engineers in the country has to be increased drastically if irrigation development is to be accelerated. IDA and other donors include training components in most projects in Nepal. Under the Mahakali Irrigation Project (Cr. 1055-NEP), about 80 Nepalese students are to be trained abroad in civil and mechanical engineering and agriculture. In the meantime, local capabilities have to be supplemented by technical assistance.
PART IV - THE PROJECT
34. In 1976, an IDA mission identified the Babai Irrigation project to irrigate some 13,500 ha (net) of land on the east bank of the Babai River. A feasibility study, financed by UNDP with the Bank as Executing Agency, was completed by Tahal Consulting Engineers (Israel) in November 1978. Subse- quently, the Government redefined the project area and additional technical studies were needed and financed from the Technical Assistance Credit (Cr. No. - 12 -
659-NEP). A supplementary report was completed by Tahal in June 1980. The studies included the preparation of preliminary engineering designs. A Bank mission visited Nepal in January 1980 to prepare the proposed engineering project which would advance project preparation to tendering stage. Negotia- tions were held in Washington, D.C., in December 1980. The Nepalese delegation was led by Dr. T.N. Pant, Joint Secretary, Ministry of Food and Agriculture. A supplementary data sheet is attached as Annex III.
The Babai Project Area
35. The Babai project area, covering some 20,000 ha gross, is located in the Far West Region of Nepal, in the Bardia District of the Bheri zone (Map IBRD 15208). Gularia, the District's headquarters, is located west of the Babai River. Since there is no bridge over the Babai river, movement of goods and people to and from the project area is more oriented towards Nepalganj, the Region's headquarters (Map IBRD 15209), from which access to the project area is only possible in the dry season, as there is also no bridge over the Man River. Completion of the East-West Highway will improve access to the project area and link it to the Central Region of Nepal. The Highway now ends east of the Man River, while, within the project area, there is only a network of badly rutted cart tracks.
36. Climatic conditions in the project area are sub-tropical, mean monthly temperatures range from 14.7 C in January to 30.6 0C in May. The monsoonal rainfall pattern varies distinctly between the wet season (June- October) and the dry season (November-May). Of the average annual rainfall of 1,335 mm about 90% falls in the wet season. Assured water control is essential for year round crop production to meet shortages in the dry season and to drain excess run-off in the wet season.
37. Most of the area is flat and forms a gently inclined plain with a gradient of about 1%. A reconnaissance soil survey and land classifica- tion was undertaken as part of the feasibility study.
38. The source of water supply for the project area is the Babii river which has mean monthly flows ranging from an absolute minimum of 3 m /sec in May to a maximum of over 100 m /sec in August. The Babai River flows into India where it discharges into the Karnali River. The Karnali River is one of the region's major rivers with a substantial dry season flow, compared to which the dry season flow of the Babai is minimal. Additionally, water flows in the Babai downstream of the proposed diversion originate mostly from groundwater regeneration. India is diverting water from the Karnali at a barrage upstream of its confluence with the Babai. The project would have no significant effect on the flow of water downstream.
39. Farmers' built intakes and canals irrigate at present about 7,000 ha in the project area. In addition, some 2,000 ha are irrigated from small streams crossing the area from the foothills. About 4,000 ha of the eastern part of the project area is still under rainfed cultivation. Present crop- ping intensity is 129% (135% in the irrigated areas and 116% in the rainfed areas). Crops grown during the wet season are paddy (70%), maize (19%) and - 13- vegetables (1%); during the dry season, wheat (14%), pulses (13%), oilseed (11%) and vegetables (1%). The most common cropping sequences are (i) paddy- wheat; (ii) paddy-pulses; and (iii) maize-oilseed. Present yields are low: paddy, 1.9 mt/ha; maize, 1.4 mt/ha; wheat, 1.1 mt/ha; and mustard, 0.6 mt/ha. Improved irrigation and drainage would greatly enhance agricultural production.
The Babai Irrigation Project
40. The Babai irrigation project would provide the necessary irrigation, drainage and road infrastructure for 13,500 ha (net) of land in order to increase agricultural production and farmers' incomes in the area, and accelerate rural development. It is estimated that project works would take approximately five years. Upon completion, annual production of various foodgrains would increase by some 19,000 tons (from the present 14,000 tons). Of this increase, rice and wheat would contribute over 80%. New cash crops such as cotton and groundnuts would be introduced on a small scale.
41. The major civil works for the Babai project would be (i) a diversion weir on the Babai River upstream of Bargadaha, approximately 240 m long and 4 m high; (ii) main canals with a total length of 38 km; (iii) irrigation laterals (150 km) and sub-laterals conveying irrigation water to tertiary units, approx- imately 40-50 ha in size; (iv) tertiary channels within the tertiary units providing irrigation water to farm groups of 7-10 ha; (v) major and tertiary drains; and (vi) the construction of an interconnected network of all weather public roads and canal service roads.
42. Future access to the project area would be provided by the East- West Highway. A pre-feasibility study for this road between Kohalpur (north of Nepalganj) and Mahend,ranagar in the Far Western Region was completed by Norconsult A. S. in November 1978. The study considered two alternative align- ments for the road section passing through the Babai project area. HMGN has recently selected the northern alignment which crosses the Babai river at the proposed diversion weir site, so that a combined weir and bridge would be constructed. This alignment also follows for some distance the alignment of the main canal. UNDP is financing a feasibility study, detailed designs and tender documents for the section of the road from the Babai River to Mahendranagar. Consultants for this study started field work in November 1980. Since close coordination would be required between the design of the road and the Babai irrigation project, the consulting firm to be recruited for the Babai project would prepare the detailed designs and tender documents for the 30 km stretch of the East-West Highway between the Babai and Man Rivers.
43. The project area overlaps the 5,700 ha UNDP-supported Khumber Cotton Project. Most of this area is still covered by low value unproductive forest which would have to be cleared. HMGN is considering the development of 2,400 ha of this area for cotton cultivation on rolling uplands and under rainfed conditions, and settle farm families in the area. These farmers would also receive 2,400 ha of lowlands for paddy cultivation which would receive irriga- tion facilities under the Babai project. Since 1977, UNDP has assisted HMGN with a pilot scheme in the Khumber area for cotton cultivation and the tech- nical viability of cotton cultivation under rainfed conditions has been - 14 -
established. However, no progress has yet been made with the establishment of the necessary institutions, nor have settlement plans been finalized. In addi- tion, HMGN has not yet decided whether to proceed with the implementation of the Khumber project. As the layout for the irrigation and road systems for the 2,400 ha of lowlands would have to be coordinated with the settlement and road plans for the overall Khumber area, the Government would, not later than June 30, 1981 decide on the future of the 2,400 ha of lowlands and whether this area should be developed as part of a settlement scheme for the cotton project, or as part of a settlement scheme for paddy cultivators and would notify the Association of any institutional arrangements made or to be made for forest clearing and settlement of the Khumber area (Section 4.02(a) of the draft Development Credit Agreement (DCA)).
