C)Z 2 '1 ZgCl - - Docuet of The World Bank
FOR OMCLAL US ONLY
MrCROFICHE COPY
Report No. :P- 5696-NEP Type: (PR)
Public Disclosure Authorized Title: SUNSSARI MORAING HEADWORKS PROJE( P-5696-NEP (Author: (ALBINSON, B. bport ND. Ext. :81928 Room:E-3C)49 Dept.:(ASTAG Y 2 VOIS
141ORANWDWAND REtMDATI
OF THE
PRESIDENTOF THE
INTRNATIONAL DEVELOPET ASSOCIATION
Public Disclosure Authorized TO THE
EXECTIVE DIRECTORS
ON A
PROPOSEDCREDIT
OF SDR 19.0 MLLION
TO THE
KINGDOM OF NEPAL
Public Disclosure Authorized FOR A
SIINSARI MORANIGEADWORKS PROJECT
OCTOBER15, 1992 Public Disclosure Authorized
Ts document has a resticted distribution and may be und by recipients only in the performace of their official duties. Its contents may not otherwise be disclosed without World Bankaothorization. NEAL
SUNSARI MORANGHEADWORKS PROJECT
CURRENCYEQUTVALENTS (as of September 1991)
Currency Unit Nepalese Rupees (NRs) US$1.00 NRs 42.80
WEIGHIS AND MEASURES
1 meter (m) 3.28 feet (ft) 1 hectare (ha) - 2.47 acres (ac)
A*IBRITATTONS AND ACRONYMS
CCP - Chatra Canal Project CMC - Chatra Main Canal DOI - Department of Irrigation ERR - Economic Rate of Return GOI - Government of India HMGN - His Majesty's Governmentof Nepal ICB - InternationalCompetitive Bidding LCB - Local Competitive Bidding 1/s - Liter per Second m3ts - Cubic Meter per Second o&M - Operation and Maintenance POE - Panel of Experts PCR - Project Completion Report SA - Special Account SAR - Staff Appraisal Report SOE - Statement of Expenditure SMIDB - Sunsari Morang IrrigationDevelopment Board SMIP - Sunsari Morang Irrigation Project SMHP - Sunsari Morang Headworks Project Chak - Tertiary Service Area Kharif - Monsoon Cropping Period (July - October) Rabi - Winter Cropping Period (December - March) WUG - Water User Group
FISCAL YEAR
July 16 - July 15 FOR OFFICIAL USE ONLY
UNPAT .
STNSARI MORANG HEADWORKS PROJECT
Cradit anA Project Summary
Bor*ower: Kingdom of Nepal
AM=SnD: SDR 19.00.million (US$28.00 million equivalent)
QL.ma: Standard. with 40 years' maturity
Financing Plan:
Loual Foreign Total --- (USS million)------
Government 1.68 0.00 1.68 IDA 1.0l 27.00 28.00 TOTAL 2.68 27.00 29.68
Rcnnmie{ Ratea f Raturn: 22%
Staff Appraisal Report: Not applicable
han.: IBRD No.23548 Location IBRD No.23549 Detailed Layout
This document has a restrktod distributionand may be used by recipientsonly in the perormanc of their oMcialduties. Its contents may not otherwib be disclosedwithout WorldBank Luthorution | MEMORANDUMAND RECOMMENDATIONOF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENTASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOMOF NEPAL FOR A ShJNSART M HRNADWOR PROJRCTr
The following memorandum and recommendationon a proposed Development Credit to the Kingdom of Nepal for SDR 19.0 million (US$28.0million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with a maturity of 40 years, to help finance the completion of the ongoing Sunsari Morang Irrigation II Project (SMIP I)Y - Credit 1814-NEP.
ProjmE-t flAsnript1nn and Object{vas
1. The project would provide new headworks facilities for the Sunsari Morang Irrigation Project, initiated by the Government of India (GOI) under the Kosi Agtreementof 1954. The project commands an area of about 68,000 ha, of which about 58,000 ha are effectively irrigable. Problems with siltation began soon after the project was completed, and have defied small-scaleremedial works. Two previous credits (Cr. 812-NEP, US$30 million and Cr. 1814-NEP, US$40 million), which provided for desilting facilities as well as development of the distribution system, failed to address the technical difficulties with sufficientlyradical solutions and siltation has caused the loss of function of a significant part of the completed works. The search for the correct technical solution to the siltation problem has been actively supported by the Bank, but has proved extremely lengthy and difficult. Finally, an internationalPanel of Experts (POE) was convened and this project would implement their recommendations which include moving the intake structure 1,300 m upstream into the Chatra Gorge, and providing a very large desilting basin. The new site of the intake would allow easy extraction of water, and the desiltingbasin would permit desilting of the extracted water.
