World Bank Document€¦ · Evaluation_ SA ar The Babai Irrigation Engineering Project assisted His Majesty's Government of Nepal in the preparation of detailed designs and tender

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 7669

PROJECT COMPLETION REPORT

NEPAL

BABAI IRRIGATION ENGINEERING PROJECT(CREDIT 1093-NEP)

MARCH 22, 1988

Agriculture Operations DivisionCountry Department 1Asia Region

This document has a restricted distribution and may be used by recipients only in the performance oftheir ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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WEIGHTS AND MEASURE EOUIVALENTS

m - meter (3.28 feet)km - kilometer (0.62 miles)ha - hectare (2.47 acres)liter - 61.02 cubic inchesM - Million

ABBREVIATIONS AND ACRONYMS

DCA - Development Credit Agreement

DIHM - Department of Irrigation, Hydrology and Meteorology (recentlyrenamed the Department of Irrigation)

DOA - Department of Agriculture

DOI - Department of Irrigation

GOI - Government of India

HMGN - His Majesty's Government of Nepal

SDR - Special Drawing Rights

NEPALESE FISCAL YEAR

July 16 - July 15

FM onUICL uU ONLYTIE WORtLO SANK

Washnton. DC 20433U.S.A.

Ouce ti Os..tacC.n.IOpeatae IfAMSNmy

March 22, 1989

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Nepal BabalIrritation Enaineerint Project (Credit 1093-NEP)

Attached, for information, is a copy of a report entitled'Project Completion Report on Nepal Babai Irrigation EngineeringProject (Credit 1093-NEP)" prepared by the Asia Regional Office. Fu1levaluation of this project hps not been made by the OperationsEvaluation Department.

Attachment

This document has a restricted ditribution and may be ued by recipients only in the performnceof their official duties. Its contents may not otherwis be discloed without World Bank authorization.

FOR OFFICIAL USE ONLY

HEPAL

BBAlU IRRIGATION ENGINEKRING YROJECT

ITED 1093--EP)

PROJECT COMPLETION REPORT

Table of Contents

Pagfe No.

Preface.i

Basic Sheet ......................................................... ii

Evaluation Summary ................................................. iii

I. INTRODUCTION

Background ................................................... 1 l

Project Identificatior., Preparation and Appraisal .............. 2

II. THE PROJECT AT APPRAISAL

The Babai Project Area ......................................... 3Project Obl>ctives ............................................. 4Project Description ............................................ 4

III. PROJECT IMPLEMENTATION

General ................................ ....................... 4Engineering Design ............................................. 4Designs of Diversion Weir and Kohalpur-Babai Highway ...........5Survey and Design for Irrigation and Drainage Systems ..........6River Hydrology ................................................ 7Topographic Mapping ............................................ 7Semi-detailed Soil Survey ...................................... 8Socioeconomic Benchmark Survey ................................. 9Procurement of Engineering Equipment ........................... 9Construction of Camps and Quarters ............................. 9Prequalification of Civil Works Contract ....................... 9Project Cost .................................................. 10Disbursement .................................................. 11Compliance with Covenants ..................................... 11Processing of Follow-on Babai Irrigation Project .............. 11

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

IV. INSTIST E .............................. 12

V. AM^ PIZ QW"fi=Nc ...................................... 13

VI. CONCLUSIONS AND LUSONS LEARNED.......................13

LIT FTABLES

Table 1: Equipment Procured under the CreditTable 2: Actual and Estimated Schedule of Disbursements

Annex 1: Compliance with Credit Conditions

MRALIkAIA TUIRT1:OTN DIGINKEUIU ULT

(CREDIT 1093-NKP)

PROJECT COMPLETION REPORT

Preface

This is a project completion report (PCR) for the Babai IrrigationEngineering Project (Credit 1093-NEP) in Nepal for which a _redit of US$3.5million was extended to His Majesty's Government of Nepal in April 1981.The credit closing date was extended three tiaes for two years and threemonths to March 31, 1986. The undisbursed balance of the Credit of US$0.03million equivalent was cancelled.

Information sources used for the PCR include the President'sReport (No. P-2926-NEP), supervision reports and correspondence files. ThePCR was prepared by Agriculture Division, Asia Technical Department staff.A specific field trip in connection with the PCR was r.ot made.

The draft was sent to the Borrower on December 16, 1988 for comments;however, no comments were zeceived.

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PR8JECT cOIwIZTION HL903?

NEPAL: DABT IhICIATbON GCINEMING PROJLCT (CREDIT 1093-NE?)