The Proposed Engineering Project
44. The purpose of the project would be to prepare detailed designs and tender documents for the Babai Irrigation Project and for the 30 km stretch of the East West Highway. A consulting firm would assist DIHM to undertake this work which would involve (i) aerial photography, ground control and topograph- ical maps; (ii) topographical surveys along alignments of irrigation and drain- age channels and roads (including the East West Highway section), and site surveys for major structures; (iii) additional geological investigations (particularly at the weir site), surveys for the location of construction materials, infiltration tests, hydrological surveys, laboratory tests and if necessary a hydraulic model test for the headworks and the desilting facili- ties; (iv) a semi-detailed soil survey and classification of the soils for irrigation; (v) final design and tender documents for the irrigation project and the East West Highway section (including bridge over the Man River); and (vi) the prequalification of contractors, the issue of tender documents and evaluation of bids. A detailed socio-economic benchmark survey would also be undertaken to establish a data base for appraisal of the irrigation project, for its design and for assessment of its future benefits. DIHM is short of engineering equipment and vehicles; the necessary equipment would therefore be provided under the project. There are no accommodation facilities in the project area for use by the consultants and DIHM staff during field work. Camps and quarters would therefore be constructed under the project. The proposed engineering project would be completed over two to three years.
45. The executing agency would be the DIHM. DIHM would appoint a Project Manager, with qualifications and experience satisfactory to the Association, to be responsible for the implementation of the project (Section 3.02 of the draft DCA). A roads engineer would be deputed from the Roads Department to DIHM to be responsible for the design of the 30 km section of the East-West Highway (Section 3.01(b) of the draft DCA). DIHM would recruit a consulting firm satisfactory to the Association to assist in conducting the surveys and preparing the detailed designs and tender documents (Section 3.03(a) of the draft DCA). DIHM has already received proposals from a short list of consul- tants acceptable to the Association. DIHM has the capability to supervise the engineering contract. DIHM would provide suitably qualified and experienced staff to work with the consultants (Section 3.01(b) of the draft DCA). In view of the inadequacy of local facilities and qualified staff, most of the design work would be undertaken in the consultants home office and two Nepalese -15 -
engineers would work with and be trained by the consultants during the design phase. This would speed up preparation and reduce costs. Related costs would be financed from the credit. Copies of documents prepared by the consultants for the project including reports, drafts, plans, designs, specifications, work schedules and estimates of costs would be furnished to HMGN with a copy to the Association (Section 3.03(c) of the draft DCA). Upon completion of the engineering services DIHM would consult the Association on the recommendations and conclusions relating to the project (Section 3.03(d) of the draft DCA).
Project Costs, Financing and Disbursements
46. The estimated total cost of the engineering project is US$3.55 mil- lion equivalent, including contingencies and approximately US$50,000 equivalent of taxes and duties. The foreign exchange component would amount to US$2.58 million equivalent or about 75% of total costs. Details of project costs are included in the Credit and Project Summary. The main cost item (US$1.3 M) is for the services of engineering consultants, comprised of approximately 95 man-months of professional services in the consultants Head Office and 55 man- months in the field at man-month costs of respectively US$7,500 and US$10,500 (including salaries, overheads, overseas allowances and international travel, but excluding reimbursable items required for the assignment). In addition, the following items would be included in the consultancy contract: aerial photography, geotechnical investigation of the weir site, mapping and model testing (US$550,000) and the procurement of field equipment (US$500,000). As required field equipment should be procured as soon as possible in order to avoid delays with the field work, the consultants would, as part of their contractual obligations, procure the equipment through international shopping procedures satisfactory to the Association. Construction of camps and quarters (US$250,000) for the consultants and Nepalese staff and labor would be carried out through local competitive bidding procedures satisfactory to the Associa- tion, or by force account.
47. UNDP has indicated that it has no funds in its program to finance the proposed engineering project before the beginning of 1982. In order not to delay implementation of the irrigation project, to which the Government attaches high priority, the Government has requested IDA financing. In view of the Government's limited capacity to raise resources (para 17 above), the proposed credit would finance the total project cost net of taxes and duties. Disbursements would be made against: (a) 100% of expenditures for civil works * carried out by force account and 95% of expenditures for civil works carried out by contract; (b) 100% of foreign expenditures for imported equipment, 100% of local expenditures (ex-factory) for locally manufactured equipment and 75% of local expenditures for other equipment procured locally; (c) 100% of salaries and operating expenses; and (d) 100% of expenditures for consultants services. Disbursements for construction of camps and quarters, salaries and wages for Nepalese staff and labor and other local operational cost would be made against statements of expenditure certified by the Project Manager. Retroactive financing, up to US$300,000, would be undertaken for the construc- tion of camps and quarters, since these facilities have to be completed before the consultants can start their field work. - 16 -
Reporting and Accounting
48. DIHM would maintain records adequate to record the progress of the engineering credit and to reflect project expenditures (Section 4.01(a) of the draft DCA). DIHM would set up a special project account for the project and have this account audited each fiscal year by independent auditors acceptable to the Association. Within nine months of the end of each fiscal year it would furnish its audited financial statements to the Association (Section 4.01(c) of the draft DCA).
Justification and Risks
49. The major benefit of the proposed project would be to enable the Government to prepare the Babai Irrigation Project for tendering. When completed the irrigation project would provide farmers with a more reliable supply of water, reduce dependence on erratic monsoon rainfalls and increase the incentives for higher input application and adoption of advanced farming practices. As a result, cropping intensity and yields would improve consider- ably, and additional employment opportunities would be created for family workers on the farm and for landless families. Foodgrain production would be increased to provide, apart from better nutrition, a surplus for export and/or distribution to food deficit areas in Nepal. Introduction of new cash crops would diversify the agricultural spectrum and provide for additional foreign exchange earnings or savings. At full development production of foodgrains is expected to increase by some 19,000 tons, equivalent to an overall increase of 140%. Cash crops, which are of little importance at present would increase from a gross value of about NRs 35 million to about NRs 60 million, mostly through introduction of new crops (cotton and groundnut). The engineering project faces no special risk.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
50. The draft Development Credit Agreement between the Kingdom of Nepal and the Association and the Recommendation of the Committee provided for in Article V, Section 1(d) of the Articles of Agreement, are being distributed to the Executive Directors separately.