Project Annkground
2. Background and Early levalo ment. Under the Kosi Project Agreement of 1954 between GOI and His Majesty's Government of Nepal (HMGN), GO undertook to finance and construct the Chatra Canal Project (CCP) in Nepal to irrigate an area of about 58,000 ha using water diverted from the left bank of the Kosi River about 20 km upstream of the Kosi Barrage at the Indian border. Constructionof the system started in 1964, and after trial operationsbetween 1970 and 1975, the project works were handed over to HMGN in 1975. The project was later renamed the Sunsari Morang Irrigation Project (SMIP). The intake and head reach of the Chatra Main Canal (CMC) were designed for a capacity of 45.30 m3/s, equivalentto about 0.66 1/s/ha over the original command area. The distribution system was terminated at turnouts serving an area of 100-200 ha. Because no minor canals were built below this level, the system could not irrigate the whole command area. Siltation problems troubled the project from its inception, and these problems became progressively worse over the years as the river migrated
1J The acronyms used for the various stages are: SNIP: The whole irrigable area commanded by the Chatra main Canal, about 58,000 ha. SMIP I: Stage I development, about 9,750 ha (Cr. 812-NEP, USS30.00 million, 1978, project cost US$41.90 million). SNIP II: Stage II development, about 16,700 ha (Cr. 1814-NEP,US$40.00 million, project estimated cost US$50.00 million). SNIP III The unimproved balance of about 31,550 ha which will benefit partially from SNHP. -2-
westward. As a result of these deficiencies,the project as originally built did not fulfill its objectives and HMGN requested IDA assistance to overcome the shortcomings of the original project. IDA involvement in the project has been divided into two stages: Stage I (9,750ha) and Stage II (16,700ha).
3. Sunmari Morang Irrigation andt nrainage I Projant - (:x A12-ISIP, UsR50.0 mdillion. 17ra. In 1978, IDA approved this project (SMIP I), which was designed to rehabilitate and improve the irrigation and drainage system on the command area of the CXC. The physical works included: (a) arrangementsfor river control and flood protection along the Kosi River in the vicinity of the CMC intake; (b) sediment control arrangements on the canal system and restoration, improvement and expansion of the existing canal system; (c) design and constructionof minor distribution systems extending to outlets each serving 10 ha on 18,000 ha: (d) drainage improvements for 15,000 ha; (e) a pilot tubevall irrigation scheme: and (f) pilot hydroelectric schemes. Implementationof the project was delayed, mainly because of procurement problems. In 1983, the project was modified to provide an improved irrigation and drainage system for about 12,000 ha. The original proposal to provide a desilting basin with dredger at the head reach of the CMC was postponed in favor of a supposedly cheaper maintenance solution, and the pilot hydroelectric schemes were deleted from the project. The area of 12,000 ha intended for improvementwas reduced to 9,750 ha because about 1,400 ha of very sandy soils within the area were found unsuitable for surface irrigation;and, a local contractor,who was awarded the works on 850 ha, failed to perform. 4. SMIP I, now called Stage I, was completed in 1985, but the steps taken to deal with the siltation problem were not effective, and increasing siltation prevented the full benefits from being obtained. Moreover, the distribution system design was too complex, attempting to provide demand-based irrigation to very small groups of farmers. The siltation problem, and the complexity of the distribut'.on network, made the system impossible to operate as designed.
S. sungari Morang Irrigation II Project - tCr. 8l4-NREP, USS40.0 millio,. li8.Il. In 1987, IDA processed a second project (SMIP II, Stage II), which provided for the rehabilitationof 16,700 ha of the command area and facilities to eliminate the siltationproblem. The physical works included: (a) improvementsto the main canal; (b) improvementsin the desilting operation; (c) rehabilitationand improvementof irrigation distributionand drainage works in 16,700 ha in the Stage II area; (d) improvement of the irrigation and drainage system in the Stage I area (9,750 ha); Ce) construction of buildings for offices and staff quarters, and also the provision for (i) purchase of equipment and vehicles for O&N (including spares) and (ii) radio communication for the canal system operation; (f) expatriate technical assistance, training, monitoring and evaluation and studies: and (g) support for incrementalproject establishmentand maintenance costs. 6. The rehabilitation of the command area has proceeded on schedule and about 40% of the distribution system has been completed. However, the siltation problem, exacerbated by the continued westward migration of the Kosi River, has proved extr emly difficult to solve technically, and HNGKobtained the advice of an international Panel of Experts, which recommended the following modifications to the Stage 1I concept: (a) moving the intake 1,300 m upstream, (b) constructing a larger capacity desilting basin, (c) utilizing larger capacity dredgers, and (d) constructinga microhydro unit to provide power for the dredger operations.
7. Although the silt ingestion was the major problem in Stage I, difficulties were also experienced with the over-complex irrigation system adopted. The design of the Stage II distribution network has been modified in light of the Stage I experience and a simplified design is now being implemented with constructionfor 7,000 ha completed in June 1992. Until the increasing levels of -3-
silt inhibited operation, this simplified system proved effective and easy to operate and shows that once the silt problem is solved, the project will yield the benefits projected at the time of appraisal.
FndaMentalsof tha SiltatinrnProblem
8. The siltation problem has two components: (a) extraction of water from the river: and (b) removal of the silt from the water, once it is in the head of the canal. During the wet season, water is easy to extract, but it is silt laden; during the dry season, water is difficult to extract, but it is silt free.
9. Extraction of Wate-a The existing intake structure was sited on the outside of a slight bend of the original river channel, which is the classically correct arrangement. However the detailed design, together with the main channel migration, has resulted in the site now being marooned in a minor branch of the main river. The resulting configurationunfortunately encourages the ingestion of bed and suspended material and acts as a surface trash trap, both of which cause serious operationalproblems. The main difficulty arises in the dry season when the river falls and the shoals of boulders, cobbles and sand which have been dropped in front of the intake must be removed to allow water to pass for the dry season irrigatio . It is important to provide the first irrigation on time for the dry season crop because this produces the majority of the incremental benefits. To overcome the extraction problem, the POE has recommendedre-siting the intakes in the Chatra Gorge about 1,300 m upstream of the present location where direct access to the river can be assured.