RASIC DATA SEET

m PROJECT DATA

AppraiTl Actual or Actual * I ofexaectttion cutrret estimate appDr il estimst*

0Lc 3 DJC dt 01 nt$S- in 35 1 Daiiefe 0o r *D/ov1 01/06/ 1-

Date abrica co I o ntc co Dlatet 06130183Proportio then comp.eted )

Closing date 12/311S3 036317 6 _Economic rate of return (x) NA NAFinancial rate of return (N) KA NAInstitutional performance S aiefectornAgronoadc performance NANuber of direct beneficiaries NA

CUMULATIVE DISBUi.SEMENTSFY81 Fn82 FY83 nY84 FY85 n 86 rY67

Appraisal estimte (USS dillion) 0.4 1. 3.0 3.5 -Actu.l (US$ million) - 1.5 2.3 2.8 2.8 3.0 3.47Actual as I of estimate - 100 77 80 SO 86 WnDate of final disburseeent 11/25/86Principal repaid to (no.ld/yr.) (US$ sillion)

ACT 7e 7Q 80 fil 82 83 84 85 86 87 88 TOTAI

PREAPPRAISAJL 7.8 7.8F APPRAISAL 3.9 11.9 .2 16.0F ONEGOTIATION 2.2 2.2

SUPEEVISIoN 1.2 5.0 3.8 2.7 1.3 .2 2.0 16.1S ~oTHeR ,7 .18

TOTAL - 117 10 p 0 41 2 7 _ i3 2 . 2-0 42 9

KISSION DATA

Date No. of Man-days Specializations Performance Type ofMissionD (eo/yr) persons in field represented /b rating /c Trend It problems /e

Identification 1977Preparation 1977/78Apprais&l 01/80

Supervirion 1 02/81 1 1 1 2Spe.rvision 2 06/81 2 2 21 1 1 NSupervision -3- 12/81 -I 4-- 3 1 1 Supervision It 11/82 3 2EC 1 2 NSupervision 5 11/4 1- 2 i I I

TotWl 8 14

OTHER PROJECT DATA

Borrower HRi Majesty's Government of Ne pal (HMN)Ezecutia ncv De rtment of Irri ation. drlo and Meteorolo DuDEFiscal year of borrower July 16 - July 15

ame of currency (abbreviation) Rupees (NRa)APPraisal vear averaze 1980 US$1.00 - NiA 12.0Intervening Years averaes 1981-85 US$1.00 - NRJ 13.2Completion year average 196 U S$ 1.00 - NRJ 14.3

/a Undisbureed balance of US$0.03 miI.. W& * aa eeled an 11V 2566.7 Kb E e *ngineer; C - economist.i77 1 - problem-free or minor problem ; 2 - moderate problesw; and 3 - major probleme./d 1 - improving; 2 - stationary; 3 - deteriorating.7e_ F - financial; N - managerial; T - technical; P - political; and 0 - other.f Disbursed axounts shown in US Dollar equivalents are valued at the exchange rate applicable on the

date of this statement.

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BABAI IRRIGATION NINEERING PROJECT

PROJECT CGO#PITION REPORT

Evaluation_ SA ar

The Babai Irrigation Engineering Project assisted His Majesty'sGovernment of Nepal in the preparation of detailed designs and tenderdocuments for irrigation and associated infrastructure covering a net area of13,500 ha for the proposed Babai Irrigation project, and for a stretch ofabout 35 km length of the East-West Highway. The project was appraised by IDAin January 1980. Project cost was estimated at US$3.55 million equivalent.The IDA credit approved for the project was US$3.50 million equivalent. Theproject became effective on June 5, 1981. The expected project completiondate was June 30, 1983, and the Credit closing date of December 31, 1983 atappraisal was extended three times to March 31, 1986.

Progress on most project components was satisfactory. All appraisaltargets were achieved bv October 1982, except for evaluation for constructionprequalification and ensuing processes. The evaluation was not made becauseuncertainty prevailed as to whether the proposed Babai segment of the East-West Highway construction was to be included under the contract, concerns overthe priority and relatively high costs of the project, and the concern thatthe use of the Babai water for the proposed project would adversely affect theestablished requirements of water for downstream users; data available was notadequate to refute the latter. Further implementation of the project washalted at this stage. Due to the suspension of project implementation,tendering for follow-on project construction as well as other start-upactivities called for under the Babai Engineering Project were suspended. Asthese activities were to be financed from the Credit, the Llosing date wasextended three times in anticipation that the above issues could be resolved.Actual disbursement amounted to SDR 2.78 million and the undisbursed balanceuf SDR 0.02 million was cancelled on Novenber 25, 1986.

In conclusion, the project achieved most of its technical targets.However, implementation of the proposed follow-on Babai Irrigation Project waspostponed indefinitely due mainly to water rights issue between Nepal andIndia. The primary lesson learned is that the international water rightsissue must be faced early by all concerned -- the Borrower, the Bank and theconsultants -- and that a strategy should be agreed for dealing with the issuefrom the beginning of preparation.

UZAL

IAlA IRlRIGATION ENGINES&ING PROJECT

PROJECT COMPLETION REPORT

I. INTRODUCTION

Background

1.1 Nepal is a landlocked country situated between China and India andoccupying a total area of 147,000 sq. Im. Its population in 1988 totals about18 million, of whom 94% live in rural areas. Population growth between 1970and 1986 has averaged 2.6% a year. The country can be divided into threebroad ecological zones--the Mountains, the Hills and the Terai. The NepalTerai plain, part of the Gangetic basin, accounts for only 16% of the totalarea but 90% of the country's cultivable land and is the center ofagricultural production in the country.