51. Special conditions of the project are listed in Section III of Annex III.
52. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. - 17 -
PART VI - RECOMMENDATION
53. I recommend that the Executive Directors approve the proposed credit.
Robert S. McNamara President
Attachments December 11, 1980 -18-
ANNEX I TABLE 3A NEPAL - SOCIAL INDICATORS DATA SHEET Page 1 of 5 pages
NEPAL REFERENCE GROUPS (WEIGHTED AVERAGES LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)/- TOTAL 140.8 MOST RECENT LOW INCOME MIDDLE INCOME AQ ICULTURAL 40. 1 1960 A 1910 A ESTIMATE A ASLA & PACIFIC ASIA & PACIFIC
GNP PER CAPITA (US$) 40.0 60.0 120.0 197.9 894.8
ENERGY CONSUMPTION PER CAPITA (UILOGRAMS OF COAL EQUIVALENT) 5.0 15.0 11.0 166.0 842.4
POPULATION AND VITAL .TATISTICS POPULATION, MID-YEAR (MILLIONS) 9.3 11.4 13.6 URBAN POPULATION (PERCENT OF TOTAL) 3.1 3.9 4.8 20.8 39.1
POPULATIONPROJECTIONS POPULATION IF5 YEAR 2000 (MILLIONS) 21.0 STATIONARY POPULATION (MIILLIONS) 46.0 YEAR STATIONARY POPULATION IS REACHED 2160
POPULATION DENSITY PER SQ. FM. 66.0 81.0 97.0 193.2 376.1 PER SQ. EM. AGRICULTURAL LAND 243.0 286.0 339.0 409.6 2350.4
POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 40.3 42.0 42.4 42.0 40.4 15-64 YRS. 57.0 55.0 54.6 55.0 56.2 65 TRS. AND ABOVE 2.7 3.0 3.0 3.0 3.4
POPULATION GROWTH RATE (PERCENT) TOTAL 1.1 2.0 2.6 2.2 2.4 URBAN 6.5 4.3 5.0 3.9 4.1
CRUDE BIRTH RATE (PER THOUSAND) 46.0 45.0 45.0 37.4 28.7 CRUDE DEATH RATE (PER THOUSAND) 29.0 23.0 21.0 14.6 7.9 GROSS REPRODUCTION RATE 3.0 3.0 3.2 2.6 1.9 PAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 37.4 138.8 USERS (PERCENT OF MARRIED WOMEN) .. 0.7. 4.3L 15.6 39.0
FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 106.0 101.0 91.0 101.4 116.9
PER CAPITA SUPPtY OF CALORIES (PERCENT OF RE(UIREMENTS) 93.0 96.0 91.0 92.4 108.9 PROTEINS (GRAMS PER DAY) 50.0 51.0 48.0 49.8 60.3 OF WHICH ANIMAL AND PULSE 9.0 9.0 9.0 12.0 18.8
CHILD (AGES 1-4) MORTALITY RATE 35.0 27.0 23.0 17.9 5.3
HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 36.0 41.0 43.0 50.8 63.0 INFANr MORTALITY RATE (PER THOUSAND) 152.0/ .. .. 52. 8
ACCESS TO SAFE WATER (PERCENT OF POPUI1,TION) TOTAL .. 2.0 9.0 30.2 42.4 URBAN *- 53.0 81.0 66.0 62.1 RURAL .. .. 5.0 20.0 29.7
ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 1.0 1.0 17.7 52.8 URBAN *- 14.0 14.0 71.3 71.1 RURAL ...... 42.4
9 7 POPULATION PER PHYSICIAN 72000.0 4 770.OLe 3520 .Le 6322.7 4120.1 POPULATION PER NURSING PERSON .. 68320.0 e 51222.0 9459.0 2213.6 POPULATION PER HOSPITAL BED TOTAL 8060.0 6750.0 6289.0 1758.4 819.4 URBAN ...... 502.9 RURAL ...... 10524.1
ADMISSIONS PER HOSPITAL BED ...... 28.8
HOUSING AVERAGE 012E OF HOUSEHOLD TOTAL .. 5.5 URBAN 5.4 .. RURAL .. ..
AVERAGE YUMBER OF PERSONS PER ROOM TOTAL .. .. URBAN 2.0 .. RL'RAL .. ..
ACCESS TG ELECTRICITY (PERCENT OP DWELLINGS) TOTAL .. .. UR8AN 30.2 .. RURAL .. .. -19-- ANNEXI Page 2 of 5 pages TABLE 3A NEPAI - SOCIAL INDICATORS DATA SHEET
NEPAL REFERENCE GROUPS (WEIGHTED AVERAGES - KOST RECENT ESTIKA1E)-a MOST RECENT LOW INCOME MIDDLE INCCttE 1960 Lb 1970 lb ESTIATE /b ASIA & PACIFIC ASIA & PACIFIC
EDUCATION ADJUSTED ENROLLMENTRATIOS PRIMARY: TOTAL 10.0 26.0 71.0 80.9 98.6 HALE 19.0 44.0 108.0 94.3 99.2 FEMALE 1.0 8.0 32.0 66.7 97.7
SECONDARY: TOTAL 6.0 9.0 14.0 26.6 55.5 MALE 11.0 15.0 23.0 34.8 60.7 FEtALE 2.0 3.0 5.0 18.2 49.9
VOCATIONAL ENROL. (2 OF SECONDARY) 0.2 6.0 22.0/f 9.9 13.7
PUPIL-TEACHER RATIO PRIMMY 33.0 22.0 31.0 41.1 34.6 SECONDARY 32.0 21.0 28.0 20.5 28.5
ADULT LITERACY RATE (PERCENT) 9.0k 14.3 19.2 40.9 85.8
CONSUKPTION PASSENGER CARS PER THOUSAND POPULATION 0.2 0.4 .. 1.8 9.0 RADIO RECEIVERS PER THOUSAND POPULATION 3.0 5.0 12.0 25.8 118.9 TV RECElIVERS PER THOUSAND POPULATION ...... 2.4 39.4 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 0.8 2.0 8.0 13.4 CINEMA ANNUALATTENDANCE PER CAPITA -...... 4.9
LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 4813.2 5566.2 6535.9 FEMALE (PERCENT) 40.3 40.3 39.0 29.4 36.8 AGRICULTLRE (PERCENT) 94.6 93.9 93.0 70.5 51.9 INDUSTRY (PERCENT) 2.0 2.1 2.0 11.6 21.9
PARTICIPATION RATE (PERCENT) TOTAL 50.0 48.7 48.3 37.9 39.1 MALE 59.8 58.3 58.1 51.3 48.5 FEMALE 40.2 39.2 38.5 23.7 29.6
ECONOMIC DEPENDENCYRATIO 0.9 0.9 0.9 1.2 1.1
INCOhE DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. LOWEST 20 PERCENT OF HOUSEHOLDS .. .. LOWEST 40 PERCENT OF HOUSEHOLDS ......