10. Desilting Extracted Water. Silt is carried in the river in two ways, bed load and wash load. The bed load rolls and skids along close to the bed and can be largely excluded by correct intake design. The wash load is distributed through the section by turbulence and can only be removed by a settling process in a settling basin which reduces the turbulence. From the settling basin the silt has to be either mechanically removed or sluiced by gravity if enough head is available. For Sunsari Morang, there is not enough head available for gravity sluicing,thus mechanical dredging,as recommendedby the POE, has to be adopted.
11. Ouantity of Silt. The quantity of silt to be handled has been analyzedl/ and the desilting basin has been designed to trap both coarse and fine silt. In an average year about 370,000 m3 would be trapped and removed by dredging. In a high flood year the quantity would be in the order of 500,000 i 3. However, the quantity of silt can be reduced by judicious operation of the intake gates, and the new headworks would be provided with gates which are easy to operate and which can be closed during the short periods of very high silt load in the river. 12. PropRoed Solution. When it became clear that the entire Sunsari Morang * command area (58,000 ha) would fail unless the ever-worseningsiltation problem * was solved, IDA actively assisted and supported the efforts of HMGN to find an effective solution. from a number of options, two possible approaches were considered in detail: (a) provide facilities for dealing with the extraction and siltation problem, or (b) abandon the surface water distribution system and use groundwater. After the technology for solving the surface supply problem was developed by the POE, a study of the groundwater option showed that the rates of return from a groundwater project would be significantly lower than from completing the surface system with adequate desilting facilities. The rates of return achieved in two recently completed groundwater projects and estimated for one ongoing project are: Bhairawa Lumbini Stage I - 10% (PCR); Bhairawa Lumbini Stage IT - 15% (PCR); and Bhairawa Lumbini Stage III - 18% (SAR).
lU Details are on Technical Annex 1 (Siltation), in the Project File. -4-
13. The works proposed for the surface system can be completed in three years; and if correctly planned, the installation would provide most of the required water supply, both in quality and quantity, after the first two years. Most of the 58,000 ha command area is still receiving some irrigation water, and can benefit almost immediately.
1?tf6nnal for Aditinnal 1AL AsiatanO
14. SMIP is the largest surface irrigation project in Nepal and would be successful it a sound technical, financial and management base were provided. The technical solutions proposed for the silt problem are certain to be successful; they have been proved in numerous projects throughout the world, including many projects in developing countries. There is unlimited water, the soils are good and the farmers competent. The water management problems have been greatly reduced by the adoption of simple structured irrigation layouts.
15. Support of this project is consistent with HMGN's irrigation development strategy, which gives priority to improving the performance of existing systems. The technical solutions to be implemented would have widespread use throughout the larger irrigation schemes in Nepal.
Pr.ojact CgMpon4antg Awid DTI-ailed fleaign41 /
16. The project would be implemented over a five-year period and would have the following main construction components: (a) a new intake in the Chatra Gorge about 1,300 m upstream of the present intake; (b) a culvert to carry the supply from the new intake to a new pre-settling basin; (c) a new pre-settling basin immediately upstream of the existing intake; (d) modification to the existing intake to make it hydraulically more efficient, together with a lead channel to the enlarged desilting basin; te) an enlarged desilting basin about 990 mn long and 70 m wide; (f) dredge facilities for removing silt from the basin; (g) a microhydro plant to provide energy for the dredge equipment; (h) technical assistance including training and consultancy services; and (i) hydrological equipmex't. In addition, support would be provided for operating the dredging equipment ror two years after installation.
Project Cost MEtimates
17. Tha Project Costs. summarized in Schedule A are estimated at US$29.68 million, including price and physical contingencies, but excluding tax and duties from which foreign funded projects are exempt. The cost estimates are based on tendered rates established in 1992.2/
18. The foreign exchange component would be US$27.00 million or about 91% of the total project costs. Physical contingencies have been included at 10-15% of the base cost for civil works and equipment depending on the perceived risks involved. Price contingencies have been added at 3.90% annually for foreign expenditures, and at 10, 7, 7, 6 and 6% annually for local expenditures, for the years 1993 to 1997.
19, Naintenance Costs for the new headworks are estimated at NRs 6.30 million per annum. Other recurrent costs for the main canal are expected to be about NRS 11 million per annum. At full development of the 58,000 ha, the total annual recurrent headworks and main canal costs would therefore be about NRs 17.30 million or NRS 298 per ha. The direct operation and maintenance (O&M) cost of
L' Detailsare on TechnicalAnnex 2 (Engineering),in the ProjectFile. 2) Detailsare on TechnicalAnnex 3 (Construction& Estimate), in the ProjectFile, -5-
the distributionsystem would be about NRs 220 per ha, making a recurrent annual total OM cost of NRs 520 per ha. RLUA=±n
20. The proposed IDA Credit of US$28.00 million would finance the entire foreign exchange component and about 37% of the local costs of the project. The balance of the capital expenditure would be met by HMGN from its development budget, while the current expenditure would be financed under HMGN's annual budgets. The Credit would be made on standard IDA terms. HMGN has agreed to provide resources and funds to execute the project in accordance with the agreed technical requirements, implementation program (schedule E) and expenditure schedules. Retroactive financing would not be required because funds are available under Cr. 1814-N$P for the ongoing works.