1.2 Agriculture, largely rainfed, dominates the country's economy. In1986-87, it accounted for 59% of GDP, contributed about 70% of total exportearnings, and provided employment to 91% of the working population.Increasing pressure on land due to rapid population growth has led to asituation where self-sufficiency in food production is dependent on betterthan average rainfall. During the past decade, the production of foodgrainshas grown at only 1.5% per year whereas the production of cash crops has grownat 5% per year. However, due to the large proportion of grain production inthe total (94% of the area sown), the overall annual rate of production growthwas only 1.6%. Current targets for agricultural production call for an annualgrowth rate of about 5%. However, this goal appears to be difficult toachieve, especially compared to historical growth rates. For growth inagricultural production to keep pace with population, an estimated additional35,000 ha of irrigation needs to be developed each year.

1.3 Nepal has abundant surface and groundwater irrigation resc-urces.About 80% of Nepal's potential irrigated area is on the Terai. It is esti-mated that river discharges average about 150 billion cubic meter per year.However, only about 1.3 M ha of land are suitably located for command bygravity, of which about 0.4 H ha is already irrigated. Exploitable ground-water resources could irrigate about 0.6 M ha, of which 0.1 M ha has so farbeen developed. The Terai is traversed by eight major perennial rivers, theMahakali, Karnali, Babai, Rapti, Nare.yani, Bagmati, Kosi and Kankai. All aretributaries to the Ganges. The many smaller stresms also crossing the Teraiare largely annual, but are nevertheless developed, in whole or in part, forirrigation, usually through farmer-constructed schemes.

1.4 The development of surface water lrrlgatlon was initiated centuriesago by farmers who built temporary weirs to direct river flown into ungatedLntakes. Most of the schems were in the Hl11s until the 1920s, whendevelopment started to expand into the Terai. Many such schemeR are inoperation and some have been improved through government assLitance. Intotal, farmer managed irrigation schemes account for about 70% of the totalirrigated area in Nepal; the remaLning 30% comptise public lrrigatlon schemesdeveloped mainly with external assistance starting in the early 1950's. TheAgricultural Development Bank of Nepal (ADBN) has supported private sectorirrigation with loans to individuals for minor lrrigation and for shallowtubewell development. ADBN has also provided a few loans to farmer groups forthe rehabilit2tion or improvement of small surface irrigation schemes.

1.5 The Bank's first involvement with irrigation in Nepal was the BirganjIrrigation project (Narayani I) (Cr. 373-NEP, US$6.0 H, 1973) which had bothsurface and groundwater components. Development has continued with theBhairawa-Lumbini Groundwiater project (Cr. 654-NEP, US$9.0 M, 1976) now beingfollowed by Stage II (Cr. 1316-NEP, US$16.0 M, 1983); Narayani Zone Stage II(Cr. 856-NEP, US$14.0 M, 1978) now being followed by Stage III (Cr. 1715-NEP,US$24.5 M, 1986); Sunsari-Morang on the Kosi (Cr. 812-NEP, US$30.0 M, 1978),also being followed by Stage II (Cr. 1814-NEP, US$40.0 M, 1987); and theMahakali I project (Cr. 1055-NEP, US$16.0 M, 1978) in the far western region,now about to enter Stage II. Several other IDA-assisted projects includesmall-scale irrigation components. These are: Second Rural DevelopmentProject (Cr. 939-NEP, US$11.0 M, 1975); Third Rural Development Project(Cr. 1727-NEP, US$19.1 M, 1986) and Hill Food Production Project(Cr. llOl-NEP, US$12.8 M, 1981). The main objective of Bank involvement inirrigation in the Terai continues to be better water distribution to the farm,through technical improvements and by more effective organization of waterusers.

Project Identification. Preoaration and ADpraisal

1.6 The irrigation development potential of the Babai area was firstexplored in 1975 by an IDA identification mission. Based on the findings ofthat mission, UNDP financed preparation of development plans for the area forwhich the Bank was appointed Executing Agency. Reconnaissance studies werecarried out by interr.ational consultants in 1977. The reconnaissance studieswere followed by a feasibility study, which thp consultants completed inNovember 1978. Subsequently, HMGN redefined the project area in order tominimize forest clearing under the project, and engaged the same consultingfirm to undertake additional studies. These complementary studies, which wereissued in June, 1980, were fin anced with funds from Technical AssistanceCredit No. 659-NEP. The feasibility and subsequent studies looked into severaloptions for reliable and increased water supply for the project area andpossible future stages, and concluded that a run-of-river diversion on theBabai to provide irrigation to about 13,500 ha on the left bank of the Babai

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river would be technically and economically viable. 1 However, detailedeconomic analysis indicated a rate of return of only about 14%.