POVERTY TARGET GROUPS ESTIATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 95.0 107.8 .. RURAL .. .. 45.0 86.5 192.1
ESTIMATED RELATIVE POVERTY INCGCE LEVEL (USS PER CAPITA) URBAN .. .. RURAL .. .. 41.0 .. 182.5
ESTIMATED POPULATION BELOWABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 55.0 46.2 RURAL .. .. 61.0 51.7 33.2
Not available Not applicable. NOTES
The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform.
lb Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970. between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978.
Ic Government programs only; Id 1971-73; /c Pcr.onnel in gQver,uwext services onlly; /f Upper s-.ondary (grade 6-10) only; 8 1962.
April. 1980 -20- ANNEXI Dt?IRTIOMOF SCLALINDIAMRSPage 3 of 5 pages
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IAJr.AlGA (thoossd l~.k. ) c-c.. to Eoireha sioo-c (es-net of roobto)-too rc c rur.l trc1-Tatc.lofcete otpistg lad are, sd maccd caters, floatr ofpol7 tnl no -o oa. se- d yecrt dsosle Aerboitoon- ROt rectt eti-tat of -gtotr.aesd temperaily peocae f their reepeotle ool- os torret Cipos.. ec icob-de or p -rsetly for -rops,patoces, es-ct coo Aittoho a-des or to the -colleti- sod .oositch Or coti-t treatooct. or bor cerete lIe fsIloo. and cas~~~~~~~~~~~W::te.-oterbrycae-o ptem or to Ceo pot pototec tad -aIi.c tWO PflCAPfITA 9i~'- lop per capita est-t.mtc acort sahe prce *k Poscaltor7ytio-Ppalodrdo ycrieo roltgpplic EiEiieby rce oenrmetod as World MUc Atlas (1976-78 albqaiidfo oidcl aetod at otes I -ylee. 2910197, aid 17fldata. Pcpslattos-o - R-ogfor feooc-tpl.to dortidd by cotro peacticiog tale ,%:'. r Ct.y?ttFtcrt-Pro o2A - Anou- oesw-ptlosof oceoot1 eteog acd fesale godoat. oto eota.cre,ai sbtc ost
therml deletroolty) It kiticoyt of coa eqlsetPer capital i96o, sc"id rios I,)di-cide by tort erponr,oar f hoaptoat teds m laInei ty acd peioate geea cd scialtod ho-tptal sod -heboilitatin oc-ters. 1I70 se 1976 dot. ~~~~~~~~~~~~~~~~ptolio Koapitaleas estt,ias,ct -racetly ataffed by at LeLAst use phystsc. PtPUttA'TTGNbin V!fA. zfAT:Z7lCS Utitblish-tts p-oidls peitripally -ootota -on oe tot t-ltodet cora 7Tta o aio >-er ilcs As of Joly to 1960, 1970, acd hsapIttao eo icolods -eths tod -eot-a -ct-o tOt pe-onetly staffed 1977Oats. ~~~~~~~~~~~~~~~~~~~~~bya pftssyctca(boa by a ediva..asistant, cors, idoife, etc. i offe tirtsi Psolaton'ecet oftota) - ttc of orhbc to total flccsiaticco lA-patteot -oowdatla cod protidealImited oseig of medIcalfailitIe.. differetdeficttoo o oroco eeto siy tIect ocaptabblity of data Odtsoocoh totl BeId- totl water of to ot. too ditobhogea from s~iotcitirs 190,1977, sd 1975 dota. topiat ddolddby tIe somi- or beds,
Pcowlti-tot to rear 002 - Correct ppcoistios projeotiocs ar basedcc iXSfl 1975 total PopoItato by age med -e cod toclr oortodity swd fertility Aer-ge Site of Htooehold(p--oi co hooc-bold)- tota. ohao sd -orl este.'foeto parastee forsytlt rates cosprioc of thre- oooe.iol ... coisto of a group of toiloi h. shar tiots qoate o ,e_I. astoming life -pe-t-no at birthic-tcoisg cihoxott the.ir mo .Iea.. A boade orloger cay oca cot be icoloord to tOe pee cptta1.00cbevl, ad feesle life topeot-cy stahilicLo a5soscoid for sltalttotoa pcpoes 77.5 years. Thr,osete for fertility rate abs har.. eelvl.Aeae oos of icrsecpe ro -~ toa. ora,sdrrl -Aeae o, e ssssing drolite Ic feetility -voodoo to -om leve coo past of peeso... poe 0000 ic e.ll a-t-, so roa- copt t itel- doellitro,, faiyecoioprform-. 0oihoc-ty is. then assiged ccc of these 'reprti-cty. f.eriittg esolIde -o =-penot tt'vtrs c -- rpied ros sine oc nteato- of -Maslity cod fertility treede for proJecti-e AIlea, t lcrct preto oio tosci. orb,o cod 0-cot - Coo- picoposes. renticoal ~~~~~~~~~d-ciiIosol, itth ot in ivis 5ateaa p-rcetago of Sttai-ocary cocotios - Ia a stationary ppalati.tsheen is cc gro.tt total, ceha, sod rura dacligs respevtiveIly. ative the birth rat is equal to toe death rate, and also the age at-oto- -ecis coctact. This is cotieced otly aft., fertIlity rates tEOlATIlt deollce to tie repIav-et l-o1 of oit cot reprodottic rate, cost Adootod -icoltet Ratios sorb gteralucof cce eobs It.-Itef neatly. 7he statitocary pop.- Prioncoooy total ntesc etl Goose totl, ole cod fosle enrol- -at "ottis ae titdc hebcso t.trprojected hcaratrrioti-t ctofalus icvpoty Iro i -a quoseof re.pootte- procavy of the popolstit istb ya 2000, and the oste of doltose of fertility tocaeppslatloss; cortaly iooIodes -hild-e eded 6-1l fea- boo rte to epcrrsee.sdjoated, for differec egh f rrs Ocsts -rtrorr t .ea statioct yroo-= oI ic rco.nbd Te y oa hee stattoas posait--lero cdo..tioce.....t. o eoIeI10 pLooet i_oPsc 'oils