21. Procurement for the project works (US$20.17million, Schedule B) would be mainly by international competitivebidding (ICB), US$17.51 million, (about 87% of all works), with some minor works items being procured under local competitive bidding (LCB), tJS$2.31million. Both procedures are acceptable to IDA. A small amount of force account works (US$0.35million) would also be allowed. The main civil works contract would be in one package estimated to cost US$17.51 million il, and would include the intake structure, conveyance culvert, pre-settlingbasin, modificationsto the old intake and channel to the desilting basin, the desilting basin, microhydro civil works and all the ancillary works for the headworks complex.
22. Procurement for goods (equipment and machinery) totals US$7.68 million Zf, of which US$7.12 million (93%) would be procured under ICS procedures acceptable to IDA. Vehicles, miscellaneous tools and minor equipment, estimated to cost US$0.56 million, would be procured under LCB procedures acceptable to IDA. The consultancyservices for supervision,to be funded out of the project, would cost US$1.50 million.3' The consultants for both the detailed design and constructionsupervision have already been engaged under Cr. 1814-NEP. The costs of studies and training are estimated at US$0.10 million. This component would include training for the dredging equipment operation.
23. Contract Review. All contracts for consultant services, technical assistance and training and all contracts for civil works and goods above US$100,000 equivalent would be subject to prior IDA review. This would account for more than 95% of the procurement. Standard IDA procurementpreferences would be given to domestic contractorsand domestic manufacturersin the evaluation of bids when ICB procedures are used.
24. Disbursements (Schedule B) under the Credit would be for: (a) 90% of expenditures on civil works; (b) 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 70% of local expenditures for other item. procured locally; (c) 100% of expenditures for consultants, studies, and training; and (d) 100% of expenditures for dredge operation service contracts.
In additionto US$2.50million to be providedfrom SNIP II (Cr. 1814-NEP). 2/ In additionto US$3.00million to be providedfrom SMIP II (Cr. 1814-NEP). 3V In addition to US$0.50 million to be provided from SMIP II (Cr. 1814-NEP). -6-
25. Itemized Statements of Expenditures (SOEs) would be used for contracts costing less than US$100,000 for goods and civil works, including force account, and all establishment and O&M costs. Documentation supporting these SOEs would be retained by the implementingagency for review by IDA missions. All other expenditureswould be fully documented. 26. A Special Account (SA) would be established at the Nepal Rashtra Bank to facilitate payment of small expenditures. This account would be maintained in US dollars with an authorized allocation of US$500,000. The account would be usod for both local and foreign expenditures of less than US$50,000 equivalent under all categories. All other expendituresabove US$50,000 equivalent would be submitteddirectly to IDA for payment. 27. The estimated schedule of expenditures, disbursement schedule, and proposed allocation for the IDA Credit are given in Schedule B. The expected rate of disbursement follQws the program included in the ICB contracts. Disbursementis expected to be completedby December 31, 1997.
Accounts and Audits
28. The Department of Irrigation (DOI) and the Sunsari Morang Irrigation Development Board (SMIDB) would: (a) maintain separate records and accounts for all project expendituresin accordancewith sound accountingprinciples; (b) furnish to IDA a report on the SA, audited by an independent auditor acceptable to IDA, in accordancewith sound accountingprinciples; (c) forward to IDA the statement of overall project accounts, together with the auditor's reports within 12 months after the end of each fiscal year; and (d) include in the annual audit reports, submitted to IDA, a separate opinion from the auditor as to whether the disbursementsmade on the basis of the SOEs were for goods and services received and incurred for the purposes of the project.
Proac't ImplAmentation
29. Status of Preparation. Detailed designs have been completed and contract bids received for all the major works. Consultancy services contracts have been awarded under the existing Cr. 1814-NEP. The implementingagency would be the Sunsari Morang IrrigationDevelopment Board, which has demonstratedcapability to execute similar works under the previous projects.
30. Revised Implementation Schedule. Construction work would be completed within three years of credit effectiveness (Schedule E). The implementation schedule has been prepared to ensure early and effective use of the investments. The headworks constructionwould be spread over three seasons, and the partially completed works would be utilized as soon as each phase is ready. The dredgers would run initially under grid power until the microhydro unit is ready. Progressive relief from siltation would be achieved after the first year's constructionwork is completed.
Ssta4nabi 1ity
31. SMIDB has demonstratedits capabilityto keep the project operating through very difficult periods, and to undertake minor civil maintenance works. Also, procurement of the main civil works package under the ongoing SMIP II has been handled satisfactorily and no major procurement problems are anticipated. However, there were weaknesses in the areas of water management, irrigation agronomy and mechanical operations. These weaknesses have been addressed by appointing a senior water management engineer and senior irrigation agronomist to the project staff. DOt has been unable to appoint qualified mechanical engineering staff, as there is a national shortage of mechanical engineers. Agreement has therefore been reached that mechanical expertise, particularlyfor -7-
the initial O&M of the dredging equipment, would be retained through the engagementof either local or foreign consultants.
