Second Sunsari Morang irrigation project
  Report No: ; Type: Report/Evaluation Memorandum ; Country: Nepal; Region: South Asia; Sector: Irrigation & Drainage; Major Sector: Agriculture;
                                                             ProjectID: P010278


Nepal: Sunsari Morang Irrigation II Project (Credit 1814-NEP)

The Nepal Sunsari Morang Irrigation II project (Cr. 1814- NEP for US$ 40.0 million equivalent) was approved in FY87.
The Credit was closed as scheduled in March 1995, at which time US$ 3.7 million was canceled. The Implementation
Completion Report (ICR) was prepared by the South Asia Regional Office. The borrower's "Evaluation of the Project" is
appended to the ICR. It does not differ substantively from the Region's ICR.

A second phase operation, the project objective was to ensure reliable and equitable year-round water supply to the
Sunsari Morang Irrigation System in order to enhance agricultural production. This would be achieved through
rehabilitation and upgrading of canals and structures and more effective operation and maintenance (O&M) procedures.
Main components were: (i) improvements to the main canal; (ii) intensification of the irrigation distribution and drainage
systems in the Stage II command area of 16,700 ha; (iii) modification of the distribution system already rehabilitated in
the Stage I command area of 9,750 ha; and (iv) support for O&M, including establishing rotational delivery schedules,
water user groups and cost recovery.

The project was approved before agreement was reached on an engineering solution for two problems which had
compromised effectiveness of the Bank-supported Sunsari Morang Stage I project (Credit 812-NEP): heavy siltation in
the main canal, which reduced wet season flows, and migration of the main branch of the river in the dry season, which
reduced dry season flows. In FY93 the Bank approved the Sunsari Morang Headworks Project (SMHP: Credit
2430-NEP), which is addressing both problems by moving the intake up the river and equipping the desilting basin with
two dredges.

The project met most of its objectives, with the exception of concluding the additional works in Stage I. The main canal
and structures were upgraded, and the Stage II distribution system was completed over 93 percent of the target area. The
drainage system lagged behind, due to farmer unwillingness to release land, and only part of works planned for Stage I
were concluded. The design capacity of the main canal and Stages I and II will not be reached until SMHP is completed,
scheduled for 1997. However, early indications are that the new intake and the dredges will achieve their purpose and
the potential of the scheme will be restored. The ICR reports that cropping intensities in Stage II have already reached
90 percent of appraisal expectations, yields have almost doubled, and these favorable trends are expected to continue.
The ICR re-estimates the economic rate of return of Stage II, including pro-rata SMHP investment costs, at 16 percent,
only slightly lower than the estimates at appraisal of Stage II in 1987 and of SMHP in 1992. Remarkable progress,
beyond appraisal expectations, took place in the arena of farmer organization, following the government's 1992 decision
to accelerate group participation, create a hierarchy of group associations, and turn over to these associations
responsibilities for managing O&M of tertiary canals, gates and other structures below the secondary canals.

The Operations Evaluation Department agrees with the ICR on the project's ratings. The project outcome is rated as
satisfactory but sustainability is uncertain pending completion of the new intake and desilting facility and demonstration
of adequate O&M of the new mechanical equipment. The ICR rates institution building as modest, but that category will
deserve a higher grade if the user associations continue to progress. The ICR rates Bank performance at preparation and
appraisal as deficient, due to the delay in coming to agreement on the headworks. Performance on implementation is
rated satisfactory. OED rates overall performance also satisfactory, given subsequent progress in resolving the
headworks issue and completing the SMHW followup works as quickly as possible.
Three lessons related to farmer behavior emerge from this project: (i) their response in group participation, improved
water management and cost recovery depends critically on the reliability of water delivery; (ii) rotations of water supply
among farmers can be learned and respected if the benefits are demonstrated; and (iii) rushing through the process of
participatory planning of watercourse layout can have costs in terms of misaligned water courses. The ICR is highly
satisfactory, providing a comprehensive assessment of the technical and agricultural issues, a detailed analysis of the
reestimated rate of return, and a good discussion of future operations. No audit is planned. The appropriateness of a
combined audit of Stage II and SMHW will be considered in two years time.