1.7 At the request of HMGN, a Bank mission visited Nepal in January 1980to plan the details of the project. In August 1980, the Bank decided that theproject would proceed in two stages. First, preparation of designs and tenderdocuments, and second, actual construction. Negotiations iere held inWashington, D.C., in December 1980 for IDA credit of SDR 2.8 million (US$3.50million equivalent) to finance the preparation of detailed designs and tenderdocuments for the Babai Irrigation Project (13,500 ha net) and for the stretchof the East-West Highway between Kohalpur and the Babai river. The Credit wasapproved by the Board on January 6, 1981, signed on March 26, 1981, and becameeffective on June 5, 1981.

II. THE PROJECT AT APPRAISAL

The Babai Project Area

2.1 The Babai project area of 13,500 ha net, is located in the mid-Western Region of Nepal, in the Bardia district of the Bheri zone. It has asubtropical monsoon climate with distinct wet and dry seasons. Annualrainfall averages ahout 1,500 mm. There are about 5,300 farm families withaverage farm size of about 3.8 ha. Distribution of land is skewed: about 72%of farms are less than 2.7 ha in size and cover about 17% of the area, whileabout 15% of farms are larger than 6.8 ha in size and cover about 72% of the

F area. However, about 90% of land is cultivated by owner-operators. Cropsgrown during the wet season are paddy and maize and wheat, pulses and oilseedsduring the dry season. Cropping intensity at appraisal was estimated at 122%.

2.2 The project area has been partly irrigated for many years by farmer-managed schemes, using primitive diversion structures requiring frequentreplacement. In times past, maintenance or reconstruction of diversions wasorganized oin a semi-feudal basis by the few very large landholders who ownmost of the area. Since enforcement of the Lands Act of 1964, much of thearea has been distributed to previously landless small farmers and settlers,and maintenance of the diversions has been continued communally. In thedesign of the project, the main emphasis was to provide more secure irrigationdiversion and distribution, thereby providing a basis for intensifiedagricultural production, and to extend the area served through more efficientuse of water.

Project Objectives

2.3 The purpose of the Babai Irrigation Engineering Project was toprepare detailed designs and tender documents for the Babai Irrigation Projectand for a nearby stretch of the East-West Highway.

1/ In addition to the run-of-river diversion weir, the options consideredwere groundwater, seasonal storage, and transbasin diversion from theBheri to Babai River. All except the weir were at best only marginallyviable.

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Project Description

2.4 The project included the following components:

(a) preparation of detailed designs, specification, and contract documentfor a permanent diversion weir across the Babai; principal canals anddrainage channels to cover a net area of 13,500 ha; and a 35 kmlength of the East-West Highway;

(b) preparation of aerial photography and topographical mapping;

(c) semi-detailed soil survey and socioeconomic benchmark survey;

(d) procurement of engineering equipment;

(e) construction of camps and quarters; and

(f) assistance in prequalifying civil works contractors and ev".luation oftenders.

III. PROJECT IMPLEMENTATION

General

3.1 The implementation of the project was to take two years (June1981-June 1983). The project made a good start by HMGN mobilizing resourcesand staff for the project implementation. HMIGN deputed six to nine engineersto support the consultants during the implementation period. Progress on mostproject components was satisfactory and followed closely the agreed timetable.All appraisal targets were met by October 1982, except for evaluation forconstruction prequalification and ensuing processes.

Engineering Design

3.2 DIHM was to recruit a consulting firm to assist in conducting thesurveys and preparing the detailed design and tender documents. The servicesof engineering consultants were to comprise of approximately 150 man-months ofprofessional services. On September 21, 1980, HMGN sent invitation letters tosix international consulting firms to submit technical and firancial proposalsfor preparation of detailed designs and tender documents. On the closingdate, November 14, 1980, all proposals had been received. However, evaluationof the proposals by the Department of Irrigation, Hvdrology and Meteorology

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(DIHM) 2J was considerably delayed. DIHM organized a special committee toreview the proposals. On March 17, 1981, HMGN informed IDA of its decision torecruit the selected consultants.

3.3 In June 1981, the project consultant was mobilized to prepare thedetailed designs and tender documents for the 13,500 ha (net) project areaand to assist DIHM with the prequalification of contractors. The inceptionand preli-.inary design report was submitted in August 1981, and reviewed inDecember 1981 at a tripartite meeting held among DIHM, the project consultantsand IDA. The meeting discussed the project areas proposed to be developed,alternative canals and road alignment, design criteria and standards of themain components and a number of items on which decisions or advice from DIHMwere required, to enable the consultant to follow the agreed timetable.

3.4 The consultants continued field work until April 1982 and detaileddesign of the project began in May 1982. The results of the soils survey,hydrology and sedimentation reports were submitted in August 1982. The finaldetailed design report, the engineer's cost estimate and the tender documentswere all submitted and approved by HMGN and IDA in October 1983. Thisincluded construction drawings and quantities for the weir and associatedheadworks, the irrigation distribution system down to outlets for tertiaryunits, the drainage system, and the public and service road network in theproject area. The bill of quantities for the tertiary units was based onpreliminary layouts and detailed designs for four typical areas of about 100ha each. The final design work for the tertiary units, inclusive of fieldchannel design and any other redesign work, was to be undertaken duringproject implementation. The tertiary unit survey and design work was to becarried out by DIHM staff seconded to the consultants or through theengagement of a local consulting firm while the overall responsibility for thepreparation of the final design was to be with the consulting firm as theconsultant. This design work was to be carried out in harmony with thecontractor's construction schedule.

