Mahaweli Ganga Development Project

RESTRICTED Report No. PA-29a Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accurocy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized MAHAWELI-GANGA DEVELOPMENT PROJECT STAGE I CEYLON Public Disclosure Authorized December 30, 1969 Public Disclosure Authorized Agriculture Projects Department Aoc*flo __65- 3-3 CURRENCY EQUIVALENTS At "Official" Exchange Rate US$1.00 = Ceylon Rupees (Rs.) 5.95 Rs 1.06 = us$o.168 Rs 1 million = us$168,000 At Higher Effective Exchange Rate US$1.00 = Ceylon Rupees (Rs) 9.23 Rs 1.00 = us$o.lo8 Rs 1 million = US$108,000 WEIGHTS AND MEASURES 1 acre (ac) = 0.405 hectares 1 mile (mi) = 1.609 kilometers 1 square mile (sa mi) = 2.564 square kilometers 1 foot (ft) = 0.3048 meters 1 acre-foot (ac-ft) = 1233.3 cubic meters 1 inch (in) = 25.4 millemeters 1 cubic foot per second (cusecs) = 0.0283 cubic meters per second 1 pound (lb) = 0.4536 kilograms 1 long ton (ton) = 1.016 metric tons 1 metric ton (m ton) 2204 pounds 1 megawatt (MW) = 1,000 kilowatts 1 gigawatt hour (GWH) = 1 million kilowatt/hours LOCAL MEASURES 1 bushel (bu) paddy = 46 pounds paddy ACRONYMS AND ABBREVIATIONS UNDP - United Nations Development Program FAO - Food and Agriculture Organization CEB - Ceylon Electricity Board DGEU - Department of Government Electricity Undertakings ECI - Engineering Consultants Inc. of Denver, Colorado, U.S.A. USOM - United States Operation Mission SAR - Sodium Absorption Ratio CEYLON MAHAWELI GANGA DEVELOPMENT PROJECT STAGE I Table of Contents Page No. SUMMARY AND CONCLUSION ....................................... i - ii I. INTRODUCTION ........ .............. .................... II. BACKGROUND .................................. 2 III. THE PROJECT AREA ......... .............................. 4 Climate .................................. 5 Topography ........ ................ 5 Soils .................................. 5 Population, Land Tenure and Communications ......... 5 Crop Production ....... .............. 5 Water Resources ....... .............. 6 Irrigation ........................ 6 Supporting Agricultural Services .... .......... 7 Transport and Processing Facilities ................ 7 IV. THE PROJECT ............ 8 General Description ................................ 8 Subsequent Phase of Development .. ................... 8 Proposed Works ....... ............... 9 Construction Schedule ............. .. ............... 10 The Power Plant ....... ........... .................. 11 Water Supply .................... ................... 11 Status of Engineering ............. .. ............... 12 Cost Estimates ....... ............ .................. 12 Financing . ............................ 15 Procurement ........................................ 16 Disbursement ....................................... 16 V. ORGANIZATION AND MANAGEMENT ........................... 17 Project Management and Coordination ........ ........ 17 Operation and Maintenance ........... .. ............ 18 Recovery of Costs ............... .. ................. 19 Supporting Agricultural Services and Credit ........ 20 Auditing of Accounts .............. .. ............... 21 This report, prepared by Messrs. ffrench-Mullen, Malone, Beach, Myint, Winston, Reese, and Kirmani, is based on documents submitted by the Ceylonese authorities, reports of the UNDP/FAO studies and findings of a Bank appraisal mission which visited Ceylon in February-March 1969. The mission consisted of Messrs. M.D. ffrench-Mullen, S.S. Kirmani, D.G. Reese, J. Beach, and D. Mitchell (Consultant). Table of Contents (Cont'd) Page No. VI. PRODUCTION, MARKET PROSPECTS, PRICES, AND FARM INCOME 21 Production ......................................... 21 Market Proapects .................. ................. 22 Prices ............................................ 22 Gross Value of Production ........... .. ............. 23 Farm Income .................... .................... 23 VII. POWER ................................................. 24 Polgolla's Contribution to the System ............. 24 Production allocation GWH ........... .. ............. 25 Comparison with a thermal Alternative ....... ....... 25 Allocation of Costs to Power .......... .. ........... 26 VIII. BENEFITS AND JUSTIFICATION ............................ 26 IX. RECOMMhNDATIONS ....................... ... 