Tnntitut6anal IaresU
32. To support SMIDB in planning, design and construction supervision, consultancy services ere included in the project design. SMIDBI's water management team would be strengthenedwith a senior water management expert, and full use would be made of the maintenance management programs being developed under the Irrigation Sector Support Programs. SMIDB is developing specialized 0&M sections to assume O&M responsibility as the system is completed. To ease the burden of O0M costs, maintenance and operation below the minor canal level would be gradually transferred to farmers through their Water Users' Groups (WUGs). For successful management of SMIP in the future, a greater degree of delegation of authority to SMIDB is desirable. In addition, the farmers will have to be deeply involved in all management decisions. Accordingly, the following agreementshave been reached with HMGN:
(a) A management plan will be submitted to IDA, which would include delegationof authority to the General Manager to implementthe project in accordance with the policy directions of SMIDB. The plan would state the contract value up to which the General Manager has approval authority; delegate the operation of the SA (with appropriate audit safeguards) to the General Manager, and other measures which would ensure the smooth implementationof the project. After taking into account any comments from IDA, the plan would be implemented by June 30, 1993.
(b) Commencing with the rabi season 1992/93, the Borrower will submit to IDA an interim plan of water management for the completed part of the SMIP II area. By March 31, 1993 the Borrower will submit an overall plan for the water management of the entire SMIP (58,000 ha). After taking into account comments from IDA, the Borrower will implement the overall plan each season, commencingwith the kharif season, 1993. (c) A senior water management expert and a senior agriculturalist, acceptableto IDA, will be maintainedon the staff of SMIDB. {d) By December 31, 1993 HMGN shall establish a consultativecommittee of representativesof the beneficiariesto advise the Project Manager on irrigation,and subsequentlyinclude as members of SMIDB at least one elected farmer representativefrom Sunsari district and at least one from Morang district.
(e) By December 31, 1993 HMGM shall submit to IDA a plan for the gradual transfer of O&M within the minor system to WUGs, and after discussing the plan with IDA begin implementing the plan as soon as a reliable water supply is available.
Projaneftm and viability
33. .nnolmin Vability.t/. The economic viability of the proposed project has been tested as a stand-aloneproject with various assumptions of sunk cost. The project is economically viable, bringing benefits to some 58,000 ha of land. Without the project, the viability of previous investments in Stage I (SM¢P I) and Stage II (SMIP It) are brought into question. An economic analysis of the project shows Economic Rates of Return (ERR) between 14% and 49%, depending upon whether the headworks are treated as a self-containedproject or whether it is
1. Details are on TechnicalAnnex 4 (Economics), in the ProjectFile. .8-
consideOed to be a time-slice of a larger Sunsari Morang Irrigation Project, which includes SNIP S, SNIP II, plus a further project in Stage III of the system (SMIP 1I1)1/. Costs and benefit streams were developed for all components and then selectively introduced into the analysis. The ERR results are summarized below:
(a) Whole Project (SMIP It SMIP IX, SMHP, SMIP III): ERR 14% (b) Without Stage III lSMIP I, SMIP II, SNHP): ERR 15% (c) With Stage I as a sunk cost (SMIP II, SMHP, SMIP III}: ERR 20% 4d) With Stage I as a sunk cost and Stage III excluded (SMIP II, SMHP): ERR 22% (e) Wlth Stage I and Stage II treated as a sunk cost (SNHP, SNIP III}: ERR 32% (f) With Stage I and Stage IS as sunk Cost, and Stage III not included (SMHP); ERR 49%
34. Options (d) and (f) above are consistent with past Bank practice in economic analysis. Approach (d) treats SMHP as the completion of the investment started under SMIP II and, in fact, partially funded under that project (dredgers, settling basin, etc.), and it analyzes SNIP II and SMHP together. If this approach is taken, an ERR of 22% is projected.
35. Option (f) treats SMHP as a stand-alone project which yields an ERR of 49%. This is high, but hardly surprising, because SMHP finally allows Stage I and Stage II to get an adequate supply of water and gain the benefits predicted for the irrigation system. It therefore benefits from the US$100.0 million investment already made or in progress under Stages I and II.
36. It is clear that, in every case, the inclusion of Stage III lowers the ERR. This is a direct result of the shape in time of the stream of net benefits of the whole project. However, since the contribution of Stage III to the net present value is positive, there is no implication that Stage III should not be iuplemented. In terms of the ERR criterion, since the ERR of the entire project and the ERR of Stage III are both higher than the opportunity cost of capital, the project is clearly economically justifiable in its entirety.
37. Sensitivity Analy is. The ERR of 49% for the SNHP indicates that it would stand large reductions in benefits, or cost increases beyond any probable level, without reaching switching values at a discount rate of 10%. Switching values at 10% are: (a) benefit reduction of 60%; (b) cost increase of 400%; and (c) reduction in benefits of 50% plus an increase in costs of 200%.
38. Cost Reoverig. The total o&M costs at the full development of 58,000 ha would be about NRs 520/ha per annum at estimated 1992 prices. The present Government charge for surface water projects is NRs 200/ha per aftnum, of which only about 25% is being recovered at this time in the Sunsari Morang area. The unreliability of the water supply and the damage caused by the ingestion of silt have prevented the Government from pursuing the enforcement of water charges.