Designs of Diversion Weir and Kohalpur-Babai Highway

3.5 The diversion structure, to be located on the Babai river about 5 kmupstream of Bardagaha. Design comprised of a concrete weir with scour Eluiceson the left bank and the canal intake located on the outside of a curvedsluiceway. The weir was designed to irrigate a potential 40,000 ha commandarea; however, the presently proposed project included only 13,500 ha becausethe additional water required for the larger area would necessitate a costlytransbasin diversion which was not considered attractive at the time. Theweir supported a road bridge which was to allow the East-West Highway to crossthe Babai River. Since the East-West Highway was to cross the Babai River onthe proposed weir and about 35 km (out of 46 km) of the Kohalpur-Babai Highwayportion was to run alongside the Babai main canal within a confined easement

2/ Renamed the Department of Irrigation (DOI) in December, 1987.

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of 100 to 150 m, both works were to be implemented simultaneously by onecontractor. However, as the funding for the construction of the highwayportion was to be provided for under IDA's Highway III Project, withconstruction supervision from the Roads Department, the contract documents forthe combined irrigation/highway package were divided into two separate sets ofdocuments without interdependence. Tender documents were prepared to outlinethe arrangements for the implementation of the Babai Irrigation works and theKohalpur-Babai highway portion by the same contractor under separate sub-contracts. The highway portion was dropped from IDA assistance, and theGovernment of India is currently assisting HMGN in its implementation.

Survey and Design for Irrigation and Drainage Systems

3.6 Site surveys for cross drainage works on main and branch canals,public road crossing of Mand River, East-West Highway alignment were completedin March 1982, as envisaged during appraisal. Final figures for survey worksare given below:

Appraisal ActualItem Unit Target Achievement

Main Canal km 29 29Branch Canal km 15 15Leferal Canal km 171 171Drain km 224 224East-West Highway km 46 46Public Roads km 26 26Site Survey no. 13 13

3.7 With the completion of field work, the project consultants' mainemphasis was to complete the design work in their main office. The design ofthe irrigation layouts began with the task of identifying the areas of uplandand lowland soils. From the soil survey and the aerial photographs, 1:5,000countour maps were prepared. The secondary canal and drain lines set out inthe field were drawn up, and alignments were reviewed in light of contourmapping. The capacity of the tertiary canal was set at 60 liters per second.The tertiary unit areas were adjusted to suit this flow depending on thepercentage of upland soils within each unit. Layout designs were completed inAugust 1982. The net areas within the boundary were found to be as follows:

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Layout Boundary AD2raisal Estimate Actual Achievement----------------(ha)--- ..-..

Machegahr & Laxuaniya 5,295 5,295

Khumber 665 665

Shivania A 4,065 4,065

Shivania B 1,940 1,940

Budhi 1,085 1,085

Bhainsali 450 450

Total 13,500 13,500

3.8 All detailed designs were submitted to DIHM and IDA for review inmid-December 1982. Two Nepali engineers participated in the design process inthe project's consultant head office.

River Hydrology

3.9 The consultant analyzed the rather sparse measured river flow dataavailable from the nearby river measuring station and derived a stage-discharge relationship formula. The formula was used to derive daily flowrate estimates from staff guage records for 1980/81. The derived stage-discharge relationship was probably adequate for establishing medium and highflows for weir design purposes. However, it had low reliability for low flowsin the dry season, which is the critical period for water use allocation.

Topographic Mapping

3.10 The contract for mapping was placed with a subcontractor to theconsultants who carried out its survey in March 1981 and undertook ground-control and ground beighting in the priority area (3,500 ha) covering a 1 kmwide strip along the northern boundary of the project. The maps werecompleted and delivered to DIHM in November 1981 and were used to locate themain canal alignment. The rest of their field work was completed on April 25,1982 and covered the entire area (13,500 ha) plus additional areas nearBargadaha on the west bank of the Babai river, near Bhainsahi on east bank ofthe Babai river, and between Mand river and the Indian border south of the

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project area. The mapping contractor prepared 33 sheets of 1:5,000 scalecontour maps and submitted them to DIHM in October 1982 as planned duringappraisal.

Semi-detailed Soil Survey

3.11 The consultant was to execute a semi-detailed soil survey on20,000 ha on the east bank to locate the project area. In addition, areconnaissance survey covering 10,000 ha on the east bank and 20,000 ha on thewest bank was to be undertaken for possible extension areas for irrigatedagriculture. The soil survey started in November 1981. Field reconnaissancetrips were made over a large part of the east bank area. Initially, progresswith the survey was severely handicapped by lack of transport and equipment.The consultants made field trips covering most of the project area and carriedout a detailed inspection of the 1:20,000 aerial photographs. Arrangementswere made with the Department of Agriculture (DOA) to use their facilities ininalyzing the soil samples collected in the project area.

