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World Bank Document Document of The World Bank Public Disclosure Authorized FOR OFFICIAL USE ONLY Report No: 51128-PE PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$20 MILLION TO THE REPUBLIC OF PERU FOR A SIERRA IRRIGATION PROJECT Public Disclosure Authorized June 25, 2010 Sustainable Development Department Bolivia, Chile, Ecuador, Peru, Venezuela Country Management Unit Latin America and the Caribbean Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 15, 2010) Currency Unit = Nuevos Soles (S/.) S/. 2.90 = US$1 US$0.34 = S/.1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ALA Local Water Administration (Administración Local del Agua) ANA National Water Authority (Autoridad Nacional del Agua) ATDR Irrigation Technical Administration (Administración Técnica del Distrito de Riego) CFAA Country Financial Accountability Assessment CPAR Country Procurement Assessment Report CPS Country Partnership Strategy CR Irrigation Commission (Comisión de Regantes) DGAASA MINAG’s Directorate General for Environment Affairs (Dirección General de Asuntos Ambientales del Sector Agrario) EA Environmental Assessment EIRR Economic Internal Rate of Return EMF Environmental Management Framework FG Farmers’ Group for Component B FM Financial Management GOP Government of Peru GDP Gross Domestic Product ICR Implementation Completion Report IDB Inter-American Development Bank INCAGRO Agricultural Extension and Research Project (Proyecto de Investigación y Extensión Agrícola para la Innovación y Competitividad para el Agro Peruano) INIA 2'-,* %0'!3*230* #1#0!& ,12'232# Instituto Nacional de Innovación Agraria) IPP Indigenous People Plan IPPF Indigenous People Planning Framework JNUDRP National Federation of Water Users’ Organizations (Junta Nacional de los Usuarios de los Distritos de Riego) LG Local Government M&E Monitoring and Evaluation MEF Ministry of Economy and Finance MINAG Ministry of Agriculture ii FOR OFFICIAL USE ONLY NPV Net Present Value O&M Operation and Maintenance PROFODUA Irrigation Water Rights Formalization Program (Programa de Formalización de Derechos de Uso de Agua) PRONAMACHCS National Program for Watershed Management and Soil Conservation (Programa Nacional de Manejo de Cuencas Hidrográficas y Conservación de Suelos) PDO Project Development Objective PMP Pest Management Plan PSC Project Steering Committee PSI Irrigation Subsector Project (Proyecto Subsectorial de Irrigación) QBS Quality Based Selection QCBS Quality and Cost Based Selection RG Regional Government RADA National Water Right Registry (Registro Administrativo de Uso de Agua) ROSC Report on the Observance of Standards and Codes SIL Specific Investment Loan SNIP National System for Public Investment (Sistema Nacional de Inversión Pública) SRP Standard Request for Proposals TA Technical Assistance TSA Treasury Singly Account WUA Water Users’ Association (Junta de Usuarios) WUO Water Users’ Organization (Organizaciones de Usuarios) Vice President: Pamela Cox Country Director: Carlos Felipe Jaramillo Sector Director Laura Tuck Sector Manager: Karin Kemper Task Team Leader: Marie-Laure Lajaunie This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. PERU Sierra Irrigation Project CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 4 A. Country and sector issues ....................................................................................................... 4 B. Rationale for Bank involvement ............................................................................................ 5 C. Higher level objectives to which the project contributes ....................................................... 6 II. PROJECT DESCRIPTION ................................................................................................. 6 A. Lending instrument ................................................................................................................ 6 B. Project development objective and key indicators ................................................................. 7 C. Project components ................................................................................................................ 7 D. Lessons learned and reflected in the Project design .............................................................. 8 E. Alternatives considered and reasons for rejection ................................................................ 11 III. IMPLEMENTATION ................................................................................................... 11 A. Partnership arrangements ..................................................................................................... 11 B. Institutional and implementation arrangements ................................................................... 12 C. Monitoring and evaluation (M&E) of outcomes/results ...................................................... 13 D. Sustainability ........................................................................................................................ 14 E Critical risks and possible controversial aspects ................................................................... 15 F. Loan conditions and covenants ............................................................................................. 18 IV. APPRAISAL SUMMARY ............................................................................................ 19 A. Economic and financial analyses ......................................................................................... 19 B. Technical .............................................................................................................................. 20 C. Fiduciary .............................................................................................................................. 21 D. Social .................................................................................................................................... 22 E. Environment ......................................................................................................................... 23 F. Safeguard policies ................................................................................................................. 25 G. Policy Exceptions and Readiness ......................................................................................... 25 Annex 1: Country and Sector Background .............................................................................. 26 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 34 iv Annex 3: Results Framework and Monitoring ........................................................................ 38 Annex 4: Detailed Project Description ...................................................................................... 41 Annex 5: Project Costs ............................................................................................................... 53 Annex 6: Implementation Arrangements ................................................................................. 54 Annex 7: Financial Management and Disbursement Arrangements ..................................... 57 Annex 8: Procurement Arrangements ...................................................................................... 71 Annex 9: Economic and Financial Analysis ............................................................................. 76 Annex 10: Safeguard Policy Issues ............................................................................................ 89 Annex 11: Project Preparation and Supervision ................................................................... 100 Annex 12: Documents in the Project File ............................................................................... 102 Annex 13: Statement of Loans and Credits ............................................................................ 103 Annex 14: Country at a Glance ............................................................................................... 105 Annex 15: Maps IBRD 37679 ................................................................................................. 106 v PERU SIERRA IRRIGATION PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSEN Date: June 25, 2010 Team Leader: Marie-Laure Lajaunie Country Director: Carlos Felipe Jaramillo Sectors: Irrigation and drainage (60%); Sector Manager/Director: Karin Erika Kemper/ General water, sanitation and flood protection Laura Tuck sector (35%); Agricultural extension and research (5%) Themes: Rural services and infrastructure (85%); Water resource management (15%) Project ID: P104760 Environmental category: Partial Assessment Lending Instrument: Specific Investment Loan Joint IFC: Joint Level: Project Financing Data [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 20.00 Proposed terms: VSL, payable in 18 years, including 17.5 years of grace period, with bullet repayment on June 15, 2028 and a front-end-fee of 0.25% of the loan amount payable from the Borrower’s proceeds.
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