39. About NRs 220 per ha of the estimated O&M costs are in connection with the maintenance of the distribution system. The irrigation system is divided into minor blocks, each of several hundred ha. About half of the direct cost of maintaining the distribution system could be passed to the farmers if they were to be made responsible for the O&M within the minor blocks. Accordingly, agreement has been reached with HMGN that (a) when the SNIP system achieves a satisfactory and reliable silt-free supply, O&M within the minor blocks receiving a satisfactory supply would be handed over to WUGss and (b) the irrigation charge
But excludesthe Indianinvestment between 1954 and 1975. -9-
on improved areas in Stage I and Stage II, receiving a satisfactory supply, would be increased to cover the cost of O&N of the distribution system above .he minor block, together with a pro-rata share (based on hectarage served) of the costs of 06M of the main and distribution canal system.
I~lvrgffnta l
40. The main environmental concern in the project is related to the construction of the headworks culvert. There were two design options for the culvert - a flexible option and a rigid option, the former of whioh would have required a larger quantity of boulders. Therefore, the main issue concerned removal of large boulders from adjacent torrential streams for use with the flexible design option. About 90,000 m3 of boulders would have been needed for the flexible option, and removal of such a large quantity of boulders would have caused erosion of their banks. After a detailed study, the conclnsion was that the rigid option is technically and environmentally better and cheaper, and this has been adopted in the final design.
.tt1Arent TISUA
41. No resettlement is expected to be necessary under the project because the project area is uninhabited.
BiparlAn !^n,
42. The effectiveness of che new headworks and the flow at Chatra would not be affected by any developments in China, as the Kosi River rises in the high Himalayas -where consumptive use is not possible and diversion unlikely. The proposed Arun III hydroelectric scheme on a tributary of the Kosi would not have any detrimental influence on the flows at Chatra. The proposed project is in accordance with the Rosi Project Agreement of 1954, as amended in 1975, between India and Nepal and would implement the original intent of the Kosi Agreement by making it possible to irrigate the area which was constructed by India as part of the Agreement. There would be no change of impact on Bangladesh, as the dry season flow is already diverted by India at the Kosi Barrage. For these reasons, in the asseFsment of Bank Staff, the Project, which involves only alterations to an ongoing scheme, would not cause appreciable harm to the other riparians, nor would it be so 'harme1 by the use of the waters of the Xosi River by the other riparians.
Prozjet ilkg
43. The risks are similar to other large-scale irrigation investments in Nepal including the po'ssible failure to maintain and manage the facilities and those associated with extracting water from one of the world's greatest rivers which has enormous destructive power. These risks would be reduced by appropriate design technology. For the river intakes, the advice of four leading specialists in fluviology has been obtained.
44. The other risks that could affect the achievement of the project objectives include inability to maintain the mechanical installation, poor water management of the improved water supply and lack of funds for O&M. For the mechanical maintenance, the design would be kept extremely simple, using a modified form of cutter suction dredger, and provision would be made for technical assistance for the operation of the dredgers until the end of the project. For the irrigation system, a simple but effective design has been adopted based on a century of successful experienc6 in Northwest India. Farmers would be organized into WUGs, which would eventually take responsibility for the O&N below the minor head level and thus reduce the direct cost burden on HMGN. To ease the financial burden of O&M, the necessary energy for the dredge operation would be supplied by a small -10- microhydro unit at the canal head. Finally, the risk of implementation delays has been reduced as detailed designs have been agreed with HMGN, and experienced international contractors have been selected.
45. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve it.
Lewis T. Preston President
Attachments
Waahington, D.C. October 15, 1992 -l- S1bedulaA
SUN{SARI MORANG READWORKS PROJECT
ERtimatod Cts and 'icaneningPlan (US$ million)
Estimated Project Cat±1/
ITEM LQ1xrrg Total
Intake 0.13 1.23 1.36 Culvertz/ 0.50 4.48 4.98 Pre-Settling Basin 0.39 3.53 3.92 Main Settling Basin-/ 0.00 0.17 0.17 Dredging Equipmenti/ 0.00 0.44 0.44 TA/Engineering/Trainingl/ 0.15 1.51 1.66 Power SupplyX/ 0.32 5.50 5.82 Operation and Maintenance 0.02 0.21 0.23 Gen/Misc/Mobilization 0.45 4.08 4.53 Unallocated A..22 21_112
TOTAL BASE COST 2.18 23.10 25.28
Physical Contingencies 0.22 2.00 2.22 Price Contingencies n.28 t..2 2.18
TOTAL PROJECT COST 2.68 27L00 2L-6R
inancina Plan: Lea 1 EtQaL Total …-----S( million)---- Government 1.68 0.00 1.68 IDA 1.AQ 27-00 2L00 TOTAL 2.68 27.00 29.68
14 Taxes and d1 ties are negligible. 2 In addition to US$1.43 million provided under the ongoing SMIP II (Credit 1814-NEP) / In addition to US$0.77 million provided under the ongoing SKIP II (Credit 1814-NEP) A/ In addition to US$3.00 million provided under the ongoing SMIP II (Credit 1814-NEP) 3I In addition to US$0.50 million provided under the ongoing SMIP II (Credit 1814-NEP) * In addition to US$0.30 million provided under the ongoing SMIP II (Credit 1814-NEP) - 12 - Sgiah1alA Page 1 of 2
-~~~~NPT STUNSARIIOAGHDWRS PROJRCf-¶P
(US$million)
------__------__-- Procurement Method Total Project Element ICB LCB Other Costs ------__--__-- 1. Works
1.1 Civil Works1 / 17.51 2.31 0.35 20.17 (16.04) (2.17) (0.32) (18.53)
2. Good9
2.1 EquipmentZ/ 7.12 0.56 - 7.68 and Machinery (7.12) (0.52) (-) (7.64) (including spares)
3. Service Contracts
3.1 Dredge operation - - 0.23 0.23 for 2 years - - (0.23) (0.23)
4. Consultancies-/
4.1 Engineering, - - 1.50 1.50 and Supervision - - (1.50) (1.50)
4.2 Training - - 0.10 0.10 - - (0.10) (0.10)
Total 24.63 2.87 2.18 29.68 123.l61 12-691 12-15L (28-00}
Note: Figures in parentheses are the respective amounts financed by IDA.