3.12 The field work for the soil survey of both the semi-detailed andreconnaissance area was completed in February 1982. The number of augerholes, pits and field tests for the project area is summarized as follows:

Item Semidetailed Reconnaissance SampleSurvey Survey Area

------------------------(No.)---------------------

Auger hole 319 97 160Trial pit 32 21Infiltration test 23 10Hydraulic Conductivity 30 20Undisturbed Core sample 90 60Disturbed sample 122 79

3.13 A total of 135 samples were delivered to the Department ofAgriculture laboratory for soil analyses. Testing of soil samples wascompleted in April 1982. Subsequently, soil maps were prepared and submittedto DIHM. The soils and land classification reports and the hydrology andsedimentation report for the Babai Project were submitted to DIHM in August1982. The findings of these reports were taken into account in the engineer-ing designs.

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Socioeconomic Benchmark Survey

3.14 DIHK entrusted in March 1982 the Agricultural Projects Service Centerto cor.duct a socioeconomic benchmark survey in the Babai project area. Thefinal report was submitted to IDA in September 1983, which was satisfactory tothe Bank.

Procurement of Engineering Eguipment

3.15 To avoid delay with the field work, the consultants were as part oftheir contractual obligation, to procure the equipment through internationalshopping procedures satisfactory to IDA. The equipment purchased on behalf ofthe DIHK by the consultant for use by the consultants and DIHM staff is givenin Table 1. DIHM provided five to eight four-wheel drive vehicles and a boatfor consultant's field work. Eight four-wheel drive vehicles were purchasedunder the credit.

Construction of CamDs and Ouarters

3.16 The construction of temporary quarters, permanent housing, a newstore, a new office block and drilling of water supply well was started inJanuary 1982 in Baidi and completed in May 1982 through local competitivebidding.

Pregualification of Civil Works Contract

3.17 Advertisements calling for contractors to submit prequalificationdata for construction of the major civil works were placed in the internation-al press as well as the local press in early July 1982. They also appeared inthe DeveloDment Forum. The closing date for applications was set asSeptember 30, 1982.

3.18 A total of 28 construction firms applied for prequalification. How-ever, evaluation for construction prequalification was not done because it wasnot clear at that stage how the werkq were to be grouped and whether the Babaisegment of the East-West Highway construction was to be included under thecontract. Thus, a final evaluation was postponed until it was decided whichworks to include in the construction contract. Furthermore, there werepossible questions from India on the use of Babai River waters. It wastherefore decided that invitations to tender would not be issued until theIDA's board has approved the Babai Irrigation Project.

3.19 Meanwhile, it was later decided that the project consultants were toproceed with preparation of three alternative evaluations based on: (i) onecontract for the construction of whole Babai project including the highway;(ii) two contractors, weir, ancillary headworks and highway and a separatecontract for irrigation and drainage distribution networks; and (iii) two

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contractors, one for weir and ancillary works (no highway) and a second onefor the remaining works and drainage facilities. The project consultantsfulfilled these tasks.

Project Cost

3.20 Total cost of the engineering project was estimated at US$3.55 aequivalent with a foreign exchange component of US$2.58 m equivalent or about75% of the total. Since a large portion of the costs was in foreigrn exchange,project cost estimated at appraisal is compared below with actual expendituresin SDR:

Appraisal Revised Actual Actual ExpenditureCategory Estimate Estimate ExRenditure as % of revised

------------------(SDR)------

Civil work 240,000 397,000 396,737 99.9

Equipment andVehicle 470,000 327,000 326,573 99.9

Salaries 120,000 160,000 159,981 100.0

ConsultantServices 1,760,000 1,916,000 1,894,628 98.9

Unallocated 210.000 - - -

Total 2,800,000 2,800,000 2,777,919 99.2

3.21 As shown in the above table, project cost was revised in late 1982with IDA approval. The reasons for the revision were to add under the civilworks category additional works not envisaged during appraisal. These werefence erections in the project compound, construction of more quarters,upgrading of an access road from Nepalganj to the project area, and provisionof electricity and water supply for the compound. In accordance withamendment to the DCA dated May 16, 1986, the credit also financed aboutSDR 100,000 for consulting services, technical assistance and training relatedto Cr. 812-NEP. On November 25, 1986, IDA cancelled an undisbursed amount ofSDR 22,081.

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Disbursemen

3.22 The IDA Credit of SDR 2.8 m (US$3.50 m equivalent) was to finance100% of total project cost net of taxes and duties. In spite of initial delayin start-up of some components, actual disbursement at the end of the firstfiscal year of project implementation reached the appraisal estimates. Theslow disbursement since 1983 and three extensions of closing date wereattributed to the pending issues related to processing of the follow-on BabaiIrrigation Project (paras. 3.24-3.31). Table 2 summarizes disbursements byaccumulated actuals semester-wise for fiscal years 1983-1987.