.Pu.stattofrss t.eoy cot -ttlesi o fesoale - Computed to o; roooto--- F., so. Xt.. - 0.1-yea Pociatioc per aqicre kilomter (100 beotares) of edocoaiioceioee tiet foor fer of approvd pro-sttra!itt-othir; totasae p-oidee g-cera occaional, or tesottertraiste iteivrtioso. f- orl Per so.ICm.sre:otutlla Cmoeaseond - foe agrltoato.. land osoald of 1.2 to 17 year of age; -oerespod -c-vocr - ro e gI.-rIly only. cvlodeo. Poqiclatocflo Itrootore (cecosti -Chlldree (0lVsr- orieaefctiosa enoiss creso ooor) -Votico .. Intitoo o,lv 15-t Yeao,cdrtre 5yassd oe)a p -etages cIfaid-year toohsi-I,idoora,t oile pr_gono ohloh operate. todepeIteol rn po.loItioc;1900, I970, sod 1977 do.t deparimects of seodory bootitotlros. PoccolaiocGrr-i sh reeb"t - total - cU_i estb racca Cf total sAd- Plcpll-t rrto-piso, acd -- rodcoy - Cotal stodc-t -soo.od is
PeiltortchPsr-eor - rin - 1Oicgrostt rates ef orhs sycdigIos poooit "o l',5-oojlod-72 acd 1970-75. Odolt littr--yrate (p-ort) - Lite..atn adolit (atln to ma-d sod oite)a foods Pieth Rote ocr-or-o so) _-tool Ice births per thousad of aid- ap-rrtag of 'totl adult pop~Iiotto se ityear sooer yea ppoott ,o17, 1970, -i 1977 octa. Crude Death Rctr (rei ocadl - Ao-ncc death per thooocd of mi-ea COffSftPrTfON
Go-c, flprodcoticRae-hyr~e ottr of .daoht-r a csI sil hear tetn esta ih 5b sldeabol-cc hearse acd .ilitovy ishro reaepo t-_ peiod If sIc cprtMcoeW presec.t age- ehicle.. specific fertil ity rates; oooab flo-yea a--rges -ndig Ia 1960, Rtdto Reci-er (err thoctod ppmcitirt( All types rf re-ivers for rodlo 190 Laibt h7dcca ogeec foohii pee toot-cdof p-ottto o odsoniressd pacilyiseiog- Ovrotre ceoal. (thoonsods) - A-..oI c-ahe of re-rieso in cootries and te year-hsabeore tlotraio of rad1io sets -o Ic aoetoeaofirot-oooooidevices -ondoe ,,-ice of cat.ioa fsily effect; dsta for- s year say sot be -opara1l slso- s-t -c-nries ploocio ps-ogrs-s aol`eIrhd ileoi-ng.
coef hl-icarfg s (5-o44ya1 the ote itrth-oostr devtce oieprtrcodppcoa coloe oni-ossd TV r-oeIer it _tosi-s to al otried -cr Wis am ag grap and so pear shoe egiotr_ti;.o of Tv sect o it effr-..
FOODAND ______of daldoeaoteat 5-pr*rfed cc a perorcol pilicotooc MIRde '--ifo0 rooooir "otto (110071.120) - lodec of per att deosted peiatily so ocodAr ce-aItot It is coacilered to be 'doily" anosP prdoroo al od -o'oitfrs. Prodoction. ecIode sI daid i t eersa eatfotttrsse feed and ts onai_dol year has Os C-enditll te rve priemy goods Clr- Ao.c.aI Atts-d-oo or C-rto fa- caned O thecor-be or t toast (e.gsagroco teseod f soga) ostoib ar edible act Ioct .ta . tteit.. sold dsroc h ea,icasa oaioo. to oic-is sisema cd mebtle (e.g.evffesodtea co i.e)."y docrrg.tt produvtibo of eahtooo nis ishase on ostroi treceProd-00r yrtceceIghta.
essegyqoiolco -foct t'dtoplcos o-rt blai it .otey P-e caPita Toto1 Labor Po- (thuosessm)- ttrisysttee P-ros., ta-lding cree - per dcci. Aoaiiable soppliracveprtse do~~-tectip-dsrt i, imports tees fo-Ir sod soceplocd hut -ULdiog h-...sl-.. esodests, et - eiii eaports, and rbh-gee il to-1,h Net-opplit coclde ~ -talfed, secds, is various -ctries ar so -op-bsi.. q_stltlet oeed Ic fcod poo-ssnt, sd losses ir distelbotica.Reqipre- Fe-al (porc-i - PF--le iab- -. brre as pretgof scial labor fo setscee- t-ttr by )Acasd oc plyoologicol o-ds fr. tor.al 4crori-tor- oe t 6.-lboOire Is formon, orestry, hostig sd aciiyc0trao co-toe-isc -ci'oserta1 teiertce td e~tgtt, fiohosg soperetag of talabrorr.- agad o torboti-s of-crttot cd tO1cacoc10 p-rro ro rotyoron)- ao oa.i ilg cnt octoos e-ottr. iag ord castat _hoocoodlecr e'Itriroty, cae do gao at er.rato of "totlIo fMo.- Per rid St. -or-y of re 'n,o e-s da) - Petalo contestof pee Pstrptt. ce(cecs to-oe,sdrsle-ieiiptoso cpt.'tee -tos';Y of tIb" Poe on. ri s,pply of food Ita otie-d ss cot-cy estee ar -op-tds oa,sle o -l oo os spr aloe -fooirrete ce ll "ootries rotabIsod hy SIN p-ccde for a -ortage of tota, asi tod lk-tal popoI.l-o of alt coc reaperti-eLyo atnmomalicovro tOgram .1tctstcoto per day cod . gras af 1900 t0,ad 19175 data. 'Tese ar 11.0' yartkiptoao ratesrfet scstsalscofoee proete, o aitob I gras shudhInitroeo g-e t -utr of the poPLdhtit, cd long tier stro. A fo Letsc
5grm ofaeitl p_t.iet soIn avrge for tne acold, proposed by FAO Fcirt-ni Secetod-- Rlatir -Act rf populaltion tdrO 15 sd 65 cd ove to Ia the Third he,ld Frod ory.heL-o force. to age goostoco 15-64 years No, -crits er tio 0-orrc tr- arite -Ji rut - PootrIl sopply af food NCNSRma