/ In addition to US$2.20 million provided under the ongoing SNIP II (Credit 1814-NEP)for the main desiltingbasin civil works. 2/ In addition to US$3.30 million provided under the ongoing SMIP II (Credit 1814-NEP)for dredging equipment. / In addition to US$0.50 million provided under the ongoing SMIP II (Credit 1814-NEP)for consultancyservices. _13- chadulgA Page 2 of 2
Amount Percentage of Category (US$ million) Expendituresto be Financed (net of taxes)
Civil Works 17.37 90% Goods 6.64 100% of foreign expenditures 100% of local expenditures (ex-factory cost) and 70% of local expenditures for other items procured locally Dredge Operations Service Contracts 0.23 100% ConsultantsServices & Training 1.60 100% Unallocated 2.16 - TOTAL 28.09
R teIatd IDA Dibraomont- Rzhadu3a:
IDA FY 1993 1994 1995 1996 1997 ------(US$ million)------Annual 7.00 8.00 10.00 2.00 1.00 Cumulative 7.00 15.00 25.00 27.00 28.00 - 14 -
NV-PAT,~~ho1a
(a) Time taken to prepare : Six months
(b) Prepared by : Government with IDA assistance
(c) First IDA mission : November 1990
(d) Appraisal Mission Departure : September 1991 le) Negotiations : September 1992
(f) Board Presentation : November 1992
(g) List of Relevant PCRs and PPARs : (!r- L-QPre.t PPA2 DatL PPAR No. 812-NEP SMIP I May 1990 8670 - 15 - ScheduloD Page 1 of 2
THESTATUS OF BAK GROUPOPERATIONS IN NEPAL
A. STATEMENTOF ANKLOANS AND IDA CREDMT> (As of June 30, 1992) Amountin USIomilion * (loss cancellations) Fiscal Undle- Credit No. Year Borrower Purpose Bank IDA bared
35 credits hae been fully disbursed 877.96 Of which SECAL, SALs and Progra Loans b) Cr. 1709-NEP 1907 Nepal Structural Adjustment 0.00 50.00 Sub-Total 0.00 50.o0 Cr. 1198-N 1982 N"apl Education II 14.30 3.Go 0 Cr. 1400-NEP 1984 Nepal Forestry II (Torat) 7.U8 5.60 c) Cr. 1468-NEP 1984 Nepal Education III (Primary) 9.61 4.80 c0 Cr. 1478-NEP 1984 Nepal Power II (Marsyangdi) 107.00 49.44 d> Cr. 1515-NEP 1985 Nqepl HighwaysIII 47.60 26.84 Cr. 1654-NE? 1986 Nbpal AgriculturalManpower 8.40 6.04 Cr. 16B6-NE? 1986 Nepal IndustrialDevelopment 7.50 2.90 Cr. 1570-NE? 1985 Neal AgriculturalExtension II 7.20 6.28 Cr. 1588-NE? 1985 Nepal TelocomunicationsIV 22.00 15.71 Cr. 1606-NE? 1988 Nepal Cottage& SmallIndustries 10.00 6.18d> Cr. 1716-NE? 1986 Nepl NerayantIrrigation III 24.60 21.98 Cr. 1727-NEP 1987 Nepal RuralDevelopment III 19.10 19.11 d> Cr. 1814-NEP 1987 Nep l Sunsari-MorangII 40.00 28.92 Cr. 1002-NE? 1988 Nepl Third T.A. (Panchoswar) 14.40 1.68 Cr. 1922-NE? 1988 Nepal Road Flood Rehabilitation 15.60 11.97 Cr. 1924-NEP 1988 Nepal Mahakali Irrigation II 41.80 25.96 Cr. 19088-NE 1989 Nep"l MunicipalDev A Earthquake 41.50 22.24 Cr. 2028-NEP 1989 Nepal Hill CommunityForestry 80.50 29.85 Cr. 2029-NEP 1989 Nepal Arun III Access Road 82.80 84.79 d> Cr. 2044-NE? 1989 Nepal Engtneerlng Education 11.40 11.60 oCr.2046-NEP 1989 Nepal Structural Adjustment II 60.00 18.97 Cr. 2047-NEP 1989 Nepal EarthquakeSchool Rehab 22.80 19.92 Cr. 2144-NE? 1990 Nepal Shairawa Lumbini III 47.20 47.44 Cr. 2239-NEP0 1901 Nepal Urban Water and Sanitation Rehab. 60.00 64.87 Cr. 2847-NE?*> 1M Nepal Power Effietency Improvement 65.00 65.58 Cr. 2857-NE? 1902 Nepl Basic and Primary Education 80.60 81.06 Cr. 2864-NE?0> 1992 Nepal Telecom V 55.00 57.17
Total 0.00 1280.44f> 681.970> of whichhas been repjad 12.98 Totalno held by Bank and IDA 0.00 1217.46 Amount sold of whclh repaid Total undisburoed 01.06