28 ANNEXES Annex 1 - Agriculture Annex 2 - Existing Water Resources in the Project Area Annex 3 - Project Description Annex 4 - Construction and Investigation Schedule Annex 5 - Water Supply and Irrigation Requirements Annex 6 - Consultant Services Annex 7 - List of Equipment and Transport Annex 8 - Cost Estimates Annex 9 - Allocation of Costs between Irrigation and Power Annex 10 - Organization Chart Annex 11 - Market Prospects and Prices for Agricultural Crops Annex 12 - Rate of Return to the Economy Annex 13 - Expenditure Schedule Maps 1. Mahaweli Ganga Development Project - Stages I, II, and III 2. Mahaweli Ganga Development Project - Stage I Civil Works 3. Ceylon Electrical Grid CEYLON MAHAWELI GANGA DEVELOPMENT PROJECT - STAGE I SUMMARY AND CONCLUSIONS i. In recent years, considerable success has been achieved by farmers in Ceylon in increasing production of foodstuffs to replace imports, particularly rice. This has been achieved primarily by increasing yields. To reach self-sufficiency in rice, expansion of the area under paddy production will be necessary in addition to measures for increasing yields. Major expansion of acreage is possible only in the dry zone, where suitable land is available. Economic development of these areas depends on the provision of year round irrigation, the water for which would have to be supplied from the wet zone. Asso- ciated with such transfer of surface water would be substantial hydro- electric power potential suitable to meet part of the estimated growth in demand. ii. A four year UNDP/FAO study of the largely untapped water resources of the largest river in Ceylon, the Mahaweli Ganga, has resulted in the formulation of a Master Plan, to be implemented in three phases for the development of some 900,000 ac of land in the dry zone and the installation of 970 MW of generating capacity. The Mahaweli Ganga Development Program comprises proposals for the development under three separate schemes, of Phase I of the Master Plan. Because of the magnitude of the task involved, and the need for further investigation, the Government of Ceylon proposed implementing the first of these schemes in three stages. iii. This report contains the appraisal of the project which consists of Stage I of the first scheme of the Mahaveli Ganga Development Program. The project includes the diversion of Mahaweli Ganga water, at Polgolla, to augment irrigation supplies to 126,700 ac (cultivated) of land located in two areas in the dry zone, and the installation of a hydro-electric power plant of 40 MW capacity at Polgolla. Provision is made for the on- farm development of 4,000 ac of sugarcane and for feasibility studies required for subsequent stages of the scheme under the Mahaweli Ganga Devel- opment Program. Major construction works required for the full development of the area would need to be carried out under this first stage project. iv. The project would result in increasing rice production by some 83,000 m tons - equivalent to about one-quarter of the country's imports in 1968 and about 7% of the country's consumption. Sugar production in the area would triple but the incremental production would be less than 5% of current imports. Ceylon's firm generating capacity would expand from 320 MW to 340 MW. - ii - v. The cost of the project is estimated to be US$ 50,0 million, of which the foreign exchange component, including interest during construction on the Bank loan (see para. x below), would be US$ 29.0 million. vi. The Mahaweli Development Board would be set up to administer and execute the project. It would be responsible to the Minister of Land, Irrigation and Power and the Project would be coordinated at the Ministerial level by the Cabinet Planning Sub-committee. On completion of the Program, the Board would hand over its operation and maintenance to established Gov- ernment agencies. Consultants would be required to assist in all aspects of the project, this being the first irrigation project of its type in Ceylon, involving diversion and conveyance of water over considerable distances. vii. The two major construction works, costing about US$ 28 million, namely the Polgolla and Bowatenna complexes, 'would be subject to international competitive bidding, the remaining minor works, consisting of a total of about US$ 4.7 million, would be done either by the Irrigation Department on force account or local contractors. Vehicles, equipment, consultant services, engineering, contingencies and interest during construction account for the remainder of the total cost. The feasibility study work would be carried out by consultants with the Irrigation and Agriculture Departments. viii. The rate of return to the economy, with foreign exchange costs and benefits calculated at the higher effective exchange rate, would be about 12%. Assuming no opportunity costs for family labor, the return would be about 14%. These returns are higher than those from separate projects for irrigation and power.

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