Chlld (ages 1--,1>rc tOy Ostoro hoco - ci deaths e thoassed Pvts fiits eoe1th. is rash and hicnd) - R.. eteed by richest taparo, age,-ot-o t otoleceI- Icthis av trop: formastproo- fratrret2 rvd,poet 20)p-rot, sod poorest cO perect oplag. o_s,tr-e data tooLe~d ter tIre stica.- of houehldst. Iiy,"Tfl FORGtr TAsR,-FcrtM1 Ldic Ep,cottcy at birth_ t -Ae)Aer mache of years sf tIre tici-ot. obo11.tlot oes c,eLcl e c-tit[L - orhotr and rural- rcaaieicbieto attOot.11.3 ad 1917.dat. Abootote p-orety I.co.- loti httcreIcl oosoiameea lafat OtefoftyOfe -ro i. oor.A)-dr,o.I deaths of i.rtfai nder oneM ctetlosaiIly adequate diet,pic rase-tat -coe-sc reqotoemea ta cot yea rofcop-o tt--. lc b,rthe.afroco
saeatrct--s:ioaestetdsrbo aesoE unttroctest, ioa esci: coa f i r o". ut" - Oris lec s tr 0- terra ee acid sctisrseth so prLrosther ofP--re.prls o1-atoa.I Esete f-tusior '01 - hooo t -- r y .- er rootJ (' th i -. odo L-d ac-otctsena lt f-ontai t~'t etrofet lov-td so rsietKs rra -tQ. Ferret cf ptpoino ,ottuoba slo~Lrod;a -obtetoe ae
ooes of toss ti-ode- I rura ar...... otl a Is,odact chat ste Io,oiO o.r -esce or c,4l tucet-id do ct. _sos toaeo a Pioo tr an-A oist Coaftot famiiy'a ester.seeds -ocml analysts n PrQec Coiefparcoct dsrprniepart t f the day ccfin og 0 -21- ANNEXI Pa-g-e4 of 5 pages
ECONOMIC INDTCATORS
CNP PER CAPITA IN 1978: Us$120 a/
GROSS NATIONAL PRODUCT IN 1978 ANNUAL RATE OF GROWTH. 1965-78 (X, constant prices) US$ Mln. X CNP at Market Prices 1,633 100.0 2.3 Gross Domestic Investment 147 9.0 Gross Domestic Saving 33 2.0 Current Account Balance (exc. grants) -47 -2.9 Exports of Goods, NFS 82 5.0 Imports of Goods, NFS 245 15.0
OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1977 Value Added Value Added Labor Force b/ Per Worker IJ5$Mlln. X US$ Mln. X US$
Agriculture 996 68.0 5.9 93.0 169 Industry 132 9.0 0.1 2.0 1,320 Services 337 23.0 0.3 5.0 1.123
Total/Average 1,465 100.0 6.3 100.0 233
GOVERNMENT FINANCE CENTRALGOVERNMENT Rs. Mln. Z of GDp 1976/77 1977/78 1978/79 1979/80 1978/79
Current Receipts 1,302.2 1,559.3 1,811.9 1,747.6 8.4 Current Expenditures 784.1 815.0 1.041.7 1,195.5 4.9 Current Surplus 518.1 744.3 770.2 552.1 3.6 Capital Expenditure 1,486.4 1,792.9 1,978.8 2,346.6 9.3 External Assistance (Net) 538.1 830.7 989.4 1,363.8 4.6
MONEY. CREDIT AND PRICES
1976 1977 1978 1979 1980 (mid-April) (Million Rs outstanding mid-July)
Money and Quasi Money 2,524 3,223 3,772 4,512 5,249 Bank Credit to Public Sector 480 750 966 1,129 1,336 Bank Credit to Public Enterprise 567 511 869 1,080 1,156 Bank Credit to Private Sector 716 864 1,072 1,332 1,849
Money and Quasi Money as x of GDP 14.5 18.7 19.3 21.1 ... General Price Index (1973/74 = 100) 115.9 119.0 132.3 136.8 153.0 Annual Percentage Changes in: General Price Index -0.7 2.7 11.2 3.5 12.0 c/ Bank Credit to Government 67.8 66.3 28.9 16.9 30.7 d/ Bank Credit to Public Enterprises -0.4 -9.9 70.1 24.3 16.9 d/ Bank Credit to Private Sector -8.6 20.7 24.1 24.3 35.3 d/
Note: All conversions to US dollars in this table are at the average exchange rate prevailing during the period cov'nred.
a/ World Development Report 1980. b/ Total labor force; unemployed are allocated to sector of their normal occupation. c/ Estimate. d/ April 1980 vs. April 1979.
.. not available -22-
ANXFX I Pvge 5 of 5 pases
TLUPF PAYMENTS AND CAPITAL FLOWS
BAlXNCE OF PATMENTS MERCHAN; St EXPOR-S 197S/79 8/ USS Mbi7. , 1976177 1977/78 1Q78/79 (Millions V$)
Exports, f.o.b. b/ 93.9 88.8 108.6 Foodstuff 6 raw materials 84.3 78.0 Imports, c.i.f. bt 166.9 209.7 242.7 Manufacturts 23.8 20.0
Trade Balance -73.0 120.9 -134.1 Total 108.1 100.0
Services, net 39.4 47.6 64.9 of which: Tourism 23.0 30.2 41.4 EXTERNAL DEBT. DFCEMBER 31. 1979 Uss Mln.
Transfers, net 30.8 25.1 29.9 of which: Private Remit. 21.5 18.3 25.3 Public Debt, inc. guaranteed 125.3 Indian Excise Fund 30.8 25.1 3.0 Non-Guaranteed Private Debt
Current Account Balance -2.8 -48.2 -39.3 Total Outstanding 6 Disbursed 125.3 (exc. grants)
Official Grants 18.5 23.9 42.6 Official Capital, net 16.3 22.7 35.7 Private Capital, net -10.3 -10.4 9.6 DEBT SERVICE RATIO for 1978t79 c/
Change in Reserves -21.7 12.0 -48.6 Public Debt. inc. guar3nteed 1.4 (- Increase)
Gross Resgrves (mid-July) 145.3 135.1 178.3 Net Reserves 137.8 126.1 149.5 IBRD/IDA LEnDING. (Agust 1980)(Millions USS) IBRD IDA
Fuel and Related Materials Imports of which: Petroleum 17.6 17.5 16.7 Outstanding 6 Disbursed 55.7 Exports of which: Petroleum -- - - Undisbursed 149.1 Outstanding, incl. undisbursed 218.4 RATE OF EXChANGE
From October 1975 Through October 1975 through March 20, 1978 Since March 20. 1978 US$1.00 - NRs 10.56 US$1.00 - NRs 12.5 US$1.00 - NRs 12.00 NR 1.00 - US$ 0.095 NR 1.00 - USS 0.08 NR 1.00 - USS 0.083
a/ Customs basis. h/ Payments basis. c/ Ratio of Debt Service to Exports of Goods and Non-Factor Services.