Comtliance with Covenants

3.23 HHGN has complied with the most important DCA covenants (Annex 1).

Processing of the Follow-on Babai Irrigation Proiect

3.24 The labai River, from which irrigation water was to be supplied forthe 13,500 ha project area, originates in Nepal and flows into India where itdischarges some 50 km south of the Nepalese border into the Karnali river,which also originates in Nepal. Most of the Babai River's catchment area isin Nepal. In the wet season (June to October), it provides minor amounts forsupplementary irrigation for both Nepal and India. In the dry season(February to June), it is unlikely that the proposed project would have anysignificant impact on irrigatio!: in India. The amount of surface flowcrossing the border is very small, and that flow is supplied mainly fromregenerated groundwater. This is typical of the Gangetic plains. The aboveassessment by the Bank was based on limited hydrology database available andsite observation. To support this assessment, the Bank repeatedly advisedHMGN on the need to update and strengthen the hydrology database especiallywith regard to downstream flows into India.

3.25 While appraising the Babai Engineering Project, the- Bank did notconsider that a formal approach to the Government of India (GOI) was requiredsince it appeared from the feasibility studies that no adverse effects wouldbe caused to downstream users.

3.26 After appraisal but prior to negotiations (as early as Ncvember 1980)of the Babai Engineering Project, GOI through its Executive Director (ED)voiced their concern that the proposed Bebai Irrigation Project would reducethe downstream flow of the Babai River, particularly during the dry season,adversely affecting the cultivable command area of two irrigation projectsundertaken by the State of Uttar Pradesh, namely the Sarju Pumped Canal andthe Sarju NehaL Parinjojana. The Bank indicated that while designing theproject, the rights of the downstream users would be protected. GOI did notraise any objection at the Board meeting when the Babai Engineering Projectwas approved.

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3.27 In February 1983, prior to tne appraisal of the proposed BabaiIrrigation Project, the Indian ED again expressed GOI's concerns about theproposed project and argued that the appraisal mission should consider aproposal to build a reservoir on the Babai River which would provideirrigation water to both riparians. In this connection, the ED made referenceto prior discussions between HMGN and GOI for the construction of such areservoi.. However, at the feasibility stage, construction of such areservoir had been analyzed and found uneconomic. Therefore, this option wasnot considered during appraisal.

3.28 In March 1983, the appraisal mission after visiting the project areawas of the opinion that the proposed Babai Irrigation Project (even without astorage reservoir) would not adversely affect the downstream users in UttarPradesh. This view was repeatedly communicated during the following year tothe ED, who continued to register GOI's concerns about the project.

3.29 In April 1984, the Bank suggested to HMGN that in order to processthe proposed project, efforts should be made to reach an agreement with GOI toregulate the use of the waters of the Babai River. HMGN did not favor thiscourse of action, but informally agreed that the Bank could provide to GOIzechnical information about the project in order to resolve the impasse.Consequently, in September 1984, a summary of the Staff Appraisal Report wasfurnished to GOI; technical discussions were held in New Delhi during February1985 between the Bank staff and officials of GOI; and, additional informationrequested by GOI on the water flows of the Babai river were furnished duringJuly 1985.

3.30 In accordance with the Bank s policy, on October 29, 1985, the Bankinformed GOI through the ED that despite GOI's concern the Bank intended toproceed with processing the Project and gave GOI six months (up to April 28,1986) to register final comments on the proposed project. On April 25, 1986,GOI informed the Bank that in its opinion the project would be harmful toIndia's interests and recorded once more its objection which finallyprevailed. The Bank did not take additional steps to reach a decision on thewater rights issue (e.g., appoint a panel of independent experts).

3.31 In June 1986, the Bank informed HMGN about GOI's ibjection to theproject as well as the Bank's decision to postpone further its processing.Processing of the project was finally halted pending agreement between HMGNand the Bank on the priority of the project within the overall agriculturaldevelopment plan.

IV. INSTITUTIONAL PERFORMANCE

4.1 Direct responsibility for project implementation was vested withDIHM. DIHM appointed a project manager in accordance with the covenant and

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initially appointed six engineers to assist with the consultants. DIHMpromptly provided five vehicles initially so as not to hinder consultant'sfield survey. Depending on the need of the project, additional engineers andvehicles were also provided. Their performance in assisting the consultantswas satisfactory.

4.2 The project maintained records on the progress of the credit and toreflect project expenditures. The project set-up a special project accountfor the project, and this account was audited each fiscal year by eitherindependent auditors or staff from the Auditor General's Office. The account-ing system was considered adequate by IDA supervision missions, although auditreports submitted to IDA for each financial statement were generally delayed.The audits confirmed proper management of the funds allocated to the project.

V. BANK PERFORMANCE

5.1 The Bank's assistance in project preparation and formulation wasuseful and the appraisal was well received overall. Assistance provided toHMGN on drafting the terms of reference for the consultancy services in mostof the project components was satisfactory. The overall design of theproject, as a composite for development of irrigated agriculture, wasconsistent with HMGN policy.

