Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 60720-NP PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 14.9 MILLION (US$23.6 MILLION EQUIVALENT) AND A PROPOSED GRANT IN THE AMOUNT OF SDR 12.3 MILLION (US$19.4 MILLION EQUIVALENT) TO NEPAL Public Disclosure Authorized FOR A MODERNIZATION OF RANI JAMARA KULARIYA IRRIGATION SCHEME – PHASE I June 3, 2011 Agriculture and Rural Development Sector Sustainable Development Department South Asia 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 February 2011) Currency Unit = Nepalese Rupee (NPR) NPR 72.00 = US$1 FISCAL YEAR July 16 – July 15 ABBREVIATIONS AND ACRONYMS ACP Agriculture Contact Point IPR Implementation Progress Report ADB Asian Development Bank ISN Interim Strategy Note ASC Agriculture Service Center MIS Management Information System AWPB Annual Work Program and Budget MLE Monitoring, Learning, and Evaluation CCA Cultivable Command Area MoAC Ministry of Agriculture and Cooperatives DADO District Agricultural Development MoF Ministry of Finance Office MoI Ministry of Irrigation DoA Department of Agriculture NPC National Planning Commission DoI Department of Irrigation O&M Operation and Maintenance DTCO District Treasury Controller Office PEFA Public Expenditure and Financial EMP Environmental Management Plan Accountability FFS Farmers Field School PFM Public Financial Management FMIS Farmer Managed Irrigation System PIM Project Implementation Manual GAAP Governance and Accountability PIO Project Implementation Office Action Plan PMT Project management Team GDP Gross Domestic Product PSC Project Steering Committee GoN Government of Nepal RJK Rani Jamara Kulariya IDA International Development Association RJKIS Rani, Jamara and Kulariya Irrigation IEE Initial Environmental Examination Scheme IPM Integrated Pest Management SA Social Assessment IWMI International Water Management SIMF Social Impact Management Framework Institute VDC Village Development Committee IWRMP Irrigation and Water Resources WUA Water Users Association Management Project Regional Vice President: Isabel M. Guerrero Country Director: Susan G. Goldmark Sector Director: John Henry Stein Sector Manager: Simeon Kacou Ehui Task Team Leader: Joop Stoutjesdijk ii NEPAL Modernization of Rani Jamara Kulariya Irrigation Scheme – Phase 1 Table of Contents I. Strategic Context ................................................................................................................................. 1 A. Country Context ........................................................................................................................... 1 B. Sectoral and Institutional Context ................................................................................................ 1 C. Higher Level Objectives to which the Project Contributes .......................................................... 3 II. Project Development Objectives ......................................................................................................... 5 III. Project Description ........................................................................................................................... 6 A. Project Components ..................................................................................................................... 6 B. Project Financing .......................................................................................................................... 8 C. Lessons Learned and Reflected in the Project Design ................................................................. 9 IV. Implementation .............................................................................................................................. 10 A. Institutional and Implementation Arrangements ........................................................................ 10 B. Results Monitoring and Evaluation ............................................................................................ 12 C. Sustainability .............................................................................................................................. 13 V. Appraisal Summary .......................................................................................................................... 13 A. Economic and Financial Analysis .............................................................................................. 13 B. Technical .................................................................................................................................... 14 C. Financial Management ............................................................................................................... 14 D. Procurement ............................................................................................................................... 15 E. Social .......................................................................................................................................... 15 F. Environment ............................................................................................................................... 16 G. Safeguard policies ...................................................................................................................... 17 Annex 1: Results Framework and Monitoring.......................................................................................... 19 Annex 2: Detailed Project Description .................................................................................................... 25 Annex 3: Overall Project Implementation Arrangement ......................................................................... 32 Annex 4: Operational Risk Assessment Framework (ORAF) .................................................................. 46 Annex 5: Implementation Support Plan .................................................................................................... 52 Annex 6: Team Composition .................................................................................................................... 55 Annex 7: Governance and Accountability Action Plan ............................................................................ 56 Annex 8: Economic and Financial Analysis ............................................................................................. 64 iii Annex 9: Safeguards ................................................................................................................................. 72 Annex 10: Statement of Loans and Credits .............................................................................................. 77 Annex 11: Country at a Glance ................................................................................................................. 78 Annex 12: Map IBRD No. 38521 ............................................................................................................. 80 iv NEPAL MODERNIZATION OF RANI JAMARA KULARIYA IRRIGATION SCHEME - PHASE 1 PROJECT APPRAISAL DOCUMENT SOUTH ASIA SASDA Date: June 3, 2011 Team Leader: Joop Stoutjesdijk Country Director: Susan G. Goldmark Sectors: Irrigation and drainage (76%); Flood Sector Director: John Henry Stein protection (15%); General agriculture, fishing Sector Manager: Simeon Kacou Ehui and forestry sector (9%) Themes: Rural services and infrastructure (76%); Water resource management (16%); Decentralization (8%) Project ID: P118179 Environmental category: Partial Assessment Lending Instrument: Specific Investment Loan Joint IFC: Joint Level: Project Financing Data [ ] Loan [X] Credit [X] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 43.00 Proposed terms: Financing Plan (US$m) Source Local Foreign Total BORROWER/RECIPIENT 5.00 0.00 5.00 International Development Association 28.00 15.00 43.00 (IDA) Local Communities 1.00 0.00 1.00 Total: 34.00 15.00 49.00 Borrower: Ministry of Finance Singhdurbar Kathmandu Nepal Tel: 977-1-4-259820 v Implementing Agency: Department of Irrigation Jawlakhel Kathmandu Nepal Tel: (977-1) 553-5382 Fax: (977-1) 553-7169 Estimated disbursements (Bank FY/US$m) FY 12 13 14 15 16 17 Annual 1.20 9.20 14.80 12.80 4.40 0.60 Cumulative 1.20 10.40 25.20 38.00 42.40 43.00 Project implementation period: Start - October 1, 2011 End - September 30, 2016 Expected effectiveness date: October 1, 2011 Expected closing date: September 30, 2016 Does the project depart from the CAS in content or other significant respects? [ ]Yes [X] No Does the project require any exceptions from Bank policies? [ ]Yes [X] No Have these been approved by Bank management? [ ]Yes [ ] No Is approval for any policy exception sought from the Board? [ ]Yes [X] No Does the project include any critical risks rated “substantial” or “high”? [X]Yes [ ] No Does the project meet the Regional criteria for readiness for implementation? [X]Yes [ ] No Project development objective: The project development objective of the Modernization of Rani Jamara and Kulariya Irrigation Scheme – Phase 1 is to improve irrigation water delivery to, and management in, the command area. Project description: Component 1 - Scheme Modernization will construct and modernize the main canal system, including hydraulic