not applicable
South Asia Programs Department November 1980 - 23 - ANNEX II
STATUS OF BANK GROUP OPERATIONS IN NEPAL
A. STATEMENT OF IDA CREDITS (as of October 31, 1980) /a
US$ Millions Amount (less cancellations) Credit Undis- No. Year Borrower Purpose IDA bursed
Three credits fully disbursed 7.1 373 1973 Kingdom of Nepal Irrigation 6.0 0.4 397 1973 Kingdom of Nepal Telecommunications II 5.5 1.5 470 1974 Kingdom of Nepal Water Supply and Sewerage 11.8 2.8 505 1974 Kingdom of Nepal Settlement 6.0 4.6 600 1976 Kingdom of Nepal Kulekhani Hydroelectric 40.8 16.3 617 1976 Kingdom of Nepal Rural Development 8.0 5.6 654 1976 Kingdom of Nepal Groundwater 9.0 2.3 659 1976 Kingdom of Nepal Technical Assistance 3.0 1.2 704 1977 Kingdom of Nepal Second Water Supply and Sewerage 8.0 6.6 705 1977 Kingdom of Nepal Industrial Development Corporation 4.0 3.4 730 1977 Kingdom of Nepal Second Highway 17.0 10.6 772 1978 Kingdom of Nepal Technical Education 5.7 5.6 799 1978 Kingdom of Nepal Telecommunications III 14.5 14.5 812 1978 Kingdom of Nepal Irrigation 30.0 28.0 856 1978 Kingdom of Nepal Irrigation 14.0 13.6 939 1979 Kingdom of Nepal Second Rural Development 11.0 11.0 1008 1980 Kingdom of Nepal Forestry 17.0 17.0 1055 1980 Kingdom of Nepal Mahakali Irrigation /b 16.0 16.0 1059 1980 Kingdom of Nepal Third Water Supply /b 27.0 27.0 1062 1980 Kingdom of Nepal Grain Storage Ic 6.2 6.2 Total Outstanding /d 267.6 Total Undisbursed 194.2
B. STATEMENT OF IFC INVESTMENT (as of October 31, 1980)
Amount of US$ Millions Year Obligor Type of Business Loan Equity Total
1975 Soaltee Hotel Hotel 2.70 0.43 3.13 (Pvt) Ltd. Total commitments now held by IFC 2.27 0.43 2.70
/a No Bank loans have been made to Nepal. /b Not yet effective. /c Approved on August 26, 1980; not yet signed. /d Prior to exchange adjustments, net of cancellations. ANNEX II -24- Page 2
C. Projects in Execution I/
Credit No. 373 - Birganj Irrigation Project US$6.0 million Credit of April 18, 1973; Effective Date: July 9, 1973; Closing Date: June 30, 1981
The project has nearly been completed. The main remaining item is the restoration of eight tubewells. Crop yields achieved in irrigated areas are promising. Water charges are now being levied in a limited area, and farmers' acceptance is satisfactory.
Credit No. 397 - Telecommunications Project II US$5.5 million Credit of June 20, 1973; Effective Date: September 11, 1973; Closing Date: June 30, 1982
Due to organizational problems, lack of continuity in senior manage- ment, and delay in obtaining expert assistance, there have been delays in procurement and the project is about two years behind schedule. Good progress is now being made with the assistance of experts and consultants provided by the United Kingdom and a new General Manager has been appointed. The project is now proceeding satisfactorily and present estimates are for completion by the end of 1981.
Credit No. 470 - Water Supply and Sewerage Project US$11.8 million Credit of May 8, 1974; Effective Date: June 26, 1974; Closing Date: June 30, 1978; Revised Closing Date: July 31, 1981
All major contracts have been let. Project implementation is over two years behind the original schedule, primarily due to delays in letting the contracts. A management team provided by the United Kingdom is assisting the Water Supply and Sewerage Board. Work is now progressing satisfactorily. An EEC Special Action Credit was approved in July 1979, to cover some of the Governments share of the local costs of the project. During the negotiations for the EEC Special Action Credit, the implementation schedule and dated covenants were revised, and the closing date amended to July 31, 1981. All major contracts are expected to be completed by December, 1980.
Credit No. 505 - Settlement Project US$6.0 million Credit of August 14, 1974; Effective Date: February 20, 1975; Closing Date: July 15, 1982
Project implementation, though still about two years behind schedule, has improved slightly over the last months and 1,550 families have been settled.
1/ These notes are designed to inform the Executive Directors regarding the projects in execution and, in particular, to report any problems which are being encountered and the action being taken. They should be used in this sense on the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. -25- ANNEX II Page 3
Forestry clearing remains a bottleneck and technical assistance is being provided to speed up the operation. Stress has also been laid on the need for employment of adequate and experienced staff and better management and planning of operations. Because of doubts about land use policy, we are discussing with the Government reduction of project area to be newly settled from 17,600 ha to 11,100 ha.
Credit No. 600 - Kulekhani Hydroelectric Project US$40.8 million Credit of January 9, 1976; Effective Date: May 18, 1976; Closing Date: December 31, 1982
All civil works contracts have been awarded and construction work started in December 1977. The revised estimate of project costs, excluding taxes and duties, is now US$109 million which is some 60% higher than the estimate of US$68 million at the time of appraisal. The increases in costs are due to a number of factors, principally design changes as a result of further geological investigations and the risk factors inherent in a major project which is remotely located. These are reflected in higher prices and implementation delays which are adding to costs. In addition, the apprecia- tion of the Japanese yen, in which substantial part of the costs of equipment and engineering services are being paid, has increased the US dollar cost of the project. Cofinanciers are providing additional funds to cover the foreign exchange cost overrun. An IDA supplemental credit of US$14.8 million and an EEC Special Action Credit of US$3.0 million equivalent were approved by the Executive Directors on May 10, 1979. Progress is satisfactory.
Credit No. 617 - Rural Development Project US$8.0 million Credit of April 30, 1976; Effective Date: July 16, 1976; Closing Date: December 31, 1981
Progress continues to be satisfactory, with almost all planned project actions being implemented ahead of schedule. Disbursements had been lagging due to delay of project authority in submitting disbursement applica- tions. Interministerial cooperation is good, and at the district level, sound and practical development plans have been produced which are fully supported and understood by project farmers. Adequate financing to carry out project proposals has been made available in the budget by the Government and sites and plans for most district construction projects have been completed and r construction started. Training of weavers and issuance of improved looms under a credit scheme is proceeding well. Shortage of middle-level staff in the project area for construction supervision and agricultural extension may hinder project implementation. However, arrangements have been made for more efficient deployment of existing staff and for special training of farmers as part-time agricultural assistants. Under the associated Bank-executed UNDP technical assistance project, the assistant to the Project Coordinator and the Irrigation Advisor have completed their assignments. ANNEX II Page 4
Credit No. 654 - Bhairawa - Lumbini Groundwater Project US$9.0 million Credit of July 9, 1976; Effective Date: November 16, 1976; Closing Date: June 30, 1981
Drilling of tubewells is in progress. Forty-one production wells have been constructed. Progress of civil works is very slow due to the weak- ness of local contractors. Project implementation is over two years behind schedule. Completion of the 11 kV transmission lines is far behind schedule. Consequently, pumps and motors cannot be installed in the completed tubewells.