5.2 Bank supervisions visited the project five times, averaging onceevery 10 months. As the nature of the project did not require regular super-vision, this was considered adequate. Supervision missions assisted withdelineation of the project area, road alignment, design criteria and standardsof the main components, and issues arising during the implementation. Fromthe early stages of project implementation, IDA supervision missions alsorepeatedly advised HMGN to carry out investigations on the impact of the Babaiweir on the river flow reaching India as there were possible questions fromIndia with respect to international water rights; these suggestions did notmeet with positive response from HMGN which considered such investigationsunnecessary.

VI. CONCLUSIONS AND LESSONS LEARNED

6.1 The Babai Irrigation Engineering Project (Cr. 1093-NEP) wassatisfactorily completed and met its primar" technical objectives. However,it did not fulfill its operational purpose -- to produce a bankable BabaiIrrigation Project -- due in part to international water rights complications.The primary lesson learned is that this particular matter needs to receivehigh priority attention by all concerned (the Bank, the Borrower, and theconsultants) ir. any proposed project in which it may possibly become an issue.Due to the sensitivity, both to the Bank and the Borrower of international water

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rights, such a project cannot be left to 'normal project processing". Todo so risks delay or loss of the project for the country and breakdown ofunderstanding between the Borrower and the Bank. Although well understoodnow, this was not appreciated at the time.

6.2 Clearly all parties concerned did not anticipate the difficultieswhich would arise because of the international water rights issue. During theBabai Engineering Project, the Bank 'repeatedly advised' HHGN about the issuebut did not insist on the actions which ultimately would have been requiredfor the follow-up Babai Irrigation Project to go forward. It did notadequately warn HMGN of the consequences of inaction, assuming that, since nodownstream impact was expected, the issue could be handled internally duringprocessing. The Borrower for its part did not face the issue openly, instructthe consultant to include it in project preparation work, and develop astrategy in cooperadion with the Bank to deal with it for the proposedproject. The consultant failed to appreciate the data requirements to handlethe issue, advise HMGN that the limited data available was probably inadequateto support the project's case, and suggest technical options to handle theissue.

EA&MI I RGATIOU MIG NEIna PROJECT

(Credit 1093-NEP)

PROJECT CKLRTION RIPOL.'

Ecuinment Prcrd Under the Credit

1. Survey Equipment Units Purchased

Automatic level 420 Sec theodolite 21 Scc theodolite 1Leveling Stave 12Stereo Scope 2Prismatic compass 6Abney level 4Binocular 2Calculator 1Survey book 155G m tape 5Optical square 2Photocopier 1

2. Hydrological EauioMent

Sediment sampler 1Bed sampler 1Current meter with ancillary 1Gauge plate 20Water level recorder 1Stop watch 1Rope 100 a

3. Camp EgUiRment

Generator 1Tent 10Camp bed 14C&mp Chair 4Table 2Lamp 11Sheet 1Net 14

-16- Table 2

NEPAL

BABAI IRRIGATION ENGINEERING PROJECT (CREDIT 1093-NEP)

PROJECT COMPLETION REPORT

Actual and Estimated Schedule of Disbursements /a(USS '000)

IDA fiscal Appraisalyear and estimate Actual Disbursement assemester (cumulative) cumulative % of appraisal

1981Second 0.4

1982First 0.8 0.7 88Second 1.5 1.5 IQO

1983First 2.5 1.9 76Second 3.0 2.3 77

1984First 3.5 2.6 74Second - 2.8 80

1985First - 2.8 80Second - 2.8 80

1986First - 2.9 83Second - 3.0 86

1987First - 3.1/b 91

/a Original closing date: December 31, 1983. The closing date was extendedthree times to March 31, 1986.

/b Includes about US$120,000 related to Credit 812-NEP.

-17 - ANNEX X

NEPAL

BABAI IRRIGATION ENGINEERING PROJECT (Cr. 1093-NEP)

PROJECT COMPLETION REPORT

Compliance wi;h Major Credit Conditions

A. Conditions Met Remarks

Section 3.02

The appointment of a Project The appointed project managerManager with qualifications and was acceptable to IDA.experience satisfactory to IDA.

Section 3.03

The employment of consultants under A contract was signed oncontracts, including terms of June 2, 1981.reference, satisfactory to IDA.

Section 4.02(a)

HNGN shall, not later than June 30, HGCN decided that the lowlands1981 decide and notify the IDA will become part of awhether approximately 2,400 ha of settlement scheme for thelowlands in the Khumber area shall Khumber Cotton Project. Abe developed as part of the settle- formal communication from HMCment cheme for the Borrower's was received on June 29, 1981.Khumber Cotton project or as partof a settlement scheme for paddycultivators, and shall notify theAssociation of any institutionalarrangements made or to be made forthe forest clearing and settlementin the Khumber area.

Section 4.02(b)

HMGN shall cause the staff of the The coordination between rDA,IKhumber Cotton Project, the staff DIHM, UNDP and the projectof the DIHM and the consultants consultant was satisfactory.employed for che project tocoordinate the preparation of theirplans.

C. Conditions not Complied With

Nil.