) Nb BSankloans hav.bean madeto Nepal. b) Approvedduring or afterFY80. c) Closed on June 80, 1992. d) Projoete being restructured and/or canelled. e)Net ye effective. fTheprncpal amounteof IDA rerdits areshown tn US Dollar equivalentat date of negotiation, as shown in the President's Report. Undisbured amountsshown In US Dollar equivalent are valued at the *xchangerate aplicable m the dateof this statement. In som case, therdefore the undisbursedbalaneo indicats a dollaramount greater than the original principal credit amountexpressed in dollare. a SAL, SECALor ProgramLoan. - 16 -
Shehdul-eO Page i of2
STATEMENTOF IFC INVESTMENTS (As of June 830,199)
Committedfor IFC.s Account InvestmentFiscal Type of Loan Equity Tot*l Number Year Obliaor usi sre (USCMlill on)
1 Projectcloed
812 1976 S**It*.Hotel Ltd. Tourism 0.00 0.4O .4O
TotalIross Commitments 0.00 0.48 .48
Total Commitment,now heldby I_FC 0.00 0.48 .4S
TotalUndlsbursed 0.00
a) Exehan9gadjustments accountfor variationIn totalgross comitment., lee cancelltion., etc.,and total commitmntsnow hold by XFC. -17- .~.~ ~ ~ ~ ~~~.7
ScheduleE NZPAL SUNSARI MORANGEEADWOR PROJECT zEstiated implementation Schedule
Pre-Pro ect IDA FY Total Remarks Projeot 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 Payment Element Jly-Jun Jly-Jun Jly-Jun Jly-ju y Jly-Jbn Jly-JUa ._____ US$16 US$6 _US$16 VS$M6 US1 US$1 US$M _ RRDIT TIMlCO Sign Effective*0111 1IlIfifIlIfllIJ1 IfIlU Close ______i__ _ _
Prequal. Bid
I Award * _
1.1 Civil Works 4.23 6.28 7.17 0.75 0.58 19.01 90% ICB
2 GOODS Prequal. Bid Award3
2.1 Equipment 2.47 1.19 2.40 0.62 6.68 ICB
3 SERVICE CONTRLCT
3.1 Dredge Operation 0.11 0.12 0.23 ICB
4 COWSDLTA3NCT 0.50 4.1 Engineering, 0.50 0.53 0.47 1.50 SMIP II Supervision - 4.2 Training 0.02 -- 0.03 0.02 - 0.03 0.10 0.50 0.50 0.50 0.30 0.36 2.16 5 Unallocated
TOTCSA 7.22 8.50 10.62 2.28 1.06 29.61 _IDX Dlsbuar smeut 7.00 8.00 10.00 2.00 1.00 28.001 - 18 -
Sched3ule F
SU?SARI MORBAG HEADWORKSPROJECT
List of Technical Annexes available in the Project File
Annex 1 - Siltation
Annex 2 - Engineering
Annex 3 - Construction & Estimates
Annex 4 - Economics IBRD23548 NEPAL t i SUNSARIMORANG HEADWORKS PROJECT 4t PROJECTLOCATION SL/n )osiR. --- POSSIBLEPOWER UNE ROUTES ( 0 SELECTEDTOWNS AND VILLAGES >Tamur River MAIN ROADS SECONDARYROADS 0Barahakshtra MAINCANAL BUND SeeIBRD 23549 ~- RIVERS hatra INTERNATIONALBOUNDARIES
KiLOMETER5 inweseasn DhorIn
MIES
/ olckorghati0 i
| A.09S/ / 3 y #'~~~~~~~~ H/ Iy N AI Duhbi~ EPLP A . V X \ - X 4,V S Sd / D I W o go a- dsaokGrow 26 ma \oieidwiseheetae 8? *r rBirotnaora IBRD2354S - CULVERTFOR DREDGER IIYDROPOWER STATION _ RALFORDREDOR CULVER D120 _ 32A~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 44~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1. ICRGPFS , RO1TOMPROTECnION PRE.SEITLINGRASIN -EXISING GANIONPEOTECIION ) _CA \A,E, X -4~f,' \ h b ;' ^b ~~~~~~~~~~~~~NEPAl HEADWORKSPROJECT \ - N~~~~~~~~~~~~~~EA ~ ~ ~ ~~~~~~~~~~~~~~SUNSARIMORANGPROJECT AREAC ,U. .f v c H I N A .; , >~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~P01 PERMANENTBUILDINGS FACIUTIES: -16 CMINEL NEW WORKS DREDGING ROADS PRE-SETTNGBASIN --- DISCHARGEPIPES FOR CUTTER SUCIoN FACGLMES - IN METERS 1 CULVERTFOR CUTTER SUCTON FACIBMES -Woo CONTOURS * N(EP A i SETtUNGBASIN --- _ RIVERS(KHOLAS) POSSIBLEFUTURE EXTENSION , RAiLFOR DREDGE 2W N E ' A , OFSETTIJNG BADN ... RI O RDEITRAINLBUDRE BOUNDARIES N)dYDRO POWER STATIONAL 0V~~~ ,, I < \. - \-'-SA' -CULVERT > I, I N DI A \ ( (0 100 200 390 400 500 dO0 700 E0 9,00 1,000 Td~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~S.dS0E$Od.,9,dhA.0.-- hh~ -26. JUNE199