Credit No. 659 - Technical Assistance Project US$3.0 million Credit of September 16, 1976; Effective Date: November 16, 1976; Closing Date: December 31, 1980; Revised Closing Date: June 30, 1982
Studies for a national agricultural extension project, a silica-lime brick factory, an airborne magnetometer survey, cottage industries and the grain storage project have been completed, while studies are in progress for river control for the Sunsari-Morang Irrigation Project, an agricultural man- power survey and the upgrading of mechanical workshops for irrigation projects.
Credit No. 704 - Second Water Supply and Sewerage Project US$8.0 million Credit of May 27, 1977; Effective Date: February 28, 1978; Closing Date: June 30, 1982
Engineering consultants have begun work, and feasibility studies, master plan updating, and final designs have been completed. A tariff spe- cialist has been recruited, and the first contract for water meters has been awarded. Evaluation of the bids for major contracts is underway. An EEC Special Action Credit was approved in July 1979 to assist in financing a por- tion of the Government's share of the local cost of the project.
Credit No. 705 - Nepal Industrial Development Corporation Project US$4.0 million Credit of May 27, 1977; Effective Date: February 17, 1978; Closing Date: December 31, 1981
The UNDP-financed policy advisor completed his assignment and the accounting and information systems advisor took up his post in February 1980. To date, subprojects for about $1.7 M have been approved by IDA. Progress in implementation of the credit has deteriorated due to shortages of complementary local currency resources. Accordingly disbursement have continued to lag.
Credit No. 730 - Second Highway Project US$17.0 million Credit of October 19, 1977; Effective Date: December 23, 1977; Closing Date: December 31, 1982
Although the project remains about two years behind schedule (disbursements are at about 35% of the appraisal estimate), recent major improvements in the Borrower's management give rise to the expectation that project performance will improve and that substantial completion may possibly - 27 -
ANNEX II Page 5 be achieved by the Closing Date of December 31, 1982. Good progress is being made in the construction of the Talsipur feeder road and significant improve- ment has been achieved in the organization of work on the Thankot-Naubise Road.
Credit No. 772 - Technical Education Project US$5.7 million Credit of April 14, 1978; Effective Date: July 11, 1978; Closing Date: September 30, 1983
Good progress towards implementation has been made. Contracts have been signed for all civil works packages, except external works, for which the bids are being evaluated; however, equipment tendering is behind schedule. The first batch of fellowship students have completed their programs and a second batch have started their programs. A team of educational experts, financed by ODA, have begun work in the field and a program of cooperation with Paisley College of Technology, Scotland, is progressing satisfactorily.
Credit No. 799 - Third Telecommunications Project US$14.5 million Credit of August 22, 1978; Effective Date: February 27, 1979 Closing Date: June 30, 1984.
ODA is financing the telex equipment and the satellite earth station. Project consultants have been appointed. Procurement actions have been initiated.
Credit No. 812 - Sunsari-Morang Irrigation and Drainage Development Project US$30.0 million Credit of July 7, 1978; Effective Date: November 30, 1978; Closing Date: June 30, 1984
In July 1980, a landslide in the catchment area caused a major flood in the Kosi river, causing considerable erosion and endangering the Chatra Main Canal. Emergency flood protection works were carried out. As a result of this event it was agreed that river training works are not viable. The sediment control studies are expected to be completed by mid-1981. Rehabili- tation work on the Chatra Main Canal and procurement of construction equipment are ongoing. Local consultants are completing designs for the first 13,000 ha of the irrigation system and international tenders will be invited to submit bids for construction. An EEC Special Action Credit of about US$4.0 million equivalent was approved in June 1979 to help finance a portion of the Govern- ment's share of the local cost.
Credit No. 856 - Narayani Zone Irrigation Development - Stage II Project US$14.0 million Credit of November 27, 1978; Effective Date: January 8, 1979; Closing Date: December 31, 1983
Project implementation is proceeding steadily, although slower than anticipated. The major constraint is the weakness of local contractors. Construction is now on-going in five of the six irrigation blocks. Procure- ment of construction and O&M equipment is underway. -28- ANNEX II Page 6
Credit No. 939 - Second Rural Development Project - Mahakali Hills US$11.0million Credit of August 9, 1979; EffectiveDate: January 15, 1980; Closing Date: February 28, 1985
The Project Coordinatorhas been appointed,but project activities are approximatelyone year behind schedule. An earthquakehit the project area in July 1980. Efforts are being made to acceleratethe infrastructure work under the project. This will contributeto reconstructionefforts.
Credit No. 1008 - Community Forestry Developmentand Training Project US$17.0 million of May 22, 1980; EffectiveDate: September 19, 1980; Closing Date: June 30, 1986
Credit became effectiveon September 19, 1980.
Credit No. 1055 - Mahakali IrrigationProject (Stage 1) US$16.0 Million Credit of September29, 1980; Effective Date: December 30, 1980, Closing Date: December 31, 1985
Credit not yet effective.
Credit No. 1059 - Third Water Supply and Sewerage Project US$27.0 Million Credit of September 29, 1980; EffectiveDate: December 30, 1980; Closing Date: December 31, 1985
Credit not yet effective. ANNEX III -29-
NEPAL
BABAI IRRIGATION ENGINEERING PROJECT
SUPPLEMENTARY PROJECT DATA SHEET
Section I: Timetable of Key Events
(a) Time taken by the country to prepare the project
6 months
(b) The agency which has prepared the project
DIHM, with the assistance of the Bank staff.
(c) Date of first presentation to the Bank and date of the first mission to consider the project
March 1979 March 1979
(d) Date of departure of appraisal mission
January 2, 1980
(e) Date of completion of negotiations
December 1980
(f) Planned date of effectiveness
April 1981
Section II: Special Bank Implementation Actions
None
Section III: Special Conditions
(a) appointment of a Project Manager with qualifications satisfactory to the Association (para 45);
(b) appointment of a road engineer to be responsible for the design of the 30 km section of the East-West Highway within the project area (para 45); and
(c) recruitment of a consulting firm acceptable to the Association to assist in the detailed designs and tender documents (para 45).
86 SEPTEMBERtv980 |o~E2 83 0E4° NEPAL C H I N A BABAI IRRIGATION PROJECT INDIA-W.-:.vEm-s.-,/za ~~~~~~~~~~~~~~~ProjectLocation
Mountain Region P j Rioers K Hill Region Develop.enet RegionBoundaries lDner Zonal Bound0ries
e 1/7Swo'A~jJjTJTJ \ Volny Internfionai Boundories ATAKt MEiandu OngoingP'miects PRO _0;. ISTAGE ,T .:~~ProposedProject